Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Q3 2021 Earnings Presentation
29 slides from Zions Bancorporation N.a's earnings presentation, Oct 18, 2021
Slide 1: Third Quarter 2021 Financial Review
Third Quarter 2021 Financial Review October 18, 2021
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information This presentation includes “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and assu
Slide 3: Select Themes
Select Themes Key near-term objectives designed to position the bank for superior revenue growth and operating leverage ▪ Reporting continued strength in deposit growth ▪ We are investing significantly in loans and modest duration securities to generate earnings today ▪ Simultaneously, we are mainta
Slide 4: Third Quarter 2021 Financial Highlights
Third Quarter 2021 Financial Highlights Vs. 2Q21, adjusted PPNR was stable, with continue strong increases in deposits and a healthy increase in non-PPP loans ✓ Earnings and Profitability: ✓ Loans and Deposits: Vs. 2Q21, growth rates not annualized ▪ $1.45 diluted earnings/share compared to $2.08 ▪
Slide 5: Diluted Earnings Per Share
Diluted Earnings Per Share Vs. 2Q21, EPS affected primarily by changes to provision for credit loss and securities gains/(losses) Diluted Earnings per Share Notable Items: $2.08 ▪ 3Q21: $1.90 $1.66 ▪ $(0.12) per share adverse mark-to-market impact from an SBIC $1.45 investment $1.01 ▪ $0.01 per shar
Slide 6: Balance Sheet Profitability
Balance Sheet Profitability Profitability remains healthy; factors that affected EPS also affected balance sheet profitability Return on Assets Return on Tangible Common Equity 21.6% 20.2% 17.8% 1.65% 1.57% 1.41% 14.2% 1.08% 11.0% 0.89% 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 6
Slide 7: Credit Quality
Credit Quality Credit quality continues to show improvement, with last 12 months net charge-offs at just 0.04% of average loans All Ratios Exclude PPP Loans Credit Quality Ratios 4.0% 3.5% Key credit metrics: 3.0% ▪ Classified loans/loans: 2.9% Classified / Loans NPAs +90/ Loans + OREO 2.5% ▪ NPAs+9
Slide 8: Capital Strength
Capital Strength Our superior risk profile and a healthy, strengthening economy positions us for continued active capital management Common Equity Tier 1 Capital Return of Shareholder Equity Dividends (Common and Preferred(1)) and Share Repurchases ($ millions) 11.2% 11.3% 10.8% 10.9% 10.4% Dividend
Slide 9: Adjusted Pre-Provision Net Revenue
Adjusted Pre-Provision Net Revenue Adjusted PPNR aided by PPP related revenues (22% of adjusted PPNR in 3Q21) Adjusted PPNR(1) Notable items: ▪ Interest Income from PPP Loans net the professional ($ millions) services expense associated with PPP forgiveness: ▪ 3Q21: $63 million ($63 million income)
Slide 10: Paycheck Protection Program Loans
Paycheck Protection Program Loans PPP lending success from Zions’ ability to link front line bankers and borrowers with an agile technology deployment 10th Ranked 10th Nationally for PPP loan dollars originated of consolidated 2020 and 2021 SBA PPP loans Average PPP Loans Loan Yields ($ millions) 6.
Slide 11: Paycheck Protection Program Customers – Enhanced Relationships
Paycheck Protection Program Customers – Enhanced Relationships Growth rate of new services provided to both existing and new-to-bank customers remains steady PPP Loans New Accounts and Services 35,000 (Prior to Forgiveness) Utilized by PPP Customers 30,000 25,000 20,000 New-to-Bank Customers Existin
Slide 12: FutureCore: A Strategic Technology Advantage for Years to Come
FutureCore: A Strategic Technology Advantage for Years to Come Replacing the entire core legacy environment to improve operational resiliency and efficiency Modern Architecture Improved Customer Empowered Driving Built for Resiliency and Experience Bankers Modernization Speed FutureCore as a Catalys
Slide 13: Modernized Digital Banking Upgrade Completed for 610,000 Consumers
Modernized Digital Banking Upgrade Completed for 610,000 Consumers Zions new consumer mobile app ratings jump to third of peers plus five largest U.S. banks Average Mobile Banking Ratings Consumer / Retail Banking Stars received, out of five possible ▪ New digital banking enhances the customer exper
Slide 14: Average Loan and Deposit Growth
Average Loan and Deposit Growth Vs. 2Q21, average non-PPP loans increased 0.5% in 3Q21; average deposits increased 3.7% Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits Average Noninterest-bearing Deposits ($ billions) ($ billions) Average Total Loans Excluding
Slide 15: Securities, Money Market Investments and Interest Rate Swaps
Securities, Money Market Investments and Interest Rate Swaps The securities portfolio increased $2.3 B in 3Q21, absorbing deposit growth Total Securities Portfolio ▪ Strong deposit growth has significantly increased the bank’s and Money Market Investments overall liquidity profile (end of period bal
Slide 16: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income stability assisted by PPP success Net Interest Income Net Interest Margin Net Interest Margin Zions’ active efforts to invest the inflow of deposits has helped to limit the compression of the net interest margin. The increase in ($ mill
Slide 17: Interest Rate Sensitivity
Interest Rate Sensitivity The low interest rate environment and surge in deposits has resulted in increased asset sensitivity Net Interest Income Sensitivity (1) Loans: Rate Reset and Cash Flow Profile −100 bps +100 bps +200 bps 25% 49% In the down 100 scenario, models assume rates do 12% not fall b
Slide 18: Noninterest Income
Noninterest Income Total customer-related fee income increased 9% from 2Q21 primarily due to an increase in loan-related fee income Customer-Related Fee Income (1) Customer-related fee income increased from the prior ($ millions) quarter due to: $151 $139 $139 $139 ▪ $6 million increase in loan-rela
Slide 19: Noninterest Expense
Noninterest Expense Increase in expense in 3Q21 reflects primarily increased incentive compensation Noninterest Expense (NIE) ▪ Total noninterest expense increased slightly over the prior quarter ($ millions) ▪ Total adjusted noninterest expense increased 3% over the prior quarter, predominantly due
Slide 20: Allowance for Credit Loss ("ACL")
Allowance for Credit Loss (“ACL”) ACL decrease from 2Q21 reflects continued improvement in portfolio mix, credit quality and economic forecasts Allowance for Credit Loss The change in 3Q21 ACL from 2Q21 reflects: ($ millions) ACL (%) ex-PPP ▪ Overall de-risking of the portfolio through 1.88 1.91 1.7
Slide 21: Financial Outlook (3Q 2022E vs 3Q 2021A)
Financial Outlook (3Q 2022E vs 3Q 2021A) Outlook Comments Moderately Loan Balances ▪ Moderate growth in the next twelve months, excluding PPP loans Increasing Net Interest Income ▪ Assumes no change in interest rates Increasing ▪ Excludes PPP loan income Customer-Related Fees Stable to ▪ Customer-re
Slide 22: Appendix
Appendix ▪ Financial results summary ▪ Loan growth by geography and type ▪ Loan loss severity (NCOs as a percentage of nonperforming assets) ▪ Mortgage banking results ▪ GAAP to Non-GAAP reconciliation 22
Slide 23: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) September 30, June 30, March 31, 2021 2021 2021 Earnings Results: Diluted Earnings Per Share $ 1.45 $ 2.08 $ 1.90 Net Earnings Applicable to Common Shareholder
Slide 24: Loan Growth - by Bank Brand and Loan Type
Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (3Q21 vs. 3Q20) (in millions) Zions Bank Amegy CB&T NBAZ NSB Vectra CBW Other Total C&I (ex-Oil & Gas) (107) 86 218 (117) 40 (17) 20 - 123 SBA PPP (1,082) (720) (712) (437) (360) (209) (210) - (3,730) Owner occupied 137
Slide 25: Loan Loss Severity
Loan Loss Severity When problems arise, Zions generally experiences less severe loan losses due to strong collateral Annualized NCOs / Nonaccrual Loans Annualized NCOs / Nonaccrual Loans Five Year Average (2016 – 2020) Fifteen Year Average (2006 – 2020) 79% 66% 64% 57% 57% 57% 56% 53% 53% 53% 51% 47
Slide 26: Mortgage Banking
Mortgage Banking Successes amid COVID-19 pandemic: very strong mortgage revenue 2019 2020 Strong Mortgage Funding $918 million $996 million ▪ Roll-out ▪ Enhanced Digital Fulfillment Process ▪ 87% of all applications taken digitally $433 $383 $345 $409 $411 ▪ 25% reduction in turn-time allowing for r
Slide 27: Middle Market and Small Business Research Feedback
Middle Market and Small Business Research Feedback Zions compares favorably to major competitors (JPMorgan, Bank of America, US Bank, Wells Fargo) Zions Major Closest Our Rank Greenwich Associates Customer Satisfaction Categories Bancorporation Competitors* Competitor's (2020) Client Score % (Averag
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions, except per share amounts 3Q21 2Q21 1Q21 4Q20 3Q20 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $429 $428 $435 $424 $442 LESS adjustments: Severance costs 1 1 1 Other real estate expense 1 - Provision for unfunded lending commitments - -
Slide 29: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) In millions, except per share amounts 3Q21 2Q21 1Q21 4Q20 3Q20 Net Earnings Applicable to Common Shareholders (NEAC) (k) Net earnings applicable to common $234 $345 $314 $275 $167 (l) Diluted Shares (average) 160 163 164 164 164 GAAP Diluted EPS 1.45 2.08
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