ZIONS(ZIONL) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Zions Bancorporation reported improved Q2 2024 diluted EPS of $1.28, driven by increased net interest income and a significant reduction in credit loss provisions, despite a decline in noninterest income | Financial Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Diluted EPS | $1.28 | $1.11 | +15.3% | | Net Interest Income | $597 million | $591 million | +1% | | Net Interest Margin | 2.98% | 2.92% | +6 bps | | Provision for Credit Losses | $5 million | $46 million | -89.1% | | Customer-related Noninterest Income | $154 million | $162 million | -5% | | Noninterest Expense | $509 million | $508 million | Stable | | Net Loan & Lease Charge-offs (% of avg. loans) | 0.10% | 0.09% | +1 bp | - Customer deposits (excluding brokered deposits) grew by $3.6 billion, or 5%, year-over-year to $69.5 billion[19] - Classified loans increased to $1.3 billion (2.16% of total loans) from $768 million (1.35%) in the prior year, and nonperforming assets rose to $265 million (0.45%) from $164 million (0.29%), primarily due to a small number of commercial and industrial and term commercial real estate loans[19] Results of Operations Q2 2024 results showed a 1% rise in net interest income and a lower provision for credit losses, offsetting a 5% decline in noninterest income, with stable noninterest expenses Balance Sheet Analysis The balance sheet as of June 30, 2024, shows a 1% increase in loans, a 5% decrease in investment securities, and a 2% decrease in total deposits, with a higher loan-to-deposit ratio Risk Management The company actively manages credit, interest rate, and liquidity risks, maintaining strong underwriting, asset-sensitive positioning, robust liquidity, and investment-grade credit ratings Capital Management The bank maintained a strong capital position with all regulatory ratios exceeding well-capitalized requirements, including a CET1 ratio of 10.6%, supported by increased shareholders' equity | Capital Ratio | June 30, 2024 | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Common equity tier 1 (CET1) | 10.6% | 10.3% | 10.0% | | Tier 1 risk-based | 11.2% | 10.9% | 10.7% | | Total risk-based | 13.1% | 12.8% | 12.5% | | Tier 1 leverage | 8.5% | 8.3% | 8.0% | - Total shareholders' equity increased by $334 million (6%) to $6.0 billion since December 31, 2023, driven by retained earnings and a $143 million improvement in Accumulated Other Comprehensive Loss (AOCI)[155] | Capital Distributions (Six Months Ended June 30) | 2024 | 2023 | | :--- | :--- | :--- | | Common dividends paid | $122 million | $122 million | | Bank common stock repurchased | $35 million | $50 million | | Total distributed to common shareholders | $157 million | $172 million | Non-GAAP Financial Measures The company utilizes non-GAAP measures like tangible common equity ratios, adjusted PPNR, and the efficiency ratio to provide a clearer view of operational performance | Non-GAAP Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Return on avg. tangible common equity | 17.5% | 17.8% | | Tangible book value per common share | $30.67 | $25.52 | | Efficiency ratio | 64.5% | 62.5% | | Adjusted PPNR | $278 million | $296 million | Financial Statements (Unaudited) The unaudited consolidated financial statements provide the financial position, results of operations, and cash flows for Zions Bancorporation as of and for the three and six months ended June 30, 2024 Consolidated Balance Sheets As of June 30, 2024, the balance sheet shows total assets of $87.6 billion, with increased net loans and shareholders' equity, and a decrease in total deposits | Balance Sheet Item (in billions) | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $87.6 | $87.2 | | Net Loans Held for Investment | $57.7 | $57.1 | | Total Investment Securities | $19.6 | $20.7 | | Total Deposits | $73.8 | $75.0 | | Total Shareholders' Equity | $6.0 | $5.7 | Consolidated Statements of Income For Q2 2024, net income rose to $201 million, or $1.28 diluted EPS, primarily due to a significantly lower provision for credit losses, despite stable net interest income | Income Statement Item (in millions) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Interest Income | $597 | $591 | | Provision for Credit Losses | $5 | $46 | | Total Noninterest Income | $179 | $189 | | Total Noninterest Expense | $509 | $508 | | Net Income | $201 | $175 | | Net Earnings Applicable to Common Shareholders | $190 | $166 | | Diluted EPS | $1.28 | $1.11 | Notes to Consolidated Financial Statements The notes provide detailed disclosures on fair value measurements, investment securities, loan portfolios, allowance for credit losses, derivative instruments, and other significant financial statement items Quantitative and Qualitative Disclosures About Market Risk The company's most significant market risk is interest rate risk, which is actively monitored and managed - The company identifies interest rate and market risk as its most significant risks, which are discussed in detail in the MD&A section of the report[284] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2024, and concluded they were effective - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2024[285] - There were no material changes to internal control over financial reporting during the second quarter of 2024[285] PART II. OTHER INFORMATION Legal Proceedings The company is involved in legal proceedings with estimated possible losses up to $10 million in excess of accruals, not expected to materially impact financial condition - The company estimates the aggregate range of reasonably possible losses for certain significant legal matters to be from zero to approximately $10 million in excess of accrued amounts[263] - Two material civil cases mentioned are Lifescan Inc. and Johnson & Johnson Health Care Services v. Jef rey Smith, et. al., and Roche Diagnostics and Roche Diabetes Care Inc. v. Jef rey C. Smith, et. al., both related to the alleged fraudulent practices of a former borrower[265] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Form 10-K - No material changes to risk factors were reported since the 2023 Form 10-K[287]