Zions Bancorporation, National Association (ZION): SWOT Analysis [Nov-2025 Updated]

You're evaluating Zions Bancorporation, National Association (ZION) in late 2025, and the core truth is they're a well-capitalized regional powerhouse-boasting a Common Equity Tier 1 (CET1) ratio near 10.5%-but they face a defintely real tightrope walk. Their strength lies in deep Western US market share and commercial lending expertise, but that very concentration, plus higher-than-peer exposure to commercial real estate (CRE), makes them highly sensitive to a sustained high-rate environment. You need to see how their core deposit stability stacks up against the threat of increased regulatory scrutiny and aggressive deposit competition; let's break down the full SWOT to map out the near-term risks and clear opportunities.

Zions Bancorporation, National Association (ZION) - SWOT Analysis: Strengths

Strong Capital Position with a Common Equity Tier 1 (CET1) Ratio Near 10.5% in 2025

You want to know if Zions Bancorporation is financially resilient, and the answer is a clear yes. The bank's capital cushion, measured by its Common Equity Tier 1 (CET1) ratio, is a significant strength. This ratio shows how much high-quality capital a bank holds against its risk-weighted assets, and a higher number means greater shock absorption capacity.

As of the third quarter of 2025, Zions Bancorporation reported an estimated CET1 capital ratio of 11.3%. Here's the quick math: this is a solid improvement from the 10.7% reported in the prior year and sits comfortably above the regulatory 'well-capitalized' threshold of 6.5%. This strong position has been boosted by earnings retention and a decline in unrealized losses on investment securities. It's a definite sign of stability in a sector where capital is king.

Deep, Established Market Share Across High-Growth Western US States Like Utah and Texas

Zions Bancorporation operates a unique, decentralized model across 11 western states, which gives it deep, local market knowledge-a huge advantage over national players. This regional focus is a core strength, especially in high-growth areas. The bank's presence in states like Utah and Texas is particularly valuable, leveraging the economic dynamism of the Mountain West and Southwest.

The bank's network of affiliate brands, such as Zions Bank in Utah and Amegy Bank in Texas, allows it to act like a local community bank while benefiting from the scale of an $88.5 billion asset holding company. This focus on small and midsize businesses means its fortunes are closely tied to the strong demographic and economic expansion of the Western US.

• Operates in 11 Western US states, including Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming.
• Local brands like Amegy Bank (Texas) and Zions Bank (Utah) provide strong, on-the-ground relationships.
• Strategic acquisitions, like the four California branches in Q2 2025, continue to expand its footprint in key markets.

Stable, Low-Cost Core Deposit Base, Though it's Been Tested by Rate Hikes

The stability of a bank's funding is paramount, and Zions Bancorporation maintains a relatively stable core deposit base. Even after the significant interest rate hikes we've seen, the bank has managed its funding costs effectively. Total customer deposits, excluding brokered deposits (which are less stable), increased by 1% to $71.1 billion in the third quarter of 2025.

The cost of deposits has actually been trending down, which is a big win for net interest margin (NIM). The total deposit spot rate declined to 1.61% at the end of September 2025. That's a clear sign of disciplined deposit pricing and a sticky, relationship-driven funding base. This stability is why S&P Global revised its outlook to stable in November 2025, specifically citing 'deposit stability.'

Significant Commercial and Industrial (C&I) Lending Expertise, a High-Quality Asset Class

Zions Bancorporation is fundamentally a commercial bank, with a deep focus on Commercial and Industrial (C&I) lending to small and midsize businesses. This expertise is a long-term competitive advantage, driving loan and lease growth of 2% to $60.3 billion in Q3 2025.

While the third quarter of 2025 saw a highly publicized, isolated $50 million charge-off on two C&I loans due to specific collateral issues, the underlying quality of the rest of the portfolio remains strong. The CEO clarified that, excluding this one-off event, the remaining net charge-offs were minimal, totaling only $6 million, or 4 basis points of average loans on an annualized basis. This shows the bank's core C&I lending is defintely a high-quality asset class, with the bank maintaining strong credit metrics overall.

Zions Bancorporation, National Association (ZION) - SWOT Analysis: Weaknesses

Higher-than-peer exposure to commercial real estate (CRE), especially office space, a key 2025 concern.

Your biggest structural risk is the outsized exposure to Commercial Real Estate (CRE), especially as the office sector struggles with post-pandemic occupancy and repricing. While regulators typically flag exposure over 300% of total equity, Zions Bancorporation's total CRE exposure was reported at 440% of its total equity as of the first quarter of 2024, significantly higher than the industry-average benchmark of 139%. This is a massive concentration risk, plain and simple.

As of the second quarter of 2025, the CRE portfolio represented 22% of the total loan balances, which stood at $13.6 billion. The office portfolio, a particularly vulnerable segment, makes up 13% of that total CRE portfolio. What makes this a near-term weakness is the maturity wall: approximately 43 percent of the office exposure was scheduled to mature in 2025. That means a lot of repricing and refinancing risk is hitting the books right now.

• Total Loans (Q3 2025): $60.3 billion
• CRE Portfolio (Q2 2025): $13.6 billion (22% of total loans)
• Office Exposure (Q2 2025): 13% of CRE portfolio
• Office Loans Maturing in 2025: Approximately 43% of the office exposure

Net Interest Margin (NIM) pressure due to higher cost of funds and deposit competition throughout 2025.

Honestly, the NIM story is a constant battle for regional banks like Zions Bancorporation. While the Net Interest Margin (NIM) has actually improved in 2025, reaching 3.28% in the third quarter, up from 3.03% a year prior, this improvement is hard-won. The underlying weakness is the cost of funds (the interest you pay on deposits and borrowings) in a competitive, higher-rate environment.

The cost of deposits was still a significant expense, totaling 1.67% in Q3 2025. This is the cost of keeping your money, and it's a structural challenge because a large, relationship-driven commercial deposit base is more rate-sensitive than a purely retail one. If the Federal Reserve's rate-cutting cycle doesn't materialize as quickly as anticipated, that deposit competition will keep your funding costs elevated, which defintely eats into your NIM.

Historically high percentage of uninsured deposits, though this has been actively managed down.

The deposit base remains a key vulnerability, especially in a world where bank runs can happen digitally overnight. While Zions Bancorporation has worked hard to manage this risk since the 2023 banking turmoil, the concentration of uninsured deposits (deposits over the $250,000 FDIC limit) is still a major concern.

Total deposits for the company stood at $74.9 billion in the third quarter of 2025. The critical ratio to watch is liquidity: as of late 2025, uninsured deposits were estimated to equal 152% of Zions' liquid assets. What this estimate hides is the behavioral risk-if confidence wavers, the liquid assets may not be enough to cover a rapid flight of uninsured funds.

Geographic concentration means economic downturns in the Mountain West hit harder.

Zions Bancorporation's strength in the Mountain West is also its Achilles' heel. The bank operates through a network of local banks across 11 western states, with a significant concentration of its loan and deposit base in a handful of regional economies. This geographic concentration means that a severe economic downturn or a major industry shock in one of its core markets-like a tech-sector slowdown in Seattle or a real estate correction in Utah or Arizona-will hit Zions Bancorporation's loan portfolio and deposit stability much harder than a nationally diversified bank.

You can see this concentration clearly in the office loan portfolio, which is heavily weighted to a few states.

• Utah (UT): 28% of office collateral
• California (CA): 19% of office collateral
• Washington (WA): 17% of office collateral
• Arizona (AZ): 14% of office collateral
• Texas (TX): 11% of office collateral

Zions Bancorporation, National Association (ZION) - SWOT Analysis: Opportunities

Expand fee-based services (e.g., wealth management) to diversify revenue away from interest income.

You need to see Zions Bancorporation shift its revenue mix; relying too heavily on net interest income (NII) exposes the bank to interest rate volatility. The opportunity is clear: aggressively grow non-interest income, particularly in high-margin areas like wealth management and capital markets, to create a more resilient revenue base.

In the third quarter of 2025, the bank showed solid progress, with adjusted customer-related fee income hitting $174 million, a 6% jump from the prior quarter. This growth is defintely a good start. Look at the Capital Markets segment, which saw fees climb approximately 25% year-over-year in Q3 2025. That's a fast-growing, high-value business line that needs more capital and focus. The goal is to make fee income a much larger buffer against NII fluctuations.

Here's the quick math: in Q1 2025, non-interest income was $171 million, while NII was $624 million. That means fee income was only about 21.5% of total revenue. Pushing that closer to 30% is the real prize.

Strategic acquisitions of smaller community banks in adjacent, high-growth markets.

Zions Bancorporation has a proven playbook for bolt-on acquisitions, and the current environment-with smaller banks facing increased compliance costs and scale challenges-creates a buyer's market. The strategy is to focus on in-footprint acquisitions that bring in strong, low-cost deposit franchises, which is the lifeblood of any bank. This is a smart, low-risk way to grow.

A concrete example of this in 2025 was the Q1 acquisition of four branches in California's Coachella Valley. That single move added approximately $630 million in deposits and $420 million in loans to the balance sheet. The focus is on expanding the bank's presence across its 11-state western footprint, particularly in high-growth metropolitan areas like Phoenix, Denver, and Salt Lake City.

• Focus on in-footprint deals for deposit stability.
• Target banks with strong, low-cost core deposits.
• Use acquisitions to quickly gain market share in high-growth Western markets.

Use technology to drive down the efficiency ratio, aiming for below 60% by year-end 2026.

The operational efficiency gains are already impressive. The goal of getting the efficiency ratio (non-interest expense as a percentage of revenue) below 60% by year-end 2026 has been essentially achieved early. The bank's efficiency ratio actually improved to 59.6% in Q3 2025. The real opportunity now is to maintain and further improve this metric, creating positive operating leverage.

A key driver is technology adoption. The bank's digital transformation, including partnerships with platforms like nCino and Snapdocs, is not just a buzzword; it's a measurable cost-saver. These tools are expected to reduce loan processing times by up to 40% and cut document errors by 80%. That directly translates into lower non-interest expense and better customer experience. You need to keep funding these kinds of automation projects.

The bank is already a best-in-class performer for regional banks, where the industry benchmark typically hovers around 60-65%. Now, the action is to push that ratio even lower, perhaps to the mid-50s, by continuing to invest in revenue-generating and cost-saving technology. That's how you create sustained operating leverage.

Capitalize on larger banks pulling back from middle-market lending due to regulatory changes.

The regulatory environment, especially the potential for stricter capital requirements from the Basel III Endgame proposals, is making it more expensive for the largest banks to serve the middle market (companies with revenues between $10 million and $500 million). This creates a massive opening for Zions Bancorporation, a bank with a simpler legal structure and a history of being prepared for large bank regulation.

Zions has a long-standing strength in this segment, having been recognized as one of only four U.S. banks to average 15 or more 'Best Bank Awards' for the Middle Market since 2009. Management has explicitly stated a strategic focus on small and middle market customers, even returning to SBA lending. As the larger banks de-risk and retrench, Zions can step in to capture market share and deepen relationships with high-quality commercial borrowers.

The bank's average total loans in Q3 2025 were $60.3 billion. A concerted effort to capture just a small percentage of the lending volume shed by larger competitors could drive significant loan growth, outpacing the 2.1% annualized growth seen in Q3 2025. This is a structural tailwind you can ride for the next few years.

Zions Bancorporation, National Association (ZION) - SWOT Analysis: Threats

Sustained high interest rates depressing commercial real estate valuations and increasing loan defaults.

The biggest near-term threat for Zions Bancorporation is the continued pressure on its Commercial Real Estate (CRE) portfolio from a higher-for-longer interest rate environment. This sustained pressure is depressing property valuations, making it harder for borrowers to refinance, and increasing the risk of default. The CRE portfolio represented a significant $13.6 billion balance, or about 22% of total loans, as of the second quarter of 2025.

We've already seen this stress emerge in credit metrics. Classified loans-those with well-defined weaknesses-reached 4.83% of total loans by year-end 2024, a sharp rise from the prior year. The annualized Net Charge-Offs (NCOs) through the first three quarters of 2025 were 18 basis points, which included a notable $50 million loss on two commercial and industrial loans in Q3 2025. That's a concrete hit. While the overall nonperforming assets ratio remains manageable at 0.54% as of September 30, 2025, the trend in classified loans is the canary in the coal mine.

The most vulnerable segment is the multi-family lending, which saw a $442 million increase in classified balances in Q3 2024 alone, primarily because higher rates and rent concessions squeezed cash flows for borrowers. The bank's office exposure, at about 14% of the CRE portfolio, also remains a structural concern due to secular work-from-home trends.

Increased regulatory scrutiny on regional banks, potentially leading to higher compliance costs.

The regulatory environment for regional banks is defintely getting tougher, and Zions Bancorporation is now firmly in the crosshairs of new, expensive rules. Even though the bank's total assets of $88.8 billion at December 31, 2024, put it just under the $100 billion threshold for the most stringent new regulations, management expects organic growth to push them over that line soon.

The two main cost drivers are the FDIC special assessment and the proposed Basel III Endgame rules. The bank already recorded approximately $101 million in deposit insurance and regulatory expense related to the FDIC special assessment over 2023 and 2024. Looking ahead, Zions Bancorporation's management estimates that the proposed Long-Term Debt (LTD) requirement alone, part of the new framework, could result in an annual incremental pretax cost of over $125 million. To be fair, that's a massive new operating expense, one that is roughly 40% greater than their cost from the FDIC special assessment. The bank's strong Common Equity Tier 1 (CET1) ratio of 11.3% as of September 30, 2025, shows they are building capital, but the new rules will force them to issue an estimated $3.5 billion in incremental debt over a three-year phase-in period once they cross the threshold.

Aggressive deposit competition from money center banks and Treasury bills pulling away customer funds.

The fight for deposits remains a serious threat, forcing Zions Bancorporation to pay more for its funding. As the Federal Reserve kept rates high, customers have continued to move money out of low-cost, noninterest-bearing accounts (NIBs) and into higher-yielding alternatives like Treasury bills or money market accounts offered by larger institutions.

Here's the quick math on the shift: NIBs dropped to 33.0% of average deposits in Q3 2024, down from 34.8% in Q1 2024. This shift directly increases the bank's funding costs. The spot rate on total deposits had risen to 1.64% by June 30, 2025. While total deposits stabilized at $74.9 billion in Q3 2025, and the reliance on volatile brokered deposits was reduced to 7.5% of total deposits as of September 30, 2025, the cost of retaining those customers is a persistent drag on the Net Interest Margin (NIM).

Economic slowdown in key operating regions like California or Utah impacting loan demand and credit quality.

Zions Bancorporation operates primarily in the Mountain West and California, and the diverging economic health of these regions presents a clear, localized credit risk. This is not a uniform threat across their footprint.

The most immediate concern is California, where the economy is facing a mild contraction. The UCLA Anderson Forecast for 2025 projects the state's unemployment rate to peak at 6.1% and average 5.8% for the year, alongside job losses and stagnation in key sectors. This is a significant headwind for loan demand and credit quality, especially considering Zions' California Bank & Trust division was tied to the $50 million loss on two commercial and industrial loans in Q3 2025.

In contrast, the bank's home state of Utah has shown remarkable resilience, leading the nation in real GDP growth at 4.6% through Q3 2024, with a low unemployment rate of 3.1%. This regional strength acts as a counterbalance, but the overall loan growth outlook for 2025 is still expected to be only 'slightly to moderately' increasing, with CRE and mortgage payoffs expected to outpace new originations due to general economic uncertainty.

The threat is that the California weakness outweighs the Utah strength, leading to a net deterioration in loan performance.