Zions Bancorporation Earnings Call Highlights Growth Momentum

Zions Bancorporation, National Association (N.A) ((ZION)) has held its Q1 earnings call. Read on for the main highlights of the call.

Zions Bancorporation’s latest earnings call struck an upbeat tone, with management emphasizing solid year‑over‑year gains despite some quarter‑to‑quarter softness. Executives highlighted stronger profits, healthier margins, stable credit quality and growing fee businesses, arguing that these positives more than offset seasonal expense spikes and modest pressure on deposits and loan yields.

Robust Profit Rebound Year over Year

Net earnings climbed to $232 million, translating to $1.56 per diluted share, a 37% jump from the prior year’s quarter. Management credited the improvement to higher revenue, a smaller provision for credit losses and a lower effective tax rate, underscoring a significantly healthier earnings base.

Net Interest Income and Margins Improve

Taxable equivalent net interest income rose 6% year over year to $662 million, as the bank benefited from better loan and securities yields. Net interest margin expanded by 17 basis points to 3.27%, signaling that Zions is earning more on its balance sheet even in a mixed rate environment.

Loan Growth Led by Commercial Clients

Average loans grew at a 2.4% annualized pace during the quarter and were up 2.5% versus a year ago. Commercial lending led the way, reinforcing Zions’ positioning as a relationship‑focused lender to businesses across its Western U.S. footprint.

Deposit Gains and Cheaper Funding

Period‑end customer deposits increased by $1.3 billion, or 1.8%, compared with year‑end, providing a stable funding base. Total funding costs eased 8 basis points quarter over quarter to 1.68% as the bank repriced deposits and reduced reliance on higher‑cost wholesale funding.

Credit Quality Remains a Strength

Credit metrics remained notably strong, with net charge‑offs running at only 3 basis points annualized of average loans. Nonperforming assets fell to 48 basis points, while the allowance for credit losses stood at 1.16%, covering nonaccrual loans by a robust 239%.

Capital Levels and Tangible Book Value Rise

Zions’ Common Equity Tier 1 ratio held steady at a solid 11.5% quarter over quarter, giving the bank a sizable capital cushion. Tangible book value per share increased 19% year over year, reflecting improved earnings and a balance sheet that has normalized after recent industry volatility.

Fee Income and Capital Markets Build Momentum

Customer‑related noninterest income reached $174 million on an adjusted basis, up 10% year over year when excluding credit valuation impacts. Capital Markets was cited as an outsized contributor, with strong pipelines into the second quarter, as Zions continues investing in investment banking, sales and trading and real estate capital markets capabilities.

Strategic Deals and New Products Expand the Franchise

The bank signed an agreement to acquire Basis Investment Group’s agency lending programs, which should bolster its commercial real estate platform. Zions also rolled out a new consumer Gold account and a pilot “beyond the business” small‑business offering, while maintaining strong momentum in SBA 7(a) lending, where it ranks among the nation’s top approval lenders.

Managed Liquidity and Securities Portfolio

Investment securities generated $493 million in principal and prepayment cash flows, of which $299 million was reinvested back into the portfolio. With an average price sensitivity of about 3.7 years, the securities book is being used as both a liquidity backstop and a tool to balance interest rate risk on the balance sheet.

Operating Leverage and Profitability Focus

Adjusted pre‑provision net revenue rose 13% year over year to $301 million, highlighting underlying earnings power. Management reiterated its goal of delivering 100 to 150 basis points of positive operating leverage for full‑year 2026 and noted that intra‑quarter trends in the latest period were even stronger than the headline figures.

Sequential Earnings and EPS Step Down

Compared with the prior quarter, earnings slipped 11%, as diluted EPS declined from $1.76 to $1.56. The drop reflected lower revenue driven by two fewer days in the quarter, sharply reduced securities gains and higher seasonal compensation expenses.

Short‑Term Pressure on NII and Margin

Net interest income fell by $21 million quarter over quarter, a 3% decline that contrasted with the solid year‑over‑year gain. Net interest margin compressed by 4 basis points to 3.27%, as yields on earning assets declined faster than funding costs and loan repricing began to reflect earlier rate cuts.

Pre‑Provision Revenue Softness Quarter over Quarter

Adjusted pre‑provision net revenue of $301 million declined 9% from the prior quarter, weighed down by the weaker net interest income and lower securities gains. Management framed these headwinds as largely seasonal and timing‑related rather than indicative of a shift in the underlying trajectory.

Higher Expenses and Seasonal Compensation

Adjusted noninterest expense rose to $558 million, up sequentially in large part due to seasonal compensation items such as bonuses and payroll taxes. Expenses were also higher year over year, reflecting stepped‑up spending on marketing, technology, professional services and incentive pay to support growth initiatives.

Average Deposit Pressure Amid Competition

Average deposits fell modestly by $540 million compared with the prior quarter, with about half of the decline tied to brokered deposits and the rest to seasonal runoff. Management acknowledged ongoing industry‑wide competition and repricing pressure but pointed to the rise in period‑end balances as evidence of underlying stability.

CRE Pricing and C&I Watchlist Risks

While commercial real estate metrics improved, management flagged intensifying pricing pressure in that market and maintained a cautious stance. In Commercial and Industrial lending, criticized balances ticked slightly higher, with restaurants and other consumer‑facing businesses called out as areas requiring ongoing monitoring.

Factors Muting Reported Loan Growth

Headline loan growth was dampened by the sale of more than $500 million in held‑for‑sale residential mortgages and an accounting netting change affecting roughly $100 million of loans. Management emphasized that underlying origination activity was stronger than reported balances might suggest.

Capital Deployment and Shareholder Returns

CET1 remained flat quarter over quarter because earnings were offset by $77 million of share repurchases and dividends, along with growth in risk‑weighted assets. Upcoming agency lending acquisitions are expected to temporarily consume capital until approvals and integration are complete, but management underscored that capital levels remain comfortably above regulatory minimums.

Guidance Points to Moderate Growth and Margin Tailwinds

Looking ahead, Zions expects net interest income to increase moderately, with management targeting 7% to 8% growth over the next year under a no‑rate‑change scenario. They also anticipate modestly higher customer‑related fee income, continued loan growth, expanding margins and positive operating leverage of 100 to 150 basis points, supported by deposit growth, a 1.68% funding cost, an 11.5% CET1 ratio and modeled regulatory capital relief over time.

Zions’ earnings call painted a picture of a bank balancing near‑term noise with improving fundamentals and strategic momentum. While quarter‑over‑quarter results showed some pressure from seasonality and competition, the strong year‑over‑year gains, disciplined credit performance and clear growth plans suggest a constructive setup for investors watching the regional banking space.