SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
---------------------
Date of Report (Date of earliest
event reported)
February 17, 2000 (February 7, 2000)
Zions Bancorporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 0-2610 87-0227400
- ------------------- --------------------------------- ------------------------
(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
One South Main, Suite 1380, Salt Lake City, Utah 84111
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 524-4787
-------------------------------
(Registrant's telephone number,
including area code)
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
Items 1-4.
Not Applicable.
Item 5. Other Events.
A copy of the press release issued by the Registrant
on February 7, 2000 announcing its fourth quarter earnings
is attached hereto as Exhibit 99.1.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits
The following exhibits are filed with this Current Report on
Form 8-K:
Exhibit
Number Description
- ------ -----------
99.1 Press release, dated February 7, 2000
Item 8. Change in Fiscal Year.
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable.
2
<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 hereunto duly authorized.
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
-----------------------------
Name: Dale M. Gibbons
Title: Executive Vice
President and Chief
Financial Officer
Date: February 17, 2000
3
***FOR IMMEDIATE RELEASE***
FOR: ZIONS BANCORPORATION
One South Main, Suite 1380 Contact: Dale Gibbons
Salt Lake City, Utah Tel: (801) 524-4787
Harris H. Simmons February 7, 2000
President/Chief Executive Officer
ZIONS BANCORPORATION REPORTS 22.2% INCREASE IN
OPERATING CASH EARNINGS PER SHARE
Salt Lake City, Utah, February 7, 2000 - Zions Bancorporation (Nasdaq: ZION)
today reported net income before merger-related charges of $58.2 million or
$0.67 per diluted share for the fourth quarter of 1999. After merger-related
charges of $15.7 million net of tax or $0.18 per share, the Company reported net
income of $42.5 million or $0.49 per diluted share. Return on average equity was
9.87% for the quarter and return on average assets was .80%.
Operating cash earnings for the quarter were $66.4 million or $0.77 per diluted
share, an increase of 24.8% and 22.2%, respectively, over the $53.2 million or
$0.63 per diluted share earned in the fourth quarter of 1998. Historical
performance data have been restated to reflect the merger with Pioneer
Bancorporation in the fourth quarter and to account for a number of business
combinations conducted in 1997 and 1998 as purchases instead of poolings of
interests. The Company and its independent auditors, KPMG LLP believed and
continue to believe that there is substantial support for its accounting for
these business combinations as poolings of interests. However, in light of the
Securities and Exchange Commission Staff's views that certain share repurchases
undertaken by the Company violated Staff Accounting Bulletin 96, the Company has
decided to restate its financial statements for a number of these business
combinations. The change in the accounting method for these business
combinations reduced net income by $0.06 during the quarter. Operating cash ROE
for the fourth quarter of 1999 was 25.5% and cash ROA was 1.29%. The Company's
operating cash efficiency ratio was 58.1% for the quarter compared to 59.5% for
the third quarter. Operating cash earnings are earnings before the amortization
of goodwill and core deposit intangible assets and merger-related charges.
Operating cash performance ratios are determined as if goodwill, core deposit
intangible assets and merger-related charges have not been recognized in the
financial statements.
1
<PAGE>
For 1999, operating cash earnings were $243.8 million or $2.84 per diluted
share, an increase of 25.4% and 19.8%, respectively, over the restated $194.4
million or $2.37 per share earned last year. For 1999, cash ROE was 26.9% and
cash ROA was 1.27%. Net income for the year was $194.1 million or $2.26 per
diluted share, including $18.5 million or $0.22 per diluted share in after tax
merger-related charges. For the year, ROE was 12.4% and ROA was 0.97%.
"Nineteen ninety-nine capped a decade of impressive performance for our Company,
with compounded earnings per share growth in excess of 20 percent during the
'90's," remarked Harris Simmons, president and chief executive officer of Zions.
"Although the delay in closing our merger with First Security has been
frustrating, as we have mapped out our integration plan our enthusiasm has
increased for the value creation opportunities that this business combination
will have for our shareholders. We expect to file our restated earnings in
accordance with the SEC interpretation within a week and schedule the
shareholder vote in March. The transaction should close immediately thereafter."
For the fourth quarter of 1999, average on-balance-sheet and sold and serviced
loans (excluding long-term residential first mortgages) increased 14.8% to
$13.73 billion and average deposits increased 2.5% to $14.32 billion over the
balances reported one year ago. For the quarter, taxable-equivalent net interest
income increased 4.81% to $195.9 million, noninterest income was $74.5 million,
an increase of 22.0%, and noninterest expense, excluding goodwill and core
deposit amortization and merger-related charges, was down 3.0% to $157.2
million.
The ratio of nonperforming assets to total loans and other real estate was 0.58%
at December 31, 1999 compared to 0.48% at September 30. For the quarter, net
loan and lease losses were $9.0 million or 0.29% of average loans on an
annualized basis. For the year, net loan and lease losses were $29.0 million or
0.25% of average loans. At $204 million at December 31, 1999, the allowance for
loan losses was approximately three times nonperforming loans and 1.60% of total
loans.
In order to secure regulatory approval for the Company's merger with First
Security Corporation, in January the Company and First Security agreed to sell
68 branch offices with approximately $2.1 billion in deposits and $0.7 billion
in loans to another financial institution. This sale is anticipated to close in
the second quarter at which time the Company expects to report a gain of
approximately 9.8% of the deposits transferred.
2
<PAGE>
Under local management teams, Zions operates over 300 full-service banking
offices in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Utah and
Washington. It also offers a comprehensive array of investment, mortgage,
insurance, and electronic commerce services and has a network of loan
origination offices for small businesses nationwide. Investor information and
product offerings can be accessed at and www.zionsbank.com. Information
regarding digital certificate services is available at www.digsigtrust.com.
Forward Looking Information
This news release contains statements regarding the timing of the close and the
projected performance of Zions and First Security assuming the merger of these
companies is completed. These statements constitute forward looking information
within the meaning of the Private Securities Litigation Reform Act. Actual
results of achievements may differ materially from the projections provided in
this release since such projections involve significant known and unknown risks
and uncertainties. Factors that might cause such differences include, but are
not limited to: the timing of closing the proposed merger being delayed or such
merger activities being prohibited; competitive pressures among financial
institutions increasing significantly; economic conditions, either nationally or
locally in areas in which the banks conduct their operations being less
favorable than expected; the cost and effort required to integrate the companies
being more difficult than expected or the required divestitures of branches or
deposits being greater than expected; expected cost savings from the proposed
merger not being fully realized or realized within the expected time frame; and
legislation or regulatory changes which adversely affect the ability of the
combined company to conduct, or the accounting for, business combinations and
new operations. The Company disclaims any obligation to update such factors or
to publicly announce the results of any revisions to any of the forward looking
statements included herein to reflect future events or developments.
3
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except per ------------------------------ --------------------------------
share and ratio data) 1999 1998 % Change 1999 1998 % Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Taxable-equivalent net interest income .. $195,930 $186,939 4.81 % $757,674 $583,901 29.76%
Net interest income ..................... 191,514 184,445 3.83 % 741,489 573,942 29.19%
Noninterest income ...................... 74,467 61,056 21.97 % 266,545 210,197 26.81%
Provision for loan losses ............... 4,555 3,635 25.31 % 17,956 14,034 27.95%
Noninterest expense ..................... 190,038 197,122 3.59)% 681,567 556,700 22.43%
Income before income taxes .............. 71,388 44,744 59.55 % 308,511 213,405 44.57%
Income taxes ............................ 26,552 14,387 84.56 % 109,498 69,632 57.25%
Minority interest ....................... 2,287 420 444.52 % 4,949 420 1,078.33%
Net income .............................. 42,549 29,937 42.13 % 194,064 143,353 35.37%
PER COMMON SHARE
Net income (diluted) .................... 0.49 0.35 40.00 % 2.26 1.75 29.14%
Dividends ............................... -- 0.14 -- 0.72 0.54 33.33%
Book value .............................. 19.39 17.39 11.50%
SELECTED RATIOS
Return on average assets ................ 0.80% 0.65% 0.97% 1.00%
Return on average common equity ......... 9.87% 8.16% 12.42% 10.98%
Efficiency ratio ........................ 70.28% 79.49% 66.55% 70.10%
Net interest margin ..................... 4.18% 4.50% 4.31% 4.56%
OPERATING CASH EARNINGS*
Taxable-equivalent net interest income .. $195,930 $186,939 4.81 % $757,674 $583,901 29.76%
Net interest income ..................... 191,514 184,445 3.83 % 741,489 573,942 29.19%
Noninterest income ...................... 74,467 61,056 21.97 % 266,545 210,197 26.81%
Provision for loan losses ............... 4,555 3,635 25.31 % 17,956 14,034 27.95%
Noninterest expense ..................... 157,175 162,046 (3.01)% 617,868 486,931 26.89%
Income before income taxes .............. 104,251 79,820 30.61 % 372,210 283,174 31.44%
Income taxes ............................ 35,574 26,186 35.85 % 123,461 88,384 39.69%
Minority interest ....................... 2,287 420 444.52 % 4,949 420 1,078.33%
Net income .............................. 66,390 53,214 24.76 % 243,800 194,370 25.43%
PER COMMON SHARE
Net income (diluted) .................... 0.77 0.63 22.22 % 2.84 2.37 19.83%
Dividends ............................... -- 0.14 -- 0.72 0.54 33.33%
Book value .............................. 11.61 9.44 22.99%
SELECTED RATIOS
Return on average assets ................ 1.29% 1.19% 1.27% 1.41%
Return on average common equity ......... 25.53% 27.15% 26.87% 26.56%
Efficiency ratio ........................ 58.13% 65.34% 60.33% 61.32%
Net interest margin ..................... 4.18% 4.50% 4.31% 4.56%
</TABLE>
* Before amortization of goodwill and core deposit intangible assets and merger
charges.
4
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except per ------------------------------------- ---------------------------------------
share and ratio data) 1999 1998 % Change 1999 1998 % Change
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCES
Total assets .................................. $21,112,766 $18,382,708 14.85 % $19,912,439 $14,397,115 38.31 %
Securities .................................... 4,802,835 4,156,117 15.56 % 4,556,049 3,549,470 28.36 %
Net loans and leases .......................... 12,496,479 10,927,875 14.35 % 11,819,094 7,631,511 54.87 %
Goodwill and core deposit intangibles ......... 678,822 677,217 0.24 % 655,266 573,064 14.34 %
Total deposits ................................ 14,317,431 13,968,660 2.50 % 14,088,114 10,225,022 37.78 %
Minority interest ............................. 38,282 35,393 8.16 % 37,355 8,848 322.19 %
Shareholders' equity .......................... 1,710,681 1,454,811 17.59 % 1,562,442 1,304,998 19.73 %
Weighted average common and common-
equivalent shares outstanding ............ 86,535,419 85,075,350 1.72 % 85,694,556 81,918,082 4.61 %
AT PERIOD END
Total assets .................................. $20,280,900 $18,049,623 12.36 %
Securities .................................... 4,437,219 3,996,668 11.02 %
Net loans and leases .......................... 12,790,645 11,219,486 14.00 %
Sold loans being serviced* .................... 1,252,791 981,784 27.60 %
Allowance for loan losses ..................... 204,114 212,557 (3.97)%
Goodwill and core deposit intangibles ......... 666,219 663,606 0.39 %
Total deposits ................................ 14,061,939 14,220,910 (1.12)%
Minority interest ............................. 39,249 34,670 13.21 %
Shareholders' equity .......................... 1,659,838 1,452,631 14.26 %
Common shares outstanding ..................... 85,592,643 83,554,630 2.44 %
Average equity to average assets .............. 8.10% 7.91% 7.85% 9.06%
Common dividend payout ........................ -- 36.80% 29.33% 28.40%
Nonperforming assets .......................... 74,598 65,155 14.49 %
Loans past due 90 days or more ................ 20,939 25,779 (18.77)%
Nonperforming assets to net loans and leases,
other real estate owned and other
nonperforming assets at December 31 ...... 0.58% 0.58%
</TABLE>
* Amount represents the outstanding balance of loans sold and being serviced by
the Company, excluding long-term first mortgage residential real estate
loans.
5
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, December 31,
(In thousands, except share amounts)
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks ............................................. $ 898,300 $ 922,654
Money market investments:
Interest-bearing deposits ...................................... 17,371 30,484
Federal funds sold ............................................. 85,898 246,946
Security resell agreements ..................................... 421,900 382,275
Investment securities:
Held to maturity, at cost (approximate market value
$3,290,508 and $2,869,162) ..................................... 3,330,444 2,850,756
Available for sale, at market .................................. 778,930 954,057
Trading account, at market...................................... 327,845 191,855
------------ ------------
4,437,219 3,996,668
Loans:
Loans held for sale ............................................ 204,800 232,253
Loans, leases, and other receivables ........................... 12,648,325 11,037,292
------------ ------------
12,853,125 11,269,545
Less:
Unearned income and fees, net of related costs ................. 62,480 50,059
Allowance for loan losses ...................................... 204,114 212,557
------------ ------------
Net Loans ................................................ 12,586,531 11,006,929
Premises and equipment, net ......................................... 287,448 249,896
Goodwill and core deposit intangibles ............................... 666,219 663,606
Other real estate owned ............................................. 8,939 5,270
Other assets ........................................................ 871,075 544,895
------------ ------------
$ 20,280,900 $ 18,049,623
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing ............................................. $ 3,276,097 $ 3,394,884
Interest-bearing:
Savings and money market ................................... 7,660,786 6,544,607
Time:
Under $100,000 ......................................... 1,836,645 2,439,696
Over $100,000 .......................................... 1,078,631 1,637,479
Foreign .................................................... 209,780 204,244
------------ ------------
14,061,939 14,220,910
Securities sold, not yet purchased .................................. 237,020 29,702
Federal funds purchased ............................................. 825,997 337,283
Security repurchase agreements ...................................... 1,366,653 992,671
Accrued liabilities ................................................. 247,406 321,258
Commercial paper .................................................... 238,660 49,217
Federal Home Loan Bank advances and other borrowings:
Less than one year ............................................. 1,038,045 100,750
Over one year .................................................. 112,622 56,796
Long-term debt ...................................................... 453,471 453,735
------------ ------------
Total liabilities .......................................... 18,581,813 16,562,322
------------ ------------
Minority interest ................................................... 39,249 34,670
Shareholders' equity:
Capital stock:
Preferred stock, without par value; authorized
3,000,000 shares; issued and outstanding, none ........ -- --
Common stock, without par value; authorized
200,000,000 shares; issued and outstanding 85,592,643,
and 83,554,630 shares ................................... 888,231 796,519
Accumulated other comprehensive loss ........................... (4,158) (3,407)
Retained earnings .............................................. 775,765 659,519
------------ ------------
Total shareholders' equity ................................ 1,659,838 1,452,631
------------ ------------
$ 20,280,900 $ 18,049,623
============ ============
</TABLE>
6
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- --------------------------
(In thousands, except per share amounts) 1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans ............................... $ 269,585 $ 236,783 $ 1,001,741 $ 694,338
Interest on loans held for sale .......................... 2,921 3,604 12,194 14,256
Lease financing .......................................... 3,522 3,429 13,293 12,630
Interest on money market investments ..................... 17,694 20,193 67,234 92,248
Interest on securities:
Held to maturity:
Taxable ........................................ 47,239 37,129 175,701 131,712
Nontaxable ..................................... 4,463 4,778 18,784 16,154
Available for sale:
Taxable ........................................ 8,245 12,835 36,480 44,735
Nontaxable ..................................... 1,733 931 3,844 2,733
Trading account ..................................... 7,958 5,917 30,067 24,043
----------- ----------- ----------- -----------
Total interest income ............................... 363,360 325,599 1,359,338 1,032,849
----------- ----------- ----------- -----------
Interest expense:
Interest on savings and money market deposits ............ 69,614 50,247 247,729 173,833
Interest on time and foreign deposits .................... 38,126 56,955 166,749 143,313
Interest on borrowed funds ............................... 64,106 33,952 203,371 141,761
----------- ----------- ----------- -----------
Total interest expense .............................. 171,846 141,154 617,849 458,907
----------- ----------- ----------- -----------
Net interest income ................................. 191,514 184,445 741,489 573,942
Provision for loan losses ..................................... 4,555 3,635 17,956 14,034
----------- ----------- ----------- -----------
Net interest income after provision for loan losses . 186,959 180,810 723,533 559,908
----------- ----------- ----------- -----------
Noninterest income:
Service charges on deposit accounts ...................... 19,851 18,439 76,756 61,131
Other service charges, commissions and fees .............. 15,992 17,260 66,098 57,027
Trust income ............................................. 3,915 3,943 15,762 10,969
Investment securities gain (loss), net ................... (3,931) (26) (5,266) 4,055
Underwriting and trading income .......................... 2,758 3,657 11,551 9,239
Loan sales and servicing income .......................... 2,311 12,325 40,516 50,365
Other income ............................................. 33,571 5,458 61,128 17,411
----------- ----------- ----------- -----------
Total noninterest income ............................ 74,467 61,056 266,545 210,197
----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits ........................... 86,992 85,758 346,710 261,531
Occupancy, net ........................................... 12,278 12,298 49,393 33,387
Furniture and equipment .................................. 12,737 11,193 45,477 38,256
Other real estate expense (income) ....................... 340 505 (66) 656
Legal and professional services .......................... 3,504 5,839 16,156 16,345
Supplies ................................................. 2,520 3,721 11,168 11,904
Postage .................................................. 2,455 3,814 11,656 11,030
Advertising .............................................. 4,689 4,249 18,502 12,613
Merger related expense ................................... 23,376 25,927 27,691 38,128
FDIC premiums ............................................ 442 497 2,152 1,528
Amortization of goodwill and core deposit intangibles .... 9,487 9,149 36,008 31,641
Amortization of mortgage servicing assets ................ 40 1,776 911 5,484
Other .................................................... 31,178 32,396 115,809 94,197
----------- ----------- ----------- -----------
Total noninterest expense ........................... 190,038 197,122 681,567 556,700
----------- ----------- ----------- -----------
Income before income taxes and minority interest .............. 71,388 44,744 308,511 213,405
Income taxes .................................................. 26,552 14,387 109,498 69,632
----------- ----------- ----------- -----------
Net income before minority interest ................. 44,836 30,357 199,013 143,773
Minority interest ............................................. 2,287 420 4,949 420
----------- ----------- ----------- -----------
Net income .......................................... $ 42,549 $ 29,937 $ 194,064 $ 143,353
=========== =========== =========== ===========
Weighted average common and common-equivalent shares
outstanding during the period ....................... 86,535 85,075 85,695 81,918
Net income per common share:
Basic .................................................... $ 0.50 $ 0.36 $ 2.29 $ 1.77
Diluted .................................................. $ 0.49 $ 0.35 $ 2.26 $ 1.75
</TABLE>
7
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
----------------------------------------------------------------------
Accumulated
Other Total
Common Comprehensive Comprehensive Retained Shareholders'
(In thousands) Stock Income Income (Loss) Earnings Equity
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1999 ................................... $ 796,519 $ (3,407) $ 659,519 $ 1,452,631
Net income for the year .................................... $ 194,064 194,064 194,064
------------
Other comprehensive income, net of tax:
Realized and unrealized holding loss arising
during the period, net of tax benefit of $5,405 ..... (8,726)
Reclassification for net realized securities loss
recorded in the income statement, net of tax
benefit of $4,940 ................................ 7,975
------------
Other comprehensive loss ............................... (751) (751) (751)
------------
Total comprehensive income ............................. $ 193,313
============
Cash dividends:
Common, $.72 per share ................................. (56,914) (56,914)
Stock dividend of acquired company ......................... 21,694 (21,701) (7)
Issuance of common shares for acquisitions ................. 58,358 797 59,155
Stock redeemed and retired ................................. (6,650) (6,650)
Stock options exercised, net of shares tendered and retired 18,310 18,310
------------ ------------ ------------ ------------
Balance, December 31, 1999 ................................. $ 888,231 $ (4,158) $ 775,765 $ 1,659,838
============ ============ ============ ============
Year Ended
December 31, 1998
----------------------------------------------------------------------
Accumulated
Other Total
Common Comprehensive Comprehensive Retained Shareholders'
(In thousands) Stock Income Income (Loss) Earnings Equity
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 ................................... $ 292,383 $ 4,537 $ 559,686 $ 856,606
Net income for the year .................................... $ 143,353 143,353 143,353
------------
Other comprehensive income, net of tax:
Realized and unrealized holding loss arising
during the period, net of tax benefit of $3,595 ..... (5,803)
Reclassification for realized investment
Securities gain recorded in the income
Statement, net of tax expense of $1,551 ............. (2,504)
------------
Other comprehensive loss ............................... (8,307) (8,307) (8,307)
------------
Total comprehensive income ............................. $ 135,046
============
Cash dividends:
Common, $.54 per share ................................. (40,715) (40,715)
Dividend of acquired companies prior to merger ......... (887) (887)
Stock dividend of acquired company ......................... 21,000 (21,009) (9)
Net proceeds from stock offering ........................... 130,131 130,131
Issuance of common shares for acquisitions ................. 368,259 363 19,091 387,713
Exercise of acquired company warrants
prior to acquisition .................................. 1,852 1,852
Stock redeemed and retired ................................. (25,696) (25,696)
Stock options exercised, net of shares tendered and retired 8,590 8,590
------------ ------------ ------------ ------------
Balance, December 31, 1998 ................................. $ 796,519 $ (3,407) $ 659,519 $ 1,452,631
============ ============ ============ ============
</TABLE>
Comprehensive income for the three months ended December 31, 1999 and 1998 was
$50,667 and $27,058, respectively.
Note to Consolidated Financial Statements
The consolidated financial statements for 1998 have been restated to give
effect to the merger of Pioneer Bancorporation which was acquired during the
last quarter of 1999 and accounted for as a pooling of interests. The
consolidated financial statements have also been restated to account for certain
business combinations consummated during 1997 and 1998, using the purchase
method of accounting instead of the pooling of interests method originally used
to account for the acquisitions.
8
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
Sold Loans Being Serviced*
(Unaudited) Year Ended
December 31,
-------------------------
(In thousands) 1999 1998
----------- -----------
Balance at beginning of the year ................. $ 981,784 $ 1,050,293
Add:
New loans sold .............................. 1,042,650 825,973
Deduct:
Payments and other reductions ............... (771,643) (894,482)
----------- -----------
Balance at end of the year ....................... $ 1,252,791 $ 981,784
=========== ===========
* Amount represents the outstanding balance of loans sold and being serviced by
the Company, excluding long-term first mortgage residential real estate
loans.
Nonperforming Assets
(Unaudited)
Year Ended
December 31,
-----------------
(In thousands) 1999 1998
------- -------
Nonaccrual loans ................................. $64,797 $54,673
Restructured loans ............................... 862 5,212
Other real estate owned and other
nonperforming assets ........................ 8,939 5,270
------- -------
Total ............................................ $74,598 $65,155
======= =======
% of net loans and leases*, other real estate
owned and other nonperforming assets ........ .58% .58%
Accruing loans past due 90 days or more .......... $20,939 $25,779
======= =======
% of net loans and leases* ....................... .16% .23%
* Includes loans held for sale
Allowance for Loan Losses
(Unaudited)
Year Ended
December 31,
---------------------
(In thousands) 1999 1998
--------- ---------
Balance at beginning of the year ................. $ 212,557 $ 88,622
Allowance for loan losses of companies acquired .. 2,623 125,691
Add:
Provision for losses ........................ 17,956 14,034
Deduct:
Loan and lease charge-offs .................. (45,566) (25,206)
Recoveries .................................. 16,544 9,416
--------- ---------
Net loan and lease charge-offs ......... (29,022) (15,790)
--------- ---------
Balance at end of the year ....................... $ 204,114 $ 212,557
========= =========
9
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)
<TABLE>
<CAPTION>
Twelve Months Ended Twelve Months Ended
December 31, 1999 December 31, 1998
----------------------------------------- -----------------------------------------
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 .................... $ 1,184,699 $ 67,234 5.68% $ 1,629,446 $ 92,248 5.66%
Securities:
Held to maturity ....................... 3,277,427 204,599 6.24% 2,270,680 154,789 6.82%
Available for sale ..................... 740,537 42,394 5.72% 848,951 48,639 5.73%
Trading account ........................ 538,085 30,067 5.59% 429,839 24,043 5.59%
------------ ------------ ------------ ------------
Total securities .................. 4,556,049 277,060 6.08% 3,549,470 227,471 6.41%
------------ ------------ ------------ ------------
Loans:
Loans held for sale .................... 178,076 12,194 6.85% 201,609 14,256 7.07%
Net loans and leases(2)................. 11,641,018 1,019,035 8.75% 7,429,902 708,833 9.54%
------------ ------------ ------------ ------------
Total loans ....................... 11,819,094 1,031,229 8.73% 7,631,511 723,089 9.48%
------------ ------------ ------------ ------------
Total interest-earning assets ............... $ 17,559,842 $ 1,375,523 7.83% $ 12,810,427 $ 1,042,808 8.14%
------------ ------------
Cash and due from banks ..................... 856,178 657,204
Allowance for loan losses ................... (211,178) (131,735)
Goodwill and core deposit intangibles ....... 655,266 573,064
Other assets ................................ 1,052,331 488,155
------------ ------------
Total assets ........................ $ 19,912,439 $ 14,397,115
============ ============
LIABILITIES
Interest-bearing deposits:
Savings and NOW deposits ............... $ 1,812,280 $ 44,119 2.43% $ 1,338,428 $ 39,355 2.94%
Money market super NOW deposits ........ 5,520,569 203,610 3.69% 3,711,429 134,478 3.62%
Time deposits under $100,000 ........... 2,084,862 98,506 4.72% 1,650,899 85,743 5.19%
Time deposits $100,000 or more ......... 1,256,698 61,102 4.86% 894,376 49,345 5.52%
Foreign deposits ....................... 164,701 7,141 4.34% 181,804 8,225 4.52%
------------ ------------ ------------ ------------
Total interest-bearing deposits .. 10,839,110 414,478 3.82% 7,776,936 317,146 4.08%
------------ ------------ ------------ ------------
Borrowed funds:
Securities sold, not yet purchased ..... 271,434 15,622 5.76% 201,842 10,026 4.97%
Federal funds purchased and security
repurchase agreements ............. 2,368,599 108,490 4.58% 1,908,243 90,446 4.74%
Commercial paper ....................... 194,200 10,808 5.57% 27,804 1,605 5.77%
FHLB advances and other borrowings:
less than one year ................ 545,463 28,505 5.23% 63,365 4,031 6.36%
over one year ..................... 76,213 4,824 6.33% 114,034 6,602 5.79%
Long-term debt ......................... 452,618 35,122 7.76% 346,697 29,051 8.38%
------------ ------------ ------------ ------------
Total borrowed funds .............. 3,908,527 203,371 5.20% 2,661,985 141,761 5.33%
------------ ------------ ------------ ------------
Total interest-bearing liabilities $ 14,747,637 $ 617,849 4.19% $ 10,438,921 $ 458,907 4.40%
------------ ------------
Noninterest-bearing deposits ................ 3,249,004 2,448,086
Other liabilities ........................... 316,001 196,262
------------ ------------
Total liabilities ................. 18,312,642 13,083,269
Minority interest ........................... 37,355 8,848
Total shareholders' equity ........ 1,562,442 1,304,998
------------ ------------
Total liabilities and shareholders'
equity ......................... $ 19,912,439 $ 14,397,115
============ ============
Spread on average interest-bearing funds .... 3.64% 3.74%
============ ============
Net interest income and net yield on
interest-earning assets ................ $ 757,674 4.31% $ 583,901 4.56%
============ ============ ============ ============
</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.
10
<PAGE>
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
December 31, 1999 December 31, 1998
----------------------------------------- -----------------------------------------
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 .................... $ 1,286,174 $ 17,694 5.46% $ 1,389,585 $ 20,193 5.77%
Securities:
Held to maturity ....................... 3,503,828 54,105 6.13% 2,659,824 43,955 6.56%
Available for sale ..................... 755,711 10,911 5.73% 1,011,716 14,165 5.55%
Trading account ........................ 543,296 7,959 5.81% 484,577 5,917 4.84%
------------ ------------ ------------ ------------
Total securities .................. 4,802,835 72,975 6.03% 4,156,117 64,037 6.11%
------------ ------------ ------------ ------------
Loans:
Loans held for sale .................... 156,581 2,921 7.40% 217,626 3,604 6.57%
Net loans and leases(2) ................ 12,339,898 274,186 8.82% 10,710,249 240,259 8.90%
------------ ------------ ------------ ------------
Total loans ....................... 12,496,479 277,107 8.80% 10,927,875 243,863 8.85%
------------ ------------ ------------ ------------
Total interest-earning assets ............... $ 18,585,488 $ 367,776 7.85% $ 16,473,577 $ 328,093 7.90%
------------ ------------
Cash and due from banks ..................... 923,795 736,450
Allowance for loan losses ................... (210,107) (218,450)
Goodwill and core deposit intangibles ....... 678,822 677,217
Other assets ................................ 1,134,768 713,914
------------ ------------
Total assets ........................ $ 21,112,766 $ 18,382,708
============ ============
LIABILITIES
Interest-bearing deposits:
Savings and NOW deposits ............... $ 1,890,469 $ 12,753 2.68% $ 1,393,163 $ 9,839 2.80%
Money market super NOW deposits ........ 5,891,378 56,861 3.83% 4,907,403 40,408 3.27%
Time deposits under $100,000 ........... 1,886,646 22,212 4.67% 2,636,585 32,521 4.89%
Time deposits $100,000 or more ......... 1,159,585 14,050 4.81% 1,665,891 22,179 5.28%
Foreign deposits ....................... 160,267 1,864 4.61% 198,625 2,255 4.50%
------------ ------------ ------------ ------------
Total interest-bearing deposits ... 10,988,345 107,740 3.89% 10,801,667 107,202 3.94%
------------ ------------ ------------ ------------
Borrowed funds:
Securities sold, not yet purchased ..... 231,930 3,467 5.93% 222,923 2,582 4.60%
Federal funds purchased and security
repurchase agreements ............. 2,807,286 34,310 4.85% 1,807,742 19,820 4.35%
Commercial paper ....................... 301,435 4,513 5.94% 73,581 1,091 5.88%
FHLB advances and other borrowings:
less than one year ................ 773,955 11,158 5.72% 69,587 1,091 6.22%
over one year ..................... 115,402 1,704 5.86% 62,206 1,004 6.40%
Long-term debt ......................... 452,288 8,954 7.85% 428,958 8,364 7.74%
------------ ------------ ------------ ------------
Total borrowed funds .............. 4,682,296 64,106 5.43% 2,664,997 33,952 5.05%
------------ ------------ ------------ ------------
Total interest-bearing liabilities $ 15,670,641 $ 171,846 4.35% $ 13,466,664 $ 141,154 4.16%
------------ ------------
Noninterest-bearing deposits ................ 3,329,086 3,166,993
Other liabilities ........................... 364,076 258,847
------------ ------------
Total liabilities ................. 19,363,803 16,892,504
Minority interest ........................... 38,282 35,393
Total shareholders' equity ........ 1,710,681 1,454,811
------------ ------------
Total liabilities and shareholders'
equity ......................... $ 21,112,766 $ 18,382,708
============ ============
Spread on average interest-bearing funds .... 3.50% 3.74%
============ ============
Net interest income and net yield on
interest-earning assets ................ $ 195,930 4.18% $ 186,939 4.50%
============ ============ ============ ============
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>
