Zions' Organic Growth On Track, Should You Stay Invested? - Analyst Blog

On Sep 4, 2014, we issued an updated research report on Zions Bancorporation (ZION). This Salt Lake City, UT-based West regional bank remains focused on the pursuit of its organic growth plans. Strong growth in loans and deposits indicates this.

Zions reported second-quarter 2014 adjusted earnings of 57 cents per share on Jul 21, beating the Zacks Consensus Estimate by 23.9%. The reported figure also compared favorably with 31 cents earned in the prior-year quarter.

Results were aided by a decline in non-interest expenses, though partly offset by a fall in revenue and higher provision for loan losses. Further, profitability ratios were strong, while capital ratios deteriorated. Credit quality was a mixed-bag during the quarter.

Total loans, including FDIC supported loans, were $39.6 billion, up 3.8% from the prior-year quarter. Total deposits climbed 1.5% to $45.7 billion from the year-ago quarter.

Nevertheless, a low interest rate environment continues to put pressure on the net interest margin (NIM). Also, Zion’s asset-sensitive balance sheet and stringent regulatory environment might affect the company’s top-line growth in the near term.

Over the past 30 days, the Zacks Consensus Estimate for 2014 and 2015 remained unchanged at $1.85 and $1.79 per share, respectively.

Zions currently carries a Zacks Rank #3 (Hold).

Some better-ranked West banks include Central Valley Community Bancorp (CVCY), Northrim Bancorp Inc. (NRIM) and Sierra Bancorp (BSRR). All these stocks sport a Zacks Rank #1 (Strong Buy).

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