On Sep 9, 2013, we reaffirmed our Neutral recommendation on
). This was based on the company's positive second-quarter 2013
results. However, we remain concerned about continuous deposit
pricing pressures as well as sluggish loan and deposit growth.
Moreover, intense competition in the sector may lower deposit
pricing further, thereby compressing Zions' net interest margin
in the upcoming quarters.
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ZIONS BANCORP (ZION): Free Stock Analysis
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On Jul 22, Zions reported second-quarter 2013 earnings per share
of 44 cents, surpassing the Zacks Consensus Estimate of 42 cents.
Earnings were primarily driven by top-line growth, partially
offset by a rise in operating expenses. Moreover, consistent
improvement in credit quality and capital ratios, along with
stable deposits and loans, were the tailwinds.
The Zacks Consensus Estimate for 2013 decreased 5.1% to $1.69 per
share over the last 60 days. However, for 2014, the Zacks
Consensus Estimate advanced 1.0% to $1.96 per share over the same
time period. As a result, Zions currently carries a Zacks Rank #3
Zions has achieved solid organic loan growth, in consistence with
the improving economic activity across its diverse footprint.
Considering the recovering economy, management expects moderate
loan growth to offset the subdued loan yields in the upcoming
quarters. Moreover, improving credit quality and steady capital
ratios are Zions' strengths.
However, the prevailing interest rates, sluggish economic growth,
the company's asset-sensitive balance sheet, losses related to
its collateralized debt obligations exposure and regulatory
restrictions are matters of concern.
Other Stocks Worth Considering
Some better-performing banks include
BofI Holding, Inc.
East West Bancorp, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).