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: 3.27%, down 4 basis points from the previous quarter but up 17 basis points year-over-year.
• Average Loans: Grew 2.4% annualized, primarily in commercial lending.
• Customer Deposits: Period-end deposits increased by $1.3 billion (1.8%) from year-end, despite a modest seasonal decline in average deposits.
• Credit Quality: Net charge-offs at 3 basis points annualized; nonperforming assets ratio declined to 48 basis points.

2. Strategic Updates and Business Highlights

• Capital Markets Growth: Continued investment in talent and technology has driven fee income growth, with a strong pipeline expected for Q2.
• Acquisition: Agreement to acquire Basis Investment Group's Fannie and Freddie lending programs, enhancing capabilities in commercial real estate.
• Consumer Initiatives: Launched "beyond the business" small business deposit product, piloted in Colorado and Arizona, alongside the existing gold account for consumers.
• SBA Lending: Ranked 11th nationally in SBA 7(a) loan approvals, reflecting strong focus on small business growth.

3. Forward Guidance and Outlook

• Net Interest Income (NII): Expected to grow by 7% to 8% for the next 12 months, assuming no rate cuts.
• Positive Operating Leverage: Anticipated in the range of 100 to 150 basis points for 2026, supported by improved revenue and cost management.
• Fee Income Outlook: Adjusted customer-related fee income expected to moderately increase, driven by capital markets and broad-based growth.

4. Bad News, Challenges, or Points of Concern

• Earnings Decline: Q1 earnings fell 11% from the previous quarter, attributed to lower revenue and seasonal compensation expenses.
• Net Interest Margin Compression: Decline in loan yields due to benchmark rate cuts and lower demand deposit balances.
• Competitive Pressures: Ongoing competition in deposit pricing and C&I lending, with some pressure on margins expected.
• Credit Quality Monitoring: While overall credit metrics are strong, attention is focused on the commercial and industrial sector, particularly restaurants and consumer-focused businesses.

5. Notable Q&A Insights

• Loan Yield Compression: The decline in loan yields was primarily due to benchmark rate changes, with a significant spread between new and existing loans.
• Deposit Costs: Deposit costs have decreased, but competition remains fierce; efforts to bring off-balance sheet deposits back on are ongoing.
• Share Buybacks: Potential for increased share repurchases, contingent on Board approval and regulatory sign-off, especially following the acquisition.
• Energy Lending: Caution in energy lending due to volatility, but strong metrics observed in reserve-based lending.
• AI Utilization: AI is being leveraged for operational efficiencies, with a focus on enhancing customer solutions and productivity.

Overall, Zions Bancorporation reported strong year-over-year growth but faced challenges in the short term due to seasonal factors and competitive pressures. The company remains optimistic about future growth driven by strategic initiatives and market opportunities.