[LOGO OF FIRST BANK]
4Q95 Earnings Release
First Bank System, Inc.
Richard A. Zona
Vice Chairman & CFO
January 9, 1996
RECORD 4Q95 AND FULL YEAR 1995 EARNINGS
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4Q 4Q PERCENT 3Q PERCENT PERCENT
1995 1994 CHANGE 1995 CHANGE 1995 1994 CHANGE
From continuing operations
before merger-related items:
Operating earnings (millions) $150.7 $122.6 22.9 $145.7 3.4 $568.1 $470.4 20.8
Earnings per common share (fully diluted) 1.12 0.90 24.4 1.06 5.7 4.11 3.32 23.8
Return on average common equity* (%) 22.4 18.0 21.2 21.3 17.6
Return on average assets* (%) 1.80 1.43 1.76 1.73 1.40
Net interest margin (%) 4.83 4.79 4.85 4.91 4.74
Efficiency ratio* (%) 51.2 57.3 53.9 53.9 58.1
Average FTE 12,918 14,588 (11.4) 12,894 0.2
* From continuing operations and before merger-related items 2
INCOME STATEMENT HIGHLIGHTS
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(Taxable-equivalent basis, $ in millions,
except for earnings per share)
4Q 4Q PERCENT 3Q PERCENT
1995 1994 CHANGE 1995 CHANGE
Net interest income $363.7 $370.2 (1.8) $360.5 0.9
Provision for credit losses 31.0 27.5 12.7 31.0 -
Noninterest income 197.3 172.6 14.3 185.5 6.4
Noninterest expense 287.3 311.8 (7.9) 280.1 2.6
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Income from continuing operations
before taxes and merger-related and
nonrecurring items $242.7 $203.5 19.3 $234.9 3.3
Taxable-equivalent adjustment 3.4 3.6 (5.6) 3.4 -
Income taxes 88.6 77.3 14.6 85.8 3.3
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Income from continuing operations
before merger-related and
nonrecurring items $150.7 $122.6 22.9 $145.7 3.4
Discontinued operations* - (1.9) nm - -
Merger-related items (after-tax) - (156.0) nm - -
Gain on sale of branches less
nonrecurring expenses - - nm - nm
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Net income $150.7 ($35.3) nm $145.7 3.4
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Earnings per share (fully diluted) $ 1.12 ($0.28) nm $1.06 5.7
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* Edina Realty
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STRONG NONINTEREST INCOME GROWTH
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4Q 4Q Percent 3Q Percent Percent
$ in millions 1995 1994 Change 1995 Change 1995 1994 Change
Credit card fees $61.7 $50.3 22.7 $62.7 (1.6) $232.7 $179.0 30.0
Trust fees 47.8 41.7 14.6 42.8 11.7 175.3 159.2 10.1
Service charges on deposit accts 30.4 30.7 (1.0) 30.9 (1.6) 123.7 127.3 (2.8)
Securities losses -- (1.0) nm -- -- -- (3.8) nm
Investment products 7.6 6.4 18.8 7.8 (2.6) 27.6 29.6 (6.8)
Other 49.8 44.5 11.9 41.3 20.6 192.8 178.8 7.8
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Subtotal $197.3 $172.6 14.3 $185.5 6.4 $752.1 $670.1 12.2
Gain on sale of branches -- -- 31.0 31.0 --
Merger-related securities losses -- (111.2) -- -- (111.2)
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Total noninterest income $197.3 $ 61.4 $216.5 $783.1 $558.9
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WELL-CONTROLLED NONINTEREST EXPENSE
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4Q 4Q Percent 3Q Percent Percent
$ in millions 1995 1994 Change 1995 Change 1995 1994 Change
Salaries & employee benefits $131.5 $140.9 (6.7) $130.1 1.1 $ 537.4 $ 556.4 (3.4)
Net occupancy 24.3 25.0 (2.8) 24.3 -- 98.6 103.8 (5.0)
Furniture and equipment 22.4 22.6 (0.9) 23.5 (4.7) 94.2 88.3 6.7
Amortization of goodwill & intangibles 14.9 13.8 8.0 13.9 7.2 57.1 50.4 13.3
Advertising 8.1 8.5 (4.7) 8.4 (3.6) 32.0 35.5 (9.9)
Other personnel costs 12.5 8.6 45.3 11.0 13.6 40.9 35.7 14.6
Professional services 11.3 11.9 (5.0) 8.5 32.9 36.9 38.5 (4.2)
Data processing 4.9 5.6 (12.5) 4.2 16.7 17.8 20.3 (12.3)
Other 51.8 60.5 (14.4) 53.4 (3.0) 224.2 236.8 (5.3)
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Subtotal excluding FDIC $281.7 $297.4 (5.3) $277.3 1.6 $1,139.1 $1,165.7 (2.3)
FDIC insurance 5.6 14.4 (61.1) 2.8 100.0 35.8 58.4 (38.7)
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Subtotal $287.3 $311.8 (7.9) $280.1 2.6 $1,174.9 $1,224.1 (4.0)
Nonrecurring charges -- -- 31.0 31.0 --
Merger-related charges -- 123.9 -- -- 125.3
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Total noninterest expense $287.3 $435.7 $311.1 $1,205.9 $1,349.4
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BALANCE SHEET MANAGEMENT
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Quarterly Average Balances
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4Q 3Q Percent 4Q Percent
$ millions 1995 1995 Change 1994 Change
ASSETS
Securities $ 3,277 $ 3,356 (2.4) $ 5,634 (41.8)
Loans 26,022 25,536 1.9 24,320 7.0
Other 3,861 3,876 (0.4) 4,077 (5.3)
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Total assets $33,160 $32,768 1.2 $34,031 (2.6)
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LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $ 5,799 $ 5,591 3.7 $ 6,028 (3.8)
Interest-bearing deposits:
Interest checking 2,753 2,728 0.9 2,879 (4.4)
Money market accounts 3,891 3,871 0.5 3,847 1.1
Other savings accounts 1,590 1,633 (2.6) 2,208 (28.0)
Savings certificates 6,986 7,256 (3.7) 7,816 (10.6)
Certificates > $100,000 976 1,028 (5.1) 1,298 (24.8)
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Total interest-bearing deposits $16,196 $16,516 (1.9) $18,048 (10.3)
Short-term borrowings 4,198 3,928 6.9 3,390 23.8
Long-term debt 3,146 2,892 8.8 2,872 9.5
Other liabilities 1,077 1,043 3.3 930 15.8
Equity 2,744 2,798 (1.9) 2,763 (0.7)
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Total liabilities & equity $33,160 $32,768 1.2 $34,031 (2.6)
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GROWING LOANS
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. Increased loans (excluding residential mortgage loans) by $2.0 billion or
10.7%
Quarterly Average Balances
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4Q 3Q Percent 4Q Percent
$ millions 1995 1995 Change 1994 Change
Commercial:
Commercial $ 8,291 $ 8,091 2.5 $ 7,209 15.0
Financial institutions 915 814 12.4 832 10.0
Commercial mortgage 2,615 2,406 8.7 2,480 5.4
Construction 370 340 8.8 311 19.0
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Total commercial $12,191 $11,651 4.6 $10,832 12.5
Consumer:
Home equity and second mortgage 2,764 2,679 3.2 2,433 13.6
Credit card 2,428 2,347 3.5 2,264 7.2
Other 3,613 3,660 (1.3) 3,439 5.1
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Subtotal $ 8,805 $ 8,686 1.4 $ 8,136 8.2
Residential mortgage 5,026 5,199 (3.3) 5,352 (6.1)
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Total consumer $13,831 $13,885 (0.4) $13,488 2.5
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Total loans $26,022 $25,536 1.9 $24,320 7.0
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Total loans excl. residential mtge. $20,996 $20,337 3.2 $18,968 10.7
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ASSET QUALITY IMPROVEMENT
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. NPAs down 33.8% from previous year
. Allowance/NPLs = 401%
$ in millions
Dec 31 Sep 30 Percent Dec 31 Percent
1995 1995 Change 1994 Change
Nonperforming loans
Commercial $ 25.1 $ 22.6 11.1 $ 36.5 (31.2)
Commercial real estate 43.8 47.3 (7.4) 72.6 (39.7)
Consumer 49.3 47.2 4.4 58.8 (16.2)
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Total $118.2 $117.1 0.9 $167.9 (29.6)
Other real estate 33.2 46.6 (28.8) 64.0 (48.1)
Other nonperforming assets 2.3 3.2 (28.1) 0.4 475.0
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Total nonperforming assets * $153.7 $166.9 (7.9) $232.3 (33.8)
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Accruing loans 90 days past due $ 38.8 $ 40.7 (4.7) $ 23.4 65.8
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Allowance to nonperforming loans (%) 401 400 283
Allowance to nonperforming assets (%) 308 281 204
Nonperforming assets to loans + ORE (%) 0.58 0.64 0.94
Net charge-offs to average loans (%) 0.44 0.47 0.77
* does not include accruing loans 90 days past due 8
SHARE BUYBACK PROGRAM CONTINUES
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. 12 million shares repurchased during 1995
. Committed to managing capital for shareholder benefit
millions 4Q 3Q 2Q 1Q Year
1995 1995 1995 1995 1995
Beginning shares outstanding 129.4 133.4 135.4 133.8 133.8
Shares issued for:
Acquisitions 1.2 -- -- 1.6 2.8
Employee stock plans 0.7 0.3 0.7 1.0 2.7
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1.9 0.3 0.7 2.6 5.5
Shares repurchased (4.0) (4.3) (2.7) (1.0) (12.0)
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Ending shares outstanding 127.3 129.4 133.4 135.4 127.3
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