Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Q4 2015 Earnings Presentation
26 slides from Zions Bancorporation N.a's earnings presentation, Jan 25, 2016
Slide 1: Fourth Quarter 2015 Financial Review
January 25, 2016 Fourth Quarter 2015 Financial Review
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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, opportunities, models, illustrations,
Slide 3: Chairman's Message
Chairman’s Message 3 What is working within expectations: Achieving positive operating leverage: solid progress in 4Q15, expect continuation into 2016 Tracking on efficiency initiative • Noninterest expense was less than $1.6 billion annualized in 2H15 • Efficiency ratio was less than 70% for 2H
Slide 4: Total Loan and Deposit Growth
35% 40% 45% 50% $42,000 $44,000 $46,000 $48,000 $50,000 $52,000 4Q14 1Q15 2Q15 3Q15 4Q15 Total Deposits Total Deposits (left) Non-Interest Bearing Deposits as a % of Total (right) Total Loan and Deposit Growth 4 In Millions In Millions • Relatively modest loan growth due primarily to attrition in tw
Slide 5: Revenue: Net Interest Income
Revenue: Net Interest Income Moving meaningfully higher after a period of stability 5 $400 $420 $440 $460 $480 4Q14 1Q15 2Q15 3Q15 4Q15 Net Interest Income In Millions • Net interest income increased more than 5% from the prior quarter • Approximately $8 million of the 4Q15 net interest income was f
Slide 6: Revenue: Fee Income
Revenue: Fee Income Increased focus is paying dividends 6 $0 $50 $100 $150 $200 Treasury Management Bankcard Capital Markets Mortgage Loan Fees NSF Other Managed Fee Income Components 2014 2015 In Millions $400 $425 $450 $475 $500 2014 2015 Managed Fee Income 4% Growth 13% Growth 4% Growth 28% Growt
Slide 7: Efficiency Initiative
Efficiency Initiative Expense progress is tracking well 7 Noninterest Expense: • Commitment to hold expenses below $1.6 billion in 2015 (and 2016). • Status: On track Cost savings: • Commitment to achieve $120 million of gross savings by FY17 • Status: On track $0 $20 $40 $60 $80 $100 $120 $140 2017
Slide 8: Efficiency Ratio
Efficiency Ratio: Sharp focus leading to substantial improvement 8 • The efficiency ratio improved to 69.8% (4Q15), from 74.1% a year ago. • Achieved the commitment of an efficiency ratio of less than or equal to 70% in 2H15. • Reiterating the commitment to drive the efficiency ratio to: • Less than
Slide 9: Major Investments in the Business
Major Investments in the Business Substantial planning and effort has resulted in an on-track outcome 9 Chart of Accounts / Financial Reporting Simplification Credit Approval Front-End Work Flow System Enterprise Loan Operations Core System (FutureCore): Loan and Deposit Processing Systems
Slide 10: Financial Results
Financial Results 10 Three Months Ended (Dollar amounts in millions, except per share data) December 31, 2015 September 30, 2015 December 31, 2014 Earnings Results: Diluted Earnings Per Share 0.43 0.41 0.33 Net Interest Income 449 425 430 Provision for Loan Losses 23 18 12 Noninterest Income 124 131
Slide 11: Securities Portfolio Growth
$0 $2,000 $4,000 $6,000 $8,000 $10,000 4Q14 1Q15 2Q15 3Q15 4Q15 Total Securities Other Securities Municipal Securities Small Business Administration Loan-Backed Securities Agency Securities Agency Guaranteed MBS Securities Securities Portfolio Growth Short-to-medium duration portfolio; limited durat
Slide 12: Loan Growth by Type
Loan Growth by Type: Solid loan growth in C&I, Term CRE and Residential Mortgage (1-4 Family), partially offset by headwinds in National Real Estate and Energy 12 Source: Company documents;); NRE = National Real Estate Group, a division of Zions Bank that focuses on small business loans with low loa
Slide 13: Net Interest Margin: Net Interest Income Drivers
3.25% 3.22% 3.18% 3.11% 3.23% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 4Q14 1Q15 2Q15 3Q15 4Q15 Net Interest Margin (NIM) Net Interest Income Drivers Loan yield has been relatively stable; margin higher in part due to mix shift 13 • The reported 4Q15 NIM was 3.23% • If adjusted for two income recoveries in 4Q1
Slide 14: Loan Pricing
Loan Pricing Loan pricing has been generally stable during the past year 14 3.64% 4.24% 3.87% 2.5% 3.0% 3.5% 4.0% 4.5% 4Q14 1Q15 2Q15 3Q15 4Q15 Portfolio Yield vs. Production Yield • Linked-quarter loan yield higher entirely due to recoveries of interest income • Yield essentially flat when adjustin
Slide 15: Credit Quality
Credit Quality: Overall Credit Quality Remains Generally Strong 15 -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4Q14 1Q15 2Q15 3Q15 4Q15 Key Credit Quality Ratios Classifieds / Loans Nonperforming Assets / Loans Net Charge-offs / Loans Net Charge-offs / Loans annualized • Continued strong cred
Slide 16: Energy Loan Loss Expectation
• Energy Loan Loss Expectation • In January 2015, Zions modeled energy losses for the 9-quarter period (4Q14 – 4Q16) to be between and $75 million and $125 million • The loss range was established using an oil price of approximately $50 per barrel for two years, after which oil reverted to the then-
Slide 17: Classified and Nonaccrual Trends
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 4Q14 1Q15 2Q15 3Q15 4Q15 Loan Balances by Energy Segment Upstream Services Other Oil & Gas Portfolio Classified and Nonaccrual Trends Fourth quarter classified loan increase driven by energy services 17 $0 $100 $200 $300 $400 $500 Classifieds by Energy Seg
Slide 18: Zions' Commercial Real Estate Portfolio in Texas
18 Zions’ Commercial Real Estate Portfolio in Texas Houston is approximately 3/5ths of total Texas exposure; Construction and Land Development loans in Houston have declined more than 80% from the prior credit cycle $ $100 $200 $300 $400 $500 Other Industrial Hospitality Office Retail Multifamily Co
Slide 19: The Derivative Effect: Commercial Real Estate
The Derivative Effect: Commercial Real Estate Limited expected NPAs or losses on Zions’ commercial real estate portfolio in Houston 19 Overview Statement: • Zions expects a moderate adverse migration of loan grades, but does not currently expect substantial loss due to strong collateral and cash flo
Slide 20: Next 12-Month Outlook Summary
Next 12-Month Outlook Summary Relative to 4Q15 Results Topic Outlook Comment Loan Balances Slightly to Moderately Increasing • Expect strengthening growth in residential mortgage (mostly short duration ARMs) and general C&I, partially offset by continued attrition from National Real Estate and Energ
Slide 21: Appendix
Appendix 21 Energy Portfolio Detail Houston Economic Trends Loan Growth by Bank Brand and Type
Slide 22: Energy Portfolio Detail
Energy Portfolio Detail 22 * Because many borrowers operate in multiple businesses, judgment has been applied in characterizing a borrower as energy-related, including a particular segment of energy-related activity, e.g., upstream or downstream; typically, 50% of revenues coming from the energy sec
Slide 23: Houston Economic Data
Houston Economic Data: Unemployment remains in line with national levels; housing indicators show healthy volume and “seller’s market” inventory levels (<5 months of supply); businesses are less optimistic than on a national level 23 Source: Bureau of Labor Statistics, Bloomberg, Texas A&M Universit
Slide 24: Houston Commercial Real Estate Data
Houston Commercial Real Estate Data Moderate weakness realized and expected in vacancy rates; rents still above 2012 levels 24 0% 5% 10% 15% 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q1 4 4Q1 4 1Q1 5 2Q1 5 3Q1 5 4Q1 5 Vacancy Rate - Houston 100 110 120 130 140 150 1Q1 2 2Q1 2 3Q1
Slide 25: Consumer customers in high oil and gas employment counties
Consumer customers in high oil and gas employment counties (HOGECs) have not experienced credit score deterioration 25 Takeaways: • Consumer loans from high O&G employment counties performing similarly to overall consumer portfolio. Nearly all of these consumer loans are with Amegy (96%) located in
Slide 26: Loan Growth by Affiliate and Type
Loan Growth by Affiliate and Type 26 Source: Company documents;); NRE = National Real Estate Group, a division of Zions Bank that focuses on small business loans generally underwritten using SBA 504 guidelines. Other loans includes Leasing, Municipal, Home Equity, and other consumer Year-over-Year L