<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2979
NORWEST CORPORATION
A Delaware Corporation-I.R.S. No. 41-0449260
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
Telephone (612) 667-1234
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. X Yes ___ No.
Common Stock, par value $1 2/3 per share,
outstanding at April 30, 1994 318,480,722 shares
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following consolidated financial statements of Norwest Corporation and
its subsidiaries are included herein:
Page
1. Consolidated Balance Sheets -
March 31, 1994 and December 31, 1993 ........................ 3
2. Consolidated Statements of Income -
Quarters Ended March 31, 1994 and 1993 ...................... 4
3. Consolidated Statements of Cash Flows -
Quarters Ended March 31, 1994 and 1993 ...................... 6
4. Consolidated Statements of Stockholders' Equity -
Quarters Ended March 31, 1994 and 1993 ...................... 8
5. Notes to Consolidated Financial Statements ..................... 10
The financial information for the interim periods is unaudited. In the
opinion of management, all adjustments necessary (which are of a normal
recurring nature) have been included for a fair presentation of the results
of operations. The results of operations for an interim period are not
necessarily indicative of the results that may be expected for a full year
or any other interim period.
2
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Norwest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except shares March 31 December 31
1994 1993
ASSETS
Cash and due from banks ....................... $ 3,028.8 2,844.4
Interest-bearing deposits with banks .......... 49.0 55.9
Federal funds sold and resale agreements ...... 709.3 707.7
Total cash and cash equivalents ........... 3,787.1 3,608.0
Trading account securities .................... 359.6 279.1
Investment securities (fair value
$1,133.3 in 1994 and $1,597.6 in 1993) ...... 1,039.4 1,542.7
Mortgage-backed securities (fair value
$153.1 in 1993) ............................. - 151.0
Investment securities available for sale
(fair value $2,260.9 in 1993) ............... 2,218.2 2,001.2
Mortgage-backed securities available for
sale (fair value $9,244.0 in 1993) .......... 10,306.5 9,021.6
Total investment securities ............... 13,564.1 12,716.5
Student loans available for sale .............. 1,575.8 1,349.2
Mortgages held for sale ....................... 4,327.5 6,090.7
Loans and leases .............................. 30,347.2 29,781.9
Unearned discount ............................. (1,060.2) (1,021.1)
Allowance for credit losses ................... (793.2) (789.2)
Net loans and leases ...................... 28,493.8 27,971.6
Premises and equipment, net ................... 859.1 842.1
Interest receivable and other assets .......... 2,361.2 1,807.8
Total assets .............................. $55,328.2 54,665.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing ......................... $ 8,614.7 9,054.3
Interest-bearing ............................ 26,713.6 26,922.2
Total deposits ............................ 35,328.3 35,976.5
Short-term borrowings ......................... 6,337.4 5,996.8
Accrued expenses and other liabilities ........ 2,979.7 2,079.9
Long-term debt ................................ 6,829.5 6,850.9
Total liabilities ......................... 51,474.9 50,904.1
Preferred stock ............................... 382.8 380.0
Unearned ESOP shares .......................... (36.2) -
Total preferred stock ..................... 346.6 380.0
Common stock, $1 2/3 par value - authorized
500,000,000 shares:
Issued 318,602,669 and 309,255,558 shares
in 1994 and 1993, respectively ............. 531.0 515.4
Surplus ....................................... 547.2 503.3
Retained earnings ............................. 2,595.4 2,433.3
Net unrealized gains (losses)
on securities available for sale ............ (47.8) -
Notes receivable from ESOP .................... (14.9) (16.3)
Treasury stock - 3,682,553 and 1,956,803 common
shares in 1994 and 1993, respectively ....... (97.4) (51.5)
Foreign currency translation .................. (6.8) (3.3)
Total common stockholders' equity ......... 3,506.7 3,380.9
Total stockholders' equity ................ 3,853.3 3,760.9
Total liabilities and
stockholders' equity .................... $55,328.2 54,665.0
See notes to unaudited consolidated financial statements.
3
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Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In millions, except per common share amounts Quarter Ended
March 31
1994 1993
INTEREST INCOME ON
Loans and leases .................................. $ 699.9 645.9
Investment securities ............................. 16.9 30.7
Mortgage-backed securities ........................ - 1.8
Investment securities available for sale .......... 32.5 29.2
Mortgage-backed securities available for sale ..... 137.5 164.6
Student loans available for sale .................. 24.1 20.6
Mortgages held for sale ........................... 68.1 67.4
Money market investments .......................... 5.4 4.6
Trading account securities ........................ 8.4 3.0
Total interest income ......................... 992.8 967.8
INTEREST EXPENSE ON
Deposits .......................................... 205.1 209.3
Short-term borrowings ............................. 45.0 65.8
Long-term debt .................................... 92.8 82.1
Total interest expense ........................ 342.9 357.2
Net interest income ......................... 649.9 610.6
Provision for credit losses ....................... 36.3 38.1
Net interest income after
provision for credit losses ............... 613.6 572.5
NON-INTEREST INCOME
Trust ............................................. 51.9 48.0
Service charges on deposit accounts ............... 57.4 50.8
Mortgage banking .................................. 135.4 77.8
Data processing ................................... 15.2 15.9
Credit card ....................................... 25.7 28.5
Insurance ......................................... 42.0 39.3
Other fees and service charges .................... 45.6 38.3
Net investment and mortgage-backed
securities losses ................................ (0.5) -
Net investment and mortgage-backed
securities available for sale gains .............. 37.0 23.3
Net venture capital gains ......................... 20.2 5.7
Other ............................................. 4.2 21.5
Total non-interest income ..................... 434.1 349.1
NON-INTEREST EXPENSES
Salaries and benefits ............................. 397.0 333.0
Net occupancy ..................................... 56.0 45.0
Equipment rentals, depreciation
and maintenance .................................. 53.3 44.2
Business development .............................. 39.7 30.8
Communication ..................................... 44.4 36.6
Data processing ................................... 27.8 27.7
FDIC assessment and regulatory examination fees ... 21.8 19.4
Intangible asset amortization ..................... 19.5 12.5
Other ............................................. 109.6 134.5
Total non-interest expenses ................... 769.1 683.7
INCOME BEFORE INCOME TAXES ........................ 278.6 237.9
Income tax expense ................................ 88.1 79.6
NET INCOME ........................................ $ 190.5 158.3
(Continued on page 5)
4
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Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued from page 4)
In millions, except per common share amounts Quarter Ended
March 31
1994 1993
Average Common and Common Equivalent Shares ....... 313.2 305.7
PER COMMON SHARE
Net Income
Primary ......................................... $ 0.59 0.49
Fully diluted ................................... 0.58 0.48
Dividends ........................................ 0.185 0.145
See notes to unaudited consolidated financial statements.
5
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Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In millions Quarter Ended
March 31
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .......................................... $ 190.5 158.3
Adjustments to reconcile net income to net cash
flows from operating activities:
Provision for credit losses ...................... 36.3 38.1
Depreciation and amortization .................... 57.0 42.8
(Gains) losses on other real estate owned, net ... (3.9) 1.6
Losses on sales of premises and equipment ........ - 14.5
Gains on sales of mortgages held
for sale ....................................... (46.4) (22.6)
Losses on sales of investment and
mortgage-backed securities ..................... 0.5 -
Gains on sales of investment, mortgage-backed
and venture capital securities
available for sale .............................. (57.2) (29.0)
Gains on sales of student loans
available for sale ............................. (0.4) (0.2)
Trading account securities losses (gains) ........ 12.4 (6.6)
Purchases of trading account securities .......... (16,542.5) (13,880.8)
Proceeds from sales of trading account
securities ..................................... 16,449.6 13,661.9
Originations of mortgages held for sale .......... (7,327.8) (5,266.0)
Proceeds from sales of mortgages held for sale ... 9,138.4 6,163.6
Proceeds from sales of investment and mortgage-
backed securities available for sale ............ - 1,058.2
Purchases of investment and mortgage-backed
securities available for sale ................... - (1,527.3)
Proceeds from maturities and paydowns of
investment and mortgage-backed securities
available for sale ............................. - 502.8
Originations of student loans available for sale.. (194.5) (175.3)
Proceeds from sales of student loans
available for sale .............................. 43.6 53.5
Deferred income taxes ............................ 5.3 1.6
Interest receivable .............................. (1.0) 19.5
Interest payable ................................. (23.5) (32.5)
Other assets, net ................................ 78.3 192.3
Other accrued expenses and liabilities, net ...... (166.5) 160.1
Net cash flows from
operating activities .......................... 1,648.2 1,128.5
(Continued on page 7)
6
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Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Continued from page 6)
In millions Quarter Ended
March 31
1994 1993
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and paydowns of:
Investment securities ............................ 652.0 186.9
Investment and mortgage-backed
securities available for sale .................. 1,030.1 -
Proceeds from sales of:
Investment securities ............................ 0.5 -
Investment and mortgage-backed
securities available for sale .................. 1,191.9 -
Purchases of:
Investment securities ............................ (133.2) (250.6)
Investment and mortgage-backed
securities available for sale .................. (2,996.3) -
Net (increase) decrease in banking
subsidiaries' loans and leases..................... (102.9) 110.6
Principal collected on non-bank
subsidiaries' loans and leases .................... 999.8 902.0
Non-bank subsidiaries' loans and
leases originated ................................. (1,195.1) (923.6)
Purchases of premises and equipment ................ (51.7) (44.5)
Proceeds from sales of premises and equipment ...... 4.4 1.4
Proceeds from sales of other real estate owned ..... 20.6 29.2
Purchases of subsidiaries, net of cash
and cash equivalents acquired ..................... 50.5 67.2
Net cash flows from (used for)
investing activities ........................... (529.4) 78.6
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits, net ...................................... (998.1) (1,562.8)
Short-term borrowings, net ......................... 279.5 (1,023.6)
Long-term debt borrowings .......................... 566.7 1,058.6
Repayments of long-term debt ....................... (664.2) (116.2)
Issuances of common stock .......................... 15.9 12.6
Repurchases of common stock ........................ (67.9) (9.6)
Repurchases of preferred stock ..................... (7.9) (0.3)
Net decrease in notes receivable from ESOP ......... 1.4 0.9
Dividends paid ..................................... (65.1) (48.9)
Net cash flows used for
financing activities ............................ (939.7) (1,689.3)
Net increase (decrease) in cash and
cash equivalents ............................... 179.1 (482.2)
CASH AND CASH EQUIVALENTS
Beginning of period ................................ 3,608.0 3,428.0
End of period ...................................... $ 3,787.1 2,945.8
See notes to unaudited consolidated financial statements.
7
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Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Net Unrealized
In Gains (Losses)
millions, Unearned on Securities Notes Foreign
except for Preferred ESOP Common Sur- Retained Available Receivable Treasury Currency
shares Stock Shares Stock plus Earnings for Sale from ESOP Stock Translation Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1992, as
originally reported $ 342.5 - 242.4 616.0 2,002.8 - (19.5) (43.2) (0.3) 3,140.7
Adjustments for
pooling of interests 51.5 - 22.7 70.6 86.3 - - - - 231.1
Balance, December 31,
1992, restated 394.0 - 265.1 686.6 2,089.1 - (19.5) (43.2) (0.3) 3,371.8
Net income 158.3 158.3
Dividends on
Common stock (40.9) (40.9)
Preferred stock (8.0) (8.0)
Repurchase of 2,375
preferred shares (0.2) (0.1) (0.3)
Conversion of 58,297
preferred shares to
123,713 common shares (2.5) 0.1 2.4 -
Issuance of 1,106,168
common shares 0.8 38.5 (24.8) 0.5 15.0
Issuance of 1,591,344
common shares for
acquisitions (24.9) 33.3 8.4
Repurchase of 385,446
common shares (9.6) (9.6)
Cash payments
received on notes
receivable from ESOP 0.9 0.9
Tax benefits of dividends
on common stock held
by ESOP 0.1 0.1
Foreign currency
translation 0.6 0.6
Balance,
March 31, 1993 $ 391.3 - 266.0 702.6 2,173.7 - (18.6) (19.0) 0.3 3,496.3
</TABLE>
(Continued on page 9)
8
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Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Continued from page 8)
<TABLE>
<CAPTION>
Net Unrealized
In Gains (Losses)
millions, Unearned on Securities Notes Foreign
except for Preferred ESOP Common Sur- Retained Available Receivable Treasury Currency
shares Stock Shares Stock plus Earnings for Sale from ESOP Stock Translation Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1993 as originally
reported $ 341.9 - 490.2 413.0 2,394.4 - (16.3) (51.5) (3.3) 3,568.4
Adjustments for
pooling of interests 38.1 - 25.2 90.3 38.9 - - - - 192.5
Balance, December 31,
1993, restated 380.0 - 515.4 503.3 2,433.3 - (16.3) (51.5) (3.3) 3,760.9
Net unrealized gains
(losses) on securities
available for sale,
January 1, 1994 313.4 313.4
Net income 190.5 190.5
Dividends on
Common stock (57.9) (57.9)
Preferred stock (7.2) (7.2)
Conversion of 1,203,570
preferred shares to
2,661,559 common shares (30.2) 4.4 25.8 -
Repurchase of 188,095
preferred shares (7.9) (7.9)
Issuance of 40,900
preferred shares
to ESOP 40.9 (42.1) 1.2 -
Release of preferred
shares to ESOP 5.9 (0.1) 5.8
Issuance of 826,726
common shares 0.1 0.9 (5.0) 22.0 18.0
Issuance of 6,681,176
common shares for
acquisitions 11.1 16.1 41.7 68.9
Repurchase of 2,548,100
common shares (67.9) (67.9)
Change in net unrealized
gains (losses) on securities
available for sale (361.2) (361.2)
Cash payments received
on notes receivable
from ESOP 1.4 1.4
Foreign currency
translation (3.5) (3.5)
Balance,
March 31, 1994 $ 382.8 (36.2) 531.0 547.2 2,595.4 (47.8) (14.9) (97.4) (6.8) 3,853.3
</TABLE>
See notes to unaudited consolidated financial statements.
9
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Change in Accounting Policies
Effective January 1, 1994, the corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity securities," ("FAS 115"). Accordingly, debt and equity securities
available for sale are measured at fair value. Net unrealized gains (losses)
on securities available for sale are excluded from earnings and reported
as a separate component of stockholders' equity until realized. Realized gains
and losses on sales are computed by the specific identification method at the
time of disposition and are recorded in non-interest income.
Prior to the adoption of FAS 115, debt and equity securities available for
sale were carried at the lower of aggregate cost or market value.
2. Consolidated Statements of Cash Flows
Cash paid for interest and income taxes for the quarters ended March 31 was:
In millions
1994 1993
Interest $ 366.0 391.2
Income taxes 77.3 15.9
During the first three months of 1994 and 1993, $12.0 million and $19.8
million, respectively, of loans were transferred to other real estate owned.
Mortgage-backed securities of $151.0 million, held for investment by First
United Bank Group, Inc. ("First United") were transferred to available for
sale in the first quarter of 1994. The transfer was made to comply with
the corporation's investment and interest rate risk policies. See Note 8
for a discussion of the acquisition of First United.
During the quarters ended March 31, 1994 and 1993, the corporation issued
32,969 shares and 1,591,344 shares of common stock, respectively,
in connection with acquisitions accounted for using the purchase method.
On March 31, 1994, the corporation issued 40,900 shares of ESOP Cumulative
Convertible Preferred Stock in the par amount of $40.9 million
at a premium of $1.2 million. A corresponding charge of $42.1 million was
recorded to unearned ESOP shares (see Note 7). Preferred stock
in the amount of $5.8 million was released to the ESOP on March 31, 1994.
In conjunction with the acquisition of First United, $30.2 million of
preferred stock of First United was converted into common stock of the
corporation.
10
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3. Investment and Mortgage-backed Securities
The amortized cost and fair value of investment and mortgage-backed
securities at March 31, 1994 and December 31, 1993 were:
<TABLE>
<CAPTION>
In millions March 31, 1994
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held for investment:
State, municipal and housing -
tax exempt.......................... $ 626.5 39.3 1.6 664.2
Other ............................... 412.9 67.0 10.8 469.1
Total investment securities
held for investment ............. $ 1,039.4 106.3 12.4 1,133.3
Available for sale:
U.S. Treasury and federal agencies .. $ 1,778.2 26.5 9.8 1,794.9
State, municipal and housing -
tax exempt ......................... 89.7 1.6 1.4 89.9
Other ............................... 251.4 87.3 5.3 333.4
Total investment securities
available for sale .............. 2,119.3 115.4 16.5 2,218.2
Mortgage-backed securities:
Federal agencies ................... 10,366.3 109.9 294.9 10,181.3
Collateralized mortgage
obligations ....................... 125.3 1.9 2.0 125.2
Total mortgage-backed securities
available for sale .............. 10,491.6 111.8 296.9 10,306.5
Total investment and
mortgage-backed securities
available for sale .............. $12,610.9 227.2 313.4 12,524.7
</TABLE>
11
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<TABLE>
<CAPTION>
In millions December 31, 1993
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held for investment:
U.S. Treasury and federal agencies .. $ 665.0 5.5 - 670.5
State, municipal and housing -
tax exempt ........................ 632.9 50.1 1.0 682.0
Other ............................... 244.8 0.3 - 245.1
Total investment securities
held for investment ............. 1,542.7 55.9 1.0 1,597.6
Mortgage-backed securities:
Federal agencies ................... 126.0 2.1 - 128.1
Collateralized mortgage
obligations ....................... 25.0 - - 25.0
Total mortgage-backed
securities held for investment .. 151.0 2.1 - 153.1
Total investment and
mortgage-backed securities
held for investment ............. $ 1,693.7 58.0 1.0 1,750.7
Available for sale:
U.S. Treasury and federal agencies .. $ 1,520.5 77.2 2.8 1,594.9
State, municipal and housing -
tax exempt ........................ 96.2 3.7 0.1 99.8
Other ............................... 384.5 188.8 7.1 566.2
Total investment securities
available for sale .............. 2,001.2 269.7 10.0 2,260.9
Mortgage-backed securities:
Federal agencies ................... 8,889.1 227.5 7.5 9,109.1
Collateralized mortgage
obligations ....................... 132.5 2.7 0.3 134.9
Total mortgage-backed securities
available for sale .............. 9,021.6 230.2 7.8 9,244.0
Total investment and
mortgage-backed securities
available for sale .............. $11,022.8 499.9 17.8 11,504.9
</TABLE>
12
<PAGE>
Interest income on investment and mortgage-backed securities for the quarters
ended March 31 were:
In millions 1994 1993
Held for investment:
U.S. Treasury and federal agencies .. $ - 12.1
State, municipal and housing -
tax exempt ........................ 12.4 14.9
Other ............................... 4.5 3.7
Total investment securities
held for investment ............. $ 16.9 30.7
Mortgage-backed securities:
Federal agencies ................... $ - 1.5
Collateralized mortgage
obligations ....................... - 0.3
Total mortgage-backed securities
held for investment ............. $ - 1.8
Available for sale:
U.S. Treasury and federal agencies .. $ 26.3 25.0
State, municipal and housing -
tax exempt ........................ 1.3 1.1
Other ............................... 4.9 3.1
Total investment securities
available for sale .............. $ 32.5 29.2
Mortgage-backed securities:
Federal agencies ................... $ 135.5 157.3
Collateralized mortgage
obligations ....................... 2.0 7.3
Total mortgage-backed securities
available for sale .............. $ 137.5 164.6
During the first quarter of 1994, certain investment securities with a total
amortized cost of $10.4 million were sold by the corporation due to significant
deterioration in the creditworthiness of the related issuers or because such
securities were called by the issuers prior to maturity. The sales and calls
of investment securities resulted in a net loss of $0.5 million.
13
<PAGE>
4. Loans and Leases
The carrying values of loans and leases at March 31, 1994 and December 31, 1993
were:
In millions March 31 December 31
1994 1993
Commercial ............................... $ 7,852.8 7,624.1
Construction and land development ........ 589.7 565.6
Real estate .............................. 11,697.3 11,738.8
Consumer ................................. 8,996.4 8,606.3
Lease financing .......................... 672.4 698.6
Foreign .................................. 538.6 548.5
Total loans and leases ................. 30,347.2 29,781.9
Unearned discount ........................ (1,060.2) (1,021.1)
Loans and leases, net of
unearned discount .................... $ 29,287.0 28,760.8
Changes in the allowance for credit losses for the quarters ended March 31 were:
In millions 1994 1993
Balance at beginning of period .............. $ 789.2 773.1
Allowance related to loans acquired ....... 10.9 1.7
Provision for credit losses ............... 36.3 38.1
Credit losses ............................. (74.7) (69.0)
Recoveries ................................ 31.5 30.8
Net credit losses ....................... (43.2) (38.2)
Balance at end of period .................... $ 793.2 774.7
5. Non-accrual, Restructured and 90-Day Past Due Loans and Other Real Estate
Owned
Non-accrual, restructured and 90-day past due loans and other real estate
owned at March 31, 1994 and 1993 and December 31, 1993 were:
In millions March 31 December 31
1994 1993 1993
Non-accrual loans ....................... $ 173.3 251.7 195.7
Restructured loans ...................... 2.9 4.6 10.3
Total non-accrual and
restructured loans ................... 176.2 256.3 206.0
Other real estate owned ................. 55.7 113.5 63.0
Total non-performing assets ........... 231.9 369.8 269.0
Loans and leases past due
90 days or more* ...................... 66.2 54.0 50.8
Total non-performing assets and
90-day past due loans and leases ..... $ 298.1 423.8 319.8
* Excludes non-accrual and restructured loans.
The effects of non-accrual and restructured loans on interest income for the
quarters ended March 31 were:
In millions 1994 1993
Interest
As originally contracted ............ $ 3.7 7.5
As recognized ....................... (0.5) (1.6)
Reduction of interest income ...... $ 3.2 5.9
14
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6. Long-term Debt
During the first quarter of 1994, certain banking subsidiaries of the
corporation received $41 million in advances from the Federal Home Loan Bank.
The advances principally bear interest at LIBOR minus 10 basis points with a
maturity date of November 1994. During the first quarter of 1994, the
corporation issued $200 million of subordinated notes bearing interest
at LIBOR plus 5 basis points and maturing in February 1999. Also,
during the first quarter of 1994, Norwest Financial, Inc. issued $323 million
of senior and subordinated notes bearing interest at fixed rates ranging
from 5.40% to 6.25% and maturing from November 1996 to February 2004.
7. Preferred Stock
The corporation is authorized to issue 5,000,000 shares of preferred stock
without par value. The table below is a summary of the corporation's
preferred stock at March 31, 1994 and December 31, 1993. A detailed
description of the corporation's preferred stock is provided in Note 10
of the Notes to Consolidated Financial Statements in the corporation's 1993
Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A dated
May 13, 1994.
In millions, except share and per share amounts
<TABLE>
<CAPTION>
Annual
Dividend
Shares Outstanding Rate at Amount Outstanding
March 31 December 31 March 31 March 31 December 31
1994 1993 1994 1994 1993
<C> <C> <C> <C> <C> <C>
10.24% Cumulative,
$100 stated value 1,131,250 1,131,250 10.24% $113.2 113.2
7.00% Cumulative
Convertible, Series B,
$200 stated value 1,143,750 1,143,750 7.00% 228.7 228.7
ESOP Cumulative Convertible,
$1,000 stated value 40,900 - 9.00% 40.9 -
First United Cumulative
Convertible Exchangeable,
Series A, $25 stated value - 1,200,000 - - 30.0
First United Adjustable Rate
Cumulative, Series B,
$1 par value - 188,095 - - 7.9
First United 10.00% Cumulative
Convertible Exchangeable,
Series C, $1 par value - 3,570 - - 0.2
Preferred stock 382.8 380.0
Unearned ESOP shares (36.2) -
Total preferred stock $346.6 380.0
</TABLE>
On March 31, 1994 the corporation issued 40,900 shares of ESOP Cumulative
Convertible Preferred Stock, $1,000 stated value per share ("ESOP Preferred
Stock"). All shares of the ESOP Preferred Stock have been issued to a trustee
acting on behalf of the Norwest Corporation Savings-Investment Plan and Master
Savings Trust (the "Plan"). Dividends are cumulative from the date of initial
issuance and are payable quarterly at an annual rate of 9.00%.
15
<PAGE>
Each share of ESOP Preferred Stock released from the unallocated reserve of the
Plan is automatically converted, as of the date such release occurs, into
shares of common stock of the corporation based on the stated value of the ESOP
Preferred Stock and the then current market price of the corporation's common
stock. The ESOP Preferred Stock is also convertible at the option of the
holder at any time, unless previously redeemed. The ESOP Preferred Stock
is redeemable at any time, in whole or in part, at the option of the
corporation at a redemption price per share equal to the higher of (a) $1,000
per share plus accrued and unpaid dividends and (b) the fair market value,
as defined in the ESOP Preferred Stock Certificate of Designations,
of the ESOP Preferred Stock.
In accordance with the American Institute of Certified Public Accountants
Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership
Plans," the corporation recorded a corresponding charge to unearned ESOP shares
in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP
shares are reduced as shares of the ESOP Preferred Stock are committed to be
released.
As a result of the acquisition of First United (see Note 8), each share of the
Cumulative Convertible Exchangeable Preferred Stock, Series A, and the 10.00%
Cumulative Convertible Exchangeable Preferred Stock, Series C, was converted
into 2.2 and 6.039 shares, respectively, of the corporation's common stock and
each outstanding share of the Adjustable Rate Cumulative Preferred Stock,
Series B, was converted into the right to receive $42 per share plus accrued
and unpaid dividends.
8. Business Combinations
The corporation regularly explores opportunities for acquisitions of financial
institutions and related businesses. Generally, management of the corporation
does not make a public announcement about an acquisition opportunity until a
definitive agreement has been signed.
On January 14, 1994, the corporation completed its acquisition of First United,
a multibank holding company headquartered in Albuquerque, New Mexico, with
total assets of $3.9 billion. The corporation issued 17,784,916 shares of
its common stock in connection with the acquisition. The acquisition was
accounted for using the pooling of interests method of accounting and,
accordingly, the corporation's financial statements have been restated
for all periods prior to the acquisition to include the accounts and operations
of First United.
16
<PAGE>
Net income and net income per share amounts of the corporation and First United
prior to restatement for the years ended December 31, 1993, 1992 and 1991 were:
In millions, except per share amounts 1993 1992 1991
The corporation
Net income ............................ $ 653.6 364.1 400.9
Net income per share
Primary .............................. 2.13 1.16 1.34
Fully diluted ........................ 2.10 1.16 1.33
First United
Net (loss) income ..................... $ (40.5) 29.9 17.4
Net (loss) income per share
Primary .............................. (3.40) 2.18 1.34
Fully diluted ........................ (3.40) 1.84 1.29
On April 15, 1994, the corporation completed its acquisition of Bank of Montana
System with assets of $807 million, located in Great Falls, Montana, and issued
4,174,105 common shares. On March 15, 1994, the corporation completed its
acquisition of Community Credit Co., a $173 million consumer finance company
located in Minneapolis, Minnesota, and issued 3,726,871 common shares. On
February 2, 1994, the corporation completed its acquisition of First National
Bank of Arapahoe County, First National Bank of Lakewood and First National
Bank of Southeast Denver, with assets of $36 million, $61 million and $134
million, respectively, located in the Denver, Colorado metro area, and issued
260,896, 337,582 and 803,439 common shares, respectively. Also on February 2,
1994, the corporation completed its acquisition of Lindeberg Financial
Corporation, a $55 million bank holding company, located in Forest Lake,
Minnesota, and issued 413,599 common shares. On January 1, 1994, the
corporation completed its acquisition of St. Cloud National Bank
& Trust Co., a $119 million bank, and on January 6, 1994, closed on St. Cloud
Metropolitan Agency, Inc., an insurance agency, and issued 1,105,820 and
32,969 common shares, respectively.
The acquisitions of Bank of Montana System, First National Bank of Arapahoe
County, First National Bank of Lakewood, First National Bank of Southeast
Denver, Lindeberg Financial Corporation, St. Cloud National Bank & Trust Co.
and Community Credit Co. were accounted for using the pooling of interests
method of accounting; however, the financial results of the corporation have
not been restated because the effect of these acquisitions on the
corporation's financial statements was not material. The acquisition of St.
Cloud Metropolitan Agency, Inc. was accounted for using the purchase method.
As of March 31, 1994, the corporation had four other pending acquisitions with
total assets of approximately $300 million and it is anticipated that
approximately 1.4 million common shares will be issued upon completion of these
acquisitions. These pending acquisitions, subject to approval by regulatory
agencies, are expected to be completed during 1994 and are not significant
to the financial statements of the corporation, either individually or in
the aggregate.
17
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's discussion and analysis should be read together with the financial
statements submitted under Item 1 of Part I and with Norwest Corporation's 1993
Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A dated
May 13, 1994.
EARNINGS PERFORMANCE
The corporation reported net income of $190.5 million for the quarter ended
March 31, 1994, a 20.3 percent increase over the $158.3 million earned in the
first quarter of 1993. Net income per common share was 59 cents, compared
with 49 cents in the first quarter of 1993, an increase of 19.1 percent.
Return on realized common equity, which excludes net unrealized gains
(losses) on securities available for sale, was 21.5 percent and return on
assets was 1.45 percent for the first quarter of 1994, compared with 20.0
percent and 1.33 percent, respectively, in the first quarter of 1993.
The 1993 first quarter results have been restated to include First United Bank
Group, Inc. ("First United"), acquired on January 14, 1994, in a pooling of
interests transaction. For a discussion of additional completed and pending
acquisitions, see Note 8 to the unaudited consolidated financial statements for
the first quarter 1994.
ORGANIZATIONAL EARNINGS*
The earnings of the corporation's major entities appear below for the quarters
ended March 31.
In millions 1994 1993
Banking $ 127.9 104.4
Mortgage banking 10.8 10.5
Norwest Financial Services, Inc.
and subsidiaries 51.8 43.4
Net income $ 190.5 158.3
* Earnings of the entities listed are impacted by intercompany revenues and
expenses, such as interest on borrowings from the parent company, corporate
service fees and allocations of federal income taxes.
Banking
The Banking Group reported first quarter 1994 earnings of $127.9 million, a
22.5 percent increase over the first quarter 1993 earnings of $104.4 million.
Increased earnings in the first quarter 1994 reflected a 5.0 percent growth in
tax-equivalent net interest income primarily due to a 6.9 percent increase in
average earning assets, partially offset by a 4 basis point decrease in net
interest margin. Provision for credit losses decreased 5.6 percent from the
same period in 1993, reflecting continued decreases in non-performing assets.
Non-interest expenses increased 4.2 percent from the first quarter 1993,
primarily due to increased charitable contributions to the Norwest Foundation.
Virtually all appreciated securities included in the $20.2 million of 1994
venture capital gains were contributed to the Norwest Foundation. Related
contribution amounts of these appreciated securities, which included cost basis,
were $21.8 million.
These gains and contribution amounts represent increases of $14.5 million and
$15.4 million, respectively, from the first quarter of 1993. At March 31,
1994, Norwest Venture Capital had net unrealized appreciation in its investment
portfolio of $94.8 million.
18
<PAGE>
Mortgage Banking
Mortgage banking operations earned $10.8 million for the first quarter of 1994,
a 2.8 percent increase over first quarter 1993 earnings of $10.5 million.
Continued growth in originations and the servicing portfolio have largely
contributed to the increase in earnings. First quarter 1994 residential
mortgage fundings were $7.2 billion, which reflected a 42.8 percent increase
over the same period in 1993 and servicing retained during the first quarter
of 1994 was $4.6 billion, compared with $4.2 billion in the first quarter of
1993. The servicing portfolio increased to $50.2 billion at March 31, 1994,
compared with $25.7 billion at March 31, 1993.
Norwest Financial Services, Inc. and Subsidiaries ("Norwest Financial")
Norwest Financial reported earnings of $51.8 million in the first quarter of
1994, compared with $43.4 million in the first quarter of 1993. The 19.4
percent growth in earnings reflected a 13.5 percent increase in Norwest
Financial's tax-equivalent net interest income as average finance receivables
grew 10.7 percent from the first quarter of 1993 and net interest margin
widened 32 basis points, reflecting lower funding costs.
CONSOLIDATED INCOME STATEMENT ANALYSIS
Net Interest Income
Consolidated tax-equivalent net interest income was $657.2 million in the first
quarter of 1994, compared with $618.5 million in the first quarter of 1993, an
increase of 6.3 percent. Growth in tax-equivalent net interest income was
driven by a 10.0 percent growth in average earning assets, partially offset by
a 15 basis point decline in net interest margin. Net interest margin, the ratio
of annualized tax-equivalent net interest income to average earning assets,
was 5.48 percent in the first quarter of 1994, compared with 5.63 percent in
the first quarter of 1993. The decrease in net interest margin was primarily
due to a 60 basis point decline in yields on earning assets, partially
offset by lower funding costs. The increase in average earning assets was
primarily due to a 26.7 percent increase in average mortgages held for sale and
a 13.4 percent increase in average loans and leases, partially offset by a
2.8 percent decrease in average total investment securities. The following
table summarizes changes in tax-equivalent net interest income between the
first quarter of 1994 and the first and fourth quarters of 1993.
19
<PAGE>
Changes in Tax-Equivalent Net Interest Income*
In millions 1Q 94 1Q 94
over over
1Q 93 4Q 93
Increase (decrease) due to
Change in earning asset volume ................. $ 57.2 (16.1)
Change in volume of interest-free funds ........ 14.9 2.9
Change in net return from
Interest-free funds ........................... (6.4) (3.3)
Interest-bearing funds ........................ (45.1) (10.8)
Change in earning asset mix .................... 19.2 20.3
Change in funding mix .......................... (1.1) 2.1
Change in tax-equivalent net interest income ..... $ 38.7 (4.9)
* Net interest income is presented on a tax-equivalent basis utilizing a
federal incremental tax rate of 35% in the first quarter of 1994 and fourth
quarter of 1993 and 34% in the first quarter of 1993.
Provision for Credit Losses
The corporation provided $36.3 million for credit losses, or 0.51 percent of
average loans and leases, in the first quarter of 1994, compared with $38.1
million, or 0.61 percent of average loans and leases, and $57.4 million, or
0.81 percent, in the first and fourth quarters of 1993, respectively. The
decrease in the provision for credit losses reflected the continued reduction
in the corporation's non-performing assets. Net credit losses amounted to
$43.2 million in the first quarter of 1994, compared with $38.2 million and
$63.8 million in the first and fourth quarters of 1993, respectively. As
a percent of average loans and leases, net credit losses were 0.61 percent in
the first quarters of 1994 and 1993 compared with 0.90 percent in the fourth
quarter of 1993. The decrease in net credit losses from the fourth quarter of
1993 was primarily due to decreases in net charge-offs of real estate,
commercial and construction loans of $7.5 million, $7.4 million and $4.5
million, respectively.
Non-interest Income
Consolidated non-interest income of $434.1 million increased 24.4 percent from
$349.1 million in the first quarter of 1993. This increase was primarily
due to increased mortgage banking revenues, as changes in venture capital
related gains, investment securities gains and trading account losses offset
one another. Excluding investment/mortgage-backed securities losses, venture
capital gains and gains on investment/mortgage-backed securities available for
sale, non-interest income was up 17.7 percent from the first quarter of 1993.
The increase in mortgage banking revenues reflected the continued
growth in mortgage loan originations and the servicing portfolio.
Non-interest Expenses
Consolidated non-interest expenses increased 12.5 percent in the first quarter
of 1994 compared with the first quarter of 1993. The increase in non-interest
expenses was due primarily to higher salaries, benefits and occupancy expenses
at the mortgage banking operation to support origination and servicing growth,
and in the Banking Group due to acquisitions, and increases in contributions
expense and intangible asset amortization.
20
<PAGE>
CONSOLIDATED BALANCE SHEET ANALYSIS
Earning Assets
At March 31, 1994, earning assets were $49.9 billion, a decrease of 0.2 percent
from $50.0 billion at December 31, 1993. The decrease is primarily due to a
decrease in mortgages held for sale, which reflects a 31.3 percent decline in
residential mortgage fundings when compared to the fourth quarter 1993.
Decreases in mortgages held for sale were partially offset by continued loan
growth and increases in total investment securities and student loans available
for sale.
Average earning assets were $48.3 billion in the first quarter of 1994, an
increase of 10.0 percent compared with the first quarter of 1993. This
increase is due to a 26.7 percent increase in average mortgages held for sale
due to increased residential mortgage fundings throughout 1993 and a
13.4 percent increase in average loans and leases, partially offset by a 2.8
percent decrease in average total investment securities.
Leverage, the ratio of average assets to average total stockholders' equity,
decreased to 13.5 times during the first quarter of 1994 from 14.1 times during
the first quarter of 1993. This decrease is due to a 14.5 percent increase in
average stockholders' equity, partially offset by a 10.0 percent increase in
average assets.
Credit Quality
Loans and leases as of the end of each of the last five quarters were as
follows:
In millions 1994 1993
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
Commercial, financial and
industrial ................ $ 6,984 6,686 6,631 6,454 6,292
Agricultural ................ 869 938 836 820 770
Real estate
Secured by 1-4
residential properties .. 8,256 8,321 8,483 7,941 7,984
Secured by development
properties .............. 1,686 1,641 1,596 1,516 1,552
Secured by construction
and land development .... 590 566 540 458 443
Secured by owner-
occupied properties ..... 1,755 1,777 1,731 1,642 1,617
Consumer .................... 6,769 6,560 6,242 5,931 5,755
Credit card and check credit 2,227 2,046 1,623 1,340 1,198
Lease financing ............. 672 698 677 645 643
Foreign ..................... 539 549 542 532 538
Total loans and leases .. 30,347 29,782 28,901 27,279 26,792
Unearned discount ....... (1,060) (1,021) (1,014) (1,007) (1,002)
Total loans and leases,
net of unearned
discount ............. $29,287 28,761 27,887 26,272 25,790
At March 31, 1994, the allowance for credit losses totaled $793.2 million, or
2.71 percent of loans and leases outstanding. Comparable amounts were $774.7
million, or 3.00 percent, at March 31, 1993, and $789.2 million, or 2.74
percent, at December 31, 1993. The ratio of the allowance for credit losses
to the total non-performing assets and 90-day past due loans and leases was
266.1 percent at March 31, 1994, compared with 182.8 percent at March 31,
1993 and 246.8 percent at December 31, 1993.
21
<PAGE>
At March 31, 1994, the corporation's commercial real estate portfolio of loans
to investors, developers and builders, including construction and land
development loans, totaled $1,975.1 million, of which $40.9 million, or 2.1
percent, were non-performing, compared with $1,632.3 million at December 31,
1993, of which $40.0 million, or 2.5 percent, were non-performing. These
loans do not include loans on owner-occupied real estate which the corporation
views as having the same general risk as commercial loans.
Non-performing assets and 90-day past due loans totaled $298.1 million, or 0.54
percent of total assets, at March 31, 1994, compared with $423.8 million, or
0.87 percent, at March 31, 1993, and $319.8 million, or 0.59 percent, at
December 31, 1993. The decrease from March 31, 1993, reflected a $42.3 million
decrease in commercial non-accrual loans, a $30.9 million decrease in
real estate non-accrual loans, a $3.4 million decrease in consumer non-accrual
loans, and a $57.8 million decrease in other real estate owned, partially
offset by a $12.2 million increase in 90-day past due loans. The decrease
from December 31, 1993, included a $6.0 million decrease in commercial
non-accrual loans, a $3.9 million decrease in real estate non-accrual loans, a
$10.9 million decrease in other non-accrual loans, a $7.4 million
decrease in restructured loans and a $7.3 million decrease in other real
estate owned, partially offset by a $15.4 million increase in 90-day past
due loans.
Interest-bearing Liabilities
At March 31, 1994, interest-bearing liabilities totaled $39.9 billion, a 0.3
percent increase from $39.8 million at December 31, 1993. The increase is
primarily due to increases in short-term borrowings, partially offset by
decreases in interest-bearing deposits and long-term debt.
Average interest-bearing liabilities were $38.8 billion during the first
quarter of 1994, up 5.1 percent from the first quarter of 1993. The increase
is due to a 11.7 percent increase in average interest-bearing deposits
and a 30.3 percent increase in average long-term debt, partially offset by a
31.1 percent decrease in average short-term borrowings.
In March 1994, Duff & Phelps upgraded the corporation's senior debt rating from
AA- to AA and subordinated debt and preferred stock ratings were upgraded
from A+ to AA-. Duff & Phelps reaffirmed the corporation's commercial paper
rating of Duff 1+. In January 1994, Standard & Poor's upgraded the
corporation's senior debt rating from A+ to AA-, subordinated debt rating
from A to A+, preferred stock rating from A- to A and commercial paper rating
from A1 to A1+. Thomson BankWatch, Fitch Investors Services, Inc., IBCA and
Moody's have currently rated the corporation's senior debt AA+, AA, AA- and A1,
respectively, and have rated its commercial paper TBW-1, F-1+, A1+ and P1,
respectively.
22
<PAGE>
Norwest Financial's senior debt is currently rated AA+ by Thomson BankWatch and
Fitch Investors Services, Inc., AA by Duff & Phelps, AA- by Standard & Poor's
and Aa3 by Moody's.
Capital Ratios
The corporation's Tier 1 capital ratio was 10.15 percent at March 31, 1994, and
its total capital to risk-based assets ratio was 12.65 percent, compared with
9.71 percent and 12.39 percent, respectively, at December 31, 1993. The
corporation's leverage ratio was 6.97 percent at March 31, 1994, compared with
6.46 percent at December 31, 1993. These ratios compare favorably to the
regulatory minimums of 4.0 percent for Tier 1, 8.0 percent for total capital to
risk-based assets, and 3.0 percent for leverage ratio. The corporation's
dividend payout was 31.4 percent for the first quarter of 1994 compared with
29.6 percent for the first quarter of 1993. During the first quarter of 1994,
the corporation increased its quarterly dividend to 18.5 cents per common share,
up 4 cents per common share from the first quarter of 1993 and up 2 cents
per common share from the fourth quarter 1993.
23
<PAGE>
Consolidated average balance sheets and related tax-equivalent yields and
rates for the quarters ended March 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
In millions 1994 1993
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
<S> <C> <C> <C> <C> <C> <C>
Assets
Money market investments $ 500 $ 5.4 4.28% $ 603 $ 4.6 3.12%
Trading account securities 371 8.5 9.36 216 3.2 5.99
Investment securities 958 22.1 9.25 1,957 36.6 7.48
Mortgage-backed securities - - - 131 1.8 5.39
Investment securities
available for sale 2,601 33.1 5.09 1,527 29.7 7.77
Mortgage-backed securities
available for sale 8,837 137.5 6.22 9,140 164.6 7.21
Total investment
securities 12,396 192.7 6.22 12,755 232.7 7.31
Student loans available
for sale 1,517 24.1 6.45 1,237 20.6 6.73
Mortgages held for sale 4,622 68.1 5.89 3,648 67.4 7.39
Loans and leases 28,901 701.3 9.76 25,475 647.2 10.22
Total earning assets 48,307 1,000.1 8.32 43,934 975.7 8.92
Allowance for credit losses (808) (785)
Cash and due from banks 2,985 2,654
Other assets 2,740 2,578
Total assets $53,224 $48,381
Liabilities and Stockholders' Equity
Non interest-bearing
deposits $ 8,783 $ 6,778
Interest-bearing
deposits 26,770 205.1 3.11 23,972 209.3 3.54
Short-term borrowings 5,445 45.0 3.35 7,907 65.8 3.37
Long-term debt 6,633 92.8 5.60 5,089 82.1 6.45
Total interest-bearing
liabilities 38,848 342.9 3.57 36,968 357.2 3.91
Other liabilities 1,655 1,192
Stockholders' equity 3,938 3,443
Total liabilities and
stockholders' equity $53,224 $48,381
Net interest income
tax-equivalent basis $657.2 $618.5
Yield spread 4.75 5.01
Net interest income to
earning assets 5.48 5.63
Interest-bearing
liabilities to
earning assets 80.42 84.14
</TABLE>
* Interest income and yields are calculated on a tax-equivalent basis
utilizing a federal incremental tax rate of 35% and 34% in 1994 and 1993,
respectively. Non-accrual loans and the related negative income effect have
been included in the calculation of yields.
24
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
The following exhibits are filed in response to Item 601 of Regulation S-K.
Exhibit
No. Exhibit Page
4. Certificate of Designations of powers,
preferences and rights relating to the corporation's
ESOP Cumulative Convertible Preferred Stock ............ 27
Copies of instruments with respect to long-term debt
will be furnished to the Commission upon request.
11. Computation of Earnings Per Share ........................ 41
12(a). Computation of Ratio of Earnings to Fixed Charges ........ 42
12(b). Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends ........................... 43
(b) Reports on Form 8-K.
On February 15, 1994, the corporation filed a Current Report on Form 8-K,
dated January 19, 1994, reporting consolidated operating results of the
corporation for the year ended December 31, 1993.
25
<PAGE>
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 thereunto duly authorized.
NORWEST CORPORATION
May 16, 1994 By /s/ Michael A. Graf
Senior Vice President
and Controller
(Chief Accounting Officer)
26
<PAGE>
Exhibit 4.
NORWEST CORPORATION
___________________________________
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
___________________________________
ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK
(Without Par Value)
___________________________________
NORWEST CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES
that the following resolutions were duly adopted by the Board of
Directors of the Corporation (the "Board") and by the Securities
Committee of the Board (the "Securities Committee"), pursuant to
authority conferred upon the Board by the provisions of the Restated
Certificate of Incorporation of the Corporation, as amended, which
authorizes the issuance of up to 5,000,000 shares of preferred stock,
without par value (the "Preferred Stock") and pursuant to authority
conferred upon the Securities Committee of the Board in accordance with
Section 141(c) of the General Corporation Law of the State of Delaware
and by the resolutions of the Board set forth herein, at a meeting of
the Board duly held on September 28, 1993, and at a meeting of the
Securities Committee duly held on March 30, 1994:
1. The Board on September 28, 1993 adopted the following
resolutions authorizing the Securities Committee of the Board of
Directors to authorize the issuance of Equity Related Securities
hereinafter referred to, including the Preferred Stock, and fixing the
voting rights of certain series of the Preferred Stock:
RESOLVED that the Corporation is authorized to issue and sell, at
any time, or from time to time, securities in the form or forms of one
or more of the following (all of which are referred to herein as
"Securities"): (i) one or more series of preferred stock of the
Corporation (the "Preferred Stock") and other related securities,
including without limitation depositary instruments evidencing interests
in Preferred Stock ("Depositary Shares"); (ii) unsecured debentures,
notes, or other evidences of indebtedness which, when issued, may rank
on a parity with or be subordinated to all other unsecured and
unsubordinated indebtedness of the Corporation (collectively, the "Debt
Securities"); (iii) Securities directly or indirectly convertible into,
or exchangeable for, and warrants (the "Stock Warrants") for the
purchase of, Preferred Stock, Depositary Shares, common stock of the
Corporation (the "Common Stock") or other capital securities of the
Corporation (the Securities described in clauses (i), (iii) and (vi)
hereof, together with any Securities related thereto, are referred to
collectively herein as "Equity Related Securities"); (iv) warrants for
the purchase of Debt Securities ("Debt Warrants") (the Stock Warrants
and Debt Warrants being collectively referred to herein as "Securities
Warrants"); (v) shares of Common Stock issuable upon the conversion of
or in exchange for Preferred Stock or Debt Securities, or upon the
exercise of Stock Warrants; and (vi) other capital securities of the
Corporation issuable in exchange for or upon conversion of Preferred
Stock or Debt Securities, all of such Securities to be issuable in an
aggregate dollar amount not to exceed $1,000,000,000 (the "Issuance
27
<PAGE>
Limit"), which Issuance Limit shall be determined (1) with respect to
the issuance of Debt Securities, whether or not convertible into or
exchangeable for other Securities, by reference to the original dollar
offering price thereof upon issuance (or, if denominated in any other
currency or currencies, by reference to the approximate equivalent value
thereof in U.S. dollars, as determined by an Authorized Officer
hereinafter referred to); (2) with respect to the issuance of Preferred
Stock or Depositary Shares, whether or not convertible into or
exchangeable for other Securities, by reference to the original offering
price thereof upon issuance; and (3) with respect to the issuance of
Securities Warrants, by reference to the original offering price thereof
upon issuance plus the aggregate exercise price (if any) of such
Securities Warrants.
* * * *
RESOLVED that the Securities Committee, exclusively, shall have
and may exercise, subject to the Issuance Limit and these resolutions,
the full powers of the Board, on behalf of the Corporation, to authorize
the issuance of Equity Related Securities, to establish all terms and
conditions with respect thereto, and to take any and all actions the
Securities Committee deems necessary or appropriate in connection
therewith; provided, however, that any shares of Preferred Stock thus
authorized for issuance shall have the voting rights set forth in
Appendix A to these resolutions.
* * * *
APPENDIX A - VOTING RIGHTS
RESOLVED that no series of the Shares, except as hereinafter set
forth in this resolution or as otherwise from time to time required by
law, shall have voting rights. Whenever, at any time or times,
dividends payable on any series of the Shares shall be in arrears for
such number of dividend periods which shall in the aggregate contain not
less than 540 days, the holders of the outstanding Shares of such series
shall have the exclusive right, voting separately as a class with
holders of shares of any one or more other series of Preferred Stock
ranking on a parity with the Shares either as to dividends, or on the
distribution of assets upon liquidation, dissolution or winding up and
upon which like voting rights have been conferred and are exercisable,
to elect two directors of the Corporation at the Corporation's next
annual meeting of stockholders and at each subsequent annual meeting of
stockholders. At elections for such directors, each holder of the
Shares of such series shall be entitled to one vote for each share held
(the holders of shares of any other series of Preferred Stock ranking on
such a parity being entitled to such number of votes, if any, for each
share of stock held as may be granted to them). Upon the vesting of
such right of such holders, the maximum authorized number of members of
the Board shall automatically be increased by two and the two vacancies
so created shall be filled by vote of the holders of such outstanding
Shares of such series (either alone or together with the holders of
shares of any one or more other series of Preferred Stock ranking on
such a parity) as hereinafter set forth. The right of such holders of
such Shares of such series, voting separately as a class, to elect
(together with the holders of shares of any one or more other series of
Preferred Stock ranking on such a parity) members of the Board as
aforesaid shall continue until such time as all dividends accumulated on
such Shares shall have been paid in full, at which time such right shall
terminate, except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of the
character above mentioned.
Upon any termination of the right of the holders of the Shares of
any series as a class to vote for directors as herein provided, the term
of office of all directors then in office elected by such holders voting
as a class shall terminate immediately. If the office of any director
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elected by such holders voting as a class becomes vacant by reason of
death, resignation, retirement, disqualification, removal from office or
otherwise, the remaining director elected by such holders voting as a
class may choose a successor who shall hold office for the unexpired
term in respect of which such vacancy occurred. Whenever the term of
office of the directors elected by such holders voting as a class shall
end and the special voting powers vested in such holders as provided in
this resolution shall have expired, the number of directors shall be
such number as may be provided for in the By-Laws of the Corporation
irrespective of any increase made pursuant to the provisions of this
resolution.
So long as any Shares remain outstanding, the consent of the
holders of at least two-thirds of the Shares of each series outstanding
at the time (voting separately as a class together with all other series
of Preferred Stock ranking on a parity with such series either as to
dividends or the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable) given in person or by proxy, either in writing or at any
special or annual meeting called for the purpose, shall be necessary to
permit, effect or validate any one or more of the following:
(a) the authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or
series of stock ranking prior to the Shares with respect to
payment of dividends or the distribution of assets on liquidation,
dissolution or winding up, or
(b) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of
the Restated Certificate of Incorporation or of the resolutions
set forth in a Certificate of Designation for any series of the
Shares designating such series of the Shares and the preferences
and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof which would
materially and adversely affect any right, preference, privilege
or voting power of the Shares or of the holders thereof; provided,
however, that any increase in the amount of authorized Preferred
Stock or the creation and issuance of other series of Preferred
Stock or any increase in the amount of authorized Shares of any
series, in each case ranking on a parity with or junior to the
Shares with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding
up, shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding Shares shall have been
redeemed or sufficient funds shall have been deposited in trust to
effect such redemption.
2. The Securities Committee on March 30, 1994, adopted the
following resolutions pursuant to the authority conferred upon the
Securities Committee by the resolutions of the Board set forth in
paragraph 1 above adopted pursuant to Section 141(c) of the General
Corporation Law of the State of Delaware:
RESOLVED that the issuance of a series of Preferred Stock, without
par value, of the Corporation is hereby authorized and the designation,
voting powers, preferences, and relative, participating, optional, and
other special rights, and qualifications, limitations and restrictions
thereof, in addition to those set forth in the Restated Certificate of
Incorporation of the Corporation, as amended, and those established by
the resolutions of the Board adopted on September 28, 1993, are hereby
fixed as follows:
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ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK
1. Designation and Number of Shares; Restricted Issue. (a)
The designation of the series of preferred stock, without par value,
provided for herein shall be "ESOP Cumulative Convertible Preferred
Stock" (hereinafter referred to as the "ESOP Preferred Stock") and the
number of authorized shares constituting the ESOP Preferred Stock is
40,900, based on an offering price for the ESOP Preferred Stock of
$1,030.00 per share. Each share of ESOP Preferred Stock shall have a
stated value of $1,000.00 per share. The number of authorized shares of
ESOP Preferred Stock may be reduced by further resolution duly adopted
by the Board or the Securities Committee and by the filing of a
certificate pursuant to the provisions of the General Corporation Law of
the State of Delaware stating that such reduction has been so
authorized, provided, however, that the authorized number of shares of
ESOP Preferred Stock shall not be decreased below the then outstanding
number of such shares, and provided further that the number of
authorized shares of ESOP Preferred Stock shall not be increased. All
shares of the ESOP Preferred Stock purchased, redeemed, or converted by
the Corporation shall be retired and canceled and shall be restored to
the status of authorized but unissued shares of preferred stock, without
designation as to series, and may thereafter be issued, but not as
shares of ESOP Preferred Stock.
(b) Shares of ESOP Preferred Stock shall be issued only
to a trustee (the "Trustee") acting on behalf of the Norwest Corporation
Savings-Investment Plan and Master Savings Trust, or any successor to
such plan (the "Plan"). All references to the holder of shares of ESOP
Preferred Stock shall mean the Trustee or any company with which or into
which the Trustee may merge or any successor trustee under the trust
agreement with respect to the Plan. In the event of any transfer of
record ownership of shares of ESOP Preferred Stock to any person other
than any successor trustee under the Plan, the shares of ESOP Preferred
Stock so transferred, upon such transfer and without any further action
by the Corporation or the holder thereof, shall be automatically
converted into shares of the common stock, par value $1 2/3 per share,
of the Corporation (the "Common Stock") on the terms otherwise provided
for the conversion of the shares of ESOP Preferred Stock into shares of
Common Stock pursuant to paragraph (a) of Section 4 hereof and no such
transferee shall have any of the voting powers, preferences, and
relative, participating, optional or special rights ascribed to shares
of ESOP Preferred Stock hereunder but, rather, only the powers and
rights pertaining to the Common Stock into which such shares of ESOP
Preferred Stock shall be so converted. In the event of such a
conversion, the transferee of the shares of ESOP Preferred Stock shall
be treated for all purposes as the record holder of the shares of Common
Stock into which such shares of ESOP Preferred Stock have been
automatically converted as of the date of such transfer. Certificates
representing shares of ESOP Preferred Stock shall bear a legend to
reflect the foregoing provisions. Notwithstanding the foregoing
provisions of this paragraph (b) of Section 1, shares of ESOP Preferred
Stock (i)(A) shall be converted into shares of Common Stock as provided
in paragraph (a) of Section 4 hereof, and (B) may be converted into
shares of Common Stock as provided by paragraph (b) of Section 4 hereof
and the shares of Common Stock issued upon such conversion may be
transferred by the holder thereof as permitted by law and (ii) shall be
redeemable by the Corporation upon the terms and conditions provided in
Sections 5 and 6(c) hereof.
2. Voting Rights. The shares of ESOP Preferred Stock shall
have voting rights on a parity with the voting rights of the
Corporation's 10.24% Cumulative Preferred Stock and its Cumulative
Convertible Preferred Stock, Series B, which shall be the voting rights
set forth in Appendix A to the resolutions adopted by the Board of
Directors of the Corporation on September 28, 1993.
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3. Dividends. (a) Holders of shares of ESOP Preferred Stock
will be entitled to receive, when and as declared by the Board or a duly
authorized committee thereof, out of assets of the Corporation legally
available for payment, an annual cash dividend of $90.00 per share,
payable quarterly on March 1, June 1, September 1, and December 1 of
each year, commencing June 1, 1994. Dividends on shares of the ESOP
Preferred Stock will be cumulative from the date of initial issuance of
such shares of ESOP Preferred Stock. Dividends will be payable, in
arrears, to holders of record as they appear on the stock books of the
Corporation on such record dates, not more than 30 days nor less than 15
days preceding the payment dates thereof, as shall be fixed by the Board
or a duly authorized committee thereof. The amount of dividends payable
per share for each dividend period shall be computed by dividing by four
the $90.00 annual rate. The amount of dividends payable for the initial
dividend period or any period shorter than a full dividend period shall
be calculated on the basis of a 360-day year of twelve 30-day months.
(b)(i) No full dividends shall be declared or paid or set
apart for payment on any stock of the Corporation ranking, as to
dividends, on a parity with or junior to ESOP Preferred Stock for any
period unless full cumulative dividends have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment
thereof has been set apart for such payment on shares of ESOP Preferred
Stock for all dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are
not paid in full, as aforesaid, upon the shares of ESOP Preferred Stock
and any other series of preferred stock ranking on a parity as to
dividends with ESOP Preferred Stock, all dividends declared upon shares
of ESOP Preferred Stock and any other series of preferred stock ranking
on a parity as to dividends with ESOP Preferred Stock shall be declared
pro rata so that the amount of dividends declared per share on ESOP
Preferred Stock and such other series of preferred stock shall in all
cases bear to each other the same ratio that accrued dividends per share
on the shares of ESOP Preferred Stock and such other series of preferred
stock bear to each other. Holders of shares of ESOP Preferred Stock
shall not be entitled to any dividend, whether payable in cash,
property, or stock, in excess of full cumulative dividends, as herein
provided, on ESOP Preferred Stock. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or
payments on ESOP Preferred Stock which may be in arrears.
(ii) So long as any shares of ESOP Preferred Stock are
outstanding, no dividend (other than dividends or distributions paid in
shares of, or options, warrants, or rights to subscribe for or purchase
shares of, Common Stock (or any other stock ranking junior to ESOP
Preferred Stock as to dividends or upon liquidation and other than as
provided in paragraph (b)(i) of this Section 3) shall be declared or
paid or set aside for payment or other distribution declared or made
upon Common Stock or any other capital stock of the Corporation ranking
junior to or on a parity with ESOP Preferred Stock as to dividends or
upon liquidation, be redeemed, purchased, or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to ESOP Preferred Stock as to dividends or
upon liquidation), unless, in each case, the full cumulative dividends
on all outstanding shares of ESOP Preferred Stock shall have been paid
or declared and set aside for payment of the then current dividend
payment period and all past dividend payment periods.
4. Conversion. Shares of ESOP Preferred Stock are
convertible from time to time hereafter pursuant to the provisions of
paragraphs (a) or (b) of this Section 4 into that number of shares of
Common Stock determined by dividing the stated value of each share of
ESOP Preferred Stock by the then applicable Conversion Price, (as
determined in accordance with the provisions of paragraph (c)(iii) of
this Section 4), as follows:
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(a) Each share of ESOP Preferred Stock released from
the unallocated reserve of the Plan in accordance with the terms thereof
shall be automatically converted, without any further action by the
Corporation or the holder thereof, as of the date such release occurs
(the "Release Date"), into fully paid and nonassessable shares of Common
Stock at the then applicable Conversion Price for the ESOP Preferred
Stock provided for in paragraph (c) of this Section 4.
(b) Subject to and upon compliance with the provisions
of this Section 4, a holder of ESOP Preferred Stock shall be entitled at
any time, prior to the close of business on the date fixed for
redemption of such shares pursuant to Sections 5 or 6 hereof, to cause
any or all of the shares of ESOP Preferred Stock held by such holder to
be converted into fully paid and nonassessable shares of Common Stock at
the then applicable Conversion Price for ESOP Preferred Stock provided
for in paragraph (c) of this Section 4.
(c) For purposes of these resolutions, the following
terms shall have the meanings set forth below:
(i) The "Average Current Market Price" per
share of Common Stock on any date shall be deemed to be the average of
the Current Market Price for one share of Common Stock for the twenty
(20) consecutive Trading Days ending on the Trading Day occurring prior
to the date the "Purchase Offer" is made (as that term is defined in
Section 6(d) hereof).
(ii) A "Business Day" means each day that is not
a Saturday, Sunday, or a day on which state or federally chartered
banking institutions in the State of New York are not required to be
open.
(iii)(A) For purposes of a mandatory conversion of
shares of ESOP Preferred Stock into shares of Common Stock pursuant to
the provisions of paragraph (a) of this Section 4, the "Conversion
Price" for such shares of ESOP Preferred Stock shall be the Current
Market Price of one share of Common Stock on the relevant Release Date.
(B) For purposes of an optional conversion of
shares of ESOP Preferred Stock into shares of Common Stock pursuant to
the provisions of paragraph (b) of this Section 4, the "Conversion
Price" for such shares of ESOP Preferred Stock shall be the Current
Market Price of one share of Common Stock on the date the Conversion
Notice (as that term is defined in paragraph (d) of this Section 4) is
received by the Corporation, by the transfer agent for the ESOP
Preferred Stock or by any agent for conversion of the ESOP Preferred
Stock designated as such pursuant to paragraph (d) of this Section 4.
(C) For purposes of a conversion of shares of ESOP
Preferred Stock into shares of Common Stock in connection with a
"Purchase Offer" (as defined in Section 6(d) hereof), the "Conversion
Price" for such shares of ESOP Preferred Stock shall be the Average
Current Market Price of one share of Common Stock.
Each share of ESOP Preferred Stock shall be valued at its stated value
of $1,000.00 for purposes of computing, based on the applicable
Conversion Price, the number of shares of Common Stock into which the
shares of ESOP Preferred Stock will be converted.
(iv) The "Current Market Price" of publicly traded
shares of Common Stock or any other class of capital stock or other
security of the Corporation or any other issuer for any day shall mean
the reported last sale price, regular way, or, in case no sale takes
place on such day, the average of the reported closing bid and asked
prices, regular way, in either case as reported on the New York Stock
Exchange Composite Tape or, if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange, on the principal
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national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or, if the Common Stock is not quoted on such National
Market System, the average of the closing bid and asked prices on such
day in the over-the-counter market as reported by NASDAQ or, if bid and
asked prices for the Common Stock on each such day shall not have been
reported through NASDAQ, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member firm
regularly making a market in the Common Stock selected for such purpose
by the Board or a committee thereof or, if no such quotations are
available, the fair market value of the Common Stock as determined by a
New York Stock Exchange member firm regularly making a market in the
Common Stock selected for such purpose by the Board or a committee
thereof.
(v) "Common Stock" shall mean the Common Stock of
the Corporation as the same exists at the date of this Certificate of
Designations or as such stock may be constituted from time to time.
(vi) "Trading Day" with respect to Common Stock
means (x) if the Common Stock is listed or admitted for trading on the
New York Stock Exchange or another national securities exchange, a day
on which the New York Stock Exchange or such other national securities
exchange is open for business or (y) if the Common Stock is quoted on
the National Market System of NASDAQ, a day on which trades may be made
on such National Market System or (z) otherwise, any Business Day.
(d) In connection with any conversion of ESOP Preferred
Stock pursuant to this Section 4, the certificate or certificates
representing the shares of ESOP Preferred Stock being converted pursuant
to this Section 4, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating
thereto), shall be surrendered at the principal executive office of the
Corporation or the offices of the transfer agent for the ESOP Preferred
Stock or such office or offices in the continental United States of an
agent for conversion as may from time to time be designated by notice to
the holders of the ESOP Preferred Stock by the Corporation or the
transfer agent for the ESOP Preferred Stock, accompanied by a written
notice of conversion (the "Conversion Notice"). Such Conversion Notice
shall specify (i)(y) in the case of a mandatory conversion pursuant to
paragraph (a) of this Section 4, the number of shares of ESOP Preferred
Stock released from the unallocated reserve of the Plan on the Release
Date or (z) in the case of an optional conversion pursuant to paragraph
(b) of this Section 4, the number of shares of ESOP Preferred Stock
being converted, and (ii) in connection with any conversion hereunder,
(x) the name or names in which such holder wishes the certificate or
certificates for Common Stock and for any shares of ESOP Preferred Stock
not to be so converted to be issued, (y) the address to which such
holder wishes delivery to be made of such new certificates to be issued
upon such conversion, and (z) such other information as the Corporation
or its agents may reasonably request.
(e) Upon surrender of a certificate representing a share
or shares of ESOP Preferred Stock for conversion, the Corporation shall
issue and send by hand delivery, by courier or by first-class mail
(postage prepaid) to the holder thereof or to such holder's designee, at
the address designated by such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled upon conversion. If there shall have been surrendered a
certificate or certificates representing shares of ESOP Preferred Stock
only part of which are to be converted, the Corporation shall issue and
deliver to such holder or such holder's designee, in the manner set
forth in the preceding sentence, a new certificate or certificates
representing the number of shares of ESOP Preferred Stock which shall
not have been converted.
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(f) The issuance by the Corporation of shares of Common
Stock upon a conversion of shares of ESOP Preferred Stock into shares of
Common Stock made pursuant to this Section 4 shall be effective (i) in
the case of a mandatory conversion of shares of ESOP Preferred Stock
pursuant to paragraph (a) of this Section 4, as of the Release Date; and
(ii) in the case of an optional conversion of such shares pursuant to
paragraph (b) of this Section 4, as of the earlier of (A) the delivery
to such holder or such holder's designee of the certificates
representing the shares of Common Stock issued upon conversion thereof
or (B) the commencement of business on the second Business Day after the
surrender of the certificate or certificates for the shares of ESOP
Preferred Stock to be converted, duly assigned or endorsed for transfer
to the Corporation (or accompanied by duly executed stock powers
relating thereto) and accompanied by all documentation required to
effect the conversion, as provided by these resolutions. On and after
the effective date of conversion, the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares of
Common Stock, but no allowance or adjustment shall be made in respect of
dividends payable to holders of Common Stock in respect of any period
prior to such effective date. The Corporation shall not be obligated to
pay any dividends which shall have accrued or have been declared and
shall be payable to holders of shares of ESOP Preferred Stock if the
date on which such dividends are paid is on or after the effective date
of conversion of such shares.
(g) The Corporation shall not be obligated to deliver to
holders of ESOP Preferred Stock any fractional share or shares of Common
Stock issuable upon any conversion of such shares of ESOP Preferred
Stock, but in lieu thereof may make a cash payment in respect thereof in
any manner permitted by law.
(h) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for
issuance upon the conversion of shares of ESOP Preferred Stock as herein
provided, free from any preemptive rights, such number of shares of
Common Stock as shall from time to time be issuable upon the conversion
of all the shares of ESOP Preferred Stock then outstanding.
(i) The Corporation will use its best efforts to cause the
listing of the shares of Common Stock required to be delivered upon
conversion of the ESOP Preferred Stock prior to distribution to Plan
participants on the national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of such delivery.
(j) The Corporation will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock on conversions of the ESOP Preferred
Stock pursuant hereto; provided, however, that the Corporation shall not
be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock in
a name other than that of the holder of the ESOP Preferred Stock to be
converted and no such issue or delivery shall be made unless and until
the person requesting such issue or delivery has paid to the Corporation
the amount of any such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.
(k) Upon the issuance of shares of Common Stock following
conversion of shares of ESOP Preferred Stock as contemplated by this
Section 4, the Corporation shall, to the extent provided for, and
subject to the limitations set forth in the Rights Agreement hereafter
described, issue together with each such share of Common Stock one right
to purchase Series A Junior Participating Preferred Stock of the
Corporation (or other securities in lieu thereof) pursuant to the Rights
Agreement dated as of November 22, 1988 between the Corporation and
Citibank, N.A. as Rights Agent, as such agreement may from time to time
be amended, or any rights issued to holders of Common Stock of the
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Corporation in addition thereto or in replacement therefor, whether or
not such rights shall be exercisable at such time, but only if such
rights are issued and outstanding and held by other holders of Common
Stock of the Corporation at such time and have not expired.
5. Redemption At the Option of the Corporation. (a) The ESOP
Preferred Stock shall be redeemable, in whole or in part, at the option
of the Corporation at any time, at a redemption price per share of ESOP
Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an
amount equal to all accrued and unpaid dividends thereon to the date
fixed for redemption, and (y) the Fair Market Value (as that term is
defined in paragraph (d) of this Section 5) per share of ESOP Preferred
Stock on the date fixed for redemption. Payment of the redemption price
shall be made by the Corporation in cash or shares of Common Stock, or a
combination thereof, as permitted by paragraph (c) of this Section 5.
From and after the date fixed for redemption, dividends on shares of
ESOP Preferred Stock called for redemption will cease to accrue and all
rights in respect of such shares of the Corporation shall cease, except
the right to receive the redemption price. Upon payment of the
redemption price, such shares shall be deemed to have been transferred
to the Corporation, to be retired as provided in paragraph (a) of
Section 1. If the full cumulative dividends have not been paid, or
contemporaneously declared and set aside for payment, on all outstanding
shares of ESOP Preferred Stock, the Company may not redeem fewer than
all the outstanding shares of ESOP Preferred Stock pursuant to this
Section 5.
(b) Unless otherwise required by law, notice of any
redemption pursuant to this Section 5 will be sent to the holders of
ESOP Preferred Stock at the address shown on the books of the
Corporation or any transfer agent for the ESOP Preferred Stock by hand
delivery, by courier, by standard form of telecommunication or by first-
class mail (postage prepaid) delivered, sent or mailed, as the case may
be, not less than twenty (20) days nor more than sixty (60) days prior
to the redemption date. Each such notice shall state: (i) the
redemption date; (ii) the total number of shares of the ESOP Preferred
Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from
such holder; (iii) the redemption price; (iv) whether the redemption
price shall be paid in cash or in shares of Common Stock, or in a
combination of such Common Stock and cash; (v) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; (vi) that dividends on the shares to be redeemed will
cease to accrue on such redemption date; and (vii) the conversion rights
of the shares to be redeemed, the period within which conversion rights
may be exercised and the manner in which the number of shares of Common
Stock issuable upon conversion of a share of ESOP Preferred Stock will
be determined. Upon surrender of the certificate for any shares so
called for redemption and not previously converted (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation
shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the date fixed for redemption and at the
redemption price set forth in this Section 5.
(c) The Corporation, at its option, may make payment of
the redemption price required upon redemption of shares of ESOP
Preferred Stock in cash or in shares of Common Stock, or in a
combination of such Common Stock and cash, any such shares of Common
Stock to be valued for such purposes at their Fair Market Value (as
defined in paragraph (d)(ii) of this Section 5) or their Current Market
Value, in either case as of the date fixed for redemption of the ESOP
Preferred Stock, whichever value will result in the issuance of the
greater number of shares of Common Stock to the holder of the ESOP
Preferred Stock then being redeemed.
(d) For purposes of these resolutions, the following terms
shall have the meanings set forth below:
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(i) "Adjustment Period" shall mean the period of five
(5) consecutive Trading Days preceding the date as of which the Fair
Market Value of a security is to be determined.
(ii) "Fair Market Value" shall mean, as to shares of
Common Stock or any other class of capital stock or securities of the
Corporation or any other issue which are publicly traded, the average of
the Current Market Prices of such shares or securities for each day of
the Adjustment Period. The "Fair Market Value" of any security which is
not publicly traded (other than the ESOP Preferred Stock) or of any
other property shall mean the fair value thereof on the date as of which
the Fair Market Value of the security is to be determined, as determined
by an independent investment banking or appraisal firm experienced in
the valuation of such securities or property selected in good faith by
the Board or a committee thereof. The "Fair Market Value" of the ESOP
Preferred Stock for purposes of paragraph (a) of Section 5, and for
purposes of paragraph (c) of Section 6 shall mean the fair market value
thereof determined by an independent appraiser, appointed by the Trustee
of the Plan in accordance with the provisions of the Plan, as of the
date fixed for redemption of the ESOP Preferred Stock (in the case of a
redemption pursuant to Section 5) or as of the date specified in
paragraph (c) of Section 6 (in the case of a redemption under that
section). For purposes of determining the Fair Market Value of the ESOP
Preferred Stock, the independent appraiser shall assume (i) that all
dividends on the ESOP Preferred Stock would have been paid when due, and
(ii) that the mandatory conversion of shares of ESOP Preferred Stock
held by the Plan into shares of Common Stock pursuant to Section 4(a)
hereof would have occurred when and as payments of principal (together
with accrued interest thereon) would have been made by the Trustee of
the Plan in accordance with the terms of that certain ESOP Convertible
Preferred Stock Note Agreement dated March 30, 1994 between the
Corporation and the Plan (including any amendments or modifications
thereto).
6. Consolidation, Merger, etc. (a) If the Corporation
consummates any consolidation or merger or similar business combination,
pursuant to which the outstanding shares of Common Stock are by
operation of law exchanged solely for or changed, reclassified or
converted solely into stock of any successor or resulting corporation
(including the Corporation) that constitutes "qualifying employer
securities" with respect to a holder of ESOP Preferred Stock within the
meaning of Section 409(1) of the Internal Revenue Code of 1986, as
amended, and Section 407(d)(5) of the Employee Retirement Income
Security Act of 1974, as amended, or any successor provisions of law,
and, if applicable, for a cash payment in lieu of fractional shares, if
any, the shares of ESOP Preferred Stock of such holder shall, in
connection with such consolidation, merger or similar business
combination, be assumed by and shall become preferred stock of such
successor or resulting corporation, having in respect of such
corporation, insofar as possible, the same powers, preferences and
relative, participating, optional or other special rights (including the
redemption rights provided by Sections 5 and 6 hereof), and the
qualifications, limitations or restrictions thereon, that the ESOP
Preferred Stock had immediately prior to such transaction, subject to
the following:
(1) After such transaction each share of the ESOP Preferred
Stock shall be convertible, otherwise on the terms and conditions
provided by Section 4 hereof, into the number and kind of
qualifying employer securities so receivable by a holder of the
number of shares of Common Stock into which such shares of ESOP
Preferred Stock could have been converted immediately prior to
such transaction.
(2) The Corporation shall not consummate any such merger,
consolidation or similar transaction unless all then outstanding
shares of ESOP Preferred Stock shall be assumed and authorized by
the successor or resulting corporation as aforesaid.
36
<PAGE>
(b) If the Corporation consummates any consolidation or
merger or similar business combination, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged for
or changed, reclassified or converted into other stock or securities or
cash or any other property, or any combination thereof, other than any
such consideration which is constituted solely of qualifying employer
securities (as referred to in paragraph (a) of this Section 6) and cash
payments, if applicable, in lieu of fractional shares, outstanding
shares of ESOP Preferred Stock shall, without any action on the part of
the Corporation or any holder thereof (but subject to paragraph (c) of
this Section 6), be automatically converted by virtue of such merger,
consolidation or similar transaction immediately prior to such
consummation into the number of shares of Common Stock into which such
shares of ESOP Preferred Stock could have been converted at such time so
that each share of ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by
a holder of the number of shares of Common Stock into which such shares
of ESOP Preferred Stock could have been converted immediately prior to
such transaction. However, if by virtue of the structure of such
transaction, a holder of Common Stock is required to make an election
with respect to the nature and kind of consideration to be received in
such transaction, which election cannot practicably be made by the
holders of the ESOP Preferred Stock, then the shares of ESOP Preferred
Stock shall, by virtue of such transaction and on the same terms as
apply to the holders of Common Stock, be converted into or exchanged for
the aggregate amount of stock, securities, cash or other property
(payable in kind) receivable by a holder of the number of shares of
Common Stock into which such shares of ESOP Preferred Stock could have
been converted immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election as to the kind or
amount of stock, securities, cash or other property receivable upon such
transaction. If the kind or amount of stock, securities, cash or other
property receivable upon such transaction is not the same for each non-
electing share, then the kind and amount of stock, securities, cash or
other property receivable upon such transaction for each non-electing
share shall be the kind and amount so receivable per share by a
plurality of the non-electing shares.
(c) In the event the Corporation shall enter into any
agreement providing for any consolidation or merger or similar business
combination described in paragraph (b) of this Section 6 (a "Business
Combination"), then the Corporation shall as soon as practicable
thereafter (and in any event at least fifteen (15) Business Days before
consummation of such transaction) give notice of such agreement and the
material terms thereof to each holder of ESOP Preferred Stock and each
such holder shall have the right to elect, by written notice to the
Corporation, to receive, upon consummation of such transaction (if and
when such transaction is consummated), from the Corporation or the
successor of the Corporation, in redemption and retirement of such ESOP
Preferred Stock, a cash payment per share of ESOP Preferred Stock equal
to the higher of (x) $1,000.00, plus accrued and unpaid dividends
thereon to the date of consummation of such transaction or (y) the Fair
Market Value per share of ESOP Preferred Stock, as of the last Business
Day (as defined in paragraph (c) of Section 4 hereof) immediately
preceding the date the Business Combination is consummated. No such
notice of redemption shall be effective unless given to the Corporation
prior to the close of business on the last Business Day prior to
consummation of such transaction, unless the Corporation or the
successor of the Corporation shall waive such prior notice, but any
notice of redemption so given prior to such time may be withdrawn by
notice of withdrawal given to the Corporation prior to the close of
business on the last Business Day prior to consummation of such
transaction.
(d) In the event that a Purchase Offer (as defined below)
shall have been made and shall be continuing, each holder of ESOP
Preferred Stock shall have the right to convert shares of ESOP Preferred
Stock into shares of Common Stock at the Conversion Price specified in
37
<PAGE>
Section 4(c)(iii)(C) hereof until the date the Purchase Offer is
terminated, including without limitation because the original Purchase
Offer is withdrawn or because the Purchase Offer has expired and is not
renewed, upon notice of such conversion given to the Corporation not
later than the close of business on the date the Purchase Offer
terminates (the "Purchase Offer Conversion Period"), unless the
Corporation or any successor of the Corporation shall waive such prior
notice, but any notice of conversion so given may be withdrawn by notice
of withdrawal given to the Corporation prior to the end of the Purchase
Offer Conversion Period.
For purposes of this paragraph (d), the following terms
shall have the meanings set forth below:
(i) "Beneficial Ownership" shall have the meaning
ascribed to it in Rule 13d-3 under the Securities Exchange Act of 1934
(the "Exchange Act") and "person" shall have the meanings specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(ii) A "Purchase Offer" shall have been made when any
person (other than the Corporation or any affiliate of the Corporation)
shall have "commenced" (as such term is defined in Rule 14d-2 under the
Exchange Act) a tender offer or exchange offer to purchase shares of
Common Stock, such that, upon consummation of such offer, such person
would have Beneficial Ownership (as defined herein) or the right to
acquire Beneficial Ownership, of twenty percent (20%) or more of the
voting power of the Corporation.
7. Liquidation Rights. (a) Upon the dissolution,
liquidation, or winding up of the Corporation, the holders of the shares
of ESOP Preferred Stock shall be entitled to receive and to be paid out
of the assets of the Corporation available for distribution to its
stockholders, before any payment or distribution shall be made on the
Common Stock or any other class of stock ranking junior to ESOP
Preferred Stock upon liquidation, the amount of $1,000.00 per share,
plus a sum equal to all dividends (whether or not earned or declared) on
such shares accrued and unpaid thereon to the date of final
distribution.
(b) Neither the sale of all or substantially all the
property and assets of the Corporation, nor the merger or consolidation
of the Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation
shall be deemed to be a dissolution, liquidation, or winding up,
voluntary or involuntary, for the purposes of this Section 7.
(c) After the payment to the holders of the shares of ESOP
Preferred Stock of the full preferential amounts provided for in this
Section 7, the holders of ESOP Preferred Stock, as such, shall have no
right or claim to any of the remaining assets of the Corporation.
(d) In the event the assets of the Corporation available
for distribution to the holders of shares of ESOP Preferred Stock upon
any dissolution, liquidation, or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to paragraph (a) of
this Section 7, no such distribution shall be made on account of any
shares of any other series of preferred stock or other capital stock of
the Corporation ranking on a parity with the shares of ESOP Preferred
Stock upon such dissolution, liquidation, or winding up unless
proportionate distributive amounts shall be paid on account of the
shares of ESOP Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation, or winding up.
38
<PAGE>
(e) Subject to the rights of the holders of the shares of
any series or class or classes of stock ranking on a parity with or
prior to the shares of ESOP Preferred Stock upon liquidation,
dissolution, or winding up, upon any liquidation, dissolution, or
winding up of the Corporation, after payment shall have been made in
full to the holders of the shares of ESOP Preferred Stock as provided in
this Section 7, but not prior thereto, any other series or class or
classes of stock ranking junior to the shares of ESOP Preferred Stock
upon liquidation shall, subject to the respective terms and provisions
(if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the shares of
ESOP Preferred Stock shall not be entitled to share therein.
8. Ranking. For the purposes of these resolutions, any stock
of any series or class or classes of the Corporation shall be deemed to
rank:
(a) prior to the shares of ESOP Preferred Stock, either as
to dividends or upon liquidation, if the holders of such series or class
or classes shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation, or winding up of the
Corporation, as the case may be, in preference or priority to the
holders of shares of ESOP Preferred Stock;
(b) on a parity with shares of ESOP Preferred Stock,
either as to dividends or upon liquidation, whether or not the dividend
rates, dividend payment dates, or redemption or liquidation prices per
share, or sinking fund provisions, if any, be different from those of
ESOP Preferred Stock, if the holders of such stock shall be entitled to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation, or winding up of the Corporation, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority, one over the other, as between the
holders of such stock and the holders of shares of ESOP Preferred Stock;
and
(c) junior to shares of ESOP Preferred Stock, either as to
dividends or upon liquidation, if such class shall be Common Stock or if
the holders of shares of ESOP Preferred Stock shall be entitled to
receipt of dividends or of amounts distributable upon dissolution,
liquidation, or winding up of the Corporation, as the case may be, in
preference or priority to the holders of shares of such series or class
or classes.
9. Priority of ESOP Preferred Stock. The shares of ESOP
Preferred Stock will rank on a parity, both as to payment of dividends
and the distribution of assets upon liquidation, with the Corporation's
10.24% Cumulative Preferred Stock and its Cumulative Convertible
Preferred Stock, Series B. The ESOP Preferred Stock will rank prior,
both as to payment of dividends and the distribution of assets upon
liquidation, to the Common Stock and the Corporation's Series A Junior
Participating Preferred Stock.
39
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by John T. Thornton, its Executive Vice
President and Chief Financial Officer, and attested by Laurel A.
Holschuh, its Secretary, whereby such Executive Vice President and Chief
Financial Officer affirms, under penalties of perjury, that this
Certificate of Designations is the act and deed of the Corporation and
that the facts stated herein are true, this 30th day of March, 1994.
NORWEST CORPORATION
By /s/ John T. Thornton
John T. Thornton
Executive Vice President and
Chief Financial Officer
Attest:
/s/ Laurel A. Holschuh
Laurel A. Holschuh
Secretary
40
<PAGE>
Exhibit 11.
Norwest Corporation and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
In thousands, except per common share amounts Quarter Ended
March 31
1994 1993
<S> <C> <C>
PRIMARY:
Weighted average number of common shares
outstanding ..................................... 310,908 302,876
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price .................................... 2,258 2,858
313,166 305,734
Net income ........................................ $190,542 158,328
Less dividends accrued on preferred stock ........ 7,161 7,963
Net income, as adjusted .......................... $183,381 150,365
Net income per common share ...................... $ 0.59 0.49
FULLY DILUTED:
Weighted average number of common shares
outstanding ..................................... 310,908 302,876
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price or period-end market price,
whichever is higher ............................. 2,252 3,187
Assumed conversion of 6-3/4% convertible
subordinated debentures due 2003 and 12%
convertible notes due 1993 as of the beginning
of the period ................................... 48 826
Assumed conversion of Cumulative Convertible
Preferred Stock, Series B ....................... 12,627 16,872
325,835 323,761
Net income ........................................ $190,542 158,328
Less dividends accrued on preferred stock ........ 3,158 3,074
Add 6 3/4% convertible subordinated debentures
and 12% convertible notes due 1993
interest and amortization of debt expense,
net of income tax effect ........................ 3 133
Net income, as adjusted .......................... $187,387 155,387
Net income per common share....................... $ 0.58 0.48
</TABLE>
41
<PAGE>
Exhibit 12(a).
Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31 Year Ended December 31
In thousands 1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $278,670 237,942 879,755 645,568 491,673 284,453 383,681
Capitalized interest - - (65) (24) - (13) (165)
Income before income
taxes and capitalized
interest 278,670 237,942 879,690 645,544 491,673 284,440 383,516
Fixed charges 355,606 365,628 1,485,936 1,651,664 2,187,536 2,354,041 2,241,827
Total income for
computation $634,276 603,570 2,365,626 2,297,208 2,679,209 2,638,481 2,625,343
Total income for
computation excluding
interest on deposits
from fixed charges $429,225 394,244 1,513,317 1,281,619 1,196,648 1,111,762 1,166,852
Computation of Fixed
Charges:
Net rental
expense (a) $ 38,211 25,197 128,573 123,342 111,609 102,192 94,568
Portion of rentals
deemed
representative
of interest $ 12,737 8,399 42,858 41,114 37,203 34,064 31,523
Interest:
Interest on
deposits 205,051 209,326 852,309 1,015,589 1,482,561 1,526,719 1,458,491
Interest on
federal funds
and other
short-term
borrowings 45,004 65,794 238,046 277,835 352,384 522,849 493,142
Interest on
long-term debt 92,814 82,109 352,658 317,102 315,388 270,396 258,506
Capitalized
interest - - 65 24 - 13 165
Total interest 342,869 357,229 1,443,078 1,610,550 2,150,333 2,319,977 2,210,304
Total fixed
charges $355,606 365,628 1,485,936 1,651,664 2,187,536 2,354,041 2,241,827
Total fixed
charges excluding
interest on
deposits $150,555 156,302 633,627 636,075 704,975 827,322 783,336
Ratio of Income
to Fixed Charges:
Excluding
interest on
deposits 2.85X 2.52 2.39 2.01 1.70 1.34 1.49
Including
interest on
deposits 1.78X 1.65 1.59 1.39 1.22 1.12 1.17
</TABLE>
(a) Includes equipment rentals.
43
<PAGE>
Exhibit 12(b).
Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31 Year Ended December 31
In thousands 1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $278,670 237,942 879,755 645,568 491,673 284,453 383,681
Capitalized interest - - (65) (24) - (13) (165)
Income before income
taxes and capitalized
interest 278,670 237,942 879,690 645,544 491,673 284,440 383,516
Fixed charges 355,606 365,628 1,485,936 1,651,664 2,187,536 2,354,041 2,241,827
Total income for
computation $634,276 603,570 2,365,626 2,297,208 2,679,209 2,638,481 2,625,343
Total income for
computation excluding
interest on deposits
from fixed charges $429,225 394,244 1,513,317 1,281,619 1,196,648 1,111,762 1,166,852
Computation of Fixed
Charges:
Net rental
expense (a) $ 38,211 25,197 128,573 123,342 111,609 102,192 94,568
Portion of rentals
deemed
representative
of interest $ 12,737 8,399 42,858 41,114 37,203 34,064 31,523
Interest:
Interest on
deposits 205,051 209,326 852,309 1,015,589 1,482,561 1,526,719 1,458,491
Interest on
federal funds
and other
short-term
borrowings 45,004 65,794 238,046 277,835 352,384 522,849 493,142
Interest on
long-term debt 92,814 82,109 352,658 317,102 315,388 270,396 258,506
Capitalized
interest - - 65 24 - 13 165
Total interest 342,869 357,229 1,443,078 1,610,550 2,150,333 2,319,977 2,210,304
Total fixed
charges $355,606 365,628 1,485,936 1,651,664 2,187,536 2,354,041 2,241,827
Total fixed
charges excluding
interest on
deposits $150,555 156,302 633,627 636,075 704,975 827,322 783,336
Preferred stock
dividends 7,161 7,963 31,170 32,219 20,065 3,225 6,870
Pre-tax earnings
needed to meet
preferred stock
dividend
requirements 10,474 11,968 44,728 44,367 23,997 5,294 9,232
Total combined fixed
charges and preferred
stock dividends $366,080 377,596 1,530,664 1,696,031 2,211,533 2,359,335 2,251,059
Total combined
fixed charges
and preferred stock
dividends excluding
interest on deposits $161,029 168,270 678,355 680,442 728,972 832,616 792,568
</TABLE>
(a) Includes equipment rentals
43
<PAGE>
Exhibit 12(b).
(continued)
Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31 Year Ended December 31
In thousands 1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Income to Combined
Fixed Charges and Preferred
Stock Dividends:
Excluding interest on
deposits 2.67X 2.34 2.23 1.88 1.64 1.34 1.47
Including interest on
deposits 1.73X 1.60 1.55 1.35 1.21 1.12 1.17
44
<PAGE>
</TABLE>
