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, 1995
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, 1995 324,005,622 shares
<PAGE>
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, 1995 and December 31, 1994 ........................ 3
2. Consolidated Statements of Income -
Quarters Ended March 31, 1995 and 1994 ...................... 4
3. Consolidated Statements of Cash Flows -
Quarters Ended March 31, 1995 and 1994 ...................... 6
4. Consolidated Statements of Stockholders' Equity -
Quarters Ended March 31, 1995 and 1994 ...................... 8
5. Notes to Unaudited 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
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
In millions, except shares March 31, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks ....................... $ 3,093.4 3,431.2
Interest-bearing deposits with banks .......... 28.4 41.1
Federal funds sold and resale agreements ...... 481.6 552.0
Total cash and cash equivalents ........... 3,603.4 4,024.3
Trading account securities .................... 153.0 172.3
Investment securities (fair value
$1,403.7 in 1995 and $1,268.7 in 1994) ...... 1,358.0 1,235.1
Investment securities available for sale ...... 1,575.9 1,427.6
Mortgage-backed securities available for
sale ........................................ 12,537.3 12,174.2
Total investment securities ............... 15,471.2 14,836.9
Student loans available for sale .............. 2,163.1 2,031.4
Mortgages held for sale ....................... 3,367.9 3,115.3
Loans and leases .............................. 35,015.7 33,703.6
Unearned discount ............................. (1,139.1) (1,127.6)
Allowance for credit losses ................... (812.5) (789.9)
Net loans and leases ...................... 33,064.1 31,786.1
Premises and equipment, net ................... 995.9 955.2
Interest receivable and other assets .......... 3,026.5 2,394.4
Total assets .............................. $61,845.1 59,315.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing ......................... $ 8,840.5 9,283.1
Interest-bearing ............................ 28,250.8 27,140.9
Total deposits ............................ 37,091.3 36,424.0
Short-term borrowings ......................... 7,208.7 7,850.2
Accrued expenses and other liabilities ........ 2,270.7 2,009.0
Long-term debt ................................ 10,886.9 9,186.3
Total liabilities ......................... 57,457.6 55,469.5
Preferred stock ............................... 599.1 526.7
Unearned ESOP shares .......................... (69.2) (14.7)
Total preferred stock ..................... 529.9 512.0
Common stock, $1 2/3 par value - authorized
500,000,000 shares:
Issued 334,025,247 and 323,084,474 shares
in 1995 and 1994, respectively ............. 556.7 538.5
Surplus ....................................... 559.5 578.8
Retained earnings ............................. 3,067.8 2,950.0
Net unrealized losses
on securities available for sale ............ (16.7) (360.4)
Notes receivable from ESOP .................... (13.3) (13.3)
Treasury stock - 11,616,603 and 13,939,617 common
shares in 1995 and 1994, respectively ....... (288.3) (350.9)
Foreign currency translation .................. (8.1) (8.3)
Total common stockholders' equity ......... 3,857.6 3,334.4
Total stockholders' equity ................ 4,387.5 3,846.4
Total liabilities and
stockholders' equity .................... $61,845.1 59,315.9
See notes to unaudited consolidated financial statements.
</TABLE>
3
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In millions, except per common share amounts Quarter Ended
March 31
1995 1994
INTEREST INCOME ON
Loans and leases ................................ $ 887.5 699.9
Investment securities ........................... 19.2 17.5
Investment securities available for sale ........ 26.6 32.0
Mortgage-backed securities available for sale ... 234.8 137.4
Student loans available for sale ................ 45.5 24.1
Mortgages held for sale ......................... 57.2 68.1
Money market investments ........................ 13.9 5.4
Trading account securities ...................... 3.3 8.4
Total interest income ....................... 1,288.0 992.8
INTEREST EXPENSE ON
Deposits ........................................ 267.1 205.1
Short-term borrowings ........................... 112.8 45.0
Long-term debt .................................. 164.4 92.8
Total interest expense ...................... 544.3 342.9
Net interest income ....................... 743.7 649.9
Provision for credit losses ..................... 55.3 36.3
Net interest income after
provision for credit losses ............. 688.4 613.6
NON-INTEREST INCOME
Trust ........................................... 56.5 51.9
Service charges on deposit accounts ............. 61.5 57.4
Mortgage banking ................................ 161.0 135.4
Data processing ................................. 14.8 15.2
Credit card ..................................... 30.9 25.7
Insurance ....................................... 51.0 42.0
Other fees and service charges .................. 47.9 45.6
Net investment securities losses ................ - (0.5)
Net investment and mortgage-backed
securities available for sale gains (losses).... (35.2) 37.0
Net venture capital gains ....................... 21.6 20.2
Other ........................................... 18.2 4.2
Total non-interest income ................... 428.2 434.1
NON-INTEREST EXPENSES
Salaries and benefits ........................... 398.5 397.0
Net occupancy ................................... 59.7 56.0
Equipment rentals, depreciation
and maintenance ................................ 63.6 53.3
Business development ............................ 43.5 39.7
Communication ................................... 50.5 44.4
Data processing ................................. 30.1 27.8
FDIC assessment and regulatory examination fees . 22.4 21.8
Intangible asset amortization ................... 18.4 19.5
Other ........................................... 105.9 109.6
Total non-interest expenses ................. 792.6 769.1
INCOME BEFORE INCOME TAXES ...................... 324.0 278.6
Income tax expense .............................. 107.2 88.1
NET INCOME ...................................... $ 216.8 190.5
(Continued on page 5)
5
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued from page 4)
In millions, except per common share amounts Quarter Ended
March 31
1995 1994
Average Common and Common Equivalent Shares ..... 314.5 313.2
PER COMMON SHARE
Net Income
Primary ....................................... $ 0.66 0.59
Fully diluted ................................. 0.65 0.58
Dividends ...................................... 0.210 0.185
See notes to unaudited consolidated financial statements.
5
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In millions Quarter Ended
March 31
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ........................................... $ 216.8 190.5
Adjustments to reconcile net income to net cash
flows from operating activities:
Provision for credit losses ...................... 55.3 36.3
Depreciation and amortization .................... 60.7 57.0
Gains on other real estate owned, net ............ (1.8) (3.9)
Gains on sales of premises and equipment ......... (0.2) -
Gains on sales of mortgages held
for sale ....................................... (1.5) (46.4)
Losses on sales of investment securities ......... - 0.5
(Gains) losses on sales of investment,
mortgage-backed and venture capital
securities available for sale ................... 13.6 (57.2)
Gains on sales of student loans
available for sale ............................. (2.0) (0.4)
Release of preferred shares to ESOP .............. 10.9 5.8
Trading account securities (gains) losses......... (6.4) 8.4
Purchases of trading account securities .......... (29,232.6) (16,542.5)
Proceeds from sales of trading account
securities ..................................... 29,137.3 16,453.6
Originations of mortgages held for sale .......... (4,702.1) (7,327.8)
Proceeds from sales of mortgages held for sale ... 4,600.1 9,138.4
Originations of student loans available for sale . (218.2) (194.5)
Proceeds from sales of student loans
available for sale .............................. 88.5 43.6
Deferred income taxes ............................ (4.2) 5.3
Interest receivable .............................. (28.5) (1.0)
Interest payable ................................. 36.9 (23.5)
Other assets, net ................................ (289.7) 78.3
Other accrued expenses and liabilities, net ...... 61.6 (172.3)
Net cash flows from (used for)
operating activities .......................... (205.5) 1,648.2
(Continued on page 7)
6
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued from page 6)
In millions Quarter Ended
March 31
1995 1994
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and paydowns of:
Investment securities ........................... 21.3 652.0
Investment and mortgage-backed
securities available for sale ................. 392.2 1,030.1
Proceeds from sales and calls of:
Investment securities ........................... 35.2 0.5
Investment and mortgage-backed
securities available for sale ................. 684.3 1,191.9
Purchases of:
Investment securities ........................... (159.3) (133.2)
Investment and mortgage-backed
securities available for sale ................. (593.4) (2,996.3)
Net increase in banking
subsidiaries' loans and leases.................... (322.4) (102.9)
Principal collected on non-bank
subsidiaries' loans and leases ................... 1,242.6 999.8
Non-bank subsidiaries' loans and
leases originated ................................ (1,311.6) (1,195.1)
Purchases of premises and equipment ............... (51.4) (51.7)
Proceeds from sales of premises and equipment ..... 2.8 4.4
Proceeds from sales of other real estate owned .... 13.3 20.6
Purchases of subsidiaries, net of cash
and cash equivalents acquired .................... 51.2 50.5
Divestiture of branches, net of cash and
cash equivalents paid ............................ (4.3) -
Net cash flows from (used for)
investing activities .......................... 0.5 (529.4)
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits, net ..................................... (1,031.8) (998.1)
Short-term borrowings, net ........................ (809.4) 279.5
Long-term debt borrowings ......................... 1,767.1 566.7
Repayments of long-term debt ...................... (93.7) (664.2)
Issuances of common stock ......................... 16.3 15.9
Repurchases of common stock ....................... (8.7) (67.9)
Sale of preferred stock held by subsidiary ........ 20.0 -
Repurchases of preferred stock .................... - (7.9)
Net decrease in notes receivable from ESOP ........ - 1.4
Dividends paid .................................... (75.7) (65.1)
Net cash flows used for
financing activities ........................... (215.9) (939.7)
Net increase (decrease) in cash and
cash equivalents .............................. (420.9) 179.1
CASH AND CASH EQUIVALENTS
Beginning of period ............................... 4,024.3 3,608.0
End of period ..................................... $ 3,603.4 3,787.1
See notes to unaudited consolidated financial statements.
7
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Gains
In (Losses) on
millions, Unearned 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>
Balance,
December 31, 1993 $ 380.0 - 515.4 503.3 2,433.3 - (16.3) (51.5) (3.3) 3,760.9
Net unrealized gains
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
(Continued on page 9)
</TABLE>
8
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Continued from page 8)
<TABLE>
<CAPTION>
Net
Unrealized
Gains
In (Losses) on
millions, Unearned 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, 1994 $ 526.7 (14.7) 538.5 578.8 2,950.0 (360.4) (13.3) (350.9) (8.3) 3,846.4
Net income - - - - 216.8 - - - - 216.8
Dividends on
Common stock - - - - (65.2) - - - - (65.2)
Preferred stock - - - - (10.5) - - - - (10.5)
Conversion of 10,863
preferred shares to
428,097 common shares (10.9) - - (1.1) - - - 12.0 - -
Sale of 100,000 preferred
shares held by
subsidiary 20.0 - - - - - - - - 20.0
Issuance of 63,300
preferred shares to
ESOP 63.3 (65.8) - 2.5 - - - - - -
Release of preferred
shares to ESOP - 11.3 - (0.4) - - - - - 10.9
Issuance of 904,697
common shares - - - 19.6 (26.9) - - 25.2 - 17.9
Issuance of 12,297,093
common shares for
acquisitions - - 18.2 (39.9) 3.6 - - 34.1 - 16.0
Repurchase of 366,100
common shares - - - - - - - (8.7) - (8.7)
Change in net unrealized
gains (losses) on
securities available
for sale - - - - - 343.7 - - - 343.7
Foreign currency
translation - - - - - - - - 0.2 0.2
Balance,
March 31, 1995 $ 599.1 (69.2) 556.7 559.5 3,067.8 (16.7) (13.3) (288.3) (8.1) 4,387.5
See notes to unaudited consolidated financial statements.
</TABLE>
9
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Change in Accounting Policies
Effective January 1, 1995, the corporation adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan" and Statement of Financial Accounting Standards No. 118, "Accounting
by Creditors for Impairment of a Loan -- Income Recognition and Disclosures"
(SFAS 114 and 118). Accordingly, loan impairment is measured based on the
present value of expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the observable market price
of the loan or the fair value of the collateral if the loan is collateral
dependent. The adoption of these statements did not have a material
effect on the corporation's financial position or results of operations.
See Note 5 for a discussion of impaired loans.
2. Consolidated Statements of Cash Flows
Cash paid for interest and income taxes for the quarters ended March 31 was:
In millions
1995 1994
Interest $ 507.4 366.0
Income taxes 13.8 77.3
During the first three months of 1995 and 1994, $10.3 million and $12.0
million, respectively, of loans were transferred to other real estate owned.
During the quarter ended March 31, 1995 and 1994, the corporation issued
1,356,320 shares and 32,969 shares of common stock, respectively, in
connection with acquisitions accounted for using the purchase method.
On March 28, 1995, the corporation issued 63,300 shares of 1995 ESOP Cumulative
Convertible Preferred Stock in the stated amount of $63.3 million at a premium
of $2.5 million; a corresponding charge of $65.8 million was recorded to
unearned ESOP shares. On March 31, 1994, the corporation issued 40,900 shares
of ESOP Cumulative Convertible Preferred Stock in the stated 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 $10.9 million and $5.8 million was released to the ESOP during the
three months ended March 31, 1995 and 1994, respectively.
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. 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 during
the first quarter of 1994.
10
<PAGE>
3. Investment and Mortgage-backed Securities
The amortized cost and fair value of investment and mortgage-backed securities
at March 31, 1995 and December 31, 1994 were:
<TABLE>
<CAPTION>
In millions March 31, 1995
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held for investment:
U.S. Treasury and federal agencies .. $ 27.4 - (4.5) 22.9
State, municipal and housing -
tax exempt ......................... 693.9 25.3 (6.4) 712.8
Other ............................... 636.7 38.3 (7.0) 668.0
Total investment securities
held for investment ............. $ 1,358.0 63.6 (17.9) 1,403.7
Available for sale:
U.S. Treasury and federal agencies .. $ 939.9 14.3 (6.0) 948.2
State, municipal and housing -
tax exempt ......................... 110.5 0.5 (1.8) 109.2
Other ............................... 366.7 159.8 (8.0) 518.5
Total investment securities
available for sale .............. 1,417.1 174.6 (15.8) 1,575.9
Mortgage-backed securities:
Federal agencies ................... 12,549.7 87.2 (271.4) 12,365.5
Collateralized mortgage
obligations ....................... 172.1 2.0 (2.3) 171.8
Total mortgage-backed securities
available for sale .............. 12,721.8 89.2 (273.7) 12,537.3
Total investment and
mortgage-backed securities
available for sale .............. $14,138.9 263.8 (289.5) 14,113.2
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
In millions December 31, 1994
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held for investment:
U.S. Treasury and federal agencies .. $ 27.4 - - 27.4
State, municipal and housing -
tax exempt ........................ 712.2 17.1 (16.5) 712.8
Other ............................... 495.5 39.6 (6.6) 528.5
Total investment securities
held for investment ............. $ 1,235.1 56.7 (23.1) 1,268.7
Available for sale:
U.S. Treasury and federal agencies .. $ 932.4 6.3 (15.4) 923.3
State, municipal and housing -
tax exempt ........................ 107.1 0.3 (3.9) 103.5
Other ............................... 321.2 97.0 (17.4) 400.8
Total investment securities
available for sale .............. 1,360.7 103.6 (36.7) 1,427.6
Mortgage-backed securities:
Federal agencies ................... 12,635.2 19.1 (642.4) 12,011.9
Collateralized mortgage
obligations ....................... 165.8 0.5 (4.0) 162.3
Total mortgage-backed securities
available for sale .............. 12,801.0 19.6 (646.4) 12,174.2
Total investment and
mortgage-backed securities
available for sale .............. $14,161.7 123.2 (683.1) 13,601.8
</TABLE>
12
<PAGE>
Interest income on investment and mortgage-backed securities for the quarters
ended March 31 were:
In millions 1995 1994
Held for investment:
U.S. Treasury and federal agencies .. $ 0.3 0.6
State, municipal and housing -
tax exempt ........................ 12.5 12.4
Other ............................... 6.4 4.5
Total investment securities
held for investment ............. $ 19.2 17.5
Available for sale:
U.S. Treasury and federal agencies .. $ 18.2 25.8
State, municipal and housing -
tax exempt ........................ 1.4 1.3
Other ............................... 7.0 4.9
Total investment securities
available for sale .............. $ 26.6 32.0
Mortgage-backed securities:
Federal agencies ................... $ 229.0 135.4
Collateralized mortgage
obligations ....................... 5.8 2.0
Total mortgage-backed securities
available for sale .............. $ 234.8 137.4
During the first quarter of 1995 and 1994, certain investment securities with a
total amortized cost of $20.5 million and $10.4 million, respectively, were sold
by the corporation due to significant deterioration in the credit worthiness 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 no gain
or loss for the three months ended March 31, 1995, and a net loss of $0.5
million in the same period a year ago.
13
<PAGE>
4. Loans and Leases
The carrying values of loans and leases at March 31, 1995 and December 31, 1994
were:
In millions March 31, December 31,
1995 1994
Commercial ............................... $ 8,735.2 8,390.4
Construction and land development ........ 623.0 568.1
Real estate .............................. 13,404.4 12,548.8
Consumer ................................. 10,860.6 10,815.9
Lease financing .......................... 763.7 764.5
Foreign .................................. 628.8 615.9
Total loans and leases ................. 35,015.7 33,703.6
Unearned discount ........................ (1,139.1) (1,127.6)
Loans and leases, net of
unearned discount .................... $ 33,876.6 32,576.0
Changes in the allowance for credit losses for the quarters ended March 31 were:
In millions 1995 1994
Balance at beginning of period ............ $ 789.9 789.2
Allowance related to assets
acquired, net .......................... 15.3 10.9
Provision for credit losses ............. 55.3 36.3
Credit losses ........................... (80.5) (74.7)
Recoveries .............................. 32.5 31.5
Net credit losses ..................... (48.0) (43.2)
Balance at end of period .................. $ 812.5 793.2
5. Impaired and 90-day Past Due Loans and Other Real Estate Owned
Impaired and 90-day past due loans and other real estate owned at March 31,
1995 and 1994 and December 31, 1994 were:
In millions March 31, December 31,
1995 1994 1994
Impaired loans
Non-accrual ........................... $ 84.5 134.5 96.8
Restructured .......................... 1.9 2.9 1.8
Total impaired loans ................ 86.4 137.4 98.6
Other non-accrual loans 43.9 38.8 31.7
Total non-accrual and
restructured loans ................... 130.3 176.2 130.3
Other real estate owned ................. 32.5 55.7 29.6
Total non-performing assets ........... 162.8 231.9 159.9
Loans and leases past due
90 days or more* ...................... 75.8 66.2 58.4
Total non-performing assets and
90-day past due loans and leases ..... $ 238.6 298.1 218.3
* Excludes non-accrual and restructured loans.
14
<PAGE>
Under the corporation's credit policies and practices, all non-accrual and
restructured commercial, agricultural, construction, and commercial real estate
loans meet the definition of impaired loans under SFAS 114 and 118. Impaired
loans as defined by SFAS 114 and 118 exclude certain consumer loans, residen-
tial real estate loans and lease financing classified as non-accrual. The
allowance for credit losses related to impaired loans at March 31, 1995 and
December 31, 1994 was $21.8 million and $31.6 million, respectively. Impaired
loans of$10.0 million and $4.6 million were not subject to a related
allowance for credit loss at March 31, 1995 and December 31, 1994, respectively,
because of the net realizable value of loan collateral, guarantees
and other factors.
The average balances of impaired loans for the quarters ended March 31,
1995 and 1994 were $89.5 million and $148.0 million, respectively.
Interest income on impaired loans is recognized after all past due and current
principal payments have been made, and collectibility is no longer doubtful.
Interest income of $0.4 million and $0.5 million was recognized on impaired
loans for the quarters ended March 31, 1995 and 1994, respectively.
The effects of total non-accrual and restructured loans on interest income
for the quarters ended March 31 were:
In millions 1995 1994
Interest
As originally contracted ........... $ 4.5 3.7
As recognized ...................... (0.4) (0.5)
Reduction of interest income ..... $ 4.1 3.2
6. Long-term Debt
During the first quarter of 1995, the corporation issued $850 million in
medium-term notes bearing fixed rates ranging from 7.65 percent to 8.67
percent, which mature from December 1996 to March 2005, and $50 million in
medium-term notes bearing interest at three month LIBOR plus eight basis points
maturing in January 1998. Also during the first three months of 1995, Norwest
Financial, Inc. issued $450 million in senior notes bearing fixed interest rates
ranging from 7.25 percent to 8.375 percent maturing from January 2000
to February 2002. Certain banking subsidiaries of the corporation received
advances from the Federal Home Loan Bank of $327.0 million primarily bearing
interest at one month LIBOR minus two basis points maturing from March 1996 to
January 2000, and $100.0 million at 7.70 percent maturing January 1998.
15
<PAGE>
7. Stockholders' Equity
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, 1995 and December 31, 1994. 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
1994 Annual Report on Form 10-K.
<TABLE>
<CAPTION>
In millions, except share amounts
Annual
Dividend
Shares Outstanding Rate at Amount Outstanding
March 31, December 31, March 31, March 31, December 31,
1995 1994 1995 1995 1994
<S> <C> <C> <C> <C> <C>
10.24% Cumulative,
$100 stated value 1,127,125 1,127,125 10.24% $112.7 112.7
Cumulative
Tracking, $200
stated value 980,000 980,000 9.30% 196.0 196.0
Cumulative
Convertible, Series B,
$200 stated value 1,143,675 1,143,675 7.00% 228.7 228.7
ESOP Cumulative Convertible,
$1,000 stated value 13,955 14,265 9.00% 14.0 14.3
1995 ESOP Cumulative
Convertible, $1,000
stated value 52,747 - 10.00% 52.7 -
Less: Cumulative
Tracking shares held by
a subsidiary (25,000) (125,000) (5.0) (25.0)
3,292,502 3,140,065 599.1 526.7
Unearned ESOP shares (69.2) (14.7)
Total preferred stock $529.9 512.0
</TABLE>
On March 29, 1995 the corporation issued 63,300 shares of 1995 ESOP Cumulative
Convertible Preferred Stock, $1,000 stated value per share ("1995
ESOP Preferred Stock"). All shares of the 1995 ESOP Preferred Stock were
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 10.00 percent.
Each share of ESOP Cumulative Convertible Preferred Stock and 1995 ESOP
Cumulative Convertible Preferred Stock (collectively, ESOP Preferred
Stock) released from the unallocated reserve of the Plan is convertible 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. During the first quarter of 1995, 10,863 shares of ESOP
Preferred Stock were converted into 428,097 shares of common stock of the
corporation. 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 Certificates of Designations of the ESOP Preferred Stock.
16
<PAGE>
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.
Preference Stock
At the annual meeting of stockholders held on April 25, 1995, the stockholders
authorized a new class of capital stock consisting of a total of 4,000,000
shares of "Preference Stock." These shares of Preference Stock will
have such powers, preferences and rights as determined by the corporation's
Board of Directors, provided that each share of Preference Stock will
not be entitled to more than one vote per share.
8. Segment Reporting
The corporation's operations include three primary business segments: banking,
mortgage banking and consumer finance. The corporation, primarily
through its subsidiary banks, offers diversified banking services including
retail, commercial and corporate banking, equipment leasing,
trust services, securities brokerage, investment banking
and venture capital investments. Mortgage banking activities include
the origination and purchase of residential mortgage loans for sale
to various investors as well as providing servicing of mortgage loans for
others where servicing rights have been retained. Consumer finance activities,
provided through the corporation's Norwest Financial subsidiaries, include
providing direct installment loans to individuals, purchasing of sales finance
contracts, private label and lease accounts receivable financing, and
other related products and services.
Selected financial information by business segment for the quarters ended
March 31 is included in the following summary:
In millions 1995 1994
Revenues:*
Banking $ 1,150.8 922.7
Mortgage banking 236.0 218.9
Consumer finance 329.4 285.3
Total $ 1,716.2 1,426.9
Organizational earnings:*
Banking $ 140.1 127.9
Mortgage banking 21.1 10.8
Consumer finance 55.6 51.8
Total $ 216.8 190.5
Total assets:
Banking $50,264.0 44,183.5
Mortgage banking 5,457.0 5,697.7
Consumer finance 6,124.1 5,447.0
Total $61,845.1 55,328.2
* Revenues, where applicable, and organizational earnings by business
segment are impacted by intercompany revenues and expenses, such as
interest on borrowings from the parent company, corporate service
fees and allocation of federal income taxes.
17
<PAGE>
9. Mortgage Banking Activities
The detail of mortgage banking non-interest income for the quarters ended
March 31 is presented below:
In millions 1995 1994
Origination fees $ 19.9 27.1
Servicing fees 73.8 35.4
Net gains on sales
of servicing rights 45.8 8.5
Net gains on sales of
mortgages 1.5 46.4
Other mortgage fee income 20.0 18.0
Total mortgage banking
non-interest income $161.0 135.4
Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The outstanding balances of serviced loans
were $100,265.0 million and $50,245.0 million at March 31, 1995
and 1994, respectively.
Changes in intangibles from purchased mortgage loan servicing rights for
the quarters ended March 31 were:
In millions 1995 1994
Balance at beginning
of period $550.3 185.2
Purchases 331.4 42.6
Sales (27.8) (7.0)
Amortization (16.7) (10.6)
Adjustments due to
changes in prepayment
assumptions (0.3) (0.1)
Balance at end of period $836.9 210.1
10. Derivative Activities
The corporation and its subsidiaries, as end-users, utilize various types of
derivative products (principally interest rate swaps) as part of an
overall interest rate risk management strategy. Interest rate swaps
generally involve the exchange of fixed and floating rate interest payments
based on an underlying notional amount. Generic swaps' notional amounts do not
change for the life of the contract. A key assumption in the information
which follows is that rates remain constant at March 31, 1995 levels. To
the extent that rates change, both the maturity and variable interest rate
information will change. The basis swaps are contracts where the corporation
receives an amount and pays an amount based on different floating indices.
Option contracts allow the holder of the option to purchase or sell
a financial instrument at a specified price and within a specified
period of time from or to the seller or "writer" of the option. As a
writer of options, the corporation receives a premium at the outset and then
bears the risk of an unfavorable change in the price of the underlying
financial instrument.
18
<PAGE>
For the three months ended March 31, 1995, the end-user derivative activities
decreased interest income by $1.3 million and increased interest expense
by $1.1 million, for a total reduction to net interest income of $2.4 million.
For the same period in 1994, interest income was increased by $2.8 million
and interest expense was reduced by $3.0 million, for a total benefit
to net interest income of $5.8 million.
The following table presents the maturities and weighted average rates for
end-user derivatives by type:
<TABLE>
<CAPTION>
Dollars in millions
Maturity
There-
March 31, 1995 1995 1996 1997 1998 1999 after Total
<S> <C> <C> <C> <C> <C> <C> <C>
Swaps:
Generic receive fixed-
Notional value $ - 675 250 200 466 225 1,816
Weighted avg.
receive rate -% 6.23 8.18 6.74 7.92 7.23 7.11
Weighted avg. pay rate -% 6.32 6.25 6.31 6.17 6.28 6.26
Generic pay fixed-
Notional value $ - 30 - - - 100 130
Weighted avg.
receive rate -% 6.25 - - - 6.25 6.25
Weighted avg. pay rate -% 6.27 - - - 5.69 5.82
Basis -
Notional value $ - 200 - 29 - - 229
Weighted avg.
receive rate -% 6.31 - 3.47 - - 5.96
Weighted avg. pay rate -% 6.16 - 5.01 - - 6.01
Interest rate caps and
floors (1):
Notional value $ - 16 - 327 400 - 743
Security options (1):
Notional value $ 695 - - - - - 695
Total notional value $ 695 921 250 556 866 325 3,613
Total weighted avg.
rates on swaps:
Receive rate -% 6.24 8.18 6.33 7.92 6.93 6.94
Pay rate -% 6.28 6.25 6.15 6.17 6.09 6.21
</TABLE>
(1) Average rates are not meaningful for interest rate caps and floors or
security options.
Note: Weighted average variable rates are based on the actual rates as of
March 31, 1995.
19
<PAGE>
Activity in the notional amounts of end-user derivatives for the three months
ended March 31, 1995 is summarized as follows:
<TABLE>
<CAPTION>
In millions December 31, Amortizations March 31,
1994 Additions and Maturities Terminations 1995
<S> <C> <C> <C> <C> <C>
Swaps:
Generic receive fixed $ 1,025 791 - - 1,816
Generic pay fixed 130 - - - 130
Basis 229 - - - 229
Total swaps 1,384 791 - - 2,175
Interest rate caps
and floors 751 - (8) - 743
Security options - 695 - - 695
Total $ 2,135 1,486 (8) - 3,613
Deferred gains and losses on closed end-user derivatives were not material
at March 31, 1995 and December 31, 1994.
</TABLE>
20
<PAGE>
The following table provides the gross gains and gross losses not yet recognized
in the income statements for open end-user derivatives applicable to
certain hedged assets and liabilities:
<TABLE>
<CAPTION>
In millions
Balance Sheet Category
Interest- Other Long-
Investment bearing Short-term term
March 31, 1995 Securities Deposits Borrowings Debt Other* Total
<S> <C> <C> <C> <C> <C> <C>
Swaps:
Pay variable
Unrealized gains $ - - - 29.9 7.4 37.3
Unrealized (losses) - (5.4) (4.0) (9.5) - (18.9)
Pay variable net - (5.4) (4.0) 20.4 7.4 18.4
Pay fixed
Unrealized gains - 9.8 - - - 9.8
Basis
Unrealized gains 1.9 - - - - 1.9
Unrealized (losses) - - - (0.1) (0.1)
Basis net 1.9 - - (0.1) - 1.8
Total unrealized gains 1.9 9.8 - 29.9 7.4 49.0
Total unrealized (losses) - (5.4) (4.0) (9.6) - (19.0)
Total net $ 1.9 4.4 (4.0) 20.3 7.4 30.0
Interest rate caps and floors:
Unrealized gains $ - - - 0.2 7.1 7.3
Unrealized (losses) (0.3) - (0.1) - - (0.4)
Total net $ (0.3) - (0.1) 0.2 7.1 6.9
Security options:
Unrealized gains $ 2.7 - - - - 2.7
Grand total
unrealized gains $ 4.6 9.8 - 30.1 14.5 59.0
Grand total
unrealized (losses) (0.3) (5.4) (4.1) (9.6) - (19.4)
Grand total net $ 4.3 4.4 (4.1) 20.5 14.5 39.6
*Includes $7.1 million in gains on floors hedging mortgage servicing rights and
$7.4 million in gains on swaps hedging the Cumulative Tracking Preferred
Stock.
</TABLE>
As a result of interest rate fluctuations, off balance-sheet derivatives have
unrealized appreciation or depreciation in market values as compared with their
cost. As these derivatives hedge certain assets and liabilities of the
corporation, as noted in the table above, there has been offsetting unrealized
appreciation and depreciation in the assets and liabilities hedged.
The corporation has entered into mandatory and standby forward contracts to
reduce interest rate risk on certain mortgage loans held for sale and other
commitments. The contracts provide for the delivery of securities at a
specified future date, at a specified price or yield. At March 31,
1995, the corporation had forward contracts totaling $6.3 billion, all
21
<PAGE>
of which mature within 240 days. Gains and losses on forward contracts are
included in the determination of market value of mortgages held for sale.
During the first quarter of 1995, the corporation entered into futures
contracts of $1.0 billion notional value, as part of its trading account
portfolio, which are valued at market with any gains or losses recognized
currently.
11. 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 March 31, 1995, the corporation completed its acquisition of the $15 billion
servicing portfolio of BarclaysAmerican/Mortgage Corporation for cash. On
March 13, 1995, the corporation acquired Directors Mortgage Loan Corporation
in Riverside, California, and issued 10,545,778 common shares. On February
28, 1995, the corporation acquired Parker Bankshares, Inc., a bank
holding company located in Parker, Colorado, with total assets of $59
million, and issued 394,995 common shares. On February 12, 1995, the
corporation acquired Independent Bancorp of Arizona, Inc., a $1.6 billion
bank holding company headquartered in Phoenix, Arizona, for cash of $159.7
million. On January 6, 1995, the corporation acquired
American Republic Bancshares, Inc., a $222 million bank holding
company located in Belen, New Mexico, and issued 1,206,546 common shares. On
January 5, 1995, the corporation completed its acquisition of Ken-Caryl
Investment Company, a bank holding company headquartered in Littleton,
Colorado, with total assets of $29 million, and issued 149,774 common shares.
The acquisitions of Parker Bankshares, Inc. and Directors Mortgage Loan
Corporation were accounted for using the pooling of interests method of
accounting; however, the financial results of the corporation for periods
prior to these acquisitions have not been restated because the effect of
these acquisitions on the corporation's financial statements was not material.
The acquisitions of Ken-Caryl Investment Company, American Republic Bancshares,
Inc., and Independent Bancorp of Arizona, Inc., were accounted for using
the purchase method.
As of March 31, 1995, the corporation had 13 other pending acquisitions with
total assets of approximately $2.7 billion and it is anticipated that cash
of $616.6 million and approximately 6.8 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
the second and third quarters of 1995 and are not significant to the
financial statements of the corporation, either individually or in the
aggregate.
22
<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 1994
Annual Report on Form 10-K.
EARNINGS PERFORMANCE
The corporation reported net income of $216.8 million for the quarter ended
March 31, 1995, a 13.8 percent increase over the $190.5 million earned in the
first quarter of 1994. Net income per common share was 66 cents, compared with
59 cents in the first quarter of 1994, an increase of 11.9 percent. Return
on realized common equity was 22.2 percent and return on assets was 1.46
percent for the first quarter of 1995, compared with 21.5 percent and 1.45
percent, respectively, in the first quarter of 1994.
ORGANIZATIONAL EARNINGS*
The earnings of the corporation's major entities appear below for the
quarters ended March 31.
In millions 1995 1994
Banking $ 140.1 127.9
Mortgage banking 21.1 10.8
Norwest Financial Services, Inc.
and subsidiaries 55.6 51.8
Net income $ 216.8 190.5
* 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 allocation of federal income taxes.
Banking
The Banking Group reported first quarter 1995 earnings of $140.1 million, a 9.6
percent increase over the first quarter 1994 earnings of $127.9 million.
Increased earnings in the first quarter of 1995 reflected a 22.8 percent
growth in tax-equivalent net interest income and increases in fee-based
revenues, partially offset by a $12.9 million increase in the provision for
credit losses and $35.2 million of investment securities losses
recorded in the quarter.
Mortgage Banking
Mortgage banking operations earned $21.1 million in the current quarter
compared with $10.8 million in the first quarter of 1994. Combined gains on
sales of mortgages and servicing rights in the first quarter of 1995 amounted
to $47.3 million, compared with $54.9 million in the same quarter last year.
The servicing portfolio increased $50.0 billion from the first quarter of 1994
and $28.8 billion from year-end 1994, and at March 31, 1995 totaled $100.3
billion with a weighted average mortgage interest rate of 7.76 percent.
Approximately $29.3 billion of servicing was added in the first quarter of 1995
principally as a result of the acquisitions of Directors Mortgage Loan
Corporation and the servicing portfolio of BarclaysAmerican/Mortgage
23
<PAGE>
Corporation. Capitalized servicing intangibles totaled $945 million or
94 basis points of the $100.3 billion servicing portfolio.
Norwest Financial Services, Inc. and subsidiaries ("Norwest Financial")
Norwest Financial reported earnings of $55.6 million in the first quarter of
1995, compared with $51.8 million in the first quarter of 1994, an increase
of 7.3 percent. Norwest Financial's net interest income increased 9.8 percent
as average finance receivables grew 15.4 percent from the first quarter of
1994. Norwest Financial's net interest margin narrowed 80 basis points
from the first quarter of last year, reflecting higher funding costs.
CONSOLIDATED INCOME STATEMENT ANALYSIS
Net Interest Income
Consolidated tax-equivalent net interest income was $752.0 million in the first
quarter of 1995, compared with $657.2 million in the first quarter of 1994, an
increase of 14.4 percent. The improvement from the first quarter of 1994 was
primarily due to a 12.9 percent growth in average earning assets, partially
offset by increases in funding costs and a change in funding mix due to
increases in long-term debt. Net interest margin, the ratio of annualized
tax-equivalent net interest income to average earning assets, was 5.49 percent
for the first quarter of 1995, unchanged from the first quarter of
1994. The following table summarizes changes in tax-equivalent net interest
income between the first quarter of 1995 and the first and fourth quarters
of 1994. In addition, see page 30 for additional information
with respect to average balances and tax-equivalent yields and rates.
Changes in Tax-Equivalent Net Interest Income*
In millions 1Q 95 1Q 95
over over
1Q 94 4Q 94
Increase (decrease) due to:
Change in earning asset volume ................ $ 94.8 45.2
Change in volume of interest-free funds ....... (9.0) (6.4)
Change in net return from
Interest-free funds .......................... 32.9 10.6
Interest-bearing funds ....................... (3.0) (23.8)
Change in earning asset mix ................... 4.2 (7.4)
Change in funding mix ......................... (25.1) (8.1)
Change in tax-equivalent net interest income .... $ 94.8 10.1
* Net interest income is presented on a tax-equivalent basis utilizing a
federal incremental tax rate of 35% in each period presented.
24
<PAGE>
Trading Revenues
Interest income derived from trading account securities was $3.3 million and
$8.4 million for the quarter ended March 31, 1995 and 1994,
respectively. Non-interest trading revenues were $6.4 million for the first
quarter 1995, compared with trading losses of $8.4 million for the same period
in 1994. The trading revenues were derived from the following activities:
<TABLE>
<CAPTION>
For Quarter Ended March 31,
In millions 1995 1994
Non- Non-
Interest interest Interest interest
Income Income Total Income Income Total
<S> <C> <C> <C> <C> <C> <C>
Securities:
U.S. Treasury
and agencies $ 1.5 - 1.5 3.9 - 3.9
State and
municipal 0.2 - 0.2 0.3 - 0.3
Mortgage-backed 0.3 - 0.3 0.6 - 0.6
Other 0.3 - 0.3 0.1 - 0.1
2.3 - 2.3 4.9 - 4.9
Derivatives:
Swaps and other
interest rate
contracts 1.0 2.6 3.6 3.5 (8.0) (4.5)
Options - 4.3 4.3 - 2.9 2.9
Futures - (0.1) (0.1) - 1.1 1.1
Losses on securities - (2.2) (2.2) - (5.8) (5.8)
Foreign exchange
trading - 1.8 1.8 - 1.4 1.4
Total $ 3.3 6.4 9.7 8.4 (8.4) -
</TABLE>
Provision for Credit Losses
The corporation provided $55.3 million for credit losses in the first quarter
of 1995, compared with $36.3 million in the same period a year ago. Net credit
losses totaled $48.0 million and $43.2 million for the quarters ended March 31,
1995 and 1994, respectively. As a percentage of average loans and leases,
net credit losses were 0.59 percent in the first quarter of 1995, compared with
0.61 percent in the same period a year ago.
Non-interest Income
Consolidated non-interest income was $428.2 million in the first quarter of
1995, a decrease of $5.9 million from first quarter of 1994. Net investment
securities losses of $35.2 million were recorded in the first quarter of 1995
compared with net gains of $36.5 million in the first quarter of 1994. The
first quarter 1995 securities losses were taken to provide an opportunity to
reinvest at higher yields. The reduction in non-interest income due to the
first quarter of 1995 securities losses was partially offset by growth
in all fee-based businesses and trading account gains. Excluding gains
(losses) on investment securities and investment securities available for sale
and venture capital gains, non-interest income increased 17.1 percent from
the first quarter of 1994.
Mortgage banking revenues were $161.0 million for the first quarter of 1995, an
increase of 18.9 percent over the same period in 1994. The growth in
25
<PAGE>
mortgage banking revenues principally reflects increased servicing fees
resulting from growth in the corporation's servicing portfolio. See Note 9
to the unaudited consolidated financial statements for the first quarter
of 1995 for a detailed analysis of mortgage banking revenues for the
quarters ended March 31, 1995 and 1994.
Net venture capital gains were $21.6 million in the first quarter,
essentially flat compared with the same period a year ago. Sales of venture
capital securities generally relate to holdings becoming publicly traded and
subsequent market conditions, causing venture capital gains to be
unpredictable in nature. At March 31, 1995, net unrealized appreciation in
the venture capital investment portfolio was $118.2 million.
Non-interest Expenses
Consolidated non-interest expenses were $792.6 million in the first quarter
of 1995. These expenses increased 3.1 percent over the first quarter of 1994
primarily as a result of increased expenses due to acquisition growth. Salaries
and benefits were essentially flat in the first quarter compared with a year
ago as acquisition-related growth in the Banking Group was offset by
reductions in mortgage banking operations.
26
<PAGE>
CONSOLIDATED BALANCE SHEET ANALYSIS
At March 31, 1995, earning assets were $55.5 billion, an increase of 4.2
percent from $53.3 billion at December 31, 1994. This increase was primarily
due to a 4.3 percent increase in total investment securities and a 4.0 percent
increase in net loans.
At March 31, 1995, interest-bearing liabilities totaled $46.3 billion, a 4.9
percent increase from $44.2 billion at December 31, 1994. The increase is
primarily due to increases in interest-bearing deposits and long-term debt,
partially offset by a decrease in short-term borrowings. See Note 6 to the
unaudited consolidated financial statements for the first quarter 1995 for
a detailed discussion of long-term debt issued during 1995.
Credit Quality
Loans and leases as of the end of each of the last five quarters were as
follows:
In millions 1995 1994
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
Commercial, financial and
industrial ................ $ 7,846 7,434 7,090 6,952 6,984
Agricultural ................ 890 956 967 959 869
Real estate
Secured by 1-4 family
residential properties .. 9,716 8,959 8,689 8,521 8,256
Secured by development
properties .............. 1,541 1,514 1,713 1,767 1,686
Secured by construction
and land development .... 623 568 588 596 590
Secured by owner-
occupied properties ..... 2,147 2,076 1,713 1,632 1,755
Consumer .................... 8,022 7,923 7,537 7,157 6,769
Credit card and check credit. 2,838 2,893 2,577 2,429 2,227
Lease financing ............. 764 765 689 670 672
Foreign ..................... 629 616 618 571 539
Total loans and leases .. 35,016 33,704 32,181 31,254 30,347
Unearned discount ....... (1,139) (1,128) (1,106) (1,081) (1,060)
Total loans and leases,
net of unearned
discount ............. $33,877 32,576 31,075 30,173 29,287
27
<PAGE>
At March 31, 1995, the allowance for credit losses totaled $812.5 million, or
2.40 percent of loans and leases outstanding. Comparable amounts were $793.2
million, or 2.71 percent, at March 31, 1994, and $789.9 million, or 2.42
percent, at December 31, 1994. The ratio of the allowance for credit losses to
total non-performing assets and 90-day past due loans and leases was 340.5
percent at March 31, 1995, compared with 266.1 percent at March 31, 1994 and
361.8 percent at December 31, 1994.
Although it is impossible for any lender to predict future credit losses with
complete accuracy, management monitors the allowance for credit losses with the
intent to provide for all losses that can reasonably be anticipated based on
current conditions. The corporation maintains the allowance for credit
losses as a general allowance available to cover future credit losses within
the entire loan and lease portfolio and other credit-related risks. However,
management has prepared an allocation of the allowance based on its views of
risk characteristics of the portfolio. This allocation of the allowance for
credit losses does not represent the total amount available for actual
future credit losses in any single category nor does it prohibit future credit
losses from being absorbed by portions of the allowance allocated to other
categories or by the unallocated portion. The allocation of the allowance
for credit losses to major categories of loans at March
31, 1995 and December 31, 1994 was:
March 31, December 31,
1995 1994
Commercial ...................... $ 163.6 151.9
Consumer ........................ 211.5 209.0
Real estate ..................... 161.5 163.5
Foreign ......................... 20.0 20.0
Unallocated ..................... 255.9 245.5
Total ........................ $ 812.5 789.9
Non-performing assets and 90-day past due loans and leases totaled $238.6
million, or 0.39 percent of total assets, at March 31, 1995, compared
with $298.1 million, or 0.54 percent, at March 31, 1994, and $218.3 million,
or 0.37 percent, at December 31, 1994. The decrease from March 31, 1994,
primarily reflects a $17.2 million decrease in commercial non-accrual
loans, a $12.6 million decrease in real estate non-accrual loans, a $13.0
million decrease in construction and development non-accrual loans and a $23.2
million decrease in other real estate owned. The increase from December 31,
1994, is primarily the result of a $17.4 million increase in 90-day past
due loans and leases.
The corporation manages exposure to credit risk through loan portfolio
diversification by customer, product, industry and geography. As a result,
there is no undue concentration in any single sector.
The corporation's Banking Group operates in 15 states, largely in the Midwest
and Rocky Mountain regions of the country. In general, the economy in both
of these regions continues to remain strong, though growth is slowing as a
result of last year's hikes in interest rates. Distribution of average loans
by region during the first quarter of 1995 was approximately 58 percent
in the North Central Midwest, 13 percent in the South Central Midwest
and 29 percent in the Rocky Mountain/Southwest region.
Norwest Card Services, Norwest Mortgage and Norwest Financial operate on a
nationwide basis. With respect to Norwest Card Services, 43 percent of the
28
<PAGE>
credit card portfolio is within the 15-state Norwest banking region.
Approximately 54 percent of the portfolio is accounted for by the states of
Massachusetts, Minnesota, Iowa, New York, Connecticut, Colorado, California,
Illinois, Nebraska and Oklahoma. No one state accounts for more than
10 percent of the total credit card portfolio.
Norwest Mortgage operates in all 50 states, representing the largest retail
mortgage network in the country. Norwest Financial engages in consumer
finance activities in 46 states, all 10 Canadian provinces and
internationally. The general strength of the consumer sector of the national
economy and the extent of the geographic diversification exercised by Norwest
Mortgage and Norwest Financial help to mitigate the credit risk in their
loan portfolios.
Credit Ratings
The commercial paper/short-term debt of the corporation and Norwest Financial,
Inc. are currently rated TBW-1 by Thomson BankWatch, P1 by Moody's, A1+ by
Standard & Poor's, Duff-1+ by Duff & Phelps and F-1+ by Fitch Investors
Services, Inc. The corporation's senior debt is currently rated AA+ by
Thomson BankWatch, AA by Fitch Investors Services, Inc. and Duff & Phelps,
AA- by Standard & Poor's and Aa3 by Moody's. 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 9.74 percent at March 31, 1995,
and its total capital to risk-based assets ratio was 12.01 percent, compared
with 9.89 percent and 12.23 percent, respectively, at December 31, 1994.
The corporation's leverage ratio was 6.72 percent at March 31, 1995, compared
with 6.94 percent at December 31, 1994. 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 ratio was 31.8 percent for the first quarter of 1995 compared
with 31.4 percent for the first quarter of 1994.
29
<PAGE>
Norwest Corporation And Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
<TABLE>
<CAPTION>
Quarter Ended March 31
In millions, except ratios 1995 1994
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 $ 973 $ 13.9 5.78% $ 500 $ 5.3 4.28%
Trading account securities 141 3.4 9.75 371 8.6 9.36
Investment securities
U.S. Treasury & federal
agencies 27 0.3 4.49 23 0.5 9.75
State, municipal and
housing tax-exempt 701 18.3 10.44 636 17.7 11.10
Other 568 6.4 4.52 322 4.5 5.59
Total 1,296 25.0 7.72 981 22.7 9.26
Investment securities available
for sale
U.S. Treasury & federal
agencies 1,055 18.2 6.89 1,984 25.8 5.34
State, municipal and
housing tax-exempt 108 2.0 7.21 90 1.8 8.22
Mortgage-backed 12,403 234.8 7.33 8,837 137.5 6.35
Other 423 7.1 8.42 504 4.9 4.58
Total 13,989 262.1 7.32 11,415 170.0 6.12
Student loans available
for sale 2,153 45.5 8.57 1,517 24.1 6.45
Mortgages held for sale 2,824 57.2 8.11 4,622 68.1 5.89
Loans and leases
(net of unearned discount)
Commercial 9,903 225.9 9.24 9,095 164.4 7.32
Real estate 12,566 284.1 9.05 11,182 235.7 8.43
Consumer 10,750 379.2 14.22 8,624 301.2 14.07
Total loans and leases 33,219 889.2 10.78 28,901 701.3 9.77
Allowance for credit losses (809) (808)
Net loans and leases 32,410 28,093
Total earning assets
(before the allowance for
credit losses) 54,595 1,296.3 9.49 48,307 1,000.1 8.37
Cash and due from banks 3,074 2,985
Other assets 3,553 2,740
Total assets $60,413 $53,224
(Continued on page 31)
</TABLE>
30
<PAGE>
Norwest Corporation And Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(Continued from page 30)
<TABLE>
<CAPTION>
Quarter Ended March 31
In millions, except ratios 1995 1994
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
<S> <C> <C> <C> <C> <C> <C>
Interest-Bearing Liabilities
Noninterest-bearing deposits $ 8,921 $ - -% $ 8,783 $ - -%
Interest-bearing deposits
Savings and NOW accounts 4,795 25.2 2.13 4,484 19.7 1.79
Money market accounts 10,398 80.3 3.13 10,541 54.6 2.10
Savings certificates 10,273 130.0 5.13 9,958 113.1 4.61
Certificates of deposit
and other time 1,548 20.8 5.46 1,636 16.7 4.13
Foreign time 753 10.8 5.81 151 1.0 2.76
Total interest-bearing
deposits 27,767 267.1 3.90 26,770 205.1 3.11
Federal funds purchased &
repurchase agreements 3,834 54.9 5.81 1,930 15.2 3.20
Short-term borrowings 3,782 57.9 6.21 3,515 29.8 3.43
Long-term debt 10,081 164.4 6.52 6,633 92.8 5.60
Total interest-bearing
liabilities 45,464 544.3 4.84 38,848 342.9 3.57
Other liabilities 1,957 1,655
Preferred stock 532 348
Common stockholders' equity 3,539 3,590
Total liabilities and
stockholders' equity $60,413 $53,224
Net interest income
(tax-equivalent basis) $752.0 $657.2
Yield spread 4.65 4.80
Net interest margin 5.49 5.49
Interest-bearing liabilities
to earning assets 83.28 80.42
* Interest income and yields are calculated on a tax-equivalent basis
utilizing a federal incremental tax rate of 35% in each period presented.
Non-accrual loans and the related negative income effect have been included in
the calculation of yields.
</TABLE>
31
<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
4. Certificate of Designations of powers, preferences and
rights relating to the corporation's 1995 ESOP
Cumulative Convertible Preferred Stock
Copies of instruments with respect to long-term debt
will be furnished to the Commission upon request.
10(a). Directors' Formula Stock Award Plan (as amended
February 28, 1995)
10(b). Amendment effective January 1, 1995 to agreement
dated March 11, 1991, between the corporation and
Richard M. Kovacevich
10(c). Amendment effective January 1, 1995 to agreement dated
March 18, 1991, between the corporation and
Richard M. Kovacevich
11. Computation of Earnings Per Share
12(a). Computation of Ratio of Earnings to Fixed Charges
12(b). Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends
Stockholders may obtain a copy of any Exhibit, none of which are
contained herein, upon payment of a reasonable fee, by writing
Norwest Corporation, Office of the Secretary, Norwest Center, Sixth
and Marquette, Minneapolis, Minnesota 55479-1026.
(b) Reports on Form 8-K.
The corporation filed a Current Report on Form 8-K, dated January 9,
1995, filing the Certificate of Designations of powers, preferences,
and rights relating to the corporation's Cumulative Tracking Preferred
Stock.
The corporation filed a Current Report on Form 8-K, dated January 27,
1995, reporting consolidated operating results of the
corporation for the year ended December 31, 1994.
The corporation filed a Current Report on Form 8-K, dated February 17,
1995, filing certain documents in connection with the corporation's
offering of Medium-Term Notes, Series F.
32
<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 15, 1995 By /s/ Michael A. Graf
Senior Vice President
and Controller
(Chief Accounting Officer)
33
<PAGE>
Exhibit 4
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
___________________________________
1995 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK
(Without Par Value)
___________________________________
NORWEST CORPORATION
___________________________________
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
meetings of the Board duly held on July 26, 1994 and September 26, 1994, and
by the resolution of the Securities Committee set forth herein, at a meeting
of the Securities Committee duly held on March 28, 1995:
1. The Board on July 26, 1994, adopted the following resolutions
("Resolutions") authorizing the Securities Committee 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),
2
<PAGE>
(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 $2,000,000,000 (the "Issuance 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 [(referred
to below as the "Shares")] 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
3
<PAGE>
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 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
4
<PAGE>
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 Board on September 26, 1994, adopted the following
resolutions authorizing the Securities Committee to authorize the issuance
of one or more series of Preferred Stock (the "ESOP Preferred Stock") to the
Corporation's Savings-Investment Plan (referred to below as the "Plan"), and
providing that such ESOP Preferred Stock not be considered when determining
compliance with the Issuance Limit set forth in the Resolutions (adopted by
the Board on July 26, 1994) and fixing the voting rights of certain series
of the ESOP Preferred Stock:
RESOLVED that the Securities Committee, pursuant to the authority
granted to it by the Resolutions, is hereby authorized to authorize the
issuance from time to time of one or more series of ESOP Preferred Stock for
sale to the Plan, having an aggregate stated value not to exceed
$300,000,000; 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
ESOP Preferred Stock thus authorized for issuance shall have the voting
rights set forth in Appendix A to the Resolutions.
RESOLVED that the original offering price of the ESOP Preferred Stock
shall not be subtracted from the Issuance Limit in determining the amount of
Securities that may hereafter be issued under the Issuance Limit.
* * * *
3. The Securities Committee on March 28, 1995, adopted the
following resolution pursuant to the authority conferred upon the Securities
Committee by the resolutions of the Board set forth in paragraphs 1 and 2
above adopted pursuant to Section 141(c) of the General Corporation Law of
the State of Delaware:
5
<PAGE>
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 July 26, 1994 and September 26, 1994, are hereby fixed as
follows:
1995 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 "1995 ESOP Cumulative Convertible Preferred Stock"
(hereinafter referred to as the "1995 ESOP Preferred Stock") and the number
of authorized shares constituting the 1995 ESOP Preferred Stock is 63,300,
based on an offering price for the 1995 ESOP Preferred Stock of $1,040.00
per share. Each share of 1995 ESOP Preferred Stock shall have a stated
value of $1,000.00 per share. The number of authorized shares of 1995 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 1995 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 1995 ESOP Preferred
Stock shall not be increased. All shares of the 1995 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 1995 ESOP Preferred Stock.
(b) Shares of 1995 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 1995 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 1995 ESOP Preferred Stock to any person other than
any successor trustee under the Plan, the shares of 1995 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 1995 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 1995 ESOP Preferred Stock hereunder
but, rather, only the powers and rights pertaining to the Common Stock into
which such shares of 1995 ESOP Preferred Stock shall be so converted. In
6
<PAGE>
the event of such a conversion, the transferee of the shares of 1995 ESOP
Preferred Stock shall be treated for all purposes as the record holder of
the shares of Common Stock into which such shares of 1995 ESOP Preferred
Stock have been automatically converted as of the date of such transfer.
Certificates representing shares of 1995 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 1995 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 1995 ESOP Preferred Stock shall
have voting rights on a parity with the voting rights of the Corporation's
10.24% Cumulative Preferred Stock, its Cumulative Convertible Preferred
Stock, Series B, its ESOP Cumulative Convertible Preferred Stock, and its
Cumulative Tracking Preferred Stock, which shall be the voting rights set
forth in Appendix A to the resolutions adopted by the Board of Directors of
the Corporation on July 26, 1994.
3. Dividends. (a) Holders of shares of 1995 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 $100.00 per share, payable
quarterly on March 1, June 1, September 1, and December 1 of each year,
commencing June 1, 1995. Dividends on shares of the 1995 ESOP Preferred
Stock will be cumulative from the date of initial issuance of such shares of
1995 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 $100.00 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 1995 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 1995 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 1995 ESOP Preferred Stock and any other series
of preferred stock ranking on a parity as to dividends with 1995 ESOP
7
<PAGE>
Preferred Stock, all dividends declared upon shares of 1995 ESOP Preferred
Stock and any other series of preferred stock ranking on a parity as to
dividends with 1995 ESOP Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share on 1995 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 1995 ESOP
Preferred Stock and such other series of preferred stock bear to each other.
Holders of shares of 1995 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 1995 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 1995 ESOP Preferred Stock which may
be in arrears.
(ii) So long as any shares of 1995 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 1995 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 1995 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 1995 ESOP
Preferred Stock as to dividends or upon liquidation), unless, in each case,
the full cumulative dividends on all outstanding shares of 1995 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 1995 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 1995 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:
(a) Each share of 1995 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 1995 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 1995 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 1995 ESOP Preferred Stock held by such holder to be converted into
fully paid and nonassessable shares of Common Stock at the then applicable
8
<PAGE>
Conversion Price for 1995 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 1995 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 1995 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
1995 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 1995 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 1995 ESOP Preferred Stock or by
any agent for conversion of the 1995 ESOP Preferred Stock designated as such
pursuant to paragraph (d) of this Section 4.
(C) For purposes of a conversion of shares of 1995 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 1995 ESOP Preferred Stock shall be the Average Current Market
Price of one share of Common Stock.
Each share of 1995 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 1995
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
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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 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 1995 ESOP Preferred
Stock pursuant to this Section 4, the certificate or certificates
representing the shares of 1995 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 1995 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 1995 ESOP Preferred Stock by the Corporation or the transfer agent
for the 1995 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 1995 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 1995 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 1995 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
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<PAGE>
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 1995 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 1995 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 1995 ESOP Preferred Stock which shall not have been converted.
(f) The issuance by the Corporation of shares of Common Stock
upon a conversion of shares of 1995 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 1995 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 1995 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
1995 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 1995 ESOP Preferred Stock any fractional share or shares of
Common Stock issuable upon any conversion of such shares of 1995 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 1995 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 1995 ESOP Preferred Stock then outstanding.
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(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 1995 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 1995 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 1995 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 1995 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 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 1995 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 1995 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 1995 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 1995 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 1995 ESOP Preferred Stock, the Company may not
redeem fewer than all the outstanding shares of 1995 ESOP Preferred Stock
pursuant to this Section 5.
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(b) Unless otherwise required by law, notice of any
redemption pursuant to this Section 5 will be sent to the holders of 1995
ESOP Preferred Stock at the address shown on the books of the Corporation or
any transfer agent for the 1995 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 1995 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 1995 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 1995 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 1995 ESOP Preferred Stock, whichever value will
result in the issuance of the greater number of shares of Common Stock to
the holder of the 1995 ESOP Preferred Stock then being redeemed.
(d) For purposes of these resolutions, the following terms
shall have the meanings set forth below:
(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 1995 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
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or a committee thereof. The "Fair Market Value" of the 1995 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 1995 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 1995 ESOP Preferred Stock, the
independent appraiser shall assume (i) that all dividends on the 1995 ESOP
Preferred Stock would have been paid when due, and (ii) that the mandatory
conversion of shares of 1995 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 1995 ESOP Convertible Preferred Stock Note Agreement dated
March 29, 1995 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 1995 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 1995 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 1995 ESOP Preferred Stock had
immediately prior to such transaction, subject to the following:
(1) After such transaction each share of the 1995 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 1995 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 1995 ESOP Preferred Stock shall be assumed and authorized by
the successor or resulting corporation as aforesaid.
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(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 1995 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 1995 ESOP Preferred Stock could have been converted at
such time so that each share of 1995 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
1995 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
1995 ESOP Preferred Stock, then the shares of 1995 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 1995 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 1995 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 1995 ESOP Preferred Stock, a cash payment
per share of 1995 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 1995 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
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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 1995 ESOP Preferred
Stock shall have the right to convert shares of 1995 ESOP Preferred Stock
into shares of Common Stock at the Conversion Price specified in 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 1995 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 1995 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.
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(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 1995 ESOP
Preferred Stock of the full preferential amounts provided for in this
Section 7, the holders of 1995 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 1995 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 1995 ESOP Preferred Stock upon such
dissolution, liquidation, or winding up unless proportionate distributive
amounts shall be paid on account of the shares of 1995 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.
(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 1995 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 1995 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 1995 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 1995 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 1995 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 1995 ESOP Preferred Stock;
(b) on a parity with shares of 1995 ESOP Preferred Stock,
either as to dividends or upon liquidation, whether or not the dividend
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rates, dividend payment dates, or redemption or liquidation prices per
share, or sinking fund provisions, if any, be different from those of 1995
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 1995 ESOP Preferred Stock; and
(c) junior to shares of 1995 ESOP Preferred Stock, either as
to dividends or upon liquidation, if such class shall be Common Stock or if
the holders of shares of 1995 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 1995 ESOP Preferred Stock. The shares of 1995 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, its Cumulative Convertible Preferred Stock,
Series B, its ESOP Cumulative Convertible Preferred Stock, and its
Cumulative Tracking Preferred Stock. The 1995 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.
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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 28th day of March, 1995.
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
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Exhibit 10(a)
NORWEST CORPORATION
DIRECTORS' FORMULA STOCK AWARD PLAN
(As Amended February 28, 1995)
1. Purpose. The purpose of the Norwest Corporation Directors'
Formula Stock Award Plan (the "Plan") is to provide compensation in the form
of shares of the Corporation's common stock, $1 2/3 par value per share
("Common Stock"), to non-employee members of the Board of Directors (the
"Board") of Norwest Corporation (the "Corporation") in consideration for
personal services rendered in their capacity as directors of the
Corporation. The Plan is intended to aid in attracting and retaining
individuals of outstanding abilities and skills for service on the Board.
2. Eligibility. Any person who (a) has served as a non-employee
director of the Corporation during the calendar year preceding an Award Date
(as defined below) and (b) is a non-employee director of the Corporation on
the last day of such calendar year ("Eligible Non-Employee Director") shall
be awarded shares of Common Stock determined as set forth in Section 3.
3. Formula Award. In consideration for past services rendered, on
February 1 of each year (the "Award Date"), each Eligible Non-Employee
Director who was a non-employee director of the Corporation during all of
the preceding calendar year shall be awarded that number of shares (rounded
up to the next whole share) of Common Stock having an aggregate fair market
value on the Award Date of $18,000 (an "Award"). Each Eligible Non-Employee
Director who was a non-employee director of the Corporation for less than
all of the calendar year preceding an Award Date shall be awarded one-
twelfth of an Award for each calendar month or portion thereof during which
such person served as a non-employee director of the Corporation.
The fair market value shall be determined using the closing price of a
share of Common Stock as reported on the consolidated tape of the New York
Stock Exchange. If the New York Stock Exchange is not open on the Award
Date, the shares shall be valued at their fair market value as of the next
preceding day on which the New York Stock Exchange is open.
4. Deferral of Awards. An Eligible Non-Employee Director may elect
to defer, in the form of shares of Common Stock, all or a portion of the
Award for his or her service as a director for the calendar year (the
"Deferral Year") following the year in which the deferral election is made.
Such election shall be made pursuant to Section 5.
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5. Election to Participate and Defer Awards.
a. Participation. An Eligible Non-Employee Director becomes a
participant in the deferral provisions of the Plan by filing not later than
December 15 of the year preceding the Deferral Year an irrevocable election
with the Plan Administrator (as defined in Section 15) on a form provided
for that purpose. The election form shall specify an amount to be deferred
expressed as a percentage of the Award, one of the payment options described
in Sections 8 and 9, and the year in which amounts deferred shall be
distributed in a lump sum pursuant to Section 8 or in which distribution in
installments shall commence pursuant to Section 9. The deferral election
shall be effective only with respect to the Award for the Deferral Year
specified on the election form. A new deferral election form must be filed
for each Deferral Year.
b. Initial Deferral Election or Initial Eligibility. The initial
deferral elections by Eligible Non-Employee Directors must be made within 30
days of the date on which the Board of Directors of the Corporation approves
the amendment of the Plan to include deferral provisions and shall be for
compensation to be earned subsequent to the deferral election. A new
Eligible Non-Employee Director must make a deferral election within 30 days
of the date in which he or she becomes eligible to participate in the Plan.
6. Deferred Stock Account. On the Award Date, a participant shall
receive a credit to his or her account under the Plan (the "Deferred Stock
Account"). The amount of the credit shall be the number of shares
determined by multiplying the amount of the Award by the percentage
specified on the election form (rounded down to the nearest whole share).
7. Dividend Credit. Each time a dividend is paid on the Common
Stock, a participant shall receive a credit to his or her Deferred Stock
Account. The amount of the dividend credit shall be the number of shares
(rounded to the nearest one-hundredth of a share) determined by multiplying
the dividend amount per share by the number of shares credited to the
participant's Deferred Stock Account as of the record date for the dividend
and dividing the product by the average of the high and low prices per share
of Common Stock reported on the consolidated tape of the New York Stock
Exchange on the dividend payment date or, if the New York Stock Exchange is
closed on the dividend payment date, the next preceding date on which it was
open.
8. Distribution of Deferred Stock Accounts in a Lump Sum. Unless a
participant elects pursuant to Section 5 to have his or her Deferred Stock
Account distributed in installments as described in Section 9, credits to a
participant's Deferred Stock Account shall be distributed in whole shares of
Common Stock (together with cash in lieu of a fractional share) on February
21
<PAGE>
28 (or the next succeeding business day if February 28 is not a business
day) of the calendar year following termination of service as a director or
such other year as elected by the participant pursuant to Section 5. Cash
distributed in lieu of any fractional share shall be determined based on the
average of the high and low prices per share of Common Stock reported on the
consolidated tape of the New York Stock Exchange on the date of distribution
or, if the New York Stock Exchange is closed on that date, the next
preceding date on which it was open. If a participant dies before receiving
a lump sum distribution to which he or she is entitled under the Plan, such
distribution shall be made on February 28 (or the next succeeding business
day if February 28 is not a business day) of the calendar year following the
date of death in accordance with the participant's designation of a
beneficiary on a form provided for that purpose and delivered to and
accepted by the Plan Administrator or, in the absence of a valid designation
or if the designated beneficiary does not survive the participant, to such
participant's estate.
9. Distribution of Deferred Stock Accounts in Installments. A
participant may elect pursuant to Section 5 to have his or her Deferred
Stock Account distributed in stock in annual installments commencing on
February 28 of the calendar year following termination of service as a
director or such other year as elected by the participant pursuant to
Section 5. The amount of each installment shall be a fraction of the number
of shares in the participant's Deferred Stock Account on the January 31 (the
"Valuation Date") prior to the date of the distribution of the installment,
the numerator of which is one and the denominator of which is the total
number of installments elected (not to exceed ten) minus the number of
installments previously paid (rounded down to the nearest whole share).
Cash in lieu of any fractional share (based on the average of the high and
low prices per share of Common Stock reported on the consolidated tape of
the New York Stock Exchange on the Valuation Date) shall be distributed with
the final installment. Undistributed shares remaining in the Deferred Stock
Account after the first installment distribution has been made shall receive
dividends in accordance with Section 7. If a participant dies before
receiving all distributions to which he or she is entitled under the Plan,
distribution of all shares remaining in the Deferred Stock Account (together
with cash in lieu of any fractional share) shall be made on February 28 (or
the next succeeding business day if February 28 is not a business day) of
the calendar year following the date of death in accordance with the
participant's designation of a beneficiary on a form provided for that
purpose and delivered to and accepted by the Plan Administrator or, in the
absence of a valid designation or if the designated beneficiary does not
survive the participant, to such participant's estate.
22
<PAGE>
10. Shares Available for Awards. No more than 50,000 shares of Common
Stock may be awarded under the Plan. These shares may consist, in whole or
in part, of authorized but unissued Common Stock or treasury Common Stock
not reserved for any other purpose.
11. Adjustments for Certain Changes in Capitalization. If the
Corporation shall at any time increase or decrease the number of its
outstanding shares of Common Stock or change in any way the rights and
privileges of such shares by means of the payment of a stock dividend or any
other distribution upon such shares payable in Common Stock, or through a
stock split, subdivision, consolidation, combination, reclassification, or
recapitalization involving the Common Stock, then the numbers, rights, and
privileges of the shares issuable under the Plan shall be increased,
decreased, or changed in like manner as if such shares had been issued and
outstanding, fully paid, and nonassessable at the time of such occurrence.
12. Effective Date. The Plan shall become effective on January 1,
1992.
13. No Guarantee of Service. Participation in the Plan does not
constitute a guarantee or contract of service as a director.
14. Non-Assignability. No right to receive an award hereunder shall
be transferable or assignable by a Plan participant other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended,
Title I of the Employee Retirement Income Security Act ("ERISA"), or rules
thereunder. The designation of a beneficiary by a participant pursuant to
Section 8 or 9 does not constitute a transfer.
15. Administration. This Plan shall be administered under such rules
and procedures as shall be established from time to time by the
Corporation's senior human resources officer (the "Plan Administrator").
16. Amendment and Termination. This Plan may be amended, suspended or
terminated by action of the Board and automatically shall be terminated when
all Common Stock subject to the Plan has been awarded; provided, however,
that (a) the provisions of the Plan may not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code,
the Employee Retirement Income Security Act, or the rules thereunder, and
(b) if the Plan has been approved by the stockholders of the Corporation,
any amendment shall be similarly approved if the amendment would:
23
<PAGE>
(i) materially increase the benefits accruing to participants
under the Plan;
(ii) materially increase the number of securities which may be
issued under the Plan; or
(iii) materially modify the requirements as to eligibility for
participation in the Plan.
7/27/93
4/26/94
2/28/95
24
<PAGE>
Exhibit 10(b)
AMENDMENT TO SEVERANCE AGREEMENT
This Amendment to Severance Agreement between Norwest Corporation, a
Delaware corporation (the "Corporation"), and Richard M. Kovacevich (the
"Executive") is effective as of January 1, 1995.
RECITALS
WHEREAS the Corporation and the Executive entered into a Severance Agreement
dated March 11, 1991, which provides that any amendments or modifications
thereto must be made by a written agreement signed by the parties; and
WHEREAS effective March 16, 1992, the Executive and the Corporation amended
paragraph 5(a)(ii)(I)(B) of the Severance Agreement, which amendment
includes reference to awards under the Corporation's Executive Incentive
Compensation Plan ("EICP"); and
WHEREAS the Executive is the Chief Executive Officer of the Corporation and,
as a result of the Corporation's adoption of the Performance-Based
Compensation Policy for Covered Executive Officers (the "Policy") which
applies to the chief executive officer, is no longer a participant in the
EICP; and
WHEREAS the parties wish to further amend paragraph 5(a)(ii)(I)(B) of the
Severance Agreement to provide for the change from EICP to the Policy but
not to increase the compensation to be paid to the Executive or otherwise
materially modify the Severance Agreement.
AGREEMENT
NOW, THEREFORE, the Corporation and the Executive agree to further amend the
language of paragraph 5(a)(ii)(I)(B) of the Severance Agreement by deleting
the language that appears immediately before the proviso in that paragraph
and substituting in its place the following language:
"in lieu of any further payments to the Executive for periods
subsequent to the Date of Termination, a lump sum payment
("Severance Payment") in an amount equal to two times the sum
of (x) the Executive's annual base salary at the highest rate
in effect between the Effective Date of this Agreement and the
time the Notice of Termination was given, (y) an amount equal
to the annualized value of the perquisites provided to the
Executive as in effect at the beginning of the year during
which a Change of Control occurs and (z) an amount equal to
25
<PAGE>
the average of the incentive compensation awarded to the
Executive under the terms of the Executive Incentive
Compensation Plan or the Performance-Based Compensation Policy
for Covered Executive Officers for the two calendar years
immediately preceding the Change of Control.
IN WITNESS WHEREOF, the Executive and an Executive Vice President of the
Corporation have executed this Amendment to Severance Agreement and the
Corporation has caused its corporate seal to be hereunto affixed by its
Secretary, as of the effective date indicated above.
NORWEST CORPORATION
By: /s/ Stanley S. Stroup /s/ Richard M. Kovacevich
Executive Vice President Executive
ATTEST:
/s/ Laurel A. Holschuh
Secretary (Seal)
26
<PAGE>
Exhibit 10(c)
AMENDMENT TO AGREEMENT
This Amendment to the letter agreement (the "Agreement") between Norwest
Corporation, a Delaware corporation (the "Corporation"), and Richard M.
Kovacevich (the "Executive") is effective as of January 1, 1995.
RECITALS
WHEREAS the Corporation and the Executive entered into an Agreement
regarding severance pay dated March 18, 1991, which includes reference to
awards under the Norwest Executive Incentive Compensation Plan ("EICP"); and
WHEREAS the Executive is the Chief Executive Officer of the Corporation and,
as a result of the Corporation's adoption of the Performance-Based
Compensation Policy for Covered Executive Officers (the "Policy") which
applies to the chief executive officer, is no longer a participant in the
EICP; and
WHEREAS the parties wish to amend the Agreement to provide for the change
from EICP to the Policy but not to increase the compensation to be paid to
the Executive or otherwise materially modify the Agreement.
AGREEMENT
NOW, THEREFORE, the Corporation and the Executive agree to amend paragraph
(ii) of the Agreement in its entirety to read as follows:
"(ii) pay you an amount equal to the actual award you
received for the immediately preceding year under the
Performance-Based Compensation Policy for Covered Executive
Officers (the "Policy") prorated for actual time elapsed
during the year your employment is terminated, less amounts,
if any, you are entitled to receive with respect to awards
under the Policy pursuant to Norwest severance policies or
other agreements then in effect; and"
IN WITNESS WHEREOF, the Executive and the Corporation have executed this
Amendment to Agreement as of the effective date indicated above.
NORWEST CORPORATION
By: /s/ Stanley S. Stroup /s/ Richard M. Kovacevich
Executive Vice President Richard M. Kovacevich
27
<PAGE>
Exhibit 11.
Norwest Corporation and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
In thousands, except per common share amounts Quarter Ended
March 31,
1995 1994
PRIMARY:
Weighted average number of common shares
outstanding ..................................... 312,739 310,908
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price .................................... 1,795 2,258
314,534 313,166
Net income ........................................ $216,823 190,542
Less dividends accrued on preferred stock ........ 10,511 7,161
Net income, as adjusted .......................... $206,312 183,381
Net income per common share ...................... $ 0.66 0.59
FULLY DILUTED:
Weighted average number of common shares
outstanding ..................................... 312,739 310,908
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 ............................. 1,875 2,252
Assumed conversion of 6 3/4% convertible
subordinated debentures due 2003 ................ 31 48
Assumed conversion of Cumulative Convertible
Preferred Stock ................................. 12,621 12,627
327,266 325,835
Net income ........................................ $216,823 190,542
Less dividends accrued on preferred stock ........ 6,508 3,158
Add 6 3/4% convertible subordinated debentures
interest and amortization of debt expense,
net of income tax effect ........................ 2 3
Net income, as adjusted .......................... $210,317 187,387
Net income per common share....................... $ 0.65 0.58
28
<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 1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $ 323,984 278,670 1,180,601 879,755 645,568 491,673 284,453
Capitalized interest (7) - (69) (65) (24) - (13)
Income before income
taxes and capitalized
interest 323,977 278,670 1,180,532 879,690 645,544 491,673 284,440
Fixed charges 557,503 355,606 1,640,049 1,485,936 1,651,664 2,187,536 2,354,041
Total income for
computation $ 881,480 634,276 2,820,581 2,365,626 2,297,208 2,679,209 2,638,481
Total income for
computation excluding
interest on deposits
from fixed charges $ 614,380 429,225 1,957,224 1,513,317 1,281,619 1,196,648 1,111,762
Computation of Fixed
Charges:
Net rental
expense (a) $ 39,589 38,211 149,462 128,573 123,342 111,609 102,192
Portion of rentals
deemed
representative
of interest $ 13,196 12,737 49,821 42,858 41,114 37,203 34,064
Interest:
Interest on
deposits 267,100 205,051 863,357 852,309 1,015,589 1,482,561 1,526,719
Interest on
federal funds
and other
short-term
borrowings 112,763 45,004 290,211 238,046 277,835 352,384 522,849
Interest on
long-term debt 164,437 92,814 436,591 352,658 317,102 315,388 270,396
Capitalized
interest 7 - 69 65 24 - 13
Total interest 544,307 342,869 1,590,228 1,443,078 1,610,550 2,150,333 2,319,977
Total fixed
charges $ 557,503 355,606 1,640,049 1,485,936 1,651,664 2,187,536 2,354,041
Total fixed
charges excluding
interest on
deposits $ 290,403 150,555 776,692 633,627 636,075 704,975 827,322
Ratio of Income
to Fixed Charges:
Excluding
interest on
deposits 2.12X 2.85 2.52 2.39 2.01 1.70 1.34
Including
interest on
deposits 1.58X 1.78 1.72 1.59 1.39 1.22 1.12
(a) Includes equipment rentals.
</TABLE>
29
<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 1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $ 323,984 278,670 1,180,601 879,755 645,568 491,673 284,453
Capitalized interest (7) - (69) (65) (24) - (13)
Income before income
taxes and capitalized
interest 323,977 278,670 1,180,532 879,690 645,544 491,673 284,440
Fixed charges 557,503 355,606 1,640,049 1,485,936 1,651,664 2,187,536 2,354,041
Total income for
computation $ 881,480 634,276 2,820,581 2,365,626 2,297,208 2,679,209 2,638,481
Total income for
computation excluding
interest on deposits
from fixed charges $ 614,380 429,225 1,957,224 1,513,317 1,281,619 1,196,648 1,111,762
Computation of Fixed
Charges:
Net rental
expense (a) $ 39,589 38,211 149,462 128,573 123,342 111,609 102,192
Portion of rentals
deemed
representative
of interest $ 13,196 12,737 49,821 42,858 41,114 37,203 34,064
Interest:
Interest on
deposits 267,100 205,051 863,357 852,309 1,015,589 1,482,561 1,526,719
Interest on
federal funds
and other
short-term
borrowings 112,763 45,004 290,211 238,046 277,835 352,384 522,849
Interest on
long-term debt 164,437 92,814 436,591 352,658 317,102 315,388 270,396
Capitalized
interest 7 - 69 65 24 - 13
Total interest 544,307 342,869 1,590,228 1,443,078 1,610,550 2,150,333 2,319,977
Total fixed
charges $ 557,503 355,606 1,640,049 1,485,936 1,651,664 2,187,536 2,354,041
Total fixed
charges excluding
interest on
deposits $ 290,403 150,555 776,692 633,627 636,075 704,975 827,322
Preferred stock
dividends 10,511 7,161 27,827 31,170 32,219 20,065 3,225
Pre-tax earnings
needed to meet
preferred stock
dividend
requirements 15,706 10,474 41,044 44,728 44,367 23,997 5,294
Total combined fixed
charges and preferred
stock dividends $ 573,209 366,080 1,681,093 1,530,664 1,696,031 2,211,533 2,359,335
Total combined
fixed charges
and preferred stock
dividends excluding
interest on
deposits $ 306,109 161,029 817,736 678,355 680,442 728,972 832,616
(a) Includes equipment rentals.
</TABLE>
30
<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 1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Income to Combined
Fixed Charges and Preferred
Stock Dividends:
Excluding interest on
deposits 2.01X 2.67 2.39 2.23 1.88 1.64 1.34
Including interest on
deposits 1.54X 1.73 1.68 1.55 1.35 1.21 1.12
</TABLE>
31
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCH 31, 1995 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3093
<INT-BEARING-DEPOSITS> 28
<FED-FUNDS-SOLD> 482
<TRADING-ASSETS> 153
<INVESTMENTS-HELD-FOR-SALE> 14113
<INVESTMENTS-CARRYING> 1358
<INVESTMENTS-MARKET> 1404
<LOANS> 33877
<ALLOWANCE> 812
<TOTAL-ASSETS> 61845
<DEPOSITS> 37091
<SHORT-TERM> 7209
<LIABILITIES-OTHER> 2271
<LONG-TERM> 10887
<COMMON> 557
0
530
<OTHER-SE> 3301
<TOTAL-LIABILITIES-AND-EQUITY> 61845
<INTEREST-LOAN> 888
<INTEREST-INVEST> 281
<INTEREST-OTHER> 119
<INTEREST-TOTAL> 1288
<INTEREST-DEPOSIT> 267
<INTEREST-EXPENSE> 544
<INTEREST-INCOME-NET> 744
<LOAN-LOSSES> 55
<SECURITIES-GAINS> (35)
<EXPENSE-OTHER> 793
<INCOME-PRETAX> 324
<INCOME-PRE-EXTRAORDINARY> 324
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 217
<EPS-PRIMARY> .66
<EPS-DILUTED> .65
<YIELD-ACTUAL> 5.48
<LOANS-NON> 128
<LOANS-PAST> 76
<LOANS-TROUBLED> 2
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 790
<CHARGE-OFFS> 81
<RECOVERIES> 33
<ALLOWANCE-CLOSE> 813
<ALLOWANCE-DOMESTIC> 537
<ALLOWANCE-FOREIGN> 20
<ALLOWANCE-UNALLOCATED> 256
<PAGE>
</TABLE>
