KBRA Affirms Ratings for Zions Bancorporation, National Association

KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, the preferred stock rating of BBB, and the short-term deposit and debt ratings of K2 for Salt Lake City, UT-based Zions Bancorporation, National Association (NASDAQ: ZION) (“Zions” or “the bank”). The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by Zions’ solid market presence across its core Western-U.S. footprint, including meaningful market share in deposits, particularly in UT, NV, AZ, ID, and middle market commercial clients. As such, we believe the bank’s multi-brand strategy and regional commercial leadership teams benefit customer loyalty and local market expertise.

Zions' loan portfolio displays a higher level of diversification and granularity compared to many peers, supported by the bank’s scale and disciplined approach to credit risk management, which includes prudent hold limits, proactive credit risk grading, and conservative provisioning. Notwithstanding the well-publicized charge-off and provision taken on two related loans in 3Q25, which KBRA views as idiosyncratic, asset quality metrics remain a relative credit strength.

Profitability has historically trailed similarly rated peers, largely due to a lower-yielding loan portfolio, a less-levered balance sheet, and, more recently, higher funding costs. That said, core ROA has improved to >1% driven by asset remixing, deposit stabilization, noninterest income momentum, and efficiency gains. Zions’ long-term technology investments position the bank for continued positive operating leverage over the near-to-medium term, in KBRA’s view.

Zions continues to accrete core capital, with its CET1 ratio reaching 11.3% as of 3Q25 from a mid-9% trough in late 2022. The bank's negative AOCI position has also declined meaningfully and management has outlined a clear path to further improvement, albeit gradually. KBRA expects capital ratios to increase at a steady pace through retained earnings, modest loan growth, a manageable dividend payout, and limited share repurchases.

Although Zions' usage of higher cost brokered deposits increased following the March 2023 regional banking crisis, it remains primarily core deposit-funded, with noninterest-bearing deposits still above peer levels (35% of total deposits). The bank has maintained a below-peer loan-to-deposit (LTD) ratio of ~80%, providing balance sheet flexibility, and has proactively increased secured borrowing capacity, which appears sufficient to meet contingent funding needs.

Rating Sensitivities

Positive rating momentum could result from further improvement in core capital ratios and core profitability while sustaining favorable through-the-cycle credit performance. Conversely, deterioration in asset quality and operating performance beyond KBRA’s expectations or aggressive capital management could pressure ratings.

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