J.P. Morgan Maintains Neutral Rating On Zions

According to J.P. Morgan, Zions Bancorporation ZION Neutral rating is maintained. J.P. Morgan reported that, after posting $1.9 billion in aggregate bottom line losses over the past three years, Zion kicked off 2011 earnings season by squeaking out a $15 million profit, which seems to represent a key milestone for the bank. “Specifically, Zions reported 1Q EPS of $0.08, with core EPS in the $0.05 range, well ahead of our estimate for a ($0.18) and consensus of ($0.15). With most first quarter trends reported in line with expectations, including loan run-off as well as NIM, what led to the bank turning profitable was a sharp 65% sequential decline in provision expense. With management guiding to expect a significant improvement in net charge-off rates, along with a corresponding improvement in required provision expense, we expect the ZION story to migrate away from a credit recovery story and in the direction of a loan growth and NIM story. On this front, although ZION did see an improvement in the organic growth picture for commercial lending, given run-off C&D loans, loan growth is expected to remain flattish in FY11, resulting in a stable NIM. With the shares trading over 4% higher in the post-market tied to the strong first quarter beat, we stay Neutral given remaining upside to our revised $27 YE11 price target.” Zions Bancorporation closed yesterday at $22.96.