Zions at BancAnalysts Conference: Strategic Growth and Challenges

On Thursday, 06 November 2025, Zions Bancorporation (NASDAQ:ZION) presented at The BancAnalysts Association of Boston Conference, offering insights into its strategic direction. The discussion led by CFO Ryan Richards highlighted both opportunities and challenges, emphasizing a renewed focus on small and middle market customers, while addressing credit quality concerns and capital management strategies.

Key Takeaways

• Zions is targeting small and middle market customers, with a strategic return to SBA lending.
• The company has experienced seven consecutive quarters of net interest margin (NIM) expansion.
• A recent $50 million charge-off related to a large NDFI loan was discussed, with assurances it is an isolated incident.
• Zions aims to reach peer median capital levels while exploring potential M&A opportunities.
• New deposit initiatives are showing promising early results, with continued marketing efforts planned for 2026.

Financial Results

• Zions has seen consistent NIM expansion over the past seven quarters.
• Efforts to reduce brokered deposits and focus on core deposit growth are underway.
• The company aims for a mid-threes NIM, contingent on a more favorable yield curve.

Operational Updates

• A new consumer demand deposit product launched in Nevada is expanding, with positive early results.
• Zions is enhancing customer offerings and marketing efforts to drive organic growth.
• The bank is focusing on C&I lending growth in Texas, California, Utah, Idaho, and Wyoming.

Future Outlook

• Zions plans to maintain disciplined growth and strategic capital management.
• The company is balancing capital deployment between reaching peer capital levels and exploring M&A opportunities.
• Management is optimistic about future performance, with positive trends in loan production and deposit growth.

Q&A Highlights

• Capital allocation priorities and risk management practices were discussed, with a focus on maintaining a strong presence in the Western market.
• The company’s approach to M&A opportunities includes a focus on in-footprint acquisitions with strong deposit franchises.

In conclusion, Zions Bancorporation’s strategic plans and initiatives were thoroughly discussed, reflecting confidence in its ability to navigate the evolving economic landscape. For more detailed insights, refer to the full transcript below.

Full transcript - The BancAnalysts Association of Boston Conference:

Sue, Moderator: I am here with Zions Bancorporation. For those of you who do not know them, they are an $89 billion asset bank headquartered in Salt Lake City. They are unique in that they operate several segments within their brand. It includes Zions Bank, Amegy, California Bank & Trust, National Bank of Arizona, Nevada State Bank, and Vectra Bank Colorado, and the Commerce Bank of Washington. Zions has an excellent profile: mid-teens ROTCE, attractive deposits with non-interest bearing at 24%. Fee revenues at 22%, which we’re going to talk about later. Valuation very attractive at 8 times 2026 earnings and 1/3 of tangible book value. All this terrific profitability with cheap valuation. With me again this year is Ryan Richards. I did it as a second year.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: As a second year.

Sue, Moderator: Two years in a row.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Hopeful. And you always land flat when you.

Sue, Moderator: Ryan Richards. Nice to have you here.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: It’s great to be back, Sue. This is my favorite moderator of all time.

Sue, Moderator: Ryan is Chief Financial Officer of Zions, a position he’s held since 2024. Prior to the CFO role, he served three years beginning as a Corporate Controller for Zions Bank. Before coming to Zions, he was Chief Accounting Officer and Director of Investor Relations at Truist and Corporate Controller at SunTrust. Ryan has had lots of other interesting positions before joining the bank, including roles at KPMG and the Fed’s Division of Banking Supervision and Regulation and at the Bank for International Settlements. Welcome back.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Thank you, Sue.

Sue, Moderator: Ryan Richards.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Great to be here. I always love this conference.

Sue, Moderator: Let’s start, if we could, on the loan side. Your bank has always had a focus on smaller customers. You might have a slightly lower average loan size compared to the peers of your size. It seems like you’re still interested, even though you’ve gotten larger, you’re still interested in small business lending. Can you start with what you’re thinking there?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, it’s wonderful. Thanks so much for facilitating here. Clearly, as a predominantly commercial bank with a growing consumer presence, our bread and butter really is the small middle market customers. It’s a place that we’ve really been focused on for a very long time. What you’ve heard us talk increasingly about is kind of restoring back to where I think we’d been in prior times and our presence in the SBA loan product. They just cut off the measurement year for the SBA, and we moved up the league tables to the 14th, which was good progress to see. We’re not done. I think there’s still quite a lot to be gained there because I think that’s a place that we really show well. It’s a place that I think we’ve built the franchise to serve those clients, and we think in a differentiated way.

We think that’s really the foundation of everything that we do at the bank. It really is a feeder for a lot of the great things that are happening across our businesses.

Sue, Moderator: That was a very large business for you at one time, and then you sort of took it down a little bit. Now you’re seeing opportunity. What sort of made you go back there this time?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: We do. We do think it’s, again, it fits. It’s not a stretch. We’ve done a lot of things technology-wise that’s really focused in that area. It’s an area that we think our capabilities translate. It’s one that, you know, when we were very, very successful in starting our clients at the small business level and when we grow them to be middle market companies all the way up into corporates, there’s a great deal of loyalty there.

When you’re part of their story and your story is kind of getting interwoven, our success in pulling through things like our growing capital markets offerings and bringing to bear when the needs arise because they’ve been very, very successful in growing their business, we don’t have to step away from them in their growth because now we’ve got capabilities in the capital market side to help them with syndications. If they decide it’s time to sell and move along, we’ve got those capabilities. When they become wealthy through the course of their exercise of their business, we’re there to help facilitate them. It’s a great place to build the foundation of our bank. That’s never become more important as we saw going back to the events of a couple of years ago. It’s been a differentiator for us over time.

You cited some really nice statistics for us. It’s a big part of the reason why our deposit costs are where they’ve been for a very long time, where we tend to be differentiated on a total funding cost. It’s against the base that’s built across those small businesses.

Sue, Moderator: Okay. We started off talking about sort of different brands and you’re in different geographies, you’re in many states in the West. Are there markets that you’re more focused on or where you see more opportunity to kind of have a very unique footprint there?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, yeah, thank you. It’s a question we get quite a lot. We’re open for business across all those markets, and they’re all very important to us. The way that I often will orient people back, and we’ve included some materials in our travel deck, is rather than peering into the future and making projections, I ask people to say, kind of look at where the growth came from in more of a recent period. And so we’ve got some materials that we show across our affiliate banks and across various products where that growth is originating from. We’ve been sort of conveying to investors and to analysts over time that we’ve been hearing good things, a lot of optimism out of Texas and our Amegy affiliate. We’ve seen that pull through in C&I growth where we sort of expected it.

We have also seen strong growth across our California affiliates and our Zions Bank in Utah, Idaho, and Wyoming. There has been leadership there, but there has certainly been growth in other areas as well.

Sue, Moderator: What are you seeing on the horizon? I know you said you’d rather look back, but what are you seeing on the horizon given period-end loans decline this quarter? What do you see that gives you confidence that you can have positive loan growth? Maybe it’s not next quarter, but in 2026 or something.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, as we sort of roll back the tape coming into this year, you know, first quarter, a lot of uncertainty about what was going to be happening in the economic environment. Didn’t know how severe the tariffs were going to be. We got some feedback after the first quarter that it felt like our team was a little bit down on life. That wasn’t purposeful. It was really just not knowing what was coming. We came into the second quarter and we had some pretty nice loan print and the deposits were lagging. Third quarter, the deposits showed up in a nice way and the loans would appear to be a little bit lagging on that basis. When you sort of average it in and look at a longer time frame over the course of a year, the loan growth is there. It’s touched over 3%.

There’s more to be done. The deposit growth was pretty stable year over year. As we sort of peer forward and see where does it go, recently in our earnings call, we were able to sort of be a little bit more constructive on how we see our guidance taking shape, sort of one-year hints. We see some really good things underlying. We said leadership would be coming out of our C&I portfolio. We still believe that. We just do not know quarter to quarter what is going to show up on the CRE side or whether or not there will be enough movement in the 10-year to bring on any refi trends in the 1-4 family.

If I had to characterize that in total, it was coming into the year, there was a lot of uncertainty in the environment, so we were a little bit softer with our guidance. What we’ve seen as we’ve built through the year is the underlying loan production has actually been ramping in a way that gives us more upbeat on saying, hey, this could be, you know, we can move up from here. The wild cards being, what do we get in terms of payoffs on CRE and how much refi activity do we see? How much of that share can we take should those things materialize?

Sue, Moderator: Okay. How do your customers seem right now? You know, there was a lot of, you’ve pointed out, first quarter, there was a lot of uncertainty. You know, maybe we got a little bit more confidence in the second quarter. Are they still carrying a little bit more cash than they were? Are their inventory levels, like, are they starting to rebuild inventories and things like that? Like, what does the confidence level look like in your customers?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, thanks, Sue. We’ve heard some of that. You know, we’ve had a chance to kind of go back here recently and just do some survey work with our people, relationship managers, credit folks, and kind of hear what they’re hearing from their clients. I think what you said there is fair. I think we do hear feedback and indications that, yeah, we need to keep going here and we need to be building inventories and taking stock. What we hear from them is it’s neither hot nor cold, right? It’s not to either one of those bookends. It feels very stable and then constructive against the backdrop of rates continuing to come down. That seems to be sort of an important factor that’s giving people incrementally more confidence.

When we ask them about the things that they’re really, really focused on, you know, tariffs are definitely in that mix and it’s back in the headlines again. I don’t know if it ever left here in the recent days. Just as important and perhaps cited even more were some macro factors around, okay, what’s going on with the rate environment? What are we going to see with inflation? What’s the employment picture? How confident are we in that? That’s going to take shape. Are we going to lose ground? In that mix is also tariffs. I think coming into the year, the worst outcomes that we would have anticipated or at least envisioned could happen, it feels like we’ve settled into a place that’s not quite that severe. That’s, I think, been really helpful in kind of building to this point.

Sue, Moderator: Okay. That’s helpful. Thank you. And then just moving over to the other side of the balance sheet and deposit side, you know, this quarter in particular, you had some really nice paydowns for brokered deposits. Will this continue? Is there still some runway for the deposits can improve? How are you thinking about the composition? Do you have any Federal Home Loan Banks maturing? Do you have a whole slug of brokered deposits? Will you replace all of them? You’re just going to give us like a little bit of a...

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, you bet. Listen, I think if you go back to a number of years, we certainly were not running brokered deposits at this level. To your point, we have been successful in bringing them down. We would aspire to continue doing that. You know, there are a number of factors, as you would expect, that would be in play there in seeing our success. Really important to that, and something we are putting a lot of energy into internally, is driving those core deposits. Where do we get the growth? How do we energize those efforts? There are at least a couple of things in play that are worth noting, I think, here. The folks who have been following us will have heard other references to this. During the course of 2025.

We sort of realized that after spending a lot of years focused inwardly, that Harris has referred to at various times as kind of our, pardon our dust era, when we were doing a lot of things on future core, our core financial transformation work, and looking to turn the corner with more of a growth orientation, we sort of said, hey, it’s probably time to do a little bit more in retouching the products on the shelf, on the storefront, and to go back and retouch some of our consumer offerings and think about how we’re serving our small businesses. One of the focal points we’ve had there is really a rollout of a demand deposit product that is really feature-rich.

That we’ve been in the marketplace that allows clients to have really nice opportunities in terms of our consumer lending products that reduce rates, have nice deposit features, and other kind of wealth tie-ins. Roll that out as sort of a way to supplement our demand deposits and growing our non-interest bearing. What you will see through the course of the year is in the second quarter, we had the first sort of migration of that in our Nevada affiliate. If you kind of use rough round numbers, about $500 million sort of migrated out of what was sort of a premier interest checking account that paid a very modest interest rate into a non-interest bearing that was, again, feature-rich. We were able to continue that effort through the third quarter, and we saw a good bit of geographical migration on that basis.

I’d say some of the very early things that we were seeing coming out of our Nevada affiliate in the second quarter are encouraging. You know, we still need to see that play through over multiple quarters. The early evidence would say that compared to its predecessor product, the new account openings were 2X or more, week over week over week. What we were seeing, the average deposit balances were coming in pretty healthy for a mass affluent strategy, averaging around $20,000. The pull through on some of those offerings that would be part and parcel to that offering, you know, whether that be like a HELOC program or a money market, mutual fund type program, were also promising. That’s a new offering for us that we’ve been rolling out through the course of the year.

Complementing that on the small business side would be something that we have our eyes trained on in 2026, in the early part of 2026, which will very much be a small business bundle. Not unlike what we’re talking about on the consumer side. One of the things that I think was said in our last earnings call and that we’re conveying in the course of our investor meetings is we think those are helpful things in sort of retouching and bringing something compelling to the marketplace from the product side, but coupling that also with a renewed presence and investment in our marketing programs and the build-out of our marketing teams with the new Chief Marketing Officer, putting a lot of effort and resource behind that. That will come to where I think you wanted me to go.

Those core deposit programs would then be in place to help us supplant what we’ve otherwise been relying upon in things that are approaching wholesale deposit rates.

Sue, Moderator: Okay. If I could just go back to this new product, you had called out Nevada as a place where it’s unveiled right now. When was it launched? Was it just in Nevada or is it in all your markets? If it’s not, when will it go to all of the markets?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yes. Nevada in the second quarter and then the third quarter, basically, essentially the bulk of the remaining affiliates came on board. It was really, really late in the third quarter. It would have shown up in period-end balances, but it would not have been averaged in in the third quarter. We can look forward to that moving forward in the fourth quarter.

Sue, Moderator: Okay. This similar success, I guess, or early readings are positive. It’s hard to say because you said it’s just...

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Because that came really at the tail end of the third quarter. It would be kind of, you know, it’s really hard to judge. The other part of that is we haven’t put the full force of the marketing dollars behind those programs yet.

Sue, Moderator: Which is an excellent segue. You talk, you know, marketing behind this. How much of the whole budget have you spent in the Nevada market to start with and then everywhere else? Like, are you 10% of the way through or you’re, you know...

Ryan Richards, Chief Financial Officer, Zions Bancorporation: The way I would characterize that is I would say through the course of 2025, it has really been about the full build-out and we are not exactly all the way there of the reimagined marketing team with some campaigns coming later in the year. I was looking forward to 2026. I would see more of those campaign dollars being put behind those products. It will probably be more evident externally about what we have been working on for those campaigns.

Sue, Moderator: More expense, but hopefully much more so, like even greater success than what we’ve had in the past.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah. It’s sort of getting, you know, the important thing when we talk about expenses, you know, with this growth orientation, this more external is, are we getting good expense growth? By good expense growth, I mean expense that’s aligned with revenue. In this case, I very much see it as expense aligned with revenue growth.

Sue, Moderator: Okay. Just going to non-interest income. In a recent conference and actually on your conference call as well, you spoke about this 3.5% margin kind of target. We asked some questions about it, follow-up questions. Can you talk about the drivers and the environment you need to have? Does this feel more aspirational or you feel like, you know, you’re going to get there?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah. Thank you for that. I mean, we’ve gotten a lot of questions on that topic. You know, to be clear, we’ve never really had NIM guidance. There has been commentary in the past, that’s also fair, that said that we think we have the potential to be a mid-threes NIM performer. There was more recent dialogue about what it might take to get to that point. That also came up in our last earnings call. The conditions that I think help you get to mid-threes, there’s a number of things that are just playing through that are helpful to us. We’ve talked quite a lot about the balance sheet healing. We’ve had a couple of years of that. Now we were able to, through our third quarter, our earnings point to seven consecutive quarters of NIM expansion. Evidence of all these things occurring.

By that, we mean, first, let’s start on the funding side. We saw after, you know, the events of March 2023 and sort of some of the shock and awe that came with that to the marketplace, a need to participate and kind of pay up for deposits relative to where we’ve been traditionally. We found ourselves towards the end of 2023 as being a little bit north of peer median on interest-bearing deposit costs. That’s not where we’ve traditionally functioned. We recognize that there would be an opportunity in a down-rate environment to kind of get back to something that looks more normal for Zions. You will have seen that play out in some of the price response in the down-rate environment on the beta, where it’s come through pretty strong.

This most recent quarter, if you look at what the trending was. On loan yields, loan yields were up five basis points because we had the fixed asset pricing still playing through. Our total funding costs were down five basis points. That is a good outcome for us. As we have gotten back to having more managed deposit costs, having that underlying kind of spot period over period deposit growth that is helping drive through our deposit growth initiatives, those things are all really, really helpful. The other things that you will hear me talking about quite a lot on our calls, and for those who stay close to our name, you will have seen play out over the course of years now, is this remix of earning assets. Where we have been able to go for where our investment security portfolio has been outsized for where we have been historically.

We have been working that down over time, allowing it to run off. In more recent periods, only reinvesting about half of those gross cash flows that are coming from that securities portfolio. We have been able to reinvest that in loan growth. That has been really useful for us. Within the loan growth category itself, we see an opportunity as another contributing factor to think about the mix within our loans. We have said as part of our guidance that we are a bit more constructive, more upbeat about where loan growth goes. We think that is going to be on the backs of C&I growth, not knowing exactly where CRE is going to come in terms of payoffs.

What we’ve seen over the course of time is going back some years, we had an outsized amount of growth that showed up in munis there for a number of years, municipal loans. We’ve seen a little bit more concentration. That was our historical norm on one to four family resi. You know, the munis are typically pretty thin spread-wise. The one to four family spreads have gotten better, but relative to where you would see growth in a C&I book, you know, maybe not as healthy. If we sort of think more about that model that we’ve been talking about externally of, hey, let’s have more of an orientation towards health for sale as opposed to inventorying as much on our balance sheet on the one to four resi side, that can also help with the loan yield remix.

One more factor that, again, people will probably get tired of hearing us talking about because it’s a little bit of a pointy-headed accounting topic, is this notion about we had some terminated hedges that go back for some time that we’ve had this headwind that’s been tapering off. Going off for some years. The headwind associated with that will continue to diminish. You couple that with the prospect of the marketing dollars behind those deposit programs, driving deposit growth. Those are all the things that combine. The other part of that is we actually need some help too, to help us get there, to get to our place where we want to be, where we think we’re going to operate. With the yield curve.

It’s always, in prior times, whenever we talked about a mid-threes NIM, it’s usually been against the backdrop of a more constructive yield curve. That’s not really the yield curve we see now. It doesn’t mean that we can’t get there. It’s just going to take longer with this type of yield curve. You know, where if you believe the forward curve and you think that rates are coming down, the Fed’s going to persist on this path. I mean, we show our asset sensitivity, we show and we screen relative to others as being a bit more asset sensitive. Now, these methodologies are not common across all banks, right?

It’s also a useful thing to look at realized sensitivity, but at least on how we report, you would say, well, you know, it may take a little bit longer to get to that mid-threes if we’re going to have a, you know, if the curve is going to take the shape of the forward curve.

Sue, Moderator: Can you just remind us when the hedges actually, you said it’s been a little bit of a headwind, but it’s going to taper off. When do they go away forever?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Right. So, thank you. Forever. Never to return. No, so right now that we would show the residue of that out to 2027, I think there’s like a $7 million headwind in that year. And we have some disclosures in the 10-K for people who really want to go deep into that topic.

Sue, Moderator: Okay, great. I am going to stop for a minute and see if there are questions. Yes, looks like there’s lots. I do not know if you can bring the microphone forward. Great. One moment.

Ryan Nash, Analyst, Goldman Sachs: Hey, Ryan, Ryan Nash, Goldman Sachs. On the earnings call, there was a discussion about capital and you talked about peers at around the 10% adjusted level and it would take you guys around, I think you said around 12 months to get in there. I guess, is CET1 the binding constraint for returning capital? Are you looking at other ratios like TCE and do you need to get all the way there before you start returning incremental capital? Thank you.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, great question, Ryan. Thank you for that. Listen, I think we do spend most of our time talking about CET1, but there is implicitly when we talk about it, including AOCI, there’s a read-through for TCE. So, you know, I think what the market, we believe what the market has told us, irrespective of what happens at Basel III Endgame, is sort of we’re going to look at your capital inclusive of AOCI. That is definitely part of the equation. When we talked about the roughly 10%, it was where are peers, where’s peer median, including AOCI?

Now, what we do not know is whether or not there is going to be convergence, whether we are going to hear, and you all have been in more of these sessions than I have, whether peers are going to judge whether they can run leaner on a capital ratio basis, including AOCI. You know, we could stare at that as well. We have been building back this tangible book value at a really quick clip. It is actually a really nice part of our story. The AOCI has been coming in quickly.

You know, what we were just sort of saying out loud was when we look at sort of our own internal projections and where we think peers are, not knowing where they’re ultimately going to be, it looks like that would be roughly around 12 months out when we would be in the same kind of close clustering of peers. We do not have to watch peer behavior. When we look internally and you’d say you really want to start from a capital policy of, well, what do you need to withstand stress losses? When we do all that math, including, you know, things that we did when we were subject to CCAR and we run scenarios like the Fed’s severely adverse scenario, running all that math tells us we have ample capital. It’s more of an environmental concern.

We just do not know what any day is going to bring anymore. We hope for a really bright future. When we were here about a year ago, things were looking really upbeat, really bullish. We just want to be in a position that should we hit a bumpy air in the future, we do not want to be screened as being an outlier on any of those dimensions.

Chris Bar, Analyst, Wells Fargo: Hi, Chris Bar with Wells Fargo. Can you tell me which markets are having the most competition and how do you handle potential disruptive mergers that are overlapped with your footprint? Thanks.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, thank you for the question or questions. Listen. Because we’re in the markets we’re in, I think people would generally judge us and other people have written notes about that we’re in a good footprint, right? That’s been established. We have slides that say 35% of GDP are in our footprint. There’s not a single market that I would point to where it doesn’t feel like we have really solid competition. You know, Texas, everybody knows the Texas stories. People know that the multiples that Texas banks trade at, it’s a pretty strong backdrop of growth to be in. We’re going to see it there. We’re in lots of fast growth markets where people tend to pour into and are very interested in. What we’ve said, you know, publicly is as long as people are being rational competitors, we totally get it.

We think there is a niche for us to serve there and continue to serve. We are good with that. In terms of the competitive M&A environment and what that means, we certainly have seen that in our footprint here recently. There have been a number of deal announcements, whether in Texas or Colorado or otherwise. We are going to be present in those markets. We are going to be open for business. It is not our intent ever to be predatory in those kinds of things. If there are things that we stand for that resonate with our clients, where we can suit their needs very, very well.

If people make a judgment that said, hey, I kind of liked being at a community bank or I liked being at a regional bank, I liked the service model that I got there, and I did not sign up to be part of a larger institution. If they are looking for that white glove service that comes from a Zions model for the small middle market, we would be happy to serve those customers. We will see.

Janet, Analyst, Piper Sandler: Hi, Janet from Piper Sandler. You’ve been limiting buyback as you were accruing capital to get to the CET1 ex-AOCI. In recent quarters, it also sounds like you’re a little bit more open to M&A opportunities from an acquirer standpoint outside of branch opportunities. What is your current stance right now, and what makes sense to you and what does not?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Thank you, Janet. Really appreciate the question. Listen, you know, we’ve done, you alluded to it, we’ve done some branch deals in the last, I don’t know, three, four years, most recently in the Coachella Valley of California. What we’ve said and it rings true is that even when we were doing our pardon the dust era and we were really focused on our core transformation, it didn’t mean that things didn’t cross our desk. Of course it did. There were things that you would look at. Nothing of very large size came of that. We are really happy with the tuck-in deals that we were able to do.

You know, I think that the message, and I have nothing different to say, I think when Harris says we want to be a great Western bank, that is who we are and who we can strive to continue to be. You know, it’s getting more, there’s more energy, as you might expect, out in the marketplace. I think when, you know, we have a number of very, very good investment bankers that call on us, and I’m sure they call on lots of different people in this room, and they would tell us that this is as bad as upbeat of a deal environment as they’ve seen in a while. You know, we’ll continue to look at things as they come through. We’re not dying to do a deal. We’ll keep saying that every time that we have a microphone.

The things that we’ve talked about that make strategic sense or could make strategic sense for us. I’m parroting here some things that I think that Harris shared about a year ago that I think are still very relevant, which is its input footprint. We like really strong deposit franchises that densify where we’re at currently. Strong management teams. We’re not looking to pay up for what we would judge to be lesser quality assets. Although some of those things you can kind of cure through purchase accounting and kind of rebalance. We’re not looking for sprawl. That’s never really been our posture. We really like kind of the Western footprint. Kevin’s a good friend of mine, so it was kind of fun coming behind him on this panel. You know, we’re not, we’re personally not interested in doing mergers of equals.

I think they made a reference to others in the southeastern markets who’ve been through that. I participated in that at a former life. That wasn’t particularly fun. That gives you any kind of idea about where we’re at. The other challenge in all this is you start with strategic fit and the deal math has to work, right? You shared in your opening remarks that, you know, our multiple is bargain price for all you here who are in your bluebird terminals, bargain price. Our multiple is not exactly yet back where we would want it to be. That doesn’t mean that deals can’t be done, but you have to be really smart about where you play in doing deals with the currency that we currently have.

Chris Bar, Analyst, Wells Fargo: Hi, Manan Gosali, Morgan Stanley. Ryan, as a follow-up to the two capital questions, you’re accreting more capital. You’ll accrete more through AOCI and through earnings. At the same time, there’s a higher bar for deals. When you think about, as you get closer to peers next year, how do you manage the asset sensitivity of the balance sheet? It looks like, you know, you are getting more asset sensitive as you move from those securities to C&I loans. How are you thinking about managing that over the medium term?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Excellent question, Manan. Thank you for it. We are doing things currently, right? I want to return to what I said before. We have published statistics and we have our models and we report asset sensitivity and we’re consistent in how we think about that. Others also have published statistics and these are not common across institutions on how we model these things. Notwithstanding that, I will acknowledge that we tend to screen more asset sensitive. We do not care to be an outlier across these dimensions. What we say is we’ve been doing some very balanced hedging strategies, right? I think as we kind of go back in time, when there were bumps, we did not like screening on the lower side for tangible common equity. That is why we’ve been allowing this to build back.

We have had hedges in place, a lot of paid fixed hedges to guard against, you know, to the extent that term rates or longer term rates started running on us to make sure that we had some protection in place to guard against that. There is no magical level that says that above or below this level, you are kind of in harm’s way from the market perspective. We did not even want to enter the fray. We did not even want to have that conversation. We have had those hedges in place for a while. Going directly back to your point, on the asset sensitivity side, we have also had an opportunity to start putting in some more receipt fixed hedges on our commercial loans to try to take the edge off of where we tend to be showing up a little bit more on asset sensitivity.

That is a tool that we can continue to deploy depending on where our sensitivity moves as we press forward.

Janet, Analyst, Piper Sandler: Anyone else for now? Okay. You ready for credit?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Let’s go. Come on.

Janet, Analyst, Piper Sandler: It’s the moment you’ve all been waiting for. Zions made headlines right before the third quarter earnings with a charge-off for a large NDFI loan. We spent a few minutes on this, got some details. Can you talk about, I guess, just talk about that quickly and why you decided to charge off what you charge off and set aside a provision and then do follow-ups?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, thanks. You know, that wasn’t very much fun. I’d prefer not to be in the press for any of those reasons. Coming on the heels of some other announcements, the timing was just really regrettable. It’s never a good time to announce anything that way, but I think it was a very tenuous kind of marketplace, I think, to have that 8K announcement. You know, we were pretty assertive, I say, in terms of how we’ve handled it. Based upon all the information that we currently had in our possession, we’d rather be on the side that says, let’s go ahead and reserve for this. So we went and put the full reserve on the full $60 million amount. And again, knowing what you know at a point in time, we went and charged 50 of that off.

We released our 8K to coincide with the timing of our complaint that was filed in the state of California. A lot of the philosophy for why, why did you do the 8K? Why did you not just wait? I mean, we get that question. It is sort of the democratization of information. We do not know how many people will be scouring the litigation records in some court in California. Given some of the other things that had transpired in the environment, we said, let’s go ahead and share so that people can see some of the things that we are working on and show folks that we are taking a pretty conservative posture here and we are going to go pursue this actively and try to do the best we can to get a recovery here. That is what that was about.

Some people have asked, well, why could not you just bundle that with your earnings? Because I think once our earnings were released, people said, well, that actually was pretty strong core earnings. I understand that philosophy, but at a minimum, we want to make sure that we allow people to see the information more equally across the various space. We are in active litigation there. The complaint was filed against the guarantors. I am really quite guarded in how deeply we can go into that. Suffice to say that there is a body of work that would continue, which is sort of getting deep into what happened, what happened when, what representations were made, what was known at a point in time, building the timeline that would be really useful as you go through a litigation process.

As an extension of that work, there’s also an opportunity to say, okay, what can we learn here? What do we know about this fact pattern? Let’s take a look at our non-depository financial institution lending practices. Let’s look at, for people that do this also for a living, maybe they do this on an advisory basis. Let’s go have an independent review of folks. They look at policies, look at processes, and see what can be learned, as any prudent institution would. Just saying, you know, what is the best practice in and around these areas? Because we want to make sure that we’re at that level.

Janet, Analyst, Piper Sandler: The review that you did and the one that’s ongoing with some of these outside third party leads you to believe that this is an isolated incident, that there aren’t more days to come.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yeah, no, and that’s a really fair question. We continue to, you know, everything that we’ve seen so far would tell us that this is not a systemic topic, right? It is just incumbent upon us to keep doing the work and make sure that we see it all the way through. Here to forward, you know, nothing else to report.

Janet, Analyst, Piper Sandler: This is a relatively small piece of your overall loan portfolio. It’s 3%?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Yes. Yeah. So our total, if you think about dimensioning across non-depository financial institutions, there we run about $2 billion in exposure. With the subcomponent, we sort of included a slide in our most recent earnings material that kind of breaks that down across the five sort of main subcomponents that kind of follows from like the call report approach. If you think about that mortgage lending subcomponent, it’s running a touch under $400 million. That’s where these Cantor exposures would have been reported.

Janet, Analyst, Piper Sandler: Okay. This has been a pretty low growth area for you. We’ve had some other folks say that this is, they really like this NDFI lending. It’s been growing in other banks, but it’s been quite small for you. The rate of growth has been quite small. Why is that?

Ryan Richards, Chief Financial Officer, Zions Bancorporation: It absolutely has. We have no real aspirations currently to grow that in any different way. It’s something that’s been very modest. Mind you, it’s a very diversified portfolio. You know, there’s lots of different things that are featured there. You know, part of, I think part of the philosophy is layering this against my earlier comments about kind of the bread and butter offering at Zions, being starting with the small and middle market clients and helping them grow. That’s core to our business. It’s core to our business because we can bring the whole bank in serving those clients. Part of Ryan’s view is why this has been more an ancillary offering for ours is that, you know, there can be value in these relationships.

It’s not the same bringing the full bank to those relationships that you can when you grow your relationships from the small and middle market clients up. Not to say that it’s always fully transactional, but probably not as much relationship lending in that portfolio for us.

Janet, Analyst, Piper Sandler: Yep. Okay.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: When we look at the whole of it, and there will be more disclosures forthcoming for those who are close followers of our 10Qs, we’ll have some more information there about credit exposures and the like. By and large, when you go back over time, our credit loss history is actually not bad here. You know, it’s held up reasonably well and it tends to be smaller than the types of loans we’ve been talking about externally on average. It’s not a growth area for us. This is a regrettable episode that, you know, we’re working our way through. It’s not really, you know, our history hasn’t shown out this way.

Janet, Analyst, Piper Sandler: Okay. We’re almost out of time. We didn’t get a chance to talk about fees, which I know is something that you guys have focused on for a while, but maybe next year.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Okay.

Janet, Analyst, Piper Sandler: We’ll start with fees and you can talk about that.

Ryan Richards, Chief Financial Officer, Zions Bancorporation: Sounds good. Less credit, more fees.

Janet, Analyst, Piper Sandler: That’s right. Okay. Please join me in thanking Ryan for joining us today.

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