ZION - Zions Bancorporation stock dives after Q1 profit slides more than expected

2023-04-19 16:45:45 ET

Zions Bancorporation ( NASDAQ: ZION ) stock tanked as much as 6.2% in Wednesday after-hours trading after the regional lender delivered first-quarter earnings below the consensus estimate as net interest income retreated from the prior quarter, amid elevated funding costs and seasonal noninterest expenses.

Chairman and CEO Harris H. Simmons said that last month's bank failures "accelerated a change in funding mix and costs that we expect will reduce the near-term quarterly 'run rate' of revenue by approximately 4%," though "an increased focus on operating costs will offset a portion of this impact.”

Q1 EPS of $1.33 (excluding negative impact from tax contingency reserve of $0.06), falling short of the average analyst estimate of $1.51, fell from $1.84 in Q4 2022 and rose from $1.27 in the year-ago quarter.

Net interest income of $679M, down from $720M in the prior quarter and up from $544M in Q1 2022. Net interest margin of 3.33% vs. 3.53% in Q4 2022 and 2.60% in Q1 of last year.

Adjusted noninterest expense was $509M, compared with $472M in Q4 2022 and $446M in the year-earlier period.

Average total loans of $56.2B increased 2.7% Q/Q; average total deposits of $70.2B fell 5.5% Q/Q. The bank's cost of deposits at the end of March was 0.90%, resulting in a deposit beta of 18%.

Loan-to-deposit ratio of 81% vs. 78% in Q4 2022 and 61% in Q1 2022.

Total securities portfolio (at fair value) and money market investments as a percentage of earning assets was 32%, down from 33% in the previous quarter and from 40% in Q1 2022.

Conference call at 5:30 p.m. ET.

Earlier, Zions GAAP EPS of $1.33 misses by $0.18, revenue of $839M in-line.

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