ITEM 1 Business General . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates and Interest Differential . . . . . . . . . . . . .19-20, 74-75 Investment Portfolio. . . . . . . . . . . . . . . . . . 37-38, 71 Loan Portfolio. . . . . . . . . . . . . . . . . 21, 25-33, 50, 77 Summary of Loan Loss Experience . . . . . . . . . . . . .21,25-33 Deposits. . . . . . . . . . . . . . . . . . . . . . . . 74-75, 77 Return on Equity and Assets . . . . . . . . . . . . . . . . . .76 Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . .78 ITEM 2
ITEM 2 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . .80 ITEM 3
ITEM 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .none ITEM 4
ITEM 4 Submission of Matters to a Vote of Security Holders . . . . .none
PART II
ITEM 5
ITEM 5 Market for the Registrant's Common Equity and Related Stockholder Matters. . . . . . . .19, 69, 76 ITEM 6
ITEM 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . .13 ITEM 7
ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . 12-39 ITEM 8
ITEM 8 Financial Statements and Supplemental Data. . . . . . . . .73, 81 ITEM 9
ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures . . . . . . . . . . . . . . . . . . .none
PART III
ITEM 10
ITEM 10 Directors and Executive Officers of the Registrant. . . . . . .83 ITEM 11
ITEM 11 Executive Compensation. . . . . . . . . . . . . . . . . . . . . * ITEM 12
ITEM 12 Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . * ITEM 13
ITEM 13 Certain Relationships and Related Transactions. . . . . . . . . *
PART IV
ITEM 14
ITEM 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . .81
*FIRST BANK SYSTEM'S DEFINITIVE PROXY STATEMENT FOR THE 1994 ANNUAL MEETING OF SHAREHOLDERS IS INCORPORATED HEREIN BY REFERENCE, OTHER THAN THE SECTIONS ENTITLED "REPORT OF THE ORGANIZATION COMMITTEE ON EXECUTIVE COMPENSATION" AND "PERFORMANCE GRAPH."
GENERAL --> First Bank System, Inc. (the "Company") is a regional, multi-state bank holding company headquartered in the Twin Cities of Minneapolis and St. Paul, Minnesota. The Company was incorporated in Delaware in 1929 and owns more than 97 percent of the capital stock of each of the nine commercial banks and four trust companies, having 181 banking offices in Minnesota, Colorado, Montana, North Dakota, South Dakota, Washington, and Wisconsin. The Company also has various nonbank subsidiaries engaged in financial services principally in the Upper Midwest.
The banks are engaged in general commercial banking business principally in domestic markets. They range in size from $42 million to $12.3 billion in deposits and provide a wide variety of services to individuals, businesses, industry, institutional organizations, governmental entities and other financial institutions. Depository services include checking accounts, savings accounts and time certificate contracts. Ancillary services such as cash management and receivable lockbox collection are provided for corporate customers. Nine subsidiary banks and four trust companies provide a full range of fiduciary activities for individuals, estates, foundations, business corporations, and charitable organizations.
The Company provides banking services through its subsidiary banks to both domestic and foreign customers and correspondent banks. These services include consumer banking, commercial lending, financing of import/export trade, foreign exchange, and investment services.
The Company, through its subsidiaries, also provides services in mortgage banking, trust, commercial and agricultural finance, data processing, leasing, and brokerage services.
On a full-time equivalent basis, employment during 1993 averaged a total of 12,300 employees.
COMPETITION --> The commercial banking business is highly competitive. Subsidiary banks compete with other commercial banks and with other financial institutions, including savings and loan associations, mutual savings banks, finance companies, mortgage banking companies, credit unions, and mutual funds. In recent years, competition also has increased from institutions not subject to the same regulatory restrictions as domestic banks and bank holding companies.
GOVERNMENT POLICIES --> The operations of the Company's various operating units are affected by state and federal legislative changes and by policies of various regulatory authorities, including those of the several states in which they operate, the United States and foreign governments. These policies include, for example, statutory maximum legal lending rates, domestic monetary policies of the Board of Governors of the Federal Reserve System, United States fiscal policy, international currency regulations and monetary policies, and capital adequacy and liquidity constraints imposed by bank regulatory agencies.
SUPERVISION AND REGULATION --> The Company is a registered bank holding company under the Bank Holding Company Act of 1956 (the "Act") and is subject to the supervision of, and regulation by, the Board of Governors of the Federal Reserve System (the "Board").
Under the Act, a bank holding company may engage in banking, managing or controlling banks, furnishing or performing services for banks it controls, and conducting activities that the Board has determined to be closely related to banking. The Company must obtain approval of the Board before acquiring control of a bank or by acquiring more than 5 percent of the outstanding voting shares of a company engaged in a "bank-related" business. Under the Act and state laws, the Company is subject to certain restrictions as to states in which the Company can acquire a bank.
National banks are subject to the supervision of, and are examined by, the Comptroller of the Currency. State banks are subject to the supervision of the regulatory authorities of the states in which they are located. All subsidiary banks of the Company are members of the Federal Deposit Insurance Corporation, and as such, are subject to examination thereby. In practice, the primary federal regulator makes regular examinations of each subsidiary bank subject to its regulatory review or participates in joint examinations with other federal regulators. Areas subject to regulation by federal and state authorities include the allowance for credit losses, investment, loans, mergers, issuance of securities, payment of dividends, establishment of branches and other aspects of operations.
PROPERTIES --> At December 31,1993, the Company's subsidiaries owned and operated a total of 138 facilities while leasing an additional 148 facilities, all of which are well maintained.
The Company's largest facilities are located in Minneapolis, St. Paul, and Denver. In Minneapolis, First Bank National Association and the Company's corporate offices occupy parts of four buildings. Thirty-one floors of First Bank Place and two floors of Pillsbury Center are leased. The Company also occupies nine floors in the Marquette bank building and five floors in the Concourse building, both of which are owned by the Company. In St. Paul, the Company leases an Operations Center as well as one-third of the First National Bank Building and four floors in the First Trust Center. In Denver, Colorado National Bank occupies approximately 70 percent of the Colorado National Bank Building and three percent of the Park Central Building, both of which are owned by subsidiaries of Colorado National Bank.
Additional information with respect to premises and equipment is presented in Notes G and 0 of Notes to Consolidated Financial Statements.
EXHIBITS
Financial Statements Filed Page - ---------------------------------------------------------------- First Bank System, Inc. and Subsidiaries Consolidated Financial Statements. . . . . . . . . . . . 40 Notes to Consolidated Financial Statements . . . . . . . 44 Report of Independent Auditors . . . . . . . . . . . . . 70
Schedules to the consolidated financial statements required by Article 9 of Regulation S-X are omitted since the required infor- mation is included in the footnotes or is not applicable.
During the three months ended December 31, 1993, the Company filed a report on Form 8-K on October 13,1993, relating to the announcement of the Company's intention to purchase Boulevard Bancorp, Inc.
The following Exhibit Index lists the Exhibits to Annual Report on Form 10-K.
(1)3A Restated Certificate of Incorporation, as amended. Filed as Exhibit 3A to report on Form 10-K for fiscal year ended December 31,1989.
3B By-laws.
4 [Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies of instruments defining the rights of holders of long-term debt are not filed. First Bank System, Inc. agrees to furnish a copy thereof to the Securities and Exchange Commission upon request.]
(1)1OA Agreement of Merger and Consolidation dated November 8,1992, by and among First Bank System, Inc., Central Bancorporation, Inc. and Colorado National Bankshares, Inc. Filed as Exhibit 2.1 to 8-K Report filed November 13,1992.
(1)10B Stock Purchase Agreements dated as of May 30, 1990, among Corporate Partners, L.P.; Corporate Offshore Partners, L.P.; The State Board of Administration of Florida and First Bank System, Inc. and related documents. Filed as Exhibits 4.8- 4.15 to Registration Statement on Form S-3 filed on September 10, 1991.
(1)(2)10C First Bank System, Inc. 1987 Stock Option Plan. Filed as Exhibit 10E to report on Form 10-K for fiscal year ended December 31,1991.
(1)(2)10D First Bank System, Inc. Nonqualified Supplemental Executive Retirement Plan. Filed as Exhibit 1OF to report on Form 10- K for fiscal year ended December 31,1991.
(1)(2)10E First Bank System, Inc. Executive Deferral Plan. Filed as Exhibit lOG to report on Form 10-K for fiscal year ended December 31,1991.
(1)(2)10F First Bank System, Inc. Annual Incentive Plan. Filed as Exhibit 10H to report on Form 10-K for fiscal year ended December 31,1992.
(1)(2)10G First Bank System, Inc. Independent Director Retirement and Death Benefit Plan. Filed as Exhibit 10I to report on Form 10-K for fiscal year ended December 31,1992.
(1)(2)10H First Bank System, Inc. Deferred Compensation Plan for Directors. Filed as Exhibit 10J to report on Form 10-K for fiscal year ended December 31,1992.
(1)10I Rights Agreement dated as of December 21,1988, between First Bank System, Inc. and Morgan Shareholder Services Trust Company. Filed as Exhibit 1 to 8-K Report filed January 5,1989.
(1)(2)10J First Bank System, Inc. Restated Employee Stock Purchase Plan. Filed as Exhibit 10L to report on Form 10-K for fiscal year ended December 31,1991.
(1)(2)10K Form of Change-in-Control Agreement between First Bank System, Inc. and certain officers of the Company. Filed as Exhibit 10M to report on Form 1O-K for fiscal year ended December 31, 1991.
(1)(2)10L First Bank System, Inc. 1991 Stock Incentive Plan. Filed as Exhibit A to Definitive Proxy Statement of Annual Meeting of Shareholders on April 24,1991.
(2)10M First Bank System, Inc. 1994 Stock Incentive Plan.
(1)(2)10N Agreement between First Bank System, Inc. and John F. Grundhofer dated December 30,1992. Filed as Exhibit 10O to report on Form 10-K for fiscal year ended December 31,1992.
(2)10O Deferred Income Agreement between First Bank System, Inc. and John F. Grundhofer dated November 1, 1993.
(2)10P Description of First Bank System, Inc. Stock Option Loan Policy.
11 Statement re: Computation of Primary and Fully Diluted Net Income per Common Share.
12 Statement re: Computation of Ratio of Earnings to Fixed Charges.
13 Integrated Annual Report / Form 10-K to Shareholders for the year ended December 31,1993 (See cover page).
21 Subsidiaries of the Registrant.
23 Consent of Ernst& Young.
Copies of the Exhibits will be furnished upon request and payment of the Company's reasonable expenses in furnishing the Financial Statement Schedule and Exhibits.
(1) Exhibit has heretofore been filed with the Securities and Exchange Commission and is incorporated herein as an exhibit by reference.
(2) Items that are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 14(c) of this Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on February 16,1994, on its behalf by the undersigned thereunto duly authorized.
First Bank System, Inc. John F. Grundhofer Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 16,1994, by the following persons on behalf of the registrant and in the capacities indicated.
JOHN F. GRUNDHOFER Chairman, President, Chief Executive Officer, and Director (principal executive officer)
RICHARD A. ZONA Vice Chairman and Chief Financial Officer (principal financial officer)
SUSAN E. LESTER Executive Vice President and Controller (principal accounting officer)
ROGER L HALE Director
DELBERT W. JOHNSON Director
JOHN H. KAREKEN Director
RICHARD L. KNOWLTON Director
KENNETH A. MACKE Director
THOMAS F. MADISON Director
MARILYN C. NELSON Director
WILL F. NICHOLSON, JR. Director
NICHOLAS R. PETRY Director
EDWARD J. PHILLIPS Director
JAMES J. RENIER Director
S. WALTER RICHEY DIRECTOR
RICHARD L ROBINSON Director
LYLE E. SCHROEDER Director
EXECUTIVE OFFICERS
JOHN F. GRUNDHOFER
Mr. Grundhofer, 55, has been Chairman of the Board, President and Chief Executive Officer of First Bank System since 1990. Previously, he served as Vice Chairman and Senior Executive Officer for Southern California, Wells Fargo Bank N.A.
WILLIAM F. FARLEY
Mr. Farley, 49, has been Vice Chairman of First Bank System since 1990. His previous positions include: Partner, Headrick& Farley and President, First Bank National Association.
PHILIP G. HEASLEY
Mr. Heasley, 44, was named Vice Chairman in 1993 and continues to serve as President of the Retail Product Group. His previous positions include: Executive Vice President and President of the Retail Product Group and Senior Vice President, Consumer Business, Electronic Banking Division.
RICHARD A. ZONE
Mr. Zona, 49, has served as Vice Chairman since 1990 and Chief Financial Officer since 1989. He was previously a Partner at Ernst & Young,
J. ROBERT HOFFMANN
Mr. Hoffmann, 48, has been Executive Vice President and Chief Credit Officer since 1990. He previously served as Executive Vice President, Credit Administration at First Bank National Association.
JOHN M. MURPHY, JR.
Mr. Murphy, 52, has been Chairman and Chief Investment Officer, First Trust National Association, since 1990. Before that he was Managing Director, First Asset Management, a division of First Bank National Association.
DANIEL C. ROHR
Mr. Rohr, 47, has served as Executive Vice President of the Commercial Banking Group since 1990. Previously, he was Executive Vice President and Chief Credit Officer at Columbia Savings & Loan Association.
ROBERT H. SAYRE
Mr. Sayre, 54, has served as Executive Vice President of Human Resources since 1990. Previously, he was Executive Director at Russell Reynolds Associates, Inc.
MICHAEL J. O'ROURKE
Mr. O'Rourke, 49, has been Executive Vice President, Secretary and General Counsel since 1991. Previously, he was Senior Vice President, Secretary and General Counsel.
SUSAN E. LESTER
Ms. Lester, 37, was named Executive Vice President in 1993, in addition to her duties as Controller. Previously, she was Senior Vice President and Controller.
DAVID R. EDSTAM
Mr. Edstam, 46, has been Senior Vice President and Treasurer since 1989.
ELIZABETH A. MALKERSON
Ms. Malkerson, 44, has been Senior Vice President of Corporate Relations since 1990. Her previous position was Vice President of External Affairs.
DIRECTORS
COLEMAN BLOOMFIELD
Chairman and Chief Executive Officer Minnesota Mutual Life Insurance Co. St. Paul, Minnesota
JOHN F. GRUNDHOFER
Chairman, President and Chief Executive Officer First Bank System, Inc. Minneapolis, Minnesota
ROGER L. HALE
President and Chief Executive Officer TENNANT Minneapolis, Minnesota
*DELBERT W. JOHNSON
President Pioneer Metal Finishing, Inc. Minneapolis, Minnesota
JOHN H. KAREKEN
Professor of Banking and Finance Curtis L. Carlson School of Management University of Minnesota Minneapolis, Minnesota
RICHARD L KNOWLTON
Chairman of the Board Hormel Foods Corporation Austin, Minnesota
KENNETH A. MACKE
Chairman and Chief Executive Officer Dayton Hudson Corporation Minneapolis, Minnesota
THOMAS F. MADISON
Retired President U.S. West Communications-Markets Minneapolis, Minnesota
MARILYN C. NELSON
Vice Chairman and Director Carlson Holdings, Inc. Minneapolis, Minnesota
WILL F. NICHOLSON, JR.
Chairman, President and Chief Executive Officer Colorado National Bankshares, Inc. Denver, Colorado
NICHOLAS R. PETRY
President The Petry Company Denver, Colorado
EDWARD J. PHILLIPS
Chairman and Chief Executive Officer Phillips Beverage Company Minneapolis, Minnesota
JAMES J. RENIER
Retired Chairman of the Board and Chief Executive Officer Honeywell Inc. Minneapolis, Minnesota
S. WALTER RICHEY
President and Chief Executive Officer Space Center Company St. Paul, Minnesota
RICHARD L. ROBINSON
Chairman and Chief Executive Officer Robinson Dairy, Inc. Denver, Colorado
RICHARD L. SCHALL
Retired Vice Chairman of the Board Dayton Hudson Corporation Minneapolis, Minnesota
LYLE E. SCHROEDER
President and Chief Executive Officer Sioux Valley Hospital Sioux Falls, South Dakota
*ELECTED TO THE BOARD OF DIRECTORS EFFECTIVE JANUARY 19, 1994
FBS LOCATIONS
First Bank System, Inc. primarily serves Minnesota, Colorado, Montana, North Dakota, South Dakota, and Wisconsin through 181 banking locations and 24 additional offices of nonbank subsidiaries. [GRAPHICS; MAP] - FBS Retail and commercial banking
- Corporate Trust offices
- Republic Acceptance offices
MINNESOTA COLORADO SOUTH DAKOTA
Albert Lea Arvada (2) Aberdeen Alexandria Aspen Rapid City (3) Anoka (2) Aurora (4) Sioux Falls (4) Apple Valley Boulder (2) Austin Broomfield WISCONSIN Babbitt Canon City Blaine Colorado Springs(6) Brookfield Bloomington (4) Denver (18) Brown Deer Brainerd Englewood (3) La Crosse Brooklyn Park Evergreen Milwaukee Burnsville (2) Fort Collins (2) Onalaska Cloquet Glenwood Springs Columbia Heights Golden CORPORATE TRUST OFFICES Cottage Grove Grand Junction Duluth (3) Greeley Billings, MT Eagan La Junta Boston, MA East Grand Forks Lakewood (4) Chicago, IL Eden Prairie (2) Littleton (4) Denver, CO Edina (3) Longmont Duluth, MN Fairmont Loveland Fargo, ND Forest Lake Northglenn Frederick, MD Hibbing Pueblo (4) Los Angeles, CA Hopkins Westminster (2) Milwaukee, WI Little Canada Wheatridge Portland, OR Mankato (2) San Francisco, CA Minneapolis (13) MONTANA Seattle, WA Minnetonka (2) St. Paul, MN Oakdale Billings (2) Owatonna Bozeman REPUBLIC ACCEPTANCE CORP. Plymouth (2) Butte OFFICES Ramsey Great Falls (3) Robbinsdale Havre Kansas City, MO Rochester (3) Helena Milwaukee, WI Shoreview Miles City Minneapolis, MN St. Anthony Missoula (2) St. Louis, MO St. Cloud St. Louis Park NORTH DAKOTA St. Paul (6) Virginia Bismarck (2) Wayzata Fargo (4) West St. Paul Grand Forks (2) White Bear Lake (2) Jamestown Willmar Minot (2) Woodbury
CORPORATE DATA
EXECUTIVE OFFICES
First Bank Place 601 Second Avenue South Minneapolis, Minnesota 55402-4302 (612) 973-1111
ANNUAL MEETING
The annual meeting of shareholders will be held at the Minneapolis Convention Center, 1301 Second Avenue South, Minneapolis, Minnesota 55403, at 2 p.m. on Thursday, April 28,1994.
SECURITIES INFORMATION
First Bank System Common Stock is traded on the New York Stock Exchange under the ticker symbol FBS and also may be found under the listing FtBkSy. The transfer agent and registrar for First Bank System is First Chicago Trust Company of New York, P.O. Box 2500, Jersey City, New Jersey 07303-2500.
DIVIDEND REINVESTMENT
First Bank System shareholders can take advantage of a plan that provides automatic reinvestment of dividends and/or optional cash purchases of additional shares at market price of up to $5,000 per quarter. If you would like more information, contact First Chicago Trust Company of New York, P.O. Box 13531, Newark, New Jersey 07188-0001, (800) 446-2617.
INVESTMENT COMMUNITY CONTACTS
John R. Danielson Senior Vice President, Investor Relations (612) 973-2261
Karin E. Glasgow Assistant Vice President, Investor Relations (612) 973-2264
General Information, Investor Relations (612) 973-2263 First Bank System, Inc. P.O. Box 522 Minneapolis, Minnesota 55480
A limited number of spiral-bound 1993 Annual Reports are available for the investment community. Please write or call Investor Relations to obtain a copy.
COMMUNITY RESPONSIBILITY REPORT
For information about FBS's community reinvestment activities, call FBS Community Relations, (612) 973-2433.
For additional annual reports or information about the 1994 annual meeting of shareholders, please contact Corporate Relations, First Bank System, First Bank Place, Minneapolis, Minnesota 55402, (612) 973-2434.
First Bank System is an Equal Employment Opportunity/Affirmative Action employer.
APPENDIX OF GRAPHIC MATERIAL