Zions Bank Economic Overview

Zions Bank Economic Overview Jackson Hole Mountain Resort March 20, 2018

National Economic Conditions When Good News is Bad News Is Good News??

Dow Tops 26,000 Up 44% Since 2016 Election Source: Wall Street Journal

The Dow Experienced the Largest Point Decline in History Feb. 5, 2018-1,175 Source: Wall Street Journal

Why?

Business Optimism Booming Source: Trading Economics, NFIB Small Business Optimism Index

Consumer Confidence at Highest Level Since 2000 140 February 2018 130.8 130 120 110 Above 110 indicates economic prosperity 100 90 80 70 60 50 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 Source: The Conference Board

Source: Trading Economics, NFIB Small Business Optimism Index Optimism Booming

Economic Growth Slowed at the End of 2017 but Remains Strong 6.0% 4.0% Q4 2017 2.5% 2.0% 0.0% -2.0% -4.0% 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 Personal Consumption Fixed Investment Net Exports Inventories Government Real GDP Growth Source: Bureau of Economic Analysis

US Tax Reform Overview Individual (Sunset in 2025) Small changes to tax rates Increase standard deduction Eliminate personal exemption Double child tax credit Lower mortgage interest deduction from $1m to $750k Cap deductions for state and local taxes at $10,000 Eliminate various itemized deductions Remove the health insurance mandate (permanent) Corporate (Permanent) Reduce corporate tax rate from 35% to 21% Pass-through income deduction of 20% Repatriation of foreign income at 15.5% (territorial tax system) Economic Impact Score of around $1.5 trillion Many US companies already increasing wages and bonuses Increase GDP by up to 0.5% Fed reaction?

February Job Indicators Indicator Expectation Actual Total Nonfarm Payrolls 205,000 313,000 Unemployment Rate 4.0% 4.1% Private Payrolls 195,000 287,000 Monthly Average Hourly Wage Growth Yearly Average Hourly Wage Growth 0.2% 0.2% 2.9% 2.6% Labor Force Participation 62.7% 63.0% Sources: Wall street Journal and Bureau of Labor Statistics

500 February Marks 89 Straight Months of Job Growth 300 100-100 -300-500 -700-900 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Bureau of Labor Statistics

National Employment Change Percent Change in National Employment by Industry: February 2017 to February 2018 Ntl. Res. & Mining 8.9% Construction 3.7% Manufacturing 2.2% Trade, Trans., Utilities 0.9% Information -2.1% Financial Activity 1.7% Prof. & Bus. Serv. 2.4% Ed. & Health Serv. 2.0% Leisure & Hospitality 2.0% Other Services Government 0.2% 1.7% Total: 1.6% -4% -2% 0% 2% 4% 6% 8% 10% Source: Bureau of Labor Statistics

National Employment Change Total Change in Number of Jobs by Industry in Thousands: February 2017 to February 2018 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government -62 58 49 95 143 224 254 251 325 449 495-100 0 100 200 300 400 500 600 Source: Bureau of Labor Statistics

But Employment Growth Rates Trending Down Source: Wall Street Journal

Unemployment Remains at 17-Year Low 11.0% 10.0% 9.0% 8.0% February 2018 4.1% 7.0% 6.0% 5.0% 4.0% 5.0% = Full Employment 3.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics

68% Labor Force Participation Rose Slightly in February 67% 66% 65% February 2018 63.0 64% 63% 62% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Bureau of Labor Statistics

Annual Wage Growth Slowed in February 4.0% 3.5% February 2018 2.6% 3.0% 2.5% 2007 2017 Average 2.4% 2.0% 1.5% 1.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics

The Fed is Missing its Inflation Target of 2 Percent 3.50% 3.0% 2.50% 2.0% 1.50% Year-over change Jan. 2018 Core CPI 1.8% 1.0% 0.50% Jan. 2018 Core PCE 1.5% 0.0% 2005 2006 2007 2008 2009 2010 U.S. Core CPI Sources: Bureau of Labor Statistics and Bureau of Economic Analysis; Note: Core CPI and Core PCE represent all items less food and energy 2011 2012 2013 2014 U.S. Core PCE 2015 2016 2017 2018

Source: Wall Street Journal Components of Inflation Growth

Federal Funds Target Rate Sees 5th Increase in Over a Decade 6.0% 5.0% 4.0% 3.0% 2.0% Federal Funds Target Rate = 1.5% 1.0% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Federal Reserve

December 2017 Fed Rate Increase Projections 4% 3% 2.7% 3.1% 3.0% 2% 1.4% 2.1% 1% 0% 2017 2018 2019 2020 Longer run Source: Board of Governors of the Federal Reserve

Source: Wall Street Journal Markets Expect More Rate Increases

Fed Announces Plan to Reduce Balance Sheet $5.00T $4.50T $4.00T $3.50T $3.00T $2.50T $2.00T $1.50T $1.00T $0.50T Recession QE1 QE2 QE3 $0.00T 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Mortgage-Backed Securities U.S. Treasury Securities Federal Agency Debt Other Source: Federal Reserve Bank of St. Louis

Source: Wall Street Journal Is a Recession on the Way?

Source: Wall Street Journal Is a Recession on the Way?

Source: Wall Street Journal The Return of Market Volatility

Source: Wall Street Journal The Return of Market Volatility

Economic Protectionism Increases Costs Source: Federal Reserve Bank of St. Louis

Wyoming Economic Conditions

CA 0.6% OR 1.4% WA 1.7% NV 2.0% Wyoming Experienced Most Population Loss in US ID 2.2% UT 1.9% AZ 1.6% AK -0.2% MT 1.1% WY -1.0% CO 1.4% NM 0.1% Percent Change: 2015 to 2016 U.S. Rate = 0.7% ND 0.0% SD 0.9% NE 0.7% TX 1.4% KS 0.3% 0.2% OK 0.2% MN 0.9% IA 0.5% MO 0.4% AR 0.5% WI 0.4% LA 0.0% IL -0.3% MS 0.0% MI 0.3% IN 0.5% TN 1.0% AL 0.3% OH 0.3% KY 0.4% WV -0.7% VT 0.0% PA 0.1% NC 1.1% SC 1.3% GA 1.1% VA 0.7% FL 1.6% NH 0.6% NY 0.1% ME 0.4% DC 1.4% CT 0.0% DE 1.0% MD 0.5% MA 0.5% RI 0.2% NJ 0.4% 1.5% + 0.7% to 1.4% 0.2% to 0.6% 0.0% to 0.1% Loss HI -0.1% Source: U.S. Census Bureau

Wyoming Population Growth Rates By County 2015 to 2016 State Average = -0.2% 3.0% + Teton 0.5% Park 1.0% Sublette -1.1% Hot Springs -1.4% Fremont -0.3% Big Horn 0.1% Washakie -1.2% Sheridan 0.4% Campbell -1.1% Crook 0.7% Johnson -1.2% Weston 0.1% Natrona -1.4% Converse -0.9% Niobrara -0.7% 1.8% to 2.9% 1.0% to 1.7% 0.0% to 0.9% Loss Lincoln 1.9% Uinta -0.2% Sweetwater -1.2% Carbon 0.4% Albany 0.5% Platte -1.4% Laramie 1.0% Goshen -1.5% Source: U.S. Census Bureau

700,000 Wyoming Population and Components of Change 30,000 600,000 579,315 20,000 Total Population 500,000 400,000 300,000 200,000 2,666-8,285 10,000 0-10,000-20,000 Components of Population Change 100,000 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Net Migration Natural Increase Total Population -30,000 Source: Zions Bank analysis of U.S. Census Bureau data

Wyoming has the 3 rd lowest employment growth in the Nation CA 2.1% OR 2.7% WA 2.1% NV 3.3% Percent Change in Employment for States: Dec. 2016 to Dec. 2017 U.S. Rate = 1.5%, WY Rate = 0.4% AK -0.7% ID 2.1% UT 2.6% AZ 1.3% MT 1.8% WY 0.4% CO 2.0% NM 1.2% ND 0.4% SD 0.9% NE 1.1% KS 0.4% TX 2.5% OK 1.2% MN 1.3% IA 1.8% MO 0.8% AR 0.9% WI 1.4% LA 0.3% IL 0.5% MS 1.6% MI 1.3% IN 0.9% TN 1.0% AL 1.7% OH 0.7% KY 1.1% GA 1.9% WV 0.2% VT 0.8% PA 1.3% NC 1.7% SC 2.2% VA 0.8% FL 2.5% NH 0.8% NY 1.0% ME 0.8% DC 1.0% CT 0.5% DE -0.1% MD 1.1% MA 1.8% RI 1.2% NJ 0.6% 2.0% + 1.6% to 1.9% 1.0% to 1.5% 0.0% to 0.9% HI 1l1% Loss Source: Bureau of Labor Statistics

320 Wyoming Employment Level Lower than Post-Recession Low Thousands of Employees 300 280 260 240 220 Loss of 19,500 jobs from 2008-2009 3,200 more than post-recession low 200 Source: U.S. Bureau of Labor Statistics, Total nonfarm 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Nonfarm Employment

Wyoming Industries Added Jobs Percent Change in Wyoming Employment by Industry: December 2016 to December 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government Total: 0.4% -2.2% -2.7% -2.4% 2.0% 3.3% 5.8% 0.6% 0.0% 0.6% 0.9% 13.5% -15% -10% -5% 0% 5% 10% 15% Source: Bureau of Labor Statistics

Wyoming Industries Seeing Employment Loss Total Change in Wyoming Employment by Industry: December 2016 to December 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government -1,700-1,200-100 0 100 200 100 400 300 600 Total: 1,100 2,400-2,000-1,500-1,000-500 0 500 1,000 1,500 2,000 2,500 3,000 Source: Bureau of Labor Statistics

Wyoming Employment Change Rates By County January 2017 to January 2018 State Rate = 1.3% 5.0% + 3.3% to 4.9% 1.0% to 3.2% 0.0% to 0.9% Loss Teton 0.7% Lincoln -0.1% Uinta -3.6% Park 1.4% Sublette 7.0% Hot Springs -2.9% Fremont -0.9% Sweetwater -2.3% Big Horn 2.5% Washakie -1.5% Sheridan -1.7% Campbell -1.4% Crook 2.1% Johnson 0.8% Weston -3.7% Natrona 0.0% Converse -1.5% Carbon -1.9% Albany -1.4% Platte 1.7% Niobrara 1.1% Laramie -3.4% Goshen 0.0% Source: Wyoming Department of Workforce Services Note: Not seasonally adjusted, total employment

Wyoming Unemployment 29 th in Nation OR 4.1% CA 4.3% WA 4.5% NV 5.0% AK 7.3% ID 2.9% UT 3.1% AZ 4.5% December 2017 U.S. Rate = 4.1%, WY Rate = 4.2% MT 4.1% WY 4.2% CO 3.1% NM 6.0% ND 2.6% SD 3.5% NE 2.7% KS 3.4% TX 3.9% OK 4.1% MN 3.1% IA 2.8% MO 3.5% AR 3.7% LA 4.6% WI 3.0% IL 4.8% MS 4.6% MI 4.7% IN 3.4% TN 3.2% AL 3.5% OH 4.7% KY 4.4% GA 4.4% WV 5.5% VT 2.8% PA 4.7% NC 4.5% SC 4.1% VA 3.7% FL 3.7% NH 2.6% NY 4.6% ME 3.0% DC 6.0% CT 4.6% DE 4.6% MD 4.0% MA 3.5% RI 4.4% NJ 5.0% 6.0% + 5.5% to 5.9% 4.8% to 5.4% 4.0% to 4.7% 3.9% or less HI 2.0% Source: Bureau of Labor Statistics

Wyoming Unemployment Rates By County November 2017 State Rate = 4.2% 7.0% + 6.0% to 6.9% 4.0% to 5.9% 3.2% to 3.9% 3.1% or lower Source: Wyoming Department of Labor

WY Unemployment Rate Higher than Nation 10.0% 8.0% WY Dec. 2017 4.2% 6.0% 4.0% 2.0% 0.0% U.S. Dec. 2017 4.1% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Wyoming Source: U.S. Bureau of Labor Statistics

Gross Domestic Product by State: Q3 2017 U.S. Rate = 3.4% VT 3.4% NH 4.4% MA 3.8% CT 3.9% RI 3.5% DE 2.5% NJ 2.7% DC 5.7% MD 2.6% 2.0% + 1.6% to 1.9% 1.0% to 1.5% 0.0% to 0.9% Loss Source: Bureau of Labor Statistics

WY Personal Income Growth Same as the Nation Percent Change in Personal Income : 2016 Q3 2017 Q3 U.S. = 2.6%, WY = 2.6% OR 3.6% CA 3.8% WA 4.6% NV 2.2% AK 0.2% ID 4.6% UT 3.3% AZ 2.4% MT 3.5% WY 2.6% HI 2.4% CO 2.9% NM 0.5% Source: Bureau of Economic Analysis ND 0.5% SD 0.5% NE 1.3% KS 0.2% TX 2.8% OK 2.1% MN 2.3% IA -0.1% MO 2.2% AR 3.3% WI 1.2% LA 2.5% IL 1.3% MI 2.1% IN 2.2% TN 2.3% MS 1.8% AL 2.9% 4.0% or more 3.6% to 3.9% 2.0% to 3.5% 0.0% to 1.9% Decrease OH 2.0% KY 1.0% GA 3.2% WV 1.6% VT 1.3% PA 2.0% NC 3.8% SC 3.3% VA 2.7% FL 3.1% NH 3.0% NY 2.9% ME 1.7% DC 2.2% CT 1.2% DE 1.5% MD 2.7% MA 1.9% RI 1.0% NJ 1.4%

Wyoming Median Household Income above national average OR $57,532 CA $67,739 WA $67,106 NV $55,180 ID $51,807 AK $76,440 UT $65,997 AZ $53,558 MT $50,027 WY $59,882 HI $74,551 CO $65,685 NM $46,748 2016 U.S. = $57,617, WY = $59,882 ND $60,656 SD $54,467 NE $56,927 KS $54,935 TX $56,565 OK $49,176 MN $65,599 IA $56,247 MO $51,746 WI $56,881 AR $44,334 IL IN $60,960 $52,314 LA $45,146 TN $48,547 OH $52,334 KY $46,659 MS $41,754 AL $46,257 $70,000 + MI $52,492 $60,000 69,999 $50,000 to $59,999 $45,000 to $49,999 $44,999 or less Source: U.S. Census Bureau, 2016 American Community Survey 1-year estimates WV $43,385 VA $68,114 GA $53,559 VT $57,677 NY $62,909 PA $56,907 NC $50,584 SC $49,501 FL $50,860 NH $70,936 ME $53,079 DC $75,506 CT $73,433 DE $61,757 MD $78,945 MA $75,297 RI $60,596 NJ $76,126

Wyoming Poverty Rate below national average CA 14.3% WA 11.3% OR 13.3% NV 13.8% ID 14.4% UT 10.1% AZ 16.3% 2016 U.S. Rate = 14.0%, WY Rate = 11.3% MT 13.3% WY 11.3% CO 11.0% NM 19.8% ND 10.6% SD 13.3% NE 11.4% KS 12.1% OK 16.3% MN 9.9% IA 11.8% MO 14.0% AR 17.1% WI 11.8% IL 13.0% MS 20.8% MI 15.0% IN 14.1% TN 15.8% OH 14.6% KY 18.5% AL 17.1% WV 17.8% VT 11.9% PA 12.9% NC 15.4% SC 15.3% GA 16.0% NH 7.2% NY 14.6% VA 11.0% ME 12.5% DC 18.6% CT 9.8% DE 11.6% MD 9.6% MA 10.4% RI 12.8% NJ 10.4% AK 9.9% TX 15.6% LA 20.1% 18.1% + 15.1% to 18.0% FL 14.6% HI 9.3% 12.1% to 15.0% 10.1% to 12.0% 10.0% or less Source: U.S. Census Bureau, Annual Community Survey 1-year estimate

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