Zions Bancorp Inc. swung to a second-quarter loss as provision for loan losses soared.
Shares fell 3.4% to $11.80 in after-hours trading although the regional bank's third consecutive loss was narrower than analysts were expecting. The stock is down 50% so far this year through Monday's close.
Regional banks have struggled during the economic downturn because they're tied to local real estate markets. Zions operates in Western states, which include some areas hit hardest by the housing downturn.
The Utah-based bank reported a loss of $40.7 million, or 35 cents a share, compared with year-earlier earnings of $69.7 million, or 65 cents a share.
The latest results included $53.7 million in impairment and valuation losses on securities and a gain of $23 million related to acquisitions.
Analysts estimated a loss of $1.02 a share, according to a poll by Thomson Reuters.
The provision for loan losses surged to $762.7 million from $297.6 million in the first quarter and from $114.2 million a year earlier. The company attributed the jump to continued deterioration in commercial real estate and commercial and industrial loan portfolios, among other reasons.
Net charge-offs — loans the bank no longer thinks are collectible — soared to $347.5 million from $151.7 million in the first quarter and $67.8 million a year earlier. Nonperforming assets, those in danger of going bad, jumped 17% to $2.06 billion from the first quarter and nearly tripled from $695.3 million a year earlier.
The tangible common equity ratio, which measures how much of a bank's hard assets its common shareholders own, increased to 5.66% from 5.26% in the first quarter and 5.51% a year earlier. Investors have focused on the figure because it does not take into account the preferred stock investments the government has made. Zions has received $1.4 billion from the federal government under the U.S. Treasury Department's Troubled Asset Relief Program.
Total assets at the end of the quarter rose 1.5% to $54.07 billion.