Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Barclays Global Financial Services Conference 2014
40 slides from Zions Bancorporation N.a's conference presentation, Sep 9, 2014
Slide 1: Barclays Global Financial Services Conference
September 9, 2014 Barclays Global Financial Services Conference
Slide 2: Forward-Looking Statements & Peer Group Abbreviations
Forward-Looking Statements & Peer Group Abbreviations This presentation contains statements that relate to the projected or modeled performance or condition of Zions Bancorporation and elements of or affecting such performance or condition, including statements with respect to forecasts, opportuniti
Slide 3: A Collection of Great Banks
Bank Headquarters Assets % of Total Zions Bank Salt Lake City $19B 34% CB&T San Diego $11B 20% Amegy Houston $13B 23% NBA Phoenix $5B 9% NSB Las Vegas $4B 7% Vectra Denver $3B 5% Commerce Bank - WA Seattle < $1B 1% Commerce Bank - OR Portland < $1B 1% Zions Bancorporation Salt Lake City $55B 100%
Slide 4: Awards: Nationally Recognized for Excellence
Awards: Nationally Recognized for Excellence • Twelve (12) Greenwich Excellence Awards in Small Business and Middle Market Banking (2013) • Including: Excellence: Overall Satisfaction Excellence: Likelihood to Recommend Excellence: Treasury Management Excellence: Financial Stability Only 11
Slide 5: Stronger Economic Growth than Overall U.S.
Job Creation: Jobs grew in Zions' footprint by 13.5% during the last 10 years, a full 8 percentage points better than U.S. nonfarm payroll growth GDP Growth: GDP growth in our footprint exceeded nominal U.S. GDP by an average of 1.3 percentage points per year (compounded) over the last ten years
Slide 6: Agenda
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 6
Slide 7: Capital Levels Compare Favorably with Peers
Capital Levels Compare Favorably with Peers Source: SNL Financial as of 2Q14 ZION, PF is pro forma for the capital levels after the capital raise that took place in July, 2014 7 8% 9% 10% 11% 12% 13% 14% 15% ZI O N , P F C ZI O N WF C P N C U B B A C R F M TB B B T K EY H BA N U SB JP M FI TB ST I C
Slide 8: Reserve for Loan Losses is Strong Relative to Peers
Reserve for Loan Losses is Strong Relative to Peers Source: SNL Financial as of 2Q14 Allowance for Credit Losses includes the Allowance for Loan & Lease Losses and the Allowance for Unfunded Commitments 8 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% C JP M ZIO N P N C US B FIT B B A C R F WF C ST I H B A N M
Slide 9: Agenda
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 9
Slide 10: Zions' Loan Loss Ratio is Among the Best in the Industry
Zions’ Loan Loss Ratio is Among the Best in the Industry 10 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% U B CM A ST I B B T KE Y ZIO N US B H B A N FIT B JP M M TB P N C R F WF C B A C C Nonperforming Lending Related Assets (Includes 90+ Days Past Due) As a percentage of loans Source: SNL Financial 2Q14 0.0% 0.2%
Slide 11: Net Charge Off Rate Compares Favorably with Peers Through the Cycle
Net Charge Off Rate Compares Favorably with Peers Through the Cycle Net Charge-offs: Through the Cycle, With and Without Construction Loans Source: SNL Financial. Net charge-off ratios annualized. 11 U B M TB CM A P N C ZIO N US B B B T ST I W FC KE Y H B A N R F FIT B JP M B A C C Annualized Averag
Slide 12: Agenda
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 12
Slide 13: Profitability Improvement in 2013 & 2014 Driven by Capital Actions
Profitability Improvement in 2013 & 2014 driven primarily by capital actions 13 (In millions) 1. ROAA and reserve release adjusted ROAA based on net income available to common. Source: SNL Financial and Company documents. * Net Income normalized for one-time debt extinguishment expense in 2Q13, pref
Slide 14: Net Interest Margin Stronger Than Most Peers
Source: SNL Financial as of 2Q14 Risk adjusted NIM calculated as net interest income less net charge-offs divided by average earning assets. Net interest margin/income, although still under pressure, is considerably stronger than most peers 14 3.3% B B T M TB ZIO N H B A N US B R F FIT B U B WF C P
Slide 15: Net Interest Income Drivers
Net Interest Income Drivers Pressures: • Reduction of FDIC Income • Repricing of Loan Portfolio Benefits: • Loan Growth • Debt Redemptions • Asset Sensitivity (positive leverage to rising interest rates) 15
Slide 16: FDIC Supported Loan Income is Declining
FDIC Supported Loan Income is Declining 16 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 2011A 2012A 2013A 2014E 2015E Net Interest Margin Contribution from FDIC Supported Loan Income 2014 and 2015 amounts are estimated, and could be revised materially higher or lower, depending upon borrower repayment
Slide 17: Loan Yields Remain Somewhat Lower Than the Overall Portfolio Yield
Loan Yields Remain Somewhat Lower Than the Overall Portfolio Yield 17 Source: Company documents as of 2Q14. Production defined as new loans and marginal draws on existing lines of credit; portfolio yield includes deferred fee income recognized over the expected life of the loan, while coupon of prod
Slide 18: Loan Growth Remains a Positive Driver
Loan Growth Remains a Positive Driver 18 Source: Company documents as of 2Q14. “FDIC” refers to FDIC-supported loans; “NRE” refers to National Real Estate. Both of these portfolios are currently in run-off mode 90 100 110 120 130 2Q 1 2 3Q 1 2 4Q 1 2 1Q 1 3 2Q 1 3 3Q 1 3 4Q 1 3 1Q 1 4 2Q 1 4 Strong
Slide 19: Significant High Cost Debt Reductions Should be Achieved in 2014-2015
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% $0 $50 $100 $150 $200 $250 $300 2014Q2** 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Senior Debt Sub Debt ROTCE (Right) Significant High Cost Debt Reductions Should be Achieved in 2014 -2015 Effective GAAP Interest Cost In High Cost Debt Maturity Profile; Return on Tangib
Slide 20: Balance Sheet Remains Significantly Asset Sensitive
-5% 0% 5% 10% 15% 20% 25% 30% - 100 bps 0 bps +100 bps +200 bps +300 bps C h an ge in N e t In terest In co m e Net Interest Income Sensitivity NII Slow NII Fast Balance Sheet Remains Significantly Asset Sensitive; Zions is Positioned for Recovery and Rising Rates 20 Zions estimates net interest inc
Slide 21: Noninterest Expense Drivers
Noninterest Expense Drivers Additions: Systems Upgrade (Core processing, accounting system overhaul, loan data entry system, etc. ) Salary Expenses Seasonal (CCAR) Reductions: Credit Related Indemnification Asset Expense 21
Slide 22: Agenda
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 22
Slide 23: Larger Loan Growth Outpacing Small Loan Growth
Larger Loan Growth Outpacing Small Loan Growth 23 -20% -10% 0% 10% 20% 30% 40% 50% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Loan Growth by Size Small Mid & Large $(600) $(400) $(200) $- $200 $400 $600 $800 $1,000 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Gross Change from Previous Quarte
Slide 24: Smaller Loan Coupons Are In-Line with the Overall Portfolio Yield
4.15% 3.26% 3.77% 0% 1% 2% 3% 4% 5% 6% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Smaller Loans vs. Larger Loans Small Production Coupon Mid & Large Production Coupon Total Production Coupon Smaller Loan Coupons Are In-Line with the Overall Portfolio Yield A shift to smaller business loans wo
Slide 25: Loan Portfolio Driven by Healthy C&I and Consumer Growth
Loan Portfolio Driven by Healthy C&I and Consumer Growth 25 Source: Company documents as of 2Q14. -10% -5% 0% 5% 10% 15% 20% 25% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Loan Growth by Type C&I O/O C&D Term CRE Consumer
Slide 26: Loans Growing Across the Subsidiaries
Loans Growing Across the Subsidiaries 26 • Increased loan production the past two years is attributable across the affiliates. • Amegy has experienced the most loan growth among the affiliates partially due to the strong growth in its energy portfolio. • ZFNB loan growth remains artificially low the
Slide 27: Agenda
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 27
Slide 28: Stronger Fee Income vs. Community Banks in Footprint
Zions has proportionately stronger fee income vs. community banks in its footprint ($5-$15B) Source: SNL Financial for the full year 2013 0% 5% 10% 15% 20% 25% 30% 35% 40% IB O C FF IN U M P Q ZI O N C O LB N BH C B B C N C V B F PA C W C A TY TC B I WA L WA FD Fee Income Ratio (Noninterest Income a
Slide 29: Lower Fee Income Relative to CCAR Peers
Zions has proportionately lower fee income relative to CCAR peers Source: SNL Financial for the full year 2013 Fee Income defined as income from fiduciary activities, service charges on deposit accounts in U.S. offices, trading gains from foreign exchange transactions, other foreign transaction gain
Slide 30: Historical Impediments and Growth Areas
Historical “Impediments” and “Growth Areas” Reported values: $190MM in 2008 and $337MM in 2013 adjusted for fixed income securities, nonhedge derivative income (loss), net impairment on OTTI, Treasury Management fees compensated by balances. $508 $527 $0 $100 $200 $300 $400 $500 $600 2008 2013 Total
Slide 31: What to Expect from Fee Income Initiative
What to Expect from Fee Income Initiative • Growth focused within Zions’ footprint with relationship customers • Greater focus and tracking • Enhanced utilization of corporate infrastructure, product development with local pricing • Above average growth rates, assisted by generally low current penet
Slide 32: Agenda
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 32
Slide 33: One-Year Outlook Summary Relative to 2Q14 Results
One-Year Outlook Summary Relative to 2Q14 Results Topic Outlook Comment Loan Balances Slightly to Moderately Increasing • Prepayments remain volatile, making net loan growth difficult to forecast • 3Q14 QTD (period-end) loans down moderately, including a managed decline in construction and land deve
Slide 34: Appendix
• Capital • Credit Quality • Profitability • Loan Growth and Pricing • Fee Income Initiative • Updated Outlook • Appendix 34
Slide 35: CDO Exposure Has Been Significantly Reduced
CDO Exposure Has Been Significantly Reduced Par value of Securities at period shown 35 In Billions Source: Company earnings releases $1.3 $0.7 $1.1 $0.5 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 1Q13 2Q14 Performing Nonperforming 50% reduction of total portfolio
Slide 36: CDO Portfolio Composition & Values as of 1Q13
CDO Portfolio Composition & Values as of 1Q13 36 March 31, 2013 (Amounts in Millions) # of Tranches Par Amount Amortized Cost Carrying Value Net Unrealized Losses Recognized in AOCI Performing CDOs Predominantly Bank CDOs 27 $774 $694 $560 -$134 Insurance CDOs 22 447 443 331 -112 Other CDOs 6 51 40
Slide 37: CDO Portfolio Composition & Values as of 2Q14
CDO Portfolio Composition & Values as of 2Q14 37 June, 2014 (Amounts in Millions) # of Tranches Par Amount Amortized Cost Carrying Value Net Unrealized Losses Recognized in AOCI Performing CDOs Predominantly Bank CDOs 23 $639 $580 $478 -$102 Insurance CDOs 2 42 40 41 1 Other CDOs -- -- -- -- -- Tota
Slide 38: Net Loan Loss Rates Projected by Federal Reserve Not Materially Worse than Peers
Zions’ Total Net Loan Loss Rates Projected by Federal Reserve Were Not Materially Worse than Peers 38 Source: Dodd-Frank Act Stress Test 2014: Supervisory Stress Test Methodology and Results 0% 2% 4% 6% 8% 10% 12% 14% B B T ST I C M A H B A N U B KE Y P N C M TB FI TB B A C ZI O N W FC R F U SB JP M
Slide 39: Federal Reserve Projected Stress PPNR for Zions Lower than Peers
0% 20% 40% 60% 80% 100% 120% STI RF USB MTB KEY BBT JPM BAC PNC FITB HBAN WFC CMA UB C ZION, As Reported ZION, Adjusted Federal Reserve Projected Stress PPNR for Zions is Materially Lower than for Peers 39 ZION, Adjusted reflects elimination of non-recurring debt extinguishment costs and securities
Slide 40: One of the Smallest Securities Portfolios vs. Peers
Zions has one of the Smallest Securities (and MBS) Portfolios vs. its Peers — Avoiding Negative Convexity Risk 40 Source: SNL Financial as of 2Q14 MBS securities include resi mortgage pass-through investments that are not guaranteed by the U.S. Government Estimated option-adjusted duration of Zion
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