Zions Bancorporation(US:ZION)2023-02-23 20:53Financial Performance - Zions Bancorporation reported annual net revenue of $3.2 billion in 2022 and total assets of approximately $90 billion as of December 31, 2022[15]. - Net interest income increased by $312 million, or 14%, driven by a higher interest rate environment, despite a $188 million decrease from SBA PPP loans[136]. - The net interest margin (NIM) improved to 3.06% from 2.72%, reflecting higher yields on interest-earning assets[136]. - Total loans and leases grew by $4.8 billion, or 9%, primarily in commercial and industrial, consumer residential mortgage, and commercial real estate portfolios[139]. - Net earnings applicable to common shareholders decreased by 20% to $878 million, impacted by a rise in the provision for credit losses[140]. - Total noninterest income decreased by $71 million, or 10%, in 2022, accounting for 20% of net revenue compared to 24% in 2021[168]. - The efficiency ratio improved to 58.8% from 60.8%, as adjusted revenue growth outpaced noninterest expense growth[140]. Capital Adequacy - Zions Bancorporation exceeded all capital adequacy requirements under the Basel III capital rules, with a Common Equity Tier 1 (CET1) ratio of 9.8% compared to the minimum requirement of 4.5%[29]. - The bank's Tier 1 capital ratio was 10.5%, exceeding the minimum requirement of 6.0%[29]. - Total capital ratio stood at 12.2%, well above the minimum requirement of 8.0%[29]. - The bank maintained a Tier 1 leverage ratio of 7.7%, surpassing the minimum requirement of 4.0%[29]. - The company’s ability to pay dividends is subject to regulatory restrictions, impacting shareholder returns[9]. Risk Management - The company has established a comprehensive risk management framework to address credit risk, interest rate risk, and other operational risks[54]. - The provision for credit losses was $122 million in 2022, compared to $(276) million in 2021, reflecting loan growth and economic scenario deterioration[140]. - The allowance for credit losses (ACL) reached $636 million at the end of 2022, up from $553 million in 2021, primarily due to loan growth and economic scenario deterioration[161]. - The company is closely monitoring evolving ESG standards and regulations, which may increase operational costs or limit business activities in certain jurisdictions[38]. Employee and Workforce - The company had 9,989 full-time equivalent employees as of December 31, 2022, with a diverse workforce comprising 59% women and 37% people of color[42]. - The company hosted over 1,000 training experiences in 2022 to support employee skill development and career advancement[48]. - The company experienced challenges in filling job openings due to competitive labor market conditions but began to see improvements in 2022[49]. - Salaries and employee benefits increased by $108 million, or 10%, primarily due to inflationary pressures and increased headcount[175]. Regulatory Compliance - The company is subject to various regulatory requirements, including limitations on dividends and restrictions on acquisitions, which may impact its operational flexibility[9]. - The company faced increased costs related to compliance with banking regulations, impacting its financial performance[93]. - The company is subject to legal and governmental proceedings that could adversely affect its financial condition and operations[98]. - The company has incurred substantial costs due to regulatory changes and may face further impacts from proposed regulations affecting financial services firms[95]. Market and Economic Conditions - The company’s operations and financial results have been adversely affected by the COVID-19 pandemic, impacting loan demand and deposit levels[108]. - Liquidity is primarily sourced from customer deposits, which may be affected by increased competition and Federal Reserve's monetary policy tightening[64]. - Rating downgrades from agencies could increase costs and negatively impact liquidity and market prices of securities[65]. Shareholder Returns - The company repurchased 3.6 million common shares for $200 million in 2022, at an average price of $56.13 per share, and has approved an additional $50 million share repurchase plan for Q1 2023[120][121]. - The company declared a dividend of $0.41 per common share in January 2023, payable on February 23, 2023[119]. Technology and Operations - Total technology spend increased to $451 million in 2022 from $435 million in 2021, reflecting ongoing investments in technology initiatives[182]. - Significant changes are being made, including organizational restructurings and technology upgrades, which may not yield the intended results[70]. - Operational disruptions may arise from ongoing projects, leading to potential regulatory scrutiny and financial liability[71]. Asset and Liability Management - The company’s net interest income is significantly influenced by interest rate risk, which is managed by its Asset Liability Management Committee[61]. - The transition away from LIBOR could adversely affect the interest rates on floating-rate obligations, loans, and deposits, potentially impacting revenue and expenses[62]. - The average cost of deposits was 0.09% in 2022, compared to 0.04% in 2021, reflecting a higher interest rate environment[148].