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Zions Bancorp NA (ZION) Q1 2024 Earnings Call Transcript Highlights: Key Financial Metrics and ...

GuruFocus Research
·Lesedauer: 3 Min.

  • Reported Net Earnings: $143 million for the quarter.

  • Period-End Loan Balance: Increased just under 1%.

  • Average Loan Balances: Increased by 1.3% for the quarter.

  • Customer Deposit Balances: Declined approximately 1% due to seasonal outflows.

  • Loan-to-Deposit Ratio: 78%.

  • Net Charge-Offs: 4 basis points as a percentage of average loans, down from 6 basis points in the previous quarter.

  • Common Equity Tier 1 Ratio: 10.4%, up from 10.3% in the previous quarter and 9.9% a year ago.

  • Diluted Earnings Per Share (EPS): $0.96, up $0.18 from the previous quarter.

  • Adjusted Preprovision Net Revenue (PPNR): $242 million, down from $262 million in the previous quarter.

  • Adjusted Noninterest Expense: Increased $22 million to $511 million, mainly due to seasonal increases in compensation.

Release Date: April 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Ryan, can you dig into the NII guide and the assumption there in terms of the number of rate cuts? I'm assuming you're using the forward curve here? And also if you could talk about the assumptions on NIB outflow and deposit repricing and what sensitivity there is if we don't get any rate cuts this year? A: (R. Ryan Richards - Executive VP & CFO, Zions Bancorporation) Thanks so much. Yes, the forward curve as of the end of the quarter implies 3 rate cuts, setting a Fed funds rate of 4.75%. We're prepared for different rate scenarios, focusing on deposit pricing and competition. We've seen stabilization in NIM and are allowing for continued migration in our guidance, aiming for stable to slightly increasing NII.

WERBUNG

Q: On the credit front -- on commercial real estate, you added a bit to the reserves. Could you discuss your confidence in the adequacy of the loan loss reserve, especially given the trends in the industry? A: (Derek Steward - Executive VP & Chief Credit Officer, Zions Bancorporation) We're confident in our reserves. The increase in classified loans is mostly from multifamily sectors, driven by slower lease-ups and higher expenses. Our conservative underwriting and the support from sponsors keep us comfortable with our exposure and reserve levels.

Q: Can you provide some insights into the expense trends and the impact of the core system conversion on expenses? A: (R. Ryan Richards - Executive VP & CFO, Zions Bancorporation) We've managed to keep adjusted expenses relatively flat year-over-year, focusing on continuous improvement and automation. With the core financial transformation, we anticipate a reduction in direct implementation expenses next year and potential savings from reduced staffing needs post-conversion.

Q: Could you expand on the guidance that there's upside if short-term rates decline, as most banks indicate pressure on NII in such scenarios? A: (R. Ryan Richards - Executive VP & CFO, Zions Bancorporation) In the short term, if short-term rates decline, we expect to benefit due to our sensitivity on interest-bearing deposits priced near wholesale rates. This sensitivity could provide a near-term advantage before broader market adjustments.

Q: What are your expectations for the capital markets and Wealth Management segments, and where do you see potential growth? A: (R. Ryan Richards - Executive VP & CFO, Zions Bancorporation) We are intensifying our efforts across all capital markets categories with a robust calling effort. We expect growth to be broad-based across the segment, supported by our strategic focus and internal targets.

Q: Can you discuss the trends and management strategies for the office CRE portfolio, given the current challenges in the market? A: (Derek Steward - Executive VP & Chief Credit Officer, Zions Bancorporation) We've intentionally reduced our exposure to office CRE over the years and are managing current challenges through conservative underwriting and active portfolio management. Despite potential ongoing issues, we expect the impact to be manageable.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.