Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Citi Financial Services Conference 2010
48 slides from Zions Bancorporation N.a's conference presentation, Mar 9, 2010
Slide 1: Citi Financial Services Conference
Citi Financial Services Conference 10 th -11 th March 2010 ■ New York
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: Bank Headquarters, Offices, Assets, Deposits
Bank Headquarters Offices __Assets _Deposits Zions Bank __Salt Lake City __128 $20.48 $14.0B CBaT San Diego 706___$11.38 39.98 “Amegy Houston $1238 39.28 NBA Phoenix 76 $4.8B $3.8B NSB Tas Vegas 58 3478 35.68 Vectra Denver 39 $2.4B $2.0B ‘Commerce WA Seattle 7 $0.88 30.78 Commerce-OR Portland 1 $0.0
Slide 4: Strong Focus on Business Banking - Loan Mix, Profit Mix
Strong Focus on Business Banking - Loan Mix, Profit Mix Consumer 22% CRE 32% *Includes FDIC Supported Assets * Commercial Loans: 79% * Retail & Other Loans: 21%
Slide 5: Zions' Strengths
Zions’ Strengths • Annual core pretax, pre-credit earnings range of $900 million to $950 million – NIM: 3.81% in 4Q09, ranked #2 of regional banks/peers* – Best among peers* for non-interest bearing deposits as a percent of earning assets • Strong allowance for credit loss: 4.3% of loans • Low origi
Slide 6: Zions' Challenges
Zions’ Challenges • Rising NPAs, to 6.0% of loans from 5.4% in prior quarter (1) – Total delinquent + NPA declined by 1.2% in 4Q09 compared to the prior quarter • 2009 net charge-off rate of 2.9% of loans; 4Q09 NCO rate: 3.0% (1) • Continued securities impairments (OTTI), primarily on bank/insurance
Slide 7: Key Issues Going Forward
Key Issues Going Forward – Net Interest Margin – Credit Quality – Term CRE – Securities Portfolio – Capital Outlook Summary Agenda
Slide 8: Net Interest Margin
Net Interest Margin Source: SNL (As Reported NIM - field not available for FHN) Strong NIM Driven by Strong Demand Deposits
Slide 9: 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 10: Key Issues Going Forward
Key Issues Going Forward – Net Interest Margin – Credit Quality – Term CRE – Securities Portfolio – Capital Outlook Summary Agenda
Slide 11: NPAs and Net Charge-offs vs. Peers
*Annualized Zions excludes FDIC supported assets Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL as of 2-11-10 (Peer Data) • 51% of 2009 NCOs Attributable to Construction, Land & Develop
Slide 12: Net Charge Offs by Loan Type (Regional Bank Peers)
Note: Peer group includes U.S. 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 Credits
Slide 13: Key Issues Going Forward
Key Issues Going Forward – Net Interest Margin – Credit Quality – Term CRE – Securities Portfolio – Capital Outlook Summary Agenda
Slide 14: Change in CRE Loan Outstandings
Change in CRE Loan Outstandings in $billions (4Q07 to 4Q09) • 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 15: Term CRE Maturity Stratification
Term CRE Maturity Stratification
Slide 16: Term CRE - LTV Stratification At Origination
Percentage of Loans within each bucket that are Non-Accrual 2.9% 1.9% 1.6% 4.9% 17.4% 6.1% 1.2% Term CRE - LTV Stratification At Origination* *Or most recent appraisal; reappraisals are most frequently conducted when a loan is downgraded to substandard
Slide 17: Macroeconomic Data - MIT's Transaction Based Index
Macroeconomic Data - MIT’s Transaction Based Index
Slide 18: Term CRE - TBI Adjusted LTV Stratification
Percentage of Loans within each bucket that are Non-Accrual 3.1% 1.5% 2.8% 3.1% 7.3% 4.1% 1.9% Term CRE - TBI* Adjusted LTV Stratification *The MIT Transaction Based Index is a national index that has been applied to ZBC's mostly regional CRE Portfolio
Slide 19: Day of Reckoning - or Not?
Day of Reckoning - or Not? • Eighty percent of the industry’s CRE loans maturing in 2014 are projected to be underwater (LTV >100%). • Based on loans adjusted for price declines as reflected in the 4Q09 MIT TBI, Zions would have approximately 6% underwater. • Loans Maturing in 2010 DO NOT include ap
Slide 20: Consolidated Non-Accrual Loans
Consolidated Non-Accrual Loans By Product $000s ‘Thousands $2,500,000 $2,000,000 $1,500,000 $1,000,000 ‘$500,000 “© Total 4. Total Commerciat Real Estate Loans © Commercial Loans % Consumer Loans —- tt tt fecos Maro Juno Sep. co ZIONS BANCORPORATION
Slide 21: C&I Outstanding Balance vs. Non Accrual Loans - NAICS
Percentage of Loans within each NAICS Category that are Non-Accrual Construction Finance Manufacturing Oil & Gas Other RE Investment & Dev. Retail Trade Service Transport Wholesale Trade 5.0% 2.0% 4.5% 5.2% 2.6% 4.0% 3.5% 3.9% 1.7% 5.9% C&I Outstanding Balance vs. Non Accrual Loans - NAICS (12/31/20
Slide 22: Nonaccrual Loan Migration
Nonaccrual Loan Migration - Favorable resolutions increased 21% vs. 3Q09 - Unfavorable resolutions declined 12% vs. 3Q09
Slide 23: Key Issues Going Forward
Key Issues Going Forward – Net Interest Margin – Credit Quality – Term CRE – Securities Portfolio – Capital Outlook Summary Agenda
Slide 24: CDO Portfolio Summary
CDO Portfolio Summary • Credit-related OTTI losses $99.3 million in 4Q09 (approximately 95% of the impairment losses had been previously recognized in OCI) • Noncredit-related losses on securities of $35.1 million in 4Q09 recognized in OCI *This table includes $2.2 billion par value of CDOs that are
Slide 25: CDO Stress Testing - OCI
Model Implied Bank Failures (1 year) Scenario @ 100% Total within Zions’ CDOs Total in Banking Universe Actual Bank Failures in 2009 57 133 Future 1 Year Failures Implied in 4Q09 Pricing 95 221 Moderate Stress 117 272 Adverse Stress 162 377 Extreme Stress 218 507 • Under various stress scenarios, Zi
Slide 26: History of Bank Deferrals & Defaults in Zions' CDOs
History of Bank Deferrals & Defaults in Zions’ CDOs As of 2-23-10
Slide 27: Key Issues Going Forward
Key Issues Going Forward – Net Interest Margin – Credit Quality – Term CRE – Securities Portfolio – Capital Outlook Summary Agenda
Slide 28: Where We Are: Capital Ratios as of December 31, 2009
4Q08 3Q09 4Q09 Tangible Common Equity (TCE) 5.89% 5.76% 6.12% Tier 1 Common 6.28% 6.59% 6.73% Tier 1 Risk Based 10.22% 10.34% 10.53% Total Risk Based 14.32% 13.08% 13.28% Where We Are: Capital Ratios as of December 31, 2009 Sensitivity to capital ratios based on announced transactions • Up to $250 m
Slide 29: Where We Are: Tier 1 + Reserves to Total Loans
Where We Are: Tier 1 + Reserves to Total Loans - 12/31/09 Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB.
Slide 30: Capital Creation - Zions' equity raises less dilutive
Equity issuance $709 $0 $986 $2,037 $0 $1,415 $1,136 $478 $571 Liability management $603 $0 $467 $1,345 $10 $24 $520 $0 $30 Other strategic $99 $18 $1,473 $176 $4 $0 $20 $0 $34 Capital Creation - - Zions’ equity raises less dilutive to shareholders Source: Credit Suisse
Slide 31: Zions' Approach to Capital
Zions’ Approach to Capital • Maintain and incrementally improve capital ratios • Use all available “levers” to minimize dilution – Common equity distribution programs – Convertible instruments • Modified sub debt converts to preferred (Tier 1) – Reduce tangible assets (loan demand remains weak) – Re
Slide 32: Risks to Approach
Risks to Approach • Regulatory/political pressure to take action not in shareholders’ interest • Not raising enough/markets deteriorate
Slide 33: Outlook Summary
▼ Loan Growth & Total Assets ▲ Low-Cost Deposit Growth ▼ Credit Costs ▲ Net Interest Margin ◄► Core Non-interest Expenses ◄ ▼ OTTI ◄ ▲ Capital Ratios Outlook Summary
Slide 34: Citi Financial Services Conference
Citi Financial Services Conference 10 th - 11 th March, 2010 New York City
Slide 35: Zions Bancorporation
ZIONS BANCORPORATION
Slide 36: Risk-adjusted Net Interest Margin (FY 2009)
Risk-adjusted Net Interest Margin* (FY 2009) *(Net Interest Income - Net Charge-offs)/Average Earning Assets Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB. Source: SNL
Slide 37: Loan Portfolio Performance
Loan Portfolio Performance (12/31/2009)
Slide 38: ZION vs. SCAP More Adverse Stress Loss Projections
ZION vs. SCAP More Adverse Stress Loss Projections
Slide 39: Construction Loan Overview - Residential
Construction loan overview - Resi Growth, NAL, NCO Trends Residential Construction
Slide 40: Construction Loan Overview - Commercial
Construction loan overview - - Commercial Growth, NAL, NCO Trends Commercial Construction
Slide 41: Term CRE - Category Stratification
Term CRE - Category Stratification
Slide 42: Term CRE Credit Trends - Effect of Gaming on Loss Rates
Term CRE Credit Trends - - Effect of Gaming on Loss Rates • Annualized 4Q09 NCOs Including Gaming: 3.1% annualized • Annualized 4Q09 NCOs Excluding Gaming: 1.7% annualized • Loss trends much more stable excluding gaming; gaming Term CRE credits remaining: $74 million.
Slide 43: 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% defaults applied to it, a
Slide 44: What Others Say About Us - Greenwich Excellence Awards
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 Greenwich Excellence
Slide 45: What Others Say About Us - Frost
Frost What Others Say About Us Overall Financial Stability Compared to Willingness to Lend ($1 - $10 million) Source: Greenwich Associates, Commercial Banking Study Q2 2009 ($1-$10 million)
Slide 46: 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: $760 million (Pay Floating, Receive Fixed) • Continual reduction of interest rate swaps
Slide 47: Loans with Floors (as of 12/31/09)
Loans with Floors (as of 12/31/09)
Slide 48: Simulation of Net Interest Income - Slow Response
Simulation of Net Interest Income - SLOW Response Change in Niland Total Rate Sensitive Income under various rate curve scenarios 10.0% 8.0% 6.0% 4.0% 2.0% | 0.0% i | = = zz — 2.0% 4.0% 6.0% -200 bps -100 bps +100 bps +200 bps +300 bps Implied P.0.25 Flat Steep 12-month simulated impact; assumes mat
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