The statement was released along with the company's second-quarter earnings announcement, in which the company saw net income applicable to common shareholders plummet 55 percent to $69.7 million, or 65 cents per common share, from the same quarter in 2007, when that net income totaled $155.6 million, or $1.43 per share.
The bank, whose earnings per share came in below analysts' expectations, pointed out that each of its affiliate banks in Utah and nine other Western states are profitable, "even those in some of the troubled geographies such as California, Nevada, and Arizona.
"Each of Zions' affiliate banks is comfortably well capitalized by bank regulatory standards, which is the highest capital rating given to banks," the bank said.
Yet its financial performance has been affected in a big way by the bad real estate market in many of the states in which it does business.
Zions disclosed it had to set aside $114.2 million during the quarter to cover bad loans, compared with only $17.8 million the same three months last year.
Nonperforming assets jumped to $697.4 million by June 30, from just $95.4 million on the same day last year.
Still, on Thursday the bank also aimed to distance itself from the credit crisis hurting a variety of banks and financial services companies nationwide. Many, like Zions, have taken a hit on Wall Street from their exposure to real estate and construction.
"Neither Zions Bancorporation, Zions Bank nor any of Zions' affiliate banks have engaged in originating or buying subprime mortgage loans, and the company has essentially no direct exposure to these loans," the bank said.
Zions Bancorp, which once traded at more than $80 per share, closed at $19.73, down 23 percent, on Monday after a Goldman Sachs analyst issued a "sell" recommendation on Zions shares.
On Thursday, Zions pointed out its stock's turnaround since that time. Shares closed Thursday at $27.51, up nearly 40 percent from Monday.
Morningstar analyst Richard McCaffery said in a recent report that credit quality remains a key concern for Zions. He noted that the company does business in some of the most "stressed" regions of the country.
On the positive side, the company is a well run regional bank. But with a real estate downturn that isn't showing any strong signs of improvement anytime soon, the company is vulnerable.
Says McCaffery: "Given the severity of the real estate correction, it's unclear when [Zions'Â] fundamentals will improve."
lesley@sltrib.com
