Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation, National Association — Investor Presentation (September 2019)
32 slides from Zions Bancorporation N.a's investor presentation, Sep 10, 2019
Slide 1: Investor Update Third Quarter 2019
Investor Update Third Quarter 2019
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 regarding f
Slide 3: The Big Picture: Zions Is A Collection of Community Banks
The Big Picture: Zions Is A Collection of Community Banks Local decision-making and top-notch service separates Zions from peers ▪ Strategic local “ownership” of Zions Markets market opportunities and Bank Headquarters Deposits % of Total Zions Bank Salt Lake City $15B 28% challenges Amegy Houston $
Slide 4: The Big Picture: Zions Receives National and Local Recognition for Excellence
The Big Picture: Zions Receives National and Local Recognition for Excellence Affiliates have strong brands in their markets ▪ One of only six banks to have averaged 15 Greenwich Excellence Awards since 2009 (survey inception) ▪ Top team of women bankers (2015, 2016, 2017, 2018)1 ▪ California Bank &
Slide 5: The Big Picture: Zions is a Leader in Small Business Lending
The Big Picture: Zions is a Leader in Small Business Lending Zions punches above its weight Commercial Loans sized $100k - $1M Commercial Loans sized $100k - $1M ($ billion) as a percent of total commercial loans $30 30% $25 25% $20 20% $15 15% $10 10% $5 5% $0 0% C C RF RF STI STI KEY KEY FRC FRC B
Slide 6: Loan Growth
Loan Growth Moderate to strong loan growth achieved in certain targeted growth categories Year-over-Year Loan Balance Growth Year over year: Total Loans: +7% ▪ Note: circle size indicates Loan growth predominantly in 60% relative proportion of loan Municipal, Residential Mortgage portfolio as of 2Q1
Slide 7: Capital: Operating From a Position of Strength
Risk Total Global, Financial/S&P as of data SNL 2Q19. Source: capital III Regulatory Baselfor2Q19. Note: ratios are Capital: Operating From a Position of Strength slightly median peer above Capitalratiosare strong relativeto activelypeers;capitalmanaging ratioslower to - Based Capital for Zions at 2
Slide 8: Decade-Long Risk Profile Improvement
Decade-Long Risk Profile Improvement Since the recession, Zions has addressed the following: Concern Mitigation Negative/Low ✓ Improved ROA to levels approximately in line with peers Profitability ✓ Efficiency Ratio improved to 59.6% (2018) from 73.5% (2014) Energy Losses and ✓ Healthy credit metric
Slide 9: Credit Quality
Credit Quality Exceptional and solid credit quality ▪ Key Credit Metrics: Credit Quality Ratios ▪ Classified loans (1.6% of loans) 4.00% ▪ Declined 19% from the prior year ▪ Increased 6% from the prior qtr 3.50% (1) ▪ NPAs+90 (0.5% of loans + OREO) 3.00% ▪ Declined 29% from the prior year ▪ Increase
Slide 10: Credit Quality
Credit Quality Continue to be a positive outlier in the future due to benefits of upgraded risk management practices NPAs+90DPD / Loans+OREO NCOs / Average Loans 2.00% 2.00% Last 12 Months Average Last 12 Months Average 2.13% 1.50% 1.50% Zions at 1.00% 2Q19: 1.00% 0.64% 0.50% 0.50% 0.00% RF STI 0.00
Slide 11: Credit Quality: Loan Loss Severity
their failed or merged status. failed their merged or to due excluded havebeen in included group Zions’ Survivorshipbanks peer may bias: have been that some Note: ofresults. annualized averagequarterly Global. Financial/S&P Calculated the using SNL Source: Annualized NCOs / Nonaccrual Loans Credit Q
Slide 12: Credit Quality Trend
Credit Quality Trend Zions has reached the best quartile for NPAs and ranks the best of peers for NCOs NPAs+90 DPD / NCOs/Loans Loans + 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% 0.70% Bump in charge offs related to 0.50%
Slide 13: Our Digital Strategic Objectives
Our Digital Strategic Objectives Build on our Strength as a Business Banking Leader Reinforcing the value proposition to our customers, with particular focus on deposit products Revamp the “front door” digital customer experience for: 1 ▪ Treasury management ▪ Small business ▪ Residential mortgage ▪
Slide 14: Tech Initiatives On the Horizon: Digital and Simplification Investments
Investments seek to improve the customer experience whilesimplifyingourimproveexperienceInvestments processes thecustomer seekto Tech Initiatives On the Horizon: Digital and Simplification Investments FUTURECORE & ENABLING CLIENT EXPERIENCE & ENGAGEMENT TECHNOLOGIES P P Treasury Internet Banking 2.0
Slide 15: FutureCore
FutureCore Replacing our core loan and deposit systems with one new modern core platform Loans Deposits (Phase 1 and 2) (Phase 3) ▪ All consumer, commercial and commercial real estate ▪ FutureCore Phase 3 is currently underway loans that were within the scope of the project are on with a planned rol
Slide 16: Deliver a "Simple, Easy, Fast, Safe" Experience for Customers and Employees
Deliver a “Simple, Easy, Fast, Safe" Experience for Customers and Employees Simplify, Strengthen, Improve Simplify the business Strengthen management model and structure information capabilities and ▪ Elimination of holding company usage ▪ Charter consolidation Simple Easy ▪ Data governance ▪ Enterp
Slide 17: Results of Simple, Easy, Fast, Safe Initiative – Growth Metrics
Results of Simple, Easy, Fast, Safe Initiative – Growth Metrics Strong performance and momentum across all key financial metrics Indexed Net Revenue Indexed Noninterest Expense Indexed Adjusted Pre-Provision Net Revenue 150 150 230 ZION 210 140 Peer Top Quartile 140 190 130 Peer Bottom Quartile 130
Slide 18: Results of Simple, Easy, Fast, Safe Initiative – Profitability Metrics
Results of Simple, Easy, Fast, Safe Initiative – Profitability Metrics Strong performance and momentum across all key financial metrics Efficiency Ratio Return on Assets % 80 1.6% 1.4% 75 1.2% 70 1.0% 65 0.8% 0.6% 60 0.4% 55 0.2% 50 0.0% 1H18 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 2H18 1H19 1H15 2H
Slide 19: Key Objectives
Key Objectives Growth through simplification and focus ▪ Demonstrate long-term positive operating leverage: ▪ Achieve broad based loan and fee income growth through small business, middle market and capital markets ▪ Manage noninterest expense growth linked to revenue growth and technology projects
Slide 20: Next 12-Month Financial Outlook (2Q20E vs. 2Q19A)
Next 12-Month Financial Outlook (2Q20E vs. 2Q19A) Outlook Comments Loan Balances Moderately • Efforts to reduce payoffs have been and are expected to be Increasing incrementally beneficial to loan growth rates Slightly • Continued modest net interest margin pressure Net Interest Income • Assumes rat
Slide 21: Appendix
Appendix ▪ Company Abbreviation Key ▪ 2Q19 Financial Results ▪ Financial Summary ▪ Deposit Profile ▪ Deposit Growth Versus Cost ▪ Loan Growth by Affiliate and Category ▪ Net Interest Income Drivers: Yields and Costs ▪ Interest Rate Sensitivity and Historical Deposit Beta ▪ Middle Market and Small Bu
Slide 22: Company Abbreviation (Ticker Symbol) Key
Company Abbreviation (Ticker Symbol) Key ASB: Associated Banc-Corp HWC: Hancock Whitney Corp BAC: Bank of America IBKC: Iberiabank Corp BBT: BB&T Corporation JPM: JPMorgan Chase & Co. BOKF: BOK Financial Corporation KEY: KeyCorp C: Citigroup, Inc. MTB: M&T Bank Corporation CFG: Citizens Financial Gr
Slide 23: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) June 30, March 31, December 31, 2019 2019 2018 Earnings Results: Diluted Earnings Per Share $ 0.99 $ 1.04 $ 1.08 Net Earnings Applicable to Common Shareholders
Slide 24: Deposit Profile
Deposit Profile: “Some of our greatest assets are our very small liabilities” Strong loan-to-deposit ratio, high concentration of granular retail and small business deposits. Noninterest bearing deposit concentration is consistently stronger than most peers; 2/3 of such deposits are tied to award-wi
Slide 25: Deposit Growth Versus Cost (3Q15-2Q19)
Deposit Growth Versus Cost (3Q15-2Q19) Zions has achieved healthy deposit growth while keeping deposit costs in check 90 ▪ Deposit growth is unsurprisingly FHN correlated to deposit pricing EWBC 80 Growth achieved with a higher CFG ▪ Zions’ deposit growth rate: In interest cost line with the median
Slide 26: Loan Growth by Bank Brand and Loan Type
Loan Growth by Bank Brand and Loan Type Year-over-year moderate loan growth of 7%; Linked quarter growth of 2% Year over Year Loan Growth (2Q19 vs. 2Q18) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) 254 (115) 308 (30) 54 1 (8) - 464 Owner occupied (ex-NRE) 1
Slide 27: Net Interest Income Drivers: Yields and Costs
Net Interest Income Drivers: Yields and Costs NIM compression reflects the effect of the lower rate environment Net Interest Margin (NIM) Relative to the prior quarter, the net 5.0% interest margin was down 14 bps to Loan Yield 3.54% ▪ ~6 bps related to lower loan yields 4.0% 3.63% 3.67% 3.68% ▪ 3.5
Slide 28: Interest Rate Sensitivity
Interest Rate Sensitivity Zions is actively managing balance sheet sensitivity Net Interest Income Sensitivity Modeled Annual Change in a Zions has been actively reducing interest rate sensitivity: (1) Interest Rate Environment ▪ $3.5 billion of interest rate floors as of 2Q19 ▪ $1.7 billion of inte
Slide 29: 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 30: Leveraged Lending
Leveraged Lending Significantly lower concentration than regional banks surveyed by Moody’s Leveraged Lending Exposure In the Moody’s 2018 Regional Bank Survey, (1) Zions’ As a percent of Moody’s Definition of Tangible Common Equity As of June 30, 2018 leveraged lending balances were $0.7 billion 19
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 2Q19 1Q19 4Q18 3Q18 2Q18 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 424 $ 430 $ 420 $ 420 $ 421 Adjustments: Severance costs 1 - 2 2 1 Other real estate expense - (1) - 1 - Debt extinguishment cost - - - - - Amortization of core deposi
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 2Q19 1Q19 4Q18 3Q18 2Q18 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $424 $430 $420 $420 $421 LESS adjustments: Severance costs 1 - 2 2 1 Other real estate expense - (1) - 1 - Debt extinguishment cost - - -
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