ZIONS BANCORPORA(ZIONP) - 2025 Q2 - Quarterly Report

Financial Performance - Net earnings applicable to common shareholders increased, with diluted EPS rising to $1.63 from $1.28 year-over-year, reflecting solid growth in net interest income and noninterest income [19]. - Net income for the six months ended June 30, 2025, reached $414 million, a 16.9% increase from $354 million in the same period of 2024 [189]. - Basic earnings per common share for the three months ended June 30, 2025, was $1.63, compared to $1.28 for the same period in 2024, representing a growth of 27.5% [188]. - Comprehensive income for the three months ended June 30, 2025, was $330 million, up from $261 million in the same period of 2024 [189]. Revenue Growth - Net interest income rose by $51 million, or 9%, primarily due to lower funding costs and an increase in average interest-earning assets, leading to an improved net interest margin of 3.17% compared to 2.98% [19]. - Customer-related noninterest income increased by $11 million, or 7%, primarily due to higher capital markets fees and improved retail and business banking fees [19]. - Noninterest income for the three months ended June 30, 2025, was $190 million, an increase of 6.1% compared to $179 million in the same period of 2024 [188]. Loan and Deposit Activity - Total loans and leases increased by $2.4 billion, or 4%, driven by growth in the consumer 1-4 family residential mortgage and commercial and industrial loan portfolios [19]. - Customer deposits totaled $69.9 billion, a slight increase from $69.5 billion, with noninterest-bearing demand deposits rising while interest-bearing deposits declined [19]. - Total loans and leases increased to $60,050 million, with interest income of $1,743 million and a yield of 5.85% for the six months ended June 30, 2025 [44]. Credit Quality - The provision for credit losses was negative $1 million, compared to a positive $5 million in the prior year period, indicating improved credit quality [19]. - Net loan and lease charge-offs totaled $10 million, or 0.07% of average loans and leases annualized, down from $15 million, or 0.10%, in the prior year quarter [22]. - Nonperforming assets rose to $313 million, or 0.51% of total loans and leases, compared to $265 million, or 0.45% in the prior year quarter [22]. Expenses and Efficiency - Noninterest expense increased by $18 million, or 4%, primarily due to higher incentive compensation accruals and other noninterest expenses [22]. - The efficiency ratio improved, reflecting better management of noninterest expenses despite increased costs in some areas [19]. - Adjusted noninterest expense increased by $15 million, or 3%, with an efficiency ratio improving to 62.2% from 64.5% [62]. Capital and Equity - Total shareholders' equity increased by $472 million, or 8%, to $6.6 billion compared to $6.1 billion at December 31, 2024 [171]. - As of June 30, 2025, common equity tier 1 (CET1) capital totaled $7.57 billion, a 7% increase from $7.07 billion in the prior year [178]. - The CET1 capital ratio improved to 11.0%, up from 10.6% in the previous year [178]. Interest Rate Risk Management - The company actively manages interest rate risk by positioning the balance sheet to reduce volatility in net interest income and economic value of equity [139]. - The Earnings at Risk (EaR) for a +200 bps shift in interest rates is estimated to be an increase of 8.3% in projected 12-month net interest income as of June 30, 2025 [147]. - The company executed $750 million in cash flow hedges to manage interest rate exposure associated with $28.9 billion of commercial and CRE loans scheduled to reprice within the next six months [153]. Asset Management - Total assets increased to $89,716 million as of June 30, 2025, from $88,271 million at the same date in 2024 [44]. - Total interest-earning assets rose to $83,286 million, generating interest income of $2,103 million with a yield of 5.09% for the six months ended June 30, 2025 [44]. - The total amount of capitalized costs associated with the core system replacement project was $241 million as of June 30, 2025 [87].