For immediate release

The Federal Reserve Board today announced its approval of the notice of U.S. Bancorp to acquire all the voting shares of Piper Jaffray Companies, Inc., both in Minneapolis, Minnesota, and thereby engage in various nonbanking activities, including underwriting and dealing in, to a limited extent, all types of debt and equity securities, other than interests in open-end investment companies. Attached is the Board's Order relating to this action.

U.S. Bancorp Minneapolis, Minnesota Order Approving Notice to Engage in Nonbanking Activities

U.S. Bancorp, Minneapolis, Minnesota ("USB"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire all the voting securities of Piper Jaffray Companies, Inc. ("Piper Jaffray"), and thereby acquire control of its subsidiaries, including Piper Jaffray, Inc. ("Company"), all in Minneapolis, Minnesota. USB would thereby engage in the following nonbanking activities: extending credit and servicing loans, pursuant to section 225.28(b)(1) of Regulation Y (12 C.F.R. 225.28(b)(1)); engaging in activities related to extending credit, pursuant to section 225.28(b)(2)(ii), (vi) and (vii) of Regulation Y (12 C.F.R. 225.28(b)(2)(2)(ii), (vi) and (vii)); providing leasing services, pursuant to section 225.28(b)(3) of Regulation Y (12 C.F.R. 225.28(b)(3)); performing functions or activities that may be performed by a trust company, pursuant to section 225.28(b)(5) of Regulation Y (12 C.F.R. 225.28(b)(5)); providing financial and investment advisory services, pursuant to section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)); providing securities brokerage, riskless principal, private placement, futures commission merchant, and other agency transactional services, pursuant to section 225.28(b)(7) of Regulation Y (12 C.F.R. 225.28(b)(7)); underwriting and dealing in government obligations and money market instruments in which state member banks may underwrite and deal under 12 U.S.C. §§ 335 and 24(7) ("bank-eligible securities"), and engaging in investing and trading activities, and buying and selling bullion and related activities, pursuant to section 225.28(b)(8) of Regulation Y (12 C.F.R. 225.28(b)(8)); providing management consulting and employee benefit consulting services, pursuant to section 225.28(b)(9) of Regulation Y (12 C.F.R. 225.28(b)(9)); engaging in general insurance agency activities, pursuant to section 225.28(b)(11)(vii) of Regulation Y (12 C.F.R. 225.28(b)(11)(vii));1 underwriting and dealing in, to a limited extent, all types of debt and equity securities other than interests in open-end investment companies ("bank-ineligible securities"); providing administrative and other services to open-end investment companies ("mutual funds");2 and acting as the general partner of private investment limited partnerships that invest in assets in which a bank holding company is permitted to invest. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 11,682 (1998)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. USB, with total consolidated assets of approximately $71.3 billion, is the 15th largest banking organization in the United States.3 USB operates subsidiary banks in 17 states, and engages through other subsidiaries in a broad range of permissible nonbanking activities. Company is, and following consummation of the proposal will continue to be, registered as a broker-dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), a member of the National Association of Securities Dealers, Inc. ("NASD"), and registered as a futures commission merchant with the Commodity Futures Trading Commission ("CFTC") under the Commodity Exchange Act (7 U.S.C. § 2 et seq.). Accordingly, Company is, and will continue to be, subject to the record-keeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934, the Commodity Exchange Act, the SEC, CFTC, and NASD. USB recently received Board approval to establish U.S. Bancorp Investments, Minneapolis, Minnesota ("USB-Investments"), and thereby engage in underwriting and dealing, to a limited extent, in certain types of bank-ineligible securities and other permissible nonbanking activities.4 USB intends to merge USB-Investments into Company by March 31, 1999, with Company surviving the merger. Underwriting and Dealing in Bank-Ineligible Securities The Board has determined that -- subject to the framework of prudential limitations established in previous decisions to address the potential for conflicts of interests, unsound banking practices, or other adverse effects -- underwriting and dealing in bank-ineligible securities is so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.5 The Board also has determined that underwriting and dealing in bank-ineligible securities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C. § 377), provided that the company engaged in the activity derives no more than 25 percent of its gross revenues from underwriting and dealing in bank-ineligible securities.6 USB has committed that Company will conduct its underwriting and dealing activities using the methods and procedures and subject to the prudential limitations established by the Board in the Section 20 Orders. USB also has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities subject to the Board's revenue restriction.7 As a condition of this order, USB is required to conduct its bank-ineligible securities activities subject to the revenue restrictions and Operating Standards established for section 20 subsidiaries ("Operating Standards").8 Other Activities Approved by Regulation or Order The Board previously has determined that the proposed credit and credit-related activities; leasing activities; trust company activities; financial and investment advisory activities; securities brokerage, riskless principal, private placement, futures commission merchant, and other agency transactional activities; bank-eligible securities underwriting and dealing, investment and trading, and buying and selling bullion and related activities; management and employee benefits consulting services; and insurance agency activities to be conducted by USB after consummation of the proposal are closely related to banking within the meaning of section 4(c)(8) of the BHC Act.9 In addition, the Board previously has determined by order that the proposed mutual fund administration services and private investment limited partnership activities are permissible for bank holding companies.10 USB has committed that it will conduct these activities in accordance with the limitations set forth in Regulation Y and the Board's orders and interpretations relating to each of the activities.11 Other Considerations In order to approve this notice, the Board also must determine that the proposed activities "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."12 As part of its review of these factors, the Board considers the financial and managerial resources of the notificant and its subsidiaries and the effect the transaction would have on such resources.13 In considering the financial resources of the notificant, the Board has reviewed the capitalization of USB and Company in accordance with the standards set forth in the Section 20 Orders and finds the capitalization of each to be consistent with approval. This determination is based on all the facts of record, including USB's projections of the volume of Company's underwriting and dealing activities in bank-ineligible securities. The Board also has reviewed the managerial resources of each of the entities involved in this proposal in light of examination reports and other supervisory information. In connection with the proposal, the Federal Reserve Bank of Minneapolis ("Reserve Bank") has reviewed the policies and procedures of Company to ensure compliance with this order and the Section 20 Orders, including Company's operational and managerial infrastructure, computer, audit, and accounting systems and internal risk management procedures and controls. On the basis of the Reserve Bank's review and all other facts of record, including the commitments provided in this case and the proposed managerial and risk management systems of Company, the Board has concluded that financial and managerial considerations are consistent with approval of the notice. The Board has carefully considered the competitive effects of the proposal. USB represents that USB-Investments and Company offer largely complementary services with few significant overlaps. USB has indicated that USB-Investments has focused on bank-eligible securities underwriting, private placement, and fixed-income debt trading activities, and has not developed the type of merger and acquisition advisory and equity underwriting, dealing, research, and distribution services offered by Company. To the extent that USB-Investments and Company offer different types of products and services, the proposed acquisition would result in no loss of competition. In those markets where the product offerings of USB's nonbanking subsidiaries and Piper Jaffray overlap, such as securities brokerage, investment advisory, trust and insurance agency activities, there are numerous existing and potential competitors. Consummation of the proposal, therefore, would have a de minimis effect on competition in the market for these services, and the Board has concluded that the proposal would not have any significantly adverse competitive effects in any relevant market. In order to approve the proposal, the Board also must find that the performance of the proposed activities by Applicant can reasonably be expected to produce benefits that would outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Under the framework established in this and prior decisions, consummation of the proposal is not likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. The Board expects that consummation of the proposal would provide added convenience to the customers of USB and Piper Jaffray. USB has indicated that consummation of the proposal would expand the range of products and services available to its customers and those of Piper Jaffray. USB also has stated that the acquisition would permit it to further diversify its nonbanking operations, thereby making it less vulnerable to economic fluctuations in individual business lines. Based on all the facts of record, the Board has determined that performance of the proposed activities by USB can reasonably be expected to produce public benefits that outweigh any adverse effects of the proposal. Accordingly, the Board has determined that the performance of the proposed activities by USB is a proper incident to banking for purposes of section 4(c)(8) of the BHC Act. Conclusion On the basis of all the facts of record, the Board has determined that the notice should be, and hereby is, approved, subject to all the terms and conditions described in this order. The Board's approval of the proposal extends only to activities conducted within the limitations of this order, including the Board's reservation of authority to establish additional limitations to ensure that Company's activities are consistent with safety and soundness, avoidance of conflicts of interests, and other relevant considerations under the BHC Act. Underwriting and dealing in any manner other than as approved in this order is not within the scope of the Board's approval and is not authorized for Company. The Board's determination is subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and orders issued thereunder. The Board's decision is specifically conditioned on compliance with all the commitments made in connection with this notice, including the commitments discussed in this order and the conditions set forth in this order and the Board regulations and orders noted above. The commitments and conditions are deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. This proposal shall not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or the Reserve Bank, acting pursuant to delegated authority.

By order of the Board of Governors,14 effective April 20, 1998. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Appendix List of Administrative Services Maintaining and preserving certain records of the Funds, including financial and corporate records; Computing dividends, performance data and financial information regarding the Funds; Furnishing statistical and research data; Preparing and filing with the SEC and state securities regulators registration statements, notices, reports and other materials required to be filed under applicable laws; Preparing reports and other informational materials regarding the Funds including proxies and other shareholder communications; Providing legal and other regulatory advice to the Funds in connection with their other administrative functions; Providing office facilities and clerical support for the Funds; Developing and implementing procedures for monitoring compliance with regulatory requirements and compliance with the Funds' investment objectives, policies, and restrictions as established by the Funds' boards; Providing routine fund accounting services and liaison with outside auditors; Preparing and filing tax returns, and monitoring tax compliance; Reviewing and arranging for payment of Fund expenses; Providing communication and coordination services with regard to the Funds' investment adviser, transfer agent, custodian, distributor and other service organizations that render recordkeeping or shareholder communication services; Reviewing and providing advice to the distributor, the Funds and the investment adviser regarding sales literature and marketing plans for the Funds; Providing information to the distributor's personnel concerning fund performance and administration; Providing marketing support with respect to sales of the Funds through financial intermediaries, including participating in seminars, meetings and conferences designed to present information concerning the operations of the Funds; Providing reports to the Funds' board with regard to the activities of the Funds; and Providing telephone shareholder services through a toll-free number.

Footnotes 1 USB is authorized to engage in insurance agency activities pursuant to section 4(c)(8)(G) of the BHC Act, which authorizes those bank holding companies that engaged in insurance agency activities prior to 1971 with Board approval to engage in insurance agency activities. 2 A list of the administrative services that USB would provide is included in the Appendix. 3 Asset and ranking data are as of December 31, 1997. 4 See U.S. Bancorp, 84 Federal Reserve Bulletin 62 (1998). 5 See J.P. Morgan & Co. Inc., et. al., 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert. denied, 486 U.S. 1059 (1988), as modified by Review of Restrictions on Director, Officer and Employee Interlocks, Cross-Marketing Activities, and the Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996), Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997); and Clarification to the Board's Section 20 Orders, 63 Federal Register 14,803 (1998) (collectively, "Section 20 Orders"). 6 Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989); 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 48,953 (1996); and Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996) (collectively, "Modification Orders"). In light of the fact that USB proposes to acquire a going concern, the Board believes that allowing Company to calculate compliance with the revenue limitation on an annualized basis during the first year after consummation of the acquisition and thereafter on a rolling quarterly average basis would be consistent with the Section 20 Orders. See Dauphin Deposit Corporation, 77 Federal Reserve Bulletin 672 (1991). The Board also believes that, in light of the fact that USB-Investments recently began operations, permitting USB-Investments to calculate compliance with the revenue limitation on an annualized basis during the first year of its operations and thereafter on a rolling quarterly average basis is consistent with the Section 20 Orders. 7 As noted above, USB intends to merge USB-Investments into Company by March 31, 1999. Until such merger occurs, USB will operate Company as a separate corporate entity and both USB-Investments and Company will be independently subject to the 25-percent revenue limitation on underwriting and dealing in bank-ineligible securities. See Citicorp, 73 Federal Reserve Bulletin 473, 486 n. 45 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert. denied, 486 U.S. 1059 (1988). 8 12 C.F.R. 225.200. Company may provide services that are necessary incidents to the proposed underwriting and dealing activities. Unless Company receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, any revenues from the incidental activities must be treated as ineligible revenues subject to the Board's revenue limitation. 9 See 12 C.F.R. 225.28(b)(1), (2), (3), (5), (6), (7), (8), (9), and (11)(vii). 10 See Mellon Bank Corporation, 79 Federal Reserve Bulletin 626 (1993); Commerzbank AG, 83 Federal Reserve Bulletin 678 (1997) ("Commerzbank"); Bankers Trust New York Corporation, 83 Federal Reserve Bulletin 780 (1997) ("Bankers Trust"); Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736 (1994). Company also would provide transfer agency services to the funds that are provided advisory or administrative services by Company or an affiliate. See 12 C.F.R. 225.125(i). 11 USB has committed that it will engage in the proposed mutual fund advisory and administrative activities in a manner consistent with previous orders, and has committed that Company will cease its mutual fund distribution activities prior to consummation. See Commerzbank; Bankers Trust. USB does not propose to have any officer or director interlocks with the mutual funds to which Company or its affiliates provide advisory or administrative services. USB also has provided the commitments previously relied on by the Board to address the potential adverse effects that could arise from USB's proposal to serve as general partner of private investment limited partnerships that invest in assets in which a bank holding company may invest, and to assure that such activities are conducted in accordance with applicable law. See Dresdner Bank AG, 84 Federal Reserve Bulletin 361 (1998). 12 12 U.S.C. § 1843(c)(8). 13 See 12 C.F.R. 225.26. 14 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Meyer and Ferguson. Absent and not voting: Governor Gramlich.

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1998 Orders on banking applications