zions-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR

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

COMMISSION FILE NUMBER 001-12307

ZIONS BANCORPORATION, NATIONAL ASSOCIATION

(Exact name of registrant as specified in its charter)


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

Registrant’s telephone number, including area code: (801) 844-8208

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


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

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

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

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

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

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

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

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

Number of common shares outstanding at April 30, 2024 147,654,732 shares

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	38

	Consolidated Balance Sheets	38
	Consolidated Statements of Income	39
	Consolidated Statements of Comprehensive Income (Loss)	40
	Consolidated Statements of Changes in Shareholders’ Equity	40
	Consolidated Statements of Cash Flows	41
	Notes to Consolidated Financial Statements	42

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	79

Item 4.	Controls and Procedures	79

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	79

Item 1A.	Risk Factors	79

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79

Item 5.	Other Information	79

Item 6.	Exhibits	80

Signatures		81

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

GLOSSARY OF ACRONYMS AND ABBREVIATIONS


ACL	Allowance for Credit Losses	HECL	Home Equity Credit Line
AFS	Available-for-Sale	HTM	Held-to-Maturity
ALLL	Allowance for Loan and Lease Losses	IPO	Initial Public Offering
Amegy	Amegy Bank, a division of Zions Bancorporation, National Association	LIHTC	Low-income Housing Tax Credit
AOCI	Accumulated Other Comprehensive Income or Loss	Municipalities	State and Local Governments
ASC	Accounting Standards Codification	NAICS	North American Industry Classification System
ASU	Accounting Standards Update	NASDAQ	National Association of Securities Dealers Automated Quotations
BOLI	Bank-Owned Life Insurance	NBAZ	National Bank of Arizona, a division of Zions Bancorporation, National Association
bps	Basis Points	NIM	Net Interest Margin
BTFP	Bank Term Funding Program	NM	Not Meaningful
CB&T	California Bank & Trust, a division of Zions Bancorporation, National Association	NSB	Nevada State Bank, a division of Zions Bancorporation, National Association
CLTV	Combined Loan-to-Value Ratio	OCC	Office of the Comptroller of the Currency
CODM	Chief Operating Decision Maker	OCI	Other Comprehensive Income or Loss
CRE	Commercial Real Estate	OREO	Other Real Estate Owned
DTA	Deferred Tax Asset	PAM	Proportional Amortization Method
DTL	Deferred Tax Liability	PEI	Private Equity Investment
EaR	Earnings at Risk	PPNR	Pre-provision Net Revenue
EPS	Earnings per Share	ROU	Right-of-Use
EVE	Economic Value of Equity	RULC	Reserve for Unfunded Lending Commitments
FASB	Financial Accounting Standards Board	S&P	Standard & Poor's
FDIC	Federal Deposit Insurance Corporation	SBA	U.S. Small Business Administration
FHLB	Federal Home Loan Bank	SBIC	Small Business Investment Company
FICO	Fair Isaac Corporation	TCBW	The Commerce Bank of Washington, a division of Zions Bancorporation, National Association
FRB	Federal Reserve Board	U.S.	United States
FTP	Funds Transfer Pricing	Vectra	Vectra Bank Colorado, a division of Zions Bancorporation, National Association
GAAP	Generally Accepted Accounting Principles	Zions Bank	Zions Bank, a division of Zions Bancorporation, National Association
GCF	General Collateral Funding

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

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

FORWARD-LOOKING INFORMATION

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

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

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

Forward-looking statements are not guarantees, nor should they be relied upon as representing management’s views as of any subsequent date. Actual results and outcomes may differ materially from those presented. Although the following list is not comprehensive, important factors that may cause material differences include:

•The quality and composition of our loan and securities portfolios and the quality and composition of our deposits;

•Changes in general industry, political and economic conditions, including elevated inflation, economic slowdown or recession, or other economic challenges; changes in interest and reference rates, which could adversely affect our revenue and expenses, the value of assets and liabilities, and the availability and cost of capital and liquidity; deterioration in economic conditions that may result in increased loan and leases losses;

•The effects of newly enacted and proposed regulations affecting us and the banking industry, as well as changes and uncertainties in applicable laws, and fiscal, monetary, regulatory, trade, and tax policies, and actions taken by governments, agencies, central banks, and similar organizations, including those that result in decreases in revenue; increases in capital standards; and increases in insurance assessments and other bank expenses;

•Competitive pressures and other factors that may affect aspects of our business, such as pricing and demand for our products and services, and our ability to recruit and retain talent;

•The impact of technological advancements, digital commerce, artificial intelligence, and other innovations affecting the banking industry;

•Our ability to complete projects and initiatives and execute on our strategic plans, manage our risks, control compensation and other expenses, and achieve our business objectives;

•Our ability to develop and maintain technology, information security systems and controls designed to guard against fraud, cybersecurity, and privacy risks;

•Our ability to provide adequate oversight of our suppliers or prevent inadequate performance by third parties upon whom we rely for the delivery of various products and services;

•Natural disasters, pandemics, catastrophic events and other emergencies and incidents and their impact on our and our customer’s operations and business and communities, including the increasing difficulty in, and the expense of, obtaining adequate insurance at reasonable prices;

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

•Governmental and social responses to environmental, social, and governance issues, including those with respect to climate change;

•Securities and capital markets behavior, including volatility and changes in market liquidity and our ability to raise capital;

•The possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and shareholders’ equity, but not on our regulatory capital;

•The impact of bank closures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks;

•Adverse news and other expressions of negative public opinion whether directed at us, other banks, the banking industry, or otherwise that may adversely affect our reputation and that of the banking industry generally;

•Protracted congressional negotiations and political stalemates regarding government funding and other issues, including those that increase the possibility of government shutdowns, downgrades in United States (“U.S.”) credit ratings, or other economic disruptions; and

•The effects of wars and geopolitical conflicts, such as the ongoing war between Russia and Ukraine, the war in the Middle East, and other local, national, or international disasters, crises, or conflicts that may occur in the future.

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

RESULTS OF OPERATIONS

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

First Quarter 2024 Financial Performance

Net Earnings Applicable to Common Shareholders
(in millions)

Diluted EPS

Adjusted PPNR
(in millions)

Efficiency Ratio

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Executive Summary

Our financial results in the first quarter of 2024 reflected low net charge-offs, reduced net interest income, loan growth, and sequential improvement of the net interest margin (“NIM”). Diluted earnings per share (“EPS”) was $0.96, compared with $1.33 in the first quarter of 2023, as lower revenue and slightly higher noninterest expense was partially offset by a lower provision for credit losses.

•Net interest income decreased $93 million, or 14%, relative to the prior year period, as higher funding costs more than offset higher earning asset yields. The net interest margin was 2.94%, compared with 3.33%, and was up from 2.91% in the fourth quarter of 2023. Net interest income was also impacted by reduced interest-earning assets and an increase in interest-bearing liabilities.

◦Average interest-earning assets decreased $2.2 billion, or 3%, driven by declines in average securities and average money market investments, partially offset by an increase in average loans and leases.

◦Total loans and leases increased $1.8 billion, or 3%, primarily due to growth in the consumer 1-4 family residential mortgage and commercial real estate (“CRE”) multi-family and industrial construction loan portfolios.

◦Average interest-bearing liabilities increased $6.0 billion, or 12%, driven by an increase in average interest-bearing deposits, partially offset by a decline in average borrowed funds.

◦Total deposits increased $5.0 billion, or 7%, as an increase in interest-bearing deposits was partially offset by a decrease in noninterest-bearing demand deposits. Customer deposits (excluding brokered deposits) totaled $69.9 billion, compared with $63.8 billion at March 31, 2023, and included approximately $7.5 billion of reciprocal deposits at March 31, 2024.

•The provision for credit losses was $13 million, compared with $45 million in the prior year period.

•Customer-related noninterest income remained flat at $151 million, as an increase in capital markets fees was offset by a decrease in loan-related fees and income. Decreases in noncustomer-related noninterest income were due largely to higher mark-to-market valuation adjustments related to servicing rights in the prior year quarter, a decrease in dividends on Federal Home Loan Bank (“FHLB”) stock, and a valuation loss associated with one of our equity investments in the current period.

•Noninterest expense increased $14 million, or 3%, driven largely by an increase in deposit insurance and regulatory expense, which included a $13 million accrual associated with an updated special assessment estimate by the Federal Deposit Insurance Corporation (“FDIC”) during the quarter. This increase was partially offset by a decrease in salaries and employee benefits expense, primarily due to a decline in incentive compensation accruals.

•Net loan and lease charge-offs totaled $6 million, or 0.04% of average loans, compared with zero net charge-offs in the prior year quarter. Classified loans increased $54 million, or 6%. Nonperforming assets increased to $254 million, or 0.44%, compared with $173 million, or 0.31%, of loans and leases, primarily due to a small number of loans in the commercial and industrial and term commercial real estate portfolios.

•Total borrowed funds, consisting primarily of secured borrowings, decreased $7.3 billion, or 57%, from the prior year quarter, due largely to an increase in interest-bearing deposits and a decrease in interest-earning assets.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Net Interest Income and Net Interest Margin

NET INTEREST INCOME AND NET INTEREST MARGIN


	Three Months Ended March 31,						Amount change		Percent change
(Dollar amounts in millions)	2024			2023

Interest and fees on loans 1	$	865		$	726		$	139	19	%
Interest on money market investments	47			57			(10)		(18)
Interest on securities	142			137			5		4
Total interest income	1,054			920			134		15
Interest on deposits	376			82			294		NM
Interest on short- and long-term borrowings	92			159			(67)		(42)
Total interest expense	468			241			227		94
Net interest income	$	586		$	679		$	(93)	(14)	%

Average interest-earning assets	$	81,613		$	83,832		$	(2,219)	(3)	%
Average interest-bearing liabilities	$	55,043		$	49,012		$	6,031	12	%
							bps
Yield on interest-earning assets 2	5.25		%	4.49		%	76
Rate paid on total deposits and interest-bearing liabilities 2	2.34		%	1.17		%	117
Cost of total deposits 2	2.06		%	0.47		%	159
Net interest margin 2	2.94		%	3.33		%	(39)

1 Includes interest income recoveries of $2 million for both the three months ended March 31, 2024, and 2023.

2 Taxable-equivalent rates used where applicable.

Net interest income accounted for approximately 79% of our net revenue (net interest income plus noninterest income) for the current quarter and decreased $93 million, or 14%, relative to the prior year quarter, as higher funding costs more than offset higher earning asset yields. The NIM was 2.94%, compared with 3.33%, and was up from 2.91% in the fourth quarter of 2023.

The yield on average interest-earning assets was 5.25% in the first quarter of 2024, an increase of 76 basis points (“bps”), reflecting higher interest rates and a favorable mix change to higher-yielding assets. The yield on average loans and leases increased 76 bps to 6.06%, and the yield on average securities increased 38 bps to 2.84% in the first quarter of 2024.

The rate paid on total deposits and interest-bearing liabilities was 2.34%, compared with 1.17% in the prior year quarter, and the cost of total deposits was 2.06%, compared with 0.47%, also reflecting the higher interest rate environment as well as reduced noninterest-bearing deposits.

Net interest income was also impacted by reduced interest-earning assets and an increase in interest-bearing liabilities. Average interest-earning assets decreased $2.2 billion, or 3%, from the prior year quarter, driven by declines of $2.5 billion and $1.5 billion in average securities and average money market investments, respectively. The decrease in average securities was primarily due to principal reductions. These decreases were partially offset by an increase of $1.8 billion in average loans and leases.

Average interest-bearing liabilities increased $6.0 billion, or 12%, from the prior year quarter, driven by an increase of $12.0 billion in average interest-bearing deposits, as customers moved from noninterest-bearing to interest-bearing products in response to the higher interest rate environment. This increase was partially offset by a decrease of $6.0 billion in average borrowed funds.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following charts further illustrate the changes in average interest-earning assets and average interest-bearing liabilities:

Average loans and leases increased $1.8 billion, or 3%, to $57.9 billion, primarily due to growth in average consumer and commercial real estate loans. Average securities decreased $2.5 billion, or 11%, to $20.4 billion, primarily due to available-for-sale (“AFS”) securities principal reductions.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Average deposits increased $3.2 billion, or 5%, to $73.4 billion at an average cost of 2.06%, from $70.2 billion at an average cost of 0.47% in the first quarter of 2023. Average noninterest-bearing deposits as a percentage of total deposits decreased to 35%, compared with 49% during the same prior year period. The loan-to-deposit ratio was 78%, compared with 81% in the prior year quarter.

Average borrowed funds, consisting primarily of secured borrowings, decreased $6.0 billion, or 45%, to $7.2 billion, due largely to an increase in interest-bearing deposits and a decrease in interest-earning assets.

For more information on our investment securities portfolio and borrowed funds and how we manage liquidity risk, refer to the “Investment Securities Portfolio” section on page 15 and the “Liquidity Risk Management” section on page 31. For further discussion of the effects of market rates on net interest income and how we manage interest rate risk, refer to the “Interest Rate and Market Risk Management” section on page 28.

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES


(Unaudited)	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
(Dollar amounts in millions)	Average balance		Interest		Yield/ Rate 1		Average balance		Interest		Yield/ Rate 1
ASSETS
Money market investments:
Interest-bearing deposits	$	1,447	$	20	5.71	%	$	2,724	$	31	4.72	%
Federal funds sold and securities purchased under agreements to resell	1,826		27		5.89		2,081		26		5.02
Total money market investments	3,273		47		5.81		4,805		57		4.85
Securities:
Held-to-maturity	10,277		57		2.25		11,024		62		2.28
Available-for-sale	10,067		86		3.45		11,824		76		2.62
Trading	33		—		4.27		21		—		4.01
Total securities	20,377		143		2.84		22,869		138		2.46
Loans held for sale	56		1		6.80		5		—		0.26
Loans and leases: 2
Commercial	30,482		451		5.95		30,678		381		5.03
Commercial real estate	13,504		245		7.29		12,876		209		6.59
Consumer	13,921		177		5.10		12,599		144		4.62
Total loans and leases	57,907		873		6.06		56,153		734		5.30
Total interest-earning assets	81,613		1,064		5.25		83,832		929		4.49
Cash and due from banks	710						543
Allowance for credit losses on loans and debt securities	(685)						(576)
Goodwill and intangibles	1,058						1,064
Other assets	5,274						5,624
Total assets	$	87,970					$	90,487
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Savings and money market	$	38,044	$	259	2.73	%	$	32,859	$	62	0.77	%
Time	9,777		117		4.81		2,934		20		2.68

Total interest-bearing deposits	47,821		376		3.16		35,793		82		0.92
Borrowed funds:
Federal funds and security repurchase agreements	1,748		23		5.38		5,614		64		4.65
Other short-term borrowings	4,931		61		4.98		6,952		84		4.89
Long-term debt	543		8		5.99		653		11		6.85
Total borrowed funds	7,222		92		5.15		13,219		159		4.88
Total interest-bearing liabilities	55,043		468		3.42		49,012		241		1.99
Noninterest-bearing demand deposits	25,537						34,363
Other liabilities	1,661						2,058
Total liabilities	82,241						85,433
Shareholders’ equity:
Preferred equity	440						440
Common equity	5,289						4,614
Total shareholders’ equity	5,729						5,054
Total liabilities and shareholders’ equity	$	87,970					$	90,487
Spread on average interest-bearing funds					1.83	%					2.50	%
Net impact of noninterest-bearing sources of funds					1.11	%					0.83	%
Net interest margin			$	596	2.94	%			$	688	3.33	%
Memo: total cost of deposits					2.06	%					0.47	%
Memo: total deposits and interest-bearing liabilities	$	80,580	468		2.34	%	$	83,375	241		1.17	%

1 Taxable-equivalent rates used where applicable.

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

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Provision for Credit Losses

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

The provision for credit losses, which is the combination of both the provision for loan and lease losses and the provision for unfunded lending commitments, was $13 million, compared with $45 million in the first quarter of 2023.

The ACL was $736 million at March 31, 2024, compared with $678 million at March 31, 2023. The increase in the ACL primarily reflects incremental reserves associated with portfolio-specific risks including commercial real estate and modest deterioration in credit quality, partially offset by improvements in economic forecasts. The ratio of ACL to total loans and leases was 1.27% and 1.20% at March 31, 2024 and 2023, respectively. The provision for securities losses was less than $1 million during both the first quarter of 2024 and 2023.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The bar chart above illustrates the broad categories of change in the ACL from the prior year period. To estimate current expected losses, we use econometric loss models that include multiple economic scenarios that reflect optimistic, baseline, and stressed economic conditions. The results derived using these economic scenarios are weighted to produce the credit loss estimate. Management may adjust the weights to reflect their assessment of current conditions and reasonable and supportable forecasts. The second bar represents changes in these economic forecasts and current economic conditions, including management's judgment of the weighting of the economic forecasts. These changes contributed to a $90 million decrease in the ACL from the prior year quarter.

The third bar represents changes in credit quality factors and includes risk-grade migration, portfolio-specific risks, and specific reserves against loans, which, when combined, contributed to a $193 million increase in the ACL, driven largely by an increased focus on certain portfolio-specific risks, including commercial real estate.

The fourth bar represents changes in our loan portfolio composition, including changes in loan balances, the aging of the portfolio, and other qualitative risk factors; all of which contributed to a $45 million decrease in the ACL.

See “Credit Risk Management” on page 20 and Note 6 in our 2023 Form 10-K for more information on how we determine the appropriate level of the ALLL and the RULC.

Noninterest Income

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

Total noninterest income decreased $4 million, or 3%, relative to the prior year. Noninterest income accounted for approximately 21% and 19% of our net revenue (net interest income plus noninterest income) during the first quarter of 2024 and 2023, respectively. The following schedule presents a comparison of the major components of noninterest income:

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NONINTEREST INCOME


	Three Months Ended March 31,				Amount change		Percent change
(Dollar amounts in millions)	2024		2023

Commercial account fees	$	44	$	43	$	1	2	%
Card fees	23		24		(1)		(4)
Retail and business banking fees	16		16		—		—
Loan-related fees and income	15		21		(6)		(29)
Capital markets fees	24		17		7		41
Wealth management fees	15		15		—		—
Other customer-related fees	14		15		(1)		(7)
Customer-related noninterest income	151		151		—		—

Fair value and nonhedge derivative income	1		(3)		4		NM
Dividends and other income (loss)	6		11		(5)		(45)
Securities gains (losses), net	(2)		1		(3)		NM
Noncustomer-related noninterest income	5		9		(4)		(44)
Total noninterest income	$	156	$	160	$	(4)	(3)	%

Customer-related Noninterest Income

Customer-related noninterest income remained flat at $151 million. An increase in capital markets fees, driven largely by improved real estate capital markets and securities underwriting activity, was offset by a decrease in loan-related fees and income, primarily due to higher gains on loan sales in the prior year period and a decline in loan servicing income resulting from the sale of associated mortgage servicing rights in the third quarter of 2023.

Noncustomer-related Noninterest Income

Noncustomer-related noninterest income decreased $4 million from the prior year quarter. Dividends and other income decreased $5 million, primarily due to higher mark-to-market valuation adjustments related to servicing rights in the prior year quarter and a decrease in dividends on FHLB stock. Net securities gains decreased $3 million, due to a $4 million valuation loss associated with one of our equity investments in the current period. These decreases were offset by a $4 million increase in fair value and nonhedge derivative income, primarily due to credit valuation adjustments on client-related interest rate swaps.

Noninterest Expense

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

NONINTEREST EXPENSE


	Three Months Ended March 31,				Amount change		Percent change
(Dollar amounts in millions)	2024		2023

Salaries and employee benefits	$	331	$	339	$	(8)	(2)	%
Technology, telecom, and information processing	62		55		7		13
Occupancy and equipment, net	39		40		(1)		(3)
Professional and legal services	16		13		3		23
Marketing and business development	10		12		(2)		(17)
Deposit insurance and regulatory expense	34		18		16		89
Credit-related expense	7		6		1		17

Other	27		29		(2)		(7)
Total noninterest expense	$	526	$	512	$	14	3	%
Adjusted noninterest expense (non-GAAP)	$	511	$	509	$	2	—	%

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Total noninterest expense increased $14 million, or 3%, relative to the prior year quarter. Deposit insurance and regulatory expense increased $16 million, driven largely by a $13 million accrual associated with an updated special assessment estimate by the FDIC during the current quarter, which was related to the bank closures in early 2023.

Technology, telecom, and information processing expense increased $7 million, or 13%, primarily due to increases in software amortization expenses associated with the replacement of our core loan and deposit banking systems, as well as other related application software, license, and maintenance expenses. Salaries and employee benefits expense decreased $8 million, or 2%, primarily due to a decline in incentive compensation accruals.

Adjusted noninterest expense remained relatively flat at $511 million. The efficiency ratio was 67.9%, compared with 59.9%, primarily due to a decline in adjusted taxable-equivalent revenue. For information on non-GAAP financial measures, see page 35.

Technology Spend

Consistent with our strategic objectives, we invest in technologies that will make us more efficient and enable us to remain competitive. We generally consider these investments as technology spend, which represents expenditures associated with technology-related investments, operations, systems, and infrastructure, and includes current period expenses presented on the consolidated statement of income, as well as capitalized investments, net of related amortization and depreciation, presented on the consolidated balance sheet. Technology spend is reported as a combination of the following:

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

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

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

The following schedule presents the composition of our technology spend:

TECHNOLOGY SPEND


	Three Months Ended March 31,				Amount change		Percent change
(Dollar amounts in millions)	2024		2023

Technology, telecom, and information processing expense	$	62	$	55	$	7	13	%
Other technology-related expense	60		54		6		11
Technology investments	15		26		(11)		(42)
Less: related amortization and depreciation	(20)		(14)		(6)		43
Total technology spend	$	117	$	121	$	(4)	(3)	%

Total technology spend decreased $4 million, or 3%, relative to the prior year quarter, as the aforementioned increase in technology, telecom, and information processing expense was offset by a decrease in certain technology investments, as the replacement of our core loan and deposit banking systems nears completion in 2024.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Income Taxes

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

INCOME TAXES


	Three Months Ended March 31,
(Dollar amounts in millions)	2024			2023

Income before income taxes	$	203		$	282
Income tax expense	50			78
Effective tax rate	24.6		%	27.7		%

The effective tax rate was 24.6% and 27.7% for the three months ended March 31, 2024 and 2023, respectively. The higher effective tax rate in the prior year period was the result of a change in a discrete item that affected the reserve for uncertain tax positions. See Note 12 of the Notes to Consolidated Financial Statements for more information about the factors that impacted the income tax rates, as well as information about deferred income tax assets and liabilities.

Preferred Stock Dividends

Preferred stock dividends totaled $10 million and $6 million for the first quarter of 2024 and 2023, respectively. The increase was primarily due to changes in the timing and rates of dividend payments for certain series of preferred stock.

BALANCE SHEET ANALYSIS

Interest-Earning Assets

Interest-earning assets have associated interest rates or yields, and generally consist of loans and leases, securities, and money market investments. We strive to maintain a high level of interest-earning assets relative to total assets. For more information regarding the average balances, associated revenue generated, and the respective yields of our interest-earning assets, see the Consolidated Average Balance Sheet on page 10.

Investment Securities Portfolio

We invest in securities to actively manage liquidity and interest rate risk and to generate interest income. We primarily own securities that can readily provide us cash and liquidity through secured borrowing agreements without the need to sell the securities. Our fixed-rate securities portfolio helps balance the inherent interest rate mismatch between loans and deposits and protects the economic value of shareholders’ equity. At March 31, 2024, the estimated duration, which measures price sensitivity to interest rate changes, of our securities portfolio was 3.6 percent, unchanged from December 31, 2023.

For information about our borrowing capacity associated with the investment securities portfolio and how we manage our liquidity risk, refer to the “Liquidity Risk Management” section on page 31. See also Note 3 and Note 5 of the Notes to Consolidated Financial Statements for more information on fair value measurements and the accounting for our investment securities portfolio.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following schedule presents the major components of our investment securities portfolio:

INVESTMENT SECURITIES PORTFOLIO


	March 31, 2024						December 31, 2023
(In millions)	Par Value		Amortized cost		Fair value		Par Value		Amortized cost		Fair value
Held-to-maturity
U.S. Government agencies and corporations:
Agency securities	$	92	$	92	$	85	$	93	$	93	$	87
Agency guaranteed mortgage-backed securities	11,748		9,776		9,696		11,966		9,935		10,041
Municipal securities	341		341		324		354		354		338
Total held-to-maturity	12,181		10,209		10,105		12,413		10,382		10,466
Available-for-sale
U.S. Treasury securities	585		584		481		585		585		492
U.S. Government agencies and corporations:
Agency securities	634		629		596		669		663		630
Agency guaranteed mortgage-backed securities	8,267		8,335		7,053		8,460		8,530		7,291
Small Business Administration loan-backed securities	509		543		518		535		571		546
Municipal securities	1,228		1,336		1,259		1,269		1,385		1,318
Other debt securities	25		25		24		25		25		23
Total available-for-sale	11,248		11,452		9,931		11,543		11,759		10,300


Total HTM and AFS investment securities	$	23,429	$	21,661	$	20,036	$	23,956	$	22,141	$	20,766

The amortized cost of total held-to-maturity (“HTM”) and AFS investment securities decreased $480 million, or 2%, from December 31, 2023. Approximately 8% and 7% of the total HTM and AFS investment securities were floating-rate instruments at March 31, 2024 and December 31, 2023, respectively. Additionally, at March 31, 2024, we have $3.6 billion of pay-fixed swaps designated as fair value hedges against fixed-rate AFS securities that effectively convert the fixed interest income to a floating rate on the hedged portion of the securities. At March 31, 2024, total taxable-equivalent premium amortization for our investment securities was $17 million for the first quarter of 2024, compared with $26 million for the same prior year period.

In addition to HTM and AFS securities, we also have a trading securities portfolio, comprised of municipal securities, which totaled $59 million at March 31, 2024, compared with $48 million at December 31, 2023.

Refer to the “Interest Rate Risk Management” section on page 28, the “Capital Management” section on page 33, and Note 5 of the Notes to Consolidated Financial Statements for more discussion regarding our investment securities portfolio, swaps, and related unrealized gains and losses.

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Municipal Investments and Extensions of Credit

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

The following schedule summarizes our total investments and extensions of credit to municipalities:

MUNICIPAL INVESTMENTS AND EXTENSIONS OF CREDIT


(In millions)	March 31, 2024		December 31, 2023

Loans and leases	$	4,277	$	4,302
Held-to-maturity securities	341		354
Available-for-sale securities	1,259		1,318

Trading securities	59		48
Unfunded lending commitments	338		231
Total	$	6,274	$	6,253

Our municipal loans and securities are primarily associated with municipalities located within our geographic footprint. The municipal loan and lease portfolio is primarily secured by general obligations of municipal entities. Other types of collateral also include real estate, revenue pledges, or equipment. At March 31, 2024, we had no municipal loans on nonaccrual.

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

Loan and Lease Portfolio

We provide a wide range of lending products to commercial customers, generally small- and medium-sized businesses. We also provide various retail lending products and services to consumers and small businesses. The following schedule presents the composition of our loan and lease portfolio:

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ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

LOAN AND LEASE PORTFOLIO


	March 31, 2024				December 31, 2023
(Dollar amounts in millions)	Amount		% of total loans		Amount		% of total loans
Commercial:
Commercial and industrial	$	16,519	28.4	%	$	16,684	28.9	%
Leasing	388		0.7		383		0.7
Owner-occupied	9,295		16.0		9,219		16.0
Municipal	4,277		7.4		4,302		7.4
Total commercial	30,479		52.5		30,588		53.0
Commercial real estate:
Construction and land development	2,686		4.6		2,669		4.6
Term	10,892		18.7		10,702		18.5
Total commercial real estate	13,578		23.3		13,371		23.1
Consumer:
Home equity credit line	3,382		5.8		3,356		5.8
1-4 family residential	8,778		15.1		8,415		14.6
Construction and other consumer real estate	1,321		2.3		1,442		2.5
Bankcard and other revolving plans	439		0.8		474		0.8
Other	132		0.2		133		0.2
Total consumer	14,052		24.2		13,820		23.9
Total loans and leases	$	58,109	100.0	%	$	57,779	100.0	%