July 17, 2018

Proposed Decision of the Financial Stability Oversight Council 

Regarding the Appeal by ZB, N.A. 

Under Section 117 of the Dodd-Frank Act

TABLE OF CONTENTS

1. Overview ................................................................................................................................. 2

2. Introduction ............................................................................................................................. 2

2.1 Process for Requests Under Section 117 of the Dodd-Frank Act........................................ 2

2.2 Overview of ZB’s Petition to the Council ........................................................................... 2

2.3 Overview of the Committee’s Analysis............................................................................... 4

3. Legal Framework..................................................................................................................... 6

3.1 ZB and Zions Bancorporation Under the Statutory Criteria................................................ 6

3.2 Scope of Permissible Applicants ......................................................................................... 7

3.3 Status as a Nonbank Financial Company............................................................................. 9

3.4 Standard of Review.............................................................................................................. 9

4. Overview of Zions Bancorporation and ZB .......................................................................... 11

4.1 Assets and Liabilities......................................................................................................... 11

4.2 Measures of Systemic Importance ..................................................................................... 12

5. Transmission Channel Analysis............................................................................................ 15

5.1 Overview............................................................................................................................ 15

5.2 Exposure Transmission Channel........................................................................................ 15

5.3 Asset Liquidation Transmission Channel .......................................................................... 23

5.4 Critical Function or Service Transmission Channel .......................................................... 35

6. Complexity and Resolvability ............................................................................................... 39

7. Existing Regulatory Scrutiny................................................................................................. 41

7.1 Supervision and Regulation ............................................................................................... 42

7.2 Regulator Consultations..................................................................................................... 46

8 Conclusion............................................................................................................................. 46

Appendix A: Zions Bancorporation Consolidated Balance Sheet................................................ 48

Appendix B: Systemic Importance Scores Under the Basel Methodology .................................. 49

Appendix C: Fire Sale Impact Analysis........................................................................................ 50

Note: Redactions of confidential information submitted to the Council 

by ZB, N.A. are indicated by “[•].”
 

2

1. OVERVIEW

On the basis of the analysis set forth below, the Financial Stability Oversight Council (Council) 

has made a proposed decision to grant, subject to the conditions set forth below, the appeal of 

ZB, N.A. (ZB) under section 117 of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act1 (Dodd-Frank Act) such that, upon the merger of Zions Bancorporation with and 

into ZB, ZB shall not be treated as a nonbank financial company that the Council has determined 

shall be supervised by the Board of Governors of the Federal Reserve System (Board of 

Governors).

2. INTRODUCTION

2.1 Process for Requests Under Section 117 of the Dodd-Frank Act

Section 117 of the Dodd-Frank Act applies to any entity that was a bank holding company 

with total consolidated assets of at least $50 billion as of January 1, 2010, and that received 

financial assistance under or participated in the Capital Purchase Plan established under the 

Troubled Asset Relief Program, and to any successor entity to such a bank holding company. 

Under section 117, if an entity subject to section 117 ceases to be a bank holding company, it 

will be treated as a nonbank financial company supervised by the Board of Governors as if the 

Council had made a determination under section 113 of the Dodd-Frank Act with respect to 

that entity. 

However, section 117 provides that an entity may request an opportunity for a written or oral 

hearing before the Council to appeal its treatment as a nonbank financial company supervised 

by the Board of Governors. After receiving a request, the Council must hold a written hearing 

(or, at the Council’s discretion, an oral hearing) regarding the appeal. The Council may grant 

an appeal under section 117 by a vote of at least two-thirds of the voting members of the 

Council then serving, including an affirmative vote by the Chairperson of the Council. In 

making its decision regarding an appeal under section 117, the Council is required to consider 

whether the company meets the Dodd-Frank Act’s standards for a nonbank financial company 

determination under section 113 of the Dodd-Frank Act and the definition of the term 

“nonbank financial company” under section 102 of the Dodd-Frank Act. The standards for a 

Council determination under section 113 are whether material financial distress at the 

company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the 

activities of the company, could pose a threat to U.S. financial stability. 

2.2 Overview of ZB’s Petition to the Council

ZB is a national bank headquartered in Salt Lake City, Utah, and a wholly owned subsidiary of 

Zions Bancorporation, a Utah corporation and a registered bank holding company and financial 

holding company. ZB has entered into an agreement with Zions Bancorporation pursuant to 

which Zions Bancorporation will merge with and into ZB (Merger). Upon the completion of the 

Merger, ZB will succeed to all the assets and liabilities of Zions Bancorporation. ZB’s assets

 1 12 U.S.C. § 5327.
 

3

comprise 99.7 percent of the total consolidated assets of Zions Bancorporation,

2 and ZB’s

revenues account for 99.7 percent of the revenues of Zions Bancorporation.3

 Accordingly, in the 

analysis below, references to Zions Bancorporation are also relevant to ZB, and ZB and Zions 

Bancorporation are collectively referred to as “Zions.” 

On April 26, 2018, ZB submitted a request for a written hearing before the Council pursuant to 

section 117 of the Dodd-Frank Act. ZB did not request an oral hearing. The Council directed 

the company to submit all written materials by May 26, 2018, which was set as the hearing date 

for purposes of section 117. ZB, pursuant to the Council Hearing Procedures, submitted a 

written statement to the Council (Zions Submission) and also submitted a copy of the Agreement 

and Plan of Merger of Zions Bancorporation and ZB, dated as of April 5, 2018 (Merger 

Agreement).4 

In its written submission, ZB requested that the Council issue a determination that ZB will, upon 

the consummation of the Merger, not be treated as a nonbank financial company supervised by 

the Board of Governors. ZB provided the Council with information about Zions and the Merger 

and an analysis of ZB following the Merger using the framework used by the Council to evaluate 

nonbank financial companies under section 113 of the Dodd-Frank Act. In its analysis, the 

company discussed the three transmission channels identified by the Council as most likely to 

facilitate the transmission of the negative effects of a nonbank financial company’s material 

financial distress or activities to other financial firms and markets (described below in section 

2.3.1). ZB argued that material financial distress at the company would not pose a risk to U.S. 

financial stability under any of these three transmission channels. ZB emphasized its relatively 

small size, lack of complexity, and low levels of interconnectedness compared to the U.S. global 

systemically important banks (G-SIBs) and other banks with $50 billion or more in total 

consolidated assets. ZB also described its role as a source of credit for low-income, minority, or 

underserved communities; its complexity and resolvability; assets under management; and the 

degree of regulatory scrutiny to which it will be subject after consummation of the Merger. 

Under the Merger Agreement submitted by ZB to the Council, the key terms of the Merger are as 

follows: 

• Zions Bancorporation will merge with and into ZB, with ZB as the surviving entity.

• All of the common and preferred shareholders of Zions Bancorporation will become 

common and preferred shareholders of the bank in identical proportions. Each 

outstanding warrant to purchase common stock of Zions Bancorporation will be 

converted automatically into a warrant to purchase common stock of ZB.

• All of the property of Zions Bancorporation and of ZB will become property of ZB. 

 2 ZB Call Report as of December 31, 2017, p. 14, and Zions Bancorporation, Annual Report on Form 10-K for the 

year ended December 31, 2017, p. 88. 

3 Calculated based on the net interest income and non-interest income of ZB and of Zions Bancorporation. ZB Call 

Report as of December 31, 2017, pp. 5-6, and Zions Bancorporation, Annual Report on Form 10-K for the year 

ended December 31, 2017, p. 89. 

4 Zions Bancorporation, Current Report on Form 8-K filed April 10, 2018, Exhibit 2.1.
 

4

• All of the liabilities of Zions Bancorporation and of ZB will become liabilities of ZB. 

In connection with the Merger, [•] will be [•], and Amegy Holdings Texas, Inc., another wholly 

owned subsidiary of Zions Bancorporation, will become a wholly owned subsidiary of ZB.

5

 

The Merger, as the merger of a national bank with a nonbank affiliate, is subject to the approval 

of the Office of the Comptroller of the Currency (OCC) under the National Bank Act.6

 The 

OCC issued an approval of the Merger on July 6, 2018, conditioned on the Merger being 

consummated within six months of the date of approval and on ZB ceasing or conforming to 

applicable law certain activities that do not currently conform to the National Bank Act. In 

addition, the Merger, as the merger of a noninsured institution into an insured depository 

institution, is subject to the approval of the Federal Deposit Insurance Corporation (FDIC) under 

the Bank Merger Act.7 The FDIC issued an approval of the Merger on July 9, 2018, subject to 

the requirement that the Merger be consummated within six months of the approval date. 

In its submission, ZB presented financial information as of December 31, 2017. Except as 

otherwise noted, financial information referred to herein is presented as of December 31, 2017,

and on the basis of GAAP. 

2.3 Overview of the Committee’s Analysis

2.3.1 Consideration of the Transmission Channels

Consistent with the Dodd-Frank Act and the Council’s interpretive guidance regarding 

determinations under section 113 of the Dodd-Frank Act8 (Interpretive Guidance), the Council 

evaluated the extent to which Zions’ material financial distress could be transmitted to other 

financial firms and markets and thereby pose a threat to U.S. financial stability primarily through 

the following three transmission channels: (1) the exposures of counterparties, creditors, 

investors, and other market participants to Zions; (2) the liquidation of Zions’ assets, which 

could trigger a fall in asset prices and thereby could significantly disrupt trading or funding in 

key markets or cause significant losses or funding problems for other firms with similar 

holdings; and (3) the inability or unwillingness of Zions to provide a critical function or service 

relied upon by market participants and for which there are no ready substitutes. Based on the 

analysis below, there is not a significant risk that material financial distress at Zions could pose a 

threat to U.S. financial stability through the exposure, asset liquidation, or critical function or 

service transmission channel. 

Exposure Transmission Channel

Under the exposure transmission channel, the Council considers the exposures that a company’s 

creditors, counterparties, investors, or other market participants have to the company. The two 

 5 Zions Submission, Annex 2, p. 7. 6 12 U.S.C. § 215a-3. 7 12 U.S.C. § 1828(c)(1)(A).

8 Financial Stability Oversight Council, Authority to Require Supervision and Regulation of Certain Nonbank 

Financial Companies, 12 C.F.R. part 1310, appendix A.
 

5

primary types of financial exposures to Zions are the exposures of its capital markets 

counterparties and of its depositors. Exposures to Zions do not appear to contribute materially to 

the threat that the company’s material financial distress or its activities could pose to U.S. 

financial stability. 

The Council assessed various types of capital markets exposures to Zions, including exposures 

arising from Zions’ debt, federal funds purchased, repurchase agreements (repo), derivatives, and 

credit-default swaps (CDS). In general, market participants’ capital markets exposures to Zions 

are small, measured both by amount and relative to the size of the counterparties. 

The Council also assessed the risks posed by depositors’ exposures to Zions. While material 

financial distress at Zions could potentially expose some of its depositors to losses, the absence 

of large financial institutions among its depositors and the mitigation provided by deposit 

insurance reduce the potential for the company’s material financial distress to impair financial 

market participants or financial market intermediation. 

Asset Liquidation Transmission Channel

Under the asset liquidation transmission channel, the Council considers whether a nonbank 

financial company holds assets that, if liquidated quickly, could significantly disrupt the 

operation of key markets or cause significant losses or funding problems for other firms with 

similar holdings. The amount and nature of Zions’ assets that it could be forced to sell in the 

event of its material financial distress do not appear to contribute materially to the threat that the 

company could pose to U.S. financial stability. 

In its analysis of Zions under the asset liquidation transmission channel, the Council assessed the 

liquidity of the company’s liabilities, the liquidity of the company’s assets, and the potential 

impact on other firms and markets of a liquidation of the company’s assets. With respect to the 

liquidity of the company’s liabilities, the Council assessed potential short-term liquidity demands 

on the company using assumptions underlying the liquidity coverage ratio (LCR), historical

examples of runs on deposits, and Zions’ internal liquidity stress test. With respect to the 

liquidity of the company’s assets, the Council assessed the amount and nature of the company’s 

assets, including its highly liquid assets and its loans. The Council evaluated the impact of a 

rapid liquidation of the company’s assets on financial markets by assessing the sizes of the 

relevant asset markets compared to the volumes of assets Zions could be forced to sell. The 

Council also evaluated the impact of a rapid liquidation of the company’s assets on other 

financial institutions by assessing the effect of such a liquidation on the balance sheets of other 

firms holding the same or similar assets. In general, the quantity of Zions’ runnable liabilities is 

relatively low, and the impact of a fire sale of Zions’ assets on other institutions or markets 

would likely be small. 

Critical Function or Service Transmission Channel

Under the critical function or service transmission channel, the Council considers whether a 

nonbank financial company may no longer be able or willing to provide a critical function or 

service that is relied upon by market participants or customers and for which there are no ready 

substitutes. The Council assessed Zions’ market share in key markets and the industry 
 

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concentration in those markets to determine whether material financial distress at Zions could 

pose a threat to U.S. financial stability. Zions does not appear to have a large enough share of 

any key market to cause a significant disruption in the provision of services if it is unable or 

unwilling to provide services. 

The most significant functions that Zions provides to its customers include taking deposits and 

making loans. Although Zions has a large deposit market share in certain states, it does not 

appear that the state and regional product-specific markets in which it has a large presence are 

sufficiently sizeable or interconnected with the broader financial system such that the negative 

effects on those markets from material financial distress at Zions would pose risks to U.S. 

financial stability. Zions’ deposits represent a small share of total U.S. commercial bank 

deposits, and the market for accepting deposits is competitive. In addition, Zions does not issue 

a significant share of loans in the markets that it operates in, including commercial real estate 

(CRE) loans and commercial and industrial (C&I) loans. 

Zions plays a minimal role in other critical services performed by the financial sector. For 

example, the company has a minimal role in payments, clearing, and settlement, and it represents 

a small share of the U.S. asset custody and underwriting businesses. 

2.3.2 Complexity and Resolvability

The Council assessed the degree to which material financial distress at Zions may be mitigated 

or aggravated by the company’s complexity, the opacity of its operations, and its resolvability. If 

the company were to experience material financial distress, it does not appear to have features 

that would lead to a disorderly resolution that could pose a threat to U.S. financial stability. 

The failure of ZB would rank among the largest U.S. bank failures. However, the framework for 

the resolution of the company following consummation of the Merger would be relatively 

straightforward. As a standalone insured depository institution, ZB would be resolved by the 

FDIC under the Federal Deposit Insurance Act if it were to fail. 

2.3.3 Existing Regulatory Scrutiny

The Council considered Zions’ regulatory scrutiny, including the company’s regulation and 

supervision if the Council grants the company’s appeal. The Council considered factors 

including applicable capital and liquidity requirements, regulators’ authority to bring 

enforcement actions, and the nature of the company’s regulatory reporting obligations. As a 

national bank, Zions is subject to extensive regulation and supervision.

3. LEGAL FRAMEWORK

3.1 ZB and Zions Bancorporation Under the Statutory Criteria

Section 117 of the Dodd-Frank Act applies to:

1. any entity that was a bank holding company with total consolidated assets of at least $50 

billion as of January 1, 2010, and received financial assistance under or participated in 
 

7

the Capital Purchase Plan (CPP) established under the Troubled Asset Relief Program 

authorized by the Emergency Economic Stabilization Act of 2008; and 

2. any successor entity (as defined by the Board of Governors, in consultation with the 

Council) to such a bank holding company. 

If any such entity ceases to be a bank holding company, it will be treated as a nonbank financial 

company supervised by the Board of Governors unless the Council grants the entity’s request 

under section 117.

Zions Bancorporation was a bank holding company with approximately $51 billion in total 

consolidated assets as of January 1, 2010.9 Zions Bancorporation participated in the CPP, 

pursuant to which the U.S. Department of the Treasury purchased 1.4 million shares of Zions 

Bancorporation’s Fixed Rate Cumulative Perpetual Preferred Stock, Series D, and warrants to 

purchase up to approximately 5.8 million shares of Zions Bancorporation’s voting common 

stock at an exercise price of $36.27 per share, for an aggregate purchase price of $1.4 billion.10 

Zions Bancorporation repurchased $700 million of the preferred stock in March 2012 and the 

remaining $700 million of preferred stock in September 2012, in each case at face value.

11 

Zions Bancorporation paid the Treasury Department a total of $253 million in dividends on the 

CPP preferred stock.12 On December 5, 2012, the Treasury Department sold its warrants in a 

public offering for $7.8 million.

13

On February 26, 2018, the Board of Governors, after consulting with the Council, determined

that, pursuant to section 117, ZB would be the successor entity to Zions Bancorporation upon 

consummation of the Merger. The Board of Governors made this determination based on the 

structure and facts and circumstances of the Merger as presented to the Board of Governors by 

ZB.

3.2 Scope of Permissible Applicants

3.2.1 Consideration of Appeal Pending Transaction

As noted above, if any bank holding company that meets the conditions in section 117 of the 

Dodd-Frank Act (and any successor) ceases to be a bank holding company, it will be treated as 

a nonbank financial company subject to Board of Governors supervision unless the Council 

grants the entity’s request under section 117. The Council has determined that the statute 

allows the Council to consider and make a determination with respect to an appeal by such an 

entity, even if the entity has not yet ceased to be a bank holding company, if the Council 

considers it appropriate under the circumstances.

 9 Zions Bancorporation, Annual Report on Form 10-K for the year ended December 31, 2009, p. 134. 10 Zions Bancorporation, Current Report on Form 8-K filed Nov. 17, 2008. 11 Zions Bancorporation, Current Report on Form 8-K filed Nov. 17, 2008; Zions Bancorporation, Current Report on 

Form 8-K filed Sept. 26, 2012, Exhibit 99.1; Treasury Department, Press Release, “Zions Bancorporation Repays in 

Full its Remaining $700 Million in TARP Funds” (Sept. 26, 2012). 12 Zions Bancorporation, Current Report on Form 8-K filed Sept. 26, 2012, Exhibit 99.1; Treasury Department, 

Press Release, “Zions Bancorporation Repays in Full its Remaining $700 Million in TARP Funds” (Sept. 26, 2012). 13 Zions Bancorporation, Current Report on Form 8-K filed Dec. 5, 2012. 
 

8

Section 117 provides that “an entity” may appeal “its treatment” under the statute as a nonbank 

financial company supervised by the Board of Governors. The reference to “an entity” 

encompasses any entity that meets the criteria in section 117 (an entity that was a bank holding 

company with at least $50 billion in total consolidated assets as of January 1, 2010, and that 

received financial assistance under or participated in the CPP, and any successor entity), 

regardless of whether the entity has ceased to be a bank holding company.14 In addition, the 

statutory reference to “its treatment” can be interpreted to encompass an entity’s treatment as a 

nonbank financial company subject to Board of Governors supervision that would result by 

operation of law under section 117 if the entity were to cease being a bank holding company in 

the future. Thus, this phrase can refer either to an entity that is being, or to an entity that as a 

matter of law will be, treated as a nonbank financial company supervised by the Board of 

Governors under section 117. 

Further, the Council believes it is appropriate in the circumstances presented in this case for the 

Council to grant an appeal under section 117 by an entity that has not yet consummated the 

transaction pursuant to which it will cease to be a bank holding company. The Council’s 

consideration of such an appeal can permit the entity to receive the Council’s decision under 

section 117 without requiring the entity to consummate a potentially costly, burdensome, and 

disruptive transaction that it might not undertake if the company were to remain subject to 

supervision by the Board of Governors. At the same time, it may not be appropriate to consider 

or grant an entity’s appeal to the Council that is predicated on a speculative or uncertain 

transaction. In this case, ZB submitted to the Council as part of its appeal a binding written 

agreement between Zions Bancorporation and ZB to engage in a transaction the consummation 

of which will result in an entity that is not a bank holding company; publicly announced the 

restructuring and intent to file the appeal; filed separately required applications with its bank 

regulators; and took initial steps to implement the restructuring prior to submission of the appeal 

to the Council. Further, the consolidated entity that will exist immediately upon consummation 

of the Merger is largely identical to Zions Bancorporation as a consolidated company as of the 

time of the appeal to the Council, which further reduces the extent to which the appeal is 

speculative. Under these circumstances, the Council is able to evaluate the applicant based on 

the specific terms of the transaction. This evaluation is based on the expectation that the 

Merger will be consummated in accordance with the terms of the Merger Agreement and that it 

will be completed within a short period of time after the Council’s final decision. 

3.2.2 Successors That Are Not Bank Holding Companies

Under section 117 of the Dodd-Frank Act, if a subject entity “ceases” to be a bank holding 

company, it is treated as a nonbank financial company subject to Board of Governors 

supervision. The Council is interpreting this statutory language to apply to any successor entity 

of a bank holding company that is not a bank holding company, regardless whether the 

successor entity itself was previously a bank holding company. Section 117 applies both to 

certain bank holding companies (under section 117(a)(1)) and to “any successor entity” to those 

 14 The statutory reference in section 117(c)(1) to “an entity” contrasts to the narrower reference in section 117(b) to 

“an entity [that] ceases to be a bank holding company.”
 

9

bank holding companies (under section 117(a)(2)).

15 The plain reading of “any” in section 

117(a)(2) makes clear that it applies to a successor entity even if that entity has never been a 

bank holding company. Any entity’s treatment under section 117 is based on whether it falls 

within the scope of section 117(a)(1) or (2); therefore, even a successor entity that has not been 

a bank holding company is within the statutory scope. Further, even if there were any 

ambiguity in the statutory language, interpreting the statute as limited to successor entities that 

were previously bank holding companies would lead to absurd results. Under that 

interpretation, section 117 would apply if a bank holding company is succeeded by another 

bank holding company that then ceases to be a bank holding company, but section 117 would 

not apply if a bank holding company ceases to be a bank holding company and is then 

succeeded by another non-bank holding company. Differentiating between these two scenarios 

would be irrational and would frustrate the purposes of section 117;16 indeed, any entity could 

structure a transaction in this way, rendering section 117 meaningless. 

3.3 Status as a Nonbank Financial Company

Section 117 of the Dodd-Frank Act requires the Council to consider whether a company that 

submits an appeal meets the definition of the term “nonbank financial company” under section 

102 of the Dodd-Frank Act. The definition of “nonbank financial company” generally includes 

companies that are “predominantly engaged” in financial activities.17 A company is 

predominantly engaged in financial activities if at least 85 percent of the company’s and all of its 

subsidiaries’ annual gross revenues are derived from, or at least 85 percent of the company’s and 

all of its subsidiaries’ consolidated assets are related to, “activities that are financial in nature” as 

defined in section 4(k) of the Bank Holding Company Act of 1956, as amended (Bank Holding 

Company Act)18 and, if applicable, the ownership or control of one or more insured depository 

institutions.

19 The Board of Governors’ regulation governing the determination of whether a 

company is predominantly engaged in financial activities, as defined in section 102 of the DoddFrank Act, includes as financial activities the activities of an insured depository institution or any 

subsidiary of an insured depository institution.20 ZB is an insured depository institution, so 100 

percent of its revenues are derived from, and all of its assets are related to, the activities of an 

insured depository institution or its subsidiaries. ZB is therefore predominantly engaged in 

financial activities and is thus a nonbank financial company under section 102 of the Dodd-Frank 

Act. 

3.4 Standard of Review

Section 117(c)(2)(C) of the Dodd-Frank Act provides that, in evaluating an appeal under section 

117, the Council is required to consider whether the company meets the standards for a Council 

 15 Dodd-Frank Act section 117(a), 12 U.S.C. § 5327(a). 16 See S. Rep. No. 176-111, at 50 (2010) (stating that section 117 “is intended to ensure that a bank holding company 

that could pose a risk to U.S. financial stability if it experienced material financial distress would remain supervised 

by the Board of Governors and subject to the prudential standards authorized under this title even if it sells or closes 

its bank.”).

17 Dodd-Frank Act section 102(a)(4), 12 U.S.C. § 5302(a)(4). 18 12 U.S.C. § 1843(k).

19 Dodd-Frank Act section 102(a)(6), 12 U.S.C. § 5302(a)(6); see also 12 C.F.R. part 242. 20 12 C.F.R. § 242.3(b)(2). 
 

10

determination regarding a nonbank financial company under section 113 of the Dodd-Frank Act. 

Section 113 includes two determination standards. The first determination standard is if material 

financial distress at a nonbank financial company could pose a threat to U.S. financial stability. 

The second determination standard is if the nature, scope, size, scale, concentration, 

interconnectedness, or mix of the activities of a nonbank financial company could pose a threat 

to U.S. financial stability. Under section 113, the Council may determine that a nonbank 

financial company will be subject to Board of Governors supervision and enhanced prudential 

standards if either the first or second determination standard is met. Section 113 lists 10

considerations that the Council must take into account in making such a determination; the 

Council may also consider any other risk-related factors it deems appropriate.21 

In evaluating ZB, the Council has considered both determination standards under section 113. 

The Council has applied the Council’s Interpretive Guidance in evaluating ZB, while tailoring 

the analysis in light of the differences between bank holding companies and nonbank financial 

companies. Accordingly, the Council has analyzed ZB by reference to the three transmission 

channels described in the Interpretive Guidance, as well as analyzing the company’s degree of 

regulatory scrutiny and its complexity and resolvability. 

As the Interpretive Guidance noted, there likely will be significant overlap between the outcome 

of an assessment of a nonbank financial company under the first and second determination 

standards.22 Although many aspects of this analysis focus on the first determination standard, 

during its evaluation of ZB’s appeal, no factors were identified that would indicate that ZB meets

the second determination standard.23 

 21 Dodd-Frank Act section 113(a), 12 U.S.C. § 5323(a). 22 Interpretive Guidance at II.c. 23 For example, the Council considered the nature, scope, size, scale, concentration, interconnectedness, and mix of 

activities of Zions in its analysis of measures of the systemic importance of Zions and its peers in section 4.2; Zions’ 

scope, interconnectedness, and mix of activities were considered by the Council in its analysis of the exposure 

transmission channel in section 5.2; and Zions’ scope and concentration were considered as part of the analysis of 

the critical function or service transmission channel in section 5.4.
 

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4. OVERVIEW OF ZIONS BANCORPORATION AND ZB

Zions Bancorporation, through its subsidiary ZB, provides banking and related services in 

Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, 

and Wyoming. ZB accounts for approximately 99.7 percent of the total consolidated assets24 and 

99.7 percent of the revenues25 of Zions Bancorporation. ZB had 433 branches as of December 

31, 2017, and approximately 10,000 full-time-equivalent employees.26 ZB’s primary services 

and activities are small and medium-sized business and corporate banking; CRE and residential 

mortgage lending; retail banking; treasury cash management services; trust and wealth 

management; and limited capital markets and investment management activities. 

4.1 Assets and Liabilities27

Zions has $66 billion of total consolidated assets and $59 billion of total liabilities. Select 

financial information of Zions is provided in Table 1, and the company’s consolidated balance 

sheet is provided in Appendix A. 

Table 1: Zions Select Financial Information ($ Millions)

Total Assets 66,288

Loans 44,262

Total Liabilities 58,609

Total Deposits 52,621

Long-Term Debt 383

Short-Term Borrowings 4,976

Common Equity Tier 1 Ratio 12.1%

Tier 1 Leverage Ratio 10.5%

Source: Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017. “Loans” are 

net of unearned income and fees and less allowance for loan losses. “Short-Term Borrowings” include FHLB 

advances, federal funds purchased, repurchase agreements, and securities sold but not yet purchased. “Common 

Equity Tier 1 Ratio” and “Tier 1 Leverage Ratio” are calculated under regulations implementing the Basel III 

regulatory framework. 

Assets

Most of the company’s assets consist of loans and investment securities. Loans held for 

investment (less loan-loss provisions and unearned income) constitute 67 percent of its total 

assets, or $44 billion. CRE loans28 are the largest component of the company’s loan portfolio, at 

 24 ZB Call Report as of December 31, 2017, p. 14, and Zions Bancorporation, Annual Report on Form 10-K for the 

year ended December 31, 2017, p. 88. 

25 Calculated based on the net interest income and non-interest income of ZB and of Zions Bancorporation. ZB Call 

Report as of December 31, 2017, pp. 5-6, and Zions Bancorporation, Annual Report on Form 10-K for the year 

ended December 31, 2017, p. 89.

26 Zions Bancorporation, Annual Report on Form 10-K for the year ended December 31, 2017, pp. 5-6. 27 Except as otherwise noted, figures in section 4.1 are from Zions Bancorporation Federal Reserve Form Y-9C as of 

December 31, 2017. 

28 CRE loans include construction and development loans; loans secured by multifamily properties; and loans 

secured by nonfarm, nonresidential real estate. 
 

12

42 percent of the total. C&I loans and residential mortgage loans29 comprise 25 and 22 percent 

of the total loan portfolio, respectively. Consumer loans, agricultural loans, and other loans and 

leases make up the remaining 11 percent of the company’s loan portfolio. 

Investment securities constitute 24 percent of Zions’ total assets, or $16 billion. Of this 

portfolio, 61 percent are agency mortgage-backed securities (MBS), 25 percent are securities 

issued by U.S. government agencies and government-sponsored enterprises, and 13 percent are 

municipal securities. The remainder of the company’s assets primarily consist of cash and 

balances due from depository institutions, federal funds sold, securities purchased under 

agreements to resell, and goodwill. 

Liabilities

Zions’ total liabilities are $59 billion, of which deposits constitute 90 percent ($53 billion) of the 

total, mostly in non-transaction accounts. The company’s ratio of loans to total deposits is 84 

percent. Of total deposits at ZB, 76 percent are money market deposits, 10 percent are other 

savings deposits, 8.5 percent are transaction deposits, and 5.9 percent are time deposits.30 

Individuals, partnerships, and corporations provide ZB with 97 percent of its total deposits, while 

U.S. states, political subdivisions, and depository institutions hold the balance.31 

Of the remaining $6.0 billion of Zions’ liabilities, short-term advances from the Federal Home 

Loan Bank System (FHLB System) total $3.6 billion; federal funds purchased total $0.9 billion; 

repo and securities sold and not yet purchased total $0.4 billion; and long-term debt, reserves for 

unfunded lending commitments, and other liabilities total $1.0 billion.

32 

Zions’ gross leverage ratio (measured by total assets to total equity) is 8.6x. The company’s 

common equity tier 1 capital ratio is 12.1 percent, and its tier 1 leverage ratio is 10.5 percent. 

4.2 Measures of Systemic Importance

In July 2015, the Board of Governors adopted a rule establishing criteria for identifying U.S. GSIBs for purposes of applying, among other things, a risk-based capital surcharge.

33 Under the 

final rule, U.S.-based top-tier bank holding companies that qualify as advanced approaches 

Board of Governors-regulated institutions (those with $250 billion or more in total consolidated 

assets or $10 billion or more in consolidated total on-balance-sheet foreign exposures) are 

required to calculate an overall measure of systemic importance that is determined by reference 

to 12 financial indicators. The indicators reflect the size of these institutions, their 

interconnectedness, the lack of readily available substitutes or financial institution infrastructure 

for the services they provide, their global (cross-jurisdictional) activity, and their complexity. 

Table 2 lists each category of systemic importance used to identify a bank holding company as a 

G-SIB, individual indicators within each category, and the weighting of each indicator in the 

institution’s systemic importance score under the rule. 

 29 Mortgage loans include home equity lines of credit, junior liens, and other loans secured by residential real estate. 30 ZB Call Report as of December 31, 2017, pp. 28-29. 31 ZB Call Report as of December 31, 2017, p. 28. 32 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, pp. 88, 131. 33 12 C.F.R. part 217. 
 

13

Table 2: Systemic Importance Indicators 

Category Individual Indicator Weight

Size Total exposures (Basel III leverage ratio definition) 20%

Interconnectedness Intra-financial system assets 6.67%

Intra-financial system liabilities 6.67%

Securities outstanding 6.67%

Substitutability Payments activity 6.67%

Assets under custody 6.67%

Underwritten debt and equity transactions 6.67%

Complexity Over-the-counter derivatives notional 6.67%

Level 3 assets 6.67%

Trading and available-for-sale securities 6.67%

Cross-jurisdictional activity Cross-jurisdictional claims 10%

Cross-jurisdictional liabilities 10%

Source: 12 C.F.R. § 217.404. Level 3 assets are assets whose accounting valuations are derived from valuation 

techniques in which one or more significant inputs or significant value drivers are unobservable. 

Although only bank holding companies that qualify as advanced approaches institutions are 

required to compute this score under the rule, data from the Board of Governors’ Banking 

Organization Systemic Risk Report (FR Y-15) allow for an assessment of systemic importance 

across a broader set of U.S. banking institutions. FR Y-15 is used to collect systemic risk data 

from U.S. bank holding companies, savings and loan holding companies, and intermediate 

holding companies with $50 billion or more of total consolidated assets. As shown in Table 3, 

among the 40 institutions that filed an FR Y-15 as of December 31, 2016, Zions ranked 40th in 

overall systemic importance. Appendix B lists all 40 filers assessed under this methodology, 

together with the indicator-based scores and overall systemic importance score of each. 
 

14

Table 3: Zions’ Ranking of Systemic Importance 

Category Subcategory ($ Millions) Rank Among the 40 

FR Y-15 Filers

Size Total Exposures 70,908 40

Interconnectedness Intra-Financial System Assets 2,685 31

Intra-Financial System Liabilities 2,941 34

Securities Outstanding 12,533 36

Substitutability Payments 459,067 29

Assets Under Custody 5,687 30

Underwriting 38 32

Complexity Over-the-counter Derivatives 6,209 38

Trading and Available-for-sale

Securities 2,277 32

Level 3 Assets 149 26

Cross-Jurisdictional 

Activity

Cross-Jurisdictional Claims 169 39

Cross-Jurisdictional Liabilities 0 38

Overall Score 40

Source: Federal Reserve Form Y-15 as of December 31, 2016; Office of Financial Research analysis. 

Zions’ ranking in each of these categories indicates that the nature, scope, size, scale, 

concentration, interconnectedness, and mix of the activities of Zions would not pose a threat to 

U.S. financial stability.34

 34 There are a number of other analyses that market participants use for measuring the importance and impact of 

certain firms. For example, one commonly used metric is S-risk, which has been used by a number of researchers as 

it combines key characteristics of systemic risk, including size, leverage, and interconnectedness. In one S-risk 

analysis, Zions ranked 37th among U.S. financial institutions as of year-end 2017. See New York University Stern 

Volatility Institute: The Volatility Laboratory, available at https://vlab.stern.nyu.edu/analysis/RISK.USFINMR.MES.
 

15

5. TRANSMISSION CHANNEL ANALYSIS

5.1 Overview

As described in the Interpretive Guidance, the Council has identified three transmission channels 

as most likely to facilitate the transmission of the negative effects of a nonbank financial 

company’s material financial distress or activities to other financial firms and markets. These 

transmission channels are similarly relevant to an analysis of an institution under section 117 of 

the Dodd-Frank Act:

• Exposure. A nonbank financial company’s creditors, counterparties, investors, or other 

market participants have exposure to the nonbank financial company that is significant 

enough to materially impair those creditors, counterparties, investors, or other market 

participants and thereby pose a threat to U.S. financial stability. 

• Asset liquidation. A nonbank financial company holds assets that, if liquidated quickly, 

would cause a fall in asset prices and thereby significantly disrupt trading or funding in 

key markets or cause significant losses or funding problems for other firms with similar 

holdings. 

• Critical function or service. A nonbank financial company is no longer able or willing to 

provide a critical function or service that is relied upon by market participants and for 

which there are no ready substitutes. 

5.2 Exposure Transmission Channel

As noted above, under the exposure transmission channel, the Council considers the exposures 

that a company’s creditors, counterparties, investors, or other market participants have to the 

company. 

The two primary types of financial exposures to Zions are the exposures of its capital markets 

counterparties and of its depositors. Based on the analysis below, these exposures to Zions do 

not appear to contribute materially to the threat that the company’s material financial distress or 

its activities could pose to U.S. financial stability. 

5.2.1 Exposures Arising from Zions’ Capital Markets Activities

Direct and indirect exposures of financial market participants to a nonbank financial company 

experiencing material financial distress can impair those market participants or the financial 

markets in which they participate and thereby pose a threat to financial stability. Even if 

individual exposures are relatively small, the direct and indirect exposures can be large enough 

in the aggregate for a company’s material financial distress to have a destabilizing effect on 
 

16

financial markets. At Zions, these capital markets exposures, which include the company’s 

outstanding debt, derivatives, and repo, are minimal (see Table 4).

35

Table 4: Summary of Capital Markets Exposures to Zions ($ Millions)

Long-Term Debt 383

Short-Term Debt 3,600

Federal Funds Purchased 927

Repurchase Agreements 354

Derivatives (Gross Notional) 6,824

Derivatives (Liabilities at Fair Value) 40

CDS as a Reference Entity <133

Source: Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017; The Depository 

Trust & Clearing Corp. (DTCC) Trade Information Warehouse as of December 29, 2017. “CDS as Reference 

Entity” is gross CDS outstanding for which the company is a reference entity; data available through DTCC’s Trade 

Information Warehouse include companies that are reported as a top 1,000 reference entity, and Zions is not listed 

(the smallest reference amount is $133 million). “Derivatives (Liabilities at Fair Value)” accounts for counterparty 

netting and cash collateral. 

Debt

A financial company’s outstanding debt provides one means by which the negative effects of the 

company’s material financial distress could be transmitted to other market participants. If Zions 

were to experience material financial distress, holders of its outstanding debt could experience 

immediate mark-to-market losses and could lose principal and interest payments in the event of a 

default. 

Zions has $4.0 billion in debt outstanding, a small amount relative to other large bank holding 

companies (see Table 5). This amount consists of $3.6 billion in short-term borrowings from the 

FHLB System and $0.4 billion in long-term debt. 

 35 Zions’ shareholders would be expected to incur losses in the event of the company’s material financial distress. 

However, losses arising from a decrease in the value of Zions’ common equity, by themselves, would not generally 

constitute a threat to financial stability. Zions Bancorporation’s market capitalization was $10 billion as of year-end 

2017 (Bloomberg, L.P.).
 

17

Table 5: Total Debt Issued by U.S. Bank Holding Companies ($ Billions)

Rank by Total Assets Company Total Debt

1 JPMorgan Chase 362

2 Bank of America 260

3 Wells Fargo 239

4 Citigroup 281

5 Goldman Sachs 289

6 Morgan Stanley 204

7 US Bancorp 48

8 PNC 57

9 Bank of New York Mellon 34

10 Capital One 60

... ... ...

25 Zions Bancorporation 4

Source: Company SEC filings as of December 31, 2017. “Total Debt” excludes securities lending and repurchase 

agreements. 

Limited data are available regarding the identity of the beneficial owners of Zions’ outstanding 

debt securities. Based on available data, nine investors hold more than $10 million of Zions’

debt, with the largest investor holding $30 million (see Table 6). The largest holders of Zions’ 

outstanding debt include insurance companies, traditional asset managers, trust companies, and 

pensions, indicating a generally diffuse investor base. Debt issued by Zions represents a very 

small percentage of total assets managed by these investors. In light of the small size of 

individual and aggregate holdings of Zions’ debt, these liabilities do not appear to contribute 

materially to the threat the company’s material financial distress could pose to U.S. financial 

stability.

Table 6: Top Known Holders of Debt Issued by Zions ($ Millions)

Lincoln National Group 30.0

Manulife Financial Corp. 25.1

First Trust 23.7

Flaherty & Crumrine, Inc. 23.5

TransAmerica Financial Life Insurance Co. 18.5

TIAA-CREF 17.2

Alliance Bernstein 16.7

Macquarie Group 11.1

OneAmerica Financial Partners, Inc. 10.4

Source: Bloomberg, L.P. as of December 31, 2017. 

Derivatives

Derivatives constitute another channel through which material financial distress at a company 

could be transmitted to other market participants. In particular, a company’s derivatives 
 

18

counterparties could experience losses if the company were unable to meet its obligations under 

those transactions.

Zions has approximately $6.8 billion in gross notional derivatives positions.36 Measured at fair 

value, the company has $40 million in gross derivatives liabilities.37 No Zions counterparty has 

more than $[•] of derivatives exposure to the company based on gross notional amount, or more 

than $[•] based on fair value.38 

Zions’ $6.8 billion in gross notional amount of derivatives consist of $5.9 billion of interest rate 

swaps and $0.9 billion of foreign exchange derivatives.39 Central clearing helps to mitigate the 

risks to counterparties from a potential default by Zions; as shown in Table 7, $[•] of the gross 

notional amount of interest rate exposures to Zions is cleared through central counterparties.

Table 7: Interest Rate Derivatives Exposures of Dealers and Central Counterparties to 

Zions ($ Millions)

Counterparty Notional Amount

[•] [•]

Total [•]

Source: Zions Submission, Item A1. 

G-SIBs’ aggregate gross notional interest rate derivatives exposure to Zions totals only $[•].

40 

These positions are nearly fully collateralized on a mark-to-market basis, with aggregate net 

liabilities to these institutions totaling $[•].

41 While the value of these positions could change 

quickly, the small sizes of these positions and their high degree of collateralization mitigate the 

potential risks to these counterparties. 

Measured on a gross notional basis, [•] U.S. G-SIBs have a combined $[•] in foreign exchange 

derivatives exposure to Zions.

42 As with the company’s interest rate derivatives, the small sizes 

of these positions and their high degree of collateralization mitigate the potential risks to these 

counterparties. 

Short-Term Wholesale Funding

Exposures arising from the provision of short-term wholesale funding to a financial institution 

could facilitate the transmission of stress from material financial distress at that financial 

institution to its counterparties and other market participants. Essentially all of Zions’ short-term 

wholesale funding consists of advances from the FHLB System, repo, and federal funds 

purchased. 

 36 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 128. 37 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 128. 38 Zions Submission, p. 19.

39 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 128. 40 Zions Submission, Item A1. 41 Zions Submission, Item A1. 42 Zions Submission, Item A1. 
 

19

Federal Home Loan Bank Advances

The FHLB System allows member banks to borrow against their eligible loans and securities to 

satisfy liquidity and funding requirements. ZB is a member of the FHLB of Des Moines. Zions 

is generally subject to the risk that the FHLB lender will declare all advances due and payable or 

increase the haircuts assigned to collateral. 

As of December 31, 2017, Zions had $3.6 billion of short-term FHLB borrowings outstanding, 

up substantially from $0.5 billion at the end of 2016.43 Of the $3.6 billion in total advances, $[•]

matures in 30 days or less, $[•] matures between 31 and 60 days, and $[•] matures between 61 

and 90 days.44 As of December 31, 2017, Zions had pledged loans with a carrying value of $[•]

to the FHLB of Des Moines as collateral for current and potential borrowings.

45 [•].46 

Zions’ current borrowings from the FHLB of Des Moines, $3.6 billion, constitute a growing 

proportion of the company’s short-term wholesale funding and total liabilities, mirroring a recent 

trend at other U.S. financial institutions. Zions’ amount currently available for additional FHLB 

advances is $8.9 billion, representing an additional potential exposure of the FHLB to Zions.

47 

At the same time, the large amount of collateral Zions has pledged to the FHLB of Des Moines 

relative to Zions’ potential future borrowing significantly mitigates the risks that Zions’ material 

financial distress could pose to the lender. 

Repurchase Agreements

Zions has $354 million and $287 million in outstanding repo and reverse repo, respectively.

48 

Individual counterparties’ exposures to Zions under repo agreements are listed in Table 8. [•] is 

Zions’ largest repo counterparty in each direction; calculated based on gross amounts (prior to 

netting in accordance with Federal Accounting Standards Board (FASB) Interpretation no. 41), 

[•] has $[•] in repo and reverse repo with Zions.

49 Zions has pledged $[•] of U.S. Treasury bills 

to collateralize its repo obligations to [•].

50 Due to the relatively small size of this position and 

the liquidity and credit quality of the collateral posted, compared to the liquidity resources 

available to [•], Zions’ failure to satisfy its obligations under these transactions would not pose a 

significant risk to [•].

Zions’ two next largest repo counterparties are [•] and [•]. Zions has pledged highly liquid U.S. 

agency securities to these counterparties, and the market value of these pledged securities 

exceeds the amount of cash borrowed in each case. Repo exposure to Zions represents less than 

1.5 percent of the total assets of the [•]51 and less than 1.2 percent of the total equity of [•].

52 The 

 43 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 44 Zions Submission, Annex 2, p. 5. 45 Zions Response to OFR Information Request (June 7, 2018), p. 2. 46 Zions Response to OFR Information Request (June 7, 2018), p. 2. 47 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 48 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 94, 131.

49 Zions Submission, Annex 2, pp. 1-2. 50 Zions Response to OFR Request (June 7, 2018), p. 3. 51 [•] 52 [•]
 

20

relatively small size of these positions, as well as the amount, liquidity, and credit quality of the 

collateral pledged against them, substantially mitigates the risk that material financial distress at 

Zions could pose to these counterparties. 

Table 8: Repurchase Agreement Exposures to Zions ($ Millions)

Repo Counterparty Cash In ($) Market Value of Collateral ($) Net Exposure ($)

[•] [•] [•] [•]

Total [•] [•] [•]

Source: Zions Submission, Annex 2, pp. 1-2; totals reflect gross balances, prior to netting pursuant to FASB 

Interpretation no. 41.

Federal Funds Purchased

Zions has $927 million in federal funds purchased.

53 [•] financial institutions provided [•]

percent of this funding, with $[•] and $[•] in federal funds sold, [•].

54 These loans are generally 

unsecured, and therefore pose some risk of loss to Zions’ counterparties. However, purchases of 

federal funds typically mature overnight and are not rolled over to a company experiencing 

material financial distress, allowing Zions’ counterparties to reduce their exposure in the event of 

Zions’ distress. Further, the aggregate amount of Zions’ federal funds purchased is small. The 

small aggregate size of these exposures to Zions mitigates the risk that material financial distress 

at Zions could pose to U.S. financial stability. 

Contagion

An important mechanism for the spread of contagion in financial markets is a nonbank financial 

company’s interconnectedness with other market participants as a result of the company’s capital 

markets activities, because capital market participants may engage in protective behavior such as 

reducing exposures to counterparties and customers or ceasing certain activities to increase 

liquidity in anticipation of a potential shock.55 Due to Zions’ relatively small size and its 

relatively low level of capital markets activities, each as described above, there is little risk of 

contagion arising through this mechanism in the event of Zions’ material financial distress.

 53 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. A federal 

funds transaction is an unsecured loan of reserves held at a Federal Reserve Bank to a depository institution by 

another depository institution or other eligible entity, typically on an overnight basis. Borrowers and lenders of 

federal funds are described as “purchasers” and “sellers” of federal funds, respectively. 

54 Zions Response to OFR Information Request (June 7, 2018), p. 4. 55 See Hal Scott, Interconnectedness and Contagion, Financial Panics and the Crisis of 2008 (November 20, 2012), 

available at http://ssrn.com/abstract=2178475; Ricardo J. Caballero, Macroeconomics After the Crisis: Time to Deal 

with the Pretense-of-Knowledge Syndrome, Journal of Economic Perspectives volume 24, issue 4 (2010), pp. 85-

102.
 

21

5.2.2 Exposures of Depositors to Zions 

Deposit exposures constitute another channel through which a bank’s material financial distress 

or its activities could pose a threat to U.S. financial stability.

56 At $53 billion, deposits constitute 

91 percent of ZB’s total liabilities.57 Non-transaction accounts,58 including money market, other 

savings, and time deposits, make up most of this total, at $40.4 billion, $5.0 billion, and $3.1

billion, respectively.59 Individuals, partnerships, and corporations provide the company with 97 

percent of its total deposits, while U.S. states, political subdivisions, and depository institutions 

hold the balance.60 

In the case of FDIC-insured deposits, depositors generally bear little or no risk in the event of the 

bank’s material financial distress or failure. In contrast, in the case of uninsured deposits, 

depositors are effectively creditors of the bank and can experience losses in the event of the 

bank’s material financial distress or failure. An estimated $25.3 billion, or 47 percent, of ZB’s

total deposits was uninsured by the FDIC as of March 31, 2018 (see Table 9).

61

Table 9: Uninsured Deposits at ZB ($ Millions)

Total Assets 66,301

Total Liabilities 58,726

Total Deposits 53,339

Estimated Uninsured Deposits 25,324

Uninsured Deposits % of Total Deposits 47.5%

Uninsured Deposits % of Total Liabilities 43.1%

Source: ZB Call Report as of March 31, 2018. Estimated uninsured deposits include related accrued and unpaid

interest. 

Among U.S. banks with assets between $50 billion and $125 billion, the share of uninsured 

deposits relative to total deposits and total liabilities varies widely. ZB’s share of uninsured 

deposits is slightly above both the mean and median of these peer institutions (see Table 10). 

 56 The Interpretive Guidance does not address bank deposits as a type of exposure that the Council will consider, 

because the Interpretive Guidance focuses on the Council’s analysis of nonbank financial companies (which 

excludes bank holding companies) under section 113 of the Dodd-Frank Act. However, the Interpretive Guidance 

notes that relevant exposures to a company under review include exposures of the company’s creditors, 

counterparties, or other market participants, and depositors are appropriately considered in the context of an 

application under section 117 of the Dodd-Frank Act. 57 ZB Call Report as of December 31, 2017, p. 14. Zions Bancorporation has $52.6 billion in total deposits, ZB has 

$53.0 billion in total deposits, and Zions Bancorporation has $332 million in deposits with ZB (see Zions 

Bancorporation Federal Reserve Form Y-9LP as of December 31, 2017). 58 Transaction accounts, such as demand deposit accounts, are those from which the depositor is permitted to make 

transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, 

or other similar device for the purpose of making payments or transfers to third parties. Non-transaction accounts 

are accounts for all other deposit types, such as money market, savings, and time deposits. 

59 ZB Call Report as of December 31, 2017, p. 29. 60 ZB Call Report as of December 31, 2017, p. 28. 61 ZB Call Report as of March 31, 2018, p. 45. In this section 5.2.2, except as otherwise noted, financial information 

is presented as of March 31, 2018, because [•]. See Zions Response to OFR Information Request (June 7, 2018), p. 

4. 
 

22

Table 10: Uninsured Deposits at ZB’s Selected Peer Institutions ($ Millions)

Company Name Total 

Assets

Total 

Liabilities

Total 

Domestic 

Deposits

Estimated 

Uninsured 

Deposits

Uninsured 

Deposits % of 

Total Liabilities

Uninsured 

Deposits % of 

Total Deposits

Citizens Bank, N.A. 122,429 105,820 89,495 36,829 34.8% 41.2%

Regions Bank 121,865 105,719 98,504 34,958 33.1% 35.5%

MUFG Union Bank, N.A. 120,913 104,385 84,487 44,165 42.3% 52.3%

M&T Trust Company 118,089 103,405 92,114 41,213 39.9% 44.7%

Capital One Bank (USA), 

N.A. 114,098 98,329 67,695 48,179 49.0% 71.2%

BMO Harris Bank, N.A. 111,890 96,398 82,948 42,645 44.2% 51.4%

Huntington National 

Bank 104,033 92,544 81,874 52,763 57.0% 64.4%

Discover Bank 100,495 89,910 62,940 4,786 5.3% 7.6%

Synchrony Financial 79,640 68,703 57,959 5,303 7.7% 9.1%

First Republic Bank 90,224 82,387 71,255 47,680 57.9% 66.9%

Bank of the West 89,461 77,489 68,790 34,178 44.1% 49.7%

Compass Bank 86,612 74,365 70,226 29,022 39.0% 41.3%

Santander Bank, N.A. 74,569 61,121 57,160 22,356 36.6% 39.1%

Comerica Bank 72,342 64,849 58,266 34,612 53.4% 59.4%

ZB 66,301 58,726 53,339 25,324 43.1% 47.5%

Morgan Stanley Private 

Bank, N.A. 66,109 59,727 57,684 7,910 13.2% 13.7%

American Express 

National Bank 55,002 48,931 45,804 10,586 21.6% 23.1%

Silicon Valley Bank 53,441 49,541 43,654 39,567 79.9% 90.6%

UBS Bank USA 51,789 46,245 46,008 2,049 4.4% 4.5%

Average (Mean) 89,437 78,347 67,905 29,691 37.9% 43.7%

Median 89,461 77,489 67,695 34,612 39.9% 44.7%

Source: Call reports of U.S. banks with total assets between $50 and $125 billion as of March 31, 2018. 

[•] depositors have $[•] or more deposited at ZB,

62 and ZB’s material financial distress or failure

could expose them to significant losses. Available data do not allow for extensive analysis of the 

potential impact on these depositors or their counterparties in such a scenario. The impact of 

these losses would be influenced by the availability of other liquidity resources to these 

depositors and their counterparties, among other factors. ZB’s largest depositors operate across a 

range of industries and do not include U.S. G-SIBs or other depository institutions. The absence 

of large financial institutions among ZB’s largest depositors reduces the potential for ZB’s 

 62 Zions Submission, Annex 2, p. 3. 
 

23

material financial distress or failure to cause a broader impairment of financial intermediation or 

financial market functioning. 

5.3 Asset Liquidation Transmission Channel

The second channel identified by the Council through which the negative effects of a nonbank 

financial company’s material financial distress could be transmitted to other firms or markets is 

the asset liquidation transmission channel. Under the asset liquidation transmission channel, the 

Council considers whether a company holds assets that, if liquidated quickly, could significantly 

disrupt the operation of key markets or cause significant losses or funding problems for other 

firms with similar holdings. During a period of overall stress in the financial services industry 

and in a weak macroeconomic environment, deterioration in asset prices or market functioning 

resulting from a rapid liquidation of assets could pressure other financial companies to sell their 

holdings of affected assets in order to maintain adequate capital and liquidity. This initial 

liquidation, in turn, could produce a cycle of asset sales that could lead to further market 

disruptions.

The two key factors in assessing the potential risks of a company’s asset liquidation are the 

amount and the nature of the assets the company may be forced to sell. In evaluating these 

factors, relevant considerations include the liquidity risk of the company’s liabilities; the size and 

composition of the company’s asset portfolio that would be liquidated; and any fire-sale 

discount, which depends on the liquidity of the assets. All other things being equal, the 

liquidation of larger or less-liquid asset portfolios poses a greater risk of disrupting financial 

markets than does the liquidation of smaller or more-liquid asset portfolios. In addition, rapid 

asset sales would be more likely to disrupt financial markets than asset liquidations over a longer 

period of time, because rapid asset sales would likely lead to larger price discounts. Moreleveraged firms may be forced to liquidate more assets in a shorter time than less-leveraged 

firms. Finally, sales of assets that are widely held or that are commonly used as collateral by 

large financial intermediaries in critical funding markets would generally be more disruptive than 

sales of assets that are not held or used as widely by such intermediaries.

In the event of its material financial distress, Zions could be forced to liquidate assets to satisfy 

its obligations to counterparties, depositors, and others. However, based on the analysis below, 

the scale of Zions’ runnable liabilities is relatively low, and the impact of a fire sale of Zions’ 

assets on other institutions or markets would likely be small. As a result, the amount and nature 

of Zions’ assets that it could be forced to sell in the event of material financial distress do not 

appear to contribute materially to the threat that the company’s material financial distress could 

pose to U.S. financial stability. 

5.3.1 Liquidity of Zions’ Liabilities

As noted above, a key factor in assessing the risks posed by a company’s liquidation of assets is 

the liquidity characteristics of the company’s liabilities. Liabilities that may be withdrawn or 

terminated by a counterparty in the event of Zions’ material financial distress, such as uninsured 

demand deposits and short-term wholesale funding, could impose liquidity strains that would 

force Zions to sell assets to satisfy its obligations. 
 

24

Deposits

As discussed in section 5.2.2, deposits constitute the largest category of ZB’s liabilities, at $53

billion. Non-transaction accounts, including money market, other savings, and time deposits, 

comprise most of ZB’s deposit funding, at $49 billion. Time deposits constitute $3.1 billion of 

ZB’s deposits, of which an aggregate of $1.9 billion are in accounts over $250,000.63 

Individuals, partnerships, and corporations provide the vast majority of ZB’s deposit funding, at 

$51 billion collectively. U.S. states and political subdivisions hold $1.5 billion in deposits at ZB. 

Commercial banks and other U.S. depository institutions hold only $300 million in deposits at 

ZB, indicating a low level of financial system interconnectedness arising from these deposits.

64 

In the context of material financial distress, a bank will generally not experience a uniform run 

rate across its various types of deposits. For example, FDIC-insured deposits and uninsured 

deposits have different degrees of risk, and therefore would generally be subject to runs of 

different severity. If a bank were to experience material financial distress, FDIC-insured 

deposits would be expected to run at a considerably lower rate than uninsured deposits. 

The Council applied three approaches to assessing the potential run rates for different types of 

deposits. One approach applies the cash outflow assumptions used in the LCR. The U.S. federal

banking agencies developed these assumptions based on estimated potential outflows over a 30-

day period of elevated financial stress. The second approach applies actual run rates experienced 

at certain depository institutions during past periods of elevated financial stress. The third 

approach considers liquidity stress tests that Zions itself uses to manage its liquidity risk. 

Assessing Deposit Run Rates: Liquidity Coverage Ratio

The LCR is a rule adopted by the federal banking regulators to create a standardized minimum 

liquidity requirement for large and internationally active banking organizations. The rule 

requires institutions to hold high-quality liquid assets in an amount at least equal to its projected 

net cash outflows during a 30-day stress period. The LCR applies to all banking organizations 

with $250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet 

foreign exposure, and a less-stringent, modified LCR applies to bank holding companies and 

savings and loan holding companies that do not meet these thresholds but have $50 billion or 

more in total assets.

ZB has four types of deposits relevant to calculations under the LCR:

65

• Stable retail deposits are retail deposits, the entire amount of which is covered by FDIC 

deposit insurance, where either (1) the deposits are held in a transactional account by the 

depositor, or (2) the depositor has another established relationship with the banking 

 63 The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership 

category. 

64 ZB Call Report as of December 31, 2017, p. 28. 65 For the definitions of these terms under the LCR rule, see 12 C.F.R. § 249.3.
 

25

entity, such that withdrawal of the deposit during a liquidity stress event would be highly 

unlikely. 

• Other retail deposits include all retail deposits that are not stable retail deposits, as 

described above. In the formulation of the LCR, supervisory data indicated a higher 

outflow rate for deposits that are partially FDIC-insured as compared to fully FDICinsured. Accordingly, the outflow rate for “other retail deposits” is higher than for stable 

retail deposits. 

• Wholesale deposits are deposits from institutional (not retail) sources, including financial 

and non-financial entities. This category includes operational and non-operational 

deposits. Operational deposits are deposits that are necessary for the bank to provide 

operational services as an independent third-party intermediary, agent, or administrator to 

the wholesale customer or counterparty providing the funding.

• Collateralized deposits are either (1) a deposit of a public-sector entity secured by a 

priority lien on assets owned by the bank, or (2) a deposit of a fiduciary account for 

which the bank is a fiduciary and sets aside assets as security. 

Table 11 presents the total quantities of these deposit categories at Zions, the corresponding 

runoff rates under the LCR, and the resulting estimated runoff amounts. ZB’s deposit funding is 

primarily a mixture of stable retail deposits, other retail deposits, and wholesale deposits, which 

account for [•] percent, [•] percent, and [•] percent of its deposit funding, respectively. The LCR 

assumptions indicate that in the event of elevated financial stress, Zions may experience a 30-day 

deposit outflow of $[•], or [•] percent of its total deposits. 

Table 11: Deposit Runoff at Zions under LCR Assumptions ($ Millions)

Category Total Quantity Runoff Rate Runoff Amount

Stable Retail Deposits [•] [•] [•]

Other Retail Deposits [•] [•] [•]

Operational Wholesale Deposits [•] [•] [•]

Non-Operational Wholesale Deposits [•] [•] [•]

Collateralized Deposits [•] [•] [•]

Total [•] [•]

Source: Zions Submission Annex 2, p. 4. 

Assessing Deposit Run Rates: Historical Deposit Runs

Historical deposit runs provide useful case studies indicating the extent to which depositors 

could withdraw from Zions in the event of its material financial distress. Because different types 

of deposits would generally be expected to run at different rates, a granular view of the deposit 

composition of the banks that have experienced runs would be beneficial to compare these 

examples to Zions; however, this data is often unavailable. 
 

26

Based on available data, Table 12 provides actual deposit outflow rates66 at five institutions that 

experienced financial distress in 2008, along with hypothetical outflow rates at these institutions 

extrapolated over a 30-day period. Using a 30-day period allows for consistent comparisons 

across firms and allows for the assessment of the effects of a bank’s distress that may continue 

for a longer period of time than these examples. These hypothetical outflow rates mostly range 

from 5.7 to 25.3 percent; in one outlier case, the bank saw an outflow of 5.1 percent of deposits 

in just two days, which would translate to a 55.6 percent hypothetical 30-day rate. Excluding 

this outlier (because the outflows occurred over a very short period and it is unclear whether such 

a withdrawal rate could continue over a longer period) and applying the range of the remaining 

examples to Zions indicates potential net outflows between $3.0 billion and $13.4 billion over a 

30-day period. The large size of this range indicates that liquidity needs at Zions could vary 

widely. 

Table 12: Historical Deposit Outflows 

Institution

Insured 

Deposits 

(% of 

Total)

Deposit 

Base ($ 

Billions)

Start of 

Outflow

Duration 

of Outflow 

(Days)

Percent 

Outflow

Hypothetical 

30-Day 

Outflow

Hypothetical 

30-Day 

Outflow at ZB 

($ Millions)

Wachovia 61.3% 414 4/15/2008 14 3.6% 7.8% 4,134

9/15/2008 5 2.0% 11.8% 6,254

9/26/2008 8 2.4% 9.0% 4,770

Washington 

Mutual

74.2% 186 7/11/2008 23 4.9% 6.5% 3,445

9/8/2008 16 10.1% 18.6% 9,858

National City 81.2% 98 3/15/2008 2 5.1% 55.6% [Excluded]

7/11/2008 5 4.6% 25.3% 13,409

9/15/2008 25 4.6% 5.7% 3,021

Sovereign 70.7% 47 9/1/2008 30 6.2% 6.2% 3,286

IndyMac 83.3% 19 6/27/2008 14 8.4% 17.6% 9,328

Source: Jonathan D. Rose, “Old-Fashioned Deposit Runs,” Finance and Economics Discussion Series 2015-111,

Board of Governors, available at http://dx.doi.org/10.17016/FEDS.2015.111. For Washington Mutual, National 

City, and Sovereign, the deposit base reflects total deposits as reported in Call Reports as of June 30, 2008. For 

Wachovia and IndyMac, the deposit base reflects total deposits as reported in Call Reports as of March 31, 2008. 

Subsidiaries of a holding company are combined where appropriate. 

The applicability of historical examples to any particular bank is limited due to differences in the 

characteristics of the institutions, the severity of the institutions’ distress, the extent to which 

deposits are FDIC-insured, the economic context of the historical deposit outflows, the length 

and nature of the relationship between the depositor and the bank, the characteristics of peer 

institutions, and changes to regulation over time, among other factors. It is difficult to adjust for 

all of the potentially differentiating factors in the historical examples to develop precise 

estimates for Zions. Nonetheless, it is appropriate to consider historical examples, because they 

 66 Deposit outflows rates are depicted as net of any deposit inflows over the periods examined. 
 

27

provide context for the range of potential deposit withdrawals that could occur from a bank 

experiencing material financial distress.

One key difference between Zions and the institutions listed in Table 12 is that Zions has a larger 

share of uninsured deposits as a percentage of total deposits. As noted above, although all 

deposits are vulnerable to runs, FDIC-insured deposits are likely to have significantly different 

liquidity characteristics than uninsured deposits.67 In particular, because uninsured deposit 

accounts tend to liquidate more quickly than insured deposit accounts, deposit runs at Zions 

could be larger than the range in Table 12 indicates. 

Assessing Deposit Run Rates: Zions’ Internal Liquidity Stress Test

Zions uses an internal liquidity stress test to gauge its potential liquidity needs over 30 and 90 

days. The company estimates that, in a context of material financial distress, $[•] in deposits

would run within 30 days and $[•] would run within 90 days (see Table 13). 

Table 13: Zion’s Internal Liquidity Stress Test ($ Millions)

Category

30-Day 

Runoff

31-90 Day 

Runoff

90-Day 

Cumulative

Deposits [•] [•] [•]

Repo [•] [•] [•]

FHLB Advances [•] [•] [•]

Federal Funds Purchased [•] [•] [•]

Undrawn Credit and Liquidity Facilities [•] [•] [•]

Other Liabilities [•] [•] [•]

Cash Inflows [•] [•] [•]

Total Estimated Runoff* [•] [•] [•]

Source: Zions Submission, Annex 2, p. 5; Zions Response to OFR Request (July 6, 2018), p. 3. 

*In this table, “N/A” indicates the specified data were not available for this analysis and are excluded from the 

relevant “Total Estimated Runoff” calculations.

Over a 30-day period, the net estimated runoff under Zions’ internal liquidity stress test [•].

68 In 

addition to the $[•] in deposit outflows, the company projects $[•] in outflows of short-term 

wholesale funding, $[•] in drawdowns of commitments, $[•] in additional collateral pledged

associated with its derivatives, and $[•] of inflows related to loan paydowns. 

However, several components of the internal runoff figures differ from the LCR rates. For 

example, [•]. While it is not possible definitively to determine which of these assumptions more 

accurately reflects the potential withdrawals from Zions in the event of its material financial 

distress, [•]. 

 67 See Martin, Puri and Ufier, Deposit Inflows and Outflows in Failing Banks: The Role of Deposit Insurance, NBER 

working paper 24589 (2018). For example, the authors determined that at one banking institution, in a context of 

significant bank-specific distress, uninsured deposit accounts liquidate at a rate 92 percent faster than other accounts. 

The authors determined that their findings generalize to other banks. 

68 Zions Submission, Item B1. 
 

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Non-Deposit Funding and Other Commitments

Non-deposit funding and other commitments, such as short-term wholesale funding and undrawn 

credit or liquidity facilities, can also be sources of liquidity risk for financial institutions. Shortterm wholesale funding in particular can be a significant source of liquidity strain at financial 

institutions experiencing material financial distress. For example, repo counterparties may 

decline to roll over repo funding in the event of material financial distress at their counterparty, 

particularly if the securities underlying the repo transactions have high interest rate, credit, or 

liquidity risk. Similarly, in the event of a borrower’s material financial distress, a FHLB lender

may declare all advances due and payable or increase the level of haircuts assigned to collateral, 

particularly if the loans securing these advances decline in value, such as during a downturn in 

U.S. real estate markets. Further, if Zions experiences material financial distress, sellers of 

federal funds are unlikely to roll over such unsecured funding, in order to reduce their exposure 

and reduce potential losses. Undrawn credit or liquidity facilities that a bank has made available 

to its customers are an additional source of liquidity risk, particularly during a period of overall 

stress in the financial services industry, when liquidity is scarce. 

Zions has $6.0 billion in short-term wholesale funding and other non-deposit liabilities, 

constituting 10 percent of the company’s total liabilities.69 Short-term FHLB advances make up 

the majority of the total in this category, at $3.6 billion.70 Federal funds purchased and funding 

secured by Level 1 and Level 2A assets (including repo) represent an additional $0.9 billion71

and $[•],

72 respectively. Zions also has approximately $[•] in undrawn credit and liquidity 

facilities, of which [•] percent is extended to retail customers, [•] percent is extended to nonfinancial wholesale customers, and [•] percent is extended to financial customers.73 The cash 

outflow assumptions used in the calculation of the LCR are instructive in assessing potential run 

rates in a period of elevated financial stress. Under LCR assumptions, the outflows of Zions’ 

non-deposit funding would total $[•] over 30 days, including $[•] of non-deposit wholesale 

funding, $[•] of undrawn credit and liquidity facilities, and $[•] of other outflows (see Table 14). 

 69 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 88. 70 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 71 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 72 Zions Submission, Item B1. 73 Zions Submission, Item B1. 
 

29

Table 14: Runoff of Non-Deposit Wholesale Funding and Other Commitments under LCR 

Assumptions ($ Millions)

Category Total 

Amount

Runoff 

Rate

Runoff 

Amount

Non-Deposit Wholesale Funding

 Funding Secured by Level 1 Assets [•] 0% [•]

 Funding Secured by Level 2A Assets [•] 15% [•]

 FHLB advances (0-30 days) [•] 25% [•]

 FHLB advances (31+ days) [•] 0% [•]

 Federal funds purchased [•] 100% [•]

Total Non-Deposit Wholesale Funding [•] [•]

Undrawn Facilities

 Undrawn Credit and Liquidity Facilities to Retail [•] 5% [•]

 Undrawn Credit Facilities to Non-Financial Wholesale 

Customers

[•] 10% [•]

 Undrawn Liquidity Facilities to Non-Financial Wholesale 

Customers

[•] 30% [•]

 Undrawn Credit and Liquidity Facilities to Deposit 

Institutions & Foreign Banks

[•] 50% [•]

 Undrawn Credit Facilities to Financial Customers [•] 40% [•]

 Undrawn Liquidity Facilities to Financial Customers [•] 100% [•]

Total Undrawn Facilities [•] [•]

Other Outflows [•]

Total [•] [•]

Source: Zions Submission, Item B1. 

Summary of the Liquidity of Zions’ Liabilities

Table 15 summarizes the above analyses of potential liquidity demands on Zions over a 30-day 

period. 
 

30

Table 15: Sample 30-Day Liquidity of Zions’ Liabilities ($ Millions)

Historical Deposit 

Runs LCR Internal Stress Test

Deposits 3,021-13,409 [•] [•]

Short-Term Wholesale Funding [•] [•] [•]

Undrawn Credit and Liquidity Facilities [•] [•] [•]

Other Liabilities [•] [•] [•]

Cash Inflows [•] [•] [•]

Net Cash Outflows [•] [•] [•]

Source: Tables 11-14; Zions Submission, Item B1; Zions Response to OFR Request (July 6, 2018), p. 3. Sample 

cash inflows and potential runs on short-term wholesale funding, undrawn credit and liquidity facilities, and other 

liabilities under the column labeled “Historical Deposit Runs” are calculated using the LCR assumptions 

Using historical examples of deposit runs, the LCR, and the company’s internal liquidity stress 

test, the gross deposit outflows that Zions could experience range from $[•] to $[•]. Using 

estimates from the LCR, the company could experience $[•] in outflows from non-deposit 

funding and $[•] in cash inflows. Across all of Zions’ liabilities and commitments, these 

examples suggest a range of $[•] to $[•] in net cash outflows from Zions over a 30-day period of 

stress.

5.3.2 Liquidity of Zions’ Assets

To address a potential liquidity strain at Zions in the event of its material financial distress, the 

company could be forced to liquidate some of its assets. Factors affecting the extent to which 

Zions could sell its assets to meet liquidity demands include the type of asset, the asset’s credit 

rating, and the market liquidity of the asset (such as whether it is publicly traded). 

Of the company’s $66 billion of total consolidated assets, loans constitute the largest category, at 

$45 billion, followed by investment securities, at $16 billion (see Appendix A). The company 

has $1.3 billion of cash and balances due from depository institutions, and $0.5 billion in federal 

funds sold and securities purchased under agreements to resell.74 The balance of Zions’ assets 

consists of goodwill, other intangible assets, and all other assets. Zions does not hold a 

significant amount of corporate bonds. 

Zions’ $45 billion loan portfolio predominantly consists of CRE ($19 billion), C&I ($11 billion), 

and residential mortgages ($10 billion). In the event of material financial distress at Zions, the 

company may seek to liquidate these loans in order to satisfy its obligations. However, loans are 

highly illiquid assets, in part because they are not publicly traded and can be highly idiosyncratic 

to the particular region or borrower. For this reason, Zions would likely seek to rely on other 

sources of liquidity, including selling other types of assets, if it experienced a liquidity strain. 

For example, the company may instead use its cash on hand or sell its more-liquid assets, 

including U.S. Treasury securities, U.S. agency securities, and agency MBS. At the same time, 

there may be limitations on the extent to which the company can or would want to sell its more-

 74 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 88.
 

31

liquid assets first, including regulatory minimum capital requirements, the extent to which liquid 

assets are encumbered, and possible first-mover advantage in selling less-liquid assets.

Table 16 shows Zions’ cash and invested assets, divided between highly liquid assets and all 

other assets. The company’s $16 billion of liquid assets consist of cash and short-term 

investments, U.S. Treasury and agency securities, and agency MBS. 

Table 16: Zions Asset Holdings ($ Millions)

Assets Total Amount

Highly Liquid

 Cash & Short-Term Investments 1,843

 U.S. Treasury Securities 25

 U.S. Agency Securities 4,040

 U.S. Agency MBS 9,667

Total Highly Liquid Assets 15,575

Other Invested Assets

 Municipal Bonds 2,103

 Other Securities 96

 Residential Mortgage Loans 9,804

 Commercial Real Estate Loans 18,632

 Commercial & Industrial Loans 11,273

 Other Loans 5,115

Total Other Invested Assets 47,023

Total Cash & Invested Assets 62,598

Source: Zions Bancorporation Federal Reserve Form Y-9C as of December 31, 2017. Cash and short-term 

investments include cash, balances due from depository institutions, federal funds sold, and securities purchased 

under agreements to resell. U.S. agency securities include securities issued by U.S. government agencies and 

government-sponsored enterprises. These figures do not exclude Reserve Bank requirements and assets pledged as 

collateral. 

The LCR provides another means to assess the assets that the company could sell in the event of 

a liquidity strain. In particular, Zions could sell high-quality liquid assets (HQLA) as defined 

under the LCR to meet liquidity demands. While the company’s HQLA resemble those listed as 

liquid assets in Table 16, haircuts are used in the calculation of HQLA to account for, among 

other things, a potential market liquidity discount for assets other than cash and U.S. government 

securities. Table 17 provides a summary of Zions’ HQLA for purposes of the LCR. 
 

32

Table 17: Zions’ High-Quality Liquid Assets ($ Millions)

Assets Unweighted 

Amount Weight Weighted Amount

Level 1 Assets

[•] [•] 100% [•]

[•] [•] 100% [•]

[•] [•] 100% [•]

Level 2A Assets

[•] [•] 85% [•]

Excess HQLA Amount*** [•]

Total HQLA**** $[•] $[•]

*[•]. 

**[•]. 

***[•].

****[•].

Source: Zions Submission, Item B1. Figures are reported as of December 29, 2017. 

Zions has additional liquidity sources that could be used to satisfy its obligations. ZB, which is a 

member of the FHLB of Des Moines, can borrow against its eligible loans and securities to 

satisfy liquidity and funding requirements. As of December 31, 2017, the company had pledged 

loans with a carrying value of approximately $[•] to the FHLB of Des Moines as collateral for 

current and potential borrowings.75 The total amount available to ZB for additional FHLB 

advances is $8.9 billion.

76 However, to the extent that Zions’ pledged collateral declines in 

value, the company’s ability to draw on its available credit lines could become constrained. In 

addition, to the extent that Zions sells some of its assets, those assets would no longer be 

available to collateralize FHLB borrowings.77

5.3.3 Potential Impact of a Liquidation of Zions’ Assets

The broader market implications of an asset liquidation depend on a number of factors, including 

the size and composition of the liquidated asset portfolio; any fire-sale discount, which depends 

on the risk and liquidity of the assets; and the extent to which other financial market participants 

may be forced or incentivized to sell similar assets. All other things being equal, the liquidation 

of larger or less-liquid asset portfolios generally poses greater risk of disrupting financial 

markets than the liquidation of smaller or more-liquid asset portfolios. In addition, fire sales of 

assets that are widely held, or commonly used as collateral in critical funding markets by large 

financial intermediaries, would generally have a greater impact on market function than fire sales 

of assets that are not held or used as widely by such intermediaries. 

 75 Zions Response to OFR Information Request (June 7, 2018), p. 2. 76 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 77 Zions’ internal liquidity stress test indicates a reduction in FHLB borrowing capacity to $[•]. Zions Response to 

OFR Information Request (June 29, 2018), p. 3.
 

33

The order in which Zions may liquidate assets in the event of its material financial distress is a 

factor in the extent of any fire sale risk but is subject to considerable uncertainty. Zions could 

liquidate a significant portion of its highly liquid assets rapidly, reducing the likelihood that the 

company would be forced to liquidate illiquid assets in the event of its material financial distress. 

However, in the event of the company’s material financial distress, the company may also be 

expected to seek to maintain risk-based capital ratios and satisfy other requirements above the 

minimum levels set by regulatory authorities. Doing so might require Zions to sell a mix of 

assets across a number of asset classes, rather than proceed with sales of assets in order from 

most to least liquid. Further, in the event of a significant market disruption, there could be a 

meaningful first-mover advantage to selling less-liquid assets first. For example, markets for 

less-liquid assets could be prone to disruption in the event that a forced seller liquidated a large 

portion of its portfolio of those assets. Given these potential discounts, in some circumstances 

Zions may be incentivized to sell a portion of its less-liquid assets first and to hold U.S. 

government securities and agency MBS, which tend to increase in value during a period of 

market turmoil. To the extent that Zions’ assets are encumbered (for example, as collateral for 

FHLB loans), Zions would need to sell less-liquid assets to fund its liquidity needs. Further, the 

company’s holdings of liquid assets could be reduced before it enters material financial distress. 

Potential Impact of Asset Liquidation on Financial Markets

One approach to assessing the potential fire-sale impact of a rapid liquidation of assets by Zions 

is to compare its amounts of assets in individual asset types to the average daily trading volume 

(ADTV) of those assets on a market-wide basis. This ratio provides insight into the ability of the 

market to absorb Zions’ assets if the company were forced to liquidate its asset portfolio or if 

market participants were concerned that the company might do so. 

Zions’ holdings of highly liquid assets and municipal bonds are smaller than the ADTVs in these

markets, in some cases significantly so. In 2017, the ADTVs for U.S. Treasury securities, U.S. 

agency securities, agency MBS, and municipal securities were $505 billion, $4.1 billion, $209

billion, and $11 billion, respectively.78 On this basis, it appears highly unlikely that fire sales of 

these assets by Zions could disrupt these markets. Notably, Zions holds an insignificant amount 

of corporate bonds, non-agency MBS, and non-agency asset-backed securities.

In the event of Zions’ material financial distress, it could seek to sell assets other than its highly 

liquid assets and municipal bonds in order to raise needed liquidity. In particular, the company 

could sell a portion of its $44 billion loan portfolio. However, because loans are typically highly 

illiquid, it may be difficult for the company to sell its loans in a short period of time without 

accepting a large discount from the face value of the loans. 

Zions’ loan portfolio predominantly consists of CRE ($19 billion), C&I ($11 billion), and 

residential mortgage loans including home equity lines of credit ($10 billion).

79 The company 

has smaller holdings of consumer loans, agricultural loans, and certain other loans and leases. 

Because banks and nonbank financial companies issue loans of similar types, these loans could 

 78 SIFMA, US Bond Market Trading Volume, available at https://www.sifma.org/resources/research/us-bondmarket-trading-volume. 79 Zions Bancorporation Federal Reserve Form Y-9C as of December 31, 2017. 
 

34

be viewed as types that are commonly held among financial market participants. Furthermore, 

CRE and residential mortgage loans are commonly pledged as collateral against advances from 

the FHLB System. 

Due to low trading activity, data on trading volumes in CRE, C&I, and residential mortgage 

loans are unavailable. However, Zions’ loans could be compared to the total size of these 

markets, measured by loan amounts outstanding. There is approximately $4.1 trillion80 in 

outstanding CRE debt, $2.1 trillion81 in outstanding C&I loans (issued by U.S. commercial 

banks), and $11 trillion82 in U.S. residential mortgage debt outstanding. While it is difficult to 

forecast with precision how a fire sale of Zions’ loan portfolio may disrupt these markets, the 

company’s holdings of each asset class are very small relative to the total amount outstanding of 

the asset class, reducing the potential for such a fire sale to disrupt those markets or to impair 

other investors in these categories of assets. 

Further, loans are often highly idiosyncratic instruments in terms of their credit quality. In 

particular, while loans within a broad category, such as CRE, could be widely held or used as 

collateral, loans that are specific to a borrower, maturity, or funding terms are not. For this 

reason, a disruption in the specific markets in which Zions operates, such as by type of borrower 

within a particular region, could have a smaller negative effect on U.S. financial stability than a 

disruption in other types of asset markets. 

Potential Impact of Asset Liquidation on Other Financial Institutions

Another approach to analyzing the potential effects of a liquidation of assets by Zions is to assess 

the relative impact that fire sales by various financial institutions could have on other financial 

institutions.

83 This analysis attempts to assess the effect of a firm’s fire sale on the balance 

sheets of other firms holding the same or similar assets. The analysis starts by assuming a 

negative shock to the net worth of a firm or group of firms (an “equity shock”). Such a shock 

would raise the firm’s leverage and decrease the equity cushion protecting the firm’s creditors. 

In attempting to return to the company’s original leverage, the company would have to rapidly 

sell assets. Such a fire sale of assets could directly affect the balance sheets of firms that hold the 

same or similar assets, thus spreading the negative effects of its distress to other firms. As a 

robustness check, the analysis employs a second scenario and assumes a downward shock to the 

value of assets of a firm or group of firms (an “asset shock”).84

 80 Calculated as the sum of (1) nonfarm, nonresidential ($2.7 trillion) and (2) multifamily residential ($1.3 trillion) 

mortgage debt outstanding as of December 31, 2017. See Board of Governors, Mortgage Debt Outstanding (June 

2018), available at http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm. 81 Federal Reserve Bank of St. Louis Economic Research: Commercial and Industrial Loans, All Commercial Banks 

(citing Board of Governors), available at https://fred.stlouisfed.org/series/BUSLOANS. 82 Including mortgages on one- to four-family residences as of December 31, 2017. See Board of Governors, 

Mortgage Debt Outstanding (June 2018), available at 

http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm. 83 The analysis considers the framework proposed in Greenwood, Landier and Thesmar, Vulnerable Banks, Journal 

of Financial Economics 115 (3) (2015), and extensions by Duarte and Eisenbach, Fire-Sale Spillovers and Systemic 

Risk, Federal Reserve Bank of New York Staff Report 645 (2015). 84 While more-leveraged firms must sell more assets in both scenarios, the asset shock scenario requires leveraged 
 

35

As noted above, a firm’s asset size and leverage relative to other financial firms will affect the 

relative impact of a rapid liquidation of assets by that firm. For instance, firms that are small 

relative to the market can sell a volume of assets that can be easily absorbed, but larger firms will 

necessarily sell larger volumes of assets that may not be so easily absorbed. In addition, the 

market impact of asset sales by a financial firm will also depend on the firm’s asset profile,

because rapid fire sales of assets that are held by other financial firms would likely have a more 

pronounced effect on the financial system.

Because Zions’ asset holdings are small relative to the market sizes of those asset classes, this 

analysis indicates that its asset liquidation would likely have a limited effect on other market 

participants. In an analysis of a sample of large financial companies, Zions ranked 47th and 

44th, respectively, with respect to the impact of equity and asset shocks (see Appendix C). 

These analyses indicate that there is not a significant risk that an asset liquidation by Zions 

would disrupt trading or funding in key markets or cause significant losses or funding problems 

for other firms with similar holdings.

5.4 Critical Function or Service Transmission Channel

Under the critical function or service transmission channel, the Council considers whether a

nonbank financial company may no longer be able or willing to provide a critical function or 

service that is relied upon by market participants or customers and for which there are no ready 

substitutes. Market share is one useful proxy for substitutability of an institution; all other things 

being equal, an institution with a large market share will be more difficult for competitors to 

replace in a short period of time than an institution with a smaller market share. Market 

concentration is another useful proxy for substitutability, because highly concentrated markets 

are often less competitive than less-concentrated markets, and other market participants may be 

better positioned to fill a void in a highly competitive market. 

Zions’ most significant services to its customers and counterparties are making loans 

(particularly CRE, C&I, and residential mortgage loans) and taking deposits. 

Zions does not appear to have a large enough share of any critical market to disrupt the provision 

of services if it experiences material financial distress and is unable or unwilling to provide

services. 

Deposits 

Accepting deposits is a critical service that U.S. banks provide to individuals, businesses, and 

governments. Depositors rely on banks to safeguard their money. Transaction deposit accounts 

provide bank customers with ready access to their cash. Non-transaction accounts, such as 

savings and money market deposit accounts, provide bank customers with the ability to accrue 

interest. 

 firms to sell significantly more assets to return to their steady state. 
 

36

As discussed above, Zions has $53 billion in deposit liabilities, mostly in non-transaction 

accounts, with 76 percent of the total in money market deposits, 10 percent in other savings, 8.5

percent in transaction deposits, and 5.9 percent in time deposits. Individuals, partnerships, and 

corporations provide the company with 97 percent of its total deposits, while U.S. states, political 

subdivisions, and depository institutions constitute the balance. 

Deposits at U.S. commercial banks totaled $12 trillion as of December 27, 2017.85 Zions’ 

deposits represent a small share of total U.S. commercial bank deposits, at less than 0.5 percent. 

Further, the market for taking deposits is competitive, with 5,670 FDIC-insured banking 

institutions as of the fourth quarter of 2017.86 

At the same time, Zions does have a strong deposit presence in certain states. In particular, in 

Utah, when considering only retail branches, Zions has a deposit market share of approximately 

25 percent (excluding 12 banks with only one branch in Utah where that branch is used to gather 

online deposits, brokered deposits, municipal deposits, health savings accounts or sweep 

deposits).

87 This market share figure would be lower if deposits drawn through the Internet and 

other methods were taken into account. In general, it does not appear that the state and regional

product-specific markets in which Zions has a strong presence are sufficiently sizeable or 

interconnected with the broader financial system such that the negative effects on those markets 

of material financial distress at Zions would pose risks to U.S. financial stability.

Commercial Real Estate Loans

CRE loans are used to finance the purchase of commercial property. These loans are generally 

secured by liens on the property. The market for CRE loans is large, competitive, and 

fragmented, with approximately $4.1 trillion in total CRE debt outstanding.88 Zions holds a 

CRE portfolio of $19 billion,89 which represents a market share of less than 0.5 percent. 

Because the CRE loan market does not appear to be highly concentrated, and because there are 

numerous CRE loan holders, it would not be difficult for other firms to substitute for the lost 

capacity if Zions exited this market.

Commercial and Industrial Loans

C&I loans are used to finance certain business needs, including inventory, working capital, and 

investments in plant and equipment. There are $2.1 trillion in C&I loans issued by U.S. 

 85 Federal Reserve Bank of St. Louis Economic Research: Deposits, All Commercial Banks (citing Board of 

Governors), available at https://fred.stlouisfed.org/series/DPSACBW027SBOG. 86 FDIC Quarterly Banking Profile, Fourth Quarter 2017, p. 5, available at 

https://www.fdic.gov/bank/analytical/qbp/2017dec/qbp.pdf. 87 Without this adjustment, ZB ranks 7th in Utah, with a 3.6 percent market share. FDIC Summary of Deposits: 

Deposit Market Share Report as of June 30, 2017. 88 Calculated as the sum of (1) nonfarm, nonresidential ($2.7 trillion) and (2) multifamily residences ($1.3 trillion) 

mortgage debt outstanding as of December 31, 2017. See Board of Governors, Mortgage Debt Outstanding (June 

2018), available at http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm. 89 Zions Bancorporation Federal Reserve Form Y-9C as of December 31, 2017, p. 19. CRE loans include 

construction and development loans, loans secured by multifamily properties, and loans secured by nonfarm, 

nonresidential real estate. 
 

37

commercial banks outstanding.90 The C&I loan market is relatively concentrated, with the three 

largest U.S. banks by total consolidated assets holding approximately one-quarter of outstanding 

C&I loans.

91 Zions’ C&I loan portfolio totals $11 billion,92 which represents a small market 

share of approximately 0.5 percent. 

Other Loans

In addition to its CRE and C&I loans, Zions has $9.8 billion in residential mortgages, $0.7 

billion in consumer loans, $0.5 billion in agricultural loans, and $4.0 billion in other loans and 

leases.93 As outstanding loans in residential housing, consumer, and agricultural loans total 

$10.6 trillion,94 $2.8 trillion,95 and $385 billion,

96 respectively, Zions represents a very small 

share of each of these markets. 

Other Products and Services

Banks provide other critical services to U.S. financial markets besides making loans and 

receiving deposits. These services include provide payment, clearing, and settlement services, 

acting as a custodian for assets, and underwriting, among other services. 

Zions has a minimal role in payments, clearing, and settlement. Zions had $544 billion97 in total 

payments activity in 2017, of which over 99 percent were payments in U.S. dollars, representing 

a small share of U.S. dollar payments in that year.98 Further, Zions does not provide a 

significant quantity of clearing or settlement services to market participants. Zions also has a 

small presence in the asset custody and underwriting markets. Zions held $7.2 billion99 of assets 

as a custodian on behalf of customers, representing a small share of total U.S. assets under 

custody.100 Zions underwrote $133 million in debt security offerings in 2017,

101 representing a 

 90 Federal Reserve Bank of St. Louis Economic Research: Commercial and Industrial Loans, All Commercial Banks 

(citing Board of Governors), available at https://fred.stlouisfed.org/series/BUSLOANS. 91 See Federal Reserve Form Y-9C as of December 31, 2017, for JP Morgan Chase, Bank of America, and Wells 

Fargo. 

92 Zions Bancorporation Federal Reserve Form Y-9C as of December 31, 2017, p.19.

93 Zions Bancorporation Federal Reserve Form Y-9C as of December 31, 2017, p. 19. Residential mortgage loans 

include home equity lines of credit, junior liens, and other loans secured by residential real estate. Agricultural loans 

include production loans and loans secured by farm real estate. 

94 Including mortgages on one- to four-family residences. See Board of Governors, Mortgage Debt Outstanding 

(June 2018), available at http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm. 95 Board of Governors, Consumer Credit – G.19, available at https://www.federalreserve.gov/releases/g19/current. 96 U.S. Department of Agriculture Economic Research Service: Summary of U.S. Farm Income Financial 

Indicators, available at https://www.ers.usda.gov/data-products/farm-income-and-wealth-statistics/data-files-us-andstate-level-farm-income-and-wealth-statistics. 97 Zions Bancorporation Federal Reserve Form Y-15 as of December 31, 2017, p. 3. 

98 For context, the four largest U.S. bank holding companies by total consolidated assets made $463 trillion in total 

U.S. dollar payments in 2017. See Federal Reserve Form Y-15 as of December 31, 2017, for JPMorgan Chase, 

Bank of America, Wells Fargo, and Citigroup. 

99 Zions Bancorporation Federal Reserve Form Y-15 as of December 31, 2017, p. 3. 100 For context, the four largest U.S. bank holding companies by total consolidated assets held $43 trillion in total 

assets under custody. See Federal Reserve Form Y-15 as of December 31, 2017, for JP Morgan Chase, Bank of 

America, Wells Fargo, and Citigroup. 101 Zions Bancorporation Federal Reserve Form Y-15 as of December 31, 2017, p. 4.
 

38

very small share of the total U.S. debt market issuance in 2017.102 Zions underwrote no equity 

security offerings in 2017.

103 Consequently, material financial distress at Zions would not 

disrupt the provision of these services to the U.S. financial system. 

Provision of Credit to State and Local Governments

Zions holds approximately $2.1 billion of debt issued by state and local governments.

104 In 

some cases, its holdings account for a large share of a particular issuer’s total debt outstanding. 

For example, Zions owns [•] percent of the debt issued by the [•] (see Table 18). However, 

Zions’ holdings of state and local government obligations are small relative to the size of these 

markets. In particular, Zions’ municipal debt portfolio is a small share of the estimated $3.9

trillion105 of total U.S. municipal securities outstanding. This portfolio is also small relative to 

the municipal securities holdings of banking institutions in the United States,

106 which 

collectively hold $594 billion of such securities.

107 Given the small size of its holdings, if Zions

were no longer able to participate as a buyer in this market, it does not appear that there would be 

an adverse impact on the liquidity or pricing of these securities.

Table 18: Zions’ 10 Largest Investments in State and Local Government Entities ($ 

Millions)

Issuer State Investment 

($ Millions)

Percent of Issuer’s 

Debt Outstanding

[•] [•] [•] [•]

Source: Zions Submission, Annex 2, p. 6. 

Provision of Credit to Low-Income, Minority or Underserved Communities

Zions provides credit to low-income, minority or underserved communities through mortgage 

lending and community development lending. In 2017, Zions originated $[•] of Home Mortgage 

Disclosure Act (HMDA) loans in low-income areas and $[•] of HMDA loans in moderateincome areas.108 In 2017, Zions originated $[•] of community development loans. Zions’

community development lending included $[•] for affordable housing, $[•] for community 

service, $[•] for economic development, and $[•] in loans under the U.S. Small Business 

Administration’s 504 loan program (a form of long-term fixed-rate financing for approved small 

 102 SIFMA, US Bond Market Issuance and Outstanding, available at https://www.sifma.org/resources/research/usbond-market-issuance-and-outstanding. In 2017, U.S. corporate bond issuance totaled $1.6 trillion, and municipal 

bond issuance totaled $448 billion. 

103 Zions Bancorporation Federal Reserve Form Y-15 as of December 31, 2017, p. 4. 104 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 52 105 SIFMA, US Municipal Securities Holders, available at https://www.sifma.org/resources/research/us-municipalsecurities-holders. 106 Includes U.S. chartered depository institutions, foreign banking offices in the United States, banks in U.S. 

affiliated areas, credit unions, and broker-dealers. 107 SIFMA, US Municipal Securities Holders, available at https://www.sifma.org/resources/research/us-municipalsecurities-holders. 108 Zions Submission, Annex 2, p. 6. 
 

39

businesses).

109 In light of the small dollar amounts of Zions’ lending, Zions does not appear to 

be a critical provider of loans to these markets. 

6. COMPLEXITY AND RESOLVABILITY 

The Council’s Interpretive Guidance notes that the potential threat to U.S. financial stability 

posed by a nonbank financial company’s material financial distress may be mitigated or 

aggravated by the company’s complexity, the opacity of its operations, or its resolvability. 

The Interpretive Guidance identifies factors that are relevant to the analysis of a company’s 

resolvability, including the complexity of the company’s legal, funding, and operational 

structure; obstacles to a rapid and orderly resolution; and legal entity and cross-border 

operations.

110

Legal Structure

Zions Bancorporation is a financial holding company headquartered in Salt Lake City, Utah. 

Zions Bancorporation provides administrative support, strategic oversight, and capital markets 

access to ZB, its sole operating subsidiary.111 In its resolution plan dated December 31, 2017, 

Zions Bancorporation identified ZB as its sole material entity under Title I of the Dodd-Frank 

Act. 

ZB was formed through the merger of Zions Bancorporation’s eight subsidiary banks in 2015.112 

As discussed in section 4, ZB accounts for approximately 99.7 percent of the total consolidated 

assets and 99.7 percent of the revenues of Zions Bancorporation. Zions Bancorporation and its 

two nonbank subsidiaries113 account for the remainder of the company’s assets and revenues. 

Zions has stated that, as part of the Merger, [•] will be [•], and the other nonbank subsidiary will 

be contributed to and become a wholly owned subsidiary of ZB.

114 Zions has also stated that ZB 

will hold 100 percent of Zions’ assets.

115 Zions has no foreign operations.116 

Funding and Derivatives Management

The complexity of a financial company can be driven by the nature and amount of its funding 

and derivatives activity. Certain types of funding, such as funding between company affiliates or 

across jurisdictions, could increase the complexity of a financial company and make its

 109 Zions Submission, Annex 2, p. 6. 110 Interpretive Guidance at III.c. 111 Zions Bancorporation Resolution Plan: Public Executive Summary as of December 31, 2017, pp. 3-4. 112 Zions Bancorporation Resolution Plan: Public Executive Summary as of December 31, 2017, p. 3. 113 The only nonbank subsidiaries of Zions Bancorporation as of March 31, 2018, were Great Western Financial 

Corporation and Amegy Holding Texas, Inc. As of December 31, 2017, Zions Bancorporation had one additional 

nonbank subsidiary. Federal Financial Institutions Examination Council National Information Center: Organization 

Hierarchy of Zions Bancorporation, available at 

https://www.ffiec.gov/nicpubweb/nicweb/OrgHierarchySearchForm.aspx?parID_RSSD=1027004&parDT_END=99

991231. 114 Zions Submission, Annex 2, p. 7. 115 Zions Submission, p. 7. 116 Zions Bancorporation Resolution Plan: Public Executive Summary as of December 31, 2017, p. 14.
 

40

resolution more difficult. Certain types of derivatives transactions, such as those that are highly 

customized or difficult to value, could have a similar effect on a company’s complexity and 

resolvability. 

As discussed in section 4.1, ZB is primarily deposit-funded, with deposits representing 91

percent of the company’s total liabilities.

117 Non-transaction accounts (including money market 

deposit accounts) constitute 92 percent of the company’s total deposits, while transaction 

accounts (including demand deposits) constitute the balance. Individuals, partnerships, and 

corporations provide ZB with 97 percent of its deposit funding, with states, U.S. political 

subdivisions, and commercial banks and other U.S. depository institutions providing the 

remainder of total deposits.118

Short-term wholesale funding and other liabilities represent the remaining 9 percent of ZB’s 

liabilities, at $6.0 billion.119 Short-term advances from the FHLB System comprise $3.6 billion 

of this amount, with all short-term advances provided by the FHLB of Des Moines.

120 The

maturities of these advances appear staggered, with $[•] maturing in 30 days or less, $[•]

maturing between 31 and 60 days, and $[•] maturing between 61 and 90 days.

121 Zions has $354

million in outstanding repo,

122 with funding provided by [•] counterparties.123 Zions has $927 

million in federal funds purchased,

124 with [•] percent of the total provided by [•] institutions.125 

Long-term debt, reserves for unfunded lending commitments, and other liabilities represent the 

balance of Zions’ total funding at $383 million, $58 million, and $500 million, respectively.126 

Derivatives are an additional source of liabilities of ZB. To the extent that Zions’ derivatives 

positions fall in value, the company may be forced to post additional margin against these 

positions or unwind them. The company has stated that its objectives in using derivatives are 

primarily to modify the duration of specific assets, liabilities, or equity; to manage exposure to 

interest rate movements or other identified risks; and to directly offset derivatives sold to 

customers of the company. The company has also stated that its derivatives that are not 

designated as accounting hedges, including basis swap agreements, are not speculative and are 

used to manage the company’s exposure to interest rate movements and other identified risks.

127

Zions has $6.8 billion in total derivatives gross notional exposure, with $5.9 billion in interest 

rate swaps and the balance in foreign exchange derivatives.128 Of the company’s $5.9 billion in 

interest rate swaps, the company has $1.1 billion in derivatives that are specifically designated as 

hedging instruments. The company has $4.6 billion in interest rate swaps for customers, 

 117 ZB Call Report as of December 31, 2017, p. 14. 118 ZB Call Report as of December 31, 2017, p. 28. 

119 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 88. 120 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, pp. 75-76. 121 Zions Submission, Annex 2, p. 5. 122 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 123 Zions Submission, Annex 2, p. 1. 124 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 131. 125 Zions Response to OFR Information Request (June 7, 2018), p. 4. 126 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 88. 127 Zions Bancorporation Resolution Plan: Public Executive Summary as of December 31, 2017, p. 10. 128 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 128.
 

41

including both customer swaps and any offsetting derivative contracts, and $0.2 billion in other 

interest rate swaps.129 With respect to its interest swaps for customers, the company has stated 

that, upon issuance, all swaps are immediately hedged by offsetting derivative contracts, such 

that the company minimizes its net risk exposure resulting from such transactions.130 Of the 

company’s $5.9 billion in interest rate swap positions, $[•] are cleared with [•] CCPs, and $[•]

represent positions with the company’s [•] dealer counterparties.

131

Operational Structure and Cross-Border Operations

ZB operates under the eight regional brands that were formerly used by its individual 

subsidiaries: Zions First National Bank; California Bank & Trust; Amegy Bank; National Bank 

of Arizona; Nevada State Bank; Vectra Bank Colorado; The Commerce Bank of Washington; 

and The Commerce Bank of Oregon. Across these eight brands, ZB operates 433 branches, with 

approximately 100 in each of Utah and California. The company also operates between 50 and 

100 branches in each of Texas, Arizona, and Nevada.132 The company has approximately 10,000

full-time-equivalent employees. Importantly, Zions has no cross-border operations. 

Resolution

The failure of ZB would rank among the largest U.S. bank failures. However, the legal 

framework for the resolution of the company after consummation of the Merger would be 

straightforward. As a single insured depository institution, ZB would be resolved by the FDIC 

under the Federal Deposit Insurance Act if it were to fail. Neither the Bankruptcy Code nor the 

Orderly Liquidation Authority will be applicable to ZB after the Merger. The Council’s decision 

with respect to ZB’s appeal will not affect the FDIC’s exercise of its insured depository 

institution resolution authorities. If the company were to fail, its expected post-Merger legal and 

operational structure does not appear to have features that would increase the likelihood of a 

disorderly resolution that would pose a threat to U.S. financial stability. Further, in light of the 

analysis set forth in section 5 regarding the transmission channel analysis, any difficulty to 

resolve Zions does not lead to a conclusion that Zions’ material financial distress could pose a 

threat to U.S. financial stability.

7. EXISTING REGULATORY SCRUTINY

In making a determination regarding a nonbank financial company under section 113 of the 

Dodd-Frank Act, the Council considers the extent to which the company is already subject to 

regulation and supervision by federal and state regulators and the extent to which this 

supervision and regulation may mitigate risks to financial stability identified by the Council. 

In the case of an appeal submitted to the Council under section 117 of the Dodd-Frank Act, the 

context is different: The Council is evaluating the entity’s request not to be treated as a nonbank 

financial company subject to supervision by the Board of Governors. Under section 117, 

 129 Zions Bancorporation Annual Report on Form 10-K for the year ended December 31, 2017, p. 128. 130 Zions Bancorporation Resolution Plan: Public Executive Summary as of December 31, 2017, p. 11. 131 Zions Submission, Item A1. 132 FDIC, Institution Directory, available at https://www5.fdic.gov/idasp/advSearchLanding.asp. 
 

42

therefore, the Council instead considered the extent to which the company would be subject to 

regulation and supervision if the Council were to grant the company’s request and the company 

were no longer subject to supervision by the Board of Governors. The factors the Council will 

consider in this regard are the same as those identified by the Council in its Interpretive 

Guidance. As relevant to ZB, these include whether regulators impose capital and liquidity 

requirements, have the authority to bring enforcement actions, impose detailed and timely 

reporting obligations, and have the ability to resolve the company, as well as the existence and 

effectiveness of consolidated supervision.133

7.1 Supervision and Regulation 

6.1.1 Supervision and Regulation by the Board of Governors

The Board of Governors exercises consolidated supervision of all bank holding companies, 

including Zions Bancorporation, under the Bank Holding Company Act and other applicable 

laws. In addition, pursuant to section 165 of the Dodd-Frank Act, the Board of Governors is 

required to impose enhanced prudential standards on any nonbank financial company that the 

Council has determined shall be subject to supervision by the Board of Governors.134 ZB, as the 

successor entity of Zions Bancorporation, would be subject to supervision by the Board of 

Governors and treated as a nonbank financial company subject to section 165 of the Dodd-Frank 

Act upon consummation of the Merger if the Council were not to grant ZB’s appeal under 

section 117. 

The Board of Governors indicated in adopting its regulations implementing section 165 that it 

would review each nonbank financial company to determine how the enhanced prudential 

standards should apply and tailor the standards appropriately, taking into account differences 

among nonbank financial companies and large bank holding companies.135 The Board of 

Governors also indicated that for those nonbank financial companies whose activities and risk 

profile are similar to bank holding companies, which would include ZB as the successor entity to 

Zions Bancorporation, the Board of Governors expects to apply enhanced prudential standards 

that are similar to those that apply to bank holding companies.136 

In addition, the Board of Governors imposes on bank holding companies such as 

Zions Bancorporation a regulatory capital framework of minimum risk-based and leverage 

capital ratios.137 Bank holding companies of any size are also subject to limitations on the types 

 133 Interpretive Guidance at II.d.2. 134 Pursuant to section 165 of the Dodd-Frank Act, as amended by the Economic Growth, Regulatory Relief, and

Consumer Protection Act, Pub. L. No. 115-174 (May 24, 2018), the Board of Governors applies enhanced prudential 

standards to bank holding companies with $250 billion or more in total consolidated assets and nonbank financial 

companies supervised by the Board of Governors. In addition, the Board of Governors has the authority to apply 

any such standard to bank holding companies with $100 billion or more in total consolidated assets if it determines 

that application of the standard is appropriate to prevent or mitigate risks to U.S. financial stability or to promote 

safety and soundness. 

135 79 Fed. Reg. 17240, 17245 (Mar. 27, 2014). 136 79 Fed. Reg. 17240, 17245 (Mar. 27, 2014). 137 See 12 C.F.R. part 217.
 

43

of activities in which they are permitted to engage and on their ability to make acquisitions under 

the Bank Holding Company Act and implementing regulations.138

In addition, as part of its supervision and oversight of bank holding companies, the Board of 

Governors evaluates the effectiveness and quality of those companies’ governance and 

management in conducting safe and sound operations and complying with applicable laws and 

regulations.139 The Board of Governors’ approach in its supervision of bank holding companies 

includes an emphasis on a firm’s management of risks in light of that firm’s risk profile and 

characteristics. Among other things, the Board of Governors considers how effectively a firm’s 

board of directors oversees the development of the firm’s strategy, risk appetite, and senior 

management and holds them accountable; supports the stature and independence of the firm’s 

independent risk management and internal audit functions; and adopts effective governance 

practices. 

7.1.2 Supervision and Regulation by the OCC

The OCC supervises and regulates ZB. The organization is also subject to “back-up” 

supervision by the FDIC and is subject to supervision and regulation by the Bureau of Consumer 

Financial Protection with respect to consumer financial law. 

Upon consummation of the Merger, ZB would continue to be subject to supervision and 

regulation by the OCC, the FDIC, and the Bureau of Consumer Financial Protection. In 

addition, the Board of Governors has some additional supervisory and regulatory authority over 

national banks such as ZB.140 The OCC would continue to deploy its supervisory tools to 

supervise ZB, which the Merger would leave generally unchanged from the entity that the OCC 

currently supervises.141 

ZB is chartered as a national bank. National banks are highly supervised and regulated 

institutions that are limited as to their powers and activities under federal law. Under the 

National Bank Act, administered by the OCC, national banks may only engage in activities that 

are part of, or incidental to, the business of banking, or are otherwise authorized by law. Their 

activities are subject to a variety of requirements, including capital adequacy standards,142

lending limits,143 restrictions on transactions with affiliates,144 restrictions regarding investment 

securities,145 and restrictions on loans to insiders.146

 138 12 U.S.C. §§ 1842–1843; 12 C.F.R. §§ 225.11–225.17, 225.21–225.28.

139 Board of Governors, Supervision & Regulation Letter 12-17 re: Consolidated Supervision Framework for Large 

Financial Institutions (Dec. 17, 2012).

140 See 12 U.S.C. §§ 248(a), 483. 141 Zions Bancorporation’s activities or assets that are nonconforming for a national bank are very limited 142 12 C.F.R. part 3. 143 12 U.S.C. § 84; 12 C.F.R. part 32. 144 12 U.S.C. §§ 371c, 371c-1; 12 C.F.R. part 223 145 12 U.S.C. § 24(Seventh); 12 C.F.R. part 1. 146 12 U.S.C §§ 375a, 375b; 12 C.F.R. part 215.
 

44

Examination Process

The core of the OCC’s supervision of national banks is the examination process. The OCC’s 

examination cycle provides for ongoing supervision of institutions such as ZB. The OCC is 

required to conduct a full-scope, on-site examination at least once during each 12-month 

period.147 If the OCC determines it would be necessary or appropriate, the OCC may schedule 

examinations more frequently. The OCC also conducts targeted examinations, which may focus 

on particular products, functions, risks, or specialty areas. The purpose of the examination 

process is to ensure that national banks operate in a safe and sound manner and comply with 

laws and regulations. As described below, ZB is subject to continuous supervision by a resident 

examination team, with risk assessments and target examinations of key risk areas. This 

supervisory work culminates in an annual examination report reflecting all of the supervisory 

work completed during the examination cycle. 

Within the OCC, ZB is supervised by the Midsize Bank Supervision office. That office’s 

portfolio is comprised of 28 national banks and federal savings associations primarily ranging in 

size from $10 billion to $80 billion in assets. The Midsize Bank Supervision office evaluates the 

portfolio banks across a number of measures, including the effectiveness of management and 

overall corporate governance in managing risk. For example, OCC examiners ensure that banks 

such as ZB adhere to stress-testing processes as part of their established risk governance and 

capital planning processes. 

With respect to corporate governance and risk management specifically, in 2014 the OCC 

adopted enforceable guidelines for governance and risk management practices applicable to 

insured national banks with $50 billion or more in average total consolidated assets.148 The 

guidelines provide that such institutions must establish and adhere to a written risk governance 

framework to manage and control their risk-taking activities. 

Each institution in the Midsize Bank Supervision office’s portfolio has a dedicated examiner in 

charge. For larger institutions, including ZB, there is full-time staff assigned to each core risk 

area, including commercial and retail credit, capital markets, bank information technology, asset 

management, compliance, and operational risk governance. Currently, the OCC has 10 

examiners assigned to ZB. 

Capital and Liquidity

With respect to capital adequacy, the OCC has established minimum capital requirements that all 

national banks must meet. These standards include three risk-based capital ratios—a common 

equity Tier 1 capital ratio, a Tier 1 capital ratio, and a total capital ratio, each of which includes 

 147 12 U.S.C. § 1820(d); 12 C.F.R. § 4.6. Other federal laws mandate particular subjects for examination at 

prescribed frequencies, such as compliance with the Bank Secrecy Act and the requirements of the national flood 

insurance program.

148 12 C.F.R. 30 appendix D. The OCC has also adopted enforceable guidelines for recovery planning applicable to 

insured banks with average total consolidated assets greater than $50 billion, such as ZB. See 12 C.F.R 30 appendix 

E. These guidelines are in addition to resolution-planning requirements adopted by the FDIC for insured depository 

institutions at 12 C.F.R. § 360.10. 
 

45

an additional capital conservation buffer—as well as a risk-neutral leverage ratio. The OCC’s 

capital rules also authorize the OCC to require additional capital based on factors that are not 

explicitly covered by quantitative capital rules, including, for example, exposures to interest rate 

risk and credit concentrations. 

Banks such as ZB are subject to OCC liquidity requirements that include requirements to 

maintain a cushion of HQLA, develop and apply a formal contingent funding plan, conduct 

regular liquidity stress testing, monitor intraday liquidity, and manage collateral. The 

supervision of such banks’ liquidity risk management consists of assessing that the bank’s 

overall liquidity risk framework is consistent with sound liquidity risk management principles 

and practices as set forth in OCC and interagency guidance. Examiners expect such banks to 

have the ability to adequately forecast cash flows, measure and monitor unstable liabilities, and 

calculate metrics such as liquid asset coverage ratios. Examiners also focus on the bank’s 

corporate governance, liquidity risk monitoring and reporting, and liquidity risk tolerances and 

limits, and assure that the bank has appropriate controls, policies, and procedures to effectively 

monitor and manage the institution’s liquidity risk.

Enforcement and Resolution Authority

The OCC’s broad supervisory authority is supported by its similarly broad enforcement 

authority. The OCC may take enforcement actions against national banks for violations of laws, 

rules, regulations, final orders, or conditions imposed in writing, or for unsafe or unsound 

practices. Enforcement actions can be formal or informal. Informal enforcement actions include 

nonpublic enforcement actions such as commitment letters, memoranda of understanding, 

operating agreements, and the imposition of individual minimum capital ratios. When a bank’s 

deficiencies are severe, uncorrected, repeated, or unsafe or unsound or negatively affect the 

bank’s condition, the OCC may use formal enforcement actions. Formal enforcement actions 

include cease and desist orders, civil money penalty orders, capital directives, and prompt 

corrective action directives.149 Where a bank’s condition deteriorates and supervisory and 

enforcement action is not successful in remediating the bank, the OCC may appoint a receiver 

for a national bank based on certain enumerated grounds, including the bank having insufficient 

assets, being undercapitalized, being in an unsafe or unsound condition, or substantial dissipation 

of the bank’s assets.150

Prior Approval

National banks must obtain prior approval of the OCC before engaging in certain activities. For 

example, prior approval is required for a national bank to establish or relocate a branch or 

relocate its main or home office, increase or reduce its capital, offer fiduciary services or 

establish certain subsidiaries.151 In addition, a change in control of the bank cannot occur until 

the OCC issues a notice of non-disapproval.152 OCC approval is also required for various 

business combinations, including bank mergers, consolidations, reorganizations, and purchase 

 149 12 USC §§ 504, 1786, 1831o. 150 12 U.S.C. §§ 191(a)(1), 1821(c)(2)(A)(ii), 1821(c)(5). 151 12 U.S.C. §§ 36, 57, 59, 92a; 12 C.F.R. §§ 5.26, 5.30, 5.34, 5.46. 152 12 U.S.C. § 1817(j); 12 C.F.R. § 5.50. 
 

46

and assumption transactions, as well as substantial asset changes or changes in charter 

purposes.153 When reviewing bank merger applications made under the Bank Merger Act, the 

OCC is required to consider the risk to the stability of the U.S. banking or financial system.154

Reports

As an adjunct to the OCC’s examination authority, the agency can require national banks to 

submit reports as to any matter relating to the performance of the OCC’s supervisory functions. 

Pursuant to this authority, the OCC requires each national bank to submit various reports on the 

results of its operations, including quarterly Consolidated Reports of Condition and Income (Call 

Reports), Reports of Indebtedness of Executive Officers and Principal Shareholders, and PastDue Loan Reports. 

Consolidated Regulation of Bank Subsidiaries

The OCC has authority to examine affiliates of national banks, including subsidiaries.155 The 

OCC’s supervisory approach takes into account current and planned activities of all related 

entities to determine how much risk they pose to the bank. An assessment of the overall safety 

and soundness of a bank includes a review of related organizations to determine whether the 

activities of those related entities mitigate or increase the risks borne by the bank. 

7.2 Regulator Consultations

On June 21, 2018, the Nonbank Designations Committee consulted with staff from the OCC, the 

FDIC, and the Board of Governors regarding Zions. Matters raised during these consultations 

are addressed herein where relevant.

8 CONCLUSION

For the reasons discussed herein, the Council has made a proposed decision to grant, subject to 

the conditions set forth below, ZB’s appeal under section 117 of the Dodd-Frank Act, such that, 

upon the consummation of the Merger, ZB shall not be treated as a nonbank financial company 

supervised by the Board of Governors. 

If the Council makes a final decision to grant ZB’s appeal under section 117, the Council intends 

to condition its decision on the Merger being consummated, in accordance with the terms of the 

Merger Agreement, within 90 days after the Council’s final decision. 

Not later than 60 days after the date of the written hearing before the Council regarding ZB’s 

appeal under section 117, the Council must submit a report to, and may testify before, the 

Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on 

Financial Services of the House of Representatives on the Council’s proposed decision. Under 

section 117, the Council must notify ZB of the final decision of the Council not later than 60 

 153 12 U.S.C. § 1828(c); 12 C.F.R. §§ 5.33, 5.53. 154 12 U.S.C. § 1828(c)(5)(B). 155 12 U.S.C. § 481.
 

47

days after the later of (1) the submission of the Council’s proposed decision to the two 

Congressional committees or (2) if, within one year after the date of submission of the Council’s 

proposed decision to the two Congressional committees, either of those committees holds one or 

more hearings regarding the proposed decision, the date of the last such hearing. In order to 

comply with the statutory deadline, the Council intends to issue its final decision within 60 days 

after its proposed decision unless, before the end of that 60-day period, at least one of the two 

Congressional committees has scheduled a hearing to be conducted within the year following the 

Council’s submission of the proposed decision to the committees.
 

48

APPENDIX A: ZIONS BANCORPORATION CONSOLIDATED BALANCE SHEET

Assets

Mortgage loans* 9,804

Commercial real estate loans** 18,632

Commercial and industrial loans 11,273

Consumer loans 690

Agricultural loans*** 459

Other loans and leases 3,966

Less: loan loss provisions and unearned income 562

Net loans and leases 44,262

Securities 15,932

Cash and balances due from depository institutions 1,329

Federal funds sold 227

Securities purchased under agreements to resell 287

Goodwill and other intangibles 1,044

All other assets 3,207

Total assets 66,288

Liabilities

Noninterest-bearing balances 3,918

Money market deposit accounts and other savings accounts 45,057

Interest-bearing demand dep., NOW, ATS, and other transaction accounts 532

Time deposits 3,114

Total deposits 52,621

Federal funds purchased 927

Securities sold under agreement to repurchase 354

Other borrowed money 3,736

All other liabilities 971

Total liabilities 58,609

Total equity 7,679

Source: Zions Bancorporation Federal Reserve Form Y-9C as of December 31, 2017.

*Mortgage loans include home equity lines of credit, junior liens and other loans secured by residential real estate. 

**Commercial real estate loans include construction and development loans, loans secured by multifamily 

properties, and loans secured by nonfarm, nonresidential real estate. 

***Agricultural loans include production loans and loans secured by farm real estate.
 

49

APPENDIX B: SYSTEMIC IMPORTANCE SCORES UNDER THE BASEL 

METHODOLOGY

*Banks not required to report this data in 2015.

Source: Basel Committee on Banking Supervision; Federal Reserve Form Y-15 as of December 31, 2016; Office of 

Financial Research analysis, available at https://www.financialresearch.gov/gsib-scoreschart/files/GSIB_Figures_Dec21.pdf. Scores for each systemic indicator are calculated by dividing an institution’s 

applicable indicator value by an aggregate global measure of that indicator. The resulting value for each systemic 

indicator is then multiplied by the prescribed weighting indicated in Table 2, and by 10,000 to reflect the result in 

basis points. 

Bank Holding 

Company Size

Total 

exposures 

score

Intrafinancial 

system assets

Intrafinancial 

system 

liabilities

Securities 

outstanding

Payments 

activity

Assets 

under 

custody

Underwriting 

activity

Amount of 

OTC derivatives

Adjusted 

trading & AFS 

securities

Level 3 

assets

Foreign 

claims

Total crossjurisdictional 

liabilities

JPMorgan Chase 405 393 413 426 1,199 1,369 741 797 724 440 329 404 467

Citigroup 300 232 388 334 679 831 622 748 416 369 404 439 410

Bank of America 348 274 125 371 471 178 774 568 576 274 193 171 347

Goldman Sachs 159 381 107 262 50 64 542 649 279 467 193 164 254

Wells Fargo 284 199 187 408 162 217 354 124 446 444 74 87 242

Morgan Stanley 134 246 47 179 45 104 449 455 472 286 153 192 213

Bank of NY Mellon 47 95 225 55 777 1,650 12 15 62 0 45 84 152

State Street 32 43 177 70 349 1,473 0 26 110 25 44 79 149

Credit Suisse U.S.* 36 36 101 1 235 9 241 17 64 89 44 48 69

Deutsche Bank Trust 31 21 90 0 418 5 118 36 98 12 41 5 64

Barclays U.S.* 36 55 31 10 237 2 273 84 62 9 43 8 63

Northern Trust 17 55 19 18 169 456 0 5 18 0 17 36 58

U.S. Bancorp 69 17 15 103 36 87 39 5 32 68 5 22 43

HSBC North America 48 60 37 43 16 8 85 114 32 74 17 0 43

PNC Financial Services 54 27 14 63 12 6 35 7 58 167 4 2 37

RBC U.S.* 21 21 22 1 43 20 293 4 28 5 3 6 34

Charles Schwab 28 21 0 41 1 187 0 0 152 0 4 2 33

TD Group U.S. 

Holdings 47 18 5 14 37 0 70 3 71 20 23 2 28

BNP (previously 

BancWest) 25 42 34 10 51 1 58 60 6 2 2 2 23

Capital One Financial 50 32 1 78 3 0 4 3 21 17 5 1 21

MUFG Americas 

Holdings 22 14 15 11 8 9 95 3 18 35 4 4 19

UBS Americas* 23 13 32 1 5 25 49 0 27 48 4 0 18

SunTrust Banks 31 6 2 34 3 4 24 4 10 47 1 1 16

BB&T 31 2 4 52 4 3 16 1 13 36 1 0 15

American Express 23 11 7 92 1 0 0 1 7 0 14 7 15

BMO Financial 19 30 20 18 22 11 19 1 18 1 2 3 14

Ally Financial 21 9 6 76 1 0 0 1 23 1 0 0 12

Santander Holdings 

USA 18 3 26 22 1 0 30 1 3 22 2 4 11

Fifth Third Bancorp 21 3 5 31 6 17 12 1 23 3 1 0 11

Huntington Bancshares 14 3 3 19 1 6 2 1 18 56 1 0 10

KeyCorp 21 3 4 31 4 5 9 1 7 1 1 0 9

Synchrony Financial* 16 1 11 58 0 0 0 0 1 1 0 0 8

Citizens Financial 22 3 6 27 6 0 0 1 6 0 1 1 8

Discover Financial 14 15 0 57 1 0 0 0 1 0 0 0 8

M&T Bank 17 3 4 29 9 6 1 0 5 0 0 0 7

Regions Financial 18 1 2 20 2 2 4 1 12 7 0 0 7

CIT Group* 10 8 12 26 1 0 0 0 5 15 2 2 7

BBVA Compass 12 1 3 11 1 0 10 1 8 1 1 1 5

Comerica 11 8 8 14 1 4 1 0 2 1 1 1 5

Zions Bancorp 9 3 3 9 2 0 0 0 6 3 0 0 4

Interconnectedness Substitutability Complexity Cross-Jurisdictional 

Activity 2016 

Systemic 

Importance 

Score
 

50

APPENDIX C: FIRE SALE IMPACT ANALYSIS

The liquidation of assets by a firm in financial distress may temporarily force prices below those 

attainable in normal market conditions. These “fire sale” prices will have a direct impact on the 

balance sheet of all firms holding the same or similar assets, thus spreading financial stress to 

other firms. 

The analysis in this appendix assumes that a downward shock to the net worth of a firm or group 

of firms can be one impetus for a firm to rapidly liquidate assets. Such a shock would raise the 

firm’s leverage and decrease the equity cushion protecting the firm’s creditors. In order to 

quickly return to its original degree of leverage, the firm would have to rapidly sell assets. Such 

a fire sale of assets could directly affect the balance sheets of firms that hold the same or similar 

assets, thus spreading the negative effects of its distress to other firms.

A firm’s asset size, leverage, and asset composition relative to other financial firms will affect 

the relative impact of a rapid liquidation of assets by that firm. For instance, a firm that is small 

relative to the market can sell a quantity of assets that can be easily absorbed, but larger firms 

will necessarily sell larger volumes of assets that may not be as easily accommodated. In 

addition, the market impact of asset sales will also depend on the firm’s asset profile relative to 

other financial firms, since fire sales of assets that are widely held by others would likely have a 

greater effect on the financial system.

This fire-sale analysis was calculated as of December 31, 2017, for Zions, the largest 50 bank 

holding companies, and the largest 25 insurance companies. A summary of the analysis of the 

relative impact on other financial institutions of negative shocks based on firms’ equity and

assets is shown below.

156 

 156 The analysis considers the framework proposed in Greenwood, Landier and Thesmar, Vulnerable Banks, Journal 

of Financial Economics 115 (3) (2015) and extensions by Duarte and Eisenbach, Fire-Sale Spillovers and Systemic 

Risk, Federal Reserve Bank of New York Staff Report 645 (2015).
 

51

Mean Scores for the Magnitude of Firm's Fire-Sale Effects (2017)

Equity Shock Asset Shock

Rank Firm

Mean 

Score 

(%)

Firm

Mean 

Score 

(%)

1 JPMorgan Chase & Co. 98.5 JPMorgan Chase & Co. 99.7

2 Bank of America Corporation 95.7 Wells Fargo & Company 92.0

3 Wells Fargo & Company 95.6 Bank of America Corporation 83.7

4 Citigroup, Inc. 51.7 Citigroup, Inc. 48.2

5 Morgan Stanley 25.8 Morgan Stanley 28.6

6 U.S. Bancorp 25.4 The Goldman Sachs Group, Inc. 27.3

7 The Goldman Sachs Group, Inc. 24.2 Brighthouse Financial, Inc. 27.1

8 Berkshire Hathaway Inc. 23.4 U.S. Bancorp 24.3

9 PNC Financial Services Group, Inc. 19.8 PNC Financial Services Group, Inc. 16.3

10 Brighthouse Financial, Inc. 17.2 MetLife, Inc. 14.3

...

41 UBS Americas Holding LLC 5.3 American Equity Investment Life Holding Co. 4.6

42 Credit Suisse Holdings (USA), Inc. 5.0 First Republic Bank 4.3

43 Charles Schwab Corporation, The 4.7 Barclays US LLC 4.2

44 Lincoln National Corporation 4.5 Zions Bancorporation 3.9

45 New York Community Bancorp, Inc. 4.4 Santander Holdings USA, Inc. 3.8

46 Barclays US LLC 4.4 BBVA Compass Bancshares, INC. 3.7

47 Zions Bancorporation 4.4 Lincoln National Corporation 3.7

48 Allstate Corporation 4.3 Comerica Incorporated 3.6

49 Jackson National Life Insurance Co. 4.3 UBS Americas Holding LLC 3.3

50 United Services Automobile Association 4.3 New York Community Bancorp, Inc. 3.3

Source: Annual Reports on Form 10-K for the year ended December 31, 2017; Federal Reserve Form Y-9C; Federal 

Reserve Board calculations.

Based on a shock to firms’ equity, Zions produces a fire-sale effect that ranks 47th among 

financial institutions. Based on a shock to firms’ assets, Zions produces a fire-sale effect that 

ranks 44th among financial institutions. Zions’ fire-sale effects under the equity shock and the 

asset shock are a small fraction of the fire-sale effects of the top-ranked institution in these 

results, primarily due to Zions’ smaller asset size.

There are a number of elements that the fire sale model does not take into account that could 

affect the results. For instance, the liability profile of a firm is not a variable in the model, 

although a company’s reliance on more-liquid funding sources could serve as a trigger for a 

potential asset liquidation. Zions’ liquid liabilities (primarily its uninsured deposits) may 

therefore exacerbate the potential effect of asset fire sales by Zions beyond what is predicted by 

this model.