• Fourth Quarter Adjusted Pre-Provision Net Revenue: Increased 19% relative to the prior year quarter.
• Net Earnings for the Year: $737 million or $4.95 per share.
• Fourth Quarter Earnings: $200 million or $1.34 per share.
• Net Interest Margin: Expanded to 3.05% for the quarter from 3.03% in the prior quarter.
• Efficiency Ratio: Improved by 62%.
• Average Loan Growth: 1.1% on a linked-quarter basis and 3.2% for the full year.
• Net Loan Losses: $36 million or 24 basis points annualized.
• Diluted Earnings Per Share: $1.34 compared to $1.37 in the prior period and $0.78 in the prior year quarter.
• Provision for Credit Losses: $41 million, impacting earnings by $0.21 per share.
• Customer-Related Noninterest Income: $173 million for the quarter, a 7.5% increase on a linked quarter basis.
• Adjusted Noninterest Expense: Increased to $509 million.
• Average Deposit Balances: Increased modestly for the fourth quarter.
• Cost of Total Deposits: Declined by 21 basis points to 1.93%.
• Allowance for Credit Losses: Stable at 1.25%.
• Common Equity Tier 1 Ratio: Increased to 10.9%.

Release Date: January 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zions Bancorp NA (NASDAQ:ZION) reported a 19% increase in fourth quarter adjusted pre-provision net revenue compared to the prior year.
• The net interest margin expanded for the fourth consecutive quarter, reaching 3.05%, up from 2.91% a year ago.
• Customer deposits increased on both an ending and average basis in the fourth quarter and the full year, with stability in noninterest-bearing deposits.
• The capital markets business experienced strong results, contributing to a 15% increase in customer-related noninterest income compared to the previous year.
• Zions Bancorp NA (NASDAQ:ZION) redeemed $374 million of preferred stock with high coupons, replacing it with lower-cost subordinated notes, positively impacting earnings per share.

Negative Points

• Net loan losses were higher in the quarter at $36 million, with two-thirds attributable to a single commercial and industrial credit.
• Classified loan balances increased by $777 million, primarily in commercial real estate, indicating potential credit quality concerns.
• The provision for credit losses of $41 million negatively impacted earnings per share by $0.21.
• The allowance for credit losses remained stable, but the increase in classified loans suggests potential future challenges.
• Zions Bancorp NA (NASDAQ:ZION) anticipates slightly to moderately increasing noninterest expenses in 2025, including costs related to branch acquisitions and marketing.

Q & A Highlights

Q: Can you discuss the current deposit betas and how you expect them to progress, considering the fewer rate cuts in the forward curve? A: Chris Kyriakakis, Chief Risk Officer: We've been pleased with the response of interest-bearing deposits, which have behaved as anticipated. There is a lag factor with time deposits and broker deposits, and we remain ready to adjust rates as needed. We expect another potential 25 basis point rate decrease in 2025, and we anticipate performance to remain in line with past trends.

Q: How are you managing your CET1 ratio, especially with the volatility in the long end of the curve? A: Chris Kyriakakis, Chief Risk Officer: We are aware of the volatility and manage our capital inclusive of AOCI. We monitor our capital levels and expect to grow capital over time to align with peer levels. Volatility in the long end of the curve would primarily impact buybacks rather than loan book growth.

Q: Can you elaborate on the rate sensitivity and assumptions for net interest income growth? A: Ryan Richards, Chief Financial Officer: The deposit beta assumption aligns with current trends. We've grown more comfortable with noninterest-bearing deposits, allowing us to be more constructive about NII sensitivity. We expect continued benefits from fixed asset repricing and stable deposit bases, supporting a positive outlook.

Q: What is your outlook on net interest margin (NIM) returning to mid-3% levels? A: Ryan Richards, Chief Financial Officer: We don't manage to a specific NIM outcome, but with a more naturally sloped yield curve, reaching mid-3% levels seems feasible. The timing is uncertain, but we see potential for improvement.

Q: Can you provide more details on the increase in classified loans, particularly in multifamily, industrial, and office sectors? A: Derek Steward, Chief Credit Officer: The increase was granular and distributed across our footprint. It was driven by construction delays, slower lease-up performance, increased costs, and interest rate hikes. We expect these loans to stabilize over time, given our low loan-to-value ratios.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.