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

Oct 21, 2019 • 05:30 pm ET

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

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from the line of Ken Zerbe of Morgan Stanley. Your line is open.

Analyst
Ken Zerbe

Great, thanks. Good evening, guys.

Executive
Paul Burdiss

Hi, Ken.

Executive
Harris H. Simmons

Hi, Ken.

Analyst
Ken Zerbe

I guess, Paul Burdiss, first question for you. The $25 million of severance that you mentioned, is that the entire amount of the elevated expenses in the fourth quarter and also is there anything that carries over into the first quarter of 2020?

Executive
Paul Burdiss

The $25 million is an approximation of the severance charge that will occur in the fourth quarter. There are other charges related to, for example, branch closures that will occur in the fourth quarter, but those will likely carryover into at least the first quarter of 2020. But I have not specified the size of those items.

Analyst
Ken Zerbe

Got it, okay. But -- okay, so first quarter could be elevated as well in addition to the seasonality of normal comp increases?

Executive
Paul Burdiss

Right, and we will call those out as they occur.

Analyst
Ken Zerbe

Okay, great. And then, I guess, my second question, is the guidance for flat expenses in 2020, does that include the $25 million of expenses you're taking in 2019, or should we strip out the $25 million to get more of a core base number that you're going to be in line to below?

Executive
Paul Burdiss

Yeah, our expense outlook is an adjusted expense outlook, as you may recall. And we have a GAAP to non-GAAP reconcilement page that shows up at the back of our earnings release and at the back of our slides. And in that, you can see that items such as severance are excluded from that adjusted non-interest expense figure. So that's a long way of saying that, yes, you should exclude that.

Analyst
Ken Zerbe

Perfect. All right. Thank you very much for the questions.

Executive
Paul Burdiss

Thank you.

Operator
Operator

Thank you. Our next question comes from the line of Ken Usdin of Jefferies. Your line is open.

Analyst
Ken Usdin

Thanks a lot. Hey, Paul. I know this is a tough question for you to answer, and I appreciate the sliding scale point on Zions wanting to remain above the peers, and you cited the 50 basis points gap. But you cited also that you continue to believe that you're going to return excess capital, which implies that you still think you can live at a lower absolute ratio. How do we just start to get a sense of where that bottoming spot is, like where you're just not going to go below because you -- as you've said previously, you wanted to stay above it in case we get to a different part of the cycle? Thanks.

Executive
Paul Burdiss

Right. Thank you for the question. And just to be clear, I'm not sure that you referred to capital specifically in the question, but I believe you're talking about, in particular, the CET 1 ratio. What I was trying to say as it relates to excess capital is that -- and what I'm trying to say by the collective comments is that we are -- as we