Earnings stock to watch: Zions Bancorporation NA (NASDAQ: ZION)

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Zions Bancorporation NA (NASDAQ: ZION) stock fell over 2.6% on April 21st, 2020 (as of 1:33 pm GMT-4 ; Source: Google finance)  post the first quarter of FY. In 1Q20, the company made large provision for credit loss mainly due to the COVID-19 pandemic, $0.05 per share adverse impact from a negative credit valuation adjustment on client-related interest rate swaps and $0.03 per share adverse impact from securities losses.

Moreover, as of mid-April, more than 95% of loans in the industries (Retail Related includes Retail CRE and Retailers, excluding supermarkets, gas stations and automotive dealerships, Hotels and Casinos, Restaurants, Dentists, Airlines, Day Cares & Leisure Related Activities includes Travel, Tourism & Theme Parks, and Gyms) were not deferring payment. At the end of March, 2020, line utilization for these industries had increased 1.2 percentage points to 86.0% ($135 million in balance increase) since December 31, 2019. Approximately 2% of loan balances were processed for a deferral or modification (as of April 16).

Furthermore, the company did $3.5 billion of loan interest rate swaps in the first quarter of 2020. At the end of December 2019, Zions had $1 billion of fixed-to-floating interest rate swaps on long-term debt (effectively converting the fixed rate debt into floating rate debt). In late March, the company cancelled the swaps, which resulted in a gain that will reduce the cost of the related debt during its remaining life.

During the first quarter 2020, Customer-related fee income rose up 17% from the year ago period on the back of63% rise in loan related fees and income,  more than 300% rise from the trailing four-quarter average in mortgage-related income to $13.8 million, 41% rise in capital markets product sales, more than 75% rise from the trailing four-quarter average in the sales of interest rate swaps to customers, 14% rise in wealth management and trust fees & 6% rise in Retail and business banking fees, which was primarily driven by business banking fees. Card fees declined moderately, down 5% as purchase activity had fallen later in 1Q20. Total noninterest expense in 1Q 2020 declined 5% over the prior year.

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