Company Quick10K Filing
Quick10K
Zions Bancorporation
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$48.26 186 $8,980
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-04-04 Amend Bylaw, Exhibits
8-K 2019-01-22 Earnings, Exhibits
8-K 2018-11-07 Other Events
8-K 2018-10-22 Earnings, Exhibits
8-K 2018-09-30 M&A, Off-BS Arrangement, Sale of Shares, Shareholder Rights, Control, Officers, Other Events, Exhibits
8-K 2018-09-14 Shareholder Vote
8-K 2018-09-12 Other Events, Exhibits
8-K 2018-07-23 Earnings, Other Events, Exhibits
8-K 2018-07-23 Earnings, Exhibits
8-K 2018-07-18 Other Events, Exhibits
8-K 2018-06-21 Regulation FD, Exhibits
8-K 2018-06-06 Shareholder Vote
8-K 2018-05-14 Regulation FD, Exhibits
8-K 2018-04-23 Earnings, Exhibits
8-K 2018-04-10 Enter Agreement, Regulation FD, Exhibits
8-K 2018-01-22 Earnings, Exhibits
JNJ Johnson & Johnson 367,520
ENIC Enel Chile 7,340
AGS PlayAGS 901
OFLX Omega Flex 803
RCUS Arcus Biosciences 545
SAMA Schultze Special Purpose Acquisition 160
GFED Guaranty Federal Bancshares 107
FRD Friedman Industries 54
NWPP New Peoples Bankshares 0
ANDES Andes 7 0
ZION 2018-12-31
Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
EX-4.5 exh45supplementalindenture.htm
EX-4.6 exh46secondsupplementalind.htm
EX-10.5 exh105thirdrestatedandrevi.htm
EX-10.6 exh106fourthrestatedandrev.htm
EX-10.8 exh108amegydirectorsdeferr.htm
EX-10.12 exh1012trustagreementdefco.htm
EX-10.13 exh1013trustagreementamend.htm
EX-10.15 exh1015defcompplansmastert.htm
EX-10.16 exh1016revisedschcdefcompp.htm
EX-10.18 exh1018fidelity5thamenddef.htm
EX-10.24 exh1024pensionplan1stamend.htm
EX-10.25 exh1025pensionplan2ndamend.htm
EX-10.27 exh1027payshelter401kamend.htm
EX-10.28 exh1028payshelter401kandes.htm
EX-10.44 exh1044formofchangeincontr.htm
EX-21 exh21listofsubs20181231.htm
EX-23 exh23eyconsent20181231.htm
EX-31.1 exh311certofceo10-k20181231.htm
EX-31.2 exh312certofcfo10-k20181231.htm
EX-32 exh32certofceocfo10-k20181.htm

Zions Bancorporation Earnings 2018-12-31

ZION 10K Annual Report

Balance SheetIncome StatementCash Flow

10-K 1 zion-20181231x10k123118.htm 10-K Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
COMMISSION FILE NUMBER 001-12307
ZIONS BANCORPORATION, NATIONAL ASSOCIATION
(Exact name of Registrant as specified in its charter)
UNITED STATES OF AMERICA
 
87-0227400
(State or other jurisdiction of
incorporation or organization)
 
(Internal Revenue Service Employer
Identification Number)
One South Main
Salt Lake City, Utah
 
84133
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (801) 844-7637
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.001
The NASDAQ Stock Market LLC
Warrants to Purchase Common Stock (expiring May 22, 2020)
The NASDAQ Stock Market LLC
Depositary Shares each representing a 1/40th ownership interest in a share of Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock
New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series G Fixed/Floating-Rate Non-Cumulative Perpetual Preferred Stock
New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series H 5.75% Non-Cumulative Perpetual Preferred Stock
New York Stock Exchange
6.95% Fixed-to-Floating Rate Subordinated Notes due September 15, 2028
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
                          Large accelerated filer ý                 Accelerated filer ¨                      Emerging growth company ¨
                          Non-accelerated filer ¨                 Smaller reporting company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý
Aggregate Market Value of Common Stock Held by Non-affiliates at June 30, 2018
 
$10,131,230,197
Number of Common Shares Outstanding ($0.001 par value) at February 8, 2019
 
186,159,654 shares
Documents Incorporated by Reference: Portions of the Banks’ Proxy Statement – Incorporated into Part III

1



ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES




FORM 10-K TABLE OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 


2


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

PART I
FORWARD-LOOKING INFORMATION
This annual report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in this Annual Report on Form 10-K that are based on other than historical information, or that express the Bank’s expectations regarding future events or determinations, are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and include, among others:
statements with respect to the beliefs, plans, objectives, goals, targets, commitments, designs, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of Zions Bancorporation, National Association and its subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”); and
statements preceded by, followed by, or that include the words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “target,” “commit,” “design,” “plan,” “projects,” and the negative thereof and similar words and expressions.
Zions Bancorporation, National Association is the successor to Zions Bancorporation by merger of Zions Bancorporation into ZB, N.A. on September 30, 2018. References to “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” and “us” are intended to refer to Zions Bancorporation and its subsidiaries for periods prior to the merger and to Zions Bancorporation, National Association, and its subsidiaries for periods on and after the merger.
These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, including without limitation, future financial and operating results. Actual results may differ materially from those presented, either expressed or implied, including, but not limited to, those presented in Management’s Discussion and Analysis (“MD&A”). Important risk factors that may cause such material differences include, but are not limited to:
the Bank’s ability to successfully execute its business plans, manage its risks, and achieve its objectives, including its operating leverage;
the impact of acquisitions, dispositions, and corporate restructurings;
increases in the levels of losses, customer bankruptcies, bank failures, claims, and assessments;
the ability of the Bank to retain and recruit executives and other personnel necessary for their businesses and competitiveness;
changes in local, national and international political and economic conditions, including without limitation the political and economic effects of the fiscal imbalance in the United States (“U.S.”) and other countries, potential or actual downgrades in ratings of sovereign debt issued by the United States and other countries, and other major developments, including wars, military actions, and terrorist attacks;
changes in financial and commodity market prices and conditions, either internationally, nationally or locally in areas in which the Bank conducts its operations, including without limitation rates of business formation and growth, commercial and residential real estate development, real estate prices, agricultural-related commodity prices, and oil and gas-related commodity prices;
changes in markets for equity, fixed income, commercial paper and other securities, commodities, including availability, market liquidity levels, and pricing;
changes in interest rates, the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows and competition;
the rate of change of the Bank’s interest-sensitive assets and liabilities relative to changes in benchmark interest rates;
changes in fiscal, monetary, regulatory, trade and tax policies and laws, and regulatory assessments and fees, including policies of the U.S. Department of Treasury, the Office of the Comptroller of the Currency (“OCC”),

3


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (“FDIC”), the Securities and Exchange Commission (“SEC”), and the Consumer Financial Protection Bureau (“CFPB”);
changes in consumer spending and savings habits;
inflation and deflation;
increased competitive challenges and expanding product and pricing pressures among financial institutions;
legislation or regulatory changes which adversely affect the Bank’s operations or business;
the Bank’s ability to comply with applicable laws and regulations;
costs of deposit insurance and changes with respect to FDIC insurance coverage levels;
any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets (“DTAs”) due to adverse changes in the economic environment, declining operations of the reporting unit, or a change to the corporate statutory tax rate or other similar changes if and as implemented by local and national governments, or other factors;
the impact of rules and regulations on our required regulatory capital and liquidity levels, governmental assessments on us, the scope of business activities in which we may engage, the manner in which we engage in such activities, and the fees we may charge for certain products and services;
uncertainties related to the application of the National Bank Act of 1863, 12 U.S.C. 38 (the “National Bank Act”) and OCC regulations to the Bank’s corporate affairs as more fully described under “Risk Factors”;
changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (“FASB”) or regulatory agencies;
risks and uncertainties related to the ability to obtain shareholder and regulatory approvals when required, or the possibility that such approvals may be delayed;
new legal claims against the Bank, including litigation, arbitration and proceedings brought by governmental or self-regulatory agencies, or changes in existing legal matters;
economies of scale attendant to the development of digital and other technologies by much larger bank and non-bank competitors, and the possible entry of technology “platform” companies into the financial services business;
the Bank’s ability to develop and maintain secure and reliable information technology systems, including as necessary to guard against fraud, cybersecurity and privacy risks; and
the Bank’s implementation of new technologies.
Except to the extent required by law, the Bank specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
GLOSSARY OF ACRONYMS AND ABBREVIATIONS
ACL
Allowance for Credit Losses
BOLI
Bank-Owned Life Insurance
AFS
Available-for-Sale
bps
basis points
ALCO
Asset/Liability Committee
CB&T
California Bank & Trust, a division of Zions Bancorporation, National Association
ALLL
Allowance for Loan and Lease Losses
CCAR
Comprehensive Capital Analysis and Review
Amegy
Amegy Bank, a division of Zions Bancorporation, National Association
CCPA
California Consumer Privacy Act of 2018
AOCI
Accumulated Other Comprehensive Income
CET1
Common Equity Tier 1 (Basel III)
ASC
Accounting Standards Codification
CFPB
Consumer Financial Protection Bureau
ASU
Accounting Standards Update
CLTV
Combined Loan-to-Value Ratio
ATM
Automated Teller Machine
CMC
Capital Management Committee
COSO
Committee of Sponsoring Organizations of the Treadway Commission
NBAZ
National Bank of Arizona, a division of Zions Bancorporation, National Association

4


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CRA
Community Reinvestment Act
NIM
Net Interest Margin
Crapo Bill
The Economic Growth, Regulatory Relief, and Consumer Protection Act
NRE
National Real Estate
CRE
Commercial Real Estate
NSB
Nevada State Bank, a division of Zions Bancorporation, National Association
CSA
Credit Support Annex
NSFR
Net Stable Funding Ratio
CSV
Cash Surrender Value
OCC
Office of the Comptroller of the Currency
DFAST
Dodd-Frank Act Stress Test
OCI
Other Comprehensive Income
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
OREO
Other Real Estate Owned
DTA
Deferred Tax Asset
OTTI
Other-Than-Temporary Impairment
EaR
Earnings at Risk
PAGA
Private Attorney General Act
EITF
Emerging Issues Task Force
PCAOB
Public Company Accounting Oversight Board
ERM
Enterprise Risk Management
PCI
Purchased Credit-Impaired
ERMC
Enterprise Risk Management Committee
PEI
Private Equity Investment
EVE
Economic Value of Equity at Risk
PPNR
Pre-provision Net Revenue
Exchange Act
Securities Exchange Act of 1934
ROC
Risk Oversight Committee
FAMC
Federal Agricultural Mortgage Corporation, or “Farmer Mac”
ROTCE
Return on Average Tangible Common Equity
FASB
Financial Accounting Standards Board
RSU
Restricted Stock Unit
FDIC
Federal Deposit Insurance Corporation
RULC
Reserve for Unfunded Lending Commitments
FDICIA
Federal Deposit Insurance Corporation Improvement Act
S&P
Standard and Poor's
FHLB
Federal Home Loan Bank
SAB 118
Staff Accounting Bulletin No. 118
FINRA
Financial Industry Regulatory Authority
SBA
Small Business Administration
FRB
Federal Reserve Board
SBIC
Small Business Investment Company
FSOC
Financial Stability Oversight Council
SEC
Securities and Exchange Commission
FTP
Funds Transfer Pricing
SIFI
Systemically Important Financial Institution
GAAP
Generally Accepted Accounting Principles
SOFR
Secured Overnight Financing Rate
GDPR
General Data Protection Regulation
TARP
Troubled Asset Relief Program
HECL
Home Equity Credit Line
TCBO
The Commerce Bank of Oregon, a division of Zions Bancorporation, National Association
HTM
Held-to-Maturity
TCBW
The Commerce Bank of Washington, a division of Zions Bancorporation, National Association
IMG
International Manufacturing Group
TDR
Troubled Debt Restructuring
ISDA
International Swaps and Derivatives Association
The Act
Tax Cuts and Jobs Act of 2017
KBW
Keefe, Bruyette & Woods, Inc.
Tier 1
Common Equity Tier 1 (Basel III) and Additional Tier 1 Capital
KRX
Regional Bank Index
Topic 606
ASC Topic 606, “Revenue from Contracts with Customers”
LCR
Liquidity Coverage Ratio
U.S.
United States
LIBOR
London Interbank Offered Rate
USA Patriot Act
Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
MD&A
Management’s Discussion and Analysis
Vectra
Vectra Bank Colorado, a division of Zions Bancorporation, National Association
Municipalities
State and Local Governments
VIE
Variable Interest Entity
NASDAQ
National Association of Securities Dealers Automated Quotations
Zions Bancorporation, N.A.
Zions Bancorporation, National Association
NAV
Net Asset Value
Zions Bank
Zions Bank, a division of Zions Bancorporation, National Association

5


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 1.
BUSINESS
DESCRIPTION OF BUSINESS
Zions Bancorporation, National Association and its subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”) is a national commercial bank headquartered in Salt Lake City, Utah. The Bank owns and operates 433 branches at year-end 2018. The Bank provides a full range of banking and related services, primarily in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. The Bank conducts its operations through seven separately managed and branded segments, which we sometimes refer to as “affiliates” or by reference to their respective brands. Full-time equivalent employees totaled 10,201 at December 31, 2018. For further information about the Bank’s industry segments, see “Business Segment Results” on page 43 in MD&A and Note 21 of the Notes to Consolidated Financial Statements. For information about the Bank’s foreign operations, see “Foreign Exposure and Operations” on page 50 in MD&A. The “Executive Summary” on page 31 in MD&A provides further information about the Bank.
PRODUCTS AND SERVICES
The Bank focuses on providing community banking services by continuously strengthening its core business lines of (1) small- and medium-sized business and corporate banking; (2) commercial and residential development, construction and term lending; (3) retail banking; (4) treasury cash management and related products and services; (5) residential mortgage lending and servicing; (6) trust and wealth management; (7) limited capital markets activities, including municipal finance advisory and underwriting; and (8) investment activities. It operates primarily through seven geographic regions, each with its own local branding, chief executive officer and management team.
In addition to providing a wide variety of commercial products and services, the Bank provides a range of personal banking services to individuals, including home mortgages, bankcard, other installment loans, home equity lines of credit, checking accounts, savings accounts, certificates of deposit of various types and maturities, trust services, safe deposit facilities, and Internet and mobile banking. The Bank provides services to key market segments through its Private Client Services and Executive Banking Groups. It offers self-directed brokerage services through Zions Direct and also offers comprehensive and personalized wealth management and investment services.
The Bank has built specialized lines of business in capital markets and public finance and is a leader in small business administration (“SBA”) lending. The Bank is one of the nation’s largest providers of SBA 7(a) and SBA 504 financing to small businesses. It owns an equity interest in FAMC and is its top originator of secondary market agricultural real estate mortgage loans. The Bank provides finance advisory and corporate trust services for municipalities. The Bank also provides bond transfer, stock transfer, and escrow services nationally in its corporate trust business.
COMPETITION
The Bank operates in a highly competitive environment. The Bank’s most direct competition for loans and deposits comes from other commercial banks, credit unions, and thrifts, including institutions that do not have a physical presence in our market footprint but solicit via the Internet and other means. In addition, the Bank competes with finance companies, mutual funds, insurance companies, brokerage firms, securities dealers, investment banking companies, financial technology and other non-traditional lending and banking companies, and a variety of other types of companies. These companies may have fewer regulatory constraints and some have lower cost structures or tax burdens.
The primary factors in competing for business include the quality of service delivered, our local community knowledge, convenience of office locations, online banking functionality and other delivery methods, range of products offered, pricing and the overall relationship with our clients. The Bank must compete effectively along all of these dimensions to remain successful.

6


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

SUPERVISION AND REGULATION
This section describes the material elements of selected laws and regulations applicable to the Bank. The descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described. Changes in applicable laws or regulations, and in their application by regulatory agencies, cannot be predicted, but they may have a material effect on the business and results of the Bank.
On September 30, 2018, we completed the merger of Zions Bancorporation, the Bank’s former holding company, with and into Zions Bancorporation, N.A., sometimes referred to herein as the “restructuring.” More information about the restructuring and its effects can be found in the proxy statement filed by Zions Bancorporation with the SEC on July 24, 2018. In connection with completing the restructuring, we also received approval of an application filed with the Financial Stability Oversight Council (“FSOC”) seeking a determination that the Bank is not “systemically important” as defined by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). As a result of the restructuring and FSOC approval:
The Bank is the top-level publicly-traded entity within our corporate structure.
The Bank is no longer subject to:
Examinations by the Board of Governors of the Federal Reserve System (“FRB”). The Bank’s primary regulator is the OCC and continues to be subject to examinations by the Bureau for Consumer Finance Protection, commonly referred to as the CFPB, with respect to consumer financial regulations;
Certain requirements of the Dodd-Frank Act, as more fully described below;
The Securities Act of 1933, as amended (the “Securities Act”), but remains subject to the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the reporting requirements thereunder. However, this will not inhibit the Bank’s ability to raise capital. The Bank is subject to OCC regulations governing securities offerings and continues to make filings required under the Exchange Act with the SEC as a voluntary filer.
The banking and financial services business in which we engage is and remains highly regulated. Such regulation is intended, among other things, to improve the stability of banking and financial companies and to protect the interests of customers, including both loan customers and depositors, and taxpayers. These regulations are not, however, generally intended to protect the interests of our shareholders or creditors, and in fact may have the consequence of reducing returns to our shareholders. Banking laws and regulations promulgated thereunder have given financial regulators expanded powers over many aspects of the financial services industry, which have reduced and may continue to reduce returns earned by shareholders.
Legislative changes to laws governing the financial industry occur frequently; some of this legislation materially affects the manner in which we and other financial institutions operate, including increasing the costs and other burdens of conducting our businesses. In addition, the banking agencies regularly promulgate new regulations or modify existing regulations, which also have significant impact on the financial industry. The content and impact of such regulatory changes cannot presently be determined. The Bank is committed to both satisfying regulatory expectations and providing attractive shareholder returns. However, given the ever-evolving regulatory environment, the results of these efforts cannot yet be known.
General
The Bank is subject to the provisions of the National Bank Act and other statutes governing national banks, as well as the rules and regulations of the OCC, the CFPB, and the FDIC. It is also subject to examination and supervision by the OCC and examination by the CFPB in respect of federal consumer financial regulations. The Bank, as well as some of its subsidiaries, is also subject to regulation by other federal and state agencies. These regulatory agencies may exert considerable influence over our activities through their supervisory and examination roles. Our brokerage and investment advisory subsidiaries are regulated by the SEC, Financial Industry Regulatory Authority (“FINRA”) and/or state securities regulators.

7


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The National Bank Act
Prior to the restructuring, Zions Bancorporation’s corporate affairs were governed by Utah state law and securities law matters were governed by the federal securities laws, including the Securities Act and Exchange Act, as administered by the SEC. Each of these legal regimes is well-developed and used widely by public companies.
Following the restructuring, the Bank’s corporate affairs are governed by the National Bank Act and related regulations administered by the OCC. With respect to securities matters, the Bank is not subject to the Securities Act, but is subject to OCC regulations governing securities offerings. The Bank’s common stock and certain other securities are registered or deemed registered under the Exchange Act, which vests the OCC with the power to administer and enforce certain sections of the Exchange Act applicable to banks such as the Bank, though the Bank continues to make filings required by the Exchange Act with the SEC as a voluntary filer. These statutory and regulatory regimes are not as well developed as the corporate and securities law regimes applicable to many other publicly held corporations. See discussion under “Risk Factors.”
The Dodd-Frank Act
The Dodd-Frank Act and related regulations broadly affect the financial services industry. Among other things, the Dodd-Frank Act involves mandatory divestiture of certain equity investments, increasing regulation of executive and incentive-based compensation, requiring banks to pay increased fees to regulatory agencies, and requiring numerous other provisions aimed at strengthening the sound operation of the financial services sector.
Regulations promulgated under the Dodd-Frank Act require many banks to maintain greater levels of capital and liquid assets than was generally the case prior to the enactment of the Dodd-Frank Act and limit the forms of capital that such banks rely upon for regulatory purposes. Certain bank holding companies and other financial institutions, known as systemically important financial institutions, or SIFIs, are required to adhere to “enhanced prudential supervision” requirements of the Dodd-Frank Act and the annual Comprehensive Capital Analysis (“CCAR”) process administered by the FRB, which in effect requires SIFIs to maintain capital based on hypothetical scenarios dictated by the FRB. As a result of the restructuring and FSOC approval, the Bank is no longer subject to these requirements (including the prior non-objection requirement under CCAR for declaring any dividends or share repurchases), or the liquidity and capital requirements applicable to SIFIs. However, the Bank continues to be subject to the OCC’s heightened standard guidelines, which establish enhanced requirements for national banks with assets of $50 billion or more, and other regulatory requirements that reduce its flexibility to return capital to shareholders and respond to market developments and opportunities in such areas as capital raising and acquisitions. Additionally, in May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act, also known as “the Crapo Bill,” was signed into law, reducing regulatory requirements for many banking institutions and exempting the Bank from the capital planning actions as required by the Dodd-Frank Act.
The Dodd-Frank Act’s provisions and related regulations also affect the fees we must pay to regulatory agencies and the pricing of certain products and services, including the following:
The assessment base for federal deposit insurance was changed to consolidated assets less tangible capital instead of the amount of insured deposits.
The federal prohibition on the payment of interest on business transaction accounts was repealed.
The FRB was authorized to issue and did issue regulations governing debit card interchange fees.
The Dodd-Frank Act also created the CFPB, which is responsible for promulgating regulations designed to protect consumers’ financial interests and examining large financial institutions for compliance with, and enforcing, those regulations. The Dodd-Frank Act adds prohibitions on unfair, deceptive or abusive acts and practices to the scope of consumer protection regulations overseen and enforced by the CFPB. The Dodd-Frank Act subjected national banks to the possibility of further regulation by restricting the preemption of state laws by federal laws. Restricting the scope of federal preemption could burden national banks with the requirement that they also comply with certain state laws covering matters already covered by federal law. In addition, the Dodd-Frank Act gives greater power to state attorneys general to pursue legal actions against banking organizations for violations of federal law.

8


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The Bank and other companies subject to the Dodd-Frank Act are subject to a number of requirements regarding the time, manner and form of compensation given to its key executives and other personnel receiving incentive compensation, which are being imposed through the supervisory process as well as published guidance and proposed rules. These restrictions imposed by the Dodd-Frank Act include documentation and governance, deferral, risk-balancing, and clawback requirements. Any deficiencies in compensation practices that are identified may be incorporated into the organization’s supervisory ratings, which can affect its ability to make acquisitions or engage in other activities, or could result in regulatory enforcement actions.
During the second quarter of 2016, the U.S. financial regulators, including the FRB and the SEC, proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets (including the Bank). The proposed revised rules would establish general qualitative requirements applicable to all covered entities, additional specific requirements for entities with total consolidated assets of at least $50 billion, such as the Bank, and further, more stringent requirements for those with total consolidated assets of at least $250 billion. The general qualitative requirements include: (i) prohibiting incentive arrangements that encourage inappropriate risks by providing excessive compensation; (ii) prohibiting incentive arrangements that encourage inappropriate risks that could lead to a material financial loss; (iii) establishing requirements for performance measures to appropriately balance risk and reward; (iv) requiring board of director oversight of incentive arrangements; and (v) mandating appropriate record-keeping. For larger financial institutions, including the Bank, the proposed revised regulations would also introduce very prescriptive requirements relating to the types and percentages, the timing of the realization, and the risk of forfeiture of incentive compensation awarded to “senior executive officers” and “significant risk-takers.” The regulators have not yet issued any final rules.
Capital Standards - Basel Framework
In 2013, the FRB, FDIC, and OCC published final rules (the “Basel III capital rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Basel III capital rules effectively replaced the Basel I capital rules and implemented the Basel Committee’s December 2010 framework, commonly referred to as Basel III, for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. The Basel III capital rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions, including the Bank, compared to the Basel I U.S. risk-based capital rules. The Basel III capital rules became effective for the Bank on January 1, 2015 and were subject to phase-in periods for certain of their components. In November 2017, the FRB, FDIC and OCC published a final rule that extended the 2017 transition provisions for certain U.S. Basel III capital rules for non-advanced approaches banks, such as the Bank. Effective January 1, 2018, the final rule retains the 2017 Basel III transitional treatment of certain DTAs and mortgage servicing assets, among others. As a result, since January 1, 2018, our DTAs and mortgage servicing assets retained their 2017 risk weight treatment until the federal banking regulators revise the extended transitional treatment under the November 2017 transitional rule.
The Basel III capital rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Basel III capital rules also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios and replaced the risk-weighting approach derived from Basel I capital accords of the Basel Committee, with a more risk-sensitive approach based, in part, on the standardized approach in the Basel Committee’s 2004 Basel II capital accords. The Basel III capital rules also implemented the requirements of Section 939A of the Dodd-Frank Act to remove references to credit ratings from the federal banking agencies’ rules.
The Basel III capital rules, among other things, (i) introduced a new capital measure called “Common Equity Tier 1” (“CET1”), (ii) specified that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) applied most deductions/adjustments to regulatory capital measures to CET1 and not to the other components of capital, thus potentially requiring higher levels of CET1 in order to meet minimum ratios, and (iv) expanded the scope of the deductions/adjustments from capital as compared to prior regulations.
Under the Basel III capital rules, the minimum capital ratios are as follows:
4.5% CET1 to risk-weighted assets;

9


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

6.0% Tier 1 capital (i.e., CET1 plus Additional Tier 1) to risk-weighted assets;
8.0% Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets; and
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).
As of January 1, 2019, the Basel III capital rules also require the Bank to maintain a 2.5% “capital conservation buffer” designed to absorb losses during periods of economic stress, composed entirely of CET1, on top of the minimum risk-weighted asset ratios, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The severity of the constraint depends on the amount of the shortfall and the institution’s “eligible retained income” (that is four quarter trailing net income, net of distributions and tax effect not reflected in net income).
The Basel III capital rules also prescribed a standardized approach for calculating risk-weighted assets that expanded the risk-weighting categories from Basel I-derived categories (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. Government and agency securities, to 600% for certain equity exposures, to 1,250% for certain securitization exposures, and resulting in higher risk weights for a variety of asset categories. In addition, the Basel III capital rules provided more advantageous risk weights for derivatives and repurchase-style transactions cleared through a qualifying central counterparty and increased the scope of eligible guarantors and eligible collateral for purposes of credit risk mitigation.
The Basel III capital rules provided for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, DTAs dependent upon future taxable income, and significant investments in common equity issued by nonconsolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1. The application of this part of the rule did not result in any deductions from CET1 for us.
Under prior Basel I capital standards, the effects of accumulated other comprehensive income (“AOCI”) items included in capital were excluded for purposes of determining regulatory capital and capital ratios. As a “non-advanced approaches banking organization,” we made a one-time permanent election as of January 1, 2015 to continue to exclude these items, as allowed under the Basel III capital rules.
Basel III also required additional regulatory capital disclosures to be made that are commonly referred to as “Pillar 3” disclosures. These disclosures require the Bank to make prescribed regulatory disclosures on a quarterly basis regarding its capital structure adequacy and risk-weighted assets. The Bank began publishing these Pillar 3 disclosures in 2015, and such disclosures are available on the Bank’s website.
The Basel Committee has issued a series of updates that propose other changes to capital regulations. In one of these, the Basel Committee finalized a revised framework for calculating minimum capital requirements for market risk, which is expected to increase market risk capital requirements for most banking organizations. The Basel Committee has set an effective date for reporting under the revised framework for market risk capital of January 1, 2022. The U.S. federal bank regulatory agencies have not yet proposed rules implementing these revisions for U.S. banking organizations. The Bank met all capital adequacy requirements under the Basel III capital rules as of December 31, 2018.
Capital Planning and Stress Testing
As a result of the successful completion of the restructuring and FSOC approval described elsewhere in this report, and the enactment of the Crapo Bill, the Bank is no longer required to participate in the FRB’s CCAR process or publicly disclose the results of stress testing or the Bank’s proposed capital actions. However, the Bank intends to continue to release the results of its internal stress tests, published to its website, as stress testing is the Bank’s

10


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

primary method of assessing capital adequacy. Prior to elimination of this requirement, however, the Bank submitted its 2018 capital plan and stress test results to the FRB. In its capital plan, the Bank was required to forecast for nine quarters, under a variety of hypothetical economic scenarios, its estimated regulatory capital ratios, and its generally accepted accounting principles (“GAAP”) tangible common equity ratio. On June 21, 2018, we filed a Form 8-K with the SEC presenting the results of the Bank’s 2018 Dodd-Frank Act stress tests (“DFAST”). The results of the stress test demonstrated that the Bank had sufficient capital to withstand a severe hypothetical economic downturn. Detailed disclosure of the Bank’s 2018 DFAST results can also be found on our website. The Bank expects to continue to utilize its internal stress testing as an important mechanism to inform its decisions on the appropriate level of capital, based upon actual and hypothetically-stressed economic conditions.
Liquidity
Historically, regulation and monitoring of bank liquidity has been addressed as a supervisory matter, both in the United States and internationally, without required formulaic measures. However, in January 2016, the FRB and other banking regulators adopted final rules (“Final Liquidity Coverage Ratio (“LCR”) Rule”) implementing a U.S. version of the Basel Committee’s LCR requirement. The LCR is intended to ensure that banks hold sufficient amounts of securities and other liquid assets to cover the anticipated net cash outflows during a hypothetical acute 30-day stress scenario. The Final LCR Rule applies to large, internationally active banking organizations (those with at least $250 billion in total assets or at least $10 billion in on-balance sheet foreign exposure) and a modified, less stringent rule applies to bank holding companies and savings and loan holding companies that have at least $50 billion in total assets but are not internationally active banking organizations.
Following the restructuring, the Bank is no longer subject to the Final LCR Rule, despite having greater than $50 billion in total assets. The Bank continues to maintain strong on-balance sheet liquidity and a portfolio of liquid assets comparable to requirements in the rule.
Financial Privacy and Cyber Security
The federal banking regulators have adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a non-affiliated third party. These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications. Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. Federal law makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by fraudulent or deceptive means.
In October 2016, the federal banking regulators jointly issued an advance notice of proposed rulemaking on enhanced cyber risk management standards that are intended to increase the operational resilience of large and interconnected entities under their supervision. The advance notice of proposed rulemaking addressed five categories of cyber standards: (1) cyber risk governance; (2) cyber risk management; (3) internal dependency management; (4) external dependency management; and (5) incident response, cyber resilience, and situational awareness. The comment period expired in February 2017; however, the regulators have not yet issued any revised proposed rules or final rules.
State regulators have been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including date encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements. In June 2018, the California legislature passed the California Consumer Privacy Act of 2018 (the “CCPA”), which is scheduled to take effect on January 1, 2020. The CCPA, which covers businesses that obtain or access personal information on California resident consumers, grants consumers enhanced privacy rights and

11


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

control over their personal information and imposes significant requirements on covered companies with respect to consumer data privacy rights. We expect this trend of state-level activity to continue and are continually monitoring developments in the states in which we operate. Other states have implemented, or are considering, similar privacy laws.
In May 2018, the General Data Protection Regulation (the “GDPR”) established new requirements regarding the handling of personal data. We believe the applicability of the GDPR to us is minimal as we do not offer goods or services to EU residents or monitor their behaviors.
Prompt Corrective Action
The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) requires each federal banking agency to take prompt corrective action to resolve the problems of insured depository institutions, including but not limited to those that fall below one or more prescribed minimum capital ratios. Pursuant to FDICIA, the FDIC promulgated regulations defining the following five categories in which an insured depository institution will be placed, based on the level of its capital ratios: well-capitalized, adequately capitalized, under-capitalized, significantly under-capitalized, and critically under-capitalized. Under the prompt corrective action provisions of FDICIA as modified by the Basel III capital rules, an insured depository institution generally will be classified as well-capitalized if it has a CET1 ratio of at least 6.5%, a Tier 1 risk-based capital ratio of at least 8%, a total capital ratio of at least 10% and a Tier 1 leverage ratio of at least 5%, and an insured depository institution generally will be classified as under-capitalized if its CET1 ratio is under 4.5%, its total risk-based capital ratio is less than 8%, its Tier 1 risk-based capital ratio is less than 6%, or its Tier 1 leverage ratio is less than 4%. An institution that, based upon its capital levels, is classified as “well-capitalized,” “adequately capitalized,” or “under-capitalized,” may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such treatment. At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits. Furthermore, if a bank is classified in one of the under-capitalized categories, it is required to submit a capital restoration plan to the Federal bank regulator.
Other Regulations
The Bank is subject to a wide range of other requirements and restrictions contained in both the laws of the United States and the states in which its banks and other subsidiaries operate. These regulations include but are not limited to the following:
Limitations on dividends payable to shareholders. The Bank’s ability to pay dividends on both its common and preferred stock is subject to regulatory restrictions. See discussion under “Liquidity Management Actions” on page 66.
Safety and soundness requirements. Federal law requires that the Bank be operated in a safe and sound manner. We are subject to additional safety and soundness standards prescribed in the FDICIA, including standards related to internal controls, information systems, internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, as well as other operational and management standards deemed appropriate by the federal banking agencies. The safety and soundness requirements give bank regulatory agencies significant latitude in their supervisory authority over us.
Requirements for approval of acquisitions and activities and restrictions on other activities. The National Bank Act requires regulatory and shareholder approval of all mergers between a national bank and another national or state bank and do not allow for the direct merger into a national bank of a non-affiliated non-bank. See discussion under “Risk Factors.” Other laws and regulations governing national banks contain similar provisions concerning acquisitions and activities.
Limits on bank organization activities, which are more limited than activities that can be conducted by bank holding company organizations.
Limitations on the amount of loans to a borrower and its affiliates.

12


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Limitations on transactions with affiliates, as expanded by the Dodd-Frank Act.
Restrictions on the nature and amount of any investments and ability to underwrite certain securities.
Requirements for opening of branches and the acquisition of other financial entities.
Fair lending and truth in lending requirements to provide equal access to credit and to protect consumers in credit transactions.
Broker-dealer and investment advisory regulations. One of our subsidiaries is a broker-dealer that is authorized to engage in securities underwriting and other broker-dealer activities. This company is registered with the SEC and is a member of FINRA. Another subsidiary is a registered investment adviser under the Investment Advisers Act of 1940, as amended, and as such is supervised by the SEC. Certain of our subsidiaries are also subject to various U.S. federal and state laws and regulations. These laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws.
Provisions of the Gramm-Leach-Bliley Act and other federal and state laws dealing with privacy for non-public personal information of individual customers.
Community Reinvestment Act (“CRA”) requirements. The CRA requires banks to help serve the credit needs in their communities, including providing credit to low and moderate income individuals. If the Bank fails to adequately serve its communities, penalties may be imposed including denials of applications to add branches, relocate, add subsidiaries and affiliates, and merge with or purchase other financial institutions.
Anti-money laundering regulations. The Bank Secrecy Act, Title III of the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”), and other federal laws require financial institutions to assist U.S. Government agencies in detecting and preventing money laundering and other illegal acts by maintaining policies, procedures and controls designed to detect and report money laundering, terrorist financing, and other suspicious activity.
The Bank is subject to the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act, and other federal and state laws and regulations which address, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. The National Association of Securities Dealers Automated Quotations (“NASDAQ”) has also adopted corporate governance rules, which are intended to allow shareholders and investors to more easily and efficiently monitor the performance of companies and their directors.
The Board of Directors of the Bank has overseen management’s establishment of a comprehensive system of corporate governance and risk practices. This system includes policies and guidelines such as Corporate Governance Guidelines, a Code of Business Conduct and Ethics for Employees, a Directors Code of Conduct, a Related Party Transaction Policy, Stock Ownership and Retention Guidelines, a Compensation Clawback Policy, an insider trading policy including provisions prohibiting hedging and placing restrictions on the pledging of bank stock by insiders, and charters for the Executive, Audit, Risk Oversight, Compensation, and Nominating and Corporate Governance Committees. More information on the Bank’s corporate governance practices is available on the Bank’s website at www.zionsbancorporation.com. (The Bank’s website is not part of this Annual Report on Form 10-K).
The Bank has adopted policies, procedures and controls to address compliance with the requirements of the banking, securities and other laws and regulations described above or otherwise applicable to the Bank. The Bank intends to make appropriate revisions to reflect any changes required.
Regulators, Congress, state legislatures, and international consultative bodies continue to enact rules, laws, and policies to regulate the financial services industry and public companies and to protect consumers and investors. The nature of these laws and regulations and the effect of such policies on future business and earnings of the Bank cannot be predicted.

13


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

GOVERNMENT MONETARY POLICIES
The earnings and business of the Bank are affected not only by general economic conditions, but also by policies adopted by various governmental authorities. The Bank is particularly affected by the monetary policies of the FRB, which affect both short-term and long-term interest rates and the national supply of bank credit.
In view of the changing conditions in the economy and the effect of the FRB’s monetary policies, it is difficult to predict future changes in loan demand, deposit levels and interest rates, or their effect on the business and earnings of the Bank. FRB monetary policies have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future.
ITEM 1A. RISK FACTORS
The Bank’s growth strategy is driven by key factors while adhering to defined risk parameters. The key elements of the Bank’s strategy reflect its prudent risk-taking philosophy. The Bank generates revenue by taking prudent and appropriately priced risks. These factors are outlined in the Bank’s Risk Appetite Framework.
The Bank’s Board of Directors has established a Risk Oversight Committee of the Board, approved an Enterprise Risk Management Framework, and appointed an Enterprise Risk Management Committee (“ERMC”) to oversee and implement the Framework. The ERMC is comprised of senior management of the Bank and is chaired by the Chief Risk Officer. The Bank’s most significant risk exposure has traditionally come from the acceptance of credit risk inherent in prudent extension of credit to relationship customers. In addition to credit risk, these committees also monitor the following level one risk areas: market and interest rate risk, liquidity risk, strategic, business and corporate governance risk, operational/technology risk, cyber risk, model risk, capital/financial reporting risk, legal/compliance risk (including regulatory risk), and reputational risk as outlined in the bank’s risk taxonomy. Additional governance and oversight includes Board-approved policies and management committees with direct focus on these specific risk categories. Incorporated into each of these level one risks mentioned previously is third party vendor risk, which the Bank views as critical in the management and oversight of vendors.
Although not comprehensive, the following describes several risk factors that are significant to the Bank:
Credit Risk
Credit quality has adversely affected us in the past and may adversely affect us in the future.
Credit risk is one of our most significant risks. A decline in the strength of the U.S. economy in general or the local economies in which we conduct operations could result in, among other things, deterioration in credit quality and/or reduced demand for credit, including a resultant adverse effect on the income from our loan portfolio, an increase in charge-offs and an increase in the allowance for loan and lease losses (“ALLL”).
We have concentrations of risk in our loan portfolio, including loans secured by real estate, leveraged and enterprise value lending, and oil and gas-related lending, which may have unique risk characteristics that may adversely affect our results.
Concentration or counterparty risk could adversely affect the Bank. Concentration risk across our loan and investment portfolios could pose significant additional credit risk to the Bank due to exposures which perform in a similar fashion. Counterparty risk could also pose additional credit risk.
We engage in commercial construction and land acquisition and development lending, as well as commercial term lending, primarily in our western states footprint. The Bank, as a whole, has relatively larger concentrations of such lending than many other peer institutions. In addition, we have a concentration in oil and gas-related lending, primarily in Texas. Both commercial real estate (“CRE”) and oil and gas-related lending are subject to specific risks, including volatility and potential significant and prolonged declines in collateral-values and activity levels. In addition, our real estate lending is concentrated in the western states, and values there may behave differently than in other parts of the United States. We may have other unidentified concentrated or correlated risks in our loan portfolio.

14


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Our business is highly correlated to local economic conditions in a specific geographic region of the United States.
The Bank provides a full range of banking and related services through its local management teams and unique brands in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. Approximately 79% and 78% of the Bank’s total net interest income relates to our banking operations in Utah, Texas, and California for the years ended December 31, 2018 and December 31, 2017, respectively. As a result of this geographic concentration, our financial results depend largely upon economic conditions in these market areas. Accordingly, adverse economic conditions affecting these three states in particular could significantly affect our consolidated operations and financial results. For example, our credit risk could be elevated to the extent that our lending practices in these three states focus on borrowers or groups of borrowers with similar economic characteristics, which are similarly affected by the same adverse economic events. At December 31, 2018, loan balances associated with our banking operations in Utah, Texas, and California comprised 79% of the Bank’s commercial lending portfolio, 73% of the CRE lending portfolio, and 69% of the consumer lending portfolio.
We have been and could continue to be negatively affected by adverse economic conditions.
Adverse economic conditions negatively affect the Bank’s assets, including its loan and securities portfolios, capital levels, results of operations, and financial condition. The most recent financial crisis resulted in significant regulatory changes that continue to affect the Bank. Although economic conditions have improved since the most recent financial crisis, it is possible that economic conditions may weaken. Economic and fiscal conditions in the United States and other countries may directly or indirectly adversely impact economic and market conditions faced by the Bank and its customers. Any sustained weakness or further weakening in economic conditions would adversely affect the Bank.
Market and Interest Rate Risks
Failure to effectively manage our interest rate risk and prolonged periods of low interest rates could adversely affect us.
Net interest income is the largest component of the Bank’s revenue. Interest rate risk is managed by the Asset Liability Management Committee, which is established by the Bank’s Board of Directors. Failure to effectively manage our interest rate risk could adversely affect the Bank. Factors beyond the Bank’s control can significantly influence the interest rate environment and increase the Bank’s risk. These factors include competitive pricing pressures for our loans and deposits, adverse shifts in the mix of deposits and other funding sources, and volatile market interest rates resulting from general economic conditions and the policies of governmental and regulatory agencies, in particular the FRB.
Over the course of the last year, we have maintained a moderate level of asset-sensitivity as the market rates seemed more likely to increase than to decrease. As risks shifted at the end of the year to be more balanced between higher or lower rates in the future, the Asset/Liability Committee (“ALCO”) has undertaken strategies to reduce the level of asset-sensitivity, such as entering into rate floor agreements and increasing the use of interest rate swaps designated as cash flow hedges to synthetically convert floating-rate assets to fixed-rate. We anticipate moving towards a less asset-sensitive interest rate risk position over the course of 2019.
Interest rates on the Bank’s financial instruments might be subject to change based on developments related to LIBOR, which could adversely impact the Bank’s revenue, expenses, and value of those financial instruments.
In July 2017, the Financial Conduct Authority, the authority regulating the London Interbank Offered Rate (“LIBOR”), along with various other regulatory bodies, announced that LIBOR would likely be discontinued at the end of 2021. LIBOR makes up the most liquid and common interest rate index in the world and is commonly referenced in financial instruments. We have exposure to LIBOR in various aspects through our financial contracts. Instruments that may be impacted include loans, securities, and derivatives, among other financial contracts indexed to LIBOR and that mature after December 31, 2021.
While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, selected by the

15


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Federal Reserve Bank of New York, started in May 2018 to publish the Secured Overnight Financing Rate (“SOFR”) as an alternative to LIBOR. SOFR is a broad measure of the cost of overnight borrowings collateralized by Treasury securities that was selected by the Alternative Reference Rate Committee due to the depth and robustness of the U.S. Treasury repurchase market. At this time, it is impossible to predict whether SOFR will become an accepted alternative to LIBOR.
The market transition away from LIBOR to an alternative reference rate, such as SOFR, is complex and could have a range of adverse effects on our business, financial condition and results of operations. In particular, any such transition could:
adversely affect the interest rates paid or received on, the revenue and expenses associate with, and the value of our floating-rate obligations, loans, deposits, derivatives, and other financial instruments tied to LIBOR rates, or other securities or financial arrangements given LIBOR’s role in determining market interest rates globally;
prompt inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with an alternative reference rate;
result in disputes, litigation or other actions with counterparties regarding the interpretation and enforceability of certain fallback language in LIBOR-based securities; and
require the transition to or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on the applicable alternative pricing benchmark, such as SOFR.
The manner and impact of this transition, as well as the effect of these developments on our funding costs, loan and investment and trading securities portfolios, asset-liability management, and business, is uncertain.
Liquidity Risk
As a regulated entity, we are subject to capital and liquidity requirements that may limit our operations and potential growth.
The Bank is subject to the comprehensive, consolidated supervision and regulation of the OCC and the FDIC, including risk-based and leverage capital ratio requirements, and Basel III liquidity requirements. Capital needs may rise above normal levels when we experience deteriorating earnings and credit quality, and our banking regulators may increase our capital requirements based on general economic conditions and our particular condition, risk profile and growth plans. Compliance with the capital requirements, including leverage ratios, may limit operations that require the intensive use of capital and could adversely affect our ability to expand or maintain present business levels. Although the Bank is not currently subject to the Final LCR Rule or the net stable funding ratio (“NSFR”), it is possible that the Bank may become subject to a liquid coverage ratio requirement or other heightened liquidity requirements in the future if the OCC or another banking regulator apply such a requirement to the Bank as a supervisory matter. In addition, the Bank may become subject to any rule implementing the NSFR that is promulgated in the future. As a result, the Bank could be required to hold a higher portion of its assets in securities and other liquid assets and a lower portion of its assets in loans. Securities and other liquid assets generally have lower yields than loans of the type made by the Bank. For a summary of the capital rules to which we are subject, see “Capital Standards – Basel Framework” on page 9 of this Annual Report on Form 10-K.
We and/or the holders of our securities could be adversely affected by unfavorable rating actions from rating agencies.
Our ability to access the capital markets is important to our overall funding profile. This access is affected by the ratings assigned by rating agencies to us and particular classes of securities that we issue. The rates that we pay on our securities are also influenced by, among other things, the credit ratings that we and/or our securities receive from recognized rating agencies. Ratings downgrades to us or our securities could increase our costs or otherwise have a negative effect on our results of operations or financial condition or the market prices of our securities.

16


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Strategic, Business and Corporate Governance Risks
Problems encountered by other financial institutions could adversely affect financial markets generally and have indirect adverse effects on us.
The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing or other relationships between the institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which we interact on a daily basis, and therefore could adversely affect us. Information security and vendor management processes are in place to actively identify, manage and monitor actual and potential impacts.
The regulation of incentive compensation under the Dodd-Frank Act may adversely affect our ability to retain our highest performing employees.
The bank regulatory agencies have published guidance and proposed regulations which limit the manner and amount of compensation that banking organizations provide to employees. These regulations and guidance may adversely affect our ability to attract and retain key personnel. If we were to suffer such adverse effects with respect to our employees, our business, financial condition and results of operations could be adversely affected, perhaps materially.
We have made, and are continuing to make, significant changes to the Bank that include, among other things, organizational restructurings, efficiency initiatives, and replacement or upgrades of certain core technological systems to improve our control environment, and operating efficiency. The ultimate success and completion of these changes, and their effect on the Bank, may vary significantly from initial planning, which could materially adversely affect the Bank.
Over the last several years, the Bank has completed numerous improvement projects, including the merger of its bank holding company into the Bank, combining the legal charters of our seven affiliate banks into one, consolidating 15 loan operations sites into two, upgrading our accounting systems, installing a credit origination work flow system, streamlining our small business and retail lending, mortgage, wealth management and foreign exchange businesses, and investing in data quality and information security. Ongoing investment continues in a multi-year project to replace our core loan and deposit systems, a collection of customer-facing digital capabilities and a variety of other projects to simplify how we do business.
These changes continue to be implemented; some of the projects are fully completed, and some projects are in their early stages. By their very nature, projections of duration, cost, expected savings, expected efficiencies, and related items are subject to change and significant variability.
We may encounter significant adverse developments in the completion and implementation of these changes. These may include significant time delays, cost overruns, loss of key people, technological problems, processing failures, and other adverse developments. Any or all of these issues could result in disruptions to our systems, processes, control environment, procedures, and employees, which may adversely impact our customers and our ability to conduct business.
We have plans, policies and procedures designed to prevent or limit the negative effect of these potential adverse developments. However, there can be no assurance that any such adverse developments will not occur or, if they do occur, that they will be adequately remediated. The ultimate effect of any adverse development could subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could materially affect the Bank, including its control environment, operating efficiency, and results of operations.

17


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Operational/Technology Risks
Catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, floods, and prolonged drought, may adversely affect the general economy, financial and capital markets, specific industries, and the Bank.
The Bank has significant operations and a significant customer base in Utah, Texas, California and other regions where natural and other disasters may occur. These regions are known for being vulnerable to natural disasters and other risks, such as hurricanes, tornadoes, earthquakes, fires, floods, and prolonged drought. These types of natural catastrophic events at times have disrupted the local economy, the Bank’s business and customers, and have posed physical risks to the Bank’s property. In addition, catastrophic events occurring in other regions of the world may have an impact on the Bank’s customers and in turn on the Bank. Although we have business continuity and disaster recovery programs in place, a significant catastrophic event could materially adversely affect the Bank’s operating results.
We could be adversely affected by failure in our internal controls.
A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors may have of the Bank. We continue to devote a significant amount of effort, time and resources to improving our controls and ensuring compliance with complex accounting standards and regulations. These efforts also include the management of controls to mitigate operational risks for programs and processes across the Bank.
We could be adversely affected by financial technology advancements and other non-traditional lending and banking sources.
The ability to successfully remain competitive is dependent upon our ability to maintain a critical technological capability and to identify and develop new, value-added products for existing and future customers. Failure to do so could impede our time to market, reduce customer product accessibility, and weaken our competitive position.
Cyber Risk
We are subject to a variety of system failure and cyber security risks that could adversely affect our business and financial performance.
We rely heavily on communications and information systems to conduct our business. We, our customers, and other financial institutions with which we interact, are subject to ongoing, continuous attempts to penetrate key systems by individual hackers, organized criminals, and in some cases, state-sponsored organizations. Information security risks for large financial institutions such as the Bank have increased significantly in recent years in part because of the proliferation of new technologies, such as Internet and mobile banking to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, activists and other external third parties. Third parties with whom we or our customers do business also present operational and information security risks to us, including security breaches or failures of their own systems. The possibility of employee error, failure to follow security procedures, or malfeasance also presents these risks. In addition, to access our products and services, our customers may use personal computers, smartphones, tablets, and other mobile devices that are beyond our control environment. Any failure, interruption or breach in security of our information systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems, misappropriation of funds, and theft, disclosure or misuse of proprietary Bank or customer data. While we have significant internal resources, policies and procedures designed to prevent or limit the effect of the possible failure, interruption or security breach of our information systems, there can be no assurance that any such failure, interruption or security breach will not occur or, if they do occur, that they will be adequately addressed.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our layers of defense or to investigate or remediate any information security vulnerabilities. System enhancements and updates may also create risks associated with implementing new systems and integrating them with existing ones. Due to the complexity and interconnectedness of information technology systems, the process of enhancing our layers of defense can itself create a risk of systems disruptions and security issues. In

18


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

addition, addressing certain information security vulnerabilities, such as hardware-based vulnerabilities, may affect the performance of our information technology systems. The ability of our hardware and software providers to deliver patches and updates to mitigate vulnerabilities in a timely manner can introduce additional risks, particularly when a vulnerability is being actively exploited by threat actors. The occurrence of any failure, interruption or security breach of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability.
Model Risk
We use models in the management of the Bank. There is risk that these models are incorrect or inaccurate in various ways, which can cause us to make non-optimal decisions, and this risk causes the Bank to hold additional capital as a buffer against that risk.
We attempt to carefully develop, document, back test, and validate the models used in the management of the Bank, including, for example, models used in the management of interest rate and liquidity risk, and those used in projecting stress losses in various segments of our credit and securities portfolios, and projecting net revenue under stress. Models are inherently imperfect for a number of reasons, however, and cannot perfectly predict outcomes. Management decisions based in part on such models, therefore, can be suboptimal. In addition, in determining the Bank’s capital needs under stress testing, we attempt to specifically quantify the amounts by which model results could be incorrect, and we hold material additional amounts of capital as a buffer against this “model risk.”
Capital/Financial Reporting Risks
Internal stress testing and capital management, as well as provisions of the National Bank Act and OCC regulations, may limit our ability to increase dividends, repurchase shares of our stock, and access the capital markets.
Although we are no longer subject to the CCAR regime, we are required to submit stress tests to the OCC because the Bank has assets in excess of $10 billion, and we expect to continue to utilize stress testing as an important mechanism to inform our decisions on the appropriate level of capital, based upon actual and hypothetically-stressed economic conditions. The stress testing and other applicable regulatory requirements may, among other things, require us to increase our capital levels, limit our dividends or other capital distributions to shareholders, modify our business strategies, or decrease our exposure to various asset classes.
Under the National Bank Act and OCC regulations, certain capital transaction may be subject to the approval of the OCC. These requirements may limit our ability to respond to and take advantage of market developments.
Economic and other circumstances may require us to raise capital at times or in amounts that are unfavorable to the Bank.
The Bank must maintain certain risk-based and leverage capital ratios, as required by its banking regulators, which can change depending upon general economic conditions, and the particular conditions, risk profiles and growth plans of the Bank. Compliance with capital requirements may limit the Bank’s ability to expand and has required, and may require, the Bank or its subsidiaries to raise additional capital. These uncertainties and risks, including those created by legislative and regulatory uncertainties, may increase the Bank’s cost of capital and other financing costs.
We could be adversely affected by accounting, financial reporting, and regulatory/compliance risk.
The Bank is exposed to accounting, financial reporting, and regulatory/compliance risk. The Bank provides to its customers, invests in, and uses for its own capital, funding, and risk management needs, a number of complex financial products and services. Estimates, judgments, and interpretations of complex and changing accounting and regulatory policies are required in order to provide and account for these products and services. Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and conditions. The level of regulatory/compliance oversight has been heightened in recent periods as a result of rapid changes in regulations that affect financial institutions. The administration of some of these regulations and related changes has required the Bank to comply before their formal adoption. Therefore, identification, interpretation and

19


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

implementation of complex and changing accounting standards as well as compliance with regulatory requirements pose an ongoing risk.
The value of our goodwill may decline in the future.
As of December 31, 2018, the Bank had $1 billion of goodwill that was allocated to Amegy Bank (“Amegy”), California Bank & Trust (“CB&T”) and Zions Bank. If the fair value of a reporting unit is determined to be less than its carrying value, the Bank may have to take a charge related to the impairment of its goodwill. Such a charge would occur if the Bank were to experience increases in the book value of a reporting unit in excess of the increase in the fair value of equity of a reporting unit. A significant decline in the Bank’s expected future cash flows, a significant adverse change in the business climate, slower economic growth or a significant and sustained decline in the price of the Bank’s common stock, any or all of which could be materially impacted by many of the risk factors discussed herein, may necessitate the Bank taking charges in the future related to the impairment of its goodwill. Future regulatory actions could also have a material impact on assessments of the appropriateness of the goodwill carrying value. If the Bank was to conclude in the future that a write-down of its goodwill is necessary, it would record the appropriate charge, which could have a material adverse effect on the Bank’s results of operations.
The Bank may not be able to utilize the significant DTA recorded on its balance sheet.
The Bank’s balance sheet includes a significant DTA. We had net DTAs of $130 million at December 31, 2018, compared with $93 million at December 31, 2017. The largest component of this asset results from additions to our ALLL for purposes of GAAP in excess of loan losses actually taken for tax purposes. Our ability to continue to record this DTA is dependent on the Bank’s ability to realize its value through net operating loss carrybacks or future projected earnings. Loss of part or all of this asset would adversely impact tangible capital. In addition, inclusion of this asset in determining regulatory capital is subject to certain limitations. Currently, no DTAs are disallowed for regulatory purposes at the Bank.
Legal Risks
The Dodd-Frank Act imposes significant limitations on our business activities and subjects us to increased regulation and additional costs.
The Dodd-Frank Act implementing regulations place significant additional regulatory oversight and requirements on financial institutions. Among other things, the Dodd-Frank Act:
impacts the Bank’s ability to invest in certain types of entities or engage in certain activities;
impacts a number of the Bank’s business strategies;
requires us to incur the cost of developing substantial heightened risk management policies and infrastructure;
regulates the pricing of certain of our products and services and restricts the revenue that the Bank generates from certain businesses;
subjects the Bank to supervision by the CFPB, with very broad rule-making and enforcement authorities;
grants authority to state agencies to enforce state and federal laws against national banks; and
subjects the Bank to new and different litigation and regulatory enforcement risks;
The Bank and the entire financial services industry have incurred and will continue to incur substantial personnel, systems, consulting, and other costs in order to comply with regulations promulgated under the Dodd-Frank Act. Some aspects of the Dodd-Frank Act continue to be subject to rulemaking, many of the rules that have been adopted will take effect over several additional years, and many of the rules that have been adopted may be subject to interpretation and clarification, and accordingly, the impact of such regulatory changes cannot be presently determined. Individually and collectively, regulations adopted under the Dodd-Frank Act may materially adversely affect the Bank’s and the financial services industry’s business, financial condition (including the Bank’s ability to compete effectively with less regulated financial services providers), and results of operations.

20


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Other legislative and regulatory actions taken now or in the future may have a significant adverse effect on our operations and earnings.
In addition to the Dodd-Frank Act described previously, bank regulatory agencies and international regulatory consultative bodies have proposed or are considering new regulations and requirements, some of which may be imposed without formal promulgation. Our deposits are insured by the FDIC up to legal limits and, accordingly, we are subject to FDIC insurance assessments.
There can be no assurance that any or all of these regulatory changes or actions will ultimately be adopted. However, if adopted, some of these proposals could adversely affect the Bank by, among other things: impacting after-tax returns earned by financial services firms in general; limiting the Bank’s ability to grow; increasing taxes or fees on some of the Bank’s funding or activities; limiting the range of products and services that the Bank could offer; and requiring the Bank to raise capital at inopportune times.
Recent political developments could result in substantial changes in tax, international trade, immigration, and other policies. The extent and timing of any such changes are uncertain, as are the potential direct and indirect impacts, whether beneficial or adverse. Regulations and laws may be modified or repealed, and new legislation may be enacted that will affect us and our subsidiaries.
The ultimate impact of these proposals cannot be predicted as it is unclear which, if any, may be adopted.
We could be adversely affected by legal and governmental proceedings.
We are subject to risks associated with legal claims, litigation, and regulatory and other government proceedings. The Bank’s exposure to these proceedings has increased and may further increase as a result of stresses on customers, counterparties and others arising from the past or current economic environments, new regulations promulgated under recently adopted statutes, the creation of new examination and enforcement bodies, and increasingly aggressive enforcement and legal actions against banking organizations. Any such matters may result in material adverse consequences to our results of operations, financial condition or ability to conduct our business, including adverse judgments, settlements, fines, penalties (including civil money penalties under applicable banking laws), injunctions, restrictions on our business activities or other relief. Our involvement in any such matters, even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business. In general, the amounts paid by financial institutions in settlement of proceedings or investigations, including those relating to anti-money laundering matters, have been increasing dramatically. In addition, any enforcement matters could impact our supervisory and CRA ratings, which may restrict or limit our activities.
The corporate and securities laws applicable to the Bank are not as well-developed as those applicable to a state-chartered corporation, and this may impact the ability of the Bank to effect corporate transactions in an efficient and optimal manner.
Prior to the restructuring, the corporate affairs of the Bank’s holding company were governed by Utah state law, and securities law matters were governed by the federal securities laws, including the Securities Act and the Exchange Act, as administered by the SEC. Each of these legal regimes is well-developed and used widely by public companies.
Post-restructuring, the Bank’s corporate affairs are governed by the National Bank Act and related regulations administered by the OCC. With respect to securities matters, the Bank is not subject to the Securities Act, but rather to OCC regulations governing securities offerings. The Bank’s common stock and certain other securities are registered or deemed registered under the Exchange Act, which vests the OCC with the power to administer and enforce certain sections of the Exchange Act applicable to banks such as the Bank (though the Bank currently makes and intends to continue to make filings required by the Exchange Act with the SEC as a “voluntary filer”). These OCC statutory and regulatory regimes have been used by publicly-traded banking organizations relatively rarely and are not as well-developed as the corporate and securities law regimes applicable to corporations. While certain specific risks associated with operating under these regimes are discussed below, unless and until these regimes are further developed and established over time, the uncertainty of how these regimes might apply to any

21


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

given corporate or securities matters may prevent us from effecting transactions in an efficient and optimal manner or perhaps at all.
Differences between the National Bank Act and state law requirements in respect of mergers could result in the Bank not being able to execute acquisitions as efficiently and advantageously as bank holding companies or other financial institutions.
Unlike state corporate law, the National Bank Act requires shareholder approval of all mergers between a national bank and another national or state bank and does not allow for exceptions in the case of various “minor” mergers, such as a parent company’s merger with a subsidiary or an acquirer’s merger with an unaffiliated entity in which the shares issued by the acquirer do not exceed a designated percentage. The National Bank Act and related regulations do not allow for the direct merger into a national bank of a non-affiliated non-bank.
These differences could adversely affect the Bank’s, and other banks registered under the National Bank Act, ability to efficiently consummate acquisition transactions. In addition, such differences could make the Bank less competitive as a potential acquirer in certain circumstances given that the Bank’s acquisition proposal may be conditioned on Bank shareholder approval while the Bank’s competitors’ proposals will not have such a condition.
Differences between the National Bank Act and state law could result in the Bank’s capacity to pay dividends and repurchase shares at any given time being different from the capacity that existed for Zions Bancorporation prior to the restructuring.
The regulations and limitations applicable to the Bank relating to the payment of dividends and repurchases or redemptions of outstanding common and preferred shares differ from the limitations and considerations that applied to the Bank’s holding company prior to the recent restructuring. While the Bank does not believe this change in legal restrictions resulting from the restructuring will constrain the Bank from executing any capital plans that are currently contemplated or otherwise reasonably foreseeable in the near term, there can be no assurance that the change in legal restrictions will not have an adverse effect on the Bank’s ability to pay dividends and repurchase or redeem stock in the future.
Shares of common stock of a national bank are assessable and this may cause investors to view the Bank’s common stock less favorably than that of Zions Bancorporation prior to the restructuring.
The National Bank Act provides that under certain circumstances the common stock of a national bank is assessable, i.e., holders may be subject to a levy for more funds if so determined by the OCC. In contrast, the common stock of state corporations is not subject to assessment. However, the OCC has confirmed that under the applicable provisions of the National Bank Act, assessability is limited to the par value of a national bank’s stock. The Bank’s common stock has a par value of $0.001. Moreover, according to the OCC, it has not exercised its authority to levy assessments since 1933 and views the assessability authority as a mechanism for addressing capital deficiency that has long been overtaken by developments in statute and regulation, including robust capital standards, prompt corrective action requirements and supervisory and enforcement authorities requiring an institution to maintain capital at a particular level. Nonetheless, potential investors may be unfamiliar with the concept of assessment and, as a result, view the Bank less favorably as an investment.
The ability of investors to access financial and other reports filed by the Bank readily could be adversely affected if such reports were not able to be made available publicly through the SEC or a system operated by the OCC comparable to that of the SEC.
The Bank has been permitted and currently makes its Exchange Act filings as a “voluntary filer” with the SEC. There can be no assurance, however, that the OCC or SEC will continue to allow the Bank to make filings as a voluntary filer or that the OCC will develop a comparable system for making Exchange Act filings publicly available. If the Bank’s Exchange Act filings ceased to be as readily available as those of bank holding companies, investors could view the Bank less favorably.

22


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The Bank’s ability to issue securities in an optimal manner may be adversely affected by the fact that the OCC’s securities offering regulations and organizational structure are less well-developed than those of the SEC, which applied to the Bank’s holding company prior to the restructuring.
The SEC maintains a well-developed regulatory regime and well-staffed organization relating to securities offerings under or exempt from the Securities Act. For example, the SEC has developed integrated disclosure rules, which allow Exchange Act filings to be incorporated by reference into prospectuses distributed as required by the Securities Act. In addition, under the SEC’s rules seasoned issuers who are timely in their filings are permitted to use “automatic shelf registration,” allowing them to offer securities under a registration statement that is automatically effective upon filing. The OCC maintains its own securities offering regime applicable to national banks and their securities offerings, which the Bank will need to comply with in order to access the public capital markets. Similar to the SEC’s offering rules, the OCC’s regime requires that registration statements be reviewed and declared or become effective. However, given that there are currently no other nationally-charted banks whose common stock has been issued under the OCC’s securities offering regime, it is unknown at this point whether and how the OCC staff would review registration statements, and unclear whether the OCC would apply the same mechanics for automatic shelf registration filings used by SEC-filers, or how, more generally, the OCC will function as a securities regulator. Given the extent to and manner in which the Bank has accessed capital markets historically, or to which it currently contemplates accessing such markets, the Bank does not believe there will be a material adverse impact on the Bank’s ability to access capital markets effectively, although there can be no assurance that this will be the case and it is possible that operating under the OCC’s securities offering regime could impede the Bank’s ability to sell securities at the most advantageous times or to achieve optimum pricing in offerings.
The Bank is subject to restrictions on permissible activities that would limit the types of business it may conduct and that may make acquisitions of other financial companies more challenging.
Under applicable laws and regulations, bank holding companies and banks are generally limited to business activities and investments that are related to banking or are financial in nature. The range of permissible financial activities is set forth in the Gramm-Leach-Bliley Act and is more limited for banks than for bank holding company organizations. The differences relate mainly to insurance underwriting (but not insurance agency activities) and merchant banking (but not broker-dealer and investment advisory activities). Merchant banking authority is an important power for financial institutions that desire to engage in a full-scale investment banking business and can also be important for institutions that wish to engage in private equity and proprietary investment business lines. While historically the Bank’s holding company did not seek to engage in activities available only to bank holding companies under the Gramm-Leach-Bliley Act, the Bank is not able to engage in these activities. Loss of the bank holding company status resulting from the restructuring will make future acquisitions by the Bank of financial institutions that have such operations more challenging.
The Bank’s common stock is not an insured deposit.
Shares of the Bank’s common stock are not a bank deposit and, therefore, losses in value are not insured by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in shares of the Bank’s common stock is inherently risky and is subject to the same market forces and investment risks that affect the price of common stock in any other company, including the possible loss of some or all principal invested.
Reputational Risk
The Bank is presented with various reputational risk issues that could stem from operational, regulatory/compliance and legal risks.
A Reputational Risk Council was established to monitor, manage and develop strategies to effectively manage reputational risk which includes, but is not limited to, addressing communication logistics, legal and regulatory issues.

23


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 1B.
UNRESOLVED STAFF COMMENTS
There are no unresolved written comments that were received from the SEC’s or OCC’s staff 180 days or more before the end of the Bank’s fiscal year relating to its periodic or current reports filed under the Securities Exchange Act of 1934.
ITEM 2. PROPERTIES
At December 31, 2018, the Bank operated 433 branches, of which 276 are owned and 157 are leased. The Bank also leases its headquarters in Salt Lake City, Utah. Other operations facilities are either owned or leased. The annual rentals under long-term leases for leased premises are determined under various formulas and factors, including operating costs, maintenance and taxes. For additional information regarding leases and rental payments, see Note 15 of the Notes to Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
The information contained in Note 15 of the Notes to Consolidated Financial Statements is incorporated by reference herein.
ITEM 4. MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
PREFERRED STOCK
We have 4,400,000 authorized shares of preferred stock without par value and with a liquidation preference of $1,000 per share. As of December 31, 2018, 66,139, 138,391, 126,221, 98,555, and 136,368 of preferred shares series A, G, H, I, and J respectively, are outstanding. See Note 13 of the Notes to Consolidated Financial Statements for further information regarding the Bank’s preferred stock.
COMMON STOCK
Market Information
The Bank’s common stock is traded on the NASDAQ Global Select Market under the symbol “ZION.” The last reported sale price of the common stock on NASDAQ on February 8, 2019 was $49.04 per share.
Common Stock Warrants
As of December 31, 2018, 29.3 million common stock warrants (NASDAQ: ZIONW) with an exercise price of $34.82 were outstanding. These warrants expire on May 22, 2020. See Note 13 of the Notes to Consolidated Financial Statements for further information about the warrants and warrant exercises during 2018.
Equity Capital and Dividends
As of February 8, 2019, there were 4,161 holders of record of the Bank’s common stock. The Bank’s Board of Directors approved a dividend of $0.30 per common share payable on February 21, 2019 to shareholders of record on February 14, 2019. The Bank expects to continue its policy of paying regular cash dividends on a quarterly basis, although there is no assurance as to future dividends because they depend on future earnings, capital requirements, financial condition, and regulatory approvals.
Share Repurchases
The Bank continued its common stock repurchase program during 2018 and repurchased 12.9 million shares of common shares outstanding, which is equivalent to 6.6% of common stock outstanding as of December 31, 2017,

24


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

with a fair value of $670 million at an average price of $51.77 per share. In February 2019, the Bank announced that the Board approved a plan to repurchase $275 million of common stock during the first quarter of 2019. During 2017, the Bank repurchased 7.0 million shares of common shares outstanding with a fair value of $320 million at an average price of $45.66 per share. The following schedule summarizes the Bank’s share repurchases for the fourth quarter of 2018:
Period
 
Total number
of shares
repurchased 1
 
Average
price paid
per share
 
Shares purchased as part of publicly announced plans or programs
 
Approximate dollar value of shares that may yet be purchased under the share repurchase plan (in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
October
 
419,583

 
$
47.78

 
 
418,632

 
 
 
$
230

 
November
 
4,723,543

 
48.69

 
 
4,723,363

 
 
 

 
December
 
5,006

 
46.87

 
 

 
 
 

 
Fourth quarter
 
5,148,132

 
48.62

 
 
5,141,995

 
 
 
 
 
1 
Represents common shares acquired from employees in connection with our stock compensation plan in addition to shares acquired under previously reported share repurchase plans. Shares were acquired from employees to pay for their payroll taxes and stock option exercise cost upon the vesting of restricted stock and restricted stock units, and the exercise of stock options, under provisions of an employee share-based compensation plan.
Performance Graph
The following stock performance graph compares the five-year cumulative total return of Zions Bancorporation’s common stock with the Standard & Poor’s 500 Index and the Keefe, Bruyette & Woods Inc. (“KBW”), Regional Bank Index (“KRX”). The KRX is a modified market capitalization-weighted regional bank and thrift stock index developed and published by KBW, a nationally recognized brokerage and investment banking firm specializing in bank stocks. The index is composed of 50 geographically diverse stocks representing regional banks or thrifts. The stock performance graph is based upon an initial investment of $100 on December 31, 2013 and assumes reinvestment of dividends.
PERFORMANCE GRAPH FOR ZIONS BANCORPORATION, N.A.
INDEXED COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN chart-e10ba27c566b5208940a01.jpg
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
Zions Bancorporation, N.A.
100.0

 
95.7

 
92.3

 
147.0

 
175.3

 
142.2

KRX Regional Bank Index
100.0

 
102.4

 
108.6

 
151.0

 
153.8

 
126.9

S&P 500
100.0

 
113.7

 
115.2

 
129.0

 
157.2

 
149.0

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The information contained in Item 12 of this Form 10-K is incorporated by reference herein.

25


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 6.
SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS
(Dollar amounts in millions, except per share amounts)
2018/2017 Change
 
2018
 
2017
 
2016
 
2015
 
2014
For the Year
 
 
 
 
 
 
 
 
 
 
 
Net interest income
+8
 %
 
$
2,230

 
$
2,065

 
$
1,867

 
$
1,715

 
$
1,680

Noninterest income
+1
 %
 
552

 
544

 
516

 
357

 
493

Total revenue
+7
 %
 
2,782

 
2,609

 
2,383

 
2,072

 
2,173

Provision for credit losses
-335
 %
 
(40
)
 
17

 
83

 
34

 
(107
)
Noninterest expense
+2
 %
 
1,678

 
1,649

 
1,585

 
1,581

 
1,649

Income before income taxes
+22
 %
 
1,143

 
936

 
705

 
451

 
621

Income taxes
-25
 %
 
259

 
344

 
236

 
142

 
223

Net income
+49
 %
 
884

 
592

 
469

 
309

 
398

Net earnings applicable to common shareholders
+55
 %
 
850

 
550

 
411

 
247

 
327

Per Common Share
 
 
 
 
 
 
 
 
 
 
 
Net earnings – diluted
+57
 %
 
4.08

 
2.60

 
1.99

 
1.20

 
1.68

Net earnings – basic
+61
 %
 
4.36

 
2.71

 
2.00

 
1.20

 
1.68

Dividends declared
+136
 %
 
1.04

 
0.44

 
0.28

 
0.22

 
0.16

Book value at year-end
+4
 %
 
37.39

 
36.01

 
34.10

 
32.67

 
31.35

Market price – end
-20
 %
 
40.74

 
50.83

 
43.04

 
27.30

 
28.51

Market price – high
+13
 %
 
59.19

 
52.20

 
44.15

 
33.03

 
33.33

Market price – low
-1
 %
 
38.08

 
38.43

 
19.65

 
23.72

 
25.02

At Year-End


 
 
 
 
 
 
 
 
 
 
Assets
+4
 %
 
68,746

 
66,288

 
63,239

 
59,665

 
57,203

Net loans and leases
+4
 %
 
46,714

 
44,780

 
42,649

 
40,650

 
40,064

Deposits
+3
 %
 
54,101

 
52,621

 
53,236

 
50,374

 
47,848

Long-term debt
+89
 %
 
724

 
383

 
535

 
812

 
1,086

Federal funds and other short-term borrowings
+14
 %
 
5,653

 
4,976

 
827

 
347

 
244

Preferred equity
 %
 
566

 
566

 
710

 
829

 
1,004

Common equity
-1
 %
 
7,012

 
7,113

 
6,924

 
6,679

 
6,366

Performance Ratios
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
 
1.33
%
 
0.91
%
 
0.78
%
 
0.53
%
 
0.71
%
Return on average common equity
 
 
12.1
%
 
7.7
%
 
6.0
%
 
3.8
%
 
5.4
%
Return on average tangible common equity
 
 
14.2
%
 
9.0
%
 
7.1
%
 
4.6
%
 
6.7
%
Net interest margin
 
 
3.61
%
 
3.45
%
 
3.37
%
 
3.19
%
 
3.26
%
Capital Ratios at Year End
 
 
 
 
 
 
 
 
 
 
 
Equity to assets
 
 
11.0
%
 
11.6
%
 
12.1
%
 
12.6
%
 
12.9
%
Common equity tier 1 (Basel III), tier 1 common
(Basel I) 1
 
 
11.7
%
 
12.1
%
 
12.1
%
 
12.2
%
 
11.9
%
Tier 1 leverage 1
 
 
10.3
%
 
10.5
%
 
11.1
%
 
11.3
%
 
11.8
%
Tier 1 risk-based capital 1
 
 
12.7
%
 
13.2
%
 
13.5
%
 
14.1
%
 
14.5
%
Total risk-based capital 1
 
 
13.9
%
 
14.8
%
 
15.2
%
 
16.1
%
 
16.3
%
Tangible common equity
 
 
8.9
%
 
9.3
%
 
9.5
%
 
9.6
%
 
9.5
%
Tangible equity
 
 
9.7
%
 
10.2
%
 
10.6
%
 
11.1
%
 
11.3
%
Selected Information
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares outstanding
(in thousands)
-2
 %
 
206,501

 
209,653

 
204,269

 
203,698

 
192,789

Bank common shares repurchased - from publicly announced plans (in thousands)
+85
 %
 
12,943

 
7,009

 
2,889

 

 

Common dividend payout ratio 2


 
23.8
%
 
16.1
%
 
14.0
%
 
18.3
%
 
9.6
%
Capital distributed as a percentage of net earnings applicable to common shareholders 3
 
 
103
%
 
74
%
 
36
%
 
18
%
 
9
%
Full-time equivalent employees
+1
 %
 
10,201

 
10,083

 
10,057

 
10,200

 
10,462

Branches
 %
 
433

 
433

 
436

 
450

 
460

1 
For 2018, 2017, 2016, and 2015, ratios are based on Basel III. For 2014, ratios are based on Basel I.
2  
The common dividend payout ratio is equal to common dividends paid divided by net earnings applicable to common shareholders.
3  
This ratio is the common dividends paid plus share repurchases for the year, divided by net earnings applicable to common shareholders.

26


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT’S DISCUSSION AND ANALYSIS
GAAP to NON-GAAP RECONCILIATIONS
This Form 10-K presents non-GAAP financial measures, in addition to GAAP financial measures, to provide investors with additional information. The adjustments to reconcile from the applicable GAAP financial measures to the non-GAAP financial measures are presented in the following schedules. The Bank considers these adjustments to be relevant to ongoing operating results and provide a meaningful base for period-to-period and company-to-company comparisons. These non-GAAP financial measures are used by management to assess the performance and financial position of the Bank and for presentations of Bank performance to investors. The Bank further believes that presenting these non-GAAP financial measures will permit investors to assess the performance of the Bank on the same basis as that applied by management.
Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied by individual entities. Although non-GAAP financial measures are frequently used by stakeholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP. The following are the non-GAAP financial measures presented in this Form 10-K and a discussion of why management and investors use these non-GAAP measures.
Return on Average Tangible Common Equity (“ROTCE”) – this schedule also includes “net earnings applicable to common shareholders, excluding the effects of the adjustments, net of tax” and “average tangible common equity.” ROTCE is a non-GAAP financial measure that management believes provides useful information about the Bank’s use of shareholders’ equity. Management believes the use of ratios that utilize tangible equity provides additional useful information about performance because they present measures of those assets that can generate income.
Schedule 1
RETURN ON AVERAGE TANGIBLE COMMON EQUITY (NON-GAAP) – ANNUAL
 
 
Year Ended December 31,
(Dollar amounts in millions)
 
2018
 
2017
 
2016
Net earnings applicable to common shareholders (GAAP)
 
$
850

 
$
550

 
$
411

Amortization of core deposit and other intangibles, net of tax
 
1

 
4

 
5

Net earnings applicable to common shareholders, excluding amortization of core deposits and intangibles, net of tax (non-GAAP)
(a)
$
851

 
$
554

 
$
416

Average common equity (GAAP)
 
$
7,024

 
$
7,148

 
$
6,915

Average goodwill and intangibles
 
(1,015
)
 
(1,019
)
 
(1,027
)
Average tangible common equity (non-GAAP)
(b)
$
6,009

 
$
6,129

 
$
5,888

Return on average tangible common equity (non-GAAP)
(a/b)
14.2
%
 
9.0
%
 
7.1
%
Tangible Equity Ratio, Tangible Common Equity Ratio, and Tangible Book Value per Common Share – this schedule also includes “tangible equity,” “tangible common equity,” and “tangible assets.” Tangible equity ratio, tangible common equity ratio, and tangible book value per common share are non-GAAP financial measures that management believes provide additional useful information about the levels of tangible assets and tangible equity between each other and in relation to outstanding shares of common stock. Management believes the use of ratios that utilize tangible equity provides additional useful information about capital adequacy because they present measures of those assets that can generate income.
Schedule 2
TANGIBLE EQUITY (NON-GAAP) AND TANGIBLE COMMON EQUITY (NON-GAAP)
(Dollar amounts in millions, except per share amounts)
 
December 31,
 
2018
 
2017
 
2016
Total shareholders’ equity (GAAP)
 
$
7,578

 
$
7,679

 
$
7,634

Goodwill and intangibles
 
(1,015
)
 
(1,016
)
 
(1,022
)
Tangible equity (non-GAAP)
(a)
6,563

 
6,663

 
6,612

Preferred stock
 
(566
)
 
(566
)
 
(710
)
Tangible common equity (non-GAAP)
(b)
$
5,997

 
$
6,097

 
$
5,902

Total assets (GAAP)
 
$
68,746

 
$
66,288

 
$
63,239

Goodwill and intangibles
 
(1,015
)
 
(1,016
)
 
(1,022
)
Tangible assets (non-GAAP)
(c)
$
67,731

 
$
65,272

 
$
62,217

Common shares outstanding (thousands)
(d)
187,554

 
197,532

 
203,085

Tangible equity ratio (non-GAAP)
(a/c)
9.7
%
 
10.2
%
 
10.6
%
Tangible common equity ratio (non-GAAP)
(b/c)
8.9
%
 
9.3
%
 
9.5
%
Tangible book value per common share (non-GAAP)
(b/d)
$31.97
 
$30.87
 
$29.06
Efficiency Ratio – this schedule also includes “adjusted noninterest expense,” “taxable-equivalent net interest income,” “adjusted taxable-equivalent revenue,” “pre-provision net revenue (“PPNR”),” and “adjusted PPNR.” The methodology of determining the efficiency ratio may differ among companies. Management makes adjustments to exclude certain items as identified in the subsequent schedule which it believes allows for more consistent comparability among periods. Management believes the efficiency ratio provides useful information regarding the cost of generating revenue. Adjusted noninterest expense provides a measure as to how well the Bank is managing its expenses, and adjusted PPNR enables management and others to assess the Bank’s ability to generate capital to cover credit losses through a credit cycle. Taxable-equivalent net interest income allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources.
Schedule 3
EFFICIENCY RATIO
(Dollar amounts in millions)
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
Noninterest expense (GAAP)
(a)
$
1,678

 
$
1,649

 
$
1,585

Adjustments:
 
 
 
 
 
 
Severance costs
 
3

 
7

 
5

Other real estate expense, net
 
1

 
(1
)
 
(2
)
Provision for unfunded lending commitments
 
(1
)
 
(7
)
 
(10
)
Amortization of core deposit and other intangibles
 
1

 
6

 
8

Restructuring costs
 
2

 
4

 
5

Total adjustments
(b)
6

 
9

 
6

Adjusted noninterest expense (non-GAAP)
(a-b)=(c)
$
1,672

 
$
1,640

 
$
1,579

Net interest income (GAAP)
(d)
$
2,230

 
$
2,065

 
$
1,867

Fully taxable-equivalent adjustments
(e)
22

 
35

 
25

Taxable-equivalent net interest income (non-GAAP)
(d+e)=(f)
2,252

 
2,100

 
1,892

Noninterest income (GAAP)
(g)
552

 
544

 
516

Combined income (non-GAAP)
(f+g)=(h)
2,804

 
2,644

 
2,408

Adjustments:
 
 
 
 
 
 
Fair value and nonhedge derivative income (loss)
 
(1
)
 
(2
)
 
2

Securities gains, net
 
1

 
14

 
7

Total adjustments
(i)

 
12

 
9

Adjusted taxable-equivalent revenue (non-GAAP)
(h-i)=(j)
$
2,804

 
$
2,632

 
$
2,399

Pre-provision net revenue (non-GAAP)
(h)-(a)
$
1,126

 
$
995

 
$
823

Adjusted pre-provision net revenue (non-GAAP)
(j-c)
1,132

 
992

 
820

Efficiency ratio (non-GAAP)
(c/j)
59.6
%
 
62.3
%
 
65.8
%

27


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Bank Overview
Zions Bancorporation, National Association and its subsidiaries (collectively “Zions Bancorporation, N.A.,” “the Bank,” “we,” “our,” “us”) together comprise a $69 billion commercial bank headquartered in Salt Lake City, Utah.
At December 31, 2018, the Bank had banking operations through 433 branches in eleven western states, with strong market share in many of the markets in which it operates. Additionally, the Bank currently has, and continues to develop its digital delivery capabilities. Revenues and profits are primarily derived from commercial customers, and the Bank also emphasizes retail banking, mortgage banking, wealth management, municipal finance, and brokerage services. The Bank is included in the Standard and Poor’s (“S&P”) 500 and NASDAQ Financial 100 indices.
The Bank is consistently ranked among the best banks in the country to work with by its small and middle-market customers, as measured by the Greenwich Associates annual survey. Since the inception of the awards in 2009, only five other U.S. banks have consistently received as many Greenwich Excellence Awards as Zions Bancorporation, N.A.
The Bank consistently wins awards for the best bank within its geography. Examples include the best bank awards given by local newspapers, business journals, or similar publications in Nevada, Arizona, and California: Orange County (five consecutive years) and San Diego County (eight consecutive years).
The Bank’s objectives include:
Continuing revenue growth (net interest income plus noninterest income) in excess of noninterest expense—so-called positive operating leverage—which should result in annual PPNR growth in the high-single digit rate and further improvement to the efficiency ratio;
Improving profitability ratios. Improved operating efficiency coupled with low credit costs as experienced in 2018 should lead to improved profitability ratios, such as the returns on assets and equity.
Maintaining or increasing capital distributions due to stronger earnings and a lower risk profile than seen in prior years.
The long-term strategy of the Bank to achieve these objectives includes the following:
Continuing to execute on our community bank business model by doing business on a “local” basis, with significant local decision making for customer-facing elements of our business including product offerings, marketing, and pricing. We believe our scale gives us superior access to capital markets, more robust treasury management, and other product capabilities than smaller community banks. We also believe that our model provides a meaningful competitive advantage and an opportunity for growth over larger national banks whose loan and deposit products are often homogeneous. We are actively engaged in community events and charitable efforts designed to give back to the people within our communities. In 2018, we believe this local, customized approach led to a strong showing with commercial customers as reflected in the Greenwich Awards referenced earlier, as well as a loan growth rate of 4% for the year;
Maintaining a strong approach to risk management, having meaningfully improved our operational, credit, and financial risk management in the past several years;
Continuing to invest in a diverse team of knowledgeable and experienced bankers, known for their integrity. We are committed to building our employees’ capabilities, so they can become trusted partners of our customers and leaders in their communities; and
Continuing to invest in technology. Looking forward for the next several years, we believe that digital delivery of products, including mobile banking, online banking and having a core processing system that is robust and prevents outages, is critical to remaining competitive. We have rolled out a wide range of improvements and additions to our customer interfaces including a redesigned website, mobile applications, and an upgraded treasury internet banking platform for our commercial customers.
During the past several years we have taken significant actions to improve the Bank’s risk profile, which include:
The reduction of an above-average concentration in CRE loans. CRE loans as a percentage of total loans has declined from 35% at December 31, 2007 to 24% at December 31, 2018;
Numerous changes made to the credit administration organization and processes to facilitate improved data collection on loans and monitoring of potential default and loss risk;

28


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The significant increase of liquidity and flexibility to reposition the securities portfolio with the purchase of moderate duration securities with limited duration extension risk; i.e., management has generally purchased securities that within the context of a rising interest rate environment would not experience interest rate related losses;
The addition of five members to the Board of Directors during the past five years that have strong financial and risk management experience;
The replacement and upgrade of management information and accounting systems to allow for a more complete view of the Bank’s risks and opportunities; and
The ongoing evaluation and classification of all known risks into approximately sixty unique risk categories, which are regularly monitored and reported in a process that flows from line-level employees through executive management to the Board of Directors;
We have also taken significant actions to improve the Bank’s efficiency during the past several years, which include the streamlining or elimination of redundant or inefficient processes, and the reduction of unnecessary complexity in product types. We intend to continue improving our efficiency by creating value through the adoption of common practices, automation, and simplification of our front, middle and back-office processes.
We believe we have achieved even greater operating efficiencies than currently reflected in our financial statements, since our profitability has improved while at the same time investing a substantial amount to upgrade and replace core systems and applications. We announced in 2013 that we had started a project to replace our core loan and deposit banking systems (“Core Transformation Project”). We successfully implemented the first phase of the TCS BαNCS® core servicing system in mid-2017, replacing our consumer lending system. The second phase of the Core Transformation Project, which replaces the Bank’s primary commercial lending systems, was deployed in the February of 2019 and we are in the process of finalizing the full implementation. The replacement of the deposit system is expected to be the third phase of the Core Transformation Project, and is still in the preliminary stages of development. As of December 31, 2018, the Bank had $196 million of capitalized expenses associated with the Core Transformation Project. BαNCS® is a real time, parameter-driven servicing system that will provide long-term benefits to the Bank by improving accessibility and functionality, allowing our bankers to better serve customers.
As part of our ongoing simplification and efficiency efforts, on September 30, 2018, the Bank completed the merger of Zions Bancorporation, its former bank holding company, with, and into, the Bank formerly known as ZB, N.A., in order to further reduce organizational complexity. The restructuring eliminated the bank holding company structure and associated regulatory framework, and resulted in ZB, N.A. being renamed Zions Bancorporation, National Association and becoming the top-level entity within our corporate structure. The merger eliminates duplicative regulatory efforts, leaving the OCC as the Bank’s primary regulator. As a result of the merger and the Financial Stability Oversight Council’s action on September 12, 2018, the Bank is no longer considered a systemically important financial institution under the Dodd-Frank Act. See “Capital Management” on page 69 for more information regarding the merger. In December 2015, the Bank consolidated its various banking charters into a single charter.
In May 2018, the Crapo Bill was signed into law, reducing regulatory requirements for many banking institutions and exempting the Bank from the capital planning actions as required by the Dodd-Frank Act.
With the improvement in profitability and our risk profile, the Bank’s capital stress test results have markedly improved during the past few years, and as such, we have increased the return on- and of-capital to shareholders, including increasing the common dividend from $0.16 per share in 2014 to $1.04 per share in 2018. Additionally, we repurchased $670 million of common stock during 2018, which is 7% of common stock outstanding as of December 31, 2017. We believe we are carrying excess capital, informed primarily by our stress test results, and have indicated that we intend to reduce our capital ratios to levels more consistent with our significantly reduced risk profile. The magnitude, timing and form of capital return will be determined by the Board.

29


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

RESULTS OF OPERATIONS
Executive Summary
The Bank reported net earnings applicable to common shareholders for 2018 of $850 million or $4.08 per diluted common share compared with $550 million or $2.60 per diluted common share for 2017. Although a reduction in the statutory tax rate contributed significantly to the improved earnings, adjusted PPNR increased by $141 million, or 14%, to $1.1 billion. The increase in adjusted PPNR was primarily the result of increased interest income due to loan growth and continued expense control. Additionally, net income was positively impacted by improving credit quality, as discussed in more detail below. The Bank’s efficiency ratio improved to 59.6% in 2018 from 62.3% in 2017. We expect to achieve a high single-digit rate of growth in PPNR during the next several years without assuming the benefit of further benchmark interest rate increases and continue to strive for improvements to our efficiency ratio going forward.
The Bank’s net interest margin (“NIM”) expanded 16 basis points (“bps”) for the full year of 2018 versus 2017, which was largely attributable to the favorable effects of higher interest rates on our moderately “asset sensitive” balance sheet – where asset yields repriced faster and/or to a greater degree than liabilities (see Schedule 6).
Asset quality improved considerably in 2018, reflecting strong improvements in the oil and gas-related portfolio and generally stable to moderate improvements in other loan portfolios. Relative to 2017, total criticized, classified, and nonaccrual loans declined by 37%, 38%, and 39%, respectively. Net loan recoveries, expressed as a percentage of average loans held for investment, improved to net recoveries of 0.04% in 2018 from net charge-offs of 0.17% in 2017, largely the result of loan recoveries in the oil and gas portfolio.
Specifically for 2018 relative to 2017, the improved financial performance reflects:
Moderate net interest income growth resulting from loan growth and a generally stable securities portfolio, combined with the benefit of rising benchmark interest rates on a balance sheet that consists of assets that generally reprice faster and to a greater degree than the liabilities.
Modest adjusted noninterest income growth due to continued focus on this source of revenue; we experienced notable successes such as generating strong growth in trust and wealth management income, increasing loan syndication arrangement fees, and arranging interest rate hedges for our loan customers.
A slight increase in noninterest expense while we remain focused on expense controls and continue to invest in technology and simplification initiatives. We delivered on our commitment to limit adjusted noninterest expense growth in 2018 to increase only slightly relative to our 2017 results. Adjusted noninterest expense increased $31 million in 2018, or 2%, to $1.7 billion in 2018.
A decline in the provision for credit losses from $17 million in 2017, to $(40) million in 2018 as the credit quality of loans improved.
Net earnings applicable to common shareholders increased by 55% over the prior year, and earnings per diluted share increased by 57%, a slightly stronger rate of growth than net earnings due to the repurchase of 12.9 million shares of Bank common stock during 2018.
Areas Experiencing Challenges in 2018
Although loan growth was generally consistent with the targeted levels we had established for 2018, we experienced increased competition during the year. Some of this competition came from non-bank financial institutions such as debt funds, debt capital markets, and covenant-light structures. Additionally, some larger customers elected to refinance loans through the issuance of debt in the capital markets – an option that is not readily available to most of our customers.
Loan growth of $1.9 billion, or 4%, exceeded deposit growth of $1.5 billion, or 3%, in 2018. Consequently, we relied more on wholesale funding to finance incremental balance sheet growth, increasing our funding cost. 
Noninterest income from customer-related fees increased 3% in 2018 from the prior year period, which was less than the targeted growth goal. We experienced strength in corporate investment services and wealth management

30


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

income, loan syndication fees and bankcard fees. This growth was partially offset by declines in mortgage-related fees and deposit service charges.
Focus for 2019
In 2019, we are focused on the ongoing initiatives related to Bank profitability and returns on- and of-equity. Major areas of emphasis include the following:
Achieve positive operating leverage
Achieve broad-based loan growth (i.e. low- to mid-single digit growth rate) within acceptable concentration limits
Achieve similar or improve upon growth rates in noninterest income, emphasizing customer-related fee income
Achieve greater sales volumes and revenue growth through enhanced use of data
Manage noninterest expense growth linked to revenue growth, profitability and digital delivery strategies
Target high single-digit annual percentage growth rate for PPNR
Demonstrate reduced volatility in financial performance than previously experienced
Implement technology upgrade and digital strategies, automation and simplification of front, middle and bank office processes
Increase the return on- and of- capital
Maintain top quartile credit risk profile and superior risk management posture leading to increasing returns of capital
Moderately increase financial leverage through the reduction of surplus common equity as informed by stress testing
Schedule 4
KEY DRIVERS OF PERFORMANCE
2018 COMPARED TO 2017
Driver
 
2018
 
2017
 
Change
better/(worse)
 
 
 
 
 
 
 
 
 
(In billions)
 
 
Average net loans and leases
 
$
45.4

 
$
43.5

 
4
 %
Average money market investments
 
1.4

 
1.5

 
(7
)
Average total securities
 
15.6

 
15.7

 
(1
)
Average noninterest-bearing deposits
 
23.8

 
23.8

 

Average total deposits
 
53.2

 
52.2

 
2

 
 
(In millions)
 
 
Net interest income
 
$
2,230

 
$
2,065

 
8
 %
Provision for loan losses
 
(39
)
 
24

 
263

Noninterest income
 
552

 
544

 
1

Customer-related fee income 1
 
501

 
485

 
3

Noninterest expense
 
1,678

 
1,649

 
(2
)
Net interest margin
 
3.61
 %
 
3.45
%
 
16 bps

Nonaccrual loans 2
 
$
252

 
$
414

 
39
 %
Ratio of net charge-offs to average loans and leases
 
(0.04
)%
 
0.17
%
 
21 bps

Ratio of nonperforming lending-related assets to loans and leases and other real estate owned 2
 
0.55
 %
 
0.93
%
 
38

Ratio of total allowance for credit losses to loans and leases outstanding
 
1.18
 %
 
1.29
%
 
11

1 Includes the following income statement line items: service charges and fees on deposit accounts, other service charges, commissions and fees, wealth management and trust income, loan sales and servicing income and capital markets and foreign exchange income.
2 Includes loans held for sale.

31


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Net Interest Income
Net interest income is the difference between interest earned on interest-earning assets and interest paid on interest-bearing liabilities and is more than three-quarters of our revenue. Net interest income is derived from both the volume of interest-earning assets and interest-bearing liabilities and the net yield earned on the assets and paid on the liabilities.
Net interest income improved by $165 million during 2018 compared with 2017 to $2.2 billion, an increase of 8%. For 2018, taxable-equivalent net interest income was $2.3 billion, compared with $2.1 billion and $1.9 billion, in 2017 and 2016, respectively. The tax rate used for calculating all taxable-equivalent adjustments was 21% for 2018 and 35% for all prior periods. The increase over 2017, and the previous increase over 2016, were driven by several factors, including average loan growth, noninterest-bearing deposit stability, disciplined deposit pricing and increases in benchmark interest rates. The increase from 2016 to 2017 was further impacted by a larger average securities portfolio balance. We are not assuming any further increases in benchmark rates in our forecasts. However, because of loan growth and the benefit of our noninterest-bearing deposits, we expect net interest income to increase at a moderate pace in 2019 when compared with 2018.
Net Interest Margin and Interest Rate Spreads in 2018 vs. 2017
The NIM was 3.61% and 3.45% for 2018 and 2017, respectively. When comparing 2018 with 2017, changes in asset mix resulted in higher average loans, lower average securities and money market investments, and higher average interest-bearing deposits and wholesale borrowings balances to fund overall balance sheet growth. A significant source of NIM expansion is the increasing value of noninterest-bearing demand deposit accounts in the rising interest rate environment. Expansion of NIM reflects a higher loan yield with only a moderate increase in funding costs. Funding balance sheet growth with wholesale borrowings reduced spreads and negatively impacted NIM, although it was accretive to net interest income. The NIM was also positively impacted by increases in the federal funds target rate during 2018. Average interest-earning assets increased $1.6 billion from 2017, with average rates improving 35 bps. Average interest-bearing liabilities increased $1.5 billion and average rates also increased 35 bps over the same period.
The average balance of our investment securities portfolio decreased $0.1 billion, while year-end balances decreased $0.5 billion. Our average lending portfolio increased $1.9 billion to $45.4 billion, an increase of 4%. The net earning asset growth was funded through a mix of deposits and wholesale borrowings.
Interest expense increased $124 million compared to 2017 results, attributable to both an increase in the cost and quantity of deposits and wholesale funding. Interest expense on deposits increased $76 million on $29.4 billion of average interest-bearing deposits.
The increase in the average loan portfolio was due to growth in 1-4 family residential, commercial and industrial, and municipal lending. Yields on average balances increased by 43 bps, 45 bps, and 20 bps in the commercial, CRE and consumer portfolios, respectively. Much of the consumer growth was in consumer 1-4 family residential, where our yields are generally lower than on commercial loans. The federal funds target rate increased nine times beginning in the fourth quarter of 2015, which has had a positive impact on NIM and spreads, as our earning assets generally reprice more quickly than our funding sources. A portion of our variable-rate loans were not affected by these changes primarily due to longer reset frequency, or because a substantial portion of our earning assets are tied to longer-term rates indices, which rates were impacted by a relatively flat yield curve for much of 2018. Additionally, NIM benefited from FDIC-supported loans by 1 and 3 bps in 2018 and 2017, respectively. We expect moderate to strong growth in 1-4 family, municipal, commercial and industrial, and owner-occupied loans and stable-to-moderate growth in CRE and oil and gas-related loans.
Average noninterest-bearing demand deposits provided us with low-cost funding and comprised 45% of average total deposits, which totaled $53.2 billion in 2018, compared with 46% of average total deposits, which totaled $52.2 billion, for 2017. Average interest-bearing deposits increased 3% in 2018, compared with 2017. Over the past 12 months the Federal Reserve has increased the overnight benchmark federal funds rate by 100 bps, while the rate

32


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

paid on the Bank’s interest-bearing deposits increased 25 bps, implying a deposit beta of 25%. We have been selectively increasing deposit pricing in certain markets and with certain clients, but we have not generally experienced significant pressure to broadly increase deposit rates. Although we consider a wide variety of sources when determining our funding needs, we benefit from access to deposits from a significant number of small to mid-sized business customers, which provide us with a low cost of funds and have a positive impact on our NIM. Including wholesale borrowings, the rate paid on interest-bearing liabilities increased 35 bps.
The average balance of long-term debt increased $118 million compared with 2017, while the average rate decreased 58 bps. During the third quarter 2018, the Bank issued a $500 million senior note with an interest rate of 3.5%. Overall interest expense on long-term debt increased $4 million. The Bank has used short-term Federal Home Loan Bank (“FHLB”) borrowings to fund some of its balance sheet growth during the past couple of years. Average short-term debt grew $0.5 billion and the rate paid increased 88 bps. Further changes in short-term borrowings will be driven by balancing changes in deposits and loans as we do not foresee significant increases in investment security balances.
The spread on average interest-bearing funds was 3.28% in 2018 and 3.27% in 2017, respectively. The spread on average interest-bearing funds for these periods was affected by the same factors that had an impact on the NIM.
Interest rate spreads and margin are impacted by the mix of assets we hold, the composition of our loan and securities portfolios and the type of funding used. We expect the yield of the loan portfolio to increase somewhat due to the effects of rising interest rates in 2018, partially offset by a continued modest change in the mix of the portfolio (increasing concentration in lower-yielding residential mortgages), as well as reduced income from higher-yielding loans purchased from the FDIC in 2009.
Our estimates of the Bank’s interest rate risk position are highly dependent upon a number of assumptions regarding the repricing behavior of various deposit and loan types in response to changes in both short-term and long-term interest rates, balance sheet composition, and other modeling assumptions, as well as the actions of competitors and customers in response to those changes. Although the federal funds target rate has increased 225 bps since the fourth quarter of 2015, we have not experienced significant migration of our noninterest-bearing deposits which we attribute to the operating nature of many of our deposit accounts. Further detail on interest rate risk is discussed in “Interest Rate and Market Risk Management” on page 62.
Refer to the “Liquidity Risk Management” section beginning on page 65 for more information on how we manage liquidity risk.
Net Interest Margin and Interest Rate Spreads in 2017 vs. 2016
The NIM was 3.45% and 3.37% for 2017 and 2016, respectively. Compared with 2016, changes in asset mix resulted in higher securities and loan balances, lower balances in money market investments, and higher balances of wholesale borrowings to fund overall balance sheet growth. Moving funds from money market investments to loans and securities had a positive impact on NIM. The NIM was also positively impacted by several increases in short-term interest rates. Average interest-earning assets increased $4.7 billion from 2016, with average rates improving 14 bps. Average interest-bearing liabilities increased $3.6 billion and average rates increased 8 bps over the same period.
The average loan portfolio increased $1.4 billion, or 3% from 2016, with the majority of growth coming from 1-4 family residential, commercial and industrial, and municipal lending. Yields on average balances increased overall, buoyed by increases of 16 bps and 26 bps in the commercial and CRE portfolios, respectively; yields on average consumer balances were relatively flat during 2017. Additionally, NIM benefited from FDIC-supported loans by approximately 3 bps and 4 bps in 2017 and 2016, respectively.
Average available-for-sale (“AFS”) securities balances increased $5.4 billion during 2017 and yields were also up 17 bps due to the effect of rising interest rates on variable-rate securities, moderation in the amount of prepayments on agency-guaranteed, mortgage-backed securities, and investment in products providing a higher yield than the

33


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

average portfolio. The purchases were funded by using lower-yielding average money market investments, which were reduced by $2.1 billion, and wholesale borrowing from the FHLB.
Average noninterest-bearing demand deposits provided us with low-cost funding and comprised 45.6% of average total deposits, which totaled $52.2 billion in 2017, compared with 44.4% of average total deposits, which totaled $50.6 billion, for 2016. Average interest-bearing deposits increased only 1% in 2017, compared with 2016. The average balance of long-term debt decreased $286 million compared with 2016 and the average rate increased 61 bps in the current year while interest expense decreased $13 million from 2016. The rate increased because the remaining debt was at a higher average rate than the rate on debt that matured and was available to be called.
The spread on average interest-bearing funds was 3.27% and 3.23% for 2017 and 2016, respectively. The spread on average interest-bearing funds for these periods was affected by the same factors that had an impact on the NIM. Refer to the “Liquidity Risk Management” section beginning on page 65 for more information on how we manage liquidity risk.

34


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Schedule 5
AVERAGE BALANCE SHEETS, YIELDS AND RATES
 
2018
 
2017
(Dollar amounts in millions)
Average
balance
 
Amount of
interest 1
 
Average
rate
 
Average
balance
 
Amount of
interest 1
 
Average
rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Money market investments
$
1,360

 
$
29

 
2.12
%
 
$
1,539

 
$
19

 
1.23
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity
781

 
28

 
3.56

 
776

 
31

 
3.95

Available-for-sale
14,712

 
328

 
2.23

 
14,907

 
313

 
2.10

Trading account
109

 
4

 
3.97

 
64

 
2

 
3.75

Total securities
15,602

 
360

 
2.31

 
15,747

 
346

 
2.20

Loans held for sale
53

 
2

 
4.63

 
87

 
3

 
3.56

Loans and leases 2
 
 
 
 
 
 
 
 
 
 
 
Commercial
23,333

 
1,118

 
4.79

 
22,116

 
964

 
4.36

Commercial real estate
11,079

 
549

 
4.95

 
11,184

 
504

 
4.50

Consumer
11,013

 
445

 
4.04

 
10,201

 
391

 
3.84

Total Loans and leases
45,425

 
2,112

 
4.65

 
43,501

 
1,859

 
4.27

Total interest-earning assets
62,440

 
2,503

 
4.01

 
60,874

 
2,227

 
3.66

Cash and due from banks
549

 
 
 
 
 
786

 
 
 
 
Allowance for loan losses
(495
)
 
 
 
 
 
(548
)
 
 
 
 
Goodwill and intangibles
1,015

 
 
 
 
 
1,019

 
 
 
 
Other assets
3,060

 
 
 
 
 
2,985

 
 
 
 
Total assets
$
66,569

 
 
 
 
 
$
65,116

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Saving and money market
$
25,480

 
81

 
0.32

 
$
25,453

 
39

 
0.15

Time
3,876

 
54

 
1.38

 
2,966

 
20

 
0.69

Foreign

 

 

 

 

 

Total interest-bearing deposits
29,356

 
135

 
0.46

 
28,419

 
59

 
0.21

Borrowed funds:
 
 
 
 
 
 
 
 
 
 
 
Federal funds purchased and other short-term borrowings
4,562

 
88

 
1.93

 
4,096

 
44

 
1.05

Long-term debt
535

 
28

 
5.21

 
417

 
24

 
5.79

Total borrowed funds
5,097

 
116

 
2.27

 
4,513

 
68

 
1.49

Total interest-bearing liabilities
34,453

 
251

 
0.73

 
32,932

 
127

 
0.38

Noninterest-bearing deposits
23,827

 
 
 
 
 
23,781

 
 
 
 
Total deposits and interest-bearing liabilities
58,280

 
251

 
0.43

 
56,713

 
127

 
0.22

Other liabilities
699

 
 
 
 
 
624

 
 
 
 
Total liabilities
58,979

 
 
 
 
 
57,337

 
 
 
 
Shareholders’ equity:
 
 
 
 
 
 
 
 
 
 
 
Preferred equity
566

 
 
 
 
 
631

 
 
 
 
Common equity
7,024

 
 
 
 
 
7,148

 
 
 
 
Total shareholders’ equity
7,590

 
 
 
 
 
7,779

 
 
 
 
Total liabilities and shareholders’ equity
$
66,569

 
 
 
 
 
$
65,116

 
 
 
 
Spread on average interest-bearing funds
 
 
 
 
3.28

 
 
 
 
 
3.27

Taxable-equivalent net interest income and net yield on interest-earning assets
 
 
$
2,252

 
3.61

 
 
 
$
2,100

 
3.45

Memo: total cost of deposits
 
 
 
 
0.25

 
 
 
 
 
0.11

1 Taxable-equivalent rates used where applicable. See “GAAP to Non-GAAP Reconciliations” on page 27 for more information regarding taxable-equivalent net interest income.
2 Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.



35


ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


2016
 
2015
 
2014
Average
balance
 
Amount of
interest 1
 
Average
rate
 
Average
balance
 
Amount of
interest 1
 
Average
rate
 
Average
balance
 
Amount of
interest 1
 
Average
rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,664

 
$
21

 
0.59
%
 
$
8,252

 
$
23

 
0.28
%
 
$
8,218

 
$
21

 
0.26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
675

 
30

 
4.40

 
581

 
30

 
5.08

 
609

 
32

 
5.27

9,546

 
184

 
1.93

 
5,181

 
100

 
1.93

 
3,472

 
75

 
2.17

83

 
3

 
3.76

 
64

 
2

 
3.46

 
61

 
2

 
3.22

10,304

 
217

 
2.11

 
5,826

 
132

 
2.26

 
4,142

 
109

 
2.64

140

 
5

 
3.36

 
125

 
5

 
3.61

 
128

 
5

 
3.63

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,748

 
913

 
4.20

 
21,419

 
903

 
4.22

 
21,125

 
922

 
4.36

11,131

 
472

 
4.24

 
10,178

 
454

 
4.46

 
10,337

 
484

 
4.68

9,183

 
351

 
3.83

 
8,574

 
334

 
3.91

 
8,060

 
328

 
4.06

42,062

 
1,736

 
4.13

 
40,171

 
1,691

 
4.21

 
39,522

 
1,734

 
4.39

56,170

 
1,979

 
3.52

 
54,374

 
1,851

 
3.40

 
52,010

 
1,869

 
3.59

675

 
 
 
 
 
642

 
 
 
 
 
894

 
 
 
 
(601
)
 
 
 
 
 
(607
)
 
 
 
 
 
(690
)
 
 
 
 
1,027

 
 
 
 
 
1,035

 
 
 
 
 
1,045

 
 
 
 
2,779

 
 
 
 
 
2,601

 
 
 
 
 
2,623

 
 
 
 
$
60,050

 
 
 
 
 
$
58,045

 
 
 
 
 
$
55,882