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Wells Fargo & Company/MN – ‘8-K’ for 4/9/00 – EX-99.2

On: Wednesday, 4/12/00 · For: 4/9/00 · Accession #: 912057-0-17693 · File #: 1-02979

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/12/00  Wells Fargo & Company/MN          8-K:5,7     4/09/00    3:26K                                    Merrill Corp/FA

Current Report — Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         2     13K 
 2: EX-99.1     Miscellaneous Exhibit                                  5     19K 
 3: EX-99.2     Miscellaneous Exhibit                                 16     20K

EX-99.2 — Miscellaneous Exhibit

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                                                                  Exhibit 99.2

Conference Call Materials       
(April 11, 2000)      

BOB:                                                                            

THIS IS BOB STRICKLAND FROM WELLS FARGO INVESTOR RELATIONS. ON THE CALL TODAY WE
HAVE LES BILLER, WELLS FARGO'S VICE CHAIRMAN AND CHIEF OPERATING OFFICER, ROSS  
KARI, EVP AND CFO OF WELLS FARGO, AND JOHN GANOE, EVP OF CORPORATE DEVELOPMENT. 
THEY HAVE ABOUT 5 MINUTES OF PREPARED COMMENTS AND THEN WE'LL OPEN THE CALL UP  
TO QUESTIONS. BUT FIRST, WE NEED THE STANDARD SECURITIES LAW DISCLOSURE. IN     
TODAY'S CALL WE WILL MAKE FORWARD LOOKING STATEMENTS ABOUT SPECIFIC ITEMS OF    
INCOME AND THE BALANCE SHEET FOR WELLS FARGO. THE LEVEL OF THESE ITEMS ACTUALLY 
REALIZED IN THE FUTURE MIGHT DIFFER MATERIALLY FROM THE LEVELS WE ANTICIPATE. IN
THE PRESS RELEASE ANNOUNCING THE TRANSACTION WE HAVE INCLUDED ADDITIONAL        
INFORMATION CONCERNING FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER        
MATERIALLY FROM WHAT WE NOW EXPECT.                                             

1     

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LES:                                                                            

THANK YOU FOR JOINING US TODAY. WE ARE EXCITED ABOUT THE OPPORTUNITIES THE      
MERGER OF WELLS FARGO AND FIRST SECURITY BRINGS FOR OUR CUSTOMERS, COMMUNITIES  
AND SHAREHOLDERS.                                                               

FIRST, A QUICK OVERVIEW OF FIRST SECURITY. THEY ARE THE 2ND LARGEST INDEPENDENT 
BANK HOLDING COMPANY IN THE WESTERN UNITED STATES. THEY OPERATE 333 BANKING     
OFFICES IN SEVEN WESTERN STATES, ALL WITHIN THE WELLS FARGO FOOTPRINT, WITH     
LEADING MARKET SHARE IN UTAH AND IDAHO. AS SHOWN ON SLIDE NUMBER 3, WITH THIS   
MERGER, WELLS FARGO WILL NOW HAVE LEADING MARKET SHARE IN THE FAST GROWING      
WESTERN STATES OF UTAH, IDAHO, NEW MEXICO AND NEVADA. WE ALSO STRENGTHEN OUR    
PRESENCE IN CALIFORNIA, OREGON AND WYOMING.                                     

2     

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THE DEAL STRUCTURE IS SHOWN ON SLIDE 4. UNDER TERMS OF THE AGREEMENT, APPROVED  
BY THE BOARDS OF BOTH COMPANIES, FIRST SECURITY SHAREHOLDERS WILL RECEIVE 0.355 
SHARES OF WELLS FARGO COMMON STOCK FOR EACH SHARE OF FIRST SECURITY COMMON      
STOCK. A TOTAL OF APPROXIMATELY 71,600,000 SHARES OF WELLS FARGO STOCK WILL BE  
ISSUED, BASED ON THE TREASURY METHOD. AT A WELLS FARGO SHARE PRICE OF $39.75 THE
DEAL IS WORTH APPROXIMATELY $2.8 BILLION. IT WILL BE ACCOUNTED FOR AS A POOLING 
OF INTERESTS AND WILL BE A TAX-FREE EXCHANGE FOR FIRST SECURITY SHAREHOLDERS. WE
EXPECT THE MERGER TO CLOSE IN THE SECOND HALF OF THIS YEAR.                     

THE DEAL PRICING MULTIPLES ARE SHOWN ON SLIDE 5. WE ARE PAYING 1.56X BOOK AND   
11.8X PRICE TO ESTIMATED 2000 EARNINGS. WE THINK THIS PRICE IS VERY REASONABLE  
CONSIDERING THE VALUABLE FRANCHISE FIRST SECURITY HAS.                          

3     

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ROSS WILL NOW DISCUSS THE FINANCIAL ASSUMPTIONS USED FOR THIS MERGER.           

ROSS:                                                                           

THE MERGER WILL BE ACCRETIVE IMMEDIATELY TO WELLS FARGO EARNINGS PER SHARE,     
EXCLUDING MERGER RELATED EXPENSES AND ANY SPECIAL CHARGES TAKEN BY FIRST        
SECURITY BEFORE THE MERGER CLOSES. THE MERGER EXCEEDS OUR IRR HURDLE RATE OF 15 
PERCENT.                                                                        

WE USED VERY CONSERVATIVE FINANCIAL ASSUMPTIONS. WE ASSUMED $1.20 CORE EPS IN   
2000 FOR FIRST SECURITY, WHICH IS CONSISTENT WITH THE CONSERVATIVE ESTIMATES    
CURRENTLY AVAILABLE FOR FIRST SECURITY. WE HAVE INCLUDED NO REVENUE SYNERGIES IN
OUR MODEL AND USED CONSERVATIVE CORE REVENUE GROWTH RATE ASSUMPTIONS. WE HAVE   
COUNTED ONLY $125 MILLION, OR 15% EXPENSE TAKEOUTS AND ALLOWED FOR UP TO $375   
MILLION OF MERGER AND INTEGRATION RELATED COSTS.                                

4     

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WE'VE ALSO ASSUMED $1.2 BILLION OF DEPOSITS WOULD NEED TO BE DIVESTED FOR       
ANTI-TRUST REASONS.                                                             

WE ARE COMFORTABLE THAT ALL OF THESE FINANCIAL ASSUMPTIONS ARE VERY CONSERVATIVE
AND THEY STILL YIELD AN ATTRACTIVE RETURN.                                      

NOW JOHN WILL DISCUSS OUR DUE DILIGENCE PROCESS AND FURTHER EXPLAIN WHY WE LIKE 
THIS MERGER.                                                                    

JOHN:                                                                           

AS MOST OF YOU KNOW, I HAVE HAD THE OPPORTUNITY TO LOOK AT HUNDREDS OF DEALS    
DURING MY CAREER AT NORWEST AND NOW WELLS FARGO. I HAVE ALSO WALKED AWAY FROM   
HUNDREDS OF DEALS IF THE SENIOR MANAGEMENT TEAM AND I WERE UNCOMFORTABLE WITH   
THE PRICE, TERMS, OR DUE DILIGENCE RESULTS. WHILE THIS DEAL WAS COMPLETED       
QUICKLY, WE HAVE COMPLETED A THOROUGH DUE DILIGENCE PROCESS. WE                 

5     

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HAD 150 EXPERIENCED WELLS FARGO TEAM MEMBERS AT FIRST SECURITY FOR OVER 3 DAYS. 
AS A RESULT OF OUR DUE DILIGENCE PROCESS, THE SENIOR MANAGEMENT TEAM AT WELLS   
FARGO AND I FEEL VERY CONFIDENT IN THE FINANCIAL ASSUMPTIONS WE USED IN THIS    
MERGER.                                                                         

WE LIKE THIS MERGER BECAUSE IT PROVIDES DOMINANT MARKET POSITION IN UTAH, IDAHO,
NEVADA AND NEW MEXICO. WE REALLY LOOK AT THIS DEAL AS BEING SIMILAR TO THE      
HUNDREDS OF OTHER FILL-IN ACQUISITIONS WE HAVE DONE IN OUR BANKING STATES - IT  
STRENGTHENS OUR PRESENCE IN STATES WE ALREADY DO BUSINESS IN.                   

THIS MERGER IS A CULTURAL FIT WITH WELLS FARGO'S REGIONAL APPROACH TO BANKING   
AND ALTHOUGH WE DID NOT ASSUME ANY REVENUE GROWTH IN OUR MODELING, IT DOES      
EXPAND OUR CUSTOMER BASE FOR CROSS-SELLING ADDITIONAL PRODUCTS.                 

6     

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LES, ROSS AND I WOULD NOW BE HAPPY TO ANSWER ANY QUESTIONS YOU MAY HAVE.        

7     

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 WELLS FARGO & COMPANY
 MERGER WITH
FIRST SECURITY CORPORATION

                                                  Conference Call (415-904-7330)
                                                                  April 11, 2000
                                                                      3 p.m. EST

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FORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements about the financial       
condition, results of operations and business of Wells Fargo on a pro forma     
basis assuming completion of the proposed merger transaction with First         
Security. These forward-looking statements include those relating to: (a) the   
internal rate of return to Wells Fargo expected to be generated by the          
merger; (b) the expected percentage accretion from the merger to Wells          
Fargo's cash and GAAP earnings per share; (c) the expenses expected to be       
incurred by Wells Fargo to integrate the two companies; (d) the cost savings    
expected to be realized by Wells Fargo from combining the two companies; (e)    
the accounting method expected to be used by Wells Fargo to account for the     
merger; (f) the business opportunities and strategies expected to be            
available to Wells Fargo and First Security following the merger; (g) the       
anticipated closing date of the merger; and (h) other statements that include   
the words "believes," "expects," "anticipates," "intends," "estimates,"         
"should" or similar expressions.                                                

These forward-looking statements involve risks and uncertainties. Factors that  
could cause actual conditions, events or results to differ significantly from   
those described in the forward-looking statements include, among other things,  
the following possibilities: (a) expected cost savings from the merger cannot be
fully realized or realized within the expected time frame; (b) revenues         
following the merger are lower than expected; (c) costs or difficulties related 
to the integration of the businesses of Wells Fargo and First Security are      
greater than expected; and (d) the merger is accounted for as a purchase rather 
than a pooling of interests.                                                    

Wells Fargo's reports filed with the SEC, including Wells Fargo's Form 10-K for 
the year ended December 31, 1999, describe additional factors that could cause  
actual conditions, events or results to differ significantly from those         
described in the forward-looking statements, including certain credit, market,  
operational, liquidity and interest rate risks associated with Wells Fargo's    
business and operations. Other factors described in Wells Fargo's December 31,  
1999 Form 10-K include changes in business and economic conditions, competition,
fiscal and monetary policies, disintermediation, legislation, the combination of
the former Norwest Corporation and the former Wells Fargo & Company, and other  
acquisitions by Wells Fargo.                                                    

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 FIRST SECURITY OVERVIEW

-  2nd largest independent bank holding company in the Western United States.   

-  Operates 333 banking offices in seven western states, all within the Wells   
Fargo footprint.                                                          

-  #1 deposit market share in Utah ($5.1B, 27%) and Idaho ($3.1B, 31%).         

                                                                             2

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DEPOSIT MARKET SHARE

STATE MARKET SHARE                                                              

                                                                [Download Table]

            DEPOSITS  MARKET   FSCO  WFC   PROFORMA 
             ($MM)     SHARE   RANK  RANK   RANK (a)
            --------  -------  ----  ----  ---------
                                                    
Utah        $ 5,098    26.5 %     1   10         1  
Idaho         3,123    30.8       1    6         1  
New Mexico    1,660    11.8       3    1         1  
Nevada        1,218     7.3       5    2         1  
California    1,020     0.2      44    3         3  
Oregon          492     1.7      10    4         4  
Wyoming         204     3.5       8    4         3  

  Total     $12,815                                 

(a) PROFORMA MARKET SHARE RANK WITH WELLS FARGO, ADJUSTED FOR POTENTIAL         
DIVESTITURES                                                            

SOURCE: SNL SECURITIES DEPOSIT DATA AS OF JUNE 30, 1999                         

                                                                             3

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DEAL STRUCTURE

-    Fixed exchange of WFC shares                                               

-    Exchange of 0.355 WFC shares for each FSCO share outstanding     

     -    Total of approximately 71,600,000 WFC shares issued (based on Treasury
method)                                                     

-    Deal value of $2,846 MM ($14.11 per share), with WFC at $39.75             

-    Tax-free exchange                                                          

-    Pooling accounting                                                         

-    Second half 2000 close                                                     

                                                                             4

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DEAL PRICING

                                                                [Download Table]

PRICE MULTIPLES                                                        
                                                                       
Price to Market                                  1.16               X  

Price to Book                                    1.56               X  

Price to 1999 Earnings                           10.2               X  

Price to Estimated 2000 Earnings                 11.8               X  

Tangible Premium to Deposits                     12.3               %  

                                                                             5

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DEAL RESULTS

-    Accretive Immediately to Wells Fargo EPS (excluding merger related expenses
and any First Security special charges)                               

-    Internal Rate of Return - 15%+                                             

                                                                           6

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 KEY ASSUMPTIONS

FSCO CORE 2000 EPS                              $1.20                           

REVENUE SYNERGIES                       NONE INCLUDED                           

EXPENSE SAVES                                 $125 MM                           

% of FSCO 1999 Expenses                          15 %                           

MERGER EXPENSES                               $375 MM                           

DEPOSIT DIVESTITURES                           $1.2 B                           

                                                                           7

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 ACQUISITION RATIONALE

-    Provides #1 market position in Utah, Idaho, Nevada and New Mexico          

-    Solidifies our position in the Intermountain West region, which is the     
fastest-growing regional economy in the United States                 

-    Cultural fit with Wells Fargo's regional approach to banking               

-    Expands our customer base for cross-selling additional products            

                                                                           8

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘8-K’ Filing	Date	First	Last	Other Filings

Filed on:	4/12/00			425
	4/11/00	1	8
For Period End:	4/9/00
	12/31/99	9		10-K, 13F-HR
	6/30/99	11		10-Q, 11-K, 13F-HR, 13F-HR/A, NT 11-K
				List all Filings

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Filing Submission 0000912057-00-017693 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Wells Fargo & Company/MN – ‘8-K’ for 4/9/00 – EX-99.2

On: Wednesday, 4/12/00 · For: 4/9/00 · Accession #: 912057-0-17693 · File #: 1-02979

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Current Report — Form 8-KFiling Table of Contents

EX-99.2 — Miscellaneous Exhibit

Dates Referenced Herein and Documents Incorporated by Reference

Current Report — Form 8-K
Filing Table of Contents