ZION — Zions Bancorporation, National Association

Zions Bancorporation Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Earnings: $232 million, or $1.56 per diluted share, up 37% year-over-year but down 11% from Q4 2025.
• Net Interest Margin (NIM): 3.27%, down 4 basis points from the prior quarter, but up 17 basis points year-over-year.
• Average Loans: Grew 2.4% annualized, primarily in commercial lending; year-over-year growth of 2.5%.
• Customer Deposits: Period-end deposits increased by $1.3 billion (1.8% from year-end), although average deposits saw a modest seasonal decline.
• Credit Quality: Net charge-offs at 3 basis points annualized; nonperforming assets ratio decreased to 48 basis points.

2. Strategic Updates and Business Highlights

• Capital Markets Growth: Continued investment in Capital Markets division, with a focus on investment banking, sales, trading, and real estate capital markets.
• Acquisition: Announced an agreement to acquire Basis Investment Group's Fannie and Freddie lending programs, expected to enhance commercial real estate services.
• Consumer Products: Launched the "beyond the business" small business deposit product, expanding offerings alongside the new gold account for consumers.
• SBA Lending: Ranked 11th nationally in SBA 7(a) loan approvals, indicating strong performance in small business lending.

3. Forward Guidance and Outlook

• Net Interest Income (NII): Expected to grow by 7% to 8% for the first quarter of 2027, assuming no rate cuts occur.
• Operating Leverage: Anticipated positive operating leverage of 100 to 150 basis points for the full year 2026.
• Fee Income: Adjusted customer-related fee income projected to moderately increase, supported by strong capital markets pipelines.

4. Bad News, Challenges, or Points of Concern

• Earnings Decline: Q1 earnings decreased from the previous quarter due to lower revenue and seasonal compensation expenses.
• Margin Compression: Loan yields compressed by 14 basis points linked quarter, primarily due to benchmark rate cuts and variable rate repricing.
• Competitive Pressures: Ongoing competitive environment for deposits, with concerns about pricing pressures in commercial real estate and C&I lending.
• Credit Quality Monitoring: While overall credit metrics are strong, attention is being paid to the commercial and industrial space, particularly in consumer-focused businesses.

5. Notable Q&A Insights

• Loan Growth and Pricing: Management highlighted healthy pipelines for small business and C&I lending, but acknowledged pricing pressures in commercial real estate.
• Deposit Strategy: Efforts to bring off-balance sheet deposits back on balance sheet are ongoing, with a focus on relationship deposits to manage costs.
• M&A Strategy: The company remains opportunistic regarding acquisitions, focusing on strategic fits rather than seeking growth through M&A.
• AI Utilization: Management discussed the integration of AI in operations, emphasizing improvements in productivity and customer service, while acknowledging potential risks.

Overall, Zions Bancorporation reported solid year-over-year growth in earnings and strategic initiatives aimed at enhancing its market position, despite facing some challenges in margin compression and competitive pressures in the lending landscape.