Zions Bancorporation N.a. · NASDAQ:ZION

Zions Bancorporation N.a — Barclays Global Financial Services Conference 2023

40 slides from Zions Bancorporation N.a's conference presentation, Sep 12, 2023

  1. Slide 1: 2023 Third Quarter Investor Update

    2023 Third Quarter Investor Update September 12, 2023

  2. Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures

    Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information This earnings presentation includes “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements, often accompanied by words such as “may,” “mi

  3. 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, superior credit performance  Affiliate CEOs “own” their local market opportunities Zions’ Markets1 Ending Ending and challenges Bank Headquarters Deposits % of Total

  4. Slide 4: Zions Consistently Receives National and Local Recognition for Excellence

    Zions Consistently Receives National and Local Recognition for Excellence Affiliates have strong brands in their markets One of only four banks to have averaged 15 or more Greenwich Excellence Awards since 2009 Top Team of Women Bankers1 (2015-2020) Consistently Voted Best Bank in Most Powerful Wome

  5. Slide 5: Zions Finishes Fifth Nationally in 2022 Greenwich Excellence Awards

    Zions Finishes Fifth Nationally in 2022 Greenwich Excellence Awards Zions compares favorably to major competitors (JPMorgan, Bank of America, Wells Fargo, US Bank) Greenwich Associates Customer Satisfaction (2022) % Excellent Citations* (Major Bank Competitors: JP Morgan, Bank of America, Wells Farg

  6. Slide 6: Second Quarter 2023 Financial Highlights

    Second Quarter 2023 Financial Highlights Improved customer fees offset by lower NII reflecting higher funding costs; Capital and credit quality remain strong  Earnings and Profitability:  Loans and Deposits: vs. 1Q23, growth rates not annualized  $1.11 diluted earnings/share, compared to $1.33 

  7. Slide 7: Average Loan and Deposit Balances

    Average Loan and Deposit Balances Vs. 1Q23, average loans increased 0.9% in 2Q23; average deposits decreased 0.7% Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits ($ billions) ($ billions) Average Noninterest-bearing Deposits $100.0 $100.0 Average Interest-beari

  8. Slide 8: Noninterest-Bearing Deposits ("NIB") Mix

    Noninterest-Bearing Deposits (“NIB”) Mix Through multiple rate cycles, Zions’ NIB deposit concentration has been consistently among the best of peers Average Noninterest Deposits / % 7 Average Total Deposits 60%  Zions’ NIB deposit mix has consistently exceeded most peers due in part to a higher pr

  9. Slide 9: Securities & Money Market Investments

    Securities & Money Market Investments We have strong on-balance sheet liquidity Total Securities Portfolio The investment portfolio is designed to be a storehouse of balance sheet liquidity and Money Market Investments  2Q23 period-end securities declined $950 million. Net cash flow provided (perio

  10. Slide 10: Loan Growth in Detail

    Loan Growth in Detail Loan growth achieved in several categories: residential real estate, CRE construction and consumer construction Linked Quarter Loan Balance Growth, Excluding PPP Total Loans: +1.0% 10% Other, 9% Growth Rate: Linked Quarter, not annualized CRE C&D, 8% 8% Linked quarter: 1-4 Fami

  11. Slide 11: Net Interest Income ("NII") and Net Interest Margin ("NIM")

    Net Interest Income (“NII”) and Net Interest Margin (“NIM”) Increased cost of total deposits negatively impacted the net interest margin in 2Q23 Net Interest Income ($ millions) Net Interest Margin Linked quarter (2Q23 vs. 1Q23): $720 5.00%  Net interest income declined 13% $663 $679  Interest ear

  12. Slide 12: Net Interest Margin ("NIM")

    Net Interest Margin (“NIM”) Earning asset growth and the impact of free funds offset funding costs and positively impacted the margin compared to 2Q22 The NIM benefited early in the cycle as loans repriced more quickly than deposits; this trend changed in 2Q23  Loan yields have steadily increased a

  13. Slide 13: Impact of Noninterest-bearing (NIB) Demand Deposits

    Impact of Noninterest-bearing (NIB) Demand Deposits The increased value of noninterest-bearing deposits has exceeded the decline in volumes Average Noninterest-bearing Demand Impact of NIB on NIM 1 Noninterest-bearing demand deposits have ($ billions) declined as interest rates have risen, though $5

  14. Slide 14: Monthly Net Interest Income, Net Interest Margin, & Cost of Deposits

    Updated as of August 31st, 2023 Monthly Net Interest Income, Net Interest Margin, & Cost of Deposits Net interest income and net interest margin declines leveled off in the second quarter and are stable Net Interest Income Average Deposits Net Interest Margin Total Cost of Deposits ($ millions) Avg.

  15. Slide 15: Interest Rate Sensitivity – Net Interest Income Sensitivity Analysis

    Interest Rate Sensitivity – Net Interest Income Sensitivity Analysis Incorporating recent deposit behavior into interest rate sensitivity analysis suggests reduced asset sensitivity Simulated Net Interest Income Sensitivity(1) Interest Rate Impacts -200 bps -100 bps +100 bps +200 bps on Net Interest

  16. Slide 16: Noninterest Income and Revenue

    Noninterest Income and Revenue Total customer-related noninterest income increased 7% vs. 1Q23 and grew 5% from the year-ago period; adjusted revenue decreased 7% vs. 1Q23 and was up 4% from the year-ago period Customer-Related Noninterest Income (1) Total Revenue (2) ($ millions) ($ millions) $162

  17. Slide 17: Noninterest Expense

    Noninterest Expense Noninterest expense decreased 1% vs. 1Q23 and was up 9% from the year-ago period Noninterest Expense (NIE) Total noninterest expense decreased $4 million, compared to the ($ millions) prior quarter, primarily due to seasonal increases during 1Q  Typical seasonal decrease in 2Q o

  18. Slide 18: Adjusted Pre-Provision Net Revenue ("PPNR")

    Adjusted Pre-Provision Net Revenue (“PPNR”) Adjusted PPNR declined 13% from the prior quarter, primarily due to higher funding costs Adjusted PPNR(1) Linked quarter (2Q23 vs. 1Q23): ($ millions)  Adjusted PPNR declined 13% primarily from: $420  A decrease of 7% in adjusted revenue from increased i

  19. Slide 19: Credit Quality

    Credit Quality Net charge-offs remain low, with last 12 months net charge-offs at just 0.07% of average loans Key Credit Metrics Credit Quality Ratios  1.3%: Classified loans/loans Classified / Loans 2.5% NPAs + 90 / Loans + OREO  Classified balance improved (declined) by 16% in ACL / Loans 2.0% 2

  20. Slide 20: Commercial Real Estate Summary

    Commercial Real Estate Summary CRE is 23% of total loans: $12.9 billion total CRE; $10.4 billion term & $2.5 billion construction Portfolio Composition Term CRE As of June 30, 2023  Conservative weighted-average LTVs (< 60%) All Other CRE 15% Multifamily  Near-term maturities ~15-20% per year Resi

  21. Slide 21: Exercising CRE Discipline Through Growth Management

    Exercising CRE Discipline Through Growth Management Commercial real estate loan growth lags peers due to continued exercise of concentration risk discipline Commercial Real Estate Zions has exercised caution in CRE 250 Excluding Owner Occupied concentrations for more than a decade and in underwritin

  22. Slide 22: CRE In-Depth Review: Commercial Real Estate

    CRE In-Depth Review: Commercial Real Estate Limited tail LTV risk in portfolio; controlled CRE growth over last five years CRE Portfolio Trends Construction Outstandings Term Outstandings % of CRE Term WAVG LTV % of CRE Term Construction Multi-family 59% 25% 30% Industrial / Warehouse 53% 22% 23% 9.

  23. Slide 23: CRE In-Depth Review: Office ($2.2 billion balance)

    CRE In-Depth Review: Office ($2.2 billion balance) CRE Office portfolio is 17% of total CRE exposure; conservatively underwritten, lowly levered  Less than $1 million of nonaccruals and no charge-offs in recent years Office Portfolio Trends  Median loan size: $890 thousand; average loan size: $4.6

  24. Slide 24: CRE In-Depth Review: Office Loans – Distribution of DSCR, LTV and Loan Maturity

    CRE In-Depth Review: Office Loans – Distribution of DSCR, LTV and Loan Maturity Zions has minimal intersecting elements of risk in the office CRE portfolio, while having a significantly large collateral cushion ($ millions) CRE Office Term by Maturity  Remaining 2023 term office maturities = $436 m

  25. Slide 25: Common Equity Tier 1 Capital & Allowance for Credit Losses

    Common Equity Tier 1 (“CET1”) Capital & Allowance for Credit Losses (“ACL”) Zions’ CET1 ratio is healthy relative to peers, and is strong relative to the regulatory “well capitalized” threshold of 6.5% Common Equity Tier 1 Capital Ratio Trailing 12-month Net Charge-offs / 13.2% CET1 Capital and Allo

  26. Slide 26: Financial Outlook (2Q24E vs 2Q23A)

    Financial Outlook (2Q24E vs 2Q23A) Outlook Comments Loan Balances Slightly  Interest rates and economic outlook resulting in softening loan demand (period-end) Increasing Net Interest Income Stable to  Funding cost pressures expected to continue despite positive impact of (NII) Slightly Decreasing

  27. Slide 27: Appendix

    Appendix  Company Abbreviation Key  Financial Results Summary  Loan Portfolio Profile  Interest Rate Risk Detail (incl. Earning Asset Repricing, Interest Rate Swaps)  Deposits Detail (Granularity)  Credit Detail: Credit Quality, Loss Severity  Non-GAAP Financial Measures 27

  28. 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. PNFP: Pinnacle Financial Partners CFG: Citizens Financial Group, Inc. RF: Regions Financial Corp

  29. Slide 29: Financial Results Summary

    Financial Results Summary Healthy fundamentals, strong credit quality Three Months Ended (Dollar amounts in millions, except per share data) June 30, March 31, December 31, September 30, 2023 2023 2022 2022 Earnings Results: Diluted Earnings Per Share $ 1.11 $ 1.33 $ 1.84 $ 1.40 Net Earnings Applica

  30. Slide 30: Loan Portfolio Profile

    Loan Portfolio Profile Zions’ loan portfolio is skewed towards commercial lending, at 77% of total loans Loan Portfolio Composition Loan Sub-Portfolio Composition ($ millions) Construction & Land Development Commercial and Industrial Paycheck Protection 14% Term 19% Foreign Loans Leasing 30% 54% Own

  31. Slide 31: Simulated Repricing Expectations: Earning Assets and Loans

    Simulated Repricing Expectations: Earning Assets and 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 52% 52% 40% 40% Earning Assets After Hedging Loans

  32. Slide 32: Interest Rate Swaps at June 30, 2023

    Interest Rate Swaps at June 30, 2023 Swaps are used to balance our interest rate sensitivity Interest rate sensitivity is managed in part with portfolio interest rate hedges1  $2.5 billion in interest-rate swaps on loans were terminated in Q2  $2.5 billion in 5 year pay fixed swaps were added as p

  33. Slide 33: Concentrations Risk Management: Granularity of Deposits

    Concentrations Risk Management: Granularity of Deposits Deposits of both commercial and consumer customers are granular Commercial Customer Deposit Consumer Customer Deposit Balance Distribution Balance Distribution 70% Commercial deposits total $39.1 B and Consumer deposits total $23.1 B and accoun

  34. Slide 34: Funding – Cost of Total Deposits and Cost of Total Funding

    Funding – Cost of Total Deposits and Cost of Total Funding Through multiple rate cycles, Zions’ total deposit and funding costs have been consistently among the best of peers Average Cost of Total Deposits Average Cost of Total Funding ZION Peer Top Quartile % ZION Peer Top Quartile % 7.00 7.00 Peer

  35. Slide 35: Credit Quality Trends Relative to Peers

    Credit Quality Trends Relative to Peers Zions’ NCOs/Loans ratio is frequently in the best (lowest) quartile of peers; very low loss rates on NPAs or classified loans Classified & NPA Ratios NCOs / Loans (Excluding PPP) Classified Loans and NPAs + 90 DPD, as a percentage (Trailing 12-month Average) o

  36. Slide 36: 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 (2018Q3 – 2023Q2) Fifteen Year Average (2008Q3 – 2023Q2) 71% 61% 60%

  37. Slide 37: Long-Term View: Credit Quality at the Sub-portfolio Level

    Long-Term View: Credit Quality at the Sub-portfolio Level Zions’ loss rates across nearly all loan portfolio categories are better or much better than peer loss rates In five of the seven major categories in which Zions has significant exposure, Zions’ loss rate has been top quartile Peer Net Charge

  38. Slide 38: Non-GAAP Financial Measures

    Non-GAAP Financial Measures In millions, except per share amounts 2Q23 1Q23 4Q22 3Q22 2Q22 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $508 $512 $471 $479 $464 LESS adjustments: Severance costs 13 1 1 Other real estate expense Amortization of core deposit and other intangibles 1 2

  39. Slide 39: Non-GAAP Financial Measures (Continued)

    Non-GAAP Financial Measures (Continued) In millions, except per share amounts 2Q23 1Q23 4Q22 3Q22 2Q22 Net Earnings Applicable to Common Shareholders (NEAC) Net earnings applicable to common $166 $198 $277 $211 $195 Diluted Shares (average) 148 148 149 150 151 (k) Diluted EPS 1.11 1.33 1.84 1.40 1.2

  40. Slide 40: Non-GAAP Financial Measures (Continued)

    Non-GAAP Financial Measures (Continued) In millions 2Q23 1Q23 4Q22 3Q22 2Q22 Return on Average Tangible Common Equity (Non-GAAP) Net earnings applicable to common $166 $198 $277 $211 $195 Adjustments, net of tax: Amortization of core deposit and other intangibles 1 1 - 1 - (a) Net earnings applicabl

Zions Bancorporation, N.A. — Barclays Global Financial Services Conference 2023 on 6ix