UPDATE: D.A. Davidson Downgrades Zions Bancorporation Following 2Q Results

In a report published Tuesday, D.A. Davidson analyst Gary P. Tenner downgraded Zions Bancorporation ZION from Buy to Neutral, and lowered the price target from $37.00 to $32.00.

In the report, D.A. Davidson noted, “ZION's NIM was flat at 3.44%, benefitting 8bp from better performance of FDIC-covered loans, which is unlikely to remain at the same level. The average yield on new loans booked during the quarter was 3.85% compared to the non-covered portfolio average of 4.57%, which was 12bp below the first quarter yield. The mid-2Q TRUP and senior debt repayments should help support the NIM (ex-the 8bp covered loan benefit) in 3Q although downward repricing remains a pressure. Period-end loan growth of 5% annualized was driven by the Commercial segment, with additional growth in CRE (construction) and Consumer (1-4 family residential). Construction loan balances are expected to continue to climb through 2013 as previously committed projects are now in the funding stage. Management noted that unfunded commitment levels increased $600 million as customers appear somewhat more positive, but indicated that pricing remains competitive.”

Zions Bancorporation closed on Monday at $30.84.