Solid 3Q lending growth at Zions

Growth in commercial and consumer lending — along with rising interest rates, lower tax rates and stronger credit quality — contributed to a 41% gain in third-quarter profits at Zions Bancorp. in Salt Lake City.

The $66.7 billion-asset Zions reported $215 million in net earnings for the third quarter, or $1.04 per share, which was 7 cents higher than the mean estimate of analysts polled by FactSet Research Systems.

“These results reflect consistent revenue growth, disciplined expense management and continued strong credit performance,” Chairman and CEO Harris Simmons said in a press release Monday.

Simmons also said that Zions completed the merger of its holding company into its subsidiary bank during the quarter, a move meant to simplify its organizational structure and regulatory framework.

Net interest income increased 8% to $565 million, and the net interest margin widened 18 basis points to 3.63%. The increase in net interest income was due to both loan growth and higher interest rates and was offset somewhat by higher deposit costs.

Total loans and leases increased 4% to $45.3 billion. Commercial loans increased 4% to $23.5 billion, and consumer loans increased 7% to $11.2 billion. Commercial real estate lending declined about 1% to $11 billion.

Total deposits increased 3% to $53.8 billion.

Noninterest income declined 2% to $136 million. Wealth management and trust income, as well as other service charges, commissions and fees, rose, but those were offset by a $6 million decrease in net securities gains. Capital markets income and loans sales and servicing income also fell.

Expenses ticked up slightly to $416 million. Salaries and employee benefits increased 5% to $264 million, but other expenses, such as operational losses and regulatory fees, declined.

The company improved its efficiency ratio to 58.8% from 62.3% last year.

Its effective tax rate fell to 23.6% from 34.2% in the third quarter of last year, thanks to the federal reduction in commercial taxes.

Zions enjoyed strong credit quality in the third quarter. Nonperforming assets fell 38% to $292 million, and the company recovered $1 million in the quarter, compared with $8 million charged off a year ago. Zions also recorded a negative $11 million provision for credit losses, compared with $1 million provision in the same period last year.

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Commercial lending Consumer lending Earnings Zions Bancorp. Utah
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