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Is a Beat in the Offing for Zions (ZION) in Q2 Earnings?

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  • ZIONP

Zions Bancorporation ZION is scheduled to report second-quarter 2021 results on Jul 19, after market close. Similar to the previous quarters, the overall demand for loans remained soft in the to-be-reported quarter despite the resumption of business activities. In fact, commercial and industrial loan balances, which constitute a large part of Zions’ loan portfolio, witnessed a decline in the quarter.

However, the Zacks Consensus Estimate for the company’s average interest-earning assets for the second quarter is pegged at $79.7 billion, which indicates a rise of 1.8% from the previous quarter’s reported number.

Thus, despite the low interest rate environment and overall muted loan growth, Zions’ net interest income (NII), which is its main revenue component, is expected to have improved slightly in the quarter supported by the rise in interest-earning assets. The consensus estimate for NII of $551 million indicates a 1.1% rise sequentially.

Now, let’s have a look at the other key factors that are expected to have impacted Zions’ second-quarter performance.

Fee Revenues: Low mortgage rates continued to fuel the demand for new mortgages in the to-be-reported quarter. As the stay-at-home orders were lifted and the economy rebounded solidly, a substantial rise in mortgage originations was witnessed as prospective home-buyers entered the housing market.

However, not-so-impressive refinancing activities and faster prepayments are expected to have offset some of the gains. Thus, owing to relatively modest mortgage-banking business performance, Zions’ loan sales and servicing income is not expected to have improved much in the second quarter. The Zacks Consensus Estimate for the same is pegged at $24.80 million, suggesting a marginal decline from the previous quarter’s reported number.

Nevertheless, the consensus estimate for commercial account fees of $32.24 million indicates a marginal rise sequentially. Similarly, the consensus estimate for card fees of $22.36 million suggests a 6.5% rise from the prior quarter’s reported figure.

The consensus estimate for retail and business banking fees is pegged at $17.66 million, suggesting a 3.9% rise sequentially. The estimate for capital markets and foreign exchange fees of $17.90 million indicates a rise of 19.3% sequentially.

Thus, driven by the expected rise in most of the components, customer-related fee (accounting for more than 85% of Zions’ total non-interest income) is anticipated to have improved in the quarter. The consensus estimate for the same is pegged at $140 million, which indicates a 5.3% rise from the previous quarter’s reported figure.

However, the consensus estimate for dividends and other income is pegged at $6.83 million, indicating a decline of 2.4% sequentially.

Hence, the consensus estimate for total non-interest income indicates that the component will decline in the quarter under review. The estimate is pegged at $159 million, suggesting a decline of 5.9% from the previous quarter’s reported number.

Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. As the company continues to invest in franchise, overall costs are expected to have been elevated in the second quarter as well.

Asset Quality: The Zacks Consensus Estimate for total non-performing loans is pegged at $351 million, suggesting an 8.3% rise from the prior quarter’s reported figure.

What Our Quantitative Model Predicts

According to our quantitative model, the chances of Zions beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Zions is +6.72%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Q2 Earnings & Sales Growth Expectations

The Zacks Consensus Estimate for earnings is pegged at $1.25 per share, which suggests significant growth from the year-ago quarter’s reported number. The estimate has been revised nearly 1% upward over the past seven days.

The consensus estimate for sales is pegged at $707.2 million, which indicates a rise of 3.1% from the prior-year reported figure.

Zions Bancorporation, N.A. Price and EPS Surprise

Zions Bancorporation, N.A. Price and EPS Surprise
Zions Bancorporation, N.A. Price and EPS Surprise

Zions Bancorporation, N.A. price-eps-surprise | Zions Bancorporation, N.A. Quote

Other Stocks That Warrant a Look

Here are some other finance stocks that you may want to consider as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.

The Earnings ESP for KeyCorp KEY is +0.26%. The Zacks Ranked #3 company is scheduled to report quarterly numbers on Jul 20. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BankUnited, Inc. BKU is scheduled to release earnings numbers on Jul 22. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +3.07%.

T. Rowe Price Group, Inc. TROW is slated to report quarterly results on Jul 29. The company has an Earnings ESP of +0.93% and a Zacks Rank of 3, currently.


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T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report

Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report

BankUnited, Inc. (BKU) : Free Stock Analysis Report

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