On Jun 10, 2013, we reiterated our long-term recommendation on
) at Neutral. Our decision rests on its continuous capital
deployment activities and solid first-quarter 2013 earnings.
However, we remain concerned about the company's asset-sensitive
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ZIONS BANCORP (ZION): Free Stock Analysis
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Why the Neutral Stance?
Zions' first-quarter 2013 adjusted earnings of 49 cents per share
surpassed the Zacks Consensus Estimate of 39 cents. Also,
earnings came in significantly ahead of the year-ago earnings of
21 cents. Better-than-expected results were aided by growth in
fee income and a decline in operating expenses, partially offset
by a fall in net interest income. Moreover, continuously
improving credit quality, capital and profitable ratios as well
as stable deposits and loans were the tailwinds.
Following the result release, the Zacks Consensus Estimate went
up by 3.5% to $1.77 per share over the last 60 days. Moreover,
for 2014, the Zacks Consensus Estimate went up by 1.0% to $1.92
per share over the same time frame. The company currently has a
Zacks Rank #2 (Buy).
On Apr 19, 2013, Zions announced a dividend hike of 300% to 4
cents per share, following the partial approval of its capital
plan by the Federal Reserve. Moreover, Zions' continuously
improving credit quality, solid organic loan growth and stable
capital ratios are expected to improve its financials going
Additionally, over the past several years, Zions has expanded its
footprint through acquisitions. This is expected to drive its
On the other hand, Zions' total liquidity continued to mount,
making the company more vulnerable in the face of a dominant low
interest-rate environment. Further, slow growth in core deposits
and loans could cause a negative mix shift.
Moreover, Zions has been incurring significant losses owing to
its collateralized debt obligation (CDO) exposure. This may prove
detrimental to the company's growth.
Other Banks to Consider
Some other stocks in the banking sector worth a look include
Central Pacific Financial Corp
). All these carry a Zacks Rank #1 (Strong Buy).