Asked about the trajectory of deposit costs, pricing competition, CD rolls, and the potential for increased buybacks given the flat CET1 ratio and capital accretion.

Deposit costs still have some trailing repricing down on term deposits. Strategic initiatives like Gold Account and Business Beyond, along with bringing off-balance sheet deposits back on, are expected to drive deposit growth and manage costs. Buybacks are still on the table, subject to Board approval, especially with potential RWA relief from Basel III Endgame and the pending acquisition of the multifamily agency program. “It looks like that we could be in a position to talk about share repurchases moving forward responsibly as our Board will allow and as regulators sign off.”

Asked if the annual guide for FY26 still holds with potential upside, and for an update on the Q2 loan pipeline, C&I excitement, and consumer loan pullback.

The annual guide for FY26 is better than initially thought due to no anticipated rate cuts. Loan pipelines are healthy across small business, middle market, corporate banking, and syndications. Increased CRE activity is also noted, though with caution. The consumer book (1-4 family residential jumbo arms) is expected to remain flat to slightly down to reduce risk in a higher rate environment. “The pipelines looking healthy actually at this point. We're seeing lots of activity in small business, middle market, corporate banking syndications. Just general C&I, we're just seeing lots of activity.”

Inquired about the drivers of the sequential increase in noninterest-bearing deposits and customer acquisitions for new products, as well as the trends and outlook for Capital Markets fees.

The "business beyond" product is too new for Q1 impact, but early reactions are positive. The Gold Account opened ~4,000 new accounts in Q1, with total relationship balances around $100,000. Capital Markets fees were strong despite a tough prior-year comparison, driven by syndications, interest rate hedging, and a new commodity hedging practice. The real estate capital markets business had a soft quarter but expects a solid remainder of the year. “we opened about 4,000 new accounts in the first quarter. And I'm hopeful that we'll see that kind of ramp up to kind of 20,000 new accounts for the year.”

ZION

Zions Bancorp (ZION) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· Apr 20, 2026

Source: earnings call transcript

Executive summary

Zions Bancorp Q1 FY26 — Strong Capital Position and Strategic Growth Initiatives

Zions Bancorp reported a reasonably strong Q1 FY26, marked by significant year-over-year earnings growth and strategic advancements in capital markets and new deposit products. While net interest margin saw a slight sequential decline, the company maintains a positive outlook for NII and operating leverage, supported by robust loan pipelines and disciplined expense management. Management is focused on organic deposit growth and opportunistic M&A, alongside a strong capital position.

Highlights

Net earnings were $232 million or $1.56 per diluted share, up 37% year-over-year.
Adjusted customer-related noninterest income was $174 million, up 10% year-over-year.
Average loans grew 2.4% annualized, primarily within commercial and industrial portfolio.
Period-end customer deposits increased by $1.3 billion or 1.8% from year-end.
Common Equity Tier 1 ratio remained strong at 11.5%, with tangible book value per share up 19% year-over-year.

Concerns

Net interest margin was 3.27%, down 4 basis points linked quarter.
Net earnings declined 11% quarter-over-quarter, primarily reflecting lower revenue and significantly lower securities gains.
Adjusted preprovision net revenue declined 9% from the prior quarter.

Guidance & targets

Category	Target	Timeline	Confidence
Net Interest Income (NII) growth	7% to 8% high materiality	Q1 · FY27	High
Adjusted customer-related fee income	towards the top end of moderately increasing medium materiality	Q1 · FY27	High
Adjusted noninterest expense	moderately increasing medium materiality	Q1 · FY27	Medium
Positive operating leverage	100 to 150 basis points high materiality	Full year 2026 · FY26	High

ZION operating KPIs by quarter

ZION operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Sep 2026 Q3 FY26	Change vs prior quarter
Net interest margin	3.27% The net interest margin was 3.27%, down 4 basis points from the prior quarter, reflecting lower earning asset yields and the decline in average demand deposits partially offset by improved funding costs. Source: earnings call transcript	3.27% The net interest margin was stable to the prior quarter at 3.27% and up 10 basis points from a year ago. Source: earnings call transcript	3.23% The net interest margin was 3.23% and down 4 basis points from the prior quarter and down 5 basis points from a year ago. Source: earnings call transcript	0 pt
Common equity tier 1 ratio (CET1)	11.5% The Common Equity Tier 1 ratio was 11.5%, flat during the quarter as earnings growth was somewhat offset by the $77 million in common shares repurchased and dividends paid in addition to the growth in risk-weighted assets. Source: earnings call transcript	—	11.8% The common equity Tier 1 ratio remained stable at 11.8% during the quarter, notwithstanding a $229 million increase in goodwill and intangible assets arising from our newly acquired multifamily agency business. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
business beyond	launch	piloted in Colorado and Arizona late in Q1 FY26, broader rollout later this quarter
gold account	update	launched in the second half of 2025

Deals & partnerships

Basis Investment Group Agreement to acquire their Fannie and Freddie lending programs, related mortgage servicing rights, and an experienced team.

This acquisition will expand Zions' capabilities in serving commercial real estate clients, particularly in multifamily lending, which is a key growth area for the region. The deal is subject to regulatory and customary closing approvals. The acquired business is P&L-based, not balance sheet intensive for long-term takeouts, but uses balance sheet for origination, construction, and stabilization of deals. MSR generation from this business could be impacted by future Basel III Endgame rules on risk weighting for MSRs. The region where the acquisition is focused (Mountain West, Southwest) accounts for about 80% of the nation's population growth, driving demand for multifamily housing. The acquisition aligns with the capital market strategy and real estate talent in-house to originate such products. It is an opportunistic acquisition, not driven by a growth objective, but by strategic fit and price. The company has been looking to do this type of business for some time. The licenses are rare and valuable. The acquisition will allow Zions to be in the stream for long-term takeouts for customers developing multifamily products. It is not a use of balance sheet for the long-term portion of the business, but for origination and construction.

Risks & headwinds

Uncertain path of benchmark rates Next 12 months

Forward curve as of March 31 assumed no rate changes over the next 12 months.

Mitigation:Company is asset-sensitive, NII outlook of 7-8% growth if rates remain static.

Pricing pressure in CRE market Current

as much pricing pressure in CRE as they've seen for some time.

Mitigation:Cautious approach to increased CRE activity.

Price competition in C&I space Current

not significant, but it's something that we're definitely very aware of.

Mitigation:Healthy activity levels and strong call programs.

Increases to expenses in certain consumer-focused businesses Current

null

Mitigation:Focused attention on commercial and industrial space, watching consumer-focused businesses.

Potential impact of tariffs or Middle East events Current

not seeing a lot of impact... at this point

Mitigation:Watching closely.

What to watch in Q2 FY26

Net Interest Income (NII) growth

1Q FY27

Current moderately increasing outlook for 1Q FY27 over 1Q FY26

Target 7% to 8% growth if benchmark rates remain static

Why it matters

NII is a primary driver of bank profitability, and achieving the higher end of the outlook would signal strong performance.

For the first quarter of 2027, our outlook for net interest income is moderately increasing given the uncertain path of benchmark rates. The forward curve as of March 31 assumed no rate changes over the next 12 months. As that plays out, we estimate net interest income growth of about 7% to 8%, which would exceed our guide.

Find out whether ZION delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired about the drivers of the 14 bps loan yield compression and new money loan yields, and how the 100-150 bps positive operating leverage expectation aligns with the NII outlook given no rate cuts.

Loan yield compression was primarily due to benchmark repricing from December rate cuts. New money loan yields show a 72 bps spread over the back book. The NII outlook of 7-8% growth (if rates stay static) implies a more powerful positive operating leverage than the 100-150 bps full-year guide, driven by repricing of investment securities and reduced swap headwinds.

“for those fixed rate loan portfolios, or things that have yet to reprice through. And there, we're seeing a 72 basis point spread on the front book vis-a-vis the back book.”

asked by John Pancari · answered by R. Richards

2 min read 7 chapters

Detailed narrative

Capital Markets Expansion

Zions continues to invest heavily in its Capital Markets division, expanding across investment banking, sales and trading, and real estate capital markets. The recent agreement to acquire Fannie and Freddie lending programs from Basis Investment Group is expected to enhance service to commercial real estate clients across the Western United States and beyond, further strengthening the capital markets franchise.

New Deposit Products and SBA Lending Momentum

The company launched "business beyond," a companion offering for small business customers, following the "gold account" consumer product. Piloted in Colorado and Arizona, it aims for a broader rollout and is designed to support clients from basic banking to complex cash flow needs, contributing to deposit growth.

Zions also ranks 11th nationally in SBA 7(a) loan approvals for the first half of the SBA's fiscal year, reflecting continued focus and momentum in small business lending.

Balance Sheet Optimization and Funding Costs

Zions is actively managing its balance sheet, with short-term borrowings declining significantly as higher-cost wholesale funding is replaced by customer deposit growth and securities cash flows, alongside remixing into senior debt. This strategy contributed to a sequential decline of 8 basis points in total funding costs to 1.68% in Q1 FY26, and is expected to continue improving net interest margin.

Strong Credit Quality

Credit quality remains strong with net charge-offs at 3 basis points annualized of average loans and the nonperforming assets ratio declining to 48 basis points. Classified and criticized balances also decreased during the quarter. The allowance for credit losses stands at 1.16%, providing 239% coverage of nonaccrual loans, indicating a well-positioned risk profile.

Basel III Endgame Regulatory Impact

Management is studying the Basel III Endgame proposal, which could provide RWA relief of 9-10% under the standardized approach, translating to approximately 93 basis points to the CET1 ratio. While the ERBA impact is still being assessed, the company views the proposal as potentially beneficial and is prepared for its implications, including the formalization of AOCI into capital standards.

Core System Modernization Benefits and Innovation

The decade-long core replacement project (FutureCore) has improved data quality and organization, enabling faster execution and innovation. This platform facilitates new initiatives like a potential tokenized deposit/stablecoin application, offering competitive advantages and allowing the company to explore new technologies more efficiently than peers.

Opportunistic M&A Strategy

Zions pursues M&A opportunistically, not as a primary growth objective, focusing on strategic fit and price. The acquisition of Basis Investment Group's agency lending business aligns with strengthening the capital markets strategy in the Western United States, particularly in multifamily lending, which is a key growth area for the region.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.