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Zions Bancorp shares fall 3.6 pc

NEW YORK (AP) — Shares of Zions Bancorp fell more than 3 percent percent in trading Tuesday after the regional bank reported first-quarter earnings that some analysts viewed as weaker than expected amid continued dampened profitability, stalled growth in new loans and low interest rates.

THE SPARK: Salt Lake City-based Zions reported Monday after the market closed that it earned 14 cents a share in the January-March quarter, up from 8 cents a year earlier but below many analysts’ estimates.

Zions also announced plans to sell up to $250 million in preferred shares and senior notes.

Zions was among hundreds of banks that received federal bailout money as soured loans piled up during the financial crisis. In the first quarter, the bank repaid $700 million of the bailout it received under the Treasury Department’s Troubled Asset Relief Program, or TARP. It plans to repay the remaining $700 million in the second half of the year.

THE BIG PICTURE: Zions has about 500 offices across Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington. Like many regional banks, much of its loan portfolio has been tied up in commercial loans, and it has been working through the bad loans. The market for commercial real estate loans has sagged for years, with office occupancy rates depressed nationwide in the wake of the recession.

Zions has been notching improvement in the quality of its loans, and the bank’s management sees favorable prospects for growth in new loans. But analysts remain cautious.

THE ANALYSIS: Sterne Agee analysts Todd Hagerman and Robert Greene said they’re still cautious on Zions shares heading into the second quarter, as a sluggish economy, slowing global growth and high unemployment continue to loom.

At Susquehanna Financial Group, analyst Jack Micenko said a “meaningful” economy recovery in the Western Mountain region of the U.S. could lift the bank’s earnings and share price, Micenko wrote in a note.

SHARE ACTION: Zions shares were down 75 cents, or 3.6 percent, to $20.05 in early afternoon trading, recovering from an earlier low of $19.51. The shares have traded between $13.18 and $24.71 in the past 52 weeks.

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