Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Q3 2020 Earnings Presentation
27 slides from Zions Bancorporation N.a's earnings presentation, Oct 19, 2020
Slide 1: Third Quarter 2020 Financial Review
Third Quarter 2020 Financial Review October 19, 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 and assumpt
Slide 3: Third Quarter 2020 Financial Highlights
Third Quarter 2020 Financial Highlights Vs. 2Q20, rebound in earnings as provisions subside; loans on deferral drop more than 90%, loans 30+ days past due improves ✓ Earnings and Profitability: ✓ Credit quality (excluding PPP Loans): ▪ $1.01 diluted earnings/share compared to $0.34 in 2Q20 ▪ 0.79%:
Slide 4: Diluted Earnings Per Share
Diluted Earnings Per Share Vs. 2Q20, EPS positively impacted by reduced provision for credit losses and increased fee income Diluted Earnings per Share Notable Items: ▪ In 3Q20: $1.17 ▪ $0.14 per share adverse impact from one-time charitable contribution related to PPP lending activity $1.01 ▪ $0.04
Slide 5: Adjusted Pre-Provision Net Revenue
Adjusted Pre-Provision Net Revenue Excluding the $30 million charitable contribution, adjusted PPNR declined 1% from 2Q20 Adjusted PPNR(1) and Provision for Credit Losses Notable Items: ($ millions) ▪ In 3Q20: $30 million one-time charitable contribution $309 $299 $300 related to PPP lending activit
Slide 6: Balance Sheet Profitability
Balance Sheet Profitability Zions’ profitability in 3Q20 improved as the provision for credit losses declined Return on Assets Return on Tangible Common Equity 14.18% 1.25% 11.80% 1.04% 10.96% 0.89% 0.35% 3.81% 0.08% 0.41% 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 In 3Q20: ▪ Increase in link
Slide 7: Success Story: Summary of Paycheck Protection Program Loans
Success Story: Summary of Paycheck Protection Program Loans PPP lending success relied on our ability to link our frontline bankers and borrowers with an agile technology deployment ▪ Zions ranked 9th in PPP lending and is ranked 37th in U.S. Future Opportunity Deposit Market Share(1) ▪ 14,000 “new
Slide 8: Success Story: Mortgage Banking
Success Story: Mortgage Banking Successes amid COVID-19 pandemic: very strong mortgage revenue 2019 2020 Record YTD Funding ▪ Roll-out ▪ Enhanced Digital Fulfillment Process $922 million ▪ 86% of all applications taken digitally $791 million ▪ 25% reduction in turn-time allowing 31% 38% 40% 59% 47%
Slide 9: Credit Quality
Credit Quality Zions entered the COVID-19 economic downturn with very clean credit quality All Ratios Exclude PPP Loans Credit Quality Ratios 14.00% Key Credit Metrics: ▪ Classified loans/loans: 3.4% 12.00% ▪ NPAs+90(1)/loans + OREO: 0.79% ▪ Annualized net loan losses: NCOs / Loans (ann.) 10.00% Cla
Slide 10: Deferrals and Delinquencies: A Positive Outcome Thus Far
Deferrals and Delinquencies: A Positive Outcome Thus Far Deferrals have receded by more than 90% to 0.6% of loans; delinquency rate down 0.2% Total Deferrals 30+ Days Past Due relative to total non-PPP loans relative to total non-PPP loans 6.3% 0.6% 0.7% 0.5% 6/30/2020 9/30/2020 6/30/2020 9/30/2020
Slide 11: Select Sub-Industries with Elevated Risk Related to COVID-19
Select Sub-Industries with Elevated Risk Related to COVID-19 COVID-19 Elevated Risk loans are less than 10% of total loans and have strong collateral coverage ▪ Portions of broad industry groups with significant growth in criticized rates COVID-19 Elevated Risk Loans: during 1H20 $4.1 billion (8.4%)
Slide 12: Additional Recent Trends in Loan Balance, Credit Quality and Line Utilization
Additional Recent Trends In Loan Balance, Credit Quality and Line Utilization In 3Q, we have experienced generally stable credit quality trends outside of COVID-19 Elevated Risk and Oil and Gas loans (excluding PPP loans) Loan Balances by Portfolio and Weighted Average Risk Grades Classified and Non
Slide 13: Allowance for Credit Loss ("ACL")
Allowance for Credit Loss (“ACL”) Reserve relatively unchanged quarter over quarter Significant increase in ACL in 1H20, stable in 3Q20 The change in 3Q20 ACL from 2Q20 reflects: ACL (%) ACL (%) ex-PPP 1.88 1.91 ▪ Increase in expected losses due to slower economic 1.68 ($ millions) 1.56 1.66 recover
Slide 14: 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 ($ millions) 2Q20 3Q20 $567 $563 MM and $559 $555 Securities Loan $548 Yields 3.48% 3.46% 3.41% Interest Wholesale Bearing an
Slide 15: Average Loan and Deposit Growth
Average Loan and Deposit Growth Loan growth year-over-year primarily attributed to increase in PPP loans, deposit growth aided by PPP funding Average Total Loans Average Total Deposits Loan Yields Cost of Total Deposits ($ millions) ($ millions) $75,000 $75,000 Average Total Loans Excluding PPP Loan
Slide 16: Interest Rate Sensitivity
Interest Rate Sensitivity Zions is actively managing balance sheet sensitivity Net Interest Income Sensitivity (1) ▪ Interest rate sensitivity reduced through interest rate hedges(2): $ millions Swaps Maturing Average Receive Fixed Rate (R-Axis) −100 bps +100 bps +200 bps $3,000 2.50% 2.06% 2.35% 16
Slide 17: Noninterest Income
Noninterest Income Total fee income, excluding CVA and securities, increased 21% due to strength in mortgage banking activity Customer-Related Fee Income (1) Customer-related fee income up 7% from the prior ($ millions) quarter due to: $140 $143 $139 $134 ▪ Loan related fees and income up 19% from 2
Slide 18: Noninterest Expense
Noninterest Expense Continued focus on expense controls and streamlining Noninterest Expense ▪ Total noninterest expense increased 3% over the prior quarter ▪ Total adjusted noninterest expense, excluding the $30 million ($ millions) $472 one-time charitable contribution, increased 2% over the prior
Slide 19: Appendix
Appendix ▪ Financial Results Summary ▪ Efficiency Ratio ▪ Loan Growth ▪ Technology Initiatives ▪ Oil & Gas Portfolio Credit Quality and Portfolio Details ▪ GAAP to Non-GAAP Reconciliation 19
Slide 20: 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, 2020 2020 2020 Earnings Results: Diluted Earnings Per Share $ 1.01 $ 0.34 $ 0.04 Net Earnings Applicable to Common Shareholder
Slide 21: Efficiency Ratio
Efficiency Ratio Substantial improvement since 2014 driven by both revenue growth and expense control ▪ The efficiency ratio(1) in 3Q20 was 62.2%, compared to 57.3% in the year ago period, and was 58.0% when excluding the one-time $30 million charitable contribution 74.1% ▪ Long term: committed to f
Slide 22: Loan Growth - by Bank Brand and Loan Type
Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (3Q20 vs. 3Q19) (in millions) Zions Bank Amegy CB&T NBAZ NSB Vectra CBW Other Total C&I (ex-Oil & Gas) (762) (366) 254 (179) (61) (77) (30) - (1,221) SBA PPP 1,713 1,329 1,606 721 608 475 358 - 6,810 Owner occupied (47)
Slide 23: Empowering Bankers: Digital Capabilities
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 24: Oil & Gas (O&G) Credit Quality
Oil & Gas (O&G) Credit Quality Oil and gas loans account for $2.3 billion or 5% of total loans, excluding PPP Loans Excluding PPP Loans and as of September 30, 2020: All Ratios Exclude ▪ Annualized NCOs equaled 3.5% of loans PPP Loans Oil and Gas 35% ▪ Classified loans equaled 11.4% of loans Key Cre
Slide 25: Oil & Gas Portfolio
Oil & Gas Portfolio Significant realignment since downturn ▪ Services, which accounted for bulk of charge offs in the last cycle, accounts Portfolio Trends for 17% of the portfolio versus 45% going into the previous cycle (Dec 2014) 3,500 14 ▪ Using current mix of loans, assuming net loss rates rema
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 3Q20 2Q20 1Q20 4Q19 3Q19 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 442 $ 430 $ 408 $ 472 $ 415 Adjustments: Severance costs 1 - - 22 2 Other real estate expense - - - - (2) Debt extinguishment cost - - - - - Amortization of core depos
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 3Q20 2Q20 1Q20 4Q19 3Q19 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $442 $430 $408 $472 $415 LESS adjustments: Severance costs 1 - - 22 2 Other real estate expense - - - - (2) Restructuring costs 1 - 1 15 - Pe