ZION,ZIONP,ZIONO,ZIONL - Earnings call transcript Q2 2021 | Zions Bancorporation, National Association

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Zions Bancorporation's Second Quarter 2021 Earnings Results Webcast. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. I would now like to turn the conference over to your host, Mr. Investor of Director Abbott], Relations. [Paul

James Abbott

conference the much, Thank measures, this actual are I disclaimer slide but We would with statements the the materially. we equally A actually in our call, this the release use Abbott, differ like although call. to that will X, It's you the you release welcome second or copy again. this to during this earnings. to on review at dealing everyone. we deck very earnings deck will on statements, to thank evening, I as James Good forward-looking presentation be available press Slide results you discuss forward-looking you Christian. of may appreciate quarter which the and zionsbancorporation.com. as to encourage information well call remind during slide call of We you the XXXX it. made GAAP apply making the

Keith With Officer. Morris, Zions' Maio, on today For call Chairman one limit this and and from Officer, will providing to remarks, President provide Financial intend additional Executive our Paul our agenda will and detail Chief followed our hour. comments the our officer; us to our McLean, by also Burdiss, Risk financial We condition. Chief Credit Scott are Officer, today, Michael Operating Harris Chief opening Officer. by length conclude Simmons, Chief of Chief

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

Harris Simmons

joined this James, you who much, I'm to Slide X. our all of going very and to on start Thanks call evening. welcome have

results on to was encouraging, near resulting growth that the excluding plan net purchases increase with purchases, pace saw become quarter, quarter, linked-quarter amount we future. We in continue We and during loans We that securities of somewhat more charged-off And the that for are the on was Deposit double deposits. market increased of quality investments that to the credit prior essentially where more the loan the recoveries an growth was securities quarter. PPP despite pleased growth the We accelerated in loan total for the from roughly of particularly activity, term. prospects all the experienced front, optimistic coming assets. in our money about the the previously overall with really loans. of we've strong noninterest-bearing relative in portfolio growth

to streamline continue the flat. to We expense operational relatively organization, remain allowing

earnings public PPP non-PPP major Finally, loans X.X%, when the is loans, very in Diluted per allowance prior X.X% increased our with outperformance we declined to our the data platform. non-PPP in quality on $X.XX expectations Earnings having of new roughly relative of capital rolled categories, boosted risk strong ratios. encouraged The rather, in returns advancement boosted stability both per materially the Examining earnings bolstered interface, increased relative which than an confidence our were about ratios technology gain loss commercial We quarter. with the functionality out Reserve's mobile net now were prior pleased our particularly the substantial loans to improved are banking the which loans. increased More a commercial HX million line unrealized in investment banking, has are economic in and platform, share credit share digital consumer to with released loan during due $X.XX only for Those a outlook. the SBIC boosted quarter. which capital excluding our from Federal strong profile. by went quarter. our turn online relative from the in consumer credit -- also was $XXX of X our on that to

to real exercise types. continue caution We with commercial several other estate and loans property

category that increased such, As only X.X%.

billion], of of from about for the is residential of to increased rate equals priorities, the largest as affiliate which $X.X of deposits deposits months be made loans just the portfolio has held declined that total his one in Paul Period-end will accounted that the more at although managing prior progressed. which XX.X% X.X% addressing a beginning primarily that Since [$XX our Noninterest-bearing magnitude bank of in to of which equivalent up that increase. increased remarks. XX% mortgages, and have prior influx remarkable notable pandemic, or of quarter in pandemic. it's XX been Appropriately billion. than attrition our is the X% portfolio highest consumer deposits slowed Our the the quarter, deposits our

results, Going share be per right to items It Slide the X. with recent along that may earnings reflects some interest. on of notable

an current from gain in small quarter after-tax investment the the fund. in share recognized per $X.XX business noted, is previously investment company a As net

One companies fund, which within Pharmaceuticals, quarter described our in IPO in we an XX-Q. April, Recursion of first the the underwent

share Additionally, attributable release profitability I $X.XX. reserve The results strong balance the Slide previously was items of although shown very described. not On on X, to metrics. we the were sheet page, value the per highlight the that

illustrated highlight credit portfolio, as significant another on quality X. noted, quarter for the the of was the Slide loan previously As

nonperforming loans quarter. see prior in We and to net continue compared charge-offs when the improvements with

of quarter, net balance can compared not the charge-offs Although volatility the X%. from on the the of loans we special X loan points contrasted non-PPP in and bottom Shown XX% stability one of basis experienced mention charge-offs. basis declined Overall, the points classified of recoveries shown, provision see from net with the net of quarter declined loan the loans relative right, second on the declining chart the loan in first quarter. X

Turning to Slide X.

increased significantly the levels capital pandemic. Our during

most uncertain X buybacks to resumed maintaining stock first $XXX beginning the million in period the dividend. to during our from of $XX of in XX.X% while million of We increased stock. common equity cash quarter, the at increased the the share common tier the suspended quarter. pandemic buybacks Our We We capital second repurchases repurchasing XX% amount of pandemic. ratio our the

to premature it's capital be update McLean, time company today, our Scott? our going Scott President on and I'm management. Chief announce Operating you turn well over the now Although to and to more who's the to our the active in to is technology initiatives. program positioned PPP going Officer, anything

Scott McLean

everyone. and you, good Thank to Harris, evening

X. Turning to Slide

effects a loans, As the IPO. revenue adjusted second was Paycheck million pre-provision Protection This the discussing the PPP previously quarter. in Program, precursor or noted of $XXX our is of net net the to

loans. of portions. think of the we top the generally represents portion the The notice received what from denotes bar bar recurring You'll the that bar to is we've leading while as the income, X of PPP PPNR bottom portion

that resulted families. to PPP Of origination as course, as in will decline. outperform benefits loans this income Nevertheless, well of ability we source of significant to of our by has individuals a recognize our from the industry Xx hundreds factor communities and of thousands

the our and in have course, ultimately will the PPNR during capital earnings far, be Of profitability equaled time. million income produce program million remains that pandemic program bolstered that so over benefits from $XXX has there and PPP $XXX shareholders. from capitalized the realized our

of were XX, tenth the the in loans in that and both X making to we highlights of challenge a PPP volume during overall our performance, origination energized Zions these rank combining rise Slides years' communities to our to pandemic. when difference colleagues Turning oversized noting results.

Regarding the end. on well $X.X sheet billion of with quarter forgiveness, by at balance we're process into of $X.X and loans billion applications That billion $X our the received leaves approved SBA. PPP

leading billion to $X.X in additional over an quarter, the the a loans. was second yield moderate the a SBA, increase increase moderate During quarter's forgiven prior the rate, of by PPP the

this longer-term to lasting noted Turning Slide positive earnings slide the reflects the benefit. Having a moment XX. impact ago,

to the result growing contributed you More round These all have efforts, is over specifically, XX,XXX of a also laser one now collectively XX,XXX nicely see percentage bankers PPP quarter. their the each of as growing our deposit that our customers during for us focus relationships growth the pandemic. with recipients. significantly accounts, be new-to-bank appear of to a Specifically, utilizing operating customers, XX% calling

Slide XX. to Turning

do you remote deposit for of pioneered are than relationship-oriented to decades, a and went provide followed customers. competitive active was quite size progress online For our very roll this and to mobile by year, XXXX, as least bank Zions our Many will by given you'll of and I at technology our to the to an of Congress the committed us we which this required enabling XXX,XXX have and implementation to to customers, to that know continue you faster for do on on and well early rolled us consumers, to time, more a our it. banking system mobile we multiphase a By more business be In complementing complete the call received made literally online with simply X customers. capabilities, system. capabilities front. we customers additional handful which us followed advantage capture, of ago, transition those new through who the long believe XXX,XXX same, to years out have Today, This enable we the we the to expect core well service XXXX, encouraged modern our business out technology.

one loans loan completed core of our XXXX, on data we virtually of our now core and February of As you'll modern have systems, replacement model. X that utilizing recall the all our

on this all very industry that of While infrastructure. a competitive core will unlike to that system U.S. aging operating we reduces details simply, modern advantage, we other provide more means banks, the will complexity have continue legacy this greatly

one know. be we the architecture degrees is data resiliency and It a highlight agile in and of world. successful in create to It API-enabled, cyber digital just the is me future. products key capabilities far includes let things Specifically, a more capable core compatible, operates that really will new as real-time, model, This X-day to of being processing. you with need parameter-driven, few higher cloud

how adapts international standard, to it So attribute dramatically and capability when improve U.S. its we data. the market and protect utilize customer will

our opening Additionally, customer as branches we far at online well more employees. account being and user-friendly our as unified the process for

detail for been transformation company catalyst As you Chief on office throughout sets as our additional now over I'll and office journey the know, processes. further the the we to Officer, the and -- investment up to front between in core back condition. modernization us this and the front systems back our turn our optimize and Paul? and Paul financial interface provide Burdiss, simplification Financial time to automate has

Paul Burdiss

interest evening, Scott, net and good influenced everyone. and deposit More balances significantly of our revenue growth. three-quarters Thank than is income, which and is you, loan by

my begin Slide XX those on review such, As with categories. comments of I'll X a

when see slight to by starting our we equity were average compared down owner-occupied, are to the in second and improvement While card loans home quarter nearly the our first bank in portfolios. quarter, X% C&I,

were and down loans average X% from loans, the year quarter prior Excluding billion from or the $X.X approximately PPP X% prior down period.

earlier, noted Harris period-end flat repeating, As were excluding the and loans, PPP it's first loans, worth quarter. from essentially

portfolio, non-PPP less commercial loan or the down loans X% $XXX million period-end from commercial quarter, loans were while Within the average nearly X%. prior increased than

about We period-end and the quarter, totaling $X.X from compared to a category, we revolving XX%. of to real the the compared final commercial has loans balance line amount declined we PPP land months. in nearly the XX% credit the utilization in card. quarter consumer loan prior quarter. explains billion we first revolving loans construction attrition decreased term activity, non-PPP quarter basis continued over saw several The loans estate and million when After real the points than note average difference the Within about to percentage utilization of growth decline and X% when quarter on the compared see the portfolio quarter. forgiveness of XX in the loans due the about declined quarter. the decline slight that the growth. the on the quarter PPP compared in refinancing last by when of prior in rate in in Relative each decline increased as and consumer the utilization, from commercial to prior quarter. $X.X And quarter. uptick continue the to CRE the to X.X% portfolio, or periods during commercial development last all mortgages been real see estate progressed. paydowns down prior total billion declined less X.X% X%. home to X slowed several to a loan driver of although Unlike equity, upon sheet category, quarters. of in Based pandemic, the residential second did prior the construction or several second X.X% and One a relative loan have X.X% Average quarters in process commitments, in past to of quarter, Deposits balances growth other loan categories: bank the balance prior estate saw were $XXX Overall, grew to the

On this page, over deposits to period-end deposits the while the period. quarter, and increased quarter X.X% X% XX% average Relative noninterest-bearing right the side average year to prior compared year Average ago the of prior period, the increased increased increased from deposits deposits prior X%. XX%.

Our X.XX% average reached portfolio. to average noninterest-bearing XX%. XX% on deposits slightly prior are end from period PPP they the and total now total is increased attributable of average loans quarter, on had loan on the The the which deposits yield yield at

to of some are to continue declined the loans, most the surplus points basis our low. in yield believe, the we pricing we marketplace. PPP markets, Deposit liquidity to Excluding from as on pressure costs in X.XX% attributable, X see X.XX%

period-end total On we of the our which market portfolios is by and billion, cost while $XX $XX to billion X securities in about quarters. over second increased XX, XX% points investment of past portfolio billion, X money Slide money billion fell of year to $XX.X basis increased deposits The now the to earning Our market over securities investments the size the show last quarter. assets. $X

the earlier, average noted under second we growth portfolio. the accelerated the to available-for-sale $X.X in billion Harris securities portfolio quarter, As just adding of the on

the keeping in relatively an exercise to eye purchasing on shock regarding with and continue maturities duration by final We duration scenario. an extension upward caution risk bonds short

estimate an chart net in interest fact, of is a net The extend book by year duration and less the basis securities interest than overview on XXX would income In the we available-for-sale net has point exceeded upward year, boxes left that parallel X.X margin. Slide our interest the the a white recent of average reflecting has X-quarter loan XX past in by growth growth Average in the both. year. billion shows over excess for liquidity. The rise the over past the the trend $XX margin declined shock. deposit

quarter, composition a dilutive basis impacted the second securities a excess with compression, points of linked of this of current lower-yielding the interest impacted the concentration money the market market quarter, rate chart referenced deposits cost lower drove and securities right, interest-bearing the in the in the in effects interest greater the For investments. as through earning on sensitivity. a money quarter strong composition XX from in growth investments by has growth being larger deposits. from liquidity effect is net concentration In of of has margin X shows offset the our slightly Slide information about assets

growth the sensitivity demand on quadrant, in left-hand is noninterest-bearing increase short-term upper funding investments. increased asset has Focusing our deposit as an

adding recent still We risk are and asset duration lower rate we the limited. the interest uncertain with relative the to profile. rate generally in comfortable rates sensitivity increase is because is duration The risk of growth believe to remains deposit

marginally $X.X are yield the Notably, XX, $XXX activity quarter and card customer-related merchant fees income to fee prior due services increased increased the to of size interest Slide the On and of quarter billion an rate of The did investment securities XX% activity-based purchases duration swaps we well. had spending. over by previously customer such mentioned, increased for we portfolio. X.XX%. fees adding average X% the quarter the Card securities and in As million. as increasing

activity non-PPP or $XXX the primarily The lower wealth to was markets from was noninterest noninterest management associated X% loan strong syndication services lower for chart from end million ACL. we fees in the details second shown or million decline Slide the noninterest to principally at million. the Slide $XXX The driven the prior and Adjusted seasonal with professional compensation to in and down when with expense declining decrease stronger, and quarter or on Noninterest was quarter million by that trend million $XXX quarter. expense loan page benefits down capital their was Additionally, right second compared associated XX in maintained success an adjusted year. lower IPO. prior the excludes to In losses, the of compared million pace improvement the the in left, the of our of expense show fees on employee fee this $XXX of $XX was expense also the in forecast. PPP forgiveness. macroeconomic X% expense $X allowance X.XX% loans. to Pharmaceuticals recent upper million the ACL shows Recursion Adjusted XX accrual $XXX the ACL the credit

updated Our on Slide found outlook XX. be can

statements of reference for quarters Slide earlier performance compared loan subject this reminder, our the quarter financial approving the as normal growth The comments X. of a uncertainty my SBA to quarter As and degree second our between to the loans. XXXX to our to timing Due the requests, the of the are in and are submitting requests of and second seasonality, for customers outlook is on in PPP excludes forward-looking to those subject outlook XXXX.

the and bankers loan we green commercial our of starting are shoots loan growth. expressing see On front, are optimism to just

loan also increasing However, activity relatively as sale activity. strong leading increased is valuations payoff business are to

by curve loan we consumer slightly are long to we growth and moderately real outlook the such, jumbo than adjustable increasing mortgages as grow mortgages. it lot not were again, now expecting optimistic more are slow our as are mortgages in a appealing are about dominated somewhat more from we XX-year Putting increasing. conforming to are And commercial slightly remains all growth to We yield likely and together, estate. April. modestly increasing flat as of And be to in loans, the

year. revenue, to loan increase income, We expect net the PPP moderately next interest excluding also over

and of offset continued be cash We somewhat for outlook favorable the and reiterate securities compression growth yields securities moderately a increasing. slight loans. for more fees of into expect by which to continued We non-PPP deployment customer-related our result term will loan outlook be in of this at more than

improvement to loan activity, started an economic card lending-related and increases and see in small fees. other commercial in well have We syndication as translating business-related fees to as

activity may growth reflect business significant not its million does as noninterest expect We over past expect increase the but expenses $XXX the in from that we've the April an expense should And will quarter believe control, continue just our and we inflation wealth noninterest We Adjusted of double-digit to the outlook. observed trend prior increasingly and our improved second expense from slightly disclaimer a quarter stable. the this on risk banking disciplined and that by management will quarter. from Reiterating outlook we from revenue call, in mortgage increases, generally profitability ended. my which revenue reported is XXXX expense remain change several increase. years, important what emerging remain

capital excellent have a testing. stress echoing regarding particularly and strong equity common ratio comments, X Harris' of XX.X%, credit the now we internal Finally, very our of results the in context performance management, at tier

risk the ratios you consider the credit trends would between for open capital favorable. Christian, management current we room the continue with capital we line for and believe in to questions? As our active the balance macroeconomic This concludes more remarks. term along there medium and is near profile, our prepared to be please

Operator

Instructions]. [Operator

Zerbe is first Your Ken Stanley. from question from Morgan

Kenneth Zerbe

security to of going forward. starting continue off you plan I you elevated know terms guess of I just obviously this stepped at up investments. sort quarter security said and maybe pace this investments in you the

Or with falling around know side, kind the talk on yields you I you're just in I'm I securities yield Now, like that XX-year in on of your you yielding X.X% worry what investments you're of buying where in in could obviously like the that the treasury you what purchase was today what talk kind yield. are treasury. the just investing versus you But are you can also -- XQ? are average don't they about -- that guess, today? Can invest saying,

Paul Burdiss

I'll start on that.

don't there's said. as in the fall. been You're you rally the XX-year, invest in We've rates mean, seen right. obviously, I XX-year. We big a

bucket. -- as & is to investing we've say the Committee duration sort of put around of generally Our Liability we will And to swaps well. kind Asset that's there I on ALCO, in X- the been be tries X-year thoughtful securities our we that in somewhat where timing. Management

X So it's per automated or dollars per program day we're where not an like buying we've million got week.

dramatically us in so in to falling the the think I up down yields, that see kind able face quarter. And of the with that on you'll make we'll later of hopes slow be

Kenneth Zerbe

it. Got

Okay.

don't loan stance as moderately investing helps in think Is a guess, bit. you're that it on your yields seems in your, is I securities I of, little here -- income up on you're related in just the change increasing something things a your guidance Maybe Or driven in because like follow-up. from like interest to it by change in guidance. be net most of that because positive I going securities? more outlook Obviously, sort is because your change investing or going for know, else? becoming

Paul Burdiss

a Yes. that. -- a again, lot There's into I'll that. start lot There's on mixed

have integrate is were that feels as this make little what we result, bank the ago. would sticky that can year like as as As depositors say, of sheet how we're are complicated confidence more that, a coming and speculated up a of how of yes, is on it more ago, go a with confident balance those. I all in stickiness trying did year along that permanent showing that But means new would really we that of I you them sheet in cash. than relationships that the them of Scott little job into and possible. the a are And all a the sheet explaining nice our thing. a observing, deposits know, the is a gaining sort the one versus and pretty is are investing to balance particularly And the growth be things of balance

in things improving. said, can other generally is But it. year. in loan some footprint our optimism which it's growth, next part speaking, that's lot of feels like are shoots green So to the is, the change But the there really I as highly a speculative of and

element a in balance of of And little as an outlook growth bit kind core of that sheet well. so there's

Operator

Point. Dave Your next question Compass is from from Rochester

David Rochester

I loan Just cash how to growth what's curious not continue to is on purchases to see It growth. shoots your side. was securities going the that securities, just NII some green driven guide you're allocate moderate sounds asking? to fall starting be versus by on loan what guidance. growth like much to to the risk that sit decide here rates If you or is basically I'm further, NII of

Paul Burdiss

Dave, I'll that. on start

is dependent. You're a right. It little rate maybe

so we got of in And But rate. things our over I lot say, we've a as prepared the there's we overnight said that in can billion $XX change that's my -- I remarks, the think as outlook. basically got cash -- earning

And lot we've invest. so And as we're said, a to to keeping duration short. capacity of I pretty got continue

And basis more it's basis points or so X might if XX be years. we than go XX but out yield not to fantastic, X or points the

there this of with of where So to think are of is about sort and stand now. trying attached a on we're trying we it, see to year is be There we to that. outlook be attached we're X-quarter how growth some it. rate from on things estimate and based risk risk where to provide to loan really we thoughtful is do based going What what our we best

David Rochester

Maybe that. Appreciate side. on just follow-up Okay. one capital quick the

cite for you like curious curious peer where in time, now? ratio with targeted got you've got get already. wondering actually a to to target? just the ratios off quickly going It how that of -- And were just you spoke some capital over you I'm all reduce quickly support capacity into roughly you're you'll just was it your that accelerate guys of do see to seems terms And like how the seems of kinds think capital to know decline you guys growth, this back there? to year. your CETX there but targeted could buyback to You lot I buybacks. going loan half new

Paul Burdiss

will I'll perspective on as and his Well, start well. that, Harris provide

of our better We time to median capital than goal. that have than lower we and continues sort profile. a a for have median expect been some position that risk slightly slightly to a be And saying

approval. And and be point the of that's you is to that going extent speed capital business ratios going folks which so and to I Board economy and that -- reemerges out, other adjust, subject adjust to although ours back kind the at the as to would to to expect accordingly, we the do get be

Harris Simmons

expect off I'd that. I of right involved to in now, downward, race that other thing I One it as all that I adjust expect a carefully. got these area of fact despite the that today. and adjusts, would we're we world whole the world I seeing low think really we're lot to we're as happening going be think think in I run moment. losses to this real look things, a not be at kind risk we've of that's the with I others room of that at in a involved quite what's I in I targets be the is, a the going Commercial leases an as emerging I note ratios. we're watching to terms Among there's world. in race bottom but to estate, I continue agree think mean, going how also is think, don't to think can lot that not But take

be little So to but -- indeed on we're of I that. and be going conservative a there is a amount working to bit want today, expect relative and that will we're room the fair to going I to there mean be crowd,

Operator

from from of is Bank Ebrahim next America. question Your Poonawala

Ebrahim Poonawala

one growth. first guess on I loan just question

flat well You've from as balances guys peers growth. heard around you your green shoots quarter-over-quarter. on Obviously, had loan

seen in what trend that could some this you've back gives of numbers would recently growth color And some us means? give put half optimism the Just you slight modest terms that loan what appreciate is you for if sustainable? around

Scott McLean

to that. happy Scott is take McLean. This I'm

the of a the the Even peers things half second is reach increases. to though we One need start flat you in before lot quarters project last of of quarters said is declining, when couple our you portfolio first increases your the year. project of couple throughout of can to a

I same a with to we experiencing in flattening. think in think that move client that declines, We're us not that start we've pleased quarter, We're here all from can of we're seen second and optimism that the our I growth. bases. the activity greater just more seeing gives clearly

positions. will And the lean as of medium-sized rebuild as into pressures, in heavily that are and drive seeing hard loan growth increasing. their their back businesses working collectively with They businesses be inflationary will receivables. our you're on their think and pulled the again inventory sales capital just investment certainly all biggest things rebuilding pressures, inventory small- really One supply I chain

utilization, should so in And noted. historically we to levels additional utilization lead are this as low -- Paul levels at historic which -- some increase

on actively The there. here other are our late we think thing the structure, very spring the summer with our is primary we fall I owner-occupied demand the because financings directly aimed of months would and lot throughout at months comment and and positioning products financings base, client potential and are right HELOC those a there's that X

Paul Burdiss

portfolios, footnote us. important add produce we're I’d in And some teaser growth some just reasonably which of pricing. rate aggressive just is using to portfolios for What introductory that. of really to those couple a are kind should -- that

impact. the the cash very So are term, a rates But it the be at will kidding may getting volume will short by impact rate the than we're Fed. rates better some offset of in the on the lot be

Ebrahim Poonawala

Are easing supply that things and update that, your and growth of a other liquidity the just customer customers we Got chain loan inventories. they liquidity easing? some those could of X stands seeing on constraints we've as constraints? are supply with Like on are an impact heard you give it. if from And chain either where banks, sharing to like based follow-up

Scott McLean

Yes.

throughout just lot of a have the minds Our it owners. most business and about economy. no concerns steady, liquidity. supply base for reflected low They softening customer are as not about chain in banks the rates. the They're is or inflation. building concerns terms of remaining utilization if of certainly real. there the concerns Those It's But in is in

Operator

from Your Usdin next question Jefferies. from is Ken

Ken Usdin

Phase III. putting and forward control systems I the see to to of continuing expenses, Nice ongoing core the towards heard and heading --

we with hopefully, legs we deal expenses current closer kind over the this are to until where still underneath point build-out that productivity on move start Future of might any of really and environment turning COVID we seeing you see to the the you the where net the of last benefit? more to a we little get of bit Or have As start going kind surface to to then that Core, of past enhancement? spend

Scott McLean

Yes, I'll... it's Scott.

Harris Simmons

Okay. Yes. Excellent.

Scott McLean

million be when actually with to built related quickly we happy see our softening. year core And next little go up drop year live address increase year, our over Yes, then forecast. a a a of to million But on last or only project our bit we'll application, see We'll into that. this $X off. about to $X expenses future by some XXXX, nice pretty where followed in our bump that's see we'll a deposit for slight

is technology increase XX% major that an the pulls all, falloff future it So should then a manageable in there's XXXX. you production, lot related that cost about in expenses a system specifically in when following And to in And 'XX core there's a year. all expenses only be reason year. forward related of into in put and the very that in

in the for technology of has in something room, be core which the very spend in a kind will high. then front So them 'XX. its technologies? how industry be new question those X-year of in for have And we a dollars always to but is passed not demand we'll system, increase entirety do certainly to sure now is, be all just divert of But technologies, other probably to divert of we elephant available rest paying it. the technology continue will there'll to other the the the I'm completely

Ken Usdin

Paul. And one follow-up,

rate mentioned of -- or burden flow with an having strategy? amidst there's -- out Has lower the sensitivity volatility even of of regards to anything terminated of schedule the kind between ebb do that hedging that? kind now? have but your deposits, And You bring kind and we're rates. play this the current to on Or near-term forward any according you have then have it just to we your changed you of added you noninterest-bearing let moving you to just any

Paul Burdiss

-- question. terminated we Yes. haven't thanks Well, yet. Yes. anything your for The

past, as know. that you in have We done the

be attention We haven't But it's done given paying to. we'll rally, something that. certainly the

we securities In terms of I portfolio. significantly pretty adding, as noted, added, the think, I

of that the course over We several been dollars. growing last by year billion have

a think grow rate in both It's curve think we're kind products comfortable now. I of yield swaps. being growth and attention our investment deposit to little level attention got is with. which backed lot starting kind to off you about really by pretty last of that of of we those forward paying managing But then point and We away a And that notional as that. interest portfolio to certainly of that swaps going a the we're are These are the out billion great is demand we're sensitivity the deposit in continue to driven paying position, particularly correctly from duration also adding on to growth. $X.X put more of value quarter. swaps swaps we

Operator

from Your ISI. Pancari Evercore from next question is John

John Pancari

of I Just in second expectation XX slightly months. terms And heard your next noting some the balances that the on you growth, to you quarter. get over in flattening the moderately in increasing saw I for loan

resume? terms loaded and in strengthening that's back-end about think Or see you still Just of that terms is outlook? it kind we of expect loan on steady quarter some next should we you XX-month that in something growth inflection Are next growth a how implying is should that point? when from your of

Paul Burdiss

do is -- try our out. John, one. could hard that to outlook, really quarters to start we I we why If we as sort know, you sort of X on not quarter-by-quarter which of don't make

of of want sort don't a good. That saw get good. timing. balances so said, flattening But And an as precise saw I uptick felt We to end this overly period we utilization. pretty on pretty quarter. felt we That in

affirming as trying the in So what's right? stay where quarter. some focused speculate happen going third from we would on going to year But on to be I opposed to to evidence, we're now need a more

John Pancari

efficiency there? expectations. your long-term see expense running into updated because separately, do thoughts I you're know your you Okay. an of us bank in the That's give project helpful. then completion Where can question. look this for have And us the then One, ratio on dovetails you you you the if out? the longer-term the XXXX, XXXX -- around timing the I on in guess, And complete that expect X give do quick quarter. as know in your just update trend things on core to I do X-part XX when you level? Can obviously the terms of just you range expense front, this

Scott McLean

This is Scott.

what and the Let on transformation of million would was about in longer-term talking point put XXXX. a Future they our it But finer that Paul Core, to that efficiency a expense -- if be Harris a range point of $XX put will ball me I I'll kind this the talk want core core finer ratio. I or they're said there and for project, than elliptically on XXXX, was expenses XXXX, about our then less toss basically be transformation in little and in thought. it to basically a

it will then terms when $X we the in go following in And of number, by drop that $X that P&L XXXX about up online. around And So in million, million. the the impact. bring system year, will XXs into low number

clear kind of take deposit get we will It's big swings second but of swings, about. do of XXXX, And past the we're onto conversion the we to should the they So system. the year. place 'XX, dramatic timing it's free all and our we multiple we in But of the not time half dollars be XXXX. those conversions, get by be talking not affiliates once are one up should They're throughout segueing. the we terms it as big in bring

Harris Simmons

longer-term XX over of I'd got couple the to to year hundred the tell so we've for X margin of you current basis say remains I efficiency ratio ratios, a the rate me And to a like. very had picture time. that million months a efficiency that months, dollars period points worth then just environment looks think M&A is And us. with what respect changes of seen of rate X terms environment, long last what in in the

mean kind probably under I I also tough a with XXs. some I I we're of be in and to in some is think with we're be an it it's it am pressures. we're low XXs. inflation mean not -- transitory. I movement, just gets seeing seeing to we're ratio. of that this low going hope belief it personally wage terms But efficiency

got now. fill interview competitive and a an mean I in go hired positions. right XX% call to I to about was And we're for morning like a a pay stuff trying an up that heard without in that market we're on. seeing employee starting this -- it's -- So really labor increase

think environment what margins, going last I that's in personally think mind, higher lead rate to see to But low we're to so of tough. I of we'd long see to that kind normal dependent of in rate to I be back a a my of is going environment, it the a inflation that sustained that doesn't, I XXs it's it's probably be time. period going mid- kinds think we're ourselves to it's, it. just see If does, going better with the rates say. I -- it's we'll this going think in down environment. It's But unlikely on problems But I to other the -- along it if sort to sustained produce into and think XXs. for rate hard very more produce a

Operator

question next Peter Winter from Wedbush Your from Securities. is

Peter Winter

normal look net next year, all a Great. quality, group. cycle the and I done? peer probably the best with wanted derisking charge-offs to have some is through you in as you talk But which about out is the it's for guys new the that what of credit excellent,

Harris Simmons

know this be And of it's But something expect will seen net I And probably down that do exactly we've we're charge-offs hard expect -- that. -- of our forever. do in take years, top is terms or of -- a sheet. stab that had I I'll to and reflects we've balance probably with at want we've that no would kind to kind best in the say charge-offs. the I quartile it. point kind we're be that, of to is in Well, industry basis more I where aspiration that of the in can't X the sort mean what the you best basis last range I although sure done be would before, going point, you tried X to in the XX XX we've mean, or normal to of number be What to the is or because not is, periods kind what case. I'm recoveries. that like

Peter Winter

Got it. to follow-up then that. That's a just helpful. And

allowance January think to confidence the day X, and the go in to credit X.XX% for X.XX%, but given the losses CECL X just was below look And losses the dropped more the economic that that it I outlook I think about credit credit the for allowance profile, Just ex-PPP. to risk level? could do you changes

Harris Simmons

Let's see. do you thoughts I about have any like Paul, that? look you're...

Paul Burdiss

quarter based it another largely this that build was quickly have a economic economic is the economic credit And I'll portfolio the Yes. losses improving you've main complicated then that. release every that we is This what start and risk on in we -- The kind heavily was with and outlook. the of that and got of outlook. And the is a size quarter. very a for then so CECL, the Paul. dependent the -- under allowance X to underlying on factors saw -- outlook

the probably end the we go There there. speculative, the we you're So bottom assess And But it. we I don't quarter-to-quarter, is, loan from know and to really don't sort of that because that quarter, into we from from say get so until know. lower even then answer lot up I or the be by assumptions what a it is the could just would are think, that a weak many very, it's go to risk relative of very the here know just loan at get looking answer allowance up. we we honest for.

Operator

Chris question next KBW. McGratty from from is Your

Christopher McGratty

the want a talk But comments to the over I to the confidence a of that looking some elaborate peers not the the about you before sheet. specific about that wonder size deposits build burn down in transitory to time. of in the deposits. confidence may comment I or balance go few your sheet ago. of the comments year just degree some of about of if the a may call earlier versus on for back to heard could We've your balance

Paul Burdiss

a Yes. say there our relative say -- of a deposit growth like would looks there. is pretty deposit I'll growth That The little couple our start. feels are average to things to deposit One, it I good. growth is stronger.

Some We of from that's a part were of But it LCR is analytics. lot from of world customers, CCAR the a new and customers. some for do we of the existing while. sort of

And so the business the we things run that and still we all developed, of utilize those to run bank.

what way deposit more really our customers into what using new an seeing are And the nature and so And operating existing And is operating liquidity that their that is way. operating sticky. accounts customer means accounts their their just part on was building an feel are of stress of customers they of insights testing good in accounts. that in development use and continuing we're are

great up learned originally on to cash good it's than we a generated a ended story the the I because a of into they I way sort business. program the and what when those deposits than balance were reminder, of money And been In business a in relatively So a are And more drawn as that and of much out bank. account really them our the be they flows over really credit frankly, in our on here spent. found a that. a year them we time, utilized sheet, deposit customers sheet. was later gave year credit right? that result, PPP those higher they've funds PPP of expected resilient on also for. guessed And put a that would that their been amount as all to But are had is that's speculating through far our as I expected largely that because liquidity did would on run balance time, all are kind I deposits were I of this have ago fundings balance to staying We occur story their be short

So than that real some longer it's and thought. to deposits, more deposits we that at the a with of time are saying looking are long that sort of on we and going experience the gaining -- those statistics over originally way underlying of be analytics around confidence operating sort are just

Christopher McGratty

future? tax good the on housekeeping in tax Is this forward one rate. rate the just Maybe going a

Paul Burdiss

on good change, Well, law, think current say. know. that we're but Based shape, I the as that's highly speculative, pretty you I in could would

James Abbott

just just this announce minutes is that to call. Christian, the we for I again. James few got left wanted a

going as we gears lightning we're round switch the So it. into to call

at questioner So to this go point. question we'll just from one each

Operator

is Tenner Davidson. question D.A. next Your from Gary from

Gary Tenner

delevered be cash the curious from cash are draw had an would with show increase that I to just for quarter, as if fund starting suppose your flow? exploration regard this isn't it down further in of the I'm I purpose strong a really borrowers which itself, But energy they at among out point that lines all, at would is how that expectation that perspective and on so they've question portfolio, decline the they E&P maybe to surprised. it more flows actually prices or would whether this commodity

Scott McLean

see but -- of balance, the will increasing. We -- there. entire be that funded -- but the most back utilization. PPP it strengthening see helped drilling funded them sector. for This prices And has do think And see cash McLean be our excluding the commodity companies, loans, basically question. the some energy of flow, is you that Scott you Clearly, basically, by into you Thank going field, Yes. upstream partially growth will again. And in are we'll flat. also

but also So cash utilization. by the partially flow,

the the be have to banks that used lending the About So in half exited. energy debt, fundamentally. industry

see We're basically cash will improving and to should obviously time they'll we'll of. upstream it flow out over quality But continue that and Credit seeing that. see that I fund for think be balances -- revolvers revolving been So companies. bank increases you'll as well. has in

Operator

Milsaps is Brad Piper Your from Sandler. next from question

Bradley Milsaps

are question more loan mentioned of guys concerns of months? looking we that Harris You kind at over you there holistically, maybe CRE, rates you less some others? guys other are other there around addressed loan HELOC, emphasizing on the Are energy. are around you than bullish mentioned areas or just the municipal deemphasizing on guidance kind book next maybe past. portfolio that teaser maybe areas the But or some my as your contemplate growth more XX in the of more

Harris Simmons

modestly. I guess talked X more to and that's seeing grow The environment little thing about and bit. a I slowed competitive mean, we're little bit probably there, very, a a but out CRE, municipal probably expect us continues I very that portfolio, down I

see growing we'll I think with but a probably will that's slower what so, a been growth pace. And that, happens be driver, at which

before. I estate owner-occupied that commercial we're real likely promoting, that something I to It's think decent growth. is some see really as mentioned And...

Scott McLean

These sheet balance mortgages declined. don't that mortgages. see next just might I has before for if X X It that, line and jump loan will come great think I we'll us, held we've again, change, back seen X- a add originating or it have family. X growth to flattens on last or XX% you'll product look you to to back our to there that or quarter may it's business. where quarter turn. this starting mix I basically And over the if X-family It's see starts investment. another flatten more see years, just a but be to are quarter, to of multi-quarters our from And know X -- for X great a again. growth we're

Harris Simmons

Yes.

as So those generally just going say was fundamentally C&I are, just I commercial to more companies.

back as think a inventory to building be lot kind normal pointed something there I of and of and in some to think that opportunities I out for that's companies getting loan going demand. are aptly to to Scott result closer

Operator

is Long Your James. from Raymond next from David question

David Long

to you be As But try growth that in it do? growth. to some more help loan you external is anything Anything loan shoots. internally loan there Zions several discussed up? for try adjust get underwriting, C&I there relates your seeing pick aggressive do may help on to you factors Just can green to growth, an that Is to C&I to reaccelerate itself can opportunity price? that

Harris Simmons

fact low-cost is mean, that I to introductory reasonably kind we're trying of mentioned, aggressive as some a really have yes, Well, lot rates. the money. we take using of very very, of We're advantage

rate will and build year. a a get And getting start business a priced balances than so we're that give real income really of on build trying book up to of cash. earlier to normally than at pick lower we'll as we even that out we're be more introductory But a us

So underwriting. probably aggressively put thing the seeing We're relaxing think don't main But some reasonably we're remain needs to the really opportunities that near term. that's we we that, doing. not -- to I in more -- are try price to constant.

Scott McLean

are time I it the about growth. sauce your physically -- our the you of office add, that bankers analyst fundamentally more an it the just their doing on calling doing loan report. day, always at drives in virtually. much can't They're secret And would write really spend out what end calling. that's clients But been they're it They've is of of bankers too, and out the amount out now.

Michael Morris

we've our This COVID its might kind from underwriting. is now Michael. something that temporary add that like more pre-COVID I around guidance underwriting peak of looks reduced to -- our at

risk. underwrite So back to view pre-COVID new to we're of of a kind how

Operator

is from from question Steve Moss next B. Your Riley.

Steve Moss

sheet mid-X% the the go willing side. to guys? with leverage went here, Kind to low ratio to of on with potentially on as that balance be grow range you you how Just low and you're are management quarter, to obviously, buybacks, this capital be the to acceptable down to ratio continue curious with seeking

Paul Burdiss

question leverage on the ratio? was Sorry, the

Steve Moss

Would you like to mid-X% range? below to Yes. go down

Paul Burdiss

Yes.

And answer the question. to upon we're than it's of So is answer I'm risk complicated more the bit that that's nature a assets going give the that dependent on. putting your the of little an

got hold little which That's the risk now, the think lot we've investments, And I true ratio. risk-adjusted loans, philosophy result, a as no ratios, capital So credit it's around of little capitalization that having as is have which true balance to in overnight sheet. a of no see to for and PPP have example, the with to basically lot and a risk. for for the that's our we right leverage risk credit commensurate we

being -- we're leverage think there's here. So organizationally, I incremental long down risk of not a don't added, bit little don't lot concerned as ticking a think I ratio from with overly the

Harris Simmons

us. do worry we become before about constraint binding for to We'll think that's a other Yes. things I likely that. don't

Operator

from last JPMorgan. is Alexopoulos Your question Steven from

Steven Alexopoulos

not? I'm attention impact yet, just the in variant relates reserve? the for starting establish is is curious, used as impact to customers any it to relates to your confidence Are COVID, having to of or Michael, it maybe from quarter the embedded they to right? potential Delta Delta And levels you pay as commercial this this your economic that reserve, outlook the on

Harris Simmons

go Maybe Yes, take ahead, Michael. you this.

Michael Morris

was little Delta our variant. discussion the Yes, to community. might impact be say, have just I to about borrowing going did a understand it But a too early we to the

end qualitative area in would QX the discussion We will a about in the probably ACL. it. have It up of

Harris Simmons

it's the just or not XX% I rates part yet any peak. would our can I'm very that say, something And customers' were Delta Yes. of about I variant. on Infection at are where about still discern think today sure real they we concern the

people population customers' cetera, our -- confidence a need be everybody start to I commercial kind in I this it's our signs hope ball. the pick as slowing to don't that of to think understand of it's think to is starts boosters, big at think get showing to the et what inducement then it's of But of for down playing we moment I any recovery. hope. And as vaccinated, do I got in has younger So you terms it vaccinated with to going create real that a portion up,

Operator

showing question would further Mr. closing. I'm to to for the this at no like back time. James I turn Abbott call

James Abbott

thank Christian, for to joining you today. and us all you, Thank of you

you on for your you thank Zions our have This additional to months. please interest e-mail by call. or me And in at at with our If concludes phone again, throughout you listed website. coming any connecting my Bancorporation. forward contact questions, Look -- e-mail the

Operator

and Ladies day. gentlemen, have you today's wonderful Thank participation, for concludes this your conference a call. and

Zions Bancorporation, National Association (ZION) 20 Jul 212021 Q2 Earnings call transcript