# Zions Bancorporation, National Association: Form 10-K for the period ended Dec 31, 2022

- Company: [Zions Bancorporation, National Association](/companies/zion.md) (CIK 109380)
- Form: 10-K
- Filed: 2023-02-23
- Accepted by EDGAR: Feb 23, 2023, 15:53 ET
- Period: 2022-12-31
- Accession: 0000109380-23-000074
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/109380/000010938023000074/zions-20221231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/109380/000010938023000074/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 12 months, 2022-01-01 to 2022-12-31 | $495.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 12 months, 2022-01-01 to 2022-12-31 | $185.0m | us-gaap:InterestExpense |
| Income tax | 12 months, 2022-01-01 to 2022-12-31 | $245.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-10-01 to 2022-12-31 | $284.0m | us-gaap:NetIncomeLoss |
| Net income | 12 months, 2022-01-01 to 2022-12-31 | $907.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-10-01 to 2022-12-31 | $1.84 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 12 months, 2022-01-01 to 2022-12-31 | $5.79 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-10-01 to 2022-12-31 | $1.84 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 12 months, 2022-01-01 to 2022-12-31 | $5.80 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2022-01-01 to 2022-12-31 | 150,271,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2022-01-01 to 2022-12-31 | $1.47bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2022-01-01 to 2022-12-31 | $190.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 12 months, 2022-01-01 to 2022-12-31 | $269.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 12 months, 2022-01-01 to 2022-12-31 | $202.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2022-12-31 | $89.55bn | us-gaap:Assets |
| Total liabilities | at 2022-12-31 | $84.65bn | us-gaap:Liabilities |
| Long-term debt | at 2022-12-31 | $651.0m | us-gaap:LongTermDebt |
| Short-term borrowings | at 2022-12-31 | $10.42bn | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2022-12-31 | $4.89bn | us-gaap:StockholdersEquity |

## Business

As filed, 29,883 characters.

### DESCRIPTION OF BUSINESS

Zions Bancorporation, National Association (“Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”) is a bank headquartered in Salt Lake City, Utah with annual net revenue (net interest income and noninterest income) of $3.2 billion in 2022, and total assets of approximately $90 billion at December 31, 2022. We provide a wide range of banking products and related services, primarily in the states of Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. We had more than one million customers at year- end 2022, served by 416 branches and various online, mobile, and digital offerings. We had 9,989 full-time equivalent employees at December 31, 2022.

We conduct our operations primarily through seven separately managed bank divisions, which we refer to as “affiliates,” or “affiliate banks,” each with its own local branding and management team. These affiliate banks comprise our primary business segments as referred to throughout this document. We emphasize local authority, responsibility, pricing, and customization of certain products that are designed to maximize customer satisfaction and strengthen community relations. Our affiliate banks are supported by an enterprise operating segment (referred to as the “Other” segment) that provides governance and risk management, allocates capital, establishes strategic objectives, and includes centralized technology, back-office functions, and certain lines of business not operated through our affiliate banks. For further information about our segments, see “Business Segment Results” on page 38 in Management's Discussion and Analysis (“MD&A”) and Note 22 of the Notes to Consolidated Financial Statements.

We focus on serving our customers and communities. Our experienced bankers develop long-lasting relationships with our customers by providing competitive products and award-winning service. Building and sustaining these relationships is essential to understanding and meeting our customers’ needs.

### PRODUCTS AND SERVICES

Some of the products and services we provide include:

- **Commercial and small business banking.** We serve a wide range of commercial customers, generally small- and medium-sized businesses. Products and services within our commercial business banking include:
- Commercial and industrial lending and leasing
- Municipal and public finance services
- Cash management services
- Commercial card and merchant processing services
- Capital markets, syndication, and foreign exchange services
- **Commercial real estate lending.** We provide lending products secured by commercial real estate to borrowers that include:
- Owner-occupied, construction and land development, and term financing
- Residential development financing
- **Retail banking.** We have a strong retail banking business with quality products and highly competitive online and mobile offerings. Our retail banking products and services include:
- Residential mortgages
- Home equity lines of credit
- Personal lines of credit and installment consumer loans
- Depository account services
- Consumer cards
- Personal trust services
- **Wealth management.** We offer various wealth management solutions to customers. Our planning-driven offerings, combined with high-touch service and sophisticated asset management capabilities, have resulted in continued growth in assets under management. Additional offerings to our wealth management customers include:
- Investment management services
- Fiduciary and estate services
- Advanced business succession and estate planning services

### COMPETITION

We operate in a highly competitive environment. Our most direct competition for loans, deposits, and other banking services comes from other commercial banks, credit unions, and financial technology companies (“fintechs”). Some of these financial institutions do not have a physical presence in our market footprint, but solicit business via the internet and other means. We also compete with finance companies, mutual fund companies, insurance companies, brokerage firms, securities dealers, investment banking companies, other nontraditional lending and banking companies, and a variety of other types of companies. Some of our competitors may have fewer regulatory constraints, and some have lower cost structures or tax burdens.

Our key differentiators include the quality of service delivered, our local community knowledge, convenience of branch and office locations, mobile and online banking functionality and other delivery methods, a wide range of products and services offered, and the overall relationship with our customers. We strive to compete effectively in all of these areas to remain successful.

### SUPERVISION AND REGULATION

The banking and financial services business in which we engage is highly regulated. Such regulation is intended to promote the stability of banking and financial companies and to protect the interests of customers, depositors, and communities. In some cases, these regulations may not be aligned with, or intended to protect, the interests of our shareholders or creditors. Banking laws and regulations have given financial regulators expanded powers over many aspects of the financial services industry, which have reduced, and may continue to reduce, returns earned by shareholders. Furthermore, changes in applicable laws or regulations, and in their application by regulatory agencies cannot be predicted and may have a material effect on our business and results.

### General

We are subject to the provisions of the National Bank Act and other statutes governing national banks, as well as the rules and regulations of the Office of the Comptroller of the Currency (“OCC”), the Consumer Financial Protection Bureau (“CFPB”), and the Federal Deposit Insurance Corporation (“FDIC”). We, as well as some of our subsidiaries, are also subject to regulation by other federal and state agencies. These regulatory agencies may exert considerable influence over our activities through their supervisory and examination roles. Our brokerage and investment advisory subsidiaries are regulated by the Securities and Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”), and state securities regulators.

### The National Bank Act

Our corporate affairs are governed by the National Bank Act, and related regulations are administered by the OCC. With respect to securities matters, we are not subject to the Securities Act, but are subject to OCC regulations governing securities offerings. Our common stock and certain other securities are registered under the Exchange Act, which vests the OCC with the power to administer and enforce certain sections of the Exchange Act applicable to national banks, though we continue to make filings required by the Exchange Act with the SEC as a voluntary filer. These statutory and regulatory frameworks are not as well-developed as the corporate and securities law frameworks applicable to many other publicly held companies.

The National Bank Act provides that under certain circumstances the common stock of a national bank is assessable, i.e., holders may be subject to a levy for more funds if so determined by the OCC. The OCC has confirmed that under the applicable provisions of the National Bank Act, assessability is limited to the par value of a national bank’s stock. Our common stock has a par value of $0.001. In addition, according to the OCC, it has not exercised its authority to levy assessments since 1933 and views the assessability authority as a mechanism for addressing capital deficiency that has long been overtaken by developments in statute and regulation, including supervisory and enforcement authorities requiring an institution to maintain capital at a particular level.

### Capital Standards – Basel Framework

At December 31, 2022, we exceeded all capital adequacy requirements under the Basel III capital rules, which include certain risk-based capital and leverage ratio requirements prescribed by the OCC. The Basel III capital rules define the components of capital and other factors, such as risk weights, affecting banking institutions’ regulatory capital ratios.

The Basel III capital rules require us to maintain certain minimum capital ratios, as well as a 2.5% “capital conservation buffer,” which is designed to absorb losses during periods of economic stress, composed entirely of common equity Tier 1 (“CET1”), and in excess of the minimum risk-based capital ratios. The following schedule presents minimum capital ratio and capital conservation buffer requirements, compared with our capital ratios at December 31, 2022.

#### Schedule 1

### MINIMUM CAPITAL RATIO AND CAPITAL CONSERVATION BUFFER REQUIREMENTS

|  | December 31, 2022 Minimum capital requirement | Capital conservation buffer | Minimum capital ratio requirement with capital conservation buffer | Current capital ratio |
| --- | ---: | ---: | ---: | ---: |
| CET1 to risk-weighted assets | 4.5% | 2.5% | 7.0% | 9.8% |
| Tier 1 capital (i.e., CET1 plus additional Tier 1 capital) to risk-weighted assets | 6.0 | 2.5 | 8.5 | 10.5 |
| Total capital (i.e., Tier 1 capital plus Tier 2 capital) to risk-weighted assets | 8.0 | 2.5 | 10.5 | 12.2 |
| Tier 1 capital to average consolidated assets (known as the “Tier 1 leverage ratio”) | 4.0 | N/A | 4.0 | 7.7 |

Financial institutions with a ratio of CET1 to risk-weighted assets above the minimum, but below the capital conservation buffer, face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The severity of the constraint depends on the amount of the shortfall and the institution’s “eligible retained income,” which is defined as four quarters of trailing net income, net of distributions and associated tax effects not already reflected in net income. For information about our capital ratios, see “Capital Management” on page 65 in MD&A.

### Capital Planning and Stress Testing

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. Our recent internal stress test included hypothetical scenarios that reflected (1) high inflation, (2) increased losses on commercial loans due to inflation and supply chain disruptions, (3) declining commercial property values, (4) increased losses on consumer loans due to falling home prices, (5) rising unemployment, and (6) other current economic, financial, and social disruptions. The results of our stress test indicated that we would maintain capital ratios in excess of regulatory minimum and capital conservation buffer requirements throughout the nine-quarter horizon for the hypothetical stress test. Regulations promulgated under the Dodd-Frank Act require many banks to adhere to an annual Comprehensive Capital Analysis and Review (“CCAR”) process and stress testing administered by the Federal Reserve Board (“FRB”). We are not regulated by the FRB and therefore are not subject to this process. However, we use the FRB’s CCAR process, including published economic scenarios, to inform our stress testing activities.

### Liquidity

We manage liquidity in accordance with Basel III liquidity requirements, and we utilize internal liquidity stress tests as our primary tool for establishing and managing liquidity guidelines including, but not limited to, holdings of investment securities and other liquid assets, levels of readily available contingency funding, concentrations of funding sources, and the maturity profile of liabilities. During the recent pandemic, our liquidity profile benefited from a significant influx of deposits, which was impacted by certain fiscal and monetary policy decisions. In 2022, with the withdrawal of such measures by the federal government, our deposit levels decreased; however, our liquidity profile remained above regulatory and internal Bank limits. We continue to actively manage our deposit base and associated deposit costs in response to the rising interest rate environment.

### Financial Privacy and Cybersecurity

The federal banking regulators have enacted rules that limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to unaffiliated third parties, including provisions of the Gramm-Leach-Bliley Act, which require financial institutions to disclose privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to an unaffiliated third party. These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications. Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. Federal law makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by fraudulent or deceptive means.

State regulators have been increasingly active in implementing privacy and cybersecurity standards and regulations. During the past several years, a growing number of states, including those in which we conduct business, have enacted, or are considering enacting, regulations granting consumers enhanced privacy rights and control over personal information, establishing or modifying data breach notification requirements, and requiring certain financial institutions to implement detailed and prescriptive cybersecurity programs. Data and cybersecurity laws and regulations are evolving rapidly and remain a focus of state and federal regulators. For example, in 2022, the SEC proposed new cybersecurity disclosure rules for public companies. If the proposed rules are adopted, they may require changes in the way such companies disclose material cybersecurity events. These evolving laws and rules will continue to have an impact on our risk management practices.

### Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) requires each federal banking agency to take prompt corrective action to resolve identified problems of insured depository institutions, including, but not limited to, those that fall below one or more prescribed minimum capital ratios. Pursuant to FDICIA, the FDIC promulgated regulations defining the following five categories in which an insured depository institution will be placed, based on the level of its capital ratios: well-capitalized, adequately capitalized, under-capitalized, significantly under-capitalized, and critically under-capitalized.

Under the prompt corrective action provisions of FDICIA as modified by the Basel III capital rules, an insured depository institution will generally be classified as well-capitalized if it has a CET1 ratio of at least 6.5%, a Tier 1 risk-based capital ratio of at least 8%, a total risk-based capital ratio of at least 10%, and a Tier 1 leverage ratio of at least 5%. An insured depository institution will generally be classified as under-capitalized if it has a CET1 ratio less than 4.5%, a Tier 1 risk-based capital ratio less than 6%, a total risk-based capital ratio less than 8%, and a Tier 1 leverage ratio less than 4%.

An institution that is classified as well-capitalized, adequately capitalized, or under-capitalized, may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such treatment. At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, interest rates paid on deposits, the acceptance of brokered deposits, and restrictions or prohibitions on the payment of dividends. Furthermore, if a bank is classified in one of the under-capitalized categories, it is required to submit a capital restoration plan to the federal banking regulator.

### Other Regulations

We are subject to a wide range of other requirements and restrictions contained in both federal and state laws. These regulations include, but are not limited to, the following:

- Limitations on dividends payable to shareholders. Our ability to pay dividends on both our common and preferred stock is subject to regulatory restrictions. See Note 15 of the Notes to Consolidated Financial Statements for additional information.
- Safety and soundness standards prescribed in the FDICIA, including standards related to internal controls, information systems, internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, as well as other operational and management standards deemed appropriate by the federal banking agencies.
- Requirements for approval of acquisitions and restrictions on other activities. The National Bank Act requires regulatory and shareholder approval of all mergers between a national bank and another national or state bank and does not allow for the direct merger into a national bank of an unaffiliated nonbank. See discussion under “Risk Factors.” Other laws and regulations governing national banks contain similar provisions concerning acquisitions and activities.
- Limits on interchange fees imposed under the Dodd-Frank Act, including a set of rules requiring that interchange transaction fees for electronic debit transactions be reasonable and proportional to certain costs associated with processing the transactions.
- Limitations on the dollar amount of loans made to a borrower and its affiliates.
- Limitations on transactions with affiliates.
- Restrictions on the nature and amount of any investments and ability to underwrite certain types of securities (e.g., common equity).
- Requirements for opening and closing of branches.
- A number of federal and state consumer protection laws, including fair lending and truth in lending requirements, to provide equal access to credit and to protect consumers in credit transactions. In addition, as a bank with $10 billion or more in assets, we are subject to examination and primary enforcement authority with respect to consumer financial laws by the CFPB, which has broad rule making, supervisory and enforcement powers under various federal consumer financial protection laws.
- Community Reinvestment Act (“CRA”) requirements. The CRA requires banks to help serve the credit needs in their communities, including providing credit to low- and moderate-income individuals. If we fail to adequately serve our communities, penalties may be imposed including denials of applications to add branches, relocate, add subsidiaries and affiliates, and merge with or purchase other financial institutions.
- Requirements regarding the time, manner, and form of compensation given to key executives and other personnel receiving incentive compensation, including requirements related to the SEC’s 2022 rule on pay versus performance disclosures. These restrictions include documentation and governance, deferral, risk-balancing, and clawback requirements. Any deficiencies in compensation practices may be incorporated into supervisory ratings, which can affect our ability to make acquisitions or engage in certain other activities, or could result in regulatory enforcement actions.
- Anti-money laundering regulations. The Bank Secrecy Act, Title III of the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”), and other federal laws require financial institutions to assist United States (“U.S.”) government agencies in detecting and preventing money laundering and other illegal acts by maintaining policies, procedures and controls designed to detect and report money laundering, terrorist financing, and other suspicious activity.

We are also subject to the Sarbanes-Oxley Act of 2002, certain provisions of the Dodd-Frank Act, and other federal and state laws and regulations which address, among other issues, corporate governance, auditing and accounting, internal controls over financial reporting, and enhanced and timely disclosure of corporate information.

Environmental, social, and governance (“ESG”) standards and related concerns, including those related to global climate change, continue to evolve and have become more prominent in recent years. We are closely monitoring developments in standards published by ESG interest groups and organizations, as well as proposed regulatory initiatives and expectations relating to ESG issues. Although we believe the way we do business has been and is consistent with many of these standards and expectations, our ongoing monitoring enables us to enhance our business practices by incorporating ESG recommendations that we believe will benefit our investors, customers, employees, and communities. In addition to proposed and evolving rulemaking by federal regulators, such as the SEC’s 2022 proposed rule on climate-related disclosures, many states have adopted, or are considering, laws that address ESG issues. These laws may include provisions that conflict with other state and federal regulations and may increase our costs or limit our ability to conduct business in certain jurisdictions. We publish an annual Corporate Responsibility Report that provides a summary of how we address ESG issues. The report is available on our website.

### Corporate Governance

Our Board of Directors (“Board”) has overseen management’s establishment of a comprehensive system of corporate governance and risk management practices. This system includes frameworks, policies, and guidelines such as the following:

- Corporate Governance Guidelines;
- A Code of Business Conduct and Ethics for Employees;
- A Director's Code of Conduct;
- A Risk Management Framework;
- A Related Party Transaction Policy;
- A Compensation Clawback Policy;
- Stock Ownership and Retention Guidelines;
- An Insider Trading Policy, including provisions prohibiting hedging and placing restrictions on the pledging of bank stock by insiders; and
- Charters for our Executive, Audit, Risk Oversight, Compensation, and Nominating and Corporate Governance Committees.

More information on our corporate governance practices is available on our website at zionsbancorporation.com. Our website is not part of this Form 10-K.

### HUMAN CAPITAL MANAGEMENT

We are proud of our employees who bring their unique, diverse talents to work each day. We are committed to identifying, recognizing, and creating fulfilling opportunities for our employees, and rewarding them for their contributions to our success.

The recent COVID-19 pandemic had a significant impact on how and where we work. We were successful in transitioning most of our employees to working remotely, and as the pandemic subsided and related treatments improved, we returned to more in-person collaboration while supporting certain flexible and remote work arrangements. We believe that in-person exchange of ideas and viewpoints, in both formal and informal settings, improves productivity and supports a strong corporate culture.

During 2022, we continued to enhance certain benefits for our employees to adapt to the changing practices of the labor market. Recent changes include more flexibility with paid time off, more options with health care plans, and greater access to mental health benefits.

We had 9,989 full-time equivalent employees December 31, 2022. The following schedule presents certain demographic attributes of our employees.

#### Schedule 2

| Employee Roles | December 31, 2022 Women | People of Color | Disabled | Veterans |
| --- | ---: | ---: | ---: | ---: |
| Management | 52% | 28% | 12% | 2% |
| Non-management | 61% | 39% | 12% | 2% |
| Overall | 59% | 37% | 12% | 2% |

The following objectives and initiatives are integral to our human capital management efforts:

### Cultivating a diverse, equitable, and inclusive environment for our employees, our customers, and the communities in which we operate

We believe in an environment where people are respected and valued, and where individual and cultural differences are embraced. We also believe that our performance is stronger when we are able to draw upon the talents and experience of a diverse team of employees.

We use analytics, recruiting outreach efforts, and manager training to reach a diverse, qualified group of potential applicants to secure a high-performing workforce drawn from all segments of society. To identify qualified candidates, our recruiting team partners with community organizations, schools, and governmental entities that support marginalized and underserved communities in our footprint. Our annual Corporate Responsibility Report, which is published on our website, highlights several achievements in this area, such as our Banker Development Program, which attracts and advances undergraduates and early career professionals.

We have instituted enterprise-wide and affiliate diversity, equity, and inclusion councils; employee business forums; regional inclusion champions; mental health initiatives; and a broad range of employee and community events. Throughout the organization, employee business resource groups foster a sense of community and enable greater connectivity and support among employees through forum meetings and discussions, which are open to all employees and offer networking and initiatives that support our commitment to diversity, both internally and externally.

### Attracting, developing, and retaining talent for long-term success

We are committed to (1) attracting, developing, and retaining the most qualified individuals who reflect the diversity of the available workforce and markets in which we operate, (2) helping our employees grow in their careers, and (3) actively building a pipeline of talent for future leadership opportunities. As we attract and hire talent, we proactively consider the demand for competencies that will be needed within the workforce of the future.

We offer more than 2,000 virtual, in-person, expert-led, and pre-recorded or self-paced learning options for employees to create custom learning plans for personal and professional development. In 2022, we hosted more than 1,000 training experiences to support employees, build new skills, or to assist in career advancement. We offer new manager programs, tuition reimbursement, education sponsorship opportunities, job shadowing, coaching, and formal mentoring programs. Our talent development program and individual development plans focus on education, experience, and exposure to help create well-rounded and successful employees.

We are also mindful of the increasing competition for talent in the labor market. We experienced greater challenges in the recent past in filling certain job openings relative to when labor market conditions were more balanced, but we began to see improvement in 2022. We continue to analyze relevant metrics related to employee recruiting and turnover, which has and will continue to impact wages and flexible work arrangements.

### Recognizing, engaging, and rewarding our employees

Our comprehensive rewards and recognition programs are designed to reward high performance, improve retention, and enhance the employee experience through recognition and growth opportunities. We provide meaningful upside opportunities for those who take accountability for business objectives that help us deliver superior results while reducing risk.

We routinely assess pay equity among employees across our organization by analyzing potential disparities in pay based on gender, minority status, and other factors. These actions help us compensate employees fairly. On a biennial basis, we enlist the services of an independent third party to review our pay equity. Results of the most recent review revealed that after adjusting for relevant variables such as education, experience, performance, and geography, there were no meaningful differences in pay levels among men, women, and people of color. We remain committed to fair and equitable compensation for all our employees.

Our employees provide regular feedback through enterprise outreach and engagement forums, which include quarterly leadership calls, biannual employee opinion surveys, and targeted focus groups. These forums for employee input continue to help strengthen working relationships with managers, improve clarity of organizational purpose and goals, and reinforce our Guiding Principles and Code of Business Conduct and Ethics.

We value work-life balance and strive to create a work environment that supports our employees with mental, physical, social, and financial wellness. Some of our key benefits include the following:

- Corporate match for our 401(k) plan of 4.5% of an employee’s salary and incentive compensation;
- Annual profit-sharing contributions;
- Health care plan options including behavioral health, wellness, and autism spectrum disorder services;
- Expanded mental health coverage, including coaching and clinical therapy sessions;
- Preventive prescription drug coverage not subject to deductibles;
- Paid parental leave program;
- Adoption assistance program; and
- Paid time off for various community service activities and other volunteer opportunities.

## Risk factors

As filed, 39,961 characters.

We generate revenue and grow our businesses by taking prudent and appropriately priced and managed risks. These risks are outlined in our Risk Management Framework. Our Board has established an Audit Committee, a Compensation Committee, a Risk Oversight Committee (“ROC”), and appointed an Enterprise Risk Management Committee (“ERMC”) to oversee and implement the Risk Management Framework. The ERMC is comprised of senior management and is chaired by the Chief Risk Officer. These committees monitor the following risk areas: credit risk, interest rate and market risk; liquidity risk; strategic and business risk; operational risk; technology risk; cybersecurity risk; capital/financial reporting risk; legal/compliance risk (including regulatory risk); and reputational risk, as outlined in our risk taxonomy. We have developed policies, procedures, and controls designed to address these risks, but there can be no certainty that our actions will be effective to prevent or limit the effects of these risks on our business or performance. Although not comprehensive, risk factors that are material to us are described below.

### CREDIT RISK

***Credit quality has adversely affected us in the past and may adversely affect us in the future.***

Credit risk is one of our most significant risks. Rising interest rates, increased market volatility, or a decline in the strength of the U.S. economy in general or the local economies in which we conduct operations could result in, among other things, deterioration in credit quality and reduced demand for credit, including a resultant adverse effect on the income from our loan and investment portfolios, an increase in charge-offs, and an increase in the allowance for credit losses (“ACL”).

***We have concentration of risk from counterparties and risk in our loan portfolio, including, but not limited to, loans secured by real estate, oil and gas-related lending, and leveraged and enterprise value lending, which may have unique risk characteristics that may adversely affect our results.***

Concentrations of risk from counterparties could adversely affect us, and risk across our loan and investment securities portfolios could pose significant additional credit risk to us due to similar exposures between the two asset types. Counterparty risk arising from derivative or securities financing transactions could also pose additional credit risk.

We engage in commercial real estate (“CRE”) term and construction lending, primarily in our Western states footprint. We also engage in oil and gas-related lending, primarily in Texas, and we provide leveraged and enterprise value loans across our entire footprint. These loan types may be subject to specific risks, including governmental and social responses to environmental issues and climate change, volatility, and potential significant and prolonged declines in collateral-values and activity levels. We may have other unidentified risks in our loan portfolio.

***Our business is highly correlated to local economic conditions in a specific geographic region of the U.S.***

We provide a wide range of banking products and related services through our local management teams and unique brands in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. At December 31, 2022, loan balances associated with our banking operations in Utah/Idaho, Texas, and California comprised 77%, 71%, and 70% of the commercial, CRE, and consumer lending portfolios, respectively. As a result of this geographic concentration, our financial performance depends largely upon economic conditions in these market areas. Accordingly, deterioration in economic conditions, such as that caused by climate change or natural disasters, may specifically affect these states, and could result in higher credit losses and significantly affect our consolidated operations and financial results.

For information about our lending exposure to various industries and how we manage credit risk, see “Credit Risk Management” on page 49 in MD&A.

### INTEREST RATE AND MARKET RISK

### 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. A slowing economy and uncertainty related to inflationary pressures, including related changes in monetary policies and actions, rising interest rates, and decreased values of our fixed-rate assets, can increase these risks and lead to lower demand for loans, higher credit losses, and lower fee income, among other negative effects.

***Failure to effectively manage our interest rate risk could adversely affect our results.***

Net interest income is the largest component of our revenue. Interest rate risk is managed by our Asset Liability Management Committee. Factors beyond our control can significantly influence the interest rate environment and increase our risk. These factors include changes in the prevailing interest rate environment, competitive pricing pressures for our loans and deposits, adverse shifts in the mix of deposits and other funding sources, and volatile market interest rates resulting from general economic conditions and the policies of governmental and regulatory agencies, in particular the FRB. Most components of our balance sheet are sensitive to rising and falling rates, and mismatches in rate sensitivity between assets and liabilities may result in unanticipated changes in both asset and liability values and related income and expense.

***Interest rates on our financial instruments are subject to change based on developments related to LIBOR, which could adversely impact our revenue, expenses, and value of those financial instruments.***

The London Interbank Offered Rate (“LIBOR”) is being phased out globally, and banks are required to migrate to alternative reference rates no later than June 2023. The market transition away from LIBOR could have a range of adverse effects on our business, financial condition, and results of operations. In particular, the transition could (1) adversely affect the interest rates paid or received on, and the value of, our floating-rate obligations, loans, deposits, derivatives, and other financial instruments indexed to LIBOR; and (2) result in disputes, litigation or other actions with counterparties regarding the interpretation and enforceability of certain fallback language in financial instruments.

For information about how we manage the transition from LIBOR, interest rate risk, and market risk, see “Interest Rate and Market Risk Management” on page 56 in MD&A.

### LIQUIDITY RISK

***Changes in levels and sources of liquidity and capital and liquidity requirements may limit our operations and potential growth.***

Our primary source of liquidity is deposits from our customers, which may be impacted by market-related forces such as increased competition for these deposits and a variety of other factors. The Federal Reserve's tightened monetary policy may contribute to a decline in the value of our fixed-rate loans and investment securities that are pledged as collateral to support short-term borrowings, and other economic conditions may also affect our liquidity and efforts to manage associated risks. The Federal Home Loan Bank (“FHLB”) system and Federal Reserve have been, and continue to be, a significant source of additional liquidity and funding. Changes in FHLB funding programs could adversely affect our liquidity and management of associated risks.

***We and the holders of our securities could be adversely affected by unfavorable rating actions from rating agencies.***

We access capital markets to augment our funding. This access is affected by the ratings assigned to us by rating agencies. The rates we pay on our securities are also influenced by, among other things, the credit ratings that we and our securities receive from recognized rating agencies. Ratings downgrades to us or our securities could increase our costs or otherwise have a negative effect on our liquidity position, financial condition, or the market prices of our securities.

For information about how we manage liquidity risk, see “Liquidity Risk Management” on page 60 in MD&A.

### STRATEGIC AND BUSINESS RISK

***Problems encountered by other financial institutions could adversely affect financial markets generally and have indirect adverse effects on us.***

The soundness and stability of many financial institutions may be closely interrelated as a result of credit, trading, clearing, or other relationships between the institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms, and exchanges, with which we interact on a daily basis, and therefore, could adversely affect us.

***We may not be able to hire or retain qualified personnel or effectively promote our corporate culture, and recruiting and compensation costs may increase as a result of changes in the workplace, marketplace, economy, and regulatory environment.***

Our ability to execute our strategy, provide services, and remain competitive may suffer if we are unable to recruit or retain qualified people, or if the costs of employee compensation and benefits increase substantially. Bank regulatory agencies have published regulations and guidance that limit the manner and amount of compensation that banking organizations provide to employees. These regulations and guidance may adversely affect our ability to attract and retain key personnel. Some of these limitations may not apply to institutions with which we compete for talent, in particular, as we are more frequently competing for personnel with financial technology providers and other entities that may not have the same limitations on compensation as we do. If we were to suffer such adverse effects with respect to our employees, our business, financial condition and results of operations could be adversely or materially affected.

Our ability to retain talent may also be adversely affected by changes in the economy and workforce trends, priorities, migration, modes of delivery and other considerations, such as the increased ability of employees to work from anywhere in many industries. This growth in remote work and other changing priorities and benefits has led to an increase in compensation and related expenses and workplace challenges, such as fewer opportunities for face-to-face interactions, training and mentoring new employees, promoting a cohesive corporate culture, and increased competition for experienced labor, especially in high-demand and highly skilled categories. Inflationary pressures have also increased our compensation costs and are likely to continue to do so in the future.

***We have made, and are continuing to make, significant changes that include, among other things, organizational restructurings, efficiency initiatives, and replacement or upgrades of technology systems to improve our control environment and operating efficiency. The ultimate success and completion of these changes, and their effects on us, may vary significantly from intended results, which could materially adversely affect us.***

We continue to invest in a variety of strategic projects designed to improve our products and services and to simplify how we do business. These initiatives and other significant changes continue to be implemented and are in various stages of completion. By their very nature, projections of duration, cost, expected savings, expected efficiencies, and related items are subject to change and significant variability. There can be no certainty that we will achieve the expected benefits or other intended results associated with these projects.

### OPERATIONAL RISK

***Our operations could be disrupted by the effects of our new and ongoing projects and initiatives.***

We may encounter significant operational disruption arising from our numerous projects and initiatives. These may include significant time delays, cost overruns, loss of key people, technological problems, and processing failures. We may also experience operational disruptions due to capacity constraints, service level failures and inadequate performance, the level of concentration, and certain replacement costs. Any or all of these issues could result in disruptions to our systems, processes, control environment, procedures, employees, and customers. The ultimate effect of any significant disruption to our business could subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability, any of which could materially affect us, including our control environment, operating efficiency, and results of operations.

### We could be adversely affected by failure in our internal controls.

Because of their inherent limitations, our internal controls may not prevent or detect the risk of misstatements in our financial statements, or capital arising from inadequate or failed internal processes or systems, human errors or misconduct, or other adverse external events. A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators, and investors may have of us and adversely affect our business and our stock price.

### We could be adversely affected by internal and external fraud schemes.

Attempts to commit fraud both internally and externally are becoming increasingly more sophisticated and may increase in an adverse economic environment. These attempts may go undetected by the systems and procedures that we have in place to monitor our operations. We have experienced losses in the past as a result of these schemes and may not be able to identify, prevent, or otherwise mitigate all instances of fraud in the future that have the potential to result in material losses.

***Climate-related and other catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, floods, prolonged drought, and pandemics may adversely affect us, our customers, and the general economy, financial and capital markets, and specific industries.***

The occurrence of pandemics, natural disasters, and other climate-related or catastrophic events could materially and adversely affect our operations and financial results. We have significant operations and customers in Utah, Texas, California, and other regions where natural and other disasters have occurred, and are likely to continue to occur. These regions are known for being vulnerable to natural disasters and other risks, such as hurricanes, tornadoes, earthquakes, fires, floods, prolonged droughts, and other weather-related events, some of which may be exacerbated by global climate change and become more frequent and intense. These types of catastrophic events at times have disrupted the local economy, our business and customers, and have posed physical risks to our property. In addition, catastrophic events occurring in other regions of the world may have an impact on us and our customers.

***We use models in the management of the Bank. There is risk that these models are inaccurate in various ways, which can cause us to make suboptimal decisions.***

We rely on models in the management of the Bank. For example, we use models to inform our estimate of the allowance for credit losses, to manage interest rate and liquidity risk, to project stress losses in various segments of our loan and investment portfolios, and to project net revenue under stress. Models are inherently imperfect and cannot perfectly predict outcomes. Management decisions based in part on such models, therefore, may be suboptimal.

***We outsource various operations to third-party vendors, which could adversely impact our business and operational performance.***

We rely on various vendors to perform operational activities to conduct our business. Although there are benefits in entering into these relationships, there are risks associated with such activities. Our operational controls and third-party management programs may not provide adequate oversight and control, and inadequate performance by third parties can adversely affect our ability to deliver products and services to our customers and conduct our business. Replacing or finding alternatives for vendors who do not perform adequately can be difficult and costly, and may also adversely impact our customers and other operations, particularly when circumstances require us to make changes under tight time constraints. Many of our vendors have experienced adverse effects upon operations, supply chains, personnel, and businesses arising from inflationary pressures, wars and geopolitical conflicts, COVID-19, and other events, all of which can impact our operations as well.

For information about how we manage operational risk, see “Operational, Technology, and Cybersecurity Risk Management” on page 63 in MD&A.

### TECHNOLOGY RISK

***We could be adversely affected by our ability to develop, adopt, and implement technology advancements.***

Our ability to remain competitive is increasingly dependent upon our ability to maintain critical technological capabilities, and to identify and develop new, value-added products for existing and future customers. These technological competitive pressures arise from both traditional banking and non-traditional sources. Larger banks may have greater resources and economies of scale attendant to maintaining existing capabilities and developing digital and other technologies. Fintechs and other technology platform companies continue to emerge and compete with traditional financial institutions across a wide variety of products and services. The expansion of blockchain technologies and the potential creation and adoption of central bank digital currencies present similar risks. Our failure to remain technologically competitive could impede our time to market and reduce customer satisfaction, product accessibility, and relevance.

***We could be adversely impacted by system vulnerabilities, failures, or outages impacting operations and customer services such as online and mobile banking.***

We rely on various information technology systems that work together in supporting internal operations and customer services. Vulnerabilities in, or a failure or outage of, one or many of these systems could impact the ability to perform internal operations and provide services to customers, such as online banking, mobile banking, remote deposit capture, treasury and payment services, and other services dependent on system processing. These risks increase as systems and software approach the end of their useful life or require more frequent updates and modifications. We cannot guarantee that such occurrences will not have a significant operational or customer impact.

For information regarding risks associated with the replacement or upgrades of our core technology systems, see “Strategic and Business Risk” on page 14 in Risk Factors. For information about how we manage technology risk, see “Operational, Technology, and Cybersecurity Risk Management” on page 63 in MD&A.

### CYBERSECURITY RISK

***We are subject to a variety of information system failure and cybersecurity risks that could adversely affect our business and financial performance.***

We rely heavily on communications and information systems to conduct our business. We, our customers, and other financial institutions with which we interact, are subject to ongoing, continuous attempts to penetrate key systems by individual hackers, organized criminals, and in some cases, state-sponsored organizations. Information security risks for large financial institutions have increased significantly in recent years, in part because of the proliferation of new technologies, internet connections, and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, activists, and other external third parties.

Third parties, including vendors and suppliers, also present operational and information security risks to us, including security breaches or failures of their own systems. In incidents involving third parties, we may not be informed promptly of any effect on our services or our data, or be able to participate in any investigation, notification, or remediation that occurs as a result. Any such incidents may have a material adverse effect upon our operations, reputation, customers, and services. The possibility of third-party or employee error, failure to follow security procedures, or malfeasance also presents these risks.

As cybersecurity threats continue to evolve, we will be required to expend significant additional resources to continue to modify or enhance our layers of defense or to investigate or remediate any information security vulnerabilities. We, and our third-party vendors, have experienced security breaches due to cyberattacks in the past that have not had material impact to our data, customers, or operations, but there can be no assurance that any such failure, interruption, or significant security breach will not occur in the future, or, if any future occurrences will be adequately addressed. It is impossible to determine the severity or potential effects of these events with any certainty, but any such breach could result in material adverse consequences for us and our customers.

System enhancements and updates may also create risks associated with implementing new systems and integrating them with existing ones. Due to the complexity and interconnectedness of information technology systems, the process of enhancing our layers of defense can itself create a risk of systems disruptions and security issues. In addition, addressing certain information security vulnerabilities, such as hardware-based vulnerabilities, may affect the performance of our information technology systems. The ability of our hardware and software providers to deliver patches and updates to mitigate vulnerabilities and our ability to implement them in a timely manner can introduce additional risks, particularly when a vulnerability is being actively exploited by threat actors. The occurrence of any failure, interruption or security breach of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability.

For information about how we manage cybersecurity risk, see “Operational, Technology, and Cybersecurity Risk Management” on page 63 in MD&A.

### CAPITAL/FINANCIAL REPORTING RISK

***Internal stress testing and capital management, as well as provisions of the National Bank Act and OCC regulations, may limit our ability to increase dividends, repurchase shares of our stock, and access the capital markets.***

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. The stress testing and other applicable regulatory requirements may, among other things, require us to increase our capital levels, limit our dividends or other capital distributions to shareholders, modify our business strategies, or decrease our exposure to various asset classes. Under the National Bank Act and OCC regulations, certain capital transactions, including share repurchases, are subject to the approval of the OCC. These requirements may limit our ability to respond to and take advantage of market developments.

***Economic and other circumstances may require us to raise capital at times or in amounts that are unfavorable to us.***

We maintain certain risk-based and leverage capital ratios, as required by our banking regulators, which can change depending upon general economic conditions, as well as the particular conditions, risk profiles, and our growth plans. Compliance with capital requirements may limit our ability to expand and has required, and may require, us to raise additional capital. These uncertainties and risks, including those created by legislative and regulatory uncertainties, may increase our cost of capital and other financing costs.

***We could be adversely affected by accounting, financial reporting, and regulatory compliance risk.***

We are exposed to accounting, financial reporting, and regulatory compliance risk. Significant estimates, judgments, and interpretations of complex and changing accounting and regulatory policies are required to properly account for the products and services we provide to our customers. Changes in our accounting policies or accounting standards could materially affect how we report our financial results and conditions. The level of regulatory compliance oversight continues to be heightened. Identification, interpretation, and implementation of complex and changing accounting standards, as well as compliance with regulatory requirements, pose an ongoing risk.

### The value of our goodwill may decline in the future.

If the fair value of a reporting unit is determined to be less than its carrying value, we may have to take a charge related to the impairment of our goodwill. Such a charge could result from, among other factors, weakening in the economic environment, a decline in the performance of the reporting unit, or new legislative or regulatory changes not anticipated in management’s expectations.

***We may not be able to fully realize our deferred tax assets, which could adversely affect our operating results and financial performance.***

At December 31, 2022, we had a net deferred tax asset of $1.1 billion. The accounting treatment for realization of deferred tax assets is complex and requires judgment. Our ability to fully realize our deferred tax asset could be reduced in the future if our estimates of future taxable income from our operations, future reversals of existing deferred tax liabilities, or tax planning strategies do not support the realization of our deferred tax asset. Changes in applicable tax laws, regulations, macroeconomic conditions, or market conditions may adversely affect our financial results, and there can be no assurance that we will be able to fully realize our deferred tax assets.

For information about how we manage capital, see “Capital Management” on page 65 in MD&A.

### LEGAL/COMPLIANCE RISK

***Laws and regulations applicable to us and the financial services industry impose significant limitations on our business activities and subject us to increased regulation and additional costs.***

We, and the entire financial services industry, have incurred, and will continue to incur, substantial costs related to personnel, systems, consulting, and other activities in order to comply with banking regulations. See “Supervision and Regulation” on page 6 for further information about the regulations applicable to us and the financial services industry generally.

Regulators, the U.S. Congress, state legislatures, and other governing or consultative bodies continue to enact rules, laws, and policies to regulate the financial services industry and public companies, including laws that are designed to promote, protect, or penalize certain activities or industries and their access to financial services. We are, and may in the future become, subject to these laws by offering our products and services to certain industries or in certain locations. The nature of these laws and regulations and their effect on our future business and performance cannot be predicted.

There can be no assurance that any or all of these regulatory changes or actions will ultimately be enacted. However, if enacted, some of these proposals could adversely affect us by, among other things: impacting after-tax returns earned by financial services firms in general; limiting our ability to grow; increasing FDIC insurance assessments, taxes or fees on our funding or activities; limiting the range of products and services that we could offer; and requiring us to raise capital at inopportune times.

Political developments may also result in substantial changes in tax, international trade, immigration, and other policies. The extent and timing of any such changes are uncertain, as are the potential direct and indirect impacts, whether beneficial or adverse. Regulations and laws may be modified or repealed, and new legislation may be enacted that will affect us and our subsidiaries. The ultimate impact of these proposals cannot be predicted as it is unclear which, if any, may be enacted.

### We could be adversely affected by legal and governmental proceedings.

We are subject to risks associated with legal claims, litigation, and regulatory and other government proceedings. Our exposure to these proceedings has increased and may further increase as a result of stresses on customers, counterparties, and others arising from the past or current economic environments, more frequent claims and actions resulting from fraud schemes perpetrated by or involving our customers, new regulations promulgated under recently enacted statutes, the creation of new examination and enforcement bodies, and enforcement and legal actions against banking organizations. Any such matters may result in material adverse consequences to our results of operations, financial condition or ability to conduct our business, including adverse judgments, settlements, fines, penalties (e.g., civil money penalties under applicable banking laws), injunctions, restrictions on our business activities, or other relief. We maintain insurance coverage to mitigate the financial risk of defense costs, settlements, and awards, but the coverage is subject to deductibles and limits of coverage. Our involvement in any such matters, even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business. In general, the amounts paid by financial institutions in settlement of proceedings or investigations, have been increasing dramatically. This has affected and will continue to adversely affect (1) our ability to obtain insurance coverage for certain claims, (2) our deductible levels, and (3) the cost of premiums associated with our coverage. Consequently, our financial results are subject to greater risk of adverse outcomes from legal claims.

Due to the difficulty in predicting the timing of, and damages or penalties associated with, the resolution of legal claims, it is possible that adverse financial impacts from litigation could occur sporadically and could be significant. In addition, any enforcement matters could impact our supervisory and CRA ratings, which may restrict or limit our activities.

***The corporate and securities laws applicable to us are not as well-developed as those applicable to a state-chartered corporation, which may impact our ability to effect corporate transactions in an efficient and optimal manner.***

Our corporate affairs are governed by the National Bank Act, and related regulations are administered by the OCC. As to securities laws, the OCC maintains its own securities offering framework applicable to national banks and their securities offerings, and our compliance with the Exchange Act is governed and enforced by the OCC.

State corporate codes, including that of Utah, are widely recognized, updated by legislative action from time-to-time, and may be based on and influenced by model statutes. The federal securities law regime established by the Securities Act and the Exchange Act and the SEC’s extensive and well-developed framework thereunder are widely used by public companies. The OCC’s statutory and regulatory frameworks have been used by publicly traded banking organizations relatively rarely and are not as well-developed as the corporate and securities law frameworks applicable to other public corporations. While certain specific risks associated with operating under these frameworks are described below, unless and until these frameworks are further developed and established over time, the uncertainty of how these frameworks might apply to any given corporate or securities matters may prevent us from effecting transactions in an efficient and optimal manner or perhaps at all.

***Differences between the National Bank Act and state law requirements regarding mergers could hinder our ability to execute acquisitions as efficiently and advantageously as bank holding companies or other financial institutions.***

Unlike state corporate law, the National Bank Act requires shareholder approval of all mergers between a national bank and another national or state bank and does not allow for exceptions in the case of various “minor” mergers, such as a parent company’s merger with a subsidiary or an acquirer’s merger with an unaffiliated entity in which the shares issued by the acquirer do not exceed a designated percentage. The National Bank Act and related regulations may also complicate the structuring of certain nonbank acquisitions.

These differences could adversely affect the ability of the Bank and other banks registered under the National Bank Act to efficiently consummate acquisition transactions. In addition, such differences could make us less competitive as a potential acquirer in certain circumstances given that our acquisition proposal may be conditioned on shareholder approval while our competitors’ proposals will not have such a condition.

***We are subject to restrictions on permissible activities that would limit the types of business we may conduct and that may make acquisitions of other financial companies more challenging.***

Under applicable laws and regulations, bank holding companies and banks are generally limited to business activities and investments that are related to banking or are financial in nature. The range of permissible financial activities is set forth in the Gramm-Leach-Bliley Act and is more limited for banks than for bank holding company organizations. The differences relate mainly to insurance underwriting (but not insurance agency activities) and merchant banking (but not broker-dealer and investment advisory activities). The fact that we do not have a bank holding company could make future acquisitions of financial institutions with such operations more challenging.

### REPUTATIONAL RISK

***We are presented with various reputational risk issues that could stem from operational, regulatory, compliance, and legal risks.***

Any of the aforementioned risks may give rise to adverse publicity and other expressions of negative public opinion, increased regulatory scrutiny, and damaged relationships among other reputational risks.

### OTHER RISKS

***The Russian invasion of Ukraine and other geopolitical conflicts, and retaliatory measures imposed by the U.S. and other countries, including the responses to such measures, may cause significant disruptions to domestic and foreign economies and markets.***

The Russia/Ukraine war and other geopolitical conflicts have created new risks for global markets, trade, economic conditions, cybersecurity, and similar concerns. For example, these conflicts 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 these conflicts and retaliatory measures is continually evolving and cannot be predicted with certainty. It is likely that these conflicts will continue to affect the global political order and global and domestic markets for a substantial period of time, regardless of when these conflicts end.

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

***Our business, financial condition, liquidity and results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic.***

The COVID-19 pandemic created economic, financial, and social disruptions that have adversely affected, and are likely to continue to adversely affect, our business, financial condition, credit exposure, and results of operations, including the direct and indirect impact on our employees, customers, communities, counterparties, service providers, other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic. The pandemic and its aftermath are likely to continue to affect consumer confidence and business activity generally, including loan demand, deposit levels, and the market for other financial products or services. Disruptions in supply chains have in some instances adversely affected our ability to procure equipment and materials for our employees and facilities in a timely fashion and may increase our costs for the same. These supply chain disruptions have in some instances adversely affected our vendors and their service level agreements to us and our subsequent delivery to customers. Pressures on the cost and availability of labor have also negatively affected us and many of our customers. The effects of these disruptions are likely to continue for the near term. Additionally, the long-term effects of the pandemic, including the increased interest in remote-work environments, may reduce our need for physical office space while negatively impacting our ability to sell or sublease any excess space.

***ESG-related risk developments could lead or require us to restrict or modify some of our business activities.***

ESG expectations of investors and regulators could, over time, lead us to restrict or modify some of our business practices. In addition, our business practices could be adversely affected by laws and regulations enacted or promulgated by federal, state, and local governments that relate to environmental and social issues. For example, in 2021 and 2022, certain states passed, or considered passing, laws prohibiting financial institutions from restricting the services that they provide to certain types of businesses if the institutions also conduct business with governmental entities in such states. Depending on how these laws are worded and implemented, they could adversely affect our ability to manage risk. These laws and rules related to ESG issues may include provisions that conflict with other state and federal regulations and may increase our costs or limit our ability to conduct business in certain jurisdictions.

Heightened regulatory and social focus on climate change may place additional requirements on public companies, including financial institutions, regarding the measurement, management, and disclosure of climate-related risks and associated lending and investment activities. This may result in higher regulatory, compliance, credit, and reputational risks and costs. In addition, the transition to a lower-carbon economy could subject us to risks through our customers' exposure to volatility in commodity prices and the market for carbon-related products and services.

## Properties

As filed, 437 characters.

At December 31, 2022, we operated 416 branches, of which 277 are owned and 139 are leased. We also lease our headquarters in Salt Lake City, Utah. The annual rentals under long-term leases for leased premises are determined under various formulas and factors, including operating costs, maintenance, and taxes. For additional information regarding leases and rental payments, see Note 8 of the Notes to Consolidated Financial Statements.

## Legal proceedings

As filed, 123 characters.

The information contained in Note 16 of the Notes to Consolidated Financial Statements is incorporated by reference herein.

## Management's discussion and analysis

As filed, 153,881 characters.

### Key Corporate Objectives

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

We focus our efforts and resources to achieve our strategic growth and profitability objectives. This includes providing high-quality products and services and deepening relationships with our commercial, small business, and retail customers. Serving as a trusted partner for our small business and commercial customers and supporting their operational needs affords us a major source of relatively stable, low-cost deposits.

We strive to achieve balanced growth of customers, pre-provision net revenue (“PPNR”), earnings per share (“EPS”), profitability, and shareholder returns. As depicted in the graphic below, we focus on four strategic growth areas: small businesses, commercial businesses, affluent customers, and capital markets.

To facilitate the achievement of our growth and profitability objectives, we invest in the following five key areas, referred to as “strategic enablers”:

- **People and Empowerment —** we invest in training our employees and providing them the tools and resources to build their capabilities, while promoting a diverse, inclusive, and equitable culture.
- **Technology —** we invest in technologies that will make us more efficient and enable us to remain competitive while helping to insulate us from the risks of bank-disrupting technology companies.
- **Operational Excellence —** we invest in and support ongoing improvements in how we safely and securely deliver value to our customers.
- **Risk Management —** we invest in enhanced risk management practices to ensure prudent risk-taking and appropriate oversight.
- **Data and Analytics —** we invest in advanced enterprise data and analytics to support local execution and prudent decision making.

### RESULTS OF OPERATIONS

### Our Financial Performance

This section and other sections provide information about our recent financial performance. For information about our results of operations for 2021 compared with 2020, see the respective sections in MD&A included in our 2021 Form 10-K.

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

Net earnings applicable to common shareholders decreased from 2021, primarily due to an increase in the provision for credit losses. Diluted earnings per share decreased from 2021 as a result of decreased net earnings, the effect of which was partially offset by a 10.0 million decrease in weighted average diluted shares, primarily due to share repurchases. Adjusted PPNR increased from 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, as growth in adjusted revenue outpaced growth in adjusted noninterest expense, resulting in positive operating leverage.

Our financial performance for 2022 relative to the prior year reflected:

- Strong net revenue growth, offset by increases in provision for credit losses and noninterest expense.
- Net interest income increased $312 million, or 14%, notwithstanding a $188 million decrease in interest income from U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans. The increase was 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 3.06%, compared with 2.72%, reflecting higher yields on interest-earning assets and favorable funding costs associated with our noninterest-bearing deposits.
- Solid credit performance, as nonperforming assets decreased $123 million, or 45%, and classified loans decreased $307 million, or 25%. Net loan and lease charge-offs were $39 million, or 0.08% of average loans (ex-PPP) in 2022, compared with net charge-offs of $6 million, or 0.01% of average loans (ex-PPP), in 2021. Despite improvements in credit quality, the provision for credit losses was $122 million in 2022, compared with $(276) million in 2021, reflecting loan growth and deterioration in economic scenarios used for estimating future losses.
- A $39 million, or 7%, increase in customer-related noninterest income, primarily due to increases in commercial account fees, capital markets and foreign exchange fees, and card fees, partially offset by decreases in loan-related fees and retail and business banking fees. Decreases in noncustomer-related

noninterest income were due largely to prior year securities gains in our Small Business Investment Company (“SBIC”) investment portfolio and gains on the sale of certain bank-owned facilities.

- An increase of $137 million, or 8%, in noninterest expense, primarily due to an increase in salaries and benefits expense, which was impacted by inflationary and competitive labor market pressures on wages and benefits, increased incentive compensation accruals arising from improvements in full-year profitability, and increased headcount.
- An increase of $1.4 billion, or 2%, in average interest-earning assets, driven by growth in average securities and average loans and leases (ex-PPP), largely offset by declines in average money market investments and PPP loans.
- Strong growth of $4.8 billion, or 9%, in total loans and leases, driven largely by increases in the commercial and industrial, consumer 1-4 family residential mortgage, commercial real estate term, and municipal loan portfolios.
- Total deposits decreased $11.1 billion, or 13%, primarily due to decreases in larger-balance and more rate-sensitive, nonoperating deposits. Our loan-to-deposit ratio was 78%, compared with 61% at the prior year- end, which continues to afford us flexibility in managing our funding costs.

The following schedule presents additional selected financial highlights. Prior period amounts have been reclassified to conform with the current period presentation, where applicable.

#### Schedule 4

### SELECTED FINANCIAL HIGHLIGHTS

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

| For the Year | 2022/2021 Change | 2022 | 2021 | 2020 | 2019 | 2018 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net interest income | +14% | $2,520 | $2,208 | $2,216 | $2,272 | $2,230 |
| Noninterest income | -10% | 632 | 703 | 574 | 562 | 552 |
| Total net revenue | +8% | 3,152 | 2,911 | 2,790 | 2,834 | 2,782 |
| Provision for credit losses | NM | 122 | (276) | 414 | 39 | (40) |
| Noninterest expense | +8% | 1,878 | 1,741 | 1,704 | 1,742 | 1,679 |
| Pre-provision net revenue 1 | +9% | 1,311 | 1,202 | 1,114 | 1,118 | 1,125 |
| Net income | -20% | 907 | 1,129 | 539 | 816 | 884 |
| Net earnings applicable to common shareholders | -20% | 878 | 1,100 | 505 | 782 | 850 |
| **Per Common Share** |  |  |  |  |  |  |
| Net earnings – diluted | -15% | 5.79 | 6.79 | 3.02 | 4.16 | 4.08 |
| Tangible book value at year-end 1 | +9% | 43.72 | 40.15 | 36.44 | 34.72 | 33.31 |
| Market price – end | -22% | 49.16 | 63.16 | 43.44 | 51.92 | 40.74 |
| Market price – high | +11% | 75.44 | 68.25 | 52.48 | 52.08 | 59.19 |
| Market price – low | +7% | 45.21 | 42.12 | 23.58 | 39.11 | 38.08 |
| **At Year-End** |  |  |  |  |  |  |
| Assets | -4% | 89,545 | 93,200 | 81,479 | 69,172 | 68,746 |
| Loans and leases, net of unearned income and fees | +9% | 55,653 | 50,851 | 53,476 | 48,709 | 46,714 |
| Deposits | -13% | 71,652 | 82,789 | 69,653 | 57,085 | 54,101 |
| Common equity | -37% | 4,453 | 7,023 | 7,320 | 6,787 | 7,012 |
| **Performance Ratios** |  |  |  |  |  |  |
| Return on average assets |  | 1.01% | 1.29% | 0.71% | 1.17% | 1.33% |
| Return on average common equity |  | 16.0% | 14.9% | 7.2% | 11.2% | 12.1% |
| Return on average tangible common equity 1 |  | 13.9% | 17.8% | 8.8% | 13.3% | 14.9% |
| Net interest margin |  | 3.06% | 2.72% | 3.15% | 3.54% | 3.61% |
| Net charge-offs to average loans and leases (ex-PPP) |  | 0.08% | 0.01% | 0.22% | 0.08% | (0.04)% |
| Total allowance for credit losses to loans and leases outstanding (ex-PPP) |  | 1.15% | 1.13% | 1.74% | 1.14% | 1.18% |
| **Capital Ratios at Year-End** |  |  |  |  |  |  |
| Common equity tier 1 capital |  | 9.8% | 10.2% | 10.8% | 10.2% | 11.7% |
| Tier 1 leverage |  | 7.7% | 7.2% | 8.3% | 9.2% | 10.3% |
| Tangible common equity 1 |  | 7.1% | 6.6% | 7.5% | 8.4% | 9.2% |
| **Other Selected Information** |  |  |  |  |  |  |
| Weighted average diluted common shares outstanding (in thousands) | -6% | 150,271 | 160,234 | 165,613 | 186,504 | 206,501 |
| Bank common shares repurchased (in thousands) | -74% | 3,563 | 13,497 | 1,666 | 23,505 | 12,943 |
| Dividends declared | +10% | $1.58 | $1.44 | $1.36 | $1.28 | $1.04 |
| Common dividend payout ratio 2 |  | 27.3% | 21.1% | 44.6% | 29.0% | 23.8% |
| Capital distributed as a percentage of net earnings applicable to common shareholders 3 |  | 50% | 94% | 59% | 170% | 103% |
| Efficiency ratio |  | 58.8% | 60.8% | 59.4% | 59.5% | 59.6% |

#### 1 See “Non-GAAP Financial Measures” on page 70 for more information.

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

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

### Net Interest Income and Net Interest Margin

Net interest income is the difference between interest earned on interest-earning assets and interest paid on interest-bearing liabilities, and represented approximately 80% of our net revenue (net interest income plus noninterest income) for the year. The NIM is calculated as net interest income as a percent of interest-earning assets.

#### Schedule 5

### NET INTEREST INCOME AND NET INTEREST MARGIN

*(Dollar amounts in millions)*

|  | 2022 | Amount change | Percent change 2021 |  | Amount change 2020 | Percent change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest and fees on loans | $2,112 | $177 | 9% | $1,935 | $(115) | (6)% | $2,050 |
| Interest on money market investments | 81 | 60 | NM | 21 | 7 | 50 | 14 |
| Interest on securities | 512 | 201 | 65 | 311 | 7 | 2 | 304 |
| Total interest income | 2,705 | 438 | 19 | 2,267 | (101) | (4) | 2,368 |
| Interest on deposits | 70 | 40 | NM | 30 | (75) | (71) | 105 |
| Interest on short- and long-term borrowings | 115 | 86 | NM | 29 | (18) | (38) | 47 |
| Total interest expense | 185 | 126 | NM | 59 | (93) | (61) | 152 |
| Net interest income | $2,520 | $312 | 14% | $2,208 | $(8) | —% | $2,216 |
| Average interest-earning assets | $83,638 | $1,371 | 2% | $82,267 | $11,108 | 16% | $71,159 |
| Average interest-bearing liabilities | 42,138 | 1,388 | 3% | 40,750 | 2,512 | 7% | 38,238 |
|  |  | bps |  |  | bps |  |  |
| Yield on interest-earning assets 1 | 3.28% | 49 |  | 2.79% | (58) |  | 3.37% |
| Rate paid on total deposits and interest-bearing liabilities 1 | 0.23% | 16 |  | 0.07% | (15) |  | 0.22% |
| Cost of total deposits 1 | 0.09% | 5 |  | 0.04% | (13) |  | 0.17% |
| Net interest margin 1 | 3.06% | 34 |  | 2.72% | (43) |  | 3.15% |

*1 Rates are calculated using amounts in thousands and a tax rate of 21% for the periods presented.*

Net interest income increased $312 million, or 14%, in 2022, relative to the prior year, despite a $188 million decrease in interest income from PPP loans. The increase was driven largely by a higher interest rate environment and a favorable change in the composition of interest-earning assets.

Average interest-earning assets increased $1.4 billion, or 2%, primarily due to increases of $6.3 billion and $4.5 billion in average securities and average loans and leases (ex-PPP), respectively. These increases were largely offset by decreases of $5.5 billion and $3.8 billion in average money market investments and average PPP loans, respectively. Average securities increased to 30.4% of average interest-earning assets, compared with 23.3%.

The NIM was 3.06%, compared with 2.72%. The yield on average interest-earning assets was 3.28% in 2022, an increase of 49 basis points (“bps”), reflecting the higher interest rate environment and a change in the mix of interest-earning assets from money market investments to securities and loans. The yield on total loans increased 30 bps to 4.06%, and the yield on securities increased 39 bps to 2.06%. The yield on securities benefited from a decrease in the market value of available-for-sale (“AFS”) securities due to rising interest rates.

Average loans and leases increased $0.6 billion, or 1%, to $52.6 billion. Excluding PPP loans, average loans and leases increased $4.5 billion, or 9%, to $51.9 billion, primarily in the commercial and industrial, consumer 1-4 family residential mortgage, commercial real estate term, and municipal loan portfolios.

During 2022 and 2021, PPP loans totaling approximately $1.5 billion and $6.5 billion, respectively, were forgiven by the SBA. PPP loans contributed $47 million and $235 million in interest income during the same time periods. The yield on PPP loans was 6.53% and 5.16% for the respective periods, and was positively impacted by accelerated amortization of deferred fees on paid off or forgiven PPP loans of $31 million and $138 million. At December 31, 2022 and 2021, the remaining unamortized net deferred fees on PPP loans totaled $2 million and $45 million, respectively.

Average deposits increased $2.2 billion, or 3%, during 2022, and period-end deposits decreased $11.1 billion, or 13%, compared with the prior year period. The average cost of deposits was 0.09% in 2022, compared with 0.04% in 2021. The rate paid on total deposits and interest-bearing liabilities was 0.23%, compared with 0.07%, reflecting the higher interest rate environment and increased short-term borrowings. Average noninterest-bearing deposits as a percentage of average deposits were 51%, up from 49% for the prior year. Our funding costs remained well controlled, reflecting the granularity of our deposit base and the extent of our noninterest-bearing deposits.

Average AFS securities balances increased $4.8 billion, or 26%, to $23.2 billion in 2022, mainly due to an increase in our agency guaranteed mortgage-backed securities portfolio. During the fourth quarter of 2022, we transferred approximately $10.7 billion fair value ($13.1 billion amortized cost) of mortgage-backed AFS securities to the held-to-maturity (“HTM”) category to reflect our intent for these securities.

Average borrowed funds increased $1.5 billion, or 74%, to $3.5 billion in 2022, driven by increases in short-term borrowings as a result of significant loan growth and declines in total deposits. These increases were partially offset by a decrease in long-term debt, primarily due to the redemption and maturity of senior notes during 2022 and 2021.

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 13. For more information on how we manage liquidity risk, refer to the “Liquidity Risk Management” section on page 14.

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.

*Schedule 6 -* **AVERAGE BALANCE SHEETS, YIELDS, AND RATES**

*(In millions)*

| ASSETS Money market investments: | Year Ended December 31, 2022 Average balance | Interest | Yield/ Rate 1 | 2021 Average balance | Interest | Yield/ Rate 1 | 2020 Average balance | Interest | Yield/ Rate 1 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest-bearing deposits | $3,066 | $27 | 0.87% | $8,917 | $12 | 0.14% | $965 | $5 | 0.49% |
| Federal funds sold and securities purchased under agreements to resell | 2,482 | 54 | 2.16 | 2,129 | 9 | 0.40 | 2,089 | 9 | 0.44 |
| Total money market investments | 5,548 | 81 | 1.45 | 11,046 | 21 | 0.19 | 3,054 | 14 | 0.46 |
| Securities: |  |  |  |  |  |  |  |  |  |
| Held-to-maturity | 1,999 | 47 | 2.36 | 562 | 17 | 2.97 | 618 | 22 | 3.54 |
| Available-for-sale | 23,132 | 461 | 1.99 | 18,365 | 292 | 1.59 | 14,208 | 284 | 2.00 |
| Trading account | 322 | 16 | 4.79 | 246 | 11 | 4.43 | 167 | 7 | 4.36 |
| Total securities | 25,453 | 524 | 2.06 | 19,173 | 320 | 1.67 | 14,993 | 313 | 2.09 |
| Loans held for sale | 39 | 1 | 2.57 | 65 | 1 | 2.35 | 96 | 4 | 3.89 |
| Loans and leases: 2 |  |  |  |  |  |  |  |  |  |
| Commercial - excluding PPP loans | 28,500 | 1,147 | 4.02 | 25,014 | 950 | 3.80 | 25,193 | 1,036 | 4.11 |
| Commercial - PPP loans | 725 | 47 | 6.53 | 4,566 | 235 | 5.16 | 4,534 | 146 | 3.22 |
| Commercial real estate | 12,251 | 544 | 4.44 | 12,136 | 418 | 3.44 | 11,854 | 458 | 3.87 |
| Consumer | 11,122 | 398 | 3.58 | 10,267 | 354 | 3.44 | 11,435 | 425 | 3.71 |
| Total loans and leases | 52,598 | 2,136 | 4.06 | 51,983 | 1,957 | 3.76 | 53,016 | 2,065 | 3.89 |
| Total interest-earning assets | 83,638 | 2,742 | 3.28 | 82,267 | 2,299 | 2.79 | 71,159 | 2,396 | 3.37 |
| Cash and due from banks | 621 |  |  | 605 |  |  | 619 |  |  |
| Allowance for credit losses on loans and debt securities | (514) |  |  | (612) |  |  | (733) |  |  |
| Goodwill and intangibles | 1,022 |  |  | 1,015 |  |  | 1,015 |  |  |
| Other assets | 4,908 |  |  | 4,122 |  |  | 3,997 |  |  |
| Total assets | $89,675 |  |  | $87,397 |  |  | $76,057 |  |  |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |
| Interest-bearing deposits: |  |  |  |  |  |  |  |  |  |
| Savings and money market | $37,045 | $61 | 0.16 | $36,717 | $21 | 0.06 | $31,100 | $60 | 0.19 |
| Time | 1,594 | 9 | 0.58 | 2,020 | 9 | 0.41 | 3,706 | 45 | 1.22 |
| Total interest-bearing deposits | 38,639 | 70 | 0.18 | 38,737 | 30 | 0.08 | 34,806 | 105 | 0.30 |
| Borrowed funds: |  |  |  |  |  |  |  |  |  |
| Federal funds purchased and security repurchase agreements | 1,531 | 38 | 2.49 | 797 | 1 | 0.07 | 1,680 | 8 | 0.45 |
| Other short-term borrowings | 1,263 | 46 | 3.65 | 5 | — | 0.04 | 208 | 2 | 1.09 |
| Long-term debt | 705 | 31 | 4.28 | 1,211 | 28 | 2.36 | 1,544 | 37 | 2.45 |
| Total borrowed funds | 3,499 | 115 | 3.27 | 2,013 | 29 | 1.45 | 3,432 | 47 | 1.39 |
| Total interest-bearing funds | 42,138 | 185 | 0.44 | 40,750 | 59 | 0.14 | 38,238 | 152 | 0.40 |
| Noninterest-bearing demand deposits | 39,890 |  |  | 37,520 |  |  | 28,883 |  |  |
| Other liabilities | 1,735 |  |  | 1,259 |  |  | 1,320 |  |  |
| Total liabilities | 83,763 |  |  | 79,529 |  |  | 68,441 |  |  |
| Shareholders’ equity: |  |  |  |  |  |  |  |  |  |
| Preferred equity | 440 |  |  | 497 |  |  | 566 |  |  |
| Common equity | 5,472 |  |  | 7,371 |  |  | 7,050 |  |  |
| Total shareholders’ equity | 5,912 |  |  | 7,868 |  |  | 7,616 |  |  |
| Total liabilities and shareholders’ equity | $89,675 |  |  | $87,397 |  |  | $76,057 |  |  |
| Spread on average interest-bearing funds |  |  | 2.84% |  |  | 2.65% |  |  | 2.97% |
| Impact of net noninterest-bearing sources of funds |  |  | 0.22% |  |  | 0.07% |  |  | 0.18% |
| Net interest margin |  | $2,557 | 3.06% |  | $2,240 | 2.72% |  | $2,244 | 3.15% |
| Memo: total loans and leases, excluding PPP loans | 51,873 | 2,089 | 4.03% | 47,417 | 1,722 | 3.63% | 48,482 | 1,919 | 3.89% |
| Memo: total cost of deposits |  |  | 0.09% |  |  | 0.04% |  |  | 0.17% |
| Memo: total deposits and interest-bearing liabilities | 82,028 | 185 | 0.23% | 78,270 | 59 | 0.07% | 67,121 | 152 | 0.22% |

1 *Rates are calculated using amounts in thousands and a tax rate of 21% for the periods presented.*

*2 Net of unamortized purchase premiums, discounts, and deferred loan fees and costs. Loans include nonaccrual and restructured loans.*

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

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

#### Schedule 7

### ANALYSIS OF TAXABLE-EQUIVALENT NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE

*(In millions)*

| INTEREST-EARNING ASSETS Money market investments: | 2022 over 2021 Changes due to Volume | Rate1 | Total changes Volume | 2021 over 2020 Changes due to Rate1 |  | Total changes |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest-bearing deposits | $(8) | $23 | $15 | $11 | $(4) | $7 |
| Federal funds sold and securities purchased under agreements to resell | 1 | 44 | 45 | 1 | (1) | — |
| Total money market investments | (7) | 67 | 60 | 12 | (5) | 7 |
| Securities: |  |  |  |  |  |  |
| Held-to-maturity | 34 | (4) | 30 | (1) | (4) | (5) |
| Available-for-sale | 86 | 83 | 169 | 66 | (58) | 8 |
| Trading account | 4 | 1 | 5 | 4 | — | 4 |
| Total securities | 124 | 80 | 204 | 69 | (62) | 7 |
| Loans held for sale | — | — | — | (1) | (2) | (3) |
| Loans and leases2 |  |  |  |  |  |  |
| Commercial - excluding SBA PPP loans | 139 | 58 | 197 | (7) | (79) | (86) |
| Commercial - SBA PPP loans | (198) | 10 | (188) | 1 | 88 | 89 |
| Commercial real estate | 3 | 123 | 126 | 10 | (50) | (40) |
| Consumer | 30 | 14 | 44 | (39) | (32) | (71) |
| Total loans and leases | (26) | 205 | 179 | (35) | (73) | (108) |
| Total interest-earning assets | 91 | 352 | 443 | 45 | (142) | (97) |
| **INTEREST-BEARING LIABILITIES** |  |  |  |  |  |  |
| Interest-bearing deposits: |  |  |  |  |  |  |
| Saving and money market | 1 | 39 | 40 | 2 | (41) | (39) |
| Time | (2) | 2 | — | (6) | (30) | (36) |
| Total interest-bearing deposits | (1) | 41 | 40 | (4) | (71) | (75) |
| Borrowed funds: |  |  |  |  |  |  |
| Federal funds purchased and security repurchase agreements | — | 37 | 37 | — | (7) | (7) |
| Other short-term borrowings | 34 | 12 | 46 | — | (2) | (2) |
| Long-term debt | (11) | 14 | 3 | (8) | (1) | (9) |
| Total borrowed funds | 23 | 63 | 86 | (8) | (10) | (18) |
| Total interest-bearing liabilities | 22 | 104 | 126 | (12) | (81) | (93) |
| Change in taxable-equivalent net interest income | $69 | $248 | $317 | $57 | $(61) | $(4) |

#### 1 Taxable-equivalent rates used where applicable.

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

### 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 and is recorded in investment securities on the consolidated balance sheet.

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 $122 million in 2022, compared with $(276) million in 2021. The ACL was $636 million at December 31, 2022, compared with $553 million at December 31, 2021. The increase in the ACL was primarily due to loan growth and deterioration in economic scenarios, partially offset by improvements in credit quality. The ratio of ACL to net loans and leases (ex-PPP) was 1.15% and 1.13% at December 31, 2022 and 2021, respectively. The provision for securities losses was less than $1 million during 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 $45 million from the prior year period.

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 $6 million, indicating improvements in overall credit quality. Nonperforming assets decreased $123 million, or 45%, and classified loans decreased $307 million, or 25%. Net loan and lease charge-offs were $39 million, or 0.08% annualized of average loans (ex-PPP), in 2022, compared with $6 million, or 0.01% annualized of average loans (ex-PPP), in 2021.

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 $44 million increase in the ACL.

See Note 6 of the Notes to Consolidated Financial Statements for more information on how we determine the appropriate level of the ALLL and the RULC.

### Noninterest Income

Noninterest income represents revenue 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 decreased $71 million, or 10%, in 2022, relative to the prior year. Noninterest income accounted for 20% and 24% of net revenue during 2022 and 2021, respectively. The following schedule presents a comparison of the major components of noninterest income.

#### Schedule 8

### NONINTEREST INCOME

*(Dollar amounts in millions)*

|  | 2022 | Amount change | Percent change | 2021 | Amount change | Percent change | 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial account fees | $159 | $22 | 16% | $137 | $5 | 4% | $132 |
| Card fees | 104 | 9 | 9 | 95 | 13 | 16 | 82 |
| Retail and business banking fees | 73 | (1) | (1) | 74 | 6 | 9 | 68 |
| Loan-related fees and income | 80 | (15) | (16) | 95 | (14) | (13) | 109 |
| Capital markets and foreign exchange fees | 83 | 13 | 19 | 70 | — | — | 70 |
| Wealth management fees 1 | 55 | 5 | 10 | 50 | 6 | 14 | 44 |
| Other customer-related fees | 60 | 6 | 11 | 54 | 10 | 23 | 44 |
| Customer-related noninterest income | 614 | 39 | 7% | 575 | 26 | 5% | 549 |
| Fair value and nonhedge derivative income (loss) | 16 | 2 | 14 | 14 | 20 | NM | (6) |
| Dividends and other income | 17 | (26) | (60) | 43 | 19 | 79 | 24 |
| Securities gains (losses), net | (15) | (86) | NM | 71 | 64 | NM | 7 |
| Noncustomer-related noninterest income | 18 | (110) | NM | 128 | 103 | NM | 25 |
| Total noninterest income | $632 | $(71) | (10)% | $703 | $129 | 22% | $574 |

*1 Wealth management fees for 2020 included certain retirement service-related fees of $3 million. Beginning in 2021, those fees, which totaled $4 million, were reported in other customer-related noninterest income.*

### Customer-related Noninterest Income

Customer-related noninterest income growth reflects our focus on our key corporate objectives. We continue to deepen existing relationships with our commercial, small business, and retail customers by providing high-quality treasury management products, capital market solutions, wealth management advisory services, and depository account services.

Total customer-related noninterest income increased $39 million, or 7%, in 2022, largely driven by improved customer transaction volume and activity during the year. Key drivers impacting customer-related revenue included:

- Commercial account fees increased $22 million or 16%, driven by increases in account analysis, treasury management, and merchant fees. Commercial account fees also benefited from a one-time adjustment of approximately $6 million during the first quarter of 2022.
- Capital markets and foreign exchange fees increased $13 million, or 19%, primarily due to improved customer swap, loan syndication, and foreign exchange activity.
- Card fees increased $9 million, or 9%, due to increased commercial and business bankcard interchange fees.
- Other customer-related fee income increased $6 million, or 11%, due to growth in corporate trust fees, reflecting new business growth.
- Wealth management fee income increased $5 million, or 10%, reflecting growth in assets and ongoing adoption of wealth and advisory services from our customer base. Our assets under management increased $1.2 billion, or 11%, to $12.2 billion at December 31, 2022, despite declines in market valuations.
- Loan-related fees decreased $15 million or 16%, in 2022, primarily due to an increased proportion of our 1-4 family residential mortgage production being retained versus sold. During 2022, we experienced a strong increase in demand for adjustable-rate mortgages, which we generally retain on our balance sheet.
- Retail and business banking fees decreased $1 million, primarily due to changes in our overdraft and non-sufficient funds practices, which were effected early in the third quarter of 2022. The impact of these changes on customer-related noninterest income is expected to be ongoing.

### Noncustomer-related Noninterest Income

Total noncustomer-related noninterest income decreased $110 million in 2022. Net securities gains and losses decreased $86 million, due largely to net gains recorded during the prior year related to our SBIC investment portfolio. Dividends and other income declined $26 million, primarily due to a valuation loss recognized on one of our equity investments during the third quarter of 2022, as well as gains on the sale of certain bank-owned facilities during the prior year. These sales resulted from the consolidation of some of our technology and operations facilities in advance of occupying our new corporate technology center in July 2022.

### Noninterest Expense

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

#### Schedule 9

### NONINTEREST EXPENSE

*(Dollar amounts in millions)*

|  | 2022 | Amount change | Percent change | 2021 | Amount change | Percent change | 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Salaries and employee benefits | $1,235 | $108 | 10% | $1,127 | $40 | 4% | $1,087 |
| Technology, telecom, and information processing | 209 | 10 | 5 | 199 | 7 | 4 | 192 |
| Occupancy and equipment, net | 152 | (1) | (1) | 153 | 2 | 1 | 151 |
| Professional and legal services | 57 | (15) | (21) | 72 | 15 | 26 | 57 |
| Marketing and business development | 39 | (4) | (9) | 43 | (18) | (30) | 61 |
| Deposit insurance and regulatory expense | 50 | 16 | 47 | 34 | 1 | 3 | 33 |
| Credit-related expense | 30 | 4 | 15 | 26 | 4 | 18 | 22 |
| Other real estate expense, net | 1 | 1 | NM | — | (1) | NM | 1 |
| Other | 105 | 18 | 21 | 87 | (13) | (13) | 100 |
| Total noninterest expense | $1,878 | $137 | 8% | $1,741 | $37 | 2% | $1,704 |
| Adjusted noninterest expense | $1,876 | $139 | 8% | $1,737 | $64 | 4% | $1,673 |

Noninterest expense increased $137 million, or 8%, in 2022, relative to the prior year, primarily due to salaries and benefits expense, which represented the largest component of total noninterest expense during 2022 and 2021. The following schedule presents the major segments of salaries and employee benefits expense.

#### Schedule 10

### SALARIES AND EMPLOYEE BENEFITS

*(Dollar amounts in millions)*

|  | 2022 | Amount/quantity change | Percent change | 2021 | Amount/quantity change | Percent change | 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Salaries and bonuses | $1,028 | $93 | 10% | $935 | $17 | 2% | $918 |
| Employee benefits: |  |  |  |  |  |  |  |
| Employee health and insurance | 93 | 10 | 12 | 83 | (3) | (3) | 86 |
| Retirement and profit sharing | 52 | (5) | (9) | 57 | 18 | 46 | 39 |
| Payroll taxes and other fringe benefits | 62 | 10 | 19 | 52 | 8 | 18 | 44 |
| Total benefits | 207 | 15 | 8 | 192 | 23 | 14 | 169 |
| Total salaries and employee benefits | $1,235 | $108 | 10% | $1,127 | $40 | 4% | $1,087 |
| Full-time equivalent employees at December 31, | 9,989 | 304 | 3% | 9,685 | 7 | —% | 9,678 |

Total salaries and benefits expense increased $108 million, or 10%, primarily due to the ongoing impact of inflationary and competitive labor market pressures on wages and benefits, increased incentive compensation accruals arising from improvements in full-year profitability, and increased headcount. We had 9,989 full-time equivalent employees at December 31, 2022, an increase of approximately 3% relative to the prior year.

Other noninterest expense increased $18 million, primarily due to a negative valuation adjustment in the prior year related to the termination of our defined benefit pension plan, as well as increased travel and various other expenses incurred during the current year. Deposit insurance and regulatory expense increased $16 million, driven largely by a higher FDIC insurance assessment resulting from changes in our balance sheet composition.

Technology, telecom, and information processing expense increased $10 million, mainly due to increased software licensing and maintenance expense, reflecting our ongoing investments in strategic technology initiatives designed to improve our products and services and to simplify how we do business. Professional and legal services expense decreased $15 million, due to third-party assistance associated with PPP loan forgiveness and other technology-related and outsourced services utilized in the prior year.

The efficiency ratio was 58.8%, compared with 60.8%, as growth in net revenue significantly outpaced growth in noninterest expense. For information on non-GAAP financial measures, including differences between noninterest expense and adjusted noninterest expense, see page 70.

### 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 presents information related to our technology spend.

#### Schedule 11

### TECHNOLOGY SPEND

*(In millions)*

|  | December 31 2022 | 2021 |
| --- | ---: | ---: |
| Technology, telecom, and information processing expense | $209 | $199 |
| Other technology-related expense | 206 | 190 |
| Technology investments | 90 | 100 |
| Less: related amortization and depreciation | (54) | (54) |
| Total technology spend | $451 | $435 |

### Income Taxes

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

#### Schedule 12

### INCOME TAXES

*(Dollar amounts in millions)*

|  | 2022 | 2021 | 2020 |
| --- | ---: | ---: | ---: |
| Income before income taxes | $1,152 | $1,446 | $672 |
| Income tax expense | 245 | 317 | 133 |
| Effective tax rate | 21.3% | 21.9% | 19.8% |

The effective tax rates for the periods presented above were decreased by nontaxable municipal interest income and nontaxable income from certain bank-owned life insurance (“BOLI”), and were increased by the nondeductibility of

FDIC premiums, certain executive compensation, and other fringe benefits. The effective tax rate for 2020 was further reduced by the proportional increase in nontaxable items and tax credits relative to a lower pretax book income, compared with 2021 and 2022. Additionally, investments in technology initiatives, low-income housing, and municipal securities during 2022, 2021, and 2020, generated tax credits and nontaxable income that benefited the effective tax rate for each respective year.

We had a net deferred tax asset (“DTA”) of $1.1 billion at December 31, 2022, compared with $0.1 billion at December 31, 2021. The increase in the net DTA was driven largely by the increase in unrealized losses in accumulated other comprehensive income (“AOCI”) associated with investment securities and derivative instruments, the capitalization of certain expenses for tax purposes, and the provision for credit losses during 2022.

We had no valuation allowance at December 31, 2022. See Note 20 of the Notes to Consolidated Financial Statements for more information about the factors that impacted our effective tax rate, significant components of our DTAs and deferred tax liabilities (“DTLs”), including our assessment regarding valuation allowances, and unrecognized tax benefits for uncertain tax positions.

### Preferred Stock Dividends

Preferred stock dividends totaled $29 million in 2022 and 2021, and $34 million in 2020. The decrease in preferred dividends was due to the redemption of the outstanding shares of our Series H preferred stock during the second quarter of 2021. See further details in Note 14 of the Notes to Consolidated Financial Statements.

### Business Segment Results

We manage our operations through seven affiliate banks located in different geographic markets, each with its own local branding and management team. These affiliate banks comprise our primary business segments and include: Zions Bank, California Bank & Trust (“CB&T”), Amegy Bank (“Amegy”), National Bank of Arizona (“NBAZ”), Nevada State Bank (“NSB”), Vectra Bank Colorado (“Vectra”), and The Commerce Bank of Washington (“TCBW”). We emphasize local authority, responsibility, and pricing, with customization of certain products (as applicable) to maximize customer satisfaction and strengthen community relations. Our affiliate banks are supported by an enterprise operating segment (referred to as the “Other” segment) that provides governance and risk management, allocates capital, establishes strategic objectives, and includes centralized technology, back-office functions, and certain lines of business not operated through our affiliate banks.

We allocate the cost of centrally provided services to the business segments based upon estimated or actual usage of those services. We also allocate capital based on the risk-weighted assets held at each business segment. We use an internal funds transfer pricing (“FTP”) allocation process to report results of operations for business segments. This process is subject to change and refinement over time. Where applicable, prior period amounts have been revised to reflect the impact of these changes had they been instituted for the periods presented. For more performance information related to our business segments, including the Other segment, see Note 22 of the Notes to Consolidated Financial Statements.

The following schedule summarizes selected financial information of our business segments. Ratios are calculated based on amounts in thousands.

#### Schedule 13

### SELECTED SEGMENT INFORMATION

*(Dollar amounts in millions)*

| 2022 KEY FINANCIAL INFORMATION | Zions Bank 2021 | 2020 | 2022 | CB&T 2021 | 2020 | 2022 | Amegy 2021 | 2020 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total average loans | $13,277 | $13,198 | $13,845 | $13,129 | $12,892 | $12,366 | $12,110 | $12,189 | $13,114 |
| Total average deposits | 24,317 | 23,588 | 18,370 | 16,160 | 15,796 | 13,763 | 15,735 | 15,496 | 12,970 |
| Income before income taxes | 387 | 380 | 295 | 314 | 405 | 182 | 311 | 362 | 178 |
| **CREDIT QUALITY** |  |  |  |  |  |  |  |  |  |
| Provision for credit losses | $43 | $(26) | $67 | $49 | $(78) | $120 | $5 | $(96) | $111 |
| Net loan and lease charge-offs (recoveries) | 29 | — | 27 | 3 | — | 15 | 3 | 2 | 49 |
| Ratio of net charge-offs to average loans and leases | 0.22% | —% | 0.20% | 0.02% | —% | 0.12% | 0.02% | 0.02% | 0.37% |
| Allowance for credit losses | $155 | $142 | $167 | $122 | $90 | $158 | $122 | $128 | $210 |
| Ratio of allowance for credit losses to net loans and leases, at year-end | 1.17% | 1.08% | 1.21% | 0.93% | 0.70% | 1.28% | 1.01% | 1.05% | 1.60% |
| Nonperforming assets | $36 | $84 | $97 | $25 | $41 | $56 | $59 | $90 | $131 |
| Ratio of nonperforming assets to net loans and leases and other real estate owned | 0.26% | 0.65% | 0.70% | 0.18% | 0.32% | 0.43% | 0.46% | 0.77% | 1.03% |

*(Dollar amounts in millions)*

| 2022 KEY FINANCIAL INFORMATION | NBAZ 2021 | 2020 | 2022 | NSB 2021 | 2020 | 2022 | Vectra 2021 | 2020 | 2022 | TCBW 2021 | 2020 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total average loans | $4,911 | $4,849 | $5,099 | $2,987 | $3,015 | $3,102 | $3,632 | $3,414 | $3,401 | $1,630 | $1,569 | $1,460 |
| Total average deposits | 8,035 | 7,288 | 5,771 | 7,436 | 6,691 | 5,427 | 4,109 | 4,386 | 3,637 | 1,571 | 1,537 | 1,256 |
| Income before income taxes | 111 | 126 | 75 | 76 | 89 | 11 | 55 | 67 | 24 | 45 | 41 | 28 |
| **CREDIT QUALITY** |  |  |  |  |  |  |  |  |  |  |  |  |
| Provision for credit losses | $11 | $(27) | $35 | $4 | $(35) | $37 | $9 | $(12) | $34 | $1 | $(3) | $7 |
| Net loan and lease charge-offs (recoveries) | (1) | (1) | 1 | (2) | 1 | (1) | 9 | — | 14 | — | 1 | — |
| Ratio of net charge-offs to average loans and leases | (0.02)% | (0.02)% | 0.02% | (0.07)% | 0.03% | (0.03)% | 0.25% | —% | 0.41% | —% | 0.06% | —% |
| Allowance for credit losses | $40 | $38 | $60 | $27 | $26 | $59 | $36 | $37 | $47 | $9 | $8 | $11 |
| Ratio of allowance for credit losses to net loans and leases, at year-end | 0.81% | 0.79% | 1.18% | 0.90% | 0.86% | 1.90% | 0.99% | 1.08% | 1.38% | 0.55% | 0.51% | 0.75% |
| Nonperforming assets | $6 | $11 | $17 | $9 | $24 | $40 | $14 | $18 | $19 | $— | $1 | $8 |
| Ratio of nonperforming assets to net loans and leases and other real estate owned | 0.12% | 0.24% | 0.34% | 0.27% | 0.85% | 1.24% | 0.36% | 0.53% | 0.56% | —% | 0.06% | 0.52% |

### Zions Bank

Zions Bank is headquartered in Salt Lake City, Utah, and conducts operations in Utah, Idaho, and Wyoming. If it were a separately chartered bank, it would be the second largest full-service commercial bank in Utah and the sixth largest in Idaho, as measured by domestic deposits in these states.

Zions Bank’s income before income taxes increased $7 million, or 2%, during 2022. The increase was due to a $108 million increase in net interest income, partially offset by a $69 million increase in the provision for credit losses, a $31 million increase in noninterest expense, and a $1 million decrease in noninterest income. The loan portfolio increased $1.1 billion during 2022, including increases of $655 million, $369 million, and $68 million, in consumer, commercial, and CRE loans, respectively. The ratio of ACL to net loans and leases increased to 1.17% at December 31, 2022, compared with 1.08%. Nonperforming assets decreased $48 million, or 57%, from the prior year. Deposits decreased 19% in 2022.

### California Bank & Trust

California Bank & Trust is headquartered in San Diego, California. If it were a separately chartered bank, it would be the 17th largest full-service commercial bank in California as measured by domestic deposits in the state.

CB&T’s income before income taxes decreased $91 million, or 22%, during 2022. The decrease was due to a $127 million increase in the provision for credit losses, and a $29 million increase in noninterest expense, partially offset by a $59 million increase in net interest income and a $6 million increase in noninterest income. The loan portfolio increased $937 million during 2022, including increases of $492 million, $361 million, and $84 million, in consumer, commercial, and CRE loans, respectively. The ratio of ACL to net loans and leases increased to 0.93% at December 31, 2022, compared with 0.70%. Nonperforming assets decreased $16 million, or 39%, from the prior year. Deposits decreased 10% in 2022.

### Amegy Bank

Amegy Bank is headquartered in Houston, Texas. If it were a separately chartered bank, it would be the ninth largest full-service commercial bank in Texas as measured by domestic deposits in the state.

Amegy’s income before income taxes decreased $51 million, or 14%, during 2022. The decrease was due to a $101 million increase in the provision for credit losses, and an $18 million increase in noninterest expense, partially offset by a $51 million increase in net interest income and a $17 million increase in noninterest income. The loan portfolio increased $1.0 billion during 2022, including increases of $759 million and $322 million in commercial and consumer loans, respectively, and a decrease of $46 million in CRE loans. The ratio of ACL to net loans and leases decreased to 1.01% at December 31, 2022, compared with 1.05%. Nonperforming assets decreased $31 million, or 34%, from the prior year. Deposits decreased 14% in 2022.

### National Bank of Arizona

National Bank of Arizona is headquartered in Phoenix, Arizona. If it were a separately chartered bank, it would be the fifth largest full-service commercial bank in Arizona as measured by domestic deposits in the state.

NBAZ’s income before income taxes decreased $15 million, or 12%, during 2022. The decrease was due to a $38 million increase in the provision for credit losses, and a $16 million increase in noninterest expense, partially offset by a $37 million increase in net interest income and a $2 million increase in noninterest income. The loan portfolio increased $484 million during 2022, including increases of $188 million, $170 million, and $126 million, in consumer, commercial, and CRE loans, respectively. The ratio of ACL to net loans and leases increased to 0.81% at December 31, 2022, compared with 0.79%. Nonperforming assets decreased $5 million, or 45%, from the prior year. Deposits decreased 8% in 2022.

### Nevada State Bank

Nevada State Bank is headquartered in Las Vegas, Nevada. If it were a separately chartered bank, it would be the fifth largest full-service commercial bank in Nevada as measured by domestic deposits in the state.

NSB’s income before income taxes decreased $13 million, or 15%, during 2022. The decrease was due to a $39 million increase in the provision for credit losses, a $9 million increase in noninterest expense, and a $2 million decrease in noninterest income, partially offset by a $37 million increase in net interest income. The loan portfolio increased $467 million during 2022, including increases of $285 million, $93 million, and $89 million, in consumer, commercial, and CRE loans, respectively. The ratio of ACL to net loans and leases increased to 0.90% at December 31, 2022, compared with 0.86%. Nonperforming assets decreased $15 million, or 63%, from the prior year. Deposits decreased 5% in 2022.

In July 2022, NSB purchased three Northern Nevada City National Bank branches and their associated deposit, credit card, and loan accounts. In addition to the three branches, the purchase included approximately $430 million in deposits and $95 million in commercial and consumer loans.

### Vectra Bank Colorado

Vectra Bank Colorado is headquartered in Denver, Colorado. If it were a separately chartered bank, it would be the twelfth largest full-service commercial bank in Colorado as measured by domestic deposits in the state.

Vectra’s income before income taxes decreased $12 million, or 18%, during 2022. The decrease was due to a $21 million increase in the provision for credit losses, a $6 million increase in noninterest expense, and a $2 million decrease in noninterest income, partially offset by a $17 million increase in net interest income. The loan portfolio increased $533 million during 2022, including increases of $275 million, $131 million, and $127 million, in consumer, CRE, and commercial loans, respectively. The ratio of ACL to net loans and leases decreased to 0.99% at December 31, 2022, compared with 1.08%. Nonperforming assets decreased $4 million, or 22%, from the prior year. Deposits decreased 17% in 2022.

### The Commerce Bank of Washington

The Commerce Bank of Washington is headquartered in Seattle, Washington, and operates in Washington under The Commerce Bank of Washington name and in Portland, Oregon, under The Commerce Bank of Oregon name. If it were a separately chartered bank, it would be the 22nd largest full-service commercial bank in Washington and the 35th largest in Oregon, as measured by domestic deposits in these states.

TCBW’s income before income taxes increased $4 million, or 10%, during 2022. The increase was due to a $10 million increase in net interest income, and a $1 million increase in noninterest income, partially offset by a $4 million increase in the provision for credit losses, and a $3 million increase in noninterest expense. The loan portfolio increased $153 million during 2022, including increases of $89 million and $83 million in CRE and commercial loans, respectively, partially offset by a decrease of $19 million in consumer loans. The ratio of ACL to net loans and leases increased to 0.55% at December 31, 2022, compared with 0.51%. Nonperforming assets decreased $1 million from the prior year. Deposits decreased 10% in 2022.

### 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 Schedule 6 on page 31.

### AVERAGE OUTSTANDING LOANS AND DEPOSITS

#### (at December 31)

### Investment Securities Portfolio

We invest in securities to generate interest income and to actively manage liquidity and interest rate risk. Refer to the “Liquidity Risk Management” section on page 60 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.

#### Schedule 14

### INVESTMENT SECURITIES PORTFOLIO

*(In millions)*

| Held-to-maturity U.S. Government agencies and corporations: | December 31, 2022 Par Value | Amortized cost | Fair value | December 31, 2021 Par Value | Amortized cost | Fair value |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Agency securities | $100 | $100 | $93 | $— | $— | $— |
| Agency guaranteed mortgage-backed securities 1 | 12,921 | 10,621 | 10,772 | — | — | — |
| Municipal securities | 404 | 405 | 374 | 441 | 441 | 443 |
| Total held-to-maturity | 13,425 | 11,126 | 11,239 | 441 | 441 | 443 |
| **Available-for-sale** |  |  |  |  |  |  |
| U.S. Treasury securities | 555 | 557 | 393 | 155 | 155 | 134 |
| U.S. Government agencies and corporations: |  |  |  |  |  |  |
| Agency securities | 790 | 782 | 736 | 833 | 833 | 845 |
| Agency guaranteed mortgage-backed securities | 9,566 | 9,652 | 8,367 | 20,340 | 20,549 | 20,387 |
| Small Business Administration loan-backed securities | 691 | 740 | 712 | 867 | 938 | 912 |
| Municipal securities | 1,571 | 1,732 | 1,634 | 1,489 | 1,652 | 1,694 |
| Other debt securities | 75 | 75 | 73 | 75 | 75 | 76 |
| Total available-for-sale | 13,248 | 13,538 | 11,915 | 23,759 | 24,202 | 24,048 |
| Total HTM and AFS investment securities | $26,673 | $24,664 | $23,154 | $24,200 | $24,643 | $24,491 |

*1 During the fourth quarter of 2022, we transferred approximately $10.7 billion fair value ($13.1 billion amortized cost) of mortgage-backed AFS securities to the HTM category to reflect our intent for these securities. The amortized cost basis of these securities does not include $2.4 billion of unrealized losses in AOCI that is amortized over the life of the securities. The amortization of the unrealized losses reported in AOCI will offset the effect of the accretion of the discount in interest income that is created by adjusting the amortized cost basis to the securities' fair value on the date of the transfer.*

The amortized cost of total HTM and AFS investment securities increased $21 million during 2022. Approximately 8% and 11% of the total HTM and AFS investment securities portfolio had a variable-rate at December 31, 2022 and December 31, 2021, respectively.

At December 31, 2022, the AFS investment securities portfolio included approximately $290 million of net premium that was distributed across various security types. Total taxable-equivalent premium amortization for these investment securities was $103 million in 2022, compared with $118 million in 2021.

In addition to HTM and AFS securities, we also have a Trading securities portfolio of $465 million and $372 million, at December 31, 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 65 and Note 5 of the Notes to Consolidated Financial Statements for more discussion regarding our investment securities portfolio and related unrealized gains and losses.

### Municipal Investments and Extensions of Credit

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

The following schedule summarizes our total investments and extensions of credit to municipalities:

#### Schedule 15

### MUNICIPAL INVESTMENTS AND EXTENSIONS OF CREDIT

*(In millions)*

|  | December 31, 2022 | 2021 |
| --- | ---: | ---: |
| Loans and leases | $4,361 | $3,658 |
| Held-to-maturity – municipal securities | 405 | 441 |
| Available-for-sale – municipal securities | 1,634 | 1,694 |
| Trading account – municipal securities | 71 | 355 |
| Unfunded lending commitments | 406 | 280 |
| Total | $6,877 | $6,428 |

Our municipal loans and securities are primarily associated with municipalities located within our geographic footprint. The municipal loan and lease portfolio is primarily secured by general obligations of municipal entities. Other types of collateral also include real estate, revenue pledges, or equipment. At December 31, 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 December 31, 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

We focus on serving and creating value for our customers and communities by helping them achieve their potential, optimize their daily operations, create economic opportunities for them, and grow their business. We do this by providing a wide range of lending products to commercial customers, generally small- and medium-sized businesses. We also provide various retail lending products and services to consumers and small businesses. The following schedule presents the composition of our loan and lease portfolio.

#### Schedule 16

### LOAN AND LEASE PORTFOLIO

*(Dollar amounts in millions)*

| Commercial: | December 31, 2022 Amount | % of total loans | December 31, 2021 Amount | % of total loans |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $16,180 | 29.1% | $13,867 | 27.3% |
| PPP | 197 | 0.4 | 1,855 | 3.6 |
| Leasing | 386 | 0.7 | 327 | 0.6 |
| Owner-occupied | 9,371 | 16.8 | 8,733 | 17.2 |
| Municipal | 4,361 | 7.8 | 3,658 | 7.2 |
| Total commercial | 30,495 | 54.8 | 28,440 | 55.9 |
| Commercial real estate: |  |  |  |  |
| Construction and land development | 2,513 | 4.5 | 2,757 | 5.4 |
| Term | 10,226 | 18.4 | 9,441 | 18.6 |
| Total commercial real estate | 12,739 | 22.9 | 12,198 | 24.0 |
| Consumer: |  |  |  |  |
| Home equity credit line | 3,377 | 6.1 | 3,016 | 5.9 |
| 1-4 family residential | 7,286 | 13.1 | 6,050 | 11.9 |
| Construction and other consumer real estate | 1,161 | 2.1 | 638 | 1.3 |
| Bankcard and other revolving plans | 471 | 0.8 | 396 | 0.8 |
| Other | 124 | 0.2 | 113 | 0.2 |
| Total consumer | 12,419 | 22.3 | 10,213 | 20.1 |
| Total loans and leases | $55,653 | 100.0% | $50,851 | 100.0% |

Our loan and lease portfolio grew significantly during 2022. At December 31, 2022 and 2021, the ratio of loans and leases to total assets was 62% 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 time periods.

The loan and lease portfolio increased $4.8 billion, or 9%, to $55.7 billion at December 31, 2022. Excluding PPP loans, total loans and leases increased $6.5 billion, or 13%, to $55.5 billion. Loan growth was driven largely by increases of $2.3 billion in commercial and industrial loans, $1.2 billion in consumer 1-4 family residential mortgage loans, $0.8 billion in commercial real estate term loans, and $0.7 billion in municipal loans.

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

#### Schedule 17

### LOAN AND LEASE PORTFOLIO BY CONTRACTUAL MATURITY

*(In millions)*

| Commercial: | December 31, 2022 One year or less | One year through five years | Five years through fifteen years | Over fifteen years | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Commercial and industrial | $9,019 | $5,232 | $1,897 | $32 | $16,180 |
| PPP | — | 197 | — | — | 197 |
| Leasing | 20 | 258 | 108 | — | 386 |
| Owner-occupied | 476 | 1,426 | 5,851 | 1,618 | 9,371 |
| Municipal | 407 | 524 | 2,521 | 909 | 4,361 |
| Total commercial | 9,922 | 7,637 | 10,377 | 2,559 | 30,495 |
| Commercial real estate: |  |  |  |  |  |
| Construction and land development | 1,202 | 1,232 | 28 | 51 | 2,513 |
| Term | 2,148 | 5,259 | 2,673 | 146 | 10,226 |
| Total commercial real estate | 3,350 | 6,491 | 2,701 | 197 | 12,739 |
| Consumer: |  |  |  |  |  |
| Home equity credit line | 101 | 16 | 242 | 3,018 | 3,377 |
| 1-4 family residential | 50 | 36 | 183 | 7,017 | 7,286 |
| Construction and other consumer real estate | 1 | 1 | 19 | 1,140 | 1,161 |
| Bankcard and other revolving plans | 337 | 134 | — | — | 471 |
| Other | 11 | 73 | 40 | — | 124 |
| Total consumer | 500 | 260 | 484 | 11,175 | 12,419 |
| Total loans and leases | $13,772 | $14,388 | $13,562 | $13,931 | $55,653 |

Our loans and leases have predetermined (fixed) or variable interest rates. The following schedule presents the interest rate composition of our loan and lease portfolio with a contractual maturity date over one year. For more information on our interest rate risk management, see “Interest Rate Risk” on page 56.

#### Schedule 18

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

*(In millions)*

| Commercial: | December 31, 2022 Loans with contractual maturities over one year Predetermined (fixed) interest rates | Variable interest rates | Total |
| --- | ---: | ---: | ---: |
| Commercial and industrial | $2,419 | $4,742 | $7,161 |
| PPP | 197 | — | 197 |
| Leasing | 366 | — | 366 |
| Owner-occupied | 3,345 | 5,550 | 8,895 |
| Municipal | 3,293 | 661 | 3,954 |
| Total commercial | 9,620 | 10,953 | 20,573 |
| Commercial real estate: |  |  |  |
| Construction and land development | 67 | 1,244 | 1,311 |
| Term | 1,662 | 6,416 | 8,078 |
| Total commercial real estate | 1,729 | 7,660 | 9,389 |
| Consumer: |  |  |  |
| Home equity credit line | 190 | 3,086 | 3,276 |
| 1-4 family residential | 538 | 6,698 | 7,236 |
| Construction and other consumer real estate | — | 1,160 | 1,160 |
| Bankcard and other revolving plans | 3 | 131 | 134 |
| Other | 111 | 2 | 113 |
| Total consumer | 842 | 11,077 | 11,919 |
| Total loans and leases | $12,191 | $29,690 | $41,881 |

### 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:

#### Schedule 19

### OTHER NONINTEREST-BEARING INVESTMENTS

*(Dollar amounts in millions)*

|  | December 31, 2022 | 2021 | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Bank-owned life insurance | $546 | $537 | $9 | 2% |
| Federal Home Loan Bank stock | 294 | 11 | 283 | NM |
| Federal Reserve stock | 68 | 81 | (13) | (16) |
| Farmer Mac stock | 19 | 19 | — | — |
| SBIC investments | 172 | 179 | (7) | (4) |
| Other | 31 | 24 | 7 | 29 |
| Total other noninterest-bearing investments | $1,130 | $851 | $279 | 33% |

Total other noninterest-bearing investments increased $279 million, or 33%, primarily due to a $283 million increase in FHLB stock. We are required to invest 4% of our FHLB borrowings in FHLB stock to maintain our borrowing capacity. The increase in FHLB stock was driven largely by increases in FHLB short-term borrowings during 2022 as a result of loan growth and declines in interest-bearing deposits.

### Premises, Equipment, and Software

Net premises, equipment, and software increased $89 million, or 7%, 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 in Denver, Colorado, which was completed in January 2023.

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 are generally amortized over ten years, and are summarized in the following schedule.

#### Schedule 20

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

*(In millions)*

|  | December 31, 2022 Phase 1 | Phase 2 | Phase 3 | Total |
| --- | ---: | ---: | ---: | ---: |
| Total amount of capitalized costs, less accumulated amortization | $30 | $55 | $201 | $286 |

### Deposits

Deposits are our primary funding source. In recent years, we benefited from a significant influx of deposits, which was impacted by considerable fiscal and monetary policy decisions. Our strong liquidity position at the beginning of 2022 afforded us the ability to prioritize the quality of deposits over quantity. During 2022, with the withdrawal of stimulus by the federal government, our deposits declined to more normalized levels and remained above regulatory and internal Bank limits.

The following schedule presents our deposits by category and percentage of total deposits.

#### Schedule 21

### DEPOSITS

*(Dollar amounts in millions)*

|  | December 31, 2022 Amount | % of total deposits | December 31, 2021 Amount | % of total deposits |
| --- | ---: | ---: | ---: | ---: |
| Noninterest-bearing demand | $35,777 | 49.9% | $41,053 | 49.6% |
| Interest-bearing: |  |  |  |  |
| Savings and money market | 33,566 | 46.9 | 40,114 | 48.4 |
| Time | 2,309 | 3.2 | 1,622 | 2.0 |
| Total deposits | $71,652 | 100.0% | $82,789 | 100.0% |

Total deposits decreased $11.1 billion, or 13%, in 2022, primarily due to decreases in larger-balance and more rate-sensitive, nonoperating deposits. Interest-bearing deposits decreased $5.9 billion, or 14%, and noninterest-bearing deposits decreased $5.3 billion, or 13%. Total deposits included $0.9 billion and $0.4 billion of brokered deposits for the same time periods. Total deposits at December 31, 2022 also included approximately $347 million in deposits associated with the purchase of three Northern Nevada City National Bank branches by NSB in July 2022.

Our deposit costs remained well controlled, reflecting the granularity of our deposit base and the extent of our noninterest-bearing deposits. We continue to actively manage our deposit base and associated deposit costs in response to the rising interest rate environment. We expect our deposit costs to increase over the near term in view of increased competition for low-cost funding sources. Nevertheless, we expect our overall cost of funds to remain low relative to our peers. See Notes 12 and 13 of the Notes to Consolidated Financial Statements and “Liquidity Risk Management” on page 60 for additional information on funding and borrowed funds.

Total time deposits that exceed the current FDIC insurance limit of $250,000 totaled $527 million and $563 million at December 31, 2022 and December 31, 2021, respectively. The estimated total amount of uninsured deposits, including related interest accrued and unpaid, was $38 billion and $49 billion at December 31, 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 utilize the three lines of defense approach to risk management with responsibilities for each line of defense defined in our Risk Management Framework. The first line of defense represents units and functions throughout the Bank engaged in activities related to revenue generation, expense reduction, operational support, and technology services. These units and functions are accountable for owning and managing the risks associated with these activities. The second line of defense represents functions responsible for independently assessing and overseeing risk management activities. The third line of defense is our internal audit function that provides independent assessment of the effectiveness of the first and second lines of defense.

In support of management’s efforts, the Board has established certain committees to oversee our risk management processes. The Audit Committee oversees financial reporting risk, and the ROC oversees the other risk management processes. The ROC meets on a regular basis to monitor and review Enterprise Risk Management (“ERM”) activities. As required by its charter, the ROC provides oversight for various ERM activities and approves ERM policies and activities as detailed in the ROC charter.

We employ various strategies to 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, cybersecurity risk, capital/financial reporting risk, legal/compliance risk (including regulatory risk), and reputational risk. These risks are overseen by various management committees of which the Enterprise Risk Management Committee is the focal point.

### Credit Risk Management

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

Credit policies, credit risk management, and credit examination functions inform and support the oversight of credit risk. Our credit policies emphasize strong underwriting standards and early detection of potential problem credits in order to develop and implement action plans on a timely basis to mitigate potential losses. These formal credit policies and procedures provide us with a framework for consistent underwriting and a basis for sound credit decisions at the local banking affiliate level. Policies include standards for sensitivity and scenario analyses that assess the resilience of the borrower, including the borrower’s ability to service the loan in a rising interest rate environment.

Our credit policies and practices are also designed to help manage potential risks, including those arising from environmental issues. Environmental risk related to our lending practices is primarily covered in our environmental credit policy and by our environmental subject matter experts and management. The extent of environmental due diligence performed by our environmental risk team is based on the risks identified at each property and the loan amount. The extension of credit to certain borrowers, or those connected with certain activities, may be restricted or require escalated approval, by policy, because of various environmental risks.

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

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

Our overall credit risk management strategy includes diversification of our loan portfolio. Our business activity is conducted primarily within the geographic footprint of our banking affiliates. We strive to avoid the risk of undue concentrations of credit in any particular industry, collateral type, location, or with any individual customer or counterparty. We have adopted and adhere to concentration limits on certain commercial industries, including leveraged lending, municipal lending, oil and gas-related lending, and various types of CRE lending, particularly construction and land development lending. Concentration limits are regularly monitored and revised as necessary.

### Government Agency Guaranteed Loans

We participate in various guaranteed lending programs sponsored by 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 December 31, 2022, approximately $649 million of these loans were guaranteed, primarily by the SBA. The following schedule presents the composition of U.S. government agency guaranteed loans.

#### Schedule 22

### U.S. GOVERNMENT AGENCY GUARANTEES

*(Dollar amounts in millions)*

|  | December 31, 2022 | Percent guaranteed | December 31, 2021 | Percent guaranteed |
| --- | ---: | ---: | ---: | ---: |
| Commercial | $753 | 83% | $2,410 | 95% |
| Commercial real estate | 21 | 76 | 22 | 73 |
| Consumer | 5 | 100 | 5 | 100 |
| Total loans | $779 | 83% | $2,437 | 94% |

### Commercial Lending

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

#### Schedule 23

### COMMERCIAL LENDING BY INDUSTRY GROUP 1

*(Dollar amounts in millions)*

|  | December 31, 2022 Amount | Percent | December 31, 2021 Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Finance and insurance | $2,992 | 9.8% | $2,303 | 8.1% |
| Real estate, rental and leasing | 2,802 | 9.2 | 2,536 | 8.9 |
| Retail trade | 2,751 | 9.0 | 2,412 | 8.5 |
| Manufacturing | 2,387 | 7.8 | 2,374 | 8.3 |
| Healthcare and social assistance | 2,373 | 7.8 | 2,349 | 8.2 |
| Public Administration | 2,366 | 7.8 | 1,959 | 6.9 |
| Wholesale trade | 1,880 | 6.2 | 1,701 | 6.0 |
| Transportation and warehousing | 1,464 | 4.8 | 1,273 | 4.5 |
| Utilities 2 | 1,418 | 4.6 | 1,446 | 5.1 |
| Construction | 1,355 | 4.4 | 1,456 | 5.1 |
| Mining, quarrying, and oil and gas extraction | 1,349 | 4.4 | 1,185 | 4.2 |
| Educational services | 1,302 | 4.3 | 1,163 | 4.1 |
| Hospitality and food services | 1,238 | 4.1 | 1,353 | 4.8 |
| Other Services (except Public Administration) | 1,041 | 3.4 | 1,213 | 4.2 |
| Professional, scientific, and technical services | 995 | 3.3 | 1,084 | 3.8 |
| Other 3 | 2,782 | 9.1 | 2,633 | 9.3 |
| Total | $30,495 | 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 At December 31, 2022, no other industry group individually exceeded 2.9%.

### Commercial Real Estate Loans

At December 31, 2022 and 2021, our CRE loan portfolio totaled $12.7 billion and $12.2 billion, representing 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 December 31, 2022, approximately 26% of the CRE loan portfolio matures in one year or less. 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.

The following schedule provides information regarding lending exposures to certain collateral types in our commercial real estate lending portfolio.

#### Schedule 24

### COMMERCIAL REAL ESTATE LENDING BY COLLATERAL TYPE

*(Dollar amounts in millions)*

| Commercial property | December 31, 2022 Amount | Percent | December 31, 2021 Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Multi-family | $3,068 | 24.1% | $2,835 | 23.2% |
| Industrial | 2,509 | 19.7 | 1,997 | 16.4 |
| Office | 2,281 | 17.9 | 2,372 | 19.5 |
| Retail | 1,529 | 12.0 | 1,594 | 13.1 |
| Hospitality | 695 | 5.4 | 689 | 5.6 |
| Land | 276 | 2.2 | 249 | 2.0 |
| Other 1 | 1,728 | 13.5 | 1,792 | 14.7 |
| Residential property |  |  |  |  |
| Single family | 340 | 2.7 | 380 | 3.1 |
| Land | 75 | 0.6 | 33 | 0.3 |
| Condo/Townhome | 13 | 0.1 | 10 | 0.1 |
| Other 1 | 225 | 1.8 | 247 | 2.0 |
| Total | $12,739 | 100.0% | $12,198 | 100.0% |

*1 Included in the total amount of the “Other” category was approximately $301 million and $440 million of unsecured loans at December 31, 2022 and 2021, respectively.*

Underwriting on commercial properties is primarily based on the economic viability of the project with significant consideration given to the creditworthiness and experience of the sponsor. We generally require that the owner’s equity be injected prior to any advances. Re-margining requirements (required equity infusions upon a decline in value or cash flow of the collateral) are often included in the loan agreement along with guarantees of the sponsor.

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

Real estate appraisals are performed in accordance with regulatory guidelines and are validated independently of the loan officer and the borrower, generally by our internal appraisal review team. In some cases, reports from automated valuation services are used or internal evaluations are performed. A new appraisal or evaluation is required when a loan deteriorates to a certain level of credit weakness.

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

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

In the event of default, we pursue any and all available sources of repayment, including from collateral and guarantors. A number of factors are considered when deciding whether to pursue a guarantor, including, but not limited to, the value and liquidity of other sources of repayment (collateral), the financial strength and liquidity of the guarantor, possible statutory limitations, and the overall cost of pursuing a guarantee versus the amount we are likely to recover.

### Consumer Loans

#### Residential Mortgages

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.

Our 1-4 family residential mortgage loan portfolio increased $1.2 billion, or 20%, to $7.3 billion at December 31, 2022, primarily due to an increased demand for variable-rate mortgages, which we have retained as part of our overall interest rate risk management strategy.

#### Home Equity Credit Lines

We also originate home equity credit lines (“HECL”). At December 31, 2022 and 2021, the outstanding balance of our HECL portfolio totaled $3.4 billion and $3.0 billion, respectively. The following schedule presents the composition of our HECL portfolio by lien status.

#### Schedule 25

### HECL PORTFOLIO BY LIEN STATUS

*(In millions)*

|  | December 31 2022 | 2021 |
| --- | ---: | ---: |
| Secured by first liens | $1,474 | $1,503 |
| Secured by second (or junior) liens | 1,903 | 1,513 |
| Total | $3,377 | $3,016 |

At December 31, 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 18% 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 recoveries for the trailing twelve months to average balances at December 31, 2022 and 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 our 1-4 family residential mortgage portfolio and our HECL portfolio.

### Nonperforming Assets

Nonperforming assets include nonaccrual loans and other real estate owned (“OREO”) or foreclosed properties. Nonperforming assets as a percentage of loans and leases and OREO decreased to 0.27% at December 31, 2022, compared with 0.53% at December 31, 2021.

Total nonaccrual loans at December 31, 2022 decreased to $149 million from $271 million, reflecting strong 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 at least a period of 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 and accruing loans past due 90 days or more.

#### Schedule 26

### NONPERFORMING ASSETS

*(Dollar amounts in millions)*

| Nonaccrual loans: | December 31, 2022 | 2021 | 2020 | 2019 | 2018 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Loans held for sale | $— | $— | $— | $— | $6 |
| Commercial: |  |  |  |  |  |
| Commercial and industrial | 56 | 124 | 140 | 110 | 82 |
| PPP | 7 | 3 | — | — | — |
| Leasing | — | — | — | — | 2 |
| Owner-occupied | 24 | 57 | 76 | 65 | 67 |
| Municipal | — | — | — | — | 1 |
| Commercial real estate: |  |  |  |  |  |
| Term | 14 | 20 | 31 | 16 | 38 |
| Consumer: |  |  |  |  |  |
| Real estate | 48 | 66 | 119 | 52 | 55 |
| Other | — | 1 | 1 | — | 1 |
| Nonaccrual loans | 149 | 271 | 367 | 243 | 252 |
| Other real estate owned1: |  |  |  |  |  |
| Commercial: |  |  |  |  |  |
| Commercial properties | — | 1 | 4 | 5 | 2 |
| Developed land | — | — | — | 1 | — |
| Land | — | — | — | 1 | — |
| Residential: |  |  |  |  |  |
| 1-4 family | — | — | — | 1 | 2 |
| Other real estate owned | — | 1 | 4 | 8 | 4 |
| Total nonperforming assets | $149 | $272 | $371 | $251 | $256 |
| Accruing loans past due 90 days or more: |  |  |  |  |  |
| Commercial: | $5 | $7 | $2 | $9 | $7 |
| Commercial real estate | — | — | 8 | — | 1 |
| Consumer | 1 | 1 | 2 | 1 | 2 |
| Total | $6 | $8 | $12 | $10 | $10 |
| Ratio of nonaccrual loans to net loans and leases2 | 0.27% | 0.53% | 0.69% | 0.50% | 0.54% |
| Ratio of nonperforming assets to net loans and leases2 and other real estate owned | 0.27% | 0.53% | 0.69% | 0.51% | 0.55% |
| Ratio of accruing loans past due 90 days or more to net loans and leases2 | 0.01% | 0.02% | 0.02% | 0.02% | 0.02% |

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

#### 2 Includes loans held for sale.

### 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 December 31, 2022 and 2021, TDRs totaled $235 million and $326 million, respectively. Modifications that qualified for applicable accounting and regulatory exemptions 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 is returned to accrual status.

#### Schedule 27

### ACCRUING AND NONACCRUING TROUBLED DEBT RESTRUCTURED LOANS

*(In millions)*

|  | December 31, 2022 | 2021 | 2020 | 2019 | 2018 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Restructured loans – accruing | $197 | $221 | $198 | $78 | $112 |
| Restructured loans – nonaccruing | 38 | 105 | 113 | 75 | 90 |
| Total | $235 | $326 | $311 | $153 | $202 |

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.

#### Schedule 28

### TROUBLED DEBT RESTRUCTURED LOANS ROLLFORWARD

*(In millions)*

|  | 2022 | 2021 |
| --- | ---: | ---: |
| Balance at beginning of year | $326 | $311 |
| New identified troubled debt restructuring and principal increases | 68 | 235 |
| Payments and payoffs | (131) | (117) |
| Charge-offs | (9) | (3) |
| No longer reported as troubled debt restructuring | (3) | (86) |
| Sales and other | (16) | (14) |
| Balance at end of year | $235 | $326 |

### 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 schedules present the changes in and allocation of the ACL:

#### Schedule 29

### CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES

*(Dollar amounts in millions)*

|  | 2022 | 2021 | 2020 | 2019 | 2018 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Loans and leases outstanding, on December 31, | $55,653 | $50,851 | $53,476 | $48,709 | $46,714 |
| Average loans and leases outstanding: |  |  |  |  |  |
| Commercial - excluding PPP loans | 28,500 | 25,014 | 25,193 | 24,990 | 23,333 |
| Commercial - PPP loans | 725 | 4,566 | 4,534 | — | — |
| Commercial real estate | 12,251 | 12,136 | 11,854 | 11,675 | 11,079 |
| Consumer | 11,122 | 10,267 | 11,435 | 11,600 | 11,013 |
| Total average loans and leases outstanding | $52,598 | $51,983 | $53,016 | $48,265 | $45,425 |
| **Allowance for loan and lease losses:** |  |  |  |  |  |
| Balance at beginning of year 1 | $513 | $777 | $497 | $495 | $518 |
| Provision for loan losses | 101 | (258) | 385 | 37 | (39) |
| Charge-offs: |  |  |  |  |  |
| Commercial | 72 | 35 | 113 | 57 | 46 |
| Commercial real estate | — | — | 1 | 4 | 5 |
| Consumer | 10 | 13 | 14 | 17 | 18 |
| Total | 82 | 48 | 128 | 78 | 69 |
| Recoveries: |  |  |  |  |  |
| Commercial | 32 | 29 | 14 | 25 | 68 |
| Commercial real estate | — | 3 | — | 6 | 9 |
| Consumer | 11 | 10 | 9 | 10 | 8 |
| Total | 43 | 42 | 23 | 41 | 85 |
| Net loan and lease charge-offs | 39 | 6 | 105 | 37 | (16) |
| Balance at end of year | $575 | $513 | $777 | $495 | $495 |
| **Reserve for unfunded lending commitments:** |  |  |  |  |  |
| Balance at beginning of year 1 | $40 | $58 | $29 | $57 | $58 |
| Provision for unfunded lending commitments | 21 | (18) | 29 | 2 | (1) |
| Balance at end of year | $61 | $40 | $58 | $59 | $57 |
| **Total allowance for credit losses:** |  |  |  |  |  |
| Allowance for loan and lease losses | $575 | $513 | $777 | $495 | $495 |
| Reserve for unfunded lending commitments | 61 | 40 | 58 | 59 | 57 |
| Total allowance for credit losses | $636 | $553 | $835 | $554 | $552 |
| Ratio of allowance for credit losses to net loans and leases, on December 31, 2 | 1.14% | 1.09% | 1.56% | 1.14% | 1.18% |
| Ratio of allowance for credit losses to nonaccrual loans, on December 31, | 427% | 204% | 228% | 228% | 224% |
| Ratio of allowance for credit losses to nonaccrual loans and accruing loans past due 90 days or more, on December 31, | 410% | 198% | 220% | 220% | 216% |
| Ratio of total net charge-offs to average total loans and leases 3 | 0.07% | 0.01% | 0.20% | 0.08% | (0.04)% |
| Ratio of commercial net charge-offs to average commercial loans | 0.14% | 0.02% | 0.33% | 0.13% | (0.09)% |
| Ratio of commercial real estate net charge-offs to average commercial real estate loans | 0.00% | (0.02)% | 0.01% | (0.02)% | (0.04)% |
| Ratio of consumer net charge-offs to average consumer loans | (0.01)% | 0.03% | 0.04% | 0.06% | 0.09% |

*1 Beginning balances at January 1, 2020 for the allowance for loan and lease losses and reserve for unfunded lending commitments do not agree to their respective ending balances at December 31, 2019 because of the adoption of the CECL accounting standard.*

*2 The ratio of allowance for credit losses to net loans and leases (ex-PPP loans), at December 31, 2022 and 2021 was 1.15% and 1.13%, respectively.*

*3 The ratio of total net charge-offs to average loans and leases (ex-PPP loans), at December 31, 2022 and 2021 was 0.08% and 0.01%, respectively.*

#### Schedule 30

### ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES

*(Dollar amounts in millions)*

| Loan segment | December 31, 2022 % of total loans | Allocation of ACL | 2021 % of total loans | Allocation of ACL | 2020 % of total loans | Allocation of ACL | 2019 % of total loans | Allocation of ACL | 2018 % of total loans | Allocation of ACL |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial | 54.8% | $316 | 55.9% | $330 | 57.0% | $494 | 52.1% | $380 | 51.7% | $371 |
| Commercial real estate | 22.9 | 189 | 24.0 | 118 | 22.6 | 191 | 23.7 | 121 | 23.8 | 127 |
| Consumer | 22.3 | 131 | 20.1 | 105 | 20.4 | 150 | 24.2 | 53 | 24.5 | 54 |
| Total | 100.0% | $636 | 100.0% | $553 | 100.0% | $835 | 100.0% | $554 | 100.0% | $552 |

The total ACL increased $83 million during 2022, primarily due to loan growth and deterioration in economic scenarios, partially offset by improvements in credit quality. Due to the adoption of the current expected credit loss (“CECL”) standard in 2020, the ACL is not comparable to periods presented prior to that time.

The RULC, which represents a reserve for potential losses associated with off-balance sheet loan commitments, increased $21 million during 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.

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

### Interest Rate Risk

Interest rate risk is one of the most significant risks to which we are regularly exposed. We strive to position the Bank for interest rate changes and manage the balance sheet sensitivity to reduce net interest income volatility. We generally have granular, stable deposit funding. Much of this funding has an indeterminate life with no maturity and can be withdrawn at any time. However, because most deposits come from household and business accounts, their duration is generally long, compared with the short duration of our loan portfolio. As such, we are naturally “asset-sensitive” — meaning that our assets are expected to reprice faster or more significantly than our liabilities. In previous interest rate environments, we have added (1) interest rate swaps to synthetically increase the duration of the loan portfolio, (2) longer-duration securities, and (3) longer-duration loans to reduce the asset sensitivity to a level where an increase in interest rates of 100 bps would result in a positive change in net interest income.

Asset sensitivity measures depend upon 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 December 2023 is approximately 0.80% 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:

#### Schedule 31

### DEPOSIT ASSUMPTIONS

| Product | December 31, 2022 Effective duration (unchanged) | Effective duration (+200 bps) | December 31, 2021 Effective duration (unchanged) | Effective duration (+200 bps) |
| --- | ---: | ---: | ---: | ---: |
| Demand deposits | 3.6% | 3.5% | 3.6% | 2.8% |
| Money market | 2.3% | 2.0% | 1.7% | 1.7% |
| Savings and interest-bearing | 3.1% | 2.8% | 2.4% | 2.2% |

As the more rate-sensitive deposits have runoff, the effective duration of deposits has lengthened due to remaining deposits that are assumed to be 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 December 31, 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.

#### Schedule 32

### DERIVATIVES DESIGNATED IN QUALIFYING HEDGING RELATIONSHIPS

*(Dollar amounts in millions)*

| Cash flow hedges Cash flow asset hedges 1 | 2023 First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 2024 First Quarter | Second Quarter |  | Third Quarter | Fourth Quarter | 2025 | 2026 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Average outstanding notional | $7,500 | $7,033 | $6,733 | $6,433 | $6,000 | $5,666 |  | $5,233 | $4,733 | $3,488 | $2,033 |
| Weighted-average fixed-rate received | 1.76% | 1.75% | 1.71% | 1.63% | 1.53% | 1.48% |  | 1.41% | 1.37% | 1.48% | 1.40% |
|  | **2023** | **2024** | **2025** | **2026** | **2027** | **2028** |  | **2029** | **2030** | **2031** | **2032** |
| **Fair value hedges** |  |  |  |  |  |  |  |  |  |  |  |
| Fair value debt hedges 2 |  |  |  |  |  |  |  |  |  |  |  |
| Average outstanding notional | $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% | —% | —% | —% |
| Fair value asset hedges 3 |  |  |  |  |  |  |  |  |  |  |  |
| Average outstanding notional | $827 | $1,099 | $1,212 | $1,217 | $1,213 | $1,208 |  | $1,203 | $1,198 | $1,192 | $1,156 |
| Weighted-average fixed-rate paid | 1.65% | 1.71% | 1.74% | 1.74% | 1.74% | 1.73% | 1.73% | 1.73% | 1.73% | 1.73% | 1.72% |

*1 Cash flow asset hedges consist of receive-fixed swaps hedging pools of floating-rate 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.*

*3 Fair value asset hedges consist of pay-fixed swaps hedging fixed-rate AFS securities. Increasing notional amounts are due to forward starting swaps.*

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.

#### Schedule 33

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

|  | December 31, 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) | (2.4)% | —% | 2.4% | 4.8% | 7.1% | (5.2)% | —% | 11.2% | 22.7% | 33.6% |
| Economic Value of Equity (EVE) | 2.0% | —% | (1.1)% | (2.3)% | (3.7)% | 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 2022, primarily due to (1) deposit runoff, (2) an increase in receive-fixed-rate swap notional, (3) an increase in the amount of fixed-rate securities, and (4) 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 35%, the EaR in the +100 bps rate shock would change from 2.4% to 1.3%.

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.

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 reduce net interest income by approximately 1% at December 31, 2023, compared with December 31, 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 December 31, 2022, we expect emergent sensitivity to reduce net interest income by approximately 1% from the latent sensitivity level, for a cumulative 2% reduction in net interest income.

Our focus on business banking also plays a significant role in determining the nature of our asset-liability management posture. At December 31, 2022, $25.2 billion of our commercial lending and CRE loan balances were scheduled to reprice in the next six months. Of these variable-rate loans, approximately 98% 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 $7.3 billion of cash flow hedges by receiving fixed rates on interest rate swaps. At December 31, 2022, we also had $3.6 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 Transition

LIBOR is being phased out globally, and banks are required to migrate to alternative reference rates no later than June 2023. To facilitate the transition process, we instituted an orderly enterprise-wide program to identify, assess, and monitor risks associated with the expected discontinuance or unavailability of LIBOR. This program included active engagement or involvement of senior management, the Enterprise Risk Management Committee, industry working groups, and our regulators.

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.

At December 31, 2022, we had approximately $14.2 billion in loans (mainly commercial loans), unfunded lending commitments, and securities referencing LIBOR. The amount of borrowed funds referencing LIBOR at December 31, 2022 was less than $1 billion. These amounts exclude derivative assets and liabilities on the consolidated balance sheet. At December 31, 2022, the notional amount of our LIBOR-referenced interest rate derivative contracts was $8.4 billion, of which nearly all related to contracts with central counterparty clearinghouses.

We support our customers’ needs by accommodating various alternative reference rates, including the Constant Maturity Treasury (“CMT”) rate, the FHLB rate, SOFR, BSBY, the prime rate, and AMERIBOR. During 2022, a significant number of customers voluntarily migrated to an alternative reference rate. We expect the remaining customers will move to an alternative rate index in accordance with the relevant fallback provisions in their contracts prior to June 2023. Under the Adjustable Interest Rate (LIBOR) Act of 2022, the Federal Reserve identified benchmark replacement rates for LIBOR contracts lacking fallback provisions with a clearly defined or practical replacement benchmark rate. Where applicable, these replacement rates will be used.

For more information on the transition from LIBOR, see related risk factors on page 13.

### Market Risk — Fixed Income

We underwrite municipal and corporate securities. We also trade municipal, agency, and U.S. 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 December 31, 2022 and 2021, we had $465 million and $372 million of trading assets, and $187 million and $254 million of securities sold, not yet purchased, 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 AOCI for each financial reporting period. During 2022, the after-tax change in AOCI attributable to AFS securities decreased $2.7 billion, compared with a $336 million decrease during 2021, due largely to increases in benchmark interest rates. See Note 5 of the Notes to Consolidated Financial Statements for further information regarding the accounting for investment securities.

As discussed in the Net Interest Income and NIM section above, our deposit costs remained 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

Through our equity investment activities, we own equity securities that are publicly traded. In addition, we own equity securities in governmental entities and companies, e.g., Federal Reserve Bank and the FHLB, that are not publicly traded. Equity investments may be accounted for at cost less impairment and adjusted for observable price changes, fair value, the equity method, or full consolidation methods of accounting, depending on our ownership position and degree of influence over the investees’ business. Regardless of the accounting method, the value of our investment is subject to fluctuation. Because the fair value of these securities may fall below the cost at which we acquired them, we are exposed to the possibility of loss. Equity investments in private and public companies are evaluated, monitored, and approved by members of management in our Equity Investments Committee and Securities Valuation Committee.

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 approximately $172 million and $179 million at December 31, 2022 and 2021, respectively. On occasion, some of the companies within our SBIC investments 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 the Notes to Consolidated Financial Statements 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.

Since liquidity risk is closely linked to both credit risk and market risk, many of the previously described risk control mechanisms also apply to the monitoring and management of liquidity risk. We manage our liquidity to provide adequate funds for our customers’ credit needs, capital plan actions, anticipated financial and contractual obligations, which include withdrawals by depositors, debt and capital service requirements, and lease obligations.

Overseeing liquidity management is the responsibility of ALCO, which implements a Board-approved corporate Liquidity Policy. This policy addresses monitoring and maintaining adequate liquidity, diversifying funding positions, and anticipating future funding needs. The policy also includes liquidity ratio guidelines, such as a 30-day liquidity coverage ratio, that are used to monitor our liquidity positions as well as our various stress test and liquid asset measurements. We perform liquidity stress tests and assess our portfolio of highly liquid assets (sufficient to cover 30-day funding needs under stress scenarios). 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 December 31, 2022, our investment securities portfolio of $23.5 billion and cash and money market investments of $4.4 billion, collectively comprised 31% of total assets.

Our Treasury group, under the direction of the Corporate Treasurer, manages our liquidity and funding, with oversight by ALCO. The Treasurer is responsible for recommending changes to existing funding plans and our policies related to liquidity and funding. These recommendations are submitted for approval to ALCO, and changes to the policies are also approved by the ERMC and the Board. We have adopted policy limits that govern liquidity risk. The policy requires us to maintain a buffer of highly liquid assets sufficient to cover cash outflows in the event of a severe liquidity crisis. We complied with this policy throughout 2022.

### Liquidity Regulation

We perform liquidity stress tests and assess our portfolio of highly liquid assets (sufficient to cover 30-day funding needs under the stress scenarios) even though we are no longer subject to the enhanced prudential standards for liquidity management (Reg. YY). In addition, we exceed the regulatory requirements that mandate a buffer of securities and other liquid assets to cover 70% of 30-day cash outflows under the assumptions mandated therein, although we are no longer subject to the regulations of the Final LCR Rule.

### Liquidity Management Actions

Our consolidated cash, interest-bearing deposits held as investments, federal funds sold, and securities purchased under agreements to resell totaled $4.4 billion at December 31, 2022, compared with $13.0 billion at December 31, 2021. During 2022, the primary sources of cash came from an increase in short-term funds borrowed, a decrease in money market investments, and net cash provided by operating activities. Uses of cash during the same period included primarily an increase in loans and leases, an increase in investment securities, and the redemption of long-term debt.

Total deposits were $71.7 billion at December 31, 2022, compared with $82.8 billion at December 31, 2021. The $11.1 billion decrease during 2022 was a result of a $5.3 billion and $6.5 billion decrease in noninterest-bearing demand deposits and savings and money market deposits, respectively, partially offset by a $0.7 billion increase in time deposits. Our core deposits, consisting of noninterest-bearing demand deposits, savings and money market deposits, and time deposits under $250,000, were $70.3 billion at December 31, 2022, compared with $81.9 billion at December 31, 2021.

At December 31, 2022, maturities of our long-term senior and subordinated debt ranged from June 2023 to October 2029. In February 2022, we redeemed $290 million of the 4-year, 3.35% senior notes.

Our cash payments for interest, reflected in operating expenses, increased to $160 million during 2022, from $81 million during 2021, primarily due to higher interest rates paid on deposits and borrowed funds and an increased balance of fed funds and other short-term borrowings. Additionally, we paid approximately $269 million of dividends on preferred and common stock during 2022, compared with $263 million during 2021. Dividends paid per common share were $1.58 in 2022, compared with $1.44 in 2021. In January 2023, the Board approved a quarterly common dividend of $0.41 per share.

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. The ratings not only influence the costs associated with borrowings, but can also influence the sources of the borrowings. All of the credit rating agencies rate our debt at an investment-grade level. During 2022, Moody’s improved its credit rating and upgraded its outlook. The following schedule presents our credit ratings.

#### Schedule 34

### CREDIT RATINGS

*as of January 31, 2023:*

|  |  |  |  |  |
| --- | --- | --- | --- | --- |
| **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 additional liquidity and funding. We are a member of the FHLB of Des Moines, which allows member banks to borrow against 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 December 31, 2022, our total investment in FHLB and Federal Reserve stock was $294 million and $68 million, respectively, compared with $11 million and $81 million at December 31, 2021.

The amount available for additional FHLB and Federal Reserve borrowings was approximately $13.4 billion at December 31, 2022, compared with $18.3 billion at December 31, 2021. Loans with a carrying value of approximately $27.6 billion at December 31, 2022 have been pledged at the FHLB of Des Moines and the Federal Reserve as collateral for current and potential borrowings, compared with $26.8 billion at December 31, 2021. At December 31, 2022, we had $7.1 billion of short-term FHLB borrowings outstanding and no Federal Reserve borrowings outstanding, compared with no FHLB or Federal Reserve borrowings outstanding at December 31, 2021.

Total borrowed funds increased by $9.2 billion during 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.

### Contractual Obligations

The following schedule summarizes our contractual obligations at December 31, 2022.

#### Schedule 35

### CONTRACTUAL OBLIGATIONS

*(In millions)*

|  | One year or less | Over one year through three years | Over three years through five years | Over five years | Indeterminable maturity 1 | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Deposits | $2,038 | $209 | $61 | $1 | $69,343 | $71,652 |
| Unfunded lending commitments | 7,654 | 9,217 | 2,949 | 9,808 | — | 29,628 |
| Standby letters of credit: |  |  |  |  |  |  |
| Financial | 667 | — | — | — | — | 667 |
| Performance | 184 | — | — | — | — | 184 |
| Commercial letters of credit | 11 | — | — | — | — | 11 |
| Mortgage-backed security purchase agreements 2 | 23 | — | — | — | — | 23 |
| Commitments to make venture and other noninterest-bearing investments 3 | — | — | — | — | 77 | 77 |
| Federal funds and other short-term borrowings | 10,417 | — | — | — | — | 10,417 |
| Long-term debt 4 | 128 | — | — | 587 | — | 715 |
| Operating leases | 47 | 67 | 39 | 73 | — | 226 |
| Total contractual obligations | $21,169 | $9,493 | $3,049 | $10,469 | $69,420 | $113,600 |

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

*2 Represents agreements with Farmer Mac to purchase securities backed by certain agricultural mortgage loans.*

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

#### 4 The values presented do not reflect the associated hedges.

In addition to the commitments specifically noted in the schedule above, we enter into a number of contractual commitments in the ordinary course of business. These include software licensing and maintenance, telecommunications services, facilities maintenance and equipment servicing, supplies purchasing, and other goods and services used in the operation of our business. Some of these contracts are renewable or cancellable annually or in shorter time intervals. To secure favorable pricing concessions, we may also commit to contracts that may extend several years.

We enter into derivative contracts under which we are required either to receive or pay cash, depending on changes in interest rates. These contracts are measured at fair value on the balance sheet, reflecting the net present value of the expected future cash receipts and payments based on market interest rates. See Note 7 of the Notes to Consolidated Financial Statements for further information on derivative contracts.

### Operational, Technology, and Cybersecurity Risk Management

### Operational Risk Management

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

We have instituted a number of measures to manage our operational risk, including, but not limited to: (1) transactional documentation requirements; (2) systems and procedures to monitor transactions and positions; (3) systems and procedures to detect and mitigate attempts to commit fraud, penetrate our systems or telecommunications, access customer data, or deny normal access to those systems to our legitimate customers; (4)

regulatory compliance reviews; and (5) periodic reviews by our Compliance Risk Management, Internal Audit, Operational Risk Management, and Credit Examination departments. Reconciliation procedures have been established to ensure that data processing systems consistently and accurately capture critical data. In addition, the Data Governance department provides additional oversight of data integrity and data availability. Further, we maintain disaster recovery and business continuity plans for operational support in the event of natural or other disasters. We also mitigate certain operational risks through the purchase of insurance, including errors and omissions and professional liability insurance.

We continually strive to improve our operational risk management, including enhancement of risk identification, risk and control self-assessments, business process mappings, regular tests of controls, and anti-fraud measures, which are reported on a regular basis to enterprise management committees. The Operational Risk Committee reports directly to the ROC. Key measures have been established in line with our Risk Management Framework to increase oversight by ERM and Operational Risk Management through the strengthening of new initiative reviews and enhancements to enterprise supply chain and vendor risk management. We also continue to enhance and strengthen the Enterprise Business Continuity program, Enterprise Security program, and Enterprise Incident Management reporting.

Significant enhancements have also been made to governance, technology, and reporting, including the establishment of Policy and Committee Governance programs; the implementation of a governance, risk, and control system to manage and integrate business processes, risks, controls, assessments, and control testing; and the creation of an Enterprise Risk Profile and Operational Risk Profile. In addition, our Enterprise Exam Management department has standardized our response and reporting, and increased our effectiveness and efficiencies with regulatory examination, communications and issues management.

### Technology Risk Management

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

Technology governance is also in place at the operational level within our Enterprise and Technology Operations (“ETO”) division to help ensure safety, soundness, operational resiliency, and compliance with our technology and cybersecurity policy requirements. ETO management teams participate in enterprise architecture review boards and technology risk councils to address such issues as enterprise standards compliance and strategic alignment, cybersecurity vulnerability management, end-of-life, audit, risk and compliance issue management, and asset management. Thresholds are defined to escalate risks in these areas to the attention of the ROC and ERMC committees as appropriate.

### Cybersecurity Risk Management

Cybersecurity risk is the risk of adverse impacts to the confidentiality, integrity and availability of data owned, stored or processed by the Bank. The number and sophistication of attempts to disrupt or penetrate our systems, and those of our suppliers — sometimes referred to as hacking, cybersecurity fraud, cyberattacks, or other similar names — continues to grow. To combat the ever-increasing sophistication of cyberattacks, we are continually improving methods for detecting and preventing attacks. We have implemented policies and procedures, benchmarked to industry, regulatory, and cybersecurity frameworks (e.g., National Institute of Standards and Technology), developed specific training for our employees, monitored threats through our Cybersecurity Operations Center, and have elevated our oversight and internal reporting to the Board and relevant committees. Further, we regularly engage independent third-party cybersecurity experts to test for vulnerabilities in our environment. We also conduct our own internal simulations and tabletop exercises as well as participate in financial sector-specific exercises. We have engaged consultants at both the strategic level and at the technology implementation level to assist us in better managing this critical risk. Cybersecurity defense and improving our resiliency against cybersecurity threats remain a key focus of our Board and all levels of management.

### Capital Management

### Overview

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

- Setting overall capital targets within the Board-approved Capital Policy, monitoring performance compared with our Capital Policy limits, and recommending changes to capital including dividends, common stock issuances and repurchases, subordinated debt, and changes in major strategies to maintain ourselves at well-capitalized levels;
- Maintaining an adequate capital cushion to withstand adverse stress events while continuing to meet the borrowing needs of our customers, and to provide reasonable assurance of continued access to wholesale funding, consistent with fiduciary responsibilities to depositors and bondholders; and
- Reviewing our agency ratings.

A strong capital position is vital to the achievement of our key corporate objectives, our continued profitability, and to promoting depositor and investor confidence. We have fundamental financial objectives and policies to consistently improve risk-adjusted returns on our shareholders’ capital, including (1) maintaining sufficient capital to support the current needs and growth of our businesses, and (2) fulfilling responsibilities to depositors and bondholders while managing capital distributions to shareholders through dividends and repurchases of common stock.

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 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 Board and OCC approval. Shares may be repurchased occasionally in the open market or through privately negotiated transactions.

#### Schedule 36

### SHAREHOLDERS' EQUITY

*(Dollar amounts in millions)*

| Shareholders’ equity: | December 31, 2022 | December 31, 2021 | Amount change | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Preferred stock | $440 | $440 | $— | —% |
| Common stock and additional paid-in capital | 1,754 | 1,928 | (174) | (9) |
| Retained earnings | 5,811 | 5,175 | 636 | 12 |
| Accumulated other comprehensive income | (3,112) | (80) | (3,032) | NM |
| Total shareholders' equity | $4,893 | $7,463 | $(2,570) | (34)% |

Total shareholders’ equity decreased $2.6 billion, or 34% to $4.9 billion at December 31, 2022. A $636 million increase in retained earnings was offset by significant decreases in AOCI and common stock and additional paid-in capital.

AOCI decreased $3.0 billion, primarily due to the decline in the fair value of fixed-rate AFS securities as a result of increases in benchmark 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. Although changes in AOCI are reflected in shareholders’ equity, they are excluded from regulatory capital, and therefore do not impact our regulatory ratios. We have excluded the impact of AOCI from certain non-GAAP financial measures, such as tangible common equity and related measures. See “Non-GAAP Financial Measures” on page 70 for further information. Refer also 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 stock and additional paid-in capital decreased $174 million, primarily due to common stock repurchases.

### Capital Management Actions

Common shares outstanding decreased 3.0 million in 2022, due to common stock repurchases. During 2022, we repurchased 3.6 million common shares outstanding for $200 million, compared with 13.5 million common shares repurchased for $800 million during 2021. In January 2023, the Board approved a plan to repurchase up to $50 million of common shares outstanding during the first quarter of 2023. In February 2023, we repurchased 946,644 common shares outstanding for $50 million at an average price of $52.82.

#### Schedule 37

### CAPITAL DISTRIBUTIONS

*(In millions, except share data)*

| Capital distributions: | 2022 | 2021 |
| --- | ---: | ---: |
| Preferred dividends paid | $29 | $29 |
| Bank preferred stock redeemed | — | 126 |
| Total capital distributed to preferred shareholders | 29 | 155 |
| Common dividends paid | 240 | 232 |
| Bank common stock repurchased 1 | 202 | 800 |
| Total capital distributed to common shareholders | 442 | 1,032 |
| Total capital distributed to preferred and common shareholders | $471 | $1,187 |
| Weighted average diluted common shares outstanding (in thousands) | 150,271 | 160,234 |
| Common shares outstanding, at year-end (in thousands) | 148,664 | 151,625 |

*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. As of January 1, 2023, we had $1.8 billion of retained net profits available for distribution.

We paid dividends on preferred stock of $29 million in both 2022 and 2021. The common stock dividend was $0.41 per share during the second half of 2022, compared with $0.38 during the first half of 2022. We paid common dividends of $240 million in 2022, compared with $232 million in 2021. In January 2023, the Board declared a quarterly dividend of $0.41 per common share payable on February 23, 2023, to shareholders of record on February 16, 2023.

### Basel III

We are subject to Basel III capital requirements to maintain adequate levels of capital as measured by several regulatory capital ratios. At December 31, 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.

#### Schedule 38

### CAPITAL RATIOS

|  | December 31, 2022 | December 31, 2021 | December 31, 2020 |
| --- | ---: | ---: | ---: |
| Average equity to average assets | 6.6% | 9.0% | 10.0% |
| Return on average common equity | 16.0% | 14.9% | 7.2% |
| Return on average tangible common equity1 | 13.9% | 17.8% | 8.8% |
| Tangible equity ratio1 | 7.6% | 7.1% | 8.2% |
| Tangible common equity ratio1 | 7.1% | 6.6% | 7.5% |
| Basel III risk-based capital ratios: |  |  |  |
| Common equity tier 1 capital | 9.8% | 10.2% | 10.8% |
| Tier 1 risk-based | 10.5% | 10.9% | 11.8% |
| Total risk-based | 12.2% | 12.8% | 14.1% |
| Tier 1 leverage | 7.7% | 7.2% | 8.3% |

*1 See “Non-GAAP Financial Measures” on page 70 for more information regarding these ratios.*

Our regulatory Tier 1 risk-based capital and total risk-based capital were $6.9 billion and $8.1 billion at December 31, 2022, compared with $6.5 billion and $7.7 billion, respectively, at December 31, 2021. See the “Supervision and Regulation” section on page 6 and Note 15 of the Notes to Consolidated Financial Statements for more information about Basel III capital requirements.

### CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

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

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

### Allowance for Credit Losses

The ACL includes the ALLL and the RULC and represents our estimate of current expected credit losses related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. The ACL for our AFS and HTM debt securities portfolio is estimated separately from loans and is not reflected separately on the consolidated balance sheet due to immateriality. The ACL for debt securities was less than $1 million at both December 31, 2022 and 2021.

The ACL may change significantly each period because the ACL is subject to economic forecasts that may change materially from period to period. Although we believe that our methodology for determining an appropriate level for the ACL adequately addresses the various components that could potentially result in credit losses, the processes and their elements include features that may be susceptible to significant change. Any unfavorable differences between the actual outcome of credit-related events and our estimates could require an additional provision for credit losses.

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

If the ACL was evaluated on the baseline economic scenario rather than probability weighting multiple scenarios, the quantitatively determined amount of the ACL at December 31, 2022 would decrease by approximately $86 million. Additionally, if the probability of default risk-grade for all pass-graded loans was immediately downgraded one grade on our internal risk-grading scale, the quantitatively determined amount of the ACL at December 31, 2022 would increase by approximately $52 million. These sensitivity analyses are hypothetical and have been provided only to indicate the potential impact that changes in economic forecasts and changes in risk-grades may have on the ACL estimate. See Note 6 of the Notes to Consolidated Financial Statements for more information on the processes and methodologies used to estimate the ACL.

### Fair Value Estimates

We measure certain of our assets and liabilities at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. To increase consistency and comparability in fair value measurements, generally accepted accounting principles (“GAAP”) has established a three-level hierarchy to prioritize the valuation inputs among (1) observable inputs that reflect quoted prices in active markets, (2) inputs other than quoted prices with observable market data, and (3) unobservable data such as our own data.

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

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

For assets and liabilities measured at fair value, our policy is to maximize the use of observable inputs, when available, and minimize the use of unobservable inputs when developing fair value measurements. In certain cases, when market observable inputs for model-based valuation techniques may not be readily available, we are required to make judgments about the assumptions market participants would use in estimating the fair value of the financial instrument. The models used to determine fair value adjustments are regularly evaluated by management for relevance under current facts and circumstances.

Changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. When market data is not available, we use valuation techniques requiring more management judgment to estimate the appropriate fair value.

Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary measure of accounting. Fair value is used on a nonrecurring basis to measure certain assets or liabilities (including loans held for sale and OREO) for impairment or for disclosure purposes in accordance with current accounting guidance.

Impairment analysis also relates to long-lived assets, goodwill, and core deposit and other intangible assets. An impairment loss is recognized if the carrying amount of the asset is not likely to be recoverable and exceeds its fair value. In determining the fair value, management uses models and applies the techniques and assumptions previously described.

AFS securities are valued using several methodologies, which depend on the nature of the security, availability of current market information, and other factors. AFS securities in an unrealized loss position are formally reviewed on a quarterly basis for the presence of credit impairment. If we have the intent to sell an identified security, or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, we first recognize an identified impairment. If we do not have the intent to sell a security, and it is more likely than not that we will not be required to sell a security prior to recovery of its amortized cost basis, then we determine whether there is any impairment attributable to credit-related factors. Credit-related impairment is recognized as an allowance. Full or partial write-offs of an AFS security are recorded in the period in which the security is deemed to be uncollectible.

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

Notes 1, 3, 5, 7, and 10 of the Notes to Consolidated Financial Statements and the “Investment Securities Portfolio” on page 42 contain further information regarding the use of fair value estimates.

### Goodwill

Goodwill is recorded at fair value in the financial statements of a reporting unit at the time of its acquisition and is subsequently evaluated at least annually for impairment in accordance with current accounting standards.

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

To determine the fair value of a reporting unit, we use (1) a market method that incorporates comparable publicly traded commercial banks along with data related to recent comparable merger and acquisition activity, and (2) an income method that consists of a discounted present value of management’s estimates of future cash flows.

Critical assumptions used as part of these methods generally include:

- Selection of comparable publicly traded companies based on location, size, and business focus and composition;
- Selection of market comparable acquisition transactions, if available, based on location, size, business focus and composition, and date of the transaction;
- The discount rate, which is based on our estimate of the cost of equity capital;
- The projections of future earnings and cash flows of the reporting unit;
- The relative weight given to the valuations derived by the two methods described previously; and
- The control premium associated with reporting units.

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

During the fourth quarter of 2022, we performed our annual goodwill impairment evaluation, effective October 1, 2022. Based on our evaluation, we determined that none of our reporting units were impaired.

### RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

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

### NON-GAAP FINANCIAL MEASURES

This Form 10-K presents non-GAAP financial measures, in addition to GAAP financial measures. The adjustments to reconcile from the applicable GAAP financial measures to the non-GAAP financial measures are presented in the following schedules. We consider these adjustments to be relevant to ongoing operating results and provide a meaningful basis for period-to-period comparisons. We use these non-GAAP financial measures to assess our performance and financial position. We believe that presenting these non-GAAP financial measures 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 and accumulated other comprehensive income or loss. 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.

#### Schedule 39

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

*(Dollar amounts in millions)*

|  |  | Year Ended December 31, 2022 | 2021 | 2020 |
| --- | --- | ---: | ---: | ---: |
| Net earnings applicable to common shareholders (GAAP) |  | $878 | $1,100 | $505 |
| Adjustments, net of tax: |  |  |  |  |
| Amortization of core deposit and other intangibles |  | 1 | 1 | — |
| Net earnings applicable to common shareholders, net of tax | (a) | $879 | $1,101 | $505 |
| Average common equity (GAAP) |  | $5,472 | $7,371 | $7,050 |
| Average goodwill and intangibles |  | (1,022) | (1,015) | (1,015) |
| Average accumulated other comprehensive loss (income), net of tax |  | 1,863 | (164) | (270) |
| Average tangible common equity (non-GAAP) | (b) | $6,313 | $6,192 | $5,765 |
| Return on average tangible common equity (non-GAAP) | (a/b) | 13.9% | 17.8% | 8.8% |

70

#### Schedule 40

### 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)*

|  | 2022 | December 31, 2021 | 2020 |  |
| --- | --- | ---: | ---: | ---: |
| Total shareholders’ equity (GAAP) |  | $4,893 | $7,463 | $7,886 |
| Goodwill and intangibles |  | (1,065) | (1,015) | (1,016) |
| Accumulated other comprehensive loss (income), net of tax |  | 3,112 | 80 | (325) |
| Tangible equity (non-GAAP) | (a) | 6,940 | 6,528 | 6,545 |
| Preferred stock |  | (440) | (440) | (566) |
| Tangible common equity (non-GAAP) | (b) | $6,500 | $6,088 | $5,979 |
| Total assets (GAAP) |  | $89,545 | $93,200 | $81,479 |
| Goodwill and intangibles |  | (1,065) | (1,015) | (1,016) |
| Accumulated other comprehensive loss (income), net of tax |  | $3,112 | $80 | $(325) |
| Tangible assets (non-GAAP) | (c) | $91,592 | $92,265 | $80,138 |
| Common shares outstanding (in thousands) | (d) | 148,664 | 151,625 | 164,090 |
| Tangible equity ratio (non-GAAP) | (a/c) | 7.6% | 7.1% | 8.2% |
| Tangible common equity ratio (non-GAAP) | (b/c) | 7.1% | 6.6% | 7.5% |
| Tangible book value per common share (non-GAAP) | (b/d) | $43.72 | $40.15 | $36.44 |

### 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.

#### Schedule 41

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

*(Dollar amounts in millions)*

|  |  | 2022 | 2021 | 2020 |
| --- | --- | ---: | ---: | ---: |
| Noninterest expense (GAAP) | (a) | $1,878 | $1,741 | $1,704 |
| Adjustments: |  |  |  |  |
| Severance costs |  | 1 | 1 | 1 |
| Other real estate expense, net |  | 1 | — | 1 |
| Amortization of core deposit and other intangibles |  | 1 | 1 | — |
| Restructuring costs |  | — | — | 1 |
| Pension termination-related expense (income) 1 |  | — | (5) | 28 |
| SBIC investment success fee accrual 2 |  | (1) | 7 | — |
| Total adjustments | (b) | 2 | 4 | 31 |
| Adjusted noninterest expense (non-GAAP) | (a-b)=(c) | $1,876 | $1,737 | $1,673 |
| Net interest income (GAAP) | (d) | $2,520 | $2,208 | $2,216 |
| Fully taxable-equivalent adjustments | (e) | 37 | 32 | 28 |
| Taxable-equivalent net interest income (non-GAAP) | (d+e)=(f) | 2,557 | 2,240 | 2,244 |
| Noninterest income (GAAP) | (g) | 632 | 703 | 574 |
| Combined income (non-GAAP) | (f+g)=(h) | 3,189 | 2,943 | 2,818 |
| Adjustments: |  |  |  |  |
| Fair value and nonhedge derivative gain (loss) |  | 16 | 14 | (6) |
| Securities gains, net |  | (15) | 71 | 7 |
| Total adjustments | (i) | 1 | 85 | 1 |
| Adjusted taxable-equivalent revenue (non-GAAP) | (h-i)=(j) | $3,188 | $2,858 | $2,817 |
| Pre-provision net revenue (non-GAAP) | (h)-(a) | $1,311 | $1,202 | $1,114 |
| Adjusted pre-provision net revenue (non-GAAP) | (j-c) | 1,312 | 1,121 | 1,144 |
| Efficiency ratio (non-GAAP) | (c/j) | 58.8% | 60.8% | 59.4% |

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

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

## Market risk

As filed, 162 characters.

Information required by this Item is included in “Interest Rate and Market Risk Management” in MD&A beginning on page 56, and is hereby incorporated by reference.

## Controls and procedures

As filed, 926 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 as of December 31, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022. There were no changes in our internal control over financial reporting during the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. See “Report on Management’s Assessment of Internal Control over Financial Reporting” included in Item 8 on page 73 for management’s report on the adequacy of internal control over financial reporting. Also see “Report on Internal Control over Financial Reporting” issued by Ernst & Young LLP included in Item 8 on page 74.

Filed Feb 23, 2023.
Source: SEC EDGAR, the filing index for accession 0000109380-23-000074. Last ingested by Listed: Nov 10, 2026, 03:32 ET. No prices; not investment advice.