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Zions (ZION) Q1 Earnings Lag Estimates, Revenues Decline Y/Y
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Zions Bancorporation’s (ZION - Free Report) first-quarter 2020 net earnings per share of 4 cents missed the Zacks Consensus Estimate of 48 cents. Results included certain notable non-recurring items.
While improvement in non-interest income was a positive, a significant increase in provision for credit losses and lower net interest income hampered results.
Net income attributable to common shareholders was $6 million, down from $205 million recorded in the prior-year quarter.
Revenues & Expenses Down
Net revenues for the quarter under review were $689 million, down 3.5% year over year. Further, the top line missed the Zacks Consensus Estimate of $679 million.
Net interest income was $548 million for the quarter, down 4.9% from the prior-year quarter. The decline resulted from a fall in interest income. Net interest margin contracted 27 basis points (bps) year over year to 3.41%.
Non-interest income amounted to $134 million, up 2% from the year-ago quarter. The increase was driven by a rise in total customer-related fees, and wealth management and trust fees.
Adjusted non-interest expenses were $407 million, down 6% from the prior-year quarter.
Efficiency ratio was 57.7%, up from 60.2% reported a year ago. A rise in efficiency ratio indicates a decline in profitability.
Balance Sheet Strong
As of Mar 31, 2020, net loans held for investment were $49.2 billion, up from $48.2 billion recorded at the end of the prior quarter. Total deposits were $57.5 billion, marginally up from $57.1 billion recorded at the end of fourth-quarter 2019.
Credit Quality: A Mixed Bag
The ratio of non-performing assets to loans and leases as well as other real estate owned shrunk 6 bps year over year to 0.56%. Provision for credit losses was $258 million as compared with $4 million in the year-earlier quarter.
However, net loan and lease charge-offs were $7 million at the end of the reported quarter compared with no charge-offs.
Capital & Profitability Ratios Deteriorate
Tier 1 leverage ratio was 9% as of Mar 31, 2020, compared with 9.9% at the end of the prior-year quarter. Tier 1 risk-based capital ratio was 11%, down from 12.3% in the year-ago quarter.
At the end of the first quarter, return on average assets was 0.08%, down from 1.26% as of Mar 31, 2019. Also, return on average tangible common equity was 0.4%, down from 13.9% reported in the year-ago quarter.
Share Repurchases
During the quarter, Zions repurchased $75 million worth of shares.
Our Viewpoint
Zion’s balance-sheet position remained strong in first-quarter 2020. This will support the company’s ongoing efficient 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, going forward.
Zions Bancorporation, N.A. Price, Consensus and EPS Surprise
Cathay General Bancorp (CATY - Free Report) is slated to report first-quarter 2020 results on Apr 27, 2020.
Columbia Banking System, Inc. (COLB - Free Report) will report its first-quarter 2020 numbers on Apr 30, 2020.
Hope Bancorp, Inc. (HOPE - Free Report) is slated to report first-quarter 2020 results on Apr 28, 2020.
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Zions (ZION) Q1 Earnings Lag Estimates, Revenues Decline Y/Y
Zions Bancorporation’s (ZION - Free Report) first-quarter 2020 net earnings per share of 4 cents missed the Zacks Consensus Estimate of 48 cents. Results included certain notable non-recurring items.
While improvement in non-interest income was a positive, a significant increase in provision for credit losses and lower net interest income hampered results.
Net income attributable to common shareholders was $6 million, down from $205 million recorded in the prior-year quarter.
Revenues & Expenses Down
Net revenues for the quarter under review were $689 million, down 3.5% year over year. Further, the top line missed the Zacks Consensus Estimate of $679 million.
Net interest income was $548 million for the quarter, down 4.9% from the prior-year quarter. The decline resulted from a fall in interest income. Net interest margin contracted 27 basis points (bps) year over year to 3.41%.
Non-interest income amounted to $134 million, up 2% from the year-ago quarter. The increase was driven by a rise in total customer-related fees, and wealth management and trust fees.
Adjusted non-interest expenses were $407 million, down 6% from the prior-year quarter.
Efficiency ratio was 57.7%, up from 60.2% reported a year ago. A rise in efficiency ratio indicates a decline in profitability.
Balance Sheet Strong
As of Mar 31, 2020, net loans held for investment were $49.2 billion, up from $48.2 billion recorded at the end of the prior quarter. Total deposits were $57.5 billion, marginally up from $57.1 billion recorded at the end of fourth-quarter 2019.
Credit Quality: A Mixed Bag
The ratio of non-performing assets to loans and leases as well as other real estate owned shrunk 6 bps year over year to 0.56%. Provision for credit losses was $258 million as compared with $4 million in the year-earlier quarter.
However, net loan and lease charge-offs were $7 million at the end of the reported quarter compared with no charge-offs.
Capital & Profitability Ratios Deteriorate
Tier 1 leverage ratio was 9% as of Mar 31, 2020, compared with 9.9% at the end of the prior-year quarter. Tier 1 risk-based capital ratio was 11%, down from 12.3% in the year-ago quarter.
At the end of the first quarter, return on average assets was 0.08%, down from 1.26% as of Mar 31, 2019. Also, return on average tangible common equity was 0.4%, down from 13.9% reported in the year-ago quarter.
Share Repurchases
During the quarter, Zions repurchased $75 million worth of shares.
Our Viewpoint
Zion’s balance-sheet position remained strong in first-quarter 2020. This will support the company’s ongoing efficient 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, going forward.
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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Schedule of Other Banks
Cathay General Bancorp (CATY - Free Report) is slated to report first-quarter 2020 results on Apr 27, 2020.
Columbia Banking System, Inc. (COLB - Free Report) will report its first-quarter 2020 numbers on Apr 30, 2020.
Hope Bancorp, Inc. (HOPE - Free Report) is slated to report first-quarter 2020 results on Apr 28, 2020.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>