Some regional banks still feel like leftover baggage from the 2023 panic. This one looks a lot healthier than that. Earnings are improving, credit metrics are stable, the dividend is covered, and management just added a new growth lane in multifamily agency lending. The stock is not flashy, but at under 10 times earnings, it does not need much excitement to work.
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What Just Happened
The latest quarter was solid
Zions Bancorporation, N.A. (NASDAQ: ZION) reported first-quarter 2026 earnings of $1.56 per share, ahead of the $1.43 consensus estimate. Net income rose to $232 million from $169 million a year earlier, while net interest income increased 6% year over year to $662 million.
Net interest margin improved to 3.27% from 3.10%, helped by lower funding costs and a better mix of earning assets.
Credit looked better
Credit quality also improved in the quarter. Net charge-offs fell to $4 million from $16 million a year earlier, and the provision for credit losses moved to a benefit of $7 million versus an $18 million provision last year.
For a regional bank, this matters as much as the headline EPS beat. Investors are not just asking whether banks can grow earnings. They want proof the loan book is not quietly getting worse.
Zions added a new growth lane
In March, Zions agreed to acquire the agency lending business of Basis Multifamily Finance I, including the team, mortgage servicing rights, and access to Fannie Mae DUS and Freddie Mac Optigo lending programs.
The deal expands Zions’ commercial real estate product suite and gives the bank a deeper role in multifamily financing, especially in its Western markets.
Why The Business Matters
This is a regional bank with a real footprint
Zions is headquartered in Salt Lake City and serves customers across high-growth Western markets. That gives it exposure to markets where housing, business formation, population growth, and commercial activity can support long-term demand for lending and banking services.
The model benefits when rates stop hurting
Like many regional banks, Zions has spent the last few years dealing with deposit-cost pressure, funding-cost volatility, and investor anxiety around credit quality. The first-quarter results show some of that pressure easing. Net interest income and margin both improved from a year earlier, which is exactly the kind of stabilization investors want to see.
The Basis deal fits the strategy
This is not a random acquisition. By adding Fannie Mae and Freddie Mac agency lending capabilities, Zions can offer more solutions to real estate clients without having to carry every loan on its own balance sheet in the same way. That makes sense for a bank trying to grow capital-markets and fee-oriented capabilities while still serving commercial real estate customers.
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Why The Stock Has A Case
The valuation is attractive
ZION trades around 9.6 times earnings based on the numbers you shared. That is not demanding for a bank producing improving earnings, better credit metrics, and a covered dividend. The market is still applying a regional-bank discount, but the latest results argue the story is not as stressed as that multiple suggests.
The dividend helps
Zions pays $0.45 per quarter, or $1.80 annually, giving the stock a yield around 2.9% at the current price. The payout ratio sits near 29% based on trailing earnings, which leaves room for the dividend to remain well covered. This is not a huge yield, but it is a credible income component with a reasonable valuation behind it.
Earnings estimates are moving in the right direction
Zacks has Zions at a Rank #2 Buy, with 2026 consensus EPS around $6.21 and expected earnings growth of about 1.5% versus the prior year. That is not explosive growth, but for a discounted bank stock, steady earnings plus a dividend can be enough. The key is avoiding credit damage and continuing to improve net interest income.
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What Has To Go Right
Net interest income needs to keep growing
This is the main driver. Management expects net interest income to grow over the next 12 months, supported by loan and deposit growth, especially in commercial and commercial real estate lending. If that holds, the earnings base should stay healthy.
Credit needs to stay clean
The market still punishes regional banks quickly when credit concerns show up. Zions’ Q1 credit metrics were encouraging, but investors need that trend to continue. Low charge-offs and manageable provisions are essential to keeping the stock’s valuation from getting stuck.
The Basis deal needs to close cleanly
The acquisition still requires customary approvals, including Fannie Mae and Freddie Mac approval. Once closed, the deal needs to prove it can add fee income, deepen customer relationships, and strengthen the real estate finance platform without adding unwanted risk.
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What Could Trip It Up
Commercial real estate is still a sensitive area
The Basis deal adds strategic upside, but anything tied to commercial real estate gets extra scrutiny right now. Multifamily is not the same as troubled office exposure, but investors will still watch credit quality closely.
Expense growth can offset the benefit
Zions is investing in marketing, technology, and revenue initiatives, and expenses are expected to rise modestly. That is fine if revenue grows faster. It becomes a problem if higher costs eat up net interest income gains.
Regional banks still carry sentiment risk
Even good quarters can get ignored when the market is nervous about banks. Funding costs, deposit flows, CRE headlines, or credit scares elsewhere in the sector can pressure ZION even if the company itself keeps executing.
What I’d Watch Next
The first thing to watch is net interest margin. If NIM holds near or above the Q1 level, the earnings story stays intact. The second is net charge-offs, because clean credit is the difference between a cheap bank and a value trap. The third is fee income from capital markets and real estate finance. The fourth is progress on the Basis acquisition and the Fannie/Freddie approvals.
My Take
Buy at current levels. Zions has improving earnings, better credit metrics, a covered dividend, and a valuation below 10 times earnings. The Basis acquisition also adds a practical growth lane in agency multifamily lending without needing the bank to reinvent itself.
The key risk is credit. If commercial real estate stress rises or loan losses increase, the low multiple will stay low for good reason. But with Q1 credit metrics improving and net interest income moving in the right direction, the setup favors owning the stock here.
Action Recap
🏦 Looking to buy? Buy at current levels for a low-multiple regional bank with improving earnings and a covered dividend.
💵 Already own it? Keep holding while net interest income, credit quality, and buyable valuation all support the story.
⚠️ Main risk to respect: Commercial real estate and broader regional-bank sentiment can pressure the stock quickly if credit concerns return.
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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