Zions Bancorporation, National Association: Form 10-K for the period ended Dec 31, 2024

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 $3.1 billion in 2024, and total assets of approximately $89 billion at December 31, 2024. 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 2024, served by 404 branches and various online, mobile, and digital offerings. We had 9,406 full-time equivalent employees at December 31, 2024.

We conduct our operations primarily through seven separately managed and geographically defined bank divisions, which we refer to as “affiliates,” or “affiliate banks,” each with its own local branding and management teams. These affiliate banks constitute our primary business segments as referenced throughout this document. We emphasize local authority, responsibility, pricing, and customization of certain products 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 more information about our segments, see “Business Segment Results” in Management’s Discussion and Analysis (“MD&A”) on page 43 and Note 22 of the Notes to Consolidated Financial Statements.

PRODUCTS AND SERVICES

We strive to develop long-lasting relationships with our customers by providing competitive products and high-quality service. Building and sustaining these relationships is essential to understanding and meeting our customers’ needs. Some of the products and services we provide, whether delivered digitally or by other means, include:

Commercial and Small Business Banking

We serve a wide range of commercial customers, generally small- and medium-sized businesses. Products and services we provide to our commercial and small business banking customers include:

• Commercial and industrial and owner-occupied lending and leasing;
• Municipal and public finance services;
• Depository account and cash management services;
• Commercial and small business cards, as well as merchant processing services;
• Corporate trust services; and
• Correspondent banking and international lending services.

Capital Markets and Investment Banking

We provide customized financing solutions to help our customers raise capital efficiently, execute strategic transactions, and manage exposure to financial markets. Capital markets products and services include:

• Loan syndications;
• Interest rate derivatives and foreign exchange services;
• Fixed income securities underwriting;
• Advisory and capital raising;
• Commercial mortgage-backed security (“CMBS”) conduit lending; and
• Power and project financing.

Commercial Real Estate Lending

We provide lending products secured by commercial real estate to borrowers that include:

• Term and construction/land development financing, including the following collateral types:
• Commercial multifamily, industrial, and office; and
• Residential single family, community development, and affordable housing.

Retail Banking

We provide quality retail banking products and services to our customers that include:

• Residential mortgages;
• Home equity lines of credit;
• Personal lines of credit and installment consumer loans;
• Depository account services;
• Consumer cards; and
• Personal trust services.

Wealth Management

We offer various wealth management products and services 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; and
• Advanced business succession and estate planning services.

COMPETITION

We operate in a highly competitive environment. Our primary competition for loans, deposits, and other banking services generally comes from commercial banks, credit unions, financial technology companies (“fintechs”), and private credit or debt funds. 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 various other types of companies. Some of our competitors may face fewer regulatory constraints, and have greater capabilities to develop, implement, and offer innovative financial services and technologies. They may also benefit from lower cost structures, taxes, and regulatory burdens.

Our key differentiators include the quality of service delivered, our local community knowledge, the convenience of branch and office locations, the wide range of products and services offered, and the overall relationships with our customers. We strive to compete effectively in all these areas to remain successful.

SUPERVISION AND REGULATION

The banking and financial services business in which we operate is highly regulated. These regulations are designed to promote the safety, soundness, and stability of banking and financial institutions, and to protect the interests of customers, depositors, communities, the Deposit Insurance Fund, and the banking and financial system as a whole. Generally, these regulations are not intended to protect shareholders, investors, or non-depositor creditors. Banking laws and regulations have granted federal banking regulators expanded powers over many aspects of the financial services industry, which have reduced, and may continue to reduce, returns earned by shareholders. Additionally, changes in applicable laws or regulations, and in their application by regulatory agencies, are unpredictable and may have a material effect on our business and results.

General

We are governed by the provisions of the National Bank Act and other statutes applicable to 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”). Additionally, we and some of our subsidiaries are 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, with related regulations administered by the OCC. In terms of securities matters, we are not subject to the Securities Act of 1933 (“Securities Act”), but are subject to OCC regulations governing securities offerings. Our common stock and certain other securities are registered under the Securities and Exchange Act of 1934 (“Exchange Act”), which grants the OCC the authority to administer and enforce certain sections of the Exchange Act applicable to national banks. Despite this, we continue to make filings required by the Exchange Act with the SEC as a voluntary filer. The statutory and regulatory frameworks applicable to us as a national bank are not as well developed as the corporate and securities law frameworks that apply to many other publicly held companies.

Capital Standards – Basel Framework

At December 31, 2024, we exceeded all capital adequacy requirements under the Basel III capital rules, which include specific 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, which affect 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,” designed to absorb losses during periods of economic stress. This buffer is composed entirely of common equity Tier 1 (“CET1”). Financial institutions with a CET1 to risk-weighted assets ratio 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 these constraints depends on the shortfall amount and the institution’s “eligible retained income,” defined as the greater of (1) net income for the four preceding quarters, net of distributions and associated tax effects not reflected in net income, or (2) average net income over the preceding four quarters.

For more information about our capital ratios, see “Capital Management” in MD&A on page 77.

Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) requires each federal banking agency to take prompt corrective action to address identified issues in insured depository institutions, particularly those that fall below one or more prescribed minimum capital ratios. Under FDICIA, the FDIC has established regulations defining five categories for insured depository institutions based on their capital ratios: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.

According to the prompt corrective action provisions of FDICIA, as modified by the Basel III capital rules, an insured depository institution is generally 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%. Conversely, an insured depository institution is generally classified as undercapitalized if it has a CET1 ratio of less than 4.5%, a Tier 1 risk-based capital ratio of less than 6%, a total risk-based capital ratio of less than 8%, and a Tier 1 leverage ratio of less than 4%.

An institution classified as well capitalized, adequately capitalized, or undercapitalized, may be treated as though it were in the next lower capital category if the appropriate federal banking regulator, after notice and opportunity for a 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 faces more restrictions and prohibitions, including limitations on growth, interest rates paid on deposits, acceptance of brokered deposits, and payment of dividends. Furthermore, if a bank is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the federal banking regulator.

The following schedule presents minimum capital ratio and capital conservation buffer requirements, our capital ratios at December 31, 2024, and the minimum requirements to be well capitalized:

MINIMUM CAPITAL RATIO AND CAPITAL CONSERVATION BUFFER REQUIREMENTS

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Regulatory Developments

Resolution and Recovery Planning

Effective October 1, 2024, the FDIC revised its rule regarding the resolution planning requirements for insured depository institutions with $50 billion or more in total assets. Beginning in 2025, banks with $100 billion or more in total assets that are not affiliates of U.S. global systemically important banking organizations (“covered banks”) are required to submit full resolution plans with an identified resolution strategy every three years. Banks with $50 billion to $100 billion in total assets are required to submit more limited information triennially. The guidance also requires these banks to file interim supplemental information regarding their resolution planning in off-cycle years. We expect to file our first informational submission in late 2025.

In October 2024, the OCC issued a final rule amending its recovery planning guidelines for insured national banks. The guidelines require covered banks to develop and maintain a recovery plan tailored to their size, risk profile, activities, and complexity, including their organizational and legal entity structure. The recovery plan, subject to annual testing to validate its effectiveness, should consider both financial and non-financial risks and include elements such as: (1) a range of credible options to restore financial strength and viability, allowing the bank to continue operating as a going concern, and (2) an analysis of how each recovery option might affect capital, liquidity, and funding. We would be required to comply with these guidelines within 12 months after becoming a covered bank.

Basel III Endgame

In July 2023, federal banking regulators issued a proposal to implement the Basel Committee on Banking Supervision’s finalization of the post-crisis bank regulatory capital reforms. Commonly referred to as the “Basel III Endgame,” this proposal would significantly revise the capital requirements for large banking organizations, defined as those with $100 billion or more in total assets. At December 31, 2024, we had $88.8 billion in total assets and do not currently qualify as a large banking organization.

Under the proposal, if our total assets were to increase to $100 billion or more, we would be required to: (1) include certain components of accumulated other comprehensive income (“AOCI”), such as unrealized gains and losses on available-for-sale (“AFS”) securities, in regulatory capital and be subject to increased limitations on deferred tax assets (“DTAs”) as a percent of CET1, (2) hold capital for operational risk and market risk, and (3) calculate risk-based capital ratios under both the standardized approach and the expanded risk-based approach. The Federal Reserve has indicated its intention to collaborate with the other federal banking regulators on a revised proposal in 2025.

Long-term Debt

In August 2023, federal banking regulators issued a proposal to expand the long-term debt requirement to all banks with $100 billion or more in total assets. The proposed rule requires these banks to maintain a minimum outstanding amount of eligible long-term debt that is the greatest of (1) 6% of total risk-weighted assets, (2) 2.5% of total leverage exposure, and (3) 3.5% of average total assets. Under the proposal, if our total assets were to increase to $100 billion or more, we would have a three-year implementation period to issue the necessary debt and meet other requirements. If adopted as proposed, and assuming our assets and liabilities remain largely consistent with those at December 31, 2024, the estimated amount of incremental debt required to meet the new requirements would be approximately $3.1 billion, to be issued over the three-year phase-in period. We anticipate that the issuance of incremental debt would replace other sources of funding, with the timing of any issuance influenced by economic factors and associated borrowing costs.

FDIC Special Assessment

In November 2023, the FDIC issued a final rule to implement a special assessment pursuant to a systemic risk determination to recover the costs associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank in early 2023. Using an assessment base equal to the estimated amount of uninsured deposits above $5 billion at December 31, 2022, the FDIC initially expected to collect the special assessment from banks at an annual rate of approximately 13.4 basis points (“bps”) for an anticipated eight quarterly assessment periods, beginning with the second quarter of 2024.

In June 2024, the FDIC announced that the special assessment would be collected at a lower rate for an additional two quarterly assessment periods, totaling ten periods. During 2023 and 2024, we recorded approximately $101 million in deposit insurance and regulatory expense related to the FDIC special assessment.

Capital Planning and Stress Testing

We use stress testing as an important tool to inform our decisions on the appropriate level of capital to maintain, based on hypothetically stressed economic conditions, comparable in severity to the scenarios published by the Federal Reserve Board (“FRB”). Our most recent internal stress test included hypothetical scenarios that reflected: (1) high inflation, (2) declining commercial property values, (3) increased losses on commercial loans due to declining asset values and slowing economic activity, (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.

Liquidity

We utilize internal liquidity stress tests as a primary tool for establishing and managing liquidity guidelines. These guidelines encompass holdings of investment securities and other liquid assets, levels of readily available contingency funding, concentrations of funding sources, and the maturity profile of liabilities. At December 31, 2024, our sources of liquidity exceeded our uninsured deposits without the need to sell any investment securities. We continue to actively manage our deposit base and associated deposit costs in response to changes in the interest rate environment.

For more information about our liquidity profile, see “Liquidity Risk Management” in MD&A on page 73.

Financial Privacy and Cybersecurity

The federal legislature and federal banking regulators have implemented laws and rules governing the use of consumer information by banks and other financial institutions, including provisions of the Gramm-Leach-Bliley Act. These laws and rules limit the ability of banks and financial institutions to disclose nonpublic information about consumers to unaffiliated third parties, require financial institutions to disclose privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to unaffiliated third parties. These regulations also affect how consumer information is transmitted through diversified financial companies and conveyed to outside suppliers.

Additionally, consumers may prevent the disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as information shown on consumer credit reports and asset and income information from applications. Consumers also have the option to direct banks and financial institutions not to share information about transactions and experiences with affiliated companies for marketing purposes. 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.

Federal and state regulators have been increasingly active in implementing privacy and cybersecurity standards and regulations. For example, SEC rules require timely disclosure of material cybersecurity incidents and description of cybersecurity risk management, strategy, and governance. Additionally, in recent years, a growing number of states, including those in which we conduct business, have enacted, or are considering enacting, laws and regulations that grant consumers enhanced privacy rights and control over personal information, establish or modify data breach notification requirements, and require 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 legislators and bank regulators.

Open Banking

In October 2024, the CFPB issued a final rule under Section 1033 of the Dodd-Frank Act. The rule imposes new data access requirements on various parties in the financial ecosystem, including financial institutions, data aggregators, and businesses authorized by consumers to access information on their behalf. Among other requirements, the rule requires certain entities, including the Bank, to make available to consumers, upon request, information in their control or possession regarding the consumer financial products or services obtained from the Bank.

The rule also requires data providers, such as the Bank, to establish a developer interface that meets specific security specifications. This interface will allow data providers to receive requests for and provide specific types of data covered by the rule in an electronic, usable form to authorized third parties, including data aggregators. The current compliance deadline for a bank our size is April 1, 2027. We are preparing to comply with the rule, although it is currently the subject of several lawsuits that may affect its implementation.

Other Regulations and Proposals

We are subject to a wide range of requirements and restrictions contained in both federal and state laws. These regulations and proposals 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 FDICIA, these standards relate to internal controls, information systems, internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, and other operational and management standards deemed appropriate by federal banking regulators.
• 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 further discussion in “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, these rules require interchange transaction fees for electronic debit transactions to be reasonable and proportional to transaction processing costs. In October 2023, the Federal Reserve proposed revising Regulation II to lower the maximum permitted debit interchange fee by almost 30% and instituting a biennial review of the cap without public comment. This proposal is the subject of litigation, which may delay or affect its outcome. If finalized as proposed, the revised regulation could reduce our fee income by approximately $10 million or more per year.
• Limitations on Loans — Restrictions on the dollar amount of loans made to a borrower and its affiliates.
• Limitations on Transactions with Affiliates.
• Limitations on Investments and Securities — Restrictions on the nature and amount of any investments and the ability to underwrite certain types of securities (e.g., common equity).
• Branches — Requirements for opening and closing of branches.
• Consumer Protection Laws — A number of federal and state consumer protection laws, including fair lending and truth in lending requirements, provide equal access to credit and protect consumers in credit transactions. As a bank with $10 billion or more in total 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. These rules and regulations often reduce bank revenues and returns earned by shareholders. For example, the CFPB recently extended certain truth in lending requirements to overdraft fees and has proposed placing other restrictions on various fees routinely charged by banks related to providing financial services to customers.
• Community Reinvestment Act (“CRA”) — The CRA requires that banks address the credit needs of their communities, including providing credit to low- and moderate-income individuals. Failure to adequately serve our communities may result in penalties, such as denials of applications to add branches, relocate, add subsidiaries and affiliates, or merge with or acquire other financial institutions. Federal banking regulators recently finalized rules that significantly overhaul the evaluation framework used to assess a bank’s performance and compliance with CRA requirements. These changes may make it more challenging for banks to achieve satisfactory ratings. Currently, these new rules are subject to challenge in federal court by several financial services industry trade associations. The court has blocked enforcement against the plaintiffs while the case is pending.
• Compensation Requirements — 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 rule on pay versus performance disclosures, and other rules regarding the clawback of executive pay in certain circumstances involving accounting restatements. These restrictions include documentation and governance, deferral, risk-balancing, and the aforementioned 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 (“AML”) Regulations — The Bank Secrecy Act (“BSA”), 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 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. Federal law grants broad enforcement powers to federal banking regulators and other government agencies with respect to AML, BSA, and Office of Foreign Assets Control (“OFAC”) laws and regulations, including the ability to assess significant civil or criminal monetary penalties and restitution and issue cease and desist or similar orders.
• Tax laws — Tax laws of the U.S., its states, and other jurisdictions where we conduct business.

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. These regulations address various matters, including corporate governance, auditing and accounting, internal controls over financial reporting, and enhanced and timely disclosure of corporate information.

Sustainability standards and related concerns, including those associated with global climate change, continue to evolve and have become increasingly prominent in recent years. We are closely monitoring developments in standards published by sustainability interest groups and organizations, as well as proposed regulatory initiatives and expectations relating to these issues. We strive to enhance our business by incorporating sustainable practices that we believe will benefit our investors, customers, employees, and communities. Examples include: our LEED Platinum-certified technology campus and other LEED-certified facilities, water conservation systems, use of remote deposit capture and electronic forms and signatures, financing renewable energy and energy efficiency projects, and subsidizing employee use of public transportation.

In addition to proposed and evolving rulemaking by federal banking regulators, such as their principles designed to help large financial institutions manage their exposure to climate-related risks, many states have adopted, or are considering, laws that address climate and social issues. For example, the state of California has enacted comprehensive climate-related disclosure laws that will require large entities doing business in the state, including the Bank, to measure and disclose greenhouse gas (“GHG”) emissions and publish biennial reports beginning in January 2026. These reports will disclose climate-related financial risks and measures adopted to reduce and adapt to those risks.

Among other requirements, the California climate-related disclosure laws require the public disclosure of GHG emissions from our operations (Scope 1) and indirect GHG emissions from our energy use (Scope 2) beginning in 2026, and our indirect upstream and downstream supply-chain GHG emissions (Scope 3) starting in 2027. These laws will increase our compliance costs and may include provisions that conflict with other state and federal regulations, 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 these 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;
• Incentive Compensation Recoupment and Clawback Policies;
• Stock Ownership and Retention Guidelines;
• An Insider Trading Policy; 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 committed to identifying, recognizing, and creating fulfilling opportunities for our employees, and rewarding them for their contributions to our success. We continue to focus on enhancing our brand in the markets we serve to attract and retain a high-performing workforce, which is essential for our long-term success and value creation for our investors.

At December 31, 2024, we had 9,406 full-time equivalent employees. Approximately 58% of our associates were women, and 38% self-identified as a part of a minority demographic. We provide additional transparency into our workforce demographics by disclosing our Equal Employment Opportunity results in our Corporate Responsibility Report, which is available on our website.

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

Cultivating an environment where everyone is respected and valued

We are committed to providing growth, development, and leadership opportunities to all employees. Our commitment is to maintain a workplace where everyone is treated with respect and fairness, based on their qualifications and abilities, ensuring that the Bank is a place where everyone counts.

We embrace differences while finding common ground and focusing on things that unite us. Our Everyone Counts Council coordinates the related efforts of our affiliates and enterprise employee groups, providing executive management with goals and recommendations for continuous improvement.

Our initiatives include employee business forums, mental health programs, and a broad range of employee and regional events. Throughout the organization, the employee business forums, which are open to all employees, foster a sense of community and enable greater connectivity and support among employees and the communities in which we operate.

We believe that our performance is stronger when we draw upon the talents and experience of a diverse team of employees. The in-person exchange of ideas and viewpoints, in both formal and informal settings, improves productivity and cultivates a strong corporate culture while offering flexibility to balance personal needs.

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

We are committed to (1) attracting, developing, and retaining the most qualified individuals to serve the diverse 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.

Consistent with our strategic objectives, we invest in training our employees and in providing them with the tools and resources to build their capabilities. We offer more than 1,500 virtual, in-person, expert-led, and pre-recorded or self-paced learning options, enabling employees to create custom learning plans for personal and professional development. In 2024, we hosted more than 1,000 training experiences to support employees, build new skills, and assist in career advancement. Our offerings include 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, highly skilled, and successful employees. We are also mindful of the continued competition for talent in the labor market. We continuously analyze relevant metrics related to employee recruiting and turnover, which 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 enrich the employee experience through meaningful recognition and growth opportunities. We offer upside opportunities for those who take accountability for business objectives, enabling us to achieve superior results while mitigating risk.

We routinely assess pay equity across our organization to ensure fair compensation for all employees. Every two years, we engage an independent third party to review our pay equity. The most recent review, which accounted for variables such as education, experience, performance, and geography, found no meaningful differences in pay levels across our workforce. We remain committed to fair and equitable compensation for all our employees.

Our employees regularly provide feedback through enterprise outreach and engagement forums, including quarterly leadership calls, biannual employee opinion surveys, town hall meetings, and targeted focus groups. These forums facilitate stronger relationships with managers, clarify organizational purpose and goals, and reinforce our Guiding Principles and Code of Business Conduct and Ethics.

We generate revenue and grow our businesses by taking prudent and well-managed risks. These risks are outlined in our Risk Management Framework. The 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 various risk areas, such as credit, interest rate and market, liquidity, strategic and business, operational, technology, cybersecurity, capital/financial reporting, legal/compliance (including regulatory), and reputational risks, as outlined in our risk taxonomy.

We have developed comprehensive policies, procedures, and controls to address these risks. However, we cannot guarantee that our actions will effectively prevent or mitigate the impact of these risks on our business or performance. Although not comprehensive, below we describe some of our material risk factors.

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 weakening U.S. economy, both nationally and in the local markets where we operate, could result in, among other things, deterioration in credit quality and reduced demand for credit. This, in turn, may adversely impact the income generated from our loan and investment portfolios, result in higher charge-offs, and necessitate an increase in the allowance for credit losses.

We have a concentration of risk from counterparties, which may have unique risk characteristics that may adversely affect our results.

Concentrations of risk from counterparties could adversely affect us. Similar exposures across our loan and investment securities portfolios could pose additional credit risk. Additionally, concentrations with counterparties in derivative or securities financing transactions could further elevate this risk.

We have a concentration of 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. These loans may have unique risk characteristics that may adversely affect our results.

We engage in commercial real estate (“CRE”) term and construction lending, primarily within our Western states footprint. Certain CRE collateral types, particularly multifamily, industrial, and office properties, continue to experience increased vacancy rates, declining property values, rent concessions, elevated costs, and pressures from higher interest rates. These factors could lead to increased delinquencies and defaults.

Additionally, we engage in oil and gas-related lending, and provide leveraged and enterprise value loans across our entire footprint. These loans 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. Any decline in these portfolios could result in increased credit losses and reduced loan demand, adversely affecting our business and that of our customers. There may also be other unidentified risks within our loan portfolio.

Our business is highly correlated with 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 distinctive brands across Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. At December 31, 2024, loan balances from our banking operations in Utah, Idaho, Texas, and California accounted for 77% of the commercial lending portfolio, 70% of the CRE lending portfolio, and 70% of the consumer lending portfolio.

Due to this geographic concentration, our financial performance is largely influenced by economic conditions in these markets. Consequently, any deterioration in economic conditions, including those triggered by climate change or natural disasters, could disproportionately impact these states, leading to higher credit losses and significantly affecting our overall operations and financial results.

For information about our lending exposure to various industries and how we manage credit risk, see “Credit Risk Management” in MD&A on page 56.

INTEREST RATE AND MARKET RISK

We could be negatively affected by adverse economic conditions.

Adverse economic conditions present significant risks to our business, impacting our loan and investment portfolios, capital levels, results of operations, and financial condition. A slowing economy, combined with inflationary pressures, changes in monetary and fiscal policies, rising interest rates, and declining values of our fixed-rate assets, as well as tariffs, sanctions, and other policies and actions impacting domestic and global trade, can increase these risks. These factors may lead to reduced loan demand, increased 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. 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, particularly the FRB.

Most components of our balance sheet are sensitive to fluctuations in interest rates. Mismatches in rate sensitivity between assets and liabilities may result in unanticipated changes in their values, as well as related income and expense. Additionally, customer behavior can significantly impact asset and liability values, as customers may choose to withdraw certain deposits or prepay certain loans at any time, affecting our expected cash flows.

For information about how we manage interest rate risk and market risk, see “Interest Rate and Market Risk Management” in MD&A on page 70.

LIQUIDITY RISK

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

Our primary source of liquidity is deposits from our customers, which can be influenced by market-related forces such as increased competition and other factors. For example, we, like many other banks, experienced heightened volatility in deposit levels and funding costs following the notable bank closures in 2023. If we are unable to fund assets through customer deposits or access other funding sources on favorable terms, or if we face increased borrowing costs or FDIC insurance assessments, or fail to manage liquidity effectively, our liquidity, operating margins, financial condition, and results of operations could be materially and adversely affected.

The Federal Reserve’s tightened monetary policy has resulted in a decline in the value of our fixed-rate loans and investment securities pledged as collateral for short-term borrowings. Additionally, other economic conditions may continue to impact our liquidity and associated risk management efforts. The Federal Home Loan Bank (“FHLB”) system and Federal Reserve have been, and remain, significant sources of additional liquidity and funding. However, borrowing from the FHLB is subject to requirements and conditions, and may not always be available as a source of liquidity. Changes in FHLB or Federal Reserve funding programs could also adversely affect our liquidity and management of associated risks.

Unfavorable rating actions from rating agencies could adversely affect both us and the holders of our securities.

We access capital markets to supplement our funding. This access is influenced by the ratings assigned to us by rating agencies. The rates we pay on our securities are also affected by, among other factors, the credit ratings assigned to us and our securities by recognized rating agencies. Ratings downgrades to us or our securities could increase our costs or otherwise negatively impact our liquidity position, financial condition, or the market prices of our securities.

For information about how we manage liquidity risk, including rating agency actions, see “Liquidity Risk Management” in MD&A on page 73.

STRATEGIC AND BUSINESS RISK

Challenges faced by other financial institutions could adversely affect financial markets as a whole and have indirect adverse effects on us.

The soundness and stability of many financial institutions may be closely interrelated due to credit, trading, clearing, or other relationships between these 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 phenomenon, sometimes referred to as “systemic risk,” 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.

This phenomenon has been evident in recent times, as financial institutions like ours were impacted by concerns regarding the soundness or creditworthiness of other financial institutions or reports of systemic deterioration in asset classes, such as commercial real estate. These concerns caused substantial and cascading disruptions within the financial markets and deposits environment, increased expenses, reduced bank fees, and adversely impacted the market price and volatility of our common stock.

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

Our ability to execute our strategy, provide services, and remain competitive may be compromised if we are unable to recruit or retain qualified personnel, or if employee compensation and benefits costs increase substantially. Bank regulatory agencies have issued regulations and guidance that limit the manner and amount of compensation that banking organizations can 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, particularly as we increasingly compete with financial technology providers and other entities that may not be subject to the same compensation limitations. If we experience such adverse effects with respect to our employees, our business, financial condition, and results of operations could be adversely or materially impacted.

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 remotely across many industries. This growth in remote work, along with changing priorities and benefits, has led to increased compensation and related expenses, as well as workplace challenges. These challenges include fewer opportunities for face-to-face interactions, training and mentoring new employees, promoting a cohesive corporate culture, and increased competition for experienced labor, particularly in high-demand and highly skilled categories. Additionally, inflationary pressures have increased our compensation costs and are likely to continue to do so in the future.

We have implemented and are continuing to implement significant changes, including organizational restructurings, efficiency initiatives, and the replacement or upgrading of technology systems to improve our operating efficiency and control environment. 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.

In July 2024, we successfully completed the final phase of our multi-year project to replace our core loan and deposit banking systems. We continue to invest in a variety of strategic projects designed to enhance our products and services and simplify our business operations. These initiatives and other significant changes are ongoing and at various stages of completion. By their nature, projections regarding duration, cost, expected savings, expected efficiencies, and related items are subject to change and significant variability. There is no certainty that we will achieve the expected benefits or other intended results associated with these projects.

Our ability to develop, adopt, implement, and deliver technological advancements could adversely affect us.

Our ability to remain competitive increasingly depends on maintaining critical technological capabilities, and identifying and developing new, value-added products for existing and future customers. These technological competitive pressures arise from both traditional banking and nontraditional sources. Larger banks may have greater resources and economies of scale for maintaining existing capabilities and developing or adopting 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. Experimentation with, and adoption of, artificial intelligence, quantum computing, the expansion of blockchain technologies and digital currencies, including the potential creation and adoption of central bank digital currencies, as well as the increasing use and mainstream acceptance of such digital currencies, may fundamentally change the business of banking and present similar risks.

Our failure to remain technologically competitive could impede our market position and reduce customer satisfaction, product accessibility, and relevance.

OPERATIONAL RISK

Our operations could be disrupted by the impact of new and ongoing projects and initiatives.

We may encounter significant operational disruptions arising from our numerous projects and initiatives. These disruptions may include significant time delays, cost overruns, loss of key personnel, technological issues, and processing failures. Additionally, we may experience operational disruptions due to capacity constraints, service level failures, inadequate performance, and certain replacement costs. Any or all of these issues could disrupt 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 impact us, including our control environment, operating efficiency, and results of operations.

We could be adversely affected by failures in our internal controls.

Due to their inherent limitations, our internal controls may not prevent or detect operational failures or misstatements in our financial statements arising from inadequate or failed internal processes and systems, human errors or misconduct, or other adverse external events. A failure in our internal controls could significantly negatively impact our earnings, and the perception that customers, regulators, and investors may have of us, thereby adversely affecting our business and stock price.

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

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

Climate-related and other catastrophic events, including but not limited to, hurricanes, tornadoes, earthquakes, wildfires, floods, mudslides, prolonged drought, and pandemics may adversely affect us, our customers, 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, wildfires, floods, mudslides, prolonged droughts, and other weather-related events, some of which may be exacerbated by climate change and become more frequent and intense. These types of catastrophic events, including the recent wildfires in Southern California, have posed physical risks to our property and disrupted the local economy, our business, and customers, including decreased access to insurance and other services. Additionally, catastrophic events occurring in other regions of the world may have an impact on us and our customers.

We utilize models in the management of the Bank. There is a risk that these models are inaccurate in various ways, potentially leading to 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, manage interest rate and liquidity risk, project stress losses in various segments of our loan and investment portfolios, and forecast net revenue under stress. However, models cannot perfectly predict outcomes, and management decisions based on these models may therefore be suboptimal. For example, due to the prominent bank closures in 2023, customer deposit behavior deviated from modeled behaviors, prompting us to redevelop our deposit models, which are currently used by management. For more information about our deposit models, see “Interest Rate and Market Risk Management” in MD&A on page 70.

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

We rely on various suppliers to perform operational activities essential to our business. While these relationships offer benefits, they also present risks. These risks vary based on several factors, such as the type and amount of data our suppliers may access or process, the concentration of services they provide to us, and the national and international locations from which they operate. Our operational controls and third-party management programs may not always provide adequate oversight and control. 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 underperforming suppliers can be difficult and costly, potentially adversely impacting our customers and other operations, especially when circumstances require us to make changes under tight time constraints. Many of our suppliers have experienced adverse effects on their operations, supply chains, personnel, and businesses due to inflationary pressures, wars and geopolitical conflicts, cyber vulnerabilities, natural disasters, 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” in MD&A on page 76.

TECHNOLOGY RISK

Our operations and customer services could be adversely impacted by system vulnerabilities, failures, or outages.

We rely on various information technology systems that support our internal operations and customer services. Vulnerabilities in, or a failure or outage of, one or more of these systems could impact our 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 have well-established business continuity, disaster recovery, and crisis management protocols that may not be sufficient to restore our operations in the event of system failure or other outages. 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 technology systems, see “Strategic and Business Risk” in Risk Factors on page 16. For information about how we manage technology risk, see “Operational, Technology, and Cybersecurity Risk Management” in MD&A on page 76.

CYBERSECURITY RISK

We are subject to various information system failures and cybersecurity risks that could adversely affect our business and financial performance.

We rely heavily on communications and information systems to conduct our business. Our systems process and maintain information that is confidential, proprietary, personal, or otherwise sensitive, including financial and other confidential business information. We, our customers, and other financial institutions with which we interact, are subject to ongoing, continuous attempts by threat actors, such as organized cybercrime, hackers, and state-sponsored organizations, to penetrate key systems. Information security risks for us and other large financial institutions have increased significantly in recent years, partly due to the proliferation of new technologies, including artificial intelligence, the ubiquity of internet connections, and the increased sophistication and activities of threat actors.

Moreover, developments in our and third parties’ use of generative artificial intelligence, as well as the use of mobile and cloud technologies, could heighten these and other operational risks, as certain aspects of the security of such technologies may be complex, unpredictable, or beyond our control. The types of attacks these threat actors use include, but are not limited to, exploiting customer or system vulnerabilities or misconfigurations, denial-of-service, ransomware, compromising business emails, deceiving employees through email phishing or social engineering, and compromising any of our suppliers. Such threats may be difficult to detect over extended periods and could be further exacerbated through threat actors' use of artificial intelligence.

Third parties, including our suppliers and their subcontractors, also present operational and information security risks to us, including security incidents or failures of their own systems and downstream systems. In incidents involving third parties, we may not be informed promptly of any effect on our services or our data, nor be able to participate in any related investigation, notification, or remediation. 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 allocate necessary resources to modify or enhance our defenses and investigate or remediate any information security vulnerabilities. While we and our third-party suppliers have experienced cybersecurity incidents in the past that have not materially impacted our data, customers, or operations, there can be no assurance that future failures, interruptions, or significant security breaches will not occur or that they will be adequately addressed. It is impossible to determine the severity or potential effects of these incidents with any certainty.

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 defenses itself can create a risk of systems disruptions and security issues. We may face additional risks to the extent our hardware and software providers are unable to deliver patches and updates to mitigate vulnerabilities or we are unable to implement patches in a timely manner, particularly when a vulnerability is being actively exploited by threat actors. We have devoted and will continue to devote significant resources to the security of our computer systems, but they may still be vulnerable to these threats and our efforts may subsequently be deemed to have been inadequate by regulators or courts. The occurrence of any failure, interruption or security incident to our information systems or those of our third-party suppliers could interfere with or disrupt our operations and services, damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, expose us to civil litigation and financial liability, or otherwise result in material adverse consequences on us.

For information about how we manage cybersecurity risk, see Part I, Item 1C. Cybersecurity on page 24.

CAPITAL/FINANCIAL REPORTING RISK

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

We utilize stress testing as an important mechanism to inform our decisions on the appropriate level of capital, based on hypothetically stressed economic conditions. 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.

Regulatory requirements, economic conditions, and other factors 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 federal 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 or retain earnings that could otherwise be distributed to shareholders. These uncertainties and risks, including those created by legislative and regulatory change and uncertainties, such as recent regulatory proposals that would significantly revise the capital requirements and expand long-term debt requirements applicable to large banking organizations, may increase our cost of capital and other financing costs. For more information about these regulatory proposals, see “Regulatory Developments” in Supervision and Regulation on page 9.

We could be adversely affected by risks related to accounting, financial reporting, and regulatory compliance.

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 would 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 unable to fully realize our deferred tax assets, which could adversely affect our operating results and financial performance.

At December 31, 2024, we had a net deferred tax asset of $904 million. 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 (“DTLs”), 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” in MD&A on page 77.

LEGAL/COMPLIANCE RISK

Laws and regulations governing us and the financial services industry impose significant limitations on our business activities, subjecting 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 7 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, including those arising from transitions in administration and shifts in congressional control, may create volatility and uncertainty, potentially resulting in significant changes in the size, scope, and effectiveness of government agencies and services.

Political developments, such as those recently announced or enacted by the new administration, may result in sudden changes in laws, policies, and government operations. For example, the administration has taken steps or indicated plans to (1) change leadership of, and potentially combine or eliminate, various regulatory agencies; (2)

alter the purpose, funding, or enforcement powers of certain agencies; (3) significantly reduce the size of the federal government and workforce; and (4) modify, reinterpret, replace, or repeal various laws, regulations and regulatory guidance.

These actions may create uncertainties and volatility in U.S. and global markets, potentially affecting the government's ability to provide services at historical levels. They may also impact our ability to obtain guidance and support from the government in addressing existing and emerging risks, such as climate change, cyber attacks, financial privacy, artificial intelligence, and public safety. Many of these actions are being legally challenged or require further legislative action before implementation. The extent and timing of these changes are uncertain, as are their potential impacts, whether beneficial or adverse, on our business, financial performance, and customers.

Legislative, administrative, and judicial changes to tax laws, regulations, and case law may adversely impact our business and financial performance.

We are subject to the income tax laws of the U.S., its states, and other jurisdictions where we conduct business. These laws are complex and subject to different interpretations by the taxpayer and the various taxing authorities. In determining the provision for income taxes, management makes judgments and estimates about the application of these inherently complex laws, related regulations, and case law. In the process of preparing our tax returns, management attempts to make reasonable interpretations of the tax laws. These interpretations are subject to challenge by the tax authorities upon audit or to reinterpretation based on management’s ongoing assessment of facts and evolving case law. Changes in tax laws, regulations, or case law may result in an adverse impact to our effective tax rate, tax obligations, and financial results. Additionally, challenges made by tax authorities during an audit may result in adjustments to our tax return filings, resulting in similar adverse impacts to our financial position.

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 may 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, changes in administration and other political developments, 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 governing us are less developed than those for state-chartered corporations, potentially impacting our ability to execute corporate transactions efficiently and optimally.

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, which limit the types of business we may conduct and may complicate acquisitions of other financial companies.

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 face various reputational risk issues arising from operational, regulatory, compliance, and legal risks.

Any of the risks described in this section 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

Wars, international trade policies and disputes, geopolitical conflicts, and retaliatory measures imposed by the U.S. and other countries, including the responses to such measures, may significantly disrupt domestic and foreign economies and markets.

Wars, international trade policies and disputes, and other geopolitical conflicts in recent years, have created increasing risks for global markets, trade, economic conditions, cybersecurity, and similar concerns. For example, these conflicts have affected and could continue to 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.

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.

Stakeholder views and developments related to environmental and social issues could lead or require us to restrict or modify certain business activities and negatively affect our business and reputation.

There has been an increased focus by politicians, investors, and other stakeholders regarding practices related to environmental and social issues. For example, the new administration has issued executive orders designed to prohibit or limit certain activities often referred to as “diversity, equity, and inclusion” by government agencies, federal contractors, and others. Due to the varying perspectives among stakeholders on these issues, we face an increased risk that any action or inaction on our part may be perceived negatively by some stakeholders, potentially adversely impacting our business and reputation.

Investor and regulatory expectations could eventually lead us to restrict or modify certain business practices. Additionally, our operations could be adversely impacted by federal, state, and local laws and regulations addressing environmental and social issues. For example, some states have recently enacted or considered laws prohibiting financial institutions from limiting services to specific types of businesses if they also engage with governmental entities in those states. Depending on the wording and implementation of these laws, our risk management capabilities could be adversely impacted. These environmental and social regulations may conflict with other state and federal laws, potentially increasing our costs or limiting our ability to operate in certain jurisdictions.

Evolving regulatory and social focus on climate change may impose additional requirements on companies, including financial institutions, regarding the measurement, management, and disclosure of climate-related risks and associated lending and investment activities. New and potentially conflicting state and federal laws and policies on climate change may increase regulatory, compliance, credit, and reputational risks and costs. Additionally, transitioning to a lower-carbon economy could expose us to other risks, such as our customers’ susceptibility to commodity price volatility, increased insurance costs or lack of access to insurance, and shifts in the market for carbon-related products and services. For more information, see “Other Regulations & Proposals” in Supervision and Regulation on page 11.

Protracted congressional negotiations in Washington, D.C. regarding government funding and other issues introduce additional volatility into the U.S. economy, particularly affecting capital and credit markets and the banking industry.

The U.S. government is currently operating under a continuing resolution that provides short-term appropriations. Efforts to pass spending bills for long-term government funding have proven challenging, increasing the risk of a government shutdown. Concurrently, the national debt continues to grow as Congress struggles to formulate a plan for greater fiscal responsibility. These circumstances may result in downgrades in the U.S. credit rating or defaults, introducing additional volatility into the U.S. economy. This could impact capital and credit markets, the banking industry, financial markets, and interest rates, among other unforeseen consequences. In such an event, the Bank’s liquidity, operating margins, financial condition, and results of operations could be materially and adversely affected.

Cybersecurity risk is the risk of adverse impacts to the confidentiality, integrity, and availability of data owned, stored, or processed by the Bank or the accompanying information systems. The number and sophistication of attempts to disrupt or penetrate our systems and those of our suppliers continues to grow. These attempts are often referred to as hacking, cybersecurity fraud, cyberattacks, or other similar names.

Cybersecurity risk is overseen by the Board and the Bank’s multiple lines of defense, including front-line bankers, operations teams, Enterprise Risk Management (“ERM”), and internal audit. Information security risk is managed in accordance with an established ERM framework, which includes elements such as key risk indicators, enterprise standards, controls, and self-assessments that comply with established ERM policies. These elements are regularly assessed, measured, and reported to Board-level and Bank senior management-level risk committees, and those committees review such reports.

The ROC is responsible for reviewing reports from management related to enterprise-wide risk management efforts, including cybersecurity risks. As part of this oversight, the ROC conducts an annual review and approval of information security policies and programs, and receives regular updates on key risk indicators, threat trends, risk remediation activities, and operational events. The ROC regularly reports on this oversight, including cybersecurity, to the Board. Management employs multiple real-time and interval-based monitoring and reporting mechanisms to detect and respond to cybersecurity incidents, and may also engage third parties to assist in these efforts. Documented escalation procedures are regularly tested through tabletop exercises and other activities, including notification to executive management during qualifying cybersecurity incidents.

Management directly responsible for assessing, measuring, and managing cybersecurity risks include the Chief Information Security Officer (“CISO”) and the Chief Technology and Operations Officer (“CTOO”). The current CISO has more than 20 years of technology leadership experience, including significant direct involvement in cybersecurity efforts, and holds multiple industry certifications. The current CTOO has more than 25 years of experience in audit, risk, operations, and technology leadership, including previous roles as Chief Audit Executive and Director of Bank Operations. The CISO and CTOO regularly report cybersecurity risk information to the Board or a Board committee.

We engage multiple independent third parties and cyber experts to assess our information security programs and practices. These assessments include, but are not limited to, framework maturity assessments, blind penetration testing, technology health checks, cyber skill and staffing assessments, externally facilitated tabletop exercises, external cyber legal counsel briefings, and strategic assessments. Findings from these assessments are regularly reviewed with management and the ROC. Additionally, we participate in various cybersecurity industry forums and have access to law enforcement analysis regarding current threats.

Our supply chain risk management practices include risk assessments of suppliers, particularly regarding cybersecurity. We monitor our suppliers using commercially available services that provide real-time security scoring of supplier technology services, threat intelligence, financial intelligence, geopolitical risk intelligence, and other cybersecurity-related considerations. Regular reviews are performed to monitor changes in our suppliers’ cybersecurity risk posture. Continuous threat intelligence monitoring is also conducted to identify potential cybersecurity incidents involving third parties. We strive to negotiate appropriate cybersecurity provisions in our contracts with suppliers.

Upon the occurrence of a cybersecurity incident, whether identified internally or through third-party cybersecurity notifications, we assess the incident’s criticality and potential materiality and disclosure. This evaluation considers various factors, including service availability, operational impact, reputational consequences, regulatory and legal implications, data sensitivity, and direct financial impact. The CISO continuously monitors these criteria to determine the incident's potential impact, individually or in aggregate. We have established escalation procedures to promptly inform senior and executive management, the Board (or relevant subcommittees), and regulators, based on the incident's criticality and materiality.

At December 31, 2024, risks from cybersecurity threats, including those arising from any previous cybersecurity incidents, have not materially impacted our business strategy, results of operations, or financial condition. Management has evaluated known cybersecurity incidents for potential materiality and disclosure using formal, documented processes and has determined that there have been no material cybersecurity incidents, either individually or in aggregate. We acknowledge that future cybersecurity incidents could potentially have a material adverse effect on our organization, despite our efforts to prevent or mitigate such events.

For additional discussion regarding cybersecurity risks, see “Cybersecurity Risk” in Risk Factors on page 19.

At December 31, 2024, we operated 404 branches, with 275 owned and 129 leased. Additionally, our headquarters in Salt Lake City, Utah, is leased. Annual rental payments under long-term leases for leased premises are determined by 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.

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

Key Corporate Objectives

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

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

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

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

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

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

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

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

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

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

RESULTS OF OPERATIONS

Our Financial Performance

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

Net Earnings Applicable to Common Shareholders (in millions) Diluted EPS Adjusted PPNR (in millions) 1 Efficiency ratio1

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

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

• Net interest income remained relatively flat, as higher earning asset yields were offset by higher funding costs. Net interest income was also impacted by increases in average interest-earning assets and interest-bearing liabilities. The net interest margin (“NIM”) decreased slightly to 3.00%, compared with 3.02%.
• Average interest-earning assets increased $480 million, or 1%, as growth in average loans and leases and average money market investments was largely offset by a decline in average securities.
• Average interest-bearing liabilities increased $4.2 billion, or 8%, as an increase in average interest-bearing deposits was partially offset by a decrease in average borrowed funds.
• Total loans and leases increased $1.6 billion, or 3%, primarily due to growth in the consumer 1-4 family residential mortgage, home equity credit lines, and commercial and industrial loan portfolios.
• Total deposits increased $1.3 billion, or 2%, primarily due to an increase in interest-bearing deposits, partially offset by a decrease in noninterest-bearing deposits. Customer deposits (excluding brokered deposits) increased $663 million, or 1%.
• The provision for credit losses was $72 million in 2024, compared with $132 million in 2023.
• Customer-related noninterest income increased $19 million, or 3%, driven largely by increases in capital markets fees and commercial account fees, partially offset by decreases in loan-related fees and card fees. Increases in noncustomer-related noninterest income were primarily due to increases in net securities gains and credit valuation adjustments (“CVA”)on client-related interest rate swaps, partially offset by a decline in dividends on FHLB stock.
• Noninterest expense decreased $51 million, or 2%. Deposit insurance and regulatory expense decreased $78 million, largely due to a $90 million accrual associated with the FDIC special assessment during the prior year. This decrease was partially offset by increases in technology, telecom, and information processing expense, and salaries and employee benefits expense. The efficiency ratio was 64.2%, compared with 62.9%, due to an increase in adjusted noninterest expense.
• Net loan and lease charge-offs totaled $60 million, or 0.10%, of average loans and leases, compared with $36 million, or 0.06%, in 2023. The increase in charge-offs was largely due to a single commercial and industrial loan. The ratio of allowance for credit losses (“ACL”) to total loans and leases was 1.25%, compared with 1.26%.
• Nonperforming assets totaled $298 million, or 0.50%, of total loans and leases and other real estate owned (“OREO”), compared with $228 million, or 0.39%. The increase in nonperforming assets was primarily due to a small number of loans in the commercial and industrial and term commercial real estate (“CRE”) portfolios.
• Classified loans totaled $2.9 billion, or 4.83%, of total loans and leases, compared with $825 million, or 1.43%. The increase in classified loans was primarily in the multifamily and industrial CRE loan portfolios, largely due to an increased emphasis in risk grading on current cash flows, and less emphasis on the adequacy of collateral values and the strength of guarantors and sponsors. The increase in classified loans was also attributable to weaker performance, particularly for 2021 and 2022 construction loan vintages, as borrowers missed projections due to longer-than-anticipated lease-up periods, rent concessions, elevated costs, and higher interest rates.
• Total borrowed funds, consisting primarily of secured borrowings, decreased $139 million, or 3%, as a decline in security repurchase agreements was partially offset by an increase in long-term debt. The increase in long-term debt was due to the issuance of $500 million of 6.82% Fixed-to-Floating Subordinated Notes due 2035, partially offset by the redemption of $88 million of 6.95% Fixed-to-Floating Subordinated Notes due 2028 during the fourth quarter of 2024.
• Preferred stock decreased $374 million due to the redemption of the outstanding shares of our Series G, I, and J preferred stock during the fourth quarter of 2024.

The following schedule presents additional selected financial highlights:

SELECTED FINANCIAL HIGHLIGHTS

(Dollar amounts in millions, except per share amounts)

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

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

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

Net Interest Income and Net Interest Margin

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

NET INTEREST INCOME AND NET INTEREST MARGIN

(Dollar amounts in millions)

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

2 Taxable-equivalent rates used where applicable.

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

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

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

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

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

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

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

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

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

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

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

AVERAGE BALANCE SHEETS, YIELDS, AND RATES

(In millions)

1 Taxable-equivalent rates used where applicable.

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

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

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

ANALYSIS OF CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME

(In millions)

1 Taxable-equivalent rates used where applicable.

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

The Allowance and Provision for Credit Losses

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

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

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

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

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

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

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

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

Noninterest Income

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

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

NONINTEREST INCOME

(Dollar amounts in millions)

Customer-related Noninterest Income

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

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

• Capital markets fees increased $29 million, or 36%, driven by expanded real estate capital markets activity as well as increased swap fees, loan syndication fees, and foreign exchange fees.
• Commercial account fees increased $8 million or 5%, largely due to an increase in account analysis fees, partially offset by decreases in merchant fees and treasury management sweep fees.
• Loan-related fees and income decreased $9 million, or 11%, primarily due to higher gains on loan sales in the prior year and a decline in loan servicing income resulting from the sale of associated mortgage servicing rights in 2023.
• Card fees decreased $5 million, or 5%, primarily due to declines in commercial and business bankcard interchange fees.
• Other customer-related fees decreased $5 million, or 8%, mainly due to a decrease in miscellaneous income, including fees associated with compliance and other support services to pharmacies and healthcare providers.

Noncustomer-related Noninterest Income

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

• Net securities gains increased $15 million, largely due to valuation adjustments in our Small Business Investment Company (“SBIC”) investment portfolio.
• Fair value and nonhedge derivative income increased $4 million due to credit valuation adjustments on client-related interest rate swaps.
• Dividends and other income decreased $15 million, primarily due to a decline in dividends on FHLB stock, as well as gains in the prior year associated with the sale of bank-owned property.

Noninterest Expense

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

NONINTEREST EXPENSE

(Dollar amounts in millions)

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

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

SALARIES AND EMPLOYEE BENEFITS

(Dollar amounts in millions)

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

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

Technology Spend

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

• Technology, telecom, and information processing expense — includes current period expenses presented on the consolidated statement of income related to application software licensing and maintenance, telecommunications, and data processing, less related non-cash amortization and depreciation;
• Other technology-related expense — includes related noncapitalized salaries and employee benefits, occupancy and equipment, and professional and legal services; and
• Technology investments — includes capitalized technology infrastructure equipment, hardware, and software (both purchased and internally developed).

The following schedule presents the composition of our technology spend:

TECHNOLOGY SPEND

(In millions)

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

Income Taxes

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

INCOME TAXES

(Dollar amounts in millions)

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

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

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

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

Preferred Stock Dividends and Redemption

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

Business Segment Results

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

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

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

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

43

Zions Bank

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

ZIONS BANK SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

44

California Bank & Trust

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

CALIFORNIA BANK AND TRUST SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

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

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

Amegy Bank

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

AMEGY BANK SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

46

National Bank of Arizona

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

NATIONAL BANK OF ARIZONA SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

47

Nevada State Bank

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

NEVADA STATE BANK SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

Vectra Bank Colorado

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

VECTRA BANK COLORADO SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

The Commerce Bank of Washington

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

THE COMMERCE BANK OF WASHINGTON SELECTED FINANCIAL INFORMATION

(Dollar amounts in millions)

49

BALANCE SHEET ANALYSIS

Interest-earning Assets

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

AVERAGE LOANS AND LEASES, INVESTMENT SECURITIES, AND

MONEY MARKET INVESTMENTS (at December 31)

Investment Securities Portfolio

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

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

INVESTMENT SECURITIES PORTFOLIO

(In millions)

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

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

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

Municipal Investments and Extensions of Credit

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

MUNICIPAL INVESTMENTS AND EXTENSIONS OF CREDIT

(In millions)

51

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

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

Loan and Lease Portfolio

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

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

LOAN AND LEASE PORTFOLIO

(Dollar amounts in millions)

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

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

LOAN AND LEASE PORTFOLIO BY CONTRACTUAL MATURITY

(In millions)

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

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

(In millions)

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Other Noninterest-bearing Investments

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

OTHER NONINTEREST-BEARING INVESTMENTS

(Dollar amounts in millions)

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

Premises, Equipment, and Software

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

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

CAPITALIZED COSTS ASSOCIATED WITH THE CORE SYSTEM REPLACEMENT PROJECT

(In millions)

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Deposits

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

DEPOSIT PORTFOLIO

(Dollar amounts in millions)

1 Includes both insured and uninsured deposits.

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

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

RISK MANAGEMENT

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

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

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

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

Credit Risk Management

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

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

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

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

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

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

U.S. Government Agency Guaranteed Loans

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

U.S. GOVERNMENT AGENCY GUARANTEED LOANS

(Dollar amounts in millions)

Commercial Lending

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

COMMERCIAL LENDING PORTFOLIO

(Dollar amounts in millions)

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

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

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

COMMERCIAL LENDING BY GEOGRAPHY

(Dollar amounts in millions)

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

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

COMMERCIAL LENDING BY INDUSTRY

(Dollar amounts in millions)

1 Includes primarily utilities, power, and renewable energy.

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

Commercial Real Estate Lending

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

COMMERCIAL REAL ESTATE LENDING PORTFOLIO

(Dollar amounts in millions)

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

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

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

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

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

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

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

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

COMMERCIAL REAL ESTATE LENDING BY GEOGRAPHY

(Dollar amounts in millions)

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

COMMERCIAL REAL ESTATE LENDING BY COLLATERAL TYPE

(Dollar amounts in millions)

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

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

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

Multifamily CRE

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

MULTIFAMILY CRE LOAN PORTFOLIO

(Dollar amounts in millions)

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

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

MULTIFAMILY CRE LOAN PORTFOLIO BY COLLATERAL LOCATION

(Dollar amounts in millions)

61

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

(Dollar amounts in millions)

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

Industrial CRE

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

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

INDUSTRIAL CRE LOAN PORTFOLIO

(Dollar amounts in millions)

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

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

INDUSTRIAL CRE LOAN PORTFOLIO BY COLLATERAL LOCATION

(Dollar amounts in millions)

(Dollar amounts in millions)

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

Office CRE

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

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

OFFICE CRE LOAN PORTFOLIO

(Dollar amounts in millions)

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

OFFICE CRE LOAN PORTFOLIO BY COLLATERAL LOCATION

(Dollar amounts in millions)

(Dollar amounts in millions)

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

Consumer Lending

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

CONSUMER LENDING PORTFOLIO

(Dollar amounts in millions)

1-4 Family Residential Mortgages

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

Home Equity Credit Lines

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

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

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

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

CONSUMER LENDING BY GEOGRAPHY

(Dollar amounts in millions)

Credit Quality

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

Nonperforming Assets

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

NONPERFORMING ASSETS

(Dollar amounts in millions)

1 Does not include banking premises held for sale.

2 Includes loans held for sale.

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

Classified Loans

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

CLASSIFIED LOANS

(Dollar amounts in millions)

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

Allowance for Credit Losses

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

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

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

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

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

CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES

(Dollar amounts in millions)

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

ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES

(Dollar amounts in millions)

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

Interest Rate and Market Risk Management

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

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

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

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

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

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

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

The following schedule presents deposit duration assumptions discussed previously:

DEPOSIT ASSUMPTIONS

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

DERIVATIVES DESIGNATED IN QUALIFYING HEDGING RELATIONSHIPS

(Dollar amounts in millions)

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

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

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

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

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

SCHEDULED OCI AMORTIZATION FOR TERMINATED CASH FLOW HEDGES

(Dollar amounts in millions)

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

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

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

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

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

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

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

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

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

Fixed Income

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

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

Equity Investments

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

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

Liquidity Risk Management

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

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

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

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

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

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

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

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

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

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

AVAILABLE LIQUIDITY

(Dollar amounts in billions)

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

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

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

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

Credit Ratings

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

The following schedule presents our credit ratings:

CREDIT RATINGS

as of January 31, 2025:

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

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

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

Contractual Obligations

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

CONTRACTUAL OBLIGATIONS

(In millions)

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

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

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

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

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

Operational, Technology, and Cybersecurity Risk Management

Operational Risk Management

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

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

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

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

Technology Risk Management

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

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

Cybersecurity Risk Management

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

Capital Management

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

• Setting overall capital targets within the Board-approved Capital Policy, monitoring performance against policy limits, and recommending changes to capital, including dividends, common stock issuances and repurchases, subordinated debt, and strategic adjustments to maintain well-capitalized levels;
• Maintaining an adequate capital cushion to withstand adverse stress events while continuing to meet the borrowing needs of our customers and ensuring continued access to wholesale funding, consistent with fiduciary responsibilities to depositors and bondholders; and
• Reviewing our credit agency ratings.

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

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

SHAREHOLDERS’ EQUITY

(Dollar amounts in millions)

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

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

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

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

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

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

CAPITAL DISTRIBUTIONS

(In millions, except share data)

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

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

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

Basel III

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

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

CAPITAL AMOUNTS AND RATIOS

(Dollar amounts in millions)

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

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

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

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

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

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

Allowance for Credit Losses

The ACL includes the ALLL and the RULC and represents our estimate of current expected credit losses related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. The ACL for our HTM debt securities portfolio is estimated separately from loans and is not presented separately on the consolidated balance sheet due to immateriality. The ACL for debt securities was less than $1 million at both December 31, 2024 and 2023.

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

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

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

Fair Value Estimates

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

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

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

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

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

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

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

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

Goodwill

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

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

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

Critical assumptions used as part of these methods include:

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

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

During the fourth quarter of 2024, we performed our annual goodwill impairment evaluation, effective October 1, 2024, utilizing a qualitative analysis. Based on our evaluation, the goodwill at our reporting units was not impaired. During the fourth quarter of 2023, we performed a full quantitative analysis and determined that the fair values of Amegy, CB&T, Zions Bank, and NSB exceeded their carrying values by 38%, 70%, 80%, and 139%, respectively. As part of the quantitative analysis, we also performed a hypothetical sensitivity analysis on the discount rate assumption to evaluate the impact of an adverse change to this assumption. If the discount rate applied to future earnings was increased by 100 bps, the fair values of Amegy, CB&T, Zions Bank, and NSB would exceed their carrying values by 32%, 60%, 63%, and 124%, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

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

NON-GAAP FINANCIAL MEASURES

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

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

Tangible Common Equity and Related Measures

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

RETURN ON AVERAGE TANGIBLE COMMON EQUITY (NON-GAAP)

(Dollar amounts in millions)

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

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)

Efficiency Ratio and Adjusted Pre-Provision Net Revenue

The efficiency ratio is a measure of operating expense relative to revenue. We believe the efficiency ratio provides useful information regarding the cost of generating revenue. We make adjustments to exclude certain items that are not generally expected to recur frequently, as identified in the subsequent schedule. We believe these adjustments allow for more consistent comparability across periods. Adjusted noninterest expense provides a measure as to how we are managing our expenses. Adjusted pre-provision net revenue enables management and others to assess our ability to generate capital. Taxable-equivalent net interest income allows us to assess the comparability of revenue arising from both taxable and tax-exempt sources.

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

(Dollar amounts in millions)

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

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

Information required by this Item is included in “Interest Rate and Market Risk Management” in MD&A beginning on page 70, and is hereby incorporated by reference.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2024. There were no changes in our internal control over financial reporting during the fourth quarter of 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. For management’s report on the adequacy of internal control over financial reporting, see “Report on Management’s Assessment of Internal Control over Financial Reporting” included in Item 8 on page 86. Additionally, see “Report on Internal Control over Financial Reporting” issued by Ernst & Young LLP included in Item 8 on page 87.