---

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

---

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

---

 

November 4, 2003 (October 16, 2003)

Date of Report (Date of earliest event reported)

 

Zions Bancorporation

(Exact name of registrant as specified in its charter)

 

Utah		0-2610		87-0227400
(State of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
One South Main, Suite 1134, Salt Lake City, Utah				84111
(Address of principal executive offices)				(Zip Code)

 

(801) 524-4787

(Registrant’s telephone number,

including area code)

 

N/A

(Former name or former address, if changed since last report)

 

---

---

ITEM 5. OTHER EVENTS

 

On October 16, 2003, Zions Bancorporation announced via press release its financial results for the quarter ended September 30, 2003. Excerpts from the press release are set forth below:

 

***FOR IMMEDIATE RELEASE***

 

FOR: ZIONS BANCORPORATION One South Main, Suite 1134 Salt Lake City, Utah Harris H. Simmons Chairman/Chief Executive Officer

Contact: Clark Hinckley Tel: (801) 524-4787 October 16, 2003

 

ZIONS BANCORPORATION REPORTS 2003 THIRD

QUARTER EARNINGS OF $0.68 PER DILUTED SHARE

 

Results Include Impact of Several Key Strategic Actions

 

SALT LAKE CITY, October 16, 2003 – Zions Bancorporation (“Zions” or “the Company”) (Nasdaq: ZION) today reported third-quarter net income of $62.1 million, or $0.68 per diluted share. This net income and earnings per share performance represented an increase of 57.4% and 58.1%, respectively, over the $39.4 million, or $0.43 per diluted share earned for the third quarter of 2002. Income from continuing operations was $64.2 million for the third quarter of 2003, a decrease of 1.8% from the $65.4 million reported for the third quarter of 2002. Income from continuing operations was $0.71 per diluted share for the third quarter of 2003, unchanged from the third quarter of 2002.

 

Year-to-date net income for 2003 was $242.2 million, or $2.67 per diluted share compared to year-to-date net income of $168.8 million, or $1.83 per diluted share for 2002. Year-to-date income from continuing operations for 2003 was $244.0 million, or $2.69 per diluted share, an increase of 4.7% and 6.7%, respectively, over income from continuing operations of $233.0 million, or $2.52 per diluted share for year-to-date 2002.

 

Results for the third quarter of 2003 included the impact of several key strategic actions related to Zions’ previously announced restructuring of Vectra Bank Colorado, the rationalization of branches in Zions Bank, restructuring of debt, and the final disposition of certain strategic investments. The impact of these items is summarized in the following table:

---

Impact of Strategic Actions

		Income Statement Line Item Affected		Pre-Tax Amount ($ millions)				After-Tax Amount ($ millions)				Diluted EPS Impact
Vectra Restructuring		Impairment loss on goodwill		$	(75.6	)		$	(75.6	)		$	(0.83	)
		Restructuring charges			(0.6	)			(0.4	)			(0.01	)
		Total Impact of Vectra			(76.2	)			(76.0	)			(0.84	)
ZFNB Restructuring		Impairment losses on long-lived assets			(1.2	)			(0.7	)			(0.01	)
Lexign Sale		Discontinued operations: Impairment     losses and loss on sale			(2.4	)			(1.5	)			(0.02	)
Debt Extinguishment		Debt extinguishment cost			(24.2	)			(15.0	)			(0.16	)
Sale of Equity Investments		Equity securities gains (losses), net [ICAP, plc]			68.5				42.3				0.47
		Equity securities gains (losses), net [Other]			16.7				10.3				0.11
		Total Sale of Equity Investments			85.2				52.6				0.58
Other Tax Effects of Above Items		Income taxes			N/A				7.3				0.08
Total Impact of Strategic Actions				$	(18.8	)		$	(33.3	)		$	(0.37	)

 

The $75.6 million of impairment losses on goodwill are intangible losses that arise from write-downs of goodwill and do not impact tangible capital.

 

Loan and Deposit Growth

 

Loan growth for the quarter was modest, reflecting the improving but still soft economy and the Company’s caution regarding aggressive loan growth in the current economic environment. On-balance-sheet net loans and leases at September 30, 2003 were $19.4 billion. On-balance-sheet and sold loans being serviced were $22.3 billion at September 30, 2003 and increased 4.7% from September 30, 2002 and 9.6% annualized from June 30, 2003.

 

Deposits at September 30, 2003 were $20.9 billion, an increase of 7.2% over the balances reported one year ago. Deposits at September 30, 2003 increased at an annualized rate of 4.8% from the balances reported at the end of the second quarter of 2003.

 

Net Interest Income

 

For the quarter, taxable-equivalent net interest income of $282.8 million increased 6.0% compared to $266.7 million for the third quarter of 2002. For the third quarter of 2003, the net interest margin

---

was 4.39%, compared to 4.50% for the second quarter of 2003, and 4.53% for the third quarter of 2002.

 

Noninterest Income

 

For the third quarter of 2003, noninterest income was $190.2 million compared to $74.8 million for the third quarter of 2002. Excluding equity securities gains (losses) from both quarters, noninterest income for the third quarter of 2003 increased 11.3% from the third quarter of 2002.

 

Loan sales and servicing income included a gain on sale of $2.4 million in the third quarter of 2003 resulting from the securitization of $587 million of small business loans.

 

The third quarter of 2003 also included net equity securities gains of $77.4 million compared to net equity securities losses of $26.5 million for the third quarter of 2002. Equity securities gains during the third quarter of 2003 included the following:

 

		Pre-Tax Amount ($ millions)				Diluted EPS Impact
Gain on sale of ICAP, plc stock		$	68.5			$	0.47
Gain on sale of other investments			16.7				0.11
Write-downs made by venture capital funds			(7.8	)			(0.04	)*
Total		$	77.4			$	0.54

 

*Net of income taxes and minority interest, the results of the venture capital funds reduced net income by $3.5 million in the third quarter of 2003.

 

The gain on the sale of ICAP, plc was previously reported in an 8-K filed with the Securities and Exchange Commission on July 1, 2003.

 

Noninterest Expense

 

For the third quarter of 2003, noninterest expense was $245.5 million compared to $219.2 million for the third quarter of 2002. The third quarter of 2003 includes debt extinguishment cost of $24.2 million. Excluding this item, noninterest expense increased 1.0% from the third quarter of 2002.

 

Vectra Bank Colorado Restructuring

 

As previously noted, earlier this year the Company and Vectra management initiated a strategic review of Vectra Bank.

 

As a part of the restructuring of Vectra Bank Colorado, the Company offered 11 branches for sale during the quarter. The assets and liabilities to be sold were measured at their fair value less

---

estimated costs to sell based on bids, letters of intent received and negotiations to date. As a result, the Company recognized an impairment loss on goodwill of $7.1 million on the branches held for sale. The loans and deposits associated with these branches at quarter end were $153.9 million and $133.0 million, respectively.

 

As a result of this restructuring and as previously communicated, Zions also performed a SFAS 142 impairment test on the retained operations of Vectra in the third quarter of 2003. As a result of this analysis, in which Zions was assisted by valuation consultants from KPMG LLP, Zions recognized an additional goodwill impairment charge of $68.5 million. The SFAS 142 “Step 1” fair value calculation resulted in a determination of modest impairment compared to current book value adjusted to exclude assets and liabilities associated with the branches being sold. The total $68.5 million goodwill impairment included the adjustments resulting from the “Step 2” measurement of the fair value of assets and liabilities.

 

The total goodwill impairment of $75.6 million in the quarter is the sum of the $7.1 million and $68.5 million described above.

 

Sale of Lexign, Inc.

 

During the third quarter of 2003, Zions completed the sale of its subsidiary, Lexign, Inc., incurring a pretax loss on sale of $2.4 million. However, the sale also triggered a tax capital loss that was recognizable only due to capital gains from the sale of equity investments during the quarter. This capital loss resulted in an income tax benefit of $11.9 million, included in other tax effects in the table on page 2.

 

Asset Quality

 

The ratio of nonperforming assets to total loans and other real estate was 0.56% at September 30, 2003 compared to 0.61% at June 30, 2003 and 0.72% at September 30, 2002. For the third quarter of 2003, net loan and lease losses were $18.4 million or 0.38% annualized of average loans, compared to $17.2 million or 0.36% annualized for the second quarter of 2003 and $21.3 million or 0.46% annualized for the third quarter of 2002. At $281.3 million on September 30, 2003, the allowance for loan losses was 1.45% of total loans and 342% of nonperforming loans.

 

Provision for Loan Losses

 

For the third quarter of 2003, the provision for loan losses was $18.3 million compared to $18.2 million provided during the second quarter of 2003 and $22.3 million provided during the third quarter of 2002. The provision reflects management’s evaluation of its various portfolios, statistical

---

trends and other economic factors, and its desire to maintain a strong coverage of nonperforming assets in a continued uncertain economic environment in the markets in which it operates.

 

Capital Management

 

During the third quarter of 2003, Zions repurchased 352,983 shares of common stock at an average price of $54.60 per share. Year-to-date 2003, Zions has repurchased 1,577,631 shares at an average price of $48.00 per share. As of September 30, 2003, the Company had $1.9 million remaining in its currently authorized share repurchase program. Weighted average common and common equivalent shares outstanding for the third quarter of 2003 were 90,810,743, compared to 90,586,065 for the second quarter of 2003 and 92,017,388 for the third quarter of 2002.

 

The Company’s tangible common equity ratio increased to 6.55% at September 30, 2003, from 6.20% at June 30, 2003 and 6.09% at September 30, 2002.

 

Zions conducted a “modified Dutch auction” tender offer during the quarter in which tenders for $197.4 million of notes were received. All tendered securities qualified as Tier 2 capital.

 

During the quarter Zions issued $500 million of 6.00% subordinated notes due 2015. All of this debt issue qualifies as Tier 2 capital. The Company subsequently swapped this fixed rate debt for a Libor-based floating rate.

---

These debt issuances and redemptions had the net effect of increasing Tier 2 capital by approximately $300 million.

 

About Zions Bancorporation

 

Zions Bancorporation is one of the nation’s premier financial services companies, consisting of a collection of great banks in select high growth markets. Under local management teams and community identities, Zions operates over 400 full-service banking offices in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Utah and Washington. In addition, Zions is a national leader in SBA lending, public finance advisory services, agricultural finance and electronic bond trading. The Company is included in the S&P 500 Index. Investor information and links to subsidiary banks can be accessed at www.zionsbancorporation.com.

 

Forward-Looking Information

 

This news release contains statements regarding the projected performance of Zions and its subsidiaries. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act. Actual results of achievements may differ materially from the projections provided in this release since such projections involve significant known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; and legislation or regulatory changes which adversely affect the ability of the combined Company to conduct business combinations or new operations. The Company disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 7

FINANCIAL HIGHLIGHTS

(Unaudited)

 

(In thousands, except per share and ratio data)		Three Months Ended September 30,											Nine Months Ended September 30,
		2003				2002				% Change			2003				2002				% Change
EARNINGS
Taxable-equivalent net interest income		$	282,776			$	266,660			6.04	%		$	834,550			$	792,247			5.34	%
Net interest income			277,079				261,306			6.04	%			817,240				776,560			5.24	%
Noninterest income			190,176				74,815			154.20	%			387,342				270,246			43.33	%
Provision for loan losses			18,260				22,309			(18.15	)%			53,960				56,104			(3.82	)%
Noninterest expense			245,506				219,158			12.02	%			675,895				640,120			5.59	%
Impairment loss on goodwill			75,628				—							75,628				—
Income before income taxes and minority interest			127,861				94,654			35.08	%			399,099				350,582			13.84	%
Income taxes			66,511				31,772			109.34	%			161,861				120,744			34.05	%
Minority interest			(2,849	)			(2,486	)		14.60	%			(6,745	)			(3,211	)		110.06	%
Income from continuing operations			64,199				65,368			(1.79	)%			243,983				233,049			4.69	%
Loss on discontinued operations			(2,115	)			(25,922	)		91.84	%			(1,770	)			(31,897	)		94.45	%
Cumulative effect of change in accounting principle			—				—							—				(32,369	)		100.00	%
Net income			62,084				39,446			57.39	%			242,213				168,783			43.51	%
PER COMMON SHARE
Net income (diluted)			0.68				0.43			58.14	%			2.67				1.83			45.90	%
Income from continuing operations (diluted)			0.71				0.71							2.69				2.52			6.75	%
Loss on discontinued operations (diluted)			(0.03	)			(0.28	)		89.29	%			(0.02	)			(0.34	)		94.12	%
Dividends			0.30				0.20			50.00	%			0.72				0.60			20.00	%
Book value														27.66				25.86			6.96	%
SELECTED RATIOS
Return on average assets			0.86	%			0.59	%						1.16	%			0.87	%
Return on average common equity			9.89	%			6.51	%						13.21	%			9.68	%
Efficiency ratio			52.08	%			74.23	%						55.42	%			64.57	%
Net interest margin			4.39	%			4.53	%						4.48	%			4.61	%

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 8

FINANCIAL HIGHLIGHTS (Continued)

(Unaudited)

 

(In thousands, except share and ratio data)		Three Months Ended September 30,											Nine Months Ended September 30,
		2003				2002				% Change			2003				2002				% Change
AVERAGE BALANCES
Total assets		$	28,696,504			$	26,429,054			8.58	%		$	28,015,477			$	26,081,737			7.41	%
Securities			4,644,337				3,788,158			22.60	%			4,308,192				3,922,040			9.85	%
Net loans and leases			19,577,780				18,442,768			6.15	%			19,252,293				18,024,954			6.81	%
Goodwill			729,149				772,439			(5.60	)%			729,769				747,888			(2.42	)%
Core deposit and other intangibles			76,457				98,032			(22.01	)%			79,148				102,559			(22.83	)%
Total deposits			20,425,204				18,851,300			8.35	%			20,074,737				18,252,378			9.98	%
Minority interest			20,930				22,234			(5.86	)%			22,293				20,725			7.57	%
Shareholders’ equity			2,489,613				2,404,871			3.52	%			2,450,617				2,331,357			5.12	%
Weighted average common and common- equivalent shares outstanding			90,810,743				92,017,388			(1.31	)%			90,621,048				92,423,909			(1.95	)%
AT PERIOD END
Total assets													$	27,604,188			$	26,289,314			5.00	%
Securities														4,339,956				3,426,574			26.66	%
Net loans and leases														19,434,101				18,321,351			6.07	%
Sold loans being serviced														2,894,638				3,012,780			(3.92	)%
Allowance for loan losses														281,311				265,406			5.99	%
Goodwill														654,161				724,353			(9.69	)%
Core deposit and other intangibles														72,265				82,146			(12.03	)%
Total deposits														20,874,124				19,481,032			7.15	%
Minority interest														20,216				23,028			(12.21	)%
Shareholders’ equity														2,485,971				2,357,601			5.44	%
Common shares outstanding														89,864,022				91,154,578			(1.42	)%
Average equity to average assets			8.68	%			9.10	%						8.75	%			8.94	%
Common dividend payout			43.39	%			46.39	%						26.79	%			32.62	%
Nonperforming assets														109,566				131,969			(16.98	)%
Loans past due 90 days or more														36,752				35,443			3.69	%
Nonperforming assets to net loans and leases, other real estate owned and other nonperforming assets at period end														0.56	%			0.72	%

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 9

FINANCIAL HIGHLIGHTS (Continued)

(Unaudited)

 

		Three Months Ended
(In thousands, except per share and ratio data)		September 30,				June 30,				March 31,				December 31,				September 30,
		2003												2002
EARNINGS
Taxable-equivalent net interest income		$	282,776			$	279,794			$	271,980			$	264,187			$	266,660
Net interest income			277,079				273,953				266,208				258,582				261,306
Noninterest income			190,176				100,805				96,339				106,568				74,815
Provision for loan losses			18,260				18,150				17,550				15,775				22,309
Noninterest expense			245,506				216,403				213,964				218,808				219,158
Impairment loss on goodwill			75,628				—				—				—				—
Income before income taxes and minority interest			127,861				140,205				131,033				130,567				94,654
Income taxes			66,511				48,956				46,394				46,958				31,772
Minority interest			(2,849	)			(1,159	)			(2,737	)			(449	)			(2,486	)
Income from continuing operations			64,199				92,408				87,376				84,058				65,368
Income (loss) on discontinued operations			(2,115	)			17				328				3,437				(25,922	)
Net income			62,084				92,425				87,704				87,495				39,446
PER COMMON SHARE
Net income (diluted)			0.68				1.02				0.97				0.96				0.43
Income from continuing operations (diluted)			0.71				1.02				0.96				0.92				0.71
Income (loss) on discontinued operations (diluted)			(0.03	)			—				0.01				0.04				(0.28	)
Dividends			0.30				0.21				0.21				0.20				0.20
Book value			27.66				27.63				26.74				26.17				25.86
SELECTED RATIOS
Return on average assets			0.86	%			1.32	%			1.30	%			1.29	%			0.59	%
Return on average common equity			9.89	%			15.07	%			14.81	%			14.64	%			6.51	%
Efficiency ratio			52.08	%			56.96	%			58.11	%			60.03	%			74.23	%
Net interest margin			4.39	%			4.50	%			4.54	%			4.41	%			4.53	%

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 10

FINANCIAL HIGHLIGHTS (Continued)

(Unaudited)

 

		Three Months Ended
(In thousands, except share and ratio data)		September 30,				June 30,				March 31,				December 31,				September 30,
		2003												2002
AVERAGE BALANCES
Total assets		$	28,696,504			$	28,021,084			$	27,313,646			$	26,933,868			$	26,429,054
Securities			4,644,337				4,360,357				3,911,833				3,686,626				3,788,158
Net loans and leases			19,577,780				19,207,484				18,964,880				18,378,151				18,442,768
Goodwill			729,149				730,067				730,101				732,292				772,439
Core deposit and other intangibles			76,457				79,314				81,731				86,368				98,032
Total deposits			20,425,204				19,874,701				19,918,741				19,637,467				18,851,300
Minority interest			20,930				22,991				22,981				22,276				22,234
Shareholders’ equity			2,489,613				2,459,145				2,402,132				2,371,372				2,404,871
Weighted average common and common-equivalent shares outstanding			90,810,743				90,586,065				90,647,613				91,073,433				92,017,388
AT PERIOD END
Total assets		$	27,604,188			$	27,805,628			$	27,208,734			$	26,565,689			$	26,289,314
Securities			4,339,956				4,228,260				3,664,417				3,635,951				3,426,574
Net loans and leases			19,434,101				19,439,822				19,130,918				19,039,843				18,321,351
Sold loans being serviced			2,894,638				2,367,751				2,401,930				2,476,490				3,012,780
Allowance for loan losses			281,311				281,486				280,533				279,593				265,406
Goodwill			654,161				730,069				730,069				730,031				724,353
Core deposit and other intangibles			72,265				75,817				79,368				82,920				82,146
Total deposits			20,874,124				20,625,170				20,801,005				20,131,980				19,481,032
Minority interest			20,216				22,995				23,285				22,677				23,028
Shareholders’ equity			2,485,971				2,479,421				2,412,504				2,373,843				2,357,601
Common shares outstanding			89,864,022				89,724,846				90,215,449				90,717,692				91,154,578
Average equity to average assets			8.68	%			8.78	%			8.79	%			8.80	%			9.10	%
Common dividend payout			43.39	%			20.47	%			21.70	%			20.79	%			46.39	%
Nonperforming assets			109,566				119,371				107,381				115,730				131,969
Loans past due 90 days or more			36,752				35,055				49,806				37,408				35,443
Nonperforming assets to net loans and leases, other real estate owned and other nonperforming assets at period end			0.56	%			0.61	%			0.56	%			0.61	%			0.72	%

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 11

CONSOLIDATED BALANCE SHEETS

 

		September 30, 2003				December 31, 2002			September 30, 2002
(In thousands, except share amounts)		(Unaudited)							(Unaudited)
ASSETS
Cash and due from banks		$	1,168,611			$	1,087,296		$	1,025,447
Money market investments:
Interest-bearing deposits			618				1,690			1,091
Federal funds sold			9,349				96,077			239,055
Security resell agreements			479,465				444,995			958,098
Investment securities:
Available for sale, at market			3,946,261				3,304,341			3,060,160
Trading account, at market (includes $108,772, $110,886, and $274,031 transferred as collateral under repurchase agreements)			393,695				331,610			366,414
			4,339,956				3,635,951			3,426,574
Loans:
Loans held for sale			216,026				289,499			250,062
Loans, leases and other receivables			19,313,092				18,843,006			18,165,833
			19,529,118				19,132,505			18,415,895
Less:
Unearned income and fees, net of related costs			95,017				92,662			94,544
Allowance for loan losses			281,311				279,593			265,406
Net loans			19,152,790				18,760,250			18,055,945
Other noninterest bearing investments			573,726				601,641			601,292
Premises and equipment, net			403,090				393,630			386,730
Goodwill			654,161				730,031			724,353
Core deposit and other intangibles			72,265				82,920			82,146
Other real estate owned			27,424				31,608			12,625
Other assets			722,733				699,600			775,958
		$	27,604,188			$	26,565,689		$	26,289,314
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand		$	5,726,664			$	5,117,458		$	4,932,736
Interest-bearing:
Savings and money market			12,065,766				11,654,258			11,138,714
Time under $100,000			1,553,127				1,766,844			1,834,638
Time $100,000 and over			1,327,629				1,402,189			1,459,621
Foreign			200,938				191,231			115,323
			20,874,124				20,131,980			19,481,032
Securities sold, not yet purchased			262,439				203,838			209,540
Federal funds purchased			904,839				819,807			672,962
Security repurchase agreements			690,910				861,177			756,426
Accrued liabilities			474,665				535,044			634,334
Commercial paper			109,771				291,566			339,575
Federal Home Loan Bank advances and other borrowings:
One year or less			15,790				15,554			512,793
Over one year			233,027				240,698			241,135
Long-term debt			1,532,436				1,069,505			1,060,888
Total liabilities			25,098,001				24,169,169			23,908,685
Minority interest			20,216				22,677			23,028
Shareholders’ equity:
Capital stock:
Preferred stock, without par value; authorized 3,000,000 shares; issued and outstanding, none			—				—			—
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 89,864,022, 90,717,692, and 91,154,578 shares			991,866				1,034,888			1,048,803
Retained earnings			1,470,063				1,292,741			1,223,437
Accumulated other comprehensive income			27,028				46,214			85,361
Shares held in trust for deferred compensation, at cost			(2,986	)			—			—
Total shareholders’ equity			2,485,971				2,373,843			2,357,601
		$	27,604,188			$	26,565,689		$	26,289,314

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 12

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except per share amounts)		2003				2002				2003				2002
Interest income:
Interest and fees on loans		$	293,997			$	310,914			$	889,212			$	926,621
Interest on loans held for sale			2,005				1,802				6,735				6,729
Lease financing			5,512				5,146				14,525				15,948
Interest on money market investments			2,762				4,507				10,310				12,403
Interest on securities:
Held to maturity—taxable			—				—				—				2,292
Available for sale—taxable			31,669				31,669				91,592				99,797
Available for sale—nontaxable			7,167				6,816				21,919				19,823
Trading account			6,280				5,766				18,035				16,679
Total interest income			349,392				366,620				1,052,328				1,100,292
Interest expense:
Interest on savings and money market deposits			24,926				42,948				86,086				124,431
Interest on time and foreign deposits			16,896				27,353				56,630				89,605
Interest on borrowed funds			30,491				35,013				92,372				109,696
Total interest expense			72,313				105,314				235,088				323,732
Net interest income			277,079				261,306				817,240				776,560
Provision for loan losses			18,260				22,309				53,960				56,104
Net interest income after provision for loan losses			258,819				238,997				763,280				720,456
Noninterest income:
Service charges and fees on deposit accounts			33,747				30,368				97,266				88,154
Loan sales and servicing income			24,385				19,792				64,798				46,066
Other service charges, commissions and fees			23,288				20,469				66,675				60,829
Trust and investment management income			5,082				4,447				15,541				14,025
Income from securities conduit			7,345				5,188				21,276				13,850
Dividends and other investment income			7,008				10,373				20,836				26,603
Market making, trading and nonhedge derivative income			7,279				7,427				24,972				31,328
Equity securities gains (losses), net			77,425				(26,452	)			65,061				(25,268	)
Fixed income securities gains (losses), net			(900	)			327				(546	)			387
Other			5,517				2,876				11,463				14,272
Total noninterest income			190,176				74,815				387,342				270,246
Noninterest expense:
Salaries and employee benefits			122,550				124,978				368,838				358,708
Occupancy, net			19,488				17,117				52,999				51,163
Furniture and equipment			16,612				15,609				48,296				47,762
Legal and professional services			6,944				5,639				17,977				17,883
Postage and supplies			6,351				6,377				19,662				20,461
Advertising			4,188				3,631				13,109				15,933
Restructuring charges			766				2,691				1,872				2,691
Amortization of core deposit and other intangibles			3,568				3,336				10,671				10,008
Debt extinguishment cost			24,210				—				24,210				—
Impairment losses on long-lived assets			1,620				3,977				2,534				3,977
Other			39,209				35,803				115,727				111,534
Total noninterest expense			245,506				219,158				675,895				640,120
Impairment loss on goodwill			75,628				—				75,628				—
Income from continuing operations before income taxes and minority interest			127,861				94,654				399,099				350,582
Income taxes			66,511				31,772				161,861				120,744
Minority interest			(2,849	)			(2,486	)			(6,745	)			(3,211	)
Income from continuing operations			64,199				65,368				243,983				233,049

 

-more-

 

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 13

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(Unaudited)

 

		Three Months Ended								Nine Months Ended
(In thousands, except per share amounts)		September 30,								September 30,
		2003				2002				2003				2002
Discontinued operations:
Loss from operations of discontinued subsidiaries		$	(1,051	)		$	(5,199	)		$	(466	)		$	(15,125	)
Impairment losses and loss on sale			(2,407	)			(28,691	)			(2,407	)			(28,691	)
Income tax benefit			(1,343	)			(7,968	)			(1,103	)			(11,919	)
Loss on discontinued operations			(2,115	)			(25,922	)			(1,770	)			(31,897	)
Income before cumulative effect of change in accounting principle			62,084				39,446				242,213				201,152
Cumulative effect of change in accounting principle, net of tax			—				—				—				(32,369	)
Net income		$	62,084			$	39,446			$	242,213			$	168,783
Weighted average shares outstanding during the period:
Basic shares			89,754				91,499				90,094				91,775
Diluted shares			90,811				92,017				90,621				92,424
Net income per common share:
Basic:
Income from continuing operations		$	0.72			$	0.71			$	2.71			$	2.54
Loss on discontinued operations			(0.03	)			(0.28	)			(0.02	)			(0.35	)
Cumulative effect of change in accounting principle			—				—				—				(0.35	)
Net income		$	0.69			$	0.43			$	2.69			$	1.84
Diluted:
Income from continuing operations		$	0.71			$	0.71			$	2.69			$	2.52
Loss on discontinued operations			(0.03	)			(0.28	)			(0.02	)			(0.34	)
Cumulative effect of change in accounting principle			—				—				—				(0.35	)
Net income		$	0.68			$	0.43			$	2.67			$	1.83

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 14

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

		Nine Months Ended September 30, 2003
										Accumulated Other Comprehensive Income (Loss)
(In thousands)		Common Stock				Retained Earnings				Net Unrealized Gains (Losses) on Investments and Retained Interests				Net Unrealized Gains (Losses) on Derivative Instruments				Minimum Pension Liability				Subtotal				Shares Held in Trust for Deferred Compensation				Total Shareholders’ Equity
Balance, January 1, 2003		$	1,034,888			$	1,292,741			$	44,151			$	25,420			$	(23,357	)		$	46,214			$	—			$	2,373,843
Comprehensive income:
Net income for the period							242,213																								242,213
Other comprehensive income, net of tax:
Net realized and unrealized holding losses during the period, net of income tax benefit of $1,366											(2,205	)											(2,205	)
Reclassification for net realized gains recorded in operations, net of income tax expense of $8,341											(13,465	)											(13,465	)
Net unrealized losses on derivative instruments, net of reclassification to operations of $30,941 and income tax benefit of $2,263															(3,516	)							(3,516	)
Other comprehensive loss											(15,670	)			(3,516	)			—				(19,186	)							(19,186	)
Total comprehensive income																															223,027
Stock redeemed and retired			(75,730	)																											(75,730	)
Stock options exercised, net of shares tendered and retired			32,708																												32,708
Cash dividends—common, $.72 per share							(64,891	)																							(64,891	)
Cost of shares held in trust for deferred compensation																											(2,986	)			(2,986	)
Balance, September 30, 2003		$	991,866			$	1,470,063			$	28,481			$	21,904			$	(23,357	)		$	27,028			$	(2,986	)		$	2,485,971
		Nine Months Ended September 30, 2002
										Accumulated Other Comprehensive Income (Loss)
(In thousands)		Common Stock				Retained Earnings				Net Unrealized Gains (Losses) on Investments and Retained Interests				Net Unrealized Gains (Losses) on Derivative Instruments				Minimum Pension Liability				Subtotal				Shares Held in Trust for Deferred Compensation				Total Shareholders’ Equity
Balance, January 1, 2002		$	1,111,214			$	1,109,704			$	31,774			$	28,177							$	59,951							$	2,280,869
Comprehensive income:
Net income for the period							168,783																								168,783
Other comprehensive income, net of tax:
Net realized and unrealized holding gains during the period, net of income tax expense of $22,355											36,089												36,089
Reclassification for net realized gains recorded in operations, net of income tax expense of $1,306											(2,109	)											(2,109	)
Net unrealized losses on derivative instruments, net of reclassification to operations of $27,907 and income tax benefit of $5,309															(8,570	)							(8,570	)
Other comprehensive income (loss)											33,980				(8,570	)							25,410								25,410
Total comprehensive income																															194,193
Stock redeemed and retired			(83,452	)																											(83,452	)
Stock options exercised, net of shares tendered and retired			21,041																												21,041
Cash dividends—common, $.60 per share							(55,050	)																							(55,050	)
Balance, September 30, 2002		$	1,048,803			$	1,223,437			$	65,754			$	19,607							$	85,361							$	2,357,601

 

Total comprehensive income for the three months ended September 30, 2003 and 2002 was $28,696 and $61,824, respectively.

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 15

 

Sold Loans Being Serviced
(Unaudited)
		Three Months Ended
(In thousands)		September 30, 2003				June 30, 2003				March 31, 2003				December 31, 2002				September 30, 2002
Balance at beginning of the period		$	2,367,751			$	2,401,930			$	2,476,490			$	3,012,780			$	2,543,887
Add:
New loans sold			715,534				142,666				98,091				137,507				742,419
Deduct:
Loans repurchased			—				—				—				(430,164	)			—
Payments and other reductions			(188,647	)			(176,845	)			(172,651	)			(243,633	)			(273,526	)
Balance at end of the period		$	2,894,638			$	2,367,751			$	2,401,930			$	2,476,490			$	3,012,780
Nonperforming Assets
(Unaudited)
(In thousands)		September 30, 2003				June 30, 2003				March 31, 2003				December 31, 2002				September 30, 2002
Nonaccrual loans		$	80,110			$	98,843			$	87,042			$	82,006			$	117,211
Restructured loans			2,032				2,523				2,108				2,116				2,133
Other real estate owned and other nonperforming assets			27,424				18,005				18,231				31,608				12,625
Total		$	109,566			$	119,371			$	107,381			$	115,730			$	131,969
% of net loans and leases*, other real estate owned and other nonperforming assets			0.56	%			0.61	%			0.56	%			0.61	%			0.72	%
Accruing loans past due 90 days or more		$	36,752			$	35,055			$	49,806			$	37,408			$	35,443
% of net loans and leases*			0.19	%			0.18	%			0.26	%			0.20	%			0.19	%
*Includes loans held for sale.
Allowance for Loan Losses
(Unaudited)
		Three Months Ended
(In thousands)		September 30, 2003				June 30, 2003				March 31, 2003				December 31, 2002				September 30, 2002
Balance at beginning of the period		$	281,486			$	280,533			$	279,593			$	265,406			$	264,432
Add:
Allowance for loan losses of companies acquired			—				—				—				1,010				—
Allowance for securitized loans repurchased			—				—				—				9,874				—
Provision for losses			18,260				18,150				17,550				15,775				22,309
Deduct:
Loan and lease charge-offs			(22,286	)			(21,242	)			(19,639	)			(21,570	)			(25,240	)
Recoveries			3,851				4,045				3,029				9,098				3,905
Net loan and lease charge-offs			(18,435	)			(17,197	)			(16,610	)			(12,472	)			(21,335	)
Balance at end of the period		$	281,311			$	281,486			$	280,533			$	279,593			$	265,406
Ratio of allowance for loan losses to net loans and leases outstanding at period end			1.45	%			1.45	%			1.47	%			1.47	%			1.45	%
Ratio of allowance for loan losses to nonperforming loans at period end			342.47	%			277.69	%			314.68	%			332.37	%			222.39	%

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 16

LOAN BALANCES BY PORTFOLIO TYPE

(Unaudited)

 

(In millions)		September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002			September 30, 2002
Loans held for sale		$	216		$	236		$	227		$	289		$	250
Commercial lending:
Commercial and industrial			4,102			4,071			4,052			4,124			4,010
Leasing			378			391			372			384			386
Owner occupied (1)			3,062			3,353			3,182			3,018			2,857
Total commercial lending			7,542			7,815			7,606			7,526			7,253
Commercial real estate:
Construction			2,907			2,983			2,991			2,947			3,080
Term			3,316			3,326			3,293			3,175			3,083
Total commercial real estate			6,223			6,309			6,284			6,122			6,163
Consumer:
Home equity credit line			780			762			703			651			679
1-4 family residential			3,675			3,275			3,191			3,209			3,222
Bankcard and other revolving plans			188			186			182			205			123
Other			797			867			934			1,000			631
Total consumer			5,440			5,090			5,010			5,065			4,655
Foreign loans			15			17			20			5			25
Other receivables			93			67			75			126			70
Total loans		$	19,529		$	19,534		$	19,222		$	19,133		$	18,416

 

(1)

Decrease reflects $587 million of small business loans sold to a securitization structure during the quarter.

 

-more-

---

ZIONS BANCORPORATION AND SUBSIDIARIES

Press Release—Page 17

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

(Unaudited)

 

		Three Months Ended September 30, 2003										Three Months Ended September 30, 2002
(In thousands)		Average Balance				Amount of Interest (1)			Average Rate			Average Balance				Amount of Interest (1)			Average Rate
ASSETS
Money market investments		$	1,346,129			$	2,762		0.81	%		$	1,105,924			$	4,502		1.62	%
Securities:
Available for sale			3,896,893				42,696		4.35	%			3,137,559				42,155		5.33	%
Trading account			747,444				6,280		3.33	%			650,599				5,766		3.52	%
Total securities			4,644,337				48,976		4.18	%			3,788,158				47,921		5.02	%
Loans:
Loans held for sale			241,064				2,005		3.30	%			185,021				1,802		3.86	%
Net loans and leases (2)			19,336,716				301,346		6.18	%			18,257,747				317,743		6.90	%
Total loans and leases			19,577,780				303,351		6.15	%			18,442,768				319,545		6.87	%
Total interest-earning assets			25,568,246				355,089		5.51	%			23,336,850				371,968		6.32	%
Cash and due from banks			949,064										897,370
Allowance for loan losses			(282,344	)									(265,656	)
Goodwill			729,149										772,439
Core deposit and other intangibles			76,457										98,032
Other assets			1,655,932										1,590,019
Total assets		$	28,696,504									$	26,429,054
LIABILITIES
Interest-bearing deposits:
Savings and NOW		$	3,076,281				4,530		0.58	%		$	2,629,700				7,140		1.08	%
Money market super NOW			8,827,152				20,396		0.92	%			8,228,171				35,808		1.73	%
Time under $100,000			1,611,590				8,487		2.09	%			1,879,858				14,790		3.12	%
Time $100,000 and over			1,295,951				8,019		2.45	%			1,453,814				12,200		3.33	%
Foreign			190,459				390		0.81	%			103,723				363		1.39	%
Total interest-bearing deposits			15,001,433				41,822		1.11	%			14,295,266				70,301		1.95	%
Borrowed funds:
Securities sold, not yet purchased			558,334				5,312		3.77	%			389,643				4,082		4.16	%
Federal funds purchased and security repurchase agreements			2,756,338				6,143		0.88	%			2,166,959				8,461		1.55	%
Commercial paper			163,805				520		1.26	%			360,023				1,903		2.10	%
FHLB advances and other borrowings:
One year or less			249,497				753		1.20	%			751,162				3,701		1.95	%
Over one year			233,421				3,053		5.19	%			239,955				3,126		5.17	%
Long-term debt			1,267,504				14,710		4.60	%			895,611				13,734		6.08	%
Total borrowed funds			5,228,899				30,491		2.31	%			4,803,353				35,007		2.89	%
Total interest-bearing liabilities			20,230,332				72,313		1.42	%			19,098,619				105,308		2.19	%
Noninterest-bearing deposits			5,423,771										4,556,034
Other liabilities			531,858										347,296
Total liabilities			26,185,961										24,001,949
Minority interest			20,930										22,234
Total shareholders’ equity			2,489,613										2,404,871
Total liabilities and shareholders’ equity		$	28,696,504									$	26,429,054
Spread on average interest-bearing funds									4.09	%									4.13	%
Taxable-equivalent net interest income and
net yield on interest-earning assets						$	282,776		4.39	%						$	266,660		4.53	%

 

(1)

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 AND SUBSIDIARIES

Press Release—Page 18

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

(Unaudited)

 

		Nine Months Ended September 30, 2003										Nine Months Ended September 30, 2002
(In thousands)		Average Balance				Amount of Interest (1)			Average Rate			Average Balance				Amount of Interest (1)			Average Rate
ASSETS
Money market investments		$	1,365,026			$	10,310		1.01	%		$	1,021,794			$	12,403		1.62	%
Securities:
Held to maturity			—				—						57,351				2,292		5.34	%
Available for sale			3,609,406				125,314		4.64	%			3,233,715				130,294		5.39	%
Trading account			698,786				18,035		3.45	%			630,974				16,679		3.53	%
Total securities			4,308,192				143,349		4.45	%			3,922,040				149,265		5.09	%
Loans:
Loans held for sale			236,112				6,735		3.81	%			191,563				6,729		4.70	%
Net loans and leases (2)			19,016,181				909,244		6.39	%			17,833,391				947,582		7.10	%
Total loans and leases			19,252,293				915,979		6.36	%			18,024,954				954,311		7.08	%
Total interest-earning assets			24,925,511				1,069,638		5.74	%			22,968,788				1,115,979		6.50	%
Cash and due from banks			934,852										930,865
Allowance for loan losses			(281,710	)									(265,465	)
Goodwill			729,769										747,888
Core deposit and other intangibles			79,148										102,559
Other assets			1,627,907										1,597,102
Total assets		$	28,015,477									$	26,081,737
LIABILITIES
Interest-bearing deposits:
Savings and NOW		$	2,926,942				14,379		0.66	%		$	2,504,196				20,177		1.08	%
Money market super NOW			8,871,269				71,707		1.08	%			7,793,899				104,254		1.79	%
Time under $100,000			1,679,640				29,469		2.35	%			1,939,379				49,051		3.38	%
Time $100,000 and over			1,299,400				25,981		2.67	%			1,509,383				39,403		3.49	%
Foreign			168,997				1,180		0.93	%			103,044				1,151		1.49	%
Total interest-bearing deposits			14,946,248				142,716		1.28	%			13,849,901				214,036		2.07	%
Borrowed funds:
Securities sold, not yet purchased			531,914				15,070		3.79	%			386,686				12,087		4.18	%
Federal funds purchased and security repurchase agreements			2,638,487				20,001		1.01	%			2,646,221				32,227		1.63	%
Commercial paper			247,510				2,669		1.44	%			362,870				5,821		2.14	%
FHLB advances and other borrowings:
One year or less			180,463				1,749		1.30	%			648,690				9,267		1.91	%
Over one year			237,346				9,308		5.24	%			240,282				9,316		5.18	%
Long-term debt			1,181,879				43,575		4.93	%			815,816				40,978		6.72	%
Total borrowed funds			5,017,599				92,372		2.46	%			5,100,565				109,696		2.88	%
Total interest-bearing liabilities			19,963,847				235,088		1.57	%			18,950,466				323,732		2.28	%
Noninterest-bearing deposits			5,128,489										4,402,477
Other liabilities			450,231										376,712
Total liabilities			25,542,567										23,729,655
Minority interest			22,293										20,725
Total shareholders’ equity			2,450,617										2,331,357
Total liabilities and shareholders’ equity		$	28,015,477									$	26,081,737
Spread on average interest-bearing funds									4.17	%									4.22	%
Taxable-equivalent net interest income and net yield on interest-earning assets						$	834,550		4.48	%						$	792,247		4.61	%

 

(1) Taxable-equivalent rates used where applicable.

(2) Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

 

##########

---

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date: November 4, 2003