ZION - Earnings call transcript Q1 2024 | Zions Bancorporation, National Association

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Operator

Greetings, and welcome to the Zions Bancorp Q1 Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce Shannon Drage, Director of Investor Relations. Shannon. you, Thank

begin. You may

Shannon Drage

this Darryl, this statements and quarter welcome you, results that morning. I forward-looking be statements, although good call to to actual during you conference remind first like you we discuss will would making Thank may to We call, our the earnings. review XXXX applies differ of with dealing the to in during presentation non-GAAP press which the made and measures, of We to materially. you release call. the equally presentation forward-looking disclaimer encourage or X this information Slide

the the are A release copy of earnings on as zionsbancorporation.com. well website, as presentation our available

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

us Officer; Chief Chief and Ryan Harris' our today Officer, Chris Richards, Scott with Following Financial Chief Risk Officer. McLean, Steward, Kyriakakis, President Derek review Officer; and our Chief Operating will comments, are Credit financial Also results.

question-and-answer for turn After over hold will call a our now will This I scheduled remarks, prepared the Harris hour. Simmons. session. is to we time one

Harris Henry Simmons

much, very call all of we Shannon, welcome our morning. this you to and Thanks

intentional reflect our depth the and talent experience. of our largest have of Richards to affiliate changes, Officer our leaders joining bank, CFO, Burdiss, As and Ryan of CEO Zions well-rounded our is been serving Bank. Controller our group organization These the Chief Ryan was is Financial former mentioned, our formerly broad leadership Corporate as call I has that changes along develop to as the with promoted think, new with as Shannon our Chief Financial other today Officer. in a we efforts now Paul

successfully to substantially uncertain bringing the Bank continue all anticipate Nevada regulatory second to While not we customers three the We've Bank shareholders and happened we of our in late summer. ago. completing economic over and remaining value and X weeks We deposit lost just to term. conditions, State new focus long system, in customers navigate of complex for migration completed have industry and on our migrations Texas Amegy core which accounts the of

the data, of to and is consistency system delivering times, the office, opening, and view and which of fewer system ability greater maintenance account processing, for the access client to deposit resulting data, provides anticipating, teller improves the relationships, core and and back in and for transaction allowing loan including calls real-time mistake This intuitive new optimized manage we accounts, fraud benefits resolution. processing, detection customer improved virtually shortening easy-to-use to X all are

enhancements of product is The of this pack our to major completion our offerings of which by accompanied resiliency, for our customers, terms the us believe strength we put ahead ability ability continued transformation other of relationship digital in digital advancements all approach the our This with manage and advantage, local banking, our our our risk and in to banking. us positions to footprint to combined serve customers. of well for capabilities

our X of inception third XX be overall and the also that since ranking Associates to market awarded brand Zions program. U.S. XXXX as average and We're our serve in tracking of create Greenwich awards the including to National U.S. awards our X wins the or among securing for XXXX. banks all pleased more through to customers XX continue banks position value was recognized, Excellence only efforts

across consistent for their business our continued way and regional with revenue our quarter current tip challenge year hat we In way, the to well both the our be market the Financial for biggest market relationships this leading continues and demonstrate at X and a By of good and the a business. Cullen/Frost values can we're environment, you the number where Associates friends were for be middle the the doing period. categories, with recognition Pinnacle and of who small of ease #X growth company over down We continue we trust, measured in proud long-term middle to to dimensions lead revenue score bank year such XX% other ago meeting in to the adjusted excellence who Greenwich and businesses. banks and small in needs compared to years, by associated and

time, hedging and of management through improve in strategy. through net relative growth risk Over to discipline interest deposit margin our rate the customer will interest pricing addition

events our to the also deposits the relative passage of We time with expect spring, improve. cost of will that continued of continue from last

late sentiment. somewhat have seems recovering year corner to demand customer low and quarter levels last improving pipelines with from Loan turned a this of sorts

ability Our business true granular small customers. on place base, continue an to we will and depend on customer of growth our success to our grow emphasis

a we've that for in our customers, meaningfully been bringing and program new streamlined It's seems number serving in efforts the builds a program the smaller cross-selling communities. and at contribute immediately successful franchise bearing also customers, is our to it's need a real fruit. SBA loan aimed to value our that business fill balance Recently, with businesses kind particularly and it unique meaningful are bank to of a product doesn't while of growth

bankers represent remain in to these fees as marketing capabilities of a to growing our key expands and Capital clients. total confident fee to set revenue. also larger our markets of our these We income are ability are opportunity, more a grow percentage product fees and

at while the combined of benign loan This increase period with XXXX, classified quarter percentage control and compared for the loans in contrasts first to These an X $XXX ways revenue a mere to of efforts million the C&I continue expenses by driven business. in a well-managed will we average as $X expenses. to we million, were annualized in the portfolio. be on to up of basis can to continue points quarter. invest current improve balances largely costs just Net the continuing to paired focus charge-offs Adjusted that be

the be which X our point later basis to quarters We quite presentation. percentage a continue will speak and in as over the Ryan which manageable, our fully in of in are losses will expectations and believe increased allowance, realized about loans, current more few reflected detail next

our improvement net With than our returns interest performance, positive continued we improve in credit anticipate we coupled with going ability a and forward. performance peer to the relative better shareholder trajectory for margin, expect

financial X, on performance We net reported the included we've Slide quarter. reported $XXX Starting for key highlights. million of earnings earnings -- net

Our period-end average the X%, quarter. increased under for while loan increased balance just balances X.X%

of X% early in quarter balances primarily outflows to small seasonal Customer the the a year. in number deposit declined approximately due

as was points quarter. percent of charge-offs down from a loans basis just Our Net reported basis loan-to-deposit ratio X XX%. the prior points noted, X as were in

was compared to in ago. year the X ratio Our and X.X% fourth XX.X% quarter Tier XX.X% common equity a

to reflect reflected $X.XX Bank Slide was the from share Moving $X.XX quarter. Bank, prior X. Signature Silicon fourth quarter the updated initial quarter. results of impact of in which per from FDIC's up the XX% the estimate Diluted impact closures expected Valley negative compares negative Current a the to losses and of the earnings $X.XX assessment from from the

Slide X. to Turning

exceeded noninterest first increase the PPNR in adjusted primarily earning in the increase revenue higher $XXX million, from was attributable Versus asset ago net in yields. quarter Our seasonally to The as down preprovision was quarter, fourth deposits linked the down the quarter was quarter. XX% cost expense. decline of year the $XXX million

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

R. Richards

a income from on interest the begin Slide I pre-provision net rising net good repricing prior assets Thank interest costs. revenue. of you, interest X-quarter is The net our margin. our the components both. Harris, outpaced margin everyone. and bars of of income. will Net the slightly morning, income sheet and includes net shows balance funding with overview in Nearly X white net through the improved the from of XX% recent discussion the revenue the of chart trend and boxes as the earning interest quarter for interest

net the Additional X. detail on is included Slide on interest margin changes in

the contribution left-hand of a of these impact to repricing the impact balance encompassing the loan waterfall XX adverse Noninterest-bearing lower with provide positive resulted interest interest-bearing profitability. side the sheet margin. of declines outlining reduction volume quarter linked -- changes of the average rate The offset components in the by funds volumes volumes. basis page, deposit and the the and slight associated in deposit we impact key volume both was On net of in borrowings, a

year The prior rates right-hand yields, These XX points which costs, to basis borrowing basis side of points of reflected interest margin. than the contributions, more impacted and to this loan by in comparison quarter. increased chart shows deposit XXX noninterest-bearing offset the basis Higher contributed net which to net margin interest by margin. the interest points. net additional an which margin XX were positive deposits adversely levels another lower The value the were contributed

declined quarter. margin basis prior interest net the Overall, XX the versus points year by

the Customer-related and capital revenue noninterest income other quarter, million to noninterest was million by X. to $XXX Moving in offset with compared categories. market prior in fees smaller declines income higher Slide on $XXX

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

ratio XX% of the stable pre-provision revenue calculation. is decreased the quarter on factors efficiency versus revenue from adjusted is chart adjusted used side included the was to Adjusted fourth previously. due our right which noted The includes the and prior page the in year the in net revenue, and the revenue

in $XXX bars $XX the expenses Reported compensation. on to at largely million $XX noninterest increased increases blue Adjusted expense million, decreased shown lighter million. in seasonal attributable Slide to X, $XXX million

As special in year. first costs, recognized $XX $XX while in quarter assessment quarter another a FDIC fourth reminder, the the was million included this million

slightly employment ability to associated the outlook noninterest expense include and is of this for manage costs. supply outlook technology, to and adjusted the Our relative Risks first of our first increasing chain, with quarter XXXX quarter for opportunities XXXX.

trends average year. the highlights XX and loans Slide our deposits in over

side, will X% can current XXXX. somewhat quarter and demand improved first that average that to slightly relative On stable sentiment first increasing in XXXX the of the you and quarter. is expectation during to be of the customer our the see loans in quarter the loans increased Loan left quarter,

first cost average on basis noninterest-bearing slightly of right page. side declined. this stayed turning in total deposits shown at deposits the and flat boxes of the to white quarter points. Average decreased The Now deposits XXX broker deposits for as

repricing repricing beta including brokered deposits XX%, deposit and and against of quarter for total was interest-bearing remained the deposits, XX%. on quarter, the first on XXXX, based measured the in deposits rates As beta fourth average the

Slide XX borrowings billion funding $X includes balance assets and Short-term of side cost earning first have more grown the customer have declined. total funding quarter sources includes XXXX have ending trends. as The a since left-hand chart deposits view trends. and decreased comprehensive of

side, along our total of cost categories average right funding the the key balances are with shown for On funding.

the prior X increase chart, of total current decline costs seen funding the quarters. rate to in to X As quarter in this the continued on points at compared has basis

Slide Moving to XX.

Our investment the market investment first funds balance in X be expected. portfolio to absorb cash and this changes. exists $XXX amortization ready investments a to slide, last portfolio the were customer-driven principal our quarters. over sheet The we storehouse show flows prepayment-related of money primarily to Maturities, million quarter. and continues behave as On securities

this be a for source investment of market With cash over anticipate money to continue balances term, sheet. will decline the of somewhat security funds we balance predictable will the flow, near the combined and portfolio which

compared at duration portfolio, to one period X.X% measure slightly is interest estimated sensitivity year versus shorter changes the of ago. the of prior currently to rates, The a investment price year which is X.X% in

the interest between This deposits. and to helps manage duration rate inherent mismatch loans

than to assumed required our investments portfolio have asset a durations. deposit larger loan and duration liability portfolio, balance term are fixed longer the to rate With

provides rate sensitivity. XX our interest information Slide about

provided most sensitivity interest in we standard presentation, rate of this of environment. a we measures the is shock relevant rate While believe parallel more in current interest the dynamic sensitivity view appendix

side XXX the X% page, to in when forward using path X.X% balance figure, about assuming and respectively. rates of first basis down the implied As outcome noted and of first higher that shocks parallel static this right forward around interest far sensitivity on of income quarter March point is the XXXX, and a XXXX quarter at XX bar suggests net of sheet. the modeled implied X.X% chart in the compared up

asset-sensitive rates short-term occur, fall interest measures changes while to income net in sheet were net traditional growth points reveals than rates. for faster using long-term no our higher. This interest is if positioned model If income XX rates modeled is analysis basis that balance

changes quarter XXXX balance Utilizing deposit we net outlook interest income stable for the curve. expectations quarter rate XXXX. deposits and pricing, compared to to believe this sheet opportunities across of overlaying growth, with and of interest path changes modeled loan competition first Risks and associated the includes first yield this be the management when for realized increasing that in in outcome will slightly

economic Net points particularly the quality is point charge-offs of real assets estate X $XXX and Moving remained portfolio, a in credit were observed classified loan balances of of to we commercial quarter. increased the increase improvement X.XX% basis $XX in in partially strong. deterioration scenario. allowance and respectively. the to basis loans reserves quarter net charge-off in for modest offset Notwithstanding modest losses increased performance, strong our The X portfolio. Credit loans, due $XXX credit Nonperforming by a criticized credit charge-offs incremental our by XX. over some net prior and million million million, and Slide indicators

the will manageable expect realized loan As Harris year. the be ultimate to noted, losses we the remainder continue very of over

real the portfolio commercial a it know in interest of appendix is presentation. detail the we to we As included regarding additional with included have this topic estate information

total an loan X% quality relatively with outlook. office of and remain limited on total CRE increased economic losses current CRE XX% provides the measures XX% the during XX of portfolio well strong, we for portfolio. portfolio expect our Credit CRE reasonably total quarter. based overview the loan though portfolio perform CRE with or classified the CRE represents to Slide representing total balances. Overall, of levels the of criticized

Our net ratio combined quarter the to in compares as CET of credit level our on is continued reflected charge-offs. to risk grow low loss-absorbing XX. when well loan ongoing profile shown to This, first with XX.X%. the for The allowance in the losses, capital Slide

from equity GAAP and through will and improvement continue common the earnings through to regulatory securities rate expect the path outcomes. accretion perspective a AOCI our of organically of both increase We regardless that portfolio

course over presentation. XX this Slide summarizes the outlook provided financial the of

to reminder, represents first outlook XXXX. the our quarter compared estimate quarter of a the XXXX As best as of first performance for current financial for this the

back Shannon. time with the And that, I'll to turn

Shannon Drage

prepared concludes our This remarks.

Instructions] [Operator

open please Darryl, line for questions. the

Operator

[Operator Instructions]

of Our Morgan with Gosalia first Manan question is coming from the Stanley. line

Manan Gosalia

there congrats and the there the number of on into I NIB Ryan, the rate was assumption I'm you're the NII any could forward curve dig welcome, the what assuming get you also about if assumptions we the using year? can sensitivity is and terms you role. repricing guide cuts and and rate talk wondering, of outflow deposit And new here? if in on cuts? this don't

R. Richards

remarks, the and emphasize at in the we much. the X And of materials implying forward the rate when And the some sort in cuts. curve fourth was yes, look the of a Fed so Thanks end X.XX%, so of as of -- funds that outlook you rate quarter. quarter there really year in my of embedded forward curve of

base cuts having of some inboxes supplementary I see we indicators perhaps and additional the that's latent year, fewer our of would around our So that but more possibility of sort that sensitivity. We sensitivity open important year. our seeing latent interest the model as each rate about like X.X%. we measures the some think of that kind cuts at of we fewer of as think rate becomes particularly, the every for morning, and then -- think advantage suggest expectation, the as really we emergent view about sharing rate And for

we good different feel pivots positioned well our So to about ability rate and be changes. for

be the were that be I deposit to that stabilization that our as Were and parts to note, keep So question deposit pleased other quarter, that watch pricing there behaves forward missed? continues stiff. any will moving of We continue moving as performance, much of dependent pretty some of see forward. a upon competition how you that we'll to on during

Manan Gosalia

and but time, you on just maybe wanted overall a flat. balances. up was them. relatively know deposits accelerated of deposit I same the this costs outflows the to follow bit little think at NIB quarter, I I got cost the

continuing to that the about as we deposits. you hearing of there or from So in as maybe if seasonality take quarter? well higher need considering? fresh the them be both the at look the through a you their cost for NIB what levels positive talk you quarter environment Are Is longer trends through any And seeing are the balances can there the cash rate clients? trajectory of a

R. Richards

you that. thank No, Yes. for

we relationship And terms quarters. some through so of of ran from seeing a some the smaller where was migration But quarter our even we in did small very seen change in -- back ways, interest-bearing with seasonality you're off. commercial tempered the yes, of So there certainly the of a deposits our that DDA was of somewhat. larger balance I in in some that most fourth see for but We've what also nice quarter NIM end think, we modest large early a in in migration with to saw the the balances, stabilization the the saw, balances. period, going relationship that

out rolled is that from you'll our guidance for and current that that level. allowed scale beta we up our not have our have for this see to total We materials continued migration deposit allow would in embedded within

So migration for as there us room terms forward in of allowing is to some one guidance that stable increasing slightly peer NII. our to we hit still in maneuver time year's and to

Operator

Evercore. come next from Our John of Pancari line with questions the

John Pancari

real estate, On to the the credit a -- reserves. you on bit added front commercial

the maybe around up the your confidence know comparatively, commercial to range are commercial estate their reserve. know about certainly You for loan reserving in mean in you I loss could reserve to regionals I X%, estate. But real X% adequacy discuss brought the I peer limited. your losses of XX% are the real

given confidence through pressure maybe adequacy the industry? in the the and in you trends seeing you're on that your here can So walk the

Derek Steward

what What A portfolio. criticized, of multifamily, the comfortable with. we've largest over actually the what's -- level very portfolio in in of of is the driver credit CRE values migration can growth points had X of Derek. as Thanks, with done comfortable very million the the quarter, office losses into we've that be years. that's John. that manageable just This the loan challenges we confident underwriting probably underwritten, in had conservative $X continue compared the reserves we've have. to to We're future. is reserved that from in lot the just over well well manageable. the for very see in losses slower loss time, some that we're periods but it think is over which We'll that the from for to the continues the we see of very the you We're basis are because as peers deterioration some our we're at we've portfolio believe -- that the to our we and It's that years

Scott McLean

size John, that this is would think about CRE and on to us, average that, Scott. what I banks half I was which coming the something you're depending growth knows this our at. buying everybody regional just into about looking add almost regional of

So less our has about peers. as Great Recession, X% than growing CRE significantly to you year, since know, which a book been is the X%

it's a having is odds is to fact average of average real. have sort actually median difference can us think portion large says loan flow you that of look that related it a the demonstrated cash size at book. portfolio support low I the we term tells of guarantor XX% you And the make then that the that of the just and

relates we've our hold levels a And think about and disciplined important is this. as particularly been I into of to finally, like to management, then peers, levels. time hold it really some going And compared very concentration

John Pancari

better it. expected. appreciate little than then are expense I separately, side, trends coming a expense bit Great. the on And

you system see to you can maybe before Can of see tied get efforts costs I efficiencies. you year was us franchise? separately, believe, the the gains front, see through us of conversion. bit as expense the -- actually core a up look I bump on completion of you in think you the in on little you expense the some And might incremental better. remind some dynamics the outlook then you if those a do the remind X,

So well. through you walk us maybe with as can if that

R. Richards

Yes.

a think, a was came a with was that an the performance, the that revenue commitment the I in me in, we the as with adjusted start having year-over-year increase year of year where mark, expense and on very modest where bend noted, ago we're feel we was basis last time about pleased out X.X% highlighting, this adjusted in relative to made Let curve to it environment expenses. backdrop

wasn't like of done. commitments a feel I we operating this continuous period in So there, kept and That really we're and won improvement.

We progressing. transformation about see to moving his the continue as think our to very forward inventory know, that's on work you as in those that make that we manage Harris good how core opportunities, success we we sure and responsibly, and opportunities financial highlighted remarks

see going We implementation next into in direct opportunity do that year. associated some of terms expense with

have time drive We internally out we where to a automation improvements. spending out lot focusing been been of can mobilizing work. people We've internally hours bring on of of a our lot our manual labor

there associated And to kind realize with we've structure across in our projects the And recent compensation environment economies years. worked we of how opportunities our ability will trend and with of on see facilities. an that revenue dimension. continue had we've some match that We some shown the to we've

know, don't add. there's to I you'd anything Scott, if want So

Scott McLean

to this to rigorous and last that year. this quarter sitting the awesome, we that of year-over-year X% we've growth comments called quarter noted, to be speak the No, were of on first those year, had when that about discipline all Ryan, would we we expense was Ryan flat XX% as

There wasn't be Ryan will rigorous we forward. So beneficial it discipline by and a going lot that of noted accident. was that think

will also the Related that in areas to with many $XX exists reduced projects, will conversions. that amortization next some bubble costs. from would we to see call -- help be core we've there be 'XX, we'll benefit the our decrease million noted bank $XX year what future about million of in in a There to specifically, staffing

we platforms process our And teller well. then at of may see higher see anyway, that as we, turnover I we from time and line accounts some improvements think where seen efficiency real as we've where new on levels noted, the some Harris

Operator

the come questions next Our of Steven Alexopoulos from with line JPMorgan.

Steven Alexopoulos

the X:XX Hopefully, is This a First, you keep by thanks great the for it. a.m. call. way, time slot.

lag would won't a of I if deposit here if guidance, in come that like yes, pressure that. that that? the interest side, net comment question the rates down most banks expand seems in because rates ask terms this that decline, question, my on are there's But of upside For income indicating in short-term opposite they the Could think but on here. short-term the it would saying NII run, you're you on the short

R. Richards

Yes. what I deposits, size nature that. you would there near-term across look is our emphasize the basically of -- But think that billion. if we're you $XX seeing our interest-bearing around

parallel above. You about wholesale we've prices, as near making that advantageous those that shift the that sort and of we not said, near-term were those of that pricing think that move on a could being can to to way down, think only good headwinds a be priced on sensitivity X/X short-term rates down, kind bit expect rounds would us we We we have of pretty been the to of deposits the if be X.XX% realize.

Steven Alexopoulos

it. Got

turning is you're improving improved customers, loans? do improved negative, And to to cuts but mostly it look bit. to Okay. for was Because the tied pretty Harris. sentiment follow-up, maybe business That's seemed for you pipelines my you a demand that? say maybe at talk to still corner. is if actual It side, like see to And loan helpful. you, inciting about sentiment interesting a consumer turn we then Can seems inflation, that need hear you

R. Richards

it sentiment point, doing that the little a more that the just just ago. that that's think of or X borrowers. hinges cuts I from might that are kind -- is you coming -- general resilient mean, kind have months Well, little that seeing our more things expressing don't what than we're a I seeing really so a is I they're what's headed were it's frontline the belief much. probably know been lenders X It's need on optimism not maybe recession into this quarter is from a this probably a economy of

that's So a what demand comment from us of hearing about our maybe I suspect improving it. our But coming simply loan lenders. is at reflection we're

but a we're internally. little that's to seeing it's So what hard quantify,

Steven Alexopoulos

In improvement how the would pipeline, the actual to filter through that long improving? past, growth when in saw typically an loan take you

R. Richards

X months.

Operator

Deutsche question of Gizycki comes the Bernard next line with Bank. Our Von from

Bernard Von Gizycki

a You've and investments sustainable Wealth the mentioned. had Markets improvement nice uptick by estate and segments to the more expected to securities Management been capital any making expect real in quarter on will base. areas? help your underwriting markets where driven revenue from? you a driven in color can from provide Capital the you these revenues Do be come you Or improvement drive

R. Richards

very it. to sort we have generally effort. might I I targets just anchors And say to that a we And a board. intentional engaged the calling of expect We've have going committed got some it. in of lot across it's be internal ambitious people and

to it's I going be any So category. single don't think

in to going markets. board of across the it see you're capital I sort think

Bernard Von Gizycki

What borrowings the nice And bringing this XX know I $X down further borrowings. your And on bringing on are in expectations quarters. presentation, billion over a $X the you job of you've then for wholesale down of in these side. Slide billion maybe last brokered deposits your several the and on having funding year? done

R. Richards

We Matt Tyler, speak got can't might about it. that thought to appreciate I you have one. a

Matt Tyler

This is after of actually, stabilizing and deposits Matt broker which Corporate we Tyler. Treasurer. it's mean down brought why we've year seen the those deposits. I'm -- last this saw where year, after last really is from we I kind growth

what a our with our function happens deposits, what growth. with really Going loan be forward, to going of happens it's

numbers more borrowing. strong, then balance need loan we whether is depends those very down sheet come continue expect wholesale somewhat. We that probably growth super behaves, of that on heap, to But of comes the to how rest the to in keep

Scott McLean

$X still we off add a just as client Ryan -- first got quarter, customer are little in still that, billion would to which in about deposits that bit somewhat We says, have sheet. I seasonal. the deposits that down balance

try or to it's it's decisions, would customers bend overnight billion so mechanics, down. of we come what simply have just customer And to something any Borrowings we looking deposit borrowings growth just for customer try about $X could a we're and pretty And would a at to decision. growth. decision billion, -- the we certainly in number try the rate We have really what best natural make very can borrowings have hit deposit point down, make we don't number shown conscious not time. through need $X come

Operator

questions the Usdin next of Ken line with Our come Jefferies. from

Kenneth Usdin

just of more about little you mix the ask assets. I Can a bit earning

down. terms do and that looking securities. cash in What and mix that rollovers of securities coming overall are within the going be be keep the would of versus securities to and cash You mentioned portfolio you to

R. Richards

Yes. Ken. Thanks for that,

that trend time helping We in continuing yield longer. some see coming terms we've have that investment our attrition. us the noticed off that's securities And can a of allowed that portfolio You've to we've has this the the sheet loans course in and past been quarter. a year, reinvestments of and the and past remix been the we that of nice through certainly the seeing balance saw trend for

let's goes behaves, what but the So kind loan have that's is, Matt our what and growth to don't I deposit seeing. where up number we've know in been that how said line. see It of a specific we shows base back

Kenneth Usdin

the originally work history infrastructure. would us needs a you like about help and the some the to that have just what wondering about given what realizing next we I having your just us if how I'm far as approaching Category kind structure, changes and could through guys of separately, think you move be talk and then at forward know of And away bank company getting not especially way ready Can company that think $XX about think XXX X there? Okay. happen where that billion, how along from you you threshold. you're holding it you

Harris Henry Simmons

take is just Harris. mean Ryan first the thing that, at the up I note something said step securities I'll Ken, that I'd continued a it's about picking down on run portfolio. in

of kind that going We is here I the that out, if it have enough don't crossing just or with push XXX. kind data year that AOCI help it it's down advance which kind and probably liquidity but to normalizing helps of what, another drag kind in of of us know getting runoff, of gives us, in inherently

the because still to be We that of little all think et terms the in I stress terms we're to to kind we there continue a in continue believe we would requirements, good probably of of models. In regulators, rigorous the we'll documentation we're doing we think pretty shape mechanics, supply cetera. -- more But -- testing. kind of have we refresh

need I think, will structure, makes We the to back our get much resolution that business. plan easier. actually But into

main bare is resolution structure I have there's makes holding I mean all It's a pretty probably the it's the we lack no stress easier. that internal. test. much supervisory only The that planning company, really of impact a bones think

until I we so get And to, think, $XXX,XXX.

what I as if we it's would expect, and concern, more the if that, a long-term I a long-term rule. anything gets think with rule. mean get have debt I Basel probably So fundamentally, endgame III how kind think that major don't the major on event going debt happens see I to around we of when there. probably revised, is event a we're really depending

billion It's bank. I think $XXX sort of anti-tailored revisited. get for that to needs regional

And be so to we're paid that, well. that see think pretty some is But I in that my going to as beyond good attention we'll hope shape.

Operator

next Brandon of questions the come from Our Securities. with Truist line King

Brandon King

I several the pace in to nice next about increase yields, expectations lay quarters? you increase So asset what a earning just talk out are your for the saw of Could quarter. wanted that over

R. Richards

asset quarters, that, talking bar. I X basis guiding chin been we the been of have you we've sort for you of of that this X points. to as And over way, able We've along look we've Thank pickup think yields. nice couple to been quarter in if a sort did to a earning

So with we in nothing that if to slide stand really the gain else rate that latent we out showed sensitivity some which borne the happens was curve, repricing that good in activity, here.

Brandon King

of Okay. do think Is you still is that go the that And X? a guess, to assumption? fair above still range? Or you X the that, can I kind

R. Richards

ourselves. where out, I been to ahead of but not wouldn't rule the wanting market it kind and that's of we've get talking for

Brandon King

office lastly, step portfolio. CRE, nonaccruals. a then in criticized in meaningful there Also And that was Okay. in down classified

you're talk metrics? you're managing actively that So just What you and you are how could seeing managing about portfolio? how internal

Derek Steward

a classifieds on in loan we full non-accrual last were Thanks, charge-off This positive actually in office We and year. is that had. Yes. criticized Derek. had where paid previously a resolution is actually we'd one decline Brandon. The

continue we the So that portfolio. -- just to office work through

over positive still we've little office while. we've And actually we'll time. next so some that for I'm that portfolio You'll had far, have actually challenges, the see sure, reduced But there. resolutions

Operator

Our next line the Peter questions of come from Winter D.A. with Davidson.

Peter Winter

the Can you on in loans? increase C&I color some classified the provide

Derek Steward

C&I living This just just migrated Harris It's and classifieds. of trends facility but classifieds a slower lease-up is some point one to actually specific there credits. other you. quarter, were Derek higher or then was to classified. industries, migrated they that were Thank Yes. large nothing this into the increase related, C&I that as out was assisted credits just The And there in number experiencing expenses again.

Peter Winter

And cuts the increase at quarter. costs most I points interest-bearing of roughly there's the going outlook just have impressive, X it you're basis points it's pretty seeing XX year? Okay. this forward because Fed no separately, X cost, this look basis to peers when deposit an What's decreased deposit if for

R. Richards

of pricing say Yes. at happy few we've this out time. the stack Listen, interest-bearing as of fair we we that to a on ran to still pattern look where kind little the game I'm peers. have on as catch-up bit been but we for deposits, our really of cost gotten words the there. of we say overall trending, It's like relative we we favorably a now behind -- appropriately historically up we've our got basis. yields that and really up play of Listen, total pretty to And

working funding and sure on but our we've ways extending meet paid. other to ourselves the been we manage observed making much not looking relative we're needs, to that sources, appropriately And their clients that, rate with too so also for have to

we so if want is plan know on continue And to don't did you there that, see that. I add. with to some and success anything Harris we working

Harris Henry Simmons

well, that really think good. it's captured I Nothing, it

Operator

Our of KBW. Chris from McGratty the next with line come questions

Christopher McGratty

capital use changes capital? OCI, year of the maybe but picture in for big of next any more Harris, or with broadly, X, uses just capital rebuilding

Harris Henry Simmons

business market lending X into the $XXX think think and we're very -- with crossing things I SBA focused internally some mark. that X focused to I I last And and a on And businesses returns, look you it to better we think look, about the create we're build only it like thresholds that or Sentiment that over think going there mean, about for in tough change our kind like, maybe means. of turning is -- little billion kinds invest a I be ratios kind fee we're clearly that beyond we try but really there capital spot generate next and like think really what bright the of business thinking brings couple income over that years, that in has And what on years, the to not of so get I higher that's value. really -- franchise probably are of we highly us. No. kind the focused but are pandemic, seeing going of sustainable as of small spread, been that that, a capital franchise, wealth, lot a because deposits lending. noted markets,

they're insured, operating sticky. -- smaller accounts, they're They're operating

things of we middle a so value. are of for there can add small do that kinds and market customers. And lot

of so incrementally years, that's us think for front. there's primary we trying in to not just that's -- but opportunity And more the a a recent focus. do some consumer on been there. That's We're driver real major kind

with that's there, insurance a I think largely the need -- creating base. think mean, at if the out I to look more a I a there's mean view comment. an a just crying I insured system. deposit fully for Again, it's editorial deposit

for think banking be longer-term absence need of a a base. I of the sustainability it of think at that, be fundamentally diversified focused system. broken. we And concern the on really building to anybody granular it's about about it In should to source more deposit a who's trying

a And think, be, It will come. in I real so that's years focus ours. of to

those it's about those are of kind that's capital, anyway, but some -- focused all on. of the -- activities but not we're So are

Christopher McGratty

is my rate That's a for would just great. rest of be in first And tax the run quarter the the rate, year. terms the follow-up of good

R. Richards

you time. at different to any give have don't this in point guidance I Yes.

Operator

next Our the of Ben from questions with Citi. come line Gerlinger

Benjamin Gerlinger

the question Just on had multifamily uptick. a quick

Or little lay kind of Is uptick are presence guys to in You by across of multifamily? more a think assumption is terms the of areas to is of that bit stage uniform state out the United it that? fair just there a geographic a kind percentages. starting indigestion the States see in certain amongst

Derek Steward

is again. depends corner a is on. a question. the you're mean in very estate good Thanks I street seeing It's It's This question. on It market. we're actually not for -- real it specific local. Derek what

there's and delays the is primary on seeing we're depends what markets to side on on it a the complete issues: the higher so the cost some one multifamily And and really projects is, X so and -- in cases, projects.

period larger seeing we're smaller maybe issues combined slower concessions during increasing. And the the of to stabilization. see are continue what them some percentage. to support to some then They're bringing continue a the a to projects. And than maybe just on issues they to so projected lease-up there originally And to number we side, really early for construction lease-up, as on with rent interest what get in -- longer stabilization them. equity continue get taking they it's to these the sponsors is we But support rates

Scott McLean

play cycles out covenant remedies to table. as or seen specific great previous We've but which And the secondary no require classified you'll and was migration because that Great coming the to and tertiary opposed as geographies. packages to in this very in twice see post underwriting, just exact equity, land, -- of much process previous same Recession criticized -- about some

softness. you rent a think path see it's is hit generally, nice flow this multifamily and multifamily But the we of the of of things -- we'll concessions One why about the with equity, and lease-up. slower periods might through doubling cash

Benjamin Gerlinger

have or this likely helpful you is classified. a problems incremental through about when That's the a a kind all whole. you're estate know it's office. next that uniform as you to phrase, use see you of -- does in commercial know of, just talked charge-off, increase work across just And color. real drop, I but looming little think criticized you. do the more to I think then CRE? Got about of shoe the bit to I hate kind but next where within Is office to some kind

R. Richards

has has by pandemic. challenge CRE rates. been certainly multifamily leasing the the been for increase of in slowdown all probably time office some interest coming then it's in out impacted the some Well, And

X so And reduced we're we years. side, $X.X actually -- X, that intentionally the We've billion. last on have the over office

is we not large were we it It's downtown have properties were And do. trophy not even we just City. thing CBD what pandemic. just never that New other the our say, the ahead It's markets. So that of we kind office we're of York in the before --

some have, think so I the from will office what And -- I near over continue next challenges but to the have the be we it term. manageable think do will

Operator

Our next with Autonomous. questions come Foran Brian line of from the

Brian Foran

Or a if wonder what just broken to $XXX,XXX I is see could the system deposit or change Is the could you comment. for key maybe level insurance give that of I operating separate you would is? the next like Harris, up on the accounts? level of follow it lack just it of detail the

Harris Henry Simmons

with which start $XXX,XXX, -- It's last last that think, in, changed for inflation. the the was XXXX. fact established not was I yes, it Well, indexed I I'd mean

last changed. And so was it close X/X its if you lost it's about of since power, to purchasing will,

real the last has insurance X/X the down by nearly since So deposit change. come

in it approval large because of a a was small facto during saw et insured. of world And because to it flow quality, the solve to was to basically -- they're example You was there, banks. because banks of treasury is Too largely very which there. Fail et Big de it's intended the to the going Fail We -- credit of very very smaller not that only Too saw to it's Dodd-Frank cetera, handful I with a still the have capital, Not episode, funds given it others very, Problem. department wasn't cetera, by crisis, you mean SVB from Big and

facto deposits And portion of the a de large insured. that have so nation's very you are

are call fully among not Big probably Fail, those deposits it, to got, have Too insured. of are You those you who half

the is it so from. leaves are XX% that that's And insured, there not XX%, out of deposits where kind all instability coming of this sliver, but

something here who deposit absence here And policymakers the disheartened during that think ought its I'm a an to is wait there going base. be it base. been today insured hasn't But it focus by next on. what to And solution important. but on why deposit insured not the no everybody to call it's that are be, suggest again. little crisis is focused it the ought until I'm rear for they simply head to on this the more because in that to developing have remain is SVB It's portion of just we of focused that that, longer becomes important really It fundamentally didn't I

Brian Foran

kind clear, of rounding over gave landing do you CETX The the XX.X% very and next spot? Or And increase increasing maybe a the good discussion equity the on then projection. AOCI in that as out, you well year? that range, is will kind That's common just see burndown you of that the were capital helpful.

Harris Henry Simmons

really on have common loan tangible it's we're going capital we're behind we're on be shape, to ratio, the to year. that probably other clarity the for mode want be solid kind stock is, looks grants, in growth look, think what Well, strong But understand equity -- getting I think a don't we here. buyback of going don't while know quite can increasing to in that AOCI that of crossing we'll don't where really than I this depend thing, like going the us, and here stock focused doing and employee be greater XXX. covering we I see ratio cost to until

Operator

Thank you.

the question-and-answer to our Shannon floor I for session. reached like to of have end closing the now would We back Drage remarks. turn over

Shannon Drage

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

This interest our you coming If look us your Bancorporation. call. on connecting with website. the concludes you throughout at in or Thank months. number phone have forward We to you the for our questions, please Zions contact e-mail additional listed

Operator

This does teleconference. Thank conclude you. today's

participation. day. the at disconnect Enjoy for may your you this Thank time. You rest of your

Zions Bancorporation, National Association (ZION) 22 Apr 242024 Q1 Earnings call transcript