Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Q4 2024 Earnings Presentation
40 slides from Zions Bancorporation N.a's earnings presentation, Jan 21, 2025
Slide 1: 2024 Fourth Quarter Financial Review
ZIONS 2024 FOURTH QUARTER Financial Review January 21, 2025
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS; USE OF NON-GAAP FINANCIAL MEASURES Forward Looking Information This presentation includes “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 assu
Slide 3: Financial Performance
FINANCIAL PERFORMANCE Net interest margin expanded for a fourth consecutive quarter; credit losses increased in the quarter though remained at 10 bps for the year Key Metrics 4Q24 FY24 • Net earnings to common declined by $4 million Net earnings to common $200 million $737 million versus prior quart
Slide 4: Diluted Earnings Per Share
DILUTED EARNINGS PER SHARE Earnings per share decreased $0.03 versus prior quarter as improved pre-provision net revenue was offset by an increase in credit loss provision Diluted Earnings per Share Notable Items1: $1.37 $1.34 4Q24: $1.28 $0.96 • No items with impact > $0.05 per share during the qua
Slide 5: Pre-Provision Net Revenue (PPNR)
PRE-PROVISION NET REVENUE (“PPNR”) Linked-quarter improvement in adjusted PPNR attributable to increased revenue PPNR1 Linked quarter (4Q24 vs. 3Q24) ($ millions) • Adjusted PPNR increased 4%: • Increased net interest income; interest expense declined $323 more than interest income $312 $302 $299 $2
Slide 6: Net Interest Income & Net Interest Margin
NET INTEREST INCOME & NET INTEREST MARGIN Net interest income increased primarily because interest-bearing liabilities repriced downward faster than earning asset yields Net Interest Income Linked quarter (4Q24 vs. 3Q24) Net Interest Margin Net interest income increased $7 million: ($ millions) • In
Slide 7: Net Interest Margin
NET INTEREST MARGIN Favorable repricing of interest-bearing deposits contributed to the expansion of the net interest margin over prior year and quarter Linked Quarter (4Q24 vs. 3Q24) Year-Over-Year (4Q24 vs. 4Q23) 0.12% 0.31% 0.01% 3.03% 0.23% 3.05% 3.05% (0.10%) 2.91% 0.03% (0.17%) (0.08%) (0.04%)
Slide 8: Noninterest Income and Revenue
NONINTEREST INCOME AND REVENUE Customer-related noninterest income growth vs prior quarter was primarily driven by capital markets Customer-Related Noninterest Income 1 Total Revenue 2 ($ millions) ($ millions) $173 $821 $820 $798 $792 $784 $776 $161 $753 $751 $154 $742 $151 $731 $150 4Q23 1Q24 2Q24
Slide 9: Noninterest Expense
NONINTEREST EXPENSE Noninterest expenses remain well-controlled with increases in the quarter related to compensation accruals, legal services, and occupancy Noninterest Expense (NIE) • Adjusted noninterest expense increased $10 million linked quarter, driven by several categories: ($ millions) • Sa
Slide 10: Average Loans and Deposits
AVERAGE LOANS AND DEPOSITS Yield on loans decreased 23 basis points; total cost of deposits decreased 21 basis points Average Total Loans Average Total Deposits Yield on Total Loans Cost of Total Deposits Total interest-bearing deposits reflect a 58% cumulative beta ($ billions) ($ billions) $75.9 $
Slide 11: Deposit Balance and Borrowing Trends
DEPOSIT BALANCE AND BORROWING TRENDS Ending and average customer deposits increased 0.9% and 1.4%, respectively, compared to prior quarter 4Q24 total funding costs decreased 24 basis points vs. 3Q24 • Average noninterest-bearing demand deposits grew ~$130 million, or 0.5% linked-quarter • Noninteres
Slide 12: Total Investment Securities & Money Market Investments
TOTAL INVESTMENT SECURITIES & MONEY MARKET INVESTMENTS The bank has strong on-balance sheet liquidity Total Investment Securities The investment securities portfolio is designed to be a storehouse of balance sheet liquidity and Money Market Investments (period-end balances) • Principal and prepaymen
Slide 13: Net Interest Income – Outlook & Rate Sensitivity
NET INTEREST INCOME – OUTLOOK & RATE SENSITIVITY Net interest income is projected to increase in 4Q25 relative to 4Q24 Net Interest Income Sensitivity Assuming interest rates follow the rate path implied as of December 31, net interest income is modeled1 to increase in 4Q25 vs. 4Q24 by an additional
Slide 14: Credit Quality
CREDIT QUALITY Net charge-offs remain low, with trailing 12 months net charge-offs at 0.10% of average loans Key Credit Metrics Credit Quality Ratios • Net charge-offs relative to average loans: Criticized / Loans NPAs / Loans + OREO Classified / Loans • 0.24% annualized in 4Q24 5.9% • 0.10% over th
Slide 15: Commercial Real Estate Summary ($13.5 Billion Balance)
COMMERCIAL REAL ESTATE SUMMARY ($13.5 BILLION BALANCE) The commercial real estate portfolio is granular and well diversified, 23% of total loans CRE Portfolio Composition Term CRE ($10.7B) As of December 31, 2024 • Weighted average LTVs (< 60%) All Other CRE, 14% • Maturity distribution over the nex
Slide 16: Commercial Real Estate Problem Loans in Focus
COMMERCIAL REAL ESTATE PROBLEM LOANS IN FOCUS The commercial real estate portfolio benefits from strong LTVs, guarantor support, low delinquencies, and diversification • CRE classifieds increased $609 million during the quarter: $254 million Change in CRE Problem Loans Levels in multifamily, $242 mi
Slide 17: Capital Strength
CAPITAL STRENGTH Loss-absorbing capital remains strong relative to our risk profile; low credit losses relative to CET1 + ACL Common Equity Tier 1 Capital Net Charge-offs and Allowance for Credit Losses annualized, as a percentage of risk-weighted assets as a percentage of risk-weighted assets 14% 1
Slide 18: Financial Outlook (FY 2025E vs. FY 2024A)
FINANCIAL OUTLOOK (FY 2025E VS . FY 2024A) Outlook provided as of January 21, 2025 Outlook Comments Commercial loans, particularly for small and medium-sized businesses, are Loan Balances Slightly expected to grow moderately, partially offset by managed declines in CRE and (period-end) Increasing
Slide 19: Zions Bancorporation Drives Value for Its Stakeholders
ZIONS BANCORPORATION DRIVES VALUE FOR ITS STAKEHOLDERS We are determined to help build strong, successful communities, create economic opportunity, and to help our clients achieve greater financial strength through the relationships we develop and the services we provide. Distinctive Local Operating
Slide 20: Appendix
APPENDIX • Financial Results Summary • Accumulated Other Comprehensive Income (AOCI) • Balance Sheet Profitability • Loan Growth by Type • Allowance and Credit Metrics • Earning Asset Repricing • Interest Rate Swaps • Interest Rate Sensitivity – Parallel Shock Analysis • Loan Loss Severity (NCOs as
Slide 21: Financial Results Summary
FINANCIAL RESULTS SUMMARY Quarterly financial highlights Three Months Ended Full Year Ending (Dollar amounts in millions, except per share data) December 31, September 30, June 30, March 31, December 31, December 31, 2024 2024 2024 2024 2024 2023 Earnings Results: Diluted Earnings Per Share $ 1.34 $
Slide 22: Accumulated Other Comprehensive Income/Loss (AOCI)
ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS (AOCI) Projected AOCI improvement reflects relative stability in higher rate environment due to hedging strategy AOCI Loss Projection The loss in AOCI will decline as the underlying Actual Projection investments pay down and mature. Based on forward curve:
Slide 23: Balance Sheet Profitability
BALANCE SHEET PROFITABILITY Profitability has stabilized over the past several quarters Return on Assets Return on Tangible Common Equity 1 17.5% 17.4% 16.0% 13.7% 11.8% 0.95% 0.96% 0.91% 0.70% 0.57% 4Q23 1Q24 2Q24 3Q24 4Q24 4Q23 1Q24 2Q24 3Q24 4Q24 23 (1) Return on Tangible Common Equity is a non-G
Slide 24: Loan Growth in Detail
LOAN GROWTH IN DETAIL Loan growth in 1-4 family mortgage and energy (oil & gas) Linked Quarter Loan Balance Growth Total Loans: +0.9% 10% Energy (Oil & Gas), 7% Compared to the prior quarter: 8% 1-4 Family, 5% 6% • Period-end loans increased $526 Growth Rate: Linked Quarter 1 Home Equity, 3% million
Slide 25: Allowance and Credit Metrics Through History
ALLOWANCE AND CREDIT METRICS THROUGH HISTORY CECL methodology reflects reserve build ahead of realized deterioration of credit metrics • Through 2022 and 2023, the ACL increased, despite improving problem loan levels, due to forecasts of future credit quality deterioration, including $190 million of
Slide 26: Simulated Repricing Expectations: Earning Assets & Loans
SIMULATED REPRICING EXPECTATIONS: EARNING ASSETS & LOANS A substantial portion of earning assets reset within one year with additional resets in later periods Earning Assets: Rate Reset and Cash Flow Profile Loans: Rate Reset and Cash Flow Profile Earning Assets 55% 56% Loans 49% After Hedging After
Slide 27: Interest Rate Swaps at December 31, 2024
INTEREST RATE SWAPS AT DECEMBER 31, 2024 Swaps are used to balance our interest rate sensitivity Interest rate sensitivity is managed in part with portfolio interest rate hedges1 • In 4Q24, $200 million in receive-fixed loan swaps added with an average fixed rate of 3.69% and $500 million in receive
Slide 28: Interest Rate Sensitivity – Parallel Rate Shocks
INTEREST RATE SENSITIVITY – PARALLEL RATE SHOCKS Standard parallel rate shocks suggest asset sensitivity Simulated Net Interest Income Sensitivity 1 −200 bps −100 bps +100 bps +200 bps 9% as of 9/30/2024 as of 12/31/2024 5% 4% 3% (3%) (4%) (6%) (9%) 28 (1) 12-month forward simulated impact of an ins
Slide 29: Loan Loss Severity
LOAN LOSS SEVERITY When problems arise, Zions generally experiences less severe loan losses due to strong collateral and underwriting practices Annualized NCOs / Nonaccrual Loans Annualized NCOs / Nonaccrual Loans Five Year Average (2019Q4 – 2024Q3) Fifteen Year Average (2009Q4 – 2024Q3) >100% >100%
Slide 30: In-Depth Review: Commercial Real Estate
IN-DEPTH REVIEW: COMMERCIAL REAL ESTATE Limited tail loan-to-value risk in portfolio; controlled CRE growth Balance Trends Maturities Term Balances Construction Balances Term Balances Construction Balances Term % of CRE % of CRE WAVG LTV Term Construction Multifamily 57% 27% 51% ($ billions) 10.7 10
Slide 31: Disciplined Commercial Real Estate Growth
DISCIPLINED COMMERCIAL REAL ESTATE GROWTH Commercial real estate loan growth lags peers due to continued exercise of concentration risk discipline Commercial Real Estate Zions has exercised caution in CRE Excluding Owner Occupied concentrations for more than a decade 350 and in underwriting standard
Slide 32: In-Depth Review: CRE Office ($1.8 Billion Balance)
IN-DEPTH REVIEW: CRE OFFICE ($1.8 BILLION BALANCE) CRE Office portfolio is 13% of total CRE exposure; 3% of total loans; charge-offs remain limited Balance Trends Maturities • Allowance for credit losses: 3.9% of balances / 27% of criticized balances Term Balances Construction Balances Term Balances
Slide 33: In-Depth Review: CRE Office ($1.8 Billion Balance)
IN-DEPTH REVIEW: CRE OFFICE ($1.8 BILLION BALANCE) Zions’ office collateral is diversified geographically, has limited exposure to CBD offices, and majority of building sizes < 200 thousand sq ft Office Collateral Summary Term CRE Office By State, CBD / Suburban ($MMs) • Largest exposure by state (p
Slide 34: In-Depth Review: CRE Multifamily ($4.0 Billion Balance)
IN-DEPTH REVIEW: CRE MULTIFAMILY ($4.0 BILLION BALANCE) CRE multifamily portfolio is 30% of total CRE exposure; 7% of total loan exposure Balance Trends Maturities • Allowance for credit losses: 2.6% of total multifamily balances / 12% of Term Balances Construction Balances Term Balances Constructio
Slide 35: In-Depth Review: CRE Industrial ($3.0 Billion Balance)
IN-DEPTH REVIEW: CRE INDUSTRIAL ($3.0 BILLION BALANCE) CRE Industrial portfolio is 22% of total CRE exposure; 5% of total loan exposure Balance Trends Maturities • Allowance for credit losses: 2.3% of balances / 16% of criticized balances Term Balances Construction Balances Term Balances Constructio
Slide 36: Customer-Related Fee Income Growth: 2015 Through 2024
CUSTOMER-RELATED FEE INCOME GROWTH: 2015 THROUGH 2024 Customer-related fee income has achieved a 4.2% compounded annual growth rate since 2015 led by Capital Markets (+15%) and Wealth Management (+10%) CAGR +4.2% 639 614 620 575 549 525 508 $ Millions 490 473 443 2015 2016 2017 2018 2019 2020 2021 2
Slide 37: Zions Finishes Third Nationally in 2023 Greenwich Excellence Awards
ZIONS FINISHES THIRD NATIONALLY IN 2023 GREENWICH EXCELLENCE AWARDS Zions compares favorably to major competitors Greenwich Excellence Awards Coalition Greenwich Customer Satisfaction (2023) • Ranked third among all U.S. banks with 20 overall % Excellent Citations* national Excellence Awards (Major
Slide 38: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES In millions, except per share amounts 4Q24 3Q24 2Q24 1Q24 4Q23 FY 2024 FY 2023 (a) Total noninterest expense $509 $502 $509 $526 $581 $2,046 $2,097 LESS adjustments: Severance costs 1 1 1 3 14 Other real estate expense (1) (1) Amortization of core deposit and other intang
Slide 39: Non-GAAP Financial Measures (Continued)
NON-GAAP FINANCIAL MEASURES (CONTINUED) In millions 4Q24 3Q24 2Q24 1Q24 4Q23 FY 2024 FY 2023 Return on Average Tangible Common Equity (Non-GAAP) Net earnings applicable to common $200 $204 $190 $143 $116 $737 $648 Adjustments, net of tax: Amortization of core deposit and other intangibles 1 1 1 1 1
Slide 40: zionsbancorporation.com
ZIONS BANCORPORATION zionsbancor, poration.com
Zions Bancorporation, N.A. — Q4 2024 Earnings Presentation on 6ix