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

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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