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Zions Bancorporation, N.A.
One South Main
Salt Lake City, UT 84133
July 19, 2021 | |
| www.zionsbancorporation.com |
Second Quarter 2021 Financial Results: FOR IMMEDIATE RELEASE
Investor and Media Contact: James Abbott (801) 844-7637
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| Zions Bancorporation, N.A. reports: 2Q21 Net Earnings of $345 million, diluted EPS of $2.08 |
compared with 2Q20 Net Earnings of $57 million, diluted EPS of $0.34,
and 1Q21 Net Earnings of $314 million, diluted EPS of $1.90 |
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SECOND QUARTER RESULTS
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| $2.08 | | $345 million | | 2.79% | | 11.3% |
Net earnings per diluted common share | | Net Earnings | | Net interest margin (“NIM”) | | Common Equity
Tier 1 |
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| SECOND QUARTER HIGHLIGHTS¹ |
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| Net Interest Income and NIM | • | Net interest income was $555 million, compared with $563 million |
| • | NIM was 2.79%, compared with 3.23%, and was significantly impacted by lower interest rates and higher average cash balances of $10.3 billion, compared with $1.6 billion |
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| Operating Performance | • | Pre-provision net revenue ("PPNR") was $339 million, up 32%, and adjusted PPNR² was $290 million, down 3% |
| • | Noninterest expense was $428 million, down less than 1%, which included a $9 million success fee accrual associated with SBIC investments, and adjusted noninterest expense2 was $419 million, up 4% |
| • | The efficiency ratio² was 59.1%, compared with 57.3% |
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| Loans and Credit Quality | • | Loans and leases were $51.4 billion, down $3.7 billion, or 7%; excluding PPP, loans and leases were $46.9 billion, down $1.5 billion, or 3% |
| • | Nonperforming assets3 were $307 million, or 0.7%, of loans (ex-PPP), compared with $344 million, or 0.7%, of loans (ex-PPP) |
| • | The provision for credit losses was a negative $123 million, compared with a positive $168 million |
| • | The allowance for credit losses was 1.2% of loans (ex-PPP), compared with 1.9% of loans (ex-PPP) |
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| Capital | • | The CET1 capital ratio was 11.3%, compared with 10.2% |
| • | Preferred stock redemption of $126 million at par value |
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| Notable items | • | The net unrealized gain for the SBIC investment in Recursion Pharmaceuticals, Inc. was $54 million, or $0.25 per share4 ($63 million unrealized gain less $9 million success fee accrual) |
| • | About 12,000 PPP loans were forgiven by the SBA, totaling $2.4 billion, which contributed $36 million of interest income through accelerated recognition of net unamortized deferred fees |
| • | Deposits were $76.1 billion, up $10.4 billion, or 16%, resulting in a loan-to-deposit ratio of 68%. Deposit growth has been impacted by government stimulus programs |
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| CEO COMMENTARY |
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Harris H. Simmons, Chairman and CEO of Zions Bancorporation, commented, “We are pleased with the financial results of the second quarter of 2021. Perhaps most notably, credit performance continues to be very strong as evidenced by modest net recoveries on loans. We also now believe that future losses will be significantly less than previously expected, with the result that we released more than $120 million of our allowance for credit losses.”
Mr. Simmons continued, “Excluding PPP loans, we were also pleased with the relative stability of period-end loan balances, as well as a continued strong performance in the growth of deposits, with noninterest bearing deposits equaling nearly one half of total deposits at quarter end. Finally, our capital position is particularly strong relative to our risk profile, with our CET1 ratio reaching 11.3%, up from 10.2% at the beginning of the pandemic.” |
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OPERATING PERFORMANCE3 |
1 Comparisons noted in the bullet points are calculated for the current quarter versus the same prior-year period, unless otherwise specified.
2 For information on non-GAAP financial measures, see pages 16-18.
3 Does not include banking premises held for sale.
4 EPS calculations assume a 24.5% statutory tax rate.
ZIONS BANCORPORATION, N.A.
Press Release – Page 2
July 19, 2021
Comparisons noted in the sections below are calculated for the current quarter versus the same prior-year period, unless otherwise specified. Growth rates of 100% or more are considered not meaningful (“NM”) as they are generally reflective of a low initial starting point.
RESULTS OF OPERATIONS
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| Net Interest Income and Margin |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | $ | | % | | $ | | % |
| Interest and fees on loans | $ | 492 | | $ | 488 | | $ | 514 | | $ | 4 | | | 1 | % | | $ | (22) | | | (4) | % |
| Interest on money market investments | 4 | | 3 | | 1 | | 1 | | | 33 | | | 3 | | | NM |
| Interest on securities | 74 | | 71 | | 80 | | 3 | | | 4 | | | (6) | | | (8) | |
| Total interest income | 570 | | 562 | | 595 | | 8 | | | 1 | | | (25) | | | (4) | |
| Interest on deposits | 7 | | 9 | | 23 | | (2) | | | (22) | | | (16) | | | (70) | |
| Interest on short- and long-term borrowings | 8 | | 8 | | 9 | | — | | | — | | | (1) | | | (11) | |
| Total interest expense | 15 | | 17 | | 32 | | (2) | | | (12) | | | (17) | | | (53) | |
| Net interest income | $ | 555 | | $ | 545 | | $ | 563 | | $ | 10 | | | 2 | | | $ | (8) | | | (1) | |
| | | | | | | bps | | | | bps | | |
Yield on interest-earning assets1 | 2.86 | % | | 2.95 | % | | 3.41 | % | | (9) | | | | | (55) | | | |
Rate paid on total deposits and interest-bearing liabilities1 | 0.08 | % | | 0.09 | % | | 0.19 | % | | (1) | | | | | (11) | | | |
Cost of total deposits1 | 0.04 | % | | 0.05 | % | | 0.15 | % | | (1) | | | | | (11) | | | |
Net interest margin1 | 2.79 | % | | 2.86 | % | | 3.23 | % | | (7) | | | | | (44) | | | |
1 Rates are calculated using amounts in thousands and taxable-equivalent rates are used where applicable.
Net interest income decreased $8 million, or 1%, to $555 million in the second quarter of 2021, from $563 million in the second quarter of 2020. Total interest income decreased $25 million, or 4%, due to a $22 million decrease in interest and fees on loans and a $6 million decrease in interest on securities. The decrease in total interest income was primarily attributable to the lower interest rate environment. Interest expense decreased $17 million, or 53%, due to a $16 million decline in interest paid on deposits and a $1 million decline in interest paid on short- and long-term borrowings. The decreases were attributable to lower rates on both categories and reduced balances of borrowed funds, given strong deposit growth of $10 billion, or 16%.
The net interest margin compressed to 2.79%, compared with 3.23% in the same prior year period. The yield on average interest-earning assets was 2.86% in the second quarter of 2021, a decrease of 55 basis points, compared with the same prior year quarter. Average money market investments, including short-term deposits held at the Federal Reserve, increased to 12.7% of average interest-earning assets, compared with 2.3% in the same prior year period. This increase had a significant dilutive effect on the net interest margin.
Average interest-earning assets included $5.9 billion of Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans with a yield of 4.56%. During the second quarter of 2021, about 12,000 PPP loans, totaling $2.4 billion, received forgiveness by the SBA and contributed $36 million of interest income through accelerated recognition of net unamortized deferred fees on these loans. Total interest income from PPP loans was $68 million during the second quarter of 2021. As of June 30, 2021, unamortized net origination fees related to the PPP loans totaled approximately $137 million.
The yield on loans decreased 6 basis points from the second quarter of 2020, and, excluding PPP loans, the yield on loans decreased 23 basis points from the second quarter of 2020. The decrease was primarily due to lower benchmark interest rates, but also reflected continued pricing pressure, which was partially attributable to the surplus liquidity in the marketplace. The yield on non-PPP loans originated during the second quarter of 2021 was moderately less than
ZIONS BANCORPORATION, N.A.
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July 19, 2021
the yield on loans maturing or otherwise paying down. The yield on securities decreased 49 basis points from the second quarter of 2020, primarily from lower yields on investments purchased in previous quarters.
The annualized cost of total deposits for the second quarter of 2021 was 0.04%, compared with 0.15% for the second quarter of 2020. The rate paid on total deposits and interest-bearing liabilities was 0.08%, a decrease from 0.19% during the second quarter of 2020, which was primarily due to lower deposit rates and strong noninterest bearing deposit growth. Average noninterest bearing deposits as a percentage of total deposits were 49% for the second quarter of 2021, compared with 46% for the same prior year period.
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| Noninterest Income |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | $ | | % | | $ | | % |
| Commercial account fees | $ | 34 | | | $ | 32 | | | $ | 30 | | | $ | 2 | | | 6 | % | | $ | 4 | | | 13 | % |
| Card fees | 24 | | | 21 | | | 19 | | | 3 | | | 14 | | | 5 | | | 26 | |
| Retail and business banking fees | 18 | | | 17 | | | 15 | | | 1 | | | 6 | | | 3 | | | 20 | |
| Loan-related fees and income | 21 | | | 25 | | | 27 | | | (4) | | | (16) | | | (6) | | | (22) | |
| Capital markets and foreign exchange fees | 17 | | | 15 | | | 18 | | | 2 | | | 13 | | | (1) | | | (6) | |
| Wealth management fees | 12 | | | 12 | | | 9 | | | — | | | — | | | 3 | | | 33 | |
| Other customer-related fees | 13 | | | 11 | | | 12 | | | 2 | | | 18 | | | 1 | | | 8 | |
| Customer-related fees | 139 | | | 133 | | | 130 | | | 6 | | | 5 | | | 9 | | | 7 | |
| Fair value and nonhedge derivative income (loss) | (5) | | | 18 | | | (12) | | | (23) | | | NM | | 7 | | | 58 |
| Dividends and other income | 8 | | | 7 | | | 3 | | | 1 | | | 14 | | | 5 | | | NM |
| Securities gains (losses), net | 63 | | | 11 | | | (4) | | | 52 | | | NM | | 67 | | | NM |
| Total noninterest income | $ | 205 | | | $ | 169 | | | $ | 117 | | | $ | 36 | | | 21 | | | $ | 88 | | | 75 | |
Total noninterest income for the second quarter of 2021 increased $88 million, or 75%, to $205 million, from $117 million for the prior year quarter. Total customer-related fees increased to $139 million from $130 million for the same periods. Card fees increased $5 million, commercial account fees increased $4 million, and wealth management and retail and business banking fees both increased $3 million, all primarily due to improved customer transaction volume and new client activity. Loan-related fees and income decreased $6 million, primarily due to a decline in our residential mortgage originations held for sale.
Securities gains increased $67 million from the second quarter of 2020, largely as a result of a $63 million unrealized gain related to the successful completion of an initial public offering (“IPO”) of one of our Small Business Investment Company (“SBIC”) investments, Recursion Pharmaceuticals, Inc. This investment will be marked-to-market until we fully divest of our shares, which are subject to a minimum 180-day lock-up period from the initial offering. An associated $9 million accrued success fee will also be adjusted based on the mark-to-market value of the investment.
We also recognized a $5 million loss related to a credit valuation adjustment (“CVA”) on client-related interest rate swaps, compared with a $12 million CVA loss in the second quarter of 2020. The CVA loss for the current quarter was primarily due to a decline in interest rates, which increased the value of, and our credit exposure to, the client-related interest rate swaps.
ZIONS BANCORPORATION, N.A.
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July 19, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest Expense |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | $ | | % | | $ | | % |
| Salaries and employee benefits | $ | 272 | | | $ | 288 | | | $ | 267 | | | $ | (16) | | | (6) | % | | $ | 5 | | | 2 | % |
| Occupancy, net | 33 | | | 33 | | | 32 | | | — | | | — | | | 1 | | | 3 | |
| Furniture, equipment and software, net | 32 | | | 32 | | | 32 | | | — | | | — | | | — | | | — | |
| Other real estate expense, net | — | | | — | | | — | | | — | | | — | | | — | | | — |
| Credit-related expense | 6 | | | 6 | | | 6 | | | — | | | — | | | — | | | — | |
| Professional and legal services | 17 | | | 20 | | | 10 | | | (3) | | | (15) | | | 7 | | | 70 | |
| Advertising | 4 | | | 5 | | | 3 | | | (1) | | | (20) | | | 1 | | | 33 | |
| FDIC premiums | 6 | | | 7 | | | 7 | | | (1) | | | (14) | | | (1) | | | (14) | |
| Other | 58 | | | 44 | | | 73 | | | 14 | | | 32 | | | (15) | | | (21) | |
| Total noninterest expense | $ | 428 | | | $ | 435 | | | $ | 430 | | | $ | (7) | | | (2) | | | $ | (2) | | | — | |
Adjusted noninterest expense 1 | $ | 419 | | | $ | 440 | | | $ | 402 | | | $ | (21) | | | (5) | | | $ | 17 | | | 4 | |
1 For information on non-GAAP financial measures, see pages 16-18.
Noninterest expense declined $2 million, when compared with the second quarter of 2020. This decline was largely attributable to a $15 million decrease in other noninterest expense, primarily due to the $28 million pension plan termination-related expense recognized during the second quarter of 2020, and partially offset by a $9 million success fee accrual related to the IPO of the SBIC investment previously discussed. Salaries and benefits expense increased $5 million, or 2%, primarily due to higher profit sharing as a result of improved profitability. Professional and legal services expense increased $7 million, or 70%, primarily due to various technology-related and other outsourced services.
Adjusted noninterest expense increased $17 million, or 4%, to $419 million, compared with $402 million for the same prior year quarter, primarily due to the increases in salaries and benefits and professional and legal services expenses previously discussed. The efficiency ratio was 59.1%, compared with 57.3% for the second quarter of 2020. For information on non-GAAP financial measures, including differences between noninterest expense and adjusted noninterest expense, see pages 16-18.
BALANCE SHEET ANALYSIS
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| Asset Quality |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | bps | | | | bps | | |
Ratio of nonperforming assets1 to loans and leases and other real estate owned | 0.60 | % | | 0.61 | % | | 0.62 | % | | (1) | | | | | (2) | | | |
| Annualized ratio of net loan and lease charge-offs to average loans | (0.02) | % | | 0.06 | % | | 0.23 | % | | (8) | | | | | (25) | | | |
Ratio of total allowance for credit losses to loans2 and leases outstanding, at period end | 1.12 | % | | 1.30 | % | | 1.66 | % | | (18) | | | | | (54) | | | |
Ratio of total allowance for credit losses to loans2 and leases outstanding (excluding PPP loans), at period end | 1.22 | % | | 1.48 | % | | 1.88 | % | | (26) | | | | | (66) | | | |
| | | | | | | $ | | % | | $ | | % |
| Classified loans | $ | 1,557 | | $ | 1,660 | | $ | 1,477 | | $ | (103) | | | (6)% | | $ | 80 | | | 5% |
Nonperforming assets1 | 308 | | 327 | | 344 | | (19) | | | (6) | | (36) | | | (10) |
| Net loan and lease charge-offs (recoveries) | (2) | | 8 | | 31 | | (10) | | | NM | | (33) | | | NM |
| Provision for credit losses | (123) | | (132) | | 168 | | 9 | | | 7 | | (291) | | | NM |
1 Does not include banking premises held for sale.
2 Does not include loans held for sale.
ZIONS BANCORPORATION, N.A.
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July 19, 2021
Net loan and lease recoveries were $2 million in the second quarter of 2021, compared with net charge-offs of $31 million in the prior year quarter. The ratio of nonaccrual loans and accruing loans past due 90 days or more to loans and leases (ex-PPP) was 0.66%, compared with 0.73% for the second quarter of 2020, and the ratio of classified loans to total loans and leases (ex-PPP) was 3.3%, compared with 3.0%, for the prior year quarter.
We recorded a negative $123 million provision for credit losses, compared with a negative $132 million provision during the first quarter of 2021, and a positive $168 million provision for the second quarter of 2020. The allowance for credit losses (“ACL”) was $574 million at June 30, 2021, compared with $695 million at March 31, 2021, and $914 million at June 30, 2020. The decrease in the ACL was due largely to an improvement in the economic outlook, compared with the more stressed economic outlook at the outset of the COVID-19 pandemic. The ratio of total ACL to total loans and leases (ex-PPP) was 1.22% at June 30, 2021, compared with 1.48% at March 31, 2021, and 1.88% at June 30, 2020.
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| Loans and Leases |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | $ | | % | | $ | | % |
| Loans held for sale | $ | 66 | | | $ | 77 | | | $ | 105 | | | $ | (11) | | | (14)% | | $ | (39) | | | (37)% |
| Loans and leases: | | | | | | | | | | | | | |
Commercial – excluding PPP loans | 24,700 | | | 24,499 | | | 25,018 | | | 201 | | | 1 | | (318) | | | (1) |
Commercial – PPP loans | 4,461 | | | 6,465 | | | 6,690 | | | (2,004) | | | (31) | | (2,229) | | | (33) |
| Commercial real estate | 12,108 | | | 12,060 | | | 11,954 | | | 48 | | | — | | 154 | | | 1 |
| Consumer | 10,129 | | | 10,448 | | | 11,467 | | | (319) | | | (3) | | (1,338) | | | (12) |
| Loans and leases, net of unearned income and fees | 51,398 | | | 53,472 | | | 55,129 | | | (2,074) | | | (4) | | (3,731) | | | (7) |
| Less allowance for loan losses | 535 | | | 646 | | | 860 | | | (111) | | | (17) | | (325) | | | (38) |
| Loans and leases held for investment, net of allowance | $ | 50,863 | | | $ | 52,826 | | | $ | 54,269 | | | $ | (1,963) | | | (4) | | $ | (3,406) | | | (6) |
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| Unfunded lending commitments and letters of credit | $ | 25,689 | | | $ | 25,487 | | | $ | 24,229 | | | 202 | | | 1 | | 1,460 | | | 6 |
Loans and leases, net of unearned income and fees, decreased $3.7 billion, or 7%, to $51.4 billion at June 30, 2021, from $55.1 billion at June 30, 2020, primarily due to the forgiveness of PPP loans. Excluding PPP loans, total loans and leases decreased $1.5 billion, or 3%, to $46.9 billion at June 30, 2021, including a $0.3 billion, or 1%, decrease in commercial loans, as economic uncertainty and an abundance of liquidity in the marketplace continued to adversely impact loan demand. Within commercial loans, a $1.1 billion decrease in commercial and industrial loans was partially offset by a $680 million increase in municipal loans. Commercial real estate construction and land development loans increased $209 million, and within consumer loans, 1-4 family residential mortgage loans decreased $1.1 billion, primarily due to continued refinancing activity. Unfunded lending commitments and letters of credit increased $1.5 billion, or 6%, to $25.7 billion at June 30, 2021, from $24.2 billion at June 30, 2020, primarily due to a decrease in commitment utilization.
ZIONS BANCORPORATION, N.A.
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July 19, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits and Borrowed Funds |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | $ | | % | | $ | | % |
| Noninterest-bearing demand | $ | 38,128 | | | $ | 35,882 | | | $ | 30,714 | | | $ | 2,246 | | | 6 | % | | $ | 7,414 | | | 24 | % |
| Interest-bearing: | | | | | | | | | | | | | |
| Savings and money market | 36,037 | | | 35,762 | | | 31,307 | | | 275 | | | 1 | | | 4,730 | | | 15 | |
| Time | 1,940 | | | 2,209 | | | 3,663 | | | (269) | | | (12) | | | (1,723) | | | (47) | |
| | | | | | | | | | | | | |
| Total deposits | $ | 76,105 | | | $ | 73,853 | | | $ | 65,684 | | | $ | 2,252 | | | 3 | | | $ | 10,421 | | | 16 | |
| | | | | | | | | | | | | |
| Borrowed funds: | | | | | | | | | | | | | |
| Federal funds purchased and other short-term borrowings | $ | 741 | | | $ | 1,032 | | | $ | 860 | | | $ | (291) | | | (28) | | | $ | (119) | | | (14) | |
| Long-term debt | 1,308 | | | 1,299 | | | 1,353 | | | 9 | | | 1 | | | (45) | | | (3) | |
| Total borrowed funds | $ | 2,049 | | | $ | 2,331 | | | $ | 2,213 | | | $ | (282) | | | (12) | | | $ | (164) | | | (7) | |
Total deposits increased $10.4 billion, or 16%, to $76.1 billion as of June 30, 2021, primarily due to a $7.4 billion increase in noninterest-bearing deposits. Average total deposits increased to $74.6 billion, compared with $63.0 billion for the second quarter of 2020. Average noninterest-bearing deposits increased 26% to $36.5 billion, from $29.1 billion for the second quarter of 2020, and were 49% and 46% of average total deposits, respectively, for the same periods.
Total borrowed funds decreased $0.2 billion, or 7%, to $2.0 billion as of June 30, 2021. Average borrowed funds decreased to $2.1 billion, compared with $4.0 billion for the prior year quarter. The decrease in both end-of-period and average borrowed funds reflects less reliance on federal funds purchased and other short-term borrowings due to the strength of deposit growth, which significantly exceeded earning asset growth over this period.
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| Shareholders’ Equity |
| | | | | | | 2Q21 - 1Q21 | | 2Q21 - 2Q20 |
| (In millions) | 2Q21 | | 1Q21 | | 2Q20 | | $ | | % | | $ | | % |
| Shareholders’ equity: | | | | | | | | | | | | | |
| Preferred stock | $ | 440 | | $ | 566 | | $ | 566 | | $ | (126) | | | (22) | % | | $ | (126) | | | (22) | % |
| Common stock and additional paid-in capital | 2,565 | | 2,653 | | 2,675 | | (88) | | | (3) | | | (110) | | | (4) | |
| Retained earnings | 4,853 | | 4,566 | | 3,979 | | 287 | | | 6 | | | 874 | | | 22 | |
| Accumulated other comprehensive income | 175 | | 148 | | 355 | | 27 | | | 18 | | | (180) | | | (51) | |
| Total shareholders' equity | $ | 8,033 | | $ | 7,933 | | $ | 7,575 | | $ | 100 | | | 1 | | | $ | 458 | | | 6 | |
| | | | | | | | | | | | | |
| Capital distributions: | | | | | | | | | | | | | |
| Common dividends paid | $ | 56 | | $ | 56 | | $ | 56 | | $ | — | | | — | | | $ | — | | | — | |
| Bank common stock repurchased | 100 | | 50 | | — | | 50 | | | NM | | 100 | | | NM |
| Total capital distributed to common shareholders | $ | 156 | | $ | 106 | | $ | 56 | | $ | 50 | | | 47 | | | $ | 100 | | | NM |
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During the second quarter of 2021, the common stock dividend was $0.34 per share, unchanged from the prior year quarter. Weighted average diluted shares outstanding decreased 1.4 million from the second quarter of 2020, primarily due to share repurchases. During the second quarter of 2021, we repurchased 1.7 million common shares outstanding for $100 million at an average price of $57.95 per share. We also redeemed the outstanding shares of our 5.75% Series H Non-Cumulative Perpetual Preferred Stock at par value, resulting in a $126 million decrease of preferred stock.
Accumulated other comprehensive income decreased $180 million to $175 million as of June 30, 2021, primarily due to decreases in the fair value of available-for-sale securities as a result of changes in interest rates.
ZIONS BANCORPORATION, N.A.
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July 19, 2021
Tangible book value per common share increased to $40.54 at June 30, 2021, compared with $36.56 at June 30, 2020. Basel III common equity tier 1 (“CET1”) capital was $6.4 billion at June 30, 2021 and $5.7 billion at June 30, 2020. The estimated Basel III CET1 capital ratio was 11.3% at June 30, 2021, compared with 10.2% at June 30, 2020. For information on non-GAAP financial measures, see pages 16-18.
Supplemental Presentation and Conference Call
Zions has posted a supplemental presentation to its website, which will be used to discuss these second quarter results at 5:30 p.m. ET this afternoon (July 19, 2021). 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 2092815, 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 annual net revenue of $2.8 billion in 2020 and more than $85 billion of total assets. 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 Bank is a consistent recipient of national and state-wide customer survey awards in small and middle-market banking, as well as a leader in public finance advisory services and Small Business Administration lending, recently ranking as the tenth largest provider in the U.S. of the SBA’s Paycheck Protection Program loans (including both rounds). 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” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and assumptions regarding future events or determinations, 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. Forward-looking statements include, among others:
•statements with respect to the beliefs, plans, objectives, goals, targets, commitments, designs, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of Zions Bancorporation, National Association and its subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”); and
•statements preceded by, followed by, or that include the words “may,” “might,” “can,” “continue,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “forecasts,” “expect,” “intend,” “target,” “commit,” “design,” “plan,” “projects,” “will,” and the negative thereof and similar words and expressions.
These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Actual results and outcomes may differ materially from those presented. Important risk factors that may cause such material differences include changes in general economic, regulatory, and industry conditions; changes and uncertainties in fiscal, monetary, regulatory, trade and tax policies and legislative and regulatory changes; changes in interest rates and uncertainty regarding the transition away from the London Interbank Offered Rate ("LIBOR") toward other alternative reference rates; the quality and composition of our loan and securities portfolios; competitive pressures and other factors that may affect aspects of our business, such as pricing and demand for our products and services; our ability to execute our strategic plans, manage our risks, and achieve our business objectives; our ability to develop and maintain information security systems, technologies and controls designed to guard against fraud, cyber and privacy risks; and the effects of the COVID-19 pandemic or other national or international crises or conflicts that may occur in the future and governmental responses to such
ZIONS BANCORPORATION, N.A.
Press Release – Page 8
July 19, 2021
matters. These factors, among others, are discussed in the Bank’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-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 Bank 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.
We caution you against undue reliance on forward-looking statements, which reflect our views only as of the date they are made. Except as may be 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.
ZIONS BANCORPORATION, N.A.
Press Release – Page 9
July 19, 2021
FINANCIAL HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| (In millions, except share, per share, and ratio data) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
BALANCE SHEET 1 | | | | | | | | | |
| Loans held for investment, net of allowance | $ | 50,863 | | | $ | 52,826 | | | $ | 52,699 | | | $ | 53,892 | | | $ | 54,269 | |
| Total assets | 87,208 | | | 85,121 | | | 81,479 | | | 78,357 | | | 76,447 | |
| Deposits | 76,105 | | | 73,853 | | | 69,653 | | | 67,094 | | | 65,684 | |
| Total shareholders’ equity | 8,033 | | | 7,933 | | | 7,886 | | | 7,668 | | | 7,575 | |
| STATEMENT OF INCOME | | | | | | | | | |
| Net earnings applicable to common shareholders | $ | 345 | | | $ | 314 | | | $ | 275 | | | $ | 167 | | | $ | 57 | |
| Net interest income | 555 | | | 545 | | | 550 | | | 555 | | | 563 | |
Taxable-equivalent net interest income 2 | 562 | | | 553 | | | 557 | | | 562 | | | 569 | |
| Total noninterest income | 205 | | | 169 | | | 166 | | | 157 | | | 117 | |
| Total noninterest expense | 428 | | | 435 | | | 424 | | | 442 | | | 430 | |
Adjusted pre-provision net revenue 2 | 290 | | | 253 | | | 280 | | | 267 | | | 300 | |
| Provision for credit losses | (123) | | | (132) | | | (67) | | | 55 | | | 168 | |
| SHARE AND PER COMMON SHARE AMOUNTS | | | | | | | | | |
| Net earnings per diluted common share | $ | 2.08 | | | $ | 1.90 | | | $ | 1.66 | | | $ | 1.01 | | | $ | 0.34 | |
| Dividends | 0.34 | | | 0.34 | | | 0.34 | | | 0.34 | | | 0.34 | |
Book value per common share 1 | 46.80 | | | 44.98 | | | 44.61 | | | 43.30 | | | 42.74 | |
Tangible book value per common share 1, 2 | 40.54 | | | 38.77 | | | 38.42 | | | 37.11 | | | 36.56 | |
| Weighted average share price | 55.86 | | | 51.34 | | | 36.86 | | | 32.09 | | | 31.53 | |
| Weighted average diluted common shares outstanding (in thousands) | 163,054 | | | 163,887 | | | 163,900 | | | 163,779 | | | 164,425 | |
Common shares outstanding (in thousands) 1 | 162,248 | | | 163,800 | | | 164,090 | | | 164,009 | | | 163,978 | |
| SELECTED RATIOS AND OTHER DATA | | | | | | | | | |
| Return on average assets | 1.65 | % | | 1.57 | % | | 1.41 | % | | 0.89 | % | | 0.35 | % |
| Return on average common equity | 18.6 | % | | 17.4 | % | | 15.3 | % | | 9.4 | % | | 3.3 | % |
Return on average tangible common equity 2 | 21.6 | % | | 20.2 | % | | 17.8 | % | | 11.0 | % | | 3.8 | % |
| Net interest margin | 2.79 | % | | 2.86 | % | | 2.95 | % | | 3.06 | % | | 3.23 | % |
| Cost of total deposits, annualized | 0.04 | % | | 0.05 | % | | 0.08 | % | | 0.11 | % | | 0.15 | % |
Efficiency ratio 2 | 59.1 | % | | 63.5 | % | | 60.2 | % | | 62.2 | % | | 57.3 | % |
| Effective tax rate | 22.2 | % | | 21.7 | % | | 20.9 | % | | 18.6 | % | | 19.5 | % |
| Ratio of nonperforming assets to loans and leases and other real estate owned | 0.60 | % | | 0.61 | % | | 0.69 | % | | 0.68 | % | | 0.62 | % |
| Annualized ratio of net loan and lease charge-offs to average loans | (0.02) | % | | 0.06 | % | | 0.11 | % | | 0.38 | % | | 0.23 | % |
Ratio of total allowance for credit losses to loans and leases outstanding 1 | 1.12 | % | | 1.30 | % | | 1.56 | % | | 1.68 | % | | 1.66 | % |
| Full-time equivalent employees | 9,727 | | 9,682 | | 9,678 | | 9,726 | | 9,859 |
CAPITAL RATIOS AND DATA 1 | | | | | | | | | |
Common equity tier 1 capital 3 | $ | 6,383 | | $ | 6,206 | | $ | 6,013 | | $ | 5,804 | | $ | 5,696 |
Risk-weighted assets 3 | 56,342 | | 55,402 | | 55,866 | | 55,654 | | 55,878 |
| Tangible common equity ratio | 7.6 | % | | 7.6 | % | | 7.8 | % | | 7.9 | % | | 7.9 | % |
Common equity tier 1 capital ratio 3 | 11.3 | % | | 11.2 | % | | 10.8 | % | | 10.4 | % | | 10.2 | % |
Tier 1 leverage ratio 3 | 8.0 | % | | 8.3 | % | | 8.3 | % | | 8.3 | % | | 8.4 | % |
Tier 1 risk-based capital ratio 3 | 12.1 | % | | 12.2 | % | | 11.8 | % | | 11.4 | % | | 11.2 | % |
Total risk-based capital ratio 3 | 14.2 | % | | 14.5 | % | | 14.1 | % | | 13.7 | % | | 13.5 | % |
1 At period end.
2 For information on non-GAAP financial measures, see pages 16-18.
3 Current period ratios and amounts represent estimates.
ZIONS BANCORPORATION, N.A.
Press Release – Page 10
July 19, 2021
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions, shares in thousands) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| (Unaudited) | | (Unaudited) | | | | (Unaudited) | | (Unaudited) |
| ASSETS | | | | | | | | | |
| Cash and due from banks | $ | 525 | | | $ | 576 | | | $ | 543 | | | $ | 576 | | | $ | 570 | |
| Money market investments: | | | | | | | | | |
| Interest-bearing deposits | 10,086 | | | 8,427 | | | 1,074 | | | 856 | | | 1,579 | |
| Federal funds sold and security resell agreements | 1,714 | | | 1,315 | | | 5,765 | | | 2,804 | | | 266 | |
| Investment securities: | | | | | | | | | |
Held-to-maturity1, at amortized cost | 620 | | | 583 | | | 636 | | | 592 | | | 688 | |
| Available-for-sale, at fair value | 18,170 | | | 16,644 | | | 15,731 | | | 14,662 | | | 14,201 | |
| Trading account, at fair value | 181 | | | 189 | | | 266 | | | 198 | | | 160 | |
| | | | | | | | | |
| Total securities, net of allowance | 18,971 | | | 17,416 | | | 16,633 | | | 15,452 | | | 15,049 | |
| Loans held for sale | 66 | | | 77 | | | 81 | | | 89 | | | 105 | |
| Loans and leases, net of unearned income and fees | 51,398 | | | 53,472 | | | 53,476 | | | 54,745 | | | 55,129 | |
| Less allowance for loan losses | 535 | | | 646 | | | 777 | | | 853 | | | 860 | |
| Loans held for investment, net of allowance | 50,863 | | | 52,826 | | | 52,699 | | | 53,892 | | | 54,269 | |
| Other noninterest-bearing investments | 895 | | | 815 | | | 817 | | | 830 | | | 813 | |
| Premises, equipment and software, net | 1,239 | | | 1,236 | | | 1,209 | | | 1,187 | | | 1,173 | |
| Goodwill and intangibles | 1,015 | | | 1,016 | | | 1,016 | | | 1,016 | | | 1,014 | |
| Other real estate owned | 23 | | | 3 | | | 4 | | | 6 | | | 5 | |
| Other assets | 1,811 | | | 1,414 | | | 1,638 | | | 1,649 | | | 1,604 | |
| Total assets | $ | 87,208 | | | $ | 85,121 | | | $ | 81,479 | | | $ | 78,357 | | | $ | 76,447 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | |
| Deposits: | | | | | | | | | |
| Noninterest-bearing demand | $ | 38,128 | | | $ | 35,882 | | | $ | 32,494 | | | $ | 31,338 | | | $ | 30,714 | |
| Interest-bearing: | | | | | | | | | |
| Savings and money market | 36,037 | | | 35,762 | | | 34,571 | | | 32,305 | | | 31,307 | |
| Time | 1,940 | | | 2,209 | | | 2,588 | | | 3,451 | | | 3,663 | |
| | | | | | | | | |
| Total deposits | 76,105 | | | 73,853 | | | 69,653 | | | 67,094 | | | 65,684 | |
| Federal funds purchased and other short-term borrowings | 741 | | | 1,032 | | | 1,572 | | | 1,252 | | | 860 | |
| Long-term debt | 1,308 | | | 1,299 | | | 1,336 | | | 1,347 | | | 1,353 | |
| Reserve for unfunded lending commitments | 39 | | | 49 | | | 58 | | | 64 | | | 54 | |
| Other liabilities | 982 | | | 955 | | | 974 | | | 932 | | | 921 | |
| Total liabilities | 79,175 | | | 77,188 | | | 73,593 | | | 70,689 | | | 68,872 | |
| Shareholders’ equity: | | | | | | | | | |
| Preferred stock, without par value; authorized 4,400 shares | 440 | | | 566 | | | 566 | | | 566 | | | 566 | |
Common stock2 ($0.001 par value; authorized 350,000 shares) and additional paid-in capital | 2,565 | | | 2,653 | | | 2,686 | | | 2,680 | | | 2,675 | |
| Retained earnings | 4,853 | | | 4,566 | | | 4,309 | | | 4,090 | | | 3,979 | |
| Accumulated other comprehensive income | 175 | | | 148 | | | 325 | | | 332 | | | 355 | |
| | | | | | | | | |
| | | | | | | | | |
| Total shareholders’ equity | 8,033 | | | 7,933 | | | 7,886 | | | 7,668 | | | 7,575 | |
| Total liabilities and shareholders’ equity | $ | 87,208 | | | $ | 85,121 | | | $ | 81,479 | | | $ | 78,357 | | | $ | 76,447 | |
1 Held-to-maturity (approximate fair value) | $ | 622 | | | $ | 584 | | | $ | 640 | | | $ | 596 | | | $ | 691 | |
2 Common shares (issued and outstanding) | 162,248 | | | 163,800 | | | 164,090 | | | 164,009 | | | 163,978 | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 11
July 19, 2021
CONSOLIDATED STATEMENTS OF INCOME
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | Three Months Ended |
| (In millions, except share and per share amounts) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Interest income: | | | | | | | | | |
| Interest and fees on loans | $ | 492 | | | $ | 488 | | | $ | 499 | | | $ | 505 | | | $ | 514 | |
| Interest on money market investments | 4 | | | 3 | | | 3 | | | 2 | | | 1 | |
| Interest on securities | 74 | | | 71 | | | 69 | | | 74 | | | 80 | |
| Total interest income | 570 | | | 562 | | | 571 | | | 581 | | | 595 | |
| Interest expense: | | | | | | | | | |
| Interest on deposits | 7 | | | 9 | | | 13 | | | 18 | | | 23 | |
| Interest on short- and long-term borrowings | 8 | | | 8 | | | 8 | | | 8 | | | 9 | |
| Total interest expense | 15 | | | 17 | | | 21 | | | 26 | | | 32 | |
| Net interest income | 555 | | | 545 | | | 550 | | | 555 | | | 563 | |
| Provision for credit losses: | | | | | | | | | |
| Provision for loan losses | (113) | | | (123) | | | (61) | | | 45 | | | 161 | |
| Provision for unfunded lending commitments | (10) | | | (9) | | | (6) | | | 10 | | | 7 | |
| | | | | | | | | |
| Total provision for credit losses | (123) | | | (132) | | | (67) | | | 55 | | | 168 | |
| Net interest income after provision for credit losses | 678 | | | 677 | | | 617 | | | 500 | | | 395 | |
| Noninterest income: | | | | | | | | | |
| Commercial account fees | 34 | | | 32 | | | 32 | | | 32 | | | 30 | |
| Card fees | 24 | | | 21 | | | 22 | | | 21 | | | 19 | |
| Retail and business banking fees | 18 | | | 17 | | | 18 | | | 17 | | | 15 | |
| Loan-related fees and income | 21 | | | 25 | | | 25 | | | 32 | | | 27 | |
| Capital markets and foreign exchange fees | 17 | | | 15 | | | 19 | | | 16 | | | 18 | |
| Wealth management fees | 12 | | | 12 | | | 10 | | | 10 | | | 9 | |
| Other customer-related fees | 13 | | | 11 | | | 13 | | | 11 | | | 12 | |
| Customer-related fees | 139 | | | 133 | | | 139 | | | 139 | | | 130 | |
| Fair value and nonhedge derivative income (loss) | (5) | | | 18 | | | 8 | | | 8 | | | (12) | |
| Dividends and other income | 8 | | | 7 | | | 7 | | | 6 | | | 3 | |
| Securities gains (losses), net | 63 | | | 11 | | | 12 | | | 4 | | | (4) | |
| Total noninterest income | 205 | | | 169 | | | 166 | | | 157 | | | 117 | |
| Noninterest expense: | | | | | | | | | |
| Salaries and employee benefits | 272 | | | 288 | | | 277 | | | 269 | | | 267 | |
| Occupancy, net | 33 | | | 33 | | | 33 | | | 33 | | | 32 | |
| Furniture, equipment and software, net | 32 | | | 32 | | | 30 | | | 32 | | | 32 | |
| Other real estate expense, net | — | | | — | | | 1 | | | — | | | — | |
| Credit-related expense | 6 | | | 6 | | | 6 | | | 6 | | | 6 | |
| Professional and legal services | 17 | | | 20 | | | 19 | | | 12 | | | 10 | |
| Advertising | 4 | | | 5 | | | 6 | | | 7 | | | 3 | |
| FDIC premiums | 6 | | | 7 | | | 6 | | | 7 | | | 7 | |
| Other | 58 | | | 44 | | | 46 | | | 76 | | | 73 | |
| Total noninterest expense | 428 | | | 435 | | | 424 | | | 442 | | | 430 | |
| Income before income taxes | 455 | | | 411 | | | 359 | | | 215 | | | 82 | |
| Income taxes | 101 | | | 89 | | | 75 | | | 40 | | | 16 | |
| Net income | 354 | | | 322 | | | 284 | | | 175 | | | 66 | |
| | | | | | | | | |
| | | | | | | | | |
| Preferred stock dividends | (9) | | | (8) | | | (9) | | | (8) | | | (9) | |
| | | | | | | | | |
| Net earnings applicable to common shareholders | $ | 345 | | | $ | 314 | | | $ | 275 | | | $ | 167 | | | $ | 57 | |
| Weighted average common shares outstanding during the period: | | | | | | | | |
| Basic shares (in thousands) | 162,742 | | | 163,551 | | | 163,658 | | | 163,608 | | | 163,542 | |
| Diluted shares (in thousands) | 163,054 | | | 163,887 | | | 163,900 | | | 163,779 | | | 164,425 | |
| Net earnings per common share: | | | | | | | | | |
| Basic | $ | 2.08 | | | $ | 1.90 | | | $ | 1.66 | | | $ | 1.01 | | | $ | 0.34 | |
| Diluted | 2.08 | | | 1.90 | | | 1.66 | | | 1.01 | | | 0.34 | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 12
July 19, 2021
Loan Balances Held for Investment by Portfolio Type
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Commercial: | | | | | | | | | |
| Commercial and industrial | $ | 12,947 | | | $ | 12,843 | | | $ | 13,444 | | | $ | 13,543 | | | $ | 14,076 | |
| PPP | 4,461 | | | 6,465 | | | 5,572 | | | 6,810 | | | 6,690 | |
| Leasing | 307 | | | 310 | | | 320 | | | 319 | | | 324 | |
| Owner occupied | 8,231 | | | 8,112 | | | 8,185 | | | 8,136 | | | 8,083 | |
| Municipal | 3,215 | | | 3,234 | | | 2,951 | | | 2,706 | | | 2,535 | |
| Total commercial | 29,161 | | | 30,964 | | | 30,472 | | | 31,514 | | | 31,708 | |
| Commercial real estate: | | | | | | | | | |
| Construction and land development | 2,576 | | | 2,443 | | | 2,345 | | | 2,298 | | | 2,367 | |
| Term | 9,532 | | | 9,617 | | | 9,759 | | | 9,729 | | | 9,587 | |
| Total commercial real estate | 12,108 | | | 12,060 | | | 12,104 | | | 12,027 | | | 11,954 | |
| Consumer: | | | | | | | | | |
| Home equity credit line | 2,727 | | | 2,695 | | | 2,745 | | | 2,797 | | | 2,856 | |
| 1-4 family residential | 6,269 | | | 6,630 | | | 6,969 | | | 7,209 | | | 7,393 | |
| Construction and other consumer real estate | 593 | | | 589 | | | 630 | | | 633 | | | 640 | |
| Bankcard and other revolving plans | 415 | | | 409 | | | 432 | | | 431 | | | 437 | |
| Other | 125 | | | 125 | | | 124 | | | 134 | | | 141 | |
| Total consumer | 10,129 | | | 10,448 | | | 10,900 | | | 11,204 | | | 11,467 | |
| Loans and leases, net of unearned income and fees | $ | 51,398 | | | $ | 53,472 | | | $ | 53,476 | | | $ | 54,745 | | | $ | 55,129 | |
Nonperforming Assets
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| | | | | | | | | |
Nonaccrual loans1 | $ | 307 | | | $ | 324 | | | $ | 367 | | | $ | 366 | | | $ | 339 | |
Other real estate owned2 | 1 | | | 3 | | | 4 | | | 6 | | | 5 | |
| Total nonperforming assets | $ | 308 | | | $ | 327 | | | $ | 371 | | | $ | 372 | | | $ | 344 | |
Ratio of nonperforming assets to loans1 and leases and other real estate owned2 | 0.60 | % | | 0.61 | % | | 0.69 | % | | 0.68 | % | | 0.62 | % |
| Accruing loans past due 90 days or more | $ | 6 | | | $ | 9 | | | $ | 12 | | | $ | 9 | | | $ | 16 | |
Ratio of accruing loans past due 90 days or more to loans1 and leases | 0.01 | % | | 0.02 | % | | 0.02 | % | | 0.02 | % | | 0.03 | % |
| Nonaccrual loans and accruing loans past due 90 days or more | $ | 313 | | | $ | 333 | | | $ | 379 | | | $ | 375 | | | $ | 355 | |
Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans1 and leases | 0.61 | % | | 0.62 | % | | 0.71 | % | | 0.68 | % | | 0.64 | % |
| Accruing loans past due 30-89 days | $ | 29 | | | $ | 100 | | | $ | 112 | | | $ | 58 | | | $ | 168 | |
| Restructured loans included in nonaccrual loans | 128 | | | 134 | | | 113 | | | 84 | | | 88 | |
| Restructured loans on accrual | 330 | | | 280 | | | 198 | | | 197 | | | 197 | |
| Classified loans | 1,557 | | | 1,660 | | | 1,641 | | | 1,639 | | | 1,477 | |
1 Includes loans held for sale.
2 Does not include banking premises held for sale.
ZIONS BANCORPORATION, N.A.
Press Release – Page 13
July 19, 2021
Allowance for Credit Losses
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| (In millions) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Allowance for Loan Losses | | | | | | | | | |
| Balance at beginning of period | $ | 646 | | | $ | 777 | | | $ | 853 | | | $ | 860 | | | $ | 730 | |
| | | | | | | | | |
| Provision for loan losses | (113) | | | (123) | | | (61) | | | 45 | | | 161 | |
| | | | | | | | | |
| Loan and lease charge-offs | 8 | | | 21 | | | 21 | | | 58 | | | 36 | |
| Less: Recoveries | 10 | | | 13 | | | 6 | | | 6 | | | 5 | |
| Net loan and lease charge-offs | (2) | | | 8 | | | 15 | | | 52 | | | 31 | |
| Balance at end of period | $ | 535 | | | $ | 646 | | | $ | 777 | | | $ | 853 | | | $ | 860 | |
Ratio of allowance for loan losses to loans1 and leases, at period end | 1.04 | % | | 1.21 | % | | 1.45 | % | | 1.56 | % | | 1.56 | % |
Ratio of allowance for loan losses to nonaccrual loans1 at period end | 175 | % | | 199 | % | | 212 | % | | 242 | % | | 254 | % |
| Annualized ratio of net loan and lease charge-offs to average loans | (0.02) | % | | 0.06 | % | | 0.11 | % | | 0.38 | % | | 0.23 | % |
| Annualized ratio of net loan and lease charge-offs to average loans (excluding PPP loans) | (0.02) | % | | 0.07 | % | | 0.13 | % | | 0.43 | % | | 0.25 | % |
| | | | | | | | | |
| Reserve for Unfunded Lending Commitments | | | | | | | | | |
| Balance at beginning of period | $ | 49 | | | $ | 58 | | | $ | 64 | | | $ | 54 | | | $ | 47 | |
| Provision for unfunded lending commitments | (10) | | | (9) | | | (6) | | | 10 | | | 7 | |
| Balance at end of period | $ | 39 | | | $ | 49 | | | $ | 58 | | | $ | 64 | | | $ | 54 | |
| | | | | | | | | |
| Allowance for Credit Losses | | | | | | | | | |
| Allowance for loan losses | $ | 535 | | | $ | 646 | | | $ | 777 | | | $ | 853 | | | $ | 860 | |
| Reserve for unfunded lending commitments | 39 | | | 49 | | | 58 | | | 64 | | | 54 | |
| Total allowance for credit losses | $ | 574 | | | $ | 695 | | | $ | 835 | | | $ | 917 | | | $ | 914 | |
Ratio of total allowance for credit losses to loans1 and leases outstanding, at period end | 1.12 | % | | 1.30 | % | | 1.56 | % | | 1.68 | % | | 1.66 | % |
Ratio of total allowance for credit losses to loans1 and leases outstanding (excluding PPP loans), at period end | 1.22 | % | | 1.48 | % | | 1.74 | % | | 1.91 | % | | 1.88 | % |
1 Does not include loans held for sale.
ZIONS BANCORPORATION, N.A.
Press Release – Page 14
July 19, 2021
Nonaccrual Loans by Portfolio Type
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| | | | | | | | | |
| Loans held for sale | $ | 1 | | | $ | — | | | $ | — | | | $ | 14 | | | $ | — | |
| Commercial: | | | | | | | | | |
| Commercial and industrial | $ | 111 | | | $ | 119 | | | $ | 140 | | | $ | 158 | | | $ | 172 | |
| PPP | 1 | | | — | | | — | | | — | | | — | |
| Leasing | — | | | — | | | — | | | 1 | | | 1 | |
| Owner occupied | 69 | | | 74 | | | 76 | | | 81 | | | 68 | |
| Municipal | — | | | — | | | — | | | — | | | — | |
| Total commercial | 181 | | | 193 | | | 216 | | | 240 | | | 241 | |
| Commercial real estate: | | | | | | | | | |
| Construction and land development | — | | | — | | | — | | | — | | | — | |
| Term | 28 | | | 31 | | | 31 | | | 37 | | | 23 | |
| Total commercial real estate | 28 | | | 31 | | | 31 | | | 37 | | | 23 | |
| Consumer: | | | | | | | | | |
| Home equity credit line | 18 | | | 19 | | | 16 | | | 16 | | | 15 | |
| 1-4 family residential | 78 | | | 80 | | | 103 | | | 59 | | | 59 | |
| Construction and other consumer real estate | — | | | — | | | — | | | — | | | — | |
| Bankcard and other revolving plans | 1 | | | 1 | | | 1 | | | — | | | 1 | |
| Other | — | | | — | | | — | | | — | | | — | |
| Total consumer | 97 | | | 100 | | | 120 | | | 75 | | | 75 | |
| | | | | | | | | |
| Total nonaccrual loans | $ | 307 | | | $ | 324 | | | $ | 367 | | | $ | 366 | | | $ | 339 | |
Net Charge-Offs by Portfolio Type
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Commercial: | | | | | | | | | |
| Commercial and industrial | $ | (2) | | | $ | 8 | | | $ | 15 | | | $ | 51 | | | $ | 26 | |
| PPP | — | | | — | | | — | | | — | | | — | |
| Leasing | — | | | — | | | — | | | — | | | — | |
| Owner occupied | — | | | — | | | — | | | (1) | | | 2 | |
| Municipal | — | | | — | | | — | | | — | | | — | |
| Total commercial | (2) | | | 8 | | | 15 | | | 50 | | | 28 | |
| Commercial real estate: | | | | | | | | | |
| Construction and land development | — | | | — | | | — | | | — | | | — | |
| Term | — | | | — | | | — | | | 1 | | | — | |
| Total commercial real estate | — | | | — | | | — | | | 1 | | | — | |
| Consumer: | | | | | | | | | |
| Home equity credit line | (1) | | | (1) | | | — | | | — | | | — | |
| 1-4 family residential | — | | | (1) | | | (1) | | | — | | | — | |
| Construction and other consumer real estate | — | | | — | | | — | | | — | | | — | |
| Bankcard and other revolving plans | 1 | | | 1 | | | — | | | 1 | | | 2 | |
| Other | — | | | 1 | | | 1 | | | — | | | 1 | |
| Total consumer loans | — | | | — | | | — | | | 1 | | | 3 | |
| Total net charge-offs (recoveries) | $ | (2) | | | $ | 8 | | | $ | 15 | | | $ | 52 | | | $ | 31 | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 15
July 19, 2021
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | Three Months Ended |
| June 30, 2021 | | March 31, 2021 | | June 30, 2020 |
| (In millions) | Average balance | | Average
yield/rate 1 | | Average balance | | Average
yield/rate 1 | | Average balance | | Average
yield/rate 1 |
| ASSETS | | | | | | | | | | | |
| Money market investments | $ | 10,253 | | | 0.17 | % | | $ | 7,791 | | | 0.16 | % | | $ | 1,610 | | | 0.35 | % |
| Securities: | | | | | | | | | | | |
| Held-to-maturity | 579 | | | 2.91 | % | | 663 | | | 2.98 | % | | 632 | | | 3.58 | % |
| Available-for-sale | 17,041 | | | 1.63 | % | | 15,876 | | | 1.69 | % | | 14,128 | | | 2.12 | % |
| Trading account | 211 | | | 4.43 | % | | 231 | | | 3.96 | % | | 149 | | | 4.29 | % |
| Total securities | 17,831 | | | 1.71 | % | | 16,770 | | | 1.77 | % | | 14,909 | | | 2.20 | % |
| Loans held for sale | 62 | | | 2.50 | % | | 68 | | | 2.81 | % | | 125 | | | 5.02 | % |
Loans and leases:2 | | | | | | | | | | | |
| Commercial - excluding PPP loans | 24,560 | | | 3.85 | % | | 24,732 | | | 3.83 | % | | 25,773 | | | 4.05 | % |
| Commercial - PPP loans | 5,945 | | | 4.56 | % | | 6,135 | | | 3.98 | % | | 5,016 | | | 3.14 | % |
| Commercial real estate | 12,037 | | | 3.46 | % | | 12,133 | | | 3.50 | % | | 11,866 | | | 3.81 | % |
| Consumer | 10,228 | | | 3.51 | % | | 10,665 | | | 3.59 | % | | 11,613 | | | 3.66 | % |
| Total loans and leases | 52,770 | | | 3.77 | % | | 53,665 | | | 3.73 | % | | 54,268 | | | 3.83 | % |
| Total interest-earning assets | 80,916 | | | 2.86 | % | | 78,294 | | | 2.95 | % | | 70,912 | | | 3.41 | % |
| Cash and due from banks | 579 | | | | | 614 | | | | | 617 | | | |
| Allowance for credit losses on loans and debt securities | (647) | | | | | (774) | | | | | (724) | | | |
| Goodwill and intangibles | 1,015 | | | | | 1,016 | | | | | 1,014 | | | |
| Other assets | 4,094 | | | | | 3,930 | | | | | 4,095 | | | |
| Total assets | $ | 85,957 | | | | | $ | 83,080 | | | | | $ | 75,914 | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Savings and money market | $ | 35,987 | | | 0.06 | % | | $ | 35,232 | | | 0.07 | % | | $ | 30,094 | | | 0.13 | % |
| Time | 2,108 | | | 0.42 | % | | 2,491 | | | 0.55 | % | | 3,853 | | | 1.35 | % |
| | | | | | | | | | | |
| Total interest-bearing deposits | 38,095 | | | 0.08 | % | | 37,723 | | | 0.10 | % | | 33,947 | | | 0.27 | % |
| Borrowed funds: | | | | | | | | | | | |
| Federal funds purchased and other short-term borrowings | 834 | | | 0.06 | % | | 1,110 | | | 0.07 | % | | 2,230 | | | 0.11 | % |
| Long-term debt | 1,303 | | | 2.31 | % | | 1,324 | | | 2.30 | % | | 1,736 | | | 1.93 | % |
| Total borrowed funds | 2,137 | | | 1.43 | % | | 2,434 | | | 1.28 | % | | 3,966 | | | 0.91 | % |
| Total interest-bearing funds | 40,232 | | | 0.15 | % | | 40,157 | | | 0.17 | % | | 37,913 | | | 0.34 | % |
| Noninterest-bearing demand deposits | 36,545 | | | | | 33,723 | | | | | 29,053 | | | |
| Other liabilities | 1,200 | | | | | 1,301 | | | | | 1,352 | | | |
| Total liabilities | 77,977 | | | | | 75,181 | | | | | 68,318 | | | |
| Shareholders’ equity: | | | | | | | | | | | |
| Preferred equity | 544 | | | | | 566 | | | | | 566 | | | |
| Common equity | 7,436 | | | | | 7,333 | | | | | 7,030 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total shareholders’ equity | 7,980 | | | | | 7,899 | | | | | 7,596 | | | |
| Total liabilities and shareholders’ equity | $ | 85,957 | | | | | $ | 83,080 | | | | | $ | 75,914 | | | |
| Spread on average interest-bearing funds | | | 2.71 | % | | | | 2.78 | % | | | | 3.07 | % |
| Impact of net noninterest-bearing sources of funds | | | 0.08 | % | | | | 0.08 | % | | | | 0.16 | % |
| Net interest margin | | | 2.79 | % | | | | 2.86 | % | | | | 3.23 | % |
| Memo: total loans and leases, excluding PPP loans | 46,825 | | | 3.67 | % | | 47,530 | | | 3.69 | % | | 49,252 | | | 3.90 | % |
| | | | | | | | | | | |
| Memo: total cost of deposits | | | 0.04 | % | | | | 0.05 | % | | | | 0.15 | % |
| Memo: total deposits and interest-bearing liabilities | 76,777 | | | 0.08 | % | | 73,880 | | | 0.09 | % | | 66,966 | | | 0.19 | % |
1 Rates are calculated using amounts in thousands and a tax rate of 21% for the periods presented.
2 Net of unamortized purchase premiums, discounts, and deferred loan fees and costs.
ZIONS BANCORPORATION, N.A.
Press Release – Page 16
July 19, 2021
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. We consider 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 us to assess our performance and financial position and for presentations of our performance to investors. We further believe that presenting these non-GAAP financial measures will permit investors to assess our performance on the same basis as that applied by our 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 we use 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 we believe provides additional useful information about the level of tangible equity in relation to outstanding shares of common stock. We believe the use of ratios that utilize tangible equity provides additional useful information about capital adequacy because they present measures of those assets that can generate income.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions, except shares and per share amounts) | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Tangible Book Value per Common Share | | | | | | | | | | |
| Total shareholders’ equity (GAAP) | | $ | 8,033 | | | $ | 7,933 | | | $ | 7,886 | | | $ | 7,668 | | | $ | 7,575 | |
| Preferred stock | | (440) | | | (566) | | | (566) | | | (566) | | | (566) | |
| Goodwill and intangibles | | (1,015) | | | (1,016) | | | (1,016) | | | (1,016) | | | (1,014) | |
| Tangible common equity (non-GAAP) | (a) | $ | 6,578 | | | $ | 6,351 | | | $ | 6,304 | | | $ | 6,086 | | | $ | 5,995 | |
| Common shares outstanding (in thousands) | (b) | 162,248 | | | 163,800 | | | 164,090 | | | 164,009 | | | 163,978 | |
| Tangible book value per common share (non-GAAP) | (a/b) | $ | 40.54 | | | $ | 38.77 | | | $ | 38.42 | | | $ | 37.11 | | | $ | 36.56 | |
Return on Average Tangible Common Equity (“ROTCE”) – this schedule also includes “net earnings applicable to common shareholders, net of tax” and “average tangible common equity.” ROTCE is a non-GAAP financial measure that we believe provides useful information about our use of shareholders’ equity. We believe the use of ratios that utilize tangible equity provides additional useful information about our performance because they present measures of those assets that can generate income.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| (Dollar amounts in millions) | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Return on Average Tangible Common Equity | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net earnings applicable to common shareholders, net of tax | (a) | $ | 345 | | | $ | 314 | | | $ | 275 | | | $ | 167 | | | $ | 57 | |
| Average common equity (GAAP) | | $ | 7,436 | | | $ | 7,333 | | | $ | 7,166 | | | $ | 7,078 | | | $ | 7,030 | |
| Average goodwill and intangibles | | (1,015) | | | (1,016) | | | (1,016) | | | (1,015) | | | (1,014) | |
| Average tangible common equity (non-GAAP) | (b) | $ | 6,421 | | | $ | 6,317 | | | $ | 6,150 | | | $ | 6,063 | | | $ | 6,016 | |
| Number of days in quarter | (c) | 91 | | | 90 | | | 92 | | | 92 | | | 91 | |
| Number of days in year | (d) | 365 | | | 365 | | | 366 | | | 366 | | | 366 | |
| Return on average tangible common equity (non-GAAP) | (a/b/c)*d | 21.6 | % | | 20.2 | % | | 17.8 | % | | 11.0 | % | | 3.8 | % |
ZIONS BANCORPORATION, N.A.
Press Release – Page 17
July 19, 2021
GAAP to Non-GAAP Reconciliations
(Unaudited)
Efficiency Ratio – this schedule also includes “adjusted noninterest expense,” “taxable-equivalent net interest income,” “adjusted taxable-equivalent revenue,” “pre-provision net revenue (PPNR)” and “adjusted PPNR.” The methodology of determining the efficiency ratio may differ among companies. We make adjustments to exclude certain items as identified in the subsequent schedule which we believe allows for more consistent comparability among periods. We believe the efficiency ratio provides useful information regarding the cost of generating revenue. Adjusted noninterest expense provides a measure as to how well we are managing our expenses, and adjusted PPNR enables us and others to assess our ability to generate capital to cover credit losses through a credit cycle. Taxable-equivalent net interest income allows us to assess the comparability of revenue arising from both taxable and tax-exempt sources.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| (In millions) | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | September 30,
2020 | | June 30,
2020 |
| Efficiency Ratio | | | | | | | | | | |
| Noninterest expense (GAAP) | (a) | $ | 428 | | | $ | 435 | | | $ | 424 | | | $ | 442 | | | $ | 430 | |
| Adjustments: | | | | | | | | | | |
| Severance costs | | — | | | — | | | 1 | | | 1 | | | — | |
| Other real estate expense, net | | — | | | — | | | 1 | | | — | | | — | |
| | | | | | | | | | |
| | | | | | | | | | |
| Restructuring costs | | — | | | — | | | (1) | | | 1 | | | — | |
| Pension termination-related expense | | — | | | (5) | | | — | | | — | | | 28 | |
| | | | | | | | | | |
SBIC investment success fee accrual 1 | | 9 | | | — | | | — | | | — | | | — | |
| Total adjustments | (b) | 9 | | | (5) | | | 1 | | | 2 | | | 28 | |
| Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 419 | | | $ | 440 | | | $ | 423 | | | $ | 440 | | | $ | 402 | |
| Net interest income (GAAP) | (d) | $ | 555 | | | $ | 545 | | | $ | 550 | | | $ | 555 | | | $ | 563 | |
| Fully taxable-equivalent adjustments | (e) | 7 | | | 8 | | | 7 | | | 7 | | | 6 | |
| Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 562 | | | 553 | | | 557 | | | 562 | | | 569 | |
| Noninterest income (GAAP) | (g) | 205 | | | 169 | | | 166 | | | 157 | | | 117 | |
| Combined income (non-GAAP) | (f+g)=(h) | 767 | | | 722 | | | 723 | | | 719 | | | 686 | |
| Adjustments: | | | | | | | | | | |
| Fair value and nonhedge derivative income (loss) | | (5) | | | 18 | | | 8 | | | 8 | | | (12) | |
| Securities gains (losses), net | | 63 | | | 11 | | | 12 | | | 4 | | | (4) | |
| Total adjustments | (i) | 58 | | | 29 | | | 20 | | | 12 | | | (16) | |
Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $ | 709 | | | $ | 693 | | | $ | 703 | | | $ | 707 | | | $ | 702 | |
| Pre-provision net revenue (PPNR) (non-GAAP) | (h)-(a) | $ | 339 | | | $ | 287 | | | $ | 299 | | | $ | 277 | | | $ | 256 | |
| Adjusted PPNR (non-GAAP) | (j)-(c) | 290 | | | 253 | | | 280 | | | 267 | | | 300 | |
Efficiency ratio (non-GAAP) 2 | (c/j) | 59.1 | % | | 63.5 | % | | 60.2 | % | | 62.2 | % | | 57.3 | % |
1 The $9 million expense relates to the accrual of a success fee associated with the $63 million unrealized gain from the IPO of our SBIC investment in Recursion Pharmaceuticals, Inc., and will be adjusted based on the mark-to-market value of the investment. The $63 million unrealized gain is excluded from the efficiency ratio through securities gains (losses), net.
2 Excluding the $30 million charitable contribution, the efficiency ratio for the three months ended September 30, 2020 would have been 58.0%.
ZIONS BANCORPORATION, N.A.
Press Release – Page 18
July 19, 2021
| | | | | | | | | | | | | | | | |
| | Six Months Ended |
| (In millions) | | June 30,
2021 | | June 30,
2020 | | |
| Efficiency Ratio | | | | | | |
| Noninterest expense (GAAP) | (a) | $ | 863 | | | $ | 837 | | | |
| Adjustments: | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Restructuring costs | | — | | | 1 | | | |
| Pension termination-related expense | | (5) | | | 28 | | | |
SBIC investment success fee accrual 1 | | 9 | | | — | | | |
| Total adjustments | (b) | 4 | | | 29 | | | |
| Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 859 | | | $ | 808 | | | |
| Net interest income (GAAP) | (d) | $ | 1,100 | | | $ | 1,111 | | | |
| Fully taxable-equivalent adjustments | (e) | 15 | | | 13 | | | |
| Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 1,115 | | | 1,124 | | | |
| Noninterest income (GAAP) | (g) | 374 | | | 250 | | | |
| Combined income (non-GAAP) | (f+g)=(h) | 1,489 | | | 1,374 | | | |
| Adjustments: | | | | | | |
| Fair value and nonhedge derivative loss | | 13 | | | (23) | | | |
| Securities gains, net | | 74 | | | (9) | | | |
| Total adjustments | (i) | 87 | | | (32) | | | |
| Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $ | 1,402 | | | $ | 1,406 | | | |
| Pre-provision net revenue (PPNR) | (h)-(a) | $ | 626 | | | $ | 537 | | | |
| Adjusted PPNR (non-GAAP) | (j)-(c) | 543 | | | 598 | | | |
| Efficiency ratio (non-GAAP) | (c/j) | 61.3 | % | | 57.5 | % | | |
1 The $9 million expense relates to the accrual of a success fee associated with the $63 million unrealized gain from the IPO of our SBIC investment in Recursion Pharmaceuticals, Inc., and will be adjusted based on the mark-to-market value of the investment. The $63 million unrealized gain is excluded from the efficiency ratio through securities gains (losses), net.
