Regional Bank Scare Was A Fluke, Zions Says—But Is The Sector Really Safe?

After last week's $60 million credit charge-off sent Zions Bancorporation (NASDAQ:ZION) tumbling 13% in a single day, the Utah-based lender is now telling investors to relax.

Backed by better-than-expected third-quarter earnings and a wave of reassuring credit commentary, the stock is clawing back losses—and sparking debate over whether the regional banking sector's panic was overblown.

Zions Shares Rebound On Strong Results

Zions reported net income of $221 million, or $1.48 per share, for the third quarter 2025—up from $204 million a year ago and well ahead of investor expectations of $1.46 per share.

Revenue came in at $861 million, marking an 8.7% year-over-year increase and beating Street estimates of $843 million, with net interest income totaling $672 million.

The upbeat results helped the stock rise 2% on Tuesday, building on Friday and Monday's recovery, and trimming the bulk of Thursday's losses.

JP Morgan raised its price target on Zions to $62 from $58, signaling restored confidence in the name.

Credit Loss: An Isolated Event?

During the earnings call, executives aggressively framed the fraud-linked charge-off as an isolated incident, not indicative of deeper credit quality issues.

"We charged off $50 million of the combined balances of two commercial and industrial loans," the bank’s management said. "We view this as an isolated situation. Excluding this matter, net charge-offs were minimal at 4 basis points annualized."

Zions said overall credit trends were improving. Non-performing assets remained steady at just 0.54%, while classified loan balances declined $282 million sequentially, primarily driven by improvements in commercial real estate (CRE) and corporate lending.

The allowance for credit losses remains stable at 1.2% of loans, and coverage of non-accrual loans stood at 213%.

Zions also highlighted that its CRE book—worth $13.5 billion—remains well-diversified and granular, with low levels of delinquency and non-accruals.

"There's still stress in pockets of the market," executives said, "but buildings are filling up, especially in multifamily. We expect criticized and classified CRE loans to continue improving into next year."

"We have a long consistent history of low credit losses relative to the industry."

Private Credit Is The Real Risk, Zions Says

Interestingly, Zions shifted part of the focus away from traditional banking risks and toward private credit—a theme echoed recently by JPMorgan CEO Jamie Dimon.

"Personally, I think if there's risk out there, it's in private credit," Zions’ CEO Harris Simmons said. "Given the rate of growth and lack of regulation, private credit could pose a yellow flag for financial stability."

So Is The Regional Bank Panic Over?

David Morrison, senior analyst at Trade Nation, said ZIONS’ results helped "offset concerns after the bank announced last week that it had lost around $60 million due to fraudulent activity."

He added, "While it's still early, this earnings season is going well so far."

If earnings momentum holds—and no new loan stress surfaces—investors may look back on last week's 6.2% crash in the SPDR Regional Banking ETF (NYSE:KRE) as a market overreaction.

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