NORWEST CORP, 10-Q, 1998-05-13

NORWEST CORP
10-Q, 1998-05-13
NATIONAL COMMERCIAL BANKS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-2979

NORWEST CORPORATION

A Delaware Corporation-I.R.S. No. 41-0449260
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479
Telephone (612) 667-1234

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. X Yes ___ No.

Common Stock, par value $1 2/3 per share,
outstanding at April 30, 1998 756,778,246 shares

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

The following consolidated financial statements of Norwest Corporation
and its subsidiaries are included herein:

Page
1. Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997......................... 3

2. Consolidated Statements of Income -
Quarters Ended March 31, 1998 and 1997....................... 4

3. Consolidated Statements of Comprehensive Income -
Quarters Ended March 31, 1998 and 1997....................... 5

4. Consolidated Statements of Cash Flows -
Quarters Ended March 31, 1998 and 1997....................... 6

5. Consolidated Statements of Stockholders' Equity -
Quarters Ended March 31, 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.

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)

In millions, except shares March 31, December 31,
1998 1997
ASSETS
Cash and due from banks ...................... $ 4,674.4 4,912.1
Interest-bearing deposits with banks ......... 82.1 46.6
Federal funds sold and resale agreements ..... 372.4 967.4
Total cash and cash equivalents .......... 5,128.9 5,926.1
Trading account securities ................... 1,411.5 486.9
Investment and mortgage-backed securities
available for sale ......................... 22,472.5 17,983.9
Investment securities (fair value
$773.1 in 1998 and $762.8 in 1997) ......... 746.3 747.2
Total investment securities .............. 23,218.8 18,731.1
Loans held for sale .......................... 3,436.3 3,407.0
Mortgages held for sale ...................... 12,030.5 8,848.0
Loans and leases, net of unearned discount ... 42,162.4 42,521.6
Allowance for credit losses .................. (1,236.3) (1,233.9)
Net loans and leases ..................... 40,926.1 41,287.7
Premises and equipment, net .................. 1,341.0 1,295.5
Mortgage servicing rights, net ............... 2,810.7 2,774.9
Interest receivable and other assets ......... 5,789.9 5,783.0
Total assets ............................. $96,093.7 88,540.2

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing ........................ $18,605.9 16,253.3
Interest-bearing ........................... 39,226.6 39,203.8
Total deposits ........................... 57,832.5 55,457.1
Short-term borrowings ........................ 14,234.4 9,557.0
Accrued expenses and other liabilities ....... 4,434.9 3,737.2
Long-term debt ............................... 12,486.5 12,766.7
Total liabilities ........................ 88,988.3 81,518.0
Preferred stock .............................. 293.8 267.4
Unearned ESOP shares ......................... (107.9) (79.4)
Total preferred stock .................... 185.9 188.0
Common stock, $1 2/3 par value - authorized
1,000,000,000 shares:
Issued 769,113,149 shares in 1998 and 1997 . 1,281.9 1,281.9
Surplus ...................................... 456.8 419.6
Retained earnings ............................ 5,190.4 5,007.7
Accumulated other comprehensive income........ 347.6 409.9
Notes receivable from ESOP ................... (8.0) (10.1)
Treasury stock - 11,502,502 and 10,493,685
common shares in 1998 and 1997, respectively (349.2) (274.8)
Total common stockholders' equity ........ 6,919.5 6,834.2
Total stockholders' equity ............... 7,105.4 7,022.2
Total liabilities and
stockholders' equity ................... $96,093.7 88,540.2

See notes to unaudited consolidated financial statements.

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

In millions, except per common share amounts Quarter Ended
March 31,

1998 1997
<S> <C> <C>
INTEREST INCOME ON
Loans and leases ................................ $1,185.4 1,095.4
Investment and mortgage-backed securities
available for sale ............................. 313.7 325.5
Investment securities ........................... 6.6 7.0
Loans held for sale ............................. 70.5 56.2
Mortgages held for sale ......................... 155.8 97.7
Money market investments ........................ 11.7 21.1
Trading account securities ...................... 10.8 4.5
Total interest income ....................... 1,754.5 1,607.4

INTEREST EXPENSE ON
Deposits ........................................ 367.1 356.1
Short-term borrowings ........................... 124.3 99.1
Long-term debt .................................. 196.5 193.9
Total interest expense ...................... 687.9 649.1
Net interest income ....................... 1,066.6 958.3
PROVISION FOR CREDIT LOSSES ..................... 124.5 109.0
Net interest income after
provision for credit losses ............. 942.1 849.3

NON-INTEREST INCOME
Mortgage banking ................................ 252.7 221.8
Trust and investment fees and commissions ....... 123.9 101.6
Service charges and credit related fees ......... 148.0 134.1
Credit card fee revenue ......................... 33.0 27.9
Insurance ....................................... 94.7 90.2
Data processing ................................. 17.1 18.1
Net investment and mortgage-backed securities
available for sale gains (losses) ............. 7.5 (4.4)
Net venture capital gains ....................... 58.7 19.2
Trading ......................................... 24.3 24.9
Other ........................................... 50.4 51.2
Total non-interest income ................... 810.3 684.6

NON-INTEREST EXPENSES
Salaries and benefits ........................... 667.3 546.6
Net occupancy ................................... 85.8 80.0
Equipment rentals, depreciation and maintenance . 88.0 82.2
Business development ............................ 65.6 58.4
Communication ................................... 76.7 71.5
Data processing ................................. 35.7 45.1
Intangible asset amortization ................... 42.3 40.4
Other ........................................... 148.6 117.3
Total non-interest expenses ................. 1,210.0 1,041.5
INCOME BEFORE INCOME TAXES ...................... 542.4 492.4
Income tax expense .............................. 174.7 170.5
NET INCOME ...................................... $ 367.7 321.9

PER COMMON SHARE
Net Income
Basic ......................................... $ 0.48 0.43
Diluted ....................................... 0.47 0.42
Dividends ...................................... 0.165 0.150

See notes to unaudited consolidated financial statements.

</TABLE>

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

In millions Quarter Ended
March 31,

1998 1997

<S> <C> <C>
Net income ...................................... $ 367.7 321.9

Other comprehensive income, before income taxes:
Change in net unrealized gains (losses) on
securities available for sale:
Unrealized losses arising during the period .... (30.0) (292.6)
Less: reclassification adjustment for gains
included in net income ....................... 66.2 14.8
(96.2) (307.4)
Foreign currency translation adjustment ........ 0.3 (1.8)
Other comprehensive income, before income taxes . (95.9) (309.2)
Income tax benefit related to components of
other comprehensive income at an effective
income tax rate of 35 percent .................. (33.6) (108.2)
Other comprehensive income, net of income taxes . (62.3) (201.0)
Comprehensive income ............................ $ 305.4 120.9

See notes to unaudited consolidated financial statements.

</TABLE>

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
Quarter Ended
In millions March 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ............................................................$ 367.7 321.9
Adjustments to reconcile net income to net cash flows from operating
activities:
Provision for credit losses ....................................... 124.5 109.0
Depreciation and amortization ..................................... 245.3 178.4
Gains on sales of loans, securities and other assets, net ......... (140.7) (70.9)
Release of preferred shares to ESOP ............................... 8.7 11.6
Purchases of trading account securities ........................... (27,358.9) (18,504.6)
Proceeds from sales of trading account securities ................. 26,369.5 18,393.0
Originations of mortgages held for sale ........................... (20,910.7) (11,024.1)
Proceeds from sales of mortgages held for sale .................... 17,761.9 12,230.8
Originations of loans held for sale ............................... (314.9) (302.6)
Proceeds from sales of loans held for sale ........................ 280.7 341.2
Interest receivable ............................................... (29.6) (38.4)
Interest payable .................................................. 42.7 8.8
Other assets, net ................................................. (165.8) (113.7)
Other accrued expenses and liabilities, net ....................... 474.1 1,241.0
Net cash flows from operating activities ........................ (3,245.5) 2,781.4

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and paydowns of investment securities ...... 0.1 0.5
Proceeds from maturities and paydowns of investment and mortgage-
backed securities available for sale .............................. 931.0 581.2
Proceeds from sales and calls of investment securities .............. 22.9 5.2
Proceeds from sales and calls of investment and mortgage-backed
securities available for sale ..................................... 1,180.7 1,302.3
Purchases of investment securities .................................. (42.4) (23.8)
Purchases of investment and mortgage-backed securities available
for sale .......................................................... (6,346.5) (6,564.7)
Net change in banking subsidiaries' loans and leases ................ 123.7 (153.6)
Non-bank subsidiaries' loans and leases originated .................. (1,829.4) (1,937.4)
Principal collected on non-bank subsidiaries' loans and leases ...... 1,980.0 2,067.5
Purchases of premises and equipment ................................. (122.2) (69.2)
Proceeds from sales of premises, equipment & other real estate owned 79.4 19.0
Cash paid for acquisitions, net of cash and cash equivalents acquired (23.1) 25.6
Net cash flows used for investing activities ...................... (4,045.8) (4,747.4)

CASH FLOWS FROM FINANCING ACTIVITIES
Deposits, net ....................................................... 2,285.1 229.0
Short-term borrowings, net .......................................... 4,761.2 1,015.4
Long-term debt borrowings ........................................... 274.7 814.1
Repayments of long-term debt ........................................ (555.9) (1,929.5)
Issuances of common stock ........................................... 38.9 18.7
Repurchases of common stock ......................................... (180.8) (48.5)
Net decrease in notes receivable from ESOP .......................... 0.4 0.9
Dividends paid ...................................................... (129.5) (116.5)
Net cash flows used for financing activities ...................... 6,494.1 (16.4)
Net decrease in cash and cash equivalents ......................... (797.2) (1,982.4)

CASH AND CASH EQUIVALENTS
Beginning of period ................................................. 5,926.1 7,371.3
End of period .......................................................$ 5,128.9 5,388.9

See notes to unaudited consolidated financial statements.

</TABLE>

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

In Accumulated
millions, Unearned Other Notes
except for Preferred ESOP Common Sur- Retained Comprehensive Receivable Treasury
shares Stock Shares Stock plus Earnings Income from ESOP Stock Total

<S> <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............ - - - - 321.9 - - - 321.9
Other................. - - - - - (201.0) - - (201.0)
Dividends on
Common stock.......... - - - - (112.1) - - - (112.1)
Preferred stock....... - - - - (4.4) - - - (4.4)
Conversion of 11,567
preferred shares to
496,632 common shares. (11.6) - - 1.3 - - - 10.3 -
Cash payments received
on notes receivable
from ESOP............. - - - - - - 0.9 - 0.9
Issuance of 51,700
preferred shares to
ESOP.................. 51.7 (53.8) - 2.1 - - - - -
Release of preferred
shares to ESOP........ - 12.1 - (0.5) - - - - 11.6
Issuance of 2,095,762
common shares......... - - - 13.4 (22.3) - - 38.3 29.4
Issuance of 14,058,200
common shares for
acquisitions.......... - - 9.3 11.7 44.0 1.0 - 59.2 125.2
Repurchase of 1,963,274
common shares......... - - - - - - - (48.5) (48.5)
Balance,
March 31, 1997........ $ 289.9 (102.7) 635.2 976.6 4,475.3 97.1 (10.2) (174.0) 6,187.2

</TABLE>

(Continued on page 8)

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

(Continued from page 7)
<TABLE>
<CAPTION>

In Accumulated
millions, Unearned Other Notes
except for Preferred ESOP Common Sur- Retained Comprehensive Receivable Treasury
shares Stock Shares Stock plus Earnings Income from ESOP Stock Total

<S> <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............ - - - - 367.7 - - - 367.7
Other................. - - - - - (62.3) - - (62.3)
Dividends on
Common stock.......... - - - - (125.1) - - - (125.1)
Preferred stock....... - - - - (4.4) - - - (4.4)
Conversion of 8,577
preferred shares to
206,467 common shares. (8.6) - - 1.6 - - - 7.0 -
Cash payments received
on notes receivable
from ESOP............. - - - - - - 0.4 - 0.4
Issuance of 35,000
preferred shares to
ESOP.................. 35.0 (37.7) - 2.7 - - - - -
Release of preferred
shares to ESOP........ - 9.2 - (0.5) - - - - 8.7
Issuance of 3,216,127
common shares......... - - - 17.4 (54.8) - - 94.8 57.4
Issuance of 136,950
common shares for
acquisitions.......... - - - 16.3 (0.7) - 1.7 4.3 21.6
Repurchase of 4,568,361
common shares......... - - - (0.3) - - - (180.5) (180.8)
Balance,
March 31, 1998........ $ 293.8 (107.9) 1,281.9 456.8 5,190.4 347.6 (8.0) (349.2) 7,105.4

See notes to unaudited consolidated financial statements.

</TABLE>

Page 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 quarters ended
March 31, include:

In millions 1998 1997

Interest...................................... $ 645.2 640.3
Income taxes.................................. 14.3 14.1
Transfer of loans to other real estate owned.. 51.2 16.0

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 ended March 31, 1998
and 1997 are shown in the table below.

In millions, except shares

1998 1997

Net income ............................... $ 367.7 321.9
Less dividends accrued on preferred stock 4.4 4.4
Income available to common stockholders .. $ 363.3 317.5

Weighted average shares outstanding ...... 757,706,435 745,575,474
Adjustments for dilutive securities:
Assumed exercise of stock options ...... 14,261,806 10,280,076
Assumed conversion of convertible
subordinated debentures .............. 34,538 34,800
Diluted common shares .................... 772,002,779 755,890,350

<PAGE>

4. Investment Securities

The amortized cost and fair value of investment securities at
March 31, 1998 were:

In millions Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury and federal agencies .. $ 6,236.0 20.7 (22.2) 6,234.5
State, municipal and housing -
tax exempt ......................... 1,398.6 85.9 (1.2) 1,483.3
Other ............................... 770.4 262.4 (4.2) 1,028.6
Total investment securities
available for sale .............. 8,405.0 369.0 (27.6) 8,746.4
Mortgage-backed securities:
Federal agencies ................... 13,159.7 361.7 (10.3) 13,511.1
Collateralized mortgage
obligations ....................... 212.1 4.8 (1.9) 215.0
Total mortgage-backed securities
available for sale .............. 13,371.8 366.5 (12.2) 13,726.1
Total investment and
mortgage-backed securities
available for sale .................. 21,776.8 735.5 (39.8) 22,472.5

Other securities held for investment . 746.3 32.0 (5.2) 773.1
Total investment securities ........ $22,523.1 767.5 (45.0) 23,245.6

</TABLE>
Interest income on investment securities for the quarters ended March 31
were:

Quarter
In millions 1998 1997

Available for sale:
U.S. Treasury and federal agencies .. $ 34.3 32.1
State, municipal and housing -
tax exempt ........................ 20.3 14.6
Other ............................... 12.1 14.5
Total investment securities
available for sale .............. 66.7 61.2
Mortgage-backed securities:
Federal agencies ................... 242.4 259.9
Collateralized mortgage
obligations ....................... 4.6 4.4
Total mortgage-backed securities
available for sale .............. 247.0 264.3
Total investment and mortgage-backed
securities available for sale ...... 313.7 325.5

Other securities held for investment . 6.6 7.0

Total investment securities ........ $ 320.3 332.5

Certain investment securities with a total amortized cost of $22.9 million
and $5.2 million for the quarters ended March 31, 1998 and 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. The sales and calls of investment
securities resulted in no gain or loss during the first quarters of 1998 and
1997.

<PAGE>

5. Loans and Leases

The carrying values of loans and leases at March 31, 1998 and
December 31, 1997 were:

In millions March 31, December 31,
1998 1997

Commercial, financial and industrial ..... $10,821.3 10,680.2
Agricultural ............................. 1,205.7 1,276.2
Real estate
Secured by 1-4 family residential
properties ........................... 10,631.0 10,746.6
Secured by development properties ...... 2,044.4 2,131.4
Secured by construction and land
development .......................... 1,040.6 1,005.8
Secured by owner-occupied properties ... 2,940.5 2,866.1
Consumer ................................. 11,892.7 12,298.0
Credit card .............................. 1,556.7 1,632.2
Lease financing .......................... 956.6 921.2
Foreign
Consumer ............................... 910.5 864.0
Commercial ............................. 228.0 212.4
Total loans and leases ............... 44,228.0 44,634.1
Unearned discount ........................ (2,065.6) (2,112.5)
Total loans and leases, net of
unearned discount .................... $42,162.4 42,521.6

Changes in the allowance for credit losses for the quarters ended March 31 were:

Quarter
In millions 1998 1997

Balance at beginning of period ....... $1,233.9 1,040.8
Allowance related to assets
acquired, net ..................... 9.3 24.8
Provision for credit losses ........ 124.5 109.0

Credit losses ...................... (173.5) (146.7)
Recoveries ......................... 42.1 34.7
Net credit losses ................ (131.4) (112.0)
Balance at end of period ............. $1,236.3 1,062.6

<PAGE>

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 March 31,
1998 and 1997 and December 31, 1997 were:

In millions March 31, December 31,
1998 1997 1997
Impaired loans
Non-accrual ........................... $ 121.8 108.7 89.4
Restructured .......................... 0.1 0.2 0.1
Total impaired loans ................ 121.9 108.9 89.5
Other non-accrual loans and leases ...... 86.9 64.7 88.7
Total non-accrual and
restructured loans and leases ........ 208.8 173.6 178.2
Other real estate owned ................. 50.1 50.0 50.3
Total non-performing assets ........... 258.9 223.6 228.5
Loans and leases past due 90 days or more* 137.2 94.3 153.8
Total non-performing assets and
90-day past due loans and leases ..... $ 396.1 317.9 382.3

* Excludes non-accrual and restructured loans and leases.

The average balances of impaired loans for the quarters ended March 31, 1998
and 1997 were $105.1 million and $104.6 million, respectively. The allowance
for credit losses related to impaired loans at March 31, 1998 and December 31,
1997 was $38.5 million and $33.5 million, respectively. Impaired loans of
$3.1 million and $1.8 million were not subject to a related allowance for
credit losses at March 31, 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 ended March 31 were:

Quarter
In millions 1998 1997

Interest
As originally contracted ........... $ 3.5 5.2
As recognized ...................... (0.6) (0.5)
Reduction of interest income ..... $ 2.9 4.7

7. Long-term Debt

During the first three months of 1998, certain subsidiaries of the corporation
received advances from the Federal Home Loan Bank. Advances of $200.0 million
were issued bearing interest at a rate of one-month LIBOR less 15 basis points,
and maturing in March 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 $70.4 million in
senior notes bearing interest at fixed rates rates ranging from 5.55 percent
to 6.08 percent, which mature between April 2003 and March 2008.

<PAGE>

8. Stockholders' Equity

The table below is a summary of the corporation's preferred and preference
stock at March 31, 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.

In millions, except share amounts

Annual
Dividend
Shares Outstanding Rate at Amount Outstanding
March 31, December 31, March 31, March 31, December 31,
1998 1997 1998 1998 1997
<S> <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 ..................... 29,498 - 10.75% 29.5 -
1997 ESOP Cumulative
Convertible, $1,000 stated
value ..................... 20,220 22,927 9.50% 20.2 23.0
1996 ESOP Cumulative
Convertible, $1,000 stated
value ..................... 22,644 22,831 9.50% 22.6 22.8
1995 ESOP Cumulative
Convertible, $1,000
stated value .............. 20,510 20,625 10.00% 20.5 20.6
ESOP Cumulative Convertible,
$1,000 stated value ....... 9,956 10,022 9.00% 10.0 10.0
Less: Cumulative
Tracking shares held by
a subsidiary .............. (25,000) (25,000) (5.0) (5.0)
1,057,828 1,031,405 293.8 267.4
Unearned ESOP shares ........ (107.9) (79.4)
Total preferred stock ... $ 185.9 188.0

</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 quarters ending March 31, 1998 and 1997, 8,577 and 11,567 shares of
ESOP preferred stock were converted into 206,467 and 496,632 shares of common
stock of the corporation, respectively.

Accumulated other comprehensive income at March 31, 1998 and December 31, 1997
is comprised of the following:

March 31, December 31,
1998 1997

Unrealized gains on securities available
for sale ............................. $ 356.9 419.4
Foreign currency translation ........... (9.3) (9.5)
Accumulated other comprehensive income $ 347.6 409.9

<PAGE>

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 ended March 31 is included in the following summary:

In millions
Quarter
1998 1997
Revenues:*
Banking ................ $ 1,588.5 1,491.8
Mortgage Banking ....... 449.4 344.4
Norwest Financial ...... 526.9 455.8
Total ................ $ 2,564.8 2,292.0
Organizational earnings:*
Banking ................ $ 263.9 226.5
Mortgage Banking ....... 51.9 33.8
Norwest Financial ...... 51.9 61.6
Total ................ $ 367.7 321.9
Total assets:
Banking ................ $63,257.7 63,606.6
Mortgage Banking ....... 22,419.1 11,103.0
Norwest Financial ...... 10,416.9 8,870.7
Total ................ $96,093.7 83,580.3

* 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.

10. Mortgage Banking Activities

Additional information about mortgage banking non-interest income for the
quarters ended March 31 is presented below:

Quarter
In millions 1998 1997

Origination and other
closing fees ...................... $109.1 58.6
Servicing fees ...................... 50.2 95.1
Net gains (losses) on sales of
servicing rights .................. (0.3) 0.2
Net gains on sales of mortgages ..... 36.8 31.5
Other ............................... 56.9 36.4
Total mortgage banking non-
interest income ................. $252.7 221.8

Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The outstanding balances of serviced loans
were $211.8 billion and $184.6 billion at March 31, 1998 and 1997,
respectively, and $205.8 billion at December 31, 1997.

<PAGE>

Changes in capitalized mortgage servicing rights for the quarters ended
March 31 were:

Quarter
In millions 1998 1997

Balance at beginning of period .. $2,839.1 2,712.7
Originations .................. 129.9 77.8
Purchases and other additions . 117.5 31.7
Sales ......................... - (17.4)
Amortization .................. (153.1) (85.2)
Other ......................... (58.5) 65.5
2,874.9 2,785.1
Less valuation allowance ...... (64.2) (64.2)
Balance at end of period ........ $2,810.7 2,720.9

The fair value of capitalized mortgage servicing rights at March 31, 1998 was
approximately $3.2 billion, calculated using discount rates ranging from 500 to
700 basis points over the ten-year U.S. Treasury rate.

There were no changes in the valuation allowance for capitalized mortgage
servicing rights during the quarters ended March 31, 1998 and 1997.

11. Trading Revenues

For the quarters ended March 31, trading revenues were derived from the
following activities:

Quarter
In millions 1998 1997

Interest income:
Securities .............................. $ 10.8 4.5

Non-interest income:
Gains on securities sold ................ 12.5 15.3
Swaps and other interest rate contracts . - 0.3
Foreign exchange trading ................ 3.6 3.7
Options ................................. 0.3 2.1
Futures ................................. 7.9 3.5
Total non-interest income ............. 24.3 24.9
Total trading revenues .................... $ 35.1 29.4

<PAGE>

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 three months ended March 31, 1998, end-user derivative activities
increased interest income by $1.9 million and decreased interest expense by
$22.8 million, for a total benefit to net interest income of $24.7 million.
For the same period in 1997, end-user derivative activities decreased
interest income by $0.1 million and interest expense by $14.5 million, for a
total benefit to net interest income of $14.4 million.

Activity in the notional amounts of end-user derivatives for the quarter ended
March 31, 1998 is summarized as follows:

In millions December 31, Amortization March 31,
1997 Additions & Maturities Terminations 1998
<S> <C> <C> <C> <C> <C>
Swaps:

Generic receive fixed ..... $ 4,316 - (200) - 4,116

Amortizing receive fixed .. 3,185 - (77) - 3,108

Generic pay fixed ......... 221 105 - - 326

Basis ..................... 29 29 (29) - 29

Total swaps ............. 7,751 134 (306) - 7,579

Interest rate caps
and floors ................ 14,377 - (315) - 14,062

Futures contracts ........... 4,690 9,821 (2,015) (5,463) 7,033

Options on futures contracts 9,886 20,420 (13,477) (6,925) 9,904

Security options ............ 1,240 9,476 (2,500) (3,740) 4,476

Forward foreign exchange

contracts ................. 491 43 (496) - 38

Total ....................... $ 38,435 39,894 (19,109) (16,128) 43,092

</TABLE>
Deferred gains and losses on closed end-user derivatives were not material at
March 31, 1998 and December 31, 1997.

A key assumption in the information which follows is that rates remain
constant at March 31, 1998 levels. To the extent that rates change, both the
average notional and variable interest rate information may change.

<PAGE>

The following table presents the maturities and weighted average rates for
end-user derivatives by type:

Dollars in millions
Maturity
There-
March 31, 1998 1998 1999 2000 2001 2002 after Total

<S> <C> <C> <C> <C> <C> <C> <C>
Swaps:
Generic receive fixed-
Notional value ........$ 450 766 400 500 500 1,500 4,116
Weighted avg.
receive rate ........ 6.03% 7.28 6.17 6.35 6.81 6.53 6.59
Weighted avg. pay rate 5.64% 5.67 5.64 5.66 5.69 5.68 5.67
Amortizing receive fixed-
Notional value ........$ - 1,875 1,233 - - - 3,108
Weighted avg.
receive rate ........ -% 7.46 6.47 - - - 7.07
Weighted avg. pay rate -% 5.50 5.67 - - - 5.57
Generic pay fixed-
Notional value ........$ - - 5 111 100 110 326
Weighted avg.
receive rate ........ -% - 5.63 5.69 5.69 5.68 5.69
Weighted avg. pay rate -% - 6.15 5.76 5.99 5.75 5.83
Basis-
Notional value ........$ - - - - - 29 29
Weighted avg.
receive rate ........ -% - - - - 4.31 4.31
Weighted avg. pay rate -% - - - - 2.69 2.69

Interest rate caps and
floors (1):
Notional value ........$ 212 400 3,200 4,750 5,500 - 14,062

Futures contracts (1):
Notional value ........$ 7,033 - - - - - 7,033

Options on futures
contracts (1):
Notional value ........$ 9,904 - - - - - 9,904

Security options (1):
Notional value ........$ 4,450 - 1 25 - - 4,476

Forward foreign exchange
contracts (1):
Notional value ........$ 38 - - - - - 38

Total notional value ....$22,087 3,041 4,839 5,386 6,100 1,639 43,092

Total weighted avg.
rates on swaps:
Receive rate ........ 6.03% 7.41 6.39 6.23 6.62 6.43 6.74

Pay rate ............ 5.64% 5.55 5.66 5.68 5.74 5.63 5.62

</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
March 31, 1998.

<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:

In millions Balance Sheet Category
Loans Mortgage Interest- Short- Long-
and Servicing bearing term term
Leases Rights Deposits Borrowings Debt Total
Swaps:

<S> <C> <C> <C> <C> <C> <C>
Pay variable
Unrealized gains ..... $ - 36.2 73.9 - 92.8 202.9
Unrealized (losses) .. - - - - (2.0) (2.0)

Pay variable net ..... - 36.2 73.9 - 90.8 200.9

Pay fixed
Unrealized gains ..... 0.5 - 1.0 - - 1.5
Unrealized losses .... (0.7) - - - - (0.7)

Pay fixed net ........ (0.2) - 1.0 - - 0.8

Basis
Unrealized gains ..... - - - - - -

Total unrealized gains . 0.5 36.2 74.9 - 92.8 204.4
Total unrealized (losses) (0.7) - - - (2.0) (2.7)

Total net ............ $ (0.2) 36.2 74.9 - 90.8 201.7

Interest rate caps and floors:

Unrealized gains ..... $ - 138.6 - - - 138.6
Unrealized (losses) .. - - - - - -

Total net .......... $ - 138.6 - - - 138.6

Futures contracts:

Unrealized gains ..... $ 3.9 0.5 - - - 4.4
Unrealized (losses) .. (0.5) (30.0) - - - (30.5)

Total net .......... $ 3.4 (29.5) - - - (26.1)

Options on futures contracts:

Unrealized gains ..... $ 0.5 4.7 - - - 5.2
Unrealized (losses) .. (0.8) (11.0) - - - (11.8)

Total net .......... $ (0.3) (6.3) - - - (6.6)

Security options:

Unrealized gains ..... $ 1.4 - - - - 1.4
Unrealized (losses) .. (12.8) - - - - (12.8)

Total net .......... $ (11.4) - - - - (11.4)

Forward foreign exchange contracts:

Unrealized (losses) .. $ - - - (0.6) - (0.6)

Grand total
unrealized gains ... $ 6.3 180.0 74.9 - 92.8 354.0
Grand total
unrealized (losses) (14.8) (41.0) - (0.6) (2.0) (58.4)

Grand total net ...... $ (8.5) 139.0 74.9 (0.6) 90.8 295.6

18
</TABLE>
<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 fair value of the assets and liabilities
hedged.

The corporation has entered into mandatory and standby forward contracts,
including options on forward contracts, to reduce interest rate risk on
certain mortgage loans held for sale and other commitments. The contracts
provide for the delivery of securities at a specified future date, at a
specified price or yield. At March 31, 1998, the corporation had forward
contracts and options on forward contracts totaling $35.2 billion, all of
which mature within 180 days. Gains and losses on forward contracts and
options on forward contracts are included in the determination of market
value of mortgages held for sale.

At March 31, 1998, the corporation's trading account portfolio included futures
of $428 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 March 31, 1998,
the corporation had eight pending acquisitions with total assets of
approximately $2.0 billion, and it is anticipated that cash of approximately
$86.4 million and approximately 11.0 million common shares will be issued upon
completion of these acquisitions.

These pending acquisitions, subject to approval by regulatory agencies, are
expected to be completed by the third quarter of 1998 and are not significant
to the financial statements of the corporation, either individually or in the
aggregate.

Transactions completed in the three months ended March 31, 1998 include:

In millions, except share amounts Common
Cash Shares Method of
Date Assets Paid Issued Accounting
<S> <C> <C> <C> <C> <C>
Finvercon S.A. Compania
Financiera
Argentina (F) ................ January 7 $ 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

$ 171.6 $ 42.7 136,950

</TABLE>

(B) - Banking Group; (F) - Norwest Financial

<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Management's discussion and analysis should be read together with the financial
statements submitted under Item 1 of Part I and with Norwest Corporation's 1997
Annual Report on Form 10-K.

EARNINGS PERFORMANCE

The corporation reported net income of $367.7 million for the quarter ended
March 31, 1998, a 14.2 percent increase over the $321.9 million earned in
the first quarter of 1997. Diluted earnings per share were 47 cents, compared
with 42 cents in the first quarter of 1997, an increase of 11.9 percent.
Basic earnings per share increased 11.6 percent to 48 cents per common share
in the first quarter of 1998 from 43 cents a year earlier. Return on
realized common equity was 22.9 percent and return on assets was 1.69 percent
for the first quarter of 1998, compared with 22.7 percent and 1.63 percent,
respectively, in the first quarter of 1997.

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 quarters ended March 31, 1998 and 1997 and are discussed in the following
paragraphs.

Banking Group

The Banking Group reported first quarter 1998 earnings of $263.9 million, a
16.5 percent increase over the first quarter 1997 earnings of $226.5 million.
The increased earnings in the first quarter of 1998 reflected a 7.5 percent
increase in tax-equivalent net interest income to $720.5 million, primarily
due to a 27 basis point increase in net interest margin. The Banking Group's
provision for credit losses for the quarter ended March 31, 1998 decreased
$7.6 million to $27.0 million from a year earlier, as average loans and leases
rose $1.2 billion, or 3.8 percent, while net charge-offs as a percent of
average loans and leases decreased to 47 basis points from 53 basis points
in 1997. Non-interest income rose $89.4 million to $477.1 million for the
first three months of 1998, due primarily to growth in trust and investment
fees and commissions, service charges, credit card, insurance and venture
capital gains. Non-interest expenses of $779.3 million for the first three
months of 1998 were $103.0 million higher when compared with the first three
months of 1997, reflecting additional operating expenses due to acquisitions
and writedowns of miscellaneous assets.

Mortgage Banking

Mortgage Banking earned $51.9 million in the current quarter compared with
$33.8 million in the first quarter of 1997. See Note 10 to the unaudited
consolidated financial statements for additional information about mortgage
banking revenues for the quarters ended March 31, 1998 and 1997.

The growth in Mortgage Banking earnings over the first quarter of 1997
primarily reflects an 86.1 percent increase in origination and other closing
fees associated with the low mortgage interest rate environment. Mortgage
loan originations amounted to $20.9 billion during the first quarter of 1998,
compared with $10.4 billion in the first quarter of 1997. The percentage of
fundings attributed to mortgage loan refinancings was approximately 57
percent in the first quarter of 1998, compared with 23 percent for the same
period of 1997. The unclosed pipeline of mortgage

<PAGE>

loans was $19.6 billion at March 31, 1998, compared with $10.6 billion at
December 31, 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 and net interest margin.
The growth in origination and closing fees and net interest income was
partially offset by lower servicing revenue, reflecting increased
amortization of capitalized mortgage servicing rights due to the low interest
rate enviroment. Amortization of capitalized mortgage servicing rights was
$153.1 million in the first quarter of 1998, compared with $85.2 million
in the first quarter of 1997.

The servicing portfolio had a weighted average coupon of 7.69 percent and
7.75 percent at March 31, 1998 and December 31, 1997, respectively.

Norwest Financial

Norwest Financial (including Norwest Financial Services, Inc. and Island
Finance) reported earnings of $51.9 million in the first quarter of 1998,
compared with $61.6 million in the first quarter of 1997. The decrease in
earnings reflects increases in the provision for credit losses associated
with increased charge-off activity and higher operating expenses related to
acquisitions. Norwest Financial's net charge-offs in the first quarter of
1998 were $93.4 million, or 4.27 percent of average loans, compared with
$67.0 million, or 3.66 percent of average loans, in the same period in 1997.
The increase in net charge-offs was primarily attributed to increased
bankruptcies in Puerto Rico and the acquisition of Fidelity Acceptance
Corporation in August 1997. Tax-equivalent net interest income increased
to $324.4 million in the first three months of 1998, or 15.9 percent over
the first quarter of 1997, due to a 19.4 percent increase in average finance
receivables. The increase was partially offset by a 20 basis point decrease
in net interest margin during the same period.

Based on higher credit losses in Puerto Rico resulting from increased
bankruptcies, and slower loan receivable growth as prepayments and
competitive pressures are causing industry loan standards and pricing to
fall below levels which management considers prudent, management now
estimates that Norwest Financial's 1998 earnings will be approximately
ten percent lower than the $243 million earned in 1997. Management believes
it is important to maintain financial discipline and is confident of
Norwest Financial's long-term growth prospects. Management expects the
diversity of Norwest's earnings stream will offset this temporary performance
challenge at Norwest Financial.

Statements made in the preceding paragraph are forward looking and are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements address management's present
expectations about future performance and involve inherent risks and
uncertainties. A number of important factors (some of which are beyond the
corporation's control) could cause actual results to differ materially from
those in the forward-looking statements. Those factors include the economic
environment, competition, products and pricing in the geographic and
business areas in which the corporation conducts its operations, prevailing
interest rates, changes in government regulations and policies affecting
financial services companies, credit quality and credit risk management,
acquisitions and integration of acquired businesses.

<PAGE>

CONSOLIDATED INCOME STATEMENT ANALYSIS

Net Interest Income

Consolidated tax-equivalent net interest income was $1,078.7 million in the
first quarter of 1998, compared with $967.2 million in the first quarter of
1997, an increase of 11.5 percent. Growth in tax-equivalent net interest
income over the three months ended March 31, 1997 was primarily due to a
9.0 percent growth in average earning assets, and a 15 basis point increase
in net interest margin. Net interest margin, the ratio of annualized
tax-equivalent net interest income to average earning assets, was 5.77
percent in the first quarter of 1998, compared with 5.62 percent in the
first quarter of 1997. The increase in net interest margin from first
quarter 1997 is primarily due to highter yield on loans and loans held
for sale and improved funding costs related to interest-bearing deposits.

The following table summarizes changes in tax-equivalent net interest income
between the first quarter of 1998 and the first and fourth quarters of 1997.

Changes in Tax-Equivalent Net Interest Income*
In millions 1Q 98 1Q 98
from from
1Q 97 4Q 97
Increase (decrease) due to:
Change in earning asset volume ............ $ 83.6 33.0
Change in volume of interest-free funds ... 18.6 0.4
Change in net return from
Interest-free funds ...................... 0.3 (3.7)
Interest-bearing funds ................... (4.2) (5.1)
Change in earning asset mix ............... 5.4 (13.1)
Change in funding mix ..................... 7.8 2.3
Change in tax-equivalent net interest income. $111.5 13.8

* Net interest income is presented on a tax-equivalent basis utilizing a
federal incremental tax rate of 35 percent in each period presented.

Provision for Credit Losses

The corporation provided $124.5 million for credit losses in the first
quarter of 1998, compared with $109.0 million in the same period a year ago.
Net credit losses totaled $131.4 million and $112.0 million for the three
months ended March 31, 1998 and 1997, respectively. As a percentage of
average loans and leases, net credit losses were 126 basis points in the
first quarter of 1998, compared with 114 basis points in the same period in
1997. The increase in net credit losses for the first quarter of 1998 is
principally due to higher levels of consumer credit charge-offs.

Non-interest Income

Consolidated non-interest income was $810.3 million in the first quarter of
1998, an increase of $125.7 million, or 18.3 percent, from the first quarter
of 1997, due to continued growth in virtually all categories, including
mortgage banking, trust and investment fees and commissions, service charges,
credit card, insurance and venture capital gains. The increases in trust
and investment fees and commissions and in service charges reflect overall
increases in business activity, due to acquisitions and marketing efforts.

Mortgage banking revenues in the first quarter of 1998 were $252.7 million,
compared with $221.8 million in the first quarter of 1997. The increase for
the quarter is attributed to increases in origination and other closing fees

<PAGE>

partially offset by increased amortization of capitalized mortgage servicing
rights related to the low mortgage interest rate environment. See Note 10 to
the unaudited consolidated financial statements for additional information
about mortgage banking revenues for the quarters ended March 31, 1998 and
1997. Mortgage banking revenue derived from sales of servicing rights is
largely dependent upon portfolio characteristics and prevailing market
conditions.

Net venture capital gains were $58.7 million for the three months ended
March 31, 1998, compared with $19.2 million for the same period 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 $163.7 million at March 31,
1998.

Non-interest Expenses

Consolidated non-interest expenses were $1,210.0 million in the first
quarter of 1998, compared with $1,041.5 million in the same period of 1997,
an increase of 16.2 percent. The increase in non-interest expense over the
first quarter of 1997 is principally due to increased operating expenses
associated with acquisitions. Other non-interest expense increased due to
writedowns of other miscellaneous assets.

CONSOLIDATED BALANCE SHEET ANALYSIS

At March 31, 1998, earning assets were $82.7 billion, an increase of 10.3
percent from $75.0 billion at December 31, 1997. This increase was primarily
due to a $4.5 billion increase in investment securities and a $3.2 billion
increase in mortgages held for sale.

At March 31, 1998, interest-bearing liabilities totaled $65.9 billion, a 7.2
percent increase from $61.5 billion at December 31, 1997. The increase was
primarily due to increases in short-term borrowings.

Credit Quality

The major categories of loans and leases are included in Note 5 to the
unaudited consolidated financial statements for the quarter ended March 31,
1998.

At March 31, 1998, the allowance for credit losses totaled $1,236.3 million,
or 2.93 percent of loans and leases outstanding. Comparable amounts were
$1,062.6 million, or 2.63 percent, at March 31, 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 312.1 percent at March 31, 1998, compared with 334.2 percent at
March 31, 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

<PAGE>

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
and leases at March 31, 1998 and December 31, 1997 was:

March 31, December 31,
1998 1997

Commercial .................... $ 219.2 207.7
Consumer ...................... 427.3 422.6
Real estate ................... 172.2 168.1
Foreign ....................... 49.6 42.0
Unallocated ................... 368.0 393.5
Total ...................... $1,236.3 1,233.9

Non-performing assets and 90-day past due loans and leases totaled $396.1
million, or 0.41 percent of total assets, at March 31, 1998, compared with
$317.9 million, or 0.38 percent, at March 31, 1997, and $382.3 million,
or 0.43 percent, at December 31, 1997.

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 three months
of 1998 was approximately 50.1 percent in the Midwest, 28.0 percent in the
Western/Rocky Mountain region and 21.9 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 country.
The five states with the highest originations year to date in 1998 are:
California $3,650.0 million; Minnesota $1,539.7 million; Illinois $1,204.9
million; Texas $1,012.2 million; and Washington $909.1 million. The
originations in these five states comprise approximately 39.8 percent of
total originations during the first quarter of 1998. The five largest
states in the servicing portfolio include: California $40.7 billion;
Minnesota $12.2 billion; Texas $10.8 billion; New York $9.7 billion; and
New Jersey $9.3 billion. These five states comprise approximately 39.2
percent of the total servicing portfolio at March 31, 1998.

Norwest Financial engages in consumer finance activities in 48 states,
Guam, Saipan, all ten Canadian provinces, the Caribbean and Latin America.
The five states with the largest consumer finance receivables are:
California $666.4 million; Illinois $280.8 million; Ohio $248.7 million;
Florida $236.9 million; and Texas $225.0 million. Consumer finance
receivables in Puerto Rico and Canada totaled $1.4 billion and $626.7
million, respectively, at March 31, 1998. The consumer finance receivables of
Puerto Rico, Canada, and the five largest states listed above comprise
approximately 44.3 percent of total consumer finance receivables at March 31,
1998.

With respect to credit card receivables, approximately 64.9 percent of the
portfolio is within the corporation's 16-state banking region. Minnesota
represents approximately 12.6 percent of the total outstanding credit card
portfolio. No other state accounts for more than 10 percent of the portfolio.

<PAGE>

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:

March 31, December 31, March 31,
1998 1997 1997

Banking Group 30 days past due ....... 1.79% 2.02 1.93
Norwest Financial 60 days past due ... 3.46 3.58 3.76
Credit card 30 days past due ......... 4.06 3.92 4.12

Capital and Liquidity Management

The corporation's regulatory capital and ratios are summarized as follows:

March 31, December 31,
1998 1997

Tier 1 capital......................... $ 5,681 5,525
Total capital.......................... 6,883 6,692
Total risk adjusted assets............. 63,696 60,774
Tier 1 capital ratio................... 8.92% 9.09
Total capital to risk adjusted assets.. 10.81% 11.01
Leverage ratio......................... 6.58% 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 34.4 percent for the first quarter of 1998 compared with 34.9 percent
for the first quarter of 1997.

On April 28, 1998, the corporation's board of directors authorized the
corporation to repurchase up to an additional ten million shares of the
corporation's common stock, bringing the total common stock purchase
authority to approximately 11.5 million shares. 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.

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 of more of combined revenue, income or assets.

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.

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

<TABLE>
<CAPTION>
Quarter Ended March 31,
In millions, except ratios 1998 1997
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balance Expense* Rates* Balance Expense* Rates*
Assets

<S> <C> <C> <C> <C> <C> <C>
Money market investments .... $ 846 $ 11.7 5.59% $1,620 $ 21.1 5.29%
Trading account securities .. 686 10.8 6.46 272 4.7 6.98

Investment securities available
for sale
U.S. Treasury & federal
agencies ................ 2,351 34.3 5.87 2,067 32.1 6.22
State, municipal and
housing tax-exempt ...... 1,491 30.6 8.71 1,012 21.6 8.85
Mortgage-backed ........... 13,706 247.0 7.41 14,263 264.3 7.46
Other ..................... 981 12.1 6.30 1,130 14.5 6.85
Total investment
securities available
for sale ............. 18,529 324.0 7.26 18,472 332.5 7.37

Other securities held for
investment .............. 744 6.6 3.56 720 7.0 3.89

Total investment
securities .............. 19,273 330.6 7.11 19,192 339.5 7.23

Loans held for sale ......... 3,606 70.5 7.93 2,924 56.2 7.79
Mortgages held for sale ..... 9,020 155.8 6.91 5,485 97.7 7.13
Loans and leases
(net of unearned discount)
Commercial ................ 13,948 315.9 9.18 13,311 297.2 9.05
Real estate ............... 15,058 364.5 9.73 14,972 357.8 9.61
Consumer .................. 13,238 506.8 15.39 11,663 442.1 15.25
Total loans and leases .. 42,244 1,187.2 11.32 39,946 1,097.1 11.07
Allowance for credit losses (1,240) (1,058)
Net loans and leases .... 41,004 38,888

Total earning assets
(before the allowance for
credit losses) .......... 75,675 1,766.6 9.48 69,439 1,616.3 9.42

Cash and due from banks ..... 3,942 3,646
Other assets ................ 9,667 8,150
Total assets .............. $88,044 $80,177

(Continued on page 27)

</TABLE>

<PAGE>

Norwest Corporation and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(Continued from page 26)

Quarter Ended March 31,
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

<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits. $16,699 $ - -% $13,086 $ - -%

Interest-bearing deposits
Savings and NOW accounts .. 10,256 40.0 1.58 9,444 38.7 1.66
Money market accounts ..... 11,555 94.9 3.33 10,467 89.7 3.48
Savings certificates ...... 12,880 173.7 5.47 13,200 176.4 5.42
Certificates of deposit
and other time .......... 3,904 53.7 5.58 3,412 47.6 5.65
Foreign time .............. 404 4.8 4.80 439 3.7 3.44
Total interest-bearing
deposits .............. 38,999 367.1 3.82 36,962 356.1 3.91
Federal funds purchased
repurchase agreements ..... 3,751 46.4 5.02 2,485 29.9 4.88
Short-term borrowings ....... 5,534 77.9 5.71 5,256 69.2 5.34
Long-term debt .............. 12,457 196.5 6.31 12,719 193.9 6.10

Total interest-bearing
liabilities ........... 60,741 687.9 4.58 57,422 649.1 4.57

Other liabilities ........... 3,564 3,550
Preferred stock ............. 187 188
Common stockholders' equity . 6,853 5,931
Total liabilities and
stockholders' equity .. $88,044 $80,177

Net interest income
(tax-equivalent basis) .. $1,078.7 $ 967.2

Yield spread .............. 4.90 4.85

Net interest margin ....... 5.77 5.62

Interest-bearing liabilities
to earning assets ....... 80.27 82.69

* Interest income and yields are calculated on a tax-equivalent basis
utilizing a federal incremental tax rate of 35% in each period presented.
Non-accrual loans and the related negative income effect have been included
in the calculation of yields.

</TABLE>
27

<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.

<PAGE>

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits.

The following exhibits are filed or incorporated by reference in
response to Item 601 of Regulation S-K.

Exhibit
No. Exhibit Page No.

3(a). Restated Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(b) of 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 and Exhibit 3
to the corporation's Current Report on Form 8-K dated
June 3, 1997).

3(b). 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).

3(c). 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(d). 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(e). 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(f). 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(g). 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).

<PAGE>

Exhibit
No. Exhibit Page No.

3(h). By-Laws (incorporated by reference to Exhibit 3 to the
corporation's Current Report on Form 8-K dated October 10,
1997).

4(a). See 3(a) through 3(h) of this Item.

4(b). Rights Agreement dated as of November 22, 1988 between
the corporation and Citibank, N.A. (incorporated by
reference to Exhibit 1 to the corporation's Form 8-A
dated 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) Copies of instruments with respect to long-term debt will be
furnished to the Commission upon request.

11. Computation of Earnings Per Share. 32

12(a). Computation of Ratio of Earnings to Fixed Charges. 33

12(b). Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends. 34

27. Financial Data Schedule (filed electronically)

Stockholders may obtain a copy of any Exhibit, none of which are contained
herein, upon payment of a reasonable fee, by writing Norwest Corporation,
Office of the Secretary, Norwest Center, Sixth and Marquette, Minneapolis,
Minnesota 55479-1026.

(b) Reports on Form 8-K.

The corporation filed a Current Report on Form 8-K, dated January 22,
1998, reporting consolidated operating results of the corporation for
the year ended December 31, 1997.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

NORWEST CORPORATION

May 13, 1998 By /s/ Michael A. Graf
Michael A. Graf

Senior Vice President
and Controller
(Chief Accounting Officer)

<PAGE>

Exhibit 11.

Norwest Corporation and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)

In thousands, except per common share amounts Quarter Ended
March 31,
1998 1997
BASIC:
Weighted average number of common shares
outstanding ..................................... 757,706 745,575

Net income ....................................... $367,706 321,861
Less dividends accrued on preferred stock ........ (4,441) (4,441)
Net income, as adjusted .......................... $363,265 317,420

Net income per common share ...................... $ 0.48 0.43

DILUTED:
Weighted average number of common shares
outstanding ..................................... 757,706 745,575
Net effect of assumed exercise of stock options
based on treasury stock method using average
market price .................................... 14,262 10,280
Assumed conversion of 6 3/4% convertible
subordinated debentures due 2003 as of the
beginning of the period ......................... 35 35
772,003 755,890

Net income ....................................... $367,706 321,861
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 .......................... $363,266 317,421

Net income per common share....................... $ 0.47 0.42

32
<PAGE>

Exhibit 12(a).

Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)

Quarter Ended
March 31, Year Ended December 31,
In thousands 1998 1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $ 542,436 492,379 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
interest 542,436 492,379 2,049,704 1,781,495 1,422,702 1,180,532 879,690
Fixed charges 706,604 665,686 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total income for
computation $1,249,040 1,158,065 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 charges $ 881,935 801,948 3,337,488 3,142,024 2,770,005 1,957,224 1,513,317

Computation of Fixed
Charges:
Net rental
expense (a) $ 55,925 49,641 211,191 205,409 166,591 149,462 128,573
Portion of rentals
deemed
representative
of interest $ 18,642 16,547 70,397 68,470 55,530 49,821 42,858
Interest:
Interest on
deposits 367,105 356,117 1,446,682 1,324,918 1,156,300 863,357 852,309
Interest on
federal funds
and other
short-term
borrowings 124,382 99,089 439,492 454,013 515,646 290,211 238,046
Interest on
long-term debt 196,475 193,933 777,873 838,032 776,015 436,591 352,658
Capitalized
interest - - 22 14 112 69 65
Total interest 687,962 649,139 2,664,069 2,616,977 2,448,073 1,590,228 1,443,078
Total fixed
charges $ 706,604 665,686 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total fixed
charges excluding
interest on
deposits $ 339,499 309,569 1,287,784 1,360,529 1,347,303 776,692 633,627
Ratio of Income
to Fixed Charges:
Excluding
interest on
deposits 2.60x 2.59 2.59 2.31 2.06 2.52 2.39
Including
interest on
deposits 1.77x 1.74 1.75 1.66 1.57 1.72 1.59

(a) Includes equipment rentals.

</TABLE>
33
<PAGE>

Exhibit 12(b).
Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Unaudited)

<TABLE>
<CAPTION>
Quarter Ended
March 31, Year Ended December 31,
In thousands 1998 1997 1997 1996 1995 1994 1993

<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Income:
Income before
income taxes $ 542,436 492,379 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
interest 542,436 492,379 2,049,704 1,781,495 1,422,702 1,180,532 879,690
Fixed charges 706,604 665,686 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total income for
computation $1,249,040 1,158,065 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 charges $ 881,935 801,948 3,337,488 3,142,024 2,770,005 1,957,224 1,513,317

Computation of Fixed
Charges:
Net rental
expense (a) $ 55,925 49,641 211,191 205,409 166,591 149,462 128,573
Portion of rentals
deemed
representative
of interest $ 18,642 16,547 70,397 68,470 55,530 49,821 42,858
Interest:
Interest on
deposits 367,105 356,117 1,446,682 1,324,918 1,156,300 863,357 852,309
Interest on
federal funds
and other
short-term
borrowings 124,382 99,089 439,492 454,013 515,646 290,211 238,046
Interest on
long-term debt 196,475 193,933 777,873 838,032 776,015 436,591 352,658
Capitalized
interest - - 22 14 112 69 65
Total interest 687,962 649,139 2,664,069 2,616,977 2,448,073 1,590,228 1,443,078
Total fixed
charges $ 706,604 665,686 2,734,466 2,685,447 2,503,603 1,640,049 1,485,936
Total fixed
charges excluding
interest on
deposits $ 339,499 309,569 1,287,784 1,360,529 1,347,303 776,692 633,627
Preferred stock
dividends 4,441 4,441 17,763 17,763 41,220 27,827 31,170
Pre-tax earnings
needed to meet
preferred stock
dividend
requirements 6,551 6,793 26,950 27,424 61,349 41,044 44,728
Total combined fixed
charges and preferred
stock dividends $ 713,155 672,479 2,761,416 2,712,871 2,564,952 1,681,093 1,530,664
Total combined
fixed charges
and preferred stock
dividends excluding
interest on
deposits $ 346,050 316,362 1,314,734 1,387,953 1,408,652 817,736 678,355

(a) Includes equipment rentals.

</TABLE>
34
<PAGE>

Exhibit 12(b).
(continued)

Norwest Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Unaudited)

Quarter Ended
March 31, Year Ended December 31,
<S> <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 2.55x 2.53 2.54 2.26 1.97 2.39 2.23
Including interest on
deposits 1.75x 1.72 1.73 1.65 1.53 1.68 1.55

</TABLE>

35
<PAGE>

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1998 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,674
<INT-BEARING-DEPOSITS> 82
<FED-FUNDS-SOLD> 372
<TRADING-ASSETS> 1,412
<INVESTMENTS-HELD-FOR-SALE> 22,473
<INVESTMENTS-CARRYING> 746
<INVESTMENTS-MARKET> 773
<LOANS> 42,162
<ALLOWANCE> 1,236
<TOTAL-ASSETS> 96,094
<DEPOSITS> 57,833
<SHORT-TERM> 14,234
<LIABILITIES-OTHER> 4,434
<LONG-TERM> 12,487
0
186
<COMMON> 1,282
<OTHER-SE> 5,638
<TOTAL-LIABILITIES-AND-EQUITY> 96,094
<INTEREST-LOAN> 1,185
<INTEREST-INVEST> 320
<INTEREST-OTHER> 250
<INTEREST-TOTAL> 1,755
<INTEREST-DEPOSIT> 367
<INTEREST-EXPENSE> 688
<INTEREST-INCOME-NET> 1,067
<LOAN-LOSSES> 125
<SECURITIES-GAINS> 8
<EXPENSE-OTHER> 1,210
<INCOME-PRETAX> 542
<INCOME-PRE-EXTRAORDINARY> 368
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368
<EPS-PRIMARY> .48
<EPS-DILUTED> .47
<YIELD-ACTUAL> 5.77
<LOANS-NON> 209
<LOANS-PAST> 137
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,234
<CHARGE-OFFS> 173
<RECOVERIES> 42
<ALLOWANCE-CLOSE> 1,236
<ALLOWANCE-DOMESTIC> 818
<ALLOWANCE-FOREIGN> 50
<ALLOWANCE-UNALLOCATED> 368

</TABLE>