Zions' Q2 Earnings Top Estimates on Higher NII & Fee Income, Stock Up

Shares of Zions Bancorporation ZION rose 4.4% in yesterday’s after-market hours trading session on better-than-expected quarterly results. Its second-quarter 2025 adjusted earnings per share (EPS) of $1.58 beat the Zacks Consensus Estimate of $1.31. Moreover, the bottom line surged 30.6% from the year-ago quarter.

Results were primarily aided by higher net interest income (NII) and non-interest income alongside a provision benefit. Additionally, higher loan amounts were another positive. However, a rise in adjusted non-interest expenses was a major headwind.

Results in the reported quarter excluded the positive impact of 5 cents per share from the IPO of SBIC Investment. After considering it, net income attributable to its common shareholders (GAAP) was $243 million, up 27.9% year over year. We had projected the metric to be $188.1 million.

Zions’ Revenues & Expenses Rise

Net revenues (tax equivalent) were $851 million, up 8.1% year over year. Further, the top line beat the Zacks Consensus Estimate of $815.5 million.

NII was $648 million, up 8.5%. The increase was mainly attributed to lower funding costs alongside an increase in average interest-earning assets. Likewise, net interest margin (NIM) expanded 19 basis points (bps) to 3.17%. Our estimates for NII and NIM were $628 million and 3.06%, respectively.

Non-interest income rose 6.1% to $190 million. The rise was driven by an increase in almost all the components except card fees, wealth management fees and dividends and other income. We had projected non-interest income to be $174.1 million.

Adjusted non-interest expenses increased 3% to $521 million. Our estimate for the metric was $524.3 million.

Adjusted efficiency ratio was 62.2%, down from 64.5% in the prior-year period. A decline in the efficiency ratio indicates an increase in profitability.

As of June 30, 2025, net loans and leases held for investment were $60.1 billion, up 1.5% from the prior quarter. On the other hand, total deposits were down 2.5% to $73.8 billion. Our estimates for net loans and leases held for investment and total deposits were $58.2 billion and $75.8 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, expanded 6 bps year over year to 0.51%. In the reported quarter, the company recorded net loan and lease charge-offs of $10 million, down 33.3% from the prior-year quarter.

Provision for credit losses was negative $1 million in the reported quarter against provision for credit losses of $5 million in the year-ago quarter.

Zions’ Profitability & Capital Ratios

Tier 1 leverage ratio was 8.5% as of June 30, 2025, stable from the prior-year quarter. The common equity tier 1 capital ratio was 11%, up from 10.6% in the prior-year period.
 
As of June 30, 2025, the tier 1 risk-based capital ratio was down to 11.1% from 11.2% in the prior-year quarter.

At the end of the second quarter, the return on average assets was 1.09%, up from 0.91% in the prior-year quarter. Return on average tangible common equity was 18.7%, up from 17.5% in the year-ago quarter.

Our Take on ZION Stock

Zions’ rising loan demand and improving fee income, alongside relatively higher interest rates, bode well for the future. However, persistently increasing operating expenses, high funding costs and significant exposure to commercial loans amid an uncertain macroeconomic outlook are concerns.

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

Zions Bancorporation, N.A. price-consensus-eps-surprise-chart | Zions Bancorporation, N.A. Quote

Currently, Zions carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

F.N.B. Corporation’s FNB second-quarter 2025 earnings of 36 cents per share outpaced the Zacks Consensus Estimate of 33 cents. Also, the bottom line compared favorably with adjusted earnings of 34 cents in the prior-year quarter.

FNB’s results benefited from growth in NII and non-interest income. Higher loans and deposits are other positives. However, higher provisions and expenses were the undermining factors.

Bank OZK’s OZK second-quarter 2025 earnings per share of $1.58 surpassed the Zacks Consensus Estimate of $1.51. Moreover, the bottom line reflected a rise of 3.9% from the prior-year quarter’s actual.

Overall, results benefited from a rise in NII and non-interest income and lower provisions. Also, higher loans and deposit balances were other positives. However, higher non-interest expenses acted as spoilsports for OZK.

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This article originally published on Zacks Investment Research (zacks.com).

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