Zions projects 8%-12% Q3 2027 net interest income growth while scaling Basis multifamily to $30M-$40M medium-term revenue
View original at seekingalpha.com“"net earnings available to common was $262 million or $1.78 per share" (Chairman & CEO Harris Simmons)”
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Q3 2027 NII is expected to increase approximately 8%-12%, assuming three rate increases and deposit costs rising to around 2%.
60% confidenceTotal cost of deposits increased 11 bps to 1.59%; a presentation change added ~3 bps to reported cost of deposits with no impact on overall cost of funds.
60% confidenceAbout $2.2 billion of broker deposits mature in Q4; excess money markets can fund loans or reduce broker deposits.
60% confidenceGuidance implies deposit costs up about 40 bps (beta in the upper 40s to low 50s), with NIM scenarios in the mid-3s in 2027.
60% confidence2026 operating leverage is now expected at approximately 40-50 bps including Basis, versus 100-150 bps previously; excluding the acquisition it would approach the low end of the prior range.
60% confidenceOver the medium term Basis is expected to generate approximately $30M-$40M of annual revenue; 2027 revenue $17M-$20M and expense $12M-$13M.
60% confidenceLoan growth expected at 2%-4% for Q3 2027 vs Q3 2026; outlook tempered, particularly in commercial real estate.
60% confidenceBuyback actions are subject to regulatory approvals and the Board, but there are scenarios where capital absorption could increase.
60% confidenceCash-flow hedges are kept under 2 years and rolled on a continuous basis.
60% confidenceQ3 2027 adjusted noninterest expense expected to increase approximately 4%-6%.
60% confidenceCRE showed basically no growth in the quarter (negative $9M), mainly due to Amegy being down; management is not especially worried.
60% confidenceQ3 deposit growth was a little uneven and may not persist at 8.8% annualized; the Basis expense outlook beyond 2027 awaits more experience.
60% confidenceCRE pipeline is pretty good but Zions is being very disciplined in underwriting amid competition and rates.
60% confidenceQ3 2027 adjusted customer-related fee income expected to grow 6%-9% from $182M in Q3 2026.
60% confidenceExpects better Q4 Basis revenue than Q3, and describes the effort as a marathon rather than a sprint.
60% confidenceAnalysts commended the new quantitative guidance ranges.
60% confidenceManagement is reasonably pleased with Q3 results: net earnings to common $262M or $1.78/share, NIM 3.23%, credit losses 2 bps annualized.
60% confidenceWealth management is a compelling growth opportunity; Wealth Select expands the addressable market to $100K-$1M investable assets.
60% confidenceTexas M&A disruption is an opportunity for Zions and is viewed as more positive.
60% confidence