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Zions (ZION) Up 6.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Zions (ZION - Free Report) . Shares have added about 6.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Zions due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Zions' Q4 Earnings & Revenues Beat Estimates, Costs Up

Zions’ fourth-quarter 2021 net earnings per share of $1.34 surpassed the Zacks Consensus Estimate by a penny. The bottom line, however, decreased 19.3% from the year-ago quarter’s number.

Results were primarily aided by an increase in net interest income and non-interest income. The company witnessed a rise in loan and deposit balances in the quarter. However, increase in non-interest expenses due to salaries, employee benefits and other expenses, besides higher provisions, acted as undermining factors.
Net income attributable to common shareholders was $207 million, down 24.7% year over year.

In 2021, earnings of $6.79 per share missed the consensus estimate of $6.80 while increasing substantially from $3.02 in 2020. Also, net income of $1.1 billion was significantly up from $505 million in 2020.

Revenues & Expenses Rise

Net revenues (tax equivalent) for the quarter were $753 million, up 4.1% year over year. The top line surpassed the Zacks Consensus Estimate of $714.7 million.

In 2021, net revenues (tax equivalent) increased 4.4% to $2.94 billion. The top line outpaced the consensus estimate of $2.89 billion.

Net interest income was $553 million, up marginally from $550 million in the prior-year quarter. Net interest margin (NIM) contracted 37 basis points (bps) year over year to 2.58%.

Non-interest income (NII) was $190 million, up 14.5% from the year-ago quarter. The increase was due to a rise in all components except loan-related fees and income. Also, the company recorded loss in fair-value and non-hedge derivative income in the quarter under review against gains in the year-ago quarter.

Adjusted non-interest expenses were $446 million, up 5.4% from the prior-year quarter.

Efficiency ratio (non-GAAP) was 60.8%, up from 60.2% in the prior-year period. A rise in the efficiency ratio indicates a decrease in profitability.

As of Dec 31, 2021, net loans held for investment were $50.3 billion, up marginally from $50.2 billion at the prior quarter’s end. Total deposits were $82.8 billion, up 6.3% sequentially.

Credit Quality: A Mixed Bag

The ratio of non-performing assets to loans and leases, as well as other real estate owned, contracted 16 bps year over year to 0.53%. In the reported quarter, the company recorded net loan and lease charge offs of $1 million, down from $15 million in the prior-year quarter.

Provision for credit losses was $25 million against a benefit of $67 million in the year-earlier quarter.

Capital & Profitability Ratios Deteriorate

Tier 1 leverage ratio was 7.2% as of Dec 31, 2021 compared with 8.3% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 10.9% decreased from 11.8%.

At the end of the reported quarter, return on average assets was 0.92%, down from 1.14% as of Dec 31, 2020. Also, return on average tangible common equity was 13.4%, down from 17.8% witnessed in the year-ago quarter.

Share Repurchase Update

The company repurchased 5 million shares for $325 million in the reported quarter.


Management has provided the outlook for financial performance for the fourth quarter of 2022 on a year-over-year basis. The quarters in between are subject to normal seasonality.

Loans (excluding paycheck protection program or PPP loans) are expected to witness moderate growth. This will be driven by moderate to strong growth in home equity, municipal, commercial & industrial (C&I) and owner-occupied loans, and stable to moderate growth in oil & gas, commercial real estate (CRE) loans. The company expects further shrinking of the PPP portfolio.

Partly due to the quantitative tapering by the Fed, deposit growth is not expected to remain as strong as the recent quarters.

NII (excluding PPP loan income and assumes no change in interest rates) is projected to increase. Any hike in interest rates is expected to be additive to NII outlook.

Customer-related fees (excluding securities gains and dividends) are expected to grow slightly.

On the cost front, adjusted non-interest expenses are likely to increase moderately.

As the company plans to allocate a large portion of capital generated to support balance sheet growth, share repurchases are likely to be relatively less than recent quarters.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Zions has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Zions has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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