<PAGE> 1
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 September 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.
<TABLE>
<S> <C>
Common Stock, without par value, outstanding at November 1, 1995 14,539,905 shares
</TABLE>
1
<PAGE> 2
ZIONS BANCORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
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 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 21
</TABLE>
2
<PAGE> 3
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
(In thousands) 1995 1994 1994
------------- ------------ -------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 342,567 $ 316,943 $ 309,173
Money market investments:
Interest-bearing deposits 29,866 19,704 17,229
Federal funds sold and security resell agreements 729,632 383,742 649,784
Securities:
Held to maturity at cost (approximate market value
$1,164,937, $1,018,798 and $969,646)
Taxable 931,406 828,626 775,726
Nontaxable 224,322 202,281 198,960
Available for sale at market 404,862 315,578 327,320
Trading account securities at market 155,760 316,948 230,720
----------- ----------- -----------
1,716,350 1,663,433 1,532,726
Loans:
Loans held for sale at cost, which approximates market 128,859 108,649 146,661
Loans, leases and other receivables 2,579,617 2,307,403 2,447,748
----------- ----------- -----------
2,708,476 2,416,052 2,594,409
Less:
Unearned income and fees, net of related costs 28,991 24,774 19,765
Allowance for loan losses 68,309 67,018 66,847
----------- ----------- -----------
2,611,176 2,324,260 2,507,797
Premises and equipment, at cost, less accumulated depreciation 81,196 74,673 74,072
Amounts paid in excess of net assets of acquired businesses 22,143 18,732 19,025
Other real estate owned 854 1,562 2,086
Other assets 133,886 131,046 116,490
----------- ----------- -----------
Total assets $ 5,667,670 $ 4,934,095 $ 5,228,382
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 916,942 $ 885,833 $ 840,184
Interest-bearing:
Savings and money market 2,242,923 2,048,715 2,081,142
Time under $100,000 660,850 513,841 512,076
Time over $100,000 137,677 123,455 102,512
Foreign 136,622 134,132 92,359
----------- ----------- -----------
4,095,014 3,705,976 3,628,273
Securities sold, not yet purchased 132,303 81,437 275,950
Federal funds purchased and security repurchase agreements 790,371 524,538 715,767
Accrued liabilities 76,931 70,873 64,728
Federal Home Loan Bank advances and other borrowings:
Less than one year 15,469 25,748 26,770
Over one year 90,334 101,571 103,702
Long-term debt 57,282 58,182 58,862
----------- ----------- -----------
Total liabilities 5,257,704 4,568,325 4,874,052
----------- ----------- -----------
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, 14,538,587, 14,559,552
and 14,555,896 shares 73,474 79,193 79,027
Net unrealized holding gains and losses on securities available for sale (149) (5,866) (4,212)
Retained earnings 336,641 292,443 279,515
----------- ----------- -----------
Total shareholders' equity 409,966 365,770 354,330
----------- ----------- -----------
Total liabilities and shareholders' equity $ 5,667,670 $ 4,934,095 $ 5,228,382
=========== =========== ===========
</TABLE>
3
<PAGE> 4
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 63,928 $55,694 $179,915 $152,242
Interest on loans held for sale 2,422 3,196 6,730 9,594
Interest on money market investments 16,796 10,570 40,863 27,377
Interest on securities:
Held to maturity:
Taxable 16,468 10,876 48,309 28,336
Nontaxable 3,181 2,716 9,276 8,062
Available for sale 5,927 5,101 17,313 14,980
Trading account 2,301 4,489 6,977 11,117
Lease financing 2,556 2,297 7,411 7,216
-------- ------- -------- --------
Total interest income 113,579 94,939 316,794 258,924
-------- ------- -------- --------
Interest expense:
Interest on savings and money market deposits 20,968 16,027 61,130 43,819
Interest on time deposits under $100,000 9,200 4,970 23,023 15,019
Interest on time deposits over $100,000 2,043 1,116 4,803 2,844
Interest on foreign deposits 1,878 1,263 5,699 2,876
Interest on securities sold, not yet purchased 1,537 3,500 4,278 7,140
Interest on borrowed funds 20,030 16,204 50,840 41,825
-------- ------- -------- --------
Total interest expense 55,656 43,080 149,773 113,523
-------- ------- -------- --------
Net interest income 57,923 51,859 167,021 145,401
Provision for loan losses 800 440 2,250 1,197
-------- ------- -------- --------
Net interest income after provision for loan losses 57,123 51,419 164,771 144,204
-------- ------- -------- --------
Noninterest income:
Service charges on deposit accounts 7,239 5,991 21,204 17,641
Other service charges, commissions and fees 6,426 5,870 17,866 16,951
Trust income 1,006 947 3,238 3,223
Investment securities gains (losses), net 486 80 433 (254)
Trading account income 774 1,019 (2,052) 1,414
Loan sales and servicing income 5,709 2,293 17,278 9,591
Other income 2,296 3,909 4,115 6,404
-------- ------- -------- --------
Total noninterest income 23,936 20,109 62,082 54,970
-------- ------- -------- --------
Noninterest expenses:
Salaries and employee benefits 26,566 23,234 74,929 69,015
Occupancy, net 2,668 2,686 7,728 7,289
Furniture and equipment expense 3,339 2,909 9,597 8,206
Other real estate expense 6 (44) 63 7
Legal and professional services 876 1,396 2,977 3,603
Supplies 1,374 1,153 3,769 3,575
Postage 1,271 1,128 3,779 3,416
FDIC premiums (194) 1,937 3,723 5,611
Amortization of intangible assets 988 1,201 2,659 2,860
Other expenses 10,121 9,139 28,491 25,644
-------- ------- -------- --------
Total noninterest expenses 47,015 44,739 137,715 129,226
-------- ------- -------- --------
Income before income taxes 34,044 26,789 89,138 69,948
Income taxes 11,753 9,124 30,325 23,427
-------- ------- -------- --------
Net income $ 22,291 $17,665 $ 58,813 $ 46,521
======== ======= ======== ========
Weighted average common and common-equivalent shares outstanding 14,702 14,721 14,717 14,566
Net income per common share $1.52 $1.20 $4.00 $3.19
</TABLE>
4
<PAGE> 5
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 22,291 $ 17,665 $ 58,813 $ 46,521
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 800 440 2,250 1,197
Write-downs of other real estate owned 33 15 41 179
Depreciation of premises and equipment 2,747 2,412 7,785 6,657
Amortization of premium on core deposits and
other intangibles 988 1,201 2,659 2,860
Amortization of net premium/discount on
investment securities 803 1,298 2,917 4,077
Accretion of unearned income and fees, net of
related costs 2,655 121 4,123 (2,239)
Proceeds from sales of trading account securities 30,788,257 25,409,178 82,360,491 71,376,169
Increase in trading account securities (30,870,700) (25,326,082) (82,316,925) (71,508,556)
Net (gain) loss on sales of investment securities (486) (80) (433) 254
Proceeds from loans held for sale 112,309 163,724 272,704 598,840
Increase in loans held for sale (129,806) (145,346) (291,135) (531,986)
Net gain on sales of loans, leases and other assets (3,989) (3,074) (11,222) (6,488)
Net gain on sales of other real estate owned (11) (183) (89) (208)
Change in accrued income taxes 1,375 (1,350) 1,291 (1,397)
Change in accrued interest receivable (2,814) (1,386) (5,466) (5,288)
Change in other assets (1,812) (2,401) (956) (6,200)
Change in accrued interest payable 3,747 2,706 3,772 2,664
Change in accrued liabilities 1,636 1,335 1,382 (4,397)
------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities (71,977) 120,193 92,002 (27,341)
------------ ------------ ------------ ------------
Cash flows from investing activities:
Net (increase) decrease in money market investments 168,148 163,275 (353,575) (67,481)
Proceeds from sales of investment securities
held to maturity 6,950 -- 6,950 --
Proceeds from maturities of investment securities
held to maturity 90,577 36,944 141,049 104,797
Purchases of investment securities held to maturity (115,033) (115,140) (193,230) (245,966)
Proceeds from sales of investment securities
available for sale 74,929 9,097 182,692 90,030
Proceeds from maturities of investment securities
available for sale 21,143 12,905 193,370 99,737
Purchases of investment securities available for sale (117,366) (10,141) (408,163) (159,604)
Proceeds from sales of loans and leases 235,916 251,500 470,402 361,589
Net increase in loans and leases (246,099) (183,403) (717,286) (464,328)
Principal collections on leveraged leases -- -- 38 --
Proceeds from sales of premises and equipment 11 332 410 756
Purchases of premises and equipment (4,394) (3,408) (13,851) (9,221)
Proceeds from sales of other real estate owned 108 1,066 1,453 3,926
Proceeds from sales of mortgage servicing rights 494 2,654 992 2,688
Purchases of mortgage servicing rights (312) (107) (373) (530)
Proceeds from sales of other assets 133 278 492 527
Cash paid for acquisitions, net of cash received (26) -- 1,566 9,851
------------ ------------ ------------ ------------
Net cash provided by (used in) investing
activities 115,179 165,852 (687,064) (273,229)
------------ ------------ ------------ ------------
</TABLE>
5
<PAGE> 6
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Net increase in deposits 204,834 29,097 357,900 100,213
Net change in short-term funds borrowed (220,423) (265,547) 307,864 232,341
Proceeds from FHLB advances over one year -- 2,293 -- 13,401
Payments on FHLB advances over one year (4,160) (4,012) (12,344) (61,808)
Payments on long-term debt (244) (245) (900) (725)
Proceeds from issuance of common stock 119 -- 989 277
Payments to redeem common stock (1,083) -- (18,208) --
Dividends paid (5,125) (4,375) (14,615) (12,926)
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities (26,082) (242,789) 620,686 270,773
--------- --------- --------- ---------
Net increase (decrease) in cash and due from banks 17,120 43,256 25,624 (29,797)
Cash and due from banks at beginning of period 325,447 265,917 316,943 338,970
--------- --------- --------- ---------
Cash and due from banks at end of period $ 342,567 $ 309,173 $ 342,567 $ 309,173
========= ========= ========= =========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In thousands) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash paid for:
Interest $51,972 $40,808 $146,420 $112,102
Income taxes 12,494 9,297 30,033 21,898
Loans transferred to other real estate owned 343 898 576 2,306
</TABLE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Months
Nine Months Ended Ended
September 30, December 31,
----------------- -------------
(In thousands) 1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $ 292,443 $ 245,920 $ 245,920
Add:
Net income 58,813 46,521 63,827
--------- --------- ---------
351,256 292,441 309,747
Deduct cash dividends:
Preferred, paid by subsidiary to minority shareholder (29) (23) (33)
Common, per share $ 1.00 in 1995 and
$ .86 and $ 1.16 in 1994 (14,586) (12,418) (16,786)
Common dividend of NBA prior to merger -- (485) (485)
--------- --------- ---------
Balance at end of period $ 336,641 $ 279,515 $ 292,443
========= ========= =========
</TABLE>
6
<PAGE> 7
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.
During the third quarter, the Company sold securities from its held to maturity
portfolio. This was in response to the deterioration of the issuer's
creditworthiness and continued downgrading in the issuer's published credit
rating. The amortized cost of the sold securities totaled $6,602,000 and the
related realized gain amounted to $200,000. Certain amounts in the 1994
consolidated financial statements have been reclassified to conform to the 1995
presentation. Operating results for the nine months ended September 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
$3,730,000 respectively, as of January 1, 1995 and September 30, 1995. Allowance
for loan losses related to impaired loans as of January 1, 1995 and September
30, 1995 amounted to $26,000 and $29,000, respectively.
7
<PAGE> 8
ZIONS BANCORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------ ----------------------------------
(In thousands, except per share and ratio data) 1995 1994 % Change 1995 1994 % Change
---- ---- -------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Net income $ 22,291 $ 17,665 26.2% $ 58,813 $ 46,521 26.4%
PER COMMON SHARE
Net income 1.52 1.20 26.7% 4.00 3.19 25.4%
Dividends .35 .30 16.7% 1.00 .86 16.3%
Book value at September 30 28.20 24.34 15.9%
Market value at September 30 61.25 39.50 55.1%
Weighted average common and common-
equivalent shares outstanding 14,702,000 14,721,000 14,717,000 14,566,000
Common shares outstanding at September 30 14,538,587 14,555,896
BALANCES AT PERIOD END
Total assets $ 5,667,670 $ 5,228,382 8.4%
Money market investments 759,498 667,013 13.9%
Securities 1,716,350 1,532,726 12.0%
Net loans and leases 2,679,485 2,574,644 4.1%
Allowance for loan losses 68,309 66,847 2.2%
Total deposits 4,095,014 3,628,273 12.9%
Shareholders' equity 409,966 354,330 15.7%
Nonperforming assets 11,763 20,312 - 42.1%
Loans past due 90 days or more 13,724 2,912 371.3%
PERFORMANCE RATIOS
Net interest margin 4.30% 4.07% 4.50% 3.93%
Return on average assets 1.48% 1.25% 1.41% 1.13%
Return on average common equity 21.87% 20.26% 20.21% 18.65%
Common dividend payout 22.95% 24.72% 24.80% 27.74%
Nonperforming assets to net loans and leases,
other real estate owned and other
nonperforming assets at September 30 .44% .79%
CAPITAL RATIOS
Average equity to average assets 6.79% 6.15% 6.99% 6.05%
Leverage ratio at September 30 5.97% 5.74%
Tier I risk-based capital at September 30 11.31% 11.27%
Total risk-based capital at September 30 14.24% 14.41%
</TABLE>
8
<PAGE> 9
ZIONS BANCORPORATION AND SUBSIDIARIES
OPERATING RESULTS
Consolidated net income for the third quarter was $22,291,000 or $1.52 per
share, an increase of 26.2% and 26.7%, respectively, over the $17,665,000 or
$1.20 per share earned in the third quarter of 1994, and an increase of 8.6% and
9.4%, respectively, over the $20,521,000 or $1.39 per share earned in the second
quarter of 1995. The earnings strength in the third quarter of 1995 was the
result of strong revenue growth combined with good expense control. Noninterest
expense growth was moderated as a result of a reduction and rebate of FDIC
insurance premiums which resulted in a $2,131,000 decrease in FDIC premium
expense (approximately $.09 per share after tax) as compared to the third
quarter of 1994. The FDIC's Bank Insurance Fund is now fully capitalized, and
the Company expects much lower ongoing levels of FDIC insurance expense than it
has experienced over the past several years.
Consolidated net income for the first nine months of 1995 was $58,813,000 or
$4.00 per share, an increase of 26.4% and 25.4%, respectively, over the
$46,521,000 or $3.19 earned during the first nine months of 1994. This stronger
level of profitability achieved for the first nine months of 1995 included 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 and a $2,192,000 rebate of
FDIC insurance premiums.
The Company's third-quarter $4,626,000 (26.2%) increase in earnings relative to
the same period a year ago reflects a $6,064,000 (11.7%) increase in net
interest income, a $3,827,000 (19.0%) increase in noninterest income, offset by
a $360,000 (81.8%) increase in the provision for loan losses, a $2,276,000
(5.1%) increase in noninterest expenses and a $2,629,000 (28.8%) increase in
income tax expense.
The $12,292,000 (26.4%) increase in net income for the nine-month period ended
September 30, 1995, compared to the similar period in 1994, reflects a
$21,620,000 (14.9%) increase in net interest income, a $7,112,000 (12.9%)
increase in noninterest income, offset by a $1,053,000 (88.0%) increase in the
provision for loan losses, a $8,489,000 (6.6%) increase in noninterest expenses
and a $6,898,000 (29.4%) increase in income tax expense.
The annualized return on average assets for the third quarter and for the first
nine months of 1995 was 1.48% and 1.41% compared to a 1.25% and 1.13%,
respectively, in 1994, resulting in an annualized return on average common
shareholders' equity of 21.87% and 20.21% for the third quarter and for the
first nine months of 1995, compared to 20.26% and 18.65% for the same periods of
1994.
9
<PAGE> 10
ZIONS BANCORPORATION AND SUBSIDIARIES
NET INTEREST INCOME AND INTEREST RATE SPREADS
Net interest income for the third quarter of 1995, adjusted to a fully
taxable-equivalent basis, increased 11.8% to $59,286,000 from the third quarter
of 1994, and increased 3.6% from the second quarter of 1995. Net interest margin
was 4.30%, compared to 4.07% for the third quarter of 1994, and 4.56% for the
second quarter of 1995. Nine-month net interest income, on a fully
taxable-equivalent basis, was $170,996,000 in 1995, an increase of 14.9%
compared to $148,856,000 for the first nine months of 1994. Net interest margin
for the first nine months of 1995 was 4.50%, compared to 3.93% for the first
nine months of 1994.
The yield on average earning assets increased 96 basis points during the third
quarter of 1995 as compared to the third quarter of 1994, but decreased 18 basis
points from the second quarter of 1995. The average rate paid this quarter on
interest-bearing funds increased 92 basis points from the third quarter of 1994,
and increased 10 basis points from the second quarter of 1995. Comparing the
first nine months of 1995 with 1994, the yield on average earning assets
increased 151 basis points, while the cost of interest-bearing funds increased
by 116 basis points.
The spread on average interest-bearing funds for the third quarter of 1995 was
3.52%, up from the 3.48% for the third quarter of 1994 but down from the 3.80%
for the second quarter of 1995. The spread on average interest-bearing funds for
the first nine months of 1995 was 3.73% compared with 3.38% 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 nine months of 1995 was $403,000
compared to $153,000 for the first nine 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 third quarter and in the first nine 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.
10
<PAGE> 11
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
-------------------------------- --------------------------------
Average Amount of Average Average Amount of Average
(In thousands) Balance Interest(1) Rate Balance Interest(1) Rate
--------- ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Money market investments:
Interest-bearing deposits $ 28,403 $ 347 4.85% $ 24,531 $ 858 4.68%
Federal funds sold and security
resell agreements 1,096,434 16,449 5.95% 899,560 40,005 5.95%
---------- -------- ---------- --------
Total money market investments 1,124,837 16,796 5.92% 924,091 40,863 5.91%
---------- -------- ---------- --------
Securities:
Held to maturity:
Taxable 901,510 16,468 7.25% 904,548 48,309 7.14%
Nontaxable 212,618 4,544 8.48% 207,790 13,251 8.53%
Available for sale 383,887 5,927 6.13% 355,139 17,313 6.52%
Trading account 157,405 2,301 5.80% 142,665 6,977 6.54%
---------- -------- ---------- --------
Total securities 1,655,420 29,240 7.01% 1,610,142 85,850 7.13%
---------- -------- ---------- --------
Loans:
Loans held for sale 120,632 2,422 7.97% 109,490 6,730 8.22%
Net loans and leases(2) 2,572,250 66,484 10.25% 2,439,288 187,326 10.27%
---------- -------- ---------- --------
Total loans 2,692,882 68,906 10.15% 2,548,778 194,056 10.18%
---------- -------- ---------- --------
Total interest-earning assets $5,473,139 $114,942 8.33% $5,083,011 $320,769 8.44%
-------- --------
Cash and due from banks 321,175 317,825
Allowance for loan losses (68,117) (67,671)
Other assets 229,385 231,901
---------- ----------
Total assets $5,955,582 $5,565,066
========== ==========
LIABILITIES
Interest-bearing deposits:
Savings deposits $ 710,452 $ 5,618 3.14% $ 726,870 $ 17,068 3.14%
Money market deposits 1,464,506 15,350 4.16% 1,402,094 44,062 4.20%
Time deposits under $100,000 652,169 9,200 5.60% 599,889 23,023 5.13%
Time deposits $100,000 or more 129,709 2,043 6.25% 111,229 4,803 5.77%
Foreign deposits 146,712 1,878 5.08% 144,808 5,699 5.26%
---------- -------- ---------- --------
Total interest-bearing deposits 3,103,548 34,089 4.36% 2,984,890 94,655 4.24%
---------- -------- ---------- --------
Borrowed funds:
Securities sold, not yet purchased 97,723 1,537 6.24% 90,505 4,278 6.32%
Federal funds purchased and security
repurchase agreements 1,222,388 16,802 5.45% 1,005,326 41,213 5.48%
FHLB advances and other borrowings:
Less than one year 19,140 464 9.62% 21,286 1,108 6.96%
Over one year 92,144 1,501 6.46% 95,716 4,672 6.53%
Long-term debt 57,456 1,263 8.72% 57,712 3,847 8.91%
---------- -------- ---------- --------
Total borrowed funds 1,488,851 21,567 5.75% 1,270,545 55,118 5.80%
---------- -------- ---------- --------
Total interest-bearing liabilities $4,592,399 $55,656 4.81% $4,255,435 $149,773 4.71%
-------- --------
Noninterest-bearing deposits 863,803 821,053
Other liabilities 95,026 99,458
---------- ----------
Total liabilities 5,551,228 5,175,946
Total shareholders' equity 404,354 389,120
---------- ----------
Total liabilities and shareholders' equity $5,955,582 $5,565,066
========== ==========
Spread on average interest-bearing funds 3.52% 3.73%
==== ====
Net interest income and net yield on
interest-earning assets $59,286 4.30% $170,996 4.50%
======= ==== ======== ====
</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.
11
<PAGE> 12
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1994 September 30, 1994
-------------------------------- -----------------------------------
Average Amount of Average Average Amount of Average
(In thousands) Balance Interest(1) Rate Balance Interest(1) Rate
--------- ---------- --------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Money market investments:
Interest-bearing deposits $ 24,317 $ 128 2.09% $ 24,597 $ 633 3.44%
Federal funds sold and security
resell agreements 923,150 10,442 4.49% 939,038 26,744 3.81%
---------- ------- ---------- ----------
Total money market investments 947,467 10,570 4.43% 963,635 27,377 3.80%
---------- ------- ---------- ----------
Securities:
Held to maturity:
Taxable 719,144 10,876 6.00% 703,774 28,336 5.38%
Nontaxable 198,884 3,880 7.74% 192,404 11,517 8.00%
Available for sale 338,286 5,101 5.98% 337,374 14,980 5.94%
Trading account 306,750 4,489 5.81% 278,078 11,117 5.35%
---------- ------- ---------- ----------
Total securities 1,563,064 24,346 6.18% 1,511,630 65,950 5.83%
---------- ------- ---------- ----------
Loans:
Loans held for sale 187,718 3,196 6.75% 200,866 9,594 6.39%
Net loans and leases(2) 2,474,276 57,991 9.30% 2,387,482 159,458 8.93%
---------- ------- ---------- ----------
Total loans 2,661,994 61,187 9.12% 2,588,348 169,052 8.73%
---------- ------- ---------- ----------
Total interest-earning assets $5,172,525 $96,103 7.37% $5,063,613 $262,379 6.93%
------- ----------
Cash and due from banks 318,979 325,485
Allowance for loan losses (69,247) (68,681)
Other assets 201,030 191,496
---------- ----------
Total assets $5,623,287 $5,511,913
========== ==========
LIABILITIES
Interest-bearing deposits:
Savings deposits $ 755,520 $ 5,443 2.86% $ 734,112 $ 16,121 2.94%
Money market deposits 1,309,768 10,584 3.21% 1,268,662 27,698 2.92%
Time deposits under $100,000 491,117 4,970 4.01% 515,597 15,019 3.89%
Time deposits $100,000 or more 88,187 1,116 5.02% 93,079 2,844 4.09%
Foreign deposits 110,832 1,263 4.52% 101,794 2,876 3.78%
---------- ------- ---------- ----------
Total interest-bearing deposits 2,755,424 23,376 3.37% 2,713,244 64,558 3.18%
---------- ------- ---------- ----------
Borrowed funds:
Securities sold, not yet purchased 224,294 3,500 6.19% 169,924 7,140 5.62%
Federal funds purchased and security
repurchase agreements 1,215,339 13,117 4.28% 1,169,377 32,159 3.68%
FHLB advances and other borrowings:
Less than one year 29,249 397 5.38% 40,497 1,388 4.58%
Over one year 104,640 1,433 5.43% 124,312 4,255 4.58%
Long-term debt 59,226 1,257 8.42% 59,408 4,023 9.05%
---------- ------- ---------- ----------
Total borrowed funds 1,632,748 19,704 4.79% 1,563,518 48,965 4.19%
---------- ------- ---------- ----------
Total interest-bearing liabilities $4,388,172 $43,080 3.89% $4,276,762 $113,523 3.55%
------- ----------
Noninterest-bearing deposits 819,894 829,450
Other liabilities 69,248 72,240
---------- ----------
Total liabilities 5,277,314 5,178,452
Total shareholders' equity 345,973 333,461
---------- ----------
Total liabilities and shareholders' equity $5,623,287 $5,511,913
========== ==========
Spread on average interest-bearing funds 3.48% 3.38%
==== ====
Net interest income and net yield on
interest-earning assets $53,023 4.07% $148,856 3.93%
======= ==== ========== ====
</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.
12
<PAGE> 13
ZIONS BANCORPORATION AND SUBSIDIARIES
PROVISION FOR LOAN LOSSES
The provision for loan losses increased 81.8% to $800,000 for the third quarter
of 1995, as compared with $440,000 for the third quarter of 1994, but decreased
5.9% from the $850,000 for the second quarter of 1995. Net charge-offs for the
third quarter of 1995 were $244,000 or .01% of average net loans and leases,
compared to net charge-offs of $2,574,000 or .10% of average net loans and
leases for the third quarter of 1994, and net charge-offs of $718,000 or .03% of
average loans and leases for the second quarter of 1995. The provision for loan
losses for the first nine months of 1995 totaled $2,250,000, 88.0% more than the
$1,197,000 provision for the first nine months of 1994. Net charge-offs for the
first nine months of 1995 were $1,208,000 or .05% of average net loans and
leases, compared to $4,119,000 or .16% of average net loans and leases of the
first nine months of 1994.
NONINTEREST INCOME
Noninterest income for the third quarter of 1995 totaled $23,936,000, an
increase of 19.0% from the $20,109,000 for the third quarter of 1994 and an
increase of 8.3% over the second quarter of 1995. Comparing the segments of
noninterest income for the third quarter of 1995 and the third quarter of 1994,
service charges on deposit accounts, other service charges, commissions and
fees, trust income, and loan sales and servicing income increased 20.8%, 9.5%,
6.2% and 149.0%, respectively, while trading account income and other income
decreased 24.0% and 41.3%, respectively, and sales of investment securities
resulted in substantially greater net gains.
Noninterest income for the nine months ending September 30, 1995 increased 12.9%
to $62,082,000, compared to $54,970,000 for the first nine months of 1994.
Comparing the segments of noninterest income for the first nine months of 1995
and the first nine months of 1994, service charges on deposit accounts, other
service charges, commissions and fees, trust income, and loan sales and
servicing income increased 20.2%, 5.4%, .5% and 80.1%, respectively, while
trading account income excluding the $3,090,000 unusual loss during the first
quarter decreased 26.6%, and other income decreased 35.7% due primarily from a
greater gain on the sale of mortgage servicing rights in the third quarter of
1994. Sales of investment securities during the first nine months resulted in
net gains in 1995 compared to net losses in 1994.
NONINTEREST EXPENSES
Noninterest expenses for the third quarter of 1995, totaling $47,015,000,
increased 5.1% from the $44,739,000 for the third quarter of 1994, and increased
2.5% from the $45,882,000 for the second quarter of 1995. Comparing the
noninterest expense segments for the third quarter of 1995 and the third quarter
of 1994, salaries and employee benefits increased 14.3%, occupancy, furniture
and equipment expenses increased 7.4%, FDIC premium expense decreased 110.0% and
the total of all other expenses increased 4.7%.
13
<PAGE> 14
ZIONS BANCORPORATION AND SUBSIDIARIES
Noninterest expenses for the nine months ending September 30, 1995 of
$137,715,000 increased 6.6% compared to the $129,226,000 for the corresponding
period in 1994. Comparing the noninterest expense segments for the first nine
months of 1995 and the first nine months of 1994, salaries and employee benefits
increased 8.6%, occupancy, furniture and equipment expenses increased 11.8%,
FDIC premium expense decreased 33.6%, and the total of all other expenses
increased 6.7%.
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, from the further expansion of the
ATM network, and the installation of personal computers and local area networks.
The increase in all other expenses resulted primarily from increases in
supplies, postage, telecommunications and advertising expenses related to
acquisitions and expansion. At September 30, 1995, the Company had 2,827
full-time equivalent employees, 126 offices and 256 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 28.8% to $11,753,000 for the third quarter
of 1995 compared to $9,124,000 for the third quarter of 1994, and $10,749,000
for the second quarter of 1995. The Company's income taxes increased 29.4% to
$30,325,000 for the first nine months of 1995 compared to $23,427,000 for the
first nine months of 1994, primarily due to the 27.4% increase in before-tax
income. The Company's effective tax rate increased slightly to 34.0% for the
first nine months of 1995 from 33.5% for the first nine months of 1994.
ANALYSIS OF FINANCIAL CONDITION
EARNING ASSETS
Average earning assets increased to $5,083.0 million in the nine months ended
September 30, 1995 compared to $5,063.6 million in the nine months ended
September 30, 1994. Earning assets comprised 91.3% of total average assets for
the first nine months of 1995, compared with 91.9% for the first nine months of
1994.
Average money market investments, consisting of interest-bearing deposits,
federal funds sold and security resell agreements decreased 4.1% to $924.1
million in the first nine months of 1995 compared to $963.6 million in the first
nine months of 1994.
14
<PAGE> 15
ZIONS BANCORPORATION AND SUBSIDIARIES
During the first nine months of 1995, average securities increased 6.5% to
$1,610.1 million compared to $1,511.6 million in the first nine months of 1994.
Average held to maturity taxable securities increased 28.5%, held to maturity
nontaxable securities increased 8.0%, available for sale securities increased
5.3%, and trading account securities decreased 48.7% compared with the first
nine months of 1994.
Average net loans and leases decreased 1.5% to $2,548.8 million in the first
nine months of 1995 compared to $2,588.3 million in the first nine months of
1994, representing 50.1% of earning assets in the first nine months of 1995
compared to 51.1% in the first nine months of 1994.
INVESTMENT SECURITIES
The following table presents the Company's investment securities at September
30, 1995, December 31, 1994 and September 30, 1994.
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1995 1994 1994
-------------------- --------------------- --------------------
Amortized Market Amortized Market Amortized Market
(In thousands) 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 $ 504,687 $ 509,862 $ 460,163 $ 459,313 $ 412,581 $ 413,747
Other agency securities 322,600 320,604 271,440 262,144 266,079 260,839
States and political subdivisions 268,490 274,092 243,225 242,754 238,318 238,031
---------- ---------- ---------- ----------- ---------- ----------
1,095,777 1,104,558 974,828 964,211 916,978 912,617
Mortgage-backed securities 59,951 60,379 56,079 54,587 57,708 57,029
---------- ---------- ---------- ---------- ---------- ----------
$1,155,728 $1,164,937 $1,030,907 $1,018,798 $ 974,686 $ 969,646
---------- ---------- ---------- ---------- ---------- ----------
Available for sale
- ------------------
U.S. Treasury securities $ 31,226 $ 31,139 $ 48,269 $ 47,177 $ 56,403 $ 55,717
U.S. government agencies 110,362 110,421 33,304 33,304 33,268 33,268
---------- ---------- ---------- ---------- ---------- ----------
141,588 141,560 81,573 80,481 89,671 88,985
---------- ---------- ---------- ---------- ---------- ----------
Mortgage-backed securities 67,986 68,204 55,560 54,334 44,862 44,421
---------- ---------- ---------- ---------- ---------- ----------
Equity securities:
Mutual funds:
Accessor Funds, Inc. 119,059 118,505 118,803 111,529 119,645 113,819
Other 556 556 534 534 528 528
Stock:
Federal Home Loan Bank 70,538 70,538 65,861 65,861 76,657 76,657
Other 5,368 5,499 2,785 2,839 2,807 2,910
---------- ---------- ---------- ---------- ---------- ----------
195,521 195,098 187,983 180,763 199,637 193,914
---------- ---------- ---------- ---------- ---------- ----------
$ 405,095 $ 404,862 $ 325,116 $ 315,578 $ 334,170 $ 327,320
---------- ---------- ---------- ---------- ---------- ----------
Total $1,560,823 $1,569,799 $1,356,023 $1,334,376 $1,308,856 $1,296,966
========== ========== ========== ========== ========== ==========
</TABLE>
15
<PAGE> 16
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 September
30, 1995, December 31, 1994 and September 30, 1994.
<TABLE>
<CAPTION>
(In thousands)
September 30, December 31, September 30,
Types 1995 1994 1994
- ----- ----- ---- ----
<S> <C> <C> <C>
Loans held for sale $ 128,859 $ 108,649 $ 146,661
Commercial, financial, and agricultural 651,453 495,647 462,161
Real estate:
Construction 251,216 218,244 212,245
Other 1,194,098 1,062,423 1,254,880
Consumer 350,377 391,033 370,359
Lease financing 127,315 129,547 126,790
Other receivables 5,158 10,509 21,313
---------- ---------- ----------
Total loans $2,708,476 $2,416,052 $2,594,409
========== ========== ==========
</TABLE>
Loans held for sale at September 30, 1995 increased 18.6% from year-end 1994.
All other loans, net of unearned income and fees, increased 11.7% to $2,550.6
million at September 30, 1995, compared to $2,282.6 million at December 31,
1994. Commercial loans, real estate construction loans, and other real
estate-secured loans increased from year end 31.4%, 15.1% and 12.4%,
respectively, as consumer loans, lease financing and other receivables decreased
10.4%, 1.7% and 50.9%, respectively. Within the other real estate-secured loan
portfolio, 1-4 family residential loans decreased 6.3%, to $423.5 million, home
equity credit line loans increased 80.9% to $72.4 million and all other real
estate loans increased 22.4%, to $698.2 million. During the first nine months of
1995, $141.7 million of home equity credit line loans were sold from the real
estate portfolio and $112.8 million of auto loans and $208.0 million of credit
card receivables were sold from the consumer loan portfolio.
16
<PAGE> 17
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 $11,763,000 at September 30, 1995, down 37.9% from $18,943,000 at December
31, 1994, and down 42.1% from $20,312,000 at September 30, 1994. Such
nonperforming assets as a percentage of net loans and leases, other real estate
owned and other nonperforming assets were .44%, .79% and .79% at September 30,
1995, December 31, 1994, and September 30, 1994, respectively.
Accruing loans past due 90 days or more totaled $13,724,000 at September 30,
1995, up 351.3% from $3,041,000 at December 31, 1994, and up 371.3% from
$2,912,000 at September 30, 1994.
No loans were considered potential problem loans at September 30, 1995, December
31, 1994 or September 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 September 30, 1995,
December 31, 1994, and September 30, 1994.
<TABLE>
<CAPTION>
September 30, December 31, September 30,
(In thousands) 1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
Nonaccrual loans $ 8,008 $13,635 $14,476
Restructured loans 252 567 571
Other real estate owned and other
nonperforming assets 3,503 4,741 5,265
------- ------- -------
Total $11,763 $18,943 $20,312
======= ======= =======
% of net loans and leases*, other real estate
owned and other nonperforming assets .44% .79% .79%
Accruing loans past due 90 days or more $13,724 $ 3,041 $ 2,912
======= ======= =======
% of net loans and leases* .51% .13% .11%
*Includes loans held for sale.
</TABLE>
17
<PAGE> 18
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
Nine Months Ended Ended
(In thousands) September 30, December 31,
----------------------------- ------------
1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
Average loans* and leases outstanding
(net of unearned income) $2,548,778 $2,588,348 $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 (606) (4,286) (5,158)
Real estate (272) (530) (573)
Consumer (5,028) (3,355) (4,756)
Lease financing (5) (1,157) (1,174)
Other receivables - - -
---------- ---------- ----------
Total (5,911) (9,328) (11,661)
---------- ---------- ----------
Recoveries:
Loans held for sale - - -
Commercial, financial and agricultural 2,114 1,679 2,180
Real estate 312 491 676
Consumer 2,003 2,904 3,732
Lease financing 274 135 141
Other receivables - - -
---------- ---------- ----------
Total 4,703 5,209 6,729
---------- ---------- ----------
Net loan and lease charge-offs (1,208) (4,119) (4,932)
Provision charged against earnings 2,250 1,197 2,181
---------- ---------- ----------
Balance at end of the period $ 68,309 $ 66,847 $ 67,018
========== ========== ==========
*Includes loans held for sale
Ratio of net charge-offs to
average loans and leases .06% .21% .19%
</TABLE>
18
<PAGE> 19
ZIONS BANCORPORATION AND SUBSIDIARIES
The allowance for loan losses as a percentage of net loans and leases was 2.55%
at September 30, 1995, compared to 2.80% at December 31, 1994 and 2.60% at
September 30, 1994. The allowance, as a percentage of nonaccrual loans and
accruing loans past due 90 days or more was 314.3% at September 30, 1995,
compared to 401.9% at December 31, 1994 and 384.4% at September 30, 1994. The
allowance, as a percentage of nonaccrual loans and restructured loans was 827.0%
at September 30, 1995, compared to 471.9% at December 31, 1994 and 444.3% at
September 30, 1994.
Included in the allowance for loan losses is an amount for unused loan
commitments and standby letters of credit which at September 30, 1995, December
31, 1994, and September 30, 1994, amounted to $5,962,000, $3,674,000 and
$3,302,000, respectively. Unused loan commitments and standby letters of credit
at September 30, 1995, December 31, 1994, and September 30, 1994, amounted to
$1,517.1 million, $1,231.2 million and $1,278.5 million, respectively.
DEPOSITS
Average total deposits of $3,805.9 million for the first nine months of 1995
increased 7.4% over the $3,542.7 million for the first nine months of 1994, with
average demand deposits decreasing 1.0%. Average money market deposits, and time
deposits under $100,000, for the first nine months of 1995 increased 10.5% and
16.3% respectively, from the first nine months of 1994, while savings deposits
decreased 1.0%. Average time deposits over $100,000 increased 19.5% and foreign
deposits increased 42.3%, during the first nine months of 1995, compared with
the same period one year earlier.
Total deposits increased 10.5% to $4,095.0 million at September 30, 1995,
compared to $3,706.0 million at December 31, 1994. Comparing September 30, 1995
to December 31, 1994, demand deposits, savings and money market deposits, and
time deposits under $100,000 increased 3.5%, 9.5% and 28.6%, respectively, while
time deposits over $100,000 increased 11.5% and foreign deposits increased 1.9%.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Average net loans and leases were 67.0% of average total deposits for the nine
months ended September 30, 1995 compared to 73.1% for the nine months ended
September 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 $1,529.0 million or 40.0% of core deposits at September 30,
1995, compared to $1,423.6 million or 41.3% of core deposits at December 31,
1994, and $1,230.8 million or 35.8% of core deposits at September 30, 1994.
The Company's core deposits, consisting of demand, savings and money market
deposits and time deposits under $100,000, constituted 93.3% of total deposits
at September 30, 1995 compared to 93.0% at December 31, 1994 and 94.6% at
September 30, 1994.
19
<PAGE> 20
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 third quarter of 1995, the Company repurchased and retired 21,213
shares of its common stock at a cost of $1,083,000 to bring the 1995 total
repurchased and retired common stock shares to 371,018 at a total cost of
$18,208,000.
Total shareholders' equity at September 30, 1995 was $410.0 million, an increase
of 12.1% over the $365.8 million at December 31, 1994, and an increase of 15.7%
over the $354.3 million at September 30, 1994. The ratio of average equity to
average assets for the first nine months of 1995 was 6.99%, compared to 6.05%,
for the same period in 1994. At September 30, 1995, the Company's Tier I
risk-based capital ratio was 11.31%, compared to 11.81% at December 31, 1994 and
11.27% at September 30, 1994. At September 30, 1995, the Company's total
risk-based capital ratio was 14.24%, compared to 14.96% at December 31, 1994 and
14.41% at September 30, 1994. The Company's leverage ratio as of September 30,
1995 was 5.97%, compared to 6.24% at December 31, 1994 and 5.74% at September
30, 1994.
Dividends declared per common share for the third quarter of 1995 of $.35
increased 16.7% compared to $.30 for the third quarter of 1994. Dividends
declared per common share of $1.00 for the first nine months of 1995 increased
16.3% compared to $.86 for the first nine months of 1994. The cash dividend
payout to net income applicable to common shares for the first nine months of
1995 was 24.8%, compared to 27.7% for the first nine months of 1994.
20
<PAGE> 21
ZIONS BANCORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
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 September 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: November 8, 1995
21
<PAGE> 22
Exhibit
Number Exhibit Description
- ------- -------------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND THE RELATED
UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1995 INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 342,567
<INT-BEARING-DEPOSITS> 29,866
<FED-FUNDS-SOLD> 729,632
<TRADING-ASSETS> 155,760
<INVESTMENTS-HELD-FOR-SALE> 404,862
<INVESTMENTS-CARRYING> 1,155,728
<INVESTMENTS-MARKET> 1,164,937
<LOANS> 2,679,485
<ALLOWANCE> 68,309
<TOTAL-ASSETS> 5,667,670
<DEPOSITS> 4,095,014
<SHORT-TERM> 938,143
<LIABILITIES-OTHER> 76,931
<LONG-TERM> 147,616
<COMMON> 73,474
0
0
<OTHER-SE> 336,492
<TOTAL-LIABILITIES-AND-EQUITY> 5,667,670
<INTEREST-LOAN> 194,056
<INTEREST-INVEST> 122,738
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 316,794
<INTEREST-DEPOSIT> 94,655
<INTEREST-EXPENSE> 149,773
<INTEREST-INCOME-NET> 167,021
<LOAN-LOSSES> 2,250
<SECURITIES-GAINS> 433
<EXPENSE-OTHER> 137,715
<INCOME-PRETAX> 89,138
<INCOME-PRE-EXTRAORDINARY> 58,813
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,813
<EPS-PRIMARY> 4.00
<EPS-DILUTED> 4.00
<YIELD-ACTUAL> 4.39
<LOANS-NON> 8,008
<LOANS-PAST> 13,724
<LOANS-TROUBLED> 252
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 67,018
<CHARGE-OFFS> 5,911
<RECOVERIES> 4,703
<ALLOWANCE-CLOSE> 68,309
<ALLOWANCE-DOMESTIC> 10,374
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 57,935
</TABLE>
