Earnings shortfall causes stock to plunge for Nevada bank operators

Friday, March 3, 2000 | 11:31 a.m.

SUN STAFF AND WIRE REPORTS

First Security Corp. and Zions Bancorporation, big players in the Nevada banking industry, saw their stock prices plunge this morning when First Security issued an earnings warning.

First Security said its first quarter earnings per share will fall as much as 27 percent from the previous quarter as rising interest rates hurt loan income and because of other problems.

This caused First Security stock to fall $9.25 to $13.25 this morning.

Zions, which owns Nevada State Bank, saw its stock fall $17.75 to $33.69.

Zions/Nevada State Bank, which just acquired Pioneer Citizens Bank of Reno, has 58 branches in Nevada. First Security has 22 Nevada branches.

Both companies are based in Salt Lake City and plan to merge.

The profit warning is the second snag for First Security since it agreed last June to be bought for about $5.3 billion by Zions. In December the banks delayed the acquisition after the Securities and Exchange Commission told Zions to restate its earnings because of accounting issues for past acquisitions.

First Security, Utah's biggest bank, said earnings per share would be 7 cents to 9 cents lower than the 33 cents it earned in the fourth quarter. An analyst surveyed by First Call/Thomson Financial expected the bank to earn 32 cents.

First Security said revenue would fall 8 percent from the fourth quarter as its mortgage banking business slipped and higher interest rates cut the amount of interest it earns on loans. It's also seeing more bad loans in auto and consumer lending, which it blamed on a computer problem it had in October when it was upgrading a system.

First Security said that despite the earnings problem, its merger with Zions is scheduled to be finalized shortly after shareholder meetings March 22.