** Regional lender Zions Bancorp's ZION.O shares fall 5% to $67.95 premarket

** ZION late on Monday posted Q2 net interest income below market consensus as deposit competition weighed on margins

** Net interest margin, a key measure of banking profitability, has come into sharper focus recently as Wall Street debates whether deposit costs could rise in the second half of 2026 as ​banks look to fund accelerating loan ​growth

** "The competition is certainly there," ZION CFO Ryan Richards told analysts

** Modest pace of net deposit growth generation at ZION combined with $837 million jump in short-term borrowings sequentially raises questions about ZION’s ability to support loan growth without relying more heavily on higher-cost wholesale funding - Evercore analyst John Pancari says

** "After two straight disappointing NII quarters, ZION needs to demonstrate the deposit initiatives are working and/or loan growth is accelerating meaningfully before investors give full credit to the reiterated guide," Morgan Stanley analyst Manan Gosalia says

** As of last close, ZION stock up 22.8% YTD