ZION 3Q13 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.

“These C&I loans have grown at a 10% compounded average interest rate for more than 2 years, but primarily because of elevated repayment activity in the third quarter, we experienced virtually no loan growth in this category”

“Loan pricing remains competitive.”

“Credit quality is very encouraging.”

“we actually experienced attrition in C&I loans in Utah and Texas, while California, Arizona and Nevada experienced relatively healthy growth”

“Line utilization rates on revolving C&I loans declined further relative to the prior quarter, and we’re at 32.2% compared to 33.2% at the end of the quarter. And again, for reference, we were kind of precrisis running in the 38% to 40% was a more normal utilization rate.”

“new construction commitments have been fairly strong for the last several quarters during a period when pricing terms and covenants were very good. These loans are now in the funding stage after the equity has gone into the project. Total new unfunded commitments increased only 1% sequentially as we’re hitting self-imposed concentration limits in some construction loan types in some markets.”

“because of the strong appetites by nonbank entities, such as life insurance companies and pension funds, which we don’t expect to abate, we’re probably going to modestly lower our outlook on loan growth to slight to moderate, instead of just moderate over the 1 year time horizon. But I will tell you that loan growth through the first 3 weeks of the quarter has been pretty good, and the fourth quarter generally is a pretty strong one for us, particularly in the last few weeks of the year, which then reverts in early January.

The bottom line is, pipelines remain fairly strong, line utilization remains fairly weak. And it’s just really hard to figure out. There’s no compelling change in the direction either — certainly not getting dramatically weaker. But there’s no evidence that the sentiment in loan demand is growing stronger out there that we can see, either.”

“we don’t want to drive deposits out by driving customers out. And it’s basically existing customers leading more cash with us, and we’re going to assume we’re providing — let’s just say about as little an incentive for them to do that as we can conjure up. So it remains a struggle to — because, I mean the fundamental cycle here is that the Fed is pumping — continuing to pump liquidity into the economy, and it piles up when people and companies that are cautious and undecided and uncertain about what to do with it. So here it sits. And we, in turn, park it, give it back to the Fed, I guess, so they can buy more bonds. And wash, rinse, repeat.”

“Real estate demand, commercial real estate demand remains reasonably strong in a lot of areas. I think the big change this quarter was the softening in C&I demand in Texas in particular, which had been a driver of growth. ”

“I’m pretty sure that our total consumer portfolio is probably still less than 20% or in the neighborhood of 20% of total loans. Strategically, that is — we would like to grow consumer to a somewhat larger percentage of the total, and the 2 natural areas for us to do that are to focus on some 2 product lines that really had not been a focus previously. One is resi mortgages, both first and equity lines, the other is credit card, where we’re starting off a much smaller base but plan to grow in both cases within our footprint, kind of serving our community regional bank customer base. And that’s what you can expect as the offset to what clearly will be less concentration than, if you go back to the mid-2005, 2006 era in commercial real estate, particularly in land lending and early-stage development lending. So less CRE, more consumer and lots of C&I is what we’d like the portfolio to look like.”