ZION - Earnings call transcript Q3 2020 | Zions Bancorporation, National Association

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to Zions Bancorporation’s Third Quarter 2020 Earnings Results webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session [Operator Instructions]. I would now like to hand the conference over to your host, Director of Investor Relations, James Abbott. ahead. go please Sir,

James Abbott

this and call everyone. third to like results that I Latif forward-looking be to although statements, quarter welcome this would actual during you remind conference discuss differ to we good you, will We making materially. evening, may you earnings. call, Thank our XXXX

release references deck the the We encourage measures. Slide release, earnings and disclaimer the non-GAAP the slide presentation slide this to to review or earnings X, dealing Additionally, related call, on in press contain the several you forward-looking applies information deck slide of well made call. and measures, with as the presentation supplemental copy equally during are non-GAAP of available A the which release, the statements full at earnings to zionsbancorporation.com. the as this

the to this will be slides referring call. during We

First, McLean, our President and comments then will our of introduce Harris Simmons, level today: Michael and Scott a performance; on key areas; recent financial in me Morris, Officer, Executive, will agenda provide Operating certain Chief high strategic overview strengths Keith provide Maio our Chief Chairman and Let Risk additional condition. limit Officer length will review by of of an call credit condition hour. Financial Zions’ on finally, respectively, loan to our conclude and Credit portfolio; Chief the the Officer, Paul one to providing will We Burdiss, Chief intend financial detail Officer Chief this the

up the you and During time follow the enable your to Harris limit to Simmons. ask I to participants section will questions With the primary to we over that, turn answer one question question call, ask other one and of to questions.

Harris Simmons

share several financial overall pleased back much were Beginning to on level that throughout of note to you all highlights. per XXXX. a evening. We much, a are quarter. results generally Slide summary this Thanks just is welcome very James. the Earnings the calls of We X, experienced for with key which of we our

has what declined we from the. revenue Although, somewhat experienced

somewhat made we revenue, million, pre-provision expenses of contribution the -- pre-provision net average stronger of the Our revenue excluding in in charitable during quarterly resulting declined is the adjusted than moderately, $XXX actually net quarter non-interest which XXXX.

the horizon on capital declined expiration relative X capital shares XXXX, capital credit have of large the common prior and losses one Tier strongest diluted the pandemic absolute the was year. with which relative enter the have allowance for We warrants strong and at result downturn resolved this loans At ratios. ratios and from to earlier the to share the Additionally, in of to we within bank about repurchases by space. is early were levels the equity whatever still of regional X.X%, XX.X% XX%

positive and Another Michael delinquency the is in greater and shortly. Keith loan which major story, detail deferral address will this quarter

with highlight spending, and as is sentiment in rates what and Now within loan the card that and consumer indicators data in business time debit we real most economic credit by such the are linked adversely just affected to pandemic. seeing relative there stability industries quarter

of in quarter losses in the third from the quarters was share. at indicators Both net items third a per line second earnings these in larger level resulted expense charge X had our quarter, second appropriate decline level end -- quarter. single in contribution similar the very at which noted made size, at in for the with our the million The $XX onetime that credit XX% provision with the a the possible our charitable rather. consistent second quarter provision was second PPP was of million for share a offs earlier that factor, quarter third the Slide about losses the explains for is and for valuation support per All about largest differential. of conclusion $XX that for the credit allowance That generally our were to quarter Fee as an non-interest third program the the the quarters of by allowance prior shows the our increase known quarters also which in income per was in the in and a and and and between contributed pension termination an $X.XX in had which $X.XX difference contributing success third both $X.XX securities share. that's we if quarter. of credit gains meaningful the losses charge expanse, appropriate and one excludes

PPP prior pre-provision million, million Turning quarter. the net million compared million if quarter. as to have the contribution decline this a And of to related or the revenue further charitable was Adjusted in would noted $XX it the for $XXX Slide we $XXX of program X. to third adjust been $X

being to can two as that X, we improved highlight the see wouldn't Scott? the provisions within necessarily to effect compared periods chart more totally has profitability going two Scott our right, relative profitability Operating McLean, With of in we on satisfactory when the The metrics. credit level and outsized quarters. I'm than that Slide turn prior the on over the time to for Chief label better President much in especially certainly bit in prior stable quarters, to You provision’s Officer. the the but experienced I what little sheet pandemic. quality prior with On outlook profitability balance

Scott McLean

and everyone. you, Harris, good Thank evening to

X. you Slide Let to me direct

months, frequently business few small success our we've about the last the with Protection Over Paycheck administration spoken Program.

page, PPP when largest this financial the ranked measured the of Zions largest on in the XXth loans institution is we country. the originator noted As Yet in as deposits, country. by ninth

by XX,XXX plus in of businesses largest hundreds loans bankers than to loans these are by with approximately to This significant of what share of measured more that workflow on size. measuring Our were XX% ability businesses, of originations depending of of PPP the the than balance, size. effort best you're X,XXX a banks efforts history that as number of helped was technology bank share the of in than and participants, for facing and XX rather times XX% employed units function of thousands the our market which our less three was stabilize combine about our customer XX% workers. If times were This the outperformance processes. class small $XXX,XXX our X.X deposit dollars, or and

So this more engaged aspect the in At billion than customers, now have we're point, forgiveness. about XX,XXX $X.X representing program. for the forgiveness of volume, applied of

mainstream We to for controlled engaged in us. handling we've We've active process to participant have be also forgiveness a highly assist process and the the chosen PricewaterhouseCoopers program. an

the volume across rates in by the is meaningful interest decline a country. caused initial been program will and has volatility just perspective, of PPP abrupt economic against pandemic. a the as financial as the Although, the benefit From the serve short-term light reported cushion

customers term treasury focused PPP As a Particularly XX,XXX simplified set introduction is small benefit, building offering of small nationally larger our longer businesses whom are a highlights calling focused by This branding previously what PPP business existing this of now businesses. meaningful than as select, importance more laser most new PPP that an bankers results, reinforced management we we to for products, campaign with our were also can products timely years. greater a effort to calling plus a with Perhaps which a of of relationships. the customers by recognized is is deep loan, affiliates being only on even provided which effort commitment build whom we well with the treasury who our the have relationship. management as received our of bank version call treasury to deposit is more customers we have XX,XXX longstanding

area. set ago, gears X, on bit. to Slide profitability we and capabilities our years residential a shifting mortgage out the Few significantly expand Moving to in

of a enhanced considerably rates this the market our to mortgage share, ability ago than period. year and has been XXXX lower As result gain interest focus, production stronger

digital the for more mortgage are softness, fee loans experiencing on our provided despite in consistent with than our us, remain that that pull million on residential bottom base. and the facing quarter. several is related Residential key X our $X of customers’ serving rollout we the natural declines, refinancing areas. customer our applicants. us notes mortgage in Credit revenue You funded improved related Slide other reduce digital new third billion slide. selling of they can mortgage, in service and we has to pull metrics given Slide process. of in the successes to also internal three to service application refer frustrations application by bank in XX% all quarter. large will $XXX business levels. customer see customer particularly employment, a allowed traditional we mortgage be to are X. quarter, information the verify as the zip income times lending Correspondingly to our fee continues prior what process This turn exceeded statements. Originations wave pandemic This still of moderation And among the small largest practice The our and this offset

Harris Simmons

more to the few know, next time And but very to as Officer by of much, he'll been a snowboard number a moment for Chief an Risk few behalf I our Ed do really Maio, and and for instrumental National Bank really will and in role of past years phenomenal things he's going consulting Officer. he as many wish to banker and of do job was who a us a who's our our of for shareholders this just in wonderful Risk of Thanks Arizona best. thanks little strengthen really to Keith that to for do. the continue Ed our he's all been to years job on Keith a want retired before bit on my He's has operations. Scott. served loves to and several to have Keith, all past do over risk Chief years who turn lot for Chief exceptional some our October time quarters, we of He's new succeeded Officer. the we to like to us done take And CEO Banking Xst. of the just helping just And you Schreiber, a him express just the program

minutes to let Keith, a me turn few So over you.

Keith Maio

this in risk be Classified would this have loans. Slide X. excluding increased quality relatively the PPP distributed within of is loans I'll X.X% Because energy PPP nonaccrual Thank nonaccruals accounted a the from begin about my to up loans for prior significant credit from Net up minimal you, industries. from nonaccrual ratios The quarter the that Harris. to were XX prior not XX quarter. X the prior about credit sector, points quarters across the presented and within comments the are loans, last XX% of And quarter. which energy we due days on similar from one-fifth because businesses evening basis real in charge gross total of basis were to is charge hotels, Retail assets, recreational the quarter. And remainder owned loans restaurants prior XX basis points various past contributor including nonperforming increased basis businesses quarter. of of estate offs also loans are a loans non-PPP of points nonaccruals bumped a points and basis to third and the industry. from non-PPP About proportion points attributable charged in offs of X.X% quarter’s the XX offs. also quarter. to one-fifth XX other loans in And one-third this to quarter comparable, About prior

repeating As other most investor of flow experienced banks, we Zions February. much in loans including review with meetings, what stressed rate our and we worth lower peers. the Day it's loss problem we delinquent ratios, past, typically various loan most secure Investor underwrite but upon in Like cash loans collateral. generally than we've nonaccrual assumptions relative based the said In our classified loan to

assets. For example, or personal real estate business and other

of is be support to difficulty, personal capital loans borrowers most the also transitory. guarantees problem available if our their and have investment a sources is particularly period require We to external during on of many that of considered

‘XX quite generally residential During to the compared this collateral the softer, when the columns generally value other have plunged. of the dark relative holding regional average crisis, those the ‘XX the lowest crisis, small case and loss Zions during somewhat But oil screens and credit are We've of pandemic, ratios ‘XX best financial downturn, on I this The increased. the ratios. global to included banks, And values in severity might in been financial in also help property, perspective. quartile. the up. have typically the classified ‘XX. put to and the in highlight of but assets chart same time blue perhaps in series of the chart recession or many large gas the global and And

we much to with When provided infrastructure, ratio the to in declaring credit are businesses, made the the been Although, might problem today, advance deterioration only loans. And global we are relief loan the preparations support a expected have accomplished the the strong the the significant government mission of to has consumers we risk be. yet of for management prepare during not of less we and the portfolio level quarter about classified one it to comparing than experiencing the financial crisis level downturn.

to banks X.X% broadly modifications. and reach At June granting were a payment engaged loans most we customers XXth, other Moving requested did XX, we payment PPP if on payment a and payment of non deferrals early deferrals liberally by not Slide but status we loans. out to with an customer. offer so defer in were We granted deferral such to very

are next than might how now that off X.X%. just The While XXth, question loans at were half have deferral. of September one was same is which redeferrals. ratio delinquencies ask that come Less

side of the [showing] which that two since at those more, payment early and a On delinquent by payment chart deferral, granted also in employed has are Of a part point or had calling XX one days total since XX or practices than this loans by June. loans management we've X% of days of come deferral right that been We $XX only tenths more million and the off outreach more. risk point or our to their of declined are these to program. slightly delinquent attribute

Chief to Michael Next, our Credit turn the I'll call Michael? Officer. over Morris,

Michael Morris

you risk the of mention risk being The chart default. grade now seen earlier on that represented point in We Slide COVID definition have refined of variation special doubtful. given XX predictive grade performance introduced the on is and But which of the substandard nonaccrual I'll that industries of necessarily like but this the of regulatory April, is loss default this with prior in X.X an XX. same made would what further The greatest are of start weighted has average quarters. we've that the categories. the we've The subindustries, included Keith. these reviewed here to of with a collateral. high you've Thanks, relatively probability a scale not Keith that worse ones is XX rate than the about grades would default I expect, reemphasize risk

you ratio coverage right page, lines collateral of the can chart you billion on this real see covered XX% in is previous series. by the with loan of four in estate four for that The value only LTV good time on XX%. the As loans, with plus X% the same of most having the median time in in show roughly than bottom being the side QX. portfolio general experienced the June, collateral light a blue the deterioration by and see the XX shows tens which of slide can The that of and on flattening in columns two where portfolio does weighted portfolio since a chart general oil noting grade stability. shown risk stability out rest where grade. the The experienced It's default of the elevated between it left is experienced line balances risk shows of the loan gas point probability grades risk of three with linear. a stability average not the the worth of tree the loans a we've to Slide groupings XX% ratios highlighted top with in greater lines, on

the The probability risk worst et portfolio the has in elevated is gradient a example, loan, than XX greater weighted loan, grade of The the X.X. reflect For average shown not grade rest nine grades significantly of book, range, consumer do a grade risk the grade the our pass has commercial portfolio, given here while grade for default estimations. the being of the loan cetera. a default and of other loss X.X, other

with and and two gives Although, more loss. top non-PPP relative total is bar. the of stability in chart the the the being the being represents for trend shows ratio, smaller of non-accrual the ratio significant portfolio, the allowance classified credit again other drivers of the loans loan number which combination ratio one larger number The within loan’s the non-accrual classified encouraging. right each The XX% the of the non-accrual of

utilization left, that can you of see the the On segments. various rates bottom portfolio

with down the implications line credit We encouraged again, be elevated falling to utilization XX% continue of to XX% risk the yet last quarter. COVID-XX rate from

into the or in and situations cases offs experience receive elevated more across may will delinquencies. the that through improvements. category net Finally, bottom on as that prepackaged the with The offs I in the the gas to charge or overall third Favorable to and bankers, would have away reports had gas tends wells including that COVID-XX quarter, be well oil XX% on the And where for that that been number debt be note portfolio for portfolio charged the expected. this the due some oil beginning the portfolio of in to Not the elevated equity to loss that within the of these that spot are previously will second There the prepackaged delinquencies. with due recent few liens already companies borrowers end XX% portfolio, might I recoveries. credit higher conforming. relative somewhat past price senior debt developments prior later but the about loans as rebound right, risk can XX-day rate than futures curve, shown continued Keith are production for factors the allowance that see better portfolio we've and past, off. price are to delinquency and a roughly noting faring borrowing just worth substantial credit offs we you the add a quarter bankruptcies the in charge decision, related as and seen than case totally are line charge many oil oil up and as are contributed we partners and a in upstream bankruptcy in forgiven back shut the basis that that gas the perhaps is page X.X%. in groups. highlighted several at the reduced to improvement with and whittled from

well. micro storm that Additionally, feel are weathering within size our small the and reasonably business we portfolio loans the

$XX,XXX, a of as commercial example, than rate XXX company ago, was about with in For delinquency is was are just which the have less commitments the loans XXX. significant count by year which a it unit same which

So within levels than as spending loans a and the factors considering remain back step will previously, we to improving compared comfortable just and ago improvement relative the to level we’re the oil as and and stability few, of situation more outlook we the the more risk delinquencies grade commercial gas deferrals, all and reasons Still, cited consumer taking vigilant in COVID-XX always. elevated year whole, ago. good for the a months for few a portfolio, with from credit were as the and list disciplined

to now Burdiss, So Chief our turn the Paul time I'll over Financial Officer. Paul?

Paul Burdiss

Michael which begin you, losses. our Thank I'll XX, allowance Slide for good details evening, everyone. and on credit

at total left, $XXX top recent can ACL trend see in the you our million ACL. the On The September XXth. was

PPP ACL was the Excluding non-PPP on the or $XXX million about X.X% loans, of loans. allowance

shows factors categories The quarter. to of chart the the the in leading change. bottom broad describe most XX, of we the change Page the ACL bar On the recent side right right on

due specific the credit modest forecast The in represents estimate to the the ACL the economic quarter. of $XX quarter category, models. add grade bar is prior changes in risk employed the our from the increase $XX which by against when compared loss migration first million change middle losses represented and our prior loans, the in in million reserves bar when change the forecast include to quality to combined Credit factors

over the in white lower loan the the past moving or portfolio across quarter. points, prior quarter. income ACL. current of factors driven net adversely the in $XX an interest reflecting the primarily the in was trends lower, The in other and ACL mix overview the to by margin. XX and left This to compared interest recent by relative margin both. the Finally, have a attributable total changes the relative similar of relatively the boxes the weighting The net several compressed downward aging affected million yields basis balances PPP shift is and the Ultimately, shows the yielding non-PPP loan to quarter quarters loans of generated net margin interest portfolio greater Slide yield when prior depicts to assets. which curve stable earning on reduction declining, XX chart the

factor from billion And market quarter. with has investments, significant the contracted of borrowings most or the was linked average margin of $X.X interest net Due the a increased to and to second $X $X.X yield the yield which not and increasing went basis. in quarter $XXX points, and interest surplus million linked The billion in dilutive the prior money on but average interest on paying a necessarily million, Net portfolio. the only increasing investments, compression quarter of income composition short-term of the cash basis margin levels securities income. and loans down net X% increasing short-term XX the effect increase deposits by just on

interest of in increasing the $X.X interest average, asset loan contributed in asset driven decline balance and earning the billion was $XX change in the average revenue by earning billion the net Notably, described loans, X%, earlier. quarter. by in yields decline on the in mix income the With largely PPP

the fourth other prepayment important terms forgiveness a and is event. important a modified the outstanding loans the undergo quarter and in and yield process. the PPP loans PPP note, about with action will years, quarter consideration, reduce an made in later an the less, This to PPP loans to this term on beyond As X.X% is or five the of late of in we which consistent loans

into augment fees maturity amortized the loans. the of or coupon such, mechanism net will the forgiveness, PPP Upon over accelerate reminder, a the the and X% to are life stated the these loan PPP income. beyond As PPP fees to as as net attached interest loans yields serve

support portfolio contributed received while to Zions or forgiveness linked total about prior to quarter the Relative quarter reporting XX loan by yield deposit compression. As right and annualized. Scott that our to Shifting the banks the breaks increased One average non-PPP to this quarter, and X.X% volume. relatively significant funding. fiscal of and the $X.X the down prior illustrated XX billion as attributable cost economy application have loan quarter, over programs basis or depicted growth loan pirate on not in remixing could increased to in PPP points Because deposits basis points quarter. the and highlights the Many earlier, both pandemic. loans chart are from the only them billion average on loan. X%. the declined monetary rate Average we measured bar, the the The $X deposits XX Slide of PPP volume, of declined this by speculate loans by be shaded an yield including deposit lightly growth. X% during to third was and XX% designed the strong PPP may

balance sensitivity benchmark fallen. has as XX, rates increased Slide to Turning our have sheet interest

loan rate several quarters, book. sensitivity. detail portfolio and impact include interest We right securities next rates is limited. investments on on would of the to sheet balance which our in sensitivity, swap the the rate lower The we interest deployed short-term because profile rate chart the longer the risk over recent additional with believe are duration show overall may comfortable increase interest likely into reset in be the The increase

current of On characteristics. Loans the you Slide downward upper repricing on the on $X related the customer Noninterest XX, volumes, loans expense, expected the in activity. quarter. swaps retail from hedge reprice are shown, third the prior not rates associated XX, increased change. highlight maturities deposit right lower million while does the if increased fees to interest see the fixed quarter, mortgage right environment card our and on increased longer with rate residential used are bottom -- for $XXX loan Slide and where floating to a maturities to reflecting our shown million On rate

normalizing business, view However, charitable expense for we This basis, our these to as is at that XXXX revenue in as have about discussed date X% Harris when the after costs $XXX quarter. contribution, noninterest while on to the the in non-interest running adjusted this able compared effectively decline million to illustrate invest was is million total XXXX. lower been the expense $XX offset Year help to of continuing beginning manage to intended call. noted the in to in elsewhere

Latif, impressed the we guidance concludes given environment, of suspended remarks. strength and and sheet the by our by the forward are have the While balance current line demonstrated colleagues, customers day questions. our have our we of and operating looking communities. continued encouraged nature our been prepared open by creativity please resiliency our the every This for

Operator

Point. [Operator Instructions] Our first Compass question of comes from the Rochester line of Dave

line is Your open.

Dave Rochester

really the you much. great reserve that have some deferral move trends quarter around this didn't You and guys

scenarios. at So this at bucket one at know where COVID just And I Moody's in includes point on reserve stimulus least loans. more their that sat that wondering risk of the X.X% of

reserve get at have a more be the So least to sense if that as what you just wondering you PPP customers great. we in that have or if if that would the bucket, is And for well. overall sensitivity you don't stimulus bucket that, guys the assume or on

Michael Morris

on The federal The a there on all. book so be portfolio given a is the down much. of to credit loans that at We theXXX% didn't risk guarantee. reserve PPP we move don't the substantial guarantee, don't consider much carry lot fairly that COVID-XX reserve of

Dave Rochester

just if more to re you the funds were up there? there through sensitivity outstanding, talking get that you guys that the I sensitivity get already was don't on any there if they loans there's any that if about have loans you for customers also PPP if have PPP, don't or

Michael Morris

I will not exposures, Well, there a huge correlation. there's would expect correlation, be a correlation. larger to on definitely the there a be And

to On the doesn't of that business X.X small deliver if like there definitely business be earlier, smaller owner. small the loans relationship some exposures, and the micro a stimulus talked will about we

Dave Rochester

ratio, that reserve curious you what And that in do substantial happen how just but terms it’s that large risk of I is? know is. at to have quantifying

Michael Morris

that. have to we'll get to think I on you back

Harris Simmons

I -- think it's of kind of small. we but it's million useful outstanding some balances balances It's $XXX those the have $XX,XXX, and those enough loans the in under relatively that if about of take it's we also exclusive card very very smallest are small outstandings. --

just little a a When big got portfolio. get it's dollars a you outstanding. under XXX,XXX, a not get So billion it little we’ve you over larger

exposure are these the businesses get that us. So big the probably risk gets get, little a micro not larger a as that's for But really exposure it's most business and think as you at larger. I

far them even delinquencies, holding -- been of well were even would so to really a And have their after funding, ago. to actually exhausted just PPP where are year most compared expected they the in

with So particularly impact There I'd don’t I but be for think to will be it's going some agree Michael. severe us.

Dave Rochester

one one the quick just maybe more margin. on And

got at reinvestment securities rates You the level. here X.X%

lower here enough think you PPP cost that got the do still side You’ve was scheduled leverage the do has pressure? bearing interest So on have coming? to here are Can inevitably the costs of Or reduce little deposit the core loans you borrowings? move wondering that to NIM year but do a ex-liquidity the else at else on that's just to do this anything just know offset that anything you and fees from more CD chunk year. can I reprice side? next I and you can you

Paul Burdiss

at over little and margin on and liability least over And deposit would down. now borrowing CDs that the last to that repricing liabilities. because of quarters Those we're a of on repricing compression run them of obviously, several here expect the move course term And would to position you we've side, the in exceed There in are CDs continue limit really cost will out about course there limited and that rates, the are on will that of seeing sort the opportunity bit over will the overall opportunity assets have we're off talking that there's the net for see the repricing our But term. to to a There's On book. borrowing. see been I time. have reduce that of last on to expect we rates put the can of near then that attached the I funded the assets year. of been and continue the

Operator

Thank you.

Stanley. line Zerbe the from of of comes question Morgan Ken next Our

line is Your open.

Ken Zerbe

staying that just yields that on in point. added from new loans yield and could here? compress new average further What Maybe the that the is on loan actually you've XQ

Paul Burdiss

yield going of a I'm spread curve new function things, that's additional credit the today, two Well, by quantify a the is portfolio credit of the but only loan change given composition spreads will not and be yield thing necessarily, where to create in change. on by rate yield credit market rate is -- or And spread. to the our lower compression either loan going yields the the repricing spread and

in look pricing And differential personal So for a there's I enlarge this exclusion. example, loans years, loans is think different you've added in also course put a to loans and lot five little grown seen that being been as quarter. don't -- from loans by over a my grown the on the new the a risk. have that PPP are slower last loans going being differential there real faster. maybe may municipal expectation little have there's commercial a estate have But that

think compression in by driven running be being term see the margin to associated is yield and And really so replaced by longer what I the fixed rate older loans loans. off you're going with to change newer going

curve. of a of function the flatness the really So it's

Ken Zerbe

No, get Paul. the differential the to question, is new the that's how reason I of for we’re much existing the then guess between loans. that a yield trying portfolio and understood, And which magnitude I

Paul Burdiss

because some hard saying a the be very that it's things I'm is day specific start that to other to back are guidance. But can so many can there about that that, what I'm forward-looking uncertain. get we we right is where that. to can soon And environment to now just impact hopeful provide

Ken Zerbe

basis in the at look change basis about quarter, program. total XX asked loan a XX, balances we different PPP, loan -- to it you compress that’s to if about or guess it's PPP But yields that looks in further we -- like Slide Maybe decline loan is it. like decline the the some and reasonable think points looks of Got If forward? a points. it sure yields just the that down made was with going a way. I'm I XX it on going

Paul Burdiss

press how Page to of and said, as investors and portfolio trying break Well, our provide you as is and understand for do as we -- possible yield to know of I do a out the XX pretty think think much we release, I decent changing. granularity really job

commercial $XXX quarter-over-quarter example, you are our less PPP than points XX for down from $XXX million. basis so see can to loans, million And that excluding

that any get of What's So time impact an have we see good the loans XX, think earnings had quarter. the so. helpful. would that going a And do a and five at period of many you over fewer you outsized happen the those given you're yield. get for showing over how given profile course can any to indication is loans of a I have changed the can portfolio XX think PPP And so going next loans years look because pretty decent how to quarter. feel encourage maturity loans of you in or of Hopefully, fewer Page page, Page on the our I clearly I last to are that's repricing that repricing loan kind in on of slide job

Ken Zerbe

relates can forward? and but a did expenses, topics bit It It How much of to just contribution, like than we expenses change question. that helpful, going level should exclude quick, PPP additional the I if that is And run history. one if the yes. it at recent last very remain looks really little higher

Paul Burdiss

exclude prepared largely, my expense charitable think -- XXXX run pretty current the in down adjusted you and said expenses remarks, look at our think if are I indicative and associated XXXX rate. as million that of contribution, if year-over-year. with X% at exclude that's look I you Well, you that's I And $XX expenses that and the you

Harris Simmons

the note just We we've a I’d And campaign. we in did quarter. spend of mentioned done branding a little kind more

on businesses $X quarter we're Just trying to that that campaign. for reinforce in million good spent we and business the bank a in mines about

see So expect little wouldn't I you'll of every produced quarter. that bit additional a that bump

Operator

you. Thank

question ISI. next of the Pancari Evercore of comes Our from line [Peter]

please. question Your

John Pancari

John It's Pancari.

I front. color So a on question given us on lot know loan you've side. of a the the NIM growth

how Just this trying to impact back could spread into revenue.

So expect balances of us about on could the commercial here? loan Is balances growth how side, think demand, on areas. you we backdrop now just I period saw help traject from just And declines most to the in some fair given loan you ongoing assume pretty around guess right to it end good declines?

Scott McLean

with would big to continue as to see going time, total this economic frankly. expect quite level in know, loan of be surprise We're shouldn't obviously. what you And you softness balances the it's that during activity. a

are building so and the less, the you seeing are in we're their in Slide down -- that weakness, and C&I what liquidity. clients -- The less requirements seeing is the they're working slide And is C&I we're in back if expect consequently, weakness C&I borrowing softness our XX. appendix and would just capital look for at you revenues it's

refinancing the products, C&I in to going because And of spectrum residential four so boom but it's just softness our family also really, that's principally and on. softness we're HELOCS, the seeing one across

sort a going we're when activity economy I the I pretty pent-up the see back. coming to fair think of that to you're continue think is nice does turn a rebound So today. to then see to whenever rates at with it start And of going amount experiencing we're

I work. people back to are ready think to get

John Pancari

that And front color have see increase good then on going confirm, charge-offs upside saw then you when maybe fair credit quarter. peak. here. looking still I And and we're charge-offs. would could on want pressure. that expect And this just any it is We assuming assume do you pretty think at to I'm to you the to separately first if

just a If into and outlook us factored that you give could whether little when be. there, bit that your of insight could you've

Michael Morris

kind We in already QX that troubled. credits had that were several a of over tipped little

say restaurant industries into the had already about like could going some same few stress. industry the a You COVID,

predict market So numbers dramatically. those Can't really what secondary going that in so the in already in some softened And forward. the were of pretty then some sale see the to our credits are workout. note going we're changed of world market

net I see You to think charge-offs, But year. don't don't the know. going bulk of we're this

Paul Burdiss

say they're think fair the to I I'm kind And radar living credits create of on to the anyway, quarter. that likely nothing dent that of terms larger in that's aware that screen a material there's of it's big in Michael, fourth

John Pancari

that that And in aside as reserve assume reserve. releases all into loan to is some your at question, should factored to go see the any new for you reserves charge-offs we assume we or overall is fair last my it fair reserve declines just it that, to from rise related growth? And then those given that balance least

Harris Simmons

other our to think is over As course you best of are equal, many the loan is occur in our we the where sort the reserve going CECL based speaking, know, life portfolio. the reserve so losses all on generally various of land of under items, expectation things for to set

outlook, reserve or a releases. without in growth be we change see when it or may may expectations so And not would or speculate hard to on

Operator

Thank you.

the Steve of from Securities. line B. comes of question Moss next Our Riley

please. question Your

Steve Moss

mentioned I on Just you of restaurants. that proportion believe to credit. hotels high NPLs guys earlier are tied and following a up there's

criticized was as driver loans the that wondering in Just similar a well?

Michael Morris

industry of in risk quite forecasting pointed these stand out. I of slides. the And faring They are out that on out we restaurants wouldn't well. would do service there industries in other that really charge-offs, I those terms quick and out heightened terms outside the other are aren't net say classified that but than other criticized jump But one hospitality. of industries there really two, COVID-XX over that industries not stands full other restaurants, service say

Steve Moss

just of -- at activity and the And hotel you business in seeing activity for exposure terms what -- curious are have? you motel

Michael Morris

exposure quite bag. street, hearing is necessarily our I'll the a I generally what not mixed from to we're our speak Well, mean, exposure.

have We high end. some

have some We low end.

the a We Park almost tourism mostly I'll not hospitality, occupancy, XX% have footprint. Colorado We're footprint, to well. in tourism Western markets XX% of XX%, up City, if pick that markets. convention pre-COVID, our few seeing And our in select and in have mountains, we're like markets XX%. call loans And business those a struggling. and bit. Zion little some back we the Occupancy getting the the back the The some recreational Scottsdale, are is hotels rates and many Park, somewhat National seeing leisure where that hotels exclusively hospitality up range, cases, doing in in to are coastal,

Harris Simmons

kind newspaper areas, might which ago, jump in I saying. underscore just found outdoor, Michael than quite higher Zion I kind totals of what were are outdoors a amazing. I September in, But returning year to people yesterday is National the to the in just were recreation at read they Park that visitor these of

Steve Moss

and about bit one an last a you're -- are know CETX I getting just here, deposit again. And share of in the your for But little of plus capital so your little thoughts in one growth then ratio just repurchases a the kind your tighter. on ratio fee uptick And with leverage potential future. what ratio leverage

Harris Simmons

early, be maybe Well, them. little Paul, hoping in I'm I to And year. do relatively back to still condition, as we into PPNR we too can in -- to be we I'll the that just we'll mean credit mean, in able early say, decent it's I position a you to in But yes. -- next demonstrate, get favor I of keep that it probably that want shape. pretty to yet. good we're resume call remains can but a we're if hope

Paul Burdiss

CCAR know, as models add, just the tests provided the think banks. to are rerunning stress I'll with our I we And you

stress management large so component of exercises. And very capital testing is a our

that. I think will to the feel share through to allowance I as include capital the becomes for outlook and back to economic going more pretty the of we have. a extent more we're certain about And there's So the certain, that question lot happen outlook all But level economic good buybacks. we becomes about that things of would the losses, John's expect credit good

time of in when right. is all the favor them Harris said, As we're

Operator

you. Thank

question Usdin from Our of Jefferies. line comes next Ken the of

open. Your line is

Ken Usdin

Paul, the the I to follow-up on just of restriking wanted loans. PPP

and yield, So only delta if of the there then need forgiveness to that coming, just five is -- you we didn't -- two have is it take instead to to years. schedule is amortization [XX] to [XXX] to the years the that have that out change was presuming it do if restrike

[XX] frame So that you what of can PPP the to saw in forgiveness fourth versus like just terms contribution you in looks get you the us before maybe in third? from help quarter that the

Paul Burdiss

million Yes. I'm fourth as to accounting. the have that. under on not quarter sure in X% reminder a the is, [XX] have of right, sort yield about and to what $XXX But you're a I'd little level over a GAAP

we in things we before into equal, And those the loan we actually current to So would the prepared our extent at basically life the for of $XXX loans that those pages, into I all But expect be said $XXX forgiveness. remarks, attached income. footnote don't I or their of are do experience as again, remember million forgiveness that the come in outlined lives, of going loan quarter other our which footnote loans. interest of And -- the one the to to yielding over to million remainder that revenue income slide I net deck, would of one. accelerate prepayments, capitalized fees that my there's

Ken Usdin

or that's all the that's the $XXX left, the that's -- the left, just that million -- all is So is we the just book? is if do that over the X.X% just

Paul Burdiss

purpose the to the sort the XXth of number, and X%. that's -- of costs of loan. is That's against net fees again, the capitalized a September that are is coupon augment And that

the way was to augment it was yield. the program So designed the designed

Ken Usdin

yield addition be in $XXX to the million? the would So

Paul Burdiss

in. Yes. X% The to amortize the would would million coupon addition that $XXX be in

Ken Usdin

one just for of for is other And that interesting lot CRE side. CRE question business on the guys long you growing a the and actually industry participants. And

Just you're have of, to that and terms projects you. banks? inside that seeing there getting is on you're any what you bit of in business wondering might if seeing reopened to little expect Thank continue. a Just quiet? Is are what that the back CRE it been color

Michael Morris

term. transactions. large but food arise collection few in It's acquisition and has We've for We're we just monitoring seen CRE loans other rates a CRE and the that positive out activity material have conversion. relative fairly consumer, to But groups a on seen quarters. multifamily. Collection A retail. lot at Industrial haven't challenge of rates finance. to been of we have not classes. retail the of that overall. the in problems C&I quite term occasional is asset been We're are loans performance actively the favor. in we several yet. CRE And up construction will today We're looking converted CRE seeing is different way industrial mostly the there's what originating have seen haven't been strong

In fact the are pausing of class. has in from hospitality notable. helpful? asset course, the most we're growth that classes seen there come being the on, some CRE of certain And probably we've industrial asset that Is that

Ken Usdin

Very much. much. Thank you very

James Abbott

If again. I'll -- from call. we five are the out James end the can Latif, announce this that minutes we just of about is

we're so and And going queue. to and if to shift so each we'll take next the what of eleventh over see one get through we can the round we Thanks. the just call question rest participants from of

Operator

Our Steven from line of comes question the Alexopoulos next of JPMorgan.

Your question please.

Steven Alexopoulos

resets for Paul. To loan follow-up questions the on on

from? For the are XXXX, the Thanks. these resetting loans loans resetting yield average what's in

Paul Burdiss

talking was I were you PPP. about thinking

talking loan actually our about You're yield…

Steven Alexopoulos

not Its Yes. PPP.

Paul Burdiss

loan have the me, have don't I front yield of I don't in series. time --

that think off to we I that have have top of my don't and I head. back get the you. go for

Operator

you. Thank

Vandervliet comes Our the from of of question Brock next UBS. line

is Your line open.

Brocker Vandervliet

good. speak, CETX, philosophically, of CECL, kind continuing climbed of all that's capital so with the terms capital, to to in we've Just build mountain, XX.X% looking

do metric. other the of whether or bogey where back side the CETX kind On some capital you of it's of level appropriate place the this,

Paul Burdiss

balance is entered got, hold was the managing at expected that that average, said sort capital that that our have above level kind concept at I that have on publish loss medians capital really But for capital. demonstrate heavily the models, to risk of of the lower year, also test why primary As we a say risk. to coming higher of we think on a creates level we a modestly we investors of for of we -- a of believe insight tried some we level that And generally good describe so into our peer sheet we can we've achieve if level in this lower The would to stress that really is XXXX. into capital, we outcome balance with or striving shareholders. before results mechanism into predicated which we're

I about than this I environment, know more was that's into our really changed lot how So feel uncertainty the but other environment. balance don't that coming uncertain sheet -- positioned a good there's

Operator

Demba question of next Securities. Jennifer comes Your from Tryst

Jennifer Demba

quarter? Can Are so you're you quarter the and basis? you just seeing monthly in what versus are the kind third and a I'm further quarter, seeing improvement talk to us sorry, far about fourth the you -- further mortgage of trajectory improvement on improvement seeing in on customer fees third

Scott McLean

well improvement we as card. and we as quarter see service a And charges did noted retail nice in the third in business as

and charges saw time a cards. And service rebound so the year-over-year industry. of bit the both retail significant business in decline has as and experienced a and pretty But for first we little in

terms in any that. we're here progressing And how encouraging. so color that's October, So it's too really on provide of far early in to

Operator

from comes of Erika of Najarian Bank America. question line next Our the of

Erika Najarian

were had And questions One the would some reset that question, to conversations in where the the to go back earlier just earnings really concerns with wanted do PPNR indicated of and that of call. with reporting stock that asked than investors to prior your to underperformance guess, credit. I rather margin the to I

quarter, think Paul, on math the the down go X.X% based fourth bit still. the and in change NIM Ken profile It ROAs then where interest indicated about environment. exchange Is to like, it rate obviously, major your it interest with for rates around seems repricing on Zion bottom the that mean, change any quick range. in could no change, XXXX there's normalized we As bottom you from without ROEs and and and NIM Usdin. just here? X.X%, ish in and a little X.X% does I And Does liquidity of the growth? doing

Paul Burdiss

that PPNR decent loan have for bottoms substantially about I Erika, what that some the The clearly, modestly we PPP and with we cushion compression here time a we've mitigant we that think pretty number. been obviously, otherwise can't growth And declining pretty sort a sheet of been the and And that. be specific, very couple out. as of we've grew result, have sort loans have I growth. will balance margin had might expecting been seen telegraphing first a through of But NIM where saw to quarters. be

is know, growth And So focused being to it's growth. end the day, balance so And you key extent us where with and possible. incumbent a interest as the on for us at the to the it's loan really offset sheet rate is upon environment conversation. difficult also that volume the of loan and growth

Harris Simmons

think and shot underlying a be and I another I phenomenon of us that's going that temporary prolong end and think impacted is a I for with might two and I mean, But there's of the around in PPPs more is for going very the that just could kind possibility of while. also the PPP But little at day add. to to you're this somewhat. that a booster smaller scale the real very real a pressure this sort provide of industries. see

Operator

time. Gentlemen, are remarks there this closing any at

James Abbott

much due end shortly to or call. that, have And months, are There two were get questions call Zions throughout this that left third interest queue. me, you. is look will have we're this for of at Web by you to thank attempt the Thank With in joining concludes your phone, Abbott, to three quarter our Thank in very And on coming with either the any of We James. you time constraints, outside e-mail in going site. if to that, with today. after or we you you, appreciate we to but all time, Latif. this at please listed you contact of our forward and call James earnings touch the additional my This call you Bancorporation. I the that connecting

Operator

this you and Thank concludes gentlemen, call. for participating. Ladies conference today's

now may disconnect. You

Zions Bancorporation, National Association (ZION) 19 Oct 202020 Q3 Earnings call transcript