-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DGRXF0sqT2x7VqK7k5QN0Alc+yC++9FUL6/8h20RdWvchM1y4OEHMzd1lNuIaCJ6 eefE/i2JOE0DUI+qKKfU0Q== /in/edgar/work/20000814/0000109380-00-000034/0000109380-00-000034.txt : 20000921 0000109380-00-000034.hdr.sgml : 20000921 ACCESSION NUMBER: 0000109380-00-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZIONS BANCORPORATION /UT/ CENTRAL INDEX KEY: 0000109380 STANDARD INDUSTRIAL CLASSIFICATION: [6021 ] IRS NUMBER: 870227400 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02610 FILM NUMBER: 695482 BUSINESS ADDRESS: STREET 1: ONE SOUTH MAIN STREET STREET 2: SUITE 1380 CITY: SALT LAKE CITY STATE: UT ZIP: 84111 BUSINESS PHONE: 8015244787 MAIL ADDRESS: STREET 1: ONE SOUTH MAIN STREET STREET 2: SUITE 1380 CITY: SALT LAKE CITY STATE: UT ZIP: 84111 FORMER COMPANY: FORMER CONFORMED NAME: ZIONS UTAH BANCORPORATION DATE OF NAME CHANGE: 19870615 FORMER COMPANY: FORMER CONFORMED NAME: ZIONS FIRST NATIONAL INVESTMENT CO DATE OF NAME CHANGE: 19660921 10-Q 1 0001.txt ZIONS BANCORPORATION QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 0-2610 ZIONS BANCORPORATION (Exact name of Registrant as specified in its charter) UTAH 87-0227400 - ------------------------------------------ ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) ONE SOUTH MAIN, SUITE 1380 SALT LAKE CITY, UTAH 84111 - ------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (801)524-4787 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirement for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, without par value, outstanding at August 4, 2000 86,884,952 shares 1 ZIONS BANCORPORATION AND SUBSIDIARIES INDEX Page ---- PART I. FINANCIAL INFORMATION --------------------- ITEM 1. Financial Statements (unaudited) Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income 7 Notes to Consolidated Financial Statements 8 ITEM 2. Management's Discussion and Analysis 9 PART II. OTHER INFORMATION ----------------- ITEM 4. Submission of Matters to a Vote of Shareholders 27 ITEM 6. Exhibits and Reports on Form 8-K 28 SIGNATURES 28 - ---------- 2 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share amounts) June 30, December 31, June 30, 2000 1999 1999 ------------ ------------ ------------ ASSETS Cash and due from banks ............................................. $ 882,064 $ 898,300 $ 940,807 Money market investments: Interest-bearing deposits ...................................... 18,580 17,371 17,757 Federal funds sold ............................................. 210,986 85,898 163,550 Security resell agreements ..................................... 498,581 421,900 281,351 Investment securities: Held to maturity, at cost (approximate market value $3,209,248, $3,290,508, and $3,263,185) ........................ 3,241,734 3,330,444 3,270,066 Available for sale, at market .................................. 746,324 778,930 710,829 Trading account, at market...................................... 340,070 327,845 416,130 ------------ ------------ ------------ 4,328,128 4,437,219 4,397,025 Loans: Loans held for sale ............................................ 186,644 204,800 195,217 Loans, leases, and other receivables ........................... 13,658,611 12,648,325 11,564,758 ------------ ------------ ------------ 13,845,255 12,853,125 11,759,975 Less: Unearned income and fees, net of related costs ................. 70,004 62,480 52,904 Allowance for loan losses ...................................... 197,430 204,114 212,424 ------------ ------------ ------------ Net Loans ................................................ 13,577,821 12,586,531 11,494,647 Premises and equipment, net ......................................... 294,628 287,448 268,608 Goodwill and core deposit intangibles ............................... 647,564 666,219 642,952 Other real estate owned ............................................. 4,073 8,939 7,322 Other assets ........................................................ 996,010 871,075 851,270 ------------ ------------ ------------ $ 21,458,435 $ 20,280,900 $ 19,065,289 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing ............................................. $ 3,421,032 $ 3,276,097 $ 3,310,150 Interest-bearing: Savings and money market ................................... 7,827,135 7,660,786 7,300,492 Time: Under $100,000 ......................................... 1,665,752 1,836,645 2,052,438 Over $100,000 .......................................... 1,473,213 1,078,631 1,207,206 Foreign .................................................... 126,851 209,780 163,729 ------------ ------------ ------------ 14,513,983 14,061,939 14,034,015 Securities sold, not yet purchased .................................. 311,133 237,020 377,056 Federal funds purchased ............................................. 479,543 825,997 669,115 Security repurchase agreements ...................................... 1,538,393 1,366,653 913,927 Accrued liabilities ................................................. 319,878 247,406 333,164 Commercial paper .................................................... 235,956 238,660 133,969 Federal Home Loan Bank advances and other borrowings: Less than one year ............................................. 1,819,328 1,038,045 532,166 Over one year .................................................. 145,712 112,622 60,216 Long-term debt ...................................................... 420,099 453,471 453,249 ------------ ------------ ------------ Total liabilities .......................................... 19,784,025 18,581,813 17,506,877 ------------ ------------ ------------ Minority interest ................................................... 40,426 39,249 37,162 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 85,726,222, 85,592,643 and 84,422,706 shares ........................ 889,422 888,231 823,552 Accumulated other comprehensive loss ........................... (20,322) (4,158) (4,664) Retained earnings .............................................. 764,884 775,765 702,362 ------------ ------------ ------------ Total shareholders' equity ................................ 1,633,984 1,659,838 1,521,250 ------------ ------------ ------------ $ 21,458,435 $ 20,280,900 $ 19,065,289 ============ ============ ============
3 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------- ---------------------- (In thousands, except per share amounts) 2000 1999 2000 1999 --------- --------- --------- --------- Interest income: Interest and fees on loans ................................. $ 299,142 $ 245,146 $ 579,526 $ 478,203 Interest on loans held for sale ............................ 3,261 3,088 6,580 6,493 Lease financing ............................................ 4,100 3,253 8,312 6,677 Interest on money market investments ....................... 18,313 17,128 38,402 31,944 Interest on securities: Held to maturity: Taxable .......................................... 48,585 42,764 97,327 83,980 Nontaxable ....................................... 4,148 4,959 8,161 9,439 Available for sale: Taxable .......................................... 7,627 8,513 16,189 18,784 Nontaxable ....................................... 1,735 690 3,013 1,399 Trading account ....................................... 9,712 7,983 18,668 14,775 --------- --------- --------- --------- Total interest income ................................. 396,623 333,524 776,178 651,694 --------- --------- --------- --------- Interest expense: Interest on savings and money market deposits .............. 81,140 59,366 156,036 114,016 Interest on time and foreign deposits ...................... 38,244 42,163 77,340 89,746 Interest on borrowed funds ................................. 82,641 46,692 157,212 85,774 --------- --------- --------- --------- Total interest expense ................................ 202,025 148,221 390,588 289,536 --------- --------- --------- --------- Net interest income ................................... 194,598 185,303 385,590 362,158 Provision for loan losses ....................................... 6,214 4,143 11,462 8,884 --------- --------- --------- --------- Net interest income after provision for loan losses ... 188,384 181,160 374,128 353,274 --------- --------- --------- --------- Noninterest income: Service charges on deposit accounts ........................ 19,263 18,636 38,312 37,304 Other service charges, commissions and fees ................ 15,860 18,116 31,699 34,233 Trust income ............................................... 4,548 4,244 9,035 7,621 Investment securities gain (loss), net ..................... 2,321 215 3,456 (1,089) Impairment loss on First Security Corporation common stock . -- -- (96,911) -- Underwriting and trading income ............................ 2,016 3,223 5,363 7,244 Loan sales and servicing income ............................ 12,706 12,410 22,530 27,582 Other income ............................................... 13,885 6,163 20,804 15,592 --------- --------- --------- --------- Total noninterest income .............................. 70,599 63,007 34,288 128,487 --------- --------- --------- --------- Noninterest expense: Salaries and employee benefits ............................. 86,374 86,446 167,511 172,728 Occupancy, net ............................................. 12,910 12,524 25,129 25,189 Furniture and equipment .................................... 13,133 10,810 25,901 21,465 Other real estate expense (income) ......................... 117 (486) 416 (442) Legal and professional services ............................ 5,536 5,240 10,526 8,856 Supplies ................................................... 2,770 3,148 5,276 5,852 Postage .................................................... 2,452 2,999 5,494 5,910 Advertising ................................................ 5,561 6,090 10,125 9,242 Merger-related expense ..................................... 1,152 1,119 42,695 2,164 FDIC premiums .............................................. 894 814 1,761 1,196 Amortization of goodwill and core deposit intangibles ...... 9,307 8,905 18,597 17,633 Amortization of mortgage servicing assets .................. 41 115 121 766 Other ...................................................... 27,065 28,162 54,072 57,932 --------- --------- --------- --------- Total noninterest expense ............................. 167,312 165,886 367,624 328,491 --------- --------- --------- --------- Income before income taxes and minority interest ................ 91,671 78,281 40,792 153,270 Income taxes .................................................... 31,445 26,944 9,490 53,673 --------- --------- --------- --------- Net income before minority interest ................... 60,226 51,337 31,302 99,597 Minority interest ............................................... 643 504 211 1,860 --------- --------- --------- --------- Net income ............................................ $ 59,583 $ 50,833 $ 31,091 $ 97,737 ========= ========= ========= ========= Basic shares .................................................... 85,707 84,396 85,674 84,290 Diluted shares .................................................. 86,323 85,599 86,420 85,482 Net income per common share: Basic ...................................................... $ 0.70 $ 0.60 $ 0.36 $ 1.16 Diluted .................................................... $ 0.69 $ 0.59 $ 0.36 $ 1.14
4 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- (In thousands) 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Cash flows from operating activities: Net income ................................................... $ 59,583 $ 50,833 $ 31,091 $ 97,737 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for loan losses .................................. 6,214 4,143 11,462 8,884 Depreciation of premises and equipment ..................... 11,450 10,241 22,818 19,328 Amortization ............................................... 12,487 12,946 24,571 26,841 Accretion of unearned income and fees, net of related costs ......................................... 11,057 6,918 7,524 9,768 Income to minority interest ................................ 643 504 211 1,860 Proceeds from sales of trading account securities .......... 25,258,087 48,341,852 77,640,435 94,197,450 Increase in trading account securities ..................... (25,201,390) (48,536,855) (77,652,660) (94,421,725) Investment securities (gain) loss, net ..................... (2,321) (215) (3,456) 1,089 Impairment loss on First Security Corporation common stock . -- -- 96,911 -- Proceeds from loans held for sale .......................... 89,753 196,362 282,485 504,471 Increase in loans held for sale ............................ (97,065) (211,989) (264,391) (468,365) Net gain on sales of loans, leases and other assets ........ (8,910) (9,977) (16,874) (22,607) Change in accrued income taxes ............................. (6,404) 8,580 15,529 30,536 Change in accrued interest receivable ...................... 7,912 5,866 (9,420) (6,096) Change in accrued interest payable ......................... (243) (860) 2,775 (1,995) Other, net ................................................. (12,485) (29,686) (43,243) (111,799) ------------ ------------ ------------ ------------ Net cash provided by (used in) operating activities ... 128,368 (151,337) 145,768 (134,623) ------------ ------------ ------------ ------------ Cash flows from investing activities: Net decrease (increase) in money market investments .......... 58,539 10,920 (202,978) 197,222 Proceeds from maturities of investment securities held to maturity ........................................ 455,018 280,128 549,352 576,198 Purchases of investment securities held to maturity .......... (383,971) (447,712) (444,556) (1,003,082) Proceeds from sales of investment securities available for sale ...................................... 171,919 13,099 256,263 151,750 Proceeds from maturities of investment securities available for sale ...................................... 52,447 66,052 79,951 160,203 Purchases of investment securities available for sale ........ (339,528) (100,023) (451,485) (286,491) Proceeds from sales of loans and leases ...................... 154,432 427,133 292,134 623,170 Net increase in loans and leases ............................. (809,995) (594,587) (1,307,747) (1,147,456) Payments on leveraged leases ................................. -- -- (4,943) (4,168) Principal collections on leveraged leases .................... -- -- 4,943 4,168 Proceeds from sales of premises and equipment ................ 3,091 1,784 4,983 3,411 Purchases of premises and equipment .......................... (18,449) (27,056) (34,988) (41,422) Proceeds from sales of mortgage-servicing rights ............. 1,049 6,085 1,994 21,003 Purchases of mortgage-servicing rights ....................... -- (136) (62) (928) Proceeds from sales of other assets .......................... 3,639 1,413 6,972 3,542 Cash paid for acquisitions, net of cash received -- -- -- 592 ------------ ------------ ------------ ------------ Net cash used in investing activities ................. (651,809) (362,900) (1,250,167) (742,288) ------------ ------------ ------------ ------------
5 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- (In thousands) 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Cash flows from financing activities: Net increase (decrease) in deposits .......................... (70,793) (111,663) 452,044 (192,357) Net change in short-term funds borrowed ...................... 585,193 728,941 677,978 1,116,610 Proceeds from FHLB advances over one year .................... 100,000 15,000 200,000 15,000 Payments on FHLB advances over one year ...................... (104,489) (5,582) (166,910) (11,580) Payments on long-term debt ................................... (17,548) (305) (33,372) (486) Proceeds from issuance of common stock ....................... 544 1,237 4,231 2,833 Payments to redeem common stock .............................. (24) (772) (3,836) (966) Dividends paid ............................................... (17,141) (22,930) (41,972) (33,990) ------------ ------------ ------------ ------------ Net cash provided by financing activities .......... 475,742 603,926 1,088,163 895,064 ------------ ------------ ------------ ------------ Net increase (decrease) in cash and due from banks ................ (47,699) 89,689 (16,236) 18,153 Cash and due from banks at beginning of period .................... 929,763 851,118 898,300 922,654 ------------ ------------ ------------ ------------ Cash and due from banks at end of period .......................... $ 882,064 $ 940,807 $ 882,064 $ 940,807 ============ ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- (In thousands) 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Cash paid for: Interest ..................................................... $ 205,431 $ 149,095 $ 391,116 $ 291,533 Income taxes ................................................. 22,552 17,665 22,556 17,720 Loans transferred to other real estate owned ...................... 588 3,247 2,391 5,697
6 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (Unaudited)
Six Months Ended June 30, 2000 --------------------------------------------------------------------- Accumulated other Total Common Comprehensive comprehensive Retained Shareholders' (In thousands) Stock Income income (loss) Earnings Equity ----------- ----------- ------------ ----------- ----------- Balance, January 1, 2000 ............................... $ 888,231 $ (4,158) $ 775,765 $ 1,659,838 Net income for the period .............................. $ 31,091 31,091 31,091 ----------- Other comprehensive income, net of tax: Realized and unrealized holding loss arising during the period, net of tax benefit of $45,759. (73,872) Reclassification for net realized securities loss recorded in the income statement, net of tax benefit of $35,747............................. 57,708 ----------- Other comprehensive loss ........................... (16,164) (16,164) (16,164) ----------- Total comprehensive income ......................... $ 14,927 =========== Cash dividends: Common, $.49 per share ............................. (41,972) (41,972) Stock redeemed and retired ............................. (3,836) (3,836) Stock options exercised, net of shares tendered and retired ............................................. 5,027 5,027 ----------- ----------- Balance, June 30, 2000 ................................. $ 889,422 $ (20,322) $ 764,884 $ 1,633,984 =========== =========== =========== =========== --------------------------------------------------------------------- Six Months Ended June 30, 1999 --------------------------------------------------------------------- Accumulated other Total Common Comprehensive comprehensive Retained Shareholders' (In thousands) Stock Income income (loss) Earnings Equity ----------- ----------- ------------ ----------- ----------- Balance, January 1, 1999 ............................... $ 796,519 $ (3,407) $ 659,519 $ 1,452,631 Net income for the period .............................. $ 97,737 97,737 97,737 ----------- Other comprehensive income, net of tax: Realized and unrealized holding loss arising during the period, net of tax benefit of $3,151 . (5,087) Reclassification for realized investment securities loss recorded in the income statement, net of tax benefit of $2,372 ......... 3,830 ----------- Other comprehensive loss ........................... (1,257) (1,257) (1,257) ----------- Total comprehensive income ......................... $ 96,480 =========== Cash dividends: Common, $.43 per share ............................. (33,990) (33,990) Stock dividend of acquired company ..................... 21,700 (21,700) -- Issuance of common shares for acquisitions ............. 83 796 879 Stock redeemed and retired ............................. (966) (966) Stock options exercised, net of shares tendered and retired .............................................. 6,216 6,216 ----------- ----------- Balance, June 30, 1999 ................................. $ 823,552 $ (4,664) $ 702,362 $ 1,521,250 =========== =========== =========== ===========
Comprehensive income for the three months ended June 30, 2000 and 1999 was $64,761 and $47,644 respectively. 7 ZIONS BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States 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. On October 15, 1999 the Company completed its acquisition of Pioneer Bancorporation in a transaction accounted for as a pooling of interests. The acquisition was considered significant and prior year amounts have accordingly been restated. Operating results for the six months ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. 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, 1999. First Security Corporation Merger Termination On June 6, 1999 the Company entered into a definitive Agreement and Plan of Merger (the "Agreement") with First Security Corporation. First Security Corporation's stockholders approved the transaction at a meeting held on March 22, 2000. In a special meeting of shareholders held on March 31, 2000, the Company's shareholders declined to adopt the Agreement and the Company was notified the next day by First Security Corporation that it was terminating the Agreement. Included in results of operations for the six months ended June 30, 2000 are approximately $42.7 million of pre-tax merger expenses related to the termination of the merger and the related disengagement. Also included in results of operations is a pre-tax impairment loss on First Security Corporation common stock owned by the Company of $96.9 million. It is possible that the Company could incur additional unidentified expenses related to the merger termination and related disengagement process. Accounting Standards Not Adopted In September 1998, the FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Statement No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The accounting for gains and losses of a derivative depends on the intended use of the derivative and the resulting designation. Under this statement, an entity that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. Those methods must be consistent with the entity's approach to managing risk. The original effective date of this statement, as amended by Statement Nos. 137 and 138, has been delayed and it is now effective for all fiscal quarters of fiscal years beginning after June 15, 2000, and should not be applied retroactively to financial statements of prior periods. The Company is currently studying the statement to determine its future effects. 8 ZIONS BANCORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ FINANCIAL HIGHLIGHTS (Unaudited)
Three Months Ended Six Months Ended (In thousands, except per share and ratio data) June 30, June 30, --------------------------------- ---------------------------------- 2000 1999 % Change 2000 1999 % Change --------- --------- -------- --------- --------- -------- EARNINGS Taxable-equivalent net interest income ..... $ 199,099 $ 189,341 5.15 % $ 393,939 $ 369,831 6.52 % Net interest income ........................ 194,598 185,303 5.02 % 385,590 362,158 6.47 % Noninterest income ......................... 70,599 63,007 12.05 % 131,199 128,487 2.11 % Impairment loss First Security Corporation common stock (1) ........................ -- -- -- (96,911) -- -- Provision for loan losses .................. 6,214 4,143 49.99 % 11,462 8,884 29.02 % Noninterest expense ........................ 167,312 165,886 0.86 % 367,624 328,491 11.91 % Income before income taxes ................. 91,671 78,281 17.11 % 40,792 153,270 (73.39)% Income taxes ............................... 31,445 26,944 16.71 % 9,490 53,673 (82.32)% Minority interest .......................... 643 504 27.58 % 211 1,860 (88.66)% Net income ................................. 59,583 50,833 17.21 % 31,091 97,737 (68.19)% PER COMMON SHARE Net income (diluted) ....................... 0.69 0.59 16.95 % 0.36 1.14 (68.42)% Dividends .................................. 0.20 0.29 (31.03)% 0.49 0.43 13.95 % Book value ................................. 19.06 18.02 5.77 % SELECTED RATIOS Return on average assets ................... 1.12% 1.04% 0.29% 1.02% Return on average common equity ............ 14.93% 13.41% 3.83% 13.15% Efficiency ratio(3) ........................ 62.04% 65.74% 70.01% 65.92% Net interest margin ........................ 4.23% 4.39% 4.18% 4.39% OPERATING CASH EARNINGS(2)(3) Taxable-equivalent net interest income ..... $ 199,099 $ 189,341 5.15 % $ 393,939 $ 369,831 6.52 % Net interest income ........................ 194,598 185,303 5.02 % 385,590 362,158 6.47 % Noninterest income ......................... 70,599 63,007 12.05 % 131,199 128,487 2.11 % Provision for loan losses .................. 6,214 4,143 49.99 % 11,462 8,884 29.02 % Noninterest expense ........................ 156,853 155,862 0.64 % 306,332 308,694 (0.77)% Income before income taxes ................. 102,130 88,305 15.66 % 198,995 173,067 14.98 % Income taxes ............................... 33,079 28,520 15.99 % 65,298 56,853 14.85 % Minority interest .......................... 643 504 27.58 % 211 1,860 (88.66)% Net income ................................. 68,408 59,281 15.40 % 133,486 114,354 16.73 % PER COMMON SHARE Net income (diluted) ....................... 0.79 0.69 14.49 % 1.54 1.34 14.93 % Dividends .................................. 0.20 0.29 (31.03)% 0.49 0.43 13.95 % Book value ................................. 11.51 10.40 10.67 % SELECTED RATIOS Return on average assets ................... 1.33% 1.25% 1.29% 1.24% Return on average common equity ............ 28.90% 27.34% 27.55% 27.28% Efficiency ratio ........................... 58.16% 61.76% 58.33% 61.95% Net interest margin ........................ 4.23% 4.39% 4.18% 4.39%
(1) This investment was written down to $14.11 per common share. (2) Before amortization of goodwill and core deposit intangible assets and merger-related expense. (3) Excludes impairment loss on First Security Corporation common stock. 9 ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------------------ ---------------------------------------- (In thousands, except per share and ratio data) 2000 1999 % Change 2000 1999 % Change ----------- ----------- -------- ----------- ----------- -------- AVERAGE BALANCES Total assets .................................. $21,410,382 $19,650,829 8.95% $21,409,795 $19,272,432 11.09 % Securities .................................... 4,509,800 4,466,551 0.97% 4,578,079 4,403,738 3.96 % Net loans and leases .......................... 13,327,079 11,623,071 14.66% 13,111,695 11,469,861 14.31 % Goodwill and core deposit intangibles ......... 652,838 650,697 0.33% 657,848 653,687 0.64 % Total deposits ................................ 14,111,988 14,042,759 0.49% 14,182,678 14,000,014 1.30 % Minority interest ............................. 40,172 36,224 10.90% 39,918 36,588 9.10 % Shareholders' equity .......................... 1,604,801 1,520,453 5.55% 1,632,068 1,499,033 8.87 % Weighted average common and common- equivalent shares outstanding ............ 86,322,966 85,599,449 0.85% 86,420,490 85,481,587 1.10 % AT PERIOD END Total assets .................................. $21,458,435 $19,065,289 12.55 % Securities .................................... 4,328,128 4,397,025 (1.57)% Net loans and leases .......................... 13,775,251 11,707,071 17.67 % Allowance for loan losses ..................... 197,430 212,424 (7.06)% Goodwill and core deposit intangibles ......... 647,564 642,952 0.72 % Total deposits ................................ 14,513,983 14,034,015 3.42 % Minority interest ............................. 40,426 37,162 8.78 % Shareholders' equity .......................... 1,633,984 1,521,250 7.41 % Common shares outstanding ..................... 85,726,222 84,422,706 1.54 % Average equity to average assets .............. 7.50% 7.74% 7.62% 7.78% Common dividend payout ........................ 28.77% 45.11% 46.16%(1) 34.78% Nonperforming assets .......................... 84,255 58,646 43.67 % Loans past due 90 days or more ................ 22,298 27,379 (18.56)% Nonperforming assets to net loans and leases, other real estate owned and other nonperforming assets at June 30 .......... 0.61% 0.50% (1) Before impairment loss on First Security Corporation common stock.
10 ZIONS BANCORPORATION AND SUBSIDIARIES OPERATING RESULTS Zions Bancorporation achieved net income of $59.6 million or $0.69 per diluted share for the second quarter of 2000, an increase of 17.2% and 16.9%, respectively, over the $50.8 million or $0.59 earned in the second quarter of 1999. Before merger-related charges, net income for the second quarter of 2000 was $60.3 million or $0.70 per diluted share, an increase of 5.8% and 6.0%, respectively, over the $57.0 million or $0.66 per diluted share earned before merger-related charges, in the first quarter of 2000. Results for the first quarter of 2000 included $85.5 million in after-tax charges ($0.99 per share) related to the Company's terminated merger with First Security Corporation, including a write down to market value of its investment in First Security Corporation common stock. Including the merger-related charges the Company incurred a net loss of $28.5 million or $0.33 per diluted share for the first quarter of 2000. Consolidated net income was $31.1 million or $0.36 per diluted share for the first six months of 2000 compared to $97.7 million or $1.14 per diluted share for the first six months of 1999. Before merger-related charges, net income was $117.2 million or $1.36 per diluted share compared to $99.0 million or $1.16 per diluted share for the first six months of 1999, increases of 18.4% and 17.2%, respectively. The annualized return on average assets for the second quarter of 2000 was 1.12% compared to 1.04% for the first quarter of 1999 and a negative 0.54% for the first quarter of 2000. The annualized return on average common shareholder's equity was 14.93% for the quarter compared to 13.41% for the second quarter of 1999 and a negative 6.91% for the first quarter of 2000. The Company's "efficiency ratio," or noninterest expenses as a percentage of total taxable-equivalent net revenues for the second quarter was 62.04% compared to 65.74% for the second quarter of 1999 and 78.42% for the first quarter of 2000. For the first six months of 2000 the annualized return on average assets was 0.29% compared to 1.02% for the same period in 1999. The annualized return on average common shareholder's equity was 3.83% for the first six months of 2000 compared to 13.15% for the first six months of 1999. The Company's second quarter $8.8 million (17.2%) increase in earnings compared to the same period a year ago reflects a $9.3 million (5.0%) increase in net interest income, and a $7.6 million (12.0%) increase in noninterest income, partially offset by a $2.1 million (50.0%) increase in the provision for loan losses, a $1.4 million (0.9%) increase in noninterest expense and a $4.5 million (16.7%) increase in income tax expense. For the first six months of 2000 compared to the same period last year the $66.6 million (68.2%) decrease in net income results from the recognition of after-tax merger charges of $86.1 million ($1.00 per diluted share) related to the Company's terminated merger with First Security Corporation. Other changes reflected in the results for the first six months of 2000 compared to the same period last year include a $23.4 (6.5%) increase in net interest income and a $2.7 million (2.1%) increase in noninterest income excluding the $96.9 million impairment loss on First Security Corporation common stock. Noninterest expense excluding merger-related expense decreased $1.4 million (0.43%), the provision for loan losses increased $2.6 million (29.0%), and income tax expense decreased $44.2 million (82.3%). 11 ZIONS BANCORPORATION AND SUBSIDIARIES OPERATING CASH EARNINGS RESULTS The Company is also providing its earnings performance on an operating cash basis since it believes that its cash performance is a better reflection of its financial position and shareholder value creation as well as its ability to support growth, pay dividends, and repurchase stock than reported net income. Operating cash earnings are earnings before amortization of goodwill and core deposit intangible assets and merger expenses. Operating cash earnings for the quarter were $68.4 million or $0.79 per diluted share, an increase of 15.4% and 14.5%, respectively, over the $59.3 million or $0.69 per diluted share earned in the second quarter of 1999. Operating cash earnings for the second quarter of 2000 increased 5.1% over the $65.1 million earned during the first quarter of 2000. Operating cash earnings per diluted share for the second quarter of 2000 increased 5.3% over the $.75 for the first quarter of 2000. Year-to-date operating cash earnings were $133.5 million or $1.54 per diluted share, an increase of 16.7% and 14.9%, respectively, over the $114.4 million or $1.34 per diluted share earned in the first half of 1999. The operating cash annualized return on average assets for the second quarter and for the first six months of 2000 was 1.33% and 1.29% compared to 1.25% and 1.24%, respectively, in 1999. Operating cash annualized return on average common shareholders' equity was 28.90% and 27.55% for the second quarter and for the first six months of 2000, compared to the restated 27.34% and 27.28% for the same periods of 1999. The Company's cash efficiency ratio for the second quarter and for the first six months of 2000 was 58.16% and 58.33%, respectively, compared to 61.76% and 61.95% for the same periods of 1999. NET INTEREST INCOME AND INTEREST RATE SPREADS Net interest income for the second quarter of 2000, adjusted to a fully taxable-equivalent basis, increased 5.2% to $199.1 million compared to $189.3 million for the second quarter of 1999 and increased 2.2% from $194.8 million for the first quarter of 2000. Net interest margin was 4.23% for the second quarter of 2000, compared to 4.39% for the second quarter of 1999 and 4.14% for the first quarter of 2000. Six-month net interest income, on a fully taxable-equivalent basis, was $393.9 million in 2000, an increase of 6.5% compared to $369.8 million for the first six months of 1999. Net interest margin for the first six months of 2000 was 4.18%, compared to 4.39% for the first six months of 1999. The decreased margins for 2000 compared to 1999 reflect continued robust loan growth by the Company which has been financed by short-term funding sources instead of the traditional core deposit growth normally experienced by the Company. The yield on average earning assets increased 69 basis points during the second quarter of 2000 as compared to the second quarter of 1999, and 37 basis points from the first quarter of 2000. The average rate paid this quarter on interest-bearing funds increased 92 basis points from the second quarter of 1999 and increased 32 basis points from the first quarter of 2000. Comparing the first six months of 2000 with 1999, the yield on average earning assets increased 50 basis points, while the cost of interest-bearing funds increased by 75 basis points. The spread on average interest-bearing funds for the second quarter of 2000 was 3.51%, down from the 3.74% for the second quarter of 1999 and up from the 3.46% for the first quarter of 2000. The spread on average interest-bearing funds for the first six months of 2000 was 3.48%, down from 3.73% for the first six months of 1999. 12 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (Unaudited)
Three Months Ended Three Months Ended June 30, 2000 June 30, 1999 -------------------------------------- -------------------------------------- Average Amount of Average Average Amount of Average (In thousands) Balance Interest(1) Rate Balance Interest(1) Rate ------------ ------------ ------- ------------ ------------ ------- ASSETS Money market investments ...................... $ 1,107,087 $ 18,313 6.65% $ 1,204,125 $ 17,128 5.71% Securities: Held to maturity ......................... 3,279,077 54,967 6.74% 3,190,395 50,393 6.34% Available for sale ....................... 614,748 10,296 6.74% 670,678 9,575 5.73% Trading account .......................... 615,975 9,712 6.34% 605,478 7,983 5.29% ------------ ------------ ------------ ------------ Total securities .................... 4,509,800 74,975 6.69% 4,466,551 67,951 6.10% ------------ ------------ ------------ ------------ Loans: Loans held for sale ...................... 174,358 3,261 7.52% 175,563 3,088 7.05% Net loans and leases(2)................... 13,152,721 304,575 9.31% 11,447,508 249,395 8.74% ------------ ------------ ------------ ------------ Total loans ......................... 13,327,079 307,836 9.29% 11,623,071 252,483 8.71% ------------ ------------ ------------ ------------ Total interest-earning assets.................. $ 18,943,966 $ 401,124 8.52% $ 17,293,747 $ 337,562 7.83% ------------ ------------ Cash and due from banks ....................... 833,878 842,440 Allowance for loan losses ..................... (201,311) (208,432) Goodwill and core deposit intangibles ......... 652,838 650,697 Other assets .................................. 1,181,011 1,072,377 ------------ ------------ Total assets .......................... $ 21,410,382 $ 19,650,829 ============ ============ LIABILITIES Interest-bearing deposits: Savings and NOW deposits ................. $ 1,824,264 $ 9,727 2.14% $ 1,760,569 $ 11,127 2.53% Money market super NOW deposits .......... 6,075,324 71,413 4.73% 5,462,042 48,239 3.54% Time deposits under $100,000 ............. 1,705,326 21,029 4.96% 2,111,492 25,208 4.79% Time deposits $100,000 or more ........... 1,130,266 15,638 5.56% 1,296,156 15,253 4.72% Foreign deposits ......................... 132,195 1,577 4.80% 165,263 1,702 4.13% ------------ ------------ ------------ ------------ Total interest-bearing deposits ..... 10,867,375 119,384 4.42% 10,795,522 101,529 3.77% ------------ ------------ ------------ ------------ Borrowed funds: Securities sold, not yet purchased ....... 303,219 4,830 6.41% 308,587 4,122 5.36% Federal funds purchased and security repurchase agreements ............... 2,784,960 40,186 5.80% 2,168,242 24,040 4.45% Commercial paper ......................... 293,205 4,545 6.23% 135,921 1,717 5.07% FHLB advances and other borrowings: less than one year .................. 1,377,691 22,225 6.49% 620,951 7,288 4.71% over one year ....................... 134,989 2,009 5.99% 57,007 896 6.30% Long-term debt ........................... 446,993 8,846 7.96% 451,392 8,629 7.67% ------------ ------------ ------------ ------------ Total borrowed funds ................ 5,341,057 82,641 6.22% 3,742,100 46,692 5.00% ------------ ------------ ------------ ------------ Total interest-bearing liabilities .. $ 16,208,432 $ 202,025 5.01% $ 14,537,622 $ 148,221 4.09% ------------ ------------ Noninterest-bearing deposits .................. 3,244,613 3,247,237 Other liabilities ............................. 312,364 309,293 ------------ ------------ Total liabilities ................... 19,765,409 18,094,152 Minority interest ............................. 40,172 36,224 Total shareholders' equity .......... 1,604,801 1,520,453 ------------ ------------ Total liabilities and shareholders' equity ........................... $ 21,410,382 $ 19,650,829 ============ ============ Spread on average interest-bearing funds ...... 3.51% 3.74% Net interest income and net yield on interest-earning assets .................. $ 199,099 4.23% $ 189,341 4.39% ============ ============
1 Taxable-equivalent rates used where applicable. 2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans. 13 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (Unaudited)
Six Months Ended Six Months Ended June 30, 2000 June 30, 1999 -------------------------------------- -------------------------------------- Average Amount of Average Average Amount of Average (In thousands) Balance Interest(1) Rate Balance Interest(1) Rate ------------ ------------ ------- ------------ ------------ ------- ASSETS Money market investments ...................... $ 1,244,112 $ 38,402 6.21% $ 1,101,468 $ 31,944 5.85% Securities: Held to maturity ......................... 3,295,519 109,883 6.71% 3,129,986 98,502 6.35% Available for sale ....................... 678,305 20,824 6.17% 707,262 20,936 5.97% Trading account .......................... 604,255 18,668 6.21% 566,490 14,775 5.26% ------------ ------------ ------------ ------------ Total securities .................... 4,578,079 149,375 6.56% 4,403,738 134,213 6.15% ------------ ------------ ------------ ------------ Loans: Loans held for sale ...................... 183,203 6,580 7.22% 193,856 6,493 6.75% Net loans and leases(2)................... 12,928,492 590,170 9.18% 11,276,005 486,717 8.70% ------------ ------------ ------------ ------------ Total loans ......................... 13,111,695 596,750 9.15% 11,469,861 493,210 8.67% ------------ ------------ ------------ ------------ Total interest-earning assets ................. $ 18,933,886 $ 784,527 8.33% $ 16,975,067 $ 659,367 7.83% ------------ ------------ Cash and due from banks ....................... 850,665 824,657 Allowance for loan losses ..................... (203,296) (211,106) Goodwill and core deposit intangibles ......... 657,848 653,687 Other assets .................................. 1,170,692 1,030,127 ------------ ------------ Total assets .......................... $ 21,409,795 $ 19,272,432 ============ ============ LIABILITIES Interest-bearing deposits: Savings and NOW deposits ................. $ 1,800,622 $ 19,575 2.19% $ 1,792,305 $ 21,072 2.37% Money market super NOW deposits .......... 6,035,199 136,461 4.55% 5,229,348 92,944 3.58% Time deposits under $100,000 ............. 1,756,156 42,651 4.88% 2,216,623 52,638 4.79% Time deposits $100,000 or more ........... 1,194,490 31,088 5.23% 1,378,505 33,578 4.91% Foreign deposits ......................... 142,371 3,601 5.09% 170,200 3,530 4.18% ------------ ------------ ------------ ------------ Total interest-bearing deposits ..... 10,928,838 233,376 4.29% 10,786,981 203,762 3.81% ------------ ------------ ------------ ------------ Borrowed funds: Securities sold, not yet purchased ....... 302,817 9,605 6.38% 303,998 7,939 5.27% Federal funds purchased and security repurchase agreements ............... 2,956,192 82,109 5.59% 2,125,212 46,424 4.41% Commercial paper ......................... 301,615 9,324 6.22% 102,868 2,621 5.14% FHLB advances and other borrowings: less than one year .................. 1,117,744 34,851 6.27% 405,997 9,554 4.75% over one year ....................... 124,835 3,647 5.88% 55,209 1,717 6.27% Long-term debt ........................... 449,776 17,676 7.90% 452,535 17,519 7.81% ------------ ------------ ------------ ------------ Total borrowed funds ................ 5,252,979 157,212 6.02% 3,445,819 85,774 5.02% ------------ ------------ ------------ ------------ Total interest-bearing liabilities .. $ 16,181,817 $ 390,588 4.85% $ 14,232,800 $ 289,536 4.10% ------------ ------------ Noninterest-bearing deposits .................. 3,253,840 3,213,033 Other liabilities ............................. 302,152 290,978 ------------ ------------ Total liabilities ................... 19,737,809 17,736,811 Minority interest ............................. 39,918 36,588 Total shareholders' equity .......... 1,632,068 1,499,033 ------------ ------------ Total liabilities and shareholders' equity ........................... $ 21,409,795 $ 19,272,432 ============ ============ Spread on average interest-bearing funds ...... 3.48% 3.73% Net interest income and net yield on interest-earning assets .................. $ 393,939 4.18% $ 369,831 4.39% ============ ============
1 Taxable-equivalent rates used where applicable. 2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans. 14 ZIONS BANCORPORATION AND SUBSIDIARIES The Company manages its earnings sensitivity to interest rate movements, in part, by matching the repricing characteristics of its assets and liabilities and through the use of off-balance sheet arrangements such as caps, floors and interest rate exchange contracts. Net interest income from the use of such off-balance sheet arrangements for the first six months of 2000 was $1.7 million compared to $5.4 million for the first six months of 1999. PROVISION FOR LOAN LOSSES The provision for loan losses increased 50.0% to $6.2 million for the second quarter of 2000, as compared with $4.1 million for the second quarter of 1999, and increased 18.4% from the $5.2 million for the first quarter of 2000. The provision for loan losses for the first six months of 2000 totaled $11.5 million, 29.0% more than the $8.9 million provision for the first six months of 1999. Annualized the provision is .18% of average loans for 2000 compared to .16% for 1999. NONINTEREST INCOME Noninterest income for the second quarter of 2000 was $70.6 million, an increase of 12.0% from the $63.0 million for the second quarter of 1999 and an increase of 16.5% from the $60.6 million for the first quarter of 2000 (excluding the impairment loss on First Security Corporation common stock). Comparing the segments of noninterest income for the second quarter of 2000 and the second quarter of 1999, service charges on deposit accounts increased 3.4%, other service charges and fees decreased 12.5%, trust income increased 7.2%, underwriting and trading income decreased 37.4%, loan sales and servicing income increased 2.4% and other income increased 125.3%. The increase in net investment securities gain is mainly the result of pre-tax gains of $2.0 million recognized on the sale of First Security Corporation common stock during the second quarter of 2000. The increase in other income is mainly due to increased income of approximately $5.2 million from nonmarketable securities including venture fund investments and increased income from additional investments in bank owned life insurance. Loan sales and servicing income for the second quarter of 2000 also includes approximately $4.6 million of income resulting from maturity, interest rate and default assumption adjustments in the securitization models utilized to determine income from loan sales. Noninterest income for the six months ended June 30, 2000 excluding the $96.9 million impairment loss on First Security Corporation common stock was $131.2 million, an increase of 2.1% from the $128.5 million for same period in 1999. Comparing the segments of noninterest income for the first six months of 2000 with the first six months of 1999, service charges on deposit accounts increased 2.7%, other service charges, commissions and fees decreased 7.4%, trust income increased 18.6%, underwriting and trading income decreased 26.0%, loans sales and servicing income decreased 18.3%, and other income increased 33.4%. The Company recognized a net gain of $3.5 million on the sale of securities during the first six months of 2000 compared to a net loss of $1.1 million for the same period in 1999. The decrease in income from loan sales and servicing is mainly due to gains from the sale of mortgage servicing recognized during 1999. The increase in other income results mainly from the factors discussed previously for the second quarter increases in other income. 15 ZIONS BANCORPORATION AND SUBSIDIARIES NONINTEREST EXPENSE Noninterest expense for the second quarter of 2000 was $167.3 million, an increase of 0.9% over $165.9 million for the second quarter of 1999, and a decrease of 16.5% from the $200.3 million for the first quarter of 2000. Excluding merger-related expenses, noninterest expense increased 4.7% for the second quarter of 2000 compared to the first quarter of the year. The first quarter of 2000 included a $4.1 million adjustment decreasing employee benefits to reflect a reduced post retirement benefit obligation related to changes adopted in the Company's Post Retirement Medical Benefits Plan. Without the adjustment in the first quarter noninterest expense, excluding all merger-related expenses, increased 2.0% from the first to second quarters of 2000. Comparing significant noninterest expense segments for the second quarter of 2000 and the second quarter of 1999, salaries and employee benefits decreased 0.1%, occupancy increased 3.1%, furniture and equipment expense increased 21.5%, and the total of all other expenses decreased 2.2%. Noninterest expense for the six months ending June 30, 2000 was $367.6 million which includes $42.7 million of merger-related expense. Excluding merger-related expense noninterest expense decreased 0.4% for the first six months of 2000 compared to the same period in 1999. Comparing significant noninterest expense segments for the first six months of 2000 and the comparable period in 1999, salaries and employee benefits decreased 3.0%, occupancy decreased 0.2%, furniture and equipment expense increased 20.7% and the total of all other expenses excluding merger charges decreased 0.5%. The increases in furniture and equipment expense for the second quarter and first six months of 2000 compared to the same periods in 1999 is mainly attributable to increased depreciation expense related to enhancements of desktop and processing systems. At June 30, 2000 the Company had 6,787 full-time equivalent employees, 364 offices and 498 ATMs compared to 6,911 full-time equivalent employees, 353 offices and 485 ATMs at June 30, 1999. INCOME TAXES The Company's income taxes increased 16.7% to $31.4 million for the second quarter of 2000 compared to $26.9 million for the second quarter of 1999. The Company's income taxes were $9.5 million for the first six months of 2000 as compared to $53.7 million for the first six months of 1999. The Company's effective income tax rate was 34.3% for the second quarter of 2000, compared to 34.4% for the second quarter of 1999. The effective income tax rate for the first six months of 2000 was 23.3% compared to 35.0% for the first six months of 1999. The decreased rate is due to the effect of merger costs and the impairment loss on First Security Corporation common stock, which are unusual, infrequently occurring items. ANALYSIS OF FINANCIAL CONDITION EARNING ASSETS Average earning assets increased 11.5% to $18,934 million for the six months ended June 30, 2000, compared to $16,975 million for the six months ended June 30, 1999. Earning assets comprised 88.4% of total average assets for the first six months of 2000, compared with 88.1% for the first six months of 1999. Average money market investments, consisting of interest-bearing deposits, federal funds sold and security resell agreements increased 13.0% to $1,244 million in the first six months of 2000 as compared to $1,101 million in the first six months of 1999. 16 ZIONS BANCORPORATION AND SUBSIDIARIES During the first six months of 2000, average securities increased 4.0% to $4,578 million compared to $4,404 million in the first six months of 1999. Average held to maturity securities increased 5.3%, available for sale securities decreased 4.1%, and trading account securities increased 6.7% compared with the first six months of 1999. Average net loans and leases increased 14.3% to $13,112 million for the first six months of 2000 compared to $11,470 million in the first six months of 1999, representing 69.2% of earning assets in the first six months of 2000 compared to 67.6% in the first six months of 1999. Average net loans and leases were 92.4% of average total deposits for the six months ended June 30, 2000, as compared to 81.9% for the six months ended June 30, 1999. INVESTMENT SECURITIES The following table presents the Company's investment securities on June 30, 2000, December 31, 1999 and June 30, 1999. As of June 30, 2000, the Company had approximately $44 million of Small Business Administration originator fee certificates that have been classified in other assets and are measured as available for sale securities.
June 30, December 31, June 30, 2000 1999 1999 --------------------- --------------------- --------------------- Amortized Market Amortized Market Amortized Market (In millions) cost value cost value cost value --------- --------- --------- --------- --------- --------- Held to maturity U.S. Treasury Securities .......... $ 1 $ 1 $ 1 $ 1 $ 2 $ 2 U.S. government agencies and corporations: Small Business Administration loan- backed securities ......... 467 486 440 445 367 363 Other agency securities ........ 1,283 1,247 1,270 1,233 1,089 1,081 States and political subdivisions . 319 314 314 309 396 396 Mortgage-backed securities ........ 1,172 1,161 1,305 1,303 1,416 1,421 --------- --------- --------- --------- --------- --------- 3,242 3,209 3,330 3,291 3,270 3,263 --------- --------- --------- --------- --------- --------- Available for sale U.S. Treasury securities .......... 57 57 93 93 114 114 U.S. government agencies corporations ................... 209 209 51 50 130 129 States and political subdivisions . 133 132 102 97 61 60 Mortgage and other asset-backed securities ..................... 94 89 147 143 205 201 --------- --------- --------- --------- --------- --------- 493 487 393 383 510 504 --------- --------- --------- --------- --------- --------- Equity securities: Mutual funds: Accessor Funds, Inc. ...... 154 140 141 139 120 120 Other Stock .................... 121 119 242 257 76 87 --------- --------- --------- --------- --------- --------- 275 259 383 396 196 207 --------- --------- --------- --------- --------- --------- 768 746 776 779 706 711 --------- --------- --------- --------- --------- --------- Total ............................. $ 4,010 $ 3,955 $ 4,106 $ 4,070 $ 3,976 $ 3,974 ========= ========= ========= ========= ========= =========
17 ZIONS BANCORPORATION AND SUBSIDIARIES LOANS The Company has structured its organization to separate the lending function from the credit administration function to strengthen the control and independent evaluation of credit activities. Loan policies and procedures provide the Company with a framework for consistent underwriting and a basis for sound credit decisions. In addition, the Company has well-defined standards for grading its loan portfolio, and management utilizes the comprehensive loan grading system to determine risk potential in the portfolio. Another aspect of the Company's credit risk management strategy is the diversification of the loan portfolio. The Company has a well-diversified loan portfolio with no significant exposure to highly leveraged transactions. The table below sets forth the amount of loans outstanding by type on June 30, 2000, December 31, 1999 and June 30, 1999.
(In millions) June 30, December 31, June 30, Types 2000 1999 1999 - ----- ------------ ------------ ------------ Loans held for sale ....................... $ 187 $ 205 $ 195 Commercial, financial, and agricultural ... 3,244 3,036 2,802 Real estate: Construction ....................... 2,104 1,722 1,307 Other: Home equity credit line .... 234 232 290 1-4 family residential ..... 2,869 2,503 2,364 Other real estate-secured .. 4,232 4,168 3,861 ------------ ------------ ------------ 7,335 6,903 6,515 ------------ ------------ ------------ 9,439 8,625 7,822 Consumer: Bankcard ........................... 115 107 92 Other .............................. 450 490 502 ------------ ------------ ------------ 565 597 594 Lease financing ........................... 273 275 223 Foreign loans ............................. 39 53 51 Other receivables ......................... 98 62 73 ------------ ------------ ------------ Total loans ........................ $ 13,845 $ 12,853 $ 11,760 ============ ============ ============
Loans held for sale on June 30, 2000 decreased 8.9% from December 31, 1999. All other loans, net of unearned income and fees increased 8.0% to $13,589 million on June 30, 2000 compared to $12,586 million on December 31, 1999. Commercial loans, construction loans, and other real estate-secured loans, increased from year end 6.8%, 22.2%, and 6.3%, respectively, as consumer loans, lease financing, and foreign loans decreased 5.4%, .7%, and 26.4%, respectively. Within the other real estate-secured loan portfolio, home equity credit line loans increased 0.9%, 1-4 family residential loans increased 14.6% and all other real estate loans increased 1.5% from year end. 18 ZIONS BANCORPORATION AND SUBSIDIARIES On June 30, 2000, long-term first mortgage real estate loans serviced for others totaled $221 million and consumer and other loan securitizations, which relate primarily to loans sold under revolving securitization structures, totaled $1,201 million. During the first six months of 2000, the Company sold $282 million of loans classified in held for sale, and securitized and sold home equity credit line loans, credit card receivables and automobile loans totaling $277 million. During the first six months of 2000, total loans sold were $559 million compared to total loans sold of $1,173 million during the first six months of 1999. RISK ELEMENTS The Company's nonperforming assets, which include nonaccruing loans, restructured loans, other real estate owned and other nonperforming assets, were $84 million on June 30, 2000, up from $75 million on December 31, 1999, and up from $59 million on June 30, 1999. Such nonperforming assets as a percentage of net loans and leases, other real estate owned and other nonperforming assets were .61%, .58% and .50% on June 30, 2000, December 31, 1999, and June 30, 1999, respectively. Accruing loans past due 90 days or more totaled $22 million on June 30, 2000, up from $21 million on December 31, 1999, and down from $27 million on June 30, 1999. These loans equaled .16% of net loans and leases on June 30, 2000, and December 31, 1999 and .23% on June 30, 1999. No loans to borrowers were considered potential problem loans at June 30, 2000, December 31, 1999 and June 30, 1999. Potential problem loans are defined as loans presently on accrual, not contractually past due 90 days or more and not restructured, 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 Company's total recorded investment in impaired loans included in nonaccrual loans and leases, amounted to $68 million on June 30, 2000, as compared to $57 million on December 31, 1999, and $36 million on June 30, 1999. The Company considers a loan to be impaired when the accrual of interest has been discontinued and it meets other criteria under the statements. The amount of the impairment is measured based on the present value of expected cash flows, the observable market price of the loan, or the fair value of the collateral. Impairment losses are included in the allowance for loan losses through a provision for loan losses. Included in the allowance for loan losses on June 30, 2000, December 31, 1999, and June 30, 1999, is a required allowance of $17 million, $16 million and $16 million, respectively, on $25 million, $22 million and $21 million, respectively, of the recorded investment in impaired loans. 19 ZIONS BANCORPORATION AND SUBSIDIARIES The following table sets forth the nonperforming assets on June 30, 2000, December 31, 1999, and June 30, 1999.
June 30, December 31, June 30, (In millions) 2000 1999 1999 ------------ ------------ ------------ Nonaccrual loans ............................... $ 79 $ 65 $ 48 Restructured loans ............................. 1 1 3 Other real estate owned and other nonperforming assets ...................... 4 9 7 ------------ ------------ ------------ Total ..................................... $ 84 $ 75 $ 59 ============ ============ ============ % of net loans and leases*, other real estate owned and other nonperforming assets ...... .61% .58% .50% Accruing loans past due 90 days or more ........ $ 22 $ 21 $ 27 ============ ============ ============ % of net loans and leases* ..................... .16% .16% .23% *Includes loans held for sale ..................
ALLOWANCE FOR LOAN LOSSES The Company's allowance for loan losses was 1.43% of net loans and leases on June 30, 2000, compared to 1.60% on December 31, 1999, and 1.81% on June 30, 1999. Net charge-offs during the second quarter of 2000 were $9 million, or annualized .27% of average net loans and leases, compared to net recoveries of $2 million for the second quarter of 1999. Net charge-offs for the first six months of 2000 were $18 million, or annualized .28% of average net loans and leases, compared to $9 million or .16% of average net loans and leases for the first six months of 1999. The allowance, as a percentage of nonaccrual loans and restructured loans, was 246.2% on June 30, 2000, compared to 310.9% on December 31, 1999, and 413.9% on June 30, 1999. The allowance, as a percentage of nonaccrual loans and accruing loans past due 90 days or more was 194.2% on June 30, 2000, compared to 238.1% on December 31, 1999 and 281.7% on June 30, 1999. On June 30, 2000, December 31, 1999, and June 30, 1999, the allowance for loan losses includes an allocation of $28 million, $23 million, and $21 million, respectively, related to commitments to extend credit on loans and standby letters of credit. Commitments to extend credit on loans and standby letters of credit on June 30, 2000, December 31, 1999 and June 30, 1999 totaled $6,260 million, $6,001 million and $5,574 million, respectively. 20 ZIONS BANCORPORATION AND SUBSIDIARIES 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.
Six Months Twelve Months Six Months Ended Ended Ended (In millions) June 30, December 31, June 30, 2000 1999 1999 ------------ ------------ ------------ Average loans* and leases outstanding (net of unearned income) ............... $ 13,112 $ 11,819 $ 11,470 ============ ============ ============ Allowance for possible losses: Balance at beginning of the period .......... $ 204 $ 212 $ 212 Allowance of companies acquired ............. -- 3 -- Provision charged against earnings .......... 11 18 9 Loans and leases charged-off: Loans held for sale .................... -- -- -- Commercial, financial and agricultural . (14) (32) (14) Real estate ............................ (2) (3) -- Consumer ............................... (5) (9) (4) Lease financing ........................ (1) (2) (2) ------------ ------------ ------------ Total ............................. (22) (46) (20) ------------ ------------ ------------ Recoveries: Loans held for sale .................... -- -- -- Commercial, financial and agricultural . 2 6 4 Real estate ............................ 1 7 6 Consumer ............................... 1 3 1 Lease financing ........................ -- 1 -- ------------ ------------ ------------ Total ............................. 4 17 11 ------------ ------------ ------------ Net loan and lease charge-offs .............. (18) (29) (9) ------------ ------------ ------------ Balance at end of the period ................ $ 197 $ 204 $ 212 ============ ============ ============ *Includes loans held for sale Ratio of net charge-offs to average loans and leases ............... .28% .25% .16%
21 ZIONS BANCORPORATION AND SUBSIDIARIES DEPOSITS Average total deposits of $14,183 million for the first six months of 2000 increased 1.3% compared to $14,000 million for the first six months of 1999, with average demand deposits also increasing 1.3%. Average savings and NOW deposits and average money market and super NOW deposits increased .5%, and 15.4%, respectively, during the first six months of 2000, compared with the same period one year earlier. Average time deposits under $100,000, time deposits over $100,000 and foreign deposits for the first six months of 2000 decreased 20.8%, 13.3%, and 16.4% respectively, from the first six months of 1999. Total deposits increased 3.2% to $14,514 million on June 30, 2000 as compared to $14,062 million on December 31, 1999. Comparing June 30, 2000 to December 31, 1999, demand deposits, savings and money market deposits, and time deposits over $100,000 increased 4.4%, 2.2%, and 36.6%, respectively, while time deposits under $100,000 and foreign deposits decreased 9.3%, and 39.5%, respectively. LIQUIDITY AND INTEREST RATE SENSITIVITY The Company manages its liquidity to provide adequate funds to meet its financial obligations, including withdrawals by depositors and debt service requirements, as well as to fund customers' demand for credit. Liquidity is primarily provided by the regularly scheduled maturities of the Company's investment and loan portfolios. The Company's core deposits, consisting of demand, savings and money market deposits and time deposits under $100,000, constituted 89.0% of total deposits on June 30, 2000 as compared to 90.8% on December 31, 1999 and 90.2% on June 30, 1999. Maturing balances in loan portfolios provide flexibility in managing cash flows. Maturity management of those funds is an important source of medium to long-term liquidity. The Company's ability to raise funds in the capital markets through the securitization process and by debt issuance allows the Company to take advantage of market opportunities to meet funding needs at reasonable cost. The parent company's cash requirements consist primarily of debt service, dividends to shareholders, operating expenses, income taxes, and share repurchases. The parent company's cash needs are routinely satisfied through dividends from subsidiaries, the payment of proportionate shares of current income taxes by subsidiaries, management and other fees, unaffiliated bank lines and debt issuance. Interest rate risk is the most significant market risk regularly undertaken by Company. The Company believes there have been no significant changes in market risk compared to the disclosures in Zions Bancorporation's Annual Report to Shareholders on Form 10-K for the year ended December 31, 1999. Interest rate sensitivity measures the Company's financial exposure to changes in interest rates. Interest rate sensitivity is, like liquidity, affected by maturities of assets and liabilities. The Company assesses its interest rate sensitivity using duration and simulation analysis. Duration is a measure of the weighted average expected lives of the discounted cash flows from assets and liabilities. Simulation is used to estimate net interest income over time using alternative interest rate scenarios. 22 ZIONS BANCORPORATION AND SUBSIDIARIES The Company, through the management of maturities and repricing of its assets and liabilities and the use of off-balance sheet arrangements such as interest rate caps, floors, futures, options, and interest rate exchange agreements, attempts to minimize the effect on net income of changes in interest rates. The Company's management exercises its best judgment in making assumptions with respect to loan and security prepayments, early deposit withdrawals and other noncontrollable events in managing the Company's exposure to changes in interest rates. The interest rate risk position is actively managed and changes daily as the interest rate environment changes; therefore, positions at the end of any period may not be reflective of the Company's interest rate position in subsequent periods. The prime lending rate is the primary basis used for pricing the Company's loans and the short-term Treasury rate is the index used for pricing many of the Company's deposits. CAPITAL RESOURCES AND DIVIDENDS Total shareholders' equity on June 30, 2000 was $1,634 million, a decrease of 1.6% over the $1,660 million on December 31, 1999, and an increase of 7.4% over the $1,521 million on June 30, 1999. The decrease at June 30, 2000 compared to December 31, 1999 is due to the loss incurred during the first quarter of 2000 resulting from the failed merger with First Security Corporation. The ratio of average equity to average assets for the first six months of 2000 was 7.62% as compared to 7.78% for the same period in 1999. On June 30, 2000, the Company's Tier I risk-based capital ratio was 7.97%, as compared to 8.64% on December 31, 1999 and 8.71% on June 30, 1999. On June 30, 2000 the Company's total risk-based capital ratio was 10.51%, as compared to 11.29% on December 31, 1999 and 11.57% on June 30, 1999. The Company's leverage ratio on June 30, 2000 was 5.91%, as compared to 6.16% on December 31, 1999 and 6.00% on June 30, 1999. Dividends declared per common share for the second quarter of 2000 of $.20 decreased 31.0%, as compared to $.29 for the second quarter of 1999 and the first quarter of 2000. The common cash dividend payout of net income for the first six months of 2000 before the impairment loss recognized on First Security Corporation common stock was 46.16%, as compared to 34.78% for the first six months of 1999. During the first six months of 2000, the Company repurchased and retired 78,428 shares of its common stock at a cost of $3.8 million. 23 ZIONS BANCORPORATION AND SUBSIDIARIES OPERATING SEGMENT INFORMATION The following is a summary of selected operating segment information for the three months and six months ended June 30, 2000 and June 30, 1999. The Company manages its operations and prepares management reports with a primary focus on geographical area. All segments presented, except for the segment defined as "other" are based on commercial banking operations. Zions First National Bank and subsidiaries operates 118 branches in Utah and 19 in Idaho. California Bank & Trust operates 75 branches in Northern and Southern California. Vectra Bank Colorado operates 54 branches in Colorado and one branch in New Mexico. National Bank of Arizona operates a total of 37 branches in Arizona. Nevada State Bank operates 58 offices in Nevada, and The Commerce Bank of Washington operates 1 office in Washington. The operating segment defined as "other" includes the Parent company, smaller nonbank operating units, and eliminations of transactions between segments. The accounting policies of the individual segments are the same as those of the Company. The Company allocates centrally provided services to the business segments based upon estimated usage of those services. The following table presents Operating Segment Information for the three months ended June 30, 2000 and for the three months ended June 30, 1999.
ZIONS FIRST NATIONAL BANK CALIFORNIA VECTRA BANK NATIONAL BANK OF AND SUBSIDIARIES BANK & TRUST COLORADO ARIZONA ------------------- ------------------- -------------------- --------------------- (Amounts in millions) 2000 1999 2000 1999 2000 1999 2000 1999 -------- -------- -------- -------- -------- -------- --------- --------- CONDENSED INCOME STATEMENT Net interest income ...................... $ 55.1 $ 55.0 $ 72.8 $ 65.5 $ 21.8 $ 21.4 $ 21.0 $ 18.8 Provision for loan losses ................ 2.3 2.3 -- -- 1.3 0.7 1.0 0.6 Noninterest income ....................... 41.2 37.4 10.9 9.3 5.0 4.0 3.5 3.5 Merger expense and amortization of goodwill and core deposit intangibles . 0.8 0.5 5.2 4.4 3.3 4.7 0.5 0.5 Noninterest expense ...................... 52.7 52.6 44.2 45.7 19.2 17.4 11.6 10.5 Income tax expense (benefit) ............. 12.6 11.1 15.4 11.3 1.8 1.2 4.5 4.3 Minority interest ........................ (0.3) (0.2) -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- --------- --------- Net income .......................... $ 28.2 $ 26.1 $ 18.9 $ 13.4 $ 1.2 $ 1.4 $ 6.9 $ 6.4 ======== ======== ======== ======== ======== ======== ========= ========= AVERAGE BALANCE SHEET DATA Total assets ............................. $ 8,258 $ 7,280 $ 6,631 $ 6,228 $ 2,162 $ 2,147 $ 1,605 $ 1,513 Net loans and leases ..................... 4,434 3,652 4,652 4,214 1,403 1,300 1,237 1,087 Total deposits ........................... 3,894 3,731 5,332 5,349 1,419 1,602 1,246 1,261 NEVADA STATE BANK THE COMMERCE BANK OF AND SUBSIDIARIES WASHINGTON OTHER CONSOLIDATED COMPANY ------------------- ------------------- -------------------- --------------------- (Amounts in millions) 2000 1999 2000 1999 2000 1999 2000 1999 -------- -------- -------- -------- -------- -------- --------- --------- CONDENSED INCOME STATEMENT Net interest income ...................... $ 25.1 $ 24.6 $ 5.0 $ 3.7 $ (6.2) $ (3.6) $ 194.6 $ 185.4 Provision for loan losses ................ 1.5 0.9 0.3 -- (0.1) (0.3) 6.3 4.2 Noninterest income ....................... 5.5 6.6 0.5 0.2 4.0 2.0 70.6 63.0 Merger expense and amortization of goodwill and core deposit intangibles . 0.6 0.6 -- -- 0.1 (0.7) 10.5 10.0 Noninterest expense ...................... 18.0 20.2 2.2 1.8 8.9 7.7 156.8 155.9 Income tax expense (benefit) ............. 3.5 2.9 1.0 0.7 (7.4) (4.5) 31.4 27.0 Minority interest ........................ -- -- -- -- 0.9 0.7 0.6 0.5 -------- -------- -------- -------- -------- -------- --------- --------- Net income .......................... $ 7.0 $ 6.6 $ 2.0 $ 1.4 $ (4.6) $ (4.5) $ 59.6 $ 50.8 ======== ======== ======== ======== ======== ======== ========= ========= AVERAGE BALANCE SHEET DATA Total assets ............................. $ 2,355 $ 2,227 $ 413 $ 351 $ (14) $ (95) $ 21,410 $ 19,651 Net loans and leases ..................... 1,359 1,188 214 163 28 19 13,327 11,623 Total deposits ........................... 1,979 1,894 295 233 (53) (27) 14,112 14,043
24 ZIONS BANCORPORATION AND SUBSIDIARIES The following table presents Operating Segment Information for the six months ended June 30, 2000 and for the six months ended June 30, 1999.
ZIONS FIRST NATIONAL BANK CALIFORNIA VECTRA BANK NATIONAL BANK OF AND SUBSIDIARIES BANK & TRUST COLORADO ARIZONA ------------------- ------------------- -------------------- --------------------- (Amounts in millions) 2000 1999 2000 1999 2000 1999 2000 1999 -------- -------- -------- -------- -------- -------- --------- --------- CONDENSED INCOME STATEMENT Net interest income ...................... $ 108.8 $ 109.9 $ 143.6 125.6 $ 43.7 $ 41.5 $ 41.4 $ 36.8 Provision for loan losses ................ 2.5 4.5 -- -- 2.4 1.3 1.7 1.2 Noninterest income ....................... 74.2 79.0 20.8 17.8 9.1 9.0 6.8 6.2 Merger expense and amortization of goodwill and core deposit intangibles . 4.5 1.0 14.6 8.2 7.0 8.2 0.9 1.0 Noninterest expense ...................... 104.6 105.5 91.2 92.0 36.8 35.3 22.8 20.9 Income tax expense (benefit) ............. 21.7 23.8 26.6 20.0 3.9 3.2 9.0 7.9 Minority interest ........................ (1.4) 0.7 -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- --------- --------- Net income .......................... $ 51.1 $ 53.4 $ 32.0 $ 23.2 $ 2.7 $ 2.5 $ 13.8 $ 12.0 ======== ======== ======== ======== ======== ======== ========= ========= AVERAGE BALANCE SHEET DATA Total assets ............................. $ 8,265 $ 7,056 $ 6,596 $ 6,204 $ 2,158 $ 2,119 $ 1,607 $ 1,482 Net loans and leases ..................... 4,283 3,608 4,616 4,210 1,388 1,251 1,233 1,063 Total deposits ........................... 3,955 3,760 5,364 5,332 1,441 1,610 1,239 1,237 NEVADA STATE BANK THE COMMERCE BANK OF AND SUBSIDIARIES WASHINGTON OTHER CONSOLIDATED COMPANY ------------------- ------------------- -------------------- --------------------- (Amounts in millions) 2000 1999 2000 1999 2000 1999 2000 1999 -------- -------- -------- -------- -------- -------- --------- --------- CONDENSED INCOME STATEMENT Net interest income ...................... $ 50.4 $ 48.2 $ 9.7 $ 7.2 $ (12.0) (7.0) $ 385.6 $ 362.2 Provision for loan losses ................ 4.5 1.8 0.5 0.4 (0.1) (0.3) 11.5 8.9 Noninterest income ....................... 11.9 12.7 0.8 0.4 (89.3) 3.4 34.3 128.5 Merger expense and amortization of goodwill and core deposit intangibles . 5.1 1.0 -- -- 29.2 0.4 61.3 19.8 Noninterest expense ...................... 35.5 39.0 4.4 3.5 11.0 12.5 306.3 308.7 Income tax expense (benefit) ............. 5.7 5.8 1.9 1.2 (59.3) (8.2) 9.5 53.7 Minority interest ........................ -- -- -- -- 1.6 1.2 0.2 1.9 -------- -------- -------- -------- -------- -------- --------- --------- Net income .......................... $ 11.5 $ 13.3 $ 3.7 $ 2.5 $ (83.7) $ (9.2) $ 31.1 $ 97.7 ======== ======== ======== ======== ======== ======== ========= ========= AVERAGE BALANCE SHEET DATA Total assets ............................. $ 2,337 $ 2,182 $ 416 $ 343 $ 31 $ (114) $ 21,410 $ 19,272 Net loans and leases ..................... 1,358 1,160 208 158 26 20 13,112 11,470 Total deposits ........................... 1,955 1,860 296 228 (67) (27) 14,183 14,000
25 ZIONS BANCORPORATION AND SUBSIDIARIES MERGERS AND ACQUISITIONS On January 7, 2000, the Company announced a definitive agreement to acquire County Bank in Prescott, Arizona, in exchange for Zions Bancorporation common stock. As of December 31, 1999, County Bank had total assets of approximately $242 million. The transaction is expected to be accounted for as a pooling of interests and closed on July 28, 2000. FORWARD-LOOKING INFORMATION Statements in Management's Discussion and Analysis that are not based on historical data are forward- looking, including, for example, the projected performance of Zions and its operations. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the projections discussed in Management's Discussion and Analysis since such projections involve significant risks and uncertainties. Factors that might cause such differences include, but are not limited to: the timing of closing proposed acquisitions being delayed or such acquisitions being prohibited; competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally in areas in which Zions conducts its operations, being less favorable than expected; and legislation or regulatory changes which adversely affect the Company's operations or business. Zions disclaims any obligation to update any 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. 26 ZIONS BANCORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION ----------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS ----------------------------------------------- The following is a summary of matters submitted to vote at the Annual Meeting of Shareholders of Zions Bancorporation: a) The Annual Meeting of Shareholders was held on May 26, 2000. Total number of shares eligible for voting was 85,695,210. b) Election of Directors Proxies were solicited by Zions Bancorporation's management pursuant to Regulation 14A under the Securities Exchange Act of 1934. There was no solicitation in opposition to management's nominees as listed in the proxy statement, and all of such nominees were elected pursuant to the vote of the shareholders as indicated in the proxy statement. c) The matters voted upon and the results were as follows: (1) Election of Directors Withhold For Authority ---------- --------- R. D. Cash 68,521,758 212,020 Richard H. Madsen 68,511,511 222,267 Robert G. Sarver 68,445,673 288,105 Harris H. Simmons 68,490,143 243,635 (2) Approve amendments to the Key Employee Incentive Stock Option Plan Approval of amendments to the Company's Key Employee Incentive Stock Option Plan. For Against Abstain 63,542,572 4,242,469 748,737 27 ZIONS BANCORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION (CONTINUED) ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- a) Exhibits Exhibit 27 Article 9 Financial Data Schedule b) Reports on Form 8-K Zions Bancorporation filed the following reports on Form 8-K during the quarter ended June 30, 2000; Form 8-K filed June 23, 2000 (Item 4). Effective June 19, 2000. Zions Bancorporation dismissed its independent auditor, KPMG LLP, and appointed Ernst & Young LLP to perform independent attestation services. 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/Dale M. Gibbons -------------------------------- Dale M. Gibbons, Executive Vice President and Chief Financial Officer Dated August 11, 2000 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the unaudited consolidated balance sheet as of June 30, 2000 and the related unaudited consolidated statement of income for the six months ended June 30, 2000 included in the companys form 10-Q for the period ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000109380 Zions Bancorporation /UT/ 1,000 U.S. 6-MOS Dec-31-2000 Jan-01-2000 Jun-30-2000 1 882,064 18,580 709,567 340,070 746,324 3,241,734 3,209,248 13,775,251 197,430 21,458,435 14,513,983 4,384,353 319,878 565,811 0 0 889,422 744,562 21,458,435 594,418 181,760 0 776,178 233,376 390,588 385,590 11,462 (93,455) 367,624 40,581 31,091 0 0 31,091 .36 .36 4.10 79,380 22,298 802 0 204,114 21,825 3,679 197,430 183,512 0 13,918
-----END PRIVACY-ENHANCED MESSAGE-----