Lehman Brothers Financial Services Conference 12 September 2007 New York City Exhibit 99.1 |
Forward-Looking Statements This presentation contains statements regarding the projected performance of Zions Bancorporation. These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act. Actual results or achievements may differ materially from the projections provided in this presentation since such projections involve significant known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally in areas in which Zions Bancorporation conducts their operations, being less favorable than expected; changes in the interest rate environment reducing expected interest margins; legislation or regulatory changes, which adversely affect the ability of the company to conduct the business in which the company would be engaged; delays in adoption of digital certificates for online services. Zions Bancorporation disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein to reflect future events or developments. |
Today’s Agenda Outlook Summary Lockhart Funding Net Interest Margin Credit Mid-Quarter Update Overview |
The Intermountain West’s Largest Banking Company Over 500 Offices and 600 ATMs in 10 Western States NASDAQ Financial 100 Index S&P 500 Index Total Assets of $49 Billion |
Our Growth Engine Population Growth Estimates from US Census (2000-2030) 114% 108% 60% 56% 52% 51% 46% 41% 37% 35% 29% 0% 20% 40% 60% 80% 100% 120% NV AZ TX UT ID ZION WA OR CA CO US Growing 75% faster than the national average |
Our Growth Engine Projected Population Growth 2006-2011 #1 Ranking Among 40 Largest Banks Source: Lehman Brothers 14.2% 12.5% 11.2% 11.0% 10.0% 10.0% 8.1% 7.8% 7.2% 3.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% |
A Collection of Great Banks Headquarters Offices ATMs Assets Deposits Salt Lake City 133 166 $15.1B $10.8B San Diego 91 103 $10.3B $8.2B Houston 80 129 $10.0B $6.9B Phoenix 88 73 $5.4B $4.3B Las Vegas 73 80 $3.9B $3.4B Denver 40 47 $2.4B $1.7B Seattle 1 0 $0.8B $0.5B Portland 1 0 $0.03B $0.01B 1Q 2007 Average Balances |
Long-Term Growth Source: SNL Net Income (millions) $583 $0 $100 $200 $300 $400 $500 $600 $700 Total Assets (millions) $46,970 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 |
Per Share Growth Source: SNL Revenue per Share (diluted) $21.44 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 Earnings Per Share (diluted) $5.36 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 |
Today’s Agenda Outlook Summary Lockhart Funding Net Interest Margin Credit Mid-Quarter Update Overview |
Loan Portfolio Diversification Loans by Purpose – 6/30/2007 C&I 26% Owner Occ 20% CRE Term 14% Consumer 1-4 Family 11% Other Consumer 7% Slice 8 0% Residential Construction 13% Comm Construction 9% C&I 46% Consumer 18% CRE 36% |
Strong Asset Quality • Direct exposure to subprime & Alt-A mortgages.…………………………………… $0 • Securities backed by subprime mortgages……….…………………………… $0 • HECL………………………………..……. $1.9B – Avg FICO at origination 752 – Avg FICO today 757 – Avg LTV at origination 60.6% On-Balance Sheet Amounts of Selected Asset Classes |
Diversified CRE Portfolio Loans by Product Type and Location – 6/30/07 Average LTV: 59.5% (6/30/2007) Collateral Location Arizona Northern California Southern California Nevada Colorado Texas Utah/ Idaho Washington/ Oregon Other Total Product as % Product as % Loan Type Total CRE Commercial Term Industrial 0.62% 0.35% 1.41% 0.03% 0.06% 0.25% 0.08% 0.16% 0.26% 3.23% 7.9% 3.2% Office 0.84% 0.62% 1.85% 1.53% 1.12% 1.88% 1.44% 0.27% 1.70% 11.26% 27.7% 11.3% Retail 0.59% 0.55% 1.51% 1.37% 0.21% 0.90% 0.27% 0.14% 0.20% 5.73% 14.1% 5.7% Hotel/Motel 0.93% 0.41% 0.71% 0.64% 0.60% 0.46% 0.98% 0.15% 2.46% 7.33% 18.0% 7.3% A&D 0.00% 0.03% 0.14% 0.02% 0.00% 0.00% 0.00% 0.05% 0.00% 0.24% 0.6% 0.2% Medical 0.02% 0.11% 0.25% 0.16% 0.02% 0.08% 0.11% 0.01% 0.03% 0.79% 1.9% 0.8% Recreation/Restaurant 0.12% 0.04% 0.26% 0.10% 0.12% 0.10% 0.07% 0.01% 0.25% 1.08% 2.6% 1.1% Multifamily 0.19% 0.40% 1.15% 0.36% 0.00% 0.74% 0.50% 0.04% 0.35% 3.94% 9.7% 3.9% Other 0.99% 0.19% 1.54% 0.64% 0.44% 0.21% 1.86% 0.06% 1.20% 7.13% 17.5% 7.1% Total Commercial Term 4.30% 2.70% 8.82% 4.86% 2.58% 4.62% 5.31% 0.87% 6.44% 40.72% 100.0% 40.7% Residential Construction Single Family Housing 4.02% 1.07% 3.50% 0.71% 0.83% 2.29% 2.14% 0.01% 0.36% 14.92% 25.2% 14.9% Land Acquisition & Development 4.65% 0.80% 2.42% 1.86% 0.68% 3.90% 2.78% 0.20% 1.70% 18.99% 32.0% 19.0% Total Residential Construction 8.66% 1.87% 5.92% 2.57% 1.51% 6.19% 4.91% 0.21% 2.06% 33.91% 57.2% 33.9% Commercial Construction Industrial 0.35% 0.00% 0.20% 0.04% 0.09% 0.70% 0.07% 0.04% 0.14% 1.62% 2.7% 1.6% Office 0.52% 0.02% 0.41% 0.65% 0.04% 0.35% 0.33% 0.14% 0.22% 2.70% 4.5% 2.7% Retail 0.65% 0.00% 0.41% 1.35% 0.19% 2.35% 0.57% 0.07% 0.90% 6.48% 10.9% 6.5% Hotel/Motel 0.19% 0.02% 0.09% 0.00% 0.07% 0.02% 0.20% 0.00% 0.15% 0.74% 1.2% 0.7% A&D 1.44% 0.24% 0.44% 2.25% 0.26% 1.65% 0.58% 0.10% 0.58% 7.54% 12.7% 7.5% Medical 0.12% 0.00% 0.05% 0.06% 0.01% 0.33% 0.22% 0.00% 0.09% 0.87% 1.5% 0.9% Recreation/Restaurant 0.03% 0.00% 0.01% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.1% 0.1% Other 0.17% 0.00% 0.27% 0.09% 0.05% 0.04% 0.10% 0.08% 0.30% 1.09% 1.8% 1.1% Apartments 0.43% 0.29% 0.69% 0.14% 0.27% 1.58% 0.24% 0.28% 0.36% 4.29% 7.2% 4.3% Total Commercial Construction 3.90% 0.56% 2.56% 4.59% 0.97% 7.02% 2.30% 0.71% 2.75% 25.37% 42.8% 25.4% TOTAL CONSTRUCTION 12.57% 2.43% 8.48% 7.16% 2.48% 13.20% 7.22% 0.93% 4.81% 59.28% 100.0% 59.3% TOTAL CRE 16.86% 5.13% 17.30% 12.02% 5.06% 17.83% 12.52% 1.80% 11.25% 100.00% |
CRE Loan-to-Value Ratios By Product Type and Location 6/30/07 Appraisals as of loan origination, or renewal (in a declining market), or upon adverse classification Collateral Location Amegy Bank of Texas (ABT) California Bank & Trust (CB&T) Commerce Bank of Oregon (CBO) Commerce Bank of Washington (CBW) National Bank of Arizona (NBA) Nevada State Bank (NSB) Vectra Bank of Colorado (VBC) Zions Bank (ZFNB) Zions Bancorporation Commercial Term Hotel/Entertainment/Golf Course 61.7% 49.2% 75.0% 55.0% 51.3% 56.0% 52.8% 53.0% Industrial 74.2% 54.1% 59.9% 55.5% 60.8% 69.1% 62.9% 57.3% Medical 66.0% 54.5% 51.0% 54.4% 54.5% Multi-family 66.8% 64.9% 65.0% 58.8% 68.8% 45.7% 64.1% 64.5% Office 61.1% 62.2% 70.3% 65.0% 62.8% 59.3% 61.8% 61.9% Other 43.6% 53.5% 51.2% 51.6% 50.7% 59.9% 53.3% 52.8% Retail 73.0% 54.1% 69.0% 63.7% 56.1% 67.1% 68.0% 37.5% 60.9% Total Commercial Term 65.7% 57.0% 69.0% 62.8% 55.9% 61.2% 58.7% 55.4% 58.2% Residential Construction Land Acquisition & Development 55.5% 57.2% 65.0% 71.9% 47.6% 77.1% 72.0% 55.3% 55.8% Finished Lots 50.4% 61.4% 36.3% 55.5% 50.5% 50.1% RLOC / Borrowing Base Certificate 55.6% 53.1% 50.0% 69.3% 55.9% Single Family Housing/Condominium 64.2% 65.0% 80.0% 63.5% 71.4% 65.4% 68.5% 65.3% Total Residential Construction 56.1% 59.1% 65.0% 73.7% 55.9% 63.6% 60.7% 60.2% 58.6% Commercial Construction Land Acquisition & Development 57.5% 53.3% 73.9% 48.1% 58.4% 62.9% 61.5% 57.4% Hotel/Entertainment/Golf Course 49.5% 63.9% 75.3% 58.1% 67.0% 63.7% Industrial 60.1% 68.6% 59.8% 71.1% 70.8% 62.8% Medical 61.5% 55.9% 64.8% 75.0% 81.8% 65.9% Multi-family 50.6% 61.6% 74.6% 58.5% 67.1% 74.3% 72.3% 62.3% Office 70.0% 63.4% 63.4% 71.6% 66.0% 67.1% 66.8% Other 25.0% 65.6% 73.0% 61.0% 72.5% 64.8% 81.6% 63.7% 66.3% Retail 58.5% 65.1% 59.0% 60.0% 56.1% 57.8% 67.0% 60.6% Total Commercial Construction 57.5% 63.0% 73.0% 70.4% 58.6% 60.9% 67.5% 67.6% 61.4% Total Construction 57.0% 60.5% 71.4% 71.1% 56.8% 61.8% 64.5% 64.1% 60.0% Total CRE 58.2% 59.4% 70.7% 65.7% 56.6% 61.6% 62.2% 60.9% 59.5% |
Note: Peer group defined as bank holding companies with assets > $10 billion. Peer data source: FFIEC Strong Asset Quality Relative to Peers Non-Performing Assets as % of Total Assets 0.20% 0.37% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% ZIONS Peers |
Strong Asset Quality Relative to Peers Source: SNL -- Peer group is defined as U.S. bank holding companies with assets > $10 billion. 0.10% 0.33% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% Zions Peers NCOs as % of Average Total Loans (Annualized) |
Credit Quality Outlook • Evidence of continued weakening in residential construction activity and land values in the Southwest • Expect increase from historically low levels of NPAs and NCOs • Provision increases driven by softening of residential real estate development |
Loan Growth Outlook • Slow in CA, AZ, NV • Relatively strong in Texas and Intermountain West • Concentrated in C&I rather than CRE • Opportunities for balance sheet lenders |
On Balance Sheet Investment Securities Available for Sale – 6-30-07 (in Billions) .19 Residuals (from ZFNB securitizations) $4.43 .25 Municipal Securities .82 FNMA / FHLMC / GNMA* .25 REIT Trust Preferred– Inv. Grade .41 Insurance Trust Preferred – Inv. Grade 1.05 Bank Trust Preferred – Inv. Grade $1.46 Treasuries & Agencies Purchased * Securitized loans originated by Zions |
Today’s Agenda Outlook Summary Lockhart Funding Net Interest Margin Credit Mid-Quarter Update Overview |
A High Net Interest Margin 2Q 2007 NIM for Selected Banks 4.89 4.53 4.05 3.76 3.67 3.56 3.46 3.44 3.27 3.22 3.17 2.79 2.59 2.35 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Source: SNL As Reported NIM for selected banks ($5-$20 Billion Market Cap or Large Presence in the West) |
4.53% 5.32% 3.39% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% ZION NIM Libor Top 50 Bank NIM Avg Zions NIM vs. 30-Day LIBOR A Stable Net Interest Margin in a Volatile Environment Source: SNL As Reported NIM (Top 50 Banks by Assets) LIBOR is Quarter Average |
NIM Outlook • Positives – Loan growth relatively strong – Higher spread between LIBOR and Fed Funds – Better loan pricing • Pressures – Weak core deposit growth – Some adverse shifting of deposit mix |
Today’s Agenda Outlook Summary Lockhart Funding Net Interest Margin Credit Mid-Quarter Update Overview |
Lockhart Funding Structure • Off-balance sheet QSPE sponsored by Zions First National Bank • Created in 2000 to enable securitization of SBA 504 and similar loans • Assets: agencies and AAA-rated floating rate securities |
Lockhart Funding Structure (cont) • Funding: P1 / F1 commercial paper • Multiple CP Dealers – Zions – Lehman Brothers – Goldman Sachs • Liquidity Agreement: 100% back-up liquidity provided by Zions Bank |
Lockhart Funding Summary of Assets $3.44B Total $0.27B Other AAA rated, structured** $0.23B Other AAA rated, insured $0.32B US gov’t and agencies $1.29B AAA rated, MBIA insured (small business loans originated by Zions)* $1.33B AAA rated bank trust preferred pools *Subordinated tranches held by Zions on balance sheet **One security rated Aa1 ($5.1 million) |
Lockhart Funding Assets • AAA rated, structured includes: – $105 million of predominantly MBS • $32 million of subprime exposure (originally purchased in 2001-2004) • $15 million of home equity loan exposure – $81 million of REIT trust preferred |
Lockhart Funding Liquidity Agreement • Provided by Zions Bank • Maximum of 100% of Lockhart assets ($3.44B) • Zions Bank buys assets from Lockhart if: – Security downgraded below AA- – Lockhart is unable to issue CP |
Lockhart Funding Impact if Brought On Balance Sheet • Funding/Liquidity – Zions has $7B of borrowing capacity at FHLB – Assets pledgeable at Fed Discount Window • Capital (excluding impact of mark-to-market) – GAAP capital ratios reduced about 45bps – Risk Based Capital ratios reduced about 15-25 bps – Share buybacks slowed to $90 million in 3Q • Mark-to-Market – Mark-to-Model? – Impact recovered over time |
Lockhart Funding Summary • Seasoned program with high quality assets • CP rated P1 / F1 • ABCP market remains very risk averse • Zions affiliate banks have purchased some Lockhart CP on some days • Liquidity facility has not been triggered |
Today’s Agenda Outlook Summary Lockhart Funding Net Interest Margin Credit Mid-Quarter Update Overview |
Earnings Drivers Stock Buybacks Efficiency Ratio Net Interest Margin Credit Costs Low-Cost Deposit Growth Loan Growth 2007-2008 |
Lehman Brothers New York City 12 September 2007 |