Zions Bancorp (NASDAQ:ZION) shares dropped more than 4% on Thursday after the company reported its Q1 earnings results, with EPS of $1.33 coming in worse than the Street estimate of $1.53. Net interest income dropped 5.7% quarter-over-quarter to $679 million as the margin fell 20 to 3.33%. Loan yields grew 49 bps quarter-over-quarter to 5.30% and securities yields rose 4 bps, while interest-bearing deposit costs increased 50 bps to 0.92%.
Core fundamental trends were softer, with increased pressure on net interest income and margin reflecting the environment and higher deposit betas, as well as higher than expected expenses.
Credit metrics continued to be relatively clean, though management remained conservative with a modest reserve build. The updated fundamental outlook suggests additional margin and net interest income headwinds in the near term given the rate environment and inverted yield curve.