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

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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



June 30,
2012


March 31,
2012


December 31,
2011





















Loans held for sale


$





$





$





$





$

18























Commercial:




















Commercial and industrial


91





103





133





149





127



Leasing


1





1





1





1





2



Owner occupied


206





223





240





245





239



Municipal


9





6















Total commercial


307





333





374





395





368























Commercial real estate:




















Construction and land development


108





125





115





148





220



Term


125





155





182





191





156



Total commercial real estate


233





280





297





339





376























Consumer:




















Home equity credit line


14





12





14





17





18



1-4 family residential


70





66





76





87





91



Construction and other consumer real estate


5





6





8





8





12



Bankcard and other revolving plans


1





1





1





1







Other


1





2





2





3





3



Total consumer


91





87





101





116





124



Total nonaccrual loans


$

631





$

700





$

772





$

850





$

886



 

 

Net Charge-Offs 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


$

(1)





$

3





$

9





$

17





$

9



Leasing


2