Zions Bancorp posts $209.7 million in third-quarter net income

Zions Bancorp, parent of Nevada State Bank, on Monday posted third-quarter earnings that easily surpassed analyst expectations, as its loan portfolio expanded modestly amid consumer cautiousness.

The Salt Lake City-based company reported net income of $209.7 million, or $1.12 per share, compared with $62.3 million, or 34 cents a share, for the third quarter of 2012.

Analysts surveyed by Yahoo Finance expected earnings of 42 cents per share.

Zions redeemed its entire $800 million of Series C preferred stock worth $926 million during the third quarter, which increased per-share earnings by 68 cents. Excluding the redemption of its preferred shares, Zions posted earnings of 44 cents per share.

Harris Simmons, chairman and CEO of Zions, said Monday that loan growth was “disappointing despite an increase in production volume and underfunded lending commitments over the prior quarter.”

Zions’ loan portfolio increased to $38.3 billion from $37.3 billion a year earlier. The bank holding company with $55 billion in assets has branches in 10 states, including Nevada, Arizona and California.

The bank said credit quality continued to improve in the third quarter, with gross loan and lease charge-offs declining 61 percent from a year earlier to $23 million. Zions did not release earnings Monday for its Las Vegas-based subsidiary Nevada State Bank.

Credit quality showed continued improvement allowing Zions a “third quarter negative provision for loan losses of $6 million.” Loans and leases held for investment, increased $142 million from the second quarter to $37.9 billion.

The increases were predominantly in residential loans, primarily in Nevada, Utah, Texas and Colorado, and multifamily construction loans, primarily in Nevada, Texas and California.

“We are encouraged with the cumulative progress we made in reducing the cost of our capital, and expect that this will contribute to future improvement in our return on equity,” said Simmons.

Net interest income decreased to $416 million for the third quarter, compared to $431 million for the second quarter. The net interest margin decreased to 3.22 percent in the third quarter, compared to 3.44 percent in the second quarter.

Shares of Zions lost 5 cents, or 0.17 percent, to close at $29.86 on heavy volume of 2.53 million shares traded on the Nasdaq. In after-hours trading, shares of Zions were unchanged at $29.86.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.