Shares of regional bank Zions plunged 12% Thursday after the company disclosed late Wednesday that it was taking a $50 million charge related to loans from two borrowers facing legal actions. Zions said that following an investigation the bank found “what it believes to be apparent misrepresentations and contractual defaults” by the borrowers and “other irregularities with respect to the loans and collateral.” Another regional bank, Western Alliance, tumbled 10% after it said it was filing a lawsuit alleging fraud by a borrower who failed to provide collateral for a loan.
Other regional banks also got hit hard on the news. The KBW Regional Banking Index (KRX) was off 6.3% as of late afternoon trading. That puts it on pace for its worst one-day decline since April 10, when it fell 6.4%, according to Dow Jones Market Data. Several other regional banks that reported earnings Thursday–including KeyCorp, M&T Bank, and Commerce Bancshares–fell between 5% and 6%.
