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First Security shareholders approve Wells Fargo merger

SHARE First Security shareholders approve Wells Fargo merger

Shareholders of First Security Corp. overwhelmingly voted Monday to merge the financial services company with Wells Fargo, leaving only the approval of federal regulators still needed to write an end, as an independent entity, to one of Utah's longest and most successful banking franchises

The vote was announced at 11:20 a.m. at the downtown Marriott Hotel at a special meeting of shareholders — likely the last one ever called by First Security — to vote on the merger with San Francisco-based Wells Fargo. The deal was first announced April 9, only 10 days after the merger of First Security and Zions Bancorp was voted down by Zions shareholders.

More than 90 percent of the 65 percent of shares voted by proxy prior to the meeting voted in favor of the $3 billion deal.

"I believe we have taken the right steps today, and I am very pleased our shareholders voted in favor of the merger," said Spencer F. Eccles, First Security chairman and chief executive officer.

"Wells Fargo is an outstanding franchise and everything we could ever want in a partner. Together, we're looking forward to continuing to be the number one bank in Utah and preserving our heritage as a leader in the Intermountain West."

FSCO (First Security's stock symbol) shareholders agreed to receive 0.355 share of Wells' stock for each of their shares, which equates to about $15 per share with Wells' stock closing Friday at just under $42. The deal is being accounted for as a "pooling of interests" and is expected to be tax-free to FSCO shareholders.

At the time of the merger announcement in April, Wells stock was trading at $43.68 per share.

Despite the failure of the Zions deal, the vote in favor of joining Wells Fargo was as much of a sure thing as is possible in such matters. Last March, First Security shareholders had resoundingly approved the Zions merger, and Monday's vote also followed management's advice.

Now, only federal regulatory approvals are needed to complete the transaction, and those are expected by the fourth quarter. First Security is currently the largest Utah-based banking company. When the

merger with Wells is completed, Wells will become the largest bank in Utah, but Zions will be the largest headquartered here.

Because of the relatively small size of the deal to Wells Fargo, a vote by its shareholders is not required, as it was in the failed "merger of equals" between Zions and First Security and the merger of Wells Fargo and Norwest in June 1998.

Prior to the Norwest merger, Wells Fargo had been struggling with its 1996 acquisition of First Interstate Bancorp, which had earlier acquired Walker Bank & Trust Co. in Utah.

But since Wells merged with Norwest and Norwest's management team took the helm of the new Wells Fargo, led by president and CEO Dick Kovacevich, the new Wells has become the nation's seventh largest banking company and a so-called "superregional" — a word coined to describe banks that are steadily expanding their reach beyond their original locales and are finding new ways to make money other than traditional banking services.

Wells Fargo returned to Utah in March 1996 after a 91-year absence when it acquired 32 First Interstate branches as part of a $11.3 billion merger. As noted, that combination did not run smoothly, as the bank struggled with record-keeping and crediting deposits to wrong accounts.

In 1998, Wells Fargo vowed it would not make the same mistakes in its merger with Norwest, and it has apparently kept its word, while adding a variety of new customer services.

The 32 First Interstate bank branches in Utah became Wells Fargo branches, and the 33 Norwest mortgage and consumer finance operations in Utah also merged with Wells and earlier this year changed their names to Wells Fargo (although the phone book still lists them as Norwest).

Under terms of the Wells/First Security agreement, Eccles will become a Wells Fargo director and receive his current salary, bonuses and stock options until 2002 and then a reduced amount until he reaches age 70 in 2004. After retirement, he will receive $1 million per year until his death. He also will get a $1.5 million special bonus on his 70th birthday.

Smaller benefits packages have been worked out for other First Security officers.

E-MAIL: max@desnews.com