SYS-CON MEDIA Authors: RealWire News Distribution, Kevin Benedict, Jason Bloomberg, Bob Gourley, Greg Schulz

News Feed Item

Zions Bancorporation Reports Annual Net Earnings for 2013 of $294 Million, With Strong Loan Growth in the Fourth Quarter

SALT LAKE CITY, Jan. 27, 2014 /PRNewswire/ -- Zions Bancorporation (NASDAQ: ZION) ("Zions" or "the Company") today reported annual net earnings for 2013 of $294 million, or $1.58 per diluted common share, compared to $179 million, or $0.97 per diluted share, for 2012.

The Company reported a fourth quarter of 2013 net loss applicable to common shareholders of $(59.4) million or $(0.32) per diluted common share. The quarterly loss included impairment charges on collateralized debt obligation ("CDO") securities as a result of both the Company's decision to reduce risk within its CDO portfolio, and the impact of the final provisions of the Volcker Rule. The loss also included debt extinguishment costs that resulted from the Company's successful tender offer for some of its high cost subordinated debt. The total impairment charges and debt extinguishment costs were $222 million pretax or $0.74 per diluted share after-tax.

For comparative purposes, net earnings for the third quarter of 2013 were $209.7 million or $1.12 per diluted share, and $35.6 million or $0.19 per diluted share for the fourth quarter of 2012. The third quarter amount included a $126 million or $0.68 per diluted share increase to net earnings for the redemption of all of the Company's Series C preferred stock.

Fourth Quarter 2013 Highlights

  • Loans and leases held for investment, excluding FDIC-supported loans, increased $795 million compared to the prior quarter to $38.7 billion at December 31, 2013. Average loans and leases, excluding FDIC-supported loans, increased $442 million.
  • Net interest income, excluding the effect of income from FDIC-supported loans, increased modestly compared to the previous quarter.
  • Credit quality showed continued improvement, with nonperforming lending-related assets and classified loans declining 16% and 13%, respectively, compared to the prior quarter. This continued improvement resulted in a fourth quarter negative provision for loan losses of $31 million.
  • The fair value of the CDO portfolio increased by $137 million during the quarter, even as sales and paydowns reduced the par balance of the portfolio.
  • Tangible book value per share improved by 3% compared to the prior quarter, increasing to $23.88 from $23.16; compared to the year-ago period, tangible book value per share improved by approximately 14%, a significant portion of which is attributable to the improvement in fair values of CDOs.

"We are pleased with the improvement in loan growth, further strengthening of credit quality, and stabilization of the net interest margin during the quarter. Additionally, the steps we are taking to reduce risk in our securities portfolio, combined with continued strengthening of our capital ratios, positions us well to serve our customers and grow as the economy continues to improve," said Harris H. Simmons, chairman and chief executive officer.

Dividend Announcement
In addition to announcing its fourth quarter financial results, the Company also announced today that its Board of Directors declared a regular quarterly dividend of $0.04 per common share. The dividend is payable February 27, 2014 to shareholders of record on February 20, 2014. The Board of Directors also declared the regular quarterly cash dividends on the Company's various perpetual preferred shares. The cash dividends on the Series A, F, G, H and J shares are payable on March 15, 2014 to shareholders of record on March 1, 2014. The cash dividends on the Series I shares are payable on June 15, 2014 to shareholders of record on June 1, 2014.

Loans
Loans and leases held for investment, excluding FDIC-supported loans, increased $795 million, or 2%, to $38.7 billion at December 31, 2013 from $37.9 billion at September 30, 2013. The increases were predominantly in commercial and industrial loans primarily in Texas and California, and in 1-4 family residential loans primarily in Texas and Utah. Average loans and leases, excluding FDIC-supported loans, increased $442 million, or 1%, to $38.3 billion during the fourth quarter of 2013, compared to $37.8 billion during the third quarter of 2013. Unfunded lending commitments at December 31, 2013 increased by approximately $578 million during the fourth quarter of 2013 to a total of $17.2 billion at December 31, 2013, compared to a $488 million increase during the third quarter of 2013.

Deposits
Average total deposits for the fourth quarter of 2013 increased $0.7 billion, or 1%, to $46.3 billion, compared to $45.6 billion for the third quarter of 2013. This increase was driven primarily by noninterest-bearing demand deposits, which increased to an average of $18.8 billion in the fourth quarter from $18.2 billion in the third quarter. The ratio of average loans to average deposits was 84% for the fourth quarter, unchanged from the third quarter.

Debt and Shareholders' Equity
The Company completed the following debt transactions during the quarter, excluding those in its medium-term note program:

  1. On November 5, 2013, the Company issued $162 million of qualifying Tier 2 fixed/floating rate subordinated notes due November 15, 2023. Interest payments at a rate of 5.65% commence May 15, 2014 and continue semiannually to the earliest possible redemption date of November 15, 2018, after which they are payable quarterly at an annual floating rate equal to three-month LIBOR plus 4.19%. Net proceeds were approximately $160 million.
  2. Effective December 6, 2013, the Company completed the purchases of $250 million par amount of its 5.5% and 6.0% convertible and nonconvertible subordinated notes. The purchases were made as a result of separate cash tender offers totaling $250 million that were announced on November 6, 2013. The total debt extinguishment cost recorded by the Company as a result of these purchases was approximately $80 million pretax or $0.27 per diluted share after-tax.

The estimated common equity Tier 1 capital ratio was 10.15% at December 31, 2013, compared to 10.47% at September 30, 2013.

CDO Investment Securities
As explained in the Company's press release issued January 21, 2014, the Company reached a decision to sell a portion of its CDO portfolio, which resulted in impairment charges of those securities to their fair values. This decision was the result of an analysis of the Company's CDO securities under the Volcker Rule (as subsequently modified by the Interim Final Rule) and other factors. The total OTTI adjustment reduced net earnings for the fourth quarter by approximately $142 million pretax or $0.47 per diluted share after-tax.

The following table provides selected information on the CDOs, stratified into performing tranches without credit impairment and nonperforming tranches at December 31, 2013:


December 31, 2013
















Net

unrealized

losses

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



December 31,

2013


September 30,

2013


Change

Performing CDOs


















Predominantly bank CDOs

23


$      687


$      617


$      499


$    (118)


5.6%


73%


71%


2%

Insurance CDOs

22


433


413


346


(67)


4.9%


80%


75%


5%

Other CDOs

3


43


26


26



10.6%


60%


75%


(15)%

Total performing CDOs

48


1,163


1,056


871


(185)


5.5%


75%


73%


2%



















Nonperforming CDOs 3


















CDOs credit impaired prior to last 12 months

32


614


369


285


(84)


7.0%


46%


42%


4%

CDOs credit impaired during last 12 months

23


448


187


150


(37)


6.5%


33%


27%


6%

Total nonperforming CDOs

55


1,062


556


435


(121)


6.8%


41%


30%


11%



















Total CDOs

103


$    2,225


$    1,612


$    1,306


$     (306)


6.1%


59%


52%


7%




















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 following table shows changes in selected information on the CDOs from December 31, 2012 to December 31, 2013:



Change from December 31, 2012 to December 31, 2013











Decrease

(increase) in net

unrealized losses

recognized in OCI


Weighted

average

discount

rate





(Amounts in millions)


No. of

tranches


Par

amount


Amortized

cost


Carrying

value




% of carrying

value to par

Performing CDOs

















Predominantly bank CDOs


(5)


$    (124)


$    (110)


$     (39)


$       71


(2.2)%



7%


Insurance CDOs



(21)


(36)


19


55


(3.7)%



8%


Other CDOs


(3)


(11)


(17)


(12)


5


1.2%



(10)%


Total performing CDOs


(8)


(156)


(163)


(32)


131


(2.6)%



7%



















Nonperforming CDOs

















Credit impairment prior to last 12 months


14


245


118


176


58


(3.7)%



16%


Credit impairment during last 12 months


(16)


(284)


(254)


(31)


223


(3.1)%



8%


Total nonperforming CDOs


(2)


(39)


(136)


145


281


(3.2)%



15%



















Total CDOs


(10)


$    (195)


$    (299)


$     113


$      412


(2.9)%



10%



















The primary improvement to the Company's accumulated other comprehensive income ("AOCI") during the fourth quarter is attributable to the recognition in earnings of unrealized losses on CDO securities and to an increase in fair value of the CDO securities.

Net Interest Income
Excluding income from FDIC-supported loans, net interest income increased slightly compared to the prior quarter due to stronger loan growth, partially offset by reduced yield in the loan portfolio. Interest income from FDIC-supported loans also improved by approximately $13 million due to payoffs. In total, net interest income increased to $432 million for the fourth quarter of 2013, compared to $416 million for the third quarter of 2013. The net interest margin increased to 3.33% in the fourth quarter of 2013, compared to 3.22% in the third quarter of 2013 primarily as a result of the strong performance of FDIC-supported loans.

Noninterest Income
Noninterest income for the fourth quarter of 2013 was $(31) million, compared to $122 million for the third quarter of 2013. The significant majority of the linked quarter decline was attributable to the OTTI on CDO securities, as previously discussed. Loan sales and servicing income decreased primarily due to a lower volume of mortgage refinancing.

Noninterest Expense
Noninterest expense for the fourth quarter of 2013 was $495 million compared to $371 million for the third quarter of 2013. Increases this quarter compared to the previous quarter were due primarily to (1) the debt extinguishment cost of $80 million, (2) the change in the provision for unfunded lending commitments to $5.6 million this quarter from a negative provision of $19.9 million in the third quarter, due in part to a higher volume of loan commitments, (3) the increase in professional and legal services to $23.9 million in the fourth quarter from $16.5 million in the third quarter, and (4) an increase in the amortization of the FDIC indemnification asset to $19.9 million, compared to the prior quarter amount of $13.0 million, included in other noninterest expense. The increase in professional and legal services was primarily due to consulting expense related to the Company's Comprehensive Capital Analysis and Review ("CCAR") submission.

Asset Quality
Nonperforming lending-related assets declined 16% to $453 million at December 31, 2013 from $538 million at September 30, 2013, primarily due to favorable resolutions. Nonaccrual loans declined 14% to $407 million at December 31, 2013 from $472 million at September 30, 2013. The ratio of nonperforming lending-related assets to loans and leases and other real estate owned decreased to 1.15% at December 31, 2013, compared to 1.40% at September 30, 2013.

Classified loans, excluding FDIC-supported loans, decreased approximately 13% to $1.2 billion at December 31, 2013, compared to $1.4 billion at September 30, 2013. Consistent with recent quarters, approximately 84% were current as to principal and interest.

Net loan and lease charge-offs increased to $19 million in the fourth quarter of 2013, compared to $9 million in the third quarter of 2013.

The negative provision for loan losses was $31 million for the fourth quarter of 2013, compared to a negative provision of $6 million for the third quarter of 2013. The negative provision continues to result from the improvement in credit quality. The allowance for credit losses was $836 million, or 2.14% of loans and leases at December 31, 2013, compared to $882 million, or 2.30% of loans and leases at September 30, 2013. The Company's allowance for credit losses remains among the strongest of its peer regional banks.

Conference Call
Zions will host a conference call to discuss these fourth quarter results at 5:30 p.m. ET this afternoon (January 27, 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 29467185, 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 through approximately 475 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, and received 13 "Excellence" awards by Greenwich Associates for the 2012 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, and its Current Report on Form 8-K dated January 21, 2014, 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,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

PER COMMON SHARE










Dividends

$    0.04


$    0.04


$    0.04


$    0.01


$    0.01

Book value per common share 1

29.57


28.87


27.82


27.43


26.73

Tangible common equity per common share 1

23.88


23.16


22.09


21.67


20.95











SELECTED RATIOS










Return on average assets

(0.30)%


0.80%


0.61%


0.83%


0.43%

Return on average common equity

(4.51)%


16.03%


4.35%


7.18%


2.91%

Tangible return on average tangible common

equity

(5.45)%


20.34%


5.73%


9.37%


4.07%

Net interest margin

3.33%


3.22%


3.44%


3.44%


3.47%











Capital Ratios










Tangible common equity ratio 1

8.02%


7.90%


7.57%


7.53%


7.09%

Tangible equity ratio 1

9.85%


9.75%


10.78%


9.97%


9.15%

Average equity to average assets

11.20%


12.39%


12.11%


11.54%


11.03%











Risk-Based Capital Ratios 1,2










Common equity Tier 1 capital

10.15%


10.47%


10.03%


10.07%


9.80%

Tier 1 leverage

10.48%


10.63%


11.75%


11.55%


10.96%

Tier 1 risk-based capital

12.72%


13.10%


14.30%


14.08%


13.38%

Total risk-based capital

14.62%


14.82%


15.94%


15.75%


15.05%











Taxable-equivalent net interest income

$    435,714


$    419,236


$    434,579


$    422,252


$    434,252











Weighted average common and common-

equivalent shares outstanding

184,208,544


184,742,414


184,061,623


183,655,129


183,456,109

Common shares outstanding 1

184,677,696


184,600,005


184,436,656


184,246,471


184,199,198











1 At period end.










2 Ratios for December 31, 2013 are estimates.






























CONSOLIDATED BALANCE SHEETS




















(In thousands, except share amounts)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)



ASSETS










Cash and due from banks

$    1,175,083


$    1,365,082


$    1,183,097


$    928,817


$    1,841,907

Money market investments:










Interest-bearing deposits

8,175,048


8,180,639


8,180,010


5,785,268


5,978,978

Federal funds sold and security resell agreements

282,248


209,070


221,799


2,340,177


2,775,354

Investment securities:










Held-to-maturity, at adjusted cost (approximate fair value
$609,547, $727,908, $734,292, $684,668, and $674,741)

588,981


777,849


783,371


736,158


756,909

Available-for-sale, at fair value

3,701,886


3,333,889


3,193,395


3,287,844


3,091,310

Trading account, at fair value

34,559


38,278


26,385


28,301


28,290


4,325,426


4,150,016


4,003,151


4,052,303


3,876,509











Loans held for sale

171,328


114,810


164,619


161,559


251,651











Loans, net of unearned income and fees:










Loans and leases

38,693,094


37,897,869


37,756,010


37,284,694


37,137,006

FDIC-supported loans

350,271


374,861


431,935


477,725


528,241


39,043,365


38,272,730


38,187,945


37,762,419


37,665,247

Less allowance for loan losses

746,291


797,523


813,912


841,781


896,087

Loans, net of allowance

38,297,074


37,475,207


37,374,033


36,920,638


36,769,160











Other noninterest-bearing investments

855,642


851,349


852,939


855,388


855,462

Premises and equipment, net

726,372


720,365


717,299


706,746


708,882

Goodwill

1,014,129


1,014,129


1,014,129


1,014,129


1,014,129

Core deposit and other intangibles

36,444


39,667


43,239


47,000


50,818

Other real estate owned

46,105


66,381


80,789


89,904


98,151

Other assets

926,228


1,001,597


1,069,436


1,208,635


1,290,917


$    56,031,127


$    55,188,312


$    54,904,540


$    54,110,564


$    55,511,918











LIABILITIES AND SHAREHOLDERS' EQUITY










Deposits:










Noninterest-bearing demand

$    18,758,753


$    18,566,137


$    17,803,950


$    17,311,150


$    18,469,458

Interest-bearing:










Savings and money market

23,029,928


22,806,132


22,887,404


22,760,397


22,896,624

Time

2,593,038


2,689,688


2,810,431


2,889,903


2,962,931

Foreign

1,980,161


1,607,409


1,514,270


1,528,745


1,804,060


46,361,880


45,669,366


45,016,055


44,490,195


46,133,073











Securities sold, not yet purchased

73,606


21,183


15,799


1,662


26,735

Federal funds purchased and security repurchase agreements

266,742


252,591


240,816


325,107


320,478

Other short-term borrowings





5,409

Long-term debt

2,273,575


2,304,301


2,173,176


2,352,569


2,337,113

Reserve for unfunded lending commitments

89,705


84,147


104,082


100,455


106,809

Other liabilities

501,056


523,915


494,280


489,923


533,660

Total liabilities

49,566,564


48,855,503


48,044,208


47,759,911


49,463,277











Shareholders' equity:










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

1,003,970


1,003,970


1,728,659


1,301,289


1,128,302

Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 184,677,696, 184,600,005, 184,436,656, 184,246,471, and 184,199,198 shares

4,179,024


4,172,887


4,167,828


4,170,888


4,166,109

Retained earnings

1,473,670


1,540,455


1,338,401


1,290,131


1,203,815

Accumulated other comprehensive income (loss)

(192,101)


(384,503)


(374,556)


(406,903)


(446,157)

Controlling interest shareholders' equity

6,464,563


6,332,809


6,860,332


6,355,405


6,052,069

Noncontrolling interests




(4,752)


(3,428)

Total shareholders' equity

6,464,563


6,332,809


6,860,332


6,350,653


6,048,641


$    56,031,127


$    55,188,312


$    54,904,540


$    54,110,564


$    55,511,918






















CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)





Three Months Ended

(In thousands, except per share amounts)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

Interest income:










Interest and fees on loans

$    458,493


$    442,366


$    460,308


$    453,433


$    462,002

Interest on money market investments

5,985


6,175


5,764


5,439


6,004

Interest on securities:










Held-to-maturity

7,721


7,739


7,846


7,974


8,130

Available-for-sale

17,450


16,917


19,028


17,712


21,971

Trading account

368


210


287


190


150

Total interest income

490,017


473,407


493,233


484,748


498,257











Interest expense:










Interest on deposits

13,622


14,506


15,143


15,642


16,861

Interest on short-term borrowings

72


71


78


92


178

Interest on long-term debt

44,288


43,309


47,355


50,899


51,261

Total interest expense

57,982


57,886


62,576


66,633


68,300











Net interest income

432,035


415,521


430,657


418,115


429,957

Provision for loan losses

(30,538)


(5,573)


(21,990)


(29,035)


(10,401)

Net interest income after provision for loan losses

462,573


421,094


452,647


447,150


440,358











Noninterest income:










Service charges and fees on deposit accounts

43,729


44,701


44,329


43,580


44,492

Other service charges, commissions and fees

46,877


45,977


45,888


42,731


46,497

Trust and wealth management income

8,067


7,120


7,732


6,994


7,450

Capital markets and foreign exchange

6,516


7,309


6,740


7,486


7,708

Dividends and other investment income

9,898


12,101


11,339


12,724


13,117

Loan sales and servicing income

5,155


8,464


10,723


10,951


10,595

Fair value and nonhedge derivative loss

(5,347)


(4,403)


(2,957)


(5,445)


(4,778)

Equity securities gains (losses), net

314


3,165


2,209


2,832


(682)

Fixed income securities gains (losses), net

(6,624)


1,580


(1,153)


3,299


10,259

Impairment losses on investment securities:










Impairment losses on investment securities

(141,733)


(10,470)


(4,910)


(31,493)


(120,082)

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


1,403


693


21,376


36,274

Net impairment losses on investment securities

(141,733)


(9,067)


(4,217)


(10,117)


(83,808)

Other

1,998


5,243


4,515


6,184


3,309

Total noninterest income (loss)

(31,150)


122,190


125,148


121,219


54,159











Noninterest expense:










Salaries and employee benefits

226,616


229,185


227,328


229,789


220,039

Occupancy, net

28,733


28,230


27,951


27,389


28,226

Equipment, software and furniture

27,450


26,560


26,545


26,074


27,774

Other real estate expense

(1,024)


(831)


1,590


1,977


5,266

Credit related expense

6,509


7,265


9,397


10,482


11,302

Provision for unfunded lending commitments

5,558


(19,935)


3,627


(6,354)


959

Professional and legal services

23,886


16,462


17,149


10,471


15,717

Advertising

5,571


6,091


5,807


5,893


5,969

FDIC premiums

8,789


9,395


10,124


9,711


10,760

Amortization of core deposit and other intangibles

3,224


3,570


3,762


3,819


4,216

Debt extinguishment cost

79,910



40,282



Other

79,528


64,671


78,116


78,097


76,786

Total noninterest expense

494,750


370,663


451,678


397,348


407,014











Income (loss) before income taxes

(63,327)


172,621


126,117


171,021


87,503

Income taxes (benefit)

(21,855)


61,107


43,091


60,634


29,817

Net income (loss)

(41,472)


111,514


83,026


110,387


57,686

Net loss applicable to noncontrolling interests




(336)


(566)

Net income (loss) applicable to controlling interest

(41,472)


111,514


83,026


110,723


58,252

Preferred stock dividends

(17,965)


(27,507)


(27,641)


(22,399)


(22,647)

Preferred stock redemption


125,700





Net earnings (loss) applicable to common shareholders

$    (59,437)


$    209,707


$    55,385


$    88,324


$    35,605











Weighted average common shares outstanding during the period:









Basic shares

184,209


184,112


183,647


183.396


183,300

Diluted shares

184,209


184,742


184,062


183,655


183,456











Net earnings (loss) per common share:










Basic

$    (0.32)


$    1.13


$   0.30


$    0.48


$    0.19

Diluted

(0.32)


1.12


0.30


0.48


0.19

 

CONSOLIDATED STATEMENTS OF INCOME



Year Ended

(In thousands, except per share amounts)

December 31,

2013


December 31,

2012


(Unaudited)



Interest income:




Interest and fees on loans

1,814,600


1,889,884

Interest on money market investments

23,363


21,080

Interest on securities:




Held-to-maturity

31,280


34,751

Available-for-sale

71,107


92,261

Trading account

1,055


746

Total interest income

1,941,405


2,038,722





Interest expense:




Interest on deposits

58,913


80,146

Interest on short-term borrowings

313


1,406

Interest on long-term debt

185,851


225,230

Total interest expense

245,077


306,782





Net interest income

1,696,328


1,731,940

Provision for loan losses

(87,136)


14,227

Net interest income after provision for loan losses

1,783,464


1,717,713





Noninterest income:




Service charges and fees on deposit accounts

176,339


176,401

Other service charges, commissions and fees

181,473


174,420

Trust and wealth management income

29,913


28,402

Capital markets and foreign exchange

28,051


26,810

Dividends and other investment income

46,062


55,825

Loan sales and servicing income

35,293


39,929

Fair value and nonhedge derivative loss

(18,152)


(21,782)

Equity securities gains, net

8,520


11,253

Fixed income securities gains (losses), net

(2,898)


19,544

Impairment losses on investment securities:




Impairment losses on investment securities

(188,606)


(166,257)

Noncredit-related losses on securities not expected to be sold

(recognized in other comprehensive income)

23,472


62,196

Net impairment losses on investment securities

(165,134)


(104,061)

Other

17,940


13,129

Total noninterest income

337,407


419,870





Noninterest expense:




Salaries and employee benefits

912,918


885,661

Occupancy, net

112,303


112,947

Equipment, software and furniture

106,629


108,990

Other real estate expense

1,712


19,723

Credit related expense

33,653


50,518

Provision for unfunded lending commitments

(17,104)


4,387

Professional and legal services

67,968


52,509

Advertising

23,362


25,720

FDIC premiums

38,019


43,401

Amortization of core deposit and other intangibles

14,375


17,010

Debt extinguishment cost

120,192


Other

300,412


275,151

Total noninterest expense

1,714,439


1,596,017





Income before income taxes

406,432


541,566

Income taxes

142,977


193,416

Net income

263,455


348,150

Net loss applicable to noncontrolling interests

(336)


(1,366)

Net income applicable to controlling interest

263,791


349,516

Preferred stock dividends

(95,512)


(170,885)

Preferred stock redemption

125,700


Net earnings applicable to common shareholders

$    293,979


$    178,631





Weighted average common shares outstanding during the year:



Basic shares

183,844


183,081

Diluted shares

184,297


183,236





Net earnings per common share:




Basic

$    1.58


$    0.97

Diluted

1.58


0.97

 

Loan Balances by Portfolio Type

(Unaudited)


(In millions)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

Commercial:










Commercial and industrial

$    12,481


$    11,904


$    11,899


$    11,504


 

$    11,257

Leasing

388


375


388


390


423

Owner occupied

7,437


7,379


7,394


7,501


7,589

Municipal

449


449


454


484


494

Total commercial

20,755


20,107


20,135


19,879


19,763











Commercial real estate:










Construction and land development

2,183


2,240


2,191


2,039


1,939

Term

8,006


7,929


7,971


8,012


8,063

Total commercial real estate

10,189


10,169


10,162


10,051


10,002











Consumer:










Home equity credit line

2,133


2,124


2,124


2,125


2,178

1-4 family residential

4,737


4,637


4,486


4,408


4,350

Construction and other consumer real estate

325


321


322


320


321

Bankcard and other revolving plans

356


332


315


293


307

Other

198


208


212


208


216

Total consumer

7,749


7,622


7,459


7,354


7,372











FDIC-supported loans 1

350


375


432


478


528

Total loans

$    39,043


$    38,273


$    38,188


$    37,762


$    37,665


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)



Three Months Ended

(In thousands)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

Balance sheet:




















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










FDIC-supported loans

$    28,502


$    15,018


$    28,424


$    18,977


$    12,970

FDIC indemnification asset (included in other assets)

(19,934)


(12,965)


(21,845)


(20,288)


(10,610)











Balance at end of period:










FDIC-supported loans

350,271


374,861


431,935


477,725


528,241

FDIC indemnification asset (included in other assets)

26,411


41,771


51,297


71,100


90,074












Three Months Ended

(In thousands)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

Statement of income:




















Interest income:










Interest and fees on loans

$    28,502


$    15,018


$    28,424


$    18,977


$    12,970











Noninterest expense:










Other noninterest expense

19,934


12,965


21,845


20,288


10,610

Net increase (decrease) in pretax income

$      8,568


$      2,053


$     6,579


$    (1,311)


$      2,360

 

Nonperforming Lending-Related Assets

(Unaudited)



















(Amounts in thousands)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012











Nonaccrual loans

$ 402,219


$ 466,795


$ 515,708


$ 589,221


$ 630,810

Other real estate owned

42,817


58,295


70,031


80,701


90,269

Nonperforming lending-related assets, excluding

FDIC-supported assets

445,036


525,090


585,739


669,922


721,079











FDIC-supported nonaccrual loans

4,394


4,744


5,256


4,927


17,343

FDIC-supported other real estate owned

3,288


8,086


10,758


9,203


7,882

FDIC-supported nonperforming assets

7,682


12,830


16,014


14,130


25,225

Total nonperforming lending-related assets

$ 452,718


$ 537,920


$ 601,753


$ 684,052


$ 746,304











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

1.15%


1.40%


1.57%


1.80%


1.96%











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

$ 9,957


$ 9,398


$ 10,685


$ 12,708


$ 9,730

Accruing FDIC-supported loans past due 90 days or
more

30,391


22,450


33,410


47,208


52,033

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

0.10%


0.08%


0.11%


0.16%


0.16%











Nonaccrual loans and accruing loans past due 90 days
or more

$ 446,961


$ 503,387


$ 565,059


$ 654,064


$ 709,916

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

1.14%


1.31%


1.47%


1.72%


1.87%











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

$ 104,760


$ 85,128


$ 103,075


$ 155,896


$ 185,422

Accruing FDIC-supported loans past due 30 - 89 days

11,752


10,983


6,522


11,571


11,924











Restructured loans included in nonaccrual loans

136,135


166,573


162,496


193,975


215,476

Restructured loans on accrual

345,299


384,793


385,428


416,181


407,026











Classified loans, excluding FDIC-supported loans

1,240,148


1,432,806


1,639,206


1,737,178


1,767,460











1 Includes loans held for sale.










 

Allowance for Credit Losses

(Unaudited)



Three Months Ended

(Amounts in thousands)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

Allowance for Loan Losses










Balance at beginning of period

$    797,523


$    813,912


$    841,781


$    896,087


$     927,068

Add:










Provision for losses

(30,538)


(5,573)


(21,990)


(29,035)


(10,401)

Adjustment for FDIC-supported loans

(1,481)


(2,118)


(209)


(7,429)


(1,721)

Deduct:










Gross loan and lease charge-offs

(37,405)


(22,826)


(35,099)


(35,467)


(54,709)

Recoveries

18,192


14,128


29,429


17,625


35,850

Net loan and lease charge-offs

(19,213)


(8,698)


(5,670)


(17,842)


(18,859)

Balance at end of period

$    746,291


$    797,523


$    813,912


$   841,781


$     896,087











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

1.91%


2.08%


2.13%


2.23%


2.38%











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

183.54%


169.13%


156.23%


141.68%


138.25%











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

0.20%


0.09%


0.06%


0.19%


0.20%











Reserve for Unfunded Lending Commitments










Balance at beginning of period

$      84,147


$    104,082


$    100,455


$    106,809


$      105,850

Provision charged (credited) to earnings

5,558


(19,935)


3,627


(6,354)


959

Balance at end of period

$      89,705


$      84,147


$    104,082


$    100,455


$      106,809











Total Allowance for Credit Losses










Allowance for loan losses

$    746,291


$    797,523


$    813,912


$    841,781


$      896,087

Reserve for unfunded lending commitments

89,705


84,147


104,082


100,455


106,809

Total allowance for credit losses

$    835,996


$    881,670


$    917,994


$    942,236


$   1,002,896











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

2.14%


2.30%


2.40%


2.50%


2.66%

 

Nonaccrual Loans by Portfolio Type

(Excluding FDIC-Supported Loans)

(Unaudited)


(In millions)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012











Commercial:










Commercial and industrial

$    98


$    100


$    94


$    100


$    91

Leasing

1


1


1


1


1

Owner occupied

136


158


186


195


206

Municipal

10


10


9


9


9

Total commercial

245


269


290


305


307











Commercial real estate:










Construction and land development

29


65


70


93


108

Term

60


61


71


102


125

Total commercial real estate

89


126


141


195


233











Consumer:










Home equity credit line

9


8


11


12


14

1-4 family residential

53


58


66


71


70

Construction and other consumer real estate

4


4


5


4


5

Bankcard and other revolving plans

1


1


2


1


1

Other

1


1


1


1


1

Total consumer

68


72


85


89


91

Total nonaccrual loans

$    402


$    467


$    516


$    589


$    631

 

Net Charge-Offs by Portfolio Type

(Unaudited)



Three Months Ended

(In millions)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012

Commercial:










Commercial and industrial

$    15


$   2


$   2


$    5


$   (1)

Leasing





2

Owner occupied

1


2


3


5


7

Municipal





Total commercial

16


4


5


10


8











Commercial real estate:










Construction and land development

(3)


(1)


(3)


(3)


(7)

Term

5


3


(2)


5


7

Total commercial real estate

2


2


(5)


2












Consumer:










Home equity credit line


1


2


2


6

1-4 family residential


1


3


3


4

Construction and other consumer real estate



1


(1)


Bankcard and other revolving plans

1


1



2


1

Other





Total consumer loans

1


3


6


6


11

Total net charge-offs

$   19


$   9


$   6


$    18


$    19

 


CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

(Unaudited)




Three Months Ended


December 31, 2013


September 30, 2013


June 30, 2013

(In thousands)

Average
balance


Average
rate


Average
balance


Average
rate


Average
balance


Average
rate

ASSETS















Money market investments

$

9,154,232


0.26%


$

9,454,131


0.26%


$

8,652,403


0.27%

Securities:









Held-to-maturity

770,168


4.75%


778,268


4.73%


740,839


5.07%

Available-for-sale

3,230,152


2.17%


3,071,039


2.22%


3,090,910


2.50%

Trading account

43,063


3.39%


25,959


3.21%


36,296


3.17%

    Total securities

4,043,383


2.68%


3,875,266


2.73%


3,868,045


3.00%










Loans held for sale

119,671


3.73%


131,652


3.70%


141,313


3.47%










Loans 1:









Loans and leases

38,259,795


4.41%


37,818,273


4.43%


37,518,549


4.55%

FDIC-supported loans

363,982


36.88%


405,316


20.52%


452,849


31.22%

    Total loans

38,623,777


4.72%


38,223,589


4.60%


37,971,398


4.87%

Total interest-earning assets

51,941,063


3.77%


51,684,638


3.66%


50,633,159


3.94%

Cash and due from banks

1,026,814




976,159




1,000,221



Allowance for loan losses

(790,361)




(810,290)




(837,651)



Goodwill

1,014,129




1,014,129




1,014,129



Core deposit and other intangibles

38,137




41,751




45,262



Other assets

2,470,837




2,608,252




2,808,640



    Total assets

$

55,700,619




$

55,514,639




$

54,663,760












LIABILITIES









Interest-bearing deposits:









Savings and money market

$

22,972,978


0.16%


$

22,982,998


0.17%


$

22,871,040


0.18%

Time

2,642,104


0.50%


2,749,985


0.56%


2,842,322


0.59%

Foreign

1,796,912


0.20%


1,675,256


0.20%


1,642,381


0.20%

    Total interest-bearing deposits

27,411,994


0.20%


27,408,239


0.21%


27,355,743


0.22%

Borrowed funds:









Federal funds purchased and other short-term

borrowings

271,501


0.11%


260,744


0.11%


287,766


0.11%

Long-term debt

2,352,748


7.47%


2,198,752


7.81%


2,214,215


8.58%

    Total borrowed funds

2,624,249


6.71%


2,459,496


7.00%


2,501,981


7.60%

Total interest-bearing liabilities

30,036,243


0.77%


29,867,735


0.77%


29,857,724


0.84%

Noninterest-bearing deposits

18,842,097




18,179,584




17,629,219



Other liabilities

584,887




591,735




559,219



    Total liabilities

49,463,227




48,639,054




48,046,162



Shareholders' equity:









Preferred equity

1,003,970




1,685,512




1,518,823



Common equity

5,233,422




5,190,073




5,102,082



    Controlling interest shareholders' equity

6,237,392




6,875,585




6,620,905



Noncontrolling interests







(3,307)



    Total shareholders' equity

6,237,392




6,875,585




6,617,598



    Total liabilities and shareholders' equity

$

55,700,619




$

55,514,639




$

54,663,760












Spread on average interest-bearing funds


3.00%



2.89%



3.10%










Net yield on interest-earning assets


3.33%



3.22%



3.44%










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)

December 31,

2013


September 30,

2013


June 30,

2013


March 31,

2013


December 31,

2012











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

$      (59,437)


$      209,707


$        55,385


$        88,324


$        35,605











Adjustments, net of tax:










Impairment loss on goodwill





583

Amortization of core deposit and other intangibles

2,046


2,268


2,391


2,425


2,677

Net earnings (loss) applicable to common

shareholders, excluding the effects of the adjustments,

net of tax (non-GAAP) (a)

$       (57,391)


$       211,975


$         57,776


$         90,749


$         38,865











Average common equity (GAAP)

$    5,233,422


$    5,190,073


$    5,102,082


$    4,990,317


$    4,862,972

Average goodwill

(1,014,129)


(1,014,129)


(1,014,129)


(1,014,129)


(1,014,986)

Average core deposit and other intangibles

(38,137)


(41,751)


(45,262)


(49,069)


(53,083)

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

$    4,181,156


$    4,134,193


$    4,042,691


$    3,927,119


$    3,794,903











Number of days in quarter (c)

92


92


91


90


92

Number of days in year (d)

365


365


365


365


366











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

(5.45)%


20.34%


5.73%


9.37%


4.07%

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

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.