SALT LAKE CITY, July 20,
2015 /PRNewswire/ -- Zions Bancorporation (NASDAQ: ZION)
("Zions" or "the Company") today reported second quarter net income
of $14.0 million and a net loss
applicable to common shareholders of $(1.1)
million, or $(0.01) per
diluted common share. During the second quarter, the Company sold
the remaining portfolio of its collateralized debt obligation
("CDO") securities and recognized a one-time pretax loss of
approximately $137 million, or
$0.42 after-tax per diluted common
share. Shareholders' equity was not adversely affected as the loss
had been previously recognized in accumulated other comprehensive
income ("AOCI"). Excluding the loss, net earnings applicable to
common shareholders was $83.4
million, or $0.41 per diluted
common share, for the second quarter of 2015, compared to
$75.3 million, or $0.37 per diluted common share, for the first
quarter of 2015.
Second Quarter 2015 Highlights
- Credit quality metrics were generally stable with a decrease in
nonaccruing loans and a slight increase in classified loans from
the prior quarter. Annualized net charge-offs were 0.11% of average
loans. The overall effect contributed to a $0.6 million provision for loan losses.
- Total noninterest expense was $404
million during the second quarter and $802 million year-to date. Certain one-time and
seasonal expenses during the second quarter of 2015 were partially
offset by other expense credits, including insurance recoveries of
$9.2 million. The Company is
maintaining its commitment to hold noninterest expenses below
$1.6 billion in 2015 and 2016.
- Loan balances, excluding energy-related loans, increased
$128 million during the second
quarter compared to a $25 million
increase during the first quarter calculated on the same basis.
Energy-related loans declined $284
million linked quarter. Overall, net loans and leases
declined $156 million during the
second quarter.
- Net interest income increased slightly from the prior quarter;
however, the net interest margin declined 4 basis points to 3.18%,
primarily driven by an increased concentration of cash and
securities. Loan yields were generally stable with the prior
quarter.
- Noninterest income, excluding securities gains and losses,
increased due to continued success in sales of treasury management
products and credit card fee growth.
- Total deposits increased at an annualized rate of 6.8% during
the second quarter, led by strength in noninterest-bearing
deposits.
"We are pleased to have completed the disposition of the
remaining collateralized debt obligations in our securities
portfolio during the second quarter, a move which both reduces risk
and will allow us to deploy the cash received in more productive
and profitable earning assets," said Harris
H. Simmons, chairman and chief executive officer. "We are
also encouraged by the Company's continued low credit costs.
Although the effects of the energy price decline are not yet fully
manifest, we are encouraged with the results of the spring
borrowing base redetermination process, the strength of the capital
markets in recapitalizing a substantial number of energy companies,
and other factors – including strong portfolio management by our
energy lending team – which contributed to linked-quarter
stability in nonaccrual energy loans."
Mr. Simmons continued, "Total loan growth was the major soft
spot of the quarter, although much of that was primarily
attributable to higher prepayment rates within the energy sector."
Mr. Simmons concluded, "Finally, I am very appreciative of the
great work being performed by so many of my colleagues throughout
Zions Bancorporation with respect to the various initiatives we've
undertaken to simplify our organizational structure and increase
our productivity. We are fully committed to achieving the goals we
announced during the quarter."
Shareholders' Equity
Tangible book value per common share improved to $26.95 at June 30, 2015, compared to
$26.64 at March 31, 2015.
Compared to June 30, 2014, tangible book value per common
share improved by approximately 7.2%.
The estimated Basel III common equity tier 1 ("CET1") capital
ratio on a 2015 phase-in basis was 11.91% at June 30, 2015. As was previously announced, due
to the sale of the remainder of its CDO portfolio, the Company
experienced a reduction of its risk-weighted assets. However,
regulatory agencies recently published a frequently-asked question
document regarding the risk weighting of certain construction and
land development loans. As a result of its review of the FAQ, the
Company increased the risk-weighting of the portion of its
construction and land development portfolio characterized as high
volatility commercial real estate ("HVCRE"), which resulted in an
increase of risk-weighted assets of approximately $0.75 billion at June 30,
2015. The Company's HVCRE interpretation includes loans on
construction projects that have greater than 15% cash equity, are
completed and cash flowing, but have not been converted to a
"permanent loan." On this basis, the CET1 capital ratio was
estimated to be 11.76% at March 31,
2015. Although the risk weighting of these loans was
adjusted, the risk profile of these loans is not materially
different than was previously reported; only 1% of construction and
land development loans are on nonaccrual status, unchanged from the
prior quarter, and the Company has experienced net recoveries on
such loans for several consecutive quarters.
Accumulated other comprehensive income (loss) improved to
$(35) million at June 30, 2015
from $(115) million at March 31,
2015, primarily as a result of the CDO sales.
Net Interest Income
Net interest income increased to $424
million in the second quarter of 2015 from $417 million in the first quarter of 2015. The
increase resulted primarily from an additional day of income. The
net interest margin decreased to 3.18% in the second quarter of
2015, compared to 3.22% in the first quarter of 2015, primarily due
to an increased concentration of cash and securities. During the
quarter, as it executes its strategy to improve yields on interest
earning assets, the Company increased its government agency
residential mortgage backed securities by $583 million and increased its interest rate swap
portfolio by approximately $438
million.
Noninterest Income
Excluding the losses from sales of CDOs, noninterest income for
the second quarter of 2015 was $137
million, compared to $122
million for the first quarter of 2015. Service charges and
fees on deposit accounts and other service charges, commissions and
fees increased 4.1% during the first half of 2015 compared to the
first half of 2014. The increases were primarily driven by credit
card and interchange fees, mortgage loan fees, and interest rate
swap management fees. Other noninterest income included a
$2.4 million gain related to a branch
sale.
During the second quarter of 2015, the Company received
approximately $13 million in paydowns
and payoffs on its CDO portfolio and by mid-June the Company sold
its remaining portfolio of CDO securities ($574 million amortized cost), resulting in net
realized pretax losses of approximately $137
million. These sales were accretive to shareholders' equity
as the realized losses were somewhat less than the unrealized
losses recorded in AOCI at March 31,
2015.
Noninterest Expense
Noninterest expense for the second quarter of 2015 was
$404 million, compared to
$397 million for the first quarter of
2015 and $406 million for the second
quarter of 2014. Salaries and employee benefits increased by
$7.6 million as a result of annual
incentive stock awards and variable compensation accruals driven by
price changes in the Company's common stock. Other noninterest
expense declined primarily due to $9.2
million in insurance recoveries.
Supplemental Presentation and Conference Call
Zions has posted a supplemental presentation to its
website, which will be used to discuss these second quarter
results at 5:30 p.m. ET this
afternoon (July 20, 2015). 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 71960337, 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, consisting of a collection of great banks in
select Western markets. Zions operates its banking businesses under
local management teams and community identities in 11 Western and
Southwestern states: Arizona, California, Colorado, Idaho, Nevada, New
Mexico, Oregon,
Texas, Utah, Washington, and Wyoming. The Company is a national leader in
Small Business Administration lending and received 24 "Excellence"
awards by Greenwich Associates for the 2014 survey. In addition,
Zions is included in the S&P 500 and NASDAQ Financial 100
indices. Investor information and links to subsidiary banks can be
accessed at 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 of future events or determinations. These
forward-looking statements are not guarantees of future performance
or determinations, nor should they be relied upon as representing
management's views as of any subsequent date. Forward-looking
statements involve significant risks and uncertainties, and actual
results may differ materially from those presented, either
expressed or implied, in this press release. Factors that could
cause actual results to differ materially from those expressed in
the forward-looking statements include the actual amount and
duration of declines in the price of oil and gas 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.
FINANCIAL
HIGHLIGHTS
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
(In thousands,
except share, per share, and ratio data)
|
June
30,
2015
|
|
March
31,
2015
|
|
December
31,
2014
|
|
September
30,
2014
|
|
June
30,
2014
|
BALANCE
SHEET
|
|
|
|
|
|
|
|
|
|
Loans and leases, net
of allowance
|
$
|
39,414,609
|
|
$
|
39,560,101
|
|
$
|
39,458,995
|
|
$
|
39,129,295
|
|
$
|
38,954,172
|
Total
assets
|
58,365,459
|
|
57,555,931
|
|
57,208,874
|
|
55,458,870
|
|
55,111,275
|
Deposits
|
48,937,124
|
|
48,123,360
|
|
47,848,075
|
|
46,266,562
|
|
45,672,140
|
Total shareholders'
equity
|
7,530,175
|
|
7,454,298
|
|
7,369,530
|
|
7,322,159
|
|
6,700,090
|
|
|
|
|
|
|
|
|
|
|
STATEMENT OF
INCOME
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
423,704
|
|
$
|
417,346
|
|
$
|
430,430
|
|
$
|
416,819
|
|
$
|
416,284
|
Taxable-equivalent
net interest income
|
428,015
|
|
421,581
|
|
434,789
|
|
420,850
|
|
420,202
|
Provision for loan
losses
|
566
|
|
(1,494)
|
|
11,587
|
|
(54,643)
|
|
(54,416)
|
Total noninterest
income
|
421
|
|
121,822
|
|
129,396
|
|
116,071
|
|
124,849
|
Total noninterest
expense
|
404,100
|
|
397,461
|
|
422,666
|
|
438,536
|
|
406,027
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
applicable to common shareholders
|
(1,100)
|
|
75,279
|
|
66,761
|
|
79,127
|
|
104,490
|
|
|
|
|
|
|
|
|
|
|
PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per diluted common share
|
$
|
(0.01)
|
|
$
|
0.37
|
|
$
|
0.33
|
|
$
|
0.40
|
|
$
|
0.56
|
Dividends
|
0.06
|
|
0.04
|
|
0.04
|
|
0.04
|
|
0.04
|
Book value per common
share 1
|
32.03
|
|
31.74
|
|
31.35
|
|
31.14
|
|
30.77
|
Tangible book value
per common share1
|
26.95
|
|
26.64
|
|
26.23
|
|
26.00
|
|
25.13
|
|
|
|
|
|
|
|
|
|
|
SELECTED
RATIOS
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
0.10%
|
|
0.66%
|
|
0.57%
|
|
0.69%
|
|
0.87%
|
Return on average
common equity
|
(0.07)%
|
|
4.77%
|
|
4.06%
|
|
5.10%
|
|
7.30%
|
|
|
|
|
|
|
|
|
|
|
Tangible return on
avg tangible common equity
|
0.03%
|
|
5.80%
|
|
4.95%
|
|
6.19%
|
|
9.07%
|
Net interest
margin
|
3.18%
|
|
3.22%
|
|
3.25%
|
|
3.20%
|
|
3.29%
|
Efficiency
ratio
|
71.4%
|
|
72.3%
|
|
74.1%
|
|
73.0%
|
|
73.3%
|
|
|
|
|
|
|
|
|
|
|
Ratio of
nonperforming lending-related assets to loans and leases and other
real estate owned
|
0.96%
|
|
0.99%
|
|
0.81%
|
|
0.84%
|
|
0.95%
|
|
|
|
|
|
|
|
|
|
|
Annualized ratio of
net loan and lease charge-offs to average loans
|
0.11%
|
|
(0.17)%
|
|
0.17%
|
|
0.11%
|
|
0.06%
|
|
|
|
|
|
|
|
|
|
|
Ratio of total
allowance for credit losses to loans and leases outstanding
1
|
1.72%
|
|
1.75%
|
|
1.71%
|
|
1.74%
|
|
1.95%
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios
1
|
|
|
|
|
|
|
|
|
|
Tangible common
equity ratio
|
9.58%
|
|
9.58%
|
|
9.48%
|
|
9.70%
|
|
8.60%
|
Basel III:
2
|
|
|
|
|
|
|
|
|
|
Common equity tier 1
capital
|
11.91%
|
|
11.76%
|
|
|
|
|
|
|
Tier 1
leverage
|
11.67%
|
|
11.75%
|
|
|
|
|
|
|
Tier 1 risk-based
capital
|
14.15%
|
|
13.93%
|
|
|
|
|
|
|
Total risk-based
capital
|
16.20%
|
|
15.98%
|
|
|
|
|
|
|
Basel I:
|
|
|
|
|
|
|
|
|
|
Tier 1 common
equity
|
|
|
|
|
11.92%
|
|
11.86%
|
|
10.45%
|
Tier 1
leverage
|
|
|
|
|
11.82%
|
|
11.87%
|
|
11.00%
|
Tier 1 risk-based
capital
|
|
|
|
|
14.47%
|
|
14.43%
|
|
13.00%
|
Total risk-based
capital
|
|
|
|
|
16.27%
|
|
16.28%
|
|
14.90%
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common and common-equivalent shares outstanding
|
202,887,762
|
|
202,944,209
|
|
203,277,500
|
|
197,271,076
|
|
185,286,329
|
Common shares
outstanding 1
|
203,740,914
|
|
203,192,991
|
|
203,014,903
|
|
202,898,491
|
|
185,112,965
|
|
|
1
|
At period
end.
|
2
|
Basel III capital
ratios became effective January 1, 2015 and are based on a 2015
phase-in. The ratios at June 30, 2015 and March 31, 2015 are
estimates; the March 31, 2015 ratios vary from previous disclosures
as the Company refines its calculation methodology. See previous
discussion in this press release under "Shareholders'
Equity."
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/zions-bancorporation-reports-second-quarter-2015-results-300115767.html
SOURCE Zions Bancorporation