Regional banking company Zions Bancorporation (NASDAQ: ZION) met Wall Street’s revenue expectations in Q1 CY2026, with sales up 7.4% year on year to $859 million. Its non-GAAP profit of $1.54 per share was 8% above analysts’ consensus estimates.

Is now the time to buy ZION? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Zions Bancorporation reported year-over-year improvements in revenue and profitability for Q1, buoyed by strong performance in its capital markets division and continued expansion of its business banking and consumer deposit products. Management attributed the quarter’s results to broad-based fee income growth, modest credit losses, and disciplined expense management. CEO Harris Simmons noted, “Our Capital Markets division continues to be an important driver of fee income growth.” Despite seasonal expense increases, the company highlighted steady growth in commercial lending and a meaningful increase in period-end customer deposits.

Looking forward, management expects moderate growth in net interest income and fee-based revenue, supported by new product rollouts and the recent acquisition agreement in agency lending. CFO Ryan Richards emphasized a focus on positive operating leverage, stating, “We continue to expect positive operating leverage for full year 2026 in the range of 100 to 150 basis points.” The company is also investing in digital modernization and sees opportunities from repricing assets and deposit gathering, while monitoring competitive pressures and potential impact from regulatory changes.

Key Insights from Management’s Remarks

Management pointed to the successful execution of strategic initiatives, including product innovation and prudent risk management, as key factors supporting the quarter’s results and the foundation for future growth.

• Capital markets momentum: The capital markets business, expanded since 2020, drove fee income growth through investments in talent and product capabilities, including syndications, interest rate hedging, and the launch of a commodity hedging practice targeting energy clients.
• Deposit growth initiatives: The rollout of new consumer and small business deposit products, such as the gold account and piloting of the "business beyond" suite, was highlighted by management. The $1.3 billion increase in period-end customer deposits in Q1 was not materially impacted by the "business beyond" product, as it had just begun piloting at quarter end and was too new to contribute. Early positive reception is expected to generate further growth as the rollout expands in future quarters.
• Credit quality stability: Credit losses remained low at 3 basis points annualized, and nonperforming assets declined, underscoring continued conservative underwriting, especially in the commercial real estate (CRE) and commercial and industrial (C&I) portfolios.
• Expense and margin discipline: Operating expenses rose seasonally due to compensation, but management maintained a focus on expense control while investing in technology and customer-facing initiatives. Net interest margin declined slightly, reflecting lower asset yields and deposit mix, but was offset by improved funding costs.
• Pending agency lending acquisition: Zions reached an agreement to acquire Fannie and Freddie lending programs from Basis Investment Group, which is expected to enhance service capabilities for commercial real estate clients and strengthen the bank’s presence in multifamily lending, pending regulatory approval.

Drivers of Future Performance

Management’s outlook centers on expanding fee income, balancing loan and deposit growth, and leveraging technology investments to support profitability and operating leverage in a static rate environment.

• Fee income and product expansion: Management anticipates continued momentum in customer-related fee income, driven by growth in capital markets, wealth management, and the full rollout of new deposit products for both consumers and small businesses. The successful integration of agency lending should further diversify revenue streams.
• Loan and deposit growth focus: The company expects moderate loan growth, particularly in commercial and industrial lending, while maintaining conservative CRE exposure. Deposit-gathering campaigns and repricing efforts aim to improve funding mix and support net interest income even if rates remain unchanged.
• Cost management amid investments: While technology and marketing investments are set to increase, management is committed to prudent expense control. The goal is to achieve positive operating leverage despite competitive deposit markets and potential headwinds from regulatory and macroeconomic factors.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will be watching (1) the full rollout and adoption rates of new deposit products across additional markets, (2) the integration progress and initial results from the agency lending acquisition, and (3) sustained fee income growth in capital markets and wealth management. Execution on technology initiatives and responses to evolving regulatory requirements will also be important to track.

Zions Bancorporation currently trades at $62.43, in line with $63.05 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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