Nevada State Bank parent reports third straight profit

Zions Bancorp, the holding company for Nevada State Bank, on Monday reported its third consecutive quarterly profit after 30 months of losses.

The regional banking company based in Salt Lake City earned $65.2 million, or 35 cents a share, compared with a loss of $80.5 million, or 47 cents a share, in the third quarter of 2010.

Excluding special charges, earnings for the third quarter were $74.8 million, or 40 cents a share. Analysts surveyed by Yahoo Finance had expected third-quarter earnings of 34 cents a share.

"We are pleased with the steady improvement in credit quality and the stability of our net interest income," Zions Chairman Harris Simmons said in a statement.

Net interest income increased 13 percent, to $471 million, compared with $416 million for the second quarter. Net interest income is the difference between the interest a bank receives from loans and the interest it pays on deposits. Net interest margin was 3.97 percent in the third quarter, compared with 4.07 percent in the second quarter of this year.

The company also increased its provision for loan losses on concerns about global economic conditions.

The provision for loan losses was $14.6 million for the third quarter, compared with $1.3 million for the second quarter.

"Although actual credit trends continue to improve, the company increased the portion of its provision related to national economic conditions in light of reported weaker economic data and fiscal uncertainty in Europe," Zions said in its earnings report.

Despite its improved quarterly earnings, the bank is seeing lower demands for loans.

Net loans and leases were $36.7 billion in the third quarter, a decrease of about $100 million, or 0.3 percent, from $36.8 billion in the second quarter of 2011.

"While loan demand softened somewhat for us compared to the prior quarter, we continue to experience growth in several categories as payoff and pay downs in the construction portfolio resulted in a modest decline in the overall portfolio," Simmons said. "We expect continued improvement in credit quality in the near term despite the uncertain economic environment."

As of Monday, Nevada State Bank had not broken out its third quarter earnings. Nevada State Bank reported second quarter earnings of $18.2 million, up from $4.2 million in the first quarter of 2011.

Shares of Zions gained $1, or 5.89 percent, to $17.98 on heavy volume of 5.15 million shares traded Monday on the Nasdaq. In after-hours trading, Zions shares lost $1.03, or 5.73 percent, to $16.95.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.