SALT LAKE CITY, April 18, 2011 /PRNewswire/ -- Zions Bancorporation (Nasdaq: ZION) ("Zions" or "the Company") today reported first quarter net earnings applicable to common shareholders of $14.8 million or $0.08 per diluted common share, compared to a net loss of $(110.3) million or $(0.62) per diluted share for the fourth quarter of 2010. Excluding the noncash effects of the discount amortization on convertible subordinated debt and additional accretion on acquired loans, net earnings were $52.6 million or $0.29 per diluted share for the first quarter of 2011 compared to a net loss of $(44.1) million or $(0.25) per diluted share for the fourth quarter of 2010.
First Quarter 2011 Highlights
- Net charge-offs declined 44% to $141 million compared to $251 million in the fourth quarter.
- The provision for loan losses declined 65% to $60 million from $173 million in the fourth quarter.
- Other noninterest income was favorably impacted by an $18.9 million pretax gain, or $0.06 per diluted share, for amounts received from the FDIC on certain acquired loans recently determined to be covered by the FDIC loss share agreement.
- The net interest margin increased to 3.76% from 3.49% in the fourth quarter, due to the lower level of subordinated debt conversions this quarter. The core net interest margin was stable at 4.06% compared to 4.07% in the fourth quarter.
- Strengthening growth in commercial, term commercial real estate, and consumer loans of $401 million offset a significant portion of the continued reduction in construction and land development loans of $544 million.
- The estimated Tier 1 common to risk-weighted assets ratio improved to 9.27% from 8.95% in the fourth quarter.
"During the first quarter we were especially pleased to see a substantial moderation of loan losses and continued improvement in credit quality, which allowed for a material reduction in our provision for loan losses," said Harris H. Simmons, chairman and chief executive officer. Mr. Simmons continued, "We believe these improved credit measures and trends are sustainable, and will lead to continued operating profitability through the remainder of the year." Mr. Simmons concluded, "We look forward to further credit improvement, increased loan volumes, and the eventual rationalization of our capital structure through the refinancing of higher cost preferred stock and subordinated debt, all of which should lead to material improvement in our earnings levels in future periods."
Asset Quality
Net loan and lease charge-offs were $141.5 million for the first quarter of 2011 compared to $250.9 million for the fourth quarter of 2010. Net charge-offs significantly declined in each major loan portfolio segment and most geographies.
Classified loans decreased 11% to $3.0 billion at March 31, 2011 compared to $3.4 billion at December 31, 2010, which was down 23% from the previous quarter. Classified loans that are current as to principal and interest were approximately 68% for the first quarter of 2011 compared to 69% for the fourth quarter of 2010.
Nonperforming lending-related assets declined 8.0% to $1,681.7 million at March 31, 2011 from $1,828.3 million at December 31, 2010. Additions to nonperforming lending-related assets declined to $337 million during the first quarter of 2011 compared to $371 million during the fourth quarter of 2010. Nonaccrual loans declined 7.6% to $1,412.8 million at March 31, 2011 from $1,528.7 million at December 31, 2010. Nonaccrual loans that are current were approximately 34% of the balance at March 31, 2011 compared to 35% at December 31, 2010. Delinquent loans (accruing loans past due 30-89 days and 90 days or more) declined 15.3% to $365.6 million at March 31, 2011 compared to $431.9 million at December 31, 2010. Other real estate owned declined 10.2% to $268.9 million at March 31, 2011 compared to $299.6 million at December 31, 2010.
The ratio of nonperforming lending-related assets to net loans and leases and other real estate owned was 4.54% at March 31, 2011 compared to 4.91% at December 31, 2010.
The provision for loan losses declined to $60.0 million for the first quarter of 2011 from $173.2 million for the fourth quarter of 2010. The allowance for loan losses declined to $1,349.8 million at March 31, 2011 compared to $1,440.3 million at December 31, 2010. As a percentage of net loans and leases, the allowance was 3.69% at March 31, 2011 compared to 3.92% at December 31, 2010. The allowance for credit losses was $1,452.0 million, or 3.97% of net loans and leases at March 31, 2011, compared to $1,552.0 million, or 4.22%, at December 31, 2010.
Loans
Net loans and leases of $36.5 billion at March 31, 2011 decreased approximately $202 million or 0.5% from $36.7 billion at December 31, 2010, compared to an $802 million decline during the fourth quarter of 2010. Strengthening growth in commercial and consumer loans and continued growth in term commercial real estate loans offset continued reductions in construction and land development loan balances. These loan volume trends were widespread throughout the Company's footprint.
Certain FDIC-supported loans continue to experience better performance than previously forecasted. The expectation of higher-than-expected cash flows from this portfolio results in a higher rate of accretion in loan balances and the recognition of additional interest income. The estimated effect on the financial statements of this higher accretion and the corresponding impact on the FDIC indemnification asset are summarized as follows:
(In thousands) | March 31, | December 31, | September 30, | ||||||||||||
2011 | 2010 | 2010 | |||||||||||||
Balance sheet: | |||||||||||||||
Change in assets - increase (decrease): | |||||||||||||||
FDIC-supported loans | $ 19,257 | $ 19,006 | $ 18,713 | ||||||||||||
FDIC indemnification asset (included in other assets) | (13,088) | (15,205) | (14,970) | ||||||||||||
Balance at end of period: | |||||||||||||||
FDIC-supported loans | 912,881 | 971,377 | 1,089,926 | ||||||||||||
FDIC indemnification asset (included in other assets) | 172,170 | 195,515 | 233,631 | ||||||||||||
Three Months Ended | |||||||||||||||
March 31, | December 31, | September 30, | |||||||||||||
2011 | 2010 | 2010 | |||||||||||||
Statement of income: | |||||||||||||||
Interest income: | |||||||||||||||
Interest and fees on loans | $ 19,257 | $ 19,006 | $ 18,713 | ||||||||||||
Noninterest expense: | |||||||||||||||
Other noninterest expense | 13,088 | 15,205 | 14,970 | ||||||||||||
Net increase in pretax income | $ 6,169 | $ 3,801 | $ 3,743 | ||||||||||||
Capital Transactions
During the first quarter of 2011, the Company increased its Tier 1 capital through common stock equity distribution issuances of 1,067,540 shares for $25.5 million (average price of $23.89). These were made under a new program announced February 10, 2011 to sell up to $200 million of common stock, which superseded all prior programs. Net of commissions and fees, these issuances added $25.0 million to tangible common equity.
Effective March 15, 2011, $85.8 million of convertible subordinated debt was converted into depositary shares each representing a 1/40th interest in a share of the Company's preferred stock. This conversion added 85,829 shares of Series C and 20 shares of Series A to the Company's preferred stock. Accelerated discount amortization on the converted debt increased interest expense by a pretax noncash amount of approximately $41.0 million ($33.3 million after-tax) in the first quarter of 2011, compared to $73.3 million ($59.9 million after-tax) in the fourth quarter of 2010.
The estimated Tier 1 common to risk-weighted assets ratio was 9.27% at March 31, 2011 compared to 8.95% at December 31, 2010.
Deposits
Average total deposits for the first quarter of 2011 decreased $0.6 billion or 1.4% to $40.6 billion compared to $41.2 billion for the fourth quarter of 2010. The change reflects primarily a reduction of higher cost time deposits partially offset by an increase in noninterest-bearing demand deposits. Average noninterest-bearing demand deposits for the first quarter of 2011 increased slightly to $13.7 billion compared to $13.6 billion for the fourth quarter of 2010.
Net Interest Margin
The net interest margin increased to 3.76% in the first quarter of 2011 compared to 3.49% in the fourth quarter of 2010, primarily due to the lower level of accelerated discount amortization (36 bp compared to 62 bp in the fourth quarter). The core net interest margin, adjusted for the amortization on convertible subordinated debt and accretion on acquired loans, was 4.06% in the first quarter compared to 4.07% in the fourth quarter.
Investment Securities
During the first quarter of 2011, the Company recognized credit-related net impairment losses on CDOs of $3.1 million or $0.01 per diluted share, compared to $12.3 million or $0.04 per diluted share during the fourth quarter of 2010. CDOs for which the underlying collateral is predominantly bank trust preferred securities comprised $2.1 billion of the $2.9 billion par amount of the CDO portfolio at March 31, 2011. The following table shows the changes in carrying value for bank and insurance trust preferred CDOs at March 31, 2011 compared to December 31, 2010 according to original ratings:
(Amounts in millions) | |||||||||||||||||||
March 31, 2011 | % of carrying | Change | |||||||||||||||||
Original | Par | Amortized cost | Carrying value | value to par | 3/31/11 | ||||||||||||||
ratings | Amount | % | Amount | % | Amount | % | 3/31/11 | 12/31/10 | vs 12/31/10 | ||||||||||
AAA | $ 1,115 | 52% | $ 931 | 55% | $ 661 | 65% | 59% | 68% | -9% | ||||||||||
A | 948 | 45% | 743 | 43% | 346 | 34% | 37% | 31% | 6% | ||||||||||
BBB | 67 | 3% | 34 | 2% | 11 | 1% | 16% | 13% | 3% | ||||||||||
$ 2,130 | 100% | $ 1,708 | 100% | $ 1,018 | 100% | 48% | 50% | -2% | |||||||||||
For original AAA-rated securities, the changes in CDO valuations were attributable to an increase in the limited trading activity, which provided additional market-based information to estimate fair value. For original A- and BBB-rated securities, the valuation changes resulted from an enhancement in valuation modeling that incorporates the performance of previously deferring collateral. The performance for certain deferring collateral improved during the quarter such that the payment of interest resumed. Accordingly, expectations have been revised regarding the extent of currently deferring collateral ultimately repaying contractually due interest. Also during the first quarter, the Company sold $33 million par amount ($4 million amortized cost with essentially no carrying value) of CDO securities.
Noninterest Income and Noninterest Expense
Noninterest income for the first quarter of 2011 was $134.1 million compared to $113.2 million in the fourth quarter of 2010. The increase resulted primarily from the $18.9 million pretax gain on FDIC-supported loans discussed previously.
Noninterest expense for the first quarter of 2011 was $408.4 million compared to $443.4 million for the fourth quarter of 2010. The more significant changes from the fourth quarter include a $7.7 million increase in salaries and employee benefits due to increased payroll taxes and adjustments in benefit-related accruals; reduced credit related and legal and professional expenses of $9.1 million; and a reduction of $23.3 million in the provision for unfunded lending commitments, resulting in a negative provision of $9.5 million.
Conference Call
Zions will host a conference call to discuss these first quarter results at 5:30 p.m. ET this afternoon (April 18, 2011). Media representatives, analysts and the public are invited to listen to this discussion by calling 1-877-368-2147 (international 253-237-1247) and entering the passcode 52656923, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at www.zionsbancorporation.com. A replay of the call will be available from approximately 7:30 p.m. ET on Monday, April 18, 2011, until midnight ET on Monday, April 25, 2011, by dialing 1-800-642-1687 (international 706-645-9291) and entering the passcode 52656923. 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 500 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. 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 might cause such differences include, but are not limited to: the Company's ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either internationally, nationally or locally in areas in which the Company conducts its operations, including changes in securities markets and valuations in structured securities and other assets; changes in governmental policies and programs resulting from general economic and financial market conditions; changes in interest and funding rates; continuing consolidation in the financial services industry; new private and governmental legal actions or changes in existing private and governmental legal actions; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company's operations or business (including the Dodd-Frank Wall Street Reform and Consumer Protection Act); and changes in accounting policies, procedures or determinations as may be required by the Financial Accounting Standards Board or other regulatory agencies.
Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Zions Bancorporation'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.
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
(In thousands, except per share and ratio data) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||
PER COMMON SHARE | ||||||||||
Dividends | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Book value per common share | 24.93 | 25.12 | 26.07 | 26.63 | 26.89 | |||||
Tangible common equity per common share | 18.96 | 19.09 | 19.81 | 20.19 | 19.89 | |||||
SELECTED RATIOS | ||||||||||
Return on average assets | 0.42% | (0.56)% | (0.36)% | (0.87)% | (0.47)% | |||||
Return on average common equity | 1.29% | (9.51)% | (6.94)% | (12.41)% | (8.30)% | |||||
Net interest margin | 3.76% | 3.49% | 3.84% | 3.58% | 4.03% | |||||
Capital Ratios | ||||||||||
Tangible common equity ratio | 7.01% | 6.99% | 7.03% | 6.86% | 6.30% | |||||
Tangible equity ratio | 11.36% | 11.10% | 10.78% | 10.40% | 9.36% | |||||
Average equity to average assets | 13.25% | 12.80% | 12.40% | 11.59% | 11.16% | |||||
Risk-Based Capital Ratios(1): | ||||||||||
Tier 1 common to risk-weighted assets | 9.27% | 8.95% | 8.66% | 7.91% | 7.14% | |||||
Tier 1 leverage | 13.14% | 12.56% | 12.00% | 11.80% | 10.77% | |||||
Tier 1 risk-based capital | 15.37% | 14.78% | 13.97% | 12.63% | 11.19% | |||||
Total risk-based capital | 17.66% | 17.15% | 16.54% | 15.25% | 13.93% | |||||
Taxable-equivalent net interest income | $ 429,231 | $ 412,001 | $ 457,172 | $ 418,953 | $ 460,981 | |||||
Weighted average common and common- | ||||||||||
equivalent shares outstanding | 181,997,687 | 178,097,851 | 172,864,619 | 161,810,017 | 151,073,384 | |||||
Common shares outstanding | 183,854,486 | 182,784,086 | 177,202,340 | 173,331,281 | 160,300,162 | |||||
(1) Ratios for March 31, 2011 are estimates. | ||||||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||
(In thousands, except share amounts) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
ASSETS | ||||||||||
Cash and due from banks | $ 949,140 | $ 924,126 | $ 1,060,646 | $ 1,068,755 | $ 1,045,391 | |||||
Money market investments: | ||||||||||
Interest-bearing deposits | 4,689,323 | 4,576,008 | 4,468,778 | 4,861,871 | 3,410,211 | |||||
Federal funds sold and security resell agreements | 67,197 | 130,305 | 116,458 | 103,674 | 117,548 | |||||
Investment securities: | ||||||||||
Held-to-maturity, at adjusted cost (approximate fair value | ||||||||||
$758,169, $788,354, $783,362, $802,370, and $856,256) | 820,636 | 840,642 | 841,573 | 852,606 | 902,902 | |||||
Available-for-sale, at fair value | 4,130,342 | 4,205,742 | 3,295,864 | 3,416,448 | 3,437,098 | |||||
Trading account, at fair value | 56,549 | 48,667 | 42,811 | 85,707 | 50,698 | |||||
5,007,527 | 5,095,051 | 4,180,248 | 4,354,761 | 4,390,698 | ||||||
Loans held for sale | 195,055 | 206,286 | 217,409 | 189,376 | 171,892 | |||||
Loans: | ||||||||||
Loans and leases excluding FDIC-supported loans | 35,753,638 | 35,896,395 | 36,579,470 | 36,920,355 | 37,784,853 | |||||
FDIC-supported loans | 912,881 | 971,377 | 1,089,926 | 1,208,362 | 1,320,737 | |||||
36,666,519 | 36,867,772 | 37,669,396 | 38,128,717 | 39,105,590 | ||||||
Less: | ||||||||||
Unearned income and fees, net of related costs | 120,725 | 120,341 | 120,037 | 125,779 | 131,555 | |||||
Allowance for loan losses | 1,349,800 | 1,440,341 | 1,529,955 | 1,563,753 | 1,581,577 | |||||
Loans and leases, net of allowance | 35,195,994 | 35,307,090 | 36,019,404 | 36,439,185 | 37,392,458 | |||||
Other noninterest-bearing investments | 858,958 | 858,367 | 858,402 | 866,970 | 909,601 | |||||
Premises and equipment, net | 721,487 | 720,985 | 719,592 | 705,372 | 707,387 | |||||
Goodwill | 1,015,161 | 1,015,161 | 1,015,161 | 1,015,161 | 1,015,161 | |||||
Core deposit and other intangibles | 82,199 | 87,898 | 94,128 | 100,425 | 106,839 | |||||
Other real estate owned | 268,876 | 299,577 | 356,923 | 413,336 | 414,237 | |||||
Other assets | 1,756,791 | 1,814,032 | 1,940,627 | 2,028,409 | 2,031,558 | |||||
$ 50,807,708 | $ 51,034,886 | $ 51,047,776 | $ 52,147,295 | $ 51,712,981 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
Deposits: | ||||||||||
Noninterest-bearing demand | $ 13,790,615 | $ 13,653,929 | $ 13,264,415 | $ 14,071,456 | $ 12,799,002 | |||||
Interest-bearing: | ||||||||||
Savings and NOW | 6,494,013 | 6,362,138 | 6,394,964 | 6,030,986 | 5,978,536 | |||||
Money market | 14,874,507 | 15,090,833 | 15,398,157 | 15,562,664 | 16,667,011 | |||||
Time under $100,000 | 1,859,005 | 1,941,211 | 2,037,318 | 2,155,366 | 2,306,101 | |||||
Time $100,000 and over | 2,085,487 | 2,232,238 | 2,417,779 | 2,509,479 | 2,697,261 | |||||
Foreign | 1,488,807 | 1,654,651 | 1,447,507 | 1,683,925 | 1,647,898 | |||||
40,592,434 | 40,935,000 | 40,960,140 | 42,013,876 | 42,095,809 | ||||||
Securities sold, not yet purchased | 101,406 | 42,548 | 41,943 | 81,511 | 47,890 | |||||
Federal funds purchased and security repurchase agreements | 727,764 | 722,258 | 738,551 | 892,025 | 953,791 | |||||
Other short-term borrowings | 182,167 | 166,394 | 236,507 | 218,589 | 178,435 | |||||
Long-term debt | 1,913,083 | 1,942,622 | 1,939,395 | 1,934,410 | 2,016,461 | |||||
Reserve for unfunded lending commitments | 102,168 | 111,708 | 97,899 | 96,795 | 96,312 | |||||
Other liabilities | 444,099 | 467,142 | 538,750 | 488,987 | 467,371 | |||||
Total liabilities | 44,063,121 | 44,387,672 | 44,553,185 | 45,726,193 | 45,856,069 | |||||
Shareholders' equity: | ||||||||||
Preferred stock, without par value, authorized 4,400,000 shares | 2,162,399 | 2,056,672 | 1,875,463 | 1,806,877 | 1,532,323 | |||||
Common stock, without par value; authorized 350,000,000 | ||||||||||
shares; issued and outstanding 183,854,486, 182,784,086, | ||||||||||
177,202,340, 173,331,281, and 160,300,162 shares | 4,178,369 | 4,163,619 | 4,070,963 | 3,964,140 | 3,517,621 | |||||
Retained earnings | 904,247 | 889,284 | 1,001,559 | 1,083,845 | 1,220,439 | |||||
Accumulated other comprehensive income (loss) | (499,163) | (461,296) | (452,553) | (433,020) | (428,177) | |||||
Controlling interest shareholders' equity | 6,745,852 | 6,648,279 | 6,495,432 | 6,421,842 | 5,842,206 | |||||
Noncontrolling interests | (1,265) | (1,065) | (841) | (740) | 14,706 | |||||
Total shareholders' equity | 6,744,587 | 6,647,214 | 6,494,591 | 6,421,102 | 5,856,912 | |||||
$ 50,807,708 | $ 51,034,886 | $ 51,047,776 | $ 52,147,295 | $ 51,712,981 | ||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | ||||||||||||||
(In thousands, except per share amounts) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||
Interest income: | ||||||||||||||
Interest and fees on loans | $ 518,157 | $ 539,452 | $ 550,489 | $ 547,662 | $ 547,636 | |||||||||
Interest on money market investments | 2,843 | 3,419 | 3,487 | 2,601 | 1,439 | |||||||||
Interest on securities: | ||||||||||||||
Held-to-maturity | 8,664 | 8,149 | 6,063 | 11,300 | 7,893 | |||||||||
Available-for-sale | 22,276 | 22,472 | 21,353 | 21,518 | 22,692 | |||||||||
Trading account | 452 | 546 | 542 | 657 | 475 | |||||||||
Total interest income | 552,392 | 574,038 | 581,934 | 583,738 | 580,135 | |||||||||
Interest expense: | ||||||||||||||
Interest on deposits | 36,484 | 40,915 | 46,368 | 52,753 | 56,076 | |||||||||
Interest on short-term borrowings | 2,180 | 2,442 | 3,566 | 3,486 | 3,067 | |||||||||
Interest on long-term debt | 89,872 | 123,813 | 80,125 | 114,153 | 65,692 | |||||||||
Total interest expense | 128,536 | 167,170 | 130,059 | 170,392 | 124,835 | |||||||||
Net interest income | 423,856 | 406,868 | 451,875 | 413,346 | 455,300 | |||||||||
Provision for loan losses | 60,000 | 173,242 | 184,668 | 228,663 | 265,565 | |||||||||
Net interest income after provision for loan losses | 363,856 | 233,626 | 267,207 | 184,683 | 189,735 | |||||||||
Noninterest income: | ||||||||||||||
Service charges and fees on deposit accounts | 44,530 | 46,498 | 49,733 | 51,909 | 51,608 | |||||||||
Other service charges, commissions and fees | 41,685 | 41,124 | 41,780 | 43,395 | 39,042 | |||||||||
Trust and wealth management income | 6,754 | 6,512 | 6,310 | 7,021 | 7,609 | |||||||||
Capital markets and foreign exchange | 7,214 | 10,309 | 8,055 | 10,733 | 8,539 | |||||||||
Dividends and other investment income | 8,028 | 7,621 | 8,874 | 8,879 | 7,700 | |||||||||
Loan sales and servicing income | 6,013 | 8,943 | 8,390 | 5,617 | 6,432 | |||||||||
Fair value and nonhedge derivative income (loss) | 1,220 | 292 | (16,755) | (1,552) | 2,188 | |||||||||
Equity securities gains (losses), net | 897 | (246) | (1,082) | (1,500) | (3,165) | |||||||||
Fixed income securities gains (losses), net | (59) | 841 | 8,428 | 530 | 1,256 | |||||||||
Impairment losses on investment securities: | ||||||||||||||
Impairment losses on investment securities | (3,105) | (15,243) | (73,082) | (19,557) | (48,570) | |||||||||
Noncredit-related losses on securities not expected to | ||||||||||||||
be sold (recognized in other comprehensive income) | - | 2,923 | 49,370 | 1,497 | 17,307 | |||||||||
Net impairment losses on investment securities | (3,105) | (12,320) | (23,712) | (18,060) | (31,263) | |||||||||
Gain on subordinated debt exchange | - | - | - | - | 14,471 | |||||||||
Other | 20,966 | 3,665 | 20,179 | 2,441 | 3,193 | |||||||||
Total noninterest income | 134,143 | 113,239 | 110,200 | 109,413 | 107,610 | |||||||||
Noninterest expense: | ||||||||||||||
Salaries and employee benefits | 215,010 | 207,288 | 207,947 | 205,776 | 204,333 | |||||||||
Occupancy, net | 28,010 | 27,957 | 29,292 | 27,822 | 28,488 | |||||||||
Furniture and equipment | 25,662 | 24,771 | 25,591 | 25,703 | 24,996 | |||||||||
Other real estate expense | 24,167 | 25,467 | 44,256 | 42,444 | 32,648 | |||||||||
Credit related expense | 14,913 | 19,284 | 17,438 | 17,658 | 16,825 | |||||||||
Provision for unfunded lending commitments | (9,540) | 13,809 | 1,104 | 483 | (20,133) | |||||||||
Legal and professional services | 6,689 | 11,372 | 9,305 | 8,887 | 9,976 | |||||||||
Advertising | 6,911 | 7,099 | 5,575 | 5,772 | 6,374 | |||||||||
FDIC premiums | 24,101 | 25,636 | 25,706 | 26,438 | 24,210 | |||||||||
Amortization of core deposit and other intangibles | 5,701 | 6,230 | 6,296 | 6,414 | 6,577 | |||||||||
Other | 66,751 | 74,443 | 83,534 | 62,958 | 54,832 | |||||||||
Total noninterest expense | 408,375 | 443,356 | 456,044 | 430,355 | 389,126 | |||||||||
Income (loss) before income taxes | 89,624 | (96,491) | (78,637) | (136,259) | (91,781) | |||||||||
Income taxes (benefit) | 37,033 | (24,097) | (31,180) | (22,898) | (28,644) | |||||||||
Net income (loss) | 52,591 | (72,394) | (47,457) | (113,361) | (63,137) | |||||||||
Net income (loss) applicable to noncontrolling interests | (226) | (194) | (132) | (368) | (2,927) | |||||||||
Net income (loss) applicable to controlling interest | 52,817 | (72,200) | (47,325) | (112,993) | (60,210) | |||||||||
Preferred stock dividends | (38,050) | (38,087) | (33,144) | (25,342) | (26,311) | |||||||||
Preferred stock redemption | - | - | - | 3,107 | - | |||||||||
Net earnings (loss) applicable to common shareholders | $ 14,767 | $ (110,287) | $ (80,469) | $ (135,228) | $ (86,521) | |||||||||
Weighted average common shares outstanding during the period: | ||||||||||||||
Basic shares | 181,707 | 178,098 | 172,865 | 161,810 | 151,073 | |||||||||
Diluted shares | 181,998 | 178,098 | 172,865 | 161,810 | 151,073 | |||||||||
Net earnings (loss) per common share: | ||||||||||||||
Basic | $ 0.08 | $ (0.62) | $ (0.47) | $ (0.84) | $ (0.57) | |||||||||
Diluted | 0.08 | (0.62) | (0.47) | (0.84) | (0.57) | |||||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||
Loan Balances By Portfolio Type | ||||||||||
(Unaudited) | ||||||||||
(In millions) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||
Commercial: | ||||||||||
Commercial and industrial | $ 9,276 | $ 9,167 | $ 9,152 | $ 9,149 | $ 9,269 | |||||
Leasing | 409 | 410 | 402 | 442 | 442 | |||||
Owner occupied | 8,252 | 8,218 | 8,345 | 8,334 | 8,457 | |||||
Municipal | 435 | 439 | 334 | 321 | 332 | |||||
Total commercial | 18,372 | 18,234 | 18,233 | 18,246 | 18,500 | |||||
Commercial real estate: | ||||||||||
Construction and land development | 2,955 | 3,499 | 4,206 | 4,484 | 5,060 | |||||
Term | 7,857 | 7,650 | 7,550 | 7,567 | 7,524 | |||||
Total commercial real estate | 10,812 | 11,149 | 11,756 | 12,051 | 12,584 | |||||
Consumer: | ||||||||||
Home equity credit line | 2,120 | 2,142 | 2,157 | 2,139 | 2,121 | |||||
1-4 family residential | 3,620 | 3,499 | 3,509 | 3,549 | 3,584 | |||||
Construction and other consumer real estate | 324 | 343 | 366 | 380 | 403 | |||||
Bankcard and other revolving plans | 276 | 297 | 287 | 285 | 314 | |||||
Other | 230 | 233 | 271 | 271 | 279 | |||||
Total consumer | 6,570 | 6,514 | 6,590 | 6,624 | 6,701 | |||||
FDIC-supported loans (1) | 913 | 971 | 1,090 | 1,208 | 1,321 | |||||
Total loans | $ 36,667 | $ 36,868 | $ 37,669 | $ 38,129 | $ 39,106 | |||||
(1) FDIC-supported loans represent loans acquired from the FDIC subject to loss sharing agreements. | ||||||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||
Nonperforming Lending-Related Assets | ||||||||||
(Unaudited) | ||||||||||
(Amounts in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||
Nonaccrual loans | $ 1,379,499 | $ 1,492,869 | $ 1,809,570 | $ 1,962,313 | $ 2,087,203 | |||||
Other real estate owned | 225,005 | 259,614 | 304,498 | 364,954 | 366,798 | |||||
Nonperforming lending-related assets, excluding | ||||||||||
FDIC-supported assets | 1,604,504 | 1,752,483 | 2,114,068 | 2,327,267 | 2,454,001 | |||||
FDIC-supported nonaccrual loans | 33,296 | 35,837 | 126,634 | 171,764 | 283,999 | |||||
FDIC-supported other real estate owned | 43,871 | 39,963 | 52,425 | 48,382 | 47,439 | |||||
FDIC-supported nonperforming assets | 77,167 | 75,800 | 179,059 | 220,146 | 331,438 | |||||
Total nonperforming lending-related assets | $ 1,681,671 | $ 1,828,283 | $ 2,293,127 | $ 2,547,413 | $ 2,785,439 | |||||
Ratio of nonperforming lending-related assets to net loans | ||||||||||
and leases (1) and other real estate owned | 4.54% | 4.91% | 6.01% | 6.60% | 7.04% | |||||
Accruing loans past due 90 days or more, excluding | ||||||||||
FDIC-supported loans | $ 14,822 | $ 23,218 | $ 74,829 | $ 131,773 | $ 60,009 | |||||
FDIC-supported loans past due 90 days or more | 94,723 | 118,760 | 9,689 | 5,483 | 22,275 | |||||
Ratio of accruing loans past due 90 days or more to | ||||||||||
net loans and leases (1) | 0.30% | 0.38% | 0.22% | 0.36% | 0.21% | |||||
Nonaccrualloansandaccruingloanspastdue90daysormore | $ 1,522,340 | $ 1,670,684 | $ 2,020,722 | $ 2,271,333 | $ 2,453,486 | |||||
Ratio of nonaccrual loans and accruing loans past due | ||||||||||
90 days or more to net loans and leases (1) | 4.14% | 4.52% | 5.35% | 5.95% | 6.27% | |||||
Accruing loans past due 30-89 days, excluding | ||||||||||
FDIC-supported loans | $ 233,632 | $ 262,714 | $ 303,472 | $ 317,666 | $ 462,409 | |||||
FDIC-supported loans past due 30-89 days | 22,463 | 27,203 | 8,919 | 27,180 | 55,919 | |||||
Restructured loans included in nonaccrual loans | 344,024 | 367,135 | 354,434 | 339,113 | 340,165 | |||||
Restructured loans on accrual | 369,281 | 388,006 | 334,416 | 288,388 | 211,486 | |||||
Classified loans, excluding FDIC-supported loans | 3,045,509 | 3,408,312 | 4,437,871 | 4,877,653 | 5,179,393 | |||||
(1) Includes loans held for sale. | ||||||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||
Allowance for Credit Losses | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
(Amounts in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||
Allowance for Loan Losses | ||||||||||
Balance at beginning of period | $ 1,440,341 | $ 1,529,955 | $ 1,563,753 | $ 1,581,577 | $ 1,531,332 | |||||
Add: | ||||||||||
Provision for losses | 60,000 | 173,242 | 184,668 | 228,663 | 265,565 | |||||
Change in allowance covered by FDIC indemnification | (9,048) | (11,930) | 17,190 | 8,748 | 11,770 | |||||
Deduct: | ||||||||||
Gross loan and lease charge-offs | (167,968) | (282,803) | (263,673) | (279,025) | (248,312) | |||||
Net charge-offs recoverable from FDIC | 4,534 | 5,884 | 5,674 | 629 | 1,859 | |||||
Recoveries | 21,941 | 25,993 | 22,343 | 23,161 | 19,363 | |||||
Net loan and lease charge-offs | (141,493) | (250,926) | (235,656) | (255,235) | (227,090) | |||||
Balance at end of period | $ 1,349,800 | $ 1,440,341 | $ 1,529,955 | $ 1,563,753 | $ 1,581,577 | |||||
Ratio of allowance for loan losses to net loans and | ||||||||||
leases, at period end | 3.69% | 3.92% | 4.07% | 4.11% | 4.06% | |||||
Ratio of allowance for loan losses to nonperforming | ||||||||||
loans, at period end | 95.54% | 94.22% | 79.02% | 73.28% | 66.70% | |||||
Annualized ratio of net loan and lease charge-offs to | ||||||||||
average loans | 1.54% | 2.71% | 2.50% | 2.64% | 2.29% | |||||
Reserve for Unfunded Lending Commitments | ||||||||||
Balance at beginning of period | $ 111,708 | $ 97,899 | $ 96,795 | $ 96,312 | $ 116,445 | |||||
Provision charged (credited) to earnings | (9,540) | 13,809 | 1,104 | 483 | (20,133) | |||||
Balance at end of period | $ 102,168 | $ 111,708 | $ 97,899 | $ 96,795 | $ 96,312 | |||||
Total Allowance for Credit Losses | ||||||||||
Allowance for loan losses | $ 1,349,800 | $ 1,440,341 | $ 1,529,955 | $ 1,563,753 | $ 1,581,577 | |||||
Reserve for unfunded lending commitments | 102,168 | 111,708 | 97,899 | 96,795 | 96,312 | |||||
Total allowance for credit losses | $ 1,451,968 | $ 1,552,049 | $ 1,627,854 | $ 1,660,548 | $ 1,677,889 | |||||
Ratio of total allowance for credit losses | ||||||||||
to net loans and leases outstanding, at period end | 3.97% | 4.22% | 4.34% | 4.37% | 4.31% | |||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
Nonaccrual Loans By Portfolio Type | ||||||||||||||||||||
(Excluding FDIC-Supported Loans) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In millions) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ 213 | $ 224 | $ 284 | $ 318 | $ 320 | |||||||||||||||
Leasing | 1 | 1 | 2 | 8 | 8 | |||||||||||||||
Owner occupied | 317 | 342 | 414 | 438 | 460 | |||||||||||||||
Municipal | 2 | 2 | - | - | - | |||||||||||||||
Total commercial | 533 | 569 | 700 | 764 | 788 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction and land development | 418 | 494 | 660 | 744 | 803 | |||||||||||||||
Term | 270 | 264 | 263 | 281 | 324 | |||||||||||||||
Total commercial real estate | 688 | 758 | 923 | 1,025 | 1,127 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Home equity credit line | 13 | 14 | 16 | 13 | 14 | |||||||||||||||
1-4 family residential | 120 | 125 | 145 | 136 | 127 | |||||||||||||||
Construction and other consumer real estate | 21 | 24 | 22 | 20 | 28 | |||||||||||||||
Bankcard and other revolving plans | - | 1 | 1 | 1 | - | |||||||||||||||
Other | 4 | 2 | 3 | 3 | 3 | |||||||||||||||
Total consumer | 158 | 166 | 187 | 173 | 172 | |||||||||||||||
Total nonaccrual loans | $ 1,379 | $ 1,493 | $ 1,810 | $ 1,962 | $ 2,087 | |||||||||||||||
Net Charge-Offs By Portfolio Type | ||||||||||||||||||||
(In millions) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ 31 | $ 55 | $ 72 | $ 52 | $ 49 | |||||||||||||||
Leasing | - | 3 | 3 | - | 2 | |||||||||||||||
Owner occupied | 22 | 43 | 32 | 35 | 36 | |||||||||||||||
Municipal | - | - | - | - | - | |||||||||||||||
Total commercial | 53 | 101 | 107 | 87 | 87 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction and land development | 48 | 80 | 71 | 99 | 86 | |||||||||||||||
Term | 22 | 44 | 31 | 39 | 23 | |||||||||||||||
Total commercial real estate | 70 | 124 | 102 | 138 | 109 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Home equity credit line | 6 | 9 | 6 | 7 | 7 | |||||||||||||||
1-4 family residential | 8 | 14 | 15 | 14 | 15 | |||||||||||||||
Construction and other consumer real estate | 4 | 2 | 7 | 6 | 5 | |||||||||||||||
Bankcard and other revolving plans | 3 | 3 | 2 | 2 | 3 | |||||||||||||||
Other | 2 | 3 | 3 | 2 | 3 | |||||||||||||||
Total consumer loans | 23 | 31 | 33 | 31 | 33 | |||||||||||||||
Charge-offs recoverable from FDIC | (5) | (5) | (6) | (1) | (2) | |||||||||||||||
Total net charge-offs | $ 141 | $ 251 | $ 236 | $ 255 | $ 227 | |||||||||||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||
March 31, 2011 | December 31, 2010 | September 30, 2010 | ||||||||||
(Amounts in thousands) | Average | Average | Average | Average | Average | Average | ||||||
balance | rate | balance | rate | balance | rate | |||||||
ASSETS | ||||||||||||
Money market investments | $ 4,513,934 | 0.26% | $ 5,022,668 | 0.27% | $ 5,192,847 | 0.27% | ||||||
Securities: | ||||||||||||
Held-to-maturity | 833,000 | 5.38% | 832,125 | 5.06% | 843,268 | 4.14% | ||||||
Available-for-sale | 4,107,003 | 2.28% | 3,639,181 | 2.53% | 3,282,056 | 2.68% | ||||||
Trading account | 49,769 | 3.68% | 60,898 | 3.56% | 59,216 | 3.63% | ||||||
Total securities | 4,989,772 | 2.81% | 4,532,204 | 3.01% | 4,184,540 | 2.99% | ||||||
Loans held for sale | 160,073 | 4.06% | 212,822 | 4.49% | 188,794 | 4.67% | ||||||
Loans: | ||||||||||||
Net loans and leases excluding FDIC supported loans(1) | 35,715,679 | 5.51% | 36,046,889 | 5.56% | 36,525,416 | 5.60% | ||||||
FDIC-supported loans | 952,078 | 14.13% | 1,033,999 | 13.08% | 1,149,976 | 11.93% | ||||||
Total loans and leases | 36,667,757 | 5.74% | 37,080,888 | 5.77% | 37,675,392 | 5.79% | ||||||
Total interest-earning assets | 46,331,536 | 4.88% | 46,848,582 | 4.90% | 47,241,573 | 4.93% | ||||||
Cash and due from banks | 1,078,869 | 1,071,389 | 1,063,000 | |||||||||
Allowance for loan losses | (1,423,701) | (1,504,034) | (1,556,558) | |||||||||
Goodwill | 1,015,161 | 1,015,161 | 1,015,161 | |||||||||
Core deposit and other intangibles | 85,372 | 91,338 | 97,741 | |||||||||
Other assets | 3,617,747 | 3,784,589 | 3,917,955 | |||||||||
Total assets | $ 50,704,984 | $ 51,307,025 | $ 51,778,872 | |||||||||
LIABILITIES | ||||||||||||
Interest-bearing deposits: | ||||||||||||
Savings and NOW | $ 6,401,249 | 0.30% | $ 6,488,349 | 0.31% | $ 6,186,704 | 0.32% | ||||||
Money market | 15,018,892 | 0.51% | 15,229,655 | 0.55% | 15,584,312 | 0.63% | ||||||
Time under $100,000 | 1,909,259 | 1.02% | 2,001,693 | 1.13% | 2,103,818 | 1.25% | ||||||
Time $100,000 and over | 2,147,502 | 1.09% | 2,316,452 | 1.15% | 2,462,904 | 1.21% | ||||||
Foreign | 1,438,979 | 0.58% | 1,526,859 | 0.61% | 1,563,090 | 0.60% | ||||||
Total interest-bearing deposits | 26,915,881 | 0.55% | 27,563,008 | 0.59% | 27,900,828 | 0.66% | ||||||
Borrowed funds: | ||||||||||||
Securities sold, not yet purchased | 32,054 | 4.34% | 28,785 | 4.45% | 38,789 | 4.33% | ||||||
Federal funds purchased and security repurchase agreements | 703,976 | 0.13% | 800,891 | 0.14% | 873,954 | 0.14% | ||||||
Other short-term borrowings | 173,349 | 3.76% | 186,500 | 3.92% | 210,235 | 5.34% | ||||||
Long-term debt | 1,939,921 | 18.79% | 1,952,428 | 25.16% | 1,945,775 | 16.34% | ||||||
Total borrowed funds | 2,849,300 | 13.10% | 2,968,604 | 16.87% | 3,068,753 | 10.82% | ||||||
Total interest-bearing liabilities | 29,765,181 | 1.75% | 30,531,612 | 2.17% | 30,969,581 | 1.67% | ||||||
Noninterest-bearing deposits | 13,672,638 | 13,607,309 | 13,786,784 | |||||||||
Other liabilities | 548,101 | 601,253 | 601,439 | |||||||||
Total liabilities | 43,985,920 | 44,740,174 | 45,357,804 | |||||||||
Shareholders' equity: | ||||||||||||
Preferred equity | 2,077,555 | 1,966,098 | 1,819,889 | |||||||||
Common equity | 4,642,639 | 4,601,598 | 4,601,920 | |||||||||
Controlling interest shareholders' equity | 6,720,194 | 6,567,696 | 6,421,809 | |||||||||
Noncontrolling interests | (1,130) | (845) | (741) | |||||||||
Total shareholders' equity | 6,719,064 | 6,566,851 | 6,421,068 | |||||||||
Total liabilities and shareholders' equity | $ 50,704,984 | $ 51,307,025 | $ 51,778,872 | |||||||||
Spread on average interest-bearing funds | 3.13% | 2.73% | 3.26% | |||||||||
Net yield on interest-earning assets | 3.76% | 3.49% | 3.84% | |||||||||
(1) Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans. | ||||||||||||
ZIONS BANCORPORATION AND SUBSIDIARIES | |||||||||
GAAP to Non-GAAP Reconciliation | |||||||||
(Unaudited) | |||||||||
Three Months Ended | |||||||||
March 31, 2011 | December 31, 2010 | ||||||||
(Amounts in thousands) | Diluted | Diluted | |||||||
Amount | EPS | Amount | EPS | ||||||
1. | Net Earnings (Loss) Excluding the Effects of the Discount Amortization on | ||||||||
Convertible Subordinated Debt and Additional Accretion on Acquired Loans | |||||||||
Net earnings (loss) applicable to common shareholders (GAAP) | $ 14,767 | $ 0.08 | $ (110,287) | $ (0.62) | |||||
Addback for the impact of: | |||||||||
Discount amortization on convertible subordinated debt | 8,101 | 0.05 | 8,499 | 0.05 | |||||
Accelerated discount amortization on convertible subordinated debt | 33,322 | 0.18 | 59,887 | 0.33 | |||||
Additional accretion of interest income on acquired loans, net of expense | (3,575) | (0.02) | (2,203) | (0.01) | |||||
Net earnings (loss) excluding the effects of the discount amortization on convertible | |||||||||
subordinated debt and additional accretion on acquired loans (non-GAAP) | $ 52,615 | $ 0.29 | $ (44,104) | $ (0.25) | |||||
Three Months Ended | |||||||||
March 31, 2011 | December 31, 2010 | ||||||||
2. | Core Net Interest Margin | ||||||||
Net interest margin as reported (GAAP) | 3.76% | 3.49% | |||||||
Addback for the impact on net interest margin of: | |||||||||
Discount amortization on convertible subordinated debt | 0.11% | 0.12% | |||||||
Accelerated discount amortization on convertible subordinated debt | 0.36% | 0.62% | |||||||
Additional accretion of interest income on acquired loans | -0.17% | -0.16% | |||||||
Core net interest margin (non-GAAP) | 4.06% | 4.07% | |||||||
This Press Release presents the "net earnings (loss) excluding the effects of the discount amortization on convertible subordinated debt and additional accretion on acquired loans" and the "core net interest margin." Both of these non-GAAP financial measures exclude the effects of the (1) periodic discount amortization on convertible subordinated debt; (2) accelerated discount amortization on convertible subordinated debt which has been converted; and (3) additional accretion of interest income on acquired loans based on increased projected cash flows, (hereinafter collectively referred to as the "amortization and accretion adjustments"). These amortization and accretion adjustments are included in financial results presented in accordance with generally accepted accounting principles ("GAAP"). Management considers these amortization and accretion adjustments to be relevant to ongoing operating results.
The Company believes the exclusion of these amortization and accretion adjustments to present results of operations provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. Excluding these amortization and accretion adjustments facilitates the ability of management and the Board of Directors to assess the ongoing performance of the Company's business for the following purposes:
- Evaluation of bank reporting segment performance
- Presentations of Company performance to investors
The Company believes that presenting results of operations excluding these amortization and accretion adjustments will permit investors 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 in the evaluation of a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
SOURCE Zions Bancorporation
