What happened
Zions Bancorp (ZION -0.30%) bounced back this week, as its stock price jumped 17.9% as of Friday at 1:30 p.m. ET, according to S&P Global Market Intelligence. The stock had been up as much as 23.3% during the week. However, the stock remains down about 46% year to date as of Friday at 1:30 p.m. ET, trading at around $26 per share.
The markets were up this week, as the S&P 500 gained 1.7%, the Dow Jones Industrial Average rose 0.5%, and the Nasdaq Composite climbed 3.1% this week, as of Friday at 1:30 p.m. ET.
So what
There has been a lot of bad news for bank stocks this year, particularly regional banks, but some good news helped to lift the industry this week.
Zions Bancorp, the 36th largest U.S. bank with about $89 billion in assets, was among those that benefited. The primary driver appeared to be news from one of its competitors, Western Alliance Bancorp, which reported a surge in deposits so far in the second quarter.
Regional banks, particularly those with elevated levels of uninsured deposits, like Western Alliance and Zions, were hard hit by the March banking crisis, as some investors pulled their deposits in fear of a larger meltdown after two major banks collapsed.
Zion saw deposits drop 16% year over year in the first quarter and 3% from the fourth quarter of last year. It had about 52% of uninsured deposits, which ranks among the top 20 in terms of uninsured deposits by percentage of total deposits.
But the industry as a whole, especially the most beleaguered and battered regional bank stocks, got a boost this week when it was reported that Western Alliance has already seen deposits bounce back. Since the end of the first quarter, Western Alliance said deposits are up $1.8 billion to $47.6 billion. In addition, the percentage of insured deposits rose to 79%, up from 68% at quarter's end.
Now what
This promising update by Western Alliance seemed to improve investor sentiment toward banks, but particularly banks similar to Western Alliance, like Zions, with a robust percentage of uninsured deposits. With deposits moving back up, it signaled that the worst may be over for regional banks. Of course, that all remains to be seen until we get additional updates, or second-quarter earnings are released.
Like most bank stocks right now, Zions is cheap, but economic headwinds and regulatory uncertainty cloud the near-term future for many regional banks right now.
