Zions Bancorporation Reports Earnings Of $0.56 Per Diluted Common Share For Second Quarter 2014

Jul 21, 2014, 16:10 ET from Zions Bancorporation

SALT LAKE CITY, July 21, 2014 /PRNewswire/ -- Zions Bancorporation (NASDAQ: ZION) ("Zions" or "the Company") today reported second quarter net earnings applicable to common shareholders of $104.5 million, or $0.56 per diluted common share, compared to $76.2 million, or $0.41 per diluted share for the first quarter of 2014, and $55.4 million, or $0.30 per diluted share for the second quarter of 2013.

Second Quarter 2014 Highlights

  • Credit quality remained strong as net loan and lease charge-offs were $6 million, or 0.06% annualized of average loans and leases, compared to $8 million, or 0.08% annualized in the prior quarter. Nonperforming lending-related assets declined 14% quarter over quarter. Both of these and significant improvement in other credit quality metrics were the primary drivers of the reserve release through a net negative provision of $48 million for both funded and unfunded loans.
  • Net loans and leases held for investment increased $432 million this quarter compared to the prior quarter, to $39.6 billion at June 30, 2014. Average loans and leases increased $419 million this quarter.
  • Net interest income of $416 million this quarter was essentially unchanged from the prior quarter; the net interest margin decreased slightly to 3.29% from 3.31%.

Loans

Net loans and leases held for investment increased $432 million, or 1.1%, to $39.6 billion at June 30, 2014 from $39.2 billion at March 31, 2014. Increases of approximately $577 million were geographically widespread in commercial and industrial loans, with smaller increases in commercial owner occupied, commercial construction, and 1-4 family residential loans. These increases were partially offset by decreases of approximately $145 million in term commercial real estate and FDIC-supported and other purchase credit-impaired ("PCI") loans.

Average loans and leases increased $419 million, or 1.1%, to $39.5 billion during the second quarter of 2014, compared to $39.1 billion during the first quarter of 2014. Unfunded lending commitments were $17.5 billion at June 30, 2014 and remained relatively stable compared to March 31, 2014.

Deposits

Total deposits decreased $861 million to $45.7 billion at June 30, 2014, compared to $46.5 billion at March 31, 2014. Average total deposits for the second quarter of 2014 decreased $320 million, or 1%, to $45.5 billion, compared to $45.8 billion for the first quarter of 2014. The ratio of average loans to average deposits was 87.0% for the second quarter of 2014, compared to 85.5% for the first quarter of 2014.

Shareholders' Equity

Tangible book value per common share improved by approximately 2% compared to the prior quarter, increasing to $25.13 from $24.53. Compared to the year-ago period, tangible book value per common share improved by approximately 14%.

The estimated Tier 1 common equity ratio was 10.42% at June 30, 2014, compared to 10.56% at March 31, 2014. The decrease was driven by the previously announced termination of the Total Return Swap on collateralized debt obligations ("CDOs"), which increased risk-weighted assets.

Investment Securities

During the second quarter of 2014, the Company did not record any other-than-temporary impairment ("OTTI") on its investment securities, and no CDO securities were sold during the quarter. Gains on paydowns of CDO securities were $5 million during the second quarter, essentially the same amount as the first quarter.

Net Interest Income

Net interest income of $416 million for the second quarter of 2014 was essentially unchanged from the first quarter of 2014. The net interest margin decreased slightly to 3.29% in the second quarter of 2014, compared to 3.31% in the first quarter of 2014; improvements from a higher loan to earning assets mix were offset by 6 bps of reduction due to lower gross income from FDIC-supported/PCI loans.

Noninterest Income

Noninterest income for the second quarter of 2014 was $125 million, compared to $138 million for the first quarter of 2014. The decrease was due to net gains on sales of CDO securities during the first quarter of 2014. Excluding these gains, noninterest income would have increased by $13 million compared to the first quarter. Improvement in fair value and nonhedge derivative income (loss) resulted from the expense reduction associated with the termination of the Total Return Swap. An increase in other service charges, commissions and fees was due primarily to increased interchange fees from commercial credit cards.

Noninterest Expense

Noninterest expense for the second quarter of 2014 was $406 million compared to $398 million for the first quarter of 2014. Changes this quarter were due primarily to (1) an increase in salaries and employee benefits, due primarily to variable compensation accruals; (2) an increase in the provision for unfunded lending commitments; and (3) an increase in professional and legal services. Approximately $5 million of the variable compensation increase resulted from the immediate recognition in expense of equity-based grants that vest over three or four years to employees currently eligible for retirement. These increases were offset by reduced other noninterest expense that resulted primarily from the decreased amortization of the FDIC indemnification asset ($9 million in the second quarter of 2014 compared to $16 million in the first quarter).

Asset Quality

Credit quality further improved as nonperforming lending-related assets declined 14% to $379 million at June 30, 2014 from $441 million at March 31, 2014. Classified loans were $1.2 billion at June 30, 2014, compared to $1.3 billion at March 31, 2014. The ratio of nonperforming lending-related assets to loans and leases and other real estate owned decreased to 0.95% at June 30, 2014, compared to 1.12% at March 31, 2014.

Net loan and lease charge-offs were $6 million in the second quarter of 2014, compared to $8 million in the first quarter of 2014. The decrease was due to recoveries of $17 million during the second quarter, compared to $13 million during the first quarter. Gross loan and lease charge-offs were $23 million during the second quarter of 2014, compared to $21 million in the first quarter of 2014.

The provision for credit losses consists of the provision for loan losses (negative $54 million in the second quarter) plus the provision for unfunded lending commitments ($6 million in the second quarter). The negative provision for loan losses in the second quarter compares to a negative provision of $1 million for the first quarter. The decrease is primarily due to continued improvement in portfolio-specific credit quality metrics and sustained improvement in broader economic and credit quality indicators. The allowance for credit losses was $771 million, or 1.95%, of loans and leases at June 30, 2014, compared to $826 million, or 2.11%, of loans and leases at March 31, 2014.

Conference Call

Zions will host a conference call to discuss these second quarter results at 5:30 p.m. ET this afternoon (July 21, 2014). 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 64591317, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at www.zionsbancorporation.com. 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 in 11 Western and Southwestern states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. The Company is a national leader in Small Business Administration lending and public finance advisory services, and received 12 "Excellence" awards by Greenwich Associates for the 2013 survey. 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 could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company'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)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

PER COMMON SHARE

Dividends

$

0.04

$

0.04

$

0.04

$

0.04

$

0.04

Book value per common share 1

30.77

30.19

29.57

28.87

27.82

Tangible book value per common share 1

25.13

24.53

23.88

23.16

22.09

SELECTED RATIOS

Return on average assets

0.87%

0.74%

(0.30)%

0.80%

0.61%

Return on average common equity

7.30%

5.52%

(4.51)%

16.03%

4.35%

Tangible return on average tangible common equity

9.07%

6.96%

(5.45)%

20.34%

5.73%

Net interest margin

3.29%

3.31%

3.33%

3.22%

3.44%

Capital Ratios

Tangible common equity ratio 1

8.60%

8.24%

8.02%

7.90%

7.57%

Tangible equity ratio 1

10.46%

10.06%

9.85%

9.75%

10.78%

Average equity to average assets

12.26%

11.90%

11.20%

12.39%

12.11%

Risk-Based Capital Ratios 1,2

Tier 1 common equity

10.42%

10.56%

10.18%

10.47%

10.03%

Tier 1 leverage

11.00%

10.71%

10.48%

10.63%

11.75%

Tier 1 risk-based capital

12.96%

13.19%

12.77%

13.10%

14.30%

Total risk-based capital

14.85%

15.11%

14.67%

14.82%

15.94%

Taxable-equivalent net interest income

$

420,202

$

420,305

$

435,714

$

419,236

$

434,579

Weighted average common and common-equivalent shares outstanding

185,286,329

185,122,844

184,208,544

184,742,414

184,061,623

Common shares outstanding 1

185,112,965

184,895,182

184,677,696

184,600,005

184,436,656

1 At period end.

2 Ratios for June 30, 2014 are estimates.

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

ASSETS

Cash and due from banks

$

1,384,131

$

1,341,319

$

1,175,083

$

1,365,082

$

1,183,097

Money market investments:

Interest-bearing deposits

6,386,353

8,157,837

8,175,048

8,180,639

8,180,010

Federal funds sold and security resell agreements

478,535

379,947

282,248

209,070

221,799

Investment securities:

Held-to-maturity, at adjusted cost (approximate fair value $643,926, $635,379, $609,547, $727,908, and $734,292)

615,104

606,279

588,981

777,849

783,371

Available-for-sale, at fair value

3,462,809

3,423,205

3,701,886

3,333,889

3,193,395

Trading account, at fair value

56,572

56,172

34,559

38,278

26,385

4,134,485

4,085,656

4,325,426

4,150,016

4,003,151

Loans held for sale

164,374

126,344

171,328

114,810

164,619

Loans and leases, net of unearned income and fees

39,630,363

39,198,136

39,043,365

38,272,730

38,187,945

Less allowance for loan losses

675,907

736,953

746,291

797,523

813,912

Loans, net of allowance

38,954,456

38,461,183

38,297,074

37,475,207

37,374,033

Other noninterest-bearing investments

854,978

848,775

855,642

851,349

852,939

Premises and equipment, net

803,214

785,519

726,372

720,365

717,299

Goodwill

1,014,129

1,014,129

1,014,129

1,014,129

1,014,129

Core deposit and other intangibles

30,826

33,562

36,444

39,667

43,239

Other real estate owned

27,725

39,248

46,105

66,381

80,789

Other assets

878,069

807,325

926,228

1,001,597

1,069,436

$

55,111,275

$

56,080,844

$

56,031,127

$

55,188,312

$

54,904,540

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing demand

$

19,609,990

$

19,257,889

$

18,758,753

$

18,566,137

$

17,803,950

Interest-bearing:

   Savings and money market

23,308,114

23,097,351

23,029,928

22,806,132

22,887,404

   Time

2,500,303

2,528,735

2,593,038

2,689,688

2,810,431

   Foreign

252,207

1,648,111

1,980,161

1,607,409

1,514,270

45,670,614

46,532,086

46,361,880

45,669,366

45,016,055

Federal funds and other short-term borrowings

258,401

279,837

340,348

273,774

256,615

Long-term debt

1,933,136

2,158,701

2,273,575

2,304,301

2,173,176

Reserve for unfunded lending commitments

95,472

88,693

89,705

84,147

104,082

Other liabilities

453,562

435,311

501,056

523,915

494,280

   Total liabilities

48,411,185

49,494,628

49,566,564

48,855,503

48,044,208

Shareholders' equity:

Preferred stock, without par value, authorized 4,400,000 shares

1,004,006

1,003,970

1,003,970

1,003,970

1,728,659

Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 185,112,965, 184,895,182, 184,677,696, 184,600,005, and 184,436,656 shares

4,192,136

4,185,513

4,179,024

4,172,887

4,167,828

Retained earnings

1,640,785

1,542,195

1,473,670

1,540,455

1,338,401

Accumulated other comprehensive income (loss)

(136,837)

(145,462)

(192,101)

(384,503)

(374,556)

   Total shareholders' equity

6,700,090

6,586,216

6,464,563

6,332,809

6,860,332

$

55,111,275

$

56,080,844

$

56,031,127

$

55,188,312

$

54,904,540

 

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

(In thousands, except per share amounts)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Interest income:

Interest and fees on loans

$

433,801

$

434,344

$

458,493

$

442,366

$

460,308

Interest on money market investments

4,888

5,130

5,985

6,175

5,764

Interest on securities

24,502

28,094

25,539

24,866

27,161

Total interest income

463,191

467,568

490,017

473,407

493,233

Interest expense:

Interest on deposits

12,096

12,779

13,622

14,506

15,143

Interest on short- and long-term borrowings

34,812

38,324

44,360

43,380

47,433

Total interest expense

46,908

51,103

57,982

57,886

62,576

Net interest income

416,283

416,465

432,035

415,521

430,657

Provision for loan losses

(54,416)

(610)

(30,538)

(5,573)

(21,990)

Net interest income after provision for loan losses

470,699

417,075

462,573

421,094

452,647

Noninterest income:

Service charges and fees on deposit accounts

42,873

42,594

43,729

44,701

44,329

Other service charges, commissions and fees

47,513

43,519

46,877

45,977

45,888

Wealth management income

7,980

7,077

8,067

7,120

7,732

Capital markets and foreign exchange

5,842

5,000

6,516

7,309

6,740

Dividends and other investment income

7,995

7,864

9,898

12,101

11,339

Loan sales and servicing income

6,335

6,474

5,155

8,464

10,723

Fair value and nonhedge derivative loss

(1,934)

(8,539)

(5,347)

(4,403)

(2,957)

Equity securities gains, net

2,513

912

314

3,165

2,209

Fixed income securities gains (losses), net

5,026

30,914

(6,624)

1,580

(1,153)

Impairment losses on investment securities:

Impairment losses on investment securities

(27)

(141,733)

(10,470)

(4,910)

Noncredit-related losses on securities not expected to be sold (recognized in other comprehensive income)

1,403

693

Net impairment losses on investment securities

(27)

(141,733)

(9,067)

(4,217)

Other

707

2,531

1,998

5,243

4,515

Total noninterest income (loss)

124,850

138,319

(31,150)

122,190

125,148

Noninterest expense:

Salaries and employee benefits

238,764

233,406

226,616

229,185

227,328

Occupancy, net

28,939

28,305

28,733

28,230

27,951

Furniture, equipment and software

27,986

27,944

27,450

26,560

26,545

Other real estate expense

(266)

1,607

(1,024)

(831)

1,590

Credit-related expense

7,139

6,906

6,509

7,265

9,397

Provision for unfunded lending commitments

6,779

(1,012)

5,558

(19,935)

3,627

Professional and legal services

12,171

10,995

23,886

16,462

17,149

Advertising

6,803

6,398

5,571

6,091

5,807

FDIC premiums

8,017

7,922

8,789

9,395

10,124

Amortization of core deposit and other intangibles

2,736

2,882

3,224

3,570

3,762

Debt extinguishment cost

79,910

40,282

Other

66,959

72,710

79,528

64,671

78,116

Total noninterest expense

406,027

398,063

494,750

370,663

451,678

Income (loss) before income taxes

189,522

157,331

(63,327)

172,621

126,117

Income taxes (benefit)

69,972

56,121

(21,855)

61,107

43,091

Net income (loss)

119,550

101,210

(41,472)

111,514

83,026

Preferred stock dividends

(15,060)

(25,020)

(17,965)

(27,507)

(27,641)

Preferred stock redemption

125,700

Net earnings (loss) applicable to common shareholders

$

104,490

$

76,190

$

(59,437)

$

209,707

$

55,385

Weighted average common shares outstanding during the period:

Basic shares

184,668

184,440

184,209

184,112

183,647

Diluted shares

185,286

185,123

184,209

184,742

184,062

Net earnings (loss) per common share:

Basic

$

0.56

$

0.41

$

(0.32)

$

1.13

$

0.30

Diluted

0.56

0.41

(0.32)

1.12

0.30

 

CDO Investments – Selected Information Stratified into Performing

Tranches Without Credit Impairment and Nonperforming Tranches

June 30, 2014

Net unrealized (losses) gains recognized in AOCI 1

Weighted average discount rate 2

% of carrying value to par

(Amounts in millions)

No. of tranches

Par amount

Amortized cost

Carrying value

Performing CDOs

Predominantly bank CDOs

23

$

639

$

580

$

478

$

(102)

5.1%

75%

Insurance CDOs

2

42

40

41

1

1.3%

98%

Total performing CDOs

25

681

620

519

(101)

4.9%

76%

Nonperforming CDOs 3

CDOs credit impaired prior to last 12 months

21

460

296

209

(87)

4.5%

45%

CDOs credit impaired during last 12 months

5

67

54

38

(16)

5.5%

57%

Total nonperforming CDOs

26

527

350

247

(103)

4.6%

47

Total CDOs

51

$

1,208

$

970

$

766

$

(204)

4.8%

63%

1 Amounts presented are pretax.

2 Margin over related LIBOR index.

3 Defined as either deferring current interest ("PIKing") or OTTI.

 

CDO Investments – Changes in Selected Information

Changes from March 31, 2014 to June 30, 2014

Decrease (increase) in net unrealized losses recognized in AOCI

Weighted average discount rate

% of carrying value to par

(Amounts in millions)

No. of

tranches

Par

amount

Amortized

cost

Carrying

value

Performing CDOs

Predominantly bank CDOs

$

(16)

$

(11)

$

(8)

$

3

(0.2)%

1%

Insurance CDOs

(8)

(8)

(5)

3

(0.9)%

6%

Total performing CDOs

(24)

(19)

(13)

6

(0.2)%

1%

Nonperforming CDOs

CDOs credit impaired prior to last 12 months

3

77

5

9

4

(1.0)%

(7)%

CDOs credit impaired during last 12 months

(3)

(78)

(5)

(4)

1

—%

28%

Total nonperforming CDOs

(1)

5

5

(0.9)%

1%

Total CDOs

$

(25)

$

(19)

$

(8)

$

11

(0.5)%

—%

 

Loan Balances Held for Investment by Portfolio Type

(Unaudited)

(In millions)

June 30, 2014

March 31, 2014

December 31, 2013

 

September 30, 2013

June 30, 2013

Commercial:

Commercial and industrial

$

12,805

$

12,512

$

12,481

$

11,904

$

11,899

Leasing

415

389

388

375

388

Owner occupied

7,387

7,348

7,437

7,379

7,394

Municipal

522

482

449

449

454

Total commercial

21,129

20,731

20,755

20,107

20,135

Commercial real estate:

Construction and land development

2,340

2,264

2,183

2,240

2,191

Term

7,969

8,080

8,006

7,929

7,971

Total commercial real estate

10,309

10,344

10,189

10,169

10,162

Consumer:

Home equity credit line

2,204

2,165

2,133

2,124

2,124

1-4 family residential

4,827

4,796

4,737

4,637

4,486

Construction and other consumer real estate

338

330

325

321

322

Bankcard and other revolving plans

376

361

356

332

315

Other

196

186

198

208

212

Total consumer

7,941

7,838

7,749

7,622

7,459

FDIC-supported/PCI loans 1

251

285

350

375

432

Total loans

$

39,630

$

39,198

$

39,043

$

38,273

$

38,188

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

 

FDIC-Supported/PCI Loans – Effect of Higher Accretion

and Impact on FDIC Indemnification Asset

(Unaudited)

Three Months Ended

(In thousands)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Balance sheet:

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

FDIC-supported/PCI loans

$

11,701

$

18,453

$

28,502

$

15,018

$

28,424

FDIC indemnification asset

(9,314)

(15,972)

(19,934)

(12,965)

(21,845)

Balance at end of period:

FDIC-supported/PCI loans (included in loans and leases)

250,568

285,313

350,271

374,861

431,935

FDIC indemnification asset (included in other assets)

5,777

13,184

26,411

41,771

51,297

Three Months Ended

(In thousands)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Statement of income:

Interest income:

Interest and fees on loans

$

11,701

$

18,453

$

28,502

$

15,018

$

28,424

Noninterest expense:

Other noninterest expense

9,314

15,972

19,934

12,965

21,845

Net increase in pretax income

$

2,387

$

2,481

$

8,568

$

2,053

$

6,579

 

Nonperforming Lending-Related Assets

(Unaudited)

(Amounts in thousands)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Nonaccrual loans

$

349,415

$

397,549

$

402,219

$

466,795

$

515,708

Other real estate owned

26,498

37,841

42,817

58,295

70,031

Nonperforming lending-related assets, excluding FDIC-supported/PCI assets

375,913

435,390

445,036

525,090

585,739

FDIC-supported/PCI nonaccrual loans

2,032

4,117

4,394

4,744

5,256

FDIC-supported/PCI other real estate owned

1,227

1,407

3,288

8,086

10,758

FDIC-supported/PCI nonperforming

lending-related assets

3,259

5,524

7,682

12,830

16,014

Total nonperforming lending-related assets

$

379,172

$

440,914

$

452,718

$

537,920

$

601,753

Ratio of nonperforming lending-related assets to

loans 1 and leases and other real estate owned

0.95%

1.12%

1.15%

1.40%

1.57%

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

$

13,728

$

6,661

$

9,957

$

9,398

$

10,685

Accruing FDIC-supported/PCI loans past due 90 days or more

33,041

31,529

30,391

22,450

33,410

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

0.12%

0.10%

0.10%

0.08%

0.11%

Nonaccrual loans and accruing loans past due 90 days or more

$

398,216

$

439,856

$

446,961

$

503,387

$

565,059

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

1.00%

1.12%

1.14%

1.31%

1.47%

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

$

100,851

$

110,566

$

104,760

$

85,128

$

103,075

Accruing FDIC-supported/PCI loans past due

30 - 89 days

7,232

3,839

11,752

10,983

6,522

Restructured loans included in nonaccrual loans

103,157

130,534

136,135

166,573

162,496

Restructured loans on accrual

320,206

318,886

345,299

384,793

385,428

Classified loans, excluding FDIC-supported/PCI loans

1,225,993

1,295,976

1,240,148

1,432,806

1,639,206

1 Includes loans held for sale.

 

 

 

Allowance for Credit Losses

(Unaudited)

Three Months Ended

(Amounts in thousands)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Allowance for Loan Losses

Balance at beginning of period

$

736,953

$

746,291

$

797,523

$

813,912

$

841,781

Add:

Provision for losses

(54,416)

(610)

(30,538)

(5,573)

(21,990)

Adjustment for FDIC-supported/PCI loans

(444)

(817)

(1,481)

(2,118)

(209)

Deduct:

Gross loan and lease charge-offs

(23,400)

(20,795)

(37,405)

(22,826)

(35,099)

Recoveries

17,214

12,884

18,192

14,128

29,429

Net loan and lease charge-offs

(6,186)

(7,911)

(19,213)

(8,698)

(5,670)

Balance at end of period

$

675,907

$

736,953

$

746,291

$

797,523

$

813,912

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

1.71%

1.88%

1.91%

2.08%

2.13%

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

192.32%

183.47%

183.54%

169.13%

156.23%

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

0.06%

0.08%

0.20%

0.09%

0.06%

Reserve for Unfunded Lending Commitments

Balance at beginning of period

$

88,693

$

89,705

$

84,147

$

104,082

$

100,455

Provision charged (credited) to earnings

6,779

(1,012)

5,558

(19,935)

3,627

Balance at end of period

$

95,472

$

88,693

$

89,705

$

84,147

$

104,082

Total Allowance for Credit Losses

Allowance for loan losses

$

675,907

$

736,953

$

746,291

$

797,523

$

813,912

Reserve for unfunded lending commitments

95,472

88,693

89,705

84,147

104,082

Total allowance for credit losses

$

771,379

$

825,646

$

835,996

$

881,670

$

917,994

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

1.95%

2.11%

2.14%

2.30%

2.40%

 

 

 

Nonaccrual Loans by Portfolio Type

(Excluding FDIC-Supported/PCI Loans)

(Unaudited)

(In millions)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Loans held for sale

$

29

$

$

$

$

Commercial:

Commercial and industrial

$

83

$

109

$

98

$

100

$

94

Leasing

1

1

1

1

1

Owner occupied

101

127

136

158

186

Municipal

9

10

10

10

9

Total commercial

194

247

245

269

290

Commercial real estate:

Construction and land development

23

29

29

65

70

Term

44

59

60

61

71

Total commercial real estate

67

88

89

126

141

Consumer:

Home equity credit line

11

10

9

8

11

1-4 family residential

45

48

53

58

66

Construction and other consumer real estate

2

3

4

4

5

Bankcard and other revolving plans

1

1

1

1

2

Other

1

1

1

1

Total consumer

59

63

68

72

85

Subtotal nonaccrual loans

320

398

402

467

516

Total nonaccrual loans

$

349

$

398

$

402

$

467

$

516

 

 

Net Charge-Offs by Portfolio Type

(Unaudited)

Three Months Ended

(In millions)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Commercial:

Commercial and industrial

$

7

$

1

$

15

$

2

$

2

Leasing

(1)

Owner occupied

(2)

2

1

2

3

Municipal

Total commercial

5

2

16

4

5

Commercial real estate:

Construction and land development

(3)

(2)

(3)

(1)

(3)

Term

3

7

5

3

(2)

Total commercial real estate

5

2

2

(5)

Consumer:

Home equity credit line

1

1

2

1-4 family residential

(1)

1

1

3

Construction and other consumer real estate

(1)

1

Bankcard and other revolving plans

2

1

1

Other

1

(1)

Total consumer loans

1

1

1

3

6

Total net charge-offs

$

6

$

8

$

19

$

9

$

6

 

 

 

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

(Unaudited)

Three Months Ended

June 30, 2014

March 31, 2014

December 31, 2013

(In thousands)

Average balance

Average

rate

Average balance

Average

rate

Average balance

Average

rate

ASSETS

Money market investments

$

7,500,554

0.26%

$

8,137,123

0.26%

$

9,154,232

0.26%

Securities:

Held-to-maturity

600,392

5.37%

587,473

5.65%

770,168

4.75%

Available-for-sale

3,355,710

2.12%

3,470,983

2.48%

3,230,152

2.17%

Trading account

66,929

3.39%

58,543

3.34%

43,063

3.39%

Total securities

4,023,031

2.63%

4,116,999

2.95%

4,043,383

2.68%

Loans held for sale

113,569

3.61%

157,170

3.61%

119,671

3.73%

Loans 1:

Loans and leases

39,271,351

4.28%

38,805,192

4.30%

38,259,795

4.41%

FDIC-supported/PCI loans

272,762

23.01%

319,695

29.35%

363,982

36.88%

Total loans

39,544,113

4.41%

39,124,887

4.51%

38,623,777

4.72%

Total interest-earning assets

51,181,267

3.66%

51,536,179

3.71%

51,941,063

3.77%

Cash and due from banks

922,421

1,040,906

1,026,814

Allowance for loan losses

(734,517)

(745,671)

(790,361)

Goodwill

1,014,129

1,014,129

1,014,129

Core deposit and other intangibles

32,234

35,072

38,137

Other assets

2,620,739

2,552,965

2,470,837

Total assets

$

55,036,273

$

55,433,580

$

55,700,619

LIABILITIES

Interest-bearing deposits:

Savings and money market

$

23,479,755

0.15%

$

22,908,201

0.16%

$

22,972,978

0.16%

Time

2,507,489

0.47%

2,560,283

0.49%

2,642,104

0.50%

Foreign

258,234

0.17%

1,751,910

0.20%

1,796,912

0.20%

Total interest-bearing deposits

26,245,478

0.18%

27,220,394

0.19%

27,411,994

0.20%

Borrowed funds:

Federal funds and other short-term borrowings

261,011

0.10%

249,043

0.11%

271,501

0.11%

Long-term debt

2,038,810

6.84%

2,237,457

6.93%

2,352,748

7.47%

Total borrowed funds

2,299,821

6.07%

2,486,500

6.25%

2,624,249

6.71%

Total interest-bearing liabilities

28,545,299

0.66%

29,706,894

0.70%

30,036,243

0.77%

Noninterest-bearing deposits

19,212,574

18,557,992

18,842,097

Other liabilities

529,716

569,361

584,887

Total liabilities

48,287,589

48,834,247

49,463,227

Shareholders' equity:

Preferred equity

1,003,988

1,003,970

1,003,970

Common equity

5,744,696

5,595,363

5,233,422

Total shareholders' equity

6,748,684

6,599,333

6,237,392

Total liabilities and shareholders' equity

$

55,036,273

$

55,433,580

$

55,700,619

Spread on average interest-bearing funds

3.00%

3.01%

3.00%

Net yield on interest-earning assets

3.29%

3.31%

3.33%

1 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

 

GAAP to Non-GAAP Reconciliation

(Unaudited)

Tangible Return on Average Tangible Common Equity

Three Months Ended

(Amounts in thousands)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30, 2013

Net earnings (loss) applicable to common shareholders (GAAP)

$

104,490

$

76,190

$

(59,437)

$

209,707

$

55,385

Adjustments, net of tax:

Amortization of core deposit and other intangibles

1,735

1,827

2,046

2,268

2,391

Net earnings (loss) applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP) (a)

$

106,225

$

78,017

$

(57,391)

$

211,975

$

57,776

Average common equity (GAAP)

$

5,744,696

$

5,595,363

$

5,233,422

$

5,190,073

$

5,102,082

Average goodwill

(1,014,129)

(1,014,129)

(1,014,129)

(1,014,129)

(1,014,129)

Average core deposit and other intangibles

(32,234)

(35,072)

(38,137)

(41,751)

(45,262)

Average tangible common equity (non-GAAP) (b)

$

4,698,333

$

4,546,162

$

4,181,156

$

4,134,193

$

4,042,691

Number of days in quarter (c)

91

90

92

92

91

Number of days in year (d)

365

365

365

365

365

Tangible return on average tangible common equity (non-GAAP) (a/b/c*d)

9.07%

6.96%

(5.45)%

20.34%

5.73%

This press release presents the non-GAAP financial measure previously shown. The adjustments to reconcile from the applicable GAAP financial measure to the non-GAAP financial measure are included where applicable in financial results presented in accordance with GAAP. The Company considers these adjustments to be relevant to ongoing operating results.

The Company believes that excluding the amounts associated with these adjustments to present the non-GAAP financial measure provides a meaningful base for period-to-period and company-to-company comparisons, which will assist investors and analysts in analyzing the operating results of the Company and in predicting future performance. This non-GAAP financial measure is used by management and the Board of Directors to assess the performance of the Company's business for evaluating bank reporting segment performance, for presentations of Company performance to investors, and for other reasons as may be requested by investors and analysts. The Company further believes that presenting this non-GAAP financial measure will permit investors and analysts to assess the performance of the Company on the same basis as that applied by management and the Board of Directors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although non-GAAP financial measures are frequently used by stakeholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.

SOURCE Zions Bancorporation



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