Zions' Profit Rises on Fewer Chargeoffs

Second-quarter profits almost doubled at Zions Bancorporation (ZION) from a year earlier, but the Salt Lake City company's results still fell short of analysts' expectations.          

The $52.9 billion-asset company said Monday that it earned $55.2 million in the second quarter, up 90% from a year earlier. Its earnings per share totaled 30 cents, missing analysts' estimates by three cents, according to Thomson Reuters.

Zions benefited from strong improvement in its credit trends and it expects classified loans to continue to decline, Harris H. Simmons, its chairman and chief executive, said in a news release. Loan growth was sluggish, however, as "business customers generally remain quite cautious, which is constraining revenue growth," he said.

The company said that credit quality improved in nearly all major geographies and loan types. Net chargeoffs fell roughly 62%, to $43 million, from a year earlier. Commercial real estate chargeoffs fell 80%, to $11 million while commercial loan chargeoffs dropped 49%, to $19 million.

The provision for loan losses totaled $10.9 million, about eight times higher than a year earlier but down almost 31% from the prior quarter.

Loans and leases, excluding Federal Deposit Insurance Corp.-supported loans, increased about 1%, to $36.2 billion, from a year earlier. Total consumer and total commercial loans both increased from a year earlier while the commercial real estate portfolio had a slight dip.

Net interest income before the provision for loan losses totaled $432 million, up almost 4% from a year earlier, as interest expense dropped roughly 39%, to $86.2 million. Declines in expenses for interest on deposits, short-term borrowings and long-term debt lead to the expense decline.

Noninterest income fell 4%, to $123 million, year over year as some service charges, commissions and fees declined.