Zions Bancorporation, N.A. Q2 Earnings Call Highlights

Key Points

• Zions reported a strong Q2 2026 profit jump, with net earnings of $452 million, or $3.05 per share, boosted by one-time gains from Visa share liquidation and an SBIC investment. Excluding those items, EPS was $1.74, up from $1.58 a year earlier.
• Core banking trends remained stable, as net interest income rose and net interest margin held at 3.27%. Loan growth was modest but positive, deposits increased, and management said it still expects moderate to upper-single-digit NII growth over the next year depending on rates.
• Fee income, credit quality, and capital all stayed healthy, with capital markets driving higher noninterest income, charge-offs remaining low, and the CET1 ratio rising to 11.8%. Management also reiterated an organic-growth focus while saying buybacks remain sustainable.

Zions Bancorporation, N.A. NASDAQ: ZION reported sharply higher second-quarter 2026 earnings, helped by one-time gains, while management pointed to steady net interest margin, modest loan growth, stronger fee income and solid credit quality.

Chairman and Chief Executive Officer Harris Simmons said the company was “reasonably pleased” with the results, which he said reflected “meaningful year-over-year improvement and continued progress” on strategic priorities. Net earnings available to common shareholders were $452 million, or $3.05 per share.

The quarter included two notable items: a $215 million pretax gain from the liquidation of Visa Class B-1 shares and a $37 million net unrealized pretax gain tied to a small business investment company investment, after a success fee accrual. Excluding those items, Simmons said earnings per share were $1.74, up from $1.58 in the year-earlier quarter.

Net Interest Income and Margin Remain Stable

Chief Financial Officer Ryan Richards said taxable-equivalent net interest income was $677 million, up $15 million, or 2%, from the prior quarter and up $29 million, or 4%, from the year-ago quarter. The net interest margin was 3.27%, flat with the prior quarter and up 10 basis points from a year earlier.

Richards said the year-over-year margin improvement primarily reflected lower funding costs for deposits and borrowings. Average loans increased at a 4.7% annualized rate during the quarter, led by commercial and industrial lending, while average customer deposits rose 4.0%.

Management faced repeated questions from analysts about the company’s net interest income outlook and the impact of potential rate hikes. Richards said the company’s guidance incorporated one rate increase implied by the forward curve at the time of its forecast. He later clarified that, with one hike included, the company sees the potential for upper-single-digit year-over-year net interest income growth by the second quarter of 2027. Without a rate hike, Richards said net interest income would still be expected to increase moderately.

Deposit Competition Remains a Focus

Executives described the deposit market as competitive, particularly as some targeted deposit campaigns approach wholesale funding rates. Richards said the company saw noninterest-bearing balances decline on a period-end basis, partly reflecting second-quarter seasonality, while interest-bearing balances increased.

President and Chief Operating Officer Scott McLean said the company’s marketing efforts are focused on granular consumer and small-business deposits. Simmons highlighted the launch of Business Beyond, a new deposit and payments account for small businesses, which follows the consumer-focused Gold Account introduced last year. Simmons said the company has opened more than 10,000 accounts between the two products so far this year.

McLean also said Zions has about $6.5 billion to $7 billion in off-balance-sheet deposits, down from a peak of roughly $12 billion, and has been bringing some of those balances back on balance sheet when doing so is accretive compared with overnight borrowing costs. He said deposits brought in through the company’s wholesale deposit campaign are generally 30 to 40 basis points accretive to overnight borrowings.

Fee Income Supported by Capital Markets

Customer-related noninterest income was $182 million, compared with $172 million in the prior quarter and $164 million a year earlier. Richards said results reflected broad-based growth across nearly all revenue streams, with capital markets fees increasing by $8 million, supported by higher real estate capital markets and investment banking advisory fees.

Simmons said the company’s capital markets division has become an important contributor to fee income growth since its launch in 2020. He also discussed Zions’ agreement to acquire Basis Investment Group’s Fannie Mae and Freddie Mac multifamily lending business line, related mortgage servicing rights and an experienced team. The transaction is expected to close in the third quarter.

Simmons said any revenue or financial contribution from the Basis transaction is not included in the company’s current outlook because the deal has not yet closed. He added that the financial benefits are expected to build gradually as the platform is integrated and production volumes ramp up.

During the question-and-answer session, McLean said the company expects a “nice upward trajectory” in capital markets revenue as multiple product areas contribute, while Richards said the business should become more durable as Zions adds capabilities in real estate capital markets, advisory fees and multifamily lending.

Expenses, Credit Quality and Capital

Adjusted noninterest expense was $546 million, down from the prior quarter primarily because of seasonal compensation, but higher than a year earlier due to increased professional and outsourced services, higher incentive compensation and technology costs. Richards said Zions continues to expect positive operating leverage for full-year 2026 in the range of 100 to 150 basis points, excluding the Visa gain.

Credit quality remained strong. Net charge-offs were six basis points of average loans on an annualized basis, and the nonperforming assets ratio was unchanged sequentially at 48 basis points. Classified and criticized balances both declined modestly. The allowance for credit losses ended the quarter at 1.13% of loans, with 227% coverage of nonaccrual loans.

Chief Credit Officer Derek Steward said the allowance is “very well reserved” and will depend on the economic outlook. He said if the economy improves, the company may have room to lower reserves, while deterioration would lead to an increase.

Zions’ commercial real estate portfolio totaled $14.1 billion, or about 22% of total loans. Richards said the portfolio remains granular and diversified by property type and geography, with conservative loan-to-value characteristics and favorable credit metrics.

The company’s common equity Tier 1 ratio rose to 11.8%, supported by earnings and the quarter’s exceptional gains, partially offset by $75 million in common share repurchases, dividends and growth in risk-weighted assets. Simmons said the current buyback pace is “certainly sustainable” and that he would expect some increase over the coming year if the economy and company forecasts continue to cooperate.

Asked about bank mergers and acquisitions, Simmons said Zions is not focused on deals but would consider opportunities that are strategically additive, likely in existing markets and with attractive deposit bases. He emphasized that the company’s primary focus remains organic growth.

About Zions Bancorporation, N.A. (NASDAQ:ZION)

Zions Bancorporation, N.A. is a bank holding company headquartered in Salt Lake City, Utah, offering a full suite of banking and financial services to individuals, businesses and institutions. Through its primary subsidiary, Zions Bank, the company provides commercial banking, retail banking and wealth management solutions designed to serve the needs of small businesses, middle‐market firms and high‐net‐worth clients. Its service portfolio includes deposit accounts, cash‐management tools, lending products, mortgage origination, treasury services and investment advisory services.

The company's commercial banking segment delivers custom credit and treasury management services, including working capital lines of credit, equipment financing and international trade finance.

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