The regional banking company earned $35.6 million, or 19 cents per share of stock, in the quarter ended Dec. 31. Analysts surveyed by Thompson Reuters were looking for 39 cents, which would have been more in line with what the bank reported three months ago. Zions, based in Salt Lake City, earned $62.3 million, or 34 cents in its third quarter. Net income a year ago was $44.4 million, or 24 cents a share.
The bank said the fourth quarter profit was affected by a $83.8 million write-down on the value of some collateralized debt obligation investments that was partially offset by a $10.2 million gain in other CDOs. The revision was equal to 25 cents per share.
Zions released its financial results after the stock market closed Monday. The bank’s stock closed at $22.89 a share, down 9 cents from its 52-week high on Friday. But in after-hours trading, Zions shares rose 11 cents, to $23.
In a conference call with analysts, Chairman and CEO Harris Simmons focused on what he said were "better-than-expected" trends in loan growth, net interest income and other measures of the bank’s performance during the September-December period — in spite of "tepid" economic conditions across the U.S.
Loans and leases rose 1.1 percent, to $37.1 billion, compared with $36.7 billion three months earlier. Most of the increases were in commercial, industrial and one-to-four family residential loans that were widespread across the bank’s 10-state territory. Borrowers seem to be more optimistic than they were six months earlier, Simmons said.
Net interest income — the bank’s largest source of income — fell 2 percent, to $430 million, in the fourth quarter versus a year ago. Net interest margin — the difference between interest income and the amount of interest paid out to depositors — narrowed to 3.47 percent from 3.58 percent, as interest rates for loans continued to hover around record lows.
Credit quality — the credit worthiness of Zions’ loan portfolio — continued to improve. But Simmons said the improvement was due as much to more stringent procedures inside the bank as it was to the behavior of borrowers.
"An 8 percent national unemployment rate and 2 percent GDP (Gross Domestic Product) isn’t what any of us would call a robust environment. But our credit-quality metrics are rapidly returning to levels last seen when the economy was in much better shape than it is today," Simmons said.
Simmons said net interest margin should be "relatively stable" during 2013, reflecting what he said were "increasing signs of economic activity around the country."
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