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The Salt Lake City company is targeting an efficiency ratio more in line with other regional banks by closing branches and finding ways to boost revenue. Zions hopes its efforts will reduce annual pretax expenses by $120 million by 2017.
June 2 -
Executives have taken a wide range of approaches to deal with the prolonged period of low interest rates and the risks associated with their eventual rise. Some of those balance-sheet strategies have cut into banks' profitability and thus their efficiency.
June 11 -
The Salt Lake City company was a prolific acquirer through the 1990s but has been quiet on the M&A front for several years. It's likely to stay that way in the near term, Chairman and CEO Harris Simmons said.
May 22
Zions Bancorp. in Salt Lake City reported a second-quarter loss after selling the remainder of its portfolio of collateralized debt obligations.
The $58.4 billion-asset company said Monday that it lost $1.1 million, compared with a profit of $104.5 million a year earlier. It lost one cent per share, compared with earnings per share of 56 cents a year earlier.
Zions recognized a one-time pretax loss of $137 million tied to the CDOs, which the
Its net interest income rose almost 2%, to $424 million, year over year even as the net interest margin fell 11 basis points, to 3.18%. Loans and leases were $39.4 billion, up about 1% from a year earlier.
Zions increased its government agency residential mortgage-backed securities portfolio by $583 million and increased its interest rate swap portfolio by $438 million in the quarter as part of an effort to improve yields on interest-bearing assets.
Zions, widely considered one of the more asset sensitive regional banks,
Noninterest income totaled $421,000, down from $124.8 million a year earlier. Excluding losses from the CDO sales, fee income would have been $137 million, Zions said.
Noninterest expenses fell less than 1%, to $404.1 million, as other noninterest expense fell mostly from insurance recoveries. Salaries and employee benefits increased from an annual incentive stock awards and variable compensation accruals driven by changes in the company's stock price.
The company's efficiency ratio improved to 71.4% from 73.3% a year earlier. Zions previously
The company sought to address its exposures in the energy sector.
Overall net loans and leases fell $156 million during the second quarter as energy-related loans declined $284 million on a linked-quarter basis. Loan balances, excluding energy-related credits, increased $128 million during the second quarter compared with a $25 million increase during the first quarter.
"Although the effects of the energy price decline are not yet fully manifest, we are encouraged with the strength of the capital markets in recapitalizing a substantial number of energy companies and other factors including strong portfolio management by our energy lending team," Chairman and Chief Executive Harris Simmons said in a press release.
