ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/ - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________

COMMISSION FILE NUMBER 001-12307

ZIONS BANCORPORATION, NATIONAL ASSOCIATION

(Exact name of registrant as specified in its charter)


United States of America			87-0189025
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
One South Main
Salt Lake City, Utah			84133-1109
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (801) 844-7637

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Common Stock, par value $0.001	ZION	The NASDAQ Stock Market LLC
Depositary Shares each representing a 1/40th ownership interest in a share of:
Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock	ZIONP	The NASDAQ Stock Market LLC
Series G Fixed/Floating-Rate Non-Cumulative Perpetual Preferred Stock	ZIONO	The NASDAQ Stock Market LLC
6.95% Fixed-to-Floating Rate Subordinated Notes due September 15, 2028	ZIONL	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ☐ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Number of common shares outstanding at October 31, 2022 149,617,754 shares

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	36

	Consolidated Balance Sheets	36
	Consolidated Statements of Income	37
	Consolidated Statements of Comprehensive Income (Loss)	38
	Consolidated Statements of Changes in Shareholders’ Equity	38
	Consolidated Statements of Cash Flows	40
	Notes to Consolidated Financial Statements	41

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	79

Item 4.	Controls and Procedures	80

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	80

Item 1A.	Risk Factors	80

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81

Item 6.	Exhibits	81

Signatures		82

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

GLOSSARY OF ACRONYMS AND ABBREVIATIONS


ACL	Allowance for Credit Losses	IPO	Initial Public Offering
AFS	Available-for-Sale	IRS	Internal Revenue Service
ALLL	Allowance for Loan and Lease Losses	LIBOR	London Interbank Offered Rate
Amegy	Amegy Bank, a division of Zions Bancorporation, National Association	Municipalities	State and Local Governments
AMERIBOR	American Interbank Offered Rate	NAICS	North American Industry Classification System
AOCI	Accumulated Other Comprehensive Income	NASDAQ	National Association of Securities Dealers Automated Quotations
ASC	Accounting Standards Codification	NBAZ	National Bank of Arizona, a division of Zions Bancorporation, National Association
ASU	Accounting Standards Update	NIM	Net Interest Margin
BOLI	Bank-Owned Life Insurance	NM	Not Meaningful
bps	Basis Points	NSB	Nevada State Bank, a division of Zions Bancorporation, National Association
BSBY	Bloomberg Short-Term Bank Yield	OCC	Office of the Comptroller of the Currency
CB&T	California Bank & Trust, a division of Zions Bancorporation, National Association	OCI	Other Comprehensive Income
CECL	Current Expected Credit Loss	OREO	Other Real Estate Owned
CLTV	Combined Loan-to-Value Ratio	PEI	Private Equity Investment
CMT	Constant Maturity Treasury	PPNR	Pre-provision Net Revenue
CRE	Commercial Real Estate	PPP	Paycheck Protection Program
CVA	Credit Valuation Adjustment	ROU	Right-of-Use
DTA	Deferred Tax Asset	RULC	Reserve for Unfunded Lending Commitments
EaR	Earnings at Risk	S&P	Standard & Poor's
EPS	Earnings per Share	SBA	U.S. Small Business Administration
EVE	Economic Value of Equity	SBIC	Small Business Investment Company
FASB	Financial Accounting Standards Board	SEC	Securities and Exchange Commission
FDIC	Federal Deposit Insurance Corporation	SOFR	Secured Overnight Financing Rate
FHLB	Federal Home Loan Bank	TCBW	The Commerce Bank of Washington, a division of Zions Bancorporation, National Association
FRB	Federal Reserve Board	TDR	Troubled Debt Restructuring
FTP	Funds Transfer Pricing	U.K.	United Kingdom
GAAP	Generally Accepted Accounting Principles	U.S.	United States
HECL	Home Equity Credit Line	Vectra	Vectra Bank Colorado, a division of Zions Bancorporation, National Association
HTM	Held-to-Maturity	Zions Bank	Zions Bank, a division of Zions Bancorporation, National Association

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

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

•statements with respect to the beliefs, plans, objectives, goals, targets, commitments, designs, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of Zions Bancorporation, National Association and its subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”); and

•statements preceded or followed by, or that include the words “may,” “might,” “can,” “continue,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “forecasts,” “expect,” “intend,” “target,” “commit,” “design,” “plan,” “projects,” “will,” and the negative thereof and similar words and expressions.

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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

RESULTS OF OPERATIONS

Executive Summary

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

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

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

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

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

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

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Third Quarter 2022 Financial Performance

Net Earnings Applicable to Common Shareholders
(in millions)

Diluted EPS

Adjusted PPNR
(in millions)

Efficiency Ratio

Net earnings applicable to common shareholders decreased from the third quarter of 2021, primarily due to a $117 million unfavorable change in the provision for credit losses.

Diluted earnings per share declined from the third quarter of 2021 as a result of decreased net earnings, the effect of which was partially offset by a 10.7 million decrease in weighted average diluted shares, primarily due to share repurchases.

Adjusted pre-provision net revenue (“PPNR”) increased $61 million from the third quarter of 2021, primarily due to growth in adjusted net revenue, driven largely by an increase in net interest income. This increase was partially offset by higher adjusted noninterest expense.

The efficiency ratio improved from the prior year quarter, as growth in adjusted revenue outpaced growth in adjusted noninterest expense, resulting in positive operating leverage.

Net Interest Income and Net Interest Margin

NET INTEREST INCOME AND NET INTEREST MARGIN


	Three Months Ended September 30,						Amount change		Percent change
(Dollar amounts in millions)	2022			2021

Interest and fees on loans 1	$	551		$	484		$	67	14	%
Interest on money market investments	24			7			17		NM
Interest on securities	132			78			54		69
Total interest income	707			569			138		24
Interest on deposits	19			7			12		NM
Interest on short- and long-term borrowings	25			7			18		NM
Total interest expense	44			14			30		NM
Net interest income	$	663		$	555		$	108	19	%

Average interest-earning assets	$	82,474		$	83,189		$	(715)	(1)	%
Average interest-bearing liabilities	$	41,398		$	40,925		$	473	1	%
							bps
Yield on interest-earning assets 2	3.45		%	2.75		%	70
Rate paid on total deposits and interest-bearing liabilities 2	0.22		%	0.07		%	15
Cost of total deposits 2	0.10		%	0.03		%	7
Net interest margin 2	3.24		%	2.68		%	56

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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

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

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

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

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

Average total deposits increased $0.1 billion to $77.5 billion at an average cost of 0.10%, from $77.4 billion at an average cost of 0.03% in the third quarter of 2021. The rate paid on total deposits and interest-bearing liabilities was 0.22%, compared with 0.07%. Average noninterest-bearing deposits as a percentage of total deposits were 51%, up

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

slightly from the same prior year period. Our funding costs were well controlled, reflecting the granularity of our deposit base and the extent of our noninterest-bearing deposits.

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

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

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES


(Unaudited)	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(Dollar amounts in millions)	Average balance		Amount of interest		Average yield/rate 1		Average balance		Amount of interest 1		Average yield/rate 1
ASSETS
Money market investments:
Interest-bearing deposits	$	1,233	$	7	2.19	%	$	10,977	$	5	0.15	%
Federal funds sold and security resell agreements	2,511		17		2.66		1,739		2		0.50
Total money market investments	3,744		24		2.51		12,716		7		0.20
Securities:
Held-to-maturity	560		4		2.88		557		4		2.87
Available-for-sale 2	24,892		129		2.05		18,814		74		1.56
Trading account	288		3		4.57		199		2		4.41
Total securities 3	25,740		136		2.10		19,570		80		1.63
Loans held for sale	37		1		5.33		52		—		3.03
Loans and leases 4
Commercial – excluding PPP loans	28,972		302		4.13		24,854		235		3.76
Commercial – PPP loans	408		6		6.28		3,795		63		6.66
Commercial real estate	12,182		145		4.73		12,144		105		3.42
Consumer	11,391		103		3.61		10,058		86		3.38
Total loans and leases	52,953		556		4.17		50,851		489		3.82
Total interest-earning assets	82,474		717		3.45		83,189		576		2.75
Cash and due from banks	604						597
Allowance for credit losses on loans and debt securities	(515)						(536)
Goodwill and intangibles	1,021						1,015
Other assets	4,923						4,291
Total assets	$	88,507					$	88,556
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Savings and money market	$	36,399	$	18	0.20	%	$	37,262	$	5	0.05	%
Time	1,441		1		0.32		1,829		2		0.32

Total interest-bearing deposits	37,840		19		0.20		39,091		7		0.07
Borrowed funds:
Federal funds purchased and other short-term borrowings	2,885		17		2.33		630		—		0.08
Long-term debt	673		8		4.83		1,204		7		2.34
Total borrowed funds	3,558		25		2.80		1,834		7		1.56
Total interest-bearing liabilities	41,398		44		0.43		40,925		14		0.13
Noninterest-bearing demand deposits	39,623						38,320
Other liabilities	1,743						1,302
Total liabilities	82,764						80,547
Shareholders’ equity:
Preferred equity	440						440
Common equity	5,303						7,569
Total shareholders’ equity	5,743						8,009
Total liabilities and shareholders’ equity	$	88,507					$	88,556
Spread on average interest-bearing funds					3.02	%					2.62	%
Net impact of noninterest-bearing sources of funds					0.22	%					0.06	%
Net interest margin			$	673	3.24	%			$	562	2.68	%
Memo: total loans and leases, excluding PPP loans	$	52,545	550		4.16	%	$	47,056	426		3.59	%

Memo: total cost of deposits					0.10	%					0.03	%
Memo: total deposits and interest-bearing liabilities	81,021		44		0.22	%	79,245		14		0.07	%

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

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

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(Dollar amounts in millions)	Average balance		Amount of interest 1		Average yield/rate		Average balance		Amount of interest 1		Average yield/rate
ASSETS
Money market investments:
Interest-bearing deposits	$	3,674	$	15	0.55	%	$	8,162	$	8	0.13	%
Federal funds sold and security resell agreements	2,451		27		1.47		2,109		6		0.37
Total money market investments	6,125		42		0.92		10,271		14		0.18
Securities:
Held-to-maturity	495		11		2.98		599		13		2.92
Available-for-sale 2	25,285		358		1.89		17,255		209		1.62
Trading account	343		12		4.81		213		7		4.25
Total securities 3	26,123		381		1.95		18,067		229		1.70
Loans held for sale	44		1		2.55		61		1		2.77
Loans and leases 4
Commercial – excluding PPP loans	28,060		798		3.80		24,716		705		3.81
Commercial – PPP loans	885		45		6.83		5,283		191		4.84
Commercial real estate	12,151		358		3.93		12,104		313		3.46
Consumer	10,801		272		3.37		10,315		270		3.50
Total loans and leases	51,897		1,473		3.79		52,418		1,479		3.77
Total interest-earning assets	84,189		1,897		3.01		80,817		1,723		2.85
Cash and due from banks	615						597
Allowance for loan losses	(503)						(651)
Goodwill and intangibles	1,017						1,015
Other assets	4,618						4,106
Total assets	$	89,936					$	85,884
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Savings and money market	$	37,942	$	29	0.10	%	$	36,168	$	16	0.06	%
Time	1,505		3		0.27		2,140		7		0.44

Total interest-bearing deposits	39,447		32		0.11		38,308		23		0.08
Borrowed funds:
Federal funds purchased and other short-term borrowings	1,415		18		1.73		856		1		0.07
Long-term debt	724		20		3.69		1,277		22		2.32
Total borrowed funds	2,139		38		2.39		2,133		23		1.41
Total interest-bearing liabilities	41,586		70		0.23		40,441		46		0.15
Noninterest-bearing demand deposits	40,523						36,213
Other liabilities	1,530						1,267
Total liabilities	83,639						77,921
Shareholders’ equity:
Preferred equity	440						516
Common equity	5,857						7,447
Total shareholders’ equity	6,297						7,963
Total liabilities and shareholders’ equity	$	89,936					$	85,884
Spread on average interest-bearing funds					2.78	%					2.70	%
Net impact of noninterest-bearing sources of funds					0.12	%					0.08	%
Net interest margin			$	1,827	2.90	%			$	1,677	2.78	%
Memo: total loans and leases, excluding PPP loans	$	51,012	1,428		3.74	%	$	47,135	1,288		3.65	%

Memo: total cost of deposits					0.05	%					0.04	%
Memo: total deposits and interest-bearing liabilities	82,109		70		0.12	%	76,654		46		0.15	%

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

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

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Provision for Credit Losses

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

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

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

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

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

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

Noninterest Income

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

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

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NONINTEREST INCOME


	Three Months Ended September 30,				Amount change		Percent change		Nine Months Ended September 30,				Amount change		Percent change
(Dollar amounts in millions)	2022		2021						2022		2021

Commercial account fees	$	40	$	34	$	6	18	%	$	118	$	100	$	18	18	%
Card fees	27		25		2		8		77		70		7		10
Retail and business banking fees	17		20		(3)		(15)		57		55		2		4
Loan-related fees and income	18		27		(9)		(33)		61		73		(12)		(16)
Capital markets and foreign exchange fees	25		17		8		47		61		49		12		24
Wealth management fees	14		13		1		8		41		37		4		11
Other customer-related fees	15		15		—		—		46		39		7		18
Customer-related noninterest income	156		151		5		3		461		423		38		9

Fair value and nonhedge derivative income	4		2		2		NM		20		15		5		33
Dividends and other income (loss)	(1)		9		(10)		NM		8		24		(16)		(67)
Securities gains (losses), net	6		(23)		29		NM		(10)		51		(61)		NM
Noncustomer-related noninterest income	9		(12)		21		NM		18		90		(72)		(80)
Total noninterest income	$	165	$	139	$	26	19	%	$	479	$	513	$	(34)	(7)	%

Customer-related

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

Noncustomer-related

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

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Noninterest Expense

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

NONINTEREST EXPENSE


	Three Months Ended September 30,				Amount change		Percent change		Nine Months Ended September 30,				Amount change		Percent change
(Dollar amounts in millions)	2022		2021						2022		2021

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

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

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

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

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

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

Income Taxes

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

INCOME TAXES


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollar amounts in millions)	2022			2021			2022			2021

Income before income taxes	$	278		$	311		$	793		$	1,177
Income tax expense	61			71			170			261
Effective tax rate	21.9		%	22.8		%	21.4		%	22.2		%

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

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Preferred Stock Dividends

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

Technology Spend

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

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

•Technology, telecom, and information processing expense — includes expenses related to application software licensing and maintenance, related amortization, telecommunications, and data processing;

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

•Technology investments — includes capitalized technology infrastructure equipment, hardware, and purchased or internally developed software, less related amortization or depreciation.

The following schedule provides information related to our technology spend:

TECHNOLOGY SPEND


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021

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

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

BALANCE SHEET ANALYSIS

Interest-Earning Assets

Interest-earning assets are assets that have associated interest rates or yields, and generally consist of money market investments, securities, loans, and leases. We strive to maintain a high level of interest-earning assets relative to total assets. For more information regarding the average balances, associated revenue generated, and the respective yields of our interest-earning assets, see the Consolidated Average Balance Sheet on page 11.

Investment Securities Portfolio

We invest in securities to generate interest income and to actively manage liquidity, interest rate, and credit risk. Refer to the “Liquidity Risk Management” section on page 32 for additional information about how we manage our liquidity risk. See Note 3 and Note 5 of the Notes to Consolidated Financial Statements for more information on fair value measurements and the accounting for our investment securities portfolio.

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

INVESTMENT SECURITIES PORTFOLIO


	September 30, 2022				December 31, 2021
(In millions)	Par value		Amortized cost		Estimated fair value		Par value		Amortized cost		Estimated fair value
Held-to-maturity
Municipal securities	$	423	$	423	$	379	$	441	$	441	$	443



Available-for-sale
U.S. Treasury securities	555		557		394		155		155		134
U.S. Government agencies and corporations:
Agency securities	859		851		807		833		833		845
Agency guaranteed mortgage-backed securities	23,002		23,162		19,566		20,340		20,549		20,387
Small Business Administration loan-backed securities	740		793		766		867		938		912
Municipal securities	1,611		1,780		1,626		1,489		1,652		1,694
Other debt securities	75		75		74		75		75		76







Total available-for-sale	26,842		27,218		23,233		23,759		24,202		24,048
Total HTM and AFS investment securities	$	27,265	$	27,641	$	23,612	$	24,200	$	24,643	$	24,491

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

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

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

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

Municipalities

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

EXPOSURE TO MUNICIPALITIES


(In millions)	September 30, 2022		December 31, 2021

Loans and leases	$	4,224	$	3,658
Held-to-maturity securities	423		441
Available-for-sale securities	1,626		1,694

Trading account securities	302		355
Unfunded lending commitments	337		280
Total direct exposure to municipalities	$	6,912	$	6,428

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

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At September 30, 2022, no municipal loans were on nonaccrual. Municipal securities are internally graded, similar to loans, using risk-grading systems which vary based on the size and type of credit risk exposure. The internal risk grades assigned to our municipal securities follow our definitions of Pass, Special Mention, and Substandard, which are consistent with published definitions of regulatory risk classifications. At September 30, 2022, all municipal securities were graded as Pass. See Notes 5 and 6 of the Notes to Consolidated Financial Statements for additional information about the credit quality of these municipal loans and securities.

Loan and Lease Portfolio

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

LOAN AND LEASE PORTFOLIO


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

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

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Other Noninterest-Bearing Investments

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

OTHER NONINTEREST-BEARING INVESTMENTS


(Dollar amounts in millions)	September 30, 2022		December 31, 2021		Amount change		Percent change

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

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

Premises, Equipment, and Software

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

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

CAPITALIZED COSTS ASSOCIATED WITH THE CORE SYSTEM REPLACEMENT PROJECT


	September 30, 2022
(In millions)	Phase 1		Phase 2		Phase 3		Total

Total amount of capitalized costs, less accumulated depreciation	$	32	$	57	$	190	$	279

Deposits

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

DEPOSITS


	September 30, 2022				December 31, 2021
(Dollar amounts in millions)	Amount		% of total deposits		Amount		% of total deposits

Noninterest-bearing demand	$	39,133	51.5	%	$	41,053	49.6	%
Interest-bearing:
Savings and money market	35,389		46.6		40,114		48.4
Time	1,473		1.9		1,622		2.0
Total deposits	$	75,995	100.0	%	$	82,789	100.0	%

Total deposits decreased $6.8 billion, or 8%, from December 31, 2021, primarily due to a $4.9 billion decrease in interest-bearing deposits, and a $1.9 billion decrease in noninterest-bearing deposits. Total deposits included $166

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million and $381 million of brokered deposits at September 30, 2022 and December 31, 2021, respectively. Additionally, total deposits at September 30, 2022 included approximately $400 million of deposit balances acquired from the purchase of three Northern Nevada branches during the third quarter of 2022. See “Liquidity Risk Management” on page 32 for additional information on funding and borrowed funds.

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

RISK MANAGEMENT

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

Credit Risk Management

Credit risk is the possibility of loss from the failure of a borrower, guarantor, or another obligor to fully perform under the terms of a credit-related contract. Credit risk arises primarily from our lending activities, as well as from off-balance sheet credit instruments. For a more comprehensive discussion of our credit risk management, see “Credit Risk Management” in our 2021 Form 10-K.

U.S. Government Agency Guaranteed Loans

We participate in various guaranteed lending programs sponsored by United States (“U.S.”) government agencies, such as the SBA, Federal Housing Authority, U.S. Department of Veterans Affairs, Export-Import Bank of the U.S., and the U.S. Department of Agriculture. At September 30, 2022, $740 million of related loans were guaranteed, primarily by the SBA, and included $306 million of PPP loans. The following schedule presents the composition of U.S. government agency guaranteed loans.

U.S. GOVERNMENT AGENCY GUARANTEED LOANS


(Dollar amounts in millions)	September 30, 2022		Percent guaranteed		December 31, 2021		Percent guaranteed

Commercial	$	844	86	%	$	2,410	95	%
Commercial real estate	18		72		22		73
Consumer	4		100		5		100
Total loans	$	866	85	%	$	2,437	94	%

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Commercial Lending

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

COMMERCIAL LENDING BY INDUSTRY GROUP 1


	September 30, 2022				December 31, 2021
(Dollar amounts in millions)	Amount		Percent		Amount		Percent

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

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

2 Includes primarily utilities, power, and renewable energy.

3 No other industry group exceeds 2.9%.

Commercial Real Estate Loans

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

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COMMERCIAL REAL ESTATE PORTFOLIO BY LOAN TYPE AND COLLATERAL LOCATION


(Dollar amounts in millions)	September 30, 2022
	Collateral Location
Loan type	Arizona			California			Colorado			Nevada			Texas			Utah/ Idaho			Wash-ington			Other 1			Total			% of total CRE
Commercial term
Balance outstanding	$	1,092		$	3,147		$	490		$	685		$	1,561		$	1,600		$	627		$	354		$	9,556		77.3	%
% of loan type	11.4		%	32.9		%	5.1		%	7.2		%	16.3		%	16.8		%	6.6		%	3.7		%	100.0		%
Delinquency rates 2:
30-89 days	—		%	0.1		%	0.4		%	—		%	0.1		%	—		%	—		%	—		%	0.1		%
≥ 90 days	—		%	—		%	—		%	—		%	1.0		%	—		%	—		%	—		%	0.2		%

Nonaccrual loans	$	—		$	3		$	—		$	—		$	15		$	—		$	—		$	1		$	19
Commercial construction and land development
Balance outstanding	$	226		$	460		$	62		$	79		$	373		$	584		$	252		$	55		$	2,091		16.9	%
% of loan type	10.8		%	22.0		%	3.0		%	3.8		%	17.9		%	27.9		%	12.0		%	2.6		%	100.0		%
Delinquency rates 2:
30-89 days	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
≥ 90 days	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%


Residential construction and land development 3
Balance outstanding	$	64		$	136		$	46		$	1		$	206		$	204		$	9		$	43		$	709		5.8	%
% of loan type	9.0		%	19.1		%	6.5		%	0.2		%	29.0		%	28.8		%	1.3		%	6.1		%	100.0		%






Total construction and land development	$	290		$	596		$	108		$	80		$	579		$	788		$	261		$	98		$	2,800
Total CRE	$	1,382		$	3,743		$	598		$	765		$	2,140		$	2,388		$	888		$	452		$	12,356		100.0	%


(Dollar amounts in millions)	December 31, 2021
	Collateral Location
Loan type	Arizona			California			Colorado			Nevada			Texas			Utah/ Idaho			Wash-ington			Other 1			Total			% of total CRE
Commercial term
Balance outstanding	$	1,038		$	3,331		$	508		$	653		$	1,606		$	1,408		$	444		$	453		$	9,441		77.4	%
% of loan type	11.0		%	35.3		%	5.4		%	6.9		%	17.0		%	14.9		%	4.7		%	4.8		%	100.0		%
Delinquency rates 2:
30-89 days	—		%	0.2		%	0.2		%	—		%	—		%	0.1		%	—		%	—		%	0.1		%
≥ 90 days	—		%	0.1		%	—		%	—		%	0.2		%	—		%	—		%	—		%	0.1		%

Nonaccrual loans	$	—		$	3		$	—		$	—		$	17		$	—		$	—		$	—		$	20
Commercial construction and land development
Balance outstanding	$	242		$	405		$	94		$	107		$	475		$	543		$	181		$	40		$	2,087		17.1	%
% of loan type	11.6		%	19.4		%	4.5		%	5.1		%	22.8		%	26.0		%	8.7		%	1.9		%	100.0		%
Delinquency rates 2:
30-89 days	—		%	—		%	—		%	—		%	—		%	—		%	13.2		%	—		%	0.9		%
≥ 90 days	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%


Residential construction and land development 3
Balance outstanding	$	82		$	167		$	44		$	2		$	162		$	167		$	9		$	37		$	670		5.5	%
% of loan type	12.3		%	25.0		%	6.6		%	0.2		%	24.2		%	24.9		%	1.3		%	5.5		%	100.0		%






Total construction and land development	$	324		$	572		$	138		$	109		$	637		$	710		$	190		$	77		$	2,757
Total CRE	$	1,362		$	3,903		$	646		$	762		$	2,243		$	2,118		$	634		$	530		$	12,198		100.0	%

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

2 Delinquency rates include nonaccrual loans.

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

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

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

Consumer Loans

We originate first-lien residential home mortgages considered to be of prime quality. We generally hold variable-rate loans in our portfolio and sell “conforming” fixed-rate loans to third parties, including Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, for which we make representations and warranties that the loans meet certain underwriting and collateral documentation standards.

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

HECL PORTFOLIO BY LIEN STATUS


(In millions)	September 30, 2022		December 31, 2021

Secured by first liens	$	1,517	$	1,503
Secured by second (or junior) liens	1,814		1,513
Total	$	3,331	$	3,016

At September 30, 2022, loans representing less than 1% of the outstanding balance in the HECL portfolio were estimated to have combined loan-to-value (“CLTV”) ratios above 100%. An estimated CLTV ratio is the ratio of our loan plus any prior lien amounts divided by the estimated current collateral value. At origination, underwriting standards for the HECL portfolio generally include a maximum 80% CLTV with high credit scores.

Approximately 91% of our HECL portfolio is still in the draw period, and about 19% of those loans are scheduled to begin amortizing within the next five years. We believe the risk of loss and borrower default in the event of a loan becoming fully amortizing and the effect of significant interest rate changes is minimal. The ratio of HECL net charge-offs (recoveries) for the trailing twelve months to average balances at September 30, 2022 and December 31, 2021 was (0.03)% and (0.01)%, respectively. See Note 6 of the Notes to Consolidated Financial Statements for additional information on the credit quality of the HECL portfolio.

Nonperforming Assets

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

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

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

The following schedule presents our nonperforming assets:

NONPERFORMING ASSETS


(Dollar amounts in millions)	September 30, 2022			December 31, 2021

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

1 Includes loans held for sale.

2 Does not include banking premises held for sale.

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

Troubled Debt Restructured Loans

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

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

ACCRUING AND NONACCRUING TROUBLED DEBT RESTRUCTURED LOANS


(In millions)	September 30, 2022		December 31, 2021

Restructured loans – accruing	$	206	$	221
Restructured loans – nonaccruing	39		105
Total	$	245	$	326

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

TROUBLED DEBT RESTRUCTURED LOANS ROLLFORWARD


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021

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

Allowance for Credit Losses

The ACL includes the ALLL and the RULC. The ACL represents our estimate of current expected credit losses related to the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. To determine the adequacy of the allowance, our loan and lease portfolio is segmented based on loan type.

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

SUMMARY OF CREDIT LOSS EXPERIENCE


(Dollar amounts in millions)	Nine Months Ended September 30, 2022			Twelve Months Ended December 31, 2021			Nine Months Ended September 30, 2021

Loans and leases outstanding	$	53,918		$	50,851		$	50,678
Average loans and leases outstanding:
Commercial – excluding PPP loans	28,060			25,014			24,716
Commercial – PPP loans	885			4,566			5,283
Commercial real estate	12,151			12,136			12,104
Consumer	10,801			10,267			10,315
Total average loans and leases outstanding	$	51,897		$	51,983		$	52,418
Allowance for loan and lease losses:
Balance at beginning of period	$	513		$	777		$	777
Provision for loan losses	70			(258)			(281)
Charge-offs:
Commercial	65			35			27
Commercial real estate	—			—			—
Consumer	8			13			10
Total	73			48			37
Recoveries:
Commercial	21			29			24
Commercial real estate	—			3			—
Consumer	10			10			8
Total	31			42			32
Net loan and lease charge-offs	42			6			5
Balance at end of period	$	541		$	513		$	491
Reserve for unfunded lending commitments:
Balance at beginning of period	$	40		$	58		$	58
Provision for unfunded lending commitments	9			(18)			(20)
Balance at end of period	$	49		$	40		$	38
Total allowance for credit losses:
Allowance for loan and lease losses	$	541		$	513		$	491
Reserve for unfunded lending commitments	49			40			38
Total allowance for credit losses	$	590		$	553		$	529

Ratio of allowance for credit losses to net loans and leases, at period end 1	1.09		%	1.09		%	1.04		%
Ratio of allowance for credit losses to nonaccrual loans, at period end	391		%	204		%	164		%
Ratio of allowance for credit losses to nonaccrual loans and accruing loans past due 90 days or more, at period end	345		%	198		%	162		%
Ratio of total net charge-offs to average loans and leases 2, 3	0.11		%	0.01		%	0.01		%
Ratio of commercial net charge-offs to average commercial loans 3	0.20		%	0.02		%	0.01		%
Ratio of commercial real estate net charge-offs to average commercial real estate loans 3	—		%	(0.02)		%	—		%
Ratio of consumer net charge-offs to average consumer loans 3	(0.02)		%	0.03		%	0.03		%

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

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

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

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

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

See Note 6 of the Notes to Consolidated Financial Statements for additional information related to the ACL and credit trends experienced in each portfolio segment.

Interest Rate and Market Risk Management

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

Interest Rate Risk

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

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

We also assume a correlation, referred to as a “deposit beta,” with respect to interest-bearing deposits, wherein the rates paid to customers change at a different pace when compared with changes in average benchmark interest rates. Generally, certificates of deposit are assumed to have a high correlation, while interest-bearing checking accounts are assumed to have a lower correlation. We anticipate that changes in deposit rates will lag changes in reference rates. Our modeled cost of total deposits for September 2023 is approximately 0.63% without the effect of additional Federal Reserve rate hikes. Additional rate hikes would be expected to result in further increases to the cost of total deposits.

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

DEPOSIT ASSUMPTIONS


	September 30, 2022
Product	Effective duration (unchanged)		Effective duration (+200 bps)

Demand deposits	3.2	%	3.0	%
Money market	1.8	%	1.6	%
Savings and interest-bearing checking	2.6	%	2.4	%

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

Additionally, we utilize derivatives to manage interest rate risk. The following schedule presents derivatives that are designated in qualifying hedging relationships at September 30, 2022. Included are the average outstanding derivative notional amounts for each period presented and the weighted average fixed-rate paid or received for each category of cash flow and fair value hedge. See Note 7 of the Notes to Consolidated Financial Statements for additional information regarding the impact of these hedging relationships on interest income and expense.

DERIVATIVES DESIGNATED IN QUALIFYING HEDGING RELATIONSHIPS


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

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

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

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

due to forward-starting interest rate swaps.

4 Represents the fourth quarter of 2022.

Incorporating the deposit assumptions and the impact of derivatives in qualifying hedging relationships previously discussed, the following schedule presents earnings at risk (“EaR”), or the percentage change in 12-month forward looking net interest income, and our estimated percentage change in economic value of equity (“EVE”). Both EaR and EVE are based on a static balance sheet size under parallel interest rate changes ranging from -100 bps to +300 bps.

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


	September 30, 2022										December 31, 2021
	Parallel shift in rates (in bps)1										Parallel shift in rates (in bps)1
Repricing scenario	-100		0		+100		+200		+300		-100		0		+100		+200		+300

Earnings at Risk (EaR)	(4.2)	%	—	%	4.1	%	8.2	%	12.2	%	(5.2)	%	—	%	11.2	%	22.7	%	33.6	%
Economic Value of Equity (EVE)	4.0	%	—	%	(2.0)	%	(4.1)	%	(6.1)	%	20.9	%	—	%	0.8	%	(0.5)	%	(1.2)	%

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

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

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

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

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

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

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

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

LIBOR Exposure

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

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

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

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

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

Market Risk – Fixed Income

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

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

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

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

Market Risk – Equity Investments

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

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additional market risk. See Note 3 of our 2021 Form 10-K for additional information regarding the valuation of our SBIC investments.

Liquidity Risk Management

Overview

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

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

Liquidity Management Actions

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

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

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

CREDIT RATINGS

as of October 31, 2022:

Rating agency

Outlook

Long-term issuer/senior
debt rating

Subordinated debt rating

Short-term debt rating

Kroll

Positive

A-

BBB+

S&P

Stable

BBB+

BBB

Fitch

Stable

BBB+

BBB

Moody's

Stable

Baa1

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

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

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

We may, from time to time, issue additional preferred stock, senior or subordinated notes, or other forms of capital or debt instruments, depending on our capital, funding, asset-liability management, or other needs as market conditions warrant. These additional issuances may be subject to required regulatory approvals. We believe that our sources of available liquidity are adequate to meet all reasonably foreseeable short- and intermediate-term demands.

Capital Management

Overview

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

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

SHAREHOLDERS' EQUITY


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

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

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

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

CAPITAL DISTRIBUTIONS


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

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

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

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

Basel III

We are subject to Basel III capital requirements to maintain adequate levels of capital as measured by several regulatory capital ratios. At September 30, 2022, we exceeded all capital adequacy requirements under the Basel III capital rules. Based on our internal stress testing and other assessments of capital adequacy, we believe we hold capital sufficiently in excess of internal and regulatory requirements for well-capitalized banks. The following schedule presents our capital and other performance ratios.

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CAPITAL RATIOS


	September 30, 2022		December 31, 2021		September 30, 2021

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

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

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

NON-GAAP FINANCIAL MEASURES

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

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

Tangible Common Equity and Related Measures

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

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RETURN ON AVERAGE TANGIBLE COMMON EQUITY (NON-GAAP)


		Three Months Ended
(Dollar amounts in millions)		September 30, 2022			June 30, 2022			September 30, 2021





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

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


(Dollar amounts in millions, except per share amounts)		September 30, 2022			June 30, 2022			September 30, 2021

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

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Efficiency Ratio and Adjusted Pre-Provision Net Revenue

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

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


		Three Months Ended									Nine Months Ended						Year Ended
(Dollar amounts in millions)		September 30, 2022			June 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			December 31, 2021

Noninterest expense (GAAP)	(a)	$	479		$	464		$	429		$	1,407		$	1,292		$	1,741
Adjustments:
Severance costs		—			1			1			1			1			1
Other real estate expense, net		—			—			—			1			—			—

Amortization of core deposit and other intangibles		1			—			—			1			—			1

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

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

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

CONSOLIDATED BALANCE SHEETS


(In millions, shares in thousands)	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Cash and due from banks	$	549	$	595
Money market investments:
Interest-bearing deposits	1,291		10,283
Federal funds sold and security resell agreements	2,797		2,133
Investment securities:
Held-to-maturity, at amortized cost (included $379 and $443 at fair value )	423		441
Available-for-sale, at fair value	23,233		24,048
Trading account, at fair value	526		372

Total securities	24,182		24,861
Loans held for sale	25		83
Loans and leases, net of unearned income and fees	53,918		50,851
Less allowance for loan and lease losses	541		513
Loans held for investment, net of allowance	53,377		50,338
Other noninterest-bearing investments	983		851
Premises, equipment and software, net	1,388		1,319
Goodwill and intangibles	1,034		1,015
Other real estate owned	3		8
Other assets	2,845		1,714
Total assets	$	88,474	$	93,200
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	39,133	$	41,053
Interest-bearing:
Savings and money market	35,389		40,114
Time	1,473		1,622

Total deposits	75,995		82,789
Federal funds purchased and other short-term borrowings	5,363		903
Long-term debt	647		1,012
Reserve for unfunded lending commitments	49		40
Other liabilities	1,724		993
Total liabilities	83,778		85,737
Shareholders’ equity:
Preferred stock, without par value; authorized 4,400 shares	440		440
Common stock ($0.001 par value; authorized 350,000 shares; issued and outstanding 149,611 and 151,625 shares) and additional paid-in capital	1,799		1,928
Retained earnings	5,597		5,175
Accumulated other comprehensive income (loss)	(3,140)		(80)


Total shareholders’ equity	4,696		7,463
Total liabilities and shareholders’ equity	$	88,474	$	93,200

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except shares and per share amounts)	2022		2021		2022		2021
Interest income:
Interest and fees on loans	$	551	$	484	$	1,456	$	1,464
Interest on money market investments	24		7		42		14
Interest on securities	132		78		372		223
Total interest income	707		569		1,870		1,701
Interest expense:
Interest on deposits	19		7		32		23
Interest on short- and long-term borrowings	25		7		38		23
Total interest expense	44		14		70		46
Net interest income	663		555		1,800		1,655
Provision for credit losses:
Provision for loan and lease losses	60		(45)		70		(281)
Provision for unfunded lending commitments	11		(1)		9		(20)

Total provision for credit losses	71		(46)		79		(301)
Net interest income after provision for credit losses	592		601		1,721		1,956
Noninterest income:
Commercial account fees	40		34		118		100
Card fees	27		25		77		70
Retail and business banking fees	17		20		57		55
Loan-related fees and income	18		27		61		73
Capital markets and foreign exchange fees	25		17		61		49
Wealth management fees	14		13		41		37
Other customer-related fees	15		15		46		39
Customer-related noninterest income	156		151		461		423
Fair value and nonhedge derivative income	4		2		20		15
Dividends and other income (loss)	(1)		9		8		24
Securities gains (losses), net	6		(23)		(10)		51
Total noninterest income	165		139		479		513
Noninterest expense:
Salaries and employee benefits	312		285		931		845
Technology, telecom, and information processing	53		50		158		148
Occupancy and equipment, net	38		37		112		115
Professional and legal services	14		17		42		56
Marketing and business development	11		9		28		22
Deposit insurance and regulatory expense	13		8		36		25
Credit-related expense	8		7		22		19
Other real estate expense, net	—		—		1		—
Other	30		16		77		62
Total noninterest expense	479		429		1,407		1,292
Income before income taxes	278		311		793		1,177
Income taxes	61		71		170		261
Net income	217		240		623		916


Preferred stock dividends	(6)		(6)		(22)		(23)

Net earnings applicable to common shareholders	$	211	$	234	$	601	$	893
Weighted average common shares outstanding during the period:
Basic shares (in thousands)	149,628		160,221		150,510		162,159
Diluted shares (in thousands)	149,792		160,480		150,766		162,460
Net earnings per common share:
Basic	$	1.40	$	1.45	$	3.96	$	5.44
Diluted	1.40		1.45		3.96		5.43

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021

Net income for the period	$	217	$	240	$	623	$	916
Other comprehensive income (loss), net of tax:
Net unrealized holding losses on investment securities	(909)		(95)		(2,729)		(225)





Net unrealized gains (losses) on other noninterest-bearing investments	(1)		—		(2)		3
Net unrealized holding losses on derivative instruments	(138)		(4)		(322)		(4)
Reclassification adjustment for decrease (increase) in interest income recognized in earnings on derivative instruments	8		(12)		(7)		(35)

Other comprehensive income (loss)	(1,040)		(111)		(3,060)		(261)
Comprehensive income (loss)	$	(823)	$	129	$	(2,437)	$	655

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions, except shares and per share amounts)	Preferred stock		Common stock			Accumulated paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)			Total shareholders’ equity
			Shares (in thousands)	Amount

Balance at June 30, 2022	$	440	150,471	$	—	$	1,845	$	5,447		$	(2,100)	$	5,632
Net income for the period								217					217
Other comprehensive loss, net of tax											(1,040)		(1,040)

Bank common stock repurchased			(888)			(50)							(50)

Net activity under employee plans and related tax benefits			28			4							4
Dividends on preferred stock								(6)					(6)
Dividends on common stock, $0.41 per share								(61)					(61)

Balance at September 30, 2022	$	440	149,611	$	—	$	1,799	$	5,597		$	(3,140)	$	4,696

Balance at June 30, 2021	$	440	162,248	$	—	$	2,565	$	4,853		$	175	$	8,033
Net income for the period								240					240
Other comprehensive loss, net of tax											(111)		(111)

Bank common stock repurchased			(5,772)			(325)							(325)

Net activity under employee plans and related tax benefits			54			5							5
Dividends on preferred stock								(6)					(6)
Dividends on common stock, $0.38 per share								(62)					(62)

Balance at September 30, 2021	$	440	156,530	$	—	$	2,245	$	5,025		$	64	$	7,774

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(In millions, except shares and per share amounts)	Preferred stock		Common stock			Accumulated paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)			Total shareholders’ equity
			Shares (in thousands)	Amount

Balance at December 31, 2021	$	440	151,625	$	—	$	1,928	$	5,175		$	(80)	$	7,463
Net income for the period								623					623
Other comprehensive loss, net of tax											(3,060)		(3,060)

Bank common stock repurchased			(2,602)			(151)							(151)

Net activity under employee plans and related tax benefits			588			22							22
Dividends on preferred stock								(22)					(22)
Dividends on common stock, $1.17 per share								(178)					(178)
Change in deferred compensation								(1)					(1)
Balance at September 30, 2022	$	440	149,611	$	—	$	1,799	$	5,597		$	(3,140)	$	4,696

Balance at December 31, 2020	$	566	164,090	$	—	$	2,686	$	4,309		$	325	$	7,886
Net income for the period								916					916
Other comprehensive loss, net of tax											(261)		(261)
Preferred stock redemption	(126)					3		(3)					(126)
Bank common stock repurchased			(8,519)			(475)							(475)

Net activity under employee plans and related tax benefits			959			31							31
Dividends on preferred stock								(23)					(23)
Dividends on common stock, $1.06 per share								(174)					(174)

Balance at September 30, 2021	$	440	156,530	$	—	$	2,245	$	5,025		$	64	$	7,774

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(In millions)	Nine Months Ended September 30,
		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period		$	623	$	916
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses		79		(301)
Depreciation and amortization		79		(22)
Share-based compensation		25		23
Deferred income tax expense		15		108
Net increase in trading securities		(154)		(39)
Net decrease in loans held for sale		51		13
Change in other liabilities		745		14
Change in other assets		(467)		(177)
Other, net		(20)		(72)
Net cash provided by operating activities		976		463
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in money market investments		8,328		(4,461)
Proceeds from maturities and paydowns of investment securities held-to-maturity		250		433
Purchases of investment securities held-to-maturity		(232)		(256)
Proceeds from sales, maturities and paydowns of investment securities available-for-sale		2,743		3,611
Purchases of investment securities available-for-sale		(5,829)		(8,730)
Net change in loans and leases		(3,026)		2,957
Purchases and sales of other noninterest-bearing investments		(147)		18
Purchases of premises and equipment		(154)		(153)

Other, net		21		8
Net cash provided by (used in) investing activities		1,954		(6,573)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits		(6,794)		8,230
Net change in short-term funds borrowed		4,461		(993)


Cash paid for preferred stock redemption		—		(126)

Redemption of long-term debt		(290)		(281)

Proceeds from the issuance of common stock		8		17
Dividends paid on common and preferred stock		(200)		(199)
Bank common stock repurchased		(151)		(475)
Other, net		(10)		(9)
Net cash (used in) provided by financing activities		(2,976)		6,164
Net decrease in cash and due from banks		(46)		54
Cash and due from banks at beginning of period		595		543
Cash and due from banks at end of period		$	549	$	597
Cash paid for interest		$	63	$	61
Net cash paid for income taxes		5		442
Noncash activities are summarized as follows:
Loans held for investment transferred to other real estate owned		—		22
Loans held for investment reclassified to loans held for sale, net		100		55

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2022

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Zions Bancorporation, National Association and its majority-owned subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. References to GAAP, including standards promulgated by the Financial Accounting Standards Board (“FASB”), are made according to sections of the Accounting Standards Codification (“ASC”).

The results of operations for the nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results that may be expected in future periods. In preparing the consolidated financial statements, we are required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. For further information, refer to the consolidated financial statements and accompanying footnotes included in our 2021 Form 10-K. Certain prior period amounts have been reclassified to conform with the current period presentation, where applicable. These reclassifications did not affect net income or shareholders’ equity.

Effective for the first quarter of 2022, we made certain financial reporting changes and reclassifications to noninterest expense in our Consolidated Statements of Income. These financial reporting changes were made primarily to improve the presentation and disclosure of certain expenses related to our ongoing technology initiatives. Other noninterest expense line items were impacted by these changes and reclassifications. These changes and reclassifications (1) were adopted retrospectively to January 1, 2020, (2) reflect changes only to noninterest expense in the Consolidated Statements of Income, and (3) do not impact net income, net interest income, or noninterest income.

We evaluated events that occurred between September 30, 2022 and the date the accompanying financial statements were issued, and determined that there were no material events that would require adjustments to our consolidated financial statements or significant disclosure in the accompanying Notes. As referenced in Note 5 of the Notes to Consolidated Financial Statements, we transferred pass-through mortgage-backed available-for-sale (“AFS”) securities to the held-to-maturity (“HTM”) category to reflect our new intent for these securities in October 2022.

Zions Bancorporation, N.A. is a commercial bank headquartered in Salt Lake City, Utah. We provide a wide range of banking products and related services in 11 Western and Southwestern states through seven separately managed bank divisions, which we refer to as “affiliates,” or “affiliate banks,” each with its own local branding and management team. These include Zions Bank, in Utah, Idaho, and Wyoming; California Bank & Trust (“CB&T”); Amegy Bank (“Amegy”), in Texas; National Bank of Arizona (“NBAZ”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; and The Commerce Bank of Washington (“TCBW”) which operates under that name in Washington and under the name The Commerce Bank of Oregon in Oregon.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standard

Description

Date of adoption

Effect on the financial statements or other significant matters

Standards not yet adopted by the Bank

ASU 2022-02,

Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

This accounting standards update (“ASU”) eliminates the recognition and measurement guidance on troubled debt restructurings (“TDRs”) for creditors that have adopted ASC 326 (“CECL”), and eliminates certain existing TDR disclosures while requiring enhanced disclosures about loan modifications for borrowers experiencing financial difficulty.

The new standard also requires public companies to present current-period gross write-offs (on a current year-to-date basis for interim-period disclosures) by year of origination in their vintage disclosures.

The new standard is effective for calendar year-end public companies beginning January 1, 2023, with early adoption permitted.

Periods beginning after December 15, 2022

We have established an implementation team to ensure that the necessary data is captured in order to comply with the new disclosure requirements. The overall effect of this standard is not expected to have a material impact on our financial statements.

We do not plan to early adopt this new standard.

ASU 2022-03,

Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

This ASU clarifies that contractual restrictions prohibiting the sale of an equity security are not considered part of the unit of account of the equity security, and therefore, are not considered in measuring fair value. The amendments clarify that an entity cannot recognize and measure a contractual sale restriction as a separate unit of account. The amendments in this ASU also require additional qualitative and quantitative disclosures for equity securities subject to contractual sale restrictions.

The new standard is effective for calendar year-end public companies beginning January 1, 2024, with early adoption permitted.

Periods beginning after December 15, 2023

The requirements of this ASU are consistent with our current treatment of equity securities subject to contractual sale restrictions and are not expected to impact the fair value measurements of these securities.

We are evaluating supplementary disclosure requirements and additional data needed to meet these requirements. The overall effect of this standard is not expected to have a material impact on our financial statements.

We do not plan to early adopt this new standard.

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3. FAIR VALUE

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For more information about our valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 3 of our 2021 Form 10-K.

Quantitative Disclosure by Fair Value Hierarchy

Assets and liabilities measured at fair value by class on a recurring basis are summarized as follows:


(In millions)	September 30, 2022
	Level 1		Level 2		Level 3		Total
ASSETS
Available-for-sale securities:
U.S. Treasury, agencies and corporations	$	394	$	21,139	$	—	$	21,533
Municipal securities			1,626				1,626

Other debt securities			74				74
Total available-for-sale	394		22,839		—		23,233
Trading account	221		305				526
Other noninterest-bearing investments:
Bank-owned life insurance			543				543
Private equity investments 1	5				81		86
Other assets:
Agriculture loan servicing and interest-only strips					12		12
Deferred compensation plan assets	118						118
Derivatives:
Derivatives designated as hedges			83				83
Derivatives not designated as hedges			212				212
Total assets	$	738	$	23,982	$	93	$	24,813
LIABILITIES
Securities sold, not yet purchased	$	34	$	—	$	—	$	34
Other liabilities:
Derivatives:
Derivatives designated as hedges			2				2
Derivatives not designated as hedges			489				489
Total liabilities	$	34	$	491	$	—	$	525

1 The Level 1 private equity investments (“PEIs”) relate to the portion of our Small Business Investment Company (“SBIC”) investments that are now publicly traded.

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(In millions)	December 31, 2021
	Level 1		Level 2		Level 3		Total
ASSETS
Available-for-sale securities:
U.S. Treasury, agencies and corporations	$	134	$	22,144	$	—	$	22,278
Municipal securities			1,694				1,694

Other debt securities			76				76

Total available-for-sale	134		23,914		—		24,048
Trading account	14		358				372
Other noninterest-bearing investments:
Bank-owned life insurance			537				537
Private equity investments 1	35				66		101
Other assets:
Agriculture loan servicing and interest-only strips					12		12
Deferred compensation plan assets	138						138
Derivatives:
Derivatives designated as hedges			10				10
Derivatives not designated as hedges			209				209
Total assets	$	321	$	25,028	$	78	$	25,427
LIABILITIES
Securities sold, not yet purchased	$	254	$	—	$	—	$	254
Other liabilities:
Derivatives:

Derivatives not designated as hedges			51				51
Total liabilities	$	254	$	51	$	—	$	305

1 The Level 1 PEIs relate to the portion of our SBIC investments that are now publicly traded.

Level 3 Valuations

Our Level 3 holdings include PEIs, agriculture loan servicing, and interest-only strips. For additional information regarding our Level 3 financial instruments, including the methods and significant assumptions used to estimate their fair value, see Note 3 of our 2021 Form 10-K.

Rollforward of Level 3 Fair Value Measurements

The following schedule presents a rollforward of assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs:


	Level 3 Instruments
	Three Months Ended								Nine Months Ended
	September 30, 2022				September 30, 2021					September 30, 2022	September 30, 2021
(In millions)	Private equity investments		Ag loan servicing & interest only strips		Private equity investments		Ag loan servicing & interest only strips				Private equity investments		Ag loan servicing & interest only strips		Private equity investments		Ag loan servicing & interest only strips

Balance at beginning of period	$	77	$	12	$	72	$	15			$	66	$	12	$	80	$	16
Unrealized securities gains (losses), net	2		—		10		—				7		—		79		—
Other noninterest income (expense)	—		—		—		(1)				—		—		—		(2)
Purchases	2		—		4		—				11		—		10		—
Cost of investments sold	—		—		(13)		—				(3)		—		(19)		—

Transfers out 1	—		—		(1)		—				—		—		(78)		—
Balance at end of period	$	81	$	12	$	72	$	14			$	81	$	12	$	72	$	14

1 Represents the transfer of SBIC investments out of Level 3 and into Level 1 because they are now publicly traded.

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The rollforward of Level 3 instruments includes the following realized gains and losses recognized in securities gains (losses) on the consolidated statement of income for the periods presented:


(In millions)	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021


Securities gains (losses), net	$	—	$	(6)	$	(2)	$	(11)

Nonrecurring Fair Value Measurements

Certain assets and liabilities may be recorded at fair value on a nonrecurring basis, including impaired loans that have been measured based on the fair value of the underlying collateral, other real estate owned (“OREO”), and nonmarketable equity securities. Nonrecurring fair value adjustments typically involve write-downs of individual assets or the application of lower of cost or fair value accounting. At September 30, 2022, we had no assets or liabilities that had fair value changes measured on a nonrecurring basis. At December 31, 2021, we had $2 million of collateral-dependent loans valued as Level 2 measurements, and we recognized $3 million of losses from fair value changes related to these loans. The previous fair values may not be current as of the dates indicated, but rather as of the most recent date the fair value change occurred. For additional information regarding the measurement of fair value for impaired loans, collateral-dependent loans, and OREO, see Note 3 of our 2021 Form 10-K.

Fair Value of Certain Financial Instruments

The following schedule summarizes the carrying values and estimated fair values of certain financial instruments:


	September 30, 2022					December 31, 2021
(In millions)	Carrying value		Fair value		Level	Carrying value		Fair value		Level
Financial assets:
Held-to-maturity investment securities	$	423	$	379	2	$	441	$	443	2
Loans and leases (including loans held for sale), net of allowance	53,402		51,735		3	50,421		50,619		3
Financial liabilities:
Time deposits	1,473		1,433		2	1,622		1,624		2

Other short-term borrowings	3,500		3,500		2	—		—		2
Long-term debt	647		628		2	1,012		1,034		2

This summary excludes financial assets and liabilities for which carrying value approximates fair value and financial instruments that are recorded at fair value on a recurring basis. For additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value, see Note 3 of our 2021 Form 10-K.

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4. OFFSETTING ASSETS AND LIABILITIES

Gross and net information for selected financial instruments in the balance sheet is as follows:


	September 30, 2022
							Gross amounts not offset in the balance sheet
(In millions)	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments		Cash collateral received/pledged		Net amount
Assets:
Federal funds sold and security resell agreements	$	2,797	$	—	$	2,797	$	—	$	—	$	2,797
Derivatives (included in other assets)	295		—		295		(10)		(159)		126
Total assets	$	3,092	$	—	$	3,092	$	(10)	$	(159)	$	2,923
Liabilities:
Federal funds purchased and other short-term borrowings	$	5,363	$	—	$	5,363	$	—	$	—	$	5,363
Derivatives (included in other liabilities)	491		—		491		(10)		—		481
Total liabilities	$	5,854	$	—	$	5,854	$	(10)	$	—	$	5,844


	December 31, 2021
							Gross amounts not offset in the balance sheet
(In millions)	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments		Cash collateral received/pledged		Net amount
Assets:
Federal funds sold and security resell agreements	$	2,133	$	—	$	2,133	$	—	$	—	$	2,133
Derivatives (included in other assets)	219		—		219		(16)		(7)		196
Total assets	$	2,352	$	—	$	2,352	$	(16)	$	(7)	$	2,329
Liabilities:
Federal funds purchased and other short-term borrowings	$	903	$	—	$	903	$	—	$	—	$	903
Derivatives (included in other liabilities)	51		—		51		(16)		(1)		34
Total liabilities	$	954	$	—	$	954	$	(16)	$	(1)	$	937

Security repurchase and reverse repurchase (“resell”) agreements are offset, when applicable, in the balance sheet according to master netting agreements. Security repurchase agreements are included with “Federal funds and other short-term borrowings.” Derivative instruments may be offset under their master netting agreements; however, for accounting purposes, we present these items on a gross basis in our balance sheet. See Note 7 for further information regarding derivative instruments.

5. INVESTMENTS

Investment Securities

Investment securities are classified as HTM, AFS, or trading. HTM securities, which management has the intent and ability to hold until maturity, are carried at amortized cost. The amortized cost amounts represent the original cost of the investments, adjusted for related amortization or accretion of any purchase premiums or discounts, and for any impairment losses, including credit-related impairment. AFS securities are carried at fair value, and changes in fair value (unrealized gains and losses) are reported as net increases or decreases to accumulated other comprehensive income (“AOCI”), net of related taxes. Trading securities are carried at fair value with gains and losses recognized in current period earnings. The carrying values of our securities do not include accrued interest receivables of $76 million and $65 million at September 30, 2022 and December 31, 2021, respectively. These receivables are presented on the consolidated balance sheet in “Other assets.”

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See Note 5 of our 2021 Form 10-K for more information regarding our accounting for investment securities, and see Note 3 of our 2021 Form 10-K for description of our process to estimate fair value for investment securities.

The following schedule summarizes the amortized cost and estimated fair values of our HTM and AFS securities:


	September 30, 2022
(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities 1	$	423	$	—	$	44	$	379
Available-for-sale
U.S. Treasury securities	557		—		163		394
U.S. Government agencies and corporations:
Agency securities	851		—		44		807
Agency guaranteed mortgage-backed securities 1	23,162		—		3,596		19,566
Small Business Administration loan-backed securities	793		1		28		766
Municipal securities 1	1,780		—		154		1,626
Other debt securities 1	75		—		1		74
Total available-for-sale	27,218		1		3,986		23,233
Total HTM and AFS investment securities	$	27,641	$	1	$	4,030	$	23,612

1 Gross unrealized gains for these security categories were less than $1 million.


	December 31, 2021
(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities	$	441	$	4	$	2	$	443
Available-for-sale
U.S. Treasury securities	155		—		21		134
U.S. Government agencies and corporations:
Agency securities	833		13		1		845
Agency guaranteed mortgage-backed securities	20,549		108		270		20,387
Small Business Administration loan-backed securities	938		2		28		912
Municipal securities	1,652		46		4		1,694
Other debt securities	75		1		—		76
Total available-for-sale	24,202		170		324		24,048


Total HTM and AFS investment securities	$	24,643	$	174	$	326	$	24,491

Maturities

The following schedule shows the amortized cost and weighted average yields of debt securities by contractual maturity of principal payments at September 30, 2022. Actual principal payments may differ from contractual or expected principal payments because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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	September 30, 2022
	Total debt securities				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years
(Dollar amounts in millions)	Amortized cost		Average yield		Amortized cost		Average yield		Amortized cost		Average yield		Amortized cost		Average yield		Amortized cost		Average yield
Held-to-maturity
Municipal securities 1	$	423	3.11	%	$	46	3.65	%	$	132	3.20	%	$	185	3.08	%	$	60	2.59	%
Available-for-sale
U.S. Treasury securities	557		2.05		—		—		—		—		—		—		557		2.05
U.S. Government agencies and corporations:
Agency securities	851		2.40		31		0.84		371		2.08		239		2.48		210		3.09
Agency guaranteed mortgage-backed securities	23,162		1.82		—		—		370		1.70		1,725		1.97		21,067		1.81
Small Business Administration loan-backed securities	793		2.58		—		—		52		2.73		160		3.02		581		2.44
Municipal securities 1	1,780		2.42		112		2.18		650		2.67		710		2.17		308		2.56
Other debt securities	75		3.46		—		—		50		1.79		10		9.52		15		4.98
Total available-for-sale securities	27,218		1.91		143		1.89		1,493		2.25		2,844		2.15		22,738		1.86
Total HTM and AFS investment securities	$	27,641	1.93	%	$	189	2.32	%	$	1,625	2.33	%	$	3,029	2.21	%	$	22,798	1.86	%

1 The yields on tax-exempt securities are calculated on a tax-equivalent basis.

The following schedule summarizes the amount of gross unrealized losses for debt securities and the estimated fair value by length of time the securities have been in an unrealized loss position:


	September 30, 2022
	Less than 12 months				12 months or more				Total
(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities	$	18	$	260	$	26	$	96	$	44	$	356




Available-for-sale
U.S. Treasury securities	95		306		68		88		163		394
U.S. Government agencies and corporations:
Agency securities	37		712		7		95		44		807
Agency guaranteed mortgage-backed securities	1,865		12,129		1,731		7,429		3,596		19,558
Small Business Administration loan-backed securities	7		77		21		571		28		648
Municipal securities	106		1,375		48		230		154		1,605
Other	1		13		—		—		1		13





Total available-for-sale	2,111		14,612		1,875		8,413		3,986		23,025


Total HTM and AFS investment securities	$	2,129	$	14,872	$	1,901	$	8,509	$	4,030	$	23,381

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	December 31, 2021
	Less than 12 months				12 months or more				Total
(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities	$	1	$	88	$	1	$	68	$	2	$	156




Available-for-sale
U.S. Treasury securities	—		—		21		134		21		134
U.S. Government agencies and corporations:
Agency securities	1		121		—		1		1		122
Agency guaranteed mortgage-backed securities	231		13,574		39		942		270		14,516
Small Business Administration loan-backed securities	—		27		28		749		28		776
Municipal securities	4		327		—		8		4		335
Other	—		—		—		—		—		—





Total available-for-sale	236		14,049		88		1,834		324		15,883


Total HTM and AFS investment securities	$	237	$	14,137	$	89	$	1,902	$	326	$	16,039

Approximately 550 and 137 HTM and 4,236 and 1,302 AFS investment securities were in an unrealized loss position at September 30, 2022, and December 31, 2021, respectively.

Impairment

We review investment securities quarterly on an individual security basis for the presence of impairment. For additional information on our policy and impairment evaluation process for investment securities, see Note 5 of our 2021 Form 10-K.

AFS Impairment

We did not recognize any impairment on our AFS investment securities portfolio during the first nine months of 2022. Unrealized losses primarily relate to changes in interest rates subsequent to purchase and are not attributable to credit. At September 30, 2022, we had not initiated any sales of AFS securities, nor did we have an intent to sell any identified securities with unrealized losses. We do not believe it is more likely than not that we would be required to sell such securities before recovery of their amortized cost basis.

HTM Impairment

For HTM securities, the allowance for credit losses (“ACL”) is assessed consistent with the approach described in Note 6 for loans and leases carried at amortized cost. The ACL on HTM securities was less than $1 million at September 30, 2022. All HTM securities were risk-graded as “Pass” in terms of credit quality and none were past due at September 30, 2022. The amortized cost basis of HTM securities categorized by year acquired is summarized in the following schedule:


	September 30, 2022
	Amortized cost basis by year acquired
(In millions)	2022		2021		2020		2019		2018		Prior		Total Securities

Held-to-maturity investment securities	$	38	$	87	$	117	$	8	$	—	$	173	$	423

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Securities Gains and Losses Recognized in Income

The following schedule summarizes securities gains and losses recognized in the income statement:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
(In millions)	Gross gains		Gross losses		Gross gains		Gross losses		Gross gains		Gross losses		Gross gains		Gross losses




Other noninterest-bearing investments	$	6	$	—	$	6	$	29	$	10	$	20	$	86	$	35

Net gains (losses) 1			$	6			$	(23)			$	(10)			$	51

1 Net gains (losses) were recognized in securities gains (losses) in the income statement.

The following schedule presents interest income by security type:


	Three Months Ended September 30,
	2022						2021
(In millions)	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total
Investment securities:
Held-to-maturity	$	2	$	1	$	3	$	3	$	1	$	4
Available-for-sale	115		11		126		64		8		72
Trading	—		3		3		—		2		2
Total securities	$	117	$	15	$	132	$	67	$	11	$	78


	Nine Months Ended September 30,
	2022						2021
(In millions)	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total
Investment securities:
Held-to-maturity	$	7	$	3	$	10	$	8	$	4	$	12
Available-for-sale	320		30		350		182		22		204
Trading	—		12		12		—		7		7
Total securities	$	327	$	45	$	372	$	190	$	33	$	223

At September 30, 2022 and December 31, 2021, investment securities with a carrying value of $4.6 billion and $3.1 billion, respectively, were pledged to secure public and trust deposits, advances, and for other purposes as required by law. Securities are also pledged as collateral for security repurchase agreements.

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6. LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES

Loans, Leases, and Loans Held for Sale

Loans and leases are summarized as follows according to major portfolio segment and specific loan class:


(In millions)	September 30, 2022		December 31, 2021

Loans held for sale	$	25	$	83
Commercial:
Commercial and industrial	$	15,656	$	13,867
PPP	306		1,855
Leasing	347		327
Owner-occupied	9,279		8,733
Municipal	4,224		3,658
Total commercial	29,812		28,440
Commercial real estate:
Construction and land development	2,800		2,757
Term	9,556		9,441
Total commercial real estate	12,356		12,198
Consumer:
Home equity credit line	3,331		3,016
1-4 family residential	6,852		6,050
Construction and other consumer real estate	973		638
Bankcard and other revolving plans	471		396
Other	123		113
Total consumer	11,750		10,213

Total loans and leases	$	53,918	$	50,851

Loans and leases are presented at their amortized cost basis, which includes net unamortized purchase premiums, discounts, and deferred loan fees and costs totaling $44 million and $83 million at September 30, 2022 and December 31, 2021, respectively. Amortized cost basis does not include accrued interest receivables of $196 million and $161 million at September 30, 2022 and December 31, 2021, respectively. These receivables are presented in the Consolidated Balance Sheet within the “Other assets” line item.

Municipal loans generally include loans to state and local governments (“municipalities”) with the debt service being 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.

Land acquisition and development loans included in the construction and land development loan portfolio were $257 million at September 30, 2022 and $160 million at December 31, 2021.

Loans with a carrying value of $27.6 billion at September 30, 2022 and $26.8 billion at December 31, 2021 have been pledged at the Federal Reserve and the Federal Home Loan Bank (“FHLB”) of Des Moines as collateral for potential borrowings.

We sold loans totaling $112 million and $635 million for the three and nine months ended September 30, 2022, and $0.4 billion and $1.2 billion for the three and nine months ended September 30, 2021, that were classified as loans held for sale. The sold loans were derecognized from the balance sheet. Loans classified as loans held for sale primarily consist of conforming residential mortgages and the guaranteed portion of Small Business Administration (“SBA”) loans that are primarily sold to U.S. government agencies or participated to third parties. They do not include loans from the SBA's Paycheck Protection Program (“PPP”). At times, we have continuing involvement in the sold loans in the form of servicing rights or guarantees. Amounts added to loans held for sale during these same periods were $96 million and $583 million for the three and nine months ended September 30, 2022, and $0.4

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billion and $1.2 billion for the three and nine months ended September 30, 2021, respectively. See Note 5 of the Notes to Consolidated Financial Statements for further information regarding guaranteed securities.

The principal balance of sold loans for which we retain servicing was $3.5 billion at September 30, 2022, and $3.3 billion at December 31, 2021. Income from loans sold, excluding servicing, was $2 million and $12 million for the three and nine months ended September 30, 2022, and $12 million and $30 million for the three and nine months ended September 30, 2021, respectively.

Allowance for Credit Losses

The allowance for credit losses (“ACL”), which consists of the allowance for loan and lease losses (“ALLL”) and the reserve for unfunded lending commitments (“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. For additional information regarding our policies and methodologies used to estimate the ACL, see Note 6 of our 2021 Form 10-K.

The ACL for AFS and HTM debt securities is estimated separately from loans. For HTM securities, the ACL is estimated consistent with the approach for loans carried at amortized cost. See Note 5 of our 2021 Form 10-K for further discussion of our methodology used to estimate the ACL on AFS and HTM debt securities.

Changes in the ACL are summarized as follows:


	Three Months Ended September 30, 2022
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at beginning of period	$	286	$	114	$	108	$	508
Provision for loan losses	41		17		2		60
Gross loan and lease charge-offs	37		—		1		38
Recoveries	6		—		5		11
Net loan and lease charge-offs (recoveries)	31		—		(4)		27
Balance at end of period	$	296	$	131	$	114	$	541
Reserve for unfunded lending commitments
Balance at beginning of period	$	13	$	15	$	10	$	38
Provision for unfunded lending commitments	3		7		1		11
Balance at end of period	$	16	$	22	$	11	$	49
Total allowance for credit losses at end of period
Allowance for loan losses	$	296	$	131	$	114	$	541
Reserve for unfunded lending commitments	16		22		11		49
Total allowance for credit losses	$	312	$	153	$	125	$	590

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	Nine Months Ended September 30, 2022
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses
Balance at beginning of period	$	311	$	107	$	95	$	513
Provision for loan losses	29		24		17		70
Gross loan and lease charge-offs	65		—		8		73
Recoveries	21		—		10		31
Net loan and lease charge-offs (recoveries)	44		—		(2)		42
Balance at end of period	$	296	$	131	$	114	$	541
Reserve for unfunded lending commitments
Balance at beginning of period	$	19	$	11	$	10	$	40
Provision for unfunded lending commitments	(3)		11		1		9
Balance at end of period	$	16	$	22	$	11	$	49
Total allowance for credit losses at end of period
Allowance for loan losses	$	296	$	131	$	114	$	541
Reserve for unfunded lending commitments	16		22		11		49
Total allowance for credit losses	$	312	$	153	$	125	$	590


	Three Months Ended September 30, 2021
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses


Balance at beginning of period	$	321	$	111	$	103	$	535
Provision for loan losses	(25)		(10)		(10)		(45)
Gross loan and lease charge-offs	4		—		4		8
Recoveries	7		—		2		9
Net loan and lease charge-offs (recoveries)	(3)		—		2		(1)
Balance at end of period	$	299	$	101	$	91	$	491
Reserve for unfunded lending commitments


Balance at beginning of period	$	21	$	10	$	8	$	39
Provision for unfunded lending commitments	(2)		—		1		(1)
Balance at end of period	$	19	$	10	$	9	$	38
Total allowance for credit losses at end of period
Allowance for loan losses	$	299	$	101	$	91	$	491
Reserve for unfunded lending commitments	19		10		9		38
Total allowance for credit losses	$	318	$	111	$	100	$	529

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	Nine Months Ended September 30, 2021
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses


Balance at beginning of period	$	464	$	171	$	142	$	777
Provision for loan losses	(162)		(70)		(49)		(281)
Gross loan and lease charge-offs	27		—		10		37
Recoveries	24		—		8		32
Net loan and lease charge-offs (recoveries)	3		—		2		5
Balance at end of period	$	299	$	101	$	91	$	491
Reserve for unfunded lending commitments


Balance at beginning of period	$	30	$	20	$	8	$	58
Provision for unfunded lending commitments	(11)		(10)		1		(20)
Balance at end of period	$	19	$	10	$	9	$	38
Total allowance for credit losses at end of period
Allowance for loan losses	$	299	$	101	$	91	$	491
Reserve for unfunded lending commitments	19		10		9		38
Total allowance for credit losses	$	318	$	111	$	100	$	529

Nonaccrual Loans

Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or the loan is 90 days or more past due as to principal or interest, unless the loan is both well-secured and in the process of collection. Factors we consider in determining whether a loan is placed on nonaccrual include delinquency status, collateral value, borrower or guarantor financial statement information, bankruptcy status, and other information which would indicate that the full and timely collection of interest and principal is uncertain.

A nonaccrual loan may be returned to accrual status when (1) all delinquent interest and principal become current in accordance with the terms of the loan agreement, (2) the loan, if secured, is well-secured, (3) the borrower has paid according to the contractual terms for a minimum of six months, and (4) an analysis of the borrower indicates a reasonable assurance of the borrower's ability and willingness to maintain payments.

The amortized cost basis of nonaccrual loans is summarized as follows:


	September 30, 2022
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance


Commercial:
Commercial and industrial	$	10	$	42	$	52	$	19
PPP	5		—		5		—

Owner-occupied	19		9		28		1

Total commercial	34		51		85		20
Commercial real estate:

Term	—		20		20		8
Total commercial real estate	—		20		20		8
Consumer:
Home equity credit line	1		9		10		1
1-4 family residential	7		29		36		4

Bankcard and other revolving plans	—		—		—		—

Total consumer loans	8		38		46		5
Total	$	42	$	109	$	151	$	33

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	December 31, 2021
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance



Commercial:
Commercial and industrial	$	30	$	94	$	124	$	34
PPP	2		1		3		—

Owner-occupied	37		20		57		3

Total commercial	69		115		184		37
Commercial real estate:

Term	6		14		20		3
Total commercial real estate	6		14		20		3
Consumer:
Home equity credit line	4		10		14		2
1-4 family residential	9		43		52		5

Bankcard and other revolving plans	—		1		1		1

Total consumer loans	13		54		67		8
Total	$	88	$	183	$	271	$	48

For accruing loans, interest is accrued and interest payments are recognized into interest income according to the contractual loan agreement. For nonaccruing loans, the accrual of interest is discontinued, any uncollected or accrued interest is reversed from interest income in a timely manner (generally within one month), and any payments received on these loans are not recognized into interest income, but are applied as a reduction to the principal outstanding. For the three and nine months ended September 30, 2022 and 2021, there was no interest income recognized on a cash basis during the period the loans were on nonaccrual.

The amount of accrued interest receivables reversed from interest income during the periods presented is summarized by loan portfolio segment as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021

Commercial	$	3	$	3	$	11	$	11
Commercial real estate	1		1		1		1
Consumer	—		—		—		—
Total	$	4	$	4	$	12	$	12

Past Due Loans

Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credits, such as bankcard and other revolving credit plans, are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multi-payment obligations (i.e., quarterly, semi-annual, etc.), single payment, and demand notes, are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more.

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Past due loans (accruing and nonaccruing) are summarized as follows:


	September 30, 2022
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1

Commercial:
Commercial and industrial	$	15,597	$	26	$	33	$	59	$	15,656	$	17	$	36
PPP	268		31		7		38		306		2		—
Leasing	347		—		—		—		347		—		—
Owner-occupied	9,264		10		5		15		9,279		—		21
Municipal	4,223		1		—		1		4,224		—		—
Total commercial	29,699		68		45		113		29,812		19		57
Commercial real estate:
Construction and land development	2,800		—		—		—		2,800		—		—
Term	9,536		5		15		20		9,556		—		5
Total commercial real estate	12,336		5		15		20		12,356		—		5
Consumer:
Home equity credit line	3,323		7		1		8		3,331		—		6
1-4 family residential	6,829		7		16		23		6,852		—		19
Construction and other consumer real estate	973		—		—		—		973		—		—
Bankcard and other revolving plans	468		3		—		3		471		1		—
Other	122		1		—		1		123		—		—
Total consumer loans	11,715		18		17		35		11,750		1		25
Total	$	53,750	$	91	$	77	$	168	$	53,918	$	20	$	87


	December 31, 2021
(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1

Commercial:
Commercial and industrial	$	13,822	$	17	$	28	$	45	$	13,867	$	2	$	91
PPP	1,813		35		7		42		1,855		5		—
Leasing	327		—		—		—		327		—		—
Owner-occupied	8,712		7		14		21		8,733		—		42
Municipal	3,658		—		—		—		3,658		—		—
Total commercial	28,332		59		49		108		28,440		7		133
Commercial real estate:
Construction and land development	2,757		—		—		—		2,757		—		—
Term	9,426		10		5		15		9,441		—		15
Total commercial real estate	12,183		10		5		15		12,198		—		15
Consumer:
Home equity credit line	3,008		4		4		8		3,016		—		10
1-4 family residential	6,018		6		26		32		6,050		—		24
Construction and other consumer real estate	638		—		—		—		638		—		—
Bankcard and other revolving plans	393		2		1		3		396		1		—
Other	112		1		—		1		113		—		—
Total consumer loans	10,169		13		31		44		10,213		1		34
Total	$	50,684	$	82	$	85	$	167	$	50,851	$	8	$	182

1 Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is still not expected.

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Credit Quality Indicators

In addition to the nonaccrual and past due criteria, we also analyze loans using loan risk grading systems, which vary based on the size and type of credit risk exposure. The internal risk grades assigned to loans follow our definition of Pass, Special Mention, Substandard, and Doubtful, which are consistent with published definitions of regulatory risk classifications.

•Pass – A Pass asset is higher-quality and does not fit any of the other categories described below. The likelihood of loss is considered low.

•Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in our credit position at some future date.

•Substandard – A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well-defined weaknesses and are characterized by the distinct possibility that we may sustain some loss if deficiencies are not corrected.

•Doubtful – A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable.

There were $1 million of loans classified as Doubtful at September 30, 2022, compared with none at December 31, 2021.

We generally assign internal risk grades to commercial and commercial real estate (“CRE”) loans with commitments greater than $1 million, based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. For these larger loans, we assign one of multiple risk grades within the Pass classification or one of the risk classifications described previously. We confirm our internal risk grades quarterly, or as soon as we identify information that affects the credit risk of the loan.

For consumer loans and for commercial and CRE loans with commitments less than or equal to $1 million, we generally assign internal risk grades similar to those described previously based on automated rules that depend on refreshed credit scores, payment performance, and other risk indicators. These are generally assigned either a Pass, Special Mention, or Substandard grade, and are reviewed as we identify information that might warrant a grade change.

The amortized cost basis of loans and leases categorized by year of origination and by credit quality classifications as monitored by management are summarized as follows.

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	September 30, 2022
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2022		2021		2020		2019		2018		Prior						Total loans
Commercial:
Commercial and industrial
Pass	$	2,640	$	2,004	$	941	$	788	$	535	$	364	$	7,626	$	182	$	15,080
Special Mention	19		2		11		11		1		42		88		—		174
Accruing Substandard	13		14		17		101		40		71		92		2		350
Nonaccrual	1		1		2		1		1		3		39		4		52
Total commercial and industrial	2,673		2,021		971		901		577		480		7,845		188		15,656
PPP
Pass	—		154		147		—		—		—		—		—		301


Nonaccrual	—		—		5		—		—		—		—		—		5
Total PPP	—		154		152		—		—		—		—		—		306
Leasing
Pass	97		76		50		74		22		23		—		—		342
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		5		—		—		5
Nonaccrual	—		—		—		—		—		—		—		—		—
Total leasing	97		76		50		74		22		28		—		—		347
Owner-occupied
Pass	1,778		2,346		1,173		909		675		1,827		162		85		8,955
Special Mention	3		8		8		11		7		18		1		—		56
Accruing Substandard	15		17		45		32		56		67		8		—		240
Nonaccrual	—		1		2		4		5		15		1		—		28
Total owner-occupied	1,796		2,372		1,228		956		743		1,927		172		85		9,279
Municipal
Pass	1,027		1,224		848		472		167		469		6		—		4,213
Special Mention	—		—		—		8		—		—		—		—		8
Accruing Substandard	—		—		—		—		—		3		—		—		3
Nonaccrual	—		—		—		—		—		—		—		—		—
Total municipal	1,027		1,224		848		480		167		472		6		—		4,224
Total commercial	5,593		5,847		3,249		2,411		1,509		2,907		8,023		273		29,812
Commercial real estate:
Construction and land development
Pass	375		814		621		128		2		2		706		85		2,733
Special Mention	1		1		—		—		—		25		—		—		27
Accruing Substandard	17		1		—		22		—		—		—		—		40
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and land development	393		816		621		150		2		27		706		85		2,800
Term
Pass	2,170		1,987		1,661		1,022		810		1,316		239		120		9,325
Special Mention	—		21		—		—		3		3		—		—		27
Accruing Substandard	51		4		35		23		37		34		—		—		184
Nonaccrual	—		—		2		4		1		13		—		—		20
Total term	2,221		2,012		1,698		1,049		851		1,366		239		120		9,556
Total commercial real estate	2,614		2,828		2,319		1,199		853		1,393		945		205		12,356

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	September 30, 2022
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2022		2021		2020		2019		2018		Prior						Total loans














Consumer:
Home equity credit line
Pass	—		—		—		—		—		—		3,222		97		3,319
Special Mention	—		—		—		—		—		—		1		—		1
Accruing Substandard	—		—		—		—		—		—		1		—		1
Nonaccrual	—		—		—		—		—		—		8		2		10
Total home equity credit line	—		—		—		—		—		—		3,232		99		3,331
1-4 family residential
Pass	1,461		1,451		1,010		648		393		1,851		—		—		6,814
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		2		—		—		2
Nonaccrual	—		1		3		3		1		28		—		—		36
Total 1-4 family residential	1,461		1,452		1,013		651		394		1,881		—		—		6,852
Construction and other consumer real estate
Pass	357		483		95		22		9		7		—		—		973
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and other consumer real estate	357		483		95		22		9		7		—		—		973
Bankcard and other revolving plans
Pass	—		—		—		—		—		—		468		2		470
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		1		—		1
Nonaccrual	—		—		—		—		—		—		—		—		—
Total bankcard and other revolving plans	—		—		—		—		—		—		469		2		471
Other consumer
Pass	58		34		13		10		5		3		—		—		123
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total other consumer	58		34		13		10		5		3		—		—		123
Total consumer	1,876		1,969		1,121		683		408		1,891		3,701		101		11,750
Total loans	$	10,083	$	10,644	$	6,689	$	4,293	$	2,770	$	6,191	$	12,669	$	579	$	53,918

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	December 31, 2021
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2021		2020		2019		2018		2016		Prior						Total loans
Commercial:
Commercial and industrial
Pass	$	2,561	$	1,309	$	1,179	$	748	$	354	$	239	$	6,594	$	121	$	13,105
Special Mention	4		17		9		12		1		3		128		1		175
Accruing Substandard	28		22		99		53		31		65		162		3		463
Nonaccrual	14		10		6		3		1		21		51		18		124
Total commercial and industrial	2,607		1,358		1,293		816		387		328		6,935		143		13,867
PPP
Pass	1,317		535		—		—		—		—		—		—		1,852


Nonaccrual	—		3		—		—		—		—		—		—		3
Total PPP	1,317		538		—		—		—		—		—		—		1,855
Leasing
Pass	46		74		70		64		42		19		—		—		315
Special Mention	—		1		4		1		1		—		—		—		7
Accruing Substandard	—		—		—		—		—		5		—		—		5
Nonaccrual	—		—		—		—		—		—		—		—		—
Total leasing	46		75		74		65		43		24		—		—		327
Owner-occupied
Pass	2,420		1,366		1,028		868		695		1,663		177		69		8,286
Special Mention	10		13		19		32		18		50		3		3		148
Accruing Substandard	14		24		41		47		24		79		13		—		242
Nonaccrual	—		4		14		9		9		20		1		—		57
Total owner-occupied	2,444		1,407		1,102		956		746		1,812		194		72		8,733
Municipal
Pass	1,303		963		553		250		327		220		3		—		3,619
Special Mention	—		—		—		—		—		25		—		—		25
Accruing Substandard	—		9		—		—		—		5		—		—		14
Nonaccrual	—		—		—		—		—		—		—		—		—
Total municipal	1,303		972		553		250		327		250		3		—		3,658
Total commercial	7,717		4,350		3,022		2,087		1,503		2,414		7,132		215		28,440
Commercial real estate:
Construction and land development
Pass	640		736		515		94		24		2		650		64		2,725
Special Mention	—		—		1		—		—		—		—		—		1
Accruing Substandard	—		3		28		—		—		—		—		—		31
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and land development	640		739		544		94		24		2		650		64		2,757
Term
Pass	2,407		1,765		1,491		1,066		529		1,401		239		179		9,077
Special Mention	22		39		10		17		8		25		—		4		125
Accruing Substandard	9		9		44		77		14		64		—		2		219
Nonaccrual	—		1		5		1		—		13		—		—		20
Total term	2,438		1,814		1,550		1,161		551		1,503		239		185		9,441
Total commercial real estate	3,078		2,553		2,094		1,255		575		1,505		889		249		12,198

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	December 31, 2021
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2021		2020		2019		2018		2016		Prior						Total loans














Consumer:
Home equity credit line
Pass	—		—		—		—		—		—		2,903		96		2,999
Special Mention	—		—		—		—		—		—		1		—		1
Accruing Substandard	—		—		—		—		—		—		2		—		2
Nonaccrual	—		—		—		—		—		—		7		7		14
Total home equity credit line	—		—		—		—		—		—		2,913		103		3,016
1-4 family residential
Pass	1,391		1,021		728		484		681		1,691		—		—		5,996
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		1		—		—		1		—		—		2
Nonaccrual	—		3		3		3		9		34		—		—		52
Total 1-4 family residential	1,391		1,024		732		487		690		1,726		—		—		6,050
Construction and other consumer real estate
Pass	295		232		73		27		4		7		—		—		638
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total construction and other consumer real estate	295		232		73		27		4		7		—		—		638
Bankcard and other revolving plans
Pass	—		—		—		—		—		—		391		3		394
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		1		—		1
Nonaccrual	—		—		—		—		—		—		1		—		1
Total bankcard and other revolving plans	—		—		—		—		—		—		393		3		396
Other consumer
Pass	58		23		17		9		4		2		—		—		113
Special Mention	—		—		—		—		—		—		—		—		—
Accruing Substandard	—		—		—		—		—		—		—		—		—
Nonaccrual	—		—		—		—		—		—		—		—		—
Total other consumer	58		23		17		9		4		2		—		—		113
Total consumer	1,744		1,279		822		523		698		1,735		3,306		106		10,213
Total loans	$	12,539	$	8,182	$	5,938	$	3,865	$	2,776	$	5,654	$	11,327	$	570	$	50,851

Modified and Restructured Loans

Loans may be modified in the normal course of business for competitive reasons or to strengthen our collateral position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. Loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for which we have granted a concession that we would not otherwise consider, are considered TDRs. For further discussion of our policies and processes regarding TDRs, see Note 6 of our 2021 Form 10-K.

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Information on TDRs, including the amortized cost on an accruing and nonaccruing basis by loan class and modification type is summarized in the following schedules:


	September 30, 2022
	Amortized cost resulting from the following modification types:
(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other 1		Multiple modification types 2		Total
Accruing
Commercial:
Commercial and industrial	$	1	$	9	$	—	$	—	$	9	$	30	$	49
Owner-occupied	1		6		—		8		13		12		40
Municipal	—		8		—		—		—		—		8
Total commercial	2		23		—		8		22		42		97
Commercial real estate:

Term	1		27		—		27		28		1		84
Total commercial real estate	1		27		—		27		28		1		84
Consumer:
Home equity credit line	—		1		5		—		—		1		7
1-4 family residential	2		1		2		—		—		13		18


Total consumer loans	2		2		7		—		—		14		25
Total accruing	5		52		7		35		50		57		206
Nonaccruing
Commercial:
Commercial and industrial	1		—		—		—		6		2		9
Owner-occupied	4		—		—		—		—		4		8

Total commercial	5		—		—		—		6		6		17
Commercial real estate:

Term	—		—		—		11		—		4		15
Total commercial real estate	—		—		—		11		—		4		15
Consumer:
Home equity credit line	—		—		1		—		—		—		1
1-4 family residential	—		1		—		—		1		4		6


Total consumer loans	—		1		1		—		1		4		7
Total nonaccruing	5		1		1		11		7		14		39
Total	$	10	$	53	$	8	$	46	$	57	$	71	$	245

1 Includes TDRs that resulted from other modification types including, but not limited to, a legal judgment awarded on different terms, a bankruptcy plan confirmed on different terms, a settlement that includes the delivery of collateral in exchange for debt reduction, etc.

2 Includes TDRs that resulted from a combination of the previous modification types reflected in the schedule.

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	December 31, 2021
	Amortized cost resulting from the following modification types:
(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other 1		Multiple modification types 2		Total
Accruing
Commercial:
Commercial and industrial	$	19	$	1	$	—	$	—	$	4	$	7	$	31
Owner-occupied	5		4		—		8		14		12		43
Municipal	—		10		—		—		—		—		10
Total commercial	24		15		—		8		18		19		84
Commercial real estate:

Term	1		29		—		27		41		8		106
Total commercial real estate	1		29		—		27		41		8		106
Consumer:
Home equity credit line	—		1		5		—		—		2		8
1-4 family residential	5		1		2		—		1		14		23


Total consumer loans	5		2		7		—		1		16		31
Total accruing	30		46		7		35		60		43		221
Nonaccruing
Commercial:
Commercial and industrial	1		4		—		2		8		49		64
Owner-occupied	5		—		—		2		—		13		20

Total commercial	6		4		—		4		8		62		84
Commercial real estate:

Term	—		—		—		11		2		3		16
Total commercial real estate	—		—		—		11		2		3		16
Consumer:
Home equity credit line	—		—		1		—		—		—		1
1-4 family residential	—		1		—		—		3		—		4


Total consumer loans	—		1		1		—		3		—		5
Total nonaccruing	6		5		1		15		13		65		105
Total	$	36	$	51	$	8	$	50	$	73	$	108	$	326

2 Includes TDRs that resulted from a combination of the previous modification types reflected in the schedule.

Unfunded lending commitments on TDRs totaled $6 million and $10 million at September 30, 2022 and December 31, 2021, respectively.

The total amortized cost of all TDRs in which interest rates were modified below market was $60 million at September 30, 2022 and $100 million at December 31, 2021. These loans are included in the previous schedule in the columns for interest rate below market and multiple modification types.

The net financial impact on interest income due to interest rate modifications below market for accruing TDRs for the three and nine months ended September 30, 2022 and 2021 was not significant.

On an ongoing basis, we monitor the performance of all TDRs according to their restructured terms. Subsequent payment default is defined in terms of delinquency, when principal or interest payments are past due 90 days or more for commercial loans, or 60 days or more for consumer loans.

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The amortized cost of TDRs that had a payment default during the three and nine months ended September 30, 2022, which were still in default at period end, and were within 12 months or less of being modified as TDRs was approximately $13 million for both periods, and $2 million and $5 million for the three and nine months ended September 30, 2021, respectively.

Collateral-Dependent Loans

When a loan is individually evaluated for expected credit losses, we estimate a specific reserve for the loan based on the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, the observable market price of the loan, or the fair value of the loan’s underlying collateral.

Select information on loans for which the borrower is experiencing financial difficulties and repayment is expected to be provided substantially through the operation or sale of the underlying collateral, including the type of collateral and the extent to which the collateral secures the loans, is summarized as follows:


	September 30, 2022
(Dollar amounts in millions)	Amortized cost		Major types of collateral	Weighted average LTV 1
Commercial:
Commercial and industrial	$	1	Corporate assets	8%

Owner-occupied	2		Land, Warehouse	39%


Commercial real estate:

Term	3		Multi-family	80%

Consumer:
Home equity credit line	1		Single family residential	14%
1-4 family residential	2		Single family residential	37%

Total	$	9


	December 31, 2021
(Dollar amounts in millions)	Amortized cost		Major types of collateral	Weighted average LTV 1
Commercial:
Commercial and industrial	$	27	Corporate assets, Single family residential	55%

Owner-occupied	11		Office building	40%


Commercial real estate:

Term	2		Multi-family, Retail	28%

Consumer:
Home equity credit line	5		Single family residential	45%
1-4 family residential	2		Single family residential	35%




Total	$	47

1 The fair value is based on the most recent appraisal or other collateral evaluation.

Foreclosed Residential Real Estate

At September 30, 2022 and December 31, 2021, we did not have any foreclosed residential real estate property. The amortized cost basis of consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $11 million and $10 million for the same periods, respectively.

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7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Objectives and Accounting

Our primary objective for using derivatives is to manage risks, primarily interest rate risk. We use derivatives to manage volatility in interest income, interest expense, earnings, and capital by adjusting our interest rate sensitivity to minimize the impact of fluctuations in interest rates. Derivatives are used to stabilize forecasted interest income from variable-rate assets and to modify the coupon or the duration of fixed-rate financial assets or liabilities as we consider advisable. We also assist clients with their risk management needs through the use of derivatives. For a more detailed discussion of the use of and accounting policies regarding derivative instruments, see Note 7 of our 2021 Form 10-K.

Fair Value Hedges of Liabilities – At September 30, 2022, we had one receive-fixed interest rate swap with a notional amount of $500 million designated in a qualifying fair value hedge relationship of fixed-rate debt. The receive-fixed interest rate swap effectively converts the interest on our fixed-rate debt to floating. During the third quarter of 2022, derivatives designated as fair value hedges of debt decreased in value by $25 million, which was offset by changes in the fair value of the hedged debt instruments as shown in the schedules below. We had no cumulative unamortized debt basis adjustments related to previously terminated fair value hedges of debt at September 30, 2022.

Fair Value Hedges of Assets – At September 30, 2022, we had pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $1.2 billion designated as fair value hedges of certain AFS securities. These swaps effectively convert the fixed interest income to a floating rate on the hedged portion of the securities. During the third quarter of 2022, derivatives designated as fair value hedges of fixed-rate AFS securities increased in value by $67 million, which was offset by changes in value of the hedged securities, as shown in the schedules below. At September 30, 2022, we had $10 million of unamortized basis adjustments to AFS securities from previously designated fair value hedges.

Cash Flow Hedges – At September 30, 2022, we had $7.4 billion notional amount of receive-fixed interest rate swaps designated as cash flow hedges of pools of floating-rate commercial loans. During the quarter, our cash flow hedge portfolio decreased in value by $172 million, which was recorded in AOCI. The amounts deferred in AOCI are reclassified into earnings in the periods in which the hedged interest receipts occur (i.e., when the hedged forecasted transactions affect earnings).

Collateral and Credit Risk

Exposure to credit risk arises from the possibility of nonperformance by counterparties. No significant losses on derivative instruments have occurred as a result of counterparty nonperformance. For a more detailed discussion of collateral and credit risk related to our derivative contracts, see Note 7 of our 2021 Form 10-K.

Our derivative contracts require us to pledge collateral for derivatives that are in a net liability position at a given balance sheet date. Certain of these derivative contracts contain credit-risk-related contingent features that include the requirement to maintain a minimum debt credit rating. We may be required to pledge additional collateral if a credit-risk-related feature were triggered, such as a downgrade of our credit rating. However, in past situations, not all counterparties have demanded that additional collateral be pledged when provided for by the contractual terms. At September 30, 2022, the fair value of our derivative liabilities was $491 million, for which we were required to pledge cash collateral of $143 million in the normal course of business. If our credit rating were downgraded one notch by either Standard & Poor’s (“S&P”) or Moody’s at September 30, 2022, there would likely be less than $1 million of additional collateral required to be pledged.

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Derivative Amounts

Certain information with respect to notional amounts and recorded gross fair values at September 30, 2022 and December 31, 2021, and the related gain (loss) of derivative instruments is summarized as follows:


	September 30, 2022						December 31, 2021
	Notional amount		Fair value				Notional amount		Fair value
(In millions)			Other assets		Other liabilities				Other assets		Other liabilities
Derivatives designated as hedging instruments:
Cash flow hedges of floating-rate assets:

Receive-fixed interest rate swaps	$	7,433	$	—	$	2	$	6,883	$	—	$	—
Fair value hedges:
Debt hedges: Receive-fixed interest rate swaps	500		—		—		500		—		—
Asset hedges: Pay-fixed interest rate swaps	1,228		83		—		479		10		—
Total derivatives designated as hedging instruments	9,161		83		2		7,862		10		—
Derivatives not designated as hedging instruments:
Customer-facing interest rate derivatives 1	6,931		1		483		6,587		192		36
Offsetting interest rate derivatives 2	6,931		501		1		6,587		38		197
Other interest rate derivatives	905		1		—		1,286		6		1
Foreign exchange derivatives	432		6		5		288		3		2
Total derivatives not designated as hedging instruments	15,199		509		489		14,748		239		236
Total derivatives	$	24,360	$	592	$	491	$	22,610	$	249	$	236

1 Customer-facing interest rate derivatives include a net credit valuation adjustment (“CVA”) of $17 million, reducing the fair value of the liability at September 30, 2022, and $3 million, reducing the fair value of the asset at December 31, 2021. These adjustments are required to reflect both our nonperformance risk and that of the respective counterparties.

2 The fair value amounts for these derivatives do not include the settlement amounts for those trades that are centrally cleared. Once the settlement amounts with the clearing houses are included, the total derivative fair values would be the following:


	September 30, 2022				December 31, 2021
(In millions)	Other assets		Other liabilities		Other assets		Other liabilities


Offsetting interest rate derivatives	$	204	$	1	$	8	$	12

The amount of derivative gains (losses) from cash flow and fair value hedges that was deferred in other comprehensive income (“OCI”) or recognized in earnings for the nine months ended September 30, 2022 and 2021 is shown in the schedules below.


	Three Months Ended September 30, 2022
(In millions)	Effective portion of derivative gain/(loss) deferred in AOCI		Amount of gain/(loss) reclassified from AOCI into income		Interest on fair value hedges
Cash flow hedges of floating-rate assets:1
Purchased interest rate floors	$	—	$	—	$	—
Interest rate swaps	(183)		(11)		—
Fair value hedges of liabilities:
Receive-fixed interest rate swaps	—		—		(1)
Basis amortization on terminated hedges 2, 3	—		—		—
Fair value hedges of assets:
Pay-fixed interest rate swaps	—		—		1
Basis amortization on terminated hedges 2, 3	—		—		—
Total derivatives designated as hedging instruments	$	(183)	$	(11)	$	—

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	Nine Months Ended September 30, 2022
(In millions)	Effective portion of derivative gain/(loss) deferred in AOCI		Amount of gain/(loss) reclassified from AOCI into income		Interest on fair value hedges
Cash flow hedges of floating-rate assets: 1
Purchased interest rate floors	$	—	$	2	$	—
Interest rate swaps	(427)		7		—
Fair value hedges of liabilities:
Receive-fixed interest rate swaps	—		—		2
Basis amortization on terminated hedges 2, 3	—		—		1
Fair value hedges of assets:
Pay-fixed interest rate swaps	—		—		(1)
Basis amortization on terminated hedges 2, 3	—		—		—
Total derivatives designated as hedging instruments	$	(427)	$	9	$	2


	Three Months Ended September 30, 2021
(In millions)	Effective portion of derivative gain/(loss) deferred in AOCI		Amount of gain/(loss) reclassified from AOCI into income		Interest on fair value hedges
Cash flow hedges of floating-rate assets: 1
Purchased interest rate floors	$	—	$	3	$	—
Interest rate swaps	4		13		—
Fair value hedges of liabilities:
Receive-fixed interest rate swaps	—		—		2
Basis amortization on terminated hedges 2, 3	—		—		3
Fair value hedges of assets:
Pay-fixed interest rate swaps	—		—		(1)
Basis amortization on terminated hedges 2, 3	—		—		—
Total derivatives designated as hedging instruments	$	4	$	16	$	4

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	Nine Months Ended September 30, 2021
(In millions)	Effective portion of derivative gain/(loss) deferred in AOCI		Amount of gain/(loss) reclassified from AOCI into income		Interest on fair value hedges
Cash flow hedges of floating-rate assets: 1
Purchased interest rate floors	$	—	$	8	$	—
Interest rate swaps	(5)		38		—
Fair value hedges of liabilities:
Receive-fixed interest rate swaps	—		—		6
Basis amortization on terminated hedges 2, 3	—		—		9
Fair value hedges of assets:
Pay-fixed interest rate swaps	—		—		(2)
Basis amortization on terminated hedges 2, 3	—		—		—
Total derivatives designated as hedging instruments	$	(5)	$	46	$	13

1 For the 12 months following September 30, 2022, we estimate that $173 million of losses will be reclassified from AOCI into interest income, compared with an estimate of $42 million of gains as of September 30, 2021.

2 Adjustment to interest expense resulting from the amortization of the debt basis adjustment on fixed-rate debt previously hedged by terminated receive-fixed interest rate.

3 There was no cumulative unamortized basis adjustment from previously terminated or redesignated fair value debt hedges and $10 million of terminated fair value asset hedges at September 30, 2022, compared with $2 million and $7 million as of September 30, 2021, respectively.

The amount of gains (losses) recognized from derivatives not designated as accounting hedges is summarized as follows:


	Other Noninterest Income/(Expense)
(In millions)	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Derivatives not designated as hedging instruments:
Customer-facing interest rate derivatives	$	(227)	$	(638)	$	(5)	$	(100)
Offsetting interest rate derivatives	238		680		12		129
Other interest rate derivatives	—		—		3		(7)
Foreign exchange derivatives	8		21		6		17
Total derivatives not designated as hedging instruments	$	19	$	63	$	16	$	39

The following schedule presents derivatives used in fair value hedge accounting relationships, as well as pre-tax gains/(losses) recorded on such derivatives and the related hedged items for the periods presented.


	Gain/(loss) recorded in income
	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(In millions)	Derivatives 2		Hedged items		Total income statement impact		Derivatives 2		Hedged items		Total income statement impact

Debt: Receive-fixed interest rate swaps 1, 2	$	(25)	$	25	$	—	$	(4)	$	4	$	—
Assets: Pay-fixed interest rate swaps 1, 2	67		(67)		—		4		(4)		—

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	Gain/(loss) recorded in income
	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(In millions)	Derivatives 2		Hedged items		Total income statement impact		Derivatives 2		Hedged items		Total income statement impact

Debt: Receive-fixed interest rate swaps 1, 2	$	(75)	$	75	$	—	$	(27)	$	27	$	—
Assets: Pay-fixed interest rate swaps 1, 2	217		(217)		—		27		(27)		—

1 Consists of hedges of benchmark interest rate risk of fixed-rate long-term debt and fixed-rate AFS securities. Gains and losses were recorded in net interest expense or income consistent with the hedged items.

2 The income/expense for derivatives does not reflect interest income/expense from periodic accruals and payments to be consistent with the presentation of the gains/(losses) on the hedged items.

The following schedule provides information regarding basis adjustments for hedged items.


	Par value of hedged assets/(liabilities)				Carrying amount of the hedged assets/(liabilities)1				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item
(In millions)	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021

Long-term fixed-rate debt	$	(500)	$	(500)	$	(432)	$	(507)	$	68	$	(7)
Fixed-rate AFS securities	1,228		479		969		435		(260)		(44)

1 Carrying amounts displayed above exclude (1) issuance and purchase discounts or premiums, (2) unamortized issuance and acquisition costs, and (3) amounts related to terminated fair value hedges.

8. LEASES

We have operating and finance leases for branches, corporate offices, and data centers. At September 30, 2022, we had 416 branches, of which 275 are owned and 141 are leased. We lease our headquarters in Salt Lake City, Utah. The remaining maturities of our lease commitments range from the year 2022 to 2062, and some lease arrangements include options to extend or terminate the leases.

All leases with lease terms greater than twelve months are reported as a lease liability with a corresponding right-of-use (“ROU”) asset. We present ROU assets for operating leases and finance leases on the consolidated balance sheet in “Other assets,” and “Premises, equipment and software, net,” respectively. The corresponding liabilities for those leases are presented in “Other liabilities,” and “Long-term debt.” For more information about our lease policies, see Note 8 of our 2021 Form 10-K.

The following schedule presents ROU assets and lease liabilities with associated weighted average remaining life and discount rate:


(Dollar amounts in millions)	September 30, 2022			December 31, 2021
Operating leases
ROU assets, net of amortization	$	183		$	195
Lease liabilities	209			222
Financing leases
ROU assets, net of amortization	4			4
Lease liabilities	4			4
Weighted average remaining lease term (years)
Operating leases	8.5			8.5
Finance leases	17.6			18.3
Weighted average discount rate
Operating leases	2.8		%	2.8		%
Finance leases	3.1		%	3.1		%

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Additional information related to lease expense is presented below:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021
Lease expense:
Operating lease expense	$	11	$	12	$	35	$	35





Other expenses associated with operating leases 1	13		12		38		37

Total lease expense	$	24	$	24	$	73	$	72

Related cash disbursements from operating leases	$	12	$	13	$	37	$	38

1 Other expenses primarily relate to property taxes and building and property maintenance.

ROU assets related to new leases totaled $5 million at September 30, 2022 and $1 million at December 31, 2021.

Total contractual undiscounted lease payments for operating lease liabilities are summarized in the following schedule by expected due date:


(In millions)	Total undiscounted lease payments

2022 1	$	13
2023	47
2024	38
2025	28
2026	24
Thereafter	92
Total	$	242

1 Contractual maturities for the three months remaining in 2022.

We enter into certain lease agreements where we are the lessor of real estate. Real estate leases are made from bank-owned and subleased property to generate cash flow from the property, including from leasing vacant suites in which we occupy portions of the building. Operating lease income was $3 million for both the third quarter of 2022 and 2021, and $10 million for both the first nine months of 2022 and 2021.

We originated equipment leases, considered to be sales-type leases or direct financing leases, totaling $347 million and $327 million at September 30, 2022 and December 31, 2021, respectively. We recorded income of $3 million on these leases for both the third quarter of 2022 and 2021, and $9 million for both the first nine months of 2022 and 2021.

9. LONG-TERM DEBT AND SHAREHOLDERS’ EQUITY

Long-Term Debt

The long-term debt carrying values in the following schedule represent the par value of the debt, adjusted for any unamortized premium or discount, unamortized debt issuance costs, and basis adjustments for interest rate swaps designated as fair value hedges.

LONG-TERM DEBT


(In millions)	September 30, 2022		December 31, 2021		Amount change		Percent change



Subordinated notes	$	515	$	590	$	(75)	(13)	%
Senior notes	128		418		(290)		(69)

Finance lease obligations	4		4		—		—
Total	$	647	$	1,012	$	(365)	(36)	%

The decrease in long-term debt was primarily due to the redemption of $290 million of the 4-year, 3.35% senior notes during the first quarter of 2022.

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Shareholders' Equity

Our common stock is traded on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) Global Select Market. At September 30, 2022, there were 149.6 million shares of $0.001 par value common stock outstanding. Common stock and additional paid-in capital totaled $1.8 billion at September 30, 2022, which decreased $129 million, or 7%, from December 31, 2021, primarily due to common stock repurchases. During the first nine months of 2022, we repurchased 2.6 million common shares outstanding for $150 million at an average price of $58.04 per share.

Accumulated other comprehensive income decreased to a loss of $3.1 billion at September 30, 2022, primarily due to decreases in the fair value of fixed-rate available-for-sale securities as a result of changes in interest rates. Changes in AOCI by component are as follows:


(In millions)	Net unrealized gains/(losses) on investment securities		Net unrealized gains/(losses) on derivatives and other		Pension and post-retirement		Total
Nine Months Ended September 30, 2022
Balance at December 31, 2021	$	(78)	$	—	$	(2)	$	(80)
OCI (loss) before reclassifications, net of tax	(2,729)		(324)		—		(3,053)
Amounts reclassified from AOCI, net of tax	—		(7)		—		(7)
Other comprehensive income (loss)	(2,729)		(331)		—		(3,060)
Balance at September 30, 2022	$	(2,807)	$	(331)	$	(2)	$	(3,140)
Income tax benefit included in OCI (loss)	$	(884)	$	(107)	$	—	$	(991)
Nine Months Ended September 30, 2021
Balance at December 31, 2020	$	258	$	69	$	(2)	$	325
OCI (loss) before reclassifications, net of tax	(225)		(1)		—		(226)
Amounts reclassified from AOCI, net of tax	—		(35)		—		(35)
Other comprehensive income (loss)	(225)		(36)		—		(261)
Balance at September 30, 2021	$	33	$	33	$	(2)	$	64
Income tax benefit included in OCI (loss)	$	(73)	$	(12)	$	—	$	(85)


	Amounts reclassified from AOCI 1								Statement of income (SI)
(In millions)	Three Months Ended September 30,				Nine Months Ended September 30,
Details about AOCI components	2022		2021		2022		2021			Affected line item











Net unrealized gains (losses) on derivative instruments	$	(11)	$	16	$	9	$	46	SI	Interest and fees on loans
Income tax expense (benefit)	(3)		4		2		11
Amounts reclassified from AOCI	$	(8)	$	12	$	7	$	35

1 Positive reclassification amounts indicate increases to earnings in the income statement.

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10. COMMITMENTS, GUARANTEES, AND CONTINGENT LIABILITIES

Commitments and Guarantees

Off-balance sheet financial obligations used to meet the financing needs of our customers include the following:


(In millions)	September 30, 2022		December 31, 2021

Unfunded lending commitments 1	$	28,959	$	25,797
Standby letters of credit:
Financial	586		597
Performance	186		245
Commercial letters of credit	12		22
Total unfunded commitments	$	29,743	$	26,661

1 Net of participations.

Our 2021 Form 10-K contains further information about these commitments and guarantees including their terms and collateral requirements.

Legal Matters

We are subject to litigation in court and arbitral proceedings, as well as investigations, examinations and other actions brought or considered by governmental and self-regulatory agencies. Litigation may relate to lending, deposit and other customer relationships, vendor and contractual issues, employee matters, intellectual property matters, personal injuries and torts, regulatory and legal compliance, and other matters. While most matters relate to individual claims, we are also subject to putative class action claims and similar broader claims. Proceedings, investigations, examinations and other actions brought or considered by governmental and self-regulatory agencies may relate to our banking, investment advisory, trust, securities, and other products and services; our customers’ involvement in money laundering, fraud, securities violations and other illicit activities or our policies and practices relating to such customer activities; and our compliance with the broad range of banking, securities and other laws and regulations applicable to us. At any given time, we may be in the process of responding to subpoenas, requests for documents, data and testimony relating to such matters and engaging in discussions to resolve the matters.

In the third quarter of 2022, we were subject to the following material litigation or governmental inquiries:

•two civil cases, Lifescan Inc. and Johnson & Johnson Health Care Services v. Jeffrey Smith, et. al., brought against us in the United States District Court for the District of New Jersey in December 2017, and Roche Diagnostics and Roche Diabetes Care Inc. v. Jeffrey C. Smith, et. al., brought against us in the United States District Court for the District of New Jersey in March 2019. In these cases, certain manufacturers and distributors of medical products seek to hold us liable for allegedly fraudulent practices of a borrower of the Bank who filed for bankruptcy protection in 2017. The cases are in early phases, with initial motion practice and discovery underway in the Lifescan case. Trial has not been scheduled in either case.

•Five civil class action cases have been filed against us by the same plaintiffs’ attorney, seeking to hold the Bank liable for practices relating to, and disclosures in, its deposit agreement pertaining to fees. Three of the five cases have been dismissed, and the following two cases remain pending and are in early phases of litigation: Sipple v. Zions Bancorporation, N.A. was brought against us in the District Court of Clark County, Nevada in February 2021 with respect to foreign transaction fees. Christensen v. Zions Bancorporation, N.A. was brought against us in California state court in November 2021 and removed to federal court in the Southern District of California in January 2022.

•In addition, two class action lawsuits, Evans v. CB&T, and Gregory, et. al. v. Zions Bancorporation, were settled in principle earlier in 2022. The parties to those cases are undertaking the procedural and administrative actions, including court approvals of the settlements, necessary to complete the settlements. There can be no assurance that the proposed settlements will receive court approvals or that the conditions to settlements will be met. If completed, these settlements are not expected to have a significant financial impact on the Bank.

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At least quarterly, we review outstanding and new legal matters, utilizing then available information. In accordance with applicable accounting guidance, if we determine that a loss from a matter is probable and the amount of the loss can be reasonably estimated, we establish an accrual for the loss. In the absence of such a determination, no accrual is made. Once established, accruals are adjusted to reflect developments relating to the matters.

In our review, we also assess whether we can determine the range of reasonably possible losses for significant matters in which we are unable to determine that the likelihood of a loss is remote. Because of the difficulty of predicting the outcome of legal matters, discussed subsequently, we are able to meaningfully estimate such a range only for a limited number of matters. Based on information available at September 30, 2022, we estimated that the aggregate range of reasonably possible losses for those matters to be from $0 million to roughly $10 million in excess of amounts accrued. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those matters for which a meaningful estimate is not possible are not included within this estimated range and, therefore, this estimated range does not represent our maximum loss exposure.

Based on our current knowledge, we believe that our current estimated liability for litigation and other legal actions and claims, reflected in our accruals and determined in accordance with applicable accounting guidance, is adequate and that liabilities in excess of the amounts currently accrued, if any, arising from litigation and other legal actions and claims for which an estimate as previously described is possible, will not have a material impact on our financial condition, results of operations, or cash flows. However, in light of the significant uncertainties involved in these matters, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to our financial condition, results of operations, or cash flows for any given reporting period.

Any estimate or determination relating to the future resolution of litigation, arbitration, governmental or self-regulatory examinations, investigations or actions or similar matters is inherently uncertain and involves significant judgment. This is particularly true in the early stages of a legal matter, when legal issues and facts have not been well articulated, reviewed, analyzed, and vetted through discovery, preparation for trial or hearings, substantive and productive mediation or settlement discussions, or other actions. It is also particularly true with respect to class action and similar claims involving multiple defendants, matters with complex procedural requirements or substantive issues or novel legal theories, and examinations, investigations and other actions conducted or brought by governmental and self-regulatory agencies, in which the normal adjudicative process is not applicable. Accordingly, we usually are unable to determine whether a favorable or unfavorable outcome is remote, reasonably likely, or probable, or to estimate the amount or range of a probable or reasonably likely loss, until relatively late in the course of a legal matter, sometimes not until a number of years have elapsed. Accordingly, our judgments and estimates relating to claims will change from time to time in light of developments and actual outcomes will differ from our estimates. These differences may be material.

11. REVENUE RECOGNITION

We derive our revenue primarily from interest income on loans and securities, which was approximately 78% of our total revenue in the third quarter of 2022. Only noninterest income is considered to be revenue from contracts with customers in scope of ASC 606. For more information about our revenue recognition from contracts, see Note 17 of our 2021 Form 10-K.

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Disaggregation of Revenue

The schedule below presents net revenue by our operating business segments for the three months ended September 30, 2022 and 2021. Certain prior period amounts have been reclassified to conform with the current period presentation, where applicable. These reclassifications did not affect net income or shareholders’ equity.


	Zions Bank				CB&T				Amegy
(In millions)	2022		2021		2022		2021		2022		2021

Commercial account fees	$	13	$	12	$	7	$	7	$	12	$	10
Card fees	14		15		5		4		8		8
Retail and business banking fees	5		6		3		3		4		4

Capital markets and foreign exchange fees	—		—		—		—		—		—
Wealth management fees	5		5		1		2		4		3
Other customer-related fees	2		2		2		1		2		2
Total noninterest income from contracts with customers (ASC 606)	39		40		18		17		30		27
Other noninterest income (non-ASC 606 customer-related)	4		4		9		6		11		10
Total customer-related noninterest income	43		44		27		23		41		37
Other noncustomer-related noninterest income	1		(1)		1		2		—		—
Total noninterest income	44		43		28		25		41		37

Net interest income	197		161		154		135		137		117
Total net revenue	$	241	$	204	$	182	$	160	$	178	$	154

	NBAZ				NSB				Vectra
(In millions)	2022		2021		2022		2021		2022		2021

Commercial account fees	$	2	$	2	$	3	$	3	$	2	$	2
Card fees	4		3		4		3		2		2
Retail and business banking fees	2		2		3		3		1		1

Capital markets and foreign exchange fees	—		—		—		—		—		—
Wealth management fees	1		1		1		1		—		—
Other customer-related fees	—		—		—		—		1		1
Total noninterest income from contracts with customers (ASC 606)	9		8		11		10		6		6
Other noninterest income (non-ASC 606 customer-related)	2		4		1		3		2		2
Total customer-related noninterest income	11		12		12		13		8		8
Other noncustomer-related noninterest income	1		1		—		—		—		—
Total noninterest income	12		13		12		13		8		8

Net interest income	64		50		50		38		41		34
Total net revenue	$	76	$	63	$	62	$	51	$	49	$	42

	TCBW				Other				Consolidated Bank
(In millions)	2022		2021		2022		2021		2022		2021

Commercial account fees	$	1	$	1	$	—	$	(3)	$	40	$	34
Card fees	—		—		1		—		38		35
Retail and business banking fees	—		—		(1)		1		17		20

Capital markets and foreign exchange fees	—		—		1		1		1		1
Wealth management fees	—		—		—		—		12		12
Other customer-related fees	—		—		8		8		15		14
Total noninterest income from contracts with customers (ASC 606)	1		1		9		7		123		116
Other noninterest income (non-ASC 606 customer-related)	1		—		3		6		33		35
Total customer-related noninterest income	2		1		12		13		156		151
Other noncustomer-related noninterest income	—		—		6		(14)		9		(12)
Total noninterest income	2		1		18		(1)		165		139

Net interest income	17		12		3		8		663		555
Total net revenue	$	19	$	13	$	21	$	7	$	828	$	694

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The following schedule presents the noninterest income and net revenue by operating segments for the nine months ended September 30, 2022 and 2021:


	Zions Bank				CB&T				Amegy
(In millions)	2022		2021		2022		2021		2022		2021

Commercial account fees	$	40	$	34	$	21	$	19	$	33	$	30
Card fees	41		42		15		12		24		21
Retail and business banking fees	17		17		10		9		12		11

Capital markets and foreign exchange fees	—		—		—		—		—		—
Wealth management fees	17		15		3		3		12		9
Other customer-related fees	6		5		4		3		5		5
Total noninterest income from contracts with customers (ASC 606)	121		113		53		46		86		76
Other noninterest income (non-ASC 606 customer-related)	15		16		23		24		33		27
Total customer-related noninterest income	136		129		76		70		119		103
Other noncustomer-related noninterest income	3		(1)		3		4		—		1
Total noninterest income	139		128		79		74		119		104

Net interest income	523		476		425		398		369		348
Total net revenue	$	662	$	604	$	504	$	472	$	488	$	452

	NBAZ				NSB				Vectra
(In millions)	2022		2021		2022		2021		2022		2021

Commercial account fees	$	7	$	5	$	8	$	7	$	6	$	5
Card fees	11		8		11		9		7		5
Retail and business banking fees	7		7		8		8		3		3

Capital markets and foreign exchange fees	—		—		—		—		—		—
Wealth management fees	2		2		4		3		1		1
Other customer-related fees	1		1		1		—		2		2
Total noninterest income from contracts with customers (ASC 606)	28		23		32		27		19		16
Other noninterest income (non-ASC 606 customer-related)	4		10		5		11		5		8
Total customer-related noninterest income	32		33		37		38		24		24
Other noncustomer-related noninterest income	2		2		—		—		—		—
Total noninterest income	34		35		37		38		24		24

Net interest income	170		154		126		111		109		102
Total net revenue	$	204	$	189	$	163	$	149	$	133	$	126

	TCBW				Other				Consolidated Bank
(In millions)	2022		2021		2022		2021		2022		2021

Commercial account fees	$	1	$	1	$	2	$	(1)	$	118	$	100
Card fees	1		1		—		—		110		98
Retail and business banking fees	—		—		(1)		—		56		55

Capital markets and foreign exchange fees	—		—		3		4		3		4
Wealth management fees	—		—		—		1		39		34
Other customer-related fees	1		1		25		21		45		38
Total noninterest income from contracts with customers (ASC 606)	3		3		29		25		371		329
Other noninterest income (non-ASC 606 customer-related)	2		1		3		(3)		90		94
Total customer-related noninterest income	5		4		32		22		461		423
Other noncustomer-related noninterest income	—		—		10		84		18		90
Total noninterest income	5		4		42		106		479		513

Net interest income	46		40		32		26		1,800		1,655
Total net revenue	$	51	$	44	$	74	$	132	$	2,279	$	2,168

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Revenue from contracts with customers did not generate significant contract assets and liabilities. Contract receivables are included in “Other assets” on the consolidated balance sheet. Payment terms vary by services offered, and the timing between completion of performance obligations and payment is typically not significant.

12. INCOME TAXES

The effective income tax rate was 21.9% for the third quarter of 2022, compared with 22.8% for the same prior year period. The effective tax rates for the first nine months of 2022 and 2021 were 21.4% and 22.2%, respectively. These rates were reduced by nontaxable municipal interest income and nontaxable income from certain bank-owned life insurance (“BOLI”), and were increased by the non-deductibility of Federal Deposit Insurance Corporation (“FDIC”) premiums, certain executive compensation plans, and other fringe benefits. The tax rate for 2022 was lower than the tax rate for the same prior year period, primarily as a result of the proportional increase in nontaxable items and tax credits relative to pre-tax book income.

At September 30, 2022, we had a net deferred tax asset (“DTA”) totaling $1.1 billion, compared with $96 million at December 31, 2021. On the consolidated balance sheet, the net DTA is included in “Other assets.” The increase in the net DTA was driven largely by the increase in unrealized losses in AOCI associated with investment securities and derivative instruments.

There was no valuation allowance at September 30, 2022 or December 31, 2021. We evaluate DTAs on a regular basis to determine whether a valuation allowance is required. In conducting this evaluation, we consider all available evidence, both positive and negative, based on the more-likely-than-not criteria that such assets will be realized. This evaluation includes, but is not limited to (1) available carryback potential to prior tax years; (2) potential future reversals of existing deferred tax liabilities, which historically have a reversal pattern generally consistent with DTAs; (3) potential tax planning strategies; and (4) future projected taxable income. Based on this evaluation, we concluded that a valuation allowance was not required at September 30, 2022.

13. NET EARNINGS PER COMMON SHARE

Basic and diluted net earnings per common share based on the weighted average outstanding shares are summarized as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except shares and per share amounts)	2022		2021		2022		2021
Basic:
Net income	$	217	$	240	$	623	$	916
Less common and preferred dividends	68		68		199		197
Less impact from redemption of preferred stock	—		—		—		3
Undistributed earnings	149		172		424		716
Less undistributed earnings applicable to nonvested shares	1		1		4		6
Undistributed earnings applicable to common shares	148		171		420		710
Distributed earnings applicable to common shares	61		61		176		172
Total earnings applicable to common shares	$	209	$	232	$	596	$	882
Weighted average common shares outstanding (in thousands)	149,628		160,221		150,510		162,159
Net earnings per common share	$	1.40	$	1.45	$	3.96	$	5.44
Diluted:
Total earnings applicable to common shares	$	209	$	232	$	596	$	882
Weighted average common shares outstanding (in thousands)	149,628		160,221		150,510		162,159


Dilutive effect of stock options (in thousands)	164		259		256		301
Weighted average diluted common shares outstanding (in thousands)	149,792		160,480		150,766		162,460
Net earnings per common share	$	1.40	$	1.45	$	3.96	$	5.43

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The following schedule presents the weighted average stock awards that were anti-dilutive and not included in the calculation of diluted earnings per share:


	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2022	2021	2022	2021

Restricted stock and restricted stock units	1,245	1,358	1,274	1,382
Stock options	305	294	170	227

14. OPERATING SEGMENT INFORMATION

We manage our operations with a primary focus on geographic area. We conduct our operations primarily through seven separately managed affiliate banks, each with its own local branding and management team, including Zions Bank, California Bank & Trust, Amegy Bank, National Bank of Arizona, Nevada State Bank, Vectra Bank Colorado, and The Commerce Bank of Washington. These affiliate banks comprise our primary business segments. Performance assessment and resource allocation are based upon this geographic structure. The operating segment identified as “Other” includes certain non-bank financial service subsidiaries, centralized back-office functions, and eliminations of transactions between segments.

We allocate the cost of centrally provided services to the business segments based upon estimated or actual usage of those services. We also allocate capital based on the risk-weighted assets held at each business segment. We use an internal funds transfer pricing (“FTP”) allocation system and process to report results of operations for business segments, which is continually refined. Total average loans and deposits presented for the business segments include insignificant intercompany amounts between business segments and may also include deposits with the “Other” segment.

At September 30, 2022, Zions Bank operated 95 branches in Utah, 25 branches in Idaho, and one branch in Wyoming. CB&T operated 80 branches in California. Amegy operated 75 branches in Texas. NBAZ operated 56 branches in Arizona. NSB operated 46 branches in Nevada. Vectra operated 34 branches in Colorado and one branch in New Mexico. TCBW operated two branches in Washington and one branch in Oregon.

In July 2022, NSB completed the purchase of three Northern Nevada branches and their associated deposit, credit card, and loan accounts. We acquired approximately $430 million in deposits and $95 million in commercial and consumer loans at the time of the purchase.

Transactions between business segments are primarily conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations. The following schedule presents average loans, average deposits, and income before income taxes because we use these metrics when evaluating performance and making decisions pertaining to the business segments. The condensed statement of income identifies the components of income and expense which affect the operating amounts presented in the “Other” segment.

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The following schedule presents selected operating segment information for the three months ended September 30, 2022 and 2021:


	Zions Bank				CB&T				Amegy
(In millions)	2022		2021		2022		2021		2022		2021
SELECTED INCOME STATEMENT DATA
Net interest income	$	197	$	161	$	154	$	135	$	137	$	117
Provision for credit losses	35		(10)		19		(12)		15		(10)
Net interest income after provision for credit losses	162		171		135		147		122		127
Noninterest income	44		43		28		25		41		37
Noninterest expense	125		115		86		77		90		83
Income (loss) before income taxes	$	81	$	99	$	77	$	95	$	73	$	81
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	$	13,448	$	12,985	$	13,100	$	12,672	$	12,176	$	11,865
Total average deposits	23,634		24,399		16,096		15,900		15,531		15,925

	NBAZ				NSB				Vectra
(In millions)	2022		2021		2022		2021		2022		2021
SELECTED INCOME STATEMENT DATA
Net interest income	$	64	$	50	$	50	$	38	$	41	$	34
Provision for credit losses	—		(5)		1		(5)		2		(4)
Net interest income after provision for credit losses	64		55		49		43		39		38
Noninterest income	12		13		12		13		8		8
Noninterest expense	44		38		39		34		31		28
Income (loss) before income taxes	$	32	$	30	$	22	$	22	$	16	$	18
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	$	4,913	$	4,689	$	3,052	$	2,892	$	3,722	$	3,339
Total average deposits	8,090		7,259		7,479		6,870		4,100		4,362

	TCBW				Other				Consolidated Bank
(In millions)	2022		2021		2022		2021		2022		2021
SELECTED INCOME STATEMENT DATA
Net interest income	$	17	$	12	$	3	$	8	$	663	$	555
Provision for credit losses	—		1		(1)		(1)		71		(46)
Net interest income after provision for credit losses	17		11		4		9		592		601
Noninterest income	2		1		18		(1)		165		139
Noninterest expense	6		5		58		49		479		429
Income (loss) before income taxes	$	13	$	7	$	(36)	$	(41)	$	278	$	311
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	$	1,633	$	1,542	$	909	$	867	$	52,953	$	50,851
Total average deposits	1,585		1,552		948		1,144		77,463		77,411

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following schedule presents selected operating segment information for the nine months ended September 30, 2022 and 2021:


	Zions Bank				CB&T				Amegy
(In millions)	2022		2021		2022		2021		2022		2021
SELECTED INCOME STATEMENT DATA
Net interest income	$	523	$	476	$	425	$	398	$	369	$	348
Provision for credit losses	35		(29)		40		(81)		(7)		(108)
Net interest income after provision for credit losses	488		505		385		479		376		456
Noninterest income	139		128		79		74		119		104
Noninterest expense	373		346		254		233		264		251
Income (loss) before income taxes	$	254	$	287	$	210	$	320	$	231	$	309
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	$	13,130	$	13,318	$	12,948	$	12,924	$	11,970	$	12,337
Total average deposits	24,920		23,001		16,407		15,564		16,062		15,179

	NBAZ				NSB				Vectra
(In millions)	2022		2021		2022		2021		2022		2021
SELECTED INCOME STATEMENT DATA
Net interest income	$	170	$	154	$	126	$	111	$	109	$	102
Provision for credit losses	2		(29)		1		(35)		8		(15)
Net interest income after provision for credit losses	168		183		125		146		101		117
Noninterest income	34		35		37		38		24		24
Noninterest expense	125		112		113		106		90		85
Income (loss) before income taxes	$	77	$	106	$	49	$	78	$	35	$	56
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	$	4,859	$	4,914	$	2,929	$	3,085	$	3,550	$	3,422
Total average deposits	8,164		6,949		7,487		6,500		4,195		4,344

	TCBW				Other				Consolidated Bank
(In millions)	2022		2021		2022		2021		2022		2021
SELECTED INCOME STATEMENT DATA
Net interest income	$	46	$	40	$	32	$	26	$	1,800	$	1,655
Provision for credit losses	—		(3)		—		(1)		79		(301)
Net interest income after provision for credit losses	46		43		32		27		1,721		1,956
Noninterest income	5		4		42		106		479		513
Noninterest expense	18		16		170		143		1,407		1,292
Income (loss) before income taxes	$	33	$	31	$	(96)	$	(10)	$	793	$	1,177
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	$	1,601	$	1,573	$	910	$	845	$	51,897	$	52,418
Total average deposits	1,571		1,484		1,164		1,500		79,970		74,521

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 4. CONTROLS AND PROCEDURES

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information contained in Note 10 of the Notes to Consolidated Financial Statements is incorporated by reference herein.

ITEM 1A. RISK FACTORS

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

We could be negatively affected by adverse economic conditions

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

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

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

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following schedule summarizes our share repurchases for the third quarter of 2022:

SHARE REPURCHASES


Period	Total number of shares repurchased 1		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs

July		—	$	—		—
August		888,092	56.30			888,092
September		—	—			—
Third quarter		888,092	56.30			888,092

1 Includes common shares acquired in connection with our stock compensation plan. Shares were acquired from employees to pay for their payroll taxes and stock option exercise cost upon the exercise of stock options under provisions of an employee share-based compensation plan.

ITEM 6. EXHIBITS

a.Exhibits


Exhibit Number	Description

3.1	Second Amended and Restated Articles of Association of Zions Bancorporation, National Association, incorporated by reference to Exhibit 3.1 of Form 8-K filed on October 2, 2018.	*

3.2	Second Amended and Restated Bylaws of Zions Bancorporation, National Association, incorporated by reference to Exhibit 3.2 of Form 8-K filed on April 4, 2019.	*

10.1	Ninth Amendment to the Trust Agreement between Fidelity Management Trust Company and Zions Bancorporation for the Deferred Compensation Plans, effective April 1, 2022 (filed herewith).

31.1	Certification by Chief Executive Officer required by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (filed herewith).

31.2	Certification by Chief Financial Officer required by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (filed herewith).

32	Certification by Chief Executive Officer and Chief Financial Officer required by Sections 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and 18 U.S.C. Section 1350 (furnished herewith).

101	Pursuant to Rules 405 and 406 of Regulation S-T, the following information is formatted in Inline XBRL (i) the Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, (ii) the Consolidated Statements of Income for the three months ended September 30, 2022 and September 30, 2021 and the nine months ended September 30, 2022 and September 30, 2021, (iii) the Consolidated Statements of Comprehensive Income for the three months ended September 30, 2022 and September 30, 2021 and the nine months ended September 30, 2022 and September 30, 2021, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the three months ended September 30, 2022 and September 30, 2021 and the nine months ended September 30, 2022 and September 30, 2021, (v) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and September 30, 2021, and (vi) the Notes to Consolidated Financial Statements (filed herewith).

104	The cover page from this Quarterly Report on Form 10-Q, formatted as Inline XBRL.

* Incorporated by reference

Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt are not filed. We agree to furnish a copy thereof to the Securities and Exchange Commission and the Office of the Comptroller of the Currency upon request.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



ZIONS BANCORPORATION, NATIONAL ASSOCIATION

/s/ Harris H. Simmons
Harris H. Simmons, Chairman and Chief Executive Officer

/s/ Paul E. Burdiss
Paul E. Burdiss, Executive Vice President and Chief Financial Officer

Date: November 3, 2022