Zions Bancorp Q2 earnings almost double but miss Street estimates

Zions Bancorp, the parent of Nevada State Bank, on Monday reported second-quarter earnings that were almost double from the same period last year, crediting the gain to partial repayment of bailout funds it received from the federal Troubled Asset Relief Program.

For the second quarter, net earnings were $55.2 million, or 30 cents per share, compared with $29 million, or 16 cents a share, in the same period last year.

Analysts surveyed by Yahoo Finance expected earnings of 33 cents a share. The Salt Lake City-based company has missed estimates for the past three quarters.

In the first quarter, Zions Bancorp posted earnings of 14 cents a share against an estimate of 26 cents per share. In the fourth quarter, the company earned 24 cents a share, falling short of forecasts by 9 cents.

"We continue to enjoy strong improvement in credit trends and expect classified loans to continue to trend lower," said Harris Simmons, chairman and CEO of Zions Bancorp.

Adjusted earnings for the second quarter were $72.9 million, or 40 cents a share.

Simmons said quarterly results included a 20 percent decrease in net charge-offs to $43 million, while loans and leases increased $328 million, to $36.2 billion.

The increase in loans and leases, excluding Federal Deposit Insurance Corp.-supported loans, was predominantly in commercial, industrial and multifamily residential loans.

Net interest income decreased 2.3 percent, to $432 million from $442 million in the first quarter. In a conference call with analysts Monday, Simmons said he expects declines in net interest income going forward "because of pressure on loan yields."

"We were pleased to experience a moderate degree of loan growth driven primarily by business loan growth; however, our business customers generally remain quite cautious, which is constraining revenue growth," Simmons said.

The company received $1.4 billion as part of the TARP bailout and repaid half the amount on March 28. Simmons said Zions Bancorp expects to repay the remaining $700 million in the second half of 2012.

Net loan charge-offs decreased 20 percent, to $43 million compared to $55 million for the first quarter of 2012. The company attributed the decline to fewer net charge-offs in commercial and industrial real estate loans.

The provision for loan losses was $10.9 million in the second quarter, Zions Bancorp said in its earnings report. As of June 30, the allowance for credit loses was about $1.1 billion, or 2.92 percent of total loans and leases.

Shares of Zions Bancorp lost 16 cents, or 0.85 percent, to close at $18.57 on average volume of 2.9 million shares traded Monday on the Nasdaq. As of June 30, Zions Bancorp had $53.4 billion in assets.

The bank holding company owns and operates eight commercial banks in the United States, including Nevada State Bank, which has more than $4.1 billion in assets and 53 branches statewide.

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