SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 18, 1994
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-2979 41-0449260
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-667-1234
Item 5. Other Events.
RECENT OPERATING RESULTS
Norwest Corporation's ("Norwest") net income was $202.0 million for the
quarter ended June 30, 1994, a 19.6% increase over the $168.9 million earned
in the second quarter of 1993. Net income per common share was 61 cents,
compared with 52 cents in the second quarter of 1993, an increase of 17.3%.
Return on common equity was 22.4% and return on assets was 1.48% for the
second quarter of 1994, compared with 20.4% and 1.37%, respectively, in the
second quarter of 1993.
For the first six months of 1994, net income was $392.5 million, or $1.20 per
common share, an increase of 20.0% and 18.8%, respectively, over the $327.2
million or $1.01 per common share earned in the first six months of 1993.
Return on common equity was 21.5% and return on assets was 1.47% for the first
six months of 1994, compared with 20.2% and 1.35%, respectively, for the same
period a year ago.
The 1993 results have been restated to include First United Bank Group, Inc.
(First United), acquired on January 14, 1994, in a pooling of interests
transaction.
Net interest income in the second quarter of 1994 was $697.3 million, compared
with $614.3 million in the second quarter of 1993, an increase of 13.5%. The
improvement from the second quarter of 1993 is primarily due to a 10.7% growth
in average earning assets, and a 11 basis point increase in net interest
margin. Net interest income increased 10.0% to $1,347.2 million for the first
six months of 1994, compared to the same period in 1993. The increase is
attributable to a 10.3% higher level of earning assets.
Norwest provided $23.7 million for credit losses in the second quarter of
1994, or 0.32% of average loans and leases. This compares with $39.4 million
or 0.61% in the same period a year ago. Net credit losses totaled $33.4
million in the second quarter of 1994, compared with $45.2 million in the
second quarter of 1993. As a percent of average loans and leases, net credit
losses were 0.45% in the second quarter of 1994, compared with 0.70% in the
same period a year ago.
For the first six months of 1994, Norwest's provision amounted to $60.0
million, compared with $77.5 million for the same period of 1993. Net credit
losses were $76.6 million and $83.4 million for the six months ended June 30,
1994 and 1993, respectively. Net credit losses, as a percent of average loans
and leases, were 0.53% in the first half of 1994, compared with 0.65% in the
same period of 1993.
Non-performing assets, including non-accrual and restructured loans and leases
and other real estate owned, totaled $200.7 million, or 0.66% of loans, leases
and other real estate owned, at June 30, 1994. Non-performing assets were
$269.0 million at December 31, 1993, and $343.3 million at June 30, 1993. The
decrease from year-end 1993 was primarily due to a $52.2 million reduction in
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non-accrual loans. The allowance for credit losses was $790.4 million at June
30, 1994, and represented 393.8% of non-performing assets.
Consolidated non-interest income decreased 8.2% to $386.9 million, compared to
the second quarter of 1993. Investment securities losses of $43.5 million
were recorded during the second quarter of 1994, providing an opportunity
to reinvest at higher yields.
For the first six months of 1994, non-interest income was up $50.2 million
to $821.0 million, an increase of 6.5% over 1993. This increase was
primarily due to increased mortgage banking revenues, insurance fees and
deposit service charges.
Consolidated non-interest expenses in the second quarter of $759.0 million
represented an increase of 0.5% over the second quarter of 1993.
For the six months ended June 30, 1994, non-interest expenses were
up $88.7 million to $1,528.1 million, an increase of 6.2% over 1993. The
quarterly and year-to-date increases reflect higher salaries and benefits
costs at Norwest Mortgage to support origination and servicing growth and in
the Banking Group due to acquisitions. Offsetting the increases in salaries
and benefits were decreases in other non-interest expenses of $68.2 million
for the three months and $93.1 million for the six months ended June 30, 1994,
compared to the same periods of the prior year.
Norwest's Banking Group reported earnings of $136.2 million in the second
quarter of 1994, 38.0% above second quarter 1993 earnings of $98.7 million.
For the first six months of 1994, the Banking Group had net income of $264.1
million, a 30.0% increase compared with $203.1 million in 1993. Banking Group
earnings in the first half of 1994 included a 11.8% growth in net interest
income and a $18.5 million decrease in the provision for credit losses,
partially offset by a 6.0% decrease in non-interest income.
Mortgage banking operations earned $11.5 million in the current quarter, down
from $23.0 million recorded in the second quarter of 1993. For the first six
months of 1994, mortgage banking operations had net income of $22.3 million, a
decrease of 33.4% from the first six months of 1993 when a gain of $61.8
million was realized on the sale of $2.9 billion of servicing in accordance
with the terms of a long-term contract.
Norwest Financial Services, Inc. ("Norwest Financial") reported second quarter
1994 net income of $54.3 million, an increase of 15.0% from the second quarter
of 1993. Norwest Financial's net income of $106.1 million for the first six
months of 1994 was up 17.1% from the first six months of 1993. Norwest
Financial's net interest income increased 13.5% as average finance receivables
grew 12.9%. Net interest margin widened 4 basis points, reflecting lower
funding costs.
At June 30, 1994, total assets were $55.8 billion, compared with $54.7 billion
at December 31, 1993. Loans and leases, net of unearned discount, increased
4.9% from year-end 1993, and totaled $30.2 billion at June 30, 1994. Total
investment securities were $14.8 billion at June 30, 1994, compared with $12.7
billion at December 31, 1993, an increase of 16.4%. Deposits decreased from
$36.0 billion at year-end 1993 to $34.7 billion at June 30, 1994, principally
in non-interest-bearing demand deposits.
Consolidated stockholders' equity was $3.84 billion at June 30, 1994, compared
with $3.76 billion at December 31, 1993. Tier 1 and total capital ratios were
10.00% and 12.40%, respectively, at June 30, 1994, compared with 9.71% and
12.39%, respectively, at December 31, 1993. The leverage ratio was 6.85% at
June 30, 1994 and 6.46% at year-end 1993.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORWEST CORPORATION
(Registrant)
Dated: July 21, 1994 By: /s/ Michael A. Graf
Senior Vice President and Controller
(Principal Accounting Officer)
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