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Zions' Q3 Earnings Top Estimates on Higher NII, Stock Up 3.2%
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Shares of Zions Bancorporation (ZION - Free Report) gained 3.2% in the after-market session in response to better-than-expected third-quarter 2024 results. Earnings per share (EPS) of $1.37 surpassed the Zacks Consensus Estimate of $1.16. Moreover, the bottom line increased 21.2% from the year-ago quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results were primarily aided by lower provisions and higher net interest income (NII). Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds.
Results in the reported quarter included certain notable items that were negligible to earnings. After considering it, net income attributable to its common shareholders (GAAP) was $204 million, rising 21.4% year over year. We had projected the metric to be $168.3 million.
Zions’ Revenues Increase, Expenses Rise
Net revenues (tax equivalent) were $804 million, up 3.6% year over year. Further, the top line beat the Zacks Consensus Estimate of $781.6 million.
NII was $620 million, up 6%. The increase was mainly attributed to higher yields on securities partially offset by higher funding costs. Likewise, net interest margin (NIM) expanded 10 basis points (bps) to 3.03%. Our estimates for NII and NIM were $596.8 million and 3.04%, respectively.
Non-interest income declined 4.4% to $172 million. We had projected non-interest income to be $168 million.
Adjusted non-interest expenses increased 1.2% to $499 million. Our estimate for the metric was $511 million.
Adjusted efficiency ratio was 62.5%, down from 64.4% in the prior-year period. A decline in the efficiency ratio indicates an increase in profitability.
As of Sept. 30, 2024, net loans and leases held for investment were $58.2 billion, up marginally from the prior quarter. Total deposits were $75.7 billion, up 2.6%.
Credit Quality for ZION Improves
The ratio of non-performing assets to loans and leases, as well as other real estate owned, expanded 24 bps year over year to 0.62%. In the reported quarter, the company recorded net loan and lease charge-offs of $3 million against $14 million loan and lease charge-offs in the prior-year quarter.
Provision for credit losses was $1 million in the reported quarter, down 97.7% from the year-ago quarter.
Zions’ Capital Ratios Improve, Profitability Ratios Rise
Tier 1 leverage ratio was 8.6% as of Sept. 30, 2024, up from 8.3% at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 11.4% increased from 10.9%.
Further, as of Sept. 30, 2024, the common equity tier 1 capital ratio was 10.7%, up from 10.2% in the prior-year period.
At the end of the third quarter, the return on average assets was 0.95%, up from 0.80% in the prior-year quarter. Return on average tangible common equity was 17.4%, up from 17.3% in the year-ago quarter.
Our Take
Zions’ decent balance sheet position and improving fee income alongside higher interest rates bode well for the future. However, persistently increasing operating expenses, high funding costs and significant exposure to commercial loans amid an uncertain macroeconomic outlook are concerns.
Zions Bancorporation, N.A. Price, Consensus and EPS Surprise
F.N.B. Corporation’s (FNB - Free Report) third-quarter 2024 adjusted EPS of 34 cents lagged the Zacks Consensus Estimate of 36 cents. Moreover, the bottom line reflected a decline of 15% from the prior-year quarter’s level.
FNB’s results were primarily affected by higher expenses and lower NII. Nonetheless, a higher non-interest income, lower provisions, and a rise in average loans and deposits balance offered some support.
Bank OZK’s (OZK - Free Report) third-quarter 2024 EPS of $1.55 surpassed the Zacks Consensus Estimate of $1.53. The bottom line reflected a rise of 4% from the prior-year quarter’s actual.
Results benefited from a rise in non-interest income and NII, driven by higher rates and improvement in loans and deposit balances. However, increases in expenses, provision for credit losses and rising funding costs were the undermining factors for OZK.
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Zions' Q3 Earnings Top Estimates on Higher NII, Stock Up 3.2%
Shares of Zions Bancorporation (ZION - Free Report) gained 3.2% in the after-market session in response to better-than-expected third-quarter 2024 results. Earnings per share (EPS) of $1.37 surpassed the Zacks Consensus Estimate of $1.16. Moreover, the bottom line increased 21.2% from the year-ago quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results were primarily aided by lower provisions and higher net interest income (NII). Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds.
Results in the reported quarter included certain notable items that were negligible to earnings. After considering it, net income attributable to its common shareholders (GAAP) was $204 million, rising 21.4% year over year. We had projected the metric to be $168.3 million.
Zions’ Revenues Increase, Expenses Rise
Net revenues (tax equivalent) were $804 million, up 3.6% year over year. Further, the top line beat the Zacks Consensus Estimate of $781.6 million.
NII was $620 million, up 6%. The increase was mainly attributed to higher yields on securities partially offset by higher funding costs. Likewise, net interest margin (NIM) expanded 10 basis points (bps) to 3.03%. Our estimates for NII and NIM were $596.8 million and 3.04%, respectively.
Non-interest income declined 4.4% to $172 million. We had projected non-interest income to be $168 million.
Adjusted non-interest expenses increased 1.2% to $499 million. Our estimate for the metric was $511 million.
Adjusted efficiency ratio was 62.5%, down from 64.4% in the prior-year period. A decline in the efficiency ratio indicates an increase in profitability.
As of Sept. 30, 2024, net loans and leases held for investment were $58.2 billion, up marginally from the prior quarter. Total deposits were $75.7 billion, up 2.6%.
Credit Quality for ZION Improves
The ratio of non-performing assets to loans and leases, as well as other real estate owned, expanded 24 bps year over year to 0.62%. In the reported quarter, the company recorded net loan and lease charge-offs of $3 million against $14 million loan and lease charge-offs in the prior-year quarter.
Provision for credit losses was $1 million in the reported quarter, down 97.7% from the year-ago quarter.
Zions’ Capital Ratios Improve, Profitability Ratios Rise
Tier 1 leverage ratio was 8.6% as of Sept. 30, 2024, up from 8.3% at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 11.4% increased from 10.9%.
Further, as of Sept. 30, 2024, the common equity tier 1 capital ratio was 10.7%, up from 10.2% in the prior-year period.
At the end of the third quarter, the return on average assets was 0.95%, up from 0.80% in the prior-year quarter. Return on average tangible common equity was 17.4%, up from 17.3% in the year-ago quarter.
Our Take
Zions’ decent balance sheet position and improving fee income alongside higher interest rates bode well for the future. However, persistently increasing operating expenses, high funding costs and significant exposure to commercial loans amid an uncertain macroeconomic outlook are 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
F.N.B. Corporation’s (FNB - Free Report) third-quarter 2024 adjusted EPS of 34 cents lagged the Zacks Consensus Estimate of 36 cents. Moreover, the bottom line reflected a decline of 15% from the prior-year quarter’s level.
FNB’s results were primarily affected by higher expenses and lower NII. Nonetheless, a higher non-interest income, lower provisions, and a rise in average loans and deposits balance offered some support.
Bank OZK’s (OZK - Free Report) third-quarter 2024 EPS of $1.55 surpassed the Zacks Consensus Estimate of $1.53. The bottom line reflected a rise of 4% from the prior-year quarter’s actual.
Results benefited from a rise in non-interest income and NII, driven by higher rates and improvement in loans and deposit balances. However, increases in expenses, provision for credit losses and rising funding costs were the undermining factors for OZK.