ZION — Zions Bancorporation, National Association

Zions Bancorp Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Interest Margin (NIM): Expanded by 11 basis points to 3.28%.
• Diluted Earnings Per Share (EPS): Reported at $1.48, down from $1.63 in the prior quarter but up from $1.37 year-over-year.
• Net Charge-Offs: Totaled $56 million (37 basis points annualized), primarily due to a $50 million charge-off related to two specific C&I loans.
• Provision for Credit Losses: Recorded at $49 million.
• Adjusted Noninterest Income: Increased to $174 million, a 6% rise from the previous quarter and 8% year-over-year.
• Efficiency Ratio: Improved to 59.6%.
• Average Loans and Deposits: Increased by 2.1% and 3.1% annualized, respectively.

2. Strategic Updates and Business Highlights:

• Loan Growth: Average loans increased by 2.1% annualized, with a focus on commercial loans expected to drive growth moving forward.
• Customer Fees: Excluding credit valuation adjustments, customer fees grew by $10 million.
• Capital Markets Growth: Significant contributions from capital markets offerings, including a 25% increase in capital market fees year-over-year.
• Operational Investments: Continued investments in technology and marketing to support revenue-generating initiatives.

3. Forward Guidance and Outlook:

• NIM Outlook: Expected to moderately increase in Q3 2026, supported by loan growth and asset repricing.
• Customer-Related Fee Income: Anticipated to grow broadly in Q3 2026, driven by increased customer activity.
• Expense Growth: Expected to moderately increase in 2026 due to ongoing investments in technology and marketing.
• Loan Growth Guidance: Slight to moderate increase in period-end loan balances anticipated for Q3 2026, primarily from commercial loans.

4. Bad News, Challenges, or Points of Concern:

• Credit Quality Issues: The $50 million charge-off related to two borrowers raised concerns about credit quality, although management views this as an isolated incident.
• Legal Actions: Ongoing legal actions related to the aforementioned loans may pose reputational risks.
• Market Conditions: Concerns about macroeconomic factors affecting loan demand, particularly in the commercial real estate sector.
• Deposit Growth: Average deposits were relatively flat, with a notable reduction in broker deposits.

5. Notable Q&A Insights:

• Credit Review Process: Management emphasized that the recent credit issues are isolated and that a thorough internal review is ongoing, with no similar issues found in the portfolio.
• NDFI Exposure: Management clarified that their non-depository financial institution (NDFI) exposure is diversified and not significantly risky.
• Capital Management: Discussions around potential M&A opportunities were cautious, with a focus on smaller, strategic deals that would not lead to dilution.
• Market Sentiment: Management acknowledged that while lower interest rates may encourage borrowing, broader economic concerns are currently dampening enthusiasm among commercial borrowers.

Overall, Zions Bancorp reported solid core earnings and growth in key financial metrics, although it faces challenges related to credit quality and market conditions. The company remains optimistic about its strategic initiatives and future growth potential.