Zions Bancorporation, National Association (ZION, NASDAQ)
Industry: Banks - Regional
Annual report, fiscal year 2023


## DEEPLY ROOTED

ANNUAL REPORT 2023



ZIONS BANCORPORATION



## A COLLECTION
OF GREAT BANKS

Zions Bancorporation is comprised of a collection of extraordinary, locally led and community-focused banks serving businesses, households and local governments in some of the best growth markets in the nation. We’re determined to help build strong, successful communities, create economic opportunity and help our clients achieve greater financial strength through the relationships we develop and the services we provide.







## ZIONS BANK.

$14.3B average loans
$888M total net revenue

$20.2B average deposits





## CALIFORNIA BANK
TRUST \( ^{®} \) 

$14.1B average loans
$714M total net revenue

$14.3B average deposits



## AmegyBank.

$12.9B average loans
$637M total net revenue

$13.6B average deposits





## NATIONAL BANK OF ARIZONA \( ^{®} \) 

$5.3B average loans
$300M total net revenue

$7.0B average deposits





## NEVADA STATE BANK \( ^{®} \) 

$3.4B average loans
$236M total net revenue

$7.0B average deposits





## VECTRABANK \( ^{®} \) 

$4.0B average loans
$178M total net revenue

$3.5B average deposits



## THE COMMERCE BANK
OF WASHINGTON/OREGON

$1.7B average loans
$67M total net revenue

$1.2B average deposits






## PERFORMANCE
AT A GLANCE







EARNINGS PER SHARE



EARNINGS PER SHARE



PRE-PROVISION NET REVENUE LESS NET CHARGE-OFFS (PERCENT OF RISK WEIGHTED ASSETS)







“THE STRENGTH THAT COMES FROM OUR LONG HISTORY, AND FROM BUILDING OUR BUSINESS THE RIGHT WAY, MAKING LONG-TERM INVESTMENTS IN BOTH PEOPLE AND TECHNOLOGY, WILL SERVE US WELL FOR MANY YEARS TO COME.”



TO OUR SHAREHOLDERS

# CHAIRMAN'S
MESSAGE

In my letter a year ago, I wrote about the investments we've made and the efforts we've undertaken in recent years to help ensure the resilience of our company during periods of great stress. Those preparations were put to the test in 2023, which was a year unlike any other since the financial crisis, and a year in which we were once again reminded of the fundamental fragility of a fractional reserve banking system. Unlike the 2008-9 financial crisis, the origins of which were found in steep credit losses across the industry, the bank crisis of 2023 was precipitated by rapidly rising interest rates and the impact of those rates on banks' balance sheets after more than a decade of virtually free money.

In the end, Zions Bancorporation's long history, our conservative growth, our relatively granular deposit base, the strong relationships we have with our customers, and the deep roots we have in the communities we serve, proved to be critically important factors in our ability to navigate the storm.
HARRIS SIMMONS
Chairman and CEO






# THE SPRING 2023
BANKING CRISIS

We entered the year expecting it would be one of outstanding financial performance. Our primary source of revenue is the interest income derived from the earnings assets on our balance sheet, less the interest expense we pay for funding those assets. The net of those amounts, expressed as a percentage of our average earning assets, constitutes our net interest margin. As we concluded 2022, that margin was 3.53%, and we expected it would remain reasonably stable at that level over the course of the ensuing year. Events in early March upended those expectations, as a depositor “run” on California-based Silicon Valley Bank that began on March 9 led to the rapid collapse of that bank, followed the same weekend by the closure of Signature Bank in New York, and several weeks later the seizure and sale of First Republic Bank, headquartered in San Francisco.

These bank failures precipitated substantial funding challenges for a number of regional banks as many large, uninsured depositors reflexively sought the perceived safety of moving their money into money center banks considered “too big to fail.” During the first quarter of 2023, our total “customer deposits,” which exclude any brokered deposits, decreased by $7 billion, or 9.8%, from their year-end 2022 level. Over 85% of that decrease occurred in accounts with balances of over $1 million, constituting approximately 20% of the beginning balances in those accounts. We immediately replaced these funds with a combination of repurchase agreements, advances from the Federal Home Loan Bank system, and brokered deposits. We had both the available liquidity, through the repo market and borrowing arrangements with the Federal Reserve and the Federal Home Loan Bank, and the mechanisms, which







we test frequently, to immediately respond to a liquidity crisis, and we continue to have those safeguards in place today.

Over the balance of the year, as confidence in the banking system was reestablished, we increased customer deposits by $6.7 billion, overcoming the outflow we experienced following the bank failures, while at the same time reducing the combination of brokered deposits and short-term borrowings by $2.5 billion from their levels at the beginning of the year. This all came at a cost, however, as it precipitated a much more rapid increase in deposit costs than had been anticipated at the beginning of the year, with the net interest margin stabilizing at just over 2.90% in the second through fourth quarters of the year.
Another cost arising from the crisis was a special assessment imposed by the FDIC on all banks with total assets greater than $5 billion. Zions Bancorporation’s share of this assessment was $90 million. Curiously, this special assessment was based on each bank’s total uninsured deposits on December 31, 2022 — before the crisis and the migration of a substantial volume of uninsured deposits to the very largest banks — as opposed to basing the assessment on the deposits that remained at the end of March 2023. For that matter, the FDIC may be the only insurance organization in the world that assesses premiums based on what it doesn’t, rather than what it does, insure — perhaps a sign that the insurance framework, and the concept of “too big to fail” institutions, is deserving of a great deal more thought.
Silicon Valley Bank, Signature Bank, and First Republic Bank all had some common threads that should have signaled higher levels of risk to management teams and regulators. The three banks had growth rates that were respectively 8.7, 4.3, and 3.9 times higher than the growth in average industry assets during the five-year period preceding their failures. They had concentrated business models that focused on a narrow set of clients, and with a reasonably narrow set of products. One result was that they all had much larger average deposit balances per account, and much lower levels of insured deposits, than is typical in the banking industry.

Silicon Valley Bank, in particular, had become a major “outlier,” with an average deposit account size some






20 times larger than that at Zions Bancorporation, and with uninsured deposits comprising approximately 94% of total deposits, compared to our 53% at the beginning of the year — almost exactly the same as the median for our peer group. First Republic Bank and Signature Bank likewise had average deposit sizes of roughly four to nine times the size of an account at Zions, and uninsured deposits that comprised approximately 67% and 90%, respectively, at the two banks.

These bank failures should have produced a watershed moment for policymakers — most all of whom proclaim their strong support for a diversified banking industry comprised of community, regional and money center banks — to consider the increasingly important role federal deposit insurance — which is not indexed for inflation — plays in an industry where a handful of players are deemed “too big to fail.” Despite the fact that many seem to believe federal deposit insurance is paid for by taxpayers, its cost is, and has always been, borne by banks. Despite this, Congress seems to be in no mood to revisit deposit insurance levels at present, though it is perhaps as pressing an issue as any in the banking industry, and particularly for smaller banks. Since the insured deposit threshold was last raised to $250,000 in 2008, the real value of insurance coverage has eroded by 30% due to inflation. Had the insurance level grown at the same pace as per capita gross domestic product since deposit insurance was first introduced in the amount of $2,500 in 1934, the insured deposit amount would today be about $386,000.

In the absence of a change in deposit insurance thresholds, many banks, including Zions, have increased their usage of reciprocal deposit arrangements to effectively divide some of our larger clients' accounts into smaller pieces that can be parceled out to other banks, receiving reciprocal deposits on our balance sheet from the same banks. It's a relatively convoluted, but effective, way to achieve higher amounts of insurance coverage, and another reason Congress should act to address the underlying need.

LOANS, AS A PERCENT OF DEPOSITS











# THE REGULATORY
ENVIRONMENT

Instead of reforms that target the proximate cause of the 2023 banking crisis, regulators have proposed rules that threaten to impair banks' competitiveness and increase the cost of doing business. One commentator suggested that it's almost as though one had gone to the hospital with a broken wrist and been discharged with a knee replacement. Though some of the more significant of these proposed rules target banks with over $100 billion in total assets, we are very focused on them inasmuch as we expect to cross that threshold within the next few years.

Two of the more significant proposed new rules are the so-called “Basel III Endgame,” which would among other things introduce additional capital requirements for operational risk, and would include the fluctuation in asset market values reflected in “Accumulated Other Comprehensive Income” in determining regulatory capital; and a new long-term debt requirement for larger banks that would require 6% of a bank’s risk-weighted assets to be funded with qualifying long-term debt. The Basel III Endgame proposal would incentivize banks to hold fewer securities categorized as “Available-for-Sale,” and would likewise encourage banks to hold securities with shorter maturities or variable interest rates, which may not match the expected behavior of the deposits that fund them. The expected result may be more volatility in a bank’s net interest income. Other elements of the proposed rule would penalize lower income borrowers and small businesses, by increasing the capital required for loans to such customers, and therefore the cost of their loans. There has been a widespread negative reaction to this proposed rulemaking, with fewer than ten letters voicing support for the proposal out of several hundred comment letters submitted in response to the rulemaking. The negative response notably includes multiple members of Congress from both parties, as well as many from outside the industry, who are concerned about the potential adverse impact on “Main Street” small- and medium-sized businesses.



Perhaps the more problematic of the proposals, from our standpoint, is a proposal that banks with over $100 billion in assets issue qualifying long-term debt equal to 6 percent of the bank’s risk-weighted assets. If implemented, we expect that when we cross the $100 billion asset threshold in the next three or four years we would be required to issue incremental long-term debt in the amount of approximately $4 billion — beyond our current outstanding debt of $0.5 billion. And because we would need to maintain a degree of cushion

COMMON EQUITY TIER 1 RATIO



ADJUSTED RETURN ON TANGIBLE COMMON EQUITY
Adjusted for securities losses and substitutes net charge-offs for provision



to facilitate unexpected fluctuations in our balance sheet and to issue debt in quantities that are economically feasible, the actual level would be higher than this minimum.

The cost of this debt will be much greater than alternative wholesale sources of funding, and much of that cost will ultimately be passed along to borrowers. We estimate it will have the effect of increasing the cost of bank loans for a typical business by around 0.2%, which would effectively impose a substantial new tax on borrowers from banks like Zions.

This is particularly significant because regional banks provide a very large portion of the small business credit extended in the United States. As we noted in a comment letter we submitted on this proposal, September 30, 2023 call report data shows that, for small business and small farm loans between $100,000 and $1,000,000 in size — the types of loans these businesses use to support operations and purchase productive equipment — Zions Bancorporation’s outstanding volume of such loans was 34% as great as that of JPMorgan Chase; 20% as great as Bank of America; and 24% as great as Wells Fargo. That’s despite being between 2.2% to 4.6% the size of each of these banks, as measured by total assets. It’s quite a remarkable record. And while call report data is not captured for loans between $1 million and, say, $10 million, one may intuit that regional banks are very substantial providers of credit to the vast population of businesses with such borrowing needs, all of whom will feel the impact of this proposal.



These proposed regulations come at a time when the regulatory agencies have been as actively engaged in establishing new rules and new expectations for the industry as almost any time in memory. In recent months the Federal Reserve, Office of the Comptroller of the Currency, FDIC, Consumer Financial Protection Bureau, Public Company Accounting Oversight Board, and SEC have proposed new regulations, in addition to the capital and debt rules discussed above, these include the following:

• Disclosures and the management of risks related to climate change.

• Limitations on debit card interchange income.

• The approval process for mergers and acquisitions.

• Failed bank resolution planning.

• The expansion of outside auditors’ duties with respect to a firm’s noncompliance with laws and regulations.

• A framework for consumer-approved data-sharing.

• Information gathering requirements on small business borrowers.

• A variety of proposed rules that would severely limit credit card and overdraft fees (which many in the industry expect will lead to a diminished availability of some of overdraft and card credit for lower-income consumers).
Proposals that would impose some of these more stringent regulations on banks with over $100 billion in assets in a “one-size-fits-all” manner come despite Congressional passage in 2018 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, that raised the threshold for defining a “systemically important financial institution” to $250 billion and mandated a “tailoring” of regulations based on a bank’s size and complexity.










## SCALE AND EFFICIENCY

One of the questions that has come up over the course of the past year in response to these proposals, is, “Does a bank like Zions Bancorporation need to be much larger than $100 billion in size to effectively compete with the largest banks in the nation?”

I believe the answer is “no,” for several reasons.

First, though there are some significant “up-front” costs involved in meeting the proposed expectations and requirements that come with crossing the $100 billion asset mark, we have already absorbed most of them. When the Dodd-Frank Act was passed in 2010, it established $50 billion in assets as the level beyond which a bank was deemed to be “systemically important,” and thus subject to the Enhanced Prudential Standards contained in section 165 of the legislation. Those enhanced standards required banks subject to the rule to establish, among other things, a comprehensive stress-testing, capital planning, and liquidity management and resolution planning requirements. Although the 2018 legislation generally raised the threshold for compliance with these requirements to $250 billion in assets, we have continued to maintain and even strengthen our capabilities with respect to many of these risk management activities. As such, based on currently proposed rules we do not expect we will incur major additional compliance costs once we cross the proposed $100 billion threshold.

Second, the proposed new Basel III Endgame capital rule and the long-term debt requirement are linear in their impact on larger banks. There are no inherent economies of scale that derive from larger size with respect to these proposals. If a $100 billion bank with our business profile would require $4.5 billion in debt, a bank twice our size would require twice as much debt. The same is true of the capital proposal.

This leads to the question of whether much larger banks are inherently more efficient. There are those who argue this to be the case. In my experience



they are, for the most part, investment bankers or very large aspirational acquirors, neither of which have fully impartial agendas. In fact, when one looks at the data, it's hard to find evidence for much in the way of economies of scale in commercial banking in our country.

Using 2022 data (because it is uncontained by the unusual impact of the banking crisis in the spring of 2023) from the nation’s 181 banks with $5 billion or more in assets, the amount of operating expense required to generate a dollar of revenue, or the so-called “efficiency ratio,” for these banks suggests that, if anything, there may be diseconomies of scale in the industry.

As shown in the chart (below), there's not a major difference in the overall operating efficiency of banks of almost any size above $5 billion. And to the extent there is, it would appear from the data that smaller banks actually have an edge.

This data isn’t and shouldn’t be the end of the argument. Notably, the revenues generated by the largest banks tend to be more skewed toward fee income that consumes less capital under current rules. But those rules, as noted, are in flux and seem destined to be more punitive with respect to non-interest income than at present, by better reflecting the operating risk in primarily fee-generating businesses which may entail significant operational risk but little credit risk.

ASSET-WEIGHTED EFFICIENCY RATIOS BY BANK SIZE






## FINANCIAL AND
CREDIT PERFORMANCE

Zions Bancorporation’s net earnings applicable to common shareholders were $648 million or $4.35 per fully diluted share in 2023, down from $878 million or $5.79 per share in 2022. Income before taxes decreased $266 million from last year, with the largest single factor being a $119 million increase in deposit insurance expense, to $160 million in 2023. This includes the $90 million special FDIC assessment pertaining to the two large bank failures in March 2023. The $90 million special assessment is deductible against income for tax purposes, but because the Tax Cuts and Jobs Act of 2017 eliminated the tax deductibility of regular deposit insurance premiums for banks with assets of $50 billion and more, the after-tax increase in total deposit insurance expense was $96 million, or $0.65 per share.

Total loans increased a moderate 3.8% during the year, to $57.8 billion,






while securities and money market investments decreased 15.1% to $23.2 billion. Total deposits increased 4.6% to $75.0 billion. But the real deposit story is much more involved, and managing deposit activity was our primary focus during much of the year.

In the wake of the spring bank failures, we saw substantial outflows — over $7 billion, as previously noted — primarily from our larger accounts. We responded by rapidly adjusting deposit rates, increasing brokered bank’s deposit and other funding costs relative to changes in the overnight federal funds rate. The resulting measure is referred to as “deposit beta,” and a lower beta generally produces better financial performance in a rising interest rate environment. In the initial phases of the Federal Reserve’s tightening of interest rates, which began in early 2022, Zions’ total deposit beta was among the best in the industry, measuring a cumulative 4.7% by the fourth quarter of that year. The shock produced by the bank failures in March 2023



deposits, and utilizing reciprocal deposit arrangements to effectively provide increased deposit insurance coverage to some of our larger clients. As noted earlier, by the end of the year we’d seen a net increase in customer deposits, and a decrease in brokered deposits from their peak in the second quarter. This all came at the cost of higher funding costs and a reduction in our net interest margin.

As interest rates rise and fall, a measure tracked by many analysts is the sensitivity, or elasticity, of a caused us to rapidly escalate deposit pricing, with the result that by the final quarter of 2023, the quarter after the Federal Reserve paused its rate hikes, our cumulative deposit beta through the cycle was 38.7%. At the same time our net interest margin contracted from a healthy 3.53% in the fourth quarter of 2022 to 2.91% in the fourth quarter of 2023. The net interest margin was relatively stable in the back half of 2023, and we are optimistic that it will improve somewhat in 2024 as securities and mortgage assets continue to reprice.
Customer-related noninterest income, which consists of fee income derived from client activity, rose modestly to $620 million, while total noninterest income increased 7% to $677 million as a result of higher levels of dividend and other investment-based income. Perhaps most notably, fee income from retail and small business deposit accounts decreased 10% to $66 million, and such fees will remain under pressure in coming quarters as the Consumer Financial Protection Bureau is pursuing an aggressive rulemaking agenda to dramatically limit overdraft and related fees. Consumer surveys indicate that overdraft services are highly desired by customers, and the severe pricing limitations proposed will likely incentivize banks to become more conservative in paying accounts into the overdraft. If there’s any good news here, it’s that Zions Bancorporation tends to be much less reliant on these fees as a source of income than many larger banks.

Noninterest expenses, excluding the aforementioned regulatory and deposit insurance costs, increased $100 million, or 5.5%. One of the primary components of the increase consisted of technology-related expenses, which rose $31 million, or 15%. This largely reflects increased costs associated with our core systems replacement project, as the implementation during 2023 of the new deposit platform — the final phase of the project — at National Bank of Arizona triggered the amortization of additional capitalized costs associated with the massive project. We expect to complete the conversion of our remaining



affiliate banks to the new deposit system in 2024.

Compensation expense increased 3.2% or $40 million during the year. Almost 40% of that amount was attributable to severance expense, as we reduced our full-time equivalent staffing by a little more than 3% between the end of 2022 and the end of 2023 in response to diminished revenue outlook. Our efforts to reduce staffing were facilitated in part by our winding down two national lines of business, our National Real Estate and Practice Pathways businesses. The National Real Estate business sourced commercial real estate loans, often in the form of first mortgages made under the SBA's 504 program, from small businesses across the country. The Practice Pathways business was largely focused on financing the acquisition of dentistry and other specialized medical practices. In both cases, increased competition over time resulted in narrowing margins and returns not compatible with the capital such loans require.

Our capital position strengthened in 2023, with a primary regulatory measure, the Common Equity Tier 1 ratio, increasing to 10.3% from 9.8% a year ago. Tangible common equity as a percentage of tangible assets also improved, from 4.3% a year ago to 5.4% at the end of 2023, as tangible assets decreased by $2.3 billion, largely due to a reduction in the size of the securities portfolio, and tangible common equity grew by $804 million through retained earnings and a $420 million improvement in Accumulated Other Comprehensive Income — a component of capital that we expect to improve by another approximately $900 million in 2024 and 2025.

We were particularly pleased by the credit quality of our loan portfolio during 2023. While we set aside $132 million for losses on loans and unfunded lending commitments, our actual net charge-offs were only $36 million during 2023, or 0.06% (6 basis points) of average total loans and leases. This performance was among commercial real estate, or CRE, portfolios, and particularly with respect to office building exposures in light of the increasing vacancies arising from the work-from-home trend. But net charge-offs in our CRE portfolio, which includes $2 billion of loans on office buildings, were a meager $3 million, or 2 basis points, in 2023. At present we don’t anticipate exaggerated losses in this portfolio, 70% of which is located in suburban markets, and is characterized by strong equity and a relatively



the best in our peer group of larger regional banks. While the ratio of non-accrual loans increased modestly from 0.27% to 0.39%, non-performing assets remain at a historically low level, and the broader population of classified loans, or loans that show some element of weakness, decreased from 1.7% of total loans to 1.4% during the year.

Concern has been expressed by many about the risks inherent in banks' modest $4.5 million average loan size. It's also helpful that over the course of the past decade, we've been very disciplined with respect to the growth in our CRE portfolio, with growth in the lowest quartile among our peer group, meaning that the average loan in our portfolio has had more amortization, and thus more equity buildup, than is typical in many portfolios.



# AREAS OF STRATEGIC FOCUS

In recent years, we’ve been highly focused on further developing some of our greatest strengths, which include serving middle market and smaller businesses, and on building lines of business in which our focus on banking businesses and their owners provides a natural advantage, including wealth management and capital markets. We also focus on strengthening several fundamental “enabling” capabilities, including risk management, technology, operational excellence, data and analytics, and people and empowerment.

Our strength in serving businesses was again demonstrated in 2023 as Coalition Greenwich, a leading financial services research firm that annually conducts thousands of surveys of business owners regarding their banking relationships, once again recognized Zions Bancorporation as one of the top business banks in the nation. Greenwich awarded Zions 10 “Excellence” and “Best Brand” awards in its Middle Market Banking category, and 16 such awards in the Small Business Banking category, with top marks in both categories in areas such as Cash Management Product Capabilities and Service, Ease of Doing Business, Trustworthiness, Values Customer Relationships and Overall Satisfaction. Overall, Zions Bancorporation was ranked third in the nation in the number of Excellence awards it received from Greenwich this past year. Since the inception of the awards in 2009, only two other U.S. banks have consistently received as many Greenwich Excellence Awards as Zions Bancorporation.

Over the course of the past year, our branch and business bankers reached out to over 100,000 small businesses to express our appreciation for their relationship with the bank, and many more calls were made by our commercial and corporate bankers on middle market and larger businesses. We have stepped up our internal banker development and training programs in recent years, including our Champions program, in which nearly 600 of our branch-based employees currently participate. This program provides these front-line bankers, most of whom spend much of their time serving small business owners, with additional skills and authority, including credit authority — something that’s especially rare for such bankers at larger banks today.

As we invest in our people, we continue to invest in technologies that assist both our bankers and their clients in making it easier and faster to do business with Zions. As noted earlier, during the year, we completed the first of a series of three conversions of our new deposit system at National Bank of Arizona. This pilot conversion allowed us to refine the software in anticipation of completing the remaining conversions in 2024. When complete, we believe we’ll have among the most modern and functional core systems in the U.S. banking industry, making it much easier for our front-line people to serve customers, and for customers to serve themselves as we build new capabilities atop this new core platform.

In the wake of the bank failures in 2023, we’ve become increasingly focused on the value smaller, insured deposits play in providing a solid foundation for a regional bank such as Zions. We expect in coming years, in addition to our focus on the small- and mid-sized businesses that are a rich source of such deposits, we’ll also refocus on competing more aggressively in the consumer market. Increasingly, this market can be served primarily through the digital tools and products we already have in our arsenal, with relatively lower incremental cost than has been the case in the past. Accordingly, we’ll be piloting new approaches to serve consumers, particularly in markets and around branches that have not historically targeted retail consumer business.



# OUR PAST AND OUR FUTURE

This past year we celebrated the 150 \( ^{th} \)  anniversary of the founding of Zion’s Savings Bank & Trust Company, the predecessor of Zions Bank, the largest affiliate in our “Collection of Great Banks.” Zion’s Savings Bank & Trust Company opened for business on October 1, 1873. The great pioneer leader Brigham Young was its founder and first depositor, and at the end of the bank’s first day of business a total of 5,876.20 had been deposited by 46 depositors. Notably, five of the original 15 depositors were women (and another was a women’s organization), at a time when many financial institutions across the United States did not allow women to have bank accounts.

Shortly before the bank opened, Brigham Young wrote, “This institution is a cooperative one and we think it is likely to meet with favor. The interest allowed is at the rate of ten per cent, per annum, compounded semiannually. It will be found of considerable advantage to those who wish to save money for the emigration of their friends, as the interest is large and sums as low as $1.00 will be received, which, if continually added to, will soon reach a considerable amount, and the depositors will hardly miss the money. We expect in time to have branches of this bank all over the Territory, and perhaps extend it into Europe.”
The European expansion was a “miss” — perhaps it will come in our second 150 years! And 10 percent interest wouldn’t work very well at the moment. But his wisdom with respect to saving remains as relevant in our times as ever. And the bank today has expanded well beyond the Utah Territory where it was established in 1873, with branches across the western United States. If the bank’s branches are analogous to a tree’s branches, its root system consists of the strong — and long — relationships our bankers have nurtured with millions of customers over the decades, the trust they have in our commitment to safeguard their savings, and the reputation we’ve built for helping to make the communities we serve better places to live.

Zions Bancorporation’s “root system” has been strengthened through the years as we’ve managed through both good times and bad. We’ve both been the beneficiary of, and contributed to, the amazing growth of the western United States over the past 150 years. And we’ve weathered the storms of the many bank panics of the late nineteenth century, the Great Depression, recessions, pandemics, and much more.
Douglas Malloch, an early twentieth century American poet (and, fittingly, associate editor of American Lumberman, an industry trade journal), penned these lines:

Good timber does not grow with ease: The stronger wind, the stronger trees; The further sky, the greater length; The more the storm, the more the strength.

The strength that comes from our long history, and from building our business the right way, making long-term investments in both people and technology, will serve us well for many years to come.

I’m most appreciative of the extraordinary work our people performed during a year that presented more than the usual kinds of challenges. Their commitment to our customers has been demonstrated again and again in recent years. And they’re the reason we’ll thrive in the years ahead.

Thanks to each of you as shareholders for your confidence in some of the best bankers in this great industry.

Respectfully,



HARRIS SIMMONS
Chairman and CEO
February 20, 2024



## FINANCIAL HIGHLIGHTS \( ^{1} \) 

<table><tr><td>(Figures in millions, except per share amounts)</td><td>2023/2022 Change</td><td>2023</td><td>2022</td><td>2021</td><td>2020</td><td>2019</td></tr><tr><td>For the Year</td><td>%</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net interest income</td><td>-3</td><td>$ 2,438</td><td>$ 2,520</td><td>$ 2,208</td><td>$ 2,216</td><td>$ 2,272</td></tr><tr><td>Noninterest income</td><td>+7</td><td>677</td><td>632</td><td>703</td><td>574</td><td>562</td></tr><tr><td>Total net revenue</td><td>-1</td><td>3,115</td><td>3,152</td><td>2,911</td><td>2,790</td><td>2,834</td></tr><tr><td>Provision for credit losses</td><td>8</td><td>132</td><td>122</td><td>(276)</td><td>414</td><td>39</td></tr><tr><td>Noninterest expense</td><td>+12</td><td>2,097</td><td>1,878</td><td>1,741</td><td>1,704</td><td>1,742</td></tr><tr><td>Pre-provision net revenue¹</td><td>-19</td><td>1,059</td><td>1,311</td><td>1,202</td><td>1,114</td><td>1,118</td></tr><tr><td>Net income</td><td>-25</td><td>680</td><td>907</td><td>1,129</td><td>539</td><td>816</td></tr><tr><td>Net earnings applicable to common shareholders</td><td>-26</td><td>648</td><td>878</td><td>1,100</td><td>505</td><td>782</td></tr><tr><td>Per Common Share</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net earnings - diluted</td><td>-25</td><td>4.35</td><td>5.79</td><td>6.79</td><td>3.02</td><td>4.16</td></tr><tr><td>Tangible book value at year-end</td><td>+24</td><td>28.30</td><td>22.79</td><td>39.62</td><td>38.42</td><td>34.98</td></tr><tr><td>Market price - end</td><td>-11</td><td>43.87</td><td>49.16</td><td>63.16</td><td>43.44</td><td>51.92</td></tr><tr><td>Market price - high</td><td>-27</td><td>55.20</td><td>75.44</td><td>68.25</td><td>52.48</td><td>52.08</td></tr><tr><td>Market price - low</td><td>-60</td><td>18.26</td><td>45.21</td><td>42.12</td><td>23.58</td><td>39.11</td></tr><tr><td>At Year End</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Assets</td><td>-3</td><td>87,203</td><td>89,545</td><td>93,200</td><td>81,479</td><td>69,172</td></tr><tr><td>Loans and leases, net of unearned income and fees</td><td>+4</td><td>57,779</td><td>55,653</td><td>50,851</td><td>53,476</td><td>48,709</td></tr><tr><td>Deposits</td><td>+5</td><td>74,961</td><td>71,652</td><td>82,789</td><td>69,653</td><td>57,085</td></tr><tr><td>Common equity</td><td>+18</td><td>5,251</td><td>4,453</td><td>7,023</td><td>7,320</td><td>6,787</td></tr><tr><td>Performance Ratios</td><td></td><td>%</td><td>%</td><td>%</td><td>%</td><td>%</td></tr><tr><td>Return on average assets</td><td></td><td>0.77</td><td>1.01</td><td>1.29</td><td>0.71</td><td>1.17</td></tr><tr><td>Return on average common equity</td><td></td><td>13.4</td><td>16.0</td><td>14.9</td><td>7.2</td><td>11.2</td></tr><tr><td>Return on average tangible common equity¹</td><td></td><td>17.3</td><td>19.8</td><td>17.3</td><td>8.4</td><td>13.1</td></tr><tr><td>Net interest margin</td><td></td><td>3.02</td><td>3.06</td><td>2.72</td><td>3.15</td><td>3.54</td></tr><tr><td>Net charge-offs to average loans and leases</td><td></td><td>0.06</td><td>0.07</td><td>0.01</td><td>0.22</td><td>0.08</td></tr><tr><td>Total allowance for credit losses to loans and leases outstanding</td><td></td><td>1.26</td><td>1.14</td><td>1.09</td><td>1.74</td><td>1.14</td></tr><tr><td>Capital Ratios at Year End</td><td></td><td>%</td><td>%</td><td>%</td><td>%</td><td>%</td></tr><tr><td>Common equity tier 1 capital</td><td></td><td>10.3</td><td>9.8</td><td>10.2</td><td>10.8</td><td>10.2</td></tr><tr><td>Tier 1 leverage</td><td></td><td>8.3</td><td>7.7</td><td>7.2</td><td>8.3</td><td>9.2</td></tr><tr><td>Tangible common equity to tangible assets</td><td></td><td>4.9</td><td>3.8</td><td>6.5</td><td>7.8</td><td>8.5</td></tr><tr><td>Other Selected Information</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Weighted average diluted common shares outstanding</td><td>-2</td><td>147.8</td><td>150.3</td><td>160.2</td><td>165.6</td><td>186.5</td></tr><tr><td>Bank common shares repurchased (in thousands)</td><td>-73</td><td>947</td><td>3,563</td><td>13,497</td><td>1,666</td><td>23,505</td></tr><tr><td>Dividends declared, per share</td><td>+4</td><td>1.64</td><td>1.58</td><td>1.44</td><td>1.36</td><td>1.28</td></tr><tr><td>Common dividend payout ratio²</td><td></td><td>37.8%</td><td>27.3%</td><td>21.1%</td><td>44.6%</td><td>29.0%</td></tr><tr><td>Capital distributed as a percentage of net earnings applicable to common shareholders³</td><td></td><td>46%</td><td>50%</td><td>94%</td><td>59%</td><td>170%</td></tr><tr><td>Efficiency ratio¹</td><td></td><td>62.9%</td><td>58.8%</td><td>60.8%</td><td>59.4%</td><td>59.5%</td></tr></table>

 \( ^{1} \) This table includes certain non-GAAP measures. See “Non-GAAP Financial Measures” on page 23 for more information.

 \( ^{2} \) The common dividend payout ratio is equal to common dividends paid divided by net earnings applicable to common shareholders.

 \( ^{3} \) This ratio is the sum of the dollars of common dividends paid and dollars used for share repurchases for the year, divided by net earnings applicable to common shareholders.



## NON-GAAP FINANCIAL MEASURES

<table><tr><td>(Figures in millions, except per share amounts)</td><td>2023</td><td>2022</td><td>2021</td><td>2020</td><td>2019</td></tr><tr><td>Pre-Provision Net Revenue (PPNR)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>(a)</td><td>Total noninterest expense (GAAP)</td><td>$ 2,097</td><td>$ 1,878</td><td>$ 1,741</td><td>$ 1,704</td></tr><tr><td></td><td>LESS adjustments:</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>Severance costs</td><td>14</td><td>1</td><td>1</td><td>1</td></tr><tr><td></td><td>Other real estate expense, net</td><td>-</td><td>1</td><td>-</td><td>1</td></tr><tr><td></td><td>Amortization of core deposit and other tangibles</td><td>6</td><td>1</td><td>1</td><td>-</td></tr><tr><td></td><td>Restructuring costs</td><td>1</td><td>-</td><td>-</td><td>1</td></tr><tr><td></td><td>Pension termination-related expense (income)</td><td>-</td><td>-</td><td>(5)</td><td>28</td></tr><tr><td></td><td>SBIC investment success fee accrual</td><td>-</td><td>(1)</td><td>7</td><td>-</td></tr><tr><td></td><td>FDIC special assessment</td><td>90</td><td>-</td><td>-</td><td>-</td></tr><tr><td>(b)</td><td>Total adjustments</td><td>111</td><td>2</td><td>4</td><td>31</td></tr><tr><td>(a-b)=(c)</td><td>Adjusted noninterest expense (non-GAAP)</td><td>1,986</td><td>1,876</td><td>1,737</td><td>1,673</td></tr><tr><td>(d)</td><td>Net interest income (GAAP)</td><td>2,438</td><td>2,520</td><td>2,208</td><td>2,216</td></tr><tr><td>(e)</td><td>Fully taxable-equivalent adjustments</td><td>41</td><td>37</td><td>32</td><td>28</td></tr><tr><td>(d+e)=(f)</td><td>Taxable-equivalent net interest income (non-GAAP)</td><td>2,479</td><td>2,557</td><td>2,240</td><td>2,244</td></tr><tr><td>(g)</td><td>Noninterest Income (GAAP)</td><td>677</td><td>632</td><td>703</td><td>574</td></tr><tr><td>(f+g)=(h)</td><td>Combined Income (non-GAAP)</td><td>3,156</td><td>3,189</td><td>2,943</td><td>2,818</td></tr><tr><td></td><td>LESS Adjustments:</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>Fair value and nonhedge derivative gain (loss)</td><td>(4)</td><td>16</td><td>14</td><td>(6)</td></tr><tr><td></td><td>Securities gains (losses), net</td><td>4</td><td>(15)</td><td>71</td><td>7</td></tr><tr><td>(i)</td><td>Total adjustments</td><td>-</td><td>1</td><td>85</td><td>1</td></tr><tr><td>(h-i)=(j)</td><td>Adjusted taxable-equivalent revenue (non-GAAP)</td><td>3,156</td><td>3,188</td><td>2,858</td><td>2,817</td></tr><tr><td>(j-c)</td><td>Adjusted pre-provision net revenue (PPNR)</td><td>1,170</td><td>1,312</td><td>1,121</td><td>1,144</td></tr><tr><td>(c)/(j)</td><td>Efficiency Ratio (non-GAAP)</td><td>62.9%</td><td>58.8%</td><td>60.8%</td><td>59.4%</td></tr><tr><td>Return on Average Tangible Common Equity</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>Net earnings applicable to common shareholders (GAAP)</td><td>$ 648</td><td>$ 878</td><td>$ 1,100</td><td>$ 505</td></tr><tr><td></td><td>Adjustments, net of tax:</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>Amortization of core deposit and other intangibles</td><td>5</td><td>1</td><td>1</td><td>-</td></tr><tr><td>(a)</td><td>Net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP)</td><td>$ 653</td><td>$ 879</td><td>$ 1,101</td><td>$ 505</td></tr><tr><td></td><td>Average common equity (GAAP)</td><td>4,839</td><td>5,472</td><td>7,371</td><td>7,050</td></tr><tr><td></td><td>Average goodwill and intangibles</td><td>(1,062)</td><td>(1,022)</td><td>(1,015)</td><td>(1,015)</td></tr><tr><td>(b)</td><td>Average tangible common equity (non-GAAP)</td><td>$ 3,777</td><td>$ 4,450</td><td>$ 6,356</td><td>$ 6,035</td></tr><tr><td>(a/b)</td><td>Return on average tangible common equity (non-GAAP)</td><td>17.3%</td><td>19.8%</td><td>17.3%</td><td>8.4%</td></tr><tr><td>Adjusted Return on Average Tangible Common Equity</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>(a)</td><td>Net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax (non-GAAP)</td><td>$ 653</td><td>$ 879</td><td>$ 1,101</td><td>$ 505</td></tr><tr><td></td><td>Adjustments:</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>Provision for credit losses</td><td>132</td><td>122</td><td>(276)</td><td>414</td></tr><tr><td></td><td>Net Charge-offs</td><td>(36)</td><td>(39)</td><td>(6)</td><td>(105)</td></tr><tr><td></td><td>Securities Gains/Losses</td><td>(4)</td><td>15</td><td>(71)</td><td>(6)</td></tr><tr><td></td><td>Tax impact of adjustments</td><td>(19)</td><td>(21)</td><td>74</td><td>(64)</td></tr><tr><td>(c)</td><td>Total Adjustments</td><td>73</td><td>77</td><td>(279)</td><td>239</td></tr><tr><td>(a+c)=(d)</td><td>Adjusted net earnings to common shareholders</td><td>$ 726</td><td>$ 956</td><td>$ 822</td><td>$ 744</td></tr><tr><td>(d/b)</td><td>Adjusted Return on average tangible common equity (non-GAAP)</td><td>19.2%</td><td>21.5%</td><td>12.9%</td><td>12.3%</td></tr></table>



## ZIONS BANCORPORATION, N.A.

## BOARD OF DIRECTORS

Harris H. Simmons
Chairman and Chief Executive Officer
Zions Bancorporation

Maria Contreras-Sweet
Managing Member
Contreras Sweet Companies
Rockway Equity Partners

Gary L. Crittenden
Private Investor

Suren K. Gupta
President
Allstate Protection and Enterprise Services

Claire A. Huang
Former Chief Marketing Officer
J.P. Morgan Chase and Company

Vivian S. Lee
Executive Fellow
Harvard Business School

Scott J. McLean
President and Chief Operating Officer
Zions Bancorporation

Edward F. Murphy
Former Chief Financial Officer
Federal Reserve Bank of New York

Stephen D. Quinn
Former Managing Director and
General Partner
Goldman, Sachs & Co.

Aaron B. Skonnard
Chief Executive Officer
Pluralsight, Inc.

Barbara A. Yastine
Former Chair, President and
Chief Executive Officer
Ally Bank

## CORPORATE OFFICERS

Harris H. Simmons
Chairman and Chief Executive Officer

Scott J. McLean
President and Chief Operating Officer

## EXECUTIVE VICE PRESIDENTS

Bruce K. Alexander
CEO, Vectra Bank Colorado

A. Scott Anderson
CEO, Zions Bank

Paul E. Burdiss
Chief Financial Officer

Kenneth J. Collins
Enterprise Program Management

Eric Ellingsen
CEO, California Bank & Trust

Alan M. Forney
CEO, The Commerce Bank of Washington

Olga T. Hoff
Retail Banking

Christopher Kyriakakis
Chief Risk Officer

Thomas E. Laursen
General Counsel

Scott A. Law
Chief Human Resources Officer

Rebecca K. Robinson
Wealth Management

Terry A. Shirey
CEO, Nevada State Bank

Jennifer A. Smith
Chief Technology and Operations Officer

Steven D. Stephens
CEO, Amegy Bank

Derek Steward
Chief Credit Officer

Randy R. Stewart
Mortgage Lending

## EXECUTIVE VICE PRESIDENTS
(CONTINUED)

Lincoln Taylor
Chief Audit Executive

Mark Young
CEO, National Bank of Arizona

## ZIONS' PEER GROUP

ASB Associated Banc-Corp
BOKF BOK Financial Corp
CFG Citizens Financial Group, Inc.
CMA Comerica Incorporated
EWBC East West Bancorp, Inc
FITB Fifth Third Bancorp
FNB FNB Corp
HWC Hancock Whitney Corp
HBAN Huntington Bancshares Incorporated
KEY KeyCorp
MTB M&T Bank Corporation
PNFP Pinnacle Financial Partners
RF Regions Financial Corporation
SNV Synovus Financial Corp.
WAL Western Alliance Bancorporation
WTFC Wintrust Financial Corp.



## CORPORATE INFORMATION

## EXECUTIVE OFFICES

One South Main Street
Salt Lake City, Utah 84133-1109
801-844-7637

## ANNUAL SHAREHOLDERS' MEETING

April 26, 2024, 1 p.m. MDT
Webcast details will be provided on the
zionsbancorporation.com website

## TRANSFER AGENT

Zions Bank
Corporate Trust Department
One South Main Street, 12th Floor
Salt Lake City, Utah 84133-1109
801-844-7545 or 888-416-5176

## REGISTRAR

Zions Bank
One South Main Street, 12th Floor
Salt Lake City, Utah 84133-1109

## AUDITORS

Ernst & Young LLP
15 W. South Temple
Suite 1800
Salt Lake City, Utah 84101

## NASDAQ GLOBAL SELECT
MARKET SYMBOL

ZION

## OTHER LISTED SECURITIES

Series A Preferred Stock – NASDAQ: ZIONP
Series G Preferred Stock – NASDAQ: ZIONO
Series I Preferred Stock – CUSIP: 989701BD8
Series J Preferred Stock – CUSIP: 989701BF3

## DIVIDEND REINVESTMENT PLAN

Shareholders can reinvest their cash dividends in additional shares of our common stock at the market price on the dividend payment date. Shareholders, as well as brokers and custodians who hold our common stock for clients, can obtain a prospectus of the plan on the Zions Bancorporation website at zionsbancorporation.com or by writing to:

Zions Bancorporation
Dividend Reinvestment Plan
P.O. Box 30880
Salt Lake City, Utah 84130-0880

## CREDIT RATINGS

Credit ratings are updated regularly and may be found on the Zions Bancorporation website at zionsbancorporation.com.

## SELECTED INDEX MEMBERSHIPS

S&P Midcap 400
S&P Global 1200
KBW Bank
NASDAQ Financial 100

## INVESTOR RELATIONS

For financial information about the bank, analysts, investors and news media representatives should contact:
Shannon Drage
801-844-7637
investor@zionsbancorp.com

## ZIONS BANCORPORATION
NEWS RELEASES

Our news releases are available on our website at zionsbancorporation.com. To be added to the email distribution list, please visit zionsbancorporation.com and click on "Email Notifications."

## INTERNET SITES

Zions Bancorporation
zionsbancorporation.com

Zions Bank
zionsbank.com

California Bank & Trust
calbanktrust.com

Amegy Bank
amegybank.com

National Bank of Arizona
nbarizona.com

Nevada State Bank
nsbank.com

Vectra Bank Colorado
vectrabank.com

The Commerce Bank of Washington
tcbwa.com

The Commerce Bank of Oregon
tcboregon.com

In addition to this report, please see our website zionsbancorporation.com for our Form 10-K, proxy, and corporate responsibility report.

This document may contain statements that could be considered “forward looking.” Readers should review the forward-looking statement disclaimer of Zions’ Annual Report on Form 10-K, which can be found on the website at zionsbancorporation.com and applies equally to this document. Certain financial measures containing descriptive words such as “core” or “adjusted” are subject to the Non-GAAP Financial Measures table, which can be found on page 23.



## ZIONS BANCORPORATION