SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 10, 1998 (October 1, 1998)
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Date of Report (Date of Earliest Event Reported)
ZIONS BANCORPORATION
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(Exact Name of Registrant As Specified In Its Charter)
UTAH
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(State or Other Jurisdiction of Incorporation)
0-2610 87-0227400
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(Commission File Number) (IRS Employer Identification No.)
One South Main, Suite 1380
Salt Lake City, Utah 84111
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(Address of Principal Executive Offices)(Zip Code)
(801) 524-4787
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(Registrant's Telephone Number, including Area Code)
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(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
This Current Report on Form 8-K/A amends and supplements the Current
Report on Form 8-K dated October 14, 1998.
Item 2. Acquisition or Disposition of Assets.
On October 1, 1998, Zions Bancorporation acquired all of the
outstanding common stock of The Sumitomo Bank of California
("Sumitomo-California") through the merger of an indirect wholly-owned
subsidiary, SBC Acquisition Corp., with and into Sumitomo-California with
Sumitomo-California surviving. Sumitomo-California then merged with and into
Grossmont Bank, with Grossmont surviving. Grossmont subsequently changed its
name to California Bank & Trust.
In connection therewith, Zions hereby (i) incorporates by reference
Sumitomo-California's unaudited balance sheet as of the interim period ending
June 30, 1998 and unaudited statements of income and cash flow for the interim
period ending June 30, 1998 from the Sumitomo-California Quarterly Report on
Form 10-Q dated June 30, 1998 and (ii) files unaudited summary pro forma
condensed balance sheet and income statement information for the acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) An unaudited interim balance sheet as of the interim period ended
June 30, 1998 and unaudited statements of income and cash flows for the interim
period ended June 30, 1998 of Sumitomo-California were filed in the
Sumitomo-California Quarterly Report on Form 10-Q and are incorporated herein by
reference.
(b) Unaudited interim summary pro forma condensed balance sheet
information as of June 30, 1998 and income statement information for the year
ended December 31, 1997 and the six months ended June 30, 1998 is filed as
Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by
reference.
(c) Exhibits
The following exhibits are filed with this Current Report on Form
8-K or incorporated by reference:
Exhibit
Number Description
- ------ -----------
99.1 An unaudited interim balance sheet as of the interim period ended
June 30, 1998 and unaudited statements of income and cash flows
for the interim period ended June 30, 1998 of The Sumitomo Bank of
California (incorporated by reference to the Quarterly Report on
Form 10-Q filed by The Sumitomo Bank of California for the period
ended June 30, 1998).
<PAGE>
99.2 Unaudited summary pro forma condensed balance sheet information as
of June 30, 1998 and income statement information for the year
ended December 31, 1997 and the six months ended June 30, 1998
(attached).
<PAGE>
SIGNATURE
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 hereunder duly authorized.
Dated: December 10, 1998
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
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Name: Dale M. Gibbons
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.1 An unaudited interim balance sheet as of the interim period ended
June 30, 1998 and unaudited statements of income and cash flows
for the interim period ended June 30, 1998 of The Sumitomo Bank of
California (incorporated by reference to the Quarterly Report on
Form 10-Q filed by The Sumitomo Bank of California for the period
ended June 30, 1998).
99.2 Unaudited summary pro forma condensed balance sheet information as
of June 30, 1998 and income statement information for the year
ended December 31, 1997 and the six months ended June 30, 1998
(attached).
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(unaudited)
The accompanying unaudited pro forma condensed combined financial
statements were prepared to give effect to the October 1, 1998 acquisition of
The Sumitomo Bank of California (Sumitomo) by Zions Bancorporation (Zions) and
the related June 10, 1998 common stock issuance using the purchase method of
accounting and the assumptions described in the accompanying notes. The
unaudited pro forma condensed combined balance sheet is based upon the
consolidated balance sheet of Zions and the balance sheet of Sumitomo as of June
30, 1998, as if the acquisition had occurred on that date. The unaudited pro
forma condensed combined statements of income are based on the consolidated
statements of income of Zions and the statements of income of Sumitomo for the
year ended December 31, 1997 and the six months ended June 30, 1998 as if the
acquisition and issuance of shares had occurred on January 1, 1997. The
Company's balance sheet as of June 30, 1998 and statements of income for the
year ended December 31, 1997 and the six months ended June 30, 1998 have been
restated to reflect the acquisitions of Vectra Banking Corporation, FP Bancorp,
Inc. and The Commerce Bancorporation which were consummated during 1998 and
accounted for as poolings of interests.
For purposes of the pro forma condensed combined financial statements,
it has been assumed that the net book value of Sumitomo's assets minus
liabilities approximates fair value. When actual fair values have been
determined, Sumitomo's assets and liabilities will be recorded at their fair
value which will change the allocation of purchase price and the related
amortization from that reflected in the pro forma condensed combined financial
statements.
The pro forma condensed combined financial statements should be read in
conjunction with the consolidated historical financial statements of Zions,
including the respective notes thereto, and the historical financial statements
of Sumitomo, including the respective notes thereto, which are incorporated by
reference. The pro forma information is presented for comparative purposes only
and is not necessarily indicative of the combined financial position or results
of operations in the future. The pro forma condensed combined financial
statements do not give effect to merger expenses related to the transaction or
anticipated cost savings resulting from the consolidation of operating
functions. The pro forma condensed combined financial statements are also not
necessarily indicative of the combined financial position or results of
operations which would have been realized had the acquisition been consummated
during the periods or as of the date for which the pro forma financial
statements are presented.
<PAGE>
<TABLE>
<CAPTION>
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 1998 (A)
(unaudited)
Historical
--------------------------------
The Sumitomo
Zions Bank of Pro Forma Pro Forma
(In millions) Bancorporation California Adjustments Combined
------------------------------------------------ --------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 697 $ 158 $ -- $ 855
Money market investments 1,294 348 (539) (B) 1,103
Investment securities: --
Held to maturity, at cost 2,250 219 -- 2,469
Available for sale, at market 589 263 -- 852
Trading 402 -- 402
Loans, net of unearned 6,279 3,611 15 (B) 9,905
Allowance for loan losses 98 113 -- 211
---------------- -------------- ----------- -----------
Net loans 6,181 3,498 15 9,694
Goodwill and core deposit intangibles 171 -- 118 (C) 289
Other assets 536 231 10 (C) 777
---------------- -------------- ----------- -----------
Total assets $ 12,120 $ 4,717 $ (396) $ 16,441
================ ============== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $ 2,238 $ 368 $ -- $ 2,606
Interest-bearing deposits 6,314 3,733 -- 10,047
---------------- -------------- ----------- -----------
Total deposits 8,552 4,101 -- 12,653
Federal funds purchased and securities
sold under repurchase agreements 1,484 100 -- 1,584
Other short-term borrowings 255 22 -- 277
Federal Home Loan Bank advances and
other borrowings over one year 118 -- -- 118
Long-term debt 386 3 -- 389
Other liabilities 378 62 33 (B) 473
---------------- -------------- ----------- -----------
Total liabilities 11,173 4,288 33 15,494
---------------- -------------- ----------- -----------
Shareholders' equity:
Common stock 326 82 (82) 326
Surplus 268 (268) --
Accumulated other comprehensive income -- -- -- --
Retained earnings 621 79 (79) 621
---------------- -------------- ----------- -----------
Total shareholders' equity 947 429 (429) 947
---------------- -------------- ----------- -----------
Total liabilities and shareholders' equity $ 12,120 $ 4,717 $ (396) 16,441
================ ============== =========== ===========
<FN>
See Notes to Pro Forma Condensed Combined Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1997 (A)
(unaudited)
Historical
--------------------------------
The Sumitomo
Zions Bank of Pro Forma Pro Forma
(In millions, except per share amounts) Bancorporation California Adjustments Combined
------------------------------------------------ --------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans and leases $ 500.5 $ 315.4 $ 1.1 (B) $ 817.0
Interest on money market investments 85.5 37.7 (23.9)(B) 99.3
Interest on securities 193.5 33.8 -- 227.3
---------------- -------------- ----------- -----------
Total interest income 779.5 386.9 (22.8) 1,143.6
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Interest expense:
Interest on deposits 208.0 169.9 -- 377.9
Interest on borrowed funds 159.0 13.1 -- 172.1
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Total interest expense 367.0 183.0 -- 550.0
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Net interest income 412.5 203.9 (22.8) 593.6
Provision for loan losses 7.7 16.5 -- 24.2
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Net interest income after provision for loan losses 404.8 187.4 (22.8) 569.4
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Noninterest income:
Service charges on deposit accounts 48.5 5.0 -- 53.5
Other service charges, commissions and fees 40.5 2.1 -- 42.6
Trust income 6.8 3.7 -- 10.5
Loan sales and servicing income 40.4 -- -- 40.4
Other 10.1 13.4 -- 23.5
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Total noninterest income 146.3 24.2 -- 170.5
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Noninterest expense:
Salaries and employee benefits 184.7 81.3 -- 266.0
Occupancy, net 19.0 15.9 -- 34.9
Furniture and equipment 28.1 7.6 -- 35.7
Amortization of goodwill and core deposit
intangibles 6.7 -- 4.7 (C) 11.4
Other 106.1 45.2 2.3 (B) 153.6
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Total noninterest expense 344.6 150.0 7.0 501.6
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Income before income taxes 206.5 61.6 (29.8) 238.3
Income taxes 72.2 20.4 (9.0) 83.6
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Net income $ 134.3 $ 41.2 $ (20.8) $ 154.7
================ ============== =========== ===========
Net income applicable to common stock $ 132.9 $ 35.1 $ (20.8) $ 147.2
================ ============== =========== ===========
Net income per common share
Basic $ 1.88 $ 2.01
================ ===========
Diluted $1.84 $ 1.95
================ ===========
Weighted-average common shares outstanding
during the year (in thousands) 70,535 73,295 (B)
================ ===========
Weighted-average common and common-equivalent
shares outstanding during the year (in thousands) 72,813 75,573 (B)
================ ===========
<FN>
See Notes to Pro Forma Condensed Combined Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1998 (A)
(unaudited)
Historical
--------------------------------
The Sumitomo
Zions Bank of Pro Forma Pro Forma
(In millions, except per share amounts) Bancorporation California Adjustments Combined
------------------------------------------------ --------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans and leases $ 289.7 $ 159.7 $ 0.6 (B) $ 450.0
Interest on money market investments 47.7 11.2 (11.9)(B) 47.0
Interest on securities 95.9 14.0 -- 109.9
---------------- -------------- ----------- -----------
Total interest income 433.3 184.9 (11.3) 606.9
---------------- -------------- ----------- -----------
Interest expense:
Interest on deposits 125.6 82.6 -- 208.2
Interest on borrowed funds 69.4 2.2 -- 71.6
---------------- -------------- ----------- -----------
Total interest expense 195.0 84.8 -- 279.8
---------------- -------------- ----------- -----------
Net interest income 238.3 100.1 (11.3) 327.1
Provision for loan losses 6.8 4.0 -- 10.8
---------------- -------------- ----------- -----------
Net interest income after provision for loan losses 231.5 96.1 (11.3) 316.3
---------------- -------------- ----------- -----------
Noninterest income:
Service charges on deposit accounts 26.4 2.5 -- 28.9
Other service charges, commissions and fees 24.3 -- 24.3
Trust income 3.6 1.7 -- 5.3
Loan sales and servicing income 23.4 -- -- 23.4
Other 14.9 8.7 -- 23.6
---------------- -------------- ----------- -----------
Total noninterest income 92.6 12.9 -- 105.5
---------------- -------------- ----------- -----------
Noninterest expense:
Salaries and employee benefits 107.3 47.3 -- 154.6
Occupancy, net 12.0 8.3 -- 20.3
Furniture and equipment 16.4 3.7 -- 20.1
Amortization of goodwill and core deposit
intangibles 4.8 -- 2.4 (C) 7.2
Other 77.7 35.4 -- (B) 113.1
---------------- -------------- ----------- -----------
Total noninterest expense 218.2 94.7 2.4 315.3
---------------- -------------- ----------- -----------
Income before income taxes 105.9 14.3 (13.7) 106.5
Income taxes 33.9 5.1 (4.5) 34.5
---------------- -------------- ----------- -----------
Net income $ 72.0 $ 9.2 $ (9.2) $ 72.0
================ ============== =========== ===========
Net income applicable to common stock $ 72.0 $ 7.2 $ (9.2) $ 70.0
================ ============== =========== ===========
Weighted average common shares outstanding
during the period (in thousands) 73,582 76,022 (B)
Weighted average common and common-equivalent
shares outstanding during the period (in thousands) 74,688 77,128 (B)
Basic net income per common share 0.98 0.92
Diluted net income per common share 0.98 0.91
<FN>
See Notes to Pro Forma Condensed Combined Financial Statements.
</FN>
</TABLE>
<PAGE>
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The unaudited pro forma condensed combined balance sheet as of June 30,
1998, combines the historical consolidated balance sheet of Zions Bancorporation
(Zions) and the historical balance sheet of The Sumitomo Bank of California
(Sumitomo) as if the acquisition had taken place on June 30, 1998. The pro forma
condensed combined statements of income for the year ended December 31, 1997,
and the six months ended June 30, 1998, combine the historical consolidated
statements of income for Zions and the historical statements of income for
Sumitomo as if the acquisition had been consummated on January 1, 1997.
The Company's balance sheet as of June 30, 1998 and statements of
income for the year ended December 31, 1997 and the six months ended June 30,
1998 have been restated to reflect the acquisitions of Vectra Banking
Corporation, FP Bancorp, Inc. and The Commerce Bancorporation which were
consummated during 1998 and accounted for as poolings of interests.
The acquisition of Sumitomo will be accounted for as a purchase. Under
this method of accounting the assets and liabilities of Sumitomo will be
adjusted to their estimated fair values and combined with the recorded book
values of the assets and liabilities of Zions. For purposes of the pro forma
financial statements, it has been assumed that the net book value of Sumitomo's
assets minus liabilities approximates fair value.
NOTE B: PURCHASE PRICE AND FUNDING
The purchase price is based upon cash consideration of $546 million
paid for the outstanding shares of Sumitomo. Sumitomo's parent, The Sumitomo
Bank, Limited, received approximately $453 million ($32.36 per share) and other
shareholders received approximately $93 million ($38.25 per share).
The transaction was financed through a combination of existing
resources and the proceeds from the issuance of securities in the capital
markets as follows: (in millions)
Issuance of Zion's common stock on June 10, 1998
for cash, net of issuance costs of $6 million $130
Reduction of money market investment balances 383
Proceeds from sale of minority interest in Sumitomo 33
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Total purchase price $546
====
Zions sold a minority interest of Sumitomo to a Robert G. Sarver, a
director of Zions and chairman of Grossmont Bank, and to a limited partnership
of which Mr. Sarver is the general partner, at its cost basis. Proceeds from the
sale of the minority interest were approximately $33 million for an approximate
10.8% common equity interest in Sumitomo after the payment of a $250 million
dividend by Sumitomo to Zions. The pro forma condensed combined statement of
income for the year ended December 31, 1997 includes a pro forma adjustment to
other noninterest expense of $2.3 million for the minority interest
shareholder's estimated 10.8% portion of Sumitomo's pro forma net income
applicable to common stock. An adjustment is not included for the six months
ended June 30, 1998 since Sumitomo's adjusted pro forma net income approximates
zero. Pro forma adjustments to the condensed combined balance sheet as of June
30, 1998 include an increase in other liabilities of $33 million for the sale of
the minority interest.
<PAGE>
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(unaudited)
Zions has entered into an agreement with Mr. Sarver in order to provide
an appropriate incentive to expand Zions' California banking operations and
distribution network. Pursuant to the agreement, Mr. Sarver serves as the chief
executive officer of California Bank & Trust, a subsidiary created from the
combination of Sumitomo, Grossmont Bank, and First Pacific. While such minority
equity interest represents approximately 10.8% of Sumitomo, it amounts to
approximately 5% of the equity interest in California Bank & Trust after such
combination. As part of the agreement, Mr. Sarver and a limited partnership
acquired such 5% equity interest for its cost basis, or approximately $33
million. Mr. Sarver is the general partner of the limited partnership, and the
limited partners of such partnership include, among others, individuals who are
senior officers of the California Bank & Trust.
Zions also agreed to finance a portion of the investment being made by
Mr. Sarver. Zions loaned to Mr. Sarver approximately $14.8 million. The loan is
non-recourse to Mr. Sarver and is secured by the 2.5% equity interest in the
California Bank & Trust held by Mr. Sarver and by 200,000 shares of Zions common
stock owned by Mr. Sarver. The loan bears interest at 200 basis points over the
five year U.S. Treasury rate, compounded annually and is payable at maturity in
2003. At maturity, for a period of 90 days, Mr. Sarver and the limited
partnership have the right to put to Zions their equity interest in California
Bank & Trust at a price to be determined by Mr. Sarver and Zions at such time.
The pro forma condensed combined statements of income for the year
ended December 31, 1997 and the six months ended June 30, 1998 include pro forma
adjustments of $1.1 million and $0.6 million, respectively, increasing interest
and fees on loans for the interest income on the loan. Pro forma adjustments to
increase loans $15 million and decrease money market investments $15 for the
loan funding are also included in the pro forma condensed combined balance
sheet.
Money market investments have been reduced on the pro forma condensed
combined balance sheet by $539 million, $524 million of which represents a
portion of the total pro forma cash purchase price including acquisition costs
and $15 million of which represents the funding of the loan to Mr. Sarver
Interest on money market investments in the pro forma condensed combined
statements of income for the year ended December 31, 1997 and the six months
ended June 30, 1998 have been reduced by $23.9 million and $11.9 million,
respectively, representing the lost interest on the money market investments
determined using the combined average rate earned on money market investments
during the periods.
Pro forma weighted average common shares and pro forma weighted average
common and common-equivalent shares outstanding during the year ended December
31, 1997 and the six months ended June 30, 1998 have been increased to reflect
the issuance of 2,760,000 shares of common stock in a public stock offering
completed on June 10, 1998 to partly finance the acquisition.
<PAGE>
ZIONS BANCORPORATION AND THE SUMITOMO BANK OF CALIFORNIA
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(unaudited)
NOTE C: PURCHASE PREMIUM
The purchase premium resulting from the acquisition reflected in the
accompanying pro forma condensed combined balance sheet as of June 30, 1998 was
determined as follows: (in millions)
Total cash consideration paid for common stock of Sumitomo $546
Acquisition costs 11
----
Subtotal 557
Common shareholders' equity of Sumitomo 429
----
Subtotal 128
Deferred tax asset adjustment 10
----
Total purchase premium adjustment $118
====
For purposes of these pro forma financial statements it has been
assumed that the net book value of Sumitomo's assets minus liabilities
approximates fair value. Accordingly the cost of the acquisition in excess of
Sumitomo's common equity, net of a $10 million adjustment of deferred tax
assets, is reflected in the accompanying pro forma condensed combined balance
sheet as purchase premium. The amortization of the purchase premium in the pro
forma condensed combined statements of income in the amounts of $4.7 million for
the year ended December 31, 1997 and $2.4 million for the six months ended June
30, 1998 have been determined using an amortization life of 25 years. Certain
matters are still pending that will have an effect on the ultimate allocation of
the purchase price. Accordingly, the allocation of the purchase price has not
been finalized.
NOTE D: MERGER EXPENSE
Estimated nonrecurring merger expenses of approximately $25 million are
expected to be incurred during the fourth quarter of 1998. These expenses are
not included in the pro forma condensed combined statements of income.
