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Zions Bancorporation’s (ZION - Free Report) second-quarter 2021 net earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.25. The bottom line marks a significant improvement from 34 cents earned in the year-ago quarter.
Results were primarily aided by an increase in non-interest income and provision benefits. The company witnessed a rise in deposit balances in the quarter. However, a fall in net interest income (NII) and higher expenses were the headwinds.
Net income attributable to common shareholders was $345 million, up substantially from the prior-year quarter’s $57 million.
Revenues Improve, Expenses Rise
Net revenues were $760 million, up 11.8% year over year. The top line surpassed the Zacks Consensus Estimate of $711.9 million.
NII was $555 million, down 1.4% from the prior-year quarter. Net interest margin contracted 44 basis points (bps) year over year to 2.79%.
Non-interest income was $205 million, jumping 75.2% from the year-ago quarter. The increase was driven by an improvement in almost all fee income components.
Adjusted non-interest expenses were $419 million, up 4.2% from the prior-year quarter.
Efficiency ratio was 59.1%, up from 57.3% reported in the prior-year period. A rise in efficiency ratio indicates deterioration in profitability.
As of Jun 30, 2021, net loans held for investment were $50.9 billion, down 3.7% from the prior quarter end. Total deposits were $76.1 billion, up 3% sequentially.
Credit Quality Improves
The ratio of non-performing assets to loans and leases as well as other real estate owned contracted 2 bps year over year to 0.60%. In the reported quarter, the company recorded net loan and lease recoveries of $2 million against charge-offs of $31 million in the prior-year quarter.
Provision for credit losses was a benefit of $123 million against a provision of $168 million reported in the year-earlier quarter.
Capital Ratios Mixed, Profitability Ratios Improve
Tier 1 leverage ratio was 8.0% as of Jun 30, 2021, compared with 8.4% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 12.1% increased from 11.2%.
At the end of the reported quarter, return on average assets was 1.65%, up from 0.35% as of Jun 30, 2020. Also, return on average tangible common equity was 21.6%, up from 3.8% witnessed in the year-ago quarter.
Our Take
Zions’ strong balance-sheet position along with its business-simplifying efforts bodes 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
Associated Banc-Corp (ASB - Free Report) , East West Bancorp (EWBC - Free Report) and SVB Financial Group are scheduled to announce quarterly numbers on Jul 22.
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Zions (ZION) Q2 Earnings Beat, Revenues & Expenses Rise
Zions Bancorporation’s (ZION - Free Report) second-quarter 2021 net earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.25. The bottom line marks a significant improvement from 34 cents earned in the year-ago quarter.
Results were primarily aided by an increase in non-interest income and provision benefits. The company witnessed a rise in deposit balances in the quarter. However, a fall in net interest income (NII) and higher expenses were the headwinds.
Net income attributable to common shareholders was $345 million, up substantially from the prior-year quarter’s $57 million.
Revenues Improve, Expenses Rise
Net revenues were $760 million, up 11.8% year over year. The top line surpassed the Zacks Consensus Estimate of $711.9 million.
NII was $555 million, down 1.4% from the prior-year quarter. Net interest margin contracted 44 basis points (bps) year over year to 2.79%.
Non-interest income was $205 million, jumping 75.2% from the year-ago quarter. The increase was driven by an improvement in almost all fee income components.
Adjusted non-interest expenses were $419 million, up 4.2% from the prior-year quarter.
Efficiency ratio was 59.1%, up from 57.3% reported in the prior-year period. A rise in efficiency ratio indicates deterioration in profitability.
As of Jun 30, 2021, net loans held for investment were $50.9 billion, down 3.7% from the prior quarter end. Total deposits were $76.1 billion, up 3% sequentially.
Credit Quality Improves
The ratio of non-performing assets to loans and leases as well as other real estate owned contracted 2 bps year over year to 0.60%. In the reported quarter, the company recorded net loan and lease recoveries of $2 million against charge-offs of $31 million in the prior-year quarter.
Provision for credit losses was a benefit of $123 million against a provision of $168 million reported in the year-earlier quarter.
Capital Ratios Mixed, Profitability Ratios Improve
Tier 1 leverage ratio was 8.0% as of Jun 30, 2021, compared with 8.4% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 12.1% increased from 11.2%.
At the end of the reported quarter, return on average assets was 1.65%, up from 0.35% as of Jun 30, 2020. Also, return on average tangible common equity was 21.6%, up from 3.8% witnessed in the year-ago quarter.
Our Take
Zions’ strong balance-sheet position along with its business-simplifying efforts bodes 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-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 - Free Report) , East West Bancorp (EWBC - Free Report) and SVB Financial Group are scheduled to announce quarterly numbers on Jul 22.