MW Zions takes $50 million loan loss as another credit 'cockroach' appears. Its stock is falling.

By Steve Gelsi

Analyst cuts price target for regional bank's shares as it discloses loan losses, days after JPMorgan CEO Jamie Dimon warned of credit-market conditions

A Truist analyst said Zions's two problem loans amount to a "step on a rake" for the regional bank.

Zions Bancorp's stock fell Thursday as it added to the noise around bad credit deals on Wall Street by disclosing a $50 million loss on two commercial loans, in what one analyst described as a "step on a rake."

Zions Bancorp's stock $(ZION)$ was losing 7.2% Thursday, just days after JPMorgan Chase & Co. $(JPM)$ Chief Executive Jamie Dimon raised concerns about credit-market conditions by noting that "when you see one cockroach, there are probably more," after his bank took losses on loans made to the now-bankrupt subprime auto lender Tricolor.

Along with JPMorgan's Tricolor loss, Fifth Third Bancorp $(FITB)$ has disclosed up to a $200 million loan loss tied to suspected fraud on two unnamed loans.

And Jefferies Financial Group Inc. $(JEF)$ said it could lose up to $45 million on its investment in bankrupt auto-parts maker First Brands, though it noted that it poses no threat to its financial condition.

For its part, Zions didn't disclose the names of the borrowers as it said late Wednesday that it would take a $60 million provision for credit losses when it reports third-quarter results on Oct. 20. Provisions for credit losses represent money that banks set aside to cover bad loans.

Truist analyst David Smith said Zions hadn't had a loan-loss provision this high since a $71 million provision in the third quarter of 2022.

"Zions is clearly not the only bank to step on a rake with credit this quarter," Smith said. "Still, the credit charges are not helpful for Zions."

In this case, the problem appears to be related to "a technical regulatory rule change as opposed to a big underlying problem," Smith noted.

Janney analyst Timothy Coffee on Thursday cut his price target on Zions Bancorp to $56 a share, from $60, on expectations of its "outsized" provision expense.

"While the company did not disclose the names of the borrowers nor the structure of the credits, investors have recently reacted first and asked questions later on opaque credits sourced from third parties that end up as credit losses on bank income statements," Coffee said.

Zions said it doesn't expect $50 million of the loan-loss provision to be paid back in what it described as an "isolated situation" around two commercial loans in California.

"The bank identified what it believes to be apparent misrepresentations and contractual defaults by the borrowers and obligors and other irregularities with respect to the loans and collateral," Zions said.

The bank said it plans to hire lawyers for an independent review of the loans. It added that it took these actions after it recently became aware of legal efforts by "several" unnamed banks against parties affiliated with the two borrowers.

Including Thursday's moves, Zions Bancorp's stock has fallen 7.5% in 2025, while the Financial Select Sector SPDR ETF XLF has risen 8.8% and the S&P 500 SPX has gained 13.4%.

-Steve Gelsi

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October 16, 2025 11:48 ET (15:48 GMT)

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