Zions Bancorporation N.A.

Greetings. Welcome to Zion's Baincorp third quarter earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Ryan Richards, corporate controller. Thank you. You may begin.

Thank you, Sherry, and good evening. Good evening. We welcome you to this conference call to discuss our 2022 third quarter earnings. My name is Ryan Richards and I'm the corporate controller. We would like to excuse James Abbott from the call today as he attends to some family business. I would like to remind you that during this call we will be making forward-looking statements, although actual results may differ materially. We encourage you to review the disclaimer in the press release or the slide deck on slide two dealing with forward-looking information, and the presentation of non-GAAP measures, which applies equally to statements made during this call. A copy of the earnings release as well as a slide deck are available at zionsbankcorporation.com. For our agenda today, Chairman and Chief Executive Officer Harris Simmons will provide opening remarks, followed by a brief review of our financial results by Paul Burtis, our Chief Financial Officer, With us also today are Scott McLean, President and Chief Operating Officer, Keith Mayo, Chief Risk Officer, and Michael Morris, Chief Credit Officer. After our prepared remarks, we will hold a 30-minute question and answer session. During Q&A, we request that you limit your questions to one primary and one follow-up question to enable other participants to ask questions. I will now turn the time over to Harris Simmons.

Thank you very much, Ryan, and thank you and welcome to all of you to our call. Beginning on slide three, we've laid out some themes that are particularly applicable to Zions in recent quarters, as well as those that are likely to be prominent over the near-term horizon. First, as Paul will discuss in greater detail, our asset-sensitive balance sheet is benefiting from rising rates, and we're seeing that in our net interest income. As you know, the futures market is pricing in a Fed Fund's upper target rate of about 5% by the spring of 23, or an increase of about 175 basis points. Our funding costs during the quarter increased modestly. However, it remains among the lowest of banks within our peer group. As rates have risen and downside risk increases, we've been moderating our asset sensitivity primarily through swaps and allowing more highly rate-sensitive deposits to a TRIT. Exclusive of PPP, period end loans increased $1.8 billion, or 3.4%, unannualized during the quarter. We've achieved strong loan growth while maintaining the same underwriting standards that have allowed Zions to outperform most of our peers in some important credit metrics over the past decade. We've restrained growth in categories that can become riskier in a recessionary environment. In particular, commercial real estate, excluding owner-occupied properties, has grown at less than half the rate of the remainder of our portfolio over the past five years, and at a rate much slower than that of our peers. Although loan growth has been stronger than we expected over the last several quarters, we believe that effects of higher rates and likely a slowing economy will slow portfolio growth over the next few quarters. The next theme is balance sheet flexibility during the pandemic we experienced somewhat greater deposit growth and most of our peers and the industry in general. We positioned the balance sheet to manage the eventual outflow of the search deposits, we have a low loan to deposit ratio at 71% whereas prior to the pandemic, we are running in the 85 to 90% range. Our securities portfolio has been structured to provide a more predictable rate of cash flow than simple 30-year mortgage-backed pass-through securities, and that cash flow was used this quarter to fund a substantial portion of our loan growth. Exiting the pandemic, our strong liquidity position allowed us the luxury of being able to prioritize the quality of deposits over quantity, and this is reflected in our total cost of deposits, which At 10 basis points, this quarter is among the very best of our peers. We believe we are well-prepared and positioned for any recession that may materialize with stronger pre-provision net revenue as a result of higher interest rates and capital that is strong relative to the risk profile of our balance sheet, particularly given the fact that much of our loan growth in recent years has been concentrated in loan types that are less prone to loss. Turning to slide four, We're generally pleased with the quarterly financial results, which are summarized on this slide. Circled there, you'll see that adjusted taxable equivalent revenue net of interest expense increased about 9% relative to the prior quarter. And if excluding PPP income, the increase was about 10%. Adjusted pre-provision net revenue increased 17%. And if excluding PPP, it was a 21% increase. Those growth rates are not annualized. Our credit metrics are quite clean, and as previously noted, loan growth was strong when adjusted for PPP forgiveness. All deposits, and most particularly more rate-sensitive deposits attributable to very large relationships, experienced some additional attrition. Moving to slide five, diluted earnings per share was $1.40. Comparing the third quarter to the second quarter, the single most significant difference was the improvement in revenue driven by the effect of interest rate changes on earning assets and continued strong performance from customer-related non-interest income. The provision for credit loss contributed a 15 cent per share negative variance, as can be seen on the bottom left chart, as we added to the loss reserve to reflect the increased probability of an economic slowdown. Interest income from PPP loans is now a much less significant contributor at three cents per share, down from seven cents per share in the second quarter. Other items that affected earnings per share are noted on the right side of the page. Turning to slide six, our third quarter adjusted pre-provision net revenue was $351 million. The adjustments, which most notably eliminate the gain or loss on securities, are shown in the latter pages of the press release and this slide deck. Within the PPNR chart, the top portion of each column denotes the revenue we've received from PPP loans, net of direct external professional services expense. These loans contributed only $6 million to PPNR in the second quarter. Exclusive of PPP income, we experienced an increase in adjusted PPNR of 53% over the year-ago period. With that high-level overview, I'm going to ask Paul Burtis, our Chief Financial Officer, to provide additional detail related to our financial performance. Paul?