Zions Posts Ninth Quarterly Loss Because of Delinquent Real Estate Loans
Zions Bancorporation, the best- performing bank in the Standard & Poor’s 500 Index last year, reported a ninth straight quarterly loss as it struggles with delinquent loans tied to real estate.
The fourth-quarter loss narrowed to $72.2 million, or 62 cents a share, from $184.1 million, or $1.26, a year earlier, the Salt Lake City-based company said today in a statement. The average estimate of 31 analysts surveyed by Bloomberg was for an adjusted loss of 36 cents a share.
“We are particularly encouraged by the strong effort made during the fourth quarter to resolve more than a billion dollars of classified loans, the vast majority of which experienced favorable resolutions,” Zions Chief Executive Officer Harris Simmons said in the statement. So-called classified loans are defined as those that may lead to a loss for the bank.
Simmons, 56, is managing portfolios of loans in some of the states hardest hit by plunging commercial real estate values. The lender, which operates in 10 western U.S. states, set aside $679 million for bad loans in the first nine months of 2010 and reported $718 million of net charge-offs, according to a filing.
Zions shares fell 56 cents, or 2.3 percent, to $23.75 as of 4 p.m. today in Nasdaq Stock Market trading, and are down 2 percent this year after gaining 89 percent in 2010. The KBW Bank Index, which counts Zions among its 24 companies, rose 22 percent last year.
The bank said it had $250.9 million of net loan and lease charge-offs in the fourth quarter, up from $235.7 million in the third quarter. The loan-loss allowance fell to $1.44 billion at the end of December from $1.53 billion through September.
Zions is among those regional banks “that are having more difficulty growing revenues and/or are still working through their credit issues,” RBC Capital Markets analyst Joe Morford wrote in a Jan. 13 note.
Zions last reported a profit in the third quarter of 2008. It has yet to repay $1.4 billion in government bailout funds. Simmons has said the company needs to break even or earn a profit before repaying taxpayers.
Zions converted $151 million of convertible subordinated debt into preferred shares in November, with the accelerated amortization on the securities amounting to a $73.3 million expense in the quarter, the company said.
As Zions looks toward recovery, rivals are expanding through acquisitions. Comerica Inc., the business bank based in Dallas, said Jan. 18 it plans to purchase Sterling Bancshares Inc. for about $1.03 billion to expand in Texas. Bank of Montreal, Canada’s fourth-largest bank, agreed last month to pay $4.1 billion for Marshall & Ilsley Corp.
Analysts including Pri de Silva of CreditSights Inc. in New York have named Zions as a potential takeover candidate.
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