Zions Bancorporation (NASDAQ:ZION) Q3 2019 Earnings Conference Call - Final Transcript

Oct 21, 2019 • 05:30 pm ET


Zions Bancorporation (NASDAQ:ZION) Q3 2019 Earnings Conference Call - Final Transcript


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Harris H. Simmons

quarter did not decline when compared to the prior quarter, I'm happy to report that recently deposit rates have been coming down, and I would therefore expect the cost of deposits to decline moderately in the fourth quarter.

Credit costs remained low. We don't see any indicators of a broad-based recession on the horizon. Credit stress appears to be somewhat episodic within our loan portfolio with the only subsector demonstrating broad-based stress being agriculture, an industry to which we have limited exposure. We've not observed broad-based credit stress.

Regarding capital, we are pleased to have repurchased nearly 4% of our outstanding shares in the third quarter and 12% of our shares during the last year. During the past few months, we've been delivering an annualized common dividend yield of about 3%. Our common equity Tier 1 capital ratio remained strong at 10.4%.

On Slide 4, we show the earnings per share results for the last several quarters. In the third quarter of 2019, we reported $1.17 of earnings per share compared to $1.04 per share in the third quarter last year. Notably, our average diluted shares outstanding have declined by 23.9 million shares or nearly 12% over the past year, accounting for most of the earnings per share improvement. Still, we feel very good about the quality of this quarter's financial performance.

Turning to Slide 5, on the left side, as you'll see adjusted pre-provision net revenue, or PPNR, which increased 6% over the same period a year ago. On the right side of the chart, showing pre-provision net revenue less current period net charge-offs on a per share basis, which increased to 19% over the prior year. We believe this view of bank performance will be perhaps more comparable across banks and once the new CECL accounting standard goes into effect next year.

Slide 6 show some of the key technology objectives we've been working on. We're enhancing digital experiences for our customers with the goal of being quite competitive for the best providers to financial service products, banks and non-banks alike, while remaining focused on continuous improvement and streamlining our processes, thereby keeping non-interest expense under control.

I'll conclude my remarks with Slide 7, which is a list of our key objectives and our commitment to shareholders. For our financial goals, we've long been committed to achieving stronger revenue growth and expense growth, also referred to as positive operating leverage. In a period of falling interest rates, our ability to achieve positive operating leverage becomes more difficult. Over the long-term, we'll remain focused on delivering positive operating leverage although we recognize that this challenge will increase as our operating efficiency improves.

As lower interest rates across the yield curve have materialized over the past several months, we've sharpened our focus on non-interest expenses. Today, we are announcing an acceleration of our drive toward improving operating efficiency, which will result in a near-term workforce reduction of about 5% along with other operating expense reductions. This acceleration will result in