Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — SunTrust Robinson Humphrey Financial Services Unconference (May 2010)
39 slides from Zions Bancorporation N.a's conference presentation, May 25, 2010
Slide 1: SunTrust Robinson Humphrey Financial Services Unconference
25 May 2010 SunTrust Robinson Humphrey Financial Services Unconference
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements that relate to the projected performance of Zions Bancorporation and elements of or affecting such performance, including statements with respect to the beliefs, plans, objectives, goals, guidelines, expectations, anticipations and est
Slide 3: Agenda
Capital Overview of Zions Key Performance Drivers – Revenue – Credit Quality – Term CRE – Securities Portfolio Outlook Summary Agenda
Slide 4: Zions' Recent Capital Announcement
Zions’ Recent Capital Announcement • On May 19, Zions announced a series of capital actions expected to create $600 million of Tier 1 capital – Warrants: • As announced: $150 million + $10 million greenshoe • As completed: $175 million (additional $10 million greenshoe option expires June 18, 2010)
Slide 5: Pro Forma Capital Ratios
1Q09 1Q10 Pro Forma For Sub Debt Conversion Pro Forma Equity Distribution, Warrants, $150mm other Tier 1 Tangible Common Equity (TCE) 5.26% 6.30% 6.23% 7.05% Tier 1 Common 5.73% 7.14% 7.02% 7.94% Tier 1 Risk Based 9.43% 11.19% 11.35% 12.58% Total Risk Based 13.39% 13.93% 13.97% 15.20% Pro Forma Capi
Slide 6: Tier 1 Capital Compared With Peers
Source: SNL TARP is included in Tier 1 Capital for the following companies: FHN, ASBC, FITB, KEY, ZION, STI, HBAN, RF, EWBC, MI, SNV, MTB. Non-TARP: CYN, USB, WFC, BBT, CMA, BOKF; Converted TARP to TruP: BPOP. *All data as of 1Q10 except Zions 4Q09 & 1Q10 Pro Forma, which includes $450 million combi
Slide 7: Agenda
Capital Overview of Zions Key Performance Drivers – Revenue – Credit Quality – Term CRE – Securities Portfolio Outlook Summary Agenda
Slide 8: Bank Headquarters, Offices, Assets, Deposits
Bank Headquarters Offices __Assets _Deposits Zions Bank __Salt Lake City __129 $19.28 $14.0B CBaT San Diego 706___$11.38 35.78 “Amegy Houston EES 39.18 NBA Phoenix 76 $4.6B $3.7B NSB Tas Vegas 58 $4.48 35.58 Vectra Denver 38 $2.5B $2.0B ‘Commerce WA Seattle 7 $0.88 3068 Commerce-OR Portland 1 $0.07B
Slide 9: Strong Focus on Business Banking - Loan Mix, Profit Mix
Strong Focus on Business Banking - Loan Mix, Profit Mix C&I 47% Consumer 21% CRE 32% *Includes FDIC Supported Assets Loan Portfolio 1Q10 * Commercial Loans: 79% * Retail & Other Loans: 21%
Slide 10: What Others Say About Us
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 2009 Greenwich Excellence
Slide 11: Zions' Strengths & Recent Improvements
Zions’ Strengths & Recent Improvements • NIM: 4.03% in 1Q10, ranked #3 of 19 regional banks/peers* • 3 rd among peers* for non-interest bearing deposits as a percent of earning assets • Strong allowance for credit loss: 4.5% of net loans (excluding FDIC supported loans) • Low original LTV ratios on
Slide 12: Zions' Challenges
Zions’ Challenges • Rising NPAs, to 6.4% of loans in first quarter from 6.0% in 4Q09; 5.4% in 3Q09 (1) – Total delinquent + NPA increased by 2.8% in 1Q10 compared to the prior quarter • Net charge-off rate 2.4% in 1Q10; full year 2009 net charge-off rate of 2.9% (1) – Gross charge-offs down 36% from
Slide 13: Agenda
Capital Overview of Zions Key Performance Drivers – Revenue – Credit Quality – Term CRE – Securities Portfolio Outlook Summary Agenda
Slide 14: Net Interest Margin
Net Interest Margin Note: Peer group includes U.S. publicly traded regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB (updated annually as of year end). Source: SNL (As Reported NIM) Strong NIM Driven by Strong Demand Deposits
Slide 15: 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 16: Simulation of Net Interest Income
Simulation of Net Interest Income Change in Nil and Total Rate Sensitive Income under various rate curve scenarios 16% 14% @ Net Interest Income 12% D Total Rate Sensitive Inc.|] 10% 8% 6% 4% 2% 0% a 2% 4% 6% -200 bps -100 bps +100 bps +200 bps +300 bps Implied P-0.25 Flat Steep 12-month simulated i
Slide 17: Agenda
Capital Overview of Zions Key Performance Drivers – Revenue – Credit Quality – Term CRE – Securities Portfolio Outlook Summary Agenda
Slide 18: Credit Quality Trends
Credit Quality Trends (Regional Bank Peers) *Annualized Zions excludes FDIC supported assets Note: Peer group includes U.S. publicly traded regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB (updated annually as of year end). Source:
Slide 19: Net Charge Offs - By Loan Type
Note: Peer group includes U.S. publicly traded regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL Net Charge Offs - By Loan Type (Regional Bank Peers) Percentage of Zions Total Loans Shaded Portion Represents Gaming Cred
Slide 20: Agenda
Capital Overview of Zions Key Performance Drivers – Revenue – Credit Quality – Term CRE – Securities Portfolio Outlook Summary Agenda
Slide 21: Change in CRE Loan Outstandings (4Q07 to 1Q10)
Change in CRE Loan Outstandings in $billions (4Q07 to 1Q10) • A decline in construction has been partially offset by Term CRE loan growth • Commercial construction loans must qualify for “pass grade” underwriting in order to move from Construction to Term CRE
Slide 22: Term CRE Maturity Stratification
Term CRE Maturity Stratification
Slide 23: Term CRE - LTV Stratification At Origination
Percentage of Loans within each bucket that are Non-Accrual 1.9% 3.7% 1.6% 8.1% 29.9% 15.5% 12.7% Term CRE - LTV Stratification At Origination* *Or most recent appraisal; reappraisals are by policy conducted when a loan is downgraded to special mention, and periodically thereafter as warranted by ma
Slide 24: Macroeconomic Data - MIT's Transaction Based Index
Macroeconomic Data - MIT’s Transaction Based Index • Property prices have appreciated at a CAGR of 1.6% during the past 10 years • Prices are now back to 2Q04 levels
Slide 25: Term CRE - TBI-Adjusted LTV Stratification
Percentage of Loans within each bucket that are Non-Accrual 2.3% 2.7% 3.9% 3.7% 8.8% 8.6% 4.0% Term CRE - TBI-Adjusted LTV Stratification (3-31-10) The MIT Transaction Based Index is a national index that has been applied to Zions’ mostly regional CRE Portfolio
Slide 26: Day of Reckoning - or Not?
Day of Reckoning - or Not? • Market Perception (top left chart) : Eighty percent of the industry’s CRE loans maturing in 2014 are projected to be underwater (LTV >100%). • Zions Specific Data (bottom right chart) : Based on loans adjusted for price declines as reflected in the 1Q10 MIT Transaction B
Slide 27: Nonaccrual Loan Migration
Nonaccrual Loan Migration - Nonaccrual loan inflows improved in early 2010 - Favorable resolutions* in stable range - Unfavorable resolutions** continue to improve *Favorable resolutions include - change to accrual status, paid off, paid down **Unfavorable resolutions include - charged off/down, mov
Slide 28: Agenda
Capital Overview of Zions Key Performance Drivers – Revenue – Credit Quality – Term CRE – Securities Portfolio Outlook Summary Agenda
Slide 29: CDO Portfolio Summary
CDO Portfolio Summary • Credit-related OTTI losses $31.3 million in 1Q10 – Approximately 85% of the credit-related net impairment losses came from original A and BBB rated, predominantly bank CDOs • Noncredit-related losses on securities of $17.3 million in 1Q10 recognized in OCI *This table include
Slide 30: CDO Stress Testing - OTTI
CDO Stress Testing - OTTI “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% default probability curve
Slide 31: CDO Stress Testing - Capital
Model Implied Bank Failures (1 year) Scenario @ 100% Total within Zions’ CDOs Total in Banking Universe Zions % of Universe Actual Bank Failures in 2009 57 132* 43% Actual Bank Failures in 1Q 2010 13 41 32% Future 1 Year Failures Implied in 4Q09 Pricing 95 221 43% Moderate Stress 117 272 43% Adverse
Slide 32: History of Bank Deferrals & Defaults in Zions' CDOs
History of Bank Deferrals & Defaults in Zions’ CDOs As of 4-23-10
Slide 33: Outlook Summary
▼ Loans ▲ Low-Cost Deposit Growth ▼ Credit Costs ◄► Core Net Interest Margin ◄► Core Non-interest Expenses ◄► OTTI ▲ Capital Ratios and Quality of Capital Outlook Summary
Slide 34: Zions Bancorporation
ZIONS BANCORPORATION
Slide 35: Zions Bancorporation
ZIONS BANCORPORATION
Slide 36: Risk-adjusted Net Interest Margin (MRQ)
Risk-adjusted Net Interest Margin* (MRQ) *(Net Interest Income - Net Charge-offs)/Average Earning Assets (annualized) Note: Peer group includes U.S. publicly traded regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB (updated annually
Slide 37: ZION vs. SCAP More Adverse Stress Loss Projections
ZION vs. SCAP More Adverse Stress Loss Projections ZION Net Charge-offs Thru 1Q10 vs. SCAP More Adverse (S$ millions) First Lien Mortgages Closed-end Junior Liens HELOCs C&l Loans Construction Muttifamily Nonfarm, Non-resi CRE Other CRE Credit Cards Other Consumer Other Loans . T T T T T T $0 $200 $
Slide 38: 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: $570 million (Pay Floating, Receive Fixed) • Continual reduction of interest rate swaps
Slide 39: Loans with Floors (as of 12/31/09)
Loans with Floors (as of 12/31/09)
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