Zions reports 6% loan growth, milestone on core conversion

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Zions Bancorp. in Salt Lake City reported solid loan growth in multiple categories and a decline in nonperforming assets in the first quarter, while also marking a major accomplishment in its core-technology conversion.

Still, net income for the $70 billion-asset Zions fell 10% from a year earlier $213 million. Its earnings per share of $1.04 missed the mean estimate of analysts surveyed by Fact Set Research Systems by 1 cent.

But Chairman and CEO Harris Simmons said last year’s first quarter had included some substantial interest recoveries on large loans and a negative provision for credit losses, thus skewing year-over-year comparisons.


Simmons also said that Zions made substantial progress on its core conversion during the first quarter, a plan it first announced in mid-2013. “During the quarter we celebrated the successful completion of the second stage of our three-stage, multiyear project to replace the bank’s core loan and deposit systems,” he said in a news release Monday. “With this milestone reached, Zions now has all its retail, commercial and commercial real estate loans on a new modern core platform.”

Net interest income rose 6% year over year to $576 million, and the net interest margin expanded 12 basis points to 3.68%.

Net loans and leases rose 6% to $47.6 billion. Commercial lending rose 6% to $24.6 billion, commercial real estate rose 4% to $11.5 billion, and consumer lending rose 6% to $11.5 billion.

Total deposits rose 3% to $54.5 billion.

Noninterest income declined 4% to $132 million, driven by declines in certain customer-related fees, services charges on deposit accounts and dividends and investment income.

Noninterest expenses rose 3% to $431 million. Zions also improved its efficiency ratio to 60.2%, compared with 61.3% in the first quarter of 2018.

Credit quality also improved. Nonperforming assets declined 39% to $240 million due to improvements in the company’s oil and gas portfolio. It had no net charge-offs, compared with $5 million in net charge-offs last year.

However, Zions recorded a $4 million provision for credit losses, compared with a $47 million negative provision for credit losses a year earlier.

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