A lagging stock price is creating headaches for Salt Lake City-based First Security Corp.

Shareholders have been badgering managers of the $22 billion-asset banking company to explain why shares that were trading at $23 in January closed Wednesday at $TK, up/down $TK for the day.

The stock has been trading at roughly 13 times First Security's estimated 1999 earnings per share. Other regional banking companies average a multiple of 16.

Neither chief executive officer Spencer F. Eccles or chief financial officer Brad Hardy were available to comment. But at last month's annual meeting, Mr. Eccles told shareholders: "First Security's management and directors share your concern, your confusion, and your disappointment. Our low stock price and P/E ratio are hard to explain given our positive outlook for the future."

To make matters even worse for First Security, crosstown rival Zions Bancorp., with $17.1 billion of assets, is considered one of the best performing banks in the nation. Its shares closed Wednesday's trading at $TK, up/down $TK.

Zions' stock trades at 23 times this year's predicted profits.

Analysts said differences in business-line strategy and geographic ambitions partly explain the price gap.

"The market doesn't like the investments First Security has focused on," said R. Jay Tejera, an analyst at Ragen MacKenzie Inc. in Seattle. "The returns are adequate but not stellar."

First Security, the oldest multistate banking company in the nation, derives a significant portion of its revenue from its mortgage operations and auto finance, two relatively traditional business lines.

Zions, on the other hand, has focused on small-business banking and some cutting-edge investments, such as its digital signature authentication subsidiary.

Analysts also argued that First Security has not been aggressive enough in areas beyond its home markets.

"Outside of Utah and Idaho, First Security has just nibbled," said James R. Bradshaw of Pacific Crest Securities in Portland, Ore. "They live and die in the Utah-Idaho marketplace."

Zions, on the other hand, has devoted "enormous attention outside of its primary market," Mr. Bradshaw said. It gained a significant foothold in California last year when it bought $5 billion-asset Sumitomo Bank California and has since racked up a series of smaller deals in other states.

In his speech at the annual meeting, Mr. Eccles accused analysts of having "overly optimistic" expectations for First Security.

The banking company had estimated 8% to 10% earnings growth in 1999, he said, though market observers predict profit growth in the 10% to 12% range.

"It seems we have been a victim of our own past success," Mr. Eccles said.

But the consequences for First Security may be serious, especially when it comes to acquisition plans.

Both Zions and First Security are likely to be interested in the same targets. But with its far stronger currency, Zions easily has the upper hand, Mr. Tejera said.

"First Security is going to lose in every prospective deal where there is a competitive situation with Zions," Mr. Tejera said. "This puts First Security at a serious competitive disadvantage."

Some analysts said First Security may also suffer from sharing a headquarters city with Zions.

"Because they're hometown competitors and in the same kinds of markets, it's natural to look at one's performance next to the other's," Mr. Bradshaw said. "Zions beats First Security in just about every area."

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