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, or0.08% 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, | March 31, | December 31, | September 30, | June 30, | |||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | |||||||||||||
(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, | March 31, | December 31, | September 30, | June 30, | |||||||||||||
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 | Weighted | % of | |||||||||||||||
(Amounts in millions) | No. of | Par | Amortized | Carrying | |||||||||||||
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) | Weighted | % of | ||||||||||||||||||||||||
(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, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | |||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | |||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||
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, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||
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 | Average rate | Average | Average rate | Average | 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, | March 31, | December 31, | September 30, | June 30, | ||||||||||||
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
