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As filed with the Securities and Exchange Commission on October 20, 1997
Registration No. 333-32791
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
AMENDMENT NO. 2
to
Form S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-------------------
Norwest Corporation
(Exact name of registrant as specified in its charter)
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Delaware 6711 41-0449260
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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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
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
612-667-8858
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Robert J. Kaukol Larry Temple
Norwest Corporation Larry Temple Attorney at Law
Norwest Center 400 West 15th Street
Sixth and Marquette Suite 1510
Minneapolis, Minnesota 55479-1026 Austin, TX 78701
------------------
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. [_]
<PAGE>
[Myers letterhead]
October 22, 1997
Dear Shareholder:
Your board of directors has approved the acquisition of Myers
Bancshares Inc. by Norwest Corporation. Norwest will acquire Myers through the
merger of Myers with a newly-formed, wholly-owned subsidiary company of Norwest.
Myers will be the surviving company in the merger. If the merger is completed,
Myers will become a wholly-owned subsidiary of Norwest and you will receive
shares of Norwest common stock for your shares of Myers common stock.
In the proposed merger, Norwest will exchange $19,870,000 in Norwest
common stock for all of the outstanding shares of Myers common stock. Based on
147 shares of Myers common stock outstanding, this works out to approximately
$135,170 in Norwest common stock for each share of Myers common stock. The
Norwest common stock to be exchanged in the Merger will be valued at the average
closing price for Norwest common stock over a fixed measurement period. For each
share of Myers common stock you own, you will receive that number of shares of
Norwest common stock equal to $135,170 divided by this average.
Norwest cannot acquire Myers without the approval of Myers'
shareholders. Your board has called a special shareholders meeting to vote on
the matter. The meeting will be held on November 13, 1997 at 11:00 a.m., local
time, at 6310 Lemmon Avenue, Suite 200, Dallas, Texas 75209. If shareholders do
not approve the acquisition, Myers will continue to operate as an independent
company.
Please read the following materials for information concerning the
merger and the special meeting. Also, please sign and return the accompanying
proxy card in the postage-paid envelope. This way, your shares will be voted as
you direct even if you can't attend the meeting.
Michael A. Myers
Chairman and Chief Executive Officer
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Whether or not you plan to attend the special meeting, please fill in, sign,
date, and promptly return the accompanying proxy card in the enclosed envelope.
- -------------------------------------------------------------------------------
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TABLE OF CONTENTS
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NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS............................................................. 1
DEFINED TERMS................................................................. 2
WHAT "INCORPORATED BY
REFERENCE" MEANS.............................................................. 4
EXPLANATORY NOTE REGARDING NORWEST COMMON STOCK SPLIT......................... 4
PROXY STATEMENT-PROSPECTUS.................................................... 5
SUMMARY................................................................. 6
Parties to the Merger.............................................. 6
Reasons for the Merger............................................. 6
Recommendation of the Myers Board.................................. 7
Approval of the Merger............................................. 7
The Merger......................................................... 7
Comparative Per Common Share Data.................................. 11
Selected Historical Financial Information.......................... 12
Share Prices and Dividends for
Norwest Common Stock ............................................ 15
SPECIAL MEETING OF SHAREHOLDERS......................................... 16
Record Date........................................................ 16
Voting Rights; Votes Required for Approval......................... 16
Voting and Revocation of Proxies .................................. 16
Solicitation of Proxies............................................ 16
Other Matters...................................................... 17
THE MERGER.............................................................. 18
Purpose and Effect of the Merger................................... 18
Background of and Reasons for the Merger........................... 18
Additional Interests of Myers Management
in the Merger.................................................... 19
Appraisal Rights................................................... 20
Exchange of Certificates........................................... 22
Regulatory Approvals .............................................. 23
Effect on Myers Employee Benefit Plans............................. 23
Certain U.S. Federal Income
Tax Consequences................................................. 23
Resale of Norwest Common Stock..................................... 24
Stock Exchange Listing............................................. 24
Accounting Treatment............................................... 24
THE REORGANIZATION AGREEMENT............................................ 26
Basic Plan of Reorganization....................................... 26
Representations and Warranties..................................... 26
Certain Covenants.................................................. 27
Conditions to the Completion of the Merger......................... 28
Termination of the Reorganization
Agreement........................................................ 28
Termination Fee.................................................... 29
Effect of Termination.............................................. 29
Waiver and Amendment............................................... 29
Expenses........................................................... 29
COMPARISON OF RIGHTS OF MYERS COMMON
STOCK AND NORWEST COMMON STOCK.......................................... 31
Capital Stock...................................................... 31
Rights Plan........................................................ 31
Directors.......................................................... 31
Amendment of Charter Documents
and Bylaws....................................................... 32
Shareholder Approval of Mergers
and Asset Sales.................................................. 32
Appraisal Rights................................................... 33
Special Meetings................................................... 33
Directors Duties................................................... 33
Action Without a Meeting........................................... 34
Limitation of Director Liability................................... 34
Indemnification of Officers and Directors.......................... 34
Dividends.......................................................... 35
Corporate Governance Procedures;
Nomination of Directors.......................................... 35
INFORMATION ABOUT MYERS................................................. 36
General............................................................ 36
The Bank........................................................... 36
Competition........................................................ 36
Regulation and Supervision......................................... 36
Employees.......................................................... 37
Properties......................................................... 37
Legal Proceedings.................................................. 38
Description of Securities.......................................... 38
Dividends and Dividend Policy...................................... 38
Holders and Market Information..................................... 38
Security Ownership of Management
and Principal Shareholders....................................... 38
MYERS' MANAGEMENT'S DISCUSSION
AND ANALYSIS OF MYERS' FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS.............................................................. 39
Results of Operations.............................................. 39
Liquidity.......................................................... 46
Capital Resources.................................................. 47
Accounting Matters................................................. 47
Impact of Inflation, Changing Prices
and Monetary Policies............................................ 48
CERTAIN REGULATORY AND OTHER
CONSIDERATIONS PERTAINING TO NORWEST.................................... 49
Bank Regulatory Agencies........................................... 49
Bank Holding Company Activities;
Interstate Banking............................................... 49
Dividend Restrictions.............................................. 50
Holding Company Structure.......................................... 50
Regulatory Capital Standards
and Related Matters.............................................. 51
FDIC Insurance..................................................... 53
Fiscal and Monetary Policies....................................... 54
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Competition........................................................ 54
EXPERTS................................................................. 54
LEGAL MATTERS........................................................... 55
INFORMATION CONCERNING NORWEST
MANAGEMENT............................................................ 55
WHERE YOU CAN FIND MORE
INFORMATION........................................................... 55
INDEX TO MYERS FINANCIAL
STATEMENTS............................................................ F-1
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APPENDIX A AMENDMENT TO AGREEMENT
AND PLAN OF REORGANIZATION
(A-1 -- A-2)
AGREEMENT AND PLAN OF
REORGANIZATION
(A-3 -- A-33)
APPENDIX B AGREEMENT AND PLAN OF
MERGER
APPENDIX C TEXAS BUSINESS
CORPORATION ACT, ARTICLES
5.11, 5.12 AND 5.13
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders of Myers Bancshares Inc. will be held
on November 13, 1997 at 11:00 a.m., local time, at 6310 Lemmon Avenue, Suite
200 Dallas Texas 75209. The purpose of the meeting is to vote on a proposal to
approve the agreement and plan of reorganization between Myers and Norwest
Corporation and the related agreement and plan of merger. These agreements
provide for the merger of a newly-formed, wholly-owned subsidiary company of
Norwest with Myers, and for Myers to be the surviving company. If the merger is
completed, Myers will become a wholly-owned subsidiary of Norwest and Myers
shareholders will receive shares of Norwest common stock for their shares of
Myers common stock.
The record date for the special meeting is October 22, 1997. Only
shareholders of record at the close of business on that date can vote at the
meeting.
Kathy Carver
Corporate Secretary
1
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DEFINED TERMS
Following are the definitions of certain terms used in this Proxy
Statement-Prospectus. Each term should be considered in the context in which it
is used.
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Adjusted Norwest Shares ....... the number equal to $19,870,000 divided by the Norwest Measurement Price.
Bank .......................... Continental State Bank, a wholly-owned subsidiary of Myers.
Bank Holding Company Act ...... Bank Holding Company Act of 1956.
DGCL .......................... Delaware General Corporation Law.
Exchange Act .................. Securities Exchange Act of 1934.
Federal Reserve Board ......... Board of Governors of the Federal Reserve System.
FDI Act ....................... Federal Deposit Insurance Act.
FDIC .......................... Federal Deposit Insurance Corporation.
Interstate Banking Act ........ Reigle-Neal Interstate Banking and Branching Act.
Merger ........................ the merger of Myers with Norwest MBI Merger Co., as a result of which Myers will
become a wholly-owned subsidiary of Norwest.
Myers ......................... Myers Bancshares Inc. and its consolidated subsidiary, Continental State Bank.
Myers Articles ................ Myers' articles of incorporation.
Myers Board ................... Myers' board of directors.
Myers Bylaws .................. Myers' bylaws.
Myers Common Stock ............ Myers' common stock, par value $1,000 per share.
Norwest ....................... Norwest Corporation and its consolidated subsidiaries.
Norwest Board ................. Norwest's board of directors.
Norwest Bylaws ................ Norwest's bylaws.
Norwest Certificate ........... Norwest's restated certificate of incorporation.
Norwest Common Stock .......... Norwest's common stock, par value $1-2/3 per share.
Norwest MBI Merger Co. ........ a wholly-owned subsidiary of Norwest incorporated for the limited purpose of merging
with Myers.
Norwest Measurement Price ..... the average of the closing prices of a share of Norwest Common Stock as reported on the
composite tape of the New York Stock Exchange during the period of 20 trading days
ending on the day immediately before the special meeting of Myers shareholders.
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2
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OCC ........................... Office of the Comptroller of the Currency.
OTS ........................... Office of Thrift Supervision.
Plan of Merger ................ the Agreement and Plan of Merger dated August 4, 1997 between Myers and Norwest MBI Merger Co.
Reorganization Agreement ...... the Agreement and Plan of Reorganization dated April 22, 1997 between Myers and Norwest,
as amended.
SEC ........................... Securities and Exchange Commission.
Securities Act ................ Securities Act of 1933.
TBCA .......................... Texas Business Corporation Act
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3
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WHAT "INCORPORATED BY REFERENCE" MEANS
Incorporation by reference is a concept that allows Norwest not to include
in this Proxy Statement-Prospectus some of the information about Norwest that
may be important to your decision whether to approve the Merger. The information
is instead "incorporated" into this Proxy Statement-Prospectus by reference to
one or more documents previously filed by Norwest with the SEC. For example, the
information contained in Norwest's consolidated financial statements for the
years ended December 31, 1996 and 1995 may be important to your decision, as may
be a detailed description of Norwest's business. None of this information is
physically included in this Proxy Statement-Prospectus. Instead, this Proxy
Statement-Prospectus refers you to Norwest's annual report on Form 10-K, which
is the document that physically contains the financial statements and the most
recent description of Norwest's business.
Information that has been incorporated by reference is considered part of
this Proxy Statement-Prospectus, even though it is not physically included. As a
result, the information is considered to have been disclosed to you, whether or
not you obtain a copy of the document containing the information.
This Proxy Statement-Prospectus will indicate when information has been
incorporated by reference. It will also specify the document that physically
contains the information. As you read this Proxy Statement-Prospectus, please
make a list of the documents that you want to review in deciding whether to
approve the Merger. The section entitled "Where You Can Find More Information"
explains how to get copies of these documents.
EXPLANATORY NOTE REGARDING
NORWEST COMMON STOCK SPLIT
On September 23, 1997, the Norwest Board declated a two-for-one split of
Norwest Common Stock in the form of a 100% stock dividend. The stock dividend
was paid on October 10, 1997, to stockholders of record on October 2, 1997. As a
result of the stock split, stockholders received one additional share of Norwest
Common Stock for each share they owned on October 2, 1997. On October 14,
1997, Norwest Common Stock began trading at half its pre-split price.
As required by the Reorganization Agreement, the number of share of Norwest
Common Stock to be exchanged in the Merger has been adjusted to reflect the
stock split. The sections of this Proxy Statement-Prospectus that discuss the
number of Norwest Common Stock issuable in the Merger reflect this adjustment.
This Proxy Statement-Prospectus will indicate where other information has been
adjusted or restated to reflect the stock split.
4
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PROXY STATEMENT-PROSPECTUS
This document serves as both a proxy statement of Myers and a prospectus of
Norwest. As a proxy statement, it is being provided to you because the Myers
Board is soliciting your proxy for use at the special meeting. As a prospectus,
it is being provided to you because Norwest will issue shares of Norwest Common
Stock to you in the Merger in exchange for your shares of Myers Common Stock.
At the special meeting, Myers shareholders will vote on the Reorganization
Agreement and the Plan of Merger. The Reorganization Agreement and the Plan of
Merger provide for the merger of Myers with a newly-formed, wholly-owned
subsidiary of Norwest. Myers will be the surviving company in the Merger. If the
Merger is completed, Myers will become a wholly-owned subsidiary of Norwest and
Myers shareholders will receive shares of Norwest Common Stock for their shares
of Myers Common Stock.
This Proxy Statement-Prospectus provides detailed information concerning
the Merger and the special meeting. The Reorganization Agreement is attached to
this Proxy Statement-Prospectus as Appendix A. The Plan of Merger is attached as
Appendix B. Both of these documents are considered part of this Proxy
Statement-Prospectus. Myers and Norwest encourage you to read this entire Proxy
Statement-Prospectus (including the appendixes) carefully.
----------------------------
In deciding whether to vote for the Merger and receive shares of Norwest
Common Stock in exchange for your shares of Myers Common Stock, you should be
aware that:
. Neither the SEC nor any state securities regulators have approved the
Norwest Common Stock offered by this Proxy Statement-Prospectus or
determined whether this Proxy Statement-Prospectus is accurate or
adequate. Any representation to the contrary is a criminal offense.
. The shares of Norwest Common Stock offered by this Proxy Statement-
Prospectus are not savings accounts, deposits or other obligations of
any bank or nonbank subsidiary of Norwest and are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
. Norwest, its banking subsidiaries and many of its nonbanking
subsidiaries are subject to extensive regulation by a number of federal
and state agencies. This regulation may affect, among other things,
Norwest's earnings and/or restrict its ability to pay dividends on
Norwest Common Stock. See "Certain Regulatory and Other Considerations
Pertaining to Norwest.
----------------------------
This Proxy Statement-Prospectus is dated October 20, 1997.
It is first being mailed to Myers shareholders on or about October 22,
1997.
5
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
Merger fully, and for a more complete description of the legal terms of the
Merger, you should carefully read this document and the other information
available to you. See "Where You Can Find More Information."
Parties to the Merger
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Norwest Corporation....................... Norwest is a diversified financial services company organized under the laws of
Sixth and Marquette Delaware and registered under the Bank Holding Company Act. Through its
Minneapolis, Minnesota 55479 subsidiaries and affiliates, Norwest provides retail, commercial and corporate
(612) 667-1234 banking services, as well as a variety of other financial services, including
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, mortgage-backed
securities servicing, and venture capital investment.
At June 30, 1997, Norwest had consolidated total assets of $83.9 billion, total
deposits of $52.0 billion and total stockholders' equity of $6.5 billion. Based on
total assets at June 30, 1997, Norwest was the 11th largest commercial banking
organization in the United States.
Myers Bancshares Inc...................... Myers is a bank holding company headquartered in Dallas, Texas. Myers derives
6310 Lemmon Avenue, Suite 200 substantially all of its revenues and income from the operation of its wholly-
Dallas, Texas 75209 owned bank subsidiary, Continental State Bank (the "Bank"), which is domiciled in
(214) 350-6500 Boyd, Texas. The Bank provides a full range of commercial and consumer banking
services to individuals and small and middle market businesses in the areas of
Wise and Parker Counties. It has branches in Rhome, Texas and Springtown, Texas.
As of June 30 , 1997, the Bank had total deposits of $111.6 million. As of June
30, 1997, Myers had total consolidated assets of $125.5 million and total
shareholders' equity of $13.2 million.
Reasons for the Merger......................... Over many months prior to April 22, 1997, Myers management monitored developments
in bank acquisitions in Texas along with developments in the banking industry
generally. Recognizing both the industry trends toward competition and
consolidation and the potential need for significant investments in technology to
provide the products and services necessary to obtain and retain customers, Myers
management began to consider alternatives that would permit Myers shareholders to
realize maximum value for their investment. In evaluating various alternatives,
Myers management determined that Myers shareholders would be best served by the
acquisition of Myers by a company whose stock is listed on one of the major
exchanges to create liquidity for the shareholders, a
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company recognized as a high performing, well regarded, and highly rated financial
institution nationwide. In addition, Myers management determined that the
transaction price must be adequate in terms of total consideration and that the
transaction would be best structured as a non-taxable stock for stock exchange so
that each individual shareholder of Myers would have the opportunity to decide in
the future whether he or she desired to continue with ownership of a bank
investment or would prefer to convert that ownership into cash by a sale.
Recommendation of the Myers Board.............. The Myers Board has adopted a resolution recommending that Myers shareholders
approve the Merger.
Approval of the Merger......................... The affirmative vote of at least two-thirds of the shares of Myers Common Stock
outstanding is required to approve the Merger. Myers' sole director and its
officers, together with their affiliates, own approximately 51.02% of the
outstanding shares of Myers Common Stock. These individuals have informed Myers
that they intend to vote for the Merger.
The Merger does not require the approval of Norwest's stockholders.
The Merger..................................... In the Merger, a newly-formed, wholly-owned subsidiary company of Norwest, will
merge with Myers. Myers will be the surviving company in the Merger. If the Merger
is completed, Myers will become a wholly-owned subsidiary of Norwest and Myers
shareholders will receive shares of Norwest Common Stock for their shares of Myers
Common Stock.
The terms of the Merger are governed by the Reorganization Agreement and the Plan
of Merger. You are encouraged to read both of these documents carefully.
What Myers Shareholders
Will Receive (see page 26)................ In the Merger, Norwest will exchange a total of $19,870,000 in Norwest Common
-- Stock for all of the outstanding shares of Myers Common Stock. Based on 147 shares
of Myers Common Stock outstanding, this works out to approximately $135,170 in
Norwest Common Stock for each share of Myers Common Stock.
The Norwest Common Stock to be exchanged in the Merger will be valued at the
Norwest Measurement Price. The Norwest Measurement Price is the average of the
closing prices of a share of Norwest Common Stock as reported on the composite
tape of the New York Stock Exchange for the 20-trading day measurement period
ending on the last trading day before the special meeting. For each share of Myers
Common Stock you own, you will receive that number of shares of Norwest Common
Stock equal to $135,170 divided by the Norwest Measurement Price. For example, if
the Norwest Measurement Price is $30, then you would receive approximately 4,506
shares of Norwest Common Stock for each share of Myers Common Stock. If the
Norwest Measurement
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Price is $32.50, then you would receive approximately 4,159 shares.
Board of Directors and Management of
Myers After the Merger ..... When the Merger is complete, Norwest will own all of the outstanding shares of
Myers Common Stock. As a result, Norwest will be able to elect or appoint all of
the directors and officers of Myers.
Additional Interests of Myers'
Management (see page 19)................. In the Merger, the sole director and the executive officers of Myers will receive
-- the same consideration for their shares of Myers Common Stock as the other
shareholders of Myers will receive for their shares of Myers Common Stock. The
director and executive officers, however, may be deemed to have interests in the
Merger that are in addition to and separate from the interests of Myers
shareholders generally.
You should also be aware that Michael A. Myers, who is Myers' principal
shareholder and sole director, also is the principal shareholder in Woodhaven
National Bank which is located in Fort Worth, Texas. Woodhaven entered into a
separate but simultaneous Reorganization Agreement with Norwest which also would
result (if approved by Woodhaven shareholders) in the merger of Woodhaven with a
wholly-owned subsidiary of Norwest, with Woodhaven shareholders receiving Norwest
Common Stock. Following completion of Norwest's acquisition of Myers or Woodhaven,
whichever is later, Norwest will employ Mr. Myers on a consultation basis as
chairman of the board of the Bank.
Conditions to the Merger (see page 28)..... A number of conditions must be satisfied before the Merger can be completed. Each
-- party's representations and warranties must be true, and each party must perform
its obligations under the Reorganization Agreement. Also, there cannot be any
change since the date of the Reorganization Agreement that has had, or would
reasonably be expected to have, an adverse effect on Myers or Norwest. Some of the
conditions to the Merger are subject to exceptions and to a "materiality"
standard. Certain conditions may also be waived by the party entitled to assert
the condition.
Qualification of the Merger for pooling of interests accounting treatment is a
condition to Norwest's obligation to complete the Merger. Norwest has been advised
by its independent auditors that the Merger will not qualify for pooling treatment
if Norwest's acquisition of Woodhaven National Bank is not approved by Woodhaven
shareholders or for any other reason is not completed.
Regulatory Approvals (see page 23)....... Another condition to completion of the Merger is approval of the Merger by the
-- Federal Reserve Board. Norwest received Federal Reserve Board approval on July 10,
1997.
Termination of the Reorganization
Agreement (see page 28)................... Norwest and Myers can agree to terminate the Reorganization Agreement without
-- completing the Merger. Also, either party can terminate the Reorganization
Agreement before completion of the
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Merger under various circumstances, including:
. if a court or other governmental authority prohibits the Merger;
. if the Merger is not completed by November 15, 1997, unless the failure of the
Merger to occur on or before that date is the fault of the party seeking to
terminate; or
. if the Myers Board, after obtaining the advice of its lawyers, determines that
a competing offer to acquire Myers is more favorable than Norwest's offer;
Norwest can terminate the Reorganization Agreement under various circumstances,
including:
. if the Myers Board withdraws its approval of the Merger;
. if, after Myers transfers, agrees to transfer or receives an offer to transfer
25% or more of its assets or voting stock to a party other than Norwest, Myers
shareholders do not approve the Merger; or
. if the special meeting is not held before September 30, 1997 and the Myers
Board has failed to perform its obligations regarding the special meeting.
Termination Fee (see page 29)............. Myers is required to pay Norwest a fee of $600,000 if it terminates the
-- Reorganization Agreement because it has received a more favorable offer. Myers is
also required to pay the termination fee if Norwest terminates the Reorganization
Agreement under certain circumstances and, before the termination or within 12
months afterwards, (a) Myers transfers or agrees to transfer 25% or more of its
assets or voting stock to a party other than Norwest or (b) the Myers Board
approves, or recommends that shareholders approve, a transfer of 25% or more of
Myers' assets or voting stock to a party other than Norwest.
Accounting Treatment (see page 24)........ Norwest will account for the Merger as a pooling of interests, assuming that all
-- of the requirements for a pooling transaction are satisfied. Norwest has been
advised by its independent auditors that, under generally accepted accounting
principles, the Merger will not qualify as a pooling unless Norwest's acquisition
of Woodhaven National Bank is completed. If the Merger does not qualify for
pooling of interests treatment, Norwest can either (a) not complete the Merger or
(b) complete the Merger and treat it as a purchase rather than a pooling of
interests. Norwest has not decided whether it will complete the Merger if the
Merger does not qualify for pooling treatment.
Under the pooling of interests accounting method, the assets and liabilities of
Myers will be carried forward to Norwest at their historical recorded values.
Norwest will not restate its balance sheet amounts and results of operations for
prior periods to reflect
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the combination of Myers with Norwest.
Under the purchase method, Norwest will record, at fair value, the acquired assets
of Myers, less the fair value of the liabilities of Myers assumed by Norwest.
Norwest will record as goodwill any difference between the total purchase price
and the sum of the fair values of Myers' net tangible and identifiable intangible
assets.
Under either accounting method, Norwest will include in its results of operations
the results of Myers' operations after the Merger.
Appraisal Rights (see page 33
and Appendix C).......................... Myers shareholders who dissent from the Merger are entitled to receive a cash
payment equal to the fair value of their shares of Myers Common Stock. To receive
this cash payment, dissenting shareholders must follow the procedures outlined in
Appendix C. Failure to comply strictly with these procedures will result in the
forfeiture of appraisal rights.
U.S. Federal Income Tax
Consequences (see page 23)............... The Merger has been structured so that Myers shareholders will not recognize any
gain or loss for U.S. federal income tax purposes as a result of the Merger
(except for cash received in lieu of fractional shares). The Merger is conditioned
on the receipt by Myers of a legal opinion to this effect.
Market Information (see page 15)......... Norwest Common Stock is listed on the New York Stock Exchange and the Chicago
Stock Exchange under the symbol NOB. On April 21, 1997, the last full trading day
before public announcement of the Merger, Norwest Common Stock closed at $23.0625
per share, as adjusted to reflect the two-for-one split of Norwest Common Stock
distributed on October 10, 1997. On October 17, 1997, Norwest Common Stock closed
at $31.9375 per share.
There is no public market for Myers Common Stock.
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Comparative Per Common Share Data
The following table presents selected comparative per common share data for
Norwest Common Stock on a historical and pro forma combined basis and for Myers
Common Stock on a historical and pro forma equivalent basis. The pro forma data
in the table shows the effect of the Merger using the pooling of interests
method of accounting. See "The Merger--Accounting Treatment." The historical
information should be read with (a) the selected historical financial data (and
related notes) for Norwest and Myers appearing elsewhere in this Proxy
Statement-Prospectus, (b) the complete consolidated financial statements of
Myers appearing elsewhere in this Proxy Statement-Prospectus and (c) the
complete consolidated financial statements of Norwest included in the documents
incorporated by reference in this Proxy Statement-Prospectus. See "Where You Can
Find More Information."
The pro forma information assumes that 662,333 shares of Norwest Common
Stock will be issued in the Merger. This is the number of shares that would be
issued if the Norwest Measurement Price is $30. Based on 147 shares of Myers
Common Stock outstanding, this would result in Norwest issuing approximately
4,506 shares of Norwest Common Stock for each share of Myers Common Stock. The
ratio of 4,506 shares of Norwest Common Stock for each share of Myers Common
Stock is referred to in the footnotes to the table as the "assumed exchange
ratio." The actual Norwest Measurement Price (and thus the actual exchange
ratio) will not be determined until the end of a 20-trading day measurement
period ending on the last trading day before the special meeting.
The assumed exchange ratio of 4,506 reflects the two-for-one split of Norwest
Common Stock distributed on October 10, 1997. The Norwest historical information
presented in the table below has been restated to reflect the stock split. See
"EXPLANATORY NOTE REGARDING NORWEST COMMON STOCK SPLIT."
The information in the following table 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 become effective prior to the periods
indicated.
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<CAPTION>
Norwest Common Stock Myers Common Stock
------------------------ -------------------------
Pro Forma Pro Forma
Historical Combined Historical Equivalent
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
BOOK VALUE (1):
June 30, 1997 $ 8.44 8.45 89,925.66 38,075.70
December 31, 1996 7.97 7.98 83,294.05 35,957.88
DIVIDENDS DECLARED (2):
Six Months Ended June 30, 1997 0.3000 0.3000 - 1,351.80
Year Ended December 31, 1996 0.5250 0.5250 - 2,365.65
Year Ended December 31, 1995 0.4500 0.4500 - 2,027.70
Year Ended December 31, 1994 0.3825 0.3825 - 1,723.55
NET INCOME (3):
Six Months Ended June 30, 1997 0.85 0.85 6,816.58 3,830.10
Year Ended December 31, 1996 1.54 1.54 13,548.35 6,934.24
Year Ended December 31, 1995 1.37 1.37 11,226.07 6,173.22
Year Ended December 31, 1994 1.21 1.21 8,659.04 5,452.20
</TABLE>
- ---------------------------------------
(1) The pro forma combined book value per share of Norwest Common Stock
represents the historical total combined common stockholders' equity for
Norwest and Myers divided by total pro forma common shares of the combined
entities. The pro forma equivalent book value per share of Myers Common
Stock represents the pro forma combined book value per share of Norwest
Common Stock multiplied by the assumed exchange ratio of 4,506.
(2) Assumes no changes in cash dividends per share by Norwest. The pro forma
equivalent dividends per share of Myers Common Stock represent cash
dividends declared per share of Norwest Common Stock multiplied by the
assumed exchange ratio of 4,506.
(3) The pro forma combined net income per share of Norwest Common Stock (based
on fully diluted net income and weighted average number of common and
common equivalent shares) is based upon the combined historical net income
for Norwest and Myers divided by the average pro forma common and common
equivalent shares of the combined entities. The pro forma equivalent net
income per share of Myers Common Stock represents the pro forma combined
net income per share multiplied by the assumed exchange ratio of 4,506.
11
<PAGE>
Selected Historical Financial Information
The following selected financial information is to aid you in your analysis
of the financial aspects of the Merger. The information for Norwest is derived
from its historical consolidated financial statements (and related notes)
contained in its annual and quarterly reports and other information filed with
the SEC and should be read with that information. These reports and other
information are incorporated by reference into this Proxy Statement-Prospectus.
See "What Incorporation by Reference Means" and "Where You Can Find More
Information." The information for Myers is derived from its historical
consolidated financial statements (and related notes) contained elsewhere in
this Proxy Statement-Prospectus. The historical consolidated financial
statements for Norwest for each of the full years shown in the table have been
audited; those for interim periods have not been audited. The historical
consolidated financial statements for Myers for the years ended December 31,
1996 and 1995 have been audited; those for the prior full years shown in the
table and for the interim periods have not been audited. The unaudited financial
information reflects, in the respective opinion of Norwest's and Myers'
management, all adjustments (consisting only of normal recurring adjustments)
that are considered necessary to present fairly the financial information for
such periods. The results of operations for any interim period are not
necessarily indicative of results for a full year, and historical results are
not necessarily indicative of future results.
The Norwest financial information has been restated to reflect the
two-for-one split of Norwest Common Stock distributed on October 10, 1997.
Continued on the following two pages
12
<PAGE>
Selected Historical Financial Information
Norwest Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended
June 30 Years Ended December 31
-------------------------------------------------------------------------------
1997 1996 1996 1995 1994 1993(1) 1992(2)
---- ---- ---- ---- ---- ------- -------
(In millions except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income............................... $ 3,268.9 3,099.0 6,318.3 5,717.3 4,393.7 3,946.3 3,806.4
Interest expense.............................. 1,310.8 1,291.7 2,617.0 2,448.0 1,590.1 1,442.9 1,610.6
--------- ---------- --------- --------- --------- --------- ----------
Net interest income........................ 1,958.1 1,807.3 3,701.3 3,269.3 2,803.6 2,503.4 2,195.8
Provision for credit losses................... 231.8 175.2 394.7 312.4 164.9 158.2 270.8
Non-interest income........................... 1,441.0 1,194.7 2,564.6 1,848.2 1,638.3 1,585.0 1,273.7
Non-interest expenses......................... 2,161.2 1,954.3 4,089.7 3,382.3 3,096.4 3,050.4 2,553.1
--------- ---------- --------- --------- --------- --------- ----------
Income before income taxes................. 1,006.1 872.5 1,781.5 1,422.8 1,180.6 879.8 645.6
Income tax expense............................ 352.8 315.7 627.6 466.8 380.2 266.7 175.6
--------- ---------- --------- --------- --------- --------- ----------
Income before cumulative effect of a
change in accounting method................. 653.3 556.8 1,153.9 956.0 800.4 613.1 470.0
Cumulative effect on years prior to 1992 of
change in accounting method................... -- -- -- -- -- -- (76.0)
--------- ----------- --------- --------- --------- --------- -----------
Net income.................................... $ 653.3 556.8 1,153.9 956.0 800.4 613.1 394.0
========= ========== ========= ========= ========= ========= ==========
PER COMMON SHARE DATA
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method.............. $ 0.85 0.75 1.54 1.38 1.23 0.95 0.72
Cumulative effect on years prior to 1992
of change in accounting method........... -- -- -- -- -- -- (0.12)
--------- ----------- --------- --------- --------- --------- -----------
Net income............................... $ 0.85 0.75 1.54 1.38 1.23 0.95 0.60
========= ========== ========= ========= ========= ========= ==========
Fully diluted:
Before cumulative effect of a change in
accounting method........................ $ 0.85 0.75 1.54 1.37 1.21 0.93 0.71
Cumulative effect on years prior to 1992
of change in accounting method........... -- -- -- -- -- -- (0.11)
--------- ----------- --------- --------- --------- --------- -----------
Net income............................... $ 0.85 0.75 1.54 1.37 1.21 0.93 0.60
========= ========== ========= ========= ========= ========= ==========
Dividends declared per common share........... $ 0.3000 0.2550 0.5250 0.4500 0.3825 0.320 0.270
BALANCE SHEET DATA
At period end:
Total assets............................... $83,856.3 77,849.3 80,175.4 72,134.4 59,315.9 54,665.0 50,037.0
Long-term debt............................. 12,043.7 13,787.6 13,082.2 13,676.8 9,186.3 6,850.9 4,553.2
Total shareholders' equity................. 6,507.1 5,634.9 6,064.2 5,312.1 3,846.4 3,760.9 3,371.8
</TABLE>
- --------------------------------------
(1) On January 14, 1994, Norwest acquired First United Bank Group, Inc.
("First United"), a $3.9 billion bank holding company headquartered in
Albuquerque, New Mexico, in a pooling of interests 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 charges for merger-related expenses,
including termination costs, systems and operations costs, and
investment banking, legal, and accounting expenses.
(2) On February 9, 1993, Norwest acquired Lincoln Financial Corporation
("Lincoln"), a $2.0 billion bank holding company headquartered in Fort
Wayne, Indiana, in a pooling of interests 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.
13
<PAGE>
Selected Historical Financial Information
Myers Bancshares Inc. and Subsidiary
(In thousands except per share and shares outstanding amounts)
<TABLE>
<CAPTION>
Six Months
Ended June 30 Years Ended December 31
--------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income $ 4,590 $ 4,391 $ 8,975 $ 8,356 $ 7,316 $ 7,142 $ 7,872
Interest expense 2,068 1,990 4,054 3,879 3,012 2,934 3,599
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income 2,522 2,401 4,921 4,477 4,304 4,208 4,273
Provision for loan losses (credit) - - - (17) - - 118
Non-interest income 516 506 1,018 947 686 886 1,377
Non-interest expenses 1,650 1,571 3,193 3,161 3,326 3,693 3,750
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 1,388 1,336 2,746 2,280 1,664 1,401 1,782
Income tax expense 386 362 754 630 391 367 458
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative effect of
a change in accounting principle 1,002 974 1,992 1,650 1,273 1,034 1,324
Cumulative effect on years prior to
1993 of change in accounting
principle - - - - - 170 -
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary credit 1,002 974 1,992 1,650 1,273 1,204 1,324
Extraordinary credit - - - - 176 - 73
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income $ 1,002 $ 974 $ 1,992 $ 1,650 $ 1,449 $ 1,204 $ 1,397
========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE DATA
Net income per share:
Before cumulative effect of a
change in accounting principle
and extraordinary credit $ 6,816.58 $ 6,626.14 $13,548.35 $11,226.07 $ 8,659.04 $ 6,988.37 $10,939.92
Cumulative effect on years prior
to 1993 of change in
accounting principle - - - - - 1,155.07 -
Extraordinary credit - - - - 1,195.63 - 605.79
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income $ 6,816.58 $ 6,626.14 $13,548.35 $11,266.07 $ 9,854.67 $ 8,143.44 $11,545.71
========== ========== ========== ========== ========== ========== ==========
Dividends declared per common
share - - - - - - -
BALANCE SHEET DATA
At period end:
Total assets 125,484 120,866 124,053 117,841 110,402 105,526 104,000
Long-term debt 175 200 200 225 250 - -
Total shareholders' equity 13,219 10,745 12,244 10,386 9,370 8,339 7,786
</TABLE>
Note - Years prior to 1995 have been restated to give effect to a 1 for 50
reverse stock split.
14
<PAGE>
Share Prices and Dividends for Norwest Common Stock
The following table sets forth the high and low sales prices per share of
Norwest Common Stock, and the cash dividends paid on Norwest Common Stock, for
the quarterly periods indicated and as adjusted to reflect the two-for-one
Norwest Common Stock split distributed on October 10, 1997. See "Explanatory
Note Regarding Norwest Common Stock Split." The prices for Norwest Common Stock
are as reported on the composite tape of the New York Stock Exchange. There is
no public market for Myers Common Stock.
<TABLE>
<CAPTION>
Norwest Common Stock
--------------------
High Low Dividends
---- --- ---------
<S> <C> <C> <C>
1995
First Quarter $13.1250 11.3125 0.105
Second Quarter 14.6875 12.5625 0.105
Third Quarter 16.3750 13.4375 0.120
Fourth Quarter 17.3750 14.6250 0.120
1996
First Quarter 18.5625 15.2500 0.120
Second Quarter 18.7500 16.5000 0.135
Third Quarter 20.5000 16.5000 0.135
Fourth Quarter 23.4375 20.3750 0.135
1997
First Quarter 26.6250 21.3750 0.150
Second Quarter 29.6250 22.1875 0.150
Third Quarter 31.8750 28.1250 0.150
Fourth Quarter 34.0625 30.6250
(through October 17, 1997)
</TABLE>
15
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
Myers is sending you this Proxy Statement-Prospectus to provide you with
information concerning the Merger and to solicit your proxy for use at the
special meeting of shareholders. The special meeting will be held at the time
and place described in the Notice of Special Meeting of Shareholders on page 1
of this document. At the special meeting, shareholders of Myers will be asked to
approve the Merger.
Record Date
Myers has established October 22, 1997 as the record date for the
meeting. Only shareholders of record on that date are entitled to attend and
vote at the special meeting.
Voting Rights; Votes Required for Approval
On the record date, there were 147 shares of Myers Common Stock outstanding
and entitled to vote at the special meeting. The holders of Myers Common Stock
are entitled to one vote per share. The presence, in person or by proxy, at the
special meeting of the holders of a majority of the outstanding shares is
necessary for a quorum.
Approval of the Merger requires the affirmative vote, in person or by
proxy, of the holders of at least two-thirds of the outstanding shares of Myers
Common Stock. The sole director and the executive officers of Myers and their
affiliates beneficially owned on the record date a total of 75 shares of Myers
Common Stock, or approximately 51.02% of the outstanding shares of Myers Common
Stock. Myers has been informed that these shareholders intend to vote in favor
of the Merger.
Voting and Revocation of Proxies
All shares of Myers Common Stock represented at the special meeting by a
properly executed proxy will be voted in accordance with the instructions
indicated on the proxy, unless the proxy is revoked before a vote is taken. If
you sign and return a proxy without voting instructions, and do not revoke the
proxy, the proxy will be voted FOR approval of the Merger.
You may revoke your proxy at any time before it is voted by (a) filing
either an instrument revoking the proxy or a duly executed proxy bearing a later
date with the corporate secretary of Myers before or at the special meeting or
(b) voting the shares subject to the proxy in person at the special meeting.
Attendance at the special meeting will not by itself result in your proxy being
revoked.
A proxy may indicate that all or a portion of the shares represented by the
proxy 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 the name of a
nominee 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 that proposal, even though the 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
will not be counted as voting in favor of the proposal. The proposal to approve
the Merger must be approved by the holders of at least two-thirds of the
outstanding shares of Myers Common Stock. Because each proposal requires the
affirmative vote of a specified percentage of outstanding shares, not voting on
a proposal will have the same effect as voting against the proposal.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees of
Myers may solicit proxies from Myers shareholders, 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
16
<PAGE>
expenses incurred in sending proxy material to beneficial owners. Myers will
bear its own expenses in connection with any solicitation of proxies for the
special meeting.
Other Matters
If an insufficient number of votes for the Merger is received before the
scheduled meeting date, Norwest and Myers may decide to postpone or adjourn the
special meeting. If this happens, proxies that have been received that either
have been voted for the Merger or contain no instructions will be voted for
adjournment.
The Myers Board is not aware of any business to be brought before the
special meeting other than the proposal to approve the Merger. If other matters
are properly brought before the special meeting or any adjournments or
postponements of the meeting, the persons appointed as proxies will have
authority to vote the shares represented by properly executed proxies in
accordance with their discretion and judgment as to the best interests of Myers.
17
<PAGE>
THE MERGER
Purpose and Effect of the Merger
Norwest is using the Merger to acquire Myers. The effect of the Merger will
be that Myers will become a wholly-owned subsidiary of Norwest and shareholders
of Myers will receive shares of Norwest Common Stock for their shares of Myers
Common Stock. Norwest will own all of the outstanding shares of Myers Common
Stock. Shareholders of Myers will become stockholders of Norwest, and their
rights will be governed by the Norwest Certificate and Norwest Bylaws rather
than the Myers Articles and Myers Bylaws. See "COMPARISON OF RIGHTS OF MYERS
COMMON STOCK AND NORWEST COMMON STOCK."
Background of and Reasons for the Merger
Since the early 1990's, Myers management has monitored developments in bank
acquisitions in Texas along with developments in the banking industry generally.
During this time, Myers management became aware of the fact that industry trends
toward competition and consolidation might combine to erode the customer base of
the Bank. Moreover, the potential need for significant investments in technology
to provide the products and services necessary to obtain and retain customers
would impact both the cost of doing business and Myers' profits.
Without committing Myers to any decision to sell or merge the company,
Myers management determined in early 1996 to investigate whether an outright
sale to or merger with another institution would be in the best interest of its
shareholders. After initial internal review, Myers management decided to retain
the professional expertise of Service Asset Management Company of Dallas, Texas
("SAM"). SAM is a successful broker of sale and purchase of banks in Texas whose
management and representatives are comprised of individuals who in their own
right have been successful bankers. Myers management engaged SAM to advise and
counsel Myers about the value of the company, who might be interested in a
potential acquisition of Myers, and what price could the shareholders of Myers
command for their stock in the event of a sale.
SAM identified several banks or holding companies who might have an
interest in acquiring Myers. With the authorization of Myers management, SAM
contacted those banks and holding companies and provided them with summary
information about Myers. Norwest was one of those entities initially contacted.
Norwest and one other bank conducted an on-site due diligence review of
Myers and the Bank. Both Norwest and the other bank also reviewed the books and
records of Myers.
While the other potential acquiring bank indicated an interest in a cash
purchase of Myers, Myers management pursued negotiations with Norwest because
management believed that the Norwest proposal was more beneficial to Myers
shareholders. The negotiation process with Norwest concluded on April 22, 1997
with the execution of the Reorganization Agreement.
In reaching its decision to approve the terms of the Reorganization
Agreement, Myers management considered a number of factors, including, without
limitation, the following:
1. The familiarity of Myers management with Myers business, operations,
financial condition, earnings and prospects, and its investigation
(directly and through SAM) of similar matters concerning Norwest.
2. The current and prospective economic environment and competitive
constraints facing Myers and the Bank, including specifically the superior
products and services which larger competitors might offer to customers and
the need for substantial investments by Myers and the Bank in technology to
compete with such competitors.
3. Myers management's opinion that Norwest is a high performing, well
regarded, and highly rated financial institution nationwide.
18
<PAGE>
4. The monetary value of the Norwest Common Stock offered to Myers
shareholders by Norwest (a) in absolute terms, (b) as compared to the value
of offers received by Myers from qualified and informed potential
acquirors, none of which offers were greater than the value of the Norwest
offer, and (c) as compared to recent merger and acquisition transactions
involving other banks and financial institutions in Texas and in this
general area of Texas.
5. The price obtainable for Myers Common Stock at this time compared with the
risk involved and possible price available at a later time.
6. The benefits of a merger with Norwest, including access to Norwest's
financial and management resources and customer products, which could
increase the services to the present customers of Myers.
7. Management's belief that Norwest would retain the present employees of
Myers to the fullest extent possible.
8. The fact that the transaction would be structured as a non-taxable stock
for stock exchange so that each individual shareholder of Myers would have
the opportunity to decide in the future whether he or she desired to
continue with ownership of a bank investment or would prefer to convert
that ownership into cash by a sale.
9. The results of operations and financial condition of Norwest and the
increased liquidity represented by Norwest Common Stock.
10. Norwest's experience in the acquisition of other banking institutions.
In its deliberations, Myers management did not assign any specific weights
to these or any other factors.
Based on the foregoing and other factors, the Myers Board adopted
resolutions approving the Merger and recommending that Myers shareholders
approve the Merger.
Additional Interests of Myers Management in the Merger
In the Merger, the sole director and the executive officers of Myers will
receive the same consideration for their shares of Myers Common Stock as the
other shareholders of Myers will receive for their shares of Myers Common Stock.
The director and the executive officers, however, may have interests in the
Merger in addition to or separate from the interests of Myers shareholders
generally.
Indemnification and Limitations on Liability. In the Reorganization
Agreement, Norwest has agreed to indemnify, defend and hold harmless the
officers, directors and employees of Myers and the Bank against losses,
expenses, claims, damages and liabilities arising out of the Merger to the
fullest extent permitted or required by the Myers Articles and the Myers Bylaws
and the comparable governing documents of the Bank. Norwest has also agreed to
ensure that all rights to indemnification and limitations of liability existing
in favor of those officers, directors and employees with respect to claims
arising from facts or events occurring before completion of the Merger will
continue in full force and effect after the Merger.
Sale of Woodhaven National Bank to Norwest. Norwest has agreed to acquire
Woodhaven National Bank, a national banking association located in Fort Worth,
Texas, for $10,000,000 in Norwest Common Stock. Myers Bancshares Inc. owns 8,820
shares of Woodhaven common stock, or approximately 4.9% of the outstanding
shares of Woodhaven common stock. Michael A. Myers, chairman and chief executive
officer of Myers Bancshares, beneficially owns 111,850 shares of Woodhaven
common stock, or approximately 62.1% of the outstanding shares of Woodhaven
common stock. Mr. Myers also beneficially owns 73 shares of Myers Common Stock,
or approximately 49.7% of the outstanding shares of Myers Common Stock.
Completion of the Merger is not conditional on Norwest's acquisition of
Woodhaven, or vice versa. Nonetheless, Norwest has been advised by its
independent auditors that the Merger will not qualify for pooling of interests
accounting treatment if Norwest's acquisition of Woodhaven is not completed.
Qualification of the Merger for pooling of interests accounting treatment is a
condition to Norwest's obligation to complete the Merger. Norwest has not
decided whether it will
19
<PAGE>
waive this condition if the condition is not satisfied. See "--Accounting
Treatment" and "THE REORGANIZATION AGREEMENT-Conditions to the Completion of the
Merger."
Michael A. Myers Employment and Non-Competition Agreement. After completion
of the Merger or upon Norwest's acquisition of Woodhaven National Bank,
whichever is later, Norwest will employ Mr. Myers on a consultative basis as
chairman of the board of the Bank. The term of Mr. Myers' employment will be for
one year, unless the term is renewed or extended by Norwest and Mr. Myers. Mr.
Myers will receive annual compensation of $45,000. Following the termination of
his employment with Norwest, Mr. Myers will be subject to restrictions against
engaging in the business of banking in certain Texas counties for a period of 12
months. Mr. Myers will receive a total of $45,000 for abiding by these
restrictions, payable in two equal installments. The first installment is
payable when the restrictions take effect--that is, after termination of his
employment with Norwest. The second installment is payable six months later.
Michael A. Fowler Employment and Non-Competition Agreement. After
completion of the Merger, Norwest will employ Michael A. Fowler as president of
the Bank. The term of Mr. Fowler's employment will be for two years, unless the
term is renewed or extended by Norwest and Mr. Fowler. Mr. Fowler will receive
annual compensation of $92,000 during the first year of the term. After the
first year, Norwest may increase Mr. Fowler's compensation based on his
performance. Following the termination of his employment with Norwest, Mr.
Fowler will be subject to restrictions against engaging in the business of
banking in certain Texas counties for a period of 12 months. Mr. Fowler will
receive a total of $92,000 for abiding by these restrictions, payable in two
equal installments. The first installment is payable when the restrictions take
effect--that is, after termination of his employment with Norwest. The second
installment is payable six months later.
Appraisal Rights
The following is a summary of the appraisal rights of dissenting
shareholders under Texas law. It is based on the provisions of Articles 5.11,
5.12 and 5.13 of the TBCA, copies of which are attached to this Proxy
Statement-Prospectus as Appendix C. To understand your appraisal rights fully,
you should read these provisions carefully.
What "Dissenters' Rights of Appraisal" Are. Dissenters' rights of appraisal
(or simply "rights of appraisal") refer to the right of shareholders who
disagree with a particular corporate action to receive the cash value of their
shares in lieu of whatever payment is called for by that corporate action. Under
the TBCA, you have this right in connection with the Merger. As a result, in
lieu of receiving shares of Norwest Common Stock, you may elect to receive the
cash value of your shares of Myers Common Stock. The value of your shares will
be measured as of the day immediately before the Merger, excluding any increase
or decrease in value in anticipation of the Merger--that is, the value will not
reflect the expected effects of the Merger on the value of Myers.
You must take a number of steps to exercise your appraisal rights. Failure
to take these steps strictly in the manner required will result in your losing
your appraisal rights. If you lose your appraisal rights, you will be bound by
the Merger and will receive shares of Norwest Common Stock for your shares of
Myers Common Stock.
Steps You Need to Take to Exercise Your Rights of Appraisal.
Before the Special Meeting--Notify Myers of your intent to dissent from the
Merger and refrain from voting for the Merger. Before the special meeting, you
must deliver or mail written notice to Myers of your intent to exercise your
right to dissent if the Merger is completed. Your notice must give an address
where Myers can notify you if the Merger is completed. Also, you must not vote
any of your shares in favor of the Merger.
Simply voting against the Merger is not sufficient to exercise your
appraisal rights. You must notify Myers as mentioned above and take the other
steps described below.
20
<PAGE>
After the Special Meeting--Demand payment for your shares and submit your
share certificates. If Myers shareholders approve the Merger and you have taken
the required steps before the special meeting, Myers will deliver or mail
written notice to you of completion of the Merger within 10 days after the
Merger becomes effective. You will have 10 days after delivery or mailing of
this notice to you to make a written demand on Myers, as the surviving company
in the Merger, for payment of the fair value of your shares. You must state in
your demand the number of shares of Myers Common Stock you own and your estimate
of the fair value of your shares. Within 20 days after demanding payment for
your shares, you must submit all of your share certificates to Myers so that
Myers can note your demand on the certificates.
You will lose your appraisal rights if you fail to demand payment for your
shares within the required 10-day period. Also, if you fail to submit your share
certificates within the required 20-day period, Myers has the option to
terminate your appraisal rights, unless a court of competent jurisdiction for
good and sufficient cause otherwise directs.
How the Fair Value of Your Shares Will be Determined.
You and Myers Agree on an Estimated Fair Value. Within 20 days after Myers
receives your demand for payment, it will deliver or mail notice to you
indicating whether it accepts your estimate of the fair value of your shares. If
Myers accepts your estimate, it will pay this amount within 90 days after the
date the Merger is completed, upon surrender of your duly endorsed share
certificates. If Myers does not accept your estimate, it will state in the
notice its estimated fair value of your shares. You will have 60 days after
completion of the Merger to accept Myers' estimated value. If you do, Myers will
pay this amount to you within 90 days after completion of the Merger, upon
surrender of your duly endorsed share certificates. Upon payment to you of the
agreed value, whether based on your estimate or Myers' estimate, you will cease
to have any interest in your shares or in Myers.
No Agreement is Reached on the Fair Value of Your Shares--Court Ordered
Appraisal. If you do not agree with Myers' estimate of the fair value of your
shares, then either you or Myers may file a petition in any court of competent
jurisdiction in Dallas County, Texas, asking the court to determine the fair
value of your shares. The petition must be filed within 120 days after
completion of the Merger. The court will notify by registered mail all
shareholders who have demanded payment for their shares and who have been unable
to reach an agreement with Myers as to the fair value of their shares. The
court's notice will state the time and place of the hearing at which the court
will consider the petition.
The court will appoint one or more appraisers to determine the value of
Myers Common Stock. The appraisers may examine the books and records of Myers
and conduct such other investigation as they deem proper. The appraisers must
afford a reasonable opportunity to the interested parties to submit pertinent
evidence as to the value of the shares. The appraisers will then determine the
fair value of the shares and report this value to the office of the clerk of the
court. The clerk of the court will notify all parties of this value. After
hearing any legal or factual exceptions to the report, the court will then
determine the fair value of the shares and direct Myers to pay that value,
together with interest for the period beginning 91 days after completion of the
Merger and ending on the date of the court's decision, to the shareholders
entitled to payment, upon surrender of their duly endorsed share certificates.
The court's determination of the value of Myers Common Stock will be binding on
Myers and all shareholders who have been so notified. Upon payment of this
amount, dissenting shareholders will cease to have any interest in their shares
or in Myers. The court allows the appraisers a reasonable fee as court costs,
and all court costs are allotted between the parties in a manner that the court
determines is fair and equitable.
Withdrawing Your Demand for Payment. You may withdraw your demand for
payment at any time before payment for your shares and before any petition is
filed seeking a determination of the fair value of the shares. With Myers'
consent, you may withdraw your demand after the petition is filed.
When You Will be Presumed to Have Approved the Merger. You will be presumed
to have approved the Merger if (a) you withdraw your demand for payment within
the time allowed, (b) Myers has terminated your appraisal rights because you did
not, within the time allowed, submit your certificates to Myers for notation of
your demand for payment, (c) no petition for a court hearing was filed within
the time allowed or (d) a petition is
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filed but the court determines that you are not entitled to exercise dissenters'
appraisal rights. If you are presumed to have approved the Merger, you will be
bound by the Merger and will cease to have any rights in the shares or in Myers.
Upon surrender of your duly endorsed certificates for your shares of Myers
Common Stock, you will receive shares of Norwest Common Stock and will be
entitled to receive any dividends and other distributions made to stockholders
of Norwest since completion of the Merger.
Right of Appraisal is Your Only Remedy if You Object to the Merger. In the
absence of fraud, the remedy provided by Article 5.12 of the TBCA is the
exclusive remedy for the recovery of the value of your shares if you object to
the Merger. If Myers complies with the requirements of Article 5.12 but you do
not, you will not be entitled to bring suit for the recovery of the value of
your shares or money damages with respect to the Merger.
Exchange of Certificates
After completion of the Merger, Norwest Bank Minnesota, National
Association, acting as exchange agent for Norwest, will mail to each holder of
record of shares of Myers Common Stock a form of letter of transmittal, together
with instructions for the exchange of the holder's stock certificates for a
certificate representing Norwest Common Stock.
MYERS SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
No dividend or other distribution declared on Norwest Common Stock after
completion of the Merger will be paid to the holder of any certificates for
shares of Myers Common Stock until after the certificates have been surrendered
for exchange.
When the exchange agent receives a surrendered certificate or certificates
from a shareholder, together with a properly completed letter of transmittal, it
will issue and mail to the shareholder a certificate representing the number of
shares of Norwest Common Stock to which the shareholder is entitled, plus the
amount in cash of any remaining fractional share and any cash dividends that are
payable with respect to the shares of Norwest Common Stock so issued. No
interest will be paid on the fractional share amount or amounts payable as
dividends or other distributions.
A certificate for Norwest Common Stock may be issued in a name other than
the name in which the surrendered certificate is registered if (a) the
certificate surrendered is properly endorsed and accompanied by all documents
required to transfer the shares to the new holder and (b) the person requesting
the issuance of the Norwest Common Stock certificate either pays to the exchange
agent in advance any transfer and other taxes due or establishes to the
satisfaction of the exchange agent that such taxes have been paid or are not
due.
The exchange agent will issue stock certificates for Norwest Common Stock
in exchange for lost, stolen or destroyed certificates for Myers Common Stock
upon receipt of a lost certificate affidavit and a bond indemnifying Norwest for
any claim that may be made against Norwest as a result of the lost, stolen or
destroyed certificates.
After completion of the Merger, no transfers will be permitted on the books
of Myers. If, after completion of the Merger, certificates for Myers Common
Stock are presented for transfer to the exchange agent, they will be canceled
and exchanged for certificates representing Norwest Common Stock.
None of Norwest, Myers, the exchange agent or any other person will be
liable to any former holder of Myers Common Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
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Regulatory Approvals
The Merger is subject to the prior approval of the Federal Reserve Board.
The Merger is also subject to certain filing and other requirements of the Texas
Department of Banking. The approval of the Federal Reserve Board is required
because Norwest is a bank holding company registered under the Bank Holding
Company Act. Norwest received the approval of the Federal Reserve Board on July
10, 1997.
The approval of an application means only that the regulatory criteria for
approval have been satisfied or waived. It does not mean that the Federal
Reserve Board has determined that the consideration to be received by Myers
shareholders is fair. Regulatory approval does not constitute an endorsement or
recommendation of the Merger.
Norwest and Myers are not aware of any governmental approvals or compliance
with banking laws and regulations that are required for the Merger to become
effective other than those described above. Norwest and Myers intend to seek any
other approval and to take any other action that may be required to effect the
Merger. There can be no assurance that any required approval or action can be
obtained or taken prior to the special meeting.
The Merger cannot be completed unless all necessary regulatory approvals
are granted. In addition, Norwest may elect not to complete the Merger if any
condition under which any regulatory approval is granted is unreasonably
burdensome to Norwest. See "THE REORGANIZATION AGREEMENT AND THE PLAN OF
CONSOLIDATION--Conditions to Completion of the Merger" and "--Termination of the
Reorganization Agreement."
Effect on Employee Benefit Plans
The Reorganization Agreement provides that, subject to any eligibility
requirements applicable to such plans, employees of Myers will be entitled to
participate in those Norwest employee benefit and welfare plans specified in the
Reorganization Agreement. Eligible employees of Myers will enter each of such
plans no later than the first day of the calendar quarter which begins at least
32 days after completion of the Merger.
Certain U.S. Federal Income Tax Consequences of the Merger to Myers Shareholders
The following is a summary of the anticipated U.S. federal income tax
consequences of the Merger to Myers shareholders. The summary is based on the
parties' understanding of the U.S. federal income tax laws as currently in
effect and as currently interpreted. It does not cover issues of state, local or
foreign taxation or address all aspects of U.S. federal income taxation that may
be important to particular shareholders in light of their personal circumstances
or to shareholders subject to special rules under U.S. federal income tax laws.
Future legislation, regulations, administrative rulings and court decisions may
alter the tax consequences summarized below.
The anticipated U.S. federal income tax consequences to Myers shareholders
are as follows:
. A shareholder who receives shares of Norwest Common Stock in exchange
for shares of Myers Common Stock will not recognize any gain or loss on
the receipt of the shares of Norwest Common Stock, except for cash
received in lieu of a fractional share. The shareholder's gain or loss
on the receipt of cash in lieu of a fractional share will equal the
difference between the cash received and the basis of the fractional
share exchanged.
. A shareholder's tax basis in the shares of Norwest Common Stock received
will be the same as the shareholder's tax basis in the shares of Myers
Common Stock exchanged in the Merger, less any cash received in lieu of
fractional shares.
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. The holding period of the shares of Norwest Common Stock received by a
shareholder will include the holding period of the shareholder's shares
of Myers Common Stock exchanged in the Merger, but only if the shares of
Myers Common Stock were held as a capital asset at the time the Merger
is completed.
Myers is not required to complete the Merger unless it receives an opinion
of its counsel that these will be the U.S. federal income tax consequences of
the Merger. The opinion may make certain assumptions and may rely on
representations of the parties to the Merger as to factual matters. It will
represent counsel's judgment as to the tax status of the Merger under the Code
and will not be binding on the IRS. There is no assurance that the IRS will not
take a contrary position regarding the tax consequences of the Merger or that
the IRS would not prevail in the event the tax consequences of the Merger were
litigated.
Shareholders are urged to consult their own tax advisors as to the specific
tax consequences to them from the Merger.
Resale of Norwest Common Stock
The Norwest Common Stock issued in the Merger will be freely transferable
under the Securities Act, except for shares issued to Myers shareholders who are
considered "affiliates" of Myers or Norwest under Rule 145 under the Securities
Act or of Norwest under Rule 144 under the Securities Act. The definition of
"affiliate" is complex and depends on the specific facts, but generally includes
directors, executive officers, 10% stockholders and other persons with the power
to direct the management and policies of the company in question.
Affiliates of Myers may not sell the shares of Norwest Common Stock
received in the Merger except (a) pursuant to an effective registration
statement under the Securities Act, (b) in compliance with an exemption from the
registration requirements of the Securities Act or (c) in compliance with Rule
144 and Rule 145 under the Securities Act. Generally, those rules permit resales
of stock received by affiliates so long as Norwest has complied with certain
reporting requirements and the selling stockholder complies with certain volume
and manner of sale restrictions.
Myers has agreed to use its best efforts to deliver to Norwest signed
representations by each person who may be an affiliate of Myers that the person
will not sell, transfer or otherwise dispose of the shares of Norwest Common
Stock to be received by the person in the Merger except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder.
This Proxy Statement-Prospectus does not cover any resales of Norwest
Common Stock received by affiliates of Myers.
Stock Exchange Listing
The shares of Norwest Common Stock to be issued in the Merger will be
listed on the New York Stock Exchange and the Chicago Stock Exchange.
Accounting Treatment
Pooling of Interests vs. Purchase--Determining Which Method to Apply. Under
generally accepted accounting principles, a business combination such as the
Merger is treated either as a pooling of interests or as a purchase. A business
combination is treated as a pooling transaction if it meets certain specified
criteria. A business combination that does not meet all of these criteria is
treated as a purchase.
Norwest will account for the Merger as a pooling of interests, assuming all
of the criteria for pooling treatment are satisfied. One of the criteria for
pooling treatment is that Myers and Norwest, as the combining entities in the
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Merger, each be relatively autonomous and not part of a larger business. For
this purpose, a company will be treated as comprising part of a larger business
if it is owned or controlled by one or a few individuals and is in the same line
of business as other companies under common ownership or control. To qualify for
pooling treatment in such a case, all of the companies in the same line of
business must be part of the combination.
Michael A. Myers, the sole member of the Myers Board and the beneficial
owner of approximately 49.7% of the outstanding shares of Myers Common Stock,
also beneficially owns approximately 62.1% of the outstanding voting stock of
Woodhaven National Bank located in Fort Worth, Texas. Norwest has been advised
by its independent auditors that this is sufficient common ownership or control
to cause Myers and Woodhaven to be treated as part of the same business. As a
result, Norwest has been advised by its auditors that a business combination
involving Myers or Woodhaven, but not both, would not qualify for pooling of
interests accounting treatment because it would involve only part of this
business.
Contemporaneous with entering into the Reorganization Agreement, Norwest
agreed to acquire Woodhaven National Bank. The acquisition is subject to the
approval of Woodhaven shareholders. As discussed above, if the Woodhaven
acquisition is not approved by Woodhaven shareholders or for any other reason is
not completed, Norwest has been advised by its independent auditors that the
Merger will not qualify for pooling of interests accounting treatment.
Qualification of the Merger for pooling of interests accounting treatment is a
condition to Norwest's obligation to complete the Merger. Norwest has not
decided whether it will waive this condition if the condition is not satisfied.
See "THE REORGANIZATION AGREEMENT--Conditions to the Completion of the Merger."
If the Merger does not qualify for pooling treatment and Norwest
nonetheless completes the Merger, Norwest will account for the Merger using the
purchase method.
Treatment of the Merger under Pooling of Interests and Purchase Methods.
Under the pooling of interests method of accounting, the assets and liabilities
of Myers will be carried forward to Norwest at their historical recorded values.
Because the Merger is not material to the consolidated financial statements of
Norwest, Norwest will not restate its balance sheet amounts and results of
operations for prior periods to reflect the combination of Myers with Norwest.
Under the purchase method of accounting, Norwest will record, at fair
value, the acquired assets of Myers, less the fair value of the liabilities of
Myers assumed by Norwest. Norwest will record as goodwill any difference between
the total purchase price and the sum of the fair values of Myers' net tangible
and identifiable intangible assets.
Under either accounting method, Norwest will include in its results of
operations the results of Myers' operations after the Merger.
The unaudited pro forma data included in this Proxy Statement-Prospectus
for the Merger have been prepared using the pooling of interests method of
accounting. See "SUMMARY--Comparative Per Common Share Data."
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THE REORGANIZATION AGREEMENT
The following is a summary of certain provisions of the Reorganization
Agreement, a copy of which is attached to this Proxy Statement-Prospectus as
Appendix A. The Reorganization Agreement is incorporated by reference into this
Proxy Statement-Prospectus. See "WHAT INCORPORATED BY REFERENCE MEANS."
This summary is qualified in its entirety by reference to the full text of
the Reorganization Agreement. Myers shareholders are encouraged to read this
document carefully and in its entirety. Parenthetical references are to the
relevant paragraph or paragraphs of the Reorganization Agreement.
Basic Plan of Reorganization
Structure. Under the Reorganization Agreement, Norwest MBI Merger Co. will be
merged by statutory merger with Myers. Myers will be the surviving company.
Shares of Myers Common Stock outstanding immediately before the Merger will be
exchanged for shares of Norwest Common Stock. When the Merger is complete, Myers
shareholders will own Norwest Common Stock and Norwest will own all of the
outstanding shares of Myers Common Stock. (paragraph 1(a))
Consideration.
Norwest Common Stock. As part of the Merger, each share of Myers Common
Stock will be converted into the right to receive the number of shares of
Norwest Common Stock determined by dividing the Adjusted Norwest Shares by the
number of shares of Myers Common Stock outstanding. The "Adjusted Norwest
Shares" will equal $19,870,000 divided by the Norwest Measurement Price. The
"Norwest Measurement Price" means the average of the closing prices of a share
of Norwest Common Stock as reported on the composite tape of the New York Stock
Exchange during the period of 20 trading days ending on the day immediately
before the special meeting. (paragraph 1(a)) Under the Reorganization Agreement,
no more than 147 shares of Myers Common Stock may be outstanding at the time the
Merger is completed. (paragraph 2(c)) As a result, for purposes of determining
the number of shares of Norwest Common Stock you will receive, you may assume
that there will be 147 shares of Myers Common Stock outstanding.
The price of Norwest Common Stock on the day the Merger is completed may be
higher or lower than the Norwest Measurement Price. No adjustment will be made
to the number of shares of Norwest Common Stock you will receive to reflect
fluctuations in the price of Norwest Common Stock after the special meeting.
Cash in Lieu of Fractional Shares. If the aggregate number of shares of
Norwest Common Stock you will receive in the Merger does not equal a whole
number, you will receive cash in lieu of the fractional share. The cash payment
will be equal to the product of the fractional part of the share of Norwest
Common Stock multiplied by the average of the closing prices of a share of
Norwest Common Stock as reported by the composite tape of the New York Stock
Exchange for each of the five trading days immediately before completion of the
Merger. (paragraph 1(c))
Completion. Norwest and Myers expect the Merger to be completed promptly
after approval of the Merger by Myers shareholders and the satisfaction (or
waiver) of the conditions to completion contained in the Reorganization
Agreement, including the receipt of all required regulatory approvals.
(paragraph 1(d))
Representations and Warranties
The Reorganization Agreement contains various representations and
warranties by Norwest and Myers as to, among other things, (a) their
organization and legal authority to engage in their respective businesses, (b)
their capitalization, (c) their corporate authority to enter into the
Reorganization Agreement and complete the Merger, (d) the absence of certain
material changes, (e) compliance with laws, (f) material contracts, (g) absence
of certain litigation, and (h) undisclosed liabilities. (paragraphs 2 and 3)
Because the representations and warranties do not
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survive completion of the Merger, they function primarily as a due diligence
device and a closing condition (that is, they have to continue to be true in all
material respects until the Merger is completed).
Certain Covenants
The Reorganization Agreement contains various covenants and agreements that
govern the actions of Myers, the Bank, and Norwest pending completion of the
Merger. Some of the more important covenants are summarized below.
Conduct of Business.
Myers. Myers has agreed that Myers and the Bank will each maintain their
corporate existence in good standing, maintain the general character of their
business, conduct their business in the ordinary and usual manner, and extend
credit in accordance with existing lending policies. Subject to certain
exceptions, Myers and the Bank are each required to obtain the consent of
Norwest before they renew any existing loan for more than $300,000 or establish
any new customer borrowing relationship of more than $100,000. The
Reorganization Agreement places restrictions on the ability of Myers and the
Bank to take certain actions without Norwest's consent, including (a) incurring
indebtedness, (b) granting rights to acquire shares of their capital stock, (c)
issuing shares of their capital stock, (d) declaring dividends or purchasing
their capital stock, (e) selling their assets and (f) raising the compensation
of their officers and directors. (paragraphs 4(a) and (b)) Some of these
restrictions apply only if the amount in question exceeds a threshold dollar
value.
Norwest. Norwest has agreed to conduct its business and to cause its
significant subsidiaries to conduct their respective businesses in compliance
with all material obligations and duties imposed by laws, regulations, rules and
ordinances or by judicial orders, judgments and decrees applicable to them or to
their businesses or properties. (paragraph 5)
Competing Transactions. Myers has agreed that neither it nor the Bank will
directly or indirectly solicit, authorize the solicitation of, or, except as
noted below, enter into any discussions with, any third party concerning any
offer or possible offer to (a) purchase the common stock of Myers or the Bank,
any security convertible into the common stock of Myers or the Bank, or any
other equity security of Myers or the Bank, (b) make a tender or exchange offer
for any shares of the common stock or other equity security of Myers or the
Bank, (c) purchase, lease or otherwise acquire the assets of Myers or the Bank
except in the ordinary course of business or (d) merge, consolidate or otherwise
combine with Myers or the Bank. Myers may enter into discussions concerning the
foregoing and provide information on Myers if the Myers Board concludes, in good
faith, after taking into account the written advice of its outside counsel, that
to fail to do so could reasonably be determined to violate its fiduciary
obligations under applicable law. Myers has also agreed to promptly inform
Norwest if any third party makes an offer or inquiry concerning any of the
foregoing. (paragraph 4(h))
Other Covenants. The Reorganization Agreement contains various other
covenants, including covenants relating to the preparation and distribution of
this Proxy Statement-Prospectus, access to information, and the listing on the
New York Stock Exchange and Chicago Stock Exchange of the shares of Norwest
Common Stock to be issued in the Merger. In addition, Myers has agreed to (a)
establish such additional accruals and reserves as is necessary to conform its
accounting and credit loss reserve practices and methods to those of Norwest and
Norwest's plans with respect to the conduct of Myers' business after the Merger
and (b) use its best efforts to deliver to Norwest prior to completion of the
Merger signed representations substantially in the form attached as Exhibit B to
the Reorganization Agreement from each executive officer, director or
shareholder of Myers who may reasonably be deemed an "affiliate" of Myers within
the meaning of each term used in Rule 145 of the Securities Act. (paragraphs
4(k) and 4(l)) See "Resale of Norwest Common Stock."
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Conditions to the Completion of the Merger
Under the Reorganization Agreement, various conditions are required to be
met before the parties are obligated to complete the Merger. For the most part,
these conditions are customary and include such items as the receipt of
shareholder, regulatory and listing approval and the receipt by Myers of a
favorable tax opinion. The obligations of each party are also subject to the
continued accuracy of the other party's representations and warranties, the
performance by the other party of its obligations under the Reorganization
Agreement, and the absence of any changes that have had or might be reasonably
expected to have an adverse effect on Myers. Each of these last three conditions
is subject to a "materiality" standard. Any condition to the Merger may be
waived by the party seeking to assert the condition. (paragraphs 6, 7 and 8)
Norwest's obligation to complete the Merger is conditional upon the Merger
qualifying for pooling of interests accounting treatment. (paragraph 8(f))
Norwest has been advised by its independent auditors that, under generally
accepted accounting principles, the Merger will qualify as a pooling transaction
only if Norwest's acquisition of Woodhaven National Bank is completed. If
Norwest's acquisition of Woodhaven is not approved by Woodhaven shareholders or
for any other reason is not completed, Norwest has been advised by its auditors
that the Merger will not qualify for pooling of interests accounting treatment.
Norwest's acquisition of Woodhaven cannot be completed unless it is approved by
the holders of at least two-thirds of the outstanding shares of Woodhaven voting
stock. Michael A. Myers, the beneficial owner of approximately 62.1% of the
outstanding shares of Woodhaven voting stock, has indicated that he intends to
vote against the Woodhaven transaction based on the current market price of
Norwest Common Stock ($31.9375 per share as of October 17, 1997). Norwest has
not decided whether it will waive the condition that the Merger qualify as a
pooling if the condition is not satisfied. See "THE MERGER--Additional Interests
of Myers' Management in the Merger" and "--Accounting Treatment."
Termination of the Reorganization Agreement
Termination by Mutual Consent. Norwest and Myers can agree to terminate the
Reorganization Agreement at any time before completion of the Merger. (paragraph
10(a)(i))
Termination by Either Norwest or Myers. Either Norwest or Myers can
terminate the Reorganization Agreement if any of the following occurs:
. The Merger has not become effective by November 15, 1997 (provided this
right to terminate will not be available to a party whose failure to
perform in all material respects any obligation under the
Reorganization Agreement resulted in the failure of the Merger to occur
on or before that date). (paragraph 10(a)(ii))
. A court or governmental authority of competent jurisdiction has issued
a final order restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Reorganization Agreement. (paragraph
10(a)(iii))
. The Myers Board determines in good faith that a "Takeover Proposal"
constitutes a "Superior Proposal," except that Myers can only terminate
the Reorganization Agreement if it has performed its obligations under
the Reorganization Agreement and pays Norwest a termination fee of
$600,000 at the time of termination. (paragraph 10(a)(iv))
. "Takeover Proposal" means a bona fide proposal or offer by a person to
make a tender or exchange offer, or to engage in a merger,
consolidation or other business combination involving Myers or to
acquire in any manner a substantial equity interest in, or all or
substantially all of the assets of, Myers. "Superior Proposal" means a
Takeover Proposal that the Myers Board determines in good faith, after
taking into account the advice of counsel, is more favorable to Myers
and its shareholders than the Merger.
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Termination by Norwest. Norwest can terminate the Reorganization Agreement
if:
. The Myers Board withdraws or modifies in a manner materially adverse to
Norwest its approval of the Merger. (paragraph 10(a)(v))
. Myers shareholders do not approve the Merger at the special meeting
after (1) an "Acquisition Event" occurs, (2) Myers agrees to engage in
an Acquisition Event or (3) a third party makes a proposal to Myers or
its shareholders to engage in an Acquisition Event. (paragraph
10(a)(v))
. The special meeting is not held before September 30, 1997 and Myers has
not performed its obligations under the Reorganization Agreement
regarding the special meeting. (paragraph 10(a)(v))
. "Acquisition Event" means any of the following: (a) a merger,
consolidation or similar transaction involving Myers, the Bank or any
successor to Myers or the Bank, (b) a purchase, lease or other
acquisition in one or a series of related transactions of assets of
Myers or the Bank representing 25% or more of the consolidated assets
of Myers and the Bank or (c) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or any similar
transaction) in one or a series of related transactions of beneficial
ownership of securities representing 25% or more of the voting power of
Myers or the Bank in each case with or by a person or entity other than
Norwest or an affiliate of Norwest.
Termination Fee
If Norwest terminates the Reorganization Agreement because the Myers Board
determines that a Takeover Proposal constitutes a Superior Proposal, Myers is
required to pay Norwest a termination fee of $600,000 within five business days
after termination. Myers is also required to pay Norwest a termination fee of
$600,000 if Norwest terminates the Reorganization Agreement under one of the
circumstances described in "Termination by Norwest" above and before such
termination or within 12 months after such termination (a) Myers, the Bank or
any successor to Myers or the Bank agrees to engage in an Acquisition Event or
an Acquisition Event occurs or (b) the Myers Board approves an Acquisition Event
or recommends to Myers shareholders to approve an Acquisition Event.
Effect of Termination
Generally, if the Reorganization Agreement is terminated by either party,
the Reorganization Agreement becomes void without any liability to either party
other than for willful and material breaches occurring before termination;
however, the provisions of the Reorganization Agreement governing confidential
information and expenses incurred in connection with the Merger survive
termination. (paragraph 10(b))
Waiver and Amendment
Either party may waive any inaccuracies in the representations and
warranties of the other party or compliance by the other party with any of the
covenants or conditions contained in the Reorganization Agreement. (paragraph
10(d))
Norwest and Myers can amend the Reorganization Agreement at any time before
the Merger is completed; however, the Reorganization Agreement prohibits them
from amending the Reorganization Agreement after the Merger is approved by
shareholders if the amendment would change in a manner adverse to Myers
shareholders the consideration to be received by Myers shareholders in the
Merger. (paragraph 10(c))
Expenses
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Norwest and Myers will each pay their own expenses in connection with the
Merger, including fees and expenses of their respective independent auditors and
counsel. (paragraph 11) Myers will pay an unrelated party a finder's fee of
$200,000 in connection with the Merger.
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COMPARISON OF RIGHTS OF HOLDERS OF MYERS
COMMON STOCK AND NORWEST COMMON STOCK
Myers is a bank holding company incorporated under the laws of the state of
Texas. The rights of Myers shareholders are governed by the TBCA, the Myers
Articles and the Myers Bylaws. Norwest is incorporated under the laws of the
state of Delaware. The rights of Norwest stockholders are governed by the DGCL,
the Norwest Certificate and the Norwest Bylaws. Upon completion of the Merger,
Myers shareholders will become stockholders of Norwest. As a result, their
rights will be governed by the DGCL, the Norwest Certificate and the Norwest
Bylaws.
The following is a summary of certain differences between the TBCA and the
DGCL, as well as differences between the Myers Articles and Myers Bylaws and the
Norwest Certificate and Norwest Bylaws. You can find additional information
concerning the rights of Norwest stockholders in the Norwest Certificate and
Norwest Bylaws themselves and Norwest's current report on Form 8-K dated October
10, 1997 and filed with the SEC on October 14, 1997. Norwest's current
report on Form 8-K contains detailed information about Norwest Common Stock and
the preferred stock purchase rights that accompany shares of Norwest Common
Stock. It also provides information regarding the rights of the holders of
Norwest's preferred stock and preference stock, many of which directly affect
the rights of the holders of Norwest Common Stock. The information set forth
below concerning the outstanding shares of Norwest capital stock supersedes the
comparable information contained in the current report.
The Norwest Certificate and the Norwest Bylaws, as well as the current
report on Form 8-K, are incorporated into this Proxy Statement-Prospectus by
reference. See "WHAT INCORPORATION BY REFERENCE MEANS" AND "WHERE YOU CAN FIND
MORE INFORMATION."
Capital Stock
Norwest. The Norwest Certificate currently authorizes the issuance of
1,000,000,000 shares of Norwest Common Stock, 5,000,000 shares of preferred
stock, without par value, and 4,000,000 shares of preference stock, without par
value. At June 30, 1997, there were 374,268,784 shares of Norwest Common Stock
outstanding, 1,046,234 shares of Norwest preferred stock outstanding, and no
shares of Norwest preference stock outstanding. The outstanding share numbers
have not been restated to reflect the two-for-one split of Norwest Common Stock
distributed on October 10, 1997. See "EXPLANATORY NOTE REGARDING NORWEST COMMON
STOCK SPLIT."
Myers. Myers Articles authorize the issuance of 2,000 shares of Myers
Common Stock. As of the date of this Proxy Statement-Prospectus, there are 147
shares of Myers Common Stock issued and outstanding.
Rights Plan
Norwest. Each share of Norwest Common Stock (including shares that will be
issued in the Merger) has attached to it one preferred share purchase right.
Once exercisable, each right allows the holder to purchase a fractional share of
Norwest's Series A Junior Participating Preferred Stock. A right, by itself,
does not confer on its holder any rights of a Norwest stockholder, including the
right to vote or receive dividends, until the right is exercised. The rights
trade automatically with shares of Norwest Common Stock. The rights are designed
to protect the interests of Norwest and its stockholders against coercive
takeover tactics. The rights are intended to encourage potential acquirors to
negotiate on behalf of all stockholders the terms of any proposed takeover.
Although not their purpose, the rights may deter takeover proposals.
Myers. Holders of Myers Common Stock do not have any purchase rights
similar to holders of Norwest Common Stock. No other plan similar to the Norwest
rights plan exists.
Directors
Norwest. The Norwest Bylaws provide for a board of directors consisting of
not less than 10 nor more than 23 persons, each serving a term of one year or
until his or her earlier death, resignation or removal. The number of directors
of Norwest is currently fixed at 15. Directors of Norwest may be removed with or
without cause by the affirmative vote of the holders of a majority of the shares
of Norwest capital stock entitled to vote thereon.
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<PAGE>
Vacancies on the Norwest Board may be filled by a majority vote of the remaining
directors or, in the event a vacancy is not so filled or if no director remains,
by the stockholders. Directors of Norwest are elected by plurality of the votes
of shares of Norwest capital stock entitled to vote thereon present in person or
by proxy at the meeting at which directors are elected. The Norwest Certificate
does not currently permit cumulative voting in the election of directors.
Myers. Myers Bylaws provide for a single director. The director serves for
a one year term or until his or her earlier death, resignation or removal. The
director is elected by holders of a majority of the shares present at a meeting
at which a quorum is present. The director can be removed, without cause, by the
same vote of Myers shareholders.
Amendment of Charter Document and Bylaws
Norwest. The Norwest Certificate may be amended only if the proposed
amendment is approved by the Norwest Board and thereafter approved by a majority
of the outstanding stock entitled to vote thereon and by a majority of the
outstanding stock of each class entitled to vote thereon as a class. The Norwest
Bylaws may be amended by a majority of the Norwest Board or by a majority of the
outstanding stock entitled to vote thereon. Shares of Norwest preferred stock
and Norwest preference stock currently authorized in the Norwest Certificate may
be issued by the Norwest Board without amending the Norwest Certificate or
otherwise obtaining the approval of Norwest's Stockholders.
Myers. Under the TBCA, amendments to the Myers Articles require approval of
a majority of the Myers Board and the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Myers Common Stock. The Myers
Bylaws may be amended by a majority of the Myers Board and also by the holders
of a majority of Myers Common Stock at a meeting at which a quorum is present.
Approval of Mergers and Asset Sales
Norwest. Except as described below, the affirmative vote of a majority of
the outstanding shares of Norwest Common Stock entitled to vote thereon is
required to approve a merger or consolidation involving Norwest or the sale,
lease or exchange of all or substantially all of Norwest's corporate assets. No
vote of the stockholders is required, however, in connection with a merger in
which Norwest is the surviving corporation and (a) the agreement of merger for
the merger does not amend in any respect the Norwest Certificate, (b) each share
of capital stock outstanding immediately before the merger is to be an identical
outstanding or treasury share of Norwest after the merger and (c) the number of
shares of capital stock to be issued in the merger (or to be issuable upon
conversion of any convertible instruments to be issued in the merger) does not
exceed 20% of the shares of Norwest's capital stock outstanding immediately
before the merger.
Myers. The TBCA requires certain mergers to be approved by holders of at
least two-thirds of the outstanding shares entitled to vote thereon, unless
there is a class of stock that is entitled to vote as a class, in which event
the merger must be approved by the holders of two-thirds of the outstanding
shares of each class of stock entitled to vote as a class and by the holders of
two-thirds of the outstanding shares otherwise entitled to vote; provided that
the articles of incorporation may require a vote of a different number, not less
than a majority, of the shares outstanding. The Myers Articles do not provide
for any class of stock other than the Myers Common Stock and do not provide for
a different number of shares for approval of a merger. For that reason, as
described above, the affirmative vote of holders of at least two-thirds of the
Myers Common Stock is required for a merger with Norwest. The TBCA similarly
requires that a sale of all or substantially all of the assets of Myers not made
in the ordinary course of business be approved by the affirmative vote of
holders of at least two-thirds of the Myers Common Stock.
32
<PAGE>
Appraisal Rights
Norwest. Section 262 of the DGCL provides for stockholder appraisal rights
in connection with mergers and consolidations generally; however, appraisal
rights are not available to holders of any class or series of stock that, at the
record date fixed to determine stockholders entitled to receive notice of and to
vote at the meeting to act upon the agreement of merger or consolidation, were
either (a) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (b) held of record by more than 2,000
stockholders, so long as stockholders receive shares of the surviving
corporation or another corporation whose shares are so listed or designated or
held by more than 2,000 stockholders. Norwest Common Stock is listed on the New
York Stock Exchange and the Chicago Stock Exchange and currently held by more
than 2,000 stockholders. As a result, assuming that the other conditions
described above are satisfied, holders of Norwest Common Stock will not have
appraisal rights in connection with mergers and consolidations involving
Norwest.
Myers. Shareholders of Texas corporations are entitled to exercise certain
dissenters' appraisal rights in the event of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property and assets of the
corporation not made in the ordinary course of business, and with the exception
discussed below, a merger or consolidation. Under Article 5.11B of the TBCA,
however, shareholders do not have dissenters' rights if, in connection with a
merger, the stock of the corporation held by the shareholders is either listed
on a national securities exchange or is held of record by not less than 2,000
shareholders and, pursuant to the plan of merger, such shareholder is not
required to accept for his or her shares any consideration other than (a) shares
of stock of a corporation which, immediately after the effective date of the
merger, (i) are listed on a national securities exchange, or (ii) are held of
record by not less than 2,000 shareholders, and (b) cash in lieu of fractional
shares otherwise entitled to be received. Shareholders of Myers will receive
merger consideration that satisfies the provisions of TBCA Article 5.11B
described in subparagraphs (a) and (b) above; however, because the Myers Common
Stock is not listed on a national securities exchange and is held of record by
fewer than 2,000 holders, dissenters' appraisal rights will be available to
Myers shareholders. See "THE MERGER--Appraisal Rights"
Special Meetings.
Norwest. Under the DGCL, special meetings of stockholders may be called by
the board of directors or by such persons as may be authorized in the
certificate of incorporation or bylaws. The Norwest Bylaws provide that a
special meeting of stockholders may be called only by the chairman of the board,
a vice chairman, the president or a majority of the Norwest Board. Holders of
Norwest Common Stock do not have the ability to call a special meeting of
stockholders.
Myers. Under the TBCA, a special meeting of shareholders of a Texas
corporation may be called by either (a) the president, the board of directors,
or such other person or persons as authorized by the articles of incorporation
or the bylaws, or (b) the holders of shares entitled to cast not less than ten
percent (10%) of all shares entitled to vote at the meeting, unless a different
percentage, not to exceed fifty percent (50%), is provided for in the articles
of incorporation. The Myers Articles and the Myers Bylaws provide that special
meetings may be called by holders of 10% or more of the Myers Common Stock and
do not otherwise expand the above provisions of the TBCA regarding calling of
special meetings.
Director Duties
Norwest. The DGCL does not specifically enumerate directors' duties. In
addition, the DGCL does not contain any provision specifying what factors a
director must and may consider in determining a corporation's best interests.
However, judicial decisions in Delaware have established that directors, in
performing their duties, are bound to use that amount of care which ordinarily
prudent men would use in similar circumstances.
Myers. The TBCA does not specifically enumerate the so-called "fiduciary
duties" of a director. Judicial decisions have established that directors must
carry out their duties as a director with due care and loyalty. Due
33
<PAGE>
care is described in certain cases as ordinary care and others as a lack of
gross negligence and intentional misconduct. Directors also have a duty of
fairness to minority shareholders.
Action Without a Meeting
Norwest. As permitted by Section 228 of the DGCL and the Norwest
Certificate, any action required or permitted to be taken at a stockholders'
meeting may be taken without a meeting pursuant to the written consent of the
holders of the number of shares that would have been required to effect the
action at an actual meeting of the stockholders.
Myers. Under the TBCA, shareholders may act without a meeting if a consent
in writing to such action is signed by all shareholders. However, the TBCA also
allows that the articles of incorporation to provide that any action required or
permitted to be taken at a shareholder's meeting may be taken without a meeting
pursuant to the written consent of the holders of the number of shares that
would have been required to effect the action at an actual meeting of the
shareholders. Myers Articles do not provide for shareholder action without a
meeting by less than unanimous consent of its shareholders.
Limitation of Director Liability
Norwest. 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 stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability arising out of (a) any breach of the director's
duty of loyalty to Norwest or its stockholders, (b) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) payment of a dividend or approval of a stock repurchase in violation of
Section 174 of the DGCL or (d) any transaction from which the director derived
an improper personal benefit. This provision protects Norwest's directors
against personal liability for monetary damages from breaches of their duty of
care. It does not eliminate the director's duty of care and 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.
Myers. The Texas Miscellaneous Corporations Laws Act permits a
corporation's articles of incorporation to set limits on the extent of a
director's liability except liability for monetary damages cannot be eliminated
for (a) a breach of duty of loyalty to the corporation or its shareholders, (b)
a failure to act in good faith that constitutes a breach of duty to the
corporation or where a director engages in intentional misconduct or knowingly
violates the law, (c) a transaction from which the director obtains an improper
benefit, and (d) an act or omission for which liability is expressly provided
for by statute. The Myers Articles do not contain any limits on the liability of
its directors.
Indemnification of Officers and Directors
Norwest. The Norwest Certificate provides that Norwest must indemnify, to
the fullest extent authorized by the DGCL, 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 the DGCL, 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,
34
<PAGE>
regardless of whether Norwest has the power or obligation to indemnify that
person against such expense, liability or loss under the DGCL.
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 Norwest Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
Myers. The TBCA provides that a corporation may indemnify an individual if
the individual (a) acted in good faith, (b) in a manner he reasonably believed,
in the case of conduct in his official capacity, was in the corporation's best
interests and, in all other cases, that his conduct was at least not opposed to
the corporation's interests, and (c) in the case of any criminal proceeding, had
no reasonable cause to believe that his conduct was unlawful. The Myers Bylaws
generally provide that directors and officers shall be indemnified against any
costs, expenses and liabilities imposed upon or reasonably incurred by the
director or officer in connection with any proceeding in which the officer or
director is named as a defendant by reason of having been an officer or director
of Myers or the Bank except that the right of indemnification does not apply (i)
if the director or officer was finally adjudged to be liable for negligence or
misconduct, or (ii) to sums paid by the director or officer in settlement of a
claim based on alleged dereliction of duty.
Dividends
Norwest. Delaware corporations may pay dividends out of surplus or, if
there is no surplus, out of net profits for the fiscal year in which declared
and for the preceding fiscal year. Section 170 of the DGCL also provides that
dividends may not be paid out of net profits if, after the payment of the
dividend, capital is less than the capital represented by the outstanding stock
of all classes having a preference upon the distribution of assets. Norwest is
also subject to Federal Reserve Board policies regarding payment of dividends,
which generally limit dividends to operating earnings. See "CERTAIN REGULATORY
CONSIDERATIONS PERTAINING TO NORWEST."
Myers. Under the TBCA, corporations are generally permitted to pay
dividends to the extent that the net assets of the corporation exceed the
aggregate par value of the corporation's outstanding stock or, in the case of
stock without par value, the aggregate stated capital of such stock. Holders of
Myers Common Stock are entitled to receive their pro rata share of any dividends
declared by the Myers Board from assets legally available to pay dividends.
Myers is also subject to Federal Reserve Board policies regarding payment of
dividends, which generally limit dividends to operating earnings.
Corporate Governance Procedures; Nomination of Directors
Norwest. The Norwest Bylaws contain detailed advance notice and
informational procedures which must be complied with in order for a stockholder
to nominate a person to serve as a director. The Norwest Bylaws generally
require a stockholder to give notice of a proposed nominee in advance of the
stockholders meeting at which directors will be elected. In addition, the
Norwest Bylaws contain detailed advance notice and informational procedures
which must be followed in order for a Norwest stockholder to propose an item of
business for consideration at a meeting of Norwest stockholders.
Myers. The Myers Bylaws do not contain any specific provisions regarding
nomination of directors or shareholder proposals for items of business at a
shareholders' meeting. The Myers Bylaws provide that special meetings of
shareholders may be called by the president, the board of directors or holders
of 10% of the outstanding Myers Common Stock.
35
<PAGE>
INFORMATION ABOUT MYERS
General
Myers is a Texas bank holding company, incorporated in 1981. Myers
maintains its principal office at 6310 Lemmon Ave., Suite 200, Dallas, Texas
75209. Its telephone number is (214) 350-6500. Myers derives substantially all
of its revenues and income from the operation of the Bank.
The Bank
The Bank conducts a general commercial and consumer banking business, which
includes the acceptance of deposits from consumers and the origination of
commercial, real estate, installment and other loans. Deposit services include
certificates of deposit, individual retirement accounts and other time deposits,
checking and other demand deposit accounts, interest-bearing accounts, savings
accounts and money market accounts. Loans consist of commercial loans directed
to small and middle market businesses, loans to individuals, loans to ranchers
and farmers and commercial real estate loans, residential mortgages and
construction loans.
The Bank provides traditional commercial and consumer banking services to
its customers through a main office located in Boyd, Texas and branch facilities
located in Springtown and Rhome, Texas.
Competition
The Bank encounters strong competition both in making loans and attracting
deposits. The state of Texas permits statewide branch banking and statewide
savings and loan branching. Moreover, the Bank competes with other commercial
and savings banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies, brokerage and investment banking
companies, and certain other nonfinancial institutions. The continued
liberalization of the banking and securities industries may also increase
competitive pressures on the Bank.
Management believes the Bank is well positioned to compete successfully in
its primary market area, although no assurances can be given in this regard.
Competition among financial institutions is based upon interest rates offered on
deposit accounts, interest rates charged on loans, other credit and service
charges, the quality and scope of the services rendered, the convenience of
banking facilities, and, in the case of loans to commercial borrowers, relative
lending limits. Management believes, however, that the Bank's long-term
presence, local expertise and ongoing commitment to the community, as well as
its commitment to quality and personalized banking services, are factors that
contribute to the Bank's competitiveness.
Regulation and Supervision
Regulation of Myers. Myers is a bank holding company under the Bank Holding
Company Act and therefore is subject to regulation and supervision by the
Federal Reserve Board. As such, Myers is required to file reports with and
furnish such other information as the Federal Reserve Board may require pursuant
to the Bank Holding Company Act, and to subject itself to examination by the
Federal Reserve Board.
Regulation of the Bank. The Bank is a state banking association and is
therefore subject to regulation, supervision, and examination by the Texas
Department of Banking. The Bank is also a member of the FDIC. Requirements and
restrictions under the laws of the state of Texas and the United States include
the requirement that reserves be maintained against deposits, restrictions on
the nature and the amount of loans which can be made, restrictions on the
business activities in which a bank may engage, restrictions on the payment of
dividends to stockholders and minimum capital requirements.
Under the Federal Reserve Board's risk-based capital guidelines for bank
holding companies, Myers is required to maintain minimum Tier 1 and total
capital to risk-adjusted assets ratios of 4% and 8%, respectively,
36
<PAGE>
and a minimum "leverage ratio" of 3%. At December 31, 1996 and 1995, Myers' Tier
1 and total capital to risk-adjusted assets ratios and its leverage ratio were
as follows.
<TABLE>
<CAPTION>
December 31
----------------------------
1996 1995
<S> <C> <C>
Tier 1 to risk-adjusted assets................. 19.15% 17.14%
Total capital to risk-adjusted assets.......... 20.41% 18.40%
Leverage ratio................................. 9.53% 8.40%
</TABLE>
For a general discussion of the Federal Reserve Board's risk-based capital
guidelines and the criteria applied to calculate the ratios, see "CERTAIN
REGULATORY CONSIDERATIONS PERTAINING TO NORWEST -- Regulatory Capital Standards
and Related Matters."
In 1995 the FDIC approved reduced assessment rates applicable to
BIF-insured institutions to a range of zero to 27 basis points from the previous
range of 4 to 31 points. Deposit insurance premiums for Subgroup A institutions
were reduced to zero beginning with the January 1, 1996 assessment period. Banks
within the Subgroup A category will be required to pay $1,000 per semiannual
period as mandated by statute. The Bank was within the Subgroup A category as of
December 31, 1996. For a general discussion concerning the criteria applied by
the FDIC to determine an institution's insurance premium assessment rate, see
"CERTAIN REGULATORY CONSIDERATIONS PERTAINING TO NORWEST--FDIC Insurance."
Employees
Myers and the Bank had approximately 56 full time equivalent employees as
of June 1, 1997. None of the employees is represented by any collective
bargaining agreement, and management believes its employee relations are good.
Myers and its subsidiaries are equal opportunity employers and provide equal
employment opportunities to individuals without regard to race, sex, age,
national origin, religion, veteran status, handicap or familial status.
Properties
Myers' principal executive offices are located at 6310 Lemmon Ave., Suite
200, Dallas, Texas 75209. The main office of the Bank is located at 201 West
Rock Island, Boyd, Texas 76023, and is owned by the Bank. The original building
was built in 1969 with approximately 6,000 square feet. An additional 3,200
square feet of space was added in 1991 along with a complete remodeling of the
interior. The Bank's drive-through facility contains one commercial window,
three operating drive-through lanes, and one lane available for future
expansion. The ATM for the Boyd office is located in the drive-through facility
and is open 24 hours per day. A night depository is also available 24 hours per
day.
The Rhome Branch is located at 101 Highway 287, Rhome, Texas 76078, and is
owned by the Bank. The building was acquired in 1987 when the Bank purchased the
failed First National Bank of Rhome from the FDIC. The building is approximately
20 years old and contains approximately 6,000 sq. ft. The drive-through facility
contains one commercial window and one additional drive-through lane. The Bank's
ATM is located in the front parking lot and is open 24 hours a day. A night
depository is also available 24 hours a day.
The Springtown Branch is located at 201 South Main, Springtown, Texas
76082. The building is owned by the Bank and contains approximately 6,000 sq.
feet. The Bank acquired the building in 1993 with the acquisition of First Bank
& Trust, Springtown. The drive-through facility contains one commercial window
and three additional drive-through lanes. The ATM is located in the
drive-through facility and is open 24 hours a day. A night depository is also
available 24 hours per day.
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<PAGE>
Legal Proceedings
The Bank periodically is involved in legal proceedings arising in the
normal course of business, such as claims to enforce liens, claims involving the
making and servicing of real property loans, and other issues incident to the
Bank's business. Management of Myers does not believe there is any proceeding,
threatened or pending against Myers or the Bank which, if determined adversely,
would have a materially adverse effect on the financial position or results of
operations of Myers.
Description of Securities
Myers authorized capital stock consists of 2,000 shares of Myers Common
Stock. At _________, 1997, the record date for the Special Meeting, there were
outstanding 147 shares of Myers Common Stock.
Holders of shares of Myers Common Stock are entitled to one vote for each
share owned of record on all matters to be voted upon by the shareholders.
Holders of Myers Common Stock are entitled to share ratably in dividends and, in
the event of a liquidation, dissolution or winding up of Myers, to share pro
rata, after payment of all debts and other liabilities, all of the remaining
assets of Myers available for distribution to its shareholders. The holders of
shares of Myers Common Stock have no preemptive or other subscription rights and
there are no conversion rights or redemption or sinking fund provisions
applicable to such shares.
Dividends and Dividend Policy
Holders of Myers Common Stock are entitled to receive dividends when, as
and if declared by the Myers Board out of funds legally available therefore. No
dividends have ever been paid on the Myers Common Stock and none are presently
contemplated. The Reorganization Agreement prohibits Myers from paying dividends
without the consent of Norwest.
Myers' source of funds to pay dividends on the Myers Common Stock is the
cash dividends Myers receives from the Bank. The payment of dividends by the
Bank to Myers is subject to certain restrictions imposed by federal banking
laws, regulations and authorities.
Holders and Market Information
At June 1, 1997, 147 outstanding shares of Myers Common Stock was owned of
record by 29 shareholders. There is no public market for the Myers Common Stock.
Security Ownership of Management and Principal Shareholders
The table below sets forth the shares of Myers Common Stock beneficially
owned by (a) the sole director of Myers, (b) the named executive officer of
Myers, (c) by all directors and executive officers as a group, and (d) each
beneficial owner known by Myers to own 5% or more of the outstanding Myers
Common Stock who is not a director or executive officer.
<TABLE>
<CAPTION>
Amount of Beneficial Percent of Common
Name Ownership Stock
<S> <C> <C>
Sole Director:
Mike A. Myers(1)(2)........................... 73 49.66%
Executive Officer(2)
Frank Talley.................................. 2 1.36%
All Directors and Executive Officers As a Group
Two individuals 75 51.02%
Holders of 5% of Myers Common Stock:
Bettis Investments............................ 8 5.44%
Turnco, Inc................................... 8 5.44%
</TABLE>
- -------------------
(1) Includes one share owned by Mike A. Myers Foundation
(2) Mike A. Myers is the Chairman and the only other executive officer of
Myers
38
<PAGE>
MYERS' MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results Of Operations
Six Months Ended June 30, 1997 and 1996
Myers experienced net income through June 30, 1997 of $1,002,037, as
compared to $974,042 for the period ended June 30, 1996, which represents a
2.9% increase. The net income per share for the six months ended June 30,
1997 was $6,816.6 compared to $6,626.1 for the period ended June 30, 1996.
Net income for June 30, 1997 represents an annualized return on equity of
15.74% compared to 18.44% for the corresponding period in the preceding year.
This net income also represents an annualized return on assets of 1.6% for the
period ended June 30, 1997 which was comparable to the return on assets for
the period ending June 30, 1996.
Myers experienced a net loan reduction of $340,992 for the first six
months of 1997. The loan to deposit ratio as of June 30, 1997 was 46.9%
compared to 47.6% as of December 31, 1996. Total deposits as of June 30, 1997
were $111,552,367 as compared to deposits of $111,027,272 at December 31, 1996.
Years Ended December 31, 1996, 1995 and 1994
Loans and Asset Quality.
Gross loans receivable as of December 31, 1996 were $54,638,545,
representing an increase of $4,395,893 or 8.75% from $50,242,652 at the end of
1995. The increase consisted of an increase of $2,184,836 (8.35%) in commercial
loans, an increase of $2,504,764 (10.08%) in real estate loans and a decrease of
$289,807 in installment loans. Gross loans receivable of $50,242,652 as of
December 31, 1995 represented an increase of $3,162,929 or 6.72% from
$47,079,723 at the end of 1994. The 1995 increase consisted of an increase of
$553,733 (3.13%) in commercial loans, an increase of $1,567,266 (6.74%) in real
estate loans and an increase of $1,032,925 (16.9%) in installment loans. The
underwriting standards of the Bank have evolved through the modification of the
loan policy and have resulted in a continued improvement in the quality of the
assets carried in the loan portfolio over the course of the past five years.
Loan concentration is defined as an amount loaned to a number of borrowers
engaged in similar activities or resident in the same geographic region which
would cause them to be similarly affected by economic and other conditions. The
Bank on a routine basis evaluates these kinds of concentrations for the purpose
of policing its concentrations and makes necessary adjustments in its lending
practices. Such adjustments help ensure that its lending practices clearly
reflect current economic conditions, loan to deposit ratios, and industry
trends.
Provision for Loan Losses.
Provisions for loan losses are charged to earnings to bring the total of
the allowance for loan losses to a level deemed appropriate by management based
on such factors as historical experience, volume and type of lending conducted
by the Bank, the amount of non-performing assets, regulatory policies, general
economic conditions, and other factors related to the collectiblity of loans in
the Bank's portfolio. On January 1, 1995, the Bank adopted the provisions of
Statement of Financial Accounting Standards 114 (SFAS 114), "Accounting by
Creditors for Impairment of a Loan," as amended by the Statement of Financial
Accounting Standards 118 (SFAS 118), "Accounting by Creditors for Impairment of
a Loan - Income Recognition and Disclosures." These statements require
impairment of non-performing loans to be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate, its
observable market value, or the fair value of the collateral if the loan is
collateral dependent. The provision for loan losses for the year ended December
31, 1996 was determined in accordance with the statements, the adoption of which
did not have a significant impact on the Bank's financial position or its
results of operations for the year then ended. The provision for loan losses for
the year
39
<PAGE>
ended December 31, 1996 was $-0- and the provision for the year ended December
31, 1995 was a credit of $16,880.
Net charge offs for the year as a percentage of average loans have equated
to 0.16%, (0.04%), and 0.16% in 1994, 1995, and 1996, respectively. As the loan
portfolio has improved, the coverage of the allowance as a percentage of
non-performing assets has improved from 109.30% in 1994 to 234.17% in 1996. Once
again the primary reason for improvement is based on the improvement of the
overall portfolio and the economic conditions surrounding the Bank. The
following table sets forth the composition of the Bank's loan portfolio by type
of loan on the dates indicated.
<TABLE>
<CAPTION>
LOAN PORTFOLIO ANALYSIS
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
(Dollars in thousands)
Aggregate Principal Amount
<S> <C> <C> <C> <C> <C>
Type of loan:
Commercial $ 20,433 $ 18,248 $ 17,695 $ 14,255 $ 12,601
Real estate 27,343 24,839 23,271 23,748 25,445
Installment 6,841 7,131 6,098 6,241 6,658
Overdrafts 22 25 16 19 26
------------- ------------- ------------- ------------- -------------
Total $ 54,639 $ 50,243 $ 47,080 $ 44,263 $ 44,730
============= ============= ============= ============= =============
<CAPTION>
Percentage of Loan Portfolio
<S> <C> <C> <C> <C> <C>
Type of loan:
Commercial 37.40% 36.32% 37.59% 32.21% 28.17%
Real estate 50.04 49.44 49.43 53.65 56.89
Installment 12.52 14.19 12.95 14.10 14.88
Overdrafts .04 .05 .03 .04 .06
------------ ------------ ------------ ------------ ------------
Total 100.00% 100.00% 100.00% 100.00% 100.00%
============ ============ ============ ============ ============
</TABLE>
The following table indicates the maturities of loans outstanding
(based on contractual dates) as of December 31, 1996.
<TABLE>
<CAPTION>
MATURITIES AND RATE SENSITIVITY OF LOANS
(Dollars in thousands)
Over 1 year
Less than 1 year through 5 years Over 5 years
------------------------- ------------------------ ------------------------
Fixed Floating Fixed Floating Fixed Floating
Rate Rate Rate Rate Rate Rate Total
----------- ----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Total loans $ 12,049 $ 4,577 $ 19,115 $ 18,276 $ 622 $ - $ 54,639
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
40
<PAGE>
Nonperforming Assets.
Generally, interest on loans is accrued and credited to income based upon
the principal balance outstanding. It is management's policy to discontinue the
accrual of interest income when principal or interest is past due 90 days or
more and the loan is not adequately collateralized, or when in the opinion of
management, principal or interest is not likely to be paid in accordance with
the terms of the obligation. The Bank will generally charge-off loans after 120
days of delinquency unless the loans are adequately collateralized and in
process of collection. A loan is considered in the process of collection if,
based on a probable specific event, management believes that the loan will be
repaid or brought current. Loans will not be returned to accrual status until
future payments of principal and interest appear certain. Interest accrued and
unpaid at the time a loan is placed on non-accrual status is charged against
interest income. Subsequent payments received are applied to the outstanding
principal balance.
Real estate acquired by the Bank as a result of foreclosure or by deed in
lieu of foreclosure is classified as other real estate. Such loans are
reclassified to other real estate and recorded at the lower of cost or fair
market value less estimated selling costs, and the estimated loss, if any, is
charged to the allowance for loan losses at that time. Further losses are
recorded as charges to other expenses at the time management believes additional
deterioration in value has occurred.
The following table sets forth certain information with respect to the
Bank's nonperforming loans, accruing loans which are contractually past due 90
days or more as to principal or interest, and other real estate.
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
(Dollars in thousands)
December 31,
--------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Non-Accrual Loans $ 389 $ 587 $ 919
Accruing loans contractually past due
90 days or more 47 176 92
------------- ------------- -------------
Total nonperforming loans 436 763 1,011
Other real estate - 20 -
------------- ------------- -------------
Total nonperforming assets $ 436 $ 783 $ 1,011
============= ============= =============
Total nonperforming assets to total assets 0.35% 0.65% 0.92%
</TABLE>
Interest payments received on non-accrual loans are recorded as reductions
of principal. Interest that would have been accrued on non-accrual loans during
1996 and 1995 was approximately $38,000 and $69,000, respectively.
Management regularly reviews and monitors the loan portfolio in order to
identify borrowers experiencing financial difficulties. Management believes that
as of December 31, 1996, all such loans had been identified and included in the
non-accrual or 90 days past due loan totals reflected in the above table.
Management continues to emphasize maintaining a low level of nonperforming
assets and returning nonperforming assets to an earning status as performance
and conditions permit.
The Bank had no other real estate at December 31, 1996. In the past five
years other real estate has not constituted a significant balance sheet item for
the Bank as no large foreclosures have occurred nor has any property been held
for any extended period of time during the past five years.
41
<PAGE>
Allowance for Loan Losses.
In originating loans, the Bank recognizes that credit losses will be
experienced and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. Management maintains an allowance
for loan losses based upon, among other things, historical experience, an
evaluation of economic conditions, regular review of delinquencies, and its
evaluation of loan portfolio quality. In addition to unallocated allowances,
specific allowances are provided for individual loans when ultimate collection
is considered questionable by management after reviewing the current status of
loans which are contractually past due and considering the net realizable value
of the collateral for the loan. On January 1, 1995, the Bank adopted the
provisions of SFAS 114 and SFAS 118, and determined the provisions for loan
losses for 1995 and 1996 in accordance with the requirements of these
statements. See "Provision for Loan Losses."
Management continues to actively monitor the Bank's asset quality and to
charge off loans against the allowance for loan losses when appropriate or to
provide specific loss allowances when necessary. Although management believes it
uses the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary if economic
conditions differ from the assumptions used in making the initial
determinations.
The following table sets forth an analysis of the Bank's allowance for loan
losses for the periods indicated.
42
<PAGE>
ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
--------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Beginning balance $ 1,105 $ 1,105 $ 1,180
Loans charged off:
Commercial 74 76 69
Real estate 5 24 49
Installment 58 50 37
------------- ------------- -------------
Total 137 150 155
Recoveries of loans previously charged-off:
Commercial and real estate 29 157 61
Installment 24 10 19
------------- ------------- -------------
Total 53 167 80
------------- ------------- -------------
Net loans charged-off (recoveries) 84 (17) 75
Provision for loan losses (credit) - (17) -
------------- ------------- -------------
Balance at year-end $ 1,021 $ 1,105 $ 1,105
============= ============= =============
Net charge-offs (recoveries) during year to average
loans 0.16% (0.04%) 0.16%
Allowance as percentage of nonperforming assets 234.17% 141.12% 109.30%
</TABLE>
The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated. Management believes that the
allowance can be allocated by category only on an approximate basis. The
allocation of an allowance to each category is not necessarily indicative of
future losses and does not restrict the use of the allowance to absorb losses in
any other category.
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
Allowance Allowance
Loans for Loan Loans for Loan
Outstanding Losses Outstanding Losses
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Commercial $ 20,433 $ 226 $ 18,248 $ 192
Real estate 27,343 483 24,839 434
Installment 6,863 103 7,156 112
Unallocated 209 367
---------------- --------------- ---------------- ---------------
$ 54,639 $ 1,021 $ 50,243 $ 1,105
================ =============== ================ ===============
</TABLE>
43
<PAGE>
Investment Activities.
The Bank's investments as of December 31, 1996 consist primarily of U. S.
federal agency obligations and mortgage-backed securities. The mortgage-backed
securities represent an interest in a pool of underlying mortgages, and are all
issued by United States government agencies. These securities may be more
sensitive to changes in interest rate and income derived from such securities
may be adversely affected by prepayments of principal on the underlying
mortgages. The total portfolio value at December 31, 1996 was $57,925,000 at
amortized cost and a fair value of $57,951,000, resulting in a net appreciation
of $26,000 on the total portfolio.
The following table sets forth the book value of the Bank's investment
portfolio as of the dates indicated. Investment securities held-to-maturity are
stated at cost, adjusted for amortization of premium and accretion of discount.
Investment securities available-for-sale are stated at fair value in accordance
with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities. See "Accounting Matters and Notes 1 and 2 of the Notes to Financial
Statements".
INVESTMENT PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------------------------------
1996 1995 1994
----------------------------- ---------------------------- ----------------------------
Amortized Amortized Amortized
Cost Market Cost Market Cost Market
-------------- ------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment securities:
Available-for-sale
U.S. government agencies
and corporations $ 45,447 $ 45,290 $ 46,442 $ 46,406 $ 13,385 $ 13,149
Other 12,478 12,661 11,268 11,533 - -
------------- ------------- ------------- ------------- ------------- -------------
Total available-for-sale 57,925 57,951 57,710 57,939 13,385 13,149
Held-to-maturity
U.S. government agencies
and corporations - - - - 32,697 30,516
Other - - - - 8,273 8,274
------------- ------------- ------------- ------------- ------------- -------------
Total held-to-maturity - - - - 40,970 38,790
------------- ------------- ------------- ------------- ------------- -------------
Total investment securities $ 57,925 $ 57,951 $ 57,710 $ 57,939 $ 54,355 $ 51,939
============= ============= ============= ============= ============= =============
</TABLE>
44
<PAGE>
Since the adoption of SFAS 115 the Bank has chosen to carry most or all of
its securities in the available for sale category to allow the portfolio to be
liquidated at any point in time. Due to the short maturities of most of the
obligations as well as relatively high dependence on variable rates securities
tied to various indices, the board of directors of the Bank believes that
maintaining high liquidity in the portfolio outweighs the potential realizable
loss that the portfolio might have at any given time.
The following table sets forth the maturity distribution and weighted
average yield of the investment portfolio of the Bank as of December 31, 1996.
The calculation of the weighted average yields is based on yield, weighted by
the respective costs of the securities.
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO - MATURITY AND YIELDS
AVAILABLE-FOR-SALE
(Dollars in thousands)
After
1 Year Yield 1 Year to Yield 5 Years Yield After Yield
or Less % 5 Years % to 10 Years % 10 Years %
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maturity distribution
U.S. treasury and
agency $ 4,075 7.62% $ 27,778 5.89% $ 986 6.50% $ - - %
Other 1,354 5.29% 9,847 5.06% 1,311 6.18% 12,600 6.42%
----------- ---------- ----------- ---------- ---------- ---------- ----------- ----------
Total available for
sale $ 5,429 6.89% $ 37,625 5.67% $ 2,297 6.32% $ 12,600 6.42%
=========== ========== =========== ========== ========== ========== =========== ==========
</TABLE>
Deposit Activities.
Deposits are attracted through the offering of a broad variety of deposit
instruments, including checking accounts, money market accounts, regular savings
accounts, term certificate accounts (including "jumbo" certificates in
denominations of $100,000 or more) and retirement savings plans.
The Bank's balance of total deposits was $111,066,000 at December 31, 1996,
up from $106,688,000 at year end 1995 and $100,547,000 as of December 31, 1994.
The following table sets forth the year-end balances and weighted average rates
for the Bank's categories of deposits for the periods indicated.
<TABLE>
<CAPTION>
YEAR END DEPOSITS
(Dollars in thousands)
December 31,
------------------------------------------------------------------------------------------
1996 Yield 1995 Yield 1994 Yield
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $ 13,396 - $ 12,572 - $ 11,216 -
Now accounts 23,908 2.58 23,091 2.84 21,213 2.39
Money market 7,531 3.29 7,499 3.23 8,977 2.94
Savings accounts 7,698 2.88 7,803 3.12 8,203 2.74
Certificates of deposit 58,533 5.24 55,723 5.15 50,938 3.82
------------- ------------- -------------
Total deposits $ 111,066 $ 106,688 $ 100,547
============= ============= =============
</TABLE>
45
<PAGE>
As of December 31, 1996, time deposits over $100,000 represent $14,927,000
or 13.44% of total deposits compared with 12.77% at year end 1995 and 12.07% at
year end 1994. The Bank does not have nor does it solicit brokered deposits of
any type. The following table sets forth the amount of the Bank's certificates
of deposit of $100,000 or more by time remaining until maturity as of December
31, 1996.
<TABLE>
<CAPTION>
TIME DEPOSITS OF $100,000 OR MORE
(Dollars in thousands)
3 Months 3-12 Over 12
or less Months Months Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Certificates and other time deposits $ 8,432 $ 4,817 $ 1,678 $ 14,927
============= ============= ============= =============
</TABLE>
Return on Equity and Assets
The following table sets forth Myers' ratios for the periods indicated.
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------
1996 1995 1994
--------------- --------------- ----------------
<S> <C> <C> <C>
Return on average assets 1.65% 1.45% 1.34%
Dividend payout ratio -- -- --
Return on average common equity 17.60% 16.71% 16.36%
Average common equity to average
total assets 9.36% 8.66% 8.20%
</TABLE>
Liquidity
Myers' principal sources of funds consist of dividends from the Bank, which
derives its funds from deposits, interest and principal payments on loans and
investment securities, and sales of investment securities. For the year ended
December 31, 1996, the Bank realized proceeds from sale and maturity of
investments of $15,696,329, a net increase in deposits of $4,377,964 and net
cash provided by operating activities of $2,222,413. Funds were used to acquire
investment securities of $15,953,335, and fund a net increase in loans to
customers of $4,468,592. For the year ended December 31, 1995, the Bank realized
proceeds from sale and maturity of investment securities of $8,868,876, net cash
provided by operating activities of $1,900,306 and net increase in deposits of
$6,140,610. These proceeds were offset by purchases of investment securities of
$12,054,201 and net increase in loans to customers of $3,364,926.
Asset liquidity is provided by cash and assets which are readily
marketable, which can be pledged, or which will mature in the near future. These
include cash, federal funds sold, and U. S. Government-backed securities. The
Bank's liquidity ratio, defined as cash, U. S. Government backed securities and
federal funds sold as a percentage of total deposits, was 52.59%, 53.45%, and
47.93% as of December 31, 1996, 1995, 1994, respectively. Liability liquidity is
provided by access to core funding sources, principally various customers'
interest-bearing deposit accounts in the Bank's market areas. The Bank does not
have and does not solicit brokered deposits.
Federal funds purchased and short-term borrowings by the Bank are
additional sources of liquidity. These sources of liquidity are short-term in
nature and can be used by the Bank as necessary to fund asset growth and meet
short-term liquidity needs. As of December 31, 1996 and 1995, the Bank had no
federal funds purchased, no borrowings from the Federal Reserve System, and no
borrowings on securities sold under repurchase agreements.
46
<PAGE>
Capital Resources
Myers' total shareholders' equity as of December 31, 1996 was $12,244,000,
an increase of $1,858,000 or 17.89% compared with shareholders' equity of
$10,386,000 on December 31, 1995. The total increase was attributable to
earnings and a change in unrealized loss on debt securities available for sale,
net of tax.
Total shareholders' equity as of December 31, 1995 was $10,386,000, an
increase of $1,016,000 or 10.84% compared with shareholders' equity of
$9,370,000 as of December 31, 1994. The increase was attributable to earnings,
unrealized loss on debt securities available for sale, net of tax, and treasury
stock transactions.
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-adjusted assets and off-balance sheet
obligations. Under the rules effective December 31, 1995, all financial
institutions are required to maintain a level of core capital (known as Tier 1
capital) which must be a least 4.0% of risk-adjusted assets, and a minimum level
of total capital of at least 8.0% of risk-adjusted assets. Tier 1 capital
consists principally of stockholders' equity less goodwill. Total capital is
comprised of Tier 1 capital, certain debt instruments and a portion of the
allowance for loan losses.
The Bank's actual risk-based capital requirement and excess risk-based
capital at December 31, 1996 (dollars in thousands) are summarized as follows:
<TABLE>
<CAPTION>
Amount Percent(1)
-------- -------------
<S> <C> <C>
Tier 1 Capital $ 11,703 19.15
Allowable portion of allowance for loan losses 767 1.26
Total risk-based capital 12,470 20.41
Risk-based capital requirement 4,888 8.00
Excess risk based capital 7,582 12.41
</TABLE>
----------------------------
(1) Percentage based on risk-weighted assets of $61,103,000 at
December 31, 1996.
Accounting Matters
Accounting for Loan Impairment. Effective January 1, 1995 Myers adopted
SFAS 114 and SFAS 118. See "Provision for Loan Losses." The adoption of these
statements did not have a significant impact on the Myers' financial position
nor its results of operations for the years ended December 31, 1995 and 1996.
Accounting for Certain Investments in Debt and Equity Securities. In May
1993, the FASB issued Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115"). SFAS No. 115 addresses the accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. Those investments are to be classified in one of
three categories: (a) debt securities that the enterprise has the positive
intent and ability to hold to maturity are classified as "held-to-maturity," and
are reported at amortized cost; (b) debt and equity securities that are bought
and held principally for the purpose of selling them in the near term are
classified as "trading securities" and are reported at fair value, with
unrealized gains and losses included in earnings; and (c) debt and equity
securities not classified as either held-to-maturity securities or trading
securities are classified as "available-for-sale securities" and are reported at
fair value, with unrealized gains and losses excluded from earnings and reported
in a separate component of stockholders' equity. Myers adopted SFAS No. 115 as
of January 1, 1994.
47
<PAGE>
Impact of Inflation, Changing Prices, and Monetary Policies.
The financial statements and related financial data concerning Myers
presented in this Proxy Statement-Prospectus have been prepared in accordance
with generally accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money over time due to
inflation. The primary effect of inflation on the operation of the Bank is
reflected in increased operating costs. Unlike most industrial companies,
virtually all of the assets and liabilities of a financial institution are
monetary in nature. As a result, changes in interest rates have a more
significant effect on the performance of a financial institution than do the
effects of changes in the general rate of inflation and changes in prices.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of good and services. Interest rates are highly
sensitive to many factors which are beyond the control of the Bank, including
the influence of domestic and foreign economic conditions and the monetary and
fiscal policies of the United States government and federal agencies,
particularly the Federal Reserve Board. The Federal Reserve Board implements
national monetary policy such as seeking to curb inflation and combat recession
by its open market operations in United States government securities, control of
the discount rate applicable to borrowing by banks and establishment of reserve
requirements against bank deposits. The actions of the Federal Reserve Board in
these areas influence the growth of bank loans, investments and deposits, and
affect the interest rates charged on loans and paid on deposits. The nature,
timing and impact of any future changes in federal monetary and fiscal policies
on Myers and the Bank and their results of operations are not predictable.
48
<PAGE>
CERTAIN REGULATORY AND OTHER
CONSIDERATIONS PERTAINING TO NORWEST
Norwest and its banking subsidiaries are subject to extensive regulation by
federal and state agencies. The regulation of bank holding companies and their
subsidiaries is intended primarily for the protection of depositors, federal
deposit insurance funds and the banking system as a whole and is not in place to
protect stockholders or other investors.
As discussed in more detail below, this regulatory environment, among other
things, may (a) restrict Norwest's ability to pay dividends on Norwest Common
Stock, (b) require Norwest to provide financial support to one or more of its
banking subsidiaries, (c) require Norwest and its banking subsidiaries to
maintain capital balances in excess of those desired by management, and/or (d)
require Norwest to pay higher deposit insurance premiums as a result of the
deterioration in the financial condition of depository institutions in general.
Bank Regulatory Agencies
Norwest Corporation, as a bank holding company, is subject to regulation by
the Federal Reserve Board under the Bank Holding Company Act.
Norwest's national banking subsidiaries are regulated primarily by the OCC.
Its state-chartered banking subsidiaries are regulated primarily by the FDIC and
applicable state banking agencies. Its savings and loan association subsidiary
is regulated primarily by the OTS. Norwest's federally insured banking
subsidiaries and its savings and loan subsidiary are also subject to regulation
by the FDIC.
Norwest has other financial services subsidiaries that are subject to
regulation by the Federal Reserve Board and other applicable federal and state
agencies. For example, Norwest's brokerage subsidiary is subject to regulation
by the Securities and Exchange Commission, the National Association of
Securities Dealers, Inc. and state securities regulators. Norwest's insurance
subsidiaries are subject to regulation by applicable state insurance regulatory
agencies. Other nonbank subsidiaries of Norwest are subject to the laws and
regulations of both the federal government and the various states in which they
conduct business.
Bank Holding Company Activities; Interstate Banking
A bank holding company is generally prohibited under the Bank Holding
Company Act from engaging in nonbanking (i.e., commercial or industrial)
activities, subject to certain exceptions. Specifically, the activities of a
bank holding company, and those companies that it controls or in which it holds
more than 5% of the voting stock, are limited to banking or managing or
controlling banks, furnishing services to its subsidiaries and such other
activities that the Federal Reserve Board determines to be so closely related to
banking as to be a "proper incident thereto." In determining whether an activity
is sufficiently related to banking, the Federal Reserve Board will consider
whether the performance of such activity by the bank holding company can
reasonably be expected to produce benefits to the public (e.g., greater
convenience, increased competition or gains in efficiency) that outweigh
possible adverse effects (e.g., undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices).
Under the Interstate Banking Act, which became effective on September 29,
1995, a bank holding company may acquire banks in states other than its home
state, subject to any state requirement that the bank has been organized and
operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company not control, prior to or following the
proposed acquisition, more than 10% of the total amount of deposits of insured
depository institutions nationwide or, unless it is the bank holding company's
initial entry into the state, more than 30% of such deposits in the state (or
such lesser or greater amount set by the state).
The Interstate Banking Act also authorizes banks to merge across state
lines (thereby creating interstate branches) effective June 1, 1997. States may
opt out of the Interstate Banking Act (thereby prohibiting interstate mergers in
the state) or opt in early (thereby allowing interstate mergers prior to June 1,
1997). Norwest will be
49
<PAGE>
unable to consolidate its banking operations in one state with those of another
state if either state in question has opted out of the Interstate Banking Act.
The state of Texas has opted out of the Interstate Banking Act. The state of
Montana has opted out until at least the year 2001.
Norwest's acquisitions of banking institutions and other companies
generally are subject to the prior approval of the Federal Reserve Board and
other applicable federal or state regulatory authorities. In determining whether
to approve a proposed bank acquisition, federal banking regulators will
consider, among other factors, the effect of the acquisition on competition, the
public benefits expected to be received from the consummation of the
acquisition, the projected capital ratios and levels on a post-acquisition
basis, and the acquiring institution's record of addressing the credit needs of
the communities it serves, including the needs of low and moderate income
neighborhoods, consistent with the safe and sound operation of the bank, under
the Community Reinvestment Act of 1977, as amended.
Dividend Restrictions
Norwest is a legal entity separate and distinct from its banking and other
subsidiaries. Its principal source of funds to pay dividends on its common and
preferred stock and debt service on its debt is dividends from its subsidiaries.
Various federal and state statutes and regulations limit the amount of dividends
that may be paid to Norwest by its banking subsidiaries without regulatory
approval.
Most of Norwest's banking subsidiaries are national banks. A national bank
must obtain the prior approval of the OCC to pay a dividend if the total of all
dividends declared by the bank in any calendar year would exceed the bank's net
income for that year combined with its retained net income for the preceding two
calendar years, less any required transfers to surplus or a fund for the
retirement of any preferred stock.
The OTS imposes substantially similar restrictions on the payment of
dividends to Norwest by its savings and loan association subsidiary. Norwest's
state-chartered banking subsidiaries also are subject to dividend restrictions
under applicable state law.
If, in the opinion of the applicable federal regulatory agency, a
depository institution 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), the regulator
may require, after notice and hearing, that such bank cease and desist from such
practice. The OCC has indicated that the payment of dividends would constitute
an unsafe and unsound practice if the payment would deplete a depository
institution's capital base to an inadequate level. Under the Federal Deposit
Insurance Act, an insured depository institution may not pay any dividend if the
institution is undercapitalized or if the payment of the dividend would cause
the institution to become undercapitalized. In addition, federal bank regulatory
agencies have issued policy statements which provide that depository
institutions and their holding companies should generally pay dividends only out
of current operating earnings.
The ability of Norwest's banking subsidiaries to pay dividends to Norwest
may also be affected by various minimum capital requirements for banking
organizations, as described below. In addition, the right of Norwest to
participate in the assets or earnings of a subsidiary is subject to the prior
claims of creditors of the subsidiary.
Holding Company Structure
Transfer of Funds from Banking Subsidiaries. Norwest's banking subsidiaries
are subject to restrictions under federal law that limit the transfer of funds
or other items of value from such subsidiaries to Norwest and its nonbanking
subsidiaries (including Norwest, "affiliates") in so-called "covered
transactions." In general, covered transactions include loans and other
extensions of credit, investments and asset purchases, as well as other
transactions involving the transfer of value from a banking subsidiary to an
affiliate or for the benefit of an affiliate. Unless an exemption applies,
covered transactions by a banking subsidiary with a single affiliate are limited
to 10% of the banking subsidiary's capital and surplus and, with respect to
covered transactions with all affiliates in
50
<PAGE>
the aggregate, to 20% of the banking subsidiary's capital and surplus. Also,
loans and extensions of credit to affiliates generally are required to be
secured in specified amounts.
Source of Strength Doctrine. The Federal Reserve Board has a policy that a
bank holding company is expected to act as a source of financial and managerial
strength to each of its subsidiary banks and, under appropriate circumstances,
to commit resources to support each such subsidiary bank. This support may be
required at times when the bank holding company may not have the resources to
provide it. Capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and certain other
indebtedness of the subsidiary bank. In addition, 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.
Depositor Preference. The FDI Act provides that, in the event of the
"liquidation or other resolution" of an insured depository institution, the
claims of depositors of the institution (including the claims of the FDIC as
subrogee of insured depositors) and certain claims for administrative expenses
of the FDIC as a receiver will have priority over other general unsecured claims
against the institution. If an insured depository institution fails, insured and
uninsured depositors, along with the FDIC, will have priority in payment ahead
of unsecured, nondeposit creditors, including the institution's parent holding
company.
Liability of Commonly Controlled Institutions. Under the FDI Act, an
insured depository institution is generally liable for any loss incurred, or
reasonably expected to be incurred, by the FDIC in connection with (a) the
default of a commonly controlled insured depository institution or (b) any
assistance provided by the FDIC to a commonly controlled 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.
Regulatory Capital Standards and Related Matters
Risk-Based Capital. The Federal Reserve Board, the OCC and the FDIC have
adopted substantially similar risk-based and leverage capital guidelines for
banking organizations. The guidelines are intended to ensure that banking
organizations have adequate capital given the risk levels of their assets and
off-balance sheet commitments.
The risk-based capital ratio is determined by classifying assets and
certain off-balance sheet financial instruments into weighted categories, with
higher levels of capital being required for those categories perceived as
representing greater risk. Under the capital guidelines, a banking
organization's total capital is divided into two tiers. "Tier 1 capital"
consists of common equity, retained earnings, qualifying noncumulative perpetual
preferred stock, a limited amount of qualifying cumulative perpetual preferred
stock and minority interests in the equity accounts of consolidated
subsidiaries, less certain items such as goodwill and certain other intangible
assets. "Tier 2 capital" consists of hybrid capital instruments, perpetual debt,
mandatory convertible debt securities, a limited amount of subordinated debt,
preferred stock that does not qualify as Tier 1 capital, and a limited amount of
the allowance for credit losses.
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 currently 8%. The minimum Tier 1 capital to risk-adjusted assets is 4%. As of
June 30, 1997, Norwest's total capital and Tier 1 capital to risk-adjusted
assets ratios were 10.98% and 9.06%, respectively.
The Federal Reserve Board also requires bank holding companies to comply
with minimum leverage ratio guidelines. The leverage ratio is the ratio of a
bank holding company's Tier 1 capital to its total consolidated quarterly
average assets, less goodwill and certain other intangible assets. The
guidelines require a minimum leverage ratio of 3% for bank holding companies
that meet certain specified criteria, including having the highest supervisory
rating. All other bank holding companies are required to maintain a minimum
leverage ratio of 4%
51
<PAGE>
to 5%. The Federal Reserve Board has not advised Norwest of any specific
leverage ratio applicable to it. As of June 30, 1997, Norwest's leverage ratio
was 6.40%.
The Federal Reserve Board's capital guidelines provide that banking
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. Also, the guidelines
indicate that the Federal Reserve Board will 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 (excluding intangibles) to total assets (excluding intangibles).
Norwest's banking subsidiaries are subject to risk-based and leverage
capital guidelines substantially similar to those imposed by the Federal Reserve
Board on bank holding companies.
Other Measures of Capital Adequacy and Safety and Soundness. In assessing a
banking organization's capital adequacy, federal bank regulatory agencies will
also consider the organization's credit concentration risk and risks associated
with nontraditional activities, as well as the organization's ability to manage
those risks. This evaluation will be performed as part of the organization's
regular safety and soundness examination.
Effective January 1, 1998, federal bank regulatory agencies will require
banking organizations that engage in significant trading activity to calculate a
charge for market risk. Organizations may opt to comply effective January 1,
1997. Significant trading activity, for this purpose, means trading activity of
at least 10% of total assets or $1 billion, calculated on a consolidated basis
for bank holding companies. Federal bank regulators may apply the market risk
measure to other banks and bank holding companies if the agency deems necessary
or appropriate for safe and sound banking practices. Each agency may exclude
organizations that it supervises that otherwise meet the criteria under certain
circumstances. The market risk charge will be included in the calculation of an
organization's risk-based capital ratios. Norwest has historically not engaged
in significant trading activity.
As an additional means to identify problems in the financial management of
depository institutions, the FDI Act requires federal bank regulatory agencies
to establish certain non-capital safety and soundness standards for institutions
for which they are the primary federal regulator. The standards relate generally
to operations and management, asset quality, interest rate exposure and
executive compensation. The agencies are authorized to take action against
institutions that fail to meet such standards.
Prompt Corrective Action. The FDI Act requires federal bank regulatory
agencies to take "prompt corrective action" with respect to FDIC-insured
depository institutions that do not meet minimum capital requirements. A
depository institution's treatment for purposes of the prompt corrective action
provisions will depend upon how its capital levels compare to various capital
measures and certain other factors, as established by regulation.
Federal bank regulatory agencies have adopted regulations that classify
insured depository institutions into one of five capital-based categories. The
regulations use the total capital ratio, the Tier 1 capital ratio and the
leverage ratio as the relevant measures of capital. A depository institution is
(a) "well capitalized" if it has a risk-adjusted total capital ratio of at least
10%, a Tier 1 capital ratio of at least 6% and a leverage ratio of at least 5%
and is not subject to any order or written directive to maintain a specific
capital level; (b) "adequately capitalized" if it has a risk-adjusted total
capital ratio of at least 8%, a Tier 1 capital ratio of at least 4% and a
leverage ratio of at least 4% (3% in some cases) and is not well capitalized;
(c) "undercapitalized" if it has a risk-adjusted total capital ratio of less
than 8%, a Tier 1 capital ratio of less than 4% or a leverage ratio of less than
4% (3% in some cases); (d) "significantly undercapitalized" if it has a
risk-adjusted total capital ratio of less than 6%, a Tier 1 capital ratio of
less than 3% or a leverage ratio of less than 3%; and (e) "critically
undercapitalized" if its tangible equity is less than 2% of total assets. As of
June 30, 1997, all but one of Norwest's insured depository institutions met the
criteria for well capitalized institutions as set forth above. The one exception
met all of the criteria for a well capitalized institution, except that its
risk-adjusted total capital ratio was 9.92% as of June 30, 1997. This
subsidiary's deposits and risk-adjusted assets represented, respectively, less
than 4% of Norwest's total deposits and total risk-adjusted assets.
A depository institution's primary federal bank regulator is authorized to
downgrade the institution's capital category to the next lower category upon a
determination that the institution is engaged in an unsafe or unsound
52
<PAGE>
condition or is engaged in an unsafe or unsound practice. An unsafe or unsound
practice can include receipt by the institution of a less than satisfactory
rating on its most recent examination with respect to its asset quality,
management, earnings or liquidity.
The FDI Act 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 as a result be
undercapitalized. Undercapitalized depository institutions are subject to a wide
range of limitations on operations and activities (including asset growth) 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 the plan. The aggregate
liability of the parent holding company is limited to the lesser of (a) 5% of
the depository institution's total assets at the time it became undercapitalized
or (b) the amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to the institution as of the time it fails to comply with the plan. If an
undercapitalized 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.
FDIC Insurance
The FDIC insures the deposits of Norwest's depository institution
subsidiaries through the Bank Insurance Fund (BIF) or, in the case of deposits
held by its savings and loan association subsidiary or deposits held by banking
subsidiaries as a result of savings and loan associations acquired by Norwest,
through the Savings Association Insurance Fund (SAIF). The amount of FDIC
assessments paid by each BIF member institution is based on its relative risk of
default as measured by regulatory capital ratios and other factors.
Specifically, the assessment rate is based on the institution's capitalization
risk category and supervisory subgroup category. An institution's capitalization
risk category is based on the FDIC's determination of whether the institution is
well capitalized, adequately capitalized or less than adequately capitalized. An
institution's supervisory subgroup category is based on the FDIC's assessment of
the financial condition of the institution and the probability that FDIC
intervention or other corrective action will be required. Subgroup A
institutions are financially sound institutions with few minor weaknesses;
Subgroup B institutions are institutions that demonstrate weaknesses which, if
not corrected, could result in significant deterioration; and Subgroup C
institutions are institutions for which there is a substantial probability that
the FDIC will suffer a loss in connection with the institution unless effective
action is taken to correct the areas of weakness.
The BIF assessment rate currently ranges from zero to 27 cents per $100 of
domestic deposits, with Subgroup A institutions assessed at a rate of zero and
Subgroup C institutions assessed at a rate of 27 cents. The FDIC may increase or
decrease the assessment rate schedule on a semiannual basis. An increase in the
rate assessed one or more of Norwest's banking subsidiaries could have a
material adverse effect on Norwest's earnings, depending on the amount of the
increase. The FDIC is authorized to terminate a depository institution's deposit
insurance upon a finding by the FDIC that the institution's financial condition
is unsafe or unsound or that the institution has engaged in unsafe or unsound
practices or has violated any applicable rule, regulation, order or condition
enacted or imposed by the institution's regulatory agency. The termination of
deposit insurance with respect to one or more of Norwest's subsidiary depository
institutions could have a material adverse effect on Norwest's earnings,
depending on the collective size of the particular institutions involved.
Deposits insured by SAIF are currently assessed at the BIF rate of zero to
27 cents per $100 of domestic deposits. The SAIF assessment rate may increase or
decrease as is necessary to maintain the designated SAIF reserve ratio of 1.25%
of insured deposits.
53
<PAGE>
Effective January 1, 1997, all FDIC-insured depository institutions must
pay an annual assessment to provide funds for the payment of interest on bonds
issued by the Financing Corporation, a federal corporation chartered under the
authority of the Federal Housing Finance Board. The bonds (commonly referred to
as FICO bonds) were issued to capitalize the Federal Savings and Loan Insurance
Corporation. Until December 31, 1999 or when the last savings and loan
association ceases to exist, whichever occurs first, depository institutions
will pay approximately 6.4 cents per $100 of SAIF-assessable deposits and
approximately 1.3 cents per $100 of BIF-assessable deposits.
Subject to certain conditions, BIF and SAIF will be merged into one
insurance fund effective January 1, 1999.
Fiscal And Monetary Policies
Norwest's business and earnings are affected significantly by the fiscal
and monetary policies of the federal government and its agencies. Norwest is
particularly affected by the policies of the Federal Reserve Board, which
regulates the supply of money and credit in the United States. Among the
instruments of monetary policy available to the Federal Reserve are (a)
conducting open market operations in United States government securities, (b)
changing the discount rates of borrowings of depository institutions, (c)
imposing or changing reserve requirements against depository institutions'
deposits, and (d) imposing or changing reserve requirements against certain
borrowing by banks and their affiliates. These methods are used in varying
degrees and combinations to directly affect the availability of bank loans and
deposits, as well as the interest rates charged on loans and paid on deposits.
For that reason alone, the policies of the Federal Reserve Board have a material
effect on the earnings of Norwest's banking subsidiaries and, thus, those of
Norwest.
Competition
The financial services industry is highly competitive. Norwest's
subsidiaries compete with traditional financial services providers, such as
banks, savings and loan associations, credit unions, finance companies, mortgage
banking companies, insurance companies, and money market and mutual fund
companies. They also face increased competition from non-banking institutions
such as brokerage houses and insurance companies, as well as from financial
services subsidiaries of commercial and manufacturing companies. Many of these
competitors enjoy the benefits of advanced technology, fewer regulatory
constraints and lower cost structures.
The financial services industry is likely to become even more competitive
as further technological advances enable more companies to provide financial
services. These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.
EXPERTS
The consolidated financial statements of Norwest and subsidiaries as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, 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 Myers Bancshares Inc. and
subsidiary as of December 31, 1996 and 1995 and for each of the years in the
three-year period ended December 31, 1996 included in this Proxy
Statement-Prospectus are included herein in reliance on the report of Stovall,
Grandey & Whatley LLP, independent certified public accountants, upon the
authority of said firm as experts in accounting and auditing.
54
<PAGE>
LEGAL MATTERS
Laurel A. Holschuh, Senior Vice President and General Counsel of Norwest
has rendered a legal opinion that the shares of Norwest Common Stock offered
hereby, when issued in accordance with the Reorganization Agreement, will be
validly issued, fully paid and nonassessable. Ms. Holschuh beneficially owns
shares of Norwest Common Stock and options to purchase additional shares of
Norwest Common Stock. As of the date of this Proxy Statement-Prospectus, the
number of shares Ms. Holschuh owns or has the right to acquire upon exercise of
her options is, in the aggregate, less than 0.1% of the outstanding shares of
Norwest Common Stock.
The material U.S. Federal income tax consequences of the Merger to Myers'
shareholders will be passed upon for Myers by the law firm of Brown McCarroll &
Oaks Hartline, Austin, Texas.
INFORMATION CONCERNING NORWEST MANAGEMENT
Information concerning executive compensation, the principal holders of
voting securities, 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, 1996. Norwest's
annual report is incorporated by reference into this Proxy Statement-Prospectus.
Myers shareholders who want a copy of this annual report or any document
incorporated by reference into the report may contact Norwest at the address or
phone number indicated under "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
Norwest files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information filed by Norwest at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
SEC. Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Norwest's SEC filings are also available to the public from
commercial document retrieval services and on the SEC Internet site
(http://www.sec.gov).
Norwest filed a registration statement on Form S-4 to register with the SEC
the Norwest Common Stock to be issued to Myers shareholders in the Merger. This
Proxy Statement-Prospectus is part of that registration statement. As allowed by
SEC rules, this Proxy Statement-Prospectus does not contain all of the
information you can find in the registration statement or the exhibits to the
registration statement.
Some of the information you may want to consider in deciding how to vote on
the Merger is not physically included in this Proxy Statement-Prospectus.
Instead, the information is "incorporated by reference" to documents filed as
appendixes to this Proxy Statement-Prospectus or to documents that have been
filed by Norwest with the SEC under SEC File No. 1-2979. See "WHAT INCORPORATED
BY REFERENCE MEANS" at the beginning of this document.
The Norwest documents that have been incorporated by reference consist of:
. Norwest's annual report on Form 10-K for the year ended December 31,
1996;
. Norwest's quarterly reports on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997;
55
<PAGE>
. Norwest's current reports on Form 8-K dated January 16, 1997 (filed
January 23, 1997), April 14, 1997 (filed April 21, 1997), June 3, 1997
(filed June 10, 1997) and July 14, 1997 (filed July 21, 1997);
. Norwest's current report on Form 8-K dated October 10, 1997 (filed
October 14, 1997) containing a description of the Norwest Common
Stock; and
. Norwest's registration statement on Form 8-A dated December 6, 1988,
as amended pursuant to Form 8-A/A dated October 13, 1997, relating to
preferred stock purchase rights attached to shares of Norwest Common
Stock.
All reports and proxy statements filed by Norwest after the date of this
Proxy Statement-Prospectus and before the special meeting are automatically
incorporated by reference into this Proxy Statement-Prospectus.
This Proxy Statement-Prospectus may contain information that updates,
modifies or is contrary to information in one or more of the documents
incorporated by reference. Reports filed by Norwest with the SEC after the date
of this Proxy Statement-Prospectus may also contain information that updates,
modifies or is contrary to information in the documents incorporated by
reference. You should review these reports, as they may disclose a change in the
business prospects, financial condition or other affairs of Norwest since the
date of this Proxy Statement-Prospectus.
As explained above, you may read and copy all reports filed by Norwest with
the SEC at the SEC's public reference rooms. Norwest will provide, without
charge, copies of any report incorporated by reference into this Proxy
Statement-Prospectus, excluding exhibits other than those that are specifically
incorporated by reference to an exhibit in this Proxy Statement-Prospectus. You
may obtain a copy of any document incorporated by reference by writing or
calling Norwest as follows:
Norwest Corporation
Corporate Secretary
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
To ensure delivery of the copies in time for the special meeting, your
request should be received by Norwest by November 6, 1997.
- -------------------------------------------------------------------------------
In deciding how to vote on the Merger, you should rely only on the
information contained or incorporated by reference in this Proxy
Statement-Prospectus. Neither Norwest nor Myers has authorized any person to
provide you with any information that is different from what is contained in
this Proxy Statement-Prospectus. This Proxy Statement-Prospectus is dated
October 20, 1997. You should not assume that the information contained in this
Proxy Statement-Prospectus is accurate as of any date other than such date, and
neither the mailing to you of this Proxy Statement-Prospectus nor the issuance
to you of shares of Norwest common stock will create any implication to the
contrary. This Proxy Statement-Prospectus does not constitute an offer to sell
or a solicitation of any offer to buy any securities, or the solicitation of a
proxy, in any jurisdiction in which, or to any person to whom, it is unlawful to
make any such offer or solicitation.
- -------------------------------------------------------------------------------
56
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
DALLAS, TEXAS
FINANCIAL STATEMENTS
<PAGE>
C O N T E N T S
---------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED FINANCIAL STATEMENTS:
For the Periods of Six Months Ended June 30, 1997 and 1996:......................................................... F2-F9
AUDITED FINANCIAL STATEMENTS:
Independent Auditor's Report........................................................................................ F-10
Balance Sheets - December 31, 1996 and 1995:
Consolidated...................................................................................................... F-11 - F-12
Company Only...................................................................................................... F-17
Statements of Income - For the Years Ended December 31, 1996, 1995 and 1994:
Consolidated...................................................................................................... F-13
Company Only...................................................................................................... F-18
Statements of Changes in Shareholders' Equity - For the Years Ended December 31, 1996, 1995 and 1994:
Consolidated and Company Only..................................................................................... F-14
Statements of Cash Flows - For the Years Ended December 31, 1996, 1995 and 1994:
Consolidated...................................................................................................... F-15 - F-16
Company Only...................................................................................................... F-19
Notes to Financial Statements -
Consolidated and Company Only..................................................................................... F-20 - F-30
</TABLE>
F-1
<PAGE>
I N D E X
---------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED FINANCIAL STATEMENTS:
Statement of Cash Flows............................................ F-3
Balance Sheets:
Consolidated.................................................... F-4 - F-5
Company Only.................................................... F-8
Statements of Income:
Consolidated.................................................... F-6
Company Only.................................................... F-9
Statements of Changes in Shareholders' Equity -
Consolidated and Company Only................................... F-7
</TABLE>
-F-2-
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,002,037 $ 974,042
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of goodwill 10,910 10,910
Depreciation 89,545 92,012
Net premium amortization or (discount accretion)
on investment securities 15,804 30,231
Net gain on sale of securities -- (1,347)
Increase in accrued income and other assets (62,296) (21,328)
Decrease in accrued expenses and other liabilities 43,504 58,740
----------- ------------
Total adjustments 97,467 169,218
----------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,099,504 1,143,260
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in federal funds sold 200,000 (1,600,000)
Purchase of investment securities (2,100,000) (10,444,272)
Proceeds from sales of investment securities -- 3,500,469
Proceeds from maturities of investment securities 1,375,000 7,450,000
Principal payments on mortgage backed securities 805,011 1,194,203
Net (increase) decrease in loans 520,992 (3,917,633)
Purchase of premises and equipment (26,176) (52,370)
----------- ------------
NET CASH PROVIDED (USED BY) 774,827 (3,869,603)
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, interest-bearing
transaction accounts, and savings 1,540,848 1,911,239
Net increase (decrease) in certificates of deposit (1,015,753) 839,927
Principal payments on note payable (25,000) (25,000)
----------- ------------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 500,095 2,726,166
----------- ------------
NET INCREASE (DECREASE) IN CASH AND
DUE FROM BANKS $ 2,374,426 $ (177)
CASH AND DUE FROM BANKS AT BEGINNING
OF YEAR 3,816,803 4,892,113
----------- ------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 6,191,229 $ 4,891,936
=========== ============
SUPPLEMENTAL SCHEDULE OF OPERATING AND INVESTING ACTIVITIES:
(1) Interest paid $ 2,092,142 $ 2,055,619
(2) Income taxes paid 402,639 359,000
</TABLE>
-F-3-
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH AND DUE FROM BANKS $ 6,191,229 $ 4,891,936
FEDERAL FUNDS SOLD 5,900,000 4,950,000
INVESTMENT SECURITIES
Available-for-sale 57,823,476 55,276,812
LOANS, Net of unearned discount and
allowance for loan losses 52,343,882 52,151,355
BANK PREMISES AND EQUIPMENT, Net of
accumulated depreciation 1,191,502 1,227,439
NET DEFERRED TAX ASSET 174,873 409,960
GOODWILL 534,575 556,394
ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS 1,324,690 1,402,484
----------- -----------
TOTAL ASSETS $125,484,227 $120,866,380
============ ============
</TABLE>
-F-4-
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
DEPOSITS
Demand $ 14,482,989 $ 14,104,813
Interest bearing transaction accounts 31,843,717 30,595,973
Savings 7,708,124 8,134,473
Time 57,517,537 56,562,745
------------ ------------
TOTAL DEPOSITS 111,552,367 109,398,004
OTHER LIABILITIES
Accrued interest payable 452,110 419,038
Accrued expenses and other liabilities 85,678 101,665
Note payable 175,000 200,000
Federal income taxes - current - 3,140
------------ ------------
TOTAL OTHER LIABILITIES 712,788 723,843
------------ ------------
TOTAL LIABILITIES 112,265,155 110,121,847
SHAREHOLDERS' EQUITY
Common stock - par value $1,000 a share:
Authorized - 2,000 shares
Issued and outstanding - 147 shares 147,000 147,000
Capital surplus 1,451,750 1,451,750
Retained earnings 11,630,120 9,610,517
Unrealized loss on available-for-sale
securities, net of tax benefit of $5,047
in 1997 and $239,408 in 1996 (9,798) (464,734)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 13,219,072 10,744,533
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $125,484,227 $120,866,380
============ ============
</TABLE>
-F-5-
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,720,171 $2,611,459
Interest on investment securities:
Taxable 1,456,998 1,378,255
Exempt from federal income taxes 297,767 310,719
---------- ----------
1,754,765 1,688,974
Interest on federal funds sold 115,296 90,385
---------- ----------
TOTAL INTEREST INCOME 4,590,232 4,390,818
INTEREST EXPENSE
On deposits 2,060,133 1,980,783
On borrowed funds 7,829 8,834
---------- ----------
TOTAL INTEREST EXPENSE 2,067,962 1,989,617
---------- ----------
NET INTEREST INCOME 2,522,270 2,401,201
PROVISION FOR LOAN LOSSES - -
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,522,270 2,401,201
NON-INTEREST INCOME
Service charges on deposit accounts 441,701 430,072
Gain on sale of securities - 1,347
Other 73,673 74,679
---------- ----------
TOTAL NON-INTEREST INCOME 515,374 506,098
---------- ----------
3,037,644 2,907,299
NON-INTEREST EXPENSE 1,650,062 1,571,639
---------- ----------
INCOME BEFORE FEDERAL
INCOME TAXES 1,387,582 1,335,660
FEDERAL INCOME TAXES 385,545 361,618
---------- ----------
NET INCOME $1,002,037 $ 974,042
========== ==========
</TABLE>
-F-6-
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIODS OF SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
Common Stock Unrealized
--------------------- Gain/(Loss)
Shares Paid-In Retained on AFS
Outstanding Amount Capital Earnings Securities Total
----------- -------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1, 1996 147 $147,000 $1,451,750 $ 8,636,475 $ 150,918 $ 10,386,143
Net income for the period of six
months ended June 30, 1996 974,042 974,042
Unrealized loss on available-
for-sale securities, net of
tax benefit (615,652) (615,652)
--------- -------- ---------- ----------- ---------- ------------
BALANCE AT
JUNE 30, 1996 147 147,000 1,451,750 9,610,517 (464,734) 10,744,533
Net income for the period of six
months ended December 31, 1996 1,017,566 1,017,566
Unrealized gain on available-
for-sale securities, net of tax
benefit 482,127 482,127
--------- -------- ---------- ----------- ---------- ------------
BALANCE AT
DECEMBER 31, 1996 147 147,000 1,451,750 10,628,083 17,393 12,244,226
Net income for the period of six
months ended June 30, 1997 1,002,037 1,002,037
Unrealized loss on available-
for-sale securities, net of
tax benefit (27,191) (27,191)
--------- -------- ---------- ----------- ---------- ------------
BALANCE AT
JUNE 30, 1997 147 $147,000 $1,451,750 $11,630,120 $ (9,798) $ 13,219,072
========= ======== ========== =========== ========== ============
</TABLE>
-F-7-
<PAGE>
MYERS BANCSHARES, INC.
BALANCE SHEET
(COMPANY ONLY)
JUNE 30, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 21,313 $ 34,734
Due from subsidiary 1,117 242
----------- -----------
TOTAL CURRENT ASSETS 22,430 34,976
INVESTMENTS AND OTHER ASSETS
Investment in Continental State Bank, at equity in
net assets 12,688,294 12,204,557
Investment in Woodhaven National Bank, at cost 149,940 149,940
Goodwill - excess of market value over book value
of net assets acquired, less amortization 534,575 556,394
----------- -----------
TOTAL INVESTMENTS AND OTHER ASSETS 13,372,809 12,910,891
----------- -----------
TOTAL ASSETS $13,395,239 $12,945,867
=========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accrued interest payable $ 1,167 $ 1,334
Current maturities of long-term debt 25,000 25,000
----------- -----------
TOTAL CURRENT LIABILITIES 26,167 26,334
LONG-TERM DEBT (exclusive of current maturities) 150,000 175,000
SHAREHOLDERS' EQUITY
Common stock - par value $1,000 a share;
Authorized - 2,000 shares
Issued and outstanding - 147 shares 147,000 147,000
Paid-in capital 1,451,750 1,451,750
Retained earnings 11,630,120 9,610,517
Unrealized loss on available-for-sale
securities, net of tax benefit of $5,047 in 1997
and $239,408 in 1996 (9,798) (464,734)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 13,219,072 10,744,533
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,395,239 $12,945,867
=========== ===========
</TABLE>
-F-8-
<PAGE>
MYERS BANCSHARES, INC.
STATEMENTS OF INCOME
(COMPANY ONLY)
FOR THE PERIODS OF SIX MONTHS ENDED
JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
INCOME
Dividend from subsidiary $ 41,000 $ 43,000
Interest income 350 381
---------- ----------
TOTAL INCOME 41,350 43,381
EXPENSES
Interest expense 7,829 8,834
Legal fees 17,089 -
State franchise taxes 10,857 10,854
Amortization of goodwill 10,910 10,910
Sundry - 3,069
---------- ----------
TOTAL EXPENSES 46,685 33,667
---------- ----------
INCOME (LOSS) BEFORE FEDERAL
INCOME TAX BENEFIT AND UNDISTRIBUTED
EARNINGS OF SUBSIDIARY (5,335) 9,714
FEDERAL INCOME TAX BENEFIT (12,045) (7,608)
---------- ----------
INCOME BEFORE UNDISTRIBUTED
EARNINGS OF SUBSIDIARY 6,710 17,322
UNDISTRIBUTED EARNINGS OF SUBSIDIARY 995,327 956,720
---------- ----------
NET INCOME $1,002,037 $ 974,042
========== ==========
</TABLE>
-F-9-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Myers Bancshares, Inc.
Dallas, Texas
We have audited the accompanying consolidated balance sheets of Myers
Bancshares, Inc. and Subsidiary and the balance sheets of Myers Bancshares, Inc.
(Company Only) as of December 31, 1996 and 1995, and the related statements of
income, changes in shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Myers Bancshares, Inc. and
Subsidiary, and the financial position of Myers Bancshares, Inc. (Company Only)
as of December 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
STOVALL, GRANDEY & WHATLEY
February 5, 1997
Fort Worth, Texas
F-10
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH AND DUE FROM BANKS $ 3,816,803 $ 4,892,113
FEDERAL FUNDS SOLD 6,100,000 3,350,000
INVESTMENT SECURITIES - Note 2
Available-for-sale 57,950,955 57,938,902
LOANS, Net of unearned discount and
allowance for loan losses - Note 3 52,864,874 48,331,000
BANK PREMISES AND EQUIPMENT - Net of
accumulated depreciation - Note 4 1,254,871 1,267,081
OTHER REAL ESTATE - 19,980
NET DEFERRED TAX ASSET - Note 5 160,055 94,315
GOODWILL 545,484 567,304
ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS 1,359,748 1,379,869
----------- ------------
TOTAL ASSETS $124,052,790 $117,840,564
============ ============
</TABLE>
The accompanying Notes are an integral part
of these financial statements.
F-11
<PAGE>
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
DEPOSITS
Demand $ 13,357,328 $ 12,531,112
Interest bearing transaction accounts 31,438,804 30,589,827
Savings 7,697,850 7,803,081
Time 58,533,290 55,722,818
------------ ------------
TOTAL DEPOSITS 111,027,272 106,646,838
OTHER LIABILITIES
Accrued interest payable 476,290 485,040
Accrued expenses and other liabilities 105,002 97,543
Note payable - Note 6 200,000 225,000
------------ ------------
TOTAL OTHER LIABILITIES 781,292 807,583
------------ ------------
TOTAL LIABILITIES 111,808,564 107,454,421
COMMITMENTS AND CONTINGENCIES - Notes 9, 10
and 11
SHAREHOLDERS' EQUITY - Notes 12 and 13
Common stock - par value $1,000 a share:
Authorized - 2,000 shares
Issued and outstanding - 147 shares 147,000 147,000
Capital surplus 1,451,750 1,451,750
Retained earnings 10,628,083 8,636,475
Unrealized gain on available-for-sale
securities, net of deferred tax of $8,960 in 1996
and $77,746 in 1995 17,393 150,918
------------ ------------
TOTAL SHAREHOLDER'S EQUITY 12,244,226 10,386,143
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $124,052,790 $117,840,564
============ ============
</TABLE>
F-12
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---------- ------------ -----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $5,363,003 $4,852,468 $4,227,699
Interest on investment securities:
Taxable 2,805,183 2,775,474 2,491,817
Exempt from federal income taxes 582,106 482,531 463,082
---------- ---------- ----------
3,387,289 3,258,005 2,954,899
Interest on federal funds sold 224,704 246,037 133,096
---------- ---------- ----------
TOTAL INTEREST INCOME 8,974,996 8,356,510 7,315,694
INTEREST EXPENSE
On deposits 4,036,847 3,860,273 2,930,743
On borrowed funds 16,838 18,833 81,078
---------- ---------- ----------
TOTAL INTEREST EXPENSE 4,053,685 3,879,106 3,011,821
---------- ---------- ----------
NET INTEREST INCOME 4,921,311 4,477,404 4,303,873
PROVISION FOR LOAN LOSSES (CREDIT) -
Note 3 - (16,880) -
---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,921,311 4,494,284 4,303,873
NON-INTEREST INCOME
Service charges on deposit accounts 868,918 781,508 695,181
Gain (loss) on sale of securities 1,347 - (165,435)
Other 147,817 165,827 155,980
---------- ---------- ----------
TOTAL NON-INTEREST INCOME 1,018,082 947,335 685,726
---------- ---------- ----------
5,939,393 5,441,619 4,989,599
NON-INTEREST EXPENSE
Salaries and employee benefits 1,688,517 1,619,935 1,548,274
Occupancy expense 235,177 230,907 234,788
Furniture and equipment expense 479,491 401,274 482,777
Other 790,169 909,615 1,060,110
---------- ---------- ----------
TOTAL NON-INTEREST EXPENSE 3,193,354 3,161,731 3,325,949
---------- ---------- ----------
INCOME BEFORE FEDERAL
INCOME TAXES AND EXTRAORDINARY CREDIT 2,746,039 2,279,888 1,663,650
FEDERAL INCOME TAXES - Note 5 754,431 629,655 390,771
---------- ---------- ----------
INCOME BEFORE EXTRAORDINARY CREDIT 1,991,608 1,650,233 1,272,879
EXTRAORDINARY CREDIT - Note 5 - - 175,758
---------- ---------- ----------
NET INCOME $1,991,608 $1,650,233 $1,448,637
========== ========== ==========
</TABLE>
The accompanying Notes are an integral
part of these financial statements.
F-13
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED AND COMPANY ONLY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock Unrealized
------------------------ Gain/(Loss)
Shares Paid-In Retained on AFS Treasury
Outstanding Amount Capital Earnings Securities Stock Total
------------- --------- ----------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1, 1994 9,135 $ 182,700 $2,267,159 $ 6,540,257 $ - $ (651,194) $ 8,338,922
Unrealized gain on available-
for-sale securities, net of
tax, at date of adoption of
FAS 115 211,823 211,823
Purchase of treasury stock (261,317) (261,317)
Net income for the year ended
December 31, 1994 1,448,637 1,448,637
Unrealized loss on available-
for-sale securities, net of
tax benefit (368,081) (368,081)
---------- --------- ---------- ------------ ---------- --------- ------------
BALANCE AT
DECEMBER 31, 1994 9,135 182,700 2,267,159 7,988,894 (156,258) (912,511) 9,369,984
Reverse stock split - Note 12 (8,953) -
Purchase of treasury stock (941,250) (941,250)
Cancellation of treasury stock (35) (35,700) (815,409) (1,002,652) 1,853,761 -
Net income for the year ended
December 31, 1995 1,650,233 1,650,233
Unrealized gain on available-
for-sale securities, net of tax 307,176 307,176
---------- --------- ---------- ------------ ---------- --------- ------------
BALANCE AT
DECEMBER 31, 1995 147 147,000 1,451,750 8,636,475 150,918 - 10,386,143
Net income for the year ended
December 31, 1996 1,991,608 1,991,608
Unrealized loss on available-for-
sale securities, net tax benefit (133,525) (133,525)
---------- --------- ---------- ------------ ---------- --------- ------------
BALANCE AT
DECEMBER 31, 1996 147 $ 147,000 $1,451,750 $ 10,628,083 $ 17,393 $ - $ 12,244,226
========== ========= ========== ============ ========== ========= ============
</TABLE>
The accompanying Notes are an integral
part of these financial statements.
F-14
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,991,608 $ 1,650,233 $ 1,448,637
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of goodwill 21,819 21,819 21,819
Depreciation 179,453 168,651 177,281
Provision for loan losses - (16,880) -
Deferred income taxes (4,808) 5,612 (42,657)
Net premium amortization or (discount accretion)
on investment securities 43,989 (19,504) 117,232
Net (gain) loss on sale of securities (1,347) - 165,435
Net gain on sale of other real estate (7,874) (17,009) (46,493)
(Increase) decrease in accrued income and
other assets (19,606) 167,117 (121,451)
Decrease in accrued expenses and other
liabilities (1,291) (60,942) (69,704)
------------ ----------- ------------
Total adjustments 210,335 248,864 201,462
------------ ----------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,201,943 1,899,097 1,650,099
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in federal funds sold (2,750,000) (550,000) 500,000
Purchase of treasury stock - (941,250) (11,317)
Purchase of investment securities
Held-to-maturity (15,953,335) (3,864,201) (2,558,497)
Available-for-sale - (8,190,000) (14,019,811)
Proceeds from sales of investment securities 3,500,469 - 4,732,000
Proceeds from maturities of investment securities
Held-to-maturity - 2,010,000 520,000
Available-for-sale 10,240,000 5,400,000 6,650,000
Principal payments on mortgage backed securities
Held-to-maturity - 1,325,971 1,841,066
Available-for-sale 1,955,860 132,905 12,863
Net increase in loans (4,468,592) (3,364,926) (2,909,381)
Net (acquisition) disposals of repossessed assets 6,550 (7,051) 3,002
Purchase of premises and equipment (167,243) (151,195) (79,632)
Cash proceeds from sale of other real estate 3,604 49,412 160,067
------------ ----------- ------------
NET CASH USED BY
INVESTING ACTIVITIES (7,632,687) (8,150,335) (5,159,640)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, interest-bearing
transaction accounts, and savings 1,569,962 1,723,629 2,942,281
Net increase in certificates of deposit 2,810,472 4,784,440 1,504,755
Principal payments on note and debentures payable (25,000) (25,000) (541,414)
------------ ----------- ------------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 4,355,434 6,483,069 3,905,622
------------ ----------- ------------
</TABLE>
The accompanying Notes are an integal
part of these financial statements.
F-15
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH AND
DUE FROM BANKS $ (1,075,310) $ 231,831 $ 396,081
CASH AND DUE FROM BANKS AT BEGINNING
OF YEAR 4,892,113 4,660,282 4,264,201
------------- ------------- -------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 3,816,803 $ 4,892,113 $ 4,660,282
============= ============= =============
</TABLE>
SUPPLEMENTAL SCHEDULE OF OPERATING AND INVESTING ACTIVITIES:
<TABLE>
<C> <S> <C> <C> <C>
(1) Interest paid $ 4,062,435 $ 3,692,998 $ 2,974,208
(2) Income taxes paid 756,640 857,028 102,963
(3) Other real estate acquired through
loan foreclosures 12,050 176,580 79,632
(4) Bank financed sales of other real
estate 36,300 124,197 142,540
(5) In 1994, consideration given for
purchase of treasury stock included
a note payable in the amount of
$250,000
</TABLE>
F-16
<PAGE>
MYERS BANCSHARES, INC.
BALANCE SHEETS
(COMPANY ONLY)
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 38,447 $ 40,916
----------- -----------
TOTAL CURRENT ASSETS 38,447 40,916
INVESTMENTS AND OTHER ASSETS
Investment in Continental State Bank, at equity in
net assets 11,720,158 9,863,489
Investment in Woodhaven National Bank, at cost 149,940 149,940
Goodwill - excess of market value over book value of
net assets acquired, less amortization 545,484 567,304
----------- -----------
TOTAL INVESTMENTS AND OTHER ASSETS 12,415,582 10,580,733
----------- -----------
TOTAL ASSETS $12,454,029 $10,621,649
=========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accrued interest payable $ 9,338 $ 10,500
Current maturities of long-term debt 25,000 25,000
Other 465 6
----------- -----------
TOTAL CURRENT LIABILITIES 34,803 35,506
LONG-TERM DEBT (exclusive of current maturities) -
Note 6 175,000 200,000
SHAREHOLDERS' EQUITY - Note 12
Common stock - par value $1,000 a share;
Authorized - 2,000 shares
Issued and outstanding - 147 shares 147,000 147,000
Paid-in capital 1,451,750 1,451,750
Retained earnings 10,628,083 8,636,475
Unrealized gain on available-for-sale securities, net
of deferred tax of $8,960 in 1996 and $77,746 in
1995 17,393 150,918
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 12,244,226 10,386,143
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,454,029 $10,621,649
=========== ===========
</TABLE>
The accompanying Notes are an integral
part of these financial statements.
F-17
<PAGE>
MYERS BANCSHARES, INC.
STATEMENTS OF INCOME
(COMPANY ONLY)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INCOME
Dividends from subsidiary $ 43,000 $ 600,000 $1,013,973
Interest income 812 1,598 2,321
---------- ---------- ----------
TOTAL INCOME 43,812 601,598 1,016,294
EXPENSES
Interest expense 16,838 18,833 33,760
Legal and professional fees - 7,392 41,984
Franchise taxes 10,854 11,836 6,498
Contract services - 2,800 3,600
Amortization of goodwill 21,819 21,819 21,819
Sundry 3,070 5,363 3,504
---------- ---------- ----------
TOTAL EXPENSES 52,581 68,043 111,165
---------- ---------- ----------
INCOME (LOSS) BEFORE FEDERAL
INCOME TAX BENEFIT AND
UNDISTRIBUTED EARNINGS OF SUBSIDIARY (8,769) 533,555 905,129
FEDERAL INCOME TAX BENEFIT (10,183) (14,994) (29,582)
---------- ---------- ----------
INCOME BEFORE UNDISTRIBUTED
EARNINGS OF SUBSIDIARY 1,414 548,549 934,711
UNDISTRIBUTED EARNINGS OF SUBSIDIARY 1,990,194 1,101,684 513,926
---------- ---------- ----------
NET INCOME $1,991,608 $1,650,233 $1,448,637
========== ========== ==========
</TABLE>
The accompanying Notes are an integral
part of these financial statements.
F-18
<PAGE>
MYERS BANCSHARES, INC.
STATEMENTS OF CASH FLOWS
(COMPANY ONLY)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,991,608 $ 1,650,233 $1,448,637
Adjustments to reconcile net
income to net cash provided by
operating activities:
Amortization of goodwill 21,819 21,819 21,819
Undistributed earnings of
subsidiary (1,990,194) (1,101,684) (513,926)
(Increase) decrease in due from
subsidiary - 29,583 (2,332)
Decrease in accrued expenses and
other liabilities (702) (1,161) 10,647
----------- ----------- ----------
Total adjustments (1,969,077) (1,051,443) (483,792)
----------- ----------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 22,531 598,790 964,845
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of treasury stock - (941,250) (11,317)
Investment in Woodhaven National
Bank - - (149,940)
----------- ----------- ----------
NET CASH USED BY
INVESTING ACTIVITIES - (941,250) (161,257)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on note payable (25,000) (25,000) -
Principal payments on debentures
payable - - (541,414)
----------- ----------- ----------
NET CASH USED BY
FINANCING ACTIVITIES (25,000) (25,000) (541,414)
----------- ----------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,469) (367,460) 262,174
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 40,916 408,376 146,202
----------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR $ 38,447 $ 40,916 $ 408,376
=========== =========== ==========
</TABLE>
The accompanying Notes are an integral
part of these financial statements.
F-19
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 1 - Summary of Significant Accounting Policies
- ------
The accounting and reporting policies of the Company and the Subsidiary
Bank are in accordance with generally accepted accounting principles. A summary
of the more significant policies follows:
Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The consolidated financial statements of Myers Bancshares, Inc. (the
Company) include its accounts and those of its one hundred percent (100%)
owned subsidiary, Continental State Bank (the Bank). All significant
intercompany balances and transactions have been eliminated.
In the Company Only statements, income from the Bank's operations is
recorded under the equity method of accounting.
Investment Securities
---------------------
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" (SFAS 115). Under the provisions of SFAS 115,
investment securities that are held for short-term resale are classified as
trading securities and carried at fair value. Debt securities that
management has the ability and intent to hold to maturity are classified as
held-to-maturity and carried at cost, adjusted for amortization of premiums
and accretion of discounts using methods approximating the interest method.
Other marketable securities are classified as available-for-sale and are
carried at fair value. Realized and unrealized gains and losses on trading
securities are included in net income. Unrealized gains and losses on
securities available-for-sale, net of the tax effect, are recognized as
direct increases or decreases in shareholders' equity.
Gains or losses on disposition are recognized using the specific
identification method.
Loans and Allowance For Loan Losses
-----------------------------------
Loans are stated at the principal amount outstanding less unearned
discount and the allowance for loan losses. Unearned discount on
installment loans is recognized as income over the terms of the loans by a
method approximating the interest method. Interest income on all other
loans is recognized based upon the principal amounts outstanding. The
accrual of interest on a loan is discontinued when, in the opinion of
management, there is doubt about the ability of the borrower to pay
interest or principal. Interest previously earned, but uncollected on such
loans, is recognized as income when collected, until such time as the loan
is returned to an accrual status.
F-20
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 1 - Summary of Significant Accounting Policies (continued)
- ------
Loans and Allowance For Loan Losses (continued)
-----------------------------------
The allowance for loan losses is comprised of amounts charged against
income in the form of the provision for possible loan losses as determined
by management. Management's evaluation is based on a number of factors,
including the Subsidiary Bank's loss experience in relation to outstanding
loans and the existing level of the allowance, prevailing and prospective
economic conditions, and management's continuing review of nonperformance
loans and its evaluation of the quality of the loan portfolio. Loans are
placed on non-accrual status when management believes that the borrower's
financial condition, after giving consideration to economic and business
conditions and collection efforts, is such that collection of interest is
doubtful. Loans are charged against the allowance for possible loan losses
when management believes that collectibility of the principal is unlikely.
Loan Origination Fees and Costs
-------------------------------
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield on the related
loan.
Bank Premises and Equipment
---------------------------
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation expense is computed on the straight-line and
declining balance methods based upon the estimated useful lives of the
assets.
Maintenance and repairs are charged to operating expenses. Renewals
and betterments are added to the asset accounts and depreciated over the
periods benefited. Depreciable assets sold or retired are removed from the
asset and related accumulated depreciation accounts and any gain or loss is
reflected in the income and expense accounts.
Intangible Assets
-----------------
The excess of market value over book value of assets acquired
(goodwill) in the amount of $872,760 is being amortized on the straight
line method over a period of forty years.
F-21
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 1 - Summary of Significant Accounting Policies (continued)
- ------
Federal Income Taxes
--------------------
The Company joins with its subsidiary, Continental State Bank, in
filing consolidated federal income tax returns. The Bank pays a charge
equivalent to current federal income tax to the parent based on separate
taxable income of the Bank.
Income taxes are provided for the tax effects of the transactions
reported in the financial statements and consist of taxes currently due
plus deferred taxes related primarily to differences between the tax and
financial reporting of the allowance for loan losses, non-accrual loans,
and accumulated depreciation. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which
will either be taxable or deductible when the assets and liabilities are
recovered or settled.
Other Real Estate
-----------------
Other real estate is foreclosed property held pending disposition and
is valued at the lower of its fair value or the recorded investment in the
related loan. At foreclosure, if the fair value of the real estate acquired
is less than the Bank's recorded investment in the related loan, a
writedown is recognized through a charge to the allowance for loan losses.
Any subsequent reduction in value is recognized by a charge to income.
Cash and Cash Equivalents
-------------------------
For the purpose of presentation in the Statements of Cash Flows, cash
and cash equivalents are defined as those amounts included in the balance
sheet caption "Cash and Due from Banks".
Fair Values of Financial Instruments
------------------------------------
Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated by
comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instruments. Statement No. 107 excludes
certain financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
F-22
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 1 - Summary of Significant Accounting Policies (continued)
- ------
Fair Values of Financial Instruments (continued)
------------------------------------
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in the
balance sheet for cash and cash equivalents approximate those assets'
fair values.
Time deposits: Fair values for time deposits are estimated using a
discounted cash flow analysis that applies interest rates currently
being offered on certificates to a schedule of aggregated contractual
maturities on such time deposits.
Investment 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
amounts. The fair values for other loans (for example, fixed rate
commercial real estate and rental property mortgage loans and
commercial and industrial loans) are estimated using discounted cash
flow analysis, based on interest rates currently being offered for
loans with similar terms to borrowers of similar credit quality. Loan
fair value estimates include judgments regarding future expected loss
experience and risk characteristics. The carrying amount of accrued
interest receivable approximates its fair value.
Deposits: The fair values disclosed for demand deposits (for example,
interest-bearing checking accounts and passbook accounts) are, by
definition, equal to the amount payable on demand at the reporting
date (that is, their carrying amounts). The fair values for
certificates of deposits are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated contractual maturities on
such time deposits. The carrying amount of accrued interest payable
approximates fair value.
Notes payable: The carrying amounts of notes payable approximate their
fair values.
F-23
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 2 - Investment Securities
- ------
The amortized cost and fair values of investment securities at
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
1996
-------------------------------------------------
Gross Gross
Available-for-Sale Securities Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. government agencies and
corporations $32,934,129 $ 73,263 $(167,630) $32,839,762
U.S. government agency
mortgage backed
securities 12,513,081 84,434 (147,226) 12,450,289
Obligations of states and
political subdivisions 12,327,452 202,672 (19,160) 12,510,964
Other 149,940 - - 149,940
----------- -------- --------- -----------
Totals $57,924,602 $360,369 $(334,016) $57,950,955
=========== ======== ========= ===========
</TABLE>
In the above schedule the fair value of total available-for-sale securities
----------
of $57,950,955 is reflected in Investment Securities on the balance sheet as of
December 31, 1996. A net unrealized gain of $26,353 is in the available-for-
sale investment securities balance. The unrealized gain, net of tax, is
included in shareholders' equity.
The amortized cost and fair values of investment securities at December 31,
1995 are as follows:
<TABLE>
<CAPTION>
1995
-------------------------------------------------
Gross Gross
Available-for-Sale Securities Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. treasury securities $ 500,984 $ 4,896 $ - $ 505,880
U.S. government agencies and
corporations 31,431,127 241,799 (232,972) 31,439,954
U.S. government agency
mortgage backed
securities 14,510,414 63,805 (114,521) 14,459,698
Obligations of states and
political subdivisions 11,117,773 290,724 (25,067) 11,383,430
Other 149,940 - - 149,940
----------- -------- --------- -----------
Totals $57,710,238 $601,224 $(372,560) $57,938,902
=========== ======== ========= ===========
</TABLE>
In the above schedule the fair value of total available-for-sale securities
----------
of $57,938,902 is reflected in Investment Securities on the balance sheet as of
December 31, 1995. A net unrealized gain of $228,664 is in the available-for-
sale investment securities balance. The unrealized gain, net of tax, is
included in shareholders' equity.
In 1995 the Bank took the one-time opportunity to reclassify all of its
investments as available-for-sale under FAS 115.
F-24
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 2 - Investment Securities (continued)
- ------
The amortized cost and fair values of available-for-sale securities at
December 31, 1996, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Securities Available-For-Sale
-----------------------------
Amounts maturing in: Amortized
Cost Fair Value
-------------- -------------
<S> <C> <C>
One year or less $ 5,345,030 $ 5,429,059
After one year through five years 37,643,077 37,624,611
After five years through ten years 2,273,474 2,297,056
----------- -----------
45,261,581 45,350,726
U.S. government agency mortgage backed
securities 12,513,081 12,450,289
Other 149,940 149,940
----------- -----------
Totals $57,924,602 $57,950,955
=========== ===========
</TABLE>
Securities with amortized cost of $17,779,879 and $17,527,017 and fair
values of $17,669,176 and $17,496,438 at December 31, 1996 and 1995,
respectively, were pledged to secure public deposits and for other purposes as
required or permitted by law.
Proceeds from sales of investment securities in 1996 were $3,500,469 and
gross realized gains on such sales were $12,084 and gross realized losses were
$10,737. There were no sales of investment securities in 1995. Proceeds from
sales of investment securities in 1994 were $4,732,000 and gross realized gains
on such sales were $4,128 and gross realized losses were $169,563.
NOTE 3 - Loans and Allowance for Loan Losses
- -------
An analysis of loan categories at December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Commercial $20,433,158 $18,248,322
Real estate loans 27,343,376 24,838,612
Installment loans 6,840,562 7,130,369
Overdrafts 21,449 25,349
----------- -----------
54,638,545 50,242,652
Less: Unearned discount (752,539) (806,329)
Allowance for loan losses (1,021,132) (1,105,323)
----------- -----------
Loans, Net $52,864,874 $48,331,000
=========== ===========
</TABLE>
Transactions in the allowance for loan for the years ended December 31, 1996,
1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Balance, beginning of year $ 1,105,323 $ 1,105,323 $1,179,894
Provisions charged to income - (16,880) -
----------- ----------- ----------
1,105,323 1,088,443 1,179,894
Loans charged off (136,856) (149,614) (155,351)
Recoveries of loans previously 52,665 166,494 80,780
charged off ----------- ----------- ----------
Net (84,191) 16,880 (74,571)
----------- ----------- ----------
Balance, end of year $ 1,021,132 $ 1,105,323 $1,105,323
=========== =========== ==========
</TABLE>
F-25
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 3 - Loans and Allowance for Loan Losses (continued)
- -------
At December 31, 1996 and 1995, the Bank had non-accrual loans of
approximately $388,543 and $587,147 for which impairment had not been
recognized. If interest on these loans had been recognized at the original
interest rates, interest income would have increased approximately $38,334 and
$69,000 in 1996 and 1995, respectively.
Continental State Bank grants agribusiness, commercial and real estate
loans to customers within Wise County and Parker County, Texas and the
surrounding area. A substantial portion of its debtors' ability to honor their
contract is dependent upon the agribusiness and real estate economic sectors in
that geographic area.
NOTE 4 - Bank Premises and Equipment
- ------
The investment in bank premises and equipment stated at cost at December
31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Land $ 168,422 $ 168,422
Buildings and improvements 1,379,422 1,373,504
Furniture and equipment 1,176,937 1,063,108
Automobiles 18,714 43,015
---------- ----------
2,743,495 2,648,049
Less accumulated depreciation 1,489,724 1,393,815
---------- ----------
1,253,771 1,254,234
Construction in progress 1,100 12,847
---------- ----------
Bank premises and equipment, net $1,254,871 $1,267,081
========== ==========
</TABLE>
Depreciation on bank premises and equipment charged to expense totaled
$179,453, $168,651 and $177,281 in the years ended December 31, 1996, 1995 and
1994, respectively.
NOTE 5 - Income Taxes
- ------
The components of income tax expense were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
Bank:
Federal Income Tax Provision:
Current $769,422 $639,037 $463,010
Deferred (4,808) 5,612 (42,657)
-------- -------- --------
Total Federal Income Tax Provision 764,614 644,649 420,353
Company:
Current - (benefit) (10,183) (14,994) (29,582)
-------- -------- --------
Tax Provision - Consolidated $754,431 $629,655 $390,771
======== ======== ========
</TABLE>
F-26
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 5 - Income Taxes (continued)
- ------
The principal factors causing a variation from the statutory tax rate and
the related tax effects are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ------------
<S> <C> <C> <C>
Bank:
Statutory tax on income $ 951,255 $ 797,753 $ 602,648
Reduction in taxes resulting from:
Tax exempt interest (184,546) (178,637) (140,288)
Other (2,095) 25,533 (42,007)
----------- ----------- -----------
Total Income Tax Provision - Bank 764,614 644,649 420,353
Company:
Statutory tax on income - (benefit) (17,601) (22,591) (37,007)
Decrease in benefit resulting from:
Goodwill amortization 7,418 7,418 7,418
Other - 179 7
----------- ----------- -----------
Total Income Tax Provision - Company (10,183) (14,994) (29,582)
----------- ----------- -----------
Tax Provision - Consolidated $ 754,731 $ 629,655 $ 390,771
=========== =========== ===========
</TABLE>
At December 31, 1996 and 1995 the net deferred tax asset is comprised of
temporary differences and their related tax effect as follows:
<TABLE>
<CAPTION>
1996 1995
----------- ------------
<S> <C> <C>
Loan loss provision and allowance for tax purposes
in excess of amount for financial reporting purposes $ 91,283 $ 91,283
Accrued expenses deducted for financial reporting
purposes but not deductible until paid for tax purposes - 1,700
Excess of depreciation taken for financial reporting
over the amount allowed for tax purposes 30,681 27,615
Interest accrued for tax purposes on loans not accruing
for financial purposes 47,051 54,053
----------- ------------
TOTAL DEFERRED TAX ASSET 169,015 174,651
Unrealized gain on available-for-sale securities (8,960) (77,746)
Other - (2,590)
----------- ------------
TOTAL DEFERRED TAX LIABILITY (8,960) (80,336)
----------- ------------
NET DEFERRED TAX ASSET $ 160,055 $ 94,315
=========== ============
</TABLE>
During 1994, the Bank settled with the Internal Revenue Service regarding
its examination of tax years 1986 - 1992. As a result of this settlement, an
extraordinary credit of $175,758 was recorded by the Bank.
F-27
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 6 - Long-Term Debt
- ------
Following is a summary of notes payable as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
8% note payable to individual for purchase of treasury
stock, payable in annual installments of $25,000 plus
interest, with final payment due May, 2004 $ 200,000 $ 225,000
Current portion 25,000 25,000
------------- -------------
LONG-TERM DEBT $ 175,000 $ 200,000
============= =============
</TABLE>
NOTE 7 - Pension Plans
- ------
In 1993, the Bank adopted a defined contribution pension plan which
covers substantially all full-time employees. Under the plan, a 401(k) plan, the
Bank matches 1/2 of the first 6% of employee contributions.
Total pension plan contributions by the Bank for the years ended
December 31, 1996, 1995 and 1994 were $49,205, $57,354 and $38,946,
respectively.
NOTE 8 - Related Party Transactions
- ------
During 1996 and 1995, the Bank had transactions made in the ordinary
course of business with certain of its officers and directors. All loans
included in such transactions were made on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with other persons. The balances of these loans were
approximately $25,000 and $50,800 at December 31, 1996 and 1995.
NOTE 9 - Other Commitments and Contingent Liabilities
- ------
In the normal course of business, there are outstanding various
commitments and contingent liabilities, such as commitments to extend credit,
which are not reflected in the accompanying financial statements. Letters of
credit in the amount of $225,650 and $141,316 and unfunded loan commitments of
$3,491,000 and $2,488,000 were outstanding at December 31, 1996 and 1995. The
Bank does not anticipate losses as a result of these transactions.
NOTE 10 - Compensated Absences
- -------
Employees of the Bank are entitled to paid vacation, paid sick days and
other personal days off, depending on job classification, length of service, and
other factors. It is impracticable to estimate the amount of compensation for
future absences, and, accordingly, no liability has been recorded in the
accompanying financial statements. The Bank's policy is to recognize the costs
of compensated absences when actually paid to employees.
F-28
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 11 - Litigation
- -------
The Bank is a party to certain legal actions arising in the ordinary
course of its business. It is the opinion of legal counsel that the settlement
of these matters will not materially affect the Bank's financial position.
NOTE 12 - Stock Split
- -------
On June 15, 1995, the Company effected a 1 for 50 reverse stock split
whereby the 9,135 outstanding shares of $20 par value common were exchanged for
182.7 shares of $1,000 par common stock.
NOTE 13 - Regulatory Matters
- -------
The Bank is subject to various regulatory capital requirements
administered by the federal and state banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory (and possibly additional
discretionary) actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. The regulations require the
Bank to meet specific capital adequacy guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance sheet items
as calculated under regulatory accounting practices. The Bank's capital
classification is also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum ratios (set forth in the table
below) of Tier I capital (as defined in the regulations) to total average assets
and minimum ratios of Tier I and total capital to risk-weighted assets as set
forth in the table below. The Bank's actual capital ratios are also presented in
the table.
<TABLE>
<CAPTION>
1996 1995
---- ----
Capital Adequacy Capital Adequacy
--------------- ----------------
Required Required Required Actual
Ratio Ratio Ratio Ratio
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Tier I Capital (to Average Assets) 4.0% 9.53% 4.0% 8.63%
Tier I Capital (to Risk Weighted Assets) 4.0% 19.15% 4.0% 12.08%
Total Capital (to Risk Weighted Assets) 8.0% 20.41% 8.0% 13.32%
</TABLE>
Management believes, as of December 31, 1996 and 1995, that the Bank
meets all capital requirements to which it is subject.
F-29
<PAGE>
MYERS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY ONLY
NOTE 14 - Fair Values of Financial Instruments
- -------
The estimated fair values of the Bank's financial instruments are as
follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------- --------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 3,816,803 $ 3,816,803 $ 4,892,113 $ 4,892,113
Federal funds sold 6,100,000 6,100,000 3,350,000 3,350,000
Investment securities 57,950,955 57,950,955 57,938,902 57,938,902
Loans, net of allowance 52,864,874 54,280,000 48,331,000 49,993,000
Interest receivable 1,270,354 1,270,354 1,274,749 1,274,749
Financial liabilities:
Deposits 111,027,272 111,198,000 106,646,838 106,892,000
Accrued interest payable 476,290 476,290 485,040 485,040
</TABLE>
The carrying amounts in the preceding table are included in the balance
sheets under the applicable captions.
F-30
<PAGE>
APPENDIX A
AMENDMENT TO AGREEMENT
(A-1 - A-2)
AGREEMENT AND PLAN OF REORGANIZATION
(A-3 - A-33)
<PAGE>
AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
This Amendment (the "Amendment") entered into as of the 10th day of June,
1997, by and between MYERS BANCSHARES, INC. ("MBI"), a Texas corporation and
NORWEST CORPORATION ("Norwest"), a Delaware corporation.
WHEREAS, MBI and Norwest have entered into an Agreement and Plan of
Reorganization dated as of April 22, 1997 (the "Reorganization Agreement") under
the terms of which a wholly-owned subsidiary of Norwest will merge with and into
MBI pursuant to a plan of merger;
WHEREAS, the parties desire to amend certain terms of the Reorganization
Agreement as hereinafter set forth; and
WHEREAS, all capitalized terms shall have the meanings ascribed to them in
the Reorganization Agreement unless otherwise defined herein,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, Norwest and MBI agree as follows:
(1) Paragraph 1(a) of the Reorganization Agreement is hereby amended to
read in its entirety 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 MBI pursuant to the Merger
Agreement, with MBI as the surviving corporation, in which merger each
share of MBI 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 the number of shares of
Norwest Common Stock determined by dividing the Adjusted Norwest
Shares (as defined below) by the number of shares of MBI Common Stock
then outstanding. The "Adjusted Norwest Shares" shall mean the number
equal to $19,870,000 divided by the Norwest Measurement Price. The
"Norwest Measurement Price" is defined as 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 ending on the day immediately preceding the meeting of
the shareholders of MBI held to vote on this Agreement and the Merger
Agreement.
(2) Schedule 2(j)(ii) of the Reorganization Agreement is hereby amended to
add the following disclosures:
Sharon Burran shall be paid a bonus in the amount of $60,000, payable
within thirty (30) days after the Effective Time of the Merger,
and Michael Fowler shall be paid a bonus in the amount of $70,000,
payable within (30) days after the Effective Time of the Merger.
A-1
<PAGE>
(3) Except as modified by this Agreement, all of the terms and conditions
of the Reorganization Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
NORWEST CORPORATION MYERS BANCSHARES, INC.
By: /s/ John E. Ganoe By: /s/ Mike A. Myers
---------------------------- -------------------------
Its: Executive Vice President Its: Chairman
--------------------------- -------------------------
A-2
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as
of the 22 day of April, 1997, by and between MYERS BANCSHARES INC. ("MBI"), 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 MBI (the "Merger")
pursuant to a plan of merger (the "Merger Agreement") in substantially the form
attached hereto as Exhibit A, which provides, among other things, for the
conversion and exchange of the shares of Common Stock of MBI of the par value of
$1,000 per share ("MBI" 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"),
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 MBI pursuant to the Merger Agreement, with MBI as the
surviving corporation, in which merger each share of MBI 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 the number of
shares of Norwest Common Stock determined by dividing the Adjusted Norwest
Shares (as defined below) by the number of shares of MBI Common Stock then
outstanding. The "Adjusted Norwest Shares" shall mean the number equal to
$20,000,000 divided by the Norwest Measurement Price. The "Norwest Measurement
Price" is defined as 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 ending on the day immediately preceding the
meeting of the shareholders of MBI held to vote on this Agreement and the Merger
Agreement.
(b) Norwest Common Stock Adjustments. If, between the date hereof
--------------------------------
and the Effective Time of the Merger (as defined in subparagraph (d) below),
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, readjustment, or
similar transaction, or if a stock dividend thereon shall be declared with a
record date within such period (a "Common Stock Adjustment"), then the number of
shares of Norwest Common Stock into which a share of MBI Common Stock shall be
converted pursuant to subparagraph (a) above and/or the price of such shares for
the purposes of calculating the Norwest Measurement Price will be appropriately
and proportionately adjusted so that the number of such shares of Norwest Common
Stock into which a share of MBI Common Stock shall be converted will equal the
number of shares of Norwest Common Stock which the holder of a share of MBI
Common Stock would have received pursuant to such reclassification,
recapitalization, split-up, combination, exchange of shares, readjustment or
similar
A-3
<PAGE>
transaction or stock dividend, had the record date therefor been immediately
following the Effective Time of the Merger (as defined in subparagraph (d)
below).
(c) Fractional Shares. No fractional shares of Norwest Common Stock
-----------------
and no certificates or scrip certificates therefor shall be issued to represent
any such fractional interest, and any holder thereof shall be paid an amount of
cash equal to the product obtained by multiplying the fractional share interest
to which such holder is entitled by the average of the closing prices of a share
of Norwest Common Stock as reported by the consolidated tape of the New York
Stock Exchange for each of the five (5) trading days immediately preceding the
Effective Date of the Merger (as defined in subparagraph (d) below).
(d) Mechanics of Closing Merger. Subject to the terms and conditions
---------------------------
set forth herein, the Merger Agreement shall be executed and it and the Articles
of Merger shall be filed with the Secretary of State of the State of Texas
within ten (10) business days following the satisfaction or waiver of all
conditions precedent set forth in paragraphs 6, 7 and 8 of this Agreement
(excluding any conditions that cannot be satisfied until the closing date) or on
such other date as may be agreed to by the parties (the "Closing Date"). Each
of the parties agrees to use its best efforts to cause the Merger to be
completed as soon as practicable after the receipt of approval by the MBI
shareholders of this Agreement and the Merger Agreement, 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 or such later date as is set forth in the
Merger Agreement or Articles of Merger is herein referred to as the "Effective
Date of the Merger". The Effective Time of the Merger shall be 11:59 p.m.
Dallas, 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 MBI 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,
or at such other place as the parties shall mutually agree.
2. Representations and Warranties of MBI. MBI represents and warrants
to Norwest as follows:
(a) Organization and Authority. MBI 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 MBI and the MBI Subsidiaries (as defined in paragraph 2(b) 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. MBI 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"). MBI has furnished
Norwest true and correct copies of its articles of incorporation and bylaws, as
amended.
(b) MBI's Subsidiaries. Schedule 2(b) sets forth a complete and
------------------
correct list of all of MBI's subsidiaries as of the date hereof (individually an
"MBI Subsidiary" and collectively the "MBI Subsidiaries"), all shares of the
outstanding capital stock of each
A-4
<PAGE>
of which, except as set forth on Schedule 2(b), are owned directly or indirectly
by MBI. No equity security of any MBI Subsidiary is or may be required to be
issued by reason of any option, warrant, scrip, right to subscribe to, call or
commitment of any character whatsoever relating to, or security or right
convertible into, shares of any capital stock of such subsidiary, and there are
no contracts, commitments, understandings or arrangements by which any MBI
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 the Texas Business Corporation Act, all of such shares
so owned by MBI are fully paid and nonassessable and, except as set forth on
Schedule 2(b), are owned by it free and clear of any lien, claim, charge,
option, encumbrance or agreement with respect thereto. Each MBI Subsidiary is a
corporation or Texas 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.
Except as set forth on Schedule 2(b), MBI 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.
(c) Capitalization. The authorized capital stock of MBI consists of
---------------
2,000 shares of common stock, $1,000 par value, of which as of the close of
business on December 31, 1996, 147 shares were outstanding and no shares were
held in the treasury. The maximum number of shares of MBI Common Stock
(assuming for this purpose that phantom shares and other share-equivalents,
constitute MBI 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 147. All of the outstanding shares of capital
stock of MBI have been duly and validly authorized and issued and are fully paid
and nonassessable. Except as set forth in Schedule 2(c), there are no
outstanding subscriptions, contracts, conversion privileges, options, warrants,
calls or other rights obligating MBI or any MBI Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of MBI or any MBI Subsidiary. Since December 31, 1996, no shares
of MBI capital stock have been issued, purchased, redeemed or otherwise
acquired, directly or indirectly, by MBI or any MBI Subsidiary and, except as
set forth on Schedule 2(c), no dividends or other distributions have been
declared, set aside, made or paid to the shareholders of MBI.
(d) Authorization. MBI 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 MBI and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of MBI.
Subject to such approvals of shareholders and of government agencies and other
governing boards having regulatory authority over MBI as may be required by
statute or regulation, this Agreement and the Merger Agreement are valid and
binding obligations of MBI enforceable against MBI in accordance with their
respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery
and performance by MBI of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by MBI 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
A-5
<PAGE>
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 MBI or any MBI
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 MBI or any MBI Subsidiary is a party or by which it may be bound, or to
which MBI or any MBI Subsidiary or any of the properties or assets of MBI or any
MBI Subsidiary may be subject, or (ii) subject to compliance with the statutes
and regulations referred to in the next paragraph, to the best knowledge of MBI,
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to MBI or any MBI 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 (the "HSR Act"), the Texas Banking 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 MBI of the transactions contemplated by this
Agreement and the Merger Agreement.
(e) MBI Financial Statements. The consolidated balance sheets of MBI
------------------------
and MBI's Subsidiaries as of December 31, 1996 and 1995 and related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
two years ended December 31, 1996, together with the notes thereto, audited by
Stovall, Grandey & Whatley, Fort Worth, Texas (collectively, the "MBI Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present fairly the
consolidated financial position of MBI and MBI's Subsidiaries at the dates and
the consolidated results of operations and cash flows of MBI and MBI's
Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1990, each of MBI and the MBI
-------
Subsidiaries has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the
Federal Reserve Board, (ii) the Federal Deposit Insurance Corporation (the
"FDIC"), and (iii) 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 "MBI Reports". As of their respective
dates, the MBI Reports complied in all material respects with all the rules and
regulations promulgated by the Federal Reserve Board, the FDIC, and applicable
state securities and banking authorities, as the case may be, and did not
contain any untrue statement of a material fact. Copies of all the MBI Reports
have been made available to Norwest by MBI. MBI is not required to file reports
with the Securities and Exchange Commission (the "SEC") pursuant to either
Section 12 or Section 15(d) of the Exchange Act.
(g) Properties and Leases. Except as may be reflected in the MBI
---------------------
Financial Statements, and except for any lien for current taxes not yet
delinquent, MBI and each MBI 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 MBI's consolidated balance
sheet as of December 31, 1996, and to all real and personal property acquired
since such date, except such real and personal property
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as has been disposed of in the ordinary course of business. All leases of real
property pursuant to which MBI or any MBI Subsidiary, as lessee, leases real
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 MBI or such MBI Subsidiary or any event
which, with notice or lapse of time or both, would constitute such a material
default. Substantially all MBI's and each MBI 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 MBI and the MBI Subsidiaries has filed all
-----
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it and has 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 MBI and the MBI
Subsidiaries for the fiscal year ended December 31, 1993, 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 as set forth on
Schedule 2(h), (i) neither MBI nor any MBI Subsidiary is a party to any pending
action or proceeding, nor to the best knowledge of MBI is any such action or
proceeding threatened by any governmental authority, for the assessment or
collection of taxes, interest, penalties, assessments or deficiencies and (ii)
no issue has been raised by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the tax returns,
business or properties of MBI or any MBI Subsidiary which has not been settled,
resolved and fully satisfied. Each of MBI and the MBI 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 December
31, 1996, 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 MBI and the MBI Subsidiaries
with respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since December 31, 1996, there has
--------------------------
been no change in the business, financial condition or results of operations of
MBI or any MBI Subsidiary, which has had, or would reasonably be expected to
have, a material adverse effect on the business, financial condition or results
of operations of MBI and the MBI 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).
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
-------------------------
neither MBI nor any MBI 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 pay,
termination pay or fringe benefits) with any present or former
officer, director, employee or consultant pursuant to which MBI or any
MBI Subsidiary has any current or future obligation or liability,
other than solely an obligation of confidentiality (other than those
which are terminable at will by MBI or such MBI Subsidiary);
(ii) any plan, contract or understanding providing for any
bonus, pension, option, deferred compensation, retirement payment,
profit sharing or
A-7
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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 containing covenants which (a) limit the ability
of MBI or any MBI Subsidiary to compete in any line of business or with any
person, (b) involve any restriction of the geographical area in which, or
method by which, MBI or any MBI Subsidiary may carry on its business (other
than as may be required by law or applicable regulatory authorities), or
(c) require MBI or any MBI Subsidiary to deal exclusively with any vendor,
service provider or other third party;
(v) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K;
(vi) any lease of personal property with annual rental payments
aggregating $10,000 or more;
(vii) any other contract or agreement that has a term of one year or
more and annual payments of $10,000 or more;
(viii) any agreement or commitment with respect to the Community
Reinvestment Act with any state or federal bank regulatory authority or any
other party; or
(ix) any current or past agreement, contract or understanding with
any current or former director, officer, employee, consultant, financial
adviser, broker, dealer, or agent providing for any rights of
indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. MBI has furnished Norwest copies of
--------------------------------
(i) all attorney responses to the request of the independent auditors for MBI
with respect to loss contingencies as of December 31, 1996, and (ii) a written
list of all legal and regulatory proceedings filed against MBI or any MBI
Subsidiary since said date. Neither MBI nor any MBI Subsidiary is a party to
any pending or, to the best knowledge of MBI, threatened, claim, action, suit,
investigation or proceeding, or is subject to any order, judgment or decree,
except for matters which, in the aggregate, will not have, or would not
reasonably be expected to have, a material adverse effect on the business,
financial condition or results of operations of MBI and the MBI Subsidiaries
taken as a whole.
(l) Insurance. Each of MBI and the MBI Subsidiaries is presently insured,
---------
and during each of the past five calendar years (or during such lesser period of
time as MBI has owned such MBI Subsidiary) has been insured, for reasonable
amounts with insurance companies that, to the best knowledge of MBI, are
financially sound and reputable 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. MBI has delivered to Norwest correct and complete copies of all
material policies of insurance of MBI and the MBI Subsidiaries currently in
effect.
(m) Compliance with Laws. Each of MBI and the MBI Subsidiaries 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
A-8
<PAGE>
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 MBI or such MBI Subsidiary; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to the best knowledge of MBI, no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current. The conduct by each of MBI and the MBI
Subsidiaries 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 MBI nor any MBI 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 which reasonably would be expected to have a
material adverse effect on the business or properties of MBI and the MBI
Subsidiaries taken as a whole. Except for statutory or regulatory restrictions
of general application and except as set forth on Schedule 2(m), no federal,
state, municipal or other governmental authority has placed any restriction on
the business or properties of MBI or any MBI Subsidiary which reasonably would
be expected to have a material adverse effect on the business or properties of
MBI and the MBI Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving MBI or any MBI Subsidiary is
-----
pending or, to the best knowledge of MBI, threatened. Neither MBI nor any MBI
Subsidiary is involved in, or to the best knowledge of MBI threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which could materially and adversely affect the business of MBI or
such MBI Subsidiary.
(o) Material Interests of Certain Persons. Except as set forth on
-------------------------------------
Schedule 2(o), to the best knowledge of MBI, no beneficial owner of 5% or more
of the outstanding capital stock of MBI, or any officer or director of MBI or of
any MBI Subsidiary, or any "associate" (as such term is defined in Rule l4a-1
under the Exchange Act) of any such 5% shareholder, 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 MBI or any MBI Subsidiary.
Schedule 2(o) also sets forth a correct and complete list of any loan or
other extension of credit from MBI or any MBI Subsidiary to any present officer,
director, employee or "principal shareholder" (as such term is defined under
Regulation O of the Federal Reserve Board) of MBI or any MBI Subsidiary or to
any associate or related interest of any such person including those required to
be approved by or reported to MBI's or such MBI Subsidiary's Board of Directors
pursuant to Regulation O.
(p) MBI 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 MBI or any MBI 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 MBI or any MBI
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), MBI or the MBI Subsidiaries have
received favorable
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<PAGE>
determination letters from the Internal Revenue Service under the
provisions of the Tax Reform Act of 1986 ("TRA '86") 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. MBI knows of no
reason that any Plan 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 knows of no reason 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 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) Except as disclosed in Schedule 2(p)(iv), and to the best
knowledge of MBI, no Plan or any trust created thereunder or 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 has violated any of the fiduciary standards under
Part 4 of Title I of ERISA, which could subject such Plan or trust, or any
trustee, fiduciary or administrator thereof, or any party dealing with any
such Plan or trust, to the tax or penalty on prohibited transactions
imposed by said Section 4975 or would result in material liability to MBI
and the MBI Subsidiaries taken as a whole.
(v) No Plan 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.which
would result in a material liability.
(vii) Except as disclosed in Schedule 2(p)(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 MBI or any MBI 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, etc. None of the information regarding MBI and the
--------------------
MBI Subsidiaries supplied or to be supplied by MBI for inclusion in (i) a
Registration Statement on Form S-4 to be filed with the SEC by Norwest for the
purpose of registering the shares of Norwest Common Stock to be exchanged for
shares of MBI Common Stock pursuant to the provisions of the Merger Agreement
(the "Registration Statement"), (ii) the proxy statement to be mailed to MBI's
shareholders in connection with the meeting to be called to consider the Merger
(the "Proxy Statement") and (iii)
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<PAGE>
any other documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the Merger Agreement
will, at the respective times such documents are filed with the SEC or any
regulatory authority and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement, when mailed, and, in
the case of the Proxy Statement as amended or supplemented at the time of the
meeting of shareholders referred to in paragraph 4(c), contain an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All documents MBI and the MBI Subsidiaries are
responsible for filing with any 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. Except as set forth on Schedule 2(r),
------------------------
neither MBI nor any MBI 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. Except as set forth on Schedule 2(s), neither
-------------------
MBI nor any MBI 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 MBI or any MBI Subsidiary
in connection with this Agreement, the Merger Agreement and/or the transactions
contemplated hereby and thereby.
(t) Fiduciary Activities. Except as set forth on Schedule 2(t), neither
--------------------
MBI nor any MBI Subsidiary has ever had any accounts for which it has acted as a
fiduciary, including but not limited to accounts for which it has served as
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor.
(u) No Defaults. Neither MBI nor any MBI 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 would reasonably be expected to have a material adverse effect
upon MBI and the MBI Subsidiaries taken as a whole. To the best of MBI's
knowledge, all parties with whom MBI or any MBI Subsidiary has material leases,
agreements or contracts or who owe to MBI or any MBI Subsidiary material
obligations, other than with respect to those arising in the ordinary course of
the banking business of the MBI 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
reasonably be expected to result in the imposition on MBI or any MBI Subsidiary
of, any liability related 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 MBI's knowledge, threatened against MBI or any MBI Subsidiary
the result of which has had or would reasonably be expected to have a material
adverse effect upon MBI and MBI's Subsidiaries taken as a whole; to the best of
MBI's knowledge there is no reasonable basis for any such proceeding, claim or
action; and to the best of MBI's knowledge neither MBI nor any MBI Subsidiary is
subject to any agreement, order, judgment, or decree by or with any court,
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governmental authority or third party imposing any such environmental liability.
MBI has provided Norwest with copies of all environmental assessments, reports,
studies and other documents in its possession which set forth the results of
investigations designed to assess compliance with or liability under
environmental laws with respect to each bank facility and each non-residential
OREO property.
(w) Regulatory Impediments. As of the date hereof, MBI is not aware of
----------------------
the existence of any factor that would materially delay or materially hinder the
issuance of any regulatory approval necessary to consummate the Merger.
3. Representations and Warranties of Norwest. Norwest represents and
warrants to MBI as follows:
(a) Organization and Authority. Norwest is a corporation duly organized,
--------------------------
validly existing and in good standing under the laws of the State of Delaware,
is duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
material adverse effect on Norwest and its subsidiaries taken as a whole and has
corporate power and authority to own its properties and assets and to carry on
its business as it 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, 1996, of Norwest's Significant Subsidiaries (as defined
in Regulation S-X promulgated by the SEC) (individually a "Norwest Subsidiary"
and collectively the "Norwest Subsidiaries"), all shares of the outstanding
capital stock of each of which, except as set forth in Schedule 3(b), are owned
directly or indirectly by Norwest. No equity security of any Norwest Subsidiary
is or may be required to be issued to any person or entity other than Norwest by
reason of any option, warrant, scrip, right to subscribe to, call or commitment
of any character whatsoever relating to, or security or right convertible into,
shares of any capital stock of such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Norwest Subsidiary is
bound to issue additional shares of its capital stock, or options, warrants or
rights to purchase or acquire any additional shares of its capital stock.
Subject to 12 U.S.C. (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 September 30, 1996, 980,000 shares (including
25,000 shares held by a subsidiary) of Cumulative Tracking Preferred Stock, at
$200 stated value, 11,949 shares of ESOP Cumulative Convertible Preferred Stock,
at $1,000 stated value, 23,190 shares of 1995 ESOP Cumulative Convertible
Preferred Stock, at $1,000 stated value, and 30,951 shares of 1996 ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value, were
outstanding; (ii) 4,000,000 shares of Preference Stock, without par value, of
which as of the close of business on September 30, 1996, no shares were
outstanding; and (iii) 500,000,000 shares of Common Stock, $1-2/3 par value, of
which as of the close of business on September 30, 1996, 370,342,549 shares were
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<PAGE>
outstanding and 5,191,076 shares were held in the treasury. All of the
outstanding shares of capital stock of Norwest have been duly and validly
authorized and issued and are fully paid and nonassessable.
(d) Authorization. Norwest has the corporate power and authority to enter
-------------
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by Norwest and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Norwest. No approval or consent by the stockholders of Norwest is
necessary for the execution and delivery of this Agreement 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, 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
provisions of (x) its certificate of incorporation or by-laws or (y) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Norwest or any Norwest
Subsidiary is a party or by which it may be bound, or to which Norwest or any
Norwest Subsidiary or any of the properties or assets of Norwest or any Norwest
Subsidiary may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next paragraph, to the best knowledge of Norwest,
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Norwest or any Norwest Subsidiary or any of their
respective properties or assets.
Other than in connection with or in compliance with (i) the provisions of
the Securities Act, the Exchange Act, the securities or blue sky laws of the
various states and filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act, the Texas Banking Act or the HSR Act, and
(ii) 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, 1996 and 1995 and related
consolidated statements of income, stockholders' equity and cash flows for the
three years ended December 31, 1996, 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, 1996 (the "Norwest 10-K") as filed with the
SEC, and the unaudited consolidated balance sheets of Norwest and its
subsidiaries as of September 30, 1996 and the related unaudited consolidated
statements of income and cash flows for the three months then ended included in
Norwest's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1996, as filed with the SEC (collectively, the "Norwest Financial
Statements"), have been prepared in accordance with generally
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<PAGE>
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, 1990, each of Norwest and the Norwest
-------
Subsidiaries 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 Office of the 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 "Norwest
Reports". As of their respective dates, the Norwest Reports complied in all
material respects with all the rules and regulations promulgated by the SEC, the
Federal Reserve Board, the FDIC, the Comptroller and any applicable state
securities or banking authorities, as the case may be, and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Norwest
---------------------
Financial Statements and except for any lien for current taxes not yet
delinquent, Norwest and each Norwest Subsidiary has good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Norwest's
consolidated balance sheet as of December 31, 1996 included in Norwest's Annual
Report on Form 10-K for the period then ended, and to all real and personal
property acquired since such date, except such real and personal property has
been disposed of in the ordinary course of business. All leases of real
property and all other leases material to Norwest or any Norwest Subsidiary
pursuant to which Norwest or such Norwest Subsidiary, as lessee, leases real or
personal property, are valid and effective in accordance with their respective
terms, and there is not, under any such lease, any material existing default by
Norwest or such Norwest Subsidiary or any event which, with notice or lapse of
time or both, would constitute such a material default. Substantially all
Norwest's and each Norwest Subsidiary's buildings and equipment in regular use
have been well maintained and are in good and serviceable condition, reasonable
wear and tear excepted.
(h) Taxes. Each of Norwest and the Norwest Subsidiaries has filed all
-----
material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Norwest and the Norwest Subsidiaries for the
fiscal year ended December 31, 1979, and for all fiscal years prior thereto, are
for the purposes of routine audit by the Internal Revenue Service closed because
of the statute of limitations, and no claims for additional taxes for such
fiscal years are pending. Except only as set forth on Schedule 3(h), (i)
neither Norwest nor any Norwest Subsidiary is a party to any pending action or
proceeding, nor to Norwest's knowledge is any such action or proceeding
threatened by any governmental authority, for the assessment or collection of
taxes, interest, penalties, assessments or deficiencies which could reasonably
be expected to have any material adverse effect on Norwest and its subsidiaries
taken as a whole, and (ii) no issue has been raised by any
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<PAGE>
federal, state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of Norwest or any Norwest
Subsidiary which has not been settled, resolved and fully satisfied, or
adequately reserved for. Each of Norwest and the Norwest Subsidiaries has paid
all taxes owed or which it is required to withhold from amounts owing to
employees, creditors or other third parties.
(i) Absence of Certain Changes. Since December 31, 1996, 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 December 31, 1996, 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); or
(iii) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. Neither Norwest nor any Norwest
--------------------------------
Subsidiary is a party to any pending or, to the best knowledge of Norwest,
threatened claim, action, suit, investigation or proceeding, or is subject to
any order, judgment or decree, except for matters which, in the aggregate, will
not have, or cannot reasonably be expected to have, a material adverse effect on
the business, financial condition or results of operations of Norwest and its
subsidiaries taken as a whole.
(l) Insurance. Each of Norwest and the Norwest Subsidiaries 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. Each of Norwest and the Norwest Subsidiaries
--------------------
has all permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, federal, state, local or
foreign governmental or regulatory bodies that are required in order to permit
it to own or lease its properties or assets and to carry on its business as
presently conducted and that are material to the business of Norwest or such
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and to the best knowledge of Norwest, no
suspension or cancellation of any of them is threatened; and all such filings,
applications and registrations are current. The conduct by Norwest and each
Norwest Subsidiary of its business and the condition and use of its properties
does not
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<PAGE>
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.
(o) Norwest Benefit Plans.
---------------------
(i) As of May 1, 1996, the only "employee benefit plans" within the
meaning of Section 3(3) of ERISA for which Norwest or any Norwest
Subsidiary acts as plan sponsor as defined in ERISA Section 3(16)(B) with
respect to which any liability under ERISA or otherwise exists or may be
incurred by Norwest or any Norwest Subsidiary are those set forth on
Schedule 3(o)(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 applied for favorable determination letters from the
Internal Revenue Service under the provisions of TRA '86 for the Norwest
Corporation Pension Plan and the Norwest Corporation Savings Investment
Plan. 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 knows of
no reason 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 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, or
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 has violated any of the 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.
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<PAGE>
(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), during the last five Norwest Plan years
which would result in a material liability.
(vii) Neither the execution and delivery of this Agreement and the
Merger Agreement nor the consummation of the transactions contemplated
hereby and thereby will (i) result in any material payment (including,
without limitation, severance, unemployment compensation, golden parachute
or otherwise) becoming due to any director or employee or former employee
of Norwest under any Norwest Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Norwest Plan or (iii) result in
the acceleration of the time of payment or vesting of any such benefits to
any material extent.
(p) Registration Statement, etc. None of the information regarding
---------------------------
Norwest and its subsidiaries supplied or to be supplied by Norwest for inclusion
in (i) the Registration Statement, (ii) the Proxy Statement, or (iii) any other
documents to be filed with the SEC or any regulatory authority in connection
with the transactions contemplated hereby or by the Merger Agreement will, at
the respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, and, in the
case of the Proxy Statement as amended or supplemented at the time of the
meeting of shareholders referred to in paragraph 4(c), contain an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All documents Norwest and the Norwest
Subsidiaries are responsible for filing with the SEC and with any other
regulatory authority in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
(q) Brokers and Finders. Neither Norwest nor any Norwest Subsidiary nor
-------------------
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Norwest or any Norwest Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(r) No Defaults. Neither Norwest nor any Norwest Subsidiary is in
-----------
default, nor has any event occurred which, with the passage of time or the
giving of notice or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Norwest and its subsidiaries taken as a whole. To
the best of Norwest's knowledge, all parties with whom Norwest or any Norwest
Subsidiary has material leases, agreements or contracts or who owe to
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<PAGE>
Norwest or any Norwest Subsidiary material obligations other than with respect
to those arising in the ordinary course of the banking business of the Norwest
Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or other
-----------------------
proceeding, claim, or action of any nature seeking to impose, or that could
reasonably be expected to result in the imposition on Norwest or any Norwest
Subsidiary of, any liability related 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 the State of Texas, and will have corporate power and
authority to own or lease its properties and assets and to carry on its
business. As of the Closing Date, Merger Co. will not have conducted any
business or own any significant assets or owe any significant liabilities.
(u) Regulatory Impediments. As of the date hereof, Norwest is not aware
----------------------
of the existence of any factor that would materially delay or materially hinder
the issuance of any regulatory approval necessary to consummate the Merger.
4. Covenants of MBI. MBI covenants and agrees with Norwest as follows:
(a) Affirmative Covenants. Except as otherwise contemplated by this
---------------------
Agreement, from the date hereof until the Effective Time of the Merger, each of
MBI and the MBI Subsidiaries will:
(i) maintain its corporate existence in good standing, maintain
the general character of its business and conduct its business in its
ordinary and usual manner;
(ii) extend credit in accordance with existing lending policies,
except that other than pursuant to commitments made prior to the date of
this Agreement it shall not, without the prior written consent of Norwest
(which consent shall be deemed granted unless written objection is received
by MBI within five business days of any request for such approval),
(A) renew any existing loan to its established customers for an amount in
excess of $300,000, or (B) establish any new customer borrowing
relationship in excess of $100,000;
(iii) maintain proper business and accounting records in
accordance with generally accepted accounting principles;
(iv) maintain its properties in good repair and condition,
ordinary wear and tear excepted;
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<PAGE>
(v) maintain in all material respects presently existing
insurance coverage;
(vi) 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;
(vii) use its best efforts to obtain any approvals or consents
required to maintain existing leases and other contracts in effect
following the Merger;
(viii) comply in all material respects with all laws, regulations,
ordinances, codes, orders, licenses and permits applicable to the
properties and operations of MBI and each MBI Subsidiary, the non-
compliance with which reasonably could be expected to have a material
adverse effect on MBI and the MBI Subsidiaries taken as a whole; and
(ix) permit Norwest and its representatives (including KPMG
Peat Marwick) to examine its books, records and properties and to interview
its officers, employees and agents at all reasonable times when it is open
for business. No such examination by Norwest or its representatives either
before or after the date of this Agreement shall in any way affect,
diminish or terminate any of the representations, warranties or covenants
of MBI herein expressed.
(b) Negative Covenants. Except as otherwise contemplated by this
------------------
Agreement, from the date hereof until the Effective Time of the Merger, each of
MBI and the MBI Subsidiaries will not (without the prior written consent of
Norwest):
(i) amend or otherwise change its articles of incorporation or
association or bylaws;
(ii) issue or sell or authorize for issuance or sale, or grant
any options or make other agreements with respect to the issuance or sale
or conversion of, any shares of its capital stock, phantom shares or other
share-equivalents, or any other of its securities;
(iii) authorize or incur any long-term debt (other than deposit
liabilities) or mortgage, pledge or subject to lien or other encumbrance
any of its properties, except in the ordinary course of business;
(iv) enter into any material agreement, contract or commitment in
excess of $10,000, except banking transactions in the ordinary course of
business and in accordance with policies and procedures in effect on the
date hereof;
(v) purchase, renew or otherwise acquire any investment security
for its own account, except investments made by bank subsidiaries in the
ordinary course of business having a maturity at issuance of not more than
one year and in amounts per investment of $100,000 or less;
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<PAGE>
(vi) amend or terminate any Plan except as required by law, or
make any contributions to any Plan in except as required by the terms of
such Plan in effect as of the date hereof;
(vii) declare, set aside, make or pay any dividend or other
distribution with respect to its capital stock, except any dividend
declared by the Board of Directors of an MBI Subsidiary in accordance with
applicable law and regulation;
(viii) redeem, purchase or otherwise acquire, directly or
indirectly, any of the capital stock of MBI;
(ix) increase the compensation of any officers, directors or
employees, except pursuant to existing compensation plans and practices;
or
(x) sell or otherwise dispose of any shares of the capital
stock of any MBI Subsidiary; or sell or otherwise dispose of any of its
assets or properties other than in the ordinary course of business.
(c) Shareholder Meeting. The Board of Directors of MBI will duly call,
-------------------
and will cause to be held a meeting of its shareholders and will direct that
this Agreement and the Merger Agreement be submitted to a vote at such meeting.
The Board of Directors of MBI 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) except to the extent that the
Board of Directors of MBI shall conclude in good faith, after taking into
account the advice of its outside counsel, that to do so would violate its
fiduciary obligations under applicable law, (A) recommend by the affirmative
vote of the Board of Directors a vote in favor of approval of this Agreement and
the Merger Agreement, and (B) use its best efforts to solicit from its
shareholders proxies in favor thereof.
(d) Information Supplied by MBI. MBI will furnish or cause to be
---------------------------
furnished to Norwest all the information concerning MBI and the MBI Subsidiaries
required for inclusion in the Registration Statement referred to in paragraph
5(c) hereof, and in 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 furnished pursuant to
this paragraph must include the audit opinion of Stovall, Grandey & Whatley and
such independent auditor's consent to use such opinion in the Registration
Statement. Any interim quarterly financial information provided under this
paragraph must have been reviewed by Stovall, Grandey & Whatley in accordance
with generally accepted auditing standards, and MBI must provide Norwest with a
copy of such review report.
(e) Regulatory Approvals. MBI 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 MBI 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) Delivery of Closing Documents. MBI will use its best efforts to
-----------------------------
deliver at the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(g) Confidential Information. MBI will hold in confidence all nonpublic
------------------------
documents and information concerning Norwest and its subsidiaries furnished to
MBI and its representatives in connection with the transactions contemplated by
this
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<PAGE>
Agreement and will not release or disclose such information to any other person,
except as required by law and except to MBI's outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. In the event that MBI or its representatives receive a request
pursuant to judicial or regulatory process to disclose such confidential
information, MBI will, unless prohibited by law, promptly notify Norwest of such
request and will cooperate with Norwest, at Norwest's expense, to obtain a
protective order or other reliable assurance that confidential treatment will be
accorded to such confidential information. If the transactions contemplated by
this Agreement shall not be consummated, such confidential treatment shall be
maintained and such information shall not be used in competition with Norwest
(except to the extent that such information can be shown to be previously known
to MBI, in the public domain, or later acquired by MBI on a nonconfidential
basis) and, upon request, all such documents, any copies thereof and extracts
therefrom shall immediately be returned to Norwest.
(h) Competing Transactions. Neither MBI, nor any MBI Subsidiary, nor any
----------------------
director, officer, representative or agent thereof, will, directly or
indirectly, solicit, authorize the solicitation of or, except to the extent the
Board of Directors of MBI shall conclude in good faith, after taking into
account the written advice of its outside counsel, that to fail to do so could
reasonably be determined to violate its fiduciary obligations under applicable
law, enter into any discussions with, or provide any information to, 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 MBI or any MBI 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 MBI or any MBI Subsidiary except in the
ordinary course of business, or (iv) to merge, consolidate or otherwise combine
with MBI or any MBI Subsidiary. If any corporation, partnership, person or
other entity or group makes an offer or inquiry to MBI or any MBI Subsidiary
concerning any of the foregoing, MBI or such MBI Subsidiary will promptly
disclose such offer or inquiry, including the terms thereof, to Norwest.
(i) Public Disclosure. MBI shall consult with Norwest as to the form,
-----------------
substance and timing of any proposed press release or other proposed public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby.
(j) Benefit Plans. Prior to the Effective Date of the Merger, MBI and
-------------
each MBI Subsidiary will take all action necessary, required or requested by
Norwest (i) to comply with the provisions of paragraph 9 hereof relating to the
qualified retirement and welfare benefit plans and all non-qualified benefit
plans and compensation arrangements as of the Effective Date of the Merger,
(ii) to amend the Plans to comply with the provisions of the TRA and regulations
thereunder and other applicable law, and (iii) to submit application to the
Internal Revenue Service for a favorable determination letter for each of the
Plans which is subject to the qualification requirements of Section 401(a) of
the Code, provided that MBI and each MBI Subsidiary will not be required to
submit such application to the Internal Revenue Service if the Internal Revenue
Service does not accept such applications prior to the Effective Date of the
Merger.
(k) Affiliate Letters. MBI shall use its best efforts to obtain and
-----------------
deliver to Norwest at least 32 days prior to the Effective Date of the Merger
signed representations, substantially in the form attached hereto as Exhibit B,
by each executive officer, director or shareholder of MBI who may reasonably be
deemed an
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<PAGE>
"affiliate" of MBI within the meaning of such term as used in Rule 145 under the
Securities Act.
(l) Accounting Practices. Prior to the Effective Date of the Merger, MBI
--------------------
shall establish such additional accruals and reserves as may be necessary (i) to
conform MBI's accounting and credit loss reserve practices and methods to those
of Norwest, consistent with Norwest's plans with respect to the conduct of MBI's
business following the Merger and (ii) to the extent permitted by generally
accepted accounting principles, to provide for the costs and expenses relating
to the consummation by MBI of the Merger and the other transactions contemplated
by this Agreement; provided, however, that MBI's compliance with this paragraph
4(l) shall in no case constitute a breach of any other representation, warranty
or covenant contained in this Agreement.
(m) Environmental Reports. MBI shall obtain, at its sole expense, 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 May 23, 1997,and written reports shall be delivered to
Norwest no later than June 20, 1997. MBI shall obtain, at its sole expense,
Phase II environmental assessments for properties identified by Norwest on the
basis of the results of such Phase I environmental assessments. MBI shall
obtain a survey and assessment of all potential asbestos containing material in
owned or leased properties (other than OREO property), and a written report of
the results shall be delivered to Norwest within four weeks of the date of this
Agreement.
(n) Title Commitments and Surveys. MBI shall obtain from a company
-----------------------------
reasonably acceptable to Norwest, at MBI's sole expense, commitments for title
insurance and boundary surveys for each owned bank facility, which commitments
and surveys shall be delivered to Norwest no later than May 23, 1997.
(o) Favorable Accounting Treatment. Neither MBI nor any MBI Subsidiary
------------------------------
shall knowingly take any action which, with respect to MBI, would disqualify the
Merger as a "pooling of interests" for accounting purposes.
(p) Data Processing Review. Prior to the Closing Date, MBI shall use its
----------------------
best efforts to obtain the consent of Overton Bank and Trust Company
("Overton"), MBI's current data processing services provider, to an audit of
Overton's data processing activities by an independent third party reasonably
acceptable to Norwest, Overton and MBI, which audit shall be performed at MBI's
sole expense, and a copy of the report from which audit shall be delivered to
Norwest.
5. Covenants of Norwest. Norwest covenants and agrees with MBI as
follows:
(a) Affirmative Covenants. From the date hereof until the Effective Time
---------------------
of the Merger, Norwest will maintain its corporate existence in good standing;
conduct, and cause the Norwest Subsidiaries to conduct, their respective
businesses in compliance with all material obligations and duties imposed on
them by all laws, governmental regulations, rules and ordinances, and judicial
orders, judgments and decrees applicable to Norwest or the Norwest Subsidiaries,
their businesses or their properties; maintain all books and records of it and
the Norwest Subsidiaries, including all financial statements, in accordance with
the accounting principles and practices consistent with those used for the
Norwest Financial Statements, except for changes in such principles and
practices required under generally accepted accounting principles.
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<PAGE>
(b) Information Supplied by Norwest. Norwest will furnish to MBI all the
-------------------------------
information concerning Norwest required for inclusion in a proxy statement or
statements to be sent to the shareholders of MBI, or in any statement or
application made by MBI to any governmental body in connection with the
transactions contemplated by this Agreement.
(c) Registration Statement. As promptly as practicable after the
----------------------
execution of this Agreement, Norwest will file with the SEC a registration
statement on Form S-4 (the "Registration Statement") under the Securities Act
and any other applicable documents, relating to the shares of Norwest Common
Stock to be delivered to the shareholders of MBI pursuant to the Merger
Agreement, and will use its best efforts to cause the Registration Statement to
become effective. At the time the Registration Statement becomes effective, the
Registration Statement will comply in all material respects with the provisions
of the Securities Act and the published rules and regulations thereunder, and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not false or misleading, and at the time of mailing thereof to the MBI
shareholders, at the time of the MBI shareholders' meeting referred to in
paragraph 4(c) hereof and at the Effective Time of the Merger, the prospectus
included as part of the Registration Statement, as amended or supplemented by
any amendment or supplement filed by Norwest (hereinafter the "Prospectus"),
will not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not false or misleading;
provided, however, that none of the provisions of this subparagraph shall apply
- -------- -------
to statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished by MBI or any
MBI Subsidiary for use in the Registration Statement or the Prospectus.
(d) Stock Exchange Listing. Norwest will file all documents required to
----------------------
be filed to list the Norwest Common Stock to 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.
(e) Norwest Shares. The shares of Norwest Common Stock to be issued by
--------------
Norwest to the shareholders of MBI pursuant to this Agreement and the Merger
Agreement will, upon such issuance and delivery to said shareholders pursuant to
the Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Norwest Common Stock to be delivered to the
shareholders of MBI pursuant to the Merger Agreement are and will be free of any
preemptive rights of the stockholders of Norwest.
(f) Blue Sky Approvals. 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. Norwest will endeavor to furnish
MBI with copies of all such filings contemporaniously with their submission to
the applicable authorities, and will furnish MBI with copies of all documents
evidencing such consents and approvals, and all correspondence received from
such authorities with respect thereto, promptly upon receipt thereof.
(g) Other Regulatory Approvals. 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 MBI
A-23
<PAGE>
to obtain all such approvals and consents required by MBI. Norwest will endeavor
to furnish MBI with copies of all such filings contemporaniously with their
submission to the applicable authorities, and will furnish MBI with copies of
all documents evidencing such consents and approvals, and all correspondence
received from such authorities with respect thereto, promptly upon receipt
thereof.
(h) Confidential Information. Norwest will hold in confidence all
------------------------
nonpublic documents and information concerning MBI and MBI'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. In the event that Norwest or its
representatives receive a request pursuant to judicial or regulatory process to
disclose such confidential information, Norwest will, unless prohibited by law,
promptly notify MBI of such request and will cooperate with MBI, at MBI's
expense, to obtain a protective order or other reliable assurance that
confidential treatment will be accorded to such confidential information. If
the transactions contemplated by this Agreement shall not be consummated, such
confidential treatment shall be maintained and such information shall not be
used in competition with MBI (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 on a nonconfidential basis) and, upon
request, all such documents, copies thereof or extracts therefrom shall
immediately thereafter be returned to MBI.
(i) Corporate Merger Filings. Norwest will file any documents or
------------------------
agreements required to be filed in connection with the Merger under the Texas
Business Corporation Act.
(j) Delivery of Closing Documents. Norwest will use its best efforts to
-----------------------------
deliver at the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(k) Public Disclosure. Norwest shall consult with MBI as to the form,
-----------------
substance and timing of any proposed press release or other proposed public
disclosure of matters related to this Agreement or to any of the transactions
contemplated hereby.
(l) Access to Information. For a period not exceeding fifteen (15) days
---------------------
prior to the Closing Date, Norwest will permit MBI and its representatives to
examine Norwest's 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 MBI or its representatives shall in any way
affect, diminish or terminate any of the representations, warranties or
covenants of Norwest herein expressed.
(m) Favorable Accounting Treatment. 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 MBI, 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 MBI during the period commencing
30 days prior to the Effective Date of the Merger and ending upon publication by
Norwest of financial results including at least 30 days of combined operations
of MBI and Norwest.
A-24
<PAGE>
(n) Indemnification Rights. From and after the Effective Time of the
----------------------
Merger: (i) Norwest shall indemnify, defend (including the advancement of
defense costs and expenses as reasonably determined by Norwest) and hold
harmless the officers, directors and employees of MBI and the MBI Subsidiaries
(the "Indemnified Parties") against all losses, expenses, claims, damages or
liabilities arising out of the transactions contemplated by this Agreement to
the fullest extent permitted or required under MBI's or a MBI Subsidiary's
Certificate of Incorporation or Articles of Incorporation or Association and By-
laws as in effect as of the Effective Time of the Merger; and (ii) Norwest shall
ensure that all rights to indemnification and all limitations of liability
existing in favor of an Indemnified Party in MBI's Articles of Incorporation or
By-laws or in similar governing documents of any MBI Subsidiary, as applicable
in the particular case and as in effect on the date hereof, shall, with respect
to claims arising from facts or events that occurred before the Effective Time
of the Merger, survive the Merger and continue in full force and effect.
Nothing contained in this paragraph 5(n) shall be deemed to preclude the
liquidation, consolidation or merger of MBI or any MBI Subsidiary, in which case
all of such rights to indemnification and limitations on liability shall be
deemed to so survive and continue as contractual rights notwithstanding any such
liquidation or consolidation or merger. Notwithstanding anything to the
contrary contained in this paragraph 5(n), nothing contained herein shall
require Norwest or MBI to indemnify any person who was a director, officer or
employee of MBI or any MBI Subsidiary to a greater extent than MBI or any MBI
Subsidiary is, as of the date of this Agreement, required to indemnify any such
person.
(o) Exchange of Shares. At or prior to the Effective Time of the Merger,
-------------------
Norwest shall deposit, or shall cause to be deposited, with Norwest Bank
Minnesota, N.A. (the "Agent"), for the benefit of the holders of certificates
representing shares of MBI Common Stock (the "Certificates"), for exchange in
accordance herewith and the Merger Agreement, a certificate or certificates
representing the shares of Norwest Common Stock and the cash in lieu of
fractional shares to be issued and paid pursuant hereto and the Merger Agreement
in exchange for outstanding shares of MBI Common Stock.
In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Norwest, the
posting by such person of a bond in such amount as Norwest may reasonably direct
(but in no event in an amount in excess of 110% of the then market value of the
underlying shares of Norwest Common Stock) as indemnity against any claim that
may be made against it with respect to such Certificate, the Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of Norwest
Common Stock and cash in lieu of fractional shares deliverable in respect
thereof pursuant hereto and the Merger Agreement.
As soon as practicable after the Effective Time of the Merger, the Agent
shall mail to each holder of record of a Certificate or Certificates a form
letter of transmittal and instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Norwest Common
Stock and the cash in lieu of fractional shares into which the shares of Company
Common Stock represented by such certificates shall have been converted pursuant
hereto and the Merger Agreement.
6. Conditions Precedent to Each Party's Obligation. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
A-25
<PAGE>
(a) Shareholder Approval. 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 MBI required for approval of a plan of merger in
accordance with the provisions of MBI's Articles of Incorporation and the Texas
Business Corporation Act.
(b) Regulatory Approvals. 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.
(c) No Injunctions or Restraints. 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.
(d) Listing of Norwest Common Stock. The shares of Norwest Common Stock
-------------------------------
to be delivered to the stockholders of MBI 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.
(e) Tax Opinion. MBI shall have received an opinion, dated as of the
-----------
Closing Date, of counsel to MBI 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 MBI 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 MBI
will be the same as the basis of MBI Common Stock exchanged therefor; and
(iv) the holding period of the shares of Norwest Common Stock received by the
shareholders of MBI will include the holding period of the MBI Common Stock,
provided such shares of MBI Common Stock were held as a capital asset as of the
Effective Time of the Merger.
(f) Registration Statement; Blue Sky Approvals. 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 shall have
been threatened and be unresolved. Norwest shall have received all state
securities law or blue sky authorizations necessary to carry out the
transactions contemplated by this Agreement.
(g) Consents Under Agreements. MBI and each MBI Subsidiary shall have
-------------------------
obtained any and all material consents or waivers from other parties to loan
agreements, leases or other contracts material to MBI's or such Subsidiary's
business required for the consummation of the Merger, and each of MBI and the
MBI Subsidiaries shall have obtained any and all material permits,
authorizations, consents, waivers and approvals required for the lawful
consummation by it of the Merger.
7. Conditions Precedent to the Obligation of MBI. The obligation of MBI
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
MBI:
(a) Representations and Warranties. Except as they may be affected by
------------------------------
transactions contemplated hereby and except to the extent such representations
and
A-26
<PAGE>
warranties are by their express provisions made as of a specified date and
except for activities or transactions after the date of this Agreement made in
the ordinary course of business and not expressly prohibited by this Agreement,
the representations and warranties contained in paragraph 3 hereof shall be true
and correct in all respects material to Norwest and its subsidiaries taken as a
whole as if made at the Time of Filing.
(b) Performance of Norwest's Obligations. 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) Norwest Compliance Certificate. MBI 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 7.
(d) No Material Adverse Change. Since December 31, 1996, no change shall
--------------------------
have occurred and no circumstances shall exist which have had or might
reasonably be expected to have a material adverse effect on the financial
condition, results of operations or business of Norwest and its 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).
8. 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 further conditions, which may be waived in
writing by Norwest:
(a) Representations and Warranties. 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 MBI and the MBI
Subsidiaries taken as a whole as if made at the Time of Filing.
(b) Performance of MBI's Obligations. MBI 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) MBI Compliance Certificate. 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 MBI, as to
the matters set forth in subparagraphs (a) and (b) of this paragraph 8.
(d) Absence of Burdensome Conditions. No approvals, licenses or consents
--------------------------------
granted by any regulatory authority shall contain any condition or requirement
relating to MBI or any MBI Subsidiary that, in the good faith judgment of
Norwest, is unreasonably burdensome to Norwest.
A-27
<PAGE>
(e) MBI Shares. At any time since the date hereof, the total number of
----------
shares of MBI Common Stock outstanding and subject to issuance upon exercise
(assuming for this purpose that phantom shares and other share-equivalents
constitute MBI Common Stock) of all warrants, options, conversion rights,
phantom shares or other share-equivalents shall not have exceeded 147.
(f) Accounting Treatment. The Merger shall qualify as a "pooling of
--------------------
interests" for accounting purposes.
(g) CEO/CFO Letter. Norwest shall have received from the Chief Executive
--------------
Officer and Chief Financial Officer of MBI 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 MBI included
or incorporated by reference in the Registration Statement are prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with the audited financial statements of MBI;
(ii) the amounts reported in the interim quarterly financial
statements of MBI agree with the general ledger of MBI;
(iii) the annual and quarterly financial statements of MBI and the
MBI Subsidiaries included in, or incorporated by reference in, the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the published
rules and regulations thereunder;
(iv) from the date of the most recent unaudited consolidated
financial statements of MBI and the MBI 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 are no
increases in long-term debt, changes in the capital stock or decreases in
stockholders' equity of MBI and the MBI 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 MBI and the MBI 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 MBI and the MBI Subsidiaries, which appear in the
Registration Statement under the certain captions to be specified by
Norwest, and have compared certain of such amounts, percentages, numbers
and financial information with the accounting records of MBI and the MBI
Subsidiaries and have found them to be in agreement with financial records
and analyses prepared by MBI included in the annual and quarterly financial
statements, except as disclosed in such letters.
A-28
<PAGE>
(h) Casualty Losses, etc. MBI and the MBI Subsidiaries considered as a
--------------------
whole shall not have sustained since December 31, 1996 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.
(i) Environmental Liability. There shall be no reasonable basis for any
-----------------------
proceeding, claim or action of any nature seeking to impose, or that could
reasonably be expected to result in the imposition on MBI or any MBI Subsidiary
of, any liability related 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 MBI and the MBI
Subsidiaries taken as a whole.
(j) No Material Adverse Change. Except for the effects of compliance by
--------------------------
MBI with the provisions of paragraphs 4(a)(ii), 4(b)(v) and 4(l) hereof, since
December 31, 1996, no change shall have occurred and no circumstances shall
exist which have had or would reasonably be expected to have a material adverse
effect on the financial condition, results of operations or business of MBI and
the MBI 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).
9. Employee Benefit Plans. Each person who is an employee of MBI or any
MBI Subsidiary as of the Effective Date of the Merger ("MBI 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. Each MBI 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 service to MBI and the MBI Subsidiaries and not subject to
any pre-existing condition exclusions, except (i) in the case of the Long Term
Care Plan, MBI Employees' eligibility will be subject to pre-existing
conditions, and (ii) in the case of Norwest retiree medical benefits, MBI
Employees will not receive credit for years of service to MBI. Each MBI
Employee shall enter such plans not later than the first day of the calendar
quarter that begins at least 32 days after the Effective Date of the Merger (the
"Entry Date"):
Medical Plan
Dental Plan
Vision Plan
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
A-29
<PAGE>
Until the Entry Date for a given Norwest welfare benefit plan, Norwest agrees to
continue for the benefit of the MBI Employees the comparable MBI welfare benefit
plans listed under Schedule 2(p)(i).
For the purpose of determining each MBI Employee's benefit for the year in which
the Merger occurs under the Norwest Vacation Program, vacation taken by an MBI
Employee prior to the Merger in the year in which the Merger occurs will be
deducted from the total Norwest benefit for that year. MBI Employees will also
receive credit under the Norwest Medical Plan for deductibles met under the MBI
medical plan during the calendar year in which the Closing occurs.
(b) Employee Retirement Benefit Plans.
----------------------------------
(i) Each MBI Employee shall be eligible for participation in the Norwest
Savings-Investment Plan (the "SIP"), subject to any eligibility requirements
applicable to the SIP (with full credit for years of past service to MBI and the
MBI Subsidiaries for the purpose of satisfying any eligibility and vesting
periods applicable to the SIP to the extent credited under the respective
retirement plans of MBI and the MBI Subsidiaries), and shall enter the SIP not
later than the first day of the calendar quarter that begins at least 32 days
after the Effective Date of the Merger.
(ii) Each MBI Employee shall be eligible for participation in the Norwest
Pension Plan, as a new employee, under the terms thereof.
10. Termination and Amendment.
(a) Termination. This Agreement may be terminated at any time prior to
-----------
the Time of Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to the
other party if the Merger shall not have been consummated by November 15,
1997, 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 MBI or Norwest upon written notice to the other party if
any court or governmental authority of competent jurisdiction shall have
issued a final order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;
(iv) by either Norwest or MBI upon written notice to the other
party if the Board of Directors of MBI shall in good faith determine that a
Takeover Proposal constitutes a Superior Proposal; provided, however, that
MBI shall not be permitted to terminate this Agreement pursuant to this
paragraph 10(a)(iv) unless (A) it has not breached any covenant contained
in paragraph 4 and (B) it delivers to Norwest simultaneously with such
notice of termination a termination fee in the amount of $600,000. As used
in this Agreement, "Takeover Proposal" means a bona fide proposal or offer
by a person to make a tender or exchange offer, or to engage in a merger,
consolidation or other business combination involving MBI or to acquire in
any manner a substantial equity interest in, or all or substantially all of
the assets of, MBI, and "Superior Proposal" means a bona fide proposal or
offer made by a person to acquire MBI pursuant to a tender or exchange
offer, a merger, consolidation or
A-30
<PAGE>
other business combination or an acquisition of all or substantially all of
the assets of MBI and the MBI Subsidiaries on terms which the Board of
Directors of MBI shall determine in good faith, after taking into account
the advice of counsel, to be more favorable to MBI and its shareholders
than the transactions contemplated hereby; or
(v) by Norwest upon written notice to MBI if (A) the Board of
Directors of MBI fails to recommend, withdraws, or modifies in a manner
materially adverse to Norwest, its approval or recommendation of this
Agreement, or the transactions contemplated hereby, (B) after an agreement
to engage in or the occurrence of an Acquisition Event (as defined below)
or after a third party shall have made a proposal to MBI or MBI 's
shareholders to engage in an Acquisition Event, the transactions
contemplated hereby are not approved at the meeting of MBI shareholders
required under paragraph 4(c) (the "Shareholder Meeting"), or (C) the
Shareholder Meeting is not held prior to September 30, 1997, and MBI has
failed to comply with its obligations under paragraph 4(c). For purposes
of this Agreement, "Acquisition Event" means any of the following: (i) a
merger, consolidation or similar transaction involving MBI, its bank
subsidiary (the "Bank") or any successor to MBI or the Bank, (ii) a
purchase, lease or other acquisition in one or a series of related
transactions of assets of MBI or any of the MBI Subsidiaries representing
25% or more of the consolidated assets of MBI and the MBI Subsidiaries or
(iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or any similar transaction) in one or a
series of related transactions of beneficial ownership of securities
representing 25% or more of the voting power of MBI or any MBI Subsidiary
in each case with or by a person or entity other than Norwest or an
affiliate of Norwest.
(b) Effect of Termination. Termination of this Agreement under this
---------------------
paragraph 10 shall not release, or be construed as so releasing, either party
hereto from any liability or damage to the other party hereto arising out of the
breaching party's willful and material breach of the warranties and
representations made by it, or willful and material failure to perform any of
its covenants, agreements, duties or obligations arising hereunder, and the
obligations under paragraphs 4(g), 5(h) and 11 shall survive such termination.
(c) 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 hereof by the shareholders
of MBI 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.
(d) Waiver and Other Action. Either party hereto may, by a signed
-----------------------
writing, give any consent, take any action pursuant to this paragraph 10 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; provided, however, that any such consent or waiver shall not
operate as a consent to any other or subsequent matter or a waiver of, or
estoppel with respect to, any other or subsequent inaccuracy or failure to
comply.
(f) Termination Fee. If this Agreement is terminated by Norwest pursuant
---------------
to paragraphs 10(a)(iv) or 10(a)(v), and if terminated pursuant to paragraph
10(a)(v) and prior thereto or within 12 months after such termination:
A-31
<PAGE>
(i) MBI or the Bank or any successor to MBI or the Bank shall
have entered into an agreement to engage in an Acquisition Event (as
defined above) or an Acquisition Event shall have occurred; or
(ii) the Board of Directors of MBI shall have authorized or
approved an Acquisition Event or shall have publicly announced an intention
to authorize or approve or shall have recommended that the shareholders of
MBI approve or accept any Acquisition Event,
then MBI shall promptly, but in no event later than five business days after the
first of such events shall have occurred, pay Norwest a fee equal to $600,000.
Norwest acknowledges and agrees that if this Agreement is terminated pursuant to
paragraphs 10(a)(iv) or 10(a)(v), its exclusive remedy shall be collection of
the $600,000 termination fee.
11. Expenses. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by MBI and the MBI Subsidiaries shall be borne by MBI,
and all such expenses incurred by Norwest shall be borne by Norwest.
12. 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.
13. Third Party Beneficiaries. Except as provided in paragraph 5(n), 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.
14. 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 MBI:
Myers Bancshares Inc.
6310 Lemmon Ave., Suite 200
Dallas, Texas 75209
Attention: Chairman
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
15. Complete Agreement. This Agreement and the Merger Agreement contain
the complete agreement between the parties hereto with respect to the Merger and
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other transactions contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
16. Captions. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
17. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
18. Non-Survival of Representations and Warranties. No representation or
warranty contained in the Agreement or the Merger Agreement, or contained in a
certificate delivered pursuant to the Agreement or the Merger Agreement, shall
survive the Merger of Merger Co. with and into MBI or, except as set forth in
paragraph 10(b), the termination of this Agreement. The agreements contained in
paragraphs 5(n) and 11 shall survive the Merger.
19. 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 MYERS BANCSHARES, INC.
By: /s/ John E. Ganoe By: /s/ Mike A. Myers
---------------------------- ------------------------------
Its: Executive Vice President Its: Chairman
-------------------------- -----------------------------
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<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF MERGER
Between
MYERS BANCSHARES INC.
a Texas corporation
(the surviving corporation)
and
NORWEST MBI MERGER CO.
a Texas corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of August 4, 1997 (the
"Agreement"), between Myers Bancshares Inc., a Texas corporation (hereinafter
sometimes called "Company" and sometimes called the "surviving corporation") and
Norwest MBI Merger Co., 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 July 29, 1997, 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 1000 shares of
common stock having a par value of $1,000 per share ("Merger Co. Common Stock"),
of which one share is outstanding as of the date hereof; and
WHEREAS, Company was incorporated by Articles of Incorporation filed in the
office of the Secretary of the State of the State of Texas on August 28, 1981
and said corporation is now a corporation subject to and governed by the
provisions of the Texas Business Corporation Act. Company has authorized capital
stock of 2,000 shares of Common Stock, par value $1,000 per share ("Company
Common Stock") of which 147 shares were outstanding and no shares were held in
the treasury as of December 31, 1996; and
WHEREAS, Norwest Corporation and Company are parties to an Agreement and
Plan of Reorganization dated as of April 22, 1997 (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 Company, with Company 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;
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; and
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Company and of Merger Co., 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
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Company 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 Company, the mode of carrying said merger into effect, the manner
and basis of converting the shares of Company Common Stock into shares of common
stock of Norwest Corporation 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
Company, 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 Myers Bancshares Inc.
SECOND: The Articles of Incorporation of Company at the time of merger
shall be the Articles of Incorporation of the surviving corporation until
amended according to law.
THIRD: The Bylaws of Company at the time of merger shall be amended as set
forth below and, as so amended, shall be and remain the Bylaws of the surviving
corporation until further amended according to the provisions of the Articles of
Incorporation of the surviving corporation or of said Bylaws:
Article III, Section 2 is amended in its entirety to read as follows:
2. Number, Tenure and Qualifications. The board of directors of the
---------------------------------
Corporation shall consist of one or more directors. The number of directors
shall be determined by the stockholders at each annual meeting. The
authorized number of directors may be increased by the stockholders or the
board and decreased by the stockholders. The directors shall be elected at
each annual meeting of the stockholders, and each director elected shall
hold office until his or her successor is elected and qualified or until
his or her earlier resignation or removal. Directors need not be
stockholders or residents of the State of Texas.
FOURTH: The number of directors of the surviving corporation shall be three
(3), and the persons named below shall become the directors of the surviving
corporation and shall hold office from the time of the merger until their
respective successors are elected and qualify:
William H. Queenan
Stanley S. Stroup
John T. Thornton
FIFTH: The persons named below shall become 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:
John T. Thornton President
Stanley S. Stroup Senior Vice President
Charles D. White Senior Vice President and Treasurer
J. D. Vandermark Vice President
Michael A. Graf Vice President
David A. Stautz Vice President
Robert J. Murphy Vice President
James A. Horton Vice President
Diana Lea-Kahle Secretary
Margaret M. Weber Assistant Secretary
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Rachelle M. Graham Assistant Secretary
SIXTH: The manner and basis of converting the shares of Company Common
Stock into cash or shares of shares of Norwest Common Stock shall be as follows:
1. Each share of Company Common Stock outstanding immediately prior to
the time of the merger (other than shares as to which statutory dissenters'
appraisal rights have been exercised) will be converted into and exchanged
for the number of shares of Norwest Common Stock determined by dividing the
Adjusted Norwest Shares (as defined below) by the number of shares of
Company Common Stock then outstanding. The "Adjusted Norwest Shares" shall
mean the number equal to $19,870,000 divided by the Norwest Measurement
Price. The "Norwest Measurement Price" is defined as 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 ending on the day immediately preceding the meeting of the
shareholders of Company held to vote on this Agreement and the
Reorganization Agreement.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate for shares of Company Common Stock outstanding immediately
prior to the time of merger shall be entitled, upon surrender of such
certificate for cancellation to the surviving corporation or to Norwest
Bank Minnesota, National Association, as the designated agent of the
surviving corporation (the "Agent"), to receive a new certificate for the
number of whole shares of Norwest 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 Company 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 Company Common Stock have been converted on
the basis above set forth; provided, however, until the holder of such
certificate for Company 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, readjustment, or similar transaction, or if a stock dividend
thereon shall be declared with a record date within such period, then the
number of shares of Norwest Common Stock into which a share of Company
Common Stock 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 Company Common Stock
shall be converted will equal the number of shares of Norwest Common Stock
which the holder of a share of Company Common Stock would have received
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pursuant to such reclassification, recapitalization, split-up, combination,
exchange of shares, readjustment, or similar transaction, or stock
dividend, had the record date therefor been immediately following the time
of merger.
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 thereof shall be paid an amount of cash
equal to the product obtained by multiplying the fractional share interest
to which such holder is entitled by the average of the closing prices of a
share of Norwest Common Stock as reported by the consolidated tape of the
New York Stock Exchange for each of the five (5) trading days immediately
preceding the effective date of merger.
5. Each share of Merger Co. Common Stock issued and outstanding at the
time of merger shall be converted into and exchanged for one share 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 and accepted by the Secretary of the 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 Company 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 Secretary or an Assistant
Secretary of Merger Co., and by the President or a Vice President of
Company and by the Secretary or an Assistant Secretary of Company, 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. (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 Company shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Sections 5.01
and 5.02 of the Texas Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. The surviving corporation shall (i) file with the Secretary of State
of the State of Texas an agreement that it may be served with process
within or without the State of Texas in the courts of the State of Texas in
any proceeding for the
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enforcement of any obligation of Merger Co. and in any proceeding for the
enforcement of the rights of a dissenting shareholder of Merger Co. against
Company, and (ii) file with said Secretary of State an agreement that it
will promptly pay to the dissenting shareholders of Merger Co. the amount,
if any, to which such dissenting shareholders will be entitled under the
provisions of the Texas Business Corporation Act with respect to the rights
of dissenting shareholders.
2. 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 Company 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.
3. 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.
4. This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of the State of
Texas.
5. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
6. 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.
7. The registered office of the surviving corporation in the State of
Texas shall be 350 North St. Paul Street, Dallas, Texas 75201, and the name
of the registered agent of the Company at such address is The Corporation
Trust Company.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers, pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
MYERS BANCSHARES INC
By:
----------------------------------
Its:
---------------------------------
(Corporate Seal)
Attest:
- ---------------------------
Secretary
NORWEST MBI MERGER CO.
By:
----------------------------------
Its:
---------------------------------
(No Corporate Seal)
Attest:
- ---------------------------
Secretary
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<PAGE>
APPENDIX C
TEXAS BUSINESS CORPORATIONS ACT
ARTICLES 5.11, 5.12, AND 5.13
<PAGE>
TEXAS BUSINESS CORPORATIONS ACT
Art. 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 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 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.
Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.
Amended by Acts 1957, 55th Leg., p. 111, ch. 54, (S) 10; Acts
1973, 63rd Leg., p. 1508, ch. 545, (S) 36, eff. Aug. 27, 1973;
Acts 1989, 71st Leg., ch. 801, (S) 34, eff. Aug. 28, 1989; Acts
1991, 72nd Leg., ch. 901, (S) 32, eff. Aug 26, 1991.
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<PAGE>
Art. 5.12 Procedure for Dissent by Shareholders as to Said Corporate Actions
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 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
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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 corporate (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 other entity. If the
petition shall be filed by the corporation (foreign or domestic)
or other entity, the petition shall be
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<PAGE>
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 costs, 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
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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 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.
Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.
Amended by Acts 1967, 60th Leg., p. 1721, ch. 657 (S) 12, eff.
June 17, 1967; Acts 1983, 68th Leg., p. 2570, ch. 442 (S) 9, eff.
Sept. 1, 1983; Acts 1987, 70th Leg., ch. 93, (S) 27, eff. Aug.
31, 1987; Acts 1989, 71st Leg., ch. 801, (S) 35, eff. Aug 28,
1989; Acts 1993, 73rd Leg., ch 215, (S) 2.16, eff. Sept. 1, 1993.
Art. 5.13 Provisions Affecting Remedies of 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 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
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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.
Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.
Amended by Acts 1967, 60th Leg., p. 1723, ch. 657, (S) 13, eff.
June 17, 1967; Acts 1983, 68th Leg., p. 2573, ch. 442, (S) 10,
eff. Sept. 1, 1983; Acts 1993, 73rd Leg., ch. 215, (S) 2.17, eff.
Sept. 1, 1993.
C-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes indemnification
of directors and officers of a Delaware corporation under certain circumstances
against expenses, judgments and the like in connection with an action, suit or
proceeding. Article Fourteenth of Norwest's Restated Certificate of
Incorporation provides for broad indemnification of directors and officers.
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<S> <C>
Exhibits: Parenthetical references to exhibits in the description of Exhibits
- --------
3.1, 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.2, 4.1 and 4.2 below are
incorporated by reference from such exhibits to the indicated
reports of Norwest filed with the Securities and Exchange
Commission under File No. 1-2979.
2.1 -- Agreement and Plan of Reorganization dated April 22, 1997 between
Myers Bancshares Inc. and Norwest Corporation, as amended June 10,
1997, (included in Proxy Statement-Prospectus as Appendix A).
2.2 -- Agreement and Plan of Merger dated August 4, 1997 between Myers
Bancshares Inc and MBI Merger Co. (included in Proxy Statement-
Prospectus as Appendix B).
3.1 -- Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3(b) to Norwest's Current Report on Form 8-K dated June 28,
1993, Exhibit 3 to Norwest's Current Report on Form 8-K dated July
3, 1995 and Exhibit 3 to Norwest's Current Report on Form 8-K dated
June 3, 1997 (filed June 10, 1997)).
3.1.1 -- Certificate of Designations of Powers, Preferences, and Rights of
Norwest ESOP Cumulative Convertible Preferred Stock (incorporated
by reference to Exhibit 4 to Norwest's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994).
3.1.2 -- Certificate of Designations of Powers, Preferences, and Rights of
Norwest Cumulative Tracking Preferred Stock (incorporated by
reference to Exhibit 3 to Norwest's Current Report on Form 8-K
dated January 9, 1995).
3.1.3 -- Certificate of Designations of Powers, Preferences, and Rights of
Norwest 1995 ESOP Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 4 to Norwest's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995).
3.1.4 -- Certificate of Designations with respect to the 1996 ESOP
Cumulative Convertible Preferred Stock (incorporated by reference
to Exhibit 3 to Norwest's Current Report on Form 8-K dated February
26, 1996).
3.1.5 -- Certificate of Designations with respect to the 1997 ESOP
Cumulative Convertible Preferred Stock (incorporated by reference
to Exhibit 3 to Norwest's Current Report on Form 8-K dated April
14, 1997).
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
3.2 -- By-Laws (incorporated by reference to Exhibit 3 to Norwest's
Current Report on Form 8-K dated October 10, 1997).
4 -- Rights Agreement, dated as of November 22, 1988, between Norwest
Corporation and Citibank, N.A. (incorporated by reference to
Exhibit 1 to Norwest's Form 8-A dated December 6, 1988).
4.1 -- Certificate of Adjustment, dated July 21, 1989, to Rights Agreement
(incorporated by reference to Exhibit 3 to Norwest's Form 8 dated
July 21, 1989).
4.2 -- Certificate of Adjustment, dated June 28, 1993, to Rights Agreement
(incorporated by reference to Exhibit 4 to Norwest's Form 8-A/A
dated June 29, 1993).
4.3 -- Certificate of Adjustment, dated October 10, 1997, to Rights
Agreement (incorporated by reference to Exhibit 5 to Norwest's Form
8-A/A dated October 14, 1997).
5 -- Opinion of Laurel A. Holschuh, counsel to Norwest. (1)
8 -- Opinion of Brown McCarroll & Oaks Hartline. (2)
23.1 -- Consent of Laurel A. Holschuh (included as part of Exhibit 5 filed
herewith).
23.2 -- Consent of KPMG Peat Marwick LLP.
23.3 -- Consent of Stovall, Grandey & Whatley.
23.4 -- Consent of Brown McCarroll & Oaks Hartline (included as a part of
Exhibit 8).
24 -- Powers of Attorney. (1)
99 -- Form of proxy for Special Meeting of Shareholders of Myers
Bancshares Inc. (1)
</TABLE>
- -----------------------------
(1) Previously filed.
(2) To be filed by amendment.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
posteffective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent posteffective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any
II-2
<PAGE>
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) ((S)230.424(b) of this chapter) if,
in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a posteffective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
II-3
<PAGE>
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on October 17, 1997.
NORWEST CORPORATION
By: /s/ Richard M. Kovacevich
----------------------------------------
Richard M. Kovacevich
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed on October 17, by the
following persons in the capacities indicated:
/s/ Richard M. Kovacevich Chairman and Chief Executive Officer
- ------------------------- (Principal Executive Officer)
Richard M. Kovacevich
/s/ John T. Thornton Executive Vice President and Chief
- ------------------------- Financial Officer
John T. Thornton (Principal Financial Officer)
/s/ Michael A. Graf Senior Vice President and Controller
- ------------------------- (Principal Accounting Officer)
Michael A. Graf
LES S. BILLER )
J.A. BLANCHARD III )
DAVID A. CHRISTENSEN )
PIERSON M. GRIEVE )
CHARLES M. HARPER )
WILLIAM A. HODDER )
REATHA CLARK KING ) A majority of the
RICHARD M. KOVACEVICH ) Board of Directors*
RICHARD S. LEVITT )
RICHARD D. McCORMICK )
CYNTHIA H. MILLIGAN )
BENJAMIN F. MONTOYA )
IAN M. ROLLAND )
MICHAEL W. WRIGHT )
- --------------------
*Richard M. Kovacevich, by signing his name hereto, does hereby sign this
document on behalf of each of the directors named above pursuant to powers of
attorney duly executed by such persons.
/s/ Richard M. Kovacevich
----------------------------
Richard M. Kovacevich
Attorney-in-Fact
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Form of
Number Description* Filing
- ------ ------------ -------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated April 22, 1997
between Myers Bancshares Inc. and Norwest Corporation, as
amended June 10, 1997 (included in Proxy Statement-
Prospectus as Appendix A).
2.2 Agreement and Plan of Merger dated August 4, 1997 between
Myers Bancshares Inc. and MBI Merger Co. (included in Proxy
Statement-Prospectus as Appendix B).
3.1 Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(b) to Norwest's Current Report on
Form 8-K dated June 28, 1993, Exhibit 3 to Norwest's
Current Report on Form 8-K dated July 3, 1995 and Exhibit 3
to Norwest's Current Report on Form 8-K dated June 3, 1997
(filed June 10, 1997)).
3.1.1 Certificate of Designations of Powers, Preferences, and
Rights of Norwest ESOP Cumulative Convertible Preferred
Stock (incorporated by reference to Exhibit 4 to Norwest's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994).
3.1.2 Certificate of Designations of Powers, Preferences, and
Rights of Norwest Cumulative Tracking Preferred Stock
(incorporated by reference to Exhibit 3 to Norwest's
Current Report on Form 8-K dated January 9, 1995).
3.1.3 Certificate of Designations of Powers, Preferences, and
Rights of Norwest 1995 ESOP Cumulative Convertible
Preferred Stock (incorporated by reference to Exhibit 4 to
Norwest's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995).
3.1.4 Certificate of Designations with respect to the 1996 ESOP
Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 3 to Norwest's Current Report on Form
8-K dated February 26, 1996).
3.1.5 Certificate of Designations with respect to the 1997 ESOP
Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 3 to Norwest's Current Report on Form
8-K dated April 14, 1997).
3.2 By-Laws (incorporated by reference to Exhibit 3 to
Norwest's Current Report on Form 8-K dated October 10,
1997).
4 Rights Agreement, dated as of November 22, 1988, between
Norwest Corporation and Citibank, N.A. (incorporated by
reference to Exhibit 1 to Norwest's Form 8-A dated
December 6, 1988).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Form of
Number Description* Filing
- ------ ------------ -------
<S> <C> <C>
4.1 Certificate of Adjustment, dated July 21, 1989, to
Rights Agreement (incorporated by reference to
Exhibit 3 to Norwest's Form 8 dated July 21, 1989).
4.2 Certificate of Adjustment, dated June 28, 1993, to
Rights Agreement (incorporated by reference to
Exhibit 4 to Norwest's Form 8-A/A dated June 29, 1993).
4.3 Certificate of Adjustment, dated October 10, 1997, to
Rights Agreement (incorporated by reference to Exhibit
5 to Norwest's Form 8-A/A dated October 14, 1997)
5 Opinion of Laurel A. Holschuh, counsel to Norwest.**
8 Opinion of Brown McCarroll & Oaks Hartline***
23.1 Consent of Laurel A. Holschuh, (included as part of
Exhibit 5 filed herewith).
23.2 Consent of KPMG Peat Marwick LLP. Electronic Transmission
23.3 Consent of Stovall, Grandey & Whatley. Electronic Transmission
23.4 Consent of Brown McCarroll & Oaks Hartline (included
as part of Exhibit 8).
24 Powers of Attorney.**
99 Form of proxy for Special Meeting of Shareholders of
Myers Bancshares Inc.**
</TABLE>
- ------------------------
* Parenthetical references to exhibits in the description of Exhibits 3.1,
3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.2, 4.1 and 4.2 are incorporated by
reference from such exhibits to the indicated reports of Norwest filed with
the SEC under File No. 1-2979.
** Previously filed.
*** To be filed by amendment.
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
Independent Auditors' Consent
-----------------------------
The Board of Directors
Norwest Corporation:
We consent to the use of our report dated January 16, 1997 incorporated herein
by reference and to the reference to our firm under the heading "EXPERTS" in the
prospectus.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 20, 1997
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF STOVALL, GRANDEY & WHATLEY, L.L.P.]
Independent Auditors' Consent
-----------------------------
The Board of Directors
of Myers Bancshares, Inc.:
We consent to the use of our report dated February 5, 1997 included herein and
to the reference to our firm under the heading "EXPERTS" in the proxy statement-
prospectus.
/s/ Stovall, Grandey & Whatley, L.L.P.
Fort Worth, Texas
October 14, 1997
