Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Keefe, Bruyette & Woods 2009 Regional Bank Conference
37 slides from Zions Bancorporation N.a's conference presentation, Mar 4, 2009
Slide 1: Keefe, Bruyette & Woods 2009 Regional Bank Conference
Keefe, Bruyette & Woods 2009 Regional Bank Conference 4 March 2009 ■ Boston, MA
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
Agenda Summary of Q4 and Full Year 2008 Key Drivers – Securities Portfolio – Credit Quality – Net Interest Margin – Lockhart funding – Capital Outlook Summary
Slide 4: Q4 2008 Earnings Highlights
$Mil $ Per Share Net Income To Common ($498) ($4.36) Goodwill Impairment ($354) ($2.97) Securities Impairments ($204) ($1.07) Provisions For Credit Losses $285 Net Charge-offs $180 Q4 2008 Earnings Highlights
Slide 5: Full Year 2008 Earnings Highlights
$Mil $ Per Share Net Income To Common ($291) ($2.66) Goodwill Impairment ($354) ($2.97) Securities Impairments ($317) ($1.73) Provisions For Credit Losses $648 Net Charge-offs $394 Full Year 2008 Earnings Highlights
Slide 6: Agenda
Agenda Summary of 4Q and 2008 Key Drivers – Securities Portfolio – Credit Quality – Net Interest Margin – Lockhart funding – Capital Outlook Summary
Slide 7: Bank & Insurance Trust Preferred CDOs
Bank & Insurance Trust Preferred CDOs
Slide 8: Other Than Temporarily Impaired Securities
• $204 million pre-tax Other Than Temporarily Impaired (OTTI) charges on 29 CDO tranches in Q408 – 20 new bank & insurance trust preferred tranches – 9 other tranches that had been previously impaired • Key valuation Drivers – 3 rd -party probabilities of default (PDs); cumulative failures assumed:
Slide 9: Other Than Temporarily Impaired Securities: Stress Tests
• Stress Tests Approx. additional OTTI Scenario (cumulative) – All PDs increase by 20% (PD x 1.2): $150mm – Default all LACE* E & D rated banks: $200mm – Default all LACE* E, D, & 1/3 of C rated banks: $450mm • Additional OTTI possible in the event of an increase in forecasted default rates • Finall
Slide 10: Agenda
Agenda Summary of 4Q and 2008 Key Drivers – Securities Portfolio – Credit Quality – Net Interest Margin – Lockhart funding – Capital Outlook Summary
Slide 11: Performance in this Cycle
Performance in this Cycle • Avoided Major Industry Issues – No subprime loans – Almost no MBS exposure – No high-LTV HELOCS – No FNMA/FHLMC Preferred Shares • But… – Residential RE and consumer lot loans in the SW – Missed correlation between CDO risk and community bank real estate exposure – Not im
Slide 12: Net Charge-offs By Loan Category and By Bank
Net Charge-offs By Loan Category Other Consumer 1 11% Commercial 18% Commercial Real Estate 70% Nevada State Bank 15% | Net Charge-offs By Bank Amegy Bank Of Zions First National Tae Bank a California Bank & 15% ‘ Trust 10% Vectra Bank —! Colorada 2% lational Bank of Arizona 52%
Slide 13: Non Performing Assets as a % of Total Assets
Note: Peer group defined as bank holding companies with assets >= $10 billion. Peer data source: SNL. STT, COF, IBOC, and DRL were excluded due to lack of NPA data in SNL Financial Non Performing Assets as a % of Total Assets
Slide 14: Net Charge-offs Peer Comparison
Note: Peer group defined as bank holding companies with assets >= $10 billion. Peer Data: SNL. As of 2/25/2009 4Q2008 data for IBOC and DRL not in SNL.
Slide 15: Credit Performance Summary
Credit Performance Summary • Relatively – Larger, secured commercial portfolio – Smaller, high performing consumer portfolio • Results in – Higher Non Performing Assets, but – Lower net charge-offs
Slide 16: Reserves / Annualized Net Charge-offs
Peers 1.3 Zions 1.5 Note: Peer group defined as bank holding companies with assets >= $10 billion. Peer Data: SNL. As of 2/25/2009 4Q2008 data for IBOC and DRL not in SNL. Reserves / Annualized Net Charge-offs (4 Quarter Moving Average)
Slide 17: Loan Portfolio Diversification
Loan Portfolio Diversification Loans by Geography & Purpose 12/31/2008
Slide 18: Total Outstanding: $2.5 billion (12/31/08)
Total Outstanding: $2.5 billion (12/31/08)
Slide 19: Total Outstanding: $2.0 billion (12/31/08)
Total Outstanding: $2.0 billion (12/31/08) *Weighted by balance Average HECL FICO: 742*
Slide 20: Commercial & Industrial
Commercial & Industrial 12/31/2008 Consumer 1-4 Farrily 9% Other Consumer 8% Other 1% CRE Term 15% AMEGY 36.3% CB&T 16.9%. Si C&l 27% NBA 3.9% NSB 4.4% Comm Construction 11% VBC 5.4% \\cow 2.8% ZFNB 30.0% CBO. 0.3% Residential Construction 7% Owner Occ 21% ZIONS BANCORPORATION
Slide 21: Total Outstanding: $20.6 billion (12/31/08)
Total Outstanding: $20.6 billion (12/31/08)
Slide 22: Commercial Real Estate
Commercial Real Estate 12/31/2008
Slide 23: Commercial Real Estate Loans Total 30-Day+ Delinquency %
16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Commercial Real Estate Loans Total 30-Day+ Delinquency % Wwe ee TR roor.a6 | ix Se ee se ez =e ze >2°2 02 2 2 = —S=COMLCONSTR —=<—COMLTERM —_ RES CONSTR CRE Total
Slide 24: Diversified CRE Portfolio Loans by Product Type and Location
Diversified CRE Portfolio Loans by Product Type and Location - 12/31/08
Slide 25: CRE Loan-To-Value Ratios by Product and Location
Average LTV: 57.4% (as of 12/31/2008) CRE Loan-To-Value Ratios by Product and Location-12/31/2008
Slide 26: Loan-To-Value Comparison For Residential A&D Loans
Loan-To-Value Comparison For Residential A&D Loans reappraised between Dec ‘07 and Jan ‘09
Slide 27: Credit Quality Outlook
Credit Quality Outlook • Weakness in residential construction activity and land values in the Southwest expected to persist through 2009 • Credit problems spreading to other geographies and loan categories as economy weakens • Continued elevated levels of NPAs, provisions and net losses
Slide 28: Agenda
Agenda Summary of 4Q and 2008 Key Drivers – Securities Portfolio – Credit Quality – Net Interest Margin – Lockhart funding – Capital Outlook Summary
Slide 29: Risk-adjusted Net Interest Margin
Historical *(Net Interest Income - Net Charge-offs)/Average Earning Assets Peers: Top 50 banks excluding BK, STI, STT, NTRS Risk-adjusted Net Interest Margin*
Slide 30: Lockhart Funding
As of 12-31-08 Total assets in Lockhart $748MM Lockhart issued CP held by Zions $412MM Net Lockhart assets not held on balance sheet $336MM *Includes the estimated impact of ($71)mm after-tax loss on security marks under a full consolidation scenario Lockhart Funding • Participating in Federal Reser
Slide 31: Capital Ratios
4Q07 4Q08 Tangible Common Equity 5.70% 5.89% Tangible Equity 6.17% 8.86% Tier 1 Risk Based 7.57% 10.22% Total Risk Based 11.68% 14.32% Capital Ratios
Slide 32: Stress Testing: More Art than Science?
Sell-Side Analyst Investment Banking Inv Bank "A" 3.5% 4.9% Inv Bank "B" NA 3.7% Inv Bank “C" 3.1% NA Inv Bank “D" 3.0% NA Inv Bank “E" 1.9% NA Note: Min TCE Ratios have in some cases been altered by 0.1% to prevent tracing to a specific bank Stress Testing: More Art than Science? Zions Minimum TCE
Slide 33: Stress Testing: Some Common Differences
Stress Testing: More Art than Science? Some Common Differences Balance sheet growth (in light of weak economy, charge-offs, and OTTI)? Each $1 billion (about 1.9%) = + / - 11 bp TCE Ratio 5% growth versus 0% = 55 bp over 2 years Double count existing OCI mark on CDO's? 64 bp TCE Ratio Adjust for Zio
Slide 34: A Stylized Stress Test Framework
A Stylized Stress Test Framework
Slide 35: Agenda
Agenda Summary of 4Q and 2008 Key Drivers – Securities Portfolio – Credit Quality – Net Interest Margin – Lockhart funding – Capital Outlook Summary
Slide 36: Outlook Summary
Outlook Summary • Continued elevated levels of credit losses and loss provisions in a weakening economy • Additional OTTI and goodwill impairment possible • Continued strong net interest margin • Reduced dividend will preserve strong capital positions - generally the highest they’ve been in over a d
Slide 37: Keefe, Bruyette & Woods 2009 Regional Bank Conference
Keefe, Bruyette & Woods 2009 Regional Bank Conference 4 March, 2009 Boston, MA
Zions Bancorporation — Keefe, Bruyette & Woods 2009 Regional Bank Conference on 6ix