Loan Growth, Higher Rates to Help Zions’ (ZION) Second Quarter Earnings – July 21, 2022

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Zions Bancorporation (IF WE Free Report) is expected to release its second quarter 2022 results on July 26, after market close. Overall loan demand was impressive in the quarter ahead. Specifically, growth in commercial and industrial loan balances (which make up a large portion of Zions’ loan portfolio) has been solid.

The Zacks consensus estimate for the company’s average interest-earning assets for the second quarter is set at $86.9 billion, indicating a 7.3% increase from the figure reported in the quarter. the previous year.

Thus, supported by rising loan balances, as well as higher interest rates (the Federal Reserve raised interest rates by 125 basis points during the quarter), net interest income (NII ) of Zions, which is its main revenue component, is expected to increase have improved. The consensus estimate for the second quarter NII of $583 million indicates a 5% year-over-year increase.

Other key factors and estimates for the second quarter

Fee revenue: Rising mortgage rates (which hit a 14-year high in June) weighed on mortgage origination and refinancing activity in the second quarter. So, due to the lackluster performance of mortgage banking, Zions’ loan sales and management revenue are not expected to have improved much in the quarter. Zacks’ consensus estimate for the same is pegged at $21.28 million, suggesting a 1.3% increase from the reported number from the prior year quarter.

The commercial account fee consensus estimate of $36.21 million indicates a 6.5% year-over-year increase. Similarly, the consensus card fee estimate of $25.92 million suggests an 8% increase over the prior year.

The consensus estimate for banking fees for individuals and businesses is pegged at $20.30 million, suggesting a 12.8% year-over-year increase. The capital markets and foreign exchange fee estimate of $16.83 million indicates a 1% year-over-year decline.

Driven by expected increases in nearly every component, client-related fees (representing over 85% of Zions’ total non-interest revenue) are expected to have improved in the quarter. The consensus estimate for the same is pegged at $155 million, indicating an increase of 11.5% from the reported figure for the prior year quarter.

The consensus estimate for dividends and other income is set at $5.71 million, indicating a 28.6% decline from the figure reported in the prior year quarter.

The consensus estimate for total non-interest income indicates that the component will decline in the quarter. The estimate is pegged at $155 million, suggesting a 24.4% decline from the reported figure for the year-ago quarter.

Expenses: Zions has witnessed a persistent increase in operating expenses over the past few years. As the company continues to invest in the franchise, overall costs are expected to have increased in the second quarter.

Asset quality: Zacks consensus estimate for total non-performing loans is set at $285 million, suggesting a 7.2% decline from the reported figure for the prior year quarter.

What our quantitative model predicts

According to our quantitative model, the odds of Zions beating the Zacks consensus estimate this time around are high. This is because it has the right combination of two key ingredients – a positive earnings ESP and a Zacks rank #3 (Hold) or better.

You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

ESP Earnings: Earnings ESP for Zions is +0.54%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Second-quarter earnings and sales growth forecast

Zacks’ consensus estimate for second-quarter earnings is pegged at $1.35 per share, suggesting a 35.1% decline from the figure reported a year ago. The estimate has remained unchanged for the past 30 days.

The consensus sales estimate is set at $745.6 million, indicating a 1.9% decline from the prior year’s figure.

Other actions worth a look

A few other financial stocks, which you may want to consider as they also have the right combination of elements to show a pace of earnings in their next releases, according to our model, are Financial Regions (RF free report) and First interstate banking system (FIBK free report).

The Revenue ESP for Financial Regions is +0.89% and it currently carries Zacks Rank 3. RF is expected to report its second quarter 2022 results on July 22.

First Interstate BancSystem is expected to release its quarterly results on July 26. FIBK currently sports a Zacks rank #1 (strong buy) and has an ESP profit of +7.14%. You can see the full list of today’s Zacks #1 Rank stocks here.

Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.

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