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Zions Stock Rises 1.7% as Q4 Earnings Beat on NII & Fee Income Growth

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Key Takeaways

  • ZION posted Q4 EPS of $1.75, beating estimates and rising 30.5% from the year-ago quarter.
  • Zions benefited from 8.9% growth in net interest income and a 26-bps expansion in net interest margin.
  • ZION faced a headwind as adjusted non-interest expenses increased 7.6% from the year-ago quarter.

Shares of Zions Bancorporation (ZION - Free Report) gained nearly 1.7% in yesterday’s trading session after reporting better-than-expected results. The company posted fourth-quarter 2025 adjusted earnings per share (EPS) of $1.75, which beat the Zacks Consensus Estimate of $1.57. Moreover, the bottom line surged 30.5% from the year-ago quarter.

Results were primarily aided by higher net interest income (NII) and non-interest income. Growth in loan and deposit balances further supported performance. However, a rise in non-interest expenses remained a headwind.

Results in the reported quarter excluded the positive impact of 6 cents per share from net unrealized gains on Small Business Investment Company (“SBIC”) investments (net of success fee accrual) and 5 cents per share from the FDIC special assessment accrual reversal. After considering it, net income attributable to its common shareholders (GAAP) was $262 million, up 31% year over year.

For full-year 2025, earnings of $6.01 per share beat the Zacks Consensus Estimate of $5.93. Moreover, the bottom line rose 21.4% from the year-ago period. We had projected earnings of $5.80 per share. Net income attributable to common shareholders was $895 million, up from $737 million a year ago.

Zions’ Revenues & Expenses Rise

Net revenues (tax equivalent) were $902 million, up 8.4% year over year. Further, the top line beat the Zacks Consensus Estimate of $864.4 million.

For 2025, Net revenues (tax equivalent) were $3.43 billion, up 8.1% year over year. The top line beat the Zacks Consensus Estimate of $3.38 billion. We had projected the metric to be $3.32 billion.

NII was $683 million, up 8.9% from the prior-year quarter. The increase was mainly attributed to lower funding costs alongside a favorable mix in average interest-earning assets, reflecting growth in higher-yielding loans and a decline in lower-yielding money market investments and securities. Likewise, net interest margin (NIM) expanded 26 basis points (bps) year over year to 3.31%. Our estimates for NII and NIM were $643.2 million and 3.17%, respectively.

Non-interest income was $208 million, up 7.8% year over year. The increase was driven by higher retail and business banking fees and other customer-related fees, partially offset by lower loan-related fees and income and capital market fees. We had projected non-interest income to be $185.8 million.

Adjusted non-interest expenses rose 7.6% year over year to $548 million. Our estimate for the metric was $542.6 million.

The adjusted efficiency ratio was 62.3%, relatively flat compared with 62.0% in the prior-year quarter. 

As of Dec. 31, 2025, net loans and leases held for investment were $60.2 billion, up 1% from the prior quarter. Total deposits were $75.6 billion, up 1% from the prior quarter. Our estimates for net loans and leases held for investment and total deposits were $60.6 billion and $78.4 billion, respectively.

Credit Quality of ZION: A Mixed Bag

The ratio of non-performing assets to loans and leases, as well as other real estate owned, was 0.52%, which expanded 2 bps from the prior-year quarter.

Net loan and lease charge-offs were $7 million in the reported quarter, significantly down from $36 million in the year-ago quarter. Provision for credit losses was $6 million compared with $41 million in the prior-year quarter.

Zions’ Profitability & Capital Ratios

As of Dec. 31, 2025, the common equity tier 1 capital ratio was 11.5%, up from 10.9% in the prior-year quarter. The Tier 1 risk-based capital ratio was 11.6% compared with 11% a year ago, while the Tier 1 leverage ratio improved to 9% from 8.3% reported at the end of the year-ago quarter.

Return on average assets was 1.16% in the fourth quarter, up from 0.96% in the year-ago quarter. Return on average tangible common equity was 17.9%, up from 16% a year ago.

Our Take on ZION Stock

Zions’ modest loan growth and improving fee income, alongside relatively higher interest rates, bode well for the future. However, persistently increasing operating expenses and significant exposure to commercial loans and weak asset quality are major concerns.

Zions Bancorporation, N.A. Price, Consensus and EPS Surprise

Currently, Zions carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

KeyCorp’s (KEY - Free Report) fourth-quarter 2025 adjusted earnings per share from continuing operations of 41 cents outpaced the Zacks Consensus Estimate of 38 cents. The bottom line reflected a 7.9% rise from the prior-year quarter.

KEY’s quarterly results primarily benefited from higher NII and non-interest income. The rise in average loans and deposit balances was another positive. However, higher expenses and a jump in provisions were the undermining factors.

M&T Bank Corporation (MTB - Free Report) reported fourth-quarter 2025 net operating earnings per share of $4.72, which beat the Zacks Consensus Estimate of $4.44. The bottom line compared favorably with earnings of $3.92 per share in the year-ago quarter.

Results were aided by higher non-interest income and NII, along with modest loan growth and higher deposits. A decline in provisions for credit losses was also a tailwind. However, an increase in expenses acted as a headwind for MTB.


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