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Stock Analyst Update

Trouble Mounts for Zions Merger, Shareholders

Stock plunges after partner says earnings are declining.


Investors should be wary of Zions Bancorporation (ZION) after the company's merger partner, First Security (FSCO), warned Friday that its earnings are on the skids. First Security, which is scheduled to merge with Zions later this month, said earnings per share for the first quarter would decline by as much as 27% over fourth-quarter results due to higher interest rates and merger-related snags.

Zions shares, which would be the surviving stock after the merger, went into a nosedive in early trading. They were off 28% at midday. First Security shares were down 40%.

Laura Pavlenko Lutton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.