10-K: Zions Bancorp Reports Strong 2025 Growth, Capital Strength

Zions Bancorporation, N.A. reported solid financial performance in 2025 with increased net earnings, diluted EPS, and improved efficiency, while maintaining strong capital ratios.

Summary

• Net earnings applicable to common shareholders increased 21% to $895 million in 2025.
• Diluted EPS rose 21% to $6.01 in 2025 from $4.95 in 2024.
• Adjusted pre-provision net revenue (PPNR) increased 12% to $1,266 million.
• The efficiency ratio improved to 62.6% from 64.2% in 2024.
• Net interest income increased 8% ($197 million) to $2,627 million, driven by lower funding costs and favorable asset composition.
• Net interest margin (NIM) improved to 3.21% from 3.00% in 2024.
• Total loans and leases increased 3% ($1.5 billion) to $60.9 billion.
• Total deposits decreased 1% ($579 million) to $75.6 billion, primarily due to reduced brokered deposits, partially offset by an increase in noninterest-bearing demand deposits.
• Net loan and lease charge-offs totaled $89 million (0.15% of average loans), up from $60 million (0.10%) in 2024, including a $50 million loss from two related commercial loans due to apparent irregularities and misrepresentations.
• Nonperforming assets increased to $320 million (0.52% of total loans and OREO) from $298 million (0.50%) in 2024.
• Classified loans decreased to $2.4 billion (3.91% of total loans) from $2.9 billion (4.83%) in 2024.
• Total available liquidity was $44.6 billion, exceeding uninsured deposits of $34.4 billion.
• Common Equity Tier 1 (CET1) capital ratio improved to 11.5% from 10.9% in 2024.
• Tangible book value per common share increased 21% to $40.79.
• Acquired four FirstBank Coachella Valley, California branches, including approximately $630 million in deposits and $420 million in consumer and commercial loans, in late March 2025.
• Completed full redemption of Series G, I, and J preferred stock in December 2024, resulting in a one-time reduction of approximately $6 million in net earnings applicable to common shareholders.
• Issued $500 million of 4.70% Fixed-to-Floating Senior Notes during the third quarter of 2025.
• Issued $500 million of 4.48% Fixed-to-Floating Senior Notes on February 4, 2026.
• Paul E. Burdiss, Executive Vice President and Chief Executive Officer and President of the Zions Bank division, retired on December 31, 2025, and will serve as a consultant until December 31, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, with significant growth in key profitability metrics and capital ratios, indicating effective management and a robust financial position despite some credit quality challenges and a slight decline in overall deposits.

Positives

• Net earnings applicable to common shareholders increased 21% to $895 million.
• Diluted EPS increased 21% to $6.01.
• Adjusted pre-provision net revenue (PPNR) increased 12% to $1,266 million.
• The efficiency ratio improved to 62.6% from 64.2%, indicating positive operating leverage.
• Net interest income increased 8% ($197 million) due to lower funding costs and favorable asset mix.
• Net interest margin (NIM) improved to 3.21% from 3.00%.
• Total loans and leases grew 3% ($1.5 billion).
• Customer deposits (excluding brokered deposits) increased to $71.8 billion from $71.2 billion.
• Common Equity Tier 1 (CET1) capital ratio improved to 11.5% from 10.9%, exceeding well-capitalized thresholds.
• Tangible book value per common share increased 21% to $40.79.
• Total available liquidity of $44.6 billion exceeded uninsured deposits of $34.4 billion.
• Classified loans decreased to $2.4 billion (3.91%) from $2.9 billion (4.83%), primarily due to loan payoffs.
• Successful completion of the final phase of core loan and deposit banking systems replacement project in July 2024.
• S&P upgraded its rating outlook on the Bank to Stable from Negative in November 2025.
• Internal stress tests demonstrated continued maintenance of capital ratios above regulatory minimums and conservation buffer.

Negatives

• Total deposits decreased 1% ($579 million), primarily due to a reduction in brokered deposits.
• Net loan and lease charge-offs increased to $89 million (0.15%) from $60 million (0.10%) in 2024, including a $50 million loss from two related commercial loans due to apparent irregularities and misrepresentations.
• Nonperforming assets increased to $320 million (0.52%) from $298 million (0.50%).
• Multifamily CRE, industrial, and office properties currently face elevated vacancy rates, declining property valuations, rent concessions, and increased operating costs.
• The Federal Reserve Board's reduction of the federal funds rate in 2025 introduced additional uncertainty into market expectations and contributed to heightened volatility in asset pricing, funding costs, and customer behavior.
• The $15 million charitable contribution to the charitable foundation increased noninterest expense in 2025.
• The redemption of Series G, I, and J preferred stock in December 2024 resulted in a one-time $6 million reduction in net earnings applicable to common shareholders.

Risks

• Credit quality has negatively impacted performance in the past and may continue to do so in the future due to adverse macroeconomic conditions such as rising interest rates, inflation, or economic slowdowns.
• Concentrations of risk among counterparties and within the loan portfolio, including real estate, oil and gas-related lending, and leveraged and enterprise value lending, could adversely impact financial results.
• Business performance is highly correlated with local economic conditions in specific geographic regions of the U.S. (e.g., Utah, Idaho, Texas, California), making it vulnerable to adverse developments like economic downturns, climate-related disruptions, or natural disasters.
• Failure to adequately manage interest rate risk could have a material adverse impact on financial results, especially given the balance sheet's sensitivity to interest rate fluctuations and customer behavior.
• Fluctuations in the availability and sources of liquidity and capital could restrict operational flexibility and constrain future growth opportunities, influenced by market forces, emerging technologies (stablecoins, tokenized deposits), and rising borrowing costs.
• Unfavorable rating actions by credit rating agencies could negatively impact the organization's access to capital markets and funding costs.
• Challenges experienced by other financial institutions could negatively impact the broader financial markets and, in turn, indirectly have an adverse effect on operations (systemic risk).
• Challenges in attracting and retaining qualified personnel or effectively fostering corporate culture, along with potential increases in recruiting and compensation costs due to evolving workplace dynamics, market conditions, and regulatory changes.
• The ultimate success, timely completion, and overall impact of significant initiatives to improve operating efficiency and strengthen the internal control environment may differ significantly from expectations.
• Failure to effectively develop, adopt, implement, and deliver technological innovations may significantly impact financial performance and competitive position.
• The development and use of AI technologies present risks and challenges, including potential for hallucinations, biases, inaccurate outputs, inadvertent disclosure of confidential information, infringement of intellectual property rights, lack of transparency, and use by threat actors for fraud or cyberattacks.
• Exposure to information system failures and increasingly sophisticated cybersecurity threats from various actors, including those leveraging AI, could adversely impact business operations and financial performance.
• Reliance on outsourced third-party providers may pose risks of inadequate performance, system failures, or cyber incidents that could adversely affect business and operational performance.
• Internal stress testing and capital management requirements, along with provisions of the National Bank Act and OCC regulations, may limit the ability to increase dividends, repurchase shares, or access capital markets.
• Regulatory requirements, prevailing economic conditions, and other factors may necessitate raising capital under unfavorable circumstances or in unfavorable amounts.
• Risks associated with accounting, financial reporting, and regulatory compliance, including the application of significant estimates, judgments, and interpretations of complex and evolving standards.
• The value of goodwill may decline in the future, requiring an impairment charge that could adversely impact earnings and shareholders' equity.
• Inability to fully realize Deferred Tax Assets (DTAs) if future projections of taxable income, anticipated reversals of existing deferred tax liabilities, or the effectiveness of tax planning strategies do not sufficiently support their recoverability.
• Laws and regulations applicable to the company and the broader financial services industry impose significant restrictions on business activities, subjecting it to heightened regulatory oversight and increased compliance costs.
• Political developments, including those resulting from administrative transitions and shifts in congressional control, can introduce volatility and uncertainty, potentially leading to significant changes in government agencies and financial markets.
• Legislative, administrative, and judicial changes to tax laws, regulations, or case law could adversely affect business operations and financial performance.
• Involvement in various legal proceedings or governmental inquiries, which may result in material adverse effects on financial condition, operating results, or ability to conduct business.
• The corporate and securities laws applicable to the company as a national bank are less developed than those governing state-chartered corporations, potentially impacting the ability to execute corporate transactions efficiently and effectively.
• Restrictions on permissible activities limit the scope of business that can be conducted and may complicate the acquisition of other financial institutions.
• Operational, regulatory, compliance, and legal risks may harm business and brands, including negative publicity and deterioration of stakeholder relationships.
• Wars, international trade policies and disputes, geopolitical conflicts, and retaliatory measures may significantly disrupt domestic and foreign economies and markets.
• Diverging and evolving policy, legal, regulatory, and political developments, and differing stakeholder views related to governance, environmental, social, and other sustainability matters, may subject the company to potentially conflicting requirements and expectations.
• Prolonged congressional negotiations regarding government funding and related issues introduce additional volatility into the U.S. economy, particularly affecting capital and credit markets and the banking industry.

Future Outlook

The Federal Reserve intends to collaborate on a revised Basel III Endgame proposal in 2026, with its timing, substance, and potential impact remaining uncertain. Similarly, the timing and structure of any final rule implementing expanded long-term debt requirements for large banking organizations are uncertain. The OCC proposed raising the asset threshold for its Heightened Standards from $50 billion to $700 billion in December 2025, which, if adopted, would exempt the Bank from these standards. The CFPB's Open Banking rule has a current compliance deadline of April 1, 2027, but is subject to litigation and potential revisions. Regulations under the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) have an extended finalization deadline to May 2026. If the Federal Reserve's proposed amendments to Regulation II (debit interchange fees) are enacted, annual fee income could be reduced by $10 million or more. Geopolitical instability is expected to continue affecting global political and economic landscapes for the foreseeable future, and inflationary pressures are expected to persist. Latent interest rate sensitivity is projected to increase net interest income by approximately 7.0% for 2026 compared to 2025, while emergent sensitivity is modeled to reduce it by 2.8% from the latent level, resulting in a cumulative increase of 4.2% for 2026. The company expects to generate sufficient future taxable income to offset remaining net DTAs and does not intend to sell AFS securities in an unrealized loss position, nor does it believe it will be required to sell them prematurely.

Management Comments

• "Our financial performance in 2025 reflected solid growth compared with the prior year, with notable increases in net earnings applicable to common shareholders, diluted earnings per share (EPS), and adjusted pre-provision net revenue (PPNR)."
• "We strive to cultivate enduring relationships with our customers by offering competitive products and delivering high-quality service. Establishing and maintaining these relationships is fundamental to understanding and fulfilling our customers evolving needs."
• "We emphasize local authority and accountability, including locally informed pricing and product customization, to maximize customer satisfaction, strengthen community relationships, and improve profitability and shareholder returns."
• "We believe maintaining a strong capital position is critical to achieving our key corporate objectives, sustaining profitability, and reinforcing confidence among depositors and investors."
• "Management has applied formal, documented processes designed to evaluate known cybersecurity incidents for materiality and disclosure, and has concluded that no incidents to date have met the threshold for materiality, either individually or in aggregate."
• "We believe our available liquidity sources are sufficient to meet all reasonably foreseeable shortand intermediate-term obligations."

Industry Context

StockSavvy.ai notes that Zions Bancorporation operates in a highly competitive financial services industry, facing competition from traditional banks, credit unions, and rapidly evolving fintech companies. The industry is undergoing significant technological transformation, with innovations like AI, quantum computing, and digital currencies reshaping the landscape. Regulatory changes, such as the proposed Basel III Endgame and expanded long-term debt requirements, are increasing capital and compliance costs for larger banking organizations, potentially impacting Zions if its assets reach the $100 billion threshold. The focus on local authority and customer relationships, combined with investments in technology, positions Zions to navigate these competitive and regulatory pressures. The increase in net charge-offs due to specific commercial loan irregularities highlights the ongoing credit risk inherent in the banking sector, while the overall improvement in efficiency and capital ratios suggests effective management in a dynamic environment.

Comparison to Industry Standards

• Zions Bancorporation's Common Equity Tier 1 (CET1) capital ratio of 11.5% at December 31, 2025, significantly exceeds the Basel III minimum requirement of 7.0% (including the capital conservation buffer) and the well-capitalized threshold of 6.5%, indicating a strong capital position relative to regulatory standards.
• The efficiency ratio improved to 62.6% in 2025, reflecting positive operating leverage. While not directly compared to specific competitors in the filing, this improvement suggests effective cost management relative to revenue growth, a key performance indicator in the banking sector.
• The net interest margin (NIM) improved to 3.21% in 2025. This metric is highly sensitive to interest rate environments and funding costs, and its improvement suggests effective asset-liability management in a period of fluctuating rates.
• The increase in net charge-offs to 0.15% of average loans in 2025, particularly the $50 million loss from two related commercial loans, indicates a specific credit quality event. While the overall allowance for credit losses to loans decreased slightly to 1.19%, the classified loan ratio improved to 3.91% from 4.83%, suggesting that while specific issues arose, broader portfolio quality management was effective.
• The acquisition of four FirstBank Coachella Valley branches and associated deposits and loans in March 2025 demonstrates inorganic growth, a common strategy among regional banks to expand market share and customer base.

Management Changes

Corporate Governance

Legal Proceedings

• Two civil cases, 'Lifescan Inc. and Johnson & Johnson Health Care Services v. Jeffrey C. Smith, et. al.' (filed December 2017) and 'Roche Diagnostics and Roche Diabetes Care Inc. v. Jeffrey C. Smith, et. al.' (filed March 2019), are brought against the company in the United States District Court for the District of New Jersey.
• These cases involve manufacturers and distributors of medical products seeking to hold the company liable for allegedly fraudulent practices of a borrower who filed for bankruptcy in 2017.
• Discovery is substantially complete for most parties, but final rulings on certain dispositive motions remain outstanding, and other dispositive motions have yet to be filed or ruled upon.
• Both cases have been set for trial in April 2027.
• Management believes that the estimated liabilities for litigation and other legal actions and claims, as reflected in accruals, are adequate. However, given the substantial uncertainties and potentially significant or indeterminate damages sought, an unfavorable outcome could affect financial condition, results of operations, or cash flows in a particular reporting period.

Related Party Transactions

• No related party transactions requiring disclosure under applicable accounting guidance were reported.
• The company extends credit to related parties, including executive officers, directors, principal shareholders, and their associates and related interests, in compliance with applicable banking regulations.

Stakeholder Impact

• Shareholders: Positive impact from increased net earnings, diluted EPS, tangible book value per common share, and planned share repurchases. Negative impact from a one-time $6 million reduction in net earnings due to preferred stock redemption and potential future impacts from regulatory changes.
• Employees: Benefits from continued investment in training and development, comprehensive rewards and recognition programs, and a focus on fostering a respectful workplace. Faces challenges in attracting and retaining qualified personnel and increased compensation costs due to market dynamics. Paul E. Burdiss's retirement and transition to a consulting role is a specific personnel event.
• Customers: Benefits from a focus on high-quality products and services, local decision-making, and strengthening customer relationships. The acquisition of new branches expands service reach. Potential impacts from the CFPB's Open Banking rule and proposed debit interchange fee reductions could affect customer services or costs.
• Creditors/Bondholders: Enhanced security due to strong capital position and available liquidity. Issuance of senior notes provides additional funding. Positive signal from S&P's upgrade of the rating outlook to Stable from Negative.
• Communities: Supported through municipal investments and extensions of credit, financing renewable energy projects, and charitable contributions. Operations in regions susceptible to natural disasters pose risks to local economies and customers.

Next Steps

• Paul E. Burdiss will serve as a consultant to the Company from January 1, 2026, through December 31, 2026.
• The 2026 Annual Meeting of Shareholders is scheduled for May 1, 2026.
• The Federal Reserve intends to collaborate with other federal banking regulators on a revised Basel III Endgame proposal in 2026.
• CISA's regulations under CIRCIA are expected to be finalized by May 2026.
• The company is taking steps to achieve compliance with the CFPB's Open Banking rule by the April 1, 2027 deadline, though the rule is subject to litigation.
• The company publicly announced a plan to repurchase up to $75 million of common shares outstanding during the first quarter of 2026.
• Trial for two civil cases (Lifescan Inc. and Roche Diagnostics) is set for April 2027.

Key Dates

Recommendation

The filing demonstrates strong financial performance in 2025, with significant increases in net earnings, diluted EPS, and an improved efficiency ratio. The company maintains robust capital ratios, well above regulatory minimums, and has ample liquidity to cover uninsured deposits. The planned share repurchases signal confidence in the company's valuation. While there are some credit quality concerns from specific commercial loans and a slight overall deposit decline, these appear manageable within the context of overall growth and strong risk management. The strategic investments in technology and branch acquisitions position the company for continued growth. The S&P rating outlook upgrade further reinforces a positive view.

Keywords

Banking, Financial Services, Commercial Lending, Real Estate Lending, Consumer Banking, Capital Markets, Wealth Management, SEC Filing, 10-K, Financial Performance, Capital Ratios, Net Interest Income, Deposits, Loans, Risk Management, Cybersecurity, Regulatory Compliance, Share Repurchase, Preferred Stock, ESG, AI, Fintech