UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 0-2610
ZIONS BANCORPORATION
--------------------
(Exact name of Registrant as specified in its charter)
UTAH 87-0227400
-------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1380 KENNECOTT BUILDING
SALT LAKE CITY, UTAH 84133
----------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 524-4787
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirement for
the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, without par value, outstanding at August 1, 1995 14,522,853 shares
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
INDEX
Page
----
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. Financial Statements (unaudited)
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Retained Earnings 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis 8
PART II. OTHER INFORMATION
-----------------
ITEM 4. Submission of Matters to a Vote of Shareholders 21
ITEM 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 22
----------
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands) June 30, December 31, June 30,
1995 1994 1994
--------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 325,447 $ 316,943 $ 265,917
Money market investments:
Interest-bearing deposits 26,457 19,704 24,323
Federal funds sold and security resell agreements 901,189 383,742 805,965
Securities:
Held to maturity at cost (approximate market value
$1,145,573, $1,018,798 and $897,210)
Taxable 926,927 828,626 706,981
Nontaxable 212,910 202,281 191,094
Available for sale at market 381,049 315,578 340,365
Trading account securities at market 73,317 316,948 313,816
---------- ---------- ----------
1,594,203 1,663,433 1,552,256
Loans:
Loans held for sale at cost, which approximates market 110,768 108,649 190,198
Loans, leases and other receivables 2,567,300 2,307,403 2,494,550
---------- ---------- ----------
2,678,068 2,416,052 2,684,748
Less:
Unearned income and fees, net of related costs 26,336 24,774 19,644
Allowance for loan losses 67,753 67,018 68,981
---------- ---------- ----------
2,583,979 2,324,260 2,596,123
Premises and equipment, at cost, less accumulated depreciation 79,514 74,673 73,779
Amounts paid in excess of net assets of acquired businesses 22,524 18,732 19,351
Other real estate owned 641 1,562 1,748
Other assets 130,385 131,046 112,985
---------- ---------- ----------
Total assets $5,664,339 $4,934,095 $5,452,447
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 890,805 $ 885,833 $ 845,983
Interest-bearing:
Savings and money market 2,122,646 2,048,715 2,048,889
Time under $100,000 646,994 513,841 518,856
Time over $100,000 105,251 123,455 109,294
Foreign 124,484 134,132 76,154
---------- ---------- ----------
3,890,180 3,705,976 3,599,176
Securities sold, not yet purchased 86,827 81,437 96,810
Federal funds purchased and security repurchase agreements 1,044,966 524,538 1,160,933
Accrued liabilities 70,275 70,873 62,037
Federal Home Loan Bank advances and other borrowings:
Less than one year 27,786 25,748 27,145
Over one year 94,494 101,571 105,421
Long-term debt 57,526 58,182 59,107
---------- ---------- ----------
Total liabilities 5,272,054 4,568,325 5,110,629
---------- ---------- ----------
Shareholders' equity:
Capital stock:
Preferred stock, without par value; authorized 3,000,000
shares; issued and outstanding, none - - -
Common stock, without par value; authorized 30,000,000
shares; issued and outstanding, 14,543,162, 14,559,552
and 14,546,211 shares 74,336 79,193 79,027
Net unrealized holding gains and losses on securities available (1,526) (5,866) (3,434)
Retained earnings 319,475 292,443 266,225
---------- ---------- ----------
Total shareholders' equity 392,285 365,770 341,818
---------- ---------- ----------
Total liabilities and shareholders' equity $5,664,339 $4,934,095 $5,452,447
========== ========== ==========
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
<S> <C> <C> <C> <C>
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
Interest income:
Interest and fees on loans $ 60,503 $50,672 $115,987 $ 96,548
Interest on loans held for sale 2,180 3,139 4,308 6,398
Interest on money market investments 14,072 9,143 24,067 16,807
Interest on securities:
Held to maturity:
Taxable 16,337 9,308 31,841 17,460
Nontaxable 3,089 2,910 6,095 5,346
Available for sale 5,743 5,038 11,386 9,879
Trading account 1,051 4,151 4,676 6,628
Lease financing 2,461 2,411 4,855 4,919
-------- -------- ------- --------
Total interest income 105,436 86,772 203,215 163,985
-------- -------- ------- --------
Interest expense:
Interest on savings and money market deposits 20,657 14,776 40,162 27,792
Interest on time deposits under $100,000 7,738 4,934 13,823 10,049
Interest on time deposits over $100,000 1,482 968 2,760 1,728
Interest on foreign deposits 1,820 1,059 3,821 1,613
Interest on securities sold, not yet purchased 465 2,741 2,741 3,640
Interest on borrowed funds 17,377 13,553 30,810 25,621
-------- -------- ------- --------
Total interest expense 49,539 38,031 94,117 70,443
-------- -------- ------- --------
Net interest income 55,897 48,741 109,098 93,542
Provision for loan losses 850 467 1,450 757
-------- -------- ------- --------
Net interest income after provision for loan losses 55,047 48,274 107,648 92,785
-------- -------- ------- --------
Noninterest income:
Service charges on deposit accounts 7,033 5,699 13,965 11,650
Other service charges, commissions and fees 6,040 5,880 11,440 11,081
Trust income 1,152 1,184 2,232 2,276
Investment securities gains (losses), net 52 (165) (53) (334)
Trading account income 111 705 (2,826) 395
Loan sales and servicing income 6,210 3,802 11,569 7,298
Other income 1,507 1,360 1,819 2,495
-------- -------- ------- --------
Total noninterest income 22,105 18,465 38,146 34,861
-------- -------- ------- --------
Noninterest expenses:
Salaries and employee benefits 24,856 22,828 48,363 45,781
Occupancy, net 2,480 2,305 5,060 4,603
Furniture and equipment expense 3,197 2,806 6,258 5,297
Other real estate expense (23) (89) 57 51
Legal and professional services 766 220 2,101 2,207
Supplies 1,144 1,145 2,395 2,422
Postage 1,261 1,099 2,508 2,288
FDIC premiums 1,963 1,853 3,917 3,674
Amortization of intangible assets 858 768 1,671 1,659
Other expenses 9,380 9,061 18,370 16,505
-------- -------- ------- --------
Total noninterest expenses 45,882 41,996 90,700 84,487
-------- -------- ------- --------
Income before income taxes 31,270 24,743 55,094 43,159
Income taxes 10,749 8,325 18,572 14,303
-------- -------- ------- --------
Net income $ 20,521 $16,418 $ 36,522 $ 28,856
========= ======== ========= =========
Weighted average common and common-equivalent shares outstanding 14,786 14,616 14,732 14,497
Net income per common share $1.39 $1.12 $2.48 $1.99
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
<S> <C> <C> <C> <C>
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
Cash flows from operating activities:
Net income $ 20,521 $ 16,418 $ 36,522 $ 28,856
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 850 467 1,450 757
Write-downs of other real estate owned - 79 8 164
Depreciation of premises and equipment 2,573 2,135 5,038 4,245
Amortization of premium on core deposits and
other intangibles 858 768 1,671 1,659
Amortization of net premium/discount on
investment securities 1,136 1,187 2,114 2,779
Accretion of unearned income and fees, net of
related costs 1,655 (1,441) 1,468 (2,360)
Proceeds from sales of trading account securities 12,123,667 25,641,744 51,572,234 45,966,991
Increase in trading account securities (12,113,616) (25,524,959) (51,446,225) (46,182,474)
Net (gain) loss on sales of investment
securities (52) 165 53 334
Proceeds from loans held for sale 78,697 193,822 160,395 435,116
Increase in loans held for sale (84,147) (175,210) (161,329) (386,640)
Net gain on sales of loans, leases and other assets (3,968) (1,903) (7,233) (3,414)
Net gain on sales of other real estate owned (8) (14) (78) (25)
Change in accrued income taxes (5,311) (4,946) (84) (47)
Change in accrued interest receivable (1,947) (1,262) (2,652) (3,902)
Change in other assets 311 1,402 856 (3,799)
Change in accrued interest payable (55) (3,286) 25 (42)
Change in accrued liabilities 5,160 982 (254) (5,732)
----------- ---------- ---------- -----------
Net cash provided by (used in) operating
activities 26,324 146,148 163,979 (147,534)
---------- ---------- --------- -----------
Cash flows from investing activities:
Net increase in money market investments (286,068) (151,311) (521,723) (230,756)
Proceeds from maturities of investment securities
held to maturity 33,284 43,971 50,472 67,853
Purchases of investment securities held to maturity (39,188) (54,340) (78,197) (130,826)
Proceeds from sales of investment securities
available for sale 79,976 13,601 107,763 80,933
Proceeds from maturities of investment securities
available for sale 166,210 17,042 172,227 86,832
Purchases of investment securities available for sale (273,869) (25,802) (290,797) (149,463)
Proceeds from sales of loans and leases 123,394 46,354 234,486 110,089
Net increase in loans and leases (274,816) (142,718) (471,187) (280,925)
Principal collections on leveraged leases - - 38 -
Proceeds from sales of premises and equipment 273 160 399 424
Purchases or premises and equipment (5,738) (2,629) (9,457) (5,813)
Proceeds from sales of other real estate owned 745 903 1,345 2,860
Proceeds from sales of mortgage servicing rights 288 23 498 34
Purchases of mortgage servicing rights (37) (199) (61) (423)
Proceeds from sales of other assets 175 157 359 249
Cash paid for acquisitions, net of cash received 1,592 9,852 1,592 9,851
--------- --------- --------- ---------
Net cash (used in) investing activities (473,779) (244,936) (802,243) (439,081)
--------- --------- --------- ---------
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
<S> <C> <C> <C> <C>
(In thousands) 1995 1994 1995 1994
Cash flows from financing activities: ---- ---- ---- ----
Net increase in deposits 72,614 9,903 153,066 71,116
Net change in short-term funds borrowed 447,221 137,915 528,287 497,888
Proceeds from FHLB advances over one year - 4,300 - 11,108
Payments on FHLB advances over one year (4,093) (53,965) (8,184) (57,796)
Payments on long-term debt (289) (243) (656) (480)
Proceeds from issuance of common stock 410 152 870 277
Payments to redeem common stock (17,125) - (17,125) -
Dividends paid (5,100) (4,081) (9,490) (8,551)
--------- --------- --------- ---------
Net cash provided by financing activities 493,638 93,981 646,768 513,562
Net (increase) decrease in cash and due from banks 46,183 (4,807) 8,504 (73,053)
Cash and due from banks at beginning of period 279,264 270,724 316,943 338,970
--------- --------- --------- --------
Cash and due from bank at end of period $ 325,447 $ 265,917 $ 325,447 $ 265,917
=========== ========== ========== ==========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
<S> <C> <C> <C> <C>
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
Cash paid for:
Interest $65,933 $41,028 $110,663 $71,294
Income taxes 16,043 12,016 17,539 12,601
Loans transferred to other real estate owned 233 703 233 1,408
</TABLE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Months
Six Months Ended Ended
June 30, December 31,
------------------ --------------
<S> <C> <C> <C>
(In thousands) 1995 1994 1994
---- ---- ----
Balance at beginning of period $292,443 $245,920 $245,920
Add:
Net income 36,522 28,856 63,827
-------- -------- --------
328,965 274,776 309,747
Deduct cash dividends:
Preferred, paid by subsidiary to minority shareholder (20) (15) (33)
Common, per share $ .65 in 1995 and
$ .56 and $ 1.16 in 1994 (9,470) (8,051) (16,786)
Common dividend of NBA prior to merger - (485) (485)
-------- -------- --------
Balance at end of period $319,475 $266,225 $292,443
========= ======== =========
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Certain amounts in the 1994 consolidated financial statements have been
reclassified to conform to the 1995 presentation. Operating results for the six
months ended June 30, 1995 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto included in
Zions Bancorporation's Annual Report to Shareholders on Form 10-K for the year
ended December 31, 1994.
Effective January 1, 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS, Statement) No. 114, "Accounting by Creditors for Impairment of
a Loan", as amended by SFAS No. 118, "Accounting by Creditors for Impairment of
a Loan - Income Recognition and Disclosures". SFAS No. 114 requires that
impaired loans be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. SFAS No. 118 modified certain
other provisions of SFAS No. 114, and requires information about the recorded
investment in certain impaired loans and about how a creditor recognizes
interest income related to those impaired loans. Adoption of the Statements did
not have a significant impact on the Company's results of operations. The
Company's recorded investment in impaired loans amounted to $9,873,000 and
$6,589,000 respectively, as of January 1, 1995 and June 30, 1995. Allowance for
loan losses related to impaired loans as of January 1, 1995 and June 30, 1995
amounted to $26,000 and $1,055,000, respectively.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(In thousands, except per share
and ratio data) 1995 1994 % Change 1995 1994 % Change
---- ---- -------- ---- ---- --------
EARNINGS
Net income $ 20,521 $ 16,418 25.0% $ 36,522 $ 28,856 26.6%
PER COMMON SHARE
Net income 1.39 1.12 24.1% 2.48 1.99 24.6%
Dividends .35 .28 25.0% .65 .56 16.1%
Book value at June 30 26.97 23.50 14.8%
Market value at June 30 50.00 39.75 25.8%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Weighted average common and common-
equivalent shares outstanding 14,786,000 14,616,000 14,732,000 14,497,000
Common shares outstanding at June 30 14,543,162 14,546,211
</TABLE>
BALANCES AT PERIOD END
<TABLE>
<S> <C> <C> <C>
Total assets $5,664,339 $5,452,447 3.9%
Money market investments 927,646 830,288 11.7%
Securities 1,594,203 1,552,256 2.7%
Net loans and leases 2,651,732 2,665,104 - .5%
Allowance for loan losses 67,753 68,981 - 1.8%
Total deposits 3,890,180 3,599,176 8.1%
Shareholders' equity 392,285 341,818 14.8%
Nonperforming assets 14,527 21,657 -32.9%
Loans past due 90 days or more 2,688 1,910 40.7%
</TABLE>
PERFORMANCE RATIOS
<TABLE>
<S> <C> <C> <C> <C>
Net interest margin 4.56% 3.92% 4.61% 3.86%
Return on average assets 1.49% 1.18% 1.37% 1.07%
Return on average common equity 21.13% 19.44% 19.31% 17.78%
Common dividend payout 24.80% 24.81% 25.93% 29.58%
Nonperforming assets to net loans and
leases, other real estate owned
and other nonperforming assets
at June 30 .55% .81%
</TABLE>
<TABLE>
CAPITAL RATIOS
<S> <C> <C> <C> <C>
Average equity to average assets 7.05% 6.07% 7.10% 6.00%
Leverage ratio at June 30 6.22% 5.62%
Tier I risk-based capital at June 30 11.40% 10.61%
Total risk-based capital at June 30 14.42% 13.69%
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
OPERATING RESULTS
Consolidated net income for the second quarter of 1995 was $20,521,000 or $1.39
per share compared to $16,418,000 or $1.12 per share for the second quarter of
1994 and $16,001,000 or $1.09 per share for the first quarter of 1995.
Consolidated net income was $36,522,000 or $2.48 per share for the first six
months of 1995, compared to $28,856,000 or $1.99 per share for the first six
months of 1994, which constituted increases of 26.6% and 24.6%, respectively.
This stronger level of profitability was achieved for the first six months of
1995 despite a $3,090,000 unusual loss in the Company's trading account during
the first quarter of 1995, as well as a $1,300,000 expense associated with the
closing and transfer of Zions First National Bank's capital markets operation in
New York City to the bank's headquarters in Salt Lake City.
The Company's second-quarter $4,103,000 (25.0%) increase in earnings relative to
the same period a year ago reflects a $7,156,000 (14.7%) increase in net
interest income, a $383,000 (82.0%) increase in the provision for loan losses, a
$3,640,000 (19.7%) increase in noninterest income, a $3,886,000 (9.3%) increase
in noninterest expenses and a $2,424,000 (29.1%) increase in income tax expense.
The $7,666,000 (26.6%) increase in net income for the six-month period ended
June 30, 1995, compared to the similar period in 1994, reflects a $15,556,000
(16.6%) increase in net interest income, a $693,000 (91.5%) increase in the
provision for loan losses, a $3,285,000 (9.4%) increase in noninterest income, a
$6,213,000 (7.4%) increase in noninterest expenses and a $4,269,000 (29.8%)
increase in income tax expense.
The annualized return on average assets for the second quarter and for the first
six months of 1995 was 1.49% and 1.37% compared to 1.18% and 1.07%,
respectively, in 1994, resulting in an annualized return on average common
shareholders' equity of 21.13% and 19.31% for the second quarter and for the
first six months of 1995, compared to 19.44% and 17.78% for the same periods of
1994.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
NET INTEREST INCOME AND INTEREST RATE SPREADS
Net interest income for the second quarter of 1995, adjusted to a fully taxable-
equivalent basis, increased 14.5% to $57,222,000 from the second quarter of
1994, and increased 5.0% from the first quarter of 1995. Net interest margin
was 4.56%, compared to 3.92% for the second quarter of 1994, and 4.66% for the
first quarter of 1995. Six-month net interest income, on a fully taxable-
equivalent basis, was $111,710,000 in 1995, an increase of 16.6% compared to
$95,833,000 for the first six months of 1994. Net interest margin for the
first six months of 1995 was 4.61%, compared to 3.86% for the first six months
of 1994.
The yield on average earning assets increased 160 basis points during the second
quarter of 1995 as compared to the second quarter of 1994, and increased 4 basis
points from the first quarter of 1995. The average rate paid this quarter on
interest-bearing funds increased 116 basis points from the second quarter of
1994, and increased 14 basis points from the first quarter of 1995. Comparing
the first six months of 1995 with 1994, the yield on average earning assets
increased 180 basis points, while the cost of interest-bearing funds increased
by 127 basis points.
The spread on average interest-bearing funds for the second quarter of 1995 was
3.80%, up from the 3.36% for the second quarter of 1994 but down from the 3.90%
for the first quarter of 1995. The spread on average interest-bearing funds for
the first six months of 1995 was 3.85% compared with 3.32% for the same period
in 1994.
The Company attempts to minimize interest rate movement sensitivity through the
management of interest rate maturities, and to a lesser extent, the use of off-
balance sheet arrangements such as caps, floors and interest rate exchange
contract agreements. Net interest income to the Company from the use of such
off-balance sheet arrangements for the first six months of 1995 was $80,000
compared to $18,000 for the first six months of 1994. Net interest margin is
also affected by the Company's maintenance of a strong liquidity position.
The increased level of taxable-equivalent net interest income and the increase
in net interest margin in the second quarter and in the first six months of
1995, compared to the same periods in 1994, resulted primarily from the effect
of rates on earning assets increasing more than rates paid on interest-bearing
funds, and decreased activity in security resell arrangements.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Average Amount of Average Average Amount of Average
(In thousands) Balance Interest 1 Rate Balance Interest 1 Rate
ASSETS ------- ---------- ------- ------- ---------- -------
Money market investments:
Interest-bearing deposits $ 24,659 $ 283 4.60% $ 22,595 $ 511 4.56%
Federal funds sold and security
resell agreements 917,226 13,789 6.03% 801,123 23,556 5.93%
---------- -------- ---------- ---------
Total money market investments 941,885 14,072 5.99% 823,718 24,067 5.89%
Securities: ---------- -------- ---------- ---------
Held to maturity:
Taxable 926,031 16,337 7.08% 906,067 31,841 7.09%
Nontaxable 207,875 4,413 8.51% 205,376 8,707 8.55%
Available for sale 345,392 5,743 6.67% 340,765 11,386 6.74%
Trading account 74,452 1,051 5.66% 135,295 4,676 6.97%
---------- --------- ---------- ----------
Total securities 1,553,750 27,544 7.11% 1,587,503 56,610 7.19%
Loans: ---------- -------- ---------- ----------
Loans held for sale 104,174 2,180 8.39% 103,919 4,308 8.36%
Net loans and leases 2 2,431,446 62,965 10.39% 2,372,807 120,842 10.27%
---------- -------- ---------- --------
Total loans 2,535,620 65,145 10.31% 2,476,726 125,150 10.19%
---------- -------- ---------- --------
Total interest-earning assets $5,031,255 $106,761 8.51% $4,887,947 $205,827 8.49%
Cash and due from banks 321,933 316,150
Allowance for loan losses (67,662) (67,448)
Other assets 242,899 233,159
---------- ----------
Total assets $5,528,425 $5,369,808
LIABILITIES ========== ==========
Interest-bearing deposits:
Savings deposits $ 720,053 $ 5,681 3.16% $ 735,079 $ 11,450 3.14%
Money market deposits 1,401,160 14,976 4.29% 1,370,888 28,712 4.22%
Time deposits under $100,000 607,372 7,738 5.11% 573,749 13,823 4.86%
Time deposits $100,000 or more 101,752 1,482 5.84% 101,989 2,760 5.46%
Foreign deposits 135,859 1,820 5.37% 143,856 3,821 5.36%
---------- -------- ---------- -------
Total interest-bearing deposits 2,966,196 31,697 4.29% 2,925,561 60,566 4.17%
Borrowed funds: ---------- -------- ---------- --------
Securities sold, not yet purchased 40,077 465 4.65% 86,896 2,741 6.36%
Federal funds purchased and security
repurchase agreements 1,032,163 14,228 5.53% 896,795 24,411 5.49%
FHLB advances and other borrowings:
Less than one year 24,485 322 5.27% 22,359 644 5.81%
Over one year 95,614 1,571 6.59% 97,502 3,171 6.56%
Long-term debt 57,696 1,256 8.73% 57,840 2,584 9.01%
---------- -------- ---------- ---------
Total borrowed funds 1,250,035 17,842 5.72% 1,161,392 33,551 5.83%
---------- -------- ---------- ---------
Total interest-bearing liabilities $4,216,231 $ 49,539 4.71% $4,086,953 $ 94,117 4.64%
Noninterest-bearing deposits 811,853 799,678
Other liabilities 110,707 101,674
---------- ----------
Total liabilities 5,138,791 4,988,305
Total shareholders' equity 389,634 381,503
---------- ----------
Total liabilities and shareholders' equity $5,528,425 $5,369,808
========== ==========
Spread on average interest-bearing funds 3.80% 3.85%
Net interest income and net yield on ===== =====
interest-earning assets $ 57,222 4.56% $111,710 4.61%
======== ===== ======== =====
</TABLE>
1 Taxable-equivalent rates used where applicable. 2 Net of unearned income and
fees, net of related costs. Loans include nonaccrual and restructured loans.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1994 June 30, 1994
-------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Average Amount of Average Average Amount of Average
(In thousands) Balance Interest 1 Rate Balance Interest 1 Rate
ASSETS ------- ---------- ------- ------- ---------- --------
Money market investments:
Interest-bearing deposits $ 24,623 $ 305 4.97% $ 24,737 $ 505 4.12%
Federal funds sold and security
resell agreements 920,992 8,838 3.85% 946,982 16,302 3.47%
----------- ------- ---------- ---------
Total money market investments 945,615 9,143 3.88% 971,719 16,807 3.49%
Securities: ----------- ------- ---------- ---------
Held to maturity:
Taxable 723,366 9,308 5.16% 696,089 17,460 5.06%
Nontaxable 197,561 4,157 8.44% 189,164 7,637 8.14%
Available for sale 327,702 5,038 6.17% 336,918 9,879 5.91%
Trading account 318,851 4,151 5.22% 263,742 6,628 5.07%
---------- -------- ---------- ---------
Total securities 1,567,480 22,654 5.80% 1,485,913 41,604 5.65%
Loans: ---------- -------- ---------- ---------
Loans held for sale 191,050 3,139 6.59% 207,440 6,398 6.22%
Net loans and leases 2 2,406,265 53,083 8.85% 2,344,085 101,467 8.73%
---------- -------- ---------- --------
Total loans 2,597,315 56,222 8.68% 2,551,525 107,865 8.53%
---------- ------- ---------- --------
Total interest-earning assets $5,110,410 $88,019 6.91% $5,009,157 $166,276 6.69%
Cash and due from banks 344,264 328,738
Allowance for loan losses (68,796) (68,398)
Other assets 192,476 186,729
---------- ----------
Total assets $5,578,354 $5,456,226
LIABILITIES ========== ==========
Interest-bearing deposits:
Savings deposits $ 707,909 $ 5,565 3.15% $ 723,408 $ 10,678 2.98%
Money market deposits 1,315,483 9,211 2.81% 1,248,109 17,114 2.77%
Time deposits under $100,000 532,145 4,934 3.72% 527,837 10,049 3.84%
Time deposits $100,000 or more 108,162 968 3.59% 95,525 1,728 3.65%
Foreign deposits 114,369 1,059 3.71% 97,275 1,613 3.34%
---------- ------- ---------- -------
Total interest-bearing deposits 2,778,068 21,737 3.14% 2,692,154 41,182 3.08%
Borrowed funds:
Securities sold, not yet purchased 206,786 2,741 5.32% 142,739 3,640 5.14%
Federal funds purchased and security
repurchase agreements 1,096,903 10,305 3.77% 1,146,396 19,042 3.35%
FHLB advances and other borrowings:
Less than one year 40,761 495 4.87% 46,121 991 4.33%
Over one year 115,336 1,379 4.80% 134,148 2,822 4.24%
Long-term debt 59,578 1,374 9.25% 59,499 2,766 9.37%
---------- ------- ---------- -------
Total borrowed funds 1,519,364 16,294 4.30% 1,528,903 29,261 3.86%
---------- ------- ---------- -------
Total interest-bearing liabilities $4,297,432 $38,031 3.55% $4,221,057 $ 70,443 3.37%
Noninterest-bearing deposits 855,403 834,228
Other liabilities 86,759 73,736
---------- ----------
Total liabilities 5,239,594 5,129,021
Total shareholders' equity 338,760 327,205
---------- ----------
Total liabilities and shareholders' equity $5,578,354 $5,456,226
========== ==========
Spread on average interest-bearing funds 3.36% 3.32%
===== =====
Net interest income and net yield on
interest-earning assets $49,988 3.92% $ 95,833 3.86%
======= ===== ======== =====
</TABLE>
1 Taxable-equivalent rates used where applicable. 2 Net of unearned income and
fees, net of related costs. Loans include nonaccrual and restructured loans.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
PROVISION FOR LOAN LOSSES
The provision for loan losses increased 82.0% to $850,000 for the second quarter
of 1995, as compared with $467,000 for the second quarter of 1994, and increased
41.7% from the $600,000 for the first quarter of 1995. Net charge-offs for the
second quarter of 1995 were $718,000 or .03% of average net loans and leases,
compared to net charge-offs of $778,000 or .03% of average loans and leases for
the second quarter of 1994, and net charge-offs of $246,000 or .01% of average
loans and leases for the first quarter of 1995. The provision for loan losses
for the first six months of 1995 totaled $1,450,000, 91.5% more than the
$757,000 provision for the first six months of 1994. Net charge-offs for the
first six months of 1995 were $964,000 or .04% of average net loans and leases,
compared to net charge-offs of $1,545,000 or .06% of average net loans and
leases for the first six months of 1994.
NONINTEREST INCOME
Noninterest income for the second quarter of 1995 totaled $22,105,000, an
increase of 19.7% from the $18,465,000 for the second quarter of 1994 and an
increase of 15.5% over the first quarter of 1995 excluding the $3,090,000
unusual loss in the Company's trading account during the first quarter.
Comparing the segments of noninterest income for the second quarter of 1995 and
the second quarter of 1994, service charges on deposit accounts, other service
charges, commissions and fees, loan sales and servicing income, and other income
increased 23.4%, 2.7%, 63.3% and 10.8%, respectively, while trust income, and
trading account income decreased 2.7% and 84.3%, respectively, and sales of
investment securities resulted in small net gains compared to net losses.
Noninterest income for the six months ending June 30, 1995 increased 9.4% to
$38,146,000, compared to $34,861,000 for the first six months of 1994.
Comparing the segments of noninterest income for the first six months of 1995
and the first six months of 1994, service charges on deposit accounts, other
service charges, commissions and fees, and loan sales and servicing income
increased 19.9%, 3.2% and 58.5%, respectively, while trust income, net losses on
sales of investment securities and trading account income excluding the
$3,090,000 unusual loss during the first quarter decreased 1.9%, 84.1% and
33.2%, respectively.
NONINTEREST EXPENSES
Noninterest expenses for the second quarter of 1995, totaling $45,882,000,
increased 9.3% from the $41,996,000 for the second quarter of 1994, and
increased 2.4% for the $44,818,000 for the first quarter of 1995. Comparing
the noninterest expense segments for the second quarter of 1995 and the second
quarter of 1994, salaries and employee benefits increased 8.9%, occupancy,
furniture and equipment expenses increased 11.1%, and the total of all other
expenses increased 9.2%.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
Noninterest expenses for the six months ending June 30, 1995 of $90,700,000
increased 7.4% compared to the $84,487,000 for the corresponding period in
1994. Comparing the noninterest expense segments for the first six months of
1995 and the first six months of 1994, salaries and employee benefits increased
5.6%, occupancy, furniture and equipment expenses increased 14.3%, and the
total of all other expenses increased 7.7%.
The increase in salaries and employee benefits resulted primarily from
increased staffing of branch offices opened and acquired and SBA loan
origination activities, as well as general salary increases, bonuses and
employee benefit costs. The increase in occupancy, furniture and equipment
expenses resulted primarily from additional branch facilities and from the
further expansion ofthe ATM network, and the installation of personal computers
and local area networks. The increase in all other expenses resulted primarily
from increases in postage, FDIC premiums, telecommunications and advertising
expenses related to acquisitions and expansion. At June 30, 1995, the Company
had 2,731 full-time equivalent employees, 123 offices and 242 ATMs compared to
2,695 full-time equivalent employees, 118 offices, and 215 ATMs at December 31,
1994. As expansion continues to improve revenue growth, the Company is
continuing its effort to reduce the cost structure and improve efficiency.
INCOME TAXES
The Company's income taxes increased 29.1% to $10,749,000 for the second
quarter of 1995 compared to $8,325,000 for the second quarter of 1994, and
$7,823,000 for the first quarter of 1995. The Company's income taxes increased
29.8% to $18,572,000 for the first six months of 1995 compared to $14,303,000
for the first six months of 1994, primarily due to the 27.7% increase in
before-tax income. The Company's effective tax rate increased slightly to
33.7% for the first six months of 1995 from 33.1% for the first six months of
1994.
ANALYSIS OF FINANCIAL CONDITION
EARNING ASSETS
Average earning assets decreased to $4,887.9 million in the six months ended
June 30, 1995 compared to $5,009.2 million in the six months ended June 30,
1994. Earning assets comprised 91.0% of total average assets for the first six
months of 1995, compared with 91.8% for the first six months of 1994.
Average money market investments, consisting of interest-bearing deposits,
federal funds sold and security resell agreements decreased 15.2% to $823.7
million in the first six months of 1995 compared to $971.7 million in the first
six months of 1994.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
During the first six months of 1995, average securities increased 6.8% to
$1,587.5 million compared to $1,485.9 million in the first six months of 1994.
Average held to maturity taxable securities increased 30.2%, held to maturity
nontaxable securities increased 8.6%, available for sale securities increased
1.1% and trading account securities decreased 48.7% compared with the first six
months of 1994.
Average net loans and leases decreased 2.9% to $2,476.7 million in the first
six months of 1995 compared to $2,551.5 million in the first six months of
1994, representing 50.7% of earning assets in the first six months of 1995
compared to 50.9% in the first six months of 1994.
INVESTMENT SECURITIES
The following table presents the Company's investment securities at June 30,
1995, December 31, 1994 and June 30, 1994.
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1995 1994 1994
---------- -------------- ----------
(In thousands) Amortized Market Amortized Market Amortized Market
cost value cost value cost value
--------- ------- --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Held to maturity
U.S. government agencies and
corporations:
Small Business Administration
loan-backed securities $ 469,298 $ 472,406 $ 460,163 $ 459,313 $ 411,448 $ 415,249
Other agency securities 350,869 348,825 271,440 262,144 212,419 208,627
States and political subdivisions 264,329 268,569 243,225 242,754 211,842 211,102
---------- ---------- --------- --------- --------- ---------
1,084,496 1,089,800 974,828 964,211 835,709 834,978
Mortgage-backed securities 55,341 55,773 56,079 54,587 62,366 62,232
---------- ---------- ---------- ---------- ---------- ---------
$1,139,837 $1,145,573 $1,030,907 $1,018,798 $ 898,075 $ 897,210
---------- ---------- ---------- ---------- ---------- ----------
Available for sale
U.S. Treasury securities $ 41,881 $ 41,737 $ 48,269 $ 47,177 $ 60,071 $ 59,499
U.S. government agencies 99,764 98,713 33,304 33,304 30,612 30,611
---------- ---------- ---------- --------- --------- ----------
141,645 140,450 81,573 80,481 90,683 90,110
---------- ---------- ---------- --------- --------- ----------
Mortgage-backed securities 49,781 49,734 55,560 54,334 48,691 48,496
Equity securities: ---------- ---------- ---------- --------- --------- ----------
Mutual funds:
Accessor Funds, Inc. 118,863 117,525 118,803 111,529 128,215 123,322
Other 548 548 534 534 291 291
Stock:
Federal Home Loan Bank 69,511 69,511 65,861 65,861 75,520 75,520
Other 3,167 3,281 2,785 2,839 2,550 2,626
--------- --------- --------- --------- --------- ---------
192,089 190,865 187,983 180,763 206,576 201,759
--------- -------- --------- --------- --------- ---------
$ 383,515 $ 381,049 $ 325,116 $ 315,578 $ 345,950 $ 340,365
--------- -------- --------- --------- --------- ---------
Total $1,523,352 $1,526,622 $1,356,023 $1,334,376 $1,244,025 $1,237,575
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
LOANS
The Company has structured its organization to separate the lending function
from the credit administration function to strengthen the control and
independent evaluation of credit activities. Loan policies and procedures
provide the Company with a framework for consistent underwriting and a basis for
sound credit decisions. In addition, the Company has well-defined standards for
grading its loan portfolio, and management utilizes the comprehensive loan
grading system to determine risk potential in the portfolio. Another aspect of
the Company's credit risk management strategy is the diversification of the loan
portfolio. The Company has a well-diversified loan portfolio with no
significant exposure to highly leveraged transactions and has no foreign credits
in its loan portfolio.
The table below sets forth the amount of loans outstanding by type at June 30,
1995 and December 31, 1994 and June 30, 1994.
<TABLE>
<CAPTION>
(In thousands)
June 30, December 31, June 30,
Types 1995 1994 1994
------ ---------- ------------- ----------
<S> <C> <C> <C>
Loans held for sale $ 110,768 $ 108,649 $ 190,198
Commercial, financial, and 641,194 495,647 532,890
Real estate:
Construction 210,428 218,244 191,008
Other 1,155,083 1,062,423 1,182,857
Consumer 426,343 391,033 447,782
Lease financing 125,820 129,547 126,711
Other receivables 8,432 10,509 13,302
---------- ---------- ----------
Total loans $2,678,068 $2,416,052 $2,684,748
========== ========== ==========
</TABLE>
Loans held for sale at June 30, 1995 increased 2.0% from year-end 1994. All
other loans, net of unearned income and fees increased 11.3% to $2,541.0 million
at June 30, 1995, compared to $2,282.6 million at December 31, 1994. Commercial
loans, other real estate-secured loans and consumer loans increased from year
end 29.4%, 8.7% and 9.0%, respectively, as real estate construction loans, lease
financing and other receivables decreased 3.6%, 2.9% and 19.8%, respectively.
Within the other real estate-secured loan portfolio, 1-4 family residential
loans decreased 5.3%, to $428.0 million, home equity credit line loans increased
55.1% to $62.1 million and all other real estate loans increased 16.6%, to
$665.0 million. During the first six months of 1995, $92.5 million home equity
credit line loans were sold from the real estate portfolio and $65.5 million of
auto loans and $71.3 million of credit card receivables were sold from the
consumer loan portfolio.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
RISK ELEMENTS
The Company's nonperforming assets, which include nonaccruing loans,
restructured loans and other real estate owned and other nonperforming assets,
were $14,527,000 at June 30, 1995, down 23.3% from $18,943,000 at December 31,
1994, and down 32.9% from $21,658,000 at June 30, 1994. Such nonperforming
assets as a percentage of net loans and leases, other real estate owned and
other nonperforming assets were .55%, .79% and .81% at June 30, 1995, December
31, 1994, and June 30, 1994, respectively.
Accruing loans past due 90 days or more totaled $2,688,000 at June 30, 1995,
down 11.6% from $3,041,000 at December 31, 1994, and up 40.7% from $1,910,000 at
June 30, 1994.
No loans were considered potential problem loans at June 30, 1995 and December
31, 1994 compared to one loan in the amount of $2,986,000 at June 30, 1994.
Potential problem loans are defined as loans presently current by their terms,
but about which management has serious doubt as to the future ability of the
borrower to comply with present repayment terms and which may result in the
reporting of the loans as nonperforming assets.
The following table sets forth the nonperforming assets at June 30, 1995,
December 31, 1994, and June 30, 1994.
<TABLE>
<CAPTION>
June 30, December 31, June 30,
(In thousands) 1995 1994 1994
-------- ------------ ---------
<S> <C> <C> <C>
Nonaccrual loans $10,981 $13,635 $15,521
Restructured loans 256 567 1,210
Other real estate owned and other
nonperforming assets 3,290 4,741 4,927
------- ------- -------
Total $14,527 $18,943 $21,658
======= ======= =======
% of net loans and leases*, other real estate
owned and other nonperforming assets .55% .79% .81%
Accruing loans past due 90 days or more $ 2,688 $ 3,041 $ 1,910
======= ========== =======
.10% .13% .07%
% of net loans and leases*
*Includes loans held for sale.
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
In analyzing the adequacy of the allowance for loan and lease losses, management
utilizes a comprehensive loan grading system to determine risk potential in the
portfolio, and considers the results of independent internal and external credit
review, historical charge-off experience, and changes in the composition and
volume of the portfolio. Other factors, such as general economic conditions and
collateral values, are also considered. Larger problem credits are individually
evaluated to determine appropriate reserve allocations. Additions to the
allowance are based upon the resulting risk profile of the portfolio developed
through the evaluation of the above factors.
The following table shows the changes in the allowance for loan losses and a
summary of loan loss experience.
<TABLE>
<CAPTION>
Twelve Months
Six Months Ended Ended
(In thousands) June 30, December 31,
------------------ --------------
1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
Average loans* and leases outstanding
(net of unearned income) $2,476,726 $2,551,525 $2,574,995
=========== ============ ===========
Allowance for possible losses:
Balance at beginning of the period $ 67,018 $ 68,461 $ 68,461
Allowance of companies acquired 249 1,308 1,308
Loans and leases charged-off:
Loans held for sale - - -
Commercial, financial and agricultural (422) (2,274) (5,158)
Real estate (128) (371) (573)
Consumer (3,411) (2,029) (4,756)
Lease financing (5) (709) (1,174)
Other receivables - - -
--------- --------- ----------
Total (3,966) (5,383) (11,661)
Recoveries: --------- --------- -----------
Loans held for sale - - -
Commercial, financial and agricultural 1,291 1,281 2,180
Real estate 190 123 676
Consumer 1,249 2,305 3,732
Lease financing 272 129 141
Other receivables - - -
--------- --------- -----------
Total 3,002 3,838 6,729
--------- --------- -----------
Net loan and lease (charge-offs) recoveries (964) (1,545) (4,932)
Provision charged against earnings 1,450 757 2,181
-------- --------- -----------
Balance at end of the period $ 67,753 $ 68,981 $ 67,018
=========== ========== ==========
*Includes loans held for sale
Ratio of net charge-offs to
average loans and leases .04% .06% .19%
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
The allowance for loan losses as a percentage of net loans and leases was 2.56%
at June 30, 1995, compared to 2.80% at December 31, 1994 and 2.59% at June 30,
1994. The allowance, as a percentage of nonaccrual loans and accruing loans
past due 90 days or more was 495.7% at June 30, 1995, compared to 401.9% at
December 31, 1994 and 395.7% at June 30, 1994. The allowance, as a percentage
of nonaccrual loans and restructured loans was 602.9% at June 30, 1995,
compared to 471.9% at December 31, 1994 and 412.3% at June 30, 1994.
Included in the allowance for loan losses is an amount for unused loan
commitments and standby letters of credit which at June 30, 1995, December 31,
1994, and June 30, 1994, amounted to $5,332,000, $3,674,000 and $3,961,000,
respectively. Unused loan commitments and standby letters of credit at
June 30, 1995, December 31, 1994, and June 30, 1994, amounted to $1,374.7
million, $1,231.2 million and $1,150.8 million, respectively.
DEPOSITS
Average total deposits of $3,725.2 million for the first six months of 1995
increased 5.6% over the $3,526.4 million for the first six months of 1994, with
average demand deposits decreasing 4.1%. Average savings deposits, money
market deposits, and time deposits under $100,000, for the first six months of
1995 increased 1.6%, 9.8% and 8.7% respectively, from the first six months of
1994. Average time deposits over $100,000 increased 6.8% and foreign deposits
increased 47.9%, during the first six months of 1995, compared with the same
period one year earlier.
Total deposits increased 5.0% to $3,890.2 million at June 30, 1995, compared to
$3,706.0 million at December 31, 1994. Comparing June 30, 1995 to December 31,
1994, demand deposits, savings and money market deposits, and time deposits
under $100,000 increased .6%, 3.6% and 25.9%, respectively, while time deposits
over $100,000 decreased 14.7% and foreign deposits decreased 7.2%.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Average net loans and leases were 66.5% of average total deposits for the six
months ended June 30, 1995 compared to 72.4% for the six months ended June 30,
1994. Liquidity is primarily provided by the regularly scheduled maturities of
the Company's investment and loan portfolios. In addition, the Company's
liquidity is enhanced by the fact that cash, money market securities and liquid
investments, net of "short-term purchased" liabilities and wholesale deposits,
totaled $1,387.7 million or 37.9% of core deposits at June 30, 1995, compared
to $1,423.6 million or 41.3% of core deposits at December 31, 1994, and
$1,116.1 million or 32.7% of core deposits at June 30, 1994.
The Company's core deposits, consisting of demand, savings and money market
deposits and time deposits under $100,000, constituted 94.1% of total deposits
at June 30, 1995 compared to 93.0% at December 31, 1994 and 94.8% at June 30,
1994.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
Maturing balances in loan portfolios provide flexibility in managing cash
flows. Maturity management of those funds is an important source of medium-
to long-term liquidity. The Company's ability to raise funds in the capital
markets through the "securitization" process and by debt issuances allows the
Company to take advantage of market opportunities to meet funding needs at
reasonable cost. The Company manages its liquidity position in order to assure
its ability to meet maturing obligations.
The Company, through the management of interest rate "maturities" and the use
of off-balance sheet arrangements such as interest rate caps, floors, and
interest rate exchange contract agreements, attempts to structure portfolios
in such a way as to minimize the effects of fluctuating interest rate levels
on net interest income.
Considering Zions Bancorporation independent from its subsidiaries (Parent
Company), the Parent Company's cash requirements consist primarily of principal
and interest payments on its borrowings, dividend payments to shareholders, and
cash operating expenses and income taxes. The Parent Company's cash needs are
routinely satisfied through payments by subsidiaries of dividends, management
and other fees, principal and interest payments on subsidiary borrowings from
the parent Company, and proportionate shares of income taxes.
CAPITAL RESOURCES AND DIVIDENDS
During the second quarter of 1995, the Company repurchased and retired 349,805
shares of its common stock at a cost of $17,125,000.
Total shareholders' equity at June 30, 1995 was $392.3 million, an increase of
7.2% over the $365.8 million at December 31, 1994, and an increase of 14.8%
over the $341.8 million at June 30, 1994. The ratio of average equity to
average assets for the first six months of 1995 was 7.10%, compared to 6.00%,
for the same period in 1994. At June 30, 1995, the Company's Tier I risk-
based capital ratio was 11.40%, compared to 11.81% at December 31, 1994 and
10.61% at June 30, 1994. At June 30, 1995, the Company's total risk-based
capital ratio was 14.42%, compared to 14.96% at December 31, 1994 and 13.69% at
June 30, 1994. The Company's leverage ratio as of June 30, 1995 was 6.22%,
compared to 6.24% at December 31, 1994 and 5.62% at June 30, 1994.
Dividends declared per common share for the second quarter of 1995 of $.35
increased 25.0% compared to $.28 for the second quarter of 1994. Dividends
declared per common share of $.65 for the first six months of 1995 increased
16.1% compared to $.56 for the first six months of 1994. The cash dividend
payout to net income applicable to common shares for the first six months of
1995 was 25.9%, compared to 29.6% for the first six months of 1994.
MERGERS AND ACQUISITIONS
At the close of business June 5, 1995, the purchase transaction of Zions
Bancorporation and First Western Bancorporation and it's banking subsidiary,
First Western National Bank, was consummated at a purchase price of $10.7
million, paid through the exchange of Zions Bancorporation common stock for
First Western Bancorporation stock and the minority interest shares of First
Western National Bank. First Western National Bank was merged into Zions
Bancorporation's wholly owned subsidiary, Zions First National Bank providing
expanded banking services in Moab, Blanding and Monticello, Utah.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The following is a summary of matters submitted to vote at the Annual Meeting
of Shareholders of Zions Bancorporation:
a) The Annual Meeting of Shareholders was held on April 28, 1995.
b) Election of Directors
Proxies were solicited by Zions Bancorporation's management
pursuant to Regulation 14A under the Securities Exchange
Act of 1934. There was no solicitation in opposition to
management's nominees as listed in the proxy statement, and
all of such nominees were elected pursuant to the vote of
the shareholders as indicated in the proxy statement.
c) The matters voted upon and the results of the voting were as
follows:
(1) Election of Directors
<TABLE>
<S> <C> <C>
Withhold
For Authority
--- ----------
Roger B. Porter 12,076,307 83,448
L. E. Simmons 12,082,199 77,556
I. J. Wagner 12,082,408 77,347
</TABLE>
(2) Amendments to the Zions
Bancorporation Key Employee
Incentive Stock Option Plan
Amendments to the Zions Bancorporation Key Employee
Incentive Stock Option Plan to increase the number
of shares issuable under the Plan from 506,000 to
806,000 and to extend the term of the Plan to April
28, 2005 were approved.
For Against Abstain
--- ------- -------
11,668,760 381,255 109,740
(3) Appointment of Independent Accountants
The selection of KPMG Peat Marwick LLP as the firm of
independent certified public accountants to audit the
books and accounts of Zions Bancorporation and its
subsidiaries for the year ending December 31, 1995
was ratified.
For Against Abstain
--- ------- -------
12,090,072 23,269 46,414
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 10.1 Zions Utah Bancorporation Key Employee
Incentive Stock Option Plan
Exhibit 10.2 Amendment No. 1 to Zions Bancorporation
(formerly Zions Utah Bancorporation) Key
Employee Incentive Stock Option Plan
Exhibit 10.3 Amendment No. 2 to Zions Bancorporation
Key Employee Incentive Stock Option Plan
Exhibit 27 Article 9 Financial Schedules for Form 10-Q
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ending June 30, 1995.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZIONS BANCORPORATION
/s/ Harris H. Simmons
---------------------------------------
Harris H. Simmons, President and
Chief Executive Officer
/s/ Gary L. Anderson
---------------------------------------
Gary L. Anderson, Senior Vice President
and Chief Financial Officer
Dated: August 10, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 AND RELATED UNAUDITED
CONSOLIDATED STAEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995
INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 325,447
<INT-BEARING-DEPOSITS> 26,457
<FED-FUNDS-SOLD> 901,189
<TRADING-ASSETS> 73,317
<INVESTMENTS-HELD-FOR-SALE> 381,049
<INVESTMENTS-CARRYING> 1,139,837
<INVESTMENTS-MARKET> 1,145,573
<LOANS> 2,651,732
<ALLOWANCE> 67,753
<TOTAL-ASSETS> 5,664,339
<DEPOSITS> 3,890,180
<SHORT-TERM> 1,159,579
<LIABILITIES-OTHER> 70,275
<LONG-TERM> 152,020
<COMMON> 74,336
0
0
<OTHER-SE> 317,949
<TOTAL-LIABILITIES-AND-EQUITY> 5,664,339
<INTEREST-LOAN> 125,150
<INTEREST-INVEST> 78,065
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 203,215
<INTEREST-DEPOSIT> 60,566
<INTEREST-EXPENSE> 94,117
<INTEREST-INCOME-NET> 109,098
<LOAN-LOSSES> 1,450
<SECURITIES-GAINS> ( 53)
<EXPENSE-OTHER> 90,700
<INCOME-PRETAX> 55,094
<INCOME-PRE-EXTRAORDINARY> 36,522
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,522
<EPS-PRIMARY> 2.48
<EPS-DILUTED> 2.48
<YIELD-ACTUAL> 4.50
<LOANS-NON> 10,981
<LOANS-PAST> 2,688
<LOANS-TROUBLED> 256
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 67,018
<CHARGE-OFFS> 3,966
<RECOVERIES> 3,002
<ALLOWANCE-CLOSE> 67,753
<ALLOWANCE-DOMESTIC> 10,975
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 56,778
</TABLE>
EXHIBIT 10.1
ZIONS UTAH BANCORPORATION
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
ARTICLE I
Purpose and Scope of the Plan
1.1 Purpose
-------
The purpose of the Plan is to promote the long-term success of Zions Utah
Bancorporation by providing financial incentives to key employees who are
in positions to make significant contributions toward such success. The
Plan is designed to attract individuals of outstanding ability to
employment with Zions Utah Bancorporation and to encourage key employees
to acquire a proprietary interest in Zions Utah Bancorporation, to
continue employment with Zions Utah Bancorporation, and to render superior
performance during such employment.
1.2 Definitions
-----------
Unless the context clearly indicates otherwise, the following terms have
the meanings set forth below.
"Board of Directors" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1954, as amended.
"Committee" means the Executive Compensation Committee of the Board of
Directors, which committee shall be composed of at least three directors
who have not been eligible to receive an award under the Plan at any time
within a period of one year immediately preceding the date of their
appointment to such committee.
"Common Stock" means the common stock of the Company, without par value,
or such other class of shares or other securities as to which the
provisions of the Plan may be applicable.
"Company" means Zions Utah Bancorporation.
"Fair Market Value" of a share of Common Stock on any particular date is
the mean between the closing dealer "bid" and "ask" prices of a share of
Common Stock as quoted by NASDAQ. If no "bid" and "ask" prices are
quoted for the date of grant, the Fair Market Value of a share of Common
Stock on such date shall be determine with reference to such prices of a
share of Common Stock on the first preceding date on which such prices
were quoted. If Common Stock is listed on an established stock exchange
or exchanges, the Fair Market Value shall be deemed to be the highest
closing price of Common stock on such stock exchange or exchanges on the
day the option is granted or, if no sale of Common Stock has been made on
any stock exchange on that day, the Fair Market Value shall be determined
by reference to
<PAGE>
such price for the next preceding day on which a sale occurred. In the
event that Common stock is not traded on an established stock exchange,
and no closing dealer "bid" and "ask" prices are available, then the
purchase price shall be 100 percent of the Fair Market Value of one share
of Common Stock on the day the option is granted, as determined on the
Committee in good faith.
"Grant Date," as used with respect to a particular Option, means the date
as of which such option is granted by the Committee pursuant to the Plan.
"Grantee" means the individual to who an Option is granted by the
Committee pursuant to the Plan.
"Incentive Stock Option" means an option, granted by the Committee
pursuant to Article II, to purchase shares of Common Stock in a manner
which qualifies as an Incentive Stock Option as described in Section 422A
of the Code of 1954, as amended.
"Option Period" means the period beginning on the Grant Date and ending
the day specified in the agreement for each option but in no event longer
than the tenth anniversary of the Grant Date.
"Plan" means the Zions Utah Bancorporation Key Employee Incentive Stock
Option Plan as set forth herein and as may be amended from time to time.
"Retirement," as applied to a Grantee, means the Grantee's termination of
employment with Zions Utah Bancorporation at a time when the Grantee
receives an immediately payable retirement benefit under the Zions Utah
Bancorporation Retirement Plan or under any other retirement plan that is
maintained by a subsidiary of Zions Utah Bancorporation and that is
determined by the Committee to be the functional equivalent of the
Company's Retirement Plan.
"Zions" means the Company, any stock corporation of which a majority of
the voting common or capital stock is owned directly or indirectly by the
Company, and any other company designated as such by the Committee, but
only during the period of such ownership or designation.
"Total and permanent Disability," as applied to a Grantee, means that the
Grantee; (i) has established to the satisfaction of the Company that the
Grantee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months (all within the meaning
of Section 105(d) (4) of the Code); and (ii) has satisfied any requirement
imposed by the Committee.
<PAGE>
1.3 Aggregate Limitation
--------------------
(a) The aggregate number of shares of Common Stock with respect to which
Incentive Stock Options may be granted shall not exceed 256,000
shares of Common Stock, subject to adjustment in accordance with
Section 3.l.
(b) Any shares of Common Stock to be delivered by the Company upon the
exercise of Incentive Stock Options shall be issued from the
Company's authorized but unissued shares of Common Stock or from
Treasury Stock acquired by the Company at the discretion of the
Board of Directors.
(c) In the event that any Incentive Stock Option lapses or otherwise
terminates prior to being fully exercised, any share of Common Stock
allocable to the unexercised portion of such option may again be
made subject to an Incentive Stock Option.
1.4 Administration of the Plan
--------------------------
(a) The Plan shall be administered by the Committee which shall have the
authority:
(i) to determine key employees of Zions and its subsidiaries
to whom, and the times at which, Incentive Stock Options
shall be granted and the number of shares of Common
stock to be subject to each such option taking into
account the nature of the services rendered by the
particular employee, the employee's potential
contribution to the long-term success of the Corporation
and/or any of its subsidiaries and such other factors as
the Committee in its discretion shall deem relevant;
(ii) to interpret the Plan and to establish rules and
regulations relating to it;
(iii) to prescribe the terms and provisions of the agreements
for the grant of Incentive Stock Options; and
(iv) to make all other determinations necessary or advisable
in order to administer the Plan.
(b) All decisions of the Committee upon questions concerning the Plan or
any Incentive Stock Option shall be conclusive.
1.5 Eligibility for Awards
----------------------
The Committee shall designate from time to time the key employees of Zions
and its subsidiaries who are to be granted Incentive Stock Options. In no
event may a member of the Committee or any nonemployee Director be granted
an Incentive Stock Option.
<PAGE>
1.6 Effective Date and Duration of Plan
-----------------------------------
The Plan shall become effective as of December 28, 1981, upon its adoption
by the Board of Directors; provided, that any grant of Incentive Stock
Options is subject to the approval of the Plan by the shareholders of the
Company within twelve months of adoption by the Board of Directors.
Unless previously terminated by the Board of Directors, the Plan shall
terminate on the tenth anniversary of the effective date.
ARTICLE II
Stock Options
2.1. Grant of Incentive Stock Options
--------------------------------
The Committee may from time to time, subject to the provisions of the
Plan, grant Incentive Stock Options to key employees to purchase shares of
Common Stock allotted in accordance with Section 1.3.
2.2 Option Requirements
-------------------
(a) All Incentive Stock Options are intended to qualify as an "incentive
stock options" within the meaning of Subsection (b) of Section 422A
of the Code.
(b) An Incentive Stock Option shall be evidenced by a written instrument
specifying the number of shares of Common Stock that may be
purchased by its exercise, the Option Period and any other such
terms and conditions consistent with the Plan as the Committee shall
determine.
(c) An Incentive Stock Option shall not be granted on or after the tenth
anniversary of the date upon which the Plan was adopted by the Board
of Directors.
(d) An Incentive Stock Option shall not be granted to an individual who,
on the date of grant, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of Zions or
any subsidiary corporation.
(e) An Incentive Stock Option shall not be exercisable after the
expiration of the Option Period.
(f) An Incentive Stock Option shall not be exercisable while there is
outstanding (within meaning of Section 422A (c) (7) of the Code) any
other "incentive stock option," within the meaning of Subsection (b)
of Section 422A of the Code, which was granted before the granting
of the Incentive Stock Option to the Grantee to purchase stock in
Zions Utah Bancorporation or in a corporation which, on the Grant
Date, is a parent or subsidiary corporation of Zions Utah
Bancorporation or is a predecessor corporation of any of such
corporations.
<PAGE>
(g) The Committee may provide, in the instrument evidencing an Incentive
Stock option, for the lapse of the Incentive Stock option, prior to
the expiration of the Option Period, upon the occurrence of any
event specified by the Committee.
(h) The option price per share of Common stock shall be equal to the
Fair Market Value of a share of Common Stock on the Grant Date.
(i) The aggregate Fair Market Value, determined on the Grant Date, of
the shares of Common Stock with respect to which any Grantee may be
granted one or more Incentive Stock Options under the Plan (within
the meaning of Subsection (b) of Section 422A of the Code) in any
calendar year shall not exceed $100,000.00 plus any "unused limit
carryover" to such year, determined in accordance with Section 422A
(c) (4) of the Code.
(j) An Incentive stock Option shall not be transferable other than by
will or the laws of descent and distribution and, during the
Grantee's lifetime, shall be exercisable only by the Grantee;
except, that the Committee may permit:
(i) exercise, during Grantee's lifetime, by Grantee's
guardian or legal representative; and
(ii) transfer, upon Grantee's death, to beneficiaries
designated by Grantee in a manner authorized by the
Company; provided that the Committee determines that
such exercise and such transfer are consonant with
requirements for exemption from Section 16 (b) of the
Securities Exchange act of 1934, as amended, and with
the requirements of Section 422A (b) (5) of the Code.
(k) In the event of retirement, the option to exercise shall lapse at
the earlier of the Option Period of the Incentive Stock Option or
three months after retirement. In the event of voluntary
termination of employment at the election of the employee or
termination for cause at the election of the Company, all Incentive
Stock Options shall lapse forthwith. In the event of termination
due to death or total and permanent disability, any Incentive Stock
Options shall lapse at the earlier of the appropriate Option Period
or one year after termination due to such causes.
(l) A person electing to exercise an Incentive stock Option shall give
written notice, in such form as the Committee may require, of such
election to the Company and shall tender to the Company the full
specified option purchase price of the shares of Common stock for
which the election is made. Payment of the purchase price shall be
made in cash or in such other form as the Board of Directors may
approve, including shares of Common stock of the Company valued at
the Fair Market Value on the date of exercise of the Option.
<PAGE>
ARTICLE III
General Provisions
3.1 Adjustment Provisions
---------------------
(a) If:
(i) any recapitalization, reclassification, split-up or
consolidation of Common Stock is effected;
(ii) the outstanding shares of Common Stock are exchanged, in
connection with a merger or consolidation of the Company
or a sale by the Company of all or a part of its assets,
for a different number or class of shares of stock or
other securities of the Company or for shares of the
stock or other securities of any other corporation;
(iii) new, different or additional shares or other securities
of the Company or of another corporation are received by
the holders of Common Stock; or
(iv) any distribution is made to the holders of Common Stock
other than a cash dividend; then the Committee shall
make appropriate adjustments to:
(A) The number and class of shares or other securities
that may be issued or transferred pursuant to
Incentive stock Options, and
(B) the purchase price to be paid per share under
outstanding options.
(b) Upon the dissolution or liquidation of the Company, the Plan
shall terminate, and all options previously granted shall
lapse on the date of such dissolution or liquidation of the
Company.
(c) Adjustments under Subsection (a) shall be made according to
the sole discretion of the Committee, and its decision shall
be binding and conclusive.
(d) Except as provided in subparagraphs (a) and (b), the issuance
by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class shall not affect
the Incentive stock Options.
<PAGE>
3.2 Additional Conditions
---------------------
Any shares of Common stock issued or transferred under any provision of
the Plan may be issued or transferred subject to such conditions, in
addition to those specifically provided in the Plan, as the Committee or
Company may impose.
3.3 No Right to Employment
----------------------
Nothing in the Plan or in any instrument executed pursuant thereto shall
confer upon any employee any right to continue in the employ of Zions Utah
Bancorporation or any of its subsidiaries or shall affect the right of
Zions Utah Bancorporation or a subsidiary thereof to terminate the
employment of any employee, with or without cause.
3.4 Legal Restrictions
------------------
The Company will not be obligated to issue shares of Common Stock or make
any payment if counsel to the Company determines that such issuance or
payment would violate any law or regulation of any governmental authority
or any agreement between the Company and any national securities exchange
upon which the Common Stock may be listed. In connection with any stock
issuance or transfer, the person acquiring the shares shall, if requested
by the Company, give assurances satisfactory to counsel to the Company
regarding such matters as the Company may deem desirable to assure
compliance with all legal requirements. The Company shall in no event be
obliged to take any action in order to cause the exercise of any Incentive
Stock Option.
3.5 No Rights as Shareholders
-------------------------
No Grantee, and no beneficiary or other person claiming through a Grantee,
shall have any interest in any shares of Common stock allocated for the
purposes of the Plan or subject to any Incentive Stock Option until such
shares of Common Stock shall have been transferred to the Grantee or such
person. Furthermore, the existence of the Incentive Stock Options shall
not affect: the right or power of the Company or its stockholders to make
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; any issue of bonds,
debentures, preferred or prior preference stocks affecting the Common
Stock of the Company or the rights thereof; the dissolution or liquidation
of the Company, or sale or transfer of any part of its assets or business;
or any other corporate act, whether of a similar character or otherwise.
3.6 Withholding Taxes
-----------------
The Company may require Grantee, as a condition of exercise of an
Incentive Stock Option, to pay or reimburse any taxes which it determines
it is required to withhold in connection with the grant or exercise of the
Incentive Stock Option.
<PAGE>
3.7 Choice of Law
-------------
The validity, interpretation and administration of the Plan and of any
rules, regulations, determinations or decisions made thereunder, and the
rights of any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in accordance with
the laws of the State of Utah. Without limiting the generality of the
foregoing, the period within which any action in connection with the Plan
must be commenced shall be governed by the Laws of the State of Utah;
without regard to the place where the act or omission complained of took
place, the residence of any party to such action or the place where the
action may be brought.
3.8 Amendment, Suspension and Termination of Plan
---------------------------------------------
The Board of Directors may at any time terminate, suspend or amend the
Plan; however, no such amendment shall, without the approval of the
shareholders of the Company:
(a) increase the aggregate number of shares which may be issued in
connection with Incentive Stock Options;
(b) change the Incentive stock Option exercise price;
(c) increase the maximum period during which Incentive Stock Options may
be exercised;
(d) extend the effective period of the Plan; or
(e) materially modify the requirements as to eligibility for
participation in the Plan.
EXHIBIT 10.2
ZIONS BANCORPORATION
AMENDMENT NO. 1 TO
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
The Key Employee Incentive Stock Option Plan (the "Plan") maintained by
Zions Bancorporation under the name Zions Utah Bancorporation Key Employee
Incentive Stock Option Plan, as adopted on December 28, 1981 by the Board of
Directors of the Company and approved on April 28, 1982 by the shareholders of
the Company, shall be and hereby is amended as follows:
1. All references in the Plan to Zions Utah Bancorporation shall be deemed to
refer to Zions Bancorporation, and the Plan may hereinafter be referred to
as the Zions Bancorporation Key Employee Incentive Stock Option Plan.
2. Paragraph 1.3(a) of the Plan shall be and hereby is amended to read in its
entirety, as follows:
(a) The aggregate number of shares of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan shall not
exceed 506,000 shares of Common Stock, subject to adjustment in
accordance with Section 3.1.
3. Paragraph 1.6 of the Plan shall be and hereby is amended to read in its
entirety as follows:
The Plan shall become effective as of December 28, 1981, upon
its adoption by the Board of Directors; provided, that any grant of
Incentive Stock Options is subject to the approval of the Plan by the
shareholders of the Company within twelve months of adoption by the Board
of Directors. Unless previously terminated by the Board of Directors, the
Plan shall terminate on the 20th anniversary of the effective date.
4. Paragraph 2.2 (f) of the Plan shall be deleted in its entirety and shall
be of no further force or effect whatsoever.
5. These amendments shall not in any way be deemed to cause or effect an
amendment of any Incentive Stock Options (as defined in the Plan)
outstanding as of the date hereof.
EXHIBIT 10.3
ZIONS BANCORPORATION
AMENDMENT NO. 2 TO THE
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
The Key Employee Incentive Stock Option Plan (the "Plan"), maintained by
Zions Bancorporation under the name Zions Bancorporation Key Employee Incentive
Stock Option Plan, as adopted on December 28, 1981 by the Board of Directors of
the Company and approved on April 28, 1982 by the shareholders of the Company,
shall be and hereby is amended as follows:
1. Paragraph 1.3(a) of the Plan shall be and hereby is amended to read in its
entirety, as follows:
(a) The aggregate number of share of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan shall not
exceed 806,000 shares of Common Stock, subject to adjustment in
accordance with Section 3.1.
2. Paragraph 1.6 of the Plan shall be and hereby is amended to read in its
entirety as follows:
The Plan shall be come effective as of December 28, 1981, upon
its adoption by the Board of Directors, provide, that any grant of
Incentive Stock Options is subject to the approval of the Plan by the
shareholders of the Company within twelve months of adoption by the Board
of Directors. Unless previously terminated by the Board of Directors, the
Plan shall terminate April 28, 2005.
These amendments shall not in any way be deemed to cause or effect an
amendment of any Incentive Stock Options (as defined in the Plan) outstanding as
of the date hereof.
