Zions Earnings: Steady Start to 2024 With Stable Net Interest Margin and Mostly Benign Credit

Zions Bancorporation is off to a good start in 2024. First-quarter revenue was roughly in line with the FactSet consensus estimate, and GAAP earnings per share of $0.96 beat the consensus estimate by a penny. FDIC special assessments were a $0.07 drag on the quarter’s EPS, but this was largely offset by lower credit provisions, which decreased to $13 million versus $45 million in the year-ago period. Net interest margin of 2.94% was consistent with the range of 2.90%-2.95% we’ve seen since the second quarter of 2023. Adjusted expenses were well controlled, in our view. Credit trends were mostly healthy, though criticized loans increased. We will maintain our no-moat rating and $56 fair value estimate. We regard the shares as undervalued as the market is too negative on the firm’s net interest income outlook.