Exhibit 20
CONTACTS:
Christine McCarthy John Danielson Ken Preston Wendy Raway
Mariann Ohanesian Karin Glasgow Shirley Hosoi Media Relations
Investor Relations Investor Relations Media Relations First Bank System
First Interstate First Bank System First Interstate (612) 973-2429
(213) 614-5866 (612) 973-2261 (213) 614-3656
(213) 614-2465 (612) 973-2264 (213) 614-3043
FIRST BANK SYSTEM AND FIRST INTERSTATE SIGN MERGER
AGREEMENT VALUED AT $10.3 BILLION
--WILL CREATE NATION'S NINTH-LARGEST BANKING COMPANY, WITH
$92.4 BILLION IN ASSETS AND 7.6 MILLION RETAIL HOUSEHOLDS--
--EXPECTED TO BE ACCRETIVE TO EPS IN FIRST FULL YEAR OF OPERATIONS--
--FIRST INTERSTATE REJECTS WELLS FARGO'S UNSOLICITED MERGER PROPOSAL--
MINNEAPOLIS AND LOS ANGELES, November 6, 1995--First Bank System, Inc.
(NYSE:FBS) and First Interstate Bank (NYSE:I) today announced that they have
entered into a definitive agreement whereby FBS will exchange 2.6 shares of its
common stock for each share of First Interstate. The transaction, which has
been unanimously approved by the boards of both companies, is valued at $10.3
billion, or $132.275 per share, based on the closing price of FBS common stock
on November 3, 1995. This represents a premium of 25% over the closing price of
First Interstate stock on October 17, 1995, the day before Wells Fargo made
public its uninvited merger proposal to First Interstate.
The exchange will be accounted for as a pooling of interests. Therefore there
will be no additional goodwill and related amortization as a result of this
combination. Consistent with the accounting requirements under a pooling of
interests, FBS will not purchase treasury shares under its existing
authorizations within 90 days of the consummation of the merger (e.g., in the
second and third quarters of 1996). After that time, consistent with its prior
practice, FBS expects to resume its capital management program to manage future
excess capital.
The FBS and First Interstate transaction is subject to shareholder and
regulatory approvals and is expected to close in the second quarter of 1996.
Both companies have exemplary CRA records and do not expect an unduly difficult
regulatory review process.
The new institution, which will retain the First Interstate name, will have
$92.4 billion in assets, $7.3 billion in shareholders' equity and the largest
service territory west of the Mississippi, consisting of 7.6 million households,
1,514 branch locations and 4,692 ATMs in 21 states. The merger is expected to
result in accretion to 1997 EPS of approximately 18 percent and a return on
common equity of approximately 26.5 percent.
John F. Grundhofer, 56, chairman, president and chief executive officer of First
Bank System, will become chairman and chief executive officer of the new First
Interstate. First Interstate chairman and chief executive officer, William E.
B. Siart, 48, will serve as president and chief operating officer of the
combined companies. Richard A. Zona, 51, FBS' vice chairman and chief financial
officer will serve in that capacity for the new First Interstate. FBS vice
chairman of Retail Products and Technology, Philip G. Heasley, 46, also will
serve in that same capacity. Linnet F. Deily, 50, who currently serves as chief
executive officer of First Interstate's Texas Region, will become vice chairman
of Retail Banking. First Interstate chief executive officer of the California
Region, Bruce G. Willison, 47, will serve as vice chairman of Corporate Banking.
The new First Interstate will have its corporate headquarters in Minneapolis,
and will direct its core business lines--including Retail, Corporate, Private
Banking, Payment Systems, and Trust and Investment Management--from Los Angeles.
Reflective of the importance of Los Angeles to First Interstate, the institution
has committed itself to maintaining its strong level of community support. The
20-member Board of Directors of the new institution will reflect equal
representation from both companies.
"Over the past five years, First Bank System has demonstrated the disciplines
that are necessary to successfully integrate 23 acquisitions and run a
multistate banking operation," Grundhofer said. "With the strong board and
management support already in place for this merger, I am confident that we will
create immediate and long-term shareholder value for the stockholders of both
companies.
"The new First Interstate combines two of the most profitable banks in the
country, as measured by return on equity, a low cost structure and proven
expertise in mastering technology as a tool for enhancing both our customer
service and financial performance. Our strategy going forward will rest on the
broad and solid foundation of our complementary operations and service
territories, our compatible, customer-driven cultures and focused products and
businesses."
Grundhofer said he expects the merger will result in an annual cost saving of
$500 million, or 22% of First Interstate's expenses, and that it will be 18%
accretive to earnings per share in the first full year of operations.
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Siart said: "This merger marks a bold new chapter for a bold new First
Interstate. It is about creating long-term growth and profitability by
expanding our business through a compelling strategic fit. It is not simply
about manufacturing gains from contraction and cost cutting alone--the formula
many are following in the industry consolidation we are seeing today.
"It also allows us to keep a major business presence in the City of Los Angeles
and maintain our commitment and strong support to the community, which has
always been our home and will remain the home of the core businesses upon which
First Interstate has built its success.
"We also expect the diverse and expanded interstate franchise resulting from
this merger to significantly insulate us from local or even regional economic
downturns and position us ideally to take advantage of the new era of interstate
branching. Another significant advantage of our geographic diversity is the
ability to focus our cost reductions on staff and back office operations, thus
minimizing the impact on customers or any single market," Siart said.
With respect to the uninvited merger proposal by Wells Fargo & Co., Siart said:
"Well before the receipt of the Wells proposal, we had made significant progress
in our own process of exploring strategic alternatives and had established
important criteria against which to measure any particular alternative. The
First Interstate board and management took the Wells Fargo proposal very
seriously. Accordingly, I spoke with Paul Hazen numerous times in the past ten
days, including two face-to-face meetings. We discussed the value of his
unsolicited offer and the many issues, including the pitfalls relating to the
successful implementation of a combination.
"After considering the hostile nature of the Wells approach, the difficulty of
executing the combination, the relatively high valuation of Wells' stock versus
all other bank stocks, including First Interstate stock, the somewhat
controversial purchase accounting treatment, and the significant job losses that
would occur in the California market--and after thoroughly reviewing alternative
opportunities--our board concluded that the First Bank System proposal
represents the best available alternative, even if Wells is prepared to increase
from .625 to .65 the number of Wells shares it would exchange for each First
Interstate share. We have, therefore, rejected the riskier Wells Fargo offer.
"We believe Wells Fargo is a fine institution and look forward to continuing to
compete with them for the benefit of our respective customers, employees,
communities and the State of California and its economy. I can understand that
Wells Fargo management may be disappointed by our board's decision, but we
expect that they, as professionals, will respect that decision," Siart said.
3
The First Interstate Banks in 13 western states provide financial products and
services to customers through 1,148 offices. These banks serve individuals,
small businesses, middle market companies and selected large corporations and
financial institutions primarily in the West. Working together with Standard
Chartered Bank of London, First Interstate provides a variety of international
banking services and extends its reach to companies around the world. First
Interstate provides quality financial products and services marketed at the
local level to nearly five million households in over 500 western communities.
First Bank System is a regional bank holding company headquartered in
Minneapolis. The company provides complete financial services to individuals
and institutions through 8 banks, a savings association and other financial
companies with 366 offices, located primarily in the 11 states of Minnesota,
Colorado, North Dakota, South Dakota, Montana, Illinois, Wisconsin, Iowa,
Kansas, Nebraska and Wyoming.
NOTE: THERE WILL BE A TELEPHONE CONFERENCE CALL FOR THE NEWS MEDIA WITH MESSRS.
GRUNDHOFER AND SIART TODAY AT 1:15 P.M. EASTERN TIME. TO GET ON THE LINE,
PLEASE CALL (212) 346-0236 AT LEAST 15 MINUTES PRIOR TO THE BEGINNING OF THE
CALL.
# # #
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FACTS ABOUT
THE NEW FIRST INTERSTATE BANK
FIRST BANK SYSTEM* FIRST INTERSTATE BANK COMBINED PRO FORMA RANK
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TOTAL ASSETS $37,323 $55,067 $92,390 9th
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MARKET CAP $7,005 $9,726 $16,606 5th
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STATES SERVED Minnesota California 21 total
Colorado Texas 3 combined
North Dakota Arizona
South Dakota New Mexico
Montana Washington
Wisconsin Oregon
Nebraska Idaho
Wyoming Utah
Kansas Montana
Illinois Wyoming
Iowa Colorado
Nevada
Alaska
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BRANCHES 366 1,148 1,514
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RETAIL HOUSEHOLDS 3,123,000 4,500,000 7,623,000
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COMMERCIAL 236,000 226,000 462,000
CUSTOMERS
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ATMS 2,896 1,796 4,692
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TOTAL DEPOSITS $25,050 $48,236 $73,286 6th
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TOTAL LOANS $28,333 $35,967 $64,300 7th
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TOP MARKETS Minneapolis/St. Paul Los Angeles #1, 2 or
Denver Phoenix 3 in 35
North Dakota Houston of 83
Montana Portland markets
Illinois Seattle served
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* Pro Forma with FirsTier