By Andrew Welsch

Zions Bancorp stock was punished last week after an unexpected $50 million charge, but it had good earnings news to share with investors in its earnings report Monday after the close.

The bank reported third-quarter earnings per share of $1.48, beating Wall Street analyst forecast of $1.46, according to according to estimates compiled by FactSet. For the same period a year ago, Salt Lake City-based Zions reported EPS of $1.37.

Shares of the bank were up 2.65% in after hours trading on Monday. Last week the bank disclosed a $50 million charge related to an internal investigation that identified "apparent misrepresentations" by two borrowers.

On Monday, the bank said its provision for credit losses was $49 million compared with $13 million during the prior year period.

This is breaking news. Read a preview of Zions earnings below and check back for more analysis soon.

When Zions Bancorp reports earnings after the market close Monday, analysts and shareholders will be looking for more information about a $50 million charge the bank disclosed last week related to bad loans.

News of that charge, along with a lawsuit Zions filed against two borrowers involved in the loans, rocked the stock market Thursday, helping to drive the Dow Jones Industrial Average down more than 300 points. Coming just weeks after the implosion of auto parts retailer First Brands, Zions' disclosure ratcheted up concerns that lenders were failing to spot problems with loans and that more problem credits might be lurking on balance sheets elsewhere.

Wall Street analysts expect the regional lender to report earnings per share of $1.46 on revenue of $843 million, according to estimates compiled by FactSet. For the same period a year ago, Salt Lake City-based Zions reported EPS of $1.37 on revenue of $792 million.

Zions's stock was up 2.2% Monday morning compared with a 0.9% gain for the S&P 500. But shares of Zions and other regional bank stocks took a hit last week after Zions' disclosure about the charge said an internal investigation revealed "apparent misrepresentations and contractual defaults."

Even with Monday's gain, Zions' shares are down 7.0% year to date as of Monday morning, which would put it on pace for its worst year since 2023, when it fell nearly 11%.

Wall Street analysts generally encouraged calm, saying the selloff in bank stocks last week was overdone. Zions' charge is equivalent to 30 cents a share, or 5% of annual earnings per share, analysts at Morgan Stanley wrote Oct. 16, adding that "there is no evidence of additional / ongoing issues at the bank."

Last week, the nation's largest banks reported strong earnings, driven by revenue growth from banks' trading desks and investment banking units. But those reports followed the bankruptcies of two auto companies, including First Brands, and the explosive growth of bank lending to nondepository financial institutions, or NDFIs, which in turn provide financial services to other companies. News about First Brands and NDFIs has put some investors on edge about unexpected credit issues. JPMorgan Chase CEO Jamie Dimon made waves last week when he said the bankruptcies of auto lender Tricolor Holdings and First Brands should raise red flags. "I probably shouldn't say this, but when you see one cockroach, there are probably more," Dimon said. "Everyone should be forewarned on this one."

What the lawsuits say. Zions's disclosure was unrelated to Tricolor Holdings and First Brands. Zions sued a group of real estate investors that includes Andrew Stupin and Gerald Marcil and two investment funds. The bank is seeking to recover more than $60 million in unpaid loans that a Zions unit, California Bank & Trust, had extended to the borrowers under two revolving credit facilities, according to the lawsuit, filed on Oct. 15 in California state court in Los Angeles. The borrowers used money provided by the bank to purchase distressed residential and commercial mortgage loans.

"The case arises from a sweeping betrayal of trust by sophisticated financial professional borrowers who abused CB&T's confidence, manipulated loan structures for their own enrichment, and systematically eliminated the collateral protections that were supposed to secure the bank's loans," Zions says in its legal complaint.

Stupin and Marcil are members or managers of the funds, according to Zions' lawsuit. They deny any wrongdoing, according to their attorney, Brandon Tran of Newport Beach-based Dhillon Law Group.

"These claims are unfounded and misrepresent the facts," Tran said in an email. "We are confident that once all the evidence is presented, our clients will be fully vindicated."

Zions' lawsuit says that underlying properties that the funds invested in were allegedly transferred to other entities or foreclosed upon, actions that weren't disclosed to the bank, according to the lawsuit. Zions discovered the alleged misconduct after Western Alliance Bank filed a lawsuit in August against Stupin, Marcil, and a real estate company. Western Alliance's lawsuit, also filed in California state court, says it extended a $100 million revolving credit facility to the borrower on Oct. 28, 2024.

The borrower allegedly failed to disclose "numerous" material facts and it engaged in a fraudulent scheme to create fake title policies that it provided to the bank, Western Alliance's lawsuit says. The borrower also failed to provide a required quarterly financial statement on June 30 and violated a requirement that it maintain a monthly average amount of $2 million in an operating account, according to the lawsuit. As of Aug. 18, the borrower held only $1,009.47 in the account, according to the lawsuit.

Write to Andrew Welsch at andrew.welsch@barrons.com

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October 20, 2025 16:27 ET (20:27 GMT)

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