SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 14, 1997
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-2979 41-0449260
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-667-1234
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ITEM 5. Other Events.
RECENT OPERATING RESULTS
Norwest Corporation's ("Norwest") net income for the quarter ended June 30,
1997 was $331.4 million, or 86 cents per fully diluted common share, an
increase of 16.1 percent and 13.2 percent, respectively, over the $285.4
million or 76 cents per fully diluted common share, earned in the second
quarter of 1996. Return on realized common equity was 22.1 percent and return
on assets was 1.61 percent for the second quarter of 1997, compared with 22.1
percent and 1.50 percent, respectively, in the same period of 1996.
For the first six months of 1997, net income was $653.3 million, or $1.70 per
fully diluted common share, an increase of 17.3 percent and 13.3 percent,
respectively, over the $556.8 million, or $1.50 per fully diluted common share
earned in the first six months of 1996. Return on realized common equity was
22.4 percent and return on assets was 1.62 percent for the first six months of
1997 compared with 22.4 percent and 1.50 percent, respectively, in the same
period a year ago.
Consolidated net interest income in the second quarter of 1997 was $999.8
million, compared with $916.5 million in the second quarter of 1996, an
increase of 9.1 percent. The improvement from the second quarter of 1996 was
principally due to a 6.4 percent growth in average earning assets and a 15
basis point increase in net interest margin from 5.54 percent to 5.69 percent.
Net interest income increased 8.3 percent to $1,958.1 million for the first
six months of 1997, compared with the same period in 1996. The improvement
from the first half of 1996 was principally due to a 7.6 percent growth in
average earning assets.
Norwest provided $122.8 million for credit losses in the second quarter of
1997, or 122 basis points of average loans and leases on an annualized basis.
This compares with $87.4 million or 92 basis points in the same period a year
ago. Net credit losses totaled $114.8 million in the second quarter of 1997,
up from $83.9 million in the second quarter of 1996 principally due to higher
levels of charge-offs in regions which have had acquisitions and higher
consumer credit charge-offs. As a percent of average loans and leases, net
credit losses were 114 basis points in the second quarter of 1997, compared
with 88 basis points in the same period a year ago. For the first six months
of 1997, Norwest's provision for credit losses amounted to $231.8 million or
117 basis points of average loans and leases on an annualized basis, compared
with $175.2 million or 94 basis points for the same period of 1996. Net credit
losses, as a percent of average loans and leases were 114 basis points in the
first half of 1997, compared with 91 basis points in the same period of 1996.
Non-performing assets totaled $232.7 million at June 30, 1997, an increase of
$32.7 million from year-end 1996. As a percent of loans, leases and other
real estate owned, non-performing assets were 0.57 percent at June 30, 1997,
compared with 0.58 percent at the same time last year. Reserve coverage of
non-performing assets was 569.9 percent at June 30, 1997, and the allowance
for credit losses was 2.63 percent of loans and leases.
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Consolidated non-interest income was $756.4 million in the second quarter of
1997, an increase of $114.5 million, or 17.8 percent, from the second quarter
of 1996. Contributing to the 1997 increase was continued growth in trust, fees
and service charges, insurance and investment securities and venture capital
gains. For the first six months of 1997, consolidated non-interest income
was up $246.3 million to $1,441.0 million, an increase of 20.6 percent over
1996. The increase was due to higher revenues in essentially all categories.
Consolidated non-interest expenses were $1,119.7 million in the second quarter
of 1997, an increase of 10.7 percent from second quarter of 1996. The
increase in non-interest expenses was the result of higher operating expenses
associated with acquisitions and $28.5 million in other non-interest expense
due to writedowns of intangible and other assets. For the six months ended
June 30, 1997, non-interest expenses increased $206.9 million, or 10.6
percent, over the six months ended June 30, 1996, and primarily reflect
increased expenses related to acquisitions. During 1997, Norwest recorded
non-recurring charges of $6.0 million related to completed acquisitions.
Norwest's Banking Group reported earnings of $229.7 million in the second
quarter of 1997, 21.4 percent above second quarter 1996 earnings of $189.3
million. The increased earnings were principally due to growth in trust, fees
and service charges, insurance and securities and venture capital gains,
partially offset by higher non-interest expenses over 1996 for acquisition-
related operating expenses. At June 30, 1997, Norwest Venture Capital had
net unrealized appreciation in its investment portfolio of $187.9 million.
For the first six months of 1997, the Banking Group's earnings were $456.2
million, an increase of 23.1 percent over the $370.5 million earned in the
first half of 1996.
Mortgage Banking earned $35.3 million in the quarter ended June 30, 1997,
compared with $30.7 million in the second quarter of 1996. Net gains on sales
of mortgages and servicing rights in the second quarter of 1997 amounted to
$11.9 million, compared with $27.3 million in the same quarter last year. The
pipeline of unclosed mortgage loans was $11.0 billion at June 30, 1997,
compared with $8.4 billion at June 30, 1996 and $7.7 billion at December 31,
1996. Mortgage loan originations were $12.6 billion in the second quarter of
1997, compared with $14.9 billion in the second quarter of 1996. The
servicing portfolio increased $23.1 billion from the second quarter of 1996
and $11.4 billion from year-end 1996, and at June 30, 1997, totaled $191.1
billion with a weighted average interest rate of 7.78 percent. Capitalized
mortgage servicing rights amounted to $2.7 billion, or 142 basis points of the
mortgage servicing portfolio at June 30, 1997. Amortization of capitalized
mortgage servicing rights was $131.7 million for the quarter ended June 30,
1997, compared with $69.2 million for the quarter ended June 30, 1996. In the
second quarter of 1997, Norwest elected to accelerate amortization of
capitalized servicing rights and recorded an additional $42.0 million of
amortization. For the first six months of 1997, Mortgage Banking's earnings
were $69.1 million, an increase of 13.1 percent over the $61.1 million
earned in the first half of 1996.
Norwest Financial reported second quarter 1997 net income of $66.4 million, an
increase of 1.5 percent from second quarter 1996 earnings of $65.4 million.
For the first six months of 1997, Norwest Financial's earnings were $128.0
million, an increase of 2.2 percent over the $125.2 million earned in the
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first half of 1996. The quarter and year-to-date increases primarily reflect
increased net interest income partially offset by a higher provision for
credit losses. Norwest Financial's net charge-offs in the second quarter of
1997 were $58.6 million, compared with $52.3 million in the second quarter of
1996. Norwest recently agreed to acquire Fidelity Acceptance Corporation, an
automobile finance company with $1.1 billion in receivables and 150 locations
in 31 states and Guam, which will be managed by Norwest Financial. This
transaction is expected to close in the third quarter of 1997.
At June 30, 1997, consolidated total assets were $83.9 billion, compared with
$80.2 billion at December 31, 1996. Consolidated loans and leases, net of
unearned discount, increased 3.6 percent from December 31, 1996, and totaled
$40.8 billion at June 30, 1997. Consolidated total deposits were $52.0
billion at June 30, 1997, compared with $50.1 billion at December 31, 1996.
Consolidated long-term debt at June 30, 1997, was $12.0 billion, compared
with $13.1 billion at year-end 1996. Consolidated stockholders' equity was
$6.5 billion at June 30, 1997, compared with $6.1 billion at December 31,
1996. Tier 1 and total capital ratios were 8.96 percent and 10.73 percent,
respectively, at June 30, 1997, compared with 8.63 percent and 10.42 percent,
respectively, at December 31, 1996. The leverage ratio was 6.33 percent at
June 30, 1997, and 6.15 percent at December 31, 1996. Dividends declared per
common share were 30 cents for the second quarter of 1997, compared with 27
cents for the same period of 1996. The dividend payout ratio was 34.9 percent
and 35.5 percent for the three months ended June 30, 1997, and 1996,
respectively.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Norwest Corporation
(Registrant)
Dated: July 21, 1997 By: \s\ Michael A. Graf
Senior Vice President and
Controller
(Principal Accounting Officer)
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