Zions Bancorp. in Salt Lake City said Monday that it earned $187 million in the second quarter, up 21% from the same period last year, as gains in fee income and business and consumer loans offset a drop in commercial real estate loan balances.
Earnings per share totaled 89 cents, missing by 3 cents the mean estimate of analysts polled by FactSet Research Systems.
“Second quarter results reflect continued strong credit quality, tempered by modest linked-quarter loan growth,” Chairman and CEO Harris Simmons said in a press release. “At the same time, competitive pressures in the market for commercial real estate loans led to additional runoff in that portfolio as we’ve exercised discipline with respect to pricing and terms, muting overall loan growth.”
Simmons also said he expects the $65.5 billion-asset Zions to be able to increase its pace of capital distribution in future quarters
Zions’ net interest income increased 4% to $548 million, and the net interest margin widened 4 basis points to 3.56%.
Loans and leases increased 4% to $45.2 billion. Commercial loans, predominantly municipal loans, increased 5% to $23.2 billion, and consumer loans, mainly one- to four-family mortgages, increased 7% to $11 billion. Commercial real estate loans declined 2% to $11 billion, due to a higher level of payoffs and a decline in originations.
Total deposits increased 2% to $53.6 billion.
Noninterest income increased 5% to $138 million, mainly because of a 3% increase in customer-related fees.
Expenses rose 5% to $420 million. Salaries and employee benefits rose 11% to $266 million, as Zions increased incentive compensation for some, added staff, gave annual merit increases and increased base salaries and paid bonuses due to the recent tax law change.
Nonperforming assets fell 29% to $347 million. However, the company increased its provision for loan losses 20% to $12 million, partly because of heightened uncertainty about trade and the potential impact on borrowers of rising interest rates.
