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 16, 1997
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
<PAGE>
ITEM 5. Other Events.
RECENT OPERATING RESULTS
Norwest Corporation's ("Norwest") net income for the year ended December 31,
1996 was $1,153.9 million, or $3.07 per fully diluted common share, an
increase of 20.7 percent and 12.5 percent, respectively, over the $956.0
million or $2.73 per fully diluted common share earned in 1995. Return on
realized common equity was 21.9 percent and return on assets was 1.51 percent
in 1996, compared with 22.3 percent and 1.44 percent, respectively, in 1995.
The 1996 results above include a non-recurring charge of $19.0 million before
income taxes (3 cents per fully diluted share) for the Savings Association
Insurance Fund (SAIF) recapitalization assessment recorded in the third
quarter. Excluding the $19.0 million charge, net operating earnings were
$1,165.7 million or $3.10 per fully diluted share for the year ended December
31, 1996. On an operating basis, return on realized common equity was 22.1
percent and return on assets was 1.52 percent in 1996.
For the quarter ended December 31, 1996, net income was $308.1 million, an
increase of 18.7 percent over the $259.7 million earned in the fourth quarter
of 1995. Fully diluted earnings per common share were 81 cents, compared with
72 cents in the fourth quarter of 1995, an increase of 12.5 percent. Return
on realized common equity for the fourth quarter of 1996 was unchanged from
the prior year at 22.0 percent and return on assets was 1.55 percent, compared
with 1.42 percent for the same period a year ago.
Consolidated net interest income increased 13.2 percent to $3,701.3 million
for the year ended 1996, compared with the same period in 1995. Growth from
the prior year was principally due to a 12.7 percent growth in average earning
assets and a 5 basis point increase in net interest margin. Net interest
income in the fourth quarter of 1996 was $946.3 million, compared with $887.6
million in the fourth quarter of 1995, an increase of 6.6 percent. The
improvement from the fourth quarter of 1995 was principally due to a 6.4
percent growth in average earning assets, partially offset by the accounting
impact for the sale and securitization of $1.1 billion of automobile loans in
the last quarter of 1996.
For the year ended 1996, Norwest's provision for credit losses amounted to
$394.7 million or 102 basis points of average loans and leases, compared with
$312.4 million or 88 basis points for 1995. Net credit losses, as a percent
of average loans and leases were 99 basis points in 1996, compared with 86
basis points in 1995. Norwest provided $113.6 million for credit losses in the
fourth quarter of 1996, or 114 basis points of average loans and leases on an
annualized basis. This compares with $95.9 million or 102 basis points, in
the same period a year ago. Net credit losses totaled $113.6 million in the
fourth quarter of 1996, compared with $95.9 million in the fourth quarter of
1995. As a percent of average loans and leases, net credit losses were 114
basis points in the fourth quarter of 1996, compared with 102 basis points in
the same period a year ago. The increase in the provision for credit losses
for the fourth quarter and the full year 1996 over the same periods of 1995 is
2
<PAGE>
principally due to higher levels of charge-offs in regions which have had
acquisitions and higher consumer credit charge-offs.
Non-performing assets totaled $200.0 million at December 31, 1996, $6.0
million below the level at December 31, 1995. As a percent of loans, leases
and other real estate owned, non-performing assets were 0.51 percent at
December 31, 1996, compared with 0.57 percent at the same time last year.
Reserve coverage of non-performing assets was 520.4 percent at December 31,
1996, and the allowance for credit losses was 2.64 percent of loans and
leases.
For the year ended 1996, consolidated non-interest income was up $716.4
million to $2,564.6 million, an increase of 38.8 percent over 1995.
Contributing to the 1996 increase was growth in virtually all categories,
including trust, fees and service charges, insurance, mortgage banking
revenues and net venture capital gains. Non-interest income in 1996 also
benefited from gains on the disposition of credit card receivables held for
sale. Non-interest income was $738.1 million in the fourth quarter of 1996,
an increase of $215.8 million, or 41.3 percent, from the fourth quarter of
1995. Such increases were principally due to higher fees and service charges,
mortgage banking revenues and net venture capital gains.
For the year ended December 31, 1996, non-interest expenses increased $707.4
million from 1995 and amounted to $4,089.7 million. In addition to the non-
recurring charge of $19.0 million for the SAIF recapitalization assessment,
the increase in non-interest expenses resulted from higher operating expenses
associated with acquisitions and certain one-time acquisition charges of $59.6
million related to completed 1996 transactions, and writedowns of goodwill and
other intangibles of $91.4 million before taxes, partially offset by reduced
pension benefits expense of $53.2 million due to changes in pension
assumptions. Non-interest expenses were $1,103.0 million in the fourth
quarter of 1996, compared with $934.9 million in the last quarter of 1995, an
increase of 18.0 percent. Non-interest expenses in the fourth quarter 1996
reflect increased year-end operating expenses and $59.1 million of
miscellaneous asset writedowns and valuation reserves.
For the year ended 1996, the Banking Group's earnings were $764.6 million, an
increase of 27.0 percent over the $602.2 million earned in the year ended
1995. The increased earnings were due to increases of $295.3 million in net
interest income and $371.8 million in non-interest income, principally growth
in trust, fees and service charges, higher venture capital gains and gains on
sales of credit card receivables. Partially offsetting these increases were
additional provisions for credit losses of $3.7 million due to higher charge-
offs and higher non-interest expenses of $352.9 million. The increase in non-
interest expenses over 1995 was due to increased operating expenses of
acquisitions, writedowns of goodwill and other intangibles and the non-
recurring SAIF recapitalization assessment, partially offset by reduced
pension benefit expenses. Norwest's Banking Group reported earnings of $204.5
million in the fourth quarter of 1996, 26.1 percent above fourth quarter 1995
earnings of $162.2 million. Norwest Venture Capital had net unrealized
appreciation in its investment portfolio of $237.7 million at December 31,
1996.
Mortgage Banking earned $125.0 million in 1996, an increase of 19.2 percent
over the $104.9 million earned in 1995. Mortgage Banking earned $32.1 million
in the fourth quarter of 1996, compared with $29.4 million in the fourth
3
<PAGE>
quarter of 1995. Combined gains on sales of mortgages and servicing rights in
1996 amounted to $70.5 million, compared with $57.1 million in 1995. The
pipeline of unclosed mortgage loans was $7.7 billion at December 31, 1996,
compared with $7.5 billion at year-end 1995. Mortgage loan originations were
$51.5 billion for the year and $11.6 billion in the fourth quarter of 1996,
compared with $33.9 billion and $10.9 billion, respectively, for the same
periods in 1995. The servicing portfolio totaled $179.7 billion at December
31, 1996, and had a weighted average coupon of 7.77 percent. Capitalized
mortgage servicing rights amounted to $2.6 billion or 147 basis points of the
mortgage servicing portfolio at December 31, 1996.
Norwest Financial's earnings were $264.3 million in 1996, an increase of 6.2
percent over the $248.9 million earned in 1995. Norwest Financial reported
fourth quarter 1996 net income of $71.5 million, an increase of 5.0 percent
from 1995 fourth quarter earnings of $68.1 million. The increases in Norwest
Financial's earnings were due to increases in net interest income partially
offset by a higher provision for credit losses and one-time charges of $9.5
million after tax for write-off of the remaining original acquisition goodwill
and settlement of litigation. Net interest income increased 16.8 percent as
average finance receivables grew 14.9 percent. Norwest Financial's net
charge-offs in the fourth quarter of 1996 were $68.8 million, compared with
$48.5 million in the fourth quarter of 1995. As a percent of average loans,
net charge-offs were 3.24 percent and 3.71 percent for the year and fourth
quarter of 1996 respectively, compared with 2.52 percent and 2.77 percent for
the same periods a year ago.
At December 31, 1996, consolidated total assets were $80.2 billion, compared
with $72.1 billion at December 31, 1995. Consolidated loans and leases, net
of unearned discount, increased 8.9 percent from December 31, 1995, and
totaled $39.4 billion at December 31, 1996. Adjusting for the securitization
of $1.1 billion of automobile loans and other loan sales in 1996, loans and
leases increased 12.8 percent from 1995. Consolidated total deposits were
$50.1 billion at December 31, 1996, compared with $42.0 billion at December
31, 1995. Consolidated long-term debt at December 31, 1996 was $13.1 billion,
compared with $13.7 billion at year-end 1995. Consolidated stockholders'
equity was $6.1 billion at December 31, 1996, compared with $5.3 billion at
December 31, 1995. Tier 1 and total capital ratios were 8.63 percent and
10.42 percent, respectively, at December 31, 1996, compared with 8.11 percent
and 10.18 percent, respectively, at December 31, 1995. The leverage ratio was
6.15 percent at December 31, 1996 and 5.65 percent at December 31, 1995.
Dividends declared per common share were $1.05 for the year and 27 cents for
the quarter ended December 31, 1996, compared with 90 cents and 24 cents,
respectively, for the same periods of 1995. The dividend payout ratio for
1996 was 34.2 percent, compared with 32.6 percent for 1995.
4
<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 hereunto duly authorized.
Norwest Corporation
(Registrant)
Dated: January 23, 1997 By: /s/ Michael A. Graf
Michael A. Graf
Senior Vice President and Controller
(Principal Accounting Officer)
