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

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Apr 21, 2014, 04:10 ET

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

First Quarter 2014 Highlights

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

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

Loans

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

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

Deposits

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

Shareholders' Equity

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

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

CDO Investment Securities

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

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

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

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



	March 31, 2014
								Net unrealized losses recognized in AOCI ¹		Weighted average discount rate ²	% of carrying value to par
*(Amounts in millions)*	No. of tranches	Par amount		Amortized cost		Carrying value		Net unrealized losses recognized in AOCI ¹		Weighted average discount rate ²	% of carrying value to par
Performing CDOs
Predominantly bank CDOs	23	$	655	$	590	$	486	$	(104)	5.3%	74%
Insurance CDOs	2	50		48		46		(2)		2.2%	92%
Other CDOs	—	—		—		—		—		—%	—%
Total performing CDOs	25	705		638		532		(106)		5.1%	75%

Nonperforming CDOs ³
CDOs credit impaired prior to last 12 months	18	382		291		200		(91)		5.5%	52%
CDOs credit impaired during last 12 months	7	145		59		42		(17)		5.5%	29%
Total nonperforming CDOs	25	527		350		242		(108)		5.5%	46%

Total CDOs	50	$	1,232	$	988	$	774	$	(214)	5.3%	63%


¹ Amounts presented are pretax.
² Margin over related LIBOR index.
³ Defined as either deferring current interest ("PIKing") or OTTI; the majority are predominantly bank CDOs.

The following table shows changes in selected information on the CDOs from December 31, 2013 to March 31, 2014, primarily reflecting the impact of the first quarter sales and paydowns previously discussed:



	Change from December 31, 2013 to March 31, 2014
								Decrease (increase) in net unrealized losses recognized in AOCI		Weighted average discount rate	% of carrying value to par
*(Amounts in millions)*	No. of tranches	Par amount		Amortized cost		Carrying value				Weighted average discount rate	% of carrying value to par
Performing CDOs
Predominantly bank CDOs	—	$	(32)	$	(27)	$	(13)	$	14	(0.3)%	1%
Insurance CDOs	(20)	(383)		(365)		(300)		65		(2.7)%	12%
Other CDOs	(3)	(43)		(26)		(26)		—		nm	nm
Total performing CDOs	(23)	(458)		(418)		(339)		79		(0.4)%	—%

Nonperforming CDOs
CDOs credit impaired prior to last 12 months	(14)	(232)		(78)		(85)		(7)		(1.5)%	6%
CDOs credit impaired during last 12 months	(16)	(303)		(128)		(105)		23		(1.0)%	(4)%
Total nonperforming CDOs	(30)	(535)		(206)		(190)		16		(1.3)%	5%

Total CDOs	(53)	$	(993)	$	(624)	$	(529)	$	95	(0.8)%	4%

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

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

Net Interest Income

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

Noninterest Income

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

Noninterest Expense

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

Asset Quality

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

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

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

Annual Shareholders' Meeting

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

Conference Call

Zions will host a conference call to discuss these first quarter results at 5:30 p.m. ET this afternoon (April 21, 2014). Media representatives, analysts and the public are invited to listen to this discussion by calling 253-237-1247 (domestic and international) and entering the passcode 22015506, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at www.zionsbancorporation.com. The webcast of the conference call will also be archived and available for 30 days.

About Zions Bancorporation

Zions Bancorporation is one of the nation's premier financial services companies, consisting of a collection of great banks in select Western markets. Zions operates its banking businesses under local management teams and community identities through approximately 475 offices in 10 Western and Southwestern states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington. The Company is a national leader in Small Business Administration lending and public finance advisory services, and received 12 "Excellence" awards by Greenwich Associates for the 2013 survey. In addition, Zions is included in the S&P 500 and NASDAQ Financial 100 indices. Investor information and links to subsidiary banks can be accessed at www.zionsbancorporation.com.

Forward-Looking Information

Statements in this press release that are based on other than historical data or that express the Company's expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management's views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission ("SEC") and available at the SEC's Internet site (http://www.sec.gov).

Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

FINANCIAL HIGHLIGHTS (Unaudited)

	Three Months Ended
*(In thousands, except share, per share, and ratio data)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
PER COMMON SHARE
Dividends	$	0.04	$	0.04	$	0.04	$	0.04	$	0.01
Book value per common share ¹	30.19		29.57		28.87		27.82		27.43
Tangible book value per common share ¹	24.53		23.88		23.16		22.09		21.67

SELECTED RATIOS
Return on average assets	0.74%		(0.30)%		0.80%		0.61%		0.83%
Return on average common equity	5.52%		(4.51)%		16.03%		4.35%		7.18%
Tangible return on average tangible common equity	6.96%		(5.45)%		20.34%		5.73%		9.37%
Net interest margin	3.31%		3.33%		3.22%		3.44%		3.44%

Capital Ratios
Tangible common equity ratio ¹	8.24%		8.02%		7.90%		7.57%		7.53%
Tangible equity ratio ¹	10.06%		9.85%		9.75%		10.78%		9.97%
Average equity to average assets	11.90%		11.20%		12.39%		12.11%		11.54%

Risk-Based Capital Ratios ^1,2
Tier 1 common equity	10.53%		10.18%		10.47%		10.03%		10.07%
Tier 1 leverage	10.71%		10.48%		10.63%		11.75%		11.55%
Tier 1 risk-based capital	13.16%		12.77%		13.10%		14.30%		14.08%
Total risk-based capital	15.07%		14.67%		14.82%		15.94%		15.75%

Taxable-equivalent net interest income	$	420,305	$	435,714	$	419,236	$	434,579	$	422,252

Weighted average common and common-equivalent shares outstanding	185,122,844		184,208,544		184,742,414		184,061,623		183,655,129
Common shares outstanding ¹	184,895,182		184,677,696		184,600,005		184,436,656		184,246,471


¹At period end.
² Ratios for March 31, 2014 are estimates.

CONSOLIDATED BALANCE SHEETS

*(In thousands, except shares)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
	(Unaudited)				(Unaudited)		(Unaudited)		(Unaudited)
ASSETS
Cash and due from banks	$	1,341,319	$	1,175,083	$	1,365,082	$	1,183,097	$	928,817
Money market investments:
Interest-bearing deposits	8,157,837		8,175,048		8,180,639		8,180,010		5,785,268
Federal funds sold and security resell agreements	379,947		282,248		209,070		221,799		2,340,177
Investment securities:
Held-to-maturity, at adjusted cost (approximate fair value $635,379, $609,547, $727,908, $734,292, and $684,668)	606,279		588,981		777,849		783,371		736,158
Available-for-sale, at fair value	3,423,205		3,701,886		3,333,889		3,193,395		3,287,844
Trading account, at fair value	56,172		34,559		38,278		26,385		28,301
	4,085,656		4,325,426		4,150,016		4,003,151		4,052,303

Loans held for sale	126,344		171,328		114,810		164,619		161,559

Loans and leases, net of unearned income and fees	39,198,136		39,043,365		38,272,730		38,187,945		37,762,419
Less allowance for loan losses	736,953		746,291		797,523		813,912		841,781
Loans, net of allowance	38,461,183		38,297,074		37,475,207		37,374,033		36,920,638

Other noninterest-bearing investments	848,775		855,642		851,349		852,939		855,388
Premises and equipment, net	785,519		726,372		720,365		717,299		706,746
Goodwill	1,014,129		1,014,129		1,014,129		1,014,129		1,014,129
Core deposit and other intangibles	33,562		36,444		39,667		43,239		47,000
Other real estate owned	39,248		46,105		66,381		80,789		89,904
Other assets	807,325		926,228		1,001,597		1,069,436		1,208,635
	$	56,080,844	$	56,031,127	$	55,188,312	$	54,904,540	$	54,110,564

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	19,257,889	$	18,758,753	$	18,566,137	$	17,803,950	$	17,311,150
Interest-bearing:
Savings and money market	23,097,351		23,029,928		22,806,132		22,887,404		22,760,397
Time	2,528,735		2,593,038		2,689,688		2,810,431		2,889,903
Foreign	1,648,111		1,980,161		1,607,409		1,514,270		1,528,745
	46,532,086		46,361,880		45,669,366		45,016,055		44,490,195

Federal funds and other short-term borrowings	279,837		340,348		273,774		256,615		326,769
Long-term debt	2,158,701		2,273,575		2,304,301		2,173,176		2,352,569
Reserve for unfunded lending commitments	88,693		89,705		84,147		104,082		100,455
Other liabilities	435,311		501,056		523,915		494,280		489,923
Total liabilities	49,494,628		49,566,564		48,855,503		48,044,208		47,759,911

Shareholders' equity:
Preferred stock, without par value, authorized 4,400,000 shares	1,003,970		1,003,970		1,003,970		1,728,659		1,301,289
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 184,895,182, 184,677,696, 184,600,005, 184,436,656, and 184,246,471 shares	4,185,513		4,179,024		4,172,887		4,167,828		4,170,888
Retained earnings	1,542,195		1,473,670		1,540,455		1,338,401		1,290,131
Accumulated other comprehensive income (loss)	(145,462)		(192,101)		(384,503)		(374,556)		(406,903)
Controlling interest shareholders' equity	6,586,216		6,464,563		6,332,809		6,860,332		6,355,405
Noncontrolling interests	—		—		—		—		(4,752)
Total shareholders' equity	6,586,216		6,464,563		6,332,809		6,860,332		6,350,653
	$	56,080,844	$	56,031,127	$	55,188,312	$	54,904,540	$	54,110,564

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

		Three Months Ended
*(In thousands, except per share amounts)*		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
Interest income:
Interest and fees on loans		$	434,344	$	458,493	$	442,366	$	460,308	$	453,433
Interest on money market investments		5,130		5,985		6,175		5,764		5,439
Interest on securities		28,094		25,539		24,866		27,161		25,876
Total interest income		467,568		490,017		473,407		493,233		484,748

Interest expense:
Interest on deposits		12,779		13,622		14,506		15,143		15,642
Interest on short- and long-term borrowings		38,324		44,360		43,380		47,433		50,991
Total interest expense		51,103		57,982		57,886		62,576		66,633

Net interest income		416,465		432,035		415,521		430,657		418,115
Provision for loan losses		(610)		(30,538)		(5,573)		(21,990)		(29,035)
Net interest income after provision for loan losses		417,075		462,573		421,094		452,647		447,150

Noninterest income:
Service charges and fees on deposit accounts		42,594		43,729		44,701		44,329		43,580
Other service charges, commissions and fees		43,519		46,877		45,977		45,888		42,731
Wealth management income		7,077		8,067		7,120		7,732		6,994
Capital markets and foreign exchange		5,000		6,516		7,309		6,740		7,486
Dividends and other investment income		7,864		9,898		12,101		11,339		12,724
Loan sales and servicing income		6,474		5,155		8,464		10,723		10,951
Fair value and nonhedge derivative loss		(8,539)		(5,347)		(4,403)		(2,957)		(5,445)
Equity securities gains, net		912		314		3,165		2,209		2,832
Fixed income securities gains (losses), net		30,914		(6,624)		1,580		(1,153)		3,299
Impairment losses on investment securities:
	Impairment losses on investment securities	(27)		(141,733)		(10,470)		(4,910)		(31,493)
	Noncredit-related losses on securities not expected to be sold (recognized in other comprehensive income)	—		—		1,403		693		21,376
	Net impairment losses on investment securities	(27)		(141,733)		(9,067)		(4,217)		(10,117)
Other		2,531		1,998		5,243		4,515		6,184
Total noninterest income (loss)		138,319		(31,150)		122,190		125,148		121,219

Noninterest expense:
Salaries and employee benefits		233,406		226,616		229,185		227,328		229,789
Occupancy, net		28,305		28,733		28,230		27,951		27,389
Furniture, equipment and software		27,944		27,450		26,560		26,545		26,074
Other real estate expense		1,607		(1,024)		(831)		1,590		1,977
Credit related expense		6,906		6,509		7,265		9,397		10,482
Provision for unfunded lending commitments		(1,012)		5,558		(19,935)		3,627		(6,354)
Professional and legal services		10,995		23,886		16,462		17,149		10,471
Advertising		6,398		5,571		6,091		5,807		5,893
FDIC premiums		7,922		8,789		9,395		10,124		9,711
Amortization of core deposit and other intangibles		2,882		3,224		3,570		3,762		3,819
Debt extinguishment cost		—		79,910		—		40,282		—
Other		72,710		79,528		64,671		78,116		78,097
Total noninterest expense		398,063		494,750		370,663		451,678		397,348

Income (loss) before income taxes		157,331		(63,327)		172,621		126,117		171,021
Income taxes (benefit)		56,121		(21,855)		61,107		43,091		60,634
Net income (loss)		101,210		(41,472)		111,514		83,026		110,387
Net loss applicable to noncontrolling interests		—		—		—		—		(336)
Net income (loss) applicable to controlling interest		101,210		(41,472)		111,514		83,026		110,723
Preferred stock dividends		(25,020)		(17,965)		(27,507)		(27,641)		(22,399)
Preferred stock redemption		—		—		125,700		—		—
Net earnings (loss) applicable to common shareholders		$	76,190	$	(59,437)	$	209,707	$	55,385	$	88,324

Weighted average common shares outstanding during the period:
Basic shares		184,440		184,209		184,112		183,647		183.396
Diluted shares		185,123		184,209		184,742		184,062		183,655

Net earnings (loss) per common share:
Basic		$	0.41	$	(0.32)	$	1.13	$	0.30	$	0.48
Diluted		0.41		(0.32)		1.12		0.30		0.48

Loan Balances Held for Investment by Portfolio Type (Unaudited)

*(In millions)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
Commercial:
Commercial and industrial	$	12,512	$	12,481	$	11,904	$	11,899	$	11,504
Leasing	389		388		375		388		390
Owner occupied	7,348		7,437		7,379		7,394		7,501
Municipal	482		449		449		454		484
Total commercial	20,731		20,755		20,107		20,135		19,879

Commercial real estate:
Construction and land development	2,264		2,183		2,240		2,191		2,039
Term	8,080		8,006		7,929		7,971		8,012
Total commercial real estate	10,344		10,189		10,169		10,162		10,051

Consumer:
Home equity credit line	2,165		2,133		2,124		2,124		2,125
1-4 family residential	4,796		4,737		4,637		4,486		4,408
Construction and other consumer real estate	330		325		321		322		320
Bankcard and other revolving plans	361		356		332		315		293
Other	186		198		208		212		208
Total consumer	7,838		7,749		7,622		7,459		7,354

FDIC-supported loans ¹	285		350		375		432		478
Total loans	$	39,198	$	39,043	$	38,273	$	38,188	$	37,762


¹ FDIC-supported loans represent loans acquired from the FDIC subject to loss sharing agreements.



FDIC-Supported Loans – Effect of Higher Accretion and Impact on FDIC Indemnification Asset (Unaudited)

	Three Months Ended
*(In thousands)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
Balance sheet:

Change in assets from reestimation of cash flows – increase (decrease):
FDIC-supported loans	$	18,453	$	28,502	$	15,018	$	28,424	$	18,977
FDIC indemnification asset	(15,972)		(19,934)		(12,965)		(21,845)		(20,288)

Balance at end of period:
FDIC-supported loans (included in loans and leases)	285,313		350,271		374,861		431,935		477,725
FDIC indemnification asset (included in other assets)	13,184		26,411		41,771		51,297		71,100

	Three Months Ended
*(In thousands)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
Statement of income:

Interest income:
Interest and fees on loans	$	18,453	$	28,502	$	15,018	$	28,424	$	18,977

Noninterest expense:
Other noninterest expense	15,972		19,934		12,965		21,845		20,288
Net increase (decrease) in pretax income	$	2,481	$	8,568	$	2,053	$	6,579	$	(1,311)

Nonperforming Lending-Related Assets (Unaudited)

*(Amounts in thousands)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013

Nonaccrual loans	$	397,549	$	402,219	$	466,795	$	515,708	$	589,221
Other real estate owned	37,841		42,817		58,295		70,031		80,701
Nonperforming lending-related assets, excluding FDIC-supported assets	435,390		445,036		525,090		585,739		669,922

FDIC-supported nonaccrual loans	4,117		4,394		4,744		5,256		4,927
FDIC-supported other real estate owned	1,407		3,288		8,086		10,758		9,203
FDIC-supported nonperforming lending-related assets	5,524		7,682		12,830		16,014		14,130
Total nonperforming lending-related assets	$	440,914	$	452,718	$	537,920	$	601,753	$	684,052

Ratio of nonperforming lending-related assets to loans ¹ and leases and other real estate owned	1.12%		1.15%		1.40%		1.57%		1.80%

Accruing loans past due 90 days or more, excluding FDIC-supported loans	$	6,661	$	9,957	$	9,398	$	10,685	$	12,708
Accruing FDIC-supported loans past due 90 days or more	31,529		30,391		22,450		33,410		47,208
Ratio of accruing loans past due 90 days or more to loans ¹ and leases	0.10%		0.10%		0.08%		0.11%		0.16%

Nonaccrual loans and accruing loans past due 90 days or more	$	439,856	$	446,961	$	503,387	$	565,059	$	654,064
Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans ¹ and leases	1.12%		1.14%		1.31%		1.47%		1.72%

Accruing loans past due 30 - 89 days, excluding FDIC-supported loans	$	110,566	$	104,760	$	85,128	$	103,075	$	155,896
Accruing FDIC-supported loans past due 30 - 89 days	3,839		11,752		10,983		6,522		11,571

Restructured loans included in nonaccrual loans	130,534		136,135		166,573		162,496		193,975
Restructured loans on accrual	318,511		345,299		384,793		385,428		416,181

Classified loans, excluding FDIC-supported loans	1,295,976		1,240,148		1,432,806		1,639,206		1,737,178


¹ Includes loans held for sale.

Allowance for Credit Losses (Unaudited)

	Three Months Ended
*(Amounts in thousands)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
Allowance for Loan Losses
Balance at beginning of period	$	746,291	$	797,523	$	813,912	$	841,781	$	896,087
Add:
Provision for losses	(610)		(30,538)		(5,573)		(21,990)		(29,035)
Adjustment for FDIC-supported loans	(817)		(1,481)		(2,118)		(209)		(7,429)
Deduct:
Gross loan and lease charge-offs	(20,795)		(37,405)		(22,826)		(35,099)		(35,467)
Recoveries	12,884		18,192		14,128		29,429		17,625
Net loan and lease charge-offs	(7,911)		(19,213)		(8,698)		(5,670)		(17,842)
Balance at end of period	$	736,953	$	746,291	$	797,523	$	813,912	$	841,781

Ratio of allowance for loan losses to loans and leases, at period end	1.88%		1.91%		2.08%		2.13%		2.23%

Ratio of allowance for loan losses to nonperforming loans, at period end	183.47%		183.54%		169.13%		156.23%		141.68%

Annualized ratio of net loan and lease charge-offs to average loans	0.08%		0.20%		0.09%		0.06%		0.19%

Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	89,705	$	84,147	$	104,082	$	100,455	$	106,809
Provision charged (credited) to earnings	(1,012)		5,558		(19,935)		3,627		(6,354)
Balance at end of period	$	88,693	$	89,705	$	84,147	$	104,082	$	100,455

Total Allowance for Credit Losses
Allowance for loan losses	$	736,953	$	746,291	$	797,523	$	813,912	$	841,781
Reserve for unfunded lending commitments	88,693		89,705		84,147		104,082		100,455
Total allowance for credit losses	$	825,646	$	835,996	$	881,670	$	917,994	$	942,236

Ratio of total allowance for credit losses to loans and leases outstanding, at period end	2.11%		2.14%		2.30%		2.40%		2.50%

Nonaccrual Loans by Portfolio Type (Excluding FDIC-Supported Loans) (Unaudited)

*(In millions)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013

Commercial:
Commercial and industrial	$	109	$	98	$	100	$	94	$	100
Leasing	1		1		1		1		1
Owner occupied	127		136		158		186		195
Municipal	10		10		10		9		9
Total commercial	247		245		269		290		305

Commercial real estate:
Construction and land development	29		29		65		70		93
Term	59		60		61		71		102
Total commercial real estate	88		89		126		141		195

Consumer:
Home equity credit line	10		9		8		11		12
1-4 family residential	48		53		58		66		71
Construction and other consumer real estate	3		4		4		5		4
Bankcard and other revolving plans	1		1		1		2		1
Other	1		1		1		1		1
Total consumer	63		68		72		85		89
Total nonaccrual loans	$	398	$	402	$	467	$	516	$	589

Net Charge-Offs by Portfolio Type (Unaudited)

	Three Months Ended
*(In millions)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013
Commercial:
Commercial and industrial	$	1	$	15	$	2	$	2	$	5
Leasing	(1)		—		—		—		—
Owner occupied	2		1		2		3		5
Municipal	—		—		—		—		—
Total commercial	2		16		4		5		10

Commercial real estate:
Construction and land development	(2)		(3)		(1)		(3)		(3)
Term	7		5		3		(2)		5
Total commercial real estate	5		2		2		(5)		2

Consumer:
Home equity credit line	—		—		1		2		2
1-4 family residential	1		—		1		3		3
Construction and other consumer real estate	(1)		—		—		1		(1)
Bankcard and other revolving plans	2		1		1		—		2
Other	(1)		—		—		—		—
Total consumer loans	1		1		3		6		6
Total net charge-offs	$	8	$	19	$	9	$	6	$	18

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (Unaudited)

	Three Months Ended
	March 31, 2014			December 31, 2013			September 30, 2013
*(In thousands)*	Average balance		Average rate	Average balance		Average rate	Average balance		Average rate
ASSETS
Money market investments	$	8,137,123	0.26%	$	9,154,232	0.26%	$	9,454,131	0.26
Securities:
Held-to-maturity	587,473		5.65%	770,168		4.75%	778,268		4.73%
Available-for-sale	3,470,983		2.48%	3,230,152		2.17%	3,071,039		2.22%
Trading account	58,543		3.34%	43,063		3.39%	25,959		3.21%
Total securities	4,116,999		2.95%	4,043,383		2.68%	3,875,266		2.73%

Loans held for sale	157,170		3.61%	119,671		3.73%	131,652		3.70%

Loans ¹:
Loans and leases	38,805,192		4.30%	38,259,795		4.41%	37,818,273		4.43%
FDIC-supported loans	319,695		29.35%	363,982		36.88%	405,316		20.52%
Total loans	39,124,887		4.51%	38,623,777		4.72%	38,223,589		4.60%
Total interest-earning assets	51,536,179		3.71%	51,941,063		3.77%	51,684,638		3.66%
Cash and due from banks	1,040,906			1,026,814			976,159
Allowance for loan losses	(745,671)			(790,361)			(810,290)
Goodwill	1,014,129			1,014,129			1,014,129
Core deposit and other intangibles	35,072			38,137			41,751
Other assets	2,552,965			2,470,837			2,608,252
Total assets	$	55,433,580		$	55,700,619		$	55,514,639

LIABILITIES
Interest-bearing deposits:
Savings and money market	$	22,908,201	0.16%	$	22,972,978	0.16%	$	22,982,998	0.17%
Time	2,560,283		0.49%	2,642,104		0.50%	2,749,985		0.56%
Foreign	1,751,910		0.20%	1,796,912		0.20%	1,675,256		0.20%
Total interest-bearing deposits	27,220,394		0.19%	27,411,994		0.20%	27,408,239		0.21%
Borrowed funds:
Federal funds and other short-term borrowings	249,043		0.11%	271,501		0.11%	260,744		0.11%
Long-term debt	2,237,457		6.93%	2,352,748		7.47%	2,198,752		7.81%
Total borrowed funds	2,486,500		6.25%	2,624,249		6.71%	2,459,496		7.00%
Total interest-bearing liabilities	29,706,894		0.70%	30,036,243		0.77%	29,867,735		0.77%
Noninterest-bearing deposits	18,557,992			18,842,097			18,179,584
Other liabilities	569,361			584,887			591,735
Total liabilities	48,834,247			49,463,227			48,639,054
Shareholders' equity:
Preferred equity	1,003,970			1,003,970			1,685,512
Common equity	5,595,363			5,233,422			5,190,073
Total shareholders' equity	6,599,333			6,237,392			6,875,585
Total liabilities and shareholders' equity	$	55,433,580		$	55,700,619		$	55,514,639

Spread on average interest-bearing funds			3.01%			3.00%			2.89%

Net yield on interest-earning assets			3.31%			3.33%			3.22%

¹ Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

GAAP to Non-GAAP Reconciliation (Unaudited)

Tangible Return on Average Tangible Common Equity
	Three Months Ended
*(Amounts in thousands)*	March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013

Net earnings (loss) applicable to common shareholders (GAAP)	$	76,190	$	(59,437)	$	209,707	$	55,385	$	88,324

Adjustments, net of tax:
Amortization of core deposit and other intangibles	1,827		2,046		2,268		2,391		2,425
Net earnings (loss) applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP) (a)	$	78,017	$	(57,391)	$	211,975	$	57,776	$	90,749

Average common equity (GAAP)	$	5,595,363	$	5,233,422	$	5,190,073	$	5,102,082	$	4,990,317
Average goodwill	(1,014,129)		(1,014,129)		(1,014,129)		(1,014,129)		(1,014,129)
Average core deposit and other intangibles	(35,072)		(38,137)		(41,751)		(45,262)		(49,069)
Average tangible common equity (non-GAAP) (b)	$	4,546,162	$	4,181,156	$	4,134,193	$	4,042,691	$	3,927,119

Number of days in quarter (c)	90		92		92		91		90
Number of days in year (d)	365		365		365		365		365

Tangible return on average tangible common equity (non-GAAP) (a/b/c*d)	6.96%		(5.45)%		20.34%		5.73%		9.37%

This press release presents the non-GAAP financial measure previously shown. The adjustments to reconcile from the applicable GAAP financial measure to the non-GAAP financial measure are included where applicable in financial results presented in accordance with GAAP. The Company considers these adjustments to be relevant to ongoing operating results.

The Company believes that excluding the amounts associated with these adjustments to present the non-GAAP financial measure provides a meaningful base for period-to-period and company-to-company comparisons, which will assist investors and analysts in analyzing the operating results of the Company and in predicting future performance. This non-GAAP financial measure is used by management and the Board of Directors to assess the performance of the Company's business for evaluating bank reporting segment performance, for presentations of Company performance to investors, and for other reasons as may be requested by investors and analysts. The Company further believes that presenting this non-GAAP financial measure will permit investors and analysts to assess the performance of the Company on the same basis as that applied by management and the Board of Directors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although non-GAAP financial measures are frequently used by stakeholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.

SOURCE Zions Bancorporation