Zions Doing The Right Things, But The Cyclical Headwinds Are Stiff

Given the sheer number of banks out there, I can’t really say that Zions Bancorporation (ZION) has improved itself the most over the last three, five, and/or 10 years, but they’re definitely one of the more striking success stories among the mid-cap banks I follow, as management has worked hard to improve credit quality and profitability while hanging on to one of the best deposit franchises in the business.

For all of the things that Zions is doing right, the reality is that this is a highly asset-sensitive bank in an easing cycle, and it is likely going to take about five years or so for Zions to regain its 2018 level of core earnings. Zions isn’t alone in that, but it may be challenging to own this bank over the next year or so in the face of weak pre-provision profit results and a valuation that is already pretty fair.

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Zions Doing The Right Things, But The Cyclical Headwinds Are Stiff