8-K: Zions Bancorporation Reports Strong Q2 2025 Earnings with 27% EPS Growth and Improved Net Interest Margin

Zions Bancorporation, N.A. announced robust second quarter 2025 financial results, reporting net earnings of $243 million and diluted EPS of $1.63, driven by a 9% increase in net interest income and an expanded net interest margin.

Summary

• Net earnings for the second quarter of 2025 were $243 million, a significant increase from $190 million in the second quarter of 2024 and $169 million in the first quarter of 2025.
• Diluted earnings per share (EPS) reached $1.63 for Q2 2025, up from $1.28 in Q2 2024 and $1.13 in Q1 2025.
• Net interest income increased by 9% year-over-year to $648 million.
• The net interest margin (NIM) improved to 3.17% in Q2 2025, compared to 2.98% in Q2 2024 and 3.10% in Q1 2025.
• Adjusted Pre-Provision Net Revenue (PPNR) was $316 million, marking a 14% increase year-over-year.
• Customer-related noninterest income grew 7% year-over-year to $164 million.
• Loans and leases outstanding increased by 4% year-over-year to $60.8 billion.
• The provision for credit losses was a negative $1 million in Q2 2025, compared to a positive $5 million in Q2 2024.
• The annualized ratio of net loan and lease charge-offs to average loans and leases was 0.07%, down from 0.10% in Q2 2024.
• Nonperforming assets increased to $313 million, or 0.51% of loans and leases and other real estate owned, from $265 million, or 0.45%, in Q2 2024.
• Classified loans totaled $2.7 billion, or 4.43% of total loans and leases, up from $1.3 billion, or 2.16%, in Q2 2024, but decreased from $2.9 billion, or 4.82%, in the prior quarter.
• Total deposits remained stable at $73.8 billion, with customer deposits (excluding brokered deposits) at $69.9 billion, up 1% year-over-year.
• The estimated Common Equity Tier 1 (CET1) capital ratio improved to 11.0% from 10.6% in Q2 2024.
• Tangible book value per common share increased to $36.81, compared with $30.67 in Q2 2024.

Sentiment

Score: 9

Explanation: The report indicates strong financial performance across key metrics including earnings, EPS, net interest margin, and capital ratios. Loan growth is solid, and credit quality remains robust with low charge-offs and a negative provision for credit losses. While nonperforming assets and classified loans increased year-over-year, the quarter-over-quarter decrease in classified loans and strong underwriting mitigate concerns. The outlook is positive with expected increases in loans and net interest income, reinforcing a very favorable sentiment.

Positives

• Net earnings per diluted common share increased 27% year-over-year to $1.63.
• Net earnings increased 28% year-over-year to $243 million.
• Net interest margin (NIM) continued to improve for the sixth straight quarter, reaching 3.17% from 2.98% a year ago.
• Adjusted pre-provision net revenue (PPNR) grew 14% year-over-year to $316 million.
• Customer-related noninterest income rose 7% year-over-year to $164 million, largely attributable to higher swap fees and loan syndication activity.
• Loans and leases grew 4% year-over-year to $60.8 billion, driven by increases in consumer and commercial loans.
• Credit results remained solid with a negative provision for credit losses of $1 million.
• Annualized net loan and lease charge-offs were very low at 0.07% of average loans.
• Estimated Common Equity Tier 1 (CET1) capital ratio improved to 11.0% from 10.6% year-over-year.
• Tangible book value per common share increased significantly to $36.81 from $30.67 year-over-year.
• The efficiency ratio improved to 62.2% from 64.5% year-over-year, reflecting positive operating leverage.
• A net unrealized gain of $9 million ($0.05 per share) was recognized for the SBIC investment in Fatpipe, Inc. due to a successful IPO.
• Classified loans decreased $194 million from the prior quarter, indicating an improvement in problem loan levels.
• Accumulated other comprehensive income (loss) improved by $385 million year-over-year, reducing unrealized losses.
• The bank maintains strong on-balance sheet liquidity, with approximately 90% of investment securities in U.S. Government and U.S. Government Agency/GSE securities.
• The commercial real estate (CRE) portfolio benefits from strong loan-to-value (LTV) ratios, guarantor support, low delinquencies (0.27%), and low charge-offs (TTM 0.02%).
• The Allowance for Credit Losses (ACL) for CRE lending is substantial at 1.8% of CRE balances, providing 4.0x coverage of CRE nonaccruals.
• Loss-absorbing capital remains strong relative to the bank's risk profile, with low credit losses relative to capital levels as a percentage of risk-weighted assets.

Negatives

• Nonperforming assets increased to $313 million (0.51% of loans) from $265 million (0.45%) in the prior year period, primarily concentrated in term commercial real estate (CRE), consumer 1-4 family residential, and owner-occupied loan portfolios.
• Classified loans increased significantly year-over-year to $2.7 billion (4.43%) from $1.3 billion (2.16%), primarily in the multifamily and industrial CRE loan portfolios, largely due to increased emphasis on risk grading of current cash flows and weaker performance in 2021, 2022, and 2023 construction loan vintages.
• Average customer deposits declined 1.4% annualized versus the prior quarter.
• Dividends and other income declined $10 million year-over-year, primarily due to higher gains in the prior year period associated with the sale of the Enterprise Retirement Solutions business and a bank-owned property.
• Short-term borrowings increased $421 million, or 7%, compared with the prior year quarter.
• Long-term debt increased $424 million, or 78%, compared with the prior year quarter.

Risks

• The quality and composition of loan and investment securities portfolios and the quality and composition of 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 in interest and reference rates, which could negatively impact revenues and expenses, the valuation of assets and liabilities, and the availability and cost of capital and liquidity.
• Deterioration in economic conditions that may result in increased loan and lease losses.
• Political developments, including those that result in significant disruptions and changes in the size, scope, and effectiveness of the government and its agencies and services.
• The effects of newly enacted and proposed regulations affecting the banking industry, as well as changes and uncertainties in the interpretation, enforcement, and applicability of laws and fiscal, monetary, regulatory, trade, and tax policies.
• Actions taken by governments, agencies, central banks, and similar organizations, including those that result in decreases in revenue, increases in regulatory bank fees, insurance assessments, and capital standards, and other regulatory requirements.
• Evolving trade policies and disputes, such as proposed and implemented tariffs and resulting market volatility and uncertainty, including the effects on supply chains, expenses and revenues for both the company and its customers.
• Judicial, regulatory and administrative inquiries, investigations, examinations or proceedings and the outcomes thereof that create uncertainty for, or are adverse to, the company or the banking industry.
• Changes in the company's credit ratings.
• The company's ability to innovate and otherwise address competitive pressures and other factors that may affect aspects of its business, such as pricing, relevance of, and demand for, its products and services, and its ability to recruit and retain talent.
• The potential for both positive and disruptive impacts of emerging technologies, including stablecoins and other digital currencies, blockchain, artificial intelligence, quantum computing, and related innovations affecting both the company and the banking industry.
• The company's ability to complete projects and initiatives and execute its strategic plans, manage its risks, control compensation and other expenses, and achieve its business objectives.
• The company's ability to develop and maintain technology and information security systems, along with effective controls designed to guard against fraud, cybersecurity, and privacy risks and related incidents, particularly given the accelerating pace at which threat actors are developing and deploying increasingly sophisticated and targeted tactics against the financial services industry.
• The company's ability to provide adequate oversight of its suppliers to help prevent or mitigate effects upon the company and its customers of inadequate performance, systems failures, or cyber and other incidents by, or affecting, third parties upon whom the company relies for the delivery of various products and services.
• The effects of wars, geopolitical conflicts, and other local, national, or international disasters, crises, or conflicts that may occur in the future.
• Natural disasters, pandemics, wildfires, catastrophic events, and other emergencies and incidents, and their impact on the company's and its customers' operations, business, and communities, including the increasing difficulty in, and the expense of, obtaining property, auto, business, and other insurance products.
• Governmental and social responses to environmental, social, and governance issues, including those with respect to climate change and diversity.
• Securities and capital markets behavior, including volatility and changes in market liquidity and the company's ability to raise capital.
• The possibility that recorded goodwill could become impaired, which may have an adverse impact on earnings and shareholders' equity.
• The impact of bank closures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks.
• Adverse news and other expressions of negative public opinion whether directed at the company, other banks, the banking industry, or otherwise that may adversely affect the company's reputation and that of the banking industry generally.

Future Outlook

Commercial loan growth is expected to lead overall loan balance increases. Net interest income is projected to moderately increase, driven by earning asset remix, loan and deposit growth, and fixed-rate asset repricing. Customer-related noninterest income growth is anticipated to moderately increase, stemming from increased customer activity and new client acquisition, with capital markets contributing significantly. Noninterest expense is expected to moderately increase due to technology costs, increased marketing, and continued investments in revenue-generating businesses, but positive operating leverage is anticipated. Accumulated Other Comprehensive Income (AOCI) is projected to improve by over $400 million, or 17%, in 2025 relative to 2024, adding 44 basis points to the tangible common equity ratio, and is projected to improve by $728 million, or 31%, from 4Q24 to 4Q26. Net interest income is modeled to increase 9.9% in a flat rate environment based on past rate movements, with the combined impact of latent and emergent sensitivities modeled to be 4.1% in 2Q26 relative to 2Q25, assuming a 40% cumulative total deposit beta. Hypothetical simulations suggest moderate rate sensitivity between 0.3% and +6.1% under -100 bps and +100 bps parallel interest rate shocks.

Management Comments

• "We're very pleased with the quarter's strong financial results, with earnings per share up 27% over the prior year period, and adjusted pre-provision net revenue up 14%."
• "The net interest margin continued to improve, increasing to 3.17% from 2.98% a year ago, and customer-related noninterest income rose 7%."
• "Though average deposits were relatively flat, average loans were up 4% over last year."
• "Credit results remained solid, with net charge-offs of only 7 basis points of average loans."
• "While there are some signs of moderate slowing, including a stabilization of housing costs in many western U.S. markets, the economy has performed somewhat better than might have been expected earlier in the year, and we're incrementally more optimistic about growth in the back half of the year than we'd previously been."

Industry Context

Zions Bancorporation operates across 11 western states, a region contributing approximately 35% of national GDP and experiencing population and job growth that outpaces the national average. The company's strong financial performance, particularly its improved net interest margin and controlled funding costs, reflects effective navigation of the current interest rate environment impacting the broader banking sector. Its disciplined approach to Commercial Real Estate (CRE) lending, characterized by conservative underwriting and diversified portfolios, positions it cautiously relative to industry peers, especially given ongoing concerns about CRE asset quality. The consistently low net credit losses to loans ratio, placing it in the top quartile of peer banks, underscores its robust risk management framework. Furthermore, the company's preparedness for large bank regulation, stemming from prior SIFI experience and a simpler legal structure, suggests resilience in a tightening regulatory landscape.

Comparison to Industry Standards

• Zions Bancorporation is ranked third among all U.S. banks in the Middle Market Banking Segment by Coalition Greenwich Best Bank Awards, indicating strong competitive standing in this area.
• The company's net credit losses to loans ratio is consistently in the top quartile of peer banks, demonstrating superior credit quality management compared to industry averages.
• Commercial real estate loan growth at Zions Bancorporation lags peers due to its continued exercise of concentration risk discipline, suggesting a more conservative approach than some competitors.
• The company's estimated deposit duration at June 30, 2025, was assumed to be longer than the loan duration (including swaps), a common interest rate risk management challenge faced by many banks.
• The commercial real estate portfolio's strong loan-to-value (LTV) ratios, significant guarantor support, low delinquencies (0.27%), and low charge-offs (TTM 0.02%) mitigate risks often observed in the broader CRE market, distinguishing its portfolio quality.
• The company's 70% cumulative beta on total interest-bearing deposits (as of 6/30/25) and 53% cumulative total deposit beta (in a flat rate environment NII model) can be benchmarked against industry averages for deposit stickiness and funding cost sensitivity.

Stakeholder Impact

• Shareholders are positively impacted by increased net earnings, diluted EPS, a higher common stock dividend ($0.43 per share vs. $0.41), and a significant increase in tangible book value per share, alongside strong capital ratios and improved accumulated other comprehensive income.
• Employees are positively impacted by higher incentive compensation accruals resulting from improved profitability.
• Customers benefit from new digital products and services designed to streamline interactions, and the company's continued focus on serving smallto medium-sized businesses.
• Creditors are supported by the company's strong capital position, despite increases in short-term borrowings and long-term debt, indicating a robust financial foundation.

Next Steps

• Host a conference call to discuss the second quarter results at 5:30 p.m. Eastern Time on July 21, 2025.
• Shares from the Small Business Investment Company (SBIC) investment in Fatpipe, Inc. are subject to a minimum 180-day lock-up period from the IPO and will be marked-to-market until fully divested.
• An associated $2 million accrued success fee payable to the investment manager will be adjusted based on the investment's fair value.
• Continue to complete projects and initiatives and execute strategic plans.
• Continue to manage risks and control compensation and other expenses to achieve business objectives.
• Continue to develop and maintain technology and information security systems, along with effective controls.
• Continue to provide adequate oversight of suppliers to mitigate potential adverse effects.

Key Dates

Recommendation

Keywords

Banking, Financial Services, Regional Bank, Commercial Banking, Consumer Lending, Net Interest Margin, Earnings, EPS, Credit Quality, Deposits, Loans, Capital Ratios, SEC Filing, 8-K, Zions Bancorporation, ZION, Financial Results, Quarterly Report, Risk Management, Corporate Governance, Asset Quality, Liquidity