ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ (ZION) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/'s 10-K for fiscal year 2024. Filing date: 2025-02-25. Report date: 2024-12-31. Accession: 0000109380-25-000040.

This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high.

Company profile: ZION · All MD&A years: index · Previous year: FY 2023 · Next year: FY 2025

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Key Corporate Objectives

We conduct our operations primarily through seven separately managed and geographically defined affiliates, each with its own local branding and management teams. These affiliate banks are supported by an enterprise operating segment (referred to as the “Other” segment) that provides governance and risk management, allocates capital, establishes strategic objectives, and includes centralized technology, back-office functions, and certain lines of business not operated through our affiliate banks.

Our efforts and resources are focused on achieving strategic growth and profitability objectives. This includes delivering high-quality products and services and strengthening relationships with our commercial, small business, and consumer customers. Serving as a trusted advisor for our business customers and supporting their operational needs generally provides us with a major source of relatively stable deposits.

We strive to achieve balanced growth in customers, pre-provision net revenue (“PPNR”), profitability, and shareholder returns. Our focus is on five strategic growth areas: commercial, small business, capital markets, wealth management, and consumer.

To achieve our growth and profitability objectives, we invest in six key areas, referred to as “strategic enablers”:

1.People and Empowerment — we invest in training our employees and providing them with the tools and resources to build their capabilities;

2.Technology — we invest in innovative technologies to make us more efficient and enable us to remain competitive;

3.Marketing — we invest in marketing strategies to strengthen our local brands, attract new clients, deepen existing relationships, and enhance customer engagement;

4.Operational Excellence — we invest in and support ongoing improvements to safely and securely deliver value to our customers;

5.Risk Management — we engage in risk management practices to ensure prudent risk-taking and appropriate oversight; and

6.Data and Analytics — we invest in relevant enterprise data and analytic tools to support local execution and informed decision making.

RESULTS OF OPERATIONS

Our Financial Performance

This section and other sections provide information about our 2024 financial performance, compared with the prior year. For more information about our results of operations for 2023 compared with 2022, see the respective sections in MD&A included in our 2023 Form 10-K. Growth rates of 100% or more are considered not meaningful (“NM”) as they generally reflect a low starting point.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7
Net Earnings Applicable to Common Shareholders(in millions)		Diluted EPS		Adjusted PPNR(in millions) 1		Efficiency ratio1

1 For information on non-GAAP financial measures, see page 83.

Our financial performance for 2024, relative to the prior year, reflected growth in net earnings and diluted earnings per share (“EPS”), with modest deterioration in adjusted pre-provision net revenue. Diluted EPS was $4.95, compared with $4.35 in 2023, and benefited from a lower provision for credit losses, higher noninterest income, and lower noninterest expenses.

•Net interest income remained relatively flat, as higher earning asset yields were offset by higher funding costs. Net interest income was also impacted by increases in average interest-earning assets and interest-bearing liabilities. The net interest margin (“NIM”) decreased slightly to 3.00%, compared with 3.02%.

◦Average interest-earning assets increased $480 million, or 1%, as growth in average loans and leases and average money market investments was largely offset by a decline in average securities.

◦Average interest-bearing liabilities increased $4.2 billion, or 8%, as an increase in average interest-bearing deposits was partially offset by a decrease in average borrowed funds.

◦Total loans and leases increased $1.6 billion, or 3%, primarily due to growth in the consumer 1-4 family residential mortgage, home equity credit lines, and commercial and industrial loan portfolios.

◦Total deposits increased $1.3 billion, or 2%, primarily due to an increase in interest-bearing deposits, partially offset by a decrease in noninterest-bearing deposits. Customer deposits (excluding brokered deposits) increased $663 million, or 1%.

•The provision for credit losses was $72 million in 2024, compared with $132 million in 2023.

•Customer-related noninterest income increased $19 million, or 3%, driven largely by increases in capital markets fees and commercial account fees, partially offset by decreases in loan-related fees and card fees. Increases in noncustomer-related noninterest income were primarily due to increases in net securities gains and credit valuation adjustments (“CVA”)on client-related interest rate swaps, partially offset by a decline in dividends on FHLB stock.

•Noninterest expense decreased $51 million, or 2%. Deposit insurance and regulatory expense decreased $78 million, largely due to a $90 million accrual associated with the FDIC special assessment during the prior year. This decrease was partially offset by increases in technology, telecom, and information processing expense, and salaries and employee benefits expense. The efficiency ratio was 64.2%, compared with 62.9%, due to an increase in adjusted noninterest expense.

•Net loan and lease charge-offs totaled $60 million, or 0.10%, of average loans and leases, compared with $36 million, or 0.06%, in 2023. The increase in charge-offs was largely due to a single commercial and industrial loan. The ratio of allowance for credit losses (“ACL”) to total loans and leases was 1.25%, compared with 1.26%.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

•Nonperforming assets totaled $298 million, or 0.50%, of total loans and leases and other real estate owned (“OREO”), compared with $228 million, or 0.39%. The increase in nonperforming assets was primarily due to a small number of loans in the commercial and industrial and term commercial real estate (“CRE”) portfolios.

•Classified loans totaled $2.9 billion, or 4.83%, of total loans and leases, compared with $825 million, or 1.43%. The increase in classified loans was primarily in the multifamily and industrial CRE loan portfolios, largely due to an increased emphasis in risk grading on current cash flows, and less emphasis on the adequacy of collateral values and the strength of guarantors and sponsors. The increase in classified loans was also attributable to weaker performance, particularly for 2021 and 2022 construction loan vintages, as borrowers missed projections due to longer-than-anticipated lease-up periods, rent concessions, elevated costs, and higher interest rates.

•Total borrowed funds, consisting primarily of secured borrowings, decreased $139 million, or 3%, as a decline in security repurchase agreements was partially offset by an increase in long-term debt. The increase in long-term debt was due to the issuance of $500 million of 6.82% Fixed-to-Floating Subordinated Notes due 2035, partially offset by the redemption of $88 million of 6.95% Fixed-to-Floating Subordinated Notes due 2028 during the fourth quarter of 2024.

•Preferred stock decreased $374 million due to the redemption of the outstanding shares of our Series G, I, and J preferred stock during the fourth quarter of 2024.

The following schedule presents additional selected financial highlights:

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Dollar amounts in millions, except per share amounts)	2024/2023 Change		2024		2023		2022
For the Year
Net interest income	—	%		$	2,430		$	2,438	$	2,520
Noninterest income	3	%		700		677		632
Total net revenue	—	%		3,130		3,115		3,152
Provision for credit losses	(45)	%		72		132		122
Noninterest expense	(2)	%		2,046		2,097		1,878
Pre-provision net revenue 1	7	%		1,129		1,059		1,311
Adjusted pre-provision net revenue 1	(3)	%		1,131		1,170		1,312
Net income	15	%		784		680		907
Net earnings applicable to common shareholders	14	%		737		648		878
Per Common Share
Net earnings – diluted	14	%		4.95		4.35		5.79
Tangible book value at year-end 1	20	%		33.85		28.30		22.79
Market price – end	24	%		54.25		43.87		49.16
Market price – high	15	%		63.22		55.20		75.44
Market price – low	NM		37.76		18.26		45.21
At Year-End
Assets	2	%		88,775		87,203		89,545
Loans and leases, net of unearned income and fees	3	%		59,410		57,779		55,653
Deposits	2	%		76,223		74,961		71,652
Common equity	15	%		6,058		5,251		4,453
Performance Ratios
Return on average assets			0.88%		0.77%		1.01%
Return on average common equity			13.1%		13.4%		16.0%
Return on average tangible common equity 1			16.2%		17.3%		19.8%
Net interest margin			3.00%		3.02%		3.06%
Net charge-offs to average loans and leases			0.10%		0.06%		0.07%
Total allowance for credit losses to loans and leases outstanding			1.25%		1.26%		1.14%
Capital Ratios at Year-End
Common equity Tier 1 capital			10.9%		10.3%		9.8%
Tier 1 leverage			8.3%		8.3%		7.7%
Tangible common equity 1			5.7%		4.9%		3.8%
Other Selected Information
Weighted average diluted common shares outstanding (in thousands)	—	%		147,215		147,756		150,271
Bank common shares repurchased (in thousands)	(6)	%		890		947		3,563
Dividends declared	1	%		$	1.66		$	1.64	$	1.58
Common dividend payout ratio 2			33.6%		37.8%		27.3%
Capital distributed as a percentage of net earnings applicable to common shareholders 3			38%		46%		50%
Efficiency ratio 1			64.2%		62.9%		58.8%

1 See “Non-GAAP Financial Measures” on page 83 for more information.

2 The common dividend payout ratio is equal to common dividends paid divided by net earnings applicable to common shareholders.

3 This ratio is the common dividends paid plus share repurchases for the year, divided by net earnings applicable to common shareholders.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Net Interest Income and Net Interest Margin

Net interest income, which is the difference between interest earned on interest-earning assets and interest paid on interest-bearing liabilities, represented 78% of our net revenue (net interest income and noninterest income) in both 2024 and 2023. The NIM is calculated as net interest income as a percentage of average interest-earning assets.

NET INTEREST INCOME AND NET INTEREST MARGIN

			Amount change		Percent change			Amount change		Percent change
(Dollar amounts in millions)	2024				2023			2022
Interest and fees on loans 1	$	3,514		$	318		10	%		$	3,196	$	1,084			51	%	$	2,112
Interest on money market investments	230		42			22		188		107		NM		81
Interest on securities	549		(14)			(2)		563		51		10			512
Total interest income	4,293		346			9		3,947		1,242		46			2,705
Interest on deposits	1,540		477			45		1,063		993		NM		70
Interest on short- and long-term borrowings	323		(123)			(28)		446		331		NM		115
Total interest expense	1,863		354			23		1,509		1,324		NM		185
Net interest income	$	2,430		$	(8)		—			$	2,438	$	(82)			(3)		$	2,520
Average interest-earning assets	$	82,464		$	480		1			$	81,984	$	(1,654)			(2)		$	83,638
Average interest-bearing liabilities	56,061		4,185			8		51,876		9,738		23			42,138
			bps					bps
Net interest margin 2	3.00	%		(2)				3.02	%		(4)				3.06	%

1 Includes interest income recoveries of $6 million, $4 million, and $9 million for the respective years ended.

2 Taxable-equivalent rates used where applicable.

Net interest income remained relatively flat year over year, as higher yields on interest-earning assets were offset by increased funding costs. Net interest income was also impacted by increases in average interest-earning assets and interest-bearing liabilities. The NIM was 3.00% in 2024, compared with 3.02% in 2023.

The following chart presents the changes in yields on average interest-earning assets:

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The yield on average interest-earning assets increased 40 basis points in 2024, reflecting higher interest rates and a favorable mix change to higher yielding assets, as average loans and leases and average money market investments increased, while average securities decreased. The yield on average loans and leases increased 37 basis points and the yield on both average securities and average money market investments increased 19 basis points.

The following chart presents the changes in rates paid on average interest-bearing liabilities:

The total cost of deposits increased 60 basis points, and the rate paid on total deposits and interest-bearing liabilities increased 41 basis points in 2024, reflecting the higher interest rate environment and a decrease in noninterest-bearing deposits. The rate paid on total borrowed funds decreased 4 basis points.

Average interest-earning assets increased $480 million, or 1%, from the prior year, as growth in average loans and leases and average money market investments, was partially offset by a decline in average securities.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Average loans and leases increased $1.8 billion, or 3%, to $58.5 billion, primarily due to growth in average consumer and commercial real estate loans. Average securities decreased $2.0 billion, or 9%, to $19.6 billion, primarily due to principal reductions.

Average interest-bearing liabilities increased $4.2 billion, or 8%, from the prior year, largely driven by an increase in average interest-bearing deposits, and decreases in average noninterest-bearing deposits and average borrowed funds.

Average deposits increased $1.9 billion, or 3%, to $74.8 billion. Average interest-bearing deposits increased $6.5 billion, or 15%, primarily due to customer deposit growth and migration to interest-bearing deposit products in response to the higher interest rate environment. Average noninterest-bearing deposits decreased $4.6 billion, or 16%, and represented 34% of total deposits in 2024, compared with 41% in 2023. Average borrowed funds, consisting primarily of secured borrowings, decreased $2.3 billion, or 27%, to $6.4 billion, primarily due to a decline in security repurchase agreements.

For more information on our investment securities portfolio and borrowed funds, and how we manage liquidity risk, refer to the “Investment Securities Portfolio” section on page 50 and the “Liquidity Risk Management” section on page 73. For further discussion on the effects of market rates on net interest income and our approach to managing interest rate risk, refer to the “Interest Rate and Market Risk Management” section on page 70.

The following schedule presents the average balances, the amount of interest earned or paid, and the applicable yields for interest-earning assets, as well as the rates paid on interest-bearing liabilities:

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

AVERAGE BALANCE SHEETS, YIELDS, AND RATES

	Year Ended December 31,
	2024		2023		2022
(In millions)	Average balance	Interest	Yield/Rate 1		Average balance	Interest	Yield/Rate 1		Average balance	Interest	Yield/Rate 1
ASSETS
Money market investments:
Interest-bearing deposits	$	1,970		$	106		5.40	%		$	2,163		$	112		5.18	%		$	3,066	$	27	0.87	%
Federal funds sold and securities purchased under agreements to resell	2,203		124		5.62			1,358		76		5.57			2,482		54		2.16
Total money market investments	4,173		230		5.52			3,521		188		5.33			5,548		81		1.45
Trading securities	36		2		4.41			53		1		2.86			322		16		4.79
Investment securities:
Available-for-sale	9,621		332		3.46			10,900		331		3.03			23,132		461		1.99
Held-to-maturity	10,017		224		2.23			10,731		240		2.24			1,999		47		2.36
Total investment securities	19,638		556		2.83			21,631		571		2.64			25,131		508		2.02
Loans held for sale	70		4		NM		39		2		NM		39		1		NM
Loans and leases: 2
Commercial	30,671		1,842		6.01			30,519		1,679		5.50			29,225		1,194		4.09
Commercial real estate	13,532		967		7.14			13,023		908		6.98			12,251		544		4.44
Consumer	14,344		737		5.14			13,198		639		4.84			11,122		398		3.58
Total loans and leases	58,547		3,546		6.06			56,740		3,226		5.69			52,598		2,136		4.06
Total interest-earning assets	82,464		4,338		5.26			81,984		3,988		4.86			83,638		2,742		3.28
Cash and due from banks	714					662					621
Allowance for credit losses on loans and debt securities	(689)					(632)					(514)
Goodwill and intangibles	1,055					1,062					1,022
Other assets	5,279					5,579					4,908
Total assets	$	88,823					$	88,655					$	89,675
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Savings and money market	$	38,796		$	1,022		2.63			$	34,135		$	650		1.90			$	37,045	$	61	0.16
Time	10,898		518		4.75			9,028		413		4.58			1,594		9		0.58
Total interest-bearing deposits	49,694		1,540		3.10			43,163		1,063		2.46			38,639		70		0.18
Borrowed funds:
Federal funds purchased and security repurchase agreements	1,309		68		5.19			3,380		169		4.98			1,531		38		2.49
Other short-term borrowings	4,458		218		4.90			4,741		241		5.08			1,263		46		3.65
Long-term debt	600		37		6.07			592		36		6.09			705		31		4.28
Total borrowed funds	6,367		323		5.07			8,713		446		5.11			3,499		115		3.27
Total interest-bearing liabilities	56,061		1,863		3.32			51,876		1,509		2.91			42,138		185		0.44
Noninterest-bearing demand deposits	25,066					29,703					39,890
Other liabilities	1,643					1,797					1,735
Total liabilities	82,770					83,376					83,763
Shareholders’ equity:
Preferred equity	423					440					440
Common equity	5,630					4,839					5,472
Total shareholders’ equity	6,053					5,279					5,912
Total liabilities and shareholders’ equity	$	88,823					$	88,655					$	89,675
Spread on average interest-bearing funds			1.94	%				1.95	%				2.84	%
Impact of net noninterest-bearing sources of funds			1.06	%				1.07	%				0.22	%
Net interest margin		$	2,475		3.00	%			$	2,479		3.02	%			$	2,557		3.06	%
Memo: total cost of deposits			2.06	%				1.46	%				0.09	%
Memo: total deposits and interest-bearing liabilities	$	81,127		1,863		2.28	%		$	81,579		1,509		1.87	%		$	82,028		185	0.23	%

1 Taxable-equivalent rates used where applicable.

2 Net of unamortized purchase premiums, discounts, and deferred loan fees and costs.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following schedule presents year-over-year changes in net interest income on a fully taxable-equivalent basis for the years indicated. For the yield calculations, average loan balances include the principal amounts of nonaccrual and restructured loans. Interest payments received on nonaccrual loans are not recognized as interest income, but are applied as reductions to the principal outstanding. Additionally, interest on modified loans is generally accrued at the modified rates.

In the analysis of changes in taxable-equivalent net interest income attributed to volume and rate, changes are allocated to volume with the following exceptions: when both volume and rate increase, the variance is allocated proportionately to both volume and rate; when the rate increases and volume decreases, the variance is allocated to rate.

ANALYSIS OF CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME

	2024 over 2023		2023 over 2022
	Changes due to		Total changes		Changes due to		Total changes
(In millions)	Volume		Rate1			Volume		Rate1
INTEREST-EARNING ASSETS
Money market investments:
Interest-bearing deposits	$	(10)			$	4			$	(6)	$	(8)		$	93	$	85
Federal funds sold and securities purchased under agreements to resell	48			—			48			(25)	47		22
Total money market investments	38			4			42			(33)	140		107
Trading securities	—			1			1			(8)	(7)		(15)
Securities:
Available-for-sale	(39)			40			1			(244)	114		(130)
Held-to-maturity	(15)			(1)			(16)			195	(2)		193
Total securities	(54)			39			(15)			(49)	112		63
Loans held for sale	2			—			2			—	1		1
Loans and leases2
Commercial	8			155			163			56	429		485
Commercial real estate	37			22			59			36	328		364
Consumer	57			41			98			84	157		241
Total loans and leases	102			218			320			176	914		1,090
Total interest-earning assets	88			262			350			86	1,160		1,246
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Saving and money market	97			275			372			(6)	595		589
Time	89			16			105			163	241		404
Total interest-bearing deposits	186			291			477			157	836		993
Borrowed funds:
Federal funds purchased and security repurchase agreements	(104)			3			(101)			72	59		131
Other short-term borrowings	(14)			(9)			(23)			171	24		195
Long-term debt	1			—			1			(6)	11		5
Total borrowed funds	(117)			(6)			(123)			237	94		331
Total interest-bearing liabilities	69			285			354			394	930		1,324
Change in taxable-equivalent net interest income	$	19			$	(23)			$	(4)	$	(308)		$	230	$	(78)

1 Taxable-equivalent rates used where applicable.

2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and modified loans.

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The Allowance and Provision for Credit Losses

The allowance for credit losses (“ACL”) comprises both the allowance for loan and lease losses (“ALLL”) and the reserve for unfunded lending commitments (“RULC”). The ALLL represents the estimated current expected credit losses related to the loan and lease portfolio as of the balance sheet date. The RULC represents the estimated reserve for current expected credit losses associated with off-balance sheet commitments. Changes in the ALLL and RULC, net of charge-offs and recoveries, are recorded as the provision for loan and lease losses and the provision for unfunded lending commitments, respectively, on the consolidated statement of income. The ACL for debt securities is estimated separately from loans and is included in “Investment securities” on the consolidated balance sheet.

The ACL was $741 million at December 31, 2024, compared with $729 million at December 31, 2023. The increase in the ACL primarily reflects credit quality deterioration and higher reserves associated with portfolio-specific risks including commercial real estate, partially offset by improvements in economic forecasts. The ratio of ACL to total loans and leases was 1.25% at December 31, 2024, compared with 1.26% at December 31, 2023.

The provision for credit losses, which includes both the provision for loan and lease losses and the provision for unfunded lending commitments, was $72 million in 2024, compared with $132 million in 2023. The provision for securities losses was less than $1 million during 2024 and 2023.

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The bar chart above illustrates the broad categories of changes in the ACL from the prior year period. To estimate current expected losses, we use econometric loss models that incorporate multiple economic scenarios, reflecting optimistic, baseline, and stressed economic conditions. The results derived from these scenarios are weighted to produce the credit loss estimate. Management may adjust the weights to reflect their assessment of current conditions and reasonable and supportable forecasts.

The second bar represents changes in these economic forecasts and current economic conditions, including management’s judgment on the weighting of the economic forecasts during the current quarter. These changes contributed to a $146 million decrease in the ACL from the prior year.

The third bar represents changes in credit quality factors, and includes risk grade migration, portfolio-specific risks, and specific reserves against loans. Combined, these factors contributed to a $158 million increase in the ACL, driven largely by deterioration in credit quality and an increased focus on certain portfolio-specific risks, including commercial real estate.

The fourth bar represents changes in our loan portfolio composition, including changes in loan balances and mix, the aging of the portfolio, and other qualitative risk factors. During 2024, changes in loan portfolio composition offset the effects of $1.6 billion in period-ending loan growth, resulting in no significant impact on the ACL.

See “Credit Quality” on page 66 and Note 6 of the Notes to Consolidated Financial Statements for more information on how we determine the appropriate level of the ALLL and the RULC.

Noninterest Income

Noninterest income represents revenue earned from products and services that generally have no associated interest rate or yield and is classified as either customer-related or noncustomer-related. Customer-related noninterest income excludes items such as securities gains and losses, dividends, insurance-related income, and mark-to-market adjustments on certain derivatives.

Total noninterest income increased $23 million, or 3%, in 2024, relative to the prior year. Noninterest income represented 22% of our net revenue in both 2024 and 2023. The following schedule presents a comparison of the major components of noninterest income:

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

NONINTEREST INCOME

(Dollar amounts in millions)	2024			Percent change		2023	Amount change			2022
Commercial account fees	$	182		$	8		5	%	$	174		$	15			9	%	$	159
Card fees	96		(5)			(5)		101		(3)		(3)			104
Retail and business banking fees	67		1			2		66		(7)		(10)			73
Loan-related fees and income	70		(9)			(11)		79		(1)		(1)			80
Capital markets fees	110		29			36		81		(2)		(2)			83
Wealth management fees	58		—			—		58		3		5			55
Other customer-related fees	56		(5)			(8)		61		1		2			60
Customer-related noninterest income	639		19			3		620		6		1			614
Fair value and nonhedge derivative income (loss)	—		4			NM	(4)		(20)		NM		16
Dividends and other income	42		(15)			(26)		57		40		NM		17
Securities gains (losses), net	19		15			NM	4		19		NM		(15)
Noncustomer-related noninterest income	61		4			7		57		39		NM		18
Total noninterest income	$	700		$	23		3		$	677		$	45			7		$	632

Customer-related Noninterest Income

Consistent with our key corporate objectives, we focus on expanding and supporting new and existing relationships by providing high-quality products and services to our commercial, small business, and consumer customers, thereby benefiting noninterest income through enhanced service offerings.

Customer-related noninterest income increased $19 million, or 3%, in 2024, relative to the prior year. Key drivers impacting customer-related revenue included:

•Capital markets fees increased $29 million, or 36%, driven by expanded real estate capital markets activity as well as increased swap fees, loan syndication fees, and foreign exchange fees.

•Commercial account fees increased $8 million or 5%, largely due to an increase in account analysis fees, partially offset by decreases in merchant fees and treasury management sweep fees.

•Loan-related fees and income decreased $9 million, or 11%, primarily due to higher gains on loan sales in the prior year and a decline in loan servicing income resulting from the sale of associated mortgage servicing rights in 2023.

•Card fees decreased $5 million, or 5%, primarily due to declines in commercial and business bankcard interchange fees.

•Other customer-related fees decreased $5 million, or 8%, mainly due to a decrease in miscellaneous income, including fees associated with compliance and other support services to pharmacies and healthcare providers.

Noncustomer-related Noninterest Income

Noncustomer-related noninterest income increased $4 million, or 7%, in 2024, relative to the prior year. Key drivers impacting noncustomer-related revenue included:

•Net securities gains increased $15 million, largely due to valuation adjustments in our Small Business Investment Company (“SBIC”) investment portfolio.

•Fair value and nonhedge derivative income increased $4 million due to credit valuation adjustments on client-related interest rate swaps.

•Dividends and other income decreased $15 million, primarily due to a decline in dividends on FHLB stock, as well as gains in the prior year associated with the sale of bank-owned property.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Noninterest Expense

The following schedule presents a comparison of the major components of noninterest expense:

NONINTEREST EXPENSE

(Dollar amounts in millions)	2024			Percent change		2023	Amount change			2022
Salaries and employee benefits	$	1,287		$	12		1	%	$	1,275		$	40			3	%	$	1,235
Technology, telecom, and information processing	260		20			8		240		31		15			209
Occupancy and equipment, net	161		1			1		160		8		5			152
Professional and legal services	64		2			3		62		5		9			57
Marketing and business development	45		(1)			(2)		46		7		18			39
Deposit insurance and regulatory expense	91		(78)			(46)		169		119		NM		50
Credit-related expense	25		(1)			(4)		26		(4)		(13)			30
Other real estate expense, net	(1)		(1)			NM	—		(1)		NM		1
Other	114		(5)			(4)		119		14		13			105
Total noninterest expense	$	2,046		$	(51)		(2)		$	2,097		$	219			12		$	1,878
Adjusted noninterest expense (non-GAAP)	$	2,025		$	39		2		$	1,986		$	110			6		$	1,876

Noninterest expense decreased $51 million, or 2%, in 2024, primarily due to a $78 million decrease in deposit insurance and regulatory expense, driven by a $90 million accrual associated with the FDIC special assessment during the fourth quarter of 2023. Technology, telecom, and information processing expense increased $20 million, or 8%, primarily due to increases in software amortization expenses associated with the replacement of our core loan and deposit banking systems, as well as other related application software, license, and maintenance expenses. For additional information on the replacement of our core loan and deposit banking systems, see “Premises, Equipment, and Software” on page 54.

Salaries and benefits expense represented approximately 63% and 61% of total noninterest expense in 2024 and 2023, respectively. The following schedule presents the major components of salaries and employee benefits expense:

SALARIES AND EMPLOYEE BENEFITS

(Dollar amounts in millions)	2024			Percent change		2023	Amount change			2022
Salaries and bonuses	$	1,061		$	4		—	%	$	1,057	$	29		3	%	$	1,028
Employee benefits:
Employee health and insurance	105		5			5		100		7	8		93
Retirement and profit sharing	49		(2)			(4)		51		(1)	(2)		52
Payroll taxes and other fringe benefits	72		5			7		67		5	8		62
Total employee benefits	226		8			4		218		11	5		207
Total salaries and employee benefits	$	1,287		$	12		1		$	1,275	$	40		3		$	1,235
Full-time equivalent employees at December 31	9,406		(273)			(3)		9,679		(310)	(3)		9,989

Total salaries and benefits expense increased $12 million, or 1%, primarily due to a decline in capitalized salaries related to reduced software development activities, as well as higher benefits accruals, partially offset by a decrease in base salaries. Excluding the effect of capitalized salaries, total salaries and benefits expense remained relatively flat compared with the prior year. We had 9,406 full-time equivalent employees at December 31, 2024, a decrease of approximately 3% relative to the prior year.

Adjusted noninterest expense increased $39 million, or 2%. The efficiency ratio was 64.2%, compared with 62.9%, due to the aforementioned increase in adjusted noninterest expense. For information on non-GAAP financial measures, see page 83.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Technology Spend

Consistent with our key corporate objectives, we invest in technology initiatives designed to improve our products and services, make us more efficient, and enable us to remain competitive. We report these investments as technology spend, which includes the following:

•Technology, telecom, and information processing expense — includes current period expenses presented on the consolidated statement of income related to application software licensing and maintenance, telecommunications, and data processing, less related non-cash amortization and depreciation;

•Other technology-related expense — includes related noncapitalized salaries and employee benefits, occupancy and equipment, and professional and legal services; and

•Technology investments — includes capitalized technology infrastructure equipment, hardware, and software (both purchased and internally developed).

The following schedule presents the composition of our technology spend:

TECHNOLOGY SPEND

(In millions)	2024			Percent change		2023	Amount change			2022
Technology, telecom, and information processing expense	$	260		$	20		8	%	$	240	$	31		15	%	$	209
Less: related non-cash amortization and depreciation	(79)		(8)			11		(71)		(17)	31		(54)
Other technology-related expense	251		19			8		232		26	13		206
Capitalized technology investments	34		(48)			(59)		82		(8)	(9)		90
Total technology spend	$	466		$	(17)		(4)		$	483	$	32		7		$	451

Total technology spend decreased $17 million, or 4%, relative to the prior year, as the aforementioned increase in technology, telecom, and information processing expense and an increase in other technology-related expense were more than offset by a decrease in certain capitalized technology investments, as the final phase of our multi-year project to replace substantially all of our in-scope core loan and deposit banking systems was completed in July 2024.

Income Taxes

The following schedule presents the income tax expense and effective tax rates for the periods presented:

INCOME TAXES

(Dollar amounts in millions)	2024			2022
Income before income taxes	$	1,012		$	886			$	1,152
Income tax expense	228		206			245
Effective tax rate	22.5	%	23.3	%		21.3	%

The effective tax rates for the periods presented above were reduced by nontaxable municipal interest income and nontaxable income from certain bank-owned life insurance policies (“BOLI”). However, they were increased by the nondeductibility of certain FDIC premiums, certain executive compensation, and other fringe benefits. The higher effective tax rates for 2024 and 2023 were primarily attributed to higher nondeductible FDIC premium expense (excluding the deductible special assessments) and nondeductible interest expense related to certain municipal loans and securities.

Investments in technology initiatives, low-income housing, and municipal securities during 2024, 2023, and 2022, generated tax credits and nontaxable income, which benefited the effective tax rate for each respective year. Additionally, the effective tax rate for 2024 benefited from a reduction in the reserve for uncertain tax positions related to credits on technology initiatives, as various statutes of limitations expired.

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At December 31, 2024 and 2023, we reported a net DTA of $0.9 billion and $1.0 billion, respectively. The reduction in the net DTA was primarily attributed to a decrease in unrealized losses in accumulated other comprehensive income (“AOCI”) associated with investment securities and derivative instruments.

No valuation allowance was recorded at December 31, 2024 and December 31, 2023. For more information about the factors influencing our effective tax rate, significant components of our DTAs and DTLs, and unrecognized tax benefits for uncertain tax positions, see Note 20 of the Notes to Consolidated Financial Statements.

Preferred Stock Dividends and Redemption

Preferred stock dividends totaled $41 million in 2024, $32 million in 2023, and $29 million in 2022. The increase was primarily driven by changes in the timing and rates of dividend payments for certain series of preferred stock. In December 2024, we fully redeemed the outstanding shares of our Series G, I, and J preferred stock and paid all declared and unpaid dividends. For further details, see Note 14 of the Notes to Consolidated Financial Statements.

Business Segment Results

We manage our operations through seven affiliate banks located in different geographic markets, each with its own local branding and management team. These affiliate banks constitute our primary business segments and include: Zions Bank, California Bank & Trust (“CB&T”), Amegy Bank (“Amegy”), National Bank of Arizona (“NBAZ”), Nevada State Bank (“NSB”), Vectra Bank Colorado (“Vectra”), and The Commerce Bank of Washington (“TCBW”). We emphasize local authority, responsibility, pricing, and customization of certain products that are designed to maximize customer satisfaction, strengthen community relations, and improve profitability and shareholder returns.

Our affiliate banks are supported by an enterprise operating segment (referred to as the “Other” segment) that provides governance and risk management, allocates capital, establishes strategic objectives, and includes centralized technology, back-office functions, and certain lines of business not operated through our affiliate banks. The cost of centrally provided services is allocated to each business segment based on estimated or actual usage of those services. Capital is allocated according to the risk-weighted assets held by each business segment.

We employ an internal funds transfer pricing (“FTP”) allocation process to report the results of operations of our business segments. This process is subject to ongoing changes and refinements. For more performance information related to our business segments, including the Other segment, see Note 22 of the Notes to Consolidated Financial Statements.

We present selected financial information below for each of our business segments. Ratios are calculated based on amounts in thousands. All references to domestic deposits by state are based on FDIC deposit market share data for full-service institutions with at least three branches at June 30, 2024.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Zions Bank

Zions Bank is headquartered in Salt Lake City, Utah. At December 31, 2024, Zions Bank operated 92 branches in Utah, 25 branches in Idaho, and one branch in Wyoming. As measured by domestic deposits in these states, Zions Bank was the largest full-service commercial bank in Utah and the fourth largest in Idaho. The FDIC deposit market share data at June 30, 2024 for Zions Bank in Wyoming was not meaningful.

ZIONS BANK SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change		2022
SELECTED INCOME STATEMENT DATA
Net interest income	$	692		$	(6)		(1)	%		$	698		$	(28)			(4)	%		$	726
Provision for credit losses	(8)		(28)			NM	20		(23)			(53)			43
Noninterest income	187		(5)			(3)		192		6			3			186
Noninterest expense	571		(11)			(2)		582		84			17			498
Income (loss) before income taxes	316		28			10		288		(83)			(22)			371
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	8,255		(269)			(3)		8,524		424			5			8,100
Commercial real estate	2,783		62			2		2,721		(130)			(5)			2,851
Consumer	3,820		278			8		3,542		557			19			2,985
Total loans	14,858		71			—		14,787		851			6			13,936
Total deposits	21,324		632			3		20,692		(691)			(3)			21,383
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	(3)			(22)		NM		$	19			(10)			(34)			$	29
Ratio of net charge-offs (recoveries) to average loans and leases	(0.02)	%					0.13	%						0.22	%
Allowance for credit losses	$	154			(3)		(2)			$	157			2			1			$	155
Ratio of allowance for credit losses to net loans and leases, at year end	1.04	%					1.10	%						1.17	%
Nonperforming assets	$	29			3		12			$	26			(10)			(28)			$	36
Ratio of nonperforming assets to net loans and leases and other real estate owned	0.20	%					0.18	%						0.26	%

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California Bank & Trust

California Bank & Trust is headquartered in San Diego, California. At December 31, 2024, CB&T operated 75 branches in California. As measured by domestic deposits in the state, CB&T was the 15th largest full-service commercial bank in California.

CALIFORNIA BANK AND TRUST SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change
SELECTED INCOME STATEMENT DATA
Net interest income	$	584		$	(18)		(3)	%		$	602	$	10			2	%		$	592
Provision for credit losses	42		(2)			(5)		44		(5)		(10)			49
Noninterest income	121		5			4		116		2		2			114
Noninterest expense	403		(8)			(2)		411		71		21			340
Income (loss) before income taxes	260		(3)			(1)		263		(54)		(17)			317
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	7,295		(30)			—		7,325		(116)		(2)			7,441
Commercial real estate	4,244		(98)			(2)		4,342		164		4			4,178
Consumer	3,040		530			21		2,510		243		11			2,267
Total loans	14,579		402			3		14,177		291		2			13,886
Total deposits	14,529		(505)			(3)		15,034		263		2			14,771
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	43			33		NM		$	10		7			NM		$	3
Ratio of net charge-offs (recoveries) to average loans and leases	0.30	%					0.07	%					0.02	%
Allowance for credit losses	$	167			5		3			$	162		40			33			$	122
Ratio of allowance for credit losses to net loans and leases, at year end	1.17	%					1.15	%					0.93	%
Nonperforming assets	$	101			19		23			$	82		57			NM		$	25
Ratio of nonperforming assets to net loans and leases and other real estate owned	0.69	%					0.58	%					0.18	%

On September 23, 2024, we announced that we entered into an agreement to purchase four FirstBank Coachella Valley, California branches and their associated deposit and loan accounts. In addition to the four branches, the purchase includes approximately $700 million in deposits and $400 million in commercial and consumer loans. These amounts are subject to change. The transaction is expected to be completed in the first quarter of 2025, subject to customary closing conditions.

In January 2025, Southern California experienced devastating wildfires. We anticipate minimal credit losses due to insurance coverage and our limited residential credit exposure in the affected areas.

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Amegy Bank

Amegy Bank is headquartered in Houston, Texas. At December 31, 2024, Amegy operated 75 branches in Texas. As measured by domestic deposits in the state, Amegy was the eighth largest full-service commercial bank in Texas.

AMEGY BANK SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change
SELECTED INCOME STATEMENT DATA
Net interest income	$	496		$	39		9	%		$	457	$	(48)			(10)	%		$	505
Provision for credit losses	22		7			47		15		10		NM		5
Noninterest income	175		(9)			(5)		184		19		12			165
Noninterest expense	456		3			1		453		98		28			355
Income (loss) before income taxes	193		20			12		173		(137)		(44)			310
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	7,851		589			8		7,262		(90)		(1)			7,352
Commercial real estate	2,438		290			14		2,148		171		9			1,977
Consumer	3,585		(2)			—		3,587		156		5			3,431
Total loans	13,874		877			7		12,997		237		2			12,760
Total deposits	15,349		(42)			—		15,391		1,304		9			14,087
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	4			(1)		(20)			$	5		2			67			$	3
Ratio of net charge-offs (recoveries) to average loans and leases	0.03	%					0.04	%					0.02	%
Allowance for credit losses	$	141			2		1			$	139		17			14			$	122
Ratio of allowance for credit losses to net loans and leases, at year end	1.05	%					1.08	%					1.01	%
Nonperforming assets	$	76			41		NM		$	35		(24)			(41)			$	59
Ratio of nonperforming assets to net loans and leases and other real estate owned	0.55	%					0.27	%					0.46	%

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National Bank of Arizona

National Bank of Arizona is headquartered in Phoenix, Arizona. At December 31, 2024, NBAZ operated 56 branches in Arizona. As measured by domestic deposits in the state, NBAZ was the fifth largest full-service commercial bank in Arizona.

NATIONAL BANK OF ARIZONA SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change		2022
SELECTED INCOME STATEMENT DATA
Net interest income	$	245		$	(4)		(2)	%		$	249		$	7			3	%		$	242
Provision for credit losses	17		13			NM	4		(7)			(64)			11
Noninterest income	43		3			8		40		(8)			(17)			48
Noninterest expense	196		2			1		194		27			16			167
Income (loss) before income taxes	75		(16)			(18)		91		(21)			(19)			112
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	2,496		(101)			(4)		2,597		73			3			2,524
Commercial real estate	1,732		(39)			(2)		1,771		259			17			1,512
Consumer	1,416		157			12		1,259		177			16			1,082
Total loans	5,644		17			—		5,627		509			10			5,118
Total deposits	6,884		39			1		6,845		(449)			(6)			7,294
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	1			—		—			$	1			2			NM		$	(1)
Ratio of net charge-offs (recoveries) to average loans and leases	0.02	%					0.02	%						(0.02)	%
Allowance for credit losses	$	73			19		35			$	54			14			35			$	40
Ratio of allowance for credit losses to net loans and leases, at year end	1.28	%					1.02	%						0.81	%
Nonperforming assets	$	10			(2)		(17)			$	12			6			NM		$	6
Ratio of nonperforming assets to net loans and leases and other real estate owned	0.18	%					0.21	%						0.12	%

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Nevada State Bank

Nevada State Bank is headquartered in Las Vegas, Nevada. At December 31, 2024, NSB operated 43 branches in Nevada. As measured by domestic deposits in the state, NSB was the fifth largest full-service commercial bank in Nevada.

NEVADA STATE BANK SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change		2022
SELECTED INCOME STATEMENT DATA
Net interest income	$	197		$	5		3	%		$	192		$	7			4	%		$	185
Provision for credit losses	(11)		(53)			NM	42		38			NM		4
Noninterest income	52		7			16		45		(3)			(6)			48
Noninterest expense	177		3			2		174		23			15			151
Income (loss) before income taxes	83		62			NM	21		(57)			(73)			78
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	1,526		180			13		1,346		(2)			—			1,348
Commercial real estate	821		(30)			(4)		851		56			7			795
Consumer	1,333		99			8		1,234		104			9			1,130
Total loans	3,680		249			7		3,431		158			5			3,273
Total deposits	7,079		(60)			(1)		7,139		54			1			7,085
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	7			4		NM		$	3			5			NM		$	(2)
Ratio of net charge-offs (recoveries) to average loans and leases	0.20	%					0.09	%						(0.07)	%
Allowance for credit losses	$	53			(13)		(20)			$	66			39			NM		$	27
Ratio of allowance for credit losses to net loans and leases, at year end	1.49	%					1.95	%						0.90	%
Nonperforming assets	$	42			(4)		(9)			$	46			37			NM		$	9
Ratio of nonperforming assets to net loans and leases and other real estate owned	1.14	%					1.34	%						0.27	%

Vectra Bank Colorado

Vectra Bank Colorado is headquartered in Denver, Colorado. At December 31, 2024, Vectra operated 33 branches in Colorado and one branch in New Mexico. As measured by domestic deposits in the state, Vectra was the 14th largest full-service commercial bank in Colorado. The FDIC deposit market share data at June 30, 2024 for Vectra in New Mexico was not meaningful.

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VECTRA BANK COLORADO SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change
SELECTED INCOME STATEMENT DATA
Net interest income	$	148		$	(3)		(2)	%		$	151	$	(2)			(1)	%		$	153
Provision for credit losses	3		(4)			(57)		7		(2)		(22)			9
Noninterest income	29		1			4		28		(3)		(10)			31
Noninterest expense	137		(4)			(3)		141		21		18			120
Income (loss) before income taxes	37		6			19		31		(24)		(44)			55
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	1,702		(62)			(4)		1,764		(89)		(5)			1,853
Commercial real estate	792		(150)			(16)		942		43		5			899
Consumer	1,409		78			6		1,331		160		14			1,171
Total loans	3,903		(134)			(3)		4,037		114		3			3,923
Total deposits	3,592		97			3		3,495		(362)		(9)			3,857
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	9			7		NM		$	2		(7)			(78)			$	9
Ratio of net charge-offs (recoveries) to average loans and leases	0.22	%					0.05	%					0.25	%
Allowance for credit losses	$	41			(4)		(9)			$	45		9			25			$	36
Ratio of allowance for credit losses to net loans and leases, at year end	1.01	%					1.12	%					0.99	%
Nonperforming assets	$	29			13		81			$	16		2			14			$	14
Ratio of nonperforming assets to net loans and leases and other real estate owned	0.74	%					0.40	%					0.36	%

The Commerce Bank of Washington

The Commerce Bank of Washington is headquartered in Seattle, Washington, and operates in Washington under The Commerce Bank of Washington name and in Portland, Oregon, under The Commerce Bank of Oregon name. At December 31, 2024, TCBW operated two branches in Washington and one branch in Oregon. The FDIC deposit market share data at June 30, 2024 for TCBW in Washington and Oregon was not meaningful.

THE COMMERCE BANK OF WASHINGTON SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)	2024		Amount change		Percent change			Amount change		Percent change		2022
SELECTED INCOME STATEMENT DATA
Net interest income	$	63		$	2		3	%		$	61		$	(2)			(3)	%		$	63
Provision for credit losses	9		7			NM	2		1			NM		1
Noninterest income	8		1			14		7		—			—			7
Noninterest expense	33		(2)			(6)		35		11			46			24
Income (loss) before income taxes	29		(2)			(6)		31		(14)			(31)			45
SELECTED BALANCE SHEET DATA (at year end)
Loans:
Commercial	1,219		151			14		1,068		(83)			(7)			1,151
Commercial real estate	668		71			12		597		68			13			529
Consumer	64		(5)			(7)		69		1			1			68
Total loans	1,951		217			13		1,734		(14)			(1)			1,748
Total deposits	1,174		69			6		1,105		(331)			(23)			1,436
CREDIT QUALITY
Net loan and lease charge-offs (recoveries)	$	1			1		NM		$	—			—			NM		$	—
Ratio of net charge-offs (recoveries) to average loans and leases	0.06	%					—	%						—	%
Allowance for credit losses	$	19			8		73			$	11			2			22			$	9
Ratio of allowance for credit losses to net loans and leases, at year end	1.05	%					0.65	%						0.55	%
Nonperforming assets	$	6			(2)		(25)			$	8			8			NM		$	—
Ratio of nonperforming assets to net loans and leases and other real estate owned	0.31	%					0.46	%						—	%

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BALANCE SHEET ANALYSIS

Interest-earning Assets

Interest-earning assets, which include loans and leases, investment securities, and money market investments, have associated interest rates or yields. We strive to maintain a high level of interest-earning assets relative to total assets. For more information regarding the average balances, associated revenue generated, and the respective yields of our interest-earning assets, see the Average Balance Sheet on page 36.

AVERAGE LOANS AND LEASES, INVESTMENT SECURITIES, AND

MONEY MARKET INVESTMENTS (at December 31)

Investment Securities Portfolio

Investment securities are classified as either available-for-sale (“AFS”) or held-to-maturity (“HTM”), based on their purpose and holding period. We invest in securities to actively manage liquidity and interest rate risk, and to generate interest income. Our portfolio primarily consists of securities that can readily provide cash and liquidity through secured borrowing agreements, without the need to sell the securities. Our fixed-rate securities portfolio helps balance the inherent interest rate mismatch between loans and deposits, and protects the economic value of shareholders’ equity. At December 31, 2024, the estimated duration of our investment securities portfolio, which measures price sensitivity to interest rate changes, was 3.4 years, compared with 3.6 years at December 31, 2023.

For information about our borrowing capacity associated with the investment securities portfolio and how we manage our liquidity risk, refer to the “Liquidity Risk Management” section on page 73. Additionally, refer to Note 3 and Note 5 of the Notes to Consolidated Financial Statements for more information on fair value measurements and the accounting for our investment securities portfolio.

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INVESTMENT SECURITIES PORTFOLIO

	December 31, 2024		December 31, 2023
(In millions)	Par Value		Amortized cost		Fair value		Par Value	Amortized cost		Fair value
Available-for-sale
U.S. Treasury securities	$	780			$	781		$	662		$	585		$	585	$	492
U.S. Government agencies and corporations:
Agency securities	446			441			415		669		663		630
Agency guaranteed mortgage-backed securities	7,656			7,713			6,451		8,460		8,530		7,291
Small Business Administration loan-backed securities	427			455			434		535		571		546
Municipal securities	1,096			1,186			1,108		1,269		1,385		1,318
Other debt securities	25			25			25		25		25		23
Total available-for-sale	10,430			10,601			9,095		11,543		11,759		10,300
Held-to-maturity
U.S. Government agencies and corporations:
Agency securities	$	148			$	148		$	140		$	93		$	93	$	87
Agency guaranteed mortgage-backed securities	10,983			9,202			8,941		11,966		9,935		10,041
Municipal securities	319			319			301		354		354		338
Total held-to-maturity	11,450			9,669			9,382		12,413		10,382		10,466
Total investment securities	$	21,880			$	20,270		$	18,477		$	23,956		$	22,141	$	20,766

The amortized cost of total investment securities decreased $1.9 billion, or 8%, during 2024, primarily due to principal reductions. Approximately 7% of the total investment securities were floating-rate instruments at both December 31, 2024 and 2023. Additionally, at December 31, 2024, we held $3.7 billion of pay-fixed swaps as fair value hedges against fixed-rate AFS securities, effectively converting the fixed interest income to a floating rate on the hedged portion of the securities.

At December 31, 2024, the AFS investment securities portfolio included approximately $171 million of net premium, distributed across various security categories. Total taxable-equivalent premium amortization for these investment securities was $57 million in 2024, compared with $75 million in 2023.

For more information regarding our investment securities portfolio, swaps, and related unrealized gains and losses, refer to the “Interest Rate Risk Management” section on page 70, the “Capital Management” section on page 77, and Note 5 of the Notes to Consolidated Financial Statements.

Municipal Investments and Extensions of Credit

We support our communities by providing products and services to state and local governments (“municipalities”), including deposit services, loans, and investment banking services. Additionally, we invest in securities issued by municipalities. Our municipal lending products generally include loans where the debt service is repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment. The following schedule presents our total investments and extensions of credit to municipalities:

MUNICIPAL INVESTMENTS AND EXTENSIONS OF CREDIT

	December 31,
(In millions)	2024		2023
Loans and leases	$	4,364			$	4,302
Unfunded lending commitments	524			231
Available-for-sale – municipal securities	1,108			1,318
Held-to-maturity – municipal securities	319			354
Trading – municipal securities	35			48
Total	$	6,350			$	6,253

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Our municipal loans and securities are primarily associated with municipalities located within our geographic footprint. The municipal loan and lease portfolio is primarily secured by general obligations of municipal entities, real estate, revenue pledges, or equipment. At December 31, 2024, approximately $11 million of our municipal loans were on nonaccrual; these loans were to private commercial entities utilizing a pass-through municipal entity to achieve favorable tax treatment. There were no municipal loans on nonaccrual at December 31, 2023.

Municipal securities are internally graded, similar to loans, using risk-grading systems that vary based on the size and type of credit risk exposure. The internal risk grades assigned to our municipal securities follow our definitions of Pass, Special Mention, and Substandard, which are consistent with published regulatory risk classifications. At December 31, 2024, all municipal securities were graded as Pass. For additional information about the credit quality of these municipal loans and securities, see Notes 5 and 6 of the Notes to Consolidated Financial Statements.

Loan and Lease Portfolio

We provide a wide range of lending products to commercial customers, primarily small- and medium-sized businesses, as well as other products secured by commercial real estate. Additionally, we provide various retail banking products and services to consumers and small businesses.

The following schedule presents the composition of our loan and lease portfolio:

LOAN AND LEASE PORTFOLIO

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total loans		Amount		% of total loans
Commercial:
Commercial and industrial	$	16,891			28.4	%		$	16,684		28.9	%
Leasing	377			0.6			383			0.7
Owner-occupied	9,333			15.7			9,219			16.0
Municipal	4,364			7.4			4,302			7.4
Total commercial	30,965			52.1			30,588			53.0
Commercial real estate:
Construction and land development	2,774			4.7			2,669			4.6
Term	10,703			18.0			10,702			18.5
Total commercial real estate	13,477			22.7			13,371			23.1
Consumer:
Home equity credit line	3,641			6.1			3,356			5.8
1-4 family residential	9,939			16.7			8,415			14.6
Construction and other consumer real estate	810			1.4			1,442			2.5
Bankcard and other revolving plans	457			0.8			474			0.8
Other	121			0.2			133			0.2
Total consumer	14,968			25.2			13,820			23.9
Total loans and leases	$	59,410			100.0	%		$	57,779		100.0	%

During 2024, the loan and lease portfolio increased $1.6 billion, or 3%, to $59.4 billion. Loan growth was primarily driven by increases in the consumer 1-4 family residential mortgage, home equity credit line, and commercial and industrial loan portfolios. At December 31, 2024 and 2023, the ratio of loans and leases to total assets was 67% and 66%, respectively. The largest loan segment was commercial and industrial loans, which constituted 28% and 29% of our total loan portfolio for the respective periods.

The following schedule presents the contractual maturity distribution of our loan and lease portfolio:

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LOAN AND LEASE PORTFOLIO BY CONTRACTUAL MATURITY

	December 31, 2024
(In millions)	One year or less		One year through five years		Five years through fifteen years		Over fifteen years	Total
Commercial:
Commercial and industrial	$	3,501			$	11,412		$	1,924	$	54	$	16,891
Leasing	24			237			116		—	377
Owner-occupied	434			1,961			5,479		1,459	9,333
Municipal	288			729			2,326		1,021	4,364
Total commercial	4,247			14,339			9,845		2,534	30,965
Commercial real estate:
Construction and land development	1,039			1,620			71		44	2,774
Term	3,201			5,298			2,056		148	10,703
Total commercial real estate	4,240			6,918			2,127		192	13,477
Consumer:
Home equity credit line	2			3			55		3,581	3,641
1-4 family residential	14			25			161		9,739	9,939
Construction and other consumer real estate	3			2			24		781	810
Bankcard and other revolving plans	365			92			—		—	457
Other	10			82			29		—	121
Total consumer	394			204			269		14,101	14,968
Total loans and leases	$	8,881			$	21,461		$	12,241	$	16,827	$	59,410

Our loans and leases have either predetermined (fixed) or variable interest rates. The following schedule presents the interest rate composition of our loan and lease portfolio with contractual maturities exceeding one year, excluding the impact of any interest rate swaps associated with the loan portfolio. For more information about our interest rate risk management, see “Interest Rate Risk” on page 70.

LOAN AND LEASE PORTFOLIO WITH CONTRACTUAL MATURITIES OVER ONE YEAR BY INTEREST RATE TYPE

	December 31, 2024
	Loans with contractual maturities over one year
(In millions)	Predetermined (fixed) interest rates		Variable interest rates		Total
Commercial:
Commercial and industrial	$	2,299			$	11,091		$	13,390
Leasing	354			—			354
Owner-occupied	2,952			5,947			8,899
Municipal	3,000			1,076			4,076
Total commercial	8,605			18,114			26,719
Commercial real estate:
Construction and land development	28			1,707			1,735
Term	1,613			5,888			7,501
Total commercial real estate	1,641			7,595			9,236
Consumer:
Home equity credit line	173			3,467			3,640
1-4 family residential	965			8,960			9,925
Construction and other consumer real estate	—			806			806
Bankcard and other revolving plans	1			91			92
Other	110			1			111
Total consumer	1,249			13,325			14,574
Total loans and leases	$	11,495			$	39,034		$	50,529

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Other Noninterest-bearing Investments

Other noninterest-bearing investments consist of equity investments held primarily for capital appreciation, dividends, or to meet certain regulatory requirements. The following schedule presents our related investments.

OTHER NONINTEREST-BEARING INVESTMENTS

	December 31,		Amount change		Percent change
(Dollar amounts in millions)	2024		2023
Bank-owned life insurance	$	562			$	553		$	9	2	%
Federal Home Loan Bank stock	124			79			45		57
Federal Reserve stock	65			65			—		—
Farmer Mac stock	28			24			4		17
SBIC investments	204			190			14		7
Other	37			39			(2)		(5)
Total other noninterest-bearing investments	$	1,020			$	950		$	70	7

Total other noninterest-bearing investments increased $70 million, or 7%, during 2024, primarily due to a $45 million increase in FHLB stock and a $14 million increase in our SBIC investment portfolio. We are required to invest approximately 4% of our FHLB borrowings in FHLB stock to maintain our borrowing capacity. The increase in period-end FHLB activity stock was due to an increase in short-term FHLB borrowings, which may fluctuate based on our wholesale funding needs.

Premises, Equipment, and Software

We continue to invest in technology to modernize our financial systems. In July 2024, we successfully completed the final phase of our multi-year project to replace our core loan and deposit banking systems. We have now transitioned substantially all of our commercial, commercial real estate, and consumer loans, as well as our deposit accounts, to a modern, integrated core system. This transition enables us to deliver improved experiences to our customers and achieve incremental operational efficiencies. For additional information about our premises, equipment, and software, see Note 9 of the Notes to Consolidated Financial Statements.

The following schedule presents the capitalized costs associated with our core system replacement project, which are depreciated using a useful life of ten years:

CAPITALIZED COSTS ASSOCIATED WITH THE CORE SYSTEM REPLACEMENT PROJECT

	December 31, 2024
(In millions)	Phase 1		Phase 2	Phase 3		Total
Total amount of capitalized costs, less accumulated amortization	$	15		$	36		$	210	$	261
End of scheduled amortization period	Q2 2027		Q1 2029	Q2 2033

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Deposits

Our primary funding source is customer deposits. The following schedule presents the composition of our deposit portfolio:

DEPOSIT PORTFOLIO

	December 31, 2024					December 31, 2023
(Dollar amounts in millions)	Amount		% of total deposits				Amount	% of total deposits
Deposits by type
Noninterest-bearing demand	$	24,704			32.4	%			$	26,244			35.0	%
Interest-bearing:
Savings and money market	40,037			52.5				38,663			51.6
Time	6,448			8.5				5,619			7.5
Brokered	5,034			6.6				4,435			5.9
Total interest-bearing	51,519			67.6	%			48,717			65.0	%
Total deposits	$	76,223			100.0	%			$	74,961			100.0	%
Deposit-related metrics
Estimated amount of insured deposits	$	41,836			55	%			$	41,777			56	%
Estimated amount of uninsured deposits	34,387			45	%			33,184			44	%
Estimated amount of collateralized deposits 1	$	3,199			4	%			$	3,979			5	%
Loan-to-deposit ratio	78%						77%

1 Includes both insured and uninsured deposits.

Total deposits increased $1.3 billion, or 2%, in 2024. Interest-bearing deposits increased $2.8 billion, or 6%, partially offset by a decrease of $1.5 billion, or 6%, in noninterest-bearing demand deposits. Our noninterest-bearing deposits are generally more valuable in a rising interest rate environment, creating meaningful economic value that is not fully reflected on our balance sheet, as core deposits and related intangible assets are not recorded at fair value for accounting purposes.

At December 31, 2024 and 2023, customer deposits (excluding brokered deposits) totaled $71.2 billion and $70.5 billion, respectively, and included approximately $7.0 billion and $6.8 billion of reciprocal deposit products. At December 31, 2024, the total estimated amount of uninsured deposits was $34.4 billion, or 45% of total deposits, compared with $33.2 billion, or 44%, at December 31, 2023. Our loan-to-deposit ratio was 78%, compared with 77% for the same respective periods. For additional information on liquidity, including the ratio of available liquidity to uninsured deposits, see “Liquidity Risk Management” on page 73.

RISK MANAGEMENT

We engage in risk management practices to ensure prudent risk-taking and appropriate oversight. Risk management is integral to our operations and a key determinant of our overall performance as one of our key strategic objectives.

We utilize a three-lines-of-defense approach to risk management, with responsibilities for each line defined in our Risk Management Framework. The first line of defense represents units and functions throughout the Bank engaged in revenue generation, expense reduction, operational support, and technology services. These units and functions are accountable for owning and managing the risks associated with their activities. The second line of defense represents functions responsible for independently assessing and overseeing risk management activities. The third line of defense is our internal audit function, which provides an independent assessment of the effectiveness of the first and second lines of defense.

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In support of management’s efforts, the Board has established specific subcommittees to oversee our risk management processes. The Audit Committee supports the Board in its responsibility to oversee the quality and integrity of the Bank's accounting, auditing, and financial reporting practices, as well as ensuring compliance with applicable laws, rules, and regulations. The ROC oversees the other risk management processes. The ROC meets regularly to monitor and review ERM activities. As required by its charter, the ROC provides oversight for various ERM activities and approves ERM policies and activities as detailed in the ROC charter.

We employ various strategies to mitigate the risks to which our operations are exposed, including credit risk, market and interest rate risk, liquidity risk, strategic and business risk, operational risk, technology risk, cybersecurity risk, capital/financial reporting risk, legal/compliance risk (including regulatory risk), and reputational risk. These risks are overseen by various management committees, with the Enterprise Risk Management Committee serving as the focal point.

Credit Risk Management

Credit risk is the possibility of loss from the failure of a borrower, guarantor, or another obligor to fully perform under the terms of a credit-related contract. Credit risk arises primarily from our lending activities and off-balance sheet credit instruments. The Board, through the ROC, is responsible for approving key credit policies. The ROC also oversees and monitors adherence to these policies and the credit risk appetite as defined in the Risk Management Framework. The Board has delegated responsibility for managing credit risk and approving changes to credit policies to the Chief Credit Officer, who chairs the Credit Risk Committee.

Our credit policies, credit risk management, and credit examination functions collectively support the oversight of credit risk. We emphasize strong underwriting standards and the early detection of potential problem credits to develop and implement timely action plans, thereby mitigating potential losses. These formal credit policies and procedures provide a framework for consistent underwriting and sound credit decisions at the local banking affiliate level. Our policies include standards for sensitivity and scenario analysis to assess the resilience of borrowers, particularly their ability to repay loans in a rising interest rate environment. Additionally, we require borrowers to provide evidence of insurance for properties used as collateral, with coverage and levels appropriate to the specific credit.

Our credit policies and practices are also designed to mitigate potential risks, including those arising from environmental issues, such as real estate collateral that may be contaminated by hazardous substances. Environmental risks related to our lending practices are primarily addressed in our environmental credit policy and managed by our environmental subject matter experts. The level of environmental due diligence conducted by our environmental risk team is determined by the risks identified at each property and the loan amount. Extending credit to certain borrowers, or those involved in certain activities, may be restricted or require escalated approval due to various environmental risks, as outlined in our policy.

Our credit risk management function operates independently from the lending function, strengthening control and the independent evaluation of credit activities. In addition, we have a well-defined set of standards for evaluating our loan portfolio, and we utilize a comprehensive loan risk-grading system to determine the risk potential in the portfolio.

The internal credit examination department, which is independent of the lending function, periodically conducts examinations of our lending departments and credit activities. These examinations are designed to review credit quality, adequacy of documentation, appropriate loan risk-grading administration, and compliance with credit policies. Credit examinations related to the ACL are reported to both the Audit Committee and the ROC.

Our business activity is conducted primarily within the geographic footprint of our banking affiliates. We strive to avoid the risk of undue concentrations of credit in any particular industry, collateral type, location, or with any individual customer or counterparty. We have adopted and adhere to concentration limits on certain commercial industries, including leveraged lending, municipal lending, oil and gas-related lending, and various types of CRE

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lending, particularly construction and land development, multifamily, industrial, and office lending. Concentration limits are regularly monitored and revised as necessary.

U.S. Government Agency Guaranteed Loans

We participate in various guaranteed lending programs sponsored by U.S. government agencies, such as the U.S. Small Business Administration (“SBA”), Federal Housing Authority, U.S. Department of Veterans Affairs, Export-Import Bank of the U.S., and the U.S. Department of Agriculture. At December 31, 2024, $558 million of related loans were guaranteed, primarily by the SBA. The following schedule presents the composition of our U.S. government agency guaranteed loans:

U.S. GOVERNMENT AGENCY GUARANTEED LOANS

(Dollar amounts in millions)	December 31, 2024			December 31, 2023		Percent guaranteed
Commercial	$	687		78	%		$	664		80	%
Commercial real estate	25		76			24			79
Consumer	4		100			4			100
Total loans	$	716		78			$	692		80

Commercial Lending

The following schedule presents the composition of our commercial lending portfolio:

COMMERCIAL LENDING PORTFOLIO

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total commercial loans		Amount		% of total commercial loans		Amount change		Percent change
Commercial:
Commercial and industrial	$	16,891			54.6	%		$	16,684			54.5	%	$	207	1.2	%
Leasing	377			1.2			383			1.3			(6)		(1.6)
Owner-occupied	9,333			30.1			9,219			30.1			114		1.2
Municipal	4,364			14.1			4,302			14.1			62		1.4
Total commercial	$	30,965			100.0	%		$	30,588			100.0	%	$	377	1.2

Our commercial loans encompass a diverse range of industries and generally mature within one to five years, with amortization schedules determined by the underlying collateral and guarantees. These loans are typically structured as seasonal, term, working capital, or bridge loans, and are offered as revolving and non-revolving lines of credit, amortizing term loans, guidance facilities, and single-payment loans. They include covenants that require borrowers to provide regular financial reporting to monitor business performance and assess leverage, debt service coverage, and liquidity.

The underwriting process for commercial loans primarily involves analyzing management, financial performance, industry, sponsorship (if applicable), and transaction structure. Credit enhancements are generally provided by collateral and guarantees from the owners or sponsors. Prospective cash flows are subjected to various downside scenario analyses, including revenue decline, margin compression, and interest rate fluctuations.

The following schedule presents the geographic distribution of our commercial lending portfolio, with geographies based on the location of the primary borrower.

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COMMERCIAL LENDING BY GEOGRAPHY

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total		Nonaccrual loans				Amount	% of total		Nonaccrual loans
Commercial
Arizona	$	2,202			7.1	%		$	5				$	2,237	7.3	%	$	7
California	6,190			20.0			58				6,106			20.0	50
Colorado	1,892			6.1			17				1,970			6.4	3
Nevada	1,336			4.3			11				1,230			4.0	11
Texas	7,367			23.8			47				7,070			23.1	13
Utah/Idaho	6,309			20.4			6				6,353			20.8	12
Washington/Oregon	1,338			4.3			10				1,339			4.4	8
Other 1	4,331			14.0			4				4,283			14.0	—
Total commercial	$	30,965			100.0	%		$	158				$	30,588	100.0	%	$	104

1 No other geography exceeds 2.6% and 2.7% for December 31, 2024 and December 31, 2023, respectively.

The following schedule presents the industry distribution of our commercial lending portfolio, classified based on the North American Industry Classification System.

COMMERCIAL LENDING BY INDUSTRY

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total		Nonaccrual loans				Amount	% of total		Nonaccrual loans
Real estate, rental and leasing	$	3,083			10.0	%		$	7				$	2,946	9.6	%	$	1
Retail trade	2,873			9.3			7				2,995			9.8	2
Finance and insurance	2,762			8.9			1				2,918			9.5	—
Healthcare and social assistance	2,541			8.2			34				2,527			8.3	8
Manufacturing	2,322			7.5			7				2,190			7.2	15
Public Administration	2,106			6.8			—				2,279			7.5	—
Wholesale trade	1,909			6.2			2				1,850			6.0	3
Transportation and warehousing	1,589			5.1			7				1,499			4.9	3
Utilities 1	1,389			4.5			2				1,409			4.6	10
Hospitality and food services	1,352			4.4			2				1,180			3.9	1
Construction	1,335			4.3			26				1,355			4.4	7
Educational services	1,292			4.2			—				1,298			4.2	—
Mining, quarrying, and oil and gas extraction	1,178			3.8			—				1,133			3.7	—
Other Services (except Public Administration)	1,069			3.4			3				1,047			3.4	2
Professional, scientific, and technical services	1,057			3.4			25				1,010			3.3	10
Other 2	3,108			10.0			35				2,952			9.7	42
Total	$	30,965			100.0	%		$	158				$	30,588	100.0	%	$	104

1 Includes primarily utilities, power, and renewable energy.

2 No other industry group exceeds 3.4% and 3.3% for December 31, 2024 and December 31, 2023, respectively.

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Commercial Real Estate Lending

The following schedule presents the composition of our commercial real estate lending portfolio:

COMMERCIAL REAL ESTATE LENDING PORTFOLIO

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total CRE loans		Amount		% of total CRE loans		Amount change		Percent change
Commercial real estate:
Construction and land development	$	2,774			20.6	%		$	2,669			20.0	%	$	105	3.9	%
Term	10,703			79.4			10,702			80.0			1		—
Total commercial real estate	$	13,477			100.0	%		$	13,371			100.0	%	$	106	0.8

Term CRE loans typically mature within a three- to seven-year period and may include full, partial, and non-recourse guarantee structures. Standard term CRE loan structures feature annually tested operating covenants that require loan rebalancing based on minimum debt service coverage, debt yield, or loan-to-value (“LTV”) ratios. Construction and land development loans generally mature within 18 to 36 months and may include full or partial recourse guarantee structures, with one- to five-year extension options or roll-to-permanent options that often convert into term loans.

Underwriting for commercial properties primarily focuses on the economic viability of the project, with significant consideration given to the creditworthiness and experience of the sponsor. We generally require that the owner’s equity to be included prior to any advances. Loan agreements often include remargining requirements (equity infusions required upon a decline in the value or cash flow of the collateral) and sponsor guarantees.

In residential construction and development lending, many of the previously mentioned requirements, such as creditworthiness and experience of the developer, up-front injection of the developer’s equity, principal curtailment requirements, and project viability, are also critical in underwriting a residential development loan. Consideration is given to the expected market acceptance of the product, location, strength of the developer, and the developer's ability to stay within budget. Progress inspections by qualified independent inspectors are routinely performed before disbursing loan funds. Advance rates vary based on the collateral, project viability, and sponsor creditworthiness, with exceptions granted on a case-by-case basis.

Real estate appraisals are conducted in accordance with applicable regulatory guidelines. In some instances, reports from automated valuation services are utilized, or internal evaluations are performed. An appraisal is ordered and reviewed prior to loan closing, and a new appraisal or evaluation is generally ordered when market conditions indicate a potential decline in the value of the collateral, or when the loan is modified, renewed, or exhibits a certain level of credit weakness. CRE LTVs are calculated by dividing the outstanding loan balance by the estimated collateral value from the most recent appraisal. At December 31, 2024, the weighted average LTV ratio for our term CRE portfolio was less than 60%.

Loan agreements require regular reporting of financial information on the project and the sponsor, including lease schedules, rent rolls, and, for construction projects, independent progress inspection reports. We monitor this financial information to ensure compliance with the covenants set forth in the loan agreement.

The existence of a guarantee that enhances the likelihood of repayment is considered when evaluating CRE loans for expected losses. If guarantor support is quantifiable and documented, it is factored into the potential cash flows and liquidity available for debt repayment. Our expected loss methodology also considers these sources of repayment. Generally, we obtain and evaluate updated financial information for the guarantor as part of our credit extension determination. The quality and frequency of financial reporting collected and analyzed vary depending on the contractual reporting requirements, the size of the transaction, and the strength of the guarantor.

In the event of default, we pursue all available sources of repayment, including collateral and guarantors. Several factors are considered when deciding whether to pursue a guarantor, including, but not limited to, the value and

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liquidity of other repayment sources (e.g., collateral), the financial strength and liquidity of the guarantor, possible statutory limitations, and the overall cost of pursuing a guarantee versus the potential recovery amount.

The following schedule presents the geographic distribution of our commercial real estate lending portfolio, based on the location of the primary collateral.

COMMERCIAL REAL ESTATE LENDING BY GEOGRAPHY

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total		Nonaccrual loans				Amount	% of total		Nonaccrual loans
Commercial real estate
Arizona	$	1,801			13.4	%		$	—				$	1,726	12.9	%	$	1
California	3,569			26.5			50				3,865			28.9	50
Colorado	666			4.9			—				709			5.3	—
Nevada	1,104			8.2			—				1,072			8.0	—
Texas	2,596			19.2			8				2,385			17.8	10
Utah/Idaho	2,170			16.1			—				2,214			16.6	—
Washington/Oregon	1,090			8.1			—				1,004			7.5	—
Other	481			3.6			1				396			3.0	—
Total commercial real estate	$	13,477			100.0	%		$	59				$	13,371	100.0	%	$	61

The following schedule presents our commercial real estate lending portfolio, categorized by the type of collateral:

COMMERCIAL REAL ESTATE LENDING BY COLLATERAL TYPE

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total		Nonaccrual loans				Amount	% of total		Nonaccrual loans
Commercial property
Multifamily	$	4,007			29.7	%		$	1				$	3,709	27.7	%	$	1
Industrial	2,954			21.9			—				3,062			22.9	1
Office	1,812			13.5			50				1,984			14.8	48
Retail	1,533			11.4			—				1,503			11.2	1
Hospitality	625			4.6			8				688			5.2	9
Land	261			1.9			—				211			1.6	—
Other 1	1,644			12.2			—				1,682			12.6	—
Residential property 2
Single family	330			2.5			—				287			2.1	1
Land	110			0.8			—				90			0.7	—
Condo/Townhome	17			0.1			—				37			0.3	—
Other 1	184			1.4			—				118			0.9	—
Total	$	13,477			100.0	%		$	59				$	13,371	100.0	%	$	61

1 Included in the total amount of the “Other” commercial and residential categories was approximately $342 million and $202 million of unsecured loans at December 31, 2024 and 2023, respectively.

2 Residential property consists primarily of loans provided to commercial homebuilders for land, lot, and single-family housing developments.

As previously discussed, our commercial real estate lending portfolio is diversified across geography and collateral types, with the largest concentration in multifamily properties. Given the recent increase in investor interest in multifamily, industrial, and office collateral types, we provide additional analysis of these segments of our CRE portfolio below.

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Multifamily CRE

At December 31, 2024 and 2023, our multifamily CRE loan portfolio totaled $4.0 billion and $3.7 billion, representing 30% and 28% of the total CRE loan portfolio, respectively. Approximately 36% of the multifamily CRE loan portfolio is scheduled to mature within the next 12 months. We believe that most of these borrowers will be able to refinance at maturity through the Bank or other lenders, due to the cash flows from the properties, acceptable LTVs, equity levels, and guarantor support. The following schedule presents the composition of our multifamily CRE loan portfolio and other related credit quality metrics:

MULTIFAMILY CRE LOAN PORTFOLIO

(Dollar amounts in millions)	December 31, 2024
Multifamily CRE
Construction and land development	$	1,089		$	902
Term	2,918		2,807
Total multifamily CRE	$	4,007		$	3,709
Credit quality metrics
Criticized loan ratio	21.5	%	6.1	%
Classified loan ratio 1	18.8	%	0.5	%
Nonaccrual loan ratio	—	%	—	%
Delinquency ratio	—	%	—	%
Ratio of multifamily CRE net charge-offs (recoveries) to average loans	—	%	—	%
Ratio of allowance for credit losses to multifamily CRE loans, at period end	2.55	%	1.70	%
Weighted average LTV for multifamily term CRE loans	57	%	61	%

1 During 2024, multifamily CRE classified loan balances significantly increased. See the “Classified Loans” section below on page 67 for more information about changes in these related balances.

The following schedules present our multifamily CRE loan portfolio, categorized by collateral location for the periods presented:

MULTIFAMILY CRE LOAN PORTFOLIO BY COLLATERAL LOCATION

	December 31, 2024
	Loan Type
(Dollar amounts in millions)	Construction and land development		Term		Total		% of total	Nonaccrual loans
Multifamily CRE
Arizona	$	142			$	364		$	506	12.6	%	$	—
California	172			850			1,022		25.5	1
Colorado	101			91			192		4.8	—
Nevada	99			188			287		7.2	—
Texas	310			808			1,118		27.9	—
Utah/Idaho	134			320			454		11.3	—
Washington/Oregon	130			234			364		9.1	—
Other 1	1			63			64		1.6	—
Total multifamily CRE	$	1,089			$	2,918		$	4,007	100.0	%	$	1

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	December 31, 2023
	Loan Type
(Dollar amounts in millions)	Construction and land development		Term		Total		% of total	Nonaccrual loans
Multifamily CRE
Arizona	$	118			$	322		$	440	11.9	%	$	—
California	183			994			1,177		31.7	1
Colorado	46			90			136		3.7	—
Nevada	40			188			228		6.1	—
Texas	359			578			937		25.3	—
Utah/Idaho	44			345			389		10.4	—
Washington/Oregon	112			228			340		9.2	—
Other 1	—			62			62		1.7	—
Total multifamily CRE	$	902			$	2,807		$	3,709	100.0	%	$	1

1 Other included $55 million of multifamily loans with collateral located in New Mexico at both December 31, 2024 and 2023.

Industrial CRE

At December 31, 2024 and 2023, our industrial CRE loan portfolio totaled $3.0 billion and $3.1 billion, representing 22% and 23% of the total CRE loan portfolio, respectively. Approximately 33% of the industrial CRE loan portfolio is scheduled to mature within the next 12 months. We believe that most of these borrowers will be able to refinance at maturity through the Bank or other lenders, due to the cash flows from the properties, acceptable LTVs, equity levels, and guarantor support.

The following schedule presents the composition of our industrial CRE loan portfolio and other related credit quality metrics:

INDUSTRIAL CRE LOAN PORTFOLIO

(Dollar amounts in millions)	December 31, 2024
Industrial CRE
Construction and land development	$	492		$	618
Term	2,462		2,444
Total industrial CRE	$	2,954		$	3,062
Credit quality metrics
Criticized loan ratio	14.6	%	1.7	%
Classified loan ratio 1	12.8	%	0.7	%
Nonaccrual loan ratio	—	%	—	%
Delinquency ratio	—	%	—	%
Ratio of industrial CRE net charge-offs (recoveries) to average loans	—	%	—	%
Ratio of allowance for credit losses to industrial CRE loans, at period end	2.30	%	1.63	%
Weighted average LTV for industrial term CRE loans	53	%	54	%

1 During 2024, industrial CRE classified loan balances significantly increased. See the “Classified Loans” section below on page 67 for more information about changes in these related balances.

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The following schedules present our industrial CRE loan portfolio, categorized by collateral location for the periods presented:

INDUSTRIAL CRE LOAN PORTFOLIO BY COLLATERAL LOCATION

	December 31, 2024
	Loan Type
(Dollar amounts in millions)	Construction and land development		Term		Total		% of total	Nonaccrual loans
Industrial CRE
Arizona	$	33			$	374		$	407	13.8	%	$	—
California	189			730			919		31.1	—
Colorado	1			58			59		2.0	—
Nevada	108			241			349		11.8	—
Texas	42			453			495		16.8	—
Utah/Idaho	83			350			433		14.7	—
Washington/Oregon	36			201			237		8.0	—
Other 1	—			55			55		1.8	—
Total industrial CRE	$	492			$	2,462		$	2,954	100.0	%	$	—

	December 31, 2023
	Loan Type
(Dollar amounts in millions)	Construction and land development		Term		Total		% of total	Nonaccrual loans
Industrial CRE
Arizona	$	30			$	323		$	353	11.5	%	$	1
California	214			769			983		32.1	—
Colorado	72			80			152		5.0	—
Nevada	77			300			377		12.3	—
Texas	33			396			429		14.0	—
Utah/Idaho	165			331			496		16.2	—
Washington/Oregon	27			174			201		6.6	—
Other 1	—			71			71		2.3	—
Total industrial CRE	$	618			$	2,444		$	3,062	100.0	%	$	1

1 Other included $31 million and $32 million of industrial loans with collateral located in Virginia at both December 31, 2024 and 2023.

Office CRE

At December 31, 2024 and 2023, our office CRE loan portfolio totaled $1.8 billion and $2.0 billion, representing 13% and 15% of the total CRE loan portfolio, respectively. Approximately 43% of the office CRE loan portfolio is scheduled to mature within the next 12 months. We believe that most of these borrowers will be able to refinance at maturity through the Bank or other lenders, due to the cash flows from the properties, acceptable LTVs, equity levels, and guarantor support.

The following schedule presents the composition of our office CRE loan portfolio and other related credit quality metrics:

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OFFICE CRE LOAN PORTFOLIO

(Dollar amounts in millions)	December 31, 2024
Office CRE
Construction and land development	$	115		$	191
Term	1,697		1,793
Total office CRE	$	1,812		$	1,984
Credit quality metrics
Criticized loan ratio	14.5	%	11.9	%
Classified loan ratio	12.8	%	8.9	%
Nonaccrual loan ratio	2.8	%	2.4	%
Delinquency ratio	1.4	%	2.3	%
Ratio of office CRE net charge-offs (recoveries) to average loans	0.3	%	0.2	%
Ratio of allowance for credit losses to office CRE loans, at period end	3.92	%	3.80	%
Weighted average LTV for office term CRE loans	56	%	53	%

The following schedules present our office CRE loan portfolio, categorized by collateral location for the periods presented:

OFFICE CRE LOAN PORTFOLIO BY COLLATERAL LOCATION

	December 31, 2024
	Loan Type
(Dollar amounts in millions)	Construction and land development		Term		Total		% of total	Nonaccrual loans
Office CRE
Arizona	$	—			$	255		$	255	14.1	%	$	—
California	38			328			366		20.2	49
Colorado	—			58			58		3.2	—
Nevada	11			77			88		4.9	—
Texas	7			186			193		10.6	1
Utah/Idaho	34			482			516		28.5	—
Washington/Oregon	25			283			308		17.0	—
Other 1	—			28			28		1.5	—
Total office CRE	$	115			$	1,697		$	1,812	100.0	%	$	50

	December 31, 2023
	Loan Type
(Dollar amounts in millions)	Construction and land development		Term		Total		% of total	Nonaccrual loans
Office CRE
Arizona	$	—			$	281		$	281	14.2	%	$	—
California	64			412			476		24.0	48
Colorado	—			92			92		4.6	—
Nevada	2			86			88		4.4	—
Texas	22			179			201		10.1	—
Utah/Idaho	29			488			517		26.1	—
Washington/Oregon	74			226			300		15.1	—
Other 1	—			29			29		1.5	—
Total office CRE	$	191			$	1,793		$	1,984	100.0	%	$	48

1 Other included approximately $17 million of office CRE loans with collateral located in Georgia at both December 31, 2024 and 2023.

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Consumer Lending

The following schedule presents the composition of our consumer lending portfolio:

CONSUMER LENDING PORTFOLIO

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total consumer loans		Amount		% of total consumer loans		Amount change		Percent change
Consumer:
Home equity credit line	$	3,641			24.3	%		$	3,356			24.3	%	$	285	8.5	%
1-4 family residential	9,939			66.4			8,415			60.9			1,524		18.1
Construction and other consumer real estate	810			5.4			1,442			10.4			(632)		(43.8)
Bankcard and other revolving plans	457			3.1			474			3.4			(17)		(3.6)
Other	121			0.8			133			1.0			(12)		(9.0)
Total consumer	$	14,968			100.0	%		$	13,820			100.0	%	$	1,148	8.3

1-4 Family Residential Mortgages

We originate first-lien residential home mortgage loans considered to be of prime quality. At December 31, 2024, our 1-4 family residential mortgage loan portfolio totaled $9.9 billion, or 66%, of our total consumer loan portfolio, compared with $8.4 billion, or 61%, at December 31, 2023. Approximately 90% and 93% of our 1-4 family residential mortgage loan portfolio was variable-rate for the same respective time periods. While we have historically retained variable-rate and other consumer construction loans in our portfolio, we are currently selling more of these loans to third parties. We continue to sell “conforming” fixed-rate loans to third parties, including Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, for which we make representations and warranties that the loans meet certain underwriting and collateral documentation standards.

Home Equity Credit Lines

We also originate home equity credit lines (“HECLs”). At December 31, 2024 and December 31, 2023, our HECL portfolio totaled $3.6 billion for both periods. Approximately 37% and 39% of our HECLs are secured by first liens for the same respective time periods.

At December 31, 2024, loans representing less than 1% of the outstanding balance in the HECL portfolio were estimated to have combined loan-to-value (“CLTV”) ratios above 100%. An estimated CLTV ratio is the ratio of our loan plus any prior lien amounts divided by the estimated current collateral value. At origination, underwriting standards for the HECL portfolio generally include a maximum 80% CLTV with a Fair Isaac Corporation (“FICO”) credit score greater than 700.

At December 31, 2024, approximately 92% of our HECL portfolio was still in the draw period, and about 22% of those loans were scheduled to begin amortizing within the next five years. We believe the risk of loss and borrower default in the event of a loan becoming fully amortizing and the effect of significant interest rate changes is low, given the rate shock analysis performed at origination. The ratio of HECL net charge-offs (recoveries) for the trailing twelve months to average balances at December 31, 2024 and December 31, 2023, was 0.00% and 0.05%, respectively. See Note 6 of the Notes to Consolidated Financial Statements for additional information on the credit quality of the HECL portfolio.

The following schedule presents the geographic distribution of our consumer lending portfolio, based on the location of the primary borrower.

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CONSUMER LENDING BY GEOGRAPHY

	December 31, 2024		December 31, 2023
(Dollar amounts in millions)	Amount		% of total		Nonaccrual loans				Amount	% of total		Nonaccrual loans
Consumer
Arizona	$	1,365			9.1	%		$	5				$	1,208	8.7	%	$	4
California	3,159			21.1			14				2,683			19.4	13
Colorado	1,353			9.1			7				1,292			9.3	7
Nevada	1,328			8.9			10				1,204			8.7	5
Texas	3,657			24.4			25				3,698			26.9	17
Utah/Idaho	3,430			22.9			14				3,188			23.1	10
Washington/Oregon	237			1.6			—				211			1.5	—
Other	439			2.9			5				336			2.4	1
Total consumer	$	14,968			100.0	%		$	80				$	13,820	100.0	%	$	57

Credit Quality

We monitor credit quality by analyzing various factors, including nonperforming status, internal risk grades, and net charge-offs, all of which are used in our overall evaluation of the adequacy of our ACL. Economic forecasts may not always align with certain credit quality trends; therefore, changes in the ACL may not always be directionally consistent with changes in credit quality. See Note 6 of the Notes to Consolidated Financial Statements for more information on these factors and the ACL.

Nonperforming Assets

Nonperforming assets include nonaccrual loans and OREO, or foreclosed properties. The following schedule presents the composition of our nonperforming assets:

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NONPERFORMING ASSETS

(Dollar amounts in millions)	December 31,
	2024		2023
Nonaccrual loans:
Commercial:
Commercial and industrial	$	114			$	82
Leasing	2			2
Owner-occupied	31			20
Municipal	11			—
Commercial real estate:
Construction and land development	—			22
Term	59			39
Consumer:
Real estate	79			57
Other	1			—
Total nonaccrual loans	297			222
Other real estate owned 1:
Commercial:
Commercial properties	1			4
Developed land	—			—
Land	—			2
Residential:
1-4 family	—			—
Total other real estate owned	1			6
Total nonperforming assets	$	298			$	228
Accruing loans past due 90 days or more:
Commercial	$	14			$	2
Commercial real estate	3			—
Consumer	1			1
Total accruing loans past due 90 days or more	$	18			$	3
Ratio of nonperforming assets to net loans and leases2 and other real estate owned	0.50	%		0.39	%
Ratio of accruing loans past due 90 days or more to net loans and leases 2	0.03	%		0.01	%
Ratio of nonperforming assets2 and accruing loans past due 90 days or more to loans and leases2 and other real estate owned 1	0.53	%		0.40	%

1 Does not include banking premises held for sale.

2 Includes loans held for sale.

Nonperforming assets totaled $298 million, or 0.50%, of total loans and leases and other real estate owned at December 31, 2024, compared with $228 million, or 0.39%, at December 31, 2023. The increase was primarily due to a small number of loans in the commercial and industrial and term CRE portfolios. See Note 6 of the Notes to Consolidated Financial Statements for more information on nonaccrual loans.

Classified Loans

Classified loans are considered loans with well-defined weaknesses and are assigned using our internal risk grade definitions of substandard and doubtful, which are consistent with regulatory risk classifications. The following schedule presents our classified loans by loan segment:

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CLASSIFIED LOANS

(Dollar amounts in millions)	December 31, 2024
Commercial	$	1,130		$	482
Commercial real estate	1,651		280
Consumer	89		63
Total classified loans	$	2,870		$	825
Ratio of classified loans to total loans and leases	4.83	%	1.43	%

Classified loans totaled $2.9 billion, or 4.83%, of total loans and leases, at December 31, 2024, compared with $825 million, or 1.43%, at December 31, 2023. The increase was primarily in the multifamily and industrial CRE loan portfolios, largely due to an increased emphasis in risk grading on current cash flows, and less emphasis on the adequacy of collateral values and the strength of guarantors and sponsors. The increase in classified loans was also attributable to weaker performance, particularly for 2021 and 2022 construction loan vintages, as borrowers missed projections due to longer-than-anticipated lease-up periods, rent concessions, elevated costs, and higher interest rates. The loss content of our CRE loan portfolio continues to be mitigated by strong underwriting, supported by high borrower equity and guarantor support; consequently, our CRE nonperforming assets have remained relatively stable and our CRE net charge-offs have remained low.

Allowance for Credit Losses

The ACL, which consists of the ALLL and the RULC, represents our estimate of current expected credit losses

related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date.

We estimate current expected credit losses by considering historical credit loss experience, current conditions, and economic forecasts, all of which inform the quantitative portion of our ACL. Additionally, we consider qualitative and environmental factors that may indicate losses could differ from levels estimated by our quantitative models. The impact of these factors on our ACL may vary from quarter to quarter.

During 2024, the qualitative portion of the ACL increased primarily due to portfolio-specific risks. This led us to assign greater weight to stressed economic assumptions for certain portfolios, particularly CRE, partially offset by a reduced weighting of recessionary economic forecasts in other portfolios.

The following schedules present the changes in, and allocation of, the ACL:

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CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES

	Year Ended December 31,
(Dollar amounts in millions)	2024		2023		2022
Loans and leases outstanding,	$	59,410		$	57,779		$	55,653
Average loans and leases outstanding:
Commercial	30,671		30,519		29,225
Commercial real estate	13,532		13,023		12,251
Consumer	14,344		13,198		11,122
Total average loans and leases outstanding	$	58,547		$	56,740		$	52,598
Allowance for loan and lease losses:
Balance at beginning of year 1	$	684			$	572			$	513
Provision for loan losses	72			148			101
Charge-offs:
Commercial	68			45			72
Commercial real estate	11			3			—
Consumer	12			14			10
Total	91			62			82
Recoveries:
Commercial	23			20			32
Commercial real estate	3			—			—
Consumer	5			6			11
Total	31			26			43
Net loan and lease charge-offs	60			36			39
Balance at end of year	$	696			$	684			$	575
Reserve for unfunded lending commitments:
Balance at beginning of year 1	$	45			$	61			$	40
Provision for unfunded lending commitments	—			(16)			21
Balance at end of year	$	45			$	45			$	61
Total allowance for credit losses:
Allowance for loan and lease losses	$	696			$	684			$	575
Reserve for unfunded lending commitments	45			45			61
Total allowance for credit losses	$	741			$	729			$	636
Ratio of allowance for credit losses to net loans and leases	1.25	%		1.26	%		1.14	%
Ratio of allowance for credit losses to nonaccrual loans	249	%		328	%		427	%
Ratio of allowance for credit losses to nonaccrual loans and accruing loans past due 90 days or more	235	%		324	%		410	%
Ratio of total net charge-offs to average total loans and leases	0.10	%		0.06	%		0.07	%
Ratio of commercial net charge-offs to average commercial loans	0.15	%		0.08	%		0.14	%
Ratio of commercial real estate net charge-offs to average commercial real estate loans	0.06	%		0.02	%		—	%
Ratio of consumer net charge-offs to average consumer loans	0.05	%		0.06	%		(0.01)	%

1 The beginning balance at January 1, 2023 for the allowance for loan and lease losses does not agree to the ending balance at December 31, 2022 because of the adoption of the new accounting standard related to loan modifications to borrowers experiencing financial difficulties.

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ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES

	December 31,
	2024		2023		2022
(Dollar amounts in millions)	% of total loans		Allocation of ACL		% of total loans	Allocation of ACL		% of total loans		Allocation of ACL
Loan segment
Commercial	52.1	%		$	334		53.0	%		$	321		54.8	%	$	316
Commercial real estate	22.7			311		23.1			258			22.9		189
Consumer	25.2			96		23.9			150			22.3		131
Total	100.0	%		$	741		100.0	%		$	729		100.0	%	$	636

See “The Allowance and Provision for Credit Losses” section on page 38 for more discussion on changes in the ACL, and see Note 6 of the Notes to Consolidated Financial Statements for additional information related to the ACL and credit trends experienced in each portfolio segment.

Interest Rate and Market Risk Management

Interest rate and market risk refer to the potential for losses to current or future earnings and capital due to changes in interest rates and other market conditions. Given our involvement in transactions with various financial products, we are exposed to these risks.

Our Board approves the key policies related to the management of our financial risk, including interest rate and market risk management. The Board has delegated the responsibility for managing these risks to the Asset Liability Committee (“ALCO”), which consists of members of management. ALCO establishes and periodically revises policy limits and reviews with the ROC the limits and limit exceptions reported by management.

We strive to position the Bank for interest rate changes and manage balance sheet sensitivity to reduce the volatility of both net interest income and economic value of equity (“EVE”). With the generally higher interest rate environment over the past couple of years, customer deposit behavior has deviated from the trends observed during the relatively low interest rate period of the previous 15 years. As a result, customers have been more inclined to (1) move deposits to nonbanking products, such as money market mutual funds, that offer higher interest rates, and (2) reduce their balances in noninterest-bearing accounts.

Observed changes in deposit behavior have been incorporated into our deposit models used for managing interest rate risk. These changes give more weight to the recently observed behavior and have increased both the deposit beta for interest-bearing products and the percentage of noninterest-bearing deposits assumed to migrate to interest-bearing products. Changes to models are independently reviewed by our Model Risk Management function.

We generally have granular deposit funding, with much of this funding in the form of demand deposits with no maturity, which can be withdrawn at any time. Instead of using contractual maturities, our interest rate risk model employs dynamically modeled behavioral assumptions based on historical behavior and future projections. Since many deposits from household and business accounts have proven to be stable over time and less sensitive to rate changes, their duration is generally longer than that of our loan portfolio. Consequently, we have historically been “asset-sensitive,” meaning our assets are expected to reprice faster or more significantly than our liabilities.

We regularly use interest rate swaps, investments in fixed-rate securities, and funding strategies to manage our interest rate risk. These strategies collectively have muted the expected sensitivity of net interest income to changes in interest rates. Asset sensitivity measures depend on the assumptions we use for deposit runoff and repricing behavior, and our models are particularly sensitive to these assumptions.

We also assume a correlation, referred to as a “deposit beta,” with respect to interest-bearing deposits, wherein the rates paid to customers change at a different pace compared with changes in average benchmark interest rates. Generally, certificates of deposit are assumed to have a high correlation, while interest-bearing checking accounts are assumed to have a lower correlation.

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The following schedule presents deposit duration assumptions discussed previously:

DEPOSIT ASSUMPTIONS

	December 31, 2024	December 31, 2023
Product	Effective duration (-200 bps)	Effective duration (unchanged)	Effective duration (+200 bps)	Effective duration (-200 bps)	Effective duration (unchanged)	Effective duration (+200 bps)
Demand deposits	4.2%	3.5%	2.9%	4.0%	3.5%	3.2%
Money market	1.9%	1.6%	1.4%	3.0%	1.5%	1.4%
Savings and interest-bearing checking	2.1%	1.8%	1.6%	2.7%	2.2%	1.9%

As noted previously, we utilize derivatives to manage interest rate risk. The following schedule presents derivatives that are designated in qualifying hedging relationships at December 31, 2024. Included are the average outstanding derivative notional amounts for each period presented and the weighted average fixed-rate paid or received for each category of cash flow and fair value hedge. See Note 7 of the Notes to Consolidated Financial Statements for additional information regarding the impact of these hedging relationships on interest income and expense.

DERIVATIVES DESIGNATED IN QUALIFYING HEDGING RELATIONSHIPS

	2025		2026		2027		2028
(Dollar amounts in millions)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter	Third Quarter		Fourth Quarter
Cash flow hedges
Cash flow hedges of assets 1
Average outstanding notional	$	550		$	550		$	550		$	500	$	333		$	300		$	300		$	300	$	208	$	183
Weighted-average fixed-rate received	2.83	%		2.83	%		2.83	%		2.79	%	2.79	%		3.01	%		3.01	%		3.01	%	3.63	%	3.70	%
Cash flow hedges of liabilities 2
Average outstanding notional	$	500		$	500		$	—		$	—	$	—		$	—		$	—		$	—	$	—	$	—
Weighted-average fixed-rate paid	3.67	%		3.67	%		—	%		—	%	—	%		—	%		—	%		—	%	—	%	—	%
	2025		2026		2027		2028		2029		2030	2031		2032		2033		2034
Fair value hedges
Fair value hedges of debt
Average outstanding notional	$	500			$	500			$	500		$	500			$	500			$	500		$	500		$	500	$	500	$	500
Weighted-average fixed-rate received	3.93	%		3.93	%		3.93	%		3.93	%	3.93	%		3.93	%		3.93	%		3.93	%	3.93	%	3.93	%
Fair value hedges of assets 3
Average outstanding notional	$	4,658		$	4,662		$	4,658		$	2,528	$	1,149		$	1,144		$	1,137		$	1,101	$	1,073	$	908
Weighted-average fixed-rate paid	3.23	%		3.23	%		3.23	%		2.58	%	2.03	%		2.03	%		2.03	%		2.03	%	2.03	%	2.14	%

1 Cash flow hedges of assets consist of receive-fixed swaps hedging pools of floating-rate loans.

2 Cash flow hedges of liabilities consist of a pay-fixed swap hedging rolling FHLB advances. This swap matures in May 2025.

3 Fair value asset hedges consist of pay-fixed swaps hedging fixed-rate AFS securities and fixed-rate commercial loans, as further discussed in Note 7 of the Notes to Consolidated Financial Statements. Increasing notional amounts in 2026 are due to forward starting swaps.

At December 31, 2024, we had $94 million of net losses deferred in AOCI related to terminated cash flow hedges. Amounts deferred in AOCI from terminated cash flow hedges are amortized into interest income on a straight-line basis through the original maturity dates of the hedges, provided the hedged forecasted transactions continue to be expected to occur.

The following schedule presents the amounts deferred in AOCI related to terminated cash flow hedges that will be fully reclassified into interest income by the fourth quarter of 2027:

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SCHEDULED OCI AMORTIZATION FOR TERMINATED CASH FLOW HEDGES

	2025		2026		2027	2028
(Dollar amounts in millions)	First Quarter		Second Quarter		Third Quarter	Fourth Quarter		First Quarter		Second Quarter	Third Quarter		Fourth Quarter
Cash flow hedges
Cash flow hedges of assets
Periodic amortization of deferred gains (losses)	$	18		$	16	$	13		$	11	$	10		$	8	$	6	$	5	$	7	$	—

Earnings at Risk (EaR) and Economic Value of Equity (EVE)

Incorporating our deposit assumptions and the impact of derivatives in qualifying hedging relationships previously discussed, the following schedule presents earnings at risk (“EaR”), or the percentage change in 12-month forward-looking net interest income, and our estimated percentage change in EVE. Both EaR and EVE are based on a static balance sheet size under instantaneous parallel interest rate changes ranging from -200 bps to +200 bps. These measures highlight the sensitivity to changes in interest rates across various scenarios; the outcomes are not intended to be forecasts of expected net interest income.

INCOME SIMULATION – CHANGE IN NET INTEREST INCOME AND CHANGE IN ECONOMIC VALUE OF EQUITY

	December 31, 2024		December 31, 2023
	Parallel shift in rates (in bps) 1		Parallel shift in rates (in bps) 1
Repricing scenario	-200		-100		0	+100		+200		-200	-100		0		+100	+200
Earnings at Risk(EaR)	(8.9)	%		(4.5)	%	—	%		4.4	%	8.7	%		(5.6)	%	(2.5)	%	—	%	2.4	%	4.9	%
Economic Value of Equity(EVE)	0.1	%		0.6	%	—	%		(1.7)	%	(3.6)	%		6.6	%	2.8	%	—	%	(1.4)	%	(3.3)	%

1 Assumes rates cannot go below zero in the negative rate shifts.

Asset sensitivity, as measured by EaR, increased during 2024 due to securities redemptions, swap maturities, and the decrease in noninterest-bearing deposits. Under our current deposit assumptions, interest rate risk remains within policy limits. For interest-bearing deposits with indeterminable maturities, the weighted average modeled beta is 48%.

Prepayment assumptions are an important factor in managing interest rate risk. Certain assets in our portfolio, such as 1-4 family residential mortgages and mortgage-backed securities, can be prepaid at any time by the borrower, which may significantly affect our expected cash flows. At December 31, 2024, lifetime prepayment speeds were estimated to be 13.7% for loans, reflecting an acceleration of prepayments upon rate reset for adjustable rate loans, and 7.0% for mortgage-backed securities.

Our EaR analysis primarily focuses on parallel rate shocks across the term structure of benchmark interest rates. Additionally, we conduct non-parallel rate shocks to identify other risks that may not be apparent in a parallel rate scenario. In non-parallel rate scenarios, the primary impacts on EaR generally arise from changes in short-term interest rates.

If interest rates were to follow the rate path implied by the forward curve at December 31, 2024, modeled net interest income would increase by an additional 6.8% at December 31, 2025, compared with December 31, 2024. For a -100 bps and +100 bps parallel interest rate shock to the implied forward rate path, the cumulative net interest income sensitivity would be between 4.0% and 9.4%, respectively.

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Our focus on business banking significantly influences our asset-liability management strategy. At December 31, 2024, $27.6 billion of commercial and CRE loans were scheduled to reprice within the next six months. To manage these variable-rate loans, we have executed $550 million of cash flow hedges by receiving fixed rates on interest rate swaps. Additionally, at December 31, 2024, we had $4.2 billion in variable-rate consumer loans scheduled to reprice within the next six months. The impact on asset sensitivity of commercial or consumer loans with floors has become insignificant due to higher interest rates. For additional information regarding derivative instruments, see Notes 3 and 7 of the Notes to Consolidated Financial Statements.

Fixed Income

We are exposed to market risk due to fluctuations in fair value, which encompasses market risk for trading securities and interest rate swaps used to hedge interest rate risk. Our underwriting activities include municipal and corporate securities, and we also trade municipal, agency, and treasury securities. This exposes us to potential losses from adverse price changes in these fixed-income securities.

Changes in the fair value of AFS securities and interest rate swaps that qualify as cash flow hedges are recorded in AOCI for each financial reporting period. For more information on investment securities and AOCI, refer to the “Capital Management” section on page 77. See also Note 5 of the Notes to Consolidated Financial Statements for further information on the accounting for investment securities.

Equity Investments

Through our equity investment activities, we hold publicly traded equity securities as well as equity securities in governmental entities and companies, such as the FRB and the FHLB, which are not publicly traded. Depending on our ownership position and level of influence over the investees’ business, these equity investments may be accounted for using various methods, including cost less impairment, adjusted for observable price changes, fair value, the equity method, or proportional or full consolidation. Regardless of the accounting method, the value of our investments are subject to fluctuation, and we are exposed to potential losses if the fair value of these securities falls below their acquisition cost. Our Equity Investments Committee and Securities Valuation Committee evaluate, monitor, and approve equity investments in both private and public companies.

Additionally, we hold direct and indirect investments in predominantly pre-public companies, primarily through various SBIC venture capital funds. This strategy aims to provide beneficial financing, growth, and expansion opportunities to diverse businesses generally within our geographic footprint. At December 31, 2024 and 2023, our equity exposure to these investments was approximately $204 million and $190 million, respectively. Occasionally, companies within our SBIC investment portfolio may issue an initial public offering (“IPO”). In such cases, the fund is generally subject to a lockout period before we can liquidate the investment, introducing additional market risk. For additional information regarding the valuation of our SBIC investments, see Note 3 of the Notes to Consolidated Financial Statements.

Liquidity Risk Management

Liquidity refers to our ability to meet cash, contractual, and collateral obligations, and manage both expected and unexpected cash flows without negatively impacting our operations or financial strength. We manage liquidity to provide funds for our customers’ credit needs, anticipated financial and contractual obligations, and other corporate activities. Primary sources of liquidity include deposits, borrowings, equity, and paydowns of assets such as loans and investment securities. Our investment securities are primarily held as a source of contingent liquidity, and we generally own securities that can readily provide cash and liquidity through secured borrowing agreements with securities pledged as collateral.

Our Treasury group manages liquidity and funding, with oversight from ALCO. The Treasurer is responsible for recommending changes to existing funding plans and liquidity and funding policies. These recommendations are submitted for approval to ALCO, and policy changes are also approved by the ERMC and the Board. We maintain and regularly test a contingency funding plan to identify sources and uses of liquidity.

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Our Board-approved liquidity policy mandates that we monitor and maintain adequate liquidity, diversify funding sources, and anticipate future funding needs. In accordance with this policy, we conduct regular liquidity stress tests and evaluate our portfolio of highly liquid assets to ensure they can cover 30-day funding needs under stress scenarios. These stress tests include projections of funding maturities, uses of funds, and assumptions of deposit runoff. The assumptions consider the size of deposit accounts, the operational nature of deposits, the type of depositor, and concentrations of funding sources, including large depositors and uncollateralized deposits exceeding insured levels. Concentrated funding sources are assigned high runoff factors, up to 100%, when projecting stressed funding needs. Our liquidity stress testing spans multiple timeframes, from overnight to 12 months. Our policy requires us to maintain sufficient on-balance sheet liquidity in the form of FRB reserve balances and other highly liquid assets to meet stressed outflow assumptions.

We have a dedicated funding desk that monitors real-time inflows and outflows of our FRB account. We also have tools, such as ready access to repo markets and FHLB advances, to manage intraday liquidity. FHLB borrowings can either be short-term or open-term, allowing us to retain or return funds based on our liquidity needs. We pledge collateral to the FRB’s primary credit facility (discount window), as well as a significant portion of our highly liquid investment securities portfolio through the General Collateral Funding (“GCF”) repo program. This program allows us to pledge high-quality collateral and exchange funds anonymously with other participants, providing near-instant access to funding during market hours.

During 2023 and the first quarter of 2024, we pledged collateral to the FRB’s Bank Term Funding Program (“BTFP”), which provided additional contingent funding sources outside the normal operating hours of the FHLB and the GCF program. The BTFP offered loans of up to one year to eligible depository institutions pledging U.S. Treasuries, agency debt and government mortgage-backed securities, and other qualifying assets as collateral. The availability of advances under the program ended in mid-March 2024. At December 31, 2024, we had no outstanding borrowings under the BTFP.

In 2024, our primary sources of cash included a decrease in investment securities, an increase in deposits, and net cash provided by operating activities. The primary uses of cash during the same period primarily included increases in money market investments and loans and leases, a decrease in short-term borrowings, and the redemption of preferred stock. Cash payments for interest, reflected in operating expenses, totaled $1.9 billion and $1.4 billion during 2024 and 2023, respectively.

The FHLB and FRB have been, and continue to be, significant sources of back-up liquidity and funding. As a member of the FHLB of Des Moines, we can borrow against eligible loans and securities to meet liquidity and funding requirements. To maintain our borrowing capacity, we are required to invest in FHLB and FRB stock. At December 31, 2024, our total investment in FHLB and FRB stock was $124 million and $65 million, respectively, compared with $79 million and $65 million at December 31, 2023. The average FHLB activity stock holdings in 2024 were $85 million, compared with $179 million in 2023, contributing to a decrease in dividends on FHLB activity stock during the year.

At December 31, 2024, loans with a carrying value of $23.4 billion and $17.0 billion were pledged at the FHLB and FRB, respectively, as collateral for current and potential borrowings, compared with $24.8 billion and $11.5 billion at December 31, 2023.

Additionally, investment securities with a carrying value of $17.9 billion and $20.5 billion were pledged as collateral for potential borrowings at December 31, 2024 and December 31, 2023, respectively. These pledged securities included $8.7 billion and $9.5 billion for available use through the GCF and other repo programs, $4.7 billion and $5.5 billion to the FRB and FHLB, and $4.5 billion and $5.5 billion to secure collateralized public and trust deposits, advances, and for other purposes.

A significant portion of these pledged assets are unencumbered, but are pledged to provide immediate access to contingency sources of funds. The following schedule presents our total available liquidity, including unused collateralized borrowing capacity:

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AVAILABLE LIQUIDITY

	December 31, 2024		December 31, 2023
(Dollar amounts in billions)	FHLB		FRB 1		GCF 2		BTFP		Total		FHLB	FRB 1		GCF		BTFP		Total
Total borrowing capacity	$	14.6			$	17.7			$	8.6		$	—			$	40.9			$	16.6	$	9.8		$	9.6	$	5.8	$	41.8
Borrowings outstanding	2.6			—			0.3			—		2.9			1.6			—			1.8	—		3.4
Remaining capacity, at period end	$	12.0			$	17.7			$	8.3		$	—			$	38.0			$	15.0	$	9.8		$	7.8	$	5.8	$	38.4
Cash and due from banks								0.7										0.7
Interest-bearing deposits 3								2.9										1.5
Total available liquidity				$	41.6										$	40.6
Ratio of available liquidity to uninsured deposits									121	%									122	%

1 Represents borrowing capacity and borrowings outstanding at the Federal Reserve Bank discount window.

2 Includes $0.9 billion pledged for available use through other repo programs.

3 Represents funds deposited by the Bank primarily at the Federal Reserve Bank.

At December 31, 2024, our total available liquidity was $41.6 billion, compared with $40.6 billion at December 31, 2023. At December 31, 2024, our sources of liquidity exceeded the estimated amount of uninsured deposits without the need to sell any investment securities.

Credit Ratings

General financial market and economic conditions affect our access to, and the cost of, external financing. Our ability to access funding markets is also directly influenced by the credit ratings assigned to us by various rating agencies. These ratings not only impact the costs associated with borrowings, but also influence the sources from which we can borrow. All credit rating agencies currently rate our debt at an investment-grade level.

The following schedule presents our credit ratings:

CREDIT RATINGS

as of January 31, 2025:
Rating agency	Outlook	Long-term issuer/senior debt rating	Subordinated debt rating	Short-term debt rating
Kroll	Stable	A-	BBB+	K2
S&P	Negative	BBB+	BBB	NR
Fitch	Stable	BBB+	BBB	F2
Moody’s	Stable	Baa2	NR	P2

Uncertainties in the banking industry during 2023 resulted in ratings pressure for several banks, including Zions. Consequently, credit rating agencies downgraded certain of our issuer, debt, and deposit ratings. However, there were no changes to our credit ratings in 2024.

We may periodically issue or redeem preferred stock, senior or subordinated notes, or other forms of capital or debt instruments, depending on our capital, funding, asset-liability management, or other needs as market conditions warrant. Additional issuances may require regulatory approvals. During the fourth quarter of 2024, we fully redeemed the outstanding shares of our Series G, I, and J preferred stock and $88 million of 6.95% Fixed-to-Floating Subordinated Notes due 2028. Additionally, we issued $500 million of 6.82% Fixed-to-Floating Subordinated Notes due 2035. We believe our sources of available liquidity are sufficient to meet all reasonably foreseeable short- and intermediate-term demands.

For more information about a recent regulatory proposal that would expand long-term debt requirements and impact our sources of available liquidity, refer to “Regulatory Developments” on page 9 in Supervision and Regulation.

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Contractual Obligations

The following schedule presents certain contractual obligations at December 31, 2024:

CONTRACTUAL OBLIGATIONS

(In millions)	One year or less			Over three years through five years		Over five years	Indeterminable maturity 1
Deposits	$	11,327		$	117		$	37	$	1		$	64,741	$	76,223
Unfunded lending commitments	8,179		8,794			2,855		8,939	—		28,767
Standby letters of credit:
Financial	574		—			—		—	—		574
Performance	262		—			—		—	—		262
Commercial letters of credit	15		—			—		—	—		15
Commitments to make venture and other noninterest-bearing investments 2	—		—			—		—	72		72
Federal funds and other short-term borrowings	3,832		—			—		—	—		3,832
Long-term debt 3	—		—			497		499	—		996
Operating leases	40		62			53		139	—		294
Total contractual obligations	$	24,229		$	8,973		$	3,442	$	9,578		$	64,813	$	111,035

1 Indeterminable maturity deposits include noninterest-bearing demand, savings, and money market deposits.

2 Commitments to make venture and other noninterest-bearing investments do not have defined maturity dates. They are due upon demand and may be drawn immediately. Therefore, these commitments are shown as having indeterminable maturities.

3 The values presented do not reflect the impact of associated fair value hedges.

In addition to the commitments and contractual obligations outlined in the schedule above, we enter into a number of contractual commitments in the ordinary course of business. These include agreements for software licensing and maintenance, telecommunications services, facilities maintenance and equipment servicing, supplies purchasing, and other goods and services essential to our operations. Some of these contracts are renewable or cancellable on an annual basis or at shorter intervals. To secure favorable pricing, we may also enter into contracts that extend over several years.

We also enter into derivative contracts that may require cash payments based on changes in interest rates. These contracts are measured at fair value on the balance sheet, reflecting the net present value of the expected future cash receipts and payments based on market interest rates. For further information on derivative contracts, see Note 7 of the Notes to Consolidated Financial Statements.

Operational, Technology, and Cybersecurity Risk Management

Operational Risk Management

Operational risk is the risk to current or anticipated earnings or capital arising from inadequate or failed internal processes or systems, human errors or misconduct, or adverse external events. ERM supports employees, management, and the Board in assessing, measuring, managing, and monitoring this risk in accordance with our Risk Management Framework. For example, we have documented control self-assessments related to financial reporting under the 2013 framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and the FDICIA.

To manage operational risk, we have implemented several measures, including: (1) transactional documentation requirements; (2) systems and procedures to monitor transactions and positions; (3) systems and procedures to detect and mitigate fraud attempts, system penetrations, unauthorized access to customer data, or denial of access to legitimate customers; (4) regulatory compliance reviews; and (5) periodic reviews by our Compliance Risk Management, Internal Audit, Operational Risk Management, and Credit Examination departments. We have established reconciliation procedures to ensure data processing systems consistently and accurately capture critical data. Additionally, our Enterprise Data & Analytics department provides oversight of data integrity and availability.

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We maintain disaster recovery and business continuity plans to support operations in the event of natural or other disasters. Furthermore, we mitigate certain operational risks through insurance, including errors and omissions and professional liability insurance.

We are committed to continuously improving our operational risk management through risk identification, risk and control self-assessments, business process mappings, regular tests of controls, and anti-fraud measures. These efforts are regularly reported to enterprise management committees. Key metrics, such as operational losses, supplier risk, model risk, and change initiative risk, have been established in line with our Risk Management Framework, and are overseen by Operational Risk Management. These metrics are incorporated into the Enterprise Risk Profile to monitor aggregated risks against board-established appetites. Additionally, we continually review and enhance our enterprise business resiliency and fraud risk oversight programs.

Technology Risk Management

Technology risk is the risk of adverse impact on business operations and customers due to reduced or denied availability or inadequate value delivery related to technology-related applications, infrastructure, or processes. We make significant investments to enhance our technology capabilities and mitigate the risk from outdated and unsupported technologies (technical debt). This includes updating core banking systems and enterprise applications, as well as introducing new digital customer-facing capabilities. Technology projects, initiatives, and operations are governed by a change management framework that assesses activities and risk within our business processes to limit disruption and resource constraints. New, expanded, or modified products and services, as well as new lines of business, change initiatives, and other risks, are regularly reviewed and approved by the Change, Initiatives, and Technology Committee. This Committee includes senior executives such as the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Technology and Operations Officer, and Chief Risk Officer. Initiative risk and change impact from the framework are reported to the ROC.

Technology governance at the operational level is managed by our Enterprise and Technology Operations (“ETO”) division to ensure safety, soundness, operational resiliency, and compliance with our technology policies. ETO management regularly participates in enterprise architecture review boards and technology risk committees to assess ongoing objectives related to enterprise standards compliance, strategic alignment, end-of-life, audit, risk and compliance issue management, and asset management. Thresholds are defined to escalate associated risks to the ERMC and ROC committees as appropriate.

Cybersecurity Risk Management

Cybersecurity risk is the risk of adverse impacts to the confidentiality, integrity, and availability of data owned, stored, or processed by the Bank. For information about how we manage cybersecurity risk, see Part I, Item 1C. Cybersecurity on page 24.

Capital Management

The Board is responsible for approving key policies associated with capital management. The Board has delegated the management of our capital risk to the Capital Management Committee (“CMC”), chaired by the Chief Financial Officer and comprising members of management. The primary responsibility of the CMC is to recommend and administer the approved capital policies that govern our capital management. Other major responsibilities of the CMC include:

•Setting overall capital targets within the Board-approved Capital Policy, monitoring performance against policy limits, and recommending changes to capital, including dividends, common stock issuances and repurchases, subordinated debt, and strategic adjustments to maintain well-capitalized levels;

•Maintaining an adequate capital cushion to withstand adverse stress events while continuing to meet the borrowing needs of our customers and ensuring continued access to wholesale funding, consistent with fiduciary responsibilities to depositors and bondholders; and

•Reviewing our credit agency ratings.

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A strong capital position is essential to achieve our key corporate objectives, ensure continued profitability, and foster depositor and investor confidence. We strive to (1) maintain sufficient capital to support the current needs and growth of our businesses, consistent with our assessment of their potential to create value for shareholders, and (2) fulfill our responsibilities to depositors and bondholders while managing capital distributions to shareholders through dividends and common stock repurchases.

We utilize stress testing as an important tool to inform our decisions on the appropriate level of capital to maintain, based on hypothetically stressed economic conditions, including the FRB’s supervisory severely adverse scenario. The timing and amount of capital actions depend on various factors, including our financial performance, business needs, prevailing and anticipated economic conditions, and the results of our internal stress testing, as well as approval from the Board and the Office of the Comptroller of the Currency (“OCC”). Shares may be repurchased occasionally in the open market or through privately negotiated transactions.

SHAREHOLDERS’ EQUITY

(Dollar amounts in millions)	December 31, 2024			Amount change		Percent change
Shareholders’ equity:
Preferred stock	$	66		$	440		$	(374)	(85)	%
Common stock and additional paid-in capital	1,737		1,731			6		—
Retained earnings	6,701		6,212			489		8
Accumulated other comprehensive income	(2,380)		(2,692)			312		12
Total shareholders’ equity	$	6,124		$	5,691		$	433	8

Total shareholders’ equity increased $433 million, or 8%, to $6.1 billion at December 31, 2024, compared with $5.7 billion at December 31, 2023. This increase was largely driven by higher retained earnings. Preferred stock decreased $374 million due to the redemption of the outstanding shares of our Series G, I, and J preferred stock during the fourth quarter of 2024. The redemption resulted in a one-time reduction to net earnings applicable to common shareholders of approximately $6 million, arising from the recognition of capitalized preferred stock issuance costs.

In 2024, we repurchased 0.9 million common shares outstanding for $35 million, compared with 0.9 million common shares repurchased for $50 million in 2023. In February 2025, we received the necessary approvals to repurchase up to $40 million of common shares outstanding during the fiscal year 2025.

The AOCI balance was a loss of $2.4 billion at December 31, 2024, and largely reflects a decline in the fair value of fixed-rate AFS securities as a result of changes in interest rates. This includes $1.8 billion ($1.4 billion after tax) of unrealized losses on the securities previously transferred from AFS to HTM. Compared with December 31, 2023, AOCI improved $312 million, primarily due to $194 million in unrealized loss amortization associated with the securities transferred from AFS to HTM, and $31 million primarily related to paydowns on AFS securities. Additionally, AOCI was also impacted by an $87 million decrease in unrealized losses and other adjustments associated with derivative instruments used for risk management purposes. We use pay-fixed, receive-floating interest rate swaps designated as hedges of our AFS securities to reduce the volatility of our AOCI balance. For more information about these swaps, see Note 7 of the Notes to Consolidated Financial Statements.

Absent any sales or credit impairment of the AFS securities, the unrealized losses will not be recognized in earnings. We do not intend to sell any securities with unrealized losses. Although changes in AOCI are reflected in shareholders’ equity, they are currently excluded from regulatory capital and therefore do not impact our regulatory ratios.

Federal banking regulators issued a proposal to implement Basel III Endgame, which would significantly revise certain capital requirements, including the inclusion of unrealized gains and losses on AFS debt securities in regulatory capital. This could potentially impact our current and future capital planning, including share repurchase activity. For more information about the regulatory proposals, see “Regulatory Developments” in Supervision and

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Regulation on page 9. For more information about our investment securities portfolio and related unrealized gains and losses, see Note 5 of the Notes to Consolidated Financial Statements.

CAPITAL DISTRIBUTIONS

(In millions, except share data)	2024		2023
Capital distributions:
Preferred dividends paid	$	41		$	32
Bank preferred stock redeemed	374		—
Total capital distributed to preferred shareholders	415		32
Common dividends paid	248		245
Bank common stock repurchased 1	36		51
Total capital distributed to common shareholders	284		296
Total capital distributed to preferred and common shareholders	$	699		$	328
Weighted average diluted common shares outstanding (in thousands)	147,215		147,756
Common shares outstanding, at year-end (in thousands)	147,871		148,153

1 Includes amounts related to the common shares acquired through our publicly announced plans and those acquired in connection with our stock compensation plan. These shares were acquired from employees to cover their payroll taxes and stock option exercise costs upon the exercise of stock options.

Under the OCC’s “Earnings Limitation Rule,” our dividend payments are restricted to the sum of our net income for the current year and retained earnings for the preceding two years, unless the OCC approves the declaration and payment of dividends in excess of such amount. As of January 1, 2025, we had $892 million in retained net profits available for distribution.

In 2024, we paid $41 million in dividends on preferred stock, compared with $32 million in 2023. We paid $248 million in dividends on common stock, or $1.66 per share, in 2024, compared with $245 million, or $1.64 per share, in 2023. In January 2025, the Board declared a quarterly dividend of $0.43 per common share, payable on February 20, 2025, to shareholders of record at the close of business on February 13, 2025.

Basel III

We are subject to Basel III capital requirements, which include certain minimum regulatory capital ratios. At December 31, 2024, we exceeded all capital adequacy requirements under the Basel III capital rules. Based on our internal stress testing and other assessments of capital adequacy, we believe our capital levels sufficiently exceed both internal and regulatory requirements for well-capitalized banks. For more information about our compliance with the Basel III capital requirements, see the “Supervision and Regulation” section on page 7 and Note 15 of the Notes to Consolidated Financial Statements.

The following schedule presents our capital amounts, capital ratios, and other selected performance ratios:

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CAPITAL AMOUNTS AND RATIOS

(Dollar amounts in millions)	December 31, 2024			December 31, 2022
Basel III risk-based capital amounts:
Common equity Tier 1 capital	$	7,363		$	6,863			$	6,481
Tier 1 risk-based	7,430		7,303			6,921
Total risk-based	9,026		8,553			8,077
Risk-weighted assets	67,685		66,934			66,111
Basel III risk-based capital ratios:
Common equity Tier 1 capital	10.9	%	10.3	%		9.8	%
Tier 1 risk-based	11.0	%	10.9	%		10.5	%
Total risk-based	13.3	%	12.8	%		12.2	%
Tier 1 leverage	8.3	%	8.3	%		7.7	%
Other ratios:
Average equity to average assets	6.8	%	6.0	%		6.6	%
Return on average common equity	13.1	%	13.4	%		16.0	%
Return on average tangible common equity 1	16.2	%	17.3	%		19.8	%
Tangible equity ratio 1	5.8	%	5.4	%		4.3	%
Tangible common equity ratio 1	5.7	%	4.9	%		3.8	%

1 See “Non-GAAP Financial Measures” on page 83 for more information regarding these ratios.

At December 31, 2024, our common equity tier 1 (“CET1”) capital was $7.4 billion, an increase of 7%, compared with $6.9 billion in the prior year period. The CET1 capital ratio improved to 10.9%, compared with 10.3%. Tangible book value per common share increased to $33.85, compared with $28.30, primarily due to higher retained earnings and reduced unrealized losses in AOCI. For more information on non-GAAP financial measures, see page 83.

During the third quarter of 2023, federal banking regulators proposed significant revisions to capital requirements, expanded long-term debt requirements, and revised requirements for resolution and recovery planning. For more information about these regulatory proposals, see “Regulatory Developments” in Supervision and Regulation on page 9.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Note 1 of the Notes to Consolidated Financial Statements contains a summary of our significant accounting policies. Certain accounting policies that we consider critical are described below because their related balances and estimates are significant to the financial statements. Any changes to these amounts, including changes in estimates, may also be significant to the financial statements. We believe that it is important to have an understanding of these policies, along with the related estimates, to inform our financial condition. Additionally, in making these estimates, we are required to make complex and subjective judgments, many of which include a high degree of uncertainty. We discuss these critical accounting policies and related estimates below.

Where applicable in this document, we have included sensitivity schedules and other examples to demonstrate the impact of the changes in estimates made for various financial transactions. The sensitivities in these schedules and examples are hypothetical and should be viewed with caution. Changes in estimates are based on variations in assumptions and are not subject to simple extrapolation, as the relationship of the change in the assumption to the change in the amount of the estimate may not be linear. In addition, the effect of a variation in one assumption is likely to cause changes in other assumptions, which could potentially magnify or counteract the sensitivities.

Allowance for Credit Losses

The ACL includes the ALLL and the RULC and represents our estimate of current expected credit losses related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. The ACL for our HTM debt securities portfolio is estimated separately from loans and is not presented separately on the consolidated

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balance sheet due to immateriality. The ACL for debt securities was less than $1 million at both December 31, 2024 and 2023.

The ACL may change significantly each period because it is estimated using economic forecasts that change from period to period. Any unfavorable differences between the actual outcome of credit-related events and our estimates could require an additional provision for credit losses.

The ACL is calculated based on quantitative models and management’s qualitative judgment based on many factors over the life of the loan. The primary assumptions of the quantitative model are the economic forecast, the length of the reasonable and supportable forecast period, the length of the reversion period, prepayment rates, and the credit quality of the portfolio. The quantitative ACL estimate is based on losses under multiple economic scenarios that reflect optimistic, baseline, and stressed economic conditions. Management uses qualitative judgment to adjust scenario weights to more closely reflect management’s assessments of current conditions and reasonable and supportable forecasts.

If the ACL were evaluated on the baseline economic scenario rather than weighting multiple scenarios, the quantitatively determined amount of the ACL at December 31, 2024 would decrease by approximately $125 million. Additionally, if the probability of default risk-grade for all pass-graded loans were immediately downgraded one grade on our internal risk-grading scale, the quantitatively determined amount of the ACL at December 31, 2024 would increase by approximately $25 million. These sensitivity analyses are hypothetical and have been provided only to indicate the potential impact that changes in economic forecasts and changes in risk-grades may have on the ACL estimate. See Note 6 of the Notes to Consolidated Financial Statements for more information on the processes and methodologies used to estimate the ACL.

Fair Value Estimates

We measure certain assets and liabilities at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. To increase consistency and comparability in fair value measurements, we focus on valuation inputs in accordance with a three-level hierarchy: (1) observable inputs that reflect quoted prices in active markets, (2) inputs other than quoted prices with observable market data, and (3) unobservable data such as our own data.

When observable market prices are not available, fair value is estimated using modeling techniques such as discounted cash flow analysis. These modeling techniques use assumptions that market participants would consider in pricing the asset or the liability.

The selection and weighting of the various fair value techniques may result in a fair value higher or lower than the carrying value of the item being valued. Considerable judgment may be involved in determining the amount that is most representative of fair value.

For assets and liabilities measured at fair value, we maximize the use of observable inputs, when available, and minimize the use of unobservable inputs when estimating fair value. In certain cases, when market observable inputs for model-based valuation techniques may not be readily available, we are required to make judgments about the assumptions that we believe market participants would consider in estimating the fair value of financial instruments. The models used to estimate fair value are regularly evaluated by management for relevance under current facts and circumstances. Changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable.

Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary measure of accounting. Fair value is used on a nonrecurring basis for certain assets or liabilities to determine any impairment, lower of cost or fair value accounting, or for disclosure purposes.

AFS securities are valued using several methodologies, which depend on the nature of the security, availability of current market information, and other factors. AFS securities in an unrealized loss position are formally reviewed on

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a quarterly basis for the presence of credit impairment. If we have the intent to sell an identified security, or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, we first recognize an identified impairment. If we do not have the intent to sell a security, and it is more likely than not that we will not be required to sell a security prior to recovery of its amortized cost basis, then we determine whether there is any impairment attributable to credit-related factors. Credit-related impairment is recognized as an allowance. Full or partial write-offs of an AFS security are recorded in the period in which the security is deemed to be uncollectible.

While certain assets and liabilities are measured at fair value, such as our AFS securities, the majority of our assets and liabilities are not adjusted for changes in fair value. This asymmetrical accounting creates volatility in AOCI and equity.

See Note 3 of the Notes to Consolidated Financial Statements for more information regarding the use of fair value estimates.

Goodwill

Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired and is subsequently evaluated at least annually for impairment.

We perform an evaluation during the fourth quarter of each year, or more frequently if events or circumstances indicate that the carrying value exceeds fair value. We may elect to perform a qualitative analysis to determine if it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If the carrying amount is more likely than not to exceed its fair value, additional quantitative analysis is performed to determine the amount of goodwill impairment. If the fair value is less than the carrying value, an impairment is recorded for the difference. Goodwill impairment does not impact our regulatory capital ratios or tangible common equity ratio.

To determine the fair value of our reporting unit, we use (1) a market value approach that incorporates comparable publicly traded commercial banks, and (2) an income method that consists of a discounted present value of management’s estimates of future cash flows.

Critical assumptions used as part of these methods include:

•Selection of comparable publicly traded companies based on location, size, and business focus and composition;

•Selection of market comparable acquisition transactions, if available, based on location, size, business focus and composition, and date of the transaction;

•The discount rate, which is based on our estimate of the cost of equity capital;

•The projections of future earnings and cash flows of the reporting unit;

•The relative weight given to the valuations derived by the two methods described previously; and

•The control premium associated with reporting units.

Since estimates are an integral part of the impairment test computations, changes in these estimates could have a significant impact on our reporting units’ fair value and the goodwill impairment amount, if any. Estimates include economic conditions, which impact the assumptions related to interest and growth rates, loss rates, and imputed cost of equity capital. Additional factors that may significantly affect the estimates include, among others, competitive forces, customer behaviors and attrition, loan losses, changes in growth trends, cost structures and technology, changes in equity market values and merger and acquisition valuations, and changes in industry conditions.

During the fourth quarter of 2024, we performed our annual goodwill impairment evaluation, effective October 1, 2024, utilizing a qualitative analysis. Based on our evaluation, the goodwill at our reporting units was not impaired. During the fourth quarter of 2023, we performed a full quantitative analysis and determined that the fair values of Amegy, CB&T, Zions Bank, and NSB exceeded their carrying values by 38%, 70%, 80%, and 139%, respectively. As part of the quantitative analysis, we also performed a hypothetical sensitivity analysis on the discount rate assumption to evaluate the impact of an adverse change to this assumption. If the discount rate applied to future

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earnings was increased by 100 bps, the fair values of Amegy, CB&T, Zions Bank, and NSB would exceed their carrying values by 32%, 60%, 63%, and 124%, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

Note 2 of the Notes to Consolidated Financial Statements discusses recently issued accounting pronouncements that we are, or will be, required to adopt. Also described is our expectation of the impact these new accounting pronouncements will have, to the extent they are material, on our financial condition or results of operations.

NON-GAAP FINANCIAL MEASURES

This Form 10-K presents non-GAAP financial measures, in addition to generally accepted accounting principles (“GAAP”) financial measures. 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 and financial position. We believe that presenting these non-GAAP financial measures allows 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)

		Year Ended December 31,
(Dollar amounts in millions)		2024		2023		2022
Net earnings applicable to common shareholders (GAAP)		$	737			$	648			$	878
Adjustment, net of tax:
Amortization of core deposit and other intangibles		5			5			1
Net earnings applicable to common shareholders, net of tax	(a)	$	742			$	653			$	879
Average common equity (GAAP)		$	5,630			$	4,839			$	5,472
Average goodwill and intangibles		(1,055)			(1,062)			(1,022)
Average tangible common equity (non-GAAP)	(b)	$	4,575			$	3,777			$	4,450
Return on average tangible common equity (non-GAAP) 1	(a/b)	16.2	%		17.3	%		19.8	%

1 Excluding the effect of AOCI from average tangible common equity would result in associated returns of 10.4%, 9.7%, and 13.9% for the periods presented, respectively.

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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)		December 31,
	2024		2023		2022
Total shareholders’ equity (GAAP)		$	6,124		$	5,691	$	4,893
Goodwill and intangibles		(1,052)		(1,059)		(1,065)
Tangible equity (non-GAAP)	(a)	5,072		4,632		3,828
Preferred stock		(66)		(440)		(440)
Tangible common equity (non-GAAP)	(b)	$	5,006		$	4,192	$	3,388
Total assets (GAAP)		$	88,775		$	87,203	$	89,545
Goodwill and intangibles		(1,052)		(1,059)		(1,065)
Tangible assets (non-GAAP)	(c)	$	87,723		$	86,144	$	88,480
Common shares outstanding (in thousands)	(d)	147,871		148,153		148,664
Tangible equity ratio (non-GAAP)	(a/c)	5.8	%		5.4	%	4.3	%
Tangible common equity ratio (non-GAAP)	(b/c)	5.7	%		4.9	%	3.8	%
Tangible book value per common share (non-GAAP)	(b/d)	$33.85		$28.30		$22.79

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. We make adjustments to exclude certain items that are not generally expected to recur frequently, as identified in the subsequent schedule. We believe these adjustments 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 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.

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EFFICIENCY RATIO (NON-GAAP) AND ADJUSTED PRE-PROVISION NET REVENUE (NON-GAAP)

(Dollar amounts in millions)		2024			2022
Noninterest expense (GAAP)	(a)	$	2,046		$	2,097			$	1,878
Adjustments:
Severance costs		3		14			1
Other real estate expense, net		(1)		—			1
Amortization of core deposit and other intangibles		7		6			1
Restructuring costs		—		1			—
SBIC investment success fee accrual 1		1		—			(1)
FDIC special assessment		11		90			—
Total adjustments	(b)	21		111			2
Adjusted noninterest expense (non-GAAP)	(c)=(a-b)	$	2,025		$	1,986			$	1,876
Net interest income (GAAP)	(d)	$	2,430		$	2,438			$	2,520
Fully taxable-equivalent adjustments	(e)	45		41			37
Taxable-equivalent net interest income (non-GAAP)	(f)=(d+e)	2,475		2,479			2,557
Noninterest income (GAAP)	(g)	700		677			632
Combined income (non-GAAP)	(h)=(f+g)	3,175		3,156			3,189
Adjustments:
Fair value and nonhedge derivative gain (loss)		—		(4)			16
Securities gains (losses), net		19		4			(15)
Total adjustments	(i)	19		—			1
Adjusted taxable-equivalent revenue (non-GAAP)	(j)=(h-i)	$	3,156		$	3,156			$	3,188
Pre-provision net revenue (non-GAAP)	(h)-(a)	$	1,129		$	1,059			$	1,311
Adjusted pre-provision net revenue (non-GAAP)	(j-c)	1,131		1,170			1,312
Efficiency ratio (non-GAAP) 2	(c/j)	64.2	%	62.9	%		58.8	%

1 The success fee accrual is associated with the gains and losses from our SBIC investments, which are excluded from the efficiency ratio through securities gains (losses), net.

2 Including the $11 million and $90 million accruals associated with the FDIC special assessment recorded in deposit insurance and regulatory expense, the efficiency ratio for 2024 and 2023 would have been 64.5% and 65.8%, respectively.

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