Shares of regional bank Zions Bancorp NA (ZION) sank nearly 5% in the extended session Wednesday after the bank reported lower-than-expected net interest income for the third quarter.
Decline in Deposits and Net Interest Income
Zions Bancorp, based in Salt Lake City, reported a third-quarter net income of $168 million, or $1.13 per share, compared with $211 million, or $1.40 per share, in the same quarter last year. Despite beating analyst expectations for earnings per share, the bank fell short on deposits, with a decline of 1% to $75.4 billion from a year ago. Additionally, net interest income fell by 12% to $585 million.
Stable Net Interest Margin
The net interest margin, which reflects the difference between interest earned from loans and interest paid to depositors, increased slightly from the prior-year quarter to 2.93%, compared with 2.92%. This stability in net interest margin was not enough to offset the decline in net interest income.
Analyst Expectations Missed
Analysts polled by FactSet had expected Zions Bancorp to achieve earnings of $1.11 per share, with net interest income of $595.3 million and a net interest margin of 2.92%. The bank fell short of these expectations, leading to a decrease in investor confidence.
Zions Bancorp's shares closed down 2.9% at $35.69 after the disappointing earnings report. Year-to-date, the bank's shares have fallen by 27.4%, while the SPDR S&P Regional Banking ETF (KRE) has declined by 29.9%. In contrast, the S&P 500 index has recorded a gain of 12.4%.
Despite facing challenges in the third quarter, Zions Bancorp will need to take decisive actions to regain investor trust and improve its financial performance moving forward.
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