SALT LAKE CITY, Jan. 23 /PRNewswire-FirstCall/ -- Zions Bancorporation (
Net earnings applicable to common shareholders for 2006 increased 20.7% to $579.3 million or $5.36 per diluted share compared to $480.1 million or $5.16 per diluted share for 2005. The return on average common equity for 2006 was 12.89% compared to 15.86% for 2005.
All comparisons to the 2005 periods reflect the impact of the Company's acquisition of Amegy Bancorporation, Inc., which was completed in December 2005.
Fourth Quarter 2006 Key Performance Drivers * Loan growth of nearly $1.0 billion, 11.4% annualized from third quarter. * Deposit growth of $1.3 billion, including core deposit growth of $652 million (8.7% annualized from third quarter). * Net interest margin of 4.60%, up two basis points from third quarter. * Continued improvement in efficiency ratio. * Continued excellent credit quality.
"Not only was this an excellent quarter, but the year 2006 was a great year for Zions Bancorporation," stated Harris Simmons, chairman and chief executive officer. "The Company produced organic loan growth of over 15%, maintained a high and stable net interest margin in a difficult rate environment, maintained consistently high credit quality, and earned a record $579.3 million."
As previously disclosed in a Form 8-K filed on January 11, 2007, earnings for the fourth quarter of 2006 were unfavorably impacted by the following three items:
* The Company recognized a pretax loss of $10.9 million ($0.06 per diluted share) during the quarter on a $17.1 million participation in an equipment lease by its National Bank of Arizona affiliate. The loss resulted from an alleged accounting fraud at a water bottling company. The $6.2 million estimated value of the related equipment was recorded as "Other Assets" and included in nonperforming assets. * The Company incurred pretax costs of $7.3 million ($0.04 per diluted share) during the quarter for the call premium on the early redemption of $176.3 million of 8.536% trust preferred debt issued by Zions Institutional Capital Trust A. Redemption of this debt is expected to reduce pretax interest expense by approximately $14.5 million annually. * The Company declared a preferred stock dividend of $3.8 million ($0.04 per diluted share) in December 2006 subsequent to the issuance of $240 million of Series A Preferred Stock. The preferred stock dividend reduced earnings applicable to common shareholders. Terms of the preferred stock required the Company to declare the full quarterly dividend and set aside the funds before the Company could repurchase common shares under the $400 million repurchase authorization announced on December 11, 2006. Loan Growth
On-balance-sheet net loans and leases were $34.7 billion at December 31, 2006, an increase of approximately $1.0 billion or 11.4% annualized from $33.7 billion at September 30, 2006, and an increase of 15.1% from $30.1 billion at December 31, 2005. Loan growth during the fourth quarter was concentrated in the commercial lending category principally at Zions Bank and Amegy Bank of Texas.
Deposit Growth
Total deposits at December 31, 2006 increased $1.3 billion to $35.0 billion, an annualized increase of 15.9%, from $33.6 billion at September 30, 2006, and increased 7.2% over the balances reported one year ago. Core deposits increased $652 million, or 8.7% annualized, during the quarter to $30.7 billion compared to $30.0 billion at September 30, 2006, and increased $552 million, or 1.8%, compared to $30.1 billion at December 31, 2005. Average noninterest-bearing demand deposits were essentially unchanged from the prior quarter. The quarterly increase in total deposits included approximately $270 million of time deposits placed by The Stockmen's Bank with two affiliate banks of the Company in October 2006. The Company's acquisition of Stockmen's was announced on September 11, 2006 and was completed on January 17, 2007.
Net Interest Income
Net interest income for the fourth quarter of 2006 increased $12.5 million, or 11.1% annualized, to $459.0 million compared to $446.5 million for the third quarter of 2006, and increased $84.2 million, or 22.5%, compared to $374.8 million for the fourth quarter of 2005. Taxable-equivalent net interest income for the fourth quarter of 2006 was $465.3 million compared to $452.6 million for the third quarter of 2006 and $380.3 million for the fourth quarter of 2005. For the fourth quarter of 2006, the net interest margin was 4.60% compared to 4.58% for the third quarter of 2006 and 4.62% for the fourth quarter of 2005. In addition, the net interest spread for the fourth quarter of 2006 was essentially unchanged from the third quarter of 2006.
Noninterest Income
For the fourth quarter of 2006, noninterest income was $139.9 million compared to $145.3 million for the third quarter of 2006 and $117.6 million for the fourth quarter of 2005. The decrease in the fourth quarter is primarily due to the decrease from $12.9 million for the third quarter to $6.3 million for the fourth quarter in gains on venture capital investments included in equity securities gains. However, net of minority interest, income taxes, and other expenses, venture capital investments increased net income by $2.5 million for the fourth quarter of 2006 compared to $1.7 million for the third quarter. Loan sales and servicing income for the fourth quarter included a pretax impairment charge of $1.9 million on retained interests from certain previous small business loan securitizations due to accelerated prepayment speeds; a $4.1 million pretax impairment charge for similar reasons was included in the third quarter 2006 results.
Noninterest Expense
Noninterest expense for the fourth quarter of 2006 was $342.9 million compared to $330.0 million for the third quarter of 2006 and $283.8 million for the fourth quarter of 2005. The increase is primarily due to the $7.3 million in debt extinguishment costs previously discussed. Salaries and employee benefits for the fourth quarter were favorably impacted by approximately $5 million as a result of lower medical costs in the Company's HDHP/HSA health plans, and cost adjustments to bonus and other employee benefit plans.
The efficiency ratio for the fourth quarter of 2006 was 56.7% compared to 55.2% for the third quarter of 2006 and 57.0% for the fourth quarter of 2005. Exclusive of the $7.3 million debt extinguishment costs, the efficiency ratio for the fourth quarter would be 55.5%. The efficiency ratio for the third quarter of 2006 was favorably impacted by the full amount of venture capital gains previously discussed. When adjusted to exclude from revenue the related minority interest, the efficiency ratio would have been 56.1% for the third quarter.
Asset Quality
Nonperforming assets were $82.0 million at December 31, 2006 and include the $6.2 million of equipment previously discussed. This compares to $74.8 million at September 30, 2006 and $89.1 million at December 31, 2005. The ratio of nonperforming assets to net loans and leases and other real estate owned was 0.24% at December 31, 2006 compared to 0.22% at September 30, 2006 and 0.30% at December 31, 2005.
For the fourth quarter of 2006, net loan and lease charge-offs were $17.9 million or 0.21% annualized of average loans, which include the $10.9 million loss on equipment lease previously discussed. This compares with $6.5 million or 0.08% annualized for the third quarter of 2006 and $8.2 million or 0.13% annualized for the fourth quarter of 2005. For the year 2006, net loan and lease charge-offs were $45.8 million or 0.14% of average loans compared to $25.0 million or 0.10% for 2005.
The provision for loan losses was $26.7 million for the fourth quarter of 2006 compared to $14.4 million for the third quarter of 2006 and $10.1 million for the fourth quarter of 2005. The provision in excess of net charge-offs for the quarter was mainly the result of the Company's continued strong loan growth. The combined provisions for loan losses and unfunded lending commitments were $27.4 million for the fourth quarter of 2006, $15.4 million for the third quarter of 2006, and $10.4 million for the fourth quarter of 2005. The combined provisions for the year 2006 were $73.8 million compared to $46.4 million for 2005.
At December 31, 2006, the allowance for loan losses as a percentage of net loans and leases was 1.05% compared to 1.06% at September 30, 2006 and 1.12% at December 31, 2005. At December 31, 2006, the allowance was 548.5% of nonperforming loans. The combined allowances for credit losses (allowance for loan losses plus the allowance for unfunded lending commitments) were $384.5 million or 1.11% of net loans and leases at December 31, 2006 and $356.5 million or 1.18% at December 31, 2005.
Capital Management
In December 2006 the Company resumed its stock repurchase plan, which had been suspended since July 2005 because of the Amegy acquisition. Under the $400 million repurchase authorization, the Company repurchased 308,359 common shares for $24.9 million during December 2006 at an average price of $81.05 per share.
As previously discussed, the Company declared a preferred stock dividend of $3.8 million in December 2006 for the quarterly dividend through and to be paid on March 15, 2007.
The Company's tangible equity ratio, which includes the impact of the perpetual noncumulative preferred stock, was 6.51% at December 31, 2006 compared to 5.92% at September 30, 2006 and 5.28% at December 31, 2005. The increase is mainly due to the issuance of the preferred stock in December 2006, increased retained earnings during the quarter, and a reduction in the accumulated other comprehensive loss. The Company's tangible common equity ratio was 5.98% at December 31, 2006 compared to 5.92% at September 30, 2006 and 5.28% at December 31, 2005.
Weighted average common and common-equivalent shares outstanding for the fourth quarter of 2006 were 108,221,096 compared to 108,061,423 for the third quarter of 2006 and 96,963,446 for the fourth quarter of 2005. Common shares outstanding at December 31, 2006 were 106,720,884 compared to 106,804,606 at September 30, 2006 and 105,147,562 at December 31, 2005.
Acquisition
The previously disclosed acquisition of The Stockmen's Bancorp, Inc., headquartered in Kingman, Arizona, was approved by regulators and by Stockmen's shareholders, and was completed on January 17, 2007. The Company issued 2.6 million shares of its common stock to Stockmen's shareholders in completing this acquisition.
Conference Call
About Zions Bancorporation
Forward-Looking Information
Statements in this news release that are based on other than historical data are forward-looking, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events. These forward-looking statements are not guarantees of future performance, 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 news release. Factors that might cause such differences include, but are not limited to: the Company's ability to successfully execute its business plans and achieve its objectives; changes in general economic and financial market conditions, either nationally or locally in areas in which the Company conducts its operations; changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Company's operations or business; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies.
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.
ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) (In thousands, except per share and Three Months Ended ratio data) December 31, 2006 2005 % Change EARNINGS Taxable-equivalent net interest income $465,267 $380,316 22.34% Taxable-equivalent revenue 605,148 497,943 21.53% Net interest income 459,039 374,819 22.47% Noninterest income 139,881 117,627 18.92% Provision for loan losses 26,675 10,116 163.69% Noninterest expense 342,926 283,789 20.84% Impairment loss on goodwill -- 602 (100.00)% Income before income taxes and minority interest 229,319 197,939 15.85% Income taxes 80,081 69,139 15.83% Minority interest 2,730 693 293.94% Net income 146,508 128,107 14.36% Net earnings applicable to common shareholders 142,673 128,107 11.37% PER COMMON SHARE Net earnings (diluted) 1.32 1.32 -- Dividends 0.39 0.36 8.33% Book value per common share SELECTED RATIOS Return on average assets 1.27% 1.38% Return on average common equity 12.08% 14.82% Efficiency ratio 56.67% 56.99% Net interest margin 4.60% 4.62% ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) (In thousands, except per share and Years Ended ratio data) December 31, 2006 2005 % Change EARNINGS Taxable-equivalent net interest income $1,788,958 $1,382,350 29.41% Taxable-equivalent revenue 2,340,167 1,819,303 28.63% Net interest income 1,764,724 1,361,350 29.63% Noninterest income 551,209 436,953 26.15% Provision for loan losses 72,572 43,023 68.68% Noninterest expense 1,330,437 1,012,791 31.36% Impairment loss on goodwill -- 602 (100.00)% Income before income taxes and minority interest 912,924 741,887 23.05% Income taxes 317,950 263,418 20.70% Minority interest 11,849 (1,652) 817.25% Net income 583,125 480,121 21.45% Net earnings applicable to common shareholders 579,290 480,121 20.66% PER COMMON SHARE Net earnings (diluted) 5.36 5.16 3.88% Dividends 1.47 1.44 2.08% Book value per common share 44.48 40.30 10.37% SELECTED RATIOS Return on average assets 1.32% 1.43% Return on average common equity 12.89% 15.86% Efficiency ratio 56.85% 55.67% Net interest margin 4.63% 4.58% ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited) (In thousands, except share and ratio Three Months Ended data) December 31, 2006 2005 % Change AVERAGE BALANCES Total assets $45,818,165 $36,780,719 24.57% Securities 5,627,906 5,352,093 5.15% Net loans and leases 34,059,617 25,982,873 31.08% Goodwill 1,895,860 1,060,381 78.79% Core deposit and other intangibles 168,547 101,593 65.90% Total deposits 33,853,608 27,605,309 22.63% Core deposits (1) 29,763,841 25,467,323 16.87% Minority interest 40,471 27,079 49.46% Shareholders' equity: Preferred equity 65,216 -- -- Common equity 4,685,507 3,428,605 36.66% Weighted average common and common-equivalent shares outstanding 108,221,096 96,963,446 11.61% AT PERIOD END Total assets Securities Net loans and leases Sold loans being serviced (2) Allowance for loan losses Allowance for unfunded lending commitments Goodwill Core deposit and other intangibles Total deposits Core deposits (1) Minority interest Shareholders' equity: Preferred equity Common equity Common shares outstanding Average equity to average assets 10.37% 9.32% Common dividend payout 29.51% 25.50% Tangible equity ratio Nonperforming assets Accruing loans past due 90 days or more Nonperforming assets to net loans and leases and other real estate owned at period end (1) Amount consists of total deposits excluding time deposits $100,000 and over. (2) Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans. ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited) (In thousands, except share and ratio Years Ended data) December 31, 2006 2005 % Change AVERAGE BALANCES Total assets $44,241,772 $33,602,704 31.66% Securities 5,793,985 5,157,334 12.34% Net loans and leases 32,395,359 24,008,629 34.93% Goodwill 1,887,335 746,072 152.97% Core deposit and other intangibles 181,316 65,969 174.85% Total deposits 32,759,623 24,867,920 31.73% Core deposits (1) 29,487,936 23,155,428 27.35% Minority interest 33,803 25,726 31.40% Shareholders' equity: Preferred equity 16,438 -- -- Common equity 4,493,042 3,027,375 48.41% Weighted average common and common-equivalent shares outstanding 108,028,075 92,993,915 16.17% AT PERIOD END Total assets $46,970,226 $42,779,639 9.80% Securities 5,767,467 6,057,212 (4.78)% Net loans and leases 34,667,556 30,126,936 15.07% Sold loans being serviced (2) 2,586,451 3,382,603 (23.54)% Allowance for loan losses 365,150 338,399 7.91% Allowance for unfunded lending commitments 19,368 18,120 6.89% Goodwill 1,900,517 1,887,588 0.68% Core deposit and other intangibles 162,134 199,166 (18.59)% Total deposits 34,981,746 32,642,408 7.17% Core deposits (1) 30,679,690 30,127,812 1.83% Minority interest 42,791 27,551 55.32% Shareholders' equity: Preferred equity 240,000 -- -- Common equity 4,747,023 4,237,264 12.03% Common shares outstanding 106,720,884 105,147,562 1.50% Average equity to average assets 10.19% 9.01% Common dividend payout 27.10% 27.14% Tangible equity ratio 6.51% 5.28% Nonperforming assets 81,994 89,063 (7.94)% Accruing loans past due 90 days or more 43,727 17,153 154.92% Nonperforming assets to net loans and leases and other real estate owned at period end 0.24% 0.30% (1) Amount consists of total deposits excluding time deposits $100,000 and over. (2) Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans. ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited) (In thousands, except per share and Three Months Ended ratio data) December 31, September 30, June 30, 2006 EARNINGS Taxable-equivalent net interest income $465,267 $452,606 $442,261 Taxable-equivalent revenue 605,148 597,935 579,772 Net interest income 459,039 446,511 436,327 Noninterest income 139,881 145,329 137,511 Provision for loan losses 26,675 14,363 17,022 Noninterest expense 342,926 330,028 333,028 Impairment loss on goodwill -- -- -- Income before income taxes and minority interest 229,319 247,449 223,788 Income taxes 80,081 83,790 78,821 Minority interest 2,730 9,985 (343) Net income 146,508 153,674 145,310 Net earnings applicable to common shareholders 142,673 153,674 145,310 PER COMMON SHARE Net earnings (diluted) 1.32 1.42 1.35 Dividends 0.39 0.36 0.36 Book value per common share 44.48 43.47 41.72 SELECTED RATIOS Return on average assets 1.27% 1.36% 1.33% Return on average common equity 12.08% 13.41% 13.20% Efficiency ratio 56.67% 55.19% 57.44% Net interest margin 4.60% 4.58% 4.64% ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited) (In thousands, except per share and Three Months Ended ratio data) March 31, December 31, 2006 2005 EARNINGS Taxable-equivalent net interest income $428,824 $380,316 Taxable-equivalent revenue 557,312 497,943 Net interest income 422,847 374,819 Noninterest income 128,488 117,627 Provision for loan losses 14,512 10,116 Noninterest expense 324,455 283,789 Impairment loss on goodwill -- 602 Income before income taxes and minority interest 212,368 197,939 Income taxes 75,258 69,139 Minority interest (523) 693 Net income 137,633 128,107 Net earnings applicable to common shareholders 137,633 128,107 PER COMMON SHARE Net earnings (diluted) 1.28 1.32 Dividends 0.36 0.36 Book value per common share 40.95 40.30 SELECTED RATIOS Return on average assets 1.31% 1.38% Return on average common equity 12.92% 14.82% Efficiency ratio 58.22% 56.99% Net interest margin 4.69% 4.62% ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited) (In thousands, except share and Three Months Ended ratio data) December 31, September 30, June 30, 2006 AVERAGE BALANCES Total assets $45,818,165 $44,680,382 $43,782,622 Securities 5,627,906 5,605,249 5,876,065 Net loans and leases 34,059,617 33,105,716 31,900,053 Goodwill 1,895,860 1,881,708 1,884,192 Core deposit and other intangibles 168,547 175,259 185,281 Total deposits 33,853,608 32,964,029 32,175,202 Core deposits (1) 29,763,841 29,427,975 29,303,520 Minority interest 40,471 37,854 28,486 Shareholders' equity: Preferred equity 65,216 -- -- Common equity 4,685,507 4,545,990 4,414,775 Weighted average common and common-equivalent shares outstanding 108,221,096 108,061,423 107,883,374 AT PERIOD END Total assets $46,970,226 $45,777,747 $45,142,086 Securities 5,767,467 5,817,571 5,797,079 Net loans and leases 34,667,556 33,706,110 32,682,335 Sold loans being serviced (2) 2,586,451 2,796,644 3,003,101 Allowance for loan losses 365,150 356,342 348,475 Allowance for unfunded lending commitments 19,368 18,637 17,592 Goodwill 1,900,517 1,884,328 1,881,256 Core deposit and other intangibles 162,134 168,135 177,692 Total deposits 34,981,746 33,640,991 33,254,210 Core deposits (1) 30,679,690 30,027,827 29,851,896 Minority interest 42,791 41,158 28,619 Shareholders' equity: Preferred equity 240,000 -- -- Common equity 4,747,023 4,643,166 4,447,330 Common shares outstanding 106,720,884 106,804,606 106,611,731 Average equity to average assets 10.37% 10.17% 10.08% Common dividend payout 29.51% 25.00% 26.37% Tangible equity ratio 6.51% 5.92% 5.54% Nonperforming assets 81,994 74,815 73,475 Accruing loans past due 90 days or more 43,727 20,407 29,434 Nonperforming assets to net loans and leases and other real estate owned at period end 0.24% 0.22% 0.22% (1) Amount consists of total deposits excluding time deposits $100,000 and over. (2) Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans. ZIONS BANCORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Continued) (Unaudited) (In thousands, except share and ratio Three Months Ended data) March 31, December 31, 2006 2005 AVERAGE BALANCES Total assets $42,646,242 $36,780,719 Securities 6,073,692 5,352,093 Net loans and leases 30,468,784 25,982,873 Goodwill 1,887,551 1,060,381 Core deposit and other intangibles 196,551 101,593 Total deposits 32,023,293 27,605,309 Core deposits (1) 29,453,658 25,467,323 Minority interest 28,223 27,079 Shareholders' equity: Preferred equity -- -- Common equity 4,321,311 3,428,605 Weighted average common and common-equivalent shares outstanding 107,724,724 96,963,446 AT PERIOD END Total assets $43,318,029 $42,779,639 Securities 5,984,115 6,057,212 Net loans and leases 31,140,326 30,126,936 Sold loans being serviced (2) 3,183,992 3,382,603 Allowance for loan losses 341,261 338,399 Allowance for unfunded lending commitments 17,841 18,120 Goodwill 1,884,225 1,887,588 Core deposit and other intangibles 188,384 199,166 Total deposits 32,872,708 32,642,408 Core deposits (1) 30,179,291 30,127,812 Minority interest 28,895 27,551 Shareholders' equity: Preferred equity -- -- Common equity 4,343,816 4,237,264 Common shares outstanding 106,070,045 105,147,562 Average equity to average assets 10.13% 9.32% Common dividend payout 27.71% 25.50% Tangible equity ratio 5.51% 5.28% Nonperforming assets 96,556 89,063 Accruing loans past due 90 days or more 10,299 17,153 Nonperforming assets to net loans and leases and other real estate owned at period end 0.31% 0.30% (1) Amount consists of total deposits excluding time deposits $100,000 and over. (2) Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans. ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share December 31, September 30, June 30, amounts) 2006 2006 2006 (Unaudited) (Unaudited) (Unaudited) ASSETS Cash and due from banks $1,938,810 $1,616,910 $1,773,829 Money market investments: Interest-bearing deposits 43,203 39,882 87,512 Federal funds sold 55,658 72,036 262,959 Security resell agreements 270,415 272,643 225,160 Investment securities: Held to maturity, at cost (approximate market value $648,828, $655,170, $620,786, $633,784 and $642,258) 653,124 662,547 639,593 Available for sale, at market 5,050,907 5,062,409 5,086,840 Trading account, at market (includes $34,494, $60,331, $50,684, $34,340 and $43,444 transferred as collateral under repurchase agreements) 63,436 92,615 70,646 5,767,467 5,817,571 5,797,079 Loans: Loans held for sale 252,818 268,305 248,948 Loans and leases 34,566,118 33,583,499 32,576,017 34,818,936 33,851,804 32,824,965 Less: Unearned income and fees, net of related costs 151,380 145,694 142,630 Allowance for loan losses 365,150 356,342 348,475 Loans and leases, net of allowance 34,302,406 33,349,768 32,333,860 Other noninterest-bearing investments 1,022,383 1,005,989 993,379 Premises and equipment, net 609,472 587,807 574,154 Goodwill 1,900,517 1,884,328 1,881,256 Core deposit and other intangibles 162,134 168,135 177,692 Other real estate owned 9,250 9,986 16,024 Other assets 888,511 952,692 1,019,182 $46,970,226 $45,777,747 $45,142,086 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing demand $10,010,310 $9,750,064 $10,163,834 Interest-bearing: Savings and money market 15,858,887 15,824,048 15,814,128 Time under $100,000 2,257,967 2,154,894 2,030,717 Time $100,000 and over 4,302,056 3,613,164 3,402,314 Foreign 2,552,526 2,298,821 1,843,217 34,981,746 33,640,991 33,254,210 Securities sold, not yet purchased 50,416 53,802 27,388 Federal funds purchased 1,993,483 2,286,561 1,397,694 Security repurchase agreements 934,057 1,108,771 1,169,296 Other liabilities 747,499 657,657 789,222 Commercial paper 220,507 265,769 245,126 Federal Home Loan Bank advances and other borrowings: One year or less 517,925 313,259 1,216,848 Over one year 137,058 132,854 133,450 Long-term debt 2,357,721 2,633,759 2,432,903 Total liabilities 41,940,412 41,093,423 40,666,137 Minority interest 42,791 41,158 28,619 Shareholders' equity: Capital stock: Preferred stock, without par value, authorized 3,000,000 shares: Series A (liquidation preference $1,000 per share); issued and outstanding 240,000 shares 240,000 -- -- Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 106,720,884, 106,804,606, 106,611,731, 106,070,045 and 105,147,562 shares 2,230,303 2,240,458 2,218,711 Retained earnings 2,602,189 2,501,625 2,386,369 Accumulated other comprehensive loss (75,849) (89,292) (148,327) Deferred compensation (9,620) (9,625) (9,423) Total shareholders' equity 4,987,023 4,643,166 4,447,330 $46,970,226 $45,777,747 $45,142,086 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, (In thousands, except share amounts) 2006 2005 (Unaudited) ASSETS Cash and due from banks $1,584,857 $1,706,590 Money market investments: Interest-bearing deposits 51,942 22,179 Federal funds sold 178,406 414,281 Security resell agreements 238,762 230,282 Investment securities: Held to maturity, at cost (approximate market value $648,828, $655,170, $620,786, $633,784 and $642,258) 644,212 649,791 Available for sale, at market 5,187,979 5,305,859 Trading account, at market (includes $34,494, $60,331, $50,684, $34,340 and $43,444 transferred as collateral under repurchase agreements) 151,924 101,562 5,984,115 6,057,212 Loans: Loans held for sale 311,655 256,236 Loans and leases 30,958,190 29,996,022 31,269,845 30,252,258 Less: Unearned income and fees, net of related costs 129,519 125,322 Allowance for loan losses 341,261 338,399 Loans and leases, net of allowance 30,799,065 29,788,537 Other noninterest-bearing investments 971,569 938,515 Premises and equipment, net 565,327 564,745 Goodwill 1,884,225 1,887,588 Core deposit and other intangibles 188,384 199,166 Other real estate owned 24,964 19,966 Other assets 846,413 950,578 $43,318,029 $42,779,639 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing demand $9,953,003 $9,953,833 Interest-bearing: Savings and money market 16,354,901 16,055,754 Time under $100,000 1,959,351 1,938,789 Time $100,000 and over 2,693,417 2,514,596 Foreign 1,912,036 2,179,436 32,872,708 32,642,408 Securities sold, not yet purchased 55,577 64,654 Federal funds purchased 1,484,049 1,255,662 Security repurchase agreements 1,096,420 1,027,658 Other liabilities 677,495 592,599 Commercial paper 153,286 167,188 Federal Home Loan Bank advances and other borrowings: One year or less 4,264 18,801 Over one year 134,043 234,488 Long-term debt 2,467,476 2,511,366 Total liabilities 38,945,318 38,514,824 Minority interest 28,895 27,551 Shareholders' equity: Capital stock: Preferred stock, without par value, authorized 3,000,000 shares: Series A (liquidation preference $1,000 per share); issued and outstanding 240,000 shares -- -- Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 106,720,884, 106,804,606, 106,611,731, 106,070,045 and 105,147,562 shares 2,197,245 2,156,732 Retained earnings 2,279,383 2,179,885 Accumulated other comprehensive loss (123,099) (83,043) Deferred compensation (9,713) (16,310) Total shareholders' equity 4,343,816 4,237,264 $43,318,029 $42,779,639 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, Three Months Ended except per share Dec. 31, Sept. 30, June 30, March 31, Dec. 31, amounts) 2006 2006 2006 2006 2005 Interest income: Interest and fees on loans $665,791 $638,610 $591,139 $542,784 $458,429 Interest on loans held for sale 4,066 4,275 4,055 4,046 3,131 Lease financing 4,974 4,690 4,496 4,130 4,010 Interest on money market investments 6,116 6,241 5,925 6,432 13,280 Interest on securities: Held to maturity - taxable 2,220 2,217 2,209 2,215 1,866 Held to maturity - nontaxable 5,963 5,732 5,683 5,531 5,948 Available for sale - taxable 68,075 66,078 68,995 69,104 56,267 Available for sale - nontaxable 2,083 2,089 2,119 2,339 1,433 Trading account 2,009 1,621 1,995 2,074 4,038 Total interest income 761,297 731,553 686,616 638,655 548,402 Interest expense: Interest on savings and money market deposits 112,105 109,410 97,131 86,623 71,093 Interest on time and foreign deposits 102,025 86,635 67,424 59,485 43,740 Interest on short-term borrowings 45,504 46,778 43,490 28,563 24,155 Interest on long-term debt 42,624 42,219 42,244 41,137 34,595 Total interest expense 302,258 285,042 250,289 215,808 173,583 Net interest income 459,039 446,511 436,327 422,847 374,819 Provision for loan losses 26,675 14,363 17,022 14,512 10,116 Net interest income after provision for loan losses 432,364 432,148 419,305 408,335 364,703 Noninterest income: Service charges and fees on deposit accounts 43,201 41,991 41,414 40,038 34,375 Loan sales and servicing income 12,332 10,972 15,058 15,468 21,315 Other service charges, commissions and fees 45,604 44,711 42,779 39,931 32,973 Trust and investment management income 6,116 5,549 5,312 4,696 4,489 Income from securities conduit 7,567 7,741 8,492 8,406 8,977 Dividends and other investment income 10,360 10,403 9,946 9,209 7,642 Market making, trading and nonhedge derivative income 4,991 3,641 5,444 4,425 1,352 Equity securities gains (losses), net 5,875 13,180 (1,764) 550 1,764 Fixed income securities gains (losses), net (554) 1,563 5,156 251 423 Other 4,389 5,578 5,674 5,514 4,317 Total noninterest income 139,881 145,329 137,511 128,488 117,627 Noninterest expense: Salaries and employee benefits 189,627 190,554 185,643 185,855 154,942 Occupancy, net 25,170 25,807 24,549 24,081 21,388 Furniture and equipment 22,623 20,361 22,737 23,004 19,032 Legal and professional services 11,234 11,386 9,005 8,509 10,012 Postage and supplies 8,402 8,313 8,646 7,715 7,043 Advertising 7,100 6,566 6,814 5,985 6,061 Debt extinguishment cost 7,261 -- -- -- -- Impairment losses on long-lived assets -- -- -- 1,304 2,500 Restructuring charges -- -- -- 17 2,351 Merger related expense 2,199 2,549 8,906 6,807 3,103 Amortization of core deposit and other intangibles 10,899 10,716 10,692 10,693 6,092 Provision for unfunded lending commitments 731 1,045 (249) (279) 277 Other 57,680 52,731 56,285 50,764 50,988 Total noninterest expense 342,926 330,028 333,028 324,455 283,789 Impairment loss on goodwill -- -- -- -- 602 Income before income taxes and minority interest 229,319 247,449 223,788 212,368 197,939 Income taxes 80,081 83,790 78,821 75,258 69,139 Minority interest 2,730 9,985 (343) (523) 693 Net income 146,508 153,674 145,310 137,633 128,107 Preferred stock dividend 3,835 -- -- -- -- Net earnings applicable to common shareholders $142,673 $153,674 $145,310 $137,633 $128,107 Weighted average common shares outstanding during the period: Basic shares 106,457 106,285 106,001 105,472 95,002 Diluted shares 108,221 108,061 107,883 107,725 96,963 Net earnings per common share: Basic $1.34 $1.45 $1.37 $1.30 $1.35 Diluted 1.32 1.42 1.35 1.28 1.32 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited) (In thousands, except per share amounts) Years Ended December 31, 2006 2005 Interest income: Interest and fees on loans $2,438,324 $1,595,916 Interest on loans held for sale 16,442 9,814 Lease financing 18,290 16,079 Interest on money market investments 24,714 31,682 Interest on securities: Held to maturity - taxable 8,861 7,331 Held to maturity - nontaxable 22,909 24,005 Available for sale - taxable 272,252 201,628 Available for sale - nontaxable 8,630 3,931 Trading account 7,699 19,870 Total interest income 2,818,121 1,910,256 Interest expense: Interest on savings and money market deposits 405,269 220,604 Interest on time and foreign deposits 315,569 119,720 Interest on short-term borrowings 164,335 92,149 Interest on long-term debt 168,224 116,433 Total interest expense 1,053,397 548,906 Net interest income 1,764,724 1,361,350 Provision for loan losses 72,572 43,023 Net interest income after provision for loan losses 1,692,152 1,318,327 Noninterest income: Service charges and fees on deposit accounts 166,644 128,796 Loan sales and servicing income 54,193 77,822 Other service charges, commissions and fees 172,662 116,635 Trust and investment management income 21,673 16,483 Income from securities conduit 32,206 34,966 Dividends and other investment income 39,918 30,040 Market making, trading and nonhedge derivative income 18,501 15,714 Equity securities gains (losses), net 17,841 (1,312) Fixed income securities gains, net 6,416 845 Other 21,155 16,964 Total noninterest income 551,209 436,953 Noninterest expense: Salaries and employee benefits 751,679 573,902 Occupancy, net 99,607 77,393 Furniture and equipment 88,725 68,190 Legal and professional services 40,134 34,804 Postage and supplies 33,076 26,839 Advertising 26,465 21,364 Debt extinguishment cost 7,261 -- Impairment losses on long-lived assets 1,304 3,133 Restructuring charges 17 2,443 Merger related expense 20,461 3,310 Amortization of core deposit and other intangibles 43,000 16,905 Provision for unfunded lending commitments 1,248 3,425 Other 217,460 181,083 Total noninterest expense 1,330,437 1,012,791 Impairment loss on goodwill -- 602 Income before income taxes and minority interest 912,924 741,887 Income taxes 317,950 263,418 Minority interest 11,849 (1,652) Net income 583,125 480,121 Preferred stock dividend 3,835 -- Net earnings applicable to common shareholders $579,290 $480,121 Weighted average common shares outstanding during the period: Basic shares 106,057 91,187 Diluted shares 108,028 92,994 Net earnings per common share: Basic $5.46 $5.27 Diluted 5.36 5.16 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (Unaudited) Preferred Common Retained (In thousands) stock stock earnings Balance, December 31, 2005 $-- $2,156,732 $2,179,885 Comprehensive income: Net income 583,125 Other comprehensive income, net of tax: Net realized and unrealized holding losses on investments and retained interests Foreign currency translation Reclassification for net realized gains on investments recorded in operations Net unrealized gains on derivative instruments Pension and postretirement Other comprehensive income Total comprehensive income Issuance of preferred stock 240,000 (4,167) Stock redeemed and retired (26,483) Net stock options exercised 91,647 Reclassification of deferred compensation, adoption of SFAS 123R (11,111) Share-based compensation 23,685 Dividend declared on preferred stock (3,835) Cash dividends on common stock, $1.47 per share (156,986) Change in deferred compensation Balance, December 31, 2006 $240,000 $2,230,303 $2,602,189 Balance, December 31, 2004 $-- $972,065 $1,830,064 Comprehensive income: Net income 480,121 Other comprehensive loss, net of tax: Net realized and unrealized holding losses on investments and retained interests Foreign currency translation Reclassification for net realized gains on investments recorded in operations Net unrealized losses on derivative instruments Minimum pension liability Other comprehensive loss Total comprehensive income Stock redeemed and retired (82,211) Net stock options exercised and restricted stock issued 113,290 Common and restricted stock issued and stock options assumed in acquisition 1,153,588 Cash dividends on common stock, $1.44 per share (130,300) Change in deferred compensation Balance, December 31, 2005 $-- $2,156,732 $2,179,885 Total comprehensive income for the three months ended December 31, 2006 and 2005 was $159,951 and $97,152, respectively. ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (Unaudited) Accumulated other Total comprehensive Deferred shareholders' (In thousands) income (loss) compensation equity Balance, December 31, 2005 $(83,043) $(16,310) $4,237,264 Comprehensive income: Net income 583,125 Other comprehensive income, net of tax: Net realized and unrealized holding losses on investments and retained interests (7,684) Foreign currency translation 715 Reclassification for net realized gains on investments recorded in operations (630) Net unrealized gains on derivative instruments 8,548 Pension and postretirement 6,245 Other comprehensive income 7,194 7,194 Total comprehensive income 590,319 Issuance of preferred stock 235,833 Stock redeemed and retired (26,483) Net stock options exercised 91,647 Reclassification of deferred compensation, adoption of SFAS 123R 11,111 -- Share-based compensation 23,685 Dividend declared on preferred stock (3,835) Cash dividends on common stock, $1.47 per share (156,986) Change in deferred compensation (4,421) (4,421) Balance, December 31, 2006 $(75,849) $(9,620) $4,987,023 Balance, December 31, 2004 $(7,932) $(4,218) $2,789,979 Comprehensive income: Net income 480,121 Other comprehensive loss, net of tax: Net realized and unrealized holding losses on investments and retained interests (28,380) Foreign currency translation (1,507) Reclassification for net realized gains on investments recorded in operations (659) Net unrealized losses on derivative instruments (40,771) Minimum pension liability (3,794) Other comprehensive loss (75,111) (75,111) Total comprehensive income 405,010 Stock redeemed and retired (82,211) Net stock options exercised and restricted stock issued 113,290 Common and restricted stock issued and stock options assumed in acquisition (3,906) 1,149,682 Cash dividends on common stock, $1.44 per share (130,300) Change in deferred compensation (8,186) (8,186) Balance, December 31, 2005 $(83,043) $(16,310) $4,237,264 Total comprehensive income for the three months ended December 31, 2006 and 2005 was $159,951 and $97,152, respectively. ZIONS BANCORPORATION AND SUBSIDIARIES Nonperforming Assets (Unaudited) (In thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2006 2006 2006 2006 2005 Nonaccrual loans $66,405 $64,650 $57,249 $71,376 $68,717 Restructured loans 164 179 202 216 380 Other real estate owned 9,250 9,986 16,024 24,964 19,966 Other assets 6,175 -- -- -- -- Total $81,994 $74,815 $73,475 $96,556 $89,063 % of net loans and leases* and other real estate owned 0.24% 0.22% 0.22% 0.31% 0.30% Accruing loans past due 90 days or more $43,727 $20,407 $29,434 $10,299 $17,153 % of net loans and leases* 0.13% 0.06% 0.09% 0.03% 0.06% *Includes loans held for sale. Allowances for Credit Losses (Unaudited) (In thousands) Three Months Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2006 2006 2006 2006 2005 Allowance for Loan Losses Balance at beginning of period $356,342 $348,475 $341,261 $338,399 $287,237 Allowance of company acquired -- -- -- -- 49,217 Add: Provision for losses 26,675 14,363 17,022 14,512 10,116 Deduct: Loan and lease charge-offs (23,219) (10,882) (16,082) (15,609) (12,168) Recoveries 5,352 4,386 6,274 3,959 3,997 Net loan and lease charge-offs (17,867) (6,496) (9,808) (11,650) (8,171) Balance at end of period $365,150 $356,342 $348,475 $341,261 $338,399 Ratio of allowance for loan losses to net loans and leases outstanding at period end 1.05% 1.06% 1.07% 1.10% 1.12% Ratio of allowance for loan losses to nonperforming loans at period end 548.53% 549.66% 606.56% 476.67% 489.74% Allowance for Unfunded Lending Commitments Balance at beginning of period $18,637 $17,592 $17,841 $18,120 $15,830 Allowance of company acquired -- -- -- -- 2,013 Provision charged (credited) against earnings 731 1,045 (249) (279) 277 Balance at end of period $19,368 $18,637 $17,592 $17,841 $18,120 Total Allowances for Credit Losses Allowance for loan losses $365,150 $356,342 $348,475 $341,261 $338,399 Allowance for unfunded lending commitments 19,368 18,637 17,592 17,841 18,120 Total allowances for credit losses $384,518 $374,979 $366,067 $359,102 $356,519 Ratio of total allowances for credit losses to net loans and leases outstanding at period end 1.11% 1.11% 1.12% 1.15% 1.18% ZIONS BANCORPORATION AND SUBSIDIARIES Sold Loans Being Serviced (Unaudited) Three Months Ended (In thousands) December 31, September 30, June 30, 2006 2006 2006 Balance at beginning of period $2,796,644 $3,003,101 $3,183,992 New loans sold 30,061 46,073 82,553 Payments and other reductions (240,254) (252,530) (263,444) Balance at end of period $2,586,451 $2,796,644 $3,003,101 Loan Balances By Portfolio Type (Unaudited) (In millions) December 31, September 30, June 30, 2006 2006 2006 Loans held for sale $253 $268 $249 Commercial lending: Commercial and industrial 8,422 7,846 7,539 Leasing 443 420 407 Owner occupied 6,260 5,855 5,574 Total commercial lending 15,125 14,121 13,520 Commercial real estate: Construction and land development 7,483 7,362 6,958 Term 4,952 4,960 4,981 Total commercial real estate 12,435 12,322 11,939 Consumer: Home equity credit line and other consumer real estate 1,850 1,944 1,963 1-4 family residential 4,192 4,255 4,244 Bankcard and other revolving plans 295 281 279 Other 457 458 453 Total consumer 6,794 6,938 6,939 Foreign loans 3 3 3 Other receivables 209 200 175 Total loans $34,819 $33,852 $32,825 ZIONS BANCORPORATION AND SUBSIDIARIES Sold Loans Being Serviced (Unaudited) Three Months Ended (In thousands) March 31, December 31, 2006 2005 Balance at beginning of period $3,382,603 $3,561,818 New loans sold 59,417 100,273 Payments and other reductions (258,028) (279,488) Balance at end of period $3,183,992 $3,382,603 Loan Balances By Portfolio Type (Unaudited) (In millions) March 31, December 31, 2006 2005 Loans held for sale $312 $256 Commercial lending: Commercial and industrial 7,261 7,192 Leasing 383 373 Owner occupied 5,159 4,825 Total commercial lending 12,803 12,390 Commercial real estate: Construction and land development 6,292 6,065 Term 4,847 4,640 Total commercial real estate 11,139 10,705 Consumer: Home equity credit line and other consumer real estate 1,892 1,831 1-4 family residential 4,191 4,130 Bankcard and other revolving plans 254 207 Other 464 537 Total consumer 6,801 6,705 Foreign loans 3 5 Other receivables 212 191 Total loans $31,270 $30,252 ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (Unaudited) Three Months Ended December 31, 2006 (In thousands) Average Amount of Average balance interest (1) rate ASSETS Money market investments $467,033 $6,116 5.20% Securities: Held to maturity 660,467 11,394 6.84% Available for sale 4,809,132 71,280 5.88% Trading account 158,307 2,009 5.03% Total securities 5,627,906 84,683 5.97% Loans: Loans held for sale 246,423 4,066 6.55% Net loans
