Zions: TARP Repayment Winner

NEW YORK (TheStreet) -- Zions Bancorporation (ZION) was the winner among the largest U.S. financial names on Wednesday, with shares rising slighlty to close at $20.37.

The broad indexes all declined amid continued uncertainty in Europe, with protests in Spain and Greece over austerity government austerity measures, heading into the Spanish government's budget announcement Thursday and amid budget negotiations in Greece.

Commenting about the Spanish government's reluctance to request aid from the European Central Bank, Deutsche Bank fixed-income analyst Jim Reid said early on Wednesday that "with the central bank liquidity guns loaded any short-term set back is unlikely to be severe but until Spain requests aid it's hard to see risk assets making much progress. Clearly such a request could come in the next few days but it's more likely in our opinion that it won't until a bit more market pressure is applied to the situation."

Reid added that "there are also those who think that a request for aid is unlikely to come before key regional elections on October 21st."

The KBW Bank Index (I:BKX) was down 1% to close at 49.20, with all but four of the 24 index components showing declines.

Shares of Zions Bancorporation of Salt Lake City have returned 25% year-to-date, following a 33% decline during 2011.

The shares trade for just over their reported June 30 tangible book value of $19.65, and for 12 times the consensus 2013 Earnings estimate of $1.75 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.15.

Zions announced on Wednesday that it had repaid its remaining $700 million in federal bailout funds received in November 2008 through the Troubled Assets Relief Program, or TARP, having repaid $700 million in TARP money during the first quarter.

Zions CEO Harris Simmons said the company was "pleased to report that we have completed the steps that we had proposed to the Federal Reserve in January, which were accepted as terms to redeem the TARP shares," and said that the preferred stock redemption was expected to "increase our annualized return on equity in the fourth quarter by approximately one percentage point compared to the third quarter results."

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