ZIONS(ZIONL) - 2022 Q4 - Annual Report

Part I Business Overview Zions Bancorporation, N.A. is a Utah-headquartered bank with $3.2 billion net revenue and $90 billion assets in 2022, operating across 11 states through seven divisions, offering diverse banking products in a highly regulated and competitive environment - Zions Bancorporation, N.A. is a bank headquartered in Salt Lake City, Utah, with annual net revenue of $3.2 billion in 2022 and total assets of approximately $90 billion at December 31, 2022, serving over one million customers through 416 branches and digital offerings, with 9,989 full-time equivalent employees[16][18] - The company operates primarily through seven separately managed bank divisions (affiliates) with local branding and management teams, supported by an enterprise operating segment for governance, risk management, capital allocation, and strategic objectives[19] - Key products and services include commercial and small business banking (lending, cash management, capital markets), commercial real estate lending, retail banking (mortgages, lines of credit, depository services), and wealth management (investment, fiduciary, estate planning)[21] - The company operates in a highly competitive environment, competing with other commercial banks, credit unions, fintechs, and various financial institutions, with key differentiators including service quality, local community knowledge, convenience, product range, and customer relationships[22][23] - Zions Bancorporation is highly regulated by the OCC, CFPB, and FDIC, exceeding all Basel III capital adequacy requirements at December 31, 2022, maintaining a CET1 ratio of 9.8%, Tier 1 capital ratio of 10.5%, Total capital ratio of 12.2%, and Tier 1 leverage ratio of 7.7%[24][25][28][31] Minimum Capital Ratio and Capital Conservation Buffer Requirements (December 31, 2022) | Capital | Minimum Capital Requirement (%) | Conservation Buffer (%) | Requirement with Capital Conservation Buffer (%) | Current Capital Ratio (%) | | :--- | :--- | :--- | :--- | :--- | | CET1 to risk-weighted assets | 4.5 % | 2.5 % | 7.0 % | 9.8 % | | Tier 1 capital (i.e., CET1 plus additional Tier 1 capital) to risk-weighted assets | 6.0 | 2.5 | 8.5 | 10.5 | | Total capital (i.e., Tier 1 capital plus Tier 2 capital) to risk-weighted assets | 8.0 | 2.5 | 10.5 | 12.2 | | Tier 1 capital to average consolidated assets (known as the "Tier 1 leverage ratio") | 4.0 | N/A | 4.0 | 7.7 | - Internal stress tests, informed by FRB's CCAR process, indicated that the company would maintain capital ratios above regulatory minimums and conservation buffers through a nine-quarter hypothetical stress test horizon[32] - The company manages liquidity according to Basel III requirements and internal stress tests, with liquidity remaining above regulatory and internal limits despite a decrease in deposit levels in 2022 due to federal stimulus withdrawal[33] - Human capital management focuses on diversity, equity, and inclusion, talent attraction/development/retention, and employee recognition/rewards, with 9,989 full-time equivalent employees at December 31, 2022, including 59% women and 37% people of color overall[43][45][47][48][51][54] Risk Factors The company faces significant credit, interest rate, liquidity, strategic, operational, technology, cybersecurity, capital, legal, compliance, and reputational risks, compounded by geopolitical events and evolving ESG standards - Credit risk is a significant concern, with potential deterioration in credit quality and reduced demand for credit due to rising interest rates, market volatility, or economic slowdowns, with concentrations in real estate, oil and gas, and leveraged lending primarily within its Western states footprint[59][61][62][63] - Interest rate risk is substantial, as net interest income is the largest revenue component, influenced by prevailing interest rates, competitive pricing, and FRB policies, with the global phase-out of LIBOR by June 2023 also posing risks to financial instruments and potential disputes[66][67] - Liquidity risk is tied to deposit levels and capital market access, with changes in Federal Reserve monetary policy and FHLB funding programs potentially affecting liquidity, and unfavorable rating actions from rating agencies increasing funding costs[69][70] - Strategic and business risks include potential systemic risk from other financial institutions, challenges in hiring and retaining qualified personnel (especially with increased competition from fintechs and remote work trends), and the successful execution of significant organizational and technology initiatives[72][73][74][75] - Operational risks encompass disruptions from new projects, failures in internal controls, sophisticated internal and external fraud schemes, and catastrophic events like natural disasters and pandemics, which can impact operations and financial results[76][77][78][79][80] - Technology risk stems from the need to develop and implement technology advancements to remain competitive against traditional and non-traditional financial institutions, with system vulnerabilities, failures, or outages potentially disrupting operations and customer services[84][85] - Cybersecurity risk is increasing due to sophisticated attacks from various actors and third-party vendor vulnerabilities, requiring significant resources to enhance defenses, as breaches could damage reputation, lead to customer loss, regulatory scrutiny, and financial liability[87][88][89][90] - Capital/financial reporting risks include limitations on capital distributions due to stress testing and regulatory requirements, the need to raise capital at potentially unfavorable times, accounting/financial reporting complexities, potential goodwill impairment, and the ability to fully realize deferred tax assets[92][93][94][95][96] - Legal/compliance risks arise from extensive and evolving regulations, potential legal and governmental proceedings (including class actions), and the less-developed corporate and securities law frameworks applicable to national banks compared to state-chartered corporations[98][99][103][105][107][109] - Reputational risk can stem from operational, regulatory, compliance, and legal issues, while other risks include disruptions from geopolitical conflicts, lingering adverse effects of the COVID-19 pandemic, and evolving ESG standards that may restrict business activities or increase costs[110][111][113][115][116] Unresolved Staff Comments No unresolved written comments from SEC or OCC staff were received 180 days or more before fiscal year-end regarding periodic reports - No unresolved written comments from the SEC's or OCC's staff were received 180 days or more before the fiscal year-end[117] Properties As of December 31, 2022, the company operated 416 branches (277 owned, 139 leased) and leased its Salt Lake City headquarters - At December 31, 2022, the company operated 416 branches (277 owned, 139 leased) and leased its headquarters in Salt Lake City, Utah[118] Legal Proceedings Legal proceedings information is incorporated by reference from Note 16 of the Notes to Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 16 of the Notes to Consolidated Financial Statements[119] Mine Safety Disclosures The company has no mine safety disclosures to report - No mine safety disclosures are applicable[120] Part II Market for Common Equity, Stockholder Matters, and Issuer Purchases Zions Bancorporation's common stock trades on NASDAQ, with $200 million in 2022 share repurchases and a $0.41 per share dividend declared in January 2023, alongside preferred stock and performance relative to market indices - The company has 4.4 million authorized shares of preferred stock (liquidation preference $1,000/share), with 66,139 Series A, 138,390 Series G, 98,555 Series I, and 136,368 Series J preferred shares outstanding at December 31, 2022[122] - Common stock is traded on the NASDAQ Global Select Market under the symbol "ZION", with a reported sale price of $54.10 per share on February 6, 2023[123] - In January 2023, the Board declared a dividend of $0.41 per common share, payable February 23, 2023[124] - In 2022, the company repurchased 3.6 million common shares for $200 million at an average price of $56.13 per share, and in January 2023, approved a plan to repurchase up to $50 million of common shares, with 946,644 shares repurchased for $50 million at an average price of $52.82 in February 2023[125][126] 2022 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share ($) | Shares Purchased (Public Plans) | | :--- | :--- | :--- | :--- | | First quarter | 778,248 | $65.42 | 765,581 | | Second quarter | 936,256 | $53.73 | 930,905 | | Third quarter | 888,092 | $56.30 | 888,092 | | October | — | | — | | November | 978,491 | $51.11 | 978,281 | | December | — | | — | | Fourth quarter total | 978,491 | $51.11 | 978,281 | | Total 2022 | 3,581,087 | $56.19 | 3,562,859 | Indexed Comparison of 5-Year Cumulative Total Return (2017-2022) | Index | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Zions Bancorporation, N.A. | 100.0 | 81.7 | 107.1 | 93.0 | 138.7 | 104.0 | | KRX Regional Bank Index | 100.0 | 82.5 | 102.2 | 93.3 | 127.5 | 118.7 | | S&P 500 | 100.0 | 95.6 | 125.7 | 148.8 | 191.5 | 156.8 | Reserved This item is reserved and contains no information Management's Discussion and Analysis MD&A reviews Zions Bancorporation's 2022 financial condition and operations, noting strong net revenue growth from higher interest rates, increased credit loss provisions, significant loan growth, decreased deposits, and comprehensive risk management strategies - Key corporate objectives include achieving balanced growth in customers, PPNR, EPS, profitability, and shareholder returns, focusing on small businesses, commercial businesses, affluent customers, and capital markets[133][134] - Strategic enablers for growth and profitability include investments in people and empowerment, technology, operational excellence, risk management, and data and analytics[136][137] - In 2022, net earnings applicable to common shareholders decreased 20% to $878 million, and diluted EPS decreased 15% to $5.79, primarily due to an increase in the provision for credit losses[140][146] - Adjusted PPNR increased from 2021, driven by growth in adjusted net revenue, largely from increased net interest income, partially offset by higher adjusted noninterest expense, with the efficiency ratio improving to 58.8% from 60.8% in the prior year[141][146][188] Selected Financial Highlights (2022 vs. 2021) | For the Year (in millions) | Change (%) | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | +14 % | $2,520 | $2,208 | $2,216 | | Noninterest income | -10 % | 632 | 703 | 574 | | Total net revenue | +8 % | 3,152 | 2,911 | 2,790 | | Provision for credit losses | NM | 122 | (276) | 414 | | Noninterest expense | +8 % | 1,878 | 1,741 | 1,704 | | Net income | -20 % | 907 | 1,129 | 539 | | Net earnings applicable to common shareholders | -20 % | 878 | 1,100 | 505 | | Per Common Share | | | | | | Net earnings – diluted ($) | -15 % | 5.79 | 6.79 | 3.02 | | Tangible book value at year-end ($) | +9 % | 43.72 | 40.15 | 36.44 | | At Year-End (in millions) | | | | | | Assets | -4 % | 89,545 | 93,200 | 81,479 | | Loans and leases, net of unearned income and fees | +9 % | 55,653 | 50,851 | 53,476 | | Deposits | -13 % | 71,652 | 82,789 | 69,653 | | Common equity | -37 % | 4,453 | 7,023 | 7,320 | | Performance Ratios (%) | | | | | | Return on average assets | | 1.01% | 1.29% | 0.71% | | Return on average common equity | | 16.0% | 14.9% | 7.2% | | Net interest margin | | 3.06% | 2.72% | 3.15% | | Net charge-offs to average loans and leases (ex-PPP) | | 0.08% | 0.01% | 0.22% | | Total allowance for credit losses to loans and leases outstanding (ex-PPP) | | 1.15% | 1.13% | 1.74% | | Capital Ratios at Year-End (%) | | | | | | Common equity tier 1 capital | | 9.8% | 10.2% | 10.8% | | Tier 1 leverage | | 7.7% | 7.2% | 8.3% | | Tangible common equity | | 7.1% | 6.6% | 7.5% | | Other Selected Information | | | | | | Weighted average diluted common shares outstanding (in thousands) | -6 % | 150,271 | 160,234 | 165,613 | | Bank common shares repurchased (in thousands) | -74 % | 3,563 | 13,497 | 1,666 | | Dividends declared ($) | +10 % | 1.58 | 1.44 | 1.36 | | Common dividend payout ratio (%) | | 27.3% | 21.1% | 44.6% | - Net interest income increased $312 million (14%) in 2022, despite a $188 million decrease from PPP loans, driven by a higher interest rate environment and favorable composition of interest-earning assets, with NIM increasing to 3.06% from 2.72%[142][148][150] Net Interest Income and Net Interest Margin (2022 vs. 2021) | (Dollar amounts in millions) | 2022 | Change | Percent Change | 2021 | Change | Percent Change | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Interest and fees on loans | $2,112 | $177 | 9 % | $1,935 | $(115) | (6)% | $2,050 | | Interest on money market investments | 81 | 60 | NM | 21 | 7 | 50 | 14 | | Interest on securities | 512 | 201 | 65 | 311 | 7 | 2 | 304 | | Total interest income | 2,705 | 438 | 19 | 2,267 | (101) | (4) | 2,368 | | Interest on deposits | 70 | 40 | NM | 30 | (75) | (71) | 105 | | Interest on short- and long-term borrowings | 115 | 86 | NM | 29 | (18) | (38) | 47 | | Total interest expense | 185 | 126 | NM | 59 | (93) | (61) | 152 | | Net interest income | $2,520 | $312 | 14 % | $2,208 | $(8) | — % | $2,216 | | Average interest-earning assets (in millions) | $83,638 | $1,371 | 2 % | $82,267 | $11,108 | 16 % | $71,159 | | Average interest-bearing liabilities (in millions) | 42,138 | 1,388 | 3 % | 40,750 | 2,512 | 7 % | 38,238 | | Yield on interest-earning assets (%) | 3.28 % | 49 bps | | 2.79 % | (58) bps | | 3.37 % | | Rate paid on total deposits and interest-bearing liabilities (%) | 0.23 % | 16 bps | | 0.07 % | (15) bps | | 0.22 % | | Cost of total deposits (%) | 0.09 % | 5 bps | | 0.04 % | (13) bps | | 0.17 % | | Net interest margin (%) | 3.06 % | 34 bps | | 2.72 % | (43) bps | | 3.15 % | - Average loans and leases (ex-PPP) increased $4.5 billion (9%) to $51.9 billion, driven by commercial and industrial, consumer 1-4 family residential mortgage, commercial real estate term, and municipal loan portfolios[153] - Period-end deposits decreased $11.1 billion (13%) in 2022, primarily due to decreases in larger-balance and more rate-sensitive, nonoperating deposits, with the average cost of deposits increasing to 0.09% from 0.04% in 2021[145][155] - The provision for credit losses was $122 million in 2022, compared with a $(276) million release in 2021, with the ACL increasing to $636 million at December 31, 2022, from $553 million in 2021, due to loan growth and deteriorating economic scenarios, partially offset by credit quality improvements[142][170] - Total noninterest income decreased $71 million (10%) in 2022, with customer-related noninterest income increasing $39 million (7%) driven by commercial account fees, capital markets and foreign exchange fees, and card fees, while noncustomer-related noninterest income decreased $110 million largely due to lower securities gains and a valuation loss on an equity investment[177][180][181][182] Noninterest Income (2022 vs. 2021) | (Dollar amounts in millions) | 2022 (in millions) | Amount Change (in millions) | Percent Change (%) | 2021 (in millions) | Amount Change (in millions) | Percent Change (%) | 2020 (in millions) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial account fees | $159 | $22 | 16 % | $137 | $5 | 4 % | $132 | | Card fees | 104 | 9 | 9 | 95 | 13 | 16 | 82 | | Retail and business banking fees | 73 | (1) | (1) | 74 | 6 | 9 | 68 | | Loan-related fees and income | 80 | (15) | (16) | 95 | (14) | (13) | 109 | | Capital markets and foreign exchange fees | 83 | 13 | 19 | 70 | — | — | 70 | | Wealth management fees | 55 | 5 | 10 | 50 | 6 | 14 | 44 | | Other customer-related fees | 60 | 6 | 11 | 54 | 10 | 23 | 44 | | Customer-related noninterest income | 614 | 39 | 7 % | 575 | 26 | 5 % | 549 | | Fair value and nonhedge derivative income (loss) | 16 | 2 | 14 | 14 | 20 | NM | (6) | | Dividends and other income | 17 | (26) | (60) | 43 | 19 | 79 | 24 | | Securities gains (losses), net | (15) | (86) | NM | 71 | 64 | NM | 7 | | Noncustomer-related noninterest income | 18 | (110) | NM | 128 | 103 | NM | 25 | | Total noninterest income | $632 | $(71) | (10)% | $703 | $129 | 22 % | $574 | - Noninterest expense increased $137 million (8%) in 2022, primarily due to a $108 million (10%) increase in salaries and employee benefits, driven by inflationary pressures, competitive labor market, increased incentive compensation, and higher headcount (9,989 FTEs, up 3%)[145][184][185] Noninterest Expense (2022 vs. 2021) | (Dollar amounts in millions) | 2022 (in millions) | Amount Change (in millions) | Percent Change (%) | 2021 (in millions) | Amount Change (in millions) | Percent Change (%) | 2020 (in millions) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $1,235 | $108 | 10 % | $1,127 | $40 | 4 % | $1,087 | | Technology, telecom, and information processing | 209 | 10 | 5 | 199 | 7 | 4 | 192 | | Occupancy and equipment, net | 152 | (1) | (1) | 153 | 2 | 1 | 151 | | Professional and legal services | 57 | (15) | (21) | 72 | 15 | 26 | 57 | | Marketing and business development | 39 | (4) | (9) | 43 | (18) | (30) | 61 | | Deposit insurance and regulatory expense | 50 | 16 | 47 | 34 | 1 | 3 | 33 | | Credit-related expense | 30 | 4 | 15 | 26 | 4 | 18 | 22 | | Other real estate expense, net | 1 | 1 | NM | — | (1) | NM | 1 | | Other | 105 | 18 | 21 | 87 | (13) | (13) | 100 | | Total noninterest expense | $1,878 | $137 | 8 % | $1,741 | $37 | 2 % | $1,704 | - Total technology spend increased to $451 million in 2022 from $435 million in 2021, reflecting ongoing investments in technology initiatives[191] Technology Spend (2022 vs. 2021) | (In millions) | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Technology, telecom, and information processing expense | $209 | $199 | | Other technology-related expense | 206 | 190 | | Technology investments | 90 | 100 | | Less: related amortization and depreciation | (54) | (54) | | Total technology spend | $451 | $435 | - Income tax expense was $245 million in 2022, with an effective tax rate of 21.3%, and the net deferred tax asset (DTA) increased significantly to $1.1 billion at December 31, 2022, from $0.1 billion in 2021, primarily due to unrealized losses in AOCI from investment securities and derivative instruments[192][195] Income Taxes (2022 vs. 2021) | (Dollar amounts in millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Income before income taxes | $1,152 | $1,446 | $672 | | Income tax expense | 245 | 317 | 133 | | Effective tax rate (%) | 21.3 % | 21.9 % | 19.8 % | - Preferred stock dividends remained stable at $29 million in 2022 and 2021[197] - Total average loans increased $0.6 billion (1%) to $52.6 billion in 2022, and excluding PPP loans, average loans and leases increased $4.5 billion (9%) to $51.9 billion[153] - The amortized cost of total HTM and AFS investment securities increased $21 million during 2022, with approximately 8% of the portfolio having a variable-rate at December 31, 2022[222] Investment Securities Portfolio (December 31, 2022) | (In millions) | Amortized Cost (in millions) | Fair Value (in millions) | | :--- | :--- | :--- | | Held-to-maturity | $11,126 | $11,239 | | Available-for-sale | 13,538 | 11,915 | | Total HTM and AFS investment securities | $24,664 | $23,154 | - Total investments and extensions of credit to municipalities increased to $6.877 billion at December 31, 2022, from $6.428 billion in 2021, with all municipal securities graded as Pass[226][227] Municipal Investments and Extensions of Credit (December 31, 2022) | (In millions) | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Loans and leases | $4,361 | $3,658 | | Held-to-maturity – municipal securities | 405 | 441 | | Available-for-sale – municipal securities | 1,634 | 1,694 | | Trading account – municipal securities | 71 | 355 | | Unfunded lending commitments | 406 | 280 | | Total | $6,877 | $6,428 | - The loan and lease portfolio increased $4.8 billion (9%) to $55.7 billion at December 31, 2022, with total loans and leases (excluding PPP loans) increasing $6.5 billion (13%) to $55.5 billion, and commercial and industrial loans being the largest category at 29% of the total portfolio[229][230] Loan and Lease Portfolio Composition (December 31, 2022) | (Dollar amounts in millions) | Amount (in millions) | % of Total Loans | | :--- | :--- | :--- | | Commercial and industrial | $16,180 | 29.1 % | | PPP | 197 | 0.4 | | Leasing | 386 | 0.7 | | Owner-occupied | 9,371 | 16.8 | | Municipal | 4,361 | 7.8 | | Total commercial | 30,495 | 54.8 | | Construction and land development | 2,513 | 4.5 | | Term | 10,226 | 18.4 | | Total commercial real estate | 12,739 | 22.9 | | Home equity credit line | 3,377 | 6.1 | | 1-4 family residential | 7,286 | 13.1 | | Construction and other consumer real estate | 1,161 | 2.1 | | Bankcard and other revolving plans | 471 | 0.8 | | Other | 124 | 0.2 | | Total loans and leases | $55,653 | 100.0 % | - Total other noninterest-bearing investments increased $279 million (33%) to $1.130 billion, primarily due to a $283 million increase in FHLB stock, required to maintain borrowing capacity[235] Other Noninterest-Bearing Investments (December 31, 2022) | (Dollar amounts in millions) | 2022 (in millions) | 2021 (in millions) | Amount Change (in millions) | Percent Change (%) | | :--- | :--- | :--- | :--- | :--- | | Bank-owned life insurance | $546 | $537 | $9 | 2 % | | Federal Home Loan Bank stock | 294 | 11 | 283 | NM | | Federal Reserve stock | 68 | 81 | (13) | (16) | | Farmer Mac stock | 19 | 19 | — | — | | SBIC investments | 172 | 179 | (7) | (4) | | Other | 31 | 24 | 7 | 29 | | Total other noninterest-bearing investments | $1,130 | $851 | $279 | 33 % | - Net premises, equipment, and software increased $89 million (7%), driven by capitalized costs for new corporate technology and corporate centers, and the final phase of core loan and deposit banking systems replacement[236][237] - Total deposits decreased $11.1 billion (13%) to $71.7 billion in 2022, primarily due to decreases in larger-balance and more rate-sensitive, nonoperating deposits, with noninterest-bearing deposits decreasing $5.3 billion (13%) and interest-bearing deposits decreasing $5.9 billion (14%)[241] Deposits by Category (December 31, 2022) | (Dollar amounts in millions) | Amount (in millions) | % of Total Deposits | | :--- | :--- | :--- | | Noninterest-bearing demand | $35,777 | 49.9 % | | Savings and money market | 33,566 | 46.9 | | Time | 2,309 | 3.2 | | Total deposits | $71,652 | 100.0 % | - The estimated total amount of uninsured deposits was $38 billion at December 31, 2022, down from $49 billion in 2021[243] - Risk management employs a three lines of defense approach, overseen by the Board's Audit Committee and Risk Oversight Committee (ROC), with the Enterprise Risk Management Committee (ERMC) central to managing various risks including credit, market, interest rate, liquidity, strategic, operational, technology, cybersecurity, capital/financial reporting, legal/compliance, and reputational risks[244][245][246] - Credit risk management emphasizes strong underwriting, early detection of problem credits, and portfolio diversification, with concentration limits set for commercial industries and CRE lending[248][250][253] - U.S. government agency guaranteed loans totaled approximately $649 million at December 31, 2022, primarily by the SBA[254] U.S. Government Agency Guarantees (December 31, 2022) | (Dollar amounts in millions) | 2022 (in millions) | Percent Guaranteed (%) | 2021 (in millions) | Percent Guaranteed (%) | | :--- | :--- | :--- | :--- | :--- | | Commercial | $753 | 83 % | $2,410 | 95 % | | Commercial real estate | 21 | 76 | 22 | 73 | | Consumer | 5 | 100 | 5 | 100 | | Total loans | $779 | 83 % | $2,437 | 94 % | - Commercial lending portfolio shows diversification across industries, with Finance and insurance, Real estate/rental/leasing, and Retail trade being the largest segments[257] Commercial Lending by Industry Group (December 31, 2022) | (Dollar amounts in millions) | Amount (in millions) | Percent (%) | | :--- | :--- | :--- | | Finance and insurance | $2,992 | 9.8 % | | Real estate, rental and leasing | 2,802 | 9.2 | | Retail trade | 2,751 | 9.0 | | Manufacturing | 2,387 | 7.8 | | Healthcare and social assistance | 2,373 | 7.8 | | Public Administration | 2,366 | 7.8 | | Wholesale trade | 1,880 | 6.2 | | Transportation and warehousing | 1,464 | 4.8 | | Utilities | 1,418 | 4.6 | | Construction | 1,355 | 4.4 | | Mining, quarrying, and oil and gas extraction | 1,349 | 4.4 | | Educational services | 1,302 | 4.3 | | Hospitality and food services | 1,238 | 4.1 | | Other Services (except Public Administration) | 1,041 | 3.4 | | Professional, scientific, and technical services | 995 | 3.3 | | Other | 2,782 | 9.1 | | Total | $30,495 | 100.0 % | - The CRE loan portfolio totaled $12.7 billion at December 31, 2022, representing 23% of the total loan portfolio, with Multi-family, Industrial, and Office properties as the largest collateral types[258][261] Commercial Real Estate Lending by Collateral Type (December 31, 2022) | (Dollar amounts in millions) | Amount (in millions) | Percent (%) | | :--- | :--- | :--- | | Multi-family | $3,068 | 24.1 % | | Industrial | 2,509 | 19.7 | | Office | 2,281 | 17.9 | | Retail | 1,529 | 12.0 | | Hospitality | 695 | 5.4 | | Land | 276 | 2.2 | | Other | 1,728 | 13.5 | | Single family | 340 | 2.7 | | Land | 75 | 0.6 | | Condo/Townhome | 13 | 0.1 | | Other | 225 | 1.8 | | Total | $12,739 | 100.0 % | - The 1-4 family residential mortgage loan portfolio increased $1.2 billion (20%) to $7.3 billion at December 31, 2022, driven by demand for variable-rate mortgages, while the HECL portfolio totaled $3.4 billion, with 91% still in the draw period[268][269][271] - Nonperforming assets decreased $123 million (45%) to $149 million at December 31, 2022, and as a percentage of loans and leases and OREO, decreased to 0.27% from 0.53%[174][272][273] Nonperforming Assets (December 31, 2022) | (Dollar amounts in millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Nonaccrual loans | $149 | $271 | $367 | | Other real estate owned | — | 1 | 4 | | Total nonperforming assets | $149 | $272 | $371 | | Accruing loans past due 90 days or more | $6 | $8 | $12 | | Ratio of nonaccrual loans to net loans and leases (%) | 0.27 % | 0.53 % | 0.69 % | | Ratio of nonperforming assets to net loans and leases and other real estate owned (%) | 0.27 % | 0.53 % | 0.69 % | | Ratio of accruing loans past due 90 days or more to net loans and leases (%) | 0.01 % | 0.02 % | 0.02 % | - Troubled Debt Restructured Loans (TDRs) decreased to $235 million at December 31, 2022, from $326 million in 2021[275][277] Accruing and Nonaccruing Troubled Debt Restructured Loans (December 31, 2022) | (In millions) | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | :--- | | Restructured loans – accruing | $197 | $221 | $198 | | Restructured loans – nonaccruing | 38 | 105 | 113 | | Total | $235 | $326 | $311 | - The total Allowance for Credit Losses (ACL) increased $83 million during 2022, primarily due to loan growth and deteriorating economic scenarios, partially offset by improvements in credit quality, with the ratio of ACL to net loans and leases (ex-PPP) at 1.15% at December 31, 2022[283][280] Changes in the Allowance for Credit Losses (2022) | (In millions) | Commercial (in millions) | Commercial Real Estate (in millions) | Consumer (in millions) | Total (in millions) | | :--- | :--- | :--- | :--- | :--- | | Balance at beginning of year | $311 | $107 | $95 | $513 | | Provision for loan losses | 29 | 49 | 23 | 101 | | Net loan and lease charge-offs (recoveries) | 40 | — | (1) | 39 | | Balance at end of year | $300 | $156 | $119 | $575 | | Reserve for unfunded lending commitments (beginning) | $19 | $11 | $10 | $40 | | Provision for unfunded lending commitments | (3) | 22 | 2 | 21 | | Reserve for unfunded lending commitments (end) | $16 | $33 | $12 | $61 | | Total allowance for credit losses (end) | $316 | $189 | $131 | $636 | - Interest rate risk is a significant exposure, with the company being naturally "asset-sensitive," using derivatives, including receive-fixed swaps ($7.6 billion notional) and pay-fixed swaps ($1.2 billion notional), to manage this risk and reduce net interest income volatility[287][291][301] Income Simulation – Change in Net Interest Income and Change in Economic Value of Equity (December 31, 2022) | Repricing Scenario | -100 bps (%) | 0 % | +100 bps (%) | +200 bps (%) | +300 bps (%) | | :--- | :--- | :--- | :--- | :--- | | Earnings at Risk (EaR) | (2.4)% | — % | 2.4 % | 4.8 % | 7.1 % | | Economic Value of Equity (EVE) | 2.0 % | — % | (1.1)% | (2.3)% | (3.7)% | - The LIBOR transition program is underway, with a significant portion of legacy LIBOR-based contracts already migrated to alternative reference rates, and at December 31, 2022, approximately $14.2 billion in loans, unfunded commitments, and securities referenced LIBOR, with $8.4 billion in notional LIBOR-referenced derivative contracts[302][304] - Liquidity management is overseen by ALCO, maintaining a buffer of highly liquid assets, with investment securities ($23.5 billion) and cash/money market investments ($4.4 billion) comprising 31% of total assets at December 31, 2022[316] - Total borrowed funds increased by $9.2 billion during 2022, driven by increases in short-term borrowings (e.g., FHLB advances of $7.1 billion outstanding) due to loan growth and deposit declines[326][327] Contractual Obligations (December 31, 2022) | (In millions) | One Year or Less (in millions) | One to Three Years (in millions) | Three to Five Years (in millions) | Over Five Years (in millions) | Indeterminable Maturity (in millions) | Total (in millions) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Deposits | $2,038 | $209 | $61 | $1 | $69,343 | $71,652 | | Unfunded lending commitments | 7,654 | 9,217 | 2,949 | 9,808 | — | 29,628 | | Standby letters of credit | 851 | — | — | — | — | 851 | | Commercial letters of credit | 11 | — | — | — | — | 11 | | Mortgage-backed security purchase agreements | 23 | — | — | — | — | 23 | | Commitments to make venture and other noninterest-bearing investments | — | — | — | — | 77 | 77 | | Federal funds and other short-term borrowings | 10,417 | — | — | — | — | 10,417 | | Long-term debt | 128 | — | — | 587 | — | 715 | | Operating leases | 47 | 67 | 39 | 73 | — | 226 | | Total contractual obligations | $21,169 | $9,493 | $3,049 | $10,469 | $69,420 | $113,600 | - Total shareholders' equity decreased $2.6 billion (34%) to $4.9 billion at December 31, 2022, primarily due to a $3.0 billion decrease in Accumulated Other Comprehensive Income (AOCI) from the decline in fair value of AFS securities due to rising interest rates[344][346] Shareholders' Equity (December 31, 2022) | (Dollar amounts in millions) | 2022 (in millions) | 2021 (in millions) | Amount Change (in millions) | Percent Change (%) | | :--- | :--- | :--- | :--- | :--- | | Preferred stock | $440 | $440 | $— | — % | | Common stock and additional paid-in capital | 1,754 | 1,928 | (174) | (9) | | Retained earnings | 5,811 | 5,175 | 636 | 12 | | Accumulated other comprehensive income | (3,112) | (80) | (3,032) | NM | | Total shareholders' equity | $4,893 | $7,463 | $(2,570) | (34)% | - The company exceeded all Basel III capital adequacy requirements at December 31, 2022, with CET1 ratio of 9.8%, Tier 1 risk-based capital of 10.5%, Total risk-based capital of 12.2%, and Tier 1 leverage ratio of 7.7%[351][353] Capital Ratios (December 31, 2022) | Ratio | December 31, 2022 (%) | December 31, 2021 (%) | December 31, 2020 (%) | | :--- | :--- | :--- | :--- | | Average equity to average assets | 6.6 % | 9.0 % | 10.0 % | | Return on average common equity | 16.0 % | 14.9 % | 7.2 % | | Return on average tangible common equity | 13.9 % | 17.8 % | 8.8 % | | Tangible equity ratio | 7.6 % | 7.1 % | 8.2 % | | Tangible common equity ratio | 7.1 % | 6.6 % | 7.5 % | | Basel III risk-based capital ratios: | | | | | Common equity tier 1 capital | 9.8 % | 10.2 % | 10.8 % | | Tier 1 risk-based | 10.5 % | 10.9 % | 11.8 % | | Total risk-based | 12.2 % | 12.8 % | 14.1 % | | Tier 1 leverage | 7.7 % | 7.2 % | 8.3 % | - Critical accounting policies include the Allowance for Credit Losses (ACL), Fair Value Estimates, and Goodwill, with ACL highly sensitive to economic forecasts and credit quality changes, fair value measurements involving significant judgment, and no goodwill impairment found in 2022[354][356][357][360][362][369][374] - The company presents non-GAAP financial measures like Tangible Common Equity and the Efficiency Ratio to provide additional insights into performance and financial position, believing they are relevant to ongoing operating results and industry comparisons[376][378][381] Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures are incorporated by reference from the "Interest Rate and Market Risk Management" section within MD&A, starting on page 56 - Information on market risk disclosures is incorporated by reference from the "Interest Rate and Market Risk Management" section in MD&A[383] Financial Statements and Supplementary Data This section presents management's effective internal control assessment and Ernst & Young's unqualified report, alongside consolidated financial statements and detailed notes for 2020-2022 - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2022, and concluded it was effective, with no material weaknesses identified[388] - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and an attestation report on internal control over financial reporting, concluding it was effective as of December 31, 2022[389][391][398][399] - A critical audit matter identified was the Allowance for Loan and Lease Losses (ALLL) due to the complexity of management's judgment in weighing economic scenarios and qualitative adjustments[403][404][405] Consolidated Balance Sheets (December 31, 2022 and 2021) | (In millions) | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | ASSETS | | | | Cash and due from banks | $657 | $595 | | Money market investments | 3,766 | 12,416 | | Total investment securities | 23,506 | 24,861 | | Loans, net of allowance | 55,078 | 50,338 | | Other noninterest-bearing investments | 1,130 | 851 | | Premises, equipment and software, net | 1,408 | 1,319 | | Goodwill and intangibles | 1,065 | 1,015 | | Other real estate owned | 3 | 8 | | Other assets | 2,924 | 1,714 | | Total assets | $89,545 | $93,200 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total deposits | $71,652 | $82,789 | | Federal funds and other short-term borrowings | 10,417 | 903 | | Long-term debt | 651 | 1,012 | | Reserve for unfunded lending commitments | 61 | 40 | | Other liabilities | 1,871 | 993 | | Total liabilities | 84,652 | 85,737 | | Total shareholders' equity | 4,893 | 7,463 | | Total liabilities and shareholders' equity | $89,545 | $93,200 | Consolidated Statements of Income (Years Ended December 31, 2022, 2021, and 2020) | (In millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total interest income | $2,705 | $2,267 | $2,368 | | Total interest expense | 185 | 59 | 152 | | Net interest income | 2,520 | 2,208 | 2,216 | | Total provision for credit losses | 122 | (276) | 414 | | Net interest income after provision for credit losses | 2,398 | 2,484 | 1,802 | | Total noninterest income | 632 | 703 | 574 | | Total noninterest expense | 1,878 | 1,741 | 1,704 | | Income before income taxes | 1,152 | 1,446 | 672 | | Income taxes | 245 | 317 | 133 | | Net income | 907 | 1,129 | 539 | | Preferred stock dividends | (29) | (29) | (34) | | Net earnings applicable to common shareholders | $878 | $1,100 | $505 | | Diluted net earnings per common share ($) | $5.79 | $6.79 | $3.02 | Consolidated Statements of Comprehensive Income (Loss) (Years Ended December 31, 2022, 2021, and 2020) | (In millions) | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | :--- | | Net income | $907 | $1,129 | $539 | | Other comprehensive income (loss), net of tax | (3,032) | (405) | 282 | | Comprehensive income (loss) | $(2,125) | $724 | $821 | Consolidated Statements of Cash Flows (Years Ended December 31, 2022, 2021, and 2020) | (In millions) | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $1,470 | $629 | $719 | | Net cash provided by (used in) investing activities | 1,405 | (11,579) | (12,204) | | Net cash provided by (used in) financing activities | (2,813) | 11,002 | 11,323 | | Net increase (decrease) in cash and due from banks | 62 | 52 | (162) | | Cash and due from banks at end of year | $657 | $595 | $543 | Changes in and Disagreements with Accountants No changes in or disagreements with accountants on accounting and financial disclosure were reported - No changes in or disagreements with accountants on accounting and financial disclosure were reported[663] Controls and Procedures Management concluded disclosure controls and procedures were effective as of December 31, 2022, with no material changes in internal control during Q4 2022 - Disclosure controls and procedures were evaluated as effective as of December 31, 2022, with no material changes in internal control over financial reporting during Q4 2022[664] Other Information This item contains no other information - No other information is reported under this item[665] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections No disclosures regarding foreign jurisdictions that prevent inspections are applicable - No disclosures regarding foreign jurisdictions that prevent inspections are applicable[666] Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2023 Annual Meeting of Shareholders[668] Executive Compensation Information on executive compensation is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2023 Annual Meeting of Shareholders[669] Security Ownership and Related Stockholder Matters This section details equity compensation plans as of December 31, 2022, including 1,257,143 securities under outstanding options and 3,683,780 available for future issuance Equity Compensation Plan Information (December 31, 2022) | Plan Category | Securities to be Issued (Number) | Weighted Average Exercise Price ($) | Securities Available for Future Issuance (Number) | | :--- | :--- | :--- | :--- | | Equity compensation plan approved by security holders: Zions Bancorporation, N.A. 2022 Omnibus Incentive Plan | 1,257,143 | $50.93 | 3,683,780 | - The table excludes 60,749 shares of unvested restricted stock and 1,169,093 RSUs, as well as 5,223 stock options from assumed merger plans[671] Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2023 Annual Meeting of Shareholders[672] Principal Accountant Fees and Services Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2023 Annual Meeting of Shareholders[673] Part IV Exhibits and Financial Statement Schedules This section lists consolidated financial statements and a comprehensive array of exhibits, including corporate documents, incentive plans, and executive certifications, filed as part of Form 10-K - The consolidated financial statements filed as part of Form 10-K include balance sheets, statements of income, comprehensive income, changes in shareholders' equity, and cash flows for the periods ended December 31, 2022, 2021, and 2020, along with accompanying notes[675][676] - A list of exhibits is provided, detailing various corporate documents such as Articles of Association, Bylaws, Value Sharing Plans, Deferred Compensation Plans, and the Payshelter 401(k) and Employee Stock Ownership Plan[677][678][679][680][681][682] - Certifications by the Chief Executive Officer and Chief Financial Officer, as required by the Securities Exchange Act of 1934, are filed herewith[681] Form 10-K Summary This item is not applicable to the report - This item is not applicable[683]