Attached files
| file | filename |
|---|---|
| 8-K - 1Q16 EARNINGS RELEASE - ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ | a1q20168-kcoverpage.htm |
| EX-99.2 - 1Q16 SLIDE PRESENTATION - ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ | earningspresentation1q16.htm |
ZIONS BANCORPORATION
Press Release – Page 1
April 25, 2016
Zions Bancorporation One South Main Salt Lake City, UT 84133 April 25, 2016 www.zionsbancorporation.com |  |
First Quarter 2016 Financial Results: FOR IMMEDIATE RELEASE
Investor and Media Contact: James Abbott (801) 844-7637
Zions Bancorporation Reports: 1Q16 Net Earnings1 of $79 million, diluted EPS of $0.38 compared to 4Q15 Net Earnings1 of $88 million, diluted EPS of $0.43, and 1Q15 Net Earnings1 of $75 million, diluted EPS of $0.37 | |||||
FIRST QUARTER RESULTS
$0.38 | $79 million | 5.59% | 12.1% | 3.35% | 68.5% | |||||
Earnings per diluted common share | Net Earnings 1 | Tangible return on average tangible common equity 2 | Common Equity Tier 1 2 | Net interest margin (“NIM”) | Efficiency ratio 2 | |||||
HIGHLIGHTS | |
Net Interest Income and Net Interest Margin | • Net interest income was $453 million for 1Q16, up 1% from 4Q15 and up 9% from 1Q15• NIM up 12 bps to 3.35% from 3.23% in 4Q15 and up 13 bps from 3.22% in 1Q15 |
Operating Performance | • Adjusted pre-provision net revenue ("PPNR")2 was $182 million for 1Q16, up 5% from 4Q15 and up 21% from 1Q15• Efficiency ratio2 of 68.5% for 1Q16, an improvement of 106 bps from 4Q15• Adjusted noninterest expense2 of $396 million in 1Q16 compared to $398 million in 4Q15• Customer-related fees in 1Q16 increased 7% from 1Q15 |
Loans and Credit Quality | • Net loans and leases increased $769 million, or 1.9%, from 4Q15 (7.6% annualized)• Provision for loan losses was $42 million compared to $23 million in 4Q15• Non-performing assets were 1.33% of loans and leases, up from 0.87% in 4Q15 • Net charge-offs were $36 million in 1Q16 compared to $13 million in 4Q15 |
Oil and Gas-Related Exposure | • Net charge-offs for oil and gas loans were $36 million in 1Q16 compared to $24 million in 4Q15• Oil and gas portfolio allowance increased to 8.1% of the portfolio• Criticized oil and gas-related loans equaled 38% of the oil and gas-related loans, up from 30% in the prior quarter |
1 Net Earnings is net earnings applicable to common shareholders.
2 For information on non-GAAP financial measures see pages 15-17.
CEO COMMENTARY |
Harris H. Simmons, Chairman and CEO, commented, “We continue to generate strong growth in pre-provision net revenue, reflecting operating leverage improvement resulting from solid loan growth, a more profitable earning assets mix and controlled core operating expenses. We are on track to achieve the goals we established in mid-2015, leading to an efficiency ratio of 66% or better in 2016 and in the low 60% range in 2017 while accelerating revenue growth. Although energy-related credit losses and related provisions largely offset these gains, recent improvements in energy prices are encouraging, and credit performance in the rest of the portfolio has been stellar. We’re pleased with the progress made during the quarter in building a stronger foundation for future growth and capital distributions.” |
OPERATING PERFORMANCE2 |
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ZIONS BANCORPORATION
Press Release – Page 2
April 25, 2016
The dollar change and percent change amounts presented in the following tables are calculated on amounts in thousands rather than millions.
RESULTS OF OPERATIONS
Net Interest Income | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Interest and fees on loans | $ | 421 | $ | 430 | $ | 416 | $ | (9 | ) | (2 | )% | $ | 5 | 1 | % | |||||||||||
Interest on money market investments | 7 | 6 | 5 | 1 | 14 | 2 | 35 | |||||||||||||||||||
Interest on securities | 47 | 38 | 27 | 10 | 26 | 20 | 72 | |||||||||||||||||||
Total interest income | 475 | 474 | 448 | 1 | — | 26 | 6 | |||||||||||||||||||
Interest on deposits | 12 | 12 | 12 | (1 | ) | (4 | ) | — | (2 | ) | ||||||||||||||||
Interest on short and long-term borrowings | 10 | 13 | 19 | (3 | ) | (23 | ) | (9 | ) | (47 | ) | |||||||||||||||
Interest expense | 22 | 25 | 31 | (3 | ) | (12 | ) | (9 | ) | (29 | ) | |||||||||||||||
Net interest income | $ | 453 | $ | 449 | $ | 417 | $ | 4 | 1 | $ | 35 | 9 | ||||||||||||||
Net interest income increased to $453 million in the first quarter of 2016 from $449 million in the fourth quarter of 2015. The net interest margin increased to 3.35% in the first quarter of 2016, compared to 3.23% in the fourth quarter of 2015. In the prior quarter, the Company realized interest income of $13 million from loan recoveries and FDIC-supported loans that was not repeated in the first quarter. However, higher benchmark interest rates assisted in maintaining and increasing net interest income despite the aforementioned $13 million of elevated interest income in the prior quarter. The increase in net interest income was primarily driven by a change in the mix of interest-earning assets; average money market investments declined by $2.7 billion, much of which was deployed into loans and term investment securities. Additionally, net interest income benefited from high cost long-term debt that matured in the fourth quarter of 2015. Interest and fees on loans decreased in the first quarter of 2016 primarily as a result of the previously mentioned interest recoveries on commercial loans that occurred in the fourth quarter of 2015 and an increase of $192 million in nonaccrual loans in the first quarter of 2016.
Noninterest Income | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Service charges and fees on deposit accounts | $ | 41 | $ | 42 | $ | 41 | $ | (1 | ) | (3 | )% | $ | — | — | % | |||||||||||
Other service charges, commissions and fees | 49 | 49 | 43 | — | — | 6 | 15 | |||||||||||||||||||
Wealth management income | 8 | 8 | 8 | — | — | — | 4 | |||||||||||||||||||
Loan sales and servicing income | 8 | 7 | 8 | 1 | 15 | — | 4 | |||||||||||||||||||
Capital markets and foreign exchange | 6 | 7 | 5 | (1 | ) | (14 | ) | 1 | 20 | |||||||||||||||||
Customer-related fees | 112 | 113 | 105 | (1 | ) | (1 | ) | 7 | 7 | |||||||||||||||||
Dividends and other investment income | 5 | 3 | 9 | 2 | 55 | (5 | ) | (51 | ) | |||||||||||||||||
Fair value and nonhedge derivative income (loss) | (3 | ) | 1 | (1 | ) | (3 | ) | (476 | ) | (1 | ) | 138 | ||||||||||||||
Other | 3 | 2 | 4 | 1 | 50 | (1 | ) | (25 | ) | |||||||||||||||||
Total noninterest income | $ | 117 | $ | 119 | $ | 117 | $ | (2 | ) | (1 | ) | $ | — | — | ||||||||||||
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ZIONS BANCORPORATION
Press Release – Page 3
April 25, 2016
In the first quarter of 2016, to be consistent with industry practice, the Company reclassified its bankcard rewards expense from “Other” noninterest expense to “Other service charges, commissions and fees” in noninterest income in order to offset this expense against the associated revenue. Prior period amounts have been reclassified to reflect this change.
Customer-related fees in the first quarter of 2016 were stable compared to the prior quarter and increased 7% from the prior year period. Most of the year-over-year increase was due to an increase in credit card and interchange fees and loan fees. Total noninterest income for the first quarter of 2016 was $117 million, compared to $119 million for the fourth quarter of 2015.
Noninterest Expense | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Salaries and employee benefits | $ | 258 | $ | 236 | $ | 244 | $ | 22 | 9 | % | $ | 15 | 6 | % | ||||||||||||
Occupancy, net | 30 | 31 | 29 | (1 | ) | (3 | ) | — | 1 | |||||||||||||||||
Furniture, equipment and software | 32 | 32 | 30 | — | 1 | 2 | 8 | |||||||||||||||||||
Credit-related expense | 6 | 8 | 6 | (2 | ) | (22 | ) | — | — | |||||||||||||||||
Provision for unfunded lending commitments | (6 | ) | (7 | ) | 1 | 1 | (11 | ) | (7 | ) | (580 | ) | ||||||||||||||
Professional and legal services | 11 | 13 | 11 | (2 | ) | (13 | ) | — | — | |||||||||||||||||
Advertising | 6 | 6 | 7 | — | (1 | ) | (1 | ) | (19 | ) | ||||||||||||||||
FDIC premiums | 7 | 9 | 8 | (2 | ) | (22 | ) | (1 | ) | (12 | ) | |||||||||||||||
Amortization of core deposit and other intangibles | 2 | 2 | 2 | — | (11 | ) | — | (15 | ) | |||||||||||||||||
Other | 50 | 67 | 55 | (17 | ) | (25 | ) | (5 | ) | (9 | ) | |||||||||||||||
Total noninterest expense | $ | 396 | $ | 397 | $ | 393 | $ | — | (10 | ) | $ | 3 | 1 | |||||||||||||
Adjusted noninterest expense 1 | $ | 396 | $ | 398 | $ | 386 | $ | (2 | ) | — | % | $ | 10 | 3 | % | |||||||||||
1 | For information on non-GAAP financial measures see pages 15-17. |
Noninterest expense for the first quarter of 2016 was $396 million, compared to $397 million for the fourth quarter of 2015, and $393 million for the first quarter of 2015. The decrease in total noninterest expense from the fourth quarter of 2015 was primarily due to a decrease of $17 million in other noninterest expense, in addition to reductions in professional and legal services, FDIC premiums, and credit-related expense. The decrease in other noninterest expense was mostly attributable to elevated fourth quarter payments related to the loss-sharing agreement with the FDIC and an elevated fourth quarter accrual for legal-related matters. The decrease in these expenses in the first quarter of 2016 was partially offset by an increase of $22 million in salaries and employee benefits. The primary reasons for the increase in salaries and employee benefits were a seasonal increase of $6 million in the accrual related to annual restricted stock awards, which historically occurred in the second quarter, a seasonal increase of $7 million in payroll taxes, and a $9 million difference in incentive compensation accrual due to performance related reductions in the fourth quarter of 2015.
The Company continued to make meaningful progress with its corporate restructuring and cost initiatives during the quarter. Adjusted noninterest expense for the first quarter of 2016 was $396 million, compared to $398 million for
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ZIONS BANCORPORATION
Press Release – Page 4
April 25, 2016
the fourth quarter of 2015 and $386 million for the first quarter of 2015. For information on non-GAAP financial measures see pages 15-17.
BALANCE SHEET ANALYSIS
Loans and Leases | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Loans held for sale | $ | 109 | $ | 150 | $ | 129 | $ | (41 | ) | (27 | )% | $ | (20 | ) | (16 | )% | ||||||||||
Loans and leases, net of unearned income and fees | 41,418 | 40,649 | 40,180 | 769 | 2 | 1,238 | 3 | |||||||||||||||||||
Less allowance for loan losses | 612 | 606 | 620 | 6 | 1 | (8 | ) | (1 | ) | |||||||||||||||||
Loans held for investment, net of allowance | $ | 40,806 | $ | 40,043 | $ | 39,560 | $ | 763 | 2 | $ | 1,246 | 3 | ||||||||||||||
Loans and leases, net of unearned income and fees increased $769 million, or 1.9% (7.6% on an annualized basis based on first quarter growth) to $41.4 billion at March 31, 2016 from $40.6 billion at December 31, 2015. Average loans and leases held for investment of $41.0 billion during the first quarter of 2016 increased from $40.3 billion during the fourth quarter of 2015. The increase in loans was widespread across products and geography with particular strength in commercial and industrial and commercial real estate term loans. Unfunded lending commitments were $18.2 billion at March 31, 2016, compared to $18.1 billion at December 31, 2015. The reserve for unfunded lending commitments declined by $6 million as a result of improved credit quality assessments related to these obligations.
Oil and Gas-Related Exposure1 | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Loans and leases | ||||||||||||||||||||||||||
Upstream - exploration and production | $ | 859 | $ | 817 | $ | 1,078 | $ | 42 | 5 | % | $ | (219 | ) | (20 | )% | |||||||||||
Midstream – marketing and transportation | 649 | 621 | 654 | 28 | 5 | (5 | ) | (1 | ) | |||||||||||||||||
Downstream – refining | 129 | 127 | 140 | 2 | 2 | (11 | ) | (8 | ) | |||||||||||||||||
Other non-services | 43 | 44 | 57 | (1 | ) | (2 | ) | (14 | ) | (25 | ) | |||||||||||||||
Oilfield services | 734 | 784 | 959 | (50 | ) | (6 | ) | (225 | ) | (23 | ) | |||||||||||||||
Energy service manufacturing | 229 | 229 | 269 | — | — | (40 | ) | (15 | ) | |||||||||||||||||
Total loan and lease balances | 2,643 | 2,622 | 3,157 | 21 | 1 | (514 | ) | (16 | ) | |||||||||||||||||
Unfunded lending commitments | 2,021 | 2,151 | 2,432 | (130 | ) | (6 | ) | (411 | ) | (17 | ) | |||||||||||||||
Total oil and gas credit exposure | $ | 4,664 | $ | 4,773 | $ | 5,589 | $ | (109 | ) | (2 | ) | $ | (925 | ) | (17 | ) | ||||||||||
Private equity investments | $ | 12 | $ | 13 | $ | 20 | $ | (1 | ) | (10 | ) | $ | (8 | ) | (40 | ) | ||||||||||
Credit quality measures | ||||||||||||||||||||||||||
Criticized loan ratio | 37.5 | % | 30.3 | % | 15.7 | % | ||||||||||||||||||||
Classified loan ratio | 26.9 | % | 19.7 | % | 9.3 | % | ||||||||||||||||||||
Nonperforming loan ratio | 10.8 | % | 2.5 | % | 2.1 | % | ||||||||||||||||||||
Net charge-off ratio, annualized 2 | 5.4 | % | 3.6 | % | 0.3 | % | ||||||||||||||||||||
1 | Because many borrowers operate in multiple businesses, judgment has been applied in characterizing a borrower as oil and gas-related, including a particular segment of oil and gas-related activity, e.g., upstream or downstream; typically, 50% of revenues coming from the oil and gas sector is used as a guide. |
2 | Calculated as the ratio of annualized net charge-offs for each respective period to loan balances at each period end. |
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ZIONS BANCORPORATION
Press Release – Page 5
April 25, 2016
During the first quarter of 2016, oil and gas-related loans increased $21 million, or 1%, and total oil and gas credit exposure decreased by $109 million, or 2%. Further attrition of total oil and gas-related loan balances and commitments during the next several quarters is expected, but at a slower pace than recent quarters. Unfunded lending commitments decreased by $130 million, primarily in the oilfield services and exploration and production portfolios.
Consistent with management’s expectations, the majority of loan downgrades in the first quarter of 2016 reflected deterioration in the financial condition of companies in the oilfield services and the exploration and production portfolios. Oil and gas-related loan net charge-offs were $36 million in the first quarter of 2016 and were predominantly in the oilfield services portfolio, compared to $24 million in the fourth quarter of 2015. Nonaccruing loans increased by $220 million in the first quarter of 2016, primarily in the exploration and production and oilfield services portfolios. Approximately 91% of oil and gas-related nonaccruing loans were current as to principal and interest payments as of March 31, 2016, up from 71% as of December 31, 2015. The Company has a substantial allowance of 8.1% for credit losses against the oil and gas-related loan portfolio.
Asset Quality | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | bps | bps | |||||||||||||||||||||
Ratio of nonperforming assets to loans and leases and other real estate owned | 1.33 | % | 0.87 | % | 0.99 | % | 46 | 34 | ||||||||||||||||||
Annualized ratio of net loan and lease charge-offs to average loans | 0.35 | 0.13 | (0.17 | ) | 22 | 52 | ||||||||||||||||||||
Ratio of total allowance for credit losses to loans and leases outstanding | 1.64 | 1.68 | 1.75 | (4 | ) | (11 | ) | |||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||
Classified loans | $ | 1,532 | $ | 1,368 | $ | 1,269 | $ | 164 | 12 | % | $ | 263 | 21 | % | ||||||||||||
Provision for loan losses | 42 | 23 | (1 | ) | 19 | 84 | 44 | (2,921 | ) | |||||||||||||||||
Outside of the oil and gas-related portfolio, credit quality improved during the quarter. As a result of the credit quality deterioration in the oil and gas-related portfolio, nonperforming assets increased 55% to $552 million at March 31, 2016 from $357 million at December 31, 2015 and classified loans increased 12% to $1.5 billion at March 31, 2016 from $1.4 billion at December 31, 2015. The ratio of nonperforming assets to loans and leases and other real estate owned increased to 1.33% at March 31, 2016, compared to 0.87% at December 31, 2015. The allowance for credit losses was $681 million at March 31, 2016 and December 31, 2015, which was 1.64% and 1.68% of loans and leases, respectively.
Total net charge-offs were $36 million in the first quarter of 2016, or an annualized 0.35% of average loans, compared to $13 million, or an annualized 0.13% of average loans, in the fourth quarter of 2015. The Company provided $42.1 million for loan losses during the first quarter of 2016, compared to $22.7 million during the fourth
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ZIONS BANCORPORATION
Press Release – Page 6
April 25, 2016
quarter of 2015. The increase in the provision for loan losses was due to continued weakness in the oil and gas sector.
Deposits | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Noninterest-bearing demand | $ | 21,872 | $ | 22,277 | $ | 20,854 | $ | (405 | ) | (2 | )% | $ | 1,018 | 5 | % | |||||||||||
Interest-bearing: | ||||||||||||||||||||||||||
Savings and money market | 25,724 | 25,672 | 24,541 | 52 | — | 1,183 | 5 | |||||||||||||||||||
Time | 2,072 | 2,131 | 2,345 | (59 | ) | (3 | ) | (273 | ) | (12 | ) | |||||||||||||||
Foreign | 220 | 294 | 383 | (74 | ) | (25 | ) | (163 | ) | (43 | ) | |||||||||||||||
Total deposits | $ | 49,888 | $ | 50,374 | $ | 48,123 | $ | (487 | ) | (1 | ) | $ | 1,765 | 4 | ||||||||||||
Total deposits decreased to $49.9 billion at March 31, 2016, compared to $50.4 billion at December 31, 2015. Average total deposits decreased $438 million to $49.6 billion for the first quarter of 2016, compared to $50.0 billion for the fourth quarter of 2015. Average noninterest bearing deposits decreased $473 million to $21.9 billion for the first quarter of 2016, compared to $22.4 billion for the fourth quarter of 2015, and were 44% of average total deposits.
Shareholders’ Equity | ||||||||||||||||||||||||||
1Q16 - 4Q15 | 1Q16 - 1Q15 | |||||||||||||||||||||||||
(In millions) | 1Q16 | 4Q15 | 1Q15 | $ | % | $ | % | |||||||||||||||||||
Shareholder's equity: | ||||||||||||||||||||||||||
Preferred Stock | $ | 828 | $ | 828 | $ | 1,004 | $ | — | — | % | $ | (176 | ) | (17 | )% | |||||||||||
Common Stock | 4,779 | 4,768 | 4,728 | 11 | — | 51 | 1 | |||||||||||||||||||
Retained earnings | 2,031 | 1,967 | 1,837 | 64 | 3 | 195 | 11 | |||||||||||||||||||
Accumulated other comprehensive income (loss) | (12 | ) | (55 | ) | (115 | ) | 43 | (79 | ) | 103 | (90 | ) | ||||||||||||||
Total shareholders' equity | $ | 7,626 | $ | 7,508 | $ | 7,454 | $ | 118 | 2 | $ | 173 | 2 | ||||||||||||||
The Company’s preferred dividends decreased by $2.6 million in the first quarter of 2016 as a result of the tender offer the Company completed in the fourth quarter of 2015 to purchase $176 million of its Series I preferred stock for an aggregate cash payment of $180 million. As reported separately on April 25, 2016, the Company has launched a tender offer for up to $120 million par amount of certain outstanding shares of preferred stock.
Accumulated other comprehensive income (loss) improved to $(12) million from $(55) million primarily as a result of improvement in the fair value of the Company’s available-for-sale securities portfolio due largely to changes in the interest rate environment.
Tangible book value per common share increased to $28.20 at March 31, 2016, compared to $27.63 at December 31, 2015.
The estimated Basel III common equity tier 1 (“CET1”) capital ratio was 12.14% at March 31, 2016, compared to 12.22% at December 31, 2015. The fully phased-in ratio was not substantially different.
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ZIONS BANCORPORATION
Press Release – Page 7
April 25, 2016
Supplemental Presentation and Conference Call
Zions has posted a supplemental presentation to its website, which will be used to discuss these first quarter results at 5:30 p.m. ET this afternoon (April 25, 2016). Media representatives, analysts, investors, and the public are invited to join this discussion by calling 253-237-1247 (domestic and international) and entering the passcode 72743364, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at 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 with total assets of approximately $60 billion. Zions operates under local management teams and unique brands 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 is a consistent top recipient of numerous Greenwich Excellence awards in banking. In addition, Zions is included in the S&P 500 and NASDAQ Financial 100 indices. Investor information and links to local banking brands can be accessed at 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. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts or intentions regarding 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 include the actual amount and duration of declines in the price of oil and gas, our ability to meet our efficiency and noninterest expense goals, as well as other factors 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.
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ZIONS BANCORPORATION
Press Release – Page 8
April 25, 2016
FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended | |||||||||||||||||||
(In thousands, except share, per share, and ratio data) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||
BALANCE SHEET 1 | |||||||||||||||||||
Loans held for investment, net of allowance | $ | 40,806,291 | $ | 40,043,494 | $ | 39,516,683 | $ | 39,414,609 | $ | 39,560,101 | |||||||||
Total assets | 59,179,913 | 59,664,543 | 58,405,718 | 58,360,005 | 57,550,232 | ||||||||||||||
Deposits | 49,887,857 | 50,374,091 | 48,920,147 | 48,937,124 | 48,123,360 | ||||||||||||||
Total shareholders’ equity | 7,625,737 | 7,507,519 | 7,638,095 | 7,530,175 | 7,454,298 | ||||||||||||||
STATEMENT OF INCOME | |||||||||||||||||||
Net interest income | $ | 452,842 | $ | 448,833 | $ | 425,377 | $ | 423,704 | $ | 417,346 | |||||||||
Taxable-equivalent net interest income | 458,242 | 453,780 | 429,782 | 428,015 | 421,581 | ||||||||||||||
Provision for loan losses | 42,145 | 22,701 | 18,262 | 566 | (1,494 | ) | |||||||||||||
Total noninterest income | 116,761 | 118,641 | 125,944 | (4,682 | ) | 117,338 | |||||||||||||
Total noninterest expense | 395,573 | 397,353 | 391,280 | 398,997 | 392,977 | ||||||||||||||
Net earnings (loss) applicable to common shareholders | 78,777 | 88,197 | 84,238 | (1,100 | ) | 75,279 | |||||||||||||
PER COMMON SHARE | |||||||||||||||||||
Net earnings (loss) per diluted common share | $ | 0.38 | $ | 0.43 | $ | 0.41 | $ | (0.01 | ) | $ | 0.37 | ||||||||
Dividends | 0.06 | 0.06 | 0.06 | 0.06 | 0.04 | ||||||||||||||
Book value per common share 1 | 33.23 | 32.67 | 32.47 | 32.03 | 31.74 | ||||||||||||||
Tangible book value per common share 1 | 28.20 | 27.63 | 27.42 | 26.95 | 26.64 | ||||||||||||||
SELECTED RATIOS | |||||||||||||||||||
Return on average assets | 0.62 | % | 0.68 | % | 0.69 | % | 0.10 | % | 0.66 | % | |||||||||
Return on average common equity | 4.67 | % | 5.17 | % | 5.02 | % | (0.07 | )% | 4.77 | % | |||||||||
Tangible return on average tangible common equity 2 | 5.59 | % | 6.20 | % | 6.05 | % | 0.03 | % | 5.80 | % | |||||||||
Net interest margin | 3.35 | % | 3.23 | % | 3.11 | % | 3.18 | % | 3.22 | % | |||||||||
Efficiency ratio 2 | 68.5 | % | 69.6 | % | 69.1 | % | 71.1 | % | 71.9 | % | |||||||||
Effective tax rate | 31.4 | % | 30.5 | % | 28.8 | % | 28.3 | % | 35.7 | % | |||||||||
Ratio of nonperforming assets to loans and leases and other real estate owned | 1.33 | % | 0.87 | % | 0.92 | % | 0.96 | % | 0.99 | % | |||||||||
Annualized ratio of net loan and lease charge-offs to average loans | 0.35 | % | 0.13 | % | 0.31 | % | 0.11 | % | (0.17 | )% | |||||||||
Ratio of total allowance for credit losses to loans and leases outstanding 1 | 1.64 | % | 1.68 | % | 1.69 | % | 1.72 | % | 1.75 | % | |||||||||
Capital Ratios 1 | |||||||||||||||||||
Tangible common equity ratio | 9.92 | % | 9.63 | % | 9.76 | % | 9.58 | % | 9.58 | % | |||||||||
Basel III: 3 | |||||||||||||||||||
Common equity tier 1 capital | 12.14 | % | 12.22 | % | 12.16 | % | 12.00 | % | 11.76 | % | |||||||||
Tier 1 leverage | 11.44 | % | 11.26 | % | 11.63 | % | 11.65 | % | 11.75 | % | |||||||||
Tier 1 risk-based capital | 13.88 | % | 14.08 | % | 14.41 | % | 14.26 | % | 13.93 | % | |||||||||
Total risk-based capital | 15.99 | % | 16.12 | % | 16.46 | % | 16.32 | % | 15.97 | % | |||||||||
Weighted average common and common-equivalent shares outstanding | 204,095,529 | 204,276,930 | 204,154,880 | 202,887,762 | 202,944,209 | ||||||||||||||
Common shares outstanding 1 | 204,543,707 | 204,417,093 | 204,278,594 | 203,740,914 | 203,192,991 | ||||||||||||||
1 | At period end. |
2 | For information on non-GAAP financial measures see pages 15-17. |
3 | Basel III capital ratios became effective January 1, 2015 and are based on the applicable phase-in periods. |
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ZIONS BANCORPORATION
Press Release – Page 9
April 25, 2016
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 517,803 | $ | 798,319 | $ | 602,694 | $ | 758,238 | $ | 720,858 | |||||||||
Money market investments: | |||||||||||||||||||
Interest-bearing deposits | 3,039,090 | 6,108,124 | 6,558,678 | 7,661,311 | 6,791,762 | ||||||||||||||
Federal funds sold and security resell agreements | 1,587,212 | 619,758 | 1,325,501 | 1,404,246 | 1,519,352 | ||||||||||||||
Investment securities: | |||||||||||||||||||
Held-to-maturity, at adjusted cost (approximate fair value $636,484, $552,088, $553,088, $578,327, and $602,355) | 631,646 | 545,648 | 544,168 | 570,869 | 590,950 | ||||||||||||||
Available-for-sale, at fair value | 8,701,885 | 7,643,116 | 6,000,011 | 4,652,415 | 4,450,502 | ||||||||||||||
Trading account, at fair value | 65,838 | 48,168 | 73,521 | 74,519 | 71,392 | ||||||||||||||
9,399,369 | 8,236,932 | 6,617,700 | 5,297,803 | 5,112,844 | |||||||||||||||
Loans held for sale | 108,764 | 149,880 | 139,122 | 152,448 | 128,946 | ||||||||||||||
Loans and leases, net of unearned income and fees | 41,418,185 | 40,649,542 | 40,113,123 | 40,023,984 | 40,180,114 | ||||||||||||||
Less allowance for loan losses | 611,894 | 606,048 | 596,440 | 609,375 | 620,013 | ||||||||||||||
Loans held for investment, net of allowance | 40,806,291 | 40,043,494 | 39,516,683 | 39,414,609 | 39,560,101 | ||||||||||||||
Other noninterest-bearing investments | 855,813 | 848,144 | 851,225 | 863,443 | 870,125 | ||||||||||||||
Premises and equipment, net | 925,430 | 905,462 | 873,800 | 856,577 | 844,900 | ||||||||||||||
Goodwill | 1,014,129 | 1,014,129 | 1,014,129 | 1,014,129 | 1,014,129 | ||||||||||||||
Core deposit and other intangibles | 14,259 | 16,272 | 18,546 | 20,843 | 23,162 | ||||||||||||||
Other real estate owned | 10,411 | 7,092 | 12,799 | 13,269 | 17,256 | ||||||||||||||
Other assets | 901,342 | 916,937 | 874,841 | 903,089 | 946,797 | ||||||||||||||
$ | 59,179,913 | $ | 59,664,543 | $ | 58,405,718 | $ | 58,360,005 | $ | 57,550,232 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing demand | $ | 21,872,274 | $ | 22,276,664 | $ | 21,572,022 | $ | 21,557,584 | $ | 20,854,630 | |||||||||
Interest-bearing: | |||||||||||||||||||
Savings and money market | 25,723,996 | 25,672,356 | 24,690,359 | 24,744,288 | 24,540,927 | ||||||||||||||
Time | 2,071,688 | 2,130,680 | 2,216,206 | 2,263,146 | 2,344,818 | ||||||||||||||
Foreign | 219,899 | 294,391 | 441,560 | 372,106 | 382,985 | ||||||||||||||
49,887,857 | 50,374,091 | 48,920,147 | 48,937,124 | 48,123,360 | |||||||||||||||
Federal funds and other short-term borrowings | 232,188 | 346,987 | 272,391 | 227,124 | 203,597 | ||||||||||||||
Long-term debt | 802,448 | 812,366 | 939,543 | 1,045,484 | 1,083,622 | ||||||||||||||
Reserve for unfunded lending commitments | 69,026 | 74,838 | 81,389 | 79,961 | 82,287 | ||||||||||||||
Other liabilities | 562,657 | 548,742 | 554,153 | 540,137 | 603,068 | ||||||||||||||
Total liabilities | 51,554,176 | 52,157,024 | 50,767,623 | 50,829,830 | 50,095,934 | ||||||||||||||
Shareholders’ equity: | |||||||||||||||||||
Preferred stock, without par value, authorized 4,400,000 shares | 828,490 | 828,490 | 1,004,159 | 1,004,032 | 1,004,032 | ||||||||||||||
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 204,543,707, 204,417,093, 204,278,594, 203,740,914, and 203,192,991 shares | 4,777,630 | 4,766,731 | 4,756,288 | 4,738,272 | 4,728,556 | ||||||||||||||
Retained earnings | 2,031,270 | 1,966,910 | 1,894,623 | 1,823,043 | 1,836,619 | ||||||||||||||
Accumulated other comprehensive income (loss) | (11,653 | ) | (54,612 | ) | (16,975 | ) | (35,172 | ) | (114,909 | ) | |||||||||
Total shareholders’ equity | 7,625,737 | 7,507,519 | 7,638,095 | 7,530,175 | 7,454,298 | ||||||||||||||
$ | 59,179,913 | $ | 59,664,543 | $ | 58,405,718 | $ | 58,360,005 | $ | 57,550,232 | ||||||||||
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ZIONS BANCORPORATION
Press Release – Page 10
April 25, 2016
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended | |||||||||||||||||||
(In thousands, except per share amounts) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||
Interest income: | |||||||||||||||||||
Interest and fees on loans | $ | 420,508 | $ | 429,842 | $ | 419,981 | $ | 420,642 | $ | 415,755 | |||||||||
Interest on money market investments | 7,029 | 6,144 | 6,018 | 5,785 | 5,218 | ||||||||||||||
Interest on securities | 47,364 | 37,573 | 30,231 | 28,809 | 27,473 | ||||||||||||||
Total interest income | 474,901 | 473,559 | 456,230 | 455,236 | 448,446 | ||||||||||||||
Interest expense: | |||||||||||||||||||
Interest on deposits | 11,845 | 12,377 | 12,542 | 12,321 | 12,104 | ||||||||||||||
Interest on short- and long-term borrowings | 10,214 | 12,349 | 18,311 | 19,211 | 18,996 | ||||||||||||||
Total interest expense | 22,059 | 24,726 | 30,853 | 31,532 | 31,100 | ||||||||||||||
Net interest income | 452,842 | 448,833 | 425,377 | 423,704 | 417,346 | ||||||||||||||
Provision for loan losses | 42,145 | 22,701 | 18,262 | 566 | (1,494 | ) | |||||||||||||
Net interest income after provision for loan losses | 410,697 | 426,132 | 407,115 | 423,138 | 418,840 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Service charges and fees on deposit accounts | 41,261 | 42,445 | 43,196 | 41,616 | 41,194 | ||||||||||||||
Other service charges, commissions and fees | 49,474 | 49,335 | 47,968 | 46,602 | 43,002 | ||||||||||||||
Wealth management income | 7,954 | 7,953 | 7,496 | 8,160 | 7,615 | ||||||||||||||
Loan sales and servicing income | 7,979 | 6,915 | 7,728 | 8,382 | 7,706 | ||||||||||||||
Capital markets and foreign exchange | 5,667 | 6,255 | 6,624 | 7,275 | 5,501 | ||||||||||||||
Dividends and other investment income | 4,639 | 2,986 | 8,449 | 9,343 | 9,372 | ||||||||||||||
Fair value and nonhedge derivative income (loss) | (2,585 | ) | 688 | (1,555 | ) | 1,844 | (1,088 | ) | |||||||||||
Equity securities gains (losses), net | (550 | ) | 53 | 3,630 | 4,839 | 3,353 | |||||||||||||
Fixed income securities gains (losses), net | 28 | (7 | ) | (53 | ) | (138,436 | ) | (239 | ) | ||||||||||
Other | 2,894 | 2,018 | 2,461 | 5,693 | 922 | ||||||||||||||
Total noninterest income | 116,761 | 118,641 | 125,944 | (4,682 | ) | 117,338 | |||||||||||||
Noninterest expense: | |||||||||||||||||||
Salaries and employee benefits | 258,338 | 236,037 | 242,023 | 251,133 | 243,519 | ||||||||||||||
Occupancy, net | 29,779 | 30,618 | 29,477 | 30,095 | 29,339 | ||||||||||||||
Furniture, equipment and software | 32,015 | 31,820 | 30,416 | 31,247 | 29,713 | ||||||||||||||
Other real estate expense | (1,329 | ) | (536 | ) | (40 | ) | (445 | ) | 374 | ||||||||||
Credit-related expense | 5,934 | 7,582 | 6,914 | 8,106 | 5,939 | ||||||||||||||
Provision for unfunded lending commitments | (5,812 | ) | (6,551 | ) | 1,428 | (2,326 | ) | 1,211 | |||||||||||
Professional and legal services | 11,471 | 13,129 | 12,699 | 13,110 | 11,483 | ||||||||||||||
Advertising | 5,628 | 5,692 | 6,136 | 6,511 | 6,975 | ||||||||||||||
FDIC premiums | 7,154 | 9,194 | 8,500 | 8,609 | 8,119 | ||||||||||||||
Amortization of core deposit and other intangibles | 2,014 | 2,273 | 2,298 | 2,318 | 2,358 | ||||||||||||||
Debt extinguishment cost | 247 | 135 | — | 2,395 | — | ||||||||||||||
Other | 50,134 | 67,960 | 51,429 | 48,244 | 53,947 | ||||||||||||||
Total noninterest expense | 395,573 | 397,353 | 391,280 | 398,997 | 392,977 | ||||||||||||||
Income before income taxes | 131,885 | 147,420 | 141,779 | 19,459 | 143,201 | ||||||||||||||
Income taxes | 41,448 | 44,933 | 40,780 | 5,499 | 51,176 | ||||||||||||||
Net income | 90,437 | 102,487 | 100,999 | 13,960 | 92,025 | ||||||||||||||
Preferred stock dividends | (11,660 | ) | (14,290 | ) | (16,761 | ) | (15,060 | ) | (16,746 | ) | |||||||||
Net earnings (loss) applicable to common shareholders | $ | 78,777 | $ | 88,197 | $ | 84,238 | $ | (1,100 | ) | $ | 75,279 | ||||||||
Weighted average common shares outstanding during the period: | |||||||||||||||||||
Basic shares | 203,967 | 203,884 | 203,668 | 202,888 | 202,603 | ||||||||||||||
Diluted shares | 204,096 | 204,277 | 204,155 | 202,888 | 202,944 | ||||||||||||||
Net earnings (loss) per common share: | |||||||||||||||||||
Basic | $ | 0.38 | $ | 0.43 | $ | 0.41 | $ | (0.01 | ) | $ | 0.37 | ||||||||
Diluted | 0.38 | 0.43 | 0.41 | (0.01 | ) | 0.37 | |||||||||||||
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ZIONS BANCORPORATION
Press Release – Page 11
April 25, 2016
Loan Balances Held for Investment by Portfolio Type
(Unaudited)
(In millions) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||
Commercial and industrial | $ | 13,590 | $ | 13,211 | $ | 13,035 | $ | 13,111 | $ | 13,264 | |||||||||||||||||||
Leasing | 437 | 442 | 427 | 402 | 407 | ||||||||||||||||||||||||
Owner occupied | 7,022 | 7,150 | 7,141 | 7,277 | 7,310 | ||||||||||||||||||||||||
Municipal | 696 | 676 | 600 | 589 | 555 | ||||||||||||||||||||||||
Total commercial | 21,745 | 21,479 | 21,203 | 21,379 | 21,536 | ||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Construction and land development | 1,968 | 1,842 | 2,214 | 2,062 | 2,045 | ||||||||||||||||||||||||
Term | 8,826 | 8,514 | 8,089 | 8,058 | 8,088 | ||||||||||||||||||||||||
Total commercial real estate | 10,794 | 10,356 | 10,303 | 10,120 | 10,133 | ||||||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||
Home equity credit line | 2,433 | 2,417 | 2,347 | 2,348 | 2,315 | ||||||||||||||||||||||||
1-4 family residential | 5,418 | 5,382 | 5,269 | 5,194 | 5,213 | ||||||||||||||||||||||||
Construction and other consumer real estate | 401 | 385 | 370 | 372 | 373 | ||||||||||||||||||||||||
Bankcard and other revolving plans | 439 | 444 | 428 | 409 | 407 | ||||||||||||||||||||||||
Other | 188 | 187 | 193 | 202 | 203 | ||||||||||||||||||||||||
Total consumer | 8,879 | 8,815 | 8,607 | 8,525 | 8,511 | ||||||||||||||||||||||||
Loans and leases, net of unearned income and fees | $ | 41,418 | $ | 40,650 | $ | 40,113 | $ | 40,024 | $ | 40,180 | |||||||||||||||||||
Nonperforming Assets
(Unaudited)
(Amounts in thousands) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||
Nonaccrual loans | $ | 541,768 | $ | 349,860 | $ | 359,272 | $ | 372,830 | $ | 382,066 | |||||||||
Other real estate owned | 10,411 | 7,092 | 12,799 | 13,269 | 17,256 | ||||||||||||||
Total nonperforming assets | $ | 552,179 | $ | 356,952 | $ | 372,071 | $ | 386,099 | $ | 399,322 | |||||||||
Ratio of nonperforming assets to loans1 and leases and other real estate owned | 1.33 | % | 0.87 | % | 0.92 | % | 0.96 | % | 0.99 | % | |||||||||
Accruing loans past due 90 days or more | $ | 37,202 | $ | 32,024 | $ | 34,857 | $ | 27,204 | $ | 31,552 | |||||||||
Ratio of accruing loans past due 90 days or more to loans1 and leases | 0.09 | % | 0.08 | % | 0.09 | % | 0.07 | % | 0.08 | % | |||||||||
Nonaccrual loans and accruing loans past due 90 days or more | $ | 578,970 | $ | 381,884 | $ | 394,129 | $ | 400,034 | $ | 413,618 | |||||||||
Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans1 and leases | 1.39 | % | 0.94 | % | 0.98 | % | 1.00 | % | 1.03 | % | |||||||||
Accruing loans past due 30-89 days | $ | 100,341 | $ | 121,732 | $ | 118,361 | $ | 124,955 | $ | 97,242 | |||||||||
Restructured loans included in nonaccrual loans | 132,524 | 103,004 | 108,387 | 118,358 | 110,364 | ||||||||||||||
Restructured loans on accrual | 195,482 | 194,084 | 178,136 | 180,146 | 199,065 | ||||||||||||||
Classified loans | 1,532,052 | 1,368,022 | 1,322,924 | 1,292,980 | 1,268,746 | ||||||||||||||
1 Includes loans held for sale.
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ZIONS BANCORPORATION
Press Release – Page 12
April 25, 2016
Allowance for Credit Losses
(Unaudited)
Three Months Ended | |||||||||||||||||||
(Amounts in thousands) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||
Allowance for Loan Losses | |||||||||||||||||||
Balance at beginning of period | $ | 606,048 | $ | 596,440 | $ | 609,375 | $ | 620,013 | $ | 604,663 | |||||||||
Add: | |||||||||||||||||||
Provision for losses | 42,145 | 22,701 | 18,262 | 566 | (1,494 | ) | |||||||||||||
Adjustment for FDIC-supported/PCI loans | — | 5 | — | 38 | (38 | ) | |||||||||||||
Deduct: | |||||||||||||||||||
Gross loan and lease charge-offs | (48,110 | ) | (45,334 | ) | (42,359 | ) | (31,048 | ) | (20,188 | ) | |||||||||
Recoveries | 11,811 | 32,236 | 11,162 | 19,806 | 37,070 | ||||||||||||||
Net loan and lease (charge-offs) recoveries | (36,299 | ) | (13,098 | ) | (31,197 | ) | (11,242 | ) | 16,882 | ||||||||||
Balance at end of period | $ | 611,894 | $ | 606,048 | $ | 596,440 | $ | 609,375 | $ | 620,013 | |||||||||
Ratio of allowance for loan losses to loans and leases, at period end | 1.48 | % | 1.49 | % | 1.49 | % | 1.52 | % | 1.54 | % | |||||||||
Ratio of allowance for loan losses to nonperforming loans, at period end | 113 | % | 173 | % | 166 | % | 163 | % | 162 | % | |||||||||
Annualized ratio of net loan and lease charge-offs to average loans | 0.35 | % | 0.13 | % | 0.31 | % | 0.11 | % | (0.17 | )% | |||||||||
Reserve for Unfunded Lending Commitments | |||||||||||||||||||
Balance at beginning of period | $ | 74,838 | $ | 81,389 | $ | 79,961 | $ | 82,287 | $ | 81,076 | |||||||||
Provision charged (credited) to earnings | (5,812 | ) | (6,551 | ) | 1,428 | (2,326 | ) | 1,211 | |||||||||||
Balance at end of period | $ | 69,026 | $ | 74,838 | $ | 81,389 | $ | 79,961 | $ | 82,287 | |||||||||
Total Allowance for Credit Losses | |||||||||||||||||||
Allowance for loan losses | $ | 611,894 | $ | 606,048 | $ | 596,440 | $ | 609,375 | $ | 620,013 | |||||||||
Reserve for unfunded lending commitments | 69,026 | 74,838 | 81,389 | 79,961 | 82,287 | ||||||||||||||
Total allowance for credit losses | $ | 680,920 | $ | 680,886 | $ | 677,829 | $ | 689,336 | $ | 702,300 | |||||||||
Ratio of total allowance for credit losses to loans and leases outstanding, at period end | 1.64 | % | 1.68 | % | 1.69 | % | 1.72 | % | 1.75 | % | |||||||||
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ZIONS BANCORPORATION
Press Release – Page 13
April 25, 2016
Nonaccrual Loans by Portfolio Type
(Unaudited)
(In millions) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||
Commercial and industrial | $ | 356 | $ | 164 | $ | 167 | $ | 165 | $ | 163 | |||||||||||||||||||
Leasing | 14 | 4 | — | — | — | ||||||||||||||||||||||||
Owner occupied | 74 | 74 | 77 | 89 | 98 | ||||||||||||||||||||||||
Municipal | 1 | 1 | 1 | 1 | 1 | ||||||||||||||||||||||||
Total commercial | 445 | 243 | 245 | 255 | 262 | ||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Construction and land development | 6 | 7 | 15 | 20 | 22 | ||||||||||||||||||||||||
Term | 33 | 40 | 39 | 44 | 38 | ||||||||||||||||||||||||
Total commercial real estate | 39 | 47 | 54 | 64 | 60 | ||||||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||
Home equity credit line | 11 | 8 | 10 | 9 | 10 | ||||||||||||||||||||||||
1-4 family residential | 44 | 50 | 48 | 43 | 48 | ||||||||||||||||||||||||
Construction and other consumer real estate | 1 | 1 | 1 | 1 | 2 | ||||||||||||||||||||||||
Bankcard and other revolving plans | 2 | 1 | 1 | 1 | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | ||||||||||||||||||||||||
Total consumer | 58 | 60 | 60 | 54 | 60 | ||||||||||||||||||||||||
Total nonaccrual loans | $ | 542 | $ | 350 | $ | 359 | $ | 373 | $ | 382 | |||||||||||||||||||
Net Charge-Offs by Portfolio Type
(Unaudited)
Three Months Ended | |||||||||||||||||||||||||||||
(In millions) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||||||||||||
Commercial: | |||||||||||||||||||||||||||||
Commercial and industrial | $ | 37 | $ | 18 | $ | 30 | $ | 13 | $ | (5 | ) | ||||||||||||||||||
Leasing | — | — | — | — | — | ||||||||||||||||||||||||
Owner occupied | (1 | ) | — | 3 | (3 | ) | — | ||||||||||||||||||||||
Municipal | — | — | — | — | — | ||||||||||||||||||||||||
Total commercial | 36 | 18 | 33 | 10 | (5 | ) | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Construction and land development | (2 | ) | (2 | ) | (2 | ) | (1 | ) | (3 | ) | |||||||||||||||||||
Term | — | (4 | ) | (1 | ) | 2 | (10 | ) | |||||||||||||||||||||
Total commercial real estate | (2 | ) | (6 | ) | (3 | ) | 1 | (13 | ) | ||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||
Home equity credit line | 1 | (1 | ) | 1 | — | (1 | ) | ||||||||||||||||||||||
1-4 family residential | 1 | 1 | — | — | 1 | ||||||||||||||||||||||||
Construction and other consumer real estate | — | (1 | ) | (1 | ) | — | — | ||||||||||||||||||||||
Bankcard and other revolving plans | — | 2 | — | 1 | 1 | ||||||||||||||||||||||||
Other | — | — | 1 | (1 | ) | — | |||||||||||||||||||||||
Total consumer loans | 2 | 1 | 1 | — | 1 | ||||||||||||||||||||||||
Total net charge-offs (recoveries) | $ | 36 | $ | 13 | $ | 31 | $ | 11 | $ | (17 | ) | ||||||||||||||||||
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ZIONS BANCORPORATION
Press Release – Page 14
April 25, 2016
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)
Three Months Ended | ||||||||||||||||||||
March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||||||||||
(In thousands) | Average balance | Average yield/rate 1 | Average balance | Average yield/rate 1 | Average balance | Average yield/rate 1 | ||||||||||||||
ASSETS | ||||||||||||||||||||
Money market investments | $ | 5,122,483 | 0.55 | % | $ | 7,801,628 | 0.31 | % | $ | 8,013,355 | 0.26 | % | ||||||||
Securities: | ||||||||||||||||||||
Held-to-maturity | 562,040 | 4.86 | % | 556,676 | 5.06 | % | 632,927 | 5.12 | % | |||||||||||
Available-for-sale | 8,108,708 | 2.11 | % | 6,770,548 | 1.88 | % | 4,080,004 | 2.06 | % | |||||||||||
Trading account | 53,367 | 3.56 | % | 62,372 | 3.57 | % | 69,910 | 3.47 | % | |||||||||||
Total securities | 8,724,115 | 2.30 | % | 7,389,596 | 2.13 | % | 4,782,841 | 2.49 | % | |||||||||||
Loans held for sale | 140,423 | 3.95 | % | 148,245 | 3.69 | % | 105,279 | 3.52 | % | |||||||||||
Loans held for investment 2: | ||||||||||||||||||||
Commercial | 21,624,134 | 4.20 | % | 21,287,497 | 4.30 | % | 21,576,463 | 4.20 | % | |||||||||||
Commercial real estate | 10,555,869 | 4.23 | % | 10,363,813 | 4.42 | % | 10,084,874 | 4.46 | % | |||||||||||
Consumer | 8,822,899 | 3.90 | % | 8,695,500 | 3.88 | % | 8,517,670 | 3.95 | % | |||||||||||
Total loans held for investment | 41,002,902 | 4.14 | % | 40,346,810 | 4.24 | % | 40,179,007 | 4.21 | % | |||||||||||
Total interest-earning assets | 54,989,923 | 3.51 | % | 55,686,279 | 3.41 | % | 53,080,482 | 3.46 | % | |||||||||||
Cash and due from banks | 727,577 | 652,201 | 743,618 | |||||||||||||||||
Allowance for loan losses | (600,216 | ) | (595,058 | ) | (609,233 | ) | ||||||||||||||
Goodwill | 1,014,129 | 1,014,129 | 1,014,129 | |||||||||||||||||
Core deposit and other intangibles | 15,379 | 17,453 | 24,355 | |||||||||||||||||
Other assets | 2,679,525 | 2,686,049 | 2,558,353 | |||||||||||||||||
Total assets | $ | 58,826,317 | $ | 59,461,053 | $ | 56,811,704 | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Savings and money market | $ | 25,350,037 | 0.15 | % | $ | 25,058,336 | 0.15 | % | $ | 24,214,265 | 0.16 | % | ||||||||
Time | 2,087,698 | 0.44 | % | 2,183,936 | 0.44 | % | 2,372,492 | 0.43 | % | |||||||||||
Foreign | 235,331 | 0.26 | % | 395,810 | 0.24 | % | 351,873 | 0.14 | % | |||||||||||
Total interest-bearing deposits | 27,673,066 | 0.17 | % | 27,638,082 | 0.18 | % | 26,938,630 | 0.18 | % | |||||||||||
Borrowed funds: | ||||||||||||||||||||
Federal funds and other short-term borrowings | 267,431 | 0.18 | % | 294,666 | 0.14 | % | 219,747 | 0.14 | % | |||||||||||
Long-term debt | 809,123 | 5.02 | % | 873,259 | 5.56 | % | 1,085,860 | 7.07 | % | |||||||||||
Total borrowed funds | 1,076,554 | 3.82 | % | 1,167,925 | 4.19 | % | 1,305,607 | 5.90 | % | |||||||||||
Total interest-bearing liabilities | 28,749,620 | 0.31 | % | 28,806,007 | 0.34 | % | 28,244,237 | 0.45 | % | |||||||||||
Noninterest-bearing deposits | 21,881,777 | 22,354,766 | 20,545,395 | |||||||||||||||||
Other liabilities | 579,453 | 614,398 | 612,752 | |||||||||||||||||
Total liabilities | 51,210,850 | 51,775,171 | 49,402,384 | |||||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred equity | 828,490 | 920,145 | 1,004,015 | |||||||||||||||||
Common equity | 6,786,977 | 6,765,737 | 6,405,305 | |||||||||||||||||
Total shareholders’ equity | 7,615,467 | 7,685,882 | 7,409,320 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 58,826,317 | $ | 59,461,053 | $ | 56,811,704 | ||||||||||||||
Spread on average interest-bearing funds | 3.20 | % | 3.07 | % | 3.01 | % | ||||||||||||||
Net yield on interest-earning assets | 3.35 | % | 3.23 | % | 3.22 | % | ||||||||||||||
1 Taxable-equivalent rates used where applicable.
2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.
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ZIONS BANCORPORATION
Press Release – Page 15
April 25, 2016
GAAP to Non-GAAP Reconciliations
(Unaudited)
(In thousands, except per share amounts) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | |||||||||||||||
Tangible Book Value per Common Share | ||||||||||||||||||||
Total shareholders’ equity (GAAP) | $ | 7,625,737 | $ | 7,507,519 | $ | 7,638,095 | $ | 7,530,175 | $ | 7,454,298 | ||||||||||
Preferred stock | (828,490 | ) | (828,490 | ) | (1,004,159 | ) | (1,004,032 | ) | (1,004,032 | ) | ||||||||||
Goodwill | (1,014,129 | ) | (1,014,129 | ) | (1,014,129 | ) | (1,014,129 | ) | (1,014,129 | ) | ||||||||||
Core deposit and other intangibles | (14,259 | ) | (16,272 | ) | (18,546 | ) | (20,843 | ) | (23,162 | ) | ||||||||||
Tangible common equity (non-GAAP) | (a) | $ | 5,768,859 | $ | 5,648,628 | $ | 5,601,261 | $ | 5,491,171 | $ | 5,412,975 | |||||||||
Common shares outstanding | (b) | 204,544 | 204,417 | 204,279 | 203,741 | 203,193 | ||||||||||||||
Tangible book value per common share (non-GAAP) | (a/b) | $ | 28.20 | $ | 27.63 | $ | 27.42 | $ | 26.95 | $ | 26.64 | |||||||||
Three Months Ended | ||||||||||||||||||||
(Dollar amounts in thousands) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | |||||||||||||||
Tangible Return on Average Tangible Common Equity | ||||||||||||||||||||
Net earnings (loss) applicable to common shareholders (GAAP) | $ | 78,777 | $ | 88,197 | $ | 84,238 | $ | (1,100 | ) | $ | 75,279 | |||||||||
Adjustments, net of tax: | ||||||||||||||||||||
Amortization of core deposit and other intangibles | 1,280 | 1,446 | 1,461 | 1,472 | 1,496 | |||||||||||||||
Net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP) | (a) | $ | 80,057 | $ | 89,643 | $ | 85,699 | $ | 372 | $ | 76,775 | |||||||||
Average common equity (GAAP) | $ | 6,786,977 | $ | 6,765,737 | $ | 6,655,513 | $ | 6,492,865 | $ | 6,405,305 | ||||||||||
Average goodwill | (1,014,129 | ) | (1,014,129 | ) | (1,014,129 | ) | (1,014,129 | ) | (1,014,129 | ) | ||||||||||
Average core deposit and other intangibles | (15,379 | ) | (17,453 | ) | (19,726 | ) | (22,135 | ) | (24,355 | ) | ||||||||||
Average tangible common equity (non-GAAP) | (b) | $ | 5,757,469 | $ | 5,734,155 | $ | 5,621,658 | $ | 5,456,601 | $ | 5,366,821 | |||||||||
Number of days in quarter | (c) | 91 | 92 | 92 | 91 | 90 | ||||||||||||||
Number of days in year | (d) | 366 | 365 | 365 | 365 | 365 | ||||||||||||||
Tangible return on average tangible common equity (non-GAAP) | (a/b/c*d) | 5.59 | % | 6.20 | % | 6.05 | % | 0.03 | % | 5.80 | % | |||||||||
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ZIONS BANCORPORATION
Press Release – Page 16
April 25, 2016
Three Months Ended | ||||||||||||||||||||
(Dollar amounts in thousands) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | |||||||||||||||
Efficiency Ratio | ||||||||||||||||||||
Noninterest expense (GAAP) 1 | (a) | $ | 395,573 | $ | 397,353 | $ | 391,280 | $ | 398,997 | $ | 392,977 | |||||||||
Adjustments: | ||||||||||||||||||||
Severance costs | 3,471 | 3,581 | 3,464 | 1,707 | 2,253 | |||||||||||||||
Other real estate expense | (1,329 | ) | (536 | ) | (40 | ) | (445 | ) | 374 | |||||||||||
Provision for unfunded lending commitments | (5,812 | ) | (6,551 | ) | 1,428 | (2,326 | ) | 1,211 | ||||||||||||
Debt extinguishment cost | 247 | 135 | — | 2,395 | — | |||||||||||||||
Amortization of core deposit and other intangibles | 2,014 | 2,273 | 2,298 | 2,318 | 2,358 | |||||||||||||||
Restructuring costs | 996 | 777 | 1,630 | 679 | 766 | |||||||||||||||
Total adjustments | (b) | (413 | ) | (321 | ) | 8,780 | 4,328 | 6,962 | ||||||||||||
Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 395,986 | $ | 397,674 | $ | 382,500 | $ | 394,669 | $ | 386,015 | |||||||||
Taxable-equivalent net interest income (GAAP) | (d) | $ | 458,242 | $ | 453,780 | $ | 429,782 | $ | 428,015 | $ | 421,581 | |||||||||
Noninterest income (GAAP) 1 | (e) | 116,761 | 118,641 | 125,944 | (4,682 | ) | 117,338 | |||||||||||||
Combined income | (d+e)=(f) | 575,003 | 572,421 | 555,726 | 423,333 | 538,919 | ||||||||||||||
Adjustments: | ||||||||||||||||||||
Fair value and nonhedge derivative income (loss) | (2,585 | ) | 688 | (1,555 | ) | 1,844 | (1,088 | ) | ||||||||||||
Equity securities gains (losses), net | (550 | ) | 53 | 3,630 | 4,839 | 3,353 | ||||||||||||||
Fixed income securities gains (losses), net | 28 | (7 | ) | (53 | ) | (138,436 | ) | (239 | ) | |||||||||||
Total adjustments | (g) | (3,107 | ) | 734 | 2,022 | (131,753 | ) | 2,026 | ||||||||||||
Adjusted taxable-equivalent revenue (non-GAAP) | (f-g)=(h) | $ | 578,110 | $ | 571,687 | $ | 553,704 | $ | 555,086 | $ | 536,893 | |||||||||
Adjusted pre-provision net revenue (PPNR) | (h-c)=(i) | $ | 182,124 | $ | 174,013 | $ | 171,204 | $ | 160,417 | $ | 150,878 | |||||||||
Efficiency ratio 1 | (c/h) | 68.5 | % | 69.6 | % | 69.1 | % | 71.1 | % | 71.9 | % | |||||||||
1In the first quarter of 2016, to be consistent with industry practice, the Company reclassified its bankcard rewards expense from “Other” noninterest expense to “Other service charges, commissions and fees” in noninterest income in order to offset this expense against the associated revenue. Prior period amounts have been reclassified to reflect this change.
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ZIONS BANCORPORATION
Press Release – Page 17
April 25, 2016
Six Months Ended | ||||||||
(Dollar amounts in thousands) | March 31, 2016 | March 31, 2015 | ||||||
Efficiency Ratio | ||||||||
Noninterest expense (GAAP) 1 | (a) | $ | 792,926 | $ | 815,643 | |||
Adjustments: | ||||||||
Severance costs | 7,052 | 4,000 | ||||||
Other real estate expense | (1,865 | ) | (3,093 | ) | ||||
Provision for unfunded lending commitments | (12,363 | ) | 2,910 | |||||
Debt extinguishment cost | 382 | — | ||||||
Amortization of core deposit and other intangibles | 4,287 | 4,998 | ||||||
Restructuring costs | 1,773 | 766 | ||||||
Total adjustments | (b) | (734 | ) | 9,581 | ||||
Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 793,660 | $ | 806,062 | |||
Taxable-equivalent net interest income (GAAP) | (d) | $ | 912,022 | $ | 856,370 | |||
Noninterest income (GAAP) 1 | (e) | 235,402 | 246,734 | |||||
Combined income | (d+e)=(f) | 1,147,424 | 1,103,104 | |||||
Adjustments: | ||||||||
Fair value and nonhedge derivative income (loss) | (1,897 | ) | (2,049 | ) | ||||
Equity securities gains (losses), net | (497 | ) | 12,959 | |||||
Fixed income securities gains (losses), net | 21 | (11,859 | ) | |||||
Total adjustments | (g) | (2,373 | ) | (949 | ) | |||
Adjusted taxable-equivalent revenue (non-GAAP) | (f-g)=(h) | $ | 1,149,797 | $ | 1,104,053 | |||
Adjusted pre-provision net revenue (PPNR) | (h-c)=(i) | $ | 356,137 | $ | 297,991 | |||
Efficiency ratio 1 | (c/h) | 69.0 | % | 73.0 | % | |||
1In the first quarter of 2016, to be consistent with industry practice, the Company reclassified its bankcard rewards expense from “Other” noninterest expense to “Other service charges, commissions and fees” in noninterest income in order to offset this expense against the associated revenue. Prior period amounts have been reclassified to reflect this change.
This press release presents the non-GAAP financial measures previously shown. The adjustments to reconcile from the applicable GAAP financial measures to the non-GAAP financial measures 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 measures provides a meaningful base for period-to-period and company-to-company comparisons, which will assist regulators, investors, and analysts in analyzing the operating results or financial position of the Company and in predicting future performance. These non-GAAP financial measures are used by management to assess the performance of the Company’s business or its financial position 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 these non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that applied by management.
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.
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