Zions Bancorporation
Q2 2022 Earnings Call
Jul 26, 2022, 5:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings. Welcome to the Zions Bancorporation Q2 earnings conference call. [Operator instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, James Abbott, director of investor relations.
You may begin.
James Abbott -- Director of Investor Relations
Thank you, Kyle, and good evening. We welcome you to this conference call to discuss our 2022 second quarter earnings. I would like to remind you that during this call, we will be making forward-looking statements although actual results may differ materially. We encourage you to review the disclaimer in this press release or the slide deck on Slide 2, dealing with forward-looking information and the presentation of non-GAAP measures, which apply equally to statements made during this call.
A copy of the earnings release, as well as the slide deck are available at zionsbancorporation.com. For our agenda today, Chairman and Chief Executive Officer Harris Simmons will provide opening remarks, followed by a brief review of our financial results by Paul Burdiss, our chief financial officer. With us also today is Scott McLean, president and chief operating officer; Keith Maio, chief risk officer; and Michael Morris, chief credit officer. After our prepared remarks, we will -- we anticipate to hold a 30-minute question-and-answer session.
During the Q&A, we request that you limit your questions to one primary and one follow-up question to enable other participants to ask questions. I will now turn the time over to Harris Simmons.
Harris Simmons -- Chairman and Chief Executive Officer
Thanks very much, James, and welcome to all of you who are joining our call this evening. Beginning on Slide 3, there are some things that are particularly applicable to Zions' recent quarters, as well as those that are likely to be prominent over the near-term horizon. First, as Paul will discuss in greater detail, we're in -- I think we think we're in a very good position for rising interest rates. The futures market is pricing in a Fed Funds upper target rate of approximately 3.5% by the spring of next year or an increase of about 175 basis points.
Our earning assets generally reprice faster and have a higher correlation or beta to the movement in rates and to our liabilities. Despite a typical lag of a month or so for variable rate loans and a longer lag for securities and longer-duration loans, we're already beginning to see significant benefits to asset yields due to recent rate hikes, while funding costs during the quarter remained low and well contained. We also estimate the impact of borrowers' cash flows under significantly higher interest rates when we are underwriting loans, and we expect that the portfolio will perform relatively well in a somewhat higher interest rate environment. Exclusive of PPP loans, our period-end loans increased $1.7 billion or 3.3% on annualized during the quarter.