Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Goldman Sachs Financial Services Conference 2020
35 slides from Zions Bancorporation N.a's conference presentation, Dec 8, 2020
Slide 1: Goldman Sachs Financial Services Conference
Goldman Sachs Financial Services Conference December 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 and assumpt
Slide 3: Zions Is A Collection of Community Banks
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 ▪ Strategic local “ownership” of market opportunities Zions’ Markets Average and challenges Bank Headquarters Deposits % of Total Zi
Slide 4: Zions Receives National and Local Recognition for Excellence
Zions Receives National and Local Recognition for Excellence Affiliates have strong brands in their markets One of only 11 banks to have averaged 10 or more Greenwich Excellence Awards since 2009 (survey inception in 2009; Zions has averaged 14 awards per year) Top team of women bankers (2015-2019)
Slide 5: 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 % of "Excellent" Customer Citations 90 90 90 80 80 80 7
Slide 6: Zions is a Leader in Small Business Lending
Zions is a Leader in Small Business Lending Zions punches above its weight Commercial Loans Commercial Loans ($ billion) sized $100k - $1M sized $100k - $1M $30 30% as a percent of total commercial loans $25 25% $20 20% $15 15% $10 10% $5 5% $0 0% USB FHN FRC WTFC WFC RF PBCT CFG CMA BAC ZION HBAN C
Slide 7: Success Story: Summary of Paycheck Protection Program Loans
Success Story: Summary of Paycheck Protection Program Loans PPP lending success relied on Zions’ ability to link frontline bankers and borrowers with an agile technology deployment Future Opportunity ▪ Zions ranked 9th in PPP lending and is ranked 37th in U.S. ▪ 14,000 “new to bank” PPP Deposit Mark
Slide 8: Success Story: Mortgage Banking
Success Story: Mortgage Banking Successes amid COVID-19 pandemic: very strong mortgage revenue 2019 2020 Record YTD Funding ▪ Roll-out ▪ Enhanced Digital Fulfillment Process $922 million ▪ 86% of all applications taken digitally $791 million ▪ 25% reduction in turn-time allowing 31% 38% 40% 59% 47%
Slide 9: We Have Furthered our Digital Capabilities Meaningfully
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 10: Third Quarter 2020 Financial Highlights
Third Quarter 2020 Financial Highlights Vs. 2Q20, rebound in earnings as provisions subside; loans on deferral drop more than 90%, loans 30+ days past due improves ✓ Earnings and Profitability: ✓ Credit quality (excluding PPP Loans): ▪ $1.01 diluted earnings/share compared to $0.34 in 2Q20 ▪ 0.79%:
Slide 11: Long-term Focus on PPNR Growth and Expense Control
Long-term Focus on PPNR Growth and Expense Control Positive operating leverage achieved through revenue growth and expense control Net Revenue Noninterest Expense Adjusted Pre-Provision Net Revenue Indexed: 1H14 = 100 Indexed: 1H14 = 100 Indexed: 1H14 = 100 250 250 250 230 230 230 ZION 210 Peer Top
Slide 12: Profitability
Profitability Efficiency and ROA improvement linked to relatively stable noninterest expense and revenue growth 80 % Return on Assets (modified) 1.8% Efficiency Ratio Substitutes 1.6% 75 Net Charge-Offs Excluding the for Provisions 1.4% $30 million charitable 70 1.2% contribution, the efficiency rat
Slide 13: Loss-Absorbing Capital
Loss-Absorbing Capital Common Equity Tier 1 capital plus the allowance for credit loss is strong relative to peers Common Equity Tier 1 Capital Ratio(1) CET1 Capital and Allowance for Credit Losses (2) / Risk Weighted Assets 1.7% CET1 Ratio ACL/RWA 1.3% 12.8% 12.8% 12.1% 12.1% 1.6% 1.8% 1.5% 1.5% 2.
Slide 14: Capital and Profitability: Two Key Lines of Defense
Capital and Profitability: Two Key Lines of Defense Whether looking at capital coverage of loan losses, or earnings coverage of loan losses, Zions ranks superior to many peers Net Charge-Offs (LTM) / Pre-Provision Net Revenue less Net Charge Offs / Common Equity Tier 1+Allowance for Credit Losses Ri
Slide 15: Diversified, High Quality Deposit Portfolio
Diversified, High Quality Deposit Portfolio Strong concentration of granular retail and small business deposits; small businesses are net contributors of stable deposits Portfolio Composition By Account Type Noninterest-Bearing Deposits / Average Deposits Time 3.5 50% Deposits NonInterest 5.6% Beari
Slide 16: Net Interest Income
Net Interest Income Changes in benchmark interest rates and balance sheet composition impact net interest income performance Net Interest Income Net Interest Margin Net Interest Margin ($ millions) 2Q20 3Q20 $567 $563 MM and $559 $555 Securities Loan $548 Yields 3.48% 3.46% 3.41% 3.23% Interest Whol
Slide 17: Average Loan and Deposit Growth
Average Loan and Deposit Growth Loan growth year-over-year primarily attributed to increase in PPP loans, deposit growth aided by PPP funding Average Total Loans Average Total Deposits Loan Yields Cost of Total Deposits Average Total Loans Excluding PPP Loans, Yield: 3.77% in 3Q20 ($ millions) Avera
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity The low and relatively flat interest rate environment and surge in deposits has resulted in increased interest rate sensitivity Net Interest Income Sensitivity (1) ▪ Interest rate sensitivity reduced through interest rate hedges(2): $ millions Swaps Maturing Average Receive
Slide 19: Credit Quality
Credit Quality Zions entered the COVID-19 economic downturn with very clean credit quality All Ratios Exclude PPP Loans Credit Quality Ratios 14.00% Key Credit Metrics: ▪ Classified loans/loans: 3.4% 12.00% ▪ NPAs+90(1)/loans + OREO: 0.79% ▪ Annualized net loan losses: NCOs / Loans (ann.) 10.00% Cla
Slide 20: Deferrals and Delinquencies: A Positive Outcome Thus Far
Deferrals and Delinquencies: A Positive Outcome Thus Far Deferrals have receded by more than 90% to 0.6% of loans; delinquency rate down 0.2% Total Deferrals 30+ Days Past Due relative to total non-PPP loans relative to total non-PPP loans 6.3% 0.6% 0.7% 0.5% 6/30/2020 9/30/2020 6/30/2020 9/30/2020
Slide 21: Select Sub-Industries with Elevated Risk Related to COVID-19
Select Sub-Industries with Elevated Risk Related to COVID-19 COVID-19 Elevated Risk loans are less than 10% of total loans and have strong collateral coverage ▪ Portions of broad industry groups with significant growth in criticized rates COVID-19 Elevated Risk Loans: during 1H20 $4.1 billion (8.4%)
Slide 22: Additional Recent Trends In Loan Balance, Credit Quality and Line Utilization
Additional Recent Trends In Loan Balance, Credit Quality and Line Utilization In 3Q, Zions experienced generally stable credit quality trends outside of COVID-19 Elevated Risk and Oil and Gas loans (excluding PPP loans) Loan Balances by Portfolio Classified (larger ratio) and and Weighted Average Ri
Slide 23: Credit Quality Trends
Credit Quality Trends Zions performance with NPAs is consistent with the best quartile of the peers NPAs+90 DPD / NCOs / Loans (Excluding PPP) Loans (Excluding PPP) + OREO (Trailing 12-month Average) Oil and gas recession 1.70% 1.70% 1.50% 1.50% 1.30% 1.30% 1.10% 1.10% 0.90% 0.90% 0.70% Bump in char
Slide 24: Loan Loss Severity
Loan Loss Severity When problems arise, Zions generally experiences less severe loan losses due to strong collateral Annualized NCOs / Nonaccrual Loans Annualized NCOs / Nonaccrual Loans Five Year Average (4Q15 – 3Q20) Fifteen Year Average (4Q05 – 3Q20) 81% 66% 64% 60% 57% 55% 53% 53% 51% 50% 46% 45
Slide 25: Allowance for Credit Loss ("ACL")
Allowance for Credit Loss (“ACL”) Allowance relatively unchanged quarter over quarter Significant increase in ACL in 1H20, stable in 3Q20 The change in 3Q20 ACL from 2Q20 reflects: ACL (%) ACL (%) ex-PPP 1.88 1.91 ▪ Increase in expected losses due to slower economic 1.68 ($ millions) 1.56 1.66 recov
Slide 26: Allowance For Credit Loss: Relative to Both Loans and to Risk-Weighted Loans
Allowance For Credit Loss: Relative to Both Loans and to Risk-Weighted Loans Zions’ ACL ratios compared to peers are in-line (vs. total loans) to robust (vs. risk-weighted loans) Allowance for Credit Losses / Total Loans Allowance for Credit Losses / Risk-Weighted Loans 2.5% 3.07% 2.3% 2.77% 2.1% 2.
Slide 27: Appendix
Appendix ▪ Company Abbreviation Key ▪ 3Q20 Financial Results Summary ▪ Loan Growth by Brand and Loan Type ▪ Oil and Gas Portfolio Detail ▪ 2018 Greenwich Associates Market Tracking Program Nationwide Data ▪ GAAP to Non-GAAP Reconciliation 27
Slide 28: 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 29: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) September 30, June 30, March 31, 2020 2020 2020 Earnings Results: Diluted Earnings Per Share $ 1.01 $ 0.34 $ 0.04 Net Earnings Applicable to Common Shareholder
Slide 30: Loan Growth - by Bank Brand and Loan Type
Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (3Q20 vs. 3Q19) (in millions) Zions Bank Amegy CB&T NBAZ NSB Vectra CBW Other Total C&I (ex-Oil & Gas) (762) (366) 254 (179) (61) (77) (30) - (1,221) SBA PPP 1,713 1,329 1,606 721 608 475 358 - 6,810 Owner occupied (47)
Slide 31: Oil & Gas (O&G) Credit Quality
Oil & Gas (O&G) Credit Quality Oil and gas loans account for $2.3 billion or 5% of total loans, excluding PPP Loans Excluding PPP Loans and as of September 30, 2020: All Ratios Exclude ▪ Annualized NCOs equaled 3.5% of loans PPP Loans Oil and Gas 35% ▪ Classified loans equaled 11.4% of loans Key Cre
Slide 32: Oil & Gas Portfolio
Oil & Gas Portfolio Significant realignment since downturn ▪ Services, which accounted for bulk of charge offs in the last cycle, accounts Portfolio Trends for 17% of the portfolio versus 45% going into the previous cycle (Dec 2014) 3,500 14 ▪ Using current mix of loans, assuming net loss rates rema
Slide 33: Middle Market and Small Business Research Feedback
Middle Market and Small Business Research Feedback Zions compares favorably to global competitors (JPMorgan, Bank of America, US Bank, Wells Fargo) Closest Zions Key Peers* Our Rank Competitor's Greenwich Associates Customer Satisfaction Categories Bancorporation (Average Score %) (2018) Score % Cli
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 3Q20 2Q20 1Q20 4Q19 3Q19 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 442 $ 430 $ 408 $ 472 $ 415 Adjustments: Severance costs 1 - - 22 2 Other real estate expense - - - - (2) Debt extinguishment cost - - - - - Amortization of core depos
Slide 35: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 3Q20 2Q20 1Q20 4Q19 3Q19 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $442 $430 $408 $472 $415 LESS adjustments: Severance costs 1 - - 22 2 Other real estate expense - - - - (2) Restructuring costs 1 - 1 15 - Pe
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