Zions Bancorp's EPS Jumps on Strong Net Interest Income, Despite Credit Loss Spike

TL;DR

**ZIONP's earnings look good on paper, but that $60M credit loss is a red flag for loan quality; proceed with caution.**

AI Summary

Zions Bancorporation, National Association (ZIONP) reported a strong third quarter 2025, with net earnings applicable to common shareholders growing and diluted EPS increasing to $1.48 from $1.37 in Q3 2024. Net interest income rose by $52 million, or 8%, to $672 million, driven by lower funding costs and a favorable shift in asset composition, improving the net interest margin to 3.28% from 3.03%. However, the provision for credit losses significantly increased to $49 million from $13 million in the prior year, primarily due to a $60 million provision related to irregularities in two commercial loan accounts, resulting in a $50 million charge-off. Total loans and leases grew by $1.4 billion, or 2%, to $60.8 billion, while total deposits decreased by $840 million, or 1%, to $74.3 billion, mainly due to a product migration and reduced brokered deposits. Noninterest expense increased by $25 million, or 5%, largely due to higher salaries and technology costs. Total borrowed funds increased by $1.8 billion, or 51%, reflecting new long-term debt issuances of $500 million in August 2025 and $500 million in November 2024.

Why It Matters

For investors, Zions Bancorporation's improved net interest margin and diluted EPS growth signal strong core banking performance in a lower interest rate environment. However, the significant $60 million credit loss provision on commercial loans highlights potential underwriting risks that could impact future profitability and investor confidence, especially in a competitive banking landscape where credit quality is paramount. Employees might see continued investment in technology and benefits, while customers could benefit from the bank's strategic product migrations. The broader market will watch how Zions manages its deposit base and loan portfolio quality amidst evolving economic conditions and competitive pressures from larger financial institutions.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant $60 million provision for credit losses, including a $50 million charge-off, related to 'apparent irregularities and misrepresentations' in two commercial loan accounts. This specific event, while addressed, indicates potential weaknesses in credit risk management or fraud detection, which could recur and impact future financial stability. Additionally, the 1% decrease in total deposits, despite a product migration, suggests ongoing funding challenges.

Analyst Insight

Investors should closely monitor Zions Bancorporation's future credit loss provisions and nonperforming asset trends, particularly in its commercial loan portfolio, to assess the effectiveness of its risk management. While the improved net interest margin is positive, the specific credit event warrants a cautious approach; consider holding existing positions but delay new investments until further clarity on credit quality emerges.

Financial Highlights

revenue

$672 million

total Debt

$1.8 billion

eps

$1.48

revenue Growth

8%

Key Numbers

• $1.48 — Diluted EPS (increased from $1.37 in Q3 2024)
• $672 million — Net interest income (increased $52 million, or 8%, from Q3 2024)
• 3.28% — Net interest margin (improved from 3.03% in Q3 2024)
• $49 million — Provision for credit losses (increased from $13 million in Q3 2024)
• $60 million — Credit loss provision (related to two commercial borrowers)
• $50 million — Charge-off (from the two related commercial loans)
• $1.4 billion — Increase in total loans and leases (2% growth to $60.8 billion)
• $840 million — Decrease in total deposits (1% reduction to $74.3 billion)
• $1.8 billion — Increase in total borrowed funds (51% growth from Q3 2024)
• $25 million — Increase in noninterest expense (5% growth from Q3 2024)

Key Players & Entities

• ZIONS BANCORPORATION, NATIONAL ASSOCIATION (company) — registrant
• Federal Reserve Board (regulator) — repayment of borrowings under BTFP
• Federal Home Loan Bank (company) — higher dividends received on FHLB stock and short-term advances
• NASDAQ Stock Market LLC (company) — exchange where ZION and ZIONP are registered
• Securities and Exchange Commission (regulator) — filing oversight

FAQ

Risk Factors

• Economic Conditions and Interest Rate Volatility [high — market]: Changes in general industry, political, and economic conditions, including elevated inflation and economic slowdowns or recessions, pose risks. Fluctuations in interest and reference rates can negatively impact revenues, expenses, asset/liability valuations, and funding costs. For example, Q3 2025 saw a net interest margin improvement to 3.28% from 3.03% due to lower funding costs, but future rate changes could reverse this.
• Regulatory and Legal Changes [high — regulatory]: Newly enacted and proposed regulations affecting the banking industry, along with uncertainties in interpretation and enforcement, present significant risks. Actions by governments and agencies, including changes in capital standards and regulatory fees, can impact financial performance. The provision for credit losses increased significantly in Q3 2025 due to issues with two commercial loan accounts, highlighting operational and credit risks within the regulatory framework.
• Loan Portfolio Quality and Credit Risk [high — financial]: The quality and composition of the loan portfolio are critical. A $60 million provision related to irregularities in two commercial loan accounts, leading to a $50 million charge-off in Q3 2025, demonstrates specific credit risks. While total loans grew by 2% to $60.8 billion, the concentration of risk in specific accounts is a concern.
• Deposit Stability and Funding Costs [medium — financial]: The quality and composition of deposits are key. Total deposits decreased by 1% to $74.3 billion in Q3 2025, attributed to product migration and reduced brokered deposits. This shift, coupled with an increase in total borrowed funds by 51% to $1.8 billion due to new debt issuances, indicates potential changes in funding structure and cost.
• Operational Costs and Technology Investments [medium — operational]: Noninterest expense increased by 5% to $25 million in Q3 2025, driven by higher salaries and technology costs. Continued investment in technology and managing personnel expenses are operational considerations that impact profitability.

Industry Context

Zions Bancorporation operates in a highly competitive banking sector influenced by macroeconomic conditions and evolving regulatory landscapes. The industry is currently navigating elevated inflation, potential economic slowdowns, and fluctuating interest rates, which directly impact net interest margins and credit risk. Banks are also investing heavily in technology to improve efficiency and customer experience, while managing deposit flows and funding costs in a dynamic environment.

Regulatory Implications

The banking industry faces ongoing scrutiny regarding capital adequacy, consumer protection, and operational resilience. Zions Bancorporation's significant increase in provision for credit losses and charge-offs highlights the importance of robust risk management and compliance with credit underwriting standards. Changes in monetary policy and regulatory frameworks can significantly affect profitability and operational strategies.

What Investors Should Do

1. Monitor the resolution of the two commercial loan irregularities and assess the adequacy of the $50 million charge-off and $60 million provision to fully address the associated credit risk.
2. Analyze the sustainability of the improved net interest margin (3.28%) in light of potential future interest rate movements and the shift in deposit composition.
3. Evaluate the impact of increased noninterest expenses (5% growth) on overall profitability and assess the return on technology investments.
4. Assess the company's strategy for managing deposit outflows and the increased reliance on borrowed funds (51% growth) to fund asset growth.

Glossary

Diluted EPS

Earnings per share (EPS) that would be reported if all convertible securities (like stock options and convertible bonds) were exercised or converted into common stock. It represents the earnings attributable to each outstanding share of common stock. (Indicates the company's profitability on a per-share basis, considering all potential dilutive securities. ZIONP's diluted EPS increased to $1.48 in Q3 2025 from $1.37 in Q3 2024.)

Net Interest Income

The difference between the interest income generated by a bank's assets (like loans and investments) and the interest paid out on its liabilities (like deposits and borrowings). (A core measure of a bank's profitability from its lending and borrowing activities. ZIONP's net interest income rose by 8% to $672 million in Q3 2025.)

Net Interest Margin

A profitability ratio that measures the difference between the interest income generated by a bank and the interest paid out to its lenders (debt and deposit holders), relative to the amount of its interest-earning assets. (Indicates how effectively a bank is managing its assets and liabilities to generate profit from interest-rate sensitive products. ZIONP's NIM improved to 3.28% in Q3 2025 from 3.03% in Q3 2024.)

Provision for Credit Losses

An expense set aside by a financial institution to cover potential losses from loans that may not be repaid by borrowers. (Reflects the expected risk of default in the loan portfolio. ZIONP's provision significantly increased to $49 million in Q3 2025, driven by specific loan issues.)

Charge-off

The act of recognizing a debt or loan as uncollectible and removing it from the balance sheet as an asset. This typically occurs when a borrower defaults and recovery is deemed unlikely. (Represents a realized loss on a loan. ZIONP recorded a $50 million charge-off in Q3 2025 related to two commercial loan accounts.)

Noninterest Expense

Expenses incurred by a bank that are not related to interest payments, such as salaries, rent, technology, and marketing costs. (Measures the operational costs of running the bank. ZIONP's noninterest expense increased by 5% in Q3 2025 due to higher salaries and technology costs.)

Year-Over-Year Comparison

Compared to the prior year's Q3, Zions Bancorporation reported stronger net earnings and diluted EPS, with net interest income growing 8% to $672 million and net interest margin improving to 3.28%. However, a significant increase in the provision for credit losses to $49 million, stemming from specific loan issues resulting in a $50 million charge-off, presents a new concern. While total loans grew, deposits saw a slight decrease, and noninterest expenses rose by 5%, indicating mixed performance across key operational areas.

Key Financial Figures

• $0.001 — ch Registered Common Stock, par value $0.001 ZION The NASDAQ Stock Market LLC Depo
• $1 — enue ("PPNR"). Diluted EPS increased to $1.48, compared with $1.37 in the third qu
• $1.37 — d EPS increased to $1.48, compared with $1.37 in the third quarter of 2024, as higher
• $60 million — nse. During the quarter, we recorded a $60 million provision for credit losses in connecti
• $50 million — . Of the total exposure, we charged off $50 million of the combined loan balances and estab
• $10 million — lished a full reserve for the remaining $10 million. These actions resulted from a review o
• $52 m — credits. Net interest income increased $52 million, or 8%, compared with the prior y
• $111 m — verage interest-earning assets declined $111 million, primarily attributable to a redu
• $641 m — interest-bearing liabilities decreased $641 million, or 1%, mainly due to a reduction
• $49 m — s. The provision for credit losses was $49 million, compared with $13 million in the
• $13 million — t losses was $49 million, compared with $13 million in the prior year period. The year-over
• $5 m — er-related noninterest income increased $5 million, or 3%, primarily due to higher l
• $11 million — This growth was partially offset by an $11 million net credit valuation adjustment ("CVA")
• $13 m — er-related noninterest income increased $13 million, or 8%, benefiting primarily from
• $12 m — er-related noninterest income increased $12 million, or 86%, mainly due to increased

Filing Documents

• zions-20250930.htm (10-Q) — 6368KB
• exh101-2025x27vspplandocxb.htm (EX-10.1) — 33KB
• exh311certofceo10-q20250930.htm (EX-31.1) — 10KB
• exh312certofcfo10-q20250930.htm (EX-31.2) — 10KB
• exh32certofceocfo20250930.htm (EX-32) — 6KB
• image_0.jpg (GRAPHIC) — 49KB
• zions-20250930_g1.jpg (GRAPHIC) — 18KB
• zions-20250930_g10.jpg (GRAPHIC) — 47KB
• zions-20250930_g11.jpg (GRAPHIC) — 70KB
• zions-20250930_g12.jpg (GRAPHIC) — 58KB
• zions-20250930_g13.jpg (GRAPHIC) — 67KB
• zions-20250930_g2.jpg (GRAPHIC) — 18KB
• zions-20250930_g3.jpg (GRAPHIC) — 17KB
• zions-20250930_g4.jpg (GRAPHIC) — 18KB
• zions-20250930_g5.jpg (GRAPHIC) — 102KB
• zions-20250930_g6.jpg (GRAPHIC) — 109KB
• zions-20250930_g7.jpg (GRAPHIC) — 66KB
• zions-20250930_g8.jpg (GRAPHIC) — 53KB
• zions-20250930_g9.jpg (GRAPHIC) — 62KB
• 0000109380-25-000129.txt ( ) — 30234KB
• zions-20250930.xsd (EX-101.SCH) — 80KB
• zions-20250930_cal.xml (EX-101.CAL) — 197KB
• zions-20250930_def.xml (EX-101.DEF) — 539KB
• zions-20250930_lab.xml (EX-101.LAB) — 998KB
• zions-20250930_pre.xml (EX-101.PRE) — 827KB
• zions-20250930_htm.xml (XML) — 8052KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 44 Consolidated Balance Sheets 44 Consolidated Statements of Income 45 Consolidated Statements of Comprehensive Income (Loss) 46 Consolidated Statements of Changes in Shareholders' Equity 46 Consolidated Statements of Cash Flows 48

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 49

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 4

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 89

Controls and Procedures

Item 4. Controls and Procedures 90

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 90

Risk Factors

Item 1A. Risk Factors 90

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 90

Other Information

Item 5. Other Information 90

Exhibits

Item 6. Exhibits 91

Signatures

Signatures 92 2 Table of Contents ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES GLOSSARY OF ACRONYMS AND ABBREVIATIONS ACL Allowance for Credit Losses GAAP Generally Accepted Accounting Principles AFS Available-for-Sale GCF General Collateral Finance ALLL Allowance for Loan and Lease Losses HECL Home Equity Credit Line Amegy Amegy Bank, a division of Zions Bancorporation, National Association HTM Held-to-Maturity AOCI Accumulated Other Comprehensive Income or Loss IPO Initial Public Offering ASU Accounting Standards Update LTV Loan-to-Value BDC Business Development Company NASDAQ National Association of Securities Dealers Automated Quotations Board Board of Directors NBAZ National Bank of Arizona, a division of Zions Bancorporation, National Association bps Basis Points NDFI Nondepository Financial Institution BTFP Bank Term Funding Program NM Not Meaningful CB&T California Bank & Trust, a division of Zions Bancorporation, National Association NSB Nevada State Bank, a division of Zions Bancorporation, National Association CET1 Common Equity Tier 1 OCC Office of the Comptroller of the Currency CLTV Combined Loan-to-Value Ratio OREO Other Real Estate Owned CODM Chief Operating Decision Maker PAGA Private Attorneys General Act CRE Commercial Real Estate PEI Private Equity Investment CVA Credit Valuation Adjustment PPNR Pre-provision Net Revenue DTA Deferred Tax Asset REIT Real Estate Investment Trust DTL Deferred Tax Liability ROU Right-of-Use EaR Earnings at Risk RULC Reserve for Unfunded Lending Commitments EPS Earnings per Share S&P Standard & Poor's EVE Economic Value of Equity SBA U.S. Small Business Administration FASB Financial Accounting Standards Board SBIC Small Business Investment Company FDIC Federal Deposit Insurance Corporation SEC Securities and Exchange Commission FHLB Federal Home Loan Bank TCBW The Commerce Bank of Washington, a division of Zions Bancorporation, National Association FICO Fair Isaac Corp

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING INFORMATION This quarterly report contains "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and assumptions regarding future events and outcomes. However, they are inherently subject to known and unknown risks, uncertainties, and other factors that could cause actual results, achievements, industry developments, or regulatory outcomes to differ materially from those expressed or implied. Forward-looking statements may include, among others: Forward-looking statements are not guarantees and should not be relied upon as representing management's views as of any subsequent date. Actual results and outcomes may differ materially from those presented. Although the following list is not comprehensive, key factors that may cause material differences include: The quality and composition of our loan and investment securities portfolios and the quality and composition of our deposits; Changes in general industry, political, and economic conditions, including increases in the national debt, elevated inflation, economic slowdowns or recessions, and other macroeconomic challenges; changes i

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