ZIONS(ZIONL) - 2024 Q1 - Quarterly Report

Financial Performance - Diluted earnings per share (EPS) for Q1 2024 was $0.96, down from $1.33 in Q1 2023, reflecting lower revenue and slightly higher noninterest expenses [19]. - Net income for Q1 2024 was $153 million, a decrease from $204 million in Q1 2023, attributed to higher interest expenses and provisions for credit losses [159]. - Net income for the three months ended March 31, 2024, was $153 million, a decrease of 25% compared to $204 million for the same period in 2023 [161]. - Noninterest expense for Q1 2024 was $526 million, slightly up from $512 million in Q1 2023, reflecting ongoing cost management efforts [158]. - The efficiency ratio for Q1 2024 was 67.9%, compared to 65.1% in the previous quarter and 59.9% a year ago, indicating rising operational costs relative to revenue [156]. Revenue and Income Sources - Net interest income decreased by $93 million, or 14%, year-over-year, totaling $586 million, primarily due to higher funding costs [19]. - Total noninterest income decreased by $4 million, or 3%, relative to the prior year, accounting for approximately 21% of net revenue in the first quarter of 2024 [47]. - Customer-related noninterest income remained flat at $151 million, with an increase in capital markets fees offset by a decrease in loan-related fees [49]. - Total interest-earning assets were $81.6 billion, generating $1.064 billion in interest income, with a net interest margin of 2.94% [34]. Loans and Leases - Total loans and leases increased by $1.8 billion, or 3%, driven by growth in consumer residential mortgages and commercial real estate [19]. - Average loans and leases rose by $1.8 billion, or 3%, to $57.9 billion, primarily due to growth in average consumer and commercial real estate loans [27]. - Total loans and leases reached $58.1 billion, with commercial and industrial loans constituting 28.4% of the total loan portfolio [70]. - The loan and lease portfolio increased by $330 million, or 1%, to $58.1 billion as of March 31, 2024, primarily driven by growth in consumer residential mortgage and commercial real estate loans [71]. Deposits and Funding - Total deposits increased by $5.0 billion, or 7%, totaling $69.9 billion, with an increase in interest-bearing deposits [19]. - Average deposits increased by $3.2 billion, or 5%, to $73.4 billion, with an average cost of 2.06%, up from 0.47% in the first quarter of 2023 [30]. - Average interest-bearing liabilities increased by $6.0 billion, or 12%, reflecting higher interest-bearing deposits [20]. - The estimated total amount of uninsured deposits was $32.0 billion, or 43% of total deposits, down from $33.2 billion, or 44%, at December 31, 2023 [77]. Credit Quality and Losses - The provision for credit losses was $13 million, down from $45 million in the prior year period [19]. - The allowance for credit losses (ACL) was $736 million at March 31, 2024, up from $678 million at the same date in 2023, reflecting incremental reserves for portfolio-specific risks [39]. - Net loan and lease charge-offs totaled $6 million, or 0.04% of average loans, compared to zero charge-offs in the prior year quarter [19]. - Total nonperforming assets increased to $254 million as of March 31, 2024, from $228 million at December 31, 2023, with a nonperforming assets ratio of 0.44% compared to 0.39% [97]. Capital and Equity - Total shareholders' equity increased by $138 million, or 2%, to $5.8 billion at March 31, 2024, compared to $5.7 billion at December 31, 2023 [143]. - Common equity tier 1 capital was $6.92 billion at March 31, 2024, up from $6.86 billion at December 31, 2023 [148]. - The common equity tier 1 capital ratio improved to 10.4% as of March 31, 2024, compared to 10.3% at December 31, 2023 [148]. - The tangible equity ratio improved to 5.5% in Q1 2024, compared to 5.4% in Q4 2023 and 4.7% in Q1 2023, indicating enhanced capital efficiency [156]. Expenses and Cost Management - Noninterest expense increased by $14 million, or 3%, largely due to higher deposit insurance and regulatory expenses [19]. - Technology, telecom, and information processing expense increased by $7 million, or 13%, driven by higher software amortization expenses [53]. - Total noninterest expense increased by $14 million, or 3%, compared to the prior year quarter, reaching $526 million [52]. - Adjusted noninterest expense remained relatively flat at $511 million, with an efficiency ratio of 67.9%, up from 59.9% [54]. Interest Rate Sensitivity - Earnings at Risk (EaR) for March 31, 2024, shows a potential increase of 11.2% under a +300 bps rate shift scenario, compared to a decrease of 3.3% under a -100 bps shift [113]. - Economic Value of Equity (EVE) is projected to decrease by 8.0% under a +300 bps rate shift scenario, while it increases by 4.8% under a -100 bps shift [113]. - The weighted average modeled beta for interest-bearing deposits with indeterminable maturities is 53%, indicating sensitivity to interest rate changes [115]. - Latent interest rate sensitivity is expected to increase net interest income by 0.8% in Q1 2025 compared to Q1 2024 [119]. Investment Securities - The amortized cost of total held-to-maturity and available-for-sale investment securities decreased by $480 million, or 2%, from December 31, 2023 [63]. - The total amortized cost of held-to-maturity (HTM) securities was $10,209 million, with an estimated fair value of $10,105 million [180]. - Gross unrealized losses for AFS securities totaled $1,521 million as of March 31, 2024, with $408 million from securities held for less than 12 months [184]. - The company reviews its investment securities portfolio for impairment on a quarterly basis [185].