ZION - Earnings call transcript Q2 2024 | Zions Bancorporation, National Association

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Operator

Greetings, and welcome to the Zions Bancorp's Q2 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shannon Drage, Senior Director of Investor Relations. Thank you, Shannon.

You may begin.

Shannon Drage

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

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

and comments, Ryan Officer. After our Kyriakakis, remarks, Harris' today and will with scheduled Chief we Financial Officer, prepared us now question-and-answer hour, a to X will is review I Officer; Harris our the are call Scott Following will and session. turn Chris our results. Simmons. over for President This Also Richards, Risk financial McLean, hold Chief Operating time Chief

Harris Simmons

Shannon. evening. Thanks very this our We to you much, call of all welcome

X. driving really modernization hundreds catalyst the has deposits get journey into created conversions the it colleagues. that the of really the happen. Slide and core Consultancy I'm our our skills with of working throughout conversions with remarkable as tirelessly note system that We who platform XXXX. The under all now for new loans a to worked in consumer, to deposits. Recall consistency success make express so month, to to to and dedication we earlier commercial loans conversion the for construction completing and company for this major pleased completed had is on -- really people previously period we operating our in quarter, Services, our really our partner, conjunction transitioned years Tata testament the noted results these we final a and a all Bancorp virtually over the before Before we've want of of gratitude simplification TCS's This

create as the really banking this core entire of that with with dwindling are does XX- Well, legacy value vendor systems, how aware going operating forward? on cases. deposit on company reducing and operates along observers XX-year-old for to industry So risk an antiquated significantly loan of virtually in U.S. the support industry many system

of deployable, across system operates detection and facilitates deposits. functionality and opening and major time, model data correction critical account consistency omnichannel real data loans in cloud attribute for fraud applications. Our it one like error customer is API-enabled It supports improves it and

report at intuitive, between the Our fingertips. results new a the training is time offers employees that system it's their more It our for experience better toggle applications. customers. of to easier data learn, in reduces much eliminates need and all It's faster, this multiple to

we've foundational treasury addition took us over by a XX% creating end, In front customers, applications consumer of XXX% application and the than that XX months. over from XX digital upgrading mortgage also, business and banking, entire utilized replaced percentage digital large system, electronic last online small business this major process paper-based course including our mobile to our to more to a of banking X the and is years, investment, which Internet nearly replacing the

that continue competitive advantages. forward, evolving and we're Going we'll many up technologies new in freeing certainly in the give core, to find invest other our us to to optimize ways investments capacity

bank than our data As product major capabilities XXXX noted on competitors. our Greenwich coalition our Slide that XX, higher rank customers the digital shows

would environment. funding be steady X in against linked-quarter as important will the points will in the and both discipline ago granular the results cost deposit repricing trend Looking by basis asset impact environment. regardless falling at numbers environment, the for the of of improved interest expanded points basis outpaced quarter, quarter net this focus the financial interest basis on and gathering generally rate came in rate as of the on continuing margin pricing Net persist expected. pricing income a We while X anticipate deposits a decreases timing behavior rate a Maintaining and in while rate to year

current increased, are While commercial expected particularly loan our also of demand and of small Higher portfolios. mind top The continued real customers. in for market rates measured. and the has in growth path loan benchmark to growth rates tempered consumer the amount reducing estate while political be the environment customers, business middle of of paydowns

a quarter, SBA and base. we've been building to smaller campaigns are successful campaign initiatives to as on bringing other customer we This the that. serving at at relationships businesses quarter, deposit aimed particularly with aimed focus streamlined targeted well new continue and expect last customer mentioned our program I granular the as with As during bank our

of bankers at our income for while points expenses been fee the are reserves of quarter for million, continue points has for remain grow for quarter. look million in as reflects in second half we've fee the compared to in we toward a We more and an credit outlook, reserves. Starting basis financial few very XXXX pursue average into basis to as last to control to in over just on reflected the loan XXXX The up loans C&I. Slide delivering next already and months. This remained us over investments compared of losses slightly in half losses realized these will growth by key XX portfolio. While which of annualized XX ability we Reported the grow are X, our of means Net of second the incremental capabilities period XXXX. Expansion supporting economic to to were X% markets low and the X business. and represents offset manageable a opportunity during costs improved contrast over performance believe charge-offs of percentage earnings an key somewhat allowance confident of included the be the was quarters our for first net the to $XXX current the income year, of highlights. decline quarter capital classified at last the increase in sluggish C&I clients. X/X quarter Adjusted the balances $XXX to

], increased Our residential [ deposit Customer period-end X% X% the X.X% growth just under normal loans. family in average loan demand declined quarter, to under the XX%. period-end that to balance balances noninterest-bearing just last for quarter basis, -- reflecting X-to-X of flat on while increased at led by while ratio internal in our reflecting deposits a total was deposits quarter rather seasonality, balances

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

in earnings accretion we've has the increased noted in quote seen which book I As value, my year-over-year. strong release, to tangible XX.X%

$X.XX, was of business. $X.XX quarter. X. to property Nevada. and results prior a Moving from sale the our from in share per Enterprise Diluted Slide the reflect Retirement Current of up sale of positive $X.XX a Solutions quarter earnings the impact bank-owned

Turning to Slide X.

$XXX the previously. linked and net adjusted increase second quarter. mentioned I Our preprovision to quarter was quarter gains revenue, The up improved including attributable net million noninterest income revenue income interest million, in in in $XXX the first from was growth

first decline to seasonality quarter. in In due adjusted compensation the expense, largely addition in expense of a noninterest to slight

trends our lower As revenue, to and compared well-managed was down results investments with bring to Generally, to products to our overview, with very additional to These our our slightly satisfactory related going that by higher some adjusted due expenses detail to combined revenue, year the respect adjusted quarter, PPNR supported outcomes. Ryan? Ryan reflects risk this Chief Richards, to expenses. Officer, value customers. and are technology, adjusted high-level higher ago provide in positive financial quarter services, I'm With ask which Financial performance.

R. Richards

Thank the the of The good through interest reflected bars derived boxes. includes the of of the X our margin Net trend evening, pre-provision revenue is interest net is and interest the will from both. net income. net is X overview balance everyone. for white shows interest you, revenue. income Slide of in our Nearly net income the net discussion Harris, quarters interest I begin sheet recent on margin. shown and the a and with XX% components chart

consecutive as reflect the of in for outpaced measures X the assets improvement Both repricing increase quarters funding costs. earning

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

page, lower borrowings changes basis net interest left-hand in slight a point loans incorporating components the were net partially funds to balance combined changes to and shows slide Higher margin. volume. Right-hand to offset contributed borrowing deposits. Noninterest-bearing points contribution side beneficial we basis and this basis to the yields, quarter the impact of the which the quarter. year both was market of contributed a XX an in by the noninterest-bearing and margin, interest linked and deposit reflected the The adverse securities, the margin interest impact of value of loan additional associated with sheet deposits market, On the in money chart money on prior another resulted investment key these declines comparison points net margin. chart XX waterfall reduction rate levels volume in in XX rates profitability. provide outlining of the

which contributions basis versus Overall, the net by costs, increased quarter. points These by prior offset the adversely X margin points. deposit interest margin impacted positive net XXX largely interest were the increased basis

the and fees, income been the Customer lower in higher market Slide commercial has income reduced fees. quarter. first related of somewhat Customer even management million prior card by growth and was X. wealth compared income than offset noninterest half fees. revenue and on through loan expected loan-related million Moving to flat account to $XXX noninterest slower With capital $XXX XXXX, activity fee

meaningfully ahead, capital allow us area this new our X are over optimistic to will capabilities that grow next the Looking market quarters. we expanding and

the to and adjusted slightly marketing for income second the $XX chart XX, due the $XXX million, million, is due versus noninterest Offset in ratio previously quarter of to X% includes quarter our the increases to revenue technology seasonal page Slide customer-related for compensation related decreased the current noted. Adjusted quarter lower million the attributable a to pre-provision included this revenue side calculation. right of quarter. the outlook moderately higher from and Reported income and Our the at noninterest revenue on the in $X The development in bars which Adjusted XXXX. of is in noninterest efficiency decreased decreased quarter. $XXX the revenue, largely business expense used prior increased net and relative for second expenses shown by factors adjusted year blue XXXX expense on lighter first to increasing in is million. ago

of costs. the XXXX a included assessment quarter As special reminder, $XX of fourth million FDIC

second $XX million respectively. and year, the million recognized of this in $X were another While first and quarters

over deposits this increasing for technology increases XXXX. trends opportunities for the past associated our loans vendor The and and slightly to highlights the relative second Risks manage outlook include contractual quarter of with in Our costs, the XXXX XX is average employment adjusted ability and second our noninterest outlook year. quarter expense of to costs. Slide

side, left and more with the impacting average Customer respect see On that improve to the materializes in political suggests rates and increased the economic can expect slightly quarter. growth we current sentiment are near-term growth. loans as you can interest higher pipeline though environments, to clarity

the be in expectation to XXXX that Our to loans of second is loans second increasing quarter stable quarter XXXX. of at slightly will the relative

to balances deposits XXX Average for points turning a the boxes quarter the of second to balances. the noninterest-bearing slight deposit page. on basis Now white right points. X of shown notwithstanding in average basis side total this deposits the decline slightly, Cost in increased increased

was chart of deposits reflecting XXXX, quarter deposits ending quarter, total view funding customer Compared against the a compared and $X trends. million XX% XX%, first the to remained year on data beta in seasonal including left The by second prior to have ago stable customer the quarter, slightly, the at and the total billion interest-bearing from to includes the side and down fourth quarter. trends. quarter funding were previous at the deposit to $X XX comprehensive of $X.X grown on XX% deposits down in trends rates cost quarter preceding versus repricing were more the in compared quarter were Broker period. and balance the year based deposits, quarter. Slide unchanged measured billion as compared the includes average for sources repricing deposits second broker As first the deposits

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

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

Moving to XX. Slide

we decline somewhat predictable million portfolios Investment a to funds This of estimated funds sheet a duration to margin our of at are investment measure Serving term. for market and into changes. to as funds of portfolio higher-yielding $XXX money behave source net Our a price investment reinvested interest contributed will customer-driven this required balances over interest X.X%. store investment amortization combined last second quarter. With primarily changes slide, The the to of between balance loans to inherent as balance is as be anticipate to sensitivity the exists securities were absorb of to is near cash flows and the house money and investment related and rates, portfolio which rate sheet deposit The loans. in we portfolio those interest portfolio mismatch rate and continue cash in Maturities, liability assumed continues loan longer our ready expected. duration X duration On show years. But the helps in principal prepayment this over the security to term to and flow, the have market larger manage portfolio, the a investments asset durations. balance are deposits. portfolio our fixed

Slide provides about rate information interest our XX sensitivity.

In in revenue standard sensitivity more present emergent upon XX the measures and rate past this sensitivity, of shock presentation, movements rate in view model that estimated sensitivity Slide our provided be to on again reflects latent realized appendix environment. which changes we yet rate interest the in latent not of given is income parallel interest to be interest interest dynamic While fully net based have X.X%. current particular, rate we

higher previous shock the XXXX combined the of the quarter compared changes parallel income when XX, of our includes emergent is and When impact included X.X%. at is quarter modeled forward the XXXX. A from This with in implied basis increase X.X% point sensitivity, curve sensitive a between X.X% suggests the outcome of incremental implied the over rate range net in June interest model meaningful projections future this second quarter. second XXX to of forward a which

interest noninterest-bearing net deposits do deposits no how XX% migration migration beta shown that and interest of slowing quarter applying income deposits. deposits slightly of here. the XXXX. first in sheet increasing relative deposit this to Utilizing Risks this assume composition changes assumed XX% we reflects competition change is the pricing, noninterest-bearing of to expectations modeled $X.X in through-the-cycle size reflected higher path our be in behavior our will and higher consider our and billion outlook income the associated could balance our deposit core. moderately the into outcome earning interest quarter sensitivities of but deposit loan of path. The from changes cost and second management shown opportunities include with of to to sensitivity, a second these across believe mix observed in the in cost beta for growth, Importantly, of our or realized change net This and for the in assets, influence rates deposits assumed the XXXX quarter of

over assets we quarter. loans leases, in deterioration credit of Notwithstanding and XX. credit loans is a with losses total a of Slide Credit estate in raw decrease point is basis performance, X.XX% metrics. $XX basis performing were of to and XX X the points owned. real million line our portfolio of and some X observed Annualized continuous increased prior percentage Moving other as loans quality or allowance The the quarter. points expectations. continued net charge-offs charge-off Nonperforming basis of strong, net for remains the

increased respectively. balances $XXX by loan $XXX million, While criticized classified and and million

losses the We remainder the continue will ultimate realized over be that year. of to loan expect very manageable

detail loan appendix measures topic of balances. the and Overall, CRE current portfolio, of representing it outlook. to X% included with with levels included total estate with the reasonably we quarter. criticized to of CRE an total of increased CRE portfolio in regarding classified remained portfolio. commercial strong, provides economic portfolio quality of information XX of As total or loan XX% based on portfolio Credit this interest, Office we relatively we know as represents losses for the well our CRE have CRE the XX% the expect though overview the perform the total limited real presentation. Slide a additional continue during

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

and organically outlook equity our increase summarizes improvement expect outcomes. Slide of the to natural course provided financial common both through accretion We rate from over of perspective and a GAAP path that regardless of securities XX AOCI this regulatory the through presentation. continue earnings will portfolio the

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

Shannon Drage

This concludes our remarks. prepared

to of that questions request for we you please Alicia, limit call, move we questions. the line section As to the the question-and-answer your open

Operator

Our with from [Operator first of Stanley. Morgan Gosalia line Instructions] question comes the

Manan Gosalia

Gosalia. Manan It's

beta if products cuts check wanted you flowing I I last slowed intra-quarter. wondering and billion analysis. to between quarter. a expect couple NIB year-end? things trends then the assumption during rate of I on get into the quarter. deposit So have how were and $X.X in now the the in I you noninterest-bearing how was of you know know trend And trends on interest latent relative just higher-cost that to sensitivity

So be a than that bit better things I wondering or was is realistic little that? can how

R. Richards

hoping for question. much that very listen, Thanks on were the to is the call. Yes, that something highlight we

the deposit all-in beta think us shared tighten assumptions revisit the think quarter. we what sort very with to with observed The was I pleased -- the up that migration were some decrease that the deposit I of had we amount the underlying as last whole, the of to see implied noninterest-bearing of in confidence that quarter. modest quarter the in reasonably gave trending on models we during deposits were our we

don't ability as DDA saying see guidance a to expected. that line deposit what at seeing So of manage increased tighter to We've could little a I result, we an pricing think doesn't to our observed forward. suggest what much point as interest-bearing costs retain that that from the been level have deposits this those you're great anticipate deal a migration and we're to is in also than that hold a of

course, generous forward laid then DDA things guidance asset latent of sort contributed going the how more out this and expectation anticipated perhaps assumptions little quarter more -- the around. have we we an sorry, So being embedded last our those a having emergence of to bit contribute, all with sensitivity with than those of on more time that would

Of things these course, bit very deposit we're guidance based here. to upon this what all we were beholden are behaviors more the constructive from seeing, to a But be quarter. able with little

Manan Gosalia

environment the Got How to given given balances loan term, about thinking are then of launch that in us uncertainty Do from -- the in those going increasing. through can near weaker and stable you're it. Or about as we if loan maybe And upcoming how about there? guide thinking that the a and growth? the the think think for trajectory bit slightly you then loan be to forward? you little ramping you elections take up just it's

Harris Simmons

Yes. big in think I'm moment, sure not Well, is election some there se. factor a the probably companies -- is factors that uncertainty but at the per I that,

been growth what unfolds -- a so in ago. lot probably -- see is We to anything bit, slowing a of It loan sort the be economy watching seen that of couple term. is some weakening the it. to -- just quarters. more suggesting near see way Obviously, the of what in hopefully we'll likely next damage. feels lot that of a that year there we've not in little it's some we've here think -- signs we're change are to a in see do I don't economy relative that's how But the will a

in see markets here We best are -- we also it's still our it's the just where operate. economies reasonably healthy Western But guess.

just programs expect will that et market we right small think some it's loan cetera, marketing the we're robust not doing things and growth business of helpful. with lending, now. be that I But incrementally a some

Operator

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

John Pancari

XX% know ask release the increase day mentioned on color about expectations you in quarter within a you I reserve, want in able in and the dues. past about a and bit little increase are I trends increase classified side. on the to the get loans, linked more XX% to the the on I I want to XX plus, generally the a the were XX guess, XX% credit but to

how reserve that So could walk expect just do the that outlook that, on given you the it that how be could change trends? could driving through commercial influence the these here? you then what's Could from book? for -- And

Scott McLean

is from And This news from that to John. where about the to -- all The of them. were X increase The XX good kind our Scott. all you about in our it million kind XX% of of idiosyncratic. it was a consumer no products Sure, could CRE And million came were didn't really portfolio. there's that kind lines of business, -- really of straight classified million, just care, between The collection a C&I portfolio. the of range. $XXX was $XX of transportation, contractor, draw health credits $XX industries the industries, come they

about more $XXX the real million. estate you made then see so about of that It multifamily. of And sort interesting up of in was related, criticized the increase. increase it's XX% And principally that

seeing see criticized So into we're category. transactions of move multifamily -- more the you'll our

interest have rates, generally, and simply flow borrowers I provide causing of generally and it's because great since Just ultimately simply those multifamily it, principal. able the a think of land multifamily we renovate -- they to out. -- every multifamily, are their but to construction rates great that periods migration cause that is have interest the is just lack Phase are impact rental are concessions. But higher of in we've and the And that we reduce cover speaking, other of And is X to that migration in are you seen contribute it don't -- cycle cash provide concluding, in level equity depression. about mean, migration. nonperforming, big to hold some because, you packages to lease-up the and when have great have speaking, the covenant strength Generally longer,

overly that. not So concerned we're about

other and make, low very before, nonperforming said and is coming true, that The loans. comment base I'd criticized, of are it's off we a we've but this classified

about want lines it's $XXX million million. because to And $XXX continues as it's the by about of. relates a the you coming little $XX are that, in outstandings office, good story story. It's out but about in are a we $X million the of to look, million -- or than simply them -- base sense of They're I So that in look that We additional CRE low more kind decrease billion. dropping. play loans. equity $XXX it $XXX say million of vertical we're that hope were of we payments off a borrowers, will almost rebalancing there to down represents

see, $XXX of a what but magnitude we almost portfolio, $X when want growth. that's you of to number the there So small million you of would to charge-offs, then wouldn't some the very which see million like portfolio. And consider was in a

So we both actually our is the largely on most size on, that support the continue the we'll of going loan to low, good the maturity portfolios, exactly these median is playing out wall guarantor report the loans. quarter to activity office attributable good average and that's on how and multifamily have and with which each and fact is

R. Richards

of like and that of well, expectation of and inform get economy some view when works We, a have the an the ACL world future bit talk others, to out-of-the-box model I you that was in reserving mean, was we've currently, learning question. a way anticipating that given about there's we to think in ahead these the macroeconomic and Moody's idea participating variables. that are the the for accounting losses. little any macroeconomic that the And prior been settings if CRE. I practices. just of darker the question our we that to and view Moody's is, Scott, also it's many to We're through that whether working the embedded looking kind variables in our time today coming see things also

back there view So it's that could to be had we've credit quarters that that fair some we going this say deterioration. think some that

So now tell -- that we it the we're that seeing our fact came. if probably us to that is expected. were sold would ] And see [ be didn't it none cards now, we that

to may seen watch the there balance But through think our we've is learnings in be and of data that so comes So I reserves. continue we'll everything certainly far right it. now, the within

John Pancari

loan opportunity? know All that. could And NII fixed then fund just I mentioned Can right. use coming asset about Great. more back to just bit the cetera. of securities got liquidity little the talk dynamic. the book appreciate that you a separately, repricing out to and I you growth you've and et the you

be just maturing feel repricing asset fixed differential? in a on So and of the rate maybe amount the could assets new you to the where better and dollar is the securities might on what you then book putting just talk about yield around the differential get

R. Richards

part. take to Yes, I'm that happy

think you're I right.

we've even some of there attached loan with some it. high don't, to seen modest during to build where growth I million remix. us to terms consistent. well, rebalanced as quarter. noted our where in You to helpful investments been in tune remarks, investment market as when the of growth able been we kind still pointed exactly the it's $XXX this is yield about right rundown thing quarter And portfolio that's money very get even that's X my securities And the the that we've That of sitting

buildup thinking consistent happen have that And with guidance, a this thinking favorably reason for here our recently an sensitivity of not certainly sort deconstruction alone, And best latent than think is our about based asset were theme of latent of what about would I overlay forward. upon to we that the on seeing have that the with way it's be some more our the funding imply going the yields sensitivity earning to do rates would the the more costs. why really continue. we've been what repricing, of -- expect and the going repricing it's that been to aggressively, basis seeing of if we kind

Now That I rolling that front book in yield. we on types have a more counteract an see a all-in based strokes on described book CRE of balance I We effects. the seeing. you portfolio, for basis, of But the those X.XX%. overlay sense you're John. don't dynamics emergent broad less for before about little have bit we're the the But expansion off calling consumer. think little front would coming that with kind gives book that upon the on loan the I securities give book, back They're statistics, the a you sheet of X.XX%. movements the at Hopefully, helps, coming back some book

John Pancari

That does, Ryan.

Operator

next question from Gerlinger Citi. Ben line of the with comes Our

Benjamin Gerlinger

Am really roughly Or of the X%, just you thinking just call sheet. balance NII whole gets mosaic Anyway, -- like could slightly just emergent about both of I on it may up you it, X.X%. kind thing? looking just kind the NII you then I imply latent what versus moderately now, XX in-depth XQ think of happen goes fair months right, have verbiage correctly? million. too thinking Is months from $XXX-ish to simplistic about I at Could XQ to guys which implied think forward, so 'XX when XX the pretty a have would And been guess a to, on now. from done and about the sides am was 'XX, the of outlook months XX that increasing of

R. Richards

to deposit are in provide uncertainty you're feel deposits. read have wrong. movements static notion there within really for happens sensitivity that to we are be all think a certainly guidance. But sheet loans, We good we about allowing to balance and it. we're be up forward. the The thinking on statistics don't of there, because view, holding we're it purposely slightly about stable they could and kind insights have what going but also some of thinking increasing we opening how some ultimately, this we're I gave we to our balance the migration you Harris what the pricing seeing for about in a quarter, leave we

thinking boundaries enough think of I degrees leave to don't you're fit about But within think to the trying it just -- the for guidance. I unknown we're So wrong.

Benjamin Gerlinger

it. Got

other And to on there classified I was curious, profitability? know like helpful. of than is think that's want most million roughly C&I. pressure issues credit. just there's I that there's of no the was very bit Or of comment slowing that common just to Just their -- depth? just points switching a more said -- the a it more down? they in higher of kind the C&I something thinking $XXX interest base. what buyers businesses That's I'm majority having our little it are operational, than businesses I And rates are Okay. impacting are then like in touch the thread. kind is

Scott McLean

of all Each just when higher Yes. themes, crisp I'd they're wouldn't people actually some really one care, transportation, but you to you -- a there's I'd rates. and about kind aren't. contractor, they like products, I -- has I interest relate know to a major give we mean story it well. just talk consumer even health

it's So happen. things -- just

And a just so wouldn't story, I don't common I think. you give

Benjamin Gerlinger

assume it's any the it Or is it's throughout fair to you. footprint? centralized geography? Got And

Scott McLean

Yes.

Harris Simmons

at, you're I reserve have the lot in all think a building what it's is during also are they to seeing there idea typically we resolutions this. I any significant to as kind there. don't think been But parts a lot are think, the risk see of of, reflective of the quarter that of but useful there of I

Operator

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

Steven Alexopoulos

you, maybe start Ryan. to want I for

could unpack this more. a bit we if So little

X just the sensitivity. at changes of that basis I So know income interest made, the net don't looking you've

assumption the you're forward so -- more that's Because that's the you're the overlay you curve, I'm you or cut improvement of in what's have is current else taking the the and for it wondering, is curves, And because down why seems that? something looking outlook. that and lower beta like bid. driving influencing a deposit So for NII beta

R. Richards

can quarter the Thank course activity and think quarter we you pretty during the runoff what attaches And by it's overlay. of about forward curve sensitivity the before of observed informed you to trends The for building about much until there tapering the our the migration. question. the the and the up beta really think of I even commentary latent

we place beta of up have it's on in observing that believe cycle. retain in deposit markets all-in I pay the what the And those taking a so activity and in that think pricing our really where little base to and we informed to tighter deposits through

Steven Alexopoulos

Okay.

the So from that that, we extrapolate can is right? on the current outlook for based NII forward curve,

R. Richards

of contemplates Once XXXX, the rate Fed the figure fund X% forward X.XX%. implied X.XX%, cited a you at includes the yes, overlay middle as emergent, the which you of

Harris Simmons

are previously to a think that more than little probably if noninterest-bearing driver, fundamentally, it's developing our on there's I a part deposits we demand -- deposits demand belief going too, stable be a just thought. single

-- think bit. we at moment, we probably the a we change. conservative trends upon that -- obviously I think overshot that been little seeing That's the little we but that just can based we're a tried

Steven Alexopoulos

Got it.

then And Okay. follow-up. for my

parts at question. So on there's happening what's guess, technology side, of if we look X this the I

one, like running technology-related year-over-year. So costs, you're the XX%

help looks new for Harris, think Now deposit year? And like then over you. maybe, that you're the the us like on that system, about next what

one few this because So to core. anticipate while usually growth. have a in they ROE from Do translate -- you're this now of core you modern how a improve shareholder should made I you rate over a growth does guys how right? for differential? things point they the improve benefits, this But banks time or higher guys of of we modern we think

Harris Simmons

people cost, year. year. peak platform the next in see terms in get the because wouldn't it's that core a were will vacuum us much always of next make among $XX come backlog come costs to ahead down they're does the will Well, million of it projects about But this -- to what We by of poor here. around first all, want we done like I of itself, that They the be year. off of

And that's -- certainly, free up that but capacity. so to helpful

the telling it a Citigroup. was systems. I to of all mean bank, I upon case lot my weekend, every a simply, our and past sees processing CrowdStrike the else, this primary was end do in to years bank he plane have, of core running incredibly I are complicated heavy these and single that last core thinking can jet some the engines from a business ago is employees, remember of have study many was when catastrophic. mean, front these all, I And every in seen I systems everything through comes they're about a in and mind, school and even like of the with to going lifting The on in foundation this, I outage. conversion. of build systems, terms in a benefit has they is think benefit bug that John talked In engine first consumer Reed weekend that chassis was the impact be the a flight. And replace. He out changing real said we've was can these what

large -- And is a so is very complexity with. one lot there something an takes a bank for to this. ultimately very amount this benefits elaborate., time of every do is of to of incredible testing me, And and deal It that and amount expensive the and huge of has people

time. deal piece will Some it with at a a

this. accomplishment. is a years we've Some -- rearview fundamentally with big it But mirror big tackled just the is the XX-plus over -- having a I lot a in last mean

time it to quickly. of you things right and allows errors real us detect core It expect to terms making time. This payments, as they one a memo everybody see, we to appear benefits it detect of fake else more us we will posting we the lot time. of I other from the that and into posting we the are is It still is it of banks kind more -- not have -- actually world that quickly. mean, in something think real allows noted, And ever worry like allows becomes in I posting as about more real fraud

screens One seeing talking from and larger the a ago. a having done. makes train front of to on just for are therefore, visiting bank remember between come I time is much about lot get and we're of much navigating. He applications eliminates easier serve much employees. just it, us the their This that. years employees easier toggling a to makes employee easier line absolutely things employees to branch customers. It It a for whole about it work complaining some

makes And so whether they with curve lot got of more a their at information us mean contact systems, having desks on there sheets are got for sitting that We we've industry. much, steep old I branches employees, centers a much learning learn of around this -- much, around to lot you've provides It crib think with our now be solution easier entry-level and that a fingertips. in a employees.

a right user's hopeful we it information I screen. functionality It brings a ways to has question, am to that our customers. answer without somebody doing right out of that research. when find So that can to deliver the of we'll some lot

be really we complexity out today, the go the So is one. can't thing that digitally on cores we'll this there in the will No is, of find native banks the new Yes, be that begin find process hoping super. we by addressed use digital someday, And is I'd this large perhaps. become not a say some really as would bank where see on. I'm that core. you larger in last -- cases discovery of

is have installed that that pretty solution we So a solid. really base -- I'm with but huge something globally. has It confident this

have have that away think all that's not to They are are going shareholders because We reason accrue a And it's every those a going over base. benefits huge time. vendor to to of and got will support this. I our installed

Operator

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

Kenneth Usdin

side. Just a the follow-up on cost

what run of the about does cost that you fully So of when $XX happen million systems the million as is further year to implied the that reduction guys rated? XQ along, guidance? 'XX get And $XX to that part quarter last moved in get talked forward

R. Richards

yes, full Harris' But probably of savings imply at comparison, Thanks, year be year-over-year would to Ken. that $XX line suggest that 'XX is all a The bottom the year million would some fall and that full appropriate. would that 'XX. delta not the to margin, sort point, of the

continue other So FutureCore. forward we've our out outside of our 'XX. the quarter intent embedded technology The for and of second investments offerings to guidance into building make

Kenneth Usdin

But time? like further over there's of about amount the an majority is as retired? just like And is had the make Or the also full which we've that point getting pieces time, incremental conversation that what long then that happens time the reduction happens? the build-out legacy there a is a comes as the of And Right. sense. for are increment that And investments, happened. over

the base. So underlying of just kind

Harris Simmons

Some systems amortizing we're of core the in longer this become than they longer earlier as few But I is lives went phases are have over ago you XX -- to much capitalized that. of these years, a amortized, years mean, this fully cost. a expect that would

help as time. into But... And out will that get you so

Scott McLean

because no -- is has And multiyear a made. is I core there. The this, a optimize become nonevent the of we how -- the software us. to has about the the replace -- a which loan monetize amortization. do renewal a contracts every investment amortization we've passing systems down or double-digit infrastructure single-year mean, this it contracts, XX% it, comes benefit of towards pressure when needing It's time we vendors for how XX-year -- whole benefit that pump just increases is at almost and turned longer it's is pressure The basically do year, it for Yes. of attitude along hardware, additional financially

So think, especially the in timing right being beneficial. now is unique, I of terms

Operator

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

Bernard Von Gizycki

Bernard Gizycki. Von It's

client you beginning these to initiatives? relationships call. Just broadening of deposits? mentioned on growing campaigns any on provide the and attract at the expectations the promotions the deposits Can customer you success color So any of new and

Harris Simmons

kinds to in today, ways the base on to believe is don't happened needle But of Well, it's on we lending, growth. are important. of that. SBA particularly year, important that year, up really substantially -- to mean opportunity. volumes think -- leaning it's wake imperative over I specifically, area we've and a thinking we referred move focused your into more be deposit of to big that But the last the the the I thing to about. expect but in see are They smaller really relationships deals. I there's -- of our way a think loan where the really focusing what we we mean last go. I'm they're an of of -- think banks lot going in spring an of I in of we I not had regional terms the granularity a for

And the about so full and where where bank. what can how a focus of of that's consumer to big kind relationships we go better thinking from here in we kinds do business, particular, we're of a on part those is small come in

Scott McLean

clients generally couple hear small I largely some that come would small just calls add to that, exciting activities -- businesses, before making granular really the about that. fun appreciation of Harris relationship. but calling business the it individuals, years of from that simply bank, about to and colleagues effort And our just thank is that started are customer ago. year XXX,XXX to the talked we've to about We're the their just a making for them --

thing not experience you that? many a the prospect We're the would. everybody the deposits awkward are on personal pure prospects a sounds loans our happening pushing when is and on relationships you people. banking like when on Of would times would moving of XXX,XXX an side top for over. But commercial simple list middle kind bankers their calling making always they big it's and over market kind say which do year, of and that's commercial But that think course, and most also small in because you moving number. middle hard about call market markets, a going and Just highest

growth customer like us to So time. focus that loan appreciation will start I calls over the think for reignite

Bernard Von Gizycki

just on sequentially the some know the the levels by fees. flagged of and you market That's can other weaker then Great. and on capital $X optimism? you next it the million just and think And and XQ, color. expanding you great Any related color provide was I activity over drivers separately, X lower syndications, I to grow loan in you meaningfully Okay. capabilities optimism highlighted quarters. the expect it swaps

Harris Simmons

of I has a And terms I we're every think a We've I what internally, dance been I really think kind be capital Yes. And with team with nature it's first to you've second it's like getting kind is mean, pipeline of card got think built. what seen. like traction that I something internally bankers. probably appointments full of to going pleased lumpy and say business, kind pretty based be really I'd that they -- -- we're the it commercial in we engagement that seeing it's just half good the fundamentally of our of they have have the markets thing notable going at have looks is least would expect -- straight a quarter. that kind about I to of here we the just say over the the And much the improvement upon in hoped. I very of kind about all that's third really the it. It's line a we're we it's doing excited early but to about venture But going have business. it. people not be half probably feels

Operator

from line comes the Truist of with question next Securities. King Our Brandon

Brandon King

from one conversation. follow-up question had Just of the And the kind C&I me. on

of concern environment where stand C&I, hearing navigate they the customers today? your how businesses and this within smaller increasing So health so comment about they could on small you business

Harris Simmons

looks loss close in loans, terms and business like charge-offs small is commercial market loans. history the commercial it the for have mean of business first be what to loss numbers I that it. have listen, overall big just always see -- doesn't believe I've to numbers. the if -- card fundamentally, with business, charge-off I exclude in to I or time, can done Over Yes. larger it business all, -- middle small of attached our card you loans think, right very it

giving we portfolio. seeing And good that's continued that so are concern. any Nothing quality in credit us

the don't Now customers. borrow. borrowing way, actually our Only customers business businesses, small XX% are by of most about small

businesses So operate good cash the not hand. that of think pretty they seeing on operate very a but lot we're we're I with help. there conservatively. growth, robust seeing have They are small But

Operator

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

Christopher McGratty

overall your money growth earning relative balance I guess in asset I'm the the that asking proportion market of cash does The to growth? so loan or the year XX% in how securities, a next And over as guide? sheet, trend

R. Richards

Thanks for Yes. that.

securities allowing we $X for to we the or trend another and continuing, I securities that continue $X billion before activity off, to of see level. that reinvestment of about the sort to speak, at investment potential think investment those runoff the think would so for portfolio billion see way of the run certainly

what how categories, it the concentration of loan depends really quickly with really that so happens And we X and pull through. the the see market on money growth

answering I that's simplest know specific probably So the that that's to way that front. have that of think question. -- I don't offer measure a on we

Christopher McGratty

You're capital? Okay. thoughts thoughts on updated maybe, pretty Any building any Great. capital And capital? Harris, quickly. on

Harris Simmons

Yes. that the enough crossing Basel I revised, to questions near as and in to end be there's going mean to expect something how we're is game here I going still threshold continue would III unanswered term. close to in. that's that we'd interested be

is expect of CETX. whatever into happens come think in that going to I calculation all we it that back simplifying AOCI

XX% quote, kind basis of kind a aggressive about we we think down the noted like book And continue tangible and in that to gratifying. I'd really both so increase see in manageable probably of number we're making about a to of as buybacks. lot before on before getting I the a a value, AOCI is share nominally per bit totally for get start something to very share that's and progress,

Operator

Wells from comes the of question line next with Christopher Fargo. Our Spahr

Christopher Spahr

a would to -- in reserves, loans? loans, you seen so have decline didn't And changed. back I you relative views XX increase in think just your then the would increase And mean, if going have problem loans to I can So criticized do and like Slide in so, to just economic if the an that go? meaningful where understand you reserves

R. Richards

Yes.

discern are So at would sort aside look contemplated scenarios. And the We forward? and I that Is separate too there. occur through various speculative whether we not have [ economic near try the or to ] have unique feel? how that process, have our our as and things executives to, grade prior within for maybe of mean portfolio alluded as reserving fulsome getting credit we migration back have foundation. practice were that set macroeconomic moving kind very covered question. it's hard upon that to It's senior of and and there qualitative that and would saying, exactly professionals with adjusting in would based been our we get our to and what a those those applications prior credit a fair world see scenarios, economic does I

the outcome? margin, back having what balance So it round -- It's factor without that the would is fewer earlier seeing types run of we migration it I of metrics reserving the criticized would thought process. and guess have I'd about say we in would practices, terms having have difficult certainly will in within would through or process. But deterioration. upon the change our a terms other to credit to the of our of entirety of inform at been that expected we're classified of based what counterfactual Whether have

Christopher Spahr

just then And stack outs if long-term my right. capital like there's side? the other ins the of follow-up on kind and is All and debt overall any on just

R. Richards

Yes.

the watchful see as we're for to long-term that to what debt think that everybody is what proposal I else as means. comes

as path Harris here sort see improve. earnings to to. the time, retaining been a alluded We have of for We AOCI for

with include again. to Moving appendix. if associated really outcomes that forward, more We were some takes of to the we put rising on periods rates, recent that some of those away some able can occur in hedges in projections adverse

So we've I kind on how we of that picture, think been big trending front. -- that's

Harris Simmons

down really kind proposal. I should But sort tailored happen. we're wait in makes just mode that somewhat. should it's by happens for expect sense will that. little happen. think a -- get it the that bit see anxious about And of It long-term rights, and I to it of we'll debt all see what

R. Richards

more build outcome, it's our a fulsome time. equity think about might us position long-term positioning on opportunities have we over that to fact proposal. capital the our given on our Depending And the debt of afford that

Operator

line Our UBS. Samuel of next question Varga comes with from the

Samuel Varga

that residential currently sort quick we color you've loan give to over get quarters in some yields getting to pace growing Just color this growth Is of roll keep question Should around single-family this book? several seen a on on similar a this rate wanted the that a has strategy? management now. at And part on your I could you any as growth. risk it last of interest you're recently? the the expect

Scott McLean

Yes.

of what call it's a permanent -- loans. closed X, volume just X X, fundings under volumes, most has There terms In over onetime the a we loan last up of seeing very we're a been a competitive. construction mortgage. quarters, that is It's the leads fund great are of product, into

for most The industry. that's from. it down is so as origination the X-X fundings significantly what And are Family held coming investment, of the is mortgages of in

think renewal so I Family in And you'll our don't of the see rates unless slow. come business. growth the a to months, we XX I X-X And next see purchased over -- down XX mortgage and

some held-for-sale So smaller then that mortgages is opportunities. offer mortgages, going other more -- the which could to happen. market And on and as that's continues thing we're that shifting originating

in don't the front I have on of of yields terms me. production, new right that In

of kind of type sort it's think I number. a mid-Xs

R. Richards

upper Yes, Xs. mid- to

Scott McLean

say gone upper suffice Xs. rates yields gone just bit the to to mid as up. Yes, And a have have it's it up that quite

Operator

Our line comes Arfstrom Markets. Capital of next from John question RBC the with

Jon Arfstrom

of questions been handled. think in talk Anything on terms call my on to you I are But most how things credit. on Houston outlook have can the Scott, just is about going in of

Scott McLean

bad was to Houston, big of They a XXX question. XXX accustomed it night Houston. Winds got about was not bad, some an that before commercial be to region the at be one storms to issues It or end, fast was hour, as barely inland. on of It to XX:XX, that It was a great out just XX got to an so and hour. of XX and Houston, both. to XX, X. just XX big residential but You're thing hookups were or have a east in go it right The came miles it It drop was it storm enough XXX other west up a and hit that this until to miles it nice storms big tree miles straight dead it to moving. And in through, to and massive similar little just the category turned that distinction rain, is miles damage were Houston you've the ask but at in was coming hit. supposed level XX% was off-line about hit at Didn't about created that have of Sunday landed. the Houston, that XX veered bit power of plus hours. to literally, minus power within a chance but the were read about, point. out going

tree that of of the because just challenge issues. huge the created a just lot was it so And a damage power

the there's folks pain through So kind of resilient. that come it. of Texas like know has this, goes things pretty that's and -- with but They But a and through up, happening. lot to pick how get everybody are Houston it and them city what's

You're nice to ask.

virtually a book, in you set $XX reserve lasted -- reserve in $XX any our million loss et we losses. no that I don't -- terms for which a aside loan loss Harvey, was days, recall X we with et cetera, So we and Harvey, loan million, had saw hurricane cetera, potential, of

Harris Simmons

I about I points. net recoveries quarters, of X So Harvey after we X quarters basis as had through recall the came Texas, X think,

Scott McLean

Yes, that was in XXXX.

related any have losses the -- Hurricane won't see good of view aside Beryl. a event, So won't and we now, setting us you as to reserve in right portfolio, well, of you any for

Operator

to There questions I are this like the floor no time. at back over for would further management to closing comments. turn

Shannon Drage

and you, today. you all for thank Thank joining Alicia,

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

Operator

teleconference. This concludes today's

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

Zions Bancorporation, National Association (ZION) 22 Jul 242024 Q2 Earnings call transcript