Zions Faces High Funding Pressure, but the Market Is Too Harsh on Its Valuation

Zions Bancorporation is one of the smaller regional banks that we cover. It is primarily a commercial bank focused on small to midsize businesses in the western half of the United States, where on-the-ground relationships are key. Although Zions struggled during the financial crisis, it has made meaningful improvements to its credit risk management and operational efficiency. We think the main determinants of the bank’s future success will be the interest-rate environment, the stability of the deposit base, and the ability to maintain and improve operational efficiency.