Commercial, consumer lending drive Zions' 4Q profits

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Profits at Zions Bancorp. beat analysts’ estimates in the fourth quarter as loan volume in most major categories increased and credit quality improved across the board.

The Salt Lake City parent of Zions Bank and several other separately branded regional banks said late Tuesday that net income available to shareholders was $217 million and $1.05 per share in the quarter that ended Dec. 31. The results beat by 3 cents the mean estimates of analysts surveyed by FactSet Research Systems.

The $68.7 billion-asset company earned $114 million in the same quarter in 2017, but those results were skewed by one-time costs related to a federal tax overhaul that lowered corporate tax rates.

Profits were driven largely by increased loan volume and higher loan yields resulting from the rise in short-term interest rates.

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Net interest income climbed 10% year over year to $576 million as total loans increased 4% to $46.2 billion and yields on interest-earning assets rose 48 basis points to 4.17%. Commercial loans increased 5.4% year over year while consumer loans, driven by strong growth in residential mortgage lending, climbed 6.4%. Commercial real estate loans held steady at $11.1 billion.

The company also reported a sharp drop in problem loans, as nonaccrual loans fell 39% to $252 million and classified loans declined by 38% to $698 million. Zions’ ratio of nonperforming assets to total loans and leases fell from 0.93% in the fourth quarter of 2017 to 0.55% in the most recent quarter.

The double-digit jump in interest income more than made up for the sluggish growth in fee income. Total noninterest income for the quarter was $140 million, up just 1% year over year.

Zions’ shares were trading at $48.22 at midday Wednesday, up 3.6% from Tuesday’s closing price.

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