Zions Bancorporation NA Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manan Gosalia - Morgan Stanley - Analyst : Hi, good afternoon all.

Question: Manan Gosalia - Morgan Stanley - Analyst : Harris, I was wondering, what are you hearing from clients in the small business and middle market side? You sound a lot more positive versus last quarter. Is it just the lower uncertainty in the macro environment that's driving that? Or are you seeing something more that's driving that change?

Question: Manan Gosalia - Morgan Stanley - Analyst : Got it. And then maybe on the other side of the balance sheet, on the deposit side, are you seeing any elevated competition? I mean it looks like the spot rate is lower than the average. It looks like things are moving the right way. But with more banks talking about loan growth improving, are you seeing any early signs of higher competition?

Question: Manan Gosalia - Morgan Stanley - Analyst : So are you saying that deposit costs should come down a little bit or total funding cost should come down a little bit from -- even without Fed rate cuts?

Question: Manan Gosalia - Morgan Stanley - Analyst : Great. Thank you.

Question: Bernard Von-Gizycki - Deutsche Bank Securities Inc - Analyst : Hi, guys, good afternoon. Just on loan growth, it looks like it was really solid in the quarter led by C&I, some term financing in CRE and mortgage from consumer. Just any color you can provide on the increase in loan growth and where you expect to continue from here?

Question: Bernard Von-Gizycki - Deutsche Bank Securities Inc - Analyst : Okay. Got it. And then just for a follow-up on just the regulation. [Bowman] has laid out a number of items that likely need to be dialed back and we'll likely see an overall easing of the regulatory framework. Can you just talk to any specific items that could be beneficial for Zion? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2025 / 9:30PM, ZION.OQ - Q2 2025 Zions Bancorporation NA Earnings Call Obviously, tiering is an area that could be beneficial. The $100 billion asset threshold has moved to $130 billion or so or to $250 billion. But just wanted to hear your thoughts if this could lead to more willingness to pursue M&A. Obviously, I understand your focus on more organic growth. Maybe it's just a benefit to the industry that could still obviously be some benefit to your bank. Just any thoughts here would be great.

Question: Bernard Von-Gizycki - Deutsche Bank Securities Inc - Analyst : Okay, great. Thanks for taking my question.

Question: John Pancari - Evercore ISI - Analyst : Good afternoon.

Question: John Pancari - Evercore ISI - Analyst : I guess just on the expense side, I know you're still targeting -- you indicated that your expense outlook does imply confidence in driving positive operating leverage. I wanted to see if you can maybe help us frame the degree of positive operating leverage that you think is reasonable, given your growth opportunities in front of you, but also the investments? And if you do see a greater degree of revenue pressure, then you currently include in the guidance, do you still have confidence in the ability to achieve positive operating leverage just given the expense flex? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2025 / 9:30PM, ZION.OQ - Q2 2025 Zions Bancorporation NA Earnings Call

Question: John Pancari - Evercore ISI - Analyst : Got it. Okay. All right. Thank you all for that detail. And then one quick follow-up. And I know M&A was already asked about. But on the M&A front, I know you mentioned the merits of the smaller Coachella Valley deal that you did? And have you seen -- as you completed that transaction and have you seen the benefit of the new core system in terms of the ability to integrate and close the deal faster and ideally save on costs and achieve potentially higher cost savings through a transaction like that?

Question: John Pancari - Evercore ISI - Analyst : Got it. All right, thank you for that. I appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2025 / 9:30PM, ZION.OQ - Q2 2025 Zions Bancorporation NA Earnings Call

Question: Bill Carcache - Wolfe Research LLC - Analyst : Hi, thank you. Good afternoon. As you think about the interplay between ongoing repricing tailwinds and your funding dynamics that you've discussed, is there anything that gets in the way of your NIM getting back to sort of that 3.5% level that we saw pre-COVID, the consensus doesn't have you getting there through 2027. Is that too conservative? Perhaps, any thoughts on the reversion to that sort of pre-covid NIM level?

Question: Bill Carcache - Wolfe Research LLC - Analyst : Thank you. That's helpful. And then, Harris, following up on your gold account comments, can you give a little bit more color on some of the features of that -- what's contributing to its success, how you're thinking about expanding that offering into your other markets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2025 / 9:30PM, ZION.OQ - Q2 2025 Zions Bancorporation NA Earnings Call

Question: Bill Carcache - Wolfe Research LLC - Analyst : Thank you for the details. That's very helpful.

Question: Ken Houston - Autonomous Research - Analyst : Great, thanks guys. Just a couple of more follow-ups on the remix points. On the liability side, you've had a great path towards getting down some of those broker deposits and this quarter, I see a little remixing into FHLB. Can you just kind of give us an update of where your brokerage stand at the end of the quarter? And how much more remixing can you do, especially if the DDA balances look like they've bottomed if not started to increase a little bit? Thanks.

Question: Ken Houston - Autonomous Research - Analyst : Got it. And on the loan side, very interesting to see all three of the loan categories yields go up. I know there's obviously a little swap impact on the C&I book, but the CRE and the consumer. So can you help us walk through what that front book back book benefit continues to be and just what's your natural state of just what competition is like got there in terms of spreads? Thanks.

Question: Ken Houston - Autonomous Research - Analyst : Okay, great. Thanks a lot, Ryan.

Question: Peter Winter - D.A. Davidson & Co - Analyst : Thanks. Good afternoon. If I look at slide 27, (inaudible) merchant scenario, the hypothetical simulation, it does seem conservative with the assumption of $1.4 billion migration of noninterest-bearing deposits. Maybe could you, Ryan, maybe provide some sensitivity if DDA deposits stabilized, which has kind of been the trend the last few quarters? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2025 / 9:30PM, ZION.OQ - Q2 2025 Zions Bancorporation NA Earnings Call

Question: Peter Winter - D.A. Davidson & Co - Analyst : Okay. Got it. And if I can ask just speaking about balance sheet, still asset-sensitive. Could you talk about maybe some of the plans going forward to manage the balance sheet sensitivity. It clearly seems like the next Chairman is likely going to take a more dovish stance on rates?

Question: Peter Winter - D.A. Davidson & Co - Analyst : Got it. Thanks, Ryan.

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Great, thanks for the question. Can you speak about the outlook for your capital markets business, your fee income that you spent a lot of time building. Interested in how that business is progressing relative to expectations and where you think that could be over time? Thanks.

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Thank you for the call. I appreciate it. I have missed it, just going back to capital including the tiering conversation. How should we be -- how are you trying to message potential resumption of buybacks again, if I missed it, I'm sorry.

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : That's helpful. Thank you so much.

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Hi everyone, your deposit balances have declined for two straight quarters now on a period-end basis. I know on the slides, you called out the headwinds in 2Q from seasonal April outflows and brokered balances. But do you think the third quarter could be a growth quarter for total deposits?

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Thank you. And then my follow-up actually on your comments, Harris, earlier on stablecoins. So I know you mentioned it's still too early to see how something like that could impact Zions. But given you have the leg up with already being integrated on TCS right? We saw the Genius Act signed into law last week, and there's only a handful of regional banks that are active in this space today. Could you see stablecoins and digital assets more broadly being an area that contributes to Zions' deposit growth at some point? Thank you.

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Thank you.

Question: David Smith - Truist Securities - Analyst : Thank you. You had some nice loan growth this month. I'm just thinking ahead about the outlook for slightly increasing loan growth a year from now. Do you constrained at all on how much you can grow given your current GAAP equity levels, just given how credit has been performing and the fact that customer sentiment seems solid, it would seem like a good time to really be leaning into growth for a while. And do you have the capacity to do as much of that as you like to organically right now? I know if you can maintain these returns, it will help, obviously, but any color on that would be really helpful.

Question: David Smith - Truist Securities - Analyst : All right, thank you.

Question: Jon Arfstrom - RBC Capital Markets Wealth Management - Analyst : Hey, thanks. I know it's getting late, so we can be quick here. But on slide 23, can you talk a little bit more about the construction and CRE term loan activity? Is that just construction loans going to permanent or is there something else happening there within plan? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2025 / 9:30PM, ZION.OQ - Q2 2025 Zions Bancorporation NA Earnings Call

Question: Jon Arfstrom - RBC Capital Markets Wealth Management - Analyst : Okay. Good. Thank you. And then, Ryan, just one quick one for you. I think you're saying this, but I just want to make sure I've got it right. You have a lot of repricing that happens immediately with a rate cut or a rate hike. You're just saying there's enough momentum in your model right now that if we get a couple of cuts, you still feel like there's enough momentum to push the margin higher?

Question: Jon Arfstrom - RBC Capital Markets Wealth Management - Analyst : Okay. Okay, thank you very much.