Zions Bancorporation (ZION)

Regional banking company Zions Bancorporation (NASDAQ:ZION) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 8.7% year on year to $861 million. Its GAAP profit of $1.48 per share was 6.1% above analysts’ consensus estimates.

Company Overview

Founded in 1873 during Utah's pioneer era and named after Mount Zion in the Bible, Zions Bancorporation (NASDAQ:ZION) operates seven regional banks across the Western United States, providing commercial, retail, and wealth management services to over a million customers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Zions Bancorporation competes with other regional banks operating in the Western United States, including U.S. Bancorp (NYSE:USB), PNC Financial Services (NYSE:PNC), Regions Financial (NYSE:RF), and Western Alliance Bancorporation (NYSE:WAL), as well as national banks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC).

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Unfortunately, Zions Bancorporation’s 3.2% annualized revenue growth over the last five years was mediocre. This wasn’t a great result compared to the rest of the banking sector, but there are still things to like about Zions Bancorporation.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Zions Bancorporation’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Zions Bancorporation reported year-on-year revenue growth of 8.7%, and its $861 million of revenue exceeded Wall Street’s estimates by 2.7%.

Since the company recorded losses on certain securities, it generated more net interest income than revenue during the last five years, meaning Zions Bancorporation lives and dies by its lending activities because non-interest income barely moves the needle.

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Zions Bancorporation’s efficiency ratio has increased by 5.1 percentage points, hitting 62.8% for the past 12 months. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Zions Bancorporation’s efficiency ratio came in at 59.6% this quarter, beating analysts’ expectations by 309.9 basis points (100 basis points = 1 percentage point). This result was 2.9 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Zions Bancorporation to maintain its trailing one-year ratio with a projection of 63.3%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Zions Bancorporation’s EPS grew at an astounding 18.7% compounded annual growth rate over the last five years, higher than its 3.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Zions Bancorporation, its two-year annual EPS growth of 1.5% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Zions Bancorporation reported EPS of $1.48, up from $1.37 in the same quarter last year. This print beat analysts’ estimates by 6.1%. Over the next 12 months, Wall Street expects Zions Bancorporation’s full-year EPS of $5.58 to grow 3.5%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Zions Bancorporation’s TBVPS was flat over the last five years. However, TBVPS growth has accelerated recently, growing by 22.5% annually over the last two years from $25.75 to $38.64 per share.

Over the next 12 months, Consensus estimates call for Zions Bancorporation’s TBVPS to grow by 12.3% to $43.37, top-notch growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Zions Bancorporation has averaged a Tier 1 capital ratio of 10.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Zions Bancorporation has averaged an ROE of 14%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Zions Bancorporation has a strong competitive moat.

We enjoyed seeing Zions Bancorporation beat analysts’ revenue expectations this quarter. We were also happy its tangible book value per share narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 2.1% to $53.11 immediately following the results.

Updated: December 3, 2025 at 11:34 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Zions Bancorporation, you should also grasp the company’s longer-term business quality and valuation.

Zions Bancorporation isn’t a terrible business, but it doesn’t pass our bar. For starters, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its remarkable EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its estimated net interest income for the next 12 months are weak. On top of that, its TBVPS growth was weak over the last five years.

Zions Bancorporation’s P/B ratio based on the next 12 months is 1.1x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $61.64 on the company (compared to the current share price of $54.97).