Norwest Corporation
| Company type | Public |
|---|---|
| Industry | Financial services, Banking |
| Predecessor | Northwestern National Bank |
| Founded | 1872 in Minneapolis, Minnesota, United States |
| Fate | Merged with Wells Fargo & Co. in 1998 |
| Headquarters | Minneapolis , United States |
Area served | United States, Canada, Caribbean, Central America |
Key people | John W. Morrison (former CEO), Lloyd P. Johnson (former CEO), Richard M. Kovacevich (former CEO) |
| Products | Consumer finance, Mortgage lending, Retail banking, Insurance, Mutual funds |
Number of employees | Not specified |
| Parent | Wells Fargo & Company (post-1998) |
Norwest Corporation was a financial services and banking firm based in Minneapolis, Minnesota, United States. In 1998, it combined with Wells Fargo & Co. and has operated under the Wells Fargo brand ever since.
Origins
The company’s beginnings date to the establishment of Northwestern National Bank in Minneapolis in 1872. Prominent early figures such as Dorilus Morrison and Henry T. Welles served as the bank’s inaugural presidents. Backed initially by the Northern Pacific Railroad, the bank experienced substantial deposit growth alongside regional expansion—from $50,000 at its founding to $3 million by 1892, reaching beyond $10 million by 1902.
The Great Depression and Banco
While the 1920s economy flourished overall, the farming sector faced hardships, leading to the collapse of many smaller banks—1,500 failures occurred in the Upper Midwest between 1920 and 1929. In early 1929, just prior to the stock market crash, two banking groups emerged in Minnesota’s Twin Cities: Northwest Bancorporation and First Bank Stock Corporation (which later became First Bank System and eventually U.S. Bancorp).
Northwest Bancorporation, nicknamed "Banco," was a cooperative banking alliance centered around Minneapolis’ Northwestern National Bank. Banco acquired shares in member banks and functioned as a mutual support network. Within its first year, it gained 90 member banks; by 1932, this number grew to 139.
During the depths of the Great Depression in 1932, when 700 banks in the Upper Midwest failed, none of Banco’s members collapsed or lost depositor funds due to shared liquidity and capital support. Membership decreased over time—to 83 by 1940 and further down to 70 by 1952—mainly because of mergers and sales.
Banco’s competitive edge lay in its ability to conduct interstate banking under a grandfather clause within the McFadden Act of 1927, permitting operations across state lines before such activities were broadly authorized. This advantage was somewhat curtailed with the advent of bank holding companies in the late 1960s, which classified subsidiary banks in different states as distinct entities.
1970s Developments
Prior to the 1970s, Banco affiliates operated independently. The decade marked a transition towards centralized systemwide coordination encompassing planning, marketing, data processing, funds management, and syndicated lending. By the end of the decade, Banco comprised 85 affiliates spanning seven states: Minnesota, Wisconsin, Iowa, Nebraska, South Dakota, North Dakota, and Montana. Its total assets reached $11 billion, ranking Banco as the twentieth largest banking institution nationwide. Internationally, Northwestern National spearheaded Banco’s global presence through Canadian American Bank with branches in Winnipeg, London, Nassau, and Luxembourg.
1980s Challenges and Transformation into Norwest
Banco encountered significant difficulties in the early 1980s following CEO Richard H. Vaughan’s accidental death in 1979. Chester Lind acted as interim CEO until John W. Morrison assumed chairman and CEO roles in October 1981.
Morrison consolidated Banco’s loosely affiliated banks into a conventional bank holding company framework. In 1982, affiliates were grouped into eight regions overseen by corporate vice-chairmen. The following year, Northwest Bancorporation rebranded as Norwest Corporation to signify its evolution toward diversified financial services beyond traditional banking. This repositioning included acquiring Dial Corporation in September 1982 for $252 million—a major consumer finance company with over $1 billion in loans across more than 460 offices nationwide—renamed Norwest Financial Services Inc. in 1983.
A major setback occurred during Thanksgiving weekend of 1982 when Norwest’s Minneapolis headquarters was destroyed by fire. While plans were underway for a new Norwest Center tower (which opened in 1988), corporate personnel temporarily operated from multiple dispersed locations.
The farm crisis of the early ’80s severely affected Norwest due to its $1.2 billion agricultural loan portfolio (7% of total loans) alongside an equivalent amount of high-risk foreign loans. Nonperforming loans increased fivefold from 1983 to over $500 million by 1984. Additionally, Norwest Mortgage Inc., then America’s second-largest mortgage holder, suffered nearly $100 million in losses from interest-rate hedging on adjustable-rate mortgages during summer 1984. Net income declined sharply from $125.2 million in 1983 to $69.5 million in 1984.
In response to these challenges, Norwest Mortgage’s head was dismissed in August 1984; parts of its mortgage operations were sold off by early 1985 to refocus solely on mortgage origination. CEO Morrison resigned amid weak performance; Lloyd P. Johnson took over and appointed Richard M. Kovacevich from Citicorp as vice-chairman and CEO of Norwest’s banking division in early 1986 (later promoted to president and COO).
Under this new leadership team, Norwest reduced bureaucracy and cut agricultural loans to $400 million and foreign loans to $10 million by early 1989. Nonperforming loans dropped to $150 million by December 1988 through stricter credit policies.
Kovacevich standardized operations across all Norwest banks, enhanced marketing initiatives, expanded service offerings, and pursued acquisitions to reinforce key markets—such as purchasing Toy National Bank ($145 million assets) in Sioux City in 1986—while downsizing rural branches.
As interstate banking regulations relaxed toward the end of the decade, Norwest extended beyond its original seven-state footprint by acquiring a small Phoenix-area bank in Arizona in 1988.
By decade’s close, Norwest had fully rebounded from earlier setbacks and ranked among the nation’s most profitable regional banks—the thirtieth largest—with assets exceeding $25 billion and net income totaling $237 million for 1989.
1990s
Throughout the early 1990s, Norwest pursued an aggressive acquisition strategy, expanding its presence to 291 branches across 11 states such as Indiana, Illinois, and Wyoming. Significant acquisitions during this period included First Interstate of Wisconsin in 1990 for $173 million and First Minnesota Savings Bank. The most substantial transaction occurred in 1992 with the $420 million stock acquisition of United Banks of Colorado Inc., which added $6.3 billion in assets to Norwest's portfolio. Additionally, Norwest Financial broadened its reach by acquiring Trans Canada Credit, recognized as Canada’s second-largest consumer finance company. By 1992, Norwest’s total assets had more than doubled since 1988, reaching $44.56 billion. That year also marked a leadership change as Johnson passed the CEO position to Kovacevich.
Norwest’s expansion continued into New Mexico and Texas through the $490 million purchase of First United Bank Group Inc., which held assets totaling $3.8 billion. In the same year, Norwest secured its position as Arizona’s fourth-largest bank by acquiring Citicorp’s operations there. Between 1994 and mid-1995, Norwest completed 25 acquisitions, with a strong focus on Texas, establishing itself as the most active bank holding company in terms of acquisitions. In 1995, Norwest Mortgage emerged as the nation’s top home mortgage originator by acquiring Directors Mortgage Loan Corp., which brought a residential portfolio valued at $13.1 billion.
In 1996, Norwest Mortgage reinforced its market leadership as the largest home-mortgage servicer by purchasing Prudential Home Mortgage for $600 million, gaining access to a high-quality loan portfolio and advanced technological capabilities. That same year, Norwest Financial expanded into Puerto Rico by acquiring ITT Island Finance, adding $1 billion in assets. By the mid-1990s, Norwest Financial accounted for approximately 25% of corporate earnings and Norwest Mortgage contributed another 12%, while traditional community banking—operating across 16 states—represented around 37%. At the close of 1995, total assets had reached $72.13 billion, positioning Norwest as the 13th largest bank holding company nationwide with net income approaching $1 billion and an annual growth rate averaging 25% over eight years.
Under Kovacevich’s strategic direction, the company focused on relationship banking targeting smaller clients and small businesses to enhance cross-selling opportunities for products such as auto loans, mortgages, insurance policies, and mutual funds. This strategy necessitated maintaining a broad branch network staffed by knowledgeable bankers—a contrast to industry trends favoring ATMs and online platforms that limited cross-selling potential. Norwest’s integrated business model effectively combined its retail banking operations with finance company and mortgage divisions while deliberately avoiding investment banking activities common among competitors, thereby strengthening its competitive edge in retail financial services.
Merger with Wells Fargo
By 1994, Norwest ranked as the 11th largest bank in the United States with assets totaling $88.54 billion and a branch system spanning 16 states including key markets like Minnesota, Texas, Colorado, and Iowa. After entering Texas in 1993 through the acquisition of 33 banks, Norwest established a significant $10 billion asset base in that state. Its mortgage division operated on a national scale while Norwest Financial provided services across 49 states plus Guam, Saipan, Canada, the Caribbean, and Central America. Net income reached $1.35 billion by that year.
In June 1998, Norwest announced a stock-swap merger valued at $34 billion with San Francisco-based Wells Fargo & Company. Although Norwest remained the surviving legal entity post-merger, the combined organization adopted the Wells Fargo name and relocated its headquarters to San Francisco. The merged company maintained Norwest’s corporate framework and SEC filings prior to 1998 but embraced Wells Fargo’s historic legacy dating back to 1852 along with its ticker symbol WFC. Former Wells Fargo shareholders owned 52.5% of the new entity while Norwest shareholders held 47.5%. Paul Hazen, previously chairman and CEO of Wells Fargo, became chairman of the merged institution; Richard M. Kovacevich assumed roles as president and CEO. The merger was finalized in November 1998.
Weatherball
In 1949, a 157-foot weatherball was mounted atop the Minneapolis headquarters of Northwestern National Bank, created by designer Douglas Leigh. This distinctive landmark served as a branding and promotional symbol until it was taken down following the 1982 Minneapolis Thanksgiving Day Fire. Afterwards, it was stored at the Minnesota State Fairgrounds but was never reassembled and ultimately dismantled in 2000.
The Weatherball’s jingle captured its function as a community weather signal:
When the Weatherball glows red, warmer days lie ahead.
When the Weatherball shines white, colder times are in sight.
When the Weatherball wears green, stable weather’s foreseen.
Colors flashing night and day, signal rain or snow on the way.