Regional banking company Zions Bancorporation (NASDAQ: ZION) announced better-than-expected revenue in Q4 CY2025, with sales up 7.1% year on year to $879 million. Its non-GAAP profit of $1.64 per share was 4.5% above analysts’ consensus estimates.

Is now the time to buy ZION? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Zions Bancorporation delivered a fourth quarter that the market viewed positively, buoyed by better-than-expected revenue and strong growth in customer deposits. Management explained that net interest margin, a key profitability metric for banks, expanded for the eighth consecutive quarter due to an improved funding mix and reduced reliance on short-term borrowings. CEO Harris Simmons credited the quarter’s progress to “stronger revenues and notably lower provision for credit losses,” as well as healthy deposit gathering and a resilient credit environment.

Looking ahead, Zions Bancorporation’s strategy focuses on targeted growth investments, especially in small business lending and customer acquisition initiatives. Management detailed plans to continue investing in marketing and technology to support loan and deposit growth, with CFO Ryan Richards stating, “Our outlook for net interest income for the full year of 2026 is moderately increasing,” driven by expectations for loan and deposit expansion and a favorable shift in earning assets. While the company anticipates maintaining positive operating leverage, it also acknowledged that expense growth will be managed as investments in new business lines and process automation accelerate.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong deposit inflows, disciplined credit risk management, and continued investment in technology and growth initiatives, while also noting the impact of charitable contributions and regulatory changes.

• Deposit growth momentum: Customer deposits increased at a 9% annualized rate, as new product launches and targeted banker initiatives helped attract both consumer and small business clients. Management emphasized that the launch of new noninterest-bearing products and a campaign focused on granular deposit growth contributed to improved funding mix.

• Net interest margin expansion: The net interest margin reached 3.31%, its highest level in two years, benefiting from reduced funding costs as higher-cost short-term borrowings were replaced by core deposits. Management noted that this was the eighth consecutive quarter of margin expansion, driven by both asset and liability remixing.

• Credit quality remains stable: Credit outcomes were described as resilient, with net charge-offs of just 5 basis points annualized and nonperforming assets remaining low. The commercial real estate portfolio, an industry focus due to broader sector stress, maintained low levels of nonaccruals and delinquencies, and classified CRE balances are expected to decline further.

• Expense discipline with growth focus: Adjusted noninterest expenses were up 5% year-over-year, with increased marketing, technology, and business development spend. Management stated that the higher expenses are tied directly to growth-oriented investments, including expansion in small business lending and digital product enhancements.

• Capital markets and fee income strength: Fee income from capital markets activities, such as loan syndications and investment banking, grew 25% for the year. Management highlighted that this business has now doubled since its formal launch in 2020, and expects continued broad-based fee growth.

Drivers of Future Performance

Zions Bancorporation expects revenue and margin growth in 2026 to be driven by continued loan and deposit expansion, efficiency gains, and disciplined expense management.

• Small business and commercial lending: Management believes growth in small business lending, including a near doubling of SBA loan production, will be a core revenue driver. New banker hires and a targeted focus on commercial and owner-occupied real estate lending are expected to further support loan growth.

• Technology and process automation: Investments in technology, particularly artificial intelligence and outsourcing, are anticipated to help contain expense growth while enabling scalable business operations. Management pointed to efficiency initiatives, such as process automation and digital product enhancements, as levers for positive operating leverage.

• Deposit mix and funding cost: The company expects ongoing efforts to attract granular deposits and further reduce reliance on brokered and wholesale funding to support net interest margin, though management noted that broader interest rate movements and competitive dynamics could impact deposit pricing and mix.

Catalysts in Upcoming Quarters

In future quarters, our analysts will monitor (1) the pace and quality of loan and deposit growth, especially in small business and commercial segments, (2) execution of technology-driven efficiency initiatives such as automation and outsourcing, and (3) trends in credit quality, particularly within commercial real estate and new loan categories. Progress toward increased capital returns and the impact of broader interest rate changes will also be closely watched.

Zions Bancorporation currently trades at $61.62, up from $59.09 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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