Attached files
| file | filename |
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| EX-99.2 - 3Q18 EARNINGS RELEASE SLIDE PRESENTATION - ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ | earningspresentation3q2018fi.pdf |
| 8-K - 8-K 3Q18 EARNINGS RELEASE - ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ | zion-201809308xkcoverpage.htm |
ZIONS BANCORPORATION, N.A.
Press Release – Page 1
October 22, 2018
Zions Bancorporation, N.A. One South Main Salt Lake City, UT 84133 October 22, 2018 |  |
www.zionsbancorporation.com | |
Third Quarter 2018 Financial Results: FOR IMMEDIATE RELEASE
Investor and Media Contact: James Abbott (801) 844-7637
Zions Bancorporation, N.A. Reports: 3Q18 Net Earnings¹ of $215 million, diluted EPS of $1.04 |
compared with 3Q17 Net Earnings¹ of $152 million, diluted EPS of $0.72, and 2Q18 Net Earnings¹ of $187 million, diluted EPS of $0.89 |
THIRD QUARTER RESULTS
$1.04 | $215 million | 3.63% | 12.1% | |||
Earnings per diluted common share | Net Earnings 1 | Net interest margin (“NIM”) | Common Equity Tier 1 | |||
THIRD QUARTER HIGHLIGHTS² | ||
Net Interest Income and NIM | • | Net interest income was $565 million, up 8% |
• | NIM was 3.63%, compared with 3.45% | |
Operating Performance | • | Pre-provision net revenue ("PPNR") was $286 million, compared with $257 million |
• | Adjusted PPNR³ was $291 million, compared with $251 million | |
• | Noninterest expense was $420 million, compared with $413 million | |
• | Adjusted noninterest expense³ was $416 million, compared with $414 million | |
• | Efficiency ratio³ was 58.8%, compared with 62.3% | |
Loans and Credit Quality | • | Net loans and leases were $45.8 billion, up 4% |
• | Classified loans were $784 million, down 37%; and nonperforming assets were $292 million, down 38% | |
• | Provision for credit losses was $(11) million, compared with $1 million | |
• | Net credit recoveries of 0.01% of average loans, compared with net charge-offs of 0.07% of average loans | |
Capital Returns | • | Return on average tangible common equity³ was 14.2%, compared with 9.8% |
• | Common stock repurchases of $185 million, 3.5 million shares, or 1.8% of shares outstanding as of June 30, 2018 | |
• | Common dividend increased to $0.30 per share from $0.12 per share | |
Notable Items | • | The Bank Holding Company was merged into the Bank at the end of the third quarter of 2018 |
• | Received notification in September from the Financial Stability Oversight Council that the Company is no longer considered a systemically important financial institution | |
CEO COMMENTARY |
Harris H. Simmons, Chairman and CEO, commented, “We’re very pleased with our results for the third quarter with earnings per share up 44% from last year’s third quarter, and an increase of 17% over the results of the prior quarter. These results reflect consistent revenue growth, disciplined expense management and continued strong credit performance. We increased our dividend by 25% during the quarter in addition to repurchasing 3.5 million shares of our common stock. And we successfully completed the merger of our holding company into its subsidiary bank, resulting in the creation of a publicly traded national bank, Zions Bancorporation, N.A., as our top-level legal entity, simplifying our organization’s structure and the resulting regulatory framework.” |
OPERATING PERFORMANCE3 |
¹ Net Earnings is net earnings applicable to common shareholders. ² Comparisons noted in the bullet points are calculated for the current quarter versus the same prior-year period, unless otherwise specified. ³ For information on non-GAAP financial measures and the reasons for which the Company presents these numbers, see pages 16-19. |
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ZIONS BANCORPORATION, N.A.
Press Release – Page 2
October 22, 2018
Comparisons noted in the sections below are calculated for the current quarter versus the same prior-year period, unless otherwise specified.
RESULTS OF OPERATIONS
Net Interest Income and Margin | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | $ | % | $ | % | ||||||||||||||||||
Interest and fees on loans | $ | 537 | $ | 514 | $ | 468 | $ | 23 | 4 | % | $ | 69 | 15 | % | |||||||||||
Interest on money market investments | 8 | 7 | 5 | 1 | 14 | 3 | 60 | ||||||||||||||||||
Interest on securities | 86 | 85 | 84 | 1 | 1 | 2 | 2 | ||||||||||||||||||
Total interest income | 631 | 606 | 557 | 25 | 4 | 74 | 13 | ||||||||||||||||||
Interest on deposits | 38 | 29 | 15 | 9 | 31 | 23 | 153 | ||||||||||||||||||
Interest on short and long-term borrowings | 28 | 29 | 20 | (1 | ) | (3 | ) | 8 | 40 | ||||||||||||||||
Total interest expense | 66 | 58 | 35 | 8 | 14 | 31 | 89 | ||||||||||||||||||
Net interest income | $ | 565 | $ | 548 | $ | 522 | $ | 17 | 3 | $ | 43 | 8 | |||||||||||||
bps | bps | ||||||||||||||||||||||||
Net interest margin | 3.63 | % | 3.56 | % | 3.45 | % | 7 | 18 | |||||||||||||||||
Net interest income increased to $565 million in the third quarter of 2018 from $522 million in the third quarter of 2017. The $43 million, or 8%, increase in reported net interest income was attributable to a $69 million increase in interest and fees on loans, resulting from increases in short-term interest rates and loan growth in consumer and commercial loans, partially offset by an increase to interest expense. The $31 million increase in interest expense was primarily due to higher rates paid on deposits and an increase in interest paid on short and long-term borrowings. Net interest income for the current quarter benefited from $3 million of interest income recoveries of at least $1 million per loan, while there were no such recoveries in the same prior year period.
The yield on interest earning assets increased 13 basis points, compared with the second quarter of 2018, and 39 basis points, compared with the third quarter of 2017. When adjusted for interest recoveries of $3 million in the third quarter of 2018 and $1 million in the second quarter of 2018, the yield on interest earning assets increased 12 basis points compared with the second quarter of 2018, and 37 basis points, compared with the third quarter of 2017.
The effective rate on total deposits and interest-bearing liabilities increased to 0.45% for the third quarter of 2018, from 0.40% for the second quarter of 2018, and 0.23% for the third quarter of 2017. The increase from both prior periods was primarily due to an increase in both the rate paid on short and long-term borrowings and deposits as a result of changes in short-term interest rates and a change in the overall composition of balance sheet funding. The total annualized cost of deposits for the third quarter of 2018 was 0.28%, compared with 0.22% for the second quarter of 2018, and 0.12% for the third quarter of 2017.
The net interest margin increased to 3.63% in the third quarter of 2018, compared with 3.56% in the second quarter of 2018, and 3.45% in the same prior year period. Excluding the previously described effect of interest recoveries and adjusting the prior year period for the effect of the change to the corporate tax rate on fully taxable equivalent yields,
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ZIONS BANCORPORATION, N.A.
Press Release – Page 3
October 22, 2018
the net interest margin would have been 3.61% in the current period, which compares with 3.55% and 3.42% in the prior quarter and the year ago period, respectively.
Noninterest Income | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | $ | % | $ | % | ||||||||||||||||||
Service charges and fees on deposit accounts | $ | 42 | $ | 42 | $ | 42 | $ | — | — | % | $ | — | — | % | |||||||||||
Other service charges, commissions and fees | 59 | 55 | 55 | 4 | 7 | 4 | 7 | ||||||||||||||||||
Wealth management and trust income | 12 | 14 | 11 | (2 | ) | (14 | ) | 1 | 9 | ||||||||||||||||
Loan sales and servicing income | 5 | 7 | 6 | (2 | ) | (29 | ) | (1 | ) | (17 | ) | ||||||||||||||
Capital markets and foreign exchange | 7 | 7 | 8 | — | — | (1 | ) | (13 | ) | ||||||||||||||||
Customer-related fees | 125 | 125 | 122 | — | — | 3 | 2 | ||||||||||||||||||
Dividends and other investment income | 11 | 11 | 9 | — | — | 2 | 22 | ||||||||||||||||||
Securities gains (losses), net | (1 | ) | 1 | 5 | (2 | ) | (200 | ) | (6 | ) | (120 | ) | |||||||||||||
Other | 1 | 1 | 3 | — | — | (2 | ) | (67 | ) | ||||||||||||||||
Total noninterest income | $ | 136 | $ | 138 | $ | 139 | $ | (2 | ) | (1 | ) | $ | (3 | ) | (2 | ) | |||||||||
Total noninterest income for the third quarter of 2018 decreased by $3 million, or 2%, to $136 million from $139 million for the third quarter of 2017, primarily due to a $6 million decrease in net securities gains. In the third quarter of 2017 the Company’s Small Business Investment Company (“SBIC”) investments increased in market value compared with a slight decline in market value in the current quarter. These decreases in noninterest income were partially offset by a $3 million, or 2%, increase in customer-related fees, primarily related to increased loan syndication fees, bankcard fees, corporate investment services and wealth management income.
Noninterest Expense | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | $ | % | $ | % | ||||||||||||||||||
Salaries and employee benefits | $ | 264 | $ | 266 | $ | 251 | $ | (2 | ) | (1 | )% | $ | 13 | 5 | % | ||||||||||
Occupancy, net | 33 | 32 | 35 | 1 | 3 | (2 | ) | (6 | ) | ||||||||||||||||
Furniture, equipment and software, net | 30 | 32 | 32 | (2 | ) | (6 | ) | (2 | ) | (6 | ) | ||||||||||||||
Other real estate expense, net | 1 | — | (1 | ) | 1 | — | 2 | 200 | |||||||||||||||||
Credit-related expense | 5 | 7 | 7 | (2 | ) | (29 | ) | (2 | ) | (29 | ) | ||||||||||||||
Provision for unfunded lending commitments | — | 7 | (4 | ) | (7 | ) | (100 | ) | 4 | 100 | |||||||||||||||
Professional and legal services | 12 | 14 | 15 | (2 | ) | (14 | ) | (3 | ) | (20 | ) | ||||||||||||||
Advertising | 8 | 7 | 6 | 1 | 14 | 2 | 33 | ||||||||||||||||||
FDIC premiums | 18 | 14 | 15 | 4 | 29 | 3 | 20 | ||||||||||||||||||
Other | 49 | 49 | 57 | — | — | (8 | ) | (14 | ) | ||||||||||||||||
Total noninterest expense | $ | 420 | $ | 428 | $ | 413 | $ | (8 | ) | (2 | ) | $ | 7 | 2 | |||||||||||
Adjusted noninterest expense 1 | $ | 416 | $ | 420 | $ | 414 | $ | (4 | ) | (1 | )% | $ | 2 | — | % | ||||||||||
1 | For information on non-GAAP financial measures, see pages 16-19. |
Noninterest expense for the third quarter of 2018 was $420 million, compared with $413 million for the third quarter of 2017. Salaries and employee benefits increased $13 million primarily due to an $8 million increase in base salaries due to increased headcount and annual merit increases and a $2 million increase in incentive compensation. The provision for unfunded lending commitments increased by $4 million, primarily due to increased unfunded lending commitments and was partially offset by credit quality improvement in the oil and gas related portfolio. Other
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ZIONS BANCORPORATION, N.A.
Press Release – Page 4
October 22, 2018
noninterest expense decreased by $8 million, primarily due to reduced operational losses, lower regulatory fees, and other miscellaneous expenses in the third quarter of 2018. The decrease in noninterest expense was partially offset by an increase in FDIC premiums due to a $4 million expense in the third quarter of 2018 that represents the cumulative effect of an adjustment related to the estimated uninsured deposits since the consolidation of bank charters.
Our efficiency ratio improved to 58.8% in the third quarter of 2018, compared with 60.9% in the second quarter of 2018, and 62.3% in the third quarter of 2017. Adjusted noninterest expense for the third quarter of 2018 increased $2 million to $416 million, compared with $414 million for the same prior year period. For information on non-GAAP financial measures, including variances between noninterest expense and adjusted noninterest expense, see pages 16-19.
Income Taxes | |||||||||||||
Our income tax rate was 23.6% for the third quarter of 2018, compared with 22.1% for the second quarter of 2018 and 34.2% for the third quarter of 2017. The income tax rates for 2018 were positively impacted by the decrease in the corporate federal income tax rate to 21% from 35%, effective January 1, 2018. The increase in the income tax rate from the second quarter of 2018 to the third quarter of 2018 was primarily due to decreased tax benefits from share-based compensation activity.
BALANCE SHEET ANALYSIS
Asset Quality | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | bps | bps | ||||||||||||||||||||
Ratio of nonperforming assets to loans and leases and other real estate owned | 0.64 | % | 0.77 | % | 1.06 | % | (13 | ) | (42 | ) | |||||||||||||||
Annualized ratio of net loan and lease charge-offs (recoveries) to average loans | (0.01 | )% | (0.11 | )% | 0.07 | % | 10 | (8 | ) | ||||||||||||||||
Ratio of allowance for loan losses to loans and leases, at period end | 1.05 | % | 1.08 | % | 1.23 | % | (3 | ) | (18 | ) | |||||||||||||||
$ | % | $ | % | ||||||||||||||||||||||
Classified loans | $ | 784 | $ | 947 | $ | 1,248 | $ | (163 | ) | (17 | )% | $ | (464 | ) | (37 | )% | |||||||||
Nonperforming assets | 292 | 347 | 468 | (55 | ) | (16 | )% | (176 | ) | (38 | )% | ||||||||||||||
Net loan and lease charge-offs (recoveries) | (1 | ) | (12 | ) | 8 | 11 | 92 | % | (9 | ) | (113 | )% | |||||||||||||
Provision for credit losses | (11 | ) | 12 | 1 | (23 | ) | (192 | )% | (12 | ) | NM | ||||||||||||||
Asset quality continued to improve for the entire loan portfolio when compared with the prior quarter and the same prior year period, primarily due to continued improvements in the oil and gas-related portfolio.
The Company recorded an $(11) million provision for credit losses during the third quarter of 2018, compared with $12 million during the second quarter of 2018, and $1 million for the third quarter of 2017. The $(11) million provision primarily reflects net recoveries and ongoing improvements of credit quality metrics in the entire loan portfolio, partially offset by increases in qualitative adjustments mostly related to economic uncertainty and potential
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ZIONS BANCORPORATION, N.A.
Press Release – Page 5
October 22, 2018
trade disruptions. The allowance for loan losses was $480 million at September 30, 2018, compared with $541 million at September 30, 2017, or 1.05% and 1.23% of loans and leases, respectively.
Loans and Leases | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | $ | % | $ | % | ||||||||||||||||||
Loans held for sale | $ | 61 | $ | 84 | $ | 71 | $ | (23 | ) | (27 | )% | $ | (10 | ) | (14 | ) | |||||||||
Loans and leases: | |||||||||||||||||||||||||
Commercial | 23,539 | 23,245 | 22,539 | 294 | 1 | 1,000 | 4 | ||||||||||||||||||
Commercial real estate | 11,047 | 10,973 | 11,114 | 74 | 1 | (67 | ) | (1 | ) | ||||||||||||||||
Consumer | 11,224 | 11,012 | 10,503 | 212 | 2 | 721 | 7 | ||||||||||||||||||
Loans and leases, net of unearned income and fees | 45,810 | 45,230 | 44,156 | 580 | 1 | 1,654 | 4 | ||||||||||||||||||
Less allowance for loan losses | 480 | 490 | 541 | (10 | ) | (2 | ) | (61 | ) | (11 | ) | ||||||||||||||
Loans held for investment, net of allowance | $ | 45,330 | $ | 44,740 | $ | 43,615 | $ | 590 | 1 | $ | 1,715 | 4 | |||||||||||||
Loans and leases, net of unearned income and fees, increased $1.7 billion, or 4%, to $45.8 billion at September 30, 2018 from $44.2 billion at September 30, 2017. The largest increases were in commercial loans and consumer loans. Within commercial loans, municipal and owner occupied loans increased $490 million and $466 million, respectively. The increase in consumer loans was primarily in 1-4 family residential loans, which increased $517 million. Term commercial real estate loans continued to decline slightly from the prior year, reflecting heightened levels of payoffs and underwriting restraint in a highly competitive lending market. Unfunded lending commitments, which includes letters of credit, increased to $21.9 billion at September 30, 2018, compared with $19.8 billion at September 30, 2017.
Deposits | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | $ | % | $ | % | ||||||||||||||||||
Noninterest-bearing demand | $ | 24,067 | $ | 24,007 | $ | 24,011 | $ | 60 | — | % | $ | 56 | — | % | |||||||||||
Interest-bearing: | |||||||||||||||||||||||||
Savings and money market | 25,462 | 25,562 | 25,179 | (100 | ) | — | 283 | 1 | |||||||||||||||||
Time | 4,256 | 4,011 | 2,909 | 245 | 6 | 1,347 | 46 | ||||||||||||||||||
Total deposits | $ | 53,785 | $ | 53,580 | $ | 52,099 | $ | 205 | — | $ | 1,686 | 3 | |||||||||||||
Total deposits increased by $1.7 billion, or 3%, from $52.1 billion at September 30, 2017. Average total deposits increased to $53.6 billion for the third quarter of 2018 compared with $51.9 billion for the third quarter of 2017. Average noninterest bearing deposits increased slightly to $24.0 billion for the third quarter of 2018, compared with $23.8 billion for the third quarter of 2017, and were approximately 45% of average total deposits for both periods.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 6
October 22, 2018
Shareholders’ Equity | |||||||||||||||||||||||||
3Q18 - 2Q18 | 3Q18 - 3Q17 | ||||||||||||||||||||||||
(In millions) | 3Q18 | 2Q18 | 3Q17 | $ | % | $ | % | ||||||||||||||||||
Shareholders’ equity: | |||||||||||||||||||||||||
Preferred stock | $ | 566 | $ | 566 | $ | 566 | $ | — | — | % | $ | — | — | % | |||||||||||
Common stock and additional paid-in-capital | 4,052 | 4,231 | 4,552 | (179 | ) | (4 | ) | (500 | ) | (11 | ) | ||||||||||||||
Retained earnings | 3,296 | 3,139 | 2,700 | 157 | 5 | 596 | 22 | ||||||||||||||||||
Accumulated other comprehensive income (loss) | (361 | ) | (315 | ) | (57 | ) | (46 | ) | (15 | ) | (304 | ) | (533 | ) | |||||||||||
Total shareholders' equity | $ | 7,553 | $ | 7,621 | $ | 7,761 | $ | (68 | ) | (1 | ) | $ | (208 | ) | (3 | ) | |||||||||
During the third quarter of 2018, the Company increased its common stock dividend to $0.30 per share from $0.24 per share in the second quarter of 2018. Common stock repurchases during the current quarter totaled $185 million, or 3.5 million shares, which is equivalent to 1.8% of common stock outstanding as of June 30, 2018. During the last four quarters the Company has repurchased $535 million, or 10.1 million shares, which is equivalent to 5.1% of common stock outstanding as of September 30, 2017. Weighted average diluted shares decreased by 3.3 million compared with the third quarter of 2017, primarily due to the aforementioned share repurchases, partially offset by the dilutive impact of an increased common share price on warrants that have been outstanding since 2008 (“TARP” warrants - NASDAQ: ZIONZ) and 2010 (NASDAQ: ZIONW). As of September 30, 2018, the Company had 1.9 million and 29.3 million warrants outstanding of ZIONZ (TARP) and ZIONW warrants, respectively. The ZIONZ warrants expire on November 14, 2018 and the ZIONW warrants expire on May 22, 2020.
Tangible book value per common share increased to $31.08 at September 30, 2018, compared with $30.93 at September 30, 2017. Basel III common equity tier 1 (“CET1”) capital was $6.3 billion at September 30, 2018, compared with $6.2 billion at September 30, 2017; the increase was primarily due to a $596 million increase in retained earnings, partially offset by share repurchases. The estimated Basel III CET1 capital ratio was 12.1% at September 30, 2018 compared with 12.2% at September 30, 2017. For information on non-GAAP financial measures, see pages 16-19.
On September 30, 2018, the Company completed the merger of Zions Bancorporation, its former bank holding company, with, and into, its subsidiary bank, formerly known as ZB, N.A. in order to further reduce organizational complexity. The restructuring eliminated the bank holding company structure and associated regulatory framework, and resulted in ZB, N.A. being renamed Zions Bancorporation, National Association and becoming the top-level entity within our corporate structure.
As a result of the Financial Stability Oversight Council’s action on September 12, 2018, the Company is no longer considered a systemically important financial institution under the Dodd-Frank Act. The Company expects to have greater flexibility in the active management of shareholders’ equity. The Company expects to continue to utilize stress testing as the primary mechanism to inform its decisions on the appropriate level of capital, based upon actual and hypothetically-stressed economic conditions. Therefore, the timing and amount of capital actions will be subject to various factors, including the company's financial performance and prevailing and anticipated economic conditions.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 7
October 22, 2018
Supplemental Presentation and Conference Call
Zions has posted a supplemental presentation to its website, which will be used to discuss these third quarter results at 5:30 p.m. ET this afternoon (October 22, 2018). Media representatives, analysts, investors, and the public are invited to join this discussion by calling (253) 237-1247 (domestic and international) and entering the passcode 5288295 or via on-demand webcast. A link to the webcast will be available on the Zions Bancorporation website at zionsbancorporation.com. The webcast of the conference call will also be archived and available for 30 days.
About Zions Bancorporation, N.A.
Zions Bancorporation, N.A. is one of the nation's premier financial services companies with total assets exceeding $65 billion. Zions operates under local management teams and distinct brands in 11 western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming. The company is a national leader in Small Business Administration lending and public finance advisory services. In addition, Zions is included in the S&P 500 and NASDAQ Financial 100 indices. Investor information and links to local banking brands can be accessed at zionsbancorporation.com.
Forward-Looking Information
This earnings release 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 earnings release that are based on other than historical information, or that express the Company’s expectations regarding future events or determinations, are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect, among other things, our current expectations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, industry results or regulatory outcomes to differ materially from those expressed or implied by such forward-looking statements.
Without limiting the foregoing, the words “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “would,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about future financial and operating results, or the anticipated benefits of the recently completed merger described in the release. Actual results and outcomes may differ materially from those presented, either expressed or implied, in the release. Important risk factors that may cause such material differences include, but are not limited to, the actual amount and duration of declines in the price of oil and gas; Zions’ ability to meet operating leverage goals; the rate of change of interest sensitive assets and liabilities relative to changes in benchmark interest rates; the ability of the Company to achieve anticipated benefits from the recently completed merger; and legislative, regulatory and economic developments that may diminish or eliminate the anticipated benefits of the merger. These risks, as well as other factors, are discussed in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-
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ZIONS BANCORPORATION, N.A.
Press Release – Page 8
October 22, 2018
Q, filed with the Securities and Exchange Commission (SEC) and available at the SEC’s Internet site (https://www.sec.gov/). In addition, you may obtain documents filed with the SEC by the Company free of charge by contacting: Investor Relations, Zions Bancorporation, N.A., One South Main Street, 11th Floor, Salt Lake City, Utah 84133, (801) 844-7637.
Except as required by law, Zions Bancorporation, N.A. specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 9
October 22, 2018
FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended | |||||||||||||||||||
(In millions, except share, per share, and ratio data) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
BALANCE SHEET 1 | |||||||||||||||||||
Loans held for investment, net of allowance | $ | 45,330 | $ | 44,740 | $ | 44,610 | $ | 44,262 | $ | 43,615 | |||||||||
Total assets | 66,731 | 66,457 | 66,481 | 66,288 | 65,564 | ||||||||||||||
Deposits | 53,785 | 53,580 | 52,963 | 52,621 | 52,099 | ||||||||||||||
Total shareholders’ equity | 7,553 | 7,621 | 7,644 | 7,679 | 7,761 | ||||||||||||||
STATEMENT OF INCOME | |||||||||||||||||||
Net earnings applicable to common shareholders | $ | 215 | $ | 187 | $ | 231 | $ | 114 | $ | 152 | |||||||||
Net interest income | 565 | 548 | 542 | 526 | 522 | ||||||||||||||
Taxable-equivalent net interest income 2 | 570 | 553 | 547 | 535 | 531 | ||||||||||||||
Total noninterest income | 136 | 138 | 138 | 139 | 139 | ||||||||||||||
Total noninterest expense | 420 | 428 | 412 | 417 | 413 | ||||||||||||||
Adjusted pre-provision net revenue 2 | 291 | 270 | 265 | 259 | 251 | ||||||||||||||
Provision for loan losses | (11 | ) | 5 | (40 | ) | (11 | ) | 5 | |||||||||||
Provision for unfunded lending commitments | — | 7 | (7 | ) | (1 | ) | (4 | ) | |||||||||||
Provision for credit losses | (11 | ) | 12 | (47 | ) | (12 | ) | 1 | |||||||||||
SHARE AND PER COMMON SHARE AMOUNTS | |||||||||||||||||||
Net earnings per diluted common share | $ | 1.04 | $ | 0.89 | $ | 1.09 | $ | 0.54 | $ | 0.72 | |||||||||
Dividends | 0.30 | 0.24 | 0.20 | 0.16 | 0.12 | ||||||||||||||
Book value per common share 1 | 36.36 | 36.11 | 35.92 | 36.01 | 36.03 | ||||||||||||||
Tangible book value per common share 1, 2 | 31.08 | 30.91 | 30.76 | 30.87 | 30.93 | ||||||||||||||
Weighted average common and common-equivalent shares outstanding (in thousands) | 205,765 | 209,247 | 210,243 | 209,681 | 209,106 | ||||||||||||||
Common shares outstanding (in thousands) 1 | 192,169 | 195,392 | 197,050 | 197,532 | 199,712 | ||||||||||||||
SELECTED RATIOS AND OTHER DATA | |||||||||||||||||||
Return on average assets | 1.33 | % | 1.19 | % | 1.45 | % | 0.74 | % | 0.97 | % | |||||||||
Return on average common equity | 12.1 | % | 10.6 | % | 13.3 | % | 6.3 | % | 8.3 | % | |||||||||
Tangible return on average tangible common equity 2 | 14.2 | % | 12.4 | % | 15.5 | % | 7.4 | % | 9.8 | % | |||||||||
Net interest margin | 3.63 | % | 3.56 | % | 3.56 | % | 3.45 | % | 3.45 | % | |||||||||
Cost of total deposits, annualized | 0.28 | % | 0.22 | % | 0.15 | % | 0.13 | % | 0.12 | % | |||||||||
Efficiency ratio 2 | 58.8 | % | 60.9 | % | 61.3 | % | 61.6 | % | 62.3 | % | |||||||||
Effective tax rate | 23.6 | % | 22.1 | % | 22.7 | % | 52.5 | % | 34.2 | % | |||||||||
Ratio of nonperforming assets to loans and leases and other real estate owned | 0.64 | % | 0.77 | % | 0.87 | % | 0.93 | % | 1.06 | % | |||||||||
Annualized ratio of net loan and lease charge-offs (recoveries) to average loans | (0.01 | )% | (0.11 | )% | 0.05 | % | 0.11 | % | 0.07 | % | |||||||||
Ratio of total allowance for credit losses to loans and leases outstanding 1 | 1.17 | % | 1.21 | % | 1.16 | % | 1.29 | % | 1.36 | % | |||||||||
Full-time equivalent employees | 10,143 | 10,217 | 10,122 | 10,083 | 10,041 | ||||||||||||||
CAPITAL RATIOS AND DATA 1 | |||||||||||||||||||
Common equity tier 1 capital | $ | 6,331 | $ | 6,360 | $ | 6,333 | $ | 6,239 | $ | 6,238 | |||||||||
Risk-weighted assets | $ | 52,493 | $ | 52,012 | $ | 51,779 | $ | 51,456 | $ | 51,043 | |||||||||
Tangible common equity ratio | 9.1 | % | 9.2 | % | 9.3 | % | 9.3 | % | 9.6 | % | |||||||||
Common equity tier 1 capital ratio | 12.1 | % | 12.2 | % | 12.2 | % | 12.1 | % | 12.2 | % | |||||||||
Tier 1 leverage ratio | 10.5 | % | 10.5 | % | 10.5 | % | 10.5 | % | 10.6 | % | |||||||||
Tier 1 risk-based capital ratio | 13.1 | % | 13.3 | % | 13.3 | % | 13.2 | % | 13.3 | % | |||||||||
Total risk-based capital ratio | 14.6 | % | 14.8 | % | 14.8 | % | 14.8 | % | 15.0 | % | |||||||||
1 | At period end. |
2 | For information on non-GAAP financial measures, see pages 16-19. |
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ZIONS BANCORPORATION, N.A.
Press Release – Page 10
October 22, 2018
CONSOLIDATED BALANCE SHEETS
(In millions, shares in thousands) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 517 | $ | 468 | $ | 470 | $ | 548 | $ | 541 | |||||||||
Money market investments: | |||||||||||||||||||
Interest-bearing deposits | 590 | 698 | 717 | 782 | 765 | ||||||||||||||
Federal funds sold and security resell agreements | 560 | 558 | 696 | 514 | 467 | ||||||||||||||
Investment securities: | |||||||||||||||||||
Held-to-maturity, at amortized cost (approximate fair value $734, $866, $752, $762 and $743) | 751 | 878 | 768 | 770 | 746 | ||||||||||||||
Available-for-sale, at fair value | 14,625 | 14,627 | 14,896 | 15,161 | 15,242 | ||||||||||||||
Trading account, at fair value | 176 | 207 | 143 | 148 | 56 | ||||||||||||||
Total investment securities | 15,552 | 15,712 | 15,807 | 16,079 | 16,044 | ||||||||||||||
Loans held for sale | 61 | 84 | 90 | 44 | 71 | ||||||||||||||
Loans and leases, net of unearned income and fees | 45,810 | 45,230 | 45,083 | 44,780 | 44,156 | ||||||||||||||
Less allowance for loan losses | 480 | 490 | 473 | 518 | 541 | ||||||||||||||
Loans held for investment, net of allowance | 45,330 | 44,740 | 44,610 | 44,262 | 43,615 | ||||||||||||||
Other noninterest-bearing investments | 1,027 | 1,054 | 1,073 | 1,029 | 1,008 | ||||||||||||||
Premises, equipment and software, net | 1,111 | 1,099 | 1,098 | 1,094 | 1,083 | ||||||||||||||
Goodwill and intangibles | 1,015 | 1,015 | 1,016 | 1,016 | 1,017 | ||||||||||||||
Other real estate owned | 4 | 5 | 5 | 4 | 3 | ||||||||||||||
Other assets | 964 | 1,024 | 899 | 916 | 950 | ||||||||||||||
Total assets | $ | 66,731 | $ | 66,457 | $ | 66,481 | $ | 66,288 | $ | 65,564 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing demand | $ | 24,067 | $ | 24,007 | $ | 23,909 | $ | 23,886 | $ | 24,011 | |||||||||
Interest-bearing: | |||||||||||||||||||
Savings and money market | 25,462 | 25,562 | 25,473 | 25,620 | 25,179 | ||||||||||||||
Time | 4,256 | 4,011 | 3,581 | 3,115 | 2,909 | ||||||||||||||
Total deposits | 53,785 | 53,580 | 52,963 | 52,621 | 52,099 | ||||||||||||||
Federal funds purchased and other short-term borrowings | 3,780 | 4,158 | 4,867 | 4,976 | 4,624 | ||||||||||||||
Long-term debt | 879 | 383 | 383 | 383 | 383 | ||||||||||||||
Reserve for unfunded lending commitments | 58 | 58 | 51 | 58 | 59 | ||||||||||||||
Other liabilities | 676 | 657 | 573 | 571 | 638 | ||||||||||||||
Total liabilities | 59,178 | 58,836 | 58,837 | 58,609 | 57,803 | ||||||||||||||
Shareholders’ equity: | |||||||||||||||||||
Preferred stock, without par value; authorized 4,400 shares | 566 | 566 | 566 | 566 | 566 | ||||||||||||||
Common stock and additional paid-in-capital; authorized 350,000 shares; issued and outstanding 192,169, 195,392, 197,050, 197,532, and 199,712 shares | 4,052 | 4,231 | 4,346 | 4,445 | 4,552 | ||||||||||||||
Retained earnings | 3,296 | 3,139 | 2,999 | 2,807 | 2,700 | ||||||||||||||
Accumulated other comprehensive income (loss) | (361 | ) | (315 | ) | (267 | ) | (139 | ) | (57 | ) | |||||||||
Total shareholders’ equity | 7,553 | 7,621 | 7,644 | 7,679 | 7,761 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 66,731 | $ | 66,457 | $ | 66,481 | $ | 66,288 | $ | 65,564 | |||||||||
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ZIONS BANCORPORATION, N.A.
Press Release – Page 11
October 22, 2018
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended | |||||||||||||||||||
(In millions, except share and per share amounts) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Interest income: | |||||||||||||||||||
Interest and fees on loans | $ | 537 | $ | 514 | $ | 497 | $ | 477 | $ | 468 | |||||||||
Interest on money market investments | 8 | 7 | 6 | 5 | 5 | ||||||||||||||
Interest on securities | 86 | 85 | 86 | 80 | 84 | ||||||||||||||
Total interest income | 631 | 606 | 589 | 562 | 557 | ||||||||||||||
Interest expense: | |||||||||||||||||||
Interest on deposits | 38 | 29 | 20 | 17 | 15 | ||||||||||||||
Interest on short- and long-term borrowings | 28 | 29 | 27 | 19 | 20 | ||||||||||||||
Total interest expense | 66 | 58 | 47 | 36 | 35 | ||||||||||||||
Net interest income | 565 | 548 | 542 | 526 | 522 | ||||||||||||||
Provision for loan losses | (11 | ) | 5 | (40 | ) | (11 | ) | 5 | |||||||||||
Net interest income after provision for loan losses | 576 | 543 | 582 | 537 | 517 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Service charges and fees on deposit accounts | 42 | 42 | 42 | 44 | 42 | ||||||||||||||
Other service charges, commissions and fees | 59 | 55 | 55 | 56 | 55 | ||||||||||||||
Wealth management and trust income | 12 | 14 | 12 | 12 | 11 | ||||||||||||||
Loan sales and servicing income | 5 | 7 | 6 | 6 | 6 | ||||||||||||||
Capital markets and foreign exchange | 7 | 7 | 8 | 9 | 8 | ||||||||||||||
Customer-related fees | 125 | 125 | 123 | 127 | 122 | ||||||||||||||
Dividends and other investment income | 11 | 11 | 11 | 10 | 9 | ||||||||||||||
Securities gains (losses), net | (1 | ) | 1 | — | — | 5 | |||||||||||||
Other | 1 | 1 | 4 | 2 | 3 | ||||||||||||||
Total noninterest income | 136 | 138 | 138 | 139 | 139 | ||||||||||||||
Noninterest expense: | |||||||||||||||||||
Salaries and employee benefits | 264 | 266 | 269 | 253 | 251 | ||||||||||||||
Occupancy, net | 33 | 32 | 31 | 29 | 35 | ||||||||||||||
Furniture, equipment and software, net | 30 | 32 | 33 | 34 | 32 | ||||||||||||||
Other real estate expense, net | 1 | — | — | — | (1 | ) | |||||||||||||
Credit-related expense | 5 | 7 | 7 | 6 | 7 | ||||||||||||||
Provision for unfunded lending commitments | — | 7 | (7 | ) | (1 | ) | (4 | ) | |||||||||||
Professional and legal services | 12 | 14 | 12 | 13 | 15 | ||||||||||||||
Advertising | 8 | 7 | 5 | 5 | 6 | ||||||||||||||
FDIC premiums | 18 | 14 | 13 | 13 | 15 | ||||||||||||||
Other | 49 | 49 | 49 | 65 | 57 | ||||||||||||||
Total noninterest expense | 420 | 428 | 412 | 417 | 413 | ||||||||||||||
Income before income taxes | 292 | 253 | 308 | 259 | 243 | ||||||||||||||
Income taxes | 69 | 56 | 70 | 136 | 83 | ||||||||||||||
Net income | 223 | 197 | 238 | 123 | 160 | ||||||||||||||
Preferred stock dividends | (8 | ) | (10 | ) | (7 | ) | (9 | ) | (8 | ) | |||||||||
Preferred stock redemption | — | — | — | — | — | ||||||||||||||
Net earnings applicable to common shareholders | $ | 215 | $ | 187 | $ | 231 | $ | 114 | $ | 152 | |||||||||
Weighted average common shares outstanding during the period: | |||||||||||||||||||
Basic shares (in thousands) | 192,973 | 195,583 | 196,722 | 198,648 | 200,332 | ||||||||||||||
Diluted shares (in thousands) | 205,765 | 209,247 | 210,243 | 209,681 | 209,106 | ||||||||||||||
Net earnings per common share: | |||||||||||||||||||
Basic | $ | 1.11 | $ | 0.95 | $ | 1.16 | $ | 0.57 | $ | 0.75 | |||||||||
Diluted | 1.04 | 0.89 | 1.09 | 0.54 | 0.72 | ||||||||||||||
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ZIONS BANCORPORATION, N.A.
Press Release – Page 12
October 22, 2018
Loan Balances Held for Investment by Portfolio Type
(Unaudited)
(In millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and industrial | $ | 14,096 | $ | 14,134 | $ | 14,125 | $ | 14,003 | $ | 14,041 | |||||||||
Leasing | 332 | 358 | 371 | 364 | 343 | ||||||||||||||
Owner occupied | 7,548 | 7,365 | 7,345 | 7,288 | 7,082 | ||||||||||||||
Municipal | 1,563 | 1,388 | 1,299 | 1,271 | 1,073 | ||||||||||||||
Total commercial | 23,539 | 23,245 | 23,140 | 22,926 | 22,539 | ||||||||||||||
Commercial real estate: | |||||||||||||||||||
Construction and land development | 2,295 | 2,202 | 2,099 | 2,021 | 2,170 | ||||||||||||||
Term | 8,752 | 8,771 | 9,023 | 9,103 | 8,944 | ||||||||||||||
Total commercial real estate | 11,047 | 10,973 | 11,122 | 11,124 | 11,114 | ||||||||||||||
Consumer: | |||||||||||||||||||
Home equity credit line | 2,884 | 2,825 | 2,792 | 2,777 | 2,745 | ||||||||||||||
1-4 family residential | 7,039 | 6,861 | 6,768 | 6,662 | 6,522 | ||||||||||||||
Construction and other consumer real estate | 644 | 661 | 599 | 597 | 558 | ||||||||||||||
Bankcard and other revolving plans | 483 | 490 | 488 | 509 | 490 | ||||||||||||||
Other | 174 | 175 | 174 | 185 | 188 | ||||||||||||||
Total consumer | 11,224 | 11,012 | 10,821 | 10,730 | 10,503 | ||||||||||||||
Loans and leases, net of unearned income and fees | $ | 45,810 | $ | 45,230 | $ | 45,083 | $ | 44,780 | $ | 44,156 | |||||||||
Nonperforming Assets
(Unaudited)
(In millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Nonaccrual loans1 | $ | 288 | $ | 342 | $ | 387 | $ | 414 | $ | 465 | |||||||||
Other real estate owned | 4 | 5 | 5 | 4 | 3 | ||||||||||||||
Total nonperforming assets | $ | 292 | $ | 347 | $ | 392 | $ | 418 | $ | 468 | |||||||||
Ratio of nonperforming assets to loans1 and leases and other real estate owned | 0.64 | % | 0.77 | % | 0.87 | % | 0.93 | % | 1.06 | % | |||||||||
Accruing loans past due 90 days or more | $ | 12 | $ | 5 | $ | 16 | $ | 22 | $ | 30 | |||||||||
Ratio of accruing loans past due 90 days or more to loans1 and leases | 0.03 | % | 0.01 | % | 0.04 | % | 0.05 | % | 0.07 | % | |||||||||
Nonaccrual loans and accruing loans past due 90 days or more | $ | 300 | $ | 347 | $ | 403 | $ | 436 | $ | 495 | |||||||||
Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans1 and leases | 0.65 | % | 0.77 | % | 0.89 | % | 0.97 | % | 1.12 | % | |||||||||
Accruing loans past due 30-89 days | $ | 87 | $ | 119 | $ | 98 | $ | 120 | $ | 99 | |||||||||
Restructured loans included in nonaccrual loans | 90 | 77 | 86 | 87 | 115 | ||||||||||||||
Restructured loans on accrual | 114 | 104 | 143 | 139 | 133 | ||||||||||||||
Classified loans | 784 | 947 | 1,023 | 1,133 | 1,248 | ||||||||||||||
1 Includes loans held for sale.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 13
October 22, 2018
Allowance for Credit Losses
(Unaudited)
Three Months Ended | |||||||||||||||||||
(In millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Allowance for Loan Losses | |||||||||||||||||||
Balance at beginning of period | $ | 490 | $ | 473 | $ | 518 | $ | 541 | $ | 544 | |||||||||
Provision for loan losses | (11 | ) | 5 | (40 | ) | (11 | ) | 5 | |||||||||||
Loan and lease charge-offs | 17 | 13 | 26 | 27 | 25 | ||||||||||||||
Less: Recoveries | 18 | 25 | 21 | 15 | 17 | ||||||||||||||
Net loan and lease charge-offs (recoveries) | (1 | ) | (12 | ) | 5 | 12 | 8 | ||||||||||||
Balance at end of period | $ | 480 | $ | 490 | $ | 473 | $ | 518 | $ | 541 | |||||||||
Ratio of allowance for loan losses to loans1 and leases, at period end | 1.05 | % | 1.08 | % | 1.05 | % | 1.16 | % | 1.23 | % | |||||||||
Ratio of allowance for loan losses to nonaccrual loans1 at period end | 167 | % | 143 | % | 131 | % | 129 | % | 120 | % | |||||||||
Annualized ratio of net loan and lease charge-offs (recoveries) to average loans | (0.01 | )% | (0.11 | )% | 0.05 | % | 0.11 | % | 0.07 | % | |||||||||
Reserve for Unfunded Lending Commitments | |||||||||||||||||||
Balance at beginning of period | $ | 58 | $ | 51 | $ | 58 | $ | 59 | $ | 63 | |||||||||
Provision for unfunded lending commitments | — | 7 | (7 | ) | (1 | ) | (4 | ) | |||||||||||
Balance at end of period | $ | 58 | $ | 58 | $ | 51 | $ | 58 | $ | 59 | |||||||||
Allowance for Credit Losses | |||||||||||||||||||
Allowance for loan losses | $ | 480 | $ | 490 | $ | 473 | $ | 518 | $ | 541 | |||||||||
Reserve for unfunded lending commitments | 58 | 58 | 51 | 58 | 59 | ||||||||||||||
Total allowance for credit losses | $ | 538 | $ | 548 | $ | 524 | $ | 576 | $ | 600 | |||||||||
Ratio of total allowance for credit losses to loans1 and leases outstanding, at period end | 1.17 | % | 1.21 | % | 1.16 | % | 1.29 | % | 1.36 | % | |||||||||
1 Does not include loans held for sale.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 14
October 22, 2018
Nonaccrual Loans by Portfolio Type
(Unaudited)
(In millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Loans held for sale | $ | — | $ | — | $ | 26 | $ | 12 | $ | 13 | |||||||||
Commercial: | |||||||||||||||||||
Commercial and industrial | $ | 112 | $ | 142 | $ | 140 | $ | 195 | $ | 257 | |||||||||
Leasing | 2 | 7 | 8 | 8 | 8 | ||||||||||||||
Owner occupied | 66 | 63 | 80 | 90 | 85 | ||||||||||||||
Municipal | 1 | 1 | 1 | 1 | 1 | ||||||||||||||
Total commercial | 181 | 213 | 229 | 294 | 351 | ||||||||||||||
Commercial real estate: | |||||||||||||||||||
Construction and land development | — | 5 | 5 | 4 | 6 | ||||||||||||||
Term | 46 | 53 | 57 | 36 | 41 | ||||||||||||||
Total commercial real estate | 46 | 58 | 62 | 40 | 47 | ||||||||||||||
Consumer: | |||||||||||||||||||
Home equity credit line | 13 | 14 | 14 | 13 | 11 | ||||||||||||||
1-4 family residential | 47 | 56 | 54 | 55 | 40 | ||||||||||||||
Construction and other consumer real estate | — | 1 | 1 | — | 1 | ||||||||||||||
Bankcard and other revolving plans | 1 | — | 1 | — | 1 | ||||||||||||||
Other | — | — | — | — | 1 | ||||||||||||||
Total consumer | 61 | 71 | 70 | 68 | 54 | ||||||||||||||
Total nonaccrual loans | $ | 288 | $ | 342 | $ | 387 | $ | 414 | $ | 465 | |||||||||
Net Charge-Offs by Portfolio Type
(Unaudited)
(In millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and industrial | $ | (3 | ) | $ | (10 | ) | $ | — | $ | 10 | $ | 4 | |||||||
Leasing | — | — | 1 | — | — | ||||||||||||||
Owner occupied | (1 | ) | — | 1 | — | — | |||||||||||||
Municipal | — | — | — | — | — | ||||||||||||||
Total commercial | (4 | ) | (10 | ) | 2 | 10 | 4 | ||||||||||||
Commercial real estate: | |||||||||||||||||||
Construction and land development | (2 | ) | (1 | ) | (2 | ) | — | — | |||||||||||
Term | 4 | (2 | ) | — | 1 | 2 | |||||||||||||
Total commercial real estate | 2 | (3 | ) | (2 | ) | 1 | 2 | ||||||||||||
Consumer: | |||||||||||||||||||
Home equity credit line | (1 | ) | (1 | ) | 1 | — | — | ||||||||||||
1-4 family residential | — | — | 2 | (1 | ) | 1 | |||||||||||||
Construction and other consumer real estate | — | — | — | (1 | ) | — | |||||||||||||
Bankcard and other revolving plans | 2 | 2 | 2 | 2 | — | ||||||||||||||
Other | — | — | — | 1 | 1 | ||||||||||||||
Total consumer loans | 1 | 1 | 5 | 1 | 2 | ||||||||||||||
Total net charge-offs (recoveries) | $ | (1 | ) | $ | (12 | ) | $ | 5 | $ | 12 | $ | 8 | |||||||
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ZIONS BANCORPORATION, N.A.
Press Release – Page 15
October 22, 2018
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Unaudited)
Three Months Ended | ||||||||||||||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | ||||||||||||||||||
(In millions) | Average balance | Average yield/rate 1 | Average balance | Average yield/rate 1 | Average balance | Average yield/rate 1 | ||||||||||||||
ASSETS | ||||||||||||||||||||
Money market investments | $ | 1,327 | 2.25 | % | $ | 1,317 | 2.02 | % | $ | 1,246 | 1.44 | % | ||||||||
Securities: | ||||||||||||||||||||
Held-to-maturity | 848 | 3.52 | % | 780 | 3.60 | % | 750 | 3.96 | % | |||||||||||
Available-for-sale | 14,592 | 2.20 | % | 14,745 | 2.14 | % | 15,197 | 2.12 | % | |||||||||||
Trading account | 65 | 3.43 | % | 179 | 4.06 | % | 43 | 3.73 | % | |||||||||||
Total securities | 15,505 | 2.28 | % | 15,704 | 2.23 | % | 15,990 | 2.21 | % | |||||||||||
Loans held for sale | 53 | 4.82 | % | 72 | 4.18 | % | 52 | 4.29 | % | |||||||||||
Loans held for investment 2: | ||||||||||||||||||||
Commercial | 23,263 | 4.88 | % | 23,275 | 4.68 | % | 22,261 | 4.36 | % | |||||||||||
Commercial real estate | 11,009 | 5.01 | % | 11,075 | 4.94 | % | 11,192 | 4.46 | % | |||||||||||
Consumer | 11,096 | 4.07 | % | 10,892 | 3.98 | % | 10,379 | 3.86 | % | |||||||||||
Total loans held for investment | 45,368 | 4.71 | % | 45,242 | 4.57 | % | 43,832 | 4.27 | % | |||||||||||
Total interest-earning assets | 62,253 | 4.06 | % | 62,335 | 3.93 | % | 61,120 | 3.67 | % | |||||||||||
Cash and due from banks | 516 | 546 | 767 | |||||||||||||||||
Allowance for loan losses | (489 | ) | (480 | ) | (540 | ) | ||||||||||||||
Goodwill and intangibles | 1,015 | 1,016 | 1,018 | |||||||||||||||||
Other assets | 3,079 | 3,088 | 2,974 | |||||||||||||||||
Total assets | $ | 66,374 | $ | 66,505 | $ | 65,339 | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Savings and money market | $ | 25,483 | 0.36 | % | $ | 25,479 | 0.26 | % | $ | 25,190 | 0.16 | % | ||||||||
Time | 4,118 | 1.49 | % | 3,807 | 1.27 | % | 2,933 | 0.70 | % | |||||||||||
Total interest-bearing deposits | 29,601 | 0.52 | % | 29,286 | 0.39 | % | 28,123 | 0.21 | % | |||||||||||
Borrowed funds: | ||||||||||||||||||||
Federal funds purchased and other short-term borrowings | 3,917 | 2.09 | % | 4,927 | 1.92 | % | 4,609 | 1.17 | % | |||||||||||
Long-term debt | 572 | 4.91 | % | 383 | 5.77 | % | 383 | 5.71 | % | |||||||||||
Total borrowed funds | 4,489 | 2.45 | % | 5,310 | 2.19 | % | 4,992 | 1.52 | % | |||||||||||
Total interest-bearing liabilities | 34,090 | 0.77 | % | 34,596 | 0.67 | % | 33,115 | 0.41 | % | |||||||||||
Noninterest-bearing deposits | 23,974 | 23,610 | 23,798 | |||||||||||||||||
Total deposits and interest-bearing liabilities | 58,064 | 0.45 | % | 58,206 | 0.40 | % | 56,913 | 0.23 | % | |||||||||||
Other liabilities | 720 | 661 | 630 | |||||||||||||||||
Total liabilities | 58,784 | 58,867 | 57,543 | |||||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred equity | 566 | 566 | 566 | |||||||||||||||||
Common equity | 7,024 | 7,072 | 7,230 | |||||||||||||||||
Total shareholders’ equity | 7,590 | 7,638 | 7,796 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 66,374 | $ | 66,505 | $ | 65,339 | ||||||||||||||
Spread on average interest-bearing funds | 3.29 | % | 3.26 | % | 3.26 | % | ||||||||||||||
Net yield on interest-earning assets | 3.63 | % | 3.56 | % | 3.45 | % | ||||||||||||||
1 Rates are calculated using amounts in thousands and taxable-equivalent rates used where applicable. The taxable-equivalent rates used are the rates that were applicable at the time of each respective reporting period.
2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.
3 The total cost of deposits, annualized, for September 30, 2018, June 30, 2018, and September 30, 2017 was 0.28% , 0.22% , and 0.12% , respectively.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 16
October 22, 2018
GAAP to Non-GAAP Reconciliations
(Unaudited)
This press release presents non-GAAP financial measures, in addition to GAAP financial measures, to provide investors with additional information. The adjustments to reconcile from the applicable GAAP financial measures to the non-GAAP financial measures are presented in the following schedules. The Company considers these adjustments to be relevant to ongoing operating results and provide a meaningful base for period-to-period and company-to-company comparisons. These non-GAAP financial measures are used by management to assess the performance and financial position of the Company and for presentations of Company performance to investors. The Company further believes that presenting these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.
Non-GAAP financial measures have inherent limitations, and are not required to be uniformly applied by individual entities. Although non-GAAP financial measures are frequently used by stakeholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.
The following are non-GAAP financial measures presented in this press release and a discussion of the reasons for which management uses these non-GAAP measures:
Tangible Book Value per Common Share – this schedule also includes “tangible common equity.” Tangible book value per common share is a non-GAAP financial measure that management believes provides additional useful information about the level of tangible equity in relation to outstanding shares of common stock. Management believes the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income.
Return on Average Tangible Common Equity – this schedule also includes “net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax” and “average tangible common equity.” Return on average tangible common equity is a non-GAAP financial measure that management believes provides useful information about the Company’s use of shareholders’ equity. Management believes the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income.
Efficiency Ratio – this schedule also includes “adjusted noninterest expense,” “taxable-equivalent net interest income,” “adjusted taxable-equivalent revenue,” and “adjusted pre-provision net revenue (PPNR).” The methodology of determining the efficiency ratio may differ among companies. Management makes adjustments to exclude certain items as identified in the subsequent schedules which it believes allows for more consistent comparability among periods. Management believes the efficiency ratio provides useful information regarding the cost of generating revenue. Adjusted noninterest expense provides a measure as to how well the Company is managing its expenses, and adjusted PPNR enables management and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. Taxable-equivalent net interest income allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources.
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ZIONS BANCORPORATION, N.A.
Press Release – Page 17
October 22, 2018
GAAP to Non-GAAP Reconciliations
(Unaudited)
(In millions, except shares and per share amounts) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
Tangible Book Value per Common Share | ||||||||||||||||||||
Total shareholders’ equity (GAAP) | $ | 7,553 | $ | 7,621 | $ | 7,644 | $ | 7,679 | $ | 7,761 | ||||||||||
Preferred stock | (566 | ) | (566 | ) | (566 | ) | (566 | ) | (566 | ) | ||||||||||
Goodwill and intangibles | (1,015 | ) | (1,015 | ) | (1,016 | ) | (1,016 | ) | (1,017 | ) | ||||||||||
Tangible common equity (non-GAAP) | (a) | $ | 5,972 | $ | 6,040 | $ | 6,062 | $ | 6,097 | $ | 6,178 | |||||||||
Common shares outstanding (in thousands) | (b) | 192,169 | 195,392 | 197,050 | 197,532 | 199,712 | ||||||||||||||
Tangible book value per common share (non-GAAP) | (a/b) | $ | 31.08 | $ | 30.91 | $ | 30.76 | $ | 30.87 | $ | 30.93 | |||||||||
Three Months Ended | ||||||||||||||||||||
(Dollar amounts in millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
Return on Average Tangible Common Equity | ||||||||||||||||||||
Net earnings applicable to common shareholders (GAAP) | $ | 215 | $ | 187 | $ | 231 | $ | 114 | $ | 152 | ||||||||||
Adjustments, net of tax: | ||||||||||||||||||||
Amortization of core deposit and other intangibles | — | — | — | 1 | 1 | |||||||||||||||
Net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP) | (a) | $ | 215 | $ | 187 | $ | 231 | $ | 115 | $ | 153 | |||||||||
Average common equity (GAAP) | $ | 7,024 | $ | 7,072 | $ | 7,061 | $ | 7,220 | $ | 7,230 | ||||||||||
Average goodwill and intangibles | (1,015 | ) | (1,016 | ) | (1,016 | ) | (1,017 | ) | (1,018 | ) | ||||||||||
Average tangible common equity (non-GAAP) | (b) | $ | 6,009 | $ | 6,056 | $ | 6,045 | $ | 6,203 | $ | 6,212 | |||||||||
Number of days in quarter | (c) | 92 | 91 | 90 | 92 | 92 | ||||||||||||||
Number of days in year | (d) | 365 | 365 | 365 | 365 | 365 | ||||||||||||||
Return on average tangible common equity (non-GAAP) | (a/b/c)*d | 14.2 | % | 12.4 | % | 15.5 | % | 7.4 | % | 9.8 | % | |||||||||
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ZIONS BANCORPORATION, N.A.
Press Release – Page 18
October 22, 2018
GAAP to Non-GAAP Reconciliations
(Unaudited)
Three Months Ended | ||||||||||||||||||||
(In millions) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
Efficiency Ratio | ||||||||||||||||||||
Noninterest expense (GAAP) | (a) | $ | 420 | $ | 428 | $ | 412 | $ | 417 | $ | 413 | |||||||||
Adjustments: | ||||||||||||||||||||
Severance costs | 2 | 1 | — | 1 | 1 | |||||||||||||||
Other real estate expense | 1 | — | — | — | (1 | ) | ||||||||||||||
Provision for unfunded lending commitments | — | 7 | (7 | ) | (1 | ) | (4 | ) | ||||||||||||
Amortization of core deposit and other intangibles | — | — | — | 1 | 2 | |||||||||||||||
Restructuring costs | 1 | — | — | 1 | 1 | |||||||||||||||
Total adjustments | (b) | 4 | 8 | (7 | ) | 2 | (1 | ) | ||||||||||||
Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 416 | $ | 420 | $ | 419 | $ | 415 | $ | 414 | |||||||||
Net interest income (GAAP) | (d) | $ | 565 | $ | 548 | $ | 542 | $ | 526 | $ | 522 | |||||||||
Fully taxable-equivalent adjustments | (e) | 5 | 5 | 5 | 9 | 9 | ||||||||||||||
Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 570 | 553 | 547 | 535 | 531 | ||||||||||||||
Noninterest income (GAAP) | (g) | 136 | 138 | 138 | 139 | 139 | ||||||||||||||
Combined income (non-GAAP) | (f+g)=(h) | 706 | 691 | 685 | 674 | 670 | ||||||||||||||
Adjustments: | ||||||||||||||||||||
Fair value and nonhedge derivative income | — | — | 1 | — | — | |||||||||||||||
Securities gains (losses), net | (1 | ) | 1 | — | — | 5 | ||||||||||||||
Total adjustments | (i) | (1 | ) | 1 | 1 | — | 5 | |||||||||||||
Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $ | 707 | $ | 690 | $ | 684 | $ | 674 | $ | 665 | |||||||||
Pre-provision net revenue (PPNR) | (h)-(a) | $ | 286 | $ | 263 | $ | 273 | $ | 257 | $ | 257 | |||||||||
Adjusted PPNR (non-GAAP) | (j-c) | 291 | 270 | 265 | 259 | 251 | ||||||||||||||
Efficiency ratio (non-GAAP) | (c/j) | 58.8 | % | 60.9 | % | 61.3 | % | 61.6 | % | 62.3 | % | |||||||||
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ZIONS BANCORPORATION, N.A.
Press Release – Page 19
October 22, 2018
Nine Months Ended | ||||||||
(In millions) | September 30, 2018 | September 30, 2017 | ||||||
Efficiency Ratio | ||||||||
Noninterest expense (GAAP) | (a) | $ | 1,259 | $ | 1,232 | |||
Adjustments: | ||||||||
Severance costs | 1 | 6 | ||||||
Other real estate expense | 1 | (1 | ) | |||||
Provision for unfunded lending commitments | — | (6 | ) | |||||
Debt extinguishment cost | — | — | ||||||
Amortization of core deposit and other intangibles | 1 | 5 | ||||||
Restructuring costs | 1 | 3 | ||||||
Total adjustments | (b) | 4 | 7 | |||||
Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 1,255 | $ | 1,225 | |||
Net interest income (GAAP) | (d) | $ | 1,654 | $ | 1,539 | |||
Fully taxable-equivalent adjustments | (e) | 16 | 26 | |||||
Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 1,670 | 1,565 | |||||
Noninterest income (GAAP) | (g) | 412 | 404 | |||||
Combined income (non-GAAP) | (f+g)=(h) | 2,082 | 1,969 | |||||
Adjustments: | ||||||||
Fair value and nonhedge derivative income (loss) | 2 | (1 | ) | |||||
Securities gains, net | (1 | ) | 13 | |||||
Total adjustments | (i) | 1 | 12 | |||||
Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $ | 2,081 | $ | 1,957 | |||
Pre-provision net revenue (PPNR) | (h)-(a) | $ | 823 | $ | 737 | |||
Adjusted PPNR (non-GAAP) | (j-c) | 826 | 732 | |||||
Efficiency ratio (non-GAAP) | (c/j) | 60.3 | % | 62.6 | % | |||
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