<PAGE>
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 March 31, 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)
<TABLE>
<S> <C>
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)
</TABLE>
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 April 28, 1995 14,605,126
shares
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
PART I. FINANCIAL INFORMATION
---------------------
<S> <C>
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 19
SIGNATURES 19
- ----------
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(In thousands) 1995 1994 1994
------ ------ ------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 279,264 $ 316,943 $ 270,724
Money market investments:
Interest-bearing deposits 21,720 19,704 24,939
Federal funds sold and security resell agreements 617,381 383,742 652,186
Securities:
Held to maturity at cost (approximate market value
$1,116,005, $1,018,798 and $869,225)
Taxable 923,697 828,626 663,698
Nontaxable 203,839 202,281 200,785
Available for sale at market 344,673 315,578 331,176
Trading account securities at market 83,368 316,948 430,601
---------- ---------- ----------
1,555,577 1,663,433 1,626,260
Loans:
Loans held for sale at cost, which approximates market 104,788 108,649 208,238
Loans, leases and other receivables 2,394,600 2,307,403 2,344,479
---------- ---------- ----------
2,499,388 2,416,052 2,552,717
Less:
Unearned income and fees, net of related costs 24,587 24,774 20,911
Allowance for loan losses 67,372 67,018 67,984
---------- ---------- ----------
2,407,429 2,324,260 2,463,822
Premises and equipment, at cost, less accumulated depreciation 75,814 74,673 72,862
Amounts paid in excess of net assets of acquired businesses 18,438 18,732 11,820
Other real estate owned 1,024 1,562 1,941
Other assets 128,961 131,046 107,618
---------- ---------- ----------
Total assets $5,105,608 $4,934,095 $5,232,172
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 816,330 $ 885,833 $ 832,207
Interest-bearing:
Savings and money market 2,128,989 2,048,715 1,974,572
Time under $100,000 580,612 513,841 516,724
Time over $100,000 102,730 123,455 90,992
Foreign 157,767 134,132 79,007
---------- ---------- ----------
3,786,428 3,705,976 3,493,502
Securities sold, not yet purchased 77,924 81,437 348,951
Federal funds purchased and security repurchase agreements 617,658 524,538 763,220
Accrued liabilities 70,426 70,873 67,926
Federal Home Loan Bank advances and other borrowings:
Less than one year 16,902 25,748 25,429
Over one year 97,480 101,571 155,086
Long-term debt 57,815 58,182 59,350
---------- ---------- ----------
Total liabilities 4,724,633 4,568,325 4,913,464
---------- ---------- -----------
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, 14,600,125, 14,559,552
and 14,208,661 shares 79,993 79,193 66,381
Net unrealized holding gains and losses on securities available (3,072) (5,866) (1,561)
Retained earnings 304,054 292,443 253,888
---------- ---------- ----------
Total shareholders' equity 380,975 365,770 318,708
--------- ---------- ----------
Total liabilities and shareholders' equity $5,105,608 $4,934,095 $5,232,172
=========== =========== ===========
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION> Three Months Ended
March 31,
------------------
(In thousands) 1995 1994
------ ------
<S> <C> <C>
Interest income:
Interest and fees on loans $55,484 $45,876
Interest on loans held for sale 2,128 3,259
Interest on money market investments 9,995 7,664
Interest on securities:
Held to maturity:
Taxable 15,504 8,152
Nontaxable 3,006 2,436
Available for sale 5,643 4,841
Trading account 3,625 2,477
Lease financing 2,394 2,508
---------- -------
Total interest income 97,779 77,213
---------- -------
Interest expense:
Interest on savings and money market deposits 19,505 13,016
Interest on time deposits under $100,000 6,085 5,115
Interest on time deposits over $100,000 1,278 760
Interest on foreign deposits 2,001 554
Interest on securities sold, not yet purchased 2,276 899
Interest on borrowed funds 13,433 12,068
---------- -------
Total interest expense 44,578 32,412
---------- -------
Net interest income 53,201 44,801
Provision for loan losses 600 290
---------- -------
Net interest income after provision for loan losses 52,601 44,511
---------- -------
Noninterest income:
Service charges on deposit accounts 6,932 5,951
Other service charges, commissions and fees 5,400 5,201
Trust income 1,080 1,092
Investment securities gains (losses), net (105) (169)
Trading account (loss) (2,937) (310)
Loan sales and servicing income 5,359 3,496
Other income 312 1,135
---------- -------
Total noninterest income 16,041 16,396
---------- -------
Noninterest expenses:
Salaries and employee benefits 23,507 22,953
Occupancy, net 2,156 2,123
Furniture and equipment expense 3,485 2,666
Other real estate expense 80 140
Legal and professional services 1,335 1,987
Supplies 1,251 1,277
Postage 1,247 1,189
FDIC premiums 1,954 1,821
Amortization of intangible assets 813 891
Other expenses 8,990 7,444
---------- -------
Total noninterest expenses 44,818 42,491
---------- -------
Income before income taxes 23,824 18,416
Income taxes 7,823 5,978
---------- ---------
Net income $16,001 $12,438
========== =========
Weighted average common and common-equivalent shares outstanding 14,702 14,379
Net income per common share $1.09 $ .87
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
(In thousands) 1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 16,001 $ 12,438
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 600 290
Write-downs of other real estate owned 8 85
Depreciation of premises and equipment 2,465 2,110
Amortization of premium on core deposits and
other intangibles 813 891
Amortization of net premium/discount on
investment securities 978 1,592
Accretion of unearned income and fees, net of
related costs (187) (919)
Proceeds from sales of trading account securities 39,448,567 20,325,247
Increase in trading account securities (39,332,609) (20,657,515)
Net loss on sales of investment securities 105 169
Proceeds from loans held for sale 81,698 241,294
Increase in loans held for sale (77,182) (211,430)
Net gain on sales of loans, leases and other assets (3,265) (1,511)
Net gain on sales of other real estate owned (70) (11)
Change in accrued income taxes 5,227 4,899
Change in accrued interest receivable (705) (2,640)
Change in other assets 545 (5,201)
Change in accrued interest payable 80 3,244
Change in accrued liabilities (5,414) (6,714)
---------- ---------
Net cash provided by (used in) operating activities 137,655 (293,682)
---------- ---------
Cash flows from investing activities:
Net increase in money market investments (235,655) (79,445)
Proceeds from sales of investment securities - -
Proceeds from maturities of investment securities held to maturity 17,188 23,882
Purchases of investment securities held to maturity (39,009) (76,486)
Proceeds from sales of investment securities
available for sale 27,787 67,332
Proceeds from maturities of investment securities
available for sale 6,017 69,790
Purchases of investment securities available for sale (16,928) (123,661)
Proceeds from sales of loans and leases 111,092 63,735
Net increase in loans and leases (196,371) (138,207)
Principal collections on leveraged leases 38 -
Proceeds from sales of premises and equipment 126 264
Purchases or premises and equipment (3,719) (3,184)
Proceeds from sales of other real estate owned 600 1,957
Proceeds from sales of mortgage servicing rights 210 11
Purchases of mortgage servicing rights (24) (224)
Proceeds from sales of other assets 184 92
Cash paid for acquisitions, net of cash received
- (1)
---------- ----------
Net cash (used in) investing activities (328,464) (194,145)
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
(In thousands) 1995 1994
------ ------
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits 80,452 61,213
Net change in short-term funds borrowed 81,066 359,973
Proceeds from FHLB advances over one year - 6,808
Payments on FHLB advances over one year (4,091) (3,831)
Payments on long-term debt (367) (237)
Proceeds from issuance of common stock 460 125
Dividends paid (4,470)
(4,390)
-------- --------
Net cash provided by financing activities 153,130 419,581
-------- --------
Net decrease in cash and due from banks (37,679) (68,246)
Cash and due from banks at beginning of period 316,943 338,970
--------- ---------
Cash and due from bank at end of period $ 279,264 $ 270,724
========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(Unaudited)
<TABLE>
<CAPTION> Three Months Ended
March 31,
--------------------
(In thousands) 1995 1994
------ ------
<S> <C> <C>
Cash paid for:
Interest $44,730 $29,923
Income taxes 1,496 585
Loans transferred to other real estate owned - 705
</TABLE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31, 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 16,001 12,438 63,827
--------- --------- ----------
308,444 258,358 309,747
Deduct cash dividends:
Preferred, paid by subsidiary to minority shareholder (10) (7) (33)
Common, per share $ .30 in 1995 and
$ .28 and $ 1.16 in 1994 (4,380) (3,978) (16,786)
Common dividend of NBA prior to merger - (485) (485)
--------- --------- ----------
Balance at end of period $304,054 $253,888 $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.
Operating results for the three months ended March 31, 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
$6,141,000, respectively, as of January 1, 1995 and March 31, 1995. Allowance
for loan lossed related to impaired loans as of January 1, 1995 and March 31,
1995 amounted to $26,000 amd $43,000 respectively.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- ---------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION> Three Months Ended
March 31
--------------------
<S> <C> <C> <C>
(In thousands, except per share and ratio data) 1995 1994 % Change
----- ----- --------
EARNINGS
EARNINGS
Net income $ 16,001 $ 12,438 28.6%
PER COMMON SHARE
Net income 1.09 .87 25.3%
Dividends .30 .28 7.1%
Book value at March 31 26.09 22.43 16.3%
Market value at March 31 37.75 37.00 2.0%
Weighted average common and common-
equivalent shares outstanding 14,702,000 14,379,000
Common shares outstanding at March 31 14,600,125 14,208,661
BALANCES AT PERIOD END
Total assets $ 5,105,608 $5,232,172 - 2.4%
Money market investments 639,101 677,125 - 5.6%
Securities 1,555,577 1,626,260 - 4.3%
Net loans and leases 2,474,801 2,531,806 - 2.3%
Allowance for loan losses 67,372 67,984 - .9%
Total deposits 3,786,428 3,493,502 8.4%
Shareholders' equity 380,975 318,708 19.5%
Nonperforming assets 14,510 25,056 - 42.1%
Loans past due 90 days or more 2,121 2,810 - 24.5%
PERFORMANCE RATIOS
Net interest margin 4.66% 3.79%
Return on average assets 1.25% .95%
Return on average common equity 17.38% 15.98%
Common dividend payout 27.37% 35.88%
Nonperforming assets to net loans and leases,
other real estate owned and other
nonperforming assets at March 31 .59% .99%
CAPITAL RATIOS
Average equity to average assets 7.16% 5.92%
Leverage ratio at March 31 6.59% 5.58%
Tier I risk-based capital at March 31 12.14% 10.84%
Total risk-based capital at March 31 15.27% 14.05%
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
OPERATING RESULTS
Consolidated net income for the first quarter of 1995 increased 28.6% to
$16,001,000 from $12,438,000 a year ago, while earnings per share increased
25.3% to $1.09 from $.87 in the first quarter of 1994. This stronger level of
profitability was achieved despite a $3,090,000 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 of Zions First National Bank's capital markets
operation in New York City. Those operations will be transferred to the bank's
headquarters in Salt Lake City during the second quarter of 1995.
The Company's first-quarter earnings relative to the same period a year ago
reflect a $8,400,000 (18.7%) increase in net interest income, a $310,000
(106.9%) increase in the provision for loan losses, a $355,000 (2.2%) decrease
in noninterest income, a $2,327,000 (5.5%) increase in noninterest expenses and
a $1,845,000 (30.9%) increase in income tax expense.
The annualized return on average assets for the first three months of 1995 was
1.25%, resulting in a return on average common shareholders' equity of 17.38%,
compared to .95% and 15.98%, respectively, for the first three months of 1994.
NET INTEREST INCOME AND INTEREST RATE SPREADS
Net interest income for the first quarter of 1995, adjusted to a fully taxable-
equivalent basis, increased 18.9% to $54,488,000 compared to $45,845,000 for the
first quarter of 1994. Net interest margin was 4.66% compared to 3.79% for the
first quarter of 1994.
The yield on average earning assets increased 200 basis points during the first
quarter of 1995 as compared to the first quarter of 1994, and the average rate
paid this quarter on interest-bearing funds increased 140 basis points from the
first quarter of 1994. The spread on average interest-bearing funds for the
first quarter of 1995 was 3.90%, up from the 3.30% for the first quarter of
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. The cost to the Company of the use of such off-balance
sheet arrangements for the first quarter of 1995 was $119,000 compared to
$12,000 for the first quarter of 1994.
The increased level of taxable-equivalent net interest income and the increase
in net interest margin in the first quarter of 1995, compared to the same period
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
March 31, 1995
------------------
Average Amount of Average
(In thousands) Balance Interest 1 Rate
--------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Money market investments:
Interest-bearing deposits $ 20,531 $ 228 4.50%
Federal funds sold and security resell agreements 685,020 9,767 5.78%
---------- ------
Total money market investments 705,551 9,995 5.75%
---------- ------
Held to maturity:
Taxable 886,103 15,504 7.10%
Nontaxable 202,877 4,294 8.58%
Available for sale 336,138 5,643 6.81%
Trading account 196,138 3,625 7.50%
---------- ------
1,621,256 29,066 7.27%
---------- ------
Loans:
Loans held for sale 103,664 2,128 8.33%
Net loans and leases 2 2,314,168 57,877 10.14%
---------- ------
Total Loans 2,417,832 60,005 10.06%
---------- ------
Total interst-earning assets $4,744,639 99,066 8.47%
------
Cash and due from banks 310,367
Allowance for loan losses (67,234)
Other assets 223,419
----------
Total assets $5,211,191
===========
LIABILITIES
Interest-bearing deposits:
Savings deposits $ 750,105 $ 5,769 3.12%
Money market deposits 1,340,616 13,736 4.16%
Time deposits under $100,000 540,126 6,085 4.57%
Time deposits $100,000 or more 102,226 1,278 5.07%
Foreign deposits 151,853 2,001 5.34%
---------- -------
Total interest-bearing deposits 2,884,926 28,869 4.06%
Borrowed funds: ---------- -------
Securities sold, not yet purchased 133,715 2,276 6.90%
Federal funds purchased and security repurchase agreements 761,427 10,183 5.42%
FHLB advances and other borrowings:
Less than one year 20,233 322 6.45%
Over one year 99,390 1,600 6.53%
Long-term debt 57,984 1,328 9.29%
---------- -------
Total borrowed funds 1,072,749 15,709 5.94%
---------- -------
Total interest-bearing liabilities $3,957,675 44,578 4.57%
Noninterest-bearing deposits 787,503 -------
Other liabilities 92,641
----------
Total liabilities 4,837,819
Total shareholders' equity 373,372
----------
Total liabilities and shareholder equity $ 5,211,191
Spread on average interest-bearing funds ========== 3.90%
======
Net interest income and net yield on
interest-earning assets $54,488 4.66%
======= ======
1 Taxable-equivalent rates used where applicable.
2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1994
-------------------
Average Amount of Average
(In thousands) Balance Interest 1 Rate
-------- --------- --------
<S> <C> <C> <C>
ASSETS
Money market investments:
Interest-bearing deposits $ 24,851 $ 248 4.05%
Federal funds sold and security resell agreements 972,972 7,416 3.09%
---------- -------
Total money market investments 997,823 7,664 3.11%
---------- -------
Held to maturity:
Taxable 668,812 8,152 4.94%
Nontaxable 180,767 3,480 7.81%
Available for sale 346,134 4,841 5.67%
Trading account 208,633 2,477 4.81%
---------- -------
Total securities 1,404,346 18,950 5.47%
---------- -------
Loans:
Loans held for sale 223,830 3,259 5.90%
Net loans and leases 2 2,281,905 48,384 8.60%
---------- -------
Total loans 2,505,735 51,643 8.36%
---------- -------
$4,907,904 $78,257 6.47%
--------
Total interest-earning assets
Cash and due from banks 313,212
Allowance for loan losses (68,000)
Other assets 180,982
-----------
Total assets $5,334,098
LIABILITIES ===========
Interest-bearing deposits:
Savings deposits $ 738,907 $ 5,113 2.81%
Money market deposits 1,180,735 7,903 2.71%
Time deposits under $100,000 523,529 5,115 3.96%
Time deposits $100,000 or more 82,888 760 3.72%
Foreign deposits 80,181 554 2.80%
---------- ------
Total interest-bearing deposits 2,606,240 19,445 3.03%
Borrowed funds: ----------- -------
Securities sold, not yet purchased 78,692 899 4.63%
Federal funds purchased and security repurchase agreements 1,195,889 8,737 2.96%
FHLB advances and other borrowings:
Less than one year 51,481 496 3.91%
Over one year 152,960 1,443 3.83%
Long-term debt 59,420 1,392 9.50%
----------- -------
Total borrowed funds 1,538,442 12,967 3.42%
----------- -------
Total interest bearing liabilities $4,144,682 32,412 3.17%
-------
Noninterest-bearing deposits 813,053
Other liabilities 60,713
-----------
Total liabilities 5,018,448
Total shareholders' equity 315,650
-----------
Total liabilities and shareholder equity $5,334,098
===========
Spread on average interest-bearing funds 3.30%
=====
Net interest income and net yield on interest-earning assets $45,845 3.79%
======= =====
1 Taxable-equivalent rates used where applicable.
2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
PROVISION FOR LOAN LOSSES
The provision for loan losses increased 106.9% to $600,000 for the first quarter
of 1995, as compared with $290,000 for the first quarter of 1994. Net charge-
offs for the quarter were $246,000 or .01% of average net loans and leases,
compared to $767,000 or .03% of average net loans and leases for the first
quarter of 1994.
NONINTEREST INCOME
Noninterest income for the first quarter of 1995 totaled $16,041,000, a decrease
of 2.2% from the $16,396,000 for the first quarter of 1994. Comparing the
segments of noninterest income for the first quarter of 1995 with the first
quarter of 1994, service charges on deposit accounts, other service charges,
commissions and fees, and loan sales and servicing income increased 16.5%, 3.8%
and 53.3%, respectively, while trust income and net losses on the sale of
investment securities remained about the same. The $3,090,000 loss in the
Company's trading account during the first quarter of 1995 was substantial
compared to the trading account loss affected by mark-to-market adjustments on
trading securities as a result of rising interest rates during the first quarter
of 1994.
NONINTEREST EXPENSES
Noninterest expenses for the first quarter of 1995, totaling $44,818,000,
increased 5.5% from the $42,491,000 for the first quarter of 1994. Comparing
the noninterest expense segments for the first quarter of 1995 and the first
quarter of 1994, salaries and employee benefits increased 2.4%, occupancy,
furniture and equipment expenses increased 17.8%, other real estate expense
decreased 42.9% and the total of all other expenses, including the $1,300,000
cost of closing the capital markets operations in New York City, increased 6.7%
The increase in occupancy, furniture and equipment expenses resulted primarily
from the further expansion of the ATM network, and the installation of personal
computers and local area networks. The Company had 2,655 full-time equivalent
employees at March 31, 1995, compared to 2,695 at December 31, 1994 and 2,776 at
March 31, 1994 as the Company continues its effort to reduce the cost structure
and improve efficiency.
INCOME TAXES
The Company's income taxes increased 30.9% to $7,823,000 for the first quarter
of 1995 compared to $5,978,000 for the first quarter of 1994, primarily due to
the 29.4% increase in before-tax income. The Company's effective tax rate
increased slightly to 32.8% for the first quarter of 1995 from 32.5% for the
first quarter of 1994.
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
ANALYSIS OF FINANCIAL CONDITION
EARNING ASSETS
Average earning assets decreased to $4,744.6 million in the three months ended
March 31, 1995 compared to $4,907.9 million in the three months ended March 31,
1994. Earning assets comprised 91.0% of total average assets for the first
three months of 1995, compared with 92.0% for the first three months of 1994.
Average money market investments, consisting of interest-bearing deposits, and
federal funds sold and security resell agreements decreased 29.3% to $705.5
million compared to $997.8 million in the first three months of 1994.
During the first three months of 1995, average securities increased 15.4% to
$1,621.3 million compared to $1,404.3 million in the first three months of 1994
Average held to maturity taxable securities increased 32.6%, held to maturity
nontaxable securities increased 12.2%, available for sale securities decreased
2.9% and trading account securities decreased 6.0% compared with the same period
in 1994.
Average net loans and leases decreased 3.5% to $2,417.8 million for the first
three months of 1995 compared to $2,505.7 million in the first three months of
1994, representing 50.0% of earning assets in the first quarter of 1995 compared
to 51.1% in the first quarter of 1994.
INVESTMENT SECURITIES
The following table presents the Company's investment securities at March 31,
1995, December 31, 1994 and March 31, 1994.
<TABLE>
<CAPTION>
March 31, December 31, March 31,
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 $ 466,506 $ 463,424 $ 460,163 $ 459,313 $412,399 $419,775
Other agency securities 351,060 343,663 271,440 262,144 194,229 191,986
States and political subdivisions 257,743 256,657 243,225 242,754 203,734 202,920
---------- ---------- --------- --------- -------- --------
1,075,309 1,063,744 974,828 964,211 810,362 814,681
Mortgage-backed securities 52,227 52,261 56,079 54,587 54,121 54,544
---------- ---------- --------- --------- -------- --------
$1,127,536 $1,116,005 $1,030,907 $1,018,798 $864,483 $869,225
---------- ---------- --------- --------- -------- --------
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1995 1994 1994
---------- ----------- --------
(In thousands) Amortized Market Amortized Market Amortized Market
cost value cost value cost value
----------- ----------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Available for sale
- -------------------
U.S. Treasury securities $ 35,160 $ 34,684 $ 48,269 $ 47,177 $ 67,345 $ 67,048
U.S. government agencies 69,878 70,252 33,304 33,304 28,436 28,436
--------- -------- -------- -------- -------- --------
105,038 104,936 81,573 80,481 95,781 95,484
--------- -------- -------- -------- -------- --------
Mortgage-backed securities 54,171 53,584 55,560 54,334 34,664 34,666
--------- -------- -------- -------- -------- --------
Equity securities:
Mutual funds:
Accessor Funds, Inc. 118,847 114,474 118,803 111,529 126,625 124,309
Other 527 527 534 534 519 519
Stock:
Federal Home Loan Bank 68,292 68,292 65,861 65,861 73,909 73,909
Other 2,792 2,860 2,785 2,839 2,217 2,289
--------- -------- -------- -------- -------- --------
190,458 186,153 187,983 180,763 203,270 201,026
--------- -------- -------- -------- -------- --------
$ 349,667 $ 344,673 $ 325,116 $ 315,578 $ 333,715 $ 331,176
--------- -------- -------- -------- -------- --------
Total $1,477,203 $1,460,678 $1,356,023 $1,334,376 $1,198,198 $1,200,401
========= ========== ========= ========= ========== ==========
</TABLE>
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 March 31,
1995, December 31, 1994 and March 31, 1994.
<TABLE>
<CAPTION>
(In thousands)
Types March 31, December ,31 March 31,
1995 1994 1994
-------- ---------- --------
<S> <C> <C> <C>
Loans held for sale $ 104,788 $ 108,649 $ 208,238
Commercial, financial, and agricultural 608,621 495,647 511,344
Real estate:
Construction 193,592 218,244 183,832
Other 1,069,601 1,062,423 1,097,128
Consumer 374,683 391,033 413,041
Lease financing 125,717 129,547 128,403
Other receivables 22,386 10,509 10,731
----------- ----------- -----------
Total loans $2,499,388 $2,416,052 $2,552,717
=========== =========== ===========
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
Loans held for sale at March 31, 1995 decreased 3.6% from year-end 1994. All
other loans, net of unearned income and fees increased 3.8% to $2,370.0 million
at March 31, 1995, compared to $2,282.6 million at December 31, 1994.
Commercial loans, other real estate-secured loans and other receivables
increased from year end 22.8%, .7% and 113.0%, respectively, as construction
loans, consumer loans, and lease financing decreased 11.3%, 4.2% and 3.0%,
respectively. Within the other real estate-secured loan portfolio, 1-4 family
residential loans decreased 6.9%, home equity credit line loans increased 19.5%
and all other real estate loans increased 5.4% from year end. The decrease in
consumer loans includes 108.9 million of auto loans and credit card receivables
sold during the first quarter of 1995.
RISK ELEMENTS
The Company's nonperforming assets, which include nonaccruing loans,
restructured loans, other real estate owned and other nonperforming assets, were
$14,510,000 at March 31, 1995, down 23.4% from $18,943,000 at December 31, 1994,
and down 42.1% from $25,056,000 at March 31, 1994. Such nonperforming assets as
a percentage of net loans and leases, other real estate owned and other
nonperforming assets were .59%, .79% and .99% at March 31, 1995, December 31,
1994, and March 31, 1994, respectively.
Accruing loans past due 90 days or more totaled $2,121,000 at March 31, 1995,
down 30.3% from $3,041,000 at December 31, 1994, and down 24.5% from $2,810,000
at March 31, 1994.
No loans were considered potential problem loans at March 31, 1995, December 31,
1994 or March 31, 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 March 31, 1995,
December 31, 1994, and March 31, 1994.
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(In thousands) 1995 1994 1994
------- -------- --------
<S> <C> <C> <C>
Nonaccrual loans $10,276 $13,635 $21,327
Restructured loans 561 567 1,788
Other real estate owned and other
nonperforming assets 3,673 4,741 1,941
------- -------- --------
Total $14,510 $18,943 $25,056
======= ======= =======
% of net loans and leases*, other real estate
owned and other nonperforming assets .59% .79% .99%
Accruing loans past due 90 days or more $ 2,121 $ 3,041 $ 2,810
======= ======= =======
% of net loans and leases* .09% .13% .11%
*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
Three Months Ended Months Ended
(In thousands) March 31, December 31,
------------------- --------------
1995 1994 1994
------ ------ ------
<S> <C> <C> <C>
Average loans* and leases outstanding
(net of unearned income) $2,417,832 $2,505,735 $2,574,995
=========== ========== ==========
Allowance for possible losses:
Balance at beginning of the period $ 67,018 $ 68,461 $ 68,461
Allowance of companies acquired - - 1,308
Loans and leases charged-off:
Loans held for sale - - -
Commercial, financial and agricultural (52) (1,750) (5,158)
Real estate (55) (41) (573)
Consumer (1,418) (916) (4,756)
Lease financing (2) (108) (1,174)
Other receivables - - -
----------- ---------- -----------
Total (1,527) (2,815) (11,661)
----------- ---------- -----------
Recoveries:
Loans held for sale - - -
Commercial, financial and agricultural 454 885 2,180
Real estate 89 52 676
Consumer 646 1,085 3,732
Lease financing 92 26 141
Other receivables - - -
----------- ---------- -----------
Total 1,281 2,048 6,729
----------- ---------- -----------
Net loan and lease (charge-offs) (246) (767) (4,932)
Provision charged against earnings 600 290 2,181
----------- ---------- -----------
Balance at end of the period $ 67,372 $ 67,984 $ 67,018
=========== ========== ==========
*Includes loans held for sale
Ratio of net charge-offs to
average loans and leases .01% .03% .19%
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
The allowance for loan losses as a percentage of net loans and leases was 2.72%
at March 31, 1995, compared to 2.80% at December 31, 1994, and 2.69% at March
31, 1994. The allowance, as a percentage of nonaccrual loans and accruing loans
past due 90 days or more was 543.5% at March 31, 1995, compared to 401.9% at
December 31, 1994, and 281.7% at March 31, 1994. The allowance, as a percentage
of nonaccrual loans and restructured loans was 621.7% at March 31, 1994,
compared to 471.9% at December 31, 1994, and 294.1% at March 31, 1994.
Included in the allowance for loan losses is an amount for unused loan
commitments and standby letters of credit which at March 31, 1995, December 31,
1994, and March 31, 1994, amounted to $5,209,000, $3,674,000 and $3,135,000,
respectively. Unused loan commitments and standby letters of credit at March 31,
1995, December 31, 1994, and March 31, 1994, amounted to $1,339 million, $1,231
million and $1,042 million, respectively.
DEPOSITS
Average total deposits of $3,672.4 million for the first three months of 1995
increased 7.4% over the $3,419.3 for the first three months of 1994, with
average demand deposits decreasing 3.1%. Average savings deposits, money market
deposits, and time deposits under $100,000, for the first three months of 1995
increased 1.5%, 13.5% and 3.2% respectively, from the first three months of
1994. Average time deposits over $100,000 increased 23.3% and foreign deposits
increased 89.4%, during the first three months of 1995, compared with the same
period one year earlier.
Total deposits increased 2.2% to $3,786.4 million at March 31, 1995, compared to
$3,706.0 million at December 31, 1994. Comparing March 31, 1995 to December 31,
1994, savings and money market deposits, time deposits under $100,000, and
foreign deposits increased 3.9%, 13.0% and 17.6%, respectively, while demand
deposits decreased 7.8% and time deposits over $100,000 decreased 16.8%.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Average net loans and leases were 65.8% of average total deposits for the three
months ended March 31, 1995 compared to 73.3% for the three months ended March
31, 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 $1,430.5 million or 40.6% of core deposits at March 31, 1995 compared to
$1,423.6 million or 41.3% of core deposits at December 31, 1994, and $1,198.6 or
36.1% of core deposits at March 31, 1994.
The Company's core deposits, consisting of demand, savings and money market
deposits and time deposits under $100,000, constituted 93.1% of total deposits
at March 31, 1995 compared to 93.0% at December 31, 1994 and 95.1% at March 31,
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 liquidty. The Company's ability to raise funds in the
capital markets through the "securitizatuon" process and by debt issuances
allows the Company to take advantage of market opportunities to meet funding
needs at resonable 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 share of income taxes.
CAPITAL RESOURCES AND DIVIDENDS
Total shareholders' equity at March 31, 1995 was $381.0 million, an increase of
4.2% over the $365.8 million at December 31, 1994, and an increase of 19.5% over
the $318.7 million at March 31, 1994. The ratio of average equity to average
assets for the first three months of 1995 was 7.16%, compared to 5.92%, for the
same period in 1994. At March 31, 1995, the Company's Tier I risk-based capital
ratio was 12.14%, compared to 11.81% at December 31, 1994 and 10.84% at March
31, 1994. At March 31, 1995 the Company's total risk-based capital ratio was
15.27%, compared to 14.96% at December 31, 1994 and 14.05% at March 31, 1994.
The Company's leverage ratio as of March 31, 1995 was 6.59%, compared to 6.24%
at December 31, 1994 and 5.58% at March 31, 1994.
Dividends declared per common share for the first quarter of 1995 of $.30
increased 7.1% compared of $.28 for the first quarter of 1994. The cash
dividend payout to net income applicable to common share for the first three
months of 1995 was 27.4%, compared to 35.9% for the first three months of 1994.
MERGERS AND ACQUISITIONS
During the first quarter of 1995, Zions Bancorporation received regulatory
approvals and now awaits shareholders approval to acquire First Western
Bancorporation and it's banking subsidiary, First Western National Bank in a
purchase transaction to be paid through the exchange of Zions Bancorporation
common stock for First Western Bancorporation stock and the minority interest
shares of First Western National Bank. The transaction is expected to be
consummated during the second quarter of 1995, and will enable the Company to
merge First Western National Bank with Zions First National Bank, and to provide
expanded banking services in Moab, Blanding and Monticello, Utah.
<PAGE>
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
March 31, 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: May 9, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 AND RELATED UNAUDITED
CONSOLIDATED STAEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995
INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 279,264
<INT-BEARING-DEPOSITS> 21,720
<FED-FUNDS-SOLD> 617,381
<TRADING-ASSETS> 83,368
<INVESTMENTS-HELD-FOR-SALE> 344,673
<INVESTMENTS-CARRYING> 1,127,536
<INVESTMENTS-MARKET> 1,116,005
<LOANS> 2,474,801
<ALLOWANCE> 67,372
<TOTAL-ASSETS> 5,105,608
<DEPOSITS> 3,786,428
<SHORT-TERM> 712,484
<LIABILITIES-OTHER> 70,426
<LONG-TERM> 155,295
<COMMON> 79,993
0
0
<OTHER-SE> 300,982
<TOTAL-LIABILITIES-AND-EQUITY> 5,105,608
<INTEREST-LOAN> 60,006
<INTEREST-INVEST> 37,773
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 97,779
<INTEREST-DEPOSIT> 28,869
<INTEREST-EXPENSE> 44,578
<INTEREST-INCOME-NET> 53,201
<LOAN-LOSSES> 600
<SECURITIES-GAINS> (105)
<EXPENSE-OTHER> 44,818
<INCOME-PRETAX> 23,824
<INCOME-PRE-EXTRAORDINARY> 16,001
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,001
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
<YIELD-ACTUAL> 4.55
<LOANS-NON> 10,276
<LOANS-PAST> 2,121
<LOANS-TROUBLED> 561
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 67,018
<CHARGE-OFFS> 1,527
<RECOVERIES> 1,281
<ALLOWANCE-CLOSE> 67,372
<ALLOWANCE-DOMESTIC> 11,499
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 55,873
</TABLE>
