Analysts say Zions Bancorp may need $800M in new capital

(Salt Lake Tribune) Two analysts lowered their target price for Zions Bancorp's shares Friday and said that the Utah-based bank-holding company will need up to $800 million in new capital if the economy were to continue to significantly deteriorate.

But the report by John Pancari and Dana King, putting their target price at $15 a share, failed to convince investors, who bid down the company's stock slightly to close the week at $15.89.

That the stock held its price after the report came out suggests that stockholders already have taken into account the possible need of Zions to raise new capital under a worst-case scenario, said James Abbott, Zions director of investor relations.

"That's already part of everyone's expectations," he said.

The analysts from Fox-Pitt Kelton Cochran Caronia Waller said under a "highly stressed scenario," they estimate Zions would need $500 million to $800 million in additional capital.

"While investors may be willing to provide additional capital, resulting dilution [of shareholder value] is likely to prove material and could limit upside to Zions shares," said Pancari and King.

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