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Norwest Company – Loans


Former American banking and monetary providers firm

Norwest Company
Norwest Financial institution
Previously Northwest Bancorporation (1929–1983)
Kind Public
Business Monetary providers
Based January 1929 (93 years in the past) (1929-01) as Northwest Bancorporation
Defunct November 2, 1998 (23 years in the past) (1998-11-02)
Destiny Acquired Wells Fargo in 1998 and assumed the Wells Fargo title
Successor Wells Fargo
Headquarters ,

United States

Space served

Minnesota, Wisconsin, Iowa, Nebraska, South Dakota, North Dakota, Montana, Arizona, Indiana, Illinois, Wyoming, Colorado, New Mexico, Nevada, and Texas

Key individuals

Richard M. Kovacevich
Web site archived official web site

Norwest Company was a banking and monetary providers firm elegant in Minneapolis, Minnesota, United States. In 1998, it merged with Wells Fargo & Co. and since that point has operated beneath the Wells Fargo title.[1]

Historical past[edit]

Early formation[edit]

The earliest roots of the corporate are with the Northwestern Nationwide Financial institution established in Minneapolis in 1872. Early Minneapolis enterprise and political leaders Dorilus Morrison and Henry T. Welles had been the financial institution’s first two presidents. Initially the financial institution was closely supported by the Northern Pacific Railroad, however as the town and area grew the financial institution’s deposits and property grew in form. Between 1872 and 1892 the financial institution’s deposits elevated from $50,000 to $3 million. Between 1892 and 1902 deposits greater than tripled to greater than $10 million.[2]

Nice Despair and Banco[edit]

Throughout the typically affluent Twenties, the nation’s agricultural sector didn’t share within the good occasions. Many smaller banks that had overextended credit score to farmers bumped into critical bother. Within the Higher Midwest alone, 1,500 banks grew to become bancrupt from 1920 to 1929. It was with this backdrop that in early 1929, simply months earlier than the inventory market crash, two banking associations had been fashioned within the Twin Cities of Minnesota: Northwest Bancorporation and the First Financial institution Inventory Company (later often called First Financial institution System after which U.S. Bancorp).

Northwest, recognised extra merely as “Banco”, was a banking cooperative anchored by Northwestern Nationwide Financial institution in Minneapolis. Banco acquired inventory within the affiliated banks and served as a mutual safety affiliation. One other 90 banks joined Banco in its first 12 months of operation, and by 1932 there have been 139 associates.

Throughout the Nice Despair, quite a few extra banks failed. In 1932, 700 Higher Midwestern banks failed. Not one of the Banco members went beneath – and no depositor misplaced any financial savings – as a result of the group was capable of transfer liquidity across the system and in some circumstances, inject new capital into troubled banks. The variety of members did decline, nevertheless, as some items within the group merged whereas others had been offered off. Membership fell to 83 by 1940, then to 70 by 1952.

Certainly one of Banco’s strategic benefits in the long term was its means to function in a number of states. The McFadden Act of 1927 had prohibited banks from working branches throughout state strains. Banco was one in every of three main banks (the others being First Financial institution System and First Interstate Bancorp) that was allowed to conduct interstate banking beneath a grandfather clause within the 1927 act. This benefit was tempered considerably by the emergence of financial institution holding corporations within the late Nineteen Sixties, however beneath the holding firm association, a subsidiary financial institution in a single state was a separate entity from a subsidiary financial institution in one other state.

Nineteen Seventies[edit]

Previous to the Nineteen Seventies, Banco’s affiliated members had been largely autonomous. However throughout that decade, Banco started adopting a extra unified construction by way of systemwide planning, advertising, knowledge processing, funds administration, and loan syndication. By the top of the last decade, Banco consisted of 85 associates in seven states: Minnesota, Wisconsin, Iowa, Nebraska, South Dakota, North Dakota, and Montana. Whole property had reached $11 billion, rating Banco because the twentieth largest banking firm in the USA. Banco was additionally energetic on the worldwide banking scene via its lead financial institution, Northwestern Nationwide, which managed Canadian American Financial institution, a service provider financial institution with places of work in Winnipeg, London, Nassau, and Luxembourg.

Eighties, and restructuring into Norwest[edit]

Banco was beset by a collection of main setbacks within the early Eighties. The troubles really started in late 1979 when Richard H. Vaughan, the president and CEO, was electrocuted by a wire that had fallen throughout a storm. This set off a administration disaster. Chester Lind stepped in as a caretaker chief till a extra everlasting successor may very well be discovered. In October 1981 John W. Morrison was named chairman and CEO.

The brand new chief started centralizing the nonetheless loosely knit confederation right into a extra conventional financial institution holding firm. In 1982 the 80-odd associates started to be grouped into eight areas reporting to a company vice-chairman. Plans had been additionally laid to unify all of the associates and Banco itself beneath a brand new title. The change occurred in 1983, when Northwest Bancorporation grew to become Norwest Company.[3] Tellingly, the brand new title didn’t embrace ‘financial institution’ or some variant thereof as a result of Morrison aimed to reposition Norwest as a diversified monetary providers firm. He’d taken steps on this course a 12 months earlier, when he engineered the acquisition of Dial Company (to not be confused with the patron merchandise firm of the identical title) in September 1982 for $252 million. Based mostly in Des Moines, Iowa, Dial had greater than 460 places of work in 38 states providing client loans for all the things from vehicles to sailboats. It was thought of one of many prime client finance corporations within the nation and had a $1 billion client loan operation.[4] Dial was renamed Norwest Monetary Providers Inc. in 1983.[3]

Whereas these restructuring initiatives had been being carried out, the financial institution suffered one other blow through the 1982 Thanksgiving weekend when a Thanksgiving Day fireplace destroyed the downtown Minneapolis headquarters. Norwest instantly introduced plans to construct a contemporary 774-foot tower, the Norwest Middle, as its alternative. Nonetheless, till the Norwest Middle opened in 1988, company workers was scattered round 26 completely different websites within the metropolis, resulting in quite a few logistical difficulties.

In the meantime, with the farm financial system going right into a tailspin beginning in 1981, Norwest started feeling the results of its heavy farm loan portfolio–$1.2 billion, or seven % of its total loan portfolio. Norwest had one other $1.2 billion in loans in overseas markets, which prompted extra issues within the early Eighties as Norwest, like most U.S. banks, had made many unhealthy loans abroad. Consequently, Norwest noticed its non-performing loans enhance 500 % from 1983 to 1984, to greater than $500 million. Additional bother got here from the financial institution’s mortgage unit, Norwest Mortgage Inc., which had been shortly constructed into the second largest holder of mortgages in the USA. In the summertime of 1984, Norwest Mortgage misplaced practically $100 million from an unsuccessful effort to hedge its mounting interest-rate threat on adjustable-rate mortgages. The loan losses and the mortgage debacle led to a drop in web revenue from $125.2 million in 1983 to $69.5 million in 1984.

In August 1984 the top of Norwest Mortgage was fired due to the hedging losses. By early 1995 substantial parts of Norwest Mortgage had been divested, together with operations concerned in servicing mortgages and shopping for mortgages from different lenders for resale. The unit now centered strictly on originating mortgages. Within the wake of Norwest’s poor efficiency in 1984, Morrison resigned and was changed by Lloyd P. Johnson, former vice-chairman of Safety Pacific Corp. Johnson quickly introduced on board Richard M. Kovacevich, who was employed away from Citicorp to turn out to be vice-chairman and CEO of Norwest’s banking group in early 1986 (he was named to the extra posts of president and COO of Norwest Corp. in January 1989). The brand new managers started slashing away at Norwest’s bloated paperwork. They drastically curtailed the financial institution’s agricultural and worldwide loan portfolios, the previous being decreased to $400 million by early 1989, the latter to $10 million. By December 1988, the nonperforming loan whole stood at simply $150 million. To assist stop future calamities, Norwest instituted tighter lending standards.

On the banking aspect, Kovacevich continued the method of standardizing the working strategies of the varied Norwest banks, elevated advertising efforts, and expanded the providers provided. He additionally started in search of acquisitions, notably aiming to bolster Norwest’s presence in key cities; in 1986, for instance, Norwest acquired Toy Nationwide Financial institution of Sioux Metropolis, Iowa, which had property of $145 million. On the identical time got here the pruning of some rural operations, together with eight banks in southern Minnesota and 7 branches in South Dakota. Later within the decade, alternatives to broaden exterior the group’s conventional seven-state banking area started to come up because the boundaries to interstate banking started to be dismantled. In 1988 Norwest entered quickly rising Arizona for the primary time via the acquisition of a small financial institution close to Phoenix. Norwest ended the Eighties absolutely recovered from its early-decade travails and rating as one of many nation’s most worthwhile regional banking corporations and the thirtieth largest financial institution total, with property in extra of $25 billion. Internet revenue stood at $237 million for 1989.

Nineteen Nineties[edit]

Acquisitions continued within the early Nineteen Nineties. By early 1991 Norwest had 291 financial institution branches in 11 states, having moved into Indiana, Illinois, and Wyoming. In April 1990 Norwest paid $173 million for Sheboygan-based First Interstate of Wisconsin (previously Citizen’s Financial institution of Sheboygan), a $2 billion concern. Additionally acquired was a troubled “financial savings and loan” in Norwest’s domestic state, First Minnesota Financial savings Financial institution. The biggest buy but got here in 1992 when Norwest paid about $420 million in inventory for United Banks of Colorado Inc., a financial institution elegant in Denver with whole property of $6.3 billion. Norwest Monetary grew via acquisition as good, with the 1992 buy of Trans Canada Credit score, the second largest client finance agency in Canada. By the top of 1992 Norwest had whole property of $44.56 billion, greater than double the determine of 1988. In the beginning of 1993, Johnson handed over his CEO place to Kovacevich.

Growth of the banking operation into New Mexico and Texas got here in 1993 via the acquisition of First United Financial institution Group Inc. of Albuquerque for about $490 million. First United had property of $3.8 billion. Additionally in 1993, Norwest grew to become the 4th-largest financial institution in Arizona by buying the Arizona operations of Citicorp (previously United Financial institution of Arizona and Nice Western Financial institution & Belief).[5] Between January 1994 and June 1995, Norwest made an extra 25 acquisitions, together with a number of in Texas, making it probably the most energetic acquirer amongst financial institution holding corporations. In 1995 Norwest Mortgage grew to become the nation’s main originator of domestic mortgages following the acquisition of Administrators Mortgage Mortgage Corp., a Riverside, California-based lender with a residential mortgage portfolio of $13.1 billion.

The next 12 months Norwest Mortgage grew to become the most important home-mortgage servicer as good via the $600 million buy of the majority of the mortgage unit of the Prudential Insurance coverage Co. of America, in any other case often called Prudential Residence Mortgage. Prudential’s high-quality loan portfolio and know-how was key to this acquisition.

In the meantime, in Could 1996, Norwest Monetary accomplished the acquisition of $1 billion-asset ITT Island Finance, a client finance firm elegant in San Juan, Puerto Rico. About one-quarter of Norwest Corp.’s earnings had been generated by Norwest Monetary within the mid-Nineteen Nineties, with one other 12 % coming from Norwest Mortgage. The standard group banking operations—which prolonged to 16 states by 1995—counted for less than about 37 % of the whole. By year-end 1995, Norwest had whole property of $72.13 billion, making it the thirteenth largest financial institution holding firm within the nation. Internet revenue, which was nearing the $1 billion mark, had grown at a compounded annual price of 25 % over the earlier eight years.

One of many keys to Norwest’s success within the retail banking sector following the arrival of Kovacevich was the emphasis on relationship banking. His focus was on smaller prospects, checking account depositors and small companies, and he aimed to construct relationships with them that will result in cross-selling of different monetary providers – an auto loan, a mortgage, insurance coverage, a mutual fund, and so forth. To take action required the upkeep of an in depth community of financial institution branches staffed by well-trained tellers and bankers.

This ran counter to the mid-Nineteen Nineties development within the trade away from costly department banking and towards impersonal ATMs and Web banking – the latter after all making cross-selling troublesome. It was additionally on this cross-selling that the principle items of Norwest – the retail financial institution, the finance firm, and the mortgage firm – match and labored collectively. One other key to Norwest’s success was its give attention to these three key areas; though it did produce other operations, comparable to a profitable enterprise capital unit, the financial institution was not transferring into such areas as funding banking, in contrast to quite a few different banks, and it was not making an attempt to compete with giant New York Metropolis securities corporations.

Acquisition of Wells Fargo[edit]

By the top of 1994, Norwest had turn out to be the eleventh largest financial institution in the USA with whole property of $88.54 billion. With financial institution branches in 16 states, Norwest had the biggest contiguous financial institution franchise within the nation. Its strongest markets had been in Minnesota, Texas, Colorado, and Iowa. Having entered the Texas market just a few years earlier, Norwest had constructed up a $10 billion presence there by shopping for 33 financial institution and belief outfits. Norwest Mortgage was nationwide in scope, whereas Norwest Monetary coated 49 states, together with extra operations in Guam, Saipan, Canada, the Caribbean, and Central America. Internet revenue had reached $1.35 billion by 1994. Norwest had grown into this place of energy with out finishing any of the blockbuster mergers that shook up the banking trade within the Nineteen Nineties, however in June 1998 the financial institution introduced the pending merger with San Francisco-based Wells Fargo & Firm in a inventory swap value $34 billion.[1] Though Norwest was the nominal survivor, the merged firm took the better-known Wells Fargo title and moved its headquarters to San Francisco. The corporate retains Norwest’s pre-1998 inventory value historical past, and all pre-1998 SEC filings are beneath Norwest, not Wells Fargo. Though former Wells Fargo stockholders held 52.5 % of the newly mixed firm and former Norwest stockholders held 47.5 %, Paul Hazen, chairman and chief govt officer of Wells Fargo, turn out to be chairman of the brand new group whereas Richard M. Kovacevich, chairman and chief govt officer of Norwest, turn out to be president and chief govt officer of the brand new group. The merger was accomplished in November 1998.[6]


In 1949, Northwestern Nationwide Financial institution constructed a 157-foot excessive weatherball, designed by Douglas Leigh, atop its headquarters constructing in downtown Minneapolis.[7] The weatherball grew to become such an icon that the financial institution even integrated it into its promoting and brand for a time. After the Minneapolis Thanksgiving Day Fireplace and earlier than the constructing was demolished, the weatherball was dismantled and saved on the Minnesota State Fairgrounds. The weatherball was by no means restored and, in 2000, it was scrapped.[8]

When the Weatherball is glowing pink, hotter climate’s simply forward.
When the Weatherball is shining white, colder climate is in sight.
When the Weatherball is sporting inexperienced, no climate modifications are foreseen.


  1. ^ ab“Wells Fargo and Norwest to Merge”. PR Newswire (Press launch). June 8, 1998. Retrieved Could 19, 2016.
  2. ^Keir, Terry (September 6, 2012). “North Western Nationwide Financial institution, a hundred and fortieth Anniversary”. Wells Fargo. Archived from the unique on September 14, 2015.
  3. ^ abDougherty, Philip H. (April 8, 1983). “Promoting; Altering The Picture Of A Financial institution”. New York Instances.
  4. ^Noble, Kenneth B. (September 17, 1981). “Dial Corp. in Accord on Merger”. The New York Instances. ISSN 0362-4331. Retrieved January 23, 2016.
  5. ^Quint, Michael (February 4, 1993). “Norwest Buying Citibank-Arizona”. The New York Instances. ISSN 0362-4331. Retrieved January 19, 2020.
  6. ^Zuckerman, Sam (November 3, 1998). “Wells, Norwest Deal Performed / Merger creates Seventh-largest U.S. financial institution”. San Francisco Chronicle.
  7. ^Croman, John (2007). “I’ve Been Questioning: The Weatherball”. KARE 11 Information. Retrieved September 27, 2008.[dead link]
  8. ^Schaack, Megan (February 23, 2007). “Guided by Historical past: Weatherball”. Wells Fargo. Archived from the unique on October 19, 2015.

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