Zions Bancorporation NA Q3 2024 Earnings Call Transcript

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

Question: Manan Gosalia - Morgan Stanley & Co LLC - Analyst : Good afternoon. I wanted to touch on deposit costs. So the spot rate you gave was really helpful. It sounds like you've already seen a deposit of about 50% or so from the first, Fed rate cut. Could you take us through how you expect that to progress? What have the early discussions been with customers of different deposit types?

Question: Manan Gosalia - Morgan Stanley & Co LLC - Analyst : And just to be clear that deposit be of 36% is for total deposits, not just interest bearing deposits. Correct?

Question: Manan Gosalia - Morgan Stanley & Co LLC - Analyst : Got it. Okay, great. And just as I think about what impact that should have on them, it feels like, you've dropped on them a couple of quarters ago, how should we expect that to progress from here as rates come down? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 9:30PM, ZION.OQ - Q3 2024 Zions Bancorporation NA Earnings Call

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

Question: John Pancari - Evercore ISI - Analyst : Good afternoon. I just wanted to get a little more color on the credit side on the increase in classifieds and, and MPAs. I know you mentioned that the problem loan increase, the classified loan increase was partly related to a change in internal risk rating. How much of that increase was attributed to the risk rating change? And if part of it was a risk rating change, why did that not necessitate a loan loss reserve increase that corresponds with it?

Question: John Pancari - Evercore ISI - Analyst : Okay. All right. Thanks for that. And then also on the credit front, the just curious how the decline in rates, how that impacted this, I would assume the turn of the inflection in rates here would inherently be a positive for borrowers to meet their debt service coverage hurdles and accordingly also help you with your loan modifications. So curious how that may have influenced the trends we're seeing here in terms of your classified and accruals and how that was impacted. Then lastly, just if you can walk through your the reserve allocation right now for if you break it out by multi family versus the rest of the CRE book. Thanks.

Question: John Pancari - Evercore ISI - Analyst : Yes, that is helpful. Appreciate it, Harris

Question: Ben Gerlinger - Citigroup - Analyst : Hi, good afternoon guys. And their loan guidance, I get that refinancing of CRE is a little bit of a headwind in the future and it makes sense, it's for everybody. But when do you guys think about your, the credits you have outstanding? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 9:30PM, ZION.OQ - Q3 2024 Zions Bancorporation NA Earnings Call Do you think that there, you need another 50 basis points, 100 basis points, 150 basis points a lot of work, I guess that there's math, but there's also behavioral component to on when people actually do try to refinance often. Can you kind of just think about, is there a kind of a line in the sand that people are looking for and then have you earmarked a kind of dollar amount that you would think potentially at risk over the next 12 to 18 months?

Question: Ben Gerlinger - Citigroup - Analyst : And then the guidance, you said slightly increasing on the noninterest expense and you kind of highlight technology costs and investments. Are these one time or kind of concurrent like given your size, I'm talking more so to kind of a plus 100 or just for overall growth? Is it kind of looking forward kind of catching up? And is it one time in nature? I guess not one quarter? But are these investment spends going to end in the immediate future or are they more likely to be consistent going forward?

Question: Bernard Von Gizycki - Deutsche Bank - Analyst : Hey guys, good afternoon. I had a follow up on the first banker's branch acquisition. How do you think about further interest in asset acquisitions? Like a, maybe another branch pick up a bolt on deal or a whole bank merger?

Question: Bernard Von Gizycki - Deutsche Bank - Analyst : Understood. And then maybe just on capital markets, obviously, that's been the emphasis for you. And obviously there's a nice pickup in the quarter from the increase in swaps, fees, loan syndications and the expanded real estate capital markets. Any color you can provide during the quarter thus far and just expectations, further for 4Q and going into like 2025?

Question: Matthew Clark - Piper Sandler Companies - Analyst : Hey, good afternoon. Thanks for the questions. First one, just on the criticized being up a lot less than classified, that would imply that special mention was down, I think almost $400 million. Can you just confirm that's the case? And then what drove the upgrades and special mention?

Question: Matthew Clark - Piper Sandler Companies - Analyst : Got it. Okay. And then on the borrowings, I think you reduce those by about a third. Any updated thoughts on your outlook on borrowings in general and appetite to reduce those further or vice-versa?

Question: Christopher McGratty - Keefe, Bruyette & Woods, Inc - Analyst : Good afternoon. Harrison on credit. You -- had the basis points this quarter were extremely low. I think, I've asked in the past, how do you think of normalized losses going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 9:30PM, ZION.OQ - Q3 2024 Zions Bancorporation NA Earnings Call

Question: Christopher McGratty - Keefe, Bruyette & Woods, Inc - Analyst : And then my follow up on capital return with the drop in rates, albeit the backup recently. Has there been any change in kind of appetite or what we should be looking for the -- for more active buybacks to be part of the equation? Thanks.

Question: Samuel Varga - UBS Securities LLC - Analyst : Hey, good afternoon. I just want to go back to the balance sheet a little bit. The liquidity levels for the quarter based on the average is meaningfully higher than the end of the period. So I just wanted to see if you could give some commentary around where you'd expect liquidity levels broadly to move in 4Q and whether there was any sort of seasonality that impacted 3Q numbers?

Question: Samuel Varga - UBS Securities LLC - Analyst : Yes. So just in terms of the cash and money market investments, where those might move.

Question: Samuel Varga - UBS Securities LLC - Analyst : Understood. Thanks for that color. And then just on the non-interest bearing deposit front, it seems like the, in the period and then the average are converging, I guess. Can you give some sense of potential 4Q seasonality there?

Question: Mike Mayo - Wells Fargo & Co - Analyst : Hey, Harris, it was great seeing you recently and hear you wax poetic about the virtues and benefits of the upward sloping yield curve. So first, I guess, do you have more conviction now? What you're seeing in the market and how do I reconcile your desire and ongoing asset sensitivity? It's very clear that you are with lots of rate cuts with the guide higher for NII over the next year. It looks like you have your cake and you get to eat it too, but it doesn't always work out that way. So what are your thoughts about that? And what are the risks of that scenario? Thanks.

Question: Mike Mayo - Wells Fargo & Co - Analyst : Yes. I guess the bottom line is you're willing to sacrifice some short term earnings, given your conviction that longer term you're going to see some of those pressures on the yield curve.

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Hey, thanks. Good evening, everyone. Harris, I want to ask you a question just on overall loan growth. Are you more optimistic on loan growth than you were a quarter ago? I mean, our pipeline is higher and our borrowers getting more confident, you expect some improvement there over time?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Yeah, it's good to hear the core C&I is a little bit better. Maybe this is for you Scott, I'm not sure who will take it, but can you comment on the energy balance trends this quarter kind of what happened there? And we expect more of the same on that or was that just capital markets or some other factor there? Thank you.