Shares of Zions Bancorporation (ZION) surged 3.2% in the after-market trading following its strong third-quarter 2024 results. The company reported earnings per share (EPS) of $1.37, exceeding the Zacks Consensus Estimate of $1.16. This reflects a notable 21.2% increase compared to the same quarter last year.
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Key factors contributing to this performance include lower provisions and increased net interest income (NII). Additionally, growth in loans and deposits provided further support. However, the company faced challenges with a drop in non-interest income and a rise in adjusted non-interest expenses.
In the quarter, net income attributable to common shareholders (GAAP) reached $204 million, representing a 21.4% year-over-year increase. This figure surpassed our projection of $168.3 million.
Revenue Growth Offset by Rising Expenses
Zions reported net revenues (on a tax-equivalent basis) of $804 million, up 3.6% from a year ago. This performance also beat the Zacks Consensus Estimate of $781.6 million.
NII stood at $620 million, an increase of 6%, driven mainly by better yields on securities, despite the negative impact of rising funding costs. Furthermore, the net interest margin (NIM) improved by 10 basis points (bps) to 3.03%. We had forecasted NII to be $596.8 million and NIM at 3.04%.
However, non-interest income fell by 4.4% to $172 million, below our expectation of $168 million. Adjusted non-interest expenses rose 1.2% to $499 million, which was slightly better than our estimate of $511 million.
The adjusted efficiency ratio improved to 62.5%, down from 64.4% in the same period last year, indicating rising profitability.
As of September 30, 2024, net loans and leases held for investment totaled $58.2 billion, a slight increase from the prior quarter. Total deposits reached $75.7 billion, reflecting a growth of 2.6%.
Improvements in Credit Quality
The ratio of non-performing assets to loans and leases, including other real estate owned, increased by 24 bps year over year to 0.62%. Zions reported net loan and lease charge-offs of $3 million, compared to $14 million in the same quarter last year.
The provision for credit losses dropped sharply to $1 million this quarter, down 97.7% from the previous year.
Enhanced Capital and Profitability Ratios
As of September 30, 2024, Zions’ Tier 1 leverage ratio improved to 8.6%, up from 8.3% the previous year. The Tier 1 risk-based capital ratio also increased to 11.4%, compared to 10.9% a year earlier.
The common equity tier 1 capital ratio rose to 10.7%, up from 10.2% in the prior-year period.
Return on average assets improved to 0.95%, up from 0.80% a year ago, while the return on average tangible common equity rose slightly to 17.4%, compared to 17.3% last year.
Outlook for Zions Bancorporation
Zions’ solid balance sheet, along with increasing fee income and rising interest rates, suggests a positive outlook. However, ongoing challenges such as rising operating expenses, high funding costs, and significant exposure to commercial loans amid economic uncertainty raise 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 holds a Zacks Rank #3 (Hold). You can view the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Other Bank Performances
F.N.B. Corporation (FNB) reported third-quarter 2024 adjusted EPS of 34 cents, falling short of the Zacks Consensus Estimate of 36 cents, marking a 15% decline from the previous year’s figures.
FNB faced challenges from increased expenses and lower NII. However, growth in non-interest income along with reduced provisions and higher average loans and deposits supported its results.
Bank OZK (OZK) exceeded expectations with an EPS of $1.55, beating the Zacks Consensus Estimate of $1.53, and registering a 4% rise from last year.
This improvement stemmed from increases in both non-interest income and NII due to higher rates and growth in loans and deposits. Nevertheless, rising expenses, provisions for credit losses, and higher funding costs were challenges for OZK.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
