SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 27, 1995
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-2979 41-0449260
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-667-1234
ITEM 5. Other Events.
RECENT OPERATING RESULTS
Norwest Corporation's ("Norwest") net income was $204.9 million for the
quarter ended December 31, 1994, an increase of 84.4% over the $111.1 million
earned in the fourth quarter of 1993. Net income per common share was 63
cents, compared with 34 cents in the fourth quarter of 1993, an increase of
85.3%. Return on realized common equity was 21.5% and return on assets was
1.43% for the fourth quarter of 1994, compared with 12.3% and 0.81%,
respectively, in the fourth quarter of 1993.
For the year ended December 31, 1994, net income was $800.4 million, or $2.45
per common share, an increase of 30.6% and 29.6%, respectively, over the
$613.1 million or $1.89 per common share earned for the year ended 1993.
Return on realized common equity was 21.4% and return on assets was 1.45% in
1994, compared with 18.2% and 1.20%, respectively, in 1993.
The 1993 results have been restated to include First United Bank Group, Inc.
("First United"), acquired on January 14, 1994, in a pooling of interests
transaction. The fourth quarter of 1993 results include pre-tax charges taken
by First United of $16.5 million to conform its credit and accounting
practices to those of Norwest and $83.2 million of accruals and reserves for
merger-related expenses.
Tax-equivalent net interest income in the fourth quarter of 1994 was $741.9
million, compared with $662.1 million in the fourth quarter of 1993, an
increase of 12.1%. The improvement from the fourth quarter of 1993 is
primarily due to a 4.3% growth in average earning assets and a 35 basis point
increase in net interest margin. Tax-equivalent net interest income increased
11.7% in 1994 to $2,832.6 million, compared with $2,536.7 million for 1993.
The increase is attributable to an 8.2% increase in average earning assets and
a 16 basis point increase in net interest margin.
Norwest provided $63.3 million for credit losses in the fourth quarter of
1994, or 0.79% of average loans and leases. This compares with $57.4 million
or 0.81% in the same period a year ago. Net credit losses totaled $72.6
million in the fourth quarter of 1994, compared with $63.8 million in the
fourth quarter of 1993. As a percent of average loans and leases, net credit
losses were 0.91% in the fourth quarter of 1994, compared with 0.90% in the
same period a year ago.
For the year ended December 31, 1994, Norwest's provision amounted to $164.9
million, compared with $158.2 million for the same period of 1993. Net credit
losses were $193.2 million and $178.3 million for the year ended December 31,
1994 and 1993, respectively. Net credit losses, as a percent of average loans
and leases, were 0.64% for the year ended December 31, 1994, compared with
0.67% for 1993.
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Non-performing assets, including non-accrual and restructured loans and leases
and other real estate owned, totaled $159.9 million, or 0.49% of loans, leases
and other real estate owned, at December 31, 1994, compared with $269.0
million and 0.93%, respectively, at December 31, 1993. The decrease from
December 31, 1993 was primarily due to reductions of $67.2 million in non-
accrual loans and $33.4 million in other real estate owned. The allowance for
credit losses was $789.9 million at December 31, 1994, and represented 606.34%
of non-performing assets and 2.42% of loans and leases.
Consolidated non-interest income increased 3.4% in 1994 to $1,638.3 million,
compared with $1,585.0 million in 1993. This increase was primarily due to
increased mortgage banking revenues, insurance fees, deposit service charges,
and trust fees partially offset by net investment securities losses taken in
1994. Net investment securities losses of $20.3 million and $79.2 million
were recorded for the quarter and year ended December 31, 1994, respectively,
providing an opportunity to reinvest at higher yields.
Consolidated non-interest expenses increased 1.5% in 1994 to $3,096.4 million
reflecting higher salaries and benefits costs, occupancy charges and equipment
rentals, primarily due to acquisitions, and an increased number of stores at
Norwest Financial. Offsetting these increases were lower contributions made
to the Norwest Foundation in 1994 compared with 1993, as well as First
United's non-recurring fourth quarter 1993 charges.
Norwest's Banking Group reported earnings of $114.6 million in the fourth
quarter of 1994, 156.0% above fourth quarter 1993 earnings of $44.7 million.
For the year 1994, the Banking Group had net income of $507.1 million, 42.1%
above 1993 earnings of $356.7 million. Included in the fourth quarter of 1993
Banking Group results are First United's special provision for credit losses
and merger and transition related expenses totaling $99.7 million before
income taxes. The Banking Group earnings increase over 1993 reflects a 17.1%
growth in net interest income and a 10.3% decrease in the provision for credit
losses, partially offset by a 9.7% decrease in non-interest income. Norwest
Venture Capital realized gains for the quarter and year ended December 31,
1994 of $25.7 million and $77.1 million, respectively. At December 31, 1994,
Venture Capital had a net unrealized appreciation in its investment portfolio
of $61.3 million.
Mortgage banking operations earned $29.9 million in the current quarter, an
increase of 194.5% from the $10.2 million earned in the fourth quarter of
1993. For the year ended December 31, 1994, mortgage banking operations had
net income of $70.8 million, an increase of 25.9% from the year ended December
31, 1993. Mortgage originations were $5.0 billion in the fourth quarter, a
decrease of 52.1% from the same period last year. For the year ended December
31, 1994, mortgage originations were $24.9 billion, down 26.1% from 1993.
Servicing increased $1.0 billion in the fourth quarter of 1994 and $25.8
billion from year end 1993. Sales of servicing amounted to $11.7 billion and
$5.2 billion, respectively, for the year and quarter ended December 31, 1994.
The servicing portfolio now totals $71.5 billion and had a weighted average
mortgage interest rate of 7.53% at December 31, 1994.
Norwest Financial reported fourth quarter 1994 net income of $60.4 million, an
increase of 7.5% over the fourth quarter of 1993. Norwest Financial's record
net income of $222.5 million in 1994 was up 11.2% from 1993. Norwest
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Financial's net interest income increased 12.5% as average finance receivables
grew 14.4%. Net interest margin narrowed 29 basis points, reflecting higher
funding costs.
At December 31, 1994, consolidated total assets were $59.3 billion, compared
with $54.7 billion at December 31, 1993. Consolidated loans and leases, net
of unearned discount, increased 13.3% from year end 1993, and totaled $32.6
billion at December 31, 1994. The increase was mainly due to consumer lending
including credit cards. Total investment securities were $14.8 billion at
December 31, 1994, compared with $12.7 billion at December 31, 1993, an
increase of 16.7%. Total deposits were $36.4 billion at December 31, 1994,
compared with $36.0 at December 31, 1993, an increase of 1.2%. Consolidated
stockholders' equity was $3.85 billion at December 31, 1994, compared with
$3.76 billion at December 31, 1993. Tier 1 and total capital ratios were
9.89% and 12.23%, respectively, at December 31, 1994, compared with 9.71% and
12.39%, respectively, at December 31, 1993. The leverage ratio was 6.94% at
December 31, 1994 and 6.46% at year end 1993.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Norwest Corporation
(Registrant)
Dated: January 27, 1995 By: /s/ Michael A. Graf
Michael A. Graf
Senior Vice President and Controller
(Principal Accounting Officer)
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