Ken Usdin: I wanted to bring together all the kind of pieces of NII. And your outlook is still talking about a 4Q €˜23 to 4Q €˜22 slight increase. And I’m just wondering, Paul, what’s the power through point, right? You’re talking about betas increasing, you’re taking out more borrowings, securities are coming down. So, we’ve got the loan growth. And I guess maybe it’s front book repricing. Can you help us kind of understand what are the positives that offset some of the things that you’ve spoken to already that would get that NII up on a year-over-year basis looking out to 4Q €˜23.
Paul Burdiss: Yes. The key — a couple of key items would be the leverage inherent in our deposit book, as I said, our ability to maintain a very favorable cost of interest-bearing funds, in addition to maintaining that book of noninterest-bearing deposits. As reported in our comments, the majority — in my way of thinking, the majority of our net interest margin expansion this quarter really had to do with the stability and the value of those noninterest-bearing deposits. So our ability to hold on to those is really important as is loan growth, which we talked about. There’s a lot of uncertainty in the economic environment. The inversion of the yield curve is not a positive for us and for many banks. And so, if rates kind of stabilize, if that inversion starts to go away, if we get decent deposit growth and we really are able to hold the line on both volume and rate with respect to our deposits, those are all incrementally helpful.
Ken Usdin: Okay. The prefunding point makes the most sense to me on that. And the — can you talk to us about just loan betas and loan repricing? Like, how does that pull through from here? And how would you put that in context with your — with the beta commentary on the deposit side? Thanks.
Paul Burdiss: Well, we just have a page in here. I don’t know if we still have it, James, back in the appendix. There’s about a little less than half of our loans ex swaps were priced within the first three months and then after that, you see some repricing out along the curve. And so, to the extent that rates stabilize, you’ll see the — that rate repricing continue to occur. But, as we think about deposit beta, I think oftentimes people are really thinking about the short end part of the curve and the short end part of that repricing. And as I said, it’s kind of between 40% and 50% of our loans will reprice within three months of a change in the base rate.
James Abbott: Slide 27, for those of you on the call and have access to the slide deck, is that schedule that Paul was referencing. And there is a lag, as we’ve talked about historically that, that lag. If you look at — if you look at what the yield is on loans in the fourth quarter of €˜22 versus the average benchmark rates in the third quarter of €˜22, you’re going to get about a 45% loan yield beta, and that’s the difference between just measuring it on the current quarter versus the current quarter. The problem with doing is it takes a little bit of time for the loans to catch up to what’s happened with the benchmark rate, if that’s helpful.
Ken Usdin: Yes. Great. And can I just ask one more just on expenses. You said moderately off of what was a better year-end result here. Is that a pivot at all from comments that you guys have made recently about what the expected growth rate might look like in terms of your just — your expense growth outlook for €˜23? Thanks.
Paul Burdiss: I wouldn’t call that a pivot. I think that the really difficult inflationary environment and the environment for compensation has kind of changed the trajectory of noninterest expense. But we’ve been talking about that for several quarters. And so, I wouldn’t characterize that as a difference. What I will say is that the factors that are driving that are also driving interest rates to be significantly higher. And on a net basis, when we think about the funds or the revenue that drops to the bottom line, there’s positive operating leverage in that environment for us.
Operator: Thank you. Ladies and gentlemen, this concludes the question-and-answer session. I’d like to turn the call back to James Abbott for closing remarks.
James Abbott: Thank you, Joe, and thank you to all of you for joining us today. If you have any additional questions, please contact us at the email or phone number listed on our website. And we look forward to connecting with you throughout the coming months. Finally, thank you for your interest in Zions Bancorporation. And this does conclude our call today.
Operator: This concludes today’s conference. Thank you for your participation. You may now disconnect.
