Zions Bancorporation(US:ZION)2026-01-20 23:32Financial Data and Key Metrics Changes - Earnings for the fourth quarter were $262 million, up 19% from the prior quarter and 31% year-over-year, driven by stronger revenues and lower provision for credit losses [4] - Net interest margin expanded for the eighth consecutive quarter to 3.31%, benefiting from an improved funding mix [4][9] - Annualized average loans were flat compared to the last quarter, but period-end balances increased by $615 million [4][16] - Tangible book value per share increased by 21% year-over-year, marking the third consecutive year of growth over 20% [7][22] - Diluted earnings per share rose to $1.76 from $1.48 last quarter and $1.34 a year ago [7] Business Line Data and Key Metrics Changes - Net interest income increased by $56 million or 9% compared to the fourth quarter of 2024 [9] - Customer-related noninterest income was $177 million for the quarter, up from $163 million in the prior period [11] - Adjusted customer-related noninterest income, excluding net CVA, was a record $175 million for the quarter [12] - Capital markets fees, excluding net CVA, increased by 25% compared to the full year 2024 [13] Market Data and Key Metrics Changes - Average non-interest-bearing deposits grew by $1.7 billion or 6% compared to the prior quarter [17] - Period-end deposit balances grew by $766 million versus the prior quarter [19] - The cost of total deposits declined by 11 basis points sequentially to 1.56% [18] Company Strategy and Development Direction - The company aims to increase capital distributions while continuing to strengthen capital [7][22] - Focus on small business lending is central to growth strategy, with a near doubling of SBA 7 loans and a 53% increase in dollars produced [42] - Increased marketing and business development expenses are part of a strategy to revamp products and drive growth [30][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of performance despite industry disruptions from the pandemic and regional bank crisis [6] - The outlook for net interest income for 2026 is moderately increasing, supported by favorable earning asset and interest-bearing liability remix [10] - Management is cautious about potential economic impacts on credit quality but remains optimistic about growth in commercial loans [49][81] Other Important Information - The company reported a $6 million provision for credit losses, which, combined with net charge-offs, reduced the allowance for credit losses by $1 million [20] - The allowance for credit losses as a percentage of loans declined to 1% [21] Q&A Session Summary Question: Clarification on expense guidance - The base for the moderately increasing guide should exclude the charitable contribution for this quarter [25][26] Question: Increased competition in markets - Management acknowledged ongoing competition but emphasized that increased marketing spend is driven by internal product revamps rather than new entrants [28][30] Question: NII outlook for 2026 - Management indicated potential for a remix on both sides of the balance sheet contributing to NII outcomes, with a focus on granular deposit growth [34][35] Question: Loan growth dynamics - Management highlighted strong growth in small business lending and a focus on C&I and owner-occupied loans [42][45] Question: Timing of share buybacks - Management indicated that they are nearing a position to start accelerating capital returns, but no specific timing was provided [51][52] Question: Source of deposit growth - Management expects growth across both non-interest-bearing and interest-bearing deposits, driven by strategic initiatives [57] Question: Non-interest-bearing deposits growth - Management reported growth from new customer acquisitions and expects this trend to continue [60][62] Question: Fixed rate asset repricing - Management noted that current fixed loan repricing impacts are around one basis point, with expectations of potential erosion from future rate cuts [64]