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 September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2979
WELLS FARGO & COMPANY
formerly known as
Norwest Corporation
A Delaware Corporation-I.R.S. No. 41-0449260
420 Montgomery Street
San Francisco, California 94163
Telephone (800) 411-4932
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 October 31, 1998 768,938,001 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 -
September 30, 1998 and December 31, 1997..................... 3
2. Consolidated Statements of Income -
Quarters and Nine Months Ended September 30, 1998 and 1997... 4
3. Consolidated Statements of Comprehensive Income -
Quarters and Nine Months Ended September 30, 1998 and 1997... 5
4. Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1998 and 1997................ 6
5. Consolidated Statements of Stockholders' Equity -
Nine Months Ended September 30, 1998 and 1997................ 7
6. Notes to Unaudited Consolidated Financial Statements........... 9
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.
EXPLANATORY NOTE
On November 2, 1998, Wells Fargo & Company (the "former Wells Fargo")
merged with WFC Holdings Corporation, a wholly-owned subsidiary of
Norwest Corporation ("WFC Holdings"), with WFC Holdings as the surviving
corporation. In connection with the merger, Norwest Corporation changed
its name to "Wells Fargo & Company." For purposes of this report, unless
otherwise indicated, "corporation" refers to the former Norwest
Corporation, now known as Wells Fargo & Company.
Because the merger occurred after September 30, 1998, this report does
not give effect to the merger and the resulting combination of the
corporation and the former Wells Fargo unless otherwise indicated.
2
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
In millions, except shares September 30, December 31,
1998 1997
<C> <C>
ASSETS
Cash and due from banks ...................... $ 4,447.3 4,912.1
Interest-bearing deposits with banks ......... 56.9 46.6
Federal funds sold and resale agreements ..... 870.5 967.4
Total cash and cash equivalents .......... 5,374.7 5,926.1
Trading account securities ................... 356.9 486.9
Investment and mortgage-backed securities
available for sale ......................... 24,585.2 17,983.9
Investment securities held to maturity (fair
value $911.8 in 1998 and $762.8 in 1997) ... 901.3 747.2
Total investment securities .............. 25,486.5 18,731.1
Loans held for sale .......................... 3,873.0 3,407.0
Mortgages held for sale ...................... 14,720.6 8,848.0
Loans and leases, net of unearned discount ... 45,250.6 42,521.6
Allowance for credit losses .................. (1,336.7) (1,233.9)
Net loans and leases ..................... 43,913.9 41,287.7
Premises and equipment, net .................. 1,469.9 1,295.5
Mortgage servicing rights, net ............... 2,724.7 2,774.9
Interest receivable and other assets ......... 5,806.8 5,783.0
Total assets ............................. $103,727.0 88,540.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing ........................ $ 18,409.1 16,253.3
Interest-bearing ........................... 41,772.9 39,203.8
Total deposits ........................... 60,182.0 55,457.1
Short-term borrowings ........................ 15,700.2 9,557.0
Accrued expenses and other liabilities ....... 5,684.9 3,737.2
Long-term debt ............................... 14,672.0 12,766.7
Total liabilities ........................ 96,239.1 81,518.0
Preferred stock .............................. 276.8 267.4
Unearned ESOP shares ......................... (89.7) (79.4)
Total preferred stock .................... 187.1 188.0
Common stock, $1 2/3 par value - authorized
2,000,000,000 shares:
Issued 783,448,890 and 769,113,149 shares
in 1998 and 1997, respectively ............ 1,305.7 1,281.9
Surplus ...................................... 541.6 419.6
Retained earnings ............................ 5,613.1 5,007.7
Accumulated other comprehensive income ....... 405.6 409.9
Notes receivable from ESOP ................... (4.0) (10.1)
Treasury stock - 15,309,106 and 10,493,685
common shares in 1998 and 1997, respectively (561.2) (274.8)
Total common stockholders' equity ........ 7,300.8 6,834.2
Total stockholders' equity ............... 7,487.9 7,022.2
Total liabilities and
stockholders' equity ................... $103,727.0 88,540.2
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
In millions, except per
common share amounts Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<C> <C> <C> <C>
INTEREST INCOME ON
Loans and leases ..................... $1,234.4 1,153.1 3,617.9 3,364.2
Investment and mortgage-backed
securities available for sale ...... 305.1 326.1 936.4 1,016.4
Investment securities
held to maturity ................... 6.9 6.9 20.0 21.0
Loans held for sale .................. 72.6 56.2 211.5 168.3
Mortgages held for sale .............. 221.1 128.5 573.9 324.0
Money market investments ............. 17.1 8.9 38.9 39.4
Trading account securities .......... 12.8 13.2 40.5 28.5
Total interest income ............ 1,870.0 1,692.9 5,439.1 4,961.8
INTEREST EXPENSE ON
Deposits ............................. 381.6 360.7 1,120.8 1,075.4
Short-term borrowings ................ 175.3 112.0 466.8 327.1
Long-term debt ....................... 197.7 197.6 588.4 578.6
Total interest expense ........... 754.6 670.3 2,176.0 1,981.1
Net interest income ............ 1,115.4 1,022.6 3,263.1 2,980.7
PROVISION FOR CREDIT LOSSES .......... 146.8 146.7 410.7 378.5
Net interest income after
provision for credit losses .. 968.6 875.9 2,852.4 2,602.2
NON-INTEREST INCOME
Mortgage banking ..................... 284.7 224.7 824.8 623.8
Trust and investment fees
and commissions .................... 130.1 112.2 386.1 321.0
Service charges and credit
related fees ...................... 180.2 148.8 490.7 424.5
Credit card fee revenue .............. 43.7 32.4 116.5 88.2
Insurance ............................ 73.3 73.5 278.5 263.6
Data processing ...................... 19.6 18.3 52.8 54.7
Net investment securities held to
maturity (losses).................... - (0.3) - -
Net investment and mortgage-backed
securities available for sale gains . 54.8 15.7 96.9 19.9
Net venture capital gains ............ 4.3 52.8 116.2 165.3
Trading .............................. 44.3 12.7 110.7 64.9
Other ................................ 54.5 62.6 176.8 168.5
Total non-interest income ........ 889.5 753.4 2,650.0 2,194.4
NON-INTEREST EXPENSES
Salaries and benefits ................ 730.8 608.0 2,119.9 1,724.5
Net occupancy ........................ 90.2 82.0 264.6 241.6
Equipment rentals, depreciation
and maintenance ................... 96.7 81.8 279.8 247.5
Business development ................. 67.1 63.3 199.1 185.4
Communication ........................ 82.6 73.4 241.6 216.2
Data processing ...................... 44.9 39.6 122.7 127.0
Intangible asset amortization ........ 40.1 42.5 126.1 125.9
Other ................................ 113.9 120.7 447.0 404.4
Total non-interest expenses ...... 1,266.3 1,111.3 3,800.8 3,272.5
INCOME BEFORE INCOME TAXES ........... 591.8 518.0 1,701.6 1,524.1
Income tax expense ................... 198.9 176.4 558.9 529.2
NET INCOME ........................... $ 392.9 341.6 1,142.7 994.9
PER COMMON SHARE
Net Income
Basic .............................. $ 0.51 0.45 1.49 1.31
Diluted ............................ 0.50 0.44 1.46 1.29
Dividends ........................... 0.185 0.150 0.515 0.450
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
Quarter Nine Months
In millions Ended Ended
September 30, September 30,
1998 1997 1998 1997
<C> <C> <C> <C>
Net income ..................................... $ 392.9 341.6 1,142.7 994.9
Other comprehensive income, before income taxes:
Change in net unrealized gains (losses) on
securities available for sale:
Unrealized gains arising during the period ... 109.9 244.1 212.4 401.7
Less: reclassification adjustment for gains
included in net income ...................... 59.1 68.5 213.1 185.2
50.8 175.6 (0.7) 216.5
Foreign currency translation adjustment ....... (4.8) (0.2) (7.5) (1.7)
Other comprehensive income,
before income taxes .......................... 46.0 175.4 (8.2) 214.8
Income tax (expense) benefit related to
components of other comprehensive income at an
effective income tax rate of 35 percent........ (16.1)(61.4) 2.9 (75.2)
Other comprehensive income,
net of income taxes ........................... 29.9 114.0 (5.3) 139.6
Comprehensive income ........................... $ 422.8 455.6 1,137.4 1,134.5
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Nine Months Ended
In millions September 30,
1998 1997
<C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..............................................$ 1,142.7 994.9
Adjustments to reconcile net income to net cash flows
from operating activities:
Provision for credit losses ......................... 410.7 378.5
Depreciation and amortization ....................... 994.4 613.9
Gains on sales of loans, securities
and other assets, net ............................. (644.9) (279.9)
Release of preferred shares to ESOP ................. 25.6 27.6
Purchases of trading account securities .............(106,926.5) (73,819.7)
Proceeds from sales of trading account securities ... 107,528.1 73,690.0
Originations of mortgages held for sale ............. (74,846.5) (38,729.2)
Proceeds from sales of mortgages held for sale ...... 69,258.5 37,603.2
Originations of loans held for sale ................. (1,038.8) (989.5)
Proceeds from sales of loans held for sale .......... 588.6 648.8
Interest receivable ................................. (91.4) (64.2)
Interest payable .................................... 31.2 23.9
Other assets, net ................................... (438.4) (853.7)
Other accrued expenses and liabilities, net ......... 977.4 335.8
Net cash flows from operating activities .......... (3,029.3) (419.6)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and paydowns of investment
securities held to maturity ......................... 4.8 0.5
Proceeds from maturities and paydowns of investment
and mortgage-backed securities available for sale ... 3,228.2 1,928.2
Proceeds from sales and calls of investment securities
held to maturity .................................... 52.8 82.4
Proceeds from sales and calls of investment and
mortgage-backed securities available for sale ....... 7,546.5 7,822.3
Purchases of investment securities held to maturity ... (231.5) (120.8)
Purchases of investment and mortgage-backed
securities available for sale ........................ (16,034.6) (11,368.4)
Net change in banking subsidiaries' loans and leases .. (411.0) (284.4)
Non-bank subsidiaries' loans and leases originated .... (6,440.8) (7,218.5)
Principal collected on non-bank subsidiaries'
loans and leases .................................... 5,591.7 7,090.8
Purchases of premises and equipment ................... (343.8) (227.1)
Proceeds from sales of premises, equipment &
other real estate owned ............................. 166.5 82.5
Cash paid for acquisitions, net of cash and cash
equivalents acquired ................................. 36.2 (229.9)
Net cash flows used for investing activities ........ (6,835.0) (2,442.4)
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits, net ......................................... 2,464.7 576.3
Short-term borrowings, net ............................ 5,866.4 1,354.0
Long-term debt borrowings ............................. 3,437.6 2,473.5
Repayments of long-term debt .......................... (1,644.6) (3,512.0)
Issuances of common stock ............................. 100.5 111.3
Repurchases of common stock ........................... (514.3) (351.1)
Net decrease in notes receivable from ESOP............. 7.9 1.0
Dividends paid ........................................ (405.3) (350.3)
Net cash flows used for financing activities ........ 9,312.9 302.7
Net decrease in cash and cash equivalents ........... (551.4) (2,559.3)
CASH AND CASH EQUIVALENTS
Beginning of period ................................... 5,926.1 7,371.3
End of period .........................................$ 5,374.7 4,812.0
</TABLE>
See notes to unaudited consolidated financial statements.
6
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
Accum-
ulated Notes
In Un- Re- Other Recei-
millions, Pre- earned tained Compre- vable Trea-
except ferred ESOP Commo Sur- Earn- hensive from sury
for Stock Shares Stock plus ings Income ESOP Stock Total
shares
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31,
1996....$ 249.8 (61.0) 625.9 948.6 4,248.2 297.1 (11.1) (233.3) 6,064.2
Comprehensive
income:
Net
income.. - - - - 994.9 - - - 994.9
Other... - - - - - 139.6 - - 139.6
Stock
split... - - 635.2 (635.2) - - - - -
Dividends on
Common
stock.. - - - - (337.0) - - - (337.0)
Preferred
stock... - - - - (13.3) - - - (13.3)
Conversion
of 27,572
preferred
shares to
1,044,696
common
shares... (27.6) - - 3.9 - - - 23.7 -
Cash payments
received
on notes
receivable
from
ESOP.... - - - - - - 1.0 - 1.0
Issuance
of 51,700
preferred
shares to
ESOP.... 51.7 (53.8) - 2.1 - - - - -
Release
of preferred
shares
to ESOP. - 28.7 - (1.1) - - - - 27.6
Issuance of
10,529,358
common
shares.. - - - 61.5 (128.2) - - 226.5 159.8
Issuance of
15,157,890
common
shares for
acquis-
itions.. - - 9.3 (1.9) 43.8 1.0 - 85.1 137.3
Repurchase
of
13,042,510
common
shares.. - - - 0.9 - - - (352.0) (351.1)
Balance,
September 30,
1997.... $ 73.9 (86.1) 1,270.4 378.8 4,808.4 437.7 (10.1) (250.0) 6,823.0
</TABLE>
(Continued on page 8)
7
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Continued from page 7)
<TABLE>
Accum-
ulated Notes
In Un- Re- Other Receiv-
millions, Pref- earned tained Compre- able
except erred ESOP Common Sur- Earn- hensive from Treasury
for Stock Shares Stock plus ings Income ESOP Stock Total
shares
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31,
1997.... $267.4 (79.4) 1,281.9 419.6 5,007.7 409.9 (10.1) (274.8) 7,022.2
Comprehensive
income:
Net
income.. - - - - 1,142.7 - - - 1,142.7
Other... - - - - - (5.3) - - (5.3)
Dividends
on Common
stock.. - - - - (392.0) - - - (392.0)
Preferred
stock.. - - - - (13.3) - - - (13.3)
Conversion
of 25,573
preferred
shares to
661,993
common
shares.. (25.6) - - 2.8 - - - 22.8 -
Cash payments
received
on notes
receivable
from
ESOP... - - - 1.8 - - 6.1 - 7.9
Issuance
of 35,000
preferred
shares to
ESOP... 35.0 (37.7) - 2.7 - - - - -
Release
of
preferred
shares
to
ESOP.. - 27.4 - (1.8) - - - - 25.6
Issuance
of
6,585,434
common
shares.. - - - 61.8 (143.3) - - 210.2 128.7
Issuance
of
16,002,900
common
shares for
acquis-
itions. - - 23.8 55.0 11.3 1.0 - 58.5 149.6
Repurchase
of 13,730,007
common
shares. - - - (0.3) - - - (514.0) (514.3)
Reclass-
ification
of
common
shares
held
in rabbi
trusts . - - - - - - - (63.9) (63.9)
Balance,
September 30,
1998... $276.8 (89.7) 1,305.7 541.6 5,613.1 405.6 (4.0) (561.2) 7,487.9
</TABLE>
See notes to unaudited consolidated financial statements.
8
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Changes in Accounting Policies
Effective January 1, 1998, the corporation adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income"(FAS 130).
FAS 130 requires disclosures of the components of comprehensive income and
the accumulated balance of other comprehensive income within total
stockholders' equity. The adoption of FAS 130 has not had a material
effect on the corporation's financial statements.
2. Consolidated Statements of Cash Flows
Supplemental disclosures of cash flow information for the nine months
ended September 30 include:
<TABLE>
In millions 1998 1997
<C> <C>
Interest...................................... $2,144.7 1,957.2
Income taxes.................................. 217.8 300.9
Transfer of loans to other real estate owned.. 105.0 35.9
</TABLE>
See Notes 8 and 13 for certain non-cash common and preferred stock
transactions.
3. Earnings Per Share
Basic earnings per share, pursuant to Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," (FAS 128) is determined using net
income, adjusted for preferred stock dividends, divided by weighted
average common shares outstanding. Diluted earnings per share, as defined
by FAS 128, is computed based on the amount of income that would be
available for each common share assuming all dilutive potential common
shares were issued. Such dilutive potential common shares include stock
options and the 6 3/4 percent convertible subordinated debentures. Amounts
used in the determination of basic and diluted earnings per share for the
quarters and nine months ended September 30, 1998 and 1997 are shown in
the table below.
<TABLE>
In millions, except shares
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<C> <C> <C> <C>
Net income ............... $ 392.9 341.6 1,142.7 994.9
Less dividends accrued on
preferred stock ........ 4.4 4.4 13.3 13.3
Income available to common
stockholders ........... $ 388.5 337.2 1,129.4 981.6
Weighted average shares
outstanding ............ 765,653,727 749,282,812 760,438,377 748,012,272
Adjustments for dilutive
securities:
Assumed exercise of
stock options .......... 15,695,414 9,181,666 13,842,583 10,031,912
Assumed conversion of
convertible
subordinated
debentures ........... 34,400 34,800 34,445 34,800
Diluted common shares .... 781,383,541 758,499,278 774,315,405 758,078,984
</TABLE>
9
<PAGE>
4. Investment Securities
The amortized cost and fair value of investment securities at September 30,
1998 were:
<TABLE>
In millions Gross Gross
Amort- Unrea- Unrea-
tized lized lized Fair
Cost Gains Losses Value
<C> <C> <C> <C>
Available for sale:
U.S. Treasury and federal agencies .. $ 2,118.8 54.0 (2.5) 2,170.3
State, municipal and housing -
tax exempt ......................... 1,439.5 96.7 (0.6) 1,535.6
Other ............................... 1,845.0 146.2 (22.2) 1,969.0
Total investment securities
available for sale .............. 5,403.3 296.9 (25.3) 5,674.9
Mortgage-backed securities:
Federal agencies ................... 18,222.6 374.5 (7.9) 18,589.2
Collateralized mortgage
obligations ....................... 314.5 7.4 (0.8) 321.1
Total mortgage-backed securities
available for sale .............. 18,537.1 381.9 (8.7) 18,910.3
Total investment and
mortgage-backed securities
available for sale .................. $23,940.4 678.8 (34.0) 24,585.2
Investment securities held to
maturity ........................... $ 901.3 12.5 (2.0) 911.8
Total investment securities .......... $24,841.7 691.3 (36.0) 25,497.0
</TABLE>
Interest income on investment securities for the quarters and nine months ended
September 30 was:
<TABLE>
Quarter Nine Months
In millions 1998 1997 1998 1997
<C> <C> <C> <C>
Available for sale:
U.S. Treasury and federal agencies .. $ 40.8 32.4 137.9 128.9
State, municipal and housing -
tax exempt ........................ 20.6 19.6 61.5 54.2
Other ............................... 21.7 11.7 45.4 35.9
Total investment securities
available for sale .............. 83.1 63.7 244.8 219.0
Mortgage-backed securities:
Federal agencies ................... 217.4 257.5 678.4 784.1
Collateralized mortgage
obligations ....................... 4.6 4.9 13.2 13.3
Total mortgage-backed securities
available for sale .............. 222.0 262.4 691.6 797.4
Total investment and mortgage-backed
securities available for sale ...... $ 305.1 326.1 936.4 1,016.4
Investment securities held to
maturity ........................... $ 6.9 6.9 20.0 21.0
Total investment securities .......... $ 312.0 333.0 956.4 1,037.4
</TABLE>
Certain investment securities held to maturity with a total amortized cost of
$18.0 million and $52.8 million for the quarter and nine months ended
September 30, 1998, respectively, and $38.7 million and $82.4 million for the
quarter and nine months ended September 30, 1997, 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. Sales and calls of investment securities resulted in no
gain or loss for the quarter and nine months ended September 30, 1998 and a
loss of $0.3 million for the quarter and no gain or loss for the nine months
ended September 30, 1997.
10
<PAGE>
5. Loans and Leases
The carrying values of loans and leases at September 30, 1998 and
December 31, 1997 were:
<TABLE>
In millions September 30, December 31,
1998 1997
<C> <C>
Commercial, financial and industrial ..... $12,017.1 10,680.2
Agricultural ............................. 1,318.4 1,276.2
Real estate
Secured by 1-4 family residential
properties ........................... 11,393.6 10,746.6
Secured by development properties ...... 1,961.6 2,131.4
Secured by construction and land
development .......................... 1,272.3 1,005.8
Secured by owner-occupied properties ... 3,311.2 2,866.1
Consumer ................................. 11,957.0 12,298.0
Credit card .............................. 1,637.0 1,632.2
Lease financing .......................... 1,075.2 921.2
Foreign
Consumer ............................... 1,206.8 864.0
Commercial ............................. 187.4 212.4
Total loans and leases ............... 47,337.6 44,634.1
Unearned discount ........................ (2,087.0) (2,112.5)
Total loans and leases, net of
unearned discount .................... $45,250.6 42,521.6
</TABLE>
Changes in the allowance for credit losses for the quarters and nine months
ended September 30 were:
<TABLE>
Quarter Nine Months
In millions 1998 1997 1998 1997
<C> <C> <C> <C>
Balance at beginning of period ....... $1,262.1 1,071.1 1,233.9 1,040.8
Allowance related to assets
acquired, net ..................... 82.8 104.1 118.1 129.4
Provision for credit losses ........ 146.8 146.7 410.7 378.5
Credit losses ...................... (189.5) (159.2) (540.3) (462.9)
Recoveries ......................... 34.5 33.7 114.3 110.6
Net credit losses ................ (155.0) (125.5) (426.0) (352.3)
Balance at end of period ............. $1,336.7 1,196.4 1,336.7 1,196.4
</TABLE>
6. Non-performing Assets and 90-day Past Due Loans and Leases
Total non-performing assets and 90-day past due loans and leases at
September 30, 1998 and 1997 and December 31, 1997 were:
In millions September 30, December 31,
1998 1997 1997
Impaired loans
Non-accrual ........................... $ 109.4 94.5 89.4
Restructured .......................... 0.6 0.1 0.1
Total impaired loans ................ 110.0 94.6 89.5
Other non-accrual loans and leases ...... 105.7 94.3 88.7
Total non-accrual and
restructured loans and leases ........ 215.7 188.9 178.2
Other real estate owned ................. 46.1 40.8 50.3
Total non-performing assets ........... 261.8 229.7 228.5
Loans and leases past due 90 days or more* 175.6 121.0 153.8
Total non-performing assets and
90-day past due loans and leases ..... $ 437.4 350.7 382.3
* Excludes non-accrual and restructured loans and leases.
11
<PAGE>
The average balances of impaired loans for the nine months ended September
30, 1998 and 1997 were $118.8 million and $107.2 million, respectively. The
allowance for credit losses related to impaired loans at September 30, 1998
and December 31, 1997 was $34.2 million and $33.5 million, respectively.
Impaired loans of $2.4 million and $1.8 million were not subject to a
related allowance for credit losses at September 30, 1998 and December 31,
1997, 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 and nine months ended September 30 was:
In millions Quarter Nine Months
1998 1997 1998 1997
Interest
As originally contracted ........... $ 8.4 3.8 18.3 15.1
As recognized ...................... (1.6) (1.3) (3.6) (2.7)
Reduction of interest income ..... $ 6.8 2.5 14.7 12.4
7. Long-term Debt
During the first nine months of 1998, the corporation issued $250 million
in medium-term notes, bearing interest at a fixed rate of 5.55 percent,
maturing in August 1999, and $250 million in medium-term notes, bearing
interest at a rate of three-month LIBOR less 5 basis points, maturing in
October 1999. Also, during the first nine months of 1998, certain
subsidiaries of the corporation received $2,519.4 million of advances from
the Federal Home Loan Bank. Advances of $44.4 million were issued bearing
interest at fixed rates ranging from 5.34 percent to 6.19 percent, which
mature between February 2000 and December 2027. Advances of $2,475 million
were issued bearing interest at rates ranging from one-month LIBOR less 15
basis points to one-month LIBOR less 10 basis points, which mature between
October 1998 and December 1999. Advances maturing within the next year are
expected to be refinanced, extending the maturity of such borrowings beyond
one year. Norwest Financial, Inc. and its subsidiaries issued $407.1
million in senior notes bearing interest at fixed rates ranging from 5.38
percent to 6.08 percent, which mature between September 2001 and March
2008. Norwest Financial, Inc. and its subsidiaries assumed $104.8 million
in senior notes in connection with its acquisition of The T. Eaton
Acceptance Company Limited, bearing interest at fixed rates ranging from
7.55 percent to 9.00 percent, which mature between December 1999 to
December 2000.
12
<PAGE>
8. Stockholders' Equity
The table below is a summary of the corporation's preferred and preference
stock at September 30, 1998 and December 31, 1997. 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 1997
annual report on Form 10-K.
<TABLE>
In millions,
except share amounts
Annual
Shares Dividend
Outstanding Rate at Amount Outstanding
September 30, December 31, September 30, September 30, December 31,
1998 1997 1998 1998 1997
<C> <C> <C> <C> <C>
Cumulative
Tracking,
$200 stated
value ...... 980,000 980,000 9.30% $ 196.0 196.0
1998 ESOP
Cumulative
Convertible,
$1,000 stated
value ....... 13,604 - 10.75% 13.6 -
1997 ESOP
Cumulative
Convertible,
$1,000 stated
value ....... 19,846 22,927 9.50% 19.8 23.0
1996 ESOP
Cumulative
Convertible,
$1,000 stated
value ....... 22,274 22,831 9.50% 22.3 22.8
1995 ESOP
Cumulative
Convertible,
$1,000 stated
value ....... 20,283 20,625 10.00% 20.3 20.6
ESOP Cumulative
Convertible,
$1,000 stated
value ....... 9,825 10,022 9.00% 9.8 10.0
Less: Cumulative
Tracking shares
held by a
subsidiary .. (25,000) (25,000) (5.0) (5.0)
1,040,832 1,031,405 276.8 267.4
Unearned
ESOP shares . (89.7) (79.4)
Total
preferred
stock .... $ 187.1 188.0
</TABLE>
On February 24, 1998, the corporation issued 35,000 shares of 1998 ESOP
Cumulative Convertible Preferred Stock, $1,000 stated value per share
("1998 ESOP Preferred Stock"), in the stated amount of $35.0 million at a
premium of $2.7 million; a corresponding charge of $37.7 million was
recorded to unearned ESOP shares.
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.
During the quarter and nine months ended September 30, 1998, 7,530 and
25,573 shares of ESOP Preferred Stock were converted into 209,325 and
661,993 shares of common stock of the corporation, respectively. During
the quarter and nine months ended September 30, 1997, 8,327 and 27,572
shares of ESOP Preferred Stock were converted into 273,024 shares and
1,044,696 shares of common stock of the corporation, respectively.
On September 22, 1998, the corporation's board of directors declared a
dividend distribution of one preferred share purchase right on each
outstanding share of the corporation's common stock. These rights will be
distributed on November 23, 1998 to stockholders of record on that date,
and are similar to the corporation's existing stockholder rights plan that
expires the same day. The rights will become exercisable only if a person
or group acquires or announces an offer to acquire 15 percent or more of
the corporation's common stock. This triggering percentage may be reduced
to no less than 10 percent by the board of directors prior to the time the
rights become exercisable. When exercisable, each right will entitle the
13
<PAGE>
holder to buy one one-thousandth of a share of a new series of junior
participating preferred stock at a price of $160. In addition, upon the
occurrence of certain events, holders of the rights will be entitled to
purchase, at the right's then-current exercise price, a number of the
acquiring company's common shares having a market value of twice such
price, and the acquiring person will not be entitled to exercise these
rights. Under certain circumstances, the corporation can exchange a share
of the corporation's common stock for each outstanding right not held by
the acquirer. The corporation will generally be entitled to redeem the
rights at one cent per right at any time before they become exercisable.
The rights will expire on November 23, 2008, unless extended, previously
redeemed or exercised. The corporation has reserved shares of preferred
stock for issuance upon exercise of the rights.
Accumulated other comprehensive income at September 30, 1998 and December
31, 1997 is comprised of the following:
September 30, December 31,
1998 1997
In millions
Unrealized gains on securities
available for sale ................... $ 420.0 419.4
Foreign currency translation ........... (14.4) (9.5)
Accumulated other comprehensive income $ 405.6 409.9
9. 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, 1997 for a detailed
description of each business segment. Selected financial information by
business segment for the quarters and nine months ended September 30 is
included in the following summary:
In millions
Quarter Nine Months
1998 1997 1998 1997
Revenues:*
Banking ................$ 1,652.7 1,555.4 4,938.3 4,655.2
Mortgage Banking ....... 569.4 400.9 1,549.9 1,092.4
Norwest Financial ...... 537.4 490.0 1,600.9 1,408.6
Total ................$ 2,759.5 2,446.3 8,089.1 7,156.2
Organizational earnings:*
Banking ................$ 281.4 254.8 819.7 711.0
Mortgage Banking ....... 56.0 37.7 161.9 106.8
Norwest Financial ...... 55.5 49.1 161.1 177.1
Total ................$ 392.9 341.6 1,142.7 994.9
Total assets:
Banking ................$ 67,919.8 61,283.5
Mortgage Banking ....... 24,665.8 13,737.8
Norwest Financial ...... 11,141.4 10,230.9
Total ................$103,727.0 85,252.2
* 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.
14
<PAGE>
10. Mortgage Banking Activities
Additional information about mortgage banking non-interest income for the
quarters and nine months ended September 30 is presented below:
Quarter Nine Months
In millions 1998 1997 1998 1997
Origination and other
closing fees ............ $128.1 86.2 366.3 222.6
Servicing fees ............ (47.6) 79.5 (16.4) 220.3
Net gains (losses) on sales
of servicing rights ..... (0.4) (2.4) 15.9 (4.8)
Net gains on sales of
mortgages ............... 152.4 15.6 287.7 61.6
Other ..................... 52.2 45.8 171.3 124.1
Total mortgage banking
non-interest income ... $284.7 224.7 824.8 623.8
Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The outstanding balances of serviced loans
were $232.7 billion and $198.2 billion at September 30, 1998 and 1997,
respectively, and $205.8 billion at December 31, 1997.
Changes in capitalized mortgage servicing rights for the quarters and nine
months ended September 30 were:
In millions Quarter Nine Months
1998 1997 1998 1997
Mortgage servicing rights:
Balance at beginning
of period ............ $2,967.8 2,783.8 2,839.1 2,712.7
Originations ........... 180.9 93.7 491.7 253.5
Purchases and other
additions ............ 183.3 127.8 491.0 236.4
Sales .................. - (17.0) (56.1) (34.4)
Amortization ........... (241.9) (103.5) (570.2) (321.5)
Other .................. (301.2) (70.3) (406.6) (32.2)
2,788.9 2,814.5 2,788.9 2,814.5
Less valuation
allowance ............ (64.2) (64.2) (64.2) (64.2)
Balance at end of period . $2,724.7 2,750.3 2,724.7 2,750.3
The fair value of capitalized mortgage servicing rights at September 30,
1998 was approximately $2.8 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 and nine months ended September 30,
1998 and 1997.
15
<PAGE>
11. Trading Revenues
For the quarters and nine months ended September 30, trading revenues were
derived from the following activities:
In millions Quarter Nine Months
1998 1997 1998 1997
Interest income:
Securities .............................. $ 12.8 13.2 40.5 28.5
Non-interest income:
Gains on securities sold ................ 41.7 13.3 90.4 44.9
Swaps and other interest rate contracts . 0.1 0.8 0.6 1.4
Foreign exchange trading ................ 3.4 3.3 9.9 10.9
Options ................................. (4.0) 1.1 (2.0) 4.9
Futures ................................. 3.1 (5.8) 11.8 2.8
Total non-interest income ............. 44.3 12.7 110.7 64.9
Total trading revenues .................... $ 57.1 25.9 151.2 93.4
12. Derivative Activities
The corporation and its subsidiaries, as end-users, utilize various types
of derivative products (principally interest rate swaps, interest rate caps
and floors, futures and options on futures contracts) 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, 1997 for a detailed
description of derivative products utilized in end-user activities.
For the nine months ended September 30, 1998, end-user derivative
activities increased interest income by $5.6 million and decreased interest
expense by $67.8 million, for a total benefit to net interest income of
$73.4 million. For the same period in 1997, the total benefit to net
interest income was $60.3 million.
Activity in the notional amounts of end-user derivatives for the nine months
ended September 30, 1998 is summarized as follows:
<TABLE>
Amorti-
zation
&
In millions December 31, Add- Matur- Termin- September 30,
1997 itions ities ations 1998
<C> <C> <C> <C> <C>
Swaps:
Generic receive fixed ..... $ 4,316 - (300) - 4,016
Amortizing receive fixed .. 3,185 - (283) - 2,902
Generic pay fixed ......... 221 749 (7) - 963
Basis ..................... 29 29 (29) - 29
Total swaps ............. 7,751 778 (619) - 7,910
Interest rate caps
and floors ................ 14,377 - (527) - 13,850
Futures contracts ........... 4,690 30,615 6,984) (13,103) 15,218
Options on futures contracts 9,886 67,617 (31,624) (32,483) 13,396
Security options ............ 1,240 36,597 (15,922) (12,040) 9,875
Forward foreign exchange
contracts ................. 491 289 (682) - 98
Total ....................... $ 38,435 135,896 (56,358) (57,626) 60,347
</TABLE>
Deferred gains and losses on closed end-user derivatives were not material
at September 30, 1998 and December 31, 1997.
A key assumption in the information which follows is that rates remain
constant at September 30, 1998 levels. To the extent that rates change,
both the average notional and variable interest rate information may
change.
16
<PAGE>
The following table presents the maturities and weighted average rates for
end-user derivatives by type:
<TABLE>
Dollars in millions
Maturity
There-
September 30, 1998 1998 1999 2000 2001 2002 after Total
<C> <C> <C> <C> <C> <C> <C>
Swaps:
Generic receive fixed-
Notional value ........$ 450 766 400 500 400 1,500 4,016
Weighted avg.
receive rate ........ 6.02% 7.28 6.17 6.35 6.59 6.53 6.56
Weighted avg. pay rate 5.69% 5.56 5.59 5.61 5.54 5.68 5.63
Amortizing receive fixed-
Notional value ........$ - 1,707 1,195 - - - 2,902
Weighted avg.
receive rate ........ -% 7.46 6.58 - - - 7.10
Weighted avg. pay rate -% 5.49 5.58 - - - 5.53
Generic pay fixed-
Notional value ........$ - 603 4 110 101 145 963
Weighted avg.
receive rate ........ -% 5.36 5.69 5.67 5.59 5.61 5.46
Weighted avg. pay rate -% 5.11 6.15 5.75 5.99 5.87 5.39
Basis-
Notional value ........$ - - - - - 29 29
Weighted avg.
receive rate ........ -% - - - - 5.11 5.11
Weighted avg. pay rate -% - - - - 2.11 2.11
Interest rate caps and
floors (1):
Notional value ........$ - 400 3,200 4,750 5,500 - 13,850
Futures contracts (1):
Notional value ........$ 7,213 1,530 740 740 740 4,255 15,218
Options on futures
contracts (1):
Notional value ........$11,795 1,601 - - - - 13,396
Security options (1):
Notional value ........$ 9,250 600 - 25 - - 9,875
Forward foreign exchange
contracts (1):
Notional value ........$ 98 - - - - - 98
Total notional value ....$28,806 7,207 5,539 6,125 6,741 5,929 60,347
Total weighted avg.
rates on swaps:
Receive rate ........ 6.02% 7.00 6.48 6.23 6.39 6.43 6.62
Pay rate ............ 5.69% 5.43 5.58 5.64 5.63 5.63 5.55
</TABLE>
(1) Average rates are not meaningful for interest rate caps and floors, futures
contracts, options or forward foreign exchange contracts.
Note: Weighted average variable rates are based on the actual rates as of
September 30, 1998.
17
<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>
In millions Balance Sheet Category
Mort-
Invest- gage Short-
ment Loans Serv- Interest term Long-
Secur- and icing Bearing Borror- term
September 30, 1998 ities Leases Rights Deposits ings Debt Total
<C> <C> <C> <C> <C> <C> <C>
Swaps:
Pay variable
Unrealized gains .... $ - - 52.9 74.9 - 175.6 303.4
Unrealized (losses).. - - - - - - -
Pay variable net .... - - 52.9 74.9 - 175.6 303.4
Pay fixed
Unrealized gains .... - - - - - - -
Unrealized losses.... - (7.6) - (2.8) - - (10.4)
Pay fixed net ....... - (7.6) - (2.8) - - (10.4)
Basis
Unrealized (losses).. (0.1) - - - - - (0.1)
Total unrealized
gains ............... - - 52.9 74.9 - 175.6 303.4
Total unrealized
(losses) ............. (0.1) (7.6) - (2.8) - - (10.5)
Total net ........... $ (0.1) (7.6) 52.9 72.1 - 175.6 292.9
Interest rate caps and floors:
Unrealized gains .... $ - - 307.6 - - - 307.6
Unrealized (losses).. - - - - - - -
Total net ......... $ - - 307.6 - - - 307.6
Futures contracts:
Unrealized gains .... $ - 0.1 227.2 - - - 227.3
Unrealized (losses).. (11.9) (4.0) - - - - (15.9)
Total net ......... $ (11.9) (3.9) 227.2 - - - 211.4
Options on futures contracts:
Unrealized gains .... $ - 4.2 28.8 - - - 33.0
Unrealized (losses).. - (3.0) (63.1) - - - (66.1)
Total net ......... $ - 1.2 (34.3) - - - (33.1)
Security options:
Unrealized gains .... $ - 49.2 - - - - 49.2
Unrealized (losses).. - (7.6) - - - - (7.6)
Total net.......... $ - 41.6 - - - - 41.6
Forward foreign exchange contracts:
Unrealized gains..... $ - - - - 1.9 - 1.9
Grand total
unrealized gains .. $ - 53.5 616.5 74.9 1.9 175.6 922.4
Grand total
unrealized (losses) (12.0) (22.2) (63.1) (2.8) - - (100.1)
Grand total net ..... $ (12.0) 31.3 553.4 72.1 1.9 175.6 822.3
</TABLE>
18
<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 September 30, 1998, the corporation had
forward contracts and options on forward contracts totaling $24.0 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 September 30, 1998, the corporation's trading account portfolio included
options and futures of $106 million notional value, which are valued at
market with any gains or losses recognized currently.
13. 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 September 30,
1998, the corporation had five pending transactions with total assets of
approximately $93.1 billion and anticipated that approximately 879.4
million common shares would be issued upon consummation of these
transactions.
The transactions pending at September 30, 1998 included the combination of
the corporation and the former Wells Fargo, which was completed November 2,
1998. Other pending acquisitions, subject to approval by regulatory
agencies, are expected to be completed by the first quarter of 1999.
19
<PAGE>
Transactions completed in the nine months ended September 30, 1998 include:
<TABLE>
In millions, except share amounts Common
Cash Shares Method of
Date Assets Paid Issued Accounting
<C> <C> <C> <C> <C>
Finvercon S.A. Compania
Financiera
Argentina (F) ........ January 8 $ 57.4 $ 19.7 - Purchase
Fidelity Bancshares, Inc.
Fort Worth,
Texas (B) ............ January 13 111.0 16.1 - Purchase
Heritage Trust Company,
Grand Junction,
Colorado (B).......... February 20 1.6 - 136,950 Purchase
Founders Trust Company
Dallas, Texas (B) .... March 2 1.6 6.9 - Purchase
The T. Eaton Acceptance
Company Limited and
National Retail
Credit Services Limited,
Don Mills,
Ontario, Canada (F) .. April 21 370.0 247.6 - Purchase
WMC Mortgage Corporation
Woodland Hills,
California (M)........ April 30 4.9 21.9 - Purchase
First Bank Pooling of
Katy, Texas (B) ...... May 22 309.7 - 1,999,980 Interests*
First Bank of Grants
Grants,
New Mexico (B) ....... May 28 44.9 - 212,487 Purchase
Spring Mountain
Escrow Corporation
Irvine,
California (M) ....... May 29 1.3 1.7 - Purchase
Emjay Corporation
Milwaukee,
Wisconsin (B) ........ June 15 5.8 - 297,979 Purchase
Six affiliated bank
holding companies and
related entities,
located in Minnesota,
Wisconsin, New Mexico,
Arizona and Colorado,
including Pooling of
MidAmerica. (B) ...... July 2,23 1,317.2 - 8,060,664 Interests*
First Bancshares of
Valley City, Inc.
Valley City,
North Dakota (B) ..... July 31 96.4 - 451,943 Purchase
Peoples Insurance
Agency, Inc.
Valley City,
North Dakota (B) ..... July 31 0.2 - 6,804 Purchase
Star Bancshares, Inc. Pooling of
Austin, Texas (B) .... August 31 581.7 - 4,275,077 Interests*
Freedom Trailer
Leasing, Inc.
Chesterfield,
Missouri (B) ......... August 31 4.8 4.2 - Purchase
Little Mountain
Bancshares, Inc.
Monticello,
Minnesota (B) ........ September 8 81.8 - 561,016 Purchase
$ 2,990.3 $ 318.1 16,002,900
* Pooling of interests transaction was not material to the corporation's
consolidated financial statements; accordingly, previously reported results
have not been restated.
(B) - Banking Group; (M) - Mortgage Banking; (F) - Norwest Financial
20
<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 the
corporation's 1997 Annual Report on Form 10-K.
EARNINGS PERFORMANCE
The corporation reported net income of $392.9 million for the quarter ended
September 30, 1998, a 15.0 percent increase over the $341.6 million earned
in the third quarter of 1997. Diluted earnings per share were 50 cents,
compared with 44 cents in the third quarter of 1997, an increase of 13.6
percent. Basic earnings per share increased 13.3 percent to 51 cents per
common share in the third quarter of 1998 from 45 cents a year earlier.
Return on realized common equity was 22.6 percent and return on assets was
1.64 percent for the third quarter of 1998, compared with 22.1 percent and
1.64 percent, respectively, in the third quarter of 1997.
For the nine months ended September 30, 1998, net income was $1,142.7
million, or $1.46 per diluted common share, an increase of 14.9
percent and 13.2 percent, respectively, over the $994.9 million, or $1.29
per diluted common share, earned in the first nine months of 1997.
Return on realized common equity was 22.9 percent and return on assets was
1.66 percent for the first nine months of 1998 compared with 22.3 percent
and 1.63 percent, respectively, in the same period a year ago.
ORGANIZATIONAL EARNINGS
The organizational earnings of the corporation's primary business segments
are included in Note 9 to the unaudited consolidated financial statements
for the three and nine months ended September 30, 1998 and 1997 and are
discussed in the following paragraphs.
Banking Group
The Banking Group reported third quarter 1998 earnings of $281.4 million, a
10.5 percent increase over the third quarter 1997 earnings of $254.8
million. For the nine months ended September 30, 1998, earnings increased
15.3 percent to $819.7 million compared with $711.0 million for the same
period in 1997. Non-interest income rose $305.5 million, or 24.1 percent,
to $1,573.4 million for the first nine months of 1998, due primarily to
growth in trust and investment fees and commissions, service charges and
fees and credit card fee revenue, partially offset by lower net venture
capital gains due to overall market conditions. The Banking Group's
provision for credit losses for the nine months ended September 30, 1998
decreased $12.5 million to $115.2 million from $127.7 million a year
earlier, as average loans and leases rose $1,707.8 million, or 5.4 percent,
and net charge-offs as a percent of average loans and leases decreased 5
basis points to 0.58 percent. Non-interest expenses of $2,397.7 million for
the first nine months of 1998 were $242.1 million higher when compared with
the first nine months of 1997, reflecting additional operating expenses
from acquired companies and acquisition related one-time charges.
21
<PAGE>
Mortgage Banking
Mortgage Banking earned $56.0 million in the current quarter compared with
$37.7 million in the third quarter of 1997. For the first nine months of
1998, Mortgage Banking earned $161.9 million compared with $106.8 million
in the same period of 1997. See Note 10 to the unaudited consolidated
financial statements for additional information about Mortgage Banking
revenues for the three and nine months ended September 30, 1998 and 1997.
The growth in Mortgage Banking earnings over the first nine months of 1997
primarily reflects a 64.5 percent increase in origination and other closing
fees associated with the low mortgage interest rate environment. Mortgage
loan originations amounted to $74.8 billion during the first nine months of
1998, compared with $38.7 billion in the first nine months of 1997.
Combined gains on sales of mortgages and servicing rights amounted to
$303.6 million in the first nine months of 1998, compared with $56.8
million in the same period of 1997. The growth in Mortgage Banking
earnings is also due to higher tax-equivalent net interest income related
to increases in the average balance of mortgage loans held for sale. The
growth in origination and closing fees, gains on sales of mortgages and
servicing rights, and net interest income was partially offset by lower
servicing revenue, reflecting increased amortization of capitalized
mortgage servicing rights due to a larger servicing portfolio and the
increased assumed prepayments as a result of the low mortgage interest rate
environment. Amortization of capitalized mortgage servicing rights was
$570.2 million in the first nine months of 1998, compared with $321.5
million in the first nine months of 1997.
The percentage of fundings attributed to mortgage loan refinancings was
approximately 49 percent in the first nine months of 1998, compared with 21
percent for the same period of 1997. The unclosed pipeline of mortgage
loans was $23.5 billion at September 30, 1998, compared with $10.6 billion
at December 31, 1997. The servicing portfolio had a weighted average coupon
of 7.54 percent and 7.75 percent at September 30, 1998 and December 31,
1997, respectively.
Norwest Financial
Norwest Financial (including Norwest Financial Services, Inc. and Island
Finance) reported third quarter 1998 earnings of $55.5 million that were
12.8 percent higher than third quarter 1997 earnings of $49.1 million which
included charges related to the acquisition of Fidelity Acceptance
Corporation. For the first nine months of 1998, Norwest Financial's net
income was $161.1 million, down 9.0 percent from the first nine months of
1997. The decrease primarily reflects higher consumer credit losses,
partially offset by increased net interest income.
Norwest Financial's net charge-offs in the first nine months of 1998 were
$278.4 million, or 4.10 percent of average loans, compared with $199.0
million, or 3.48 percent of average loans, in the same period in 1997. The
increase in net charge-offs was primarily attributable to the acquisition
of Fidelity Acceptance Corporation in 1997 and the related inclusion
of their charge-offs and to higher bankruptcy levels in Puerto Rico.
Net charge-offs in Norwest Financial's domestic base business continued to
decline in the third quarter. Non-interest expenses for the first nine
months of 1998 increased 17.8 percent over the same period of 1997
primarily due to the acquisition of Fidelity Acceptance Corporation. Tax-
equivalent net interest income for the first nine months of 1998 increased
14.3 percent over the same period of last year due to a 17.6 percent
increase in average earning assets partially offset by a decrease of 25
basis points in net interest margin.
22
<PAGE>
CONSOLIDATED INCOME STATEMENT ANALYSIS
Net Interest Income
Consolidated tax-equivalent net interest income was $1,127.3 million in the
third quarter of 1998, compared with $1,034.2 million in the third quarter
of 1997, an increase of 9.0 percent. For the first nine months of 1998,
tax-equivalent net interest income increased 9.5 percent from the same
period in 1997 to $3,299.0 million. Growth in tax-equivalent net interest
income over the third quarter ended September 30, 1997 was primarily due to
a 14.3 percent growth in average earning assets, partially offset by a 28
basis point decrease in net interest margin. Net interest margin, the
ratio of annualized tax-equivalent net interest income to average earning
assets, was 5.53 percent in the third quarter of 1998, compared with 5.81
percent in the third quarter of 1997. The decrease in net interest margin
from third quarter of 1997 is principally due to a higher mix of mortgages
held for sale which have lower yields than other interest-bearing assets.
The following table summarizes changes in tax-equivalent net interest income
between the quarters ended September 30 and June 30 and the nine months ended
September 30.
Changes in Tax-Equivalent Net Interest Income*
In millions 3Q 98 3Q 98 9 Mos. 98
from from from
3Q 97 2Q 98 9 Mos. 97
Increase (decrease) due to:
Change in earning asset volume ............ $148.7 32.8 344.0
Change in volume of interest-free funds ... 16.8 10.8 44.4
Change in net return from
Interest-free funds ...................... 1.1 2.3 2.8
Interest-bearing funds ................... (50.2) (11.1) (88.0)
Change in earning asset mix ............... (26.5) (2.9) (32.0)
Change in funding mix ..................... 3.2 2.4 14.8
Change in tax-equivalent net interest income. $ 93.1 34.3 286.0
* Net interest income is presented on a tax-equivalent basis using a
federal incremental tax rate of 35 percent in each period presented.
Provision for Credit Losses
The corporation provided $146.8 million for credit losses in the third
quarter of 1998, compared with $146.7 million in the same period a year
ago. Net credit losses totaled $155.0 million and $125.5 million for the
three months ended September 30, 1998 and 1997, respectively. As a
percentage of average loans and leases, net credit losses were 138 basis
points in the third quarter of 1998, compared with 122 basis points in the
same period a year ago.
For the first nine months of 1998, the provision for credit losses totaled
$410.7 million, compared with $378.5 million in the first nine months of
1997. Net credit losses were $426.0 million, or 1.32 percent of average
loans and leases, for the nine months ended September 30, 1998, compared
with $352.3 million, or 1.17 percent, for the same period in 1997. The
increase in net credit losses over 1997 is principally due to higher levels
of consumer credit charge-offs.
23
<PAGE>
Non-interest Income
Consolidated non-interest income was $889.5 million in the third quarter of
1998, an increase of $136.1 million, or 18.1 percent, from the third
quarter of 1997. For the nine months ended September 30, 1998, non-interest
income was up $455.6 million to $2,650.0 million, an increase of 20.8
percent over 1997. Contributing to the 1998 increase was continued growth
in mortgage banking revenue, trust and investment fees and commissions,
service charges and fees and credit card fee revenue, partially offset by
lower net venture capital gains.
The increase in mortgage banking revenue is attributed to increases in
origination and other closing fees and gains on sales of mortgages and
servicing rights, partially offset by increased amortization of capitalized
mortgage servicing rights related to the low mortgage interest rate
environment. Mortgage banking revenue derived from sales of servicing
rights is largely dependent upon portfolio characteristics and prevailing
market conditions. See Note 10 to the unaudited consolidated financial
statements for additional information about mortgage banking revenues for
the three and nine months ended September 30, 1998 and 1997.
The increases in trust and investment fees and commissions, service charges
and fees, and credit card fee revenue reflect overall increases in business
activity due to acquisitions and marketing efforts.
Net venture capital gains were $4.3 million for the three months and
$116.2 million for the nine months ended September 30, 1998, compared with
$52.8 million and $165.3 million, respectively, for the same periods in
1997. 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 $126.5 million
at September 30, 1998.
The corporation's trading revenue for the third quarter of 1998 was $44.3
million, compared with $12.7 million in the third quarter of 1997. Trading
revenues amounted to $110.7 million in the first nine months of 1998,
compared with $64.9 million in the same period of 1997. See Note 11 to the
unaudited consolidated financial statements for a detailed analysis of
trading revenues for the three and nine months ended September 30, 1998 and
1997.
Non-interest Expense
Consolidated non-interest expense was $1,266.3 million in the third quarter
of 1998, an increase of 14.0 percent from the third quarter of 1997. For
the first nine months of 1998, consolidated non-interest expense increased
$528.3 million, or 16.1 percent, over the nine months ended
September 30, 1997. The increase in non-interest expense reflects
increased Mortgage Banking expenses associated with higher origination
volume and additional operating expenses related to acquisitions. During
1998, the corporation has recorded non-recurring charges of $25.4 million
related to completed acquisitions, of which $20.5 million was incurred
during the third quarter.
24
<PAGE>
CONSOLIDATED BALANCE SHEET ANALYSIS
At September 30, 1998, earning assets were $90.6 billion, an increase of 20.8
percent from $75.0 billion at December 31, 1997. This increase was primarily
due to a $6.8 million increase in total investment securities and a
$5.9 billion increase in mortgages held for sale related to the increased
mortgage origination activity during the first nine months of 1998. In
conjunction with the merger with the former Wells Fargo and recent financial
projections, the corporation is currently in the process of assessing goodwill
and intangibles for impairment. At September 30, 1998, goodwill and other
intangibles totaled $1.1 billion. At September 30, 1998, interest-bearing
liabilities totaled $72.1 billion, a 17.3 percent increase from $61.5 billion
at December 31, 1997. The increase was primarily due to a $6.1 billion
increase in short-term borrowings to fund mortgage originations.
Credit Quality
The major categories of loans and leases are included in Note 5 to the
unaudited consolidated financial statements for the quarter ended September
30, 1998.
At September 30, 1998, the allowance for credit losses totaled $1,336.7
million, or 2.95 percent of loans and leases outstanding. Comparable
amounts were $1,196.4 million, or 2.87 percent, at September 30, 1997, and
$1,233.9 million, or 2.90 percent, at December 31, 1997. The ratio of the
allowance for credit losses to total non-performing assets and 90-day past
due loans and leases was 305.6 percent at September 30, 1998, compared with
341.1 percent at September 30, 1997 and 322.7 percent at December 31, 1997.
Although it is impossible for any lender to predict future credit losses
with complete accuracy, management monitors the allowance for credit losses
with the intent to provide for all losses that can reasonably be
anticipated based on current conditions. The corporation maintains the
allowance for credit losses as a general allowance available to cover
future credit losses within the entire loan and lease portfolio and other
credit-related risks. However, management has prepared an allocation of
the allowance based on its views of risk characteristics of the portfolio.
This allocation of the allowance for credit losses does not represent the
total amount available for actual future credit losses in any single
category nor does it prohibit future credit losses from being absorbed by
portions of the allowance allocated to other categories or by the
unallocated portion.
The allocation of the allowance for credit losses to major categories of
loans at September 30, 1998 and December 31, 1997 was:
September 30, December 31,
in millions 1998 1997
Commercial .................... $ 230.2 207.7
Consumer ...................... 434.9 422.6
Real estate ................... 197.0 168.1
Foreign ....................... 72.9 42.0
Unallocated ................... 401.7 393.5
Total ...................... $1,336.7 1,233.9
Non-performing assets and 90-day past due loans and leases totaled $437.4
million, or 0.42 percent of total assets, at September 30, 1998, compared
with $350.7 million, or 0.41 percent, at September 30, 1997, and $382.3
million, or 0.43 percent, at December 31, 1997.
25
<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, Western/Rocky Mountain
and Southwest regions of the country. Distribution of average loans by
region during the first nine months of 1998 was approximately 51 percent in
the Midwest, 27 percent in the Western/Rocky Mountain and 22 percent in the
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 United
States. The five states with the highest originations year to date in 1998
are: California $14,721.0 million; Minnesota $4,853.1 million; Illinois
$3,910.5 million; Texas $3,834.7 million; and Washington $3,220.9 million.
The originations in these five states comprise approximately 41 percent of
total originations in 1998. The five largest states in the servicing
portfolio include: California $43.9 billion; Minnesota $14.0 billion;
Texas $12.5 billion; New York $10.7 billion; and New Jersey $10.4 billion.
These five states comprise approximately 40 percent of the total servicing
portfolio at September 30, 1998.
Norwest Financial engages in consumer finance activities in 47 states, Guam,
Saipan, all ten Canadian provinces, the Caribbean and Latin America. The
five states with the largest consumer finance receivables are: California
$636.6 million; Ohio $254.5 million; Texas $249.5 million; Florida $244.8
million; and Illinois $242.9 million. Consumer finance receivables in
Puerto Rico and Canada totaled $1.4 billion and $872.1 million,
respectively, at September 30, 1998. The consumer finance receivables of
Puerto Rico, Canada, and the five largest states listed above comprise
approximately 45 percent of total consumer finance receivables at September
30, 1998.
With respect to credit card receivables, approximately 66 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. Consumer
past due delinquencies were as follows:
September 30, December 31, September 30,
1998 1997 1997
Banking Group 30 days past due ....... 1.65% 2.02 1.84
Norwest Financial 60 days past due ... 3.85 3.58 3.63
Credit card 30 days past due ......... 3.44 3.92 3.98
26
<PAGE>
Capital and Liquidity Management
The corporation's regulatory capital and ratios are summarized as follows:
September 30, December 31,
Dollars in millions 1998 1997
Tier 1 capital......................... $ 5,764 5,525
Total capital.......................... 7,094 6,692
Total risk-adjusted assets............. 71,497 60,774
Tier 1 capital ratio................... 8.06% 9.09
Total capital to risk-adjusted assets.. 9.92% 11.01
Leverage ratio......................... 6.19% 6.63
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
36.3 percent for the third quarter of 1998 compared with 33.3 percent for
the third quarter of 1997.
On September 22, 1998, the corporation's board of directors authorized the
corporation to repurchase up to an additional five million shares of the
corporation's common stock. The shares will be used to meet the common
stock issuance requirements of the corporation including its Savings
Investment Plan, stock option plans and other stock issuance requirements
other than acquisitions accounted for as pooling of interests.
The corporation's pending business combinations at September 30, 1998
included the combination of the corporation and the former Wells Fargo,
which was completed November 2, 1998. In accordance with the transaction,
common stockholders of the former Wells Fargo received ten shares of the
corporation's common stock for each share exchanged.
YEAR 2000
The business combination involving the corporation and the former Wells Fargo
was completed on November 2, 1998 resulting in the "new" Wells Fargo & Company
(the "combined company"). The following Year 2000 discussion includes
information about the corporation and the former Wells Fargo because the
combined company will be affected by the Year 2000 readiness of each of the
former Wells Fargo and the corporation.
During 1998, the corporation has continued with its company-wide project to
prepare the corporation's systems for Year 2000 compliance. The Year 2000
issue relates to computer systems that use two digits rather than four to
define the applicable year and whether such systems will properly process
information when the year changes to 2000. "Systems" include all firmware,
hardware, networks, system and application software, and commercial "off the
shelf" software, and embedded technology such as properties/date impacted
processors in automated systems such as elevators, telephone systems,
security systems, vault systems, heating and cooling systems and others.
Priority is given to "mission critical" systems. A system is considered
"mission critical" if it is vital to the successful continuation of a core
business activity.
The corporation's Year 2000 readiness project is divided into four phases -
Phase I: a comprehensive assessment and inventory of applicable software,
system hardware devices, data and voice communication devices and embedded
technology intended to determine Year 2000 vulnerability and risk; Phase II:
date detection on systems intended to determine which systems must be
27
<PAGE>
remediated and which systems are compliant and require testing only,
determination of the resources and costs, and the development of schedules
and high level testing plans for the repair, replacement and/or retirement of
systems that are determined not to be compliant; Phase III: repair, replacement
and/or retirement of systems that are determined not to be Year 2000 compliant,
and planning the integration testing for those systems that have interfaces with
other systems both internal and external to the corporation, such as customers
and suppliers; and Phase IV: integration testing on applicable systems to
validate that interfaces are Year 2000 compliant and contingency planning. The
corporation has substantially completed Phases I and II of its Year 2000
project. It is anticipated that Phase III will be substantially completed by
December 31, 1998. Phase IV is anticipated to be completed by June 30, 1999.
The former Wells Fargo, following an initial awareness phase, utilizes a
four-phase plan for achieving Year 2000 readiness. The Assessment Phase is
intended to determine which computers, operating systems, applications and
facilities require remediation and prioritizing those remediation efforts.
The Assessment Phase has been completed except for the on-going assessment
of new systems. The Renovation Phase addressed the correction or replacement
of any non-compliant hardware, software or facilities and has been substantially
completed. All renovated software, both in-house applications and vendor
software was placed back into production before commencement of the Validation
Phase. The Validation Phase, which involves testing of in-house systems,
vendor software and service providers, is in process. Testing of internal
mission-critical systems is anticipated to be substantially completed by
December 31, 1998, and testing of mission-critical service providers is
anticipated to be substantially completed by March 31, 1999. During the
fourth phase, the Implementation Phase, remediated and validated code
will be tested in interfaces with customers, business partners, government
institutions and others. It is anticipated that the Implementation Phase
will be substantially completed by June 30, 1999.
The combined company may be impacted by the Year 2000 compliance issues of
governmental agencies, businesses and other entities who provide data to, or
receive data from, the combined company, and by entities, such as borrowers,
vendors, customers and business partners, whose financial condition or
operational capability is significant to the combined company. The combined
company's Year 2000 project also includes assessing the Year 2000 readiness
of certain customers, borrowers, vendors, business partners, counterparties
and governmental entities. In addition to assessing the readiness of these
external parties, the combined company is developing contingency plans which
will include plans to recover operations and alternatives to mitigate the
effects of counterparties whose own failure to properly address Year 2000
issues may adversely impact the combined company's ability to perform certain
functions. These contingency plans are currently being developed and are
expected to be substantially completed by June 30, 1999.
The combined company currently estimates that its total cost for the Year
2000 project will approximate $300 million. The accounting policies of the
corporation and the former Wells Fargo are in the process of being reviewed
in detail to conform policies for the combined company. The estimate of the
combined company's total costs for the Year 2000 project could change when
such accounting policy determinations have been made. To date, the
corporation has incurred charges of $74.0 million related to its Year 2000
project and $21.8 million and $58.1 million total expenditures were incurred
in the quarter and nine months ended September 30, 1998, respectively.
Charges include the cost of internal staff redeployed to the Year 2000
project, as well as external consulting costs and costs of accelerated
replacement of hardware and software due to Year 2000 issues. To date, the
former Wells Fargo has incurred charges of $77.0 million related to its Year
28
<PAGE>
2000 project, and $24.0 million and $67.0 million total expenditures were
incurred in the quarter and nine months ended September 30, 1998,
respectively. Charges for the former Wells Fargo include the cost of
external consulting costs and costs of accelerated replacement of hardware
and software, but do not include the cost of internal staff redeployed to
the Year 2000 project. The combined company does not believe that the
redeployment of internal staff will have a material impact on the financial
condition or results of operations for the combined company.
The foregoing paragraphs contain a number of forward-looking statements.
These statements reflect management's best current estimates, which were
based on numerous assumptions about future events, including the continued
availability of certain resources, representations received from third party
service providers and other third parties, and additional factors. There
can be no guarantee that these estimates, including Year 2000 costs, will be
achieved, and actual results could differ materially from those estimates. A
number of important factors could cause management's estimates and the impact
of the Year 2000 issue to differ materially from what is described in the
forward-looking statements contained in the above paragraphs. Those factors
include, but are not limited to, uncertainties in the cost of hardware and
software, the availability and cost of programmers and other systems
personnel, inaccurate or incomplete execution of the phases, ineffective
remediation of computer code, and whether the combined company's customers,
vendors, competitors and counterparties effectively address the Year 2000 issue.
If Year 2000 issues are not adequately addressed by the combined company and
significant third parties, the combined company's business, results of
operations and financial position could be materially adversely affected.
Failure of certain vendors to be Year 2000 compliant could result in
disruption of important services upon which the combined company depends,
including, but not limited to, such services as telecommunications,
electrical power and data processing. Failure of the combined company's loan
customers to properly prepare for the Year 2000 could also result in
increases in problem loans and credit losses in future years.
Notwithstanding the combined company's efforts, there can be no assurance
that the combined company or significant third party vendors or other
significant third parties will adequately address their Year 2000 issues. The
combined company is continuing to assess the Year 2000 readiness of third
parties but does not know at this time whether the failure of third parties to
be Year 2000 compliant will have a material effect on the combined company's
results of operations, liquidity and financial condition.
The forward-looking statements made in the foregoing Year 2000 discussion
speak only as of the date on which such statements are made, and the
combined company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (FAS 131). FAS 131 requires disclosure of selected information
about operating segments including segment income, revenues and asset data.
Operating segments, as defined in FAS 131, would include those components
for which financial information is available and evaluated regularly by the
chief operating decision maker in assessing performance and making resource
allocation determinations for operating components such as those which
exceed ten percent or more of combined revenue, income or assets.
29
<PAGE>
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132 "Employers' Disclosures about Pensions and Other
Postretirement Benefits" (FAS 132). FAS 132 standardizes disclosure
requirements for pension and other postretirement plans, and requires
certain additional information on changes in benefit obligations and fair
values of plan assets.
The corporation will be required to adopt the provisions of FAS 131 and FAS
132 at the end of 1998, and adoption is not expected to have a material
impact on the corporation's consolidated financial statements.
In March 1998, the AICPA issued Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use" (SOP
98-1). SOP 98-1 requires capitalization of certain costs associated with
software developed or obtained for internal use. The corporation will be
required to adopt the provisions of SOP 98-1 in 1999. The adoption of SOP
98-1 is not expected to have a material effect on the corporation's
consolidated financial statements.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities" (FAS
133). FAS 133 requires recognition of all derivative instruments as either
assets or liabilities in the statement of financial position and
measurement of those instruments at fair value. A derivative may be
designated as a hedge of an exposure to changes in the fair value of a
recognized asset or liability, an exposure to variable cash flows of a
forecasted transaction, or a foreign currency exposure. The accounting for
gains and losses associated with changes in the fair value of a derivative
and the impact on the corporation's consolidated financial statements will
depend on its hedge designation and whether the hedge is highly effective
in offsetting changes in the fair value or cash flows of the underlying
hedged item. The corporation will be required to adopt the provisions of
FAS 133 in the year 2000 and has currently not determined the impact of FAS
133 on its consolidated financial statements.
In October 1998, the FASB issued Statement of Financial Accounting
Standards No. 134 "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise" (FAS 134). FAS 134 requires that after the securitization of
mortgage loans held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed securities or other
retained interests based on its ability and intent to sell or hold those
investments. The corporation will be required to adopt the provisions of
FAS 134 beginning in 1999, and adoption is not expected to have a material
impact on the corporation's consolidated financial statements.
30
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
</TABLE>
<TABLE>
Quarter Ended September 30,
In millions, except ratios 1998 1997
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
Assets
<C> <C> <C> <C> <C> <C>
Money market
investments ......... $ 1,106 $ 17.1 6.14% $ 619 $ 8.9 5.76%
Trading account
securities .......... 850 12.9 6.06 741 13.3 7.14
Investment securities
available for sale:
U.S. Treasury &
federal agencies .. 2,723 40.8 6.07 2,262 32.4 5.76
State, municipal
and housing
tax-exempt ........ 1,519 30.9 8.60 1,454 29.3 8.43
Mortgage-backed ..... 12,605 222.0 7.22 14,295 262.4 7.48
Other ............... 1,560 21.7 6.28 976 11.8 6.39
Total investment
securities
available
for sale ....... 18,407 315.4 7.09 18,987 335.9 7.30
Investment securities
held to maturity .. 785 6.9 3.50 720 6.9 3.89
Total investment
securities ..... 19,192 322.3 6.93 19,707 342.8 7.17
Loans held for sale ... 3,638 72.6 7.92 2,874 56.2 7.76
Mortgages held
for sale ............ 12,626 221.1 7.00 6,980 128.5 7.36
Loans and leases
(net of
unearned discount)
Commercial .......... 15,314 340.2 8.81 13,350 312.8 9.30
Real estate ......... 15,780 383.0 9.68 15,071 369.8 9.79
Consumer ............ 13,456 512.6 15.20 12,374 472.2 15.22
Total loans
and leases ...... 44,550 1,235.8 11.05 40,795 1,154.8 11.27
Allowance for
credit losses ..... (1,319) (1,118)
Net loans
and leases ...... 43,231 39,677
Total earning assets
(before the
allowance for
credit losses) ... 81,962 1,881.8 9.22 71,716 1,704.5 9.55
Cash and due
from banks .......... 3,997 3,553
Other assets .......... 10,359 8,584
Total assets ........ $94,999 $82,735
</TABLE>
(Continued on page 32)
31
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(Continued from page 31)
<TABLE>
Quarter Ended September 30,
In millions, except ratios 1998 1997
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
<C> <c< <C> <C> <C> <C>
Liabilities and
Stockholders' Equity
Noninterest-bearing
deposits.. .......... $18,406 $ - -% $14,351 $ - -%
Interest-bearing
deposits
Savings and
NOW accounts ....... 10,986 48.3 1.75 9,472 38.6 1.62
Money market
accounts ........... 12,052 101.4 3.34 10,851 85.3 3.12
Savings certificates . 12,657 171.3 5.39 12,884 176.5 5.44
Certificates of deposit
and other time ..... 3,749 52.3 5.54 3,424 50.0 5.78
Foreign time ......... 620 8.3 5.30 883 10.3 4.65
Total interest-bearing
deposits ......... 40,064 381.6 3.78 37,514 360.7 3.81
Federal funds
purchased repurchase
agreements ........... 4,008 55.1 5.46 3,180 41.1 5.13
Short-term borrowings .. 8,364 120.1 5.69 4,962 70.9 5.66
Long-term debt ......... 12,633 197.7 6.26 12,510 197.6 6.32
Total interest-bearing
liabilities ...... 65,069 754.5 4.61 58,166 670.3 4.58
Other liabilities ...... 4,166 3,626
Preferred stock ........ 187 187
Common stockholders'
equity .............. 7,171 6,405
Total liabilities
and stockholders'
equity ........... $94,999 $82,735
Net interest income
(tax-equivalent
basis) ............ $ 1,127.3 $ 1,034.2
Yield spread ......... 4.61 4.97
Net interest margin .. 5.53 5.81
Interest-bearing
liabilities to
earning assets .... 79.39 81.11
</TABLE>
32
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
<TABLE>
Nine Months Ended September 30,
In millions, except ratios 1998 1997
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
Assets
<C> <C> <C> <C> <C> <C>
Money market
investments ........ $ 878 $ 38.8 5.90% $ 964 $ 39.4 5.47%
Trading account
securities ......... 896 40.9 6.10 536 29.1 7.24
Investment securities
available for sale:
U.S. Treasury &
federal agencies .. 3,149 137.9 5.88 2,728 128.9 6.29
State, municipal
and housing
tax-exempt ........ 1,499 92.2 8.68 1,287 80.8 8.66
Mortgage-backed .... 12,960 691.6 7.30 14,395 797.4 7.44
Other .............. 1,182 45.4 6.22 1,057 35.9 6.17
Total investment
securities
available
for sale ...... 18,790 967.1 7.11 19,467 1,043.0 7.31
Investment securities
held to
maturity ......... 758 20.0 3.51 726 21.0 3.87
Total investment
securities .... 19,548 987.1 6.96 20,193 1,064.0 7.18
Loans held for sale .. 3,578 211.5 7.91 2,880 168.3 7.82
Mortgages held
for sale ........... 10,996 573.9 6.96 5,957 324.0 7.25
Loans and leases
(net of
unearned discount)
Commercial ......... 14,590 980.2 8.98 13,364 917.5 9.18
Real estate ........ 15,323 1,115.8 9.72 15,040 1,093.4 9.70
Consumer ........... 13,311 1,526.7 15.31 11,927 1,358.4 15.20
Total loans
and leases ..... 43,224 3,622.7 11.19 40,331 3,369.3 11.16
Allowance for
credit losses .... (1,272) (1,084)
Net loans
and leases ..... 41,952 39,247
Total earning assets
(before the
allowance for
credit losses) .. 79,120 5,474.9 9.31 70,861 4,994.1 9.46
Cash and due
from banks ......... 3,982 3,571
Other assets ......... 10,088 8,449
Total assets ....... $91,918 $81,797
</TABLE>
(Continued on page 34)
33
<PAGE>
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(Continued from page 33)
<TABLE>
Nine Months Ended September 30,
In millions, except ratios 1998 1997
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
Liabilities and
Stockholders' Equity
<C> <c > <C> <C> <C> <C>
Noninterest-bearing
deposits ............ $17,583 $ - -% $13,637 $ - -%
Interest-bearing deposits
Savings and
NOW accounts ...... 10,617 131.0 1.65 9,490 116.7 1.64
Money market
accounts .......... 11,795 295.8 3.35 10,647 258.7 3.25
Savings
certificates ...... 12,691 514.8 5.42 13,054 529.7 5.43
Certificates of
deposit and
other time ........ 3,851 160.2 5.56 3,425 146.2 5.70
Foreign time ........ 509 19.0 4.99 728 24.1 4.43
Total interest-bearing
deposits ........ 39,463 1,120.8 3.80 37,344 1,075.4 3.85
Federal funds
purchased repurchase
agreements .......... 4,597 178.7 5.20 3,161 117.5 4.97
Short-term
borrowings .......... 6,754 288.0 5.70 5,092 209.6 5.50
Long-term debt ........ 12,500 588.4 6.28 12,395 578.6 6.22
Total interest-bearing
liabilities ..... 63,314 2,175.9 4.59 57,992 1,981.1 4.56
Other liabilities ..... 3,844 3,839
Preferred stock ....... 186 188
Common stockholders'
equity ............. 6,991 6,141
Total liabilities
and stockholders'
equity ......... $91,918 $81,797
Net interest income
(tax-equivalent
basis) .......... $3,299.0 $3,013.0
Yield spread ....... 4.72 4.90
Net interest
margin ............ 5.61 5.71
Interest-bearing
liabilities
to earning
assets ........... 80.02 81.84
</TABLE>
* Interest income and yields are calculated on a tax-equivalent basis using
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.
34
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in market risk exposures that affect the
quantitative or qualitative disclosures presented in the corporation's annual
report on Form 10-K for the year ended December 31, 1997.
35
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Deadline for Stockholder Proposals Submitted Other Than Pursuant to Rule 14a-8
under the Securities Exchange Act of 1934
Any proposal from a stockholder to be presented at the 1999 Annual Meeting of
Stockholders of the corporation that is submitted outside the processes of
Rule 14a-8 of the Securities Exchange Act of 1934 and therefore will not be
included in proxy materials to be sent to stockholders by the corporation,
must be received by the Secretary of the corporation, at Norwest Center, Sixth
and Marquette, Minneapolis, Minnesota 55479-1026, no earlier than February
26, 1999 and no later than March 28, 1999 in order to be considered timely
received under the By-laws of the corporation.
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
2. Agreement and Plan of Merger dated as of June 7, 1998
and amended and restated as of September 10, 1998 by and
among Wells Fargo & Company, Norwest Corporation and WFC
Holdings Corporation (incorporated by reference to
Exhibit 2.1 of the corporation's Registration Statement
on Form S-4 [No. 333-63247]).
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, Exhibit 3 to the corporation's Current
Report on Form 8-K dated July 3, 1995, Exhibit 3 to
the corporation's Current Report on Form 8-K dated
June 12, 1998, and Exhibits 3(b) and 3(c) filed herewith).
3(b). Certificate of Amendment of Certificate of Incorporation
filed on November 2, 1998 with the Delaware Secretary of
State.
3(c). Certificate of Amendment of Certificate of Incorporation filed
on November 2, 1998 with the Delaware Secretary of State.
3(d). Certificate of Designations of Powers, Preferences and
Rights of 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).
36
<PAGE>
Exhibit
No. Exhibit
3(e). Certificate of Designations of Powers, Preferences and
Rights of 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(f). Certificate of Designations of Powers, Preferences and
Rights of 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(g). Certificate of Designations with respect to the 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).
3(h). Certificate of Designations with respect to the 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). Certificate of Designations with respect to the 1998 ESOP
Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 3 to the corporation's Current Report
on Form 8-K dated April 20, 1998).
3(j). Certificate of Designations for Adjustable Cumulative Preferred
Stock, Series B.
3(k). Certificate of Designations for Fixed/Adjustable Rate
Noncumulative Preferred Stock, Series H.
3(l). By-Laws, as amended through November 2, 1998.
4(a). See 3(a) through 3(l) of this Item.
4(b). Rights Agreement dated as of November 22, 1988 between
the corporation and Citibank, N.A., as Rights Agent
(incorporated by reference to Exhibit 1 to the corporation's
Form 8-A dated December 6, 1988).
4(c). Certificate of Adjustment, dated October 10, 1997, to Rights
Agreement (incorporated by reference to Exhibit 5 to the
corporation's Form 8-A/A dated October 14, 1997).
4(d). Amendment No. 1 to Rights Agreement, dated as of June 7, 1998,
between the corporation and Citibank, N.A., as Rights Agent
(incorporated by reference to Exhibit 4(b) to the corporation's
Current Report on Form 8-K, dated June 7, 1998 and filed on
June 18, 1998).
4(e). Rights Agreement, dated as of October 21, 1998, between the
corporation and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (incorporated by reference to Exhibit 4.1 to the
corporation's Form 8-A dated October 21, 1998).
37
<PAGE>
Exhibit
No. Exhibit
4(f). Copies of instruments with respect to long-term debt will be
furnished to the Commission upon request.
10(a). Long-Term Incentive Compensation Plan, as amended effective
July 28, 1998.
10(b). Directors' Stock Deferral Plan, as amended effective July 1,
1998.
10(c). Employees' Stock Deferral Plan, as amended effective July 1,
1998.
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.
27. Financial Data Schedule (filed electronically).
Stockholders may obtain a copy of any Exhibit not contained herein, upon
payment of a reasonable fee, by writing Wells Fargo & Company, Office of the
Secretary, Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-
1026.
(b) Reports on Form 8-K.
On July 22, 1998, the corporation filed a Current Report on Form 8-K,
dated July 14, 1998, reporting consolidated operating results of the
corporation for the quarter and six months ended June 30, 1998, and also
placing on file a copy of abridged presentation materials concerning the
proposed combination of the corporation with the former Wells Fargo
that have been used in presentation to analysts.
On August 5, 1998, the corporation filed a Current Report on Form 8-K,
dated August 5, 1998, reporting consolidated pro forma combining
financial information to reflect the corporation's pending combination
with the former Wells Fargo.
38
<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.
WELLS FARGO & COMPANY
November 13, 1998 By /s/ Richard M. Kovacevich
President and
Chief Executive Officer
By /s/ Rodney L. Jacobs
Vice Chairman and
Chief Financial Officer
(Principal Financial Officer)
39
<PAGE>
Exhibit 3(b)
NORWEST CORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware
We, Stanley S. Stroup, Executive Vice President, and Laurel A.
Holschuh, Secretary, of Norwest Corporation, a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation"), do hereby certify:
FIRST: That by unanimous written consent of the Board of
Directors of the Corporation duly adopted on September 8, 1998,
resolutions were adopted proposing an amendment, as hereinafter set
forth, of the Restated Certificate of Incorporation of the Corporation,
declaring the advisability of such amendment, and directing that the
amendment be presented for the consideration of the stockholders of the
Corporation at a special meeting of such stockholders.
SECOND: That at the special meeting of all such stockholders
entitled to vote on the amendment hereinafter set forth, held on
October 20, 1998, and called in accordance with the relevant provisions
of the General Corporation Law of the State of Delaware, the holders of
a majority of the outstanding shares of common stock of the Corporation
voted in favor of such amendment, as hereinafter set forth, to the
Restated Certificate of Incorporation of the Corporation.
THIRD: The aforesaid amendment to the Restated Certificate of
Incorporation shall become effective at 5:01 p.m. Eastern Standard Time
on the date of its filing with the Secretary of State of the State of
Delaware.
FOURTH: That there has been duly adopted, in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware, an amendment of the Restated Certificate of Incorporation
of the Corporation, as follows:
1. Article FIRST shall be amended to state in its entirety:
FIRST: The name of this corporation is Wells Fargo & Company.
IN WITNESS WHEREOF, NORWEST CORPORATION has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by
Stanley S. Stroup, its Executive Vice President, and attested by Laurel
A. Holschuh, its Secretary, this 2nd day of November, 1998.
NORWEST CORPORATION
(Corporate Seal)
By:/s/ Stanley S. Stroup
Executive Vice President
ATTEST:
/s/ Laurel A. Holschuh
Secretary
[Filed in the Office of the Delaware Secretary of State on November 2,
1998]
Exhibit 3(c)
NORWEST CORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware
We, Stanley S. Stroup, Executive Vice President, and Laurel A.
Holschuh, Secretary of Norwest Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation"), do hereby certify:
FIRST: That by unanimous written consent of the Board of
Directors of the Corporation duly adopted on September 8, 1998,
resolutions were adopted proposing an amendment, as hereinafter set
forth, of the Restated Certificate of Incorporation of the Corporation,
declaring the advisability of such amendment, and directing that the
amendment be presented for the consideration of the stockholders of the
Corporation at a special meeting of such stockholders.
SECOND: That at the special meeting of all such stockholders
entitled to vote on the amendment hereinafter set forth, held on
October 20, 1998, and called in accordance with the relevant provisions
of the General Corporation Law of the State of Delaware, the holders of
a majority of the outstanding shares of common stock of the Corporation
voted in favor of such amendment, as hereinafter set forth, to the
Restated Certificate of Incorporation of the Corporation.
THIRD: That there has been duly adopted, in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware, an amendment of the Restated Certificate of Incorporation
of the Corporation, as follows:
1. The first sentence of Article FOURTH shall be amended to state
in its entirety:
FOURTH: The total number of shares of all classes of stock
which the corporation shall have authority to issue is Four Billion
Twenty-Four Million (4,024,000,000), consisting of Twenty Million
(20,000,000) shares of Preferred Stock without par value, Four Million
(4,000,000) shares of Preference Stock without par value, and Four
Billion (4,000,000,000) shares of Common Stock of the par value of $1-
2/3 per share.
2. The first sentence of Section 1 of Article FOURTH shall be
amended to state in its entirety:
1. The Preferred Stock may be issued at any time or from
time to time in any amount, provided not more than 20,000,000 shares
thereof shall be outstanding at any one time, as Preferred Stock of one
or more series, as hereinafter provided.
IN WITNESS WHEREOF, NORWEST CORPORATION has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by
Stanley S. Stroup, its Executive Vice President, and attested by Laurel
A. Holschuh, its Secretary, this 2nd day of November, 1998.
NORWEST CORPORATION
(Corporate Seal)
By: /s/ Stanley S. Stroup
Executive Vice President
ATTEST:
/s/ Laurel A. Holschuh
Secretary
[Filed in the Office of the Delaware Secretary of State on November 2,
1998]
Exhibit 3(j)
NORWEST CORPORATION
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES B (Without Par
Value)
NORWEST CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES
that the following resolution, as modified by unanimous written consent
of the Board of Directors of the Corporation (the "Board") on September
8, 1998, was duly adopted by the Board pursuant to authority conferred
upon the Board by the provisions of the Restated Certificate of
Incorporation of the Corporation, as amended, which authorizes the
issuance of not more than 20,000,000 shares of Preferred Stock, without
par value (the "Preferred Stock"), at a meeting of the Board duly held
on July 28, 1998:
RESOLVED that the issuance of a series of Preferred Stock, without
par value, of the Corporation is hereby authorized, and the number,
designation, powers, preferences, and relative, participating,
optional, and other rights, and qualifications, limitations and
restrictions thereof, in addition to those set forth in the Restated
Certificate of Incorporation of the Corporation, as amended, are hereby
fixed as follows:
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES B
1. Designation.
1,500,000 shares of the preferred stock, without par value, of the
Corporation ("Preferred Stock") are hereby constituted as a series of
Preferred Stock designated as Adjustable Rate Cumulative Preferred
Stock, Series B (hereinafter called "Series B Preferred Stock" or,
sometimes, "New Series B Preferred Stock"). The number of shares of
Series B Preferred Stock may not be increased but may be decreased by a
resolution duly adopted by the Board of Directors of the Corporation
(or a duly authorized committee thereof), but not below the number of
shares of Series B Preferred Stock then outstanding.
Shares of New Series B Preferred Stock shall be issued upon
conversion of shares of Adjustable Rate Cumulative Preferred Stock,
Series B of Wells Fargo & Company ("Old Series B Preferred Stock") upon
the terms and subject to the conditions set forth in the Agreement and
Plan of Merger, dated as of June 7, 1998, and amended and restated as
of September 10, 1998, by and among the Corporation, WFC Holdings
Corporation, a wholly-owned subsidiary of the Corporation, and Wells
Fargo & Company (the "Merger Agreement").
2. Dividends.
(a) The holders of shares of Series B Preferred Stock shall be
entitled to receive cash dividends, when, as and if declared by the
Board of Directors of the Corporation (the "Board of Directors"), out
of funds legally available for that purpose, from the date of original
issuance to and including the 15th day of the immediately following
February, May, August or November, whichever month firsts follows the
date of original issue (the "Initial Dividend Period"), and thereafter
for each dividend period commencing on February 16, May 16, August 16
and November 16 and ending on and including the day next preceding the
first day of the next dividend period (the Initial Dividend Period and
each of such other periods herein referred to as a "Dividend Period")
at a rate for each Dividend Period at a rate per annum applied against
$50.00 per share equal to the Applicable Rate (as defined in Section 3)
in respect of such Adjustable Dividend Period. The amount of dividend
per share payable for the Initial Dividend Period shall equal the
dividend per share payable for a full Dividend Period less the dividend
per share payable for the partial dividend period for the Old Series B
Preferred Stock occurring prior to conversion of the Old Series B
Preferred Stock into New Series B Preferred Stock pursuant to the
Merger Agreement (the "Final Old Series B Dividend Period"), such that
the dividends per share payable for the Final Old Series B Dividend
Period and the Initial Dividend Period collectively equal the dividend
payable per share for a full Dividend Period. The amount of dividend
per share payable for any portion of a Dividend Period (other than the
Initial Dividend Period) less than a full Dividend Period shall be
computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in the period for which payable. The
amount of dividend per share payable for each full Dividend Period
shall be computed by dividing the annual dividend rate for each
Dividend Period by four and applying such resulting rate against $50.00
per share. Dividends shall be payable when and as declared by the
Board of Directors, out of funds legally available therefor, on
February 15, May 15, August 15 and November 15 of each year, commencing
on the final day of the Initial Dividend Period to holders of record on
such respective dates not exceeding 30 days preceding the payment date
thereof as may be determined by the Board of Directors in advance of
such payment date. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of record on
such date not exceeding 30 days preceding the payment date thereof as
may be fixed by the Board of Directors. No dividends shall be declared
on any other series or class or classes of preferred stock ranking on a
parity (as that term is defined in Section 8(d)) with the Series B
Preferred Stock as to dividends in respect of any dividend period
unless there shall likewise be or have been declared on all shares of
Series B Preferred Stock at the time outstanding like dividends for all
Dividend Periods coinciding with or ending before such dividend period,
ratably in proportion to the respective dividend rates fixed for all
such other series or class or classes of preferred stock and the Series
B Preferred Stock. Dividends shall be cumulative and will accrue on
each share of Series B Preferred Stock from the date of original
issuance thereof. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments which
may be in arrears.
(b) If dividends at the rate per share set out in Section 2(a) for
any Dividend Period shall not have been declared and paid or set apart
for payment on all outstanding shares of Series B Preferred Stock for
such Dividend Period and all preceding Dividend Periods from and after
the date of issue thereof, then, until the aggregate deficiency shall
be declared and fully paid or set apart for payment, the Corporation
shall not (i) declare or pay or set apart for payment any dividends or
make any other distribution on the common stock, $1-2/3 par value per
share, of the Corporation ("Common Stock") or any other capital stock
of the Corporation ranking junior to the Series B Preferred Stock with
respect to the payment of dividends or distribution of assets on
liquidation, dissolution or winding up of the Corporation (which for
all purposes of this resolution shall mean any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary)
(the Common Stock and such other stock being herein referred to as
"Junior Stock"), other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock, or (ii) make any payment on account of the purchase,
redemption or other retirement of any Junior Stock.
3. Applicable Rate.
Except as provided below in this paragraph, the "Applicable Rate"
for any Dividend Period shall be (a) 76% of (b) the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Twenty
Year Constant Maturity Rate (each as hereinafter defined) for the
Dividend Period. If the Corporation determines in good faith that for
any reason one or more of such rates cannot be determined for any
Dividend Period, then the Applicable Rate for such Dividend Period
shall be 76% of the higher of whichever of such rates can be so
determined. If the Corporation determines in good faith that none of
such rates can be determined for any Dividend Period, then the
Applicable Rate in effect for the preceding Dividend Period shall be
continued for such Dividend Period. Anything herein to the contrary
notwithstanding, the Applicable Rate for any Dividend Period shall in
no event be less than 5.50% per annum or greater than 10.50% per annum.
Except as provided below in this paragraph, the "Treasury Bill
Rate" for each Dividend Period shall be the arithmetic average of the
two weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during
the relevant Calendar Period as provided below) for three-month U.S.
Treasury bills, published by the Federal Reserve Board during the
Calendar Period immediately prior to the ten calendar days immediately
preceding the February 15, May 15, August 15 and November 15, as the
case may be, prior to the Dividend Period for which the dividend rate
on the Series B Preferred Stock is being determined. If the Federal
Reserve Board does not publish such a weekly per annum market discount
rate during such Calendar Period, then the Treasury Bill Rate for such
Dividend Period shall be the arithmetic average of the two weekly per
annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S.
Treasury bills, published during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency selected by
the Corporation. If a per annum market discount rate for three-month
U.S. Treasury bills shall not be published by the Federal Reserve Board
or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Treasury Bill Rate for
such Dividend Period shall be the arithmetic average of the two weekly
per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for all the U.S. Treasury
bills then having maturities of not less than 80 nor more than 100
days, finally published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such
rates, by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. If the Corporation determines
in good faith that for any reason no such U.S. Treasury bill rates are
published as provided above during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
non-interest bearing U.S. Treasury securities with a maturity of not
less than 80 nor more than 100 days from the date of each such
quotation, as chosen and quoted daily for each business day in New York
City (or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation. If the
Corporation determines in good faith that for any reason the
Corporation cannot determine the Treasury Bill Rate for any Dividend
Period as provided above in this paragraph, the Treasury Bill Rate for
such Adjustable Dividend Period shall be the arithmetic average of the
per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable, interest-bearing
U.S. Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently
if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities
dealers selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each Dividend Period shall be the arithmetic average
of the two weekly per annum Ten Year Average Yields (or the one weekly
per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below),
published by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the
February 15, May 15, August 15 and November 15, as the case may be,
prior to the Dividend Period for which the dividend rate on the Series
B Preferred Stock is being determined. If the Federal Reserve Board
does not publish such a weekly per annum Ten Year Average Yield during
such Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the two weekly per
annum Ten Year Average Yields (or the one weekly per annum Ten Year
Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), published during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. If a per annum Ten
Year Average Yield shall not be published by the Federal Reserve Board
or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the
two weekly per annum average yields to maturity (or the one weekly
average yield to maturity, if only one such yield shall be published
during the relevant Calendar Period as provided below) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having maturities of not less than
eight nor more than twelve years, finally published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve
Board shall not publish such yields, by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation.
If the Corporation determines in good faith that for any reason the
Corporation cannot determine the Ten Year Constant Maturity Rate for
any Dividend Period as provided above in this paragraph, then the Ten
Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the per annum average yields to maturity based
upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date
not less than eight nor more than twelve years from the date of each
such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three recognized
U.S. Government securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year
Constant Maturity Rate" for each Dividend Period shall be the
arithmetic average of the two weekly per annum Twenty Year Average
Yields (or the one weekly per annum Twenty Year Average Yield, if only
one such Yield shall be published during the relevant Calendar Period
as provided below), published by the Federal Reserve Board during the
Calendar Period immediately prior to the ten calendar days immediately
preceding the February 15, May 15, August 15 and November 15, as the
case may be, prior to the Dividend Period for which the dividend rate
on the Series B Preferred Stock is being determined. If the Federal
Reserve Board does not publish such a weekly per annum Twenty Year
Average Yield during such Calendar Period, then the Twenty Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two weekly per annum Twenty Year Average Yields (or the
one weekly per annum Twenty Year Average Yield, if only one such Yield
shall be published during the relevant Calendar Period as provided
below), published during such Calendar Period by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. If a per annum
Twenty Year Average Yield shall not be published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Twenty Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two weekly per annum average yields to maturity (or the
one weekly average yield to maturity, if only one such yield shall be
published during the relevant Calendar Period as provided below) for
all of the actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having maturities of
not less than eighteen nor more than twenty-two years, finally
published during such Calendar Period by the Federal Reserve Board or,
if the Federal Reserve Board shall not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. If the Corporation determines in good
faith that for any reason the Corporation cannot determine the Twenty
Year Constant Maturity Rate for any Dividend Period as provided above
in this paragraph, then the Twenty Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date not less than eighteen nor more
than twenty-two years from the date of each such quotation, as chosen
and quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities
dealers selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Twenty Year Constant Maturity Rate shall each be rounded to the nearest
five hundredths of a percentage point.
The Applicable Rate with respect to each Dividend Period will be
calculated as promptly as practicable by the Corporation according to
the appropriate method described herein. The Corporation will cause
each Applicable Rate to be published in a newspaper of general
circulation in New York City prior to the commencement of the new
Dividend Period to which it applies and will cause notice of such
Applicable Rate to be included with the dividend payment checks next
mailed to the holders of the Series B Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at the
option of the holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the holder and are
priced to reflect such tax benefits or which were originally issued at
a deep or substantial discount;
(iii) The weekly per annum market discount rate for three month
U.S. Treasury bills shall be the secondary market rate;
(iv) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and
(v) "Twenty Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of twenty years).
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, before any payment or distribution of the assets of
the Corporation shall be made to or set apart for the holders of any
Junior Stock, the holders of the shares of Series B Preferred Stock
shall be entitled to receive $50.00 per share plus an amount equal to
all dividends (whether or not earned or declared) accrued and unpaid
thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the
holders of the shares of the Series B Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any other preferred stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Series B
Preferred Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Series B Preferred Stock and any such
other preferred stock ratably in accordance with the respective amounts
which would be payable on such shares of Series B Preferred Stock and
any such other preferred stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, a consolidation or merger
of the Corporation with or into one or more corporations shall not be
deemed to be a liquidation, dissolution or winding up.
(b) Subject to the rights of the holders of shares of any series
or class or classes of stock ranking on a parity with or prior to the
Series B Preferred Stock upon liquidation, dissolution or winding up,
upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Series B Preferred
Stock as provided in this Section 4, but not prior thereto, any Junior
Stock shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining
to be paid or distributed, and the Series B Preferred Stock shall not
be entitled to share therein.
5. Redemption.
(a) The Series B Preferred Stock shall be redeemable, at the
option of the Corporation, in whole or in part, at a redemption price
of $50.00 per share plus accrued and unpaid dividends thereon to the
date fixed for redemption.
(b) In the event the Corporation shall redeem shares of Series B
Preferred Stock pursuant to Section 5(a), notice of such redemption
shall be given by first class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the redemption date, to each
holder of record of the shares to be redeemed, at such holder's address
as the same appears on the stock register of the Corporation. Each
such notice shall state: (1) the redemption date; (2) the number of
shares of Series B Preferred Stock to be redeemed and, if less than all
the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the redemption price and
the manner in which such redemption price is to be paid and delivered;
(4) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (5) that dividends
on the shares to be redeemed will cease to accrue on such redemption
date. Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing funds for the payment of the redemption price), dividends on
the shares of Series B Preferred Stock so called for redemption shall
cease to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as shareholders of
the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. The Corporation's obligation to provide
funds in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the redemption date, the Corporation shall
deposit with a bank or trust company (which may be an affiliate of the
Corporation), having an office or agency in the City and County of San
Francisco, State of California, having a capital and surplus of at
least $50,000,000, or with any other such bank or trust company located
in the continental United States as may be designated from time to time
by the Corporation, funds necessary for such redemption, in trust, with
irrevocable instructions that such funds be applied to the redemption
of the shares of Series B Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation
from time to time. Any funds so deposited and unclaimed at the end of
six years from such redemption date shall be repaid or released to the
Corporation, after which the holder or holders of such shares of Series
B Preferred Stock so called for redemption shall look only to the
Corporation for payment of the redemption price.
(c) Upon surrender in accordance with said notice of the
certificates for any shares redeemed pursuant to Section 5(a) (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state), such shares shall be redeemed
by the Corporation at the redemption price. If less than all the
outstanding shares of Series B Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Corporation from
outstanding shares of Series B Preferred Stock not previously called
for redemption by lot or pro rata (as nearly as may be) or by any other
method determined by the Board of Directors in its sole discretion to
be equitable.
(d) In no event shall the Corporation redeem less than all the
outstanding shares of Series B Preferred Stock pursuant to Section 5(a)
unless full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Series B Preferred
Stock for all past Dividend Periods.
6. Shares to be Retired.
All shares of Series B Preferred Stock redeemed or purchased by the
Corporation shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued, but not as
shares of Series B Preferred Stock.
7. Conversion or Exchange.
The holders of shares of Series B Preferred Stock shall not have
any rights herein to convert such shares into or exchange such shares
for shares of any other class or classes or any other series of any
class or classes of capital stock (or any other security) of the
Corporation.
8. Voting.
(a) Except as hereinafter in this Section 8 expressly provided for
and as otherwise from time to time required by the laws of the State of
Delaware, the Series B Preferred Stock shall have no voting rights.
Whenever, at any time or times, dividends payable on the Series B
Preferred Stock shall be in arrears in an amount equal to at least six
full quarterly dividends on the Series B Preferred Stock at the time
outstanding, whether or not consecutive, the holders of the outstanding
Series B Preferred Stock shall have the exclusive right, voting
separately as a class with holders of shares of any one or more other
series of preferred stock ranking on a parity with the Series B
Preferred Stock either as to dividends or the distribution of assets
upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable, to elect two (2) of the
authorized number of members of the Board of Directors at the
Corporation's next annual meeting of shareholders and at each
subsequent annual meeting of shareholders. At elections for such
directors, each holder of Series B Preferred Stock shall be entitled to
one vote for each share held (the holders of shares of any other series
of preferred stock ranking on such a parity and having like voting
rights being entitled to such number of votes, if any, for each share
of such stock held as may be granted to them). The right of the
holders of Series B Preferred Stock, voting separately as a class, to
elect (either alone or together with the holders of shares of any one
or more other series of preferred stock ranking on such a parity and
having like voting rights) members of the Board of Directors as
aforesaid shall continue until such time as all dividends accumulated
on the Series B Preferred Stock shall have been fully paid or set apart
for payment, at which time such right shall terminate, except as herein
or by law expressly provided, subject to revesting in the event of each
and every subsequent default of the character above mentioned. Upon
any termination of the right of the holders of the Series B Preferred
Stock as a class to vote for directors as herein provided, the term of
office of all directors then in office elected by the Series B
Preferred Stock shall terminate immediately. Any director who shall
have been so elected pursuant to this paragraph may be removed at any
time, either with or without cause, and any vacancy thereby created may
be filled, only by the affirmative vote of the holders of Series B
Preferred Stock voting separately as a class (either alone or together
with the holders of shares of any one or more other series of preferred
stock ranking on such a parity and having like voting rights). If the
office of any director elected by the holders of Series B Preferred
Stock voting as a class becomes vacant for any reason other than
removal from office as aforesaid, the remaining director may choose a
successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.
(b) So long as any shares of Series B Preferred Stock remain
outstanding, the consent of the holders of at least two-thirds of the
shares of Series B Preferred Stock outstanding at the time (voting
separately as a class together with all other series of preferred stock
ranking on a parity with the Series B Preferred Stock either as to
dividends or the distribution of assets upon liquidation, dissolution
or winding up and upon which like voting rights have been conferred and
are exercisable) given in person or by proxy, either in writing or at
any special or annual meeting called for the purpose, shall be
necessary to permit, effect or validate any one or more of the
following:
(i) the authorization, creation or issuance of a new class or
series of shares having rights, preferences or privileges prior (as
that term is defined in Section 8(d)) to the shares of the Series B
Preferred Stock, or any increase in the number of authorized shares of
any class or series having rights, preferences or privileges prior to
the shares of Series B Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Certificate of Incorporation of the Corporation or of this resolution
which would materially and adversely affect any right, preference,
privilege or voting power of the Series B Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized common stock or authorized preferred stock or the creation
and issuance of other series of common stock or preferred stock, in
each case ranking on a parity with or junior to the Series B Preferred
Stock with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed
to materially and adversely affect such rights, preferences, privileges
or voting powers.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Series B Preferred Stock shall have been redeemed or called for
redemption and sufficient funds shall have been deposited in trust to
effect such redemption.
(d) Any class or classes of stock of the Corporation shall be
deemed to rank:
(i) prior to the Series B Preferred Stock as to dividends or as
to distribution of assets upon liquidation, dissolution or winding up
if the holders of such class shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of Series B Preferred Stock; and
(ii) on a parity with the Series B Preferred Stock as to
dividends or as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof are
different from those of the Series B Preferred Stock, if the holders of
such class of stock and of the Series B Preferred Stock shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority one over the other.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Charles D. White, its Senior Vice
President and Treasurer, and attested by Laurel A. Holschuh, its
Secretary, whereby such Senior Vice President and Treasurer affirms,
under penalties of perjury, that this Certificate of Designations is
the act and deed of the Corporation and that the facts stated herein
are true, this 2nd day of November, 1998.
NORWEST CORPORATION
By /s/ Charles D. White
Charles D. White
Senior Vice President and Treasurer
Attest:
/s/ Laurel A. Holschuh
Laurel A. Holschuh
Secretary
[Filed in the Office of the Delaware Secretary of State on November 2,
1998]
EXHIBIT 3(K)
NORWEST CORPORATION
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK, SERIES H (Without
Par Value)
NORWEST CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES
that the following resolution, as modified by unanimous written consent
of the Board of Directors of the Corporation (the "Board") on September
8, 1998, was duly adopted by the Board pursuant to authority conferred
upon the Board by the provisions of the Restated Certificate of
Incorporation of the Corporation, as amended, which authorizes the
issuance of not more than 20,000,000 shares of Preferred Stock, without
par value (the "Preferred Stock"), at a meeting of the Board duly held
on July 28, 1998:
RESOLVED that the issuance of a series of Preferred Stock, without
par value, of the Corporation is hereby authorized and the number,
designation, powers, preferences, and relative, participating,
optional, and other rights, and qualifications, limitations and
restrictions thereof, in addition to those set forth in the Restated
Certificate of Incorporation of the Corporation, as amended, are hereby
fixed as follows:
FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK, SERIES H
1. Designations.
4,000,000 shares of preferred stock, without par value, of the
Corporation ("Preferred Stock") are hereby constituted as a series of
Preferred Stock designated as "Fixed/Adjustable Rate Noncumulative
Preferred Stock, Series H" (hereinafter called "Series H Preferred
Stock" or, sometimes, "New Series H Preferred Stock").
Shares of New Series H Preferred Stock shall be issued upon
conversion of shares of Fixed/Adjustable Rate Noncumulative Preferred
Stock, Series H of Wells Fargo & Company ("Old Series H Preferred
Stock") upon the terms and subject to the conditions set forth in the
Agreement and Plan of Merger, dated as of June 7, 1998, and amended and
restated as of September 10, 1998, by and among the Corporation, WFC
Holdings Corporation, a wholly-owned subsidiary of the Corporation, and
Wells Fargo & Company (the "Merger Agreement").
2. Dividends.
2.1 The holders of shares of the Series H Preferred Stock shall
be entitled to receive cash dividends, when, as and if declared by the
Board of Directors of the Corporation (the "Board of Directors"), out
of funds legally available for that purpose, at the rate set forth
below in this Section 2 applied to the amount of $50 per share. Such
dividends shall be payable quarterly, when, as and if declared by the
Board of Directors on January 1, April 1, July 1 and October 1 of each
year, commencing on the first such date immediately following the date
of original issue of the Series H Preferred Stock. Each such dividend
shall be payable in arrears to the holders of record of shares of the
Series H Preferred Stock, as they appear on the stock register of the
Corporation on such record dates, not more than 30 nor less than 15
days preceding the payment dates thereof, as shall be fixed by the
Board of Directors. Dividends on the Series H Preferred Stock shall
not be cumulative and no rights shall accrue to the holders of the
Series H Preferred Stock if the Corporation fails to declare one or
more dividends on the Series H Preferred Stock in any amount, whether
or not the earnings or financial condition of the Corporation were
sufficient to pay such dividends in whole or in part, except as
described below under "Voting Rights".
2.2 (a) Dividend periods ("Dividend Periods') shall commence
on January 1, April 1, July 1 and October 1 of each year other than the
initial Dividend Period, which shall commence on the date of original
issue of the Series H Preferred Stock and shall end on and include the
calendar day next preceding the first day of the next Dividend Period.
For each Dividend Period the dividend rate on the shares of Series H
Preferred Stock shall be 6.59% per annum through October 1, 2001. The
amount of dividends payable for each full Dividend Period occurring
prior to October 1, 2001 for the Series H Preferred Stock shall be
computed by dividing the dividend rate of 6.59% per annum by four and
applying the resulting rate of 1.6475% to the amount of $50 per share.
For each Dividend Period beginning on or after October 1, 2001, the
dividend rate on the shares of Series H Preferred Stock shall be the
Applicable Rate (as defined below) per annum. The amount of dividends
payable for each full Dividend Period beginning on or after October 1,
2001 shall be computed by dividing the Applicable Rate per annum by
four and applying the resulting rate to the amount of $50 per share.
The amount of dividends payable for any period shorter or longer than a
full Dividend Period (other than the initial Dividend Period) on the
Series H Preferred Stock shall be computed on the basis of twelve 30-
day months, a 360-day year and, for any Dividend Period of less than
one month (other than the initial Dividend Period), the actual number
of days elapsed in such period. The amount of dividend per share
payable for the initial Dividend Period shall equal the dividend per
share payable for a full Dividend Period occurring prior to October 1,
2001 less the dividend payable for the partial dividend period for the
Old Series H Preferred Stock occurring prior to conversion of the Old
Series H Preferred Stock into New Series H Preferred Stock pursuant to
the Merger Agreement (the "Final Old Series H Dividend Period"), such
that the dividends per share payable for the Final Old Series H
Dividend Period and the initial Dividend Period for the New Series H
Preferred Stock collectively equal the dividend payable per share for a
full Dividend Period occurring prior to October 1, 2001. Unless
otherwise required by law, dividends payable with respect to each share
of Series H Preferred Stock, shall be rounded to the fourth significant
digit if expressed in dollars. Dividends payable to each holder shall
be determined by multiplying the number of shares held by such holder
by the per share dividend and the product rounded to the nearest one
cent. Holders of shares called for redemption on a redemption date
between a dividend payment record date and the dividend payment date
shall not be entitled to receive the dividend payable on such dividend
payment date.
(b) The "Applicable Rate" per annum for any Dividend Period
beginning on or after October 1, 2001 shall be equal to .44% plus the
Effective Rate (as defined below), but not less than 7% or more than
13% (without taking into consideration any adjustments as described in
paragraph (viii) below), except as described below in this paragraph.
The "Effective Rate" for any Dividend Period beginning on or after
October 1, 2001 shall be equal to the highest of the Treasury Bill
Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant
Maturity Rate (each as defined below) for such Dividend Period. The
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percent, with .025% being rounded upward. In the event
that the Corporation determines in good faith that for any reason: (A)
any one of the Treasury Bill Rate, the Ten Year Constant Maturity Rate
or the Thirty Year Constant Maturity Rate cannot be determined for any
Dividend Period beginning on or after October 1, 2001, then the
Effective Rate for such Dividend Period shall be equal to the higher of
whichever two of such rates can be so determined; (B) only one of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Thirty
Year Constant Maturity Rate can be determined for any Dividend Period
beginning on or after October 1, 2001, then the Effective Rate for such
Dividend Period shall be equal to whichever such rate can be so
determined; or (C) none of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate can be
determined for any Dividend Period beginning on or after October 1,
2001, then the Effective Rate for the preceding Dividend Period shall
be continued for such Dividend Period.
(c) The "Treasury Bill Rate" for each applicable Dividend
Period shall be the arithmetic average of the two most recent weekly
per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate is published during the relevant
Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board (as defined
below) during the Calendar Period immediately preceding the last ten
calendar days preceding the Dividend Period for which the dividend rate
on the Series H Preferred Stock is being determined, except as
described below in this paragraph. In the event that the Federal
Reserve Board does not publish such a weekly per annum market discount
rate during any such Calendar Period, then the Treasury Bill Rate for
such Dividend Period shall be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate is published during
the relevant Calendar Period) for three-month U.S. Treasury bills, as
published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum market discount rate for
three-month U.S. Treasury bills is not published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury
Bill Rate for such Dividend Period shall be the arithmetic average of
the two most recent weekly per annum market discount rates (or the one
weekly per annum market discount rate, if only one such rate is
published during the relevant Calendar Period) for all of the U.S.
Treasury bills then having remaining maturities of not less than 80 nor
more than 100 days, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board does not publish
such rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that
the Corporation determines in good faith that for any reason no such
U.S. Treasury bill rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such Dividend Period
shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during such Calendar Period for each of the
issues of marketable non-interest-bearing U.S. Treasury securities with
a remaining maturity of not less than 80 nor more than 100 days from
the date of each such quotation, as chosen and quoted daily for each
business day in New York City (or less frequently if daily quotations
are not generally available) to the Corporation by at least three
recognized dealers in U.S. Government securities selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason the Corporation cannot determine the Treasury
Bill Rate for any applicable Dividend Period as provided above in this
paragraph, the Treasury Bill Rate for such applicable Dividend Period
shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during such Calendar Period for each of the
issues of marketable interest-bearing U.S. Treasury securities with a
remaining maturity of not less than 80 nor more than 100 days, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
(d) The "Ten Year Constant Maturity Rate" for each applicable
Dividend Period shall be the arithmetic average of the two most recent
weekly per annum Ten Year Average Yields (as defined below) (or the one
weekly per annum Ten Year Average Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly by
the Federal Reserve Board during the Calendar Period immediately
preceding the last ten calendar days preceding the Dividend Period for
which the dividend rate on the Series H Preferred Stock is being
determined, except as described below in this paragraph. In the event
that the Federal Reserve Board does not publish such a weekly per annum
Ten Year Average Yield during such Calendar Period, then the Ten Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields
(or the one weekly per annum Ten Year Average Yield, if only one such
yield is published during the relevant Calendar Period), as published
weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation.
In the event that a per annum Ten Year Average Yield is not published
by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then
the Ten Year Constant Maturity Rate for such Dividend Period shall be
the arithmetic average of the two most recent weekly per annum average
yields to maturity (or the one weekly per annum average yield to
maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities
(as defined below)) then having remaining maturities of not less than
eight nor more than twelve years, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board
does not publish such yields, by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for any
reason the Corporation cannot determine the Ten Year Constant Maturity
Rate for any applicable Dividend Period as provided above in this
paragraph, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the per annum average yields
to maturity based upon the closing bids during such Calendar Period for
each of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) with a final
maturity date not less than eight nor more than twelve years from the
date of each such quotation, as chosen and quoted daily for each
business day in New York City (or less frequently if daily quotations
are not generally available) to the Corporation by at least three
recognized dealers in U.S. Government securities selected by the
Corporation.
(e) The "Thirty Year Constant Maturity Rate" for each
applicable Dividend Period shall be the arithmetic average of the two
most recent weekly per annum Thirty Year Average Yields (as defined
below) (or the one weekly per annum Thirty Year Average Yield, if only
one such yield is published during the relevant Calendar Period), as
published weekly by the Federal Reserve Board during the Calendar
Period immediately preceding the last ten calendar days preceding the
Dividend Period for which the dividend rate on the Series H Preferred
Stock is being determined, except as described below in this paragraph.
In the event that the Federal Reserve Board does not publish such a
weekly per annum Thirty Year Average Yield during such Calendar Period,
then the Thirty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the two most recent weekly per annum
Thirty Year Average Yields (or the one weekly per annum Thirty Year
Average Yield, if only one such yield is published during the relevant
Calendar Period), as published weekly during such Calendar Period by
any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum Thirty Year
Average Yield is not published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency
during such Calendar Period, then the Thirty Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the
two most recent weekly per annum average yields to maturity (or the one
weekly per annum average yield to maturity, if only one such yield is
published during the relevant Calendar Period) for all of the actively
traded marketable U.S. Treasury fixed interest rate securities (other
than Special Securities) then having remaining maturities of not less
than twenty-eight nor more than thirty years, as published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve
Board does not publish such yields, by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation.
In the event that the Corporation determines in good faith that for any
reason the Corporation cannot determine the Thirty Year Constant
Maturity Rate for any applicable Dividend Period as provided above in
this paragraph, then the Thirty Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date not less than twenty-eight nor
more than thirty years from the date of each such quotation, as chosen
and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
(f) The Applicable Rate with respect to each Dividend Period
beginning on or after October 1, 2001 shall be calculated as promptly
as practicable by the Corporation according to the appropriate method
described above. The Corporation shall cause notice of each Applicable
Rate to be enclosed with the dividend payment checks next mailed to the
holders of Series H Preferred Stock.
(g) As used above, the term "Calendar Period" means a period of
fourteen calendar days; the term "Federal Reserve Board" means the
Board of Governors of the Federal Reserve System; the term "Special
Securities" means securities which can, at the option of the holder, be
surrendered at face value in payment of any Federal estate tax or which
provide tax benefits to the holder and are priced to reflect such tax
benefits or which were originally issued at a deep or substantial
discount; the term "Ten Year Average Yield" means the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and the
term "Thirty Year Average Yield" means the average yield to maturity
for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of thirty years).
(h) If one or more amendments to the Internal Revenue Code of
1986, as amended (the "Code"), are enacted that change the percentage
of the dividends received deduction as specified in Section 243(a)(1)
of the Code or any successor provision (the "Dividends Received
Percentage"), the amount of each dividend payable per share of the
Series H Preferred Stock for dividend payments made on or after the
date of enactment of such change shall be adjusted by multiplying the
amount of the dividend payable determined as described above (before
adjustment) by a factor, which shall be the number determined in
accordance with the following formula (the "DRD Formula"), and rounding
the result to the nearest cent:
1 - [.35 (1- .70)]
1 - [.35 (1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No
amendment to the Code, other than a change in the percentage of the
dividends received deduction set forth in Section 243 (a)(1) of the
Code or any successor provision, will give rise to an adjustment.
Notwithstanding the foregoing provisions, in the event that, with
respect to any such amendment, the Corporation shall receive either an
unqualified opinion of nationally recognized independent tax counsel
selected by the Corporation or a private letter ruling or similar form
of authorization from the Internal Revenue Service to the effect that
such an amendment would not apply to dividends payable on the Series H
Preferred Stock, then any such amendment shall not result in the
adjustment provided for pursuant to the DRD Formula. The opinion
referenced in the previous sentence shall be based upon a specific
exception in the legislation amending the DRP or upon a published
pronouncement of the Internal Revenue Service addressing such
legislation. Unless the context otherwise requires, references to
dividends in this Certificate of Designations shall mean dividends as
adjusted by the DRD Formula. The Corporation's calculation of the
dividends payable, as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified
public accountants then regularly engaged by the Corporation, shall be
final and not subject to review.
(i) If any amendment to the Code which reduces the Dividends
Received Percentage is enacted after a record date and before the next
Dividend Payment Date, the amount of dividend payable on such Dividend
Payment Date will not be increased in accordance with paragraph (viii)
above, but instead, an amount equal to the excess of (x) the product of
the dividends paid by the Corporation on such Dividend Payment Date and
the DRD Formula (where the DRP used in the DRD Formula would be equal
to the reduced Dividends Received Percentage) and (y) the dividends
paid by the Corporation on such Dividend Payment Date, will be payable
(if declared) to holders of record on the next succeeding Dividend
Payment Date in addition to any other amounts payable on such date.
(j) In the event that the amount of dividend payable per share
of the Series H Preferred Stock shall be adjusted pursuant to the DRD
Formula and/or Additional Dividends are to be paid, the Corporation
will cause notice of each such adjustment and, if applicable, any
Additional Dividends, to be sent to the holders of the Series H
Preferred Stock.
(k) So long as any shares of the Series H Preferred Stock are
outstanding, no dividends shall be paid or declared upon any shares of
any class or series of stock of the Corporation ranking on a parity
with the Series H Preferred Stock in the payment of dividends for any
period unless, at or prior to the time of such payment or declaration,
(i) all dividends payable on the Series H Preferred Stock for all
dividend periods ended prior to the date of such payment or declaration
shall have been paid, and (ii) a like proportionate dividend for the
same dividend period, ratably in proportion to the respective annual
dividend rates fixed thereupon, shall be paid upon or declared for the
Series H Preferred Stock then issued and outstanding.
(l) If any shares of the Series H Preferred Stock are
outstanding, no full dividends shall be declared or paid or set apart
for payment on any series of the Preferred Stock of the Corporation
ranking, as to dividends, on a parity with or junior to the Series H
Preferred Stock for any period unless full dividends have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the
Series H Preferred Stock for all dividend periods terminating on or
prior to the date of payment of such full dividends. In the event
that dividends are not paid in full (or a sum sufficient for such full
payment set apart) upon the shares of the Series H Preferred Stock or
the shares of any other series of Preferred Stock ranking on a parity
as to dividends with the shares of the Series H Preferred Stock,
dividends upon shares of the Series H Preferred Stock and dividends on
shares of such other series of Preferred Stock shall be declared by the
Board of Directors or a duly authorized committee thereof pro rata with
respect thereto so that the amount of dividends per share on the Series
H Preferred Stock and such other series of Preferred Stock so declared
shall in all cases bear to each other the same ratio that full
dividends on the shares of the Series H Preferred Stock and full
dividends, including accumulations, if any, on the shares of such other
series of Preferred Stock, bear to each other.
(m) Except as provided in this Section, if full dividends on
all outstanding shares of the Series H Preferred Stock at the rate per
share set forth above shall not have been declared and paid or set
aside for payment, the Corporation shall not, until full dividends have
been declared and paid or set aside for payment on all outstanding
shares of the Series H Preferred Stock, (i) declare or pay or set aside
for payment any dividends (other than a dividend in common stock, $1-
2/3 par value per share, of the Corporation (the "Common Stock") or in
any other stock ranking junior to the Series H Preferred Stock as to
dividends and upon liquidation, dissolution or winding up of the
Corporation) or make any other distribution on the Common Stock or any
other stock of the Corporation ranking junior to or on a parity with
shares of the Series H Preferred Stock, with respect to the payment of
dividends or distribution of assets upon liquidation, dissolution or
winding up of the Corporation, or (ii) make any payment on account of
the purchase, redemption or other retirement of, or pay or make
available any moneys for a sinking fund for the redemption of, any
shares of Common Stock or such other junior or parity stock except by
conversion into or exchange for stock of the Corporation ranking junior
to the Series H Preferred Stock as to dividends and upon liquidation.
(n) Any dividend payment made on shares of the Series H
Preferred Stock shall first be credited against the earliest unpaid
dividend due with respect to such shares.
3. Liquidation Preference.
3.1 In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the
holders of outstanding shares of the Series H Preferred Stock shall be
entitled, before any payment or distribution shall be made on the
Common Stock or any other class of stock ranking junior to the Series H
Preferred Stock upon liquidation, to be paid in full an amount equal to
$50 per share, plus an amount equal to all dividends (whether or not
earned or declared) from the immediately preceding dividend payment
date (but without any cumulation for unpaid dividends for prior
Dividend Periods on the Series H Preferred Stock) to the date fixed for
redemption. After payment of the full amount of such liquidation
distribution, the holders of the Series H Preferred Stock shall not be
entitled to any further participation in any distribution of assets of
the Corporation.
3.2 If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of the shares of the Series H Preferred
Stock and the holders of shares of all other stock of the Corporation
ranking, as to liquidation, dissolution or winding up, on a parity with
the Series H Preferred Stock, shall be insufficient to pay in full the
preferential amount set forth in Section 3.1 and liquidating payments
on all such other stock ranking, as to liquidation, dissolution or
winding up, on a parity with the Series H Preferred Stock, then such
assets, or the proceeds thereof, shall be distributed among the holders
of the Series H Preferred Stock and all such other stock ratably in
accordance with the respective amounts which would be payable on such
shares of the Series H Preferred Stock and any such other stock if all
amounts payable thereon were paid in full (which, in the case of such
other stock, may include accumulated dividends).
3.3 In the event of any such liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, unless and
until payment in full is made to the holders of all outstanding shares
of the Series H Preferred Stock of the liquidation distribution to
which they are entitled pursuant to Section 3.1, no dividend or other
distribution shall be made to the holders of the Common Stock or any
other class of stock ranking upon liquidation junior to the shares of
the Series H Preferred Stock and no purchase, redemption or other
acquisition for any consideration by the Corporation shall be made in
respect of the shares of the Common Stock or such other class of stock.
3.4 Neither the consolidation nor merger of the Corporation into
or with another corporation or corporations shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 3.
4. Redemption.
4.1 Except as provided below, the Series H Preferred Stock may not
be redeemed prior to October 1, 2001. At any time or from time to time
on and after October 1, 2001, the Corporation, at its option, may
redeem shares of the Series H Preferred Stock, in whole or in part, out
of funds legally available therefor, at a redemption price of $50 per
share, together in each case with accrued and unpaid dividends (whether
or not declared) from the immediately preceding dividend payment date
(but without any cumulation for unpaid dividends for prior Dividend
Periods on the Series H Preferred Stock) to the date fixed for
redemption.
4.2 If the Dividends Received Percentage is equal to or less than
40% and, as a result, the amount of dividends on the Series H Preferred
Stock payable on any Dividend Payment Date will be or is adjusted
upwards as described in Section 2.2(h) above, the Corporation, at its
option, may redeem all, but not less than all, of the outstanding
shares of the Series H Preferred Stock, out of funds legally available
therefor, provided, that within sixty days of the date on which an
amendment to the Code is enacted which reduces the Dividends Received
Percentage to 40% or less, the Corporation sends notice to holders of
the Series H Preferred Stock of such redemption in accordance with
Section 4.6 below. Any redemption of the Series H Preferred Stock in
accordance with this Section 4.2 shall be on notice as aforesaid at the
applicable redemption price set forth in the following table, in each
case plus accrued and unpaid dividends (whether or not declared) from
the immediately preceding dividend payment date (but without any
cumulation for unpaid dividends for prior Dividend Periods on the
Series H Preferred Stock) to the date fixed for redemption.
Redemption Period
Redemption Price Per Share
Issuance to September 30, 1999 $51.50
October 1, 1999 to September 30, 2000 51.00
October 1, 2000 to September 30, 2001 50.50
On or after October 1, 2001 50.00
4.3 If the holders of the shares of the Series H Preferred Stock
are entitled to vote upon or consent to a merger or consolidation of
the Corporation, and if the Corporation offers to purchase all of the
outstanding shares of the Series H Preferred Stock (the "Offer"), then
each holder of Series H Preferred Stock who does not sell his or her
shares of the Series H Preferred Stock pursuant to the Offer shall be
deemed irrevocably to have voted or consented with respect to all
shares of Series H Preferred Stock owned by such holder in favor of the
merger or consolidation of the Corporation without any further action
by the holder. The Offer shall be at a price of $50 per share,
together with accrued and unpaid dividends, if any, from the
immediately preceding dividend payment date (but without any cumulation
for unpaid dividends for prior Dividend Periods on the Series H
Preferred Stock) to the date fixed for repurchase, including any
increase in dividends payable due to increases in the Dividends
Received Percentage and Additional Dividends. The Offer must remain
open for acceptance for a period of at least 30 days.
4.4 Notwithstanding the foregoing, if full dividends on all
outstanding shares of Series H Preferred Stock have not been paid or
contemporaneously declared and paid for all past dividend periods, no
shares of Series H Preferred Stock shall be redeemed pursuant to this
Section unless all outstanding shares of Series H Preferred Stock are
simultaneously redeemed, and, unless the full dividends on all
outstanding shares of Series H Preferred Stock and any other Preferred
Stock ranking on a parity therewith as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and
paid for all past dividend periods, the Corporation shall not purchase
or otherwise acquire any shares of Series H Preferred Stock or shares
of any other series of Preferred Stock ranking on a parity therewith as
to dividends and upon liquidation (except by conversion into or
exchange for shares of the Corporation ranking junior to the shares of
the Series H Preferred Stock); provided, however, that the foregoing
shall not prevent the purchase or acquisition of shares of the Series H
Preferred Stock or of shares of such other series of Preferred Stock
pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of the Series H Preferred Stock or of
such other series.
4.5 In the event that fewer than all the outstanding shares of the
Series H Preferred Stock are to be redeemed, the number of shares to be
redeemed shall be determined by the Board of Directors or a duly
authorized committee thereof and the shares to be redeemed shall be
redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held by such holders (with
adjustments to avoid fractional shares).
4.6 In the event the Corporation shall redeem shares of the Series
H Preferred Stock, notice of such redemption (a "Notice of Redemption")
shall be given by first class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the redemption date, to each
holder of record of the shares to be redeemed, at such holder's address
as the same appears on the stock register of the Corporation. Each
such Notice of Redemption shall state: (i) the redemption date; (ii)
the number of shares of the Series H Preferred Stock to be redeemed
and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder;
(iii) the redemption price (specifying the amount of accrued and unpaid
dividends to be included therein); (iv) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will
cease to accumulate on such redemption date; and (vi) the provision
hereunder pursuant to which such redemption is being made.
4.7 If a Notice of Redemption has been given, from and after the
redemption date for the shares of the Series H Preferred Stock called
for redemption (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares
so called for redemption plus an amount equal to full cumulative
dividends thereon (whether or not earned or declared) to the date fixed
for redemption) dividends on the shares of the Series H Preferred Stock
so called for redemption shall cease to accrue and said shares shall no
longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive
the redemption price plus an amount equal to such accumulated and
unpaid dividends) shall cease. Upon surrender in accordance with said
Notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the Notice shall so state), the
redemption price set forth above plus an amount equal to such
accumulated and unpaid dividends shall be paid by the paying agent for
the Corporation. In the case that fewer than all of the shares
represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the
holder thereof.
4.8 Shares of Series H Preferred Stock which have been redeemed
shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series,
until such shares are once more designated as part of a particular
series by or on behalf of the Board of Directors.
5. Conversion or Exchange.
The holders of shares of Series H Preferred Stock shall not have
any right herein to convert such shares into or exchange such shares
for shares of any other class or classes or of any other series of any
class or classes of capital stock of the Corporation.
6. Ranking.
The Series H Preferred Stock shall rank on a parity as to dividends
and liquidation with each series of Preferred Stock outstanding on the
date of issuance of the Series H Preferred Stock.
7. Voting Rights.
7.1 Holders of the Series H Preferred Stock shall not have any
voting rights except as hereinafter provided or as otherwise from time
to time required by law. If at the time of any annual meeting of
stockholders for the election of directors of the Corporation a default
in preference dividends shall exist on the Series H Preferred Stock, or
any series of Preferred Stock ranking on a parity with the Series H
Preferred Stock as to dividends or upon liquidation (the Series H
Preferred Stock and any such series of Preferred Stock being herein
referred to as the "Parity Preferred Stock"), the maximum authorized
number of members of the Board of Directors shall automatically be
increased by two. The two vacancies so created shall be filled at such
meeting by the vote of the holders of the Series H Preferred Stock and
the holders of any other Parity Preferred Stock upon which like voting
rights have been conferred and are then exercisable (the Preferred
Stock and such other Parity Preferred Stock being herein referred to as
"Voting Parity Preferred Stock"), voting together as a single class
without regard to series, to the exclusion of the holders of the Common
Stock and any other class of capital stock of the Corporation that is
not Voting Parity Preferred Stock. The holders of the Common Stock and
any other class of capital stock of the Corporation which has the right
to vote at such meeting (other than the Voting Parity Preferred Stock)
shall elect the remaining directors. Such right of the holders of the
Voting Parity Preferred Stock shall continue until there are no
preference dividends in arrears upon the Voting Parity Preferred Stock
of any series at which time such right shall terminate, except as by
law expressly provided, subject to revesting in the event of each and
every subsequent default of the character above mentioned. Upon any
such termination of the right of the holders of shares of Voting Parity
Preferred Stock as a class to vote for directors as herein provided,
the term of office of each director then in office elected by such
holders voting as a class (herein called a "Preferred Director") shall
terminate immediately. Any Preferred Director may be removed by, and
shall not be removed without cause except by, the vote of the holders
of record of the outstanding shares of Voting Parity Preferred Stock,
voting together as a single class without regard to series, at a
meeting of the stockholders, or of the holders of shares of Voting
Parity Preferred Stock, called for such purpose. So long as a default
in any preference dividends on the Voting Parity Preferred Stock of any
series shall exist, (A) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following clause (B))
by the person appointed by an instrument in writing signed by the
remaining Preferred Director and filed with the Corporation and (B) in
the case of the removal of any Preferred Director, the vacancy may be
filled by the person elected by the vote of the holders of outstanding
shares of Voting Parity Preferred Stock, voting together as a single
class without regard to series, at the same meeting at which such
removal shall be voted or at any subsequent meeting. Each director
appointed as aforesaid by the remaining Preferred Director shall be
deemed to be a Preferred Director. Whenever a default in preference
dividends on the Voting Parity Preferred Stock shall no longer exist:
(i) the term of office of the Preferred Directors shall end, (ii) the
special voting powers vested in the holders of the Voting Parity
Preferred Stock as provided in this resolution shall expire, and (iii)
the number of members of the Board of Directors shall be such number as
may be provided for in the Corporation's By-Laws irrespective of any
increase made as provided in this resolution. A "default in preference
dividends" on the Voting Parity Preferred Stock of any series shall be
deemed to have occurred whenever the amount of unpaid accrued dividends
upon such series through the last preceding dividend period therefor
shall be equivalent to six quarterly dividends (which, with respect to
the Series H Preferred Stock, shall be deemed to be dividends in
respect of a number of dividend periods containing not less than 540
days) or more, and having so occurred, such default shall be deemed to
exist thereafter until, but only until, full cumulative dividends on
all shares of Voting Parity Preferred Stock of each and every series
then outstanding shall have been paid to the end of the last preceding
dividend period.
7.2 So long as any shares of Series H Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of at least two-thirds of the shares of the
Series H Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (voting separately as a class
together with all other series of Parity Preferred Stock), (i)
authorize, create or issue, or increase the authorized or issued amount
of, any class or series of stock ranking prior to the Series H
Preferred Stock with respect to payment of dividends or the
distribution of assets on liquidation, or reclassify any authorized
stock of the Corporation into any such shares, or create, authorize or
issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the
provisions of the Corporation's Restated Certificate of Incorporation
or of the resolution contained in the certificate of designation for
the Series H Preferred Stock, whether by merger, consolidation or
otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of the Series H Preferred Stock
or the holders thereof; provided, however, that any increase in the
amount of the authorized Preferred Stock or the creation or issuance of
other series of Preferred Stock, or any increase in the amount of
authorized shares of such series or of any other series of Preferred
Stock, in each case ranking on a parity with or junior to the Series H
Preferred Stock, shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers.
7.3 The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of the
Series H Preferred Stock shall have been redeemed or called for
redemption and sufficient funds shall have been deposited in trust to
effect such redemption.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Michael A. Graf, its Senior Vice President
and Controller, and attested by Laurel A. Holschuh, its Secretary,
whereby such Senior Vice President and Controller affirms, under
penalties of perjury, that this Certificate of Designations is the act
and deed of the Corporation and that the facts stated herein are true,
this 2nd day of November, 1998.
NORWEST CORPORATION
By /s/ Michael A. Graf
Michael A. Graf
Senior Vice President and Controller
Attest:
/s/ Laurel A. Holschuh
Laurel A. Holschuh
Secretary
[Filed in the Office of the Delaware Secretary of State on November 2,
1998]
Exhibit 3(l)
NORWEST CORPORATION
September 22, 1998 Meeting of the Board of Directors
Action: Amend By-Laws and Elect Directors as of Effective Time of
Merger
RESOLVED that immediately prior to the effective time of the merger
(the "Merger") of Wells Fargo & Company ("Wells Fargo") into a
subsidiary of the Corporation pursuant to the Agreement and Plan of
Merger, dated as of June 7, 1998, and amended and restated as of
September 10, 1998 (the "Agreement"), by and among Wells Fargo, the
Corporation, and WFC Holdings Corporation, the By-Laws of the
Corporation shall be amended as set forth below.
A. The second paragraph of Section 1 of the By-Laws is amended to
read as follows:
"The Corporation may also have an office in the City of San
Francisco, State of California, 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."
B. Section 3 of the By-Laws is amended to read as follows:
"3. Place. All meetings of stockholders shall be held at
the office of the Corporation in San Francisco, California, 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."
C. The first sentence of Section 14 of the By-Laws is amended to
read as follows:
"The property and business of the Corporation shall
be managed by its Board of not less than ten nor more
than twenty-eight directors, with the number to be
designated from time to time by resolution of the
Board."
WELLS FARGO & COMPANY
By-Laws
(As amended through November 2, 1998)
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 San Francisco,
State of California, 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 San Francisco, California, 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 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 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 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-eight 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' 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 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.
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.
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 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.
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.
Certificated and Uncertificated Shares
38. Shares of the Corporation's stock may be certificated or
uncertificated, as provided under Delaware law. 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 record holder of such stock, or by attorney lawfully
constituted in writing, and, in the case of stock represented by a
certificate, upon surrender of the certificate.
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
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
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
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
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.
Exhibit 10(a)
LONG-TERM INCENTIVE COMPENSATION PLAN
(As amended effective July 28, 1998)
1. Purpose. The purpose of Norwest Corporation's Long-Term Incentive
Compensation Plan (the "Plan") is to motivate key employees to
produce a superior return to the stockholders of Norwest
Corporation by offering them an opportunity to participate in
stockholder gains, by facilitating stock ownership and by
rewarding them for achieving a high level of corporate financial
performance. The Plan is also intended to facilitate recruiting
and retaining talented executives for key positions by providing
an attractive capital accumulation opportunity.
2. Definitions.
2.1 The following terms, whenever used in this Plan, shall
have the meanings set forth below:
(a) "Affiliate" means any corporation or limited
liability company, a majority of the voting stock or
membership interests of which is directly or indirectly
owned by the Corporation, and any partnership or joint
venture designated by the Committee in which any such
corporation or limited liability company is a partner
or joint venturer.
(b) "Award" means a grant made under this Plan in the
form of Performance Shares, Restricted Stock, Stock
Options, Performance Units, Stock Appreciation Rights,
or Stock.
(c) "Board" means the Board of Directors of the
Corporation.
(d) "Committee" means a committee of at least three
members of the Board who are not eligible, and have not
at any time within one year prior to service on the
Committee been eligible, to receive any Award under the
Plan or under any other benefit plan of the Corporation
or any of its Affiliates entitling the participants
therein to acquire stock, stock options or stock
appreciation rights of the Corporation or any of its
Affiliates.
(e) "Corporation" means Norwest Corporation.
(f) "Employee" means a regular salaried employee
(including an officer or director who is also an
employee) of the Corporation or an Affiliate.
(g) "Fair Market Value" as of any date means the average
of the highest and lowest price of a share of Stock as
reported by the consolidated tape of the New York Stock
Exchange for that date. If there are no Stock
transactions reported for said date, the determination
of said average shall be made as of the last
immediately preceding date on which Stock transactions
were reported by said consolidated tape.
(h) "Incentive Stock Option" means any Option designated
as such and granted in accordance with the requirements
of Section 422A of the Internal Revenue Code of 1986,
as amended.
(i) "Non-Qualified Stock Option" means an Option other
than an Incentive Stock Option.
(j) "Option" means a right to purchase Stock.
(k) "Participant" means a person designated by the
Committee to receive an Award under the Plan who is an
Employee at the time of such designation.
(l) "Performance Cycle" means the period of time of not
fewer than two years nor more than five years as
specified by the Committee over which Performance
Shares or Performance Units are to be earned.
(m) "Performance Shares" means an Award made pursuant to
Section 6 which entitles a Participant to receive
Shares, their cash equivalent or a combination thereof
based on the achievement of performance targets during
a Performance Cycle.
(n) "Performance Units" means an Award made pursuant to
Section 6 which entitles a Participant to receive cash,
Stock or a combination thereof based on the achievement
of performance targets during a Performance Cycle.
(o) "Plan" means this Long-Term Incentive Compensation
Plan, as amended from time to time.
(p) "Restricted Stock" means Stock granted under Section
7 that is subject to restrictions imposed pursuant to
said Section.
(q) "Retirement" means retirement which entitles a
Participant to a benefit under Section 6.1 or Section
6.2 of the Norwest Corporation Pension Plan or under
Section 4.1 or Section 4.2 of the Norwest Financial
Pension Plan as said sections may be amended from time
to time.
(r) "Share" means a share of Stock.
(s) "Stock" means the common stock, $1-2/3 par value per
share, of the Corporation.
(t) "Stock Appreciation Right" means the right to receive
a payment in cash or in Stock or a combination thereof
in an amount equal to the excess of the Fair Market
Value of the Stock at the time of exercise over the
Fair Market Value of the Stock at the time of grant.
(u) "Successor" means the legal representative of the
estate of a deceased Participant or the person or
persons who may acquire the right to exercise an Option
or to receive Shares issuable in satisfaction of an
Award, by bequest or inheritance.
(v) "Term" means the period during which an Option or
Stock Appreciation Right may be exercised or the period
during which the restrictions placed on Restricted
Stock are in effect.
2.2 Gender and Number. Except when otherwise indicated by
context, reference to the masculine gender shall include,
when used, the feminine gender and any term used in the
singular shall also include the plural.
3. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall have
exclusive power to determine when and to whom Awards will be
granted, the form of each Award, the amount of each Award, and
any other terms or conditions of each Award. The Committee's
interpretation of the Plan and of any Awards made under the Plan
shall be final and binding on all persons with an interest
therein. The Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt and revise rules and
regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan.
4. Shares Available Under the Plan; Limitation on Awards. The
maximum number of Shares that may be issued under this Plan on
and after April 28, 1998 (in addition to Shares which prior to
April 28, 1998 were subject to Awards) shall not exceed the sum
of (i) the number of Shares available for, but not yet subject
to, an Award as of April 28, 1998, plus (ii) 37,000,000 Shares.
These Shares may consist, in whole or in part, of authorized but
unissued Stock or treasury Stock not reserved for any other
purpose. Any Shares subject to the terms and conditions of an
Award under this Plan which are forfeited or not issued because
the terms and conditions of the Award are not met or for which
payment is not made in Stock and any Shares which are used for
full or partial payment of the purchase price of Shares with
respect to which an Option is exercised may again be used for an
Award under the Plan. No Employee may be awarded in any calendar
year Options or Stock Appreciation Rights covering an aggregate
of more than 7,000,000 Shares.
5. Participation. Participation in the Plan shall be limited to key
Employees of the Corporation or an Affiliate selected by the
Committee. Participation is entirely at the discretion of the
Committee, and is not automatically continued after an initial
period of participation.
6. Performance Shares and Performance Units. An Award of
Performance Shares or Performance Units under the Plan shall
entitle the Participant to future payments or Shares or a
combination thereof based upon the achievement of pre-established
performance targets.
6.1 Amount of Award. The Committee shall establish a maximum
amount of a Participant's Award, which amount shall be
denominated in Shares in the case of Performance Shares or
in dollars in the case of Performance Units.
6.2 Communication of Award. Written notice of the maximum
amount of a Participant's Award and the Performance Cycle
determined by the Committee shall be given to a
Participant as soon as practicable after approval of the
Award by the Committee.
6.3 Amount of Award Payable. The Committee shall establish
maximum and minimum performance targets to be achieved
during the applicable Performance Cycle. Performance
targets established by the Committee shall relate to
corporate, group, unit or individual performance and may
be established in terms of earnings, growth in earnings,
ratios of earnings to equity or assets, or such other
measures or standards determined by the Committee.
Multiple performance targets may be used and the
components of multiple performance targets may be given
the same or different weighting in determining the amount
of an Award earned, and may relate to absolute performance
or relative performance measured against other groups,
units, individuals or entities. Achievement of the
maximum performance target shall entitle the Participant
to payment (subject to Section 6.5) at the full or maximum
amount specified with respect to the Award; provided,
however, that notwithstanding any other provisions of this
Plan, in the case of an Award of Performance Shares the
Committee in its discretion may establish an upper limit
on the amount payable (whether in cash or Stock) as a
result of the achievement of the maximum performance
target. The Committee may also establish that a portion
of a full or maximum amount of a Participant's Award will
be paid (subject to Section 6.5) for performance which
exceeds the minimum performance target but falls below the
maximum performance target applicable to such Award.
6.4 Adjustments. At any time prior to payment of a
Performance Share or Performance Unit Award, the Committee
may adjust previously established performance targets or
other terms and conditions to reflect events such as
changes in law, regulation, or accounting practice, or
mergers, acquisitions or divestitures.
6.5 Payment of Awards. Following the conclusion of each
Performance Cycle, the Committee shall determine the
extent to which performance targets have been attained,
and the satisfaction of any other terms and conditions
with respect to an Award relating to such Performance
Cycle. The Committee shall determine what, if any,
payment is due with respect to an Award and whether such
payment shall be made in cash, Stock or some combination.
Payment shall be made in a lump sum or installments, as
determined by the Committee, commencing as promptly as
practicable following the end of the applicable
Performance Cycle, subject to such terms and conditions
and in such form as may be prescribed by the Committee.
Payment in Stock may be in Restricted Stock.
6.6 Termination of Employment. If a Participant ceases to be
an Employee before the end of a Performance Cycle by
reason of his death, permanent disability or Retirement,
the Performance Cycle for such Participant for the purpose
of determining the amount of Award payable shall end at
the end of the calendar quarter immediately preceding the
date on which such Participant ceased to be an Employee.
The amount of an Award payable to a Participant to whom
the preceding sentence is applicable shall be paid at the
end of the Performance Cycle and shall be that fraction of
the Award computed pursuant to the preceding sentence the
numerator of which is the number of calendar quarters
during the Performance Cycle during all of which said
Participant was an Employee and the denominator of which
is the number of full calendar quarters in the Performance
Cycle. Upon any other termination of employment of a
Participant during a Performance Cycle, participation in
the Plan shall cease and all outstanding Awards of
Performance Shares or Performance Units to such
Participant shall be cancelled.
7. Restricted Stock Awards. An Award of Restricted Stock under the
Plan shall consist of Shares subject to restrictions on transfer,
conditions of forfeiture, and such other terms and conditions as
the Committee shall determine.
7.1 Agreements. An Award of Restricted Stock shall be
evidenced by a Restricted Stock agreement in such form and
not inconsistent with this Plan as the Committee shall
approve from time to time, which shall include the
following terms and conditions:
(a) Restrictions. A statement of the terms, conditions,
and restrictions to which the Restricted Stock awarded
is subject, including, without limitation, terms
requiring forfeiture and imposing restriction on
transfer for such Term or Terms as shall be determined
by the Committee. The Committee shall have the
authority to permit in its discretion an acceleration
of the expiration of the applicable Term with respect
to any part or all of the Restricted Stock awarded to a
Participant.
(b) Lapse of Restrictions. A statement of the terms and
any other conditions upon which any restrictions upon
Restricted Stock awarded shall lapse, as determined by
the Committee. Upon the lapse of the restrictions,
Shares free of restrictive legend, if any, shall be
issued to the Participant or his Successor.
7.2 Nontransferability. Restricted Stock awarded, and the
right to vote such Restricted Stock and to receive
dividends thereon, may not be sold, assigned, transferred,
exchanged, pledged, or otherwise encumbered, during the
Term applicable to the Award. A Participant with a
Restricted Stock Award shall have all the other rights of
a stockholder including, but not limited to, the right to
receive dividends and the right to vote the Shares.
7.3 Termination of Employment. If a Participant ceases to be
an Employee prior to the lapse of restrictions by reason
of his death, permanent disability or Retirement, all
restrictions on Shares of Restricted Stock held for his
benefit shall immediately lapse. Upon any other
termination of employment prior to the lapse of
restrictions, participation in the Plan shall cease and
all Shares of Restricted Stock held for the benefit of a
Participant shall be forfeited by the Participant.
7.4 Certificates. Each certificate issued in respect to an
Award of Restricted Stock shall be deposited with the
Corporation or its designee and may, at the election of
the Committee, bear the following legend:
"This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture provisions and restrictions
against transfer) contained in the Long-Term Incentive
Compensation Plan and an Agreement entered into
between the registered owner and Norwest Corporation.
Release from such terms and conditions shall obtain
only in accordance with the provisions of the Plan and
Agreement, a copy of each of which is on file in the
office of the Secretary of Norwest Corporation."
8. Stock Awards. Awards of Stock without restrictions may be made
according to terms and conditions established by the Committee.
9. Stock Options.
9.1 Agreements. An Award of an Option shall be evidenced by
an Option agreement in such form and not inconsistent with
the Plan as the Committee shall approve from time to time,
which shall include the following terms and conditions:
(a) Type of Option; Number of Shares. A statement
identifying the Option represented thereby as an
Incentive Stock Option or Non-Qualified Stock Option,
as the case may be, and the number of Shares to which
the Option applies.
(b) Option Price. A statement of the purchase price of
the Stock subject to Option which shall not be less
than the Fair Market Value, and in any event not less
than the par value, of the Stock on the date the Option
is granted.
(c) Exercise Term. A statement of the Term of each
Option granted as established by the Committee,
provided that no Option shall be exercisable after ten
years from the date of grant. The Committee shall have
the authority to permit an acceleration of previously
established Terms, at its discretion.
(d) Payment for Shares. A statement that the purchase
price of the Shares with respect to which an Option is
exercised shall be payable at the time of exercise in
accordance with procedures established by the
Corporation. The purchase price may be payable in
cash, in Stock having a Fair Market Value on the date
the Option is exercised equal to the Option price of
the Stock being purchased pursuant to the Option, or a
combination thereof, as the Committee shall determine.
(e) Nontransferability. Each Option agreement shall
state that the Option is not transferable other than by
will, the laws of descent and distribution or by the
Participant designating a beneficiary in accordance
with this Section 9.1(e). During the lifetime of the
Participant, Options may be exercised only by the
Participant or by the Participant's legal
representative. The Participant may, by completing and
signing a written beneficiary designation form which is
delivered to and accepted by the Corporation, designate
a beneficiary to exercise and receive any outstanding
Options (and all outstanding Stock Appreciation Rights
granted in conjunction with Options) upon the
Participant's death. If at the time of the
Participant's death there is not on file a fully
effective beneficiary designation form, or if the
designated beneficiary did not survive the Participant,
the legal representative of the Participant's estate
shall have the right to exercise the Option.
(f) Incentive Stock Options. In the case of an Incentive
Stock Option, each Option agreement shall be subject to
any terms, conditions and provisions as the Committee
determines necessary or desirable in order to qualify
the Option as an Incentive Stock Option (within the
meaning of Section 422A of the Internal Revenue Code of
1986, or any amendment or regulation pertaining to it)
or any other law or regulation providing special tax
treatment for stock options and related stock.
Provided, however, that the aggregate Fair Market Value
(as determined at the effective date of the grant) of
the Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Participant
during any calendar year shall not exceed $100,000.
9.2 Termination of Employment Due to Death, Disability, or
Retirement.
(a) If a Participant ceases to be an Employee by reason
of his death, permanent disability or Retirement,
all outstanding Options shall become immediately
exercisable and remain exercisable to the extent and
for such period or periods determined by the
Committee but not beyond the expiration date of said
Options. If a Participant dies before exercising all
outstanding Options, the outstanding Options shall be
exercisable by the Participant's beneficiary determined
in accordance with Section 9.1(e).
(b) If a Participant ceases to be an Employee by reason
of his death, permanent disability or Retirement, all
outstanding Stock Appreciation Rights granted in
conjunction with Options shall become immediately
exercisable and remain exercisable to the extent and
for such period or periods determined by the Committee
but not beyond the expiration date of said Stock
Appreciation Rights. If a Participant dies before
exercising all outstanding Stock Appreciation Rights
granted in conjunction with Options, said outstanding
Stock Appreciation Rights shall be exercisable by the
Participant's beneficiary determined in accordance with
Section 9.1(e).
9.3 Termination of Employment for Reasons Other Than Death,
Disability, or Retirement. Except as otherwise determined
by the Committee, in the event a Participant ceases to be
an Employee for any reason other than his death, permanent
disability or Retirement, all rights of the Participant
under this Plan shall immediately terminate without notice
of any kind.
10. Stock Appreciation Rights. An Award of a Stock Appreciation
Right shall entitle the Participant, subject to terms and
conditions determined by the Committee, to receive upon exercise
of the right all or a portion of the excess of (i) the Fair
Market Value of a specified number of Shares at the time of
exercise over (ii) a specified price which shall not be less than
100% of the Fair Market Value of the Shares at the time of grant.
Stock Appreciation Rights may be granted in connection with a
previously or contemporaneously granted Option, or independent of
any Option. If issued in connection with an Option, the
Committee may impose a condition that exercise of a Stock
Appreciation Right cancels the Option with which it is connected.
A Stock Appreciation Right may not be exercised at any time when
the Fair Market Value of the Shares of Stock to which it relates
does not exceed the exercise price of the Option associated with
those Shares.
10.1 Agreement. An Award of a Stock Appreciation Right shall
be evidenced by a Stock Appreciation Right agreement in
such form and not inconsistent with this Plan as the
Committee shall approve from time to time, which shall
include a statement of the Term within which the Stock
Appreciation Right may be exercised subject to terms and
conditions prescribed by the Committee, provided that no
Stock Appreciation Right shall be exercisable after ten
years from the date of grant. The Committee shall have
the authority to permit an acceleration of previously
established exercise Terms.
10.2 Termination of Employment Due to Death, Disability, or
Retirement. If a Participant ceases to be an Employee by
reason of his death, permanent disability or Retirement,
all Stock Appreciation Rights then outstanding which were
granted independent of any Option shall become immediately
exercisable and remain exercisable to the extent and for
such period or periods determined by the Committee but not
beyond the expiration date of said Stock Appreciation
Rights.
10.3 Termination of Employment for Reasons Other Than Death,
Disability, or Retirement. Except as otherwise determined
by the Committee, in the event a Participant ceases to be
an Employee for any reason other than his death, permanent
disability or Retirement, all rights of the Participant
under this Plan shall immediately terminate without notice
of any kind.
10.4 Payment. Upon exercise of a Stock Appreciation Right,
payment shall be made in the form of cash or Stock or some
combination thereof as determined by the Committee.
However, notwithstanding any other provisions of this
Plan, in no event may the payment (whether in cash or
Stock) upon exercise of a Stock Appreciation Right exceed
an amount equal to 100% of the Fair Market Value of the
Shares at the time of grant.
11. Nontransferability of Rights. Except as otherwise set forth in
this Plan, no rights under any Award will be transferable other
than by will or the laws of descent and distribution, and the
rights and the benefits of any Award may be exercised and
received during the lifetime of the Participant only by the
Participant or by the Participant's legal representative.
12. Termination of Employment.
12.1 Transfers of employment between the Corporation and an
Affiliate, or between Affiliates, will not constitute
termination of employment for purposes of any Award.
12.2 The Committee may specify in the agreement relating to an
Award whether any authorized leave of absence or absence
for military or government service or for any other
reasons will constitute a termination of employment for
purposes of the Award and the Plan.
13. 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 as to each Participant
who is an Employee immediately prior to the consummation of the
transaction:
(a) All outstanding Options and Stock Appreciation Rights
shall become exercisable immediately prior to the
consummation of the transaction.
(b) All restrictions with respect to Restricted Stock shall
lapse immediately prior to the consummation of the
transaction.
(c) All Performance Cycles for the purpose of determining the
amounts of Awards of Performance Shares and Performance
Units payable shall end at the end of the calendar quarter
immediately preceding the consummation of the transaction.
The amount of an Award payable shall be that fraction of
the Award computed pursuant to the preceding sentence the
numerator of which is the number of calendar quarters
completed in the Performance Cycle through the end of the
calendar quarter immediately preceding the consummation of
the transaction and the denominator of which is the number
of full calendar quarters in the Performance Cycle. The
amount of an Award payable shall be paid within sixty days
after consummation of the transaction.
The Committee shall take such action as in their discretion may
be necessary or advisable to carry out the provisions of this
Section.
14. Board Changes. On the date that a majority of the Board shall be
persons other than persons (a) for whose election proxies shall
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 by removal) or to fill
newly-created directorships, then as to any Participant who is an
Employee immediately prior to said date and who ceases to be an
Employee within six months after said date for any reason other
than as a result of death, permanent disability or Retirement:
(i) All outstanding Options and Stock Appreciation Rights
shall become immediately exercisable and may be exercised
at any time within six months after the Participant ceases
to be an Employee.
(ii) All restrictions with respect to Restricted Stock shall
lapse and Shares free of restrictive legend shall be
delivered to the Participant.
(iii) All Performance Cycles for the purpose of determining the
amounts of Awards of Performance Shares and Performance
Units payable shall end at the end of the calendar quarter
immediately preceding the date on which said Participant
ceased to be an Employee. The amount of an Award payable
to said Participant shall be that fraction of the Award
computed pursuant to the preceding sentence the numerator
of which is the number of calendar quarters during the
Performance Cycle during all of which said Participant was
an Employee and the denominator of which is the number of
full calendar quarters in the Performance Cycle. The
amount of an Award payable shall be paid within sixty days
after said Participant ceases to be an Employee.
The Committee shall take such action as in their discretion may
be necessary or advisable to carry out the provisions of this
Section.
15. Effective Date of the Plan.
15.1 Effective Date. The Plan shall become effective as of
September 25, 1984 upon the approval and ratification of
the Plan by the affirmative vote of the holders of a
majority of the outstanding Shares of Stock present or
represented and entitled to vote in person or by proxy at
a meeting of the stockholders of the Corporation.
15.2 Duration of the Plan. The Plan shall remain in effect
until all Stock subject to it shall be distributed, until
the Term of all Options or Stock Appreciation Rights
granted under this Plan shall expire, until all
restrictions on Restricted Stock granted under this Plan
shall lapse, or until the Performance Cycle for any
Performance Shares or Performance Units awarded under this
Plan shall end.
16. Right to Terminate Employment. Nothing in the Plan shall confer
upon any Participant the right to continue in the employment of
the Corporation or any Affiliate or affect any right which the
Corporation or any Affiliate may have to terminate employment of
the Participant.
17. Withholding Taxes. The Corporation and its Affiliates shall have
the right to deduct from all payments under this Plan, whether in
cash or in Stock, an amount necessary to satisfy any federal,
state or local withholding tax requirements.
18. Deferral of Payments. The Corporation may, from time to time,
establish rules and conditions under which a Participant may
defer the payment of Awards. Such terms and conditions shall be
included in a deferral agreement signed by a Participant electing
such deferral.
19. Amendment, Modification and Termination of the Plan. The Board
or Committee may at any time terminate, suspend or modify the
Plan, except that the Board or Committee will not, without
authorization of the stockholders of the Corporation, effect any
change (other than through adjustment for changes in
capitalization as provided in Section 20) which will:
(a) Increase the total amount of Stock which may be awarded
under the Plan.
(b) Change the class of Employees eligible to participate in
the Plan.
(c) Withdraw the administration of the Plan from the
Committee.
(d) Permit any person, while a member of the Committee, to be
eligible to participate in the Plan.
(e) Extend the duration of the Plan.
No termination, suspension, or modification of the Plan will
adversely affect any right acquired by any Participant or any
Successor under an Award granted before the date of termination,
suspension, or modification, unless otherwise agreed to by the
Participant; but it will be conclusively presumed that any
adjustment for changes in capitalization provided for in Section
20 does not adversely affect any right.
20. Adjustment for Changes in Capitalization. Any change in the
number of outstanding Shares occurring through Stock splits,
reverse Stock splits, or Stock dividends after the grant of an
Award will be reflected proportionately in the aggregate number
of Shares then available for Awards and in the number of Shares
subject to Awards then outstanding; and a proportionate change
will be made in the per share Option price as to any outstanding
Options. Any fractional Shares resulting from adjustments will
be rounded to the nearest whole Share.
Exhibit 10(b)
NORWEST CORPORATION
DIRECTORS' STOCK DEFERRAL PLAN
(As amended July 1, 1998)
1. Eligibility. Each member of the Board of Directors of Norwest
Corporation (the "Corporation") who is not an employee or officer of
the Corporation or of any subsidiary of the Corporation shall be
eligible to participate in the Directors' Stock Deferral Plan (the
"Plan").
2. Deferral of Compensation. Subject to the availability of shares of
Common Stock under this Plan, an eligible director may elect to defer,
in the form of shares of the common stock of the Corporation (the
"Common Stock"), all or a portion of the annual retainer and meeting
fees payable in cash by the Corporation for his or her service as a
director for the calendar year (the "Deferral Year") following the year
in which the deferral election is made. Such election shall be made
pursuant to Section 3.
3. Election to Participate. An eligible director becomes a
participant in the Plan by filing not later than December 15 of the
year preceding the Deferral Year an irrevocable election with the Plan
Administrator (as defined in Section 15) on a form provided for that
purpose. The election to participate shall be effective with respect
to fees payable for the Deferral Year and after the date indicated on
the election form. The election form shall specify an amount to be
deferred expressed as a percentage of the fees otherwise payable in
cash for the director's service, one of the payment options described
in Sections 8 and 9, and the year in which amounts deferred shall be
paid in a lump sum pursuant to Section 8 or in which installment
payments shall commence pursuant to Section 9. The deferral election
shall be effective only for the Deferral Year specified on the form. A
new deferral election form must be filed for each Deferral Year.
4. Deferred Stock Account. On the first day of each calendar quarter
(the "Credit Date"), a participant shall receive a credit to his or her
account under the Plan (the "Deferred Stock Account"). The amount of
the credit shall be the number of shares (rounded to the nearest one-
hundredth of a share) determined by dividing the amount of the
participant's fees earned during the immediately preceding quarter and
specified for deferral 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 Credit Date or, if the New York Stock Exchange is
closed on the Credit Date, the next preceding date on which it was
open.
5. Dividend Credit. Each time a dividend is paid on the Common Stock,
a participant shall receive a credit to his or her Deferred Stock
Account. The amount of the dividend credit shall be the number of
shares (rounded to the nearest one-hundredth of a share) determined by
multiplying the dividend amount per share by the number of shares
credited to the participant's Deferred Stock Account as of the record
date for the dividend and dividing the product by the average of the
high and low prices per share of Common Stock reported on the
consolidated tape of the New York Stock Exchange on the dividend
payment date or, if the New York Stock Exchange is closed on the
dividend payment date, the next preceding date on which it was open.
6. Number of Shares Issuable Under the Plan. Subject to adjustment as
provided in Section 7, the maximum number of shares of Common Stock
that may be credited under the Plan is 600,000.
7. 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.
8. Payment of Deferred Stock Accounts in a Lump Sum. Unless a
participant elects pursuant to Section 3 to receive payment of his or
her Deferred Stock Account in installments as described in Section 9,
credits to a participant's Deferred Stock Account shall be payable in
full in cash or in whole shares of Common Stock (together with cash in
lieu of a fractional share), or in a combination thereof, on February
28 (or the next succeeding business day if February 28 is not a
business day) of the calendar year following termination of service as
a director or such other year as elected by the participant pursuant to
Section 3. Amounts paid in cash, including cash in lieu of fractional
shares, shall be determined based on the average of the high and low
prices per share of Common Stock reported on the consolidated tape of
the New York Stock Exchange on the January 31 immediately preceding the
date of payment or, if the New York Stock Exchange is closed on that
date, the next preceding date on which it was open. If a participant
dies before receiving all payments to which he or she is entitled under
the Plan, payment shall be made on February 28 (or the next succeeding
business day if February 28 is not a business day) of the calendar year
following the date of death in accordance with the participant's
designation of a beneficiary on a form provided for that purpose and
delivered to and accepted by the Plan Administrator or, in the absence
of a valid designation or if the designated beneficiary does not
survive the participant, to such participant's estate. Notwithstanding
the foregoing, in the event of a Change of Control (as defined in
Section 17), credits to a participant's Deferred Stock Account as of
the day immediately prior to the effective date of the transaction
constituting the Change of Control shall be paid in full to the
participant or the participant's beneficiary or estate, as the case may
be, in whole shares of Common Stock (together with cash in lieu of a
fractional share) on such date.
9. Payment of Deferred Stock Accounts in Installments. A participant
may elect pursuant to Section 3 to have his or her Deferred Stock
Account paid in cash in annual installments commencing on February 28
of the calendar year following termination of service as a director or
such other year as elected by the participant pursuant to Section 3. A
participant's Deferred Stock Account shall be converted from a share
balance to a cash balance by multiplying the number of shares credited
as of the Valuation Date (as defined below) immediately prior to the
first installment payment, 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 Valuation Date or, if the New York Stock
Exchange is closed on the Valuation Date, the next preceding date on
which it was open. The amount of each installment payment shall be a
fraction of the value of the participant's Deferred Stock Account on
the January 31 (the "Valuation Date") prior to the date of the
installment payment, 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. Beginning on
the day following the date of the first installment payment, the cash
balance remaining in the Deferred Stock Account from time to time shall
bear interest at an annual rate equal to the interest equivalent of the
secondary market yield for three-month United States Treasury Bills as
reported for the preceding month in Federal Reserve statistical release
H.15(519). The interest rate shall be adjusted monthly, and interest
shall be credited to the participant's Deferred Stock Account as of the
last day of each month. If a participant dies before receiving all
payments to which he or she is entitled under the Plan, payment in full
shall be made on February 28 (or the next succeeding business day if
February 28 is not a business day) of the calendar year following the
date of death in accordance with the participant's designation of a
beneficiary on a form provided for that purpose and delivered to and
accepted by the Plan Administrator or, in the absence of a valid
designation or if the designated beneficiary does not survive the
participant, to such participant's estate. Notwithstanding the
foregoing, in the event of a Change of Control (as defined in Section
17) before the first installment payment date, credits to a
participant's Deferred Stock Account as of the day immediately prior to
the effective date of the transaction constituting the Change of
Control shall be paid in full to the participant or the participant's
beneficiary or estate, as the case may be, in whole shares of Common
Stock (together with cash in lieu of a fractional share) on such date.
In the event of a Change of Control after the first installment payment
date, the remaining cash balance in such participant's Deferred Stock
Account shall be paid in full to the participant or the participant's
beneficiary or estate, as the case may be, in cash on the day
immediately prior to the effective date of the transaction constituting
the Change of Control.
10. Nonassignability. No right to receive payments under the Plan nor
any shares of Common Stock credited to a participant's Deferred Stock
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 ("ERISA"), or rules thereunder.
The designation of a beneficiary by a participant pursuant to Section 8
or 9 does not constitute a transfer.
11. Funding. If the Corporation chooses to fund the credits to the
Deferred Stock Accounts, the Corporation shall make contributions in
cash or in shares of Common Stock to the trust described in Section 12.
Any cash contributions shall be used by the trustee named in Section 12
to purchase shares of Common Stock within 10 business days after such
deposit. Purchase of such shares may be made by the trustee in
brokerage transactions or by private purchase, including purchase from
the Corporation. All shares held by the trust shall be held in the
name of the trustee.
12. Trust Fund. Shares of Common Stock credited to Deferred Stock
Accounts under the Plan may, in the sole discretion of the Corporation,
be held and administered in trust (referred to as the "Trust Fund") in
accordance with the terms of the Plan. The Trust Fund shall be held
under a trust agreement between the Corporation and Marquette Bank
Minneapolis, N.A. as Trustee, or any duly appointed successor trustee.
All Common Stock in the Trust Fund shall be held on a commingled basis
and shall be subject to the claims of general creditors of the
Corporation.
13. Voting Common Stock. If any credits made pursuant to this Plan
are, in the discretion of the Corporation, funded in a trust as
described in Section 12, the Common Stock held in trust shall be voted
by the Trustee in its discretion; provided, however, that the
participant may instruct the Trustee with respect to the voting of a
number of shares determined by multiplying a fraction, the numerator of
which is the number of shares credited to the participant's Deferred
Stock Account and the denominator of which is the total number of
shares credited to all participants' Deferred Stock Accounts, by the
total number of shares held by the Trustee for the Plan. For purposes
of this section, all numbers of shares shall be determined as of the
applicable record date.
14. Unsecured Obligation. Benefits payable under this Plan shall be
an unsecured obligation of the Corporation.
15. Administration. The Plan shall be administered by the
Corporation's senior human resources officer (the "Plan
Administrator"), who shall have the authority to interpret the Plan and
to adopt procedures for implementing the Plan.
16. Amendment and Termination. The Board Affairs 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, 5, and 6 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. 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 service as a director had
occurred on the day prior to the date such action was taken, unless
agreed to by the participant.
17. Change of Control. "Change of Control" shall mean either one of
the following events:
(a) A third person, including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, becomes the
beneficial owner, directly or indirectly, of 25% or more of the
combined voting power of the Corporation's outstanding voting
securities ordinarily having the right to vote for the election of
directors of the Corporation; or
(b) Individuals who constitute the Board of Directors of the
Corporation as of April 27, 1992 (the "Incumbent Board") cease for any
reason to constitute at least two-thirds thereof, provided that any
person becoming a director subsequent to said date whose election, or
nomination for election by the Corporation's stockholders, was approved
by a vote of at least three-quarters of the directors comprising the
Incumbent Board, shall be, for the purposes of this clause (b),
considered as though such person were a member of the Incumbent Board.
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, or sale or other disposition
of all or substantially all of the assets of the Corporation (a
"Business Combination"), in each case, unless following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Corporation
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Corporation Voting Securities, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
board action, providing for such Business Combination.
18. Effective Date. The effective date of the Plan shall be the date
of approval of the Plan by the holders of the Common Stock.
Exhibit 10(c)
NORWEST CORPORATION
EMPLOYEES' STOCK DEFERRAL PLAN
(As amended effective July 1, 1998)
1. Eligibility. Each full-time employee of Norwest Corporation (the
"Corporation") or any of its subsidiaries who participates in the
Corporation's Executive Incentive Compensation Plan or such other
incentive compensation plans as may be designated by the Human
Resources Committee of the Corporation's Board of Directors (each, a
"Designated Plan") and who has also been selected for participation in
this Plan by the Human Resources Committee shall be eligible to
participate in the Employees' Stock Deferral Plan (the "Plan").
2. Deferral of Incentive Compensation. Subject to the availability of
shares of Common Stock under this Plan as determined by the Human
Resources Committee, an eligible employee may elect to defer, in the
form of shares of common stock of the Corporation (the "Common Stock"),
all or a portion of any incentive compensation that he or she may earn
under a Designated Plan (an "Incentive Award") during the calendar year
(the "Deferral Year") following the year in which the deferral election
is made. Such election shall be made pursuant to Section 3.
3. Election to Participate. 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 with the Plan
Administrator (as defined in Section 16) on a form provided for that
purpose. The deferral election form shall specify both an amount to be
deferred, expressed as a percentage of the Incentive Award otherwise
payable in cash to the employee under the terms of any Designated Plan,
one of the payment options described in Sections 8 and 9 and the year
in which amounts deferred shall be paid in a lump sum pursuant to
Section 8 or in which installment payments shall commence pursuant to
Section 9. The deferral election form shall be effective only for the
Deferral Year specified on the form. A new deferral election form must
be filed for each Deferral Year.
4. Deferred Stock Account. On the first day of the month following
the date on which an Incentive Award would otherwise be paid to the
participant pursuant to a Designated Plan (the "Credit Date"), a
participant shall receive a credit to his or her account under the Plan
(the "Deferred Stock Account"). The amount of the credit shall be the
number of shares (rounded to the nearest one-hundredth of a share)
determined by dividing the amount of the participant's Incentive Award
specified for deferral 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 Credit Date or, if the New York Stock Exchange is
closed on the Credit Date, the next preceding date on which it was
open.
5. Dividend Credit. Each time a dividend is paid on the Common Stock,
a participant shall receive a credit to his or her Deferred Stock
Account. The amount of the dividend credit shall be the number of
shares (rounded to the nearest one-hundredth of a share) determined by
multiplying the dividend amount per share by the number of shares
credited to the participant's Deferred Stock Account as of the record
date for the dividend and dividing the product by the average of the
high and low prices per share of Common Stock reported on the
consolidated tape of the New York Stock Exchange on the dividend
payment date or, if the New York Stock Exchange is closed on the
dividend payment date, the next preceding date on which it was open.
6. Number of Shares Issuable Under the Plan. Subject to adjustment as
provided in Section 7, the maximum number of shares of Common Stock
that may be credited under the Plan is 700,000.
7. 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.
8. Payment of Deferred Stock Accounts in a Lump Sum. Unless a
participant elects pursuant to Section 3 to receive payment of his or
her Deferred Stock Account in installments as described in Section 9
and subject to Section 14, credits to a participant's Deferred Stock
Account shall be payable in full 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,
on February 28 (or the next succeeding business day if February 28 is
not a business day) of the calendar year following termination of
employment or such other year as elected by the participant pursuant to
Section 3. Amounts paid in cash, including cash in lieu of fractional
shares, shall be determined based on the average of the high and low
prices per share of Common Stock reported on the consolidated tape of
the New York Stock Exchange on the January 31 immediately preceding the
date of payment or, if the New York Stock Exchange is closed on that
date, the next preceding date on which it was open. If a participant
dies before receiving all payments to which he or she is entitled under
the Plan, payment shall be made on February 28 (or the next succeeding
business day if February 28 is not a business day) of the calendar year
following the date of death 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.
Notwithstanding the foregoing, in the event of a Change of Control (as
defined in Section 18), credits to a participant's Deferred Stock
Account as of the day immediately prior to the effective date of the
transaction constituting the Change of Control shall be paid in full to
the participant or the participant's estate or beneficiary, as the case
may be, in whole shares of Common Stock (together with cash in lieu of
a fractional share) on such date.
9. Payment of Deferred Stock Accounts in Installments. Subject to
Section 14, a participant may elect pursuant to Section 3 to have his
or her Deferred Stock Account paid in cash in annual installments
commencing on February 28 (or the next succeeding business day if
February 28 is not a business day) of the calendar year following
termination of employment or such other year as elected by the
participant pursuant to Section 3. A participant's Deferred Stock
Account shall be converted from a share balance to a cash balance by
multiplying the number of shares credited as of the Valuation Date (as
defined below) immediately prior to the first installment payment, 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
Valuation Date or, if the New York Stock Exchange is closed on the
Valuation Date, the next preceding date on which it was open. The
amount of each installment payment shall be a fraction of the value of
the participant's Deferred Stock Account on the January 31 (the
"Valuation Date") prior to the date of the installment payment, 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. Beginning on the day following the date
of the first installment payment, the cash balance remaining in the
Deferred Stock Account from time to time shall bear interest at an
annual rate equal to the interest equivalent of the secondary market
yield for three-month United States Treasury Bills as reported for the
preceding month in Federal Reserve statistical release H.15(519). The
interest rate shall be adjusted monthly, and interest shall be credited
to the participant's Deferred Stock Account as of the last day of each
month. If a participant dies before receiving all payments to which he
or she is entitled under the Plan, payment in full shall be made on
February 28 (or the next succeeding business day if February 28 is not
a business day) of the calendar year following the date of death 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. Notwithstanding the foregoing, in the
event of a Change of Control (as defined in Section 18) before the
first installment payment date, credits to a participant's Deferred
Stock Account as of the day immediately prior to the effective date of
the transaction constituting the Change of Control shall be paid in
full to the participant or the participant's estate or beneficiary, as
the case may be, in whole shares of Common Stock (together with cash in
lieu of a fractional share) on such date. In the event of a Change of
Control after the first installment payment date, the remaining cash
balance in such participant's Deferred Stock Account shall be paid in
full to the participant or the participant's estate or beneficiary, as
the case may be, in cash on the day immediately prior to the effective
date of the transaction constituting the Change of Control.
10. Nonassignability. No right to receive payments under the Plan nor
any shares of Common Stock credited to a participant's Deferred Stock
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 ("ERISA"), or rules thereunder.
The designation of a beneficiary by a participant does not constitute a
transfer.
11. Funding. If the Corporation chooses to fund the credits to the
Deferred Stock Accounts, the Corporation shall make contributions in
cash or in shares of Common Stock to the trust described in Section 12.
Any cash contributions shall be used by the trustee named in Section 12
to purchase shares of Common Stock within 10 business days after such
deposit. Purchases of shares may be made by the trustee in brokerage
transactions or by private purchase, including purchase from the
Corporation. All shares held by the trust shall be held in the name of
the trustee.
12. Trust Fund. Shares of Common Stock credited to Deferred Stock
Accounts may, in the sole discretion of the Corporation, be held and
administered in trust (the "Trust Fund") in accordance with the terms
of the Plan. The Trust Fund shall be held under a trust agreement
between the Corporation and Marquette Bank Minneapolis, N.A. as
Trustee, or any duly appointed successor trustee. All Common Stock
held in the Trust Fund shall be held on a commingled basis and shall be
subject to the claims of general creditors of the Corporation.
13. Voting Common Stock. If any credits made pursuant to this Plan
are, in the discretion of the Corporation, funded in a trust as
described in Section 12, the Common Stock held in trust shall be voted
by the Trustee in its discretion; provided, however, that the
participant may instruct the Trustee with respect to the voting of a
number of shares determined by multiplying a fraction, the numerator of
which is the number of shares credited to the participant's Deferred
Stock Account and the denominator of which is the total number of
shares credited to all participants' Deferred Stock Accounts, by the
total number of shares held by the Trustee for the Plan. For purposes
of this section, all numbers of shares shall be determined as of the
applicable record date.
14. 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.
15. Unsecured Obligation. Benefits payable under this Plan shall be
an unsecured obligation of the Corporation.
16. Administration. The Plan shall be administered by the Human
Resources Committee of the Corporation's Board of Directors (the "Plan
Administrator"), which shall have the authority to interpret the Plan
and to adopt procedures for implementing the Plan.
17. 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, 5, and 6 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. 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.
18. Change of Control. "Change of Control" means any one of the
following events:
(a) the acquisition by any individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding Corporation
Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Corporation,
(ii) any acquisition by the Corporation, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation, or (iv)
any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii), and (iii) of subsection (c) below; or
(b) individuals who constitute the Board of Directors of the
Corporation as of April 27, 1992, (the "Incumbent Board") cease for any
reason to constitute at least two-thirds thereof; provided that any
person becoming a director subsequent to such date whose election, or
nomination for election, by the stockholders of the Corporation was
approved by a vote of at least three-fourths of the directors
comprising the Incumbent Board shall, for the purposes of this clause,
be considered as though such person were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Incumbent Board; or
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, or sale or other disposition
of all or substantially all of the assets of the Corporation (a
"Business Combination"), in each case, unless following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Corporation
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Corporation Voting Securities, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
board action, providing for such Business Combination.
19. Effective Date. The effective date of the Plan shall be
determined by the Human Resources Committee of the Board of Directors
after approval of the Plan by the holders of Common Stock.
Exhibit 11.
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
In thousands, except per common share amounts Quarter Ended
September 30,
1998 1997
<C> <C>
BASIC:
Weighted average number of common shares
outstanding ..................................... 765,654 749,283
Net income ....................................... $392,871 341,614
Less dividends accrued on preferred stock ........ (4,441) (4,441)
Net income, as adjusted .......................... $388,430 337,173
Net income per common share ...................... $ 0.51 0.45
DILUTED:
Weighted average number of common shares
outstanding ..................................... 765,654 749,283
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price .................................... 15,695 9,182
Assumed conversion of 6 3/4% convertible
subordinated debentures due 2003 as of the
beginning of the period ......................... 34 35
781,383 758,500
Net income ....................................... $392,871 341,614
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 .......................... $388,431 337,174
Net income per common share....................... $ 0.50 0.44
</TABLE>
Exhibit 11.
(continued)
Wells Fargo & Company and Subsidiaryies
formerly known as Norwest Corporation and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
In thousands, except per common share amounts Nine Months Ended
September 30,
1998 1997
<C> <C>
BASIC:
Weighted average number of common shares
outstanding ..................................... 760,438 748,012
Net income ....................................... $1,142,709 994,866
Less dividends accrued on preferred stock ........ (13,322) (13,322)
Net income, as adjusted .......................... $1,129,387 981,544
Net income per common share ...................... $ 1.49 1.31
DILUTED:
Weighted average number of common shares
outstanding ..................................... 760,438 748,012
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price .................................... 13,843 10,032
Assumed conversion of 6 3/4% convertible
subordinated debentures due 2003 as of the
beginning of the period ......................... 34 35
774,315 758,079
Net income ....................................... $1,142,709 994,866
Less dividends accrued on preferred stock ........ (13,322) (13,322)
Add 6 3/4% convertible subordinated debentures
interest and amortization of debt expense,
net of income tax effect ........................ 3 3
Net income, as adjusted .......................... $1,129,390 981,547
Net income per common share....................... $ 1.46 1.29
</TABLE>
Exhibit 12(a).
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
<TABLE>
Nine Months Ended
September 30, Year Ended December 31,
In
thousands 1998 1997 1997 1996 1995 1994 1993
<C> <C> <C> <C> <C> <C> <C>
Computation of
Income:
Income
before
income
taxes $1,701,627 1,524,069 2,049,726 1,781,509 1,422,814 1,180,601 879,755
Capitalized
interest - - (22) (14) (112) (69) (65)
Income
before
income
taxes and
capitalized
inter-
est 1,701,627 1,524,069 2,049,704 1,781,495 1,422,702 1,180,532 879,690
Fixed
charges 2,234,327 2,032,875 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total
income
for
compu-
tation $3,935,954 3,556,944 4,784,170 4,466,942 3,926,305 2,820,581 2,365,626
Total
income for
computation
excluding
interest
on deposits
from
fixed
char-
ges $2,815,133 2,481,532 3,337,488 3,142,024 2,770,005 1,957,224 1,513,317
Computation of
Fixed
Charges:
Net
rental
expense
(a) $ 175,203 155,309 211,191 205,409 166,591 149,462 128,573
Portion
of rentals
deemed
repre-
sentative
of
inter-
est $ 58,401 51,770 70,397 68,470 55,530 49,821 42,858
Interest:
Interest
on
dep-
osits 1,120,821 1,075,412 1,446,682 1,324,918 1,156,300 863,357 852,309
Interest
on
federal
funds
and other
short-term
borr-
owings 466,718 327,062 439,492 454,013 515,646 290,211 238,046
Interest
on
long-term
debt 588,387 578,631 777,873 838,032 776,015 436,591 352,658
Capitalized
interest - - 22 14 112 69 65
Total
inter-
est 2,175,926 1,981,105 2,664,069 2,616,977 2,448,073 1,590,228 1,443,078
Total
fixed
char-
ges $2,234,327 2,032,875 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total
fixed
charges
excluding
interest
on dep-
osits $1,113,506 957,463 1,287,784 1,360,529 1,347,303 776,692 633,627
Ratio of
Income
to Fixed Charges:
Excluding
interest on
deposits 2.53x 2.59 2.59 2.31 2.06 2.52 2.39
Including
interest on
deposits 1.76x 1.75 1.75 1.66 1.57 1.72 1.59
</TABLE>
(a) Includes equipment rentals.
Exhibit 12(b).
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Unaudited)
<TABLE>
Nine Months Ended
September 30, Year Ended December 31,
In <C> <C> <C> <C> <C> <C> <C>
thousands 1998 1997 1997 1996 1995 1994 1993
Computation of Income:
Income
before
income
taxes $1,701,627 1,524,069 2,049,726 1,781,509 1,422,814 1,180,601 879,755
Capitalized
interest - - (22) (14) (112) (69) (65)
Income
before income
taxes and
capitalized
inter-
est 1,701,627 1,524,069 2,049,704 1,781,495 1,422,702 1,180,532 879,690
Fixed
charges 2,234,327 2,032,875 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total income
for
comput-
ation $3,935,954 3,556,944 4,784,170 4,466,942 3,926,305 2,820,581 2,365,626
Total income
for
computation
excluding
interest
on deposits
from fixed
char-
ges $2,815,133 2,481,532 3,337,488 3,142,024 2,770,005 1,957,224 1,513,317
Computation
of Fixed
Charges:
Net rental
expense
(a) $ 175,203 155,309 211,191 205,409 166,591 149,462 128,573
Portion of
rentals
deemed
repres-
entative
of
inter-
est $ 58,401 51,770 70,397 68,470 55,530 49,821 42,858
Interest:
Interest
on dep-
osits 1,120,821 1,075,412 1,446,682 1,324,918 1,156,300 863,357 852,309
Interest
on
federal
funds
and other
short-term
borrow-
ings 466,718 327,062 439,492 454,013 515,646 290,211 238,046
Interest
on
long-term
debt 588,387 578,631 777,873 838,032 776,015 436,591 352,658
Capitalized
inter-
est - - 22 14 112 69 65
Total
inter-
est 2,175,926 1,981,105 2,664,069 2,616,977 2,448,073 1,590,228 1,443,078
Total
fixed
char-
ges $2,234,327 2,032,875 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total
fixed
charges
excluding
interest
on dep-
osits $1,113,506 957,463 1,287,784 1,360,529 1,347,303 776,692 633,627
Preferred
stock
divi-
dends 13,322 13,322 17,763 17,763 41,220 27,827 31,170
Pre-tax
earnings
needed to
meet pre-
ferred stock
dividend
require-
ments 19,838 20,409 26,950 27,424 61,349 41,044 44,728
Total
combined fixed
charges
and pre-
ferred
stock
div-
idends $2,254,165 2,053,284 2,761,416 2,712,871 2,564,952 1,681,093 1,530,664
Total
combined
fixed charges
and pre-
ferred stock
dividends
excluding
interest
on dep-
osits $1,133,344 977,872 ,314,734 1,387,953 1,408,652 817,736 678,355
</TABLE>
(a) Includes equipment rentals.
Exhibit 12(b).
(continued)
Wells Fargo & Company and Subsidiaries
formerly known as Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Unaudited)
<TABLE>
Nine Months Ended
September 30, Year Ended December 31,
<C> <C> <C> <C> <C> <C> <C>
In thousands 1998 1997 1997 1996 1995 1994 1993
Ratio of Income
to Combined
Fixed Charges
and Preferred
Stock Dividends:
Excluding
interest on
deposits 2.48x 2.54 2.54 2.26 1.97 2.39 2.23
Including
interest on
deposits 1.75x 1.73 1.73 1.65 1.53 1.68 1.55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1998 QUARTERLY REPORT FILED ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE AMOUNTS PRESENTED FOR
[EPS-PRIMARY] AND [EPS-DILUTED] REPRESENT THE CORPORATION'S BASIC AND DILUTED
EARNINGS PER SHARE, RESPECTIVELY, FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,447
<INT-BEARING-DEPOSITS> 57
<FED-FUNDS-SOLD> 871
<TRADING-ASSETS> 357
<INVESTMENTS-HELD-FOR-SALE> 24,585
<INVESTMENTS-CARRYING> 901
<INVESTMENTS-MARKET> 912
<LOANS> 45,251
<ALLOWANCE> 1,337
<TOTAL-ASSETS> 103,727
<DEPOSITS> 60,182
<SHORT-TERM> 15,700
<LIABILITIES-OTHER> 5,685
<LONG-TERM> 14,672
0
187
<COMMON> 1,306
<OTHER-SE> 5,995
<TOTAL-LIABILITIES-AND-EQUITY> 103,727
<INTEREST-LOAN> 3,618
<INTEREST-INVEST> 936
<INTEREST-OTHER> 885
<INTEREST-TOTAL> 5,439
<INTEREST-DEPOSIT> 1,121
<INTEREST-EXPENSE> 2,176
<INTEREST-INCOME-NET> 3,263
<LOAN-LOSSES> 411
<SECURITIES-GAINS> 97
<EXPENSE-OTHER> 3,801
<INCOME-PRETAX> 1,702
<INCOME-PRE-EXTRAORDINARY> 1,702
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,143
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.46
<YIELD-ACTUAL> 5.61
<LOANS-NON> 215
<LOANS-PAST> 176
<LOANS-TROUBLED> 1
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,234
<CHARGE-OFFS> 540
<RECOVERIES> 114
<ALLOWANCE-CLOSE> 1,337
<ALLOWANCE-DOMESTIC> 862
<ALLOWANCE-FOREIGN> 73
<ALLOWANCE-UNALLOCATED> 402
</TABLE>
