22
Core NIM Trends
• Zions expects net interest
sensitive income to increase
between an estimated 5.4% and
8.6% if interest rates were to
rise 200 bps*
• Core NIM (excludes discount
accretion) has been generally
stable
– Recent core NIM compression
attributable to a greater drag from
cash balances
– 1Q09 experienced a temporary dip
partially due to an intentional build
-up of excess liquidity during the
significant turmoil during late
2008/early 2009
– Large senior note issuance in
September 2009 had about 8 bps
adverse impact on the core NIM in
4Q09
(1) Cash drag refers to the adverse impact on the net interest margin due to the total balance of cash held in interest-bearing accounts. Assumptions
used to compute the cash drag include investing the cash at a rate of 4.5%, similar to the rate achieved on recent loan production. Liquidity targets and
loan demand are factors that may prevent fully deploying such cash; the cash drag is shown for illustrative purposes only.
*Assumes a parallel shift in the yield curve; key assumptions include a slow and a fast deposit repricing response (i.e. if deposit rates are slow to
increase Zions expects a 7.2% increase in interest sensitive income, and if deposits were to reprice quickly Zions expects a 4.2% increase in interest
sensitive income); sensitivity analysis based on 2Q10 data
Due to the extinguishment/ reissuance of subordinated debt in June 2009, Zions experiences non-cash discount accretion, which increases interest
expense, reducing GAAP NIM
| 1Q0
9 | 2Q0
9 | 3Q0
9 | 4Q0
9 | 1Q1
0 | 2Q1
0 | 3Q1
0 |
Cash Drag (1) | | 24
bps | 17
bps | 16
bps | 24
bps | 20
bps | 35
bps | 46
bps |
