Printer Friendly

NORWEST CORPORATION REPORTS RECORD QUARTERLY AND SIX MONTH EARNINGS

    QUARTERLY HIGHLIGHTS:
    -- Record quarterly earnings, up 26.5 percent from prior year
    -- Record quarterly earnings per share, up 26.8 percent from prior
        year
    -- Record return on common equity of 20.8 percent
    -- Record return on assets of 1.41 percent
    -- Net interest margin of 5.65 percent, up 41 basis points from
        prior year
                 (in millions, except per share amounts)
                             Second Quarter          Six Months
                            1993       1992       1993      1992
                                    Pct. Chg.             Pct. Chg.(a)
    Net Income             $161.1       26.5     $311.3       28.8
    Net Income Per
     Common Share            0.52       26.8       1.01       29.5
    Return on Common Equity  20.8 pct.  13.7       20.6 pct.  17.7
    Return on Assets         1.41 pct.  18.5       1.38 pct.  21.1
    Net Interest Margin      5.65 pct.   7.8       5.71 pct.   8.6
    Non-Performing Assets  $298.1      (23.9)    $298.1      (23.9)
    (a) Comparisons are before the reduction of net income for the cumulative effect of a 1992 change in accounting for postretirement medical benefits.
    MINNEAPOLIS, July 15 /PRNewswire/ -- Norwest Corporation (NYSE: NOB) today reported record net income of $161.1 million for the quarter ended June 30, 1993, a 26.5 percent increase over the $127.4 million earned in the second quarter of 1992.  Net income per common share was a record 52 cents, compared with 41 cents in the second quarter of 1992, an increase of 26.8 percent.  Return on common equity was a record 20.8 percent and return on assets was a record 1.41 percent for the second quarter of 1993, compared with 18.3 percent and 1.19 percent, respectively, in the second quarter of 1992.
    For the first six months of 1993, net income was a record $311.3 million, or $1.01 per common share, an increase of 28.8 percent and 29.5 percent, respectively, over the $241.8 million or 78 cents per common share earned in the first six months of 1992.  Return on common equity was 20.6 percent and return on assets was 1.38 percent for the first six months of 1993, compared with 17.5 percent and 1.14 percent, respectively, for the same period a year ago.
    The 1992 second quarter and six months' results have been restated for the 100 percent stock dividend distributed on June 28, 1993 and include Lincoln Financial Corporation, acquired on February 9, 1993, in a pooling of interests transaction.  The 1992 six months' results, for comparative purposes, do not include a one-time special charge in 1992 of $76.0 million, or 26 cents per common share, related to Norwest's early adoption of Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions (FAS-106).
    "Norwest continues to generate record levels of earnings and earnings per share with all business units performing at, or above, expectations", said Richard M. Kovacevich, Norwest's president and chief executive officer.  "Norwest Financial's results remain strong, with earnings up 22.9 percent over the second quarter of last year.  The Banking Group's earnings were up 16.2 percent over 1992's second quarter, with South Dakota, Nebraska, Iowa, North Dakota and Montana/Wyoming realizing returns on assets in excess of 1.40 percent and Colorado in excess of 1.35 percent.
    "Mortgage banking earnings of $23.0 million were up $12.2 million from the second quarter of 1992.  The current quarter mortgage banking earnings were positively impacted by a $61.8 million gain on sale of $2.9 billion of servicing, which we were obligated to sell under a long- term contract.  Nevertheless, net servicing retained during the quarter was in excess of $4 billion, increasing our total servicing portfolio to over $30 billion.  Mortgage originations continued to be strong at more than $8.5 billion in the quarter, an increase of $3.9 billion from the second quarter of 1992 and $3.6 billion above the first quarter of 1993.
    "During the quarter we elected to cap the maximum amortizable life of goodwill at 15 years which is the current maximum life allowed by the Office of the Comptroller of the Currency.  Additionally, we changed the amortization method for credit card premiums to an accelerated method that more closely relates to expected account attrition as compared with the straight-line amortization method previously used for such premiums. We also increased our amortization charges for purchased mortgage servicing rights as a result of reviewing the portfolio on a segment basis as compared to reviewing it on a total portfolio basis. Additional amortization charges of $30.9 million were reflected in the quarter as a result of these changes.  The quarter also included charges of $28.7 million for excess facilities and other asset writedowns. These actions continued to enhance our already strong financial position.
    "Non-performing assets declined $22.0 million in the current quarter to $298.1 million at June 30, 1993.  Non-performing assets now represent 1.21 percent of loans, leases and other real estate owned.  The allowance for credit losses, at $743.9 million, represents 329.7 percent of non-performing loans at June 30, 1993."
    Norwest's net interest margin was 5.65 percent for the second quarter of 1993, compared with 5.24 percent in the second quarter of 1992 and 5.77 percent in the first quarter of 1993.  The increase in net interest margin from the second quarter of 1992 was primarily due to lower funding costs and the repurchase of securitized credit card receivables, partially offset by lower yields on earning assets.  The decline in net interest margin of 12 basis points from the first quarter of 1993 was primarily due to lower yields on earning assets.  Average loans, leases, student and mortgage loans held for sale increased 20.5 percent over the second quarter of 1992 and 4.4 percent over the first quarter of 1993.
    Consolidated tax-equivalent net interest income in the second quarter of 1993 was $591.0 million, compared with $507.9 million in the second quarter of 1992, an increase of 16.3 percent, and 0.5 percent above the $587.6 million earned in the first quarter of 1993.  The increase from the second quarter of 1992 is due to a 7.8 percent increase in average earning assets and a 41 basis point increase in net interest margin.
    Norwest provided $39.4 million for credit losses in the second quarter of 1993, or 0.65 percent of average loans and leases.  This compares with $47.6 million, or 0.89 percent, in the same period a year ago and $37.2 million, or 0.63 percent, in the first quarter of 1993. Net credit losses totaled $43.7 million, compared with $49.1 million in the second quarter of 1992 and $37.4 million in the first quarter of 1993.  As a percent of average loans and leases, net credit losses were 0.72 percent in the second quarter of 1993, compared with 0.92 percent in the same period a year ago and 0.63 percent in the first quarter of 1993.  For the first six months of 1993, Norwest's provision amounted to $76.6 million, compared with net charge-offs of $81.1 million.
    Non-interest income increased 38.6 percent over the second quarter of 1992 and 21.7 percent over the first quarter of 1993.  For the first six months of 1993, non-interest income was up $176 million, an increase of 30.7 percent over 1992.  These increases are primarily due to increased mortgage banking revenues, insurance fees, gains on investment securities available for sale and trading account gains.  Excluding gains on sale of investment securities, venture capital gains and gains on sale of investment securities available for sale, non-interest income increased 34.3 percent.  Non-interest expenses increased 24.2 percent over the second quarter of 1992 and 11.0 percent over the first quarter of 1993.  For the first six months of 1993, non-interest expenses were up $239.4 million, an increase of 21.0 percent over 1992.  The increase from the second quarter of 1992 is primarily due to increased salaries and benefits, at both Norwest Mortgage to support the large origination and servicing increases in that business, and at Norwest Financial due to its fourth quarter 1992 acquisition of Trans-Canada Credit Corporation, LTD (Trans-Canada), and due to the $59.6 million of charges recognized in the quarter, as previously discussed, of which $42.4 million were recorded in the Banking Group.
    The Banking Group, after the special charges noted above, reported earnings of $90.9 million in the second quarter of 1993, 16.2 percent above the second quarter, 1992 earnings of $78.2 million and 5.6 percent below the first quarter 1993 earnings of $96.3 million.  For the first six months of 1993, the Banking Group had record net income of $187.2 million, a 29.6 percent increase compared with $144.4 million in 1992.  The increase in Banking Group earnings over the first six months of 1992 reflect a 10.1 percent growth in net interest income and a 62.8 percent decrease in the provision for credit losses, partially offset by a 12.5 percent increase in non-interest expenses, which includes the special charges noted above.  Norwest Venture Capital had a net unrealized appreciation in its investment portfolio of $123.9 million at June 30, 1993.
    Mortgage banking operations earned $23.0 million in the quarter, compared with $10.8 million in the second quarter of 1992 and $10.5 million in the first quarter of 1993.  For the first six months of 1993, mortgage banking operations had net income of $33.5 million, an increase of 28.4 percent over the first six months of 1992.  Servicing increased to in excess of $30 billion at the end of the quarter, an increase of over $4 billion in the quarter and approximately $18 billion from last year.  Originations amounted to approximately $8.6 billion during the quarter and approximately $13.7 billion in the first six months, increases of 83 percent and 56 percent, respectively, over the same periods last year.  Norwest Financial reported record earnings of $47.2 million in the second quarter of 1993, compared with 38.4 million in the same period a year ago and $43.4 million in the first quarter of 1993.  Norwest Financial's net income of $90.6 million for the first six months of 1993 was up 27.1 percent from the first six months of 1992. Net interest income increased 28.4 percent and average finance receivables grew 18.4 percent.  Net interest margin grew 111 basis points, reflecting lower short-term rates and the benefits from refinancing long-term debt at lower interest rates.
    Norwest Corporation is a $47.8 billion company providing banking, insurance, investments and other financial services through 2,116 offices in all 50 states, all 10 Canadian provinces and internationally.
                    NORWEST CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                   (In millions except per share amounts)
                                 Quarter Ended        Six Months Ended
                               6/30/93   6/30/92    6/30/93     6/30/92
    INTEREST INCOME
    Loans and leases            $612.2    $574.3   $1,223.7    $1,158.5
    Investment securities         17.7     235.7       35.3       492.9
    Investment securities
     available for sale          177.4       2.8      370.4         2.8
    Student loans available
     for sale                     23.1        --       43.7          --
    Mortgages held for sale       76.0      67.3      143.4       127.2
    Money market investments       2.3       6.5        5.1        11.8
    Trading account securities    10.5       7.9       13.5        13.4
    Total interest income        919.2     894.5    1,835.1     1,806.6
    INTEREST EXPENSE
    Deposits                     190.4     242.7      381.1       511.0
    Short-term borrowings         59.9      76.2      124.6       152.2
    Long-term debt                85.9      76.7      166.3       153.6
    Total interest expense       336.2     395.6      672.0       816.8
    Net interest income          583.0     498.9    1,163.1       989.8
    Provision for credit losses   39.4      47.6       76.6       111.2
    Net interest income after
     provision for credit
      losses                     543.6     451.3    1,086.5       878.6
    NON-INTEREST INCOME
    Trust                         44.3      38.9       90.5        80.7
    Service charges on
     deposit accounts             46.3      41.3       92.0        82.7
    Mortgage banking             132.1      56.8      209.9       125.0
    Data processing               16.4      17.0       32.3        33.6
    Credit card                   28.5      33.4       57.0        70.6
    Insurance                     64.1      49.6      103.4        88.2
    Other fees and service
     charges                      37.8      33.7       74.8        70.9
    Net investment securities
      gains                         --       5.1         --        10.8
    Net venture capital gains     20.9       2.6        26.6        7.7
    Net investment securities
     available for sale gains      5.8       2.6        28.6        2.6
    Other                         15.2      15.7        34.3        0.6
    Total non-interest income    411.4     296.7       749.4      573.4
    NON-INTEREST EXPENSES
    Salaries and benefits        344.8     266.5       664.4      535.8
    Net occupancy                 43.2      41.0        85.7       80.1
    Equipment rentals,
     depreciation and
      maintenance                 46.3      40.6        88.6       77.7
    Business development          33.6      27.3        63.4       50.1
    Communication                 38.1      33.3        73.4       66.0
    Data Processing               23.4      21.1        48.8       43.6
    FDIC assessment and regulatory
     examination fees             17.8      17.3        35.5       34.7
    Intangible asset amortization 19.5      16.5        31.4       32.7
    Other                        158.6     120.2       287.8      218.9
    Total non-interest expenses  725.3     583.8     1,379.0    1,139.6
    INCOME BEFORE INCOME TAXES
     AND CUMULATIVE EFFECT OF A
     CHANGE IN ACCOUNTING FOR
     POSTRETIREMENT MEDICAL
     BENEFITS                    229.7     164.2       456.9      312.4
    Income tax expense            68.6      36.8       145.6       70.6
    Income before cumulative
     effect of a change in
     accounting for post-
     retirement medical
     benefits                    161.1     127.4       311.3      241.8
    Cumulative effect for years
     ended prior to December 31,
     1992 of a change in accounting
     for postretirement medical
     benefits, net of tax           --        --          --      (76.0)
    NET INCOME                 $ 161.1     127.4       311.3      165.8
    Average common and common
     equivalent shares           293.9     290.5       293.3      290.6
    NET INCOME PER COMMON SHARE
     Primary
     Before cumulative effect of
     a change in accounting for
     postretirement medical
     benefits                    $0.52     $0.41       $1.01      $0.78
    Cumulative effect for years
     ended prior to December 31,
     1992 of a change in accounting
     for postretirement medical
     benefits                       --        --          --      (0.26)
    Net Income                   $0.52     $0.41       $1.01      $0.52
    Fully diluted
    Before cumulative effect of
     a change in accounting for
     postretirement medical
     benefits                    $0.52     $0.41       $1.00      $0.77
    Cumulative effect for years
     ended prior to December 31,
     1992 of a change in accounting
     for postretirement medical
     benefits                       --        --          --      (0.25)
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 15, 1993
Words:2477
Previous Article:K-TEL INTERNATIONAL, INC., COMMON STOCK TO TRADE ON NASDAQ NATIONAL MARKET SYSTEM
Next Article:SEND YOUR TEEN BACK-TO-SCHOOL WITHOUT BREAKING THE BANK
Topics:


Related Articles
NORWEST CORPORATION REPORTS RECORD QUARTERLY AND SIX MONTH EARNINGS
NORWEST CORPORATION REPORTS RECORD ANNUAL AND QUARTERLY EARNINGS
QUARTERLY HIGHLIGHTS: -- Record quarterly earnings, up 20.3 percent from prior year -- Record quarterly earnings per share, up 19.1 percent from...
NORWEST CORPORATION REPORTS RECORD QUARTERLY EARNINGS
NORWEST CORPORATION REPORTS RECORD QUARTERLY EARNINGS
NORWEST REPORTS RECORD QUARTERLY EARNINGS UP 20.8%
NORWEST CORPORATION REPORTS RECORD FIRST QUARTER 1996 EARNINGS
Norwest Reports Record Earnings for Third Quarter
Norwest Tops $1 Billion in Annual Earnings For First Time
Norwest Posts Record Earnings for First Quarter

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters