Zions' (ZION) Q4 Earnings & Revenues Beat Estimates, Costs Up

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Zions Bancorporation’s ZION fourth-quarter 2021 net earnings per share of $1.34 surpassed the Zacks Consensus Estimate by a penny. The bottom line, however, decreased 19.3% from the year-ago quarter’s number.

Results were primarily aided by an increase in net interest income and non-interest income. The company witnessed a rise in loan and deposit balances in the quarter. However, increase in non-interest expenses due to salaries, employee benefits and other expenses, besides higher provisions, acted as undermining factors.

Net income attributable to common shareholders was $207 million, down 24.7% year over year.

In 2021, earnings of $6.79 per share missed the consensus estimate of $6.80 while increasing substantially from $3.02 in 2020. Also, net income of $1.1 billion was significantly up from $505 million in 2020.

Zions Bancorporation, N.A. price-consensus-eps-surprise-chart, Zions Bancorporation, N.A. Quote, Click to get this free report, Zacks Investment Research
– Zacks

Revenues & Expenses Rise

Net revenues (tax equivalent) were $753 million, up 4.1% year over year. The top line surpassed the Zacks Consensus Estimate of $714.7 million.

In 2021, net revenues (tax equivalent) increased 4.4% to $2.94 billion. The top line outpaced the consensus estimate of $2.89 billion.

Net interest income was $553 million, up marginally from $550 million in the prior-year quarter. Net interest margin (NIM) contracted 37 basis points (bps) year over year to 2.58%.

Non-interest income (NII) was $190 million, up 14.5% from the year-ago quarter. The increase was due to a rise in all components except loan-related fees and income. Also, the company recorded loss in fair-value and non-hedge derivative income in the quarter under review against gains in the year-ago quarter.

Adjusted non-interest expenses were $446 million, up 5.4% from the prior-year quarter.

Efficiency ratio (non-GAAP) was 60.8%, up from 60.2% in the prior-year period. A rise in the efficiency ratio indicates a decrease in profitability.

As of Dec 31, 2021, net loans held for investment were $50.3 billion, up marginally from $50.2 billion at the prior quarter’s end. Total deposits were $82.8 billion, up 6.3% sequentially.

Credit Quality: A Mixed Bag

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The ratio of non-performing assets to loans and leases, as well as other real estate owned, contracted 16 bps year over year to 0.53%. In the reported quarter, the company recorded net loan and lease charge offs of $1 million, down from $15 million in the prior-year quarter.

Provision for credit losses was $25 million against a benefit of $67 million in the year-earlier quarter.

Capital & Profitability Ratios Deteriorate

Tier 1 leverage ratio was 7.2% as of Dec 31, 2021 compared with 8.3% recorded at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 10.9% decreased from 11.8%.

At the end of the reported quarter, return on average assets was 0.92%, down from 1.14% as of Dec 31, 2020. Also, return on average tangible common equity was 13.4%, down from 17.8% witnessed in the year-ago quarter.

Share Repurchase

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The company repurchased 5 million shares for $325 million in the reported quarter.

Our Take

Zions’ strong balance-sheet position, along with its business-simplifying efforts and rise in loan demand, bodes well for the future. However, persistently increasing operating expenses, mainly owing to the company’s investments in franchise and its efforts to digitize operations, are likely to hurt the bottom line to some extent in the near term.

Zions Bancorporation, N.A. Price, Consensus and EPS Surprise

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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 fourth-quarter 2021 adjusted earnings per share of 30 cents met the Zacks Consensus Estimate. The bottom line reflected a rise of 7.1% from the prior-year quarter.

F.N.B.’s results were primarily aided by a rise in fee income, lower expenses and provision benefits. However, a fall in NII was the undermining factor.

BankUnited, Inc.’s BKU fourth-quarter 2021 earnings per share of $1.41 surpassed the Zacks Consensus Estimate of $1.14. The bottom line also jumped 58.4% from the prior-year quarter.

BankUnited’s results primarily benefited from higher revenues and rise in loans and deposit balances. However, a rise in expenses and poor credit quality were the undermining factors.

SVB Financial Group’s SIVB fourth-quarter 2021 adjusted earnings per share of $6.56 comfortably outpaced the Zacks Consensus Estimate of $6.29. In the year-ago quarter, the company recorded earnings of $7.40 per share.

SVB Financial’s results largely benefited from growth in revenues. Loans and deposit balances witnessed sequential improvement. However, a rise in expenses and lower NIM were the undermining factors.


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Zions Bancorporation, N.A. (ZION): Free Stock Analysis Report

 

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