ZION — Zions Bancorporation, National Association

Zions Bancorp Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Earnings: $452 million, or $3.05 per share, boosted by a $215 million pretax gain from Visa Class B-1 shares and a $37 million unrealized gain from an SBIC investment.
• Adjusted EPS: Excluding exceptional items, EPS was $1.74, up 10% from $1.58 year-over-year.
• Net Interest Margin (NIM): Stable at 3.27%, up 10 basis points year-over-year.
• Loan Growth: Average loans grew 4.7% annualized, primarily in commercial lending.
• Deposits: Average customer deposits increased 4.0% quarter-over-quarter.
• Credit Quality: Modest credit losses at 6 basis points annualized; nonperforming assets ratio stable at 48 basis points.

2. Strategic Updates and Business Highlights

• Capital Markets Growth: Continued focus on expanding the Capital Markets division, with investments in talent and technology since its launch in 2020.
• Acquisition: Agreement to acquire Basis Investment Group's multifamily lending business, expected to close in Q3 2026, aimed at enhancing commercial real estate services.
• New Products: Launched the Business Beyond Account for small businesses, complementing the Gold Account for consumers, with over 10,000 accounts opened this year.
• Fee Income: Customer-related noninterest income increased to $182 million, reflecting broad-based growth, particularly in capital markets.

3. Forward Guidance and Outlook

• Net Interest Income (NII): Expected to moderately increase, with potential for upper single-digit growth if one or more interest rate hikes occur over the next 12 months.
• Expense Management: Anticipated positive operating leverage of 100-150 basis points for the full year 2026, despite some increases in technology and professional service costs.
• Loan and Deposit Growth: Continued moderate growth expected, with a focus on granular deposits.

4. Challenges and Points of Concern

• Competitive Pressures: Intense competition in both deposit pricing and loan spreads, leading to potential margin compression.
• Funding Costs: Concerns about rising funding costs due to competitive pressures on deposits, with reliance on wholesale funding highlighted.
• Legal Expenses: Increased loan-related legal costs noted, particularly related to the Cantor Fund, which may continue to impact expenses.

5. Notable Q&A Insights

• Deposit Strategy: Management emphasized ongoing targeted deposit campaigns and the importance of granular deposits, with about $6.5 billion in off-balance sheet deposits that could be brought back on balance sheet.
• NII Sensitivity: Clarified that NII guidance includes expectations for one interest rate hike, with potential for better performance if more hikes occur.
• Capital Management: Plans for continued capital returns to shareholders, with expectations for increased buybacks and dividends if economic conditions remain favorable.
• Market Outlook: Management expressed cautious optimism regarding future growth, emphasizing the importance of maintaining a disciplined approach to lending and deposit growth.

This summary encapsulates Zions Bancorp's financial performance, strategic initiatives, future outlook, and challenges faced during Q2 2026, providing a comprehensive overview for stakeholders.