Zions Bancorporation

The Federal Reserve is reportedly preparing to raise the asset thresholds that trigger stricter regulatory requirements for U.S. banks, a move aimed at reflecting inflation and broader economic growth. The thresholds currently step up at $100 billion, $250 billion and $700 billion in assets, and raising them could reduce compliance costs and give regional lenders more room to expand. U.S. Bancorp, Capital One Financial, PNC Financial and Truist Financial, each clustered near the $700-billion mark, could be among the key beneficiaries if the threshold rises toward $1 trillion, while Western Alliance Bancorporation and Zions Bancorporation could gain more room to cross $100 billion in assets without immediately facing all the rules triggered at that level. Federal Reserve vice chairman for Supervision Michelle Bowman has argued that fixed thresholds become increasingly restrictive over time because they do not adjust for inflation or economic expansion, and in January she suggested indexing them to nominal gross domestic product. Reuters reported that the incremental costs of crossing the $100-billion level can run into tens of millions of dollars annually, and the added regulatory headroom could also make mergers and acquisitions more attractive for mid-sized and regional banks.

Zions Bancorporation increased its quarterly cash dividend by 6.7% to 48 cents per share and authorized an additional $75 million common share repurchase program for the third quarter of 2026, bringing the 2026 repurchase target to $300 million. The company has raised its dividend five times over the past five years with an annualized growth rate of 5.2%, and its payout ratio stands at 27% with a dividend yield of 2.58%. During the second quarter of 2026, Zions repurchased 1.2 million common shares for $75 million, bringing total capital distribution to $142 million in the quarter. The company's estimated Common Equity Tier 1 capital ratio improved to 11.8% as of June 30, 2026, from 11.0% a year earlier, while total deposits increased 4% to $76.6 billion and loans and leases grew 3% to $62.5 billion. Zions also agreed to acquire the agency lending business of Basis Investment Group in March 2026 to expand its real estate financing capabilities.

Zions reported second-quarter earnings per share of $1.74, beating the Zacks Consensus Estimate of $1.57 by 10.83%. Revenue came in at $879 million, a 3.3% year-over-year increase but slightly below the $879.16 million consensus. Key metrics included an efficiency ratio of 62.2%, net interest margin of 3.3%, and total noninterest income of $460 million, which was more than double the $189.81 million analyst estimate. Average interest-earning assets reached $84.35 billion, while total nonperforming assets were $298 million, both better than expected. The stock has returned 9.2% over the past month and carries a Zacks Rank #2, or Buy.

Zions Bancorporation reported second-quarter 2026 net earnings available to common of $452 million, or $3.05 per share, including a $215 million pretax gain on the liquidation of Visa Class B-1 shares and a $37 million net unrealized pretax gain on an SBIC investment. Excluding those items, earnings per share totaled $1.74, while adjusted pre-provision net revenue reached $332 million, up 10% from the prior quarter. Taxable equivalent net interest income was $677 million, customer-related noninterest income was $182 million, and adjusted noninterest expense was $546 million. The net interest margin held steady at 3.27%, average loans grew 4.7% annualized, and average customer deposits grew 4.0%. The company reaffirmed its expectation for positive operating leverage for the full year 2026 in the range of 100 to 150 basis points and guided to moderately increasing net interest income over the next year, with the potential for upper single-digit growth if the forward curve’s assumed rate increase materializes. The pending acquisition of Basis Investment Group is expected to close in the third quarter and is not included in the current outlook.

Zions Bancorporation, trading as ZION, currently pays a quarterly dividend of $0.45 per share, yielding 2.68%, which exceeds the Banks - West industry average of 2.57% and the S&P 500's 1.44%. The annualized dividend of $1.80 represents a 2.3% increase from last year, and the company has raised its dividend three times over the past five years for an average annual increase of 5.20%. Zions maintains a payout ratio of 28% of trailing twelve-month earnings. The Zacks Consensus Estimate for fiscal 2026 earnings is $6.44 per share, implying 5.23% growth from the prior year. The stock carries a Zacks Rank of 3, or Hold.