Zions Bancorporation N.A.

Greetings and welcome to the Zions Bancorp Q1 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce Shannon Drage, Director of Investor Relations. Thank you, Shannon. You may begin.

Thank you, Daryl, and good morning. we welcome you to this conference call to discuss our 2024 first quarter earnings. 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 on our website, zionsbankcorporation.com. For our agenda today, Chairman and Chief Executive Officer Harris Simmons will provide opening remarks. Following Harris's comments, Ryan Richards, 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 morning. As Shannon mentioned, Ryan Richards is joining our call today as our new chief financial officer. Ryan was formerly our corporate controller and has been promoted to chief financial officer as our former CFO, Paul Burtis, is now serving as the CEO of our largest affiliate bank, Zions Bank. These changes, along with other leadership changes, I think reflect the depth of the talent that we have in our organization and our intentional efforts to develop a well-rounded group of leaders with broad experience. While we in the industry continue to navigate complex and uncertain economic and regulatory conditions, we have not lost focus on bringing value to our customers and shareholders over the long term. We've just successfully completed the second of three migrations to our new core deposit system, which happened for Nevada State Bank and Amogee Bank of Texas customers two weeks ago. We anticipate completing migration of substantially all remaining accounts in late summer. This core system is delivering the benefits we were anticipating, including one intuitive, easy-to-use system for virtually all deposit and loan accounts, which improves the ability to view and manage client relationships, provides greater access to data and consistency of data, resulting in fewer calls to the back office, optimized teller transaction processing, the shortening of new account opening and customer maintenance times, and real-time processing, allowing for improved fraud detection and mistake resolution. The completion of this major transformation is accompanied by other enhancements to digital capabilities for our customers, all of which we believe put us ahead of the pack in terms of our resiliency, our product offerings, and ability to serve our customers. This advantage combined with our local approach to relationship banking, the strength of our footprint, and our ability to manage risk positions us well for continued advancements in digital banking. We're also pleased that our efforts to serve and create value for our customers continue to be recognized, including through the 2023 Greenwich Associates Market Tracking Program. Zions was awarded 20 overall National Excellence Awards, ranking third among all U.S. banks, and securing our position as one of only three U.S. banks to average 16 or more wins since the inception of the Brand Awards in 2009. We continue to score well across a number of measure dimensions for both small business and middle market categories, where we lead the way for bank you can trust, values, long-term relationships, and ease of doing business. By the way, we tip our hat to our friends at Colin Frost and Pinnacle Financial, who were number one and two this year. and for their continued and consistent recognition by Greenwich Associates over the years. We're proud to be in such good company and associated with other leading regional banks who demonstrate excellence in meeting the needs of small and middle market businesses. In the current environment, revenue growth continues to be our biggest challenge, with adjusted revenue in the quarter down 11% compared to the year-ago period. Over time, relative net interest margin will improve through customer deposit growth and pricing discipline, in addition to the management of interest rate risk through our hedging strategy. We also expect that with the continued passage of time from the events of last spring, our relative cost of deposits will continue to improve. Loan demand seems to have turned a corner of sorts this quarter, with pipelines recovering somewhat from low levels late last year and improving customer sentiment. Our true success will depend on our ability to grow our customer base and we continue to place an emphasis on granular growth of small business customers. Recently, we've been particularly successful with a streamlined SBA program aimed at serving smaller businesses in our communities. It's a program that seems to fill a unique product need for our customers and while it doesn't immediately contribute meaningfully to loan balance growth, it's the kind of business that builds real franchise value and it's bringing in a meaningful number of new to the bank customers and our cross-selling efforts are also bearing fruit. We also remain confident in our ability to grow fee income to a larger percentage of total revenue. Capital markets fees represent a key opportunity and these fees are growing as our product set expands and more of our bankers are marketing these capabilities to clients. These combined efforts to improve revenue will be paired with well-managed expenses Adjusted expenses in the current period were up a mere $2 million compared to the first quarter of 2023, and we continue to focus on ways that we can control costs while continuing to invest in the business. Net charge-offs continue to be benign at just four basis points annualized as a percentage of average loans for the quarter. This contrasts to an increase in classified loan balances of $141 million driven largely by the C&I portfolio. We believe realized losses over the next few quarters will continue to be quite manageable and our current expectations are fully reflected in our allowance, which increased one basis point as a percentage of loans, and which Ryan will speak about in more detail later in the presentation. With the continued improvement we expect in our net interest margin, coupled with better than pure credit performance, we anticipate a positive trajectory for relative performance and our ability to improve shareholder returns going forward. Starting on slide three, we've included key financial performance highlights. We reported net earnings of $143 million for the quarter. Our period end loan balance increased just under 1%, while average balances increased 1.3% for the quarter. Customer deposit balances declined approximately 1% in the quarter due primarily to a small number of seasonal outflows early in the year. Our loan deposit ratio was 78%. Net charge-offs as a percent of loans were just four basis points, as noted, down from six basis points reported in the prior quarter. Our common equity Tier 1 ratio was 10.4% compared to 10.3% in the fourth quarter and 9.9% a year ago. Moving to slide four, diluted earnings per share of 96 cents was up 18 cents from the prior quarter. Current quarter results reflect a 7 cent negative impact from the FDIC's updated estimate of expected losses from the closures of the Silicon Valley Bank and Signature Bank, which which compares to the 46% negative impact from the initial assessment reflected in the fourth quarter. Turning to slide five, our first quarter adjusted pre-provision net revenue was $242 million, down from $262 million in the fourth quarter. The length quarter decline was attributable primarily to seasonally higher non-interest expense, versus the year-ago quarter, PPNR was down 29%, as the increase in the cost of deposits exceeded the increase in earning asset yields. With that high-level overview, I'm going to ask Ryan Richards, our Chief Financial Officer, to provide additional detail related to our financial performance. Ryan?