Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Q3 2024 Earnings Presentation
38 slides from Zions Bancorporation N.a's earnings presentation, Oct 21, 2024
Slide 1: 2024 Third Quarter Financial Review
ZIONS 2024 THIRD QUARTER Financial Review October 21, 2024
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS; USE OF NON-GAAP FINANCIAL MEASURES Forward Looking Information This presentation includes “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 assu
Slide 3: Financial Performance
FINANCIAL PERFORMANCE Net interest margin expanded for a third consecutive quarter while credit losses remain low Key Metrics 3Q24 2Q24 • Net earnings to common improved by $14 million Net earnings to common $204 million $190 million due to higher revenues and lower expenses Diluted earnings per sha
Slide 4: Diluted Earnings Per Share
DILUTED EARNINGS PER SHARE Earnings per share increased 7% over prior quarter from improved pre-provision net revenue, slightly offset by an increase in provision Diluted Earnings per Share Notable Items1: $1.37 3Q24: $1.28 $1.13 $0.96 • No items with impact > $0.05 per share during the quarter $0.7
Slide 5: Pre-Provision Net Revenue (PPNR)
PRE-PROVISION NET REVENUE (“PPNR”) Linked-quarter improvement in adjusted PPNR attributable to increased net interest income and lower adjusted noninterest expense PPNR1 Linked quarter (3Q24 vs. 2Q24) ($ millions) • Adjusted PPNR increased 8%: • Increased net interest income • Increased customer-rel
Slide 6: Net Interest Income & Net Interest Margin
NET INTEREST INCOME & NET INTEREST MARGIN Net interest income up due to continued earning asset repricing, favorable changes in asset mix, and stability in the cost of funding Net Interest Income Linked quarter (3Q24 vs. 2Q24) Net Interest Margin Net interest income increased $23 million: ($ million
Slide 7: Net Interest Margin
NET INTEREST MARGIN The net interest margin expanded from prior year as asset repricing offset cost of funding increases Linked Quarter (3Q24 vs. 2Q24) Year-Over-Year (3Q24 vs. 3Q23) 0.24% 2.98% 0.02% 0.03% 0.04% 3.03% 2.93% 0.10% 3.03% (0.02%) (0.05%) (0.13%) (0.02%) (0.06%) Money Mkt Loans Deposit
Slide 8: Noninterest Income and Revenue
NONINTEREST INCOME AND REVENUE Increase in customer-related income largely due to growth in Capital Markets Customer-Related Noninterest Income 1 Total Revenue 2 ($ millions) ($ millions) $157 $161 $150 $151 $154 $798 $792 $784 $776 $765 $765 $753 $751 $742 $731 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23 4Q23 1Q
Slide 9: Noninterest Expense
NONINTEREST EXPENSE Adjusted noninterest expense decreased compared to the linked-quarter reflecting ongoing expense discipline Noninterest Expense (NIE) • Adjusted noninterest expense decreased $7 million linked quarter, driven by several categories: ($ millions) • Professional and legal services d
Slide 10: Average Loans and Deposits
AVERAGE LOANS AND DEPOSITS Yields on loans increased 4 basis points; total cost of deposits increased 3 basis points Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits $100.0 $100.0 ($ billions) $75.6 $75.9 $74.2 $75.0 $73.4 $75.0 $75.0 ($ billions) $27.9 $26.9 $2
Slide 11: Deposit Balance and Borrowing Trends
DEPOSIT BALANCE AND BORROWING TRENDS Ending customer deposits increased 1.5% vs. 2Q24 while short-term borrowings decreased more than $2 billion 3Q24 total funding costs remained flat vs 2Q24 • Period-end noninterest-bearing demand deposits grew ~$240 million, or 1% linked-quarter. Noninterest-beari
Slide 12: Total Investment Securities & Money Market Investments
TOTAL INVESTMENT SECURITIES & MONEY MARKET INVESTMENTS The bank has strong on-balance sheet liquidity Total Investment Securities The investment securities portfolio is designed to be a storehouse of balance sheet liquidity and Money Market Investments (period-end balances) • Principal and prepaymen
Slide 13: Net Interest Income – Outlook & Rate Sensitivity
NET INTEREST INCOME – OUTLOOK & RATE SENSITIVITY Net interest income is expected to be slightly to moderately increasing in 3Q25 relative to 3Q24 Net Interest Income Sensitivity Net interest income increased by 4% from 2Q24 to 3Q24. Assuming interest rates follow the rate path implied as of Septembe
Slide 14: Credit Quality
CREDIT QUALITY Net charge-offs remain low, with trailing 12 months net charge-offs at 0.06% of average loans Key Credit Metrics Credit Quality Ratios • Net charge-offs relative to average loans: 5.0% Criticized / Loans NPAs / Loans + OREO • 0.02% annualized in 3Q24 Classified / Loans 4.0% • 0.06% ov
Slide 15: Commercial Real Estate Summary ($13.5 Billion Balance)
COMMERCIAL REAL ESTATE SUMMARY ($13.5 BILLION BALANCE) The commercial real estate portfolio is granular and well diversified CRE Portfolio Composition Term CRE ($10.7B) As of September 30, 2024 • Conservative weighted average LTVs (< 60%) All Other CRE, 14% • Maturity distribution: 20% on average an
Slide 16: Commercial Real Estate Problem Loans in Focus
COMMERCIAL REAL ESTATE PROBLEM LOANS IN FOCUS The commercial real estate portfolio benefits from strong LTVs, guarantor support, low delinquencies, and diversification • CRE represented $682 million, or 82%, of the increase in total Classifieds during the Change in CRE Problem Loans Levels quarter 6
Slide 17: Capital Strength
CAPITAL STRENGTH Loss-absorbing capital remains strong relative to our risk profile; low credit losses relative to CET1 + ACL Common Equity Tier 1 Capital Net Charge-offs and Allowance for Credit Losses annualized, as a percentage of risk-weighted assets as a percentage of risk-weighted assets 14% 1
Slide 18: Financial Outlook (3Q 2025E vs 3Q 2024A)
FINANCIAL OUTLOOK (3Q 2025E VS 3Q 2024A) Outlook provided as of October 21, 2024 Outlook Comments Loan Balances Stable to Slightly Customer sentiment and commercial pipelines suggest modest growth (period-end) Increasing expectations as rates decline, offset by refinancing activity in CRE and mort
Slide 19: Zions Bancorporation Drives Value for Its Stakeholders
ZIONS BANCORPORATION DRIVES VALUE FOR ITS STAKEHOLDERS We are determined to help build strong, successful communities, create economic opportunity and help our clients achieve greater financial strength through the relationships we develop and the services we provide. Distinctive Local Operating Mod
Slide 20: Appendix
APPENDIX • Financial Results Summary • Accumulated Other Comprehensive Income (AOCI) • Balance Sheet Profitability • Loan Growth by Type • Allowance and Credit Metrics • Earning Asset Repricing • Interest Rate Swaps • Interest Rate Sensitivity – Parallel Shock Analysis • Loan Loss Severity (NCOs as
Slide 21: Financial Results Summary
FINANCIAL RESULTS SUMMARY Quarterly financial highlights Three Months Ended (Dollar amounts in millions, except per share data) September 30, June 30, March 31, December 31, 2024 2024 2024 2023 Earnings Results: Diluted Earnings Per Share $ 1.37 $ 1.28 $ 0.96 $ 0.78 Net Earnings Applicable to Common
Slide 22: Accumulated Other Comprehensive Income/Loss (AOCI)
ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS (AOCI) Projected AOCI improvement reflects relative stability in higher rate environment due to hedging strategy AOCI Loss Projection Actual Projection Based on forward curve: The loss in AOCI will decline as the underlying as of 6/30/24 as of 9/30/24 inve
Slide 23: Balance Sheet Profitability
BALANCE SHEET PROFITABILITY Return on asset improvement attributable to earnings; ROTCE relatively stable against backdrop of increased tangible common equity Return on Assets Return on Tangible Common Equity 1 17.3% 17.5% 17.4% 13.7% 11.8% 0.91% 0.95% 0.80% 0.70% 0.57% 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23
Slide 24: Loan Growth in Detail
LOAN GROWTH IN DETAIL Loan growth in 1-4 family mortgage, commercial, and owner occupied Linked Quarter Loan Balance Growth Total Loans: +0.8% 10% Compared to the prior quarter: 8% 1-4 Family, 4% 6% CRE C&D, 4% • Period-end loans increased $469 Growth Rate: Linked Quarter 1 Home Equity, 2% million o
Slide 25: Allowance and Credit Metrics Through History
ALLOWANCE AND CREDIT METRICS THROUGH HISTORY CECL methodology reflects reserve build ahead of realized deterioration of credit metrics • Through 2022 and 2023, the ACL increased, despite improving problem loan levels, due to forecasts of future credit quality deterioration, including $190 million of
Slide 26: Simulated Repricing Expectations: Earning Assets & Loans
SIMULATED REPRICING EXPECTATIONS: EARNING ASSETS & LOANS A substantial portion of earning assets reset within one year with additional resets in later periods Earning Assets: Rate Reset and Cash Flow Profile Loans: Rate Reset and Cash Flow Profile 55% 56% Earning Assets Loans After Hedging After Hed
Slide 27: Interest Rate Swaps at September 30, 2024
INTEREST RATE SWAPS AT SEPTEMBER 30, 2024 Swaps are used to balance our interest rate sensitivity Interest rate sensitivity is managed in part with portfolio interest rate hedges1 • In 3Q24, $200 million in receive-fixed swaps matured with an average fixed rate of 2.96% Pay-Fixed Rate Received-Fixed
Slide 28: Interest Rate Sensitivity – Parallel Rate Shocks
INTEREST RATE SENSITIVITY – PARALLEL RATE SHOCKS Standard parallel rate shocks suggest asset sensitivity Simulated Net Interest Income Sensitivity 1 −200 bps −100 bps +100 bps +200 bps as of 6/30/2024 6% as of 9/30/2024 5% 3% 3% (3%) (3%) (5%) (6%) 28 (1) 12-month forward simulated impact of an inst
Slide 29: Loan Loss Severity
LOAN LOSS SEVERITY When problems arise, Zions generally experiences less severe loan losses due to strong collateral and underwriting practices Annualized NCOs / Nonaccrual Loans Annualized NCOs / Nonaccrual Loans Five Year Average Fifteen Year Average (2019Q3 – 2024Q2) (2009Q3 – 2024Q2) >100% >100%
Slide 30: In-Depth Review: Commercial Real Estate
IN-DEPTH REVIEW: COMMERCIAL REAL ESTATE Limited tail loan-to-value risk in portfolio; controlled CRE growth Total CRE Portfolio Trends Construction Balances Term Balances Term % of CRE % of CRE WAVG LTV Term Construction Multifamily 57% 26% 52% Industrial / Warehouse 52% 24% 23% 10.6 10.7 10.9 10.8
Slide 31: Disciplined Commercial Real Estate Growth
DISCIPLINED COMMERCIAL REAL ESTATE GROWTH Commercial real estate loan growth lags peers due to continued exercise of concentration risk discipline Commercial Real Estate Zions has exercised caution in CRE Excluding Owner Occupied concentrations for more than a decade 350 and in underwriting standard
Slide 32: In-Depth Review: CRE Office ($1.9 Billion Balance)
IN-DEPTH REVIEW: CRE OFFICE ($1.9 BILLION BALANCE) CRE Office portfolio is 14% of total CRE exposure; 3% of total loan exposure • Allowance for credit losses: 3.9% of balances / 40% of criticized balances CRE Office Portfolio Trends • 11% decrease in balances YOY via payoffs, loan rebalance, amortiz
Slide 33: In-Depth Review: CRE Office ($1.9 Billion Balance)
IN-DEPTH REVIEW: CRE OFFICE ($1.9 BILLION BALANCE) Zions office collateral is diversified geographically, has limited exposure to CBD offices, and majority of building sizes < 200 thousand sq ft Office Collateral Summary CRE Term Office by Maturity • Largest state exposure (in millions): Utah $435 (
Slide 34: In-Depth Review: CRE Multifamily ($3.9 Billion Balance)
IN-DEPTH REVIEW: CRE MULTIFAMILY ($3.9 BILLION BALANCE) CRE multifamily portfolio is 29% of total CRE exposure; 7% of total loan exposure • Elevated criticized levels - longer lease up timelines plus rent CRE Multifamily Portfolio Trends concessions, higher interest rates, construction delays Constr
Slide 35: Zions Finishes Third Nationally in 2023 Greenwich Excellence Awards
ZIONS FINISHES THIRD NATIONALLY IN 2023 GREENWICH EXCELLENCE AWARDS Zions compares favorably to major competitors Greenwich Excellence Awards Coalition Greenwich Customer Satisfaction (2023) • Ranked third among all U.S. banks with 20 overall % Excellent Citations* national Excellence Awards (Major
Slide 36: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES In millions, except per share amounts 3Q24 2Q24 1Q24 4Q23 3Q23 (a) Total noninterest expense $502 $509 $526 $581 $496 LESS adjustments: Severance costs 1 1 Other real estate expense (1) Amortization of core deposit and other intangibles 2 1 2 2 2 FDIC special assessment 1
Slide 37: Non-GAAP Financial Measures (Continued)
NON-GAAP FINANCIAL MEASURES (CONTINUED) In millions 3Q24 2Q24 1Q24 4Q23 3Q23 Return on Average Tangible Common Equity (Non-GAAP) Net earnings applicable to common $204 $190 $143 $116 $168 Adjustments, net of tax: Amortization of core deposit and other intangibles 1 1 1 1 1 (a) Net earnings applicabl
Slide 38: Zions Bancorporation
ZIONS BANCORPORATION zionsbancor, poration.com
Zions Bancorporation, N.A. — Q3 2024 Earnings Presentation on 6ix