Mar. 3, 2000
Two local banks that have pledged to become one large bank have hit roadblocks here at home and on Wall Street.
News Specialist Scott Light has been following Zions Bank and First Security.
He explains what happened and whether the merger is still on.
Both banks say the merger is still a go, but it's the merger itself that's causing problems.
The merger is taking longer than expected to complete.
And then the latest news today-- First Security reported revenues are down in the first quarter of 2000.
It's all causing a plunge in stock prices for both banks.
First Security and Zions have called their consolidation plan a 'merger of equals.'
Lately on Wall Street, there's an equal amount of ups and downs for both banks.
First Security announced the revenue and earnings decline Friday morning and by closing bell the sell-off was evident.
For Zions Bank, the stock began the day just over $51 a share.
At one point it dipped to $32.
It finally closed above $38-- a loss of more than 12 points.
For First Security stock, a similar roller coaster.
It opened at $22, dipped to $12 and finally closed above $13 a share.
It's a loss of more than eight points.
First Security attributed the drop to several things.
As we mentioned, the merger is taking longer than expected.
The bank also suffered a computer glitch in October that eventually caused some un-necessary write-offs.
The Federal Reserve also had a hand in it.
Jay Rice/Jay Rice and Associates: "THEY HAD ANOTHER AREA WHICH IS SIMPLY INTEREST RATES RISING.. JUST THE MARKET INTEREST RATES RISING AND THAT HURT THEIR MORTGAGE BUSINESS ACCOUNTING FOR ABOUT 25% OF THE THE SHORTFALL."
Obviously, some people lost money on both stocks.
But when stocks are down it's also an opportunity.
Ten analysts watch First Security for Jay Rice.
Jay Rice/Jay Rice and Associates: "THERE WERE FOUR THAT HAD A STRONG BUY ON THE STOCK.. FOUR THAT HAD A BUY AND TWO THAT A NEUTRAL RATING ON THE STOCK."
In fact some of Jay Rices' clients bought that stock today.
We mentioned the merger-- the SEC, Federal Reserve and Department of Justice have signed off on it.
Stockholders vote the 22nd of this month.
The banks hope to seal the deal and finish the merger shortly after that.
