Zions Bancorporation Reports Earnings Of $0.19 Per Diluted Common Share For Fourth Quarter 2012

28 Jan, 2013, 16:10 ET from Zions Bancorporation

SALT LAKE CITY, Jan. 28, 2013 /PRNewswire/ -- Zions Bancorporation (NASDAQ: ZION) ("Zions" or "the Company") today reported fourth quarter net earnings applicable to common shareholders of $35.6 million or $0.19 per diluted common share, compared to $62.3 million or $0.34 per diluted share for the third quarter of 2012. Net earnings were adversely affected this quarter by a net amount of $73.6 million pretax, or $0.25 per diluted share, consisting of $83.8 million of other-than-temporary impairment ("OTTI") on collateralized debt obligation ("CDO") securities, partially offset by $10.2 million of CDO securities gains.  

Fourth Quarter 2012 Highlights

  • Loans and leases, excluding FDIC-supported loans, increased $463 million to $37.1 billion at December 31, 2012. Average loans and leases, excluding FDIC-supported loans, increased only $100 million, as most of the loan growth occurred near quarter-end.
  • Net loan and lease charge-offs declined 51% and nonperforming lending-related assets declined 11% compared to the third quarter. The continued improvement in credit quality resulted in a fourth quarter negative provision for loan losses of $10 million
  • The OTTI on CDO securities was primarily attributable to significant changes in modeling assumptions related to prepayment speeds and PDs on certain deferring bank holding company trust preferred securities.
  • Tangible common equity per common share improved $0.71 to $20.95 from $20.24 in the third quarter.

"Credit quality and net interest income exceeded our expectations for the fourth quarter of 2012," said Harris H. Simmons, chairman and chief executive officer.  Mr. Simmons continued, "We expect continued reduction in problem loans in the near term, along with relatively stable net interest income, resulting from moderate loan growth offset by some continued net interest margin pressure."  Mr. Simmons concluded, "Over the next several quarters, we expect to execute several capital actions that will significantly reduce interest expense and dividends associated with legacy debt and preferred stock, which should have a favorable effect on our return on equity."

Reclassifications in Statement of Income

For the fourth quarter of 2012, approximately $9 million of credit card interchange fees were reclassified from interest and fees on loans to other service charges, commissions and fees.  In addition, $3 million of income on factored receivables was reclassified from other service charges, commissions and fees to interest and fees on loans. These reclassifications reduced net interest income by approximately $6 million and the net interest margin by 5 basis points for the fourth quarter of 2012. At December 31, 2012, the reclassifications related to factored receivables also increased loan and lease balances by approximately $96 million and the allowance for loan losses by $2 million, with a corresponding reduction in other assets of $94 million. The changes were made primarily to conform with prevailing reporting practices in the banking industry. Current and prior period amounts for all periods presented throughout this press release have been adjusted where appropriate so that amounts are on a comparable basis. There was no change in net earnings for any prior period presented.

Loans

Loans and leases, excluding FDIC-supported loans, increased $463 million on a net basis to $37.1 billion at December 31, 2012, compared to $36.7 billion at September 30, 2012. The increases were predominantly in commercial and industrial and 1-4 family residential loans and were widespread geographically. Decreases of $174 million in commercial owner occupied, construction and land development, and term commercial real estate loans partially offset increases in other loan categories. Most of this increase occurred during the month of December. Average loans and leases, excluding FDIC-supported loans, increased $100 million to $36.7 billion during the fourth quarter of 2012, compared to $36.6 billion during the third quarter of 2012.

Deposits

Average total deposits for the fourth quarter of 2012 increased $1.4 billion, or 3.3%, to $44.9 billion, compared to $43.5 billion for the third quarter of 2012. The increase resulted primarily from a higher level of average noninterest-bearing demand deposits, primarily in nonpersonal accounts, for the fourth quarter of 2012, which were $17.9 billion compared to $16.8 billion for the third quarter of 2012. The ratio of average loans to average deposits was 83% at December 31, 2012, compared to 86% at September 30, 2012.

Debt and Shareholders' Equity

The tangible common equity ratio was 7.09% at December 31, 2012, compared to 7.17% at September 30, 2012. The decline was primarily due to a 5% increase in total tangible assets, driven primarily by a 24% increase in cash-related balances that resulted from increased deposits late in the year. The estimated common equity tier 1 capital ratio was 9.78% at December 31, 2012, compared to 9.86% at September 30, 2012. 

The $89 million after-tax improvement in accumulated other comprehensive income (loss) ("AOCI") during the fourth quarter related primarily to CDO securities and consisted of $52 million due to the reduction of unrealized losses in AOCI from the OTTI discussed subsequently and $37 million due primarily to net fair value increases.

Net Interest Income

Net interest income (adjusted for the previously-discussed reclassifications) decreased 2% to $430 million for the fourth quarter of 2012, compared to $438 million for the third quarter of 2012. Net interest income during the fourth quarter was reduced by approximately $12 million for the discount amortization resulting from subordinated debt conversions and increased by $13 million from additional accretion on acquired FDIC-supported loans. The net interest margin decreased to 3.47% in the fourth quarter of 2012, compared to 3.58% in the third quarter of 2012. The decrease in the margin continues to reflect both increases in cash equivalents and other low-yielding assets, as well as lower yields on resetting or maturing older loans, which is expected to continue. New loan pricing has been relatively stable in recent months. The cost of interest-bearing deposits continued to decline and was 0.25% in the fourth quarter compared to 0.28% in the third quarter.

Noninterest Income

Noninterest income for the fourth quarter of 2012 was $54 million, compared to $125 million for the third quarter of 2012. The decrease was primarily due to the increased OTTI, partially offset by increased gains on CDO securities, as discussed subsequently.  Excluding the incremental pretax effect of these items compared to the third quarter, noninterest income was approximately $128 million in the fourth quarter.

CDO Investment Securities

During the fourth quarter of 2012, the Company recognized credit-related OTTI on CDOs of $83.8 million or $0.28 per diluted share, compared to $2.7 million or $0.01 per diluted share during the third quarter of 2012. The significant increase in OTTI this quarter compared to recent quarters resulted from (1) increasing our assumed probabilities of default ("PDs") for bank holding company issuers of trust preferred securities that are still deferring, and (2) increasing our near-term prepayment assumptions for some banks.  This quarter, the Company observed greater regulatory and restructuring risk than previously modeled in those deferrals that have not yet chosen to or been allowed to resume payments on trust preferred securities. Approximately 61% of the OTTI was attributable solely to the increased PDs. Also this quarter the Company observed a significant increase in prepayments from small bank holding companies, which led us to increase the assumed prepayment rates on issuers with less than $15 billion in assets. The Company also recognized $10.2 million or $0.03 per diluted share in gains during the quarter, compared to $3.0 million or $0.01 per diluted share in the third quarter, from cash principal payments on CDOs previously written down.

The following table stratifies the CDOs into performing tranches without credit impairment and nonperforming tranches at December 31, 2012:

 

December 31, 2012

 

Net unrealized losses recognized in AOCI 1

% of carrying value

to par

(Amounts in millions)

 

No. of

tranches

Par

amount

Amortized

cost

Carrying

value

Weighted average discount rate 2

 

December 31, 2012

 

September 30, 2012

Change

Performing CDOs

Predominantly bank CDOs

28

$

811

$

727

$

538

$

(189)

7.8%

66%

72%

 

(6)%

Insurance-only CDOs

22

454

449

327

(122)

8.6%

72%

72%

 

Other CDOs

6

54

43

38

(5)

9.4%

70%

78%

 

(8)%

Total performing CDOs

56

1,319

1,219

903

(316)

8.1%

68%

72%

 

(4)%

Nonperforming CDOs 3

CDOs credit impaired prior to last 12 months

18

369

251

109

(142)

10.7%

30%

22%

 

8%

CDOs credit impaired during last 12 months

39

732

441

181

(260)

9.6%

25%

14%

 

11%

Total nonperforming CDOs

57

1,101

692

290

(402)

10.0%

26%

19%

 

7%

Total CDOs

113

$

2,420

$

1,911

$

1,193

$

(718)

9.0%

49%

49%

 

1 Amounts presented are pretax. 2 Margin over related LIBOR index. 3 Defined as either deferring current interest ("PIKing") or OTTI; the majority are predominantly bank CDOs.

The net unrealized pretax losses in AOCI improved to $718 million in the fourth quarter of 2012 from $857 million in the third quarter of 2012 due to OTTI and to significant improvement in credit spreads for junior tranches.  

Noninterest Expense

Noninterest expense for the fourth quarter of 2012 was $407 million compared to $395 million for the third quarter of 2012. The increase was due primarily to costs for legal-related matters and increased other real estate expense.

Asset Quality

Net loan and lease charge-offs decreased 51% to $19 million for the fourth quarter of 2012, compared to $38 million for the third quarter of 2012. The $19 million includes $5 million resulting from the new OCC regulatory guidance that requires the write-down of borrowers' loans discharged in a Chapter 7 bankruptcy even when the loans are performing. Gross charge-offs declined 7% compared to the third quarter and have declined 55% compared to the year-ago period. Recoveries increased to $36 million for the fourth quarter of 2012, compared to $20 million for the third quarter of 2012. Net charge-offs declined primarily in commercial- and commercial real estate-related loans.

Nonperforming lending-related assets declined 11% to $746 million at December 31, 2012 from $838 million at September 30, 2012. Nonaccrual loans declined 10% to $647 million at December 31, 2012 (including $6 million resulting from the new OCC guidance) from $719 million at September 30, 2012. The ratio of nonperforming lending-related assets to loans and leases and other real estate owned decreased to 1.96% at December 31, 2012, compared to 2.23% at September 30, 2012.

Classified loans, excluding FDIC-supported loans, decreased approximately 2% to $1.77 billion at December 31, 2012, compared to $1.81 billion at September 30, 2012. Approximately 79% of classified loans were current as to principal and interest for the fourth quarter of 2012, compared to 76% for the third quarter of 2012.

The provision (credit) for loan losses was $(10.4) million for the fourth quarter of 2012, compared to $(1.9) million for the third quarter of 2012. The allowance for credit losses was $1.0 billion, or 2.66% of loans and leases at December 31, 2012, essentially unchanged from $1.0 billion, or 2.77% of loans and leases at September 30, 2012. 

Conference Call

Zions will host a conference call to discuss these fourth quarter results at 5:30 p.m. ET this afternoon (January 28, 2013). Media representatives, analysts and the public are invited to listen to this discussion by calling 253-237-1247 (domestic and international) and entering the passcode 83645774, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at www.zionsbancorporation.com. A replay of the call will be available from approximately 7:30 p.m. ET on Monday, January 28, 2013, until midnight ET on Monday, February 5, 2013, by dialing 404-537-3406 (domestic and international) and entering the same passcode. The webcast of the conference call will also be archived and available for 30 days.

About Zions Bancorporation

Zions Bancorporation is one of the nation's premier financial services companies, consisting of a collection of great banks in select Western markets. Zions operates its banking businesses under local management teams and community identities through approximately 480 offices in 10 Western and Southwestern states:  Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington. The Company is a national leader in Small Business Administration lending and public finance advisory services. In addition, Zions is included in the S&P 500 and NASDAQ Financial 100 indices. Investor information and links to subsidiary banks can be accessed at www.zionsbancorporation.com.

Forward-Looking Information

Statements in this press release that are based on other than historical data or that express the Company's expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management's views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that might cause such differences include, but are not limited to: the Company's ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either internationally, nationally or locally in areas in which the Company conducts its operations, including changes in securities markets and valuations in structured securities and other assets; changes in governmental policies and programs resulting from general economic and financial market conditions; changes in interest and funding rates; continuing consolidation in the financial services industry; new private and governmental legal actions or changes in existing private and governmental legal actions; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company's operations or business (including The Dodd-Frank Wall Street Reform and Consumer Protection Act); and changes in accounting policies, procedures or determinations as may be required by the Financial Accounting Standards Board or other regulatory agencies.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Zions Bancorporation's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and available at the SEC's Internet site (http://www.sec.gov).

Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

 

 

Financial Highlights

(Unaudited)

 

Three Months Ended

(In thousands, except share, per share, and ratio data)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

PER COMMON SHARE

Dividends

$

0.01

$

0.01

$

0.01

$

0.01

$

0.01

Book value per common share 1

26.73

26.05

25.48

25.25

25.02

Tangible common equity per common share 1

20.95

20.24

19.65

19.39

19.14

SELECTED RATIOS

Return on average assets

0.43

%

0.82

%

0.70

%

0.69

%

0.67

%

Return on average common equity

2.91

%

5.21

%

4.71

%

2.21

%

3.84

%

Tangible return on average tangible common equity

4.07

%

7.02

%

6.41

%

3.18

%

5.38

%

Net interest margin

3.47

%

3.58

%

3.56

%

3.69

%

3.81

%

Capital Ratios

Tangible common equity ratio 1

7.09

%

7.17

%

6.91

%

6.89

%

6.77

%

Tangible equity ratio 1

9.15

%

9.32

%

10.35

%

10.24

%

11.33

%

Average equity to average assets

11.03

%

12.22

%

12.37

%

13.31

%

13.27

%

Risk-Based Capital Ratios 1,2

Common equity tier 1 capital

9.78

%

9.86

%

9.78

%

9.71

%

9.57

%

Tier 1 leverage

10.95

%

11.05

%

12.31

%

12.17

%

13.40

%

Tier 1 risk-based capital

13.35

%

13.49

%

15.03

%

14.83

%

16.13

%

Total risk-based capital

15.02

%

15.25

%

16.89

%

16.76

%

18.06

%

Taxable-equivalent net interest income

$

434,252

$

442,595

$

430,967

$

442,340

$

462,457

Weighted average common and common-equivalent shares outstanding

183,456,109

183,382,650

183,136,631

182,963,828

182,823,190

Common shares outstanding 1

184,199,198

184,156,402

184,117,522

184,228,178

184,135,388

1 At period end. 2 Ratios for December 31, 2012 are estimates.

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

ASSETS

Cash and due from banks

$

1,841,907

$

1,060,918

$

1,124,673

$

1,082,186

$

1,224,350

Money market investments:

Interest-bearing deposits

5,978,978

5,519,463

7,887,175

7,629,399

7,020,895

Federal funds sold and security resell agreements

2,775,354

1,960,294

83,529

52,634

102,159

Investment securities:

Held-to-maturity, at adjusted cost (approximate fair value $674,741, $655,768, $715,710, $728,479, and $729,974)

756,909

740,738

773,016

797,149

807,804

Available-for-sale, at fair value

3,091,310

3,127,192

3,167,590

3,223,086

3,230,795

Trading account, at fair value

28,290

13,963

20,539

19,033

40,273

3,876,509

3,881,893

3,961,145

4,039,268

4,078,872

Loans held for sale

251,651

220,240

139,245

184,579

201,590

Loans, net of unearned income and fees:

Loans and leases

37,137,006

36,674,288

36,319,596

35,998,928

36,507,039

FDIC-supported loans

528,241

588,566

642,246

687,126

750,870

37,665,247

37,262,854

36,961,842

36,686,054

37,257,909

Less allowance for loan losses

896,087

927,068

973,443

1,011,786

1,051,685

Loans, net of allowance

36,769,160

36,335,786

35,988,399

35,674,268

36,206,224

Other noninterest-bearing investments

855,462

874,903

867,882

875,037

865,231

Premises and equipment, net

708,882

709,188

714,913

715,815

719,276

Goodwill

1,014,129

1,015,129

1,015,129

1,015,129

1,015,129

Core deposit and other intangibles

50,818

55,034

59,277

63,538

67,830

Other real estate owned

98,151

118,190

144,816

158,592

153,178

Other assets

1,290,917

1,335,963

1,420,829

1,405,862

1,494,375

$

55,511,918

$

53,087,001

$

53,407,012

$

52,896,307

$

53,149,109

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing demand

$

18,469,458

$

17,295,911

$

16,498,248

$

16,185,140

$

16,110,857

Interest-bearing:

Savings and money market

22,896,624

21,970,062

21,945,230

22,220,405

21,775,841

Time

2,962,931

3,107,815

3,211,942

3,326,717

3,413,550

Foreign

1,804,060

1,398,749

1,504,827

1,366,826

1,575,361

46,133,073

43,772,537

43,160,247

43,099,088

42,875,609

Securities sold, not yet purchased

26,735

21,708

104,882

47,404

44,486

Federal funds purchased and security repurchase agreements

320,478

451,214

759,591

486,808

608,098

Other short-term borrowings

5,409

6,608

7,621

19,839

70,273

Long-term debt

2,337,113

2,326,659

2,274,571

2,283,121

1,954,462

Reserve for unfunded lending commitments

106,809

105,850

103,586

98,718

102,422

Other liabilities

533,660

484,170

507,151

474,551

510,531

Total liabilities

49,463,277

47,168,746

46,917,649

46,509,529

46,165,881

Shareholders' equity:

Preferred stock, without par value,

 authorized 4,400,000 shares

1,128,302

1,123,377

1,800,473

1,737,633

2,377,560

Common stock, without par value;  authorized 350,000,000 shares; issued and outstanding 184,199,198, 184,156,402, 184,117,522, 184,228,178, and 184,135,388 shares

4,166,109

4,162,001

4,157,525

4,162,522

4,163,242

Retained earnings

1,203,815

1,170,477

1,110,120

1,060,525

1,036,590

Accumulated other comprehensive income (loss)

(446,157)

(534,738)

(576,147)

(571,567)

(592,084)

Controlling interest shareholders' equity

6,052,069

5,921,117

6,491,971

6,389,113

6,985,308

Noncontrolling interests

(3,428)

(2,862)

(2,608)

(2,335)

(2,080)

Total shareholders' equity

6,048,641

5,918,255

6,489,363

6,386,778

6,983,228

$

55,511,918

$

53,087,001

$

53,407,012

$

52,896,307

$

53,149,109

 

 

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

(In thousands, except per share amounts)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Interest income:

Interest and fees on loans

$

462,002

$

473,162

$

472,926

$

481,794

$

500,001

Interest on money market investments

6,004

5,349

5,099

4,628

4,308

Interest on securities:

Held-to-maturity

8,130

8,337

9,325

8,959

9,106

Available-for-sale

21,971

22,042

25,090

23,158

21,268

Trading account

150

110

148

338

548

Total interest income

498,257

509,000

512,588

518,877

535,231

Interest expense:

Interest on deposits

16,861

19,049

20,823

23,413

26,645

Interest on short-term borrowings

178

193

256

779

1,221

Interest on long-term debt

51,261

51,597

65,165

57,207

49,699

Total interest expense

68,300

70,839

86,244

81,399

77,565

Net interest income

429,957

438,161

426,344

437,478

457,666

Provision for loan losses

(10,401)

(1,889)

10,853

15,664

(1,426)

Net interest income after provision for loan losses

440,358

440,050

415,491

421,814

459,092

Noninterest income:

Service charges and fees on deposit accounts

44,492

44,951

43,426

43,532

42,873

Other service charges, commissions and fees

46,497

44,679

44,197

39,047

42,781

Trust and wealth management income

7,450

6,521

8,057

6,374

6,481

Capital markets and foreign exchange

7,708

6,026

7,342

5,734

8,106

Dividends and other investment income

13,117

11,686

21,542

9,480

7,805

Loan sales and servicing income

10,595

10,695

10,287

8,352

6,058

Fair value and nonhedge derivative loss

(4,778)

(5,820)

(6,784)

(4,400)

(4,677)

Equity securities gains (losses), net

(682)

2,683

107

9,145

1,961

Fixed income securities gains, net

10,259

3,046

5,519

720

1,288

Impairment losses on investment securities:

Impairment losses on investment securities

(120,082)

(3,876)

(24,026)

(18,273)

(12,351)

Noncredit-related losses on securities not

 expected to be sold (recognized in other

 comprehensive income)

36,274

1,140

16,718

8,064

265

Net impairment losses on investment securities

(83,808)

(2,736)

(7,308)

(10,209)

(12,086)

Other

3,309

3,495

2,280

4,045

1,956

Total noninterest income

54,159

125,226

128,665

111,820

102,546

Noninterest expense:

Salaries and employee benefits

220,039

220,223

220,765

224,634

220,290

Occupancy, net

28,226

28,601

28,169

27,951

27,899

Furniture and equipment

27,774

27,122

27,302

26,792

27,036

Other real estate expense

5,266

207

6,440

7,810

14,936

Credit related expense

11,302

13,316

12,415

13,485

14,213

Provision for unfunded lending commitments

959

2,264

4,868

(3,704)

4,360

Legal and professional services

15,717

12,749

12,947

11,096

14,974

Advertising

5,969

7,326

6,618

5,807

7,780

FDIC premiums

10,760

11,278

10,444

10,919

12,012

Amortization of core deposit and other intangibles

4,216

4,241

4,262

4,291

4,741

Other

76,786

67,648

67,426

63,291

76,749

Total noninterest expense

407,014

394,975

401,656

392,372

424,990

Income before income taxes

87,503

170,301

142,500

141,262

136,648

Income taxes

29,817

60,704

51,036

51,859

47,877

Net income

57,686

109,597

91,464

89,403

88,771

Net loss applicable to noncontrolling interests

(566)

(254)

(273)

(273)

(248)

Net income applicable to controlling interest

58,252

109,851

91,737

89,676

89,019

Preferred stock dividends

(22,647)

(47,529)

(36,522)

(64,187)

(44,599)

Net earnings applicable to common shareholders

$

35,605

$

62,322

$

55,215

$

25,489

$

44,420

Weighted average common shares outstanding during the period:

Basic shares

183,300

183,237

182,985

182,798

182,703

Diluted shares

183,456

183,383

183,137

182,964

182,823

Net earnings per common share:

Basic

$

0.19

$

0.34

$

0.30

$

0.14

$

0.24

Diluted

0.19

0.34

0.30

0.14

0.24

 

 

Loan Balances by Portfolio Type

(Unaudited)

(In millions)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Commercial:

Commercial and industrial

$

11,257

$

10,840

$

10,471

$

10,253

$

10,448

Leasing

423

405

406

394

380

Owner occupied

7,589

7,669

7,811

7,886

8,159

Municipal

494

469

477

441

441

Total commercial

19,763

19,383

19,165

18,974

19,428

Commercial real estate:

Construction and land development

1,939

1,956

2,099

2,100

2,265

Term

8,063

8,140

8,012

8,070

7,883

Total commercial real estate

10,002

10,096

10,111

10,170

10,148

Consumer:

Home equity credit line

2,178

2,175

2,181

2,167

2,187

1-4 family residential

4,350

4,181

4,019

3,875

3,921

Construction and other consumer real estate

321

320

328

316

306

Bankcard and other revolving plans

307

295

284

274

291

Other

216

224

232

223

226

Total consumer

7,372

7,195

7,044

6,855

6,931

FDIC-supported loans 1

528

589

642

687

751

Total loans

$

37,665

$

37,263

$

36,962

$

36,686

$

37,258

1 FDIC-supported loans represent loans acquired from the FDIC subject to loss sharing agreements.

 

 

FDIC-Supported Loans – Effect of Higher Accretion

and Impact on FDIC Indemnification Asset

(Unaudited)

(In thousands)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Balance sheet:

Change in assets from reestimation of cash flows – increase (decrease):

FDIC-supported loans

$

12,970

$

17,594

$

14,761

$

13,171

$

17,003

FDIC indemnification asset (included in other assets)

(10,610)

(14,401)

(11,233)

(10,002)

(13,126)

Balance at end of period:

FDIC-supported loans

528,241

588,566

642,246

687,126

750,870

FDIC indemnification asset (included in other assets)

90,074

100,004

117,167

123,862

137,719

Three Months Ended

(In thousands)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Statement of income:

Interest income:

Interest and fees on loans

$

12,970

$

17,594

$

14,761

$

13,171

$

17,003

Noninterest expense:

Other noninterest expense

10,610

14,401

11,233

10,002

13,126

Net increase in pretax income

$

2,360

$

3,193

$

3,528

$

3,169

$

3,877

 

 

Nonperforming Lending-Related Assets

(Unaudited)

(Amounts in thousands)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Nonaccrual loans

$

630,810

$

699,952

$

771,510

$

849,543

$

885,608

Other real estate owned

90,269

106,356

125,142

129,676

128,874

Nonperforming lending-related assets,

 excluding FDIC-supported assets

721,079

806,308

896,652

979,219

1,014,482

FDIC-supported nonaccrual loans

16,661

19,454

21,980

22,623

24,267

FDIC-supported other real estate owned

7,882

11,834

19,674

28,916

24,304

FDIC-supported nonperforming assets

24,543

31,288

41,654

51,539

48,571

Total nonperforming lending-related assets

$

745,622

$

837,596

$

938,306

$

1,030,758

$

1,063,053

Ratio of nonperforming lending-related assets to loans 1 and leases and other real estate owned

1.96

%

2.23

%

2.52

%

2.78

%

2.83

%

Accruing loans past due 90 days or more, excluding FDIC-supported loans

$

9,730

$

14,508

$

29,460

$

38,172

$

19,145

Accruing FDIC-supported loans past due 90 days or more

52,314

60,913

70,453

76,945

74,611

Ratio of accruing loans past due 90 days or more to loans 1 and leases

0.16

%

0.20

%

0.27

%

0.31

%

0.25

%

Nonaccrual loans and accruing loans past due 90 days or more

$

709,515

$

794,827

$

893,403

$

987,283

$

1,003,631

Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans 1 and leases

1.87

%

2.12

%

2.41

%

2.68

%

2.68

%

Accruing loans past due 30 - 89 days, excluding FDIC-supported loans

$

185,422

$

143,539

$

142,501

$

171,224

$

183,976

Accruing FDIC-supported loans past due 30 - 89 days

11,924

15,462

15,519

13,899

24,691

Restructured loans included in nonaccrual loans

215,476

207,089

227,568

276,669

295,825

Restructured loans on accrual

407,026

421,055

393,360

401,554

448,109

Classified loans, excluding FDIC-supported loans

1,767,460

1,810,099

1,880,932

2,076,220

2,056,472

1 Includes loans held for sale.

 

 

Allowance for Credit Losses

(Unaudited)

Three Months Ended

(Amounts in thousands)

December 31, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Allowance for Loan Losses

Balance at beginning of period

$

927,068

$

973,443

$

1,011,786

$

1,051,685

$

1,150,580

Add:

Provision for losses

(10,401)

(1,889)

10,853

15,664

(1,426)

Adjustment for FDIC-supported loans

(1,721)

(5,908)

(5,856)

(1,057)

(2,655)

Deduct:

Gross loan and lease charge-offs

(54,709)

(58,781)

(73,685)

(80,014)

(120,599)

Recoveries

35,850

20,203

30,345

25,508

25,785

Net loan and lease charge-offs

(18,859)

(38,578)

(43,340)

(54,506)

(94,814)

Balance at end of period

$

896,087

$

927,068

$

973,443

$

1,011,786

$

1,051,685

Ratio of allowance for loan losses to loans and leases, at period end

2.38

%

2.49

%

2.63

%

2.76

%

2.82

%

Ratio of allowance for loan losses to nonperforming loans, at period end

138.40

%

128.87

%

122.68

%

116.01

%

115.59

%

Annualized ratio of net loan and lease charge-offs to average loans

0.20

%

0.41

%

0.47

%

0.59

%

1.02

%

Reserve for Unfunded Lending Commitments

Balance at beginning of period

$

105,850

$

103,586

$

98,718

$

102,422

$

98,062

Provision charged (credited) to earnings

959

2,264

4,868

(3,704)

4,360

Balance at end of period

$

106,809

$

105,850

$

103,586

$

98,718

$

102,422

Total Allowance for Credit Losses

Allowance for loan losses

$

896,087

$

927,068

$

973,443

$

1,011,786

$

1,051,685

Reserve for unfunded lending commitments

106,809

105,850

103,586

98,718

102,422

Total allowance for credit losses

$

1,002,896

$

1,032,918

$

1,077,029

$

1,110,504

$

1,154,107

Ratio of total allowance for credit losses to loans and leases outstanding, at period end

2.66

%

2.77

%

2.91

%

3.03

%

3.10

%

 

 

Nonaccrual Loans by Portfolio Type

(Excluding FDIC-Supported Loans)

(Unaudited)

(In millions)

December 31, 2012

September 30, 2012