Initiated 2026-10-14 · Price $61.12 (intraday 2026-10-14 10:12 ET, stockanalysis.com) · Mkt cap $8.92bn · Financials / regional bank · Model: verified

Rating: Hold — Conviction: Low

Zions has rebuilt from the 2023 deposit scare: tangible book per share is up 58% since end-2023 ($28.30 → $44.74), CET1 is 11.8%, NIM has held near 3.27% and credit losses are running at single-digit basis points. But at ~1.4x tangible book and ~9.5x forward earnings, the market already prices a steady 3.3–3.4% margin and normal credit. Our base case is only modestly above the price, and the bear case is deep because 22% of loans are CRE and TCE/assets is still a thin 7.4%. Hold.

Conviction tests (3a-v-c): T1 fail (Hold → Buy at −1pp: Base +28.2%; −3.4% at +1pp) · T2 pass · T3 pass · T4 pass

Model value range vs price
Bear $35.58Base $67.39Bull $99.38Price $61.12

Business overview

Zions is an $89bn-asset commercial bank in the Western and Southwestern US, operating through regional affiliate brands. Loans are $62.5bn: about $32bn commercial, $14.1bn CRE (22%) and $15.8bn consumer, mainly residential mortgage (Q2 2026 averages). Revenue is roughly three-quarters net interest income ($677mm in Q2 2026) and one-quarter fees. Customer-related fees were $182mm, up 11% year on year. In August it closed the purchase of Basis Investment Group's Fannie Mae/Freddie Mac multifamily lending business. Three variables drive earnings. First, NIM: 3.27% in Q2 on an asset-sensitive balance sheet (the company estimates about +4% NII per +100bp), with deposit costs at 1.48% and a 53% cumulative interest-bearing beta. Second, loan growth as securities run off into C&I and owner-occupied loans. Third, credit costs, especially CRE.

Competition

Zions competes for Western commercial and small-business relationships with the national banks (JPMorgan, Wells Fargo, Bank of America) and with Western Alliance, East West, Cullen/Frost in Texas and First Horizon in the Sun Belt. Western Alliance, its closest comparable by footprint and size, grew held-for-investment loans $1.8bn in Q2 2026, more than 80% of it C&I, at a 3.53% NIM (Q2 2026 release). That outpaces Zions' 4.7% annualized average loan growth. Pressure would show up first in deposit pricing: Zions' cost of deposits is already 1.48%, and Western Alliance is deliberately shrinking higher-cost deposits. On valuation, Western Alliance trades at 1.15x tangible book and 7.3x forward earnings, the low end of the peer set, and Cullen/Frost at 2.10x and 13.1x, the high end (stockanalysis, 2026-10-14).

Bull case

  1. Asset sensitivity pays. If the forward curve's hike(s) arrive, NII rises roughly 4% per +100bp, and the remix from securities into loans lifts NIM to ~3.6% by 2028. Operating leverage pushes efficiency to ~58%. Plays out if deposit betas stay near the current 53% and the 10Y holds above 5%. Model: nim, efficiency_ratio
  2. Commercial growth and fee momentum. C&I and owner-occupied lending across the Western footprint sustains ~5% earning-asset growth, and capital markets plus the new Basis agency platform lift fees toward 1.08% of earning assets. Plays out if management's "moderately increasing" outlook proves conservative. Model: ea_growth, fee_pct_ea

Bear case

  1. Margin give-back. Deposit competition and a turn to rate cuts push NIM back toward ~3.0%, the FY2024 level, while technology and marketing spend keep efficiency at ~64%. Plays out if Q3/Q4 deposit costs rise or the Fed pivots to cuts. Model: nim, efficiency_ratio
  2. Growth stalls. Higher-for-longer rates cut loan demand to zero, and capital-markets fees and SBIC marks retreat. Plays out if commercial line utilization falls and deal activity freezes. Model: ea_growth, fee_pct_ea
  3. CRE and commercial credit turn. The $14.1bn CRE book refinances into 5%+ rates and NCOs peak near 90bp, from ~4bp in H1 2026. The allowance (1.13% of loans, down from 1.20%) rebuilds by 35bp. Plays out if the slow default cycle (S7b) arrives. Model: nco_rate, reserve_build

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
P/TBV (price ÷ period-end TBV/share) 1.37x on $44.74 (stockanalysis 1.39x) TBV/share $28.30 FY23 · $33.85 FY24 · $40.79 FY25; P/TBV history n/a (unverified) WAL 1.15x · FHN 1.54x · EWBC 1.95x · CFR 2.10x (stockanalysis basis) er2q26 6/30/26; stockanalysis 2026-10-14
Forward P/E (stockanalysis consensus) 9.53x n/a (unverified) WAL 7.27x · FHN 10.27x · EWBC 11.11x · CFR 13.14x stockanalysis 2026-10-14
ROTCE (company, annualized) 16.6% ex-gains (28.6% reported, Q2 2026) 15.5% Q1 2026; FY history n/a (unverified) n/a (unverified) er2q26; pres2q26
NIM (reported) 3.27% (Q2 2026) 3.00% FY24 · 3.21% FY25 WAL 3.53% (Q2 2026) er2q26; er4q25

Zions trades at a ~22% P/TBV discount to the 1.75x peer median and slightly below the 10.7x forward P/E median. The discount tracks its thinner capital (TCE/assets 7.4%) and CRE weight more than cheap earnings. Trailing P/E (7.9x) is flattered by the Q2 Visa gain.

Model-implied value range (from model-summary.json; bank, residual income and justified P/TBV, midpoints): Bear $35.58 · Base $67.39 · Bull $99.38 per share, i.e. implied returns of −41.8% / +10.3% / +62.6% vs $61.12. These ranges show how the bull and bear drivers translate into value; they are not price targets. The price sits a little below Base and closer to Base than to either tail, so the market credits most of the steady-margin, normal-credit path and pays nothing extra for asset sensitivity. Re-rating: on the model's own basis, today's multiple is 1.48x FY2025 TBV/share ($41.19). Base justified P/TBV ($68.80) embeds ~1.67x, a ~13% re-rating, and residual income ($65.97, ~1.60x) embeds ~8%. The methods agree within 5%, but both credit a re-rating as ROTCE holds near 16%. No tail sensitivity was run: no single product exceeds half of revenue, and Bear is a break, not a plateau.

Balance sheet: net leverage not meaningful (deposit-funded bank). CET1 11.8% (Q2 2026, estimated), TCE/tangible assets 7.4%, AOCI −$1.87bn. The company projects $499mm of AOCI accretion from 4Q25 to 4Q27, which the model does not include. Deposits are $76.6bn ($72.7bn customer). Long-term debt was $1.96bn at 6/30, before $500mm of senior notes priced 7/28/26; the maturity ladder was not retrieved, so the model's single 2030 bucket is a placeholder. Model TCE/earning assets is 7.8% in Y1, and PPNR/provision coverage is 7.4x in Y2 (Y1's 25.5x reflects near-zero H1 charge-offs). ACL 1.13% of loans. Ratings: n/a (unverified).

Model note: Verified (LibreOffice recalculated all 3,394 formula cells and they match). Unverified inputs: none. Assumptions without basis: none. Scenario consistency checks: all OK. Conventions: NIM is the reported margin on TE NII; the TE adjustment and preferred dividends are folded into a 23.5% all-in tax_rate. Y1 fee rate includes the $252mm of Q2 notable gains (Visa B-1, SBIC) because that capital is already in TCE. Base Y1 EPS of $8.12 therefore sits on GAAP, and Y2 ($6.67) is the clean run-rate, below Q2's $1.74 ex-items quarterly pace because NCOs normalize to 25–30bp. The company gives no EPS guidance. AOCI is not modeled, so rate-shock rows understate the capital channel. Cost of equity carries a stated +1pp funding-run premium over pure CAPM (9.36% on a 0.83 beta).

Relative value vs peers
MetricZIONWALFHNEWBCCFRPeer medianvs median
P/E (TTM)7.9x8.3x10.8x11.8x14.3x11.3x−30%
P/E (forward)9.5x7.3x10.3x11.1x13.1x10.7x−11%
PEG1.5x0.7x1.0x1.4x1.8x1.2x+27%
P/B1.2x1.1x1.3x1.9x2.1x1.6x−24%
P/TBV1.4x1.1x1.5x1.9x2.1x1.7x−20%
Dividend yield3.1%2.3%3.0%2.6%2.7%2.7%+0.5pp
P/E (TTM)CFR14.3xEWBC11.8xFHN10.8xWAL8.3xZION7.9x
P/E (forward)CFR13.1xEWBC11.1xFHN10.3xZION9.5xWAL7.3x
PEGCFR1.8xZION1.5xEWBC1.4xFHN1.0xWAL0.7x
P/BCFR2.1xEWBC1.9xFHN1.3xZION1.2xWAL1.1x
P/TBVCFR2.1xEWBC1.9xFHN1.5xZION1.4xWAL1.1x
Dividend yieldZION3.1%FHN3.0%CFR2.7%EWBC2.6%WAL2.3%

As of 2026-10-14. One source and one definition for every company: aggregator TTM and consensus-forward multiples; P/TBV on the source's tangible book. Not the model's own TBV basis (see the report's valuation table). Quotes taken with the market open, 2026-10-14 ~10:06-10:21 AM ET. Dashed line = peer median. Source: stockanalysis.com /stocks/<ticker>/statistics/, fetched 2026-10-14.

Notes. The source's PEG figures, based on its analyst growth estimates; not computed here. ZION's 7.9x trailing P/E is flattered by the Q2 2026 Visa B-1 sale gain ($215mm pre-tax, $1.12/share). Omitted: EV-based multiples are not meaningful for deposit-funded banks. Omitted: bank operating cash flow mixes loan-sale and trading flows, so FCF yield is not meaningful.

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − Regional-bank multiple de-rates; no credit channel without recession Med −$8.33
S2 Slow bear / recession − CRE and C&I losses, lower loan demand and fees, deleverage; asset-sensitive NIM falls with cuts. About 45% of Base−Bear because it's transitory, while Bear is permanent High −$14.40
S3 Rapid rate shock − Asset-sensitive NII gains partly offset a higher CoE; AOCI widens and slows buybacks (not modeled) Med −$6.13
S4 Slow rate grind − NIM up modestly, but loan demand slows and CRE refinancing strains Med −$8.82
S5 Soft-landing cuts + Lower CoE and AOCI recovery outweigh a modest NIM give-back Med +$8.66
S6 Recession-driven cuts − Labor-market break drives CRE and commercial losses; cuts compress an asset-sensitive NIM High −$12.38
S7a Credit liquidity shock − 2023-style funding scare, in which Zions was a direct target: deposit outflows, wholesale funding, de-rating High −$15.91
S7b Slow default cycle − CRE and leveraged-loan defaults flow into charge-offs Med −$10.04
S8 Stagflation − Higher CoE, borrower strain, cost inflation; NIM roughly neutral High −$10.71
S9a Dollar spike 0 no material effect, not modeled Low $0.00
S9b Dollar slide 0 no material effect, not modeled Low $0.00
S10 Melt-up + Regional-bank risk premium compresses; capital-markets fees benefit High +$10.97
S11 Energy supply shock − Rates spillover and modest credit strain; Texas energy lending a small offset Low −$3.53
S12 Mega-cap/AI derating 0 no material effect, not modeled Low $0.00

Currently active/on watch per the playbook: S3 active; S8, S10 and S11 on watch.

Model value change vs Base, by scenario
S7a Credit liquidity shock−$15.91S2 Slow bear / recession−$14.40S6 Recession-driven cuts−$12.38S8 Stagflation−$10.71S7b Slow default cycle−$10.04S4 Slow rate grind−$8.82S1 Fast equity crash−$8.33S3 Rapid rate shock−$6.13S11 Energy supply shock−$3.53S9a Dollar spike$0.00S9b Dollar slide$0.00S12 Mega-cap/AI derating$0.00S5 Soft-landing cuts+$8.66S10 Melt-up+$10.97

What would change the call

Upgrades if: Q3/Q4 NIM holds at or above 3.30% with deposit costs flat, NCOs stay below 20bp, and the 2027 outlook keeps positive operating leverage, or the stock falls toward ~1.2x tangible book with that path intact. Downgrades if: NIM falls below 3.15% on deposit costs, NCOs move above ~40bp or classified loans (3.72%) rise materially, or buybacks stop.

Watch items

Sources