Zions Bancorp provides a range of banking and related services through its banking, primarily in Utah, California, Texas, Arizona, Nevada, Colorado, Idaho, Washington and Oregon. As of December 31, 2008, ZION owned and operated eight commercial banks with a total of 513 domestic branches. ZION focuses on providing community-banking services by its core business lines of small, medium-sized business and corporate banking, commercial and residential development, construction and term lending, retail banking, treasury cash management and related products and services, residential mortgage, trust and wealth management and investment activities. On Jan 25, 2010, Zion beat EPS forecast due to lower provisions and better than expected credit quality trends. Since then, several Tier 1 analysts have upgraded the stock to either Buy or Neutral, including Goldman Sachs, Morgan Stanley and Raymond James. ZION currently trades at 8.8x normalized 2010 EPS estimate and 1.0x trough tangible book value, which are mostly in line with its peer group.
The important thing is traders are waiting for ZION to file Y9-C form with SEC by Feb 15, which will provide further granularity on delinquency and loss trends by loan mix.
From the technical standpoint, the stock has not been able to breakout from $20 with convincing volume and with the recent run-up ZION is trying it the third time in one year (see attached daily chart). Perhaps this is the reason why traders are electing to choose calls spreads out in July to give themselves more time to work it out.
The stock has eased a little now trading around $19 and the call spread has come in. I want to follow the fast money and do the following:
- Buy to open July $21 calls
- Sell to open July $25 calls, for a net debit of $1.20 or less
Good luck!
