Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Investor Day (February 2010)
177 slides from Zions Bancorporation N.a's investor day presentation, Feb 11, 2010
Slide 1: 2010 Investor Day, February 11, 2010, Salt Lake City
2010 Investor Day February 11, 2010 Salt Lake City
Slide 2: Table of Contents
Table of Contents Ø Overview Ø Geography & Footprint Economics Ø Business Mix Ø Customer Growth / Retention Ø Net Interest Margin Ø Credit Quality - Big Picture Ø Efficiency Ø Capital Ø Shareholder Dilution Ø Construction Ø Residential Ø Commercial Ø National Real Estate: SBA 504 Program Ø Term Comm
Slide 3: Introductory Overview
Introductory Overview
Slide 4: Bank Headquarters, Offices, Assets, Deposits
Bank Headquarters Offices __Assets__Deposits ape Zions Bank Salt Lake City 128 $20.4B $14.0B CBaT San Diego 106 ___ $11.08 39.98 ‘Amegy Houston 84 ‘$12.38 39.28 NBA Phoenix 76 $4.8B $3.8B NE hed NSB Las Vegas 58 $4.78 $3.68 ‘ZIONS BANK Vectra Denver 39 $2.4B $2.0B f a bes ‘Commerce WA Seattle 7 $0.8
Slide 5: Long-Term Growth Engine Footprint
Long-Term Growth Engine Footprint Population Growth Estimates from SNL Financial (2009-2014)
Slide 6: Advantages of Multi-Bank Model
Advantages of Multi-Bank Model • Local Decisions – Quick turnaround of lending decisions – Customer access to decision-maker – Relationship approach leads to strong business banking = stronger DDA balances – Breadth of products of a regional/super-regional bank – Service levels of a community bank –
Slide 7: Strong Focus on Business Banking - Loan Mix, Profit Mix
Strong Focus on Business Banking - Loan Mix, Profit Mix Consumer 22% CRE 32% *Includes FDIC Supported Assets * Commercial Loans: 79% * Retail & Other Loans: 21%
Slide 8: Deposit Composition
Deposit Composition • Retail: 45% • Commercial: 55%
Slide 9: Zions' Strengths
Zions’ Strengths • Annual core pretax, pre-credit earnings range of $900 million to $950 million – NIM: 3.81%, ranked #2 of regional banks/peers* – Best among peers* for non-interest bearing deposits as a percent of earning assets • Strong allowance for credit loss: 4.3% of loans • Low original LTV
Slide 10: Customer Retention and Growth
Customer Retention and Growth - Total Commercial Customers up 18% (Organic) Since
Slide 11: Zions' Challenges
Zions’ Challenges • Rising NPAs, to 5.9% of loans from 5.4% in prior quarter (1) – Total delinquent + NPA declined by 2% in 4Q09 compared to the prior quarter • 2009 net charge-off rate of 2.9%; 4Q09 NCO rate: 3.0% (1) • Continued securities impairments (OTTI), primarily on bank/insurance CDOs - $99
Slide 12: Zions Bancorporation
ZIONS BANCORPORATION
Slide 13: Net Interest Margin (FY 2009)
Net Interest Margin (FY 2009) Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL (As Reported NIM - field not available for FHN, BOKF)
Slide 14: Risk-adjusted Net Interest Margin (FY 2009)
Risk-adjusted Net Interest Margin* (FY 2009) *(Net Interest Income - Net Charge-offs)/Average Earning Assets Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL
Slide 15: Net Interest Margin (Historical)
Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL (As Reported NIM) Net Interest Margin (Historical) Weighted Average Spread on new production is >4.5%
Slide 16: Core NIM Trends
Core NIM Trends Core NIM Performance • Due to the extinguishment/ reissuance of subordinated debt in June 2009, Zions experiences non-cash discount accretion, which increases interest expense, reducing GAAP NIM Core NIM (excludes discount accretion) has been generally stable • 1Q09 experienced a tem
Slide 17: Driver of Strong NIM: DDA
Driver of Strong NIM: DDA Core NIM Performance • Zions non-interest bearing deposit growth remains strong • ZION: +27% Y/Y • US commercial banks: +3% Y/Y DDA Growth - - Indexed: 4Q08=100
Slide 18: Driver of Strong NIM: New Loan Spread and Deposit Costs
Driver of Strong NIM: New Loan Spread and Deposit Costs
Slide 19: Credit Quality - Big Picture Overview
Credit Quality - Big Picture Overview
Slide 20: Loan Portfolio Performance (12/31/2009)
Loan Portfolio Performance (12/31/2009)
Slide 21: NPAs & Delinquency Trends
NPAs + Greater than 90 Days Delinquent / Loans + OREO NPAs & Delinquency Trends (Regional Bank Peers) Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL
Slide 22: Net Charge-offs as % of Loans
Net Charge-offs as % of Loans* (Regional Bank Peers) *Annualized Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL
Slide 23: Net Charge Offs By Loan Type
*The C&I Loans category excludes the impact of a significant credit, of which the majority was recovered in 4Q09. Net Charge Offs - - By Loan Type (Regional Bank Peers) Percentage of Zions Total Loans
Slide 24: ALLL as a % of Loans
ALLL as a % of Loans Source: SNL (ALLL as a % of Gross Loans)
Slide 25: Allowance for Credit Loss - By Loan Type
Allowance for Credit Loss - By Loan Type Allowance for Credit Loss 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 42430 -ieunsuog SIaNONOY -seunsuog, uoljonsjsu0g -4aunsuog HR Awwesr-s 2.0% 0.0% 907 Aynby ewoH BYO uuel uoronsjsu0g ppuwog uojonsjsu0g 1soy paidnos0 42UMO. Buiseeq -Je}aUIWOD : PY A 2) 6 N
Slide 26: Reserves to Non Performing Assets
Reserves to Non Performing Assets 500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% 3-00 eeseee aaa SSS865 122-00 3 22 ee 8s SSSSSSG55SS Source: SNL Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than §200 billion plus footprint competitors WFC and USB.
Slide 27: Reserve Coverage of NCOs
Reserve Coverage of NCOs Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL
Slide 28: Consolidated Classified Loans
Consolidated Classified Loans (Total & Products Based on Outstanding Balance) ~© Total ~©- Commercial Loans 4 Commercial Real Estate Loans _x Consumer Loans far-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 ZIONS BANCORPORATION scourcnovo ct ts gl |
Slide 29: Zions Affiliate Classified Loans
Zions Affiliate Classified Loans a Amegy Bank of Texas + California Bank & Trust National Bank of Arizona ~*Nevada State Bank Vectra Bank of Colorado ~e-ZFNB —*-ZFNB-NRE 3/31/2007 6/30/2007 9/30/2007 12/31/2007 3/31/2008 6/30/2008 9/30/2008 12/31/2008 3/31/2009 6/30/2009 9/30/2009 12/31/2009 ZIONS B
Slide 30: Consolidated Non-Accrual Loans
Consolidated Non-Accrual Loans By Product $2,500,000,000 ~¢- Total ~©- Commercial Loans A Total Commercial Real EstateLoans * Consumer Loans A Commercial Loans ~- Commercial Construction Commercial Term “i Residential Construction $2,000,000,000 = Consumer Loans Overdraft Protection $1,500,000,000 $
Slide 31: Consolidated CRE Non-Accrual Loans
Consolidated CRE Non-Accrual Loans By Product $450,000,000 $400,000,000 ~ Commercial Construction $350,000,000 ~©- Commercial Term 4 Residential Construction $30,000,000 $250,000,000 $20,000,000 $150,000,000 $10,000,000 $50,000,000 s Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 ZIONS BANC
Slide 32: Zions Affiliate Non-Accrual Loans
Zions Affiliate Non-Accrual Loans (Outstanding Balance $000s) 600,000 + Amegy Bank of Texas 500,000 ~~ California Bank & Trust National Bank of Arizona —* Nevada State Bank 400,000 Vectra Bank of Colorado —®-ZFNB —¢- ZFNB-NRE 300,000 200,000 100,000 0 =» & 5 =) SS een Seo Some Be Sr. hy 8. 848s “BSN
Slide 33: Zions' Top Non-Accrual Loans
Zions’ Top 20 Non-Accrual Loans
Slide 34: Nonaccrual Loan Migration
Nonaccrual Loan Migration - Nonaccrual loan inflows have stabilized; expect receding to begin in early - Favorable resolutions increased 21% vs. 3Q09 - Unfavorable resolutions declined 12% vs. 3Q09
Slide 35: Other Real Estate Owned (OREO) Migration
Other Real Estate Owned (OREO) Migration - OREO inflows stable - Favorable resolutions increased 108% vs. 3Q09 - Unfavorable resolutions increased 34% vs. 3Q09
Slide 36: Top Relationships
Top 20 Relations! ZIONS BANCORPORATION December 31, 2008 Commitments (ont=s000) Bank Relationship Name ‘Commitment | Outstanding Description ‘ABTZENB [Customer $167,636 $117,396 [Manfacturing & Mining ABT iCustomer2 $155,682 ‘$144,709 [Real Estate Devel /Subdividers ZFNB___|Customer3, ‘$107,982 ‘$87
Slide 37: Granularity of Loans - By Major Loan Type
Granularity of Loans - By Major Loan Type
Slide 38: Zions Bancorporation
ZIONS BANCORPORATION
Slide 39: Efficiency - Expense Management
Efficiency - - Expense Management *4Q09 Non-Interest Expense Annualized Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL (estimated for reporting gaps where necessary)
Slide 40: Zions Bancorporation
ZIONS BANCORPORATION
Slide 41: Where We Are: Capital Ratios as of December 31, 2009
4Q08 3Q09 4Q09 Tangible Common Equity 5.89% 5.76% 6.12% Tier 1 Common 6.28% 6.59% 6.57%* Tier 1 Risk Based 10.22% 10.34% 10.37%* Total Risk Based 14.32% 13.08% 13.13%* Where We Are: Capital Ratios as of December 31, 2009 * 4Q09 ratios are estimates
Slide 42: Where We Are: Tier 1 + Reserves to Total Loans
Where We Are: Tier 1 + Reserves to Total Loans - 12/31/09* * ZION estimated as of 4Q09; all peer data as of 3Q09 (4Q09 data not yet available at time of printing)
Slide 43: Capital Actions Timeline 2008-2009
1Q - - 2Q 08: No Capital Actions 3Q 08: $47mm 9.50% Fixed-Rate Non-Cumulative Perpetual Preferred Stock issued; $245mm common stock issued 4Q 08: $1.4 billion TARP 2Q 09: $100mm preferred repurchased; $54mm gain—preferred stock redemption; $124mm common stock issued ($46mm to fund preferred repurcha
Slide 44: Capital Creation - Equity raises less dilutive to shareholders
Equity issuance $709 $0 $986 $2,037 $0 $1,415 $1,136 $478 $571 Liability management $603 $0 $467 $1,345 $10 $24 $520 $0 $30 Other strategic $99 $18 $1,473 $176 $4 $0 $20 $0 $34 Capital Creation - Zions’ equity raises less dilutive to shareholders Source: Credit Suisse
Slide 45: Zions' Approach to Capital
Zions’ Approach to Capital • Maintain and incrementally improve capital ratios • Use all available “levers” to minimize dilution – Common equity distribution programs – Convertible instruments • Modified sub debt converts to preferred (Tier 1) – Reduce tangible assets (loan demand remains weak) – Re
Slide 46: Risks to Approach
Risks to Approach • Regulatory/political pressure to take action not in shareholders’ interest • Not raising enough/markets deteriorate
Slide 47: Summary
Summary • Zions is managing capital: – For current shareholders – To do enough to avoid unacceptable risks
Slide 48: Zions Bancorporation
ZIONS BANCORPORATION
Slide 49: Construction Loan Deep Dive
Construction Loan Deep Dive Reducing Risk: A Portfolio in Active Runoff Mode David Blackford Keith Maio Dallas Haun Scott McLean Michael Morris
Slide 50: Construction Overview
C&I 47% Consumer 22% CRE 32% *Includes FDIC Supported Assets For 4Q09, construction loans accounted for • 14% of the loan portfolio • 51% of FY09 NCOs Construction Overview
Slide 51: Basic Construction Underwriting Guidelines
Commercial Properties Residential Properties Loan Amount Yes Yes Loan-to-Value Yes Yes Cash Equity In? Yes Yes Loan-to-Cost Yes Yes Debt Service Coverage Yes N/A Term Yes Yes Preleasing Yes N/A Market Analysis Yes Yes Recourse/Guarantor Yes Yes General Contractor Yes Yes Basic Construction Underwrit
Slide 52: Construction Loan Overview - Residential Properties
Construction loan overview - RESIDENTIAL Properties • Total Residential Properties under Construction: $1.7 billion
Slide 53: Construction Loan Overview - Commercial Properties
Construction loan overview - COMMERCIAL Properties • Total Commercial Properties under Construction: $3.8 billion
Slide 54: Granularity of Residential Portfolio
Construction loan overview - Granularity of Residential Portfolio
Slide 55: Granularity of Commercial Portfolio
Construction loan overview - Granularity of Commercial Portfolio
Slide 56: Macroeconomic Data - Home Price Appreciation
Macroeconomic Data - Home Price Appreciation
Slide 57: Construction Credit Trends - Growth, NAL, NCO
Construction Credit Trends - Growth, NAL, NCO
Slide 58: Residential Construction Growth, NAL, NCO Trends
Construction loan overview - Resi Growth, NAL, NCO Trends Residential Construction
Slide 59: Commercial Construction Growth, NAL, NCO Trends
Construction loan overview - Commercial Growth, NAL, NCO Trends Commercial Construction
Slide 60: Construction Loan Overview - Allowance for Credit Loss
Construction loan overview - Allowance for Credit Loss • Zions holds a significant reserve against its construction portfolio • Primarily based on statistical loss factors (as opposed to specific reserves) • Residential: 10.9% of total residential construction loans • Commercial: 13.5% of total comm
Slide 61: Construction Lending - Supplemental Information
Construction Lending - Supplemental Construction Lending - Supplemental Information
Slide 62: Interest Reserves - Total Construction Portfolio
Interest Reserves - Total Construction Portfolio Interest reserves • Common industry practice for construction lending • Only 19% of Zions’ construction portfolio has an interest reserve
Slide 63: Interest Reserves - Residential and Commercial
Interest Reserves - Split between Residential and Commercial Construction
Slide 64: Residential Construction - Vintage Stratification
Residential Construction - Vintage Stratification
Slide 65: Construction: Indexed Growth
Construction: Indexed Growth Indexed Loan Growth: 4Q05=100
Slide 66: Construction Nonaccrual Loans and NCOs, by Affiliate
Construction Nonaccrual Loans and NCOs, by Affiliate Construction Performance • Nevada loss content has exceeded all other geographies in 2009 • Losses relative to defaults have run considerably higher on construction loans than on other loan types • Texas loss severity not as bad as other states -
Slide 67: Construction: Relative Concentration and Performance
Construction: Relative Concentration and Performance Construction accounts for approximately 14% of total loans. Relative to the consolidated total construction loans, – TX, AZ, and NV have a higher concentration in Term CRE – Concentrations in UT and CA are significantly less than the overall portf
Slide 68: Construction Outlook
Construction Outlook Outlook • Impediments to growth – Lack of qualified borrowers and/or good projects – New internal concentration limits – Lack of demand for new projects • Growth opportunities – Recognize: Zions is in markets where population growth is likely to be strong • Construction and deve
Slide 69: National Real Estate Group / SBA Program
National Real Estate Group / SBA 504 Program Peter Morgan
Slide 70: Zions National Real Estate
Peter J. Morgan, Executive Vice President ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE
Slide 71: Executive Summary
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Executive Summary Nationally: • Small businesses in all industries experiencing different levels of declining revenues, net income and cash flow • Declining CRE values (30-50%). Given default, many small businesses unable to sell building to sati
Slide 72: National Real Estate Dept. Loan Portfolio
ZIONS NATIONAL REAL ESTATE National Real Estate Dept. Loan Portfolio (Year-End Outstanding Loan Balance: $ Millions)
Slide 73: Changes & Challenges
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Changes & Challenges • FL, AZ, NV, and GA have seen commercial real property values decline 50-70% which has contributed to higher net charge-offs • 30+ day delinquency rate increased from 5.62% in June ’09 to 7.79% at Dec.’09 • Dec. ’09 non-accr
Slide 74: Other Nat'l R. E. Dept Facts
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Other Nat’l R. E. Dept Facts a) At Jan 31, 2009; 36% of Zions Bank total loans and 48.6% of Zions Bank NPAs b) If a loan defaults, resulting in foreclosure, the average principal loss is ± 10% c) 92% of borrowers continue to pay as agreed with mo
Slide 75: Collateral Property Type
ZIONS NATIONAL REAL ESTATE Collateral Property Type December 31, 2009
Slide 76: Owner-Occupied vs. CRE
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Owner-Occupied vs. CRE December 31, 2009
Slide 77: National Real Estate Dept. NPAs
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE National Real Estate Dept. NPAs ($ in Millions)
Slide 78: Loans by State
ZIONS NATIONAL REAL ESTATE Loans by State December 31, 2009 Portfolio Non-accruals
Slide 79: Loans by State (cont.)
ZIONS NATIONAL REAL ESTATE Loans by State (cont.) December 31, 2009 Portfolio OREO
Slide 80: OREO Aging
Months: # $ % 0 to 3 months 34 $22.5 48.3% 3 to 6 months 22 $11.7 25.1% 6 to 9 months 12 $12.0 25.8% 9 to 12 months 0 $0.0 0.0% 12+ months 1 $0.4 0.8% Total 69 $46.6 100.0% ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE OREO Aging December 31, 2009
Slide 81: 2009 Net Credit Losses and Losses on Sale of OREO
($ Millions) Average Portfolio Balance 2009 Credit Losses bps Losses on OREO bps Owner-Occupied (C&I) $3,307.1 $21.5 65.0 $11.9 36.0 Investor (CRE) $1,990.9 $17.8 89.4 $3.8 19.1 Total $5,298.0 $39.3 74.2 $15.7 29.6 ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE 2009 Net Credit Losses and Loss
Slide 82: Historical Delinquency
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Historical Delinquency
Slide 83: Delinquency Trends
ZIONS NATIONAL REAL ESTATE Delinquency Trends
Slide 84: NPA History by Cohort
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE NPA History by Cohort Tracking Non-accruals by month first placed on non-accrual
Slide 85: ZIONS
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE
Slide 86: #1 Objective: Reduce NPAs
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE • Get to Borrower quicker and determine best course of action • Created team(s) of experienced officers to craft solutions for each borrower • Waive prepayment penalties, consider short sales, and explore note sales to investors, SBA, or junior l
Slide 87: Improvement Steps
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Improvement Steps • Established National CRE limits at 135% of risk based capital • Set CRE property type and geographic limits which resulted in: a) A current restriction on new hotel lending b) No additional CRE lending, in CA, NV, AZ, as well
Slide 88: Outlook
ZIONS NATIONAL REAL ESTATE ZIONS NATIONAL REAL ESTATE Outlook 2010: • Selective portfolio growth until NPAs decrease to acceptable level • NPAs expected to rise modestly until mid-year, then decline to < $375 million (7.2%) at year end • Annualized net credit losses ≈ 150 bps Longer Term: • Signific
Slide 89: Term Commercial Real Estate Loan Deep Dive
Term Commercial Real Estate Loan Deep Dive Scott McLean Michael Morris David Blackford Keith Maio
Slide 90: Term Commercial Real Estate - Location
Term Commercial Real Estate - Location • Term CRE, or non-owner occupied loans account for approximately 19% of total loans, excluding FDIC supported assets. Geography of Term CRE • Based on affiliate, Term CRE loans are most significantly concentrated in Utah and California. • Utah Term CRE include
Slide 91: Term CRE - Category Stratification
Term CRE - Category Stratification
Slide 92: Term CRE Credit Trends - Excluding Gaming Credits
Term CRE Credit Trends - EXCLUDING Gaming Credits
Slide 93: Term CRE Credit Trends - Effect of Gaming on Loss Rates
Term CRE Credit Trends - Effect of Gaming on Loss Rates • Annualized 4Q09 NCOs Including Gaming: 3.1% annualized • Annualized 4Q09 NCOs Excluding Gaming: 1.7% annualized • Loss trends much more stable excluding gaming; gaming Term CRE credits remaining: $74 million.
Slide 94: Change in CRE Loan Commitments (4Q07 to 4Q09)
Change in CRE Loan Commitments in $billions (4Q07 to 4Q09) • A significant decline in construction commitments has been partially offset by Term CRE loan growth • Construction loans must qualify for “pass grade” underwriting in order to move from Construction to Term CRE
Slide 95: ZION vs. SCAP More Adverse Stress Loss Projections
ZION vs. SCAP More Adverse Stress Loss Projections
Slide 96: Term CRE - Vintage Stratification
Term CRE -Vintage Stratification
Slide 97: Term CRE Maturity Stratification
Term CRE Maturity Stratification
Slide 98: Term CRE - LTV Stratification At Origination
Term CRE - LTV Stratification At Origination* *Or most recent appraisal; reappraisals are most frequently conducted when a loan is downgraded to substandard
Slide 99: Macroeconomic Data - MIT's Transaction Based Index
Macroeconomic Data - MIT’s Transaction Based Index
Slide 100: Term CRE - TBI Adjusted LTV Stratification
Term CRE - TBI* Adjusted LTV Stratification *The MIT Transaction Based Index is a national index that has been applied to ZBC's mostly regional CRE Portfolio
Slide 101: Day of Reckoning - or Not?
Day of Reckoning - or Not? • Eighty percent of the industry’s CRE loans maturing in 2014 are projected to be underwater (LTV >100%). • Based on loans adjusted for price declines as reflected in the 4Q09 MIT TBI, Zions would have approximately 6% underwater. • Loans Maturing in 2010 DO NOT include ap
Slide 102: Term CRE - Supplemental Slides
Term CRE - Supplemental Slides
Slide 103: Term CRE Loan Growth By Affiliate
Term CRE Loan Growth By Affiliate • Growth of Term CRE in the last three years has come primarily from the National Real Estate Group (typically SBA 504 or 504-look-alike loans). – ZFNB (including NREG) growth was more than $1 billion, or approximately 45% of total franchise growth • Texas grew at t
Slide 104: Term CRE Nonaccrual Loans and NCOs, by Affiliate (FY09)
Term CRE Nonaccrual Loans and NCOs, by Affiliate (FY09) Term CRE Performance • Loss severity on Term CRE typically runs at a fraction of nonaccrual loans • Nevada losses running significantly higher due to casino properties - $ • Remaining gaming/casino portfolio: $169M, of which $74M is Term CRE •
Slide 105: Term CRE Relative Performance - 4Q09
Term CRE Relative Performance - 4Q09 Term CRE accounts for approximately 18% of total loans. Relative to the consolidated total Term CRE of 18%, – UT and CA have slightly more concentration in Term CRE – TX, AZ, NV, and CO have a significantly lower concentration Relative to the consolidated Term CR
Slide 106: Collateral Location Arizona Northern California Southern California Nevada Colorado Texas Utah/ Idaho Washington Other
Collateral Location Arizona Northern California Southern California Nevada Colorado Texas Utah/ Idaho Washington Other Total Commercial Term Industrial $28,178 $9,017 ($19,155) $16,416 ($6,992) $52,968 $21,475 $4,482 $38,314 $144,702 Office $42,423 $59,366 $105,473 ($2,661) ($51,947) ($356) $9,907 $
Slide 107: Term CRE - TBI Adjusted LTV by Product & Location
Term CRE - TBI* Adjusted LTV by Product & Location *The MIT Transaction Based Index is a national index that has been applied to ZBC's mostly regional CRE Portfolio
Slide 108: ZION vs. SCAP Baseline Stress Loss Projections
ZION vs. SCAP Baseline Stress Loss Projections
Slide 109: Term CRE Outlook
Term CRE Outlook Outlook • Impediments to growth – Sluggish transaction volume – Depressed prices • Growth opportunities – SBA 504 – Limited securitization market • Key differentiator – Local businesses need local decision makers for financing
Slide 110: Energy Loan Portfolio
Energy Loan Portfolio Scott McLean Steve Stephens
Slide 111: Amegy Bank of Texas
AmegyBank of Texas The A Bank 02005 amegyBank WA. Member Foc. Kt
Slide 112: Energy Lending
Energy Lending E&P/Midstream Lending Corporate Energy Services Lending * § Upstream: E&P companies § Midstream: Natural gas gathering systems Gas gathering/pipeline companies Gas processing plants Petroleum storage terminals § Energy Services: Field services Equipment manufacturing Drillers (working
Slide 113: The Energy Lending Group
The Energy Lending Group * Steve Kennedy, P.E. Senior Vice President years Gregory Petruska P.E. Senior Vice President years E&P / Midstream Lending - - Houston Charles W. Patterson Senior Vice President years Corporate Energy Services Lending - - Houston C Ross Bartley Senior Vice President years E
Slide 114: Energy Group Growth
Energy Group Growth Commitments Outstanding Deposits ($ in Millions) Includes Energy Service Commitments >$1MM bank wide *
Slide 115: Energy Portfolio Loan Composition
Energy Portfolio Loan Composition Outstanding $1.75 Billion Commitments $3.3 Billion E & P Midstream Services Coal Other Refining 12/31/09 Includes Energy Service Commitments >$1MM bank wide *
Slide 116: Energy Service Exposure by Market Segment
Energy Service Exposure by Market Segment $1.7 Billion in Commitments
Slide 117: Selected Oilfield Service Relationships
Selected Oilfield Service Relationships * *
Slide 118: Selected Exploration & Production Relationships
Selected Exploration & Production Relationships
Slide 119: Credit Quality - Total Energy Portfolio
Credit Quality - Total Energy Portfolio Commitments $3.3 Billion Outstanding $1.75 Billion 12/31/09 Performing Non Performing Non Performing Includes Energy Service Commitments >$1MM bank wide Performing
Slide 120: Credit Quality - E&P/Midstream Portfolio
Credit Quality - E&P/Midstream Portfolio (1) Commitments $1.6 Billion Outstanding $1.02 Billion 12/31/09 Performing Non Performing Non Performing Performing (1) Includes Other/Coal/Refining
Slide 121: E&P Underwriting
E&P Underwriting Typical Oil & Gas Reserve based loan (75% producing reserves and 25% non-producing) $100 - value using NYMEX oil and gas prices $ 85 - Amegy risk-adjusted reserves (i.e. collateral value) $ 68 - apply Amegy prices (80% of NYMEX) $ 51 - loan value 75% adv. rate (25% of reserves hedge
Slide 122: NYMEX Oil Prices vs. Amegy Price Deck
$/BbI $150.00 $130.00 $110.00 $90.00 $70.00 $50.00 $30.00 NYMEX Oil Prices vs. Amegy Price Deck NYMEX Historical EOM 12-Month Strip (Average of next 12 months contracts) NYMEX Forward EOM 12-Month Strip as of 4n4io Market Price 80% - Amegy Base Case 60% - Amegy Stress Case
Slide 123: NYMEX Natural Gas Prices vs. Amegy Price Deck
$/MMBtu NYMEX Natural Gas Prices vs. Amegy Price Deck $15.00 $13.00 $11.00 $9.00 $7.00 $5.00 $3.00 NYMEX Historical EOM 12-Month Strip (Average of next 12 months contracts) \ NYMEX Forward EOM 12-Month Strip as of 4n4i10 $1.00 Maroy = PSS SSIES — NYMEX —Amegy Strip Base —Amegy Strip Sensitivity ggee
Slide 124: Cost per Barrel of Oil Equivalent
($ per Barrel of Oil Equivalent)
Slide 125: Credit Quality - Energy Services Portfolio
Credit Quality - Energy Services Portfolio (1) Commitments $1.7 Billion Outstanding $730 Million 12/31/09 Performing Non Performing Non Performing Performing Includes Energy Service Commitments >$1MM bank wide (1) Includes Other/Coal/Refining
Slide 126: U.S. Rig Count: A Driver of Service Demand
U.S. Rig Count: A Driver of Service Demand *
Slide 127: Services - Credit Quality Drivers
Services - - Credit Quality Drivers …all lessons learned from the 1980’s • Dramatic decline in prices and industry capx. • Excessive financial leverage in “up cycle” generally via junior debt. • Term lending to companies directly tied to well site activity. • Certain other subsegments just not appro
Slide 128: Slide 128
Slide 129: What Drives Future Energy Demand?
What Drives Future Energy Demand? Two main drivers: DEVELOPED billion people use 85% of modern energy. UNDER DEVELOPED billion people use the other 15%. 2 billion people aspire to greater energy use. Source: Simmons & Company International *
Slide 130: A Sampling Of Energy Use
A Sampling Of Energy Use Source: Simmons & Company International *
Slide 131: Fossil fuels will continue as the dominant source of energy
Coal Fossil fuels will continue as the dominant source of energy Richard Newell, SAIS, December 14, 2009 Annual Usage quadrillion Btu Liquid fuels Natural gas Projections History Nuclear Liquid biofuels Renewables (excluding liquid biofuels) Source: Annual Energy Outlook 2010 *
Slide 132: OPEC: The Only Source of Excess Oil Capacity
OPEC: The Only Source of Excess Oil Capacity *
Slide 133: Upstream Spending to Decline in 2009/2010
Upstream Spending to Decline in 2009/2010 * SCI 2009 Expectation = 15 -20% decline Y/Y Expected costs of $350-375B Development Costs Exploration Costs SCI Estimate Costs WTI ($/bbl) Jeff Dietert jdietert@simmonsco-intl.com Houston: 1.713.546.7245
Slide 134: Gas Shale Plays: A New Dimension
Gas Shale Plays: A New Dimension Source: CIBC World Markets and Gas Technology Institute
Slide 135: Adding to Production...But, Shorter Life
Adding to Production…But, Shorter Life * U.S. Domestic Production Sensitivities
Slide 136: Import share of natural gas supply declines
Import share of natural gas supply declines as domestic supply grows * Richard Newell, SAIS, December 14, 2009 trillion cubic feet Consumption Domestic supply Net imports Projections History AEO2010 reference case Updated AEO2009 reference case 2% 6% 13% Source: Annual Energy Outlook 2010
Slide 137: Outlook
Outlook Amegy’s Energy Team • Experienced Team • Conservative Underwriting Standards • Active use of Hedging • Diversified Energy Portfolio Industry Condition • Consolidation has resulted in larger companies with stronger balance sheets and access to multiple capital sources Price Outlook • Continue
Slide 138: Amegy Bank of Texas - End of Presentation
Amegy Bank of Texas Post Oak Parkway Houston, TX 77027 End of Presentation
Slide 139: Small Business Lending / C&I Loan Deep Dive
Small Business Lending / C&I Loan Deep Dive Scott Anderson Bruce Alexander Stanley Savage Dallas Haun
Slide 140: Commercial & Industrial Loans - By Geography
Commercial & Industrial Loans - By Geography Relative Size of Portfolio • C&I loans account for approximately 25% of total loans, excluding FDIC supported assets. Geography of Term CRE • Based on affiliate, C&I loans are most significantly concentrated in Texas and Utah. • $1.8 billion, or approxima
Slide 141: Commercial & Industrial Average Loan Size and Distribution
Commercial & Industrial Average Loan Size and Distribution
Slide 142: Commercial & Industrial Trends - Growth, NAL, NCO
Commercial & Industrial Trends - Growth, NAL, NCO
Slide 143: Commercial & Industrial Line Usage
Commercial & Industrial Line Usage
Slide 144: C&I Outstanding Balance vs. Non Accrual Loans - NAICS
C&I Outstanding Balance vs. Non Accrual Loans - NAICS
Slide 145: SBA 7(a) Lending Market Rankings
Bank FY 2009 # of Loans FY 2009 Dollars Average Loan Size 1 Superior Financial Group, LLC 2,690 $27,177,500 $10,103 2 Wells Fargo & Company 2,156 $678,221,500 $314,574 3 U.S. Bank 1,896 $261,602,982 $137,976 4 Zions Bancorporation 1,367 $138,153,300 $101,063 5 JPMorgan Chase & Co 1,250 $136,576,000
Slide 146: What Others Say About Us: Greenwich Excellence Awards
Small Business Banking: National Awards: • Overall Satisfaction • Relationship Manager Performance • Financial Stability • Overall Treasury Management Regional Awards: • Overall Satisfaction - - West • Overall Satisfaction - - Treasury Management - West What Others Say About Us Greenwich Excellence
Slide 147: What Others Say About Us
Frost What Others Say About Us Overall Financial Stability Compared to Willingness to Lend ($1 - $10 million) Source: Greenwich Associates, Commercial Banking Study Q2 2009 ($1-$10 million)
Slide 148: What Others Say About Us
What Others Say About Us Overall Financial Stability Compared to Willingness to Lend ($10 - $500 million) Source: Greenwich Associates, Commercial Banking Study Q2 2009 ($10-$500 million)
Slide 149: Zions Bank Treasury Management Core Strengths
Zions Bank Treasury Management Core Strengths • Sales and Service – Aggressive sales culture resulting in very strong market share - near 50% in certain markets. • Extensive training implemented in 2008 and 2009 at the local and corporate treasury levels • A high percentage of the relationship manag
Slide 150: C&I - Supplemental Information
C&I - - Supplemental Commercial & Industrial - Supplemental Information
Slide 151: Commercial & Industrial Loan Growth
• The growth rate of C&I loans in the last four years was strongest in Texas • Amegy grew by $2.0 billion to a peak of $4.2 billion in 4Q08 • Colorado grew at the next strongest rate, although a much smaller segment of the franchise • Vectra grew by $230 million to a peak of ~$500 million in 4Q08 •
Slide 152: C&I Nonaccrual Loans and NCOs, by Affiliate (FY09)
C&I Nonaccrual Loans and NCOs, by Affiliate (FY09) C&I Performance • Loss severity on C&I typically runs higher than Term CRE or Owner -Occupied • The seven states shown equaled 99% of FY09 C&I NCOs • Utah and Nevada losses each accounted for 24% of total FY09 C&I losses, while CA accounted for 21%
Slide 153: C&I Relative Concentration & Performance
C&I accounts for approximately 25% of total loans. Relative to the consolidated total C&I of 25%, – TX and WA have significantly more concentration in C&I – Texas concentration is largely attributable to its energy portfolio Relative to the consolidated C&I nonaccrual ratio, – AZ, NV, WA, and CO are
Slide 154: C&I Outlook
C&I Outlook Outlook • Impediments to growth – Weakness in credit trends, adverse to lend to companies whose fundamentals are not stabilizing – Demand beginning to return, but slow • Growth opportunities – Expanded SBA 7(a) limits • Key differentiator – Local businesses need local decision makers for
Slide 155: Investment Securities and Interest Rate Risk
Investment Securities and Interest Rate Risk David Hemingway
Slide 156: CDO Portfolio Summary
CDO Portfolio Summary • Credit-related OTTI losses $99.3 million in 4Q09 (approximately 95% of the impairment losses had been previously recognized in OCI) • Noncredit-related losses on securities of $35.1 million in 4Q09 recognized in OCI *This table includes $2.2 billion par value of CDOs that are
Slide 157: CDO Stress Testing
CDO Stress Testing “Deterioration in PDs %” means that the default curve applied to the performing collateral of each deal is made worse by the percentage indicated. Thus a deal with a default curve of 5% stressed to a 25% “Deterioration in PDs %” would have a 6.25% defaults applied to it, a deal wi
Slide 158: History of Bank Deferrals & Defaults in Zions' CDOs
History of Bank Deferrals & Defaults in Zions’ CDOs
Slide 159: History of Bank Deferrals & Defaults in Zions' CDOs
History of Bank Deferrals & Defaults in Zions’ CDOs
Slide 160: Universe of Failed Banks vs. Banks in CDOs
History of Bank Deferrals & Defaults in Zions’ CDOs Universe of Failed Banks vs. Banks in CDOs Failed Banks As of 2-8-10 ZIONS BANCORPORATION
Slide 161: Largest Aggregate Bank CDO Exposures (1 through 25)
Largest Aggregate Bank CDO Exposures (1 through 25) Data as of 12-31-09 Among the top 50 bank exposures, the average cumulative 5 year default probability being applied is: • Performing Banks = 7.2% • Deferring Banks = 38.7%
Slide 162: Largest Aggregate Bank CDO Exposures (26 through 50)
Largest Aggregate Bank CDO Exposures (26 through 50)
Slide 163: Zions Bancorporation
ZIONS BANCORPORATION
Slide 164: Asset Sensitivity
Asset Sensitivity Fixed-rate loans: – 27% of portfolio – Duration of about 1 year Variable-rate loans: – 73% of portfolio – Floors on 46% of variable-rate loans (79% of those loans are at the floor rate) – Swaps: $760 million (Pay Floating, Receive Fixed) • Continual reduction of interest rate swaps
Slide 165: Loans with Floors (as of 12/31/09)
Loans with Floors (as of 12/31/09)
Slide 166: Duration of Assets, Liabilities, and Equity
Duration of Assets, Liabilities, and Equity
Slide 167: Simulation of Net Interest Income - SLOW Response
Simulation of Net Interest Income - SLOW Response Change in Niland Total Rate Sensitive Income under various rate curve scenarios 10.0% 8.0% 6.0% 4.0% : bi he | — a HE -2.0% 4.0% 6.0% -100 bps +100 bps +200 bps +300 bps Implied P.0.25 Flat Steep -200 bps 12-month simulated impact; assumes material d
Slide 168: 12-month simulated impact
12-month simulated impact; assumes material demand deposit run- off in rising rate scenarios
Slide 169: Outlook: Zions Bancorporation in 3-5 Years
Outlook: Zions Bancorporation in 3-5 Years Harris Simmons
Slide 170: Outlook: Zions Bancorporation in 3-5 Years
Outlook: Zions Bancorporation in 3-5 Years • Revenue drivers – Macroeconomic advantage • Western population growth profile continues to remain strong relative to U.S. – Spread Expansion • Incremental loans have a NIM near 5.0% • Higher capital levels within the industry likely to translate to higher
Slide 171: Outlook: Zions Bancorporation in 3-5 Years (continued)
Outlook: Zions Bancorporation in 3-5 Years (continued) • Term CRE and Owner-Occupied CRE – Growth trends more stable than construction and C&I – Continued soft CMBS market provides opportunity – Continued focus on SBA programs, tenants with more predictable cash flow • Commercial & Industrial – Zion
Slide 172: Outlook: Zions Bancorporation in 3-5 Years (continued)
• Consumer – Residential prime and superprime jumbo mortgage » Absence in the marketplace » Capital friendly » Low LTV, no gimmicks – Credit cards » Strong credit performance » Good value proposition for customers - avoided teaser rates and gimmicks • Securities Portfolio – Near term • At the bottom
Slide 173: Outlook: Zions Bancorporation in 3-5 Years (continued)
Outlook: Zions Bancorporation in 3-5 Years (continued) • Expense controls – Strong expense controls – Successful at bringing costs down to help offset the increase in non-interest expense related to credit – Expect significant improvement in credit related expenses over the 3-5 year horizon • Partia
Slide 174: Conclusion
• Conclusion – Natural growth likely due to footprint – Near term portfolio rebalancing – Strong spread expansion likely with maturing loans and new customers – Less nonperforming asset drag – Credit costs (both provision and non-interest expense) likely to experience significant improvement Outlook
Slide 175: Outlook: Zions Bancorporation in 3-5 Years (continued)
Outlook: Zions Bancorporation in 3-5 Years (continued)
Slide 176: Outlook: Zions Bancorporation in 3-5 Years (continued)
Outlook: Zions Bancorporation in 3-5 Years (continued)
Slide 177: 2010 Investor Day, February 11, 2010, Salt Lake City
2010 Investor Day February 11, 2010 Salt Lake City