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Zions Bancorporation (ZION - Analyst Report) is scheduled to release second-quarter 2014 results on Monday, Jul 21, after the market close.

Last quarter, Zions delivered a negative earnings surprise of 2.3% owing to a fall in net interest income and lower benefit from provision. However, this was partially offset by improvement in non-interest income and effective cost-control measures.

Will Zions be able to beat earnings estimates this time or will it disappoint again? Let us see how things have developed for this announcement.

Factors Impacting Q2 Results

With the persistent low interest rate environment, Zions’ net interest income should remain pressurized. Further, deposit pricing pressure and sluggish loan demand also worsened the scenario.

Additionally, Zions’ continue to face higher consulting and compliance costs. Hence, operating expenses should remain elevated in the quarter.

We expect Zions to maintain impressive credit quality in the upcoming release. But, sequentially, benefit from provision declined significantly in the last reported quarter mainly due to the sale of collateralized debt obligations (CDOs). We believe that a declining trend in benefit from provision will continue in this quarter as well.

Nevertheless, Zions’ non-interest income should rise driven by absence of impairment charges. Further, service charges and fees on deposit accounts would likely increase backed by continued growth in total deposits.

Zions’ activities during the second quarter were not sufficient to win analysts’ confidence. As a result, the Zacks Consensus Estimate remained unchanged at 46 cents per share over the last 7 days.

Earnings Whispers?

Our proven model does not conclusively show that Zions is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Negative Zacks ESP:  The Earnings ESP for Zions is -2.17%. This is because the Most Accurate estimate of 45 cents is below the Zacks Consensus Estimate of 46 cents.

Zacks Rank: Zions’ Zacks Rank #3 increases the predictive power of ESP. But we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks to Consider

Here are a few finance stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Earnings ESP for Regions Financial Corporation (RF - Analyst Report) is +4.76% and it has a Zacks Rank #3. The company is slated to report on Jul 22.

CIT Group Inc. (CIT - Analyst Report) has an Earnings ESP of +2.33% and holds a Zacks Rank #3. It is scheduled to report on Jul 22.

The Earnings ESP for Hancock Holding Company (HBHC - Analyst Report) is +1.75% and it carries a Zacks Rank #3. The company is scheduled to release results on Jul 24.

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