Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation, National Association — Q4 2019 Earnings Presentation
24 slides from Zions Bancorporation N.a's earnings presentation, Jan 21, 2020
Slide 1: Fourth Quarter 2019 Financial Review
Fourth Quarter 2019 Financial Review January 21, 2020
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
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 regarding f
Slide 3: Fourth Quarter 2019 Financial Highlights
Fourth Quarter 2019 Financial Highlights Quarterly earnings adversely impacted by several infrequent items ✓ Earnings and Profitability: ✓ Deposits ▪ $0.97 diluted earnings per share compared to $1.08 in 4Q18 ▪ Average deposit growth: ▪ Infrequent items include: ▪ 10.5% annualized total deposit grow
Slide 4: Diluted Earnings per Share and Pre-Provision Net Revenue
Diluted Earnings per Share and Pre-Provision Net Revenue Earnings per share in the quarter were adversely impacted by several infrequent items Diluted Earnings per Share Adjusted PPNR(1) ($mm) $305 $309 $294 $1.17 $285 $275 $1.08 $259 $1.04 $0.99 $0.97 $217 $175 $147 4Q18 1Q19 2Q19 3Q19 4Q19 4Q14 4Q
Slide 5: Efficiency Ratio
Efficiency Ratio Substantial improvement since 2014 driven by both revenue growth and expense control ▪ The efficiency ratio(1) in 4Q19 was 61.3%, compared to 57.8% in the year ago period 74.1% ▪ Adverse impact of 1.4 percentage points due to resolution of a self-identified operational issue 69.6% ▪
Slide 6: Noninterest Bearing Deposits
Noninterest Bearing Deposits Noninterest bearing deposits remain strong among peers Average Average Noninterest Noninterest Bearing ($mm) Bearing Deposits 50% Deposits $30,000 Most Recent Quarter 50% ZION DDA Percent of Total Deposits 45% 45% 40% $25,000 35% 40% 30% $20,000 25% 35% 20% 15% $15,000 3
Slide 7: Credit Quality
Credit Quality Exceptional credit quality Credit Quality Ratios ▪ Key Credit Metrics: ▪ Classified loans (1.6% of loans) 4.00% ▪ Increased 15% from the prior year 3.50% ▪ Increased less than 1% from the prior qtr 3.00% ▪ NPAs+90(1) (0.5% of loans + OREO) ▪ Decreased 0.03% from the prior year 2.50% ▪
Slide 8: We Have Furthered our Digital Capabilities Meaningfully Over the Last Several Years
We Have Furthered our Digital Capabilities Meaningfully Over the Last Several Years COMMERCIAL SMALL BUSINESS AFFLUENT CONSUMER Treasury Internet Banking 2.0 2018-2019 Online and Mobile Banking Replacement 2020-2021 $10B Demand Deposits 625,000 consumer accounts $100MM Fee Income 125,000 business ac
Slide 9: Balance Sheet Profitability
Balance Sheet Profitability Zions’ profitability has improved since embarking on the efficiency initiative in 2015 Return on Assets Return on Tangible Common Equity 14.5% 14.2% 1.34% 13.9% 1.26% 1.25% 12.7% 1.14% 11.8% 1.04% 0.88% 8.4% 0.74% 7.4% 0.68% 0.57% 6.2% 5.0% 4Q14 4Q15 4Q16 4Q17 4Q18 1Q19 2
Slide 10: Net Interest Income
Net Interest Income Changes in interest rates and balance sheet composition impact net interest income performance Net Interest Income Net Interest Margin Net Interest Margin 3Q19 $576 $576 ($mm) NIM 4Q19 $569 $567 NIM $559 3.48% -0.02% 3.46% Money -0.14% 0.05% Market & Securities Yields 0.05% Cost
Slide 11: Average Loan and Deposit Growth
Average Loan and Deposit Growth Solid loan growth in a lower rate environment, while deposits remain a source of strength Average Total Loans Average Total Deposits Loan Yields Cost of Total Deposits ($mm) ($mm) $55,000 $55,000 $50,000 $50,000 0.49% 0.50% 4.93% 0.44% 4.85% $45,000 0.43% $45,000 4.79
Slide 12: Investment Portfolio and Borrowed Funds
Investment Portfolio and Borrowed Funds Zions is actively managing on balance sheet liquidity Investment Portfolio Borrowed Funds Average Balance 3.40% Average Balance $8,000 3.40% $18,000 3.20% 3.20% $16,000 $6,000 3.00% 3.00% 2.80% 2.80% $14,000 2.80% 2.78% $4,000 2.76% 2.60% 2.60% 2.57% 2.56% 2.5
Slide 13: Loan Growth
Loan Growth Solid loan growth achieved in certain targeted growth categories Year-over-Year Loan Balance Growth Total Loans: +4% 50% Municipal, Note: Circle size indicates 44% relative proportion of loan 40% portfolio as of 4Q19 Growth Rate: Year over Year 30% 20% O&G, Term CRE, 10% 5% C&I (ex-O&G),
Slide 14: Noninterest Income
Noninterest Income Growth of 2% over the prior year primarily due to capital markets and foreign exchange fees and wealth management fees Customer-Related Fee Income (1) ($mm) ▪ Customer-related fee income up 2% from the year $140 $131 $130 $134 ago period due to strength in: $122 ▪ Capital markets
Slide 15: Noninterest Expense
Noninterest Expense Continued focus on expense controls and streamlining ▪ Total noninterest expense increased 12%, including ($mm) infrequent items in 4Q19 of: ▪ $22 million of severance costs $472 ▪ $15 million of restructuring costs $435 $431 $430 $424 $423 $420 $418 $415 $415 ▪ $10 million resol
Slide 16: Current Expected Credit Losses (CECL) Estimates
Current Expected Credit Losses (CECL) Estimates Allowance for credit losses reduced 5% upon adoption of CECL – volatility expected to increase There are a few key drivers that affect the allowance with the adoption of CECL: ▪ Relatively benign consensus “reasonable and supportable” (R&S) economic fo
Slide 17: Financial Outlook (4Q 2020E vs 4Q 2019A)
Financial Outlook (4Q 2020E vs 4Q 2019A) Outlook Comments Moderately ▪ Moderate growth reflects activity in the next twelve months which may not Loan Balances Increasing be as strong as that experienced in the past twelve months Slightly Net Interest Income ▪ Assumes benchmark rates generally consis
Slide 18: Appendix
Appendix ▪ Financial Results Summary ▪ Interest Rate Sensitivity ▪ Impact of Warrants ▪ Loan Growth by Bank Brand and Loan Type ▪ Deposit Growth by Account Type ▪ GAAP to Non-GAAP Reconciliation 18
Slide 19: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) December 31, September 30, June 30, 2019 2019 2019 Earnings Results: Diluted Earnings Per Share $ 0.97 $ 1.17 $ 0.99 Net Earnings Applicable to Common Sharehol
Slide 20: Interest Rate Sensitivity
Interest Rate Sensitivity Zions is actively managing balance sheet sensitivity Earnings at Risk Sensitivity (1) −200 bps −100 bps +100 bps +200 bps 1▪ Interest rate sensitivity has been reduced by adding interest rate hedges 6% ▪ $3.6 billion of loan interest rate swaps as of Q4 2019 3% ▪ Additional
Slide 21: Impact of Warrants
Impact of Warrants Potential dilution is expected to be slight to moderate, depending upon future stock price ▪ Zions has 29 million warrants (Nasdaq: ZIONW) outstanding which are currently in the money and expire on May 22, 2020 ▪ Dilution is calculated using the treasury method of accounting, whic
Slide 22: Loan Growth by Bank Brand and Loan Type
Loan Growth by Bank Brand and Loan Type Year over Year Loan Growth (4Q19 vs. 4Q18) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) (42) 108 16 (148) 93 14 (4) - 37 Owner occupied (ex-NRE) 42 86 36 42 33 (10) 13 - 242 Energy (Oil & Gas) 4 193 7 3 - 10 - - 217 Mu
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 4Q19 3Q19 2Q19 1Q19 4Q18 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 472 $ 415 $ 424 $ 430 $ 420 Adjustments: Severance costs 22 2 1 - 2 Other real estate expense - (2) - (1) - Debt extinguishment cost - - - - - Amortization of core dep
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 4Q19 3Q19 2Q19 1Q19 4Q18 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $472 $415 $424 $430 $420 LESS adjustments: Severance costs 22 2 1 - 2 Other real estate expense - (2) - (1) - Debt extinguishment cost -
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