<PAGE>
As filed with the Securities and Exchange Commission on October 17, 1997
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
Form S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-------------------------------
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 6711 41-0449260
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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 John Guthery
Norwest Corporation Perry, Guthery, Haase and Gessford, P.C.
Norwest Center 1400 First Bank Building
Sixth and Marquette Lincoln, Nebraska 68501
Minneapolis, Minnesota 55479-1026
__________________
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of the Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box./ /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================
Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
to Be to Be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,300,000(2) N/A $18,573,000 (3) $5,628.18
(par value $1-2/3 per share) (1)
======================================================================================================
</TABLE>
(1) Each share of the registrant's common stock includes one preferred stock
purchase right.
(2) As adjusted to reflect the two-for-one split of the registrant's common
stock in the form of a 100% stock dividend distributed
on October 10, 1997 to stockholders of record on October 2, 1997.
(3) Estimated solely for the purpose of computing the registration fee, in
accordance with Rule 457(f), based upon the book value as of June 30, 1997
of all shares of common stock to be acquired by the registrant in the
transaction described herein.
__________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
[Packers letterhead]
October __, 1997
Dear Shareholder:
Your board of directors has approved the acquisition of Packers Management
Company, Inc. by Norwest Corporation. Norwest will acquire Packers through the
merger of Packers with a newly-formed, wholly-owned subsidiary company of
Norwest. Packers will be the surviving company in the merger. If the merger is
completed, Packers will become a wholly-owned subsidiary of Norwest and you will
receive shares of Norwest common stock for your shares of Packers common stock.
In the merger, Norwest will exchange shares of Norwest common stock for shares
of Packers common stock based on an exchange ratio. The exchange ratio will be
determined under a formula set forth in the agreement governing the merger. The
formula has two variables: (1) the number of shares of Packers common stock
outstanding immediately before the merger is completed, and (2) the amount of
cash dividends paid on Norwest common stock between the date of the merger
agreement and the date the merger is completed.
If calculated as of today, the exchange ratio would be 3.32395, meaning you
would receive 3.32395 shares of Norwest common stock for each share of Packers
common stock you own. Because the merger agreement restricts Packers' ability
to issue and repurchase its shares, the only variable that could cause the
actual exchange ratio to differ from 3.32395 is the future payment of cash
dividends on Norwest common stock. If the merger is completed before Norwest
next pays dividends, the actual exchange ratio will be 3.32395. If Norwest pays
dividends before the merger is completed, the exchange ratio will be increased
from 3.32395 in accordance with the formula. Norwest does not expect to pay
cash dividends before December 1, 1997.
Norwest cannot acquire Packers without the approval of Packers' shareholders.
Your board has called a special shareholders meeting to vote on the matter. The
meeting will be held on November __, 1997 at 10:00 a.m. at 2710 South 140th
Street, Omaha, Nebraska. If shareholders do not approve the acquisition,
Packers 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.
Rodney P. Vandenberg
Chairman and President
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS......................................
DEFINED TERMS........................................
WHAT "INCORPORATED BY REFERENCE" MEANS...............
EXPLANATORY NOTE REGARDING NORWEST
COMMON STOCK SPLIT...................................
PROXY STATEMENT-PROSPECTUS...........................
SUMMARY
Parties to the Merger.............................
Reasons for the Merger............................
Recommendation of the Packers Board...............
Approval of the Merger............................
The Merger........................................
Comparative Per Common Share Data.................
Selected Historical Financial Information.........
Share Prices and Dividends for
Norwest Common Stock.............................
SPECIAL MEETING OF SHAREHOLDERS.....................
Record Date.......................................
Voting Rights; Votes Required for Approval........
Voting and Revocation of Proxies..................
Solicitation of Proxies...........................
Other Matters.....................................
THE MERGER..........................................
Purpose and Effect of the Merger..................
Background of and Reasons for the Merger..........
Additional Interests of Packers Management
in the Merger....................................
Appraisal Rights..................................
Exchange of Certificates..........................
Regulatory Approvals..............................
Effect on Packers Employee Benefit Plans..........
Certain U.S. Federal Income Tax Consequences......
Resale of Norwest Common Stock....................
Stock Exchange Listing............................
Accounting Treatment..............................
THE REORGANIZATION AGREEMENT........................
Basic Plan of Reorganization......................
Representations and Warranties....................
Certain Covenants.................................
Conditions to the Completion of the Merger........
Termination of the Reorganization Agreement.......
Effect of Termination.............................
Waiver and Amendment..............................
Expenses..........................................
COMPARISON OF RIGHTS OF PACKERS COMMON
STOCK AND NORWEST COMMON STOCK
Capital Stock.....................................
Rights Plan.......................................
Directors.........................................
Amendment of Charter Documents and Bylaws.........
Approval of Mergers and Asset Sales...............
Appraisal Rights..................................
Special Meetings..................................
Directors Duties..................................
Action Without a Meeting..........................
Limitation of Director Liability..................
Indemnification of Officers and Directors.........
Dividends.........................................
Corporate Governance Procedures;
Nomination of Directors..........................
INFORMATION ABOUT PACKERS...........................
General...........................................
Regulation and Supervision........................
Properties........................................
Competition.......................................
Legal Proceedings.................................
Principal Shareholders and Security...............
Ownership of Packers..............................
Market Information and Dividends..................
Management of Packers.............................
PACKERS MANAGEMENT'S DISCUSSION AND
ANALYSIS OF PACKERS' FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...........................
General...........................................
Six Months Ended June 30, 1997 and 1996...........
Years Ended December 31, 1996 and 1995............
CERTAIN REGULATORY AND OTHER
CONSIDERATIONS PERTAINING TO NORWEST................
Bank Regulatory Agencies..........................
Bank Holding Company Activities; Interstate
Banking..........................................
Dividend Restrictions.............................
Holding Company Structure.........................
Regulatory Capital Standards and Related Matters..
FDIC Insurance....................................
Fiscal and Monetary Policies......................
Competition.......................................
EXPERTS.............................................
LEGAL MATTERS.......................................
INFORMATION CONCERNING NORWEST MANAGEMENT...........
WHERE YOU CAN FIND MORE INFORMATION.................
PACKERS FINANCIAL STATEMENTS........................
APPENDIX A AGREEMENT AND PLAN OF
REORGANIZATION
APPENDIX B AGREEMENT AND PLAN OF
MERGER
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders of Packers Management Company, Inc. will be
held on November __, 1997 at 10:00 a.m. at 2710 South 140th Street, Omaha,
Nebraska. The purpose of the meeting is to vote on a proposal to approve the
Agreement and Plan of Reorganization between Packers 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
Packers, and for Packers to be the surviving company. If the merger is
completed, Packers will become a wholly-owned subsidiary of Norwest and Packers
shareholders will receive shares of Norwest common stock for their shares of
Packers common stock.
The record date for the special meeting is ________, 1997. Only shareholders
of record at the close of business on that date can vote at the meeting.
Pennie Z. Davis
Corporate Secretary
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C>
ADJUSTED NORWEST SHARES................ the number equal to (a) 1,158,000 plus (b) the number of shares of
Norwest Common Stock equal to (i) the aggregate amount which would
have been received as cash dividends by the holders of 1,158,000
shares of Norwest Common Stock between the date of the Reorganization
Agreement and the date the Merger is completed, divided by (ii) $26.25.
BANK................................... Packers Bank, a wholly-owned subsidiary of Packers.
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.
IRS.................................... Internal Revenue Service
INTERSTATE BANKING ACT................. Reigle-Neal Interstate Banking and Branching Act.
MERGER................................. the merger of Packers with PMC Merger Co., as a result of which
Packers will become a wholly-owned subsidiary of Norwest.
NBCA................................... Nebraska Business Corporation Act.
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.
OCC.................................... Office of the Comptroller of the Currency.
PMC MERGER CO.......................... a wholly-owned subsidiary of Norwest incorporated for the limited
purpose of merging with Packers.
PACKERS................................ Packers Management Company, Inc. and its consolidated subsidiary,
Packers Bank.
PACKERS ARTICLES....................... Packers' articles of incorporation.
PACKERS BOARD.......................... Packers' board of directors.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PACKERS BYLAWS......................... Packers' bylaws.
PACKERS COMMON STOCK................... Packers' common stock, par value $100 per share.
PLAN OF MERGER......................... the Agreement and Plan of Merger between Packers and PMC Merger Co.
REORGANIZATION AGREEMENT............... the Agreement and Plan of Reorganization dated May 2, 1997 between
Packers and Norwest.
SEC.................................... Securities and Exchange Commission.
SECURITIES ACT......................... Securities Act of 1933.
</TABLE>
3
<PAGE>
WHAT "INCORPORATED BY REFERENCE" MEANS
Incorporation by reference is a concept that allows Norwest not to
physically 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 indicates 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 declared a two-for-one stock 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 shares 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 SHARES 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
<PAGE>
PROXY STATEMENT-PROSPECTUS
This document serves as both a proxy statement of Packers and a prospectus
of Norwest. As a proxy statement, it is being provided to you because the
Packers 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 Packers
Common Stock.
At the special meeting, Packers 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 Packers with a newly-formed, wholly-owned
subsidiary of Norwest. Packers will be the surviving company in the Merger. If
the Merger is completed, Packers will become a wholly-owned subsidiary of
Norwest and Packers shareholders will receive shares of Norwest Common Stock for
their shares of Packers 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. Packers 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 Packers Common Stock, you should be
aware that:
- - 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 __, 1997.
It is first being mailed to Packers shareholders on or about October __, 1997.
5
<PAGE>
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."
<TABLE>
<CAPTION>
<S> <C>
PARTIES TO THE MERGER
NORWEST CORPORATION......................... Norwest is a diversified financial services company organized
Sixth and Marquette under the laws of Delaware and registered under the Bank Holding
Minneapolis, Minnesota 55479 Company Act. Through its subsidiaries and affiliates, Norwest
(612) 667-1234 provides retail, commercial and corporate 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 bank holding company in the United
States.
PACKERS MANAGEMENT COMPANY, INC............. Packers is a one bank holding company headquartered in Omaha,
4710 South 23rd Street Nebraska which derives substantially all of its revenues and
Omaha, Nebraska 68107 income from the operation of its wholly-owned subsidiary, Packers
(402) 731-4900 Bank. The Bank is a full service, independent community bank
that provides a full range of commercial banking services.
At June 30, 1997, Packers had consolidated total assets of $167.3
million, total deposits of $146.1 million and total stockholders'
equity of $18.6 million.
REASONS FOR THE MERGER........................ In reaching its determination to enter into the Reorganization
Agreement, the Packers Board considered a number of factors,
including but not limited to the following: (1) the current and
prospective economic environment and competitive constraints
facing independent community banks such as the Bank; (2) the
Packers Board's view of reasonably available alternatives for the
shareholders; (3) the increased liquidity and diversification of
risk that the Merger would provide to Packers shareholders; and
(4) the Packers Board's view that the consideration to be
received by Packers shareholders pursuant to the Reorganization
Agreement was the highest price reasonably obtainable.
RECOMMENDATION OF THE PACKERS BOARD........... The Packers Board has approved the Merger as being in the best
interests of Packers shareholders and recommends that Packers
shareholders approve the Merger at the special meeting.
APPROVAL OF THE MERGER........................ The affirmative vote of at least two-thirds of the shares of
Packers
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Common Stock outstanding is required to approve the
Merger. Packers' directors and executive officers, together with
their respective affiliates, own approximately 55.6% of the
outstanding shares of Packers Common Stock. These individuals
have informed Packers 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 Packers. Packers will be the surviving
company. If the Merger is completed, Packers will become a
wholly-owned subsidiary of Norwest and Packers shareholders will
receive shares of Norwest Common Stock for their shares of
Packers Common Stock.
The Merger will be governed by the Reorganization Agreement and
the Plan of Merger. You are encouraged to read both of these
documents carefully.
What Packers Shareholders
Will Receive (see page __).................. In the Merger, Norwest will exchange shares of Norwest Common
Stock for shares of Packers Common Stock based on an exchange
ratio. The exchange ratio will be determined under a formula set
forth in the Reorganization Agreement. The formula has two
variables: (1) the number of shares of Packers Common Stock
outstanding immediately before the Merger is completed and (2)
the amount of cash dividends paid on Norwest Common Stock between
the date of the Reorganization Agreement and the date the Merger
is completed.
If calculated as of the date of this Proxy Statement-Prospectus,
the exchange ratio would be 3.32395. This means that
shareholders would receive 3.32395 shares of Norwest Common Stock
for each share of Packers Common Stock. Because the
Reorganization Agreement restricts Packers' ability to issue and
repurchase Packers Common Stock, the only variable that could
cause the actual exchange ratio to differ from 3.32395 is the
future payment of dividends on Norwest Common Stock. If the
Merger is completed before Norwest next pays cash dividends, the
actual exchange ratio will be 3.32395. If Norwest pays dividends
before the Merger is completed, the exchange ratio will be
increased from 3.32395 in accordance with the formula. Norwest
does not expect to pay cash dividends before December 1, 1997.
Board of Directors and Management of
Packers After the Merger (see page ___) When the Merger is complete, Norwest will own all of the
outstanding shares of Packers Common Stock. As a result, Norwest
will be able to elect or appoint all of the directors and
officers of Packers.
Other Interests of Packers'
Management (see page ___)................... After completion of the Merger, James Riha, currently president
of the Bank, will become a full-time employee of Norwest.
Norwest
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
will pay Mr. Riha annual base compensation of $75,300,
plus $1,000 per month until the Bank is converted to Norwest's
business systems. The term of his employment ends December 31,
1999.
Conditions to the Merger (see page__)....... 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 Packers.
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.
Regulatory Approvals (see page ___)......... Completion of the Merger is also conditional on approval of the
Merger by the Federal Reserve Board and the Nebraska Department
of Banking and Finance. The Federal Reserve Board approved the
Merger on September 5, 1997. The Nebraska Department of Banking
and Finance has not yet issued its decision.
Termination of the Reorganization
Agreement (see page __)..................... Norwest and Packers can agree to terminate the Reorganization
Agreement without completing the Merger. Also, either party can
terminate the Reorganization Agreement before completion of the
Merger under various circumstances, including:
- if a court or other governmental authority prohibits the
Merger; or
- if the Merger is not completed by December 31, 1997, unless
the failure of the Merger to occur on or before that date is the
fault of the party seeking to terminate.
Accounting Treatment (see page __).......... Norwest expects to account for the Merger using the purchase
method of accounting. Under the purchase method, Norwest will
record, at fair value, the acquired assets and assumed
liabilities of Packers.. To the extent the total purchase price
exceeds the fair value of assets acquired and liabilities
assumed, Norwest will record goodwill. Norwest will include in
its consolidated results of operations the results of Packers'
operations after the Merger is completed.
APPRAISAL RIGHTS (SEE PAGE __) RIGHTS Under Section 21-20,138 (3) of the NBCA, shareholders of a bank
(SEE PAGE __).............................. or a bank holding company do not have statutory dissenters'
appraisal rights. As a result, Packers shareholders who object
to the Merger are not entitled to exercise dissenters' appraisal
rights.
U.S. Federal Income Tax
Consequences (see page ___)................. The Merger has been structured so that Packers 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
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Packers of a legal opinion to this effect.
Market Information (see page ___)........... Norwest Common Stock is listed on the New York Stock Exchange and
the Chicago Stock Exchange under the symbol NOB. On May 1, 1997,
the last full trading day before public announcement of the
Merger, Norwest Common Stock closed at $25.5625 per share, as
adjusted to reflect the two-for-one split of Norwest Common Stock
effected October 10, 1997. On ____________, 1997, Norwest Common
Stock closed at $___ per share.
There is no public market for Packers Common Stock.
</TABLE>
9
<PAGE>
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
Packers Common Stock on a historical and pro forma equivalent basis. The pro
forma data in the table assumes the Merger is accounted for using the purchase
method of accounting. See "The Merger--Accounting Treatment." The historical
information should be read in conjunction with (a) the selected consolidated
financial data for Norwest and Packers (and related notes) appearing elsewhere
in this Proxy Statement-Prospectus, (b) the complete consolidated financial
statements of Packers 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 the exchange ratio will be 3.32395
shares of Norwest Common Stock for each share of Packers Common Stock. Based on
352,362 shares of Packers Common Stock outstanding, this would be the exchange
ratio if the Merger is completed before Norwest next pays cash dividends on
Norwest Common Stock, which Norwest anticipates will not be before December 1,
1997. Based on this exchange ratio, Norwest will issue a total of approximately
1,171,234 shares of Norwest Common Stock in the Merger.
The assumed exchange ratio of 3.32395 reflects the two-for-one Norwest Common
Stock split distributed on October 10, 1997. The Norwest historical financial
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.
<TABLE>
<CAPTION>
Norwest Common Stock Packers 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 52.71 28.09
December 31, 1996 7.97 7.98 46.10 26.53
DIVIDENDS DECLARED (2):
Six Months Ended June 30, 1997 0.300 0.300 -- 0.997
Year Ended December 31, 1996 0.525 0.525 -- 1.745
NET INCOME (3):
Six Months Ended June 30, 1997 0.85 0.85 2.85 2.83
Year Ended December 31, 1996 1.54 1.54 2.95 5.12
</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 Packers divided by total pro forma common shares of the combined
entities. The pro forma equivalent book value per share of Packers Common
Stock represents the pro forma combined book value per share of Norwest
Common Stock multiplied by the assumed exchange ratio of 3.32395.
(2) Assumes no changes in cash dividends per share by Norwest. The pro forma
equivalent dividends per share of Packers Common Stock represent cash
dividends declared per share of Norwest Common Stock multiplied by the
assumed exchange ratio of 3.32395.
(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 Packers divided by the average pro forma common and common
equivalent shares of the combined entities. The pro forma equivalent net
income per share of Packers Common Stock represents the pro forma combined
net income per share multiplied by the assumed exchange ratio of 3.32395.
10
<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 Packers 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 Packers for the years ended December 31,
1996 and 1995 have been audited; those for the interim periods have not been
audited. The unaudited financial information reflects, in the respective
opinion of Norwest's and Packers' 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 information for Norwest has been restated to reflect the two-for-one
Norwest Common Stock split distributed on October 10, 1997. See "Explanatory
Note Regarding Norwest Common Stock Split."
continued on the following two pages
11
<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............... $ 0.30 0.255 0.525 0.450 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.
12
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
Packers Management Company, Inc. and Subsidiary
<TABLE>
<CAPTION>
Six Months Ended
June 30 Years Ended December 31
-----------------------------------------------
1997 1996 1996 1995
----------- --------- ----------- ----------
(In thousands except per share amounts)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income................................... $ 6,098.0 5,189.0 10,614.5 9,917.2
Interest expense.................................. 2,337.0 1,848.0 3,895.5 3,712.7
---------- --------- --------- ---------
Net interest income.............................. 3,761.0 3,341.0 6,719.0 6,204.5
Provision for credit losses....................... 240.0 270.0 520.2 185.7
Non-interest income............................... 823.0 651.0 1,706.0 1,229.5
Non-interest expense.............................. 2,867.0 2,864.0 6,309.8 5,391.7
---------- --------- --------- ---------
Income before income taxes....................... 1,477.0 858.0 1,595.0 1,856.6
Income tax expense 472.0 241.0 475.2 437.9
---------- --------- --------- ---------
Net income $ 1,005.0 617.0 1,119.8 1,418.7
========== ========= ========= =========
BALANCE SHEET DATA
At Period End:
Total Assets..................................... $167,301.0 146,793.0 161,770.1 146,223.1
Liabilities...................................... 148,728.0 130,192.0 144,330.8 130,120.8
Total stockholders' equity....................... 18,573.0 16,601.0 17,439.3 16,102.3
</TABLE>
13
<PAGE>
SHARE PRICES AND DIVIDENDS FOR NORWEST COMMON STOCK
The following table sets forth the high and low sales prices per share of the
Norwest Common Stock, and the cash dividends paid on Norwest Common Stock, for
the quarterly periods indicated, 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 Packers Common Stock. Norwest has historically paid dividends
on the first day of March, June, September and December.
<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 16.0000 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
(through October __, 1997)
</TABLE>
14
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
Packers 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 Packers will be asked
to approve the Merger.
RECORD DATE
Packers has established_______________, 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 352,362 shares of Packers Common Stock
outstanding and entitled to vote at the special meeting. The holders of Packers
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 Packers
Common Stock. The directors and executive officers of Packers, together with
their respective affiliates, beneficially owned on the record date a total of
195,763 shares, or approximately 55.6% of the outstanding shares of Packers
Common Stock. Those individuals have informed Packers that they intend to vote
for the Merger.
VOTING AND REVOCATION OF PROXIES
All shares of Packers 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 Packers 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 Packers 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
Packers may solicit proxies from Packers 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
15
<PAGE>
custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their reasonable expenses incurred in sending
proxy material to beneficial owners. Packers 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 Packers 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 Packers 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
Packers.
16
<PAGE>
THE MERGER
PURPOSE AND EFFECT OF THE MERGER
Norwest is using the Merger to acquire Packers. The effect of the Merger
will be that Packers will become a wholly-owned subsidiary of Norwest and
shareholders of Packers will receive shares of Norwest Common Stock for their
shares of Packers Common Stock. Norwest will own all of the outstanding shares
of Packers Common Stock. Shareholders of Packers will become stockholders of
Norwest, and their rights will be governed by the Norwest Certificate and
Norwest Bylaws rather than the Packers Articles and Packers Bylaws. See
"COMPARISON OF RIGHTS OF PACKERS COMMON STOCK AND NORWEST COMMON STOCK."
BACKGROUND OF AND REASONS FOR THE MERGER
Since the early 1990s, Packers' management has monitored developments in
bank acquisitions in Nebraska, along with the developments in the banking
industry generally. During this time, members of the Packers Board became
concerned that industry trends towards competition, consolidation, and the
increased use of technology could combine to erode Packers' customer base. In
1996, a representative of Norwest's then existing operation in Nebraska
contacted management of Packers, stating that Norwest had an interest in
establishing a presence in the market served by the Bank and inquiring whether
Packers had any interest in being acquired by Norwest. The inquiry confirmed
that competition from larger financial institutions utilizing increasingly
sophisticated technology would be a factor in the future in Packers' markets.
Subsequent to the initial inquiry by Norwest, Packers continued to monitor
bank acquisition activity in Nebraska, identifying and investigating in an
informal way the institutions that served Nebraska. At the same time, Packers
continued to observe anecdotal evidence of the increasing competition in the
banking industry and the need for significant investments in technology to
provide the products and services necessary to obtain and retain customers.
Based on its informal investigations, senior management of Packers had formed
the belief that a stock for stock transaction with Norwest afforded the best
opportunity for the Packers shareholders. If a satisfactory arrangement could
be negotiated with Norwest, Packers believed that it would be in the best
interest of its shareholders to manage the acquisition process affirmatively,
rather than to wait for an offer from another acquiror.
The acquisition process proceeded deliberately and while it was ongoing,
Packers considered whether approaching other potential acquirors would reduce
the time necessary to complete a transaction and result in a comparable value to
shareholders. After considering the other institutions active in Nebraska,
including transactions completed by these parties and the price and liquidity of
their common equity securities, Packers concluded that a transaction with
Norwest, if it could be completed, would be preferable to a transaction with
other potential acquirors. Accordingly, Packers determined to continue
negotiations with Norwest.
Following further negotiations, Norwest representatives tendered a proposal
to acquire Packers in exchange for shares of Norwest Common Stock. Following
the offer, discussions and redrafts of proposed agreements occurred resulting in
the Reorganization Agreement which was executed in May of 1997.
In reaching its decision to approve the terms of the Reorganization
Agreement, the Packers Board considered a number of factors, including, without
limitation, the following:
1. The familiarity of the Packers Board with Packers' business, operations,
financial condition, earnings, and prospects and its investigation
(directly and through its advisors) of similar matters concerning
Norwest.
2. The current and prospective economic environment and competitive
constraints facing Packers, including specifically the products and
services which larger competitors could offer to customers and the need
for substantial investment by Packers in technology to compete with such
competitors.
17
<PAGE>
3. The limited alternatives available to Packers and the relation of the
price to be received by the Packers shareholders in the Merger to the
Packers Board's view of the value of these limited alternatives, as well
as the timing and likelihood of actually receiving, and the risks
associated with pursuing, such alternatives.
4. The expectation that the receipt of Norwest Common Stock generally will
be a tax-free transaction to the Packers shareholders, allowing them to
defer the recognition of gain.
5. The Packers Board's evaluation of the risks to the consummation of the
Merger, including the risks associated with obtaining all necessary
regulatory approvals without the imposition of terms or conditions which
would fail to satisfy the conditions of the consummation of the Merger.
6. The increased liquidity that Norwest Common Stock would provide to
current Packers shareholders.
In its deliberation, the Packers Board did not assign any specific weights to
these or any other factors.
Based on the foregoing and other factors, the Packers Board concluded
that the Merger is in the best interest of Packers and its shareholders.
Accordingly, the Packers Board unanimously recommends that the shareholders vote
in favor of the approval of the Reorganization Agreement and the Plan of
Merger.
ADDITIONAL INTERESTS OF PACKERS MANAGEMENT IN THE MERGER
James Riha, currently president of the Bank, has entered into an
employment agreement with Norwest. Under the terms of his employment agreement,
Mr. Riha will become a full-time employee of Norwest following completion of the
Merger. Norwest will pay Mr. Riha annual base compensation of $75,300, plus
$1,000 per month until the Bank is converted to Norwest's business systems. Mr.
Riha will also be eligible for additional compensation based on the achievement
of specific objectives. The term of his employment agreement ends December 31,
1999.
APPRAISAL RIGHTS
Under the NBCA, Section 21-20,138 (3), shareholders of a bank or a bank
holding company do not have statutory dissenters' appraisal rights. As a
result, Packers shareholders who object to the Merger are not entitled to
exercise dissenters' appraisal rights.
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 Packers 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.
PACKERS 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 Packers 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
18
<PAGE>
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 Packers 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 Packers. If, after completion of the Merger, certificates for Packers 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, Packers, the exchange agent or any other person will be
liable to any former holder of Packers Common Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
REGULATORY APPROVALS
The Merger is subject to the prior approval of the Federal Reserve Board.
The Merger is also subject to the approval of the Nebraska Department of Banking
and Finance. The approval of the Federal Reserve Board is required because
Norwest is a bank holding company registered under the Bank Holding Company Act.
The approval of the Nebraska Department of Banking and Finance is required
because the Bank is state bank chartered under the laws of Nebraska.
The Federal Reserve Board approved the Merger on September 5, 1997. The
Nebraska Department of Banking and Finance has not yet issued its decision.
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 or the Nebraska Department of Banking and Finance has determined
that the consideration to be received by Packers shareholders is fair.
Regulatory approval does not constitute an endorsement or recommendation of the
Merger.
Norwest and Packers 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 Packers 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
MERGER--Conditions to Completion of the Merger" and "--Termination of the
Reorganization Agreement."
19
<PAGE>
EFFECT ON EMPLOYEE BENEFIT PLANS
The Reorganization Agreement provides that, subject to any eligibility
requirements applicable to such plans, employees of Packers will be entitled to
participate in those Norwest employee benefit and welfare plans specified in the
Reorganization Agreement. Eligible employees of Packers 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 PACKERS
SHAREHOLDERS
The following is a summary of the anticipated U.S. federal income tax
consequences of the Merger to Packers 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 Packers shareholders
are as follows:
- A shareholder who receives shares of Norwest Common Stock in exchange
for shares of Packers 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 Packers
Common Stock exchanged in the Merger, less any cash received in lieu of
fractional shares.
- 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 Packers Common Stock exchanged in the Merger, but only if the shares
of Packers Common Stock were held as a capital asset at the time the
Merger is completed.
Packers is not required to complete the Merger unless it receives an opinion
of its counsel or accountant 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 or the accountant'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. Nor is there is any assurance 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 Packers shareholders who
are considered to be "affiliates" of Packers 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.
20
<PAGE>
Affiliates of Packers 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.
Packers has agreed to use its best efforts to deliver to Norwest signed
representations by each person who may be deemed to be an affiliate of Packers
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 Packers.
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
Norwest will account for its acquisition of Packers using the purchase
method of accounting. Under this method, Norwest will record, at fair value,
the acquired assets and assumed liabilities of Packers. To the extent the total
purchase price exceeds the fair value of assets acquired and liabilities
assumed, Norwest will record goodwill. Norwest will include in its results of
operations the consolidated results of Packers' operations after the Merger is
completed.
The unaudited pro forma data included in this Proxy Statement-Prospectus for
the Consolidation have been prepared using the purchase method of accounting.
See "SUMMARY--Comparative Per Common Share Data."
21
<PAGE>
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. Packers 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, PMC Merger Co. will be
merged by statutory merger with Packers. Packers will be the surviving company.
Shares of Packers Common Stock outstanding immediately before the Merger will be
exchanged for shares of Norwest Common Stock. When the Merger is complete,
Packers shareholders will own Norwest Common Stock and Norwest will own all of
the outstanding shares of Packers Common Stock. (paragraph 1(a))
Consideration.
Norwest Common Stock. As part of the Merger, each share of Packers Common
Stock will be converted into and exchanged for the number of shares of Norwest
Common Stock determined by dividing the Adjusted Norwest Shares by the number of
shares of Packers Common Stock then outstanding. The "Adjusted Norwest Shares"
is the number equal to (a) 1,158,000, plus (b) the number of shares of Norwest
Common Stock equal to (i) the aggregate amount that would have been received as
cash dividends by the holders of 1,158,000 shares of Norwest Common Stock
between the date of the Reorganization Agreement and the date the Merger is
completed, divided by (ii) $26.25.
There are 352,362 shares of Packers Common Stock currently outstanding, and
Packers is restricted from issuing or repurchasing shares before completion of
the Merger. Since May 2, 1997, the date of the Reorganization Agreement,
Norwest has paid cash dividends of $0.15 per share twice, on June 1, 1997 and
September 1, 1997. As a result, if calculated as of the date of this Proxy
Statement-Prospectus, the exchange ratio would be 3.32395, determined as
follows:
<TABLE>
<CAPTION>
<S> <C>
Adjusted Norwest Shares = 1,158,000 + [(1,158,000 times $0.15 times 2)) divided by $26.25]
= 1,158,000 + ($347,400 divided by $26.25)
= 1,158,000 + 13,234
= 1,171,234
Number of shares of Packers Common Stock outstanding = 352, 362
Exchange Ratio = 1,171,234 divided by 352,362
= 3.32395
=======
</TABLE>
The only variable that could cause the actual exchange ratio to differ from
3.32395 is the future payment of cash dividends on Norwest Common Stock.
Norwest does not expect to pay dividends before December 1, 1997.
EXCEPT AS ADJUSTED TO REFLECT CASH DIVIDENDS PAID ON NORWEST COMMON STOCK, THE
EXCHANGE RATIO IS FIXED. AS A RESULT, A CHANGE IN THE MARKET PRICE OF NORWEST
COMMON STOCK BEFORE THE MERGER IS COMPLETED WILL AFFECT THE MARKET VALUE OF THE
NORWEST COMMON STOCK TO BE RECEIVED IN THE MERGER IN EXCHANGE FOR YOUR PACKERS
COMMON STOCK. NEITHER NORWEST NOR PACKERS CAN MAKE ANY ASSURANCES OR GUARANTEES
AS TO THE MARKET
22
<PAGE>
PRICE OF NORWEST COMMON STOCK BEFORE OR AFTER THE MERGER IS COMPLETED. YOU ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR NORWEST COMMON STOCK.
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 the meeting of the
shareholders. (paragraph 1(c))
Completion. Norwest and Packers expect the Merger to be completed promptly
after approval of the Merger by Packers 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 Packers 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 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 Packers, the Bank, and Norwest pending completion of the
Merger. Some of the more important covenants are summarized below.
Conduct of Business.
Packers. Packers has agreed that Packers 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, Packers and the Bank are each required to obtain the consent of
Norwest before they make any new loan or modify, restructure or renew any
existing loan if the amount of the resulting loan, when combined with all other
loans to the customer, would exceed $250,000. The Reorganization Agreement
places restrictions on the ability of Packers 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. Packers has agreed that neither it nor the Bank will
directly or indirectly solicit, authorize the solicitation of, or enter into any
discussions with, any third party concerning any offer or possible offer to (a)
purchase the common stock of Packers or the Bank, any security convertible into
the common stock of Packers or the Bank, or any other equity security of Packers
or the Bank (b) make a tender or exchange offer for any shares of the common
stock or other equity security of Packers or the Bank, (c) purchase, lease or
otherwise
23
<PAGE>
acquire the assets of Packers or the Bank except in the ordinary course of
business or (d) merge, consolidate or otherwise combine with Packers or the
Bank. (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, Packers has agreed to (a)
establish such additional accruals and reserves as are 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 Packers' 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 Packers who may reasonably be deemed an "affiliate" of Packers
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."
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 and regulatory approval and the receipt by Packers of a favorable
tax opinion. The obligations of the parties 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 Packers. Each of these last three conditions is subject to a
"materiality" standard. Certain conditions to the Merger may be waived by the
party seeking to assert the condition. (paragraphs 6 and 7)
TERMINATION OF THE REORGANIZATION AGREEMENT
Termination by Mutual Consent. Norwest and Packers can agree to terminate
the Reorganization Agreement at any time before completion of the Merger.
(paragraph 9(a)(i))
Termination by Either Norwest or Packers. Either Norwest or Packers can
terminate the Reorganization Agreement if any of the following occurs:
- The Merger has not become effective by December 31, 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 9(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
9(a)(iii))
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 9(b))
24
<PAGE>
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
16)
Norwest and Packers 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 has been
approved by Packers shareholders if the amendment would change in a manner
adverse to the shareholders the consideration to be received by the shareholders
in the Merger. (paragraph 17)
EXPENSES
Norwest and Packers will each pay their own expenses in connection with the
Merger, including fees and expenses of their respective independent auditors and
counsel. (paragraph 10)
25
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF PACKERS
COMMON STOCK AND NORWEST COMMON STOCK
Packers is a bank holding company incorporated under the laws of the state
of Nebraska. The rights of Packers shareholders are governed by the NBCA, the
Packers Articles and the Packers Bylaws. Norwest is incorporated under the laws
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, Packers 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 NBCA and the
DGCL, as well as differences between the Packers Articles and Packers 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 April
30, 1996 and filed with the SEC on May 1, 1996. 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. These numbers have not been
adjusted to reflect Norwest Common Stock split. See "Explanatory Note Regarding
Norwest Common Stock Split."
Packers. Packers Articles authorize the issuance of 500,000 shares of
Packers Common Stock. As of the date of this Proxy Statement-Prospectus, there
are 352,362 shares of Packers 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.
Packers. The Packers Articles authorize the issuance of 500,000 shares of
common stock, having a par value of $10.00 per share and 5,000 shares of
preferred stock having a par value of $100.00 per share. As of the record date,
352,362 shares of Packers Common Stock were issued and outstanding and no shares
of preferred stock were issued and outstanding. Since no shares of preferred
stock are issued or outstanding by Packers, as of the date of this Proxy
Statement-Prospectus, no class or series has any preference over Packers
Common Stock with respect to dividends and distributions upon the liquidation
of Packers.
26
<PAGE>
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. 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.
Packers. The Packers Bylaws provide for a board of directors consisting of
not less than 3 members. The actual number is determined by the shareholders at
the annual meeting of shareholders or any special meeting of shareholders. Each
director holds office until the next annual meeting of shareholders and until
his or her successor shall have been elected and qualified. Vacancies on the
board of directors may be filled by an affirmative vote of a majority of the
remaining directors, though less than a quorum, and the person so elected serves
the unexpired term of his or her predecessor. The Packers Bylaws provide that
each director shall be elected by cumulative voting.
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.
Packers. The Packers Articles can be amended with a two-thirds vote of the
shareholders and for specific matters as set forth in Nebraska statutes by an
affirmative vote of the majority of the members of the Packers Board. The
Packers Bylaws may be amended by the Packers Board or shareholders in accordance
with Nebraska corporate statutes.
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.
Packers. In addition to being subject to the laws in Nebraska, Packers, as
a bank holding company, is subject to various provisions of federal law with
respect to mergers, consolidations and certain other corporate transactions.
The affirmative vote of two-thirds of the outstanding shares of Packers
Common Stock entitled to vote thereon is required to approve a merger or
consolidation involving Packers, the sale, lease, exchange or other disposition
of all or substantially all of Packers' assets outside the normal course of
business or the voluntary
27
<PAGE>
dissolution of Packers. Approval of a merger or sale of assets transaction by
the shareholders at a meeting thereof requires that notice be given in the
manner provided in the Nebraska statutes and in the Packers Bylaws, not less
than 10 or more than 50 days before the date of the meeting if such meeting is
a special meeting.
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.
Packers. Under Nebraska corporate law, Packers shareholders do not have
right to dissent from consummation of a plan of merger to which Packers is a
party or to obtain payment under the Nebraska Statutory Corporate Dissenters'
Rights statutes.
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.
Packers. Under Nebraska statutes and the Packers Bylaws, special meetings
of shareholders may be called by the president or by the board of directors and
shall be called by the president at the request of the holders of not less than
one-third of all of the outstanding shares of Packers entitled to vote at the
meeting. A special meeting may also be called if holders of at least 10% of all
of the votes entitled to be cast on any issue proposed to be considered at a
special meeting of shareholders, sign, date and deliver to Packers' secretary
one or more written demands for the meeting describing the purpose or purposes
for which it is to be held. A district court in the State of Nebraska may also
order a special meeting of shareholders upon certain statutory criteria.
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.
Packers. Under Nebraska statutes, all corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
such as Packers shall be managed under the direction of, the board of directors
subject to any limitations set forth in the articles of incorporation. In
addition, Nebraska statutes provide that a director shall discharge his or her
duties in good faith, with the care an ordinarily prudent person in a like
position, and in a manner that the director believes to be in the best interests
of the corporation.
28
<PAGE>
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.
Packers. Under Nebraska statutes, any action required or permitted to be
taken at a meeting of the Packers Board or shareholders of Packers may be taken
without a meeting if a consent in writing, setting forth the action so taken is
signed by all members of the Packers Board or all of the shareholders entitled
to vote with respect to the subject matter thereof, as the case may be.
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.
Packers. Nebraska statutes do not contain any provisions limiting or
eliminating the liability of the directors of a Nebraska corporation for
monetary damages for breach by a director of his or her fiduciary duty as a
director though they do provide for indemnification by the corporation to the
directors under certain circumstances.
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, 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.
Packers. Under Nebraska statutes, a director and officer of Packers shall
be indemnified by Packers when the director was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he or she
29
<PAGE>
was a party because he or she was a director or officer of Packers, against
reasonable expenses incurred by him or her in connection with the proceeding.
Additionally, Packers may indemnify a director or officer who is a party to a
proceeding because he or she was a director or officer against liability
incurred in the proceeding if a director or officer conducted himself or
herself in good faith; and he or she reasonably believed his or her conduct in
their official capacity was in the best interest of the corporation and in all
other cases that his or her conduct was at least not opposed to the best
interests of the corporation and in the case of criminal proceedings that he
or she had no reasonable cause to believe the conduct was unlawful.
No indemnification is available where the officer or director is adjudged
liable to Packers or where the officer or director has been adjudged liable on
the basis that he or she improperly received a financial benefit to which he or
she was not entitled.
A court of appropriate jurisdiction, upon application of the director or
officer may order indemnification if the court determines that the director or
officer has been wholly successful in the defense of a proceeding or if the
court determines that the director is fairly and reasonably entitled to
indemnification in view of all of the relevant circumstances, whether or not the
director or officer has met the statutory standards of conduct or has been
liable for receiving an improper personal benefit.
The Packers Bylaws and Packers Articles do not provide any separate rights
for indemnification for directors or officers.
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."
Packers. Under Nebraska statutes, the Packers Board may authorize and
Packers may pay dividends to its shareholders, provided that no such
distribution of dividends may be made if, after giving effect thereto, either
(i) Packers would be unable to pay its debts as they become due in the usual
course of business; or (ii) Packers' total assets would be less than the sum of
its total liabilities plus the amount that would be needed in any liquidation,
in respect of all shares having liquidation preference.
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.
Packers. Unlike the Norwest Bylaws, the Packers Bylaws do not contain any
advance notice requirements or other information procedures to be followed in
order to nominate a person to serve as a director or to propose an item of
business for consideration in meeting of Packers shareholders. The only
requirements is that such information be contained in the notices sent for the
shareholders meeting or special meeting of directors.
30
<PAGE>
INFORMATION ABOUT PACKERS
GENERAL
Packers is a one-bank holding company registered under the Bank Holding
Company Act. Packers was incorporated and organized as a Nebraska business
corporation in 1968. Packers' executive offices are located at 4710 South 23
Street, Omaha, Nebraska, 68107, and its telephone number at that address is
(402) 731-4900.
The Bank was originally incorporated in 1891 and is chartered by the State
of Nebraska. Its principal place of business is located in South Omaha at 4710
South 23 Street, Omaha, Nebraska 68107. It has three additional full-service
offices in Omaha located at 5106 "L" Street, 5005 Underwood Avenue, and 2710
South 140 Street. The latter two offices were added as a result of the Bank's
merger with Nebraska National Bank in 1993. The Bank also operates a mobile
office for commercial customers.
The Bank's market area is located primarily within Douglas County and, to a
lesser extent, Sarpy County. Total assets of the Bank at December 31, 1996 were
$161.8 million. The Bank is a full service, independent community bank which
provides a full range of commercial banking services including traditional
deposit services, as well as commercial, consumer and real estate loans.
REGULATION AND SUPERVISION
As a bank holding company, Packers is subject to regulation by and files
quarterly reports with the Federal Reserve Board. The Federal Reserve Board is
authorized to conduct examinations of Packers and any of its subsidiaries. The
Federal Reserve Board may also exercise cease and desist powers over bank
holding companies and their nonbank affiliates if their actions represent unsafe
and unsound practices or violations of law.
The Bank and its operations are affected by various restrictions and
requirements under the laws of the United States and the State of Nebraska.
Under these generally applicable federal and state restrictions and
requirements, the Bank must maintain reserves against deposits and is restricted
with respect to the nature and amount of loans which it may make, the interest
rate that it may charge on those loans and the conditions under which it may pay
dividends on its capital stock.
PROPERTIES
Packers conducts its operations in the Bank's principal offices located at
4710 South 23 Street, Omaha, Nebraska 68107. The principal asset of Packers is
the common stock of the Bank. As a bank holding company, Packers conducts its
operations through its subsidiary, the Bank.
The Bank owns its principal executives offices and main banking facility in
Omaha as well as its offices at 5106 "L" Street and 2710 South 140 Street. It
leases its office at 5005 Underwood Avenue under a five-year lease expiring in
the year 2000 and also has annual leases with the City of Omaha for parking at
its South 23 Street office and with Convenience Plus Store at 72nd & "Q" Street
for an ATM. Set forth below is certain information regarding the principal
properties of Packers and the Bank.
<TABLE>
<CAPTION>
Approximate Date
Location Address Square Footage Opened
- ----------------- --------------------- -------------- ------
<S> <C> <C> <C>
Omaha, NE 68107 4710 South 23 Street 25,000 1979
Omaha, NE 68117 5106 "L" Street 3,200 1975
Omaha, NE 68132 5005 Underwood Avenue 3,600 1993
Omaha, NE 68144 2710 South 140 Street 14,000 1993
</TABLE>
The Bank's main banking facility consists of a single structure
located in South Omaha. The main facility is a 25,000 square foot structure
which houses the Bank's lending and teller operations, accounting, computer and
31
<PAGE>
electronic data processing facilities, as well as the executive offices of the
Bank and Packers. The office at 5005 Underwood Avenue is located in the area
of Omaha known as Dundee. The office at 2710 South 140 Street is a two-story
building with the main level for banking and the lower level for real estate
loan production. A major remodeling of this facility was completed in October
1996.
COMPETITION
The Bank experiences competition in both attracting deposits and
lending funds. Competition in lending comes principally from other commercial
banks, credit unions, savings and loan associations, the farm credit system and
various regional and national brokerage firms offering alternative financial
products in the Bank's market area. To a lesser extent, the Bank competes with
mortgage companies and insurance companies. Competition for deposits comes
principally from other commercial banks, savings and loan associations and
credit unions. The primary factors in competing for deposits among these
institutions are interest rates paid on accounts and extent of services offered.
LEGAL PROCEEDINGS
The nature of the Bank's business causes it to be involved in routine
legal proceedings from time to time. Management of the Bank believes that there
are no pending or threatened legal proceedings which, upon resolution, would
have a material adverse effect on the financial condition or results of
operation of the Bank.
MARKET INFORMATION AND DIVIDENDS
Shareholders. There has been no public market for the shares of
Packers Common Stock and each year an offer is made to buy back shares of stock
based on the prior year-end book value. As of the date of this Proxy Statement-
Prospectus, there are issued and outstanding 352,362 shares of Packers Common
Stock held by approximately 125 holders of record.
Dividends. During 1996 and 1995, no dividends were declared on
Packers common Stock.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT OF PACKERS
Set forth below are the names and addresses of, and the number of
shares and the percentage of outstanding shares beneficially owned as of the
record date for the special meeting by, each holder of record who owns of
record, or who is known by Packers to be the beneficial owner of, more than five
percent of the outstanding shares of Packers Common Stock. The Packers Common
Stock is the only class of equity security of Packers outstanding. Each
shareholder named below has sole voting and investment power with respect to the
shares shown in the table, unless otherwise indicated.
<TABLE>
<CAPTION>
Name & Address Amount & Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------------ --------------------- -----------------
<S> <C> <C>
Duane W. Acklie 81,921 23.25%
P.O. Box 81228
Lincoln, NE 68501
Pennie Z. Davis 19,335 5.49%
5100 South 26 Street
Omaha, NE 68107
H. Douglas Riley 32,196 9.14%
P.O. Box 241207
Omaha, NE 68124
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Theodore Seldin 28,557 (a) 8.10%
13057 West Center Road
Omaha, NE 68144
Clarence L. Werner 21,962 6.23%
P.O. Box 37308
Omaha, NE 68137
</TABLE>
(a) Represents shares in Theodore Seldin Revocable Trust for which Mr. Seldin
serves as Trustee.
Set forth below are the numbers of shares of Packers Common Stock held
by each director and executive officer, and by all directors and executive
officers as a group of Packers, as of the record date for the special meeting.
For information concerning the positions of such persons with Packers, see
"Management of Packers." Each shareholder named below has sole voting and
investment power over the shares shown in the table unless otherwise indicated.
<TABLE>
<CAPTION>
Amount & Nature of
Beneficial
Name Ownership Percent of Class
- ---- ------------ -----------------
<S> <C> <C>
Duane W. Acklie 81,921 23.25%
Dwight L. Clements 5,000 *
Pennie Z. Davis 19,335 5.49%
Paul Gutierrez 3,400 *
Aaron C. Hilkemann 3,400 (a) *
Carol L. Kontor 3,400 *
Patrick G. McNeil 3,400 *
Tonn M. Ostergard 2,558 *
James R. Riha 747 *
H. Douglas Riley 32,196 9.14%
Theodore M. Seldin 28,557 (b) 8.10%
D.L. Sommerhalder 3,025 (c) *
Rodney P. Vandeberg 7,845 (d) 2.20%
Gail Werner-Robertson 1 *
Thomas E. Wolf 978 *
Directors & Executive Officers
As A Group (15 persons) 195,763 55.56%
</TABLE>
- ----------------------------
* Less than one percent.
(a) Includes 104 shares each under the Uniform Gift to Minors Act for Shelby
Hilkemann, Marc P. Hilkemann, Adam D. Hilkemann and Kellie K. Hilkemann.
(b) Represents shares in Theodore Seldin Revocable Trust for which Mr. Seldin
serves as Trustee.
(c) Includes 3,024 shares in the Delphin L. Sommerhalder Revocable Trust for
which Mr. Sommerhalder serves as Trustee. Excludes 2,052 shares held by Mr.
Sommerhalder's spouse in the Joy A. Sommerhalder Trust as to which he
disclaims beneficial ownership.
(d) Excludes 2,308 shares held by Mr. Vandeberg's spouse as to which he
disclaims beneficial ownership.
33
<PAGE>
MANAGEMENT OF PACKERS
BOARD OF DIRECTORS
The following table sets forth information as of the record date concerning
the members of the Packers Board:
<TABLE>
<CAPTION>
Name Age Position with Packers & Business Experience
- ---- --- -----------------------------------------------------
<S> <C> <C>
Duane W. Acklie 65 Director of Packers. Chairman, Director and
Shareholder of Crete Carrier Corporation
Dwight L. Clements 77 Director of Packers. Retired President & Chairman
of the Board of American Exchange Bank, Elmwood, NE
Pennie Z. Davis 78 Director of Packers. Chief Executive Officer of
Greater Omaha Packing Co.
Paul Gutierrez 54 Director of Packers. Chairman of the Board of
Midwest Maintenance Co., Inc.
Aaron C. Hilkemann 39 Director of Packers. President and
Chief Operating Officer of Duncan Aviation Co.
Lincoln, NE
Carol L. Kontor 54 Director of Packers. Retired Corporate Financial
Director of ConAgra, Inc.
Patrick G. McNeil 40 Director of Packers. Owner of McNeil Company, Inc.
Tonn M. Ostergard 37 Director of Packers. President and CEO of Crete
Carrier Corporation, Lincoln, NE
H. Douglas Riley 48 Director of Packers. President and Treasurer of Doug
Riley Enterprises, Inc. Chairman of Impressive Labels,
Inc. and Chairman of SuperFast Label Service, Inc.
Gail Werner-Robertson 34 Director of Packers. President of GWR Financial and
President of GWR Investments. Director of Werner
Enterprises, Inc.
Theodore M. Seldin 65 Director of Packers. President of Seldin Development
Company, Inc.
D.L. Sommerhalder 70 Director of Packers. Chairman, President & Director
Bank of Brady, Brady, NE
Rodney P. Vandeberg 60 Chairman of the Board of Packers. Director,
Chairman, President & CEO of First National Bank
& Trust Co., Falls City, NE
Thomas E. Wolf 52 Director of Packers. President and Chairman of the
Board of Platte Valley Bank, North Bend, NE
</TABLE>
34
<PAGE>
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Certain of the principal shareholders of Packers and the directors and
executive officers of Packers and the Bank are presently customers of the Bank
or are officers, directors or shareholders of corporations, or owners of a
participation or other interest in entities or ventures which currently have or
in the past have had transactions with the Bank. In order to comply with
regulations promulgated under the Federal Reserve Act, such transactions are
required to be made in the ordinary course of business of the Bank, on
substantially the same terms, including interest rate, collateral and repayment
terms, as those prevailing at the time for comparable transactions with other
persons not affiliated with the Bank or Packers and should not involve more than
the normal risk of collectibility or present other unfavorable features. The
aggregate indebtedness to the Bank of its and Packers' principal shareholders,
executive officers and directors and their affiliates, directly or indirectly,
as of June 30, 1997, was $10,462,000 or approximately 58.2% of shareholders'
equity at such date.
No loans to any director or executive officer of Packers or the Bank
or any of the respective "associates" of such person are past due, on non-
accrual, restructured, considered a potential problem loan, or classified as
substandard, doubtful or loss by regulatory examiners.
As of the record date, the directors and executive officers of Packers
owned approximately 195,763 shares of Packers Common Stock, representing 55.6%
of such class. Such shares will be converted into shares of Norwest Common
Stock in the Merger on the same basis as the shares of Packers Common Stock held
by the other Packers shareholders. Each of the directors and executive officers
of Packers has separately indicated his or her intention to vote in favor of the
Merger.
35
<PAGE>
PACKERS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
GENERAL
The following is Packers management's discussion and analysis of the
significant factors affecting Packers' financial condition and results of
operations. This should be read in conjunction with Packers' audited and
unaudited consolidated financial statements and accompanying footnotes and other
selected financial data presented elsewhere herein.
Packers, a one bank holding company headquartered in Omaha, Nebraska,
derives substantially all of its revenues and income from the operation of its
wholly-owned subsidiary, the Bank. The Bank is a full service, independent
community bank that provides a full range of commercial banking services. See
"INFORMATION ABOUT PACKERS AND THE BANK -- General". References to the
operations of Packers include the operations of the Bank, unless the context
otherwise requires.
Packers's earnings depend primarily on the Bank's net interest income,
the difference between the income earned on the Bank's loans and investments and
the interest paid on its deposits. Among the factors affecting net interest
income are the type, volume and quality of the Bank's assets, the type and
volume of its deposits and the relative sensitivity of the Bank's interest
earning assets and its interest bearing deposits to changes in interest rates.
In addition, the Bank's income is significantly affected by the fees it receives
from other banking services, by its required provisions for loan losses and by
the level of its operating expenses. All aspects of the Bank's operations are
affected generally by market, economic and competitive conditions.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Financial Condition
Total assets increased by $20.5 million during the twelve-month period
ended June 30, 1997 and have grown by $5.5 million since December 31, 1996.
Strong loan demand has resulted in loans increasing to $120.5 million at June
30, 1997 compared to $114.8 million at year end 1996 and $97.3 million at June
30, 1996.
Deposits at June 30, 1997 totaled $146.1 million, an increase of more
than $20 million from June 30, 1996 and $7.2 million from December 31, 1996.
Time and savings deposits continue to account for most of the increases,
resulting in an average rate paid for the first six months of 1997 of 4.12%
compared to 3.85% for the same period a year ago.
As of June 30, 1997, the bank remained in the "well-capitalized" category
with the ratio of total capital to risk-weighted assets in excess of 15%.
Earnings Performance
Net income for the six months ended June 30, 1997 was $1,005,000 compared
to $617,000 for the same period in 1996. Net interest income on a taxable
equivalent basis totaled $3,761,000 through June 30, 1997, an increase of
$420,000 over the same period last year. The growth in loans resulted in an
increase in the yield on total earning assets to 8.27% for the six months
ended June 30, 1997 compared to 8.01% for the six months ended June 30, 1996,
offsetting the increased cost of deposits.
Provision for loan losses for the first six months of 1997 totaled
$240,000 compared to $270,000 for the same period last year. Net charge offs
for the first six months of this year have totaled $17,600 leaving a reserve
for loan losses of $1,327,000 or 1.09% of total loans as of June 30, 1997.
Non-Interest income for the first six months of 1997 increased by
$172,000 to $823,000 primarily due to increases of $90,000 in deposit service
charges and $111,400 in loan fees. Real estate loan production resulted in
$100,000 in fees during the first six months of 1997 compared to $33,700 for
the same period last year. With the closing of the Trust Department, there
were no fees during 1997 compared to $47,600 for the first six months of
1996.
Non-Interest Expense for the first six months of 1997 remained unchanged
at $2,867,000.
YEARS ENDED DECEMBER 31, 1996 AND 1995
Financial Condition
12/31/96 12/31/95
------------ ------------
Securities $ 32,016,700 $ 40,773,600
Loans (Gross) 114,753,800 86,059.800
Earning Assets 146,770,500 132,490,400
Total Assets 161,770,100 146,223,200
Demand Deposits $ 34,436,000 $ 33,303,800
Time & Savings Deposits 104,455,800 92,860,900
Total Deposits 138,891,800 126,164,700
Total Equity 17,439,300 16,102,300
Total assets increased by $15.5 million during 1996 to $161.8 million at
December 31, 1996, an increase of 10.63% following an increase of $1.7 million
or 1.19% during 1995.
Earning assets increased $14.3 million during 1996 with loan growth of
$28.7 million offsetting a reduction of $8.8 million in investment securities.
The loan increase during 1996 followed a decline of $435,000 during 1995.
Commercial loans accounted for more than $25 million of the growth during 1996
with consumer loans increasing despite a decline of $2.7 million in student
loans. Securities were not replaced as they matured during the year, except
where needed for asset diversification, liquidity or pledging.
Total deposits grew 10.09% during 1996 to $138.9 million, primarily
due to time and savings deposits which increased more than $11.5 million.
Packers' overall rate paid for deposits during 1996 increased to 3.85% compared
to 3.79% for 1995.
Earnings Performance.
<TABLE>
<CAPTION>
12/31/96 12/31/95
---------- ----------
<S> <C> <C>
Net Interest Income (Taxable Equivalent) $6,982,600 $6,479,300
Provision for Loan Losses 520,200 185,700
</TABLE>
36
<PAGE>
Non-Interest Income 1,706,000 1,229,500
Non-Interest Expense 6,309,800 5,391,700
Net Income 1,119,800 1,418,700
Return on Average Assets 0.75% 1.00%
Return on Average Equity 6.72% 9.41%
Equity to Assets 10.78% 11.01%
Loan Loss Reserve 0.96% 1.00%
Net Interest Margin 5.19% 5.06%
Loan-to-Deposit Ratio (Average) 76.37% 70.14%
Consolidated net income for 1996 was $1,119,800 compared to $1,418,700 for 1995.
Material, non-recurring expense, net of income taxes, totaled $396,100 including
demolition of the office at 140th & West Center and write-off in conjunction
with the anticipated closing of the Bank's trust department. Before the non-
recurring expenses, return on assets (ROA) was 1.02% and return on equity (ROE)
was 9.10%. ROA and ROE for net income were 0.75% and 6.72%, respectively,
compared to 1.00% and 9.41% for 1995.
Net Interest Income.
<TABLE>
<CAPTION>
Years Ending December 31
-------------------------------
1996 1995
------- -------
Avg.Bal. Interest Avg.Bal. Interest
(000's) (000's) Rate (000's) (000's) Rate
-------- ------- ------ -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Loans $ 96,593 8,372 8.67% $ 84,916 7,366 8.67%
Investment Securities 36,281 2,414 6.65% 38,870 2,589 6.66%
Fed Funds Sold 1,787 94 5.26% 4,145 237 5.72%
-------- ------- ---- -------- ------- ----
Total Earning Assets $134,661 10,880 8.08% $127,931 10,192 7.97%
-------- ------- ---- -------- ------- ----
NOW Accounts $ 14,982 242 1.62% $ 15,825 326 2.06%
Savings Accounts 26,586 527 1.98% 27,378 610 2.23%
Money Market Deposit Accts 4,230 177 4.18% 3,288 70 2.13%
IRA Deposits 6,921 380 5.49% 6,690 382 5.71%
Time Deposits
-LESS THAN- $100M 39,080 2,121 5.43% 34,480 1,859 5.39%
Time Deposits
-GREATER THAN- $100M 4,336 251 5.79% 3,214 196 6.10%
-------- ------- ---- -------- ------- ----
Total Interest Bearing
Deposits 96,135 3,698 3.85% 90,875 3,443 3.79%
Fed Funds Purchased 417 19 4.56% 346 22 6.36%
Other Borrowed Money 3,116 180 5.78% 3,934 248 6.30%
-------- ------- ---- -------- ------- ----
Total Interest Bearing
Liabilities $ 99,668 $ 3,897 3.91% 95,155 3,713 3.90%
-------- ------- ---- -------- ------- ----
Net Interest Income $ 6,983 $ 6,479
======= =======
Net Interest Rate Spread 4.17% 4.07%
==== ====
Net Interest Margin 5.19% 5.06%
==== ====
</TABLE>
Net interest income on a taxable equivalent basis increased $504,000 to
$6,983,000 during 1996. Interest income on loans increased $1,006,000 due
primarily to an increase of $25 million in commercial loans, while the overall
yield on all loans remained at 8.67%.
37
<PAGE>
Total interest bearing deposits increased $5.26 million during 1996 primarily in
time deposits resulting in an increase in the average rate paid to 3.85% from
3.79% in 1995. The overall rate of interest bearing liabilities increased
slightly to 3.91%.
The interest rate spread between earning assets and interest bearing liabilities
increased from 4.07% to 4.17% during 1996, while the net interest margin
remained strong at 5.19% compared to 5.06% for 1995.
Provision for Loan Losses.
The provision for loan losses for 1996 totaled $520,200. The allowance for loan
losses at December 31, 1996 was $1,104,600 and represents 0.96% of total loans.
Net charge-offs for the year totaled $272,200 or 0.28% of average loans. Asset
quality remains strong.
Non-Interest Income.
The following table represents a summary of non-interest income:
<TABLE>
<CAPTION>
Year Ending December 31
------------------------
1996 1995
----------- -----------
<S> <C> <C>
Trust Department $ 89,600 $ 106,500
Service Charges on Deposit Accts. 632,800 534,400
Loan Fees 575,300 280,800
Safe Deposit Box Rentals 47,900 52,300
Retail Brokerage Fees 49,400 38,700
Correspondent Fees 118,500 107,700
Other Fees 86,900 66,500
Other Income 105,600 42,600
---------- ----------
$1,706,000 $1,229,500
========== ==========
</TABLE>
Other operating income increased 38.75% to $1,706,000. Service charges on
deposits accounts, the largest source of fee income, rose 18.41% to $632,800 due
to increases in individual fees, as well as more consistent charging of fees.
Loan fees increased from $280,800 to $575,300 during the year which is a
reflection of the new loan activity as well as the addition of the real estate
loan production department which generated $132,000 in fees during 1996. The
decrease in Trust Department fees was due to the closing of the department.
During 1996 procedures were started to close the trust department. No fees are
projected to be earned during 1997.
Non-Interest Expense.
The following table represents a summary of non-interest expenses:
<TABLE>
<CAPTION>
Year Ending December 31
-----------------------
1996 1995
----------- ----------
<S> <C> <C>
Personnel Expenses $3,007,200 $2,448,900
Occupancy Expense of Bank Premise 493,700 490,500
Furniture, Fixtures & Equipment 406,100 407,000
Data Processing Expense 424,100 295,500
Telecommunications 95,800 94,800
Delivery 171,700 169,200
Business Development 327,600 235,500
Loan Fees 198,100 371,900
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Insurance 39,600 54,100
Professional Fees 73,000 50,700
Processing Fees 81,600 82,300
Processing Losses 40,100 26,000
Stationary and Supplies 168,100 111,100
Directors Fees 44,400 30,500
Education 17,400 22,900
Miscellaneous Personnel 61,900 39,600
Subscriptions & Publications 23,100 26,800
FDIC & State Assessments 16,500 156,100
Goodwill Amortization 50,800 56,300
Loss on Premises & Equipment 535,600 147,600
Miscellaneous Expenses 33,400 74,400
---------- ----------
$6,309,800 $5,391,700
========== ==========
</TABLE>
Non-interest expenses for 1996 include $601,400 for special charges for the
demolition of the office at 140th and West Center Road prior to remodeling and
for expenses associated with the closing of the trust department. Without such
non-recurring expenses, total non-personnel expenses decreased $241,600
including a reduction in regulatory assessments of $139,600. Excluding the
effects of the above mentioned non-recurring expenses, the Bank's overall
efficiency ratio improved during the year to 65.70% from 69.94%.
INCOME TAXES
Packers is subject to Federal and Nebraska income taxes which fluctuate from
period to period based upon Packers' earning performance. Income tax expense
attributable to earnings before income taxes for 1996 and 1995 differed from the
amounts computed by applying the U.S. federal income tax rate of 34 percent to
pretax earnings before income taxes as a result of the following:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Computed "expected" tax expense $ 541,000 $ 631,000
Increase (reduction) in income taxes resulting from:
State income taxes, net of Federal
income tax benefit 40,000 38,000
Goodwill amortization 20,000 19,000
Utilization of acquired net operating losses --- (25,000)
Income from obligations of state and
political subdivisions (156,000) (166,000)
Other 30,200 (59,100)
--------- ---------
Actual income tax expense $ 475,200 $ 437,900
========= =========
</TABLE>
REGULATORY CAPITAL REQUIREMENTS
The Bank is subject to various regulatory capital requirements administered by
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possible additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital 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 amounts and classification are also
subject to qualitative judgment by the regulators about components, risk
weighting and other factors. Qualitative measures established by regulation to
ensure capital adequacy require the Bank to maintain minimum amounts and ratios
of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to
average assets as defined.
39
<PAGE>
At December 31, 1996, the Bank was in the "well capitalized" category. To be
categorized as "well capitalized", the Bank must maintain total risk-based, Tier
1 risk-based and Tier 1 leverage ratios as set forth in the table below. The
Bank's actual capital amounts and ratios are also presented below:
<TABLE>
<CAPTION>
To be well
capitalized under
prompt corrective
Actual actions provisions
------------------- --------------------
Amount Ratio Amount Ratio
----------- ------ ----------- -------
<S> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital
(to risk-weighted assets) $17,687,000 15.4% $11,516,000 >10.0%
-
Tier 1 capital
(to risk-weighted assets) 16,582,000 14.4 6,910,000 > 6.0
-
Tier 1 capital
(to average assets) 16,582,000 10.5 7,861,000 > 5.0
-
</TABLE>
The consolidated capital amounts and ratios for Packers were not materially
different from those of the Bank as disclosed above. Management believes
Packers and the Bank meet all capital adequacy requirements.
CERTAIN SELECTED STATISTICAL INFORMATION
The following tables set forth certain comparative information with respect to
Packers' operation as of the dates indicated.
<TABLE>
<CAPTION>
Securities
December 31, 1996 December 31, 1995
------------------------- ------------------------
Amortized Estimated Amortized Estimated
Cost Market Cost Market
----------- Value ----------- Value
------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 3,987,500 $ 4,000,500 $ 7,128,000 $ 7,167,100
Securities of U.S. Government
corporations, agencies and
agency collateralilzed
mortgage obligations 15,718,500 15,674,400 20,465,600 20,590,700
Obligations of states and
political subdivisions 10,531,400 10,627,100 10,998,800 11,176,900
Other collateralized
mortgage obligations 187,900 201,100 241,400 260,000
FHLB Stock 1,479,900 1,479,900 1,366,200 1,366,200
Other Securities 12,000 33,700 219,200 212,700
----------- ----------- ----------- -----------
$31,917,200 $32,016,700 $40,419,200 $40,773,600
=========== =========== =========== ===========
</TABLE>
Investment securities with a carrying value of $5,250,500 and $7,178,000 at
December 31, 1996 and 1995, respectively, were pledged to secure public deposits
and for other purposes required by law.
40
<PAGE>
The contractual maturity of investment securities at December 31, 1996 is shown
below (mortgage-backed securities are included in the schedule based on average
weighted lives):
<TABLE>
<CAPTION>
Estimated
Amortized market
cost value
------------ ------------
<S> <C> <C>
Due in one year or less $ 7,221,200 $ 7,257,000
Due after one year through five years 14,734,900 14,872,900
Due after five years through ten years 4,408,000 4,355,700
Due after ten years 4,061,200 4,017,400
Federal Home Loan Bank stock 1,479,900 1,479,900
Farmer Mac stock 12,000 33,800
------------ -----------
$ 31,917,200 $32,016,700
============ ===========
</TABLE>
Loans.
A breakdown of loans at December 31, is as follows:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Commercial and agricultural $ 29,144,700 $16,943,300
Commercial and agricultural real estate 40,285,700 27,358,300
Residential real estate 8,275,400 13,824,900
Individuals 27,316,700 15,700,700
Students 8,079,100 10,811,300
Credit Card 1,652,200 1,421,300
------------ -----------
$114,753,800 $86,059,800
Less allowance for loan losses 1,104,600 856,600
------------ -----------
$113,649,200 $85,203,200
============ ===========
</TABLE>
Loans are concentrated primarily in the Omaha metropolitan area. Also, because
of correspondent banking relationships, there are agricultural, real estate and
operating lines to borrowers across the State of Nebraska.
Transactions in the allowance for loan losses for the years ended December 31,
1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Balance at beginning of year $ 856,600 $ 835,400
---------- ---------
Loans:
Charged Off (339,500) (243,700)
Recoveries 67,300 79,200
---------- ---------
Net $ (272,200) $(164,500)
Provision for loan losses 520,200 185,700
---------- ---------
Balance at end of year $1,104,600 $ 856,600
========== =========
</TABLE>
41
<PAGE>
Depositor Accounts.
Depositor accounts at December 31 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Demand deposit $ 34,436,000 $ 33,303,800
NOW 15,493,000 18,344,300
Money Market 7,049,100 2,693,000
Savings 25,454,000 24,163,100
Certificates of Deposit and IRA 56,459,700 47,660,500
------------ ------------
$138,891,800 $126,164,700
============ ============
</TABLE>
Certificates of deposit with balances greater than $100,000 totaled
approximately $5,362,000 in 1996 and $4,173,000 in 1995. Interest expense on
these certificates was approximately $251,000 and $196,000 in 1996 and 1995,
respectively.
At December 31, 1996, the scheduled maturities of time deposits are
approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $35,706,000
1998 19,883,000
1999 857,000
2000 14,000
2001 and thereafter ---
</TABLE>
42
<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. 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 SEC, 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 unable to consolidate its banking operations in one
state with those of another state if either state in question has
43
<PAGE>
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.
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 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.
44
<PAGE>
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 11.03% and 9.11%, 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% 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 6.43%.
45
<PAGE>
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 condition
or is engaged in an unsafe or unsound practice. An unsafe or unsound practice
can include receipt by the
46
<PAGE>
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 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.
47
<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 Packers Management Company,
Inc. and subsidiary as of December 31, 1996 and 1995 and for each of the years
then ended included in this Proxy Statement-Prospectus are included herein in
reliance on the report of KPMG Peat Marwick LLP, independent certified public
accountants, upon the authority of said firm as experts in accounting and
auditing.
48
<PAGE>
LEGAL MATTERS
Stanley S. Stroup, Executive 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. As of the date of this
Proxy Statement-Prospectus, the number of shares Mr. Stroup owns or has the
right to acquire upon exercise of options exercisable within 60 days from the
date of this Proxy Statement-Prospectus 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
Packers' shareholders will be passed upon for Packers by the law firm of Perry,
Guthery, Haase & Gessford, P.C., Lincoln, Nebraska
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.
Packers 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 Packers 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 report on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997;
- 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;
49
<PAGE>
- 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 14, 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 __________.
- ------------------------------------------------------------------------------
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 PACKERS 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 __,
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.
- ------------------------------------------------------------------------------
50
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Assets 1997 1996
--------
<S> <C> <C>
Assets:
Cash and due from banks $ 10,036,000 7,687,000
Investment securities, available-for-sale 29,143,000 35,266,000
Securities purchased under agreement to resell574,00017,000
Loans 120,463,000 97,294,000
Bank premises and equipment 5,067,000 4,567,000
Interest earned, not collected 1,462,000 1,352,000
Other assets 227,000 231,000
Goodwill, net of amortization 329,000 379,000
------------- -----------
Total assets 167,301,000 146,793,000
============ ===========
Liabilities and Stockholders' Equity
-------------------------------------
Liabilities:
Depositor accounts $146,095,000 125,471,000
Securities sold under agreement to repurchase 473,000 0
Treasury tax and loan note payable 965,000 1,000,000
Advances from Federal Home Loan Bank 0 2,550,000
Interest payable 427,000 311,000
Other liabilities 768,000 860,000
------------ -----------
Total liabilities 148,728,000 130,192,000
------------ -----------
Stockholders' equity:
Common stock, $2.50 par value. Authorized
500,000 shares; issued and outstanding 378,330 shares
in 1997 and 378,330 in 1996 946,000 950,000
Surplus 802,000 594,000
Retained earnings 17,382,000 15,944,000
Unrealized gains on available-for-sale investment securities 38,000 (140,000)
------------ -----------
19,168,000 17,348,000
Less cost of 25,968 and 30,636 shares of common stock
in treasury in 1997 and 1996, respectively 595,000 747,000
------------ -----------
Total stockholders' equity 18,573,000 16,601,000
------------ -----------
Commitments:
Total liabilities and stockholders' equity $167,301,000 146,793,000
============ ===========
</TABLE>
F-1
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Statements of Earnings
Six Months ended June 30, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
6/30/97 6/30/96
<S> <C> <C>
Interest revenue:
Loans $5,200,000 3,976,000
U.S. government obligations 545,000 688,000
Obligations of states and political subdivisions 246,000 264,000
Federal funds sold, net 0 69,000
Collateralized mortgage obligations and other securities 107,000 192,000
---------- ----------
Total interest revenue 6,098,000 5,189,000
---------- ----------
Interest expense on deposits:
NOW accounts 116,000 122,000
Savings accounts 239,000 267,000
Money market accounts 206,000 57,000
Certificates of deposit and IRA's 1,682,000 1,323,000
Other 94,000 79,000
Total interest expense on deposits 2,337,000 1,848,000
---------- ----------
New interest revenue 3,761,000 3,341,000
Provision for loan losses 240,000 270,000
---------- ----------
Net interest revenue after
provision for loan losses 3,521,000 3,071,000
Other operating income 823,000 651,000
Other operating expense 2,867,000 2,864,000
---------- ----------
Earnings before income taxes 1,477,000 858,000
Income taxes 472,000 241,000
---------- ----------
Net earnings $1,005,000 617,000
========== ==========
</TABLE>
F-2
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Six Months ended June 30, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Unrealized Total
Common Retained gains Treasury Stockholders'
Stock Surplus Earnings (losses) Stock Equity
---------- --------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 950,000 404,000 15,327,000 234,000 (813,000) 16,102,000
Net Earnings 617,000 617,000
Purchase of 932 shares
of treasury stock (42,000) (42,000)
Treasury Stock Adjustment
to FIFO
Sale of 6,499 shares of
treasury stock 190,000 108,000 298,000
Change in net unrealized
gains (available-for-sale
investment securities (374,000) (374,000)
---------- --------- ---------- --------- --------- ------------
Balance at June 30, 1996 950,000 594,000 15,944,000 (140,000) (747,000) 16,601,000
Balance at December 31, 1996 946,000 699,000 16,377,000 65,000 (648,000) 17,439,000
Net Earnings 1,005,000 1,005,000
Purchase and retirement
of 1 shares of
common stock
Sale of 3,199 shares of
treasury stock 103,000 53,000 156,000
Change in net unrealized
gains (available-for-sale
investment securities (27,000) (27,000)
---------- --------- ---------- --------- --------- ------------
Balance at June 30, 1997 $ 946,000 802,000 17,382,000 38,000 (595,000) 18,573,000
========== ========= ========== ========= ========= ============
</TABLE>
F-3
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Cash Flow
Six Months ended June 30, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Six months ended
6/30/1997 6/30/1996
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net earnings 1,005,000 617,000
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 207,000 214,000
Provision for loan loss 240,000 270,000
Changes in assets and liabilities:
Interest earned, not collected 3,000 18,000
Other assets 125,000 (18,000)
Interest payable 48,000 (24,000)
Other liabilities (691,000) (148,000)
---------------- ---------------
Net cash provided by operating activities 937,000 929,000
---------------- ---------------
Cash flows from investing activites
Net additions to premises and equipment (41,000) (672,000)
Net proceeds from maturities of investment securities,
available for sale 2,833,000 4,941,000
Increase in loans (7,054,000) (12,361,000)
(Increase) decrease in securities purchased under
agreement to resell (574,000) 5,640,000
---------------- ---------------
Net cash used in investing activities (4,836,000) (2,452,000)
---------------- ---------------
Cash flows from financing activities:
Increase (decrease) in depositor accounts 7,203,000 (694,000)
Decrease in securities sold under agreement
to repurchase (2,343,000)
Increase in treasury tax and loan payable194,000 580,000
Net proceeds from FHLB advances - 550,000
Purchase of common stock - (42,000)
Sale of treasury stock 156,000 298,000
---------------- ---------------
Net cash provided by financing activities 5,210,000 692,000
---------------- ---------------
Net increase (decrease) in cash and due from banks 1,311,000 (831,000)
Cash and due from banks at beginning of period 8,725,000 8,518,000
---------------- ---------------
Cash and due from banks at end of period 10,036,000 7,687,000
================ ===============
</TABLE>
F-4
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Financial Statements and Schedules
December 31, 1996 and 1995
(With Independent Auditors' REPORT THEREON)
F-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Packers Management Company, Inc.:
We have audited the accompanying consolidated balance sheets of Packers
Management Company, Inc. and subsidiary as of December 31, 1996 and 1995, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Packers Management
Company, Inc. and subsidiary at December 31, 1996 and 1995, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The consolidating and supplementary
information in Schedules 1 through 3 is presented for purposes of additional
analysis of the consolidated financial statements rather than to present the
financial position, results of operations and cash flows of the individual
companies. The information has been subjected to the auditing procedures
applied in the audits of the consolidated financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
consolidated financial statements taken as a whole.
KPMG Peat Marwick LLP
Lincoln, Nebraska
January 17, 1997
F-6
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1996 and 1995
REVISED AS OF SEPTEMBER 9, 1997
<TABLE>
<CAPTION>
Assets 1996 1995
--------- ------------ -----------
<S> <C> <C>
Assets:
Cash and due from banks $ 8,724,858 8,517,545
Investment securities, available-for-sale (note 2) 32,016,672 40,773,638
Securities purchased under agreement to resell - 5,657,000
Loans (note 3) 113,649,236 85,203,215
Bank premises and equipment (note 4) 5,207,608 4,083,804
Interest earned, not collected 1,465,569 1,369,636
Other assets 352,172 213,533
Goodwill, net of amortization 353,980 404,800
------------ -----------
Total assets $161,770,095 146,223,171
============ ===========
Liabilities and Stockholders' Equity
-------------------------------------
Liabilities:
Depositor accounts (note 5) $138,891,760 126,164,660
Securities sold under agreement to repurchase 2,816,000 -
Treasury tax and loan note payable 770,943 420,316
Advances from Federal Home Loan Bank (note 6) - 2,000,000
Interest payable 379,231 335,183
Other liabilities (note 7) 1,472,905 1,200,689
------------ -----------
Total liabilities 144,330,839 130,120,848
------------ -----------
Stockholders' equity:
Common stock, $2.50 par value. Authorized
500,000 shares; issued and outstanding 378,330 shares
in 1996 and 380,000 in 1995 945,825 950,000
Surplus 698,789 404,464
Retained earnings 16,377,155 15,327,449
Unrealized gains on available-for-sale investment securities 65,652 233,888
------------ -----------
18,087,421 16,915,801
Less cost of 29,166 and 39,065 shares of common stock
in treasury in 1996 and 1995, respectively 648,165 813,478
------------ -----------
Total stockholders' equity 17,439,256 16,102,323
------------ -----------
Commitments (note 8)
Total liabilities and stockholders' equity $161,770,095 146,223,171
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Statements of Earnings
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Interest revenue:
Loans $ 8,366,429 7,366,156
U.S. Government obligations 1,304,895 1,283,743
Obligations of states and political subdivisions 526,605 539,953
Federal funds sold, net 93,275 236,544
Collateralized mortgage obligations and other securities 323,328 490,841
----------- ---------
Total interest revenue 10,614,532 9,917,237
----------- ---------
Interest expense on deposits:
NOW accounts 241,835 325,946
Savings accounts 527,260 609,952
Money market accounts 176,732 69,813
Certificates of deposit and IRAs (note 5) 2,752,406 2,437,227
Other 197,289 269,768
----------- ---------
Total interest expense on deposits 3,895,522 3,712,706
----------- ---------
Net interest revenue 6,719,010 6,204,531
Provision for loan losses (note 3) 520,200 185,701
----------- ---------
Net interest revenue after
provision for loan losses 6,198,810 6,018,830
Other operating income 1,706,019 1,229,473
Other operating expense 6,309,789 5,391,689
----------- ---------
Earnings before income taxes 1,595,040 1,856,614
Income taxes (note 7) 475,215 437,905
----------- ---------
Net earnings $ 1,119,825 1,418,709
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1996 and 1995
REVISED AS OF SEPTEMBER 9, 1997
<TABLE>
<CAPTION>
Unrealized Total
Common Retained gains Treasury stockholders'
stock Surplus earnings (losses) stock equity
---------- -------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $950,000 394,324 13,908,740 (441,783) (698,914) 14,112,367
Net earnings - - 1,418,709 - - 1,418,709
Purchase of 2,856 shares
of treasury stock - - - (117,182) (117,182)
Treasury stock adjustment
to FIFO - 2,460 - - (2,460) -
Sale of 304 shares of
treasury stock - 7,680 - - 5,078 12,758
Change in net unrealized
gains (available-for-sale
investment securities) - - - 675,671 - 675,671
---------- -------- ----------- ---------- ---------- -------------
Balance at December 31, 1995 950,000 404,464 15,327,449 233,888 (813,478) 16,102,323
Net earnings - - 1,119,825 - - 1,119,825
Purchase and retirement
of 1,670 shares of
common stock (4,175) (1,737) (70,119) - - (76,031)
Sale of 9,899 shares of
treasury stock - 296,062 - - 165,313 461,375
Change in net unrealized
gains (available-for-sale
investment securities) - - - (168,236) - (168,236)
---------- -------- ----------- ---------- ---------- -------------
Balance at December 31, 1996 $945,825 698,789 16,377,155 65,652 (648,165) 17,439,256
========== ======== =========== =========== ========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-9
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,119,825 1,418,709
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 431,422 455,058
Loss on premises and equipment 535,613 135,242
Deferred income taxes (430,500) (184,500)
Provision for loan losses 520,200 185,701
Changes in assets and liabilities:
Interest earned, not collected (95,933) 137,637
Other assets (138,639) 63,384
Interest payable 44,048 61,819
Other liabilities, excluding deferred income taxes 789,383 (268,762)
------------ ----------
Net cash provided by operating activities 2,775,419 2,004,288
------------ ----------
Cash flows from investing activities:
Additions to premises and equipment (2,049,319) (192,385)
Proceeds from sale of equipment 9,300 12,355
Purchases of investment securities, available-for-sale (3,747,310) (4,874,430)
Proceeds from maturities of investment securities, available-for-sale 11,255,936 7,168,505
Proceeds from sales of investment securities, available-for-sale 993,437 -
(Increase) decrease in loans, net of provision for loan losses (28,966,221) 270,552
(Increase) decrease in securities purchased under agreement to resell 5,657,000 (5,656,000)
------------ ----------
Net cash used in investing activities (16,847,177) (3,271,403)
------------ ----------
Cash flows from financing activities:
Increase in depositor accounts 12,727,100 2,665,287
Increase in securities sold under agreement to repurchase 2,816,000 -
Increase in treasury tax and loan note payable 350,627 221,233
Payments of Federal Home Loan Bank advances (2,000,000) (3,118,000)
Purchase of common stock (76,031) (117,182)
Sale of treasury stock 461,375 12,758
------------ ----------
Net cash provided by (used in) financing activities 14,279,071 (335,904)
------------ ----------
Net increase (decrease) in cash and due from banks 207,313 (1,603,019)
Cash and due from banks at beginning of year 8,517,545 10,120,564
------------ ----------
Cash and due from banks at end of year $ 8,724,858 8,517,545
============ ==========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 3,851,474 3,630,449
Income taxes 522,030 1,000,708
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-10
<PAGE>
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) ORGANIZATION
Packers Management Company, Inc. (the Company) is a one-bank holding
company that owns all of the outstanding common stock of Packers Bank (the
Bank), formerly Packers Nebraska Bank & Trust Co., Omaha, Nebraska. The
Bank conducts a general commercial banking business in the Omaha, Nebraska
area.
(b) INVESTMENT SECURITIES
Investment securities classified as held-to-maturity are stated at cost,
adjusted for amortization of premiums and for accretion of discounts which
are recognized as adjustments to interest income. Gain or losses on the
sale of investment securities classified as held-to-maturity are recognized
only upon realization using the specific-identification method. Investment
securities classified as available-for-sale are carried at fair market
value and any provision for net unrealized gains or losses are recorded as
an adjustment to stockholders' equity, net of income taxes. The Company had
no investments held-to-maturity or held for trading purposes. All of the
Company's investment securities are classified as available-for-sale.
(c) LOANS
Loans that management has the intent and ability to hold for the
foreseeable future or pay-off are reported at their outstanding principal
adjusted for any charge-offs and the allowance for loan losses.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to
the extent cash payments are received.
(d) ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for loan
losses charged to expenses. Loans are charged against the allowance for
loan losses when management believes the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be
adequate to absorb losses inherent in existing loans, commitments to extend
credit, based on evaluations of the collectibility and prior loss
experience of loans, and commitments to extend credit. The evaluations take
into consideration such factors as changes in the nature and volume of the
portfolio, overall portfolio quality, loan concentrations, specific problem
loans, commitments and current and anticipated economic conditions that may
affect the borrowers' ability to pay.
(Continued)
F-11
<PAGE>
2
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies, (Continued)
------------------------------------------------------
(d) ALLOWANCE FOR LOAN LOSSES, CONTINUED
Management believes that the allowance for loan losses is adequate. While
management used available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part
of their examination process, periodically review the subsidiary bank's
allowance for loan losses. Such agencies may require the subsidiary bank to
recognize additions to the respective allowances based on their judgments
of information available to them at the time of their examination.
(e) ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. The allowance for loan losses and
related provision as described above presents the significant area
requiring management's judgment and estimate. Actual results could differ
from those estimates.
(f) IMPAIRED LOANS
Financial Accounting Standards (FAS) No. 114, ACCOUNTING FOR IMPAIRMENT OF
A LOAN, addresses the accounting by creditors for impairment of certain
loans. It is applicable to all loans, uncollateralized as well as
collateralized, and includes loans that are restructured in a troubled debt
restructuring involving a modification of terms. It requires that impaired
loans be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate at the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. This Statement clarifies that a creditor should evaluate the
collectibility of both contractual interest and contractual principal of
all receivables when assessing the need for a loss accrual.
The Bank has determined the effects of FAS No. 114 are immaterial on these
consolidated financial statements.
(g) BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed by the straight-line method for
financial reporting purposes and on accelerated methods for tax reporting
purposes.
(Continued)
F-12
<PAGE>
3
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies, (Continued)
------------------------------------------------------
(h) GOODWILL
Goodwill relates to the cost of the acquisition in excess of the fair value
of Nebraska National Bank in 1993 and is being amortized on a straight-line
basis over 10 years.
(i) PROFIT-SHARING PLAN
The Company has a qualified noncontributory trusteed profit-sharing plan
covering eligible full-time employees. The plan provides for contributions
by the Company in such amounts as the Board of Directors may annually
determine. The 1996 and 1995 contributions to the plan and expenses were
approximately $129,000 and $98,000, respectively.
The Company also sponsors a qualified contributory 401(k) profit-sharing
plan covering eligible full-time employees. Bank contributions provided for
by the plan equal 50 percent of the participant's contributions not to
exceed 3 percent of the participant's compensation. The Company contributed
and expensed approximately $17,000 and $20,000 in 1996 and 1995,
respectively.
(j) INCOME TAXES
The Company and the Bank file consolidated corporate income tax returns.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
(k) CASH EQUIVALENTS
For the purpose of presentation in the consolidated statements of cash
flows, cash and cash equivalents are defined as those amounts included in
the balance sheet caption "Cash and due from banks."
(l) RECLASSIFICATIONS
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
(Continued)
F-13
<PAGE>
4
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(2) Investment Securities
---------------------
A breakdown of investment securities, classified as available-for-sale, at
December 31 is as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized market
1996 cost gains losses value
-------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 3,987,530 24,008 11,051 4,000,487
Securities of U.S. Government
corporations, agencies and
agency collateralized
mortgage obligations 15,718,482 81,612 125,718 15,674,376
Obligations of states and
political subdivisions 10,531,395 106,772 11,096 10,627,071
Other collateralized
mortgage obligations 187,893 13,195 - 201,088
FHLB stock 1,479,900 - - 1,479,900
Other securities 12,000 21,750 - 33,750
------------ ---------- ---------- ----------
$31,917,200 247,337 147,865 32,016,672
============ ========== ========== ==========
1995
--------
U.S. Treasury securities 7,128,032 51,187 12,082 7,167,137
Securities of U.S. Government
corporations, agencies and
agency collateralized
mortgage obligations 20,465,603 210,012 84,919 20,590,696
Obligations of states and
political subdivisions 10,998,833 187,335 9,240 11,176,928
Other collateralized
mortgage obligations 241,431 18,562 - 259,993
FHLB stock 1,366,200 - - 1,366,200
Other securities 219,164 - 6,480 212,684
------------ ---------- ---------- ---------- ------
$40,419,263 467,096 112,721 40,773,638
============ ========== ========== ==========
</TABLE>
(Continued)
F-14
<PAGE>
5
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(2) Investment Securities, (Continued)
---------------------------------
Collateralized mortgage obligations (CMOs) of $1,764,819 and $2,884,917 at
December 31, 1996 and 1995, respectively, with an aggregate market value of
$1,747,330 and $2,869,291 at December 31, 1996 and 1995, respectively, were
included in the totals above.
Investment securities having a carrying value of $5,250,454 and $7,178,032 at
December 31, 1996 and 1995, respectively, were pledged to secure public
deposits and for other purposes required by law.
The amortized cost and estimated market value of investment securities at
December 31, 1996, by contractual maturity, are shown below. Mortgage-backed
securities are included in the schedule using maturities based on average
weighted lives as determined by the Company using outside sources. The
mortgage-backed securities may mature earlier than their weighted-average
contractual maturities because of accelerated principal prepayments.
Estimated
Amortized market
cost value
------------ ----------
Due in one year or less $ 7,221,227 7,256,968
Due after one year through five years 14,734,927 14,872,934
Due after five years through ten years 4,408,011 4,355,715
Federal Home Loan Bank stock 1,479,900 1,479,900
Farmer Mac stock 12,000 33,750
Due after ten years 4,061,135 4,017,405
----------- ----------
$31,917,200 32,016,672
=========== ==========
Proceeds from sales of investments in debt securities for 1996 were $993,437.
Gross losses of $3,855 were realized on those sales.
(Continued)
F-15
<PAGE>
6
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) Loans
-----
A breakdown of loans at December 31 is as follows:
1996 1995
------------ ----------
Commercial and agricultural $ 29,144,664 16,943,329
Commercial and agricultural real estate 40,285,748 27,358,296
Residential real estate 8,275,385 13,824,923
Individuals 27,316,701 15,700,703
Students 8,079,163 10,811,320
Credit card 1,652,155 1,421,256
------------ ----------
114,753,816 86,059,827
Less allowance for loan losses 1,104,580 856,612
------------ ----------
$113,649,236 85,203,215
============ ==========
Certain directors of the Bank and certain corporations and individuals related
to such persons incurred indebtedness, in the form of loans, as customers.
These loans were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other customers and did not involve more than the normal
risk of collectibility. These loans totaled approximately $8,057,000 and
$6,950,000 at December 31, 1996 and 1995, respectively.
Loans are concentrated primarily in the Omaha metropolitan area. Also, because
of correspondent banking relationships, there are agricultural, real estate
and operating lines to borrowers across the state of Nebraska.
Transactions in the allowance for loan losses for the years ended December 31,
1996 and 1995 are summarized as follows:
1996 1995
---------- --------
Balance at beginning of year $ 856,612 835,394
---------- --------
Loans:
Charged off (339,484) (243,743)
Recoveries 67,252 79,260
---------- --------
Net (272,232) (164,483)
---------- --------
Provision for loan losses 520,200 185,701
---------- --------
Balance at end of year $1,104,580 856,612
========== ========
The Bank does not have a significant amount of loans on nonaccrual status.
(Continued)
F-16
<PAGE>
7
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(4) Bank Premises and Equipment
---------------------------
The detail of bank premises and equipment at December 31 follows:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Banking premises and leasehold improvements $ 6,604,373 5,805,325
Furniture and equipment 1,679,198 1,600,892
Vehicles 80,009 93,410
Computers and computer software 636,137 670,016
Construction in progress - 34,615
------------ -----------
8,999,717 8,204,258
Less accumulated depreciation 3,792,109 4,120,454
------------ -----------
$ 5,207,608 4,083,804
============ ===========
</TABLE>
(5) Depositor Accounts
------------------
Depositor accounts at December 31 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Demand deposit $ 34,436,038 33,303,800
NOW 15,492,929 18,344,266
Money market 7,049,101 2,693,000
Savings 25,454,008 24,163,108
Certificates of deposit and IRA 56,459,684 47,660,486
------------ -----------
$138,891,760 126,164,660
============ ===========
</TABLE>
Certificates of deposit with balances greater than $100,000 totaled
approximately $5,362,000 in 1996 and $4,173,000 in 1995. Interest expense on
these certificates was approximately $251,000 and $196,000 in 1996 and 1995,
respectively.
At December 31, 1996, the scheduled maturities of time deposits are
approximately as follows:
1997 $35,706,000
1998 19,883,000
1999 857,000
2000 14,000
2001 and thereafter -
===========
(Continued)
F-17
<PAGE>
8
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) Advances from Federal Home Loan Bank
------------------------------------
At December 31, 1995, the Company was indebted to the Federal Home Loan Bank
for borrowings totaling $2,000,000. The borrowings matured and were paid on
December 31, 1996. The advance had a variable interest rate of 6.25% at
December 31, 1995.
(7) Income Taxes
------------
Income tax expense (benefit) attributable to earnings before income taxes
consisted of:
Current Deferred Total
--------- ------------ -------
Year ended December 31, 1996:
U.S. Federal $757,715 (343,500) 414,215
State and local 61,000 - 61,000
--------- ------------ -------
$818,715 (343,500) 475,215
======== ============ =======
Year ended December 31, 1995:
U.S. Federal 564,405 (184,500) 379,905
State and local 58,000 - 58,000
--------- ------------ -------
$622,405 (184,500) 437,905
======== ============ =======
Income tax expense attributable to earnings before income taxes for 1996 and
1995 differed from the amounts computed by applying the U.S. Federal income
tax rate of 34 percent to pretax earnings before income taxes as a result of
the following:
1996 1995
---------- --------
Computed "expected" tax expense $ 541,000 631,000
Increase (reduction) in income taxes resulting from:
State income taxes, net of Federal
income tax benefit 40,000 38,000
Goodwill amortization 20,000 19,000
Utilization of acquired net operating losses - (25,000)
Income from obligations of state
and political subdivisions (156,000) (166,000)
Other 30,215 (59,095)
---------- --------
Actual income tax expense $ 475,215 437,905
========= ========
(Continued)
F-18
<PAGE>
9
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(7) Income Taxes, (Continued)
------------------------
The approximate tax effects of temporary differences that gave rise to
significant portions of the net deferred tax liabilities at December 31, 1996
and 1995 are presented below:
1996 1995
-------- -------
Deferred tax liabilities:
FAS No. 115 adjustment for financial statements $ 33,000 120,000
Allowance for loan losses, less than the
deduction for Federal income tax purposes 120,000 297,000
Bank premises and equipment, principally
due to differences in depreciation 303,000 332,000
Investment securities 46,000 158,000
Other (40,000) (14,500)
-------- -------
Net deferred tax liabilities $462,000 892,500
======== =======
The income taxes payable of approximately $325,000 in 1996 and $54,000 in 1995
and the net deferred tax liabilities above are included in other liabilities
in the consolidated balance sheets. The FAS No. 115 deferred taxes were
netted against the unrealized gains in a separate component of stockholders'
equity.
(8) Commitments
-----------
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to financial instruments is represented by the contracted national
amount of these instruments. The Bank uses the same credit policies in making
commitments as it does for on-balance-sheet instruments.
(Continued)
F-19
<PAGE>
10
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(8) Commitments, (Continued)
-----------------------
The Bank has outstanding commitments under commercial lines of credit and
unused letters of credit of approximately $18,152,000 and $1,668,000,
respectively, at December 31, 1996. Commitments to extend credit represent
contractual commitments to make loans and revolving credits. Commitments
generally have fixed expiration dates or other termination clauses and require
the payment of a fee. Since commitments may expire without being drawn upon,
the total contract amounts do not necessarily represent future cash
requirements.
The Bank was acting as agent for approximately $38,528,000 and $51,476,000 of
Federal funds and repurchase agreements at December 31, 1996 and 1995,
respectively.
(9) Regulatory Compliance
---------------------
The audit procedures applied to the Bank were also performed in accordance
with the State of Nebraska, Department of Banking Rule 45 NAC 24 and Rule 45
NAC 25. The Company's audit firm has met the tests of independence as
specified by the Nebraska Department of Banking and Finance and is in fact
independent of the Bank.
(10) Regulatory Capital Requirements
-------------------------------
The Bank is subject to various regulatory capital requirements administered by
the Federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possible additional discretionary actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital 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 amounts and
classification are also subject to qualitative judgment by the regulators
about components, risk weightings and other factors. Qualitative measures
established by regulation to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios of total and Tier 1 capital to risk-
weighted assets and of Tier 1 capital to average assets, as defined.
(Continued)
F-20
<PAGE>
11
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(10) Regulatory Capital Requirements, (Continued)
-------------------------------------------
At December 31, 1996, the Bank was in the "well capitalized" category. To be
categorized as "well capitalized" the Bank must maintain total risk-based,
Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.
The Bank's actual capital amounts and ratios are also presented below:
<TABLE>
<CAPTION>
To be well
capitalized under
For Capital prompt corrective
Actual adequacy purposes actions provisions
---------------------- -------------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ------ ----------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total capital
(to risk-weighted assets) $17,687,000 15.4% $9,213,000 >8.0% $11,516,000 >10.0%
- -
Tier 1 capital
(to risk-weighted assets) 16,582,000 14.4% 4,607,000 >4.0% 6,910,000 > 6.0%
- -
Tier 1 capital
(to average assets) 16,582,000 10.5% 6,288,000 >4.0% 7,861,000 > 5.0%
- -
As of December 31, 1995:
Total capital
(to risk-weighted assets) 16,547,000 16.46% 8,043,000 >8.0% 10,054,000 >10.0%
- -
Tier 1 capital
(to risk-weighted assets) 15,690,000 15.61% 4,021,000 >4.0% 6,032,000 > 6.0%
- -
Tier 1 capital
(to average assets) 15,690,000 10.58% 5,932,000 >4.0% 7,416,000 > 5.0%
- -
</TABLE>
The consolidated capital amounts and ratios for the Company were not
materially different from those of the Bank as disclosed above. Management
believes the Company and the Bank meet all capital adequacy requirements.
(Continued)
F-21
<PAGE>
12
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(11) Fair Value of Financial Instruments
-----------------------------------
FAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires
the Company to disclose the fair value of all their financial instruments.
Fair value estimates, methods and assumptions are set forth below for the
Company and its subsidiary's financial instruments.
GENERAL ASSUMPTIONS
The Company determined that the book value of short-term financial
instruments, defined as any item that matures or reprices within six months or
less, approximates their fair value.
Short-term financial instruments consist of cash and due from banks, Federal
funds sold, interest receivable, and securities purchased under agreements to
resell, treasury, tax and loan note payable, Federal Home Loan Bank advances,
interest payable and all off-balance-sheet instruments.
Investment Securities
The fair value of investment securities, as shown in note 2, are based on the
quoted market prices at December 31, 1996 and 1995.
LOANS AND DEPOSITS
The fair values of loans and deposits have been estimated using two methods:
1) the book value of short-term loans and deposits approximates fair value;
and 2) for all other loans and deposits, discounting of projected future cash
flows at current market rates. In addition, the allowances for loan losses
are subtracted from the calculated fair values of all loans for consideration
of credit issues. At December 31, 1996, the fair value of loans were
approximately $114,578,000 and the fair value of deposits were approximately
$139,310,000.
LIMITATIONS
Although management uses its best judgment in estimating the fair value of
these financial instruments, there are inherent limitations in any estimation
techniques. Therefore, the fair value estimates presented herein are not
necessarily indicative of the amounts which the Company could realize in a
current transaction and have not been comprehensively revalued since December
31, 1996. The current estimated values of these financial instruments may
have changed significantly since that point in time.
F-22
<PAGE>
Schedule 1
----------
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidating Schedule - Balance Sheet Information
December 31, 1996
<TABLE>
<CAPTION>
Packers
Management
Company, Packers
Assets Inc. Bank Eliminations Consolidated
--------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 25,394 8,724,858 (25,394) 8,724,858
Investment securities, available-
for-sale 10 32,016,662 - 32,016,672
Securities purchased under agreement
to resell 412,000 - (412,000)
Loans, net - 113,649,236 - 113,649,236
Bank premises and equipment - 5,207,608 - 5,207,608
Interest earned, not collected - 1,465,569 - 1,465,569
Other assets 17,001,852 352,172 (17,001,852) 352,172
Goodwill - 353,980 - 353,980
------------ ----------- ------------ ------------
Total assets $17,439,256 161,770,085 (17,439,246) 161,770,095
============ =========== ============ ===========
Liabilities and
Stockholders' Equity
---------------------
Liabilities:
Depositor accounts $ - 138,917,154 (25,394) 138,891,760
Securities sold under agreement
to repurchase - 3,228,000 (412,000) 2,816,000
Treasury tax and loan note payable - 770,943 - 770,943
Interest payable - 379,231 - 379,231
Other liabilities - 1,472,905 - 1,472,905
------------ ----------- ------------ ------------
Total liabilities - 144,768,233 (437,394) 144,330,839
------------ ----------- ------------ ------------
Stockholders' equity:
Common stock 945,825 2,500,000 (2,500,000) 945,825
Surplus 698,789 6,845,186 (6,845,186) 698,789
Retained earnings 16,377,155 7,591,014 (7,591,014) 16,377,155
Unrealized gain on available-
for-sale investment securities 65,652 65,652 (65,652) 65,652
----------- ----------- ----------- -----------
18,087,421 17,001,852 (17,001,852) 18,087,421
Less cost of common stock
in treasury 648,165 - - 648,165
------------ ----------- ------------ ------------
Total stockholders' equity 17,439,256 17,001,852 (17,001,852) 17,439,256
------------ ----------- ------------ ------------
Total liabilities and
stockholders' equity $17,439,256 161,770,085 (17,439,246) 161,770,095
=========== =========== =========== ===========
</TABLE>
See accompanying independent auditors' report.
F-23
<PAGE>
Schedule 2
----------
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Consolidating Schedule - Earnings Information
Year ended December 31, 1996
<TABLE>
<CAPTION>
Packers
Management
Company, Packers
Inc. Bank Eliminations Consolidated
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Interest revenue:
Loans $ - 8,366,429 - 8,366,429
U.S. Government obligations - 1,304,895 - 1,304,895
Obligations of states and political
subdivisions - 526,605 - 526,605
Federal funds sold, net - 93,275 - 93,275
Collateralized mortgage
obligations and other securities 5,314 319,324 (1,310) 323,328
---------- ---------- ---------- ------------
Total interest revenue 5,314 10,610,528 (1,310) 10,614,532
---------- ---------- ---------- ------------
Interest expense on deposits:
NOW accounts - 241,835 - 241,835
Savings accounts - 527,260 - 527,260
Money market accounts - 176,732 - 176,732
Certificates of deposit and IRAs - 2,752,406 - 2,752,406
Other - 198,599 (1,310) 197,289
---------- ---------- ---------- ------------
Total interest expense
on deposits - 3,896,832 (1,310) 3,895,522
---------- ---------- ---------- ------------
Net interest revenue 5,314 6,713,696 - 6,719,010
Provision for loan losses - 520,200 - 520,200
---------- ---------- ---------- ------------
Net interest revenue after
provision for loan losses 5,314 6,193,496 - 6,198,810
Other operating income 1,115,179 1,706,019 (1,115,179) 1,706,019
Other operating expense 668 6,309,121 - 6,309,789
---------- ---------- ---------- ------------
Earnings before income taxes 1,119,825 1,590,394 (1,115,179) 1,595,040
Income taxes - 475,215 - 475,215
---------- ---------- ---------- ------------
Net earnings $1,119,825 1,115,179 (1,115,179) 1,119,825
========== ========== ========== ===========
</TABLE>
See accompanying independent auditors' report.
F-24
<PAGE>
Schedule 3
----------
PACKERS MANAGEMENT COMPANY, INC.
AND SUBSIDIARY
Other Operating Income and Expense
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Operating Income 1996 1995
- --------------------------------
<S> <C> <C>
Trust department $ 89,644 106,478
Service charges and other fees 632,799 534,401
Loan fees 575,317 280,833
Safe deposit box rental 47,870 52,303
Retail brokerage fees 49,377 38,669
Correspondent fees 118,529 107,689
Gain on sale of fixed assets - 12,355
Other fees 86,888 66,492
Other income 105,595 30,253
---------- ---------
$1,706,019 1,229,473
========== =========
Operating Expense
- --------------------------------
Salaries - officers 1,105,581 989,972
Salaries - employees 1,422,925 1,081,340
Taxes - payroll 199,108 156,093
Employee benefits 279,570 221,527
Advertising and promotion 170,354 130,392
Amortization 50,820 56,323
Furniture, fixtures and equipment 406,137 407,025
Business development 107,052 33,093
Periodicals 23,108 26,813
Directors' expenses 44,428 30,472
Donations 22,890 36,516
Electronic data processing 424,114 295,498
Correspondent bank fees 81,603 82,341
FDIC and state assessment 16,531 156,101
Insurance 39,577 54,147
Loan expense 198,078 371,876
Loss on premises and equipment 535,613 147,597
Occupancy of bank premises 493,670 490,499
Membership dues 27,343 35,452
Postage, armored car and courier 171,744 169,245
Professional fees 72,960 50,701
Processing losses 40,105 26,037
Supplies and office expense 168,125 111,102
Miscellaneous personnel expense 61,883 39,588
Telephone and telegraph 95,783 94,769
Education expense 17,361 22,851
Loss on security sales 3,855 -
Miscellaneous 29,471 74,319
---------- ---------
$6,309,789 5,391,689
========== =========
</TABLE>
See accompanying independent auditors' report.
F-25
<PAGE>
APPENDIX A
AGREEMENT
AND
PLAN OF REORGANIZATION*
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 2nd day of May, 1997, by and between PACKERS MANAGEMENT COMPANY, INC.
("Packers"), a Nebraska 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 Packers (the
"Merger") pursuant to an agreement and 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
Packers of the par value of $2.50 per share ("Packers 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 (the "Merger Co.") will be merged by
statutory merger with and into Packers pursuant to the Merger Agreement, with
Packers as the surviving corporation, in which merger each share of Packers
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, if any, 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 by the number of shares of Packers Common
Stock then outstanding. The "Adjusted Norwest Shares" shall be a number equal
to (i) 579,000, plus (ii) the number of shares of Norwest Common Stock equal to
(x) the aggregate amount which would have been received as cash dividends by the
holders of 579,000 shares of Norwest Common Stock between the date of the
Agreement and Effective Date of the Merger, divided by (y) $52.50.
_________________
* On September 23, 1997, the Norwest Board declared a two-for-one split of
Norwest Common Stock in the form of a 100% stock dividend. The stock dividend
was distributed on October 10, 1997 to stockholders of record on October 2,
1997. The "Adjusted Norwest Shares" amount and other references to Norwest
Common Stock in the Reorganization Agreement have not been restated to reflect
the stock split. Under the terms of the Reorganization Agreement and related
Plan of Merger, however, the number of shares that Packers shareholders will
receive in the Merger has been adjusted to reflect the stock split. This
adjustment is reflected in the Proxy Statement-Prospectus to which this Appendix
A is attached.
A-1
<PAGE>
(b) Norwest Common Stock Adjustments. If, between the date hereof and the
Effective Time of the Merger, shares of Norwest Common Stock shall be changed
into a different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared with a
record date within such period (a "Common Stock Adjustment"), then the number of
shares of Norwest Common Stock into which a share of Packers Common Stock shall
be converted pursuant to subparagraph (a), above, will be appropriately and
proportionately adjusted so that the number of such shares of Norwest Common
Stock into which a share of Packers Common Stock shall be converted will equal
the number of shares of Norwest Common Stock which holders of shares of Packers
Common Stock would have received pursuant to such Common Stock Adjustment had
the record date therefor been immediately following the Effective Time of the
Merger.
(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 ending on the day immediately
preceding the meeting of shareholders required by paragraph 4(c) of this
Agreement.
(d) Mechanics of Closing Merger. Subject to the terms and conditions set
forth herein, the Merger Agreement shall be executed and it or Articles of
Merger or a Certificate of Merger shall be filed with the Secretary of State of
the State of Nebraska within ten (10) business days following the satisfaction
or waiver of all conditions precedent set forth in Sections 6 and 7 of this
Agreement or on such other date as may be agreed to by the parties (the "Closing
Date"). Each of the parties agrees to use its best efforts to cause the Merger
to be completed as soon as practicable after the receipt of final regulatory
approval of the Merger and the expiration of all required waiting periods. The
time that the filing referred to in the first sentence of this paragraph is made
is herein referred to as the "Time of Filing". The day on which such filing is
made and accepted is herein referred to as the "Effective Date of the Merger".
The "Effective Time of the Merger" shall be 11:59 p.m. Minneapolis, Minnesota
time on the Effective Date of the Merger. At the Effective Time of the Merger
on the Effective Date of the Merger, the separate existence of Merger Co. shall
cease and Merger Co. will be merged with and into Packers pursuant to the Merger
Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Norwest, Norwest Center, Sixth and Marquette, Minneapolis, Minnesota.
2. REPRESENTATIONS AND WARRANTIES OF PACKERS. Packers represents and
warrants to Norwest as follows:
(a) Organization and Authority. Packers is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nebraska,
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 Packers and the Packers 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. Packers is registered as a
bank holding company with the Federal Reserve Board under the Bank Holding
Company Act of
A-2
<PAGE>
1956, as amended (the "BHC Act"). Packers has furnished Norwest
true and correct copies of its articles of incorporation and by-laws, as
amended.
(b) Packers' Subsidiaries. Schedule 2(b) sets forth a complete and
correct list of all of Packers' subsidiaries as of the date hereof (individually
a "Packers Subsidiary" and collectively the "Packers Subsidiaries"), all shares
of the outstanding capital stock of each of which, except as set forth on
Schedule 2(b), are owned directly or indirectly by Packers. No equity security
of any Packers Subsidiary is or may be required to be issued by reason of any
option, warrant, scrip, preemptive right, right to subscribe to, call or
commitment of any character whatsoever relating to, or security or right
convertible into, shares of any capital stock of such subsidiary, and there are
no contracts, commitments, understandings or arrangements by which any Packers
Subsidiary is bound to issue additional shares of its capital stock, or any
option, warrant or right to purchase or acquire any additional shares of its
capital stock. Subject to 12 U.S.C. (S) 55 (1982) and the Nebraska Business
Corporation Act, all of such shares so owned by Packers 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 Packers 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. Except as set forth on Schedule 2(b), Packers 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 Packers consists of
5,000 shares of preferred stock, $100 par value per share ("Packers Preferred
Stock"), of which as of the close of business on December 31, 1996, no shares
were outstanding and no shares were held in the treasury, and 500,000 shares of
common stock, $2.50 par value, of which as of the close of business on December
31, 1996, 378,330 were issued, of which 349,164 shares were outstanding and
29,166 shares were held in the treasury. The maximum number of shares of
Packers Common Stock (assuming for this purpose that phantom shares and other
share-equivalents constitute Packers 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 352,362. All of the
outstanding shares of capital stock of Packers 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, preemptive rights or other rights
obligating Packers or any Packers Subsidiary to issue, sell or otherwise dispose
of, or to purchase, redeem or otherwise acquire, any shares of capital stock of
Packers or any Packers Subsidiary. Except as set forth in Schedule 2(c), since
December 31, 1996 no shares of Packers capital stock have been issued, sold,
purchased, redeemed or otherwise acquired, directly or indirectly, by Packers or
any Packers Subsidiary and no dividends or other distributions have been
declared, set aside, made or paid to the shareholders of Packers.
(d) Authorization. Packers 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 Packers and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Packers. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority over
A-3
<PAGE>
Packers as may be required by statute or regulation, this Agreement and the
Merger Agreement are valid and binding obligations of Packers enforceable
against Packers in accordance with their respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Packers of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor
compliance by Packers 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 Packers or any
Packers 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 Packers or any Packers Subsidiary is a party or by which
it may be bound, or to which Packers or any Packers Subsidiary or any of the
properties or assets of Packers or any Packers 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 Packers, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Packers or any Packers Subsidiary or any of their respective
properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934 and the rules and regulations
thereunder (the "Exchange Act"), the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act or the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 ("HSR Act"), and filings required to effect the Merger under Nebraska
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 Packers of the transactions contemplated by this Agreement and
the Merger Agreement.
(e) Packers Financial Statements. The consolidated balance sheets of
Packers and Packers' Subsidiaries as of December 31, 1996 and 1995 and related
consolidated statements of income, shareholders' equity and cash flows for the
two years ended December 31, 1996, together with the notes thereto, certified by
KMPG Peat Marwick LLP (collectively, the "Packers Financial Statements"), have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis and present fairly (subject, in the case of
financial statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Packers and Packers' Subsidiaries at the
dates and the consolidated results of operations and cash flows of Packers and
Packers' Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1991, Packers and each Packers Subsidiary
has filed all reports, registrations and statements, together with any required
amendments thereto, that it was required to file with (i) the Securities and
Exchange Commission (the "SEC"), including, but not limited to, Forms 10-K,
Forms 10-Q and proxy statements, (ii) the Federal Reserve Board, (iii) the
Federal Deposit Insurance Corporation (the "FDIC"), (iv) the United States
Comptroller of the Currency (the "Comptroller") and (v) any applicable state
securities or banking authorities. All such reports and statements filed with
any such regulatory body or authority are collectively referred to herein as the
"Packers Reports". As of their respective dates, the Packers Reports complied
in all material respects with all the rules and regulations promulgated by the
SEC, the Federal Reserve Board, the FDIC, the Comptroller and applicable state
securities or banking authorities, as the case may be, and
A-4
<PAGE>
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Copies of all the Packers Reports have been made available to
Norwest by Packers.
(g) Properties and Leases. Except as may be reflected in the Packers
Financial Statements and except for any lien for current taxes not yet
delinquent, Packers and each Packers 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 Packers'
consolidated balance sheet as of December 31, 1996, and all real and personal
property acquired since such date, except such real and personal property as
has been disposed of in the ordinary course of business. All leases of real
property and all other leases material to Packers or any Packers Subsidiary
pursuant to which Packers or such Packers Subsidiary, as lessee, leases real
or personal property, which leases are described on Schedule 2(g), are valid
and effective in accordance with their respective terms, and there is not,
under any such lease, any material existing default by Packers or such Packers
Subsidiary or any event which, with notice or lapse of time or both, would
constitute such a material default. Substantially all Packers' and each
Packers 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 Packers and the Packers Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and paid all taxes owed by it, including
those with respect to income, withholding, social security, unemployment,
workers compensation, franchise, ad valorem, premium, excise and sales taxes,
and no taxes shown on such returns to be owed by it or assessments received by
it are delinquent. The federal income tax returns of Packers and the Packers
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 only as set forth on
Schedule 2(h), (i) neither Packers nor any Packers Subsidiary is a party to any
pending action or proceeding, nor is any such action or proceeding threatened by
any governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies and (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 Packers or any Packers
Subsidiary which has not been settled, resolved and fully satisfied. Each of
Packers and the Packers 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 Packers and the Packers 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 Packers
or any Packers 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 Packers and the Packers Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither Packers nor any Packers Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
A-5
<PAGE>
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those which are terminable
at will by Packers or such Packers Subsidiary);
(ii) any plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retirement payment, profit
sharing or similar arrangement with respect to any present or former
officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
(iv) any contract not made in the ordinary course of business
containing covenants which limit the ability of Packers or any Packers
Subsidiary to compete in any line of business or with any person or which
involve any restriction of the geographical area in which, or method by
which, Packers or any Packers Subsidiary may carry on its business (other
than as may be required by law or applicable regulatory authorities);
(v) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K; or
(vi) any lease with annual rental payments aggregating $10,000 or
more; or
(vii) any agreement or commitment with respect to the Community
Reinvestment Act with any state or federal bank regulatory authority or
any other party; or
(viii) 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. Packers has furnished Norwest
copies of (i) all attorney responses to the request of the independent auditors
for Packers with respect to loss contingencies as of December 31, 1996 in
connection with the Packers Financial Statements, and (ii) a written list of
legal and regulatory proceedings filed against Packers or any Packers Subsidiary
since said date. Neither Packers nor any Packers Subsidiary is a party to any
pending or, to the best knowledge of Packers, 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 Packers and the Packers Subsidiaries taken
as a whole.
(l) Insurance. Packers and each Packers Subsidiary is presently insured,
and during each of the past five calendar years (or during such lesser period of
time as Packers has owned such Packers Subsidiary) has been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation.
(m) Compliance with Laws. Packers and each Packers Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are
A-6
<PAGE>
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 Packers or such Packers Subsidiary; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect
and, to the best knowledge of Packers, no suspension or cancellation of any of
them is threatened; and all such filings, applications and registrations are
current. The conduct by Packers and each Packers Subsidiary of its business
and the condition and use of its properties does not violate or infringe, in
any respect material to any such business, any applicable domestic (federal,
state or local) or foreign law, statute, ordinance, license or regulation.
Neither Packers nor any Packers 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 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 Packers or any Packers Subsidiary which reasonably
could be expected to have a material adverse effect on the business or
properties of Packers and the Packers Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Packers or any Packers Subsidiary
is pending or, to the best knowledge of Packers, threatened. Neither Packers
nor any Packers 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 Packers or such Packers
Subsidiary. Employees of Packers and the Packers Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth on
Schedule 2(o), to the best knowledge of Packers no officer or director of
Packers or any Packers Subsidiary, or any "associate" (as such term is defined
in Rule l4a-1 under the Exchange Act) of any such officer or director, has any
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Packers or any Packers
Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
Packers or any Packers Subsidiary to any present officer, director, employee or
any associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Packers' or such Packers Subsidiary's Board of Directors.
(p) Packers 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 Packers or any Packers 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
Packers or any Packers Subsidiary are those set forth on Schedule 2(p)
(the "Plans"). No Plan is a "multi-employer plan" within the meaning of
Section 3(37) of ERISA.
(ii) Each Plan is and has been in all material respects operated and
administered in accordance with its provisions and applicable law. Except
as set forth on Schedule 2(p), Packers or the Packers subsidiaries have
received favorable determination letters from the Internal Revenue Service
under the provisions of the Tax Equity and Fiscal Responsibility Act
("TEFRA"), the Deficit Reduction Act ("DEFRA") and the Retirement Equity
Act ("REA") for each of the Plans to which the
A-7
<PAGE>
qualification requirements of Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), apply. Packers knows of no reason that
any Plan which is subject to the qualification provisions of Section
401(a) of the Code is not "qualified" within the meaning of Section
401(a) of the Code and that each related trust is not exempt from
taxation under Section 501(a) of the Code.
(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), and to the best knowledge
of Packers, no Plan or any trust created thereunder, nor any trustee,
fiduciary or administrator thereof, has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated any of the fiduciary standards under
Part 4 of Title I of ERISA which could subject, to the best knowledge
of Packers, 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 Packers and the Packers
Subsidiaries taken as a whole.
(v) No Plan which is subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable events"
as that term is defined in Section 4043 of ERISA, with respect to any Plan,
other than those events which may result from the transactions contemplated
by this Agreement and the Merger Agreement.
(vi) No Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412
of the Code (whether or not waived), since the effective date of ERISA.
(vii) Except as disclosed in Schedule 2(p), neither the execution and
delivery of this Agreement and the Merger Agreement 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 Packers or any Packers 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 Packers and
the Packers Subsidiaries supplied or to be supplied by Packers 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 Packers Common Stock pursuant to the provisions of the Merger
Agreement (the "Registration Statement"), (ii) the proxy statement to be mailed
to Packers' shareholders in connection with the meeting to be called to consider
the Merger (the "Proxy Statement") and (iii) any other documents to be filed
with the SEC or any regulatory authority in connection with the transactions
contemplated hereby or by the Merger Agreement will, at the respective times
such documents are filed with the SEC or any regulatory authority and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement, when mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the meeting of
shareholders referred to in paragraph 4(c), be false or misleading with respect
to any material fact, or omit to
A-8
<PAGE>
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
All documents which Packers and the Packers Subsidiaries are responsible for
filing with the SEC and any other regulatory authority in connection with the
Merger will comply as to form in all material respects with the provisions of
applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r),
neither Packers nor any Packers Subsidiary is under any obligation, contingent
or otherwise, which will survive the Merger by reason of any agreement to
register any of its securities under the Securities Act.
(s) Brokers and Finders. Neither Packers nor any Packers 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 Packers or any Packers Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(t) Administration of Trust Accounts. Packers and each Packers Subsidiary
has properly administered in all respects material and which could reasonably be
expected to be material to the financial condition of Packers and the Packers
Subsidiaries taken as a whole all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law. Neither Packers, any Packers
Subsidiary, nor any director, officer or employee of Packers or any Packers
Subsidiary has committed any breach of trust with respect to any such fiduciary
account which is material to or could reasonably be expected to be material to
the financial condition of Packers and the Packers Subsidiaries taken as a
whole, and the accountings for each such fiduciary account are true and correct
in all material respects and accurately reflect the assets of such fiduciary
account.
(u) No Defaults. Neither Packers nor any Packers 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 Packers and the Packers Subsidiaries, taken as a
whole. To the best of Packers' knowledge, all parties with whom Packers or any
Packers Subsidiary has material leases, agreements or contracts or who owe to
Packers or any Packers Subsidiary material obligations other than with respect
to those arising in the ordinary course of the banking business of the Packers
Subsidiaries are in compliance therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition of, on Packers or any Packers Subsidiary, any liability
relating to the release of hazardous substances as defined under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), pending or to the best of Packers'
knowledge, threatened against Packers or any Packers Subsidiary the result of
A-9
<PAGE>
which has had or could reasonably be expected to have a material adverse effect
upon Packers and Packers' Subsidiaries taken as a whole; to the best of Packers'
knowledge there is no reasonable basis for any such proceeding, claim or action;
and to the best of Packers' knowledge neither Packers nor any Packers 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.
Packers has provided Norwest with copies of all environmental assessments,
reports, studies and other related information in its possession with respect to
each bank facility and each non-residential OREO property.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to Packers 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 December 31, 1996, 980,000 shares of Cumulative
Tracking Preferred Stock, at $200 stated value, and 11,594 shares of ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value, 22,716 shares of
1995 ESOP Cumulative Convertible Preferred Stock, at $1,000 stated value, and
24,469 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 December 31, 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 December 31, 1996,
368,702,706 shares were outstanding and 6,830,919 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.
A-10
<PAGE>
(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 the provisions of the
Securities Act, the Exchange Act, the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act or the HSR Act, and filings required to effect the
Merger under Nebraska 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 December 31, 1996, as filed with the SEC (collectively, the
"Norwest Financial Statements"), have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis and present fairly
(subject, in the case of financial statements for interim periods, to normal
recurring adjustments) the consolidated financial position of Norwest and its
subsidiaries at the dates and the consolidated results of operations, changes in
financial position and cash flows of Norwest and its subsidiaries for the
periods stated therein.
(f) Reports. Since December 31, 1991, Norwest and each Norwest Subsidiary
has filed all reports, registrations and statements, together with any required
amendments
A-11
<PAGE>
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii) the Federal
Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any applicable
state securities or banking authorities. All such reports and statements filed
with any such regulatory body or authority are collectively referred to herein
as the "Norwest Reports". As of their respective dates, the Norwest Reports
complied in all material respects with all the rules and regulations
promulgated by the SEC, the Federal Reserve Board, the FDIC, the Comptroller
and any applicable state securities or banking authorities, as the case may
be, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Norwest
Financial Statements and except for any lien for current taxes not yet
delinquent, Norwest and each Norwest Subsidiary has good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Norwest's
consolidated balance sheet as of December 31, 1996 included in Norwest's Annual
Report on Form 10-K, and 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 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
A-12
<PAGE>
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);
(iii) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. Neither Norwest nor any Norwest
Subsidiary is a party to any pending or, to the best knowledge of Norwest,
threatened, claim, action, suit, investigation or proceeding, or is subject to
any order, judgment or decree, except for matters which, in the aggregate, will
not have, or cannot reasonably be expected to have, a material adverse effect on
the business, financial condition or results of operations of Norwest and its
subsidiaries taken as a whole.
(l) Insurance. Norwest and each Norwest Subsidiary is presently insured
or self insured, and during each of the past five calendar years (or during such
lesser period of time as Norwest has owned such Norwest Subsidiary) has been
insured or self-insured, for reasonable amounts with financially sound and
reputable insurance companies against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured and has maintained all insurance required by applicable law and
regulation.
(m) Compliance with Laws. Norwest and each Norwest Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to
own or lease its properties or assets and to carry on its business as
presently conducted and that are material to the business of Norwest or such
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and to the best knowledge of Norwest,
no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by Norwest
and each Norwest Subsidiary of its business and the condition and use of its
properties does not violate or infringe, in any respect material to any such
business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. Neither Norwest nor any Norwest
Subsidiary is in default under any order, license, regulation or demand of any
federal, state, municipal or other governmental agency or with respect to any
order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application, no federal, state, municipal
or other governmental authority has placed any restrictions on the business or
properties of Norwest or any Norwest Subsidiary which reasonably could be
expected to have a material adverse effect on the business or properties of
Norwest and its subsidiaries taken as a whole.
A-13
<PAGE>
(n) Labor. No work stoppage involving Norwest or any Norwest Subsidiary
is pending or, to the best knowledge of Norwest, threatened. Neither Norwest
nor any Norwest Subsidiary is involved in, or threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Norwest or such Norwest
Subsidiary. Except as set forth on Schedule 3(j), employees of Norwest and the
Norwest Subsidiaries are not represented by any labor union nor are any
collective bargaining agreements otherwise in effect with respect to such
employees.
(o) Norwest Benefit Plans.
(i) As of 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) (the "Norwest Plans"). No Norwest Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA.
(ii) Each Norwest Plan is and has been in all material respects
operated and administered in accordance with its provisions and
applicable law. Except as set forth on Schedule 3(o), Norwest or the
Norwest Subsidiaries have received favorable determination letters from
the Internal Revenue Service under the provisions of TEFRA, DEFRA and REA
for each of the Norwest Plans to which the qualification requirements of
Section 401(a) of the Code apply. Norwest knows of no reason that any
Norwest Plan which is subject to the qualification provisions of Section
401(a) of the Code is not "qualified" within the meaning of Section
401(a) of the Code and that each related trust is not exempt from
taxation under Section 501(a) of the Code.
(iii) The present value of all benefits vested and all benefits
accrued under each Norwest Plan which is subject to Title IV of ERISA did
not, in each case, as determined for purposes of reporting on Schedule B
to the Annual Report on Form 5500 of each such Norwest Plan as of the end
of the most recent 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), and to the best knowledge
of Norwest, no Norwest Plan or any trust created thereunder, nor any
trustee, fiduciary or administrator thereof, has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated fiduciary standards under Part 4 of
Title I of ERISA, which could subject, to the best knowledge of Norwest,
such Norwest Plan or trust, or any trustee, fiduciary or administrator
thereof, or any party dealing with any such Norwest Plan or trust, to the
tax or penalty on prohibited transactions imposed by said Section 4975 or
would result in material liability to Norwest and its subsidiaries taken
as a whole.
(v) Except as set forth on Schedule 3(o), no Norwest Plan which is
subject to Title IV of ERISA or any trust created thereunder has been
terminated, nor have there been any "reportable events" as that term is
defined in Section 4043 of ERISA with respect to any Norwest Plan, other
than those events which may result from the transactions contemplated by
this Agreement and the Merger Agreement.
A-14
<PAGE>
(vi) No Norwest Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412
of the Code (whether or not waived), during the last five Norwest Plan
years which would result in a material liability.
(vii) Neither the execution and delivery of this Agreement and the
Merger Agreement nor the consummation of the transactions contemplated
hereby and thereby will (i) result in any material payment (including,
without limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or employee or
former employee of Norwest under any Norwest Plan or otherwise, (ii)
materially increase any benefits otherwise payable under any Norwest Plan
or (iii) result in the acceleration of the time of payment or vesting of
any such benefits to any material extent.
(p) Registration Statement, etc. None of the information regarding
Norwest and its subsidiaries supplied or to be supplied by Norwest for inclusion
in (i) the Registration Statement, (ii) the Proxy Statement, or (iii) any other
documents to be filed with the SEC or any regulatory authority in connection
with the transactions contemplated hereby or by the Merger Agreement will, at
the respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading or, in the case
of the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the meeting of shareholders referred to in paragraph 4(c), be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for such meeting. All documents which Norwest and
the Norwest Subsidiaries are responsible for filing with the SEC and any other
regulatory authority in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
(q) Brokers and Finders. Neither Norwest nor any Norwest Subsidiary nor
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Norwest or any Norwest Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(r) No Defaults. Neither Norwest nor any Norwest Subsidiary is in
default, nor has any event occurred which, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Norwest and its subsidiaries taken as a whole. To
the best of Norwest's knowledge, all parties with whom Norwest or any Norwest
Subsidiary has material leases, agreements or contracts or who owe to Norwest
or any Norwest Subsidiary material obligations other than with respect to
those arising in the ordinary course of the banking business of the Norwest
Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition, on Norwest or any Norwest Subsidiary of any liability
relating to the release of hazardous substances as defined under any local,
state or federal environmental statute, regulation or
A-15
<PAGE>
ordinance including, without limitation, CERCLA, pending or to the best of
Norwest's knowledge, threatened against Norwest or any Norwest Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Norwest and its subsidiaries taken as a whole; to the best
of Norwest's knowledge there is no reasonable basis for any such proceeding,
claim or action; and to the best of Norwest's knowledge neither Norwest nor
any Norwest Subsidiary is subject to any agreement, order, judgment, or decree
by or with any court, governmental authority or third party imposing any such
environmental liability.
(t) Merger Co. As of the Closing Date, Merger Co. will be a corporation
duly organized, validly existing, duly qualified to do business and in good
standing under the laws of its jurisdiction of incorporation, and will have
corporate power and authority to own or lease its properties and assets and to
carry on its business.
4. COVENANTS OF PACKERS. Packers covenants and agrees with Norwest as
follows:
(a) Except as otherwise permitted or required by this Agreement, from the
date hereof until the Effective Time of the Merger, Packers, and each Packers
Subsidiary will: maintain its corporate existence in good standing; maintain
the general character of its business and conduct its business in its ordinary
and usual manner; extend credit in accordance with existing lending policies,
except that it shall not, without the prior written consent of Norwest (which
consent requirement shall be deemed to be waived as to any loan approval request
to which Norwest has made no response by the end of the second business day
following receipt of the request), make any new loan or modify, restructure or
renew any existing loan (except pursuant to commitments made prior to the date
of this Agreement) to any borrower if the amount of the resulting loan, when
aggregated with all other loans or extensions of credit to such person, would be
in excess of $250,000; maintain proper business and accounting records in
accordance with generally accepted principles; maintain its properties in good
repair and condition, ordinary wear and tear excepted; maintain in all material
respects presently existing insurance coverage; use its best efforts to preserve
its business organization intact, to keep the services of its present principal
employees and to preserve its good will and the good will of its suppliers,
customers and others having business relationships with it; use its best efforts
to obtain any approvals or consents required to maintain existing leases and
other contracts in effect following the Merger; comply in all material respects
with all laws, regulations, ordinances, codes, orders, licenses and permits
applicable to the properties and operations of Packers and each Packers
Subsidiary the non-compliance with which reasonably could be expected to have a
material adverse effect on Packers and the Packers Subsidiaries taken as a
whole; and permit Norwest and its representatives (including KPMG Peat Marwick)
to examine its and its subsidiaries books, records and properties and to
interview officers, employees and agents at all reasonable times when it is open
for business. No such examination by Norwest or its representatives either
before or after the date of this Agreement shall in any way affect, diminish or
terminate any of the representations, warranties or covenants of Packers herein
expressed.
(b) Except as otherwise contemplated or required by this Agreement, from
the date hereof until the Effective Time of the Merger, Packers and each Packers
subsidiary will not (without the prior written consent of Norwest): amend or
otherwise change its articles of incorporation or association or by-laws;
issue or sell or authorize for issuance or sale, or grant any options or make
other agreements with respect to the issuance or sale or conversion of, any
shares of its capital stock, phantom shares or other share-equivalents, or any
other of its securities; authorize or incur any long-term debt (other than
deposit liabilities); mortgage, pledge or subject to lien or other encumbrance
any of its properties,
A-16
<PAGE>
except in the ordinary course of business; enter into any material agreement,
contract or commitment in excess of $25,000 except banking transactions in the
ordinary course of business and in accordance with policies and procedures in
effect on the date hereof; make any individual investments except investments
made by bank subsidiaries in the ordinary course of business for terms of up
to one year and in amounts of $100,000 or less; amend or terminate any Plan
except as required by law; make any contributions to any Plan except as
required by the terms of such Plan in effect as of the date hereof; declare,
set aside, make or pay any dividend or other distribution with respect to its
capital stock except any dividend declared by a subsidiary's Board of
Directors in accordance with applicable law and regulation; redeem, purchase
or otherwise acquire, directly or indirectly, any of the capital stock of
Packers; increase the compensation of any officers, directors or executive
employees, except pursuant to existing compensation plans and practices; sell
or otherwise dispose of any shares of the capital stock of any Packers
Subsidiary; or sell or otherwise dispose of any of its assets or properties
other than in the ordinary course of business.
(c) The Board of Directors of Packers will duly call, and will cause to be
held not later than twenty-five (25) business days following the effective date
of the Registration Statement referred to in paragraph 5(c) hereof, 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 Packers will (i)
cause proper notice of such meeting to be given to its shareholders in
compliance with the Nebraska Business Corporation Act and other applicable law
and regulation, (ii) recommend by the affirmative vote of the Board of Directors
a vote in favor of approval of this Agreement and the Merger Agreement, and
(iii) use its best efforts to solicit from its shareholders proxies in favor
thereof.
(d) Packers will furnish or cause to be furnished to Norwest all the
information concerning Packers and its subsidiaries required for inclusion in
the Registration Statement referred to in paragraph 5(c) hereof, or any
statement or application made by Norwest to any governmental body in connection
with the transactions contemplated by this Agreement. Any financial statement
for any fiscal year provided under this paragraph must include the audit opinion
and the consent of KMPG Peat Marwick LLP to use such opinion in such
Registration Statement.
(e) Packers 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 Packers 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) Packers will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(g) Packers will hold in confidence all documents and information
concerning Norwest and its subsidiaries furnished to Packers 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 Packers' outside professional advisers
in connection with this Agreement, with the same undertaking from such
professional advisers. If the transactions contemplated by this Agreement shall
not be consummated, such confidence shall be maintained and such information
shall not be used in competition with Norwest (except to the extent that such
information can be shown to be previously known to Packers, in the public
domain, or later acquired by Packers from other legitimate sources) and, upon
request, all such documents, any copies thereof and extracts therefrom shall
immediately thereafter be returned to Norwest.
A-17
<PAGE>
(h) Neither Packers, nor any Packers Subsidiary, nor any director,
officer, representative or agent thereof, will, directly or indirectly, solicit,
authorize the solicitation of or enter into any discussions with any
corporation, partnership, person or other entity or group (other than Norwest)
concerning any offer or possible offer (i) to purchase any shares of common
stock, any option or warrant to purchase any shares of common stock, any
securities convertible into any shares of such common stock, or any other equity
security of Packers or any Packers 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 Packers or any Packers
Subsidiary except in the ordinary course of business, or (iv) to merge,
consolidate or otherwise combine with Packers or any Packers Subsidiary. If any
corporation, partnership, person or other entity or group makes an offer or
inquiry to Packers or any Packers Subsidiary concerning any of the foregoing,
Packers or such Packers Subsidiary will promptly disclose such offer or inquiry,
including the terms thereof, to Norwest.
(i) Packers shall consult with Norwest as to the form and substance of any
proposed press release or other proposed public disclosure of matters related to
this Agreement or any of the transactions contemplated hereby.
(j) Packers and each Packers Subsidiary will take all action necessary or
required (i) to terminate or amend, if requested by Norwest, all qualified
pension and welfare benefit plans and all non-qualified benefit plans and
compensation arrangements as of the Effective Date of the Merger to facilitate
the merger of such plans with Norwest plans without gaps in coverage for
participants in the plans and without duplication of costs caused by the
continuation of such plans after coverage is available under Norwest plans
provided, however, that no such action shall be required if, in the reasonable
opinion of Packer's counsel, such termination or amendment shall result in any
additional liability to members of the board of directors of Packers under
ERISA, and (ii) to submit application to the Internal Revenue Service for a
favorable determination letter for each of the Plans which is subject to the
qualification requirements of Section 401(a) of the Code prior to the Effective
Date of the Merger.
(k) Packers shall use its best efforts to obtain and deliver at least 32
days prior to the Effective Date of the Merger signed representations
substantially in the form attached hereto as Exhibit B to Norwest by each
executive officer, director or shareholder of Packers who may reasonably be
deemed an "affiliate" of Packers within the meaning of such term as used in Rule
145 under the Securities Act.
(l) Packers shall establish such additional accruals and reserves as may be
necessary to conform Packers' accounting and credit loss reserve practices and
methods to those of Norwest and Norwest's plans with respect to the conduct of
Packers' business following the Merger and, to the extent permitted by generally
accepted accounting principles, to provide for the costs and expenses relating
to the consummation by Packers of the Merger and the other transactions
contemplated by this Agreement.
(m) Except for the Phase I environmental assessment for the bank facility
located at 5106 L Street in Omaha, Packers 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 four (4) weeks and written reports shall
be delivered to Norwest no later than eight (8) weeks from the date of this
Agreement. Except for the Phase II environmental assessment for the bank
facility located at 5106 L Street in Omaha, Packers 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.
Packers shall obtain a survey and assessment
A-18
<PAGE>
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 (4) weeks of execution of the definitive
agreement.
(n) Packers shall obtain, at its sole expense, commitments for title
insurance and boundary surveys for each bank facility which shall be delivered
to Norwest no later than four (4) weeks from the date of this Agreement.
(o) Packers shall make a good faith effort to complete the actions set
forth in the Compliance Action Plan, dated May 1, 1997 (the "Compliance Plan"),
which has been furnished to Packers by Norwest.
(p) Packers shall take such actions as may be necessary (i) to rescind any
stock option plan relating to the capital stock of Packers or any Packers
Subsidiary ("Stock Option Plan"), including the stock option plan originally
approved by the board of directors of Packers on January 17, 1996, and (ii) to
obtain binding releases of any liability under each such stock option plan from
each participant or proposed participant therein, including but not limited to
Jim Riha, Emmet Tinley and Tom Cover.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with Packers as
follows:
(a) From the date hereof until the Effective Time of the Merger, Norwest
will maintain its corporate existence in good standing; conduct, and cause the
Norwest Subsidiaries to conduct, their respective businesses in compliance with
all material obligations and duties imposed on them by all laws, governmental
regulations, rules and ordinances, and judicial orders, judgments and decrees
applicable to Norwest or the Norwest Subsidiaries, their businesses or their
properties; maintain all books and records of it and the Norwest Subsidiaries,
including all financial statements, in accordance with the accounting principles
and practices consistent with those used for the Norwest Financial Statements,
except for changes in such principles and practices required under generally
accepted accounting principles.
(b) Norwest will furnish to Packers all the information concerning Norwest
required for inclusion in a proxy statement or statements to be sent to the
shareholders of Packers, or in any statement or application made by Packers to
any governmental body in connection with the transactions contemplated by this
Agreement.
(c) As promptly as practicable after the execution of this Agreement,
Norwest will file with the SEC a registration statement on Form S-4 (the
"Registration Statement") under the Securities Act and any other applicable
documents, relating to the shares of Norwest Common Stock to be delivered to the
shareholders of Packers 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 Packers shareholders, at
the time of the Packers 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
A-19
<PAGE>
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 Packers or any Packers subsidiary for
use in the Registration Statement or the Prospectus.
(d) Norwest will file all documents required to be filed to list the
Norwest Common Stock to be issued pursuant to the Merger Agreement on the New
York Stock Exchange and the Chicago Stock Exchange and use its best efforts to
effect said listings.
(e) The shares of Norwest Common Stock to be issued by Norwest to the
shareholders of Packers 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 Packers pursuant to the Merger Agreement are and will be free of
any preemptive rights of the stockholders of Norwest.
(f) Norwest will file all documents required to obtain, prior to the
Effective Time of the Merger, all necessary Blue Sky permits and approvals, if
any, required to carry out the transactions contemplated by this Agreement, will
pay all expenses incident thereto and will use its best efforts to obtain such
permits and approvals.
(g) Norwest will take all necessary corporate and other action and file
all documents required to obtain and will use its best efforts to obtain all
approvals of regulatory authorities, consents and approvals required of it to
carry out the transactions contemplated by this Agreement and will cooperate
with Packers to obtain all such approvals and consents required by Packers.
(h) Norwest will hold in confidence all documents and information
concerning Packers and Packers' Subsidiaries furnished to it and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to its outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with Packers (except to the extent that such information
can be shown to be previously known to Norwest, in the public domain, or later
acquired by Norwest from other legitimate sources) and, upon request, all such
documents, copies thereof or extracts therefrom shall immediately thereafter be
returned to Packers.
(i) Norwest will file any documents or agreements required to be filed in
connection with the Merger under the Nebraska Business Corporation Act.
(j) Norwest will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(k) Norwest shall consult with Packers as to the form and substance of any
proposed press release or other proposed public disclosure of matters related to
this Agreement or any of the transactions contemplated hereby.
(l) Norwest shall give Packers notice of receipt of the regulatory
approvals referred to in paragraph 7(e).
(m) For a period not exceeding fifteen days prior to the Closing Date,
Norwest will permit Packers and its representatives to examine its books,
records and properties and
A-20
<PAGE>
interview officers, employees and agents of Norwest at all reasonable times
when it is open for business. No such examination by Packers or its
representatives shall in any way affect, diminish or terminate any of the
representations, warranties or covenants of Norwest herein expressed.
(n) Norwest, as sole shareholder of Merger Co., shall vote all of the
outstanding shares of Merger Co. in favor of the Agreement and the Merger
Agreement in accordance with the Articles of Incorporation of Merger Co. and the
Nebraska Business Corporation Act.
6. CONDITIONS PRECEDENT TO OBLIGATION OF PACKERS. The obligation of
Packers 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 Packers:
(a) Except as they may be affected by transactions contemplated hereby and
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for activities or transactions
after the date of this Agreement made in the ordinary course of business and not
expressly prohibited by this Agreement, the representations and warranties
contained in paragraph 3 hereof shall be true and correct in all respects
material to Norwest and its subsidiaries taken as a whole as if made at the Time
of Filing.
(b) Norwest shall have, or shall have caused to be, performed and observed
in all material respects all covenants, agreements and conditions hereof to be
performed or observed by it and Merger Co. at or before the Time of Filing.
(c) Packers shall have received a favorable certificate, dated as of the
Effective Date of the Merger, signed by the Chairman, the President or any
Executive Vice President or Senior Vice President and by the Secretary or
Assistant Secretary of Norwest, as to the matters set forth in subparagraphs (a)
and (b) of this paragraph 6.
(d) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Packers required for approval of a plan of merger in accordance with the
provisions of Packers' Articles of Incorporation and the Nebraska Business
Corporation Act.
(e) Norwest shall have received approval by the Federal Reserve Board and
by such other governmental agencies as may be required by law of the
transactions contemplated by this Agreement and the Merger Agreement and all
waiting and appeal periods prescribed by applicable law or regulation shall have
expired.
(f) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(g) The shares of Norwest Common Stock to be delivered to the stockholders
of Packers pursuant to this Agreement and the Merger Agreement shall have been
authorized for listing on the New York Stock Exchange and the Chicago Stock
Exchange.
(h) Packers shall have received an opinion, dated the Closing Date, of
counsel or accountant to Packers, 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 Packers Common Stock upon receipt of
Norwest Common Stock except for cash received in lieu of
A-21
<PAGE>
fractional shares; (iii) the basis of the Norwest Common Stock received by the
shareholders of Packers will be the same as the basis of Packers Common Stock
exchanged therefor; and (iv) the holding period of the shares of Norwest
Common Stock received by the shareholders of Packers will include the
holding period of the Packers Common Stock, provided such shares of Packers
Common Stock were held as a capital asset as of the Effective Time of the
Merger.
(i) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened and be unresolved. Norwest shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATION OF NORWEST. The obligation of
Norwest to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following conditions, which may be waived in writing
by Norwest:
(a) Except as they may be affected by transactions contemplated hereby and
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for activities or transactions
or events occurring after the date of this Agreement made in the ordinary course
of business and not expressly prohibited by this Agreement, the representations
and warranties contained in paragraph 2 hereof shall be true and correct in all
respects material to Packers and the Packers Subsidiaries taken as a whole as if
made at the Time of Filing.
(b) Packers shall have, or shall have caused to be, performed and observed
in all material respects all covenants, agreements and conditions hereof to be
performed or observed by it at or before the Time of Filing.
(c) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Packers required for approval of a plan of merger in accordance with the
provisions of Packers' Articles of Incorporation and the Nebraska Business
Corporation Act.
(d) Norwest shall have received a favorable certificate dated as of the
Effective Date of the Merger signed by the Chairman or President and by the
Secretary or Assistant Secretary of Packers, as to the matters set forth in
subparagraphs (a) through (c) of this paragraph 7.
(e) Norwest shall have received approval by all governmental agencies as
may be required by law of the transactions contemplated by this Agreement and
the Merger Agreement and all waiting and appeal periods prescribed by applicable
law or regulation shall have expired. No approvals, licenses or consents
granted by any regulatory authority shall contain any condition or requirement
relating to Packers or any Packers Subsidiary that, in the good faith judgment
of Norwest, is unreasonably burdensome to Norwest.
(f) Packers and each Packers Subsidiary shall have obtained any and all
material consents or waivers from other parties to loan agreements, leases or
other contracts material to Packers' or such subsidiary's business required for
the consummation of the Merger, and Packers and each Packers Subsidiary shall
have obtained any and all material permits, authorizations, consents, waivers
and approvals required for the lawful consummation by it of the Merger.
A-22
<PAGE>
(g) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(h) At any time since the date hereof the total number of shares of
Packers Common Stock outstanding and subject to issuance upon exercise (assuming
for this purpose that phantom shares and other share-equivalents constitute
Packers Common Stock) of all warrants, options, conversion rights, phantom
shares or other share-equivalents shall not have exceeded 352,362. At no time
since the date hereof, no shares of Packers Preferred Stock shall have been
outstanding and no shares shall have been subject to issuance upon exercise
(assuming for this purpose that phantom shares and other share-equivalents
constitute Packers Preferred Stock) of all warrants, options, conversion
rights, phantom shares or other share-equivalents.
(i) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened or be unresolved. Norwest shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(j) Norwest shall have received from the Chief Executive Officer and Chief
Financial Officer of Packers 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 Packers 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 Packers;
(ii) the amounts reported in the interim quarterly financial
statements of Packers agree with the general ledger of Packers;
(iii) the annual and quarterly financial statements of Packers and the
Packers 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 Packers and the Packers 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 Packers and the Packers 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 Packers and the
Packers 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
A-23
<PAGE>
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 Packers and the Packers 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 Packers
and the Packers Subsidiaries and have found them to be in agreement with
financial records and analyses prepared by Packers included in the annual
and quarterly financial statements, except as disclosed in such letters.
(k) Packers and the Packers 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.
(l) There shall be no reasonable basis for any proceeding, claim or action
of any nature seeking to impose, or that could result in the imposition on
Packers or any Packers Subsidiary of, any liability relating to the release of
hazardous substances as defined under any local, state or federal environmental
statute, regulation or ordinance including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended, which has had or could reasonably be expected to have a material
adverse effect upon Packers and its subsidiaries taken as a whole.
(m) Since December 31, 1996, no change shall have occurred and no
circumstances shall exist which has had or might reasonably be expected to have
a material adverse effect on the financial condition, results of operations,
business or prospects of Packers and the Packers 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).
(n) Packers shall have made a good faith effort to complete the actions
set forth in the Compliance Plan.
(o) Packers shall have rescinded any Stock Option Plan and shall have
obtained and delivered to Norwest the binding releases described in paragraph
4(p) of this Agreement.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of Packers or
any Packers Subsidiary as of the Effective Date of the Merger ("Packers
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 Packers 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
and shall enter each plan not later than the first day of the calendar quarter
which begins at least 32 days after the Effective Date of the Merger (provided,
however, that it is Norwest's intent that the transition from the Packers plans
to the Norwest plans be facilitated without gaps in coverage to the participants
and without duplication in costs to Norwest):
Medical Plan
Dental Plan
A-24
<PAGE>
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
For the purpose of determining each Packers Employee's benefit for the year in
which the Merger occurs under the Norwest vacation program, vacation taken by a
Packers Employee in the year in which the Merger occurs will be deducted from
the total Norwest benefit.
Packers Employees shall receive credit for years of service to Packers, the
Packers Subsidiaries and any predecessors of the Packers Subsidiaries (to the
extent credited under the severance programs of Packers and the Packers
Subsidiaries) for the purpose of determining benefits under the Norwest
Severance Pay Plan.
(b) Employee Retirement Benefit Plans.
Each Packers 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 Packers and
the Packers Subsidiaries for the purpose of satisfying any eligibility and
vesting periods applicable to the SIP, to the extent credited under the
respective employee retirement benefit plans of Packers and the Packers
Subsidiaries), and shall enter the SIP not later than the first day of the
calendar quarter which begins at least 32 days after the Effective Date of the
Merger.
Each Packers Employee shall be eligible for participation, as a new employee, in
the Norwest Pension Plan under the terms thereof.
9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to the other
party if the Merger shall not have been consummated by December 31, 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; or
(iii) by Packers 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.
A-25
<PAGE>
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's wilful
and material breach of the warranties and representations made by it, or wilful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h) and 10 shall survive such termination.
10. EXPENSES. Except as otherwise specifically provided in this
Agreement, all expenses in connection with this Agreement and the transactions
contemplated hereby, including without limitation legal and accounting fees,
incurred by Packers and Packers Subsidiaries shall be borne by Packers, and all
such expenses incurred by Norwest shall be borne by Norwest.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
A-26
<PAGE>
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to Packers:
Packers Management Company, Inc.
4710 South 23rd Street
Omaha, NE 68107
Attention: Rodney P. Vandeberg, Chairman
With a copy to:
Perry, Guthery, Haase and Gessford, P.C.
1400 First Bank Building
Lincoln, NE 68501
Attention: John Guthery
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
14. COMPLETE AGREEMENT. This Agreement and the Merger Agreement contain
the complete agreement between the parties hereto with respect to the Merger and
other transactions contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
15. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
16. WAIVER AND OTHER ACTION. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to paragraph 9 hereof or
otherwise, or waive any inaccuracies in the representations and warranties by
the other party and compliance by the other party with any of the covenants and
conditions herein.
17. AMENDMENT. At any time before the Time of Filing, the parties hereto,
by action taken by their respective Boards of Directors or pursuant to authority
delegated by their respective Boards of Directors, may amend this Agreement;
provided, however, that no amendment after approval by the shareholders of
Packers shall be made which changes in a manner adverse to such shareholders the
consideration to be provided to said shareholders pursuant to this Agreement and
the Merger Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation,
warranty or covenant contained in the Agreement or the Merger Agreement shall
survive the Merger or except as set forth in paragraph 9(b), the termination of
this Agreement. Paragraph 10 shall survive the Merger.
A-27
<PAGE>
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NORWEST CORPORATION PACKERS MANAGEMENT COMPANY, INC.
By: ________________________ By: ________________________
Its: ________________________ Its: ________________________
ph1k0100.packers
A-28
<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF MERGER
Between
PACKERS MANAGEMENT COMPANY, INC.
a Nebraska corporation
(the surviving corporation)
AND
PMC MERGER CO.
a Nebraska corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of November ___, 1997, between
PACKERS MANAGEMENT COMPANY, INC., a Nebraska corporation (hereinafter sometimes
called "Packers" and sometimes called the "surviving corporation") and PMC
MERGER CO., a Nebraska corporation ("Merger Co.")(said corporations being
hereinafter sometimes referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest Corporation
("Norwest"), was incorporated by Articles of Incorporation filed in the office
of the Secretary of State of the State of Nebraska on September ___, 1997, and
said corporation is now a corporation subject to and governed by the provisions
of the Nebraska Business Corporation Act. Merger Co. has authorized capital
stock of 10,000 shares of common stock, par value of $10.00 per share ("Merger
Co. Common Stock"). As of October ___, 1997, there were 100 shares of Merger Co.
Common Stock outstanding and no shares were held in the treasury; and
WHEREAS, Packers was incorporated by Articles of Incorporation filed in the
office of the Secretary of State of the State of Nebraska on June 14, 1968, and
said corporation is now a corporation subject to and governed by the provisions
of the Nebraska Business Corporation Act. The authorized capital stock of
Packers consists of 5,000 shares of preferred stock, $100 par value per share,
of which as of the close of business on October ___, 1997, no shares were
outstanding and no shares were held in the treasury, and 500,00 shares of common
stock, $2.50 par value ("Packers Common Stock"), of which as of the close of
business on October ___, 1997, 352,362 shares were outstanding and 25,968 shares
were held in the treasury; and
WHEREAS, Norwest and Packers are parties to an Agreement and Plan of
Reorganization dated as of May 2, 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 corporation 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 Packers, with Packers continuing as the surviving corporation, on
the terms and conditions hereinafter set forth in accordance with the provisions
of the Nebraska Business Corporation Act, which statute permits such merger; and
WHEREAS, it is the intent of the parties to effect a merger which qualifies
as a tax-free reorganization pursuant to Section 368(a)(2)(E) of the Internal
Revenue Code;
B-1
<PAGE>
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Merger Co. and Packers, 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 Packers pursuant to the laws of the State of
Nebraska, and do hereby agree upon, prescribe and set forth the terms and
conditions of the merger of Merger Co. with and into Packers, the mode of
carrying said merger into effect, the manner and basis of converting the
shares of Packers Common Stock into shares of common stock of Norwest, par
value $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
Packers, 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 remain Packers Management Company, Inc..
SECOND: The Articles of Incorporation of Packers at the time of merger
shall be the Articles of Incorporation of the surviving corporation until
amended according to law
THIRD: The By-Laws of Packers at the time of merger shall be and remain
the By-Laws of the surviving corporation until amended according to the
provisions of the Articles of Incorporation of the surviving corporation or of
said By-Laws.
FOURTH: At the time of merger, the following named persons shall be the
directors of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected and qualify:
Stanley S. Stroup
John T. Thornton
William H. Queenen
FIFTH: The officers of Merger Co. at the time of merger shall be and
remain the officers of the surviving corporation and shall hold office from the
time of merger until their respective successors are elected or appointed and
qualify.
SIXTH: The manner and basis of converting the shares of Packers Common
Stock into shares of Norwest Common Stock shall be as follows:
1. Each of the shares of Packers Common Stock outstanding immediately
prior to the time of merger (other than shares as to which statutory
dissenters' rights, if any, have been exercised) shall at the time of
merger, by virtue of the merger and without any action on the part of the
holder or holders thereof, be converted into and exchanged for a number of
shares of Norwest Common Stock determined by dividing the Adjusted Norwest
Shares (as defined in the Reorganization Agreement) by the number of shares
of Packers Common Stock outstanding immediately prior to the Merger.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate for shares of Packers 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 Nebraska, 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 above set forth. Until so surrendered each
B-2
<PAGE>
certificate which, immediately prior to the time of merger, represented
shares of Packers Common Stock shall not be transferable on the books of
the surviving corporation but shall be deemed (except for the payment of
dividends as provided below) to evidence ownership of the number of whole
shares of Norwest Common Stock into which such shares of Packers Common
Stock have been converted on the basis above set forth; provided, however,
that, until the holder of such certificate shall have surrendered the same
for exchange as above set forth, no dividend payable to holders of record
of Norwest Common Stock as of any date subsequent to the effective date of
merger shall be paid to such holder with respect to the Norwest Common
Stock represented by such certificate, but, upon surrender and exchange
thereof as herein provided, there shall be paid by the 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 corporate event, or if a stock dividend
thereon shall be declared with a record date within such period (a "Norwest
Common Stock Adjustment"), then (i) the number of shares of Norwest Common
Stock into which a share of Packers 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 Packers Common Stock shall be converted will equal the number of
shares of Norwest Common Stock which the holder of a share of Packers
Common Stock would have received pursuant to such reclassification,
recapitalization, split-up, combination, exchange of shares, readjustment
or similar corporate event, or stock dividend had the record date for the
Norwest Common Stock Adjustment been immediately following the time of
merger and (ii) if a Norwest Common Stock Adjustment occurs between the
date hereof and any date that the closing price of a share of Norwest
Common Stock is used for purposes of this Agreement, the closing price of a
share of Norwest Common Stock for such purposes shall be the sum of the
closing prices on the date of each such determination of the number of
shares of Norwest Common Stock and other securities, if any, (in each case
as reported on the consolidated tape of the New York Stock Exchange on such
date) issued with respect to one share of Norwest Common Stock as a result
of the Norwest Common Stock Adjustment.
4. No fractional shares of Norwest Common Stock and no certificates or
scrip certificates therefor shall be issued to represent any such
fractional interest, and any holder of a fractional interest shall be paid
an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Norwest Common Stock as reported by the
consolidated tape of the New York Stock Exchange for each of the five (5)
trading days immediately preceding the time 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 (1) share of
the surviving corporation after the time of merger.
B-3
<PAGE>
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 the Articles of
Merger (as described in subparagraph 1(b) of this Article Seventh) shall be
delivered to and filed by the Secretary of State of the State of Nebraska;
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 Packers in accordance with the Nebraska 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 Nebraska 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 Packers and by the Secretary or an Assistant Secretary
of Packers, and shall be filed in the office of the Secretary of
State of the State of Nebraska in accordance with the Nebraska
Business Corporation Act; and
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 Packers shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by the Nebraska
Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. The registered office of Packers in the State of Nebraska shall be 206
So. 18th Street, Suite 1500, Lincoln, NE 68508, and the name of the
registered agent of Packers at such address is C T Corporation System.
2. If at any time Packers 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 Packers 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 Packers 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 Packers 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
Nebraska.
B-4
<PAGE>
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 Nebraska, this Agreement may be
terminated in accordance with the terms of the Reorganization Agreement
upon approval by the Board of Directors of either of the constituent
corporations notwithstanding the approval of the shareholders of either
constituent corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers, pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
PMC MERGER CO.
By: ________________________
Its: ________________________
Attest:
__________________________
Secretary
PACKERS MANAGEMENT COMPANY, INC.
By: _________________________
Its: _________________________
Attest:
___________________________
Secretary
B-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes indemnification
of directors and officers of a Delaware corporation under certain circumstances
against expenses, judgments and the like in connection with an action, suit or
proceeding. Article Fourteenth of Norwest's Restated Certificate of
Incorporation provides for broad indemnification of directors and officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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,
4.2and 4.3 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 between Packers Management
Company, Inc. and Norwest Corporation (included in Proxy
Statement-Prospectus as Appendix A).
2.2 -- Agreement and Plan of Merger between Packers Management Company,
Inc. and PMC 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).
II-1
<PAGE>
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 Stanley S. Stroup, counsel to Norwest.
8 -- Opinion of Perry, Guthery, Haase and Gessford.*
23.1 -- Consent of Stanley S. Stroup (included as part of Exhibit 5).
23.2 -- Consent of KPMG Peat Marwick LLP.
23.3 -- Consent of KPMG Peat Marwick LLP.
23.4 -- Consent of Perry, Guthery, Haase and Gessford, P.C. (included as a
part of Exhibit 8).
24 -- Powers of Attorney.
99 -- Form of proxy for Special Meeting of Shareholders of Packers
Management Company, Inc.
- -------------------------------
*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-2
<PAGE>
(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 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.
II-3
<PAGE>
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on October 16, 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, the Registration
Statement has been signed on October 16, 1997 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 )
LLOYD P. JOHNSON )
REATHA CLARK KING ) A majority of the
RICHARD M. KOVACEVICH ) Board of Directors*
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 between Packers Management
Corporation and Norwest Corporation (included in Proxy Statement-
Prospectus as Appendix A).
2.2 Agreement and Plan of Merger between Packers Management Company, Inc.
and PMC 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 14, 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).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Form of
Number Description* Filing
- ------ ------------ ------------
<S> <C> <C>
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 Stanley S. Stroup, counsel to Norwest. Electronic
Transmission
8 Opinion of Perry, Guthery, Haase and Gessford, P.C.**
23.1 Consent of Stanley S. Stroup (included as part of
Exhibit 5 filed herewith).
23.2 Consent of KPMG Peat Marwick LLP. Electronic
Transmission
23.3 Consent of KPMG Peat Marwick LLP. Electronic
Transmission
23.4 Consent of Perry, Guthery, Haase and Gessford, P.C.
included as part of Exhibit 8).
24 Powers of Attorney. Electronic
Transmission
99 Form of proxy for Special Meeting of Shareholders Electronic
of Woodhaven National Bank Transmission
</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, 4.2 and 4.3 are incorporated by
reference from such exhibits to the indicated reports of Norwest filed with
the SEC under File No. 1-2979.
** To be filed by amendment.
<PAGE>
EXHIBIT 5
[LETTERHEAD OF STANLEY S. STROUP]
October 16, 1997
Board of Directors
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1000
Ladies and Gentlemen:
In connection with the proposed registration under the Securities Act of
1933, as amended, of up to 1,300,000 shares of common stock, par value $1-2/3
per share ("Common Stock"), of Norwest Corporation, a Delaware corporation (the
"Corporation"), as adjusted to reflect the two-for-one split of Common Stock in
the form of a 100% stock dividend distributed on October 10, 1997 (as so
adjusted, the "Shares"), which are proposed to be issued by the Corporation in
connection with the merger (the "Merger") of a wholly-owned subsidiary of the
Corporation with Packers Management Company, Inc., I have examined such
corporate records and other documents, including the Registration Statement on
Form S-4 relating to the Shares, and have reviewed such matters of law as I have
deemed necessary for this opinion, and I advise you that in my opinion:
1. The Corporation is a corporation duly organized and existing under the
laws of the State of Delaware.
2. All necessary corporate action on the part of the Corporation has been
taken to authorize the issuance of the Shares in connection with the Merger,
and, when issued as described in the Registration Statement, the Shares will be
legally and validly issued, fully paid and nonassessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Stanley S. Stroup
<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 16, 1997
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF KPMG Peat Marwick LLP]
Independent Auditors' Consent
-----------------------------
The Board of Directors
Packers Management Company, Inc.:
We consent to the use of our report dated January 17, 1997 included herein and
to the reference to our firm under the heading "EXPERTS" in the proxy statement-
prospectus.
/s/ /s/ KPMG Peat Marwick LLP
Omaha, Nebraska
October 16, 1997
<PAGE>
EXHIBIT 24
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary and to file the same, with all exhibits thereto
and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Les S. Biller
-----------------
Les S. Biller
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ J.A. Blanchard
-----------------------
J.A. Blanchard III
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ David A. Christensen
------------------------
David A. Christensen
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Pierson M. Grieve
---------------------
Pierson M. Grieve
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Charles M. Harper
---------------------
Charles M. Harper
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ William A. Hodder
---------------------
William A. Hodder
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Lloyd P. Johnson
--------------------
Lloyd P. Johnson
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Reatha Clark King
---------------------
Reatha Clark King
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Richard M. Kovacevich
-------------------------
Richard M. Kovacevich
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Richard D. McCormick
------------------------
Richard D. McCormick
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Cynthia H. Milligan
-----------------------
Cynthia H. Milligan
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Benjamin F. Montoya
-------------------------
Benjamin F. Montoya
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Ian M. Rolland
------------------
Ian M. Rolland
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S. STROUP, JOHN T.
THORNTON AND LAUREL A. HOLSCHUH, and each or any one of them, the undersigned's
true and lawful attorneys-in-fact, with power of substitution, for the
undersigned and in the undersigned's name, place and stead, to sign and affix
the undersigned's name as such director and/or officer of said Corporation to a
Registration Statement on Form S-4 or other applicable form, and all amendments,
including post-effective amendments, thereto, to be filed by said Corporation
with the Securities and Exchange Commission, Washington, D.C., in connection
with the registration under the Securities Act of 1933, as amended, of up to
650,000 shares of Common Stock of the Corporation which may be issued in
connection with the acquisition by the Corporation of Packers Management
Company, Inc. and its subsidiary, and to file the same, with all exhibits
thereto and other supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney this
22nd day of April, 1997.
/s/ Michael W. Wright
------------------------
Michael W. Wright
<PAGE>
PACKERS MANAGEMENT COMPANY, INC
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints _______________,_______________, and _______,
or any of them, as proxies to vote all shares of Common Stock the undersigned is
entitled to vote at the Special Meeting of Stockholders of Packers Management
Company, Inc. ("Packers") to be held at ___________________________________,
Omaha, Nebraska on ____________, 1997, or at any adjournment or postponement
thereof, as follows, hereby revoking any proxy previously given:
1. To approve the Agreement and Plan of Reorganization dated May 2, 1997 (the
"Reorganization Agreement") between Packers and Norwest Corporation ("Norwest")
and the related Agreement and Plan of Merger dated __________, 1997 (the "Plan
of Merger") pursuant to which a wholly-owned subsidiary of Norwest will merge
with Packers and Packers will become a wholly-owned subsidiary of Norwest (the
"Merger"), all upon the terms and subject to the conditions set forth in the
Reorganization Agreement and the Plan of Merger, copies of which are included as
Appendix A and Appendix B, respectively, in the accompanying Proxy Statement-
Prospectus; and to authorize such further action by the board of directors and
officers of Packers as may be necessary or appropriate to carry out the intent
and purposes of the Merger.
FOR / / AGAINST / / ABSTAIN / /
2. In the discretion of the persons appointed proxies hereby on such
other matters as may properly come before the Special Meeting.
Shares represented by this proxy will be voted as directed by the
stockholder. The Board of Directors recommends a vote "FOR" proposal 1. If no
direction is supplied, the proxy will be voted "FOR" proposal 1.
Dated:_______________________________, 199_.
___________________________________________
(Please sign exactly as name appears at left.)
___________________________________________
(If stock is owned by more than one person, all
owners should sign. Persons signing as executors,
administrators, trustees, or in similar
capacities should so indicate.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF PACKERS MANAGEMENT COMPANY, INC.
