Zions Bancorporation, N.A. Q4 Earnings Call Highlights

Key Points

• Q4 earnings of $262 million (up 19% sequentially and 31% year-over-year) were driven by an expanding net interest margin (3.31%, the eighth consecutive quarter of improvement) and strong deposit growth that lowered reliance on short-term borrowings and reduced funding costs.
• Credit metrics stayed stable with net charge-offs of $7 million and a 1% allowance for loans, while tangible book value rose 21% y/y and CET1 was 11.5%, giving management scope to potentially accelerate capital returns in H2 2026 (subject to approvals).
• For 2026 the bank expects moderate increases in net interest income and fee income (assuming two 25-bp Fed cuts), plans continued investments that will modestly raise expenses, but anticipates roughly 100–150 bps of positive operating leverage.

Zions Bancorporation, N.A. NASDAQ: ZION reported fourth-quarter 2025 earnings of $262 million, up 19% from the prior quarter and 31% from a year earlier, as management pointed to stronger revenues and a notably lower provision for credit losses. On the company’s earnings call, executives also highlighted continued net interest margin expansion, deposit growth that reduced reliance on borrowings, and stable credit performance.

Quarterly and full-year performance

Chairman and CEO Harris Simmons said fourth-quarter results showed “continued progress and steady improvement” across key metrics. The bank’s net interest margin expanded for the eighth consecutive quarter to 3.31%, which Simmons attributed to an improved funding mix as deposit initiatives reduced reliance on short-term borrowings. Customer deposits grew 9% during the quarter, while average loans were essentially flat versus the prior quarter, reflecting payoffs at the end of the third quarter. Period-end loan balances rose by $615 million, which management said was driven by solid production.

For the full year 2025, Simmons said earnings increased 21% and net interest margin expanded 21 basis points. Adjusted pre-provision net revenue (PPNR) rose 12%, and Simmons noted that excluding a charitable contribution, the company achieved “over 300 basis points of positive operating leverage.” Tangible book value per share increased 21%, marking the third consecutive year of growth greater than 20%.

Earnings drivers: margin, fees, and expenses

Diluted earnings per share for the fourth quarter was $1.76, up from $1.48 in the third quarter and $1.34 a year earlier. Simmons said results included an $0.08 per share headwind from a $15 million charitable donation, partially offset by a combined $0.11 per share benefit from a reversal related to the FDIC special assessment and net gains in the company’s SBIC portfolio.

Chief Financial Officer Ryan Richards said net interest income increased $56 million, or 9%, compared with the fourth quarter of 2024 and rose $11 million sequentially, marking the second consecutive quarter of linked-quarter growth. Richards attributed the improvement to average customer deposit growth outpacing loan growth, allowing the bank to improve its funding mix and lower overall funding costs.

On noninterest income, Richards said customer-related noninterest income totaled $177 million in the quarter, compared with $163 million in the prior quarter and $176 million a year earlier. He noted the third quarter included an $11 million impact from a net CVA loss tied primarily to an update in valuation methodology. Excluding net CVA, adjusted customer-related noninterest income was $175 million, which Richards called a record quarter for the company.

Richards also highlighted capital markets performance on a full-year basis, saying capital markets fees excluding net CVA increased 25% versus 2024, driven by higher customer swaps, investment banking, and loan syndication fee revenue. He said the company had met its aspirational goal to double capital markets fees since the launch of Zions Capital Markets in 2020 and continued to see “opportunity for outsize growth” in the business.

Expenses rose in the quarter, with adjusted noninterest expense of $548 million up 5% sequentially and 8% year over year, reflecting the $15 million charitable donation. Excluding that donation, expenses were up 2% from the prior quarter and up 5% from a year earlier. Richards attributed the quarter’s increase to higher marketing and business development spending, higher application software licensing and maintenance costs, and “normalization of legal fees.”

Balance sheet trends: loans, deposits, and funding mix

Richards said period-end loans increased $615 million sequentially, with strong commercial growth in Texas, California, and the Pacific Northwest. Loan yields declined 15 basis points sequentially.

On deposits, average total deposits increased 2.3% from the prior quarter. Average noninterest-bearing deposits grew $1.7 billion, or 6%, versus the prior quarter. Richards said this was partially due to an approximately $1 billion migration of a consumer interest-bearing product into a new noninterest-bearing product at the end of the prior quarter, now fully reflected in averages, as well as the bank’s deposit-gathering initiatives. Total deposit costs fell 11 basis points to 1.56%.

At period-end, deposits increased by $766 million, enabling the bank to reduce higher-cost short-term borrowings by $653 million, or 17%. Total funding costs declined 16 basis points during the quarter to 1.76%.

Credit quality, CRE exposure, and capital return outlook

Credit metrics remained stable in the quarter. Richards reported net charge-offs of $7 million, or 5 basis points annualized, and nonperforming assets of 52 basis points of loans and other real estate, compared with 54 basis points in the prior quarter. Classified loan balances declined by $35 million, driven by a $132 million reduction in commercial real estate (CRE) classified loans, partially offset by a $92 million increase in C&I classified balances. Chief Credit Officer Derek Stewart said the C&I downgrades were broadly distributed and that while the company was watching the trend, the C&I classified balances were down compared with year-end 2024.

The bank recorded a $6 million provision for credit losses in the fourth quarter, and the allowance for credit losses declined one basis point to 1% of loans. The loan loss allowance coverage of nonaccrual loans decreased to 215%.

On CRE, management said the $13.4 billion portfolio represents 22% of total loan balances and continues to show low levels of nonaccrual loans and delinquencies. Richards described the CRE portfolio as granular and diversified by property type and location, with growth managed through concentration limits.

Capital levels improved during the year, with a Common Equity Tier 1 (CET1) ratio of 11.5% for the quarter. Management said tangible book value per share rose 21% year over year, aided by organic earnings growth and expected improvement in accumulated other comprehensive income (AOCI) as securities mature and pay down.

In response to analyst questions about share repurchases, Simmons said he expects the company could be in position to “start to accelerate capital returns” in the second half of 2026, though he did not provide a target amount and emphasized the need for regulatory and board approvals.

2026 outlook: moderate growth with deposit and mix initiatives

Looking ahead, Richards said management expects net interest income to be “moderately increasing” in 2026 versus 2025, supported by continued balance sheet remix and growth in loans and deposits. The company’s outlook assumes two 25-basis-point cuts to the fed funds rate in June and September 2026.

Richards said customer-related fee income is also expected to be moderately increasing in 2026, and he added that the company currently expects to be at the “top end” of that range, with growth led by capital markets and loan-related fees.

For expenses, Richards said adjusted noninterest expense is expected to be moderately increasing in 2026, reflecting higher marketing spending, continued investments in revenue-generating businesses and personnel, and contractual technology cost increases. At the same time, management said it expects positive operating leverage of roughly 100 to 150 basis points in 2026 (with the charitable donation removed from the expense base when assessing “core” trends).

On loan growth, management reiterated expectations for moderate growth in period-end loan balances, led primarily by commercial lending, including C&I and owner-occupied categories, with additional growth from CRE. Simmons emphasized a focus on small business banking and said the bank saw a near doubling in SBA 7(a) loan counts and a 53% increase in dollars produced over the past year.

About Zions Bancorporation, N.A. NASDAQ: ZION

Zions Bancorporation, N.A. is a bank holding company headquartered in Salt Lake City, Utah, offering a full suite of banking and financial services to individuals, businesses and institutions. Through its primary subsidiary, Zions Bank, the company provides commercial banking, retail banking and wealth management solutions designed to serve the needs of small businesses, middle‐market firms and high‐net‐worth clients. Its service portfolio includes deposit accounts, cash‐management tools, lending products, mortgage origination, treasury services and investment advisory services.

The company's commercial banking segment delivers custom credit and treasury management services, including working capital lines of credit, equipment financing and international trade finance.

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