Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Q1 2021 Earnings Presentation
28 slides from Zions Bancorporation N.a's earnings presentation, Apr 19, 2021
Slide 1: First Quarter 2021 Financial Review
First Quarter 2021 Financial Review April 19, 2021
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 and assumpt
Slide 3: First Quarter 2021 Financial Highlights
First Quarter 2021 Financial Highlights Vs. 4Q20, improved earnings due to reserve release leading to stronger capital ratios ✓ Earnings and Profitability: ✓ Capital Strength: ▪ $1.90 diluted earnings/share compared to $1.66 ▪ 11.2% Common Equity Tier 1 Ratio (CET1), up from 10.8% ▪ $287 million Pre
Slide 4: Diluted Earnings Per Share
Diluted Earnings Per Share Vs. 4Q20, EPS positively impacted by a release of credit reserves, interest rate swaps and securities gains Diluted Earnings per Share Notable Items: ▪ 1Q21: $1.90 ▪ $0.08 per share benefit from credit valuation adjustment on client-related interest rate swaps (“CVA”) $1.6
Slide 5: Adjusted Pre-Provision Net Revenue
Adjusted Pre-Provision Net Revenue Adjusted PPNR aided by PPP related revenues Adjusted PPNR(1) and Provision for Credit Losses Notable Items: ▪ Interest Income from PPP Loans: ($ millions) ▪ 1Q21: $60 million $299 $300 $280 $300 ▪ 4Q20: $55 million $258 $267 $253 ▪ 3Q20: $52 million $250 ▪ 2Q20: $3
Slide 6: Balance Sheet Profitability
Balance Sheet Profitability Balance sheet profitability in 1Q21 improved predominantly due to the strengthening credit outlook Return on Assets Return on Tangible Common Equity 20.20% 17.80% 1.57% 1.41% 10.96% 0.89% 0.35% 3.81% 0.08% 0.41% 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 6
Slide 7: Capital Strength
Capital Strength Despite the recession, capital continues to strengthen, positioning the Bank for more active capital management Common Equity Tier 1 Capital Return of Shareholder Equity Dividends – Common and Preferred – and Share Repurchases ($ millions) 11.2% 10.8% $75 10.4% $50 10.2% 10.0% $66 $
Slide 8: Success Story: Summary of Paycheck Protection Program Loans
Success Story: Summary of Paycheck Protection Program Loans PPP lending success from Zions’ ability to link frontline bankers and borrowers with an agile technology deployment 10th Ranked 10th Nationally In PPP loan dollars originated of consolidated 2020 and 2021 SBA PPP loans Average PPP Loans Loa
Slide 9: Success Story: Paycheck Protection Program Customers – Enhanced Relationships
Success Story: Paycheck Protection Program Customers – Enhanced Relationships Zions has been highly successful at strengthening relationships and growing customer utilization of revenue generating services PPP Loans New Services Utilized by 2020 PPP Customers 25,000 > 55,000 Existing Customers 20,00
Slide 10: Average Loan and Deposit Growth
Average Loan and Deposit Growth Average non-PPP loans were generally stable in 1Q21 compared to 4Q20; average deposit growth continued to be strong Average Total Loans Average Total Deposits Loan Yields ($ billions) Cost of Total Deposits ($ billions) $75.0 $75.0 Average Total Loans Excluding PPP Lo
Slide 11: Securities, Money Market Investments and Interest Rate Swaps
Securities, Money Market Investments and Interest Rate Swaps The securities portfolio increased in 1Q21 as the yield curve steepened, and growth in money market investments was strong Total Securities Portfolio ($ billions) ▪ Strong deposit growth has significantly increased the bank’s and Money Mar
Slide 12: Net Interest Income
Net Interest Income Changes in interest rates and balance sheet composition continue to impact net interest income performance Net Interest Income Net Interest Margin Net Interest Margin Average money market investments increased to 10.0% of interest- $563 $555 earning assets in 1Q21, compared with
Slide 13: Interest Rate Sensitivity
Interest Rate Sensitivity The low interest rate environment and surge in deposits has resulted in increased asset sensitivity Net Interest Income Sensitivity (1) Loans: Rate Reset and Cash Flow Profile −100 bps +100 bps +200 bps 45% 20% In the down 100 scenario, models assume rates do 10% Loans Afte
Slide 14: Noninterest Income
Noninterest Income Total customer-related fee income decreased modestly from 4Q20 primarily due to reduced capital markets fee income Customer-Related Fee Income (1) Customer-related fee income declined from the prior ($ millions) quarter due to decreases in: $143 $139 $139 $130 $133 ▪ Customer-rela
Slide 15: Noninterest Expense
Noninterest Expense Elevated expense in 1Q21 reflects seasonal factors and expense associated with PPP forgiveness Noninterest Expense (NIE) ▪ Total noninterest expense increased 3% over the prior quarter ($ millions) ▪ Total adjusted noninterest expense increased 4% over the prior quarter, predomin
Slide 16: Credit Quality
Credit Quality Credit quality continues to show improvement All Ratios Exclude PPP Loans Credit Quality Ratios 4.00% Key Credit Metrics: ▪ Classified loans/loans: 3.5% ▪ NPAs+90(1)/loans + OREO: 0.71% NCOs / Loans (ann.) 3.00% ▪ Annualized net loan losses: Classified / Loans ▪ 0.07% of average loans
Slide 17: Allowance for Credit Loss ("ACL")
Allowance for Credit Loss (“ACL”) Reserve decrease from 4Q20 reflects improvement in experienced and expected economic conditions Allowance for Credit Loss The change in 1Q21 ACL from 4Q20 reflects: ACL (%) ACL (%) ex-PPP 1.88 1.91 1.74 ▪ Improvement in economic outlook and credit 1.68 ($ millions)
Slide 18: Financial Outlook (1Q 2022E vs 1Q 2021A)
Financial Outlook (1Q 2022E vs 1Q 2021A) Outlook Comments Slightly ▪ Slight to moderate growth activity in the next twelve months, excluding PPP Loan Balances Increasing loans Stable to Net Interest Income ▪ Assumes benchmark rates generally consistent with the forward curve Slightly ▪ Excludes PPP
Slide 19: Appendix
Appendix ▪ Financial Results Summary ▪ Loan Growth ▪ COVID-19 Elevated Risk Loans ▪ Oil & Gas Portfolio Credit Quality and Portfolio Details ▪ 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) March 31, December 31, September 30, 2021 2020 2020 Earnings Results: Diluted Earnings Per Share $ 1.90 $ 1.66 $ 1.01 Net Earnings Applicable to Common Shareho
Slide 21: Loan Growth - by Bank Brand and Loan Type
Loan Growth - by Bank Brand and Loan Type Period-End Year over Year Loan Growth (1Q21 vs. 1Q20) (in millions) Zions Bank Amegy CB&T NBAZ NSB Vectra CBW Other Total C&I (ex-Oil & Gas) (729) (776) (380) (164) (17) (136) (111) - (2,313) SBA PPP 1,442 1,319 1,706 609 557 482 350 - 6,465 Owner occupied (
Slide 22: Select Sub-Industries with Elevated Risk Related to COVID-19
Select Sub-Industries(1) with Elevated Risk Related to COVID-19 COVID-19 Elevated Risk loans are less than 10% of total loans and have strong collateral coverage COVID-19 Elevated Risk Loans ▪ Sub-segments withing broad industry groups with significant growth in $3.8 billion (8.2%) of 1Q21 non-PPP l
Slide 23: Additional Recent Trends In Loan Balance, Credit Quality and Line Utilization
Additional Recent Trends In Loan Balance, Credit Quality and Line Utilization We have experienced generally stable credit quality trends outside of COVID-19 Elevated Risk and Oil and Gas loans (data excludes PPP loans) Loan Balances by Portfolio $50.0 and Weighted Average Risk Grades 12.0 Classified
Slide 24: Oil & Gas (O&G) Credit Quality
Oil & Gas (O&G) Credit Quality Oil and gas loans account for $1.9 billion or 4.2% of total loans, excluding PPP Loans Excluding PPP Loans and as of March 31, 2021: All Ratios Exclude Oil and Gas ▪ Annualized NCOs equaled 0.78% of loans PPP Loans Key Credit Quality Ratios 14% ▪ Classified loans equal
Slide 25: Oil & Gas Portfolio
Oil & Gas Portfolio Oil and gas portfolio exposures OIL & GAS-RELATED EXPOSURE QoQ YoY (In millions) 1Q21 4Q20 1Q20 $ Change % Change $ Change % Change Loans and leases: Upstream $838 $916 $1,025 ($78) (9)% ($187) (18)% Midstream 732 814 889 ($82) (10)% ($157) (18)% Oil and gas services 402 392 470
Slide 26: Success Story: Mortgage Banking
Success Story: Mortgage Banking Successes amid COVID-19 pandemic: very strong mortgage revenue 2019 2020 Record Mortgage Funding ▪ Roll-out ▪ Enhanced Digital Fulfillment Process $846 million ▪ 87% of all applications taken digitally $725 million 59% 47% 49% 49% ▪ 25% reduction in turn-time allowing
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 1Q21 4Q20 3Q20 2Q20 1Q20 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 435 $ 424 $ 442 $ 430 $ 408 Adjustments: Severance costs - 1 1 - - Other real estate expense - 1 - - - Debt extinguishment cost - - - - - Amortization of core deposit
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 1Q21 4Q20 3Q20 2Q20 1Q20 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense $435 $424 $442 $430 $408 LESS adjustments: Severance costs - 1 1 - - Other real estate expense - 1 - - - Restructuring costs - (1) 1 - 1 Pens
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