Zions: 3 Key Takeaways for Long-Term Investors
A rare multifamily agency license positions Zions to capture fee income competitors cannot, reshaping its long-term earnings mix.
Zions reported $262 million in net earnings for the third quarter of 2026, driven by customer deposit growth and low credit losses. The regional lender aims to expand fee-generating capabilities in the capital market while adapting to changes in interest rates to rebuild net interest income. Three key takeaways from the company's presentation include acquiring a multifamily agency platform, which grants direct access to government-backed housing programs and allows Zions to process commercial loans in-house.
This acquisition positions Zions as one of only four banks in the country with direct access to both Fannie Mae and Freddie Mac programs, along with third-party CMBS conduit platforms. Management expects net interest income to increase by 8% to 12% in the next year, following three anticipated Federal Reserve rate hikes. Additionally, customer deposits expanded at an 8.8% annualized rate, providing Zions with the liquidity needed to meet short-term obligations and reducing reliance on volatile brokered CDs, which stabilizes funding costs.
Higher benchmark interest rates and expanding capital market fee streams are seen as positive factors, while management focuses on pricing discipline and controlling operational expenses to support long-term growth.
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