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Zions Bancorporation Reports Earnings Of $0.41 Per Diluted Common Share For First Quarter 2014

SALT LAKE CITY, April 21, 2014 /PRNewswire/ -- Zions Bancorporation (NASDAQ: ZION) ("Zions" or "the Company") today reported first quarter net earnings applicable to common shareholders of $76.2 million, or $0.41 per diluted common share, compared to a loss of $(59.4) million, or $(0.32) per diluted share for the fourth quarter of 2013, and earnings of $88.3 million, or $0.48 per diluted share for the first quarter of 2013. The Company's loss in the fourth quarter of 2013 included $137 million after-tax, or $0.74 per diluted share, of impairment charges on collateralized debt obligation ("CDO") securities and debt extinguishment costs.

First Quarter 2014 Highlights

  • Sales and paydowns of nearly $1 billion, or 45% of the par amount of CDO securities in the first quarter of 2014, resulted in net pretax gains of approximately $31 million, or $0.10 per diluted share after-tax. The sales were made as a result of the Volcker Rule, as modified, and the Company's efforts to reduce risk in its CDO portfolio.
  • Loans and leases held for investment increased $155 million this quarter ($220 million excluding FDIC-supported loans) compared to the prior quarter, to $39.2 billion at March 31, 2014. Average loans and leases increased $501 million this quarter ($545 million excluding FDIC supported loans).
  • Net interest income decreased to $416 million this quarter from $432 million in the prior quarter; the change is primarily the result of a decline in income from FDIC-supported loans and of two fewer days in the quarter. The net interest margin decreased slightly to 3.31% from 3.33%.
  • Credit quality remained strong as gross loan and lease charge-offs were $20.8 million, the lowest level since 2007, and net loan and lease charge-offs were 0.08% annualized of average loans and leases.
  • Tangible book value per common share improved by approximately 3% compared to the prior quarter, increasing to $24.53 from $23.88; compared to the year-ago period, tangible book value per common share improved by approximately 13%, a significant portion of which is attributable to the sales of CDOs and improvement in their fair values.

"We are pleased with the successful reduction in our CDO securities portfolio, which improved the Company's risk profile while also improving both its tangible and Tier 1 common equity levels, as many of these securities had high risk weightings and were sold at prices above the values recorded at December 31, 2013," said Harris H. Simmons, chairman and chief executive officer. Mr. Simmons continued, "After a strong fourth quarter, our first quarter loan growth was somewhat slower; however, our capital levels continue to improve and we are optimistic as we look at the underlying economic strength within our footprint."

Loans

Loans and leases held for investment increased $155 million on a net basis, or 0.4%, ($220 million or 0.6% excluding FDIC-supported loans) to $39.2 billion at March 31, 2014 from $39.0 billion at December 31, 2013. Increases of approximately $321 million were predominantly in commercial real estate loans, primarily in California and Texas, and 1-4 family residential loans, primarily in Texas and Utah. These increases were partially offset by decreases of approximately $166 million, primarily in commercial owner occupied and FDIC-supported loans.

Average loans and leases increased $501 million, or 1.3%, ($545 million or 1.4% excluding FDIC-supported loans) to $39.1 billion during the first quarter of 2014, compared to $38.6 billion during the fourth quarter of 2013. Unfunded lending commitments increased by approximately $0.3 billion during the first quarter of 2014 to $17.5 billion at March 31, 2014, compared to a $0.6 billion increase during the fourth quarter of 2013.

Deposits

Total deposits increased $170 million to $46.5 billion at March 31, 2014, compared to $46.4 billion at December 31, 2013. Average total deposits for the first quarter of 2014 decreased $0.5 billion, or 1%, to $45.8 billion, compared to $46.3 billion for the fourth quarter of 2013. The ratio of average loans to average deposits was 85.5% for the first quarter of 2014, compared to 83.5% for the fourth quarter of 2013.

Shareholders' Equity

Preferred stock dividends were $25 million in the first quarter of 2014, compared to $18 million in the fourth quarter of 2013. The increase was due to the phase-in of semiannual dividend accruals on a newly issued series of preferred stock. Subsequent quarterly preferred stock dividends for 2014 and 2015 are expected to average approximately $16 million.

The estimated Tier 1 common equity ratio was 10.53% at March 31, 2014, compared to 10.18% at December 31, 2013.

CDO Investment Securities

During the first quarter of 2014, the Company recorded a total of $993 million par amount of sales and paydowns of CDO securities, thereby reducing the exposure by 45% compared to the par value recorded at December 31, 2013. The sales included those previously announced on February 12, 2014 of $631 million par amount of CDO securities resulting in first quarter pretax gains of $65 million. These securities had been identified for sale as of December 31, 2013 and their amortized cost was adjusted to fair value as of that date.

Late in the first quarter, the Company sold an additional $301 million par amount of primarily insurance CDOs. These sales resulted in net realized pretax losses of $39 million, a substantial improvement compared to the $65 million of unrealized losses recorded on these securities at December 31, 2013, reflecting further price improvement during the first quarter. Accordingly, the sales were accretive to tangible common equity.

Total sales proceeds of CDO securities in the first quarter were $607 million and, together with approximately $5 million of gains on paydowns, resulted in net gains of $31 million. Interest income recognized during the first quarter of 2014 on the securities sold or paid down was approximately $2 million.

The following table provides selected information on the CDOs, stratified into performing tranches without credit impairment and nonperforming tranches at March 31, 2014:





















March 31, 2014










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



Performing CDOs














Predominantly bank CDOs

23


$

655


$

590


$

486


$

(104)


5.3%


74%

Insurance CDOs

2


50


48


46


(2)


2.2%


92%

Other CDOs






—%


—%

Total performing CDOs

25


705


638


532


(106)


5.1%


75%















Nonperforming CDOs 3














CDOs credit impaired prior to last 12 months

18


382


291


200


(91)


5.5%


52%

CDOs credit impaired during last 12 months

7


145


59


42


(17)


5.5%


29%

Total nonperforming CDOs

25


527


350


242


(108)


5.5%


46%















Total CDOs

50


$

1,232


$

988


$

774


$

(214)


5.3%


63%

















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, 2013 to March 31, 2014, primarily reflecting the impact of the first quarter sales and paydowns previously discussed:





















Change from December 31, 2013 to March 31, 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


$

(32)


$

(27)


$

(13)


$

14


(0.3)%


1%

Insurance CDOs

(20)


(383)


(365)


(300)


65


(2.7)%


12%

Other CDOs

(3)


(43)


(26)


(26)



nm


nm

Total performing CDOs

(23)


(458)


(418)


(339)


79


(0.4)%


—%















Nonperforming CDOs














CDOs credit impaired prior to last 12 months

(14)


(232)


(78)


(85)


(7)


(1.5)%


6%

CDOs credit impaired during last 12 months

(16)


(303)


(128)


(105)


23


(1.0)%


(4)%

Total nonperforming CDOs

(30)


(535)


(206)


(190)


16


(1.3)%


5%















Total CDOs

(53)


$

(993)


$

(624)


$

(529)


$

95


(0.8)%


4%















The improvement in the Company's accumulated other comprehensive income ("AOCI") during the first quarter is primarily attributable to the previously mentioned sales of CDO securities and to fair value price increases in remaining CDO securities.

Due to the significant decrease in its CDO portfolio, the Company has given notice effective April 28, 2014 to cancel the Total Return Swap ("TRS") described in detail in the 2013 Annual Report on Form 10-K. The Company expects to record less than $0.5 million in expense for the TRS during the second quarter of 2014 beyond that already accrued, following which the expense will be zero. At March 31, 2014, the TRS reduced risk-weighted assets by approximately $1.1 billion.

Net Interest Income

Net interest income decreased to $416 million for the first quarter of 2014, compared to $432 million for the fourth quarter of 2013. The decrease is primarily the result of lower interest income of approximately $10 million on FDIC-supported loans and of two fewer days in the first quarter compared to the fourth quarter. Lower yields on new loans pressured net interest income, but were partially offset by lower long-term debt costs from the Company's previous refinancing activities. The net interest margin decreased slightly to 3.31% in the first quarter of 2014, compared to 3.33% in the fourth quarter of 2013.

Noninterest Income

Noninterest income for the first quarter of 2014 was $138 million, compared to a loss of $(31) million for the fourth quarter of 2013. The increase this quarter was primarily due to other-than-temporary impairment ("OTTI") recognized on CDO securities in the prior quarter, and to net gains on sales and paydowns of CDO securities.

Noninterest Expense

Noninterest expense for the first quarter of 2014 was $398 million compared to $495 million for the fourth quarter of 2013. Changes this quarter compared to the previous quarter were due primarily to (1) the debt extinguishment cost of $79.9 million recognized in the fourth quarter; (2) the decrease in professional and legal services to $11.0 million this quarter from $23.9 million in the fourth quarter, due to increased consulting expenses in the fourth quarter largely related to the Company's CCAR submission; and (3) the increase in salaries and employee benefits, due primarily to increased FTE count, payroll taxes and variable compensation accruals.

Asset Quality

Credit quality remained stable and strong as nonperforming lending-related assets declined to $441 million at March 31, 2014 from $453 million at December 31, 2013, offset by a slight increase of 4.50% in the level of classified loans. The ratio of nonperforming lending-related assets to loans and leases and other real estate owned decreased to 1.12% at March 31, 2014, compared to 1.15% at December 31, 2013.

Gross loan and lease charge-offs were $20.8 million during the first quarter of 2014, compared to $37.4 million in the fourth quarter of 2013. The first quarter of 2014 amount is the lowest level since 2007. Net loan and lease charge-offs were $8 million in the first quarter of 2014, compared to $19 million in the fourth quarter of 2013.

The negative provision for loan losses was approximately $1 million for the first quarter of 2014, compared to a negative provision of $31 million for the fourth quarter of 2013. The allowance for credit losses was $826 million, or 2.11% of loans and leases at March 31, 2014, compared to $836 million, or 2.14% of loans and leases at December 31, 2013.

Annual Shareholders' Meeting

The Company's Annual Shareholders' Meeting will be held Friday, May 30, 2014 at 1:00 p.m. at the Company's headquarters, One South Main Street, Salt Lake City, Utah, in the Founders Room, 18th Floor.

Conference Call

Zions will host a conference call to discuss these first quarter results at 5:30 p.m. ET this afternoon (April 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 22015506, 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 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)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013

PER COMMON SHARE










Dividends

$

0.04


$

0.04


$

0.04


$

0.04


$

0.01

Book value per common share 1

30.19


29.57


28.87


27.82


27.43

Tangible book value per common share 1

24.53


23.88


23.16


22.09


21.67











SELECTED RATIOS










Return on average assets

0.74%


(0.30)%


0.80%


0.61%


0.83%

Return on average common equity

5.52%


(4.51)%


16.03%


4.35%


7.18%

Tangible return on average tangible common equity

6.96%


(5.45)%


20.34%


5.73%


9.37%

Net interest margin

3.31%


3.33%


3.22%


3.44%


3.44%











Capital Ratios










Tangible common equity ratio 1

8.24%


8.02%


7.90%


7.57%


7.53%

Tangible equity ratio 1

10.06%


9.85%


9.75%


10.78%


9.97%

Average equity to average assets

11.90%


11.20%


12.39%


12.11%


11.54%











Risk-Based Capital Ratios 1,2










Tier 1 common equity

10.53%


10.18%


10.47%


10.03%


10.07%

Tier 1 leverage

10.71%


10.48%


10.63%


11.75%


11.55%

Tier 1 risk-based capital

13.16%


12.77%


13.10%


14.30%


14.08%

Total risk-based capital

15.07%


14.67%


14.82%


15.94%


15.75%











Taxable-equivalent net interest income

$

420,305


$

435,714


$

419,236


$

434,579


$

422,252











Weighted average common and common-equivalent shares outstanding

185,122,844


184,208,544


184,742,414


184,061,623


183,655,129

Common shares outstanding 1

184,895,182


184,677,696


184,600,005


184,436,656


184,246,471



1 At period end.

2 Ratios for March 31, 2014 are estimates.

 

 

CONSOLIDATED BALANCE SHEETS
















(In thousands, except shares)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


(Unaudited)




(Unaudited)


(Unaudited)


(Unaudited)

ASSETS










Cash and due from banks

$

1,341,319


$

1,175,083


$

1,365,082


$

1,183,097


$

928,817

Money market investments:










Interest-bearing deposits

8,157,837


8,175,048


8,180,639


8,180,010


5,785,268

Federal funds sold and security resell agreements

379,947


282,248


209,070


221,799


2,340,177

Investment securities:










Held-to-maturity, at adjusted cost (approximate fair value $635,379, $609,547, $727,908, $734,292, and $684,668)

606,279


588,981


777,849


783,371


736,158

Available-for-sale, at fair value

3,423,205


3,701,886


3,333,889


3,193,395


3,287,844

Trading account, at fair value

56,172


34,559


38,278


26,385


28,301


4,085,656


4,325,426


4,150,016


4,003,151


4,052,303











Loans held for sale

126,344


171,328


114,810


164,619


161,559











Loans and leases, net of unearned income and fees

39,198,136


39,043,365


38,272,730


38,187,945


37,762,419

Less allowance for loan losses

736,953


746,291


797,523


813,912


841,781

Loans, net of allowance

38,461,183


38,297,074


37,475,207


37,374,033


36,920,638











Other noninterest-bearing investments

848,775


855,642


851,349


852,939


855,388

Premises and equipment, net

785,519


726,372


720,365


717,299


706,746

Goodwill

1,014,129


1,014,129


1,014,129


1,014,129


1,014,129

Core deposit and other intangibles

33,562


36,444


39,667


43,239


47,000

Other real estate owned

39,248


46,105


66,381


80,789


89,904

Other assets

807,325


926,228


1,001,597


1,069,436


1,208,635


$

56,080,844


$

56,031,127


$

55,188,312


$

54,904,540


$

54,110,564











LIABILITIES AND SHAREHOLDERS' EQUITY










Deposits:










Noninterest-bearing demand

$

19,257,889


$

18,758,753


$

18,566,137


$

17,803,950


$

17,311,150

Interest-bearing:










 Savings and money market

23,097,351


23,029,928


22,806,132


22,887,404


22,760,397

 Time

2,528,735


2,593,038


2,689,688


2,810,431


2,889,903

 Foreign

1,648,111


1,980,161


1,607,409


1,514,270


1,528,745


46,532,086


46,361,880


45,669,366


45,016,055


44,490,195











Federal funds and other short-term borrowings

279,837


340,348


273,774


256,615


326,769

Long-term debt

2,158,701


2,273,575


2,304,301


2,173,176


2,352,569

Reserve for unfunded lending commitments

88,693


89,705


84,147


104,082


100,455

Other liabilities

435,311


501,056


523,915


494,280


489,923

Total liabilities

49,494,628


49,566,564


48,855,503


48,044,208


47,759,911











Shareholders' equity:










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

1,003,970


1,003,970


1,003,970


1,728,659


1,301,289

Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 184,895,182, 184,677,696, 184,600,005, 184,436,656, and 184,246,471 shares

4,185,513


4,179,024


4,172,887


4,167,828


4,170,888

Retained earnings

1,542,195


1,473,670


1,540,455


1,338,401


1,290,131

Accumulated other comprehensive income (loss)

(145,462)


(192,101)


(384,503)


(374,556)


(406,903)

Controlling interest shareholders' equity

6,586,216


6,464,563


6,332,809


6,860,332


6,355,405

Noncontrolling interests





(4,752)

Total shareholders' equity

6,586,216


6,464,563


6,332,809


6,860,332


6,350,653


$

56,080,844


$

56,031,127


$

55,188,312


$

54,904,540


$

54,110,564

 

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)






















Three Months Ended






(In thousands, except per share amounts)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013






Interest income:















Interest and fees on loans

$

434,344


$

458,493


$

442,366


$

460,308


$

453,433






Interest on money market investments

5,130


5,985


6,175


5,764


5,439






Interest on securities

28,094


25,539


24,866


27,161


25,876






Total interest income

467,568


490,017


473,407


493,233


484,748





















Interest expense:















Interest on deposits

12,779


13,622


14,506


15,143


15,642






Interest on short- and long-term borrowings

38,324


44,360


43,380


47,433


50,991






Total interest expense

51,103


57,982


57,886


62,576


66,633





















Net interest income

416,465


432,035


415,521


430,657


418,115






Provision for loan losses

(610)


(30,538)


(5,573)


(21,990)


(29,035)






Net interest income after provision for loan losses

417,075


462,573


421,094


452,647


447,150





















Noninterest income:















Service charges and fees on deposit accounts

42,594


43,729


44,701


44,329


43,580






Other service charges, commissions and fees

43,519


46,877


45,977


45,888


42,731






Wealth management income

7,077


8,067


7,120


7,732


6,994






Capital markets and foreign exchange

5,000


6,516


7,309


6,740


7,486






Dividends and other investment income

7,864


9,898


12,101


11,339


12,724






Loan sales and servicing income

6,474


5,155


8,464


10,723


10,951






Fair value and nonhedge derivative loss

(8,539)


(5,347)


(4,403)


(2,957)


(5,445)






Equity securities gains, net

912


314


3,165


2,209


2,832






Fixed income securities gains (losses), net

30,914


(6,624)


1,580


(1,153)


3,299






Impairment losses on investment securities:
















Impairment losses on investment securities

(27)


(141,733)


(10,470)


(4,910)


(31,493)







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



1,403


693


21,376







Net impairment losses on investment securities

(27)


(141,733)


(9,067)


(4,217)


(10,117)






Other

2,531


1,998


5,243


4,515


6,184






 Total noninterest income (loss)

138,319


(31,150)


122,190


125,148


121,219





















Noninterest expense:















Salaries and employee benefits

233,406


226,616


229,185


227,328


229,789






Occupancy, net

28,305


28,733


28,230


27,951


27,389






Furniture, equipment and software

27,944


27,450


26,560


26,545


26,074






Other real estate expense

1,607


(1,024)


(831)


1,590


1,977






Credit related expense

6,906


6,509


7,265


9,397


10,482






Provision for unfunded lending commitments

(1,012)


5,558


(19,935)


3,627


(6,354)






Professional and legal services

10,995


23,886


16,462


17,149


10,471






Advertising

6,398


5,571


6,091


5,807


5,893






FDIC premiums

7,922


8,789


9,395


10,124


9,711






Amortization of core deposit and other intangibles

2,882


3,224


3,570


3,762


3,819






Debt extinguishment cost


79,910



40,282







Other

72,710


79,528


64,671


78,116


78,097






Total noninterest expense

398,063


494,750


370,663


451,678


397,348





















Income (loss) before income taxes

157,331


(63,327)


172,621


126,117


171,021






Income taxes (benefit)

56,121


(21,855)


61,107


43,091


60,634






Net income (loss)

101,210


(41,472)


111,514


83,026


110,387






Net loss applicable to noncontrolling interests





(336)






Net income (loss) applicable to controlling interest

101,210


(41,472)


111,514


83,026


110,723






Preferred stock dividends

(25,020)


(17,965)


(27,507)


(27,641)


(22,399)






Preferred stock redemption



125,700








Net earnings (loss) applicable to common shareholders

$

76,190


$

(59,437)


$

209,707


$

55,385


$

88,324





















Weighted average common shares outstanding during the period:














Basic shares

184,440


184,209


184,112


183,647


183.396






Diluted shares

185,123


184,209


184,742


184,062


183,655





















Net earnings (loss) per common share:















Basic

$

0.41


$

(0.32)


$

1.13


$

0.30


$

0.48






Diluted

0.41


(0.32)


1.12


0.30


0.48






 

Loan Balances Held for Investment by Portfolio Type

(Unaudited)
















(In millions)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013

Commercial:










Commercial and industrial

$

12,512


$

12,481


$

11,904


$

11,899


$

11,504

Leasing

389


388


375


388


390

Owner occupied

7,348


7,437


7,379


7,394


7,501

Municipal

482


449


449


454


484

   Total commercial

20,731


20,755


20,107


20,135


19,879











Commercial real estate:










Construction and land development

2,264


2,183


2,240


2,191


2,039

Term

8,080


8,006


7,929


7,971


8,012

   Total commercial real estate

10,344


10,189


10,169


10,162


10,051











Consumer:










Home equity credit line

2,165


2,133


2,124


2,124


2,125

1-4 family residential

4,796


4,737


4,637


4,486


4,408

Construction and other consumer real estate

330


325


321


322


320

Bankcard and other revolving plans

361


356


332


315


293

Other

186


198


208


212


208

   Total consumer

7,838


7,749


7,622


7,459


7,354











FDIC-supported loans 1

285


350


375


432


478

Total loans

$

39,198


$

39,043


$

38,273


$

38,188


$

37,762



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)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013

Balance sheet:




















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










FDIC-supported loans

$

18,453


$

28,502


$

15,018


$

28,424


$

18,977

FDIC indemnification asset

(15,972)


(19,934)


(12,965)


(21,845)


(20,288)











Balance at end of period:










FDIC-supported loans (included in loans and leases)

285,313


350,271


374,861


431,935


477,725

FDIC indemnification asset (included in other assets)

13,184


26,411


41,771


51,297


71,100












Three Months Ended

(In thousands)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013

Statement of income:




















Interest income:










Interest and fees on loans

$

18,453


$

28,502


$

15,018


$

28,424


$

18,977











Noninterest expense:










Other noninterest expense

15,972


19,934


12,965


21,845


20,288

Net increase (decrease) in pretax income

$

2,481


$

8,568


$

2,053


$

6,579


$

(1,311)

 

Nonperforming Lending-Related Assets

(Unaudited)
















(Amounts in thousands)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013











Nonaccrual loans

$

397,549


$

402,219


$

466,795


$

515,708


$

589,221

Other real estate owned

37,841


42,817


58,295


70,031


80,701

Nonperforming lending-related assets, excluding FDIC-supported assets

435,390


445,036


525,090


585,739


669,922











FDIC-supported nonaccrual loans

4,117


4,394


4,744


5,256


4,927

FDIC-supported other real estate owned

1,407


3,288


8,086


10,758


9,203

FDIC-supported nonperforming

lending-related assets

5,524


7,682


12,830


16,014


14,130

Total nonperforming lending-related assets

$

440,914


$

452,718


$

537,920


$

601,753


$

684,052











Ratio of nonperforming lending-related assets to

loans 1 and leases and other real estate owned

1.12%


1.15%


1.40%


1.57%


1.80%











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

$

6,661


$

9,957


$

9,398


$

10,685


$

12,708

Accruing FDIC-supported loans past due 90 days or more

31,529


30,391


22,450


33,410


47,208

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

0.10%


0.10%


0.08%


0.11%


0.16%











Nonaccrual loans and accruing loans past due 90 days or more

$

439,856


$

446,961


$

503,387


$

565,059


$

654,064

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

1.12%


1.14%


1.31%


1.47%


1.72%











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

$

110,566


$

104,760


$

85,128


$

103,075


$

155,896

Accruing FDIC-supported loans past due 30 - 89 days

3,839


11,752


10,983


6,522


11,571











Restructured loans included in nonaccrual loans

130,534


136,135


166,573


162,496


193,975

Restructured loans on accrual

318,511


345,299


384,793


385,428


416,181











Classified loans, excluding FDIC-supported loans

1,295,976


1,240,148


1,432,806


1,639,206


1,737,178


1 Includes loans held for sale.

 

Allowance for Credit Losses

(Unaudited)

















Three Months Ended

(Amounts in thousands)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013

Allowance for Loan Losses










Balance at beginning of period

$

746,291


$

797,523


$

813,912


$

841,781


$

896,087

Add:










Provision for losses

(610)


(30,538)


(5,573)


(21,990)


(29,035)

Adjustment for FDIC-supported loans

(817)


(1,481)


(2,118)


(209)


(7,429)

Deduct:










Gross loan and lease charge-offs

(20,795)


(37,405)


(22,826)


(35,099)


(35,467)

Recoveries

12,884


18,192


14,128


29,429


17,625

Net loan and lease charge-offs

(7,911)


(19,213)


(8,698)


(5,670)


(17,842)

Balance at end of period

$

736,953


$

746,291


$

797,523


$

813,912


$

841,781











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

1.88%


1.91%


2.08%


2.13%


2.23%











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

183.47%


183.54%


169.13%


156.23%


141.68%











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

0.08%


0.20%


0.09%


0.06%


0.19%











Reserve for Unfunded Lending Commitments










Balance at beginning of period

$

89,705


$

84,147


$

104,082


$

100,455


$

106,809

Provision charged (credited) to earnings

(1,012)


5,558


(19,935)


3,627


(6,354)

Balance at end of period

$

88,693


$

89,705


$

84,147


$

104,082


$

100,455











Total Allowance for Credit Losses










Allowance for loan losses

$

736,953


$

746,291


$

797,523


$

813,912


$

841,781

Reserve for unfunded lending commitments

88,693


89,705


84,147


104,082


100,455

Total allowance for credit losses

$

825,646


$

835,996


$

881,670


$

917,994


$

942,236











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

2.11%


2.14%


2.30%


2.40%


2.50%

 

Nonaccrual Loans by Portfolio Type

(Excluding FDIC-Supported Loans) 

(Unaudited)
















(In millions)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013











Commercial:










Commercial and industrial

$

109


$

98


$

100


$

94


$

100

Leasing

1


1


1


1


1

Owner occupied

127


136


158


186


195

Municipal

10


10


10


9


9

   Total commercial

247


245


269


290


305











Commercial real estate:










Construction and land development

29


29


65


70


93

Term

59


60


61


71


102

   Total commercial real estate

88


89


126


141


195











Consumer:










Home equity credit line

10


9


8


11


12

1-4 family residential

48


53


58


66


71

Construction and other consumer real estate

3


4


4


5


4

Bankcard and other revolving plans

1


1


1


2


1

Other

1


1


1


1


1

   Total consumer

63


68


72


85


89

   Total nonaccrual loans

$

398


$

402


$

467


$

516


$

589

 

Net Charge-Offs by Portfolio Type

(Unaudited)

















Three Months Ended

(In millions)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013

Commercial:










Commercial and industrial

$

1


$

15


$

2


$

2


$

5

Leasing

(1)





Owner occupied

2


1


2


3


5

Municipal





   Total commercial

2


16


4


5


10











Commercial real estate:










Construction and land development

(2)


(3)


(1)


(3)


(3)

Term

7


5


3


(2)


5

   Total commercial real estate

5


2


2


(5)


2











Consumer:










Home equity credit line



1


2


2

1-4 family residential

1



1


3


3

Construction and other consumer real estate

(1)




1


(1)

Bankcard and other revolving plans

2


1


1



2

Other

(1)





   Total consumer loans

1


1


3


6


6

   Total net charge-offs

$

8


$

19


$

9


$

6


$

18

 


CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

(Unaudited)

















Three Months Ended


March 31, 2014


December 31, 2013


September 30, 2013

(In thousands)

Average

balance


Average

rate


Average

balance


Average

rate


Average

balance


Average

rate

ASSETS















Money market investments

$

8,137,123


0.26%


$

9,154,232


0.26%


$

9,454,131


0.26

Securities:












Held-to-maturity

587,473


5.65%


770,168


4.75%


778,268


4.73%

Available-for-sale

3,470,983


2.48%


3,230,152


2.17%


3,071,039


2.22%

Trading account

58,543


3.34%


43,063


3.39%


25,959


3.21%

   Total securities

4,116,999


2.95%


4,043,383


2.68%


3,875,266


2.73%













Loans held for sale

157,170


3.61%


119,671


3.73%


131,652


3.70%













Loans 1:












Loans and leases

38,805,192


4.30%


38,259,795


4.41%


37,818,273


4.43%

FDIC-supported loans

319,695


29.35%


363,982


36.88%


405,316


20.52%

   Total loans

39,124,887


4.51%


38,623,777


4.72%


38,223,589


4.60%

Total interest-earning assets

51,536,179


3.71%


51,941,063


3.77%


51,684,638


3.66%

Cash and due from banks

1,040,906




1,026,814




976,159



Allowance for loan losses

(745,671)




(790,361)




(810,290)



Goodwill

1,014,129




1,014,129




1,014,129



Core deposit and other intangibles

35,072




38,137




41,751



Other assets

2,552,965




2,470,837




2,608,252



   Total assets

$

55,433,580




$

55,700,619




$

55,514,639















LIABILITIES












Interest-bearing deposits:












Savings and money market

$

22,908,201


0.16%


$

22,972,978


0.16%


$

22,982,998


0.17%

Time

2,560,283


0.49%


2,642,104


0.50%


2,749,985


0.56%

Foreign

1,751,910


0.20%


1,796,912


0.20%


1,675,256


0.20%

   Total interest-bearing deposits

27,220,394


0.19%


27,411,994


0.20%


27,408,239


0.21%

Borrowed funds:












Federal funds and other short-term borrowings

249,043


0.11%


271,501


0.11%


260,744


0.11%

Long-term debt

2,237,457


6.93%


2,352,748


7.47%


2,198,752


7.81%

   Total borrowed funds

2,486,500


6.25%


2,624,249


6.71%


2,459,496


7.00%

Total interest-bearing liabilities

29,706,894


0.70%


30,036,243


0.77%


29,867,735


0.77%

Noninterest-bearing deposits

18,557,992




18,842,097




18,179,584



Other liabilities

569,361




584,887




591,735



   Total liabilities

48,834,247




49,463,227




48,639,054



Shareholders' equity:












Preferred equity

1,003,970




1,003,970




1,685,512



Common equity

5,595,363




5,233,422




5,190,073



Total shareholders' equity

6,599,333




6,237,392




6,875,585



Total liabilities and shareholders' equity

$

55,433,580




$

55,700,619




$

55,514,639















Spread on average interest-bearing funds



3.01%




3.00%




2.89%













Net yield on interest-earning assets



3.31%




3.33%




3.22%


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)

March 31,
2014


December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013











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

$

76,190


$

(59,437)


$

209,707


$

55,385


$

88,324











Adjustments, net of tax:










Amortization of core deposit and other intangibles

1,827


2,046


2,268


2,391


2,425

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

$

78,017


$

(57,391)


$

211,975


$

57,776


$

90,749











Average common equity (GAAP)

$

5,595,363


$

5,233,422


$

5,190,073


$

5,102,082


$

4,990,317

Average goodwill

(1,014,129)


(1,014,129)


(1,014,129)


(1,014,129)


(1,014,129)

Average core deposit and other intangibles

(35,072)


(38,137)


(41,751)


(45,262)


(49,069)

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

$

4,546,162


$

4,181,156


$

4,134,193


$

4,042,691


$

3,927,119











Number of days in quarter (c)

90


92


92


91


90

Number of days in year (d)

365


365


365


365


365











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

6.96%


(5.45)%


20.34%


5.73%


9.37%

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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