Zions Bancorp. reports $832.2 million loss

Zions Bancorp. on Monday reported a first-quarter loss of $832.2 million, or $7.29 per share, with the bulk coming from noncash charges from goodwill impairment. Core banking operations had a loss of 39 cents per share.

The Salt Lake-based company said the goodwill impairment charges totaled $634 million, or $5.55 per share. Impairment and valuation charges on securities contributed $1.35 per share to the quarter's total loss figure.

"The first quarter impairment loss was at Amegy Bank of Texas, which has $616 million of goodwill remaining after this impairment," Zions said in announcing its quarterly financials. "This loss primarily reflects declines in market values of peer banks in Texas and a weaker economic outlook in that state."

The figures compare with net income of $104.3 million, or 97 cents per share, for the 2008 first quarter.

Zions said net loan charge-offs actually fell year over year, from $179.7 million in the 2008 first quarter to $151.7 million in the first quarter of this year.

"In what continues to be perhaps the most difficult economic environment in over half a century, our balance sheet remains strong, with record levels of liquidity," Harris H. Simmons, Zions' chairman and chief executive officer, said in a prepared statement. "After several quarters of significant increases, net loan charge-offs actually declined this quarter. And over the past two quarters we have reduced the goodwill on our balance sheet by nearly 50 percent.

"While these noncash goodwill impairments impact reported earnings, they have no impact on regulatory and tangible capital ratios. In addition, we continue to successfully serve our customers and, in fact, extended $3.8 billion of credit during the quarter, of which $1.9 billion were new loans to credit-worthy individuals and businesses. This continued lending is important to our customers because it helps them manage in this very challenging environment and, in turn, will bolster the overall economy."

On-balance-sheet net loans and leases of $41.9 billion at the end of the first quarter were up about $2.2 billion from $39.7 billion a year earlier. Zions' average total deposits grew $5.5 billion to $42.1 billion year over year.

Net interest income for the first quarter of 2009 fell to $474.8 million from $486.5 million for the first quarter of 2008.

Nonperforming assets totaled $1.77 billion at the end of the first quarter, compared with $1.14 billion at the end of the 2008 fourth quarter and $434.3 million at the end of the 2008 first quarter. Zions attributed the increase mainly to commercial real estate loans primarily in Nevada, Arizona and Texas and to commercial and industrial loans primarily in Utah.

The company said it recognized $249.4 million in losses on investment securities during the first quarter.

Industry analysts had predicted Zions would post a loss of $1.77 per share for the quarter, excluding one-time charges.

Zions' quarterly report was announced after markets closed Monday. During the day, its stock was down $2.09, or nearly 14 percent, to close at $12.93 During the past year, the price has ranged from $5.90 to $54.90.

The company has 513 offices in 10 states.

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