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    ZION
    Earnings call· Jun 2026(Q2 FY26)

    ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ ZION

    Jul 20, 2026 Source

    Executive summary

    Zions Bancorporation Q2 FY26 — Strong Earnings and Capital Markets Growth

    Zions Bancorporation reported a strong second quarter, marked by double-digit adjusted EPS growth and robust customer-related noninterest income, particularly from capital markets. The bank maintained a stable net interest margin and saw healthy loan growth, primarily in commercial and industrial. Management emphasized strategic initiatives to drive granular deposit growth and expressed confidence in continued positive operating leverage, anticipating increased capital returns to shareholders.

    Highlights

    5

    • Adjusted EPS grew 10% to $1.74 from $1.58 year-over-year, excluding net equity investment gains.

    • Customer-related noninterest income increased by $17 million or 10% year-over-year to $181 million (adjusted).

    • Average loans grew 4.7% annualized during the quarter, primarily driven by C&I.

    • Net interest margin was stable at 3.27% sequentially and up 10 basis points year-over-year.

    • Common Equity Tier 1 (CET1) ratio improved to 11.8%.

    Concerns

    3

    • Noninterest-bearing deposits were off on a period-end basis, with competition noted in deposit pricing.

    • Loan spread compression was observed, partially masked by underlying factors.

    • Credit-related expense rose $4 million due to increased loan-related legal costs.

    Guidance & targets

    4
    CategoryTargetConfidence
    Net Interest Income (NII)
    Moderately increasing, with potential for upper single-digit growth if rate hikes play out
    high materiality
    High
    Adjusted Customer Fee-Related Income
    Moderately increasing, towards the top end of the range
    medium materiality
    High
    Adjusted Noninterest Expense
    Moderately increasing
    medium materiality
    Medium
    Operating Leverage
    100 bps to 150 bps
    high materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Commercial Real Estate Portfolio
    The commercial real estate portfolio remains granular and diversified by property type and geography with conservative loan-to-value characteristics. Credit metrics remain favorable, including low levels of non-accruals and delinquency. The construction mix decreased as construction loans rolled into term and new term originations occurred.
    Total loans: $14.1 billionPercentage of total loans: 22%Construction mix as % of CRE: 16%
    		————

    Operational metrics

    27
    Adjusted EPS
    $1.74up 10% YoY
    Q2 FY26

    Adjusted earnings per share, excluding exceptional items.

    Net Equity Investment Gains (per share)
    $1.31
    Q2 FY26

    Impact of net equity investment gains on EPS for the current quarter.

    Net Equity Investment Gains (per share)
    $0.05
    Q2 FY25

    Impact of net equity investment gains on EPS for the prior year's quarter.

    Pretax Gain on Visa Class B-1 Shares
    $215 million
    Q2 FY26

    Exceptional item contributing to net earnings.

    Unrealized Pretax Gain on SBIC Investment
    $37 million
    Q2 FY26

    Exceptional item, net of a success fee accrual.

    Customer-Related Noninterest Income
    $182 millionvs $172 million prior quarter, vs $164 million prior year
    Q2 FY26

    Reported customer-related noninterest income.

    Adjusted Customer-Related Noninterest Income
    $181 millionup $17 million or 10% YoY
    Q2 FY26

    Adjusted customer-related noninterest income, showing broad-based growth.

    Capital Markets Fees Increase
    $8 million
    Q2 FY26

    Increase in capital markets fees, reflecting strong pipelines.

    Adjusted Pre-Provision Net Revenue
    $332 millionup 10% QoQ
    Q2 FY26

    Adjusted PPNR, reflecting expense discipline and revenue improvement.

    Total Funding Cost
    1.69%stable vs 1.68% prior quarter
    Q2 FY26

    Overall cost of funding sources.

    Cost of Total Deposits (Spot Rate)
    1.49%
    Q2 FY26 (end of quarter)

    Spot rate for total deposit costs at quarter-end.

    Deposit and Regulatory Expense Decrease
    $8 million
    Q2 FY26

    Decrease in deposit and regulatory expenses, primarily due to FDIC assessment.

    Investment Securities Cash Flows
    $514 million
    Q2 FY26

    Principal and prepayment-related cash flows from investment securities, partially offset by reinvestment.

    Investment Securities Portfolio Price Sensitivity
    3.6 years
    Q2 FY26

    Estimated price sensitivity of the investment securities portfolio.

    Tangible Book Value Per Share Growth
    22%YoY
    Q2 FY26

    Increase in tangible book value per share versus the prior year.

    Credit-Related Legal Costs Increase
    $4 million
    Q2 FY26

    Increase in credit-related expense due to increased loan-related legal costs, including the Cantor Fund issue.

    Off-Balance Sheet Deposits
    $6.5 billion - $7 billiondown from $12 billion previously
    Q2 FY26

    Amount of client deposits held off-balance sheet, which can be brought back on-balance sheet at accretive rates.

    Deposits Brought Back On-Balance Sheet
    $3.5 billion
    last 9 months

    Amount of off-balance sheet deposits that have been brought back on-balance sheet through targeted campaigns.

    Overnight Borrowings (Average Brokered Deposits + Net Overnight Borrowings)
    $2.5 billion
    Q2 FY26

    Current level of higher-cost funding sources.

    Peer Median CRE Growth Comparison
    60% higher
    last 5 years

    Zions' CRE growth has been significantly lower than the peer median, reflecting disciplined growth.

    Technology Spend as % of Total Expenses
    25%
    Q2 FY26

    Approximate proportion of total expenses allocated to technology.

    Average Loans Growth
    4.7%annualized QoQ
    Q2 FY26

    Annualized growth in average loans during the quarter.

    Average Loans Growth
    2.3%YoY
    Q2 FY26

    Year-over-year growth in average loans.

    Average Deposits Growth
    4.0%annualized QoQ
    Q2 FY26

    Annualized growth in average deposits during the quarter.

    New Accounts Opened (Gold & Business Beyond)
    over 10,000
    YTD FY26

    Number of new consumer and small business accounts opened through strategic initiatives.

    Loan Utilization Increase
    2%
    Q2 FY26

    Increase in utilization on revolving lines of credit, contributing significantly to C&I loan growth.

    Noninterest-Bearing Deposits as % of Total
    —
    Q2 FY26

    Discussion around the proportion of noninterest-bearing deposits, noting a decline and seasonality, with a question from an analyst about it staying in the '34% of total range'.

    Industry KPIs

    12
    MetricValueDetails
    Loans—
    Deposits—
    Cet1 ratio11.8%%
    Capital returns$75 millionUSD
    Fee income lines—
    Allowance reserves1.13%%
    Net interest income$677 millionUSD
    Net interest margin3.27%%
    Net charge offs npls6 bpsbps
    Total operating expenses$546 millionUSD
    Provision for credit losses—
    Efficiency ratio operating leverage—

    Product announcements

    1
    ProductTypeDetails
    Business Beyond Accountlaunch

    Deals & partnerships

    1
    Basis Investment GroupAcquisition of Fannie Mae and Freddie Mac multifamily lending business line, related mortgage servicing rights, and an experienced team.

    Agreement to acquire Basis Investment Group's multifamily lending business. Revenue or financial contribution not included in current outlook as transaction has not closed.

    Risks & headwinds

    4
    Competitive deposit environmentNear-term

    Targeted deposit campaigns approaching wholesale rates

    Mitigation: Focus on core strategic initiatives, marketing, and growing granular deposits; leveraging off-balance sheet deposits.

    Loan spread compressionNear-term

    Observed in Q2 FY26

    Mitigation: Underlying factors like terminated cash flow swaps and fixed asset repricing helping to counteract; disciplined loan growth.

    Increased loan-related legal costsQ2 FY26

    $4 million increase in credit-related expense

    Mitigation: No specific mitigation stated, but acknowledged as a prominent component of expense.

    Technology vendor pricing pressureOngoing

    Not quantified, but noted as 'upper hand' for vendors in recent years

    Mitigation: Potential tempering from AI adoption and increased competition among vendors; exploring outsourcing as a lever.

    What to watch in Q3 FY26

    5

    Basis Investment Group Acquisition Close

    Q3 FY26
    CurrentAgreement announced, pending close
    TargetTransaction closed

    Why it matters

    The acquisition is expected to enhance commercial real estate client services and strengthen the capital markets franchise, with financial benefits building gradually.

    Last quarter, we announced an agreement with Basis Investment Group to acquire its Fannie Mae and Freddie Mac multifamily lending business line, related mortgage servicing rights and an experienced team supporting those businesses. We expect the transaction to close here in the third quarter.

    Q&A highlights

    7

    Can you provide color on deposit pricing trends and the competitive landscape, and how loan spreads are shaping up?

    The environment is competitive for both deposits and loans. Deposit costs were stable, but noninterest-bearing deposits were down. Loan spread compression was observed, but underlying factors like cash flow swaps and fixed asset repricing helped. Management highlighted ongoing strategic initiatives to drive deposit growth.

    “It is a competitive environment on both sides of that equation. We're seeing that. You'll see that in also a little bit of the mix that's showing up on the deposit side, average holding on. But on a period-end basis, we saw noninterest-bearing being off.”

    asked by John Pancari · answered by R. Richards

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Initiatives and Account Growth

    Zions Bancorporation continues to invest in its consumer and small business franchises. The company introduced the 'Business Beyond Account' for small businesses in Q2 FY26, a companion to the 'Gold Account' launched for consumers last year. These initiatives have resulted in over 10,000 new accounts opened so far this year, demonstrating early success in attracting granular deposits, though management notes it is a 'marathon, not a sprint'.

    02

    Capital Markets Expansion

    The Capital Markets division remains a significant driver of fee income growth, with steady investments in talent, technology, and product capabilities since its launch in 2020. The company announced an agreement to acquire Basis Investment Group's Fannie Mae and Freddie Mac multifamily lending business, expected to close in Q3 FY26. This acquisition is anticipated to enhance commercial real estate client services and further strengthen the capital markets franchise, with financial benefits building gradually over time⏳.

    03

    Deposit Dynamics and Competition

    Average customer deposits grew 4.0% annualized, but period-end noninterest-bearing deposits were down, offset by interest-bearing balances. The cost of total deposits was flat sequentially at 1.48% and declined 20 basis points year-over-year. Management acknowledged a competitive environment for deposits, with targeted campaigns approaching wholesale rates, and emphasized internal strategic initiatives to drive granular deposit growth.

    04

    Loan Growth and Portfolio Mix

    Average loans grew 4.7% annualized, primarily driven by diversified growth in the Commercial and Industrial (C&I) portfolio, including increased utilization of revolving lines of credit and new originations. The term Commercial Real Estate (CRE) book also saw good growth, with the construction mix decreasing to 16% of total CRE, reflecting construction loans rolling into term and new term originations.

    05

    Capital Management and AOCI

    The Common Equity Tier 1 (CET1) ratio improved to 11.8% due to strong earnings and exceptional items📎, partially offset by $75 million in common share repurchases and dividends. Tangible book value per share increased 22% year-over-year. Management expects continued net capital generation and AOCI improvement, providing capacity for increased capital returns to shareholders, though M&A remains opportunistic rather than a primary focus.

    06

    Technology and Expense Management

    Adjusted noninterest expense decreased sequentially due to seasonal compensation but was higher year-over-year, reflecting increased professional services, incentive compensation, and technology costs. Technology expenses, representing about a quarter of total expenses, are expected to continue rising with ongoing investments, though AI could potentially temper vendor pricing leverage and reduce reliance on outsourcing over time⏳.

    AI-generated summary of the company’s earnings call. Not investment advice.