Financial Performance - Net earnings applicable to common shareholders increased, with diluted EPS rising to $1.48 from $1.37 in Q3 2024, reflecting higher net interest income and noninterest income [19]. - Net income for Q3 2025 reached $222 million, a 3.7% increase from $214 million in Q3 2024 [199]. - Net income for the nine months ended September 30, 2025, was $636 million, an increase of 12% compared to $568 million in 2024 [202]. - Basic earnings per share for Q3 2025 were $1.48, up from $1.37 in Q3 2024, reflecting a growth of 8% [198]. - Comprehensive income for Q3 2025 was $330 million, down from $427 million in Q3 2024, indicating a decline of 22.7% [199]. Interest Income and Expenses - Total interest income for Q3 2025 was $1,064 million, down $40 million, or 4%, from Q3 2024 [22]. - Total interest expense decreased by $92 million, or 19%, to $392 million compared to the prior year [22]. - Net interest income (GAAP) for the three months ended September 30, 2025, was $672 million, compared to $620 million for the same period in 2024, representing an 8.4% increase [195]. - Net interest income after provision for credit losses increased to $623 million in Q3 2025, compared to $607 million in Q3 2024, reflecting a growth of 2.6% [198]. Noninterest Income - Customer-related noninterest income increased by $5 million, or 3%, driven by higher loan-related fees, despite an $11 million net credit valuation adjustment loss [20]. - Noninterest income for Q3 2025 was $189 million, up 9.9% from $172 million in Q3 2024 [198]. - Noncustomer-related noninterest income increased by $12 million, or 86%, primarily due to higher dividends and a gain on the sale of a bank-owned property [23]. - Total noninterest income for the nine months ended September 30, 2025, was $550 million, an increase of $43 million, or 8%, compared to the same period in 2024 [57]. Credit Losses and Provisions - The provision for credit losses was $60 million, primarily related to two commercial borrowers, with $50 million charged off and a full reserve established for the remaining $10 million [20]. - The provision for credit losses was $49 million in Q3 2025, up from $13 million in Q3 2024, primarily due to credit losses related to two commercial loans [53]. - The allowance for credit losses (ACL) was $725 million as of September 30, 2025, down from $736 million a year earlier, reflecting lower reserves for commercial real estate risks [47]. - The ratio of ACL to total loans and leases decreased to 1.20% at September 30, 2025, compared to 1.25% at the same date in 2024 [47]. Loans and Leases - Total loans and leases increased by $1.4 billion, or 2%, driven by growth in the consumer 1-4 family residential mortgage and commercial and industrial loan portfolios [23]. - Average loans and leases increased by $2.1 billion, or 4%, to $60.8 billion, primarily due to growth in average consumer and commercial loans [34]. - The loan and lease portfolio increased by $892 million, or 2%, to $60,302 million at September 30, 2025, driven by growth in consumer 1-4 family residential mortgages, commercial and industrial loans, and term commercial real estate loans [81]. - The net loan and lease charge-offs totaled $56 million, or 0.37% of average loans and leases annualized, compared to $3 million, or 0.02%, in the prior year quarter [23]. Deposits and Borrowings - Total deposits decreased by $840 million, or 1%, with a notable reduction in interest-bearing deposits due to product migration [23]. - Total borrowed funds increased by $1.8 billion, or 51%, compared to the prior year quarter, driven by higher levels of long-term debt and short-term advances from the FHLB [23]. - Average deposits decreased by $726 million, or 1%, to $74.3 billion, with average noninterest-bearing deposits increasing by $199 million, or 1% [38]. - The estimated amount of uninsured deposits was $33,588 million, or 45% of total deposits, consistent with the previous period [88]. Efficiency and Cost Management - The efficiency ratio improved, indicating better cost management in operations [19]. - Noninterest expense increased by $25 million, or 5%, year-over-year, with salaries and employee benefits rising by $20 million due to higher severance and base salaries [62]. - Adjusted noninterest expense increased by $21 million, or 4%, with an efficiency ratio improving to 59.6% from 62.5% as adjusted pre-provision net revenue increased by $53 million, or 18% [63]. - The efficiency ratio (non-GAAP) improved to 59.6% for the three months ended September 30, 2025, from 62.5% in the same period last year [195]. Capital and Shareholder Equity - Total shareholders' equity rose by $741 million, or 12%, to $6.9 billion at September 30, 2025, compared to $6.1 billion at December 31, 2024 [180]. - The common equity tier 1 (CET1) capital totaled $7.7 billion, a 7% increase from $7.2 billion in the prior year [187]. - The CET1 capital ratio improved to 11.3%, compared to 10.7% in the previous year [187]. - Tangible book value per common share increased by $5.52, or 17%, to $38.64, primarily due to increased retained earnings and reduced unrealized losses [187]. Technology and Operational Improvements - The company plans to continue focusing on technology and information security systems to mitigate risks and enhance operational efficiency [15]. - The company completed the final phase of a multi-year project to replace its core loan and deposit banking systems, enhancing operational performance and customer experience [85]. - Total technology spend increased by $15 million, or 13%, compared to the same prior year quarter, driven by higher capitalized technology investments [65]. Risk Management - The company actively manages interest rate risk through a combination of interest rate swaps and investments in fixed-rate securities to moderate the expected sensitivity of net interest income [146]. - Interest rate risk remains within established policy limits despite shifts in the composition of deposit balances, with a weighted average modeled beta of 50% for interest-bearing deposits with indeterminable maturities [157]. - The Earnings at Risk (EaR) analysis showed a potential decrease in net interest income of 9.7% under a -200 bps rate shift scenario as of September 30, 2025 [157].
ZIONS(ZIONL) - 2025 Q3 - Quarterly Report