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Zions' Revenues Supported by Loan Growth, Rise in Rates

Zacks Equity Research

Zions Bancorporation’s ZION prospects look promising backed by impressive loan growth, potential lesser regulations and higher interest rates. Also, its initiatives to control expenses are expected to support bottom-line growth.

With the improvement in the interest rates, margin pressure for Zions seems to be easing. Also, the company is witnessing consistent loan growth, with a compound annual growth rate (CAGR) of 2.8% over the five years ended 2016. The trend persisted in the first six months of 2017 as well.

Moreover, Zions’ efforts to efficiently deploy non-interest deposits and the rise in loan demand will likely support top-line growth in the quarters ahead. Further, proposed lesser regulations for banks are expected to better position them to grow business. Thus, overall revenues should continue to increase in the quarters ahead.

Zions initiatives to lower non-interest expenses through several initiatives are commendable. Over the last four years (2013–2016), expenses have declined at a CAGR of 2.6%. Also, management remains committed to driving the efficiency ratio to the low 60s.

Additionally, credit quality continues to be a major strength for Zions. The company has been recording a consistent decline in allowance for credit losses over the past several quarters. With the gradually rebounding oil prices and improving economy, the company is likely to witness improving asset quality.

Driven by such positives, analysts are optimistic about the prospects of the company. The Zacks Consensus Estimate for 2017 jumped 9.3% over the last 30 days. Also, this Zacks Rank #1 (Strong Buy) stock has rallied 9.4% over the past three months, significantly outperforming the industry’s gain of 3.4%.

Other Stocks Worth a Look

Some other stocks in the finance space worth considering are BancFirst Corporation BANF, First Financial Bankshares, Inc. FFIN and People's Utah Bancorp PUB.

The Zacks Consensus Estimate for BancFirst Corporation has jumped 12.5% over the past 30 days, for 2017. Further, the company’s share price has increased 5.2% over the past three months. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

First Financial Bankshares currently carries a Zacks Rank #2 (Buy). The company’s earnings estimates improved 1.2% over the past 30 days. Over the past three months, its shares have gained 2.1%.

People's Utah Bancorp also carries a Zacks Rank #2. Its earnings estimates for 2017 have risen 2.9% over the past 30 days. Over the past three months, its shares have gained 4.1%.

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BancFirst Corporation (BANF) : Free Stock Analysis Report
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