Zions Bancorporation N.a. · NASDAQ:ZION
Zions Bancorporation N.a — Zions Bancorporation — Q2 2018 Earnings Presentation
22 slides from Zions Bancorporation N.a's earnings presentation, Jul 24, 2018
Slide 1: Second Quarter 2018 Financial Review
Second Quarter 2018 Financial Review July 23, 2018
Slide 2: Forward-Looking Statements; Use of Non-GAAP Financial Measures
Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information The attached presentation includes 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
Slide 3: Earnings per Share
Earnings per Share Continued Year-Over-Year EPS Growth After Considering Items Diluted Earnings per Share $1.20 Diluted earnings per share increased $1.09 $1.10 to $0.89 in 2Q18 from $0.73 in the $1.00 year-ago period $0.89 $0.90 Infrequent items of: 2Q18 of $0.01 per share from $0.88 $0.88 $0.80 $0
Slide 4: Balance Sheet Profitability
Balance Sheet Profitability Zions’ profitability continues to improve since initiating the “Simple, Easy, Fast” initiative Return on Assets Return on Tangible Common Equity 1.6% 16.0% 15.5% 1.45% 1.4% 14.0% 1.19% 12.4% 1.2% 12.0% 12.5% 12.3% 1.18% 1.18% 1.03% 10.2% 0.97% 9.8% 1.07% 10.9% 1.0% 10.0%
Slide 5: Credit Quality
Credit Quality Strong and improving credit quality Key Credit Metrics: Credit Quality Ratios Classified loans, about 2% of loans, were 4.00% Down 28% from the prior year 3.50% Down 7% from the prior quarter NPAs+90, about 0.8% of loans + OREO, 3.00% were 2.50% Down 39% from the prior year Down 13% f
Slide 6: Pre-Provision Net Revenue
Pre-Provision Net Revenue Year-over-year 7% improvement, Excluding Interest Recoveries Adjusted Pre-Provision Net Revenue (1) ($mm) $300 Adjusted pre-provision net revenue (2) (2) (2) was up 0.7% over the past year and up 83% since 4Q14 $250 Up 7% and 82% over 2Q17 and 4Q14, respectively, after adju
Slide 7: 2018-2019 Objectives
2018-2019 Objectives: Growth through simplification and focus Demonstrate positive operating leverage by: Achieving broad based loan growth; major loan portfolios within acceptable concentration limits Building on momentum from noninterest income growth initiatives Managing noninterest expense growt
Slide 8: Net Interest Income
Net Interest Income Growth due to combination of wider net interest margin and loan growth Net interest income increased about Net Interest Income 4% over the year-ago period, to $548 ($mm) million (1) $550 (1) When excluding the previously (1) mentioned interest income recoveries $525 of greater th
Slide 9: Net Interest Income Drivers: Average Loan and Deposit Growth
Net Interest Income Drivers: Average Loan and Deposit Growth Moderate balance sheet growth is expected to be a key driver of Zions’ positive operating leverage Average loans held for investment increased 4.6% over the year-ago period, and 3.4% (annualized) from the prior quarter Average deposits wer
Slide 10: 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: Loan growth predominantly in Note: circle size indicates relative proportion of loan Residential Mortgage (1-4 Fa
Slide 11: 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 Relative to the prior quarter, the Net Interest Margin (NIM) NIM remained flat at 3.56% 5.0% Loan Yield Interest recoveries on loans in 2Q18 were $1 4.5% million
Slide 12: Noninterest Income
Noninterest Income Continued focus on fee income Customer-Related Fee Income (1) ($mm) Customer-related fee income increased slightly $150 over 3% from the year ago period, primarily due to increases in: Corporate trust $120 Capital markets $121 $122 $127 $123 $125 Loan sales and servicing income $9
Slide 13: Noninterest Expense
Noninterest Expense Focus on expense controls while strategically hiring in revenue generating areas Noninterest Expense Total noninterest expense increased 6% from the year-ago period due to increases ($ millions) in: (1) $428 Incentive compensation as a result of $413 $417 $412 $400 $405 stronger
Slide 14: Efficiency Ratio
Efficiency Ratio Substantial improvement since 2014 driven by both revenue growth and expense control Efficiency Ratio (1) 75% The efficiency ratio in 2Q18 was 74.1% 60.9% In 2Q17, excluding interest recoveries(2) the efficiency ratio was 70% 61.0% 69.6% In 1Q18, excluding interest recoveries(2) the
Slide 15: Next 12-Month Financial Outlook (2Q19E vs. 2Q18A)
Next 12-Month Financial Outlook (2Q19E vs. 2Q18A) Outlook Comments Moderately Loan Balances Increasing • Excludes the effects of future interest rate hikes. Driven by moderate Net Interest Income Moderately loan growth partially offset by an expected moderate increase in Increasing funding costs Loa
Slide 16: Appendix
Appendix Financial Results Summary Impact of Warrants Loan Growth by Bank Brand and Loan Type Interest Rate Sensitivity GAAP to Non-GAAP Reconciliation 16
Slide 17: 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, June 30, 2018 2018 2017 Earnings Results: Diluted Earnings Per Share $ 0.89 $ 1.09 $ 0.73 Net Earnings Applicable to Common Shareholders 187
Slide 18: Impact of Warrants
Impact of Warrants Potential dilution is expected to be slight to moderate, depending upon future stock price Zions has two tranches of warrants outstanding (ZIONZ and ZIONW), both of which are currently in the money During 2Q18, 100,000 warrants were exercised ZIONZ warrants expire on November 14,
Slide 19: Loan Growth by Bank Brand and Loan Type
Loan Growth by Bank Brand and Loan Type Year over Year Loan Growth (2Q18 vs. 2Q17) Zions ZBNA (in millions) Amegy CB&T NBAZ NSB Vectra CBW Total Bank Other C&I (ex-Oil & Gas) (184) (272) 432 (13) 26 124 37 - 150 Owner occupied (ex-NRE) 56 206 (3) 29 9 (17) 69 - 349 CRE C&D 135 (55) 1 22 (52) (52) 17
Slide 20: 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 2004-2006 and 2015-2Q18 Rate Cycles Modeled Annual Change in a 6.0 +200bps Interest Rate ZION Cost of Total De
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) 2Q18 1Q18 4Q17 3Q17 2Q17 Efficiency Ratio Noninterest expense (GAAP) (1) (a) $ 428 $ 412 $ 417 $ 413 $ 405 Adjustments: Severance costs 1 - 1 1 - Other real estate expense - - - (1) - Provision for unfunded lending commitments 7 (7) (1) (4) 3 Deb
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ In millions except per share amounts 2Q18 1Q18 4Q17 3Q17 2Q17 Pre-Provision Net Revenue (PPNR) (a) Total noninterest expense (1) $428 $412 $413 $413 $405 LESS adjustments: Severance costs 1 - 1 1 - Other real estate expense - - - (1) - Provision for unfunded lending