Zions Bancorporation N.a. · NASDAQ:ZION

Zions Bancorporation N.a — Zions Bancorporation, National Association — Q2 2019 Earnings Presentation

25 slides from Zions Bancorporation N.a's earnings presentation, Jul 22, 2019

  1. Slide 1: Second Quarter 2019 Financial Review

    Second Quarter 2019 Financial Review July 22, 2019

  2. 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

  3. Slide 3: Second Quarter 2019 Financial Highlights

    Second Quarter 2019 Financial Highlights Continued strong PPNR growth and profitability vs. year-ago period  EPS: Diluted earnings per share increased from the year-ago period, to $0.99 in 2Q19 from $0.89 • Adjusted PPNR less Net Charge-Offs / Share was $1.48 in 2Q19, up 10% over year-ago period 

  4. Slide 4: Diluted Earnings per Share

    Diluted Earnings per Share EPS growth of 11% compared with the year-ago period  Diluted earnings per share increased to $0.99 in 2Q19 from $0.89 in the year-ago $1.08 period $1.04 $1.04 $0.99  Other prior quarters included the $0.89 following infrequent items:  4Q18 of $0.02 per share benefit fro

  5. Slide 5: Adjusted Pre-Provision Net Revenue

    Adjusted Pre-Provision Net Revenue(1) Year-over-year 9% improvement; Adjusted PPNR Less NCOs per share up 10%  Growth primarily attributable to:  Strong loan growth which produced greater interest and fees on loans  Continued expense control  Linked quarter improvement in Adjusted PPNR is primar

  6. Slide 6: Tech Initiatives On the Horizon: Digital and Simplification Investments

    Tech Initiatives On the Horizon: Digital and Simplification Investments Investments seek to improve the customer experience while simplifying our processes CO MM MME RE CR ICAI LA L SSMMAAL LL L AFFLUENT CO AFFLUENT CONSUMER BBUUSSI INNEESSSS Treasury Internet Banking 2.0 2018-2019 $10B demand depos

  7. Slide 7: Key Objectives

    Key Objectives Growth through simplification and focus  Demonstrate long-term positive operating leverage:  Achieve broad based loan and fee income growth through small business, middle market and capital markets  Manage noninterest expense growth linked to revenue growth and technology projects

  8. Slide 8: Balance Sheet Profitability

    Balance Sheet Profitability Zions’ profitability has doubled since embarking on the efficiency initiative Return on Assets Return on Tangible Common Equity 14.2% 14.5% 13.9% 1.33% 1.34% 1.26% 12.4% 12.7% 1.19% 1.14% 0.88% 8.4% 0.74% 7.4% 0.68% 6.2% 0.57% 5.0% 4Q14 4Q15 4Q16 4Q17 2Q18 3Q18 4Q18 1Q19

  9. Slide 9: Net Interest Income

    Net Interest Income Loan growth driving net interest income performance Net Interest Income  Up 4% over the year-ago period, to $569 Net Interest Margin million  Down 1% over the prior quarter driven primarily by declines in loan yields and an ($mm) increase in cost of deposits $576 $576 $565 $569

  10. Slide 10: Net Interest Income Drivers: Average Loan and Deposit Growth

    Net Interest Income Drivers: Average Loan and Deposit Growth Strong loan growth in a lower rate environment, softening deposit growth  Average loans held for investment: +7% over the year-ago period  Average deposits: +3% over the year-ago period Average Total Loans Average Total Deposits Loan Yie

  11. Slide 11: Net Interest Income Drivers: Yields and Costs

    Net Interest Income Drivers: Yields and Costs NIM compression reflects the effect of the lower rate environment Net Interest Margin (NIM) Relative to the prior quarter, the net 5.0% interest margin was down 14 bps to Loan Yield 3.54%  ~6 bps related to lower loan yields 4.0% 3.56% 3.63% 3.67% 3.68%

  12. Slide 12: Net Interest Income Drivers: Loan Growth

    Net Interest Income Drivers: Loan Growth Moderate to strong loan growth achieved in certain targeted growth categories Year-over-Year Loan Balance Growth Year over year: Total Loans: +7% Note: circle size indicates  Loan growth predominantly in 60% relative proportion of loan Municipal, Residential

  13. Slide 13: Interest Rate Sensitivity

    Interest Rate Sensitivity Zions is actively managing balance sheet sensitivity Net Interest Income Sensitivity Modeled Annual Change in a Zions has been actively reducing interest rate sensitivity: Interest Rate Environment(1)  $3.5 billion of interest rate floors as of 2Q19 +200 bps -200 bps  $2.

  14. Slide 14: Noninterest Income

    Noninterest Income Moderate growth of 4% primarily due to robust lending activity Customer-Related Fee Income (1) ($mm)  Customer-related fee income up 4% from $128 $130 the year ago period due to strength in: $125 $125 $120  Lending activity  Capital markets product sales 2Q18 3Q18 4Q18 1Q19 2Q1

  15. Slide 15: Noninterest Expense

    Noninterest Expense Focus on “Simple, Easy, Fast, Safe” expense controls and streamlining ($mm)  Total noninterest expense up 1% from the $431 $430 year-ago period $424 $423 $421 $420 $420 $420 $418 $416  Adjusted noninterest expense(1) up 1% from the year-ago period due to:  Increases in salarie

  16. Slide 16: Efficiency Ratio

    Efficiency Ratio Substantial improvement since 2014 driven by both revenue growth and expense control 74.1%  The efficiency ratio(1) in 2Q19 was 69.6% 59.0%, an improvement when compared to the year ago period and 64.5% the prior quarter 61.6% 60.9% 60.2%  Adjusted net revenue growth: +4% 58.8% 59

  17. Slide 17: Credit Quality

    Credit Quality Exceptional and solid credit quality  Key Credit Metrics: Credit Quality Ratios  Classified loans (1.6% of loans) 4.00%  Declined 19% from the prior year  Increased 6% from the prior qtr 3.50%  NPAs+90(1) (0.5% of loans + OREO) 3.00%  Declined 29% from the prior year 2.50%  Inc

  18. Slide 18: Next 12-Month Financial Outlook

    Next 12-Month Financial Outlook Outlook Comments Moderately • Efforts to reduce payoffs have been and are expected to be Loan Balances incrementally beneficial to loan growth rates Increasing Stable to Net Interest Income • Assumes rate cuts generally consistent with the forward curve Slightly • Ass

  19. Slide 19: Appendix

    Appendix  Financial Results Summary  Impact of Warrants  Loan Growth by Bank Brand and Loan Type  Deposit Growth by Account Type  GAAP to Non-GAAP Reconciliation 19

  20. Slide 20: Financial Results Summary

    Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) June 30, March 31, December 31, 2019 2019 2018 Earnings Results: Diluted Earnings Per Share $ 0.99 $ 1.04 $ 1.08 Net Earnings Applicable to Common Shareholders

  21. 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

  22. Slide 22: Loan Growth by Bank Brand and Loan Type

    Loan Growth by Bank Brand and Loan Type Year over Year Loan Growth (2Q19 vs. 2Q18) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) 254 (115) 308 (30) 54 1 (8) - 464 Owner occupied (ex-NRE) 140 131 63 92 44 (10) 26 - 486 Energy (Oil & Gas) (46) 303 - 3 - 5 (1) -

  23. Slide 23: Deposit Growth by Account Type

    Deposit Growth by Account Type Year-over-Year Average Balance Deposit Growth: +3% Deposit Growth by Product 2Q19 vs. 2Q18 (QTD Avg.) 60% Time, 50.6% 50% 40% Growth Rate (%) 30% Interest on Checking, 13.0% 20% Noninterest Bearing Money Market, Demand, -2.3% 10% 0.5% 0% Savings, -5.3% -10% -20% $0 $5

  24. Slide 24: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation (Amounts in millions) 2Q19 1Q19 4Q18 3Q18 2Q18 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 424 $ 430 $ 420 $ 420 $ 421 Adjustments: Severance costs 1 - 2 2 1 Other real estate expense - (1) - 1 - Debt extinguishment cost - - - - - Amortization of core deposi

  25. Slide 25: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 2Q19 1Q19 4Q18 3Q18 2Q18 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $424 $430 $420 $420 $421 LESS adjustments: Severance costs 1 - 2 2 1 Other real estate expense - (1) - 1 - Debt extinguishment cost - - -

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