Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation, National Association — Q4 2018 Earnings Presentation
25 slides from Zions Bancorporation N.a's earnings presentation, Jan 22, 2019
Slide 1: Fourth Quarter 2018 Financial Review
Fourth Quarter 2018 Financial Review January 22, 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 within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in the attached presentation that are ba
Slide 3: Fourth Quarter 2018 Financial Highlights
Fourth Quarter 2018 Financial Highlights Continued strong PPNR growth and improved profitability EPS: Diluted earnings per share increased from the year-ago period, to $1.08 in 4Q18 from $0.54 • Tax reform had a significant positive impact on earnings during 2018 • Notable items that are operating b
Slide 4: Diluted Earnings per Share
Diluted Earnings per Share Earnings per share increased 100% over the prior year, assisted by strong positive operating leverage and tax reform Diluted earnings per share increased to $1.08 in 4Q18 from $0.54 in the year-ago $1.09 $1.08 period and included the following $1.04 infrequent items: 4Q18
Slide 5: Adjusted Pre-Provision Net Revenue
Adjusted Pre-Provision Net Revenue Year-over-year 13% improvement (excluding 4Q17 charitable contribution) Adjusted pre-provision net revenue (1): ($mm) $305 Up 18% over the past year and 108% $291 since 4Q14 and up 5% from 3Q18 $265 $270 Excluding the $12 million charitable $259 contribution in the
Slide 6: Credit Quality
Credit Quality Strong and improving credit quality Key Credit Metrics: Credit Quality Ratios Classified loans (1.5% of loans) 4.00% Declined 38% from the prior year Declined 11% from the prior qtr 3.50% NPAs+901 (0.6% of loans + OREO) were 3.00% Declined 42% from the prior year 2.50% Declined 14% fr
Slide 7: Leveraged Lending
Leveraged Lending Significantly lower concentration than regional banks surveyed by Moody’s Leveraged Lending Exposure As a percent of Moody’s Definition of Tangible Common Equity In the Moody’s 2018 Regional Bank Survey, (1) As of June 30, 2018 Zions’ leveraged lending balances were $0.7 billion 19
Slide 8: Tech Initiatives On the Horizon: Digital and Simplification Investments
Tech Initiatives On the Horizon: Digital and Simplification Investments Investments seek to improve the customer experience while simplifying our processes CO MM MME RE CR ICAI LA L SSMMAAL LL L AFFLUENT CO AFFLUENT CONSUMER BBUUSSI INNEESSSS Treasury Internet Banking 2.0 2018-2019 $10B demand depos
Slide 9: 2019-2020 Objectives
2019-2020 Objectives: Growth through simplification and focus Demonstrate positive operating leverage by: Achieving broad based loan growth; major loan portfolios within acceptable concentration limits Noninterest income growth initiatives Managing noninterest expense growth linked to revenue growth
Slide 10: Balance Sheet Profitability
Balance Sheet Profitability Zions’ profitability continues to improve Return on Assets Return on Tangible Common Equity 15.5% 1.45% 14.2% 14.5% 1.33% 1.34% 12.4% 1.19% 0.88% 8.4% 7.4% 0.68% 0.74% 6.2% 0.57% 5.0% 4Q14 4Q15 4Q16 4Q17 1Q18 2Q18 3Q18 4Q18 4Q14 4Q15 4Q16 4Q17 1Q18 2Q18 3Q18 4Q18 Results
Slide 11: Net Interest Income
Net Interest Income Growth due to combination of wider net interest margin and loan growth ($mm) Up 10% over the year-ago period, to $576 $576 million $565 3Q18, 2Q18 and 1Q18 results include $548 the previously mentioned interest $542 income recoveries of greater than $1 $526 million Majority of th
Slide 12: Net Interest Income Drivers: Average Loan and Deposit Growth
Net Interest Income Drivers: Average Loan and Deposit Growth Deposit growth achieved even with the rising interest rate environment with a modest incremental cost Average loans held for investment: +4% over the year-ago period Average deposits: +4% over the year-ago period Average Total Loans Averag
Slide 13: Net Interest Income Drivers: Loan Growth
Net Interest Income Drivers: Loan Growth Moderate to strong loan growth achieved in certain targeted growth categories Year-over-Year Loan Balance Growth Total Loans: +4% Year over year: Note: circle size indicates Loan growth predominantly in relative proportion of loan portfolio as of 4Q18. Reside
Slide 14: Net Interest Income Drivers: Yields and Costs
Net Interest Income Drivers: Yields and Costs Expansion of NIM reflects a higher loan yield with only a moderate increase in funding costs Net Interest Margin (NIM) Relative to the prior quarter, the Loan Yield 5.0% NIM: +4 bps to 3.67% Year-over-year NIM beta (1) : +22% 4.5% Yield on loans: +8 bps
Slide 15: Noninterest Income
Noninterest Income Some headwinds due to higher interest rates Customer-Related Fee Income (1) Customer-related fee income up 1% from the year ago period, primarily due to increases in: ($mm) $127 $128 Loan commitment fees $123 $125 $125 Cards – business and personal Interest rate swap sales and cap
Slide 16: Noninterest Expense
Noninterest Expense Focus on “Simple, Easy, Fast” expense controls and streamlining Total noninterest expense was flat from ($mm) the year-ago period $428 Adjusted noninterest expense(1) up 0.7% $420 $420 $419 $419 $418 $417 $416 $415 $412 from the year-ago period due to: Increases in salaries, bonu
Slide 17: Efficiency Ratio
Efficiency Ratio Substantial improvement since 2014 driven by both revenue growth and expense control The efficiency ratio(1) in 4Q18 was 74.1% 57.8% 69.6% The FY 2018 efficiency ratio was 59.6%, compared to 62.3% in 2017 64.5% Adjusted net revenue growth: +7.3% 61.6% 61.3% 60.9% from the year ago p
Slide 18: Next 12-Month Financial Outlook (4Q19E vs. 4Q18A)
Next 12-Month Financial Outlook (4Q19E vs. 4Q18A) Outlook Comments Slightly - Loan Balances Moderately • Outlook recognizes increased competition from non-bank lenders Increasing • Assumes the benefit of the December 2018 increase in the federal Net Interest Income Moderately funds rate but no addit
Slide 19: Appendix
Appendix Financial Results Summary Impact of Warrants Loan Growth by Bank Brand and Loan Type Interest Rate Sensitivity GAAP to Non-GAAP Reconciliation 19
Slide 20: 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, December 31, 2018 2018 2017 Earnings Results: Diluted Earnings Per Share $ 1.08 $ 1.04 $ 0.54 Net Earnings Applicable to Common Shar
Slide 21: Impact of Warrants
Impact of Warrants Potential dilution is expected to be slight to moderate, depending upon future stock price Zions has 29 million warrants (Nasdaq: ZIONW) outstanding which are currently in the money and expire on May 22, 2020 Dilution is calculated using the treasury method of accounting, which re
Slide 22: Loan Growth by Bank Brand and Loan Type
Loan Growth by Bank Brand and Loan Type Year over Year Loan Growth (4Q18 vs. 4Q17) Zions (in millions) Amegy CB&T NBAZ NSB Vectra CBW Other Total Bank C&I (ex-Oil & Gas) 192 (546) 359 26 71 38 22 - 162 Owner occupied (ex-NRE) 189 108 77 28 20 (2) 24 - 444 Energy (Oil & Gas) (16) 319 - (2) - 6 4 - 31
Slide 23: Interest Rate Sensitivity and Historical Deposit Beta
Interest Rate Sensitivity and Historical Deposit Beta Zions remains moderately asset sensitive, with a loan profile that is weighted towards a one-year reset Net Interest Income Sensitivity Modeled Annual Change in a Historical Deposit Betas 4Q18 vs 4Q18 vs 4Q18 vs +200bps Interest Rate 3Q18 4Q17 3Q
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 4Q18 3Q18 2Q18 1Q18 4Q17 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 419 $ 420 $ 428 $ 412 $ 417 Adjustments: Severance costs 2 2 1 - 1 Other real estate expense - 1 - - - Provision for unfunded lending commitments (1) - 7 (7) (1) Debt
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 4Q18 3Q18 2Q18 1Q18 4Q17 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $419 $420 $428 $412 $417 LESS adjustments: Severance costs 2 2 1 - 1 Other real estate expense - 1 - - - Provision for unfunded lending c
Zions Bancorporation, National Association — Q4 2018 Earnings Presentation on 6ix