Nevada State Bank’s parent company reports $498.1 million loss

By Steve Green

Monday, Jan. 26, 2009 | 3:47 p.m.

The parent company of Nevada State Bank reported a huge loss today because of bad loans and other issues tied to the economic slowdown.

Zions Bancorporation of Salt Lake City said it lost $498.1 million, or $4.36 per share in the fourth quarter that ended Dec. 31, largely because of a $353.8 million non-cash charge to write down the value of three banks: Nevada State Bank, National Bank of Arizona and Vectra Bank Colorado.

"Substantially all of this loss resulted from impairment of all of the goodwill" at the three banks, Zions said.

"Goodwill" is an accounting term representing the intangible market value of a business, above and beyond the value of the firm's tangible assets.

Zions also took a write-off of $204.3 million in the value of securities it holds and boosted its reserves for loan losses by $105.5 million.

The quarterly loss compares to a profit one year ago of $42.2 million, or 39 cents per share. The 2008 quarterly loss would have been 32 cents per share without the special charges, Zions said. That compares to published analyst estimates predicting a loss of 30 cents.

Zions received a $1.4 billion investment from the U.S. Treasury Department as part of the federal bank bailout program during the quarter and the bank holding company is using that money to shore up its finances.

Despite the rough fourth quarter, Zions remains in solid financial shape, Chairman and Chief Executive Harris Simmons said in a statement.

"In what most observers agree is the most difficult economic environment in over half a century, we have strengthened our balance sheet by building record high levels of capital and liquidity," said Simmons. "The goodwill impairment has no impact on regulatory and tangible capital ratios, and reflects in part the fact that market values of all banks are significantly lower in current highly stressed markets.

"While this is a challenging environment for Zions and the industry, we continue to successfully extend new credit and serve our customers. In fact, we extended $4.6 billion of credit in the fourth quarter, of which $2.7 billion were new loans, in our continued effort to make credit available to credit-worthy individuals and businesses. This, in turn, will help them weather this economic storm and strengthen the economy," he said.

Zions said its non-performing loans and other assets totaled $1.14 billion on Dec. 31, compared to $283.9 million one year earlier.

"The increase was driven primarily by deterioration in residential real estate acquisition, development and construction exposures in the Southwest, and by continued weakening in Utah residential construction and commercial and industrial portfolios," Zions said in a statement.

In Nevada, Nevada State Bank is celebrating its 50th anniversary and is the state's fourth largest bank. Last September, it was the successful bidder in acquiring the insured deposits of the failed Silver State Bank of Henderson and Silver State's 13 freestanding branches.

Another change for Nevada State Bank in 2008 was a deal for U.S. Bank to assume the leases for 28 Nevada State branches in Smith's Food & Drug Center stores statewide.

On Monday, Nevada State filled in some of the gaps left by its departure from the Smith's stores by opening four new full-service branches in the Las Vegas and Henderson areas. A fifth is opening next month in Dayton in Northern Nevada.

It also unveiled 45 additional ATMs at Walgreens drugstores statewide. The new branches in Southern Nevada are at: Craig and Rancho roads, Nellis Boulevard and Stewart Avenue, Flamingo and Sandhill roads and in Henderson at Eastern Avenue and Horizon Ridge Parkway.

"We're opening the doors to the future by expanding the access our clients have to Nevada State Bank," said Craig Kirkland, executive vice president of retail banking at Nevada State Bank, which now has 58 branches and assets of more than $4 billion.

Nevada State Bank said the opening of the new branches is part of a strategy to provide full-service banking in quiet, professional atmospheres.

That's something not always found in branches in busy supermarkets.

"The best place to conduct business is somewhere you can discuss your financial matters privately, which is what the full-service branches offer," said Kirkland. "However, we also know our clients want easy access to their funds, which is why we've expanded the number of ATMs the bank operates."

Steve Green can be reached at 990-7714 or [email protected].