Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation, National Association — Investor Day (February 2020)
140 slides from Zions Bancorporation N.a's investor day presentation, Feb 6, 2020
Slide 1: 2020 Investor Conference
2020 Investor Conference Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation February 6, 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 regarding f
Slide 3: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 4: Zions' Profile: Zions Is A Collection of Community Banks
Zions’ Profile: Zions Is A Collection of Community Banks Key Differentiators: Local decision-making and top-notch service, commercial banking focus, granular and low-cost deposit base Zions’ Markets ▪ Strategic local “ownership” of market opportunities Deposits % and challenges Bank Headquarters $Bi
Slide 5: Zions' Profile: Strong Economic Footprint
Zions’ Profile: Strong Economic Footprint The Zions footprint is one of the strongest and most dynamic in the U.S. banking industry Real GDP Growth Job Growth Current 5-Year, Compounded 5-Year, Compounded Unemployment Rates During the past 5 years, real GDP growth During the past 5 years, job growth
Slide 6: Zions' Profile: Zions is a Leader in Small Business Lending
Zions’ Profile: Zions is a Leader in Small Business Lending Zions punches above its weight ($ billion) Commercial Loans Commercial Loans 30% $25 sized $100k - $1M sized $100k - $1M as a percent of total commercial loans 25% $20 20% $15 15% $10 10% $5 5% $0 0% C RF C FRC KEY RF CFG ASB FNB USB BAC SN
Slide 7: Zions Receives National and Local Recognition for Excellence
Zions’ Profile: Zions Receives National and Local Recognition for Excellence Affiliates have strong brands in their markets One of only six banks to have averaged 15 Greenwich Excellence Awards since 2009 (survey inception) Business Services – Banking and Community Development – Large Business Voted
Slide 8: Zions Receives National and Local Recognition for Excellence
Zions’ Profile: Zions Receives National and Local Recognition for Excellence Affiliates have strong brands in their markets Top team of women bankers (2015-2019) 1 Nevada State Bank consistently voted #1 Bank in Nevada4 National Bank of Arizona consistently voted #1 Bank in Arizona3 8 1 www.american
Slide 9: Zions' Business Banking Reputation is Highly Ranked
Zions’ Profile: Zions’ Business Banking Reputation is Highly Ranked Zions compares favorably to key competitors (JPMorgan, Bank of America, US Bank, Wells Fargo) Overall Satisfaction Customer Satisfaction With Our Bankers Customer Satisfaction - Credit Process 90 90 90 80 80 80 Middle Market 70 70 7
Slide 10: Key Conference Themes
Zions Investor Conference 2020: Key Conference Themes Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Healthy profitability achieved; targeting improved ranking vs. peers ▪ Acknowledge headwinds in the near-term revenue outlook,
Slide 11: Profitability Metrics
Profitability Metrics Efficiency and ROA improvement linked relatively stable noninterest expense and revenue growth. Expense cuts in 4Q19 are expected to benefit 2020 financial performance. Efficiency Ratio 80 % Return on Assets 1.8% 1.6% 75 1.4% 70 1.2% 1.0% 65 0.8% 60 0.6% 0.4% 55 0.2% 50 0.0% 2H
Slide 12: Drive for Simplification and Efficiency
Drive for Simplification and Efficiency Deliver a “simple, easy, fast, safe" experience for customers and employees Simplify the business model Strengthen data and structure quality/access ▪ Holding company elimination Simple Easy ▪ Credit LEAD ▪ Charter consolidation ▪ General ledger project ▪ Ente
Slide 13: Simple, Easy, Fast, Safe Update
Simple, Easy, Fast, Safe Update Recent highlights…Meaningful progress made in simplifying customer and employee experiences FutureCore Release 1 and 2 Deposit Product Simplification Credit Process Simplification 2.0 • Virtually all consumer, commercial and CRE loans on one • Reduced our 529 unique p
Slide 14: Risk Management: Upgrade and Be a Positive Outlier
Risk Management: Upgrade and Be a Positive Outlier Significant risk management upgrade has led to a very strong, low risk bank today ▪ Major risk management overhaul since 2008 ▪ Improvement to: ▪ Capital ▪ Credit ▪ Risk Management ▪ Credit Administration ▪ Profitability ▪ Simplification of various
Slide 15: Decade-Long Risk Profile Improvement
Decade-Long Risk Profile Improvement Since the recession, Zions has addressed the following: Concern Mitigation Concern Mitigation ✓ Reduced modeled net interest income volatility by a very substantial ✓ Reduced risk through simplified business model and structure, amount charter consolidation, merg
Slide 16: Board of Directors
Board of Directors Composition since 2014: 2014: Edward F. Murphy: CFO of the FRB of New York and EVP of its Corporate Group, EVP and CFO of the retail division of JP Morgan and Chief Operating Officer of its Asia Pacific Region, Global Audit Director 2015: Suren K. Gupta: Current EVP of Technology
Slide 17: Zions' History of Leading Technology Initiatives
Zions’ History of Leading Technology Initiatives Focus on innovative technology is not something new at Zions Initiative Description Initiative Description Electronic ▪ Zions was the first bank in the U.S. to receive approval ▪ Zions was one of the first commercial banks in the U.S. Identity to act
Slide 18: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 19: Double Down
DOUBLE DOWN Building on our strength as a business banking leader INFORMED BY F U E L E D B Y E X PA N D I N G C U S T O M E R S T R AT E G I C COMPLIMENTARY SEGMENTS INVESTMENTS BUSINESSES 19
Slide 20: Double Down
DOUBLE DOWN Building on our strength as a business banking leader INFORMED BY F U L E D B Y E X PA N D I N G C U S T O M E R S T R AT E G I C COMPLIMENTARY SEGMENTS INVESTMENTS BUSINESSES 20
Slide 21: Business/Commercial Customer Revenue
Business/Commercial Customer Revenue Two thirds of Zions’ total revenue is from business customers $900 FY19 Commercial Net Revenue ($M) 1 $800 $807 $700 $600 Definitions $500 Gross Annual Revenue (GAR) Commercial: $10 million+ $400 $403 $425 Business Banking: $1-9.9 million $300 Micro Business: <$1
Slide 22: We Are A Business Bank First
We Are A Business Bank First Segmentation provides key insights into customer value and needs Customer Count Deposit Balances Loan Balances Customer Segment (rounded to nearest thousand) ($ millions) ($ millions) Business 207,000 $28,269 $23,465 Commercial 13,000 $2,649 $12,330 Real Estate Consumer
Slide 23: Business Customer Acquisition Trends
Our Business Customer Acquisition Trends Outpace the Trends for Our Markets The annualized growth rate of net new business clients is 4.4% vs. growth of businesses in affiliate markets of 2.1% * 2018-2019 Quarterly Business Customer Acquisition vs. Attrition Trends 4.0% Acquisition Attrition 3.5% 3.
Slide 24: Business Customer Net Funding by Small Business Segment
Business Customer Net Funding by Small Business Segment Sticky core deposits from small business provide excellent net source of funding 4.8% T O T A L 5.2% 12/31/19 Deposit Balance ($B) DDA P E R C E N T $2.7 DEPOSITS $3.0 ( $ B ) DDA 4.6% Consumer ( $ B ) $2.6 Commercial Micro Business $2.7 $2.0 7
Slide 25: Zions' Business Banking Reputation is Highly Ranked
Zions’ Business Banking Reputation is Highly Ranked Zions compares favorably to key competitors (JPMorgan, Bank of America, US Bank, Wells Fargo) Overall Satisfaction Customer Satisfaction With Our Bankers Customer Satisfaction - Credit Process 90 90 90 80 80 80 Middle Market 70 70 70 60 60 60 Custo
Slide 26: Double Down
DOUBLE DOWN Building on our strength as a business banking leader INFORMED BY F U E L E D B Y E X PA N D I N G C U S T O M E R S T R AT E G I C COMPLIMENTARY SEGMENTS INVESTMENTS BUSINESSES 26
Slide 27: Our Strategy is to Lead with Our Strength in Business Banking
Our Strategy is to Lead with Our Strength in Business Banking We have focused our investments on enhancing products and services for business banking customers People Technology Bankers provide tailored Products and Solutions advice based on proficiency Digital experiences provide with full suite of
Slide 28: Compelling Products and Streamlined Journeys Designed for Business Clients
Compelling Products and Streamlined Journeys Designed for Business Clients Our business product design is inspired by our customers and informed by the problems they are looking to solve People Technology Bankers provide tailored advice based on Products and Solutions proficiency with full suite of
Slide 29: Our Digital Technology Roadmap Is Largely Focused on Business Clients
Our Digital Technology Roadmap Is Largely Focused on the Needs of Business Clients Recent investments deliver full spectrum of digital origination and banking experiences for business banking clients People Technology Initiatives Bankers provide tailored advice based on proficiency with full suite o
Slide 30: Differentiating Through Technology, Winning Through Personal Service
Differentiating Through Technology, Winning Through Personal Service Our competitive advantage in a relationship driven business will be our people. People Initiatives Banker Capability Building – Self-paced learning and development Technology program to help branch managers and business bankers bui
Slide 31: Our Branch Network Is a Critical Differentiator for Businesses
Our Branch Network, Run by Empowered Bankers, is a Critical Differentiator for Businesses While technology is Important, business customers value a conveniently located branch and relationship banker as principle considerations when selecting a primary bank SMALL BUSINESS 93% IMPORTANCE OF CHANNELS
Slide 32: Both Branch and Digital Are Critical to Business Customer Retention
Both Branch and Digital Are Critical to Business Customer Retention Channel use patterns of our most loyal business customers confirm the importance of both digital and branch Business Customer Attrition 1 and Overall Satisfaction by Channel Use 2 Branch and Digital Use 4.9 8.6 Branch Use Only 7.5 8
Slide 33: Frontline Banker Development
Frontline Banker Development Investing in banker capabilities to bring advice and authority closer to the customer Empowering Bankers with Authority • Credit & Relationship Skills • Bringing advice and authority Learning Program designed closer to our customer for Business and Branch • Retail banker
Slide 34: Double Down
DOUBLE DOWN Building on our strength as a business banking leader INFORMED BY F U E L E D B Y E X PA N D I N G C U S T O M E R S T R AT E G I C COMPLIMENTARY SEGMENTS INVESTMENTS BUSINESSES 34
Slide 35: We Think About Other Businesses In A Complimentary Way
We Strategically Think About Other Businesses In A Complimentary Way Business customers have a full spectrum of personal banking needs CORE BELIEFS Our business owner customers: ▪ Value relationship officers for their business AND personal banking needs ▪ Benefit from our advice ▪ Trust our organiza
Slide 36: Mortgage Differentiating Factors
Mortgage Differentiating Factors Lender of Choice for Self-Employed and Leader in One-Time Close Product in our Markets Self Employed Loans Funded (2016 - 2019) Self Employed Borrower Lending Aligns with Strong Business Banking Reputation and Referrals Innovative Non-QM Solutions for Clients Proprie
Slide 37: Creating a Positive Customer Experience and Deepening Relationships
Creating a Positive Customer Experience and Deepening Relationships Digital mortgage application leads to additional opportunities and increased efficiencies ▪ Introduction of digital application “ZIP” in 2019 ▪ Clients can elect to automate services reducing time to close ▪ Digital verification of
Slide 38: Mortgage Strategy Implementation and Growth
Mortgage Strategy Implementation and Growth Mortgage is a key contributor to loan portfolio growth with 9% CAGR Portfolio Loans Outstanding (2014-2019) Portfolio Growth with Exceptional Quality Held-for-Sale lending in 2019 resulted in 60% increase or $290MM “Best in Class” credit quality continues
Slide 39: Planning and Advice Are at the Core of Wealth Management
Planning and Advice Are at the Core of our Wealth Management Offering The Wealth Management offering is built around the needs of our business owners VALUE PROPOSITION ▪ We leverage our strength as a business bank to assist our business owner clients with their personal and business succession plans
Slide 40: A Model Built to Serve our Core Customers Has Resulted in Organic Growth
A Model Built to Serve our Core Customers Has Resulted in Organic Growth Wealth Management deployed a clear and concise strategy in 2016 which has driven positive outcomes Earnings & Growth Opportunities Organic growth opportunity through increased wealth penetration with existing 91.6% 2 business c
Slide 41: Advisory Growth Continues to Drive Increases in Fee Income
Advisory Growth Continues to Drive Increases in Fee Income Recurring fiduciary advisory revenue is the core relationship offering of our wealth management division Both brokerage and advisory assets have grown over time ($B)1 Advisory fees reduce traditional bank model risk 1 Advisory Brokerage Advi
Slide 42: Double Down: Strong Revenue Growth
DOUBLE DOWN Building on our strength as a business banking leader Improved Increased net Improved targeted Best frontline onboarding of customer “profitable” bankers armed STRONG core deposit retention and complimentary with great REVENUE rich customer satisfaction business digital tools GROWTH base
Slide 43: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 44: Technology Strategy Update
Technology Strategy Update Investor Day – February 6, 2020
Slide 45: Introducing our Technology Strategy – Building the Future TODAY
Introducing our Technology Strategy – Building the Future TODAY'S OBJECTIVES WHAT YOU WILL HEAR • Interact with our • Acting as one company, not a company with many silos. colleagues leading • Leveraging technology to enhance the fundamental relationships between technology strategic bankers and cus
Slide 46: Technology Strategy
TECHNOLOGY STRATEGY Building our strength as a business banking leader C U S T O M E R E M P O W E R E D DIGITAL TO FIRST LOCAL BANKERS T H E C O R E 46
Slide 47: Investing in Technology That Furthers a Banker's Relationship
We Are Investing in Technology That Furthers a Bankers Relationship Not Replacing It Building enduring relationships with Small Business owners 47
Slide 48: Changing Core Banking Systems Designed for a Different Era
Changing Core Banking Systems that were Designed for a Different Era Migrating from a branch-centric operating model to a digital operating model 48
Slide 49: Making Deliberate and Effective Technology Spend Decisions
Making Deliberate and Effective Technology Spend Decisions How does Zions manage to compete in an environment when we don’t have same the same scale as national banks? FOUR THINGS TO KNOW ON HOW WE COUNTER THE SCALE OF LARGE COMPETITORS 1. We have a leadership team that constructively debates option
Slide 50: Digital Capabilities Furthered Over the Last Several Years
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 51: New Digital Capabilities Investments Coming in 2020
We Continue to Add New Digital Capabilities Investments coming in 2020 COMMERCIAL SMALL BUSINESS AFFLUENT CONSUMER Small Business and Consumer Online and Mobile Banking Replacement $35B Deposits and ~750,000 Accounts Treasury Management Digital Entry Point Affluent Strategy Implementation ~ 25,000 C
Slide 52: Technology Strategy
TECHNOLOGY STRATEGY Building our strength as a business banking leader C U S T O M E R E M P O W E R E D DIGITAL TO FIRST LOCAL BANKERS T H E C O R E 52
Slide 53: Presenters: Olga Hoff, Jake Heugly, Jason Brock
O L G A H O F F JAKE HEUGLY JASON BROCK Executive Vice President Executive Vice President Executive Vice President Enterprise Retail Banking Fee Income Strategies Digital Banking (Small Business and and Commercial Products Consumer) 53
Slide 54: The Customer First
THE CUSTOMER FIRST From the first digital interaction to the last, end-to-end customer experience is welcoming, simple, and fast D I G I T I Z E D S E R V I C I N G E A S Y FA S T EXPERIENCE NEW ACCOUNT O P E N I N G W E L C O M I N G F I R S T IMPRESSION 54
Slide 55: Building on Business Banking Strengths by Better Understanding the Customer
Building on Business Banking Strengths by Better Understanding the Customer Interviews with customers and customer centric testing increase our knowledge that we apply to design SMALL BUSINESS TREASURY CUSTOMER CUSTOMER An independently owned business with limited An established business with more s
Slide 56: Integrated Experience for Treasury Customers
An Integrated, Consistent and Personalized Customer Experience for Treasury Customers A digital platform to build and optimize user experiences across all digital channels and stages of the customer lifecycle 60+ Average Logins Future Treasury Customer Digital Entry Point per User per Existing Treas
Slide 57: Fast and Convenient Onboarding Experiences for Treasury Customers
Fast and Convenient Onboarding Experiences for Treasury Customers Fully digital Treasury Management master agreement to get products to customers faster 6000 Agreements per Year ▪ Offering digital onboarding for over 16 treasury management products ▪ With digital account acquisition, reduced turnaro
Slide 58: Doubling Down on Our Small Business Lending Customer Experience
Doubling Down on Our Small Business Lending Customer Experience Customer-centric digital experience for new small business loans 60% Digital Apps ▪ Convenient online application that can be started in a branch or at home for Business Access Loans (up to $50k unsecured and $175k secured, $1mm secured
Slide 59: A Single Modern Digital Banking Platform
A Single Modern Digital Banking Platform for Small Businesses and Consumers One experience across all access points 27 Average Logins per User per ▪ Modern user interface with simple Month and intuitive navigation for over 625,000 consumer and 125,000 small business customers ▪ Architecture supports
Slide 60: Technology Strategy
TECHNOLOGY STRATEGY Building our strength as a business banking leader C U S T O M E R E M P O W E R E D DIGITAL TO FIRST LOCAL BANKERS T H E C O R E 60
Slide 61: Presenters: Brandon Thomas, Jake Heugly, Jason Brock
BRANDON THOMAS JAKE HEUGLY JASON BROCK Chief Data Officer Executive Vice President Executive Vice President Fee Income Strategies Digital Banking and Commercial Products 61
Slide 62: Empowered Local Bankers
EMPOWERED LOCAL BANKERS Local bankers have the information, insights, and tools to serve customers wherever and whenever they meet Past Present Future SOLUTIONS INSIGHT SELLING PRODUCTS CUSTOMER - CENTRIC 62
Slide 63: Supporting Bankers in the Field with New Insights
Supporting Bankers in the Field with New Insights and Facilitating Higher Productivity Giving bankers the mobile tools to be efficient and effective ▪ One of the only large banks in the country with one instance of the “Financial Services Cloud” ▪ A full view into the customer's relationship and rel
Slide 64: Solid Foundation Supporting Advanced Analytics
Solid Foundation Supporting Advanced Analytics to Drive Customer Insights Future work is on creating simple solutions for customers and bankers with a target state of providing deep and real time insights BANK BENEFITS CUSTOMER BENEFITS ZIONS TARGET LEVEL Gain deeper insights into Enhanced customer
Slide 65: Technology Strategy
TECHNOLOGY STRATEGY Building our strength as a business banking leader C U S T O M E R E M P O W E R E D DIGITAL TO FIRST LOCAL BANKERS T H E C O R E 65
Slide 66: Presenters: Kristiane Koontz, Ken Collins, Dave Stirling
KRISTIANE KOONTZ KEN COLLINS DAVE STIRLING Executive Vice President Executive Vice President Executive Vice President Banking Transformation / Business Technology Chief Information FutureCore Security Officer 66
Slide 67: Digital to the Core
DIGITAL TO THE CORE Support faster and more agile delivery of customer value while reducing technology debt EVOLVING CORE ARCHITECTURE MODERNIZING LEGACY ENVIRONMENT ENABLING ECOSYSTEMS EMBEDDING INTELLIGENCE AND AUTOMATION PROTECTING CROWN JEWELS 67
Slide 68: The Dawn of Automation in Deposit Processing
The Dawn of Automation in Deposit Processing From paper ledgers in the branch to automated accounting of deposits PRE-AUTOMATION PAPER LEDGERS IN BRANCHES B A N K E R TERMINAL DEBITS GL CREDITS D E P O S I T NIGHTLY BATCH PROCESSING S E R V I C I N G SYSTEM 1970-80s CORE ARCHITECTURE 68
Slide 69: Layering Digital Channels on an Architecture that is Years Old
Layering Digital Channels on an Architecture that is 40 Years Old Creating complexity, reducing speed, and increasing costs ATMAPI and CHANNEL Services Layer DEPOSIT SERVICING SYSTEM 69
Slide 70: Layering Digital Channels on an Architecture that is Years Old
Layering Digital Channels on an Architecture that is 40 Years Old Creating complexity, reducing speed, and increasing costs API and Services LayerBRANCH PLATFORM ATMAPI and CHANNEL Services Layer DEPOSIT SERVICING SYSTEM 70
Slide 71: Layering Digital Channels on an Architecture that is Years Old
Layering Digital Channels on an Architecture that is 40 Years Old Creating complexity, reducing speed, and increasing costs CALLAPI and CENTER Services Layer API and Services LayerBRANCH PLATFORM ATMAPI and CHANNEL Services Layer DEPOSIT SERVICING SYSTEM 71
Slide 72: Layering Digital Channels on an Architecture that is Years Old
Layering Digital Channels on an Architecture that is 40 Years Old Creating complexity, reducing speed, and increasing costs API and Services LayerINTERNET BANKING CALLAPI and CENTER Services Layer API and Services LayerBRANCH PLATFORM ATMAPI and CHANNEL Services Layer DEPOSIT SERVICING SYSTEM 72
Slide 73: Layering Digital Channels on an Architecture that is Years Old
Layering Digital Channels on an Architecture that is 40 Years Old Creating complexity, reducing speed, and increasing costs MOBILEAPI and Services BANKING Layer API and Services LayerINTERNET BANKING CALLAPI and CENTER Services Layer API and Services LayerBRANCH PLATFORM ATMAPI and CHANNEL Services
Slide 74: Layering Digital Channels on an Architecture that is Years Old
Layering Digital Channels on an Architecture that is 40 Years Old Creating complexity, reducing speed, and increasing costs API and Services INTERNETLayer OF THINGS MOBILEAPI and Services BANKING Layer API and Services LayerINTERNET BANKING CALLAPI and CENTER Services Layer API and Services LayerBRA
Slide 75: Comparison Between the Digital Core Architecture and an iPhone
A Comparison Between the Digital Core Architecture and an iPhone Platforms that enable quick changes, easy integrations, and risk isolation Our Core Banking System Apple iPhone Operating System API Platforms The App Store Open Banking & APIs The Apps Our Digital Banking Platforms & Banker Tools Appl
Slide 76: A Nimble Ecosystem Using Integration (API) Marketplaces
A Nimble Ecosystem Using Integration (API) Marketplaces for Product Deployment Speed Post FutureCore deposits implementation – using micro programs to integrate quickly into external and Zions digital ecosystems CUSTOMER’S ACCOUNTING D I G I T A L PLATFORM BANKING API INTEGRATION CORE BANKING 76
Slide 77: The Path to a Modern Digital Core Banking System
The Path to a Modern Digital Core Banking System An arduous journey from legacy core servicing systems to an integrated and modern digital core banking system Core replacement Release 1 API integration Release 3 project RFP Consumer Release 2 platform launched Conversion launched loans and Commercia
Slide 78: Owning the Customer Experience Versus Relying on Disparate Vendors
Owning the Customer Experience Versus Relying on Disparate Vendors Using customer journeys and user research to create customer and banker centric experiences VENDOR DRIVEN EXPERIENCES DIGITAL EXPERIENCE PLATFORMS p r o d u c t Welcome John product PRODUCT Zions product product BEFORE AFTER • Vendor
Slide 79: Purpose-Built Automation – Making Work More Human
Purpose-Built Automation – Making Work More Human Improving quality, speed and value one process at a time 78,000 Manual Hours Saved in 2019 BEFORE Customer’s Accesses Updates Other Drafts & Sends automation Reads Ticket Applies Edits Request Backend System Systems Response DAYS AFTER Customer’s Aut
Slide 80: Protecting the Crown Jewels in a Growing Threat Environment
Protecting the Crown Jewels in a Growing Threat Environment Evolving our security approach to address dramatic growth in Internet use and cybersecurity risk Shifting from traditional “walled garden” perimeter security model to a strategy of: Engaging everyone through better awareness, training and t
Slide 81: Technology Strategy
TECHNOLOGY STRATEGY Building our strength as a business banking leader C U S T O M E R E M P O W E R E D DIGITAL TO FIRST LOCAL BANKERS T H E C O R E 81
Slide 82: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 83: Decade-Long Risk Profile Improvement
Decade-Long Risk Profile Improvement Since the recession, Zions has addressed the following: Concern Mitigation Concern Mitigation ✓ Reduced modeled net interest income volatility by a very substantial ✓ Reduced risk through simplified business model and structure, amount charter consolidation, merg
Slide 84: Strong Risk Management Infrastructure and Simplifications to Reduce Risk
Strong Risk Management Infrastructure and Simplifications to Reduce Risk Key risk controls in place today are designed to make Zions a positive outlier during future economic downturns: ▪ Strong concentration risk management ▪ Restructured Compliance and Risk Management ▪ Strong oversight of areas t
Slide 85: Risk Management Emphasis / Accomplishments
Risk Management Emphasis / Accomplishments Development of risk management infrastructure includes the following: ▪ Further refinements in: ▪ Risk Management Framework (RMF), including 2nd level RMFs ▪ 1st Line of Defense ownership of risk ▪ Accountability for risk management with executive performan
Slide 86: Concentration Risk Management Altered Composition of Loan Portfolio
Concentration Risk Management Altered Composition of Loan Portfolio Active Concentration Risk Management has Altered our Loan Portfolio Composition ▪ Changes in portfolio composition from 2007Q4 to 2019Q4: Portfolio Commitments as a Percent of Risk Based Capital ▪ Land A&D decreased from 72% to 4% o
Slide 87: Exercising Discipline to Reduce Risk Profile
Exercising Discipline to Reduce Risk Profile Commercial real estate loan growth lags due to continued exercise of concentration risk discipline Total CRE CRE >$1 million 250 250 200 200 150 150 100 100 50 50 ZION Peer Top Quartile Peer Bottom Quartile ZION Peer Top Quartile Peer Bottom Quartile 0 0
Slide 88: Credit Risk Enhancements
Credit Risk Enhancements Disciplined Risk Management practices led to deep-dive research in Investor CRE, followed by additional discipline Based upon business segment review process and governance, Zions Midpoint of Rating Agency Probability of Risk Grade Type Range: 1- Equivalent Default Grade imp
Slide 89: Enhanced Risk Management Evident in Recent Loss Rates
Enhanced Risk Management Evident in Recent Loss Rates Positive outlier in comparisons of loan loss rates and is expected to improve with enhanced risk management practices NCOs / Average Loans 1.50% Last 12 Months Average 1.25% 1.00% 0.75% 0.50% 0.25% 0.00% FRC WAL PBCT ZION FHN FNB EWBC SNV MTB CMA
Slide 90: Credit Quality: Nonperforming Assets and Loan Loss Severity
Zions’ peer group have been excluded due to their failed or or status. theirmergedduefailedbeento peerhaveexcludedgroupZions’ Source: SNL Global.Financial/S&P Calculatedaveragethequarterly using annualizedsome bias: of Note:results. Survivorship Due toDue strong collateral, problemsariseZionsgeneral
Slide 91: Credit Quality Trend
Credit Quality Trend Zions has reached the best quartile for NPAs and ranks the best of peers for NCOs NPAs+90 DPD / NCOs/Loans Loans + OREO (Trailing 12-month Average) Oil and gas recession 1.70% 1.70% 1.50% 1.50% 1.30% 1.30% 1.10% 1.10% 0.90% 0.90% 0.70% 0.70% Bump in charge offs related to 0.50%
Slide 92: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 93: Credit Quality – Total Portfolio
Credit Quality – Total Portfolio Overall credit quality is strong and diversified • Growth in lower risk areas (total growth of $2.0 billion YoY): • Municipals: $732 million YoY balance growth Portfolio Composition (Balance in $B) • Mortgage: $394 million YoY balance growth $50 • Lower losses than p
Slide 94: Commercial Portfolio Summary ($25.4 billion)
Commercial Portfolio Summary ($25.4 billion) Commercial and Industrial portfolio is diversified and performing well Commercial and Industrial Portfolio Trends ▪ Total C&I $30.0 10 ▪ Balances up $1.3 billon YoY ▪ Delinquencies 0.56%, classifieds 2.63%, nonaccrual 0.68% $25.0 9 8 ▪ Oil & Gas $20.0 ▪ Y
Slide 95: Commercial Real Estate Portfolio Summary ($11.6 billion)
Commercial Real Estate Portfolio Summary ($11.6 billion) Mix heavily skewed to Term CRE; Strong credit quality as seen in very low nonaccrual and NCOs ▪ CRE Balances up 3.8% YoY Commercial Real Estate Portfolio Trends ▪ Well diversified by collateral location across the southwest and $12.0 10 wester
Slide 96: CRE Term Portfolio ($9.3 billion)
CRE Term Portfolio ($9.3 billion) Balanced portfolio mix, conservative structures, low criticized rates CRE Term – Current LTV ▪ Balanced CRE mix among Multi Family, Office, 40% 35% Retail and Industrial/Warehouse 30% ▪ Term portfolio consists of conservative 25% 20% advance rates, strong sponsors,
Slide 97: CRE Construction Portfolio ($2.2 billion)
CRE Construction Portfolio ($2.2 billion) Balanced, performing portfolio CRE Commercial Construction -- LTC ▪ Diversified construction portfolio; approx. 1/3 $500 $450 Homebuilder Residential, 2/3 Commercial $400 $350 ▪ Residential plus all Land is less than 10% of $300 Total CRE $250 $200 ▪ Credit
Slide 98: Consumer Portfolio Summary ($11.8 billion)
Consumer Portfolio Summary ($11.8 billion) Strategic objective of the company is to continue focusing on consumer lending growth, particularly in RE Secured products ▪ 2019 balance growth is primarily in mortgage ($394 million) and Jr. Consumer Portfolio Trends Lien HELOCs ($40 million) – Total cons
Slide 99: Portfolio Overview – Consumer Credit Quality
Portfolio Overview – Consumer Credit Quality Origination quality is high with tight underwriting criteria and limited field overrides ▪ Current FICO scores show strong, credit-worthy customers: Quarterly Refresh FICO Distribution – All Consumer ▪ 762 average for all Mortgage Products 50% ▪ 748 avera
Slide 100: Commercial Portfolios of Interest – Agriculture, Restaurants, Subcontractors
Commercial Portfolios of Interest – Agriculture Production, Restaurants, Subcontractors The three areas of the commercial portfolio that are experiencing elevated concerns equal a small portion (<4%) of total loans Percent of Total C&I Balances in these portfolios ▪ Agriculture Production Agricultur
Slide 101: Portfolios of Interest – Oil & Gas
Portfolios of Interest – Oil & Gas Significant realignment since downturn ▪ Portfolio balances decreased slightly (1.5%) during 4Q, but grew Portfolio Trends 9.5% YoY $3.5 10 ▪ Services, which accounted for bulk of charge offs in the last cycle, $3.0 9 account for 18% of the portfolio versus 39% goi
Slide 102: Portfolios of Interest – Leveraged Lending
Portfolios of Interest – Leveraged Lending Risk primarily related to Oil & Gas ▪ Relationship and middle-market sponsor driven, not the larger syndicated Portfolio Trends leveraged loan market $1.6 10 ▪ Not a focused growth area; balances generally stable-to-declining $1.4 9 $1.2 ▪ 8 Diversified acr
Slide 103: Portfolios of Interest – Municipal Lending
Portfolios of Interest – Municipal Lending Low risk growth driver Portfolio Trends ▪ Strong growth in municipals loans particularly in the $3.0 10 last three years. $2.5 9 8 ▪ Growth is focused in core municipal lending exhibiting $2.0 7 $1.5 resilient payment sources such as taxes and fees for 6 ut
Slide 104: Portfolio Overview – Mortgage
Portfolio Overview – Mortgage The portfolio is stable and continues growing at a solid pace with excellent performance metrics ▪ A majority of the Mortgage loans on the books are in 1st lien Mortgage Portfolio Trends position, with Jr Lien Mortgages only comprising of $19.4 million in $8.0 820 $7.0
Slide 105: Current LTV and FICO Distribution on Mortgage Loans
Current LTV and FICO Distribution on Mortgage Loans No material layering of risk (e.g. having both high LTV and low FICO) FICO/LTV Buckets Less than 50 50-59 60-69 70-79 80-89 90-99 100 or Greater 800 or Greater 7% 3% 4% 5% 1% 0% 0% 750-799 12% 8% 10% 14% 2% 0% 0% 700-749 5% 4% 6% 8% 1% 0% 0% 650-69
Slide 106: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 107: 2019 vs 2017 Key Performance Indicators
2019 vs 2017 Key Performance Indicators Since our last Investor Day (March 2018), Zions has experienced strong improvement in many performance metrics ✓ Strong growth in EPS: ✓ Loans & Deposits: ▪ Diluted earnings per share increased 60% to $4.16 from ▪ Total loans increased $3.9 billion from YE17,
Slide 108: Strong Earnings Growth and Expense Control
Strong Earnings Growth and Expense Control Positive operating leverage achieved through revenue growth and expense control 160 Noninterest Expense 160 Net Revenue ZION Indexed: 4Q14 = 100 150 Indexed: 4Q14 = 100 150 Peer Top Quartile 140 140 Peer Bottom Quartile 130 130 120 120 110 110 100 100 90 90
Slide 109: Securities Profile
comparison not data or meaningful available, areis when those not peers peers,certain For Global Financial/S&P as of 4Q19. SNL Source: Securities Securities Profile Significant change in composition in and size of the securities portfolio during last 15 years portfolioduringlast15 of thesecuritiessi
Slide 110: Securities Spreads: Then vs. Now
Securities Spreads: Then vs. Now Zions’ securities portfolio has migrated to a high credit quality, minimal duration extension risk, highly liquid portfolio 2005 Securities Portfolio Spread 2019 Securities Portfolio Spread Portfolio yield spread vs. blend of benchmark indices 2.00% Portfolio yield s
Slide 111: Securities Yield versus Duration
Securities Yield versus Duration Zions’ securities portfolio has a short duration, minimal duration extension risk, and no material credit risk Yield vs. Duration 3.5 3Q19 Data FRC FITB 3.0 TFC (fka STI) – EWBC TFC (fka BBT) 2.5 CFG ZION HWC 2.0 1.5 1.0 Yield on Securitieson Yield Taxable Equivalent
Slide 112: Loan Portfolio Yield: Then vs. Now
Loan Portfolio Yield: Then vs. Now Significant change in composition in and size of the loan portfolio during last 15 years 4Q05 Loan Portfolio Yield % Total Loans Peer Median: 6.66% 8.0 (end of period balances) billions 7.0 $60 6.0 5.0 $50 4.0 3.0 2.0 24% 24% 24% $40 1.0 23% 0.0 23% 23% RF KEY CFG
Slide 113: Loan Portfolio Spreads: Then vs. Now
Loan Portfolio Spreads: Then vs. Now Zions’ loan portfolio has migrated to a higher credit quality portfolio, as seen in credit performance and loan portfolio spreads 2005 Loan Portfolio Spread 2019 Loan Portfolio Spread 4.0 % Portfolio yield spread vs. blend of benchmark indices 4.0 % Portfolio yie
Slide 114: Risk-Adjusted Loan Yield and Risk-Adjusted Loan Spread
Risk-Adjusted Loan Yield and Risk-Adjusted Loan Spread Zions’ risk-adjusted yields are superior to peers Risk-Adjusted Loan Yield (%) Risk-Adjusted Loan Spread (%) 4.68 4.69 4.43 4.23 4.17 4.28 4.01 3.99 4.11 4.10 3.72 3.81 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y ZION
Slide 115: Risk-Adjusted Loan Yield and Spread
Risk-Adjusted Loan Yield and Spread Risk-adjusted loan yield and spread are superior to peers over the last six years 6.0 (%) 6.0 (%) Risk-Adjusted Loan Yield Risk-Adjusted Loan Spread Average from 2014-2019 5.5 Average from 2014-2019 Peer Median: 4.02% Peer Median: 3.58% 5.5 5.0 5.0 4.5 4.5 4.28 4.
Slide 116: Risk-Adjusted Loan Spread versus Duration
Risk-Adjusted Loan Spread versus Duration Duration does not appear to be driving loan yield differences Risk-Adjusted Loan Spread vs. Duration 3Q19 Data 5.0 MTB 4.5 CMA BOKF ZION – FHN 4.0 EWBC FITB SNV HBAN FNB 3.5 WTFC PBCT RF KEY 3.0 CFG ASB FRC 2.5 2.0 1.5 1.0 Adjusted Loans Spread Spread Loans
Slide 117: Deposit Profile
Deposit Profile Quality of Zions’ deposit portfolio has improved and has one of the lowest cost of deposits among its peers Deposit Composition Noninterest Bearing Deposits/Total Deposits (%) (% of Total Deposits) 50% 41% 40% 5.0% 4.2% 5.2% 5.9% 8.0% 8.3% 30% 13.6% 0.7% 0.6% 0.0% 0.0% 0.0% 0.0% 20%
Slide 118: Deposit Growth Versus Cost (3Q15-4Q19)
Deposit Growth Versus Cost (3Q15-4Q19) Zions has achieved healthy deposit growth while keeping deposit costs in check ▪ After a prolonged period of low rates, 90 benchmark rates began to rise in 4Q15 FHN EWBC 80 Growth achieved with ▪ Zions’ deposit growth rate: In line with the a higher interest co
Slide 119: Cost of Deposits – Year History
Cost of Deposits – 20 Year History The high quality of Zions’ deposit portfolio relative to peers can be observed over time – and has improved 7.0% ZION Peer Best Quartile Peer Worst Quartile Fed Funds (High) Target 6.0 5.0 4.0 3.0 Zions relative performance 2.0 is now significantly better than most
Slide 120: Cost of Deposits, Risk-Adjusted Loan Yield and NIM
Cost of Deposits, Risk-Adjusted Loan Yield and NIM Zions’ cost of deposits, risk-adjusted yields and margins are superior to peers Risk-Adjusted Loan Yield (%) 4.68 4.69 Risk-Adjusted NIM 4.28 4.11 4.10 3.81 3.60% 3.49% 3.31% 3.15% 3.10% 3.12% Cost of Deposits (%) 0.46 0.25 0.11 0.10 0.10 0.11 2016Y
Slide 121: Net Interest Margin Volatility
Net Interest Margin Volatility Actively reducing net interest margin volatility – most recent eight year ranking is considerably better than prior eight 25% Net Interest Margin Net Interest Margin Volatility 5.0(%) 20% Last 15 Years 2004-2011 15% 4.5 9% 10% 5% 4.0 0% RF FRC KEY CFG ASB FNB SNV FHN F
Slide 122: Superior Liquidity Profile
Superior Liquidity Profile Zions’ liquidity profile is very strong – excellent capacity to lend, low cost and stable deposits, low reliance upon brokered deposits Loans/Deposits Relationship based deposit pricing $7.2 billion of deposits with relationship-based pricing have a cost of 1.30% (mid-Janu
Slide 123: High Quality Deposit Profile
High Quality Deposit Profile High concentration of granular retail and small business deposits Deposit Composition(1) Noninterest-Bearing Deposits / 40% Percent Total Deposits 3.5 50% 35% 3.0 40% 30% 2.5 25% 30% 2.0 20% 1.5 20% 15% 1.0 10% 10% 0.5 5% 0.0 0% 0% 2017 2008 2009 2010 2011 2012 2013 2014
Slide 124: Net Interest Income
Net Interest Income Changes in interest rates and balance sheet composition impact net interest income performance Net Interest Income Net Interest Margin Net Interest Margin 4Q19 4Q17 ($mm) $576 $576 0.07% -0.17% NIM $569 NIM 0.19% $567 -0.06% 3.42% $559 3.39% 0.07% -0.07% Balance Loan Sheet Mix Co
Slide 125: Interest Rate Sensitivity
Interest Rate Sensitivity Zions is actively managing balance sheet sensitivity Earnings at Risk Sensitivity (1) −200 bps −100 bps +100 bps +200 bps 1▪ Interest rate sensitivity has been reduced by adding interest rate hedges 6% ▪ $3.6 billion of loan interest rate swaps as of Q4 2019 3% ▪ Additional
Slide 126: Current Expected Credit Losses (CECL) Estimates
Current Expected Credit Losses (CECL) Estimates Allowance for credit losses reduced 5% upon adoption of CECL – volatility expected to increase There are a few key drivers that affect the allowance with the adoption of CECL: ▪ Relatively benign consensus “reasonable and supportable” (R&S) economic fo
Slide 127: Capital: Operating From a Position of Strength
Including Zions Allowance for Unfunded Lending Commitments, Zions Allowance for CreditZions Commitments,Loss to Allowance ZionsLendingLoan for Ratio UnfundedIncluding was 1.14% 4Q19.in Note: capitalRegulatory ratios are Basel III 4Q19.for Source: SNL Global,Financial/S&P data as of 4Q19. Total Risk
Slide 128: Stress Test Results
Stress Test Results CET1 Ratio deterioration in the severely adverse stress scenario has improved ▪ Change in CET1 Ratio: Pre-to-Post-Stress Delta – Strong improvement from 2014 to 2019 ▪ Improvement primarily due to resilience of PPNR, in part due to improved overall profitability and securities po
Slide 129: Impact of Warrants
Impact of Warrants Warrant dilution is already reflected in the diluted share count, although potential for more / less dilution can be estimated ▪ Zions has 29 million warrants (Nasdaq: ZIONW) outstanding which are currently in the Dilution is calculated using the money and expire on May 22, 2020 t
Slide 130: Key Financial Objectives
Key Financial Objectives Growth through simplification and focus ▪ Remain focused on achieving long-term positive operating leverage: ▪ Realize broad based loan and fee income growth through focus on small and medium sized enterprises, and their owners ▪ Manage noninterest expense growth linked to r
Slide 131: Financial Outlook (4Q 2020E vs 4Q 2019A)
Financial Outlook (4Q 2020E vs 4Q 2019A) Outlook Comments Moderately ▪ Moderate growth reflects activity in the next twelve months which may not Loan Balances Increasing be as strong as that experienced in the past twelve months Slightly ▪ Assumes benchmark rates generally consistent with the forwar
Slide 132: 2020 Investor Conference Agenda
2020 Investor Conference Agenda Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation ▪ Welcome – Harris Simmons, Chief Executive Officer ▪ Chief Banking Officer Initiatives – Keith Maio, Chief Banking Officer ▪ Technology and Innovatio
Slide 133: 2020 Investor Conference
2020 Investor Conference Building a Premier Business Bank with Highly Skilled Bankers, Great Technology and a Solid Risk Management Foundation February 6, 2020
Slide 134: Appendix
Appendix ▪ Company Abbreviation Key ▪ 4Q19 Financial Results ▪ Year-over-Year Loan Balance Growth ▪ Loan Growth by Brand and Loan Type ▪ GAAP to Non-GAAP Reconciliation 134
Slide 135: Company Abbreviation (Ticker Symbol) Key
Company Abbreviation (Ticker Symbol) Key ASB: Associated Banc-Corp JPM: JPMorgan Chase & Co. BAC: Bank of America KEY: KeyCorp BOKF: BOK Financial Corporation MTB: M&T Bank Corporation C: Citigroup, Inc. PBCT: People’s United Financial, Inc. CFG: Citizens Financial Group, Inc. RF: Regions Financial
Slide 136: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) December 31, September 30, June 30, 2019 2019 2019 Earnings Results: Diluted Earnings Per Share $ 0.97 $ 1.17 $ 0.99 Net Earnings Applicable to Common Sharehol
Slide 137: Loan Growth
Loan Growth Solid loan growth achieved in certain targeted growth categories Year-over-Year Loan Balance Growth 2019Q4 Total Loans: +4% 50% Municipal, Note: Circle size indicates 44% relative proportion of loan 40% portfolio as of 4Q19 30% 20% O&G, Term CRE, Owner 10% 5% C&I (ex-O&G), Occupied , 0.3
Slide 138: Loan Growth by Bank Brand and Loan Type
Loan Growth by Bank Brand and Loan Type Year over Year Loan Growth (4Q19 vs. 4Q18) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) (42) 108 16 (148) 93 14 (4) - 37 Owner occupied (ex-NRE) 42 86 36 42 33 (10) 13 - 242 Energy (Oil & Gas) 4 193 7 3 - 10 - - 217 Mu
Slide 139: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 4Q19 3Q19 2Q19 1Q19 4Q18 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 472 $ 415 $ 424 $ 430 $ 420 Adjustments: Severance costs 22 2 1 - 2 Other real estate expense - (2) - (1) - Debt extinguishment cost - - - - - Amortization of core dep
Slide 140: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 4Q19 3Q19 2Q19 1Q19 4Q18 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $472 $415 $424 $430 $420 LESS adjustments: Severance costs 22 2 1 - 2 Other real estate expense - (2) - (1) - Debt extinguishment cost -
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