Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Investor Day (March 2018)
130 slides from Zions Bancorporation N.a's investor day presentation, Mar 1, 2018
Slide 1: 2018 Investor Conference
2018 Investor Conference March 1, 2018 Exhibit 99.1
Slide 2: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 3: The Big Picture: Zions Is A Collection of Community Banks
Local decision-making and top-notch service separates Zions from peers Source: SNL Financial/S&P Global, BEA.gov, Zions’ calculations, using simple average of trailing 10 years (2007-2016) of annual GDP growth by state multiplied by the percent of deposits in each state. Dollars of deposits do not s
Slide 4: Zions Receives National and Local Recognition for Excellence
Zions Receives National and Local Recognition for Excellence Only three other banks have consistently received as many Greenwich Excellence Awards as Zions since 2009 16 Greenwich Excellence Awards (2017) for middle-market and small business banking Averaged 16 Excellence Awards annually for the pas
Slide 5: We Said We Would Strengthen the Company
We Said We Would Strengthen the Company… 1 Assumes two 25 basis point fed funds rate increases by the end of 2017 After Strengthening: Capital (2008-2010) Credit Quality (2010-2014) Risk Management Infrastructure (2010-2015) Board composition (2014-2017+) Regulatory matters (2009-2016) We embarked u
Slide 6: Decade-Long Risk Profile Improvement
Decade-Long Risk Profile Improvement Since the recession, Zions has addressed the following: Concern Mitigation Negative/Low Profitability Improved ROA to levels approximately in line with peers Improved Efficiency Ratio to 62.3% (2017), consistent with commitment to “low 60s” for 2017 Energy Losses
Slide 7: Simple, Easy, Fast: Simplify, Strengthen, Improve
Simplify the business model and structure Proposed holding company elimination Charter consolidation Enterprise retail banking, mortgage, international, foreign exchange, wealth management Greater visibility for our 17 product groups Deliver a “Simple, Easy, Fast" Experience for Customers and Employ
Slide 8: Soliciting Feedback During the Simple, Easy, Fast Journey
Soliciting Feedback During the “Simple, Easy, Fast” Journey Town Hall Meetings and Listening Sessions: CEO and President “SWAT” Sessions Direct employee feedback Employee Survey Active listening to customers and employees
Slide 9: Results of Simple, Easy, Fast: Revenue and Noninterest Expense
Results of Simple, Easy, Fast: Revenue and Noninterest Expense Zions’ revenue growth improved from a trend slower than that of peers to in line with peer growth, while noninterest expense growth has been well below peers Indexed Net Revenue Source: SNL Financial/S&P Global. Data adjusted to account
Slide 10: Results of Simple, Easy, Fast: Pre-Provision Net Revenue
Results of Simple, Easy, Fast: Pre-Provision Net Revenue Zions’ PPNR growth has been above the best quartile of its peer group Indexed Adjusted Pre-Provision Net Revenue Source: SNL Financial/S&P Global. Data adjusted to account for major acquisitions. Zions results adjusted in 2Q17 to exclude $16 m
Slide 11: Results of Simple, Easy, Fast: Efficiency Ratio
Results of Simple, Easy, Fast: Efficiency Ratio Zions improved from an adverse outlier to within the peer group Efficiency Ratio Source: SNL Financial/S&P Global. Data adjusted to account for major acquisitions. Zions results adjusted in 2Q17 to exclude $16 million of interest income from loan recov
Slide 12: Results of Simple, Easy, Fast: Return on Assets
Results of Simple, Easy, Fast: Return on Assets Zions improved from an adverse outlier to approximately the 60th percentile for 2017 Return on Assets Source: SNL Financial/S&P Global. Data adjusted to account for major acquisitions. Zions results adjusted in 2Q17 to exclude $16 million of interest i
Slide 13: Results of Simple, Easy, Fast: EPS Growth vs. Peers
Results of Simple, Easy, Fast: EPS Growth vs. Peers EPS growth has been strong since the launch of Simple, Easy, Fast, and has accelerated as the oil and gas recession has turned the corner Indexed EPS Growth Source: SNL Financial/S&P Global, as of 4Q17. Data adjusted to account for major acquisitio
Slide 14: Zions Intends to Merge Parent Company into Bank Subsidiary
Simplification Continued: Zions Intends to Merge Parent Company into Bank Subsidiary Eliminates duplicative regulatory oversight and enhances capital flexibility Zions intends to merge the Bank Holding Company (Parent) into its bank subsidiary Approval required by the OCC, FDIC and shareholders Appl
Slide 15: Key Strategic Themes for 2018
Within Our Control: Greater focus on growth than at any point in the last decade Major loan portfolio concentrations are within acceptable limits, thus allowing for broad-based growth Noninterest income growth initiatives have momentum Expense growth primarily dedicated to digital delivery and reven
Slide 16: Operational/Strategic and Financial Goals
Operational/Strategic Creating value through the adoption of common practices, automation and simplification of all front, middle and back office processes Merging the holding company into the operating bank Execute on our Community Bank Model – doing business on a “local” basis Implement technology
Slide 17: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 18: Mission of Risk Management
The mission of risk management has been to build an infrastructure that will allow Zions to be a positive outlier – or to substantially outperform peers – through economic/credit cycles Credit Risk: Substantial improvement to portfolio management, including concentration risk management and hold lim
Slide 19: Strong Risk Management Infrastructure
Strong Risk Management Infrastructure Substantial improvement in practices and policies that should lead to superior through-the-cycle performance Risk Matrix: dollar limits on different industries for lending and investments Strong concentration risk management Strong oversight of areas that are gr
Slide 20: Risk Management Emphasis / Accomplishments
Risk Management Emphasis / Accomplishments Development of risk management infrastructure includes the following: Further refinements in: Risk Appetite Framework 1st Line of Defense Accountability for risk management with executive management committee performance Implementation of “White Paper” proc
Slide 21: Concentration Risk Management
Concentration Risk Management Altered Composition of Loan Portfolio Oil & Gas uses NAICS “Mining & Oil & Gas Extraction” Total Commitments as % of Risk-based Capital C&I Commitments as % of Risk-based Capital CRE Commitments as % of Risk-based Capital Changes in portfolio composition from 4Q07 to 4Q
Slide 22: Credit Risk Enhancements (Continued)
Credit Risk Enhancements (Continued) Multi-family portfolio quality has improved substantially since 2013 due to effective risk management policies and practices Prior to May 2012 new risk management program Prior to deep dive evaluation on multifamily Post deep dive evaluation on multifamily (First
Slide 23: Portfolio Probability of Default (PD) Grades
Portfolio Probability of Default (PD) Grades Note: PD grades weighted by loan balances. Weighted Average PD Grade (Portfolio Balances) Rating Scale PD Grade S&P Equivalent 1 AAA / AA / AA- 2 A+ / A- 3 BBB+ 4 BBB 5 BBB- 6 BB+ 7 BB 8 BB- 9 B+ 10 B 11 B- 12 CCC+ / CCC / CCC- / CC 13 C 14 D The weighted
Slide 24: Our Data Governance Journey
Our Data Governance Journey 2005 2010 2015 Enterprise Data Warehouse (EDW) established Dodd-Frank Act creates larger demands on Company data Consultant advises on structure/ strategy Consolidation of Enterprise Business Intelligence teams 2016 2017 Adopted industry standard financial services data m
Slide 25: Sales Practices
Sales Practices Zions’ sales practices do not encourage the behaviors, nor do they tend to create the issues that have been disclosed by other banks Our careful review has not revealed any systemic issues regarding sales practices While we have not identified systemic issues, we continue to improve
Slide 26: Risk Identification & Escalation
Risk Identification & Escalation Like other SIFIs, Zions developed and implemented a Risk Identification process. This process assists Zions in prioritizing risks into Level 1 and Level 2 categories Examples of Level 1 risks include Credit, Liquidity, Interest Rate Zions has identified and actively
Slide 27: Decade-Long Risk Profile Improvement
Decade-Long Risk Profile Improvement Since the recession, Zions has addressed the following: Concern Mitigation Negative/Low Profitability Improved ROA to levels approximately in line with peers Improved Efficiency Ratio to 62.3% (2017), consistent with commitment to “low 60s” for 2017 Energy Losses
Slide 28: Review of Credit Quality
— Review of Credit Quality 28 ZIONS BANCORPORATION
Slide 29: Credit Quality
Credit Quality Last 4 Quarter Average (NPAs + 90DPD) / (Loans + OREO) Last 12 Months NCOs / Avg Loans Source: SNL Financial/S&P Global, data as of 4Q17. Note: Survivorship bias: some banks that may have been included in Zions’ peer group have been excluded due to their failed or merged status. Throu
Slide 30: Credit Quality – Total Portfolio
Credit Quality – Total Portfolio Overall credit quality is strong; energy portfolio has improved substantially in recent quarters Classifieds down $421MM YoY (down $91MM ex-energy) Nonaccrual down $126MM YoY (up $18MM ex-energy) Energy net loss $36MM YTD Non-energy net loss $38MM YTD On Energy: YoY,
Slide 31: C&I Credit Quality
2017 Dec 2017 Sep QoQ ($MM) 2016 Dec YoY Loan Balance ($B) 22.8 22.4 427 21.5 6.2% Commitments ($B) 34.7 33.8 861 32.8 5.7% Delinquencies 0.81% 1.04% -22bp 0.99% -18bp Non-Maturity Delinquencies 0.46% 0.58% -12bp 0.61% -15bp Classifieds (% of loans)* 3.93% 4.50% -57bp 6.22% -229bp Nonaccrual Loans 1
Slide 32: Commercial Real Estate Portfolio Summary
Commercial Real Estate Portfolio Summary Stable CRE Credit Quality Note: Data as of 4Q17 CRE Balances down 2% YoY; stable credit metrics for delinquencies, nonaccrual, and classifieds Criticized balance by type (Total CRE: 2.7%) Commercial Construction – 1.3% Home Builder Construction – 0.1% CRE Ter
Slide 33: Commercial Real Estate Credit Quality
Comments Source: Credit Dashboards. Data as of 12/31/2017. Excludes FDIC-supported loans. Commercial includes multifamily Commercial Real Estate Credit Quality Commercial Construction Resi. Home Builder Construction Term High credit quality for term and homebuilder, with improvement in construction
Slide 34: CRE Term Portfolio
CRE Term Portfolio Strong CRE metrics and conservative structures Balanced CRE portfolio; ¾ is Office, Multifamily, Retail and Industrial/Warehouse. Portfolio benefits from conservative advance rates (low LTVs) Term criticized rate was 3.1%, up from 2.2% at YE 2016 Weighted average PD grade improved
Slide 35: CRE Construction Portfolio
CRE Construction Portfolio Balanced, performing portfolio Note: Data as of 4Q17, published semi-annually. Diversified construction portfolio with 30% Homebuilder Residential, 70% Commercial Homebuilder Residential performing well; ~75% of portfolio in CA and TX Weighted average PD grade improved fro
Slide 36: Shared National Credits and Leveraged Lending
Shared National Credits and Leveraged Lending Total Shared National Credit balance: $5.3 billion Total Leverage Lending balance: $2.7 billion ~3/4 of leveraged loan (LL) commitments are also shared national credits (SNCs) Approximately 80% of each the Shared National Credit and Leverage Lending port
Slide 37: Shared National Credits
Shared National Credits Note: Data as of 4Q17. Shared National Credit portfolio reported total commitments and balances of $10.2 and $5.3 billion, respectively Average SNC commitment was $23 million C&I Non-Oil & Gas SNCs comprised 61% of total SNC commitments and had a Classified rate of 5.5% Oil &
Slide 38: Leveraged Lending
Leveraged Lending Note: Data as of 4Q17. (1) As a percentage of total leveraged lending commitments Leveraged Lending commitments and balances totaled $5.0 and $2.7 billion, respectively The average Leveraged Lending commitment was $18 million Well diversified across industries, with the largest ind
Slide 39: O&G Loan Loss Expectation
O&G Loan Loss Expectation O&G loan losses are expected to decline substantially over the next 12 months as compared to the last 12 months (1) Most of the expected loss is likely to come from services loans 51% of classified O&G loans are from services loans Approximately three quarters of O&G losses
Slide 40: Retail C&I Summary
Retail C&I Summary The portfolio is stable, with limited exposure to national brick and mortar retailers Retail C&I loans (defined by NAICS codes) total $2.3B and represent exposure to the overall retail industry; More insulated (84%) includes auto dealers, gas stations, grocery stores, building mat
Slide 41: Retail C&I Summary – More Insulated
Retail C&I Summary – More Insulated More Insulated (84%; $1.9 billion) includes auto dealers, gas stations, supermarkets, home improvement, and non-store retailers Approximately half of the More Insulated exposure is real estate secured with another 22% comprised of dealer flooring lines Only 3% is
Slide 42: Retail CRE Summary - Credit Metrics
Retail CRE Summary - Credit Metrics Balanced Retail CRE portfolio with emphasis on stand alone and neighborhood retail Note: Data as of 4Q17 Retail CRE average loan balance < $2.0MM Retail portfolio metrics: > 90% occupied Loan-to-value of ~ 55% Debt Service Coverage of ~ 2.00x Granular tenant mix;
Slide 43: Retail CRE Summary – Regional Malls
Retail CRE Summary – Regional Malls Limited exposure to Regional Malls; performing portfolio Note: Data as of 4Q17 During recession, the retail and regional mall portfolios performed poorly – high criticized, delinquent and non-accrual levels; however, generally stable today 94% of regional mall exp
Slide 44: Credit Risk: Consumer Summary
Consumer origination volume and quality are strong with continued low delinquency and NCOs; no significant concerns YoY balance growth mostly mortgage ($795MM) and HECL ($130MM) Commitment growth of 11.1% exceeds 10% RAF trigger Origination quality of consumer loans is high due to our underwriting c
Slide 45: Consumer Trends
Source: Consumer and Bankcard ALLL data. As of 12/31/2017. Excludes FDIC-supported loans. *Trailing 12 months. Categories based on GAAP subcategory. Consumer Trends Recent performance and favorable historical trends reflect low credit risk Credit losses have bottomed out near zero for all but bankca
Slide 46: Consumer Lending vs. Peers and CCAR
Consumer Lending vs. Peers and CCAR Note: Data as of 4Q17. CCAR as of 4Q16. *Produced by Federal Reserve model CCAR* Severely Adverse Peer Comparison First-lien mortgage loss rates lowest and HELOC loss rates 2nd lowest among Fed severe adverse losses (80% of consumer commitments) Low delinquency le
Slide 47: Current LTV and FICO Distribution on Mortgage Loans
Current LTV and FICO Distribution on Mortgage Loans Source: Company documents. Note: Data as of 4Q17. Percentages based on balances. 1st Lien Mortgages Junior Lien Mortgages Refreshed FICO Segments <= 600 600>-650 650>-700 > 700 Row Total Updated LTV Segments <= 80 5% 2% 9% 83% 99% 80>-90 0% 0% 0% 1
Slide 48: Consumer Credit Scores and Other Underwriting Distribution Metrics
Consumer Credit Scores and Other Underwriting Distribution Metrics Note: Metrics as of December 2017. A strong 67% of Consumer Loans have refresh FICO at or above 750 99% of Consumer loans have Updated Combined LTV (UCLTV) of 80% or less 78% of Consumer loans have Origination DTI of 43% or less Cons
Slide 49: CECL Readiness Status
CECL Readiness Status Infrastructure is being developed to calculate CECL estimates Calculating CECL estimates based on: Modified CCAR econometric credit losses models to forecast loan losses over the contractual life of a loan or security Long-term average loss estimates based on credit attributes
Slide 50: Hurricane Harvey Update
Hurricane Harvey Update $8.0 billion of loan balance exposure to customers or collateral in FEMA-designated counties $0.1 billion par value of municipal securities in FEMA-designated counties Utilized multiple top-down and bottom-up analyses to apply a $34 million qualitative allowance for credit lo
Slide 51: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 52: Branch Centric to Hyper-Connected Digital Ecosystem
Branch Centric to Hyper-Connected Digital Ecosystem Changes customer behaviors, offers new value, and new insights
Slide 53: Zions Technology Ecosystem
Zions Technology Ecosystem Building and enabling a digital future Core Computing Systems of Customer Insights Systems of Customer Engagement Core Computing and Banking Systems Data Management Platform Automation, APIs, and Robotic Platforms Cybersecurity Customer Facing Enabling and Infrastructure
Slide 54: Core Computing Investment - FutureCore
Core Computing Investment - FutureCore A solution to an aging infrastructure First fully integrated core replacement by a domestic regional or larger bank! Replaces 3 loan systems, 4 related deposit systems and the teller system Modern and flexible infrastructure to provide the foundation for our di
Slide 55: Differentiating Technology Investments
Core Computing Systems of Customer Insights Systems of Customer Engagement Core Computing and Banking Systems Data Management Platform Automation, APIs, and Robotic Platforms Cybersecurity Next Generation Integration Platform (API) Meaningful infrastructure investments to enable the future Different
Slide 56: Differentiating Technology Investments: Customer Experience
Fast! Online Deposit Account Opening Deposit Product Simplification Customer Centric Website Refresh Online Credit Card Prequal and App Mobile Positive Pay Improved P2P through Zelle Third Party Connections (API Platform) Digital Experience Platform End to End Account Payable Automation Upgraded Tre
Slide 57: Zions Receives National Recognition for Excellence
Zions Receives National Recognition for Excellence Leading in digital experience for our primary customer segment 16 Middle Market and Small Business Banking Greenwich Awards. Including the top award Middle Market Awards for: Cash Management - Digital Experience Cash Management – Digital Experience
Slide 58: Investing in Corporate Treasury Management Digital Capabilities
Investing in Corporate Treasury Management Digital Capabilities Complete merchant digital solutions to help customers manage and run their businesses Offers Multiple Payment Acceptance Options for Merchant Customers Provides Tools for Customers to Increases Sales Opportunities with Web Stores Helps
Slide 59: Investing in Corporate Treasury Management Digital Capabilities
Investing in Corporate Treasury Management Digital Capabilities Automated end-to-end accounts payable automation
Slide 60: Active Mobile Development
Active Mobile Development Development hit a record pace of 30 improvements per month; a few highlights: Mobile Password Management eStatements/eNotices for “Life of Account”
Slide 61: Online and Mobile Website Redesign
Enhancements of the new site: Attractive, intuitive & efficient Works equally well on all devices Greater user insights Simple/Easy/Fast for marketing Common components for ongoing cost management Old Website Challenges: Low utilization and account conversion rates on websites Poor experience on sma
Slide 62: Fast! Deposit Online Account Opening
Fast! Deposit Online Account Opening Workflow automation enables 70% of applications to be approved and onboarded—or rejected—without human involvement Moving account opening speed from days to minutes
Slide 63: Fast! Deposit Online Account Opening
BEFORE AFTER Fast! Deposit Online Account Opening Conversational customer centric relationship design in mobile and online interactions
Slide 64: Risks from Disruption are Real
Risks from Disruption are Real But, not primarily from FinTechs FinTechs have evolved from Being a Threat to Being Partners with Banks Banks provide scale and trust FinTechs provide new functionality (e.g. Clover) Long-term FinTechs will plug into our Digital Experience Platform where Zions owns the
Slide 65: Risk from Disruption are Real
Mega banks, investing heavily in digital, are now beating regional and small banks in consumer satisfaction, but lag in Middle Market. Platform companies long term (Amazon, Google, Facebook) will play and are playing a larger role in the financial system ecosystem. Risk from Disruption are Real Our
Slide 66: Future Ready in a Digital World
Future Ready in a Digital World Ready for what our customers want today Maintaining current market competitiveness with rapidly changing customer expectations
Slide 67: Future Ready in a Digital World
Future Ready in a Digital World Well ahead of peers in addressing aging legacy core systems Leading the way with long term and differentiated investments in replacing our core Servicing systems
Slide 68: Future Ready in a Digital World
Future Ready in a Digital World Building a platform to meet anticipated customer segment demands for seamless interactions Strategic investments to leverage our proven banker relationship management strengths in the digital channel
Slide 69: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 70: What complicates how we do business?
What complicates how we do business? Simple, Easy, Fast Rust builds up in any organization Antiquated legacy core systems Regulatory demands increasing Inability to see the entire customer journey Customization of technology/process/products for each affiliate Data inconsistencies
Slide 71: What makes us different? Simple, Easy, Fast
No business line silos Determination across the company to adopt common practices for process, procedure, and technology Core loan and deposit system replacement project will provide a more agile foundation for all future technology enhancements Executive engagement 15% of executive goals focused on
Slide 72: Simplify the business model and structure
Simplify the business model and structure Proposed holding company elimination Charter consolidation Enterprise retail banking, mortgage, international, foreign exchange, wealth management Greater visibility for our 17 product groups Deliver a “Simple, Easy, Fast" Experience for Customers and Employ
Slide 73: Simple, Easy, Fast Initiatives
Deposit product simplification: reduced from 547 products to 100 Client onboarding related: Digital signatures – a common approach Simplification of required documentation Improve employee onboarding process Credit related: Simplify the credit process for small CRE and C&I loans Adopt one cash flow
Slide 74: Case Study: Simplification in Fee Income Areas
Case Study: Simplification in Fee Income Areas Consolidating systems/locations, improving processes & enhancing the customer experience Sites/ Entities Process Improvements Systems Wealth Management Foreign Exchange (FX) Consolidated two trust systems into one; Consolidated three brokerage firms int
Slide 75: Case Study: Simplification in Lending Areas
Case Study: Simplification in Lending Areas Consolidating systems/locations, improving processes & enhancing the customer experience Sites/ Entities Process Improvements Systems Mortgage Business Banking Loan Center (Under $3 million) Consolidated six originations platforms to a single loan originat
Slide 76: Case Study: Operational Excellence Focus Achieves Results
Improved Efficiency Reduced direct expense by $16 million or 28% (from 2015 to 2017) Reduced Operations’ FTE from 705 (2015) to 531 (2017) Reduced Unit Cost: Lockbox Operations: 19% ACH Operations: 50% Check Processing: 43% Wire Operations: 30% Risk Mitigation Improved fraud controls and detection p
Slide 77: Achieving Operational Excellence Through Simplification
Commercial lending renewals/modifications forms (50% of our volume): Reduced pages from 35 to 12 Signature cards: New way: One signature card for multiple accounts Old way: signature cards for each account Streamlined credit authority matrix in Consumer Lending and Bankcard: Fewer escalations for cr
Slide 78: Achieving Operational Excellence Through Automation
Commercial Loan Operations: reduced errors in the boarding process by 47% and reduced processing time from 60 minutes to 20 minutes/loan FutureCore Consumer Lending Release: Consumer loan servicing information is more available and easier to navigate Functionality previously reserved as back-office
Slide 79: Achieving Operational Excellence Through Improved Service
Improved Online Banking up-time by 98 basis points since 2015 to 99.83% in 2017 Eliminated the need to transfer tens of thousands of call center requests (annually) to branch offices Added four hours of availability per day for Treasury customers to transact business Doubled the client history for “
Slide 80: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 81: Strong growth in EPS
Strong growth in EPS: Diluted earnings per share increased to $2.60 from $1.20; excluding loss on securities and other adjustments used to calculate the efficiency ratio, EPS increased to $2.82 from $1.66 in FY15 Strong growth in adjusted pre-provision net revenue (1): 51% growth over FY15 18.7% inc
Slide 82: Profitability: Solid Improvement Since 2014
Profitability: Solid Improvement Since 2014 Source: SNL Financial/S&P Global, Zions calculations *Adjusted ROA and ROTCE for ZION excludes gains/losses on fixed income securities, debt extinguishment and preferred stock redemption cost, and reserve release, which is defined as provision for credit l
Slide 83: The Big Picture: Zions is a Commercially-Oriented Bank
The Big Picture: Zions is a Commercially-Oriented Bank Earning Assets Liabilities and Equity 55% of earning assets are commercial loans (vs. 45% for peers), and 36% of liabilities and equity are funded by noninterest-bearing deposits (vs. 25% for peers) Note: SNL Financial/S&P Global as of 4Q17. Non
Slide 84: Loan Profile: Zions is a Leader in Small Business Lending
Loan Profile: Zions is a Leader in Small Business Lending Commercial Loans sized $100k - $1M Commercial Loans sized $100k - $1M as a percent of total commercial loans Note: Call report data via SNL Financial/S&P Global, as of 4Q17; peer group shown different than typical peer group in order to show
Slide 85: Loan Profile: Commercial
Loan Profile: Commercial Loans to commercial customers are very granular in nature Commercial loans are very granular, with a median balance of less than $40,000 and an average balance of less than $700,000 Marginal loan pricing (new loans and draws on existing lines) is now accretive to the commerc
Slide 86: Loan Profile: Consumer Term Mortgage
Loan Profile: Consumer Term Mortgage Loans to retail customers are also very granular in nature Mortgage Customer Loan Count Distribution Mortgage Customer Loan Balance Distribution Mortgage loans are very granular, with a median balance of less than $125,000, an average balance of less than $300,00
Slide 87: Loan Profile: Other Consumer Loans
Loan Profile: Other Consumer Loans Loans to retail customers are also very granular in nature “Other” Consumer Customer Loan Count Distribution “Other” Consumer Customer Loan Balance Distribution Other consumer loans (primarily home equity, but also cards and signature lines of credit) are very gran
Slide 88: Securities Profile
Securities Profile Short to medium duration portfolio; minimal duration extension risk Total Securities (end of period balances) ($ billion) Securities portfolio has increased significantly in size since 2014 Serves as on-balance sheet high quality liquidity Significantly improves PPNR during possib
Slide 89: Deposit Profile
Deposit Profile: “Some of our greatest assets are our very small liabilities” Note: Regulatory capital ratios are Basel III. Source: SNL Financial/S&P Global, data as of 4Q17. Solid liquidity profile as measured by healthy loan-to-deposit ratio and above peer noninterest bearing deposits as a percen
Slide 90: Deposit Growth
Deposit Growth Total Deposit Growth Indexed: 2007=100 Source: SNL Financial/S&P Global. Data excludes peers that purchased significant companies during the time period, including BBT, HBAN, MTB, KEY Deposit growth has been consistent with peers
Slide 91: Deposit Profile: Commercial
Deposit Profile: Commercial Deposits of commercial customers are granular and have a median balance of less than $20,000 and an average balance of less than $200,000 Commercial Customer Deposit Count Distribution ($000) Commercial Customer Deposit Balance Distribution Data as of 12/31/2017. Commerci
Slide 92: Deposit Profile: Consumer
Deposit Profile: Consumer Deposits of consumer customers are granular and have a median balance of less than $3,000 and an average balance of less than $30,000 Consumer Customer Deposit Count Distribution ($000) Consumer Customer Deposit Balance Distribution Data as of 12/31/2017. Consumer customers
Slide 93: Revenue: Net Interest Income
Net interest income increased 22% since 4Q14 and 10% over the year-ago period Majority of the increase attributable to: Disciplined deposit pricing Increases in interest and fees on loans due to loan growth in commercial and consumer loans Remixing the liquidity portfolio (cash and securities) towar
Slide 94: Revenue: Net Interest Income Drivers
Revenue: Net Interest Income Drivers Net Interest Margin has expanded moderately Net Interest Margin (NIM) Avg Earning Asset Mix During the rising rate environment the NIM has expanded moderately due in part to remixing of the balance sheet Yield on loans has been generally stable, in part due to: r
Slide 95: Revenue: Loan Yield Comparison
Revenue: Loan Yield Comparison Zions’ loan yield has consistently been in the top quartile Loan Yield Loan Yield Substantial Benefit from Purchase Credit Impaired Loans (loans purchased from the FDIC in 2009)
Slide 96: Revenue: Interest Rate Sensitivity and Historical Deposit Beta
Much of the reduction in rate sensitivity was due to securities purchases during 2016 and early 2017 The average investment portfolio is $11.4 billion higher than 4Q14; taxable-equivalent interest income from the investment portfolio increased nearly $130 million in FY17 compared with FY16 Zions and
Slide 97: Revenue: Noninterest Income
Customer-related fee income increased approximately 8% from the year ago period, primarily due to: An 8% Increase in non-deposit service charges, which was primarily due to credit card fee income growth A 9% increase from trust and wealth management income An increase capital markets (includes swap
Slide 98: Noninterest Expense
Noninterest Expense Zions’ noninterest expense growth has been well below peers Source: SNL Financial/S&P Global. Data adjusted to account for major acquisitions. Zions results adjusted to exclude a charitable foundation contribution of $12 million in 4Q17. Results also adjusted for items such as se
Slide 99: Efficiency Ratio
The efficiency ratio in 4Q17 was 61.6%, declining about 3 percentage points from 64.5% in the year-ago period Excluding the charitable contribution previously referenced, the efficiency ratio was 59.8% Achieved low 60 percent range of 62.3% for 2017 Committed to continued improvement to the efficien
Slide 100: Tax Rates
Tax Rates The effective tax rate for 2018 is estimated to be between 24% and 25%, down from the adjusted effective tax rate of 34.8% in 2017 2017 adjusted effective tax rate of 34.8% excludes the effect of: DTA adjustment of $47 million One time state tax adjustments in the first half of 2017 Applic
Slide 101: Capital: Operating From a Position of Strength
Capital: Operating From a Position of Strength Common Equity Tier 1 Capital Ratio Tier 1 Risk-Based Capital Ratio Note: Regulatory capital ratios are Basel III. Source: SNL Financial/S&P Global, data as of 4Q17. Capital ratios are strong relative to peers Peer Median 10.6% (+22 bps from 4Q16)
Slide 102: Capital: Stress Test Results
Change in CET1 Ratio: Pre-to-Post-Stress Delta – Strong improvement from 2014 to 2017 Improvement primarily due to resilience of PPNR, in part due to improved overall profitability and securities portfolio (longer duration of earning assets) Capital: Stress Test Results Post Stress FRB Modeled CET1
Slide 103: Increased Payout
Increased Payout Expect improved return on tangible common equity due to improved profitability and less excess equity outstanding Actively managing capital somewhat lower to better align with improved risk profile Capital Actions: CCAR / Horizontal Capital Review 2017 Improved profitability and red
Slide 104: Profitability: Zions Not Satisfied with Median Performance
Profitability: Zions Not Satisfied with Median Performance Zions expects to continue to drive profitability higher Keys to improving profitability over the next two-plus years include: Moderate loan growth (mid-single digits) Economic backdrop and improved internal processes provide meaningful oppor
Slide 105: Next 12-Month Financial Outlook
Next 12-Month Financial Outlook (4Q18E, vs. 4Q17A) Outlook Comments Moderately Increasing Over the next 12 months, we expect continued strong growth from residential mortgage and municipal loans, moderate growth in C&I and CRE loans Moderately Increasing Excludes the effects of future interest rate
Slide 106: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 107: 2018 Investor Conference Agenda
Welcome Risk Management Technology and Innovation – Future Ready Simplification Financial Performance and Goals Roundtable Sessions Access to Lending Managers CRE Large C&I Small C&I Access to Affiliate CEOs Texas, Colorado, Utah California, Arizona, Nevada, Washington Wrap-up 2018 Investor Conferen
Slide 108: Operational/Strategic and Financial Goals
Operational/Strategic Creating value through the adoption of common practices, automation and simplification of all front, middle and back office processes Merging the holding company into the operating bank Execute on our Community Bank Model – doing business on a “local” basis Implement technology
Slide 109: Appendix
Appendix 109 ZIONS BANCORPORATION
Slide 110: Committed Exposures and Limits
As of Date = 12/31/17, RBC values: 9/30/17 Sources: Total Risk Based Capital = SNL Financial/S&P Global, Bank Balance and Remaining Commitment = EDW. Notes: Peak energy not currently included in source document. Values are Committed Exposure as a percentage of Total Risk Based Capital (CE / TRBC); C
Slide 111: Risk Management: Credit Risk Enhancements
Risk Management: Credit Risk Enhancements Based upon “White Paper” process and governance, Zions implemented an adjustment to Investor CRE Adjusted concentration limits Adjusted underwriting to improve the quality of the Investor CRE loan portfolio by requiring: No multi-family (MF) loans rated with
Slide 112: Risk Management: Relative Commercial Real Estate (CRE) Growth
Risk Management: Relative Commercial Real Estate (CRE) Growth CRE concentration management has been a focus for Zions over the past several years Note: “CRE” includes term CRE, multifamily, and construction and land development loans. Growth indexed to 4Q11, when ZION instituted concentration limits
Slide 113: Risk Management: CRE Peer Concentrations
Source: SNL. Data as of 12/31/2017. Segments based on call report segmentation—will not match internal concentrations precisely Risk Management: CRE Peer Concentrations: Not materially larger than peer median Concentrations - Term Concentrations (commitments, not balances) - Total CRE Concentrations
Slide 114: Risk Management: Board of Directors
Risk Management: Board of Directors Composition since 2014: Edward F. Murphy: Prior to joining Zions’ Board, Mr. Murphy served as CFO of the FRB of New York and EVP of its Corporate Group. He had previously served as EVP and CFO of the retail division of JP Morgan and in several other positions with
Slide 115: Criticized Loans (Non Oil & Gas) by Customer > $20mm Commitment
Criticized Loans (Non Oil & Gas) by Customer > $20mm Commitment Note: Data as of 11/30/2017 Bank Commitment ($000s) Outstanding ($000s) Description Weighted Avg Risk Grade Credit Facilities ABT $29,596 $29,596 Lessors of Residential Buildings & Dwellings 11 Multiple ABT $28,840 $26,310 Lessors of No
Slide 116: Commercial and Industrial: Probability of Default Grade Migration
Commercial and Industrial: Probability of Default Grade Migration Grade improvement reflects continued risk reduction and cautious approach Note: Data is based on loan balances. Negative grade migration has been isolated to Energy credits, with improvement in 2017 Non-Energy Commercial and Industria
Slide 117: Commercial Real Estate: PD Grade Migration
Commercial Real Estate: PD Grade Migration No observable deterioration in credit quality, even within pass grade buckets Approximately 1/3 of CRE loans are or have similar credit characteristics to investment grade Note: Data is based on loan balances. Risk reduction and grade improvement reflects c
Slide 118: CRE Peer Commitment Growth
Source: SNL. Data as of 12/31/2017 CRE Peer Commitment Growth Year-Over-Year Commitment Growth - All Term Year-Over-Year Commitment Growth - Total CRE Year-Over-Year Commitment Growth - Construction Year-Over-Year Commitment Growth - Multifamily Term
Slide 119: Oil and Gas: Benefits of 2012-2013 Risk Management Enhancements
Oil and Gas: Benefits of 2012-2013 Risk Management Enhancements Due to enhanced risk management practices, losses were less than otherwise would have been Zions’ concentration limits had been in place years before the downturn Risk Management lowered the loan-to-risk-based capital ratio prior to the
Slide 120: Credit Quality: Oil & Gas (O&G) and Non-O&G
Credit Quality: Oil & Gas (O&G) and Non-O&G Key Credit Quality Ratios O&G credit quality remains challenged, but improving and Ex-O&G credit quality remains very good Note: Net Charge-offs/Loans ratio is annualized for all periods shown. NM: not meaningful O&G Non-O&G Criticized Loans $113 million l
Slide 121: Retail C&I Summary - Total
Retail C&I Summary - Total Total Retail C&I is dominated by Term Debt secured by Real Estate or Dealer Flooring Approximately half of the Total Retail C&I balances are secured by real estate, primarily auto dealers, gas stations and grocery stores Flooring lines of credit (those secured by new and u
Slide 122: Retail C&I Summary – Less Insulated
Retail C&I Summary – Less Insulated Less insulated (20%; $403 million) includes those providing products widely available both on-line and through traditional brick and mortal channels Limited exposure to national, legacy brick and mortar retailers Majority of borrowers defined as less insulated are
Slide 123: Retail CRE Summary - Location and Collateral Type
Retail CRE Summary - Location and Collateral Type Footprint based lending with term loan emphasis Note: Data as of 4Q17 93% of portfolio is in the Bank’s footprint states Since 2008-9 recession, Zions identified specific retail types as a concern, thus limiting exposure to shadow anchor retail and r
Slide 124: Consumer Credit: Examining the Credit Score Tail
Consumer Credit: Examining the Credit Score Tail Note: Refresh FICO values are included along the trend lines for each refresh period. The median refresh FICO appears along the 'Overall D60+ Rate' line, while the 10th percentile refresh FICO appears along the 'Bottom 10% D60+ Rate' trend line. (60 d
Slide 125: Consumer loans from high O&G employment counties
Consumer loans from high O&G employment counties performing similarly to overall consumer portfolio; nearly all of these consumer loans are with Amegy (92%) located in Texas, primarily in the Houston area 86% of consumer loans in high O&G counties are Mortgage and HECL Consumer FICO scores are stabl
Slide 126: Customers Moving More Money Digitally
5.4% CAGR 18% CAGR 25th largest ACH originator in US and 26th largest receiver Over 4 years, Zions 18% CAGR of ACH origination volume outpaces the industry average of 5.3% CAGR coming primarily from Treasury customer growth Improved Corporate Card ranking by 23 places in 7 years to number 7 overall
Slide 127: Mobile Engagement is High
25% 20% 15% Mobile Engagement is High Growth in Major Mobile Transactions is Increasing
Slide 128: 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 within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in this presentation that are based o
Slide 129: Peer Group Key
Peer Group Key ASB: Associated Banc-Corp BAC: Bank of America BBT: BB&T Corporation BOKF: BOK Financial Corporation C: Citigroup, Inc. CBSH: Commerce Bancshares, Inc. CFG: Citizens Financial Group, Inc. CMA: Comerica Incorporated EWBC: East West Bancorp, Inc. FHN: First Horizon National Corporation
Slide 130: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions 2017 2016 2015 2014 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense 1,649,017 1,585,274 1,580,607 1,649,367 LESS adjustments: Severance costs 7,096 4,649 11,005 8,644 Other real estate expense (1,422) (1,597) (647) (1,251) Provision for un