Zions Bancorporation(US:ZION)2025-07-21 22:32Financial Data and Key Metrics Changes - The company reported net earnings of $243 million for the second quarter, reflecting a 28% improvement year-over-year and a 44% increase compared to the first quarter [6][9] - The efficiency ratio improved to 62.2%, and the net interest margin increased for the sixth consecutive quarter to 3.17% [10][12] - Average customer deposits increased by 0.5% year-over-year but decreased by 1.4% on a linked quarter basis [10][18] - Average loans grew by 5.6% on an annualized linked quarter basis and 3.7% year-over-year [10][17] Business Line Data and Key Metrics Changes - The company experienced a 91% increase in the number of loans booked through the SBA program in the first nine months of the fiscal year compared to the previous year [8] - Customer-related non-interest income was $164 million, a 4% increase on a linked quarter basis and a 7% increase year-over-year [14] - Adjusted non-interest expenses decreased by $12 million compared to the prior year, reflecting lower technology costs [15] Market Data and Key Metrics Changes - The company noted a decline in average broker deposits by 8% and a decrease in total average deposits by 0.9% due to seasonal customer deposit outflows [18] - Non-performing assets remained low at 0.51% of loans and other real estate owned [21][23] Company Strategy and Development Direction - The company is focusing on growing customer relationships, particularly in small business banking, and has launched a consumer gold account offering aimed at the mass affluent market [7][8] - The management is optimistic about the potential for growth, citing reduced tariff-related risks and a more favorable economic outlook [6][29] - The company is exploring opportunities in capital markets, including M&A advisory work and launching an oil and gas derivatives business [108] Management's Comments on Operating Environment and Future Outlook - Management expressed a more positive outlook compared to the previous quarter, attributing it to reduced uncertainty in the macro environment and a more flexible administration regarding tariffs [29][31] - The company expects continued growth in net interest income and customer-related fee income, supported by increased customer activity and new client acquisition [13][15] Other Important Information - The company recorded a negative provision for credit losses of $1 million, reducing the allowance for credit losses by $11 million relative to the prior quarter [22] - The common equity Tier one ratio was reported at 11%, indicating strong capital levels [25] Q&A Session Summary Question: What are you hearing from clients in the small business and middle market side? - Management noted that while some businesses are being hurt by tariffs, others see opportunities, leading to a more optimistic outlook compared to the previous quarter [29][31] Question: Are you seeing any elevated competition on the deposit side? - Management acknowledged a competitive market for deposits but emphasized a focus on maintaining margin while growing the deposit base [32][34] Question: Can you provide color on the increase in loan growth? - Loan growth was solid, primarily driven by commercial and industrial loans, with increased utilization and new originations contributing significantly [40][41] Question: Can you discuss the potential benefits of deregulation for the company? - Management highlighted the potential benefits of tiering in regulatory requirements, which could positively impact the company's operations and M&A strategy [45][47] Question: What is the outlook for your capital markets business? - The capital markets business is growing nicely, with expectations to double in size over the next few years, driven by loan syndications and new service offerings [106][108]