Zions Bancorporation N.a. · NASDAQ:ZION

Zions Bancorporation N.a — Q1 2024 Earnings Presentation

36 slides from Zions Bancorporation N.a's earnings presentation, Apr 22, 2024

  1. Slide 1: First Quarter 2024 Financial Review

    First Quarter 2024 Financial Review April 22, 2024

  2. Slide 2: 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” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and assu

  3. Slide 3: Financial Performance Highlights

    Financial Performance Highlights Key Metrics 1Q24 4Q23 Net earnings to common $143 million $116 million  Earning assets continue to reprice in the higher Diluted earnings per share interest rate environment while funding costs (GAAP) $0.96 $0.78 increased modestly Ending Average Ending Average Loan

  4. Slide 4: Diluted Earnings Per Share

    Diluted Earnings Per Share The additional FDIC special assessment reduced earnings per share by $0.07 in the current quarter Diluted Earnings per Share Notable Items1: $1.33 $1.11 $1.13 1Q24: $0.96 $0.78  $(0.07) per share negative impact from FDIC Special Assessment 4Q23:  $(0.46) per share negat

  5. Slide 5: Pre-Provision Net Revenue (PPNR)

    Pre-Provision Net Revenue (“PPNR”) Linked-quarter decline in Adjusted PPNR primarily from increased noninterest expense due to seasonality in compensation PPNR1 Linked quarter (1Q24 vs. 4Q23): ($ millions)  Adjusted PPNR decreased 8%:  Slightly increased net interest income  Stable customer-relat

  6. Slide 6: Net Interest Income and Net Interest Margin

    Net Interest Income (“NII”) and Net Interest Margin (“NIM”) Net interest income rose slightly as earning asset repricing offset a modest increase in funding costs Net Interest Income ($ millions) Net Interest Margin Linked quarter (1Q24 vs. 4Q23):  Net interest income rose slightly 5.00% $679  Int

  7. Slide 7: Net Interest Margin

    Net Interest Margin (“NIM”) The net interest margin has been relatively stable for the past four quarters Earning asset yields continue to improve while rate of increase on liabilities slows Linked Quarter (1Q24 vs. 4Q23) Year-Over-Year (1Q24 vs. 1Q23) Loans Loans Deposits Money Mkt Money Mkt Borrow

  8. Slide 8: Noninterest Income and Revenue

    Noninterest Income and Revenue Stable noninterest income attributable to higher Capital Markets fees offsetting modest declines in other categories Customer-Related Noninterest Income (1) Total Revenue (2) ($ millions) ($ millions) $162 $157 $151 $151 $850 $150 $839 $790 $780 $765 $765 $753 $751 $74

  9. Slide 9: Noninterest Expense

    Noninterest Expense Adjusted noninterest expense increased linked quarter due to seasonal increases in compensation Noninterest Expense (NIE)  Total noninterest expense decreased $55 million linked quarter ($ millions) and includes an additional $13 million of FDIC special assessment $581 ($90 mill

  10. Slide 10: Average Loan and Deposit Balances

    Average Loan and Deposit Balances Yield on loans continued to rise as rates reset in a higher-rate environment while total cost of deposits was flat Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits ($ billions) Average Noninterest-bearing deposits ($ billions) $

  11. Slide 11: Deposit Balance and Borrowing Trends

    Deposit Balance and Borrowing Trends Ending deposits declined ~$720 million vs. 4Q23; customer deposits decreased ~$580 million 1Q24 total funding costs increased 9 basis points due to higher average short-term borrowings  Noninterest-bearing demand deposits declined $1.1 billion, or 4.2% linked-qu

  12. Slide 12: Securities & Money Market Investments

    Securities & Money Market Investments The bank has strong on-balance sheet liquidity Total Securities Portfolio The investment portfolio is designed to be a storehouse of balance sheet liquidity and Money Market Investments  Principal and prepayment-related cash flows from securities were $712 (per

  13. Slide 13: Net Interest Income – Outlook & Rate Sensitivity

    Net Interest Income – Outlook & Rate Sensitivity The rate path implied by the forward curve reveals liability sensitivity if short-term rates fall faster than long-term rates Interest Rate Impacts on Net Interest Income(1) Net Interest Income Sensitivity Based on the yield curve implied forward path

  14. Slide 14: Credit Quality

    Credit Quality Net charge-offs remain low, with trailing 12 months net charge-offs at 0.07% of average loans Key Credit Metrics  Net charge-offs (recoveries), relative to average loans: Credit Quality Ratios 5.0%  0.04% annualized in 1Q24 Criticized / Loans NPAs + 90 / Loans + OREO  0.07% over th

  15. Slide 15: Commercial Real Estate Summary

    Commercial Real Estate Summary ($13.6 billion balance) The commercial real estate portfolio is granular and well diversified Portfolio Composition Term CRE ($10.9B)  Conservative weighted-average LTVs (< 60%) As of March 31, 2024 All Other CRE, 14%  Maturity distribution: 20% on average annually o

  16. Slide 16: Capital Strength

    Capital Strength Loss-absorbing capital remains strong relative to our risk profile; low credit losses relative to CET1 + ACL Common Equity Tier 1 Capital Net Charge-offs and Allowance for Credit Losses annualized, as a percentage of risk-weighted assets as a percentage of risk-weighted assets 12.3%

  17. Slide 17: Financial Outlook (1Q 2025E vs 1Q 2024A)

    Financial Outlook (1Q 2025E vs 1Q 2024A), as of April 22nd, 2024 Outlook Comments Loan Balances Stable to slightly  Slower near-term growth due to interest rates though customer sentiment (period-end) increasing and demand improved during the quarter, particularly in commercial pipelines Net Intere

  18. Slide 18: Zions Bancorporation Drives Value for its Stakeholders

    Zions Bancorporation Drives Value for its Stakeholders We are determined to help build strong, successful communities, create economic opportunity and help our clients achieve greater financial strength through the relationships we develop and the services we provide. Distinctive Local Operating Mod

  19. Slide 19: Appendix

    Appendix  Financial Results Summary  Accumulated Other Comprehensive Income (AOCI)  Balance Sheet Profitability  Loan Growth by Type  Earning Asset Repricing  Interest Rate Swaps  Interest Rate Sensitivity – Parallel Shock Analysis  Allowance for Credit Losses  Loan Loss Severity (NCOs as a

  20. Slide 20: Financial Results Summary

    Financial Results Summary Improving fundamentals, strong credit quality Three Months Ended (Dollar amounts in millions, except per share data) March 31, December 31, September 30, June 30, 2024 2023 2023 2023 Earnings Results: Diluted Earnings Per Share $ 0.96 $ 0.78 $ 1.13 $ 1.11 Net Earnings Appli

  21. Slide 21: Accumulated Other Comprehensive Income/Loss (AOCI)

    Accumulated Other Comprehensive Income/Loss (AOCI) Projected AOCI improvement reflects relative stability in higher rate environment due to hedging strategy Projected AOCI Actual Projection The loss in AOCI will decline as the underlying investments pay down and mature $3.1 Based on forward curve: a

  22. Slide 22: Balance Sheet Profitability

    Balance Sheet Profitability Profitability impacted by higher funding costs while 4Q23 & 1Q24 include the impact of the FDIC special assessment Return on Assets Return on Tangible Common Equity 22.7% 17.8% 17.3% 13.7% 11.8% 0.91% 0.79% 0.80% 0.70% 0.57% 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q

  23. Slide 23: Loan Growth in Detail

    Loan Growth in Detail Loan growth in 1-4 Family Mortgage, Term Commercial Real Estate and Owner Occupied Linked Quarter Loan Balance Growth Total Loans: +0.6% 10% Growth Rate: Linked Quarter, not annualized 8% Linked quarter: 1-4 Family, 4%  Period-end loans increased $330 million or 0.6% 6% Energy

  24. Slide 24: Simulated Repricing Expectations: Earning Assets and Loans

    Simulated Repricing Expectations: Earning Assets and Loans A substantial portion of earning assets reset within one year with additional resets in later periods Earning Assets Rate Reset and Cash Flow Profile Loans: Rate Reset and Cash Flow Profile 52% 52% 45% 42% Earning Assets After Hedging Loans

  25. Slide 25: Interest Rate Swaps at March 31, 2024

    Interest Rate Swaps at March 31, 2024 Swaps are used to balance our interest rate sensitivity Interest rate sensitivity is managed in part with portfolio interest rate hedges1 In 1Q24, $600 million in Receive-Fixed Swaps matured with an average Fixed Rate of 2.81% Pay-Fixed Rate Received-Fixed Rate

  26. Slide 26: Interest Rate Sensitivity – Parallel Rate Shocks

    Interest Rate Sensitivity – Parallel Rate Shocks Standard parallel rate shocks suggest asset sensitivity Simulated Net Interest Income Sensitivity (1) −200 bps −100 bps +100 bps +200 bps 7% as of 12/31/2023 as of 3/31/2024 5% 4% 2% -2% -3% -6% -6% (1) 12-month forward simulated impact of an instanta

  27. Slide 27: Allowance for Credit Losses

    Allowance for Credit Losses (“ACL”) The ACL increase vs. 4Q23 reflects incremental reserves for Commercial Real Estate offset by a less negative economic outlook Allowance for Credit Losses ($ millions) ACL (%) 1.66 1.68 1.56 1.56 1.30 1.25 1.30 1.26 1.27 1.12 1.14 1.20 1.08 1.04 1.09 1.04 1.09 1.00

  28. Slide 28: Loan Loss Severity

    Loan Loss Severity When problems arise, Zions generally experiences less severe loan losses due to strong collateral and underwriting practices Annualized NCOs / Nonaccrual Loans Annualized NCOs / Nonaccrual Loans Five Year Average (2019Q1 – 2023Q4) Fifteen Year Average (2009Q1 – 2023Q4) >100% >100%

  29. Slide 29: CRE In-Depth Review: Commercial Real Estate

    CRE In-Depth Review: Commercial Real Estate Limited tail loan-to-value risk in portfolio; controlled CRE growth 16.0 Total CRE Portfolio Trends % of CRE Term WAVG LTV % of CRE Term Construction Balances Term Balances Construction 14.0 Multi-family 58% 27% 36% 12.0 10.0 Industrial / Warehouse 57% 24%

  30. Slide 30: Disciplined Commercial Real Estate Growth

    Disciplined Commercial Real Estate Growth Commercial real estate loan growth lags peers due to continued exercise of concentration risk discipline Commercial Real Estate Zions has exercised caution in CRE 350 Excluding Owner Occupied concentrations for more than a decade 300 and in underwriting stan

  31. Slide 31: CRE In-Depth Review: Office

    CRE In-Depth Review: Office ($1.9 billion balance) CRE Office portfolio is 14% of total CRE exposure; 3% of total loan exposure  13% decrease in balances YOY via payoffs, loan rebalance, amortization CRE Office Portfolio Trends  Median loan size: < $1 million; average loan size: $4.6 million Const

  32. Slide 32: CRE Office Loans – Distribution of LTV and Loan Maturity

    CRE In-Depth Review: Office Loans – Distribution of LTV and Loan Maturity Zions is addressing loan level concerns with clients, monitoring covenants, and assessing valuations CRE Term Office by Maturity  Actively managing office portfolio and near-term ($ millions) 439 436 maturities  Cash flow an

  33. Slide 33: CRE In-Depth Review: Multifamily

    CRE In-Depth Review: Multifamily ($3.9 billion balance) CRE multifamily portfolio is 28% of total CRE exposure; 7% of total loan exposure  21% increase in balances YOY; construction funding and term conversion CRE Multifamily Portfolio Trends  75% term, 25% construction ($ billions) Term Balances

  34. Slide 34: Zions Finishes Third Nationally in 2023 Greenwich Excellence Awards

    Zions Finishes Third Nationally in 2023 Greenwich Excellence Awards Zions compares favorably to major competitors (JPMorgan, Bank of America, Wells Fargo, US Bank) Coalition Greenwich Customer Satisfaction (2023) Greenwich Excellence Awards • Ranked third among all U.S. banks with 20 overall % Excel

  35. Slide 35: Non-GAAP Financial Measures

    Non-GAAP Financial Measures In millions, except per share amounts 1Q24 4Q23 3Q23 2Q23 1Q23 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $526 $581 $496 $508 $512 LESS adjustments: Severance costs 13 1 Other real estate expense Amortization of core deposit and other intangibles 2 2 2

  36. Slide 36: Non-GAAP Financial Measures (Continued)

    Non-GAAP Financial Measures (Continued) In millions 1Q24 4Q23 3Q23 2Q23 1Q23 Return on Average Tangible Common Equity (Non-GAAP) Net earnings applicable to common $143 $116 $168 $166 $198 Adjustments, net of tax: Amortization of core deposit and other intangibles 1 1 1 1 1 (a) Net earnings applicabl

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