Friday, July 15, 2011

Zions Bancorp. (NASDAQ: ZION): Q2 Earnings Preview 2011

Zions Bancorp. (NASDAQ: ZION) is scheduled to release its fourth-quarter financial results after the closing bell on Monday, July 18, 2011. Analysts, on average, expect the company to report a loss of 2 cents per share on revenue of $540.14 million. In the year ago quarter, the company reported a loss of 84 cents per share on revenue of $522.76 million.

Zions Bancorporation, a multi bank holding company, provides various banking and related products and services in the United States. Zions operates its banking businesses under local management teams and community identities through approximately 500 offices in 10 Western and Southwestern states.

In the preceding first quarter, the Salt Lake City, Utah-based company's net loss was $14.8 million, or 8 cents per share, compared to a net loss of $86.5 million, or 57 cents per share in the previous year. Excluding special items, adjusted earnings were $52.6 million or $0.29 per share for the quarter. Analysts, on average, expected a loss of $0.17 per share for the quarter. 

Zions’ profit in the latest quarter follows losses in the three previous quarters. Revenue has fallen in the past four quarters.

At its last earnings call in April, CEO Harris Simmons said that the improved credit measures will lead to continued profits for the rest of the year. "We look forward to further credit improvement, increased loan volumes, and the eventual rationalization of our capital structure through the refinancing of higher cost preferred stock and subordinated debt, all of which should lead to material improvement in our earnings levels in future periods."

Zions is located in some of the highest-growth markets in the U.S., where the population growth is faster than the rest of the country. Also, most of its markets have a higher per capita income than the national average. Such factors are expected to increase Zions’ market share in the foreseeable future. Additionally, an improving credit quality remains one the major strengths of Zions. Furthermore, the company anticipates credit costs to trend low for the next several quarters owing to continuous loan balance reduction in loan categories that have exhibited higher loss rates. Also, lower credit costs will lead to stable-to-declining non-interest expenses in the upcoming quarters. This will likely enhance Zions’ bottom line, considering management’s attempts to improve loan production.

Zions has half its total loan portfolio tied up in commercial loans, including commercial real estate projects. The market for commercial real estate loans has sagged for years with office occupancy rates depressed nationwide in the wake of the recession and financial market crash.

Zions Bancorp received $1.4 billion in TARP funds in 2008. The money was used to bolster the regional bank’s capital reserves. Zions has said in the past that it will repay the TARP money only after showing some consistent level of profitability. It also wants to see evidence the economy is healing at a steady pace.

Full Disclosure: None.
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