Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Barclays Global Financial Services Conference 2022
41 slides from Zions Bancorporation N.a's conference presentation, Sep 12, 2022
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference September 12, 2022
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information This earnings presentation includes “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements, often accompanied by words such as “may,” “mi
Slide 3: Zions Is A Collection of Community Banks
Zions Is A Collection of Community Banks Key Differentiators: Local decision-making and top-notch service, commercial banking focus, granular and low-cost deposit base Strategic local “ownership” of market opportunities and Zions’ Markets1 Ending challenges Bank Headquarters Deposits % of Total Zi
Slide 4: Zions Consistently Receives National and Local Recognition for Excellence
Zions Consistently Receives National and Local Recognition for Excellence Affiliates have strong brands in their markets One of only four banks to have averaged 15 or more Greenwich Excellence Awards since 2009 Top team of women bankers (2015-2020) 1 Consistently Voted Best Bank in San Diego and Ora
Slide 5: Middle Market and Small Business Research Feedback (2021)
Middle Market and Small Business Research Feedback (2021) Zions compares favorably to four major bank competitors (JP Morgan, Bank of America, Wells Fargo, US Bank) Four Major Greenwich Associates Customer Satisfaction Categories Zions Bancorporation Highest Four Major Our Rank Competitors (2021) Co
Slide 6: Key Corporate Objectives
Key Corporate Objectives Focus on four growth areas, supported by investments in key “enablers” driving solid risk-adjusted financial performance Risk Management Data Small People & Business Commercial & Analytics Empowerment BALANCED GROWTH Capital Affluent Markets Operational Technology Excellence
Slide 7: Technology Roadmap – Select Projects
Technology Roadmap – Select Projects We continue to invest in technology solutions focused on customer experience & empowering bankers COMMERCIAL SMALL BUSINESS AFFLUENT CONSUMER Treasury Internet Banking & Gateway Enhancements Digital Banking Replacement Improved Customer Experience (2022) Consumer
Slide 8: FutureCore: A Strategic Technology Advantage for Years to Come
FutureCore: A Strategic Technology Advantage for Years to Come Replacing the entire core legacy environment to improve operational resiliency and efficiency Modern Architecture: Improved Customer Empowered Driving Resiliency and Speed Experience Bankers Modernization FutureCore as a Catalyst Benefit
Slide 9: Average Loan and Deposit Balances
Average Loan and Deposit Balances Vs. 1Q22, average non-PPP loans increased 3.1% in 2Q22; average deposits decreased 0.9% Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits ($ billions) ($ billions) Average Total Loans Excluding PPP Loans, Average Noninterest-bear
Slide 10: Deposit Growth and the Loan-to-Deposit Ratio
Deposit Growth and the Loan-to-Deposit Ratio Zions’ low loan-to-deposit ratio provides ample funding for future loan growth Deposit Growth Loan-to-Deposit Ratio % Indexed: 1H17 = 100 190 100 180 Zions ranked 11th 90 170 160 80 150 140 Zions ranked 2nd 70 130 60 120 110 50 100 90 40 1H17 2H17 1H18 2H
Slide 11: Deposits – Noninterest Bearing Concentration and Cost of Total Deposits
Deposits – Noninterest Bearing (“NIB”) Concentration and Cost of Total Deposits Through multiple rate cycles, Zions’ NIB deposit concentration and cost have been consistently among the best of peers Average Noninterest Deposits / Average Cost of Total Deposits Average Total Deposits 60% % 4.50 Zions
Slide 12: Loan Growth in Detail
Loan Growth in Detail Moderate to strong loan growth achieved in certain targeted growth categories Linked Quarter Loan Balance Growth, Excluding PPP Total Loans, excluding PPP: +3% 10% Linked quarter: Growth Rate: Linked Quarter, not annualized 8% Home Equity, 6% C&I (ex-Oil & Gas), 5% Excluding
Slide 13: Securities, Money Market Investments
Securities, Money Market Investments Outsized deposit growth during the pandemic was primarily invested in highly liquid assets Total Securities Portfolio and Money Market Investments (end of period balances) Strong deposit growth during the pandemic was primarily invested in highly liquid assets ($
Slide 14: Net Interest Income and Net Interest Margin
Net Interest Income (“NII”) and Net Interest Margin (“NIM”) Risk-adjusted NIM poised to benefit from rising interest rates and deployment of surplus liquidity into loans Net Interest Income Net Interest Margin Risk-Adjusted NIM Net Interest Margin(1) (Risk Adjusted) ($ millions) $593 3.00% $555 $555
Slide 15: Interest Rate Sensitivity
Interest Rate Sensitivity Latent and emergent interest rate sensitivity are expected to lead to a significant increase in net interest income Simulated Net Interest Income Sensitivity (1) Latent interest rate sensitivity refers to future changes in −100 bps +100 bps +200 bps NII based upon past rate
Slide 16: Noninterest Income
Noninterest Income Total customer-related noninterest income improved vs. 1Q22, and was up 11% from the year-ago period Customer-Related Noninterest Income (1) Customer-related noninterest income continued to improve ($ millions) $154 Relative to the prior quarter, Commercial account fees decrease
Slide 17: Noninterest Expense
Noninterest Expense Noninterest expense was elevated due primarily to increased incentive compensation from current and anticipated profitability Noninterest Expense (NIE) Total noninterest expense was flat compared to the prior ($ millions) quarter Salaries and benefits were flat to the previous
Slide 18: Adjusted Pre-Provision Net Revenue (PPNR)
Adjusted Pre-Provision Net Revenue (“PPNR”) Adjusted PPNR increased considerably from 1Q22, primarily due to the benefit of higher rates and loan growth Linked quarter: ($ millions) Adjusted PPNR(1) Adjusted PPNR increased 24% primarily from Higher yields on all major asset categories from risin
Slide 19: Credit Quality Trends Relative to Peers
Credit Quality Trends Relative to Peers Zions’ NCOs/Loans ratio is frequently in the best (lowest) quartile of peers; very low loss rates on NPAs or classified loans Classified & NPA Ratios NCOs / Loans (Excluding PPP) Classified Loans and NPAs + 90 DPD, as a percentage (Trailing 12-month Average) o
Slide 20: Loan Loss Severity
Loan Loss Severity When problems arise, Zions generally experiences less severe loan losses due to strong collateral Annualized NCOs / Nonaccrual Loans Annualized NCOs / Nonaccrual Loans Five Year Average (2017 – 2021) Fifteen Year Average (2007 – 2021) 74% 65% 64% 63% 60% 59% 58% 57% 55% 55% 55% 54
Slide 21: Examples of Lower Risk Portfolios: Term 1-4 Family Real Estate Secured Loans
Examples of Lower Risk Portfolios: Term 1-4 Family Real Estate Secured Loans (12% of Loans) Minimal risk layering shows strength of the consumer real estate loan portfolio Term 1-4 family mortgages (“1-4 family residential”) account for approximately $6.4 billion of the outstanding balances or 12% o
Slide 22: Examples of Lower Risk Portfolios: Term Commercial Real Estate
Examples of Lower Risk Portfolios: Term Commercial Real Estate (“CRE”) (18% of Total Loans) Low loan-to-values ratios in the Term CRE portfolio demonstrates the ability of the portfolio to withstand stress Term CRE loans account for $9.5 billion of the outstanding balances or 18% of the total loan p
Slide 23: Allowance for Credit Loss (ACL)
Allowance for Credit Loss (“ACL”) Zions’ ACL is strong relative to its recent NCOs Allowance for Credit Loss Allowance for Credit Loss ($ millions) As a Multiple of Annualized Net Charge-Offs ACL (%) ex-PPP Peer 25th to 75th Percentile 25 ZION 1.88 1.91 1.74 20 1.56 1.48 15 1.22 914 917 1.11 1.13 1.
Slide 24: Loss-Absorbing Capital
Loss-Absorbing Capital Common Equity Tier 1 capital plus the allowance for credit loss compares well relative to peers Common Equity Tier 1 Capital Ratio CET1 Capital and Allowance for Credit Losses / Risk-Weighted Assets CET1 % ACL/RWA 1.2% 11.6% 0.7% 1.1% 12.0% 12.0% 1.3% Zions ranked 6th 11.6% Me
Slide 25: Earnings Per Share and Tangible Book Value Per Share Growth
Earnings Per Share and Tangible Book Value Per Share Growth Assisted by lower credit costs and greater returns of capital to shareholders, EPS growth ranks sixth among peers, while the TBV/Share has grown steadily Earnings per Share (modified) Tangible Book Value per Share Substitutes Net Charge-Off
Slide 26: Select Themes
Select Themes Rising rates are expected to lead to a significant increase in revenue. Credit quality remains clean. We are well positioned for rising interest rates We have positioned the bank’s balance sheet for higher interest rates Our loans are underwritten to withstand the effects of high
Slide 27: Financial Outlook (2Q 2023E vs 2Q 2022A)
Financial Outlook (2Q 2023E vs 2Q 2022A), as of July 26, 2022 Outlook Comments Moderately Loan Balances, ex-PPP Moderate growth in the next twelve months, excluding PPP loans Increasing We expect latent and emergent interest rate sensitivity, combined with Net Interest Income See continued loan
Slide 28: Appendix
Appendix Company Abbreviation Key Financial Results Summary 2Q22 Financial Highlights 2021 Greenwich Excellence Awards Small Business Niche Loan growth by Geography and Type Net Interest Margin (GAAP vs. ex-PPP) Interest rate swaps (detailed schedule) Credit: Lack of Layering of Ri
Slide 29: Company Abbreviation (Ticker Symbol) Key
Company Abbreviation (Ticker Symbol) Key ASB: Associated Banc-Corp HBAN: Huntington Bancshares Incorporated BAC: Bank of America JPM: JPMorgan Chase & Co. BOKF: BOK Financial Corporation KEY: KeyCorp C: Citigroup, Inc. MTB: M&T Bank Corporation CFG: Citizens Financial Group, Inc. PNFP: Pinnacle Fina
Slide 30: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) June 30, March 31, December 31, September 30, 2022 2022 2021 2021 Earnings Results: Diluted Earnings Per Share $ 1.29 $ 1.27 $ 1.34 $ 1.45 Net Earnings Applica
Slide 31: Second Quarter 2022 Financial Highlights
Second Quarter 2022 Financial Highlights Vs. 1Q22, a solid increase in non-PPP loans and strong growth in adjusted PPNR Earnings and Profitability: Loans and Deposits: Vs. 1Q22, growth rates not annualized $1.29 diluted earnings/share, compared to $1.27 2.2% increase in period-end loan balan
Slide 32: Zions Finishes 2nd Among All US Banks in Greenwich 2021 Excellence Awards
Zions Finishes 2nd Among All US Banks in Greenwich 2021 Excellence Awards Zions has Consistently Achieved “Excellence” vs Four Major Competitors1 and Peers2 Business Segment 100 100 100 100 Zions Bancorp Middle Market 80 80 80 80 Zions’ Peer Group Avg 81 77 60 65 60 60 60 Average of Four Major 63 62
Slide 33: 2021 Greenwich Excellence Awards for Middle Market and Small Business
2021 Greenwich Excellence Awards for Middle Market and Small Business Zions is one of four U.S. banks to average 15 or more wins since the inception of the awards in 2009 2021 Best Brand Awards (Zions wins 6 out of 6) • Best Brand – Bank You Can Trust – Middle Market Segment • Best Brand – Ease of D
Slide 34: Zions is a Leader in Small Business Lending
Zions is a Leader in Small Business Lending Zions punches above its weight Commercial Loans Commercial Loans ($ billion) sized $100k - $1M sized $100k - $1M $20,000 25% as a percent of total commercial loans $18,000 $16,000 20% $14,000 $12,000 15% $10,000 $8,000 10% $6,000 $4,000 5% $2,000 $0 0% JPM
Slide 35: Loan Growth - by Bank Brand and Loan Type
Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (2Q22 vs. 2Q21) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) 331 511 820 113 148 123 77 - 2,123 SBA PPP (814) (778) (1,114) (370) (343) (336) (172) - (3,927) Owner occupied 215 2
Slide 36: Net Interest Income and Net Interest Margin
Net Interest Income (“NII”) and Net Interest Margin (“NIM”) Vs. 1Q22, net interest income increase driven by rate increases, loan growth Net Interest Income Net Interest Margin Net Interest Margin Zions’ active efforts to invest excess liquidity in securities, combined ($ millions) Net Interest Marg
Slide 37: Simulated Repricing Expectations: Earning Assets and Loans
Simulated Repricing Expectations: Earning Assets and Loans Earning Assets Rate Reset and Cash Flow Profile Loans: Rate Reset and Cash Flow Profile 51% 39% Earning Assets After Hedging Percent of Loans Loans After Hedging 33% 40% Percent of Earning Assets 19% 19% 13% 12% 13% 13% 14% 11% 13% 13% 10% 1
Slide 38: Interest Rate Swaps
Interest Rate Swaps Although the outlook is for rising rates, we continue to create some protection for falling rates Interest rate sensitivity managed in part with interest rate hedges: Average total swaps Average fixed rate in effect during quarter (right scale) Weighted- Average average 7.0 outst
Slide 39: Credit Quality
Credit Quality Net charge-offs remain very low, with last 12 months net charge-offs at just 0.03% of average loans All Ratios Exclude PPP Loans Credit Quality Ratios 3.5% 3.0% Key credit metrics: 2.5% Classified / Loans 1.9%: Classified loans/loans NPAs + 90 / Loans + OREO 2.0% Classified balanc
Slide 40: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions, except per share amounts 2Q22 1Q22 4Q21 3Q21 2Q21 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $464 $464 $449 $429 $428 LESS adjustments: Severance costs 1 1 Other real estate expense 1 Amortization of core deposit and other intangibles
Slide 41: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) In millions, except per share amounts 2Q22 1Q22 4Q21 3Q21 2Q21 Net Earnings Applicable to Common Shareholders (NEAC) Net earnings applicable to common $195 $195 $207 $234 $345 Diluted Shares (average) 151 152 154 160 163 (k) Diluted EPS 1.29 1.27 1.34 1.45
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