Inquire about the feasibility and timing of reaching the previously discussed 3.50% NIM target.

Management believes reaching mid-3s NIM is realizable in 2027 under the current rate environment and deposit behavior assumptions, though it depends on deposit growth, rates, and beta. “we think with some reasonably conservative assumptions that we can reach those mid-3 levels in 2027.”

Ask about the pace of buybacks for coming quarters, specifically if the $75M level can be maintained despite rate volatility, and if there's potential for increased capital absorption.

Management is subject to regulatory approvals but sees scenarios for potentially increasing capital absorption moving forward given a positive operating environment. They highlight strong relative performance on mark-to-market and AOCI, with hedges in place. “I think that we see scenarios where we could actually increase our capital absorption moving forward.”

Clarify the drivers for tempering loan growth expectations, particularly in CRE (competition, rates, credit concerns), and discuss pipeline/utilization trends.

The tempered CRE outlook is due to competitive environment, supply/demand issues, and higher interest rates, not primarily credit concerns. The overall pipeline is good, but C&I utilization was down slightly in Q3. Amegy had a soft quarter, impacting overall loan growth. “I think just given the competitive environment, given some of the supply/demand issues that are going on in our market as well as just the increase in interest rates could have an impact on the CRE growth.”

ZION

Zions Bancorporation (ZION) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2026 (Q3 FY26)· Financials· Oct 19, 2026

Source: earnings call transcript

Executive summary

Zions Bancorporation Q3 FY26 — Strong Deposit Growth and Strategic Fee Income Expansion

Zions Bancorporation delivered solid third-quarter results marked by robust deposit growth and strategic investments in fee-generating businesses, notably the multifamily agency platform. While net interest margin faced pressure from rising funding costs, the bank anticipates NII expansion in a higher rate environment, supported by asset sensitivity and ongoing efforts to optimize funding mix. Management remains focused on driving long-term relationship growth through targeted product offerings and disciplined capital management.

Highlights

Net earnings available to common increased 20% YoY to $262 million or $1.78 per share.
Average customer deposits grew 8.8% on an annualized basis, contributing to reduced wholesale funding.
Customer-related noninterest income increased 5% YoY, driven by strong Capital Markets performance.
Acquired Basis Investment Group's multifamily agency lending business, enhancing CRE offerings and making Zions one of only four banks with dual agency access.
Tangible book value per share increased 13% year-over-year, supported by strong capital generation.

Concerns

Net interest margin declined 4 basis points QoQ and 5 basis points YoY to 3.23%.
Total cost of deposits increased 11 basis points sequentially to 1.59%, with an expected rise to 2% by Q3 FY27.
Adjusted pre-provision net revenue decreased 4% from a strong prior-year period.
Full-year 2026 operating leverage guidance revised down to 40-50 basis points, partly due to acquisition integration costs.
Loan growth outlook tempered to 2-4% for Q3 FY27 YoY, particularly in commercial real estate, due to higher rates and competitive pressures.

Guidance & targets

Category	Target	Timeline	Confidence
Net interest income growth	8% to 12% high materiality	Q3 · FY27	High
Cost of deposits	around 2% medium materiality	Q3 · FY27	Medium
Multifamily agency platform revenue	$17 million to $20 million medium materiality	FY27	Medium
Multifamily agency platform expense	$12 million to $13 million medium materiality	FY27	Medium
Multifamily agency platform annual revenue	$30 million to $40 million medium materiality	Medium-term	Medium
Adjusted customer-related fee income growth	6% to 9% medium materiality	Q3 · FY27	High
Adjusted noninterest expense growth	4% to 6% medium materiality	Q3 · FY27	High
Full-year 2026 operating leverage	40 to 50 basis points high materiality	FY26	Medium
Loan growth	2% to 4% high materiality	Q3 · FY27	Medium

ZION operating KPIs by quarter

ZION operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	This call 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
Wealth Select	launch	—

Deals & partnerships

Basis Investment Group Acquisition of multifamily agency lending business.

Enhances Zions' ability to serve commercial real estate clients, particularly in the Western United States, by combining direct access to Fannie Mae DUS and Freddie Mac Optigo programs.

Risks & headwinds

Net interest margin compression Q3 FY26

NIM down 4 bps QoQ and 5 bps YoY to 3.23%. Total cost of deposits up 11 bps QoQ to 1.59%.

Mitigation:Asset-sensitive balance sheet expected to produce stronger NII in higher rate environment; focus on reducing wholesale funding.

Operating leverage impact from acquisition and strong prior-year comps FY26

FY26 operating leverage revised to 40-50 bps from prior 100-150 bps. Adjusted PPNR declined 4% YoY.

Mitigation:Continued expense management while investing for growth; expectation of positive operating leverage in FY27.

Loan growth tempering, particularly in CRE Q3 FY27

Loan growth outlook 2-4% for Q3 FY27 YoY. Amegy loan portfolio down $293 million in Q3 FY26.

Mitigation:Disciplined underwriting and risk selection; focus on C&I and owner-occupied loans; pipeline remains good.

Competitive deposit market Q3 FY27

Deposit costs expected to rise to ~2% by Q3 FY27, implying a beta of upper 40s to low 50s.

Mitigation:Focus on granular deposit gathering strategies (Strategic 6 products, Wealth Select) to attract sticky, lower-cost client funds.

Volatility in AOCI from interest rate changes Q3 FY26

Unrealized losses at AOCI increased by $122 million QoQ.

Mitigation:Fixed received floating interest rate swaps designated as hedges; significant portion of unrealized losses related to securities transferred to held-to-maturity.

What to watch in Q4 FY26

Net Interest Income Growth

Q3 FY27

Current NII up 1% QoQ, 2% YoY in Q3 FY26.

Target Increase by 8% to 12% YoY.

Why it matters

NII is a primary driver of profitability for banks, and achieving this growth target is crucial for overall earnings and operating leverage.

For the third quarter of 2027, we anticipate net interest income to increase by approximately 8% to 12%.

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

Q&A highlights

Break down the NII guide of 8-12% increase for Q3 FY27, specifically regarding deposit costs and rate hike assumptions.

Management assumes 3 rate hikes (Dec, Mar, Jun), interest-bearing deposits will be a larger contributor, and deposit costs will rise by ~40 bps to 2% (implying a beta of upper 40s to low 50s). Earning asset yields are expected to increase by 5-7 bps from fixed-rate loan repricing and securities remix.

“Our outlook is based on the forward curve as of September 30, which assumes 3 rate increases occurring in December, March and June, respectively.”

asked by Bernard Von Gizycki · answered by R. Richards

2 min read 5 chapters

Detailed narrative

Capital Markets Expansion

Zions' Capital Markets division has nearly doubled its annual fee income contribution since 2020, driven by investments in talent and capabilities like investment banking, commodities hedging, and real estate capital markets. The annualized fee income for 2026 is $136 million based on performance through September 30, with expectations for the full year to exceed this.

The bank sees strong momentum across the business, including a fertile pipeline for small- and medium-sized business M&A, despite almost no investment banking or M&A advisory work in the current quarter.

Multifamily Agency Platform Acquisition

The acquisition of Basis Investment Group's multifamily agency lending business in Q3 FY26 positions Zions as one of only four banks nationally with direct access to both Fannie Mae DUS and Freddie Mac Optigo programs. This creates a differentiated one-stop platform for commercial real estate clients, particularly in the Western United States, addressing demand driven by population growth and housing affordability.

The platform is expected to generate $17M-$20M revenue and $12M-$13M expense in FY27, with a medium-term target of $30M-$40M annual revenue.

Wealth Management Strategy

Zions views wealth management as a significant growth opportunity given its broad customer base and the size of assets under management. The bank is enhancing coordination between banking and advisory businesses and has launched "Wealth Select," a new offering targeting clients with $100,000 to $1 million in investable assets.

This scalable advisory model aims to engage clients earlier, deepen relationships, and create pathways for long-term financial growth.

Strategic 6 Products for Core Deposit Growth

The "Strategic 6 products" are designed to strengthen sustainable growth through core deposits, small business relationships, and fee income. Early results are encouraging, with over 14,000 Gold accounts opened for consumers, totaling approximately $275 million in new-to-bank deposits, and 1,300 Business Beyond accounts bringing in about $120 million in new deposits.

These initiatives are fostering long-term relationships and creating cross-selling opportunities, with Zions ranking #10 nationally in SBA 7(a) lending and #9 in SBA 504 loans.

Deposit Dynamics and Funding Optimization

The bank achieved significant average customer deposit growth of 8.8% annualized in Q3, which allowed for a reduction in wholesale funding sources, including FHLB borrowings and broker deposits. While the total cost of deposits increased to 1.59% due to repricing and a presentation change, the focus remains on attracting client funds and reducing higher-cost non-client funding.

The bank has reduced broker deposits and overnight borrowings (net of money market investments) by $3B-$4B since June 2025, with approximately $2.2 billion of broker deposits maturing in Q4.

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