Zions Bancorporation N.a. · NASDAQ:ZION

Zions Bancorporation N.a — Q1 2022 Earnings Presentation

32 slides from Zions Bancorporation N.a's earnings presentation, Apr 25, 2022

  1. Slide 1: First Quarter 2022 Financial Review

    First Quarter 2022 Financial Review April 25, 2022

  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: Select Themes

    Select Themes Key near-term objectives designed to position the bank for superior revenue growth and positive operating leverage  Our non-PPP loan growth was solid; outlook favorable  Strong growth in multiple categories  Continued but diminishing impact from promotional lending campaigns  Inves

  4. Slide 4: First Quarter 2022 Financial Highlights

    First Quarter 2022 Financial Highlights Vs. 4Q21, stable level of deposits and a solid increase in non-PPP loans  Earnings and Profitability:  Loans and Deposits: Vs. 4Q21, growth rates not annualized  $1.27 diluted earnings/share compared to $1.34  0.8% increase in period-end loan balances  $2

  5. Slide 5: Diluted Earnings Per Share

    Diluted Earnings Per Share Primary variance to prior periods attributable to provision for credit losses and PPP-related income Diluted Earnings per Share Notable Items: $1.90 $2.08  1Q22:  $(0.10) per share adverse mark-to-market impact from a SBIC $1.45 $1.34 $1.27 investments (primarily Recursi

  6. Slide 6: Adjusted Pre-Provision Net Revenue

    Adjusted Pre-Provision Net Revenue Adjusted PPNR decreased considerably from 4Q21, primarily due to seasonal factors and lower PPP income Adjusted PPNR(1) Linked quarter: ($ millions)  Adjusted PPNR decreased 16% as detailed in the following slide, primarily from 290 290 288  Seasonal factors (e.g

  7. Slide 7: Adjusted Pre-Provision Net Revenue – Linked Quarter View

    Adjusted Pre-Provision Net Revenue – Linked Quarter View Adjusted PPNR decreased considerably from 4Q21, primarily due to seasonal factors and lower PPP income ($ millions) 288 2 241 (20) 10 10 (18) (13) (6) (6) (6) 4Q21 PPP Income Real property, Share-Based Incentive Retirement Payroll Tax Non-PPP

  8. Slide 8: Deploying a Single Platform for Online and Mobile Banking

    Deploying a Single Platform for Online and Mobile Banking Serving More Than 750,000 Customers Building on digital services already considered on par or better than our four major competitors1 Small Business Highlights Consumer Highlights  More than 600,000 consumers migrated as of Completed May 202

  9. Slide 9: Zions Finishes 2nd Among All US Banks in Greenwich 2021 Excellence Awards

    Zions Finishes 2nd Among All US Banks in Greenwich 2021 Excellence Awards Zions has Consistently Achieved “Excellence” vs Four Major Competitors1 and Peers2 Business Segment 100 100 100 100 Zions Bancorp Middle Market 80 80 80 80 Zions’ Peer Group Avg 81 77 60 65 60 60 60 Average of Four Major 63 62

  10. Slide 10: Average Loan and Deposit Growth

    Average Loan and Deposit Growth Vs. 4Q21, average non-PPP loans increased 2.5% in 1Q22; average deposits increased 0.2% Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits ($ billions) ($ billions) Average Total Loans Excluding PPP Loans, Average Noninterest-bearin

  11. Slide 11: Loan Growth in Detail

    Loan Growth in Detail Moderate to strong loan growth achieved in certain targeted growth categories Linked Quarter Loan Balance Growth, Excluding PPP Total Loans, excluding PPP: +2% Linked quarter: 10%  Excluding PPP loans, period-end loans Municipal, 8% Growth Rate: Linked Quarter, not annualized

  12. Slide 12: Noninterest Income

    Noninterest Income Total customer-related fee income was stable to 4Q21, and was up 14% from the year-ago period Customer-related fee income was generally stable from the Customer-Related Fee Income (1) prior quarter ($ millions)  Increase in commercial account fees due to one-time accrual of $6 $1

  13. Slide 13: Mortgage Banking

    Mortgage Banking Mortgage originations up 38% versus a 36% industry decline Strong Mortgage Funding 2019 2021 $1.2 billion  Roll-out  Enhanced Digital Fulfillment Process $846 million $384 $259  95% of all applications taken digitally $383 $345  33% reduction in turn-time vs. 2019, $411 allowing

  14. Slide 14: Technology Roadmap

    Technology Roadmap We continue to invest in technology solutions focused on customer experience & empowering bankers COMMERCIAL SMALL BUSINESS AFFLUENT CONSUMER Treasury Internet Banking & Gateway Enhancements Digital Banking Replacement Improved Customer Experience (2022) Consumer Customer Migratio

  15. Slide 15: Securities, Money Market Investments and Interest Rate Swaps

    Securities, Money Market Investments and Interest Rate Swaps The securities portfolio has absorbed much of the deposit growth Total Securities Portfolio  Strong deposit growth has significantly increased the bank’s and Money Market Investments overall liquidity profile (end of period balances)  1Q

  16. Slide 16: Net Interest Income and Net Interest Margin

    Net Interest Income and Net Interest Margin Net interest income stability driven by PPP success, securities purchases, and loan growth Net Interest Income Net Interest Margin Net Interest Margin Zions’ active efforts to invest the inflow of deposits has helped to ($ millions) limit the compression o

  17. Slide 17: Interest Rate Sensitivity

    Interest Rate Sensitivity The surge in deposits coupled with modest loan growth has resulted in increased asset sensitivity Earning Assets Rate Reset and Cash Flow Profile Net Interest Income Sensitivity (1) 41% Earning Assets After Hedging Percent of Earning Assets −100 bps +100 bps +200 bps 31% 16

  18. Slide 18: Noninterest Expense

    Noninterest Expense Increase in expense in 1Q22 vs. 4Q21 primarily attributable to seasonal factors Noninterest Expense (NIE)  Total noninterest expense increased 3% over the prior quarter ($ millions)  Salaries and benefits increased $30 million due primarily to seasonal expenses including: $464

  19. Slide 19: Credit Quality

    Credit Quality Net charge-offs remain very low, with last 12 months net charge-offs at just 0.01% of average loans All Ratios Exclude PPP Loans Credit Quality Ratios 4.0% 3.5% Key credit metrics: 3.0% Classified / Loans  2.3%: Classified loans/loans NPAs + 90 / Loans + OREO 2.5%  Improved (decline

  20. Slide 20: Allowance for Credit Loss ("ACL")

    Allowance for Credit Loss (“ACL”) ACL decrease vs. 4Q21 from improved economic scenarios, continued clean credit quality Allowance for Credit Loss ($ millions) ACL (%) ex-PPP The decrease in the 1Q22 ACL from 4Q21 reflects: 1.91  Improved economic scenarios used in 1.88 1.74 quantitative model 1.56

  21. Slide 21: Capital Strength

    Capital Strength Zions has a strong level of capital relative to its risk profile Common Equity Tier 1 Capital and Allowance for Credit Losses Net Charge-offs as a percentage of risk-weighted assets annualized, as a percentage of risk-weighted assets 12.5% 12.3% 14.0% 14.0% 12.3% 12.3% 12.0% 11.8% 1

  22. Slide 22: Financial Outlook (1Q 2023E vs 1Q 2022A)

    Financial Outlook (1Q 2023E vs 1Q 2022A) Outlook Comments Moderately Loan Balances, ex-PPP  Moderate growth in the next twelve months, excluding PPP loans. Increasing Net Interest Income  Includes interest rate increases consistent with the forward curve Increasing  Excludes PPP loan income.  Cu

  23. Slide 23: Appendix

    Appendix  Financial Results Summary  Balance Sheet Profitability  Loan growth by geography and type  PPP results  FutureCore project  Loan loss severity (NCOs as a percentage of nonperforming assets)  Middle Market and Small Business Research Feedback  GAAP to Non-GAAP reconciliation 23

  24. Slide 24: 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, September 30, June 30, 2022 2021 2021 2021 Earnings Results: Diluted Earnings Per Share $ 1.27 $ 1.34 $ 1.45 $ 2.08 Net Earnings Applica

  25. Slide 25: Balance Sheet Profitability

    Balance Sheet Profitability Profitability remains healthy; volatility of the results primarily due to variability in the provision for credit losses and PPP income Return on Assets Return on Tangible Common Equity 21.6% 20.2% 1.65% 1.57% 14.2% 13.9% 13.4% 1.08% 0.92% 0.90% 1Q21 2Q21 3Q21 4Q21 1Q22 1

  26. Slide 26: Loan Growth - by Bank Brand and Loan Type

    Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (1Q22 vs. 1Q21) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) 177 509 801 19 45 59 117 - 1,727 SBA PPP (1,252) (1,102) (1,361) (505) (495) (379) (290) - (5,384) Owner occupied 216

  27. Slide 27: Paycheck Protection Program: Ranked 10th Nationally for Loan Dollars Originated

    Paycheck Protection Program: Ranked 10th Nationally for Loan Dollars Originated Growth rate of new services provided to both existing and new-to-bank customers remains steady PPP Loans Average PPP Loans $9.9 billion Loan Yields ($ millions) 7.16% 20,000 New-to-Bank Customers 6.66% 6.64% $6,135 $5,94

  28. Slide 28: FutureCore: A Strategic Technology Advantage for Years to Come

    FutureCore: A Strategic Technology Advantage for Years to Come Replacing the entire core legacy environment to improve operational resiliency and efficiency Modern Architecture Improved Customer Empowered Driving Built for Resiliency and Experience Bankers Modernization Speed FutureCore as a Catalys

  29. Slide 29: 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 (2017 – 2021) Fifteen Year Average (2007 – 2021) 74% 65% 64% 63% 60% 59% 58% 57% 55% 55% 55% 54

  30. Slide 30: Middle Market and Small Business Research Feedback (2021)

    Middle Market and Small Business Research Feedback (2021) Zions compares favorably to four major bank competitors (JP Morgan, Bank of America, Wells Fargo, US Bank) Four Major Greenwich Associates Customer Satisfaction Categories Zions Bancorporation Highest Four Major Our Rank Competitors (2021) Co

  31. Slide 31: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation In millions, except per share amounts 1Q22 4Q21 3Q21 2Q21 1Q21 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $464 $449 $429 $428 $435 LESS adjustments: Severance costs 1 Other real estate expense 1 Amortization of core deposit and other intangibles 1

  32. Slide 32: GAAP to Non-GAAP Reconciliation (Continued)

    GAAP to Non-GAAP Reconciliation (Continued) In millions, except per share amounts 1Q22 4Q21 3Q21 2Q21 1Q21 Net Earnings Applicable to Common Shareholders (NEAC) Net earnings applicable to common $195 $207 $234 $345 $314 Diluted Shares (average) 152 154 160 163 164 (k) Diluted EPS 1.27 1.34 1.45 2.08

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