Why Is Zions (ZION) Down 6.5% Since Last Earnings Report?

Core Viewpoint - Zions' recent earnings report indicates strong performance with adjusted earnings per share surpassing estimates, driven by higher net interest income and fee income, despite some challenges with rising non-interest expenses [2][4][5] Financial Performance - Adjusted earnings per share for Q2 2025 were $1.58, exceeding the Zacks Consensus Estimate of $1.31, and reflecting a 30.6% increase year-over-year [2] - Net income attributable to common shareholders was $243 million, up 27.9% year-over-year, after accounting for the positive impact from the IPO of SBIC Investment [3] - Net revenues were $851 million, an 8.1% increase year-over-year, and also beat the Zacks Consensus Estimate of $815.5 million [4] Income and Expenses - Net interest income (NII) rose to $648 million, an 8.5% increase, attributed to lower funding costs and an increase in average interest-earning assets [4] - Non-interest income increased by 6.1% to $190 million, driven by growth in most components except for card fees and wealth management fees [5] - Adjusted non-interest expenses rose 3% to $521 million, with an adjusted efficiency ratio improving to 62.2% from 64.5% in the prior year [5] Loan and Deposit Trends - As of June 30, 2025, net loans and leases held for investment were $60.1 billion, up 1.5% from the prior quarter, while total deposits decreased by 2.5% to $73.8 billion [6] Credit Quality - The ratio of non-performing assets to loans and leases increased by 6 basis points year-over-year to 0.51%, with net loan and lease charge-offs of $10 million, down 33.3% from the prior year [7] Profitability and Capital Ratios - The Tier 1 leverage ratio remained stable at 8.5%, while the common equity tier 1 capital ratio improved to 11% from 10.6% in the prior year [8] - Return on average assets was 1.09%, up from 0.91% in the prior year, and return on average tangible common equity increased to 18.7% from 17.5% [9] Future Outlook - Management anticipates a moderate year-over-year increase in NII, driven by earning asset remix and loan growth, with customer-related non-interest income expected to rise moderately due to increased activity [10][11] - Adjusted non-interest expenses are projected to increase moderately, influenced by technology costs and marketing expenses [12] Market Position - Zions has seen upward revisions in estimates, with a consensus shift of 7.83%, and holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [13][15]