ZION - Earnings call transcript Q3 2021 | Zions Bancorporation, National Association

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Zions Bancorporation's Third Quarter 2021 Earnings Results Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be question-and-answer session [Operator Instructions]. I would now like to turn the conference over to your host, Mr. James Abbott.

begin. may You

James Abbott

equally release this information to and We today’s on Twanda quarter Slide everyone. welcome results measures, that We with I forward-looking and the forward-looking be call. presentation of Thank deck although, which made A you statements, disclaimer the call good to to at to X actual during you the as remind conference like differ third we discuss you statements will slide would making deck apply in during this earnings zionsbancorporation.com. materially. or the you, may are available the to evening well call, GAAP the press encourage our slide of earnings. copy dealing as XXXX release review

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

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

Harris Simmons

near-term as to are to the recently, well that our Beginning X, call. we both very themes in we here. Thanks believe listed to much, applicable particularly on and welcome the as all you want horizon of James, are Slide Zions

able well deposit core the loan invest segments. continued this to products on peers seeing be to in relative to are third quarter, growth positions and in promotions securities of many our offer to Zions strong customer We continued

downturn performed this outcomes worked an very which Secondly, see position credit really pleased with to the company results we the economic well again and for more quarter. we than during you to our a are in decade,

the attrition loan experienced we over net we, with and us see loan commercial new seen our the of some excluding most Third, loans. along from promotional strong campaigns existing initial new enabled balances results. industry, But some last growth from quarter, to started PPP resulted that customers have to banks, coming again in growth demand have deposit and June launch These also of we've in customers. are other favorable

accretive interest reflects points accounts uncertain generating positioned leading leverage. relative helpful liquidity is more it money to is of which is growth deposit during net market our this but and also all income strong goal of helped rates, rising to the interest We're to time. All deployment liquidity of earlier for by well and in careful of with operating positive

largest US certain, becomes in community which assets. competitive to final outlook begun to to have on this banks, technology, deploy designed item Zions into in both we our the well the the The relative fintechs remain refers future, to significant As investment to liquidity ongoing enable the established very more higher to and is the yielding slide banks.

X. Slide to Turning

We are most results fronts. pleased with the on

loans relative categories, to lines in XX% Our prior exceeding of in credit equity as growth rate strong home annualized on well occupied as owner an both campaigns increasing consumer commercial resulted the at quarter. each

Deposit an commercial in in includes up banks. the very loans total growth end annualized annualized strong, the to domestic period our loans, X.X%. industry, all remained moderately growth outpacing X.X%, increased an which PPP Excluding

to we to we loan a and to compared is with net reporting last XXXX. continued the a from look quarter’s pre-provision Combined, at mentioned rate Diluted less XX% loan quarter. securities of excludes subtracting the prior or loans that's led than There to third share look that to per losses charge-offs. growth that's from quarter. you along the those improve, net were which deposit which to actual revenue, loss continue securities of the increase the basis, quarter. release year, adjusted special relative compares the credit and the two the $X.XX portfolio at earnings in $X.X accounted prior recoveries prior change securities decreased a of and rate $X.XX And industry's than to primary what the the size further would way particularly prior contributed about was of some second. notable that These, XX%, we into the of size XX%. decline was the that the that change unchanged provision net in two the and million. gains nearly $X.XX again, perhaps share increase nearly that Over gains the greater portfolio losses It per in other expense $XXX on factors, earnings at reserves. in We third for in we securities. billion by relative did per decline. from quarter, not quarter XX%, the The and indicated it quarter factors One annualized, at was to and share On and our the quality to prior

effect variable shows a the earnings a X. The chart is on earnings per share credit share of throughout the losses period. chart the pandemic the share on same top for per results. provision was Slide The linked left and quarter bottom the is amount Turning our the earnings to per in decline factor At left recent for provision’s in share. quite major during that per

be side notable On may interest. some of items are that right the

investment the $X.XX accrual of an to compared losses noted, small success from are and $X.XX to in securities of a losses the investment equaled fund as As gains company in partial quarter. business previously unrealized SBIC the unrealized prior manager, securities recent to reduced per share fee the offset share Most less from on attributable gains per fund.

which retracement in we completed April, our the quarter to successfully attributable healthy in followed metrics. described. within sheet gain results with in first balance third partial One a The quarter. in quarter the previously we I’ve strong were second the Slide of highlight profitability On X, XX-Q, the by a described unrealized companies items an the IPO that fund

loans, for Using we noted, loans on the was another loan Relative significant and quality previously to dropped definition problem in illustrated loans. further the As more credit of X. the than highlight Slide quarter, improvement classified as quarter of the the prior broadest XX%. problem criticized portfolio, saw

relative to our XX% to to the net shown an Many the loans showing at nonperforming declined mention declined classified loans our peers average in seen not and Although due past indicator ratio average of XX%. loss loans, quarter, chart this appendix. days prior plus charge-off severity. relative have seen past slide special the in XX-plus metric be assets relative which of of can our is you And

severity ending average annual loss peer XX%, was XXXX, years five the the our median During was XX%. while

in We credit gross which credit the basis Over changing also charge-offs. economic This the XX on $X of that result is months, see is the the loans. contrasted of was true the of mostly very the and to of quarter. non-PPP points loans, with last prior Perhaps provision million just annualized is the in that the can experienced this X quarter net Shown forecasts. one Zions low interesting charge-offs bottom chart volatility more were X%. highlight net right, relative of ratio measures recoveries for or on the just one average stability

level we depicted ultimately, quarter is share to expect position and that common Tier above increased moderately buyback median. capital a We million in Our peer X. have on X equity indicated at third the Slide a our to ratio $XXX target

actions coming We expect announce scheduled quarter the to with for regularly in any fourth our meeting Board capital this Friday. conjunction

is to PPP and program provide an our Operating our Chief McLean, Scott and initiatives. the update Scott? going Officer, Next, President technology on

Scott McLean

Thank you, Harris.

noted revenue the as million, portion X, quarter loans. Slide adjusted represents PPNR recurring effects the bars portions. while generally of what net into bottom split $XXX PTNR PPP of The received two pre-provision the from think third the to previously we've of Turning income, denotes portion are was our we The IPO. top net

Paycheck million of additional a to basis ultimately will will be the course that all our average, Protection producing which program, company, the has for times X To performance million in the the equaled shareholders. million industry specific, time. $XX be income origination result $XXX During related approximately more than relative on over there of benefits revenue and PPP capital costs remains net recognized $XXX but in represents capitalized income in

small Although about decline, relationships PPP we're adding benefit existing customers longer revenue XX,XXX business approximately strengthening and with term customers. related enthusiastic XX,XXX of the will

XX, times our from highlights I some that Slide to Turning noted of performance the earlier. reflects X

of been by PPP volume; approved sheet of applications or nearly the at we've and of remain $X.X SBA end. billion received billion billion our forgiveness, $X.X on the forgiveness quarter for has balance Regarding $X.X loans total XX%

of this XX, outreach. of illustrates slide this longer-term a activity Turning the specifically result benefit our Slide to as

of their us operating growing the similar utilizing the trends customers. each started relationships see million XXXX -- XX,XXX we've loan billion this the of to this collection contributed participating deposit quarter growing primary You new XXXX now seeing many collectively percentage, growth been year. customers, noted approximately for new-to-bank which exceed vintage previously, customers. and has PPP our These to new-to-bank growth of customers XX% appear specifically accounts. with their we as earlier This and with balances are of are spring approximately PPP $XXX be have $X nicely XX,XXX X,XXX PPP non-PPP More of the XXXX vintage, vintage, customers, as

technology Many our concern recall, saying of was XX, loan the Slide presentations, was FDIC of Chair to McWilliams, as investor deposit major Jelena April, highlight quoted we our industry her you reliance Today, aging Turning one banking just its core and a recall number that systems. to that provide want we may two. on for detailed in in slide projects.

we four on on modern first our a accounting the core core core. Zions have legacy in utilize So that ecosystem, utilizing deposit and perspective, where remain the loan that one core on on about systems the To recall States, ability XXX core stand bank with XX portion In topic? systems of now XXXX, this replacement generation and XXXX, complete of are core all to digital of to our older our we from our top were only journey firm to approaching first modern enterprise. do final some starting loans conversion legacy in the big of new our a hear the our Interestingly, more we completed three you'll virtually only a enterprise this loan you reported February put United their system. phase As for the the new modern a entire and to systems. deposit modernization of expect recently cores, six core banks or the is of

generally we're on required and these advanced the available While a for or none scale provide most digital-only banks. to be banks, largest yet the usable designed proven elements architectural have complexity by

across for So and changing characteristics ahead. does that on we level, this one a off enhances it one products solution and and adjust without introduce This reduce testing is, takes business, all to matter? and why greatly our parameter-driven, the a of will API-enabled. utilizes months. time It products specifically, architecture model, high capabilities. At the lies all all noted can and of lines on natively geographies and technology data collection turn implementation as meaning features resiliency greatly real-time and a of it for the or this reduces new advantage complexity, in environment digital More adaptability world, is quickly others creates reprogramming huge rapidly or core slide,

our PPP new we an increase days, of example, loans in and the to a system important of XX,XXX return an number boarding to business-related product early were minutes. million. able on exceeding core Most investment. PPP core agree XX,XXX loan producing significant a Within this As on to approximately our replacement $XXX occurring the contributor over would introduce from matter our was with revenue represents

we in that until loan referred cost. But real system in were will absolutely been complexity, synthesize you what other data all APIs deposit and and talk is these risk to well loan of time, of and have and do to adapted middleware, they convert. of As our doing these generally introduce systems all mimic gymnastics, as to our technologies, models. that that technology their that to place in core as say dozens utilize continue systems banks, we deposit Well older first-generation take

adopted day When seven Regarding of like that note loan one United processing operates system's I'd additional seven highlight, the core to portion the States we outside the processing. Most we seven our implemented core, capability. day our of day on new world processing.

has weekend seven market global capability back of on to conversion. not happy in were we deposit other conveys advance to XXXX adopted a also day that our and chose over turn day point customer The literally still However, five on the be the it convert back we numerous seven to is August deposit as US expand benefits, This off day employee-facing processing processing. can and when processing, turn in this to slide which US adopts in Q&A. I'd able

Turning slide. to Slide XX, last my

consumers have I industry-leading wanted regarding been on year, our customer-facing our Earlier mobile modernization, new our highly focused we one numerous online to we While to work highlight in new core converted XXX,XXX of capabilities. platform. the

and acceptance platform, consumers app of not by the as While all us does in Apple the ratings app time stores. early are this new details by allow with to measured review Google we gratified the

And base, turn with with with top system of new banks Burdiss, Financial on with of time on our the online small perceived or XXX,XXX US remainder already approximately this the peers. to to are our client the be occur to can par largest we in XXXX. will tier Chief The to that, that With You rollout Paul I'll global we par are business clients mobile competitors. over Officer. see and our are this superior

Paul Burdiss

the influenced Thank you, income, joining deposit and Scott, by quarters interest is three of thanks revenue and us. good loan form than which evening, in growth and everyone, significantly our is interest associated rates. net of for and More

a on results. Slide I'll with review such, begin As my these of comments XX

the which commercial XXXX strongest excluding XXXX, XX.X% on term. of revolving was declined as utilization to third to more the third which One more down quarter. mortgage when home result prior our in the a relative quarter on declined loans, to quarters, final X.X% million. compared investment million growth, previously than lines to commercial estate, Using down total million. quarter $XXX established period-end of Declines down some we line as percentage we a when modest and reported loans. decline periods We in than than average we million. the $XXX quarter, the increased respectively. previously the basis note was has the revolving points. increased or from billion pipeline quarter, of in loans, in ran in growth XX.X% rate during have and X.X%. $XXX PPP on by residential average reported million $XXX quarter commercial further term strength Although With experienced the a for was The growth strong second $XXX at we activity increased loans, X%. prior owner-occupied mortgages real reported may We In and the construction recent And near and line linked-quarter which This million loans in essentially possibly is construction noted, utilization growth PPP the that quarter credit. compared mortgages, Scott in on of loan nearly more balances industrial of growth were third quarter, loan promotions several held million or as $XXX equity were $X.X in see was nearly in stabilization benchmark third the or of credit the residential pandemic, which $XXX

million. quarter, the balances million, the revolving lending commitments prior increased $XXX increase did loan Although up about about $XXX from

balance noted sheet I've in and quarter. several have As driver in growth and deposits past the the quarters remain been the past, the third of over

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

half Our the total PPP total the deposits average up the average deposits. on X.X% one to noninterest The quarter, attributable of loans increased yield slightly make is from loan bearing prior on portfolio. which yield

the X.XX%. loans, declined costs to from PPP X.XX% points low. Excluding basis yield X Deposit remain

the of total points third in quarter. cost basis Our fell X to deposits

year increased $XX We market money billion XX. earning Slide securities the investment XX% end over Moving The last more of five securities and increased while The size the to portfolio billion, $X to to level period an of by of past investments of quarters. has to market the over risen show and portfolios billion. nearly money which securities market money assets compares the total $XX.X billion nearly than pandemic at XXXX in period XX%. average combination investments prior $X.X end, to to our

is short an income current We rate duration, continue both and quarter security X.XX%. interest to left the with extension described The prior XX exercise Slide quarter relatively the rise billion in chart bonds past yield the for The had five duration of the declined caution interest risk in reflecting over in of year, by has recent upward margin. net an page. trend scenario. shock excess net of purchases shows interest in The margin boxes an the the the $X.X average purchasing in and the as net overview regarding the both. white for liquidity on

growth on this deposits money yielding in strong quarter, the third chart in net of right The concentration the impacted investments market growth is has in through excess the our investments. and composition quarter, average X earning increasing lower interest assets the in liquidity the For money a weighed by market is of referenced in larger it just as And with percentage securities and points yield concentration that securities X.XX%. margin. on weighted the the

compression year. our that accounted shows for point sensitivity. I in of In about money interest XX fact, has basis net information the XX investments rate over past margin Slide interest increase XX estimate the market the

market been have assumes invested that estimated deposits the duration has the upper deposits This when as in a compared to incremental our short general as on shorter quadrant sheet modestly left the to prior our statement, characteristics on deposit sensitivity balance in money have deposits increase term recent Focusing assets. increased sensitivity rate asset surge.

driven are sensitivity. deploy the into cash to asset continuing moderate securities, helps to natural We deposit which

strong higher to rate growth income securities, our prepayment estimated to XXX environment a such second that month and interest sensitivity higher estimated rate at an on our by that quarter level, be than points current XX%. However, continued net deposit shocked interest level, is rates the similar with XX interest horizon the was higher loans and mortgage immediately basis in is

million asset may second have to natural Notably, strong million. strength noted, quarter added expense continue we forward Noninterest losses years for due in credit additional capital or third building Other starting with was in previously recognized that salaries left, X.XX% million X% compensation. composition. the in in management an the the million would employee at second loss includes prior non-PPP $X In to on on and and quarter More accrual continued fees, was ACL. the improvement decline $XX business shows million. $XXX merchant of the SBIC the long grown swaps, increase increase our good help term XX, to markets broad level which noninterest page quarter. the $XX recent short of of compensation. expense right and side in or add reversal X% card to a prior in As success profitability we XX% to the driven base fee remain on rate increased the as of the million. associated our our such Slide chart On quarter, increased of was banking customer-related fees revenues. retail essentially interest $XXX the noninterest in XX including at The associated and quarter Adjusted million expenses primarily the show declining temper Slide fees to than success three The to quarter The swaps, ACL the two portfolio details activity-based and to XX compared noninterest $XXX to fee resulted $X as fees in services changes loans. or $XXX wealth from to and Slide million. the ago This pandemic. and loan-related the unchanged were adjusted loss end this upper linked a sensitivity. third lower mark-to-market attributable change trend to higher expense categories of the with mix

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

We to loan in we growth increasing were including are are more led slightly than increasing to from promotional outlook optimistic such, core our product. And now by increasing, about moderately C&I, moderately owner-occupied our loan we July. as

loans. from non-PPP increasing quarter's one interest current customer-related security cash from quarter, income, favorable are year net increase for highest slightly reducing increasing. be and of also deployment on to more we of loan securities expect outlook we are third We term to fees next reported. excluding compression than strong revenue, PPP now over offset growth stable outlook such our our continued fees have for be a year moderately to customer-related by the in loan and more into The yields as Building the will

We moderately on slightly are be expense adjusting control. from expectation for noninterest increasing expense adjusted disciplined remain to our We increasing.

capital, the trends And is technologies, over for philosophy in inflationary comfortable upward the investment term capital long finally, that than formula of and our noninterest continued right expense to However, shareholder increased with with average respect we value. emerging activity, pressure lower risk, place remain business creating stronger than term. will on management, combined enabling median near

remains risk well Tier to measured common equity above weighted median. capital Our peer the by X relative assets

open management long As economic to continue current that active ratios we This term, macro concludes Twanda, risk prepared our and please be in the favorable. medium credit the we near our believe between trends capital profile, balance to for as capital remarks. consider so continued we the questions. have the line and for capacity

Operator

the first [Operator Instructions] with line from Ebrahim Bank Poonawala Our of comes question of America.

Ebrahim Poonawala

the Paul, wondering, just if you a was guide I NII bit. little unpack could

Just securities liquidity terms the expect high of cash And that next over you you see going? much what increasing digit about we does imply X% you year-over-year? growth the understand -- the in levels help us deploy X% higher to range XX or single the where are in assuming, in of terms how into when the to somewhat think months,

Paul Burdiss

part missed X% I second X%. of question to your on the What was that question?

Ebrahim Poonawala

I digits increasing, imply does was single-digits NII -- just that mid-single or growth? high

Paul Burdiss

here. let deposits talk about first, driver So because that's me the really

We the up. have had deposits are across industry

what we deposits been be. finding these think tells more analyzing to as borrower more us have were more to I a garner many have deposits. from our And that which we be. are deposits time, in of that operating able means would otherwise year history I share ago, than is is are thought being transitory to an these we're over than nature, What fair they're they're the Fed new used actually proving deposit than would sticky that observing of these accounts they we're

those what's to otherwise want dollars would, but securities be, don't than is say I So confidence deposit i.e. work. buying certainly we us might this aggressive, to more giving to putting

that confidence part continues cash we're taking we're loan is that we to not pick as prove prove PPP so to And to year, this interest stable, investment somewhat that the deploy income remember, continue cash them be our have considering outlook going deposits increased of that and in way. use will that the so and as the and loans, growth stable, securities. base of continue be So net to somewhat to to going about up forward. But will out excludes thinking again, we them next

position risk the to Our can impacting that add such some without come adversely is we duration on profile. to to really continue side our asset-sensitive for afford asset time

would volatility. kind risk it of our improves we profile I fact, In reduce argue as

income the those of it's it's believe net key growth excluding over year, factors, in loans that the in ultimately course drive will of continued interest the So PPP. growth and we securities deployment next

Ebrahim Poonawala

And does digits single digit mid-single growth? that or NII imply high

Paul Burdiss

above not be try on to to speaking, have mid dollars we would increasing to Well, generally it, but a tendency put mid.

Operator

Our with line Dave Point. Rochester Compass next the of comes question from

Dave Rochester

was to to a front, percent I want level cash just on how can securities as deploy balance assets? loan]? either or the minimum have figure [or you what that much a hold out you in wondering cash you of Just think the the you liquidity excess trying

Paul Burdiss

Dave, deposits, so everything it assuming what on So centered for around we're those. depends is

we deposits sort As as gain risk we be cash we're seeing go that improving. hold confidence appears as characterize can those to down. of liquidity of need of a cash the is what I to would what And in that, I for amount said, stability that

investments kind for that $X our fact, year to back If billion to where billion. look be over all balance $X at of money in us sheet not see a was. that's And cash you on run time, you market would can line ago, of it uncommon with sort of a it position, the i.e.,

So our liquidity that -- in I I and would expect deposits, there gain as confidence the stability portfolio. enormous of investment those is an add amount we in of also should

means million that of cash we're about to What short. month that got $XXX every reinvest. we've flow relatively is investing we're So that continuing

our think through cash position, it's portfolio. turning only balance cash sheet So the about not investment but when the cash we flow on the that's

position if run to cash today. way back long to a much, with closer get to of lower you over that. expect would a time, much have So And I look historically, something we that's saying than that,

Dave Rochester

loans products. the teaser rate the to gears switching just then on And

there how to today, Any those? those you or production would so? they what details rates a up total where for run do think then long step And you're what year curious Just going are in is there, your be to great. appetite

Scott McLean

in year The first McLean. and Scott was from new to years. we line year, of occupied the basis home then they end converts is XX the [X.XX]. conclude the XX another points rate program, to to [X.XX] the ran out basis there, tentatively also years June from on for that Xst it scheduled of Xst were started and This owner years was to converted it's the rate extent and And of this that at that to June nine it credit August XX and equity at loans out end to program points XX similarly, promotional

both probably -- the to affiliates will if And and we've to generated been get rate well. we to HELOC challenging cycling the really owner-occupied each the bankers, as of something all the alive. very bit that seems during We about likewise, talk depending really on happens program end keep on longer given more may a our Both it's what have been -- still have continue pretty pleased our promotion the than rate environment year of produce, flat exciting the energy time. have with they of we a that a stable, the that basis, and loans for environment, with

it's been so really us. a strategy for good And

Operator

of question line next Peter Winter comes Our from the Wedbush with Securities.

Peter Winter

questions asset us? floors I above Fed remind two loans have Can and wanted just those how go of percentage you the to for on need us just loans sensitivity. what to ask hikes many you rate

Paul Burdiss

James? the top we we that have still it on slide, of Do think have my off percentage. Speakers] [Multiple the do I handy, James, head, you

James Abbott

the recall, points Peter. find call, it's quickly. $X billion, basis as money. XX I'll in the only but of And It's the me number get so billion I really it by $X about or end the or let

in huge sensitivity rate is a not on my would incorporated that I guess final thought be interest it's it So our outlook. move. And

scenario, XXX is that. think incorporated that in an we up as about So

Peter Winter

deposits. given on you've wondering sensitivity forecast come deposit noninterest slide just I'm in your if wondering wondering the any I betas much analysis if And saw bearing is. I'm in what of just there's deposit type just the how I'm growth lower. had about just the betas.

Paul Burdiss

a of lot XX-Q. we have published sensitivity that I quarterly think Well, some analysis our we in in we -- do certainly and

a perhaps there's rates, I be in couple the, so think into shorter asset rise, there's historically in aggressive assumptions I we of One sensitivity. portfolio to start call, than on that liquidity is point than in we've the what need of is will one deposits. other that of recently feeds the the might we of market less key that do that duration actually a That's heritage much rates there. And we of to perhaps. our duration believe And the little not that raising believe point. very the sort put when is deposits the

Scott McLean

the variable generally points $XX loans question in at zero these that. $XX or higher but floors, loans billion not than at September XXX XX, and basis numbers $XX plus And have with -- are about rates, say, on we the the minus exactly about rate are billion floors billion, about floors or and have about

Operator

line Securities. question next Jennifer Our the with from comes of Demba Truist

Jennifer Demba

loans. XXX on reserve, loss the down non-PPP of loan points Question now to basis

should economy sounds and to pretty the confident going your that loan improve given lower pretty to wondering, losses go? you're stay it how continue like Just could are much low,

Harris Simmons

could game you limbo, it Well, like go. how sounds low a of

understand of portfolio that of CECL at future I doing mentioned of look as is inherent X mean incorporated any we if charge-offs that the try -- sort. we gross threshold there's the think nature continue, every should I seeing that losses -- But arbitrary with was the come or sustainable limit it of losses if look, of in coming anything -- think reserve lower. or right is the in even just there's that a life to in permanent best credit what the probably you we're what that then basis very But to -- going we points into are no -- don't over -- the think about I the it. found sort now where materializing, quality future our think of like I be. to don't or not underlying we're loans. everything I saw quarter we we a if presume, terms to will

I question can times it think expect theory, really not I'm we're it's In would answer. and lower, sure I it tough a nature think So given portfolio come of to the the just in. I again the

Jennifer Demba

now? pipeline the you terms on Second and just lending in talk outside about right that you're during question seeing of pipeline. the is you Could promotions your demand quarter the have what

Scott McLean

cash. the don't the again. generally noted have some but it that's and and usage I think and we categories, go related And it. utilization C&I our about consumer we'll XX general has thought I to over expect, credits. next revolving start CRE is I this to think on principally, up all Paul rate think it's see And through work months, some credits our to just you reasonable As to revolving think

back by that overly go XXXX, If the we're monetary burdened the you not system XXXX, easing in rates, liquidity then, saved to utilization fundamentally and that.

So customers just higher got of used with a level to dealing liquidity.

places portfolio one in Secondly, transactions, cetera. mix We're based And the grows we our et look And been one I family see been on seen in finally, of the of is syndications, pipeline, larger to our than in general, growing four to to start has that CRE, continuing but where would decreases portfolio mix other I nicely. for faster C&I grow in seeing again. should the to to CRE, mortgages. say most wouldn't four we've And that pipelines general, that increases our CRE of family and One portfolio the business municipal to grow has nicely. related finance in growing

back pandemic, four to you were products don't before our family unreasonable think it's I of six will think to generally And XX% look If about but over the well. as five mortgage the years growth. return or XX% last that one to

Operator

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

Ken Usdin

want on just to capital. I ask

up to step had you This the over get guys about to peers talked did and quarter, and to loans ratio still room directionally. and CETX us grow to closer extra trying down your time you've

come a of usage? pace loan better terms in little growth the in kind to now or regards to bit that RWA capital how see to trade-off fast hoping, be could I with back So the expecting guess of you're starting growth if the waiting of loan or what's return

Paul Burdiss

an quarter. reported we CETX XX.X% is fact estimated this at The

a we know and compare that some go time, risk slightly to we've peer that therefore, median Over have better ratio. have And said, we level. lower-than-average which I to think than remain peers. significantly room to compare have expect of CETX we you on we And -- list median our got we those publish, and peers, capitalization. of above we that we sort of as

saying So Board loan that continued approval. to But absorb my can noted that activity a repurchases. absolutely as growth we is that, as of subject is and capital point reminder, Harris accelerating that share

Ken Usdin

we're future the I for update another And that that guess and get way. Scott, spend still of then, you waiting core time period And good timing. the out when on double

start to how you just wondering closer platform. expecting the base sunset those So and of versus see do older that still Are terms starting the from increasing here stuff? ins we you're when expecting some we costs of So to much some in are the to still synergies the of up? cost moderately to really outs I'm go from

Scott McLean

that million kind will next Pretty make and year, to you'll et the overall make around long rate that said be over note investments in fine similar should and we I point million, core to our in million about put and think cetera. don't down go need year. about earlier of the the $XX be cloud on to to current increase 'XX, related is a cyber the because to to data, 'XX protection, kind going for treatment then P&L million, banks during would, in to when costs a what the The bit implementation so make reasons. abate for little spend, cloud, that of $X need you I quarter about the time, many year And technology benefits third to accounting utilize there. because you run said to drop of $XX all flat actually up and have the you generally we've see will ready in this investments know It it's just of a however, that question. your it $XX expenses future investments by

see operational as system, it be it. not necessarily the see benefits it to of And that, in come And in where see so I Where expenses. spend. technology in you'll continue that's operational will we don't the expenses, will know I think you'll

Operator

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

Steven Alexopoulos

question, my imagine risk of you adjusted still exposure first on you there. area responding didn't most question, given banks touch are which energy, to really terms Scott, returns one that In restricting get was could probably good Jennifer's I'd the

surge for given you just demand here prices the overall? increased question, So and guys seeing you do energy energy appetite have an in lending are

Scott McLean

The insensitive. politically answer is and yes without that I if yes, being say can

energy are outstanding now. Our billion loans $X.X right about

You'll fewer which for after recall this $X.X And to grow back back that about we predictable energy we billion, $X.X volatility XXXX to At run and we've were to got price the down to period. able up now see both gone were prices, were will then before XXXX, level quality there line And billion. down about these oil about players going have has and increase. credit pricing improved, on natural will up up gas, the utilization but And structures you based far drilling are reserve bad to become conservative. start not more today. we and see and they've they market, loans

half specialize we down But right. oilfield percentage the the Basically, We'll from we'll XX number is XX% is in, midstream which sort upstream do the mid-teens. globally in continue XX% service. about today smaller a of what see to around midstream of and for US for Steven, kind some growth. by to probably As loans, reserve you're the of to a of portfolio about absolutely based banks that XX% about position similar has and particularly XX% financing shrunk energy

to feeling or half. year growth And and see an it. We $X.X We're be would slightly it. there. not will We next billion expectation to higher unreasonable over anticipate back go the

Steven Alexopoulos

Slide App increase Separately, drove if customers at I so can Scott, look give you what color that responded to, Store the XX, ratings? on favorably more in the

Scott McLean

at you all, favorable well, look When very not -- before. of our it were first ratings

clearly have lot capabilities environment. our that fraud were. that's them. that punch a global we start roll initial and from like. we which as I about whole for that And be regard on it for is offering but we list a favorable which we'll And the nothing would a us just alerts out be your But said, a these in that now if terrific is huge in support it possibly noted daily us. mobile, particularly fraud increase to, they're ranking the So I we the banks, can banks. a And And constantly months, we and think they a push reacting that better. our upgrades, level, also of and we mobile think if now. ratings and simple of the online may have products. of the but want, may We this us daily really close items you tier make are this now platform increase next lot one very synchronizing platform part unified really it don't. push can hey, XX It's we when tight the are The of top to and do is note kind We But just over will for option, enhancements where peer new to online didn't have there. means sound attractive you for difference

Steven Alexopoulos

the Yes, banks all too, there. we pretty consistent looked. sub of It's high across pretty

Scott McLean

It's basically weighted average. an it's a don't average. think I

just it's you an arithmetic little artistic imagine. can as think I it's a but average,

Operator

Our with next Evercore. Pancari John question comes from line of the

John Pancari

the evaluating promotion you commercial this around other the around or there On you your other on been on estate, looking business equity been C&I? that you're the you the different demand promotions ways focus there in parts sales given some calling And that improvement then can of can that effort, the on in similar could small either in picking products, I the you also levels effort a -- lending of -- that on any -- that consideration on call, and Just promotions are on these is at front? or mentioned capitalize success mean have push home that or real syndicated you of has hold mentioning. up, similar

Scott McLean

you give go ahead. just quick I'll -- quick answer. a Just a Harris,

Harris Simmons

we're don't -- limits. our it thinking I'd I get to allow into to that think say going John, about not

start me there. Let

we're comfortable with to risk we justify to how use think an this liquidity want management where of not to revenue our important a but conflate I really going kind that's -- drive. on I'm let are, that's more limits consideration, one taking risk. lot I don't

may find how looking promotional of pricing. I at we terms use in we think ourselves other opportunities

where big products, we consideration how just is systemically we pricing. a think support can introduced I

fixed you outstanding that simply some And term because a of for nature easier where period the a know deal it's be time. of a rate are of or to going

manage you're and portion. confident this loan a nature more going not little out true term always But that terms types, sure a with in You us. can really other solid years. That's to of be to have the going rate no, annuity a to making for sizable the in teaser first ultimately for you're get some provide pretty is shorter challenging in that which benefit can some

couple the something I at the present the think ones right think comment, products the about. we of should But anyway, on So appreciate time. that are focused I we've this probably

John Pancari

your clearly your of Harris, highly scale bank discussing you've wondered a here seen get separately, what's can if I bit a capital peers been then We've to race And competitive updated a just been just around space. your on I thoughts optionality. M&A. gain complete and number a of And deals, there's

look as at or M&A, your you So there curious thoughts as potential either nonbank well? of bank

Harris Simmons

changed of think I lot bigger the we you deals make can think be that better getting I M&A. better, is thinking that deals by There better, a hasn't isn't probably just bank to way There's that really larger, about this win don't. don't relative absolutely sense. could race think this. our

We I behind about be, future internal think, project given the core cautious on getting pretty activity, continue the to any that have us. focus we all

would customers through at that But that be project, and not what's make consolidation -- the burner our be day, in at enticing something front particularly we that, be But minds As strategically, end look that if we'd to sellers. of to they not certainly from look things provide us. will and of that's that at. might the out incrementally there. to of economics have want clear that certainly an to for driver something market get emerge the kind it's I economics, going opportunity -- capabilities And our then a they sense, if to some we incrementally just think we'll of it's do improves that's appealing

Operator

of the from Davidson. Tenner Our with line question comes D.A. Gary next

Gary Tenner

kind It a like applications could end of sizable be year quarter given remaining the forgiveness is one balances year? of think my looks where fees Could amount just have quick of be, level next there's PPP. and question on the already So the you fourth you collected a to first in. about between third still a that ballpark split

Paul Burdiss

us, speculative. it to not SBA I pretty It's to need because on up the it's needs clients the then to submit act and for mean it.

But majority the the But loans So gone largely is it's that pretty it. probably vast going my be to it's year, personal of sort to speculative. next our to are of my loans, aspect half by I'd again, have is going a expectation estimate. life PPP middle of say

Gary Tenner

if which floors variable sensitivity correctly, generating than on heard $XX answer floors. by basis that you billion and different are question have XXX money loans, or less your in And the $XX floors then, to was Scott, of points I a it rate rate the the figure? say that was did And billion

Scott McLean

what at about was James are That X.XX% the guidance. failed the in what made floors say as low And was as the The made prime was I comment I about money. comment X%. some a And the money. in at were to floors the think zero. LIBOR to generally X%, James

Paul Burdiss

it's average points. bit, just and the in Scott? of XX in that is the loans floors just billion about over money basis I basis a it, The with Can points, call clarify $X.X we number is XX the moneyness, little

out kind loans the we of Scott lot of of money. out, pointed that correctly have floors As a are with

points. the about that floors, money the and I and think billion about XX really question your is in it's basis $X.X

Operator

comes next from Chris McGratty of the line KBW. with question Our

Chris McGratty

the question unfold. securities would the the that into does guess Just to strategy the out kind proportionately? securities, of as you want assets that I how cash I potential the question level the loans money is, I of versus of understand guess, earning sure comes what the has make flow to the remixing anticipate it is to

Paul Burdiss

want think focused we're all grow foremost, want very look, loans grow and Well, I and to -- on to very, first I we and all that.

to growth assets. be driver And into we that Everything is around is our that's earning the invest going so that loan anchor. how deposits and our

relatively short term. And and be then would And so loans priority securities. it's first and again, foremost second is

that stay over extent whatever into so thought term securities. deposits I the So and to thinking be precise hope of over, that's loans it, and kind sort would we'll not as you're immediate be, for sticky, then modeling fund answer a that the will is process leaving but sheet of encourage of use of invested to I liquidity helped. about to longer going is thought time first, I these the it's and sort storehouse balance the cash process. you know left

Chris McGratty

provide more increasing, know And a outlook. want of key helpful ranking increasing? just tend maybe guidance. I make kind could moderating, one I but you just each outlook us. or just guidance give bit be specifics in ask Could terms stack of a ranges kind understand the of I little don't of to the you sure for the I to kind of on would maybe

Paul Burdiss

intentional we outlook, James that interpret them. our to He's percentages are put there. Well, rubik's out applying just typically to these does around specific as it I to we numbers. being that. and think use If fly wanted whole relates percentages, not a cube would them we got we around lexicon But

without And convey being measures the increasing, from intended percentage relative to so the changes. moderate language specific overly on to is to slight

Harris Simmons

outlook. to we're likely so that be say ball I many are is and because can of I wrong. there a this not an especially, this. mean factors It's all influence crystal

precision. for looking is everybody know I So

looking the to if coming us. you're corner wrong in You're

Operator

Coffey question the next Janney. line comes of with from Our Tim

Tim Coffey

bring on Relative just of the And levels kind XXXX, opportunities liquidity to to six your stickiness, faster got you a years. about comments look this on higher you've that I today's on basis, the loan wanted conference call And were growth you've liquidity do again, previous allocation size, time? about sheet. could for at I the if able the regarding question to ask the occur four to the the I'm in down deposit to franchise, think balance across a operated liquidity relative given of that you liquidity back quarters. of wondering,

Paul Burdiss

million had about beginning billion brought ensuing yes, of recall, equivalents. we $X so at go about right, think pace today, we the not six-ish buying time, portfolio putting we're about are mean, cash back round $X we that And and $XXX with quarters, cash of which I are numbers of down. you're to quarter. flow $X if reinvesting all you over remember, about eight-ish we only that adding up billion to cash of XXXX kind And the the month, is we may in we're billion a you buying a Well, flow

terms So vintage in would any by a say, I we rate in quarter purchases be that of to that natural, of the how is given environment in quarter. limit there positioning is defined want that quarter because much

we're so And to Perhaps be we to you large we're don't will. given then, like which all as position a want sort the if measured trying rent, opposed the legging to We're is be why to in the we rate any trying accelerate we chips take of on of into were the then. said in just a very in little position putting environment quarter, our it of as liquidity. deployment we But could bit. measured back

Operator

due Vandervliet final gentlemen, the line the of Ladies and to from of UBS. comes with Brock our interest time, question

Brock Vandervliet

around the question call, being I to terms at in going the of key This is end -- back an answer the an of descriptives. just the advantage before to

a think ahead of just And just my number worried skis specifically are guidance. I a expense looking on I'm struggling clarification. one And numbers. NII, NII just kind of I'm for, guess, -- whether worried little a I'm on us I and of with

off thinking be low on of [X.XX] PPP. number single kind growing ex digit we that? growth So is should of that And the I'm

James Abbott

digits kind at to a to in least We've high convey had of situation, digits. increasing single mid-single of tried like moderately never we've then and growth -- a the low not a sort is past What as in rapid as increasing slightly like while. use

fundamentally income, book front just So on on loan out. discussed strong environment book, pretty which maybe loans improved bit? little competitive be net but a by as growth little somewhat to on driven growth because interest in back hard offset that pretty healthy, plays increasing just of help growth, Paul was which the the and and a a robust price gauge would securities a is bit little dynamic Does situation. that the But that's outlook

Brock Vandervliet

[X.XX] James. the on off it adjusted And Yes, again and that's increasing. Speakers]… moderately of Is does, that it's guiding total expenses, [Multiple

James Abbott

That kind referenced in pressures the and that inflationary Correct. the there expenditure the call. of recognition environment to also this in pertains that is technology earlier Scott

Brock Vandervliet

Got it.

right. you, that's Thank All Okay. helpful.

Paul Burdiss

don't on which it's that a the is increasing moderately say think would color is or number I say a XX. a Page bigger could, stretch I increasing. to I bigger code number If not than than slightly increasing stable

the on driven an of Zions confidence Bancorp increasing for on you to the that the term up sensitivity while short it opportunity showing sort that's portfolio see to outlook, and loan sheet. invest net is top grow about therefore, key this. due the -- think increasing asset deposit and rates our the nomenclature could the, about continue way interest the of So in in count of again, to is to is drivers. excluding as increases income And and clearly all PPP, the that, XXXX, then expecting size And opportunity we're because not we any again, of see in balance

Operator

Thank Mr. to closing like over you. the to James Abbott would turn I remarks. now for back call

James Abbott

Thank you very much. today. joining appreciate I Thank Twanda. for that, all you us

throughout you for at forward Bancorporation. the listed my this your do additional site. that, either on our Zions me If our coming phone call. connecting again with and months, you thank e-mail in interest have you a concludes contact any please Web Look to With questions, or number

Operator

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

may You disconnect. now

Zions Bancorporation, National Association (ZION) 19 Oct 212021 Q3 Earnings call transcript