Investing.com -- Zions Bancorp, a Salt Lake City-based bank holding company, saw its profits fall substantially over its second quarter after it unloaded the final portions of its risky assets in collateralized debt obligations.
During Zions' second quarter of Fiscal Year 2015, the financial services company recorded earnings of $14 million, drastically lower from a net profit of $104.5 million last year at this time. Over the three-month period, Zions sold the remaining portfolio of its collateralized debt obligation securities and incurred a one-time pre-tax loss of $137 million.
Although Zions' revenue fell by more than $100 million for the quarter on a year-over-year basis, it sill earned revenue of $424.1 million along with an adjusted profit of 0.41 per share. Analysts expected the lender to post earnings per share of 0.38 on revenue of $532.7 million.
"We are pleased to have completed the disposition of the remaining collateralized debt obligations in our securities portfolio during the second quarter, a move which both reduces risk and will allow us to deploy the cash received in more productive and profitable earning assets," CEO Harris H. Simmons said in a statement.
Decreases in nonaccuring loans coupled with slight increases in classified loans led to a disappointing quarter for the lender in terms of loan growth. In addition, Zions' energy-related loans declined by $284 million for the quarter contributing to a $156 decline in net loans and leases during the period.
"Total loan growth was the major soft spot of the quarter, although much of that was primarily attributable to higher prepayment rates within the energy sector," Simmons added.
The origins of Zions Bancorp, which was founded in Utah in 1873, date back to the early phases of the Mormon settlement in the state.