Zions Bancorporation N.A. (ZION)

On our desk, the reaction to Zions' 2Q26 earnings report was immediately polarized by the headline numbers versus the operational cost reality. While the $452 million net earnings print and $3.05 EPS looked fantastic on paper, stripping out the $215 million Visa gain and SBIC gains leaves a cleaner core EPS of $1.74. The market clearly focused on the cost woes mentioned in the financial press, which explains why the stock dipped despite the headline beat.

Watching the 50-day moving average and recent price action around $68 to $72, I am noting that JPMorgan's downgrade to Underweight with a $75 price target creates a tight trading channel. The bank's authorization of a $75 million buyback and dividend increases help support the floor, but the upside looks capped near that $75 resistance level until management demonstrates better control over operating expenses.

From a portfolio management perspective, the aggressive capital return strategy—expanding 2026 buybacks alongside stable quarterly dividends—shows management's confidence. Yet, the juxtaposition between robust wealth management expansion under Mike Selfridge and persistent expense creep keeps our long-term sentiment neutral. We need to see sustained organic fee-based growth before turning aggressive on ZION.

Looking at the net interest margin holding flat quarter-over-quarter at 3.27%, Zions has done a commendable job defending its NIM in a challenging rate environment across its 11 western states. That said, regional deposit competition remains fierce, and any unexpected acceleration in funding costs could quickly erode the slight 4% gain seen in net interest income.

When evaluating regional bank capital structures in our weekly risk meetings, Zions' estimated common equity tier 1 ratio of 11.8% and return on average tangible common equity of 28.6% stand out as exceptionally strong metrics for Q2 2026. However, analysts must separate recurring net interest income of $677 million from one-off equity investment windfalls when building long-term discounted cash flow models.

In our quantitative screening models, Zions trades at a low P/E of around 8.59 based on trailing twelve-month figures, which superficially flags it as undervalued on automated value platforms. But as fundamental analysts, we must factor in that a significant chunk of recent profitability is non-operating equity gains rather than core banking expansion.