Zions Bancorporation N.a. · NASDAQ:ZION

Zions Bancorporation N.a — Zions Bancorporation, National Association — Q1 2019 Earnings Presentation

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

  1. Slide 1: First Quarter 2019 Financial Review

    First Quarter 2019 Financial Review April 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 within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in the attached presentation that are ba

  3. Slide 3: First Quarter 2019 Financial Highlights

    First Quarter 2019 Financial Highlights Excluding infrequent items, continued strong PPNR growth and profitability vs. year-ago period  EPS: Diluted earnings per share decreased from the year-ago period, to $1.04 in 1Q19 from $1.09 • Notable items that are operating but believed to be infrequent in

  4. Slide 4: Diluted Earnings per Share

    Diluted Earnings per Share EPS in the year-ago quarter included the benefit of two infrequent items; $0.04 per share of interest income recoveries and a negative provision for credit losses equaling $0.17 per share  Diluted earnings per share decreased to $1.04 in 1Q19 from $1.09 in the year-ago $1

  5. Slide 5: Adjusted Pre-Provision Net Revenue

    Adjusted Pre-Provision Net Revenue(1) Year-over-year 8% improvement; Adjusted PPNR Less NCOs per share up 18% Growth primarily attributable to:  Loan and deposit growth  Deposit pricing discipline  The effect of higher benchmark interest rates on earning assets  Expense control Adjusted PPNR Adj

  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: 2019-2020 Objectives

    2019-2020 Objectives: Growth through simplification and focus  Demonstrate positive operating leverage and achieve high single digit annual percentage growth rate for pre-provision net revenue1 by:  Achieving broad based loan and fee income growth through small business, middle market and capital

  8. Slide 8: Balance Sheet Profitability

    Balance Sheet Profitability Zions’ profitability has more than doubled since embarking on efficiency initiative Return on Assets Return on Tangible Common Equity 15.5% 1.45% 14.2% 14.5% 13.9% 1.33% 1.34% 1.26% 12.4% 1.19% 0.88% 8.4% 0.74% 7.4% 0.68% 6.2% 0.57% 5.0% 4Q14 4Q15 4Q16 4Q17 1Q18 2Q18 3Q18

  9. Slide 9: Net Interest Income

    Net Interest Income Growth due to combination of loan growth and wider net interest margin Net Interest Income  Up 6% over the year-ago period, to $576 Net Interest Margin million; excluding interest income recoveries(1) up more than 8%  Average loans up 5%, average deposits up 4% ($mm) $576 $576

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

    Net Interest Income Drivers: Average Loan and Deposit Growth Deposit growth achieved with a modest incremental cost  Average loans held for investment: +5% over the year-ago period  Average deposits: +4% over the year-ago period Average Total Loans Average Total Deposits Loan Yields Cost of Total

  11. Slide 11: 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 Total Loans: +6% Note: circle size indicates Year over year: relative proportion of loan  Loan growth predominantly in portfolio as of 1Q19 40% R

  12. Slide 12: Net Interest Income Drivers: Yields and Costs

    Net Interest Income Drivers: Yields and Costs Expansion of NIM reflects a higher loan yield with only a moderate increase in funding costs Net Interest Margin (NIM) Relative to the prior quarter, the 5.0%  NIM: +1 bps to 3.68% Loan Yield  Yield on loans: +14 bps to 4.93% 4.0%  Yield on securities

  13. Slide 13: Interest Rate Sensitivity: Preparing For Possible Reduction in Rates

    Interest Rate Sensitivity: Preparing For Possible Reduction in Rates Zions remains moderately asset sensitive, with a loan profile that is weighted towards a one-year reset Net Interest Income Sensitivity Modeled Annual Change in a Zions began taking action to reduce its interest rate sensitivity: +

  14. Slide 14: Noninterest Income

    Noninterest Income Relatively soft quarter after a strong fourth quarter Customer-Related Fee Income (1) ($mm) Customer-related fee income down 2% from $128 the year ago period $123 $125 $125 $120 Strength in:  Loan fees  Interest rate swap fees  Letters of credit  Trust and wealth management in

  15. Slide 15: Noninterest Expense

    Noninterest Expense Focus on “Simple, Easy, Fast, Safe” expense controls and streamlining ($mm)  Total noninterest expense was up 2.6% $431 $430 from the year-ago period $421 $420 $420 $420 $419 $419 $418 $416  Adjusted noninterest expense(1) up 2.9% from the year-ago period due to:  Increases in

  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 1Q19 was 69.6% 60.2%  Adjusted net revenue growth: +4.7% 64.5% from the year ago period 61.6% 61.3% 60.9% 60.2%  Adjusted noninterest expense growth: 58.8% 57.8%

  17. Slide 17: Credit Quality

    Credit Quality Strong and improving credit quality  Key Credit Metrics: Credit Quality Ratios  Classified loans (1.5% of loans) 4.00%  Declined 29% from the prior year  Increased 4% from the prior qtr 3.50%  NPAs+901 (0.5% of loans + OREO) 3.00%  Declined 42% from the prior year 2.50%  Declin

  18. Slide 18: Next 12-Month Financial Outlook (1Q20E vs. 1Q19A)

    Next 12-Month Financial Outlook (1Q20E vs. 1Q19A) Outlook Comments Moderately • Efforts to reduce payoffs have been and are expected to be Loan Balances incrementally beneficial to loan growth rates Increasing Moderately • Assumes stable short term interest rates Net Interest Income Assumes slightly

  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) March 31, December 31, March 31, 2019 2018 2018 Earnings Results: Diluted Earnings Per Share $ 1.04 $ 1.08 $ 1.09 Net Earnings Applicable to Common Shareholder

  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 (1Q19 vs. 1Q18) (in millions) Zions Bank Amegy CB&T NBAZ NSB Vectra CBW Other Total C&I (ex-Oil & Gas) 42 (193) 248 14 79 19 16 - 225 Owner occupied (ex-NRE) 183 77 116 67 21 (13) 14 - 465 Energy (Oil & Gas) (36) 381 (1) (1) - 11 (2)

  23. Slide 23: Deposit Growth by Account Type

    Deposit Growth by Account Type Year-over-Year Average Balance Deposit Growth: +3.7% Time, 50% 43.7% 45% Brokered Time, 40% 41.4% Growth Rate (%) Year over Year 35% 30% 25% Interest on Checking, 20% 11.6% Noninterest 15% Bearing Demand, Money Market, -0.8% 10% 0.4% 5% Savings, 0% -3.7% -5% -10% -15%

  24. Slide 24: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation (Amounts in millions) 1Q19 4Q18 3Q18 2Q18 1Q18 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 430 $ 420 $ 420 $ 421 $ 419 Adjustments: Severance costs - 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 1Q19 4Q18 3Q18 2Q18 1Q18 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $430 $420 $420 $421 $419 LESS adjustments: Severance costs - 2 2 1 - Other real estate expense (1) - 1 - - Debt extinguishment cost - - -

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