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The The Salt Lake City, Utah-based company reported a net loss applicable to common shareholders for the third quarter of $179.5 million or $1.41 per share, compared to net income applicable to common shareholders of $33.35 million or $0.43 per share in the year-ago quarter.
On average, twenty two analysts polled by Thomson Reuters expected the company to report a loss of $0.89 per share for the quarter. Analysts estimates typically exclude special items.
Net interest income for the quarter decreased 3.24% to $476.05 million from $492.00 million in the prior-year quarter. Noninterest income for the third quarter of 2009 rose to $270.7 million $89.6 million for the third quarter of 2008. Fourteen analysts had a revenue consensus of $647.10 million for the third quarter.
Provision for loan losses in the quarter was $565.93 million, up 261.37% from $156.61 million in the prior year quarter. The provision exceeded losses as a result of moderate increase in troubled assets and greater loss severity, and "after the company completed its implementation of loss migration factors that are more weighted toward recent loss experience."
Impairment and valuation losses on collateralized debt obligation or CDOs were $56.5 million or $0.27 per share. These bank CDOs comprise $2.2 billion of the $2.7 billion par amount of the bank and insurance CDO portfolio. Of the total $2.2 billion credit portfolio, 52% was originally rated 'AAA', 43% was rated 'A', and 5% was rated 'BBB'.
In the sequential second quarter, the company reported a net loss loss applicable to common shareholders of $40.67 million or $0.35 per share, compared net income of $69.74 million or $0.65 per share in the year-ago quarter.
Net interest margin for the quarter under review declined to 3.91% from $4.13% in the previous fiscal quarter. The net interest margin for the third quarter of 2009 was unfavorably impacted by 0.13% for the discount amortization on the modified subordinated debt and an additional 0.07% for the conversion of subordinated debt to Series C preferred stock.
Noninterest expense for the third quarter was $434.7 million, up from $372.3 million for the third quarter of 2008. FDIC premiums were $19.8 million, compared to $42.3 million for the second quarter of 2009 that included a special assessment of $24.2 million.
Net loans and leases at September 30, 2009 were $41.7 billion, essentially unchanged from $41.7 billion at September 30, 2008. Average total deposits for the third quarter of 2009 increased 16.2% to $43.3 billion from $37.3 billion in the third quarter of 2008.
Nonperforming lending related assets at September 30, 2009 were $2.17 billion, compared to $922.3 million at September 30, 2008. The ratio of nonperforming lending related assets supported assets to net loans, leases and other real estate owned was 5.40% at September 30, 2009 compared to 2.19% at September 30, 2008. .
Harris Simmons, chairman and chief executive officer of Zions commented, "Results from the third quarter were mixed. We again augmented our capital, reserves, and liquidity positions, even as we saw some signs of stabilization in some geographies and markets; however, we believe the economy remains fragile and therefore we continue to exercise caution."
For the nine-month period, net loss applicable to common shareholders totaled $1.07 billion or $8.99 per share, compared to net income applicable to common shareholders of $207.39 million or $1.93 per share in the same period last year.
Net interest income for the nine-month period decreased 1.28% to $1.44 billion from $1.46 billion in the comparable period of 2008. Noninterest income, however, surged 160.39% to $710.82 million from $272.98 million in the similar period of the previous year.
ZION closed Monday's regular trading on the Nasdaq at $18.33, up $0.16 or 0.88%, with a volume of 6.82 million shares. After hours, the stock dropped $0.30 or 1.64%, trading at $18.03. In the past 52-week period, the stock traded in the range of $5.90 - $45.00, with a 3-month average volume of 6.40 million shares.
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