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Higher Rates to Aid Zions (ZION) Q3 Earnings, Provisions to Ail
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Zions Bancorporation (ZION - Free Report) is slated to report third-quarter 2022 results on Oct 24, after market close. The overall loan demand was impressive in the to-be-reported quarter. Specifically, growth in commercial & industrial loans (which constitute a large part of Zions’ loan portfolio) was decent.
The Zacks Consensus Estimate for the company’s average interest-earning assets for the third quarter is pegged at $83.7 billion, which indicates a rise of almost 1% from the prior-year quarter’s reported number.
Supported by the rise in loan balances and higher interest rates (the Federal Reserve increased interest rates by 150 basis points in the quarter), Zions’ net interest income (NII), which is its main revenue component, and net interest margin (NIM) are expected to have improved. The consensus estimate for NII of $656 million indicates a year-over-year rise of 18.2%. Our estimate for the metric is pegged at $653.2 million, reflecting an increase of 17.7%.
Other Major Factors and Estimates for Q3
Fee Revenues: Rising mortgage rates (that crossed the 6% mark in September) weighed on mortgage originations and refinancing activities in the third quarter. Thus, due to the not-so-impressive mortgage-banking business performance, Zions’ loan sales and servicing income are likely to have been adversely impacted in the quarter. The Zacks Consensus Estimate for the same is pegged at $20.45 million, suggesting a 24.3% plunge from the prior-year quarter’s reported number.
The consensus estimate for commercial account fees of $37 million implies a year-over-year rise of 8.8%. Similarly, the consensus estimate for card fees of $25.53 million indicates a rise of 2.1% from the previous year.
The consensus estimate for retail and business banking fees is pegged at $16.23 million, suggesting an 18.9% year-over-year decline. The Zacks Consensus Estimate for wealth management fees of $12.81 million indicates a fall of 1.5%.
Increased volatility across the markets and products seems to have supported Zions’ capital markets and foreign exchange fees. The estimate the same is $18.92 million, which suggests a year-over-year rise of 11.3%.
Hence, due to the expected fall in almost all components, the customer-related fee (accounting for more than 85% of Zions’ total non-interest income) is anticipated to have decreased in the quarter. The Zacks Consensus Estimate for the same is pegged at $146 million, which indicates a decline of 3.3%. We project this metric to decrease 12.1% to $132.1 million.
The consensus estimate for dividends and other income is pegged at $5.99 million, indicating a decline of 33.4% from the prior-year quarter’s reported number.
Overall, the Zacks Consensus Estimate for total non-interest income is pegged at $151 million, suggesting a rise of 8.6% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $144.8 million, reflecting a rise of 4.2%.
Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. The company continues to invest in franchise, which along with inflationary pressure, is expected to have kept operating expenses elevated in the third quarter.
Our estimate for total non-interest expenses is pegged at $467.9 million, reflecting a 9.1% increase from the prior-year quarter number.
Asset Quality: With the rise in loan balance and expectations of economic slowdown due to geopolitical and inflation concerns, ZION is expected to have built reserves in the third quarter. Our estimate for provision for credit losses is pegged at $18.8 million against a provision benefit of $46 million a year ago.
The Zacks Consensus Estimate for total non-performing loans is pegged at $288 million, suggesting a decline of 10.8% from the prior-year quarter’s reported figure. Further, the consensus estimate for total non-performing assets of $288 million indicates an 11.1% fall.
What Our Quantitative Model Predicts
According to our quantitative model, the chances of Zions beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Zions is +0.97%.
Zacks Rank: The company currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Zions’ third-quarter earnings is $1.58 per share, which suggests an increase of 9% from the year-ago quarter’s reported number. The estimate has been unchanged over the past 30 days. Our estimate for earnings is also $1.58 per share.
The consensus estimate for sales is pegged at $813 million, which indicates a rise of 16% from the prior-year reported figure. Our estimate for sales is $5807.3, reflecting an increase of 15.2%.
Other Bank Stocks That Warrant a Look
Here are a few other bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Huntington Bancshares (HBAN - Free Report) is +0.72% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2022 results on Oct 21.
Over the past 30 days, the Zacks Consensus Estimate for HBAN’s quarterly earnings has been revised 2.6% lower.
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Higher Rates to Aid Zions (ZION) Q3 Earnings, Provisions to Ail
Zions Bancorporation (ZION - Free Report) is slated to report third-quarter 2022 results on Oct 24, after market close. The overall loan demand was impressive in the to-be-reported quarter. Specifically, growth in commercial & industrial loans (which constitute a large part of Zions’ loan portfolio) was decent.
The Zacks Consensus Estimate for the company’s average interest-earning assets for the third quarter is pegged at $83.7 billion, which indicates a rise of almost 1% from the prior-year quarter’s reported number.
Supported by the rise in loan balances and higher interest rates (the Federal Reserve increased interest rates by 150 basis points in the quarter), Zions’ net interest income (NII), which is its main revenue component, and net interest margin (NIM) are expected to have improved. The consensus estimate for NII of $656 million indicates a year-over-year rise of 18.2%. Our estimate for the metric is pegged at $653.2 million, reflecting an increase of 17.7%.
Other Major Factors and Estimates for Q3
Fee Revenues: Rising mortgage rates (that crossed the 6% mark in September) weighed on mortgage originations and refinancing activities in the third quarter. Thus, due to the not-so-impressive mortgage-banking business performance, Zions’ loan sales and servicing income are likely to have been adversely impacted in the quarter. The Zacks Consensus Estimate for the same is pegged at $20.45 million, suggesting a 24.3% plunge from the prior-year quarter’s reported number.
The consensus estimate for commercial account fees of $37 million implies a year-over-year rise of 8.8%. Similarly, the consensus estimate for card fees of $25.53 million indicates a rise of 2.1% from the previous year.
The consensus estimate for retail and business banking fees is pegged at $16.23 million, suggesting an 18.9% year-over-year decline. The Zacks Consensus Estimate for wealth management fees of $12.81 million indicates a fall of 1.5%.
Increased volatility across the markets and products seems to have supported Zions’ capital markets and foreign exchange fees. The estimate the same is $18.92 million, which suggests a year-over-year rise of 11.3%.
Hence, due to the expected fall in almost all components, the customer-related fee (accounting for more than 85% of Zions’ total non-interest income) is anticipated to have decreased in the quarter. The Zacks Consensus Estimate for the same is pegged at $146 million, which indicates a decline of 3.3%. We project this metric to decrease 12.1% to $132.1 million.
The consensus estimate for dividends and other income is pegged at $5.99 million, indicating a decline of 33.4% from the prior-year quarter’s reported number.
Overall, the Zacks Consensus Estimate for total non-interest income is pegged at $151 million, suggesting a rise of 8.6% from the prior-year quarter’s reported figure. Our estimate for the metric stands at $144.8 million, reflecting a rise of 4.2%.
Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. The company continues to invest in franchise, which along with inflationary pressure, is expected to have kept operating expenses elevated in the third quarter.
Our estimate for total non-interest expenses is pegged at $467.9 million, reflecting a 9.1% increase from the prior-year quarter number.
Asset Quality: With the rise in loan balance and expectations of economic slowdown due to geopolitical and inflation concerns, ZION is expected to have built reserves in the third quarter. Our estimate for provision for credit losses is pegged at $18.8 million against a provision benefit of $46 million a year ago.
The Zacks Consensus Estimate for total non-performing loans is pegged at $288 million, suggesting a decline of 10.8% from the prior-year quarter’s reported figure. Further, the consensus estimate for total non-performing assets of $288 million indicates an 11.1% fall.
What Our Quantitative Model Predicts
According to our quantitative model, the chances of Zions beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Zions is +0.97%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Zions Bancorporation, N.A. Price and EPS Surprise
Zions Bancorporation, N.A. price-eps-surprise | Zions Bancorporation, N.A. Quote
Q3 Earnings & Sales Growth Expectations
The Zacks Consensus Estimate for Zions’ third-quarter earnings is $1.58 per share, which suggests an increase of 9% from the year-ago quarter’s reported number. The estimate has been unchanged over the past 30 days. Our estimate for earnings is also $1.58 per share.
The consensus estimate for sales is pegged at $813 million, which indicates a rise of 16% from the prior-year reported figure. Our estimate for sales is $5807.3, reflecting an increase of 15.2%.
Other Bank Stocks That Warrant a Look
Here are a few other bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Huntington Bancshares (HBAN - Free Report) is +0.72% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2022 results on Oct 21.
Over the past 30 days, the Zacks Consensus Estimate for HBAN’s quarterly earnings has been revised 2.6% lower.
Cathay General Bancorp (CATY - Free Report) is scheduled to release third-quarter 2022 earnings on Oct 24. CATY, which carries a Zacks Rank #3 at present, has an Earnings ESP of +6.56%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CATY’s quarterly earnings estimates have moved almost 1% north over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.