Zions Bancorporation(US:ZION)2023-07-19 23:55Financial Data and Key Metrics Changes - Customer deposits increased by $2 billion for the quarter, reflecting customer loyalty and confidence [8] - Total deposit costs rose to 127 basis points from 47 basis points in the previous quarter, with period-end customer deposits up 3.2% [11][26] - Diluted earnings per share was reported at $1.11, impacted by increased deposit and funding costs on net interest income [12] - Adjusted pre-provision net revenue was $296 million, showing a slight decline compared to the previous quarter and year-ago quarter [14] Business Line Data and Key Metrics Changes - Noninterest income from customer-related activities was $162 million, a 7% increase from the prior quarter and 5% from the prior year [20] - Adjusted noninterest expense decreased by 3% from the prior quarter to $494 million, reflecting seasonal expense variations [23] Market Data and Key Metrics Changes - Loan growth has moderated, with expectations for slight increases in the second quarter of 2024 compared to the second quarter of 2023 [24] - The cost of deposits increased significantly, with interest-bearing deposit yield at 2.8% and total cost of deposits at 1.7% [26] Company Strategy and Development Direction - The company is focused on managing expenses in a challenging revenue environment, with a goal to flatten expenses over the next year [9] - There is a commitment to optimizing the funding mix and interest rate hedging strategies in response to interest rate risks [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the banking industry's environment has stabilized compared to the disruptions seen in the first quarter [6] - The outlook for net interest income in the second quarter of 2024 is stable to slightly decreasing relative to the second quarter of 2023, influenced by loan growth and competition for deposits [19][36] Other Important Information - The CET1 ratio increased to 10.0%, indicating a strong capital position relative to the bank's risk profile [37] - Credit quality remains strong, with non-performing assets and classified loan levels stable and low [38] Q&A Session Summary Question: Trends in deposit balances and rates - Management indicated that the net interest margin improved to 2.92%, attributed to a flattening of trends in deposit rates [43][44] Question: Ongoing benefits from severance costs - Management discussed that severance costs are part of a larger program aimed at maintaining noninterest expense levels consistent with the current quarter [45] Question: Noninterest-bearing deposit mix - Management noted that the noninterest-bearing deposit mix is influenced by macroeconomic conditions and the growth of interest-bearing deposits [47][49] Question: Capital return and stock buybacks - Management stated that due to regulatory uncertainties, there are no immediate plans for stock buybacks, focusing instead on organic capital growth [53][54] Question: Growth of broker deposits and customer funds - Management highlighted the ability to utilize broker deposits while also seeing good progress in building customer deposits, with expectations to replace brokered CDs with lower-cost customer funds [57][58]