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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Utah-based banker Zions Bancorporation (Nasdaq: ZION ) were flying high today, gaining as much as 11% in intraday trading after the bank announced plans to use debt to repay its TARP loans.
So what: In short, Zions will be getting the government off its balance sheet and will do it without diluting shareholders with new equity. In a press release yesterday, Zions said the Federal Reserve gave the bank a go-ahead on its plan to repay TARP and other government loans. It was widely expected that Zions would have to issue new stock to make the repayment, but the plan that it's moving forward with is only raising money through debt -- specifically, $600 million in new senior debt.
Now what: Not only is it good news for shareholders that Zions isn't issuing new stock, but the fact that it's been given the green light to repay the loans suggests that regulators believe the bank is on solid footing. For investors excited about dividends, though, it may be notable that included in Zions' plan is the pledge to keep its quarterly dividend at $0.01 at least through 2012.
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