Regulators had hoped that the sale of the embattled First Republic Bank to JPMorgan Chase this week would contain the panic. But short sellers, investors who profit off bets that stock prices will fall, have continued to take aim at regional lenders like PacWest, Western Alliance and Zions Bancorp. (Shares in PacWest and Western Alliance are down again in premarket trading.)
The market carnage could result in more pain for regional banks.
Regional bank shares fall second day after First Republican Bank collapse - Reuters
Below are the price drops for the shares of several US banks:
PacWest Bancorp -40%
Western Alliance -25%
Metropolitan Bank -21%
HomeStreet Bank -15%
Zions Bank -10%
KeyCorp -7%
HarborOne -6%
Citizens Financial -5%TrinityPoint Wealth LLC Reduces Investment in ZION Stock
TrinityPoint Wealth LLC has sold 13.7% of its holdings in Zions Bancorporation (NSD:ZION), National Association, according to its latest Form 13F filing with the Securities and Exchange Commission. The hedge fund now owns 27,192 shares of the bank’s stock, worth $1.34 million.
Other hedge funds have also made changes to their positions in Zions Bancorporation, including Vanguard Group Inc., Victory Capital Management Inc., State Street Corp, Massachusetts Financial Services Co., and LSV Asset Management.
The bank’s stock, traded under the NSD:ZION ticker, closed at $23.33 on Tuesday, down $3.49, with 14.36 million shares traded, compared to its average volume of 4.16 million. Its market cap is $3.46 billion, and it has a Financial ratio of 4.25 and a beta of 1.10. Zions Bancorporation, National Association last reported earnings on April 19th, with $1.33 earnings per share for the quarter, missing analysts’ consensus estimates of $1.51 by ($0.18).
ZION Stock Analysis & Forecast
Zions Bancorporation’s future performance looks to be modest, according to a consensus of 21 analysts.
The average target price for the bank’s stock is USD 47.38 over the next year. The stock is currently rated as “Hold” by analysts on average. However, Stock Target Advisor’s analysis indicates a “Neutral” rating based on 6 positive and 7 negative signals.
Zions Bancorporation’s shares closed at USD 23.92, a decline of 10.51% over the past week, 20.08% over the past month, and 58.04% over the past year.
Business Profile
Zions Bancorporation, National Association is a banking and financial services provider that operates primarily in several US states, including Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. The company offers a range of services, including corporate banking, commercial banking (with a focus on small and medium-sized businesses), commercial real estate banking, municipal and public finance services, retail banking (including residential mortgages), trust services, wealth management and private client banking, and capital markets products and services. In 2018, the company changed its name from ZB, National Association to Zions Bancorporation, National Association.
(Chris Samuels | The Salt Lake Tribune) A Zions Bank branch in Cottonwood Heights, Monday, March 13, 2023.
"After its stock lurched downward amid reaction to March’s banking alarms, Zions Bancorp on Wednesday reported lower-than-expected earnings for the first quarter as the regional bank sought to highlight signs of its stability.
Announcing its results after the markets closed, Salt Lake City-based Zions said it had first-quarter net earnings of $198 million or $1.33 per share, 18 cents below a Wall Street consensus prediction of $1.54 per share.
That mark, though, was above its $195 million in earnings for the same quarter in 2022, while the bank’s net interest income jumped 25% over last year, to $679 million.
Zions Chairman and CEO Harris Simmons said in a statement the bank’s “fundamentally solid” first-quarter results were being overshadowed by liquidity worries flowing from the mid-March failures of California-based Silicon Valley Bank and New York’s Signature Bank.
Shares in Zions declined in after-hours trading Wednesday, then hovered just under $31.50 a share.
Its stock price fell dramatically in late February and early March, from a trading threshold of around $50 a share to less than $30 in recent weeks — part of broad market volatility stemming from the bank failures and fears those troubles would spread.
That has left its share price down almost 50% over the past year.
In a conference call later with analysts, Simmons said the scrutiny of Zions’ financial standing in the market turbulence had been “myopic,” and he urged investors “to really think more holistically about banks’ balance sheets and business models.”
“While the events of mid-March were disruptive, they were very manageable,” Simmons said, “and, in large measure, reflected a continuation of a trend seen in the industry and certainly in our own balance sheet over the past few quarters.”
Deposits dropped but have stabilized
Zions’ deposits sank by 16%, to $69.2 billion, for the most recent quarter, its latest report said. That drop also exceeded some analysts’ predictions, though only by a few percentage points.
Deposit outflows, according to the bank’s executives, started as the Federal Reserve first began to hike interest rates in hopes of tamping down inflation, with the bank seeing $1.8 billion in third-quarter outflows starting as early as June, then $5 billion between September and December and $8 billion over the first quarter of 2023.
“In some respects,” Simmons told analysts, “it’s a case of the Fed giveth and the Fed taketh away.”
Those deposit trends have stabilized since the end of the quarter, he and other Zions executives said.
Meanwhile, the CEO said, Zions gained more than 7,000 accounts between March 7 — when the banking crisis first struck — and March 31, with a total value of $629 million.
Simmons and other bank bosses also said Zions had steadily lessened its exposure to credit risks in commercial real estate sectors over more than a decade, fortifying it against current signs of a recession involving that sector.
The bank holding company serves customers primarily in Utah, Idaho and Wyoming, with nearly 10,000 full-time-equivalent employees as of the end of 2022. It reported annual net revenue of $3.2 billion in 2022 and total assets of approximately $90 billion.
Worries in commercial real estate lending
Shares in regional banks — such as Zions, San Francisco-based First Republic Bank, Phoenix-based Western Alliance and others — plunged as Silicon and Signature tanked in March, partly over perceived vulnerabilities from unrealized losses in their investments and over unprotected customer deposits in accounts above the $250,000 limit for federal insurance.
The ratings agency Moody’s Investors Service placed Zions and five other regional banks under review for possible downgrades in some of their credit ratings, threatening to increase their borrowing costs. The warning reflected what the agency said was “the extremely volatile funding conditions for some U.S. banks exposed to the risk of uninsured deposit outflows. . ."
Excerpt: "...Moody’s lowered Zions’ stand-alone Baseline Credit Assessment (BCA) to “baa1″ from “a3.” BCA is defined as the intrinsic strength of the bank without any outside support. Four other ratings for Zions were also lowered, but two others were held steady after a review of the bank. Moody’s had announced the credit review for Zions and other banks shortly after Silicon Valley imploded March 10.
“Moody’s expects the bank to be more reliant on short-term and higher cost wholesale funding to avoid crystalizing securities losses,” Moody’s said in its credit report. “This could, in turn, negatively impact profitability, capital retention and curb financial flexibility in an increasingly challenging banking environment.”
,,,,Last week, Zions reported first-quarter net earnings of $198 million or $1.33 per share, 18 cents below a Wall Street consensus prediction of $1.54 per share.
Deposits were down 16.2% for the quarter as depositors continued to seek higher returns in an inflationary market. Executives said that deposit trends have stabilized since then.
Zions Bancorp includes Zions Bank and seven affiliate banks: California Bank & Trust; Amegy Bank of Texas; National Bank of Arizona; Nevada State Bank; Vectra Bank Colorado; The Commerce Bank of Oregon; and The Commerce Bank of Washington. It employs approximately 10,000 full-time-equivalent workers, and, at the end of 2022, it reported an annual net income of $3.2 billion and total assets of about $90 billion.
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