Zions Bancorporation's (ZION) repayment of half of its funds from the Troubled Asset Relief Program tamped down earnings in the first quarter, but its core results still handily beat expectations.
The $52.6 billion-asset company reported Monday a first-quarter profit of $25.5 million, up more than 72% from a year earlier but down about 42% from the fourth quarter. Earnings per share totaled 14 cents, but that figure was skewed by the $700 million Tarp redemption, which cut per-share earnings by 11 cents, discount amortization on conversion of subordinated debt and additional accretion on acquired loans.
Excluding these items, Zions would have earned $60.1 million, or 33 cents per share, the company said. Analysts polled by Thomson Reuters had predicted earnings of 27 cents per share for the quarter,
The company was given the go-head to repay Tarp based on the results of a recent stress test. It expects to repay the remaining $700 million later this year.
Zions saw improvements in its underlying credit trends, but “the combination of sluggish loan demand and very low interest rates continues to impede growth in our largest source of revenue, net interest income,” Harris H. Simmons, Zions' chairman and chief executive, said in a news release.
The company’s net chargeoffs totaled $55 million, down 62% from a year earlier, with declines primarily in the commercial real estate and owner occupied real estate-secured commercial loans portfolios. The provision for loan-losses fell 74%, to $15.7 million, year over year.
The bank’s net interest income increased 4% from a year earlier but declined 4% from the fourth quarter, to $442 million. The decline from the previous quarter was due to rate resets on vintage longer-term loans and accelerated discount amortization on the subordinated debt that was converted to preferred stock. Noninterest income totaled $107 million, down 20% from a year earlier, as service charges, commissions and fees declined.
Loans and leases, excluding Federal Deposit Insurance Corp. loans, fell less than 1% from a year earlier, to $35.9 billion.