<PAGE>
As filed with the Securities and Exchange Commission on April 8, 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)
Delaware 6711 41-0449260
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
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 Robert Muehlenweg
Norwest Corporation Kelly, Rammelkamp, Muehlenweg & Lucero, P.A.
Norwest Center 320 Gold Avenue
Sixth and Marquette Suite 600
Minneapolis, Minnesota 55479-1026 Albuquerque, NM 87114
------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of the Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================== ===================== ======================== ======================== ================
Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
to Be to Be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- ---------------------------------- --------------------- ------------------------ ------------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock 250,000 N/A $3,463,171 (2) $1,049.44
(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 December 31,
1997 of all shares of common stock to be acquired by the registrant in the
transaction described herein.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
[First Bank symbol]
- --------------------------------------------------------------------------------
First Bank of Grant's board of directors has approved the acquisition of
First Bank by Norwest Corporation. If the acquisition is completed, Norwest will
exchange a total of 212,500 shares of its common stock for all of the
outstanding shares of First Bank common stock.
The exchange ratio, or the number of shares of Norwest common stock that
Norwest will exchange for each share of First Bank common stock, will be
determined by dividing 212,500 by the number of shares of First Bank common
stock outstanding. There are currently 26,996 shares of First Bank common stock
outstanding. This number should not change before the acquisition is completed.
AS A RESULT, YOU SHOULD ASSUME THAT YOU WILL RECEIVE APPROXIMATELY 7.87 SHARES
OF NORWEST COMMON STOCK FOR EACH SHARE OF FIRST BANK COMMON STOCK YOU OWN.
Norwest's acquisition of First Bank will involve two steps. First Bank will
first convert to a national banking association from a New Mexico banking
association. Immediately after its conversion to a national bank, First Bank
will consolidate with a wholly-owned subsidiary of Norwest. As a result of the
consolidation, First Bank will become a wholly-owned subsidiary of Norwest.
First Bank's conversion to a national banking association and its
subsequent consolidation with a Norwest subsidiary bank both require the
approval of First Bank's shareholders. Neither the conversion nor the
consolidation will occur unless both are approved. First Bank's board of
directors has called a special meeting of shareholders to vote on both matters.
Whether or not you plan to attend the meeting, please complete and mail the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, your proxy will be voted in favor of the
conversion and the consolidation. If you fail to return your card, the effect
will be a vote against the conversion and the consolidation.
The date, time and place of the special meeting are as follows:
[DAY], [DATE OF SPECIAL MEETING]
[TIME OF MEETING]
[LOCATION OF MEETING]
This Proxy Statement-Prospectus provides detailed information about the
proposed acquisition. Please read this entire document carefully.
[NAME OF CHAIRMAN]
Chairman of the Board
- --------------------------------------------------------------------------------
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."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE NORWEST COMMON STOCK OFFERED BY THIS PROXY
STATEMENT-PROSPECTUS OR DETERMINED WHETHER THIS PROXY STATEMENT-PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Proxy Statement-Prospectus dated April ___, 1998, and first mailed to
shareholders on April __, 1998.
<PAGE>
TABLE OF CONTENTS
GLOSSARY OF IMPORTANT TERMS........................... 1
QUESTIONS AND ANSWERS
ABOUT THE CONSOLIDATION............................... 3
QUESTIONS AND ANSWERS ABOUT
THIS PROXY STATEMENT-
PROSPECTUS............................................ 5
SUMMARY............................................... 6
Parties to the Consolidation....................... 6
Reason for the Conversion.......................... 7
Reasons for the Consolidation...................... 7
Required Vote...................................... 7
Recommendation of First Bank's
Board of Directors.............................. 8
The Consolidation.................................. 8
Comparative Per Common Share Data..................12
Selected Historical Financial Information..........13
Share Prices and Dividends for
Norwest Common Stock............................15
SPECIAL MEETING OF SHAREHOLDERS.......................16
Record Date........................................16
Voting Rights; Votes Required for Approval.........16
Voting Agreements..................................16
Voting and Revocation of Proxies...................16
Solicitation of Proxies............................17
Other Matters......................................17
THE CONVERSION........................................18
General............................................18
Reason for the Conversion..........................18
Appraisal Rights...................................18
Regulatory Approvals...............................19
THE CONSOLIDATION.....................................20
Purpose and Effect of the Consolidation............20
Background of and Reasons for the
Consolidation...................................20
Additional Interests of First Bank's
Management in the Consolidation.................20
Appraisal Rights...................................20
Exchange of Certificates...........................21
Regulatory Approvals...............................22
Effect on First Bank's Employee
Benefit Plans...................................23
Certain U.S. Federal Income Tax
Consequences of the Consolidation to
First Bank Shareholders............................23
Resale of Norwest Common Stock.....................24
Stock Exchange Listing.............................24
Accounting Treatment...............................24
THE REORGANIZATION AGREEMENT..........................26
Basic Plan of Reorganization.......................26
Representations and Warranties.....................27
Certain Covenants..................................27
Conditions to the Completion of the
Consolidation...................................28
Termination of the Reorganization
Agreement.......................................28
Effect of Termination..............................29
Waiver and Amendment...............................29
Expenses...........................................29
COMPARISON OF RIGHTS OF
HOLDERS OF FIRST BANK COMMON
STOCK AND NORWEST COMMON STOCK........................30
Capital Stock......................................30
Rights Plan........................................30
Directors..........................................31
Amendment of Charter Document
and Bylaws......................................31
Approval of Mergers and Asset Sales................32
Appraisal Rights...................................32
Special Meetings...................................32
Directors Duties...................................33
Action Without a Meeting...........................33
Limitation of Director Liability...................34
Indemnification of Officers and Directors..........34
Dividends..........................................35
Corporate Governance Procedures;
Nomination of Directors.........................35
INFORMATION ABOUT FIRST BANK..........................36
General............................................36
Regulation and Supervision.........................36
Properties.........................................36
Competition........................................36
(i)
<PAGE>
Legal Proceedings..................................37
Market Information and Dividends...................37
Beneficial Ownership of First Bank
Common Stock by First Bank
Management and Principal Shareholders...........37
FIRST BANK'S MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FIRST BANK'S FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................38
Overview of First Bank's Operations................38
Earnings Performance...............................38
Income Statement Analysis..........................38
Balance Sheet Analysis.............................39
Funding Sources....................................39
Interest Rate Sensitivity and
Liquidity Management.............................39
Capital............................................40
Taxes..............................................40
Impact of Inflation, Changing Prices
and Monetary Policies...........................40
CERTAIN REGULATORY AND
OTHER CONSIDERATIONS PERTAINING
TO NORWEST............................................42
Bank Regulatory Agencies...........................42
Bank Holding Company Activities;
Interstate Banking..............................42
Dividend Restrictions..............................43
Holding Company Structure..........................44
Regulatory Capital Standards and
Related Matters.................................45
FDIC Insurance.....................................47
Fiscal and Monetary Policies.......................48
Competition........................................48
EXPERTS...............................................48
LEGAL MATTERS.........................................49
INFORMATION CONCERNING
NORWEST MANAGEMENT....................................49
WHERE YOU CAN FIND MORE
INFORMATION...........................................49
FIRST BANK FINANCIAL STATEMENTS......................F-1
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX B NEW MEXICO STATUTES 1978 CHAPTER 58, ARTICLE 4, SECTION 10
APPENDIX C TITLE 12, SECTION 15 OF THE UNITED STATES CODE
APPENDIX E 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.
BANK HOLDING COMPANY ACT ................. Bank Holding Company Act of 1956.
CONSOLIDATION ............................ The consolidation of First Bank
with Norwest Interim Bank Grants,
National Association, pursuant to
the terms of the Reorganization
Agreement. The Consolidation is the
means by which Norwest will acquire
First Bank.
CONVERSION................................ The conversion of First Bank to a
national banking association from a
New Mexico banking corporation. The
Conversion will occur immediately
before the Consolidation.
DGCL ..................................... Delaware General Corporation Law.
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 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.
FIRST BANK................................ Before the Conversion, First Bank
of Grants, a New Mexico banking
association. After the Conversion,
First Bank of Grants, National
Association, a national banking
association.
FIRST BANK COMMON STOCK................... First Bank's common stock, par
value $10 per share.
INTERSTATE BANKING ACT ................... Reigle-Neal Interstate Banking and
Branching Act.
NATIONAL BANK ACT ........................ National Bank Act.
NEW MEXICO BANKING ACT.................... Chapter 58 of the New Mexico
Statutes 1978.
1
<PAGE>
NEW MEXICO BANKING COMMISSIONER........... The director of the Financial
Institutions Division of the New
Mexico Regulation and Licensing
Department.
NORWEST .................................. Norwest Corporation and its
consolidated subsidiaries.
NORWEST COMMON STOCK ..................... Norwest's common stock, par value
$1-2/3 per share.
OCC .................................. Office of the Comptroller of the
Currency.
REORGANIZATION AGREEMENT ................. The Agreement and Plan of
Reorganization dated as of January
20, 1998 between First 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 BANK AGREED TO BE ACQUIRED BY NORWEST?
A: In determining that the sale of First Bank to Norwest was in the best
interests of First Bank shareholders, First Bank's board of directors
considered a number of factors. These factors included the current and
future economic environment and competitive constraints facing independent
community banks such as First Bank, the board's view of reasonably
available alternatives to First Bank shareholders, and the increased
liquidity and risk diversification that a sale to Norwest would provide
First Bank shareholders.
Q: HOW WILL I BENEFIT?
A: First Bank's board of directors believes that First Bank shareholders will
benefit by becoming owners of a company that has more resources to compete
in the financial services industry than First Bank independently. The
Consolidation will also provide First Bank shareholders with risk
diversification and increased liquidity, as there is no established market
for First Bank common stock.
Q: WHAT DO I NEED TO DO NOW?
A: Just sign the enclosed proxy card and mail it to First Bank in the enclosed
return envelope as soon as possible. This way, your shares will be
represented at the special meeting on [DATE OF MEETING]. First Bank's board
of directors recommends that you vote FOR the Conversion and 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 IS THE EXCHANGE RATIO?
A: The Exchange Ratio is the number of shares of Norwest common stock that
Norwest will exchange in the Consolidation for each share of First Bank
common stock.
Q: HOW WILL THE EXCHANGE RATIO BE DETERMINED?
A: Norwest will issue a total of 212,500 shares of its common stock in the
Consolidation. The Exchange Ratio will be determined by dividing 212,500 by
the number of shares of First Bank common stock outstanding immediately
before the Consolidation.
Q: HOW WILL I KNOW THE EXCHANGE RATIO BEFORE I VOTE?
A: There are currently 26,996 shares of First Bank common stock outstanding.
The Reorganization Agreement prohibits First Bank from issuing additional
shares of First Bank common stock without Norwest's consent. It also
prohibits First Bank from repurchasing shares of First Bank common stock
without Norwest's consent. As a result, you should assume that the Exchange
Ratio will equal approximately 7.87, determined by dividing 212,500 by
26,996.
As an example, if you own 1,000 shares of First Bank common stock, you will
receive approximately 7,870 shares of Norwest common stock.
3
<PAGE>
Q: WHY IS FIRST BANK CONVERTING TO A NATIONAL BANK BEFORE THE CONSOLIDATION?
A: Norwest intends to operate First Bank as a stand-alone, separately
chartered bank for a period of time after the Consolidation. The majority
of Norwest's subsidiary banks are national banks regulated by the OCC. As a
result, Norwest prefers that First Bank operate as a national bank rather
than as a state bank.
First Bank will convert to a national bank only if the Consolidation is
approved.
Q: WHAT ARE THE TAX CONSEQUENCES TO SHAREHOLDERS OF THE CONSOLIDATION?
A: For federal income tax purposes, the exchange of Norwest common stock for
shares of First Bank common stock will be tax free to First Bank
shareholders, except for cash received in lieu of fractional shares. To
review the tax consequences to First Bank shareholders in greater detail,
see page 23.
YOU SHOULD CONSULT A TAX ADVISOR AS TO THE TAX CONSEQUENCES TO YOU OF THE
CONSOLIDATION.
Q: WHEN WILL THE CONSOLIDATION BE COMPLETED?
A: First 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 OBJECT TO THE CONVERSION OR THE CONSOLIDATION?
A: You have a right to an appraisal of the value of your First Bank common
stock in connection with the Conversion and the Consolidation. You may
exercise this right in connection with either the Conversion or the
Consolidation, but not both. See pages 18 and 20 for information on your
appraisal rights and how to exercise them.
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 Bank and a
prospectus of Norwest. As a proxy statement, it is being provided to you
because First Bank's board of directors is soliciting your proxy for use at
the special meeting. As a prospectus, it is being provided to you because
Norwest will exchange shares of Norwest common stock for your shares of
First 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 is any inconsistency between the
summary and the actual terms of the Reorganization Agreement, the actual
terms will control. As a result, to fully understand the Consolidation and
your rights as a First Bank shareholder, you will need to read carefully
this entire document including appendices.
Q: IS THERE OTHER INFORMATION I SHOULD CONSIDER?
A: This document does not physically include all of the information that may
be important to you. Under SEC rules, Norwest is permitted to "incorporate
by reference" into this Proxy Statement-Prospectus information about
Norwest that is contained in other documents filed with the SEC. For
example, Norwest's consolidated financial statements for the year ended
December 31, 1997 are not included in this document. Instead, the financial
statements are incorporated by reference to 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. This
information may be important to your voting decision but is not physically
included in this Proxy Statement-Prospectus.
INFORMATION THAT IS INCORPORATED BY REFERENCE TO ANOTHER DOCUMENT IS
CONSIDERED PART OF THIS PROXY STATEMENT-PROSPECTUS. IT IS CONSIDERED TO
HAVE BEEN DISCLOSED TO YOU WHETHER OR NOT YOU ACTUALLY REVIEW THE
INFORMATION.
Q: WHERE CAN I FIND INFORMATION THAT HAS BEEN INCORPORATED BY REFERENCE?
A: On page 49, under "WHERE YOU CAN FIND MORE INFORMATION," there is a list of
the documents that Norwest has incorporated by reference into this Proxy
Statement-Prospectus. There is also information on how to obtain copies of
these documents from the SEC and Norwest.
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
NORWEST CORPORATION........................ Norwest is a diversified financial
Sixth and Marquette services company organized under
Minneapolis, Minnesota 55479 the laws of Delaware and registered
under the Bank Holding Company Act.
Through its subsidiaries and
affiliates, Norwest provides
retail, commercial and corporate
banking services, as well as a
variety of other financial
services, including mortgage
banking, consumer finance,
equipment leasing, agricultural
finance, commercial finance,
securities brokerage and investment
banking, insurance agency services,
computer and data processing
services, trust services, mortgage-
backed securities servicing, and
venture capital investment.
At December 31, 1997, Norwest had
consolidated total assets of $88.5
billion, total deposits of $55.5
billion and total stockholders'
equity of $7.0 billion. Based on
total assets at December 31, 1997,
Norwest was the 11th largest
commercial banking organization in
the United States.
FIRST BANK ................................ First Bank is a state chartered
201 North First Street bank, originally chartered as a
P. O. Box 699 national bank on August 11, 1958,
Grants, New Mexico 87020 and converted to a state chartered
(505) 287-9481 institution as of September 11,
1992. First Bank's principal place
of business is located at 201 North
First Street, Grants, New Mexico
87020. It has one branch located in
Milan, New Mexico. The bank's
market area consists primarily of
areas located principally within
Cibola, Valencia, McKinley,
Bernalillo Counties, New Mexico and
to a lesser extent parts of Catron,
Socorro, Sandoval Counties. The
bank is a full service, independent
community bank which provides a
full range of commercial banking
services, including traditional
deposit services and commercial,
interim construction, consumer,
home improvement, real estate,
agricultural and industrial loans.
At December 31, 1997, the bank had
total assets of approximately $44.8
million, total deposits of
approximately $41.0 million and
total shareholders'
6
<PAGE>
equity of approximately $3.5
million.
REASON FOR THE CONVERSION................... Norwest intends to operate First
Bank as a stand-alone, separately
chartered bank, at least for some
period of time after the
Consolidation. The majority of
Norwest's subsidiary banks are
national banks, regulated by the
same government agency (the OCC).
As a result, Norwest prefers that
First Bank operate as a national
bank rather than a state bank.
First Bank has agreed to convert to
a national bank to facilitate the
Consolidation.
First Bank will convert to a
national bank only if the
Consolidation is approved.
REASONS FOR THE CONSOLIDATION
(SEE PAGE 20)............................. First Bank's board of directors
believes that the Consolidation is
advisable and in the best interest
of First Bank and its shareholders.
In reaching its determination, the
First Bank board considered a
number of factors including but not
limited to the following: the
current and prospective economic
environment and competitive
constraints facing independent
community banks such as First Bank;
First Bank's board of directors'
view of reasonably available
alternatives to First Bank
shareholders; and the increased
liquidity and diversification of
risk that the Consolidation would
provide to First Bank shareholders.
REQUIRED VOTE; VOTING AGREEMENTS............ The holders of at least two-thirds
of the outstanding shares of First
Bank common stock must approve the
Conversion. The Consolidation also
requires the approval of the
holders of at least two-thirds of
the outstanding First Bank common
stock.
First Bank's directors and an
affiliate of a First Bank director
have agreed to vote all shares of
First Bank common stock
beneficially owned by them at the
record date for the special meeting
in favor of the Conversion and the
Consolidation. At the record date,
the directors and the affiliate
beneficially owned an aggregate of
17,222 shares of First Bank common
stock, representing approximately
63.8% of the shares of First Bank
common stock outstanding at the
record date.
Because the Conversion and the
Consolidation require approval of a
specified percentage of the
outstanding shares, not voting will
have the same effect as voting
7
<PAGE>
against the Conversion and the
Consolidation.
RECOMMENDATION OF FIRST BANK'S
BOARD OF DIRECTORS........................ First Bank's board of directors has
approved both the Conversion and
the Consolidation as being in the
best interests of First Bank
shareholders and recommends that
First Bank shareholders approve the
Conversion and the Consolidation at
the special meeting.
THE CONSOLIDATION........................... In the Consolidation, First Bank
will consolidate with a
newly-formed, wholly-owned
subsidiary bank of Norwest. First
Bank will be the surviving entity
in the Consolidation.
WHAT FIRST BANK SHAREHOLDERS
WILL RECEIVE (SEE PAGE 26).................. In the Consolidation, Norwest will
exchange a total of 212,500 shares
of its common stock for all of the
outstanding shares of First Bank
common stock. Based on 26,996
shares of First Bank common stock
outstanding, this works out to
approximately 7.87 shares of
Norwest common stock for each share
of First Bank common stock
outstanding. 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 in lieu of the fractional
share.
MANAGEMENT OF FIRST BANK AFTER THE
CONSOLIDATION............................... When the Consolidation is complete,
Norwest will own all of the
outstanding shares of First Bank
common stock. As a result, Norwest
will be able to elect or appoint
all of the directors and officers
of First Bank.
ADDITIONAL INTERESTS OF FIRST BANK'S
MANAGEMENT (SEE PAGE 20).................... First Bank's management will
receive the same consideration for
their shares of First Bank common
stock as the other First Bank
shareholders. Certain members of
First Bank's management, however,
may be deemed to have interests
that are in addition to and
separate from the interests of
First Bank shareholders generally.
These interests include the
following:
- Joseph A. Fidel, a First Bank
director, has signed a
Non-Competition Agreement which
generally provides that in
exchange for the payment of two
annual installments of $25,000
each, Mr. Fidel will not compete
with Norwest or its affiliates
in
8
<PAGE>
Cibola County, New Mexico for a
period of 24 months following
the effective date of the
Consolidation.
- Antonio C.Esparza, president of
First Bank, has entered into an
Employment and Non-Competition
Agreement which generally
provides for the payment of base
compensation of $84,275, per
annum (which may be increased
based on Mr. Esparza's
performance) and participation
in the Norwest employee benefit
plans available to regular
employees of Norwest Companies
in a similar position as well as
the Norwest corporation
severance pay plan. Mr.
Esparza's Employment and
Non-Competition Agreement also
provides that he shall receive
two annual installments of
$50,000 each in exchange for his
agreement not to compete with
Norwest or its affiliates in
Cibola, McKinley and Bernalillo
Counties, New Mexico for a
period of 24 months from the
date of his termination of
employment with Norwest.
CONDITIONS TO THE CONSOLIDATION
(SEE PAGE 28)............................... A number of conditions must be
satisfied before the Consolidation
can be completed, including the
following:
- Each party's representations
and warranties must be true,
and each party must perform its
obligations under the
Reorganization Agreement.
- There cannot be any change since
December 31, 1996 that has had,
or might reasonably be expected
to have, an adverse effect on
First Bank.
Some of the conditions to the
Consolidation are subject to
exceptions and/or to a
"materiality" standard. Certain
conditions may also be waived by
the party entitled to assert the
condition.
REGULATORY APPROVALS The Consolidation is subject to the
(SEE PAGES 19 AND 22)...................... prior approval of the Federal
Reserve Board and the OCC. Approval
of the Federal Reserve Board is
required because Norwest is a bank
holding company. Approval of the
OCC is required because the
Consolidation will involve two
national banks.
Norwest has applied to the Federal
Reserve Board and
9
<PAGE>
the OCC for approval of the
Consolidation. Both applications
are pending as of the date of this
Proxy Statement-Prospectus.
TERMINATION OF THE REORGANIZATION
AGREEMENT (SEE PAGE28)...................... Norwest and First 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 June 30, 1998,
unless the failure to complete
the Consolidation on or before
that date is the fault of the
party seeking to terminate.
ACCOUNTING TREATMENT (SEE PAGE 24).......... 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 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
Bank's operations after the
Consolidation is completed.
APPRAISAL RIGHTS (SEE PAGES 18 AND 20
AND APPENDICES B AND C)..................... First Bank shareholders who dissent
from the Conversion are entitled to
receive a cash payment equal to the
value of their shares of First 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.
First Bank shareholders who dissent
from the Consolidation are entitled
to receive a cash payment equal to
the fair value of their shares of
First Bank common stock. To receive
this cash payment, dissenting
shareholders must follow the
procedures outlined in Appendix C.
Failure to comply strictly with
these procedures will result in the
forfeiture of appraisal rights.
10
<PAGE>
If you vote any of your shares of
First Bank common stock against the
Conversion, your appraisal rights
as to those shares will be limited
to those set forth in Appendix B.
This is true regardless of whether
you also vote the shares against
the Consolidation. To exercise your
appraisal rights in connection with
the Consolidation (that is, as a
shareholder of a national bank),
you must vote shares for the
Conversion and against the
Consolidation.
U.S. FEDERAL INCOME TAX
CONSEQUENCES (SEE PAGE 23).................. The Consolidation has been
structured so that First Bank
shareholders 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
Bank of a legal opinion to this
effect.
MARKET INFORMATION (SEE PAGE 15)............ Norwest common stock is listed on
the New York Stock Exchange and the
Chicago Stock Exchange under the
symbol NOB. On January 16, 1998,
the last full trading day before
First Bank and Norwest signed the
Reorganization Agreement, Norwest
common stock closed at $35.0625 per
share. On ____________, 1998,
Norwest common stock closed at $___
per share.
There is no public market for First
Bank common stock.
11
<PAGE>
COMPARATIVE PER COMMON SHARE DATA
The following table presents selected comparative per common share data for
Norwest common stock on a historical and pro forma combined basis and for First
Bank common stock on a historical and pro forma equivalent basis. The historical
information should be read with (a) the selected consolidated financial data
(and related notes) for Norwest and First Bank appearing elsewhere in this Proxy
Statement-Prospectus, (b) the complete financial statements of First Bank
appearing elsewhere in this Proxy Statement-Prospectus and (c) the complete
consolidated financial statements of Norwest included in the documents
incorporated by reference in this Proxy Statement-Prospectus. See "Where You Can
Find More Information."
The pro forma information in the table assumes that Norwest will exchange
7.87 shares of its common stock for each share of First Bank common stock. 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."
The information in the following table is not necessarily indicative of the
results of the future operations of the combined entity or the actual results
that would have occurred had the Consolidation become effective prior to the
periods indicated.
<TABLE>
<CAPTION>
NORWEST COMMON STOCK FIRST BANK COMMON STOCK
---------------------- ------------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
BOOK VALUE (1):
December 31, 1997 $9.01 9.01 128.28 70.91
DIVIDENDS DECLARED (2): 0.615 0.615 7.20 4.84
Year Ended December 31, 1997
NET INCOME (3): 1.75 1.75 13.49 13.77
Year Ended December 31, 1997
</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 Bank divided by total pro forma common shares of the
combined entities. The pro forma equivalent book value per share of First
Bank common stock represents the pro forma combined book value per share of
Norwest common stock multiplied by an assumed exchange ratio of 7.87.
(2) Assumes no changes in cash dividends per share by Norwest. The pro forma
equivalent dividends per share of First Bank common stock represent cash
dividends declared per share of Norwest common stock multiplied by an
assumed exchange ratio of 7.87.
(3) The pro forma combined net income per share of Norwest common stock (based
on diluted net income and weighted average number of common and common
equivalent shares) is based upon the combined historical net income for
Norwest and First 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 Bank common stock represents the pro forma
combined net income per share multiplied by an assumed exchange ratio of
7.87.
12
<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 "What
Incorporation by Reference Means" and "Where You Can Find More Information." The
information for First Bank is derived from its historical financial statements
(and related notes) contained elsewhere in this Proxy Statement-Prospectus.
NORWEST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1997 1996 1995 1994 1993(1)
---- ---- ---- ---- -------
(In Millions, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income........................ $ 6,697.4 6,318.3 5,717.3 4,393.7 3,946.3
Interest expense....................... 2,664.0 2,617.0 2,448.0 1,590.1 1,442.9
----------- --------- --------- --------- ---------
Net interest income.................. 4,033.4 3,701.3 3,269.3 2,803.6 2,503.4
Provision for credit losses............ 524.7 394.7 312.4 164.9 158.2
Non-interest income.................... 2,962.3 2,564.6 1,848.2 1,638.3 1,585.0
Non-interest expenses.................. 4,421.3 4,089.7 3,382.3 3,096.4 3,050.4
----------- --------- --------- --------- ---------
Income before income taxes........... 2,049.7 1,781.5 1,422.8 1,180.6 879.8
Income tax expense..................... 698.7 627.6 466.8 380.2 266.7
----------- --------- --------- --------- ---------
Net income............................. $ 1,351.0 1,153.9 956.0 800.4 613.1
=========== ========= ========= ========= =========
PER COMMON SHARE DATA
Net income:
Basic............................... $ 1.78 1.55 1.39 1.23 0.95
Diluted.............................. 1.75 1.54 1.36 1.20 0.93
Dividends declared..................... 0.6150 0.5250 0.4500 0.3825 0.3200
BALANCE SHEET DATA At period end:
Total assets......................... $ 88,540.2 80,175.4 72,134.4 59,315.9 54,665.0
Long-term debt....................... 12,766.7 13,082.2 13,676.8 9,186.3 6,850.9
Total stockholders' equity........... 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 merger-related expenses, including termination costs, systems
and operations costs, and investment banking, legal, and accounting
expenses.
13
<PAGE>
FIRST BANK OF GRANTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996
---- ----
<S> <C> <C>
INCOME STATEMENT DATA
Interest income................................. $ 3,182,816 3,104.420
Interest expense................................ 1,249,827 1,450,285
------------ -------------
Net interest income........................... 1,932,989 1,654,135
Provision for credit losses..................... 25,000 --
Non-interest income............................. 411,738 411,544
Non-interest expenses........................... 1,720,681 1,512,591
------------ -------------
Income before income taxes.................... 599,046 553,088
Income tax expense.............................. 234,971 179,450
------------ -------------
Net income...................................... $ 364,075 373,638
============ =============
PER COMMON SHARE DATA
Net income:
Basic......................................... $ 13.49 13.84
Diluted....................................... 13.49 13.84
Dividends declared.............................. 7.20 5.50
BALANCE SHEET DATA At period end:
Total assets.................................. $ 44,755,911 40,794,308
Total liabilities............................. 41,292,740 37,500,841
Total stockholders' equity.................... 3,463,171 3,293,467
</TABLE>
14
<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 Bank common stock.
NORWEST COMMON STOCK
---------------------------------------------
HIGH LOW DIVIDENDS
---- --- ---------
1995
First Quarter $13.1250 11.3125 0.105
Second Quarter 14.6875 12.5625 0.105
Third Quarter 16.3750 13.4375 0.120
Fourth Quarter 17.3750 14.6250 0.120
1996
First Quarter 18.5625 15.2500 0.120
Second Quarter 18.7500 16.5000 0.135
Third Quarter 20.5000 16.0000 0.135
Fourth Quarter 23.4375 20.3750 0.135
1997
First Quarter 26.6250 21.3750 0.150
Second Quarter 29.6250 22.1875 0.150
Third Quarter 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
(through April __, 1998)
15
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
First Bank is sending you this Proxy Statement-Prospectus to provide you
with information concerning the Conversion and the Consolidation and to solicit
your proxy for use at the special meeting of shareholders. At the special
meeting, shareholders of First Bank will be asked to approve the Conversion and
to approve the Consolidation.
DATE, TIME AND PLACE OF SPECIAL MEETING
The date, time and place of the special meeting are as follows:
[DAY],[DATE OF SPECIAL MEETING]
[TIME OF MEETING]
[LOCATION OF MEETING]
RECORD DATE
First Bank has established ____________, 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 26,996 shares of First Bank common stock
outstanding and entitled to vote at the special meeting. The holders of First
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 Conversion and the
Consolidation each requires the affirmative vote, in person or by proxy, of the
holders of at least two-thirds of the outstanding shares of First Bank common
stock on the record date.
VOTING AGREEMENTS
Each First Bank director has entered into a voting agreement with Norwest
pursuant to which the director has agreed to vote all shares of First Bank
common stock beneficially owned by the director at the record date in favor of
the Conversion and the Consolidation. Dubl J. Corporation, an affiliate of a
First Bank director, has also agreed to vote all shares of First Bank common
stock beneficially owned by it at the record date in favor of the Conversion and
the Consolidation. First Bank's directors and Dubl J. Corporation collectively
owned at the record date 17,222 shares of First Bank common stock, representing
approximately 63.8% of the shares of First Bank common stock outstanding at the
record date. See "INFORMATION ABOUT FIRST BANK--Beneficial Ownership of First
Bank Common Stock by First Bank Management and Principal Shareholders."
VOTING AND REVOCATION OF PROXIES
All shares of First 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 APPROVAL OF THE CONVERSION AND FOR APPROVAL
OF THE CONSOLIDATION.
16
<PAGE>
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 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 proposals to approve the Conversion and the Consolidation must each be
approved by the holders of at least two-thirds of the outstanding shares of
First Bank common stock. Because each proposal requires the affirmative vote of
a specified percentage of outstanding shares, not voting on a proposal will have
the same effect as voting against the proposal.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees of
First Bank may solicit proxies from First 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 Bank will bear its own expenses in connection with any solicitation of
proxies for the special meeting.
OTHER MATTERS
If an insufficient number of votes for either the Conversion or for the
Consolidation is received before the scheduled meeting date, Norwest and First
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 Conversion
and the Consolidation or contain no instructions will be voted for adjournment.
First 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 Conversion
and 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 Bank.
17
<PAGE>
THE CONVERSION
GENERAL
Immediately before the Consolidation, First Bank will convert to a national
bank under the name "First Bank of Grants, National Association." First Bank of
Grants, National Association will be the surviving bank in the Consolidation.
The Conversion will occur only if the Consolidation is also approved. If
the Consolidation is not approved, First Bank will remain a New Mexico banking
corporation, at least for the time being.
REASON FOR THE CONVERSION
Norwest intends to operate First Bank as a stand-alone, separately
chartered bank for some period of time after the Consolidation. The majority of
Norwest's subsidiary banks are national banks, regulated by the same government
agency (the OCC). As a result, Norwest prefers that First Bank operate as a
national bank rather than a state bank. First Bank has agreed to convert to a
national bank to facilitate the Consolidation.
APPRAISAL RIGHTS
As a First Bank shareholder, you will have appraisal rights in connection
with the Conversion, as well as in connection with the Consolidation (see "THE
CONSOLIDATION--Appraisal Rights"). Your appraisal rights are based on the
provisions of Article 4, Section 10 of the New Mexico Banking Act. Copies of
these provisions are attached to this Proxy Statement-Prospectus as Appendix B.
To understand these appraisal rights fully, you should read these provisions
carefully.
What "Dissenters' Rights of Appraisal" Are. Dissenters' rights of appraisal
(or simply "rights of appraisal") refer to the right of shareholders who
disagree with a particular corporate action to receive the cash value of their
shares in lieu of whatever payment is called for by that corporate action. Under
the Banking Act, you have this right in connection with the Conversion. As a
result, instead of receiving shares of Norwest common stock, you may elect to
receive the cash value of your shares of First Bank common stock. The value of
your shares will be measured as of the date of the special meeting.
YOU MUST TAKE A NUMBER OF STEPS TO EXERCISE YOUR APPRAISAL RIGHTS. SIMPLY
VOTING AGAINST THE CONVERSION IS NOT SUFFICIENT TO EXERCISE YOUR APPRAISAL
RIGHTS. FAILURE TO TAKE THESE STEPS STRICTLY IN THE MANNER REQUIRED MAY RESULT
IN YOUR LOSING YOUR APPRAISAL RIGHTS. IF YOU LOSE YOUR CONVERSION APPRAISAL
RIGHTS AND FIRST BANK SHAREHOLDERS APPROVE THE CONVERSION AND THE CONSOLIDATION,
YOU WILL BE BOUND BY THE CONVERSION AND, UNLESS YOU EXERCISE YOUR APPRAISAL
RIGHTS IN CONNECTION WITH THE CONSOLIDATION, WILL RECEIVE SHARES OF NORWEST
COMMON STOCK FOR YOUR SHARES OF FIRST BANK COMMON STOCK.
Steps You Need to Take to Exercise Your Rights of Appraisal. First, you
must vote against the Consolidation any shares of First Bank common stock as to
which you want to exercise your appraisal rights (the "dissenting shares").
Second, within 30 days after the Consolidation is completed, you must demand in
writing that First Bank, as the surviving entity in the Consolidation, pay to
you the value of the dissenting shares. You must include with your written
demand the certificate or certificates for the dissenting shares.
18
<PAGE>
How the Value of Your Dissenting Shares Will be Determined. The value of
your dissenting shares will be measured as of the date of the special meeting.
The value will be determined by three appraisers. First Bank's board of
directors will select one appraiser. A second appraiser will be selected by
dissenting shareholders at a meeting called for this purpose by the New Mexico
Banking Commissioner. To be selected, a candidate must receive the approval of
the holders of at least two-thirds of the dissenting shares. The third and final
appraiser will be selected by the two appraisers so chosen.
REGULATORY APPROVALS
The Conversion is subject to the prior approval of the OCC, as the primary
regulator of national banks. First Bank has submitted an application to the OCC
for approval of the Conversion. The application is pending as of the date of
this Proxy Statement-Prospectus.
19
<PAGE>
THE CONSOLIDATION
PURPOSE AND EFFECT OF THE CONSOLIDATION
Norwest is using the Consolidation to acquire First Bank. As a result of
the Consolidation, First Bank will become a wholly-owned subsidiary of Norwest
and shareholders of First Bank will receive shares of Norwest common stock for
their shares of First Bank common stock. Norwest will own all of the outstanding
shares of First Bank common stock. Shareholders of First Bank will become
stockholders of Norwest, and their rights will be governed by Norwest's restated
certificate of incorporation and bylaws rather than First Bank's articles of
association and bylaws. See "COMPARISON OF RIGHTS OF HOLDERS OF FIRST BANK
COMMON STOCK AND NORWEST COMMON STOCK."
BACKGROUND OF AND REASONS FOR THE CONSOLIDATION
First Bank's board of directors believes that the Consolidation is
advisable and in the best interest of First Bank and its shareholders. In
reaching its determination, the board of directors considered a number of
factors including but not limited to the following: the current and prospective
economic environment and competitive constraints facing independent community
banks such as First Bank; First Bank's board of directors' view of reasonably
available alternatives to First Bank shareholders; and the increased liquidity
and diversification of risk that the Consolidation would provide to First Bank
shareholders.
ADDITIONAL INTERESTS OF FIRST BANK MANAGEMENT IN THE CONSOLIDATION
First Bank's management will receive the same consideration for their
shares of First Bank common stock as the other First Bank shareholders. Certain
members of First Bank's management, however, may be deemed to have interests
that are in addition to and separate from the interests of First Bank's
shareholders generally. These are: (a) Joseph A. Fidel has signed a
Non-Competition Agreement which generally provides that in exchange for the
payment of two annual installments of $25,000 each, Mr. Fidel will not compete
with Norwest or its affiliates in Cibola County, New Mexico for a period of 24
months following the effective date of the Consolidation and (b) Antonio C.
Esparza has entered into an Employment and Non-Competition Agreement which
generally provides for the payment of base compensation of $84,275 per annum
(which may be increased based on Mr. Esparza's performance), and participation
in the Norwest employee benefit plans available to regular employees of Norwest
Companies in a similar position as well as the Norwest corporation severance pay
plan. Mr. Esparza's Employment and Non-Competition Agreement also provides that
he shall receive two annual installments of $50,000 each in exchange for his
agreement not to compete with Norwest or its affiliates in Cibola, McKinley and
Bernalillo Counties, New Mexico for a period of 24 months from the date of his
termination of employment with Norwest.
APPRAISAL RIGHTS
Under federal law, any shareholder of First Bank who objects to the
Consolidation has the right to receive cash equal to the value of the
shareholder's shares as measured on the date the Consolidation becomes
effective. 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
20
<PAGE>
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 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 C. 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 D 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 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 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 Bank common stock until after the certificates have been
surrendered for exchange.
21
<PAGE>
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 Bank common
stock upon receipt of a lost certificate affidavit and a bond indemnifying
Norwest for any claim that may be made against Norwest as a result of the lost,
stolen or destroyed certificates.
After completion of the Consolidation, no transfers will be permitted on
the books of First Bank. If, after completion of the Consolidation, certificates
for First 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 Bank, the exchange agent or any other person will be
liable to any former holder of First 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 and the OCC. The approval of the Federal Reserve Board is required because
Norwest is a bank holding company registered under the Bank Holding Company Act.
The approval of the OCC is required because First Bank will convert to a
national banking association immediately before the Consolidation, and the OCC
is the primary regulator of national banks.
Norwest has filed applications with the Federal Reserve Board and the OCC
requesting approval of the Consolidation. Both applications are 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 Bank
shareholders is fair. Regulatory approval does not constitute an endorsement or
recommendation of the Consolidation.
Norwest and First 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 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.
22
<PAGE>
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
AGREEMENT--Conditions to the Completion of the Consolidation" and "--Termination
of the Reorganization Agreement."
EFFECT ON EMPLOYEE BENEFIT PLANS
The Reorganization Agreement provides that, subject to any eligibility
requirements applicable to such plans, employees of First Bank will be entitled
to participate in those Norwest employee benefit and welfare plans specified in
the Reorganization Agreement. Eligible employees of First 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.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE CONSOLIDATION TO FIRST BANK
SHAREHOLDERS
The following is a summary of the anticipated U.S. federal income tax
consequences of the Consolidation to First Bank shareholders. The summary is
based on the parties' understanding of the U.S. federal income tax laws as
currently in effect and as currently interpreted. It does not cover issues of
state, local or foreign taxation. Nor does it address all aspects of U.S.
federal income taxation that may be important to particular shareholders in
light of their personal circumstances or to shareholders subject to special
rules under U.S. federal income tax laws. Future legislation, regulations,
administrative rulings and court decisions may alter the tax consequences
summarized below.
The anticipated U.S. federal income tax consequences to First Bank
shareholders are as follows:
- A shareholder who receives shares of Norwest common stock in exchange
for shares of First Bank common stock will not recognize any gain or
loss on the receipt of the shares of Norwest common stock, except for
cash received in lieu of a fractional share. The shareholder's gain or
loss on the receipt of cash in lieu of a fractional share will equal
the difference between the cash received and the basis of the
fractional share exchanged.
- A shareholder's tax basis in the shares of Norwest common stock
received will be the same as the shareholder's tax basis in the shares
of First Bank common stock exchanged in the Consolidation, less any
cash received in lieu of fractional shares.
- The holding period of the shares of Norwest common stock received by a
shareholder will include the holding period of the shareholder's
shares of First Bank common stock exchanged in the Consolidation, but
only if the shares of First Bank common stock were held as a capital
asset at the time the Consolidation is completed.
First Bank is not required to complete the Consolidation unless it receives
an opinion of its counsel that these will be the U.S. federal income tax
consequences of the Consolidation. The opinion may make certain assumptions and
may rely on representations of the parties to the Consolidation as to factual
matters. It will represent counsel's judgment as to the tax status of the
Consolidation under the Code and will not be binding on the IRS. There is no
assurance that the IRS will not take a contrary position regarding the tax
consequences of the Consolidation. Nor is there is any assurance that the IRS
would not prevail in the event the tax consequences of the Consolidation were
litigated.
23
<PAGE>
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
TAX CONSEQUENCES TO THEM FROM THE CONSOLIDATION.
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 Bank
shareholders who are considered to be "affiliates" of First 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 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 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
Bank that (a) 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 and (b) the person will not
sell or reduce the person's risk relative to any Norwest common stock until such
time as financial results covering at least 30 days of post-Consolidation
combined operations of Norwest and First Bank have been published.
Norwest has agreed to use its best efforts to deliver to First Bank signed
representations of each director and each executive officer of Norwest that such
person will not sell any Norwest common stock or First Bank common stock during
the period beginning 30 days before the Consolidation and ending on publication
of financial results covering at least 30 days of combined operations of Norwest
and First Bank have been published.
This Proxy Statement-Prospectus does not cover any resales of Norwest
common stock received by affiliates of First 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
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 Bank's operations
after the Consolidation.
24
<PAGE>
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."
25
<PAGE>
THE REORGANIZATION AGREEMENT
The following is a summary of certain provisions of the Reorganization
Agreement, a copy of which is attached to this Proxy Statement-Prospectus as
Appendix A. The Reorganization Agreement is incorporated by reference into this
Proxy Statement-Prospectus. See "WHAT INCORPORATED BY REFERENCE MEANS."
This summary is qualified in its entirety by reference to the full text of
the Reorganization Agreement. First 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's acquisition of First Bank will be accomplished through
a two-step process. First, First Bank will convert to a national banking
association from a New Mexico banking corporation. Second, immediately after its
conversion to a national bank, First Bank will consolidate with a newly-formed,
wholly-owned subsidiary of Norwest. First Bank will be the surviving bank in the
Consolidation. (paragraph 1(a))
In the Consolidation, Norwest will exchange shares of Norwest common stock
for shares of First Bank common stock. Norwest will own all of the outstanding
shares of First Bank after the Consolidation is completed. Norwest stockholders
will continue to own shares of Norwest common stock. (paragraph 1(a))
Consideration.
Norwest common stock. As part of the Consolidation, each share of First
Bank common stock outstanding immediately before the Consolidation will be
converted into the right to receive the number of shares of Norwest common stock
determined by dividing 212,500 by the number of shares of First Bank common
stock then outstanding. (paragraph 1(a)) As of the date of this Proxy
Statement-Prospectus, there were 26,996 shares of First Bank common stock
outstanding. Because the Reorganization Agreement prohibits First Bank from
issuing additional shares of First Bank common stock without Norwest's consent,
you may assume that the number of shares of First Bank common stock outstanding
will remain constant at 26,996 shares. As a result, each share of First Bank
common stock will be converted into the right to receive approximately 7.87
shares of Norwest common stock
THE PRICE OF NORWEST COMMON STOCK ON THE DAY THE CONSOLIDATION IS
COMPLETED MAY BE HIGHER OR LOWER THAN THE PRICE OF NORWEST COMMON STOCK ON THE
DAY OF THE SPECIAL MEETING. BECAUSE THE EXCHANGE RATIO IS FIXED, 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 BEFORE OR
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))
26
<PAGE>
Completion of the Consolidation. Norwest and First Bank expect the
Consolidation to be completed promptly after approval of the Consolidation by
First 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))
REPRESENTATIONS AND WARRANTIES
The Reorganization Agreement contains various representations and
warranties by Norwest and First 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 Bank and Norwest pending completion of the
Consolidation. Some of the more important covenants are summarized below.
Conduct of Business.
First Bank. First 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 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 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 except upon exercise of outstanding options,
(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 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 Bank (b) make a tender or exchange offer for any shares of its
common stock or other equity security of First Bank, (c) purchase, lease or
otherwise acquire the assets of First Bank except in the ordinary course of
business or (d) merge, consolidate or otherwise combine with First Bank. First
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))
27
<PAGE>
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 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 the conduct of First 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 Bank who may
reasonably be deemed an "affiliate" of First Bank within the meaning of each
term used in Rule 145 of the Securities Act. (paragraphs 4(l) and 4(m)) See
"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 Bank of a favorable
tax opinion. (paragraphs 6 and 7) See "THE CONSOLIDATION--Certain U.S. Federal
Income Tax Consequences of the Consolidation to First 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 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 Bank can agree to
terminate the Reorganization Agreement at any time before completion of the
Merger. (paragraph 9(a)(i))
Termination by Either Norwest or First Bank. Either Norwest or First Bank
can terminate the Reorganization Agreement if any of the following occurs:
- The Consolidation has not been completed by June 30, 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))
28
<PAGE>
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 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 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 Bank
shareholders approve the Consolidation if the amendment would change in a manner
adverse to First Bank shareholders the consideration to be received by First
Bank shareholders in the Consolidation. (paragraph 17)
EXPENSES
Norwest and First Bank will each pay their own expenses in connection with
the Consolidation, including fees and expenses of their respective independent
auditors and counsel.
29
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF FIRST BANK
COMMON STOCK AND NORWEST COMMON STOCK
First Bank currently is a New Mexico banking corporation. The rights of
First Bank shareholders are governed by the New Mexico Banking Act and First
Bank's articles of incorporation 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 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 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 dated October 10, 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 "WHAT INCORPORATION BY REFERENCE MEANS"
AND "WHERE YOU CAN FIND MORE INFORMATION."
CAPITAL STOCK
Norwest. Norwest's restated certificate of incorporation currently
authorizes the issuance of 1,000,000,000 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 December 31,
1997, there were 758,619,464 shares of Norwest common stock outstanding,
1,031,405 shares of Norwest preferred stock outstanding, and no shares of
Norwest preference stock outstanding.
First Bank. First Bank articles of incorporation authorize the issuance of
27,000 shares of common stock, par value $10 per share. As of the record date
for the Special Meeting, there were 26,996 shares of First 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 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
30
<PAGE>
to negotiate on behalf of all stockholders the terms of any proposed takeover.
Although not their purpose, the rights may deter takeover proposals.
First Bank. First Bank has no preferred share purchase rights. First Bank
does have preemptive rights in favor of its shareholders.
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 15. Directors of Norwest may be removed with or
without cause by the affirmative vote of the holders of a majority of the shares
of Norwest capital stock entitled to vote thereon. Vacancies on 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.
First Bank. First Bank's bylaws provide for a board of directors consisting
of not less than 5 nor more than 25 shareholders each serving until the next
annual meeting or until his or her earlier death, resignation or removal. The
number of directors of First Bank is currently fixed at 6. Directors of First
Bank may be removed with or without cause by the shareholders. First Bank's
certificate of incorporation provides for cumulative voting in the election of
directors, which means that no director shall be removed unless the votes cast
against a motion for his or her removal are less than the total number of shares
outstanding divided by the number of authorized directors. Vacancies on First
Bank'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 shareholders.
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 Bank. First Bank's articles of incorporation may be amended only if
the proposed amendment is approved by First Bank's board of directors and
thereafter approved by at least two-thirds of the outstanding First Bank common
stock entitled to vote thereon at a meeting of the shareholders. First Bank's
bylaws may be amended by a majority of First Bank's entire board of directors or
by a majority of the outstanding First Bank common stock entitled to vote
thereon at a meeting of the shareholders.
31
<PAGE>
APPROVAL OF MERGERS AND ASSET SALES
Norwest. Except as described below, the affirmative vote of a majority of
the outstanding shares of Norwest common stock entitled to vote thereon is
required to approve a merger or consolidation involving Norwest or the sale,
lease or exchange of all or substantially all of Norwest's corporate assets. No
vote of the stockholders is required, however, in connection with a merger in
which Norwest is the surviving corporation and (a) the agreement of merger for
the merger does not amend in any respect Norwest's restated certificate of
incorporation, (b) each share of capital stock outstanding immediately before
the merger is to be an identical outstanding or treasury share of Norwest after
the merger and (c) the number of shares of capital stock to be issued in the
merger (or to be issuable upon conversion of any convertible instruments to be
issued in the merger) does not exceed 20% of the shares of Norwest's capital
stock outstanding immediately before the merger.
First Bank. The affirmative vote of at least two-thirds of the outstanding
First Bank common stock entitled to vote thereon is required to approve a merger
or consolidation involving First Bank. The affirmative vote of a majority of
First Bank common stock entitled to vote thereon is required to approve the
sale, lease or exchange of all or substantially all of First Bank's corporate
assets.
APPRAISAL RIGHTS
Norwest. Section 262 of the DGCL provides for stockholder appraisal rights
in connection with mergers and consolidations generally; however, appraisal
rights are not available to holders of any class or series of stock that, at the
record date fixed to determine stockholders entitled to receive notice of and to
vote at the meeting to act upon the agreement of merger or consolidation, were
either (a) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (b) held of record by more than 2,000
stockholders, so long as stockholders receive shares of the surviving
corporation or another corporation whose shares are so listed or designated or
held by more than 2,000 stockholders. Norwest common stock is listed on the New
York Stock Exchange and the Chicago Stock Exchange and currently held by more
than 2,000 stockholders. As a result, assuming that the other conditions
described above are satisfied, holders of Norwest common stock will not have
appraisal rights in connection with mergers and consolidations involving
Norwest.
First Bank. Section 58-4-10 of the New Mexico Banking Act provides for
shareholder appraisal rights in connection with mergers and consolidations if
written demand is made within 30 days after the effective date of the
transaction accompanied by the surrender of the stock certificates. See "THE
CONVERSION--Appraisal Rights" and "THE CONSOLIDATION--Appraisal Rights."
SPECIAL MEETINGS.
Norwest. Under the DGCL, special meetings of stockholders may be called by
the board of directors or by such persons as may be authorized in the
certificate of incorporation or bylaws. 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 Bank. Section 58-1-64 of the New Mexico Banking Act provides that
special meetings of First Bank shareholders may be called at any time by the New
Mexico Banking Commissioner, or at least one-third of the directors, or the
holder or holders of at least 25% of the outstanding voting shares.
32
<PAGE>
First Bank's bylaws provide that special meetings of shareholders may be called
by the board of directors, or by three or more holders owning, in the aggregate,
not less than 10% of all shares entitled to vote at the meeting.
DIRECTOR DUTIES
Norwest. The DGCL does not specifically enumerate directors' duties. In
addition, the DGCL does not contain any provision specifying what factors a
director must and may consider in determining a corporation's best interests.
However, judicial decisions in Delaware have established that directors, in
performing their duties, are bound to use that amount of care which ordinarily
prudent men would use in similar circumstances.
First Bank. Section 58-1-66 of the New Mexico Banking Act contains the
minimum duties of the board of directors which are:
(a) to review, at least quarterly, the following transactions that have
occurred since the last review:
(i) each loan, advance, discount, overdraft and purchase or sale of a
security that exceeds in amount one-tenth of one percent of the
capital and surplus of the corporation or twenty-five thousand
dollars ($25,000), whichever is larger; and
(ii) every increase in loans, advances, discounts and overdrafts that
exceeds the amount specified in Paragraph (i) of this subsection
or with the increase will exceed it and every purchase or sale of
a security that, together with other such transactions in the
security during the preceding three months, involves that amount,
and
(b) to examine, at least once in every calendar year at intervals of not
more than fifteen months, all the affairs of the state bank, including
the character and value of investments and loans and the efficiency of
operating procedures.
Section 53-11-35 of the New Mexico Business Corporation Act provides that
directors shall perform their duties in good faith, in a manner the director
believes to be in or not opposed to the best interests of First Bank.
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 Bank. Pursuant to Section 58-1-71 of the New Mexico Banking Act, any
action required or permitted to be taken at a shareholders' meeting or a
directors' meeting may be taken without a meeting if all of the shareholders or
directors who would have been entitled to vote upon the action consent in
writing.
33
<PAGE>
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 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 Bank. First Bank's articles of incorporation and bylaws contain no
provisions limiting director or officer liability.
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 Bank. Pursuant to Section 53-11-4.1 of the New Mexico Business
Corporation Act, First Bank has the power to indemnify a director or officer if
the director or officer acted in good faith and reasonably. First Bank is
obligated to indemnify a director or officer who, in the opinion of the board of
directors, has been wholly successful in the defense of a proceeding seeking to
impose personal liability or if ordered to do so by court order.
34
<PAGE>
First Bank may pay expenses incurred in defending the proceedings specified
above in advance of their final disposition, provided that 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. First Bank may
maintain insurance, at its expense, to protect itself and any directors,
officers, employees or agents of First Bank or another entity against any
expense, liability or loss, regardless of whether First Bank has the power or
obligation to indemnify that person against such expense, liability or loss
under New Mexico law. The right to indemnification is not exclusive of any other
right which any person may have or acquire under any statute, provision of First
Bank's certificate of incorporation or bylaws, agreement, vote of shareholders
or disinterested directors or otherwise.
DIVIDENDS
Norwest. Delaware corporations may pay dividends out of surplus or, if
there is no surplus, out of net profits for the fiscal year in which declared
and for the preceding fiscal year. Section 170 of the DGCL also provides that
dividends may not be paid out of net profits if, after the payment of the
dividend, capital is less than the capital represented by the outstanding stock
of all classes having a preference upon the distribution of assets. Norwest is
also subject to Federal Reserve Board policies regarding payment of dividends,
which generally limit dividends to operating earnings. See "CERTAIN REGULATORY
CONSIDERATIONS PERTAINING TO NORWEST."
First Bank. First Bank's articles of incorporation provide that the board
of directors may declare dividends or authorize distributions not more than once
in each calendar quarterly, provided: (a) the undivided profits account has been
maintained in accordance with New Mexico law and (b) the reserves against
deposits required by law will not be impaired.
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 Bank. First Bank's bylaws provide that the directors shall be elected
by the stockholders at the shareholders' annual meeting. First Bank has no
advance notice or informational procedures required for a shareholder to bring a
matter before the annual meeting.
35
<PAGE>
INFORMATION ABOUT FIRST BANK
GENERAL
First Bank is a state chartered bank, originally chartered as a national
bank on August 11, 1958, and converted to a state chartered institution as of
September 11, 1992. First Bank's principal place of business is located at 201
North First Street, Grants, New Mexico 87020. It has one branch located in
Milan, New Mexico. The bank's market area consists primarily of areas located
principally within Cibola, Valencia, McKinley, Bernalillo Counties, New Mexico
and to a lesser extent parts of Catron, Socorro, Sandoval Counties. The bank is
a full service, independent community bank which provides a full range of
commercial banking services, including traditional deposit services and
commercial, interim construction, consumer, home improvement, real estate,
agricultural and industrial loans.
At December 31, 1997, the bank had total assets of approximately $44.8
million, total deposits of approximately $41.0 million and total shareholders'
equity of approximately $3.5 million.
REGULATION AND SUPERVISION
The FDIC and New Mexico Financial Institutions Division are authorized to
conduct examination of First Bank. First Bank operates under the laws of the
United States and State of New Mexico. Under these generally applicable federal
and state restrictions and requirements, the bank must maintain reserves against
deposits and is restricted with respect to the nature and amount of loans which
it may make, the interest it may charge on these loans and the conditions under
which it may pay dividends on its capital stock.
PROPERTIES
First Bank conducts its operations at its principal office located at 201
North First Street, Grants, New Mexico. The outstanding common stock of First
Bank is owned by 23 stockholders.
The bank owns its principal office and motor branch facility in Grants, New
Mexico. It leases its Milan Branch in Milan, New Mexico from Milan Townsite
under a five year lease expiring in 1998. The bank also currently has three
stand-alone automatic teller machines, located in the Smiths grocery store in
Grants, the John Brooks grocery store in Milan, and the Lobo Canyon Shopping
Center in Grants.
First Bank's main facility consists of a single structure located in
Grants, New Mexico. The main facility is 6000 square fee, which houses the
bank's lending, teller operations and accounting. The 201 North Second location,
approximately 2849 square fee, serves as a motor branch facility and house the
electronic data processing facility.
COMPETITION
First Bank experiences competition in both attracting deposits and lending
funds principally from other commercial banks. First Bank also competes with
mortgage companies and insurance companies. Competition for deposits comes
primarily from other commercial banks. The primary factors in competing for
deposits are interest rates paid on accounts and extent of services offered.
36
<PAGE>
LEGAL PROCEEDINGS
In the normal course of its business, First Bank is from time to time
involved in legal proceedings. First Bank's management is not aware of any
pending or threatening legal proceeding that upon resolution would have a
material adverse effect on its financial condition or results of operations.
MARKET INFORMATION AND DIVIDENDS
There is no public market for shares of First Bank common stock. There are
26,996 shares outstanding held by 23 holders of record.
During 1997 and 1996 First Bank declared dividends on First Bank common
stock totaling 7.20 per share and 5.50 per share, respectively.
BENEFICIAL OWNERSHIP OF FIRST BANK COMMON STOCK BY FIRST BANK MANAGEMENT AND
PRINCIPAL SHAREHOLDERS
The following table shows, as of the record date for the special meeting,
the number of shares of First Bank common stock beneficially owned by each
director and executive officer of First Bank and by each person known by First
Bank to beneficially own more than 5% of the outstanding shares of First Bank
common stock.
NUMBER OF SHARES
NAME BENEFICIALLY OWNED PERCENT OF OUTSTANDING
Dubl J. Corporation (1) 2,543 9.4%
Lynn E. Elkins (2) 4,000 14.8
Antonio F. Esparza (2)((3) 2,741 10.2
Joseph A. Fidel (2)(4) 165 *
Jamez J. Hanosh (2) 2,558 9.5
Frank McClure (2) 2,609 9.7
Gilbert Manning 2,015 7.5
Orville Moore (2) 2,663 9.9
Teofilo Savedra 2,566 9.5
- -----------------------
(1) Affiliate of Joseph A. Fidel
(2) Director of First Bank
(3) Executive officer of First Bank
(4) May be deemed to beneficially own an additional 2,543 shares (9.4%) by
reason of his affiliation with Dubl J. Corporation.
* Less than 1%
37
<PAGE>
FIRST BANK'S MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FIRST BANK'S FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is First Bank's management's discussion of the significant
factors affecting First Bank's result of operations for the years ended December
31, 1997 and 1996 and its financial condition as of December 31, 1997 and 1996.
This discussion should be read in conjunction with First Bank's audited and
unaudited financial statements and accompanying footnotes and other selected
financial data presented elsewhere herein.
OVERVIEW OF FIRST BANK'S OPERATIONS
First Bank, a state chartered bank headquartered in Grants, New Mexico,
derives all of its revenues and income from banking operations. The bank is a
full service independent community bank that provides a full range of commercial
banking services. First Bank has been serving Cibola County and its defined
trade area for approximately 40 years.
First Bank's earnings depend primarily on First Bank's net interest income,
the difference between the income earned on First Bank's loans and investments
and interest paid on deposits. Factors affecting net interest income are the
type, volume and quality of First Bank's assets, the type and volume of its
deposits and the relative sensitivity of First Bank's interest earning assets
and its interest bearing deposits to changes in interest rates.
EARNINGS PERFORMANCE
First Bank's net income was $364,000 for the year ended December 31, 1997,
a decrease of 2.6% over the $374,000 earned in 1996. Net income per common share
was $13.49 in 1997 compared with $13.84 in 1996. The return on equity was 10.78%
and return on assets was 0.85% for 1997, compared to 11.99% and 0.89%,
respectively, in 1996.
INCOME STATEMENT ANALYSIS
Net Interest Income. Net interest income is the difference between interest
earned on assets and interest paid on liabilities. Changes in the mix and volume
of earning assets and interest-bearing liabilities, their related yields and
overall interest rates have a major impact on earnings.
Total net interest income was $1,933,000 in 1997, a 16.9% increase over the
$1,654,000 in 1996. This increase over 1996 can be attributed to a decrease in
the interest rates paid on deposits during 1997.
Provision for Credit Losses. The provision for credit losses reflects
management's judgment of the cost associated with credit risk inherent in the
loan portfolio. The provision for loan losses was $25,000 in 1997, compared with
zero in 1996. Net charge-offs were $24,000 in 1997 and $6,000 in 1996.
Non-interest Income. Non-interest income is primarily comprised of service
charges on deposits and was essentially unchanged in 1997 from 1996.
Non-interest Expense. Non-interest expenses increased 13.8% in 1997 to
$1,721,000. The increase is attributable to higher personnel, equipment and
other expenses.
38
<PAGE>
Income Taxes. First Bank is subject to federal taxes and files a cash basis
tax return. The effective income tax rate can fluctuate each year as a result of
the timing and impact of cash transactions. First Bank's effective tax rates for
the years ended December 31, 1997 and 1996 were 39.22% and 32.45%, respectively.
BALANCE SHEET ANALYSIS
Earning Assets. At December 31, 1997, earning assets were $40,244,000
compared with $36,987,000 at December 31, 1996. This increase was the result of
a $1,642,000 increase in the loan portfolio and a $1,500,000 increase in
interest-bearing deposits with banks.
Credit Risk Management. Credit risk management includes pricing loans to
cover anticipated future credit losses, funding costs and allow for a profit
margin. First Bank manages exposure to credit risk through loan portfolio
diversification by customer, product, and industry. First Bank's credit risk
management policies and activities help mitigate the credit risk in its loan
portfolio.
Allowance for Loan Losses. At December 31, 1997, the allowance for loan
losses was $360,000 or 1.78% of loans outstanding, compared to $359,000 or 1.93%
of loans outstanding at December 31, 1996.
The allowance represents an amount which, in First Bank management's
judgment, will be adequate to absorb all losses that can reasonably be
anticipated based on current conditions. In determining the adequacy of the
allowance, First Bank evaluates the risk characteristics of the loan portfolio.
This evaluation takes into consideration such factors as changes in the nature
and volume of the loan portfolio, current economic conditions that may affect
the borrowers' ability to pay, overall portfolio quality, and review of specific
problem loans.
Non-performing Loans. Loans are placed on nonaccrual status when First 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, non-performing loans amounted to
$372,000 or 1.8% of loans outstanding, compared to $77,000 or 0.4% of loans
outstanding at December 31, 1996.
FUNDING SOURCES
At December 31, 1997, interest-bearing liabilities totaled $34,131,000 an
increase of $3,756,000 or 12.4% over December 31, 1996. The increase was
principally due to a $3,251,000 increase in time deposits. First Bank relies on
deposits from within its markets, and has no purchased deposits or short-term
borrowings.
INTEREST RATE SENSITIVITY AND LIQUIDITY MANAGEMENT
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 Bank's board of directors
and management forms and 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.
39
<PAGE>
Interest sensitivity risk is the risk that future changes in interest rates
will reduce net interest income or the net market value of the company's balance
sheet. Management monitors the interest sensitivity risk and ensures it is
within acceptable limits.
Liquidity Management. Liquidity management involves planning to meet
funding needs and cash flow requirements of customers and First Bank at a
reasonable cost. At December 31, 1997, First Bank had approximately $13,504,000
in cash, interest-bearing deposits and marketable securities available to meet
liquidity needs. Another factor providing a favorable liquidity position is
First Bank's deposit base. During the past year, total deposits increased 10%.
CAPITAL
Quantitative measures established by regulation to ensure capital adequacy
require First Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital to risk-weighted assets and average
total assets.
As of December 31, 1997, the most recent notification from the FDIC
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 total risk-based, Tier 1 leverage ratios as set forth the
table:
For Capital To be Considered
Minimum Capital Standards Adequacy Well-Capitalized
- ----------------------------------------- ---------------- -------------------
Total capital to risk weighted assets 8.00% 10.00%
Tier 1 Equity to risk weighted assets 4.00% 6.00%
Tier 1 Equity to total assets 4.00% 5.00%
There are no conditions or events since that notification that management
believes have changed First Bank's category.
TAXES
First Bank is subject to federal taxes and files a cash basis tax return.
The effective income tax rate can fluctuate each year as a result of the timing
and impact of cash transactions. First Bank's effective tax rates for the years
ended December 31, 1997 and 1996 were 39.22% and 32.45%, respectively.
IMPACT OF INFLATION, CHANGING PRICES AND MONETARY POLICIES
The financial statements and related financial data concerning First Bank
presented in this Proxy Statement-Prospectus have been prepared in accordance
with generally accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars without
considering changes in relative purchasing power of money over time due to
inflation. The primary effect of inflation on the operation of First Bank is
reflected in increased operating costs. Unlike most industrial companies,
virtually all of the asset and liabilities of a financial institution are
monetary in nature. As a result, changes in interest rates have a more
significant effect on the performance of a financial institution than do the
effects of changes in the general rate of inflation and changes in prices.
Interest rates can be highly sensitive to many factors which are beyond the
control of
40
<PAGE>
First Bank including the influence of domestic and foreign economic
conditions and the monetary and fiscal policies of the United States government
and more particularly the Federal Reserve Board. Actions of the Federal Reserve
Board can influence the growth of bank loans, investments and deposits and
affect the interest rates charged on loans and paid on deposits. The nature,
timing and impact of any future changes in federal monetary and fiscal policies
on First Bank and their results of operations are not predictable.
41
<PAGE>
CERTAIN REGULATORY AND OTHER
CONSIDERATIONS PERTAINING TO NORWEST
Norwest and its banking subsidiaries are subject to extensive regulation by
federal and state agencies. The regulation of bank holding companies and their
subsidiaries is intended primarily for the protection of depositors, federal
deposit insurance funds and the banking system as a whole and is not in place to
protect stockholders or other investors.
As discussed in more detail below, this regulatory environment, among other
things, may (a) restrict Norwest's ability to pay dividends on Norwest common
stock, (b) require Norwest to provide financial support to one or more of its
banking subsidiaries, (c) require Norwest and its banking subsidiaries to
maintain capital balances in excess of those desired by management, and/or (d)
require Norwest to pay higher deposit insurance premiums as a result of the
deterioration in the financial condition of depository institutions in general.
BANK REGULATORY AGENCIES
Norwest Corporation, as a bank holding company, is subject to regulation by
the Federal Reserve Board under the Bank Holding Company Act.
Norwest's national banking subsidiaries are regulated 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,
42
<PAGE>
more than 10% of the total amount of deposits of insured depository institutions
nationwide or, unless 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 mergers in
the state) or opt in early (thereby allowing interstate mergers prior to June 1,
1997). Norwest will be unable to consolidate its banking operations in one state
with those of another state if either state in question has opted out of the
Interstate Banking Act. The state of Texas has opted out of the Interstate
Banking Act. The state of Montana has opted out until at least the year 2001.
Norwest's acquisitions of banking institutions and other companies
generally are subject to the prior approval of the Federal Reserve Board and
other applicable federal or state regulatory authorities. In determining whether
to approve a proposed bank acquisition, federal banking regulators will
consider, among other factors, the effect of the acquisition on competition, the
public benefits expected to be received from the consummation of the
acquisition, the projected capital ratios and levels on a post-acquisition
basis, and the acquiring institution's record of addressing the credit needs of
the communities it serves, including the needs of low and moderate income
neighborhoods, consistent with the safe and sound operation of the bank, under
the Community Reinvestment Act of 1977, as amended.
DIVIDEND RESTRICTIONS
Norwest is a legal entity separate and distinct from its banking and other
subsidiaries. Its principal source of funds to pay dividends on its common and
preferred stock and debt service on its debt is dividends from its subsidiaries.
Various federal and state statutes and regulations limit the amount of dividends
that may be paid to Norwest by its banking subsidiaries without regulatory
approval.
Most of Norwest's banking subsidiaries are national banks. A national bank
must obtain the prior approval of the OCC to pay a dividend if the total of all
dividends declared by the bank in any calendar year would exceed the bank's net
income for that year combined with its retained net income for the preceding two
calendar years, less any required transfers to surplus or a fund for the
retirement of any preferred stock.
The OTS imposes substantially similar restrictions on the payment of
dividends to Norwest by its savings and loan association subsidiary. Norwest's
state-chartered banking subsidiaries also are subject to dividend restrictions
under applicable state law.
If, in the opinion of the applicable federal regulatory agency, a
depository institution under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial
condition of the bank, could include the payment of dividends), the regulator
may require, after notice and hearing, that such bank cease and desist from such
practice. The OCC has indicated that the payment of dividends would constitute
an unsafe and unsound practice if the payment would deplete a depository
institution's capital base to an inadequate level. Under the Federal Deposit
Insurance Act, an insured depository institution may not pay any dividend if the
institution is undercapitalized or if the payment of the dividend would cause
the institution to become undercapitalized. In addition, federal bank regulatory
agencies have issued policy statements which provide that depository
institutions and their holding companies should generally pay dividends only out
of current operating earnings.
43
<PAGE>
The ability of Norwest's banking subsidiaries to pay dividends to Norwest
may also be affected by various minimum capital requirements for banking
organizations, as described below. In addition, the right of Norwest to
participate in the assets or earnings of a subsidiary is subject to the prior
claims of creditors of the subsidiary.
HOLDING COMPANY STRUCTURE
Transfer of Funds from Banking Subsidiaries. Norwest's banking subsidiaries
are subject to restrictions under federal law that limit the transfer of funds
or other items of value from such subsidiaries to Norwest and its nonbanking
subsidiaries (including Norwest, "affiliates") in so-called "covered
transactions." In general, covered transactions include loans and other
extensions of credit, investments and asset purchases, as well as other
transactions involving the transfer of value from a banking subsidiary to an
affiliate or for the benefit of an affiliate. Unless an exemption applies,
covered transactions by a banking subsidiary with a single affiliate are limited
to 10% of the banking subsidiary's capital and surplus and, with respect to 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.
44
<PAGE>
REGULATORY CAPITAL STANDARDS AND RELATED MATTERS
Risk-Based Capital. The Federal Reserve Board, the OCC and the FDIC have
adopted substantially similar risk-based and leverage capital guidelines for
banking organizations. The guidelines are intended to ensure that banking
organizations have adequate capital given the risk levels of their assets and
off-balance sheet commitments.
The risk-based capital ratio is determined by classifying assets and
certain off-balance sheet financial instruments into weighted categories, with
higher levels of capital being required for those categories perceived as
representing greater risk. Under the capital guidelines, a banking
organization's total capital is divided into two tiers. "Tier 1 capital"
consists of common equity, retained earnings, qualifying noncumulative perpetual
preferred stock, a limited amount of qualifying cumulative perpetual preferred
stock and minority interests in the equity accounts of consolidated
subsidiaries, less certain items such as goodwill and certain other intangible
assets. "Tier 2 capital" consists of hybrid capital instruments, perpetual debt,
mandatory convertible debt securities, a limited amount of subordinated debt,
preferred stock that does not qualify as Tier 1 capital, and a limited amount of
the allowance for credit losses.
Under the Federal Reserve Board's risk-based capital guidelines for bank
holding companies, the minimum ratio of total capital to risk-adjusted assets
(including certain off-balance sheet items, such as stand-by letters of credit)
is currently 8%. The minimum Tier 1 capital to risk-adjusted assets is 4%. At
December 31, 1997, Norwest's total capital and Tier 1 capital to risk-adjusted
assets ratios were 11.01% and 9.09%, 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 December 31, 1997, Norwest's
leverage ratio was 6.63%.
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.
45
<PAGE>
Federal bank regulatory agencies require banking organizations that engage
in significant trading activity to calculate a charge for market risk.
Significant trading activity means trading activity of at least 10% of total
assets or $1 billion, calculated on a consolidated basis for bank holding
companies. Federal bank regulators may apply the market risk measure to other
banks and bank holding companies 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. Norwest has not historically engaged in significant
trading activity.
As an additional means to identify problems in the financial management of
depository institutions, the FDI Act requires federal bank regulatory agencies
to establish certain non-capital safety and soundness standards for institutions
for which they are the primary federal regulator. The standards relate generally
to operations and management, asset quality, interest rate exposure and
executive compensation. The agencies are authorized to take action against
institutions that fail to meet such standards.
Prompt Corrective Action. The FDI Act requires federal bank regulatory
agencies to take "prompt corrective action" with respect to FDIC-insured
depository institutions that do not meet minimum capital requirements. A
depository institution's treatment for purposes of the prompt corrective action
provisions will depend upon how its capital levels compare to various capital
measures and certain other factors, as established by regulation.
Federal bank regulatory agencies have adopted regulations that classify
insured depository institutions into one of five capital-based categories. The
regulations use the total capital ratio, the Tier 1 capital ratio and the
leverage ratio as the relevant measures of capital. A depository institution is
(a) "well capitalized" if it has a risk-adjusted total capital ratio of at least
10%, a Tier 1 capital ratio of at least 6% and a leverage ratio of at least 5%
and is not subject to any order or written directive to maintain a specific
capital level; (b) "adequately capitalized" if it has a risk-adjusted total
capital ratio of at least 8%, a Tier 1 capital ratio of at least 4% and a
leverage ratio of at least 4% (3% in some cases) and is not well capitalized;
(c) "undercapitalized" if it has a risk-adjusted total capital ratio of less
than 8%, a Tier 1 capital ratio of less than 4% or a leverage ratio of less than
4% (3% in some cases); (d) "significantly undercapitalized" if it has a
risk-adjusted total capital ratio of less than 6%, a Tier 1 capital ratio of
less than 3% or a leverage ratio of less than 3%; and (e) "critically
undercapitalized" if its tangible equity is less than 2% of total assets. At
December 31, 1997, 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
46
<PAGE>
plan to be acceptable, the depository institution's parent holding company must
guarantee that the institution will comply with the plan. The aggregate
liability of the parent holding company is limited to the lesser of (a) 5% of
the depository institution's total assets at the time it became undercapitalized
or (b) the amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to the institution as of the time it fails to comply with the plan. If an
undercapitalized depository institution fails to submit an acceptable plan, it
is treated as if it were significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized institutions are subject to the appointment of a receiver or
conservator.
FDIC INSURANCE
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.
47
<PAGE>
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 consolidated financial statements of First Bank of Grants as of
December 31, 1997 and for the year then ended included in this Proxy
Statement-Prospectus are included herein in reliance on the report of M. Scott
Edwards, independent certified public accountant, and upon the authority of Mr.
Edwards as an expert in accounting and auditing.
48
<PAGE>
LEGAL MATTERS
Stanley S. Stroup, Executive Vice President and General Counsel of
Norwest, has rendered a legal opinion that the shares of Norwest common stock
offered hereby, when issued in accordance with the Reorganization Agreement,
will be validly issued, fully paid and nonassessable. 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 Bank's shareholders will be passed upon for First Bank by Kelly,
Rammelkamp, Muehlenweg & Lucero, P.A., Albuquerque, New Mexico.
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 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 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. See "WHAT INCORPORATED
BY REFERENCE MEANS" at the beginning of this document.
49
<PAGE>
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 current reports on Form 8-K dated January 22, 1998 and April
14, 1998;
- Norwest's current report on Form 8-K dated October 10, 1997 containing
a description of the Norwest common stock; and
- Norwest's registration statement on Form 8-A dated December 6, 1988,
as amended pursuant to Form 8-A/A dated October 14, 1997, relating to
preferred stock purchase rights attached to shares of Norwest common
stock.
All reports and proxy statements filed by Norwest after the date of this
Proxy Statement-Prospectus and before the special meeting are automatically
incorporated by reference into this Proxy Statement-Prospectus.
This Proxy Statement-Prospectus may contain information that updates,
modifies or is contrary to information in one or more of the documents
incorporated by reference. Reports filed by Norwest with the SEC after the date
of this Proxy Statement-Prospectus may also contain information that updates,
modifies or is contrary to information in the documents incorporated by
reference. You should review these reports, as they may disclose a change in the
business prospects, financial condition or other affairs of Norwest since the
date of this Proxy Statement-Prospectus.
As explained above, you may read and copy all reports filed by Norwest with
the SEC at the SEC's public reference rooms. Norwest will provide, without
charge, copies of any report incorporated by reference into this Proxy
Statement-Prospectus, excluding exhibits other than those that are specifically
incorporated by reference to an exhibit in this Proxy Statement-Prospectus. You
may obtain a copy of any document incorporated by reference by writing or
calling Norwest as follows:
Norwest Corporation
Corporate Secretary
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
To ensure delivery of the copies in time for the special meeting, your
request should be received by Norwest by __________.
- --------------------------------------------------------------------------------
IN DECIDING HOW TO VOTE ON THE MERGER, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT-PROSPECTUS. NEITHER NORWEST NOR FIRST 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 APRIL
__, 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.
- --------------------------------------------------------------------------------
50
<PAGE>
M. SCOTT EDWARDS
CERTIFIED PUBLIC ACCOUNTANT
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
First Bank of Grants
We have audited the accompanying statements of condition of First Bank of Grants
as of December 31, 1997 and 1996 and the related statements of income, changes
in stockholder's equity, and cash flows for the years then ended. 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 audits 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 financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Bank of Grants at
December 31, 1997 and 1996 and the results of their operations and their cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
M. SCOTT EDWARDS, CPA
/s/ M. Scott Edwards
Las Cruces, New Mexico
February 6, 1998
- --------------------------------------------------------------------------------
M. SCOTT EDWARDS, CPA - 5455 WILSHIRE BLVD., SUITE 1614 - LOS ANGELES, CA 90036
MEMBER: AICPA
<PAGE>
FIRST BANK OF GRANTS
STATEMENTS OF CONDITION
DECEMBER 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS
Cash and due from banks ........................................... $ 3,602,951 $ 2,906,100
Interest bearing deposits with banks .............................. 9,400,000 7,900,000
Investment securities (market value of $10,559,552 and $10,425,349)
(Note 2) ........................................................ 10,557,849 10,442,989
Loans, net of unearned interest and allowance
for credit losses (Note 3) .............................. 19,925,712 18,284,266
Properties and equipment (Note 4) ................................. 532,507 528,271
Accrued income and other assets (Note 5) ......................... 736,892 732,682
----------- -----------
Total assets ........................... $44,755,911 $40,794,308
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Demand deposits .......................................... $ 6,913,613 $ 6,935,492
Savings/money market deposits ............................ 7,136,098 7,219,320
NOW deposits ............................................. 6,779,106 6,190,926
Other time deposits (Note 6) ............................. 20,215,548 16,964,612
----------- -----------
Total deposits ...................................... 41,044,365 37,310,350
Accrued interest and other liabilities (Note 7) .......... 248,375 190,491
----------- -----------
Total liabilities ................................... 41,292,740 37,500,841
----------- -----------
Commitments and Contingent Liabilities (Note 13)
SHAREHOLDERS' EQUITY:
Common stock, $10 par value;
27,000 shares authorized, 26,996 shares issued
and outstanding .......................................... 269,960 269,960
Surplus ........................................................... 1,630,000 1,630,000
Retained earnings ................................................. 1,563,211 1,393,507
----------- -----------
Total shareholders' equity .................................... 3,463,171 3,293,467
----------- -----------
Total liabilities and shareholders' equity .................... $44,755,911 $40,794,308
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
2
<PAGE>
FIRST BANK OF GRANTS
STATEMENTS OF INCOME
December 31
- --------------------------------------------------------------------------------
1997 1996
---- ----
Interest Income:
Interest and fees on loans ............. $2,052,011 $1,983,746
Interest on investment securities:
Taxable ........................... 543,350 533,347
Exempt from income tax ............ 41,956 34,977
Interest on deposits with banks ........ 545,499 552,350
---------- ----------
Total interest income ........ 3,182,816 3,104,420
---------- ----------
Interest Expense:
Interest on deposits ................... 1,249,827 1,450,285
---------- ----------
Total interest expense ............ 1,249,827 1,450,285
---------- ----------
Net interest income ............... 1,932,989 1,654,135
Provision for loan losses (Note 3) ......... 25,000 -0-
---------- ----------
Net interest income after provision
for loan losses ...................... 1,907,989 1,654,135
---------- ----------
Other Income:
Service charges on deposit accounts .... 313,674 305,596
Other income ........................... 98,064 105,948
---------- ----------
Total other income ................ 411,738 411,544
Other Expense:
Salaries and employee benefits (Note 8) 833,709 733,142
Occupancy expense ...................... 54,163 66,853
Equipment expense ...................... 72,462 67,794
Other operating expense ................ 760,347 644,802
---------- ----------
Total other expense ............... 1,720,681 1,512,591
---------- ----------
Income before income taxes ........ 599,046 553,088
Income taxes (Note 12) .................... 234,971 179,450
---------- ----------
Net income ................................. $ 364,075 $ 373,638
========== ==========
Net income per share of common stock ....... $ 13.49 $ 13.84
========== ==========
Average shares outstanding ................. 26,996 26,996
========== ==========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
3
<PAGE>
FIRST BANK OF GRANTS
STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
COMMON STOCK
Retained
Shares Par Value Surplus Earnings
------ --------- ------- --------
Balance at
December 31, 1995 ..... $26,996 $269,960 $1,630,000 $ 1,037,424
Net income ............ -0- -0- -0- 373,638
Dividends ............. -0- -0- -0- (148,479)
Prior Period Adjustment
Cash Value
Life Insurance ........ -0- -0- -0- 130,924
------- -------- ---------- ------------
Balance at
December 31,1996 ...... $26,996 $269,960 $1,630,000 $ 1,393,507
======= ======== ========== ============
Balance at
December 31, 1996 ..... 26,996 $269,960 $1,630,000 $ 1,393,507
Net income ............ -0- -0- -0- 364,075
Dividends ............. -0- -0- -0- (194,371)
------- -------- ---------- ------------
Balance at
December 31, 1997 ..... $26,996 $269,960 $1,630,000 $ 1,563,211
======= ======== ========== ============
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
4
<PAGE>
FIRST BANK OF GRANTS
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .............................................. $ 364,075 $ 373,638
Adjustments to reconcile net income to net
cash provided by operations:
Provision for loan losses/ORE Reserve .............. 25,000 44,743
Depreciation and amortization ...................... 75,923 64,935
(Increase) decrease in accrued income and
other assets ..................................... (4,209) (14,785)
Increase (decrease) in accrued interest and
other liabilities ................................ 57,884 (89,374)
----------- -----------
Total adjustments .............................. 154,598 5,519
----------- -----------
Net cash provided by operating activities .......... 518,673 379,157
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest bearing deposits with
banks ................................................. (1,500,000) 2,100,000
Proceeds from maturities of available-for-sale
and held-to-maturity securities ....................... 7,625,000 9,650,000
Purchases of securities to be held-to-maturity .......... (7,238,142) (9,832,516)
Purchases of securities available-for-sale .............. (501,718) -0-
Net (increase) decrease in loans ........................ (1,666,446) 6,022
Purchases of properties and equipment ................... (80,160) (26,271)
----------- -----------
Net cash (used) in investing activities ............... (3,361,466) 1,897,235
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in non-interest bearing demand,
savings and NOW deposit accounts ...................... 483,079 (5,247,498)
Net increase (decrease) in time deposits ................ 3,250,936 2,614,335
Dividends paid .......................................... (194,371) (148,478)
----------- -----------
Net cash provided by financing activities ............. 3,539,644 (2,781,641)
----------- -----------
Net increase in cash and due from banks ...................... 696,851 (505,249)
Cash and due from banks at beginning of year ................. 2,906,100 3,411,349
----------- -----------
Cash and due from banks at end of year ....................... $ 3,602,951 $ 2,906,100
=========== ===========
Interest paid ................................................ $ 1,252,405 $ 1,265,616
=========== ===========
Income taxes paid ............................................ $ 204,120 $ 210,280
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
5
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1997
- --------------------------------------------------------------------------------
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies follows:
BASIC ACCOUNTING POLICY
The accounting and reporting policies of the Company and its Subsidiary conform
to generally accepted accounting principles and to general practice within the
banking industry.
NATURE OF OPERATIONS
The Company operates two branch offices in the New Mexico County of Cibola. The
Bank's operating policy since its inception has emphasized retail banking. Most
of the Bank's customers are retail customers and small to medium sized
businesses.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and assumptions that
affect the reported amounts of assets and liabilities 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 those estimates.
INVESTMENT SECURITIES
The Bank's investments in securities are classified in two categories, as the
bank has no securities that are held for trading, and accounted for as follows.
- - Securities to be Held-to-Maturity. Bonds, notes and debentures for
which the Bank has the positive intent and ability to hold to maturity
are reported at cost, adjusted for amortization of premiums, and
accretion of discounts which are recognized in interest income using
the interest method over the period to maturity.
- - Securities Available-for-Sale. Securities available-for-sale consist of
bonds, notes, debentures, and certain equity securities not classified
as trading securities or as securities to be held-to-maturity.
Declines in the fair value of individual held-to-maturity and available-for-sale
securities below their cost that are other than temporary have resulted in
write-downs of the individual securities to their fair value. The related
write-downs have been included in earnings as realized losses.
Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate component of
shareholders' equity until realized.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
6
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1997
- --------------------------------------------------------------------------------
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Gains and losses on the sale of securities available-for-sale are determined
using the specific-identification method. Premiums and discounts are amortized
into interest income using a level yield method.
On January 1, 1994, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, 'Accounting for Certain Investments in Debt and Equity
Securities.O Certain securities are deemed by management to be
available-for-sale and, in accordance with SFAS No. 115, are reported at fair
value (based on quoted market prices) with net unrealized gains and losses
reported as a separate component of stockholders' equity. The remaining
securities are deemed by management to be held-to-maturity and are therefore
reported at amortized cost.
LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans are stated at the amount of unpaid principal, reduced by unearned
interest and the allowance for credit losses. Unearned interest on some
installment loans is recognized as income over the terms of the loans by the
sum-of-the-months-digits method. Interest on other loans is calculated using the
simple interest method on daily balances of the principal amount outstanding.
The allowance for credit losses is established through a provision for credit
losses charged to expenses. The allowance represents an amount which, in
management's judgment, will be adequate to absorb probable losses on existing
loans that may become uncollectible. Management's judgment in determining the
adequacy of the allowance is based on evaluations of the collectibility of
loans. These evaluations take into consideration such factors as changes in the
nature and volume of the loan portfolio, current economic conditions that may
affect the borrowers' ability to pay, overall portfolio quality, and review of
specific problem loans.
Loans are placed on nonaccrual status when management
believes that the borrower's financial condition, after giving consideration to
economic and business conditions and collection efforts, is such that collection
of interest is doubtful (see Note 3). Loans are charged against the allowance
for credit losses when management believes that the collectibility of the
principal is unlikely.
INTEREST INCOME ON LOANS
Interest on loans is accrued and
credited to income based on the principal amount outstanding. The accrual of
interest on loans is discontinued when, in the opinion of management, there is
an indication that the borrower may be unable to meet payments as they become
due. Upon such discontinuance, all unpaid accrued interest is reversed.
LOAN ORIGINATION FEES AND COSTS
Loan origination fees and certain direct origination costs are taken to income
and expense as they occur. Although a deviation from generally accepted
accounting principals, the results are not deemed material.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
7
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1997
- --------------------------------------------------------------------------------
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTIES AND EQUIPMENT
Office equipment, buildings, and leasehold improvements are stated at cost less
accumulated depreciation computed using both the straight-line and accelerated
methods over the estimated useful lives of the respective assets.
INCOME TAXES
Provisions for income taxes are based on amounts reported in the statement of
income (after exclusion of non-taxable income such as interest on state and
municipal securities) and include deferred taxes on temporary differences in the
recognition of income and expense for tax and financial statement purposes.
Deferred tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled as
prescribed in SFAS No. 109, Accounting for Income Taxes. As changes in tax laws
or rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.
NET INCOME PER SHARE OF COMMON STOCK
Net income per share of common stock is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
FINANCIAL INSTRUMENTS
The Bank accounts for various financial instruments to which it is a party in
the following manner--
Other Off-Balance-Sheet Instruments. Off Balance Sheet Financial Instruments. In
the ordinary course of business the Bank has entered into off-balance-sheet
financial instruments consisting of commitments to extend credit, commitments
under credit card arrangements, commercial letters of credit and standby letters
of credit. Such financial instruments are recorded in the financial statements
when they are funded or related fees are incurred or received.
EFFECT OF NEW FINANCIAL ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of
a Loan". SFAS No. 114, as amended by SFAS No. 118, is effective for the Bank for
the year beginning January 1, 1995 and requires that impaired loans that are
within the scope of this Statement be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate, or,
as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. For year-ended
December 31, 1996 and 1997, the Bank had no loans which required accounting
under SFAS No. 114.
CASH AND CASH EQUIVALENTS
For the purpose of presentation in the Statements of Cash Flows, cash and cash
equivalents are defined as those amounts included in the balance sheet caption,
"Cash and Due from Banks."
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
8
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1997
- --------------------------------------------------------------------------------
Note 2. INVESTMENT SECURITIES
The carrying amounts of investment securities and their approximate market
values at December 31, 1997 were as follows:
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ---------- ---------- ----------
Securities available-for-sale
December 31, 1997:
Equity $ -0- $ -0- $ -0- $ -0-
U.S. Government and agency 501,198 3,489 -0- 504,687
State and municipal -0- -0- -0- -0-
----------- ------ ------- -----------
$ 501,198 $3,489 $ -0- $ 504,687
=========== ====== ======= ===========
Securities to be held-to-maturity
December 31, 1997:
U.S. Government and agency $ 9,158,153 $ -0- $ 9,038 $ 9,149,115
State and municipal 898,498 7,252 -0- 905,750
----------- ------ ------- -----------
$10,056,651 $7,252 $ 9,038 $10,054,865
=========== ====== ======= ===========
There were no gross realized gains and gross realized losses on sales of
securities. The scheduled maturities of securities to be held-to-maturity and
securities available-for-sale at December 31, 1997 were as follows:
Securities to be Securities
held-to-maturity available-for-sale
---------------------- ------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- -------- --------
Due in one year or less $ 6,917,956 $ 6,909,333 $ -0- $ -0-
Due from one year
to five years 3,039,151 3,050,208 501,198 504,687
Due from five years
to ten years -0- -0- -0- -0-
Due after ten years 99,544 95,324 -0- -0-
----------- ----------- -------- --------
$10,056,651 $10,054,865 $501,198 $504,687
=========== =========== ======== ========
Investment securities with a carrying value of approximately $5,583,849 and
$8,532,440 at December 31, 1997 and 1996, were pledged to secure public deposits
and for other purposes as required or permitted by law.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
9
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 2. INVESTMENT SECURITIES
The carrying amounts of investment securities and their approximate
market values at December 31, 1996 were as follows:
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- -----------
Securities available-for-sale
December 31, 1996:
Equity $ -0- $ -0- $ -0- $ -0-
U.S. Government
and agency -0- -0- -0- -0-
State and municipal -0- -0- -0- -0-
----------- ------ ------- -----------
$ -0- $ -0- $ -0- $ -0-
=========== ====== ======= ===========
Securities to be held-to-maturity
December 31, 1996:
U.S. Government and
agency $ 9,765,401 $ -0- $21,952 $ 9,743,449
State and municipal 677,588 4,312 -0- 681,900
----------- ------ ------- -----------
$10,442,989 $4,312 $21,952 $10,425,349
=========== ====== ======= ===========
There were no gross realized gains and gross realized losses on sales of
securities. The scheduled maturities of securities to be held-to-maturity and
securities available-for-sale at December 31, 1996 were as follows:
Securities to be Securities
held-to-maturity available-for-sale
------------------------- ------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- --------- -----
Due in one year or less $ 8,067,636 $ 8,058,958 $-0- $-0-
Due from one year
to five years 2,275,868 2,269,675 -0- -0-
Due from five years
to ten years -0- -0- -0- -0-
Due after ten years 99,485 96,716 -0- -0-
----------- ----------- ----- -----
$10,442,989 $10,425,349 $-0- $-0-
=========== =========== ===== =====
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
10
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 3. LOANS
A summary of the loan portfolio by major category follows:
1997 1996
------------ ------------
Consumer $ 2,449,822 $ 2,375,089
Real Estate 11,176,885 5,580,284
Commercial 6,915,446 10,936,418
Other overdrafts 6,915 8,981
------------ ------------
Total loans 20,549,068 18,900,772
Less:
Unearned interest (263,139) (257,171)
Allowance for loan losses (360,217) (359,335)
------------ ------------
Loans, net $ 19,925,712 $ 18,284,266
============ ============
Loans on which the accrual of interest has been discontinued or reduced amounted
to $372,262 and $77,467 at December 31, 1997 and 1996. If interest on those
loans had been accrued, such income would have approximated $39,000 and $8,000
for 1997 and 1996.
An analysis of the change in the allowance for credit losses follows:
1997 1996
--------- ---------
Balance at beginning of year $ 359,335 $ 365,745
Provision charged to operations 25,000 -0-
Loans charged off (76,897) (51,088)
Recoveries 52,779 44,678
--------- ---------
Balance at end of year $ 360,217 $ 359,335
========= =========
Note 4. PROPERTIES AND EQUIPMENT
Components of properties and equipment included in the balance sheets at
December 31 were as follows:
Cost: 1997 1996
- ----- ----------- -----------
Land $ 145,017 $ 145,017
Bank premises 504,354 504,354
Furniture and equipment 559,496 479,336
----------- -----------
Total cost 1,208,867 1,128,707
Less accumulated depreciation (676,360) (600,436)
----------- -----------
Net book value $ 532,507 $ 528,271
=========== ===========
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
11
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 4. PROPERTIES AND EQUIPMENT (Continued)
Certain bank facilities and equipment are leased under various operating leases.
Rental expense was $41,754 and $46,193 in 1997 and 1996. Future minimum rental
commitments under noncancellable leases are:
1998 $42,408
1999 18,996
2000 14,948
2001 1,017
2002 --
-------
$77,369
=======
Note 5. OTHER ASSETS
Accrued income and other assets consist of the following:
1997 1996
-------- --------
Cash value life ins. & art $147,096 $131,331
Interest receivable - loans 164,034 158,898
Interest receivable - securities 208,013 188,633
Other 70,448
Deferred income tax 52,176 85,457
Prepaid expenses 72,242 86,984
Other real estate owned 22,883 81,379
-------- --------
$736,892 $732,682
======== ========
Note 6. TIME DEPOSITS
The scheduled maturities of time deposits as of December 31 were as follows:
1997 1996
----------- -----------
Less than 1 year $16,733,408 $12,707,859
One year to three years 2,593,869 3,359,632
Three years to five years 886,271 897,121
Over five years 2,000 -0-
----------- -----------
$20,215,548 $16,964,612
=========== ===========
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
12
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 7. ACCRUED INTEREST AND OTHER LIABILITIES
A summary of accrued interest and other liabilities follows:
1997 1996
------- -------
Accrued interest 156,197 158,778
Accrued other expenses 2,497 --
Other Liabilities 89,681 31,713
-------- --------
$248,375 $190,491
======== ========
Note 8. EMPLOYEE BENEFITS
As part of employee benefits, all eligible employees of the Bank participate in
an employee 401K plan. Contributions under the defined contribution plan are
made at the discretion of the Board of Directors. The Bank approved
contributions of $27,492 and $21,373 for 1997 and 1996.
The board of directors approved a salary continuation plan for President
Esparza. The plan calls for payment of 50% of his annual salary at retirement,
provided retirement is after age 62. These payments are for his life. Upon his
death, if less than ten years of payments, payments will continue to his heirs
for ten years.
Note 9. RELATED PARTY TRANSACTIONS
The Bank has entered into transactions with its directors, significant
shareholders and their affiliates (related parties). Such transactions were made
in the ordinary course of business on substantially the same terms and
conditions, including interest rates and collateral, as those prevailing at the
same time for comparable transactions with other customers, and did not, in the
opinion of management, involve more than normal credit risk or present other
unfavorable features. The aggregate amount of loans to such related parties at
December 31, 1997 was $583,383 and $703,467 at December 31, 1996.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
13
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 10. INCOME TAXES
The Company files a cash basis tax return and made income tax estimated tax
payments of $204,120 during 1997 and payments of $210,280 in 1996.
The provision for income taxes consisted of the following:
1997 1996
-------- --------
Currently Payable:
Federal $234,971 $179,450
State -0- -0-
Deferred:
Federal -0- -0-
State -0- -0-
-------- --------
$234,971 $179,450
======== ========
The provision for federal income taxes is less than that computed by applying
the federal statutory rate of 34% as indicated in the following analysis:
1997 1996
--------- ---------
Statutory rate $ 203,675 $ 188,050
Increase (decrease) resulting from:
Effect of tax exempt income (6,800) (12,101)
Conversion accrual to cash,
adjustments and other
nondeductible expenses 38,096 3,501
--------- ---------
$ 234,971 $ 179,450
========= =========
The components of the deferred income tax asset included in other assets are as
follows:
1997 1996
---- ----
Deferred tax asset:
Federal $52,176 $85,457
State -0- -0-
------- -------
$52,176 $85,457
======= =======
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
14
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 11. CONTINGENT LIABILITIES AND COMMITMENTS
The Bank's financial statements do not reflect various commitments and
contingent liabilities which arise in the normal course of business and
which involve elements of credit risk, interest rate risk and liquidity
risk. These commitments and contingent liabilities are described in
Note 13, Financial Instruments.
The Bank is party to litigation and claims arising in the normal course
of business. Management, after consultation with legal counsel,
believes that the liabilities, if any, arising from such litigation and
claims will not be material to the Bank's financial position.
Note 12. CONCENTRATIONS OF CREDIT
All of the Bank's loans, commitments and standby letters of credit have
been granted to customers in the Bank's market area. The majority of
such customers are depositors of the Bank. The concentrations of credit
by type of loan are set forth in Note 3. The distribution of
commitments to extend credit approximates the distribution of loans
outstanding. Standby letters of credit were granted primarily to
commercial borrowers.
Note 13. FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of
its customers and to reduce its own exposure to fluctuations in
interest rates. These financial instruments include commitments to
extend credit and standby letters of credit. Those instruments involve,
to varying degrees, elements of credit and interest-rate risk in excess
of the amount recognized in the statement of financial position. The
contract or notional amounts of those 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 instrument for commitments to extend
credit, standby letters of credit, and financial guarantees written is
represented by the contractual notional amount of those instruments.
The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.
COMMITMENTS TO EXTEND CREDIT AND FINANCIAL GUARANTEES
At December 31, 1997, the Bank was exposed to credit risk on
commitments to extend credit having contract amounts of $962,883 and
letters of credit written of $80,000.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained, if it is deemed
necessary by the Bank upon extension of credit, is based on
management's credit evaluation of the counterparty. Collateral held
varies, and may include accounts receivable; inventory, property,
plant, and equipment; and income-producing commercial properties.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
15
<PAGE>
FIRST BANK OF GRANTS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997
- --------------------------------------------------------------------------------
Note 13. FINANCIAL INSTRUMENTS (Continued)
Standby letters of credit written are a conditonal commitment issued by
the Bank to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support public and private
borrowing arrangements. Guarantees are generally extended for periods
of one year. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. The Bank holds collateral supporting those commitments for
which collateral is deemed necessary.
The Bank has not been required to perform on any financial guarantees during the
past year.
The Bank has not incurred any losses on its commitments in 1996 or 1997.
Note 14. CAPITAL REQUIREMENTS
Banks are currently subject to certain risk-based capital calculation
guidelines. The guidelines require an institution to maintain "Tier 1"
capital, intended to be composed of tangible equity, at a minimum of
4.0% of total assets as adjusted for risk characteristics. Tangible
equity is generally defined as the total of common and preferred equity
reduced by goodwill, deposit-based intangibles, and purchased loan
servicing rights, subject to some limitations. Risk-adjusted assets
reflect the sum of all asset categories and types, each weighted from
0% to 100% depending upon relative credit risk, plus off-balance sheet
commitments and obligations, also weighted from 0% to 100% to reflect
relative credit risk.
Total "Tier 1" capital plus additional "Tier 2" components (primarily
reserves for credit losses and qualifying subordinated debt) must be at
a minimum of 8.0% of risk-adjusted assets. The "leverage ratio" ("Tier
1" capital to non-risk-adjusted assets) must be equal to or greater
than 3.0%.
At December 31,1997 and 1996, the Bank's risk-adjusted "Tier 1" capital
ratio was 19.00% and 19.14%, the total risk-adjusted "Tier 1 plus Tier
2" ratio was 20.03% and 20.4%, and the leverage ratio was 7.80% and
7.88%.
- --------------------------------------------------------------------------------
FIRST BANK OF GRANTS
16
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
dated January 20, 1998 between
FIRST BANK OF GRANTS
and
NORWEST CORPORATION
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as
of the 20th day of January, 1998, by and between FIRST BANK OF GRANTS ("First
Bank"), a New Mexico corporation, and NORWEST CORPORATION ("Norwest"), a
Delaware corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby
First Bank will convert (the "Conversion") to a national banking association
and, immediately following the Conversion, a wholly-owned subsidiary of Norwest
will consolidate with First Bank (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 First Bank of the par
value of $10 per share ("First Bank 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) CONVERSION AND CONSOLIDATION. Subject to the terms and conditions
contained herein, First Bank will convert to a national banking association and,
immediately following the Conversion, a wholly-owned subsidiary of Norwest will
be consolidated with First Bank pursuant to the Consolidation Agreement, with
First Bank as the surviving corporation, in which consolidation each share of
First Bank 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 212,500 by the number of shares of First Bank Common Stock then
outstanding.
(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
<PAGE>
readjustment, or if a stock dividend thereon shall be declared with a record
date within such period (a "Common Stock Adjustment"), then the number of shares
of Norwest Common Stock into which a share of First Bank 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 First Bank Common Stock shall be converted will
equal the number of shares of Norwest Common Stock which holders of shares of
First Bank 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 within
ten (10) business days following the satisfaction or waiver of all conditions
precedent set forth in Sections 6 and 7 of this Agreement or on such other date
as may be agreed to by the parties (the "Closing Date"). Each of the parties
agrees to use its best efforts to cause the 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., Grants, New Mexico 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 FIRST BANK. First Bank represents
and warrants to Norwest as follows:
(a) ORGANIZATION AND AUTHORITY. First Bank is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Mexico, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on First Bank and the First Bank Subsidiaries
taken as a whole and has corporate power and authority to own its properties
A-2
<PAGE>
and assets and to carry on its business as it is now being conducted. First Bank
has furnished Norwest true and correct copies of its articles of incorporation
and by-laws, as amended.
(b) FIRST BANK'S SUBSIDIARIES. Schedule 2(b) sets forth a complete and
correct list of all of First Bank's subsidiaries as of the date hereof
(individually a "First Bank Subsidiary" and collectively the "First Bank
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 First
Bank. No equity security of any First Bank 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 First Bank 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. All of such shares so owned
by First Bank 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 First Bank 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), First Bank 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 First Bank consists
of 27,000 shares of common stock, $10 par value, of which as of the close of
business on September 30, 1997, 26,996 shares were outstanding and no shares
were held in the treasury. The maximum number of shares of First Bank Common
Stock (assuming for this purpose that phantom shares and other share-equivalents
constitute First Bank 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 26,996. All of the
outstanding shares of capital stock of First Bank have been duly and validly
authorized and issued and are fully paid and nonassessable. Except as set forth
in Schedule 2(c), there are no outstanding subscriptions, contracts, conversion
privileges, options, warrants, calls, preemptive rights or other rights
obligating First Bank or any First Bank Subsidiary to issue, sell or otherwise
dispose of, or to purchase, redeem or otherwise acquire, any shares of capital
stock of First Bank or any First Bank Subsidiary. Except as set forth in
Schedule 2(c), since September 30, 1997, no shares of First Bank capital stock
have been purchased, redeemed or otherwise acquired, directly or indirectly, by
First Bank or any First Bank Subsidiary and no dividends or other distributions
have been declared, set aside, made or paid to the shareholders of First Bank.
A-3
<PAGE>
(d) AUTHORIZATION. First Bank has the corporate power and authority to
enter into this Agreement and the Consolidation Agreement and, subject to any
required approvals of its shareholders, to carry out its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement and
the Consolidation Agreement by First Bank and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of First Bank. Subject to such approvals of shareholders and
of government agencies and other governing boards having regulatory authority
over First Bank as may be required by statute or regulation, this Agreement and
the Consolidation Agreement are valid and binding obligations of First Bank
enforceable against First Bank in accordance with their respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery
and performance by First Bank of this Agreement or the Consolidation Agreement,
nor the consummation of the transactions contemplated hereby and thereby, nor
compliance by First Bank 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 First Bank or any First Bank Subsidiary
under any of the terms, conditions or provisions of (x) its articles of
incorporation or by-laws or (y) any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which First Bank or any First Bank Subsidiary is a party or by which it may be
bound, or to which First Bank or any First Bank Subsidiary or any of the
properties or assets of First Bank or any First Bank 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 First Bank, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation applicable
to First Bank or any First Bank 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 Conversion and the Consolidation under the
National Bank Act or New Mexico law, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by First Bank of the transactions
contemplated by this Agreement and the Consolidation Agreement.
(e) FIRST BANK FINANCIAL STATEMENTS. The consolidated balance sheets of
First Bank and First Bank's Subsidiaries as of December 31, 1996 and related
consolidated
A-4
<PAGE>
statements of income, shareholders' equity and cash flows for the three years
ended December 31, 1996, together with the notes thereto, certified by M. Scott
Edwards, CPA, and the unaudited consolidated statements of financial condition
of First Bank and First Bank's Subsidiaries as of September 30, 1997 and the
related unaudited consolidated statements of income, shareholders' equity and
cash flows for the nine (9) months then ended (collectively, the "First Bank
Financial Statements"), will be, when delivered to Norwest pursuant to paragraph
4(d) hereof, prepared in accordance with generally accepted accounting
principles applied on a consistent basis and will present fairly (subject, in
the case of financial statements for interim periods, to normal recurring
adjustments) the consolidated financial position of First Bank and First Bank's
Subsidiaries at the dates and the consolidated results of operations and cash
flows of First Bank and First Bank's Subsidiaries for the periods stated
therein.
(f) REPORTS. Since December 31, 1991, First Bank and each First Bank
Subsidiary has filed all reports, registrations and statements, if any, 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 "First Bank Reports". As of their respective dates, the First Bank
Reports complied in all material respects with all applicable rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and applicable state securities or banking authorities, as the case
may be, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Copies of all the First Bank Reports have been made
available to Norwest by First Bank.
(g) PROPERTIES AND LEASES. Except as may be reflected in the First Bank
Financial Statements and except for any lien for current taxes not yet
delinquent, First Bank and each First Bank 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 First Bank's
consolidated balance sheet as of September 30, 1997, and all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases of real property
and all other leases material to First Bank or any First Bank Subsidiary
pursuant to which First Bank or such First Bank 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 First Bank or such First
Bank Subsidiary or any event which, with notice or lapse of time or both, would
constitute such a material default. Substantially all First Bank's and each
First Bank 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 First Bank and the First Bank 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 First Bank and the First
Bank Subsidiaries for the fiscal year ended December 31, 1993, and for all
fiscal years prior thereto, are for the purposes of routine audit by the
Internal Revenue Service closed because of the statute of limitations, and no
claims for additional taxes for such fiscal years are pending. Except only as
set forth on Schedule 2(h), (i) neither First Bank nor any First Bank Subsidiary
is a party to any pending action or proceeding, nor is any such action or
proceeding threatened by any governmental authority, for the assessment or
collection of taxes, interest, penalties, assessments or deficiencies and (ii)
no issue has been raised by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the tax returns,
business or properties of First Bank or any First Bank Subsidiary which has not
been settled, resolved and fully satisfied. Each of First Bank and the First
Bank 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 September 30, 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 First Bank and the First Bank Subsidiaries with respect to all
periods through the date thereof.
(i) ABSENCE OF CERTAIN CHANGES. Since December 31, 1996 there has been
no change in the business, financial condition or results of operations of First
Bank or any First Bank 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 First Bank and the First Bank Subsidiaries taken as a
whole.
(j) COMMITMENTS AND CONTRACTS. Except as set forth on Schedule 2(j),
neither First Bank nor any First Bank 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 First Bank or such First Bank 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;
A-6
<PAGE>
(iii) any labor contract or agreement with any labor union;
(iv) any contract not made in the ordinary course of business
containing covenants which limit the ability of First Bank or any First
Bank 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, First Bank or any First Bank 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 $2,500
or more; or
(vii) any agreement or commitment with respect to the
Community Reinvestment Act with any state or federal bank regulatory
authority or any other party; or
(viii) any current or past agreement, contract or
understanding with any current or former director, officer, employee,
consultant, financial adviser, broker, dealer, or agent providing for
any rights of indemnification in favor of such person or entity.
(k) LITIGATION AND OTHER PROCEEDINGS. First Bank has furnished Norwest
copies of (i) all attorney responses to the request of the independent auditors
for First Bank with respect to loss contingencies as of December 31, 1996 in
connection with the First Bank financial statements, and (ii) a written list of
legal and regulatory proceedings filed against First Bank or any First Bank
Subsidiary since said date. Except as set forth in Schedule 2(k), neither First
Bank nor any First Bank Subsidiary is a party to any pending or, to the best
knowledge of First Bank, threatened, claim, action, suit, investigation or
proceeding, or is subject to any order, judgment or decree, except for matters
which, in the aggregate, will not have, or cannot reasonably be expected to
have, a material adverse effect on the business, financial condition or results
of operations of First Bank and the First Bank Subsidiaries taken as a whole.
(l) INSURANCE. First Bank and each First Bank Subsidiary is presently
insured, and during each of the past five calendar years (or during such lesser
period of time as First Bank has owned such First Bank 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.
A-7
<PAGE>
(m) COMPLIANCE WITH LAWS. First Bank and each First Bank Subsidiary has
all permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties and assets and to carry on its business as presently
conducted and that are material to the business of First Bank or such First Bank
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best knowledge of First Bank,
no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by First Bank
and each First Bank 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 First Bank nor any First Bank
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 First Bank or any First
Bank Subsidiary which reasonably could be expected to have a material adverse
effect on the business or properties of First Bank and the First Bank
Subsidiaries taken as a whole.
(n) LABOR. No work stoppage involving First Bank or any First Bank
Subsidiary is pending or, to the best knowledge of First Bank, threatened.
Neither First Bank nor any First Bank 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 First
Bank or such First Bank Subsidiary. Employees of First Bank and the First Bank
Subsidiaries are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees.
(o) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth on
Schedule 2(o), to the best knowledge of First Bank no officer or director of
First Bank or any First Bank Subsidiary, or any "associate" (as such term is
defined in Rule l4a-1 under the Securities Exchange Act of 1934) 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
First Bank or any First Bank Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
First Bank or any First Bank 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 First Bank's or such First Bank Subsidiary's Board of Directors.
(p) FIRST BANK BENEFIT PLANS.
A-8
<PAGE>
(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 First Bank or any First Bank 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 First Bank or any First Bank 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), First Bank or the
First Bank 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. First Bank knows of no
reason that any Plan which is subject to the qualification provisions
of Section 401(a) of the Code is not "qualified" within the meaning of
Section 401(a) of the Code and that each related trust is not exempt
from taxation under Section 501(a) of the Code.
(iii) The present value of all benefits vested and all
benefits accrued under each Plan which is subject to Title IV of ERISA
did not, in each case, as determined for purposes of reporting on
Schedule B to the Annual Report on Form 5500 of each such Plan as of
the end of the most recent Plan year exceed the value of the assets of
the Plan allocable to such vested or accrued benefits.
(iv) Except as disclosed in Schedule 2(p), and to the best
knowledge of First Bank, 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 First Bank, 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 First
Bank and the First Bank 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.
A-9
<PAGE>
(vi) No Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section
412 of the Code (whether or not waived), since the effective date of
ERISA.
(vii) Except as disclosed in Schedule 2(p), neither the
execution and delivery of this Agreement and the 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 First Bank or any First Bank 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 First Bank
and the First Bank Subsidiaries supplied or to be supplied by First Bank 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 First Bank Common Stock pursuant to the provisions of
the Consolidation Agreement (the "Registration Statement"), (ii) the proxy
statement to be mailed to First Bank'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 First Bank and the First Bank 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 First Bank nor any First Bank Subsidiary is under any obligation,
contingent or otherwise, which will survive the Consolidation by reason of any
agreement to register any of its securities under the Securities Act of 1933 and
the rules and regulations thereunder.
(s) BROKERS AND FINDERS. Neither First Bank nor any First Bank
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
A-10
<PAGE>
finder's fees, and no broker or finder has acted directly or indirectly for
First Bank or any First Bank Subsidiary in connection with this Agreement and
the Consolidation Agreement or the transactions contemplated hereby and thereby.
(t) FIDUCIARY ACTIVITIES. Neither First Bank nor any First Bank
subsidiary has ever had any accounts for which it has acted as a fiduciary
including but not limited to accounts for which it has served as trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor.
(u) NO DEFAULTS. Neither First Bank nor any First Bank 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 First Bank and the First Bank Subsidiaries, taken
as a whole. To the best of First Bank's knowledge, all parties with whom First
Bank or any First Bank Subsidiary has material leases, agreements or contracts
or who owe to First Bank or any First Bank Subsidiary material obligations other
than with respect to those arising in the ordinary course of the banking
business of the First Bank 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 First Bank or any First Bank Subsidiary,
any liability relating to the release of hazardous substances as defined under
any local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or to the
best of First Bank's knowledge, threatened against First Bank or any First Bank
Subsidiary the result of which has had or could reasonably be expected to have a
material adverse effect upon First Bank and First Bank's Subsidiaries taken as a
whole; to the best of First Bank's knowledge there is no reasonable basis for
any such proceeding, claim or action; and to the best of First Bank's knowledge
neither First Bank nor any First Bank 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. First Bank has provided Norwest
with copies of all environmental assessments, reports, studies and other related
information in its possession with respect to each bank facility and each
non-residential OREO property.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to First Bank as follows:
(a) ORGANIZATION AND AUTHORITY. Norwest is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so
A-11
<PAGE>
qualified would have a material adverse effect on Norwest and its subsidiaries
taken as a whole and has corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted. Norwest is
registered as a bank holding company with the Federal Reserve Board under the
BHC Act.
(b) NORWEST SUBSIDIARIES. Schedule 3(b) sets forth a complete and
correct list as of December 31, 1996, of Norwest's Significant Subsidiaries (as
defined in Regulation S-X promulgated by the SEC) (individually a "Norwest
Subsidiary" and collectively the "Norwest Subsidiaries"), all shares of the
outstanding capital stock of each of which, except as set forth in Schedule
3(b), are owned directly or indirectly by Norwest. No equity security of any
Norwest Subsidiary is or may be required to be issued to any person or entity
other than Norwest by reason of any option, warrant, scrip, right to subscribe
to, call or commitment of any character whatsoever relating to, or security or
right convertible into, shares of any capital stock of such subsidiary, and
there are no contracts, commitments, understandings or arrangements by which any
Norwest Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock. Subject to 12 U.S.C. ss. 55 (1982), all of such shares so owned
by Norwest are fully paid and nonassessable and are owned by it free and clear
of any lien, claim, charge, option, encumbrance or agreement with respect
thereto. Each Norwest Subsidiary is a corporation or national banking
association duly organized, validly existing, duly qualified to do business and
in good standing under the laws of its jurisdiction of incorporation, and has
corporate power and authority to own or lease its properties and assets and to
carry on its business as it is now being conducted.
(c) NORWEST CAPITALIZATION. The authorized capital stock of Norwest
consists of (i) 5,000,000 shares of Preferred Stock, without par value, of which
as of the close of business on September 30, 1997, 980,000 shares of Cumulative
Tracking Preferred Stock, at $200 stated value, and 10,438 shares of ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value, 21,177shares of
1995 ESOP Cumulative Convertible Preferred Stock, at $1,000 stated value, 23,260
shares of 1996 ESOP Cumulative Convertible Preferred Stock, at $1,000 stated
value, and 28,032 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 September 30,
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 October 31,
1997, 755,315,646 shares were outstanding and 10,506,201 shares were held in the
treasury. All of the outstanding shares of capital stock of Norwest have been
duly and validly authorized and issued and are fully paid and nonassessable.
(d) AUTHORIZATION. Norwest has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Norwest and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Norwest. No approval or consent by the stockholders
of Norwest is necessary for the execution and
A-12
<PAGE>
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 or New Mexico law, no
notice to, filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Norwest of the transactions contemplated by this Agreement and the Consolidation
Agreement.
(e) NORWEST FINANCIAL STATEMENTS. The consolidated balance sheets of
Norwest and Norwest's subsidiaries as of December 31, 1996 and 1995 and related
consolidated statements of income, stockholders' equity and cash flows for the
three years ended December 31, 1996, together with the notes thereto, certified
by KPMG Peat Marwick and included in Norwest's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 (the "Norwest 10-K") as filed with the
SEC, and the unaudited consolidated balance sheets of Norwest and its
subsidiaries as of September 30, 1997 and the related unaudited consolidated
statements of income and cash flows for the nine (9) months then ended included
in Norwest's Quarterly Report on Form 10-Q, as filed with the SEC (collectively,
the "Norwest Financial Statements"), have been prepared in
A-13
<PAGE>
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly (subject, in the case of financial statements for
interim periods, to normal recurring adjustments) the consolidated financial
position of Norwest and its subsidiaries at the dates and the consolidated
results of operations, changes in financial position and cash flows of Norwest
and its subsidiaries for the periods stated therein.
(f) REPORTS. Since December 31, 1991, Norwest and each Norwest
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii)
the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any
applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Norwest Reports". As of their respective dates, the
Norwest Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) PROPERTIES AND LEASES. Except as may be reflected in the Norwest
Financial Statements and except for any lien for current taxes not yet
delinquent, Norwest and each Norwest Subsidiary has good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Norwest's
consolidated balance sheet as of September 30, 1997 included in Norwest's
Quarterly Report on Form 10-Q, and all real and personal property acquired since
such date, except such real and personal property has been disposed of in the
ordinary course of business. All leases of real property and all other leases
material to Norwest or any Norwest Subsidiary pursuant to which Norwest or such
Norwest Subsidiary, as lessee, leases real or personal property, are valid and
effective in accordance with their respective terms, and there is not, under any
such lease, any material existing default by Norwest or such Norwest Subsidiary
or any event which, with notice or lapse of time or both, would constitute such
a material default. Substantially all Norwest's and each Norwest Subsidiary's
buildings and equipment in regular use have been well maintained and are in good
and serviceable condition, reasonable wear and tear excepted.
(h) TAXES. Each of Norwest and the Norwest Subsidiaries has filed all
material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Norwest and the Norwest Subsidiaries for the
fiscal year ended December 31, 1979, and for all fiscal years prior thereto, are
for
A-14
<PAGE>
the purposes of routine audit by the Internal Revenue Service closed because
of the statute of limitations, and no claims for additional taxes for such
fiscal years are pending. Except only as set forth on Schedule 3(h), (i) neither
Norwest nor any Norwest Subsidiary is a party to any pending action or
proceeding, nor to Norwest's knowledge is any such action or proceeding
threatened by any governmental authority, for the assessment or collection of
taxes, interest, penalties, assessments or deficiencies which could reasonably
be expected to have any material adverse effect on Norwest and its subsidiaries
taken as a whole, and (ii) no issue has been raised by any federal, state, local
or foreign taxing authority in connection with an audit or examination of the
tax returns, business or properties of Norwest or any Norwest Subsidiary which
has not been settled, resolved and fully satisfied, or adequately reserved for.
Each of Norwest and the Norwest Subsidiaries has paid all taxes owed or which it
is required to withhold from amounts owing to employees, creditors or other
third parties.
(i) ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, there has been
no change in the business, financial condition or results of operations of
Norwest or any Norwest Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Norwest and its subsidiaries taken as a whole.
(j) COMMITMENTS AND CONTRACTS. Except as set forth on Schedule 3(j), as
of December 31, 1996 neither Norwest nor any Norwest Subsidiary is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Norwest or
any Norwest Subsidiary to compete in any line of business or with any
person or which involve any material restriction of the geographical
area in which, or method by which, Norwest or any Norwest Subsidiary
may carry on its business (other than as may be required by law or
applicable regulatory authorities);
(iii) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K.
(k) LITIGATION AND OTHER PROCEEDINGS. Neither Norwest nor any Norwest
Subsidiary is a party to any pending or, to the best knowledge of Norwest,
threatened, claim, action, suit, investigation or proceeding, or is subject to
any order, judgment or decree, except for matters which, in the aggregate, will
not have, or cannot reasonably be expected to have, a material adverse effect on
the business, financial condition or results of operations of Norwest and its
subsidiaries taken as a whole.
(l) INSURANCE. Norwest and each Norwest Subsidiary is presently insured
or self insured, and during each of the past five calendar years (or during such
lesser period of
A-15
<PAGE>
time as Norwest has owned such Norwest Subsidiary) has been insured or
self-insured, for reasonable amounts with financially sound and reputable
insurance companies against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured and has maintained all insurance required by applicable law and
regulation.
(m) COMPLIANCE WITH LAWS. Norwest and each Norwest Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties or assets and to carry on its business as presently
conducted and that are material to the business of Norwest or such Subsidiary;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and to the best knowledge of Norwest, no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current. The conduct by Norwest and each Norwest
Subsidiary of its business and the condition and use of its properties does not
violate or infringe, in any respect material to any such business, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license or regulation. Neither Norwest nor any Norwest Subsidiary is
in default under any order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court. Except for statutory or regulatory
restrictions of general application, no federal, state, municipal or other
governmental authority has placed any restrictions on the business or properties
of Norwest or any Norwest Subsidiary which reasonably could be expected to have
a material adverse effect on the business or properties of Norwest and its
subsidiaries taken as a whole.
(n) LABOR. No work stoppage involving Norwest or any Norwest Subsidiary
is pending or, to the best knowledge of Norwest, threatened. Neither Norwest nor
any Norwest Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Norwest or such Norwest
Subsidiary. Except as set forth on Schedule 3(j), employees of Norwest and the
Norwest Subsidiaries are not represented by any labor union nor are any
collective bargaining agreements otherwise in effect with respect to such
employees.
(o) NORWEST BENEFIT PLANS.
(i) As of May 1, 1996, the only "employee benefit plans"
within the meaning of Section 3(3) of ERISA for which Norwest or any
Norwest Subsidiary acts as plan sponsor as defined in ERISA Section
3(16)(B) with respect to which any liability under ERISA or otherwise
exists or may be incurred by Norwest or any Norwest Subsidiary are
those set forth on Schedule 3(o) (the "Norwest Plans"). No Norwest Plan
is a "multi-employer plan" within the meaning of Section 3(37) of
ERISA.
A-16
<PAGE>
(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 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
A-17
<PAGE>
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.
(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
A-18
<PAGE>
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 FIRST BANK. First Bank 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, First Bank, and
each First Bank 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, make any new loan or modify, restructure or renew any
existing loan (except pursuant to commitments made prior to the date of this
Agreement) to any borrower if the amount of the resulting loan, when aggregated
with all other loans or extensions of credit to such person, would be in excess
of $100,000; maintain proper business and accounting records in accordance with
generally accepted principles; maintain its properties in good repair and
condition, ordinary wear and tear excepted; maintain in all material respects
presently existing insurance coverage; use its best efforts to preserve its
business organization intact, to keep the services of its present principal
employees and to preserve its good will and the good will of its suppliers,
customers and others having business relationships with it; use its best efforts
to obtain any approvals or consents required to maintain existing leases and
other contracts in effect following the Consolidation; comply in all material
respects with all laws, regulations, ordinances, codes, orders, licenses and
permits applicable to the properties and operations of First Bank and each First
Bank Subsidiary the non-compliance with which reasonably could be expected to
have a material adverse effect on First Bank and the First Bank 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 First Bank herein expressed.
(b) Except as otherwise contemplated or required by this Agreement,
from the date hereof until the Effective Time of the Consolidation, First Bank
and each First Bank 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
A-19
<PAGE>
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 reinvestment of maturing investment
securities into U.S. Treasury securities for terms of up to one (1) year and
except investments made 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
except any dividend declared by a subsidiary's Board of Directors in accordance
with applicable law and regulation; redeem, purchase or otherwise acquire,
directly or indirectly, any of the capital stock of First Bank; increase the
compensation of any officers, directors or executive employees, except pursuant
to existing compensation plans and practices; sell or otherwise dispose of any
shares of the capital stock of any First Bank 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 First Bank will duly call, and will cause
to be held not later than twenty-five (25) business days following the effective
date of the Registration Statement referred to in paragraph 5(c) hereof, a
meeting of its shareholders and will direct that this Agreement, the Conversion
and the Consolidation Agreement be submitted to a vote at such meeting. The
Board of Directors of First Bank 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, the Conversion and the
Consolidation Agreement, and (iii) use its best efforts to solicit from its
shareholders proxies in favor thereof.
(d) First Bank will furnish or cause to be furnished to Norwest all the
information concerning First Bank and its subsidiaries required for inclusion in
the Registration Statement referred to in paragraph 5(c) hereof (including the
First Bank Financial Statements which First Bank agrees to have prepared by M.
Scott Edwards, CPA and have delivered to Norwest within thirty (30) days of the
date of this Agreement), 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 M. Scott Edwards,
CPA to use such opinion in such Registration Statement.
(e) First Bank will take all necessary corporate and other action and
use its best efforts to obtain all approvals of regulatory authorities, consents
and other approvals required of First Bank to carry out the transactions
contemplated by this Agreement and
A-20
<PAGE>
will cooperate with Norwest to obtain all such approvals and consents required
of Norwest.
(f) First Bank will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(g) First Bank will hold in confidence all documents and information
concerning Norwest and its subsidiaries furnished to First Bank 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 First Bank's outside professional
advisers in connection with this Agreement, with the same undertaking from such
professional advisers. If the transactions contemplated by this Agreement shall
not be consummated, such confidence shall be maintained and such information
shall not be used in competition with Norwest (except to the extent that such
information can be shown to be previously known to First Bank, in the public
domain, or later acquired by First Bank 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 First Bank, nor any First Bank 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 First Bank or any First Bank 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 First Bank or any
First Bank Subsidiary except in the ordinary course of business, or (iv) to
merge, consolidate or otherwise combine with First Bank or any First Bank
Subsidiary. If any corporation, partnership, person or other entity or group
makes an offer or inquiry to First Bank or any First Bank Subsidiary concerning
any of the foregoing, First Bank or such First Bank Subsidiary will promptly
disclose such offer or inquiry, including the terms thereof, to Norwest.
(i) First Bank 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) First Bank and each First Bank 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
A-21
<PAGE>
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 First Bank nor any First Bank Subsidiary shall take any
action which with respect to First Bank would disqualify the Consolidation as a
"pooling of interests" for accounting purposes.
(l) First Bank 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 shareholder of First Bank who may
reasonably be deemed an "affiliate" of First Bank within the meaning of such
term as used in Rule 145 under the Securities Act.
(m) First Bank shall establish such additional accruals and reserves as
may be necessary to conform First Bank's accounting and credit loss reserve
practices and methods to those of Norwest and Norwest's plans with respect to
the conduct of First Bank's business following the Consolidation and to provide
for the costs and expenses relating to the consummation by First Bank of the
Consolidation and the other transactions contemplated by this Agreement.
(n) First Bank shall obtain, at its sole expense, Phase I environmental
assessments for each bank facility and Phase I environmental assessments or,
with the consent of Norwest, environmental screens each non-residential OREO
property. Oral reports of such environmental assessments or screens 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. First Bank 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 and further Phase I or Phase II
environmental assessments for properties identified by Norwest on the basis of
the results of such environmental screens. First Bank shall obtain a survey and
assessment of all potential asbestos containing material in owned or leased
properties (other than OREO property) and a written report of the results shall
be delivered to Norwest within four weeks of execution of the definitive
agreement.
(o) First Bank shall obtain, at its sole expense, commitments for title
insurance and boundary surveys for each owned bank facility which shall be
delivered to Norwest no later than four (4) weeks from the date of this
Agreement.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with First Bank
as follows:
A-22
<PAGE>
(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.
(b) Norwest will furnish to First Bank all the information concerning
Norwest required for inclusion in a proxy statement or statements to be sent to
the shareholders of First Bank, or in any statement or application made by First
Bank to any governmental body in connection with the transactions contemplated
by this Agreement.
(c) As promptly as practicable after the execution of this Agreement,
Norwest will file with the SEC a registration statement on Form S-4 (the
"Registration Statement") under the Securities Act and any other applicable
documents, relating to the shares of Norwest Common Stock to be delivered to the
shareholders of First Bank pursuant to the Consolidation Agreement, and will use
its best efforts to cause the Registration Statement to become effective. At the
time the Registration Statement becomes effective, the Registration Statement
will comply in all material respects with the provisions of the Securities Act
and the published rules and regulations thereunder, and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not false or
misleading, and at the time of mailing thereof to the First Bank shareholders,
at the time of the First Bank 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 First Bank
or any First Bank 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 First Bank pursuant to this Agreement and the Consolidation
Agreement
A-23
<PAGE>
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 First Bank 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.
(g) Norwest will take all necessary corporate and other action and file
all documents required to obtain and will use its best efforts to obtain all
approvals of regulatory authorities, consents and approvals required of it to
carry out the transactions contemplated by this Agreement and will cooperate
with First Bank to obtain all such approvals and consents required by First
Bank.
(h) Norwest will hold in confidence all documents and information
concerning First Bank and First Bank'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 First Bank (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 First Bank.
(i) Norwest will file any documents or agreements required to be filed
in connection with the Consolidation under applicable law.
(j) Norwest will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(k) Norwest shall consult with First Bank 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 First Bank notice of receipt of the regulatory
approvals referred to in paragraph 7(e).
(m) Neither Norwest nor any Norwest Subsidiary shall take any action
which with respect to Norwest would disqualify the Consolidation as a "pooling
of interests" for
A-24
<PAGE>
accounting purposes. Norwest shall use its best efforts to obtain and deliver to
First Bank, prior to the Effective Date of the Consolidation, signed
representations from the directors and executive officers of Norwest to the
effect that, except for de minimus dispositions which will not disqualify the
Consolidation as a pooling of interests, they will not dispose of shares of
Norwest or First Bank during the period commencing 30 days prior to the
Effective Date and ending upon publication by Norwest of financial results
including at least 30 days of combined operations of First Bank and Norwest.
(n) For a period not exceeding fifteen days prior to the Closing Date,
Norwest will permit First Bank and its representatives to examine its books,
records and properties and interview officers, employees and agents of Norwest
at all reasonable times when it is open for business. No such examination by
First Bank or its representatives shall in any way affect, diminish or terminate
any of the representations, warranties or covenants of Norwest herein expressed.
6. CONDITIONS PRECEDENT TO OBLIGATION OF FIRST BANK. The obligation of
First Bank to effect the Consolidation shall be subject to the satisfaction at
or before the Effective Time of the Consolidation of the following further
conditions, which may be waived in writing by First Bank:
(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 Time 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 Time of the
Consolidation.
(c) First Bank 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 First Bank required for approval of a plan of
consolidation in accordance with the provisions of First Bank's articles of
incorporation and applicable law.
(e) Norwest shall have received approval by the Federal Reserve Board,
the OCC and by such other governmental agencies as may be required by law of the
transactions
A-25
<PAGE>
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 First Bank 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) First Bank shall have received an opinion, dated the Closing Date,
of counsel to First Bank, 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 First Bank Common Stock upon receipt
of Norwest Common Stock except for cash received in lieu of fractional shares;
(iii) the basis of the Norwest Common Stock received by the shareholders of
First Bank will be the same as the basis of First Bank Common Stock exchanged
therefor; and (iv) the holding period of the shares of Norwest Common Stock
received by the shareholders of First Bank will include the holding period of
the First Bank Common Stock, provided such shares of First Bank 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.
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 Time 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 First Bank and the First Bank Subsidiaries
taken as a whole as if made at the Effective Time of the Consolidation.
A-26
<PAGE>
(b) First Bank 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 Time 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 First Bank required for approval of a plan of
consolidation in accordance with the provisions of First Bank's articles of
incorporation 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 First Bank, 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 First Bank or any First Bank Subsidiary that, in the
good faith judgment of Norwest, is unreasonably burdensome to Norwest.
(f) First Bank and each First Bank Subsidiary shall have obtained any
and all material consents or waivers from other parties to loan agreements,
leases or other contracts material to First Bank's or such subsidiary's business
required for the consummation of the Consolidation, and First Bank and each
First Bank 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.
(h) The Consolidation shall qualify as a "pooling of interests" for
accounting purposes and Norwest shall have received from M. Scott Edwards, CPA
an opinion to that effect.
(i) At any time since the date hereof the total number of shares of
First Bank Common Stock outstanding and subject to issuance upon exercise
(assuming for this purpose that phantom shares and other share-equivalents
constitute First Bank Common Stock) of all warrants, options, conversion rights,
phantom shares or other share-equivalents, other than any option held by
Norwest, shall not have exceeded 26,996.
(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
A-27
<PAGE>
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 First Bank 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 First Bank
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
First Bank;
(ii) the amounts reported in the interim quarterly financial
statements of First Bank agree with the general ledger of First Bank;
(iii) the annual and quarterly financial statements of First
Bank and the First Bank Subsidiaries included in, or incorporated by
reference in, the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the published rules and regulations thereunder;
(iv) from the date of the most recent unaudited consolidated
financial statements of First Bank and the First Bank 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 First Bank and
the First Bank Subsidiaries, except in each case for changes, increases
or decreases which the Registration Statement discloses have occurred
or may occur or which are described in such letters. For the same
period, there have been no decreases in consolidated net interest
income, consolidated net interest income after provision for credit
losses, consolidated income before income taxes, consolidated net
income and net income per share amounts of First Bank and the First
Bank Subsidiaries, or in income before equity in undistributed income
of subsidiaries, in each case as compared with the comparable period of
the preceding year, except in each case for changes, increases or
decreases which the Registration Statement discloses have occurred or
may occur or which are described in such letters;
(v) they have reviewed certain amounts, percentages, numbers
of shares and financial information which are derived from the general
accounting records of First Bank and the First Bank Subsidiaries, which
appear in the Registration
A-28
<PAGE>
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 First Bank and the
First Bank Subsidiaries and have found them to be in agreement with
financial records and analyses prepared by First Bank included in the
annual and quarterly financial statements, except as disclosed in such
letters.
(l) First Bank and the First Bank Subsidiaries considered as a whole
shall not have sustained since December 31, 1996 any material loss or
interference with their business from any civil disturbance or any fire,
explosion, flood or other calamity, whether or not covered by insurance.
(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 First Bank or any First Bank 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 First Bank and its subsidiaries taken as a whole.
(n) Since September 30, 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 First Bank and the First Bank Subsidiaries taken as a
whole (other than changes in banking laws or regulations, or interpretations
thereof, that affect the banking industry generally or changes in the general
level of interest rates).
(o) First Bank shall have entered into an agreement, on terms and
conditions satisfactory to Norwest, for the sale or other disposition of First
Bank's interest in the loan, collateral and collection action relating to the
Ramsey Oil Texaco Travel Center located in Grants, New Mexico.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of First Bank
or any First Bank Subsidiary as of the Effective Date of the Consolidation
("First Bank Employees") shall be eligible for participation in the employee
welfare and retirement plans of Norwest, as in effect from time to time, as
follows:
(a) EMPLOYEE WELFARE BENEFIT PLANS. Each First Bank employee shall be
eligible for participation in the employee welfare benefit plans of Norwest
listed below subject to any eligibility requirements applicable to such plans
(but not subject to any preexisting conditions or exclusions except for the Long
Term Care Plan), and shall enter each plan not later than the first day of the
calendar quarter which begins at least 32 days after the Effective Date of the
Consolidation (provided, however, that it is Norwest's intent that
A-29
<PAGE>
the transition from the First Bank plans to the Norwest plans be facilitated
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):
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
For the purpose of determining each First Bank Employee's benefit for the year
in which the Consolidation occurs under the Norwest vacation program, vacation
taken by a First Bank Employee in the year in which the Consolidation occurs
will be deducted from the total Norwest benefit. First Bank Employees shall
receive credit for years of service to First Bank, the First Bank Subsidiaries
and any predecessors of the First Bank Subsidiaries (to the extent credited
under the vacation programs of First Bank and the First Bank Subsidiaries) for
the purpose of determining benefits under the Norwest vacation program and short
term disability plan.
(b) EMPLOYEE RETIREMENT BENEFIT PLANS.
Each First Bank 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 First Bank
and the First Bank 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 First Bank and the First Bank
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 First Bank Employee shall be eligible for participation, as a new employee,
in the Norwest Pension Plan under the terms thereof.
9. TERMINATION OF AGREEMENT.
A-30
<PAGE>
(a) This Agreement may be terminated at any time prior to the Effective
Time 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
June 30, 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 First Bank or Norwest upon written notice to the
other party if any court or governmental authority of competent
jurisdiction shall have issued a final order restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
by this Agreement.
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h) and 10 shall survive such termination.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by First Bank and First Bank Subsidiaries shall be
borne by First Bank, and all such expenses incurred by Norwest shall be borne by
Norwest.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
If to Norwest:
Norwest Corporation
Sixth and Marquette
A-31
<PAGE>
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to First Bank:
First Bank of Grants
201 North 1st Street
P. O. Box 699
Grants, New Mexico 87020
Attention: Mr. Antonio Esparza, President
With a copy to:
Kelly, Rammelkamp, Muehlenweg & Lucero, PA
320 Gold Avenue, Suite 600
Albuquerque, NM 87102
Attention: Robert J. Muehlenweg, 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.
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 Time 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 First Bank shall be made which changes in a
manner adverse to such shareholders the consideration to be provided to said
shareholders pursuant to this Agreement and the Consolidation Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
A-32
<PAGE>
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 BANK OF GRANTS
By: /s/ John E. Ganoe By: /s/ Antonio E. Esparza
Its: Executive Vice President Its: President
A-33
<PAGE>
EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF CONSOLIDATION
This Agreement and Plan of Consolidation (the "Consolidation
Agreement") is dated as of _______________________, 19__, between NORWEST
INTERIM BANK GRANTS, NATIONAL ASSOCIATION ("Interim Bank") and FIRST BANK OF
GRANTS, NATIONAL ASSOCIATION, a national banking association ("First Bank").
Interim Bank and First Bank are sometimes referred to herein as the
"Consolidating Banks".
PREAMBLE
Interim Bank and First Bank acknowledge and confirm the following:
(a) Interim Bank is a national banking association having its principal
office and place of business at 201 North 1st Street, P. O. Box 699, Grants,
Cibola County, New Mexico 87020. 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) First Bank is a national banking association having its principal
office and place of business at 201 North 1st Street, P. O. Box 699, Grants,
Cibola County, New Mexico 87020. As of __________, 1998, First Bank had capital
of $_________, divided into ______ shares of common stock, par value $_____ per
share ("First Bank Common Stock"), surplus of $______, and retained earnings of
$_______.
(c) First Bank and Norwest Corporation ("Norwest") have entered into an
Agreement and Plan of Reorganization dated as of January __, 1998 (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 First
Bank 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.
A-34
<PAGE>
AGREEMENTS
IN CONSIDERATION OF THE PREMISES, Interim Bank and First Bank make this
Consolidation Agreement and fix the terms and conditions of the Consolidation of
Interim Bank and First Bank (the "Consolidation") as follows:
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 First Bank, under the
charter of First Bank (the "Consolidated Bank").
1.2 The name of the Consolidated Bank shall be "First Bank of Grants,
National Association."
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 201 North 1st Street, P. O. Box
699, Grants, Cibola County, New Mexico 87020, 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.
A-35
<PAGE>
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 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 First Bank 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 212,500 by the number of shares of First Bank Common
Stock then outstanding. As soon as practicable after the consolidation becomes
effective, each holder of a certificate for shares of First Bank 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
First Bank 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 First Bank 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.
A-36
<PAGE>
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
First Bank Common Stock or 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 First Bank 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 First Bank 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 First Bank 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 First Bank and Interim Bank, respectively, for approval at
meetings to be called and held in accordance with the articles of association of
First Bank 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.
A-37
<PAGE>
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
First Bank 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
(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 First Bank 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 First Bank and Interim
Bank, or either of them, to terminate this Consolidation Agreement as First Bank
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 First Bank 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 First Bank, no such amendment shall
affect the rights of such shareholders of First Bank 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, First Bank 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-38
<PAGE>
(NO BANK SEAL) NORWEST INTERIM BANK GRANTS,
NATIONAL ASSOCIATION
ATTEST:
By:
-----------------------------------
Its:
- ------------------------------- ----------------------------------
Secretary
A majority of the Board of Directors of Norwest Interim Bank Grants,
National Association:
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
STATE OF NEW MEXICO )
) 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 GRANTS, 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.
----------------------------
(Seal of Notary) Notary Public, __________ County
My Commission Expires ________
A-39
<PAGE>
(BANK SEAL) FIRST BANK OF GRANTS,
NATIONAL ASSOCIATION
ATTEST:
By:
-----------------------------------
Its:
- ------------------------------- ----------------------------------
Secretary
A majority of the Board of Directors of First Bank of Grants, National
Association:
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
------------------------------- -------------------------------
STATE OF NEW MEXICO )
) 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
BANK OF GRANTS, NATIONAL ASSOCIATION, and each in his or her said capacity
acknowledged the foregoing instrument to be the act and deed of said bank and
the seal affixed thereto to be its seal; 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-40
<PAGE>
APPENDIX B
NEW MEXICO STATUTES 1978
CHAPTER 58, ARTICLE 4, SECTION 10
<PAGE>
NEW MEXICO STATUTES 1978
CHAPTER 58. Financial Institutions and Regulations
ARTICLE 4. Merger and Consolidation of Banks
58-4-10 Dissenting Stockholders
A. A dissenting stockholder of a state bank shall be entitled to
receive the value in each of only those shares which were voted against a merger
to result in a state bank, against the conversion of a state bank into a
national bank or against a sale of all or substantially all of the state bank's
assets, and only if written demand thereupon is made to the resulting state or
national bank at any time within thirty days after the effective date of the
merger or conversion accompanied by the surrender of the stock certificates. The
value of such shares shall be determined, as of the date of the stockholders'
meeting approving the merger or conversion, by three appraisers, one to be
selected by the vote of the owners of two-thirds of the shares involved at a
meeting called by the director of the financial institutions division on 10 days
notice, one by the board of directors of the resulting state or national bank
and the third by the two so chosen. The valuation agreed upon by any two
appraisers shall govern. If any necessary appraiser is not appointed within 60
days after the effective date of the merger or conversion, the director of the
financial institutions division shall make the necessary appointment, or if the
appraisal is not completed within 90 days after the merger or conversion becomes
effective, the director of the financial institutions division shall cause an
appraisal to be made.
B. The merger agreement may fix an amount which the merging banks
consider to be the fair market value of the shares of a merging or the
converting bank at the time of the stockholders' meeting approving the merger or
conversion, which the resulting bank will pay dissenting stockholders of that
bank entitled to payment in cash. The amount due under such accepted offer or
under the appraisal shall constitute a debt of the resulting state or national
bank.
C. The expenses of appraisal shall be paid by the resulting state
bank except where the value fixed by the appraisers does not exceed the value
fixed by the merger agreement in which case one-half of the expenses shall be
paid by the resulting bank and one-half by the dissenting stockholders
requesting the appraisal in proportion to their respective holdings.
<PAGE>
APPENDIX C
TITLE 12, SECTION 215
OF THE
UNITED STATES CODE
<PAGE>
SS. 215. CONSOLIDATION OF NATIONAL BANKS OR STATE BANKS WITH NATIONAL BANKS
(A) APPROVAL OF COMPTROLLER, BOARD AND SHAREHOLDERS; TERMS AND CONDITIONS;
NOTICE
Any national banking association or any bank incorporated under the
laws of any State may, with the approval of the Comptroller, be consolidated
with one or more national banking associations located in the same State under
the charter of a national banking association on such terms and conditions as
may be lawfully agreed upon by a majority of the board of directors of each
association or bank proposing to consolidate, and be ratified and confirmed by
the affirmative vote of the shareholders of each such association or bank owning
at least two-thirds of its capital stock outstanding, or by a greater proportion
of such capital stock in the case of such State bank if the laws of the State
where it is organized so require, at a meeting to be held on the call of the
directors after publishing notice of the time, place and object of the meeting
for four consecutive weeks in a newspaper of general circulation published in
the place where the association or bank is located, or, if there is no such
newspaper, then in the paper of general circulation published nearest thereto,
and after sending such notice to each shareholder of record by certified or
registered mail at least ten days prior to the meting, except to those
shareholders who specifically waive notice, but any additional notice shall be
given to the shareholders of such State bank which may be required by the laws
of the State where it is organized. Publication of notice may be waived, in
cases where the Comptroller determines that an emergency exists justifying such
waiver, by unanimous action of the shareholders of the association or State
bank.
(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
C-1
<PAGE>
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 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.
C-2
<PAGE>
APPENDIX D
BANKING CIRCULAR 259
<PAGE>
BC-259
BANKING ISSUANCE
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Type: Banking Circular Subject: Stock Appraisals
- --------------------------------------------------------------------------------
TO: Chief Executive Officers of National Banks, Deputy
Comptrollers (District), Department and Division Heads, and
Examining Personnel
PURPOSE
This banking circular informs all national banks of the valuation methods used
by the Office of the Comptroller of the Currency (OCC) to estimate the value of
a bank's shares when requested to do so by a shareholder dissenting to the
conversion, merger, or consolidation of its bank. The results of appraisals
performed by the OCC between January 1, 1985 and September 30, 1991 are also
summarized.
References: 12 U.S.C. 214a, 215 and 215a; 12 CFR 11.590 (Item 2)
BACKGROUND
Under 12 U.S.C. Sections 214a, a shareholder dissenting from a conversion,
consolidation, or merger involving a national bank is entitled to receive the
value of his or her shares from the resulting bank. A valuation of the shares
shall be made by a committee of three appraisers (a representative of the
dissenting shareholder, a representative of the resulting bank, and a third
appraiser selected by the other two). If the committee is formed and renders an
appraisal that is acceptable to the dissenting shareholder, the process is
complete and the appraised value of the shares is paid to the dissenting
shareholder by the resulting bank. If, for any reason, the committee is not
formed or if it renders an appraisal that is not acceptable to the dissenting
shareholder, an interested party may request an appraisal by the Office of the
Comptroller of the Currency (OCC). 12 U.S.C. Section 215 provides these
appraisal rights to any shareholder dissenting to a consolidation. Any
dissenting shareholder of a target bank in a merger is also entitled to these
appraisal rights pursuant to 12 U.S.C. Section 215a.
- --------------------------------------------------------------------------------
Date: March 5, 1992
The above provides only a general overview of the appraisal process. The
specific requirements of the process are set forth in the statutes themselves.
D-1
<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 is not well established, other
methods of estimating market value can be used, such as the investment value and
adjusted book value methods.
INVESTMENT VALUE
Investment value requires an assessment of the value to investors of a share in
the future earnings of the target bank. Investment value is estimated by
applying an average price/earnings ratio of banks with similar earnings
potential to the earnings capacity of the target bank.
The peer group selection is based on location, size, and earnings patterns. If
the state in which the subject bank is located provides a sufficient number of
comparable banks using location, size and earnings patterns as the criteria for
selection, the price/earnings ratios assigned to the banks are applied to the
earnings per share estimated for the subject bank. In order to select a
reasonable peer group when there are too few comparable independent banks in a
location that is comparable to that of the subject bank, the pool of banks from
which a peer group is selected is broadened by including one-bank holding
company banks in a comparable location, and/or by selecting banks in less
comparable locations, including adjacent states, that have earnings patterns
similar to the subject bank.
ADJUSTED BOOK VALUE
The OCC also uses an "adjusted book value" method for estimating value.
Historically, the OCC has not placed any weight on the bank's "unadjusted book
value", since the value is based on historical acquisition costs of the bank's
assets, and does not reflect investors' perceptions of the value of the bank as
an ongoing concern. Adjusted book value is calculated by multiplying the book
value of the target bank's assets per share times the average market price to
book value ratio of comparable banking organizations. The average market price
to book value ratio measures the premium or discount to book value which
investors attribute to shares of similarly situated banking organizations.
Both the investment value method and the adjusted book value method present
appraised values which are based on the target bank's value as a going concern.
These techniques provide estimates of the market value of the shares of the
subject bank.
D-2
<PAGE>
OVERALL VALUATION
The OCC may use more than one of the above-described methods in deriving the
value of shares of stock. If more than one method is used, varying weights may
be applied in reaching an overall valuation. The weight given to the value by a
particular valuation method is based on how accurately the given method is
believed to represent market value. For example, the OCC may give more weight to
a market value representing infrequent trading by shareholders than to the value
derived from the investment value method when the subject bank's earnings trend
is so irregular that it is considered to be a poor predictor of future earnings.
PURCHASE PREMIUMS
For mergers and consolidations, the OCC recognizes that purchase premiums do
exist and may, in some instances, be paid in the purchase of small blocks of
shares. However, the payment of purchase premiums depends entirely on the
acquisition or control plans of the purchasers, and such payment are not regular
or predictable elements of market value. Consequently, the OCC's valuation
methods do not include consideration of purchase premiums in arriving at the
value of shares.
STATISTICAL DATA
The chart below lists the results of appraisals the OCC performed between
January 1, 1985 and September 30, 1991. The OCC provides statistical data on
book value and price/earnings ratios for comparative purposes, but does not
necessarily rely on such data in determining the value of the banks' shares.
Dissenting shareholders should not view these statistics as determinative for
future appraisals.
In connection with disclosures given to shareholders under 12 CFR 11.590 (Item
2), banks may provide shareholders a copy of this banking circular or disclose
the information contained herein, including the past results of OCC appraisals.
If the bank discloses the past results of the OCC appraisals, it should advise
shareholders that: (1) the OCC did not rely on all the information set forth in
the chart in performing each appraisal; and (2) the OCC's past appraisals are
not necessarily determinative of its future appraisals of a particular bank's
shares.
D-3
<PAGE>
APPRAISAL RESULTS
OCC AVERAGE PRICE/
APPRAISAL APPRAISAL PRICE BOOK EARNINGS RATIO
DATE* VALUE OFFERED VALUE OF PEER GROUP
1/1/85 107.25 110.00 178.29 5.3
1/2/85 73.16 NA 66.35 6.8
1/15/85 53.41 60.00 83.95 4.8
1/31/85 22.72 20.00 38.49 5.4
2/1/85 30.63 24.00 34.08 5.7
2/25/85 27.74 27.55 41.62 5.9
4/30/85 25.98 35.00 42.21 4.5
7/30/85 3,153.10 2,640.00 6,063.66 NC
9/1/85 17.23 21.00 21.84 4.7
11/22/85 316.74 338.75 519.89 5.0
11/22/85 30.28 NA 34.42 5.9
12/16/85 66.29 77.00 89.64 5.6
12/27/85 60.85 57.00 119.36 5.3
12/31/85 61.77 NA 73.56 5.9
12/31/85 75.79 40.00 58.74 12.1
1/12/86 19.93 NA 26.37 7.0
3/14/86 59.02 200.00 132.20 3.1
4/21/86 40.44 35.00 43.54 6.4
5/2/86 15.50 16.50 23.69 5.0
7/3/86 405.74 NA 612.82 3.9
7/31/86 297.34 600.00 650.63 4.4
8/22/86 103.53 106.67 136.23 NC
12/26/86 16.66 NA 43.57 4.0
12/31/86 53.39 95.58 69.66 7.1
5/1/87 186.42 NA 360.05 5.1
6/11/87 50.46 70.00 92.35 4.5
6/11/87 38.53 55.00 77.75 4.5
7/31/87 13.10 NA 20.04 6.7
8/26/87 55.92 57.52 70.88 NC
8/31/87 19.55 23.75 30.64 5.0
8/31/87 10.98 NA 17.01 4.2
10/6/87 56.48 60.00 73.11 5.6
3/15/88 297.63 NA 414.95 6.1
6/2/88 27.26 NA 28.45 5.4
6/30/88 137.78 NA 215.36 6.0
8/30/88 768.62 677.00 1,090.55 10.7
3/31/89 773.62 NA 557.30 7.9
5/26/89 136.47 180.00 250.42 4.5
5/29/90 9.87 NA 11.04 9.9
- --------------------------------------------------------------------------------
* The "Appraisal Date" is the consummation date for the conversion,
consolidation, or merger.
NA - Not Available
NC - Not Computed
D-4
<PAGE>
For more information regarding the OCC's stock appraisal process, contact the
Office of the Comptroller of the Currency, 490 L'Enfant Plaza East, S.W.,
Washington, D.C. 20219, Director for Corporate Activity, Bank Organization and
Structure.
/S/ FRANK MCGUIRE
- ---------------------------------
Frank McGuire
Acting Corporate Policy and Economic Analysis
D-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes indemnification
of directors and officers of a Delaware corporation under certain circumstances
against expenses, judgments and the like in connection with an action, suit or
proceeding. Article Fourteenth of Norwest's Restated Certificate of
Incorporation provides for broad indemnification of directors and officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS: Parenthetical references to exhibits in the description
of Exhibits 3.1, 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.2, 4.1 and
4.2 below are incorporated by reference from such exhibits to
the indicated reports of Norwest filed with the Securities and
Exchange Commission under File No.
1-2979.
2.1 -- Agreement and Plan of Reorganization dated January 20, 1998
between First Bank 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, Exhibit 3 to Norwest's Current Report
on Form 8-K dated July 3, 1995 and Exhibit 3 to Norwest's
Current Report on Form 8-K dated June 3, 1997).
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 14, 1998).
3.2 -- By-Laws (incorporated by reference to Exhibit 3 to Norwest's
Current Report on Form 8-K dated October 10, 1997).
II-1
<PAGE>
4.1 -- Rights Agreement, dated as of November 22, 1988, between Norwest
Corporation and Citibank, N.A. (incorporated by reference to
Exhibit 1 to Norwest's Form 8-A dated December 6, 1988).
4.2 -- 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.
5 -- Opinion of Stanley S. Stroup.
8 -- Opinion of Kelly, Rammelkamp, Muehlenweg & Lucero, P.A.*
23.1 -- Consent of Stanley S. Stroup (included as part of Exhibit 5).
23.2 -- Consent of KPMG Peat Marwick LLP.
23.3 -- Consent of Scott Edwards, CPA.
23.4 -- Consent of Kelly, Rammelkamp, Muehlenweg & Lucero, P.A.
(included as a part of Exhibit 8).
24 -- Powers of Attorney.
99 -- Form of proxy for Special Meeting of Shareholders of First Bank
- ------------------------
*To be filed by amendment.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a posteffective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent posteffective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any 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)
(ss.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.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a posteffective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-3
<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 April 8, 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 April 8, 1998 by the following persons
in the capacities indicated:
/S/ RICHARD M. KOVACEVICH Chairman and Chief Executive Officer
- ------------------------------- (Principal Executive Officer)
Richard M. Kovacevich
/S/ JOHN T. THORNTON Executive Vice President and Chief
- ------------------------------- Financial Officer
John T. Thornton (Principal Financial Officer)
/S/ MICHAEL A. GRAF Senior Vice President and Controller
- ------------------------------- (Principal Accounting Officer)
Michael A. Graf
LES S. BILLER )
J.A. BLANCHARD III )
DAVID A. CHRISTENSEN )
PIERSON M. GRIEVE )
CHARLES M. HARPER )
WILLIAM A. HODDER )
LLOYD P. JOHNSON )
REATHA CLARK KING ) A majority of the
RICHARD M. KOVACEVICH ) Board of Directors*
RICHARD 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-4
<PAGE>
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF FIRST BANK
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 Bank of Grants ("First Bank") to be held on [date of meeting] at [time
of meeting] local time, at [location of meeting], or at any adjournment or
postponement thereof, as follows, hereby revoking any proxy previously given:
1. To approve the conversion of First Bank to a national
banking association from a New Mexico banking corporation.
FOR |_| AGAINST |_| ABSTAIN |_|
2. To approve the Agreement and Plan of Reorganization dated
January 20, 1998 (the "Reorganization Agreement") between First Bank and Norwest
Corporation ("Norwest") pursuant to which a wholly-owned subsidiary of Norwest
will consolidate with First Bank and First Bank 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 First
Bank as may be necessary or appropriate to carry out the intent and purposes of
the Consolidation.
FOR |_| AGAINST |_| ABSTAIN |_|
3. 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 and a
vote "FOR" for proposal 2. If no direction is supplied, the proxy will be voted
"FOR" proposal 1 and "FOR" proposal 2.
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 BANK
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Form of
NUMBER DESCRIPTION* FILING
- ------- ------------ -------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated January 20, 1998
between First Bank 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, Exhibit 3 to Norwest's Current Report on Form
8-K dated July 3, 1995 and Exhibit 3 to Norwest's Current Report
on Form 8-K dated June 3, 1997).
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
14, 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. (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).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Form of
NUMBER DESCRIPTION* FILING
- ------- ------------ -------
<S> <C> <C>
5 Opinion of Stanley S. Stroup. Electronic
Transmission
8 Opinion of Kelly, Rammelkamp, Muehlenweg & Lucero, P.A.**
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 Scott Edwards, CPA. Electronic
Transmission
23.4 Consent of Kelly, Rammelkamp, Muehlenweg & Lucero, P.A.**
(included as part of Exhibit 8)
24 Powers of Attorney. Electronic
Transmission
99 Form of proxy for Special Meeting of Shareholders of Electronic
First Bank. Transmission
</TABLE>
- ------------------------
* Parenthetical references to exhibits in the description of Exhibits 3.1,
3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.2, 4.1 and 4.2 are incorporated by
reference from such exhibits to the indicated reports of Norwest filed with
the SEC under File No. 1-2979.
** To be filed by amendment.
<PAGE>
EXHIBIT 5
[LETTERHEAD OF THE LAW DIVISION OF NORWEST CORPORATION]
April 8, 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 up to 250,000 shares of common stock, par value $1-2/3
per share (the "Shares"), of Norwest Corporation, a Delaware corporation (the
"Corporation"), 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 Bank of Grants, I have examined such corporate records
and other documents, including the Registration Statement on Form S-4 relating
to the Shares, and have reviewed such matters of law as I have deemed necessary
for this opinion, and I advise you that in my opinion:
1. The Corporation is a corporation duly organized and existing under
the laws of the State of Delaware.
2. All necessary corporate action on the part of the Corporation has
been taken to authorize the issuance of the Shares in connection with the
Consolidation, and, when issued as described in the Registration Statement, the
Shares will be legally and validly issued, fully paid and nonassessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Stanley S. Stroup
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Norwest Corporation:
We consent to the use of our report dated January 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
April 8, 1998
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF M. SCOTT EDWARDS, CPA]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
First Bank of Grants:
I consent to the use of my report dated February 6, 1998 included herein and to
the reference to me under the heading "EXPERTS" in the proxy
statement-prospectus.
/s/ M. Scott Edwards, CPA
Albuquerque, NM
April 8, 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ LES S. BILLER
-------------------------------
Les S. Biller
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ J.A. BLANCHARD
-------------------------------
J.A. Blanchard III
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ PIERSON M. GRIEVE
-------------------------------
Pierson M. Grieve
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ CHARLES M. HARPER
-------------------------------
Charles M. Harper
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ WILLIAM A. HODDER
-------------------------------
William A. Hodder
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ LLOYD P. JOHNSON
-------------------------------
Lloyd P. Johnson
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ REATHA CLARK KING
-------------------------------
Reatha Clark King
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ RICHARD M. KOVACEVICH
-------------------------------
Richard M. Kovacevich
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ RICHARD D. MCCORMICK
-------------------------------
Richard D. McCormick
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ CYNTHIA H. MILLIGAN
-------------------------------
Cynthia H. Milligan
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ BENJAMIN F. MONTOYA
-------------------------------
Benjamin F. Montoya
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ IAN M. ROLLAND
-------------------------------
Ian M. Rolland
<PAGE>
NORWEST CORPORATION
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint 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 250,000 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 Bank of Grants, located in Grants, New Mexico, 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 25th day of November, 1997.
/S/ MICHAEL W. WRIGHT
-------------------------------
Michael W. Wright
