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For a while there, things were looking dicey. Some thought Zions might not survive. That it has is a testament to its culture, creativity and the fortitude of its CEO, Harris Simmons.
May 26 -
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January 25
Zions Bancorporation's fourth-quarter earnings fell short of analysts' estimates as vastly improved asset quality could not offset declining interest income and a sharp drop in fee income.
The $53 billion-asset, multi-bank holding company said after markets closed Monday that it earned $44.4 million in the quarter, or 24 cents per share, compared to a loss of $11 million in the same quarter in 2010. Excluding the impact of discount amortization on subordinated debt and additional accretion on acquired loans, the Salt Lake City-based Zions earned $53.5 million, or 30 cents per share, in the quarter.
Analysts polled by Thomson Reuters had expected Zions to earn 33 cents per share.
The company once again made significant progress in reducing its overall level of problem loans. At Dec. 31, its ratio of nonperforming loans to total loans was 2.83%, down from 3.43% three months earlier and 4.91% at Dec. 31, 2010. For the quarter, Zions recorded no provision for loan losses, compared to a provision of $14.5 million in the third quarter and $173 million in the fourth quarter of 2010.
Like many banking companies, though, Zions was challenged on the revenue side. Interest income was down 6% year over year and nearly 2% from the prior quarter, to $539.5 million, as persistently low interest rates suppressed yields. Meanwhile fee income was 18.7% from the prior quarter due largely to the impact of a new law that caps fees on debit card transactions. Zions said that the change reduced fee income by about $8 million from the third quarter.
In a news release, Zions Chairman and Chief Executive Harris H. Simmons said that despite the challenging environment he is seeing positive signs that bode well for 2012. "We are again pleased with the significant improvement in credit quality this quarter, which we expect to continue and to result in lower net chargeoffs in 2012," Simmons said. "We also are pleased with the somewhat stronger loan growth this quarter and with signs of strengthening loan pipelines, particularly for business loans…We see signs of stabilizing loan pricing, which with continued loan growth and improving credit quality should lead to improved results in 2012."
Zions's shares closed at $18.55 Monday, down 1.6% from Friday's closing price.
