Zions Bancorporation’s ( ZION Quick Quote ZION - Free Report) second-quarter 2020 net earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line compares unfavorably with the year-ago quarter’s 99 cents.
Results reflect lower net interest and non-interest income, and a significant rise in provision for credit losses. However, an increase in deposit and loan balances, and fall in expenses were positives.
Net income attributable to common shareholders was $57 million, down from the prior-year quarter’s $189 million.
Revenues Decline, Expenses Down
Net revenues for the quarter under review came in at $686 million, down 3.1% year over year. Further, the top line missed the Zacks Consensus Estimate of $694.1 million.
Net interest income in the quarter came in at $563 million, down 1.1% from the prior-year quarter. This downside resulted from a fall in interest income. Net interest margin contracted 31 basis points (bps) year over year to 3.23%.
Non-interest income amounted to $117 million, down 11.4% from the year-ago quarter. The decrease resulted from a fall in card fees, retail and business banking fees and capital markets and foreign exchange fees.
Adjusted non-interest expenses were $402 million, down 5% from the prior-year quarter.
Efficiency ratio was 57.3%, down from the 59% reported in the prior-year period. A fall in efficiency ratio indicates an increase in profitability.
Solid Balance Sheet
As of Jun 30, 2020, net loans held for investment were $54.3 billion, up from the $49.2 billion recorded at the end of the prior quarter. Total deposits were $65.7 billion, up 14.2% from the $57.1 billion recorded at the end of first-quarter 2020.
Credit Quality Deteriorates
The ratio of non-performing assets to loans and leases as well as other real estate owned expanded 6 bps year over year to 0.62%. Provision for credit losses was $168 million compared with the $21 million reported in the year-earlier quarter.
Moreover, net loan and lease charge-offs were $31 million at the end of the reported quarter compared with the $14 million witnessed in the year-earlier quarter.
Capital & Profitability Ratios Deteriorate
Tier 1 leverage ratio was 8.4% as of Jun 30, 2020, compared with the 9.5% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio was 11.2%, down from the year-ago quarter’s 11.8%.
At the end of the June-end quarter, return on average assets was 0.35%, down from 1.14% as of Jun 30, 2019. Also, return on average tangible common equity was 3.8%, down from the 12.7% reported in the year-ago quarter.
During the reported quarter, the company did not repurchase any shares.
Zion’s balance-sheet position was strong in the second quarter. This will support the company’s capital deployments, thereby, enhancing shareholder value.
However, a decline in interest rates amid the Federal Reserve's accommodative policy stance is expected to hurt the company’s margins and revenues in the days to come.
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 Schedules of Other Banks
Signature Bank (
SBNY Quick Quote SBNY - Free Report) , Hancock Whitney Corporation ( HWC Quick Quote HWC - Free Report) and Texas Capital Bancshares ( TCBI Quick Quote TCBI - Free Report) are scheduled to announce second-quarter results this week. While Signature Bank and Hancock Whitney will release the quarterly figures on Jul 21, Texas Capital will report on Jul 22. More Stock News: This Is Bigger than the iPhone!
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