Zions Bancorporation 's ZION earnings for the first quarter came in at $1.09 per share, comfortably surpassing the Zacks Consensus Estimate of 83 cents. Also, the figure compares favorably with the prior-year quarter's earnings of 61 cents per share.
Results, to a great extent, benefited from improvement in both net interest income and non-interest income. Also, the quarter witnessed overall improvement in credit quality. However, higher adjusted non-interest expenses remained a major headwind.
Notably, net income attributable to common shareholders for the quarter came in at $231 million indicating an increase of 79.1% year over year.
Revenues Improve, Costs Escalate
Net revenues came in at $684 million for the reported quarter, increasing 9.6% year over year. Moreover, the revenue figure surpassed the Zacks Consensus Estimate of $666 million.
Net interest income for the quarter came in at $542 million, up 10.8% year over year. The rise was primarily attributable to increased interest income, partially offset by higher interest expenses. Further, net interest margin expanded 18 basis points (bps) year over year to 3.56%.
Non-interest income amounted to $138 million, up 4.5% from the year-ago quarter. The uptick primarily stemmed from increase in other service charge, commission and fees, as well as wealth management and trust income.
Adjusted non-interest expenses were up 1.9% from the year-ago quarter to $419 million.
Efficiency ratio was 61.3%, down from 65.9% reported a year ago. A fall in efficiency ratio indicates improvement in profitability.
Strong Balance Sheet
As of Mar 31, 2018, total loans, net of allowance came in at $44.9 billion, up 1.3% from the end of the prior quarter. Total deposits inched up 0.8% from the prior-quarter end to $53 billion.
Credit Quality Improves
The ratio of non-performing assets to loans and leases, as well as other real estate owned, shrunk 50 bps, year over year, to 0.87%. Nonetheless, net charge-offs came in at $5 million, tanking 89.1% from the year-earlier quarter.
In the reported quarter, the company registered a provision benefit of $47 million compared with $18 million of provision for credit losses recorded in the prior-year quarter.
Capital & Profitability Ratios Deteriorate
Under the Basel III rules, Tier 1 leverage ratio was 10.5%, as of Mar 31, 2018, down from 10.8% at the end of the prior-year quarter. Tier 1 risk-based capital ratio was 13.3%, down from 13.6% in the year-ago quarter.
At the end of the Jan-Mar quarter, return on average assets was 1.45%, inching up from 0.88% as of Mar 31, 2017. Also, as of Mar 31, 2017, tangible return on average tangible common equity was 15.5%, up from 8.8% a year ago.
Zion's revenue growth looks encouraging. We are also impressed with its ability to increase net interest income. In addition, we are encouraged by the improvement in the company's credit quality.
However, downtick in its capital ratio remains a concern. Furthermore, elevated interest expenses hurt the company's financials.
Zions Bancorporation Price, Consensus and EPS Surprise
Zions Bancorporation Price, Consensus and EPS Surprise | Zions Bancorporation 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 and Upcoming Releases of Other Stocks
First Republic Bank's FRC registered a positive earnings surprise of 1.29% in first-quarter 2018, reflecting higher revenues. Earnings per share came in at $1.13, outpacing the Zacks Consensus Estimate of $1.06. Moreover, the figure improved 11.9% from the year-ago tally.
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