Attached files

file filename
8-K - 8-K - 3Q17 EARNINGS RELEASE - ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/a3q20178-kcoverpage.htm
EX-99.2 - 3Q17 EARNINGS RELEASE SLIDE PRESENTATION - ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/earningspresentation2017.htm

ZIONS BANCORPORATION
Press Release – Page 1
October 23, 2017


Zions Bancorporation
One South Main
Salt Lake City, UT 84133
October 23, 2017
bancorp20173qa01.jpg
www.zionsbancorporation.com
Third Quarter 2017 Financial Results: FOR IMMEDIATE RELEASE
 
Investor and Media Contact: James Abbott (801) 844-7637
Zions Bancorporation Reports: 3Q17 Net Earnings¹ of $152 million, diluted EPS of $0.72
compared with 2Q17 Net Earnings¹ of $154 million, diluted EPS of $0.73,
and 3Q16 Net Earnings¹ of $117 million, diluted EPS of $0.57


THIRD QUARTER RESULTS
$0.72
 
$152 million
 
3.45%
 
12.2%
Earnings per diluted common share
 
Net Earnings 1
 
Net interest margin (“NIM”)
 
Common Equity
Tier 1

THIRD QUARTER HIGHLIGHTS²
 
 
 
Net Interest Income and NIM
Net interest income was $522 million, up 11%
NIM was 3.45% compared with 3.36%
 
 
 
Operating Performance2
Pre-provision net revenue ("PPNR") was $257 million, up 18%
Adjusted PPNR³ was $251 million, up 20%
Noninterest expense was $413 million, compared with $403 million
Adjusted noninterest expense³ was $414 million, compared with $404 million
Efficiency ratio³ was 62.3%, compared with 65.9%
 
 
 
Loans and Credit Quality
Net loans and leases were $44.2 billion, compared with $42.5 billion
Provision for credit losses was $1 million, compared with $16 million
Net charge-offs were $8 million, compared with $30 million
 
 
 
Capital Returns
Tangible return on average tangible common equity³ was 9.8%, compared with 7.9%
Common stock repurchases of $115 million, 2.5 million shares, or 1.3% of shares outstanding as of June 30, 2017, during the quarter
Common dividend increased to $0.12 per share from $0.08 per share
 
 
 
Notable Items
Hurricane Harvey non-credit related impact of $6 million recognized in noninterest expense

 
CEO COMMENTARY
 
Harris H. Simmons, Chairman and CEO, commented, “Our third quarter earnings reflect moderate loan growth and continued improvement in credit quality. Furthermore, the year-to-date efficiency ratio, at 62.6%, is on track to meet the cost objective we established for 2017. The quarterly results were impacted by Hurricane Harvey, which led us to provide financial relief to affected employees in Texas, and to set aside additional reserves for any credit-related impact from the storm.” Mr. Simmons continued, “We are pleased with the quarterly earnings result, and look forward to continued progress in simplifying our business, meeting our customers’ needs and improving our profitability in the year ahead.”

OPERATING PERFORMANCE3
exh9912q20_chart-39401a06.jpgexh9912q20_chart-40338a06.jpg
¹ Net Earnings is net earnings applicable to common shareholders.
² Comparisons noted in the bullet points are calculated for the current quarter versus the same prior-year period, unless otherwise specified.
³ For information on non-GAAP financial measures and why the Company presents these numbers, see pages 16-19. Included in these non-GAAP financial measures are the key metrics to which Zions announced it would hold itself accountable in its June 1, 2015 efficiency initiative, and to which executive compensation is tied.

- more -


ZIONS BANCORPORATION
Press Release – Page 2
October 23, 2017

Comparisons noted in the sections below are calculated for the current quarter versus the same prior-year period, unless otherwise specified.
RESULTS OF OPERATIONS
Net Interest Income and Margin
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
$
 
%
 
$
 
%
Interest and fees on loans
$
468

 
$
469

 
$
437

 
$
(1
)
 
(0.2
)%
 
$
31

 
7.1
%
Interest on money market investments
5

 
5

 
5

 

 

 

 

Interest on securities
84

 
84

 
49

 

 

 
35

 
71.4

Total interest income
557

 
558

 
491

 
(1
)
 
(0.2
)
 
66

 
13.4

Interest on deposits
15

 
14

 
13

 
1

 
7.1

 
2

 
15.4

Interest on short and long-term borrowings
20

 
16

 
9

 
4

 
25.0

 
11

 
122.2

Total interest expense
35

 
30

 
22

 
5

 
16.7

 
13

 
59.1

Net interest income
$
522

 
$
528

 
$
469

 
$
(6
)
 
(1.1
)
 
$
53

 
11.3

 
 
 
 
 
 
 
bps
 
 
 
bps
 
 
Net interest margin
3.45
%
 
3.52
%
 
3.36
%
 
(0.07
)
 

 
0.09

 
 
Net interest income increased to $522 million in the third quarter of 2017 from $469 million. The $53 million, or 11.3%, increase in net interest income was due to a $35 million increase in interest on securities resulting from a 52.5% increase in the average investment securities portfolio and a $31 million increase in interest and fees on loans resulting from loan growth in commercial and consumer loans and increases in short-term interest rates. Interest expense increased $13 million primarily due to an increase in wholesale borrowings.
The net interest margin decreased to 3.45% in the third quarter of 2017, compared with 3.52% in the second quarter of 2017, primarily as a result of $16 million of interest income recoveries on four loans that occurred in the second quarter of 2017 that did not recur in the same magnitude in the current quarter. Excluding that effect, the net interest margin increased slightly from the prior quarter.
Noninterest Income
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
$
 
%
 
$
 
%
Service charges and fees on deposit accounts
$
42

 
$
43

 
$
45

 
$
(1
)
 
(2.3
)%
 
$
(3
)
 
(6.7
)%
Other service charges, commissions and fees
55

 
56

 
54

 
(1
)
 
(1.8
)
 
1

 
1.9

Wealth management income
11

 
10

 
10

 
1

 
10.0

 
1

 
10.0

Loan sales and servicing income
6

 
6

 
11

 

 

 
(5
)
 
(45.5
)
Capital markets and foreign exchange
8

 
6

 
6

 
2

 
33.3

 
2

 
33.3

Customer-related fees
122

 
121

 
126

 
1

 
0.8

 
(4
)
 
(3.2
)
Dividends and other investment income
9

 
10

 
9

 
(1
)
 
(10.0
)
 

 

Securities gains, net
5

 
2

 
8

 
3

 
150.0

 
(3
)
 
(37.5
)
Other
3

 
(1
)
 
2

 
4

 
400.0

 
1

 
50.0

Total noninterest income
$
139

 
$
132

 
$
145

 
$
7

 
5.3

 
$
(6
)
 
(4.1
)
Total noninterest income for the third quarter of 2017 decreased by 4.1% to $139 million from $145 million. Customer-related fees decreased by $4 million in the third quarter of 2017 due to a $5 million decline in loan sales

- more -


ZIONS BANCORPORATION
Press Release – Page 3
October 23, 2017

and servicing income primarily resulting from lower sales of consumer mortgages and a $2 million valuation adjustment on a loan held for sale. Additionally, service charges and fees on deposit accounts declined $3 million. Income from net securities gains was $5 million representing a decrease of $3 million the third quarter of 2016 as a result of a smaller increase in the market values of the Company’s Small Business Investment Company (“SBIC”) investments in the third quarter of 2017. Other noninterest income included a gain of $1 million related to the sale of three branch properties.
Noninterest Expense
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
$
 
%
 
$
 
%
Salaries and employee benefits
$
253

 
$
242

 
$
242

 
$
11

 
4.5
 %
 
$
11

 
4.5
 %
Occupancy, net
35

 
32

 
33

 
3

 
9.4

 
2

 
6.1

Furniture, equipment and software, net
32

 
32

 
29

 

 

 
3

 
10.3

Other real estate expense, net
(1
)
 

 

 
(1
)
 
NM
 
(1
)
 
NM
Credit-related expense
7

 
8

 
7

 
(1
)
 
(12.5
)
 

 

Provision for unfunded lending commitments
(4
)
 
3

 
(3
)
 
(7
)
 
(233.3
)
 
(1
)
 
(33.3
)
Professional and legal services
14

 
13

 
14

 
1

 
7.7

 

 

Advertising
6

 
6

 
6

 

 

 

 

FDIC premiums
15

 
13

 
12

 
2

 
15.4

 
3

 
25.0

Amortization of core deposit and other intangibles
2

 
2

 
2

 

 

 

 

Other
54

 
54

 
61

 

 

 
(7
)
 
(11.5
)
Total noninterest expense
$
413

 
$
405

 
$
403

 
$
8

 
2.0

 
$
10

 
2.5

Adjusted noninterest expense 1
$
414

 
$
399

 
$
404

 
$
15

 
3.8
 %
 
$
10

 
2.5
 %
1 
For information on non-GAAP financial measures, see pages 16-19.
Noninterest expense for the third quarter of 2017 was $413 million, which included $6 million of noninterest expense related to property damage and community and employee support as a result of Hurricane Harvey, compared with $403 million for the third quarter of 2016. The Company has provided approximately $1.5 million of support, primarily in the form of grants and donations, to its employees and the local community affected by Hurricane Harvey. Additionally, the Company has made over 300 interest-free loans totaling more than $5 million to employees impacted by the natural disaster.
Adjusted noninterest expense for the third quarter of 2017 was $414 million compared with $404 million for the same prior year period. The $10 million, or 2.5%, increase in total and adjusted noninterest expense from the third quarter of 2016 was primarily driven by the expense associated with Hurricane Harvey and an increase in salaries and employee benefits, partially offset by a $7 million decrease in other noninterest expense primarily due to legal accruals that occurred in the third quarter of 2016.
The $11 million increase in salaries and employee benefits during the third quarter was primarily due to an increase in incentive compensation accruals. Additionally, healthcare costs increased $3 million from the same prior year period and are expected to remain consistent with the current quarter.

- more -


ZIONS BANCORPORATION
Press Release – Page 4
October 23, 2017

The Company is committed to its expense and efficiency ratio goals for 2017, which are to hold adjusted noninterest expense growth to 2-3% in 2017, and to achieve an efficiency ratio in the low 60% range. For information on non-GAAP financial measures, see pages 16-19.
BALANCE SHEET ANALYSIS
Asset Quality
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
bps
 
 
 
bps
 
 
Ratio of nonperforming assets to loans and leases and other real estate owned
1.06
%
 
1.12
%
 
1.37
%
 
(6
)
 
 
 
(31
)
 
 
Annualized ratio of net loan and lease charge-offs to average loans
0.07
%
 
0.06
%
 
0.28
%
 
1

 
 
 
(21
)
 
 
Ratio of total allowance for credit losses to loans and leases outstanding
1.36
%
 
1.39
%
 
1.55
%
 
(3
)
 
 
 
(19
)
 
 
 
 
 
 
 
 
 
$
 
%
 
$
 
%
Classified loans
$
1,248

 
$
1,317

 
$
1,615

 
$
(69
)
 
(5.2
)%
 
$
(367
)
 
(22.7
)%
Nonperforming assets
468

 
490

 
587

 
(22
)
 
(4.5
)%
 
(119
)
 
(20.3
)%
Net loan and lease charge-offs
8

 
7

 
30

 
1

 
14.3
 %
 
(22
)
 
(73.3
)%
Provision for credit losses
1

 
10

 
16

 
(9
)
 
(90.0
)%
 
(15
)
 
(93.8
)%
Asset quality improved for the entire loan portfolio when compared with the prior quarter and the same prior year period, primarily due to an improvement in the oil and gas-related portfolio, highlighted by decreases in classified and nonperforming assets. Classified loans and nonperforming assets for the oil and gas-related portfolio decreased $274 million and $137 million, respectively, from the third quarter of 2016.
The Company provided $1 million for credit losses during the third quarter of 2017 ($5 million provision for the allowance for loan and lease losses and a reserve reduction of $4 million for unfunded lending commitments), compared with $10 million during the second quarter of 2017 and $16 million for the third quarter of 2016. The $1 million provision is the result of a $34 million qualitative increase in the allowance for credit losses due to potential losses caused by Hurricane Harvey, offset by decreasing default and loss rates, in addition to improving credit quality metrics in the oil and gas-related portfolio. The allowance for credit losses was $600 million at September 30, 2017, compared with $659 million at September 30, 2016, or 1.36% and 1.55% of loans and leases, respectively. The allowance for credit losses for oil and gas-related loans remains above 7% of the portfolio.



- more -


ZIONS BANCORPORATION
Press Release – Page 5
October 23, 2017

Loans and Leases
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
$
 
%
 
$
 
%
Loans held for sale
$
71

 
$
53

 
$
160

 
$
18

 
34.0
 %
 
$
(89
)
 
(55.6
)
Loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
22,539

 
22,203

 
21,624

 
336

 
1.5

 
915

 
4.2

Commercial real estate
11,114

 
11,198

 
11,450

 
(84
)
 
(0.8
)
 
(336
)
 
(2.9
)
Consumer
10,503

 
10,282

 
9,466

 
221

 
2.1

 
1,037

 
11.0

Loans and leases, net of unearned income and fees
44,156

 
43,683

 
42,540

 
473

 
1.1

 
1,616

 
3.8

Less allowance for loan losses
541

 
544

 
597

 
(3
)
 
(0.6
)
 
(56
)
 
(9.4
)
Loans held for investment, net of allowance
$
43,615

 
$
43,139

 
$
41,943

 
$
476

 
1.1

 
$
1,672

 
4.0

Loans and leases, net of unearned income and fees, increased $1.6 billion, or 3.8%, to $44.2 billion at September 30, 2017 from $42.5 billion at September 30, 2016. When compared with the same prior year period, commercial loans increased $915 million and consumer loans increased $1.0 billion, predominantly in 1-4 family residential loans. Commercial real estate loans declined slightly from the same prior year period, primarily due to active management of credit risk concentrations. Unfunded lending commitments increased to $19.8 billion at September 30, 2017, compared with $19.1 billion at September 30, 2016.
Deposits
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
$
 
%
 
$
 
%
Noninterest-bearing demand
$
24,011

 
$
24,172

 
$
22,711

 
$
(161
)
 
(0.7
)%
 
$
1,300

 
5.7
 %
Interest-bearing:
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings and money market
25,179

 
25,165

 
25,503

 
14

 
0.1

 
(324
)
 
(1.3
)
Time
2,909

 
3,041

 
2,516

 
(132
)
 
(4.3
)
 
393

 
15.6

Foreign

 

 
119

 

 
NM

 
(119
)
 
(100.0
)
Total deposits
$
52,099

 
$
52,378

 
$
50,849

 
$
(279
)
 
(0.5
)
 
$
1,250

 
2.5

Total deposits increased by $1.3 billion, or 2.5%, from $50.8 billion at September 30, 2016. Average total deposits increased to $51.9 billion for the third quarter of 2017 compared with $50.7 billion for the third quarter of 2016. Average noninterest bearing deposits increased to $23.8 billion for the third quarter of 2017, compared with $22.5 billion for the third quarter of 2016, and were 46% of average total deposits compared with 44% for the same prior year period.
Shareholders’ Equity
 
 
 
 
 
 
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
3Q17
 
2Q17
 
3Q16
 
$
 
%
 
$
 
%
Shareholders’ equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock
$
566

 
$
566

 
$
710

 
$

 
 %
 
$
(144
)
 
(20.3
)%
Common Stock
4,552

 
4,660

 
4,748

 
(108
)
 
(2.3
)
 
(196
)
 
(4.1
)
Retained earnings
2,700

 
2,572

 
2,212

 
128

 
5.0

 
488

 
22.1

Accumulated other comprehensive income (loss)
(57
)
 
(49
)
 
9

 
(8
)
 
(16.3
)
 
(66
)
 
(733.3
)
Total shareholders' equity
$
7,761

 
$
7,749

 
$
7,679

 
$
12

 
0.2

 
$
82

 
1.1


- more -


ZIONS BANCORPORATION
Press Release – Page 6
October 23, 2017

During the third quarter of 2017, the Company increased its common stock dividend to $0.12 cents per share from $0.08 cents per share in second quarter of 2017. Common stock repurchases during the current quarter totaled $115 million, or 2.5 million shares, which is equivalent to 1.3% of common stock as of June 30, 2017, at an average price of $45.45 per share. The Company has repurchased $250 million, or 6.1 million shares, of common stock during the last four quarters at an average price of $40.92 per share. The Company has $350 million of buyback capacity remaining in its 2017 capital plan, which spans the timeframe of July 2017 to June 2018. Weighted average diluted shares increased by 4.4 million compared with the third quarter of 2016 primarily due to the dilutive impact of warrants that have been outstanding since 2008 (“TARP” warrants - NASDAQ: ZIONZ) and 2010 (NASDAQ: ZIONW).
Preferred stock decreased by $144 million from September 30, 2016 to September 30, 2017 as a result of the Company redeeming all outstanding shares of its 7.90% Series F Non-Cumulative Perpetual Preferred Stock during the second quarter of 2017. Preferred dividends are expected to be $9.6 million for the fourth quarter of 2017 and second quarter of 2018 and $7.5 million for the first and third quarters of 2018.
Tangible book value per common share increased to $30.93 at September 30, 2017, compared with $29.16. The estimated Basel III common equity tier 1 (“CET1”) capital ratio was 12.2% at September 30, 2017 compared with 12.0%. Basel III capital ratios are based on the applicable phase-in periods; however, the fully phased-in ratio is not substantially different. For information on non-GAAP financial measures, see pages 16-19.

- more -


ZIONS BANCORPORATION
Press Release – Page 7
October 23, 2017

Supplemental Presentation and Conference Call
Zions has posted a supplemental presentation to its website, which will be used to discuss these third quarter results at 5:30 p.m. ET this afternoon (October 23, 2017). Media representatives, analysts, investors, and the public are invited to join this discussion by calling 253-237-1247 (domestic and international) and entering the passcode 82373635, or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at zionsbancorporation.com. The webcast of the conference call will also be archived and available for 30 days.
About Zions Bancorporation
Zions Bancorporation is one of the nation's premier financial services companies with total assets exceeding $65 billion. Zions operates under local management teams and distinct brands in 11 western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming. The company is a national leader in Small Business Administration lending and public finance advisory services. In addition, Zions is included in the S&P 500 and NASDAQ Financial 100 indices. Investor information and links to local banking brands can be accessed at zionsbancorporation.com.
Forward-Looking Information
Statements in this press release that are based on other than historical data or that express the Company’s expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts or intentions regarding future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date.
Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this presentation. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include the actual amount and duration of declines in the price of oil and gas, our ability to meet our efficiency and noninterest expense goals, the rate of change of interest sensitive assets and liabilities relative to changes in benchmark interest rates as well as other factors discussed in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s Internet site (http://www.sec.gov).
Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

- more -


ZIONS BANCORPORATION
Press Release – Page 8
October 23, 2017

FINANCIAL HIGHLIGHTS
(Unaudited)
 
Three Months Ended
(In millions, except share, per share, and ratio data)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
BALANCE SHEET 1
 
 
 
 
 
 
 
 
 
Loans held for investment, net of allowance
$
43,615

 
$
43,139

 
$
42,198

 
$
42,082

 
$
41,943

Total assets
65,564

 
65,446

 
65,463

 
63,239

 
61,039

Deposits
52,099

 
52,378

 
53,475

 
53,236

 
50,849

Total shareholders’ equity
7,761

 
7,749

 
7,730

 
7,634

 
7,679

STATEMENT OF INCOME
 
 
 
 
 
 
 
 
 
Net earnings applicable to common shareholders
$
152

 
$
154

 
$
129

 
$
125

 
$
117

Net interest income
522

 
528

 
489

 
480

 
469

Taxable-equivalent net interest income 2
531

 
537

 
497

 
488

 
476

Total noninterest income
139

 
132

 
132

 
128

 
145

Total noninterest expense
413

 
405

 
414

 
404

 
403

Adjusted pre-provision net revenue 2
251

 
268

 
213

 
217

 
209

Provision for loan losses
5

 
7

 
23

 
(3
)
 
19

Provision for unfunded lending commitments
(4
)
 
3

 
(5
)
 
3

 
(3
)
Provision for credit losses
1

 
10

 
18

 

 
16

PER COMMON SHARE
 
 
 
 
 
 
 
 
 
Net earnings per diluted common share
$
0.72

 
$
0.73

 
$
0.61

 
$
0.60

 
$
0.57

Dividends
0.12

 
0.08

 
0.08

 
0.08

 
0.08

Book value per common share 1
36.03

 
35.54

 
34.65

 
34.09

 
34.19

Tangible book value per common share 1, 2
30.93

 
30.50

 
29.61

 
29.06

 
29.16

SELECTED RATIOS AND OTHER DATA
 
 
 
 
 
 
 
 
 
Return on average assets
0.97
%
 
1.03
%
 
0.88
%
 
0.88
%
 
0.84
%
Return on average common equity
8.3
%
 
8.6
%
 
7.5
%
 
7.1
%
 
6.7
%
Tangible return on average tangible common equity 2
9.8
%
 
10.2
%
 
8.8
%
 
8.4
%
 
7.9
%
Net interest margin
3.45
%
 
3.52
%
 
3.38
%
 
3.37
%
 
3.36
%
Efficiency ratio 2
62.3
%
 
59.8
%
 
65.9
%
 
64.5
%
 
65.9
%
Effective tax rate
34.2
%
 
32.3
%
 
24.5
%
 
33.8
%
 
33.9
%
Ratio of nonperforming assets to loans and leases and other real estate owned
1.06
%
 
1.12
%
 
1.37
%
 
1.34
%
 
1.37
%
Annualized ratio of net loan and lease charge-offs to average loans
0.07
%
 
0.06
%
 
0.43
%
 
0.25
%
 
0.28
%
Ratio of total allowance for credit losses to loans and leases outstanding 1
1.36
%
 
1.39
%
 
1.41
%
 
1.48
%
 
1.55
%
Full-time equivalent employees
10,041

 
10,074

 
10,004

 
10,057

 
9,968

CAPITAL RATIOS 1
 
 
 
 
 
 
 
 
 
Tangible common equity ratio
9.57
%
 
9.57
%
 
9.31
%
 
9.49
%
 
9.91
%
Basel III: 3
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
12.2
%
 
12.3
%
 
12.2
%
 
12.1
%
 
12.0
%
Tier 1 leverage
10.6
%
 
10.5
%
 
10.8
%
 
11.1
%
 
11.3
%
Tier 1 risk-based capital
13.3
%
 
13.4
%
 
13.6
%
 
13.5
%
 
13.5
%
Total risk-based capital
15.0
%
 
15.1
%
 
15.3
%
 
15.2
%
 
15.3
%
Risk-weighted assets
$
51,044

 
$
50,575

 
$
50,016

 
$
49,937

 
$
49,318

Weighted average common and common-equivalent shares outstanding (in thousands)
209,106

 
208,183

 
210,405

 
205,446

 
204,714

Common shares outstanding (in thousands) 1
199,712

 
202,131

 
202,595

 
203,085

 
203,850

1 
At period end.
2 
For information on non-GAAP financial measures, see pages 16-19.
3 
Basel III capital ratios became effective January 1, 2015 and are based on the applicable phase-in periods. Current period ratios and amounts represent estimates.

- more -


ZIONS BANCORPORATION
Press Release – Page 9
October 23, 2017

CONSOLIDATED BALANCE SHEETS
(In millions, shares in thousands)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 

 
(Unaudited)
ASSETS
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
541

 
$
481

 
$
566

 
$
737

 
$
553

Money market investments:
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
765

 
1,167

 
1,761

 
1,411

 
1,489

Federal funds sold and security resell agreements
467

 
427

 
363

 
568

 
1,676

Investment securities:
 
 
 
 
 
 
 
 
 
Held-to-maturity, at amortized cost (approximate fair value $743, $774, $803, $850 and $718)
746

 
775

 
815

 
868

 
715

Available-for-sale, at fair value
15,242

 
15,341

 
15,606

 
13,372

 
10,358

Trading account, at fair value
56

 
61

 
40

 
115

 
108

Total investment securities
16,044

 
16,177

 
16,461

 
14,355

 
11,181

Loans held for sale
71

 
53

 
128

 
172

 
160

Loans and leases, net of unearned income and fees
44,156

 
43,683

 
42,742

 
42,649

 
42,540

Less allowance for loan losses
541

 
544

 
544

 
567

 
597

Loans held for investment, net of allowance
43,615

 
43,139

 
42,198

 
42,082

 
41,943

Other noninterest-bearing investments
1,008

 
1,012

 
973

 
884

 
894

Premises, equipment and software, net
1,083

 
1,069

 
1,047

 
1,020

 
987

Goodwill
1,014

 
1,014

 
1,014

 
1,014

 
1,014

Core deposit and other intangibles
3

 
5

 
7

 
8

 
10

Other real estate owned
3

 
4

 
3

 
4

 
8

Other assets
950

 
898

 
942

 
984

 
1,124

Total assets
$
65,564

 
$
65,446

 
$
65,463

 
$
63,239

 
$
61,039

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
$
24,011

 
$
24,172

 
$
24,410

 
$
24,115

 
$
22,711

Interest-bearing:
 
 
 
 
 
 
 
 
 
Savings and money market
25,179

 
25,165

 
26,071

 
26,364

 
25,503

Time
2,909

 
3,041

 
2,994

 
2,757

 
2,516

Foreign

 

 

 

 
119

Total deposits
52,099

 
52,378

 
53,475

 
53,236

 
50,849

Federal funds and other short-term borrowings
4,624

 
4,342

 
3,137

 
827

 
1,116

Long-term debt
383

 
383

 
383

 
535

 
570

Reserve for unfunded lending commitments
59

 
63

 
60

 
65

 
62

Other liabilities
638

 
531

 
678

 
942

 
763

Total liabilities
57,803

 
57,697

 
57,733

 
55,605

 
53,360

Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Preferred stock, without par value, authorized 4,400 shares
566

 
566

 
710

 
710

 
710

Common stock, without par value; authorized 350,000 shares; issued and outstanding 199,712, 202,131, 202,595, 203,085, and 203,850 shares
4,552

 
4,660

 
4,696

 
4,725

 
4,748

Retained earnings
2,700

 
2,572

 
2,435

 
2,321

 
2,212

Accumulated other comprehensive income (loss)
(57
)
 
(49
)
 
(111
)
 
(122
)
 
9

Total shareholders’ equity
7,761

 
7,749

 
7,730

 
7,634

 
7,679

Total liabilities and shareholders’ equity
$
65,564

 
$
65,446

 
$
65,463

 
$
63,239

 
$
61,039


- more -


ZIONS BANCORPORATION
Press Release – Page 10
October 23, 2017

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
Three Months Ended
(In millions, except share and per share amounts)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Interest income:
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
468

 
$
469

 
$
433

 
$
438

 
$
437

Interest on money market investments
5

 
5

 
4

 
4

 
5

Interest on securities
84

 
84

 
78

 
59

 
49

Total interest income
557

 
558

 
515

 
501

 
491

Interest expense:
 
 
 
 
 
 
 
 
 
Interest on deposits
15

 
14

 
13

 
13

 
13

Interest on short- and long-term borrowings
20

 
16

 
13

 
8

 
9

Total interest expense
35

 
30

 
26

 
21

 
22

Net interest income
522

 
528

 
489

 
480

 
469

Provision for loan losses
5

 
7

 
23

 
(3
)
 
19

Net interest income after provision for loan losses
517

 
521

 
466

 
483

 
450

Noninterest income:
 
 
 
 
 
 
 
 
 
Service charges and fees on deposit accounts
42

 
43

 
42

 
43

 
45

Other service charges, commissions and fees
55

 
56

 
49

 
52

 
54

Wealth management income
11

 
10

 
10

 
11

 
10

Loan sales and servicing income
6

 
6

 
7

 
6

 
11

Capital markets and foreign exchange
8

 
6

 
7

 
6

 
6

Customer-related fees
122

 
121


115

 
118

 
126

Dividends and other investment income
9

 
10

 
12

 
4

 
9

Securities gains (losses), net
5

 
2

 
5

 
(3
)
 
8

Other
3

 
(1
)
 

 
9

 
2

Total noninterest income
139

 
132

 
132

 
128

 
145

Noninterest expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
253

 
242

 
262

 
241

 
242

Occupancy, net
35

 
32

 
33

 
32

 
33

Furniture, equipment and software, net
32

 
32

 
32

 
33

 
29

Other real estate expense, net
(1
)
 

 

 

 

Credit-related expense
7

 
8

 
8

 
7

 
7

Provision for unfunded lending commitments
(4
)
 
3

 
(5
)
 
3

 
(3
)
Professional and legal services
14

 
13

 
14

 
17

 
14

Advertising
6

 
6

 
5

 
5

 
6

FDIC premiums
15

 
13

 
12

 
11

 
12

Amortization of core deposit and other intangibles
2

 
2

 
2

 
2

 
2

Other
54

 
54

 
51

 
53

 
61

Total noninterest expense
413

 
405

 
414

 
404

 
403

Income before income taxes
243

 
248

 
184

 
207

 
192

Income taxes
83

 
80

 
45

 
70

 
65

Net income
160

 
168

 
139

 
137

 
127

Preferred stock dividends
(8
)
 
(12
)
 
(10
)
 
(12
)
 
(10
)
Preferred stock redemption

 
(2
)
 

 

 

Net earnings applicable to common shareholders
$
152

 
$
154

 
$
129

 
$
125

 
$
117

 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding during the period:
 
 
 
 
 
 
 
 
Basic shares (in thousands)
200,332

 
201,822

 
202,347

 
202,886

 
204,312

Diluted shares (in thousands)
209,106

 
208,183

 
210,405

 
205,446

 
204,714

Net earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
$
0.75

 
$
0.76

 
$
0.63

 
$
0.61

 
$
0.57

Diluted
0.72

 
0.73

 
0.61

 
0.60

 
0.57


- more -


ZIONS BANCORPORATION
Press Release – Page 11
October 23, 2017

Loan Balances Held for Investment by Portfolio Type
(Unaudited)
(In millions)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
14,041

 
$
13,850

 
$
13,368

 
$
13,452

 
$
13,543

Leasing
343

 
387

 
404

 
423

 
439

Owner occupied
7,082

 
7,095

 
6,973

 
6,962

 
6,889

Municipal
1,073

 
871

 
811

 
778

 
753

Total commercial
22,539

 
22,203

 
21,556

 
21,615

 
21,624

Commercial real estate:
 
 
 
 
 
 
 
 
 
Construction and land development
2,170

 
2,186

 
2,123

 
2,019

 
2,147

Term
8,944

 
9,012

 
9,083

 
9,322

 
9,303

Total commercial real estate
11,114

 
11,198

 
11,206

 
11,341

 
11,450

Consumer:
 
 
 
 
 
 
 
 
 
Home equity credit line
2,745

 
2,697

 
2,638

 
2,645

 
2,581

1-4 family residential
6,522

 
6,359

 
6,185

 
5,891

 
5,785

Construction and other consumer real estate
558

 
560

 
517

 
486

 
453

Bankcard and other revolving plans
490

 
478

 
459

 
481

 
458

Other
188

 
188

 
181

 
190

 
189

Total consumer
10,503

 
10,282

 
9,980

 
9,693

 
9,466

Loans and leases, net of unearned income and fees
$
44,156

 
$
43,683

 
$
42,742

 
$
42,649

 
$
42,540


Nonperforming Assets
(Unaudited)
(In millions)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans1
$
465

 
$
486

 
$
585

 
$
569

 
$
579

Other real estate owned
3

 
4

 
3

 
4

 
8

Total nonperforming assets
$
468

 
$
490

 
$
588

 
$
573

 
$
587

Ratio of nonperforming assets to loans1 and leases and other real estate owned
1.06
%
 
1.12
%
 
1.37
%
 
1.34
%
 
1.37
%
Accruing loans past due 90 days or more
$
30

 
$
19

 
$
30

 
$
36

 
$
29

Ratio of accruing loans past due 90 days or more to loans1 and leases
0.07
%
 
0.04
%
 
0.07
%
 
0.08
%
 
0.07
%
Nonaccrual loans and accruing loans past due 90 days or more
$
495

 
$
505

 
$
615

 
$
605

 
$
608

Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans1 and leases
1.12
%
 
1.15
%
 
1.43
%
 
1.41
%
 
1.42
%
Accruing loans past due 30-89 days
$
99

 
$
98

 
$
137

 
$
126

 
$
164

Restructured loans included in nonaccrual loans
115

 
137

 
131

 
100

 
125

Restructured loans on accrual
133

 
167

 
167

 
151

 
170

Classified loans
1,248

 
1,317

 
1,464

 
1,577

 
1,615

1 Includes loans held for sale.

- more -


ZIONS BANCORPORATION
Press Release – Page 12
October 23, 2017

Allowance for Credit Losses
(Unaudited)
 
Three Months Ended
(In millions)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Allowance for Loan Losses
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
544

 
$
544

 
$
567

 
$
597

 
$
608

Add:
 
 
 
 
 
 
 
 
 
Provision for losses
5

 
7

 
23

 
(3
)
 
19

Deduct:
 
 
 
 
 
 
 
 
 
Gross loan and lease charge-offs
(25
)
 
(35
)
 
(57
)
 
(38
)
 
(54
)
Recoveries
17

 
28

 
11

 
11

 
24

Net loan and lease charge-offs
(8
)
 
(7
)
 
(46
)
 
(27
)
 
(30
)
Balance at end of period
$
541

 
$
544

 
$
544

 
$
567

 
$
597

Ratio of allowance for loan losses to loans1 and leases, at period end
1.23
%
 
1.25
%
 
1.27
%
 
1.33
%
 
1.40
%
Ratio of allowance for loan losses to nonaccrual loans1 at period end
120
%
 
115
%
 
99
%
 
107
%
 
109
%
Annualized ratio of net loan and lease charge-offs to average loans
0.07
%
 
0.06
%
 
0.43
%
 
0.25
%
 
0.28
%
Reserve for Unfunded Lending Commitments
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
63

 
$
60

 
$
65

 
$
62

 
$
65

Provision charged (credited) to earnings
(4
)
 
3

 
(5
)
 
3

 
(3
)
Balance at end of period
$
59

 
$
63

 
$
60

 
$
65

 
$
62

Total Allowance for Credit Losses
 
 
 
 
 
 
 
 
 
Allowance for loan losses
$
541

 
$
544

 
$
544

 
$
567

 
$
597

Reserve for unfunded lending commitments
59

 
63

 
60

 
65

 
62

Total allowance for credit losses
$
600

 
$
607

 
$
604

 
$
632

 
$
659

Ratio of total allowance for credit losses to loans1 and leases outstanding, at period end
1.36
%
 
1.39
%
 
1.41
%
 
1.48
%
 
1.55
%
1 Does not include loans held for sale.



- more -


ZIONS BANCORPORATION
Press Release – Page 13
October 23, 2017

Nonaccrual Loans by Portfolio Type
(Unaudited)
(In millions)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
 
 
 
 
 
 
 
 
 
Loans held for sale
$
13

 
$
12

 
$
34

 
$
40

 
$
29

Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
257

 
$
278

 
$
358

 
$
354

 
$
387

Leasing
8

 
10

 
13

 
14

 
14

Owner occupied
85

 
86

 
89

 
74

 
66

Municipal
1

 
1

 
1

 
1

 
1

Total commercial
351

 
375

 
461

 
443

 
468

Commercial real estate:
 
 
 
 
 
 
 
 
 
Construction and land development
6

 
6

 
7

 
7

 
4

Term
41

 
37

 
38

 
29

 
28

Total commercial real estate
47

 
43

 
45

 
36

 
32

Consumer:
 
 
 
 
 
 
 
 
 
Home equity credit line
11

 
11

 
9

 
11

 
11

1-4 family residential
40

 
43

 
35

 
36

 
36

Construction and other consumer real estate
1

 
1

 
1

 
2

 
1

Bankcard and other revolving plans
1

 

 

 
1

 
2

Other
1

 
1

 

 

 

Total consumer
54

 
56

 
45

 
50

 
50

Total nonaccrual loans
$
465

 
$
486

 
$
585

 
$
569

 
$
579



Net Charge-Offs by Portfolio Type
(Unaudited)
 
 
(In millions)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
4

 
$
11

 
$
45

 
$
25

 
$
33

Leasing

 

 

 

 

Owner occupied

 
2

 
1

 
(1
)
 

Municipal

 

 

 

 

Total commercial
4

 
13

 
46

 
24

 
33

Commercial real estate:
 
 
 
 
 
 
 
 
 
Construction and land development

 
(8
)
 
(2
)
 

 
(1
)
Term
2

 

 
1

 
1

 
(5
)
Total commercial real estate
2

 
(8
)
 
(1
)
 
1

 
(6
)
Consumer:
 
 
 
 
 
 
 
 
 
Home equity credit line

 
1

 
(1
)
 

 
1

1-4 family residential
1

 

 
(1
)
 

 

Construction and other consumer real estate

 

 

 

 

Bankcard and other revolving plans

 
1

 
3

 
2

 
2

Other
1

 

 

 

 

Total consumer loans
2

 
2

 
1

 
2

 
3

Total net charge-offs
$
8

 
$
7

 
$
46

 
$
27

 
$
30


- more -


ZIONS BANCORPORATION
Press Release – Page 14
October 23, 2017

Oil and Gas Related Exposure1 
(Unaudited)
 
September 30,
2017
 
June 30,
2017
 
September 30,
2016
 
3Q17 - 2Q17
 
3Q17 - 3Q16
(In millions)
 
 
 
$
 
%
 
$
 
%
Loans and leases
 
 
 
 
 
 
 
 
 
 
 
 
 
Upstream – exploration and production
$
784

 
$
709

 
$
752

 
$
75

 
10.6
 %
 
$
32

 
4.3
 %
Midstream – marketing and transportation
601

 
622

 
623

 
(21
)
 
(3.4
)
 
(22
)
 
(3.5
)
Downstream – refining
100

 
103

 
123

 
(3
)
 
(2.9
)
 
(23
)
 
(18.7
)
Other non-services
40

 
37

 
44

 
3

 
8.1

 
(4
)
 
(9.1
)
Oilfield services
412

 
455

 
596

 
(43
)
 
(9.5
)
 
(184
)
 
(30.9
)
Oil and gas service manufacturing
109

 
136

 
176

 
(27
)
 
(19.9
)
 
(67
)
 
(38.1
)
Total loan and lease balances 2
2,046

 
2,062

 
2,314

 
(16
)
 
(0.8
)
 
(268
)
 
(11.6
)
Unfunded lending commitments
1,799

 
1,855

 
1,784

 
(56
)
 
(3.0
)
 
15

 
0.8

Total oil and gas credit exposure
$
3,845

 
$
3,917

 
$
4,098

 
$
(72
)
 
(1.8
)
 
$
(253
)
 
(6.2
)
Private equity investments
$
4

 
$
4

 
$
6

 
$

 

 
$
(2
)
 
(33.3
)
Credit quality measures 2
 
 
 
 
 
 
 
 
 
 
 
 
 
Criticized loan ratio
29.8
%
 
33.1
%
 
41.8
%
 
 
 
 
 
 
 
 
Classified loan ratio
24.0
%
 
27.2
%
 
33.1
%
 
 
 
 
 
 
 
 
Nonaccrual loan ratio
10.2
%
 
12.1
%
 
15.0
%
 
 
 
 
 
 
 
 
Ratio of nonaccrual loans that are current
67.9
%
 
84.7
%
 
87.3
%
 
 
 
 
 
 
 
 
Net charge-off ratio, annualized 3
1.2
%
 
3.1
%
 
7.1
%
 
 
 
 
 
 
 
 
1 
Because many borrowers operate in multiple businesses, judgment has been applied in characterizing a borrower as oil and gas-related, including a particular segment of oil and gas-related activity, e.g., upstream or downstream; typically, 50% of revenues coming from the oil and gas sector is used as a guide.
2 Total loan and lease balances and the credit quality measures do not include oil and gas loans held for sale at period end.
3 
Calculated as the ratio of annualized net charge-offs to the beginning loan balances for each respective period.

- more -


ZIONS BANCORPORATION
Press Release – Page 15
October 23, 2017

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)
 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
(In millions)
Average balance
 
Average
yield/rate 1
 
Average balance
 
Average
yield/rate
1
 
Average balance
 
Average
yield/rate
1
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Money market investments
$
1,246

 
1.44
%
 
$
1,572

 
1.20
%
 
$
3,140

 
0.63
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity
750

 
3.96
%
 
788

 
3.97
%
 
706

 
4.33
%
Available-for-sale
15,197

 
2.12
%
 
15,386

 
2.11
%
 
9,698

 
1.82
%
Trading account
43

 
3.73
%
 
79

 
3.43
%
 
80

 
3.34
%
Total securities
15,990

 
2.21
%
 
16,253

 
2.20
%
 
10,484

 
2.00
%
Loans held for sale
52

 
4.29
%
 
100

 
3.23
%
 
133

 
3.34
%
Loans held for investment 2:
 
 
 
 
 
 
 
 
 
 
 
Commercial
22,261

 
4.36
%
 
21,885

 
4.44
%
 
21,816

 
4.19
%
Commercial real estate
11,192

 
4.46
%
 
11,236

 
4.74
%
 
11,331

 
4.19
%
Consumer
10,379

 
3.86
%
 
10,122

 
3.83
%
 
9,340

 
3.81
%
Total loans held for investment
43,832

 
4.27
%
 
43,243

 
4.38
%
 
42,487

 
4.11
%
Total interest-earning assets
61,120

 
3.67
%
 
61,168

 
3.72
%
 
56,244

 
3.52
%
Cash and due from banks
767

 
 
 
795

 
 
 
556

 
 
Allowance for loan losses
(540
)
 
 
 
(546
)
 
 
 
(609
)
 
 
Goodwill
1,014

 
 
 
1,014

 
 
 
1,014

 
 
Core deposit and other intangibles
4

 
 
 
6

 
 
 
11

 
 
Other assets
2,974

 
 
 
2,974

 
 
 
2,846

 
 
Total assets
$
65,339

 
 
 
$
65,411

 
 
 
$
60,062

 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Savings and money market
$
25,190

 
0.16
%
 
$
25,467

 
0.14
%
 
$
25,683

 
0.15
%
Time
2,933

 
0.70
%
 
3,048

 
0.66
%
 
2,409

 
0.51
%
Foreign

 
 
 

 
 
 
117

 
0.30
%
Total interest-bearing deposits
28,123

 
0.21
%
 
28,515

 
0.20
%
 
28,209

 
0.18
%
Borrowed funds:
 
 
 
 
 
 
 
 
 
 
 
Federal funds and other short-term borrowings
4,609

 
1.17
%
 
4,302

 
0.94
%
 
343

 
0.22
%
Long-term debt
383

 
5.71
%
 
383

 
5.77
%
 
680

 
5.13
%
Total borrowed funds
4,992

 
1.52
%
 
4,685

 
1.34
%
 
1,023

 
3.48
%
Total interest-bearing liabilities
33,115

 
0.41
%
 
33,200

 
0.36
%
 
29,232

 
0.29
%
Noninterest-bearing deposits
23,798

 
 
 
23,819

 
 
 
22,466

 
 
Other liabilities
630

 
 
 
565

 
 
 
668

 
 
Total liabilities
57,543

 
 
 
57,584

 
 
 
52,366

 
 
Shareholders’ equity:
 
 
 
 
 
 
 
 
 
 
 
Preferred equity
566

 
 
 
684

 
 
 
710

 
 
Common equity
7,230

 
 
 
7,143

 
 
 
6,986

 
 
Total shareholders’ equity
7,796

 
 
 
7,827

 
 
 
7,696

 
 
Total liabilities and shareholders’ equity
$
65,339

 
 
 
$
65,411

 
 
 
$
60,062

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spread on average interest-bearing funds
 
 
3.26
%
 
 
 
3.36
%
 
 
 
3.23
%
Net yield on interest-earning assets
 
 
3.45
%
 
 
 
3.52
%
 
 
 
3.36
%
1 Rates are calculated using amounts in thousands and taxable-equivalent rates used where applicable.
2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

- more -


ZIONS BANCORPORATION
Press Release – Page 16
October 23, 2017

GAAP to Non-GAAP Reconciliations
(Unaudited)
This press release presents non-GAAP financial measures, in addition to GAAP financial measures, to provide investors with additional information. The adjustments to reconcile from the applicable GAAP financial measures to the non-GAAP financial measures are presented in the following schedules. The Company considers these adjustments to be relevant to ongoing operating results and provide a meaningful base for period-to-period and company-to-company comparisons. These non-GAAP financial measures are used by management to assess the performance and financial position of the Company and for presentations of Company performance to investors. The Company further believes that presenting these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.
Non-GAAP financial measures have inherent limitations, and are not required to be uniformly applied by individual entities. Although non-GAAP financial measures are frequently used by stakeholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.
The following are the non-GAAP financial measures presented in this press release and a discussion of why management uses these non-GAAP measures:
Tangible Book Value per Common Share – this schedule also includes “tangible common equity.” Tangible book value per common share is a non-GAAP financial measure that management believes provides additional useful information about the level of tangible equity in relation to outstanding shares of common stock. Management believes the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income.
Tangible Return on Average Tangible Common Equity – this schedule also includes “net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax” and “average tangible common equity.” Tangible return on average tangible common equity is a non-GAAP financial measure that management believes provides useful information about the Company’s use of shareholders’ equity. Management believes the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income.
Efficiency Ratio – this schedule also includes “adjusted noninterest expense,” “taxable-equivalent net interest income,” “adjusted taxable-equivalent revenue,” and “adjusted pre-provision net revenue (“PPNR”).” The methodology of determining the efficiency ratio may differ among companies. Management makes adjustments to exclude certain items as identified in the subsequent schedule which it believes allows for more consistent comparability among periods. Management believes the efficiency ratio provides useful information regarding the cost of generating revenue. Adjusted noninterest expense provides a measure as to how well the Company is managing its expenses, and adjusted PPNR enables management and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. Taxable-equivalent net interest income allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The efficiency ratio and adjusted noninterest expense are the key metrics to which the Company announced it would hold itself accountable in its June 1, 2015 efficiency initiative, and to which executive compensation is tied.


- more -


ZIONS BANCORPORATION
Press Release – Page 17
October 23, 2017

GAAP to Non-GAAP Reconciliations
(Unaudited)
(In millions, except shares and per share amounts)
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Tangible Book Value per Common Share
 
 
 
 
 
 
 
 
Total shareholders’ equity (GAAP)
 
$
7,761

 
$
7,749

 
$
7,730

 
$
7,634

 
$
7,679

Preferred stock
 
(566
)
 
(566
)
 
(710
)
 
(710
)
 
(710
)
Goodwill
 
(1,014
)
 
(1,014
)
 
(1,014
)
 
(1,014
)
 
(1,014
)
Core deposit and other intangibles
 
(3
)
 
(5
)
 
(7
)
 
(8
)
 
(10
)
Tangible common equity (non-GAAP)
(a)
$
6,178

 
$
6,164

 
$
5,999

 
$
5,902

 
$
5,945

Common shares outstanding (in thousands)
(b)
199,712

 
202,131

 
202,595

 
203,085

 
203,850

Tangible book value per common share (non-GAAP)
(a/b)
$
30.93

 
$
30.50

 
$
29.61

 
$
29.06

 
$
29.16

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(Dollar amounts in millions)
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Tangible Return on Average Tangible Common Equity
 
 
 
 
 
 
 
 
Net earnings applicable to common shareholders (GAAP)
 
$
152

 
$
154

 
$
129

 
$
125

 
$
117

Adjustments, net of tax:
 
 
 
 
 
 
 
 
 
 
Amortization of core deposit and other intangibles
 
1

 
1

 
1

 
1

 
1

Net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP)
(a)
$
153

 
$
155

 
$
130

 
$
126

 
$
118

Average common equity (GAAP)
 
$
7,230

 
$
7,143

 
$
6,996

 
$
6,998

 
$
6,986

Average goodwill
 
(1,014
)
 
(1,014
)
 
(1,014
)
 
(1,014
)
 
(1,014
)
Average core deposit and other intangibles
 
(4
)
 
(6
)
 
(8
)
 
(10
)
 
(11
)
Average tangible common equity (non-GAAP)
(b)
$
6,212

 
$
6,123

 
$
5,974

 
$
5,974

 
$
5,961

Number of days in quarter
(c)
92

 
91

 
90

 
92

 
92

Number of days in year
(d)
365

 
365

 
365

 
366

 
366

Tangible return on average tangible common equity (non-GAAP)
(a/b/c)*d
9.8
%
 
10.2
%
 
8.8
%
 
8.4
%
 
7.9
%

- more -


ZIONS BANCORPORATION
Press Release – Page 18
October 23, 2017

GAAP to Non-GAAP Reconciliations
(Unaudited)
 
 
Three Months Ended
(In millions)
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Efficiency Ratio
 
 
 
 
 
 
 
 
 
 
Noninterest expense (GAAP)
(a)
$
413

 
$
405

 
$
414

 
$
404

 
$
403

Adjustments:
 
 
 
 
 
 
 
 
 
 
Severance costs
 
1

 

 
5

 
1

 

Other real estate expense
 
(1
)
 

 

 

 

Provision for unfunded lending commitments
 
(4
)
 
3

 
(5
)
 
3

 
(3
)
Amortization of core deposit and other intangibles
 
2

 
2

 
2

 
2

 
2

Restructuring costs 1
 
1

 
1

 
1

 
3

 

Total adjustments
(b)
(1
)
 
6

 
3

 
9

 
(1
)
Adjusted noninterest expense (non-GAAP)
(a-b)=(c)
$
414

 
$
399

 
$
411

 
$
395

 
$
404

Net interest income (GAAP)
(d)
$
522

 
$
528

 
$
489

 
$
480

 
$
469

Fully taxable-equivalent adjustments
(e)
9

 
9

 
8

 
8

 
7

Taxable-equivalent net interest income (non-GAAP)
(d+e)=(f)
531

 
537

 
497

 
488

 
476

Noninterest income (GAAP)
(g)
139

 
132

 
132

 
128

 
145

Combined income (non-GAAP)
(f+g)=(h)
670

 
669

 
629

 
616

 
621

Adjustments:
 
 
 
 
 
 
 
 
 
 
Fair value and nonhedge derivative income
 

 

 

 
7

 

Securities gains (losses), net
 
5

 
2

 
5

 
(3
)
 
8

Total adjustments
(i)
5

 
2

 
5

 
4

 
8

Adjusted taxable-equivalent revenue (non-GAAP)
(h-i)=(j)
$
665

 
$
667

 
$
624

 
$
612

 
$
613

Pre-provision net revenue (PPNR)
(h)-(a)
$
257

 
$
264

 
$
215

 
$
212

 
$
218

Adjusted PPNR (non-GAAP)
(j-c)
251

 
268

 
213

 
217

 
209

Efficiency ratio (non-GAAP)
(c/j)
62.3
%
 
59.8
%
 
65.9
%
 
64.5
%
 
65.9
%
1 The restructuring costs in the fourth quarter of 2016 are primarily related to the termination of the Zions Direct auction platform and changes to create a simplified lending approach for our business banking customers.


- more -


ZIONS BANCORPORATION
Press Release – Page 19
October 23, 2017

 
 
Nine Months Ended
(In millions)
 
September 30,
2017
 
September 30,
2016
Efficiency Ratio
 
 
 
 
Noninterest expense (GAAP)
(a)
$
1,232

 
$
1,181

Adjustments:
 
 
 
 
Severance costs
 
6

7

4

Other real estate expense
 
(1
)
 
(2
)
Provision for unfunded lending commitments
 
(6
)
 
(13
)
Amortization of core deposit and other intangibles
 
5

4

6

Restructuring costs
 
3

2

1

Total adjustments
(b)
7

 
(4
)
Adjusted noninterest expense (non-GAAP)
(a-b)=(c)
$
1,225

 
$
1,185

Net interest income (GAAP)
(d)
$
1,539

 
$
1,386

Fully taxable-equivalent adjustments
(e)
26

 
19

Taxable-equivalent net interest income (non-GAAP)
(d+e)=(f)
1,565

 
1,405

Noninterest income (GAAP)
(g)
404

 
388

Combined income (non-GAAP)
(f+g)=(h)
1,969

 
1,793

Adjustments:
 
 
 
 
Fair value and nonhedge derivative loss
 
(1
)
 
(5
)
Securities gains, net
 
13

 
11

Total adjustments
(i)
12

 
6

Adjusted taxable-equivalent revenue (non-GAAP)
(h-i)=(j)
$
1,957

 
$
1,787

Pre-provision net revenue (PPNR)
(h)-(a)
$
737

 
$
612

Adjusted PPNR (non-GAAP)
(j-c)
732

 
602

Efficiency ratio (non-GAAP)
(c/j)
62.6
%
 
66.3
%


# # #