Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Barclays Global Financial Services Conference 2015
32 slides from Zions Bancorporation N.a's conference presentation, Sep 16, 2015
Slide 1: Barclays Global Financial Services Conference
September 16, 2015 Barclays Global Financial Services Conference
Slide 2: Forward-Looking Statements & Peer Group Abbreviations
Forward-Looking Statements & Peer Group Abbreviations This presentation contains statements that relate to the projected or modeled performance or condition of Zions Bancorporation and elements of or affecting such performance or condition, including statements with respect to forecasts, opportuniti
Slide 3: Agenda
Agenda • Company Profile • Geographic Footprint • Footprint Growth Profile • Awards: Superior Brand • Common-Sized Balance Sheet and Income Statement • Small Business Focus • Fundamentals • Energy Portfolio • Efficiency Initiative • Outlook 3
Slide 4: A Collection of Great Banks
Bank Headquarters Assets % of Total Zions Bank Salt Lake City $19B 33% Amegy Houston $14B 24% CB&T San Diego $12B 20% NBA Phoenix $5B 9% NSB Las Vegas $4B 7% Vectra Denver $3B 5% Commerce Bank - WA/OR Seattle $1B 2% Zions Bancorporation Salt Lake City $58B 100% Superior lending capacity relative t
Slide 5: Stronger Economic Growth than Overall U.S.
Job Creation: Jobs grew in Zions' footprint by 15% during the last 10 years, a full 9 percentage points better than U.S. nonfarm payroll growth GDP Growth: GDP growth in our footprint exceeded nominal U.S. GDP by an average of 1.2 percentage points per year (compounded) over the last ten years S
Slide 6: Awards: Nationally Recognized for Excellence
Awards: Nationally Recognized for Excellence • Twenty Four (24) Greenwich Excellence Awards in Small Business and Middle Market Banking (2014) • Including: Excellence: Overall Satisfaction Excellence: Likelihood to Recommend Excellence: Treasury Management Excellence: Financial Stability Zio
Slide 7: Relative balance sheet composition versus peers
7 On a relative basis, Zions has an above-average cash position, is a strong commercial lender, has strong noninterest bearing deposits, and low debt. 16% 36% 21% 17% 10% 5% 27% 8% 31% 25% Cash Commercial Loans Commercial Real Estate Loans Consumer Loans Securities Earning Assets 37% 47% 2% 11% 2% 2
Slide 8: Zions Punches Above Its Weight in Small Business Lending
$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 W FC B A C JP M US B B B T P N C ZIO N M TB R F ST I C H B A N FIT B KE Y CM A U B Commercial Loans Sized $100k - $1M Zions Punches Above Its Weight in Small Business Lending 8 Source: Call report data via SNL Financial, as of
Slide 9: Agenda
Agenda • Company Profile • Fundamentals • Capital • Credit Quality • Liquidity • Profitability • Asset Sensitivity • Energy Portfolio • Efficiency Initiative • Outlook 9
Slide 10: Capital Levels are Among the Best in the Industry
Capital Levels are Among the Best in the Industry Regulatory capital ratios are Basel III. Source: SNL Financial as of 2Q15 10 12.0% C U B ZIO N R F B A C JP M WF C KE Y P N C CM A B B T ST I M TB H B A N U SB FIT B Common Equity Tier 1 Capital Ratio 0% 100% 200% 300% 400% ZIO N CM A R F ST I U B KE
Slide 11: Zions' Credit Quality Metrics are Strong
Zions’ Credit Quality Metrics are Strong Through-the-Cycle Losses are Substantially Better than Most Peers 11 Source: SNL Financial as of 2Q15 ; trailing 12 months net charge-offs used in the allowance / loan chart 0.0% 0.5% 1.0% 1.5% 2.0% U B ZI O N C M A M TB P N C H B A N K EY ST I WF C R F B B T
Slide 12: Strong Liquidity Profile, Superior Deposit Franchise
Strong Liquidity profile, Superior Deposit Franchise Over Time 12 0% 10% 20% 30% 40% 50% 60% 2000 2002 2004 2006 2008 2010 2012 2014 Noninterest-Bearing Deposits / Total Deposits ZION Peer Median Source: SNL Financial as of 2Q15 50% 60% 70% 80% 90% 100% JP M C WF C B A C ZI O N R F U SB K EY C M A P
Slide 13: Profitability: Historical Improvement
Profitability: Historical Improvement driven primarily by capital actions; expected improvement likely driven by positive operating leverage 13 Source: SNL Financial *Adjusted ROAA and ROTCE for ZION excludes gains/losses on fixed income securities, debt extinguishment and preferred stock redemption
Slide 14: Net Interest Income Drivers: Loan Growth
Net Interest Income Drivers: Loan Growth Slightly Behind CCAR Banks, Substantially Lagging Small Regional Banks 14 Source: SNL Financial Smaller Non-CCAR Regional peer group selected based upon asset size that is reasonably comparable to the asset sizes of Zions’ affiliate banks Softer Growth Driven
Slide 15: Net Interest Income Drivers: Loan Growth by Category
Net Interest Income Drivers: Loan Growth is strongest in 1-4 Family, with declines in construction & land development and the National Real Estate Group 15 Source: Company documents;); NRE = National Real Estate Group, a division of Zions Bank that focuses on small business loans generally underwrit
Slide 16: Net Interest Income Drivers: Net Interest Margin
Source: SNL Financial as of 2Q15 *Risk adjusted NIM calculated as net interest income less net charge-offs divided by average earning assets. Net Interest Income Drivers: Net Interest Margin Remains Stronger Than Peers 16 3.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% ZIO N M TB H B A N B B T R F
Slide 17: Net Interest Income Drivers: Loan pricing discipline supports NIM stability
Net Interest Income Drivers: Loan pricing discipline supports NIM stability 17 3.0% 3.5% 4.0% 4.5% 5.0% 2Q14 3Q14 4Q14 1Q15 2Q15 Portfolio Yield vs. Production Yield New Production Coupon Loans HFI Yield Loans HFI Coupon • Stable linked-quarter loan yield • Coupon rate of new loan production (green)
Slide 18: Positioned for Economic Recovery and Rising Rates
Net Interest Income Drivers: Zions is Positioned for Economic Recovery and Rising Rates 18 Source: Company Documents as of 2Q15 -$0.09 $0.00 $0.42 $0.78 $1.07 -5% 0% 5% 10% 15% 20% 25% 30% -100 0 100 200 300 N et In te re st I n co me C h an ge Basis Point Interest Rate Change Net Interest Income In
Slide 19: Agenda
Agenda • Company Profile • Fundamentals • Energy Portfolio • Segmentation • Underwriting Example • Price Deck • Derivative Effects: Commercial Real Estate in Houston • Efficiency Initiative • Outlook 19
Slide 20: Energy Loan Portfolio Overview
Energy Loan Portfolio Overview 20 • $2.9 billion of outstanding balances at June 30, 2015 (Oil & Gas) • 7% of total loans • Diversified portfolio, primarily upstream / midstream / services • No junior or second liens • Very modest growth in 2014, moderate run-off expected in 2015. • Declines in 2015
Slide 21: Zions' Energy Portfolio is Very Diversified
Zions’ Energy Portfolio is Very Diversified 21 Source: Company Documents Oil Gas Balanced production between oil and gas: approximately half of weighted average production is oil and the other half is natural gas Upstream 33% Midstream 20% Downstream 5% Other 3% Oilfield Services 30% Energy Service
Slide 22: Example of Upstream (Reserve-Based) Underwriting
Example of Upstream (Reserve-Based) Underwriting 22 Typical Oil & Gas Reserve-Based Loan $100 - E&P company’s PV of oil & gas reserves using current NYMEX prices $ 85 - Zions’ risk-adjusted value of reserves (e.g. Zions applies discounts to non-producing reserves) $ 77 - Apply “bank price deck” (gen
Slide 23: Price Deck: Consistently Conservative vs. 12-Month Oil Futures Strip
$- $20 $40 $60 $80 $100 $120 $140 $160 Mar -0 0 Se p -0 0 M ar -0 1 Se p -0 1 M ar -0 2 Se p -0 2 M ar -0 3 Se p -0 3 M ar -0 4 Se p -0 4 M ar -0 5 Se p -0 5 M ar -0 6 Se p -0 6 M ar -0 7 Se p -0 7 M ar -0 8 Se p -0 8 M ar -0 9 Se p -0 9 Mar -1 0 Se p -1 0 M ar -1 1 Se p -1 1 M ar -1 2 Se p -1 2 M a
Slide 24: Commercial Real Estate in Texas
24 Commercial Real Estate in Texas Houston is approximately 50% of total exposure $0 $50 $100 $150 $200 $250 $300 $350 Other Industrial Hospitality Office Retail Apartments Commercial Term Houston - 52% TX-Not Houston - 48% Source: Company Documents $0 $50 $100 $150 $200 Other Industrial Retail Hosp
Slide 25: Agenda
Agenda • Company Profile • Fundamentals • Energy Portfolio • Efficiency Initiative • Overview • Noninterest Expense • Efficiency Ratio • Outlook 25
Slide 26: Organizational and operational changes announced June 1, 2015
On June 1, 2015, Zions announced several organizational and operational changes, including: • Consolidate bank charters from seven to one while maintaining local leadership, local product pricing, and local brands • Create a Chief Banking Officer position, with responsibility for retail banking, wea
Slide 27: Positive Operating Leverage: Expenses Roadmap
Positive Operating Leverage: Expenses Roadmap to Substantially Improving Profitability 27 • We expect to hold noninterest expense to below $1.60 billion in FY15 and FY16, slightly increasing in FY171 • Targeted FY17 Gross Cost Savings vs. FY14: • Operational Initiatives: $120 million • Maturing of s
Slide 28: Positive Operating Leverage: Path to Low 60% Efficiency Ratio
28 Positive Operating Leverage Path to low 60% or Better Efficiency Ratio 76 % Low 60s FY14 Actual Normalized FY14 (1) Debt Reduction Savings from Operational, Technology and Charter Consolidation Balance Sheet Repositioning (e.g. MBS) Loan & Fee Income Growth Other Expense Increases (2) Pro Forma F
Slide 29: Efficiency Ratio
Efficiency Ratio 29 73.3% 73.0% 74.1% 72.3% 71.4% 55% 60% 65% 70% 75% 80% 2Q14 3Q14 4Q14 1Q15 2Q15 Noninterest Expenses as a Percentage of Net Revenue1 • The efficiency ratio improved modestly to 71.4%, from 73.3% a year ago. • The Company is reiterating its commitment to holding the efficiency rati
Slide 30: Agenda
Agenda • Company Profile • Fundamentals • Energy Portfolio • Efficiency Initiative • Outlook • Next 12 Month Outlook • Capital Return Opportunities 30
Slide 31: Next 12-Month Outlook Summary
Next 12-Month Outlook Summary Relative to 2Q15 Results Topic Outlook Comment Loan Balances Slightly to Moderately Increasing • Prepayments remain volatile, energy lending softness making net loan growth difficult to forecast • Expect stable balances in 3Q15 due primarily to energy loan contraction N
Slide 32: Capital Return Opportunities
Capital Return Opportunities 32 1 Federal Reserve’s model Source: SNL Financial *UB not included, as it is not a publically traded company Strong Capital Levels, but Limited Return of Capital: • Low 5.1% Tier 1 Common result on 2014 DFAST from Federal Reserve vs. Zions’ modeled 8.6%. • Further enhan
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