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Zions Bancorporation, N.A.
One South Main
Salt Lake City, UT 84133
October 24, 2022 | |
| www.zionsbancorporation.com |
Third Quarter 2022 Financial Results: FOR IMMEDIATE RELEASE
Investor and Media Contact: James Abbott (801) 844-7637
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| Zions Bancorporation, N.A. reports: 3Q22 Net Earnings of $211 million, diluted EPS of $1.40 |
compared with 3Q21 Net Earnings of $234 million, diluted EPS of $1.45,
and 2Q22 Net Earnings of $195 million, diluted EPS of $1.29 |
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THIRD QUARTER RESULTS
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| $1.40 | | $211 million | | 3.24% | | 9.6% |
Net earnings per diluted common share | | Net earnings | | Net interest margin (“NIM”) | | Estimated Common Equity
Tier 1 ratio |
| | | | | | | | |
| THIRD QUARTER HIGHLIGHTS¹ |
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| Net Interest Income and NIM | • | Net interest income was $663 million, up 19% |
| • | NIM was 3.24%, compared with 2.68% |
| | |
| Operating Performance | • | Pre-provision net revenue ("PPNR") was $359 million, up 32%; adjusted PPNR² was $351 million, up 21% |
| • | PPP loans contributed $6 million in interest income, compared with $63 million |
| • | Customer-related noninterest income was $156 million, up 3% |
| • | Noninterest expense was $479 million, up 12%; adjusted noninterest expense² was $477 million, up 10% |
| • | The efficiency ratio² was 57.6%, compared with 59.8% |
| | |
| Loans and Credit Quality | • | Loans and leases were $53.9 billion, up 6%; and excluding PPP, loans and leases were $53.6 billion, up 13% |
| • | The provision for credit losses was $71 million, compared with ($46) million |
| • | The allowance for credit losses was 1.10% of loans (ex-PPP), compared with 1.11% of loans (ex-PPP) |
| • | Nonperforming assets3 were $151 million, or 0.3%, of loans, compared with $324 million, or 0.6%, of loans |
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| Capital | • | The estimated CET1 capital ratio was 9.6%, compared with 10.9% |
| • | Shares of common stock repurchased during the quarter were 0.9 million for $50 million |
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| Notable items | • | Equity investment valuation loss of $6 million, or $0.03 per share |
| • | Credit valuation adjustment gain on client-related interest rate swaps of $4 million, or $0.02 per share |
| • | Deposits were $76.0 billion, down 2%, and the loan-to-deposit ratio was 71%, compared with 65% |
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| CEO COMMENTARY |
|
Harris H. Simmons, Chairman and CEO of Zions Bancorporation, commented, “Our third quarter results continued to demonstrate the positive impact of solid loan growth and moderately higher interest rates, as our net interest margin strengthened to 3.24%, up from 2.68% a year ago, producing strong adjusted pre-provision net revenue (PPNR) growth and positive operating leverage.”
Mr. Simmons continued, “Strong PPNR growth was offset by a higher provision for credit losses. Despite material improvements in most of our credit quality metrics relative to both last quarter and last year, we boosted our loan loss reserve to reflect both loan growth and a heightened probability of economic recession in the coming year.” |
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OPERATING PERFORMANCE2 |
| | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Adjusted PPNR | $ | 351 | | $ | 290 | | $ | 892 | | $ | 833 |
| Net charge-offs (recoveries) | $ | 27 | | $ | (1) | | $ | 42 | | $ | 5 |
| Efficiency ratio | 57.6% | | 59.8% | | 61.1% | | 60.8% |
| Weighted average diluted shares | 149.8 | | 160.5 | | 150.8 | | 162.5 |
1 Comparisons noted in the bullet points are calculated for the current quarter compared with the same prior-year period unless otherwise specified.
2 For information on non-GAAP financial measures, see pages 15-17.
3 Does not include banking premises held for sale.
ZIONS BANCORPORATION, N.A.
Press Release – Page 2
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 generally reflect a low starting point.
RESULTS OF OPERATIONS
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| Net Interest Income and Margin |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Interest and fees on loans | $ | 551 | | $ | 468 | | $ | 484 | | $ | 83 | | | 18 | % | | $ | 67 | | | 14 | % |
| Interest on money market investments | 24 | | 12 | | 7 | | 12 | | | NM | | 17 | | | NM |
| Interest on securities | 132 | | 128 | | 78 | | 4 | | | 3 | | | 54 | | | 69 | |
| Total interest income | 707 | | 608 | | 569 | | 99 | | | 16 | | | 138 | | | 24 | |
| Interest on deposits | 19 | | 7 | | 7 | | 12 | | | NM | | 12 | | | NM |
| Interest on short- and long-term borrowings | 25 | | 8 | | 7 | | 17 | | | NM | | 18 | | | NM |
| Total interest expense | 44 | | 15 | | 14 | | 29 | | | NM | | 30 | | | NM |
| Net interest income | $ | 663 | | $ | 593 | | $ | 555 | | $ | 70 | | | 12 | | | $ | 108 | | | 19 | |
| | | | | | | bps | | | | bps | | |
Yield on interest-earning assets1 | 3.45 | % | | 2.94 | % | | 2.75 | % | | 51 | | | | | 70 | | | |
Rate paid on total deposits and interest-bearing liabilities1 | 0.22 | % | | 0.07 | % | | 0.07 | % | | 15 | | | | | 15 | | | |
Cost of total deposits1 | 0.10 | % | | 0.03 | % | | 0.03 | % | | 7 | | | | | 7 | | | |
Net interest margin1 | 3.24 | % | | 2.87 | % | | 2.68 | % | | 37 | | | | | 56 | | | |
1 Rates are calculated using amounts in thousands and a tax rate of 21% for the periods presented.
Notwithstanding a $57 million decrease in interest income from PPP loans, net interest income increased $108 million, or 19%, to $663 million in the third quarter of 2022, primarily due to a higher interest rate environment and a favorable change in the composition of interest-earning assets.
Average interest-earning assets decreased $0.7 billion, or 1%, from the prior year quarter, driven by significant declines in average money market investments and PPP loans, the effects of which were largely offset by strong growth in average available-for-sale securities and average loans and leases (ex-PPP). Average money market investments declined $9.0 billion and average PPP loans decreased $3.4 billion. Average securities increased $6.2 billion, representing 31% of average interest-earning assets, compared with 24%, and average loans and leases (ex-PPP) increased $5.5 billion.
The net interest margin was 3.24%, compared with 2.68%. The yield on average interest-earning assets was 3.45% in the third quarter of 2022, an increase of 70 basis points. The yield on total loans increased 35 basis points to 4.17%, the yield on non-PPP loans increased 57 basis points to 4.16%, and the yield on securities increased 47 basis points to 2.10%, all reflecting the higher interest rate environment.
The cost of total deposits for the third quarter of 2022 was 0.10%, compared with 0.03%. The rate paid on total deposits and interest-bearing liabilities was 0.22%, compared with 0.07%. Average noninterest-bearing deposits as a percentage of total deposits were 51%, up slightly from the same prior year period.
In the third quarter of 2022, more than 1,000 PPP loans totaling $0.2 billion were forgiven by the SBA. PPP loans contributed $6 million in interest income during the quarter, compared with $63 million. During the same time periods, approximately $4 million and $41 million of the interest income from PPP loans was related to accelerated recognition of net unamortized deferred fees due to forgiveness, respectively. At September 30, 2022, the remaining net unamortized deferred fees on PPP loans totaled $5 million.
ZIONS BANCORPORATION, N.A.
Press Release – Page 3
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| Noninterest Income |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Commercial account fees | $ | 40 | | | $ | 37 | | | $ | 34 | | | $ | 3 | | | 8 | % | | $ | 6 | | | 18 | % |
| Card fees | 27 | | | 25 | | | 25 | | | 2 | | | 8 | | | 2 | | | 8 | |
| Retail and business banking fees | 17 | | | 20 | | | 20 | | | (3) | | | (15) | | | (3) | | | (15) | |
| Loan-related fees and income | 18 | | | 21 | | | 27 | | | (3) | | | (14) | | | (9) | | | (33) | |
| Capital markets and foreign exchange fees | 25 | | | 21 | | | 17 | | | 4 | | | 19 | | | 8 | | | 47 | |
| Wealth management fees | 14 | | | 13 | | | 13 | | | 1 | | | 8 | | | 1 | | | 8 | |
| Other customer-related fees | 15 | | | 17 | | | 15 | | | (2) | | | (12) | | | — | | | — | |
| Customer-related noninterest income | 156 | | | 154 | | | 151 | | | 2 | | | 1 | | | 5 | | | 3 | |
| Fair value and nonhedge derivative income (loss) | 4 | | | 10 | | | 2 | | | (6) | | | (60) | | | 2 | | | NM |
| Dividends and other income (loss) | (1) | | | 7 | | | 9 | | | (8) | | | NM | | (10) | | | NM |
| Securities gains (losses), net | 6 | | | 1 | | | (23) | | | 5 | | | NM | | 29 | | | NM |
| Total noninterest income | $ | 165 | | | $ | 172 | | | $ | 139 | | | $ | (7) | | | (4) | | | $ | 26 | | | 19 | |
Total customer-related noninterest income increased $5 million, or 3%, driven by increases in capital markets and foreign exchange fees, commercial account fees, card fees, and wealth management fees. Capital markets and foreign exchange fees benefited from improved customer swap, foreign exchange, and syndication activity. These increases were partially offset by a decrease in loan-related fees, primarily due to a decline in our residential mortgages held for sale, and a decrease in retail and business banking fees. The latter decrease was due largely to a previously disclosed change in our overdraft and non-sufficient funds practices, which was effected early in the third quarter of 2022.
Net securities gains and losses increased $29 million, due largely to unrealized losses recorded during the prior year period related to our SBIC investment in Recursion Pharmaceuticals, Inc. Dividends and other income (loss) decreased $10 million from the prior year period, primarily due to a $6 million valuation loss recognized on one of our equity investments in the current period.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest Expense |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Salaries and employee benefits | $ | 312 | | | $ | 307 | | | $ | 285 | | | $ | 5 | | | 2 | % | | $ | 27 | | | 9 | % |
| Technology, telecom, and information processing | 53 | | | 53 | | | 50 | | | — | | | — | | | 3 | | | 6 | |
| Occupancy and equipment, net | 38 | | | 36 | | | 37 | | | 2 | | | 6 | | | 1 | | | 3 | |
| Professional and legal services | 14 | | | 14 | | | 17 | | | — | | | — | | | (3) | | | (18) | |
| Marketing and business development | 11 | | | 9 | | | 9 | | | 2 | | | 22 | | | 2 | | | 22 | |
| Deposit insurance and regulatory expense | 13 | | | 13 | | | 8 | | | — | | | — | | | 5 | | | 63 | |
| Credit-related expense | 8 | | | 7 | | | 7 | | | 1 | | | 14 | | | 1 | | | 14 | |
| Other real estate expense, net | — | | | — | | | — | | | — | | | NM | | — | | | NM |
| Other | 30 | | | 25 | | | 16 | | | 5 | | | 20 | | | 14 | | | 88 | |
| Total noninterest expense | $ | 479 | | | $ | 464 | | | $ | 429 | | | $ | 15 | | | 3 | | | $ | 50 | | | 12 | |
Adjusted noninterest expense 1 | $ | 477 | | | $ | 463 | | | $ | 432 | | | $ | 14 | | | 3 | | | $ | 45 | | | 10 | |
1 For information on non-GAAP financial measures, see pages 15-17.
Total noninterest expense increased $50 million, or 12%, relative to the prior year quarter. Salaries and benefits expense increased $27 million, or 9%, due to the impact of inflationary and competitive labor market pressures on wages and benefits, increased headcount, and increased incentive compensation accruals arising from improvements in anticipated full-year profitability.
ZIONS BANCORPORATION, N.A.
Press Release – Page 4
Other noninterest expense increased $14 million, primarily due to the reversal of a success fee accrual in the prior year period related to our SBIC investment in Recursion Pharmaceuticals, Inc., as well as increased travel and certain other expenses incurred during the current period. Deposit insurance and regulatory expense increased $5 million, driven largely by a higher FDIC insurance assessment resulting from changes in the balance sheet composition.
Professional and legal services expense decreased $3 million, or 18%, due to third-party assistance associated with PPP loan forgiveness and other technology-related and outsourced services utilized in the prior year period.
The efficiency ratio was 57.6%, compared with 59.8%, as growth in net revenue outpaced growth in noninterest expense. For information on non-GAAP financial measures, including differences between noninterest expense and adjusted noninterest expense, see pages 15-17.
BALANCE SHEET ANALYSIS
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| Loans and Leases |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Loans held for sale | $ | 25 | | | $ | 42 | | | $ | 67 | | | $ | (17) | | | (40) | % | | $ | (42) | | | (63) | % |
| Loans and leases: | | | | | | | | | | | | | |
Commercial – excluding PPP loans | $ | 29,506 | | | $ | 28,649 | | | $ | 25,369 | | | $ | 857 | | | 3 | | | $ | 4,137 | | | 16 | |
Commercial – PPP loans | 306 | | | 534 | | | 3,080 | | | (228) | | | (43) | | | (2,774) | | | (90) | |
| Commercial real estate | 12,356 | | | 12,136 | | | 12,153 | | | 220 | | | 2 | | | 203 | | | 2 | |
| Consumer | 11,750 | | | 11,051 | | | 10,076 | | | 699 | | | 6 | | | 1,674 | | | 17 | |
| Loans and leases, net of unearned income and fees | 53,918 | | | 52,370 | | | 50,678 | | | 1,548 | | | 3 | | | 3,240 | | | 6 | |
| Less allowance for loan losses | 541 | | | 508 | | | 491 | | | 33 | | | 6 | | | 50 | | | 10 | |
| Loans and leases held for investment, net of allowance | $ | 53,377 | | | $ | 51,862 | | | $ | 50,187 | | | $ | 1,515 | | | 3 | | | $ | 3,190 | | | 6 | |
| | | | | | | | | | | | | |
| Unfunded lending commitments | $ | 29,758 | | | $ | 28,008 | | | $ | 26,138 | | | $ | 1,750 | | | 6 | | | $ | 3,620 | | | 14 | |
Loans and leases, net of unearned income and fees, increased $3.2 billion, or 6%, to $53.9 billion at September 30, 2022. Excluding PPP loans, total loans and leases increased $6.0 billion, or 13%, to $53.6 billion. Commercial and industrial loans, owner occupied loans, and municipal loans increased $2.4 billion, $0.8 billion, and $0.8 billion, respectively. The consumer 1-4 family residential mortgage loan portfolio increased $0.7 billion, and home equity credit lines increased $0.5 billion.
Unfunded lending commitments increased $3.6 billion, or 14%, to $29.8 billion at September 30, 2022, primarily due to growth in home equity and consumer one-time close construction lending commitments.
ZIONS BANCORPORATION, N.A.
Press Release – Page 5
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Credit Quality |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Provision for credit losses | $ | 71 | | $ | 41 | | $ | (46) | | $ | 30 | | | 73 | % | | $ | 117 | | | NM |
| Allowance for credit losses | 590 | | 546 | | 529 | | 44 | | | 8 | | | 61 | | | 12 | % |
| Net loan and lease charge-offs (recoveries) | 27 | | 9 | | (1) | | 18 | | | NM | | 28 | | | NM |
Nonperforming assets2 | 151 | | 201 | | 324 | | (50) | | | (25) | | | (173) | | | (53) | |
| Classified loans | 965 | | 1,009 | | 1,397 | | (44) | | | (4) | | | (432) | | | (31) | |
| 3Q22 | | 2Q22 | | 3Q21 | | bps | | | | bps | | |
Ratio of ACL to loans1 and leases outstanding, at period end | 1.09 | % | | 1.04 | % | | 1.04 | % | | 5 | | | | | 5 | | | |
Ratio of ACL to loans1 and leases outstanding (ex-PPP), at period end | 1.10 | % | | 1.05 | % | | 1.11 | % | | 5 | | | | | (1) | | | |
| Annualized ratio of net loan and lease charge-offs to average loans | 0.20 | % | | 0.07 | % | | (0.01) | % | | 13 | | | | | 21 | | | |
| Ratio of classified loans to total loans and leases (ex-PPP) | 1.80 | % | | 1.95 | % | | 2.93 | % | | (15) | | | | | (113) | | | |
Ratio of nonperforming assets1 and accruing loans 90 days or more past due to loans and leases and other real estate owned | 0.32 | % | | 0.39 | % | | 0.65 | % | | (7) | | | | | (33) | | | |
1 Does not include loans held for sale.
2 Does not include banking premises held for sale.
Nonperforming assets decreased $173 million, or 53%, and classified loans decreased $432 million, or 31%. Net loan and lease charge-offs were $27 million, compared with net recoveries of $1 million in the prior year quarter. During the third quarter of 2022, we recorded a $71 million provision for credit losses, compared with a $(46) million provision during the prior year period. The allowance for credit losses (“ACL”) was $590 million at September 30, 2022, compared with $529 million at September 30, 2021. The increase in the ACL was primarily due to growth in the loan portfolio. The ratio of ACL to total loans and leases (ex-PPP) was 1.10% at September 30, 2022, compared with 1.11% at September 30, 2021.
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| Deposits and Borrowed Funds |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Noninterest-bearing demand | $ | 39,133 | | | $ | 40,289 | | | $ | 39,150 | | | $ | (1,156) | | | (3) | % | | $ | (17) | | | — | % |
| Interest-bearing: | | | | | | | | | | | | | |
| Savings and money market | 35,389 | | | 37,346 | | | 37,046 | | | (1,957) | | | (5) | | | (1,657) | | | (4) | |
| Time | 1,473 | | | 1,426 | | | 1,688 | | | 47 | | | 3 | | | (215) | | | (13) | |
| | | | | | | | | | | | | |
| Total deposits | $ | 75,995 | | | $ | 79,061 | | | $ | 77,884 | | | $ | (3,066) | | | (4) | | | $ | (1,889) | | | (2) | |
| Borrowed funds: | | | | | | | | | | | | | |
| Federal funds purchased and other short-term borrowings | $ | 5,363 | | | $ | 1,018 | | | $ | 579 | | | $ | 4,345 | | | NM | | $ | 4,784 | | | NM |
| Long-term debt | 647 | | | 671 | | | 1,020 | | | (24) | | | (4) | | | (373) | | | (37) | |
| Total borrowed funds | $ | 6,010 | | | $ | 1,689 | | | $ | 1,599 | | | $ | 4,321 | | | NM | | $ | 4,411 | | | NM |
Total deposits decreased $1.9 billion, or 2%, primarily due to a $1.7 billion, or 4%, decrease in savings and money market deposits. Total deposits at September 30, 2022 included approximately $400 million of deposit balances acquired from the purchase of three Northern Nevada branches during the third quarter of 2022. Our loan-to-deposit ratio was 71%, compared with 65% in the prior year quarter, which continues to afford us flexibility in managing our funding costs.
ZIONS BANCORPORATION, N.A.
Press Release – Page 6
Average total deposits remained relatively flat at $77.5 billion, compared with the prior year period. Average noninterest-bearing deposits increased $1.3 billion, or 3%, and were 51% and 50% of average total deposits for the respective time periods.
Total borrowed funds increased $4.4 billion from the prior year quarter, driven by increases in short-term borrowings as a result of significant loan growth and declines in interest-bearing deposits. The decrease in long-term debt was primarily due to the redemption and maturity of senior notes during the past year.
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| Shareholders’ Equity |
| | | | | | | 3Q22 - 2Q22 | | 3Q22 - 3Q21 |
| (In millions, except share data) | 3Q22 | | 2Q22 | | 3Q21 | | $ | | % | | $ | | % |
| Shareholders’ equity: | | | | | | | | | | | | | |
| Preferred stock | $ | 440 | | $ | 440 | | $ | 440 | | $ | — | | | — | % | | $ | — | | | — | % |
| Common stock and additional paid-in capital | 1,799 | | 1,845 | | 2,245 | | (46) | | | (2) | | | (446) | | | (20) | |
| Retained earnings | 5,597 | | 5,447 | | 5,025 | | 150 | | | 3 | | | 572 | | | 11 | |
| Accumulated other comprehensive income (loss) | (3,140) | | (2,100) | | 64 | | (1,040) | | | (50) | | | (3,204) | | | NM |
| Total shareholders’ equity | $ | 4,696 | | $ | 5,632 | | $ | 7,774 | | $ | (936) | | | (17) | | | $ | (3,078) | | | (40) | |
| Capital distributions: | | | | | | | | | | | | | |
| Common dividends paid | $ | 62 | | $ | 58 | | $ | 62 | | $ | 4 | | | 7 | | | $ | — | | | — | |
| Bank common stock repurchased | 50 | | 50 | | 325 | | — | | | — | | | (275) | | | (85) | |
| Total capital distributed to common shareholders | $ | 112 | | $ | 108 | | $ | 387 | | $ | 4 | | | 4 | | | $ | (275) | | | (71) | |
| | | | | | | | | | | | | |
| | | | | | | shares | | % | | shares | | % |
| Weighted average diluted common shares outstanding (in thousands) | 149,792 | | | 150,838 | | | 160,480 | | | (1,046) | | | (1) | % | | (10,688) | | | (7) | % |
| Common shares outstanding, at period end (in thousands) | 149,611 | | | 150,471 | | | 156,530 | | | (860) | | | (1) | | | (6,919) | | | (4) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The common stock dividend was $0.41 per share, compared with $0.38 per share during the prior year quarter. Common shares outstanding decreased 6.9 million, or 4%, from the third quarter of 2021, primarily due to common stock repurchases. During the third quarter of 2022, we repurchased 0.9 million common shares outstanding for $50 million.
Accumulated other comprehensive income (“AOCI”) decreased to a loss of $3.1 billion at September 30, 2022, due to decreases in the fair value of fixed-rate available-for-sale securities as a result of changes in interest rates. Absent any sales or credit impairment of these securities, the unrealized losses will not be recognized in earnings. We do not intend to sell any securities with unrealized losses. Additionally, changes in AOCI do not impact our regulatory capital ratios.
Estimated common equity tier 1 (“CET1”) capital was $6.3 billion, compared with $6.2 billion, and the estimated CET1 capital ratio was 9.6%, compared with 10.9%, driven by the increase in risk-weighted assets due to strong loan growth. Tangible book value per common share decreased to $21.54, compared with $40.37, primarily due to the decrease in AOCI previously described.
ZIONS BANCORPORATION, N.A.
Press Release – Page 7
Supplemental Presentation and Conference Call
Zions has posted a supplemental presentation to its website, which will be used to discuss the third quarter results at 5:30 p.m. ET on October 24, 2022. Media representatives, analysts, investors, and the public are invited to join this discussion by calling (877) 709-8150 (domestic and international) and entering the passcode 13733310, 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 more than $90 billion of total assets at December 31, 2021, and annual net revenue of $2.9 billion in 2021. 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. 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, often accompanied by words such as “may,” “might,” “could,” “anticipate,” “expect,” and similar terms, are based on management’s current expectations and assumptions regarding future events or determinations, all of which are subject to known and unknown risks and uncertainties.
Forward-looking statements are not guarantees, nor should they be relied upon as representing management’s views as of any subsequent date. Factors that could cause our actual results, performance or achievements, industry trends, and results or regulatory outcomes to differ materially from those expressed or implied in the forward-looking statements are discussed in our 2021 Form 10-K and subsequent filings with the Securities and Exchange Commission (SEC), and are available on our website (www.zionsbancorporation.com) and from the SEC (www.sec.gov).
Except to the extent required by law, we specifically disclaim any obligation to update any factors or to publicly announce the revisions to any forward-looking statements to reflect future events or developments.
ZIONS BANCORPORATION, N.A.
Press Release – Page 8
FINANCIAL HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| (In millions, except share, per share, and ratio data) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
BALANCE SHEET 1 | | | | | | | | | |
| Loans held for investment, net of allowance | $ | 53,377 | | $ | 51,862 | | $ | 50,764 | | $ | 50,338 | | $ | 50,187 |
| Total assets | 88,474 | | 87,784 | | 91,126 | | 93,200 | | 88,306 |
| Deposits | 75,995 | | 79,061 | | 82,351 | | 82,789 | | 77,884 |
| Total shareholders’ equity | 4,696 | | 5,632 | | 6,294 | | 7,463 | | 7,774 |
| STATEMENT OF INCOME | | | | | | | | | |
| Net earnings applicable to common shareholders | $ | 211 | | $ | 195 | | $ | 195 | | $ | 207 | | $ | 234 |
| Net interest income | 663 | | 593 | | 544 | | 553 | | 555 |
Taxable-equivalent net interest income 2 | 673 | | 602 | | 552 | | 563 | | 562 |
| Total noninterest income | 165 | | 172 | | 142 | | 190 | | 139 |
| Total noninterest expense | 479 | | 464 | | 464 | | 449 | | 429 |
Adjusted pre-provision net revenue 2 | 351 | | 300 | | 241 | | 288 | | 290 |
| Provision for credit losses | 71 | | 41 | | (33) | | 25 | | (46) |
| SHARE AND PER COMMON SHARE AMOUNTS | | | | | | | | | |
| Net earnings per diluted common share | $ | 1.40 | | $ | 1.29 | | $ | 1.27 | | $ | 1.34 | | $ | 1.45 |
| Dividends | 0.41 | | 0.38 | | 0.38 | | 0.38 | | 0.38 |
Book value per common share 1 | 28.45 | | 34.50 | | 38.68 | | 46.32 | | 46.85 |
Tangible book value per common share 1, 2 | 21.54 | | 27.76 | | 31.97 | | 39.62 | | 40.37 |
| Weighted average share price | 54.50 | | 56.62 | | 68.23 | | 63.69 | | 54.78 |
| Weighted average diluted common shares outstanding (in thousands) | 149,792 | | 150,838 | | 151,687 | | 153,635 | | 160,480 |
Common shares outstanding (in thousands) 1 | 149,611 | | 150,471 | | 151,348 | | 151,625 | | 156,530 |
| SELECTED RATIOS AND OTHER DATA | | | | | | | | | |
| Return on average assets | 0.97 | % | | 0.91 | % | | 0.90 | % | | 0.92 | % | | 1.08 | % |
| Return on average common equity | 15.8 | % | | 14.0 | % | | 11.8 | % | | 11.5 | % | | 12.3 | % |
Return on average tangible common equity 2 | 19.5 | % | | 17.1 | % | | 13.9 | % | | 13.4 | % | | 14.2 | % |
| Net interest margin | 3.24 | % | | 2.87 | % | | 2.60 | % | | 2.58 | % | | 2.68 | % |
| Cost of total deposits | 0.10 | % | | 0.03 | % | | 0.03 | % | | 0.03 | % | | 0.03 | % |
Efficiency ratio 2 | 57.6 | % | | 60.7 | % | | 65.8 | % | | 60.8 | % | | 59.8 | % |
| Effective tax rate | 21.9 | % | | 21.9 | % | | 20.4 | % | | 20.8 | % | | 22.8 | % |
| Ratio of nonperforming assets to loans and leases and other real estate owned | 0.28 | % | | 0.38 | % | | 0.49 | % | | 0.53 | % | | 0.64 | % |
| Annualized ratio of net loan and lease charge-offs to average loans | 0.20 | % | | 0.07 | % | | 0.05 | % | | 0.01 | % | | (0.01) | % |
Ratio of total allowance for credit losses to loans and leases outstanding 1 | 1.09 | % | | 1.04 | % | | 1.00 | % | | 1.09 | % | | 1.04 | % |
| Full-time equivalent employees | 9,920 | | 9,895 | | 9,724 | | 9,685 | | 9,641 |
CAPITAL RATIOS AND DATA 1 | | | | | | | | | |
Common equity tier 1 capital 3 | $ | 6,342 | | $ | 6,257 | | $ | 6,166 | | $ | 6,068 | | $ | 6,236 |
Risk-weighted assets 3 | 65,982 | | 63,424 | | 61,427 | | 59,600 | | 57,459 |
Tangible common equity ratio 2 | 3.7 | % | | 4.8 | % | | 5.4 | % | | 6.5 | % | | 7.2 | % |
Common equity tier 1 capital ratio 3 | 9.6 | % | | 9.9 | % | | 10.0 | % | | 10.2 | % | | 10.9 | % |
Tier 1 leverage ratio 3 | 7.5 | % | | 7.4 | % | | 7.3 | % | | 7.2 | % | | 7.6 | % |
Tier 1 risk-based capital ratio 3 | 10.3 | % | | 10.6 | % | | 10.8 | % | | 10.9 | % | | 11.6 | % |
Total risk-based capital ratio 3 | 12.0 | % | | 12.3 | % | | 12.5 | % | | 12.8 | % | | 13.6 | % |
1 At period end.
2 For information on non-GAAP financial measures, see pages 15-17.
3 Current period ratios and amounts represent estimates.
ZIONS BANCORPORATION, N.A.
Press Release – Page 9
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions, shares in thousands) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| (Unaudited) | | (Unaudited) | | (Unaudited) | | | | (Unaudited) |
| ASSETS | | | | | | | | | |
| Cash and due from banks | $ | 549 | | | $ | 559 | | | $ | 700 | | | $ | 595 | | | $ | 597 | |
| Money market investments: | | | | | | | | | |
| Interest-bearing deposits | 1,291 | | | 1,249 | | | 5,093 | | | 10,283 | | | 9,442 | |
| Federal funds sold and security resell agreements | 2,797 | | | 2,273 | | | 2,345 | | | 2,133 | | | 1,858 | |
| Investment securities: | | | | | | | | | |
Held-to-maturity1, at amortized cost | 423 | | | 614 | | | 439 | | | 441 | | | 459 | |
| Available-for-sale, at fair value | 23,233 | | | 25,297 | | | 26,145 | | | 24,048 | | | 20,461 | |
| Trading account, at fair value | 526 | | | 304 | | | 382 | | | 372 | | | 305 | |
| | | | | | | | | |
| Total securities, net of allowance | 24,182 | | | 26,215 | | | 26,966 | | | 24,861 | | | 21,225 | |
| Loans held for sale | 25 | | | 42 | | | 43 | | | 83 | | | 67 | |
| Loans and leases, net of unearned income and fees | 53,918 | | | 52,370 | | | 51,242 | | | 50,851 | | | 50,678 | |
| Less allowance for loan losses | 541 | | | 508 | | | 478 | | | 513 | | | 491 | |
| Loans held for investment, net of allowance | 53,377 | | | 51,862 | | | 50,764 | | | 50,338 | | | 50,187 | |
| Other noninterest-bearing investments | 983 | | | 840 | | | 829 | | | 851 | | | 868 | |
| Premises, equipment and software, net | 1,388 | | | 1,372 | | | 1,346 | | | 1,319 | | | 1,282 | |
| Goodwill and intangibles | 1,034 | | | 1,015 | | | 1,015 | | | 1,015 | | | 1,015 | |
| Other real estate owned | 3 | | | — | | | 4 | | | 8 | | | 21 | |
| Other assets | 2,845 | | | 2,357 | | | 2,021 | | | 1,714 | | | 1,744 | |
| Total assets | $ | 88,474 | | | $ | 87,784 | | | $ | 91,126 | | | $ | 93,200 | | | $ | 88,306 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | |
| Deposits: | | | | | | | | | |
| Noninterest-bearing demand | $ | 39,133 | | | $ | 40,289 | | | $ | 41,937 | | | $ | 41,053 | | | $ | 39,150 | |
| Interest-bearing: | | | | | | | | | |
| Savings and money market | 35,389 | | | 37,346 | | | 38,864 | | | 40,114 | | | 37,046 | |
| Time | 1,473 | | | 1,426 | | | 1,550 | | | 1,622 | | | 1,688 | |
| | | | | | | | | |
| Total deposits | 75,995 | | | 79,061 | | | 82,351 | | | 82,789 | | | 77,884 | |
| Federal funds purchased and other short-term borrowings | 5,363 | | | 1,018 | | | 638 | | | 903 | | | 579 | |
| Long-term debt | 647 | | | 671 | | | 689 | | | 1,012 | | | 1,020 | |
| Reserve for unfunded lending commitments | 49 | | | 38 | | | 36 | | | 40 | | | 38 | |
| Other liabilities | 1,724 | | | 1,364 | | | 1,118 | | | 993 | | | 1,011 | |
| Total liabilities | 83,778 | | | 82,152 | | | 84,832 | | | 85,737 | | | 80,532 | |
| Shareholders’ equity: | | | | | | | | | |
| Preferred stock, without par value; authorized 4,400 shares | 440 | | | 440 | | | 440 | | | 440 | | | 440 | |
Common stock2 ($0.001 par value; authorized 350,000 shares) and additional paid-in capital | 1,799 | | | 1,845 | | | 1,889 | | | 1,928 | | | 2,245 | |
| Retained earnings | 5,597 | | | 5,447 | | | 5,311 | | | 5,175 | | | 5,025 | |
| Accumulated other comprehensive income (loss) | (3,140) | | | (2,100) | | | (1,346) | | | (80) | | | 64 | |
| | | | | | | | | |
| | | | | | | | | |
| Total shareholders’ equity | 4,696 | | | 5,632 | | | 6,294 | | | 7,463 | | | 7,774 | |
| Total liabilities and shareholders’ equity | $ | 88,474 | | | $ | 87,784 | | | $ | 91,126 | | | $ | 93,200 | | | $ | 88,306 | |
1 Held-to-maturity (fair value) | $ | 379 | | | $ | 578 | | | $ | 414 | | | $ | 443 | | | $ | 461 | |
2 Common shares (issued and outstanding) | 149,611 | | | 150,471 | | | 151,348 | | | 151,625 | | | 156,530 | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 10
CONSOLIDATED STATEMENTS OF INCOME
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | Three Months Ended |
| (In millions, except share and per share amounts) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| Interest income: | | | | | | | | | |
| Interest and fees on loans | $ | 551 | | | $ | 468 | | | $ | 437 | | | $ | 471 | | | $ | 484 | |
| Interest on money market investments | 24 | | | 12 | | | 6 | | | 7 | | | 7 | |
| Interest on securities | 132 | | | 128 | | | 112 | | | 88 | | | 78 | |
| Total interest income | 707 | | | 608 | | | 555 | | | 566 | | | 569 | |
| Interest expense: | | | | | | | | | |
| Interest on deposits | 19 | | | 7 | | | 6 | | | 7 | | | 7 | |
| Interest on short- and long-term borrowings | 25 | | | 8 | | | 5 | | | 6 | | | 7 | |
| Total interest expense | 44 | | | 15 | | | 11 | | | 13 | | | 14 | |
| Net interest income | 663 | | | 593 | | | 544 | | | 553 | | | 555 | |
| Provision for credit losses: | | | | | | | | | |
| Provision for loan losses | 60 | | | 39 | | | (29) | | | 23 | | | (45) | |
| Provision for unfunded lending commitments | 11 | | | 2 | | | (4) | | | 2 | | | (1) | |
| | | | | | | | | |
| Total provision for credit losses | 71 | | | 41 | | | (33) | | | 25 | | | (46) | |
| Net interest income after provision for credit losses | 592 | | | 552 | | | 577 | | | 528 | | | 601 | |
| Noninterest income: | | | | | | | | | |
| Commercial account fees | 40 | | | 37 | | | 41 | | | 34 | | | 34 | |
| Card fees | 27 | | | 25 | | | 25 | | | 25 | | | 25 | |
| Retail and business banking fees | 17 | | | 20 | | | 20 | | | 19 | | | 20 | |
| Loan-related fees and income | 18 | | | 21 | | | 22 | | | 22 | | | 27 | |
| Capital markets and foreign exchange fees | 25 | | | 21 | | | 15 | | | 24 | | | 17 | |
| Wealth management fees | 14 | | | 13 | | | 14 | | | 13 | | | 13 | |
| Other customer-related fees | 15 | | | 17 | | | 14 | | | 15 | | | 15 | |
| Customer-related noninterest income | 156 | | | 154 | | | 151 | | | 152 | | | 151 | |
| Fair value and nonhedge derivative income (loss) | 4 | | | 10 | | | 6 | | | (1) | | | 2 | |
| Dividends and other income (loss) | (1) | | | 7 | | | 2 | | | 19 | | | 9 | |
| Securities gains (losses), net | 6 | | | 1 | | | (17) | | | 20 | | | (23) | |
| Total noninterest income | 165 | | | 172 | | | 142 | | | 190 | | | 139 | |
| Noninterest expense: | | | | | | | | | |
| Salaries and employee benefits | 312 | | | 307 | | | 312 | | | 282 | | | 285 | |
| Technology, telecom, and information processing | 53 | | | 53 | | | 52 | | | 51 | | | 50 | |
| Occupancy and equipment, net | 38 | | | 36 | | | 38 | | | 38 | | | 37 | |
| Professional and legal services | 14 | | | 14 | | | 14 | | | 16 | | | 17 | |
| Marketing and business development | 11 | | | 9 | | | 8 | | | 20 | | | 9 | |
| Deposit insurance and regulatory expense | 13 | | | 13 | | | 10 | | | 9 | | | 8 | |
| Credit-related expense | 8 | | | 7 | | | 7 | | | 7 | | | 7 | |
| Other real estate expense, net | — | | | — | | | 1 | | | — | | | — | |
| Other | 30 | | | 25 | | | 22 | | | 26 | | | 16 | |
| Total noninterest expense | 479 | | | 464 | | | 464 | | | 449 | | | 429 | |
| Income before income taxes | 278 | | | 260 | | | 255 | | | 269 | | | 311 | |
| Income taxes | 61 | | | 57 | | | 52 | | | 56 | | | 71 | |
| Net income | 217 | | | 203 | | | 203 | | | 213 | | | 240 | |
| | | | | | | | | |
| | | | | | | | | |
| Preferred stock dividends | (6) | | | (8) | | | (8) | | | (6) | | | (6) | |
| | | | | | | | | |
| Net earnings applicable to common shareholders | $ | 211 | | | $ | 195 | | | $ | 195 | | | $ | 207 | | | $ | 234 | |
| Weighted average common shares outstanding during the period: | | | | | | | | |
| Basic shares (in thousands) | 149,628 | | | 150,635 | | | 151,285 | | | 153,248 | | | 160,221 | |
| Diluted shares (in thousands) | 149,792 | | | 150,838 | | | 151,687 | | | 153,635 | | | 160,480 | |
| Net earnings per common share: | | | | | | | | | |
| Basic | $ | 1.40 | | | $ | 1.29 | | | $ | 1.27 | | | $ | 1.34 | | | $ | 1.45 | |
| Diluted | 1.40 | | | 1.29 | | | 1.27 | | | 1.34 | | | 1.45 | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 11
Loan Balances Held for Investment by Portfolio Type
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| Commercial: | | | | | | | | | |
| Commercial and industrial | $ | 15,656 | | | $ | 14,989 | | | $ | 14,356 | | | $ | 13,867 | | | $ | 13,230 | |
| PPP | 306 | | | 534 | | | 1,081 | | | 1,855 | | | 3,080 | |
| Leasing | 347 | | | 339 | | | 318 | | | 327 | | | 293 | |
| Owner occupied | 9,279 | | | 9,208 | | | 9,026 | | | 8,733 | | | 8,446 | |
| Municipal | 4,224 | | | 4,113 | | | 3,944 | | | 3,658 | | | 3,400 | |
| Total commercial | 29,812 | | | 29,183 | | | 28,725 | | | 28,440 | | | 28,449 | |
| Commercial real estate: | | | | | | | | | |
| Construction and land development | 2,800 | | | 2,659 | | | 2,769 | | | 2,757 | | | 2,843 | |
| Term | 9,556 | | | 9,477 | | | 9,325 | | | 9,441 | | | 9,310 | |
| Total commercial real estate | 12,356 | | | 12,136 | | | 12,094 | | | 12,198 | | | 12,153 | |
| Consumer: | | | | | | | | | |
| Home equity credit line | 3,331 | | | 3,266 | | | 3,089 | | | 3,016 | | | 2,834 | |
| 1-4 family residential | 6,852 | | | 6,423 | | | 6,122 | | | 6,050 | | | 6,140 | |
| Construction and other consumer real estate | 973 | | | 787 | | | 692 | | | 638 | | | 584 | |
| Bankcard and other revolving plans | 471 | | | 448 | | | 410 | | | 396 | | | 395 | |
| Other | 123 | | | 127 | | | 110 | | | 113 | | | 123 | |
| Total consumer | 11,750 | | | 11,051 | | | 10,423 | | | 10,213 | | | 10,076 | |
| Total loans and leases | $ | 53,918 | | | $ | 52,370 | | | $ | 51,242 | | | $ | 50,851 | | | $ | 50,678 | |
Nonperforming Assets
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| | | | | | | | | |
Nonaccrual loans 1 | $ | 151 | | | $ | 201 | | | $ | 252 | | | $ | 271 | | | $ | 323 | |
Other real estate owned 2 | — | | | — | | | — | | | 1 | | | 1 | |
| Total nonperforming assets | $ | 151 | | | $ | 201 | | | $ | 252 | | | $ | 272 | | | $ | 324 | |
Ratio of nonperforming assets to loans1 and leases and other real estate owned 2 | 0.28 | % | | 0.38 | % | | 0.49 | % | | 0.53 | % | | 0.64 | % |
| Accruing loans past due 90 days or more | $ | 20 | | | $ | 6 | | | $ | 3 | | | $ | 8 | | | $ | 4 | |
Ratio of accruing loans past due 90 days or more to loans1 and leases | 0.04 | % | | 0.01 | % | | 0.01 | % | | 0.02 | % | | 0.01 | % |
| Nonaccrual loans and accruing loans past due 90 days or more | $ | 171 | | | $ | 207 | | | $ | 255 | | | $ | 279 | | | $ | 327 | |
Ratio of nonperforming assets1 and accruing loans 90 days or more past due to loans and leases and other real estate owned | 0.32 | % | | 0.39 | % | | 0.50 | % | | 0.55 | % | | 0.65 | % |
Accruing loans past due 30-89 days 3 | $ | 84 | | | $ | 123 | | | $ | 93 | | | $ | 70 | | | $ | 114 | |
| Restructured loans included in nonaccrual loans | 39 | | | 61 | | | 100 | | | 105 | | | 121 | |
| Restructured loans on accrual | 206 | | | 214 | | | 216 | | | 221 | | | 231 | |
| Classified loans | 965 | | | 1,009 | | | 1,148 | | | 1,236 | | | 1,397 | |
1 Includes loans held for sale.
2 Does not include banking premises held for sale.
3 Includes $31 million of PPP loans at September 30, 2022, which we expect will be paid in full by either the borrower or the SBA.
ZIONS BANCORPORATION, N.A.
Press Release – Page 12
Allowance for Credit Losses
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| (In millions) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| Allowance for Loan Losses | | | | | | | | | |
| Balance at beginning of period | $ | 508 | | | $ | 478 | | | $ | 513 | | | $ | 491 | | | $ | 535 | |
| | | | | | | | | |
| Provision for loan losses | 60 | | | 39 | | | (29) | | | 23 | | | (45) | |
| | | | | | | | | |
| Loan and lease charge-offs | 38 | | | 18 | | | 17 | | | 11 | | | 8 | |
| Less: Recoveries | 11 | | | 9 | | | 11 | | | 10 | | | 9 | |
| Net loan and lease charge-offs | 27 | | | 9 | | | 6 | | | 1 | | | (1) | |
| Balance at end of period | $ | 541 | | | $ | 508 | | | $ | 478 | | | $ | 513 | | | $ | 491 | |
Ratio of allowance for loan losses to loans1 and leases, at period end | 1.00 | % | | 0.97 | % | | 0.93 | % | | 1.01 | % | | 0.97 | % |
Ratio of allowance for loan losses to nonaccrual loans1 at period end | 358 | % | | 261 | % | | 190 | % | | 189 | % | | 152 | % |
| Annualized ratio of net loan and lease charge-offs to average loans | 0.20 | % | | 0.07 | % | | 0.05 | % | | 0.01 | % | | (0.01) | % |
| Annualized ratio of net loan and lease charge-offs to average loans (excluding PPP loans) | 0.21 | % | | 0.07 | % | | 0.05 | % | | 0.01 | % | | (0.01) | % |
| Reserve for Unfunded Lending Commitments | | | | | | | | | |
| Balance at beginning of period | $ | 38 | | | $ | 36 | | | $ | 40 | | | $ | 38 | | | $ | 39 | |
| Provision for unfunded lending commitments | 11 | | | 2 | | | (4) | | | 2 | | | (1) | |
| Balance at end of period | $ | 49 | | | $ | 38 | | | $ | 36 | | | $ | 40 | | | $ | 38 | |
| Allowance for Credit Losses | | | | | | | | | |
| Allowance for loan losses | $ | 541 | | | $ | 508 | | | $ | 478 | | | $ | 513 | | | $ | 491 | |
| Reserve for unfunded lending commitments | 49 | | | 38 | | | 36 | | | 40 | | | 38 | |
| Total allowance for credit losses | $ | 590 | | | $ | 546 | | | $ | 514 | | | $ | 553 | | | $ | 529 | |
Ratio of ACL to loans1 and leases outstanding, at period end | 1.09 | % | | 1.04 | % | | 1.00 | % | | 1.09 | % | | 1.04 | % |
Ratio of ACL to loans1 and leases outstanding (excluding PPP loans), at period end | 1.10 | % | | 1.05 | % | | 1.02 | % | | 1.13 | % | | 1.11 | % |
1 Does not include loans held for sale.
ZIONS BANCORPORATION, N.A.
Press Release – Page 13
Nonaccrual Loans by Portfolio Type
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| | | | | | | | | |
| Loans held for sale | $ | — | | | $ | 6 | | | $ | — | | | $ | — | | | $ | — | |
| Commercial: | | | | | | | | | |
| Commercial and industrial | $ | 52 | | | $ | 86 | | | $ | 112 | | | $ | 124 | | | $ | 157 | |
| PPP | 5 | | | 1 | | | 2 | | | 3 | | | — | |
| Leasing | — | | | — | | | — | | | — | | | — | |
| Owner occupied | 28 | | | 40 | | | 53 | | | 57 | | | 67 | |
| Municipal | — | | | — | | | — | | | — | | | — | |
| Total commercial | 85 | | | 127 | | | 167 | | | 184 | | | 224 | |
| Commercial real estate: | | | | | | | | | |
| Construction and land development | — | | | — | | | — | | | — | | | — | |
| Term | 20 | | | 20 | | | 20 | | | 20 | | | 25 | |
| Total commercial real estate | 20 | | | 20 | | | 20 | | | 20 | | | 25 | |
| Consumer: | | | | | | | | | |
| Home equity credit line | 10 | | | 10 | | | 13 | | | 14 | | | 15 | |
| 1-4 family residential | 36 | | | 38 | | | 51 | | | 52 | | | 58 | |
| Construction and other consumer real estate | — | | | — | | | — | | | — | | | — | |
| Bankcard and other revolving plans | — | | | — | | | 1 | | | 1 | | | 1 | |
| Other | — | | | — | | | — | | | — | | | — | |
| Total consumer | 46 | | | 48 | | | 65 | | | 67 | | | 74 | |
| | | | | | | | | |
| Total nonaccrual loans | $ | 151 | | | $ | 201 | | | $ | 252 | | | $ | 271 | | | $ | 323 | |
Net Charge-Offs by Portfolio Type
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In millions) | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| Commercial: | | | | | | | | | |
| Commercial and industrial | $ | 31 | | | $ | 8 | | | $ | 6 | | | $ | 3 | | | $ | (2) | |
| PPP | — | | | — | | | — | | | — | | | — | |
| Leasing | — | | | — | | | — | | | — | | | — | |
| Owner occupied | — | | | — | | | (1) | | | — | | | (1) | |
| Municipal | — | | | — | | | — | | | — | | | — | |
| Total commercial | 31 | | | 8 | | | 5 | | | 3 | | | (3) | |
| Commercial real estate: | | | | | | | | | |
| Construction and land development | — | | | — | | | — | | | (3) | | | — | |
| Term | — | | | — | | | — | | | — | | | — | |
| Total commercial real estate | — | | | — | | | — | | | (3) | | | — | |
| Consumer: | | | | | | | | | |
| Home equity credit line | — | | | (1) | | | (1) | | | — | | | 1 | |
| 1-4 family residential | (4) | | | 1 | | | 1 | | | — | | | 1 | |
| Construction and other consumer real estate | — | | | — | | | — | | | — | | | — | |
| Bankcard and other revolving plans | — | | | 1 | | | 1 | | | — | | | — | |
| Other | — | | | — | | | — | | | 1 | | | — | |
| Total consumer loans | (4) | | | 1 | | | 1 | | | 1 | | | 2 | |
| Total net charge-offs (recoveries) | $ | 27 | | | $ | 9 | | | $ | 6 | | | $ | 1 | | | $ | (1) | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 14
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | Three Months Ended |
| September 30, 2022 | | June 30, 2022 | | September 30, 2021 |
| (In millions) | Average balance | | Average
yield/rate 1 | | Average balance | | Average
yield/rate 1 | | Average balance | | Average
yield/rate 1 |
| ASSETS | | | | | | | | | | | |
| Money market investments: | | | | | | | | | | | |
| Interest-bearing deposits | $ | 1,233 | | | 2.19 | % | | $ | 3,113 | | | 0.66 | % | | $ | 10,977 | | | 0.15 | % |
| Federal funds sold and security resell agreements | 2,511 | | | 2.66 | % | | 2,542 | | | 1.13 | % | | 1,739 | | | 0.50 | % |
| Total money market investments | 3,744 | | | 2.51 | % | | 5,655 | | | 0.87 | % | | 12,716 | | | 0.20 | % |
| Securities: | | | | | | | | | | | |
| Held-to-maturity | 560 | | | 2.88 | % | | 485 | | | 2.96 | % | | 557 | | | 2.87 | % |
| Available-for-sale | 24,892 | | | 2.05 | % | | 25,722 | | | 1.91 | % | | 18,814 | | | 1.56 | % |
| Trading account | 288 | | | 4.57 | % | | 357 | | | 5.07 | % | | 199 | | | 4.41 | % |
| Total securities | 25,740 | | | 2.10 | % | | 26,564 | | | 1.97 | % | | 19,570 | | | 1.63 | % |
| Loans held for sale | 37 | | | 5.33 | % | | 38 | | | 0.72 | % | | 52 | | | 3.03 | % |
Loans and leases:2 | | | | | | | | | | | |
| Commercial - excluding PPP loans | 28,972 | | | 4.13 | % | | 28,151 | | | 3.71 | % | | 24,854 | | | 3.76 | % |
| Commercial - PPP loans | 408 | | | 6.28 | % | | 801 | | | 7.45 | % | | 3,795 | | | 6.66 | % |
| Commercial real estate | 12,182 | | | 4.73 | % | | 12,098 | | | 3.69 | % | | 12,144 | | | 3.42 | % |
| Consumer | 11,391 | | | 3.61 | % | | 10,734 | | | 3.24 | % | | 10,058 | | | 3.38 | % |
| Total loans and leases | 52,953 | | | 4.17 | % | | 51,784 | | | 3.67 | % | | 50,851 | | | 3.82 | % |
| Total interest-earning assets | 82,474 | | | 3.45 | % | | 84,041 | | | 2.94 | % | | 83,189 | | | 2.75 | % |
| Cash and due from banks | 604 | | | | | 617 | | | | | 597 | | | |
| Allowance for credit losses on loans and debt securities | (515) | | | | | (480) | | | | | (536) | | | |
| Goodwill and intangibles | 1,021 | | | | | 1,015 | | | | | 1,015 | | | |
| Other assets | 4,923 | | | | | 4,712 | | | | | 4,291 | | | |
| Total assets | $ | 88,507 | | | | | $ | 89,905 | | | | | $ | 88,556 | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Savings and money market | $ | 36,399 | | | 0.20 | % | | $ | 38,325 | | | 0.06 | % | | $ | 37,262 | | | 0.05 | % |
| Time | 1,441 | | | 0.32 | % | | 1,488 | | | 0.24 | % | | 1,829 | | | 0.32 | % |
| | | | | | | | | | | |
| Total interest-bearing deposits | 37,840 | | | 0.20 | % | | 39,813 | | | 0.07 | % | | 39,091 | | | 0.07 | % |
| Borrowed funds: | | | | | | | | | | | |
| Federal funds purchased and other short-term borrowings | 2,885 | | | 2.33 | % | | 743 | | | 0.70 | % | | 630 | | | 0.08 | % |
| Long-term debt | 673 | | | 4.83 | % | | 678 | | | 3.79 | % | | 1,204 | | | 2.34 | % |
| Total borrowed funds | 3,558 | | | 2.80 | % | | 1,421 | | | 2.17 | % | | 1,834 | | | 1.56 | % |
| Total interest-bearing funds | 41,398 | | | 0.43 | % | | 41,234 | | | 0.14 | % | | 40,925 | | | 0.13 | % |
| Noninterest-bearing demand deposits | 39,623 | | | | | 41,074 | | | | | 38,320 | | | |
| Other liabilities | 1,743 | | | | | 1,575 | | | | | 1,302 | | | |
| Total liabilities | 82,764 | | | | | 83,883 | | | | | 80,547 | | | |
| Shareholders’ equity: | | | | | | | | | | | |
| Preferred equity | 440 | | | | | 440 | | | | | 440 | | | |
| Common equity | 5,303 | | | | | 5,582 | | | | | 7,569 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total shareholders’ equity | 5,743 | | | | | 6,022 | | | | | 8,009 | | | |
| Total liabilities and shareholders’ equity | $ | 88,507 | | | | | $ | 89,905 | | | | | $ | 88,556 | | | |
| Spread on average interest-bearing funds | | | 3.02 | % | | | | 2.80 | % | | | | 2.62 | % |
| Impact of net noninterest-bearing sources of funds | | | 0.22 | % | | | | 0.07 | % | | | | 0.06 | % |
| Net interest margin | | | 3.24 | % | | | | 2.87 | % | | | | 2.68 | % |
| Memo: total loans and leases, excluding PPP loans | 52,545 | | | 4.16 | % | | 50,983 | | | 3.61 | % | | 47,056 | | | 3.59 | % |
| | | | | | | | | | | |
| Memo: total cost of deposits | | | 0.10 | % | | | | 0.03 | % | | | | 0.03 | % |
| Memo: total deposits and interest-bearing liabilities | 81,021 | | | 0.22 | % | | 82,308 | | | 0.07 | % | | 79,245 | | | 0.07 | % |
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 15
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 basis for period-to-period comparisons. We use these non-GAAP financial measures to assess our performance, financial position, and for presentations of our performance to investors. We believe that presenting these non-GAAP financial measures permits investors to assess our performance on the same basis as that applied by our management and the financial services industry.
Non-GAAP financial measures have inherent limitations and are not necessarily comparable to similar financial measures that may be presented by other financial services companies. 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.
Tangible Common Equity and Related Measures
Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets and their related amortization. We believe these non-GAAP measures provide useful information about our use of shareholders’ equity and provide a basis for evaluating the performance of a business more consistently, whether acquired or developed internally.
RETURN ON AVERAGE TANGIBLE COMMON EQUITY (NON-GAAP)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| (Dollar amounts in millions) | | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net earnings applicable to common shareholders, net of tax | (a) | $ | 211 | | | $ | 195 | | | $ | 195 | | | $ | 207 | | | $ | 234 | |
| Average common equity (GAAP) | | $ | 5,303 | | | $ | 5,582 | | | $ | 6,700 | | | $ | 7,146 | | | $ | 7,569 | |
| Average goodwill and intangibles | | (1,021) | | | (1,015) | | | (1,015) | | | (1,015) | | | (1,015) | |
| Average tangible common equity (non-GAAP) | (b) | $ | 4,282 | | | $ | 4,567 | | | $ | 5,685 | | | $ | 6,131 | | | $ | 6,554 | |
| 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 | 19.5 | % | | 17.1 | % | | 13.9 | % | | 13.4 | % | | 14.2 | % |
TANGIBLE EQUITY RATIO, TANGIBLE COMMON EQUITY RATIO, AND TANGIBLE BOOK VALUE PER COMMON SHARE (ALL NON-GAAP MEASURES)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollar amounts in millions, except per share amounts) | | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| | | | | | | | | |
| Total shareholders’ equity (GAAP) | | $ | 4,696 | | | $ | 5,632 | | | $ | 6,294 | | | $ | 7,463 | | | $ | 7,774 | |
| Goodwill and intangibles | | (1,034) | | | (1,015) | | | (1,015) | | | (1,015) | | | (1,015) | |
| Tangible equity (non-GAAP) | (a) | 3,662 | | | 4,617 | | | 5,279 | | | 6,448 | | | 6,759 | |
| Preferred stock | | (440) | | | (440) | | | (440) | | | (440) | | | (440) | |
| Tangible common equity (non-GAAP) | (b) | $ | 3,222 | | | $ | 4,177 | | | $ | 4,839 | | | $ | 6,008 | | | $ | 6,319 | |
| Total assets (GAAP) | | $ | 88,474 | | | $ | 87,784 | | | $ | 91,126 | | | $ | 93,200 | | | $ | 88,306 | |
| Goodwill and intangibles | | (1,034) | | | (1,015) | | | (1,015) | | | (1,015) | | | (1,015) | |
| Tangible assets (non-GAAP) | (c) | $ | 87,440 | | | $ | 86,769 | | | $ | 90,111 | | | $ | 92,185 | | | $ | 87,291 | |
| Common shares outstanding (in thousands) | (d) | 149,611 | | | 150,471 | | | 151,348 | | | 151,625 | | | 156,530 | |
| Tangible equity ratio (non-GAAP) | (a/c) | 4.2 | % | | 5.3 | % | | 5.9 | % | | 7.0 | % | | 7.7 | % |
| Tangible common equity ratio (non-GAAP) | (b/c) | 3.7 | % | | 4.8 | % | | 5.4 | % | | 6.5 | % | | 7.2 | % |
| Tangible book value per common share (non-GAAP) | (b/d) | $ | 21.54 | | | $ | 27.76 | | | $ | 31.97 | | | $ | 39.62 | | | $ | 40.37 | |
ZIONS BANCORPORATION, N.A.
Press Release – Page 16
Efficiency Ratio and Adjusted Pre-Provision Net Revenue
The efficiency ratio is a measure of operating expense relative to revenue. We believe the efficiency ratio provides useful information regarding the cost of generating revenue. The methodology of determining the efficiency ratio may differ among companies. We make adjustments to exclude certain items that are not generally expected to recur frequently, as identified in the subsequent schedule, which we believe allow for more consistent comparability across periods. Adjusted noninterest expense provides a measure as to how we are managing our expenses; adjusted pre-provision net revenue (“PPNR”) enables management and others to assess our ability to generate capital. Taxable-equivalent net interest income allows us to assess the comparability of revenue arising from both taxable and tax-exempt sources.
EFFICIENCY RATIO (NON-GAAP) AND ADJUSTED PRE-PROVISION NET REVENUE (NON-GAAP)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| (Dollar amounts in millions) | | September 30,
2022 | | June 30,
2022 | | March 31,
2022 | | December 31,
2021 | | September 30,
2021 |
| | | | | | | | | | |
| Noninterest expense (GAAP) | (a) | $ | 479 | | | $ | 464 | | | $ | 464 | | | $ | 449 | | | $ | 429 | |
| Adjustments: | | | | | | | | | | |
| Severance costs | | — | | | 1 | | | — | | | — | | | 1 | |
| Other real estate expense, net | | — | | | — | | | 1 | | | — | | | — | |
| | | | | | | | | | |
| Amortization of core deposit and other intangibles | | 1 | | | — | | | — | | | 1 | | | — | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
SBIC investment success fee accrual 1 | | 1 | | | — | | | (1) | | | 2 | | | (4) | |
| Total adjustments | (b) | 2 | | | 1 | | | — | | | 3 | | | (3) | |
| Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 477 | | | $ | 463 | | | $ | 464 | | | $ | 446 | | | $ | 432 | |
| | | | | | | | | | |
| Net interest income (GAAP) | (d) | $ | 663 | | | $ | 593 | | | $ | 544 | | | $ | 553 | | | $ | 555 | |
| Fully taxable-equivalent adjustments | (e) | 10 | | | 9 | | | 8 | | | 10 | | | 7 | |
| Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 673 | | | 602 | | | 552 | | | 563 | | | 562 | |
| Noninterest income (GAAP) | (g) | 165 | | | 172 | | | 142 | | | 190 | | | 139 | |
| Combined income (non-GAAP) | (f+g)=(h) | 838 | | | 774 | | | 694 | | | 753 | | | 701 | |
| Adjustments: | | | | | | | | | | |
| Fair value and nonhedge derivative income (loss) | | 4 | | | 10 | | | 6 | | | (1) | | | 2 | |
| Securities gains (losses), net | | 6 | | | 1 | | | (17) | | | 20 | | | (23) | |
Total adjustments 2 | (i) | 10 | | | 11 | | | (11) | | | 19 | | | (21) | |
Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $ | 828 | | | $ | 763 | | | $ | 705 | | | $ | 734 | | | $ | 722 | |
| | | | | | | | | | |
| Pre-provision net revenue (PPNR) (non-GAAP) | (h)-(a) | $ | 359 | | | $ | 310 | | | $ | 230 | | | $ | 304 | | | $ | 272 | |
| Adjusted PPNR (non-GAAP) | (j)-(c) | 351 | | | 300 | | | 241 | | | 288 | | | 290 | |
| Efficiency ratio (non-GAAP) | (c/j) | 57.6 | % | | 60.7 | % | | 65.8 | % | | 60.8 | % | | 59.8 | % |
1 The success fee accrual is associated with the gains/(losses) from our SBIC investments. The gains/(losses) related to these investments are excluded from the efficiency ratio through securities gains (losses), net.
2 Excluding the $6 million equity investment valuation loss recorded in dividends and other income, the efficiency ratio for the three months ended September 30, 2022 would have been 57.2%.
ZIONS BANCORPORATION, N.A.
Press Release – Page 17
| | | | | | | | | | | | | | | | |
| | Nine Months Ended |
| (Dollar amounts in millions) | | September 30,
2022 | | September 30,
2021 | | |
| | | | | | |
| Noninterest expense (GAAP) | (a) | $ | 1,407 | | | $ | 1,292 | | | |
| Adjustments: | | | | | | |
| Severance costs | | 1 | | | 1 | | | |
| Other real estate expense | | 1 | | | — | | | |
| | | | | | |
| Amortization of core deposit and other intangibles | | 1 | | | — | | | |
| | | | | | |
| Pension termination-related expense | | — | | | (5) | | | |
SBIC investment success fee accrual 1 | | — | | | 5 | | | |
| Total adjustments | (b) | 3 | | | 1 | | | |
| Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $ | 1,404 | | | $ | 1,291 | | | |
| | | | | | |
| Net interest income (GAAP) | (d) | $ | 1,800 | | | $ | 1,655 | | | |
| Fully taxable-equivalent adjustments | (e) | 27 | | | 22 | | | |
| Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 1,827 | | | 1,677 | | | |
| Noninterest income (GAAP) | (g) | 479 | | | 513 | | | |
| Combined income (non-GAAP) | (f+g)=(h) | 2,306 | | | 2,190 | | | |
| Adjustments: | | | | | | |
| Fair value and nonhedge derivative income (loss) | | 20 | | | 15 | | | |
| Securities gains (losses), net | | (10) | | | 51 | | | |
Total adjustments 2 | (i) | 10 | | | 66 | | | |
| Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $ | 2,296 | | | $ | 2,124 | | | |
| | | | | | |
| Pre-provision net revenue (PPNR) | (h)-(a) | $ | 899 | | | $ | 898 | | | |
| Adjusted PPNR (non-GAAP) | (j)-(c) | 892 | | | 833 | | | |
| Efficiency ratio (non-GAAP) | (c/j) | 61.1 | % | | 60.8 | % | | |
1 The success fee accrual is associated with the gains/(losses) from our SBIC investments. The gains/(losses) related to these investments are excluded from the efficiency ratio through securities gains (losses), net.
2 Excluding the $6 million equity investment valuation loss recorded in dividends and other income, the efficiency ratio for the nine months ended September 30, 2022 would have been 61.0%.
