ZIONP — 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, including exceptional items (a $215 million gain from Visa shares and a $37 million unrealized gain from an SBIC investment).
• Adjusted EPS: $1.74, up 10% year-over-year from $1.58.
• Net Interest Margin (NIM): Stable at 3.27%, up 10 basis points year-over-year.
• Loan Growth: Average loans increased by 4.7% annualized, primarily in commercial lending; year-over-year growth of 2.3%.
• Deposits: Average customer deposits grew by 4.0%.
• Credit Quality: Modest credit losses at 6 basis points; nonperforming assets ratio stable at 48 basis points.

2. Strategic Updates and Business Highlights

• Capital Markets Division: Continues to drive fee income growth. A new acquisition of Basis Investment Group’s multifamily lending business is expected to close in Q3 2026, enhancing commercial real estate services.
• Consumer and Small Business Initiatives: Launched the Business Beyond Account for small businesses, complementing the Gold Account for consumers, with over 10,000 accounts opened this year.
• Expense Management: Adjusted noninterest expense decreased to $546 million, reflecting seasonal compensation adjustments.

3. Forward Guidance and Outlook

• Net Interest Income (NII): Expected to moderately increase, with potential for upper single-digit growth if interest rates rise as anticipated.
• Fee Income: Outlook for adjusted customer-related noninterest income is moderately increasing, driven by capital markets and broader revenue streams.
• Expenses: Expected to moderately increase, but management aims for positive operating leverage of 100-150 basis points for the full year.

4. Challenges and Points of Concern

• Competitive Pressures: Intense competition in both deposit and loan pricing is noted, leading to potential spread compression.
• Funding Costs: Concerns about rising funding costs due to competitive deposit environment, although management believes they can maintain a competitive advantage.
• Legal Expenses: Increased loan-related legal costs were highlighted, particularly concerning the Cantor Fund, which may continue to impact expenses.

5. Notable Q&A Insights

• Deposit Strategy: Management is focused on growing granular deposits and has initiated targeted campaigns to attract clients, with about $6.5 billion in off-balance sheet deposits available for potential reintegration.
• NII Guidance Clarification: The guidance for moderately increasing NII includes an assumption of one interest rate hike; two hikes could lead to upper single-digit growth.
• Credit Loss Allowance: The allowance for credit losses is viewed as well-positioned, with coverage of 227% of nonaccrual loans.
• M&A Outlook: While open to opportunistic acquisitions, management emphasizes organic growth and strengthening core operations over aggressive M&A strategies.

This summary encapsulates the key points from Zions Bancorp's Q2 2026 earnings call, highlighting both the positive developments and the challenges the company faces moving forward.