Zions Bancorp third-quarter earnings beat Street expectations

Zions Bancorp, the parent company of Nevada State Bank, on Monday posted a third-quarter profit that exceeded expectations of analysts for the first time since last year.

The Salt Lake City-based bank holding company earned $62.3 million, or 34 cents per share, in the three months ending Sept. 30. Analysts surveyed by Yahoo Finance were looking for earnings of 32 cents per share.

A year ago, Zions' net income was $55.2 million, or 30 cents. Earnings had failed to meet expectations for the previous three quarters, largely due to weak loan demand and near-zero interest rates.

"We are pleased with the accomplishment in the third quarter, including stronger loan growth and the final redemption of Trouble Asset Relief Program (TARP) funds," said Harris Simmons, chairman and CEO of Zions.

Simmons told analysts on a conference call it was "good to have that chapter behind us."

Subtracting several expenses, including the cost of repaying the remaining $700 million in TARP funds, the banking company earned $85.2 million, or 46 cents per share. Zions received $1.4 billion in TARP funds from the federal government in 2008.

Simmons credited the company's success to higher net interest income. Net interest income - the difference between what Zions charges on loans and what it pays on deposits - increased to $444 million from $432 million in the second quarter.

The company also approved more loans in the third quarter. Loans increased $351 million, or 3.9 percent, in the quarter to $36.6 billion.

Simmons expected moderate loan growth to continue over the next year.

"We are also pleased with the continued strong improvement in credit quality, including a strong improvement in nonperforming assets and net charge-offs compared to the previous quarter," Simmons said.

Net-loan charge-offs decreased 11 percent to $38 million in the third quarter, compared to $43 million in the second quarter of 2012.

Zions owns banks that operate in Texas, California, Arizona, Nevada, Oregon, Washington, Colorado, Idaho and Utah.

The company noted that Utah and Idaho had the "strongest growth" in the third quarter, while California and Nevada continue to struggle.

"This quarter Southern Nevada was pretty flat in the net change of the loan portfolio," said Doyle Arnold, vice chairman and CFO, told analysts Wednesday. "That market is still very slow to emerge from the recession."

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