Zions Expects Net Interest Income Growth of 8% to 12% in Third Quarter of 2027

Key Facts

Zions Bank forecast net interest income growth of between 8% and 12% in the third quarter of 2027 compared with the same period in 2026, in results announced on October 19, 2026. Third-quarter 2026 net interest income was about $684 million, up 2% year on year, according to the earnings release filed with the U.S. Securities and Exchange Commission. The bank identified asset sensitivity to interest rate changes and a shift in its earning asset mix as drivers of the expected growth. It also cited loan and deposit growth, according to the official presentation accompanying the results. Management's outlook is based on a forward interest rate curve that assumes rate increases in December and the following March and June, according to its remarks on the earnings call.

Net earnings available to common shareholders totaled $262 million in the third quarter of 2026, while diluted earnings per share reached $1.78, according to the bank's statement. The chief executive attributed the earnings improvement primarily to better credit quality during the reported quarter. Net charge-offs fell to $3 million from $56 million in the same period a year earlier. The bank also recorded an $8 million credit loss provision benefit, compared with a provision expense of $49 million a year earlier. On capital, the estimated common equity Tier 1 capital ratio rose to 11.8% at quarter-end from 11.3% a year earlier, according to the same statement.

On the balance sheet, total deposits at the end of the third quarter stood at $77.9 billion, up 4% year on year, according to the official results. Loans and leases reached $62.5 billion, also recording annual growth of 4%. Looking ahead, the bank expects loan balances at the end of the third quarter of 2027 to rise between 2% and 4% compared with the third quarter of 2026. Commercial loans are expected to lead that growth, followed by commercial real estate loans, according to the accompanying presentation. The bank summarized the drivers of its interest income outlook as "asset sensitivity to interest rates, a shift in the earning asset mix, and loan and deposit growth."

Compared with prior performance, net interest income in the second quarter of 2026 was $677 million, according to the earnings release issued in July. Annual growth was 4% at that time, compared with the increase recorded in the third quarter. Second-quarter results also included a one-time gain of $215 million from the sale of Visa shares. Third-quarter net interest margin fell to 3.23% from 3.28% in the same period a year earlier, according to the bank's statement. In after-hours trading following the earnings announcement on October 19, 2026, Zions shares rose 0.98% to $63.76, according to Investing.com coverage.

Outside interest income, Zions expects adjusted customer-related noninterest income to grow between 6% and 9% in the third quarter of 2027 compared with the same period in 2026. The bank identified capital markets as the largest expected contributor to that growth, followed by wealth management and commercial account fees. Meanwhile, it expects adjusted noninterest expenses to rise between 4% and 6% over the same comparison period. It attributed the expected increase to spending on technology and marketing and investment in revenue-generating businesses, according to the official earnings presentation. Despite the expected rise in expenses, management said it expects positive operating leverage as revenue grows.

In the Pace business, management is targeting annual revenue of between $30 million and $40 million over the medium term, according to the earnings call transcript published by Benzinga. Management described the annual revenue target as "$30 million to $40 million," as the business gradually expands. Its 2027 outlook puts revenue at between $17 million and $20 million. It expects expenses of between $12 million and $13 million for the business in the same year. Management said during the call that next year's estimates accompany the gradual expansion of the business.