Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Goldman Sachs 2012 Financial Services Conference
31 slides from Zions Bancorporation N.a's conference presentation, Dec 4, 2012
Slide 1: Goldman Sachs 2012 Financial Services Conference
December 5, 2012 Goldman Sachs 2012 Financial Services Conference
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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, opportunities, models, illustrations,
Slide 3: Agenda
Overview Credit Quality Loans CDOs Profitability Net Interest Income Drivers Volume Rate/Spread Floors Cash/MBS Exposure Asset Sensitivity Fee Income and Non-interest Expense Capital Capital Adequacy Allowance For Credit Losses Improvements to Profitability From Expected Capital Actions Financial Ou
Slide 4: A Collection of Great Banks
$3.7 billion market capitalization as of 12/3/2012 Trading symbol: NASDAQ: ZION A Collection of Great Banks More than 70% of Assets in Utah / Texas / Coastal California *
Slide 5: Awards: Nationally Recognized for Excellence
Awards: Nationally Recognized for Excellence Thirteen 2011 Greenwich Excellence Awards in Small Business and Middle Market Banking Including: Excellence: Overall Satisfaction Excellence: Relationship Manager Performance – Small Businesses Excellence: Relationship Manager Performance – Middle-Market
Slide 6: Agenda
Agenda Overview Credit Quality Loans CDOs Profitability Net Interest Income Drivers Volume Rate/Spread Floors Cash/MBS Exposure Asset Sensitivity Fee Income and Non-interest Expense Capital Capital Adequacy Allowance For Credit Losses Improvements to Profitability From Expected Capital Actions Finan
Slide 7: Credit Quality is Improving and Losses are Better Than Peers
Credit Quality is Improving and Losses are Better Than Peers For Zions, Net Charge-offs Have Returned to Pre-Crisis Levels Nonperforming ratio does not include accrual TDRs. Source: Company Documents & SNL Financial Net charge-off ratios annualized. * (In millions) (In millions)
Slide 8: Credit Quality Continues to Improve
* Credit Quality Continues to Improve Loss Absorbing Capital defined as Tangible Common Equity, Perpetual Preferred Equity, and Allowance for Credit Losses
Slide 9: Term CRE Metrics are Solid
(In billions) Updated Weighted Average LTV = 60% Left - Sample data: As of 9/30/12; non-FDIC supported term loans > $500k balance; 76% of term loan dollars outstanding Right - LTV’s were adjusted using PPR’s market level/property type value trend indices. * Term CRE Metrics are Solid Percentage of l
Slide 10: Bank CDOs: Fundamental Trends are Improving
Bank CDOs: Fundamental Trends are Improving Failures and Deferrals Have Declined Sharply * As of 11-8-12 (“quarterized”) (1) Last 12 months. Prior to 3Q09, averages were predominately large banks, significantly skewing the data. New Bank Deferrals in Zions’ CDOs are Trending Downward (Aggregate Unde
Slide 11: Bank CDOs: Deferring Bank Re-performance has Increased
Bank CDOs: Fundamental Trends are Improving Deferring Bank Re-performance has Increased * As of 11-8-12 (“quarterized”) * (In millions) Net of $193 million of re-deferrals from 5 banks Total underlying collateral supporting Zions’ bank CDOs: $17 billion Peak dollar value of deferring collateral: $3.
Slide 12: Bank CDOs: What To Expect Should the Environment Continue to Improve
Bank CDOs: What To Expect Should the Environment Continue to Improve A Net Positive Impact to Tangible Common Equity per Share Prepayments Increase... As banks become more healthy and as Trust Preferred is considered to be a weaker form of capital, the more healthy banks are prepaying principal and
Slide 13: CDOs: 4Q12 Update
CDOs: 4Q12 Update We are Seeing These Trends Emerging in 4Q12; Thus Far We Have Seen: Approximately $100 million of CDO principal paydowns (of our $2.5 billion par value exposure), mostly from senior tranches. Approximately $10 million of pre-tax gains on CDOs previously written down An acceleration
Slide 14: What Happens if Things get Better?
What Happens if Things get Better? A Net Positive Impact to TCE/Share Bank & Ins. CDO Portfolio Scenario Assumptions Bank & Ins. CDO Portfolio Scenario Assumptions Bank & Ins. CDO Portfolio Scenario Assumptions Bank & Ins. CDO Portfolio Scenario Assumptions After-tax TCE per Share Impact After-tax T
Slide 15: Agenda
Agenda Overview Credit Quality Loans CDOs Profitability Net Interest Income Drivers Volume Rate/Spread Floors Cash/MBS Exposure Asset Sensitivity Fee Income and Non-interest Expense Capital Capital Adequacy Allowance For Credit Losses Improvements to Profitability From Expected Capital Actions Finan
Slide 16: Net Interest Income: Loan Balances vs. Commitments
Net Interest Income: Loan Balances vs. Commitments Favorable Trend in Commitments; However, Loan Balances Adversely Affected by Prepayments Source: company documents *
Slide 17: New Loan Spread Stabilizing, but Still Under Slight Pressure
New Loan Spread Stabilizing, but Still Under Slight Pressure Older 2009-2010 Vintage Loans Are Maturing and Are Generally Replaced at Lower Rates Cost of Interest Bearing Deposits Spread on Production: New Business * Source: Company documents as of 3Q12. Spreads are calculated using matched-maturity
Slide 18: Net Interest Margin Pressure Partially Due to Rate Floors
* (In millions) Net Interest Margin Pressure Partially Due to Rate Floors Floors Are A Source of Support to Net Interest Income Today, But Eroding… $5.9 billion of loans in-the-money, wtd avg 135 bps in the money Cumulative benefit to Net Interest Income: ~$79 million (pre-tax) Cumulative benefit to
Slide 19: Cash Impact on Net Interest Margin is Significant
(In millions) Cash Impact on Net Interest Margin is Significant The Result of a Disciplined Effort to Avoid Adding Assets with Duration Extension Risk * Core net interest income excludes items that are one time or non-recurring in nature such as regular and accelerated discount amortization on conve
Slide 20: Securities & Cash Portfolio
Securities & Cash Portfolio ZION has the Smallest Securities (and MBS) Portfolio vs. its Peers; Securities Duration is ~1.8 years Source: SNL as of 3Q12 MBS securities include resi mortgage pass-through investments that are not guaranteed by the U.S. Government Estimated option-adjusted duration of
Slide 21: Net Interest Margin Remains Strong Relative to Peers
Source: SNL and company 10-Q’s. ZION as of 3Q12; peers as of 2Q12 NIM adjusted for accretion of interest income on FDIC loans and sub debt amortization expense, where applicable 2. Risk adjusted core NIM calculated as core net interest income less net charge-offs over average earning assets * Net In
Slide 22: Balance Sheet Remains Significantly Asset Sensitive
Balance Sheet Remains Significantly Asset Sensitive * Zions estimates net interest sensitive income would increase between an estimated 12.1% and 14.0% if interest rates were to rise 200 bps* in the first year Assumes a 43% ($7.5 billion) attrition of noninterest bearing balances and a 25% ($1.9 bil
Slide 23: Noninterest Income & Expense Trends
Noninterest Income & Expense Trends * (In millions) Indexed as of 2Q11 * Credit category includes other real estate, credit related, and provision for unfunded lending commitment expenses. ** Regulatory & legal category includes legal & professional, FDIC premium and indemnification expenses. (In mi
Slide 24: Consistently Profitable and Improving Earnings Quality
Consistently Profitable and Improving Earnings Quality High Cost Capital at Parent is the Primary Difference vs. Healthy Profitability at Subsidiaries * * Excludes regular and accelerated discount amortization on sub debt and additional accretion of interest income on FDIC loans, and other items con
Slide 25: Agenda
Agenda Overview Credit Quality Loans CDOs Profitability Net Interest Income Drivers Volume Rate/Spread Floors Cash/MBS Exposure Asset Sensitivity Fee Income and Non-interest Expense Capital Capital Adequacy Allowance For Credit Losses Improvements to Profitability From Expected Capital Actions Finan
Slide 26: Capital Levels are Now Strong Relative to Peers
Capital Levels are Now Strong Relative to Peers Source: SNL as of 3Q12 1. Cash consists of cash & equivalents. Loss Absorbing Capital defined as Tangible Common Equity, Perpetual Preferred Equity, and Allowance for Credit Losses *
Slide 27: Loan Loss Coverage is also Strong Comparatively
Source: company documents, SNL Financial. CYN excluded from Reserve/NCO ratio due to ratio exceeding 2000% Annualized charge-off ratio. Reserves include loan loss reserve plus reserve for unfunded lending commitments. * Loan Loss Coverage is also Strong Comparatively
Slide 28: Capital & Funding Actions
Capital & Funding Actions * YTD 2012 Capital Actions Completed Redeemed $1.4 billion TARP preferred equity Repaid $255 million of TLGP debt Upstreamed more than $800 million of capital from subsidiaries and issued new senior debt to maintain liquidity ratios Redeemed 11.0% Series E preferred shares
Slide 29: Restructuring Capital Profile: Significant Potential Earnings Improvement
Restructuring Capital Profile: Significant Potential Earnings Improvement Assumes no change to revenue and noninterest expense * Not updated for Basel III Notice of Proposed Rulemaking Key assumptions for medium-term target capital stack: preferred stock dividend: 6.5% (after tax); subordinated debt
Slide 30: Agenda
Agenda Overview Credit Quality Loans CDOs Profitability Net Interest Income Drivers Volume Rate/Spread Floors Cash/MBS Exposure Asset Sensitivity Fee Income and Non-interest Expense Capital Capital Adequacy Allowance For Credit Losses Improvements to Profitability From Expected Capital Actions Finan
Slide 31: One-Year Outlook Summary
Topic Outlook Comment Loan Balances Stable to Moderately Higher 4Q12: Lower than 3Q Due to Prepayments Pipelines remain strong Core Net Interest Income Stable to Moderately Lower - 4Q12: 2% -3% Lower than 3Q - Lower near-term balances - Rate pressure: older loans resetting to newer rates Provision f
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