Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Q4 2021 Earnings Presentation
30 slides from Zions Bancorporation N.a's earnings presentation, Jan 24, 2022
Slide 1: Fourth Quarter 2021 Financial Review
Fourth Quarter 2021 Financial Review January 24, 2022
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
Slide 3: Select Themes
Select Themes Key near-term objectives designed to position the bank for superior revenue growth and positive operating leverage Our loan growth strengthened; outlook favorable Strong growth in multiple categories Strategic use of liquidity by running promotional lending campaigns Our deposi
Slide 4: Fourth Quarter 2021 Financial Highlights
Fourth Quarter 2021 Financial Highlights Vs. 3Q21, continued strong increases in deposits and a strong increase in non-PPP loans Earnings and Profitability: Loans and Deposits: Vs. 3Q21, growth rates not annualized $1.34 diluted earnings/share compared to $1.45 0.3% increase in period-end lo
Slide 5: Diluted Earnings Per Share
Diluted Earnings Per Share Strong underlying performance in EPS growth, with most variance to prior periods attributable to provision for credit losses Diluted Earnings per Share Notable Items: $2.08 4Q21: $1.90 $1.66 $1.45 $0.06 per share favorable impact from the sale of corporate real $1.34 e
Slide 6: Balance Sheet Profitability
Balance Sheet Profitability Profitability remains healthy; volatility of the results primarily due to variability in the provision for credit losses Return on Assets Return on Tangible Common Equity 21.6% 20.2% 17.8% 1.65% 1.57% 1.41% 14.2% 13.4% 1.08% 0.92% 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3
Slide 7: Adjusted Pre-Provision Net Revenue
Adjusted Pre-Provision Net Revenue Adjusted PPNR increased considerably from 3Q21 when adjusting for items (detailed below) Adjusted PPNR(1) Adjusted PPNR increased 7% (not annualized) from 3Q21, if ($ millions) adjusting for items: Less: PPP income (revenue of $44 million, 4Q21; $64 280 290 290 2
Slide 8: Average Loan and Deposit Growth
Average Loan and Deposit Growth Vs. 3Q21, average non-PPP loans increased 2.5% in 4Q21; average deposits increased 5.2% Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits ($ billions) ($ billions) Average Total Loans Excluding PPP Loans, Average Noninterest-bearin
Slide 9: 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 2.5%: Classified loans/loans NPAs + 90 / Loans + OREO 2.5% Improved (decline
Slide 10: 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: +3% Linked quarter: 15% Excluding PPP loans, period-end loans Growth Rate: Linked Quarter, not annualized increased $1.4
Slide 11: Noninterest Income
Noninterest Income Total customer-related fee income increased slightly from 3Q21, and was up 10% from the year-ago period Customer-Related Fee Income (1) Customer-related fee income increased slightly from the prior ($ millions) quarter $151 $152 $139 $139 $7 million increase in capital markets a
Slide 12: Mortgage Banking
Mortgage Banking Successes amid COVID-19 pandemic with numerous customer experience improvements moving into 2022 Strong Mortgage Funding 2019 2021 $1.2 billion Roll-out Enhanced Digital Fulfillment Process $842 million $384 95% of all applications taken digitally $383 $345 33% reduction in
Slide 13: Technology: Key 2021 & 2022 Deliverables
Technology: Key 2021 & 2022 Deliverables These technology investments are expanding the reach of our bankers and improving the customer and employee experience 2021 2022 Consumer Digital Banking Rollout Small Business Small Business Loan Application Salesforce Sales Management Unification Commitment
Slide 14: Securities, Money Market Investments and Interest Rate Swaps
Securities, Money Market Investments and Interest Rate Swaps The securities portfolio increased $3.6 B in 4Q21, absorbing deposit growth; further strong increase is likely Total Securities Portfolio Strong deposit growth has significantly increased the bank’s and Money Market Investments overall l
Slide 15: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income stability driven by PPP success, securities purchases, and loan growth Net Interest Income Net Interest Margin Net Interest Margin Zions’ active efforts to invest the inflow of deposits has helped to ($ millions) limit the compression o
Slide 16: 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) 46% Earning Assets After Hedging Percent of Earning Assets −100 bps +100 bps +200 bps 23% 35
Slide 17: Noninterest Expense
Noninterest Expense Increase in expense in 4Q21 primarily attributable to a contribution to Zions’ charitable foundation Noninterest Expense (NIE) Total noninterest expense increased 5% over the prior quarter ($ millions) Total adjusted noninterest expense increased 3% over the prior quarter, pr
Slide 18: Allowance for Credit Loss ("ACL")
Allowance for Credit Loss (“ACL”) ACL increase from 3Q21 reflects loan growth and concerns about Omicron’s effect on economic improvement Allowance for Credit Loss The change in 4Q21 ACL from 3Q21 reflects: ($ millions) ACL (%) ex-PPP Concerns about the potential economic effects from the 1.91 Omi
Slide 19: Capital Strength
Capital Strength Zions has returned one-third of the average market value to shareholders in the last three years Common Equity Tier 1 Capital 11.3% 11.2% 11.3% 10.9% 10.8% 10.4% 10.4% 10.8% 10.2% 10.0% 10.2% 10.2% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Quarterly Return of Share
Slide 20: Financial Outlook (4Q 2022E vs 4Q 2021A)
Financial Outlook (4Q 2022E vs 4Q 2021A) Outlook Comments Moderately Loan Balances Moderate growth in the next twelve months, excluding PPP loans. Increasing Does not include interest rate increases. Any interest rate increases are Net Interest Income Increasing expected to be additive to our ne
Slide 21: Appendix
Appendix Financial Results Summary 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 21
Slide 22: Financial Results Summary
Financial Results Summary Solid and improving fundamental performance Three Months Ended (Dollar amounts in millions, except per share data) December 31, September 30, June 30, March 31, 2021 2021 2021 2021 Earnings Results: Diluted Earnings Per Share $ 1.34 $ 1.45 $ 2.08 $ 1.90 Net Earnings Applica
Slide 23: Loan Growth - by Bank Brand and Loan Type
Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (4Q21 vs. 4Q20) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) (189) 407 479 (64) 23 17 88 - 761 SBA PPP (1,035) (745) (765) (393) (366) (205) (208) - (3,717) Owner occupied 155 67
Slide 24: Paycheck Protection Program Loans
Paycheck Protection Program Loans PPP lending success from Zions’ ability to link front line bankers and borrowers with an agile technology deployment 10th Ranked 10th Nationally for PPP loan dollars originated of consolidated 2020 and 2021 SBA PPP loans Average PPP Loans Loan Yields ($ millions) 7.
Slide 25: Paycheck Protection Program Customers – Enhanced Relationships
Paycheck Protection Program Customers – Enhanced Relationships Growth rate of new services provided to both existing and new-to-bank customers remains steady PPP Loans New Accounts and Services 40,000 (Prior to Forgiveness) Utilized by PPP Customers 35,000 Existing New 30,000 20,000 New-to-Bank Cust
Slide 26: 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
Slide 27: 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 (2016 – 2020) Fifteen Year Average (2006 – 2020) 79% 66% 64% 57% 57% 57% 56% 53% 53% 53% 51% 47
Slide 28: Middle Market and Small Business Research Feedback
Middle Market and Small Business Research Feedback Zions compares favorably to major competitors (JPMorgan, Bank of America, US Bank, Wells Fargo) Zions Major Closest Our Rank Greenwich Associates Customer Satisfaction Categories Bancorporation Competitors* Competitor's (2020) Client Score % (Averag
Slide 29: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions, except per share amounts 4Q21 3Q21 2Q21 1Q21 4Q20 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $449 $429 $428 $435 $424 LESS adjustments: Severance costs 1 1 Other real estate expense 1 Amortization of core deposit and other intangibles
Slide 30: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) In millions, except per share amounts 4Q21 3Q21 2Q21 1Q21 4Q20 Net Earnings Applicable to Common Shareholders (NEAC) (k) Net earnings applicable to common $207 $234 $345 $314 $275 (l) Diluted Shares (average) 154 160 163 164 164 GAAP Diluted EPS 1.34 1.45
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