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FIRST BANK SYSTEM'S 1991 RESULTS UP 46 PERCENT

 FIRST BANK SYSTEM'S 1991 RESULTS UP 46 PERCENT
 EARNINGS SUMMARY
 1991 1990 4Q 1991 4Q 1990
 Net income (in millions) $190.4 $130.6 $54.2 $36.9
 Earnings per common share 2.13 1.53 .60 .40
 Dividends paid per common share .82 .82 .205 .205
 ROA (percent) 1.09 .66 1.21 .78
 ROCE 15.3 11.8 16.5 12.0
 MINNEAPOLIS, Jan. 15 /PRNewswire/ -- First Bank System, Inc. (NYSE: FBS) today reported 1991 earnings of $190.4 million, an increase of $59.8 million, or 45.8 percent, from the prior year. On a per share basis, earnings were $2.13 in 1991, compared with $1.53 in 1990, an increase of 39.2 percent.
 Return on average common equity increased steadily during 1991 to 15.3 percent for the year compared with 11.8 percent for 1990. Return on average assets was 1.09 percent in 1991, up significantly from .66 percent in the prior year.
 The strong improvement in net income during 1991 primarily reflects an increase in net interest income on a taxable-equivalent basis of $58.8 million from 1990. This improvement in net interest income was achieved despite a $2.1 billion decline in average earning assets.
 Net interest margin on a taxable-equivalent basis rose to 4.67 percent for 1991, up from 3.79 percent in the prior year. Total expenses were essentially flat from last year despite an increase of $17.2 million in expenses related to 1991 acquisitions and a $10.4 million increase in FDIC insurance expense. The efficiency ratio, the ratio of expenses to revenues, improved in 1991 to 63.4 percent from 68.2 percent due to revenue growth and continued cost control.
 In the fourth quarter of 1991 earnings were $54.2 million, or $.60 per share, compared with $36.9 million, or $.40 per share, in the fourth quarter a year ago. Return on average common equity increased to 16.5 percent in the fourth quarter of 1991 compared with 12.0 percent last year. Return on average assets increased to 1.21 percent from .78 percent last year.
 The increase in fourth quarter 1991 net income reflects strong revenue growth. Net interest income on a taxable-equivalent basis was up $19.8 million from last year as the net interest margin rose to 4.86 percent from 4.08 percent. Noninterest income was up $11.5 million, or 14.4 percent. Expenses increased $10.8 million from the fourth quarter of 1990 reflecting the effect of recent acquisitions of $9.7 million and increased FDIC insurance expense of $2.8 million. The efficiency ratio improved to 62.8 percent from 66.3 percent.
 Nonperforming assets declined $53.0 million, or 13.6 percent, to $336.6 million at year-end 1991, from $389.6 million at year-end 1990. The ratio of allowance for credit losses to nonperforming loans increased to 146.1 percent from 107.7 percent a year ago, providing strong reserve coverage.
 First Bank System's chairman, president and chief executive officer, John F. Grundhofer said, "Our 1991 results reflect the successful completion of a two-year turnaround strategy. Profitability increased steadily each quarter. Capital strength advanced as our total equity to assets ratio reached 8.4 percent, one of the highest among regional banks. Asset quality improved with nonperforming asset levels declining by $53 million during the year. In addition, our year-end ratio of allowance for credit losses to nonperforming loans reached 146.1 percent, which is among the highest in the industry.
 "First Bank System is well positioned for future success. We remain dedicated to running a high quality bank and enhancing shareholder value through consistently delivering a high quality earnings stream."
 Evidence of this year's progress is reflected in the Comptroller of the Currency's recent release of the company's lead bank, First Bank National Association, from a formal agreement entered into in 1990. This agreement arose from the OCC's 1989 review of the bank's lending activities and required revisions to the loan underwriting process, a plan to reduce problem assets and modifications of internal lending limits.
 The company's progress was also recognized by favorable rating agency actions in the fourth quarter. During December, Thomson BankWatch raised the issuer rating on First Bank System to "B/C" from "C." Earlier in the fourth quarter, Moody's raised the senior debt rating on the company to A3 from Baa1. Other Moody's ratings were raised as well.
 During 1991, several acquisitions were announced which provide opportunities to enhance the market position of the company's core businesses of retail banking, commercial banking and trust services. Wells Fargo Ag Credit, a Denver-based provider of commercial and asset- based lending to agribusinesses with loans of $250 million, was acquired in April. In July, First Bank System purchased deposits and selected assets of Capitol Federal Savings, a savings and loan with 18 branches in Colorado, from the Resolution Trust Corporation. The purchase included $650 million of insuranced deposits, $110 million of residential mortgages and an $800 million mortgage servicing portfolio. In October, the company agreed to acquire the corporate trust business of Bankers Trust of California with total revenues of about $13.5 million. A first quarter 1992 closing is anticipated. In December, the company announced its intention to purchase Siouxland Bank Holding Company of North Dakota with assets of $180 million. Additionally, credit card portfolios aggregating $395 million were purchased in 1991.
 INCOME STATEMENT HIGHLIGHTS (In Millions)
 1991 1990 4Q 1991 4Q 1990
 Net interest income (TEB) $741.2 $682.4 $195.1 $175.3
 Provision for credit losses 152.7 133.0 39.0 35.3
 Noninterest income 344.4 326.1 91.5 80.0
 Noninterest expense 688.7 687.8 180.0 169.2
 Taxable-equivalent adjustment 31.5 43.3 6.6 10.6
 Income taxes 22.3 13.8 6.8 3.3
 Net income $190.4 $130.6 $54.2 $36.9
 Net interest margin (TEB)
 (percents) 4.67 3.79 4.86 4.08
 Efficiency ratio 63.4 68.2 62.8 66.3
 Net interest income on a taxable-equivalent basis was $741.2 million in 1991, an increase of $58.8 million, or 8.6 percent, from a year ago. The improvement in net interest income reflects the reduction in wholesale funding and the widening spreads between the prime rate and other short-term interest rates throughout 1991 as well as a change in mix of the company's loan portfolio towards higher-yielding consumer loans.
 Net interest income has improved during the past year despite a $2.1 billion decline in average earning assets. Average earning assets declined from 1990 levels as the continuing result of asset reductions associated with the company's restructuring which started in late 1989. Since the second quarter of 1991, however, average earning assets have grown from $15.5 billion to $15.9 billion principally reflecting the asset acquisitions discussed earlier.
 The net interest margin on a taxable-equivalent basis was 4.67 percent in 1991, an increase of 88 basis points from 3.79 percent in 1990. The improvement in net interest margin results from increased spreads and a change in the asset and liability mix. Since year-end 1990, higher-cost national wholesale funding has been reduced by approximately $1.0 billion.
 Fourth quarter taxable-equivalent net interest income was $195.1 million with a margin of 4.86 percent. These results compare favorably with the same quarter a year ago when taxable-equivalent net interest income was $175.3 million with a margin of 4.08 percent.
 ALLOWANCE FOR CREDIT LOSSES SUMMARY (In Millions)
 1991 1990 4Q 1991 4Q 1990
 Balance at beginning
 of period $359.8 $401.6 $351.2 $369.5
 Net charge-offs (recoveries):
 Commercial and financial 54.8 47.7 6.8 17.3
 HLTs 6.2 12.8 7.2 (1.1)
 Commercial Real Estate 45.9 60.4 9.0 10.6
 Consumer 72.1 51.5 22.4 17.2
 Foreign .1 1.6 (.9) .9
 Other .6 1.3 .7 .2
 Total 179.7 175.3 45.2 45.1
 Provision for credit losses 152.7 133.0 39.0 35.3
 Asset acquisition additions 12.4 .5 .2 .1
 Balance at end of period $345.2 $359.8 $345.2 $359.8
 The provision for credit losses was $152.7 million in 1991, an increase of $19.7 million from the provision of $133.0 million in 1990. In the fourth quarter of 1991, the provision for credit losses was $39.0 million compared with $35.3 million in the fourth quarter of 1990.
 Net charge-offs were $179.7 million in 1991 and $175.3 million in the prior year. A decline in commercial real estate net charge-offs during 1991 was offset by an increase in consumer net charge-offs associated with the 30.8 percent increase in the average balance of the credit card portfolio.
 During the fourth quarter of 1991, net charge-offs totaled $45.2 million compared with $45.1 million in the fourth quarter of 1990.
 The allowance for credit losses decreased to $345.2 million at Dec. 31, 1991, from $359.8 million at Dec. 31, 1990. However, the allowance for credit losses to nonperforming loans ratio increased 146.1 percent at year-end 1991 compared with 107.7 percent at year-end 1990 providing strong reserve coverage. During 1991, $12.4 million was added to the allowance as a result of acquisitions of the Wells Fargo Ag Credit subsidiary and the credit card portfolios discussed earlier.
 ASSET QUALITY ($ In Millions)
 12/31/91 9/30/91 6/30/91 3/31/91 12/31/90
 Nonperforming loans:
 Commercial and financial $99.8 $108.5 $133.1 $134.2 $169.2
 HLTs 37.6 48.4 79.8 96.8 79.3
 Commercial Real Estate 69.3 90.2 58.8 50.6 61.1
 Consumer 23.7 23.3 19.4 22.3 18.9
 Foreign 2.5 2.4 2.3 3.1 1.6
 Other 3.4 3.4 4.2 4.1 3.9
 Total 236.3 276.2 297.6 311.1 334.0
 Other real estate 91.3 78.2 79.1 73.4 55.6
 Other nonperforming assets 9.0 9.1 -- -- --
 Total nonperforming
 assets $336.6 $363.5 $376.7 $384.5 $389.6
 Accruing loans 90 days
 or more past due $38.0 $39.7 $27.9 $30.5 $28.2
 Allowance as percent of
 nonperforming loans
 (percents) 146.1 127.2 116.9 112.5 107.7
 Nonperforming assets at Dec. 31, 1991, totaled $336.6 million, down $26.9 million from the third quarter of 1991 and down $53.0 million from the level a year ago. This decline in nonperforming assets includes significant reductions in commercial and financial and HLT nonperforming loans.
 NONINTEREST INCOME (In millions)
 1991 1990 4Q 1991 4Q 1990
 Trust fees $104.1 $96.8 $27.4 $24.3
 Service charges 69.6 66.8 17.8 16.7
 Credit card fees 45.7 32.0 14.4 10.1
 Insurance commissions 24.0 25.2 5.3 6.4
 Trading account profits 9.5 8.8 2.5 .7
 Investment securities gains .1 .2 -- .1
 Other 91.4 96.3 24.1 21.7
 Total noninterest income $344.4 $326.1 $91.5 $80.0
 Noninterest income in 1991 was $344.4 million, an increase of $18.3 million, or 5.6 percent, from 1990. Trust fees, service charges and credit card fees increased $23.8 million, or 12.2 percent, from the prior year. The increase in trust fees reflects a new pricing structure for trust services which was introduced during the third quarter of 1991. The increase in credit card fees reflects increased volume, including $5.9 million in fees from the portfolios acquired during the year.
 Fourth quarter noninterest income was $91.5 million, an increase of $11.5 million, or 14.4 percent, from the same quarter a year ago. The increase reflects higher credit card fees, trust fees and service charges.
 NONINTEREST EXPENSE (in millions)
 1991 1990 4Q 1991 4Q 1990
 Salaries $270.9 $289.3 $69.6 $69.8
 Employee benefits 62.5 63.4 15.8 13.9
 Net occupancy 63.6 61.9 16.3 15.7
 Furniture and equipment 45.7 49.6 12.1 13.5
 FDIC Insurance 28.3 17.9 7.3 4.5
 Other 217.7 205.7 58.9 51.8
 Total noninterest expense 688.7 687.8 180.0 169.2
 Noninterest expense in 1991 was $688.7 million, an increase of less than $1.0 million from 1990. Expenses were held essentially flat with the prior year despite several acquisitions during the year including the Capital Federal transaction and the acquisitions of the Wells Fargo Ag Credit subsidiary and credit card portfolios which added $17.2 million of noninterest expense. In addition, FDIC insurance expense increased $10.4 million during 1991 resulting from the increase in the rate charged on deposits.
 Salaries and employee benefits expenses were down $19.3 million, or 5.5 percent, from 1990 as a result of reduced staff levels. Recent acquisitions added $3.6 million in salaries and benefits expenses during 1991.
 During the fourth quarter of 1991, noninterest expense increased $10.8 million, or 6.4 percent from the quarter a year ago, to $180.0 million. The increase reflects $2.3 million of salaries and employee benefits expenses and $7.4 million of other noninterest expense related to acquisitions and a $2.8 million increase in FDIC insurance.
 The provision for income taxes was $22.3 million in 1991 compared with $13.8 million in 1990 reflecting a higher level of taxable income. During the fourth quarter of 1991, the provision for income taxes was $6.8 million, up from $3.3 million a year ago.
 CAPITAL POSITION (Percents)
 12/31/91 9/30/91 6/30/91 3/31/91 12/31/90
 Common equity to assets 6.3 6.2 6.4 6.1 5.4
 Total shareholders'
 equity to assets 8.4 7.7 7.9 7.6 6.8
 Tier 1 capital ratio(a) 8.3 7.3 7.2 7.1 6.5
 Total capital ratio(a) 11.6 10.6 10.4 10.5 9.9
 Leverage ratio 8.1 7.3 7.2 6.8 6.3
 (a) Computed using 1992 rules.
 Common equity to assets increase 90 basis points from year-end 1990 to 6.3 percent at year-end 1991. Total equity to assets reached 8.4 percent at year-end 1991, an increase of 160 basis points from the prior year-end, reflecting in part the issuance of $114.5 million of Convertible Preferred Stock in November 1991. The company's total equity ratio is one of the highest among regional banks.
 The risk-based capital ratios (under the 1992 rules) also strengthened from a year ago. Tier 1 and total capital ratios were 8.3 percent and 11.6 percent on Dec. 31, 1991, compared with 6.5 percent and 9.9 percent at Dec. 31, 1990, respectively. This improvement occurred as a result of reduced levels of assets, earnings retention and the preferred equity issuance. The leverage ratio, a measure of Tier 1 capital to total quarterly average assets, also increased to 8.1 percent from 6.3 percent a year ago.
 First Bank System is a regional bank holding company headquartered in Minneapolis with assets of $18.3 billion. The company provides complete financial services to individuals and institutions through 25 banks and trust companies with more than 158 offices located in Minnesota, Colorado, Montana, North Dakota, South Dakota, Washington and Wisconsin. On Dec. 31, 1991, the company consolidated nine of the 17 Colorado banks into Central Bank Denver. This reduced the number of banks within First Bank System to 25 from 34.
 FIRST BANK SYSTEM, INC., AND SUBSIDIARIES
 CONSOLIDATED FINANCIAL SUMMARY
 (Dollars in Millions)
 12/31/91 12/31/90
 Loan portfolio:
 Commercial and financial $5,973 $6,363
 HLTs 331 568
 Commercial real estate 1,289 1,275
 Consumer 5,200 4,793
 Other 285 331
 Foreign 74 128
 Total loans 13,152 13,458
 Total assets 18,301 19,001
 Total deposits 14,479 14,633
 Tier 1 capital ratio (1992 rules) 8.3 pct. 6.5 pct.
 Common shares outstanding 78,405,259 77,430,651
 Book value per common share $14.68 $13.32
 Nonperforming assets 336.6 389.6
 Year Ended Three Months Ended
 12/31/91 12/31/90 12/31/91 12/31/90
 Net interest margin(a) 4.67 pct. 3.79 pct. 4.86 pct. 4.08 pct.
 Efficiency ratio 63.4 pct. 68.2 pct. 62.8 pct. 66.3 pct.
 Average loans $13,014 $14,411 $13,115 $13,553
 Interest yield on
 average loans 9.99 pct. 10.78 pct. 9.66 pct. 10.74 pct.
 Average earning assets $15,875 $17,985 $15,928 $17,055
 Average total assets 17,543 19,705 17,785 18,748
 Average deposits 13,650 14,926 13,917 14,347
 Average interest-bearing
 liabilities 12,377 14,930 12,224 13,752
 Rate paid on average interest
 bearing liabilities 6.20 pct. 7.86 pct. 5.55 pct. 7.64 pct.
 Average common equity $1,090 $903 $1,135 $1,021
 Average total equity 1,372 1,167 1,470 1,285
 Return on average assets 1.09 pct. .66 pct. 1.21 pct. .78 pct.
 Return on average common
 equity 15.3 pct. 11.8 pct. 16.5 pct. 12.0 pct.
 Preferred dividends $23.7 $22.7 $6.9 $5.9
 (a) On a taxable-equivalent basis.
 -0- 1/15/92
 /CONTACT: (Media) Wendy L. Raway, 612-370-5154 or (Investors) Thomas R. Rice, 612-370-3596, both of First Bank System/
 (FBS) CO: First Bank System, Inc. ST: Minnesota IN: FIN SU: ERN


DS -- MN003 -- 9953 01/15/92 11:23 EST
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