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Zions (ZION) Q3 Earnings Beat Despite Decline in Revenues
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Zions Bancorporation’s (ZION - Free Report) third-quarter 2021 net earnings per share of $1.45 surpassed the Zacks Consensus Estimate of $1.38. The bottom line represents an increase of 43.6% from the year-ago quarter’s number.
Results were primarily aided by a decline in expenses and provision benefits. The company witnessed a rise in deposit balances in the quarter. However, net interest income (NII) remained unchanged year over year, while non-interest income witnessed a fall.
Net income attributable to common shareholders was $234 million, up 40.1% from the prior-year quarter’s figure.
Revenues & Expenses Decline
Net revenues (tax equivalent) were $701 million, down 2.5% year over year. The top line missed the Zacks Consensus Estimate of $708.4 million.
NII was $555 million, unchanged from the prior-year quarter. Net interest margin contracted 38 basis points (bps) year over year to 2.68%.
Non-interest income was $139 million, down 11.5% from the year-ago quarter. The decline was due to a fall in fair value and non-hedge derivative income. Also, the company recorded net securities losses in the quarter under review against net gains in the year-ago quarter.
Adjusted non-interest expenses were $432 million, down 1.8% from the prior-year quarter.
Efficiency ratio was 59.8%, down from 62.2% reported in the prior-year period. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2021, net loans held for investment were $50.2 billion, down 1.3% from the prior quarter’s end. Total deposits were $77.9 billion, up 2.3% sequentially.
Credit Quality Improves
The ratio of non-performing assets to loans and leases as well as other real estate owned contracted 4 bps year over year to 0.64%. In the reported quarter, the company recorded net loan and lease recoveries of $1 million against charge-offs of $52 million in the prior-year quarter.
Provision for credit losses was a benefit of $46 million against a provision of $55 million reported in the year-earlier quarter.
Capital Ratios Mixed, Profitability Ratios Improve
Tier 1 leverage ratio was 7.6% as of Sep 30, 2021, compared with 8.3% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 11.6% increased from 11.4%.
At the end of the reported quarter, return on average assets was 1.08%, up from 0.89% as of Sep 30, 2020. Also, return on average tangible common equity was 14.2%, up from 11% 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 low interest rate environment, the company’s margins are expected to remain under pressure.
Zions Bancorporation, N.A. Price, Consensus and EPS Surprise
Robust advisory business, reserve release, and a modest rise in demand for loans drove JPMorgan’s (JPM - Free Report) third-quarter 2021 earnings of $3.74 per share. The bottom line also handily outpaced the Zacks Consensus Estimate of $3.00.
Bank of America’s (BAC - Free Report) third-quarter 2021 earnings of 85 cents per share beat the Zacks Consensus Estimate of 71 cents. The bottom line compared favorably with 51 cents earned in the prior-year quarter. Results in the quarter included a reserve release of $1.1 billion.
PNC Financial (PNC - Free Report) pulled off a third-quarter 2021 earnings beat of 3.02% on substantial recapture of credit losses. Adjusted earnings per share (excluding pre-tax integration costs related to the BBVA USA acquisition) of $3.75 surpassed the Zacks Consensus Estimate of $3.64 and improved 42% sequentially.
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Zions (ZION) Q3 Earnings Beat Despite Decline in Revenues
Zions Bancorporation’s (ZION - Free Report) third-quarter 2021 net earnings per share of $1.45 surpassed the Zacks Consensus Estimate of $1.38. The bottom line represents an increase of 43.6% from the year-ago quarter’s number.
Results were primarily aided by a decline in expenses and provision benefits. The company witnessed a rise in deposit balances in the quarter. However, net interest income (NII) remained unchanged year over year, while non-interest income witnessed a fall.
Net income attributable to common shareholders was $234 million, up 40.1% from the prior-year quarter’s figure.
Revenues & Expenses Decline
Net revenues (tax equivalent) were $701 million, down 2.5% year over year. The top line missed the Zacks Consensus Estimate of $708.4 million.
NII was $555 million, unchanged from the prior-year quarter. Net interest margin contracted 38 basis points (bps) year over year to 2.68%.
Non-interest income was $139 million, down 11.5% from the year-ago quarter. The decline was due to a fall in fair value and non-hedge derivative income. Also, the company recorded net securities losses in the quarter under review against net gains in the year-ago quarter.
Adjusted non-interest expenses were $432 million, down 1.8% from the prior-year quarter.
Efficiency ratio was 59.8%, down from 62.2% reported in the prior-year period. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2021, net loans held for investment were $50.2 billion, down 1.3% from the prior quarter’s end. Total deposits were $77.9 billion, up 2.3% sequentially.
Credit Quality Improves
The ratio of non-performing assets to loans and leases as well as other real estate owned contracted 4 bps year over year to 0.64%. In the reported quarter, the company recorded net loan and lease recoveries of $1 million against charge-offs of $52 million in the prior-year quarter.
Provision for credit losses was a benefit of $46 million against a provision of $55 million reported in the year-earlier quarter.
Capital Ratios Mixed, Profitability Ratios Improve
Tier 1 leverage ratio was 7.6% as of Sep 30, 2021, compared with 8.3% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 11.6% increased from 11.4%.
At the end of the reported quarter, return on average assets was 1.08%, up from 0.89% as of Sep 30, 2020. Also, return on average tangible common equity was 14.2%, up from 11% 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 low 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.
Performance of Major Banks
Robust advisory business, reserve release, and a modest rise in demand for loans drove JPMorgan’s (JPM - Free Report) third-quarter 2021 earnings of $3.74 per share. The bottom line also handily outpaced the Zacks Consensus Estimate of $3.00.
Bank of America’s (BAC - Free Report) third-quarter 2021 earnings of 85 cents per share beat the Zacks Consensus Estimate of 71 cents. The bottom line compared favorably with 51 cents earned in the prior-year quarter. Results in the quarter included a reserve release of $1.1 billion.
PNC Financial (PNC - Free Report) pulled off a third-quarter 2021 earnings beat of 3.02% on substantial recapture of credit losses. Adjusted earnings per share (excluding pre-tax integration costs related to the BBVA USA acquisition) of $3.75 surpassed the Zacks Consensus Estimate of $3.64 and improved 42% sequentially.