Zions Bancorp’s Q1 Earnings Show Resilience Amid Economic Crosscurrents

Zions Bancorporation, National Association (NASDAQ: ZION) reported first-quarter 2025 earnings that underscored its ability to navigate a challenging economic environment. While the bank delivered an 18% year-over-year earnings boost, its results also highlighted vulnerabilities tied to macroeconomic uncertainty and regulatory shifts. Investors will need to weigh these factors as they assess the bank’s trajectory in the coming quarters.

Financial Highlights: A Tax-Adjusted Win

Zions reported net earnings of $169 million, or $1.13 per diluted share, for Q1 2025—a result that beat consensus estimates of $1.20 per share by a narrow margin. The earnings growth stemmed from a 16 basis-point expansion in the net interest margin (NIM) to 3.43%, aided by disciplined balance sheet management. Adjusted pre-provision net revenue rose 10%, reflecting stronger core profitability.

However, a $0.11 per share tax charge emerged due to a Utah tax law change impacting the bank’s securities portfolio. Management emphasized this adjustment was non-cash and would reverse over time as securities mature, with future tax rates on securities income expected to decline. This nuance is critical: while the tax hit dented near-term results, it’s a temporary drag that shouldn’t obscure the bank’s underlying strength.

Strategic Moves and Credit Quality

The quarter’s standout event was the completion of Zions’ acquisition of four California Bank & Trust branches in the Coachella Valley, adding $630 million in deposits and $420 million in loans. This move reinforces Zions’ focus on high-growth markets and its role as a regional banking powerhouse in the Western U.S.

Credit metrics remained robust, with nonperforming assets (NPAs) holding steady at 0.51% of loans and leases, and net charge-offs at just 0.11%. CEO Harris H. Simmons noted, however, that trade policy risks and tariffs could strain small- and middle-market borrowers—a key Zions customer segment.

Headwinds and Tail Risks

The bank’s results also revealed vulnerabilities. Compared to Q4 2024, earnings fell 15%, a drop driven by seasonal factors and the tax charge. More concerning is the broader macroeconomic backdrop: Zions’ stock has plunged 18.4% year-to-date, underperforming the S&P 500’s rise, as investors grow wary of banking sector stability amid regional bank failures and Fed rate uncertainty.

Management acknowledged these risks but emphasized resilience. Reserves remain ample, and the bank’s net interest income—its primary revenue driver—remains on an upward trajectory.

Conclusion: A Hold with Upside Potential

Zions’ Q1 results paint a mixed but ultimately encouraging picture. Core metrics like NIM and credit quality are healthy, and strategic moves like the Coachella Valley acquisition bolster growth prospects. However, the stock’s underperformance reflects legitimate concerns about economic slowdowns and regulatory headwinds.

Analysts’ consensus of a “Hold” rating (per Zacks) aligns with this cautious optimism. While the tax hit is temporary, the bank’s exposure to small businesses in trade-sensitive industries could amplify risks if the economy falters. Investors should monitor two key metrics: the trajectory of Zions’ NIM and the broader economic data shaping small-business lending demand.

In the near term, Zions appears to be a stable play in a turbulent sector. But with the Federal Reserve’s policy path and global trade dynamics still uncertain, this is a stock to watch—not to chase—until clarity emerges.