Zions' Q2 net interest income, margin fall short of expectations, shares down 2%

Zions Bancorporation (ZION) was trading lower after the regional bank reported Q2 net interest income and margin below consensus analyst estimates.

Shares were 2.10% down to $70.38 during post-market trading on Monday.

Earnings per share, excluding net equity investment gains, increased 10% year-over-year to $1.74, surpassing the Visible Alpha consensus of $1.58.

Net equity investment gains of $215M on Visa Class B-1 shares and $37M on SBIC investments added $1.12 and $0.19 per share, respectively. Comparatively, the gains stood at $0.05 per share a year ago.

Net interest income rose 4% year-over-year to $677M, below the Visible Alpha consensus of $685.34M.

For Q2 2027, net interest income is seen moderately increasing on the back of earning asset remix and loan and deposit growth.

Net interest margin was 3.27% during the quarter, compared with 3.17% a year ago and flat quarter-over-quarter. The Q2 NIM falls short of the average analyst estimate of 3.35%.

Noninterest income rose to $460M from $187M a quarter ago and $190M in the year-ago period. The figure remained well above the Visible Alpha consensus of $186.70M.

The boost in noninterest income could be attributed to a notable rise in securities gains to $269M during Q2, compared to $3M in the prior quarter and $14M a year ago.

Provision for credit losses stood at $3M, compared to -$1M a year ago. The consensus estimate had stood at $24.40M.

"We're also encouraged by strong growth in tangible book value per share, which increased 22% to $44.74 from $36.81, while our common equity Tier 1 capital ratio further strengthened to 11.8% from 11.0% a year ago," said CEO Harris Simmons.

"While loan growth compared to last year's quarter was modest at 3%, annualized linked-quarter growth was strong at 8%. Deposits grew 4% from last year and were seasonally lower compared to the first quarter," said Simmons.