ZIONS(ZIONL) - 2025 Q1 - Quarterly Report

Financial Performance - Net earnings applicable to common shareholders increased, with diluted EPS rising to $1.13 from $0.96 year-over-year, reflecting a growth of approximately 18%[19]. - Net income for the period rose to $170 million in Q1 2025, up from $153 million in Q1 2024, marking an increase of 11.1%[186]. - Comprehensive income for the period was $300 million in Q1 2025, compared to $236 million in Q1 2024, reflecting a growth of 27.1%[186]. - Basic earnings per common share increased to $1.13 for Q1 2025, compared to $0.96 for Q1 2024, a rise of 17.7%[185]. - Adjusted pre-provision net revenue (PPNR) for the three months ended March 31, 2025, was $267 million, compared to $312 million in the previous quarter[183]. Interest Income and Margin - Net interest income grew by $38 million, or 6%, compared to the prior year, driven by lower funding costs and a favorable mix in average interest-earning assets[20]. - Net interest income increased to $624 million for the three months ended March 31, 2025, compared to $586 million for the same period in 2024, reflecting a growth of 6.5%[185]. - The net interest margin improved to 3.10%, up from 2.94%, indicating enhanced profitability on interest-earning assets[22]. Loans and Leases - Total loans and leases increased by $1.8 billion, or 3%, primarily due to growth in the consumer 1-4 family residential mortgage and commercial and industrial loan portfolios[20]. - Average loans and leases increased by $1.7 billion, or 3%, to $59.6 billion, driven by growth in consumer and commercial loans[35]. - As of March 31, 2025, total loans and leases increased by $531 million, or 1%, to $59.9 billion, driven primarily by growth in the consumer 1-4 family residential mortgage and term commercial real estate loan portfolios[79]. Deposits - Total deposits rose by $1.5 billion, or 2%, with customer deposits (excluding brokered deposits) totaling $70.9 billion, compared to $69.9 billion[20]. - Average deposits increased by $1.5 billion, or 2%, to $74.9 billion, with interest-bearing deposits up by $2.9 billion, or 6%[39]. - Total deposits decreased to $75,692 million as of March 31, 2025, down from $76,223 million at December 31, 2024, a reduction of 0.7%[184]. Credit Losses and Allowance - The provision for credit losses was $18 million, an increase from $13 million in the prior year period, reflecting a cautious approach to potential credit risks[20]. - The allowance for credit losses (ACL) was $743 million, with a ratio of ACL to total loans and leases at 1.24%, down from 1.27% a year ago[47]. - The provision for loan losses for the first three months of 2025 was $17 million, a decrease from $72 million in the previous quarter[134]. Noninterest Income and Expenses - Customer-related noninterest income increased by $6 million, or 4%, due to higher loan-related fees and improved capital markets fees[23]. - Noninterest income increased to $171 million for the three months ended March 31, 2025, compared to $156 million in the same period of 2024, an increase of 9.6%[185]. - Noninterest expense increased by $12 million, or 2%, mainly due to higher salaries and technology expenses[23]. Capital and Equity - Total shareholders' equity increased by $203 million, or 3%, to $6.3 billion at March 31, 2025, compared to $6.1 billion at December 31, 2024[166]. - Common equity tier 1 (CET1) capital increased by 7% to $7.4 billion compared to $6.9 billion in the prior year period[175]. - CET1 capital ratio improved to 10.8%, up from 10.4% in the previous year[175]. Tax and Regulatory Matters - An increase of $16 million in income tax expense was noted due to a revaluation of deferred tax assets from newly enacted Utah state tax legislation[20]. - The effective tax rate rose to 28.9% for Q1 2025, up from 24.6% in Q1 2024, largely due to new Utah state tax legislation[64]. - Regulatory proposals from federal bank regulators may impact capital requirements for large banking organizations[176]. Asset Management - Total assets decreased to $87,992 million as of March 31, 2025, from $88,775 million at December 31, 2024, representing a decline of 0.9%[184]. - The amortized cost of total investment securities decreased by $216 million, or 1%, from December 31, 2024, primarily due to principal reductions[70]. - Total available liquidity was $41.2 billion, compared to $41.6 billion at December 31, 2024, with a liquidity ratio of 125% to uninsured deposits[161]. Risk Management - The company has been managing interest rate risk through strategies such as interest rate swaps and investments in fixed-rate securities, which have reduced the expected sensitivity of net interest income to interest rate changes[139]. - Earnings at Risk (EaR) for a +200 bps parallel shift in rates is estimated at 7.6%, while for a -200 bps shift, it is -8.2%[144]. - The company has executed $750 million in cash flow hedges to manage $27.9 billion of commercial and CRE loans scheduled to reprice within the next six months[151].