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Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2022 net earnings per share of $1.84 surpassed the Zacks Consensus Estimate of $1.66. The bottom line increased 37.3% from the year-ago quarter. We had projected earnings of $1.57 per share.
Results were primarily aided by an improvement in net interest income (NII), which was driven by rising rates and increasing loan demand. However, higher provisions, a rise in non-interest expenses, and lower deposit balances and non-interest income were the headwinds, which hurt results to some extent.
Probably because of these negatives, shares of the company lost 3.7% in after-market trading despite better-than-expected results.
Net income attributable to common shareholders was $277 million, up 33.8% year over year. Our estimate for the metric was $233.2 million.
Earnings for 2022 were $5.79 per share, which beat the Zacks Consensus Estimate of $5.60. The bottom line declined 14.7% from the year-ago period. We had projected earnings of $5.53 per share. Net income attributable to common shareholders was $878 million, down 20.2% year over year. Our estimate for the metric was $834.2 million.
Revenues Improve, Expenses Rise
Quarterly revenues (tax equivalent) were $883 million, jumping 17.3% year over year. The top line surpassed the Zacks Consensus Estimate of $873.1 million. Our estimate for the metric was $865.4 million.
Revenues (tax equivalent) for 2022 were $3.19 billion, up 8.4% year over year. The top line marginally surpassed the Zacks Consensus Estimate of $3.18 billion. Our estimate for the metric was $3.17 billion.
Quarterly NII was $720 million, growing 30.2% from the prior-year quarter. The rise was mainly driven by higher interest rates and a favorable change in the composition of interest-earning assets. Likewise, the net interest margin (NIM) expanded 95 basis points (bps) to 3.53%. Our estimates for NII and NIM were $689.2 million and 3.30%.
Non-interest income was $153 million, decreasing 19.5% year over year. The decline was due to a fall in retail and business banking fees, loan-related fees, and income, capital markets and foreign exchange fees, other customer-related fees, and dividends and other income. We had projected non-interest income of $165.7 million. In the reported quarter, the company recorded a net securities loss against a gain in the prior-year quarter.
Adjusted non-interest expenses were $472 million, up 5.8% year over year. We had expected this metric to be $502.7 million.
The efficiency ratio (non-GAAP) was 52.9%, down from 60.8% in the prior-year period. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec 31, 2022, net loans and leases held for investment were $55.1 billion, up 3.2% from the prior quarter. Total deposits were $71.7 billion, down 5.7% sequentially.
Credit Quality: Mixed Bag
The ratio of non-performing assets and accruing loans 90 days or more past due to loans and leases, as well as other real estate owned, contracted 27 bps year over year to 0.28%. In the reported quarter, the company recorded net loan and lease recoveries of $3 million against net charge-offs of $1 million in the prior-year quarter.
However, the provision for credit losses was $43 million, up 72% from the year-earlier quarter. We had projected provisions of $44 million for the fourth quarter.
Capital Ratios Deteriorate, Profitability Ratios Improve
Tier 1 leverage ratio was 7.6% as of Dec 31, 2022, compared with 7.2% at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 10.3% decreased from 10.9%.
Further, as of Dec 31, 2022, the common equity tier 1 capital ratio was 9.7%, which declined from 10.2% in the prior-year period.
At the end of the fourth quarter, the return on average assets was 1.27%, up from 0.92% as of Dec 31, 2021. Also, the return on average tangible common equity was 16.9%, up from 13.5% in the year-ago quarter.
Share Repurchases
The company repurchased 1 million shares for $50 million in the reported quarter.
Our Take
Zions’ strong balance-sheet position, business-simplifying efforts, higher interest rates and a rise in loan demand bode well for the future. However, persistently increasing operating expenses and deteriorating economic outlook are near-term concerns.
Zions Bancorporation, N.A. Price, Consensus and EPS Surprise
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2022 earnings of $1.65 per share surpassed the Zacks Consensus Estimate of $1.63. The bottom line rose 6.5% from the prior-year quarter’s earnings of $1.55.
HWC’s results benefited from higher net interest income, supported by a rise in loan balance and increasing interest rates. However, lower non-interest income mainly due to higher mortgage rates was the undermining factor. Higher expenses and a rise in provisions were other concerns for HWC.
The PNC Financial Services Group, Inc.’s (PNC - Free Report) fourth-quarter 2022 adjusted earnings per share of $3.49 lagged the Zacks Consensus Estimate of $3.95. Also, the bottom line declined 5.2% year over year.
PNC’s results were primarily hurt by a decline in non-interest income and higher provisions. However, an increase in net interest income, supported by higher rates and loan growth, and a decline in expenses were tailwinds for PNC.
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Zions (ZION) Dips Despite Q4 Earnings Beat, Revenues Rise Y/Y
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2022 net earnings per share of $1.84 surpassed the Zacks Consensus Estimate of $1.66. The bottom line increased 37.3% from the year-ago quarter. We had projected earnings of $1.57 per share.
Results were primarily aided by an improvement in net interest income (NII), which was driven by rising rates and increasing loan demand. However, higher provisions, a rise in non-interest expenses, and lower deposit balances and non-interest income were the headwinds, which hurt results to some extent.
Probably because of these negatives, shares of the company lost 3.7% in after-market trading despite better-than-expected results.
Net income attributable to common shareholders was $277 million, up 33.8% year over year. Our estimate for the metric was $233.2 million.
Earnings for 2022 were $5.79 per share, which beat the Zacks Consensus Estimate of $5.60. The bottom line declined 14.7% from the year-ago period. We had projected earnings of $5.53 per share. Net income attributable to common shareholders was $878 million, down 20.2% year over year. Our estimate for the metric was $834.2 million.
Revenues Improve, Expenses Rise
Quarterly revenues (tax equivalent) were $883 million, jumping 17.3% year over year. The top line surpassed the Zacks Consensus Estimate of $873.1 million. Our estimate for the metric was $865.4 million.
Revenues (tax equivalent) for 2022 were $3.19 billion, up 8.4% year over year. The top line marginally surpassed the Zacks Consensus Estimate of $3.18 billion. Our estimate for the metric was $3.17 billion.
Quarterly NII was $720 million, growing 30.2% from the prior-year quarter. The rise was mainly driven by higher interest rates and a favorable change in the composition of interest-earning assets. Likewise, the net interest margin (NIM) expanded 95 basis points (bps) to 3.53%. Our estimates for NII and NIM were $689.2 million and 3.30%.
Non-interest income was $153 million, decreasing 19.5% year over year. The decline was due to a fall in retail and business banking fees, loan-related fees, and income, capital markets and foreign exchange fees, other customer-related fees, and dividends and other income. We had projected non-interest income of $165.7 million. In the reported quarter, the company recorded a net securities loss against a gain in the prior-year quarter.
Adjusted non-interest expenses were $472 million, up 5.8% year over year. We had expected this metric to be $502.7 million.
The efficiency ratio (non-GAAP) was 52.9%, down from 60.8% in the prior-year period. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec 31, 2022, net loans and leases held for investment were $55.1 billion, up 3.2% from the prior quarter. Total deposits were $71.7 billion, down 5.7% sequentially.
Credit Quality: Mixed Bag
The ratio of non-performing assets and accruing loans 90 days or more past due to loans and leases, as well as other real estate owned, contracted 27 bps year over year to 0.28%. In the reported quarter, the company recorded net loan and lease recoveries of $3 million against net charge-offs of $1 million in the prior-year quarter.
However, the provision for credit losses was $43 million, up 72% from the year-earlier quarter. We had projected provisions of $44 million for the fourth quarter.
Capital Ratios Deteriorate, Profitability Ratios Improve
Tier 1 leverage ratio was 7.6% as of Dec 31, 2022, compared with 7.2% at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 10.3% decreased from 10.9%.
Further, as of Dec 31, 2022, the common equity tier 1 capital ratio was 9.7%, which declined from 10.2% in the prior-year period.
At the end of the fourth quarter, the return on average assets was 1.27%, up from 0.92% as of Dec 31, 2021. Also, the return on average tangible common equity was 16.9%, up from 13.5% in the year-ago quarter.
Share Repurchases
The company repurchased 1 million shares for $50 million in the reported quarter.
Our Take
Zions’ strong balance-sheet position, business-simplifying efforts, higher interest rates and a rise in loan demand bode well for the future. However, persistently increasing operating expenses and deteriorating economic outlook are near-term concerns.
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 Other Banks
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2022 earnings of $1.65 per share surpassed the Zacks Consensus Estimate of $1.63. The bottom line rose 6.5% from the prior-year quarter’s earnings of $1.55.
HWC’s results benefited from higher net interest income, supported by a rise in loan balance and increasing interest rates. However, lower non-interest income mainly due to higher mortgage rates was the undermining factor. Higher expenses and a rise in provisions were other concerns for HWC.
The PNC Financial Services Group, Inc.’s (PNC - Free Report) fourth-quarter 2022 adjusted earnings per share of $3.49 lagged the Zacks Consensus Estimate of $3.95. Also, the bottom line declined 5.2% year over year.
PNC’s results were primarily hurt by a decline in non-interest income and higher provisions. However, an increase in net interest income, supported by higher rates and loan growth, and a decline in expenses were tailwinds for PNC.