Morningstar

Zions Bancorp: Loan Write-Off Raises Questions About Underwriting and Risk Management Practices.

We see drop in Zion stock as less about this one episode and more about the surprise and potential for future issues.

In this Photo illustration a Zions Bancorporation logo is seen on a smartphone and a pc screen.
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Zions Bancorp NA
(ZION)

Key Morningstar Metrics for Zions Bancorporation

Zion Stock Update

Zions ZION unexpectedly announced on Oct. 15 that it had identified apparent misrepresentations and contractual defaults by two of its borrowers. Zions will take a provision of $60 million and a charge-off of $50 million related to this in the third quarter. Zion stock lost 13.1% Thursday after the news.

Why it matters: The announcement understandably raises questions about the firm’s underwriting and risk management practices.

  • Zions isn’t the only regional bank facing a similar issue. In September 2025, Fifth-Third Bank announced it would take a $170 million-$200 million charge due to external fraud related to an asset-backed finance loan; Bloomberg reported this was related to subprime auto lender Tricolor.

The bottom line: After updating our model, we are maintaining our $58 per share fair value estimate for Zions, noting that the higher provisioning and charge-offs were offset by the time value of money since our last update. Our previous model already had charge-offs and provisioning rising, with the period from 2021-24 being generally healthy from a credit perspective, and results tending to revert to norms over time.

  • The $60 million in loan provisioning represents less than 1% of the firm’s equity and is a small part of Zions’ $61 billion loan book. That said, provisions over the last five years have averaged $93 million, which makes a $60 million increase significant.
  • We see the market concern, exemplified by the share selloff, as being less about this one episode and more about the surprise factor and potential for future similar issues.

Coming up: We expect more details when the firm reports third-quarter earnings after the market closes on Oct. 20.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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