Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to Zions Bancorp Q1 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Director of Investor Relations, James Abbott. James. you Thank

begin. You may

James Abbott

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

agenda provide Chief Harris Executive For Chairman and Officer, opening our Simmons, today, remarks. will

Financial Paul customary the but discussion review Paul’s to to will questions be Chief Following several a Included be received the weeks. we and we Harris’ then past financial our deposits in in-depth Officer call over comments responsive form, results. an our earnings capital comments will more want Burdiss, have our in about is

us Credit Following our portfolio but Keith Maio, hour. anticipate Michael asked this a Officer. of guests Scott hold comments, that our to be today, our office Chief discussion Morris, specifically Risk generally, include Officer; McLean, Chief our will portfolio. and one Paul’s credit duration with discuss commercial – and our and call the estate quality include to We we prepared President Chief After Also session. question-and-answer will remarks, in-depth we’ve an estate do Officer about real real commercial Operating

the to Harris I will time over now turn Simmons.

Harris Simmons

about to in in the welcome that current of and been the have two weeks. few James, begin environment focus thoughts brief to recent like and analyst by all much, offering community a and or just very topic a by I'd you. Thanks investors

to led failures structure to Some – well features known of of the that most are bank recent the idiosyncratic you. domestic of all

of about to examining us, It's tangible of the all thoughtful equity components without adjusted and by tangible of think soda the straw this It my bank's holistically through its business I the equity all and should about think more in assess considering really bank would business odd or strength we of that sustainability capital balance HTM common economic think, view of model. for particularly cause value of any observers common bank’s and balance the its sheet the marks models. sheets how

major major my Doing as a value of its portion characteristics so is perhaps bank's deposit portion, is optic, franchise. in the of found any the

leverage that’s framework relative February a cost of framework of mentioned of of hardly nod the I the before in of deposits amplified shareholder in reality by familiar to mid-March, are or letter insured well model. the I short necessary to with recent that fair historic accounting wrote business some component most Generally medley disruptions economic are and that the A the presents value the is that and noted the GAAP that surface. all accounting distortions Principles, of the In Accounting analyses. Something further percentage we're banking's on Accepted

is approaching of to sometimes core Applying any value the loans I and what refer example Mark's capital including clapping. the deposits one-hand to to bank's an the from securities without as liabilities comprehensively and impact of project by other

quarters. a reflected industry disruptive, over mid-March manageable in events they continuation the large While in certainly own balance the in past seen of the trend a our and of were sheet very and were measure few

through rise the years. pandemic dramatic balances a seen We've in deposit

concerns The giveth to the Fed policy. a In deposit taketh of monetary some we've respects, the trend two course that bank reverse even begun Fed funding away. by absolutely year that share as in and accelerated only the generated by saw modestly changed of case our XXXX the the the deposit part base Something constitutes was latter of and failures. was this valuable it's part the its lion's growth durable And of the our latter that first of had months itself any with seen in part the Fed of March. and most

our in new opened over impact the March with net XX. in broker accelerations on any and that though we and believe income, excluding that a greater costs March funding in X be $XXX a Specifically, we'll balances manageable with a deposits, ahead. manner million of accounts in we X,XXX between net months shift very offset will part interest operating focus to The totaling does work

wake commercial estate, credit real a financial of greater with a We topic a in over about reduce as increase concerns is a the or decade in portfolio crisis. possible two to great focus risk becoming of recession. on respect long-term to ago the a which Finally, word project our embarked perhaps

that. was a that to was objectives pace growing our portfolio done the of less remainder at and ensure the of that we've than One loan CRE of

we We'll an finance. Commercial a about of the cap later surge that that's the over this portfolio. rate additional grown projects of to required half period rates. us of It's rest at that X.X% a grade the the growth rate and real provide has with annual a of about had details growth of estate has high work we the clients decade, the haven't And during presentation. low past very we meant

summary turning a So, this fourth the quarter quarterly the now linked financial Slide to of is with comparison showing results, X, of quarter XXXX.

of first adjusted interest days. non-interest related to is a fewer and seasonality experienced income there combination expense aware, Also, lower higher compensation, net are net the based stock which efficiency taxes. payroll two The you compresses of the in revenue to most in materially and ratio. quarter due As results less pre-provision

factors would you we normalize seasonal the through As move as year. those expect,

of Period pace was which deposits percentage X.X% about quality strong, the billion we last growth deposits. end growth. broker [though] Our moderate declined points to deposits, few of very X.X remains a [ph] credit loan from of slowed added $X.X quarters annualized

to per share was Moving diluted X, Slide earnings $X.XX.

million As related costs. involving accrued to side, due case capitalized change made a right or tax outcome and shown to We the development share for of contingency $X of the per and research the firm. another treatment litigation recent the on reserve the we tax $X.XX

half in the discuss which of comments. primarily will linked operating quarter Nearly are expense, other decline to composition due while was the change factors, and his Paul by in elements the seasonal explained funding

ago our third well noted adjusted I attributable and normalizing year as Turning quarter thus as seasonality, removing increase net revenue just million. was primary ago that The loans, year the to to comparing of for PPP XX% was pre-provision X, factors Slide the period. by same decline linked $XXX quarter effect was to the quarter, the over

going overview, to our level Paul additional ask high Financial our to that Chief provide Burdiss, Officer, detail related With performance. Paul? I'm financial to

Paul Burdiss

margin interest bars the margin. ground income quarter the shows the everyone. discussion income. on PPNR. and of of income the lost I'll The the our Harris, XX% for net net chart on for the evening, trend the the net of quarter Page in and first in balance Difficulty]. white interest an begin components you, boxes in overview both, X recent the net first time good with revenue of net [Technical and Approximately from through is left interest interest five interest is a Thank sheet

of Higher side The the net linked quarter chart yield margin. the helped asset on interest certain earning basis to effect shows the rates improve by points. items of right XX hand our

overall rate As to – on on rate we we've saw sensitivity to increased the quarter. overall environment, deposit more we increased basis interest relative XX rate deposits higher the points the fourth roll the by

core sensitivity with our a combined deposits, when points. basis of which of XX resulted increased in of increased, rate funds interest the degree also point XX funds basis bearing higher contraction total borrowed therefore in cost spread. the Our cost interest by This deposit

sources earning However, funded over with funds. bearing non-interest XX% of are our of assets

by margin XX tell about you interest sheet in XX rate in net when increase combined These non-interest basis of quarter. just point XX contraction the The trends more in compared higher in a recent an fourth I'll yields the the offset point the factors in minutes. first few was basis produce to quarter to environment. partially a bearing of interest therefore in points value in funds basis rate spread contraction balance

income revenue, was on the the $XXX Page year. prior a X, versus customer to flat of non-interest income related decrease and non-interest X% million, on prior to Moving quarter and

per noted third last quarter, practices fee non-sufficient we we modified of quarter reduced million funds our As the has quarter. and overdraft by of $X our the about which beginning non-interest income XXXX, near

us in lost management allowed some revenue. has that of fees to make Improvement treasury up

the related first relative for income outlook non-interest quarter increasing is our Our XXXX first quarter moderately of for to XXXX. of customer the

as income the is interest of related page, net On non-interest shown. customer the which side income the right sum and of revenue,

grew by XX% Revenue versus the the of ago retirement also seasonal an grew employees $X insurance million. million revenue, included of FDIC items period, to and positively by compensation the such the year the quarter based XXXX prior over The excluding incentive quarter. from of $XXX Page eligible as reversal by X% cost on same taxes Non-interest million, PPP The compensation of payroll quarter of period. was while was impacted up first base fourth $X expense a for XX% stock $XX and quarter X when XXXX, fourth from million. increased it

percentage that first the ratio on our were quarter page by quarter, improved X to year up in points when see compared expenses ago. While can same the you one nearly efficiency this

quarter the is be the Our expect first as we now in year of non-interest of first for outlook expenses adjusted XXXX. flat stable to to next expense quarter

this year. deposits first in Page slowed as growth in on past quarter the and over shown to XX page. The trends period in seen highlights as loans end opposed numbers average our rate in the the the loans of

loans quarter quarter when is of expectation the XXXX slightly first to Our in the that compared of first will XXXX. increase

continued have XXXX. reported throughout trend the Deposits we

Larger have as the a is in to betas minutes, sensitivity there accelerated. discuss market deposits compared depositors few will moved uninsured into repricing when I smaller deeper to of deposits. rate and interest the more sensitive As in higher larger difference we cycle, have insured rates are a deposit

we our call, search aggressive will rates, sheet earnings off the become of attract that have expect moved have balance deposit yields. higher As some in more of to last larger which discussed we help on in balances

the end of our XX was points basis basis quarter, increased prior to X.XX%. with yielding of up the of the quarter. spot the bearing points, cost At the XX deposits deposits interest total from quarter, basis points For deposits cost in XX total

compared the deposit in XXXX. Our was composition and the the the on our additional the about margin first X% portfolio details quarter. I point time next performance interest of over at end in few estimated will end pages. of to combined provide when quarter improvement at of deposit when quarter of yields an continued the loan of fourth in resulted with the net the changes XX% beta These

Page Beginning to deposits the about are commercial consumer portfolio. with are XX, trusted Not surprisingly out of due one-third commercial contributing shown our deposit total deposits one-half with in of deposits deposits deposits not insured. deposits estate as here, our of about two-thirds size, brokered, rounding

relationships. to year. the view account over of operational deposits the deposits However, bank in of view Due those when large being are deposits, Page prior first deposit operating sensitive to a in the we other end these the compared XX% balanced than as provides less of by through changes quarter tied to balances these deposits. quarter rate XX nature

we have activity past drivers sensitivity. size of the key year, deposit and deposit As over observed are

the larger compelling status. deposits. We for that option, provide portfolio will Page pricing by deposit a sheet FDIC deposit recent insurance in on believe particularly shows changes XX balance

notable deposits been reported, falling back As XXXX throughout in and left the those XXXX has the toward a we increase on historical and previously deposits reported shows, been chart have levels. uninsured

right deposits. XXXX, are of the the to moving excluding is page end broker Likewise, XX%, our total level. on deposits up side loan-to-deposit up XX% with pre-pandemic of be are the the in-line ratio Since and

uninsured Page observed deposits where sensitivity of amount have XX sources compares of more funds. deposit aggregate the to we total and the available of secured amount

shown the will expected entire to current preemptively As I funds of an level here, volume the respond uninsured of deposits. handily question. exceeds of sources demonstrated

program an the of nor new for million operational access except in did term overnight Reserve advance. of a quarter $X test funding BTFP the not bank consisting Federal window the We the first discount

a securities of five show page, to over earning investment the money XX, portfolio ready Moving the but be This remains Page investment previous larger immediately primarily On declined percent our portfolios sheet funds changes. source driven to expected. facilitate this preceding our client portfolio of behaved as the market versus last the and we to investment portfolio The quarters. it balance of pandemic. exists has it was a size quarter, assets as than

flows flow, cash decline market create related prepayment balance will the combined anticipate were that term, a of With balances and just over this investment and of continue principal over portfolio source we the cash The near the in quarter. securities money $XXX sheet. which in-turn predictable first of the million rest funds will to

importantly, more investment financing sell to the securities. Perhaps need the a Repo. us collateral primarily the the as or allows to portfolio investment without known This is composition of GCF achieved general any funding secure through the of mechanism

collateral very program the quality participants same currently year of of duration risk X.X all a is deep component by is at unchanged market, the a sole years versus and the high settlement, from and recognized ago. and liquid X.X the The as this virtually portfolio assessment. years investment year prior anonymously third-party is value In exchange collateral funds meaning clearing pledged of the through guaranteeing that period

loans the be be years, value and fixed bring estimated investments economic to to portfolio duration deposits years and the balance to deposit This duration manage and larger to mismatch protect interest the loan shareholders' with to asset are estimated rate liability thus X.X balance rate bring durations helps durations required between and – equity. inherent of sheet to term X.X

rate XX about sensitivity. our provides Page interest information

reminder, emergent that interest net the occurred, we interest to describe using been on of changes latent have have rate the of well occur yet curve. rate to shape and a activity sensitivity, by the implied yield terms, as As the rate as have as those effects income interest

these to Importantly, as in descriptions. in remain balance assumed sheet unchanged size is

curve are latent XX, curve, of addition interest we in over the compared which curve difference the prior These March than as a the decline the December beta, cost income when through of quarter's of notably work to shape yield Regarding in will result sensitivity, net to of yield quarter first the income The modeled discussed the of nearly was XX, the inverted on factors XXXX. in-place to sensitivity, more our latent in at is net period from accelerated disclosures last XXXX the which first interest call. quarter of X% time. funding

sensitivity, interest using XXX our sensitivity about the net if our when balance rate stable of a rate in measure traditional quarter risk and first XXXX interest XXXX. With XX, March additional quarter. rates a basis an sensitivity to shock sheet first emergent Regarding materialize income sized interest X% has by path of emergent using point parallel the sheet, a respect compared were point quarter the balance indicates the in to to forward interest interest the same disclosures, of XXXX estimated to decline from increased size a rate X percentage of fourth

balance portfolio risk we our or flow changes the our rate As changes, through interest the investment through composition of swaps. manage actively in the cash sheet

unwinding to begun reduce duration of We through have swaps. interest the recently asset rate

XX. reminder, latent represents at while a yield and As rate prevailing traditional views reflect the disclosure curve the this March instantaneous shock risk and interest a parallel emergent

for immediately income balance the expect relative XXXX reduce of by to interest of to deposit we beta when is first sheet X% quarter more first quarter about recent first moderately interest repricing quarter for net to second acceleration outlook decreasing, changes the income compared quarter. in the and XXXX the the Our of net

On rate portfolio in Page the interest XX, risk. investment the quantified managing value we of our

income interest rate portfolio the net our blue reported be what side would of at left hand manage rate the income page, dark bars net show at actively if show interest not through our and swaps. bars blue light we while measures, interest risk the the risk investment did On risk interest

parallel value impact basis the right XX%, on from and interest to in This X Reported from of shocks in view demonstrates securities balance value the bars chart. a the positions. economic rates [EVE] changes risk moderating [ph] be and due XX% move at of equity would through swap the larger hand difference minus the As the impact even partial the XXX seen to holistically point assessing can of XX% to difference plus indicate, the than described on differential previously risk rather fixed without move to Harris. and point rate the would interest by sheet our percentage rate

loss operating balance Page absorbing sheet ratio is grow continued We low This is aligned ongoing that on The believe capital our risk CETX of charge-offs. net to and shown position the well Our X.X%. of the in the compares to XX. position first capital bank. with to very a quarter level

in the environment we repurchase the to uncertain, second shares macroeconomic expect not As has become quarter. more do

ratio, be peer managing a to maintain median, profile. while slightly to CETX to above below-average continues a goal risk Our

by interest loss. and with reverse and portfolios the XXXX. would common equal, under for as and portfolio this share. down loss billion provides accumulated XX points expected investment accumulated rate cash the swaps other All outlook loss $X to end pay changes associated of unrealized the just mature. comprehensive book The ratio flow These illustrative nearly are XXX improve other position basis comprehensive value will these common add things the per Page $X by an add to equity to would

over the and now discussion Chief will of commercial in particular, I call turn Credit a Michael for Officer, Morris, real credit estate. to our Michael?

Michael Morris

quality. we Thanks, we're And the loans. and the line. slightly, total first was all quarter that report assets Non-performing report of able to be the by to in on X.X% as as a had off quarter, an another Such Harris very I'll measured charge-offs overview to XX increased net loans of no in but those noted loans earlier, improved low Paul, happy our base. today begin pleased Slide declined hello to problem classified with We're to loans. of credit on quarter.

the models the quantitative qualitative Nevertheless, dollars that recession along of in to increase used an the allowance. we primarily probability additional to setting for with due a allowance in added the

credit of X.XX% allowance or to ratio. loss real nearly X% million estate coverage office XXX loans the For segment, increased commercial as a for the

Looking charge-offs XX%, decreased over remained low longer interest net the very period, and we've have increase by a rates, Reserve have increased Federal to allowance XX%. back as loans began while the classified while

to and commercial loss on the Turning of about XX, Slide and loan a real there estate significant coverage defaults media amount risk of portfolios. is

Harris not are commercial loans outset created As the all equal. real call, said at of the estate

now at risk to than XXXX. late more a We loans XX% addressing this have CRE been from decade XX% reduced total the in peak for of having

we efforts, we risk ago, best be and a spent through highlighting we charge-offs XXXX estate ago, years our Investor net our that being Five commercial go well our as recession. in good considerable of of we Day Day portion quartile must years investors expected next element, to Investor make With reduction the three perform to at a credit the real expectation. that that on key told

Over decade, peers. margin the both our outperformed whole we've the of past rate regional considerable large as by and industry loss bank a a the

commercial Our portfolio with California. estate is concentration diversified real in largest geography across the

there concentration Although of than it's per that measured our other capita we're in. on actually smaller geographies is a many basis, our

is Our type Office media and so moment. is portfolio a a well-diversified and with in I'll financial CRE asset types investors product property most across in also receiving the by little more multifamily. in in the the attention classes largest the or concentration detail discuss that

we've more our we've employed the below seen underwriting to is it at peers. In Since which we CRE this our our have slower compares of inflation organic rigorous real And we've grown growth, XX% than time peers. media XX, during period. adhered many relative XX% X%, peers over time. growth framework. standards Slide of increase rates commercial late On well estate to order to of concentration roughly of same And that total a engineer our to been the XXXX, tracking

calculated although divided which classes, asset the It less major on a types using the number current amount is presenting of data appraisal slide of weighted loan left in property XX, XX% years. Slide been for LTV the most each have the LTV the by to our appendix to Turning the shows or the of average similar that we've loan is value. decks a of than recent weighted this

can portfolios, coverage LTVs within loans Further, well. the our risk, just tail as the Such of for layering LTV tail CRE risk off underwriting distribution should on all that underwriting generally is debt ratio. as element term watch risk with see we only factors having look for risk, if note Shown other the of X% mitigation an but we the standards at greater CRE loans not you a bottom, require of one bit that XX%. is of fairway. I than and LTV

a This the higher example, group forth. among than best and sweep, industry. For normal may is rates greater within guarantee a and given is schedule, LTV a if peer comfort we require our the major non-accrual cash our wire level, faster loss are in factor practice the personal amortization within so

of in bars the a recent at On loan the our darker The blue one most distribution underwriting the look CRE aspect the right portfolio. using LTV appraisal. is balance show current

indices sensitivities However, appraisal analyses show more appraisal the most forma periodically, or indexed value LTV. estimated commercial the of we by rolling attaching current to run the recent and pro and show price that a property to forward

the but have our category, none office With or we estimated in a provide category. blue million additional in the deterioration to the an see XX% prices, XX% Slides bars not light portfolio. the of in Not right. lot XX% in shown slide, in to detail office to greater on of loans With XXX on and but XX office XX the somewhat this the property that shifted surprising it's appendix,

such tenancy year, estimating and median of loans, as factors loss loan to well other loans, and important expirations coverage year, criticized key average maturities by the factors the the rates, as Including size, relative in lease our as given credit and per office allowance default. office probability

but loss, think how we're the be going comfortable exposure very In profile we managing of summary, the manageable. office expecting some and to loans, we're risk those we're it's with credit

I to back call the you. James, turn will So

James Abbott

Thanks, mentioned so in throughout the these. I'll summarize financial the just changes summarizes these our call, outlook. XX Paul Michael. of briefly Slide some

And reduction expectation loan result of tightening policy The in the reflects moderately in increasing. this that of further of simply will a waning continued from to is demand. first change loan monetary one growth the our increasing slightly

from view that. non-interest edition. increasing. of net we in won't has then moderately And income in slightly moderately in I improvement extensively which on reduction that, a decreasing interest to deliver an from elaborated the is our expense, changed changed stable so Paul to previous quarterly Secondly, increasing thirdly,

prepared concludes remarks. This our

to and question to the one call, As question-and-answer to follow-up ask primary other you we the one move enable participants we questions request of section your that questions. limit to

And with that, line if Alicia, you'll for open questions. the

Operator

you. you. [Operator Thank Thank Instructions]

Our first question Gosalia Please Morgan proceed is with your Manank question. from Stanley. with

Manank Gosalia

a asked is? that March the what after lot you I was, this this I to can little through question. Hi, mentioned deposit of rate know anyway, seen saw deposit good overall you environment typically get taking was the wanted know, afternoon. but for thoughts through your quarter? about deposits a you know, seasonal the Thanks mostly in bit I I specifically continued accelerated rate flow you because quarter. talk was in my How wondering, that the have deposits decline of trajectory you of has of run-off would versus And you versus, much what sensitive on

Harris Simmons

just I Yeah, product. over $X seen we [ph], [non-tenants] [ph], product] [gold more very to in maybe in to a little can had specifically run-off, which little I'm is the of it. call quarter, $X fourth non-brokered wholesale and billion We and offer speak our billion what roughly going color sweet a to

September and between a had the was over quarter. we've – billion, in just $X over little $X excluding deposits December first broker billion So,

of began continuation $X.X trend, decrease. in about actually a was a had back We'd a billion a that June. so trend And it

back things much exactly as much were or phenomenon something was to know, know, mid-March. rising. was accelerating an of billion, how was trend maybe, that, you you it's much how like it you was, that how sense rates due to know, it pinpoint, $X to my But in disruption this how was slow to as liquid the the So, is billion is billion. due had know maybe And hard that we've X and more – a very it's of done and that stabilize. come that probably because to it, things little and I And beta, low the And deliberate we've beyond position probably line, trend. contributed we furthermore, very to It X a as that a bring was in expect to amount a was fair deposit will that down.

Manank Gosalia

then on so, guide And you us detail little through from it. you that the on how but you're through decreasing a on the help us you moderately us NII, about basis, think help for you can XXXX Got XQ course of guidance XXXX? can the know, now year-on-year with maybe more help think thinking through can a or if is through trajectory

Paul Burdiss

course, It's worse Well, there, Paul curve. was an is to kind this you important the the, the main worse, i.e. the you fourth inversion of That of components, yield it know, of relative first know, know, continued more the are in change. quarter than quarter. you was inverted

I balance noted, about think changes. as composition funding view we as sort there sensitivity, think, also, rates I that latent of work was the some through sheet, the but of changes in as they

we Then look getting be to think in that second there. over to you what that I is would results that I I've the in pretty year, what to as know, expect described. from specific, the gave time course outlook quarter year, some loan would my and respect of expectation improved out in So, the over there, the improve of deposit flows next ballpark growth, perhaps, with

Manank Gosalia

Got it. Thank you.

Paul Burdiss

Thank you.

Operator

you. Thank

Our with your next with question. from Point. Please question proceed Compass comes Dave Rochester

Dave Rochester

just XQ. it the XQ annual Hey, sounds look I to but XQ, all year-over-year, talking for on Back want through sounds back the like quick, it's moderate step like NII or a you're a appreciated worse that details, it than real take at you the when the or little to XQ X% the guide, Paul, bit saying, run good down NII and about the decline mid-single-digit versus you're afternoon, guys. them

– So, guys looking effectively, correct? stable NII context? and for wanted and so go in I are you funding And how Speakers] guys deposits like from are is to XQ that Oh, XQ on [Multiple just trends that ahead. confirm XXXX you

Paul Burdiss

side influences. Okay, yeah, income, we XXXX. The inverted expect looking wouldn't as of, as in some on the about the other been growth composition, And of second well. what has on continued low characterize I'm the our you've balance necessarily I so have XXXX interest with of net of as then countervailing I'm sheet way that, for, quarter would the first what our continued funding it One thinking impact worse, curve, being some relates the kind in so kind is a the beta long. of of it, for point, but than is, to quarter I there the first model got

up over expect As we we quarters the said call, that to catch beta course in XXXX. last of

that we catch quarter. of throughout saw beta going of if in the the first it, of up, And here some first will, outlook, again, We XXXX. so, up of continue quarter, you that but is in beta end at catch to incorporated sort that the sort saw

some in that there. up a kind that would to you Speakers] countervailing place – second in where trends ends to know, I we where the of similar kind were say, guidance be there's of But [Multiple it So, be we expect would roughly quarter.

Dave Rochester

was XQ I about down being XQ just saying XXXX, X%, be NII was the potentially you just just XXXX in looking given you versus higher confuse, X%. like didn't XXXX forward talking to what the you taking were you were looked quarter were XQ XXXX to going only just And saying, reported. I roughly it effectively down that than to mean

that's it were like that, bit thinking? about I sounds just that wanted a little So, on NII, an to you trend confirm upward what you're talking of

Paul Burdiss

funding balance an growth sheet if countervailing year. go potential, we as be would be improvement outside. in mix kind the related these of And kind upside Again, to, you will, that throughout trends of the the would in

Dave Rochester

the or accounts up they definitely your about seen any less March operating commentary date of broadly on gave, month, Got their just deposit you to since turmoil the have larger account and the the And you would down Thanks. movement if what in of operating give more quarter helpful be all in account trends on then talk doing holding well? the there's on are kind you then you. deposit Are and color customers post appreciated failures can the details last terms other openings side? in guys XQ much accounts as funds you that

Scott McLean

second quarter part provide, of the we, on of updates. know, you intro you kind McLean, we that Scott is know, this just Dave, don't

there, for in we, know, in And a they we'll accounts. have stay certain commercial of where practice. said, as operating need just subset larger excess of those as their that depositors So, there's well larger discussed, Paul terms we've what of with they depositors, you

some it's of rate interest is interest certainly money that most rate sensitive, And probably sensitive. the

And then just disruption. secondly, was you know, there a

talked before some to the they that are know, They, you related and, really customers disruption, Harris company. So, talked the of deposits know, etcetera. lost you the large Paul, seen we the and strong this to, those understand strength but certainly they've I've to relationships

think some balances I, Paul particularly those this of come as So, release. I earnings said, will naturally back after

and move And money some interest so, a of volatility. sentiment rate combination of did sensitivity certainly it's just because the

Dave Rochester

Great. guys. Thanks,

Operator

you. Thank

with Evercore question from Our your Pancari ISI. with John comes Please next proceed question.

John Pancari

Good afternoon.

Paul Burdiss

Hi, John.

John Pancari

the is that I similarly, well? then you want on as you couple of can deposit what trend into what outlook, forecast? growth NII is And on Thanks. a see the, NII bearing to clarify just your just non-interest baked outlook things assume mix your

Paul Burdiss

Yeah, know, in they're on that a we embedded provide don't deposit that little but we can outlook I deposits, more say attrition. is typically you

we sheet As balance with, the a on have I of balance said, sheet, as previously, that my expectation back is the comments is pricing, back, of more deposit that in more a the kind moved deposits perhaps waive know, these in attrition. little inherent some but moved I said outlook aggressive could, my you better, off

John Pancari

about color you you're then beta? ability the, deposit on us the can some similarly, just mixed to and us change? you Okay, do then bearing remind thinking it cycle have how through give help And

Paul Burdiss

– historical trends but total Well, of as on holding bearing pretty about runoff think period deposits, some half average, of total indicate, XX% did deposits non-interest remain mix, deposits, see kind saw of level. at is of we as it's the would a period-over-period, bearing we saw in end I you non-interest typical bearing a deposits non-interest deposits, you of know, XX% balances,

year. would And of so revert that over to expect the course we the

And deposits. bearing where bearing that except to mix course that we of non-interest the the bearing year, the predict to the change over end going goes, say deposits time by deposits get of not exceed interest to that will that expect I I'm So, year. to interest would the

John Pancari

thanks. great, Okay,

Paul Burdiss

about or is XX%, funds, interest-bearing terminal deposits On near total sorry, data, for for interest-bearing Sorry. beta deposits total our funds, XX%. interest is XX% deposits about deposits total – total

John Pancari

Great. you. Thank

Paul Burdiss

you. Okay. Thank

Operator

you. Thank

your Milsaps comes Please question next Brad with from with Piper Sandler. Our proceed question.

Brad Milsaps

or, of afternoon, Paul, for the the you bank then come you broker to that just you the trade-off my if purchase, end brokered sense and curious you some duration be of kind brought the that deposits curious, what and maybe could the I at you questions. borrowings color? you know, maybe take wanted to expect reduce but want of be taking those, to some on, money good would get Hey, the between a would think back just to and thinking maybe versus it the try I what deposits, rate that to thanks additional assume that you was I the pickup put incorrectly, Funds on the trying me be the of, give could Fed funding and may wholesale or short-term about to know, just on quarter, there? was about,

Paul Burdiss

No, correct. that's approximately I think

the see know. deposits deposits, funds, sensitive, as way really, kind source of though know, You you wholesale brokered rate pretty they're of we even called they're – another as

goes to very, those course that competitive, know, of the on of you the from, maturity disclosures you that's effort rates profile And months that we see, brokered kind ladder think so, out those are an so our a imagine. an that's and We sort distinction. important why to core paid XX investors break would months, clearly make can is of profile versus those The over in X very as deposits.

left advantage, we rate That's speculative, wholesale in if example, it. about some than hard of expectation we're point that it's bringing little an in recently that's you predict, think the rate It's probably bring point refinancing my is, at brokered for the kind how to sheet have basis to successful XXX we borrowing. to lower a I those could deposits a effectively know, balance of little the they're in, that but that's basis range. The due believe XXX deposits. So, those a alternative source of

Brad Milsaps

lot you. guidance of And a you as know, follow-up, you Great, thank expenses. around, gave my

for or as also maybe be in comment should noted there further you're You I you already more treat encompassed the ways to that those given know, be reduce in outlook? come could to expenses, that guide, looking deck were your the revenue reduced

Paul Burdiss

Those outlook provided. are incorporated we that the into

Brad Milsaps

Okay, much. great. very Thank you

Paul Burdiss

Thank you.

Operator

Thank you.

from with Usdin Our question comes with Jefferies. Please your next Ken question. proceed

Ken Usdin

balance lot Thanks are And come talking we're left talking wanted the onto of I just sheet. a a the you the to – about side lot. lot back a rate.

and you the the So, as on about side, you outlook you adjustments what like runoff] happen portfolio is just gave know, you what you And from loan how changes think of loans in know, apart. here that any look at then, you between, terms act growth have do pulled change just you – Thanks. deposits know, [pace us [ph], I general the AFS for the just here? balancing in terms what and of security the know, asset how your of

Paul Burdiss

little and been a the drop over about, would that pretty flowing I'd around years, On that's And in been longer-term that's the some $XXX has barring as kind consistent despite the reporting change expect has course a interest unforeseen, level quarter. That's rates. some duration year. over flow million over portfolio That last portfolio pretty at four in for a continue to steady last I the been been of time, say at we've of that cash pretty cash massive year, of the massive rates. securities, Sure. of

you the accretion level to amortization as things. some the accumulated other disclosure around noted, that'll, loss provided of those comprehensive all the or that's of we So related

kind funds next of that course you certainly to know, of us. be do expect be year. the to the any I So, would it purchasing ready securities. remains level, portfolio a I the expect at, source of for not over And running off

Harris Simmons

the loan that question our at history. four of XXXX compared a some And growth last on you XXXX. look this as growth at like been rate that And or the in last, we've you quarters, of, of latter five quarters the asked, more long four the fourth quarters you know, the through they've if throughout on part had, strongest quarter – we is is you what XXXX running know, saw a quarter the to

sustainable so, And is rate, we know, – it's you think. a growing mid-single-digits very

Ken Usdin

treated former you of just here? to of picture crowd, of type know on but Zions do Okay, and be talk know, [XX lot X think know the, you reregulation potential and just in losses, of, with where Harris, billion] of one How your know, know, that crowd the were bigger, re-regulation size of follow-up, you you TCE about, of unrealized your you what terms I banks hangs [ph] you happens a view bigger bank? might stand kind with

Harris Simmons

because third has if held the banking surge you think rid it lot [ph] implications total and mortgage has jury create and others for those the that, is hope Fed, the know, I is I securities for by the a if regulators agency mean, the holdings implications you trying are you housing. for] for all My it backed system, banking example, will there'll And has, mortgage Well, the of [and beyond of get really in to XX-year know, come system. a be markets, out. the are of congress it at another two, and a still lot those this held that thoughtfully housing of, of two-thirds thus

their truly insured. more believe banks that most kind are deposits you are more I that traditional, of half know,

we'd and very some the mortgage tools, but stability. might know, value sensitive, we know, You earnings be to to of slides not asset here for know, this equity. mean, they're earnings, act earnings put balance, and creating the good for to securities risk backed equity, know, trying economic etcetera, stability using you weren't so swaps, between managing do if balancing of in And of you'd, some at that's economic be that, and you these value why we couple stream, I showing, much a of the you

during traditionally so, stream The fact know, an a talk and is, stress a focused stress earnings about stress of you weakness. create that matter have frankly, built-in causes more period has credit the to on been also of in in those so And tests the traditional that a tests. a trouble which of built, tests industry, I’d of And really lot duration economic the related. the a incentive there's have though, there's

so of know, a idiosyncratic, there's we banks you that and I you created really obviously, view Silicon throw couple with we've things those of of kinds out I, And that balanced of had the the would Valley, babies structures. know, this, have be hope will all don't all deposit of this be the the, a I And careful you all particularly of because business are that of ignited lot thought through very and know, idiosyncratic to kinds storm got think models but this, very bathwater.

be you've I of of and got get you if of I about think but market know, sensible not capital. absorb kind to even I resolved. tens going feel, largest if be, will probably So, think of also some about regulation, of be don't expect a size how it, a this sudden. very tens of probably well. there'll it's it kind that's tapered billions lot that of have are that There's upon banks I to very, a go very the country tens large don't I'm it think we're I to new banks, how they're in, we'll in could of sure the I some upon the raise [indiscernible], dollars going with some that discussion

some random it. thoughts just about So,

Ken Usdin

Appreciate Harris. thoughts, Thank your you.

Operator

you. Thank

of Ebrahim your comes question with Please from proceed question. with next Poonawala America. Our Bank

Ebrahim Poonawala

of afternoon. up A couple questions. follow One. Good

think you the bank? of the more And apologies think rate has I for do provided level If interest deposits, it, for spot go? us cost total the to terminal you I XXX deposit hike Fed bearing that think you bearers? missed or expect you one out can cost deposits deposit if we maybe at Where interest bearing but where deposits. remind

Harris Simmons

beta, the we're cost, going this over under we so about said will XX%. won't Right, deposit precise to kind up up year catch say, to and I on this just to but give you I I some of cycle see the as XX%, expect previously, be

I interest was think bearing which specifically, for your question. Sorry,

Ebrahim Poonawala

expect you end to of get do the the And year? by it. there Got

Harris Simmons

suspect would. I Yes. we

Ebrahim Poonawala

a is this guess separate I question.

for maybe So, a the CRE detail book, on question you Michael. provided

this Office lot the right market Just focusing the just CRE worry area you in think do terms beyond a office remain higher stressful sector? of if from that your the as about lens, is when at look or spreading do CRE of for most in sub rates the probably longer concern, you market, on you

Michael Morris

do the the it downsizing? Well, challenged don't do sort tenants those it has are work that's architecture work. for plates. being to where a current office I few optionality know, one how is lot who in other we segments I going And size because to is tougher you the the So, remote I issue. I do be of really of industry, think think quite asset the the market. to and see continue just and will with don't has model the do years. our a office stressed, And to it think developing with four design And not be, of right new classes and of contagion in really you more a kind and

multifamily. done there if continues the do multifamily. over too may into is, I'm in up, well, Multifamily well. starting lot a but pandemic, And of supplied so it's has the years Industrial last three have to activity over there been about isn't back going not worried

pretty I think supply in demand and are equilibrium. much

think hospitality will industry. underwritten I to guidelines, continue be, conservative You underwriting pretty know, throughout the potentially

up for and the saw before rates either really about of back homebuilders plateau and records bit and concerned even coming down little sales flatten they're sales. a homebuilders though [some homebuilder as were know, dry end the portfolio even year coming fairly years, year, are the industry You thinking] were last back. we but We last We of potentially move setting the or they feel our the by and [ph]. good about year

Ebrahim Poonawala

you. Thank

Operator

Thank you.

proceed Our with Please next Securities. Brandon comes question. from King Truist question with your

Brandon King

afternoon. good Hey,

Harris Simmons

Brandon. Hey,

Brandon King

through charge-offs as wanted all quality cadence get appreciate as the as of I net you're I progress a sense the and far far normalize levels? to very of low year So, color what from credit losses we as as the thinking, the and details all as trends. and

Harris Simmons

the problems at coming us. it's to don't us is, see radar, know, we at see trying that you have can What working I know, of in Feds anything though to we, slow the that's think large in on Well, I going of to there's be you this coming slow terms think things terms demand. looming we at currently, – been

I we've bank, seen space, on the going and to no, regional than think been they probably capital. focused what have and community in had more bank everybody liquidity

credit will, create tighter that that's that you an know, to expectation there's And think conditions. I going

we, through know, the the sense, so, recession, will why get of a shape. will hope loans. I of I And we that we through you're probably events during And, you life we quarter. to know, reserves it there's there you good know, expect in we that that's likelihood reserves you very built are know, the you pretty you it higher possible expect going out for a are relative it's, these think think but,

by the It's any concern. that's our us we seeing not almost arrive we're best that's giving definition, estimate, I term, kind of, guess, real But how number. at anything the in near

it's comes, So, to later to next think year into the the going I extent in year. come it and

Paul Burdiss

pretty clearly slides. that our see can investor you think XX of on I Page

Brandon King

when Is net in underwriting [indiscernible] a that or Got kind mind you to keep you there normalized charge-off underwrite it. it. of range that process? Got

Harris Simmons

quite unforeseen in I'm we customers the CRE serious about good space. – you standards. things We I limits become they, always more had fact are the that But we've into underwrite about over underwriting get repaid about there's happened. But know, every I know, the careful perhaps plus, think decade the certainly last concentration to run We particularly you really on do. obviously, it's, deal. problems, mean, that that and

back financial it land and more look I go really what great was concentrations, where was land we pain. had it about se. you at per too That had much in and about was we think underwriting And us if most acquisition. and development to construction, the happened crisis, the

little very have days. of these We that

going [ph] in rather to to in I – think I quite going good expect since] so, And be [relevance shape. we're we're

Paul Burdiss

a no under general recession, Well you broad if pressure in about a classes we've recession, we about buying you in you kind have retail paper, to just a said speak going to CRE XX% consumer, based before, have about that. is a numerous that really the of of think lot unsecured are be We times think don't Harris portfolio. that virtually And just consumer that of there's don't any asset it. greatest recession, the only think the land thing. as construction lending, of said, Construction

toxic is So be think and study is, three refers our asset another that doing well. right highly peers. that's radar is we Moody's highly would classes transaction. most they're transactions, what less on it ago, on leveraged people's the leveraged Those believe We area, has always to industry pop-up terms that in and challenges. than you of exposure to potential that years believe then said we'll would, know, now, we would compare some

Brandon King

my questions. Thanks for taking

Harris Simmons

Thank We're are going go through quickly you, more at Brandon. we just limit. we time see to our very can Alicia, if two questions.

very them through skip really Just quickly.

appreciate we just for And over going time. so everyone's patience

minute. a Just

Operator

Of course, no worries.

your with question. Please Our next comes with from proceed KBW. question Chris McGratty

Chris McGratty

of of XX, The a in. quarters, around top in OCI going officially about take points to squeezing world that of capital peers. for kind basis that you Thanks a know come seen me that Great. level I back consider Paul know next you've would seven XXX that's fair you some bless static XX. you over end, Is always to peers, running? said We've might the

Paul Burdiss

on I going think there. there's maybe two things

not do the regulatory in capital. we our know, you AOCI include As

who not We have looking So, are regulatory capital, know – those other is CETX that comprehensive an we by at tangible of the loss. It's at common and we ratio, distinction. recently X.X% to affected which the our is know accumulated important accretion managed equity. are that there been

continued accretion of for in of XXX amortization. duration relatively of is, whole portfolio comprehensive kind faith, for as other on to without an so, allows loss who And short of purpose accretion know, capital, points the on leaps folks to tangible lot slide common a that, equity, demonstrate you that our the can know, rapid of that into we accumulated solely based those are basis fairly of you the about focused ratio, get the, of

Chris McGratty

thank you. Great,

Paul Burdiss

Thank you.

Operator

from Please proceed Alexopoulos with your with question. comes Our next question Morgan. J.P. Steven

Steven Alexopoulos

liquidity. for Hi, when hope a baby follow the if earlier aside, we we this new to Ken’s with on that you are get totally thrown has you. mention even to you way Harris, deposits up of that though very is business put a different the to said one's I this changed that speed the bathwater. about and you look risk role unique topic, media out board, your at which question, response than signature those think regulation models banks, the basically them, everybody. doesn't the social that moved and at regulation, is and which SEBI out not separate the managing your played, want But the

Harris Simmons

think if Yeah, new etc. know, from in that's just listen, it's money, very social not it's media, will, you a I institution that I mean, – the, you the reduced friction, much element, institution, to moving it's

much a built. managing, was, of you and figure think well Silicon in core all think company Valley that that And a of calculus, accounts, from is I had I all Valley of deposits. that Signature, that to deposit hard been, I in terms banks needs think government's the of for the digital the brought their that's kind don't half know, obvious how they, think moment so, and I, size really that dozen down puppeteers And the Silicon because buyout, over base in actually as think be it's most that you about you have thing to of really people a reasons, everybody's pretty could duration particularly few I the think the out something of I you are know that

will a I bank a you way. probably But don't assumptions well. And, core see funds upon a taking actually with think we'll, I going all it's at know, And money account. going duration of expect was been of think, moved, is we do is attributes, just about trouble where type, precursor to the and I so, based their you which our operational, duration that around I as think, something you're it's as certainly, we'll think and it And deposit, traditional adjusting useful the not insured? looking we you think a of getting be you models the that's the know, exercise money, into into but to that as others be what on that know, and what it through

Paul Burdiss

just add agree to with totally everything that I that If I could so Harris, Harris said.

I think for that, you stress liquidity to we know, liquidity, testing. manage example,

to I practices, change massively probably untapped and I to into reason that. of what's that got, going the amount outflows we've it's so, agree very sources of and as the stress now don't of of the, that I change, don't what of and not deposit the at result know, kind incorporated a would of massive view we're kind at our risk. And think going available And, are what's characterize But risk $XX end of strong billion liquidity. management kind we've right got test. liquidity I

the change I might change going don't it's – change So, know the that to the result but analytic. much, might it

Steven Alexopoulos

other they call, an the of deposit they sharp say, right said was in a because of if reported fairly one price an of versus association that reaction you earlier, one the a SEBI. the Alliance aftermath helpful. question, of an banks [indiscernible] Just our of associations and their at curious, or If maybe can bit more a look did movement their at Speakers] out bit maybe of more Western stock That's Zions company pressure, individual on ask as pretty I not under but I'm Okay. from strong flows was quite the depositors saw the of [indiscernible] banks, [Multiple as stock one you see Bank a universal? to of where holding

Paul Burdiss

think we question, I saw think any don't correlation any don't interesting I here. we but – saw

Steven Alexopoulos

the Okay. questions. Thanks for

Harris Simmons

weeks, bank of as know, Because are just owners, you stock not of prices watch transactions, think consumers The didn't, handling know, three they're that tuned lot of just that there. of is is And small a their you people lot I into etcetera. what open, a other much. electric, business their a their it. bankers They're mean, reality don't lot as we being

level to, what's [in economy] I going the on businesses [ph]. and attentiveness think have of actually consumers many that we override sometimes

Steven Alexopoulos

That’s good color.

Okay. Thanks guys.

Paul Burdiss

level It's about you. circle current earlier of was to Thank a back worth I'm going a comment There deposits. quickly the – deposits. real question to around

the have flat It's my say, in return to the since relatively in to of seen, a environment. outflows. I think of end mention it's – kind Reg the been deposits FD and a kind more of inflows net that We've would worthwhile quarter. friendly I characterization, or operating,

the worthwhile I the we think of given course over sort flows saw that's the, of deposit quarter. mentioning

Harris Simmons

you call Thank you. Thank all for your conclude you will questions. That of today. our

forward with to this Zions connecting coming please or questions, our phone on months If website. Alicia, you look listed do the us for interest Bancorporation. have thank again, additional concludes you call. our throughout in contact email you your We number the at and

Operator

you. Thank Great.

Thank lines you disconnect at time. participation. may your your You for this

Zions Bancorporation, National Association (ZION) 19 Apr 232023 Q1 Earnings call transcript