# Zions Bancorporation, National Association: Form 10-Q for the period ended Sep 30, 2022

- Company: [Zions Bancorporation, National Association](/companies/zion.md) (CIK 109380)
- Form: 10-Q
- Filed: 2022-11-03
- Accepted by EDGAR: Nov 3, 2022, 15:24 ET
- Period: 2022-09-30
- Accession: 0000109380-22-000184
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/109380/000010938022000184/zions-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/109380/000010938022000184/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $123.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $371.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $44.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-01-01 to 2022-09-30 | $70.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | $61.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-01 to 2022-09-30 | $170.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $217.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $623.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.40 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | $3.96 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.40 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | $3.96 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 149,792,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 150,766,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | $976.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-01-01 to 2022-09-30 | $154.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2022-01-01 to 2022-09-30 | $200.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2022-01-01 to 2022-09-30 | $151.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2022-09-30 | $88.47bn | us-gaap:Assets |
| Total liabilities | at 2022-09-30 | $83.78bn | us-gaap:Liabilities |
| Long-term debt | at 2022-09-30 | $647.0m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2022-09-30 | $4.70bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 98,290 characters.

### FORWARD-LOOKING INFORMATION

This quarterly report includes “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and assumptions regarding future events or determinations, all of which are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements, industry trends, and results or regulatory outcomes to differ materially from those expressed or implied. Forward-looking statements include, among others:

- statements with respect to the beliefs, plans, objectives, goals, targets, commitments, designs, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of Zions Bancorporation, National Association and its subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”); and
- statements preceded or followed by, or that include the words “may,” “might,” “can,” “continue,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “forecasts,” “expect,” “intend,” “target,” “commit,” “design,” “plan,” “projects,” “will,” and the negative thereof and similar words and expressions.

These forward-looking statements are not guarantees, nor should they be relied upon as representing management’s views as of any subsequent date. Actual results and outcomes may differ materially from those presented. Although this list is not comprehensive, important factors that may cause material differences include changes in general industry and economic conditions, including inflation, economic slowdown or other economic disruption; securities and capital markets behavior, including volatility and changes in market liquidity; changes and uncertainties in legislation and fiscal, monetary, regulatory, trade, and tax policies; changes in interest and reference rates; the quality and composition of our loan and securities portfolios; our ability to recruit and retain talent, including increased competition for qualified candidates as a result of expanded remote-work opportunities and increased compensation expenses; competitive pressures and other factors that may affect aspects of our business, such as pricing and demand for our products and services; our ability to execute our strategic plans, manage our risks, and achieve our business objectives; our ability to develop and maintain information security systems and controls designed to guard against fraud, cyber, and privacy risks; the effects of the COVID-19 pandemic (including variants) and associated actions that may affect our business, employees, and communities; the effects of the ongoing conflict in Eastern Europe and other local, national, or international disasters, crises, or conflicts that may occur in the future; and governmental and social responses to environmental issues and climate change. These factors, risks, and uncertainties, among others, are discussed in our 2021 Form 10-K and subsequent filings with the Securities and Exchange Commission (“SEC”).

We caution against the undue reliance on forward-looking statements, which reflect our views only as of the date they are made. Except to the extent required by law, we specifically disclaim any obligation to update any factors or to publicly announce the revisions to any of the forward-looking statements included herein to reflect future events or developments.

*Comparisons noted below are calculated for the current quarter compared with the same prior-year period unless otherwise specified. Growth rates of 100% or more are considered not meaningful (“NM”) as they generally reflect a low starting point.*

### RESULTS OF OPERATIONS

### Executive Summary

Our financial results in the third quarter of 2022 reflected strong revenue growth, which was offset by increases in the provision for credit losses and noninterest expense. Diluted earnings per share (“EPS”) decreased to $1.40, compared with $1.45 in the third quarter of 2021.

Notwithstanding a $57 million decrease in interest income from Paycheck Protection Program (“PPP”) loans, net interest income increased $108 million, or 19%, to $663 million, primarily due to a higher interest rate environment and a favorable change in the composition of interest-earning assets. The net interest margin (“NIM”) was 3.24%, compared with 2.68%.

Nonperforming assets decreased $173 million, and classified loans decreased $432 million. Net loan and lease charge-offs were $27 million, or 0.21% of average loans (ex-PPP), compared with net recoveries of $1 million, or 0.01% of average loans (ex-PPP), in the prior year quarter. Despite improvements in most of our credit quality metrics, the provision for credit losses was $71 million, compared with a $(46) million provision in the prior year period, reflecting loan growth and changes in economic scenarios.

Total customer-related noninterest income increased $5 million, or 3%, driven by increases in capital markets and foreign exchange fees, commercial account fees, card fees, and wealth management fees, partially offset by decreases in loan-related fees and retail and business banking fees. Total noninterest income increased $26 million, or 19%, primarily due to unrealized losses recorded during the prior year period related to our Small Business Investment Company (“SBIC”) investment in Recursion Pharmaceuticals, Inc.

Total noninterest expense increased $50 million, or 12%. The increase was driven largely by a $27 million increase in salaries and benefits expense, which was impacted by inflationary and competitive labor market pressures on wages and benefits, increased headcount, and increased incentive compensation accruals arising from improvements in anticipated full-year profitability. Our efficiency ratio was 57.6%, compared with 59.8%, as growth in net revenue outpaced growth in noninterest expense.

Average interest-earning assets decreased $0.7 billion, or 1%, from the prior year quarter, driven by declines in average money market investments and PPP loans, the effects of which were largely offset by growth in average available-for-sale (“AFS”) investment securities and average loans and leases (ex-PPP).

Excluding PPP loans, total loans and leases increased $6.0 billion, or 13%. The increases were primarily in the commercial and industrial, owner-occupied, municipal, consumer 1-4 family residential mortgage, and home equity credit line (“HECL”) portfolios.

Total deposits decreased $1.9 billion, or 2%, primarily due to a $1.7 billion, or 4%, decrease mainly related to more rate-sensitive larger-balance deposits. Total deposits at September 30, 2022 included approximately $400 million of deposit balances acquired from the purchase of three Northern Nevada branches during the third quarter of 2022. Our loan-to-deposit ratio was 71%, compared with 65% in the prior year quarter, which continues to afford us flexibility in managing our funding costs.

### Third Quarter 2022 Financial Performance

### Net Earnings Applicable to Common Shareholders (in millions) Diluted EPS Adjusted PPNR (in millions) Efficiency Ratio

Net earnings applicable to common shareholders decreased from the third quarter of 2021, primarily due to a $117 million unfavorable change in the provision for credit losses. Diluted earnings per share declined from the third quarter of 2021 as a result of decreased net earnings, the effect of which was partially offset by a 10.7 million decrease in weighted average diluted shares, primarily due to share repurchases. Adjusted pre-provision net revenue (“PPNR”) increased $61 million from the third quarter of 2021, primarily due to growth in adjusted net revenue, driven largely by an increase in net interest income. This increase was partially offset by higher adjusted noninterest expense. The efficiency ratio improved from the prior year quarter, as growth in adjusted revenue outpaced growth in adjusted noninterest expense, resulting in positive operating leverage.

### Net Interest Income and Net Interest Margin

### NET INTEREST INCOME AND NET INTEREST MARGIN

*(Dollar amounts in millions)*

|  | Three Months Ended September 30, 2022 | 2021 | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Interest and fees on loans 1 | $551 | $484 | $67 | 14% |
| Interest on money market investments | 24 | 7 | 17 | NM |
| Interest on securities | 132 | 78 | 54 | 69 |
| Total interest income | 707 | 569 | 138 | 24 |
| Interest on deposits | 19 | 7 | 12 | NM |
| Interest on short- and long-term borrowings | 25 | 7 | 18 | NM |
| Total interest expense | 44 | 14 | 30 | NM |
| Net interest income | $663 | $555 | $108 | 19% |
| Average interest-earning assets | $82,474 | $83,189 | $(715) | (1)% |
| Average interest-bearing liabilities | $41,398 | $40,925 | $473 | 1% |
|  |  |  | bps |  |
| Yield on interest-earning assets 2 | 3.45% | 2.75% | 70 |  |
| Rate paid on total deposits and interest-bearing liabilities 2 | 0.22% | 0.07% | 15 |  |
| Cost of total deposits 2 | 0.10% | 0.03% | 7 |  |
| Net interest margin 2 | 3.24% | 2.68% | 56 |  |

*1 Includes interest income recoveries of $2 million and $1 million for the three months ended September 30, 2022, and 2021, respectively.*

*2 Rates are calculated using amounts in thousands; taxable-equivalent rates are used where applicable.*

Net interest income accounted for approximately 80% of our net revenue (net interest income plus noninterest income) for the quarter. Notwithstanding a $57 million decrease in interest income from PPP loans, net interest income increased $108 million, or 19%, primarily due to a higher interest rate environment and a favorable change in the composition of interest-earning assets.

Average interest-earning assets decreased $0.7 billion, or 1%, from the prior year quarter, driven by declines of $9.0 billion and $3.4 billion in average money market investments and average PPP loans, respectively. These decreases were largely offset by increases of $6.2 billion and $5.5 billion in average securities and average loans and leases (ex-PPP), respectively.

The NIM was 3.24%, compared with 2.68%. The yield on average interest-earning assets was 3.45% in the third quarter of 2022, an increase of 70 basis points (“bps”), reflecting a change in the mix of interest-earning assets from money market investments to securities and loans. The yield also benefited from a decrease in the market value of AFS securities due to rising interest rates. The average rate paid on interest-bearing liabilities increased to 0.43%, compared with 0.13%, reflecting the higher interest rate environment and increased short-term borrowings.

Total average loans and leases increased $2.1 billion, or 4%, to $53.0 billion, and were partially offset by decreases in PPP loans, primarily due to forgiveness of these loans by the Small Business Administration (“SBA”). The yield on total loans increased 35 basis points to 4.17%, reflecting the higher interest rate environment. Excluding PPP loans, average loans and leases increased $5.5 billion, or 12%, primarily in the commercial and industrial, owner-occupied, municipal, 1-4 family residential mortgage, and home equity credit line portfolios. The yield on non-PPP loans increased 57 basis points to 4.16%.

During the third quarter of 2022 and 2021, PPP loans totaling $0.2 billion and $1.5 billion, respectively, were forgiven by the SBA. PPP loans contributed $6 million and $63 million in interest income during the same time periods. The yield on PPP loans was 6.28% and 6.66% for the respective periods, and was positively impacted by accelerated amortization of deferred fees on paid off or forgiven PPP loans. At September 30, 2022 and 2021, the remaining unamortized net deferred fees on PPP loans totaled $5 million and $83 million, respectively.

Average total deposits increased $0.1 billion to $77.5 billion at an average cost of 0.10%, from $77.4 billion at an average cost of 0.03% in the third quarter of 2021. The rate paid on total deposits and interest-bearing liabilities was 0.22%, compared with 0.07%. Average noninterest-bearing deposits as a percentage of total deposits were 51%, up slightly from the same prior year period. Our funding costs were well controlled, reflecting the granularity of our deposit base and the extent of our noninterest-bearing deposits.

Average AFS securities balances increased $6.1 billion, or 32%, to $24.9 billion, primarily due to an increase in our agency guaranteed mortgage-backed securities portfolio.

Average borrowed funds increased $1.8 billion, driven by increases in short-term borrowings as a result of loan growth and declines in interest-bearing deposits. These increases were partially offset by a decrease in long-term debt, primarily due to the redemption and maturity of senior notes during the past year.

For further discussion of the effects of market rates on net interest income and how we manage interest rate risk, refer to the “Interest Rate and Market Risk Management” section on page 28. For more information on how we manage liquidity risk, refer to the “Liquidity Risk Management” section on page 32.

The following schedule summarizes the average balances, the amount of interest earned or paid, and the applicable yields for interest-earning assets and the costs of interest-bearing liabilities.

### CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

*(Unaudited)*

*(Dollar amounts in millions)*

| ASSETS Money market investments: | Three Months Ended September 30, 2022 Average balance | Amount of interest | Average yield/rate 1 | Three Months Ended September 30, 2021 Average balance | Amount of interest 1 | Average yield/rate 1 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest-bearing deposits | $1,233 | $7 | 2.19% | $10,977 | $5 | 0.15% |
| Federal funds sold and security resell agreements | 2,511 | 17 | 2.66 | 1,739 | 2 | 0.50 |
| Total money market investments | 3,744 | 24 | 2.51 | 12,716 | 7 | 0.20 |
| Securities: |  |  |  |  |  |  |
| Held-to-maturity | 560 | 4 | 2.88 | 557 | 4 | 2.87 |
| Available-for-sale 2 | 24,892 | 129 | 2.05 | 18,814 | 74 | 1.56 |
| Trading account | 288 | 3 | 4.57 | 199 | 2 | 4.41 |
| Total securities 3 | 25,740 | 136 | 2.10 | 19,570 | 80 | 1.63 |
| Loans held for sale | 37 | 1 | 5.33 | 52 | — | 3.03 |
| Loans and leases 4 |  |  |  |  |  |  |
| Commercial – excluding PPP loans | 28,972 | 302 | 4.13 | 24,854 | 235 | 3.76 |
| Commercial – PPP loans | 408 | 6 | 6.28 | 3,795 | 63 | 6.66 |
| Commercial real estate | 12,182 | 145 | 4.73 | 12,144 | 105 | 3.42 |
| Consumer | 11,391 | 103 | 3.61 | 10,058 | 86 | 3.38 |
| Total loans and leases | 52,953 | 556 | 4.17 | 50,851 | 489 | 3.82 |
| Total interest-earning assets | 82,474 | 717 | 3.45 | 83,189 | 576 | 2.75 |
| Cash and due from banks | 604 |  |  | 597 |  |  |
| Allowance for credit losses on loans and debt securities | (515) |  |  | (536) |  |  |
| Goodwill and intangibles | 1,021 |  |  | 1,015 |  |  |
| Other assets | 4,923 |  |  | 4,291 |  |  |
| Total assets | $88,507 |  |  | $88,556 |  |  |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |
| Interest-bearing deposits: |  |  |  |  |  |  |
| Savings and money market | $36,399 | $18 | 0.20% | $37,262 | $5 | 0.05% |
| Time | 1,441 | 1 | 0.32 | 1,829 | 2 | 0.32 |
| Total interest-bearing deposits | 37,840 | 19 | 0.20 | 39,091 | 7 | 0.07 |
| Borrowed funds: |  |  |  |  |  |  |
| Federal funds purchased and other short-term borrowings | 2,885 | 17 | 2.33 | 630 | — | 0.08 |
| Long-term debt | 673 | 8 | 4.83 | 1,204 | 7 | 2.34 |
| Total borrowed funds | 3,558 | 25 | 2.80 | 1,834 | 7 | 1.56 |
| Total interest-bearing liabilities | 41,398 | 44 | 0.43 | 40,925 | 14 | 0.13 |
| Noninterest-bearing demand deposits | 39,623 |  |  | 38,320 |  |  |
| Other liabilities | 1,743 |  |  | 1,302 |  |  |
| Total liabilities | 82,764 |  |  | 80,547 |  |  |
| Shareholders’ equity: |  |  |  |  |  |  |
| Preferred equity | 440 |  |  | 440 |  |  |
| Common equity | 5,303 |  |  | 7,569 |  |  |
| Total shareholders’ equity | 5,743 |  |  | 8,009 |  |  |
| Total liabilities and shareholders’ equity | $88,507 |  |  | $88,556 |  |  |
| Spread on average interest-bearing funds |  |  | 3.02% |  |  | 2.62% |
| Net impact of noninterest-bearing sources of funds |  |  | 0.22% |  |  | 0.06% |
| Net interest margin |  | $673 | 3.24% |  | $562 | 2.68% |
| Memo: total loans and leases, excluding PPP loans | $52,545 | 550 | 4.16% | $47,056 | 426 | 3.59% |
| Memo: total cost of deposits |  |  | 0.10% |  |  | 0.03% |
| Memo: total deposits and interest-bearing liabilities | 81,021 | 44 | 0.22% | 79,245 | 14 | 0.07% |

*1 Rates are calculated using amounts in thousands and a tax rate of 21% for the periods presented. The taxable-equivalent rates used are the rates that were applicable at the time of each respective reporting period.*

*2 The fair value of AFS securities at September 30, 2022, and September 30, 2021, was $23.2 billion and $20.5 billion, respectively. In addition to other factors, the yield on AFS securities was positively impacted by the decline in fair value.*

*3 Interest on total securities includes $27 million and $29 million of taxable-equivalent premium amortization for the third quarter of 2022 and 2021, respectively.*

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

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

*(Dollar amounts in millions)*

| ASSETS Money market investments: | Nine Months Ended September 30, 2022 Average balance | Amount of interest 1 | Average yield/rate | Nine Months Ended September 30, 2021 Average balance | Amount of interest 1 | Average yield/rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest-bearing deposits | $3,674 | $15 | 0.55% | $8,162 | $8 | 0.13% |
| Federal funds sold and security resell agreements | 2,451 | 27 | 1.47 | 2,109 | 6 | 0.37 |
| Total money market investments | 6,125 | 42 | 0.92 | 10,271 | 14 | 0.18 |
| Securities: |  |  |  |  |  |  |
| Held-to-maturity | 495 | 11 | 2.98 | 599 | 13 | 2.92 |
| Available-for-sale 2 | 25,285 | 358 | 1.89 | 17,255 | 209 | 1.62 |
| Trading account | 343 | 12 | 4.81 | 213 | 7 | 4.25 |
| Total securities 3 | 26,123 | 381 | 1.95 | 18,067 | 229 | 1.70 |
| Loans held for sale | 44 | 1 | 2.55 | 61 | 1 | 2.77 |
| Loans and leases 4 |  |  |  |  |  |  |
| Commercial – excluding PPP loans | 28,060 | 798 | 3.80 | 24,716 | 705 | 3.81 |
| Commercial – PPP loans | 885 | 45 | 6.83 | 5,283 | 191 | 4.84 |
| Commercial real estate | 12,151 | 358 | 3.93 | 12,104 | 313 | 3.46 |
| Consumer | 10,801 | 272 | 3.37 | 10,315 | 270 | 3.50 |
| Total loans and leases | 51,897 | 1,473 | 3.79 | 52,418 | 1,479 | 3.77 |
| Total interest-earning assets | 84,189 | 1,897 | 3.01 | 80,817 | 1,723 | 2.85 |
| Cash and due from banks | 615 |  |  | 597 |  |  |
| Allowance for loan losses | (503) |  |  | (651) |  |  |
| Goodwill and intangibles | 1,017 |  |  | 1,015 |  |  |
| Other assets | 4,618 |  |  | 4,106 |  |  |
| Total assets | $89,936 |  |  | $85,884 |  |  |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |
| Interest-bearing deposits: |  |  |  |  |  |  |
| Savings and money market | $37,942 | $29 | 0.10% | $36,168 | $16 | 0.06% |
| Time | 1,505 | 3 | 0.27 | 2,140 | 7 | 0.44 |
| Total interest-bearing deposits | 39,447 | 32 | 0.11 | 38,308 | 23 | 0.08 |
| Borrowed funds: |  |  |  |  |  |  |
| Federal funds purchased and other short-term borrowings | 1,415 | 18 | 1.73 | 856 | 1 | 0.07 |
| Long-term debt | 724 | 20 | 3.69 | 1,277 | 22 | 2.32 |
| Total borrowed funds | 2,139 | 38 | 2.39 | 2,133 | 23 | 1.41 |
| Total interest-bearing liabilities | 41,586 | 70 | 0.23 | 40,441 | 46 | 0.15 |
| Noninterest-bearing demand deposits | 40,523 |  |  | 36,213 |  |  |
| Other liabilities | 1,530 |  |  | 1,267 |  |  |
| Total liabilities | 83,639 |  |  | 77,921 |  |  |
| Shareholders’ equity: |  |  |  |  |  |  |
| Preferred equity | 440 |  |  | 516 |  |  |
| Common equity | 5,857 |  |  | 7,447 |  |  |
| Total shareholders’ equity | 6,297 |  |  | 7,963 |  |  |
| Total liabilities and shareholders’ equity | $89,936 |  |  | $85,884 |  |  |
| Spread on average interest-bearing funds |  |  | 2.78% |  |  | 2.70% |
| Net impact of noninterest-bearing sources of funds |  |  | 0.12% |  |  | 0.08% |
| Net interest margin |  | $1,827 | 2.90% |  | $1,677 | 2.78% |
| Memo: total loans and leases, excluding PPP loans | $51,012 | 1,428 | 3.74% | $47,135 | 1,288 | 3.65% |
| Memo: total cost of deposits |  |  | 0.05% |  |  | 0.04% |
| Memo: total deposits and interest-bearing liabilities | 82,109 | 70 | 0.12% | 76,654 | 46 | 0.15% |

*1 Rates are calculated using amounts in thousands and a tax rate of 21% for the periods presented. The taxable-equivalent rates used are the rates that were applicable at the time of each respective reporting period.*

*2 The fair value of AFS securities at September 30, 2022, and September 30, 2021, was $23.2 billion and $20.5 billion, respectively. In addition to other factors, the yield on AFS securities was positively impacted by the decline in fair value.*

*3 Interest on total securities includes $82 million and $87 million of taxable-equivalent premium amortization for the first nine months of 2022 and 2021, respectively.*

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

### Provision for Credit Losses

The allowance for credit losses (“ACL”) is the combination of 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, in the income statement. The ACL for debt securities is estimated separately from loans.

The provision for credit losses, which is the combination of both the provision for loan and lease losses and the provision for unfunded lending commitments, was $71 million, compared with $(46) million in the third quarter of 2021. The ACL was $590 million at September 30, 2022, compared with $529 million at September 30, 2021. The increase in the ACL was primarily due to growth in the loan portfolio, as well as changes in economic scenarios, which were driven by the increased probability of a recession, the effects of which were partially offset by improvements in credit quality. The ratio of ACL to net loans and leases (ex-PPP) was 1.10% and 1.11% at September 30, 2022 and 2021, respectively. The provision for securities losses was less than $1 million during the third quarter of 2022 and 2021.

The bar chart above illustrates the broad categories of change in the ACL from the prior year period. The second bar represents changes in economic scenarios and current economic conditions, which increased the ACL by $11 million from the prior year quarter.

The third bar represents changes in credit quality factors and includes risk-grade migration and specific reserves against loans, which, when combined, decreased the ACL by $9 million, indicating improvements in overall credit quality. Nonperforming assets decreased $173 million, or 53%, and classified loans decreased $432 million, or 31%. Net loan and lease charge-offs were $27 million, or 0.21% annualized of average loans (ex-PPP), in the third quarter of 2022, compared with net recoveries of $1 million, or 0.01% annualized of average loans (ex-PPP), in the prior year quarter.

The fourth bar represents loan portfolio changes, driven primarily by loan growth, as well as changes in portfolio mix, the aging of the portfolio, and other risk factors; all of which resulted in a $59 million increase in the ACL.

See “Credit Risk Management” on page 21 and Note 6 in our 2021 Form 10-K for more information on how we determine the appropriate level of the ALLL and the RULC.

### Noninterest Income

Noninterest income represents revenue we earn 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 $26 million, or 19%. Noninterest income accounted for approximately 20% of our net revenue during both the third quarter of 2022 and 2021. The following schedule presents a comparison of the major components of noninterest income.

### NONINTEREST INCOME

*(Dollar amounts in millions)*

|  | Three Months Ended September 30, 2022 | 2021 | Amount change 2022 | Percent change 2021 | Nine Months Ended September 30, |  | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial account fees | $40 | $34 | $6 | 18% | $118 | $100 | $18 | 18% |
| Card fees | 27 | 25 | 2 | 8 | 77 | 70 | 7 | 10 |
| Retail and business banking fees | 17 | 20 | (3) | (15) | 57 | 55 | 2 | 4 |
| Loan-related fees and income | 18 | 27 | (9) | (33) | 61 | 73 | (12) | (16) |
| Capital markets and foreign exchange fees | 25 | 17 | 8 | 47 | 61 | 49 | 12 | 24 |
| Wealth management fees | 14 | 13 | 1 | 8 | 41 | 37 | 4 | 11 |
| Other customer-related fees | 15 | 15 | — | — | 46 | 39 | 7 | 18 |
| Customer-related noninterest income | 156 | 151 | 5 | 3 | 461 | 423 | 38 | 9 |
| Fair value and nonhedge derivative income | 4 | 2 | 2 | NM | 20 | 15 | 5 | 33 |
| Dividends and other income (loss) | (1) | 9 | (10) | NM | 8 | 24 | (16) | (67) |
| Securities gains (losses), net | 6 | (23) | 29 | NM | (10) | 51 | (61) | NM |
| Noncustomer-related noninterest income | 9 | (12) | 21 | NM | 18 | 90 | (72) | (80) |
| Total noninterest income | $165 | $139 | $26 | 19% | $479 | $513 | $(34) | (7)% |

### Customer-related

Total customer-related noninterest income increased $5 million, or 3%, from the prior year quarter, driven by increases in capital markets and foreign exchange fees, commercial account fees, card fees, and wealth management fees. Capital markets and foreign exchange fees benefited from improved customer swap, foreign exchange, and syndication activity. These increases were partially offset by a decrease in loan-related fees, primarily due to an increased proportion of our 1-4 family residential mortgage production being retained versus sold, and a decrease in retail and business banking fees. The latter decrease was due largely to previously disclosed changes in our overdraft and non-sufficient funds practices, including the rate and frequency with which we assess related fees. These changes were effected early in the third quarter of 2022.

### Noncustomer-related

Total noncustomer-related noninterest income increased $21 million, relative to the prior year quarter. Net securities gains increased $29 million, due largely to unrealized losses recorded during the prior year period related to our SBIC investment in Recursion Pharmaceuticals, Inc. Dividends and other income (loss) decreased $10 million from the prior year period, primarily due to a $6 million valuation loss recognized on one of our equity investments in the current period.

### Noninterest Expense

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

### NONINTEREST EXPENSE

*(Dollar amounts in millions)*

|  | Three Months Ended September 30, 2022 | 2021 | Amount change 2022 | Percent change 2021 | Nine Months Ended September 30, |  | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Salaries and employee benefits | $312 | $285 | $27 | 9% | $931 | $845 | $86 | 10% |
| Technology, telecom, and information processing | 53 | 50 | 3 | 6 | 158 | 148 | 10 | 7 |
| Occupancy and equipment, net | 38 | 37 | 1 | 3 | 112 | 115 | (3) | (3) |
| Professional and legal services | 14 | 17 | (3) | (18) | 42 | 56 | (14) | (25) |
| Marketing and business development | 11 | 9 | 2 | 22 | 28 | 22 | 6 | 27 |
| Deposit insurance and regulatory expense | 13 | 8 | 5 | 63 | 36 | 25 | 11 | 44 |
| Credit-related expense | 8 | 7 | 1 | 14 | 22 | 19 | 3 | 16 |
| Other real estate expense, net | — | — | — | NM | 1 | — | 1 | NM |
| Other | 30 | 16 | 14 | 88 | 77 | 62 | 15 | 24 |
| Total noninterest expense | $479 | $429 | $50 | 12% | $1,407 | $1,292 | $115 | 9% |
| Adjusted noninterest expense 1 | $477 | $432 | $45 | 10% | $1,404 | $1,291 | $113 | 9% |

*1 For information on non-GAAP financial measures, see “Non-GAAP Financial Measures” on page 33.*

Total noninterest expense increased $50 million, or 12%, relative to the prior year quarter. Salaries and benefits expense increased $27 million, or 9%, due to the impact of inflationary and competitive labor market pressures on wages and benefits, increased headcount, and increased incentive compensation accruals arising from improvements in anticipated full-year profitability.

Other noninterest expense increased $14 million, primarily due to the reversal of a success fee accrual in the prior year period related to our SBIC investment in Recursion Pharmaceuticals, Inc., as well as increased travel and certain other expenses incurred during the current period. Deposit insurance and regulatory expense increased $5 million, driven largely by a higher Federal Deposit Insurance Corporation (“FDIC”) insurance assessment resulting from changes in the balance sheet composition.

Professional and legal services expense decreased $3 million, or 18%, due to third-party assistance associated with PPP loan forgiveness and other technology-related and outsourced services utilized in the prior year period.

The efficiency ratio was 57.6%, compared with 59.8%, as growth in net revenue outpaced growth in noninterest expense. For information on non-GAAP financial measures, including differences between noninterest expense and adjusted noninterest expense, see page 33.

### Income Taxes

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

### INCOME TAXES

*(Dollar amounts in millions)*

|  | Three Months Ended September 30, 2022 | 2021 | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Income before income taxes | $278 | $311 | $793 | $1,177 |
| Income tax expense | 61 | 71 | 170 | 261 |
| Effective tax rate | 21.9% | 22.8% | 21.4% | 22.2% |

See Note 12 of the Notes to Consolidated Financial Statements for more information about the factors that influenced the income tax rates as well as information about deferred income tax assets and liabilities.

### Preferred Stock Dividends

Preferred stock dividends totaled $6 million for both the third quarter of 2022 and 2021.

### Technology Spend

As the banking industry continues to move toward information technology-based products and services, we recognize there are disparate ways of discussing expenditures associated with technology-related investments and operations. We generally describe these expenditures as total technology spend, which includes current period expenses reported on our consolidated statement of income, and capitalized investments, net of related amortization and depreciation, reported on our consolidated balance sheet. We believe these disclosures provide more relevant presentation and discussion regarding our technology-related investments and operations.

Total technology spend represents expenditures for technology systems and infrastructure and is reported as a combination of the following:

- Technology, telecom, and information processing expense — includes expenses related to application software licensing and maintenance, related amortization, telecommunications, and data processing;
- Other technology-related expenses — 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 purchased or internally developed software, less related amortization or depreciation.

The following schedule provides information related to our technology spend:

### TECHNOLOGY SPEND

*(In millions)*

|  | Three Months Ended September 30, 2022 | 2021 | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Technology, telecom, and information processing expense | $53 | $50 | $158 | $148 |
| Other technology-related expense | 52 | 48 | 152 | 140 |
| Technology investments | 21 | 28 | 65 | 80 |
| Less: related amortization and depreciation | (14) | (13) | (41) | (40) |
| Total technology spend | $112 | $113 | $334 | $328 |

Total technology spend remained relatively flat compared with the prior year period, as increases in related expenses were offset by reduced technology investments.

### BALANCE SHEET ANALYSIS

### Interest-Earning Assets

Interest-earning assets are assets that have associated interest rates or yields, and generally consist of money market investments, securities, loans, and leases. 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 Consolidated Average Balance Sheet on page 11.

### Investment Securities Portfolio

We invest in securities to generate interest income and to actively manage liquidity, interest rate, and credit risk. Refer to the “Liquidity Risk Management” section on page 32 for additional information about how we manage our liquidity risk. See 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.

The following schedule presents the components of our investment securities portfolio.

### INVESTMENT SECURITIES PORTFOLIO

*(In millions)*

| Held-to-maturity | September 30, 2022 Par value | Amortized cost | Estimated fair value | December 31, 2021 Par value | Amortized cost | Estimated fair value |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Municipal securities | $423 | $423 | $379 | $441 | $441 | $443 |
| **Available-for-sale** |  |  |  |  |  |  |
| U.S. Treasury securities | 555 | 557 | 394 | 155 | 155 | 134 |
| U.S. Government agencies and corporations: |  |  |  |  |  |  |
| Agency securities | 859 | 851 | 807 | 833 | 833 | 845 |
| Agency guaranteed mortgage-backed securities | 23,002 | 23,162 | 19,566 | 20,340 | 20,549 | 20,387 |
| Small Business Administration loan-backed securities | 740 | 793 | 766 | 867 | 938 | 912 |
| Municipal securities | 1,611 | 1,780 | 1,626 | 1,489 | 1,652 | 1,694 |
| Other debt securities | 75 | 75 | 74 | 75 | 75 | 76 |
| Total available-for-sale | 26,842 | 27,218 | 23,233 | 23,759 | 24,202 | 24,048 |
| Total HTM and AFS investment securities | $27,265 | $27,641 | $23,612 | $24,200 | $24,643 | $24,491 |

The amortized cost of total held-to-maturity (“HTM”) and AFS investment securities increased $3.0 billion, or 12%, from December 31, 2021. Approximately 8% and 11% of the total HTM and AFS investment securities portfolio were floating rate at September 30, 2022 and December 31, 2021, respectively.

At September 30, 2022, the investment securities portfolio includes $376 million of net premium that is distributed across the various asset classes. Total taxable-equivalent premium amortization for our investment securities was $27 million for the third quarter of 2022, compared with $29 million for the same prior year period.

In addition to HTM and AFS securities, we also have a Trading securities portfolio of $526 million and $372 million, at September 30, 2022 and December 31, 2021, respectively, which is comprised primarily of municipal securities and money market sweep transactions for customers. Refer to the “Capital Management” section on page 33 and Note 5 of the Notes to Consolidated Financial Statements for more discussion regarding our investment securities portfolio and related unrealized gains and losses.

In October 2022, we transferred approximately $9.0 billion amortized cost ($7.2 billion fair value) of pass-through mortgage-backed AFS securities to the HTM category to reflect our new intent for these securities.

### Municipalities

We provide products and services to state and local governments (referred to collectively as “municipalities”), including deposit services, loans, and investment banking services. We also invest in securities issued by municipalities. The following schedule summarizes our exposure to state and local municipalities:

### EXPOSURE TO MUNICIPALITIES

*(In millions)*

|  | September 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Loans and leases | $4,224 | $3,658 |
| Held-to-maturity securities | 423 | 441 |
| Available-for-sale securities | 1,626 | 1,694 |
| Trading account securities | 302 | 355 |
| Unfunded lending commitments | 337 | 280 |
| Total direct exposure to municipalities | $6,912 | $6,428 |

The municipal loan and lease portfolio is primarily secured by general obligations of municipal entities. Other types of collateral also include real estate, revenue pledges, or equipment. Our municipal loans and securities primarily relate to municipalities located within our geographic footprint.

At September 30, 2022, no municipal loans were on nonaccrual. Municipal securities are internally graded, similar to loans, using risk-grading systems which 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 definitions of regulatory risk classifications. At September 30, 2022, all municipal securities were graded as Pass. See Notes 5 and 6 of the Notes to Consolidated Financial Statements for additional information about the credit quality of these municipal loans and securities.

### Loan and Lease Portfolio

At September 30, 2022 and December 31, 2021, the ratio of loans and leases to total assets was 61% and 55%, respectively. The largest loan category was commercial and industrial loans, which constituted 29% and 27% of our total loan portfolio for the same periods. The following schedule presents our loans and leases according to major portfolio segment, specific loan class, and percentage of total loans:

### LOAN AND LEASE PORTFOLIO

*(Dollar amounts in millions)*

| Commercial: | September 30, 2022 Amount | % of total loans | December 31, 2021 Amount | % of total loans |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $15,656 | 29.0% | $13,867 | 27.3% |
| PPP | 306 | 0.6 | 1,855 | 3.6 |
| Leasing | 347 | 0.7 | 327 | 0.6 |
| Owner-occupied | 9,279 | 17.2 | 8,733 | 17.2 |
| Municipal | 4,224 | 7.8 | 3,658 | 7.2 |
| Total commercial | 29,812 | 55.3 | 28,440 | 55.9 |
| Commercial real estate: |  |  |  |  |
| Construction and land development | 2,800 | 5.2 | 2,757 | 5.4 |
| Term | 9,556 | 17.7 | 9,441 | 18.6 |
| Total commercial real estate | 12,356 | 22.9 | 12,198 | 24.0 |
| Consumer: |  |  |  |  |
| Home equity credit line | 3,331 | 6.2 | 3,016 | 5.9 |
| 1-4 family residential | 6,852 | 12.7 | 6,050 | 11.9 |
| Construction and other consumer real estate | 973 | 1.8 | 638 | 1.3 |
| Bankcard and other revolving plans | 471 | 0.9 | 396 | 0.8 |
| Other | 123 | 0.2 | 113 | 0.2 |
| Total consumer | 11,750 | 21.8 | 10,213 | 20.1 |
| Total net loans and leases | $53,918 | 100.0% | $50,851 | 100.0% |

The loan and lease portfolio increased $3.1 billion from December 31, 2021. Excluding PPP loans, commercial loans increased $2.9 billion, or 11%, driven largely by increases in commercial and industrial loans, municipal loans, and owner-occupied loans of $1.8 billion, $566 million, and $546 million, respectively. Consumer loans increased $1.5 billion, primarily due to increases in 1-4 family residential loans, construction and other consumer real estate loans, and home equity credit lines of $802 million, $335 million, and $315 million, respectively.

### Other Noninterest-Bearing Investments

Other noninterest-bearing investments are equity investments that are held primarily for capital appreciation, dividends, or for certain regulatory requirements. The following schedule summarizes our related investments:

### OTHER NONINTEREST-BEARING INVESTMENTS

*(Dollar amounts in millions)*

|  | September 30, 2022 | December 31, 2021 | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Bank-owned life insurance | $543 | $537 | $6 | 1% |
| Federal Home Loan Bank stock | 151 | 11 | 140 | NM |
| Federal Reserve stock | 69 | 81 | (12) | (15) |
| Farmer Mac stock | 19 | 19 | — | — |
| SBIC investments | 169 | 179 | (10) | (6) |
| Other | 32 | 24 | 8 | 33 |
| Total other noninterest-bearing investments | $983 | $851 | $132 | 16% |

Total other noninterest-bearing investments increased $132 million, or 16%, during the first nine months of 2022, primarily due to a $140 million increase in Federal Home Loan Bank (“FHLB”) stock. This increase was driven largely by increases in FHLB short-term borrowings during the third quarter of 2022 as a result of loan growth and declines in interest-bearing deposits.

### Premises, Equipment, and Software

Net premises, equipment, and software increased $69 million, or 5%, from December 31, 2021, primarily due to capitalized costs related to the construction of a new corporate technology center in Midvale, Utah, which was completed in July 2022, and a new corporate center for Vectra Bank Colorado (“Vectra”) in Denver, Colorado, which is expected to be completed in the fourth quarter of 2022.

We are also in the final phase of a three-phase project to replace our core loan and deposit banking systems, and are on track to convert our deposit servicing system in 2023. Capitalized costs associated with the core system replacement project generally carry a useful life of ten years, and are summarized in the following schedule.

### CAPITALIZED COSTS ASSOCIATED WITH THE CORE SYSTEM REPLACEMENT PROJECT

*(In millions)*

|  | September 30, 2022 Phase 1 | Phase 2 | Phase 3 | Total |
| --- | ---: | ---: | ---: | ---: |
| Total amount of capitalized costs, less accumulated depreciation | $32 | $57 | $190 | $279 |

### Deposits

Deposits are a primary funding source. The following schedule presents our deposits by category and percentage of total deposits:

### DEPOSITS

*(Dollar amounts in millions)*

|  | September 30, 2022 Amount | % of total deposits | December 31, 2021 Amount | % of total deposits |
| --- | ---: | ---: | ---: | ---: |
| Noninterest-bearing demand | $39,133 | 51.5% | $41,053 | 49.6% |
| Interest-bearing: |  |  |  |  |
| Savings and money market | 35,389 | 46.6 | 40,114 | 48.4 |
| Time | 1,473 | 1.9 | 1,622 | 2.0 |
| Total deposits | $75,995 | 100.0% | $82,789 | 100.0% |

Total deposits decreased $6.8 billion, or 8%, from December 31, 2021, primarily due to a $4.9 billion decrease in interest-bearing deposits, and a $1.9 billion decrease in noninterest-bearing deposits. Total deposits included $166 million and $381 million of brokered deposits at September 30, 2022 and December 31, 2021, respectively. Additionally, total deposits at September 30, 2022 included approximately $400 million of deposit balances acquired from the purchase of three Northern Nevada branches during the third quarter of 2022. See “Liquidity Risk Management” on page 32 for additional information on funding and borrowed funds.

Total time deposits that exceed the current FDIC insurance limit of $250,000 were $420 million and $563 million at September 30, 2022 and December 31, 2021, respectively. The estimated total amount of uninsured deposits, including related interest accrued and unpaid, was $44 billion and $49 billion at September 30, 2022 and December 31, 2021, respectively.

### RISK MANAGEMENT

Risk management is an integral part of our operations and is a key determinant of our overall performance. We employ various strategies to reduce 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, cyber risk, capital/financial reporting risk, legal/compliance risk (including regulatory risk), and reputational risk. These risks are overseen by the various management committees of which the Enterprise Risk Management Committee is the focal point. For a more comprehensive discussion of these risks, see “Risk Factors” in our 2021 Form 10-K.

### 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, as well as from off-balance sheet credit instruments. For a more comprehensive discussion of our credit risk management, see “Credit Risk Management” in our 2021 Form 10-K.

### U.S. Government Agency Guaranteed Loans

We participate in various guaranteed lending programs sponsored by United States (“U.S.”) government agencies, such as the 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 September 30, 2022, $740 million of related loans were guaranteed, primarily by the SBA, and included $306 million of PPP loans. The following schedule presents the composition of U.S. government agency guaranteed loans.

### U.S. GOVERNMENT AGENCY GUARANTEED LOANS

*(Dollar amounts in millions)*

|  | September 30, 2022 | Percent guaranteed | December 31, 2021 | Percent guaranteed |
| --- | ---: | ---: | ---: | ---: |
| Commercial | $844 | 86% | $2,410 | 95% |
| Commercial real estate | 18 | 72 | 22 | 73 |
| Consumer | 4 | 100 | 5 | 100 |
| Total loans | $866 | 85% | $2,437 | 94% |

19

### Commercial Lending

The following schedule provides information regarding lending exposures to certain industries in our commercial lending portfolio.

### COMMERCIAL LENDING BY INDUSTRY GROUP 1

*(Dollar amounts in millions)*

|  | September 30, 2022 Amount | Percent | December 31, 2021 Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Finance and insurance | $2,853 | 9.6% | $2,303 | 8.1% |
| Real estate, rental and leasing | 2,703 | 9.1 | 2,536 | 8.9 |
| Retail trade | 2,663 | 8.9 | 2,412 | 8.5 |
| Manufacturing | 2,414 | 8.1 | 2,374 | 8.3 |
| Healthcare and social assistance | 2,374 | 8.0 | 2,349 | 8.2 |
| Public Administration | 2,254 | 7.5 | 1,959 | 6.9 |
| Wholesale trade | 1,908 | 6.4 | 1,701 | 6.0 |
| Transportation and warehousing | 1,387 | 4.6 | 1,273 | 4.5 |
| Construction | 1,339 | 4.5 | 1,456 | 5.1 |
| Utilities 2 | 1,331 | 4.5 | 1,446 | 5.1 |
| Educational services | 1,310 | 4.4 | 1,163 | 4.1 |
| Hospitality and food services | 1,243 | 4.2 | 1,353 | 4.8 |
| Mining, quarrying, and oil and gas extraction | 1,237 | 4.1 | 1,185 | 4.2 |
| Other Services (except Public Administration) | 1,075 | 3.6 | 1,213 | 4.2 |
| Professional, scientific, and technical services | 972 | 3.3 | 1,084 | 3.8 |
| Other 3 | 2,749 | 9.2 | 2,633 | 9.3 |
| Total | $29,812 | 100.0% | $28,440 | 100.0% |

*1 Industry groups are determined by North American Industry Classification System (“NAICS”) codes.*

#### 2 Includes primarily utilities, power, and renewable energy.

#### 3 No other industry group exceeds 2.9%.

### Commercial Real Estate Loans

The following schedules present credit quality information for our commercial real estate (“CRE”) loan portfolio segmented by real estate category and collateral location.

### COMMERCIAL REAL ESTATE PORTFOLIO BY LOAN TYPE AND COLLATERAL LOCATION

*(Dollar amounts in millions)*

| Loan type Commercial term | September 30, 2022 Collateral Location Arizona | California | Colorado | Nevada | Texas | Utah/ Idaho | Wash-ington | Other 1 | Total | % of total CRE |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Balance outstanding | $1,092 | $3,147 | $490 | $685 | $1,561 | $1,600 | $627 | $354 | $9,556 | 77.3% |
| % of loan type | 11.4% | 32.9% | 5.1% | 7.2% | 16.3% | 16.8% | 6.6% | 3.7% | 100.0% |  |
| Delinquency rates 2: |  |  |  |  |  |  |  |  |  |  |
| 30-89 days | —% | 0.1% | 0.4% | —% | 0.1% | —% | —% | —% | 0.1% |  |
| ≥ 90 days | —% | —% | —% | —% | 1.0% | —% | —% | —% | 0.2% |  |
| Nonaccrual loans | $— | $3 | $— | $— | $15 | $— | $— | $1 | $19 |  |
| **Commercial construction and land development** |  |  |  |  |  |  |  |  |  |  |
| Balance outstanding | $226 | $460 | $62 | $79 | $373 | $584 | $252 | $55 | $2,091 | 16.9% |
| % of loan type | 10.8% | 22.0% | 3.0% | 3.8% | 17.9% | 27.9% | 12.0% | 2.6% | 100.0% |  |
| Delinquency rates 2: |  |  |  |  |  |  |  |  |  |  |
| 30-89 days | —% | —% | —% | —% | —% | —% | —% | —% | —% |  |
| ≥ 90 days | —% | —% | —% | —% | —% | —% | —% | —% | —% |  |
| **Residential construction and land development 3** |  |  |  |  |  |  |  |  |  |  |
| Balance outstanding | $64 | $136 | $46 | $1 | $206 | $204 | $9 | $43 | $709 | 5.8% |
| % of loan type | 9.0% | 19.1% | 6.5% | 0.2% | 29.0% | 28.8% | 1.3% | 6.1% | 100.0% |  |
| Total construction and land development | $290 | $596 | $108 | $80 | $579 | $788 | $261 | $98 | $2,800 |  |
| Total CRE | $1,382 | $3,743 | $598 | $765 | $2,140 | $2,388 | $888 | $452 | $12,356 | 100.0% |

*(Dollar amounts in millions)*

| Loan type Commercial term | December 31, 2021 Collateral Location Arizona | California | Colorado | Nevada | Texas | Utah/ Idaho | Wash-ington | Other 1 | Total | % of total CRE |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Balance outstanding | $1,038 | $3,331 | $508 | $653 | $1,606 | $1,408 | $444 | $453 | $9,441 | 77.4% |
| % of loan type | 11.0% | 35.3% | 5.4% | 6.9% | 17.0% | 14.9% | 4.7% | 4.8% | 100.0% |  |
| Delinquency rates 2: |  |  |  |  |  |  |  |  |  |  |
| 30-89 days | —% | 0.2% | 0.2% | —% | —% | 0.1% | —% | —% | 0.1% |  |
| ≥ 90 days | —% | 0.1% | —% | —% | 0.2% | —% | —% | —% | 0.1% |  |
| Nonaccrual loans | $— | $3 | $— | $— | $17 | $— | $— | $— | $20 |  |
| **Commercial construction and land development** |  |  |  |  |  |  |  |  |  |  |
| Balance outstanding | $242 | $405 | $94 | $107 | $475 | $543 | $181 | $40 | $2,087 | 17.1% |
| % of loan type | 11.6% | 19.4% | 4.5% | 5.1% | 22.8% | 26.0% | 8.7% | 1.9% | 100.0% |  |
| Delinquency rates 2: |  |  |  |  |  |  |  |  |  |  |
| 30-89 days | —% | —% | —% | —% | —% | —% | 13.2% | —% | 0.9% |  |
| ≥ 90 days | —% | —% | —% | —% | —% | —% | —% | —% | —% |  |
| **Residential construction and land development 3** |  |  |  |  |  |  |  |  |  |  |
| Balance outstanding | $82 | $167 | $44 | $2 | $162 | $167 | $9 | $37 | $670 | 5.5% |
| % of loan type | 12.3% | 25.0% | 6.6% | 0.2% | 24.2% | 24.9% | 1.3% | 5.5% | 100.0% |  |
| Total construction and land development | $324 | $572 | $138 | $109 | $637 | $710 | $190 | $77 | $2,757 |  |
| Total CRE | $1,362 | $3,903 | $646 | $762 | $2,243 | $2,118 | $634 | $530 | $12,198 | 100.0% |

*1 No other geography exceeds $66 million and $65 million for all three loan types at September 30, 2022 and December 31, 2021, respectively.*

#### 2 Delinquency rates include nonaccrual loans.

*3At September 30, 2022 and December 31, 2021, there was no meaningful delinquency or nonaccrual activity for residential construction and land development loans.*

At September 30, 2022 and December 31, 2021, our CRE construction and land development and term loan portfolios represented approximately 23% and 24% of the total loan portfolio, respectively. The majority of our CRE loans are secured by real estate, which is primarily located within our geographic footprint. At September 30, 2022, approximately 21% of the CRE loan portfolio matures in the next 12 months. Construction and land development loans generally mature in 18 to 36 months and contain full or partial recourse guarantee structures with one- to five-year extension options or roll-to-perm options that often result in term debt. Term CRE loans generally mature within a three- to seven-year period and consist of full, partial, and non-recourse guarantee structures. Typical term CRE loan structures include annually tested operating covenants that require loan rebalancing based on minimum debt service coverage, debt yield, or loan-to-value tests.

At September 30, 2022 and December 31, 2021, approximately $257 million, or 9%, and $160 million, or 6%, of the commercial construction and land development portfolio consisted of land acquisition and development loans, respectively. Most of these loans are secured by specific retail, apartment, office, or other projects. For a more comprehensive discussion of CRE loans, see the “Commercial Real Estate Loans” section in our 2021 Form 10-K.

### Consumer Loans

We originate first-lien residential home mortgages considered to be of prime quality. We generally hold variable-rate loans in our portfolio and 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.

We also originate home equity credit lines. At September 30, 2022 and December 31, 2021, our HECL portfolio totaled $3.3 billion and $3.0 billion, respectively. The following schedule presents the composition of our HECL portfolio by lien status.

### HECL PORTFOLIO BY LIEN STATUS

*(In millions)*

|  | September 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Secured by first liens | $1,517 | $1,503 |
| Secured by second (or junior) liens | 1,814 | 1,513 |
| Total | $3,331 | $3,016 |

At September 30, 2022, 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 high credit scores.

Approximately 91% of our HECL portfolio is still in the draw period, and about 19% of those loans are 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 minimal. The ratio of HECL net charge-offs (recoveries) for the trailing twelve months to average balances at September 30, 2022 and December 31, 2021 was (0.03)% and (0.01)%, respectively. See Note 6 of the Notes to Consolidated Financial Statements for additional information on the credit quality of the HECL portfolio.

### Nonperforming Assets

Nonperforming assets as a percentage of loans and leases and other real estate owned (“OREO”) decreased to 0.28% at September 30, 2022, compared with 0.53% at December 31, 2021.

Total nonaccrual loans at September 30, 2022 decreased to $151 million from $271 million at December 31, 2021, reflecting credit quality improvements across most of our loan portfolios.

The balance of nonaccrual loans can decrease due to paydowns, charge-offs, and the return of loans to accrual status under certain conditions. If a nonaccrual loan is refinanced or restructured, the new note is immediately placed on nonaccrual. If a restructured loan performs under the new terms for a period of at least six months, the loan can be considered for return to accrual status. See “Restructured Loans” and Note 6 of the Notes to Consolidated Financial Statements for more information on nonaccrual loans.

The following schedule presents our nonperforming assets:

### NONPERFORMING ASSETS

*(Dollar amounts in millions)*

|  | September 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Nonaccrual loans 1 | $151 | $271 |
| Other real estate owned 2 | — | 1 |
| Total nonperforming assets | $151 | $272 |
| Ratio of nonperforming assets to net loans and leases1 and other real estate owned 2 | 0.28% | 0.53% |
| Accruing loans past due 90 days or more | $20 | $8 |
| Ratio of accruing loans past due 90 days or more to loans and leases 1 | 0.04% | 0.02% |
| Nonaccrual loans1 and accruing loans past due 90 days or more | $171 | $279 |
| Ratio of nonperforming assets1 and accruing loans past due 90 days or more to loans and leases1 and other real estate owned 2 | 0.32% | 0.55% |
| Accruing loans past due 30-89 days 3 | $84 | $70 |
| Nonaccrual loans1 current as to principal and interest payments | 57.6% | 67.2% |

#### 1 Includes loans held for sale.

#### 2 Does not include banking premises held for sale.

*3 Includes $31 million and $35 million of PPP loans at September 30, 2022 and December 31, 2021, respectively, which we expect will be paid in full by either the borrower or the SBA.*

### Troubled Debt Restructured Loans

Loans may be modified in the normal course of business for competitive reasons or to strengthen our collateral position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. Loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for which we have granted a concession that we would not otherwise consider, are classified as troubled debt restructurings (“TDRs”). At September 30, 2022 and December 31, 2021, TDRs totaled $245 million and $326 million, respectively. Modifications that qualified for applicable accounting and regulatory exemption for borrowers experiencing financial difficulties exclusively related to the COVID-19 pandemic were not classified and reported as TDRs.

If the restructured loan performs for at least six months according to the modified terms, and an analysis of the customer’s financial condition indicates that we are reasonably assured of repayment of the modified principal and interest, the loan may be returned to accrual status. The borrower’s payment performance prior to and following the restructuring is taken into account to determine whether a loan should be returned to accrual status.

### ACCRUING AND NONACCRUING TROUBLED DEBT RESTRUCTURED LOANS

*(In millions)*

|  | September 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Restructured loans – accruing | $206 | $221 |
| Restructured loans – nonaccruing | 39 | 105 |
| Total | $245 | $326 |

23

In the periods following the calendar year in which a loan was restructured, a loan may no longer be reported as a TDR if it is accruing, is in compliance with its modified terms, and yields a market rate (as determined and documented at the time of the modification or restructure). See Note 6 of the Notes to Consolidated Financial Statements for additional information regarding TDRs.

### TROUBLED DEBT RESTRUCTURED LOANS ROLLFORWARD

*(In millions)*

|  | Three Months Ended September 30, 2022 | 2021 | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Balance at beginning of period | $275 | $458 | $326 | $311 |
| New identified TDRs and principal increases | 15 | 17 | 42 | 200 |
| Payments and payoffs | (41) | (33) | (103) | (64) |
| Charge-offs | (3) | — | (5) | (3) |
| No longer reported as TDRs | — | (86) | (3) | (86) |
| Sales and other | (1) | (4) | (12) | (6) |
| Balance at end of period | $245 | $352 | $245 | $352 |

### Allowance for Credit Losses

The ACL includes the ALLL and the RULC. The ACL 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. To determine the adequacy of the allowance, our loan and lease portfolio is segmented based on loan type.

The following schedule shows the changes in the ACL and a summary of credit loss experience:

### SUMMARY OF CREDIT LOSS EXPERIENCE

*(Dollar amounts in millions)*

|  | Nine Months Ended September 30, 2022 | Twelve Months Ended December 31, 2021 | Nine Months Ended September 30, 2021 |
| --- | ---: | ---: | ---: |
| Loans and leases outstanding | $53,918 | $50,851 | $50,678 |
| Average loans and leases outstanding: |  |  |  |
| Commercial – excluding PPP loans | 28,060 | 25,014 | 24,716 |
| Commercial – PPP loans | 885 | 4,566 | 5,283 |
| Commercial real estate | 12,151 | 12,136 | 12,104 |
| Consumer | 10,801 | 10,267 | 10,315 |
| Total average loans and leases outstanding | $51,897 | $51,983 | $52,418 |
| **Allowance for loan and lease losses:** |  |  |  |
| Balance at beginning of period | $513 | $777 | $777 |
| Provision for loan losses | 70 | (258) | (281) |
| Charge-offs: |  |  |  |
| Commercial | 65 | 35 | 27 |
| Commercial real estate | — | — | — |
| Consumer | 8 | 13 | 10 |
| Total | 73 | 48 | 37 |
| Recoveries: |  |  |  |
| Commercial | 21 | 29 | 24 |
| Commercial real estate | — | 3 | — |
| Consumer | 10 | 10 | 8 |
| Total | 31 | 42 | 32 |
| Net loan and lease charge-offs | 42 | 6 | 5 |
| Balance at end of period | $541 | $513 | $491 |
| **Reserve for unfunded lending commitments:** |  |  |  |
| Balance at beginning of period | $40 | $58 | $58 |
| Provision for unfunded lending commitments | 9 | (18) | (20) |
| Balance at end of period | $49 | $40 | $38 |
| **Total allowance for credit losses:** |  |  |  |
| Allowance for loan and lease losses | $541 | $513 | $491 |
| Reserve for unfunded lending commitments | 49 | 40 | 38 |
| Total allowance for credit losses | $590 | $553 | $529 |
| Ratio of allowance for credit losses to net loans and leases, at period end 1 | 1.09% | 1.09% | 1.04% |
| Ratio of allowance for credit losses to nonaccrual loans, at period end | 391% | 204% | 164% |
| Ratio of allowance for credit losses to nonaccrual loans and accruing loans past due 90 days or more, at period end | 345% | 198% | 162% |
| Ratio of total net charge-offs to average loans and leases 2, 3 | 0.11% | 0.01% | 0.01% |
| Ratio of commercial net charge-offs to average commercial loans 3 | 0.20% | 0.02% | 0.01% |
| Ratio of commercial real estate net charge-offs to average commercial real estate loans 3 | —% | (0.02)% | —% |
| Ratio of consumer net charge-offs to average consumer loans 3 | (0.02)% | 0.03% | 0.03% |

*1 The ratio of allowance for credit losses to net loans and leases (excluding PPP loans) was 1.10% at September 30, 2022, 1.13% at December 31, 2021, and 1.11% at September 30, 2021.*

*2 The annualized ratio of net charge-offs to average loans and leases (excluding PPP loans) was 0.11% at September 30, 2022, 0.01% at December 31, 2021, and 0.01% at September 30, 2021.*

*3 Ratios are annualized for the periods presented except for the period representing the full twelve months.*

The total ACL increased to $590 million, from $553 million, during the first nine months of 2022, primarily due to growth in the loan portfolio, as well as changes in economic scenarios, which were driven by the increased probability of a recession, the effects of which were partially offset by improvements in credit quality.

The RULC represents a reserve for potential losses associated with off-balance sheet commitments and increased $9 million during the first nine months of 2022. The reserve is separately recorded on the consolidated balance sheet in “Other liabilities,” and any related increases or decreases in the reserve are recorded on the consolidated income statement in “Provision for unfunded lending commitments.”

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 risk is the potential for reduced net interest income and other rate-sensitive income resulting from adverse changes in the level of interest rates. Market risk is the potential for loss arising from adverse changes in the fair value of fixed-income securities, equity securities, other earning assets, and derivative financial instruments as a result of changes in interest rates or other factors. Because we engage in transactions involving various financial products, we are exposed to both interest rate risk and market risk. For a more comprehensive discussion of our interest rate and market risk management, see the “Interest Rate and Market Risk Management” section in our 2021 Form 10-K.

### Interest Rate Risk

Average total deposits remained relatively flat at $77.5 billion, compared with the prior year period. During 2021, deposits increased and were primarily invested in fixed-rate, medium-duration AFS securities. The investment in these securities relative to short-duration money market funds resulted in higher earning-asset yields, increased net interest income, and decreased asset sensitivity to rising rates.

Asset sensitivity measures depend upon the assumptions we use for deposit runoff and repricing behavior. As interest rates rise, we expect some customers to move balances from demand deposits to interest-bearing accounts such as money market, savings, or certificates of deposit. Our models are particularly sensitive to the assumption about the rate of such migration.

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 when 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. We anticipate that changes in deposit rates will lag changes in reference rates. Our modeled cost of total deposits for September 2023 is approximately 0.63% without the effect of additional Federal Reserve rate hikes. Additional rate hikes would be expected to result in further increases to the cost of total deposits.

Actual results may differ materially due to various factors, including the shape of the yield curve, competitive pricing, money supply, our credit worthiness, etc. We use our historical experience as well as industry data to inform our assumptions. The migration and correlation assumptions previously discussed result in deposit durations presented in the following schedule:

### DEPOSIT ASSUMPTIONS

| Product | September 30, 2022 Effective duration (unchanged) | Effective duration (+200 bps) |
| --- | ---: | ---: |
| Demand deposits | 3.2% | 3.0% |
| Money market | 1.8% | 1.6% |
| Savings and interest-bearing checking | 2.6% | 2.4% |

26

As the more rate sensitive deposits have runoff, the effective duration of deposits has lengthened due to remaining deposits assumed to be stickier and less rate sensitive.

Additionally, we utilize derivatives to manage interest rate risk. The following schedule presents derivatives that are designated in qualifying hedging relationships at September 30, 2022. 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

*(Dollar amounts in millions)*

| Cash flow hedges Cash flow asset hedges 1 | 2022 Fourth Quarter | 2023 First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 2024 First Quarter | Second Quarter | Third Quarter | 4Q24 - 3Q25 | 3Q25 - 2Q26 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Average outstanding notional | $7,336 | $7,300 | $6,833 | $6,533 | $6,233 | $5,800 | $5,466 | $5,033 | $3,737 | $2,221 |
| Weighted-average fixed-rate received | 1.77% | 1.84% | 1.83% | 1.79% | 1.71% | 1.61% | 1.57% | 1.50% | 1.57% | 1.68% |
|  | **2022 4** | **2023** | **2024** | **2025** | **2026** | **2027** | **2028** | **2029** | **2030** | **2031** |
| **Fair value hedges** |  |  |  |  |  |  |  |  |  |  |
| Fair value debt hedges 2 |  |  |  |  |  |  |  |  |  |  |
| Average outstanding notional | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $— | $— |
| Weighted-average fixed-rate received | 1.70% | 1.70% | 1.70% | 1.70% | 1.70% | 1.70% | 1.70% | 1.70% | —% | —% |
| Fair value asset hedges 3 |  |  |  |  |  |  |  |  |  |  |
| Average outstanding notional | $828 | $827 | $1,099 | $1,212 | $1,217 | $1,213 | $1,208 | $1,203 | $1,198 | $1,192 |
| Weighted-average fixed-rate paid | 1.65% | 1.65% | 1.71% | 1.74% | 1.74% | 1.74% | 1.73% | 1.73% | 1.73% | 1.73% |

*1 Cash flow hedges consist of receive-fixed swaps hedging pools of floating rates loans.*

*2 Fair value debt hedges consist of receive-fixed swaps hedging fixed-rate debt. The $500 million fair value debt hedge matures at the end of July 2029. Amounts for 2029 have not been prorated to reflect this hedge maturing during the year.*

#### 3 Fair value assets hedges consist of pay-fixed swaps hedging AFS fixed-rate securities. Increases in average outstanding notional are

#### due to forward-starting interest rate swaps.

#### 4 Represents the fourth quarter of 2022.

Incorporating the 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 economic value of equity (“EVE”). Both EaR and EVE are based on a static balance sheet size under parallel interest rate changes ranging from -100 bps to +300 bps.

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

|  | September 30, 2022 Parallel shift in rates (in bps)1 |  |  |  |  | December 31, 2021 Parallel shift in rates (in bps)1 |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Repricing scenario** | **-100** | **0** | **+100** | **+200** | **+300** | **-100** | **0** | **+100** | **+200** | **+300** |
| Earnings at Risk (EaR) | (4.2)% | —% | 4.1% | 8.2% | 12.2% | (5.2)% | —% | 11.2% | 22.7% | 33.6% |
| Economic Value of Equity (EVE) | 4.0% | —% | (2.0)% | (4.1)% | (6.1)% | 20.9% | —% | 0.8% | (0.5)% | (1.2)% |

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

The asset sensitivity, as measured by EaR, decreased during the third quarter of 2022, primarily due to (1) deposit runoff, (2) an increase in receive-fixed-rate swap notional, and (3) a higher level of “base-case” net interest income, which reduced the percentage change for the same modeled dollar change in net interest income.

For interest-bearing deposits with indeterminate maturity, the weighted average modeled beta is 26%. If the weighted average deposit beta were to increase to 36%, the EaR in the +100 bps rate shock would change from 4.1% to 3.0%.

The EaR analysis focuses on parallel rate shocks across the term structure of benchmark interest rates. In a non-parallel rate scenario where the overnight rate increases 200 bps, but the ten-year rate increases only 30 bps, the increase in EaR is modeled to be approximately two-thirds of the change associated with the parallel +200 bps rate change.

We recognize that EaR has inherent limitations in describing expected changes in net interest income in rapidly changing interest rate environments due to a lag in asset and liability repricing behavior. As such, we expect net interest income to change due to “latent” and “emergent” interest rate sensitivity. Unlike EaR, which measures net interest income over 12 months, latent and emergent interest rate sensitivity explains changes in current quarter net interest income (ex-PPP), compared with expected net interest income in the same quarter one year forward.

Latent interest rate sensitivity refers to future changes in net interest income based upon past rate movements that have yet to be fully recognized in revenue, but will be recognized over the near term. We expect latent sensitivity to add approximately 10% to net interest income in the third quarter of 2023, compared with the third quarter of 2022 (ex-PPP).

Emergent interest rate sensitivity refers to future changes in net interest income based upon future interest rate movements and is measured from the latent level of net interest income. If interest rates rise consistent with the forward curve at September 30, 2022, we expect emergent sensitivity to add approximately 4% to the latent sensitivity level of net interest income.

Our focus on business banking also plays a significant role in determining the nature of our asset-liability management posture. At September 30, 2022, $24.3 billion of our commercial lending and CRE loan balances were scheduled to reprice in the next six months. Of these variable-rate loans, approximately 97% are tied to either the prime rate, London Interbank Offered Rate (“LIBOR”), Secured Overnight Financing Rate (“SOFR”), American Interbank Offered Rate (“AMERIBOR”), or Bloomberg Short-term Bank Yield (“BSBY”). For these variable-rate loans, we have executed $7.1 billion of cash flow hedges by receiving fixed rates on interest rate swaps. At September 30, 2022, we also had $3.5 billion of variable-rate consumer loans scheduled to reprice in the next six months. The impact on asset sensitivity from commercial or consumer loans with floors has become insignificant as rates have risen. See Notes 3 and 7 of the Notes to Consolidated Financial Statements for additional information regarding derivative instruments.

### LIBOR Exposure

LIBOR is being phased out globally, and U.S. banking regulators instructed banks to cease entering into new lending arrangements using LIBOR no later than December 31, 2021, and migrate to alternative reference rates no later than June 2023. To facilitate the transition process, we instituted an enterprise-wide program to identify, assess, and monitor risks associated with the expected discontinuance or unavailability of LIBOR, which includes active engagement with industry working groups and regulators. This program also includes active involvement of senior management with regular engagement from the Enterprise Risk Management Committee, and seeks to minimize client and internal business operational impacts, while providing reporting transparency, consistency, and a central governance model that aligns with accounting and regulatory guidance.

We have implemented processes, procedures, and systems to ensure contract risk is sufficiently mitigated. New originations, and any modifications or renewals of LIBOR-based contracts, contain fallback language to facilitate transition to an alternative reference rate. For our contracts that referenced LIBOR and had a duration beyond June 2023, all fallback provisions and variations were identified and classified based upon those provisions. By the end of 2021, we had discontinued substantially all new originations and any renewals or modifications referencing LIBOR.

We have a significant number of assets and liabilities that reference LIBOR. At September 30, 2022, we had $20.3 billion in loans (mainly commercial loans), unfunded lending commitments, and securities referencing LIBOR. The amount of borrowed funds referencing LIBOR at September 30, 2022 was less than $1 billion. These amounts exclude derivative assets and liabilities on the consolidated balance sheet. At September 30, 2022, the notional amount of our LIBOR-referenced interest rate derivative contracts was $10.0 billion, of which nearly all related to contracts with central counterparty clearinghouses.

The adoption of alternative reference rates continues to evolve in the marketplace. We are positioned to support our customers’ needs by accommodating multiple alternative reference rates, including the Constant Maturity Treasury (“CMT”) rate, the FHLB rate, AMERIBOR, SOFR, and BSBY. During the first quarter of 2022, we began to prompt our customers to voluntarily modify their contracts and migrate to a reference rate other than LIBOR. Voluntary modifications are expected to qualify for the available Tax Safe-Harbor provisions as allowed by Internal Revenue Service (“IRS”) guidance.

We expect that customers who voluntarily migrate to an alternative reference rate will do so by the end of this year, and we expect the remaining customers to move to an alternative rate index in accordance with the relevant fallback provisions in their contracts prior to June 2023. For more information on the transition from LIBOR, see Risk Factors in our 2021 Form 10-K.

### Market Risk – Fixed Income

We underwrite municipal and corporate securities. We also trade municipal, agency, and treasury securities. This underwriting and trading activity exposes us to a risk of loss arising from adverse changes in the prices of these fixed-income securities.

At September 30, 2022, we had $526 million of trading assets and $34 million of securities sold, not yet purchased, compared with $372 million and $254 million at December 31, 2021, respectively.

We are exposed to market risk through changes in fair value. This includes market risk for interest rate swaps used to hedge interest rate risk. Changes in the fair value of AFS securities and in interest rate swaps that qualify as cash flow hedges are included in accumulated other comprehensive income (“AOCI”) for each financial reporting period. The after-tax change in AOCI attributable to AFS securities decreased $909 million and $2.7 billion for the three and nine months ended September 30, 2022, respectively, due largely to increased interest rates. Refer to Note 5 of the Notes to Consolidated Financial Statements for more discussion regarding our investment securities portfolio and related unrealized gains and losses.

As discussed in the Net Interest Income and NIM section above, our deposit costs are well controlled, reflecting the granularity of our deposit base and the extent of our noninterest-bearing deposits. This funding advantage is more pronounced in a rising interest rate environment, creating meaningful economic value that is not fully reflected on our balance sheet since deposits and related intangible assets are not recorded at fair value for accounting purposes.

### Market Risk – Equity Investments

We hold both direct and indirect investments in predominantly pre-public companies, primarily through various SBIC venture capital funds as a strategy to provide beneficial financing, growth, and expansion opportunities to diverse businesses generally in communities within our geographic footprint. Our equity exposure to these investments was $169 million and $179 million at September 30, 2022 and December 31, 2021, respectively. On occasion, some of the companies within our SBIC investment may issue an initial public offering (“IPO”). In this case, the fund is generally subject to a lockout period before liquidating the investment, which can introduce additional market risk. See Note 3 of our 2021 Form 10-K for additional information regarding the valuation of our SBIC investments.

### Liquidity Risk Management

### Overview

Liquidity refers to our ability to meet our cash, contractual, and collateral obligations, and to manage both expected and unexpected cash flows without adversely impacting our operations or financial strength. Sources of liquidity include deposits, borrowings, equity, and unencumbered assets, such as marketable loans and investment securities. For a more comprehensive discussion of our liquidity risk management, see “Liquidity Risk Management” in our 2021 Form 10-K.

Our AFS investment securities are primarily held as a source of contingent liquidity. We target securities that can be readily turned into cash through repurchase agreements or sales. We manage our short-term funding needs through secured borrowing with securities pledged as collateral. At September 30, 2022, our investment securities portfolio of $24.2 billion and cash and money market investments of $4.6 billion, collectively comprised 33% of total assets, compared with $24.9 billion of investment securities, and $13.0 billion of cash and money market investments, collectively comprising 41% of total assets at December 31, 2021.

### Liquidity Management Actions

For the first nine months of 2022, the primary sources of cash came from a decrease in money market investments, an increase in short-term funds borrowed, and net cash provided by operating activities. Uses of cash during the same period included primarily an increase in investment securities, an increase in loans and leases, and redemption of long-term debt. Cash payments for interest were $63 million and $61 million for the first nine months of 2022 and 2021, respectively.

Total deposits were $76.0 billion at September 30, 2022, compared with $82.8 billion at December 31, 2021. The decrease in deposits was primarily due to a $4.7 billion decrease in savings and money market deposits, and a $1.9 billion decrease in noninterest-bearing demand deposits. Our core deposits, consisting of noninterest-bearing demand deposits, savings and money market deposits, and time deposits under $250,000, were $75.5 billion at September 30, 2022, compared with $81.9 billion at December 31, 2021. At September 30, 2022, our loan-to-deposit ratio was 71%, compared with 61% at December 31, 2021.

General financial market and economic conditions impact our access to, and cost of, external financing. Access to funding markets is also directly affected by the credit ratings received from various rating agencies. Our credit ratings are presented in the following schedule:

| CREDIT RATINGS |  |  |  |  |
| --- | --- | --- | --- | --- |
| **as of October 31, 2022:** |  |  |  |  |
| **Rating agency** | **Outlook** | **Long-term issuer/senior debt rating** | **Subordinated debt rating** | **Short-term debt rating** |
| Kroll | Positive | A- | BBB+ | K2 |
| S&P | Stable | BBB+ | BBB | NR |
| Fitch | Stable | BBB+ | BBB | F1 |
| Moody's | Stable | Baa1 | NR | NR |

The FHLB system and Federal Reserve Banks have been, and continue to be, a significant source of back-up liquidity and funding. We are a member of the FHLB of Des Moines, which allows member banks to borrow against their eligible loans and securities to satisfy liquidity and funding requirements. We are required to invest in FHLB and Federal Reserve stock to maintain our borrowing capacity. At September 30, 2022, our total investment in FHLB and Federal Reserve stock was $151 million and $69 million, respectively, compared with $11 million and $81 million at December 31, 2021.

The amount available for additional FHLB and Federal Reserve borrowings was $15.9 billion at September 30, 2022, compared with $18.3 billion at December 31, 2021. Loans with a carrying value of $27.6 billion and $26.8 billion at September 30, 2022 and December 31, 2021, respectively, were pledged at the FHLB and the Federal Reserve as collateral for current and potential borrowings. At September 30, 2022 we had $3.5 billion of short-term FHLB borrowings outstanding and no Federal Reserve borrowings outstanding. At December 31, 2021, we had no FHLB or Federal Reserve borrowings outstanding.

Total borrowed funds increased $4.1 billion during the first nine months of 2022, driven by increases in short-term borrowings as a result of loan growth and declines in interest-bearing deposits. These increases were partially offset by a decrease in long-term debt primarily due to the redemption of senior notes during the first quarter of 2022.

We may, from time to time, issue additional 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. These additional issuances may be subject to required regulatory approvals. We believe that our sources of available liquidity are adequate to meet all reasonably foreseeable short- and intermediate-term demands.

### Capital Management

### Overview

A strong capital position is vital to the achievement of our key corporate objectives, our continued profitability, and to promoting depositor and investor confidence. Our capital management objectives include: (1) consistently improving risk-adjusted returns on our shareholders' capital and appropriately managing capital distributions, (2) maintaining sufficient capital to support the current needs and growth of our businesses, and (3) fulfilling responsibilities to depositors and bondholders.

We utilize stress testing as an important mechanism to inform our decisions on the appropriate level of capital, based upon actual and hypothetically stressed economic conditions, which are comparable in severity to the scenarios published by the Federal Reserve Board (“FRB”). The timing and amount of capital actions are subject to various factors, including our financial performance, business needs, prevailing and anticipated economic conditions, and the results of our internal stress testing, as well as our Board of Directors (“Board”) and Office of the Comptroller of the Currency (“OCC”) approval. Shares may be repurchased occasionally in the open market or through privately negotiated transactions. For a more comprehensive discussion of our capital risk management, see “Capital Management” in our 2021 Form 10-K.

### SHAREHOLDERS' EQUITY

*(Dollar amounts in millions)*

| Shareholders’ equity: | September 30, 2022 | December 31, 2021 | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Preferred stock | $440 | $440 | $— | —% |
| Common stock and additional paid-in capital | 1,799 | 1,928 | (129) | (7) |
| Retained earnings | 5,597 | 5,175 | 422 | 8 |
| Accumulated other comprehensive income (loss) | (3,140) | (80) | (3,060) | NM |
| Total shareholders' equity | $4,696 | $7,463 | $(2,767) | (37)% |

Total shareholders’ equity decreased $2.8 billion, or 37%, to $4.7 billion at September 30, 2022, compared with $7.5 billion at December 31, 2021. Common stock and additional paid-in capital decreased $129 million, primarily due to common stock repurchases.

AOCI decreased $3.1 billion, primarily due to decreases in the fair value of fixed-rate available-for-sale securities as a result of changes in interest rates. Absent any sales or credit impairment of these securities, the unrealized losses will not be recognized in earnings. We do not intend to sell any securities with unrealized losses. Additionally, changes in AOCI do not impact our regulatory capital ratios. Refer to Note 5 of the Notes to Consolidated Financial Statements for more discussion on our investment securities portfolio and related unrealized gains and losses.

Common shares outstanding decreased 2.0 million during the first nine months of 2022, primarily due to common stock repurchases. During the third quarter of 2022, we repurchased 0.9 million common shares outstanding for $50 million. In October 2022, the Board approved a plan to repurchase up to $50 million of common shares outstanding during the fourth quarter of 2022.

### CAPITAL DISTRIBUTIONS

*(In millions, except share data)*

| Capital distributions: | Three Months Ended September 30, 2022 | 2021 | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Preferred dividends paid | $6 | $6 | $22 | $23 |
| Bank preferred stock redeemed | — | — | — | 126 |
| Total capital distributed to preferred shareholders | 6 | 6 | 22 | 149 |
| Common dividends paid | 62 | 62 | 178 | 174 |
| Bank common stock repurchased 1 | 50 | 325 | 151 | 475 |
| Total capital distributed to common shareholders | 112 | 387 | 329 | 649 |
| Total capital distributed to preferred and common shareholders | $118 | $393 | $351 | $798 |
| Weighted average diluted common shares outstanding (in thousands) | 149,792 | 160,480 | 150,766 | 162,460 |
| Common shares outstanding, at period end (in thousands) | 149,611 | 156,530 | 149,611 | 156,530 |

*1 Includes amounts related to the common shares acquired from our publicly announced plans and those acquired in connection with our stock compensation plan. Shares were acquired from employees to pay for their payroll taxes and stock option exercise cost upon the exercise of stock options.*

Under the OCC’s “Earnings Limitation Rule,” our dividend payments are restricted to an amount equal to the sum of the total of (1) our net income for that year, and (2) retained earnings for the preceding two years, unless the OCC approves the declaration and payment of dividends in excess of such amount. At September 30, 2022, we had $1.6 billion of retained net profits available for distribution.

During the third quarter of 2022, we paid dividends on preferred stock of $6 million and dividends on common stock of $62 million, or $0.41 per share. In October 2022, the Board declared a regular quarterly dividend of $0.41 per common share, payable on November 17, 2022, to shareholders of record on November 10, 2022. See Note 9 of the Notes to Consolidated Financial Statements for additional information about our capital management actions.

### Basel III

We are subject to Basel III capital requirements to maintain adequate levels of capital as measured by several regulatory capital ratios. At September 30, 2022, 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 we hold capital sufficiently in excess of internal and regulatory requirements for well-capitalized banks. The following schedule presents our capital and other performance ratios.

### CAPITAL RATIOS

|  | September 30, 2022 | December 31, 2021 | September 30, 2021 |
| --- | ---: | ---: | ---: |
| Tangible common equity ratio 1 | 3.7% | 6.5% | 7.2% |
| Tangible equity ratio 1 | 4.2 | 7.0 | 7.7 |
| Average equity to average assets (three months ended) | 6.5 | 8.3 | 9.0 |
| Basel III risk-based capital ratios: |  |  |  |
| Common equity tier 1 capital | 9.6 | 10.2 | 10.9 |
| Tier 1 leverage | 7.5 | 7.2 | 7.6 |
| Tier 1 risk-based | 10.3 | 10.9 | 11.6 |
| Total risk-based | 12.0 | 12.8 | 13.6 |
| Return on average common equity (three months ended) | 15.8 | 11.5 | 12.3 |
| Return on average tangible common equity (three months ended) 1 | 19.5 | 13.4 | 14.2 |

*1 See “Non-GAAP Financial Measures” on page 33 for more information regarding these ratios.*

Our regulatory tier 1 risk-based capital and total risk-based capital was $6.8 billion and $7.9 billion at September 30, 2022, compared with $6.5 billion and $7.7 billion, respectively, at December 31, 2021. See the “Supervision and Regulation” section and Note 15 of our 2021 Form 10-K for more information about our compliance with the Basel III capital requirements.

### NON-GAAP FINANCIAL MEASURES

This Form 10-Q presents non-GAAP financial measures, in addition to generally accepted accounting principles (“GAAP”) financial measures, to provide investors with additional information. The adjustments to reconcile from the applicable GAAP financial measures to the non-GAAP financial measures are presented in the following schedules. We consider these adjustments to be relevant to ongoing operating results and provide a meaningful basis for period-to-period comparisons. We use these non-GAAP financial measures to assess our performance, financial position, and for presentations of our performance to investors. We believe that presenting these non-GAAP financial measures permits investors to assess our performance on the same basis as that applied by our management and the financial services industry.

Non-GAAP financial measures have inherent limitations and are not necessarily comparable to similar financial measures that may be presented by other financial services companies. Although non-GAAP financial measures are frequently used by stakeholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.

### Tangible Common Equity and Related Measures

Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets and their related amortization. We believe these non-GAAP measures provide useful information about our use of shareholders’ equity and provide a basis for evaluating the performance of a business more consistently, whether acquired or developed internally.

### RETURN ON AVERAGE TANGIBLE COMMON EQUITY (NON-GAAP)

*(Dollar amounts in millions)*

|  |  | Three Months Ended September 30, 2022 | June 30, 2022 | September 30, 2021 |
| --- | --- | ---: | ---: | ---: |
| Net earnings applicable to common shareholders, net of tax | (a) | $211 | $195 | $234 |
| Average common equity (GAAP) |  | $5,303 | $5,582 | $7,569 |
| Average goodwill and intangibles |  | (1,021) | (1,015) | (1,015) |
| Average tangible common equity (non-GAAP) | (b) | $4,282 | $4,567 | $6,554 |
| Number of days in quarter | (c) | 92 | 91 | 92 |
| Number of days in year | (d) | 365 | 365 | 365 |
| Return on average tangible common equity (non-GAAP) | (a/b/c)\*d | 19.5% | 17.1% | 14.2% |

### TANGIBLE EQUITY RATIO, TANGIBLE COMMON EQUITY RATIO, AND TANGIBLE BOOK VALUE PER COMMON SHARE (ALL NON-GAAP MEASURES)

*(Dollar amounts in millions, except per share amounts)*

|  |  | September 30, 2022 | June 30, 2022 | September 30, 2021 |
| --- | --- | ---: | ---: | ---: |
| Total shareholders’ equity (GAAP) |  | $4,696 | $5,632 | $7,774 |
| Goodwill and intangibles |  | (1,034) | (1,015) | (1,015) |
| Tangible equity (non-GAAP) | (a) | 3,662 | 4,617 | 6,759 |
| Preferred stock |  | (440) | (440) | (440) |
| Tangible common equity (non-GAAP) | (b) | $3,222 | $4,177 | $6,319 |
| Total assets (GAAP) |  | $88,474 | $87,784 | $88,306 |
| Goodwill and intangibles |  | (1,034) | (1,015) | (1,015) |
| Tangible assets (non-GAAP) | (c) | $87,440 | $86,769 | $87,291 |
| Common shares outstanding (thousands) | (d) | 149,611 | 150,471 | 156,530 |
| Tangible equity ratio (non-GAAP) | (a/c) | 4.2% | 5.3% | 7.7% |
| Tangible common equity ratio (non-GAAP) | (b/c) | 3.7% | 4.8% | 7.2% |
| Tangible book value per common share (non-GAAP) | (b/d) | $21.54 | $27.76 | $40.37 |

34

### 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, which we believe allow for more consistent comparability across periods. Adjusted noninterest expense provides a measure as to how we are managing our expenses; adjusted pre-provision net revenue enables management and others to assess our ability to generate capital. Taxable-equivalent net interest income allows us to assess the comparability of revenue arising from both taxable and tax-exempt sources.

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

*(Dollar amounts in millions)*

|  |  | Three Months Ended September 30, 2022 | June 30, 2022 | September 30, 2021 | Nine Months Ended September 30, 2022 | September 30, 2021 | Year Ended December 31, 2021 |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Noninterest expense (GAAP) | (a) | $479 | $464 | $429 | $1,407 | $1,292 | $1,741 |
| Adjustments: |  |  |  |  |  |  |  |
| Severance costs |  | — | 1 | 1 | 1 | 1 | 1 |
| Other real estate expense, net |  | — | — | — | 1 | — | — |
| Amortization of core deposit and other intangibles |  | 1 | — | — | 1 | — | 1 |
| Pension termination-related (income) expense 1 |  | — | — | — | — | (5) | (5) |
| SBIC investment success fee accrual 2 |  | 1 | — | (4) | — | 5 | 7 |
| Total adjustments | (b) | 2 | 1 | (3) | 3 | 1 | 4 |
| Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $477 | $463 | $432 | $1,404 | $1,291 | $1,737 |
| Net interest income (GAAP) | (d) | $663 | $593 | $555 | $1,800 | $1,655 | $2,208 |
| Fully taxable-equivalent adjustments | (e) | 10 | 9 | 7 | 27 | 22 | 32 |
| Taxable-equivalent net interest income (non-GAAP) | (d+e)=f | 673 | 602 | 562 | 1,827 | 1,677 | 2,240 |
| Noninterest income (GAAP) | g | 165 | 172 | 139 | 479 | 513 | 703 |
| Combined income (non-GAAP) | (f+g)=(h) | 838 | 774 | 701 | 2,306 | 2,190 | 2,943 |
| Adjustments: |  |  |  |  |  |  |  |
| Fair value and nonhedge derivative gains |  | 4 | 10 | 2 | 20 | 15 | 14 |
| Securities gains (losses), net 2 |  | 6 | 1 | (23) | (10) | 51 | 71 |
| Total adjustments 3 | (i) | 10 | 11 | (21) | 10 | 66 | 85 |
| Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $828 | $763 | $722 | $2,296 | $2,124 | $2,858 |
| Pre-provision net revenue (non-GAAP) | (h)-(a) | $359 | $310 | $272 | $899 | $898 | $1,202 |
| Adjusted PPNR (non-GAAP) | (j)-(c) | 351 | 300 | 290 | 892 | 833 | 1,121 |
| Efficiency ratio (non-GAAP) | (c/j) | 57.6% | 60.7% | 59.8% | 61.1% | 60.8% | 60.8% |

*1 Represents a valuation adjustment related to the termination of our defined benefit pension plan.*

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

*3 Excluding the $6 million equity investment valuation loss recorded in dividends and other income, the efficiency ratio for the three and nine months ended September 30, 2022 would have been 57.2% and 61.0%, respectively.*

## Market risk

As filed, 320 characters.

Interest rate and market risks are among the most significant risks regularly undertaken by us, and they are closely monitored as previously discussed. A discussion regarding our management of interest rate and market risk is included in the section entitled “Interest Rate and Market Risk Management” in this Form 10-Q.

## Controls and procedures

As filed, 598 characters.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures at September 30, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at September 30, 2022. There were no changes in our internal control over financial reporting during the third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,200 characters.

The following risk factors supplement the risk factors disclosed in our 2021 Form 10-K.

### We could be negatively affected by adverse economic conditions

Adverse economic conditions pose significant risks to our business, including our loan and investment portfolios, capital levels, results of operations, and financial condition. Increasing indicators of a slowing economy including negative GDP growth, rising interest rates, increased volatility in the financial markets, and uncertainty related to inflationary pressures, including related changes in monetary policies and actions, can increase these risks and lead to lower demand for loans, higher credit losses, decreased values for our investment securities, and lower fee income, among other negative effects.

***The Russian invasion of Ukraine and the retaliatory measures imposed by the U.S., U.K., European Union, and other countries, and the responses of Russia to such measures, have caused significant disruptions to domestic and foreign economies.***

The Russia and Ukraine conflict has created new risks for global markets, trade, economic conditions, cybersecurity, and similar concerns. For example, the conflict could affect the availability and price of commodities and products, adversely affecting supply chains and increasing inflationary pressures; the value of currencies, interest rates, and other components of financial markets; and lead to increased risks of events such as cyberattacks that could result in severe costs and disruptions to governmental entities and companies and their operations. The impact of the conflict and retaliatory measures is continually evolving and cannot be predicted with certainty. It is likely that the conflict will continue to affect the global political order and global and domestic markets for a substantial period of time, regardless of when the conflict itself ends.

While these events have not materially interrupted our operations, these or future developments resulting from the Russia and Ukraine conflict, such as cyberattacks on the U.S., us, our customers, or our suppliers, could make it difficult to conduct business activities for us, our customers, or our vendors.

Filed Nov 3, 2022.
Source: SEC EDGAR, the filing index for accession 0000109380-22-000184. Last ingested by Listed: Nov 6, 2026, 13:14 ET. No prices; not investment advice.