Zions' (ZION) Q2 Earnings Beat Estimates, Stock Up 3.1%
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Shares of Zions Bancorporation ZION gained 3.1% in the after-market session in response to better-than-expected second-quarter 2024 results. Adjusted net earnings per share (EPS) of $1.21 surpassed the Zacks Consensus Estimate of $1.10. Moreover, the bottom line increased 9% from the year-ago quarter.
Results were primarily aided by lower provisions and higher net interest income (NII). Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds.
Results in the reported quarter included certain notable items. After considering it, net income attributable to its common shareholders (GAAP) was $190 million, rising 14.5% year over year. We had projected the metric to be $152.5 million.
Revenues Decline, Expenses Rise
Net revenues (tax equivalent) were $787 million, down marginally year over year. The top line, however, beat the Zacks Consensus Estimate of $761.1 million.
NII was $597 million, rising 1%. The increase was mainly attributed to higher yields on securities. Likewise, net interest margin (NIM) expanded 6 basis points (bps) to 2.98%. Our estimates for NII and NIM were $581.7 million and 2.93%, respectively.
Non-interest income came in at $179 million, decreasing 5.3%. We had projected non-interest income to be $164.1 million.
Adjusted non-interest expenses increased 2.4% to $506 million. Our estimate for the metric was $509.5 million.
Adjusted efficiency ratio was 64.5%, up from 62.5% in the prior-year period. A rise in the efficiency ratio indicates a decrease in profitability.
As of Jun 30, 2024, net loans and leases held for investment were $57.7 billion, up marginally from the prior quarter. Total deposits were $73.8 billion, down marginally.
Credit Quality: Mixed Bag
The ratio of non-performing assets to loans and leases, as well as other real estate owned, expanded 16 bps year over year to 0.45%. In the reported quarter, the company recorded net loan and lease charge-offs of $15 million against $13 million loan and lease charge-offs in the prior-year quarter.
Provision for credit losses was $5 million in the reported quarter, down 89.1% from the year-ago quarter.
Capital Ratios Improve, Profitability Ratios Mixed Bag
Tier 1 leverage ratio was 8.5% as of Jun 30, 2024, up from 8% at the end of the prior-year quarter. Tier 1 risk-based capital ratio of 11.2% increased from 10.7%.
Further, as of Jun 30, 2024, the common equity tier 1 capital ratio was 10.6%, up from 10% in the prior-year period.
At the end of the second quarter, the return on average assets was 0.91%, up from 0.79% in the prior-year quarter. Return on average tangible common equity was 17.5%, down from 17.8% in the year-ago quarter.
