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, 1997
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, 1997 374,939,826 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, 1997 and December 31, 1996......................... 3
2. Consolidated Statements of Income -
Quarters Ended March 31, 1997 and 1996....................... 4
3. Consolidated Statements of Cash Flows -
Quarters Ended March 31, 1997 and 1996....................... 5
4. Consolidated Statements of Stockholders' Equity -
Quarters Ended March 31, 1997 and 1996....................... 6
5. Notes to Unaudited Consolidated Financial Statements........... 8
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)
In millions, except shares March 31, December 31,
1997 1996
ASSETS
Cash and due from banks ...................... $ 4,157.1 4,856.6
Interest-bearing deposits with banks ......... 30.6 1,237.9
Federal funds sold and resale agreements ..... 1,201.2 1,276.8
Total cash and cash equivalents .......... 5,388.9 7,371.3
Trading account securities ................... 326.6 186.5
Investment and mortgage-backed securities
available for sale ......................... 21,498.4 16,247.1
Investment securities (fair value
$768.5 in 1997 and $745.2 in 1996) ......... 735.5 712.2
Total investment securities .............. 22,233.9 16,959.3
Loans held for sale .......................... 2,795.1 2,827.6
Mortgages held for sale ...................... 5,160.8 6,339.0
Loans and leases, net of unearned discount ... 40,369.4 39,381.0
Allowance for credit losses .................. (1,062.6) (1,040.8)
Net loans and leases ..................... 39,306.8 38,340.2
Premises and equipment, net .................. 1,237.8 1,200.9
Mortgage servicing rights, net ............... 2,720.9 2,648.5
Interest receivable and other assets ......... 4,409.5 4,302.1
Total assets ............................. $83,580.3 80,175.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing ........................ $14,332.3 14,296.3
Interest-bearing ........................... 37,693.2 35,833.9
Total deposits ........................... 52,025.5 50,130.2
Short-term borrowings ........................ 8,704.8 7,572.6
Accrued expenses and other liabilities ....... 4,691.4 3,326.2
Long-term debt ............................... 11,971.4 13,082.2
Total liabilities ........................ 77,393.1 74,111.2
Preferred stock .............................. 289.9 249.8
Unearned ESOP shares ......................... (102.7) (61.0)
Total preferred stock .................... 187.2 188.8
Common stock, $1 2/3 par value - authorized
500,000,000 shares:
Issued 381,109,956 and 375,533,625 shares
in 1997 and 1996, respectively ............ 635.2 625.9
Surplus ...................................... 976.6 948.6
Retained earnings ............................ 4,475.3 4,248.2
Net unrealized gains on securities
available for sale ......................... 104.7 303.5
Notes receivable from ESOP ................... (10.2) (11.1)
Treasury stock - 5,063,590 and 6,830,919
common shares in 1997 and 1996, respectively (174.0) (233.3)
Foreign currency translation ................. (7.6) (6.4)
Total common stockholders' equity ........ 6,000.0 5,875.4
Total stockholders' equity ............... 6,187.2 6,064.2
Total liabilities and
stockholders' equity ................... $83,580.3 80,175.4
See notes to unaudited consolidated financial statements.
3
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In millions, except per common share amounts Quarter Ended
March 31,
1997 1996
INTEREST INCOME ON
Loans and leases ................................ $1,095.4 1,039.8
Investment and mortgage-backed securities
available for sale ............................. 325.5 265.9
Investment securities ........................... 7.0 8.9
Loans held for sale ............................. 56.2 87.2
Mortgages held for sale ......................... 97.7 108.4
Money market investments ........................ 21.1 7.8
Trading account securities ...................... 4.5 6.0
Total interest income ....................... 1,607.4 1,524.0
INTEREST EXPENSE ON
Deposits ........................................ 356.1 310.0
Short-term borrowings ........................... 99.1 110.8
Long-term debt .................................. 193.9 212.4
Total interest expense ...................... 649.1 633.2
Net interest income ....................... 958.3 890.8
Provision for credit losses ..................... 109.0 87.8
Net interest income after
provision for credit losses ............. 849.3 803.0
NON-INTEREST INCOME
Trust ........................................... 84.7 70.8
Service charges on deposit accounts ............. 89.1 75.2
Mortgage banking ................................ 227.8 171.3
Data processing ................................. 18.1 16.5
Credit card ..................................... 27.9 31.5
Insurance ....................................... 90.2 69.7
Other fees and service charges .................. 86.4 69.6
Net investment and mortgage-backed securities
available for sale gains (losses) .............. (4.4) 1.7
Net venture capital gains ....................... 19.2 66.5
Trading ......................................... 24.9 (15.3)
Other ........................................... 26.7 (4.7)
Total non-interest income ................... 690.6 552.8
NON-INTEREST EXPENSES
Salaries and benefits ........................... 546.6 509.1
Net occupancy ................................... 80.0 68.3
Equipment rentals, depreciation and maintenance . 82.2 72.7
Business development ............................ 58.4 53.2
Communication ................................... 71.5 66.5
Data processing ................................. 45.1 33.4
Intangible asset amortization ................... 40.4 38.2
Other ........................................... 123.3 101.8
Total non-interest expenses ................. 1,047.5 943.2
INCOME BEFORE INCOME TAXES ...................... 492.4 412.6
Income tax expense .............................. 170.5 141.2
NET INCOME ...................................... $ 321.9 271.4
Average common and common equivalent shares .... 377.9 360.8
PER COMMON SHARE
Net Income
Primary ...................................... $ 0.84 0.74
Fully diluted ................................ 0.84 0.74
Dividends ..................................... 0.30 0.24
See notes to unaudited consolidated financial statements.
4
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
In millions March 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ............................................................$ 321.9 271.4
Adjustments to reconcile net income to net cash flows from operating
activities:
Provision for credit losses ....................................... 109.0 87.8
Depreciation and amortization ..................................... 178.4 137.2
Gains on sales of loans, securities and other assets, net ......... (70.9) (55.0)
Release of preferred shares to ESOP ............................... 11.6 13.4
Purchases of trading account securities ........................... (2,539.8) (19,367.1)
Proceeds from sales of trading account securities ................. 2,428.2 19,013.5
Originations of mortgages held for sale ........................... (11,024.1) (12,272.7)
Proceeds from sales of mortgages held for sale .................... 12,230.8 13,065.7
Originations of loans held for sale ............................... (302.6) (249.2)
Proceeds from sales of loans held for sale ........................ 341.2 147.6
Interest receivable ............................................... (38.4) 1.7
Interest payable .................................................. 8.8 3.5
Other assets, net ................................................. (113.7) (242.1)
Other accrued expenses and liabilities, net ....................... 1,241.0 139.5
Net cash flows from operating activities ........................ 2,781.4 695.2
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and paydowns of investment securities ...... 0.5 8.0
Proceeds from maturities and paydowns of investment and mortgage-
backed securities available for sale .............................. 581.2 739.5
Proceeds from sales and calls of investment securities .............. 5.2 64.8
Proceeds from sales and calls of investment and mortgage-backed
securities available for sale ..................................... 1,302.3 946.3
Purchases of investment securities .................................. (23.8) (160.6)
Purchases of investment and mortgage-backed securities available
for sale .......................................................... (6,564.7) (1,757.1)
Net change in banking subsidiaries' loans and leases ................ (153.6) 153.4
Non-bank subsidiaries' loans and leases originated .................. (1,937.4) (1,459.5)
Principal collected on non-bank subsidiaries' loans and leases ...... 2,067.5 1,343.9
Purchases of premises and equipment ................................. (69.2) (50.1)
Proceeds from sales of premises, equipment & other real estate owned 19.0 23.0
Cash paid for acquisitions, net of cash and cash equivalents acquired 25.6 55.5
Net cash flows used for investing activities ...................... (4,747.4) (92.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits, net ....................................................... 229.0 (577.4)
Short-term borrowings, net .......................................... 1,015.4 (661.4)
Long-term debt borrowings ........................................... 814.1 2,070.5
Repayments of long-term debt ........................................ (1,929.5) (1,414.1)
Issuances of common stock ........................................... 18.7 24.8
Repurchases of common stock ......................................... (48.5) (50.8)
Repurchases of preferred stock ...................................... - (112.7)
Net decrease in notes receivable from ESOP .......................... 0.9 0.1
Dividends paid ...................................................... (116.5) (90.9)
Net cash flows used for financing activities ...................... (16.4) (811.9)
Net decrease in cash and cash equivalents ......................... (1,982.4) (209.6)
CASH AND CASH EQUIVALENTS
Beginning of period ................................................. 7,371.3 4,946.5
End of period .......................................................$ 5,388.9 4,736.9
See notes to unaudited consolidated financial statements.
</TABLE>
5
<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, 1995....... $ 341.2 (38.9) 597.2 734.2 3,496.3 327.1 (13.3) (125.9) (5.8) 5,312.1
Net income............... - - - - 271.4 - - - - 271.4
Dividends on
Common stock........... - - - - (86.4) - - - - (86.4)
Preferred stock........ - - - - (4.5) - - - - (4.5)
Conversion of 13,406
preferred shares to
363,671 common shares.. (13.4) - - 2.5 - - - 10.9 - -
Repurchase of 1,127,125
preferred shares....... (112.7) - - - - - - - - (112.7)
Cash payments received
on notes receivable
from ESOP.............. - - - - - - 0.1 - - 0.1
Issuance of 59,000
preferred shares
to ESOP................ 59.0 (61.3) - 2.3 - - - - - -
Release of preferred
shares to ESOP......... - 13.9 - (0.5) - - - - - 13.4
Issuance of 1,053,160
common shares.......... - - - 5.3 (5.3) - - 29.0 - 29.0
Issuance of 6,325,906
common shares for
acquisitions........... - - 10.1 64.3 22.6 (0.2) (1.5) 8.2 - 103.5
Repurchase of 1,415,908
common shares.......... - - - - - - - (50.8) - (50.8)
Change in net unrealized
gains (losses) on
securities available
for sale............... - - - - - (29.1) - - - (29.1)
Foreign currency
translation............ - - - - - - - - 0.5 0.5
Balance,
March 31, 1996.......... $ 274.1 (86.3) 607.3 808.1 3,694.1 297.8 (14.7) (128.6) (5.3) 5,446.5
</TABLE>
(Continued on page 7)
6
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Continued from page 6)
<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, 1996...... $ 249.8 (61.0) 625.9 948.6 4,248.2 303.5 (11.1) (233.3) (6.4) 6,064.2
Net income.............. - - - - 321.9 - - - - 321.9
Dividends on
Common stock.......... - - - - (112.1) - - - - (112.1)
Preferred stock....... - - - - (4.4) - - - - (4.4)
Conversion of 11,567
preferred shares to
248,316 common shares. (11.6) - - 1.3 - - - 10.3 - -
Cash payments received
on notes receivable
from ESOP............. - - - - - - 0.9 - - 0.9
Issuance of 51,700
preferred shares to
ESOP.................. 51.7 (53.8) - 2.1 - - - - - -
Release of preferred
shares to ESOP........ - 12.1 - (0.5) - - - - - 11.6
Issuance of 1,047,881
common shares......... - - - 13.4 (22.3) - - 38.3 - 29.4
Issuance of 7,029,100
common shares for
acquisitions.......... - - 9.3 11.7 44.0 1.0 - 59.2 - 125.2
Repurchase of 981,637
common shares......... - - - - - - - (48.5) - (48.5)
Change in net unrealized
gains (losses) on
securities available
for sale.............. - - - - - (199.8) - - - (199.8)
Foreign currency
translation........... - - - - - - - - (1.2) (1.2)
Balance,
March 31, 1997........ $ 289.9 (102.7) 635.2 976.6 4,475.3 104.7 (10.2) (174.0) (7.6) 6,187.2
See notes to unaudited consolidated financial statements.
</TABLE>
7
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Changes in Accounting Policies
Effective January 1, 1997, the corporation adopted Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (FAS
125). FAS 125 sets forth the criteria for determining whether a
transfer of financial assets should be accounted for as a sale or as a
pledge of collateral in a secured borrowing. FAS 125 requires that
after a transfer of financial assets, a company must recognize the
financial and servicing assets controlled and liabilities incurred,
and derecognize financial assets and liabilities in which control is
surrendered or debt is extinguished. The adoption of FAS 125 has not
had a material effect on the corporation's consolidated financial
statements.
2. Consolidated Statements of Cash Flows
Supplemental disclosures of cash flow information for the quarters
ended March 31, include:
In millions 1997 1996
Interest...................................... $ 640.3 629.7
Income taxes.................................. 14.1 12.3
Transfer of loans to other real estate owned.. 16.0 13.2
See Notes 7 and 12 for certain non-cash common and preferred stock
transactions.
8
<PAGE>
3. Investment Securities
The amortized cost and fair value of investment securities at
March 31, 1997 were:
<TABLE>
<CAPTION>
In millions Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury and federal agencies .. $ 3,972.0 13.3 (35.2) 3,950.1
State, municipal and housing -
tax exempt ......................... 1,167.0 45.7 (3.8) 1,208.9
Other ............................... 850.2 285.8 (11.9) 1,124.1
Total investment securities
available for sale .............. 5,989.2 344.8 (50.9) 6,283.1
Mortgage-backed securities:
Federal agencies ................... 15,183.0 120.5 (255.2) 15,048.3
Collateralized mortgage
obligations ....................... 162.9 5.4 (1.3) 167.0
Total mortgage-backed securities
available for sale .............. 15,345.9 125.9 (256.5) 15,215.3
Total investment and
mortgage-backed securities
available for sale .................. 21,335.1 470.7 (307.4) 21,498.4
Other securities held for investment . 735.5 35.8 (2.8) 768.5
Total investment securities ........ $22,070.6 506.5 (310.2) 22,266.9
</TABLE>
Interest income on investment securities for the quarters ended March 31
were:
Quarter
In millions 1997 1996
Available for sale:
U.S. Treasury and federal agencies .. $ 32.1 17.3
State, municipal and housing -
tax exempt ........................ 14.6 12.6
Other ............................... 14.5 10.9
Total investment securities
available for sale .............. 61.2 40.8
Mortgage-backed securities:
Federal agencies ................... 259.9 221.4
Collateralized mortgage
obligations ....................... 4.4 3.7
Total mortgage-backed securities
available for sale .............. 264.3 225.1
Total investment and mortgage-backed
securities available for sale ...... 325.5 265.9
Other securities held for investment . 7.0 8.9
Total investment securities ........ $ 332.5 274.8
Certain investment securities with a total amortized cost of $5.2
million and $0.8 million for the quarters ended March 31, 1997 and
1996, respectively, were sold by the corporation due to significant
deterioration in the creditworthiness of the related issuers or because
such securities were called by the issuers prior to maturity. The
sales and calls of investment securities resulted in no gain or loss
during the first quarters of 1997 and 1996.
9
<PAGE>
4. Loans and Leases
The carrying values of loans and leases at March 31, 1997 and
December 31, 1996 were:
In millions March 31, December 31,
1997 1996
Commercial, financial and industrial ..... $10,578.9 10,204.9
Agricultural ............................. 1,066.0 1,107.7
Real estate
Secured by 1-4 family residential
properties ........................... 10,667.4 10,376.3
Secured by development properties ...... 2,249.0 2,104.5
Secured by construction and land
development .......................... 980.4 943.8
Secured by owner-occupied properties ... 2,774.2 2,644.6
Consumer ................................. 10,510.9 10,431.2
Credit card .............................. 1,497.1 1,566.2
Lease financing .......................... 815.2 812.4
Foreign
Consumer ............................... 805.6 774.9
Commercial ............................. 235.1 187.7
Total loans and leases ............... 42,179.8 41,154.2
Unearned discount ........................ (1,810.4) (1,773.2)
Total loans and leases, net of
unearned discount .................... $40,369.4 39,381.0
Changes in the allowance for credit losses for the quarters ended March 31,
were:
Quarter
In millions 1997 1996
Balance at beginning of period ....... $1,040.8 917.2
Allowance related to assets
acquired, net ..................... 24.8 40.2
Provision for credit losses ........ 109.0 87.8
Credit losses ...................... (146.7) (116.0)
Recoveries ......................... 34.7 30.5
Net credit losses ................ (112.0) (85.5)
Balance at end of period ............. $1,062.6 959.7
10
<PAGE>
5. Non-performing Assets and 90-day Past Due Loans and Leases
Total non-performing assets and 90-day past due loans and leases at March 31,
1997 and 1996 and December 31, 1996 were:
In millions March 31, December 31,
1997 1996 1996
Impaired loans
Non-accrual ........................... $ 108.7 107.3 94.0
Restructured .......................... 0.2 1.8 0.2
Total impaired loans ................ 108.9 109.1 94.2
Other non-accrual loans and leases ...... 64.7 68.9 62.5
Total non-accrual and
restructured loans and leases ........ 173.6 178.0 156.7
Other real estate owned ................. 50.0 37.8 43.3
Total non-performing assets ........... 223.6 215.8 200.0
Loans and leases past due 90 days or more* 94.3 113.8 110.7
Total non-performing assets and
90-day past due loans and leases ..... $ 317.9 329.6 310.7
* Excludes non-accrual and restructured loans and leases.
The average balances of impaired loans for the quarters ended March 31, 1997
and 1996 were $104.6 million and $105.3 million, respectively. The allowance
for credit losses related to impaired loans at March 31, 1997 and December 31,
1996 was $36.6 million and $31.4 million, respectively. Impaired loans of
$1.0 million and $0.9 million were not subject to a related allowance for
credit losses at March 31, 1997 and December 31, 1996, respectively, because
of the net realizable value of loan collateral, guarantees and other factors.
The effect of non-accrual and restructured loans on interest income for the
quarters ended March 31, were:
Quarter
In millions 1997 1996
Interest
As originally contracted ........... $ 5.2 4.6
As recognized ...................... (0.5) (0.5)
Reduction of interest income ..... $ 4.7 4.1
6. Long-term Debt
During the first three months of 1997, certain subsidiaries of the
corporation received advances from the Federal Home Loan Bank.
Advances of $775 million were issued bearing interest at rates
ranging from one-month LIBOR less 17 basis points to three-month
LIBOR less 7 basis points, and which mature between June 1997 and
September 2000. Norwest Financial, Inc. issued a $36.5 million
senior note bearing interest at a fixed rate of 4.9 percent, which
matures in March 2000.
11
<PAGE>
7. Stockholders' Equity
The table below is a summary of the corporation's preferred and
preference stock at March 31, 1997 and December 31, 1996. A detailed
description of the corporation's preferred and preference stock is
provided in Note 10 to the audited consolidated financial statements
included in the corporation's 1996 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,
1997 1996 1997 1997 1996
<S> <C> <C> <C> <C> <C>
Cumulative
Tracking, $200
stated value .............. 980,000 980,000 9.30% $196.0 196.0
1997 ESOP Cumulative
Convertible, $1,000 stated
value ..................... 41,434 - 9.50% 41.4 -
1996 ESOP Cumulative
Convertible, $1,000 stated
value ..................... 24,066 24,469 8.50% 24.1 24.5
1995 ESOP Cumulative
Convertible, $1,000
stated value .............. 22,203 22,716 10.00% 22.2 22.7
ESOP Cumulative Convertible,
$1,000 stated value ....... 11,209 11,594 9.00% 11.2 11.6
Less: Cumulative
Tracking shares held by
a subsidiary .............. (25,000) (25,000) (5.0) (5.0)
1,053,912 1,013,779 289.9 249.8
Unearned ESOP shares ........ (102.7) (61.0)
Total preferred stock ... $ 187.2 188.8
</TABLE>
On February 24, 1997, the corporation issued 51,700 shares of 1997
ESOP Cumulative Convertible Preferred Stock, $1,000 stated value per
share ("1997 ESOP Preferred Stock"), in the stated amount of $51.7
million at a premium of $2.1 million; a corresponding charge of $53.8
million was recorded to unearned ESOP shares.
On February 26, 1996, the corporation issued 59,000 shares of 1996
ESOP Cumulative Convertible Preferred Stock, $1,000 stated value per
share ("1996 ESOP Preferred Stock"), in the stated amount of $59.0
million at a premium of $2.3 million; a corresponding charge of $61.3
million was recorded to unearned ESOP shares.
During the quarters ending March 31, 1997 and 1996, 11,567 and 13,406
shares of ESOP preferred stock were converted into 248,316 and
363,671 shares of common stock of the corporation, respectively.
12
<PAGE>
8. Business Segments
The corporation's operations include three primary business segments:
banking, mortgage banking and consumer finance. See Note 16 to the
audited consolidated financial statements included in the
corporation's annual report on Form 10-K for the year ended December
31, 1996 for a detailed description of each business segment.
Selected financial information by business segment for the quarters
ended March 31 is included in the following summary:
In millions
Quarter
1997 1996
Revenues:*
Banking ................ $ 1,491.7 1,344.1
Mortgage Banking ....... 350.5 301.3
Norwest Financial ...... 455.8 431.4
Total ................ $ 2,298.0 2,076.8
Organizational earnings:*
Banking ................ $ 226.5 181.2
Mortgage Banking ....... 33.8 30.4
Norwest Financial ...... 61.6 59.8
Total ................ $ 321.9 271.4
Total assets:
Banking ................ $63,606.6 56,081.1
Mortgage Banking ....... 11,103.0 9,496.2
Norwest Financial ...... 8,870.7 8,364.8
Total ................ $83,580.3 73,942.1
* Revenues (interest income plus non-interest income), 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.
9. Mortgage Banking Activities
Additional information about mortgage banking non-interest income for
the quarters ended March 31, is presented below:
Quarter
In millions 1997 1996
Origination and other
closing fees ............ $ 58.6 72.3
Servicing fees ............ 101.1 58.4
Net gains on sales of
servicing rights ........ 0.2 15.1
Net gains (losses) on
sales of mortgages ...... 31.5 (5.7)
Other ..................... 36.4 31.2
Total mortgage banking
non-interest income ... $227.8 171.3
13
<PAGE>
Mortgage loans serviced for others are not included in the
accompanying consolidated balance sheets. The outstanding balances
of serviced loans were $184.6 billion and $112.1 billion at March 31,
1997 and 1996, respectively, and $179.7 billion at December 31, 1996.
Changes in capitalized mortgage servicing rights for the quarters
ended March 31, were:
Quarter
In millions 1997 1996
Mortgage servicing rights:
Balance at beginning
of period ............ $2,712.7 1,290.9
Originations ........... 77.8 84.2
Purchases and other
additions ............ 31.7 165.3
Sales .................. (17.4) (16.9)
Amortization ........... (85.6) (47.0)
Other .................. 65.9 25.8
2,785.1 1,502.3
Less valuation allowance (64.2) (64.2)
Balance at end of period . $2,720.9 1,438.1
The fair value of capitalized mortgage servicing rights at March 31,
1997 was approximately $3.2 billion, calculated using discount rates
ranging from 500 to 700 basis points over the ten-year U.S. Treasury
rate.
There were no changes in the valuation allowance for capitalized
mortgage servicing rights during the quarters ended March 31, 1997
and 1996.
10. Trading Revenues
For the quarters ended March 31, trading revenues were derived from
the following activities:
Quarter
In millions 1997 1996
Interest income:
Securities .............................. $ 4.5 6.0
Non-interest income:
Gains(losses) on securities sold ........ 15.3 (26.3)
Swaps and other interest rate contracts . 0.3 8.5
Foreign exchange trading ................ 3.7 2.1
Options ................................. 2.1 (1.6)
Futures ................................. 3.5 2.0
Total non-interest income ............. 24.9 (15.3)
Total trading revenues .................... $ 29.4 (9.3)
14
<PAGE>
11. Derivative Activities
The corporation and its subsidiaries, as end-users, utilize various
types of derivative products (principally interest rate swaps and
interest rate caps and floors) as part of an overall interest rate
risk management strategy. See Note 15 to the audited consolidated
financial statements included in the corporation's annual report on
Form 10-K for the year ended December 31, 1996 for a detailed
description of derivative products utilized in end-user activities.
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. The rate of return on the amortizing swaps is the
underlying coupon yield, paydown adjustment and price characteristics
of an amortizing pool of mortgages or mortgage-backed securities.
Basis swaps are contracts where the corporation receives an amount
and pays an amount based on different floating indices. Currently,
interest rate floors, futures contracts and options on futures
contracts are principally being used by the corporation in hedging
its portfolio of mortgage servicing rights. The floors provide for
the receipt of payments when interest rates are below predetermined
interest rate levels. The unrealized gains (losses) on interest rate
floors and futures contracts are included, as appropriate, in
determining the fair value of the capitalized mortgage servicing
rights.
For the three months ended March 31, 1997, end-user derivative
activities decreased interest income by $0.1 million and interest
expense by $14.5 million, for a total benefit to net interest income
of $14.4 million. For the same period in 1996, net interest income
was increased by $15.1 million by a corresponding reduction in
interest expense.
Activity in the notional amounts of end-user derivatives for the quarter
ended March 31, 1997 is summarized as follows:
<TABLE>
<CAPTION>
In millions December 31, Amortization March 31,
1996 Additions & Maturities Terminations 1997
Swaps:
<S> <C> <C> <C> <C> <C>
Generic receive fixed ..... $ 4,602 703 (400) (36) 4,869
Amortizing receive fixed .. 83 2,364 (1) - 2,446
Generic pay fixed ......... 354 15 - (150) 219
Basis ..................... 29 - - - 29
Total swaps ............. 5,068 3,082 (401) (186) 7,563
Interest rate caps
and floors ................ 15,977 3,500 - (1,500) 17,977
Futures contracts ........... 3,617 7,117 - (7,436) 3,298
Options on futures contracts 5,559 10,539 (2,964) (5,094) 8,040
Security options ............ 825 1,425 (1,350) (900) -
Total ....................... $ 31,046 25,663 (4,715) (15,116) 36,878
</TABLE>
Deferred losses on closed end-user derivatives included in mortgage
servicing rights at March 31, 1997 totalled $69.8 million. Deferred
gains and losses on other closed end-user derivatives were not
material at
March 31, 1997 and December 31, 1996.
15
<PAGE>
A key assumption in the information which follows is that rates
remain constant at March 31, 1997 levels. To the extent that rates
change, both the average notional and variable interest rate
information may change.
The following table presents the maturities and weighted average
rates for
end-user derivatives by type:
Dollars in millions
<TABLE>
<CAPTION>
Maturity
There-
March 31, 1997 1997 1998 1999 2000 2001 after Total
<S> <C> <C> <C> <C> <C> <C> <C>
Swaps:
Generic receive fixed-
Notional value ........$ 550 653 766 400 500 2,000 4,869
Weighted avg.
receive rate ........ 6.58% 6.34 7.28 6.17 6.35 6.60 6.61
Weighted avg. pay rate 5.61% 5.56 5.52 5.58 5.58 5.68 5.61
Amortizing receive fixed-
Notional value ........$ - 62 1,270 1,114 - - 2,446
Weighted avg.
receive rate ........ -% 2.89 7.21 6.83 - - 6.93
Weighted avg. pay rate -% 5.63 5.37 5.41 - - 5.40
Generic pay fixed-
Notional value ........$ 4 - - - 4 211 219
Weighted avg.
receive rate ........ 5.56% - - - 5.44 5.60 5.59
Weighted avg. pay rate 6.37% - - - 6.29 5.86 5.88
Basis-
Notional value ........$ - 29 - - - - 29
Weighted avg.
receive rate ........ -% 4.45 - - - - 4.45
Weighted avg. pay rate -% 4.00 - - - - 4.00
Interest rate caps and
floors (1):
Notional value ........$ - 577 1,400 5,750 5,750 4,500 17,977
Futures contracts (1):
Notional value ........$ 3,298 - - - - - 3,298
Options on futures
contracts (1):
Notional value ........$ 8,040 - - - - - 8,040
Total notional value ....$11,892 1,321 3,436 7,264 6,254 6,711 36,878
Total weighted avg.
rates on swaps:
Receive rate ........ 6.58% 5.98 7.24 6.66 6.34 6.50 6.67
Pay rate ............ 5.62% 5.50 5.43 5.45 5.58 5.69 5.54
</TABLE>
(1) Average rates are not meaningful for interest rate caps and floors, futures
contracts or options.
Note: Weighted average variable rates are based on the actual rates as of
March 31, 1997.
16
<PAGE>
The following table provides the gross gains and gross losses not yet
recognized in
the consolidated financial statements for open end-user derivatives
applicable to
certain hedged assets and liabilities:
<TABLE>
<CAPTION>
In millions Balance Sheet Category
Loans Mortgage Interest- Long-
Investment and Servicing bearing term
March 31, 1997 Securities Leases Rights Deposits Debt Total
Swaps:
<S> <C> <C> <C> <C> <C> <C>
Pay variable
Unrealized gains ........ $ - - - - 27.7 27.7
Unrealized (losses) ..... - - (10.3) (19.8) (65.0) (95.1)
Pay variable net ........ - - (10.3) (19.8) (37.3) (67.4)
Pay fixed
Unrealized gains ........ - - 3.2 5.9 - 9.1
Unrealized losses ....... - (0.3) - - - (0.3)
Pay fixed net ........... - (0.3) 3.2 5.9 - 8.8
Basis
Unrealized gains ........ 0.4 - - - - 0.4
Total unrealized gains .... 0.4 - 3.2 5.9 27.7 37.2
Total unrealized (losses) . - (0.3) (10.3) (19.8) (65.0) (95.4)
Total net ............... $ 0.4 (0.3) (7.1) (13.9) (37.3) (58.2)
Interest rate caps and floors:
Unrealized gains .......... $ - - 5.3 - - 5.3
Unrealized (losses) ....... (3.5) - (84.6) (0.1) (0.2) (88.4)
Total net ............... $ (3.5) - (79.3) (0.1) (0.2) (83.1)
Futures contracts:
Unrealized gains .......... $ - 0.1 - - - 0.1
Options on futures contracts:
Unrealized gains .......... $ - 0.3 20.5 - - 20.8
Unrealized (losses) ....... - (0.3) (30.9) - - (31.2)
Total net ............... $ - - (10.4) - - (10.4)
Grand total
unrealized gains ........ $ 0.4 0.4 29.0 5.9 27.7 63.4
Grand total
unrealized (losses) ..... (3.5) (0.6) (125.8) (19.9) (65.2) (215.0)
Grand total net ........... $ (3.1) (0.2) (96.8) (14.0) (37.5) (151.6)
</TABLE>
17
<PAGE>
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,
including options on 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, 1997, the corporation had forward
contracts and options on forward contracts totaling $20.3 billion, all of
which mature within 180 days. Gains and losses on forward contracts and
options on forward contracts are included in the determination of market
value of mortgages held for sale.
At March 31, 1997, the corporation's trading account portfolio included
futures of $504 million notional value, which are valued at market with any
gains or losses recognized currently.
12. 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. At March 31,
1997, the corporation had two pending acquisitions with total assets of
approximately $166.2 million, and it is anticipated that approximately 0.6
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 by the third quarter of 1997 and are not
significant to the financial statements of the corporation, either
individually or in the aggregate.
Transactions completed in the three months ended March 31, 1997 include:
<TABLE>
<CAPTION>
In millions, except share amounts Common
Cash Shares Method of
Date Assets Paid Issued Accounting
<S> <C> <C> <C> <C> <C>
Franklin Federal
Bancorp., F.S.B.
Austin, Texas (B) ............ January 1 $ 621.3 $ 90.0 - Purchase of
assets
Central Bancorporation, Inc.
Fort Worth, Texas (B) ........ January 28 1,105.3 - 4,699,788 Pooling of
interests*
Reliable Financial
Services, Inc.
San Juan, Puerto (F) ......... February 21 38.6 - 876,543 Pooling of
interests*
Statewide Mortgage Company,
Birmingham, Alabama (B) ...... February 26 27.9 - 524,996 Purchase
The United Group, Inc.
Charlotte, North Carolina (F). March 21 40.6 - 324,174 Purchase
Farmers National Bancorp, Inc.
Geneseo, Illinois (B) ........ March 24 197.6 - 603,599 Purchase
$2,031.3 $ 90.0 7,029,100
* Pooling of interests transactions were not material to the corporation's
consolidated financial statements; accordingly, previously reported results
have not been restated.
(B) - Banking Group; (F) - Norwest Financial
</TABLE>
18
<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 1996 Annual Report on Form 10-K.
EARNINGS PERFORMANCE
The corporation reported net income of $321.9 million for the quarter ended
March 31, 1997, an 18.6 percent increase over the $271.4 million earned in
the first quarter of 1996. Fully diluted earnings per share were 84 cents,
compared with 74 cents in the first quarter of 1996, an increase of 13.5
percent. Return on realized common equity was 22.7 percent and return on
assets was 1.63 percent for the first quarter of 1997, compared with 22.7
percent and 1.51 percent, respectively, in the first quarter of 1996.
ORGANIZATIONAL EARNINGS
The organizational earnings of the corporation's primary business segments
are included in Note 8 to the unaudited consolidated financial statements
for the quarters ended March 31, 1997 and 1996 and are discussed in the
following paragraphs.
Banking Group
The Banking Group reported first quarter 1997 earnings of $226.5 million, a
25.0 percent increase over the first quarter 1996 earnings of $181.2
million. The increased earnings in the first quarter of 1997 reflected a
10.6 percent increase in tax-equivalent net interest income to $682.2
million, primarily due to an 11.6 percent increase in average earning
assets and partially offset by a five basis point decrease in net interest
margin. The Banking Group's provision for credit losses for the quarter
ended March 31, 1997 increased $8.1 million to $38.2 million from a year
earlier, as average loans and leases rose $2.5 billion, or 8.5 percent,
while net charge-offs as a percent of average loans and leases increased 16
basis points to 0.57 percent. Non-interest income rose $76.1 million to
$387.7 million for the first three months of 1997, due primarily to growth
in trust and insurance revenues, and fees and service charges, partially
offset by lower venture capital gains. Non-interest expenses of $680.3
million for the first three months of 1997 were $59.8 million higher when
compared with the first three months of 1996, reflecting additional
operating expenses due to acquisitions.
Mortgage Banking
Mortgage Banking earned $33.8 million in the current quarter compared with
$30.4 million in the first quarter of 1996. See Note 9 to the unaudited
consolidated financial statements for additional information about mortgage
banking revenues for the quarters ended March 31, 1997 and 1996.
The growth in Mortgage Banking earnings over 1996 reflects higher servicing
fees from a larger servicing portfolio and an increase in the combined
gains on sales of mortgages and servicing rights to $31.7 million in the
first quarter of 1997, compared with $9.4 million in the same period a year
ago. Mortgage loan originations amounted to $10.4 billion during the first
quarter of 1997, compared with $11.7 billion, in the comparable period in
1996. The percentage of fundings attributed to mortgage loan refinancings
19
<PAGE>
was approximately 19 percent in 1997, compared with 40 percent in 1996.
The unclosed pipeline of mortgage loans was $9.7 billion at March 31, 1997,
compared with $7.7 billion at December 31, 1996. The servicing portfolio
totaled $184.6 billion at March 31, 1997, compared with $179.7 billion at
year-end 1996, and currently has a weighted average coupon of 7.76 percent.
Norwest Financial
Norwest Financial (including Norwest Financial Services, Inc. and Island
Finance) reported earnings of $61.6 million in the first quarter of 1997,
compared with $59.8 million in the first quarter of 1996, an increase of
2.9 percent. The growth in earnings reflected a 6.3 percent increase in
Norwest Financial's tax-equivalent net interest income as average finance
receivables grew 4.3 percent from the first quarter of 1996. Norwest
Financial's net charge-offs in the first quarter of 1997 were $67.0
million, or 3.66 percent of average loans, compared with $55.8 million, or
3.15 percent of average loans, in the same period in 1996. The increase in
charge-offs was due to higher consumer credit losses.
CONSOLIDATED INCOME STATEMENT ANALYSIS
Net Interest Income
Consolidated tax-equivalent net interest income was $967.2 million in the first
quarter of 1997, compared with $898.3 million in the first quarter of 1996, an
increase of 7.7 percent. Growth in tax-equivalent net interest income over the
three months ended March 31, 1996 was primarily due to an 8.8 percent growth in
average earning assets, principally investment securities and loans, partially
offset by a seven basis point decrease in net interest margin. Net interest
margin, the ratio of annualized tax-equivalent net interest income to average
earning assets, was 5.62 percent in the first quarter of 1997, compared with
5.69 percent in the first quarter of 1996. The decrease in net interest margin
from first quarter of 1996 is primarily due to a lower yield on loans held for
sale, partially offset by an improvement in funding costs.
The following table summarizes changes in tax-equivalent net interest income
between the first quarter of 1997 and the first and fourth quarters of 1996.
Changes in Tax-Equivalent Net Interest Income*
In millions 1Q 97 1Q 97
from from
1Q 96 4Q 96
Increase (decrease) due to:
Change in earning asset volume ............ $ 82.6 13.2
Change in volume of interest-free funds ... 12.2 0.8
Change in net return from
Interest-free funds ...................... (5.5) (4.2)
Interest-bearing funds ................... (12.8) (1.4)
Change in earning asset mix ............... (22.4) (2.6)
Change in funding mix ..................... 14.8 6.3
Change in tax-equivalent net interest income. $ 68.9 12.1
* Net interest income is presented on a tax-equivalent basis utilizing a
federal incremental tax rate of 35 percent in each period presented.
20
<PAGE>
Provision for Credit Losses
The corporation provided $109.0 million for credit losses in the first
quarter of 1997, compared with $87.8 million in the same period a year ago.
Net credit losses totaled $112.0 million and $85.5 million for the three
months ended March 31, 1997 and 1996, respectively. As a percentage of
average loans and leases, net credit losses were 114 basis points in the
first quarter of 1997, compared with 93 basis points in the same period a
year ago. The increase in net credit losses for the first quarter of 1997
is principally due to higher levels of charge-offs in regions where the
corporation has had acquisitions and to higher consumer credit charge-offs
at Norwest Financial.
Non-interest Income
Consolidated non-interest income was $690.6 million in the first quarter of
1997, an increase of $137.8 million, or 24.9 percent, from the first
quarter of 1996, due to continued growth in virtually all categories,
including trust, fees and service charges, insurance and mortgage banking
revenues. The increases in trust revenues and fees and service charges
reflect overall increases in business activity, including acquisitions and
marketing efforts.
Mortgage banking revenues in the first quarter of 1997 were $227.8 million,
compared with $171.3 million in the first quarter of 1996. The increase for
the quarter was principally due to increased levels of servicing fees from
a larger servicing portfolio and higher net gains on sales of mortgages.
Mortgage banking revenue derived from sales of servicing rights and future
sales of servicing rights are largely dependent upon portfolio
characteristics and prevailing market conditions. See Note 9 to the
unaudited consolidated financial statements for additional information
about mortgage banking revenues for the quarter ended March 31, 1997 and
1996.
Net venture capital gains were $19.2 million for the three months ended
March 31, 1997, compared with $66.5 for the same period in 1996. Sales of
venture capital securities generally relate to timing of holdings becoming
publicly traded and subsequent market conditions, causing venture capital
gains to be unpredictable in nature. Net unrealized appreciation in the
venture capital investment portfolio was $192.2 million at March 31, 1997.
Insurance revenues in the first quarter of 1997 were $90.2 million,
compared with $69.7 million in the corresponding period in 1996. The
increase in insurance revenues is primarily attributed to commissions on
higher sales of crop hail and credit life insurance.
The corporation's trading revenue for the first quarter of 1997 was $24.9
million compared with a loss of $15.3 million in the first quarter of 1996.
See Note 10 to the unaudited consolidated financial statements for a
detailed analysis of trading revenues for the quarters ended March 31, 1997
and 1996.
Non-interest Expenses
Consolidated non-interest expenses were $1,047.5 million in the first
quarter of 1997, compared with $943.2 million in the same period of 1996,
an increase of 11.1 percent. First quarter 1997 results reflect increased
operating expenses associated with acquisitions and one-time acquisition
charges of $4.6 million related to transactions completed during the
quarter.
21
<PAGE>
CONSOLIDATED BALANCE SHEET ANALYSIS
At March 31, 1997, earning assets were $72.1 billion, an increase of 5.7
percent from $68.2 billion at December 31, 1996. This increase was
primarily due to a 31.1 percent increase in total investment securities.
The increase is due to purchases of securities with short term funds
pending reinvestment at year-end 1996 and to acquisitions.
At March 31, 1997, interest-bearing liabilities totaled $41.2 billion, a
2.5 percent increase from $40.2 billion at December 31, 1996. The increase
was primarily due to increases in interest-bearing deposits from
acquisitions.
Credit Quality
The major categories of loans and leases are included in Note 4 to the
unaudited consolidated financial statements for the quarter ended March 31,
1997.
At March 31, 1997, the allowance for credit losses totaled $1,062.6
million, or 2.63 percent of loans and leases outstanding. Comparable
amounts were $959.7 million, or 2.57 percent, at March 31, 1996, and
$1,040.8 million, or 2.64 percent, at December 31, 1996. The ratio of the
allowance for credit losses to total non-performing assets and 90-day past
due loans and leases was 334.2 percent at March 31, 1997, compared with
291.2 percent at March 31, 1996 and 335.0 percent at December 31, 1996.
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 March 31, 1997 and December 31, 1996 was:
March 31, December 31,
1997 1996
Commercial .................... $ 238.7 208.6
Consumer ...................... 294.0 285.7
Real estate ................... 146.5 150.3
Foreign ....................... 36.3 32.3
Unallocated ................... 347.1 363.9
Total ...................... $1,062.6 1,040.8
Non-performing assets and 90-day past due loans and leases totaled $317.9
million, or 0.38 percent of total assets, at March 31, 1997, compared with
$329.6 million, or 0.45 percent, at March 31, 1996, and $310.7 million, or
0.39 percent, at December 31, 1996.
22
<PAGE>
The corporation manages exposure to credit risk through loan portfolio
diversification by customer, product, industry and geography in order to
minimize concentrations in any single sector.
The corporation's Banking Group operates in 16 states, largely in the
Midwest, Southwest and Rocky Mountain regions of the country. Distribution
of average loans by region during the first three months of 1997 was
approximately 54 percent in the North Central Midwest, 15 percent in the
South Central Midwest and 31 percent in the Rocky Mountain/Southwest
region.
Norwest Mortgage, Norwest Financial and Norwest Card Services operate on a
nationwide basis. Mortgage Banking includes the largest retail mortgage
origination network and the largest servicing portfolio in the country.
The five states with the highest originations year to date in 1997 are:
California $1,987.6 million; Washington $487.4 million; New Jersey $483.6
million; Illinois $482.0 million; and Minnesota $455.8 million. The
originations in these five states comprise approximately 37 percent of
total originations in 1997. The five largest states in the servicing
portfolio include: California $36.5 billion; Minnesota $10.5 billion;
Texas $8.8 billion; New York $8.6 billion; and Florida $7.9 billion. These
five states comprise approximately 39 percent of the total servicing
portfolio at March 31, 1997.
Norwest Financial engages in consumer finance activities in 48 states, all
10 Canadian provinces, the Caribbean, Central America and Guam. The five
states with the largest consumer finance receivables are: California
$443.9 million; Illinois $217.4 million; Florida $216.0 million; Texas
$213.7 million; and Alabama $165.2 million. Consumer finance receivables
in Puerto Rico and Canada totaled $1.2 billion and $587.8 million,
respectively, at March 31, 1997. The consumer finance receivables of
Puerto Rico, Canada, and the five largest states listed above comprise
approximately 44 percent of total consumer finance receivables at March 31,
1997.
With respect to credit card receivables, approximately 64 percent of the
portfolio is within the corporation's 16-state banking region. Minnesota
represents approximately 13 percent of the total outstanding credit card
portfolio. No other state accounts for more than 10 percent of the
portfolio.
In general, the economy in regions of the U.S. where the corporation
primarily conducts operations continues to reflect modest growth. The
corporation's credit-risk management policies and activities as well as the
geographical diversification of the corporation's Banking Group (including
Norwest Card Services), Mortgage Banking, and Norwest Financial help
mitigate the credit risk in their respective portfolios.
Capital and Liquidity Management
The corporation's regulatory capital and ratios are summarized as follows:
March 31, December 31,
1997 1996
Tier 1 capital......................... $ 4,716 4,716
Tier 1 and Tier 2 capital.............. 5,709 5,692
Total risk adjusted assets............. 56,027 54,638
Tier 1 capital ratio................... 8.42% 8.63
Total capital to risk adjusted assets.. 10.19% 10.42
Leverage ratio......................... 6.07% 6.15
23
<PAGE>
The corporation's Tier 1 capital, total capital to risk-adjusted assets and
leverage ratios exceed the regulatory minimums of 4.0 percent, 8.0 percent
and 3.0 percent, respectively.
The corporation's dividend payout ratio was 35.7 percent for the first
quarter of 1997 compared with 32.4 percent for the first quarter of 1996.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings per Share," (FAS 128) which establishes new
standards for calculating and presenting earnings per share disclosures.
The corporation will be required to adopt the provisions of FAS 128 at
year-end 1997. Under FAS 128, basic and diluted earnings per share for the
quarters ended March 31 were:
Quarter
In millions 1997 1996
Net income.................. $321.9 271.4
Less dividends accrued
on preferred stock........ (4.5) (4.5)
Income available to common
stockholders.............. $317.4 266.9
Weighted average common
shares outstanding........ 372.8 357.4
Adjustments for dilutive
securities:
Assumed exercise of
outstanding stock options. 9.9 9.9
Diluted common shares....... 382.7 367.3
Earnings per common share:
Basic..................... $ 0.85 0.75
Diluted................... 0.83 0.73
Also in February 1997, the FASB issued Statement of Financial Accounting
Standards No. 129, "Disclosure of Information about Capital Structure," (FAS
129) which codifies existing disclosure requirements regarding capital
structure. FAS 129 will be required to be adopted at year-end 1997 and is not
expected to have a material impact on the corporation's current capital
structure disclosures.
24
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
<TABLE>
<CAPTION>
Quarter Ended March 31,
In millions, except ratios 1997 1996
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 .... $ 1,620 $ 21.1 5.29% $ 559 $ 7.8 5.63%
Trading account securities .. 272 4.7 6.98 398 6.1 6.14
Investment securities available
for sale
U.S. Treasury & federal
agencies ................ 2,067 32.1 6.22 1,131 17.3 6.22
State, municipal and
housing tax-exempt ...... 1,012 21.6 8.85 840 18.4 9.22
Mortgage-backed ........... 14,263 264.3 7.46 12,333 225.1 7.41
Other ..................... 1,130 14.5 6.85 933 10.9 7.30
Total investment
securities available
for sale ............. 18,472 332.5 7.37 15,237 271.7 7.42
Other securities held for
investment .............. 720 7.0 3.89 796 8.9 4.50
Total investment
securities ........... 19,192 339.5 7.23 16,033 280.6 7.27
Loans held for sale ......... 2,924 56.2 7.79 3,440 87.2 10.19
Mortgages held for sale ..... 5,485 97.7 7.13 6,344 108.4 6.83
Loans and leases
(net of unearned discount)
Commercial ................ 13,311 297.2 9.05 12,287 279.9 9.16
Real estate ............... 14,972 357.8 9.61 13,085 323.0 9.88
Consumer .................. 11,663 442.1 15.25 11,648 438.5 15.09
Total loans and leases .. 39,946 1,097.1 11.07 37,020 1,041.4 11.28
Allowance for credit losses (1,058) (952)
Net loans and leases .... 38,888 36,068
Total earning assets
(before the allowance for
credit losses) .......... 69,439 1,616.3 9.42 63,794 1,531.5 9.71
Cash and due from banks ..... 3,646 3,551
Other assets ................ 8,150 5,909
Total assets .............. $80,177 $72,302
(Continued on page 26)
</TABLE>
25
<PAGE>
Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(Continued from page 25)
<TABLE>
<CAPTION>
Quarter Ended March 31,
In millions, except ratios 1997 1996
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
<S> <C> <C> <C> <C> <C> <C>
Liabilities and
Stockholders' Equity
Noninterest-bearing deposits. $13,086 $ - -% $11,167 $ - -%
Interest-bearing deposits
Savings and NOW accounts .. 9,444 38.7 1.66 5,513 24.2 1.76
Money market accounts ..... 10,467 89.7 3.48 11,485 84.6 2.96
Savings certificates ...... 13,200 176.4 5.42 11,826 162.7 5.53
Certificates of deposit
and other time .......... 3,412 47.6 5.65 2,510 35.7 5.72
Foreign time .............. 439 3.7 3.44 239 2.8 4.68
Total interest-bearing
deposits .............. 39,962 356.1 3.91 31,573 310.0 3.95
Federal funds purchased
repurchase agreements ..... 2,485 29.9 4.88 3,170 41.1 5.22
Short-term borrowings ....... 5,256 69.2 5.34 5,099 69.7 5.50
Long-term debt .............. 12,719 193.9 6.10 13,689 212.4 6.21
Total interest-bearing
liabilities ........... 57,422 649.1 4.57 53,531 633.2 4.75
Other liabilities ........... 3,550 2,330
Preferred stock ............. 188 191
Common stockholders' equity . 5,931 5,083
Total liabilities and
stockholders' equity .. $80,177 $72,302
Net interest income
(tax-equivalent basis) .. $967.2 $ 898.3
Yield spread .............. 4.85 4.96
Net interest margin ....... 5.62 5.69
Interest-bearing liabilities
to earning assets ....... 82.69 83.91
</TABLE>
* 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.
26
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
The following exhibits are filed or incorporated by reference in
response to Item 601 of Regulation S-K.
Exhibit
No. Exhibit
3(a). Restated Certificate of Incorporation, as amended,
incorporated by reference to Exhibit 3(b) to the
corporation's Current Report on Form 8-K dated
June 28, 1993. Certificate of Amendment of
Certificate of Incorporation of the corporation
authorizing 4,000,000 shares of Preference Stock,
incorporated by reference to Exhibit 3 to the
corporation's Current Report on Form 8-K dated
July 3, 1995.
3(b). Certificate of Designations of powers, preferences and
rights relating to the corporation's ESOP Cumulative
Convertible Preferred Stock incorporated by reference
to Exhibit 4 to the corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994.
3(c). Certificate of Designations of powers, preferences and
rights relating to the corporation's Cumulative Tracking
Preferred Stock incorporated by reference to Exhibit 3
to the corporation's Current Report on Form 8-K dated
January 9, 1995.
3(d). Certificate of Designations of powers, preferences and
rights relating to the corporation's 1995 ESOP Cumulative
Convertible Preferred Stock incorporated by reference to
Exhibit 4 to the corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995.
3(e). Certificate Eliminating the Certificate of Designations
with respect to the Cumulative Convertible Preferred Stock,
Series B, incorporated by reference to Exhibit 3(a) to the
corporation's Current Report on Form 8-K dated
November 1, 1995.
3(f). Certificate Eliminating the Certificate of Designations
with respect to the 10.24% Cumulative Preferred Stock
incorporated by reference to Exhibit 3 to the corporation's
Current Report on Form 8-K dated February 20, 1996.
3(g). Certificate of Designations of powers, preferences and
rights relating to the corporation's 1996 ESOP Cumulative
Convertible Preferred Stock incorporated by reference to
Exhibit 3 to the corporation's Current Report on Form 8-K
dated February 26, 1996.
27
<PAGE>
Exhibit
No. Exhibit
3(h). Certificate of Designations of powers, preferences and rights
relating to the corporation's 1997 ESOP Cumulative Convertible
Preferred Stock incorporated by reference to Exhibit 3 to the
Corporation's Current Report on Form 8-K dated April 14, 1997.
3(i). By-Laws (as amended through April 22, 1997).
4(a). See 3(a) through 3(i) of this Item.
4(b). Rights Agreement dated as of November 22, 1988 between
the corporation and Citibank, N.A., incorporated by
reference to Exhibit 1 to the corporation's Form 8-A
dated November 6, 1988 and Certificates of Adjustment
pursuant to Section 16 of the Rights Agreement
incorporated by reference to Exhibit 3 to the
corporation's Form 8 dated July 21, 1989 and Exhibit 4
to the corporation's Form 8-A/A dated June 29, 1993.
4(c). Copies of instruments with respect to long-term debt
will be furnished to the Commission upon request.
10(a). Norwest Corporation Employees' Deferred Compensation Plan.
10(b). Norwest Corporation Performance Deferred Award Plan for Mortgage
Banking Executives.
10(c). Norwest Corporation Elective Deferred Compensation Plan for
Mortgage Banking Executives.
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 Current Reports on Form 8-K, dated January 16,
1997, reporting consolidated operating results of the corporation for
the quarter ended December 31, 1996 and dated April 14, 1997, reporting
consolidated operating results of the corporation for the quarter ended
March 31, 1997.
28
<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 14, 1997 By /s/ Michael A. Graf
Senior Vice President
and Controller
(Chief Accounting Officer)
29
<PAGE>
Exhibit 3(i).
NORWEST CORPORATION
April 22, 1997 Meeting of the Board of Directors
RESOLVED that Section "4. Annual Meeting." of the By-Laws of the
Corporation is hereby amended and restated to read as follows:
4. Annual Meeting. An annual meeting of stockholders shall be
held on the fourth Tuesday of April in each year, or such other date as
shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, if not a legal holiday, and if a
legal holiday, then on the next day following, at such time as shall be
designated by the Board of Directors, when the stockholders shall elect,
by a plurality vote except as otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws, by ballot, a Board of
Directors, and transact such other business as may properly be brought
before this meeting.
<PAGE>
NORWEST CORPORATION
By-Laws
(As amended through April 22, 1997)
Offices
1. The principal office shall be in the City of Wilmington, County of New
Castle, State of Delaware, and the name of the resident agent in charge
thereof is The Corporation Trust Company.
The Corporation may also have an office in the City of Minneapolis, State of
Minnesota, and also offices at such other places as the Board of Directors
may from time to time appoint or the business of the Corporation may
require.
Seal
2. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Stockholders' Meetings
3. Place. All meetings of stockholders shall be held at the office of the
Corporation in Minneapolis, Minnesota, or at such other place within or
without the State of Delaware as shall from time to time be designated by
the Board of Directors.
4. Annual Meeting. An annual meeting of stockholders shall be held on the
fourth Tuesday of April in each year, or such other date as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting, if not a legal holiday, and if a legal holiday, then
on the next day following, at such time as shall be designated by the Board
of Directors, when the stockholders shall elect, by a plurality vote except
as otherwise provided by law, by the Certificate of Incorporation or by
these By-Laws, by ballot, a Board of Directors, and transact such other
business as may properly be brought before this meeting.
5. Quorum. The holders of a majority of the stock issued and outstanding,
and entitled to vote thereat, present in person, or represented by proxy,
shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
law, by the Certificate of Incorporation or by these By-Laws. If, however,
such majority shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person
<PAGE>
or by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the requisite
amount of voting stock shall be present. At such adjourned meeting at which
the requisite amount of voting stock shall be represented, any business may
be transacted which might have been transacted at the meeting as originally
convened.
6. Voting Proxies. At each meeting of the stockholders every stockholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than one year prior to said meeting, unless said
instrument provides for a longer period. Each stockholder shall have one
vote for each share of stock having voting power registered in his name on
the books of the Corporation, provided that, except where the transfer books
of the Corporation shall have been closed or a date shall have been fixed as
a record date for the determination of stockholders entitled to vote, no
share of stock shall be voted at any election of directors which has been
transferred on the books of the Corporation within twenty days next
preceding such election. The vote for directors, and, upon the demand of
any stockholder, the vote upon any question before the meeting shall be by
ballot. All elections shall be had and all questions decided by a plurality
vote, except such as may, under the provisions of law, the Certificate of
Incorporation, or these By-Laws, require the vote of a larger number of
shares.
7. Notice of Annual Meeting. Written notice of the annual meeting shall
be mailed to each stockholder entitled to vote thereat at such address as
appears on the stock records of the Corporation, at least ten days prior to
the meeting.
8. Stockholders' List. A complete list of the stockholders entitled to
vote at the ensuing election, arranged in alphabetical order, shall be
prepared by the Secretary and shall, during the usual hours of business, be
open to the examination of any stockholder at the place where said election
is to be held for ten days before such election and shall be produced and
kept at the time and place of election during the whole time thereof, and
subject to the inspection of any stockholder who may be present.
9. Notice of Stockholder Business at Annual Meeting. At an annual meeting
of the stockholders, only such business shall be conducted as shall have
been brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who complies with the
notice procedures set forth in this Section 9. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation, not less
than 30 days nor more than 60 days prior to the meeting; provided, however,
that in the event that less than 40 days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice by the
<PAGE>
stockholder to be timely must be received not later than the close of
business on the tenth day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the
name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of
the Corporation which are beneficially owned by the stockholder and (d) any
material interest of the stockholder in such business. Notwithstanding
anything in these By-Laws to the contrary, no business shall be conducted at
an annual meeting except in accordance with the procedures set forth in this
Section 9. The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this Section 9,
and if he should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be
transacted.
10. Special Meetings - Call. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be
called by the Chairman or a Vice Chairman or the President or a majority of
the Board of Directors.
11. Special Meeting - Business. Business transacted at all special
meetings shall be confined to the objects stated in the call.
12. Special Meetings - Notice. Written notice of a special meeting of
stockholders, stating the time and place and object thereof, shall be
mailed, postage prepaid, at least ten days before such meeting, to each
stockholder entitled to vote thereat at his last known address as shown by
the books of the Corporation.
13. Action by Written Consent of Stockholders. (a) Any action which is
required to be or may be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting, without
prior notice and without a vote, if consents in writing, setting forth the
action so taken, shall have been signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or to take such action at a meeting at which all shares entitled
to vote thereon were present and voted; provided, however, that prompt
notice of the taking of the corporate action without a meeting and by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing.
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting shall be fixed by
the Board of Directors. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent without a
<PAGE>
meeting shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. Upon receipt of such a request, the
Secretary shall place such request before the Board of Directors at its next
regularly scheduled meeting, provided, however, that if the stockholder
represents in such request that he intends, and is prepared, to commence a
consent solicitation as soon as is permitted by the Securities Exchange Act
of 1934, as amended, and the regulations thereunder and other applicable
law, the Secretary shall as promptly as practicable call a special meeting
of the Board of Directors, which meeting shall be held as promptly as
practicable. At such regular or special meeting, the Board of Directors
shall fix a record date as provided in Section 40 of these By-Laws and
Section 213(a) (or its successor provision) of the Delaware General
Corporation Law. Should the Board of Directors fail to fix a record date as
provided for in this Section 13, then the record date shall be the day on
which the first written consent is expressed.
(c) In the event of the delivery to the Corporation of written consents
purporting to represent the requisite voting power to authorize or take
corporate action and/or related revocations, the Secretary of the
Corporation shall provide for the safekeeping of such consents and
revocations and shall, as promptly as practicable, engage nationally
recognized independent inspectors of election for the purpose of promptly
performing a ministerial review of the validity of the consents and
revocations. No action by written consent and without a meeting shall be
effective until such inspectors have completed their review, determined that
the requisite number of valid and unrevoked consents has been obtained to
authorize or take the action specified in the consents, and certified such
determination for entry in the records of the Corporation kept for the
purpose of recording the proceedings of meetings of stockholders.
Directors
14. Number. The property and business of the Corporation shall be managed
by its Board of not less than ten nor more than twenty-three directors, with
the number to be designated from time to time by resolution of the Board.
Directors shall be elected at the annual meeting of the stockholders, except
as otherwise provided by the Certificate of Incorporation or by these By-
Laws, and each director shall be elected to serve until his successor shall
be elected and shall qualify.
15. Notice of Stockholder Nominees. Only persons who are nominated in
accordance with the procedures set forth in these By-Laws shall be eligible
for election as directors. Nominations of persons for election to the Board
of Directors of the Corporation may be made at a meeting of stockholders (a)
by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation entitled to vote for the election of directors at the
meeting who complies with the notice procedures set forth in this Section
15. Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 30 days nor more than 60 days prior
to the meeting; provided, however, that in the event that less than 40 days'
<PAGE>
notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or such
public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such
person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the
Corporation's books, of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder.
At the request of the Board of Directors any person nominated by the Board
of Directors for election as a director shall furnish to the Secretary of
the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be
eligible for election as a director of the Corporation unless nominated in
accordance with the procedures set forth in the By-Laws. The Chairman of
the meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by these By-Laws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
16. Vacancies. If the office of any director or directors becomes vacant
by reason of death, resignation, retirement, disqualification, removal from
office, or otherwise, a majority of the remaining directors, though less
than a quorum, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, shall choose a successor until a
successor or successors have been duly elected, unless sooner displaced.
17. Place of Meetings. The directors may hold their meetings and have one
or more offices, and keep the books of the Corporation, except the original
or duplicate stock ledger, outside of Delaware, at the office of the
Corporation in the City of Minneapolis, Minnesota, or at such other places
as they may from time to time determine.
18. Powers. In addition to the powers and authorities by these By-Laws
expressly conferred upon them, the Board may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or
by the Certificate of Incorporation or by these By-Laws directed or required
to be exercised or done by the stockholders.
Committees
19. Purposes - Powers. The Board of Directors may, by resolution or
resolutions, passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
<PAGE>
Corporation, which to the extent provided in said resolution or resolutions
or in these By-Laws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
and may have power to authorize the seal of the Corporation to be affixed to
all papers which may require it. Such committee or committees shall have
such name or names as may be stated in these By-Laws or as may be determined
from time to time by resolution adopted by the Board of Directors.
20. Minutes. The committees may keep regular minutes of their proceedings
and shall report to the Board when required.
Compensation
21. Directors. By resolution of the Board, directors may receive a fixed
fee for their services, and a fixed sum and expenses of attendance, if any,
may be allowed for attendance at each regular or special meeting of the
Board; provided, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
22. Committee Members. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Meetings of the Board
23. Annual Meeting. Immediately following the annual meeting of
stockholders and at the place of such meeting the newly elected Board shall
meet for the purpose of organization, the election of officers and the
transaction of other business, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided that a majority of the whole Board shall be present. In
lieu of meeting at such time and place, the newly elected Board may meet at
such time and place as may be fixed by the consent in writing of all the
directors or by call issued by the Chairman or a Vice Chairman or the
President.
24. Regular Meetings. Regular meetings of the Board may be held without
notice at such time and place as shall from time to time be determined by
the Board.
25. Special Meetings - Call. Special meetings of the Board may be called
by the Chairman or a Vice Chairman or the President on two days' notice to
each director, either personally or by mail or by telegram; special meetings
shall be called by the Chairman or a Vice Chairman or the President or the
Secretary in like manner and on like notice on the written request of two
directors.
<PAGE>
26. Quorum. At all meetings of the Board of Directors any number of
directors constituting not less than one-third (1/3) of the total number of
members of said Board shall be necessary and sufficient to constitute a
quorum for the transaction of business, provided that where there is less
than a majority of the Board of Directors present at any meeting, no action
by those present, although constituting a quorum, shall be taken except by
unanimous vote.
Officers
27. Officers. The officers of the Corporation shall be a Chairman, one or
more Vice Chairmen, President, a Secretary, a Treasurer, a Controller, a
Chief Examiner, a Chief Auditor, and such other officers, and with such
duties, as may be determined by the Board as necessary for the prompt and
orderly transaction of the business of the Corporation. Any two or more
offices may be held by the same person. The Chairman and the President
shall be members of the Board of Directors and other officers may be members
of the Board of Directors. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors.
In its discretion, the Board of Directors by a majority vote may leave
unfilled any offices specified in the preceding paragraph.
28. Election - Appointment - Term of Office - Removal. All officers
holding the title of Chairman, Vice Chairman, President, Secretary,
Treasurer, Controller, Chief Examiner, Chief Auditor, and such other
officers as may be designated by the Board of Directors shall be elected by
the Board of Directors. Any officer elected by the Board of Directors may
be removed at any time by the affirmative vote of a majority of the whole
Board of Directors. The Board of Directors may authorize officers elected
by the Board to appoint other officers and agents pursuant to procedures
established by resolution of the Board. All officers shall hold office
until their successors are elected or appointed and qualified, unless
theretofore they shall have resigned, become disqualified or been removed.
29. Chairman and Vice Chairman. The Chairman may, by resolution of the
Board of Directors, be designated Chief Executive Officer of the
Corporation. The Chairman shall preside at all meetings of the stockholders
and at all meetings of the Board. If the Chairman is not designated Chief
Executive Officer, the Chairman shall assist the Chief Executive Officer in
the management of the Corporation and shall perform such other duties as the
Board of Directors shall prescribe. If the Chairman is not designated Chief
Executive Officer, the Chairman shall in the absence or disability of the
Chief Executive Officer perform the duties and exercise the powers of the
Chief Executive Officer.
The Vice Chairman or Chairmen shall assist the Chief Executive Officer in
the management of the Corporation and shall perform such other duties as the
Board of Directors shall prescribe. In the absence or disability of the
Chairman, the President or a Vice Chairman shall perform the duties and
exercise the powers of the Chairman.
<PAGE>
If at any time there shall be elected and serving more than one person in
the office of Vice Chairman, then in the absence or disability of the
Chairman, the President or the Vice Chairman as designated in writing by the
Chief Executive Officer shall perform the duties and exercise the powers of
the Chairman. In the absence of such designation by the Chief Executive
Officer, then the duties and powers of the Chairman shall be performed and
exercised by the President or the Vice Chairman with greater seniority of
continuous service in that office or, in the absence of such seniority,
seniority of continuous service to the Corporation and its subsidiaries.
30. President. The President may, by resolution of the Board of
Directors, be designated Chief Executive Officer of the Corporation. If
the President is not designated Chief Executive Officer, the President
shall assist the Chief Executive Officer in the management of the
Corporation and shall perform such other duties as the Board of Directors
shall prescribe.
31. Chief Executive Officer. The Board of Directors shall by resolution
designate either the Chairman or the President as the Chief Executive
Officer of the Corporation. The Chief Executive Officer shall be charged
with the management of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The Chief
Executive Officer shall be charged with the duty of causing to be
currently presented to the Board of Directors full information regarding
the conditions and operations of the Corporation, as well as matters of a
policy nature concerning the affairs of the Corporation and all
information requisite to enable the Board in the discharge of its
responsibilities to exercise judgment and take action upon all matters
requiring its consideration.
Except where by law the signature or action of any other officer is
required, the Chief Executive Officer shall possess the same power as any
such other officer to sign certificates, contracts and other instruments
of the Corporation and to take other action on behalf of the Corporation.
The Chief Executive Officer shall have the general powers and duties of
supervision and management usually vested in the chief executive officer
of a corporation.
32. Vice Presidents. Any Vice President may, in the absence or
disability of the Chairman, all Vice Chairmen and the President, perform
the duties and exercise the powers of the Chairman, all Vice Chairmen and
the President, and shall perform such other duties as the Board of
Directors shall prescribe.
33. Secretary and Assistant Secretaries. (a) Except as may be
otherwise expressly provided in these By-Laws, the Secretary shall attend
all sessions of the Board and all meetings of the stockholders and record
all votes and the minutes of all proceedings in a book to be kept for that
purpose, and shall perform like duties for the standing or special
committees when requested. He shall give, or cause to be given, notice of
<PAGE>
all meetings of the stockholders and of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors
or the Chief Executive Officer, under whose supervision he shall be. He
shall keep in safe custody the seal of the Corporation, and, when
authorized by the Board, affix the same to any instrument requiring it and
when so affixed it shall be attested by his signature or by the signature
of the Treasurer or an Assistant Secretary or an Assistant Treasurer. He
shall be sworn to the faithful discharge of his duties.
(b) Any Assistant Secretary may, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary,
and shall perform such other duties as the Board of Directors shall
prescribe.
(c) If the Board of Directors shall appoint a Secretary to the Board,
then such Secretary to the Board shall have and perform the duties of the
Secretary and with respect to attendance at and recording of votes and
minutes of all proceedings at sessions of the Board and meetings of the
stockholders and, when requested, meetings of standing and special
committees.
34. Treasurer and Assistant Treasurers. (a) The Treasurer shall have
the custody of the corporate funds and securities and shall keep full and
accurate accounts thereof, and shall deposit all moneys, and other
valuable effects, in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors.
(b) He shall disburse the funds of the Corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render
to the Chief Executive Officer and the Board of Directors, whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation.
(c) He shall give the Corporation a bond, if required by the Board of
Directors, in a sum and with one or more sureties satisfactory to the
Board, for the faithful performance of the duties of his office, and for
the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
(d) Any Assistant Treasurer may, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer,
and shall perform such other duties as the Board of Directors shall
prescribe.
35. Controller. The Controller shall supervise all accounting and
bookkeeping of the Corporation, shall make such reports to the Board on
the financial condition of the Corporation as shall be required by the
Board, and shall perform such other duties as the Board shall prescribe.
He shall be subject to removal only by the Board of Directors.
<PAGE>
36. Chief Examiner. The Chief Examiner shall examine and appraise the
assets of each affiliate of the Corporation, shall make, at least once a
year, a report to the Board summarizing the condition of the assets and
capital position of the Corporation and its affiliates, and shall perform
such other duties as the Board shall prescribe. He shall be subject to
removal only by the Board of Directors.
37. Duties of Officers May Be Delegated. In case of the absence of any
officer of the Corporation, or for any other reason that the Board may
deem sufficient, the Board may delegate, for the time being, the powers or
duties, or any of them, of such officer to any other officer or to any
director, provided a majority of the entire Board concurs therein.
Certificate of Stock
38. All certificates of stock of the Corporation shall be numbered and
shall be entered in the books of the Corporation as they are issued. They
shall exhibit the holder's name and number of shares and shall be signed
by the Chairman or a Vice Chairman or the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary. Any of or all the signatures on the certificate may
be a facsimile.
Transfers of Stock
39. Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate, or by attorney lawfully
constituted in writing, and upon surrender of the certificate therefor.
Closing of Transfer Books
40. The Board of Directors shall have the power to close the stock
transfer books of the Corporation for a period not exceeding fifty days
preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go
into effect, or for a period not exceeding fifty days in connection with
obtaining the consent of stockholders for any purpose; provided, however,
that in lieu of closing the stock transfer books as aforesaid, the Board
of Directors may fix in advance a date not exceeding fifty days preceding
the date of any meeting of stockholders, or the date for the payment of
any dividend, or the date for the allotment of rights, or the date when
any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent, as a record
date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend, or to any such allotment of rights,
or to exercise the rights in respect to any such change, conversion or
exchange of capital stock, or to give such consent, and in such case such
<PAGE>
stockholders, and only such stockholders as shall be stockholders of
record on the date so fixed, shall be entitled to notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of any
such dividends or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be, notwithstanding any
transfer of such stock on the books of the Corporation after any such
record date fixed as aforesaid.
Registered Stockholders
41. The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by
the laws of Delaware.
Lost Certificates
42. Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation of the fact and advertise the same
in such manner as the Board of Directors may require, and the Board of
Directors may, in their discretion, require the owner of the lost or
destroyed certificate, or his legal representative, to give the
Corporation a bond in such sum as they may direct to indemnify the
Corporation against any claim that may be made against it on account of
the alleged loss of any such certificate, or the issuance of a new
certificate; a new certificate of the same tenor and for the same number
of shares as the one alleged to be lost or destroyed may be issued without
requiring any bond or advertisement when, in the judgment of the
directors, it is proper so to do.
Contracts
43. Except as may be otherwise expressly provided in these By-Laws, all
contracts or other written instruments made in the Corporation's name
shall be signed by the Chairman or a Vice Chairman or the President or
Executive Vice President or Senior Vice President and attested by the
Secretary or an Assistant Secretary, or shall be executed by such other
person or persons and in such other manner as shall from time to time be
directed by the Board of Directors by appropriate resolutions.
Stock Held in Other Corporations
44. Voting - Proxies. All capital stocks in other corporations owned by
this Corporation shall be voted at the regular and/or special meeting of
the stockholders of said other corporations by proxy by an attorney
specifically named in a proxy and given a power of attorney to represent
this Corporation at such stockholders' meeting for the purposes in said
power of attorney specified; and the Chairman or any Vice Chairman or any
<PAGE>
Vice President together with the Secretary or any Assistant Secretary of
this Corporation are hereby authorized to execute and deliver in the name
and under the seal of this Corporation proxies in such form as may be
required by the corporation whose stock is to be voted thereunder naming
as the attorney authorized to act by said proxy such individual or
individuals as said Chairman or Vice Chairman or Vice President together
with said Secretary or Assistant Secretary shall deem advisable; provided,
however, that no stock in other corporations shall be voted, and no
proxies to vote the same shall be given, with reference to the adoption,
amendment or termination of any pension or profit sharing plan or any
other plan of deferred compensation except by the affirmative vote of a
majority of the Board of Directors of this Corporation at the time when
such action is taken and such majority shall not include any director who
is a salaried officer of this Corporation or of any affiliated bank or
company.
45. Local Directors. In the event that this Corporation shall own in
excess of fifty percent of the capital stock of any financial or moneyed
corporation or association and if in the acquisition of such stock this
Corporation shall have agreed that as to the voting of such stock for the
election of directors this By-Law or an agreement substantially in accord
therewith shall be binding on the Corporation, then and in each such event
the stock so acquired shall, at all meetings for the election of a Board
of Directors of any such association or corporation, be voted in favor of
the election to such Board of a sufficient number of residents of the city
where the principal office of such corporation or association is located
so that, if the candidate so voted for shall be elected, at least seventy-
five percent of the members of said Board of Directors shall be residents
of said city. This Section 41 of these By-Laws shall be amended only upon
the affirmative vote of eighty percent in amount of the common stock of
this Corporation outstanding at the time of such amendment or by the Board
of Directors after receipt of the written consent of the holders of at
least eighty percent of the common stock of this Corporation.
Inspection of Books
46. The directors shall determine from time to time whether, and, if
allowed, when and under what conditions and regulations the accounts and
books of the Corporation (except as such as may by statute be specifically
open to inspection) or any of them shall be open to the inspection of the
stockholders, and the stockholders' rights in this respect are and shall
be restricted and limited accordingly.
Checks
47. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or employees as the Board of
Directors may from time to time designate.
Fiscal Year
<PAGE>
48. The fiscal year shall begin the first day of January in each year.
Dividends
49. Dividends upon the capital stock of the Corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital
stock.
Before payment of any dividend there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the directors
from time to time in their absolute discretion think proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation, or for such other purpose
as the directors shall think conducive to the interests of the
Corporation.
Annual Statement
50. The Chairman or a Vice Chairman or the President or a Vice President
shall present at each annual meeting of stockholders a statement of the
business and condition of the Corporation.
Notices
51. Whenever under the provisions of these By-Laws notice is required to
be given to any director, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in
writing, by mail, by depositing the same in the post office or letter box,
in a postpaid sealed wrapper, addressed to such stockholder, officer or
director at such address as appears on the books of the Corporation, or,
in default of other address, to such director, officer or stockholder at
the General Post Office in the City of Wilmington, Delaware, and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
Any stockholder, director or officer may waive any notice required to be
given under these By-Laws.
Amendments
52. These By-Laws, except as hereinabove otherwise provided, may be
altered or amended by the affirmative vote of a majority of the stock
issued and outstanding and entitled to vote thereat, at any regular or
special meeting of the stockholders if notice of the proposed alteration
or amendment be contained in the notice of the meeting, or, except as
hereinbefore and in the Certificate of Incorporation of this Corporation
otherwise provided, by the affirmative vote of a majority of the Board of
<PAGE>
Directors; provided, however, that no change of the time or place for the
election of directors shall be made within sixty days next before the day
on which such election is to be held, and that in case of any change of
such time or place notice thereof shall be given to each stockholder in
person or by letter mailed to his last known post office address at least
twenty days before the election is held.
<PAGE>
Exhibit 10(a).
NORWEST CORPORATION
EMPLOYEES' DEFERRED COMPENSATION PLAN
1. Eligibility. Each full-time employee of Norwest Corporation (the
"Corporation") or any of its subsidiaries who has target total compensation
of $80,000 or more ("Compensation") and who has also been selected for
participation in this Plan by the Human Resources Committee of the Board of
Directors or such officers of the Corporation to which said Committee has
delegated its authority ("Eligible Employee") shall be eligible to
participate in the Employees' Deferred Compensation Plan (the "Plan").
2. Deferral of Compensation. An Eligible Employee may elect to defer all or
a portion of his or her Compensation, that he or she may earn from the
Corporation or its subsidiaries during the calendar year (the "Deferral Year")
following the year in which the Deferral Election (as defined in Section 3(a))
is made. However, any other payroll deductions elected by the Eligible
Employee (such as payments for welfare or retirement benefits or insurance),
including FICA taxes, shall be made before any deferrals are made under this
Plan. Such election shall be made pursuant to Section 3.
3. Election to Participate and Defer Compensation.
a) Participation. An Eligible Employee becomes a participant in the Plan
by filing during an enrollment period specified by the Plan Administrator not
later than December 15 of the year preceding the Deferral Year an irrevocable
election (the "Deferral Election") with the Plan Administrator (as defined in
Section 10) through a process provided for that purpose. An Eligible Employee
who has made a Deferral Election under this Section for any year and has a
Deferral Account (as defined in Section 4) is deemed a "Participant." The
Deferral Election shall be effective only for the Deferral Year specified. A
new Deferral Election must be filed for each Deferral Year.
b) Deferral Election. The Deferral Election shall consist of the Eligible
Employee's election to defer compensation, election of Earnings Option(s) as
described in Section 4, and election of options to govern distribution of
amounts deferred. An Eligible Employee may elect to defer, in any
combination, all or part of the employee's 1) base salary earned and paid on a
periodic basis throughout the year, 2) incentive pay earned throughout the
year and paid after the end of the year, and 3) commissions and other periodic
incentive payments. The employee shall specify for each compensation category
an amount to be deferred per pay period, expressed either as a percentage or a
dollar amount.
c) Initial Deferral Election or Initial Eligibility. The initial Deferral
Elections by Participants will be made within thirty days of the effective
date of the Plan for compensation to be earned subsequent to the Deferral
Election. A new Eligible Employee must make a Deferral Election within thirty
days of the date the employee becomes eligible to participate in the Plan to
defer compensation earned in the current year.
d) Early Withdrawal. A Participant who wishes to receive payment of all or
part of his or her deferred Compensation on a date earlier than that specified
<PAGE>
in the Deferral Election may do so by filing with the Corporation a request
for early withdrawal. Such disbursements will be made from the earliest Plan
Year(s) in which the Participant has participated in the Plan. For the
appropriate Plan Year(s) account accruals to date shall be disbursed
completely, less a 10% early withdrawal penalty on the amount disbursed. The
10% penalty assessed for early withdrawal will be permanently forfeited by the
Participant and will be credited to the account of the Corporation. Further,
the Participant shall forfeit eligibility to participate in the Plan during
the two Plan Years following the year in which the early withdrawal is made,
but in no case shall an early withdrawal cause a current deferral election to
be suspended or canceled. In no case may a Participant take more than one
such withdrawal per year.
4. Deferral Account
a) Earnings Options. The earnings options available for selection in the
Deferral Election are as follows:
i) Norwest Corporation common stock option ("Common Stock Option").
ii) Norwest Bank Minnesota, N.A. one-year certificate of deposit option ("CD
Option")
iii) A selection of registered investment companies chosen by the Employee
Benefit Review Committee of the Corporation ("Fund Option").
A Participant must choose to allocate amounts credited to his or her account
under the Plan (the "Deferral Account") among the earnings options in
increments of five (5) percent. The allocation of earnings options must be
made by the Participant in advance of each Deferral Year and, once made,
cannot be changed for the deferred Compensation.
b) Periodic Credits. On each pay day on which the deferred Compensation
would otherwise be paid to a Participant, the Participant shall receive a
credit to his or her Deferral Account. The amount of each credit shall be
equal to the amount deferred from the Participant's paycheck, and each credit
shall be accounted for based on the earnings options selected by the
Participant in the Deferral Election. In the case of the Common Stock Option,
the credit shall be a number of shares of Norwest common stock ("Common
Stock") determined in accordance with paragraph 5(b) below.
c) Adjustments. That portion of a Participant's Deferral Account which is
accounted for under each earnings option shall be further adjusted by an
amount determined in accordance with the respective earnings option as
follows:
i) CD Option. Adjustments under the CD Option shall be made monthly as of
the last day of each month. The amount of the adjustment for the CD Option
shall be calculated by multiplying the Participant's average balance in the CD
Option for the month by an earnings factor based on the interest rate for a
Norwest Bank Minnesota, N.A. one-year certificate of deposit as determined
from time to time by the Plan Administrator.
ii) Fund Option. Adjustments under any Fund Option shall be made monthly as
of the last day of each month. The amount of the adjustment for a Fund Option
shall be calculated by multiplying the Participant's average balance in the
Fund Option for the month by an adjustment factor based on the reported
<PAGE>
positive or negative performance for the month of the registered investment
company assets relating to the Fund Option selected.
iii) Common Stock Option. Adjustments under the Common Stock Option shall
be made each time a dividend is paid on Common Stock in accordance with
paragraph 5(c) below.
5. Common Stock Option
a) Accounting. All periodic credits and all adjustments to a Participant's
Deferral Account under the Common Stock Option shall be credited in shares of
Common Stock. Shares of Common Stock shall be rounded to the nearest one-
hundredth of a share.
b) Determination of Number of Shares. The number of shares of Common
Stock credited to a Participant's Deferral Account under the Common Stock
Option shall be determined by dividing the amount of each periodic credit 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 last day of each
month (or, if the New York Stock Exchange is closed on that date, on the next
preceding date on which it was open).
c) Adjustments Based on Dividends. Adjustments under the Common Stock
Option shall be made each time a dividend is paid on Common Stock. The
number of shares credited to a Participant's Deferral Account for such
adjustments shall be determined by multiplying the dividend amount per share
by the number of shares credited to the Participant's Deferral 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 that date, on the next preceding date on
which it was open).
d) Number of Shares Issuable under the Plan. Subject to adjustment as
provided in Section 5(e), the maximum number of shares of Common Stock that
may be credited under the Plan is 500,000.
e) 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.
6. Distributions. Payment of Deferral Accounts shall be made pursuant to the
Participant's Deferral Election, subject to the following:
a) Upon Retirement. A Participant may designate in the Deferral
Election distribution of the Deferral Account in either a lump sum or
annual installments for a period of years not to exceed ten if the
Participant elects distribution to be made after his or her regular
<PAGE>
retirement date or early retirement as defined in Sec. 6.1 or 6.2 of the
Norwest Corporation Pension Plan.
b) Upon Disability. A Participant may designate in the Deferral
Election distribution of the Deferral Account in either a lump sum or up to
ten annual installments if he or she becomes disabled as described in the
Norwest Corporation Long Term Disability Plan. The Participant may also
specify that such a disability not cause a distribution before the
originally elected date.
c) Upon death. If a Participant dies before receiving all payments to
which he or she is entitled under the Plan, payment of the balance in the
Deferral Account shall be made as designated in the Deferral Election in a
lump sum 90 days following the date of death to such Participant's estate
or, if the Participant has designated a beneficiary in writing and the
written designation has been delivered to and accepted by the Plan
Administrator prior to the Participant's death, to such beneficiary.
d) Upon other termination of employment. If a Participant terminates
employment with the Corporation prior to regular or early retirement as
defined in Section 6.1 or 6.2 of the Norwest Corporation Pension Plan or
disability as described in the Norwest Corporation Long-Term Disability Plan
or death, the Deferral Account will be paid to the Participant in accordance
with the elections made in the termination section of the Deferral Election.
The termination-related choices include retaining the original election,
distribution in up to 10 annual installments, distribution in 60 days or
distribution on February 28 (or the next preceding business day if February 28
is not a business day) of the year following the date of termination.
e) Form of distributions. All distributions shall be payable as follows:
I) in cash for all Deferral Accounts for which the Participant elected an
earnings option other than the Common Stock Option; or
ii) if the Participant elected the Common Stock Option, in cash, or in
whole shares of Common Stock (together with cash in lieu of a fractional
share), or in a combination thereof, as the Participant shall elect prior to
payment. If no election is made, distribution shall be made in cash
f) Valuation of Deferral Accounts for distribution.
I) Amounts paid on any February 28 (or the next preceding business day if
February 28 is not a business day) shall be determined based on the
Participant's Deferral Account balance and/or on the price of Common Stock
determined pursuant to Section 5 as of the preceding December 31 (or the next
preceding business day if December 31 is not a business day). Amounts paid as
of any other date on which a distribution is made shall be determined based on
the Participant's Deferral Account balance and/or on the price of Common Stock
determined pursuant to Section 5 as of the end of the month in which the event
which triggers distribution occurs.
ii) The amount of each installment payment shall be a fraction of the value
of the Participant's Deferral Account as of the December 31 preceding the date
of the installment payment (or the next preceding business day if December 31
<PAGE>
is not a business day), 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. The balance remaining in the
Deferral Account shall continue to be adjusted based on the earnings options
selected by the Participant in the Deferral Election until the Deferral
Account is paid out in full. All installment payments will be made by pro
rata withdrawals from each earnings option elected by the Participant.
g) Timing of distributions.
I) All lump sum distributions shall be made as designated in the Deferral
Election on either February 28 (or the next preceding business day if February
28 is not a business day) of the year designated in the Deferral Election or
on the date 60 days following the occurrence of the event which triggers
distribution.
ii) All annual installment distributions shall be made on February 28 (or
the next preceding business day if February 28 is not a business day),
commencing on February 28 of the calendar year following disability or
retirement.
7. Nonassignability. No right to receive cash payments under the Plan nor
any shares of Common Stock credited to a Participant's Deferral Account shall
be assignable or transferable by a 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 ("Internal
Revenue Code"), Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or rules thereunder. The designation of a
beneficiary by a Participant does not constitute a transfer.
8. Withholding of Taxes. Distributions under this Plan shall be subject to
the deduction of the amount of any federal, state, or local income taxes,
Social Security tax, Medicare tax, or other taxes required to be withheld from
such payments by applicable laws and regulations.
9. Unsecured Obligation. Benefits payable under this Plan shall be an
unsecured obligation of the Corporation.
10. Administration. The Plan shall be administered by the Human Resources
Committee of the Corporation's Board of Directors (the "Plan Administrator")
or its delegate, which shall have the authority to interpret the Plan, to
adopt procedures for implementing the Plan, and to determine adjustments under
the Plan.
11. Amendment and Termination. The Human Resources Committee of the
Corporation's Board of Directors may at any time terminate, suspend, or amend
this Plan; provided, however, that the provisions of Sections 1, 2, 3, 4 and 5
may not be amended more than once in every six months other than to comport
with changes in the Internal Revenue Code, ERISA, or the rules thereunder or
the regulations of the Securities and Exchange Commission. No such action
shall deprive any Participant of any benefits to which he or she would have
been entitled under the Plan if termination of the Participant's employment
had occurred on the day prior to the date such action was taken, unless agreed
to by the Participant.
<PAGE>
12. Effective Date. The effective date of the Plan shall be determined by
the Human Resources Committee of the Board of Directors or such officers of
the Corporation to which said Committee has delegated its authority to set the
effective date.
<PAGE>
Exhibit 10(b).
NORWEST CORPORATION
PERFORMANCE DEFERRAL AWARD PLAN
FOR MORTGAGE BANKING EXECUTIVES
The Norwest Corporation Performance Deferral Award Plan for Mortgage
Banking Executives shall be established as a non-qualified compensation
deferral plan..
1. Eligibility. Each employee of Norwest Mortgage, Inc. or its
subsidiaries (the "Company"), a subsidiary of Norwest Corporation (the
"Corporation"), or of any subsidiary of the Corporation or its
subsidiaries substantially involved in the mortgage banking business who
participates in an incentive compensation plan requiring mandatory
deferral of incentive compensation shall be declared a Participant in
the Norwest Corporation Performance Deferral Award Plan for Mortgage
Banking Executives (the "Plan"). Incentive awards are made pursuant to
the provisions of the Participant's primary incentive compensation plan,
and mandated deferrals of such incentive awards shall be subject to the
provisions of this Plan.
2. Deferral of Compensation. The portion of a Participant's incentive
award required by that Participant's incentive compensation plan to be
deferred shall be converted to a Performance Deferral Award ("PDA") and
credited to an account in the Plan for the Participant's benefit ("PDA
Account"). The term of the deferral shall be determined pursuant to the
vesting schedule in Section 4(d).
3. Early Withdrawal. No Participant shall be allowed to withdraw any
portion of his or her PDA before that portion is fully vested, except as
set forth in Section 5.
4. PDA Account Credits. On the day on which an incentive award is
made, the Participant's PDA Account shall receive an initial credit
equal to the amount mandatorily deferred from the Participant's
incentive award. This amount shall be credited in Phantom Shares of
Norwest Common Stock (Common Stock). Phantom Shares shall be rounded to
the nearest one-hundredth of a share. Participants may not elect other
earnings options for PDA Accounts.
a) Determination of Number of Shares. The number of Phantom Shares
credited to a Participant's PDA Account shall be determined by dividing
the amount of each initial credit 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 day the incentive award is made (or,
if the New York Stock Exchange is closed on that date, on the next
preceding date on which it was open) ("Fair Market Value").
b) Adjustments Based on Dividends. Adjustments to a Participant's PDA
Account shall be made each time a dividend is paid on Common Stock.
The number of Phantom Shares credited to a Participant's PDA Account for
such adjustments shall be determined by multiplying the dividend amount
per share of Common Stock by the number of Phantom Shares credited to
the Participant's Deferral 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 that date, on the next preceding date
on which it was open).
<PAGE>
c) 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 Phantom Shares credited under
the Plan shall be increased, decreased, or changed in like manner as if
such Phantom Shares had been issued and outstanding, fully paid, and
nonassessable Common Stock at the time of such occurrence.
d) Vesting. Each PDA shall vest and be fully payable according to the
following schedule:
33 percent on March 1 of the first year following the year in which the
award is granted,
33 percent on March 1 of the second year following the year in which the
award is granted,
34 percent on March 1 of the third year following the year in which the
award is granted,
No PDA shall vest otherwise, except in cases of change of control,
retirement, or death or disability as described in Section 5 below.
5. Distribution. Payment (unless an extended deferral is made pursuant
to Section 5(a) hereunder ) of PDA Account balances shall be made
according to the vesting schedule above, subject to the following:
a) Upon Vesting. A Participant will receive the value of the vested
portion of his or her PDA Account in a lump sum within sixty days of the
date of vesting, unless that Participant has elected to defer some or
all of the vested portion into the Norwest Corporation Elective Deferred
Compensation Plan for Mortgage Banking Executives, as set forth in
Section 5(g) Cash payments shall be made pursuant to Section 5(f).
b) Upon Change of Control. All PDA Accounts will become immediately
fully vested and payable in a lump sum if either of the following
conditions applies.
i) Reorganization. If substantially all of the assets of the Corporation
are acquired by another corporation or in case of a reorganization of
the Corporation involving the acquisition of the Corporation by another
entity, then all of each Participant's unvested PDA Account balance
shall vest immediately and become payable to the Participant.
ii) Board Changes. On the date that a majority of the Board of
Directors of the Corporation shall be persons other than persons (a) for
whose election proxies have been solicited by the Board or (b) who are
then serving as directors appointed by the Board to fill vacancies on
the Board caused by death or resignation (but not removal) or to fill
newly created directorships, then the unvested PDA Account balance of
each Participant who is an employee of the Company, the Corporation, or
any of its subsidiary or affiliated companies ("Norwest") immediately
prior to said date and who ceases to be an employee of Norwest within
six months after said date for any reason other than as a result of
death, disability or retirement shall vest immediately and become
payable to the Participant
<PAGE>
c) Upon Retirement or Disability. A Participant will receive
distribution of his or her PDA Account in a lump sum within sixty days
following his or her disability as described in the Norwest Corporation
Long Term Disability Plan or after his or her regular retirement date or
early retirement as defined in Sec. 6.1 or 6.2 of the Norwest
Corporation Pension Plan.
d) Upon death. If a Participant dies before all that Participant's
PDA's vest under the Plan, the Participant's PDA Accounts shall
completely and immediately vest, and distribution of the value will be
made in a lump sum on February 28 (or the next preceding business day if
February 28 is not a business day) of the year following the date of
death to such Participant's estate or, if the Participant has designated
a beneficiary in writing and the written designation has been delivered
to and accepted by the Plan Administrator prior to the Participant's
death, to such beneficiary.
e) Upon other termination of employment. No unvested amounts shall be
paid to a Participant who voluntarily or involuntarily terminates
employment with the Norwest before his or her regular retirement date or
before early retirement as defined in Sec. 6.1 or 6.2 of the Norwest
Corporation Pension Plan, except in cases of change of control, death or
disability as described above.
f) Forms of Distributions. All distributions of vested PDAs shall be
payable in cash in a lump sum.
g) Deferral of vesting mandatory deferrals. A Participant in the Plan
shall be entitled to make an irrevocable election to defer receipt of
any unvested portion (or portions) of his or her PDA Account balance to
the Norwest Elective Deferred Compensation Plan for Mortgage Banking
Executives ("Extended Deferral Election"). Such election must be
received and accepted by the Plan Administrator by March 30 of the year
prior to the year in which the portion (or portions) shall vest. PDA
Account balances transferred to the Norwest Corporation Elective
Deferred Compensation Plan for Mortgage Banking Executives shall be
subject to all provisions of that plan and shall no longer be governed
by any provision of this Plan. The burden of making a deferral under
this section shall rest with the Participant and not with the Company,
the Corporation, or the Plan Administrator.
h) Valuation of PDA Accounts for Distribution or Extended Deferral.
The value of the portion of a Participant's PDA Account to be
distributed or subjected to an Extended Deferral Election shall be
determined based on the Participant's Phantom Share balance in his or
her PDA Account and on the Fair Market Value of Common Stock determined
pursuant to Section 4(b) for the day on which the portion vests. The
remaining PDA Account balance shall continue to be credited pursuant to
Section 4 above.
6. Non-assignability. No right to receive payments under the Plan nor
any portion of a Participant's PDA Account shall be assignable or
transferable by a 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 ("Internal
Revenue Code"), Title I of the Employee Retirement Income Security Act
of 1974 ("ERISA), or rules thereunder. The designation of a beneficiary
does not constitute a transfer.
<PAGE>
7. Unsecured Obligation. Benefits payable under this Plan shall be an
unsecured obligation of the Corporation.
8. No Guarantee of Employment. Participation in this Plan does not
constitute a guarantee or contract of employment with the Company, the
Corporation, or any of its subsidiary or affiliated companies.
Participation in the Plan shall in no way limit or determine Norwest's
right to determine the duration, terms or conditions of the
Participant's employment.
9. Withholding of Taxes. Distributions under this Plan shall be
subject to the deduction of the amount of any federal, state, or local
income taxes, Social Security tax, Medicare tax, or other taxes required
to be withheld from such payments by applicable laws and regulations.
10. Administration. The Plan shall be administered by the Senior Vice
President of Human Resources (the "Plan Administrator") or his or her
delegate, who shall have the authority to interpret the Plan, to adopt
procedures for implementing the Plan, and to determine adjustments under
the Plan.
11. Amendment and Termination. The Human Resources Committee of the
Corporation's Board of Directors or the Chairman, President, or any
Executive or Senior Vice President may at any time terminate, suspend,
or amend this Plan. No such action shall deprive any Participant of any
benefits to which he or she would have been entitled under the Plan if
termination of the Participant's employment had occurred on the day
prior to the date such action was taken, unless agreed to by the
Participant.
12. Effective Date. The effective date of the Plan shall be January 1,
1995.
<PAGE>
Exhibit 10(c).
NORWEST CORPORATION
ELECTIVE DEFERRED COMPENSATION PLAN
FOR MORTGAGE BANKING EXECUTIVES
The Norwest Corporation Elective Deferred Compensation Plan for Mortgage
Banking Executives shall be established by Norwest Corporation as a non-
qualified compensation deferral plan.
1. Eligibility. Each employee of Norwest Mortgage, Inc. or its
subsidiaries (the "Company"), a subsidiary of Norwest Corporation (the
"Corporation"), or of any subsidiary of the Corporation or its
subsidiaries substantially involved in the mortgage banking business who
participates in an incentive compensation plan requiring mandatory
deferral of incentive compensation shall be eligible to participate in
the Norwest Corporation Elective Deferred Compensation Plan for Mortgage
Banking Executives (the "Plan"). Mandatory deferrals of incentive
compensation as required by the Participant's primary compensation plan
shall be accomplished pursuant to the appropriate compensation plan, and
voluntary deferrals, if any, shall be subject to the terms of this Plan.
2. Deferral of Compensation. An Eligible Employee may elect to defer
any or all of his or her available Compensation that he or she may earn
from the Corporation or its subsidiaries during the calendar year (the
"Deferral Year") following the year in which the Deferral Election (as
defined in Section 3(a)) is made; provided however, that any other
payroll deductions elected by the Eligible Employee (such as payments
for welfare or retirement benefits or insurance), including FICA taxes,
shall be made before any deferrals are made under this Plan. Such
election shall be made pursuant to Section 3. Available Compensation
shall include (but not be limited to) a Participant's salary, that
portion of the Participant's annual incentive compensation not
mandatorily deferred as required by the Participant's primary
compensation plan and vesting portions of PDA Deferral Accounts as
described in Section 5 hereunder.
3. Election to Participate and Defer Compensation.
a) Participation. An Eligible Employee becomes a Participant in the
Plan by filing not later than December 15 of the year preceding the
Deferral Year an irrevocable election (the "Deferral Election") with the
Plan Administrator (as defined in Section 11) on a form provided for
that purpose. An Eligible Employee who has made a Deferral Election
under this Section for any year and has a Deferral Account (as defined
in Section 4) is deemed a "Participant." The Deferral Election shall be
effective only for the Deferral Year specified. A new Deferral Election
must be filed for each Deferral Year. An Eligible Employee may also
become a Participant by filing a PDA Deferral Election as described in
Section 5.
b) Deferral Election. The Deferral Election shall consist of two
parts: 1) the deferral of incentive pay which is earned throughout the
year and paid after the end of the year, and 2) the deferral of base pay
or incentives, which are paid on a periodic basis during the year. The
employee shall specify in the Deferral Election a) an amount to be
deferred, expressed either as a percentage or a dollar amount of
Compensation otherwise payable in cash to the employee; b) an earnings
<PAGE>
option (or options) as described in Section 4; and c) distribution
options described in Section 7.
c) Initial Deferral Election or Initial Eligibility. A newly Eligible
Employee must make a Deferral Election within thirty days of the date
the employee becomes eligible to participate in the Plan to defer
compensation earned in the current year.
4. Deferral Account
a) Earnings Options. The earnings options available for selection in
the Deferral Election are as follows:
i) "Phantom Stock Option", wherein the Account balance earns as though
it were invested in Norwest Corporation Common Stock ("Common Stock").
ii) Norwest Bank Minnesota, N.A. one-year certificate of deposit option
("CD Option").
iii) A selection of registered investment companies chosen by the
Employee Benefit Review Committee of the Corporation ("Fund Option").
A Participant may choose to allocate amounts credited to his or her
account under the Plan (the "Elective Deferral Account") among the
earnings options in increments of five (5) percent. The allocation of
earnings options must be made by the Participant in advance of each
Deferral Year and, once made, cannot be changed for the deferred
Compensation. If the Participant makes no earnings option election, the
Participant will be deemed to have selected the Phantom Stock Option for
that Deferral Year.
b) Periodic Credits. On each pay day on which the deferred Compensation
would otherwise be paid to a Participant, the Participant shall receive
a credit to his or her Deferral Account. The amount of each credit
shall be equal to the amount deducted from the Participant's paycheck
according to his or her Deferral Election, and each credit shall be
accounted for based on the earnings options selected by the Participant
in the Deferral Election. In the case of the Phantom Stock Option, the
credit shall be a number of units each equal in value to a share of
Common Stock ("Phantom Shares") determined in accordance with paragraph
6(b) below.
c) Adjustments. That portion of a Participant's Deferral Account which
is accounted for under each earnings option shall be further adjusted by
an amount determined in accordance with the respective earnings option
as follows:
i) CD Option. Adjustments under the CD Option shall be made monthly as
of the last day of each month. The amount of the adjustment for the CD
Option shall be calculated by multiplying the Participant's average
balance in the CD Option for the month by an earnings factor based on
the interest rate for a Norwest Bank Minnesota, N.A. one-year
certificate of deposit as determined from time to time by the Plan
Administrator.
ii) Fund Option. Adjustments under any Fund Option shall be made monthly
as of the last day of each month. The amount of the adjustment for a
Fund Option shall be calculated by multiplying the Participant's average
balance in the Fund Option for the month by an adjustment factor based
<PAGE>
on the reported positive or negative performance for the month of the
registered investment company assets relating to the Fund Option
selected.
iii) Phantom Stock Option. Adjustments under the Phantom Stock Option
shall be made each time a dividend is paid on Common Stock in accordance
with paragraph 6(c) below.
5. Deferral of vesting portions of mandatory deferrals. Elections to
defer portions of a Participant's mandatory deferral account ("PDA
Account") vesting under the terms of the Norwest Corporation Performance
Deferral Award Plan for Mortgage Banking Executives, or from other plans
which may be approved from time to time, shall be allowed, subject to
all provisions of this Plan, the Norwest Corporation Performance
Deferral Award Plan for Mortgage Banking Executives (the "PDA Plan) and
the Participant's primary incentive compensation plan. A Participant
with a PDA Account balance is entitled to make an irrevocable election
(a "PDA Deferral Election") to defer of all or part of his or her
vesting PDA Account balance to the Plan.
Such election must be made on a form provided for that purpose and
accepted by the Plan Administrator by March 31 of the year prior to the
year in which the portion of the PDA vests and would otherwise be
payable under the provisions of the PDA Plan. A PDA Deferral Election
is separate from any other Deferral Election. Compensation deferred
according to a PDA Deferral Election is subject to Earnings and
Distribution Options recorded only on the PDA Deferral Election and is
not subject to Earnings and Distribution Options recorded on the
Deferral Election for any Plan Year.
6. Phantom Stock Option.
a) Accounting. All periodic credits and all adjustments to a
Participant's Deferral Account under the Phantom Stock Option shall be
credited in Phantom Shares. Phantom Shares shall be rounded to the
nearest one-hundredth of a Phantom Share.
b) Determination of Number of Phantom Shares. The number of Phantom
Shares credited to a Participant's Deferral Account under the Phantom
Stock Option shall be determined by dividing the amount of each periodic
credit 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 last day of each month (or, if the New York Stock Exchange is
closed on that date, on the next preceding date on which it was open).
c) Adjustments Based on Dividends. Adjustments under the Phantom Stock
Option shall be made each time a dividend is paid on Common Stock. The
number of Phantom Shares credited to a Participant's Deferral Account
for such adjustments shall be determined by multiplying the dividend
amount per share of Common Stock by the number of Phantom Shares
credited to the Participant's Deferral 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 that date, on the next preceding date
on which it was open).
<PAGE>
d) 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 Phantom Shares credited under
the Plan shall be increased, decreased, or changed in like manner as if
such Phantom Shares had been issued and outstanding, fully paid, and
nonassessable Common Stock at the time of such occurrence.
7. Distributions. Payment of Deferral Accounts shall be made pursuant
to the Participant's Deferral Election, subject to the following:
a) Upon retirement or a date certain. A Participant may designate in
the Deferral Election distribution of the Deferral Account in either a
lump sum or annual installments for a period of years not to exceed ten
if the Participant elects distribution to be made either :
1) following his or her regular retirement date or early retirement as
defined in Sec. 6.1 or 6.2 of the Norwest Corporation Pension Plan, or
2) in the year or years of the Participant's choosing.
b) Upon death. If a Participant dies before receiving all payments to
which he or she is entitled under the Plan, payment of the balance in
the Deferral Account shall be made in a lump sum on the date 90 days
after the date of the Participant's death to such Participant's estate
or, if the Participant has designated a beneficiary in writing and the
written designation has been delivered to and accepted by the Plan
Administrator prior to the Participant's death, to such beneficiary.
c) Upon disability. If a Participant becomes disabled, as described by
the Norwest Corporation Long-Term Disability Plan, payment of the
balance in the Deferral Account shall be made according to the Deferral
Election, either
1) in a lump sum 60 days after the date of disability,
2) in a lump sum on the February 28 of the first full calendar year
following the year in which the Participant becomes disabled,
3) in two to ten annual installments beginning February 28 of the first
full calendar year following the year in which the Participant becomes
disabled, or
4) on the date when the distribution would have been made had the
Participant not become disabled.
c) Upon other termination of employment. If a Participant terminates
employment with the Corporation, the Company, or any subsidiary or
affiliate thereof prior to regular or early retirement as defined in
Section 6.1 or 6.2 of the Norwest Corporation Pension Plan or disability
as described in the Norwest Corporation Long-Term Disability Plan,
payment of the balance in the Deferral Account shall be made according
to the Deferral Election, either
1) in a lump sum 60 days after the date of termination,
2) in a lump sum on the February 28 of the first full calendar year
following the year in which the Participant's employment terminates,
<PAGE>
3) in two to ten annual installments beginning February 28 of the first
full calendar year following the year in which the Participant's
employment terminates, or
4) on the date when the distribution would have been made had the
Participant's employment not terminated.
d) Early Withdrawal. A Participant who wishes to receive payment of
all or part of his or her deferred Compensation on a date earlier than
that specified in the Deferral Election may do so by filing a request
for early withdrawal with the Plan Administrator. In fulfilling the
request, the Plan Administrator will distribute an amount equal to (i)
the entire amounts credited to the Participant's Deferral Account for a
number of Deferral Years sufficient to cover the amount requested,
beginning with the earliest Deferral Year in which the Participant
participated in the Plan, less (ii) an early withdrawal penalty equal to
10% of the amounts credited for such Year(s). The amount distributed
will never be less than the entire amount credited including adjustments
for the full Deferral Year or Years less the 10% early withdrawal
penalty. In determining the sequence of deferrals for purposes of early
withdrawal, any amount deferred according to a PDA Deferral Election
will be considered effective as of the day that amount was deferred.
The Participant shall permanently forfeit the early withdrawal penalty
and shall forfeit eligibility to make Deferral Elections for the two
calendar years following the year in which the early withdrawal is
requested. In no case shall an early withdrawal cause a current
Deferral Election to be suspended or canceled. A Participant may not
request more than one early withdrawal per calendar year.
e) Form of distributions. All distributions shall be payable in cash
for all Deferral Accounts, regardless of the earnings options elected.
Distributions shall be made in lump sums unless an election has been
duly made and accepted to have distributions paid in installments
following retirement or disability.
f) Valuation of Deferral Accounts for distribution.
i) Amounts paid on any February 28 (or the next preceding business day
if February 28 is not a business day) shall be determined based on the
Participant's Deferral Account balance and/or on the price of Common
Stock determined pursuant to Section 6 as of the preceding December 31
(or the next preceding business day if December 31 is not a business
day). Amounts paid as of any other date on which a distribution is made
shall be determined based on the Participant's Deferral Account balance
and/or on the price of Common Stock determined pursuant to Section 6 as
of the end of the month in which the event which triggers distribution
occurs
ii) The amount of each installment payment shall be a fraction of the
value of the Participant's Deferral Account as of the December 31
preceding the date of the installment payment (or the next preceding
business day if December 31 is not a business day), 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. The balance remaining in the Deferral
Account shall continue to be adjusted based on the earnings options
selected by the Participant in the Deferral Election until the Deferral
Account is paid out in full. All installment payments will be made by
<PAGE>
pro rata withdrawals from each earnings option elected by the
Participant.
g) Timing of distributions.
i) All lump sum distributions shall be made as designated in the
Deferral Election on either February 28 (or the next preceding business
day if February 28 is not a business day) of the year designated in the
Deferral Election or on the date 60 days following the occurrence of the
event which triggers distribution.
ii) All annual installment distributions shall be made on February 28
(or the next preceding business day if February 28 is not a business
day), commencing on February 28 of the calendar year following
disability or retirement.
8. Non-assignability. No right to receive cash payments under the Plan
shall be assignable or transferable by a 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 ("Internal Revenue Code"), Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or rules
thereunder. The designation of a beneficiary by a Participant does not
constitute a transfer.
9. Withholding of Taxes. Payments under this Plan shall be subject to
the deduction of the amount of any federal, state, or local income
taxes, Social Security tax, Medicare tax, or other taxes required to be
withheld from such payments by applicable laws and regulations.
10. Unsecured Obligation. Benefits payable under this Plan shall be an
unsecured obligation of the Corporation.
11. Administration. The Plan shall be administered by the Senior Vice
President of Human Resources (the "Plan Administrator") or his or her
delegate, who shall have the authority to interpret the Plan, to adopt
procedures for implementing the Plan, and to determine adjustments under
the Plan.
12. Effective Date. The effective date of the Plan shall be January 1,
1995.
13. Amendment and Termination. The Human Resources Committee of the
Corporation's Board of Directors or the Chairman, President or any
Executive or Senior Vice President may at any time terminate, suspend,
or amend this Plan. No such action shall deprive any Participant of any
benefits to which he or she would have been entitled under the Plan if
termination of the Participant's employment had occurred on the day
prior to the date such action was taken, unless agreed to by the
Participant.
<PAGE>
Exhibit 11.
Norwest Corporation and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
In thousands, except per common share amounts Quarter Ended
March 31,
1997 1996
PRIMARY:
Weighted average number of common shares
outstanding ..................................... 372,788 357,392
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price .................................... 5,140 3,444
377,928 360,836
Net income ........................................ $321,861 271,382
Less dividends accrued on preferred stock ........ 4,441 4,441
Net income, as adjusted .......................... $317,420 266,941
Net income per common share ...................... $ 0.84 0.74
FULLY DILUTED:
Weighted average number of common shares
outstanding ..................................... 372,788 357,392
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 ............................. 5,140 3,832
Assumed conversion of 6 3/4% convertible
subordinated debentures due 2003 ................ 17 18
377,945 361,243
Net income ........................................ $321,861 271,382
Less dividends accrued on preferred stock ........ 4,441 4,441
Add 6 3/4% convertible subordinated debentures
interest and amortization of debt expense,
net of income tax effect ........................ 1 1
Net income, as adjusted .......................... $317,421 266,942
Net income per common share....................... $ 0.84 0.74
<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 1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $ 492,379 412,552 1,781,509 1,422,814 1,180,601 879,755 645,568
Capitalized interest - (14) (14) (112) (69) (65) (24)
Income before income
taxes and capitalized
interest 492,379 412,538 1,781,495 1,422,702 1,180,532 879,690 645,544
Fixed charges 665,686 648,396 2,685,447 2,503,603 1,640,049 1,485,936 1,651,664
Total income for
computation $1,158,065 1,060,934 4,466,942 3,926,305 2,820,581 2,365,626 2,297,208
Total income for
computation excluding
interest on deposits
from fixed charges $ 801,948 750,949 3,142,024 2,770,005 1,957,224 1,513,317 1,281,619
Computation of Fixed
Charges:
Net rental
expense (a) $ 49,641 45,614 205,409 166,591 149,462 128,573 123,342
Portion of rentals
deemed
representative
of interest $ 16,547 15,205 68,470 55,530 49,821 42,858 41,114
Interest:
Interest on
deposits 356,117 309,985 1,324,918 1,156,300 863,357 852,309 1,015,589
Interest on
federal funds
and other
short-term
borrowings 99,089 110,776 454,013 515,646 290,211 238,046 277,835
Interest on
long-term debt 193,933 212,416 838,032 776,015 436,591 352,658 317,102
Capitalized
interest - 14 14 112 69 65 24
Total interest 649,139 633,191 2,616,977 2,448,073 1,590,228 1,443,078 1,610,550
Total fixed
charges $ 665,686 648,396 2,685,447 2,503,603 1,640,049 1,485,936 1,651,664
Total fixed
charges excluding
interest on
deposits $ 309,569 338,411 1,360,529 1,347,303 776,692 633,627 636,075
Ratio of Income
to Fixed Charges:
Excluding
interest on
deposits 2.59x 2.22 2.31 2.06 2.52 2.39 2.01
Including
interest on
deposits 1.74x 1.64 1.66 1.57 1.72 1.59 1.39
(a) Includes equipment rentals.
</TABLE>
<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 1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $ 492,379 412,552 1,781,509 1,422,814 1,180,601 879,755 645,568
Capitalized interest - (14) (14) (112) (69) (65) (24)
Income before income
taxes and capitalized
interest 492,379 412,538 1,781,495 1,422,702 1,180,532 879,690 645,544
Fixed charges 665,686 648,396 2,685,447 2,503,603 1,640,049 1,485,936 1,651,664
Total income for
computation $1,158,065 1,060,934 4,466,942 3,926,305 2,820,581 2,365,626 2,297,208
Total income for
computation excluding
interest on deposits
from fixed charges $ 801,948 750,949 3,142,024 2,770,005 1,957,224 1,513,317 1,281,619
Computation of Fixed
Charges:
Net rental
expense (a) $ 49,641 45,614 205,409 166,591 149,462 128,573 123,342
Portion of rentals
deemed
representative
of interest $ 16,547 15,205 68,470 55,530 49,821 42,858 41,114
Interest:
Interest on
deposits 356,117 309,985 1,324,918 1,156,300 863,357 852,309 1,015,589
Interest on
federal funds
and other
short-term
borrowings 99,089 110,776 454,013 515,646 290,211 238,046 277,835
Interest on
long-term debt 193,933 212,416 838,032 776,015 436,591 352,658 317,102
Capitalized
interest - 14 14 112 69 65 24
Total interest 649,139 633,191 2,616,977 2,448,073 1,590,228 1,443,078 1,610,550
Total fixed
charges $ 665,686 648,396 2,685,447 2,503,603 1,640,049 1,485,936 1,651,664
Total fixed
charges excluding
interest on
deposits $ 309,569 338,411 1,360,529 1,347,303 776,692 633,627 636,075
Preferred stock
dividends 4,441 4,441 17,763 41,220 27,827 31,170 32,219
Pre-tax earnings
needed to meet
preferred stock
dividend
requirements 6,793 6,751 27,424 61,349 41,044 44,728 44,367
Total combined fixed
charges and preferred
stock dividends $ 672,479 655,147 2,712,871 2,564,952 1,681,093 1,530,664 1,696,031
Total combined
fixed charges
and preferred stock
dividends excluding
interest on
deposits $ 316,362 345,162 1,387,953 1,408,652 817,736 678,355 680,442
(a) Includes equipment rentals.
</TABLE>
<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 1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Income to Combined
Fixed Charges and Preferred
Stock Dividends:
Excluding interest on
deposits 2.53x 2.18 2.26 1.97 2.39 2.23 1.88
Including interest on
deposits 1.72x 1.62 1.65 1.53 1.68 1.55 1.35
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCH 31, 1997 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,157
<INT-BEARING-DEPOSITS> 31
<FED-FUNDS-SOLD> 1,201
<TRADING-ASSETS> 327
<INVESTMENTS-HELD-FOR-SALE> 21,498
<INVESTMENTS-CARRYING> 736
<INVESTMENTS-MARKET> 769
<LOANS> 40,369
<ALLOWANCE> 1,062
<TOTAL-ASSETS> 83,580
<DEPOSITS> 52,026
<SHORT-TERM> 8,705
<LIABILITIES-OTHER> 4,691
<LONG-TERM> 11,971
0
187
<COMMON> 635
<OTHER-SE> 5,365
<TOTAL-LIABILITIES-AND-EQUITY> 83,580
<INTEREST-LOAN> 1,095
<INTEREST-INVEST> 333
<INTEREST-OTHER> 179
<INTEREST-TOTAL> 1,607
<INTEREST-DEPOSIT> 356
<INTEREST-EXPENSE> 649
<INTEREST-INCOME-NET> 958
<LOAN-LOSSES> 109
<SECURITIES-GAINS> (4)
<EXPENSE-OTHER> 1,048
<INCOME-PRETAX> 492
<INCOME-PRE-EXTRAORDINARY> 492
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 322
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
<YIELD-ACTUAL> 5.62
<LOANS-NON> 174
<LOANS-PAST> 94
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,041
<CHARGE-OFFS> 147
<RECOVERIES> 35
<ALLOWANCE-CLOSE> 1,062
<ALLOWANCE-DOMESTIC> 679
<ALLOWANCE-FOREIGN> 36
<ALLOWANCE-UNALLOCATED> 347
</TABLE>
