10-Q 1 zion-20160331x10q.htm 10-Q 10-Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from         to                         
COMMISSION FILE NUMBER 001-12307
ZIONS BANCORPORATION
(Exact name of registrant as specified in its charter)
UTAH
87-0227400
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
One South Main, 15th Floor
Salt Lake City, Utah
84133
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (801) 844-7637
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
¨
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, without par value, outstanding at April 29, 2016
204,623,502 shares



ZIONS BANCORPORATION AND SUBSIDIARIES
Table of Contents



2


PART I.
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS (Unaudited)
ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
March 31,
2016
 
December 31,
2015
(Unaudited)
 
 
ASSETS
 
 
 
Cash and due from banks
$
517,803

 
$
798,319

Money market investments:
 
 
 
Interest-bearing deposits
3,039,090

 
6,108,124

Federal funds sold and security resell agreements
1,587,212

 
619,758

Investment securities:
 
 
 
Held-to-maturity, at amortized cost (approximate fair value $636,484 and $552,088)
631,646

 
545,648

Available-for-sale, at fair value
8,701,885

 
7,643,116

Trading account, at fair value
65,838

 
48,168

 
9,399,369

 
8,236,932

Loans held for sale
108,764

 
149,880

Loans and leases, net of unearned income and fees
41,418,185

 
40,649,542

Less allowance for loan losses
611,894

 
606,048

Loans, net of allowance
40,806,291

 
40,043,494

Other noninterest-bearing investments
855,813

 
848,144

Premises and equipment, net
925,430

 
905,462

Goodwill
1,014,129

 
1,014,129

Core deposit and other intangibles
14,259

 
16,272

Other real estate owned
10,411

 
7,092

Other assets
901,342

 
916,937

 
$
59,179,913

 
$
59,664,543

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Deposits:
 
 
 
Noninterest-bearing demand
$
21,872,274

 
$
22,276,664

Interest-bearing:
 
 
 
Savings and money market
25,723,996

 
25,672,356

Time
2,071,688

 
2,130,680

Foreign
219,899

 
294,391

 
49,887,857

 
50,374,091

Federal funds and other short-term borrowings
232,188

 
346,987

Long-term debt
802,448

 
812,366

Reserve for unfunded lending commitments
69,026

 
74,838

Other liabilities
562,657

 
548,742

Total liabilities
51,554,176

 
52,157,024

Shareholders’ equity:
 
 
 
Preferred stock, without par value, authorized 4,400,000 shares
828,490

 
828,490

Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 204,543,707 and 204,417,093 shares
4,777,630

 
4,766,731

Retained earnings
2,031,270

 
1,966,910

Accumulated other comprehensive income (loss)
(11,653
)
 
(54,612
)
Total shareholders’ equity
7,625,737

 
7,507,519

 
$
59,179,913

 
$
59,664,543

See accompanying notes to consolidated financial statements.

3


ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
2016
 
2015
Interest income:
 
 
 
Interest and fees on loans
$
420,508

 
$
415,755

Interest on money market investments
7,029

 
5,218

Interest on securities
47,364

 
27,473

Total interest income
474,901

 
448,446

Interest expense:
 
 
 
Interest on deposits
11,845

 
12,104

Interest on short- and long-term borrowings
10,214

 
18,996

Total interest expense
22,059

 
31,100

Net interest income
452,842

 
417,346

Provision for loan losses
42,145

 
(1,494
)
Net interest income after provision for loan losses
410,697

 
418,840

Noninterest income:
 
 
 
Service charges and fees on deposit accounts
41,261

 
41,194

Other service charges, commissions and fees
49,474

 
43,002

Wealth management income
7,954

 
7,615

Loan sales and servicing income
7,979

 
7,706

Capital markets and foreign exchange
5,667

 
5,501

Dividends and other investment income
4,639

 
9,372

Fair value and nonhedge derivative loss
(2,585
)
 
(1,088
)
Equity securities gains (losses), net
(550
)
 
3,353

Fixed income securities gains (losses), net
28

 
(239
)
Other
2,894

 
922

Total noninterest income
116,761

 
117,338

Noninterest expense:
 
 
 
Salaries and employee benefits
258,338

 
243,519

Occupancy, net
29,779

 
29,339

Furniture, equipment and software
32,015

 
29,713

Other real estate expense, net
(1,329
)
 
374

Credit-related expense
5,934

 
5,939

Provision for unfunded lending commitments
(5,812
)
 
1,211

Professional and legal services
11,471

 
11,483

Advertising
5,628

 
6,975

FDIC premiums
7,154

 
8,119

Amortization of core deposit and other intangibles
2,014

 
2,358

Debt extinguishment cost
247

 

Other
50,134

 
53,947

Total noninterest expense
395,573

 
392,977

Income before income taxes
131,885

 
143,201

Income taxes
41,448

 
51,176

Net income
90,437

 
92,025

Dividends on preferred stock
(11,660
)
 
(16,746
)
Net earnings applicable to common shareholders
$
78,777

 
$
75,279

Weighted average common shares outstanding during the period:
 
 
 
Basic shares
203,967

 
202,603

Diluted shares
204,096

 
202,944

Net earnings per common share:
 
 
 
Basic
$
0.38

 
$
0.37

Diluted
0.38

 
0.37

See accompanying notes to consolidated financial statements.

4


ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
 
Three Months Ended
March 31,
(In thousands)
 
2016
 
2015
 
 
 
 
 
Net income for the period
 
$
90,437

 
$
92,025

Other comprehensive income, net of tax:
 
 
 
 
Net unrealized holding gains on investment securities
 
32,168

 
486

Reclassification of HTM securities to AFS securities
 

 
10,938

Reclassification to earnings for realized net fixed income securities losses (gains)
 
(17
)
 
148

Net unrealized gains (losses) on other noninterest-bearing investments
 
430

 
(364
)
Net unrealized holding gains on derivative instruments
 
12,901

 
2,553

Reclassification adjustment for increase in interest income recognized in earnings on derivative instruments
 
(1,858
)
 
(629
)
Pension and postretirement
 
(665
)
 

Other comprehensive income
 
42,959

 
13,132

Comprehensive income
 
$
133,396

 
$
105,157

See accompanying notes to consolidated financial statements.

5


ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands, except shares
and per share amounts)
Preferred
stock
 
Common stock
 
Retained earnings
 
Accumulated other
comprehensive income (loss)
 
Total
shareholders’ equity
Shares
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
$
828,490

 
204,417,093

 
$
4,766,731

 
$
1,966,910

 
 
$
(54,612
)
 
 
$
7,507,519

Net income for the period
 
 
 
 
 
 
90,437

 
 
 
 
 
90,437

Other comprehensive income, net of tax
 
 
 
 
 
 
 
 
 
42,959

 
 
42,959

Net activity under employee plans and related tax benefits
 
 
126,614

 
10,899

 
 
 
 
 
 
 
10,899

Dividends on preferred stock


 
 
 
 
 
(11,660
)
 
 
 
 
 
(11,660
)
Dividends on common stock, $0.06 per share
 
 
 
 
 
 
(12,350
)
 
 
 
 
 
(12,350
)
Change in deferred compensation
 
 
 
 
 
 
(2,067
)
 
 
 
 
 
(2,067
)
Balance at March 31, 2016
$
828,490

 
204,543,707

 
$
4,777,630

 
$
2,031,270

 
 
$
(11,653
)
 
 
$
7,625,737

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
1,004,011

 
203,014,903

 
$
4,723,855

 
$
1,769,705

 
 
$
(128,041
)
 
 
$
7,369,530

Net income for the period
 
 
 
 
 
 
92,025

 
 
 
 
 
92,025

Other comprehensive income, net of tax
 
 
 
 
 
 
 
 
 
13,132

 
 
13,132

Subordinated debt converted to preferred stock
21

 
 
 
(6
)
 
 
 
 
 
 
 
15

Net activity under employee plans and related tax benefits
 
 
178,088

 
4,707

 
 
 
 
 
 
 
4,707

Dividends on preferred stock


 
 
 
 
 
(16,746
)
 
 
 
 
 
(16,746
)
Dividends on common stock, $0.04 per share
 
 
 
 
 
 
(8,176
)
 
 
 
 
 
(8,176
)
Change in deferred compensation
 
 
 
 
 
 
(189
)
 
 
 
 
 
(189
)
Balance at March 31, 2015
$
1,004,032

 
203,192,991

 
$
4,728,556

 
$
1,836,619

 
 
$
(114,909
)
 
 
$
7,454,298

See accompanying notes to consolidated financial statements.

6


ZIONS BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Three Months Ended
March 31,
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income for the period
$
90,437

 
$
92,025

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for credit losses
36,333

 
(283
)
Depreciation and amortization
40,736

 
34,169

Fixed income securities losses (gains), net
(28
)
 
239

Deferred income tax expense (benefit)
(4,680
)
 
3,402

Net increase in trading securities
(17,670
)
 
(1,021
)
Net decrease in loans held for sale
38,566

 
3,517

Change in other liabilities
17,770

 
25,566

Change in other assets
7,301

 
(65,248
)
Other, net
13,997

 
(3,549
)
Net cash provided by operating activities
222,762

 
88,817

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Net decrease in money market investments
2,101,580

 
253,274

Proceeds from maturities and paydowns of investment securities
held-to-maturity
22,036

 
39,323

Purchases of investment securities held-to-maturity
(108,141
)
 
(22,576
)
Proceeds from sales, maturities, and paydowns of investment securities available-for-sale
2,098,526

 
228,894

Purchases of investment securities available-for-sale
(3,123,244
)
 
(784,856
)
Net change in loans and leases
(808,358
)
 
(100,442
)
Purchases of premises and equipment
(40,015
)
 
(33,533
)
Proceeds from sales of other real estate owned
4,304

 
3,401

Other, net
(10,565
)
 
3,351

Net cash provided by (used in) investing activities
136,123

 
(413,164
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Net increase (decrease) in deposits
(486,234
)
 
275,285

Net change in short-term funds borrowed
(114,799
)
 
(40,626
)
Repayments of long-term debt
(10,636
)
 
(8,185
)
Proceeds from the issuance of common stock
538

 
962

Dividends paid on common and preferred stock
(27,421
)
 
(23,234
)
Other, net
(849
)
 
(939
)
Net cash provided by (used in) financing activities
(639,401
)
 
203,263

Net decrease in cash and due from banks
(280,516
)
 
(121,084
)
Cash and due from banks at beginning of period
798,319

 
841,942

Cash and due from banks at end of period
$
517,803

 
$
720,858

 
 
 
 
Cash paid for interest
$
18,430

 
$
22,119

Net refunds received for income taxes
(84
)
 
(500
)
See accompanying notes to consolidated financial statements.

7


ZIONS BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2016
1.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Zions Bancorporation (“the Parent”) and its majority-owned subsidiaries (collectively “the Company,” “Zions,” “we,” “our,” “us”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. References to GAAP, including standards promulgated by the Financial Accounting Standards Board (“FASB”), are made according to sections of the Accounting Standards Codification (“ASC”). Changes to the ASC are made with Accounting Standards Updates (“ASU”) that include consensus issues of the Emerging Issues Task Force (“EITF”). In certain cases, ASUs are issued jointly with International Financial Reporting Standards (“IFRS”).
Operating results for the three months ended March 31, 2016 and 2015 are not necessarily indicative of the results that may be expected in future periods. In preparing the consolidated financial statements, we are required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated balance sheet at December 31, 2015 is from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s 2015 Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform with the current period presentation. These reclassifications did not affect net income or shareholders’ equity.
Zions Bancorporation is a financial holding company headquartered in Salt Lake City, Utah, and with its subsidiaries, provides a full range of banking and related services. Following the close of business on December 31, 2015, the Company completed the merger of its subsidiary banks and other subsidiaries into a single bank, ZB, N.A. The Company continues to manage its banking operations through seven separately managed and branded segments in 11 Western and Southwestern states as follows: Zions Bank, in Utah, Idaho and Wyoming; Amegy Bank (“Amegy”), in Texas; California Bank & Trust (“CB&T”); National Bank of Arizona (“NBAZ”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; and The Commerce Bank of Washington (“TCBW”), in Washington and Oregon. Pursuant to a Board resolution adopted November 21, 2014, The Commerce Bank of Oregon merged into TCBW following the close of business on March 31, 2015.



8


ZIONS BANCORPORATION AND SUBSIDIARIES

2.
RECENT ACCOUNTING PRONOUNCEMENTS
Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
 
 
 
 
 
 
 
Standards not yet adopted by the Company
 
 
 
 
 
 
 
ASU 2016-09, Stock Compensation (Topic 718), Improvements to Share-Based Payment Accounting
 
The standard requires entities to recognize the income tax effects of share-based payment awards in the income statement when the awards vest or are settled (i.e. the additional paid-in capital pools will be eliminated). The guidance on employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing. The standard also provides an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur.
 
January 1, 2017
 
We are currently evaluating the potential impact of this new guidance on the Company’s financial statements.
 
 
 
 
 
 
 
ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
 
The standard provides revised accounting guidance related to the accounting for and reporting of financial instruments. Some of the main provisions include:
– Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values.
– Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income.
– Elimination of the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments carried at amortized cost. However it will require the use of exit price when measuring the fair value of financial instruments measured at amortized cost for disclosure purposes.
 
January 1, 2018
 
We do not currently expect this new guidance will have a material impact on the Company’s financial statements.
 
 
 
 
 
 
 
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)

ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal vs. Agent Considerations (Reporting Revenue Gross versus Net)


 
The core principle of the new guidance is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The banking industry does not expect significant changes because major sources of revenue are from financial instruments that have been excluded from the scope of the new standard, (including loans, derivatives, debt and equity securities, etc.). However, these new standards affect other fees charged by banks, such as asset management fees, credit card interchange fees, deposit account fees, etc. Adoption may be made on a full retrospective basis with practical expedients, or on a modified retrospective basis with a cumulative effect adjustment. Early adoption of the guidance is permitted as of January 1, 2017.
 
January 1, 2018, as extended in August 2015 by ASU 2015-14
 
While we currently do not expect these standards will have a material impact on the Company’s financial statements, we are still in process of conducting our evaluation.
 
 
 
 
 
 
 

9


ZIONS BANCORPORATION AND SUBSIDIARIES

ASU 2016-02,
Leases (Topic 842)
 
The standard requires that a lessee recognize assets and liabilities for leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, the standard will require both types of leases to be recognized on the balance sheet. It also requires disclosures to better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements.
 
January 1, 2019
 
We are currently evaluating the potential impact of this new guidance on the Company’s financial statements.

10


ZIONS BANCORPORATION AND SUBSIDIARIES

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
 
 
 
 
 
 
 
Standards adopted by the Company
 
 
 
 
 
 
 
ASU 2015-02, Amendments to the Consolidation Analysis (Topic 810)
 
The new standard changes certain criteria in the variable interest model and the voting model to determine whether certain legal entities are variable interest entities (“VIEs”) and whether they should be consolidated. Additional disclosures are required for entities not currently considered VIEs, but may become VIEs under the new guidance and may be subject to consolidation. Adoption may be retrospective or modified retrospective with a cumulative effect adjustment.
 
January 1, 2016
 
We currently do not consolidate any VIEs and our adoption of this standard did not have a material impact on the Company’s financial statements.
 
 
 
 
 
 
 
ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30)
 
The standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with debt discounts. Adoption is retrospective.
 
January 1, 2016
 
Our adoption of this standard did not have a material impact on the accompanying financial statements.
 
 
 
 
 
 
 
ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40)
 
The standard provides guidance to determine whether an arrangement includes a software license. If it does, the customer accounts for it the same way as for other software licenses. If no software license is included, the customer accounts for it as a service contract. Adoption may be retrospective or prospective.
 
January 1, 2016
 
We adopted this standard on a prospective basis and it did not have a material impact on the accompanying financial statements.
 
 
 
 
 
 
 
ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent), (Topic 820)
 
The guidance eliminates the current requirement to categorize within the fair value hierarchy investments whose fair values are measured at net asset value (“NAV”) using the practical expedient in ASC 820. Fair value disclosure of these investments will be made to facilitate reconciliation to amounts reported on the balance sheet. Other related disclosures will continue when the NAV practical expedient is used. Adoption is retrospective.
 
January 1, 2016
 
Our adoption of this standard did not have a material impact on the accompanying financial statements.
3.
SUPPLEMENTAL CASH FLOW INFORMATION
Noncash activities are summarized as follows:
(In thousands)
Three Months Ended
March 31,
2016
 
2015
 
 
 
 
Loans and leases transferred to other real estate owned
$
5,998

 
$
3,568

Loans held for sale reclassified as loans held for investment
1,976

 
13,138

Amortized cost of HTM securities reclassified as AFS securities

 
79,276


11


ZIONS BANCORPORATION AND SUBSIDIARIES

4.
OFFSETTING ASSETS AND LIABILITIES
Gross and net information for selected financial instruments in the balance sheet is as follows:
 
 
March 31, 2016
(In thousands)
 
 
 
 
 
 
 
Gross amounts not offset in the balance sheet
 
 
Description
 
Gross amounts recognized
 
Gross amounts offset in the balance sheet
 
Net amounts presented in the balance sheet
 
Financial instruments
 
Cash collateral received/pledged
 
Net amount
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and security resell agreements
 
$
1,587,212

 
$

 
$
1,587,212

 
$

 
$

 
$
1,587,212

Derivatives (included in other assets)
 
125,363

 

 
125,363

 
(22,322
)
 

 
103,041

 
 
$
1,712,575

 
$

 
$
1,712,575

 
$
(22,322
)
 
$

 
$
1,690,253

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds and other short-term borrowings
 
$
232,188

 
$

 
$
232,188

 
$

 
$

 
$
232,188

Derivatives (included in other liabilities)
 
104,469

 

 
104,469

 
(22,322
)
 
(71,149
)
 
10,998

 
 
$
336,657

 
$

 
$
336,657

 
$
(22,322
)
 
$
(71,149
)
 
$
243,186

 
 
December 31, 2015
(In thousands)
 
 
 
 
 
 
 
Gross amounts not offset in the balance sheet
 
 
Description
 
Gross amounts recognized
 
Gross amounts offset in the balance sheet
 
Net amounts presented in the balance sheet
 
Financial instruments
 
Cash collateral received/pledged
 
Net amount
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and security resell agreements
 
$
619,758

 
$

 
$
619,758

 
$

 
$

 
$
619,758

Derivatives (included in other assets)
 
77,638

 

 
77,638

 
(5,916
)
 

 
71,722

 
 
$
697,396

 
$

 
$
697,396

 
$
(5,916
)
 
$

 
$
691,480

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds and other short-term borrowings
 
$
346,987

 
$

 
$
346,987

 
$

 
$

 
$
346,987

Derivatives (included in other liabilities)
 
72,568

 

 
72,568

 
(5,916
)
 
(61,134
)
 
5,518

 
 
$
419,555

 
$

 
$
419,555

 
$
(5,916
)
 
$
(61,134
)
 
$
352,505

Security repurchase and reverse repurchase (“resell”) agreements are offset, when applicable, in the balance sheet according to master netting agreements. Security repurchase agreements are included with “Federal funds and other short-term borrowings.” Derivative instruments may be offset under their master netting agreements; however, for accounting purposes, we present these items on a gross basis in the Company’s balance sheet. See Note 7 for further information regarding derivative instruments.


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5.
INVESTMENTS 
Investment Securities
Investment securities are summarized below. Note 10 discusses the process to estimate fair value for investment securities.
 
March 31, 2016
(In thousands)

Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated fair
value
Held-to-maturity
 
 
 
 
 
 
 
Municipal securities
$
631,646

 
$
11,519

 
$
6,681

 
$
636,484

 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
U.S. Government agencies and corporations:
 
 
 
 
 
 
 
Agency securities
1,497,652

 
14,055

 
856

 
1,510,851

Agency guaranteed mortgage-backed securities
4,487,279

 
17,801

 
9,091

 
4,495,989

Small Business Administration loan-backed securities
2,019,668

 
14,480

 
13,321

 
2,020,827

Municipal securities
552,872

 
4,391

 
1,190

 
556,073

Other debt securities
25,434

 
147

 
3,672

 
21,909

 
8,582,905

 
50,874

 
28,130

 
8,605,649

Money market mutual funds and other
96,132

 
104

 

 
96,236

 
8,679,037

 
50,978

 
28,130

 
8,701,885

Total
$
9,310,683

 
$
62,497

 
$
34,811

 
$
9,338,369

 
December 31, 2015
(In thousands) 

Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated fair
value
Held-to-maturity
 
 
 
 
 
 
 
Municipal securities
$
545,648

 
$
11,218

 
$
4,778

 
$
552,088

 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
U.S. Government agencies and corporations:
 
 
 
 
 
 
 
Agency securities
1,231,740

 
4,313

 
2,658

 
1,233,395

Agency guaranteed mortgage-backed securities
3,964,593

 
7,919

 
36,037

 
3,936,475

Small Business Administration loan-backed securities
1,932,817

 
12,602

 
14,445

 
1,930,974

Municipal securities
417,374

 
2,177

 
856

 
418,695

Other debt securities
25,454

 
152

 
2,665

 
22,941

 
7,571,978

 
27,163

 
56,661

 
7,542,480

Money market mutual funds and other
100,612

 
61

 
37

 
100,636

 
7,672,590

 
27,224

 
56,698

 
7,643,116

Total
$
8,218,238

 
$
38,442

 
$
61,476

 
$
8,195,204

CDO Sales and Paydowns
During the second quarter of 2015, we sold the remaining portfolio of our collateralized debt obligation (“CDO”) securities, or $574 million at amortized cost, and realized net losses of approximately $137 million. During the first quarter of 2015, we reclassified all of the remaining held-to-maturity (“HTM”) CDO securities, or approximately $79 million at amortized cost, to Available-for-Sale (“AFS”) securities. The reclassification resulted from increased risk weights for these securities under the new Basel III capital rules, and was made in accordance with applicable accounting guidance that allows for such reclassifications when increased risk weights of debt securities must be used for regulatory risk-based capital purposes. No gain or loss was recognized in the statement of income at the time of reclassification.

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Maturities
The amortized cost and estimated fair value of investment debt securities are shown subsequently as of March 31, 2016 by expected timing of principal payments. Actual principal payments may differ from contractual or expected principal payments because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
Held-to-maturity
 
Available-for-sale
(In thousands)
Amortized
cost
 
Estimated
fair
value
 
Amortized
cost
 
Estimated
fair
value
 
 
 
 
 
 
 
 
Principal return in one year or less
$
69,225

 
$
69,515

 
$
1,187,108

 
$
1,189,787

Principal return after one year through five years
238,605

 
242,328

 
3,483,268

 
3,491,732

Principal return after five years through ten years
203,989

 
207,198

 
2,769,584

 
2,781,632

Principal return after ten years
119,827

 
117,443

 
1,142,945

 
1,142,498

 
$
631,646

 
$
636,484

 
$
8,582,905

 
$
8,605,649

The following is a summary of the amount of gross unrealized losses for investment securities and the estimated fair value by length of time the securities have been in an unrealized loss position:
 
March 31, 2016
 
Less than 12 months
 
12 months or more
 
Total
(In thousands)
 
Gross
unrealized
losses
 
Estimated
fair
value
 
Gross
unrealized
losses
 
Estimated
fair
value
 
Gross
unrealized
losses
 
Estimated
fair
value
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
Municipal securities
$
5,952

 
$
193,737

 
$
729

 
$
12,480

 
$
6,681

 
$
206,217

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
U.S. Government agencies and corporations:
 
 
 
 
 
 
 
 
 
 
 
Agency securities
312

 
299,591

 
544

 
129,191

 
856

 
428,782

Agency guaranteed mortgage-backed securities
6,836

 
1,707,106

 
2,255

 
149,293

 
9,091

 
1,856,399

Small Business Administration loan-backed securities
4,549

 
539,651

 
8,772

 
528,850

 
13,321

 
1,068,501

Municipal securities
935

 
140,612

 
255

 
14,231

 
1,190

 
154,843

Other

 

 
3,672

 
11,331

 
3,672

 
11,331

 
12,632

 
2,686,960

 
15,498

 
832,896

 
28,130

 
3,519,856

Mutual funds and other

 

 

 

 

 

 
12,632

 
2,686,960

 
15,498

 
832,896

 
28,130

 
3,519,856

Total
$
18,584

 
$
2,880,697

 
$
16,227

 
$
845,376

 
$
34,811

 
$
3,726,073


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ZIONS BANCORPORATION AND SUBSIDIARIES

 
December 31, 2015
 
Less than 12 months
 
12 months or more
 
Total
(In thousands)
 
Gross
unrealized
losses
 
Estimated
 fair
 value
 
Gross
unrealized
losses
 
Estimated
 fair
 value
 
Gross
unrealized
losses
 
Estimated
 fair
 value
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
Municipal securities
$
4,521

 
$
122,197

 
$
257

 
$
13,812

 
$
4,778

 
$
136,009

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
U.S. Government agencies and corporations:
 
 
 
 
 
 
 
 
 
 
 
Agency securities
2,176

 
559,196

 
482

 
131,615

 
2,658

 
690,811

Agency guaranteed mortgage-backed securities
34,583

 
3,639,824

 
1,454

 
65,071

 
36,037

 
3,704,895

Small Business Administration loan-backed securities
5,348

 
567,365

 
9,097

 
535,376

 
14,445

 
1,102,741

Municipal securities
735

 
102,901

 
121

 
5,733

 
856

 
108,634

Other

 

 
2,665

 
12,337

 
2,665

 
12,337

 
42,842

 
4,869,286

 
13,819

 
750,132

 
56,661

 
5,619,418

Mutual funds and other
37

 
35,488

 

 

 
37

 
35,488

 
42,879

 
4,904,774

 
13,819

 
750,132

 
56,698

 
5,654,906

Total
$
47,400

 
$
5,026,971

 
$
14,076

 
$
763,944

 
$
61,476

 
$
5,790,915

At March 31, 2016 and December 31, 2015, respectively, 157 and 187 HTM and 684 and 709 AFS investment securities were in an unrealized loss position.
Other-Than-Temporary Impairment
Ongoing Policy
We review investment securities on a quarterly basis for the presence of other-than-temporary impairment (“OTTI”). We assess whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the balance sheet date (the majority of the investment portfolio are debt securities). Under these circumstances, OTTI is considered to have occurred if (1) we have formed a documented intent to sell identified securities or initiated such sales; (2) it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.
Noncredit-related OTTI in securities we intend to sell is recognized in earnings as is any credit-related OTTI in securities, regardless of our intent. Noncredit-related OTTI on AFS securities not expected to be sold is recognized in other comprehensive income (“OCI”). The amount of noncredit-related OTTI in a security is quantified as the difference in a security’s amortized cost after adjustment for credit impairment, and its lower fair value. Presentation of OTTI is made in the statement of income on a gross basis with an offset for the amount of OTTI recognized in OCI.
OTTI Conclusions
Our 2015 Annual Report on Form 10-K describes in more detail our OTTI evaluation process. The following summarizes the conclusions from our OTTI evaluation by each security type that has significant gross unrealized losses at March 31, 2016:
OTTI – U.S. Government Agencies and Corporations
Agency Guaranteed Mortgage-Backed Securities: These pass-through securities are comprised largely of fixed and floating-rate residential mortgage-backed securities issued by the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”), or the Federal Home Loan Mortgage Corporation (“FHLMC”). They were generally purchased at premiums with maturity dates from 10 to 15 years for fixed-rate securities and 30 years for floating-rate securities. These securities benefit from certain guarantee provisions or, in the case of GNMA, direct U.S. government guarantees. Unrealized losses relate to changes in interest rates subsequent to purchase and are not attributable to credit. At March 31, 2016, we did not

15


ZIONS BANCORPORATION AND SUBSIDIARIES

have an intent to sell identified securities with unrealized losses or initiate such sales, and we believe it is more likely than not we would not be required to sell such securities before recovery of their amortized cost basis. Therefore, we did not record OTTI for these securities during 2016.
Small Business Administration (“SBA”) Loan-Backed Securities: These securities were generally purchased at premiums with maturities from 5 to 25 years and have principal cash flows guaranteed by the SBA. Unrealized losses relate to changes in interest rates subsequent to purchase and are not attributable to credit. At March 31, 2016, we did not have an intent to sell identified SBA securities with unrealized losses or initiate such sales, and we believe it is more likely than not we would not be required to sell such securities before recovery of their amortized cost basis. Therefore, we did not record OTTI for these securities during the first quarter of 2016.
The following is a tabular rollforward of the total amount of credit-related OTTI:
(In thousands)

Three Months Ended
March 31, 2016
 
Three Months Ended
March 31, 2015
HTM

AFS

Total

HTM
 
AFS
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Balance of credit-related OTTI at beginning
of period
$

 
$

 
$

 
$
(9,079
)
 
$
(95,472
)
 
$
(104,551
)
Reductions for securities sold or paid off during the period

 

 

 

 
1,313

 
1,313

Reclassification of securities from HTM to AFS

 

 

 
9,079

 
(9,079
)
 

Balance of credit-related OTTI at end of period
$

 
$

 
$

 
$

 
$
(103,238
)
 
$
(103,238
)
The following summarizes gains and losses, including OTTI, that were recognized in the statement of income:
 
 
Three Months Ended
 
 
March 31, 2016
 
March 31, 2015
 
(In thousands)
Gross gains
 
Gross
losses
 
Gross gains
 
Gross losses
 
 
Investment securities:
 
 
 
 
 
 
 
 
Held-to-maturity
$

 
$

 
$
1

 
$

 
Available-for-sale
30

 
2

 
958

 
1,198

 
 
 
 
 
 
 
 
 
 
Other noninterest-bearing investments
3,187

 
3,737

 
3,595

 
242

 
 
3,217

 
3,739

 
4,554

 
1,440

 
Net gains (losses)
 
 
$
(522
)
 
 
 
$
3,114

 
 
 
 
 
 
 
 
 
 
Statement of income information:
 
 
 
 
 
 
 
 
Equity securities gains (losses), net
 
 
$
(550
)
 
 
 
$
3,353

 
Fixed income securities gains (losses), net
 
 
28

 
 
 
(239
)
 
Net gains (losses)
 
 
$
(522
)
 
 
 
$
3,114

Interest income by security type is as follows:
(In thousands)
Three Months Ended
March 31, 2016
 
Three Months Ended
March 31, 2015
 
Taxable
 
Nontaxable
 
Total
 
Taxable
 
Nontaxable
 
Total
Investment securities:
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity
$
2,604

 
$
2,726

 
$
5,330

 
$
3,592

 
$
2,862

 
$
6,454

Available-for-sale
39,607

 
1,955

 
41,562

 
19,768

 
653

 
20,421

Trading
472

 

 
472

 
598

 

 
598

 
$
42,683

 
$
4,681

 
$
47,364

 
$
23,958

 
$
3,515

 
$
27,473

Investment securities with a carrying value of $2.0 billion at March 31, 2016 and $2.3 billion at December 31, 2015 were pledged to secure public and trust deposits, advances, and for other purposes as required by law. Securities are also pledged as collateral for security repurchase agreements.

16


ZIONS BANCORPORATION AND SUBSIDIARIES

Private Equity Investments
Effect of Volcker Rule
The Volcker Rule (“VR”), as published pursuant to the Dodd-Frank Act in December 2013 and amended in January 2014, significantly restricted certain activities by covered bank holding companies, including restrictions on certain types of securities, proprietary trading, and private equity investing. The Company’s private equity investments (“PEIs”) consist of Small Business Investment Companies (“SBICs”) and non-SBICs. Following the sales of its CDO securities, the only prohibited investments under the VR requiring divestiture by the Company were certain of its PEIs. Of the recorded PEIs of $134 million at March 31, 2016, approximately $16 million remain prohibited by the VR.
For the first quarter of 2016, we did not sell any PEIs. We sold a total of approximately $9 million of PEIs during 2015. All of these sales related to prohibited PEIs. The 2015 sales resulted in insignificant amounts of realized gains or losses. We will dispose of the remaining $16 million of prohibited PEIs before the required deadline. However, the required deadline has been extended to July 21, 2016 from July 21, 2015 and the Federal Reserve has announced its intention to grant banking entities an additional one-year extension to July 21, 2017. See other discussions in Notes 10 and 11.
As discussed in Note 11, we have $20 million at March 31, 2016 of unfunded commitments for PEIs, of which approximately $6 million relate to prohibited PEIs. Until we dispose of the prohibited PEIs, we expect to fund these commitments if and as the capital calls are made, as allowed under the VR.
6.
LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans and Loans Held for Sale
Loans are summarized as follows according to major portfolio segment and specific loan class:
(In thousands)
March 31,
2016
 
December 31,
2015
 
 
 
 
Loans held for sale
$
108,764

 
$
149,880

 
 
 
 
Commercial:
 
 
 
Commercial and industrial
$
13,590,238

 
$
13,211,481

Leasing
437,150

 
441,666

Owner occupied
7,022,429

 
7,150,028

Municipal
695,436

 
675,839

Total commercial
21,745,253

 
21,479,014

Commercial real estate:
 
 
 
Construction and land development
1,967,702

 
1,841,502

Term
8,826,375

 
8,514,401

Total commercial real estate
10,794,077

 
10,355,903

Consumer:
 
 
 
Home equity credit line
2,432,632

 
2,416,357

1-4 family residential
5,417,810

 
5,382,099

Construction and other consumer real estate
401,422

 
385,240

Bankcard and other revolving plans
438,540

 
443,780

Other
188,451

 
187,149

Total consumer
8,878,855

 
8,814,625

Total loans
$
41,418,185

 
$
40,649,542

Loan balances are presented net of unearned income and fees, which amounted to $148.5 million at March 31, 2016 and $150.3 million at December 31, 2015.
Owner occupied and commercial real estate (“CRE”) loans include unamortized premiums of approximately $24.9 million at March 31, 2016 and $26.2 million at December 31, 2015.

17


ZIONS BANCORPORATION AND SUBSIDIARIES

Municipal loans generally include loans to municipalities with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.
Land development loans included in the construction and land development loan class were $286.8 million at March 31, 2016 and $288.0 million at December 31, 2015.
Loans with a carrying value of approximately $25.3 billion at March 31, 2016 and $19.4 billion at December 31, 2015 have been pledged at the Federal Reserve and various Federal Home Loan Banks (“FHLBs”) as collateral for potential borrowings.
We sold loans totaling $273.2 million and $300.4 million for the three months ended March 31, 2016 and 2015, respectively, that were classified as loans held for sale. The sold loans were derecognized from the balance sheet. Loans classified as loans held for sale primarily consist of conforming residential mortgages and the guaranteed portion of SBA loans. Amounts added to loans held for sale during these periods were $235.7 million and $309.7 million, respectively.
The principal balance of sold loans for which we retain servicing was approximately $1.3 billion at both March 31, 2016 and December 31, 2015. Income from loans sold, excluding servicing, for the three months ended March 31, 2016 and 2015 was $3.0 million and $4.6 million, respectively.
Allowance for Credit Losses
The allowance for credit losses (“ACL”) consists of the allowance for loan and lease losses (“ALLL”) (also referred to as the allowance for loan losses) and the reserve for unfunded lending commitments (“RULC”).
Allowance for Loan and Lease Losses
The ALLL represents our estimate of probable and estimable losses inherent in the loan and lease portfolio as of the balance sheet date. Losses are charged to the ALLL when recognized. Generally, commercial and CRE loans are charged off or charged down when they are determined to be uncollectible in whole or in part, or when 180 days past due unless the loan is well secured and in process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end consumer loans that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due. We establish the amount of the ALLL by analyzing the portfolio at least quarterly, and we adjust the provision for loan losses so the ALLL is at an appropriate level at the balance sheet date.
We determine our ALLL as the best estimate within a range of estimated losses. The methodologies we use to estimate the ALLL depend upon the impairment status and loan portfolio. The methodology for impaired loans is discussed subsequently. For commercial and CRE loans with commitments equal to or greater than $750,000, we assign internal risk grades using a comprehensive loan grading system based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. The credit quality indicators discussed subsequently are based on this grading system. Estimated losses for these commercial and CRE loans are derived from a statistical analysis of our historical default and loss given default (“LGD”) experience over the period of January 2008 through the most recent full quarter.
For consumer and small commercial and CRE loans with commitments less than $750,000, we primarily use roll rate models to forecast probable inherent losses. Roll rate models measure the rate at which these loans migrate from one delinquency category to the next worse delinquency category, and eventually to loss. We estimate roll rates for these loans using recent delinquency and loss experience by segmenting our loan portfolios into separate pools based on common risk characteristics and separately calculating historical delinquency and loss experience for each pool. These roll rates are then applied to current delinquency levels to estimate probable inherent losses.
The current status and historical changes in qualitative and environmental factors may not be reflected in our quantitative models. Thus, after applying historical loss experience, as described above, we review the

18


ZIONS BANCORPORATION AND SUBSIDIARIES

quantitatively derived level of ALLL for each segment using qualitative criteria and use those criteria to determine our estimate within the range. We track various risk factors that influence our judgment regarding the level of the ALLL across the portfolio segments. These factors primarily include:
Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices
Changes in international, national, regional, and local economic and business conditions
Changes in the nature and volume of the portfolio and in the terms of loans
Changes in the experience, ability, and depth of lending management and other relevant staff
Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans
Changes in the quality of the loan review system
Changes in the value of underlying collateral for collateral-dependent loans
The existence and effect of any concentration of credit, and changes in the level of such concentrations
The effect of other external factors such as competition and legal and regulatory requirements
The magnitude of the impact of these factors on our qualitative assessment of the ALLL changes from quarter to quarter according to changes made by management in its assessment of these factors, the extent these factors are already reflected in historic loss rates, and the extent changes in these factors diverge from one to another. We also consider the uncertainty inherent in the estimation process when evaluating the ALLL.
Reserve for Unfunded Lending Commitments
We also estimate a reserve for potential losses associated with off-balance sheet commitments, including standby letters of credit. We determine the RULC using the same procedures and methodologies that we use for the ALLL. The loss factors used in the RULC are the same as the loss factors used in the ALLL, and the qualitative adjustments used in the RULC are the same as the qualitative adjustments used in the ALLL. We adjust the Company’s unfunded lending commitments that are not unconditionally cancelable to an outstanding amount equivalent using credit conversion factors, and we apply the loss factors to the outstanding equivalents.
Changes in ACL Assumptions
During the first quarter of 2016, due to the consolidation of our separate banking charters, we enhanced our methodology to estimate the ACL on a Company-wide basis. As described previously, for large commercial and CRE loans, we began estimating historic loss factors by separately calculating historic default and LGD rates, instead of directly calculating loss rates for groupings of probability of default and LGD grades using a loss migration approach. For small commercial and CRE loans, we began using roll rate models to forecast probable inherent losses. For consumer loans, we began pooling loans by current loan-to-value, where applicable. The impact of these changes was largely neutral to the total ACL at March 31, 2016.


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ZIONS BANCORPORATION AND SUBSIDIARIES

Changes in the allowance for credit losses are summarized as follows:

 
Three Months Ended March 31, 2016
(In thousands)
Commercial
 
Commercial
real estate
 
Consumer
 
Total
Allowance for loan losses
 
 
 
 
 
 
 
Balance at beginning of period
$
454,277

 
$
113,992

 
$
37,779

 
$
606,048

Additions:
 
 
 
 
 
 
 
Provision for loan losses
45,875

 
1,701

 
(5,431
)
 
42,145

Adjustment for FDIC-supported/PCI loans

 

 

 

Deductions:
 
 
 
 
 
 
 
Gross loan and lease charge-offs
(43,230
)
 
(975
)
 
(3,905
)
 
(48,110
)
Recoveries
7,065

 
2,994

 
1,752

 
11,811

Net loan and lease charge-offs
(36,165
)
 
2,019

 
(2,153
)
 
(36,299
)
Balance at end of period
$
463,987

 
$
117,712

 
$
30,195

 
$
611,894

 
 
 
 
 
 
 
 
Reserve for unfunded lending commitments
 
 
 
 
 
 
 
Balance at beginning of period
$
57,696

 
$
16,526

 
$
616

 
$
74,838

Provision credited to earnings
(1,429
)
 
(3,767
)
 
(616
)
 
(5,812
)
Balance at end of period
$
56,267

 
$
12,759

 
$

 
$
69,026

 
 
 
 
 
 
 
 
Total allowance for credit losses at end of period
 
 
 
 
 
 
 
Allowance for loan losses
$
463,987

 
$
117,712

 
$
30,195

 
$
611,894

Reserve for unfunded lending commitments
56,267

 
12,759

 

 
69,026

Total allowance for credit losses
$
520,254

 
$
130,471

 
$
30,195

 
$
680,920

 
Three Months Ended March 31, 2015
(In thousands)
Commercial

Commercial
real estate

Consumer

Total
Allowance for loan losses
 
 
 
 
 
 
 
Balance at beginning of period
$
412,514

 
$
145,009

 
$
47,140

 
$
604,663

Additions:
 
 
 
 
 
 
 
Provision for loan losses
24,934

 
(26,887
)
 
459

 
(1,494
)
Adjustment for FDIC-supported/PCI loans
(38
)
 

 

 
(38
)
Deductions:
 
 
 
 
 
 

Gross loan and lease charge-offs
(15,951
)
 
(626
)
 
(3,611
)
 
(20,188
)
Recoveries
20,613

 
14,119

 
2,338

 
37,070

Net loan and lease charge-offs
4,662

 
13,493

 
(1,273
)
 
16,882

Balance at end of period
$
442,072

 
$
131,615

 
$
46,326

 
$
620,013


 
 
 
 
 
 
 
Reserve for unfunded lending commitments
 
 
 
 
 
 
 
Balance at beginning of period
$
58,931

 
$
21,517

 
$
628

 
$
81,076

Provision charged (credited) to earnings
3,844

 
(2,580
)
 
(53
)
 
1,211

Balance at end of period
$
62,775

 
$
18,937

 
$
575

 
$
82,287


 
 
 
 
 
 
 
Total allowance for credit losses at end of period
 
 
 
 
 
 
 
Allowance for loan losses
$
442,072


$
131,615


$
46,326


$
620,013

Reserve for unfunded lending commitments
62,775

 
18,937

 
575

 
82,287

Total allowance for credit losses
$
504,847

 
$
150,552

 
$
46,901

 
$
702,300


20


ZIONS BANCORPORATION AND SUBSIDIARIES

The ALLL and outstanding loan balances according to the Company’s impairment method are summarized as follows:
 
March 31, 2016
(In thousands)
Commercial
 
Commercial
real estate
 
Consumer
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
Individually evaluated for impairment
$
76,987

 
$
3,047

 
$
7,230

 
$
87,264

Collectively evaluated for impairment
386,943

 
114,448

 
22,882

 
524,273

Purchased loans with evidence of credit deterioration
57

 
217

 
83

 
357

Total
$
463,987

 
$
117,712

 
$
30,195

 
$
611,894

 
 
 
 
 
 
 
 
Outstanding loan balances:
 
 
 
 
 
 
 
Individually evaluated for impairment
$
477,363

 
$
95,784

 
$
86,957

 
$
660,104

Collectively evaluated for impairment
21,219,580

 
10,649,342

 
8,782,839

 
40,651,761

Purchased loans with evidence of credit deterioration
48,310

 
48,951

 
9,059

 
106,320

Total
$
21,745,253

 
$
10,794,077

 
$
8,878,855

 
$
41,418,185

 
 
December 31, 2015
(In thousands)
Commercial
 
Commercial
real estate
 
Consumer
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
Individually evaluated for impairment
$
36,909

 
$
3,154

 
$
9,462

 
$
49,525