ZIONP — 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 prior quarter, but up 17 basis points year-over-year.
• Average Loans: Grew 2.4% annualized, primarily in commercial lending.
• Customer 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 Division: Continued to drive fee income growth; significant investments in talent and technology since its launch in 2020.
• Acquisition: Announced the acquisition of Basis Investment Group's Fannie and Freddie lending programs, expected to enhance commercial real estate services.
• New Products: Launched "beyond the business" small business deposit account, complementing the consumer "gold account," with plans for broader rollout.
• SBA Lending: Ranked 11th nationally in SBA 7(a) loan approvals, reflecting strong focus on small business support.

3. Forward Guidance and Outlook

• Net Interest Income (NII): Expected to grow by 7% to 8% in FY 2027, assuming no rate cuts.
• Operating Leverage: Anticipated positive operating leverage of 100 to 150 basis points for FY 2026.
• Customer-Related Fee Income: Expected to moderately increase in Q1 2027 compared to Q1 2026 results of $174 million.
• Expense Management: Adjusted noninterest expense projected to moderately increase, with a focus on maintaining positive operating leverage.

4. Bad News, Challenges, or Points of Concern

• Earnings Decline: Q1 earnings decreased from Q4 2025 primarily due to lower revenue and seasonal compensation expenses.
• Net Interest Margin Pressure: Continued compression in loan yields due to benchmark rate cuts and competitive pressures.
• Deposit Costs: While deposit costs declined, competition remains high, and there are concerns about the trajectory of deposit pricing.
• Credit Quality Monitoring: Increased scrutiny on commercial and industrial loans, particularly in sectors like restaurants and consumer-focused businesses.

5. Notable Q&A Insights

• Loan Yield Compression: Linked quarter loan yield compressed largely due to benchmark rate changes, with a significant spread between new money and existing loans.
• Deposit Strategy: Efforts to bring off-balance sheet deposits back on balance sheet are ongoing, with a focus on relationship deposits.
• Capital Management: The CET1 ratio remained flat despite earnings growth, with potential for share repurchases pending board approval and regulatory considerations.
• Regulatory Environment: Management expressed optimism about recent regulatory proposals, highlighting potential RWA relief from Basel III changes.
• AI Utilization: The bank is leveraging AI for operational efficiencies, with a focus on improving productivity and customer service.

Overall, Zions Bancorporation reported solid year-over-year growth but faced challenges in maintaining momentum from the previous quarter. Strategic initiatives and acquisitions are positioned to enhance future growth, though competitive pressures and regulatory changes remain areas of focus.