<PAGE>
As filed with the Securities and Exchange Commission on September 17, 1998
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 55479-10007
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 William T. Luedke IV
Norwest Corporation Bracewell & Patterson, L.L.P.
Norwest Center South Tower Penzoil Place
Sixth and Marquette 711 Louisiana Street, Suite 2900
Minneapolis, Minnesota 55479-1026 Houston, Texas 77002-2781
--------------------------------
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
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<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 750,000 N/A $10,803,000(2) $3,186.89(3)
(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) 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, 1998
of all shares of common stock to be acquired by the registrant in the
transaction described herein.
(3) Based on .000295 of the proposed maximum aggregate offering price.
--------------------------------
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>
[First National Bank symbol]
================================================================================
The board of directors of First period of 20 trading days ending on
National Bank of Missouri City has the day immediately before the
approved the acquisition of First special meeting.
National Bank by Norwest
Corporation. The acquisition is For example, if this average is $35,
subject to the approval of First you would receive approximately 2.44
National Bank's shareholders. A shares of Norwest common stock for
special meeting of shareholders each share of First National Bank
will be held to vote on the common stock you own. If this
proposed acquisition. The date, average is $30, you would receive
time and place of the meeting are approximately 2.85 shares of Norwest
as follows: common stock for each share of First
National Bank common stock.
FRIDAY, OCTOBER 30, 1998
__:___.M., LOCAL TIME The closing price of Norwest common
3660 HAMPTON DRIVE stock on September __, 1998 was
MISSOURI CITY, TEXAS 77459 $_____ a share.
If the acquisition is completed, Whether or not you plan to attend the
Norwest will exchange $26,000,000 meeting, please complete and mail the
of its common stock for all of the enclosed proxy card. If you sign,
outstanding common stock of First date and mail your proxy card without
National Bank. Based on 304,449 indicating how you want to vote, your
shares of First National Bank proxy will be voted in favor of the
common stock outstanding, this acquisition. If you fail to return
works out to approximately $85.40 your card, the effect will be the
of Norwest common stock for each same as a vote against the
share of First National Bank acquisition.
common stock.
This Proxy Statement-Prospectus
The exchange ratio, or the number provides detailed information about
of shares of Norwest common stock the proposed acquisition. Please
you will receive for each share of read this entire document carefully.
First National Bank common stock
you own, will be determined by
dividing $85.40 by the average of
the closing prices of a share of R. Fred Beeler, Chairman of the Board
Norwest common stock as reported
on the New York Stock Exchange
composite tape for the
- --------------------------------------------------------------------------------
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" ON PAGE ___.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NORWEST COMMON STOCK TO BE ISSUED
OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROXY STATEMENT-PROSPECTUS DATED SEPTEMBER 30, 1998.
FIRST MAILED TO FIRST NATIONAL BANK SHAREHOLDERS ON OR ABOUT SEPTEMBER 30, 1998.
<PAGE>
IMPORTANT INFORMATION NOT INCLUDED
IN THIS PROXY STATEMENT-PROSPECTUS
This Proxy Statement-Prospectus incorporates important business and
financial information about Norwest that is not included in or delivered with
this document. Page __ has a list of the documents containing this information.
This information is available to you without charge upon written or oral request
to Norwest's Corporate Secretary as follows:
Corporate Secretary
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Telephone (612) 667-8655
TO RECEIVE DOCUMENTS IN TIME FOR THE SPECIAL MEETING, YOUR REQUEST MUST BE
RECEIVED NO LATER THAN OCTOBER 22, 1998.
<PAGE>
TABLE OF CONTENTS
GLOSSARY OF IMPORTANT TERMS..................................
QUESTIONS AND ANSWERS
ABOUT THE CONSOLIDATION......................................
QUESTIONS AND ANSWERS ABOUT
THIS PROXY STATEMENT-
PROSPECTUS....................................................
SUMMARY.......................................................
Parties to the Consolidation.................................
Reasons for the Consolidation;
Recommendation of First National Bank's
Board of Directors.........................................
Required Vote; Voting Agreements.............................
The Consolidation............................................
Comparative Per Common Share Data............................
Selected Historical Financial Information....................
Share Prices and Dividends for
Norwest Common Stock.......................................
NORWEST-WELLS FARGO MERGER....................................
Agreement and Plan of Merger.................................
Management of the Combined Company...........................
Ownership of the Combined Company............................
Stock Option Agreements......................................
Conditions to the Norwest-Wells Fargo........................
Merger.......................................................
Significant Transaction......................................
SPECIAL MEETING OF SHAREHOLDERS...............................
Date, Time and Place of Special Meeting......................
Record Date..................................................
Voting Rights; Votes Required for Approval...................
Voting Agreements............................................
Voting and Revocation of Proxies.............................
Solicitation of Proxies......................................
Other Matters................................................
THE CONSOLIDATION.............................................
Purpose and Effect of the Consolidation......................
Background of and Reasons for the
Consolidation..............................................
Additional Interests of First National Bank's
Management in the Consolidation............................
Appraisal Rights.............................................
Exchange of Certificates.....................................
Regulatory Approvals.........................................
Effect on First National Bank's Employee
Benefit Plans..............................................
Material U.S. Federal Income Tax Consequences of the
Consolidation to First National Bank Shareholders...........
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
Consolidation..............................................
Termination of the Reorganization
Agreement..................................................
Effect of Termination........................................
Waiver and Amendment.........................................
Expenses.....................................................
COMPARISON OF RIGHTS OF HOLDERS OF FIRST NATIONAL
BANK COMMON STOCK AND NORWEST COMMON STOCK...................
Capital Stock................................................
Rights Plan..................................................
Directors....................................................
Amendment of Charter Document
and Bylaws.................................................
Approval of Consolidations and Asset Sales...................
Preemptive Rights............................................
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 FIRST NATIONAL BANK.........................
First National Bank
Legal Proceedings..........................................
Market Price and Dividends...................................
(i)
<PAGE>
Beneficial Ownership of First National Bank
Common Stock by First National Bank
Management and Principal Stockholders......................
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FIRST NATIONAL BANK'S FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.........................................
General......................................................
Six Months Ended June 30
1998 and 1997..............................................
Years Ended December 31,
1997 and 1996..............................................
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...................................................
FINANCIAL STATEMENTS OF
MISSOURI CITY................................................. F-1
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX B UNITED STATES CODE TITLE 12, SECTION 215
PARAGRAPHS (A) (C)
APPENDIX C BANKING CIRCULAR 259
(ii)
<PAGE>
GLOSSARY OF IMPORTANT TERMS
Following are the meanings of some important terms used in this Proxy
Statement-Prospectus. Each term should be considered in the context in which it
is used.
ADJUSTED NORWEST SHARES................. The number determined by dividing
$26,000,000 by the Norwest
Measurement Price.
BANK HOLDING COMPANY ACT................ Bank Holding Company Act of 1956.
CONSOLIDATION........................... The statutory consolidation of a
wholly-owned subsidiary of Norwest
with First National Bank pursuant
to the terms of the Reorganization
Agreement. The Consolidation is the
means by which Norwest will acquire
First National Bank.
DGCL.................................... Delaware General Corporation Law.
EFFECTIVE DATE OF THE CONSOLIDATION..... The date specified in the
certificate issued by OCC approving
the Consolidation.
EFFECTIVE TIME OF THE CONSOLIDATION..... 12:01 a.m, Minneapolis, Minnesota
time, on the Effective Date of the
Consolidation.
EXCHANGE ACT............................ Securities Exchange Act of 1934.
EXCHANGE RATIO.......................... The number of shares of Norwest
common stock that Norwest will
exchange in the Consolidation for
each share of First National Bank
common stock, as determined in
accordance with the formula in the
Reorganization Agreement.
FEDERAL RESERVE BOARD................... Board of Governors of the Federal
Reserve System.
FDI ACT................................. Federal Deposit Insurance Act.
FDIC.................................... Federal Deposit Insurance
Corporation.
INTERSTATE BANKING ACT.................. Reigle-Neal Interstate Banking and
Branching Act.
FIRST NATIONAL BANK..................... First National Bank of Missouri
City.
FIRST NATIONAL BANK COMMON STOCK........ First National Bank's common stock,
par value $5 per share.
NORWEST................................. Norwest Corporation and its
consolidated subsidiaries.
1
<PAGE>
NORWEST COMMON STOCK.................... Norwest's common stock, par value
$1-2/3 per share.
NORWEST MEASUREMENT PRICE............... The average of the closing prices
of a share of Norwest common stock
as reported on the New York Stock
Exchange composite tape during the
period of 20 trading days ending on
the day immediately before the
special meeting.
OCC..................................... Office of the Comptroller of the
Currency.
REORGANIZATION AGREEMENT................ The Agreement and Plan of
Reorganization dated as of June 11,
1998 between First National Bank
and Norwest.
SEC..................................... Securities and Exchange Commission.
SECURITIES ACT.......................... Securities Act of 1933.
2
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE CONSOLIDATION
Q: Why has First National Bank agreed to be acquired by
Norwest?
A: The Consolidation offers the holders of First National Bank
common stock the opportunity to acquire an equity interest
in a larger, more diversified financial institution, which
is interested in expanding its operations in Texas, but
which is not dependent solely upon the economic conditions
of the Houston metropolitan area of Texas. Norwest common
stock is publicly traded and has a history of paying
dividends. First National Bank's board of directors
anticipates that the Consolidation will expand the banking
products and services offered to customers and the community
and will enable First National Bank to compete more
effectively among banks and non-bank financial institutions.
As part of a much larger banking organization, First
National Bank will be provided with specialized staff
resources in accounting, auditing, investment, trust
management, loan review, marketing, data processing and
electronic funds transfer services.
Q: WHAT DO I NEED TO DO NOW?
A: Just sign the enclosed proxy card and mail it to First
National Bank in the enclosed return envelope as soon as
possible. This way, your shares will be represented at the
special meeting on October 30, 1998. First National Bank's
board of directors recommends that you vote FOR the
Consolidation.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the Consolidation is completed, Norwest will send
you written instructions for exchanging your stock
certificates.
Q: WHAT WILL I RECEIVE FOR MY SHARES OF FIRST NATIONAL BANK
COMMON STOCK?
A: Norwest will exchange $26,000,000 of its common stock for
all of the outstanding shares of First National Bank common
stock. Based on 304,449 shares of First National Bank common
stock outstanding, this works out to approximately $85.40 of
Norwest common stock for each share of First National Bank
common stock.
Q: HOW MANY SHARES OF NORWEST COMMON STOCK WILL I RECEIVE?
A: The exchange ratio, or the number of shares of Norwest
common stock you will receive for each share of First
National Bank common stock you own, will be determined by
dividing the Adjusted Norwest Shares by the number of shares
of First National Bank common stock then outstanding. The
number of Adjusted Norwest Shares will be determined by
dividing $26,000,000 by the Norwest Measurement Price. The
Norwest Measurement Price is the average of the closing
prices of a share of Norwest common stock for the period of
20 trading days ending on the day immediately before the
special meeting.
For example, based on 304,449 shares of First National Bank
common stock outstanding, if the Norwest Measurement Price
is $35, you would receive approximately 2.44 shares of
Norwest common stock for each share of First National Bank
common stock you own. If the Norwest Measurement Price is
$30, you would receive approximately 2.85 shares.
3
<PAGE>
Q: WHAT ARE THE TAX CONSEQUENCES TO SHAREHOLDERS OF THE
CONSOLIDATION?
A: The exchange of Norwest common stock for shares of First
National Bank common stock generally will be tax free to
First National Bank shareholders for federal income tax
purposes. First National Bank shareholders will recognize
income or gain, however, as a result of cash received
instead of fractional shares. To review the tax consequences
to First National Bank shareholders in greater detail, see
page __.
THIS TAX TREATMENT MAY NOT APPLY TO SOME FIRST NATIONAL BANK
SHAREHOLDERS BECAUSE OF THEIR SPECIFIC CIRCUMSTANCES. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING
OF THE CONSOLIDATION'S TAX CONSEQUENCES.
Q: WHEN WILL THE CONSOLIDATION BE COMPLETED?
A: First National Bank and Norwest expect to complete the
Consolidation within a few days after the special meeting,
assuming the required regulatory approvals have been
received by then.
Q: WHAT RIGHTS DO I HAVE IF I DISSENT FROM THE CONSOLIDATION?
A: You have a right to an appraisal of the fair value of your
First National Bank common stock. See page __ for
information on your appraisal rights and how to exercise
them.
Q: HOW WILL NORWEST'S PROPOSED MERGER WITH WELLS FARGO &
COMPANY AFFECT NORWEST'S ACQUISITION OF FIRST NATIONAL BANK?
A: As you may know, Norwest and Wells Fargo have agreed to
merge. Under the terms of the proposed merger, Norwest will
exchange 10 shares of its common stock for each share of
Wells Fargo common stock. The proposed merger with Wells
Fargo will be significant to the financial statements of
Norwest.
Because Wells Fargo is merging into a wholly-owned
subsidiary of Norwest, you will still receive shares of
Norwest common stock even if the Wells Fargo merger is
completed before Norwest completes its acquisition of First
National Bank.
Q: WHERE CAN I FIND INFORMATION ABOUT NORWEST'S PENDING MERGER
WITH WELLS FARGO & COMPANY?
A: Page __ summarizes the proposed merger between Norwest and
Wells Fargo. You can find more information about the merger
in Norwest's and Wells Fargo's joint proxy
statement-prospectus. For directions on how to obtain a copy
of this document, see "Where You Can Find More Information"
on page __.
4
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE PROXY STATEMENT-PROSPECTUS
Q: WHAT IS THE PURPOSE OF THIS DOCUMENT?
A: This document serves as both a proxy statement of First
National Bank and a prospectus of Norwest. As a proxy
statement, it's being provided to you because First National
Bank's board of directors is soliciting your proxy for use
at the special meeting. As a prospectus, it's being provided
to you because Norwest will exchange shares of its common
stock for your shares of First National Bank common stock.
Q: DO I NEED TO READ THE ENTIRE DOCUMENT, INCLUDING THE
APPENDICES?
A: Absolutely. Much of this Proxy Statement-Prospectus
summarizes information that is set forth in greater detail
elsewhere in this document or in the appendices to this
document. Each summary is qualified in its entirety by
reference to the information being summarized. For example,
the summary of the terms of the Reorganization Agreement is
qualified in its entirety by reference to the full text of
the Reorganization Agreement, a copy of which is included as
Appendix A. If there are any differences, the information in
the Reorganization Agreement will control over the
information in the summary. As a result, to fully understand
the Consolidation and your rights as a First National Bank
shareholder, you'll need to read carefully this entire
document including appendices.
Q: IS THERE OTHER INFORMATION I SHOULD CONSIDER?
A: This Proxy Statement-Prospectus incorporates important
business and financial information about Norwest that is not
included in or delivered with this document. For example,
Norwest's consolidated financial statements for the year
ended December 31, 1997 are not included in this document.
Instead, they are incorporated from Norwest's annual report
on Form 10-K for 1997. Norwest's 1997 Form 10-K also
contains a description of Norwest's business and a financial
review of its operations.
INFORMATION THAT IS INCORPORATED FROM ANOTHER DOCUMENT IS
CONSIDERED PART OF THIS PROXY STATEMENT-PROSPECTUS. IT'S
CONSIDERED TO HAVE BEEN DISCLOSED TO YOU WHETHER OR NOT YOU
ACTUALLY REVIEW THE INFORMATION.
Q: WHERE CAN I FIND THE INFORMATION THAT HAS BEEN INCORPORATED
BY REFERENCE?
A: Information incorporated from other documents is available
to you without charge upon written or oral request. See page
__ under "WHERE YOU CAN FIND MORE INFORMATION" for a list of
the documents that Norwest has incorporated by reference
into this Proxy Statement-Prospectus, and how to obtain
copies of these documents.
Q: WHAT ABOUT REPORTS FILED BY NORWEST AFTER THE DATE OF THIS
PROXY STATEMENT-PROSPECTUS?
A: Reports filed by Norwest with the SEC after the date of this
Proxy Statement-Prospectus may update, modify or correct
information in the documents incorporated by reference. You
should review these reports, as they could disclose a change
in the business prospects, financial condition or other
affairs of Norwest since the date of this Proxy
Statement-Prospectus.
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
Consolidation fully, and for a more complete description of the legal terms of
the Consolidation, you should carefully read this document and the other
information available to you. See "Where You Can Find More Information."
PARTIES TO THE CONSOLIDATION
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NORWEST CORPORATION.......................... Norwest is a diversified financial services company.
Sixth and Marquette Through its subsidiaries and affiliates, Norwest
Minneapolis, Minnesota 55479 provides retail, commercial and corporate banking
(612) 667-1234 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, 1998, Norwest had assets of $93.2
billion, deposits of $56.8 billion and stockholders'
equity of $7.3 billion. Based on assets at June 30,
1998, Norwest was the 12th largest commercial banking
organization in the United States.
WELLS FARGO MERGER........................ Norwest has entered into a merger agreement with
Wells Fargo & Company under which Wells Fargo will
merge into a wholly-owned subsidiary of Norwest. In
the proposed merger, Norwest will issue 10 shares of
Norwest common stock for each share of Wells Fargo
common stock. The merger is subject to a number of
conditions. Norwest expects to complete the merger
in the fourth quarter of 1998. The Wells Fargo
merger will be significant to Norwest's financial
statements. See page __ for more details on the
merger.
OTHER PENDING MERGERS AND
ACQUISITIONS............................. Norwest regularly explores opportunities to expand
its businesses through acquisitions of financial
institutions and related businesses. Discussions are
continually being carried on about possible
acquisitions. Norwest generally does not comment on
such discussions or possible acquisitions until a
definitive agreement has been signed.
At June 30, 1998, excluding the Wells Fargo merger,
Norwest had five pending acquisitions with total
assets of approximately $2.3 billion. Norwest
expects to issue approximately 14.0 million shares of
Norwest
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6
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<S> <C>
common stock to complete these five acquisitions.
Norwest expects to complete these acquisitions by
the end of 1998. These five acquisitions will not
be significant, either individually or in the
aggregate, to the financial statements of Norwest.
FIRST NATIONAL BANK.......................... First National Bank is a national banking association
3660 Hampton Drive with one full-service office located in Missouri
Missouri City, Texas 77459 City, Texas. First National Bank provides a wide
(281) 499-9999 range of lending and deposit products to its
commercial and consumer customers. First National
Bank's primary market is the city of Missouri City,
where it competes with a number of financial
institutions, including other commercial banks,
savings and loan associations, savings banks,
mortgage companies, consumer finance companies,
credit unions and insurance companies.
At June 30, 1998, First National Bank had total
assets of approximately $94.7 million, total deposits
of approximately $83.1 million and total
stockholders' equity of approximately $10.8 million.
REASONS FOR THE CONSOLIDATION;
RECOMMENDATION OF FIRST NATIONAL BANK'S
BOARD OF DIRECTORS (SEE PAGE __)............. At a meeting of First National Bank's board of
directors held on June 4, 1998, after considering the
terms and conditions of the Reorganization Agreement
and obtaining the advice of its counsel, First
National Bank's board of directors unanimously
approved the Reorganization Agreement. First
National Bank's board of directors believes that the
Consolidation is advisable and in the best interests
of First National Bank and its shareholders. First
National Bank's board of directors recommends that
First National Bank shareholders vote in favor of the
Reorganization Agreement. For a discussion of the
circumstances surrounding the Consolidation and the
factors considered by First National Bank's board of
directors in making its recommendations, see "The
Consolidation--Background of and Reasons for the
Consolidation."
The Consolidation offers the holders of First
National Bank common stock the opportunity to acquire
an equity interest in a larger, more diversified
financial institution, which is interested in
expanding its operations in Texas, but which is not
dependent solely upon the economic conditions of the
Houston metropolitan area of Texas. Norwest common
stock is publicly traded and has a history of paying
dividends. First National Bank's board of directors
anticipates
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
that the Consolidation will expand the banking
products and services offered to customers and the
community and will enable First National Bank to
compete more effectively among banks and non-bank
financial institutions. As part of a much larger
banking organization, First National Bank will be
provided with specialized staff resources in
accounting, auditing, investment, trust
management, loan review, marketing, data
processing and electronic funds transfer services.
For reasons set forth above, First National Bank's
board of directors believes the Consolidation to be
in the best interests of First National Bank's
shareholders. FIRST NATIONAL BANK'S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT FIRST NATIONAL
BANK SHAREHOLDERS VOTE FOR APPROVAL OF THE
CONSOLIDATION and has authorized consummation thereof
subject to approval of First National Bank
shareholders and the satisfaction of certain other
conditions.
REQUIRED VOTE; VOTING AGREEMENTS............... The holders of at least two-thirds of the outstanding
shares of First National Bank common stock must
approve the Consolidation. Certain First National
Bank directors and shareholders have agreed to vote
in favor of the Consolidation all shares of First
National Bank common stock beneficially owned by them
at the record date for the special meeting. At the
record date, these directors and shareholders
beneficially owned an aggregate of 233,914 shares of
First National Bank common stock, representing
approximately 76.8% of the shares of First National
Bank common stock outstanding at the record date. As
a result, these directors and shareholders can
approve the Consolidation without the vote of any
other shareholders.
THE CONSOLIDATION.............................. In the Consolidation, a newly-formed, wholly-owned
bank subsidiary of Norwest will consolidate with
First National Bank. First National Bank will be the
surviving entity in the Consolidation.
WHAT FIRST NATIONAL BANK SHAREHOLDERS
WILL RECEIVE (SEE PAGE __)................... In the Consolidation, Norwest will exchange a total
of $26,000,000 of Norwest common stock for all of the
outstanding shares of First National Bank common
stock. Based on 304,449 shares of First National
Bank common stock outstanding, Norwest will
</TABLE>
8
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<TABLE>
<S> <C>
exchange approximately $85.40 of its common stock
for each share of First National Bank common stock.
The Exchange Ratio will be determined by dividing
the Adjusted Norwest Shares by the number of shares
of First National Bank common stock then outstanding.
The number of Adjusted Norwest Shares will be
determined by dividing $26,000,000 by the Norwest
Measurement Price. The Norwest Measurement Price
will be the average of the closing prices of a share
of Norwest common stock as reported on the New York
Stock Exchange consolidated tape during the period of
20 consecutive trading days ending on the day
immediately before the special meeting.
Norwest will not issue fractional shares in the
Consolidation. If the total number of shares of
Norwest common stock you are entitled to receive in
the Consolidation does not equal a whole number,
Norwest will pay you cash instead of the fractional
share.
MANAGEMENT AND OPERATIONS OF FIRST NATIONAL
BANK AFTER THE CONSOLIDATION................ When the Consolidation is complete, Norwest will own
all of the outstanding shares of First National Bank
common stock. As a result, Norwest will be able to
elect or appoint all of the directors and officers of
First National Bank.
As a result of the Consolidation, First National Bank
will become a subsidiary of Norwest. Norwest expects that
after the Consolidation First National Bank will operate
at its current location, providing products and services
offered by Norwest affiliates.
ADDITIONAL INTERESTS OF FIRST NATIONAL
BANK'S MANAGEMENT (SEE PAGE __)............. First National Bank's management will receive the
same consideration for their shares of First National
Bank common stock as you will. Certain members of
management, however, have interests that are
different from, or in addition to, the interests of
First National Bank shareholders generally. See page
__ for a discussion of these interests.
Conditions to the Consolidation
(see page __)................................ A number of conditions must be satisfied before the
Consolidation can be completed, including the
following:
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
* The Consolidation must be approved by the holders
of at least two thirds of the outstanding First
National Bank common stock.
* The Consolidation must be approved by governmental
authorities without unreasonably burdensome demands
on Norwest.
* First National Bank must receive a legal opinion
that its shareholders will not recognize any gain or
loss for federal income tax purposes as a result of
the Consolidation (except for cash received in lieu
of fractional shares).
* There cannot be any change since December 31, 1997
that has had, or might reasonably be expected to
have, a material adverse effect on First National
Bank.
Some of the conditions to the Consolidation are
subject to exceptions and/or to a "materiality"
standard. Some conditions may also be waived by the
party entitled to assert the condition.
REGULATORY APPROVALS (SEE PAGE __)........... The Consolidation is subject to the prior approval of
the Federal Reserve Board, as the regulator of bank
holding companies such as Norwest. Federal Reserve
Board approval was received effective as of September
11, 1998. Because First National Bank is a national
bank, the Consolidation is also subject to the prior
approval of the OCC, as the primary regulator of
national banks. An application for approval is
pending with the OCC.
TERMINATION OF THE REORGANIZATION
Agreement (see page __)...................... Norwest and First National Bank can mutually agree to
terminate the Reorganization Agreement without
completing the Consolidation. Also, either party can
terminate the Reorganization Agreement under the
following circumstances:
* if a court or other governmental authority
prohibits the Consolidation; or
* the Consolidation is not completed by December 31,
1998, unless the failure to complete the
Consolidation on or before that date is the fault of
the party seeking to terminate.
First National Bank can terminate the Reorganization
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Agreement without completing the Consolidation under
certain circumstances based on the Norwest
Measurement Price.
ACCOUNTING TREATMENT (SEE PAGE __)........... Norwest expects to account for the Consolidation
under the purchase method of accounting. Norwest
will record, at fair value, the acquired assets and
assumed liabilities of First National Bank. To the
extent the total purchase price exceeds the fair
value of the assets acquired and liabilities assumed,
Norwest will record goodwill. Norwest will include
in its consolidated results of operations the results
of First National Bank's operations after the
Consolidation is completed.
APPRAISAL RIGHTS (SEE PAGE __ AND
APPENDIX B)................................. First National Bank shareholders who dissent from the
Consolidation are entitled to receive a cash payment
equal to the value of their shares of First National
Bank common stock. To receive this cash payment,
dissenting shareholders must follow the procedures
outlined in Appendix B. Failure to comply strictly
with these procedures will result in the forfeiture
of appraisal rights.
U.S. FEDERAL INCOME TAX
Consequences (see page __)................... The Consolidation has been structured so that First
National Bank shareholders generally will not
recognize any gain or loss for U.S. federal income
tax purposes as a result of the Consolidation (except
for cash received in lieu of fractional shares). The
Consolidation is conditioned on the receipt by First
National Bank of a legal opinion to this effect.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN FIRST
NATIONAL BANK SHAREHOLDERS. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE
CONSOLIDATION'S TAX CONSEQUENCES.
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 June 10, 1998, the last full trading
day before First National Bank and Norwest signed the
Reorganization Agreement, Norwest common stock closed
at $36.25 per share. On ____________, 1998, Norwest
common stock closed at $___ per share.
There is no public market for First National Bank
common stock.
</TABLE>
11
<PAGE>
COMPARATIVE PER COMMON SHARE DATA
The following tables present selected comparative per common share data for
Norwest common stock on a historical and pro forma combined basis and for First
National Bank common stock on a historical and pro forma equivalent basis. The
first table does not reflect the proposed merger between Norwest and Wells Fargo
& Company. The second table does. See "Norwest-Wells Fargo Merger." Norwest
will account for the Wells Fargo merger under the "pooling of interests"
accounting method. This means that the historical information for Norwest in
the second table reflects the combination of Norwest's and Wells Fargo's
historical information for the periods presented.
The information in the tables should be read with (a) the selected historical
information (and related notes) for Norwest and First National Bank appearing
elsewhere in this Proxy Statement-Prospectus, (b) the complete financial
statements of First National Bank appearing elsewhere in this Proxy Statement-
Prospectus, (c) the complete financial statements of Norwest included in the
documents incorporated by reference in this Proxy Statement-Prospectus, and (d)
the pro forma financial information for the Norwest-Wells Fargo merger contained
in Norwest's quarterly report on Form 10-Q for the quarter ended June 30, 1998.
See "WHERE YOU CAN FIND MORE INFORMATION." The information in the 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 Consolidation
become effective prior to the periods indicated.
The pro forma information in both tables assumes that Norwest will exchange
2.44 shares of its common stock for each share of First National Bank common
stock. This is the Exchange Ratio that would result if the Norwest Measurement
Price is $35. See "THE REORGANIZATION AGREEMENT--Basic Plan of Reorganization."
The pro forma information also assumes the Consolidation is accounted for using
the purchase method of accounting. See "THE CONSOLIDATION--Accounting
Treatment."
COMPARATIVE PER COMMON SHARE DATA--WITHOUT GIVING EFFECT TO WELLS FARGO MERGER
<TABLE>
<CAPTION>
FIRST NATIONAL BANK
NORWEST COMMON STOCK COMMON STOCK
------------------------------------ -----------------------------------
Pro Forma PRO FORMA
HISTORICAL Combined HISTORICAL EQUIVALENT
--------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
BOOK VALUE (1):
June 30, 1998 $ 9.42 9.42 35.48 22.98
December 31, 1997 9.01 9.01 32.67 21.98
DIVIDENDS DECLARED (2):
Six Months Ended June 30, 1998 0.330 0.330 -- 0.805
Year Ended December 31, 1997 0.615 0.615 2.250 1.501
NET INCOME (3):
Basic:
Six Months Ended June 30, 1998 0.98 0.98 2.83 2.39
Year Ended December 31, 1997 1.78 1.78 5.65 4.34
DILUTED:
Six Months Ended June 30, 1998 0.96 0.96 2.83 2.34
Year Ended December 31, 1997 1.75 1.75 5.65 4.27
</TABLE>
12
<PAGE>
COMPARATIVE PER COMMON SHARE DATA--GIVING EFFECT TO WELLS FARGO MERGER
<TABLE>
<CAPTION>
FIRST NATIONAL BANK
NORWEST COMMON STOCK COMMON STOCK
------------------------------------ -----------------------------------
Pro Forma PRO FORMA
HISTORICAL Combined HISTORICAL EQUIVALENT
--------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
BOOK VALUE (1):
June 30, 1998 $11.83 11.83 35.48 28.87
December 31, 1997 11.92 11.92 32.67 29.08
DIVIDENDS DECLARED (2):
Six Months Ended June 30, 1998 0.330 0.330 -- 0.805
Year Ended December 31, 1997 0.615 0.615 2.250 1.501
NET INCOME (3):
Basic:
Six Months Ended June 30, 1998 0.86 0.86 2.83 2.10
Year Ended December 31, 1997 1.51 1.51 5.65 3.68
DILUTED:
Six Months Ended June 30, 1998 0.85 0.85 2.83 2.07
Year Ended December 31, 1997 1.49 1.49 5.65 3.64
</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 First National Bank divided by total pro forma common shares of
the combined entities. The pro forma equivalent book value per share of
First National Bank common stock represents the pro forma combined book
value per share of Norwest common stock multiplied by an assumed Exchange
Ratio of 2.44.
(2) Assumes no changes in cash dividends per share by Norwest. The pro forma
equivalent dividends per share of First National Bank common stock
represent cash dividends declared per share of Norwest common stock
multiplied by an assumed Exchange Ratio of 2.44.
(4) The pro forma combined net income per share of Norwest common stock (based
on weighted average number of common and common equivalent shares) is the
combined historical net income for Norwest and First National Bank divided
by the average pro forma common and common equivalent shares of the
combined entities. The pro forma equivalent net income per share of First
National Bank common stock represents the pro forma combined net income per
share multiplied by an assumed Exchange Ratio of 2.44.
13
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected financial information is to aid you in your analysis
of the financial aspects of the Consolidation. The information for Norwest is
derived from its historical financial statements (and related notes) contained
in its annual 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 "WHERE YOU
CAN FIND MORE INFORMATION." The information for First National Bank is derived
from its historical financial statements (and related notes) contained elsewhere
in this Proxy Statement-Prospectus.
Norwest Corporation and Subsidiaries
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30 YEARS ENDED DECEMBER 31
------------------- --------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993(1)
--------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(In millions, except per
share data)
INCOME STATEMENT DATA
Interest income........ $ 3,569.1 3,268.9 6,697.4 6,318.3 5,717.3 4,393.7 3,946.3
Interest expense....... 1,421.4 1,310.8 2,664.0 2,617.0 2,448.0 1,590.1 1,442.9
--------- -------- -------- -------- -------- -------- --------
Net interest income.... 2,147.7 1,958.1 4,033.4 3,701.3 3,269.3 2,803.6 2,503.4
Provision for credit 263.9 231.8 524.7 394.7 312.4 164.9 158.2
losses................
Non-interest income.... 1,760.5 1,441.0 2,962.3 2,564.6 1,848.2 1,638.3 1,585.0
Non-interest expenses.. 2,534.5 2,161.2 4,421.3 4,089.7 3,382.3 3,096.4 3,050.4
--------- -------- -------- -------- -------- -------- --------
Income before income
taxes................. 1,109.8 1,006.1 2,049.7 1,781.5 1,422.8 1,180.6 879.8
Income tax expense..... 360.0 352.8 698.7 627.6 466.8 380.2 266.7
--------- -------- -------- -------- -------- -------- --------
Net income............. $ 749.8 653.3 1,351.0 1,153.9 956.0 800.4 613.1
========= ======== ======== ======== ======== ======== ========
PER COMMON SHARE DATA
Net income:
Basic................. $ 0.98 0.86 1.78 1.55 1.39 1.23 0.95
Diluted............... 0.96 0.85 1.75 1.54 1.36 1.20 0.93
Dividends declared..... 0.330 0.300 0.6150 0.5250 0.4500 0.3825 0.3200
BALANCE SHEET DATA
At period end:
Total assets.......... $93,153.3 83,856.3 88,540.2 80,175.4 72,134.4 59,315.9 54,665.0
Long-term debt........ 12,315.6 12,043.7 12,766.7 13,082.2 13,676.8 9,186.3 6,850.9
Total stockholders'
equity.............. 7,346.1 6,507.1 7,022.2 6,064.2 5,312.1 3,846.4 3,760.9
</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
Consolidation-related expenses, including termination costs, systems and
operations costs, and investment banking, legal, and accounting expenses.
14
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
<TABLE>
<CAPTION>
Six Months Ended YEARS ENDED
JUNE 30 DECEMBER 31
1998 1997 1997 1996 1995 1994 1993
-------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
(In thousands, except per share data)
INCOME STATEMENT DATA
Interest income...................... $ 3,694 3,402 7,029 6,596 6,118 5,151 4,602
Interest expense..................... 1,196 1,093 2,213 2,012 1,868 1,202 983
------- ------ ------ ------ ------ ------ ------
Net interest income................. 2,498 2,309 4,816 4,584 4,250 3,949 3,619
Provision for losses on loans........ 60 30 96 83 100 59 0
Non-interest income.................. 208 242 513 516 626 700 777
Non-interest expenses................ 1,373 1,335 2,640 2,450 2,490 2,366 2,291
------- ------ ------ ------ ------ ------ ------
Income before income taxes.......... 1,273 1,186 2,593 2,567 2,286 2,224 2,105
Income tax expense................... 410 382 838 832 741 716 680
------- ------ ------ ------ ------ ------ ------
Net income........................... $ 863 804 1,755 1,735 1,545 1,508 1,425
======= ====== ====== ====== ====== ====== ======
PER COMMON SHARE DATA
Net income:
Basic............................... $2.83 2.64 5.76 5.48 4.91 4.85 4.58
Diluted............................. 2.66 2.47 5.40 5.34 4.75 4.64 4.38
Dividends declared................... 0 0 2.25 2.00 1.75 1.75 1.00
BALANCE SHEET DATA
At period end:
Total assets........................ $94,679 83,196 86,143 84,665 79,288 70,310 67,696
Total liabilities................... 83,876 73,586 76,197 75,446 71,140 63,461 61,521
Total stockholders' equity.......... 10,803 9,610 9,946 9,219 8,148 6,849 6,175
</TABLE>
15
<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. The prices for Norwest common stock are as
reported on the New York Stock Exchange. There is no public market for First
National Bank common stock.
<TABLE>
<CAPTION>
NORWEST COMMON STOCK
---------------------------------------
HIGH LOW DIVIDENDS
-------- ------- ---------
1995
<S> <C> <C> <C>
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 32.1563 28.1250 0.150
Fourth Quarter 39.5000 29.7500 0.165
1998
First Quarter 43.8750 34.7500 0.165
Second Quarter 43.7500 34.0000 0.165
Third Quarter
(through September __, 1998)
</TABLE>
16
<PAGE>
NORWEST-WELLS FARGO CONSOLIDATION
The following summarizes the proposed merger between Norwest and Wells
Fargo & Company ("Wells Fargo"). The summary is qualified in its entirety by
reference to Norwest's registration statement on Form S-4 (Registration No. 333-
63247), which includes the joint proxy statement-prospectus of Norwest and Wells
Fargo, and to Norwest's current reports on Form 8-K filed June 8, 1998, June 9,
1998, June 22, 1998, July 22, 1998 and August 5, 1998. The registration
statement and the current reports are incorporated herein by reference. See
"WHERE YOU CAN FIND MORE INFORMATION."
AGREEMENT AND PLAN OF MERGER
Norwest has entered into an Agreement and Plan of Merger dated June 7,
1998 with Wells Fargo & Company ("Wells Fargo") under which Wells Fargo will
merge with a wholly-owned subsidiary of Norwest. The name of the combined
company will be Wells Fargo & Company, and its headquarters will be San
Francisco, California.
MANAGEMENT OF THE COMBINED COMPANY
The board of directors of the combined company will initially be comprised of
an equal number of Norwest and Wells Fargo directors. Paul Hazen, currently
Chairman and Chief Executive Officer of Wells Fargo, will become Chairman of the
combined company. Richard M. Kovacevich, currently Chairman and Chief Executive
Officer of Norwest, will become President and Chief Executive Officer of the
combined company.
OWNERSHIP OF THE COMBINED COMPANY
In the proposed combination, Norwest will exchange 10 shares of its common
stock for each share of Wells Fargo common stock. After the exchange, it is
expected that Wells Fargo stockholders will own approximately 52.5% of the
outstanding shares of the combined company.
STOCK OPTION AGREEMENTS
As an inducement and condition to Wells Fargo's entering into the merger
agreement, Norwest granted Wells Fargo an option to purchase approximately 19.9%
of the outstanding shares of Norwest common stock. The option is exercisable
only if certain events occur, including the acquisition by any person other than
Wells Fargo of the beneficial ownership of 20% or more of the outstanding
Norwest common stock. Certain business combinations involving Norwest will also
cause the option to become exercisable.
Wells Fargo has granted Norwest a substantially identical option to purchase
approximately 19.9% of the outstanding Wells Fargo common stock.
CONDITIONS TO THE NORWEST-WELLS FARGO MERGER
The Norwest-Wells Fargo merger is subject to a number of conditions, including
the approval of the merger agreement by the stockholders of each company and the
receipt of all required governmental approvals. There is no assurance that the
Norwest-Wells Fargo merger will be completed.
17
<PAGE>
SIGNIFICANT TRANSACTION
The Wells Fargo merger, if completed, will be significant to the financial
statements of Norwest.
18
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
First National Bank is sending you this Proxy Statement-Prospectus to
provide you with information concerning the Consolidation and to solicit your
proxy for use at the special meeting of shareholders. At the special meeting,
shareholders of First National Bank will be asked to approve the Consolidation.
DATE, TIME AND PLACE OF SPECIAL MEETING
The date, time and place of the special meeting are as follows:
FRIDAY, OCTOBER 30, 1998
______.M., LOCAL TIME
3660 HAMPTON DRIVE
Missouri City, Texas 77459
RECORD DATE
First National Bank has established September 30, 1998 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 304,449 shares of First National Bank common
stock outstanding and entitled to vote at the special meeting. The holders of
First National Bank 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
Consolidation requires the affirmative vote, in person or by proxy, of the
holders of at least two-thirds of the outstanding shares of First National Bank
common stock on the record date.
VOTING AGREEMENTS
The following directors and other shareholders have entered into voting
agreements with Norwest under which they have agreed to vote in favor of the
Consolidation all shares of First National Bank beneficially owned by them at
the record date. (Beneficial ownership, for this purpose, means having the
power to vote or dispose of the shares in question, even if such power is
shared.)
Directors Shares
- --------- -------
R. Fred Beeler 61,034
Jot Hodges, Jr. 33,168
Harold J. Mathis, Jr. 12,675
Joseph M. Rice 11,940
Others
- ------
Estate of Hampton C. Robinson, Jr. 66,461
Joe C. Wessendorff 48,636
-------
TOTAL 233,914
=======
PERCENTAGE OF OUTSTANDING 76.8%
19
<PAGE>
Because approval of the Consolidation requires the vote of at least
two-thirds of the outstanding shares of First National Bank common stock, these
shareholders can approve the Consolidation without the vote of any other
shareholders.
VOTING AND REVOCATION OF PROXIES
All shares of First National Bank 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 THE CONSOLIDATION.
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 First National Bank 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 Consolidation must be approved by the holders of
at least two-thirds of the outstanding shares of First National Bank common
stock. Because approval of the Consolidation requires the affirmative vote of a
specified percentage of outstanding shares, not voting on the 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
First National Bank may solicit proxies from First National Bank shareholders,
either personally or by telephone or other form of communication. None of the
foregoing persons who solicit proxies will be specifically compensated for such
services. Nominees, fiduciaries and other custodians will be requested to
forward soliciting materials to beneficial owners and will be reimbursed for
their reasonable expenses incurred in sending proxy material to beneficial
owners. First National Bank will bear its own expenses in connection with any
solicitation of proxies for the special meeting.
20
<PAGE>
OTHER MATTERS
If an insufficient number of votes for the Consolidation is received
before the scheduled meeting date, Norwest and First National Bank may decide to
postpone or adjourn the special meeting. If this happens, proxies that have
been received that either have been voted for the Consolidation or contain no
instructions will be voted for adjournment.
First National Bank's board of directors is not aware of any business to
be brought before the special meeting other than the proposals to approve the
Consolidation. 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 First National Bank.
21
<PAGE>
THE CONSOLIDATION
PURPOSE AND EFFECT OF THE CONSOLIDATION
Norwest is using the Consolidation to acquire First National Bank. As a
result of the Consolidation, First National Bank will become a wholly-owned
subsidiary of Norwest and shareholders of First National Bank will receive
shares of Norwest common stock for their shares of First National Bank common
stock. Norwest will own all of the outstanding shares of First National Bank
common stock. Shareholders of First National Bank will become stockholders of
Norwest, and their rights will be governed by Norwest's restated certificate of
incorporation and bylaws rather than First National Bank's articles of
association and bylaws. See "COMPARISON OF RIGHTS OF HOLDERS OF FIRST NATIONAL
BANK COMMON STOCK AND NORWEST COMMON STOCK."
BACKGROUND OF AND REASONS FOR THE CONSOLIDATION
During 1997 and 1998 First National Bank's board of directors monitored
developments in bank acquisitions in Texas along with similar developments in
the financial institutions industry generally. As a result of perceived
improvements in the financial institutions acquisition market and the prospect
of increased competition in Missouri City's market area, the board of directors
decided to explore the possibility of a business combination with another
financial institution.
The board of directors authorized First National Bank's Chairman, Fred
Beeler, to contact a list of possible acquirors to assess their level of
interest in an acquisition. In February of 1998, a representative of Norwest
visited First National Bank and expressed an interest in Norwest's acquiring
First National Bank. Representatives of Norwest met again with First National
Bank directors and certain principal shareholders in April 1998.
As a result of these discussions, which included a purchase price and other
terms, the board of directors decided to enter into a letter of intent with
Norwest dated April 30, 1998. Pursuant to the letter of intent, Norwest
commenced its due diligence investigation of First National Bank, and the
parties began negotiating a definitive acquisition agreement. The Reorganization
Agreement was approved by First National Bank's board of directors on June 4,
1998, and executed as of June 11, 1998.
In reaching its determination to enter into the Reorganization Agreement,
First National Bank's board of directors consulted with its legal, tax, and
other advisors and considered a number of factors including, but not limited to,
the following: (i) the price to be received by First National Bank shareholders,
including how the price to be received related to prices received by other
comparable banking organizations, (ii) the increased investment liquidity that
the receipt of Norwest common stock would provide to First National Bank
shareholders, (iii) the financial condition and future prospects of Norwest,
(iv) the prospects for First National Bank continuing to operate as an
independent community banking organization, including the increasing competitive
and regulatory burdens and technological challenges facing community banks, (v)
the tax free nature of the exchange of First National Bank common stock for
shares of Norwest common stock, (vi) the potential for increased dividends and
(vii) the non-economic terms of the Consolidation.
In connection with its deliberations and discussions, First National Bank's
board of directors did not assign any specific weights to these or any other
factors.
For the reasons set forth above, First National Bank's board of directors
unanimously approved the Consolidation and recommends approval of the
transaction by First National Bank shareholders.
22
<PAGE>
ADDITIONAL INTERESTS OF FIRST NATIONAL BANK'S MANAGEMENT IN THE CONSOLIDATION
In considering the recommendation of First National Bank's board of
directors to approve the Consolidation, you should be aware that First National
Bank directors and executive officers have interests in the Consolidation that
are different from, or in addition to, the interests of First National Bank
shareholders generally. First National Bank's board of directors was aware of
these interests when it approved the Consolidation.
Employment Agreements. Messrs. Jeff Smith, Ken Hutto and Mark W. Brinker have
entered into employment agreements with Norwest, pursuant to which each of them
will be employed by Norwest for a one-year period following the Effective Date
of the Consolidation. Mr. Smith will receive base annual compensation of
$140,000, Mr. Hutto will receive base annual compensation of $116,700 and Mr.
Brinker will receive base annual compensation of $98,000. Messrs. Smith, Hutto
and Brinker will also be eligible for all benefits available to regular, full-
time employees of Norwest and its affiliates. The employment agreements of
Messrs. Smith and Hutto contain economic incentives to refrain from competing
with Norwest for a period of one year after the terms of their respective
employment agreements expire. Specifically, Mr. Smith will receive a total of
$70,000, payable in two semiannual installments, and Mr. Hutto will receive a
total of $58,350, also payable in two semiannual installments.
Indemnification and Insurance. Norwest has agreed to ensure that all rights to
indemnification and all limitations of liability existing in favor of the
present and former directors and officers of First National Bank with respect to
all liabilities arising out of actions or omissions occurring prior to the
Effective Date of the Consolidation shall survive the Consolidation and continue
in full force and effect. Norwest has agreed for a period of three years after
the Effective Date of the Consolidation to use its best efforts to maintain in
effect First National Bank's current directors' and officers' liability
insurance policies with respect to claims arising from facts or events which
occurred before the Effective Date of the Consolidation.
APPRAISAL RIGHTS
Under federal law, any shareholder of First National Bank who dissents from
the Consolidation has the right to receive cash equal to the value of the
shareholder's shares as measured on the Effective Date of the Consolidation.
This right is subject to the following conditions: (a) the shareholder must vote
against approval of the Consolidation at the special meeting or give notice in
writing at or before the special meeting to the presiding officer that such
shareholder dissents from the proposed Consolidation; (b) the shareholder must,
within 30 days after the Effective Date of the Consolidation, make a written
request for payment to the surviving bank; and (c) the written request must be
accompanied by surrender of the shareholder's stock certificate(s). Any
shareholder who votes against the Consolidation at the special meeting, or who
gives notice in writing at or before the special meeting to the presiding
officer that such shareholder dissents, will be notified in writing of Effective
Date of the Consolidation. Failure to comply strictly with each of the foregoing
conditions will result in the loss of appraisal rights.
The value of the shares of any dissenting shareholder will be determined by
an appraisal made by a committee of three persons, one to be selected by the
majority vote of the dissenting shareholders, one by the board of directors of
the surviving bank, and the third by the two so chosen. The valuation agreed
upon by any two of the three appraisers will govern. If the value so fixed is
not satisfactory to any dissenting shareholder, that shareholder may, within
five days after being notified of the appraised value of such shareholder's
shares, appeal to the OCC, who will cause a reappraisal to be made which will be
final and binding as to the value of such shares. If a shareholder dissents and,
within 90 days from the Effective Date of the Consolidation, one or more of the
appraisers is not selected for any
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reason, or the appraisers fail to determine the value of such shares, the OCC
will, upon written request of any interested party, cause an appraisal to be
made which will be final and binding on all parties. The expenses of the OCC in
making the reappraisal or the appraisal, as the case may be, will be paid by the
surviving bank. The value of the shares ascertained will be promptly paid to the
dissenting shareholder by the surviving bank.
The foregoing is a summary of Title 12, Section 215 of the United States
Code. It is not a complete statement of the provisions of Section 215 and is
qualified in its entirety by reference to the relevant provisions of Section
215, the text of which is attached to this Proxy Statement-Prospectus as
Appendix B. Any shareholder of First Bank who desires to exercise dissenters'
appraisal rights should carefully review and comply with the relevant provisions
of Section 215. APPRAISAL RIGHTS WILL BE FORFEITED IF THE PROCEDURAL
REQUIREMENTS OF SECTION 215 ARE NOT STRICTLY COMPLIED WITH.
Attached to this Proxy Statement-Prospectus as Appendix C is a copy of
Banking Circular 259 regarding the valuation methods used by the OCC to estimate
the value of a bank's shares when the OCC is involved in the appraisal of shares
held by dissenting shareholders. The results of appraisals performed by the OCC
between January 1, 1985 and September 30, 1991 are also summarized in Appendix
C. YOU SHOULD CONSIDER CAREFULLY THE INFORMATION IN BANKING CIRCULAR 259 BEFORE
DECIDING WHETHER TO EXERCISE YOUR APPRAISAL RIGHTS.
EXCHANGE OF CERTIFICATES
After completion of the Consolidation, Norwest Bank Minnesota, National
Association, acting as exchange agent for Norwest, will mail to each holder of
record of shares of First National Bank 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.
FIRST NATIONAL BANK 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 Consolidation will be paid to the holder of any certificates
for shares of First National Bank common stock until after the certificates have
been surrendered for exchange.
When the exchange agent receives a surrendered certificate or certificates
from a shareholder, together with a properly completed letter of transmittal, it
will issue and mail to the shareholder a certificate representing the number of
shares of Norwest common stock to which the shareholder is entitled, plus the
amount in cash of any remaining fractional share and any cash dividends that are
payable with respect to the shares of Norwest common stock so issued. No
interest will be paid on the fractional share amount or amounts payable as
dividends or other distributions.
A certificate for Norwest common stock may be issued in a name other than
the name in which the surrendered certificate is registered if (a) the
certificate surrendered is properly endorsed and accompanied by all documents
required to transfer the shares to the new holder and (b) the person requesting
the issuance of the Norwest common stock certificate either pays to the exchange
agent in advance any transfer and other taxes due or establishes to the
satisfaction of the exchange agent that such taxes have been paid or are not
due.
The exchange agent will issue stock certificates for Norwest common stock
in exchange for lost, stolen or destroyed certificates for First National Bank
common stock upon receipt of a lost certificate
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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 Consolidation, no transfers will be permitted on
the books of First National Bank. If, after completion of the Consolidation,
certificates for First National Bank 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, First National Bank, the exchange agent or any other
person will be liable to any former holder of First National Bank 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 Consolidation is subject to the prior approval of the Federal Reserve
Board. The approval of the Federal Reserve Board is required because Norwest is
a bank holding company registered under the Bank Holding Company Act. Norwest
has filed an application with the Federal Reserve Board requesting approval of
the Consolidation. The Federal Reserve Board approved the application effective
as of September 11, 1998.
The Consolidation is also subject to the prior approval of the OCC. The
approval of the OCC is required because the Consolidation involves national
banks. Norwest has filed an application with the OCC requesting approval of the
Consolidation. The application is pending as of the date of this Proxy
Statement-Prospectus.
The approval of an application means only that the regulatory criteria for
approval have been satisfied or waived. It does not mean that the approving
authority has determined that the consideration to be received by First National
Bank shareholders is fair. Regulatory approval does not constitute an
endorsement or recommendation of the Consolidation.
Norwest and First National Bank are not aware of any governmental approvals
or compliance with banking laws and regulations that are required for the
Consolidation to become effective other than those described above. Norwest and
First National Bank intend to seek any other approval and to take any other
action that may be required to effect the Consolidation. There can be no
assurance that any required approval or action can be obtained or taken prior to
the special meeting.
The Consolidation cannot be completed unless all necessary regulatory
approvals are granted. In addition, Norwest may elect not to complete the
Consolidation if any condition under which any regulatory approval is granted is
unreasonably burdensome to Norwest. See "THE REORGANIZATION AGREEMENTConditions
to the Completion of the Consolidation" and "Termination of the Reorganization
Agreement."
EFFECT ON FIRST NATIONAL BANK'S EMPLOYEE BENEFIT PLANS
The Reorganization Agreement provides that, subject to any eligibility
requirements applicable to such plans, employees of First National Bank will be
entitled to participate in those Norwest employee benefit and welfare plans
specified in the Reorganization Agreement. Eligible employees of First National
Bank 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 Consolidation.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE CONSOLIDATION TO FIRST
NATIONAL BANK SHAREHOLDERS
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR
GENERAL INFORMATION ONLY. FIRST NATIONAL BANK SHAREHOLDERS ARE URGED TO CONSULT
WITH THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM
OF THE CONSOLIDATION, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND
FOREIGN INCOME OR OTHER TAX LAWS.
Set forth below is a summary of the opinion provided by Bracewell &
Patterson, L.L.P. concerning the material federal income tax consequences to
holders of First National Bank common stock who dispose of their First National
Bank common stock in the Consolidation. This discussion is primarily based on
the Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations promulgated thereunder.
The following discussion is limited to the material federal income tax
aspects of the Consolidation to a holder of First National Bank common stock who
is a citizen or resident of the United States and who, on the date of
disposition of his shares of First National Bank common stock, holds such shares
as a capital asset. This discussion does not purport to deal with all aspects of
taxation that may be relevant to particular investors in light of their personal
investment circumstances, or to certain types of investors, including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers, "S"
corporations, limited liability corporations, foreign corporations and tax
payers subject to alternative minimum tax. Further, this discussion does not
consider the state, local, or foreign tax consequences of the Consolidation to a
holder of First National Bank common stock.
First National Bank has been advised by its special counsel, Bracewell &
Patterson, L.L.P., that based on the Code, judicial decisions, and certain
factual assumptions, the Consolidation will qualify as a "reorganization" within
the meaning of Section 368(a)(1)(A) of the Code. The following is a summary of
the federal income tax consequences set forth in the form of proposed legal
opinion to be delivered by Bracewell & Patterson, L.L.P., a copy of which is
included as an exhibit to the Registration Statement filed by Norwest. In
rendering this opinion, Bracewell & Patterson, L.L.P. has assumed, among other
matters, that no shareholder of First National Bank receiving Norwest common
stock in the Consolidation has the intention, at the time of the Consolidation,
of disposing of any Norwest common stock received or requesting registration of
any shares except as permitted under the Reorganization Agreement or the
agreement executed by the affiliates of First National Bank in favor of Norwest.
The Consolidation should qualify for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code, and, as
such, will result in the following federal income tax consequences to holders of
First National Bank common stock:
1. No gain or loss will be realized by holders of First National Bank
common stock to the extent they exchange their shares of First
National Bank common stock for shares of Norwest common stock pursuant
to the terms of the Consolidation.
2. The aggregate basis of Norwest common stock received by each First
National Bank shareholder in the Consolidation will be the same as the
aggregate basis of the First National Bank common stock surrendered
and exchanged therefor, decreased by the amount of cash received and
increased by the amount of gain realized by the shareholder under the
exchange.
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3. The holding period of Norwest common stock received by each First
National Bank shareholder will include the period during which First
National Bank common stock surrendered therefor was held, provided the
First National Bank common stock is a capital asset in the hands of
the First National Bank shareholder on the date of the exchange. The
payment of cash in lieu of fractional shares of Norwest common stock
will be treated as a sale or exchange of such fractional shares
potentially eligible for capital gains treatment.
4. Dissenting shareholders whose shares of First National Bank common
stock are disposed of pursuant to the exercise of appraisal rights
will realize gain or loss equal to the difference between the amount
of cash received from the exercise of such dissenters rights and such
dissenting shareholder's aggregate adjusted tax basis in the stock
exchanged.
5. Unless an exemption applies, under the backup withholding rules of
Section 3406 of the Code, an exchange agent shall be required to
withhold, and will withhold, 31% of all cash payments to which a First
National Bank shareholder is entitled pursuant to the Consolidation
(unless such shareholder provides his taxpayer identification number--
social security number in the case of an individual, or Employer
Identification Number in other cases) and certifies that such number
is correct.
Neither the foregoing discussion nor the opinion of Bracewell & Patterson,
L.L.P. to First National Bank is binding on the Internal Revenue Service ("IRS")
or the courts. AS SUCH, THE FOREGOING PRESENTS ONLY A GENERAL DESCRIPTION OF THE
FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF FIRST NATIONAL BANK COMMON STOCK
OF THE TRANSACTIONS CONTEMPLATED BY THE CONSOLIDATION. ACCORDINGLY, EACH
SHAREHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISOR WITH RESPECT TO ALL TAX
CONSEQUENCES STEMMING FROM THE CONSOLIDATION THAT MAY AFFECT THE SHAREHOLDERS.
RESALE OF NORWEST COMMON STOCK
The Norwest common stock issued in the Consolidation will be freely
transferable under the Securities Act, except for shares issued to First
National Bank shareholders who are considered to be "affiliates" of First
National Bank or Norwest under Rule 145 under the Securities Act or of Norwest
under Rule 144 under the Securities Act. The definition of "affiliate" is
complex and depends on the specific facts, but generally includes directors,
executive officers, 10% stockholders and other persons with the power to direct
the management and policies of the company in question.
Affiliates of First National Bank may not sell the shares of Norwest common
stock received in the Consolidation 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.
First National Bank 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 First National Bank 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 Consolidation except in compliance with the applicable provisions
of the Securities Act and the rules and regulations promulgated thereunder.
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This Proxy Statement-Prospectus does not cover any resales of Norwest
common stock received by affiliates of First National Bank.
STOCK EXCHANGE LISTING
The shares of Norwest common stock to be issued in the Consolidation will
be listed on the New York Stock Exchange and the Chicago Stock Exchange.
ACCOUNTING TREATMENT
Norwest will account for the Consolidation as a purchase. Norwest will
record, at fair value, the acquired assets and assumed liabilities of First
National Bank. To the extent the total purchase price exceeds the fair value of
the assets acquired and liabilities assumed, Norwest will record goodwill.
Norwest will include in its results of operations the results of First National
Bank's operations after the Consolidation.
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."
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THE REORGANIZATION AGREEMENT
The following is a summary of certain provisions of the Reorganization
Agreement, a copy of which is attached to this Proxy Statement-Prospectus as
Appendix A. The Reorganization Agreement is incorporated by reference into this
Proxy Statement-Prospectus.
This summary is qualified in its entirety by reference to the full text of
the Reorganization Agreement. First National Bank shareholders are encouraged to
read the Reorganization Agreement carefully and in its entirety. Parenthetical
references are to the relevant paragraph or paragraphs of the Reorganization
Agreement.
BASIC PLAN OF REORGANIZATION
Structure. Norwest will acquire First National Bank pursuant to a
consolidation of First National Bank with a newly-formed, wholly-owned
subsidiary of Norwest. First National Bank will be the surviving company in the
Consolidation. Norwest will exchange shares of Norwest common stock for all of
the outstanding shares of First National Bank common stock, so that after the
Consolidation First National Bank will be a wholly-owned subsidiary of Norwest.
(paragraph 1(a))
CONSIDERATION.
Norwest common stock. As part of the Consolidation, each share of First
National Bank common stock outstanding immediately before the Consolidation 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
First National Bank common stock then outstanding. The number of Adjusted
Norwest Shares will equal $26,000,000 divided by the Norwest Measurement Price.
The Norwest Measurement Price will be the average of the closing prices of a
share of Norwest common stock as reported on the New York Stock Exchange
consolidated tape during the period of 20 consecutive trading days ending on the
day immediately before the special meeting. (paragraph 1(a))
THE PRICE OF NORWEST COMMON STOCK ON THE EFFECTIVE DATE OF THE
CONSOLIDATION MAY BE HIGHER OR LOWER THAN THE NORWEST MEASUREMENT PRICE. NO
ADJUSTMENT WILL BE MADE TO THE NUMBER OF SHARES OF NORWEST COMMON STOCK YOU WILL
RECEIVE TO REFLECT FLUCTUATIONS IN THE PRICE OF NORWEST COMMON STOCK OCCURRING
AFTER THE SPECIAL MEETING.
Cash in Lieu of Fractional Shares. If the aggregate number of shares of
Norwest common stock you will receive in the Consolidation 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 special
meeting. (paragraph 1(c))
Completion of the Consolidation. Norwest and First National Bank expect the
Consolidation to be completed promptly after approval of the Consolidation by
First National Bank 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))
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REPRESENTATIONS AND WARRANTIES
The Reorganization Agreement contains various representations and
warranties by Norwest and First National Bank 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 Consolidation, (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 Consolidation, they function primarily as a due diligence device and a
closing condition (that is, they must continue to be true in all material
respects until the Consolidation is completed).
CERTAIN COVENANTS
The Reorganization Agreement contains various covenants and agreements that
govern the actions of First National Bank and Norwest pending completion of the
Consolidation. Some of the more important covenants are summarized below.
CONDUCT OF BUSINESS.
First National Bank. First National Bank has agreed to maintain its
corporate existence in good standing, maintain the general character of its
business, conduct its business in the ordinary and usual manner, and extend
credit in accordance with existing lending policies. Subject to certain
exceptions, First National Bank is required to obtain the consent of Norwest
before it makes any new loan or modifies, restructures or renews any existing
loan if the amount of the resulting loan, when combined with all other loans to
the customer, would exceed $100,000. The Reorganization Agreement places
restrictions on the ability of First National Bank to take certain actions
without Norwest's consent, including (a) incurring indebtedness, (b) granting
rights to acquire shares of its capital stock, (c) issuing shares of its capital
stock, (d) declaring dividends or purchasing its capital stock, (e) selling its
assets and (f) raising the compensation of its 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.
Competing Transactions. First National Bank has agreed not to 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 its
common stock, any security convertible into its common stock, or any other
equity security of First National Bank (b) make a tender or exchange offer for
any shares of its common stock or other equity security of First National Bank,
(c) purchase, lease or otherwise acquire the assets of First National Bank
except in the ordinary course of business or (d) merge, consolidate or otherwise
combine with First National Bank. First National Bank has also agreed to
promptly inform Norwest if any third party makes an offer or inquiry concerning
any of the foregoing. (paragraph 4(h))
Other Covenants. The Reorganization Agreement contains various other
covenants, including covenants relating to the preparation and distribution of
this Proxy Statement-Prospectus, access to information, and the listing on the
New York Stock Exchange and Chicago Stock Exchange of the shares of Norwest
common stock to be issued in the Consolidation. In addition, First National Bank
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
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the conduct of First National Bank's business after the Consolidation and (b)
use its best efforts to deliver to Norwest prior to completion of the
Consolidation signed representations substantially in the form attached as
Exhibit B to the Reorganization Agreement from each executive officer, director
or shareholder of First National Bank who may reasonably be deemed an
"affiliate" of First National Bank within the meaning of each term used in Rule
145 of the Securities Act. (paragraphs 4(l) and 4(m)) See "THE
CONSOLIDATION-Resale of Norwest Common Stock."
CONDITIONS TO THE COMPLETION OF THE CONSOLIDATION
Under the Reorganization Agreement, various conditions are required to be
met before the parties are obligated to complete the Consolidation. These
conditions are customary and include such items as the receipt of shareholder,
regulatory and listing approval, and the receipt by First National Bank of a
favorable tax opinion. (paragraphs 6 and 7) See "THE CONSOLIDATION--Material
U.S. Federal Income Tax Consequences of the Consolidation to First National Bank
Shareholders."
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, subject
to certain exceptions, the absence of any changes that have had or might be
reasonably expected to have an adverse effect on First National Bank. Some of
the conditions to the Consolidation are subject to exceptions and/or a
"materiality" standard. Certain conditions to the Consolidation 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 First National Bank can agree to
terminate the Reorganization Agreement at any time before completion of the
Consolidation. (paragraph 9(a)(i))
Termination by Either Norwest or First National Bank. Either Norwest or
First National Bank can terminate the Reorganization Agreement if any of the
following occurs:
* The Consolidation has not been completed by December 31, 1998
(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
Consolidation 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))
Termination by First National Bank. First National Bank can terminate the
Reorganization Agreement, within five days after the end of the Index
Measurement Period (defined below), if both of the following conditions are
satisfied:
(1) the Norwest Measurement Price is less than $35; and
(2) the number obtained by dividing the Norwest Measurement Price by the
closing price of Norwest common stock on the trading day immediately
preceding the date of the Reorganization Agreement is less than the
number obtained by dividing the Final Index Price (defined below) by
the Initial Index Price (defined below) and subtracting 15% from such
quotient.
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For purposes of this paragraph:
(i) The "Company Market Capitalization" means (a) the price of one share
of the common stock of a given company at the close of the trading day
immediately preceding the date of the Reorganization Agreement
multiplied by (b) the number of shares of common stock of such company
outstanding as of March 31, 1998 (adjusted for any stock dividend,
reclassification, recapitalization, exchange of shares or similar
transaction between March 31, 1998 and the close of the trading day
immediately preceding the date of the Reorganization Agreement).
(ii) The "Index Group" means all of those companies listed below the common
stock of which is publicly traded and as to which there is, during the
period of 20 trading days ending on the day immediately preceding the
special meeting of the shareholders of First National Bank held to
vote on the Reorganization Agreement (the "Index Measurement Period"),
no pending publicly announced proposal for such company to be
acquired, nor has there been any proposal by such company publicly
announced subsequent to the day before the date of the Reorganization
Agreement to acquire another company in exchange for stock where, if
the company to be acquired were to become a subsidiary of the
acquiring company, the company to be acquired would be a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated by
the SEC nor has there been any program publicly announced subsequent
to the day before the date of the Reorganization Agreement to
repurchase 5% or more of the outstanding shares of such company's
common stock.
BB&T Corporation National City Corporation
BancOne Corporation Nations Bank
BankBoston Corporation Northern Trust Corporation
Bank of New York Company, Inc. PNC Financial Corporation
Bankers Trust Corporation of New York Republic Financial Corporation
Chase Manhattan Corporation Republic New York Corporation
Citicorp Signet Banking Corporation
Comerica, Inc. SouthTrust Corporation
Crestar Financial Corporation State Street Boston Corporation
Fifth Third Bancorp Summit Bancorp
First Union Corporation Suntrust Banks, Inc.
Fleet Financial Group, Inc. UnionBanCal Corp.
Huntington Bancshares U.S. Bancorp
KeyCorp Wachovia Corporation
Mellon Bank Corporation Wells Fargo & Co.*
Mercantile Bancorp
------------
* Will be excluded from Index Group because of agreement to merge with
Norwest.
(iii) The "Initial Index Price" means the sum of the following, calculated for
each of the companies in the Index Group: (a) the closing price per share
of common stock of each such company on the trading day immediately
preceding the date of the Reorganization Agreement multiplied by (b) the
Weighting Factor (as defined below) for each such company.
(iv) The "Final Index Price" shall mean the sum of the following, calculated
for each of the companies in the Index Group: (a) the Final Price for each
such company multiplied by (b) the Weighting Factor (as defined below) for
each such company.
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(v) The "Final Price" of any company in the Index Group shall mean the average
of the daily closing prices of a share of common stock of such company, as
reported on the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, during the Index
Measurement Period.
(vi) The "Total Market Capitalization" shall mean the sum of the Company Market
Capitalization for each of the companies in the Index Group.
(vii)The "Weighting Factor" for any given company shall mean the Company
Market Capitalization for such company divided by the Total Market
Capitalization.
EFFECT OF TERMINATION
Generally, if either party terminates the Reorganization Agreement, it
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 Consolidation continue in effect after
termination of the Reorganization Agreement. (paragraph 9(b))
WAIVER AND AMENDMENT
Either Norwest or First National Bank 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 First National Bank can amend the Reorganization Agreement at
any time before the Consolidation is completed; however, the Reorganization
Agreement prohibits them from amending the Reorganization Agreement after First
National Bank shareholders approve the Consolidation if the amendment would
change in a manner adverse to First National Bank shareholders the consideration
to be received by First National Bank shareholders in the Consolidation.
(paragraph 17)
EXPENSES
Norwest and First National Bank will each pay their own expenses in
connection with the Consolidation, including fees and expenses of their
respective independent auditors and counsel. (paragraph 10)
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COMPARISON OF RIGHTS OF HOLDERS OF FIRST NATIONAL BANK
COMMON STOCK AND NORWEST COMMON STOCK
First National Bank currently is a national bank. The rights of First
National Bank shareholders are governed by the National Bank Act and First
National Bank's articles of association and bylaws. Norwest is incorporated
under the laws the state of Delaware. The rights of Norwest stockholders are
governed by the DGCL and Norwest's restated certificate of incorporation and
bylaws. Upon completion of the Consolidation, First National Bank shareholders
will become stockholders of Norwest. As a result, their rights will be governed
by the DGCL and Norwest's governing documents.
The following compares certain rights of the holders of First National Bank
common stock to the rights of the holders of Norwest common stock. You can find
additional information concerning the rights of Norwest stockholders in
Norwest's restated certificate of incorporation and bylaws and in Norwest's
current report on Form 8-K filed October 13, 1997. Norwest's current report on
Form 8-K contains detailed information about Norwest common stock and the
preferred stock purchase rights that accompany shares of Norwest common stock.
It also provides information regarding the rights of the holders of Norwest's
preferred stock and preference stock, many of which directly affect the rights
of the holders of Norwest common stock.
To the extent that any information in the current report is inconsistent
with the information below, you should rely on the information below, as it is
as of a more recent date.
Norwest's restated certificate of incorporation and its bylaws, as well as
the current report on Form 8-K, are incorporated into this Proxy Statement-
Prospectus by reference. See "WHERE YOU CAN FIND MORE INFORMATION."
CAPITAL STOCK
Norwest. Norwest's restated certificate of incorporation currently
authorizes the issuance of 2,000,000,000 shares of Norwest common stock, par
value $1-2/3 per share, 5,000,000 shares of preferred stock, without par value,
and 4,000,000 shares of preference stock, without par value. At June 30, 1998,
there were 760,262,978 shares of Norwest common stock outstanding, 1,048,362
shares of Norwest preferred stock outstanding, and no shares of Norwest
preference stock outstanding. In connection with the Norwest-Wells Fargo
Consolidation, Norwest's board of directors has recommended that Norwest's
restated certificate of incorporation be amended to authorize a total of
4,000,000,000 shares of common stock. Norwest's stockholders are scheduled to
vote on the amendment as part the vote on the Norwest-Wells Fargo Consolidation.
See "NORWEST-WELLS FARGO CONSOLIDATION."
First National Bank. First National Bank's articles of incorporation
currently authorize the issuance of 325,000 shares of common stock, $5.00 par
value. At June 30, 1998, there were 304,449 shares of First National Bank
common stock outstanding.
RIGHTS PLAN
Norwest. Each share of Norwest common stock (including shares that will be
issued in the Consolidation) 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
34
<PAGE>
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.
First National Bank. First National Bank has no comparable rights plan.
DIRECTORS
Norwest. Norwest's 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 14. 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
Norwest's board of directors may be filled by 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. Norwest's restated
certificate of incorporation does not currently permit cumulative voting in the
election of directors. In connection with the Wells Fargo merger, Norwest will
amend its bylaws to provide for a board of directors consisting of a maximum of
28 members.
First National Bank. First National Bank's articles of association provide
for a board of directors of not less than five nor more than 25 shareholders,
each serving a term of one year or until his or her earlier death, resignation
or removal. The exact number of directors is fixed from time to time by
resolution of the board of directors or a majority of the shareholders, provided
that the board of directors may not increase the number of directors to a number
which (i) exceeds by more than two the number of directors last elected if such
number was 15 or less and (ii) exceeds by more than four the number of directors
last elected where such number was 16 or more. The number of directors of First
National Bank is currently fixed at 12. The directors of First National Bank
are elected by a majority of the votes of shares of First National Bank common
stock, present in person or by proxy at the meeting at which shareholders are
elected. Shareholders of First National Bank are entitled to cumulate their
votes in the election of directors. Directors of First National Bank may be
removed only by the OCC. Vacancies on First National Bank's board of directors
may be filled by the affirmative vote of the majority of the remaining
directors.
AMENDMENT OF CHARTER DOCUMENT AND BYLAWS
Norwest. Norwest's restated certificate of incorporation may be amended
only if the proposed amendment is approved by Norwest's board of directors 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. Norwest's bylaws may be amended by a majority of
Norwest's board of directors or by a majority of the outstanding stock entitled
to vote thereon. Shares of Norwest preferred stock and Norwest preference stock
currently authorized in Norwest's restated certificate of incorporation may be
issued by Norwest's board of directors without amending Norwest's restated
certificate of incorporation or otherwise obtaining the approval of Norwest's
Stockholders.
First National Bank. First National Bank's articles of association may be
amended only if the proposed amendment is approved by First National Bank's
board of directors and thereafter approved by the holders of a majority of the
issued and outstanding First National Bank common stock. First National
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<PAGE>
Bank's bylaws may be amended by a majority of First National Bank's board of
directors. Although First National Bank's articles of association provide for
the issuance of shares of preferred stock entitled to receive dividend and
liquidation preference over shares of common stock, First National Bank has no
issued and outstanding preferred stock.
APPROVAL OF CONSOLIDATIONS 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 Consolidation 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
Consolidation in which Norwest is the surviving corporation and (a) the
agreement of Consolidation for the Consolidation does not amend in any respect
Norwest's restated certificate of incorporation, (b) each share of capital stock
outstanding immediately before the Consolidation is to be an identical
outstanding or treasury share of Norwest after the Consolidation and (c) the
number of shares of capital stock to be issued in the Consolidation (or to be
issuable upon conversion of any convertible instruments to be issued in the
Consolidation) does not exceed 20% of the shares of Norwest's capital stock
outstanding immediately before the Consolidation.
First National Bank. The affirmative vote of two-thirds of the outstanding
shares of First National Bank common stock is required to approve a merger or
consolidation involving First National Bank or the sale of all or substantially
all of First National Bank's assets.
PREEMPTIVE RIGHTS
Norwest. Neither Norwest's restated certificate of incorporation nor its
bylaws grants preemptive rights to its stockholders.
First National Bank. First National Bank's articles of association provide
that in the event of any increase in the number of shares of First National Bank
common stock by the sale of additional shares, each shareholder is entitled to
subscribe for such additional shares in proportion to the number of shares owned
by him or her at the time the increase is authorized by shareholders.
APPRAISAL RIGHTS
Norwest. Section 262 of the DGCL provides for stockholder appraisal rights
in connection with Consolidations 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 Consolidation
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 Consolidations and
consolidations involving Norwest.
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<PAGE>
First National Bank. The National Bank Act provides shareholders with
dissenters' rights in connection with mergers and consolidations. For a
specific discussion of the appraisal rights available to shareholders of First
National Bank, see "The ConsolidationAppraisal Rights."
SPECIAL MEETINGS
Norwest: Under the DGCL, special meetings of stockholders may be called by
the board of directors or by such persons as may be authorized in the
certificate of incorporation or bylaws. Norwest's 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 Norwest's board of directors. Holders
of Norwest common stock do not have the ability to call a special meeting of
stockholders.
First National Bank. The articles of association and bylaws of First
National Bank provide that special meetings of shareholders may be called by the
board of directors or three or more shareholders owning not less than 25% of the
issued and outstanding First National Bank common stock.
DIRECTORS' 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, , in performing
their duties, directors are bound to use that degree of care which ordinarily
prudent persons would use in similar circumstances.
First National Bank. Although the National Bank Act does not specifically
enumerate directors duties, judicial decisions concerning the issue have
established that in performing their duties, national bank directors are bound
to use that degree of care which ordinarily prudent persons would use in similar
circumstances.
ACTION WITHOUT A MEETING
Norwest. As permitted by Section 228 of the DGCL and Norwest's restated
certificate of incorporation, 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.
First National Bank. First National Bank's articles of association and
bylaws do not provide that written actions may be taken by directors or
shareholders in lieu of a meeting.
LIMITATION OF DIRECTOR LIABILITY
Norwest. Norwest's restated certificate of incorporation 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
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<PAGE>
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.
First National Bank. First National Bank's articles of association do not
eliminate or limit the liability of a director to First National Bank or its
shareholders for monetary damages for breach of a director's fiduciary duty.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Norwest. Norwest's restated certificate of incorporation 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 Norwest's board of directors. Norwest's restated certificate of
incorporation 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. Norwest's restated certificate of
incorporation authorizes Norwest to provide similar indemnification to employees
or agents of Norwest.
Pursuant to Norwest's restated certificate of incorporation, 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 Norwest's restated
certificate of incorporation or Norwest Bylaws, agreement, vote of stockholders
or disinterested directors or otherwise.
First National Bank. First National Bank's articles of association provide
that First National Bank may indemnify any director, officer or employee of
First National Bank and directors, officers and employees who are or were
serving at the request by First National Bank as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
corporation, association, partnership, joint venture, trust, unincorporated
organization, enterprise or any other form of entity or employee benefit plan to
the fullest extent permitted by law and shall indemnify such persons as and to
the extent required by law.
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
38
<PAGE>
dividends, which generally limit dividends to operating earnings. See "CERTAIN
REGULATORY AND OTHER CONSIDERATIONS PERTAINING TO NORWEST."
First National Bank. Under the National Bank Act, the prior approval of
the OCC is required if the total of all dividends declared by First National
Bank in any calendar year exceeds the total of First National Bank's net profits
of that year combined with its retained net profits of the preceding two years,
less any required transfers to surplus.
CORPORATE GOVERNANCE PROCEDURES; NOMINATION OF DIRECTORS
Norwest. Norwest's 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. Norwest's 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, Norwest's
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.
First National Bank. First National Bank's articles of association provide
that any nominations for director other than those made by or on behalf of the
board of directors must be made in writing and delivered or mailed to the
president of First National Bank and the OCC not less than 14 days nor more than
50 days prior to the meeting of shareholders called for the election of
directors, provided, however, that if less than 21 days notice of the meeting is
given to shareholders, such nomination shall be delivered or mailed not later
than the close of business on the seventh day following the day on which the
notice of meeting was mailed.
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<PAGE>
INFORMATION ABOUT FIRST NATIONAL BANK
GENERAL
First National Bank is a national banking association with one full-service
office located in Missouri City, Texas. First National Bank provides a wide
range of lending and deposit products to its commercial and consumer customers.
First National Bank's primary market is the city of Missouri City, where it
competes with a number of financial institutions, including other commercial
banks, savings and loan associations, savings banks, mortgage companies,
consumer finance companies, credit unions and insurance companies.
LEGAL PROCEEDINGS
In the normal course of its business, First National Bank is from time to time
involved in legal proceedings. First National Bank's management is not aware of
any pending or threatened legal proceeding which, upon resolution, would have a
material adverse effect on First National Bank's financial condition, results of
operations, or cash flows.
MARKET PRICE AND DIVIDENDS
There is no active trading market in First National Bank common stock. As of
the record date for the special meeting, there were 304,449 shares of First
National Bank common stock outstanding held by approximately 135 shareholders.
First National Bank paid dividends on its common stock of $2.00 per share and
$2.25 per share, respectively, in 1996 and 1997.
BENEFICIAL OWNERSHIP OF FIRST NATIONAL BANK COMMON STOCK BY FIRST NATIONAL BANK
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
Set forth below is certain information concerning the ownership of shares
of First National Bank common stock as of June 30, 1998, by (1) each person
known to First National Bank to be the beneficial owner of more than 5% of the
issued and outstanding First National Bank common stock, (2) each director of
First National Bank, and (3) other executive officers. Unless otherwise
indicated, all shares are owned directly, and the owner has sole voting and
investment power with respect thereto.
Amount of
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class
- ------------------------------------ ---------- --------
R. Fred Beeler 61,034 20.05%
3943 Pleasant Valley
Missouri City, Texas 77459
James D. Condrey, D.D.S. 200 0.07
3939 Pleasant Valley
Missouri City, Texas 77459
Frederick R. Grates 200 0.07
3902 East Creek Club Drive
Missouri City, Texas 77459
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Amount of
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class
- ------------------------------------ ---------- --------
W. K. Hardeman 1,400 .46
609 Denard Drive
Missouri City, Texas 77489
Jot Hodges, Jr. 33,168 10.89
3527 Thunderbird
Missouri City, Texas 77459
Ken Hutto 5,400 1.77
2950 Glenn Lakes Lane
Missouri City, Texas 77459
Harold J. Mathis, Jr. 12,675(1) 4.16
502 Bayou Drive
Richmond, Texas 77469
William C. McCorkle 200 0.07
3002 Green Tree Court
Missouri City, Texas 77459
Joe Rice 11,940 3.92
2938 Lakeview Drive
Missouri City, Texas 77459
Estate of Hampton C. Robinson, Jr., M.D. 66,416 21.82
3711 San Felipe, #9E
Houston, Texas 77027
Jeff Smith 1,000 .33
13118 Frances St.
Stafford, Texas 77477
D. N. Streater, D.V.M. 200 0.07
25 Burnham Circle
Sugar Land, Texas 77478
Joe C. Wessendorff 48,636 15.98
612 Morton St.
Richmond, Texas 77469
Other officers 6,374 2.09
------- -----
Total 248,843 81.74%
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(1) Includes 3,000 shares held of record by Central Gulf Marine, Inc., which is
wholly owned by Mr. Mathis. Also includes 8,000 shares held of record by
Mr. Mathis as custodian for his two minor children.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FIRST NATIONAL BANK'S FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The following is First National Bank's management's discussion and analysis
of the significant factors affecting First National Bank's financial condition
and results of operations. This discussion should be read in conjunction with
First National Bank's audited financial statements and accompanying footnotes
and other selected financial data presented elsewhere herein.
First National Bank's earnings depend primarily on First National Bank's
net interest income, which is the difference between the income earned on First
National 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 First National Bank's assets; the type and volume of its deposits; and the
relative sensitivity of First National Bank's interest-earning assets and its
interest-bearing deposits to changes in interest rates. In addition, First
National Bank's income is significantly affected by the fees it receives from
other banking services, by its required provision for loan losses and by the
level of its operating expenses. All aspects of First National Bank's operations
are affected generally by market, economic and competitive conditions.
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
FINANCIAL CONDITION
At June 30, 1998, total assets were $94.7 million, an increase of $8.6
million or 10.0% from $86.1 million at December 31, 1997. This change was
primarily due to increases in cash and cash equivalents, net loans and
investment securities. At June 30, 1998, total liabilities were $83.9 million,
an increase of $7.7 million or 10.1% from $76.2 million at December 31, 1997.
The increase was primarily due to an increase in time and demand deposits. As of
June 30, 1998, First National Bank remained in the "well-capitalized" category
with the ratio of total capital to risk-weighted assets in excess of 18%.
EARNINGS PERFORMANCE
Net income for the six months ended June 30, 1998, was $863,000 compared
with $804,000 for the same period in 1997. Net interest income totaled
$2,498,000 through June 30, 1998, an increase of $189,000 over the same period
last year. The increase in net interest income resulted from the overall growth
in earning assets being greater than the growth in interest-bearing deposits.
The net interest margin for the six month period ended June 30, 1998, was 5.95%
as compared with 5.96% for the same period in 1997.
First National Bank increased its provision for loan losses by $60,000 for
the first six months of 1998, which was $30,000 more than the increase during
the same period in 1997. Net loan recoveries for the first six months of 1998
have totaled $26,000, leaving a loan loss reserve of $526,000 or .82% of total
loans as of June 30, 1998.
Noninterest income for the first six months of 1998 decreased by $34,000 to
$208,000 compared with the same period during 1997, primarily due to a decrease
in fees and service charges. Fees and service charges are subject to fluctuation
based on customer behavior. Noninterest expense for the first six
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months of 1998 increased $38,000 to $1,373,000, primarily due to an increase in
employee compensation and benefits.
YEARS ENDED DECEMBER 31, 1997 AND 1996
FINANCIAL CONDITION
December 31,
---------------------------
1997 1996
-------- --------
(Dollars in thousands)
Interest-bearing deposits in financial $ 4,800 $ 400
institutions
Investment securities 15,104 20,362
Net loans 60,667 56,262
------- -------
Total earning assets 80,571 77,024
Cash and due from banks 3,339 5,555
Other assets 2,233 2,086
------- -------
TOTAL ASSETS $86,143 $84,665
======= =======
Demand deposits $17,895 $17,484
Time and savings deposits 56,673 55,167
------- -------
Total deposits 74,568 72,651
Repurchase agreements - 1,490
Other liabilities 1,629 1,305
------- -------
Total liabilities 76,197 75,446
Equity 9,946 9,219
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $86,143 $84,665
======= =======
Total assets increased $1.5 million during 1997 to $86.1 million, an
increase of 1.7%. Earning assets increased $3.5 million during 1997, primarily
due to an increase in real estate loans. Total deposits increased $1.9 million
during 1997 to $74.6 million, primarily due to an increase in time deposits.
Stockholders' equity increased $0.7 million after dividends declared of $685,000
and the purchase of $376,000 in treasury stock.
EARNINGS PERFORMANCE
Years Ended December 31,
---------------------------
1997 1996
-------- --------
(Dollars in thousands)
Net interest income $4,816 $4,584
Provision for credit losses 96 83
Noninterest income 513 516
Noninterest expense 2,640 2,450
Net income after taxes 1,755 1,735
Return on average assets 2.05% 2.19%
Return on average realized equity 18.00% 19.00%
Equity to assets 11.60% 11.00%
Loan loss reserve to average loans 0.75% 0.66%
Net interest margin 5.95% 6.19%
Loan-to-deposit ratio (average) 79.96% 76.40%
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NET INTEREST INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------
1997 1996
----------------------- ----------------------
(Dollars in thousands)
Avg.Bal. Interest(1) Rate Avg.Bal. Interest(1) Rate
---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Loans, including fees $ 58,190 $5,784 9.94% $ 52,447 $5,271 10.05%
Investment securities 18,419 1,123 6.10 18,078 1,115 6.17
Interest-bearing deposits 2,237 122 5.45 2,362 124 5.25
Federal funds sold - - - 1,590 86 5.41
---------- ------ ---------- ------
TOTAL EARNING ASSETS $ 78,846 $7,029 8.92 $ 74,477 $6,596 8.86
========== ====== ========== ======
Savings $ 4,940 $ 99 2.00 $ 5,246 $ 108 2.06
NOW 10,757 175 1.63 9,728 159 1.63
Money market 7,979 210 2.63 8,941 236 2.64
Time 32,305 1,686 5.22 29,311 1,508 5.14
---------- ------ ---------- ------
Total interest-bearing deposits 55,981 2,170 3.88 53,226 2,011 3.78
Repurchase agreements 785 43 5.48 8 1 5.81
TOTAL INTEREST-BEARING $ 56,766 $2,213 3.90 $ 53,234 $2.012 3.78
LIABILITIES ========== ====== ========== ======
Net interest income $4,816 $4,584
====== ======
Net interest spread 5.02% 5.08%
Net interest margin 5.95 6.19
</TABLE>
- ------------
(1) Tax-exempt income was not significant and thus has not been presented on a
tax-equivalent basis. Tax-exempt income of $172,000 and $164,000 was
recognized during the years ended December 31, 1997 and 1996, respectively.
Interest income increased $433,000 or 6.6% during 1997 to $7,029,000,
primarily due to a $5.7 million increase in average loans. The yield on earning
assets increased slightly from 8.86% to 8.92%. Interest expense increased
$201,000 to $2,213,000 during 1997, primarily due to a $2.8 million increase in
average interest-bearing deposits. The overall rate on interest-bearing
liabilities increased from 3.78% to 3.90%.
The interest rate spread between earning assets and interest-bearing
liabilities decreased slightly from 5.08% to 5.02% during 1997. During the same
period, net interest margin decreased from 6.19% to 5.95%.
Allowance for Credit Losses
The allowance represents an amount which, in management's judgment, will be
adequate to absorb all probable losses that can reasonably be anticipated based
on current conditions. In determining the adequacy of the allowance, First
National Bank evaluates the risk characteristics of the loan portfolio. This
evaluation takes into consideration factors including, but not limited to,
specific occurrences, general economic conditions, loan portfolio composition
and historical experience. Net charge-offs were .01% of
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average loans on 1997 and .13% in 1996. An analysis of activity in the allowance
for credit losses is as follows (in thousands):
Years Ended December 31,
---------------------------
1997 1996
---- ----
Balance at beginning of year $350 $334
Provision charged to operations 96 83
Loans charged off (19) (89)
Loan recoveries 13 22
---- ----
Balance at end of year $440 $350
==== ====
Loans are placed on nonaccrual status when First National Bank believes
that the borrower's financial condition, after giving consideration to economic
and business conditions and collection efforts, is such that collection of
interest is doubtful. At December 31, 1997, nonaccrual loans amounted to
$246,000 or 0.40% of loans outstanding, compared with $543,000 or 0.96% of loans
outstanding at December 31, 1996. As of December 31, 1997 and 1996, the amounts
of performing loans past due 30 days or more were $410,000 (0.67% of loans
outstanding) and $536,000 (0.95% of loans outstanding), respectively.
NONINTEREST INCOME
Noninterest income decreased $3,000 or 0.58% for the year ended December
31, 1997. The following table summarizes noninterest income (in thousands):
Years Ended December 31,
---------------------------
1997 1996
---- ----
Service charges on deposit accounts $382 $396
Other noninterest income 131 120
---- ----
$513 $516
==== ====
NONINTEREST EXPENSE
Noninterest expense increased $190,000 or 7.76% for the year ended December
31, 1997. The following table summarizes noninterest expense (in thousands):
Years Ended December 31,
---------------------------
1997 1996
---- ----
Salaries and employee benefits $1,557 $1,424
Net occupancy expenses 312 276
Outside service fees 174 179
Stationery, supplies, and printing 63 65
Other 534 506
------ ------
$2,640 $2,450
====== ======
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INCOME TAXES
The provision for federal income taxes differs from the amount computed by
applying the federal income tax statutory rate on income at December 31, 1997
and 1996 as follows (in thousands):
December 31,
---------------------------
1997 1996
---- ----
Taxes calculated as statutory rate $882 $873
Increase (decrease) resulting from:
Tax-exempt interest (52) (50)
Other, net 8 9
---- ----
Total $838 $832
==== ====
REGULATORY CAPITAL REQUIREMENTS
First National Bank is subject to various regulatory capital requirements
administered by federal banking agencies. Failure to meet minimum capital
requirements may result in certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on First National Bank's assets, liabilities, and certain off-
balance-sheet items as calculated under regulatory accounting practices. First
National 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 First National Bank to maintain minimum amounts and ratios of
total and Tier 1 capital to risk-weighted assets and of Tier 1 to average assets
as calculated under regulatory accounting practices.
At June 30, 1998, First National Bank was "well-capitalized" as defined by
regulations adopted by the federal bank regulatory agencies. To be categorized
as "well-capitalized," a bank must maintain 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. As of June 30,1 998, First National Bank had total
capital, Tier 1 capital, and leverage ratios of 11.50%, 18.0% and 18.7%,
respectively, and was not subject to any order or written directive to maintain
a specifica capital level.
ASSET AND LIABILITY MANAGEMENT
The goal of the asset and liability management process is to manage the
structure of the balance sheet to provide the maximum level of net interest
income while maintaining acceptable levels of interest rate sensitivity, risk
and liquidity. First National Bank's asset and liability committee monitors
policies governing investments, funding sources and overall interest
sensitivity, risk and liquidity. These policies form the framework for
management of the asset and liability process.
Interest sensitivity risk is the risk that future changes in interest rates
will reduce net interest income or the net market value of First National Bank's
balance sheet. Market risk is the risk of loss from adverse changes in market
prices and rates. First National Bank's market risk arises primarily from
interest rate risk inherent in its investing, lending and deposit-taking
activities. Management monitors the interest sensitivity and market risks to
assess that First National Bank is within acceptable limits.
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LIQUIDITY
Asset liquidity is provided by cash and assets which are readily
marketable, which can be pledged, or which will mature in the near future.
Interest-bearing deposits in financial institutions plus unpledged marketable
securities as a percentage of total deposits were 22.29% and 23.70% as of
December 31, 1997 and 1996, respectively.
Liability liquidity is provided by access to core funding sources,
principally various customers' interest-bearing deposit accounts in First
National Bank's market area. First National Bank does not have and does not
solicit brokered deposits. Repurchase agreements and short-term borrowing by
First National Bank are additional sources of liquidity. These sources of
liquidity are short-term in nature and can be used by First National Bank as
necessary to fund asset growth and meet short-term liquidity needs. As of
December 31, 1996, the Bank had $1,490,000 in repurchase agreements which were
paid in 1997 from liquid assets. First National Bank had no borrowings as of
June 30, 1998 and December 31, 1997, respectively.
YEAR 2000 COMPLIANCE
First National Bank has formally initiated its Year 2000 project to insure
that its operational and financial systems will not be adversely affected by
Year 2000 problems. First National Bank has formed a Year 2000 project team and
the board of directors and management are supporting all compliance efforts and
allocating the necessary resources to ensure completion. An inventory of all
systems and products (including both information technology and non-
informational technology systems) that could be affected by the Year 2000 date
change has been developed, verified and categorized as to its importance to
First National Bank. The software for First National Bank's systems is provided
through service bureaus and software vendors. First National Bank has contacted
all of its third party vendors and software providers and is requiring them to
demonstrate and represent that the products provided are or will be Year 2000
compliant and has planned a program of testing compliance. The service bureau
has asserted that it is Year 2000 compliant and pursuant to applicable
regulatory guidelines First National Bank is currently testing its system to
verify its assertion. First National Bank has also surveyed its largest dollar
deposit and loan customers to determine their readiness for Year 2000.
Management does not expect the costs of bringing First National Bank's
systems into Year 2000 compliance will have a material adverse effect on First
National Bank's financial conditions, results of operations or liquidity. As of
June 30, 1998, First National Bank has not incurred any significant costs in
relation to Year 2000. The largest potential risk to First National Bank
concerning Year 2000 is the malfunction of its data processing system. In the
event its data processing system does not function properly, First National Bank
is prepared to perform functions manually. First National Bank believes it is in
compliance wtih regulatory guidelines regarding Year 2000 compliance, including
the timetable for achieving compliance.
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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 by the OCC. Its
state- chartered banking subsidiaries are regulated primarily by the FDIC or the
Federal Reserve Board and applicable state banking agencies. Norwest's federally
insured banking subsidiaries 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
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the acquisition 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
Consolidations in the state) or opt in early (thereby allowing interstate
Consolidations 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 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.
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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 all
covered transactions with 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.
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.
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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 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. The
remainder (Tier 2 and Tier 3 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 (the sum of Tier 1, Tier 2
and Tier 3) 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%. At June 30, 1998, Norwest's total capital and
Tier 1 capital to risk-adjusted assets ratios were 10.64% and 8.84%,
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. At June 30, 1998, Norwest's
leverage ratio was 6.44%.
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.
Federal bank regulatory agencies require banking organizations that engage
in significant trading activity to calculate a capital charge for market risk.
Significant trading activity
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means trading activity of at least 10% of total assets or $1 billion, whichever
is smaller, 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 as 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.
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 fails to meet any of the required minimums for an
adequately capitalized institution; (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. At
June 30, 1998, all of Norwest's insured depository institutions met the criteria
for well capitalized institutions as set forth above.
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 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
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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.
Under FDI Act regulations, a bank may not accept brokered deposits (that
is, deposits obtained through a person engaged in the business of placing
deposits with insured depository institutions or with interest rates
significantly higher than prevailing market rates) unless (a) it is well
capitalized or (b) it is adequately capitalized and receives a waiver from the
FDIC. A bank that may not receive brokered deposits also may not offer
"pass-through" insurance on certain employee benefit accounts, unless it
provides certain notices to affected depositors. Also, a bank that is adequately
capitalized and that has not received a waiver from the FDIC may not pay an
interest rate on any deposits in excess of 75 basis points over certain
prevailing market rates. There are no such restrictions on a bank that is well
capitalized. At March 31, 1998, all of Norwest's subsidiary banks were well
capitalized.
FDIC INSURANCE
Through the Bank Insurance Fund (BIF), the FDIC insures the deposits of
Norwest's depository institution subsidiaries up to prescribed per depositor
limits. 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
BIF assessment rate 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.
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. FDIC-
insured
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depository institutions will continue to pay approximately 1.3 cents per $100 of
BIF-assessable deposits until the earlier of December 31, 1999 or the last
savings and loan association ceases to exist.
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 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, 1997 and 1996, and for each of the years in the three-year period
ended December 31, 1997, 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 financial statements of First National Bank as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997
included in this Proxy Statement-Prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing herein,
and have been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
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
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Reorganization Agreement, will be validly issued, fully paid and nonassessable.
Mr. Stroup beneficially owns shares of Norwest common stock and options to
purchase additional shares of Norwest common stock. As of the date of this Proxy
Statement-Prospectus, the number of shares Mr. Stroup owns or has the right to
acquire upon exercise of his options is, in the aggregate, less than 0.1% of the
outstanding shares of Norwest common stock.
The material U.S. Federal income tax consequences of the Consolidation to
First National Bank's shareholders and certain other legal matters will be
passed upon for First National Bank by Bracewell & Patterson, L.L.P., Houston,
Texas.
INFORMATION CONCERNING NORWEST MANAGEMENT
Information concerning executive compensation, the principal holders of
voting securities, certain relationships and related transactions, and other
related matters concerning Norwest is included or incorporated by reference in
its annual report on Form 10-K for the year ended December 31, 1997. Norwest's
annual report is incorporated by reference into this Proxy Statement-Prospectus.
First National Bank 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 First National Bank shareholders in the
Consolidation. 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 Consolidation 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.
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,
1997;
* Norwest's quarterly reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998;
* Norwest's current reports on Form 8-K filed January 22, 1998, April
20, 1998, April 22, 1998, June 8, 1998, June 9, 1998, June 12, 1998,
July 22, 1998 and August 5, 1998;
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* Norwest's registration statement on Form S-4 filed September 11, 1998
(Reg. No. 333-63247) containing the joint proxy statement-prospectus
of Norwest and Wells Fargo.
* Norwest's current report on Form 8-K filed October 13, 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:
57
<PAGE>
Norwest Corporation
Corporate Secretary
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
(612) 667-8655
TO ENSURE DELIVERY OF THE COPIES IN TIME FOR THE SPECIAL MEETING, YOUR
REQUEST SHOULD BE RECEIVED BY NORWEST BY OCTOBER 22, 1998.
- --------------------------------------------------------------------------------
IN DECIDING HOW TO VOTE ON THE CONSOLIDATION, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT-
PROSPECTUS. NEITHER NORWEST NOR FIRST NATIONAL BANK 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
SEPTEMBER 30, 1998. 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.
- --------------------------------------------------------------------------------
58
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS:
Statements of Condition As of June 30, 1998 (Unaudited) and December 31, 1997 and 1996 F-3
Statements of Earnings for the Six Months Ended June 30, 1998 (Unaudited) and June 30,
1997 (Unaudited) and for the Years Ended December 31, 1997, 1996, and 1995 F-4
Statements of Stockholders' Equity for the Years Ended December 31, 1997, 1996 and
1995 and for the Six Months ended June 30, 1998 (Unaudited) F-5
Statements of Cash Flows for Six Months Ended June 30, 1998 (Unaudited) and June 30,
1997 (Unaudited) and for the Years Ended December 31, 1997, 1996 and 1995 F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
First National Bank of Missouri City:
We have audited the accompanying statements of condition of First National Bank
of Missouri City (the "Bank") as of December 31, 1997 and 1996, and the related
statements of earnings, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Bank's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of First National Bank of Missouri City as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Houston, Texas
January 16, 1998
F-2
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
STATEMENTS OF CONDITION,
(Dollars in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30,
1998 December 31,
--------------------------
ASSETS (Unaudited) 1997 1996
<S> <C> <C> <C>
Cash and due from banks (Note 2) $ 2,623 $ 3,339 $ 5,555
Interest-bearing deposits in financial institutions 13,282 4,800 400
------- ------- -------
Total cash and cash equivalents 15,905 8,139 5,955
Investment securities available for sale, at fair value (approximate
cost of $8.9 million (unaudited), $10 million and $15.3 million for
1998, 1997 and 1996, respectively) (Note 3) 8,789 9,928 15,199
Investment securities held to maturity, at cost (approximate fair value
of $5.0 million (unaudited), $5.4 million and $5.3 million for 1998,
1997 and 1996, respectively) (Note 3) 4,809 5,176 5,163
Loans (Notes 4 and 5) 63,791 61,107 56,612
Less allowance for credit losses (Note 6) (526) (440) (350)
------- ------- -------
Net loans 53,265 60,667 56,262
Bank premises and equipment, net (Note 7) 1,038 1,094 1,139
Real estate acquired by foreclosure 45
Accrued interest receivable 467 473 486
Other assets 406 666 416
------- ------- -------
TOTAL $94,679 $86,143 $84,665
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing $21,402 $17,895 $17,484
Interest-bearing (Note 8) 61,723 56,673 55,167
------- ------- -------
Total deposits 83,125 74,568 72,651
Repurchase agreements 1,490
Accrued interest payable 464 466 423
Deferred income taxes (Note 11) 84 82 72
Other liabilities 203 1,081 810
------- ------- -------
Total liabilities 83,876 76,197 75,446
------- ------- -------
COMMITMENTS AND CONTINGENCIES (Notes 10 and 14)
STOCKHOLDERS' EQUITY (Notes 12 and 15):
Common stock, $5 par value; 325,000 shares authorized; 304,499,
304,449 and 316,440 shares issued and outstanding in 1998
(unaudited), 1997 and 1996, respectively 1,582 1,582 1,582
Surplus 1,582 1,582 1,582
Retained earnings 8,058 7,195 6,125
Treasury stock, at cost (11,991 shares at June 30, 1998 (unaudited) and
December 31, 1997) (376) (376)
Unrealized loss on available-for-sale investment securities, net of tax (43) (37) (70)
------- ------- -------
Total stockholders' equity 10,803 9,946 9,219
------- ------- -------
TOTAL $94,679 $86,143 $84,665
======= ======= =======
</TABLE>
See notes to financial statements.
F-3
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
STATEMENTS OF EARNINGS
(Dollars in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------------- -----------------------------------------
1998 1997 1997 1996 1995
(Unaudited)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $ 3,034 $ 2,753 $ 5,784 $ 5,271 $ 4,978
Investment securities 444 633 1,123 1,115 901
Deposits in financial institutions 216 16 122 124 177
Federal funds sold 86 62
------- ------ ------- ------- -------
Total interest income 3,694 3,402 7,029 6,596 6,118
1,868
INTEREST EXPENSE - Interest-bearing deposits 1,196 1,093 2,213 2,012 2,012
------- ------ ------- ------- -------
NET INTEREST INCOME 2,498 2,309 4,816 4,584 4,250
PROVISION FOR CREDIT LOSSES (Note 6) 60 30 96 83 100
------- ------ ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES 2,438 2,279 4,720 4,501 4,150
------- ------ ------- ------- -------
NONINTEREST INCOME:
Service charges on deposit accounts 165 192 382 396 473
Other 43 50 131 120 153
------- ------ ------- ------- -------
Total noninterest income 208 242 513 516 626
------- ------ ------- ------- -------
NONINTEREST EXPENSES:
Salaries and employee benefits 827 765 1,557 1,424 1,384
Net occupancy expense 134 171 312 276 260
Outside service fees 105 85 174 179 179
Stationery, supplies, and printing 24 35 63 65 65
Other 283 279 534 506 602
------- ------ ------- ------- -------
Total noninterest expenses 1,373 1,335 2,640 2,450 2,490
------- ------ ------- ------- -------
EARNINGS BEFORE INCOME TAXES 1,273 1,186 2,593 2,567 2,286
PROVISION FOR INCOME TAXES (Note 11) 410 382 838 832 741
------- ------ ------- ------- -------
NET EARNINGS $ 863 $ 804 $ 1,755 $ 1,735 $ 1,545
======= ====== ======= ======= =======
</TABLE>
See notes to financial statements.
F-4
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, Except per Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income-Unrealized
Gain (Loss) on
Available-for-Sale
Investment Total
Common Retained Securities, Treasury Stockholders'
Stock Surplus Earnings Net of Tax Stock Equity
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1995 $ 1,560 $ 1,517 $ 4,068 $ (296) $ $ 6,849
Net earnings 1,545 1,545
Dividends declared ($1.75 share) (550) (550)
Stock options exercised (Note 12) 12 13 25
Change in unrealized gain (loss) on available-
for-sale investment securities, net of tax 279 279
------- ------- ------- ------ ------- -------
BALANCE AT DECEMBER 31, 1995 1,572 1,530 5,063 (17) 8,148
Net earnings 1,735 1,735
Dividends declared ($2.00 per share) (633) (633)
Capital transfer 40 (40)
Stock options exercised (Note 12) 10 12 22
Change in unrealized gain (loss) on available-
for-sale investment securities, net of tax (53) (53)
------- ------- ------- ------ ------- -------
BALANCE AT DECEMBER 31, 1996 1,582 1,582 6,125 (70) 9,219
Net earnings 1,755 1,755
Dividends declared ($2.25 per share) (685) (685)
Purchase of treasury stock $ (376) (376)
Change in unrealized gain (loss) on available-for-sale
investment securities, net of tax 33 33
------- ------- ------- ------ ------- -------
BALANCE AT DECEMBER 31, 1997 1,582 1,582 7,195 (37) (376) 9,946
Net earnings (unaudited) 863 863
Change in unrealized gain (loss on available-for-sale
investment securities, net of tax (unaudited) (6) (6)
------- ------- ------- ------ ------- -------
BALANCE AT JUNE 30, 1998 (UNAUDITED) $ 1,582 $ 1,582 $ 8,058 $ (43) $ (376) $ 10,803
======= ======= ======= ====== ======= =======
</TABLE>
See notes to financial statements.
F-5
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
-------------------------- --------------------------------
1998 1997 1997 1996 1995
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net earnings $ 863 $ 804 $ 1,755 $ 1,735 $ 1,545
------ ----- ------- ------- -------
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Amortization and (accretion) of premiums and discounts on
investment securities, net (7) (4) (2) (19) 2
Provision for credit losses 60 30 96 83 100
Provision for real estate losses 5 5
Gain on sale of securities available for sale (4)
Gain on sale of real estate acquired by foreclosure (30)
Depreciation 76 61 144 147 139
(Increase) decrease in accrued interest receivable 6 19 13 (65) (72)
(Increase) decrease in other assets 2 12 10 8 (36)
Increase (decrease) in accrued interest payable (2) (53) 43 (22) 227
Increase (decrease) in deferred taxes 2 (28) 10 (47) (19)
Increase (decrease) in other liabilities (193) (15) 271 12 (2)
------ ----- ------- ------- -------
Total adjustments (56) 27 586 97 309
------ ----- ------- ------- -------
Net cash provided by operating activities 807 831 2,341 1,832 1,854
------ ----- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and calls of investment securities 1,200 800 1,300 775
Proceeds from principal paydown of investment securities 307 298 567 871
Purchase of investment securities (295) (6,535) (2,119)
Proceeds from sale of investment securities available for sale 3,741
Net loan originations (2,658) (2,434) (4,501) (4,724) (3,241)
Proceeds from sale of real estate required by foreclosure and
repossessed assets 40 40 398
Proceeds from sale of bank premises and equipment 9 9
(Purchase) sale of bank premises and equipment (20) (43) (108) (26) (126)
(Purchase) sale of Federal Reserve Bank and Federal Home
Loan Bank stock 258 (261) (276) (29) (25)
------ ----- ------- ------- -------
Net cash provided by (used in) investing activities (913) (1,591) 477 (10,443) (4,338)
------ ----- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in repurchase agreements 10 (1,490) 1,490
Net increase (decrease) in deposit accounts 8,557 (1,141) 1,917 2,790 7,331
Stock options exercised 22 25
Dividends paid (685) (633) (685) (550) (546)
Purchase of treasury stock (376) (376)
------ ----- ------- ------- -------
Net cash (used in) provided by financing activities 7,872 (2,140) (634) 3,752 6,810
------ ----- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,766 (2,900) 2,184 (4,859) 4,326
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,139 5,955 5,955 10,814 6,488
------ ----- ------- ------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,905 $ 3,055 $ 8,139 $ 5,955 $ 10,814
======== ======= ======= ======= ========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
FIRST NATIONAL BANK OF MISSOURI CITY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
1. REPORTING AND ACCOUNTING POLICIES
NATURE OF OPERATIONS - First National Bank of Missouri City (the "Bank") is a
bank located in Missouri City, Texas, that provides retail and commercial
banking services. The Bank provides a broad line of financial products and
services for small- to medium-sized businesses and consumers.
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES - The accounting and
reporting policies of the Bank conform to generally accepted accounting
principles ("GAAP") and the prevailing practices within the banking industry.
A summary of significant accounting and reporting policies follows.
INTERIM FINANCIAL INFORMATION - Financial information as of June 30, 1998 and
for the six months ended June 30, 1998 and June 30, 1997, included herein, is
unaudited. Such information includes all adjustments (consisting only of
normal recurring adjustments), which are, in the opinion of management,
necessary for a fair statement of the financial information in the interim
periods. The results of operations for the six months ended June 30, 1998 are
not necessarily indicative of the results for the full fiscal year.
USE OF ESTIMATES - The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
INVESTMENT SECURITIES - Investment securities held to maturity are carried at
cost, adjusted for the amortization of premiums and the accretion of
discounts. Management has the positive intent and the Bank has the ability to
hold these assets as long-term investments until their estimated maturities.
Under certain circumstances (including the deterioration of the issuer's
creditworthiness or a change in tax law or statutory or regulatory
requirements), securities may be sold or transferred to another portfolio.
Investment securities available for sale are carried at fair value.
Unrealized gains and losses are excluded from earnings and reported net of
tax, as a separate component of stockholders' equity, until realized.
Securities within the available-for-sale portfolio may be used as part of the
Bank's asset/liability strategy and may be sold in response to changes in
interest-rate risk, prepayment risk, or other similar economic factors.
Premiums and discounts are amortized and accreted to operations using the
level-yield method of accounting, adjusted for prepayments as applicable. The
specific identification method of accounting is used to compute gains or
losses on the sales of these assets.
LOANS - Loans are stated at the principal amounts outstanding, net of
unearned discounts and fees. Unearned discount relates principally to
consumer installment loans. The related-interest income for installment loans
is recognized principally by the "sum-of-the-months' digits" method, which
records interest in proportion to the declining outstanding balances of the
loans. This method approximates the interest method. For other loans, such
income is recognized using the simple interest method.
F-7
<PAGE>
Effective January 1, 1995, the Bank adopted Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a
Loan," as amended by SFAS No. 118, "Accounting by Creditors for Impairment of
a Loan - Income Recognition and Disclosure." SFAS No. 114 applies to all
impaired loans, with the exception of groups of smaller-balance homogeneous
loans that are collectively evaluated for impairment. A loan is defined as
impaired by SFAS No. 114 if, based on current information and events, it is
probable that a creditor will be unable to collect all amounts due, both
interest and principal, according to the contractual terms of the loan
agreement. Specifically, SFAS No. 114 requires that the fair value of
impaired loans be determined based on the present value of expected cash
flows discounted at the loan's effective interest rate or, as a practical
expedient, the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. Prior to the adoption of SFAS
No. 114, the Bank's methodology for determining the adequacy of the allowance
for credit losses did not incorporate the concept of the time value of money
and the expected future interest cash flow.
As permitted by SFAS No. 118, interest revenue received on impaired loans
continues to be either applied against principal or realized as interest
revenue, according to management's judgment as to the collectibility of
principal.
NONPERFORMING AND PAST-DUE LOANS - Included in the nonperforming loan
category are loans which have been categorized by management as nonaccrual
because collection of interest is doubtful and loans which have been
restructured to provide a reduction in the interest rate or a deferral of
interest or principal payments.
When the payment of principal or interest on a loan is delinquent for 90
days, or earlier in some cases, the loan is placed on nonaccrual status,
unless the loan is in the process of collection and the underlying collateral
fully supports the carrying value of the loan. If the decision is made to
continue accruing interest on the loan, periodic reviews are made to confirm
the accruing status of the loan. When a loan is put on nonaccrual status,
interest accrued prior to a judgment of uncollectibility during the current
year is charged to operations. Interest accrued during prior periods and
deemed uncollectible is charged to the allowance for credit losses.
Generally, any payments received on nonaccrual loans are applied first to
outstanding loan amounts and next to the recovery of charged-off loan
amounts. Any excess is treated as recovery of lost interest.
ALLOWANCE FOR CREDIT LOSSES - The allowance for credit losses is a valuation
allowance available for losses incurred on loans. All losses are charged to
the allowance for credit losses when the loss actually occurs or when a
determination is made that a loss is probable. Recoveries are credited to the
allowance at the time of recovery.
Prior to the beginning of each year, and monthly during the year, management
estimates the likely level of future losses to determine whether the
allowance for credit losses is adequate to absorb probable losses in the
existing portfolio. Based on these estimates, an amount is charged to the
provision for credit losses and credited to the allowance for credit losses
in order to adjust the allowance to a level determined to be adequate to
absorb losses.
Management's judgment as to the level of losses on existing loans involves
the consideration of current and anticipated economic conditions and their
potential effects on specific borrowers; an evaluation of the existing
relationships among loans, potential credit losses, and the present level of
the allowance; results of examinations of the loan portfolio by regulatory
agencies; and management's internal review of the loan portfolio. In
determining the collectibility of certain loans, management also considers
the fair value
F-8
<PAGE>
of any underlying collateral. The amounts ultimately realized may differ from
the carrying values of these assets due to economic, operating, or other
conditions beyond the Bank's control.
It should be understood that estimates of credit losses involve an exercise
of judgment. While it is reasonably possible that the Bank may sustain losses
which are substantial relative to the allowance for credit losses, it is the
judgment of management that the allowance for credit losses reflected in the
statements of condition is adequate to absorb probable losses that exist in
the current loan portfolio.
BANK PREMISES AND EQUIPMENT - Bank premises and equipment are carried at cost
less accumulated depreciation. Depreciation expense is computed using the
straight-line method over the estimated useful lives of the assets.
REAL ESTATE ACQUIRED BY FORECLOSURE - The Bank records real estate acquired
by foreclosure at fair value, less estimated costs to sell at the time of
foreclosure. Subsequent to foreclosure, real estate acquired by foreclosure
is carried at the lower of its fair value, less estimated costs to sell, or
its cost. Any adjustments to reflect declines in value below the recorded
amounts are recognized as a valuation allowance. Increases or decreases in
the valuation allowance are charged or credited to income. Required
developmental costs associated with foreclosed property under construction
are capitalized and considered in determining the fair value of the property.
Operating expenses of such properties, net of related income, are included as
noninterest expenses in the statements of earnings.
FEDERAL INCOME TAXES - Deferred income taxes are accounted for by applying
statutory tax rates in effect at the balance sheet date to differences
between the book basis and the tax basis of assets and liabilities. The
resulting deferred tax assets and liabilities are adjusted to reflect changes
in enacted tax laws or rates.
Realization of net deferred tax assets is dependent on generating sufficient
future taxable income. Although realization is not assured, management
believes it is more likely than not that all of the net deferred tax assets
will be realized. The amount of the net deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income are reduced.
STATEMENT OF CASH FLOWS - For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks, federal funds sold, and
interest-bearing deposits in financial institutions. Generally, federal funds
sold are invested for one-day periods.
RECENTLY ISSUED ACCOUNTING STANDARDS - In March 1995 the Financial Accounting
Standards Board ("FASB") issued SFAS No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
statement establishes accounting standards for recognizing and measuring
impairment of long-lived assets to be held and used and for such assets held
for disposal. Implementation of this pronouncement during the year ended
December 31, 1996 had no materially adverse effect on the Bank's financial
statements.
SFAS No. 130, "Reporting Comprehensive Income," requires that all components
of comprehensive income and total comprehensive income be reported on one of
the following: (1) the statement of operations, (2) the statement of
stockholders' equity, or (3) a separate statement of comprehensive income.
Comprehensive income comprises net income and all changes to stockholders'
equity, except those due to investments by owners (changes in paid-in
capital) and distributions to owners (dividends). This statement is effective
for fiscal years beginning after December 15, 1997. Earlier application is
permitted. The Bank adopted SFAS No. 130 effective January 1, 1998.
F-9
<PAGE>
2. CASH AND DUE FROM BANKS
The Bank is required by the Federal Reserve Bank to maintain average reserve
balances. "Cash and due from banks" in the statements of condition included
amounts so restricted of $0 and approximately $299,000 at December 31, 1997
and 1996, respectively.
3. INVESTMENT SECURITIES
The amortized cost and estimated market value of investments in debt
securities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1997
------------------------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market Carrying
Cost Gains Losses Value Value
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE:
U.S. Treasury notes $ 2,046 $ 30 $ 2,076 $ 2,076
Obligation of U.S. agency 3,778 9 3,787 3,787
Mortgage-backed securities 4,160 $ 95 4,065 4,065
------- ---- ---- ------- -------
Total $ 9,984 $ 39 $ 95 $ 9,928 $ 9,928
======= ==== ==== ======= =======
December 31, 1997
------------------------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market Carrying
Cost Gains Losses Value Value
HELD TO MATURITY:
Municipal bonds $ 3,525 $ 94 $ 6 $ 3,613 $ 3,525
Mortgage-backed securities 1,651 95 1,746 1,651
------- ----- --- ------- -------
Total $ 5,176 $ 189 $ 6 $ 5,359 $ 5,176
======= ===== === ======= =======
December 31, 1996
------------------------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market Carrying
Cost Gains Losses Value Value
AVAILABLE FOR SALE:
U.S. Treasury notes $ 2,870 $ 37 $ 2,907 $ 2,907
Obligation of U.S. agency 6,255 10 $ 24 6,241 6,241
Mortgage-backed securities 6,180 1 130 6,051 6,051
-------- ---- ----- -------- --------
Total $ 15,305 $ 48 $ 154 $ 15,199 $ 15,199
======== ==== ===== ======== ========
December 31, 1996
------------------------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market Carrying
Cost Gains Losses Value Value
HELD TO MATURITY:
Municipal bonds $ 3,214 $ 79 $ 7 $ 3,286 $ 3,214
Mortgage-backed securities 1,949 109 2,058 1,949
------- ----- --- ------- -------
Total $ 5,163 $ 188 $ 7 $ 5,344 $ 5,163
======= ===== === ======= =======
</TABLE>
F-10
<PAGE>
The amortized cost and estimated market value of debt securities at December
31, 1997, by contractual maturity, are shown below (in thousands). Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
Approximate
Amortized Market
Cost Value
AVAILABLE FOR SALE:
Due less than one year
Due after one year through five years $ 4,833 $ 4,861
Due after five years through ten years 991 1,002
Mortgage-backed securities 4,160 4,065
----- -----
Total $ 9,984 $ 9,928
======= =======
Approximate
Amortized Market
Cost Value
HELD TO MATURITY:
Due after one year through five years $ 1,098 $ 1,107
Due after five years through ten years 1,705 1,736
Due after ten years 721 770
Mortgage-backed securities 1,652 1,746
----- -----
Total $ 5,176 $ 5,359
======= =======
During 1997, two available-for-sale securities were sold and there were no
sales of held-to-maturity securities. During 1996, there were no sales of
available-for-sale or held-to-maturity investments.
The Bank does not own any investment securities of any one issuer of which
par or face value exceeds 10% of stockholders' equity at December 31, 1997.
Investment securities with carrying amounts of $.7 million at December 31,
1997 and 1996 were pledged to secure public deposits and for other purposes
required by law.
4. LOANS
The loan portfolio consists of various types of loans made principally to
borrowers located in Fort Bend County and Harris County, Texas, and is
classified by major type of loans as follows (in thousands):
December 31,
----------------------------
1997 1996
Commercial $ 17,501 $ 18,178
Real estate - mortgage 41,797 35,705
Real estate - construction 1,799 2,595
Installment 10 142
--------- ---------
Total 61,107 56,620
Less unearned discounts 8
--------- ---------
Loans, net $ 61,107 $ 56,612
========= =========
F-11
<PAGE>
As discussed in Note 1, the Bank adopted SFAS No. 114 and No. 118 effective
January 1, 1995. Adoption of these statements had no impact on the Bank's
financial statements including the level of the allowance for credit losses.
Instead, it resulted only in a reallocation of the existing allowance for
credit losses.
At December 31, 1997 and 1996, the recorded investments in impaired loans
under SFAS No. 114 were $246,000 and $543,000, respectively.
At December 31, 1997, no SFAS No. 114 reserve was required for $240,000 of
the recorded investment in impaired loans since previously taken charge-offs
and interest applied to principal had reduced the recorded-investment values
to amounts less than the calculated values. The remaining $6,000 of impaired
loans required an SFAS No. 114 allowance for credit losses of $1,000.
At December 31, 1996, no SFAS No. 114 reserve was required for $521,000 of
the recorded investment in impaired loans since previously taken charge-offs
and interest applied to principal had reduced the recorded-investment values
to amounts less than the calculated values. The remaining $22,000 of impaired
loans required an SFAS No. 114 allowance for credit losses of $11,000.
The average recorded investments in impaired loans for the years ended
December 31, 1997 and 1996 were $626,000 and $531,000, respectively. The Bank
recognized interest revenue on these impaired loans of $21,000 and $26,000 in
1997 and 1996, respectively.
Approximate final loan maturities and rate sensitivity of the loan portfolio,
excluding installments and before unearned discounts at December 31, 1997,
were as follows (in thousands):
WITHIN ONE - AFTER FIVE
ONE YEAR FIVE YEARS YEARS TOTAL
Commercial $ 5,654 $ 7,920 $ 3,927 $ 17,501
Real estate - mortgage 1,006 7,418 33,373 41,797
Real estate - construction 561 1,238 1,799
------- -------- -------- --------
Total $ 7,221 $ 15,338 $ 38,538 $ 61,097
======= ======== ======== ========
Loans at fixed interest rates $ 10,123 $ 4,078
Loans at variable interest rates 5,215 34,460
------ ------
Total $ 15,338 $ 38,538
======== ========
Loans outstanding to directors, executive officers, and their affiliates as
of December 31, 1997 and 1996 were approximately $1.2 million and $1.3
million, respectively. In the opinion of management, all transactions entered
into between the Bank and such related parties have been and are made on the
same terms and conditions as similar transactions with unaffiliated persons
in the ordinary course of business.
F-12
<PAGE>
An analysis of activity with respect to these related-party loans is as
follows (in thousands):
Year Ended
December 31,
-------------------------------------
1997 1996 1995
Balance at beginning of year $ 1,265 $ 1,319 $ 1,051
New loans 123 144 449
Repayments (209) (198) (181)
------- ------- -------
Balance at end of year $ 1,179 $ 1,265 $ 1,319
======= ======= =======
5. NONPERFORMING LOANS
The following table presents information relating to nonperforming loans (in
thousands):
Year Ended
December 31,
-----------------------------------
1997 1996 1995
Nonaccrual loans $ 246 $ 543 $ 525
----- ----- -----
Total $ 246 $ 543 $ 525
===== ===== =====
As of December 31, 1997 and 1996, the amounts of performing loans past due 30
days or more were $410,000 and $536,000, respectively.
With respect to the above nonperforming loans, the following table presents
interest income actually earned and additional interest income that would
have been earned under the original terms of the loans (in thousands):
Year Ended
December 31,
----------------------------------
1997 1996 1995
Nonaccrual loans:
Income earned $ 21 $ 26 $ 40
Forgone income 24 29 20
6. ALLOWANCE FOR CREDIT LOSSES
An analysis of activity in the allowance for credit losses is as follows (in
thousands):
Year Ended
December 31,
------------------------------------------
1997 1996 1995
Balance at beginning of year $ 350 $ 334 $ 395
Provision charged to operations 96 83 100
Loans charged off (19) (89) (77)
Loan recoveries 13 22 11
----- ----- -----
Balance at end of year $ 440 $ 350 $ 334
===== ===== =====
F-13
<PAGE>
7. BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized below (in thousands):
December 31,
-------------------------
1997 1996
Land and land improvements $ 277 $ 277
Building 1,104 1,107
Furniture, fixtures, and equipment 350 427
Auto 27 24
------- -------
Total 1,758 1,835
Less accumulated depreciation (664) (696)
------- -------
Total $ 1,094 $ 1,139
======= =======
8. DEPOSITS
Included in interest-bearing deposits are certificates of deposit in amounts
of $100,000 or more. These certificates and their remaining maturities at
December 31, 1997 and 1996 are as follows (in thousands):
December 31,
-----------------------------
1997 1996
Three months or less $ 3,202 $ 4,986
Four through six months 5,450 3,715
Seven through twelve months 4,332 2,504
After one year 1,209 1,908
-------- --------
Total $ 14,193 $ 13,113
======== ========
9. INTEREST-RATE RISK
The Bank is principally engaged in providing short-term commercial loans with
interest rates that fluctuate with various market indices and long-term,
fixed-rate real estate loans. These loans are primarily funded through
short-term demand deposits and longer-term certificates of deposit with
variable and fixed rates. The real estate loans are more sensitive to
interest-rate risk than the commercial loans due to their fixed rates and
longer maturity characteristics.
10. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to various financial instruments with off-balance-sheet
risk in the normal course of business in order to meet the financing needs of
its customers and to reduce its own exposure to fluctuations in interest
rates. These financial instruments include commitments to extend both credit
and standby letters of credit. These instruments involve, to varying degrees,
elements of credit and interest-rate risk in excess of the amounts recognized
in the statements of condition. The contract or notional
F-14
<PAGE>
amounts of the instruments reflect the extent of the Bank's involvement in
particular classes of financial instruments. The Bank's exposure to credit
loss in the event of nonperformance by the other party to the financial
instruments for commitments to extend credit and standby letters of credit is
represented by the contractual notional amount of those instruments. The Bank
uses the same credit policies in making these commitments and conditional
obligations as it does for on-balance-sheet instruments.
The following is a summary of the various financial instruments entered into
by the Bank as of December 31, 1997 and 1996 (in thousands):
Approximate
Contract Amount at
December 31,
--------------------------
1997 1996
Financial instruments whose contract
amount represents credit risk:
Commitments to extend credit $ 8,511 $ 8,817
Standby letters of credit 1,403 725
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being fully drawn upon, the total commitment
amounts disclosed above do not necessarily represent cash requirements. The
Bank holds some form of collateral for substantially all of these
commitments. Collateral held varies but consists primarily of certificates of
deposit, accounts receivable, inventory, and property, plant, and equipment.
The Bank evaluates each customer's creditworthiness on a case-by-case basis.
The amount of collateral obtained if considered necessary by the Bank upon
extension of credit is based on management's credit evaluation of the
customer.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to its customers.
11. INCOME TAXES
The components of the provision for federal income taxes for the years ended
December 31, 1997, 1996 and 1995 were as follows (in thousands):
December 31,
--------------------------------
1997 1996 1995
Current $ 844 $ 852 $ 760
Deferred (6) (20) (19)
----- ----- -----
Total $ 838 $ 832 $ 741
===== ===== =====
F-15
<PAGE>
The provision for federal income taxes differs from the amount computed by
applying the federal income tax statutory rate on income for the years ended
December 31, 1997, 1996 and 1995 as follows (in thousands):
December 31,
------------------------------------
1997 1996 1995
Taxes calculated at statutory rate $ 882 $ 873 $ 777
Increase (decrease) resulting from:
Tax-exempt interest (52) (50) (44)
Other, net 8 9 8
----- ----- -----
Total $ 838 $ 832 $ 741
===== ===== =====
Deferred income taxes and benefits are provided for differences between the
financial statement carrying amount of existing assets and liabilities and
their respective tax basis. At December 31, 1997 and 1996, significant
deferred tax assets and liabilities were as follows (in thousands):
December 31,
---------------------
1997 1996
Deferred tax assets:
FASB 115 adjustment $ 19 $ 36
Forgone interest on nonaccrual loans 22 28
Allowance for credit losses 114 90
----- -----
Total 155 154
----- -----
Deferred tax liabilities:
Depreciation 216 215
Capitalization of FHLB interest 21 11
----- -----
Total 237 226
----- -----
Net deferred tax asset (liability) $ (82) $ (72)
===== =====
F-16
<PAGE>
12. STOCK OPTION PLAN
Stockholders of the Bank have approved a stock option plan reserving 25,000
shares of common stock for issuance to officers and certain key employees.
The options granted are exercisable in four annual installments, commencing
40% in the second year of grant with the remaining 60% in three equal annual
installments, and expire ten years after the date of grant. A summary of
changes in outstanding options is as follows:
Year Ended
December 31,
1996
Shares under option, beginning of year 2,540
Options exercised during the year (1,980)
Options forfeited during the year (560)
--------------
Shares under option, end of year 0
==============
Option price $10.16 - 16.17
Options exercisable at end of year 0
Shares reserved for future granting of options 8,560
During 1997, no options were issued, exercised, or forfeited during the year.
13. EMPLOYEE SAVINGS PLAN
The Bank provides an employee savings plan for substantially all full-time
employees. Contributions to the plan by the Bank are made at the discretion
of the Board of Directors. The Bank contributed approximately $26,700 and
$24,000 in fiscal years 1997 and 1996, respectively.
14. COMMITMENTS AND CONTINGENCIES
The Bank leases office space in its building to various tenants under
cancelable lease agreements. Rental income received on these lease agreements
aggregated approximately $14,505 and $32,000 for the years ended December 31,
1997 and 1996, respectively, and is included in net occupancy expense.
As of December 31, 1997, there were no lawsuits pending against the Bank.
15. REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Any bank that fails to meet its minimum
capital requirements is subject to actions by regulators that could have a
direct material effect on the bank's financial statements. Under the capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital requirements based on the Bank's
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices.
To meet the capital adequacy requirements, the Bank must maintain minimum
amounts and ratios as defined in the regulations. Management believes that as
of December 31, 1997, the Bank met all capital adequacy requirements.
F-17
<PAGE>
As of December 31, 1997, the most recent notification from the Office of the
Comptroller of the Currency categorized the Bank as well-capitalized under
the regulatory framework for prompt corrective action. To be categorized as
well-capitalized, the Bank must maintain minimum capital amounts and ratios
as set forth in the table below. There have been no conditions or events
since that notification that management believes have changed the Bank's
category.
<TABLE>
<CAPTION>
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------- ----------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital (to Risk Weighted Assets) $ 10,423 18.7% $ 4,461 8.0% $ 5,577 10.0%
Tier I Capital (to Risk Weighted Assets) $ 9,983 18.0% $ 2,213 4.0% $ 3,320 6.0%
Tier I Capital (to Total Assets) $ 9,983 11.6% $ 2,586 3.0% $ 4,310 5.0%
As of December 31, 1996:
Total Capital (to Risk Weighted Assets) $ 9,639 19.6% $ 3,947 8.0% $ 4,933 10.0%
Tier I Capital (to Risk Weighted Assets) $ 9,289 19.0% $ 1,960 4.0% $ 2,940 6.0%
Tier I Capital (to Total Assets) $ 9,289 11.0% $ 2,573 3.0% $ 4,289 5.0%
</TABLE>
16. CASH FLOWS
The Bank made interest payments of approximately $2.2 million and $2.0
million during 1997 and 1996, respectively. The Bank also made federal income
tax payments of $641,000 and $820,000 during 1997 and 1996, respectively.
On May 22, 1997, the Bank decreased its equity capital by $375,874 through
the repurchase of 11,990 shares of common stock.
Noncash transactions consisted of real estate acquired through foreclosure
and repossessed assets of loans totaling approximately $45,000 for the year
ended December 31, 1996. On December 21, 1997, the Bank declared dividends of
$2.25 per share to be paid on January 2, 1998. On December 18, 1996, the Bank
declared dividends of $2.00 per share to be paid on January 2, 1997. The Bank
recorded an unrealized gain (loss) on securities available for sale, before
taxes, of $49,000 and ($81,000) in 1997 and 1996, respectively.
******
F-18
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 11th day of June, 1998, by and between FIRST NATIONAL BANK OF MISSOURI CITY
("Missouri City"), a national banking association, and NORWEST CORPORATION
("Norwest"), a Delaware corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Norwest will consolidate with Missouri City (the
"Consolidation") pursuant to an agreement and plan of consolidation (the
"Consolidation 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 Missouri City of the par value of $5.00 per share
("Missouri City Common Stock") outstanding immediately prior to the time the
Consolidation becomes effective in accordance with the provisions of the
Consolidation 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) Consolidation. Subject to the terms and conditions contained herein,
a wholly-owned subsidiary of Norwest ("Norwest Bank") will be consolidated with
Missouri City pursuant to the Consolidation Agreement, with Missouri City as the
surviving corporation, in which consolidation each share of Missouri City Common
Stock outstanding immediately prior to the Effective Time of the Consolidation
(as defined below)(other than shares as to which statutory dissenters' appraisal
rights have been exercised) will be converted into and exchanged for the number
of shares of Norwest Common Stock determined by dividing the Adjusted Norwest
Shares by the number of shares of Missouri City Common Stock then outstanding.
The "Adjusted Norwest Shares" shall be a number equal to $26,000,000 divided by
the Norwest Measurement Price. The "Norwest Measurement Price" is defined as
the average of the closing prices of a share of Norwest Common Stock as reported
on the consolidated tape of the New York Stock Exchange during the period of 20
trading days ending on the day immediately preceding the meeting of shareholders
required by paragraph 4(c) of this Agreement.
(b) Norwest Common Stock Adjustments. If, between the date hereof and the
Effective Time of the Consolidation, 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
<PAGE>
such period (a "Common Stock Adjustment"), then the number of shares of Norwest
Common Stock into which a share of Missouri City 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 Missouri City Common Stock shall be converted will equal the number of
shares of Norwest Common Stock which holders of shares of Missouri City Common
Stock would have received pursuant to such Common Stock Adjustment had the
record date therefor been immediately following the Effective Time of the
Consolidation.
(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 Consolidation. Subject to the terms and
conditions set forth herein, the closing of the Consolidation will occur on a
mutually agreeable date, which date shall be not later than ten (10) business
days following the satisfaction or waiver of all conditions precedent set forth
in Sections 6 and 7 of this Agreement 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 Consolidation to be completed as soon as practicable after
the receipt of final regulatory approval of the Consolidation and the expiration
of all required waiting periods. The Consolidation shall be effective at 12:01
a.m., Minneapolis, Minnesota time (the "Effective Time of the Consolidation") on
the date specified in the certificate of approval to be issued by the
Comptroller of the Currency of the United States, under the seal of his office,
approving the Consolidation (the "Effective Date of the Consolidation").
The closing of the transactions contemplated by this Agreement and the
Consolidation 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 MISSOURI CITY. Missouri City
represents and warrants to Norwest as follows:
(a) Organization and Authority. Missouri City is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States, 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 Missouri City and the Missouri City
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
A-2
<PAGE>
conducted. Missouri City has furnished Norwest true and correct copies of its
articles of association and by-laws, as amended.
(b) Missouri City's Subsidiaries. Schedule 2(b) sets forth a complete and
correct list of all of Missouri City's subsidiaries as of the date hereof
(individually a "Missouri City Subsidiary" and collectively the "Missouri City
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
Missouri City. No equity security of any Missouri City 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 Missouri City 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, all of such shares so owned by Missouri City 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 Missouri City
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), Missouri City 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 Missouri City
consists of 2,000 shares of preferred stock, $500 par value, of which at the
close of business on March 31, 1998, no shares were outstanding and no shares
were held in the treasury, and 325,000 shares of common stock, $5 par value, of
which as of the close of business on March 31, 1998, 304,449 shares were
outstanding and 11,991 shares were held in the treasury. The maximum number of
shares of Missouri City Common Stock (assuming for this purpose that phantom
shares and other share-equivalents constitute Missouri City Common Stock) that
would be outstanding as of the Effective Date of the Consolidation if all
options, warrants, conversion rights and other rights with respect thereto were
exercised is 304,449. All of the outstanding shares of capital stock of
Missouri City have been duly and validly authorized and issued and, subject to
12 U.S.C. (S) 55, 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 Missouri City or any Missouri City Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of Missouri City or any Missouri City Subsidiary. Except as set
forth in Schedule 2(c), since March 31, 1998 no shares of Missouri City capital
stock have been purchased, redeemed or otherwise acquired, directly or
indirectly, by Missouri City or any Missouri City Subsidiary and no dividends or
other distributions have been declared, set aside, made or paid to the
shareholders of Missouri City.
A-3
<PAGE>
(d) Authorization. Missouri City has the corporate power and authority to
enter into this Agreement and the Consolidation Agreement and, subject to any
required approvals of its shareholders and regulatory authorities, to carry out
its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and the Consolidation Agreement by Missouri City
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Board of Directors of Missouri City. Subject to
such approvals of shareholders and of government agencies and other governing
boards having regulatory authority over Missouri City as may be required by
statute or regulation, this Agreement and the Consolidation Agreement are valid
and binding obligations of Missouri City enforceable against Missouri City in
accordance with their respective terms, except as enforceability may be limited
by the effect of bankruptcy, insolvency, reorganization, moratorium, and other
similar laws and court decisions of general application relating to, limiting or
affecting the enforcement of creditors' rights generally, and by general
principles of equity.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Missouri City of this Agreement or the Consolidation Agreement,
nor the consummation of the transactions contemplated hereby and thereby, nor
compliance by Missouri City 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 Missouri City or
any Missouri City Subsidiary under any of the terms, conditions or provisions of
(x) its articles of association or by-laws or (y) any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Missouri City or any Missouri City Subsidiary
is a party or by which it may be bound, or to which Missouri City or any
Missouri City Subsidiary or any of the properties or assets of Missouri City or
any Missouri City Subsidiary may be subject, or (ii) subject to compliance with
the statutes and regulations referred to in the next paragraph, to the knowledge
of Missouri City, violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Missouri City or any Missouri City
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 Bank Holding Company Act of 1956, as amended (the "BHC Act")
or the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), and
filings required to effect the Consolidation under the National Bank Act, 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
A-4
<PAGE>
Missouri City of the transactions contemplated by this Agreement and the
Consolidation Agreement.
(e) Missouri City Financial Statements. The consolidated balance sheets
of Missouri City and Missouri City's Subsidiaries as of December 31, 1997 and
related consolidated statements of income, shareholders' equity and cash flows
for the three years ended December 31, 1997, together with the notes thereto,
certified by Deloitte & Touche (collectively, the "Missouri City 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 Missouri City and Missouri
City's Subsidiaries at the dates and the consolidated results of operations and
cash flows of Missouri City and Missouri City's Subsidiaries for the periods
stated therein.
(f) Reports. Since December 31, 1992, Missouri City and each Missouri
City 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 "Missouri City Reports". As of their respective dates, the Missouri City
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 were
accurate in all material respects. Copies of all the Missouri City Reports have
been made available to Norwest by Missouri City.
(g) Properties and Leases. Except as set forth in Schedule 2(g), except as
may be reflected in the Missouri City Financial Statements and except for any
lien for current taxes not yet delinquent, Missouri City and each Missouri City
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 Missouri City's consolidated balance sheet as of
December 31, 1997 for the period then ended, and to 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 Missouri City or any Missouri City Subsidiary
pursuant to which Missouri City or such Missouri City 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 Missouri City or
such Missouri City Subsidiary or any event which, with notice or lapse of time
or both, would constitute such a material default. Substantially all Missouri
City's and each Missouri City Subsidiary's buildings and equipment in regular
use have been well maintained and are in good and serviceable condition,
reasonable wear and tear excepted.
A-5
<PAGE>
(h) Taxes. Each of Missouri City and the Missouri City 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 Missouri City
and the Missouri City Subsidiaries for the fiscal year ended December 31, 1994,
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 Missouri City nor any Missouri City
Subsidiary is a party to any pending action or proceeding, nor to the knowledge
of Missouri City 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 Missouri City or any
Missouri City Subsidiary which has not been settled, resolved and fully
satisfied. Each of Missouri City and the Missouri City 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, 1997, 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 Missouri City and the
Missouri City Subsidiaries with respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since December 31, 1997 there has been no
change in the business, financial condition or results of operations of Missouri
City or any Missouri City 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 Missouri City and the Missouri City Subsidiaries
taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither Missouri City nor any Missouri City Subsidiary is a party or subject to
any of the following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any understandings
or obligations with respect to severance or termination pay liabilities or
fringe benefits) with any present or former officer, director, employee or
consultant (other than those which are terminable at will by Missouri City
or such Missouri City 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;
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(iv) any contract containing covenants which limit the ability of Missouri
City or any Missouri City 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, Missouri City or any Missouri City 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.
(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. Missouri City has furnished Norwest
copies of (i) all attorney responses to the request of the independent auditors
for Missouri City with respect to loss contingencies as of December 31, 1997 in
connection with the Missouri City Financial Statements, and (ii) a written list
of legal and regulatory proceedings filed against Missouri City or any Missouri
City Subsidiary since said date. Neither Missouri City nor any Missouri City
Subsidiary is a party to any pending or, to the knowledge of Missouri City,
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 Missouri City and
the Missouri City Subsidiaries taken as a whole.
(l) Insurance. Missouri City and each Missouri City Subsidiary is
presently insured, and during each of the past five calendar years (or during
such lesser period of time as Missouri City has owned such Missouri City
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. Missouri City and each Missouri City Subsidiary
has all permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, federal, state, local or
foreign governmental or regulatory bodies that are required in order to permit
it to own or lease its properties and
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assets and to carry on its business as presently conducted and that are material
to the business of Missouri City or such Missouri City Subsidiary; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to the knowledge of Missouri City, no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current. The conduct by Missouri City and each Missouri
City 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 Missouri City nor any Missouri City
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 Missouri City or any
Missouri City Subsidiary which reasonably could be expected to have a material
adverse effect on the business or properties of Missouri City and the Missouri
City Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Missouri City or any Missouri City
Subsidiary is pending or, to the knowledge of Missouri City, threatened.
Neither Missouri City nor any Missouri City Subsidiary is involved in, or to the
knowledge of Missouri City, threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding which could materially and
adversely affect the business of Missouri City or such Missouri City Subsidiary.
Employees of Missouri City and the Missouri City 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 knowledge of Missouri City no officer or director of
Missouri City or any Missouri City 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
Missouri City or any Missouri City Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
Missouri City or any Missouri City 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 Missouri City's or such Missouri City Subsidiary's Board of
Directors.
(p) Missouri City 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 Missouri City or any Missouri City 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
Missouri City or any
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Missouri City 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), Missouri City or the Missouri City
subsidiaries have received favorable determination letters from the
Internal Revenue Service under the provisions of the Tax Reform Act of 1986
("TRA `86") for each of the Plans to which the qualification requirements
of Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), apply. Missouri City 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 knowledge of
Missouri City, 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
Missouri City, 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 Missouri City and the Missouri
City 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 Consolidation 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), during the past five plan years which would result
in a material liability.
(vii) Except as disclosed in Schedule 2(p), neither the execution and
delivery of this Agreement and the Consolidation Agreement nor the
consummation of the transactions contemplated hereby and thereby will (i)
result
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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 Missouri City or any
Missouri City 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 Missouri City
and the Missouri City Subsidiaries supplied or to be supplied by Missouri City
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 Missouri City Common Stock pursuant to the
provisions of the Consolidation Agreement (the "Registration Statement"), (ii)
the proxy statement to be mailed to Missouri City's shareholders in connection
with the meeting to be called to consider the Consolidation (the "Proxy
Statement") and (iii) any other documents to be filed with the SEC or any
regulatory authority in connection with the transactions contemplated hereby or
by the Consolidation Agreement will, at the respective times such documents are
filed with the SEC or any regulatory authority and, in the case of the
Registration Statement, when it becomes effective and, with respect to the Proxy
Statement, when mailed, be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein not misleading or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the 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 Missouri City and the Missouri
City Subsidiaries are responsible for filing with the SEC and any other
regulatory authority in connection with the Consolidation will comply as to form
in all material respects with the provisions of applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r),
neither Missouri City nor any Missouri City Subsidiary is under any obligation,
contingent or otherwise, by reason of any agreement to register any of its
securities under the Securities Act.
(s) Brokers and Finders. Except as set forth in Schedule 2(s), neither
Missouri City nor any Missouri City 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
Missouri City or any Missouri City Subsidiary in connection with this Agreement
and the Consolidation Agreement or the transactions contemplated hereby and
thereby.
(t) Fiduciary Activities. Neither Missouri City nor any Missouri City
subsidiary has ever had any accounts for which it has acted as a fiduciary
including but not limited to
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accounts for which it has served as trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor.
(u) No Defaults. Neither Missouri City nor any Missouri City 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 Missouri City and the Missouri City Subsidiaries,
taken as a whole. To the knowledge of Missouri City, all parties with whom
Missouri City or any Missouri City Subsidiary has material leases, agreements or
contracts or who owe to Missouri City or any Missouri City Subsidiary material
obligations other than with respect to those arising in the ordinary course of
the banking business of the Missouri City 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 Missouri City or any Missouri City 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
knowledge of Missouri City, threatened against Missouri City or any Missouri
City Subsidiary the result of which has had or could reasonably be expected to
have a material adverse effect upon Missouri City and Missouri City's
Subsidiaries taken as a whole; to the knowledge of Missouri City there is no
reasonable basis for any such proceeding, claim or action; and to the knowledge
of Missouri City neither Missouri City nor any Missouri City 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.
Missouri City 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.
(w) Compliance with Year 2000 Requirements. Missouri City is in full
compliance with current Federal Financial Institutions Examination Council
("FFIEC") requirements relating to assessing and addressing Year 2000 business
risk. Missouri City has made its Year 2000 project assessment and remediation
plan available to Norwest for review and has furnished Norwest with copies of
all communications between Missouri City or any Missouri City subsidiary and
regulators having responsibility for overseeing compliance with such FFIEC
requirements.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to Missouri City as follows:
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(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, 1997, 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. As of December 31, 1997, 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, 1997, 980,000
shares of Cumulative Tracking Preferred Stock, at $200 stated value, and 10,022
shares of ESOP Cumulative Convertible Preferred Stock, at $1,000 stated value,
20,625 shares of 1995 ESOP Cumulative Convertible Preferred Stock, at $1,000
stated value, 22,831 shares of 1996 ESOP Cumulative Convertible Preferred Stock,
at $1,000 stated value, and 22,927 shares of 1997 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, 1997, no shares were outstanding; and (iii) 1,000,000,000 shares of
Common Stock, $1-2/3 par value, of which as of the close of business on December
31, 1997, 758,619,494 shares were outstanding and 10,493,685 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. On June 7, 1998, Norwest entered into an Agreement and Plan of
Merger (the "Wells Merger Agreement") by and between Norwest and Wells Fargo &
Company, a Delaware corporation ("Wells Fargo"), under which it is contemplated
that Wells Fargo will merge with and into Norwest, with Norwest as the surviving
corporation (the "Wells Merger").
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The Wells Merger Agreement provides that, prior to consummation of the Wells
Merger, Norwest will amend its Restated Certificate of Incorporation to provide
that Norwest shall have authority to issue an aggregate of 20,000,000 shares of
Preferred Stock without par value, 4,000,000 of Preference Stock without par
value, and 4,000,000,000 shares of Common Stock of the par value of $1-2/3 per
share.
(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 Consolidation
Agreement and the consummation of the transactions contemplated hereby and
thereby. Subject to such approvals of government agencies and other governing
boards having regulatory authority over Norwest as may be required by statute or
regulation, this Agreement is a valid and binding obligation of Norwest
enforceable against Norwest in accordance with its terms.
Neither the execution, delivery and performance by Norwest of this
Agreement or the Consolidation Agreement, nor the consummation of the
transactions contemplated hereby and thereby, nor compliance by Norwest with any
of the provisions hereof or thereof, will (i) violate, conflict with, or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any lien, security interest, charge or encumbrance upon any of the
properties or assets of Norwest or any 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
Consolidation under the National Bank Act, 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 Consolidation Agreement.
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(e) Norwest Financial Statements. The consolidated balance sheets of
Norwest and Norwest's subsidiaries as of December 31, 1997 and 1996 and related
consolidated statements of income, stockholders' equity and cash flows for the
three years ended December 31, 1997, together with the notes thereto, certified
by KPMG Peat Marwick LLP and included in Norwest's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 (the "Norwest 10-K") as filed with
the SEC, and the unaudited consolidated balance sheets of Norwest and its
subsidiaries as of March 31, 1998 and the related unaudited consolidated
statements of income and cash flows for the 3 months then ended included in
Norwest's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1998, 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, 1992, Norwest and each Norwest Subsidiary
has filed all reports, registrations and statements, together with any required
amendments thereto, that it was required to file with (i) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii) the
Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any
applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Norwest Reports". As of their respective dates, the
Norwest Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
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(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 March 31, 1998 included in Norwest's Quarterly
Report on Form 10-Q for the period then ended, and all real and personal
property acquired since such date, except such real and personal property 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, 1982, 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, 1997, there has been
no change in the business, financial condition or results of operations of
Norwest or any Norwest Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Norwest and its subsidiaries taken as a whole.
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(j) Commitments and Contracts. Except as set forth on Schedule 3(j), as
of December 31, 1997 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 for reasonable amounts with financially sound and reputable insurance
companies or self-insured, 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
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general application, no federal, state, municipal or other governmental
authority has placed any restrictions on the business or properties of Norwest
or any Norwest Subsidiary which reasonably could be expected to have a material
adverse effect on the business or properties of Norwest and its subsidiaries
taken as a whole.
(n) Labor. No work stoppage involving Norwest or any Norwest Subsidiary
is pending or, to the best knowledge of Norwest, threatened. Neither Norwest
nor any Norwest Subsidiary is involved in, or threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Norwest or such Norwest
Subsidiary. Except as set forth on Schedule 3(j), employees of Norwest and the
Norwest Subsidiaries are not represented by any labor union nor are any
collective bargaining agreements otherwise in effect with respect to such
employees.
(o) Norwest Benefit Plans.
(i) As of January 1, 1998, 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 TRA `86 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
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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 Consolidation Agreement.
(vi) No Norwest Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of
the Code (whether or not waived), during the last five Norwest Plan years
which would result in a material liability.
(vii) Neither the execution and delivery of this Agreement and the
Consolidation Agreement nor the consummation of the transactions
contemplated hereby and thereby will (i) result in any material payment
(including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or employee or
former employee of 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 Consolidation Agreement
will, at the respective times such documents are filed with the SEC or any
regulatory authority and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement, when mailed, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading
or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the 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
Consolidation will comply as to form in all material respects with the
provisions of applicable law.
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(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 Consolidation 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 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.
4. COVENANTS OF MISSOURI CITY. Missouri City 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 Consolidation, Missouri City, and
each Missouri City 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 the day of receipt of the request by a
representative designated by Norwest in writing), 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
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aggregated with all other loans or extensions of credit to such person, would be
in excess of $100,000; maintain proper business and accounting records in
accordance with generally accepted principles; maintain its properties in good
repair and condition, ordinary wear and tear excepted; maintain in all material
respects presently existing insurance coverage; use its best efforts to preserve
its business organization intact, to keep the services of its present principal
employees and to preserve its goodwill and the goodwill 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 Consolidation; comply in all material
respects with all laws, regulations, ordinances, codes, orders, licenses and
permits applicable to the properties and operations of Missouri City and each
Missouri City Subsidiary the non-compliance with which reasonably could be
expected to have a material adverse effect on Missouri City and the Missouri
City Subsidiaries taken as a whole; and permit Norwest and its representatives
(including KPMG Peat Marwick LLP) 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 Missouri City herein expressed.
(b) Except as otherwise contemplated or required by this Agreement, from the
date hereof until the Effective Time of the Consolidation, Missouri City and
each Missouri City 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, except in the ordinary course of
business; enter into any material agreement, contract or commitment in excess of
$10,000 except banking transactions in the ordinary course of business and in
accordance with policies and procedures in effect on the date hereof; make any
investments except investments made by bank subsidiaries in the ordinary course
of business for terms of up to one (1) 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; redeem, purchase or otherwise acquire, directly or
indirectly, any of the capital stock of Missouri City; increase the compensation
of any officers, directors or executive employees, except pursuant to existing
compensation plans and practices, provided, however, that Missouri City may, in
addition, accrue and pay bonuses in accordance with Schedule 4(b) attached
hereto; sell or otherwise dispose of any shares of the capital stock of any
Missouri City 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 Missouri City will duly call, and will cause
to be held not later than twenty-five (25) business days following the effective
date of the
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Registration Statement referred to in paragraph 5(c) hereof, a meeting of its
shareholders and will direct that this Agreement and the Consolidation Agreement
be submitted to a vote at such meeting. The Board of Directors of Missouri City
will (i) cause proper notice of such meeting to be given to its shareholders in
compliance with all 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 Consolidation Agreement, and (iii) use its best efforts to
solicit from its shareholders proxies in favor thereof.
(d) Missouri City will furnish or cause to be furnished to Norwest all the
information concerning Missouri City and its subsidiaries required for inclusion
in the Registration Statement referred to in paragraph 5(c) hereof (which comply
as to form in all material respects with the applicable accounting requirements
of the Securities Act and the published rules and regulations thereunder, and
which otherwise are required or necessary to be filed or included in the
Registration Statement), 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 Deloitte & Touche
to use such opinion in such Registration Statement.
(e) Missouri City 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 Missouri City 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) Missouri City 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) Missouri City will hold in confidence all confidential or proprietary
documents and information concerning Norwest and its subsidiaries furnished to
Missouri City 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 Missouri City's
outside professional
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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 Missouri City, in the public
domain, or later acquired by Missouri City from other legitimate sources) and,
upon request, all such documents, any copies thereof and extracts therefrom
shall immediately thereafter be returned to Norwest.
(h) Neither Missouri City, nor any Missouri City 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 Missouri City or any Missouri City 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 Missouri City or any
Missouri City Subsidiary except in the ordinary course of business, or (iv) to
merge, consolidate or otherwise combine with Missouri City or any Missouri City
Subsidiary. If any corporation, partnership, person or other entity or group
makes an offer or inquiry to Missouri City or any Missouri City Subsidiary
concerning any of the foregoing, Missouri City or such Missouri City Subsidiary
will promptly disclose such offer or inquiry, including the terms thereof, to
Norwest.
(i) Missouri City 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) Missouri City and each Missouri City 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 Consolidation 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, 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
Consolidation.
(k) Neither Missouri City nor any Missouri City Subsidiary shall take any
action which with respect to Missouri City would disqualify the Consolidation as
a "pooling of interests" for accounting purposes.
(l) Missouri City shall use its best efforts to obtain and deliver at least
32 days prior to the Effective Date of the Consolidation signed representations
substantially in the form attached hereto as Exhibit B to Norwest by each
executive officer, director or
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shareholder of Missouri City who may reasonably be deemed an "affiliate" of
Missouri City within the meaning of such term as used in Rule 145 under the
Securities Act.
(m) Immediately prior to the Closing, Missouri City shall establish such
additional accruals and reserves as may be necessary to conform Missouri City's
accounting and credit loss reserve practices and methods to those of Norwest and
Norwest's plans with respect to the conduct of Missouri City's business
following the Consolidation.
(n) Missouri City shall obtain, at its sole expense, Phase I environmental
assessments for each bank-owned facility. 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. Missouri City 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. Missouri City
shall obtain a survey and assessment of all potential asbestos containing
material in owned 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.
(o) Missouri City 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.
(p) Missouri City and Norwest will work together to assess the impact of
the transactions contemplated by this Agreement on Missouri City's continued
compliance with the FFIEC Year 2000 requirements and Missouri City will take
such action, in consultation with Norwest, as may be necessary to amend Missouri
City's Year 2000 project assessment and remediation plan. Missouri City will
prepare a contingency plan to be used in the event the transactions contemplated
by this Agreement are not consummated.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with Missouri City
as follows:
(a) From the date hereof until the Effective Time of the Consolidation,
Norwest will maintain its corporate existence in good standing; conduct, and
cause the Norwest Subsidiaries to conduct, their respective businesses in
compliance with all material obligations and duties imposed on them by all laws,
governmental regulations, rules and ordinances, and judicial orders, judgments
and decrees applicable to Norwest or the Norwest Subsidiaries, their businesses
or their properties; maintain all books and records of it and the Norwest
Subsidiaries, including all financial statements, in accordance with the
accounting principles and practices consistent with those used for the Norwest
Financial Statements, except for changes in such principles and practices
required under generally accepted accounting principles.
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(b) Norwest will furnish to Missouri City all the information concerning
Norwest required for inclusion in a proxy statement or statements to be sent to
the shareholders of Missouri City, or in any statement or application made by
Missouri City to any governmental body in connection with the transactions
contemplated by this Agreement.
(c) As promptly as practicable after the execution of this Agreement and
the receipt by Norwest of the audited financial statements required by paragraph
4(d) hereof, Norwest will prepare and 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 Missouri City pursuant to the Consolidation
Agreement, and will use its best efforts to cause the Registration Statement to
become effective following receipt of approval of the transaction from the
Federal Reserve Board or on such earlier date as may be agreed to by the
parties. 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
Missouri City shareholders, at the time of the Missouri City shareholders'
meeting referred to in paragraph 4(c) hereof and at the Effective Time of the
Consolidation the prospectus included as part of the Registration Statement, as
amended or supplemented by any amendment or supplement filed by Norwest
(hereinafter the "Prospectus"), will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not false or misleading; provided, however, that none of the
provisions of this subparagraph shall apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished by Missouri City or any Missouri City
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 Consolidation Agreement on the
New York Stock Exchange and the Chicago Stock Exchange and use its best efforts
to effect said listings.
(e) The shares of Norwest Common Stock to be issued by Norwest to the
shareholders of Missouri City pursuant to this Agreement and the Consolidation
Agreement will, upon such issuance and delivery to said shareholders pursuant to
the Consolidation Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Norwest Common Stock to be delivered to the
shareholders of Missouri City pursuant to the Consolidation Agreement are and
will be free of any preemptive rights of the stockholders of Norwest.
(f) Norwest will file all documents required to obtain, prior to the
Effective Time of the Consolidation, all necessary Blue Sky permits and
approvals, if any, required to carry out the transactions contemplated by this
Agreement, will pay all expenses incident thereto and will use its best efforts
to obtain such permits and approvals.
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(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 the Consolidation
Agreement and will cooperate with Missouri City to obtain all such approvals and
consents required by Missouri City.
(h) Norwest will hold in confidence all documents and information
concerning Missouri City and Missouri City's Subsidiaries furnished to it and
its representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to its outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with Missouri City (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 Missouri City.
(i) Norwest will file any documents or agreements required to be filed in
connection with the Consolidation under the National Bank 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 Missouri City 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 Missouri City written notice of receipt of the
regulatory approvals referred to in paragraph 7(e).
(m) With respect to the indemnification of directors and officers and with
respect to directors' and officers' insurance, Norwest agrees as follows:
(i) Norwest shall ensure that all rights to indemnification and all
limitations of liability existing in favor of any person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time of the Consolidation, a director or officer of Missouri City
or any Missouri City Subsidiary, (an "Indemnified Party" and, collectively,
the "Indemnified Parties") in Missouri City's Articles of Incorporation or
By-laws or similar governing documents of any Missouri City Subsidiary, as
applicable in the particular case and as in effect on the date hereof,
shall, with respect to claims arising from (A) facts or events that
occurred before the Effective Time of the Consolidation, or (B) this
Agreement or any of the transactions contemplated by this Agreement,
whether in
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any case asserted or arising before or after the Effective Time of the
Consolidation, survive the Consolidation and shall continue in full force
and effect. Nothing contained in this paragraph 5(m)(i) shall be deemed to
preclude the liquidation, consolidation or merger of Missouri City or any
Missouri City Subsidiary, in which case all of such rights to
indemnification and limitations on liability shall be deemed to survive and
continue as contractual rights notwithstanding any such liquidation or
consolidation or merger; provided, however, that in the event of
liquidation or sale of substantially all of the assets of Missouri City,
Norwest shall guarantee, to the extent of the net asset value of Missouri
City or any Missouri City Subsidiary as of the Effective Date of the
Consolidation, the indemnification obligations of Missouri City or any
Missouri City Subsidiary to the extent of indemnification obligations of
Missouri City and the Missouri City Subsidiaries described above.
Notwithstanding anything to the contrary contained in this paragraph
5(m)(i), nothing contained herein shall require Norwest to indemnify any
person who was a director or officer of Missouri City or any Missouri City
Subsidiary to a greater extent than Missouri City or any Missouri City
Subsidiary is, as of the date of this Agreement, required to indemnify any
such person;
(ii) any Indemnified Party wishing to claim indemnification under
paragraph 5(m)(i), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Norwest thereof, but the
failure to so notify shall not relieve Norwest of any liability it may have
to such Indemnified Party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time of the Consolidation), (A) Norwest shall have the right to assume the
defense thereof and Norwest shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof,
except that if Norwest elects not to assume such defense or counsel for the
Indemnified Party advises that there are issues which raise conflicts of
interest between Norwest and the Indemnified Party, the Indemnified Party
may retain counsel satisfactory to them, and Norwest shall pay the
reasonable fees and expenses of such counsel for the Indemnified Party
promptly as statements therefor are received; provided, however, that
Norwest shall be obligated pursuant to this subparagraph (ii) to pay for
only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present
such counsel with a conflict of interest and (B) such Indemnified Party
shall cooperate in the defense of any such matter;
(iii) for a period of three years after the Effective Time of the
Consolidation, Norwest shall use its best efforts to cause to be maintained
in effect the current policies of directors' and officers' liability
insurance maintained by Missouri City (provided that Norwest may substitute
therefor policies of at least the same coverage and amount containing terms
and conditions which are substantially no less advantageous) with respect
to claims arising from facts or events which occurred before the Effective
Time of the Consolidation; provided, however, that Norwest shall not be
required to maintain the coverage for
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employees (other than directors and officers), which is currently included
by endorsement in the directors' and officers' liability policies
maintained by Missouri City; and provided, further, however, that in no
event shall Norwest be obligated to expend, in order to maintain or provide
insurance coverage pursuant to this paragraph 5(m)(iii), any amount per
annum in excess of 125% of the amount of the annual premiums paid as of the
date hereof by Missouri City for such insurance (the "Maximum Amount") and
provided further that, prior to the Effective Time of the Consolidation,
Missouri City shall notify the appropriate directors' and officers'
liability insurers of the Consolidation and of all pending or threatened
claims, actions, suits, proceedings or investigations asserted or claimed
against any Indemnified Party, or circumstances likely to give rise
thereto, in accordance with terms and conditions of the applicable
policies. If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Norwest shall
use reasonable efforts to maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal
to the Maximum Amount;
(iv) if Norwest or any of its successors or assigns (A) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (B) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each
such case, proper provision shall be made so that the successors and
assigns of Norwest shall assume the obligations set forth in this paragraph
5(m); and
(v) the provisions of this paragraph 5(m) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6. CONDITIONS PRECEDENT TO OBLIGATION OF MISSOURI CITY. The obligation of
Missouri City to effect the Consolidation shall be subject to the satisfaction
at or before the Effective Date of the Consolidation of the following further
conditions, which may be waived in writing by Missouri City:
(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
Effective Date of the Consolidation.
(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 at or before the Effective Date of the
Consolidation.
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(c) Missouri City shall have received a favorable certificate, dated as of
the Effective Date of the Consolidation, 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 Consolidation Agreement shall have been
approved by the affirmative vote of the holders of the percentage of the
outstanding shares of Missouri City required for approval of a plan of
consolidation in accordance with the provisions of Missouri City's Articles of
Association and the National Bank 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 Consolidation 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 Missouri City pursuant to this Agreement and the Consolidation Agreement
shall have been authorized for listing on the New York Stock Exchange and the
Chicago Stock Exchange.
(h) Missouri City shall have received an opinion, dated the Closing Date,
of counsel to Missouri City, substantially to the effect that, for federal
income tax purposes: (i) the Consolidation 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 Missouri City Common Stock
upon receipt of Norwest Common Stock except for cash received in lieu of
fractional shares; (iii) the basis of the Norwest Common Stock received by the
shareholders of Missouri City will be the same as the basis of Missouri City
Common Stock exchanged therefor; and (iv) the holding period of the shares of
Norwest Common Stock received by the shareholders of Missouri City will include
the holding period of the Missouri City Common Stock, provided such shares of
Missouri City Common Stock were held as a capital asset as of the Effective Time
of the Consolidation.
(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.
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7. CONDITIONS PRECEDENT TO OBLIGATION OF NORWEST. The obligation of
Norwest to effect the Consolidation shall be subject to the satisfaction at or
before the Effective Date of the Consolidation 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 Missouri City and the Missouri City Subsidiaries taken as a
whole as if made at the Effective Date of the Consolidation.
(b) Missouri City 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 Effective Date of the
Consolidation.
(c) This Agreement and the Consolidation Agreement shall have been
approved by the affirmative vote of the holders of the percentage of the
outstanding shares of Missouri City required for approval of a plan of
consolidation in accordance with the provisions of Missouri City's Articles of
Association and the National Bank Act.
(d) Norwest shall have received a favorable certificate dated as of the
Effective Date of the Consolidation signed by the Chairman or President and by
the Secretary or Assistant Secretary of Missouri City, 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 Consolidation Agreement and all waiting and appeal periods prescribed by
applicable law or regulation shall have expired. No approvals, licenses or
consents granted by any regulatory authority shall contain any condition or
requirement relating to Missouri City or any Missouri City Subsidiary that, in
the good faith judgment of Norwest, is unreasonably burdensome to Norwest.
(f) Missouri City and each Missouri City Subsidiary shall have obtained
any and all material consents or waivers from other parties to loan agreements,
leases or other contracts material to Missouri City's or such subsidiary's
business required for the consummation of the Consolidation, and Missouri City
and each Missouri City Subsidiary shall have obtained any and all material
permits, authorizations, consents, waivers and approvals required for the lawful
consummation by it of the Consolidation.
(g) No court or governmental authority of competent jurisdiction shall have
issued an order restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement.
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(h) The Consolidation shall qualify as a "pooling of interests" for
accounting purposes and Norwest shall have received from Deloitte & Touche an
opinion to that effect.
(i) At any time since the date hereof the total number of shares of
Missouri City Common Stock outstanding and subject to issuance upon exercise
(assuming for this purpose that phantom shares and other share-equivalents
constitute Missouri City Common Stock) of all warrants, options, conversion
rights, phantom shares or other share-equivalents, other than any option held by
Norwest, shall not have exceeded 304,449.
(j) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened or be unresolved. Norwest shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(k) Norwest shall have received from the Chief Executive Officer and Chief
Financial Officer of Missouri City 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 Missouri City 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 Missouri City;
(ii) the amounts reported in the interim quarterly financial statements of
Missouri City agree with the general ledger of Missouri City;
(iii) from the date of the most recent unaudited consolidated financial
statements of Missouri City and the Missouri City 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 Missouri City and the
Missouri City Subsidiaries, except in each case for changes, increases or
decreases which the
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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 Missouri
City and the Missouri City Subsidiaries, or in income before equity in
undistributed income of subsidiaries, in each case as compared with the
comparable period of the preceding year, except in each case for changes,
increases or decreases which the Registration Statement discloses have
occurred or may occur or which are described in such letters;
(iv) they have reviewed certain amounts, percentages, numbers of shares
and financial information which are derived from the general accounting
records of Missouri City and the Missouri City 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 Missouri City and
the Missouri City Subsidiaries and have found them to be in agreement with
financial records and analyses prepared by Missouri City included in the
annual and quarterly financial statements, except as disclosed in such
letters.
(l) Missouri City and the Missouri City Subsidiaries considered as a whole
shall not have sustained since December 31, 1997 any material loss or
interference with their business from any civil disturbance or any fire,
explosion, flood or other calamity, whether or not covered by insurance.
(m) There shall be no reasonable basis for any proceeding, claim or action
of any nature seeking to impose, or that could result in the imposition on
Missouri City or any Missouri City 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 Missouri City and its subsidiaries taken as a whole.
(n) Since December 31, 1997, 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 Missouri City and the Missouri City 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). No action taken by Missouri City solely
in order to comply with the requirements of paragraph 4(m) hereof shall be
deemed to have a material adverse effect for purposes of this paragraph 7(n).
(o) Missouri City shall be in full compliance with current FFIEC Year 2000
requirements. There shall be no feature of Missouri City's data processing,
operating or platform systems that would prevent those systems from being
successfully converted to Norwest systems.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of Missouri
City or any Missouri City Subsidiary as of the Effective Date of the
Consolidation ("Missouri City Employees") shall be eligible for participation in
the employee welfare and retirement plans of Norwest, as in effect from time to
time, as follows:
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(a) Employee Welfare Benefit Plans. Each Missouri City 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 Consolidation
(provided, however, that it is Norwest's intent that the transition from the
Missouri City 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
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
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For the purpose of determining each Missouri City Employee's benefit for the
year in which the Consolidation occurs under the Norwest vacation program,
vacation taken by a Missouri City Employee in the year in which the
Consolidation occurs will be deducted from the total Norwest benefit. Missouri
City Employees shall receive credit for years of service to Missouri City, the
Missouri City Subsidiaries and any predecessors of the Missouri City
Subsidiaries (to the extent credited under the vacation programs of Missouri
City and the Missouri City Subsidiaries) for the purpose of determining benefits
under the Norwest vacation program.
Missouri City Employees shall receive credit for years of service to Missouri
City, the Missouri City Subsidiaries and any predecessors of the Missouri City
Subsidiaries (to the extent credited under the severance programs of Missouri
City and the Missouri City Subsidiaries) for the purpose of determining benefits
under the Norwest Severance Pay Plan.
(b) Employee Retirement Benefit Plans.
Each Missouri City 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 Missouri
City and the Missouri City 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 Missouri City and the
Missouri City 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 Consolidation.
Each Missouri City 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 Effective
Date of the Consolidation:
(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 Consolidation shall not have been consummated by December 31,
1998 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 Missouri City 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; or
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(iv) by Missouri City, within five business days after the end of the Index
Measurement Period (as defined in subparagraph (c)(ii) below), if both of
the following conditions are satisfied:
(A) the Norwest Measurement Price is less than $35; and
(B) the number obtained by dividing the Norwest Measurement Price by
the closing price of Norwest Common Stock on the trading day
immediately preceding the date of this Agreement is less than the
number obtained by dividing the Final Index Price (as defined in
subparagraph (c) below) by the Initial Index Price (as defined in
subparagraph (c) below) and subtracting 15% from such quotient.
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h) and 10 shall survive such termination.
(c) For purposes of this paragraph 9:
(i) The "Company Market Capitalization" shall mean (a) the price of one
share of the common stock of a given company at the close of the trading
day immediately preceding the date of this Agreement multiplied by (b) the
number of shares of common stock of such company outstanding as of March
31, 1998 (adjusted for any stock dividend, reclassification,
recapitalization, exchange of shares or similar transaction between March
31, 1998 and the close of the trading day immediately preceding the date of
this Agreement).
(ii) The "Index Group" shall mean all of those companies listed on Exhibit
C the common stock of which is publicly traded and as to which there is,
during the period of 20 trading days ending on the day immediately
preceding the meeting of the shareholders of Missouri City held to vote on
this Agreement and the Consolidation Agreement (the "Index Measurement
Period"), no pending publicly announced proposal for such company to be
acquired, nor has there been any proposal by such company publicly
announced subsequent to the day before the date of this Agreement to
acquire another company in exchange for stock where, if the company to be
acquired were to become a subsidiary of the acquiring company, the company
to be acquired would be a "significant subsidiary" as
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defined in Rule 1-02 of Regulation S-X promulgated by the SEC nor has there
been any program publicly announced subsequent to the day before the date
of this Agreement to repurchase 5% or more of the outstanding shares of
such company's common stock.
(iii) The "Initial Index Price" shall mean the sum of the following,
calculated for each of the companies in the Index Group: (a) the closing
price per share of common stock of each such company on the trading day
immediately preceding the date of this Agreement multiplied by (b) the
Weighting Factor (as defined below) for each such company.
(iv) The "Final Index Price" shall mean the sum of the following,
calculated for each of the companies in the Index Group: (a) the Final
Price for each such company multiplied by (b) the Weighting Factor (as
defined below) for each such company.
(v) The "Final Price" of any company in the Index Group shall mean the
average of the daily closing prices of a share of common stock of such
company, as reported on the consolidated transaction reporting system for
the market or exchange on which such common stock is principally traded,
during the Index Measurement Period.
(vi) The "Total Market Capitalization" shall mean the sum of the Company
Market Capitalization for each of the companies in the Index Group.
(vii) The "Weighting Factor" for any given company shall mean the Company
Market Capitalization for such company divided by the Total Market
Capitalization.
If a Common Stock Adjustment occurs with respect to the shares of Norwest
or any company in the Index Group between the date of this Agreement and the
Missouri City shareholder meeting date, the closing prices for the common stock
of such company shall be appropriately and proportionately adjusted for the
purposes of the definitions above so as to be comparable to what the price would
have been if the record date of the Common Stock Adjustment had been immediately
following the Effective Time of the Consolidation.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Missouri City and Missouri City Subsidiaries shall
be borne by Missouri City, 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.
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12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to Missouri City:
First National Bank of Missouri City
3660 Hampton Drive
P. O. Box 669
Missouri City, TX 77459
Attention: Fred Beeler, Chairman & CEO
With a copy to:
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana St., Suite 2900
Houston, TX 77002-2781
Attention: William T. Luedke IV, Esq.
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 Consolidation Agreement
contain the complete agreement between the parties hereto with respect to the
Consolidation and other transactions contemplated hereby and supersede all prior
agreements and understandings between the parties hereto with respect thereto.
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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 Effective Date of the
Consolidation, 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 Missouri City 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 Consolidation Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty contained in the Agreement or the Consolidation Agreement shall survive
the Consolidation or except as set forth in paragraph 9(b), the termination of
this Agreement. Paragraph 10 shall survive the Consolidation.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NORWEST CORPORATION FIRST NATIONAL BANK OF
MISSOURI CITY
By: /s/ John E. Ganoe By: /s/ R. Fred Beeler
------------------------ ------------------
Its: Executive Vice President Its: Chairman and CEO
------------------------ ------------------
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF CONSOLIDATION
This Agreement and Plan of Consolidation (the "Consolidation Agreement") is
dated as of _______________________, 19__, between NORWEST INTERIM BANK MO CITY,
NATIONAL ASSOCIATION ("Interim Bank") and FIRST NATIONAL BANK OF MISSOURI CITY,
a national banking association ("Missouri City"). Interim Bank and Missouri City
are sometimes referred to herein as the "Consolidating Banks".
PREAMBLE
Interim Bank and Missouri City acknowledge and confirm the following:
(a) Interim Bank is a national banking association having its principal
office and place of business at ______________________, ________ County, Texas
_______. As of __________, 1998, Interim Bank had capital of $100,000, divided
into 1,000 shares of common stock, par value $100 per share ("Interim Bank
Common Stock"), and surplus of $20,000.
(b) Missouri City is a national banking association having its principal
office and place of business at ______________________, ________ County, Texas
_______. As of __________, Missouri City had capital of $_________, divided
into ______ shares of common stock, par value $_____ per share ("Missouri City
Common Stock"), surplus of $______, and retained earnings of $_______.
(c) Missouri City and Norwest Corporation ("Norwest") have entered into an
Agreement and Plan of Reorganization dated as of ___________ (the
"Reorganization Agreement"), which Reorganization Agreement contemplates the
transactions to be effected by this Consolidation Agreement.
(d) A majority of the Boards of Directors of Interim Bank and of Missouri
City have duly approved this Consolidation Agreement and authorized its
execution.
(e) It is the intent of the parties hereto to effect a corporate
reorganization which qualifies as a tax-free reorganization pursuant to Sections
368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code.
AGREEMENTS
IN CONSIDERATION OF THE PREMISES, Interim Bank and Missouri City make this
Consolidation Agreement and fix the terms and conditions of the Consolidation of
Interim Bank and Missouri City (the "Consolidation") as follows:
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SECTION 1
1.1 Pursuant to the authority of and in accordance with the provisions of
12 U.S.C. 215, Interim Bank shall be consolidated with Missouri City, under the
charter of Missouri City (the "Consolidated Bank").
1.2 The name of the Consolidated Bank shall be "First National Bank of
Missouri City."
1.3 The Consolidation shall be effective as of 12:01 a.m. on the date
specified in the certificate of approval to be issued by the Comptroller of the
Currency of the United States, under the seal of his office, approving the
Consolidation (the "Effective Date").
1.4 The business of the Consolidated Bank shall be that of a national
banking association and shall be conducted at the main office of the
Consolidated Bank, which shall be located at ______________________, ________
County, Texas _______, and at its legally established branches.
SECTION 2
As of the Effective Date:
2.1 The corporate existences of the Consolidating Banks shall be
consolidated into the Consolidated Bank.
2.2 All rights, franchises, and interests of the Consolidating Banks in
and to every type of property (real, personal and mixed) and choses in action
shall be transferred to and vested in the Consolidated Bank by virtue of the
Consolidation without any deed or other transfer. The Consolidated Bank, upon
the Consolidation and without any order or other action on the part of any court
or otherwise, shall hold and enjoy all rights of property, franchises, and
interests, including appointments, designations, and nominations, and all other
rights and interests as trustee, executor, administrator, registrar of stocks
and bonds, guardian of estates, assignee, receiver, and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises,
and interests were held or enjoyed by either of the Consolidating Banks at the
time of Consolidation.
2.3 The Consolidated Bank shall be liable for all liabilities of every
kind and description, including liabilities arising out of the operation of a
trust department, of each of the Consolidating Banks existing as of the
Effective Date.
2.4 The amount of capital stock of the Consolidated Bank shall be
$________, divided into _____ shares of common stock, each of $____ par value,
and at the time the Consolidation shall become effective, the Consolidated Bank
shall have a surplus of $________ and retained earnings which, when combined
with the capital and surplus, will be equal to the combined capital structures
of the Consolidating Banks as stated in the preamble of this Consolidation
Agreement, adjusted, however, for the results of
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operations, the payment of dividends, if any, between __________,
and the Effective Date, and the payment provided for in Section 3.2 hereof.
SECTION 3
As of the Effective Date:
3.1 Each share of Missouri City Common Stock outstanding immediately prior
to the Effective Time of the Consolidation (other than shares as to which
statutory dissenters' appraisal rights have been exercised) will be converted
into and exchanged for the number of shares of Norwest Common Stock determined
by dividing the Adjusted Norwest Shares by the number of shares of Missouri City
Common Stock then outstanding. The "Adjusted Norwest Shares" shall be a number
equal to $26,000,000 divided by the Norwest Measurement Price. The "Norwest
Measurement Price" is defined as the average of the closing prices of a share of
Norwest Common Stock as reported on the consolidated tape of the New York Stock
Exchange during the period of 20 trading days ending on the day immediately
preceding the meeting of shareholders required by paragraph 4(c) of the
Reorganization Agreement. As soon as practicable after the consolidation becomes
effective, each holder of a certificate for shares of Missouri City Common Stock
outstanding immediately prior to the time of consolidation shall be entitled,
upon surrender of such certificate for cancellation to Norwest Bank Minnesota,
National Association, as the designated agent of the Consolidated Bank (the
"Agent"), to receive the Norwest Common Stock to which such holder shall be
entitled on the basis above set forth. Until so surrendered each certificate
which, immediately prior to the time of consolidation, represented shares of
Missouri City Common Stock shall not be transferable on the books of the
Consolidated Bank but shall be deemed (except for the payment of dividends as
provided below) to evidence ownership of the number of whole shares of Norwest
Common Stock into which such shares of Missouri City Common Stock have been
converted on the basis above set forth; provided, however, that, until the
holder of such certificate shall have surrendered the same for exchange as above
set forth, no dividend payable to holders of record of Norwest Common Stock as
of any date subsequent to the effective date of consolidation shall be paid to
such holder with 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 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 the consolidation and the date of such exchange.
3.2 The shares of Interim Bank outstanding immediately prior to the time
of Consolidation shall be converted into and exchanged for _______ shares of the
Consolidated Bank, plus cash in the amount of $120,000.
3.3 From and after the Effective Date, there shall be no transfers on the
stock transfer books of Consolidated Banks of the shares of Missouri City Common
Stock or
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Interim Bank Common Stock which were issued and outstanding immediately
prior to the Effective Date.
SECTION 4
4.1 As of the Effective Date, the Articles of Association of the
Consolidated Bank shall be the Articles of Association of Missouri City and
shall read in their entirety as set forth in Appendix A attached hereto, and the
Consolidated Bank shall be authorized under such Articles of Association to
issue _______ shares of common stock, par value $____ per share.
4.2 The by-laws of Missouri City as they exist at the Effective Date shall
continue in full force as the by-laws of the Consolidated Bank until altered,
amended, or repealed as provided therein or as provided by law.
4.3 As of the Effective Date, the following named persons shall serve as
the Board of Directors of the Consolidated Bank until the next annual meeting of
the shareholders or until such time as their successors have been elected and
have qualified:
_________________
_________________
_________________
4.4 The officers of Missouri City holding office at the Effective Date
shall continue as the officers of the Consolidated Bank for the term prescribed
in the by-laws or until the Board of Directors otherwise shall determine.
SECTION 5
5.1 This Consolidation Agreement shall be submitted to the shareholders of
Missouri City and Interim Bank, respectively, for approval at meetings to be
called and held in accordance with the articles of association of Missouri City
and the articles of association of Interim Bank, and in accordance with
applicable provisions of law. Such approval by the shareholders shall require
the affirmative vote of the shareholders of each of the Consolidating Banks
owning at least two-thirds of its capital stock outstanding.
SECTION 6
6.1 The Consolidation shall be subject to and conditioned upon the
following:
(a) approval of this Consolidation Agreement by the shareholders of
Missouri City and Interim Bank as required by law;
(b) approval of the Consolidation by all appropriate banking and regulatory
authorities and the satisfaction of all other requirements prescribed by
law necessary for consummation of the Consolidation; and
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(c) satisfaction of the conditions precedent set forth in paragraphs 6 and
7 of the Reorganization Agreement.
6.2 At any time before the Effective Date, if any of the following
circumstances obtain, this Consolidation Agreement may be terminated, at the
election of Missouri City or Interim Bank, by written notice from the party so
electing to the other, or the consummation of the Consolidation may be postponed
for such period, and subject to such further rights of Missouri City and Interim
Bank, or either of them, to terminate this Consolidation Agreement as Missouri
City and Interim Bank may agree in writing:
(a) by mutual consent of the Boards of Directors of the Consolidating Banks
if consummation of the Consolidation would be inadvisable in the opinion of
said Boards; or
(b) by action of the Board of Directors of any party hereto if the
Reorganization Agreement is terminated.
SECTION 7
7.1 Missouri City and Interim Bank, by mutual consent of their respective
Boards of Directors, may amend this Consolidation Agreement before the Effective
Date; provided, however, that after this Consolidation Agreement has been
approved by the shareholders of Missouri City, no such amendment shall affect
the rights of such shareholders of Missouri City in a manner which is materially
adverse to such shareholders.
7.2 This Consolidation Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Missouri City and Interim Bank have caused this
Consolidation Agreement to be executed by their respective duly authorized
officers and their corporate seals, if any, to be hereunto affixed as of the
date first above written, pursuant to a resolution of each Consolidating Bank's
Board of Directors, acting by a majority thereof, and witness the signatures
hereto of a majority of each of said Consolidating Bank's Board of Directors.
A-42
<PAGE>
(NO BANK SEAL) NORWEST INTERIM BANK MISSOURI CITY,
NATIONAL ASSOCIATION
ATTEST:
By: _________________________________
___________________________ Its: _________________________________
Secretary
A majority of the Board of Directors of Norwest Interim Bank Missouri City,
National Association:
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
STATE OF _____________)
) ss
COUNTY OF ____________)
On this _____ day of __________, 19__, before me, a Notary Public for the
State and County aforesaid, personally came _________________________, as
___________________, and ________________________, as ______________________, of
NORWEST INTERIM BANK MISSOURI CITY, NATIONAL ASSOCIATION, and each in his or her
said capacity acknowledged the foregoing instrument to be the act and deed of
said bank; and came also:
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
being a majority of the Board of Directors of said bank, and each of them
acknowledged said instrument to be the act and deed of said bank and of himself
or herself as a director thereof.
WITNESS my official seal and signature this day and year aforesaid.
A-43
<PAGE>
____________________________
(Seal of Notary) Notary Public, __________ County
My Commission Expires ________
(BANK SEAL) FIRST NATIONAL BANK OF MISSOURI CITY
ATTEST:
By: _________________________________
_______________________ Its:_________________________________
Secretary
A majority of the Board of Directors of First National Bank of Missouri
City:
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
STATE OF TEXAS _____________ )
) ss
COUNTY OF __________________ )
On this _____ day of ______________, 19__, before me, a Notary Public for
the State and County aforesaid, personally came _______________________, as
_________________, and ____________________, as __________________, of FIRST
NATIONAL BANK OF MISSOURI CITY, and each in his or her said capacity
acknowledged the foregoing instrument to be the act and deed of said bank and
the seal affixed thereto to be its seal; and came also:
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
____________________________ ____________________________
being a majority of the Board of Directors of said bank, and each of them
acknowledged said instrument to be the act and deed of said bank and of himself
or herself as a director thereof.
WITNESS my official seal and signature this day and year aforesaid.
__________________________
(Seal of Notary) Notary Public, __________________ County
My Commission Expires _______________
A-44
<PAGE>
EXHIBIT B
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Attention: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") of FIRST
NATIONAL BANK OF MISSOURI CITY, a national banking association ("Missouri
City").
Pursuant to an Agreement and Plan of Reorganization, dated as of ________,
19__, (the "Reorganization Agreement"), between Missouri City and Norwest
Corporation, a Delaware corporation ("Norwest"), it is contemplated that a
wholly-owned subsidiary of Norwest will consolidate with Missouri City (the
"Consolidation") and as a result, I will receive in exchange for each share of
Common Stock, par value $5.00 per share, of Missouri City ("Missouri City Common
Stock") owned by me immediately prior to the Effective Time of the Consolidation
(as defined in the Reorganization Agreement), a number of shares of Common
Stock, par value $1 2/3 per share, of Norwest ("Norwest Common Stock"), as more
specifically set forth in the Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Missouri City Common Stock or Norwest Common Stock held by me during
the 30 days prior to the Effective Time of the Consolidation.
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Norwest Common Stock issued to me pursuant to the Consolidation (the
"Stock") except (a) in compliance with the applicable provisions of Rule 145,
(b) in a transaction that is otherwise exempt from the registration requirements
of the Securities Act, or (c) in an offering registered under the Securities
Act.
I will not sell, transfer or otherwise dispose of any Norwest Common Stock
or in any way reduce my risk relative to any shares of any Norwest Common Stock
issued to me pursuant to the Consolidation until such time as financial results
covering at least 30 days of post-Consolidation combined operations of Missouri
City and Norwest have been published.
A-45
<PAGE>
I consent to the endorsement of the Stock issued to me pursuant to the
Consolidation with a restrictive legend which will read substantially as
follows:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933,
as amended (the "Act"), applies, and may be sold or otherwise transferred
only in compliance with the limitations of such Rule 145, or upon receipt
by Norwest Corporation of an opinion of counsel reasonably satisfactory to
it that some other exemption from registration under the Act is available,
or pursuant to a registration statement under the Act."
Norwest's transfer agent shall be given an appropriate stop transfer order
and shall not be required to register any attempted transfer of the shares of
the Stock, unless the transfer has been effected in compliance with the terms of
this letter agreement.
It is understood and agreed that this letter agreement shall terminate and
be of no further force and effect and the restrictive legend set forth above
shall be removed by delivery of substitute certificates without such legend, and
the related stop transfer restrictions shall be lifted forthwith, if (a) (i) any
such shares of Stock shall have been registered under the Securities Act for
sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Stock are sold
in accordance with the provisions of paragraphs (c), (e), (f) and (g) of Rule
144 promulgated under the Securities Act, or (iii) I am not at the time of such
disposition an affiliate of Norwest and have been the beneficial owner of the
Stock for at least one year (or such other period as may be prescribed
thereunder) and Norwest has filed with the Commission all of the reports it is
required to file under the Securities Exchange Act of 1934, as amended, during
the preceding twelve months, or (iv) I am not and have not been for at least
three months an affiliate of Norwest and have been the beneficial owner of the
Stock for at least two years (or such other period as may be prescribed by the
Securities Act, and the rules and regulations promulgated thereunder), or (v)
Norwest shall have received an opinion of counsel acceptable to Norwest to the
effect that the stock transfer restrictions and the legend are not required, and
(b) financial results covering at least 30 days of post-Consolidation combined
operations have been published.
I have carefully read this letter agreement and the Reorganization Agreement and
have discussed their requirements and other applicable limitations upon my
ability to offer to sell, transfer or otherwise dispose of shares of Missouri
City Common Stock, Norwest Common Stock, or the Stock, to the extent I felt
necessary, with my counsel or counsel for Missouri City.
Sincerely,
_______________________
A-46
<PAGE>
EXHIBIT C
BB&T Corporation
BancOne Corporation
BankBoston Corporation
Bank of New York Company, Inc.
Bankers Trust Corporation of New York
Chase Manhattan Corporation
Citicorp
Comerica, Inc.
Crestar Financial Corporation
Fifth Third Bancorp
First Union Corporation
Fleet Financial Group, Inc.
Huntington Bancshares
KeyCorp
Mellon Bank Corporation
Mercantile Bancorp
National City Corporation
Nations Bank
Northern Trust Corporation
PNC Financial Corporation
Republic Financial Corporation
Republic New York Corporation
Signet Banking Corporation
SouthTrust Corporation
State Street Boston Corporation
Summit Bancorp
Suntrust Banks, Inc.
UnionBanCal Corp.
U.S. Bancorp
Wachovia Corporation
Wells Fargo & Co., Inc.
A-47
<PAGE>
APPENDIX B
UNITED STATES CODE TITLE 12, SECTION 215, PARAGRAPHS (A) (C)
<PAGE>
(S) 215. Consolidation of national banks or State banks with national banks
(b) Liability of consolidated association; capital stock; dissenting
shareholders
The consolidated association shall be liable for all liabilities of the
respective consolidating banks or associations. The capital stock of such
consolidated association shall not be less than that required under existing law
for the organization of a national bank in the place in which it is located:
Provided, That if such consolidation shall be voted for at such meetings by the
necessary majorities of the shareholders of each association and State bank
proposing to consolidate, and thereafter the consolidation shall be approved by
the Comptroller, any shareholder of any of the associations or State banks so
consolidated who has voted against such consolidation at the meeting of the
association or bank of which he is a stockholder or who has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of consolidation, shall be entitled to receive the value of the
shares so held by him when such consolidation is approved by the Comptroller
upon written request made to the consolidated association at any time before
thirty days after the date of consummation of the consolidation, accompanied by
the surrender of his stock certificates.
(C) VALUATION OF SHARES
The value of the shares of any dissenting shareholder shall be ascertained,
as of the effective date of the consolidation, by an appraisal made by a
committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the consolidated banking
association; and (3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed
shall not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified of the
appraised value of his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares of the appellant.
(D) APPRAISAL BY THE COMPTROLLER; EXPENSES OF CONSOLIDATED ASSOCIATION; SALE
AND RESALE OF SHARES; STATE APPRAISAL AND CONSOLIDATION LAW
If, within ninety days from the date of consummation of the consolidation,
for any reason one or more of the appraisers is not selected as herein provided,
or the appraisers fail to determine the value of such shares, the Comptroller
shall upon written request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of the
Comptroller in making the reappraisal or the appraisal, as the case may be,
shall be paid by the consolidated banking association. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by the
consolidated banking association. Within thirty days after payment has been
made to all dissenting shareholders as provided for in this section the shares
of stock of the consolidated banking association which would have been delivered
to such dissenting shareholders had they not requested payment shall be sold by
the consolidated banking association at an advertised public auction, unless
some other method of sale is approved by the Comptroller, and the consolidated
banking association shall have the rights to purchase any of such shares at such
public auction, if it is the highest bidder therefor, for the purpose of
reselling such shares within thirty days thereafter to such person or persons
and at such price not less than par as its board of directors by resolution may
determine. If the shares
B-1
<PAGE>
are sold at public auction at a price greater than the amount paid to the
dissenting shareholder the excess in such sale price shall be paid to such
shareholders. The appraisal of such shares of stock in any State bank shall be
determined in the manner prescribed by the law of the State in such cases,
rather than as provided in this section, if such provision is made in the State
law; and no such consolidation shall be in contravention of the law of the State
under which such bank is incorporated.
B-2
<PAGE>
APPENDIX C
BANKING CIRCULAR 259
<PAGE>
OCC-BC-259 Stock Appraisals
Comptroller of the Currency BC 259
Administrator of National Banks
Type: Banking Circular Subject: Stock Appraisals
TO: Chief Executive Officers of National Banks, Deputy
Comptrollers (District), Department and Division Heads,
and Examining Personnel
PURPOSE
This Banking Circular informs all national banks of the valuation methods used
by the Office of the Comptroller of the Currency (OCC) to estimate the value of
a bank's shares when requested to do so by a shareholder dissenting to the
conversion, merger, or consolidation of its bank. The results of appraisals
performed by the OCC between January 1, 1985, and September 30, 1991 are
summarized.
References: 12 U.S.C. 214a, 215 and 215a; 12 CFR 11.590 (Item 2)
BACKGROUND
Under 12 U.S.C. Section 214a, a shareholder dissenting from a conversion,
consolidation, or merger involving a national bank is entitled to receive the
value of his or her shares from the resulting bank. A valuation of the shares
shall be made by a committee of three appraisers (a representative of the
dissenting shareholder, a representative of the resulting bank, and a third
appraiser selected by the other two). If the committee is formed and renders an
appraisal that is acceptable to the dissenting shareholder, the process is
complete and the appraised value of the shares is paid to the dissenting
shareholder by the resulting bank. If, for any reason, the committee is not
formed or if it renders an appraisal that is not acceptable to the dissenting
shareholder, an interested party may request an appraisal by the OCC. 12 U.S.C.
Section 215 provides these appraisal rights to any shareholder dissenting to a
consolidation. Any dissenting shareholder of a target bank in a merger is also
entitled to these appraisal rights pursuant to 12 U.S.C. Section 215a.
The above provides only a general overview of the appraisal process. The
specific requirements of the process are set forth in the statutes themselves.
<PAGE>
METHODS OF VALUATION USED
Through its appraisal process, the OCC attempts to arrive at a fair estimate of
the value of a bank's shares. After reviewing the particular facts in each case
and the available information on a bank's shares, the OCC selects an appropriate
valuation method, or combination of methods, to determine a reasonable estimate
of the shares' value.
Market Value
The OCC uses various methods to establish the market value of shares being
appraised. If sufficient trading in the shares exists and the prices are
available from direct quotes from the Wall Street Journal or a market-maker,
those quotes are considered in determining the market value. If no market value
is readily available, or if the market value available is not well established,
the OCC may use other methods of estimating market value, such as the investment
value and adjusted book value methods.
Investment Value
Investment value requires an assessment of the value to investors of a share in
the future earnings of the target bank. Investment value is estimated by
applying an average price/earnings ratio of banks with similar earnings
potential to the earnings capacity of the target bank.
The peer group selection is based on location, size, and earnings patterns. If
the state in which the subject bank is located provides a sufficient number of
comparable banks using location, size and earnings patterns as the criteria for
selection, the price/earnings ratios assigned to the banks are applied to the
earnings per share estimated for the subject bank. In order to select a
reasonable peer group when there are too few comparable independent banks in a
location that is comparable to that of the subject bank, the pool of banks from
which a peer group is selected is broadened by including one-bank holding
company banks in a comparable location, and/or by selecting banks in less
comparable locations, including adjacent states, that have earnings patterns
similar to the subject bank.
Adjusted Book Value
The OCC also uses an "adjusted book value" method for estimating value.
Historically, the OCC has not placed any weight on the bank's "unadjusted book
value", since that value is based on historical acquisition costs of the bank's
assets, and does not reflect investors' perceptions of the value of the bank as
an ongoing concern. Adjusted book value is calculated by multiplying the book
value of the target bank's assets per share times the average market price to
book value ratio of comparable banking organizations. The average market price
to book value ratio measures the
-2-
<PAGE>
premium or discount to book value, which investors attribute to shares of
similarly situated banking organizations.
Both the investment value method and the adjusted book value method present
appraised values which are based on the target bank's value as a going concern.
These techniques provide estimates of the market value of the shares of the
subject bank.
OVERALL VALUATION
The OCC may use more than one of the above-described methods in deriving the
value of shares of stock. If more than one method is used, varying weights may
be applied in reaching an overall valuation. The weight given to the value by a
particular valuation method is based on how accurately the given method is
believed to represent market value. For example, the OCC may give more weight to
a market value representing infrequent trading by shareholders than to the value
derived from the investment value method when the subject bank's earnings trend
is so irregular that it is considered to be a poor predictor of future earnings.
PURCHASE PREMIUMS
For mergers and consolidations, the OCC recognizes that purchase premiums do
exist and may, in some instances, be paid in the purchase of small blocks of
shares. However, the payment of purchase premiums depends entirely on the
acquisition or control plans of the purchasers, and such payments are not
regular or predictable elements of market value. Consequently, the OCC's
valuation methods do not include consideration of purchase premiums in arriving
at the value of shares.
STATISTICAL DATA
The chart below lists the results of appraisals the OCC performed between
January 1, 1985 and September 30, 1991. The OCC provides statistical data on
book value and price/earnings ratios for comparative purposes, but does not
necessarily rely on such data in determining the value of the banks' shares.
Dissenting shareholders should not view these statistics as determinative for
future appraisals.
In connection with disclosures given to shareholders under 12 CFR 11.590 (Item
2), banks may provide shareholders a copy of this Banking Circular or disclose
the information in the Banking Circular, including the past results of OCC
appraisals. If the bank discloses the past results of the OCC appraisals, it
should advise shareholders that: (1) the OCC did not rely on all the information
set forth in the chart in performing each appraisal; and (2) the OCC's past
appraisals are not necessarily determinative of its future appraisals of a
particular bank's shares.
-3-
<PAGE>
APPRAISAL RESULTS
<TABLE>
<CAPTION>
OCC Average Price/
Appraisal Appraisal Price Book Earnings Ratio
Date Value Offered Value of Peer Group
- ----------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
1/1/85 107.05 110.00 178.29 5.3
1/2/85 73.16 NA 66.35 6.8
1/15/85 53.41 60.00 83.95 4.8
1/31/85 22.72 20.00 38.49 5.4
2/1/85 30.63 24.00 34.08 5.7
2/25/85 27.74 27.55 41.62 5.9
4/30/85 25.98 35.00 42.21 4.5
7/30/85 3,153.10 2,640.00 6,063.66 NC
9/1/85 17.23 21.00 21.84 4.7
11/22/85 316.74 338.75 519.89 5.0
11/22/85 30.28 NA 34.42 5.9
12/16/85 66.29 77.00 89.64 5.6
12/27/85 60.85 57.00 119.36 5.3
12/31/85 61.77 NA 73.56 5.9
12/31/85 75.79 40.00 58.74 12.1
1/12/86 19.93 NA 26.37 7.0
3/14/86 59.02 200.00 132.20 3.1
4/21/86 40.44 35.00 43.54 6.4
5/2/86 15.50 16.50 23.69 5.0
7/3/86 405.74 NA 612.82 3.9
7/31/86 297.34 600.00 650.63 4.4
8/22/86 103.53 106.67 136.23 NC
12/26/86 16.66 NA 43.57 4.0
12/31/86 53.39 95.58 69.66 7.1
5/1/87 186.42 NA 360.05 5.1
6/11/87 50.46 70.00 92.35 4.5
6/11/87 38.53 55.00 77.75 4.5
7/31/87 13.10 NA 20.04 6.7
8/26/87 55.92 57.52 70.88 NC
8/31/87 19.55 23.75 30.64 5.0
8/31/87 10.98 NA 17.01 4.2
10/6/87 56.48 60.00 73.11 5.6
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
OCC Average Price/
Appraisal Appraisal Price Book Earnings Ratio
Date Value Offered Value of Peer Group
- ----------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
3/15/88 297.63 NA 414.95 6.1
6/2/88 27.26 NA 28.45 5.4
6/30/88 137.78 NA 215.36 6.0
8/30/88 768.62 677.00 1,090.55 10.7
3/31/89 773.62 NA 557.30 7.9
5/26/89 136.47 180.00 250.42 4.5
5/29/90 9.87 NA 11.04 9.9
</TABLE>
* - The "Appraisal Date" is the consummation date for the conversion,
consolidation, or merger.
NA - Not Available NC - Not Computed
For more information regarding the OCC's stock appraisal process, contact the
Office of the Comptroller of the Currency, Bank Organization and Structure.
Frank Maguire
Acting Senior Deputy Comptroller
Corporate Policy and Economic Analysis
Date: March 10, 1992
-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
(a) Exhibits. See Exhibit Index.
(b) Financial Statement Schedules. Not Applicable.
(c) Report, Opinion or Appraisal. See Exhibits 5 and 8.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a posteffective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent posteffective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
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.
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effecctive amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<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 September 17, 1998.
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 September 17, 1998 by the following persons in the
capacities indicated:
/s/ Richard M. Kovacevich Chairman and Chief Executive Officer
- -------------------------
Richard M. Kovacevich (Principal Executive Officer)
/s/ John T. Thornton Executive Vice President and Chief
- --------------------
John T. Thornton Financial Officer
(Principal Financial Officer)
/s/ Michael A. Graf Senior Vice President and Controller
- -------------------
Michael A. Graf (Principal Accounting Officer)
LES S. BILLER )
J.A. BLANCHARD III )
DAVID A. CHRISTENSEN )
SUSAN E. ENGEL )
WILLIAM A. HODDER )
LLOYD P. JOHNSON )
REATHA CLARK KING ) A majority of the
RICHARD M. KOVACEVICH) Board of Directors*
RICHARD S LEVITT )
RICHARD D. McCORMICK )
CYNTHIA H. MILLIGAN )
BENJAMIN F. MONTOYA )
IAN M. ROLLAND )
MICHAEL W. WRIGHT )
- --------------------
*Richard M. Kovacevich, by signing his name hereto, does hereby sign this
document on behalf of each of the directors named above pursuant to powers of
attorney duly executed by such persons.
/s/ Richard M. Kovacevich
-------------------------
Richard M. Kovacevich
Attorney-in-Fact
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Form of
Number Description Filing
- ------ ----------- -------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated June 11, 1998 between First
National Bank of Missouri City and Norwest Corporation (included in Proxy
Statement-Prospectus as Appendix A).
3.1 Restated Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3(b) to Norwest's Current Report on Form 8-K dated
June 28, 1993 (filed July 6, 1993), Exhibit 3 to Norwest's Current Report
on Form 8-K dated July 3, 1995 (filed July 3, 1995), Exhibit 3 to
Norwest's Current Report on Form 8-K dated June 3, 1997 (filed June 10,
1997) and Exhibit 3 to Norwest's Current Report on Form 8-K dated June 8,
1998 (filed June 12, 1998)).
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 November 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).
3.1.6 Certificate of Designations with respect to the 1998 ESOP Cumulative
Convertible Preferred Stock (incorporated by reference to Exhibit 3 to
Norwest's Current Report on Form 8-K dated April 20, 1998).
3.2 By-Laws (incorporated by reference to Exhibit 3 to Norwest's Current
Report on Form 8-K dated October 10, 1997).
4.1 Rights Agreement, dated as of November 22, 1988, between Norwest
Corporation and Citibank, N.A., as Rights Agent (incorporated by
reference to Exhibit 1 to Norwest's Form 8-A dated December 6, 1988).
4.2 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).
4.3 Amendment No. 1 to Rights Agreement, dated as of June 7, 1998, between
Norwest and Citibank, N.A., as Rights Agent (incorporated by reference to
Exhibit 4(a) to Norwest's Form 8-K dated June 18, 1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Form of
Number Description Filing
- ------ ----------- -------
<S> <C> <C>
5 Opinion of Stanley S. Stroup. Electronic
Transmission
8 Form of Opinion of Bracewell & Patterson, L.L.P. Electronic
Transmission
23.1 Consent of Stanley S. Stroup (included as part of Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP. Electronic
Transmission
23.3 Consent of Deloitte & Touche LLP Electronic
Transmission
23.4 Consent of Bracewell & Patterson, L.L.P. *
(included as part of Exhibit 8)
24 Powers of Attorney. Electronic
Transmission
99 Form of proxy for Special Meeting of Shareholders of Electronic
First National Bank of Missouri City Transmission
</TABLE>
________________________
* To be filed by amendment.
<PAGE>
EXHIBIT 5
[LETTERHEAD OF NORWEST CORPORATION]
Septmber 17, 1998
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 a maximum of 750,000 shares of common stock, par value $1-
2/3 per share (the "Shares"), of Norwest Corporation, a Delaware corporation
(the "Corporation"), and associated preferred stock purchase rights (the
"Rights"), which are proposed to be issued by the Corporation in connection with
the consolidation (the "Consolidation") of a wholly-owned subsidiary of the
Corporation with First National Bank of Missouri City, 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. Provided a rights agreement providing for the issuance of Rights is in
effect at the time of the Consolidation, all necessary corporate action on the
part of the Corporation has been taken to authorize the issuance of the Shares
and Rights in connection with the Consolidation, and, when issued as described
in the Registration Statement, the Shares and Rights 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 8
[LETTERHEAD OF BRACEWELL & PETERSON, L.L.P.]
October __, 1998
Board of Directors
First National Bank of Missouri City
3660 Hampton Drive
Missouri City, Texas 77459
Re: Federal Income Tax Consequences to Shareholders of First National Bank
of Missouri City Disposing of Their Shares of Common Stock in the
Consolidation
Gentlemen:
You have asked us to provide First National Bank of Missouri City ("Missouri
City") with our tax opinion as to the likely federal income tax consequences to
holders ("Shareholders") of the outstanding common stock, $5.00 par value, of
Missouri City ("Missouri City Common Stock") with respect to the above-
referenced consolidation. You have advised that Norwest Corporation, a Delaware
corporation ("Norwest"), is acquiring all of the Missouri City Common Stock by
way of a consolidation ("Consolidation") of a wholly-owned subsidiary of Norwest
with Missouri City in which Missouri City will be the surviving entity.
In particular, it is our understanding that the Consolidation will be
implemented by having the holders of Missouri City Common Stock exchange such
stock for shares of common stock, $1-2/3 par value, of Norwest ("Norwest Common
Stock"). Shareholders of Missouri City will also have the opportunity to
exercise dissenters' rights in accordance with the procedure provided in the
National Bank Act, entitling them to receive cash for their shares of Missouri
City Common Stock.
Our opinions are set forth herein and are also discussed under the caption "The
Consolidation-Federal Income Tax Consequences" in the Prospectus and Proxy
Statement ("Prospectus"), which is to be included in Norwest's Registration
Statement on Securities and Exchange Commission Form S-4 ("Registration
Statement"). Our opinion, however, does not address issues dependent upon the
individual tax situation of any Shareholder. In addition, our opinion does not
directly consider tax consequences to the Shareholders for actions taken before
the Consolidation, nor tax consequences unique to Norwest following the
Consolidation.
<PAGE>
You have indicated you will rely on our opinions and will not seek a ruling from
the Internal Revenue Service ("Service") regarding these matters. Our opinions
represent only our best legal judgment and have no binding effect or official
status of any kind. No assurance can be given that our conclusions would be
sustained by a court if contested by the Service.
REPRESENTATIONS
In rendering our opinion, we have relied on representations made by both Norwest
and Missouri City. Such representations are noted below. (The capitalized
words and phrases used herein, to the extent not defined herein, shall have the
meanings provided in the Registration Statement, as amended).
Norwest's Representations
- -------------------------
(i) The fair market value of the Norwest Common Stock to be received by
each Shareholder will be approximately equal to the fair market value of the
Missouri City Common Stock surrendered by such Shareholder in the exchange.
(ii) Except for purchases made on the open market pursuant to an ongoing
authorized stock repurchase program, Norwest has no plan or intention to
reacquire any of the Norwest Common Stock issued in the Consolidation.
(iii) Norwest has no plan or intention to sell or otherwise dispose of any
of the assets of Missouri City acquired in the transaction except for
dispositions made in the ordinary course of business, transactions described in
Section 368(a)(2)(C) of the Internal Revenue Code of 1986, as amended ("Code")
or Treas. Reg. 1.368-2(k), or transfers or dispositions that do not violate the
"substantially all requirement."
(iv) Following the Consolidation, Norwest will continue the historic
business of Missouri City or use a significant portion of Missouri City's
historic business assets in a business.
(v) Norwest will pay its respective expenses, if any, incurred in
connection with the Consolidation.
(vi) There is no intercorporate indebtedness existing between Norwest and
Missouri City that was issued, acquired, or will be settled at a discount.
(vii) Norwest is not an investment company as defined in Code (S)
368(a)(2)(F)(iii) and (iv).
(viii) The fair market value of the assets of Missouri City transferred to
Norwest will equal or exceed the sum of the liabilities assumed by Norwest,
including the amount of liabilities, if any, to which the transferred assets are
subject.
<PAGE>
Missouri City's Representations
- -------------------------------
(i) The fair market value of the Norwest Common Stock and other
consideration received by each Shareholder will be approximately equal to the
fair market value of the Missouri City Common Stock surrendered by such
Shareholder in the exchange.
(ii) The liabilities of Missouri City assumed by Norwest and the
liabilities to which the transferred assets of Missouri City are subject were
incurred by Missouri City in the ordinary course of business.
(iii) Missouri City will pay its respective expenses, if any, incurred in
connection with the Consolidation.
(iv) No intercorporate debt exists between Missouri City and Norwest that
was issued, acquired, or will be settled at a discount.
(v) Missouri City is not an investment company as defined under Code (S)
368(a)(2)(F)(iii) and (iv).
(vi) Missouri City is not under the jurisdiction of a Court in a Title 11
or similar case within the meaning of Code (S) 368(a)(3)(A).
(vii) The fair market value of the assets of Missouri City transferred to
Norwest will equal or exceed the sum of the liabilities assumed by Norwest,
including the amount of liabilities, if any, to which the transferred assets are
subject.
In addition, our opinion is based on the representation that there is no plan or
intention by Shareholders who own 1% or more of the Missouri City Common Stock,
and to the best knowledge of the management of Missouri City, there is no plan
or intention on the part of the remaining Shareholders, to sell, exchange, or
otherwise dispose of a number of shares of Norwest Common Stock received in the
transaction that would reduce the Shareholders' ownership of Norwest Common
Stock to a number of shares having a value, as of the date of the Consolidation,
of less than 50% of the value of all of the (formerly) outstanding Missouri City
Common Stock as of the same date. For purposes of this representation, shares
of Missouri City Common Stock exchanged for cash or other property, surrendered
by dissenters, or exchanged for cash in lieu of fractional shares of Norwest
Common Stock will be treated as outstanding Missouri City Common Stock on the
date of the Consolidation. Moreover, shares of Missouri City Common Stock and
shares of Norwest Common Stock held by Shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the transaction will be
considered in making this representation.
<PAGE>
Opinion
- -------
Based on the foregoing and subject to the limitations and assumptions set forth
above and herein, and having due regard for such legal considerations as we deem
relevant, our opinion is set forth below.
The Consolidation will, for federal income tax purposes, constitute a
reorganization described in Code (S) 368(a)(1)(A). Accordingly, it is our
opinion that the following statements will be true with respect to the
Shareholders:
1. No gain or loss will be realized by Shareholders to the extent they
exchange Missouri City Common Stock for Norwest Common Stock pursuant to
the terms of the Consolidation.
2. The aggregate basis of Norwest Common Stock received by each Shareholder in
the Consolidation will be the same as the aggregate basis of the Missouri
City Common Stock surrendered and exchanged therefor, decreased by the
amount of cash received and increased by the amount of gain realized by the
Shareholder under the exchange.
3. The holding period of Norwest Common Stock received by each Shareholder
will include the period during which Missouri City Common Stock surrendered
therefore was held, provided the Missouri City Common Stock is a capital
asset in the hands of the Shareholder on the date of the exchange. The
payment of cash in lieu of fractional shares of Norwest Common Stock will
be treated as a sale or exchange of such fractional shares potentially
eligible for capital gains treatment.
4. Dissenting Shareholders whose shares of Missouri City Common Stock are
disposed of pursuant to the exercise of appraisal rights will realize gain
or loss equal to the difference between the amount of cash received from
the exercise of such dissenters' rights and such Shareholder's aggregate
adjusted tax basis in the stock exchanged.
5. Unless an exemption applies, under the backup withholding rules of Code (S)
3406, an exchange agent (such as the exchange agent for Norwest) shall be
required to withhold, and will withhold, 31% of all cash payments to which
a Shareholder is entitled pursuant to the Consolidation (unless such
Shareholder provides his taxpayer identification number-Social Security
Number in the case of an individual, or Employer Identification Number in
other cases) and certifies that such number is correct.
CONCLUSION
In conclusion, this opinion is solely for the benefit of Missouri City and the
Shareholders and, as such, this opinion may not be relied upon in any manner by
any other person or entity.
<PAGE>
CONSENT
We hereby consent to the filing of this letter as Exhibit 8 to the Registration
Statement on Form S-4 and to the reference to us in the section entitled "The
Consolidation--U.S. Federal Income Tax Consequences of the Consolidation to
First National Bank Shareholders."
Very truly yours,
Bracewell & Patterson, L.L.P.
<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 15, 1998 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
September 17, 1998
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
Independent Auditors' Consent
-----------------------------
The Board of Directors
First National Bank of Missouri City
We consent to the use of our report dated January 16, 1998 included herein and
to the reference to our firm under the heading "EXPERTS" in the prospectus.
/s/ Deloitte & Touche LLP
Houston, Texas
September 17, 1998
<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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of of First National Bank
of Missouri City, located in Missouri City, Texas,, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/s/ Susan E. Engel
------------------
Susan E. Engel
<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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/s/ Richard S. Levitt
---------------------
Richard S. Levitt
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of NORWEST CORPORATION, a Delaware corporation, does hereby make, constitute and
appoint RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/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 RICHARD M. KOVACEVICH, LES BILLER, 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 750,000
shares of Common Stock of the Corporation, adjusted for any change in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits or stock dividends occurring after the date hereof, which may be issued
in connection with the acquisition by the Corporation of First National Bank of
Missouri City, located in Missouri City, Texas, 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
28th day of July, 1998.
/s/ Michael W. Wright
---------------------
Michael W. Wright
<PAGE>
Exhibit 99
Proxy for Special Meeting of Shareholders of First National Bank of Missouri
City
The undersigned hereby appoints ____________________ and ____________
___________________, or either of them, as proxies to vote all shares of Common
Stock the undersigned is entitled to vote at the Special Meeting of Shareholders
of First National Bank of Missouri City ("FNB") to be held on October 29, 1998
at Missouri City, Texas, 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 June 11,
1998 (the "Reorganization Agreement") between First National Bank of Missouri
City and Norwest Corporation ("Norwest") pursuant to which a wholly-owned
subsidiary of Norwest will consolidate with FNB and FNB will become a wholly-
owned subsidiary of Norwest (the "Consolidation"), all upon the terms and
subject to the conditions set forth in the Reorganization Agreement, a copy of
which is included as Appendix A in the accompanying Proxy Statement-Prospectus;
and to authorize such further action by the Board of Directors and officers of
FNB as may be necessary or appropriate to carry out the intent and purposes of
the Consolidation.
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
shareholder. The Board of Directors recommends a vote "FOR" proposal 1. If no
direction is supplied, the proxy will be voted "FOR" proposal 1.
Dated:_________________________, 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 FIRST NATIONAL BANK OF MISSOURI CITY
