ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ (ZION) stock intrinsic value fair value estimate & owner earnings analysis

Zions Bancorporation is a Salt Lake City-based commercial bank with about $89 billion of assets, $62.5 billion of loans and $76.6 billion of deposits at June 30, 2026. It operates under local brands - Zions Bank, Amegy Bank, California Bank & Trust, National Bank of Arizona, Nevada State Bank, Vectra Bank and Commerce Bank of Washington and Oregon - across the western United States and Texas. Most of its income is the spread between what its loans and securities earn and what it pays depositors (net interest income was $2.63 billion in 2025), plus about $0.76 billion of fees. Lending is weighted to businesses: commercial real estate is $13.4 billion, about 22% of loans, of which construction and land is about $2.8 billion. About 45% of deposits ($34.4 billion) are above the insured limit, which is why the 2023 regional-bank panic hit Zions hard. How we measure earnings. For a bank, deposits and borrowings are raw material, so we value the cash earnings left for common shareholders after interest, credit losses and preferred dividends, and subtract no debt. We start from operating cash flow, strip out swings in trading securities, loans held for sale and other timing items, deduct stock compensation and the maintenance part of spending on branches and software, and keep the provision for credit losses as a cost: loan losses are a lender's main operating expense even though they are booked as a non-cash charge. On that basis owner earnings per share were $1.68 in 2016, $3.44 in 2017, $4.44 in 2018, $4.55 in 2019, $2.16 in 2020 (a $414 million pandemic reserve build), $5.66 in 2021 (a reserve release), $5.06 in 2022, $4.47 in 2023 (deposit costs jumped during the regional-bank crisis), $5.09 in 2024 and $6.38 in 2025. The $215 million gain on selling Visa Class B-1 shares in the second quarter of 2026 is a one-time item and is left out. One cash-flow line mixes depreciation with accretion of loan fees and securities discounts; it was negative in 2021 while pandemic-loan fees were being recognised, and we use it as reported, which slightly understates 2021. Earnings level. We use 2018-2025: eight years under today's tax rules that include a pandemic credit scare, a reserve release, a rate shock and a deposit run. Median annual owner earnings over that span were about $804 million. Buybacks cut diluted shares from 206.5 million in 2018 to 146.2 million in mid-2026, so the older per-share figures understate today's per-share earning power; spread over today's shares the median is about $5.50 a share. Owner earnings per share grew 25% in 2025. The base case's first year assumes $6.20, below 2025's $6.38, because credit costs today (net charge-offs of 0.06% of loans in the second quarter of 2026) are far below what a full cycle has averaged. Growth. None is credited. Loans grew from $46 billion in 2018 to $62.5 billion, but that came from Zions' markets expanding and from winning customers, neither of which is secured, and a bank must hold back capital to grow its balance sheet. The buybacks that lifted past per-share results are reflected in today's share count and are not projected forward. Base case: $92.59 a share. Owner earnings of $6.20 next year as today's unusually low credit costs begin to normalise, $5.80 the year after, then $5.50 a year with no growth. What keeps the earnings going past year ten is the deposit franchise itself: a bank founded in 1873 that kept its commercial customers through 2008-2010, the pandemic and 2023, and that earned $4.47 a share even in the 2023 panic. Bear case: $56.22 a share. Two years of a 2023-style deposit-cost squeeze at $4.50 a share, then one full credit cycle of the kind Zions actually went through in 2008-2010, when it set aside $2.0 billion for loan losses in 2009 alone on a $41 billion loan book and lost $1.23 billion for common shareholders that year. We size the repeat at cumulative loan losses of 6.5% of today's book (about $4.1 billion over three years) plus about $0.6 billion of extra reserves, against roughly $1.0 billion a year of earnings before credit costs (the 2023 level). That leaves a pre-tax shortfall of about $1.7 billion, roughly $1.3 billion or $9 a share after tax, spread as -$0.50, -$6.00 and -$2.47 a share in years three to five, then a recovery year at $3.00 and $4.50 a share for good, reflecting deposit costs that have stayed higher since 2023. The 2009 losses came from a far larger construction book and from securities and goodwill write-downs that today's balance sheet does not carry, which is why we use 6.5% rather than more. Common equity tier 1 capital was $7.9 billion, 11.5% of risk-weighted assets, at year-end 2025 and 11.8% in mid-2026; a $1.3 billion loss would leave the ratio near 10%, above the 7% regulatory minimum including buffers, so no forced share issuance is assumed. The bear value is above tangible book value of $44.74 a share because the deposit franchise keeps earning in a downturn: even in 2023, when deposits had fallen from $82.8 billion (2021) to $75.0 billion, owner earnings were $660 million. Bull case: $112.81 a share. The business's own levers keep working: older, low-yielding securities and loans keep repricing as they pay down (net interest income rose 8% in 2025 and 5% in the first half of 2026), fee income keeps growing and credit stays clean, giving owner earnings of $6.60, $6.75 and $6.90 a share over the next three years and $7.00 thereafter, with one mild, pandemic-sized credit year (about $2.50, the 2020 pattern) in year six. Expansion beyond the current footprint is not credited. Debt. As a bank, Zions funds itself with deposits, borrowings and about $1 billion of subordinated and senior notes; their interest is already deducted from owner earnings, so nothing further is subtracted. The $66 million of preferred stock ranks ahead of common and its dividends are already deducted. In every case the business is worth the case value to common shareholders and owes nothing further on top: $56.22 in the bear case, $92.59 in the base case and $112.81 in the bull case. Other items. Zions faces two lawsuits by medical-products makers (Lifescan and Johnson & Johnson; Roche) over a borrower that went bankrupt in 2017, set for trial in April 2027; the company says its accruals are adequate, and the filing does not quantify the exposure, so it is not modelled. Our previous estimates were prepared on a different basis and are not comparable. Margin-of-safety price: $48. We are fairly sure of the mid-cycle earnings level of about $5.50 a share: it comes from eight years that include a pandemic, a rate shock and a deposit run, and recent results are above it. We are much less sure of the trough. The worst plausible event is a deposit run like 2023 at the same time as heavy commercial real estate losses, forcing Zions to sell securities at a loss or raise equity at a low price, as it did in 2009. The structure would survive it: no customer concentration, liquidity sources that exceed the $34.4 billion of uninsured deposits without selling securities, and a capital ratio well above the minimum - but shareholders could be diluted. If we are wrong about the two or three things we are most likely to be wrong about - losses closer to Zions' own 2009-2011 experience with a capital raise at a low price, deposit costs keeping earnings near $4.50 for good, and an adverse result in the medical-products lawsuits - the shares would be worth roughly tangible book value, about $40 to $45. The price assumes a holding period of about four years, over which the business pays a $1.80 annual dividend ($0.45 a quarter) and keeps buying back stock. At $48 the price is little more than tangible book value, which grows every quarter from retained earnings, for a franchise that earned $4.47 a share in its worst recent panic; the dividend alone equals nearly 4% a year; a recovery to the base value within four years, plus dividends, implies about 20% a year; and if we are wrong on the points above the implied decline is roughly 5% to 15%. That combination is why the margin-of-safety price is $48 and not higher.