Zions Bank 2Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“Loan pricing remains competitive, although the yield on our overall production was pretty stable compared to the prior quarter, and this trend was confirmed by recent reports from our relationship managers suggesting that pricing today is not significantly worse than a quarter ago.”

“The pricing on smaller loans, although down in the last 6 months, has been much more stable than the pricing of larger credits.”

“Interestingly, for the first time in quite a while, line utilization rates on revolving C&I loans experienced an increase over the prior quarter. They were about 33.2% compared to 31.8% at the end of the first quarter”

“We resolved about 25% of total nonperforming assets during the quarter. The overwhelming majority ended up going our way, i.e. favorable resolutions reached a new high at 79% of total resolutions.”

“we’ve decided to go ahead and launch a major upgrade to our core loan and deposit systems and accounting systems. We’ve been studying this for probably a couple of years now, thoroughly vetting different alternatives and different vendors. And we have pulled the trigger to go forward on those projects, although there are a number of off-reps or we can turn them off or scale them back if we don’t like what we’re seeing as we phase it in….We believe that much of the incremental costs can be offset by reduced so-called environmental costs, such as credit-related noninterest expenses and regulatory assessments and FDIC premiums and the like.”

“if you look at kind of what differentiates us from some of our peers, it is that we are more small- and middle-market business-oriented, and that’s where we’re seeing a lot of the activity. We have missed out on a number of larger deals because we won’t match the pricing that some of the bigger banks are throwing out there on those deals.”

“I don’t think the market is not yet liquid enough that we’re likely to sell material amounts [of our Trust preferred CDOs] unless we see further improvement. But I mean one of the things that motivated us to do that was we did want to kind of test the pricing for — on a variety of tranches at different points in the waterfall. They were directly securities that we own to make — to kind of further validate our pricing of the whole portfolio. And so we selected 6 securities that were representative of various — very, very different parts of our risk exposure. And generally I would just say, those prices tended to validate exactly what we’ve been doing.”

“one point that is probably worth making here is that Nevada seems to have turned the corner. Nevada had net positive loan growth for the quarter”

“we’ve been — I think we’ve been very clear about this, too. We’ve made a strategic decision in this company not to let the CRE portfolio grow back to anything like the proportion of the total portfolio that was in circa 2006 and ’07.”

“The system that we are going to implement is a modern integrated banking system that is used in probably by I think it’s something like a couple hundred institutions around the world. Parts of it are used on Wall Street, but we would be the first U.S. implementation of a full integrated system. So there has to be some customization of that system for the U.S. market. The vendor, Tata or TCS, is obliged to undertake that on their own nickel. That’s not our cost. We will, on the other hand, have to work with them and incur some costs to basically implement our product set and our operating methods on their system as you would with any other platform. But our overall goal here is to minimize the amount of customization that we have to do and pay for as we go through this rollout.”