Zions Bancorporation N.A. Barclays 24th Annual Global Financial Services Conference

Moving right along. Very pleased to have Zions Bancorporation with us. I want to say this is the 24th consecutive year they have been at this conference, and we have only done it 24. Let me double-check that. But Harris Simmons has been Chairman and CEO for every one of those years. Probably one of the very few companies of the 220 we have here that can say that. So Harris, welcome back. Thank you.

Maybe the best place to start is just the macro environment. You operate in many markets that are traditionally above average growth on the western part of the U.S. The environment today feels a lot different than the environment we talked about when you were here last year. I was going to just talk about your outlook for the U.S. economy, your expectations for interest rates over the next few months, and just how you think that will overall impact customer behavior.

Yeah. Well, I think the economy continues to just chug along. I think in each of the markets we operate in, we are kind of everything Texas up to the Pacific Northwest and south and west of that. So it is a pretty good cross-section of the Southwest. We are not seeing signs of any kind of fraying in terms of credit. Nothing is on fire other than a lot of forests this summer. But the economy just kind of cranks it out. It is kind of the Energizer Bunny of economies, which has surprised me. I had really expected that the combination of tariffs and what is happening in the Middle East, et cetera, would slow things down. But we are just not really seeing it. It is hard to know how much of that is sort of spillover from data centers and everything else, but it does not feel that way.

It feels like Main Street businesses are in pretty decent shape right now. We'll see probably a hike or two. I don't think that's going to materially change anything. I think it's going to take some bigger shock. It's so widely anticipated that I don't think it's going to be a big deal.

You mentioned Texas, which is a market we've heard a lot about at this conference. You entered there, I want to say 15 plus years ago- 20 years ago.

20 years ago with the Amegy purchase. Now it seems like everyone wants to be there. There's a bunch of, whether it's Veritex going to Cadence going to Huntington, Fifth Third with Comerica. There's been some other smaller transactions. Just how has that landscape changed? Do those kind of mergers create opportunities for you, either for employees or customers, and just how you're tackling that?

Yeah, it has created some opportunity, probably so far, mostly in terms of employees. We have had a few hires. I think we have probably seen more opportunity coming out of some of the larger banks, Wells Fargo, U.S. Bank, in terms of people and bringing some nice business with them. Probably just their sheer size relative to a Veritex or even a Comerica. We would run into them, but not that frequently, kind of in the smaller end of the middle market, which is where a lot of our activity takes place.

Got it. Maybe just talk about the overall lending environment. C&I growth has been strong. I think you are up like 5% last quarter. You talked to higher utilization of revolving credit lines. Maybe just talk to kind of what industries, client segments, geographies are kind of driving growth and just how you are thinking about the near-term outlook for C&I.

Well, what I would say is what we are seeing most recently is C&I is probably Lending generally has flattened growth. We are seeing a nice pickup in deposit growth. You kind of hope over time that they stay somewhat in sync. But very late, we are seeing lending growth slow and deposit growth pick up. The growth that we have seen year to date has been pretty broad-based. We are really working at taking the one-to-four family portfolio and keeping that kind of stable to even coming down a little bit. The reason for that is just to keep it from becoming a source of more rate risk and kind of convexity that you find sometimes in that product. But the rest of the portfolio, we have seen just been geographically and by industry. I cannot point to any single thing that is driving it. It has been across the board.

Interesting. I can talk about where we are not growing- Okay is NDFI.

We have been very flat there. We are trying to kind of sit that one out. I tend to believe that there is quite a lot of risk building in that sector. We have some exposure, but it tends to be very seasoned kind of long-time customers that I think know what they are doing. But we are not kind of trying to build balances that way.

Got it. Maybe you could talk a bit more just on commercial real estate. Balances have been going up, obviously more kind of construction maybe migrating to term or maybe some new term. Just provide some color in terms of what you are seeing kind of across the portfolio and where you see opportunities or, and maybe where you do not see opportunities.

Well, there again, our goal over the last 15 years has been to build that portfolio kind of at a slower pace than the rest of the balance sheet. We have brought our concentrations and CRE down from, it was about a third of the balance sheet coming out of the financial crisis. It is down to about 22% or something like that today. I think that discipline is going to be useful when we hit a bump. The categories that we have been building in, I mean, multifamily has been active over the last number of years. Again, we are trying to keep that kind of a little bit restrained. We have capacity to do more than we are doing.

One of the reasons we acquired an agency lending franchise from Basis Investment Group gives us Fannie and Freddie multifamily origination licenses that we think are going to be really useful tools, kind of managing that and catering to a great client base we have there. But we have also seen, it has been reasonably broad-based. We are seeing retail, some growth there. Industrial, and multifamily have been most predominantly where we are seeing growth.