Zions Bancorporation Reports Earnings Of $0.48 Per Diluted Common Share For First Quarter 2013

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Apr 22, 2013, 04:10 ET

SALT LAKE CITY, April 22, 2013 /PRNewswire/ -- Zions Bancorporation (NASDAQ: ZION) ("Zions" or "the Company") today reported first quarter net earnings applicable to common shareholders of $88.3 million or $0.48 per diluted common share, compared to $35.6 million or $0.19 per diluted share for the fourth quarter of 2012, and $25.5 million or $0.14 per diluted share for the first quarter of 2012.

First Quarter 2013 Highlights

Loans and leases, excluding FDIC-supported loans, increased $148 million to $37.3 billion at March 31, 2013. Average loans and leases, excluding FDIC-supported loans, increased $413 million.
Gross loan and lease charge-offs declined 35% compared to the fourth quarter, while net loan and lease charge-offs declined 5%. Other improvements in credit quality were generally consistent with prior quarters.
The continued improvement in credit quality resulted in first quarter negative provisions of $29.0 million for loan losses and $6.4 million for unfunded lending commitments.
Tangible common equity per common share improved $0.72 to $21.67 from $20.95 in the fourth quarter, driven by increased retained earnings and improvement in accumulated other comprehensive income ("AOCI").
Net interest income decreased compared to the prior quarter due to reduced day count and loan interest rates resetting at lower levels.

"We are again pleased with our improvement in credit quality, which we expect to continue, and by somewhat better loan growth over the past couple of quarters," said Harris H. Simmons, chairman and chief executive officer, "but we see some renewed signs of new loan pricing pressure. However, we do expect continued bottom line improvement as we take numerous actions over the next several quarters to reduce the cost of our capital and debt financing."

Loans

Loans and leases, excluding loans held for sale and FDIC-supported loans, increased $148 million on a net basis to $37.3 billion at March 31, 2013, compared to $37.1 billion at December 31, 2012. The increases were predominantly in commercial and industrial, construction and land development, and 1-4 family residential loans primarily in Texas and California. Decreases of $258 million primarily in commercial owner occupied, term commercial real estate, and home equity credit line loans partially offset increases in other loan categories. Average loans and leases, excluding FDIC-supported loans, increased $413 million to $37.1 billion during the first quarter of 2013, compared to $36.7 billion during the fourth quarter of 2012.

Deposits

Average total deposits for the first quarter of 2013 decreased $0.5 billion, or 1%, to $44.4 billion, compared to $44.9 billion for the fourth quarter of 2012. Average noninterest-bearing demand deposits declined $0.7 billion, to $17.2 billion in the first quarter from $17.9 billion in the fourth quarter, while average interest-bearing deposits increased $0.2 billion, to $27.2 billion from $27.0 billion quarter over quarter. The ratio of average loans excluding loans held for sale to average deposits was 85% at March 31, 2013, compared to 83% at December 31, 2012.

Debt and Shareholders' Equity

As previously reported, on January 31, 2013, the Company sold $171.8 million of its Series G Fixed/Floating Rate Non-Cumulative Perpetual Preferred Stock. Dividends are payable from the issuance date to March 14, 2023 at an annual rate of 6.30%. Beginning March 15, 2023 (date of earliest redemption) to maturity, dividends will be payable at an annual floating rate equal to three-month LIBOR plus 4.24%. Net of commissions and fees, the proceeds added $168.8 million to shareholders' equity and Tier 1 capital.

The tangible common equity ratio was 7.53% at March 31, 2013, compared to 7.09% at December 31, 2012. The increase was primarily due to increased retained earnings this quarter, a $39 million improvement in AOCI which resulted primarily from increased fair values on collateralized debt obligation ("CDO") securities, and lower cash-related balances. The estimated common equity Tier 1 capital ratio was 10.06% at March 31, 2013, compared to 9.80% at December 31, 2012.

As previously announced, on May 3, 2013, Zions Capital Trust B will redeem all of its 8.0% outstanding trust preferred securities, or 11.4 million shares, at 100% of their $25 per share liquidation amount for a total of $285 million.

Net Interest Income

Net interest income decreased to $418 million for the first quarter of 2013, compared to $430 million for the fourth quarter of 2012. The net interest margin decreased to 3.44% in the first quarter of 2013, compared to 3.47% in the fourth quarter of 2012. The major drivers of these declines were loan rate resets, expiration of in-the-money floors on loans, reduced day count (for net interest income), and lower yields on available-for-sale investment securities. The cost of interest-bearing deposits continued to decline and was 0.23% in the first quarter compared to 0.25% in the fourth quarter.

Noninterest Income

Noninterest income for the first quarter of 2013 was $121.2 million, compared to $54.2 million for the fourth quarter of 2012. The increase was primarily due to the reduced amount of other-than-temporary impairment ("OTTI") on CDO securities taken this quarter compared to the previous quarter.

CDO Investment Securities

During the first quarter of 2013, the Company recognized credit-related OTTI on CDOs of $10.1 million or $0.03 per diluted share, compared to $83.8 million or $0.28 per diluted share during the fourth quarter of 2012. Approximately $6.2 million of the OTTI this quarter was related to an event of default on one CDO. The higher amount of OTTI in the previous quarter resulted from increases to our assumed probabilities of default, primarily on bank issuers deferring payment of trust preferred interest, and to our near-term prepayment assumptions for some banks. Gains from cash principal payments on CDOs previously written down were $3.3 million in the first quarter of 2013, compared to $10.2 million in the fourth quarter of 2012.

The following table provides fair value and other information on the CDOs, stratified into performing tranches without credit impairment and nonperforming tranches at March 31, 2013:


	March 31, 2013
								Net unrealized losses recognized in AOCI ¹			% 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	March 31, 2013	December 31, 2012	Change
Performing CDOs
Predominantly bank CDOs	27	$	774	$	694	$	560	$	(134)	5.9%	72%	66%	6%
Insurance-only CDOs	22	447		443		331		(112)		7.9%	74%	72%	2%
Other CDOs	6	51		40		37		(3)		9.6%	73%	70%	3%
Total performing CDOs	55	1,272		1,177		928		(249)		6.7%	73%	68%	5%

Nonperforming CDOs ³
CDOs credit impaired prior to last 12 months	19	394		275		126		(149)		10.1%	32%	30%	2%
CDOs credit impaired during last 12 months	39	732		432		179		(253)		11.4%	24%	25%	(1)%
Total nonperforming CDOs	58	1,126		707		305		(402)		11.0%	27%	26%	1%

Total CDOs	113	$	2,398	$	1,884	$	1,233	$	(651)	8.7%	51%	49%	2%


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

The net unrealized pretax losses in AOCI improved to $651 million in the first quarter of 2013 from $718 million in the fourth quarter of 2012 due to fair value increases that occurred primarily in senior tranches and were driven by continued improvement in credit spreads.

Noninterest Expense

Noninterest expense for the first quarter of 2013 was $397.3 million compared to $407.0 million for the fourth quarter of 2012. The decrease was due primarily to a $7.3 million reduction in the provision for unfunded lending commitments, and to reduced levels of other real estate expense and legal and professional services compared to the fourth quarter. These were partially offset by increased salaries and employee benefits due to increased payroll taxes and variable compensation accruals. Other noninterest expense was approximately $9.7 million higher this quarter than the previous quarter due to increased amortization of the FDIC indemnification asset from loan prepayments.

Asset Quality

Gross loan and lease charge-offs declined 35% to $35.5 million in the first quarter of 2013, compared to $54.7 million in the fourth quarter of 2012; gross charge-offs declined 56% from the first quarter of 2012. Net loan and lease charge-offs decreased 5% in the first quarter of 2013, compared to the fourth quarter of 2012. Net charge-offs declined primarily in consumer home equity credit line and term commercial real estate loans.

Nonperforming lending-related assets declined 8% to $684 million at March 31, 2013 from $746 million at December 31, 2012. Nonaccrual loans declined 8% to $594 million at March 31, 2013 from $648 million at December 31, 2012. The ratio of nonperforming lending-related assets to loans and leases and other real estate owned decreased to 1.80% at March 31, 2013, compared to 1.96% at December 31, 2012.

Classified loans, excluding FDIC-supported loans, decreased approximately 2% to $1.74 billion at March 31, 2013, compared to $1.77 billion at December 31, 2012. Approximately 80% of classified loans were current as to principal and interest for the first quarter of 2013, compared to 79% for the fourth quarter of 2012, and 73% for the first quarter of 2012.

The provision (credit) for loan losses was $(29.0) million for the first quarter of 2013, compared to $(10.4) million for the fourth quarter of 2012. The decline in the provision was driven by the continued improvement in credit quality, including continued improvement in loss severity from classified loans. The allowance for credit losses was $0.9 billion, or 2.50% of loans and leases at March 31, 2013, compared to $1.0 billion, or 2.66% of loans and leases at December 31, 2012.

Conference Call

Zions will host a conference call to discuss these first quarter results at 5:30 p.m. ET this afternoon (April 22, 2013). 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 24666556, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at www.zionsbancorporation.com. A replay of the call will be available from approximately 7:30 p.m. ET on Monday, April 22, 2013, until midnight ET on Monday, April 29, 2013, by dialing 855-859-2056 (domestic and international) and entering the same passcode. 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 480 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 13 "Excellence" awards by Greenwich Associates for the 2012 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 might cause such differences include, but are not limited to: the Company's ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either internationally, nationally or locally in areas in which the Company conducts its operations, including changes in securities markets and valuations in structured securities and other assets; changes in governmental policies and programs resulting from general economic and financial market conditions; changes in interest and funding rates; continuing consolidation in the financial services industry; new private and governmental legal actions or changes in existing private and governmental legal actions; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company's operations or business (including The Dodd-Frank Wall Street Reform and Consumer Protection Act); and changes in accounting policies, procedures or determinations as may be required by the Financial Accounting Standards Board or other regulatory agencies.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Zions Bancorporation's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and available at the SEC's Internet site (http://www.sec.gov).

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

FINANCIAL HIGHLIGHTS (Unaudited)

	Three Months Ended
(In thousands, except share, per share, and ratio data)	March 31, 2013		December 31, 2012		September 30, 2012		June 30, 2012		March 31, 2012
PER COMMON SHARE
Dividends	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01
Book value per common share ¹	27.43		26.73		26.05		25.48		25.25
Tangible common equity per common share ¹	21.67		20.95		20.24		19.65		19.39

SELECTED RATIOS
Return on average assets	0.83%		0.43%		0.82%		0.70%		0.69%
Return on average common equity	7.18%		2.91%		5.21%		4.71%		2.21%
Tangible return on average tangible common equity	9.37%		4.07%		7.02%		6.41%		3.18%
Net interest margin	3.44%		3.47%		3.58%		3.56%		3.69%

Capital Ratios
Tangible common equity ratio ¹	7.53%		7.09%		7.17%		6.91%		6.89%
Tangible equity ratio ¹	9.97%		9.15%		9.32%		10.35%		10.24%
Average equity to average assets	11.54%		11.03%		12.22%		12.37%		13.31%

Risk-Based Capital Ratios ^1,2
Common equity Tier 1 capital	10.06%		9.80%		9.86%		9.78%		9.71%
Tier 1 leverage	11.56%		10.96%		11.05%		12.31%		12.17%
Tier 1 risk-based capital	14.04%		13.38%		13.49%		15.03%		14.83%
Total risk-based capital	15.72%		15.05%		15.25%		16.89%		16.76%

Taxable-equivalent net interest income	$	422,252	$	434,252	$	442,595	$	430,967	$	442,340

Weighted average common and common-equivalent shares outstanding	183,655,129		183,456,109		183,382,650		183,136,631		182,963,828
Common shares outstanding ¹	184,246,471		184,199,198		184,156,402		184,117,522		184,228,178


¹At period end.
²Ratios for March 31, 2013 are estimates.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)	March 31, 2013		December 31, 2012		September 30, 2012		June 30, 2012		March 31, 2012
	(Unaudited)				(Unaudited)		(Unaudited)		(Unaudited)
ASSETS
Cash and due from banks	$	928,817	$	1,841,907	$	1,060,918	$	1,124,673	$	1,082,186
Money market investments:
Interest-bearing deposits	5,785,268		5,978,978		5,519,463		7,887,175		7,629,399
Federal funds sold and security resell agreements	2,340,177		2,775,354		1,960,294		83,529		52,634
Investment securities:
Held-to-maturity, at adjusted cost (approximate fair value $684,668, $674,741, $655,768, $715,710, and $728,479)	736,158		756,909		740,738		773,016		797,149
Available-for-sale, at fair value	3,287,844		3,091,310		3,127,192		3,167,590		3,223,086
Trading account, at fair value	28,301		28,290		13,963		20,539		19,033
	4,052,303		3,876,509		3,881,893		3,961,145		4,039,268

Loans held for sale	161,559		251,651		220,240		139,245		184,579

Loans, net of unearned income and fees:
Loans and leases	37,284,694		37,137,006		36,674,288		36,319,596		35,998,928
FDIC-supported loans	477,725		528,241		588,566		642,246		687,126
	37,762,419		37,665,247		37,262,854		36,961,842		36,686,054
Less allowance for loan losses	841,781		896,087		927,068		973,443		1,011,786
Loans, net of allowance	36,920,638		36,769,160		36,335,786		35,988,399		35,674,268

Other noninterest-bearing investments	855,388		855,462		874,903		867,882		875,037
Premises and equipment, net	706,746		708,882		709,188		714,913		715,815
Goodwill	1,014,129		1,014,129		1,015,129		1,015,129		1,015,129
Core deposit and other intangibles	47,000		50,818		55,034		59,277		63,538
Other real estate owned	89,904		98,151		118,190		144,816		158,592
Other assets	1,208,635		1,290,917		1,335,963		1,420,829		1,405,862
	$	54,110,564	$	55,511,918	$	53,087,001	$	53,407,012	$	52,896,307

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	17,311,150	$	18,469,458	$	17,295,911	$	16,498,248	$	16,185,140
Interest-bearing:
Savings and money market	22,760,397		22,896,624		21,970,062		21,945,230		22,220,405
Time	2,889,903		2,962,931		3,107,815		3,211,942		3,326,717
Foreign	1,528,745		1,804,060		1,398,749		1,504,827		1,366,826
	44,490,195		46,133,073		43,772,537		43,160,247		43,099,088

Securities sold, not yet purchased	1,662		26,735		21,708		104,882		47,404
Federal funds purchased and security repurchase agreements	325,107		320,478		451,214		759,591		486,808
Other short-term borrowings	—		5,409		6,608		7,621		19,839
Long-term debt	2,352,569		2,337,113		2,326,659		2,274,571		2,283,121
Reserve for unfunded lending commitments	100,455		106,809		105,850		103,586		98,718
Other liabilities	489,923		533,660		484,170		507,151		474,551
Total liabilities	47,759,911		49,463,277		47,168,746		46,917,649		46,509,529

Shareholders' equity:
Preferred stock, without par value, authorized 4,400,000 shares	1,301,289		1,128,302		1,123,377		1,800,473		1,737,633
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 184,246,471, 184,199,198, 184,156,402, 184,117,522, and 184,228,178 shares	4,170,888		4,166,109		4,162,001		4,157,525		4,162,522
Retained earnings	1,290,131		1,203,815		1,170,477		1,110,120		1,060,525
Accumulated other comprehensive income (loss)	(406,903)		(446,157)		(534,738)		(576,147)		(571,567)
Controlling interest shareholders' equity	6,355,405		6,052,069		5,921,117		6,491,971		6,389,113
Noncontrolling interests	(4,752)		(3,428)		(2,862)		(2,608)		(2,335)
Total shareholders' equity	6,350,653		6,048,641		5,918,255		6,489,363		6,386,778
	$	54,110,564	$	55,511,918	$	53,087,001	$	53,407,012	$	52,896,307

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended
*(In thousands, except per share amounts)*	March 31, 2013		December 31, 2012		September 30, 2012		June 30, 2012		March 31, 2012
Interest income:
Interest and fees on loans	$	453,433	$	462,002	$	473,162	$	472,926	$	481,794
Interest on money market investments	5,439		6,004		5,349		5,099		4,628
Interest on securities:
Held-to-maturity	7,974		8,130		8,337		9,325		8,959
Available-for-sale	17,712		21,971		22,042		25,090		23,158
Trading account	190		150		110		148		338
Total interest income	484,748		498,257		509,000		512,588		518,877

Interest expense:
Interest on deposits	15,642		16,861		19,049		20,823		23,413
Interest on short-term borrowings	92		178		193		256		779
Interest on long-term debt	50,899		51,261		51,597		65,165		57,207
Total interest expense	66,633		68,300		70,839		86,244		81,399

Net interest income	418,115		429,957		438,161		426,344		437,478
Provision for loan losses	(29,035)		(10,401)		(1,889)		10,853		15,664
Net interest income after provision for loan losses	447,150		440,358		440,050		415,491		421,814

Noninterest income:
Service charges and fees on deposit accounts	43,580		44,492		44,951		43,426		43,532
Other service charges, commissions and fees	42,731		46,497		44,679		44,197		39,047
Trust and wealth management income	6,994		7,450		6,521		8,057		6,374
Capital markets and foreign exchange	7,486		7,708		6,026		7,342		5,734
Dividends and other investment income	12,724		13,117		11,686		21,542		9,480
Loan sales and servicing income	10,951		10,595		10,695		10,287		8,352
Fair value and nonhedge derivative loss	(5,445)		(4,778)		(5,820)		(6,784)		(4,400)
Equity securities gains (losses), net	2,832		(682)		2,683		107		9,145
Fixed income securities gains, net	3,299		10,259		3,046		5,519		720
Impairment losses on investment securities:
Impairment losses on investment securities	(31,493)		(120,082)		(3,876)		(24,026)		(18,273)
Noncredit-related losses on securities not expected to be sold (recognized in other comprehensive income)	21,376		36,274		1,140		16,718		8,064
Net impairment losses on investment securities	(10,117)		(83,808)		(2,736)		(7,308)		(10,209)
Other	6,184		3,309		3,495		2,280		4,045
Total noninterest income	121,219		54,159		125,226		128,665		111,820

Noninterest expense:
Salaries and employee benefits	229,789		220,039		220,223		220,765		224,634
Occupancy, net	27,389		28,226		28,601		28,169		27,951
Furniture and equipment	26,074		27,774		27,122		27,302		26,792
Other real estate expense	1,977		5,266		207		6,440		7,810
Credit related expense	10,482		11,302		13,316		12,415		13,485
Provision for unfunded lending commitments	(6,354)		959		2,264		4,868		(3,704)
Legal and professional services	10,471		15,717		12,749		12,947		11,096
Advertising	5,893		5,969		7,326		6,618		5,807
FDIC premiums	9,711		10,760		11,278		10,444		10,919
Amortization of core deposit and other intangibles	3,819		4,216		4,241		4,262		4,291
Other	78,097		76,786		67,648		67,426		63,291
Total noninterest expense	397,348		407,014		394,975		401,656		392,372

Income before income taxes	171,021		87,503		170,301		142,500		141,262
Income taxes	60,634		29,817		60,704		51,036		51,859
Net income	110,387		57,686		109,597		91,464		89,403
Net loss applicable to noncontrolling interests	(336)		(566)		(254)		(273)		(273)
Net income applicable to controlling interest	110,723		58,252		109,851		91,737		89,676
Preferred stock dividends	(22,399)		(22,647)		(47,529)		(36,522)		(64,187)
Net earnings applicable to common shareholders	$	88,324	$	35,605	$	62,322	$	55,215	$	25,489

Weighted average common shares outstanding during the period:
Basic shares	183,396		183,300		183,237		182,985		182,798
Diluted shares	183,655		183,456		183,383		183,137		182,964

Net earnings per common share:
Basic	$	0.48	$	0.19	$	0.34	$	0.30	$	0.14
Diluted	0.48		0.19		0.34		0.30		0.14

Loan Balances by Portfolio Type (Unaudited)

*(In millions)*	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012
Commercial:
Commercial and industrial		$	11,504		$	11,257		$	10,840		$	10,471		$	10,253
Leasing		390			423			405			406			394
Owner occupied		7,501			7,589			7,669			7,811			7,886
Municipal		484			494			469			477			441
Total commercial		19,879			19,763			19,383			19,165			18,974

Commercial real estate:
Construction and land development		2,039			1,939			1,956			2,099			2,100
Term		8,012			8,063			8,140			8,012			8,070
Total commercial real estate		10,051			10,002			10,096			10,111			10,170

Consumer:
Home equity credit line		2,125			2,178			2,175			2,181			2,167
1-4 family residential		4,408			4,350			4,181			4,019			3,875
Construction and other consumer real estate		320			321			320			328			316
Bankcard and other revolving plans		293			307			295			284			274
Other		208			216			224			232			223
Total consumer		7,354			7,372			7,195			7,044			6,855

FDIC-supported loans ¹		478			528			589			642			687
Total loans		$	37,762		$	37,665		$	37,263		$	36,962		$	36,686

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)

*(In thousands)*	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012
Balance sheet:

Change in assets from reestimation of cash flows – increase (decrease):
FDIC-supported loans		$	18,977		$	12,970		$	17,594		$	14,761		$	13,171
FDIC indemnification asset (included in other assets)		(20,288)			(10,610)			(14,401)			(11,233)			(10,002)

Balance at end of period:
FDIC-supported loans		477,725			528,241			588,566			642,246			687,126
FDIC indemnification asset (included in other assets)		71,100			90,074			100,004			117,167			123,862

	Three Months Ended
*(In thousands)*	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012
Statement of income:

Interest income:
Interest and fees on loans		$	18,977		$	12,970		$	17,594		$	14,761		$	13,171

Noninterest expense:
Other noninterest expense		20,288			10,610			14,401			11,233			10,002
Net increase (decrease) in pretax income		$	(1,311)		$	2,360		$	3,193		$	3,528		$	3,169

Nonperforming Lending-Related Assets (Unaudited)

*(Amounts in thousands)*	March 31, 2013		December 31, 2012		September 30, 2012		June 30, 2012		March 31, 2012

Nonaccrual loans	$	589,221	$	630,810	$	699,952	$	771,510	$	849,543
Other real estate owned	80,701		90,269		106,356		125,142		129,676
Nonperforming lending-related assets, excluding FDIC-supported assets	669,922		721,079		806,308		896,652		979,219

FDIC-supported nonaccrual loans	4,927		17,343		19,454		21,980		22,623
FDIC-supported other real estate owned	9,203		7,882		11,834		19,674		28,916
FDIC-supported nonperforming assets	14,130		25,225		31,288		41,654		51,539
Total nonperforming lending-related assets	$	684,052	$	746,304	$	837,596	$	938,306	$	1,030,758

Ratio of nonperforming lending-related assets to loans ¹ and leases and other real estate owned	1.80%		1.96%		2.23%		2.52%		2.78%

Accruing loans past due 90 days or more, excluding FDIC-supported loans	$	12,708	$	9,730	$	14,508	$	29,460	$	38,172
Accruing FDIC-supported loans past due 90 days or more	47,208		52,033		60,913		70,453		76,945
Ratio of accruing loans past due 90 days or more to loans ¹ and leases	0.16%		0.16%		0.20%		0.27%		0.31%

Nonaccrual loans and accruing loans past due 90 days or more	$	654,064	$	709,916	$	794,827	$	893,403	$	987,283
Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans ¹ and leases	1.72%		1.87%		2.12%		2.41%		2.68%

Accruing loans past due 30 - 89 days, excluding FDIC-supported loans	$	155,896	$	185,422	$	143,539	$	142,501	$	171,224
Accruing FDIC-supported loans past due 30 - 89 days	11,571		11,924		15,462		15,519		13,899

Restructured loans included in nonaccrual loans	193,975		215,476		207,088		227,568		276,669
Restructured loans on accrual	416,181		407,026		421,055		393,360		401,554

Classified loans, excluding FDIC-supported loans	1,737,178		1,767,460		1,810,099		1,880,932		2,076,220


¹Includes loans held for sale.

Allowance for Credit Losses (Unaudited)

	Three Months Ended
(Amounts in thousands)	March 31, 2013		December 31, 2012		September 30, 2012		June 30, 2012		March 31, 2012
Allowance for Loan Losses
Balance at beginning of period	$	896,087	$	927,068	$	973,443	$	1,011,786	$	1,051,685
Add:
Provision for losses	(29,035)		(10,401)		(1,889)		10,853		15,664
Adjustment for FDIC-supported loans	(7,429)		(1,721)		(5,908)		(5,856)		(1,057)
Deduct:
Gross loan and lease charge-offs	(35,467)		(54,709)		(58,781)		(73,685)		(80,014)
Recoveries	17,625		35,850		20,203		30,345		25,508
Net loan and lease charge-offs	(17,842)		(18,859)		(38,578)		(43,340)		(54,506)
Balance at end of period	$	841,781	$	896,087	$	927,068	$	973,443	$	1,011,786

Ratio of allowance for loan losses to loans and leases, at period end	2.23%		2.38%		2.49%		2.63%		2.76%

Ratio of allowance for loan losses to nonperforming loans, at period end	141.68%		138.25%		128.87%		122.68%		116.01%

Annualized ratio of net loan and lease charge-offs to average loans	0.19%		0.20%		0.41%		0.47%		0.59%

Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	106,809	$	105,850	$	103,586	$	98,718	$	102,422
Provision charged (credited) to earnings	(6,354)		959		2,264		4,868		(3,704)
Balance at end of period	$	100,455	$	106,809	$	105,850	$	103,586	$	98,718

Total Allowance for Credit Losses
Allowance for loan losses	$	841,781	$	896,087	$	927,068	$	973,443	$	1,011,786
Reserve for unfunded lending commitments	100,455		106,809		105,850		103,586		98,718
Total allowance for credit losses	$	942,236	$	1,002,896	$	1,032,918	$	1,077,029	$	1,110,504

Ratio of total allowance for credit losses to loans and leases outstanding, at period end	2.50%		2.66%		2.77%		2.91%		3.03%

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

(In millions)	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012

Loans held for sale		$	—		$	—		$	—		$	—		$	—

Commercial:
Commercial and industrial		100			91			103			133			149
Leasing		1			1			1			1			1
Owner occupied		195			206			223			240			245
Municipal		9			9			6			—			—
Total commercial		305			307			333			374			395

Commercial real estate:
Construction and land development		93			108			125			115			148
Term		102			125			155			182			191
Total commercial real estate		195			233			280			297			339

Consumer:
Home equity credit line		12			14			12			14			17
1-4 family residential		71			70			66			76			87
Construction and other consumer real estate		4			5			6			8			8
Bankcard and other revolving plans		1			1			1			1			1
Other		1			1			2			2			3
Total consumer		89			91			87			101			116
Total nonaccrual loans		$	589		$	631		$	700		$	772		$	850

Net Charge-Offs by Portfolio Type (Unaudited)

(In millions)	March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012
Commercial:
Commercial and industrial		$	5		$	(1)		$	3		$	9		$	17
Leasing		—			2			—			—			—
Owner occupied		5			7			10			10			8
Municipal		—			—			—			—			—
Total commercial		10			8			13			19			25

Commercial real estate:
Construction and land development		(3)			(7)			—			(2)			(2)
Term		5			7			16			13			18
Total commercial real estate		2			—			16			11			16

Consumer:
Home equity credit line		2			6			2			6			4
1-4 family residential		3			4			4			5			7
Construction and other consumer real estate		(1)			—			1			—			1
Bankcard and other revolving plans		2			1			2			1			2
Other		—			—			—			1			—
Total consumer loans		6			11			9			13			14
Total net charge-offs		$	18		$	19		$	38		$	43		$	55

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (Unaudited)

	Three Months Ended
	March 31, 2013			December 31, 2012			September 30, 2012
(In thousands)	Average balance		Average rate	Average balance		Average rate	Average balance		Average rate
ASSETS
Money market investments	$	8,111,798	0.27%	$	8,652,394	0.28%	$	7,990,243	0.27%
Securities:
Held-to-maturity	756,739		5.11%	740,297		5.29%	758,761		5.32%
Available-for-sale	3,035,592		2.41%	2,958,311		3.01%	3,052,559		2.93%
Trading account	22,620		3.41%	21,793		2.74%	13,691		3.20%
Total securities	3,814,951		2.95%	3,720,401		3.46%	3,825,011		3.41%

Loans held for sale	204,597		3.50%	231,710		3.22%	183,224		3.52%

Loans ¹:
Loans and leases	37,099,182		4.67%	36,685,969		4.78%	36,585,753		4.86%
FDIC-supported loans	498,654		21.43%	559,643		15.12%	613,710		17.27%
Total loans	37,597,836		4.90%	37,245,612		4.94%	37,199,463		5.07%
Total interest-earning assets	49,729,182		3.99%	49,850,117		4.01%	49,197,941		4.15%
Cash and due from banks	1,063,314			1,259,311			1,000,159
Allowance for loan losses	(884,363)			(925,943)			(964,676)
Goodwill	1,014,129			1,014,986			1,015,129
Core deposit and other intangibles	49,069			53,083			57,345
Other assets	2,889,354			3,014,503			3,060,914
Total assets	$	53,860,685		$	54,266,057		$	53,366,812

LIABILITIES
Interest-bearing deposits:
Savings and money market	$	22,735,258	0.19%	$	22,356,014	0.20%	$	22,025,891	0.23%
Time	2,935,316		0.62%	3,038,934		0.64%	3,162,165		0.69%
Foreign	1,528,665		0.20%	1,597,513		0.23%	1,472,437		0.29%
Total interest-bearing deposits	27,199,239		0.23%	26,992,461		0.25%	26,660,493		0.28%
Borrowed funds:
Securities sold, not yet purchased	494		—%	3,320		—%	2,062		—%
Federal funds purchased and security repurchase agreements	289,918		0.10%	429,653		0.14%	453,209		0.14%
Other short-term borrowings	3,837		2.01%	6,293		1.71%	8,273		1.73%
Long-term debt	2,331,314		8.85%	2,318,478		8.80%	2,297,409		8.93%
Total borrowed funds	2,625,563		7.88%	2,757,744		7.42%	2,760,953		7.46%
Total interest-bearing liabilities	29,824,802		0.91%	29,750,205		0.91%	29,421,446		0.96%
Noninterest-bearing deposits	17,211,214			17,918,890			16,817,085
Other liabilities	608,206			610,316			606,973
Total liabilities	47,644,222			48,279,411			46,845,504
Shareholders' equity:
Preferred equity	1,229,708			1,126,566			1,765,162
Common equity	4,990,317			4,862,972			4,758,858
Controlling interest shareholders' equity	6,220,025			5,989,538			6,524,020
Noncontrolling interests	(3,562)			(2,892)			(2,712)
Total shareholders' equity	6,216,463			5,986,646			6,521,308
Total liabilities and shareholders' equity	$	53,860,685		$	54,266,057		$	53,366,812

Spread on average interest-bearing funds			3.08%			3.10%			3.19%

Net yield on interest-earning assets			3.44%			3.47%			3.58%


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, 2013		December 31, 2012		September 30, 2012		June 30, 2012		March 31, 2012

Net earnings applicable to common shareholders (GAAP)	$	88,324	$	35,605	$	62,322	$	55,215	$	25,489

Adjustments, net of tax:
Impairment loss on goodwill	—		583		—		—		—
Amortization of core deposit and other intangibles	2,425		2,677		2,692		2,704		2,722
Net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP) (a)	$	90,749	$	38,865	$	65,014	$	57,919	$	28,211

Average common equity (GAAP)	$	4,990,317	$	4,862,972	$	4,758,858	$	4,713,318	$	4,644,722
Average goodwill	(1,014,129)		(1,014,986)		(1,015,129)		(1,015,129)		(1,015,129)
Average core deposit and other intangibles	(49,069)		(53,083)		(57,345)		(61,511)		(65,837)
Average tangible common equity (non-GAAP) (b)	$	3,927,119	$	3,794,903	$	3,686,384	$	3,636,678	$	3,563,756

Number of days in quarter (c)	90		92		92		91		91
Number of days in year (d)	365		366		366		366		366

Tangible return on average tangible common equity (non-GAAP) (a/b/c*d)	9.37%		4.07%		7.02%		6.41%		3.18%

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