Zions Bancorporation(ZION) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Customer deposits grew by $3 billion during the quarter, resulting in a 5$0.02 to $1.13, with net income reported at$168 million [12] - Adjusted pre-provision net revenue decreased to $272 million, down from$296 million, reflecting a 23% decline year-over-year [13][21] - Total deposit costs rose to 192 basis points from 127 basis points in the previous quarter [11][23] Business Line Data and Key Metrics Changes - Period-end loans remained flat compared to the prior quarter, indicating softening loan demand [11][22] - Non-interest income from customer-related activities was $157 million, a decrease of 3$493 million, with reported expenses decreasing to $496 million [21] Market Data and Key Metrics Changes - Average deposit balances increased by 9% in the third quarter, while ending balances grew by 1% compared to the second quarter [23] - The cost of deposits increased to 192 basis points, reflecting a repricing beta of 36% for total deposits [23] Company Strategy and Development Direction - The company aims to maintain a strong loan-to-deposit ratio while continuing to grow customer deposits [62] - Management emphasized a commitment to managing balance sheet risks and optimizing funding sources [10][24] - The outlook for net interest income is stable, with expectations for loan growth to remain flat [18][29] Management's Comments on Operating Environment and Future Outlook - Management noted that credit quality remains strong, with non-performing assets increasing primarily due to specific office loans in Southern California [30][33] - The company expects to maintain strong levels of regulatory capital while managing a below-average risk profile [34] - Management acknowledged inflationary pressures impacting expense management efforts [52][53] Other Important Information - The Chief Credit Officer position was transitioned to Derek Steward following the retirement of Michael Morris [8] - The company celebrated its 150th anniversary, highlighting its long-standing commitment to community and customer service [6][7] Q&A Session Summary Question: Inquiry about NII decline in September - Management explained that monthly NII figures can fluctuate and emphasized the expectation of stable NII moving forward [37][39] Question: Expectations for deposit flows and beta - Management indicated a continued increase in deposit rates and migration from non-interest bearing to interest-bearing deposits [44][46] Question: Potential for loan growth - Management expressed caution regarding loan growth forecasts, noting recent weak demand but acknowledging potential for slight increases [48][50] Question: Expense rationalization efforts - Management discussed inflationary pressures affecting expense management and the impact of core system upgrades on expenses [51][55] Question: Clarification on deposit beta and costs - Management clarified that the increase in deposit costs is due to the lagging effect of deposit rates and migration trends [57][59]