Zions Bancorporation N.A.

Greetings and welcome to the Zions Bank Corporation Q4 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shannon Drage, Director of Investor Relations. Thank you, Ms. Drage. You may begin.

Thank you, Camilla, and good evening. We welcome you to this conference call to discuss our 2023 fourth quarter earnings. My name is Shannon Drage, the Director of Investor Relations. 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 slide two of the presentation 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 the presentation are available at zionsbankcorporation.com. For our agenda today, Chairman and Chief Executive Officer Harris Simmons will provide opening remarks. Following Harris's comments, Paul Burtis, our Chief Financial Officer, will review our financial results. Also with us today are Scott McClain, President and Chief Operating Officer, Chris Kyriakakis, Chief Risk Officer, and Derek Stewart, Chief Credit Officer. After our prepared remarks, we will hold a question and answer session. This call is scheduled for one hour. I will now turn the time over to Harris Simmons.

Thanks very much, Shannon, and we welcome all of you to our call this afternoon. As Shannon mentioned, Chris Kyriakakis is joining our call today as our new Chief Risk Officer, and we want to welcome him. Chris was formerly our chief audit executive, and he's replacing Keith Mayo, who recently retired after 32 years of really phenomenal service with Zions in a variety of senior positions. I'd like to start with comments on slide three, which includes some themes which are particularly applicable to Zions. Our financial performance this quarter reflects the unusual circumstances of the past year, as events last spring were the catalyst for an acceleration of deposit betas across the industry. We've been proactive in managing our balance sheet, making adjustments to our edging strategy, working with clients to bring back on balance sheets deposits that we'd steered to off-balance sheet money market funds in times of surplus liquidity. And we've demonstrated our ability to effectively manage interest rate and liquidity risk in a very dynamic environment. In the fourth quarter, we've seen the deposit mix stabilize and deposit costs start to level out. Net interest margin and net interest income were stable in the quarter. We continue to have a higher concentration of more costly funding sources than is typical for us. And we believe in the near term that reducing our reliance on funding priced at or near wholesale rates combined with continued deposit pricing discipline, regardless of the future rate path, presents a meaningful opportunity to improve revenue performance. In the medium to long term, we remain focused on improving shareholder returns by growing profitable small business and commercial customer relationships, by emphasizing growth in our capital markets and wealth management businesses, and continuing to move away from single product, loan only, and other less profitable relationships. In 2023, we exited two national lending businesses that produced few deposits and we're experiencing declining levels of profitability, and we changed our approach to mortgage lending as part of our focus on improved profitability. We continue to invest in the business and in enabling technologies to deliver products and services that our customers need and which enhance the customer experience, all while managing expense growth to nominal levels. We have an established track record for managing risk and underwriting credit with better than pure performance. We believe that the combination of these efforts will result in improved financial outcomes for our investors in years ahead. Turning to slide four, we've included key financial performance highlights for the quarter and for the full year. We reported a period end loan balance increase of 3.8% for the full year and 1.6% in the current quarter. Customer deposit balances were flat for the full year and were up 2.4% in the quarter. Our loan-to-deposit ratio was 77%. Net charge-offs as a percent of loans were just six basis points, both in the quarter and for the full year, down from an already low eight basis points reported in the prior year. Our common equity tier one ratio was 10.3% compared to 9.8% in the prior year. Moving to slide five, Link's quarter diluted earnings per share was down 35 cents to 78 cents per share on net earnings of $116 million due to the impact of the FDIC special assessments combined with lower non-interest income. Turning to slide six, our fourth quarter adjusted pre-provision net revenue was $262 million, down from $272 million. The linked quarter decline was attributable primarily to lower non-interest revenue. Versus the year-ago quarter, PPNR was down 38% as the increase in our cost of funds exceeded the increase in earning asset yields. So 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?