When Zions Bancorp holds its annual meeting Friday, CEO Harris Simmons should be in a chipper mood.
In addition to overseeing the usual business of electing directors and conducting other routine business, Simmons will be able to publicly celebrate the regional bank’s first annual profit since 2007, when the recession began.
After accumulating losses of nearly $1.8 billion over three years, Zions swung to a net income of $323 million in 2011. The largest factor was a big reduction in what the bank is setting aside to cover loan losses. Between 2008 and 2010, Zions was forced to reserve $3.5 billion to cover land development, construction and other loans tied to the real estate industry. But as it cleaned up its bad-loan portfolio, Zions felt it was necessary only to set aside $74 million last year.
Momentum slowed in the first quarter of 2012. Zions earned $25.5 million in the three months ending March 31, down from $44.4 million in the last quarter of 2011.
Even so, Harris said in a letter to shareholders last month, while the economy is still weak, “2012 will be a year of continued improvement and stronger fundamental profitability” for Zions.
There may be some grumbling from shareholders. Shares of Zions stock have continued to give ground. Since the last annual meeting, they have lost 25 percent of their value. And since the onset of the recession, share values are down more than 60 percent.
What’s more, gadfly Gerald Armstrong is back with a proposal to claw back bonuses from Zions executives linked to poor performance. A similar proposal was rejected by shareholders last year.
Simmons and other top executives haven’t received bonuses since 2008, in part because of the company’s poor financial performance and because Zions accepted $1.4 billion in Troubled Asset Relief Program funds from the federal government that year. Under TARP rules, the executives are ineligible to receive bonuses until the funds have been returned.
In March, Zions repaid half the amount. It expects to repay the balance by the end of 2012.
Last year, Simmons received $875,000 in cash compensation and $600,000 in stock compensation. This year, his stock compensation was raised to $837,000; his cash salary is unchanged.