SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) JUNE 8, 1998
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NORWEST CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 1-2979 41-0449260
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(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
NORWEST CENTER, SIXTH AND MARQUETTE, MINNEAPOLIS, MINNESOTA 55479
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(Address of principal executive offices)
1-612-667-1234
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
<PAGE>
ITEMS 1 - 4. Not Applicable.
ITEM 5. OTHER EVENTS.
A final version of the presentation to analysts, dated June 8, 1998,
regarding the proposed merger between Norwest Corporation ("Norwest") and Wells
Fargo & Company ("Wells Fargo"), is attached as Exhibit 99.1 hereto and is
incorporated by reference herein. For information regarding the proposed merger,
reference is made to the Current Report on Form 8-K filed by Norwest on June 7,
1998.
The exhibit to this current report on Form 8-K contains forward looking
statements with respect to the financial conditions, results of operations and
businesses of each of Norwest and Wells Fargo and, assuming the consummation of
the merger, a combined Norwest/Wells Fargo including statements relating to: (a)
the cost savings and accretion to reported earnings that will be realized from
the merger; (b) the impact on revenues of the merger, and (c) the restructuring
charges expected to be incurred in connection with the merger. These forward
looking statements involve certain risks and uncertainties. Factors that may
cause actual results to differ materially from those contemplated by such
forward looking statements include, among others, the following possibilities:
(1) expected cost savings from the merger cannot be fully realized or realized
within this expected timeframe; (2) revenues following the merger are lower than
expected; (3) competitive pressure among financial services companies increases
significantly; (4) costs or difficulties related to the integration of the
businesses of Norwest and Wells Fargo are greater than expected; (5) changes in
the interest rate environment reduce interest margins; (6) general economic
conditions, either internationally or nationally or in the states in which the
combined company will be doing business, are less favorable than expected; or
(7) legislation or regulatory requirements or changes adversely affect the
businesses in which the combined company would be engaged.
Such forward-looking statements speak only as of the date on which such
statements were made, and Norwest undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which any such statement is made to reflect the occurrence of unanticipated
events.
ITEM 7. EXHIBITS.
(99.1) Final Analyst Presentation Materials, dated June 8, 1998.
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<PAGE>
SIGNATURE
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
By /s/ JOHN T. THORNTON
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Name: John T. Thornton
Title: Chief Financial Officer
Date: June 8, 1998
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Norwest + Wells Fargo
"Creating ... The Premier Financial Services
Company in the Western Hemisphere"
June 8, 1998
Forward Looking Statements
This presentation contains forward looking statements with respect to the
financial conditions, results of operations and businesses of Norwest and Wells
Fargo and, assuming the consummation of the merger, a combined Norwest/Wells
Fargo including statements relating to: (a) the cost savings and accretion to
reported earnings that will be realized from the merger; (b) the impact on
revenues of the merger, and (c) the restructuring charges expected to be
incurred in connection with the merger. These forward looking statements involve
certain risks and uncertainties. Factors that may cause actual results to differ
materially from those contemplated by such forward looking statements include,
among others, the following possibilities: (1) expected cost savings from the
merger cannot be fully realized or realized within this expected timeframe; (2)
revenues following the merger are lower than expected; (3) competitive pressure
among financial services companies increases significantly; (4) costs or
difficulties related to the integration of the businesses of Norwest and Wells
Fargo are greater than expected; (5) changes in the interest rate environment
reduce interest margins; (6) general economic conditions, either internationally
or nationally or in the states in which the combined company will be doing
business, are less favorable than expected; or (7) legislation or regulatory
requirements or changes adversely affect the businesses in which the combined
company would be engaged.
<PAGE>
The New Company
o Name Wells Fargo
o Headquarters
Corporate San Francisco
Midwest Minneapolis
o Management
Board of Directors 50/50 Split
Chairman Paul Hazen
President & CEO Dick Kovacevich
Transaction Overview
o Terms
o Fixed exchange ratio
o 10 Norwest Shares for each Wells Fargo share
o 19.9% option to each party
o Structure
o Negotiated Merger of Equals
o Tax Free Exchange
o Pooling of Interests
<PAGE>
<TABLE>
<CAPTION>
COMBINED COMPANY STATISTICS
DOLLARS IN MILLIONS
============================================================================================================================
WELLS
NORWEST % FARGO % COMBINED RANK
------------- ------- ----------- ------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
MARKET CAPITALIZATION $ 30,068 49.3% $ 30,980 50.7 $ 61,047 4
(Share Price @ 6/05/98)
BALANCE SHEET (3/31/98)
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Assets $ 96,094 50.3% $ 94,820 49.7% $ 190,914 7
Loans 42,162 39.5% 64,504 60.5% 106,666
Deposits 57,833 44.4% 72,316 55.6% 130,149
Common Equity 6,920 35.6% 12,528 64.4% 19,448
Tangible Common Equity 5,825 60.8% 3,757 39.2% 9,582
REVENUE (3/31/98 YTD) $ 1,889 50.4% $ 1,856 49.6% $ 3,745
NET INCOME (3/31/98 YTD) $ 368 53.9% $ 315 46.1% $ 683
KEY RATIOS (3/31/98)
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Return on Assets 1.69% 1.34% 1.51% 8
Net Interest Margin 5.77% 6.01% 5.89% 1
Return on Realized Common Equity 22.9% 10.1% 14.5% 22
Equity/Assets 7.39% 13.50% 10.43% 1
</TABLE>
<PAGE>
Transaction Overview
o Substantial EPS accretion to all shareholders
o Synergies $650 mm expense reduction
o Merger costs $950 mm
o Targeted close Second Half 1998
o Due diligence Completed
o Approvals Required Regulatory
Wells Fargo Shareholders
Norwest Shareholders
"A Compelling Partnership"
Norwest + Wells Fargo
"Leveraging
Complementary
Strengths"
<PAGE>
Leveraging Complementary Strengths
o Norwest
o Outstanding sales and service culture
o Strong revenue generation
o Wells Fargo
o Alternative delivery leader
o Outstanding expense efficiency
The New Wells Fargo
o Major cross-sell focus
o Spanning 9 of 10 highest growth states
o Broader business and product line
o Leading market share in complementary businesses
<PAGE>
The New Wells Fargo
o #1, 2, or 3 Bank Deposit Share in 73 MSA's
o #1 Mortgage Originator and Servicer
o #1 Bank Commercial Real Estate Lender
o #1 Bank-Owned Insurance Agency
o #1 Agricultural Bank
o #2 Small Business Lender
o #4 Bank Mutual Fund Manager
o #4 Middle Market Lender
o #1 Internet Bank
o Premier Consumer Finance Company
Complementary Retail Banking
Wells Fargo Focus Norwest Focus
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o Western o Midwest, Rocky Mountains, Southwest
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o Larger, higher density markets o Smaller, lower density markets
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o Optimized branch/in-store o High performance, community bank
configuration "store-based" distribution
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o Leadership in alternative o Superior sales culture and customer
delivery systems customer service focused on
cross-sell
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<PAGE>
Flexibility to Change
o Each has superior yet distinct approaches to delivering
community banking services
o Both methods will be employed depending on each
market's characteristics
o Result: diverse distribution capabilities to service
the broadest range of customers and markets
Premier Banking Franchise in the West and Midwest
[Map]
<PAGE>
Premier Banking Franchise in the West and Midwest
<TABLE>
<CAPTION>
Pro Forma Combined Pro Forma Combined
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State Rank in Deposits Market Rank in Deposits Market
State share(%) State Share(%)
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<S> <C> <C> <C> <C> <C> <C> <C>
California #2 $54.2 14 South #1 $2.1 20
Dakota
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Texas 4 13.8 7 Wisconsin 5 1.9 3
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Minnesota 2 12.6 22 Nebraska 3 1.9 7
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Arizona 3 8.2 23 Indiana 6 1.7 3
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Colorado 1 7.6 19 Montana 1 1.3 16
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Nevada 1 5.0 32 North 2 1.1 12
Dakota
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Iowa 1 4.1 10 Utah 8 0.5 3
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Oregon 2 3.0 11 Idaho 4 0.5 5
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New Mexico 2 2.4 18 Wyoming 4 0.4 7
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Washington 4 2.2 4 Illinois 69 0.4 --
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Ohio 193 0.1 --
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<FN>
($ in billions)
Note: Share and rankings based on June 30, 1997 commercial banking and thrift
deposits adjusted for subsequent acquisitions and divestitures.
Source: SNL Securities.
</FN>
</TABLE>
Presence in Growth Markets
o Combined franchise in 9 of 10 fastest growing states
o Benefits from projected demographic trends
o Accelerating population growth in California
o 25% of projected U.S. population growth
o Sustained growth in Texas, Mountain, and Western States
o A further 25% of projected U.S. population growth
o Leveraging of national mortgage banking and consumer finance presence
<PAGE>
Strong Presence in Attractive Markets
Total
Deposits Pro Forma
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Top 15 MSA Markets for Norwest/Wells Fargo ($bn) Share Rank
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1 San Francisco $19 43% #1
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2 Los Angeles-Long Beach 9 12 2
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3 Minneapolis-St. Paul 9 26 2
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4 Phoenix-Mesa 6 24 3
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5 Denver 5 27 1
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6 Oakland 4 18 2
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7 Houston 4 11 3
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8 Orange County 4 20 2
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9 San Jose 4 20 2
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10 Las Vegas 3 30 2
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11 San Diego 3 21 2
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12 Sacramento 2 26 2
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13 Portland-Vancouver 2 13 3
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14 Riverside-San Bernardino 2 17 2
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15 Des Moines 2 30 1
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Note: Share and rankings are based on June 30, 1997 commercial banking deposits
adjusted for subsequent acquisitions and divestitures.
Source: SNL Securities.
<PAGE>
Leading Retail Banking Market Share
MSA Market Deposits Percent of
Share Rank # of MSAs ($ bn) Total Deposits Cumulative
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1 19 $33 26% 26%
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2 33 51 41 67
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3 21 16 13 80
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Other 33 11 9 89
Non-MSA 14 11 100
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Total $125 100%
The combined entity will rank among the top three in market share in 73 MSAs
comprising 80% of its deposit base.
Note: Share and rankings are based on June 30, 1997 commercial bank deposits
adjusted for subsequent acquisitions and divestitures.
Source: SNL Securities.
<PAGE>
Leadership in Retail Distribution
o #1 in total stores (5,777)
o #3 Bank network (2,800 stores)
o #1 Retail mortgage network (741 stores)
o Largest mortgage banking originator (1 out of 15 mortgages)
o Largest mortgage banking servicer (2,000,000 customers)
o #1 Premier, U.S. Consumer finance company (1,425 stores)
o #3 ATM network in U.S. (6,500 ATMs)
o #1 Internet bank for consumers (460,000 customers)
o #1 Supermarket bank (900 stores)
o Leader in telephone banking functionality
o Leading NAFTA bank
o #1 Mexican border
o #1 Canadian border
Broad Product Capability
Consumer/Small Business
Wells Fargo Norwest
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Auto Leasing Auto Lending
Credit Cards Credit Cards
Mutual Funds Consumer Finance
Private Banking Mortgage Banking
Small Business Lending Mutual Funds
Trust Private Banking
Brokerage Small Business Lending
Student Lending
Insurance
Trust
Brokerage
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Market Leadership Positions Spanning Entire Spectrum of Consumer and Wholesale
Products.
<PAGE>
Broad Product Capability
Wholesale/Corporate
Wells Fargo Norwest
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Leasing Leasing
Agricultural Lending Agricultural Lending
Capital Markets Asset-Based Lending
Commercial Real Estate Capital Markets
Corporate Lending Commercial Real Estate
Merchant Processing Corporate Lending
Private Equity/Venture Capital Corporate Trust
Merchant Processing
Private Equity/Venture Capital
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Market Leadership Positions Spanning Entire Spectrum of Consumer and Wholesale
Products.
Business Line Leadership
Lending U.S. Rank*
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Commercial Real Estate #1
Agricultural #1
Small Business Loans #2
Middle Market Loans #4
* Norwest/Wells Fargo combined
<PAGE>
Business Line Leadership
($ in Billions)
Wells
Norwest Fargo Combined Rank
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Mortgage Banking
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Servicing $211 -- $211 #1
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Origination $55 -- $55 #1
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ACH Volume $240 $67 $307 #2
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Mutual Funds $21 $25 $46 #4
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Merchant Processing Volume $4 $19 $23 #6
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Credit Card Outstanding $2 $5 $6 #8
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Significant Customer Base
Norwest Wells Fargo Combined
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Retail Banking 3mm 6.1mm 9.1mm households
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Mortgage 2.1mm -- 2.1mm customers
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Consumer Finance 3.2mm -- 3.2mm customers
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Small Business 284k 750k 1.0mm customers
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Middle Market 10k 13k 23k customers
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Large Corporate 1.2k 1.5k 2.7k customers
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<PAGE>
Complementary Expertise: Efficiency
o Wells Fargo's 1998 First Quarter cash efficiency ratio was 52%
o Further opportunities to bring Norwest's expense efficiency closer to
Wells Fargo's average (not included in expense assumptions)
o Norwest's target: efficiency ratio in mid-50's
o Expect to achieve without compromising focus on revenue growth
Complementary Expertise: Revenue Growth
o Norwest's average annual revenue growth of 16% over last 10 years
o Focused on cross-sell to grow revenue per customer
o Substantial opportunities to bring Wells Fargo's cross-sell to Norwest's
average (not included in revenue assumptions)
o Wells Fargo's revenue growth for 1998 and beyond projected 6% annually
o Exceeds Wall Street projections
<PAGE>
Low Execution Risk
o Negotiated Merger of Equals
o Realistic Expense Savings Projections
o No revenue enhancements included in model
o Focus on "People As Our Competitive Advantage"
o "Retain & Retrain"
o Deliberate Integration Plan: "Will Take the Time to Do It Right"
o Year-2000 Conversions on Schedule
People as a Competitive Advantage
o Maximize return on team member capital
o "Retain & Retrain" approach
o Maintain alignment between interests of shareholders and teammates
o Enhance ability to outperform the competition
o Facilitate alternative job placement in combined businesses and
locations
o Maximize return on shareholder capital
o Synergies over three years -- build sustainable long term value, with
appropriate considerations for Year-2000
o Retain talented teammates
<PAGE>
Common Disciplines
o Consistent shareholder-value focus
o Strong credit culture
o Disciplined approach to acquisitions
Pro Forma Financial Review
<PAGE>
Pro Forma Financial Results
($ in millions) 1999E 2000E 2001E
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Norwest Net Income to Common* $1,748 $1,967 $2,210
Wells Fargo Net Income to
Common** 1,632 1,913 2,130
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Subtotal $3,380 $3,880 $4,340
After-Tax Synergies 202 288 403
Earnings on Excess Capital*** 176 215 369
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Pro Forma GAAP Net Income $3,758 $4,363 $5,112
Intangibles Amortization 560 550 540
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Pro Forma Cash Net Income $4,318 $4,913 $5,652
* Based on analyst estimates and long term growth rates.
** Based on Wells Fargo Management Plan.
*** Reinvestment of excess capital at 4% after-tax.
Pro Forma Financial Results
1999E 2000E 2001E
Pro Forma Norwest
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Cash EPS $2.56 $2.91 $3.35
% Accretion 7.6% 9.4% 12.8%
GAAP EPS $2.23 $2.59 $3.03
% Accretion -- 3.2% 7.4%
Note: Estimates exclude one-time merger related costs.
<PAGE>
Wells Fargo Management Sources of Difference
($ in millions)
1999E 2000E 2001E
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Net income (Analyst Estimates) $1,418 $1,572 $1,725
Increased Revenue 74 121 185
Lower Provision/Credit Losses 50 60 60
First Interstate/Other Expense Saves 60 120 120
Year 2000 Expense Run-Off 30 40 40
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Net Income (Management Forecast) $1,632 $1,913 $2,130
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<PAGE>
Expense Savings
Amount
Source of Savings ($mm) Comments
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Systems $200 o Conversion to one system platform
Operations 120 o Consolidation of operations
Branch Consolidations 175 o Based on states with market place
overlap
General Administration 155 o Elimination of duplicate overhead
--- functions
Total Cost Saves $650
* Expenses excluding intangible amortization.
<PAGE>
Expense Savings Projected in
Recent Major Bank Transactions
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($ in Millions) Cost Saves as
a % of Smaller Pre-Tax
Non-Interest Non-Interest
Merger Partners Expense Base Expense Savings
- --------------- -------------- ---------------
Norwest/Wells Fargo 15% $ 650
Corestates/First Union 46% $ 723
First Interstate/Wells Fargo 37 800
Chase/Chemical 41 1,800
BankAmerica/NationsBank 27% $2,000
First Chicago NBD/Banc One 28 930
First America/National City 31 243
US Bancorp/First Banks 30 340
First Chicago/NBO Bancorp 10 200
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<PAGE>
Opportunities Not Included in Financial Model
o Increase Wells Fargo's current products per
household to Norwest average
o Improve Norwest banking efficiency ratio to
level of Wells Fargo
o Other cross-business integration revenue
opportunities
Merger Costs
Employee Related Expenses $295
Systems/Operations/Customers Conversions 350
Branch Consolidations/Name Change/Signage 185
Investment Bankers/Legal Fees/Travel/Other 120
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Total, Pre-Tax $950
($ in millions)
<PAGE>
Financial Benefits
o First year accretion*
o Immediate on cash basis
o Break-even for GAAP
o $650 mm expense savings over three years
o Significant capital generation
o Improved productivity
o Strong balance sheet
* Excluding non-recurring transition expenses
Conclusion
o Merger of two great companies continuing to build shareholder value
o Highly complementary business mix and skills
o Good deal for both shareholder groups; immediate cash EPS accretion*
o Focus on building long term value
o Conservative financial management and accounting will continue in the
future
o Will take advantage of what each is good at to identify best practices
and use throughout the combined company
* Before one-time transaction costs
