Zions Bancorporation(US:ZION)2022-01-25 01:12Financial Data and Key Metrics Changes - Loans, excluding PPP loans, increased by $1.4 billion during the quarter, roughly double the growth in the third quarter [9] - Diluted earnings per share was $1.34, with a provision for credit loss impacting earnings per share by $0.12 [13][14] - Average total deposits increased by $4 billion or 5.2% unannualized, with period-end deposits increasing by $4.9 billion or 6.3% [19] Business Line Data and Key Metrics Changes - Average non-PPP loans increased by $1.2 billion or an annualized 2.5% compared to the third quarter, with period-end growth of $1.4 billion or 2.9% [18] - Loans to businesses increased over $1.2 billion, with significant growth in C&I, owner-occupied, and municipal finance [22] - Customer-related fees were $152 million, a 10% increase over the year-ago quarter [25] Market Data and Key Metrics Changes - Zions achieved a deposit growth of 19% compared to the 12% growth reported by domestic commercial banks [10] - The yield on average total loans decreased slightly, with average PPP loans declining by $1.4 billion [18] - The credit quality of the loan portfolio improved, with problem loans dropping significantly [20] Company Strategy and Development Direction - The company is focused on increasing new-to-bank customers and has seen success with promotional campaigns [9] - Significant investment in technology is ongoing to remain competitive against larger banks and fintechs [12] - The company aims to operate with lower-than-average risk while maintaining a stronger-than-median common equity Tier 1 capital ratio [50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for loan demand in 2022, citing businesses needing to rebuild inventories [58] - Concerns about inflation's impact on business activity were acknowledged, but overall sentiment remained positive [58] - The company expects net interest income to increase over the next year, excluding PPP loan revenue [48] Other Important Information - The allowance for credit losses increased slightly due to concerns over the Omicron variant's impact on the economy [42] - The company repurchased $325 million of common stock in the fourth quarter [43] - A new technology campus in Salt Lake City is set to open, reducing occupancy costs by about 13% [32] Q&A Session Summary Question: NII guidance and cash deployment assumptions - Management indicated that loan growth is the primary focus for cash deployment, with confidence in the quality of depositors [53][54] Question: Loan growth outlook and inflation risks - Management believes 2022 will be a good year for loan demand, despite uncertainties related to inflation [58] Question: Deposit liquidity expectations - Management expressed confidence in the operational nature of deposits and expects continued deployment of liquidity [62][64] Question: Areas of lending sensitivity - Management noted sensitivity in commercial real estate, particularly in office space and retail [66] Question: Expense trajectory with potential rate hikes - Management expects much of the net interest income from rate hikes to fall to the bottom line, but wage pressures may impact expenses [70][71] Question: Loan growth outlook and active campaigns - Ongoing campaigns for owner-occupied and HELOC loans are expected to continue driving growth [78] Question: Energy sector loan growth expectations - Management anticipates some growth in the energy sector, with improved credit quality and increased commitments [95]