Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation, National Association — Q4 2020 Earnings Presentation
28 slides from Zions Bancorporation N.a's earnings presentation, Jan 19, 2021
Slide 1: Fourth Quarter 2020 Financial Review
January 19, 2021 Fourth Quarter 2020 Financial Review
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
2 Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information These materials include “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 assum
Slide 3: Fourth Quarter 2020 Financial Highlights
✓ Earnings and Profitability: ▪ $1.66 diluted earnings/share compared to $1.01 in 3Q20 ▪ $0.09/share benefit from credit valuation adjustment on client- related interest rate swaps (“CVA”) and securities gains ▪ $0.31/share benefit from the negative provision for credit losses, compared to the $0.25
Slide 4: 2020 Key Performance Indicators
4 2020 Key Performance Indicators Although bottom line results fluctuated significantly in 2020 due to provision expense, core Adjusted PPNR was relatively stable $4.08 $4.16 $3.02 2018 2019 2020 Diluted Earnings Per Share 1.33% 1.17% 0.71% 2018 2019 2020 Return on Assets $1,132 $1,162 $1,143 2018 2
Slide 5: Diluted Earnings per Share
$0.97 $0.04 $0.34 $1.01 $1.66 4Q19 1Q20 2Q20 3Q20 4Q20 Diluted Earnings Per Share Notable Items: ▪ 4Q20: $0.09 per share benefit from securities gains and credit valuation adjustment on client-related interest rate swaps (“CVA”) ▪ 3Q20: ▪ $0.14 per share adverse impact from one-time charitable contr
Slide 6: Adjusted Pre-Provision Net Revenue
Adjusted Pre-Provision Net Revenue 6 Adjusted PPNR increased from 3Q20 as 3Q20 had a large charitable contribution expense (1) Adjusted for items such as severance, restructuring, securities gains and losses and debt extinguishment costs. See Appendix for GAAP to non-GAAP reconciliation table. Notab
Slide 7: Balance Sheet Profitability
1.04% 0.08% 0.35% 0.89% 1.41% 4Q19 1Q20 2Q20 3Q20 4Q20 11.80% 0.41% 3.81% 10.96% 17.80% 4Q19 1Q20 2Q20 3Q20 4Q20 Balance Sheet Profitability 7 Zions’ profitability in 4Q20 improved primarily due to the significant decline in the provision for credit losses Return on Assets Return on Tangible Common
Slide 8: Success Story: Summary of Paycheck Protection Program
Round 2 – PPP 2.0: ▪ December 21, 2020: $284B authorized by the Consolidated Appropriations Act ▪ As of January 18, 2021: Processing more than 20,000 applications ▪ PPP 2.0 preparations: What is different this time?: ▪ Banker and technology optimized for 1/13/21 launch ▪ Consistent marketing and ban
Slide 9: Success Story: PPP 1.0 – Building Relationships
Success Story: PPP 1.0 – Building Relationships 9 Zions is experiencing excellent success in strengthening relationships with PPP customers ▪ ~30 % of PPP 1.0 loans were new-to-bank customers PPP 1.0 Loan Recipients Post PPP 1.0 PPP Loan Funding Remaining in Account (12/31/2020) Pre- PPP 1.0 Relatio
Slide 10: Success Story: Mortgage Banking
10 Success Story: Mortgage Banking Successes amid COVID-19 pandemic: very strong mortgage revenue 2019 ▪ Roll-out 2020 ▪ Enhanced Digital Fulfillment Process ▪ 87% of all applications taken digitally ▪ 25% reduction in turn-time allowing for record unit production 4Q20 ▪ Third straight strong fundin
Slide 11: Credit Quality Ratios
11 Credit Quality Ratios Zions entered the COVID-19 economic downturn with very clean credit quality Key Credit Metrics: ▪ Classified loans/loans: 3.4% ▪ NPAs+90(1)/loans + OREO: 0.80% ▪ Annualized net loan losses: ▪ 0.13% of average loans in 4Q20 ▪ 0.22% net charge-offs of average loans over the la
Slide 12: Deferrals and Delinquencies: A Positive Outcome Thus Far
Deferrals and Delinquencies: A Positive Outcome Thus Far 12 Deferrals have receded from the 2Q20 high by more than 90%; nonaccrual and delinquency rates remain stable 6.3% 0.6% 0.5% 6/30/2020 9/30/2020 12/31/2020 Total Deferrals relative to total non-PPP loans 0.03% 0.02% 0.03% 0.70% 0.76% 0.76% 6/3
Slide 13: Select Sub-Industries with Elevated Risk Related to COVID-19
Select Sub-Industries with Elevated Risk Related to COVID-19 13 COVID-19 Elevated Risk Loans: $4.0 billion (8.4%) of 4Q20 non-PPP loan balances (1) C19ER select industries with the most criticized loans include within broad industry groups: regional and neighborhood shopping centers (excludes standa
Slide 14: Additional Recent Trends in Loan Balance, Credit Quality and Line Utilization
Additional Recent Trends In Loan Balance, Credit Quality and Line Utilization 14 In 4Q, Zions experienced generally stable credit quality trends outside of COVID-19 Elevated Risk and Oil and Gas loans (excluding PPP loans) Loan Balances by Portfolio and Weighted Average Risk Grades $4.2 $4.3 $4.2 $4
Slide 15: Allowance for Credit Loss (ACL)
15 Allowance for Credit Loss (“ACL”) Reserve decrease from 3Q20 reflects portfolio changes and a slight improvement in credit quality 526 777 914 917 8351.08 1.56 1.66 1.68 1.56 1.88 1.91 1.74 1/1/20 CECL 1Q20 2Q20 3Q20 4Q20 Allowance for Credit Loss ACL (%) ACL (%) ex-PPP The change in 4Q20 ACL fro
Slide 16: Net Interest Income and Net Interest Margin
$559 $548 $563 $555 $550 3.46% 3.41% 3.23% 3.06% 2.95% 4Q19 1Q20 2Q20 3Q20 4Q20 Net Interest Income Net Interest Income Net Interest Margin 16 Changes in interest rates and balance sheet composition impact net interest income performance ($ millions) Net Interest Margin 3Q20 4Q20 MM and Securities L
Slide 17: Average Loan and Deposit Growth
4.56% 4.42% 3.83% 3.68% 3.71% $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 $75,000 4Q19 1Q20 2Q20 3Q20 4Q20 Average Total Loans Excluding PPP Loans, Yield: 3.74% in 4Q20 Average PPP Loans, Yield: 3.50% in 4Q20 Average Loan and Deposit Growth Average Total Loans Loa
Slide 18: Interest Rate Sensitivity
1.81% 2.06% 2.35% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Through end of 2021 2022 2023-2024 Swaps Maturing Average Receive Fixed Rate (R-Axis)$ millions 4 7 % 1 2 % 1 0 % 8 % 1 2 % 1 1 % 3 2 % 1 2 % 1 4 % 9 % 2 2 % 1 1 % ≤ 3m 4-12m 1-2 yrs 2-3 yrs 3-5 yrs > 5
Slide 19: Noninterest Income
$134 $143 $130 $139 $139 4Q19 1Q20 2Q20 3Q20 4Q20 Customer-related fee income was stable from the prior quarter due to: ▪ Slightly improved revenue in commercial, card, and retail and business banking fees ▪ Loan related fees and income declined from 3Q20 due to mortgage banking activity ▪ Full year
Slide 20: Noninterest Expense
$ 4 7 2 $ 4 0 8 $ 4 3 0 $ 4 4 2 $ 4 2 4 $ 4 3 5 $ 4 0 7 $ 4 0 2 $ 4 4 0 $ 4 2 3 4Q19 1Q20 2Q20 3Q20 4Q20 NIE (GAAP) Adjusted NIE (Non-GAAP) ($ millions) Noninterest Expense 20 Expense control remains a significant focus ▪ Total noninterest expense decreased 4% over the prior quarter ▪ Excluding the
Slide 21: Financial Outlook (4Q 2021E vs 4Q 2020A)
Financial Outlook (4Q 2021E vs 4Q 2020A) 21 Outlook Comments Slightly Increasing ▪ Slight to moderate growth activity in the next twelve months, excluding PPP loans Slightly Increasing ▪ Assumes benchmark rates generally consistent with the forward curve ▪ Excludes PPP loan income Slightly Increasin
Slide 22: Appendix
▪ Financial Results Summary ▪ Loan Growth ▪ Oil & Gas Portfolio Credit Quality and Portfolio Details ▪ GAAP to Non-GAAP Reconciliation 22 Appendix
Slide 23: Financial Results Summary
Financial Results Summary 23 Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) December 31, 2020 September 30, 2020 June 30, 2020 Earnings Results: Diluted Earnings Per Share $ 1.66 $ 1.01 $ 0.34 Net Earnings Applicable to Common Share
Slide 24: Loan Growth - by Bank Brand and Loan Type
24 Loan Growth - by Bank Brand and Loan Type Note: National Real Estate (NRE) is a division of Zions Bank with a focus on small business loans with low LTV ratios, which generally are in line with SBA 504 program parameters. “Other” loans includes municipal and other consumer loan categories. Totals
Slide 25: Oil & Gas (O&G) Credit Quality
Oil & Gas (O&G) Credit Quality 25 Oil and Gas Key Credit Quality Ratios Excluding PPP Loans and as of December 31, 2020: ▪ Annualized NCOs equaled 2.2% of loans ▪ Classified loans equaled 12.8% of loans ▪ Allowance for credit losses of $104 million or 4.8% of balances ▪ Approximately 68% of 2020 oil
Slide 26: Oil & Gas Portfolio
▪ Oilfield Services, which accounted for bulk of charge offs in the last cycle, accounts for 17% of the portfolio versus 45% going into the previous cycle (Dec 2014) ▪ Major differences today vs. then: Stronger individual loan underwriting, but weaker capital markets support ▪ Allowance for credit l
Slide 27: GAAP to Non-GAAP Reconciliation
27 GAAP to Non-GAAP Reconciliation (Amounts in millions) 4Q20 3Q20 2Q20 1Q20 4Q19 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 424 $ 442 $ 430 $ 408 $ 472 Adjustments: Severance costs 1 1 - - 22 Other real estate expense 1 - - - - Debt extinguishment cost - - - - - Amortization of core depo
Slide 28: GAAP to Non-GAAP Reconciliation
28 GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 4Q20 3Q20 2Q20 1Q20 4Q19 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $424 $442 $430 $408 $472 LESS adjustments: Severance costs 1 1 - - 22 Other real estate expense 1 - - - - Restructuring costs (1) 1 - 1 15
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