EXHIBIT 99.1
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Contacts:
John Danielson Wendy Raway Donald F. Bowler, Jr. Mary B. Ruble
Investor Relations Media Relations Patricia Stanton Karen Tolvstad
First Bank System First Bank System Investor Relations Media Relations
(612) 973-2261 (612) 973-2429 U.S. Bancorp U.S. Bancorp
(503) 275-5702 (503) 275-6200
FIRST BANK SYSTEM TO ACQUIRE U.S. BANCORP
MERGER CREATES $70 BILLION BANKING ORGANIZATION IN 17 CONTIGUOUS STATES UNDER
THE NAME U.S. BANCORP; HEADQUARTERS TO BE IN MINNEAPOLIS
MINNEAPOLIS/PORTLAND, March 20, 1997 -- First Bank System, Inc.
(NYSE:FBS) and U.S. Bancorp (NASDAQ:USBC) today announced the signing of a
definitive agreement for FBS to acquire Portland, Oregon-based U.S. Bancorp.
The resulting company, which will be called U.S. Bancorp, will create the 8th
largest banking organization in the U.S. based on market capitalization, and
the 14th largest banking organization based on assets. The combined
organization will serve nearly 4 million households and 475,000 businesses in
17 contiguous states.
Under terms of the agreement, U.S. Bancorp shareholders will receive a
tax-free exchange of 0.755 shares of FBS common stock for each share of U.S.
Bancorp common stock. Based on FBS's closing stock price on March 19, 1997,
this exchange ratio represents a price of $59.08 for each U.S. Bancorp share,
resulting in a purchase price of approximately $9 billion.
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"Together, our combined company will become the best-performing major
bank in the United States, a regionally-based, nationally-competitive bank
that uses technology to drive superior efficiency and customer service," said
John F. Grundhofer, chairman, president and chief executive officer of First
Bank System. "Our regions are contiguous, compatible and are in attractive
growth markets. Our banks both have strong market presence. Our business
strategies are virtually identical. Our business lines and products
complement each other. And each of us has special skills and resources to
offer the other. You could live a couple of lifetimes without finding another
fit this good."
Grundhofer will serve as the president and chief executive officer of
the combined organization. U.S. Bancorp chairman and CEO, Gerry B. Cameron,
will serve as chairman until his retirement in 1998. Joining Grundhofer's
current direct reports will be Gary T. Duim and Robert D. Sznewajs, who will
be vice chairmen in the new U.S. Bancorp.
Cameron said, "U.S. Bancorp and First Bank System both have strong
reputations for superior customer service, excellent employees, community
involvement and future-focused thinking. These two organizations will
integrate very well. Employees will be key to the future success of the
combined company as we provide customers with enhanced products and services
over a wider geographic territory."
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The transaction is expected to be accretive to FBS earnings per share in
the second quarter of 1998, nine months after closing. By 1999, FBS estimates
earnings per share accretion of approximately 8 percent. FBS said it would
incur pre-tax merger-related charges totaling $625 million through the second
quarter of 1998. The acquisition will be accounted for as a pooling. The FBS
board of directors has rescinded its stock repurchase authorization. In
connection with the merger agreement, FBS and U.S. Bancorp have each granted
the other an option for 19.9% of its outstanding shares exercisable under
certain circumstances with a potential value of between $200 million and $300
million.
FBS estimated that an expense reduction of approximately $340 million
(pre-tax), or stated as a percentage, representing 28 percent of U.S.
Bancorp's operating expenses, would be created by centralizing data
processing, staff functions and some operations functions as well as through
standardizing products, improving technology, and branch efficiencies and
offering customers increased alternative delivery channels for bank products
and services. The companies estimated that their combined operating expenses
would be reduced by 14 percent.
The companies said that as with any merger of this magnitude, job loss
at both organizations will be unavoidable. Approximately 4,000 positions will
be eliminated, however, both companies said they were committed to do
whatever they could to minimize the impact through hiring restrictions,
normal attrition and redeploying employees into other positions.
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FBS said the transaction would enable it to leverage its unique position
in the payment systems business by offering those services to U.S. Bancorp's
extensive corporate customer base. FBS is the largest provider of Visa
corporate and purchasing cards in the world. Other anticipated revenue
enhancements include capitalizing on FBS' success in home equity lending,
exporting U.S. Bancorp's market position and expertise in leasing to FBS'
franchise, and bringing First Bank's investment management expertise to U.S.
Bancorp's customers.
The combined organization will use the name U.S. Bancorp and will be
headquartered in Minneapolis. "The U.S. Bancorp name better reflects the
expanded geographic service area of the combined organizations," Grundhofer
explained. FBS said it intends to establish Portland as a major development
site for its ongoing technology efforts which will be critical in order to
address the needs of the combined organization. "Employees will be part of a
stronger, even more dynamic industry leader," Grundhofer noted. "The merger
enhances management depth, capitalizes on shared experience and creates
future opportunities for employees of the new U.S. Bancorp.
"The new U.S. Bancorp will have a strong shared vision in serving
customers," Grundhofer added. "The investments that FBS has already made in
technology to enhance customer satisfaction and address their needs can be
used to the benefit of U.S. Bancorp's customers. And the combined
organization will have the critical mass to invest even further in innovative
products and services." Cameron also emphasized
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that the complementary nature of the two companies' businesses and priorities
as well as the non-overlapping nature of the markets served by each company
would minimize disruption for customers. "We are very focused on customer
needs," stated Cameron. "Mergers can be disruptive and we are determined to
make this transition as smooth as possible." Customers will have access to
nearly 1,000 branch offices, more than 4,500 ATMs and continued 24-hour
customer service. Business customers will continue to have their needs
supported through local decision making as well as over 80 products and
services.
"Both companies have strong records as community partners and we are
totally committed to continuation of that record. Our mutual focus has been
one of community development and reinvestment initiatives that build
economically strong neighborhoods and contribute to the quality of life. The
effort has earned both our companies outstanding Community Reinvestment Act
(CRA) ratings in our major markets, as well as a high degree of community
goodwill," Grundhofer noted.
The FBS and U.S. Bancorp boards of directors will be combined. FBS
currently has 16 directors; U.S. Bancorp currently has 12 directors. The
boards of both organizations have unanimously approved the acquisition. The
acquisition is contingent upon regulatory and shareholder approvals and is
expected to close in the third quarter of 1997.
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First Bank System is a regional bank holding company headquartered in
Minneapolis with assets of $36.5 billion. The Company provides complete
financial services to individuals and institutions through 9 banks, a savings
association and other financial companies with 359 banking offices and 15
nonbanking offices, located primarily in the 11 states of Minnesota,
Colorado, Nebraska, North Dakota, South Dakota, Montana, Illinois, Wisconsin,
Iowa, Kansas and Wyoming.
Northwest-based U.S. Bancorp is the 26th largest bank holding company in
the nation, with assets of $33.3 billion. The company has 636 branches and
provides comprehensive financial products and services to consumers and
businesses in Oregon, Washington, Idaho, Nevada, Northern California and Utah.
Merger Summary Table
Name U.S. Bancorp
Headquarters Minneapolis
Purchase Price Approximately $9 billion
Exchange Ratio 0.755
Current Price Per Share $59.08
A NEWS MEDIA TELECONFERENCE WILL BE HELD AT 12:30 P.M. (EASTERN STANDARD
TIME) ON THURSDAY, MARCH 20. TO PARTICIPATE IN THE CALL, PLEASE CALL
(800) 251-6682. ASK TO BE CONNECTED TO THE FIRST BANK SYSTEM/U.S. BANCORP
TELECONFERENCE. INTERNATIONAL CALLERS, PLEASE CALL (706) 645-9723.
/Photo available on AP PhotoExpress Network (7:00 am, March 20, 1997, and
PRN 1. PRN 2); via NewsCom, 305-448-8411 or http://www.newscom.com; or via
PressLink Online, 703-758-1740/
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Forward-Looking Information
This news release contains estimates of future operating results for
1997, 1998 and 1999 for both First Bank System, Inc. and U.S. Bancorp on a
stand-alone and pro forma combined basis, as well as estimates of financial
condition, operating efficiencies and revenue creation on a combined basis.
These estimates constitute forward-looking statements (within the meaning of
the Private Securities Litigation Reform Act of 1995), which involve
significant risks and uncertainties. Actual results may differ materially
from the results discussed in these forward-looking statements. Factors that
might cause such a difference include, but are not limited to: (1) expected
cost savings from the Merger cannot be fully realized or realized within the
expected time frame; (2) revenues following the Merger are lower than
expected; (3) competitive pressures among depository institutions increase
significantly; (4) costs or difficulties related to the integration of the
business of FBS and USBC are greater than expected; (5) changes in the
interest rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the states in which the combined company
will be doing business are less favorable than expected; and (7) legislation
or regulatory changes adversely affect the business in which the combined
company would be engaged.
PRO FORMA RECAP
THE "NEW" U.S. BANCORP
HEADQUARTERS: MINNEAPOLIS, MINNESOTA
NATIONAL
FBS U.S. BANCORP COMBINED RANK
--- ------------ -------- --------
ASSETS ($ billions) $37 $33 $70 14th
MARKET CAPITALIZATION $10.5 $8.5 $19 8th
($ billions)
DEPOSITS ($ billions) $24 $25 $49
RETURN ON ASSETS 1.88% 1.43% 2.00+%
RETURN ON EQUITY 21.4% 17.1% Mid 20s
NET INTEREST MARGIN 4.89% 5.32% 5.00+%
EFFICIENCY RATIO 46.8% 55.2% Low 40s
STATES 11 6 17
BRANCHES
Traditional 327 578 905
Store-based 32 58 90
ATMS 3,265 1,300 4,565 3rd
CUSTOMERS
Households (millions) 1.9 2.0 3.9
Businesses (thousands) 225 250 475
COMBINED PRODUCT STRENGTHS ($ millions)
Home Equity Loans $3,263 $1,654 $ 4,917 9th
Other Consumer Loans 6,699 4,111 10,810 13th
Small Business Loans 1,535 2,108 3,643 6th
MUTUAL FUNDS ($ billions) $12.8 $ 2.5 $ 15.3
ASSETS UNDER MANAGEMENT
($ billions) 39.3 10.2 49.5
TOTAL TRUST FEE REVENUES
($ millions) 230.7 71.6 302.3
CUSTOMER CALLS USING
TELEPHONE BANKING (per year) 46 million 42 million 88 million