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Zions (ZION) Q1 Earnings & Revenues Top Estimates, Stock Up 2%

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Shares of Zions Bancorporation ZION rallied almost 2% in aftermarket trading in response to first-quarter 2021 results. Net earnings per share of $1.90 surpassed the Zacks Consensus Estimate of $1.15. Also, the bottom line marks a significant improvement from 4 cents earned in the year-ago quarter.

Results were aided by an increase in non-interest income and provision benefits. Also, the company witnessed a rise in loans and deposits balance during the quarter. However, fall in net interest income (NII) due to lower rates and higher expenses were the headwinds.

Net income attributable to common shareholders was $314 million, up substantially from the prior-year quarter’s $6 million.

Revenues Improve, Expenses Rise

Net revenues (on a taxable-equivalent basis) were $722 million, up 4.8% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $691 million.

NII (taxable equivalent) was $553 million, down marginally. Net interest margin contracted 55 basis points (bps) year over year to 2.86%.

Non-interest income was $169 million, jumping 26.1% from the year-ago quarter. The increase was largely driven by improvement in fair value and non-hedge derivative income, and net securities gains, partially offset by lower total customer-related fees.

Adjusted non-interest expenses were $440 million, up 8.1% from the prior-year quarter.

Efficiency ratio was 63.5%, up from 57.7% reported in the prior-year period. A rise in efficiency ratio indicates deterioration in profitability.

As of Mar 31, 2021, net loans held for investment were $52.8 billion, up slightly from the prior quarter. Total deposits were $73.9 billion, up 6%.

Credit Quality: Mixed Bag

The ratio of non-performing assets to loans and leases as well as other real estate owned expanded 5 bps year over year to 0.61%. Also, net loan and lease charge-offs were $8 million, up 14.3%.

However, provision for credit losses was a benefit $132 million against a provision of $258 million reported in the year-earlier quarter.

Capital Ratios Mixed, Profitability Ratios Improve

Tier 1 leverage ratio was 8.3% as of Mar 31, 2021, compared with 9.0% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 12.2% increased from 11.0%.

At the end of the March quarter, return on average assets was 1.57%, up from 0.08% as of Mar 31, 2020. Also, return on average tangible common equity was 20.2%, up from 0.40% witnessed in the year-ago quarter.

Our Take

Zions’ strong balance-sheet position, along with its business simplifying efforts, bode well for the future. However, given the near-zero interest rate environment, the company’s margins are expected to remain under pressure.

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

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

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

Currently, Zions carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Schedule of Other Banks

Associated Banc-Corp ASB, East West Bancorp EWBC and SVB Financial Group SIVB are scheduled to announce quarterly numbers on Apr 22.

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

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