Zions Bancorp ZION
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/22/2013

Operator: Welcome to Zions Bancorporation's Second Quarter Earnings Call. This call is being recorded.

I will now turn the time over to James Abbott.

James R. Abbott - SVP, IR and External Communications: Thank you, Jamie and good evening. We welcome you to this conference call to discuss our second quarter 2013 earnings. Our primary participants today will be Harris Simmons, Chairman and Chief Executive Officer; and Doyle Arnold, Vice Chairman and Chief Financial Officer. I would like to remind you that during this call, we will be making forward-looking statement, although actual results may differ materially.

We encourage you to review the disclaimer in the press release, dealing with forward-looking information, which applies equally to statements made in this call. A copy of the earnings release is available at

We intend to limit the length of this call to one hour, which will include time for you to ask questions. At this time, we have cleared the queue and you will need to re-queue if you have already hit star one. During the Q&A section, we ask you to limit your questions to one primary and one related follow-up question to enable other participants to ask questions.

With that I will now turn the time over to Harris Simmons. Harris?

Harris H. Simmons - Chairman, President and CEO: Thanks very much, James and we welcome all of you to the call this afternoon or evening depending on where you are. We are encouraged with the second quarter's results which included positive performance in areas of loan growth, credit quality, capital levels and costs.

Talking first about loan growth, we enjoyed a stronger loan growth in the past several quarters along with solid improvement in loan production volumes. We experienced strong growth and commitments including more than $600 million increase in unfunded commitments during the quarter which is often a sign of customer optimization. Indeed conversations with our relationship managers suggest that customer optimization has improved compared to late 2012. So, we do think the environment is getting better that way.

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. As we've mentioned on prior calls and at conferences, the loan pricing pressure comes predominantly from the largest loans. The pricing on smaller loans, although down in the last six months, has been much more stable than the pricing of larger credits.

In fact, small loan pricing is declining at a rate that's about a third the rate of decline of large loans, and that's important for us because smaller loans account for about two-thirds of our total production and a similar amount of our overall portfolio. Nevertheless, because we are still experiencing adjustable rate loans resetting lower and real estate loans refinancing at elevated speeds we do expect further pressure on loan yields perhaps to a lesser degree today than we did three months ago given the rise we are seeing in five year and 10 year benchmark interest rates.

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