For immediate release

The Federal Reserve Board announced today its approval of the application of Norwest Corporation, Minneapolis, Minnesota, to acquire Mountain Bancshares, Inc., Newport, Minnesota, and thereby acquire Mountain Bank, Eagle, Colorado. Attached is the Board's Order relating to this action.

Norwest Corporation Minneapolis, Minnesota Order Approving Acquisition of a Bank Holding Company

Norwest Corporation ("Norwest"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act to acquire Mountain Bancshares, Inc., Newport, Minnesota ("Mountain"), and thereby acquire Mountain Bank, Eagle, Colorado. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 18,021 (1998)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act. Norwest operates banks in Arizona, Colorado, Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, South Dakota, Wisconsin, and Wyoming. Norwest is the largest commercial banking organization in Colorado, controlling approximately $7.1 billion in deposits, representing approximately 22.1 percent of total deposits in commercial banking organizations in Colorado ("state deposits").1 Mountain is the 66th largest commercial banking organization in Colorado, controlling approximately $70 million in deposits, representing less than 1 percent of state deposits. On consummation of the proposal, Norwest would remain the largest commercial banking organization in Colorado. Interstate Analysis Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank in a state other than the home state of such bank holding company, if certain conditions are met. For purposes of the BHC Act, the home state of Norwest is Minnesota, and Mountain controls a bank in Colorado.2 All of the conditions for an interstate acquisition enumerated in section 3(d) are met in this case.3 In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act. Competitive Considerations The BHC Act prohibits the Board from approving an application if the proposal would result in a monopoly or if the proposal would substantially lessen competition in any relevant market, unless the Board finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.4 Norwest and Mountain compete in the Montrose County and the Eagle County banking markets, both in Colorado.5 In the Montrose County banking market, Norwest would remain the largest depository institution in the market, controlling $173.4 million in deposits, representing 38.5 percent of deposits in depository institutions in the market ("market deposits") after consummation of the proposal.6 Concentration in the banking market as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines") would increase by 82 points to 2134.7 Twelve competitors, including Norwest, would remain in the Montrose County banking market after consummation of this proposal. The second largest competitor would control 19.7 percent of market deposits, and five other competitors, not including Norwest, each would control more than 5 percent of market deposits after consummation of the proposal. In the Eagle County banking market, Norwest would become the third largest depository institution after consummation of the proposal, controlling $71 million in deposits, representing approximately 15.1 percent of market deposits. The HHI would increase by 35 points to 4014. Five competitors, including Norwest, would remain in the market. Two competitors would control a larger percentage of market deposits than Norwest, including the largest competitor in the market which controls 58.7 percent of market deposits. Consummation of the proposal in both banking markets would be consistent with the DOJ Guidelines and Board precedent. In addition, the Department of Justice reviewed the proposal and advised the Board that consummation of the proposal would not likely have a significantly adverse effect on competition in any relevant banking market. Based on all the facts of record, including the small increases in market concentration as measured by the HHI, the number of competitors remaining, and the market shares controlled by the remaining competitors, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in any relevant banking market. Other Considerations The BHC Act requires the Board, in acting on an application, to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the communities to be served, and certain supervisory factors. The Board has reviewed these factors in light of the record, including supervisory reports of examination assessing the financial and managerial resources of the organizations. Based on all the facts of record, the Board concludes that the financial and managerial resources and the future prospects of Norwest, Mountain, and their respective subsidiary banks are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. In addition, considerations related to the convenience and needs of the communities to be served, including the records of performance of the institutions under the Community Reinvestment Act, are consistent with approval of the proposal. Conclusion Based on the foregoing, and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by Norwest with all the commitments made in connection with the application. For the purposes of this action, the commitments and conditions relied on by the Board in reaching its decision 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 transaction shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Minneapolis, acting pursuant to delegated authority.

By order of the Board of Governors,8 effective June 1, 1998. (signed) Robert deV. Frierson Robert deV. Frierson Associate Secretary of the Board

Footnotes 1 State deposit data are as of June 30, 1997. 2 A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries are principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 12 U.S.C. § 1841(o)(4)(C). 3 See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Norwest is adequately capitalized and adequately managed, as defined by applicable law, and Mountain Bank has been in existence and operated for the minimum period of time necessary to satisfy age requirements established by applicable state law. See Colo. Rev. Stat. Ann. § 11-6.4-103(2)(1997)(five years). On consummation of the proposal, Norwest would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States. Norwest would control less than 25 percent of the total amount of federally insured deposits in Colorado, as calculated under applicable Colorado law. See Colo. Rev. Stat. Ann 11-6.4-103(4)(1997). All other requirements of section 3(d) of the BHC Act also would be met on consummation of the proposal. 4 12 U.S.C. § 1842(c)(1)(B). 5 The Montrose County banking market is defined as Montrose, Ouray, and San Miguel Counties in Colorado. The Eagle County banking market is defined as Eagle County, Colorado, excluding the towns of El Jebel, Basalt, and Emma. 6 In this context, depository institutions include commercial banks, savings banks, and savings associations. Market share data used to analyze the competitive effects of the proposal are as of June 30, 1997. These data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). 7 Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI exceeds 1800 is considered highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers and acquisitions for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 8 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Meyer, Ferguson, and Gramlich. Absent and not voting: Governors Kelley and Phillips.

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1998 Orders on banking applications