Zions Bancorp shares fell Tuesday, a day after the stock rallied, after an analyst reiterated concerns about the regional bank's credit problems, .
Shares of Zions declined 68 cents, or 4.8 percent, to $13.44 in afternoon trading. It rallied 12.5 percent on Monday after it announced a plan to swap some of its preferred shares for common stock, which would help reduce its outstanding debt burden.
Citi Investment Research analyst Greg Ketron affirmed his "sell" rating on the stock, writing in a research note that the exchange offer is "incrementally positive," but does "not change the fundamental challenges facing the company that are driven by credit conditions and sizable exposure to (commercial real estate) lending."
Regional banks like Zions are getting hammered by mounting loan losses, with the bulk of recent losses tied to a deteriorating commercial real estate market.
Ketron predicts losses tied to commercial real estate will help push the bank's loan-loss provisions to $2.1 billion by the end of 2011. Net charge-offs, loans written off as not being repaid, will reach $2.2 billion by the end of that year, he added.
Zions loan-loss provision totaled $565.9 million during the third quarter. The Salt Lake City-based bank lost $179.5 million, or $1.41 per share, during the three months ended Sept. 30, due in large part to those souring loans.
Ketron's price target for the stock is $13. He estimates the bank will lose $10.50 per share for 2009 and $1.95 per share for 2010.
Analysts polled by Thomson Reuters, on average, forecast a loss of $10.66 per share for 2009 and $2.14 per share for 2010.