0000109380us-gaap:~~CommercialPortfolioSegmentMemberzions:FinancingReceivableAccruingMemberzions:OwnerOccupiedMember2019-01-012019-09-30~~NondesignatedMemberzions:InterestRateSwapsForCustomersMember2021-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~September 30, 2020~~March 31, 2021 OR

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

COMMISSION FILE NUMBER 001-12307

ZIONS BANCORPORATION, NATIONAL ASSOCIATION

(Exact name of registrant as specified in its charter)


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

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

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


Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Common Stock, par value $0.001	ZION	The NASDAQ Stock Market LLC
Depositary Shares each representing a 1/40th ownership interest in a share of:
Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock	ZIONP	The NASDAQ Stock Market LLC
Series G Fixed/Floating-Rate Non-Cumulative Perpetual Preferred Stock	ZIONO	The NASDAQ Stock Market LLC
Series H 5.75% Non-Cumulative Perpetual Preferred Stock	ZIONN	The NASDAQ Stock Market LLC
6.95% Fixed-to-Floating Rate Subordinated Notes due September 15, 2028	ZIONL	The NASDAQ Stock Market LLC

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

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

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

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

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

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

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

Number of common shares outstanding at ~~October 28, 2020 164,011,595~~April 22, 2021 163,815,613 shares

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

GLOSSARY OF ACRONYMS


ACL	Allowance for Credit Losses	HTM	Held-to-Maturity
AFS	Available-for-Sale	IMG	International Manufacturing Group
ALCO	Asset/Liability Committee	IOSCO	International Organization of Securities Commissions
ALLL	Allowance for Loan and Lease Losses	IPO	Initial Public Offering
ALM	Asset Liability Management	LIBOR	London Interbank Offered Rate
Amegy	Amegy Bank, a division of Zions Bancorporation, National Association	MD&A	Management’s Discussion and Analysis
AOCI	Accumulated Other Comprehensive Income	Municipalities	State and Local Governments
ASC	Accounting Standards Codification	NASDAQ	National Association of Securities Dealers Automated Quotations
ASU	Accounting Standards Update	NBAZ	National Bank of Arizona, a division of Zions Bancorporation, National Association
bps	basis points	NIM	Net Interest Margin
CB&T	California Bank & Trust, a division of Zions Bancorporation, National Association	NSB	Nevada State Bank, a division of Zions Bancorporation, National Association
CECL	Current Expected Credit Loss	OCI	Other Comprehensive Income
CET1	Common Equity Tier 1 (Basel III)	OREO	Other Real Estate Owned
CFPB	Consumer Financial Protection Bureau	PEI	Private Equity Investment
CLTV	Combined Loan-to-Value Ratio	PPNR	Pre-provision Net Revenue
COSO	Committee of Sponsoring Organizations of the Treadway Commission	PPP	Paycheck Protection Program
CRE	Commercial Real Estate	PPPLF	Payroll Protection Program Liquidity Facility
CVA	Credit Valuation Adjustment	ROC	Risk Oversight Committee
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act	ROU	Right-of-Use
DTA	Deferred Tax Asset	RULC	Reserve for Unfunded Lending Commitments
DTL	Deferred Tax Liability	S&P	Standard and Poor's
EaR	Earnings at Risk	SBA	Small Business Administration
ERM	Enterprise Risk Management	SBIC	Small Business Investment Company
EVE	Economic Value of Equity at Risk	SEC	Securities and Exchange Commission
FASB	Financial Accounting Standards Board	TCBW	The Commerce Bank of Washington, a division of Zions Bancorporation, National Association
FCA	Financial Conduct Authority	TDR	Troubled Debt Restructuring
FDIC	Federal Deposit Insurance Corporation	Tier 1	Common Equity Tier 1 (Basel III) and Additional Tier 1 Capital
FDICIA	Federal Deposit Insurance Corporation Improvement Act	U.S.	United States
FHLB	Federal Home Loan Bank	Vectra	Vectra Bank Colorado, a division of Zions Bancorporation, National Association
FTP	Funds Transfer Pricing	Zions Bancorporation, N.A.	Zions Bancorporation, National Association
GAAP	Generally Accepted Accounting Principles	Zions Bank	Zions Bank, a division of Zions Bancorporation, National Association
HECL	Home Equity Credit Line

Table of Contents

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~~GLOSSARY OF ACRONYMS

This quarterly report on Form 10-Q 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, market trends, industry results or regulatory outcomes to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include, among others:


ACL	Allowance for Credit Losses	HTM	Held-to-Maturity
AFS	Available-for-Sale	IMG	International Manufacturing Group
ALCO	Asset/Liability Committee	IOSCO	International Organization of Securities Commissions
ALLL	Allowance for Loan and Lease Losses	IPO	Initial Public Offering
ALM	Asset Liability Management	LIBOR	London Interbank Offered Rate
Amegy	Amegy Bank, a division of Zions Bancorporation, National Association	MD&A	Management’s Discussion and Analysis
AOCI	Accumulated Other Comprehensive Income	Municipalities	State and Local Governments
ASC	Accounting Standards Codification	NASDAQ	National Association of Securities Dealers Automated Quotations
ASU	Accounting Standards Update	NBAZ	National Bank of Arizona, a division of Zions Bancorporation, National Association
bps	basis points	NIM	Net Interest Margin
CB&T	California Bank & Trust, a division of Zions Bancorporation, National Association	NSB	Nevada State Bank, a division of Zions Bancorporation, National Association
CECL	Current Expected Credit Loss	OCI	Other Comprehensive Income
CET1	Common Equity Tier 1 (Basel III)	OREO	Other Real Estate Owned
CFPB	Consumer Financial Protection Bureau	PEI	Private Equity Investment
CLTV	Combined Loan-to-Value Ratio	PPNR	Pre-provision Net Revenue
COSO	Committee of Sponsoring Organizations of the Treadway Commission	PPP	Paycheck Protection Program
CRE	Commercial Real Estate	PPPLF	Payroll Protection Program Liquidity Facility
CVA	Credit Valuation Adjustment	ROC	Risk Oversight Committee
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act	ROU	Right-of-Use
DTA	Deferred Tax Asset	RULC	Reserve for Unfunded Lending Commitments
DTL	Deferred Tax Liability	S&P	Standard and Poor's
EaR	Earnings at Risk	SBA	Small Business Administration
ERM	Enterprise Risk Management	SBIC	Small Business Investment Company
EVE	Economic Value of Equity at Risk	SEC	Securities and Exchange Commission
FASB	Financial Accounting Standards Board	TCBW	The Commerce Bank of Washington, a division of Zions Bancorporation, National Association
FCA	Financial Conduct Authority	TDR	Troubled Debt Restructuring
FDIC	Federal Deposit Insurance Corporation	Tier 1	Common Equity Tier 1 (Basel III) and Additional Tier 1 Capital
FDICIA	Federal Deposit Insurance Corporation Improvement Act	U.S.	United States
FHLB	Federal Home Loan Bank	Vectra	Vectra Bank Colorado, a division of Zions Bancorporation, National Association
FTP	Funds Transfer Pricing	Zions Bancorporation, N.A.	Zions Bancorporation, National Association
GAAP	Generally Accepted Accounting Principles	Zions Bank	Zions Bank, a division of Zions Bancorporation, National Association
HECL	Home Equity Credit Line

•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 concerning the potential effects of the COVID-19 pandemic on the Bank's businesses and financial results and condition; and

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

These forward-looking statements are not guarantees 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, such as statements about future financial and operating results. Actual results and outcomes may differ materially from those presented, either expressed or implied, including, but not limited to, those presented in Management’s Discussion and Analysis. Important risk factors that may cause such material differences include, but are not limited to:

•the effect of the COVID-19 pandemic, and other infectious illness outbreaks that may arise in the future, on the Bank’s customers, businesses, liquidity, financial results and overall condition and which has created significant uncertainties in U.S. and global markets, including our customers' ability to make timely payments on obligations, fee income revenue due to reduced loan origination activity and card swipe income, and operating expense due to alternative approaches to doing business;

•changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), the Federal Reserve Board's efforts to provide liquidity to the financial system and provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic;

•the Bank's participation as a lender in the PPP and similar programs and its effect on the Bank's liquidity, financial results, businesses and customers, including the availability of program funds and the ability of customers to comply with requirements and otherwise perform with respect to loans obtained under such programs;

•~~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

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~or actual downgrades in ratings of sovereign debt issued by the U. S. and other countries, and other major developments, including wars, military actions, and terrorist attacks;~~PART I. FINANCIAL INFORMATION

•changes in business, 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, particularly with respect to the effects on the economy and the Bank’s customers, businesses, and financial results of segments subject to high volatility and stress that may be exacerbated by the COVID-19 pandemic, such as the recent sudden decreases in oil and gas prices;

•~~changes in markets for equity, fixed-income, and other securities, commodities, including availability, market liquidity levels, and pricing;~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•~~changes in interest rates, the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows and competition;~~

•~~uncertainty regarding the future of the London Interbank Offered Rate ("LIBOR"), and the potential transition away from LIBOR toward new benchmark interest rates;~~

•~~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”), 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” in our 2019 Annual Report on Form 10-K;~~

•~~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;

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

•~~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, including its core deposit system, to remain competitive.~~

Further, statements about the potential effects of the COVID-19 pandemic on the Bank’s businesses and financial results and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Bank’s control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on the Bank, its customers and third parties.

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, 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


ACL	Allowance for Credit Losses	~~FHLB~~HTM	~~Federal Home Loan Bank~~Held-to-Maturity
AFS	Available-for-Sale	~~FTP~~IMG	~~Funds Transfer Pricing~~International Manufacturing Group
ALCO	Asset/Liability Committee	~~GAAP~~IOSCO	~~Generally Accepted Accounting Principles~~ International Organization of Securities Commissions
ALLL	Allowance for Loan and Lease Losses	~~HECL~~IPO	~~Home Equity Credit Line~~Initial Public Offering
ALM	Asset Liability Management	~~HTM~~LIBOR	~~Held-to-Maturity~~London Interbank Offered Rate
Amegy	Amegy Bank, a division of Zions Bancorporation, National Association	~~IMG~~MD&A	~~International Manufacturing Group~~Management’s Discussion and Analysis
AOCI	Accumulated Other Comprehensive Income	~~LIBOR~~	~~London Interbank Offered Rate~~
~~ASC~~	~~Accounting Standards Codification~~	~~MD&A~~	~~Management’s Discussion and Analysis~~
~~ASU~~	~~Accounting Standards Update~~	Municipalities	State and Local Governments
~~bps~~ASC	~~basis points~~Accounting Standards Codification	NASDAQ	National Association of Securities Dealers Automated Quotations
ASU	Accounting Standards Update	NBAZ	National Bank of Arizona, a division of Zions Bancorporation, National Association
bps	basis points	NIM	Net Interest Margin
CB&T	California Bank & Trust, a division of Zions Bancorporation, National Association	~~NBAZ~~NSB	~~National~~Nevada State Bank, ~~of Arizona,~~ a division of Zions Bancorporation, National Association
CECL	Current Expected Credit Loss	~~NIM~~OCI	~~Net Interest Margin~~Other Comprehensive Income
CET1	Common Equity Tier 1 (Basel III)	~~NSB~~OREO	~~Nevada State Bank, a division of Zions Bancorporation, National Association~~Other Real Estate Owned
CFPB	Consumer Financial Protection Bureau	~~OCC~~PEI	~~Office of the Comptroller of the Currency~~Private Equity Investment
CLTV	Combined Loan-to-Value Ratio	~~OCI~~PPNR	~~Other Comprehensive Income~~Pre-provision Net Revenue
COSO	Committee of Sponsoring Organizations of the Treadway Commission	~~OREO~~PPP	~~Other Real Estate Owned~~Paycheck Protection Program
CRE	Commercial Real Estate	~~OTTI~~PPPLF	~~Other-Than-Temporary Impairment~~Payroll Protection Program Liquidity Facility
CVA	Credit Valuation Adjustment	~~PEI~~ROC	~~Private Equity Investment~~Risk Oversight Committee
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act	~~PPNR~~ROU	~~Pre-provision Net Revenue~~Right-of-Use
DTA	Deferred Tax Asset	~~PPP~~RULC	~~Paycheck Protection Program~~Reserve for Unfunded Lending Commitments
DTL	Deferred Tax Liability	S&P	Standard and Poor's
EaR	Earnings at Risk	~~PPPLF~~SBA	~~Payroll Protection Program Liquidity Facility~~Small Business Administration
ERM	Enterprise Risk Management	~~ROC~~SBIC	~~Risk Oversight Committee~~Small Business Investment Company
EVE	Economic Value of Equity at Risk	~~ROU~~SEC	~~Right-of-Use~~Securities and Exchange Commission
FASB	Financial Accounting Standards Board	~~RULC~~TCBW	~~Reserve for Unfunded Lending Commitments~~The Commerce Bank of Washington, a division of Zions Bancorporation, National Association
FCA	Financial Conduct Authority	TDR	Troubled Debt Restructuring
FDIC	Federal Deposit Insurance Corporation	~~S&P~~	~~Standard and Poor's~~
~~FDICIA~~	~~Federal Deposit Insurance Corporation Improvement Act~~	~~SBA~~	~~Small Business Administration~~

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


~~SBIC~~	~~Small Business Investment Company~~	Tier 1	Common Equity Tier 1 (Basel III) and Additional Tier 1 Capital
~~SEC~~FDICIA	~~Securities and Exchange Commission~~Federal Deposit Insurance Corporation Improvement Act	U.S.	United States
~~TCBW~~FHLB	~~The Commerce~~Federal Home Loan Bank ~~of Washington, a division of Zions Bancorporation, National Association~~	Vectra	Vectra Bank Colorado, a division of Zions Bancorporation, National Association
~~TDR~~FTP	~~Troubled Debt Restructuring~~Funds Transfer Pricing	Zions Bancorporation, N.A.	Zions Bancorporation, National Association
GAAP	Generally Accepted Accounting Principles	Zions Bank	Zions Bank, a division of Zions Bancorporation, National Association
HECL	Home Equity Credit Line

Table of Contents

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 on Form 10-Q 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, market trends, industry results or regulatory outcomes to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include, among others:

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. Actual results and outcomes may differ materially from those presented, either expressed or implied, due to various factors including, but not limited to, those presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors in our 2020 Form 10-K.

Although there can be no assurance that any list of risks and uncertainties is complete, important factors that may cause such material differences include changes in general economic, regulatory, and industry conditions; changes and uncertainties in fiscal, monetary, regulatory, trade and tax policies and legislative and regulatory changes, including the broad changes that often occur as a result of a new presidential administration; changes in interest rates and uncertainty regarding the transition away from the London Interbank Offered Rate (“LIBOR”) toward other alternative reference rates; the quality and composition of our loan and securities portfolios; competitive pressures and other factors that may affect aspects of our business, such as pricing and demand for our products and services; our ability to execute our strategic plans, manage our risks, and achieve our business objectives; our ability to develop and maintain information security systems and controls designed to guard against fraud, cyber and privacy risks; and the effects of the COVID-19 pandemic or other national or international catastrophes or conflicts that may occur in the future and governmental responses to such matters.

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

GAAP to NON-GAAP RECONCILIATIONS

This Form 10-Q 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. We consider these adjustments to be relevant to ongoing operating results and provide a meaningful base for period-to-period and company-to-company comparisons. ~~These~~We use these non-GAAP financial measures ~~are used by management~~ to assess ~~the~~our performance, ~~and~~ financial position, ~~of the Bank~~ and for presentations of ~~Bank~~our performance to investors. We further believe that presenting these non-GAAP financial measures will permit investors to assess ~~the~~our performance ~~of the Bank~~ on the same basis as that applied by ~~management.~~us and the banking industry.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied ~~by individual entities.~~across the financial services industry. 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 non-GAAP financial measures presented in this Form 10-Q, ~~and~~together with a discussion of the reasons ~~for which management uses~~why we use these non-GAAP measures:

Return on Average Tangible Common Equity – this schedule also includes ~~“net~~net earnings applicable to common shareholders, excluding the effects of ~~the adjustment,~~any adjustments, net of ~~tax”~~tax, and ~~“average~~average tangible common equity.” Return on average tangible common equity is a non-GAAP financial measure that ~~management believes~~we believe provides useful information to ~~management~~us and others about our use of shareholders’ equity. ~~Management believes~~We believe 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.

RETURN ON AVERAGE TANGIBLE COMMON EQUITY (NON-GAAP)

Three Months Ended
(Dollar amounts in millions) September 30,
2020 June 30,
2020 March 31,
2020 September 30,
2019
Net earnings applicable to common shareholders (GAAP) $ 167 $ 57 $ 6 $ 214
Adjustment, net of tax:
Amortization of core deposit and other intangibles — — — —
Net earnings applicable to common shareholders, excluding the effects of the adjustment, net of tax (non-GAAP) (a) $ 167 $ 57 $ 6 $ 214
Average common equity (GAAP) $ 7,078 $ 7,030 $ 6,924 $ 7,002
Average goodwill and intangibles (1,015) (1,014) (1,014) (1,014)
Average tangible common equity (non-GAAP) (b) $ 6,063 $ 6,016 $ 5,910 $ 5,988
Number of days in quarter (c) 92 91 91 92
Number of days in year (d) 366 366 366 365
Return on average tangible common equity (non-GAAP) (a/b/c)*d 11.0 % 3.8 % 0.4 % 14.2 %


		Three Months Ended
(Dollar amounts in millions)		March 31, 2021			December 31, 2020			March 31, 2020




Net earnings applicable to common shareholders, excluding the effects of the adjustment, net of tax (non-GAAP) 1	(a)	$	314		$	275		$	6
Average common equity (GAAP)		$	7,333		$	7,166		$	6,924
Average goodwill and intangibles		(1,016)			(1,016)			(1,014)
Average tangible common equity (non-GAAP)	(b)	$	6,317		$	6,150		$	5,910
Number of days in quarter	(c)	90			92			91
Number of days in year	(d)	365			366			366
Return on average tangible common equity (non-GAAP)	(a/b/c)*d	20.2		%	17.8		%	0.4		%

~~Table~~1 For all periods presented, no adjustments were made related to the amortization of ~~Contents~~core deposits and other intangibles

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

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 provides~~we believe provide additional useful information about the levels of tangible assets and tangible ~~equity in relation to outstanding shares of common stock. Management believes~~equity. We believe the use of ratios that utilize tangible equity provides additional useful information ~~to management and others~~ about capital adequacy because ~~they~~the ratios present measures of those assets that can generate income.

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


(Dollar amounts in millions, except per share amounts)	(Dollar amounts in millions, except per share amounts)		September 30, 2020			June 30, 2020			March 31, 2020			September 30, 2019			(Dollar amounts in millions, except per share amounts)		March 31, 2021			December 31, 2020			March 31, 2020

Total shareholders’ equity (GAAP)	Total shareholders’ equity (GAAP)		$	7,668		$	7,575		$	7,472		$	7,509		Total shareholders’ equity (GAAP)		$	7,933		$	7,886		$	7,472
Goodwill and intangibles	Goodwill and intangibles		(1,016)			(1,014)			(1,014)			(1,014)			Goodwill and intangibles		(1,016)			(1,016)			(1,014)
Tangible equity (non-GAAP)	Tangible equity (non-GAAP)	(a)	6,652			6,561			6,458			6,495			Tangible equity (non-GAAP)	(a)	6,917			6,870			6,458
Preferred stock	Preferred stock		(566)			(566)			(566)			(566)			Preferred stock		(566)			(566)			(566)
Tangible common equity (non-GAAP)	Tangible common equity (non-GAAP)	(b)	$	6,086		$	5,995		$	5,892		$	5,929		Tangible common equity (non-GAAP)	(b)	$	6,351		$	6,304		$	5,892
Total assets (GAAP)	Total assets (GAAP)		$	78,357		$	76,447		$	71,467		$	70,361		Total assets (GAAP)		$	85,121		$	81,479		$	71,467
Goodwill and intangibles	Goodwill and intangibles		(1,016)			(1,014)			(1,014)			(1,014)			Goodwill and intangibles		(1,016)			(1,016)			(1,014)
Tangible assets (non-GAAP)	Tangible assets (non-GAAP)	(c)	$	77,341		$	75,433		$	70,453		$	69,347		Tangible assets (non-GAAP)	(c)	$	84,105		$	80,463		$	70,453
Common shares outstanding (thousands)	Common shares outstanding (thousands)	(d)	164,009			163,978			163,852			170,373			Common shares outstanding (thousands)	(d)	163,800			164,090			163,852
Tangible equity ratio (non-GAAP)	Tangible equity ratio (non-GAAP)	(a/c)	8.6		%	8.7		%	9.2		%	9.4		%	Tangible equity ratio (non-GAAP)	(a/c)	8.2		%	8.5		%	9.2		%
Tangible common equity ratio (non-GAAP)	Tangible common equity ratio (non-GAAP)	(b/c)	7.9		%	7.9		%	8.4		%	8.5		%	Tangible common equity ratio (non-GAAP)	(b/c)	7.6		%	7.8		%	8.4		%
Tangible book value per common share (non-GAAP)	Tangible book value per common share (non-GAAP)	(b/d)	$	37.11		$	36.56		$	35.96		$	34.80		Tangible book value per common share (non-GAAP)	(b/d)	$	38.77		$	38.42		$	35.96

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Efficiency Ratio and Adjusted Pre-Provision Net Revenue – this schedule also includes “adjusted noninterest expense,” “taxable-equivalent net interest income,” “adjusted taxable-equivalent ~~revenue”~~revenue,” and “pre-provision net ~~revenue"~~revenue” (“PPNR”). The methodology of determining the efficiency ratio may differ among companies. ~~Management makes~~We make adjustments to exclude certain items, as identified in the subsequent schedule, which ~~it believes allows~~we believe allow for more consistent comparability among periods. ~~Management believes~~We believe the efficiency ratio provides useful information regarding the cost of generating revenue. Adjusted noninterest expense provides a measure as to how well we are managing our expenses, and adjusted PPNR enables ~~management~~us and others to assess ~~the Bank’s~~our ability to generate capital to cover credit losses through a credit cycle. Taxable-equivalent net interest income allows ~~management~~us to assess the comparability of revenue arising from both taxable and tax-exempt sources.

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


			Three Months Ended									Nine Months Ended						Year Ended					Three Months Ended									Year Ended
(Dollar amounts in millions)	(Dollar amounts in millions)		September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			December 31, 2019			(Dollar amounts in millions)		March 31, 2021			December 31, 2020			March 31, 2020				December 31, 2020

Noninterest expense (GAAP)	Noninterest expense (GAAP)	(a)	$	442		$	430		$	415		$	1,279		$	1,270		$	1,742		Noninterest expense (GAAP)	(a)	$	435		$	424		$	408			$	1,704
Adjustments:	Adjustments:																				Adjustments:
Severance costs	Severance costs		1			—			2			—			4			25			Severance costs		—			1			—				1
Other real estate expense, net	Other real estate expense, net		—			—			(2)			—			(3)			(3)			Other real estate expense, net		—			1			—				1

Amortization of core deposit and other intangibles	Amortization of core deposit and other intangibles		—			—			—			—			—			1			Amortization of core deposit and other intangibles		—			—			—				—
Restructuring costs	Restructuring costs		1			—			—			2			—			15			Restructuring costs		—			(1)			1				1
Pension termination-related expense			—			28			—			28			—			—
Pension termination-related (income) expense																					Pension termination-related (income) expense		(5)			—			—				28
Total adjustments	Total adjustments	(b)	2			28			—			30			1			38			Total adjustments	(b)	(5)			1			1				31
Adjusted noninterest expense (non-GAAP)	Adjusted noninterest expense (non-GAAP)	(a-b)=(c)	$	440		$	402		$	415		$	1,249		$	1,269		$	1,704		Adjusted noninterest expense (non-GAAP)	(a-b)=(c)	$	440		$	423		$	407			$	1,673
Net interest income (GAAP)	Net interest income (GAAP)	(d)	$	555		$	563		$	567		$	1,665		$	1,713		$	2,272		Net interest income (GAAP)	(d)	$	545		$	550		$	548			$	2,216
Fully taxable-equivalent adjustments	Fully taxable-equivalent adjustments	(e)	7			6			7			21			19			26			Fully taxable-equivalent adjustments	(e)	8			7			7				27
Taxable-equivalent net interest income (non-GAAP)	Taxable-equivalent net interest income (non-GAAP)	(d+e)=f	562			569			574			1,686			1,732			2,298			Taxable-equivalent net interest income (non-GAAP)	(d+e)=f	553			557			555				2,243
Noninterest income (GAAP)	Noninterest income (GAAP)	g	157			117			146			408			410			562			Noninterest income (GAAP)	g	169			166			134				574
Combined income (non-GAAP)	Combined income (non-GAAP)	(f+g)=(h)	719			686			720			2,094			2,142			2,860			Combined income (non-GAAP)	(f+g)=(h)	722			723			689				2,817
Adjustments:	Adjustments:																				Adjustments:
Fair value and nonhedge derivative gain (loss)	Fair value and nonhedge derivative gain (loss)		8			(12)			(6)			(15)			(15)			(9)			Fair value and nonhedge derivative gain (loss)		18			8			(11)				(6)
Securities gains (losses), net	Securities gains (losses), net		4			(4)			2			(5)			—			3			Securities gains (losses), net		11			12			(6)				7
Total adjustments	Total adjustments	(i)	12			(16)			(4)			(20)			(15)			(6)			Total adjustments	(i)	29			20			(17)				1
Adjusted taxable-equivalent revenue (non-GAAP)	Adjusted taxable-equivalent revenue (non-GAAP)	(h-i)=(j)	$	707		$	702		$	724		$	2,114		$	2,157		$	2,866		Adjusted taxable-equivalent revenue (non-GAAP)	(h-i)=(j)	$	693		$	703		$	706			$	2,816
Pre-provision net revenue (PPNR) (non-GAAP)	Pre-provision net revenue (PPNR) (non-GAAP)	(h)-(a)	$	277		$	256		$	305		$	815		$	872		$	1,118		Pre-provision net revenue (PPNR) (non-GAAP)	(h)-(a)	$	287		$	299		$	281			$	1,113
Adjusted PPNR (non-GAAP)	Adjusted PPNR (non-GAAP)	(j)-(c)	267			300			309			865			888			1,162			Adjusted PPNR (non-GAAP)	(j)-(c)	253			280			299				1,143
Efficiency ratio (non-GAAP) 1		(c/j)	62.2		%	57.3		%	57.3		%	59.1		%	58.8		%	59.5		%
Efficiency ratio (non-GAAP)																					Efficiency ratio (non-GAAP)	(c/j)	63.5		%	60.2		%	57.7		%		59.4		%

1 ~~Excluding the $30 million charitable contribution, the efficiency ratio for the three months and nine months ended September 30, 2020, would have been 58.0% and 57.7%, respectively.~~

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

RESULTS OF OPERATIONS

Executive Summary

The financial performance in the ~~third~~first quarter of ~~2020 improved from the first half of 2020, as~~2021 reflected an improving credit environment and outlook, which resulted in minimal net ~~income was more than double that of the first two quarters combined, reflecting~~charge-offs and a decline in the provision for credit losses. Highlights in the third quarter of 2020 include diluted earnings per share of $1.01, which was a level similar to those experienced throughout much of 2019. The lower interest rate environment continued to drive loan yields down more quickly than deposit rates, contributing to a 17-basis point decline in the net interest margin, which was 3.06% in the third quarter. Loans reflected growth in PPP loans, while deposit growth, assisted by various recent government economic stimulus programs, reduced the need for more expensive borrowed funds. Customer-related fee income increased in the third quarter of 2020, when compared with the second quarter of 2020, primarily from strength in residential mortgage loan originations and sales, as a result of lower benchmark interest rates and an enhanced customer-facing digital fulfillment process. Noninterest expenses, after normalizing for the $30 million charitable contribution to our foundation, were down relative to the year-ago period even as business investment continued.

~~COVID-19 Pandemic~~

~~During the third quarter of 2020, the COVID-19 pandemic continued to impact our operations. These impacts included:~~

•~~Alternative work arrangements as most employees continued to work remotely, and branch operating hours and lobby access were restricted in many cases.~~

•Significant support to employees through an increase in flexibility with paid leave and vacation policies, and more frequent cleaning of facilities to enable a safer environment for those employees who are not able to work from home.

•~~Increased flexibility with customers, as some borrowers requested and received temporary forbearance or re-deferrals~~substantial reversal of loan ~~obligations. See "COVID-19 Modifications and Deferrals" on page 30 for more information.~~

•~~Facilitation of government lending programs. See "SBA's Paycheck Protection Program" and "Federal Reserve's Main Street Lending Program"~~loss provisions made in ~~this section for more information.~~

•~~Support to our communities, including a $30 million charitable contribution associated with the PPP lending activity.~~

•~~Maintained our capital ratios and allowance for credit losses ("ACL") at strong levels. On January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13,~~ ~~Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ and its subsequent updates, often referred to as the Current Expected Credit Loss ("CECL") accounting standard. See "Critical Accounting Policies and Significant Estimates" on page 41 for more information on CECL.

~~Select Industries with Elevated Risk Related to COVID-19~~

~~Select industries have elevated risk~~prior quarters due to the COVID-19 ~~pandemic, and as a result, we are more closely managing our credit exposure~~pandemic. Diluted earnings per share in first quarter of 2021 increased to ~~these industries, including ongoing detailed industry credit reviews during~~$1.90, compared with $0.04 in the ~~second and third quarters~~first quarter of 2020.

Compared with the first quarter of 2020, net interest income decreased $3 million, or 1%, to $545 million, as the adverse impact of lower interest rates was offset by average interest-earning asset growth of $12.9 billion, which included $6.1 billion of U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans. Net loan and lease charge-offs were $8 million, or 0.06% of average loans in the first quarter of 2021, and excluding PPP loans, they were 0.07%. Customer-related fee income decreased by $10 million, or 7%, primarily due to lower customer interest rate swap fees. Total noninterest expense increased by $27 million, or 7%, primarily due to increases in long-term incentive compensation and PPP-related professional and legal services.

Total deposits increased $16.3 billion, or 28%, primarily due to government stimulus programs. Total loans and leases increased $3.6 billion, or 7%, due to PPP loan originations. Excluding PPP loans, total loans and leases decreased $2.9 billion, or 6%, as the economic environment and an abundance of liquidity in the marketplace continued to reduce overall loan demand. The deposit-driven excess liquidity on our balance sheet has been challenging to deploy profitably in the low interest rate environment and our customers have had minimal need for traditional bank credit. We continue to look for suitable investments to act as an interest-earning asset bridge until loan demand returns.

SBA Paycheck Protection Program

During first quarter of 2021, we continued to provide assistance to many small businesses through the PPP, which was extended until May 31, 2021. Designed to address the effects of the COVID-19 pandemic, this program provides small businesses with funds to be used for specific expenses, such as payroll, as defined by the SBA. Since the inception of the program in the first quarter of 2020, we have processed nearly $10 billion of PPP loans for approximately 73,000 customers, which included more than 18,000 new customers. We continue to work diligently to solidify those new relationships. As of March 31, 2021, we ranked as the tenth largest originator of PPP loans by dollar volume, as disclosed by the SBA.

The following schedule ~~shows $4.1 billion,~~presents additional information related to our PPP loans.

PPP LOANS


	Three Months Ended			Year Ended
	March 31, 2021			December 31, 2020			Total

(in billions)
Balance of loan originations during the period	$	2.6		$	7.3		$	9.9
Balance of loans forgiven by the SBA1 during the period	1.6			1.3			2.9
(in millions)
Interest and amortization of fees	29			120			149
Accelerated recognition of unamortized net origination fees 2	31			26			57
Total interest income related to PPP loans	$	60		$	146		$	206
Total unamortized net origination fees, at period end	$	168		$	102
Loan yield	3.98		%	3.22		%

1As of March 31, 2021, no PPP loans from Round 2021 had been forgiven.

2 When a loan is paid off or 8.5%, of our non-PPP loan balances as of September 30, 2020, in these industries. Approximately 3% of these loans were deferring payments, and 98% were secured by collateral. The oil and gas-related industry has also been affectedforgiven by the ~~COVID-19 pandemic. For more information see "Oil~~SBA prior to its maturity date, the remaining net unamortized deferred fees are accelerated and ~~Gas-Related Exposure" on page 26 of Management's Discussion and Analysis.~~recognized into interest income at that time, impacting the PPP loan portfolio yield in that period.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~COVID-19 ELEVATED RISK EXPOSURE~~

September 30, 2020
(Dollar amounts in millions) Amount % of total non-PPP loans
CRE
Retail $1,121 2.4 %
Hotel/motel 611 1.3 %
C&I
Retail 431 0.9 %
Tech, telecom, media 427 0.9 %
Entertainment, recreation 383 0.8 %
Transportation 373 0.8 %
Consumer services 256 0.5 %
Other 1
452 0.9 %
Total $4,054 8.5 %

1 ~~No other industry group exceeds 0.5% of total non-PPP loans.~~

Line utilization of revolving loans for the COVID-19 industries with elevated risk has declined since the first quarter of 2020 to 29% at September 30, 2020, compared with 34% at June 30, 2020, and 43% at March 31, 2020.

~~SBA's Paycheck Protection Program~~

~~During 2020, we provided assistance to many small businesses through the PPP. This program provides small businesses with funds to be used for certain expenses as defined by the SBA.~~

As of September 30, 2020, we had processed more than $7 billion of PPP loans for more than 47,000 customers, which included more than 14,000 new customers. We continue to work diligently to solidify those new relationships. While we are the 37th largest financial institution in the United States when measured by total deposits, we ranked as the ninth largest originator of PPP loans by dollar volume of all the participating financial institutions, as disclosed by the SBA.

Loan processing fees paid to us from the SBA are accounted for as loan origination fees. These fees, net of loan origination costs, are deferred and recognized over the life of the loan as a yield adjustment. Toward the end of the third quarter of 2020, we extended the maturity dates of PPP loans with an initial two-year maturity to five years, which lengthened the period of time the remaining unamortized net deferred fees will be recognized into interest income as a yield adjustment. When a loan is paid off or forgiven by the SBA prior to its maturity date, the remaining unamortized net deferred fees are recognized into interest income at that time, and will therefore impact the PPP loan portfolio yield in that period. Beginning in October 2020, the SBA initiated forgiveness of certain PPP loans.

~~Federal Reserve's Main Street Lending Program~~

We are a participant in the Federal Reserve's Main Street Lending Program to support lending to small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. As of September 30, 2020, we had funded a limited number of loans under this program and expect to fund more Main Street Lending Program loans by the end of the year.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~Third~~First Quarter ~~2020~~2021 Financial Performance

Net Earnings Applicable to Common Shareholders
(in millions)

~~Provision for Credit Losses (in millions)~~Diluted EPS

Adjusted PPNR
(in millions)

Efficiency ratio

Net earnings ~~decreased in~~applicable to common shareholders increased from the ~~third~~first quarter of 2020, ~~from the third quarter of 2019,~~ primarily ~~from~~due to a ~~higher~~negative $132 million provision for credit losses. The ~~increase in net earnings from the second quarter of 2020 to the third quarter of 2020 was primarily due to a lower provision for credit losses.~~

~~The increased~~negative provision for credit losses was driven by a decrease in the ~~second and third quarters of 2020,~~ACL due to an improvement in the economic outlook, compared with the ~~third quarter~~more stressed economic outlook at the outset of ~~2019, is due to experienced and expected economic stress caused by~~ the COVID-19 pandemic. ~~The provision in the third quarter of 2020 was down~~

Diluted earnings per share increased from the ~~second~~first quarter of 2020 as a result of increased earnings and a 5% decrease in average diluted shares, primarily due to the ~~effect~~out-of-the-money expiration of ~~changes~~29.2 million ZIONW warrants in ~~economic forecasts and credit quality were offset by other portfolio changes.~~2020.

Adjusted PPNR ~~decreased in~~declined $46 million from the ~~third~~first quarter of ~~2020 from both the second quarter of 2020~~2020. Customer-related fees decreased by $10 million, primarily due to lower customer interest rate swap fees. Noninterest expense increased $27 million primarily due to increases in long-term incentive compensation and ~~the third quarter of 2019.~~ PPP-related professional and legal services.

The ~~decrease~~increase in ~~adjusted PPNR~~our efficiency ratio is primarily a result of ~~a $30 million charitable contribution~~increased noninterest expense, mainly related to ~~our foundation, which was associated with~~long-term incentive compensation, and lower interest income due to the ~~PPP lending activity. Excluding this contribution, our adjusted PPNR would have been $297 million.~~

~~Our efficiency ratio in the third quarter of 2020 was also affected by the $30 million charitable contribution. Excluding this contribution, our efficiency ratio was 58.0%.~~low interest rate environment.

We reported net earnings applicable to common shareholders of $167 million, or $1.01 per diluted common share for the third quarter of 2020, compared with net earnings applicable to common shareholders of $214 million, or $1.17 per diluted common share for the third quarter of 2019.

We entered the current economic environment with a strong capital and reserve position, a robust liquidity profile, and a loan portfolio that has been substantially “de-risked” in recent years and that largely tends to have collateral as a secondary source of repayment – a characteristic that has historically resulted in lower loss rates per dollar of troubled loans. Additionally, beginning in the second quarter of 2020, we suspended share repurchase activity to assist in maintaining our strong capital position.

During this time of economic uncertainty, we have also materially strengthened our allowance for credit losses, which increased 74% to $917 million at the end of the third quarter of 2020, from $526 million at January 1, 2020. Net charge-offs increased during 2020, primarily from charge-offs related to oil and gas-related loans, and were $52 million during the third quarter of 2020, compared with $1 million during the same prior year period.

Net income decreased by $47 million to $175 million in the third quarter of 2020, from $222 million in the third quarter of 2019, primarily due to a $45 million increase in the provision for credit losses, a $30 million charitable contribution, and a decrease of $12 million in net interest income. These adverse impacts were partially offset by a $26 million reduction in income taxes and ~~a $14 million improvement in credit valuation adjustments on client-related interest rate swaps.~~

Net interest income was $555 million in the third quarter of 2020, compared with $567 million in the same prior year period. Interest income decreased $96 million, while interest expense decreased $84 million. Both were impacted by lower benchmark interest rates. Interest income also benefited from loan growth of 12%, which was primarily due to PPP loan originations. Excluding PPP loans, loans decreased 2%.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Adjusted PPNR of $267 million for the third quarter of 2020 was down $42 million, or 14%, from the third quarter of 2019. Adjusted noninterest expense increased by $25 million in the same time period as a result of the $30 million charitable contribution, but also reflected expense control and the reduction in workforce announced in October 2019. Excluding the $30 million charitable contribution, adjusted PPNR for the third quarter of 2020 was $297 million, down 4%, and adjusted noninterest expense was $410 million, down 1%. Our efficiency ratio was 62.2% in the third quarter of 2020, compared with 57.3% in both the second quarter of 2020 and the third quarter of 2019. Excluding the $30 million charitable contribution, the efficiency ratio in the third quarter of 2020 was 58.0%. See “GAAP to Non-GAAP Reconciliations” on page 6 for more information regarding the calculation of the adjusted PPNR and the efficiency ratio.

Our average loan portfolio increased $6.2 billion, or 13%, from the third quarter of 2019, but declined by $606 million when excluding PPP loans. Average PPP loans for the third quarter of 2020 were $6.8 billion. The yield on average loans decreased by 107 basis points (“bps”), reflecting the decline in benchmark interest rates and the impact of lower-yielding PPP loans. Overall, for the third quarter of 2020, compared with the third quarter of 2019, classified loans increased by $840 million, or 105%, and nonaccrual loans increased by $133 million, or 57%. The annualized ratio of net loan charge-offs to average loans was 0.38% for the third quarter of 2020, compared with 0.01% for the third quarter of 2019.

~~Areas of focus for 2020~~

We started 2020 with a continued focus on initiatives related to Bank profitability and returns on- and of-equity as detailed in our 2019 Annual Report on Form 10-K (see “Focus for 2020” in our 2019 Annual Report on
Form 10-K). More recently, the human and economic crises caused by the COVID-19 pandemic has shifted our focus toward serving our customers, communities, and employees who have been negatively impacted by the COVID-19 pandemic, as well as heightening our vigilance in managing emerging risks.

Net Interest Income and Net Interest Margin

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~~approximately 76% of our net revenue. Net interest income is derived from both the volume of interest-earning assets and interest-bearing liabilities and their respective yields and rates.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

NET INTEREST INCOME AND NET INTEREST MARGIN


	Three Months Ended March 31,						Amount change		Percent change
(In millions)	2021			2020
Interest and fees on loans	$	488		$	532		$	(44)	(8)	%
Interest on money market investments	3			8			(5)		(63)
Interest on securities	71			82			(11)		(13)
Total interest income	562			622			(60)		(10)
Interest on deposits	9			51			(42)		(82)
Interest on short- and long-term borrowings	8			23			(15)		(65)
Total interest expense	17			74			(57)		(77)
Net interest income	$	545		$	548		$	(3)	(1)	%

Average interest-earning assets	$	78,294		$	65,363		$	12,931	20	%
Average interest-bearing liabilities	$	40,157		$	37,979		$	2,178	6	%
							bps
Yield on interest-earning assets1	2.95		%	3.87		%	(92)
Rate paid on total deposits and interest-bearing liabilities1	0.09		%	0.48		%	(39)
Cost of total deposits1	0.05		%	0.36		%	(31)
Net interest margin1	2.86		%	3.41		%	(55)

1Rates are calculated using amounts in thousands and taxable-equivalent rates are used where applicable.

Net interest income decreased ~~$12~~$3 million, or 1%, primarily due to ~~$555~~the lower interest rate environment, which contributed to a $44 million decrease in interest and fees on loans and an $11 million decrease in interest on securities. Interest expense decreased $57 million, or 77%, due to a $42 million decline in interest paid on deposits and a $15 million decline in interest paid on short- and long-term borrowings, both of which were impacted by lower interest rates, reduced competitive pricing pressure for deposits, and reduced balances of borrowed funds, given strong deposit growth.

The net interest margin compressed to 2.86% in the ~~third~~first quarter of ~~2020, from $567 million~~2021, compared with 3.41% in the ~~third~~first quarter of ~~2019.~~2020. The yield on average interest-earning assets was 2.95% in the first quarter of 2021, a decrease of 92 bps, compared with the first quarter of 2020. Approximately 22 bps of the decrease was due to growth in low-yielding money market investments. Yields on loans and securities decreased by ~~107~~69 bps and 3357 bps, respectively, while ~~yields~~rates paid on deposits and borrowed funds decreased by 6652 bps and ~~123~~67 bps, respectively. The impact of lower interest rates was partially offset by loan growth from PPP loans, and a shift in liability balances from ~~federal~~borrowed funds ~~purchased and other short-term borrowings~~ to lower-cost deposits. ~~The net interest margin (“NIM”) compressed to 3.06% in the third quarter of 2020, compared with 3.48% in the same prior year period, and 3.23% in the second quarter of 2020.~~ Excluding the effect of the PPP loans, the NIM may continue to compress over the next several quarters, primarily ~~attributable~~due to ~~benchmark interest rate-related pressure on earning~~continued repricing of loans, deposit growth potentially exceeding loan demand, and further shifts in interest-earning asset ~~yields.~~composition towards lower-yielding securities and money market investments.

Average interest-earning assets increased ~~$7.6~~$12.9 billion, or ~~12%~~20%, infrom the ~~third~~first quarter of 2020, ~~from~~and included $6.1 billion of PPP loans. Average money market investments, including short-term deposits held at the ~~third~~Federal Reserve, increased $5.8 billion to equal 10% of average interest-earning assets in the first quarter of ~~2019, with average yields decreasing 95 bps. The yield on average interest earning assets includes the dilutive effect of $6.8 billion, or 9% of earning assets, of PPP loans with a yield of 3.03%, as~~2021, compared with ~~a yield on the non-PPP loan portfolio of 3.77%.~~

As of September 30, 2020, we received about 10,000 applications for PPP loan forgiveness, representing more than 20% of our PPP loans by count. Beginning in October 2020, the SBA initiated forgiveness of some of these loans and also announced a streamlined forgiveness process for borrowers with PPP loans of $50 thousand or less, which represents approximately $540 million, or 8%, of our PPP loan balance outstanding. When a loan is paid off or forgiven by the SBA prior to its maturity date, the remaining unamortized net deferred fees are recognized into interest income at that time.

~~The PPP loan yield~~3% in the ~~third quarter~~same prior year period. The increase in average money market investments is primarily attributable to deposit growth outpacing loan growth due to government stimulus programs and the resulting abundance of ~~2020 was 3.03%. As previously discussed, toward~~liquidity in the ~~end of the third quarter of 2020, we extended the maturity dates of PPP loans with an initial two-year maturity to five years, which~~marketplace.

129

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~lengthened~~

Average loans and leases increased $4.9 billion, or 10%, to $53.7 billion in the ~~period~~first quarter of ~~time~~2021, from $48.8 billion in the ~~remaining unamortized net deferred fees will be recognized into interest income as a yield adjustment. As~~first quarter of ~~September 30,~~ 2020, ~~there was approximately $141 million of unamortized net origination fees related~~primarily due to the origination of PPP loans. The yield on loans ~~which will be recognized~~and leases decreased 69 bps from the first quarter of 2020, or 73 bps when excluding PPP loans. These decreases were primarily due to lower benchmark interest rates, but also reflected continued pricing pressure, in view of surplus market liquidity. The yield on non-PPP loans originated during the first quarter of 2021 was moderately less than the yield on loans maturing or otherwise paying down.

Average available-for-sale (“AFS”) securities balances increased $2.2 billion, or 16%, to $15.9 billion in the first quarter of 2021, from $13.7 billion in the first quarter of 2020. The yield on securities decreased 57 bps from the same prior year period. The yield on securities purchased during the first quarter of 2021 was significantly lower than the yield on securities that paid off or paid down. We purchased $2.7 billion of AFS securities during the first quarter of 2021 with an average yield of 1.3%. Principal repayment volume on AFS securities during the first quarter of 2021 was $1.4 billion, or 9% of the December 31, 2020 balance. Given our current excess liquidity, we anticipate security purchases to exceed runoff by similar amounts over the remaining life of these loans. Using a five-year contractual maturity, these fees will add approximately 0.7% to the loan coupon rate of 1.0%. Prepayment or SBA forgiveness of these loans will accelerate the recognition of yield-enhancing fees and increase the net yield accordingly.next few quarters.

Average interest-bearing liabilities ~~decreased $119 million in the third quarter of 2020, from the third quarter of 2019,~~increased $2.2 billion, or 6%, and the average rate paid on interest-bearing liabilities decreased 8761 bps to ~~0.27%.~~

0.17% during the first quarter of 2021. The ~~loan growth in~~rate paid on total deposits and interest-bearing liabilities was 0.09% during the ~~third~~first quarter of 2021, a decrease from 0.48% during the first quarter of 2020, ~~from the third quarter of 2019,~~which was primarily due to PPP loans, which were funded primarily through deposit growth. The average loan yield decreased 107 bps over the same prior year period, with decreases of 87 bps, 158 bps, and 62 bps in non-PPP commercial loans, CRE, and consumer loans, respectively. Recently, aslower benchmark interest rates ~~have settled at a lower level, yields on new loans have been only modestly lower than yields on maturing loans.~~

~~Benchmark interest rates decreased in 2019~~ and 2020, resulting in the previously discussed negative effect on yields. A portion of our variable-rate loans, such as those with longer initial fixed rate periods or longer reset frequencies (e.g., 5- and 7-year fixed rate adjustable mortgages), have not yet been affected by declines in benchmark interest rates. Also, our interest-earning assets generally reprice more quickly than our funding sources, in part because nearly half of our deposits are noninterest-bearing.strong deposit growth.

Average total deposits were ~~$66.5~~$71.4 billion at an average cost of ~~11 bps~~0.05% for the ~~third~~first quarter of ~~2020,~~2021, compared with ~~$55.3~~$56.9 billion at an average cost of ~~50 bps~~0.36% for the ~~third~~first quarter of 2019. Various government stimulus programs contributed significantly to the deposit growth. Average interest-bearing deposits grew 12%, and were $35.7 billion at an average cost of 20 bps for the third quarter of 2020, compared with $31.9 billion at an average cost of 86 bps for the same prior year period.2020. The 3931 bps decline in the cost of total deposits ~~and the 66 bps decline in the cost of interest bearing deposits~~ was primarily due to ~~the daily average~~lower benchmark ~~federal funds target rate decrease from 2.31% to 0.25%, or 206 bps, between the third quarter of 2019 and the third quarter of 2020. This was partially attributable to our strong~~interest rates, growth in noninterest-bearing ~~deposit growth~~deposits, and reduced competitive pricing ~~pressure~~pressure.

Average interest-bearing deposits grew 13% to $37.7 billion at an average cost of 10 bps for ~~deposits.~~

the first quarter of 2021, compared with $33.3 billion at an average cost of 62 bps for the same prior year period. 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 provides us with a low cost of

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

funds that has a positive impact on our NIM. Because many of our deposit accounts are of an operating nature for businesses and households, we expect our noninterest-bearing deposits to remain a competitive advantage. Average noninterest-bearing demand deposits increased ~~by $7.4~~$10.1 billion, or ~~32%~~43%, infrom the ~~third~~first quarter of ~~2020, from the third quarter~~2020. Average noninterest-

Table of ~~2019. Average noninterest-bearing~~Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

bearing deposits comprised ~~46%~~47% and ~~42%~~41% of average total deposits for the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively. The net positive impact of noninterest-bearing sources of funds on the NIM was ~~0.13%~~0.08% during the ~~third~~first quarter of ~~2020,~~2021, compared with ~~0.47%~~0.32% during the ~~third~~first quarter of ~~2019,~~2020, reflecting the decline in benchmark interest rates.

Average borrowed funds decreased $2.2 billion from the first quarter of 2020, with average short-term borrowings decreasing $1.8 billion, and average long-term borrowings decreasing $0.4 billion from the same prior year period, reflecting less reliance on borrowed funds due to strong deposit growth. The average rate paid on short-term borrowings and long-term debt decreased 112 bps and 91 bps, respectively, from the first quarter of 2020.

The spread on average interest-bearing funds was ~~2.93%~~2.78% and ~~3.01%~~3.09% for the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, and was affected by the same factors that impacted the NIM. Interest rate spreads and margins are impacted by the ~~mix of assets we hold, the~~ composition of our loan and securities portfolios ~~and~~as well as the type of funding used. ~~Our estimates of our~~For information regarding how we manage 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, other modeling assumptions, and the actions of competitors and customers in response to those changes. Further detail on interest rate risk is discussed insee “Interest Rate and Market Risk Management” on page ~~31.~~

Average available-for-sale (“AFS”) securities balances decreased by $240 million in the third quarter of 2020, from the third quarter of 2019. Yields on average AFS securities decreased by 34 bps over the same time period. The duration of the securities portfolio is 2.8 years. Runoff volume during the third quarter of 2020 was $1.5 billion, or 10% of the June 30, 2020 balance. We purchased $1.9 billion of securities during the third quarter of 2020 at an average yield of 1.2%. Given our current excess liquidity, we anticipate security purchases to exceed runoff by similar amounts over the next few quarters.

Average borrowed funds decreased $3.9 billion in the third quarter of 2020, from the third quarter of 2019, with average short-term borrowings decreasing $4.0 billion, and average long-term borrowings increasing by $0.1 billion during the same time period, reflecting less reliance on federal funds purchased and other short-term borrowings because of strong deposit growth. The average interest rate paid on short-term borrowings and long-term debt decreased by 220 bps and 133 bps, respectively, in the third quarter of 2020, from the third quarter of 2019.26.

The following schedule summarizes the average balances, the amount of interest earned or incurred, and the applicable yields for interest-earning assets and the costs of interest-bearing liabilities that generate taxable-equivalent net interest income.

1411

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES


(Unaudited)	(Unaudited)	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019						(Unaudited)	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(Dollar amounts in millions)	(Dollar amounts in millions)	Average balance		Amount of interest 1		Average yield/rate		Average balance		Amount of interest 1		Average yield/rate		(Dollar amounts in millions)	Average balance		Amount of interest 1		Average yield/rate		Average balance		Amount of interest 1		Average yield/rate
ASSETS	ASSETS													ASSETS
Money market investments	Money market investments	$	3,116	$	2	0.25	%	$	1,413	$	8	2.41	%	Money market investments	$	7,791	$	3	0.16	%	$	2,013	$	8	1.52	%
Securities:	Securities:													Securities:
Held-to-maturity	Held-to-maturity	672		6		3.39		693		6		3.66		Held-to-maturity	663		5		2.98		593		5		3.72
Available-for-sale	Available-for-sale	14,083		69		1.95		14,323		82		2.29		Available-for-sale	15,876		66		1.69		13,687		77		2.26
Trading account	Trading account	158		1		4.31		135		2		4.50		Trading account	231		2		3.96		164		2		4.27
Total securities 2	Total securities 2	14,913		76		2.04		15,151		90		2.37		Total securities 2	16,770		73		1.77		14,444		84		2.34
Loans held for sale	Loans held for sale	86		1		4.32		89		1		3.67		Loans held for sale	68		—		2.81		109		1		3.14
Loans and leases 3	Loans and leases 3													Loans and leases 3
Commercial - excluding PPP loans	Commercial - excluding PPP loans	24,909		248		3.96		25,284		308		4.83		Commercial - excluding PPP loans	24,732		234		3.83		25,514		287		4.53
Commercial - PPP loans	Commercial - PPP loans	6,771		52		3.03		—		—		—		Commercial - PPP loans	6,135		60		3.98		—		—		—
Commercial real estate	Commercial real estate	11,986		106		3.52		11,849		153		5.10		Commercial real estate	12,133		105		3.50		11,546		133		4.62
Consumer	Consumer	11,327		103		3.60		11,695		124		4.22		Consumer	10,665		95		3.59		11,737		116		3.99
Total loans and leases	Total loans and leases	54,993		509		3.68		48,828		585		4.75		Total loans and leases	53,665		494		3.73		48,797		536		4.42
Total interest-earning assets	Total interest-earning assets	73,108		588		3.20		65,481		684		4.15		Total interest-earning assets	78,294		570		2.95		65,363		629		3.87
Cash and due from banks	Cash and due from banks	583						616						Cash and due from banks	614						676
Allowance for credit losses on loans and debt securities	Allowance for credit losses on loans and debt securities	(852)						(502)						Allowance for credit losses on loans and debt securities	(774)						(499)
Goodwill and intangibles	Goodwill and intangibles	1,015						1,014						Goodwill and intangibles	1,016						1,014
Other assets	Other assets	4,129						3,643						Other assets	3,930						3,651
Total assets	Total assets	$	77,983					$	70,252					Total assets	$	83,080					$	70,205
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY													LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
Savings and money market	Savings and money market	$	32,111	$	9	0.11	%	$	26,962	$	44	0.65	%	Savings and money market	$	35,232	$	6	0.07	%	$	28,856	$	33	0.47	%
Time	Time	3,602		9		0.96		4,963		25		1.99		Time	2,491		3		0.55		4,454		18		1.61

Total interest-bearing deposits	Total interest-bearing deposits	35,713		18		0.20		31,925		69		0.86		Total interest-bearing deposits	37,723		9		0.10		33,310		51		0.62
Borrowed funds:	Borrowed funds:													Borrowed funds:
Federal funds purchased and other short-term borrowings	Federal funds purchased and other short-term borrowings	1,078		—		0.09		5,099		30		2.29		Federal funds purchased and other short-term borrowings	1,110		—		0.07		2,922		9		1.19
Long-term debt	Long-term debt	1,353		8		2.32		1,239		11		3.65		Long-term debt	1,324		8		2.30		1,747		14		3.21
Total borrowed funds	Total borrowed funds	2,431		8		1.33		6,338		41		2.56		Total borrowed funds	2,434		8		1.28		4,669		23		1.95
Total interest-bearing liabilities	Total interest-bearing liabilities	38,144		26		0.27		38,263		110		1.14		Total interest-bearing liabilities	40,157		17		0.17		37,979		74		0.78
Noninterest-bearing demand deposits	Noninterest-bearing demand deposits	30,789						23,359						Noninterest-bearing demand deposits	33,723						23,599
Other liabilities	Other liabilities	1,406						1,062						Other liabilities	1,301						1,137
Total liabilities	Total liabilities	70,339						62,684						Total liabilities	75,181						62,715
Shareholders’ equity:	Shareholders’ equity:													Shareholders’ equity:
Preferred equity	Preferred equity	566						566						Preferred equity	566						566
Common equity	Common equity	7,078						7,002						Common equity	7,333						6,924
Total shareholders’ equity	Total shareholders’ equity	7,644						7,568						Total shareholders’ equity	7,899						7,490
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	77,983					$	70,252					Total liabilities and shareholders’ equity	$	83,080					$	70,205
Spread on average interest-bearing funds	Spread on average interest-bearing funds					2.93	%					3.01	%	Spread on average interest-bearing funds					2.78	%					3.09	%
Net impact of noninterest-bearing sources of funds	Net impact of noninterest-bearing sources of funds					0.13						0.47		Net impact of noninterest-bearing sources of funds					0.08	%					0.32	%
Net interest margin	Net interest margin			$	562	3.06				$	574	3.48		Net interest margin			$	553	2.86	%			$	555	3.41	%
Memo: total loans and leases, excluding PPP loans	Memo: total loans and leases, excluding PPP loans	$	48,222	457		3.77		$	48,828	585		4.75		Memo: total loans and leases, excluding PPP loans	$	47,530	434		3.69	%	$	48,797	536		4.42	%

Memo: total cost of deposits	Memo: total cost of deposits					0.11						0.50		Memo: total cost of deposits					0.05	%					0.36	%
Memo: total deposits and interest-bearing liabilities	Memo: total deposits and interest-bearing liabilities	68,933		26		0.15		61,622		110		0.71		Memo: total deposits and interest-bearing liabilities	73,880		17		0.09	%	61,578		74		0.48	%

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

2 Interest on total securities includes ~~$26~~$30 million and ~~$33~~$28 million of taxable-equivalent premium amortization for the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

3Net of ~~unearned income~~unamortized purchase premiums, discounts, and deferred loan fees ~~net of related~~and costs. ~~Loans include nonaccrual and restructured loans.~~

1512

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

(Unaudited) Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
(Dollar amounts in millions) Average
balance
Amount of
interest 1
Average
yield/rate Average
balance
Amount of
interest 1
Average
yield/rate
ASSETS
Money market investments $ 2,250 $ 11 0.65 % $ 1,315 $ 26 2.59 %
Securities:
Held-to-maturity 632 17 3.56 736 20 3.69
Available-for-sale 13,967 220 2.11 14,597 262 2.40
Trading account 157 5 4.29 138 5 4.49
Total securities 2
14,756 242 2.19 15,471 287 2.48
Loans held for sale 106 4 4.19 74 1 2.65
Loans and leases 3
Commercial - excluding PPP loans 25,398 794 4.18 24,899 919 4.94
Commercial - PPP loans 3,938 91 3.08 — — —
Commercial real estate 11,800 351 3.98 11,656 454 5.21
Consumer 11,558 325 3.75 11,559 369 4.26
Total loans and leases 52,694 1,561 3.96 48,114 1,742 4.84
Total interest-earning assets 69,806 1,818 3.48 64,974 2,056 4.23
Cash and due from banks 625 588
Allowance for loan losses (692) (499)
Goodwill and intangibles 1,014 1,014
Other assets 3,960 3,493
Total assets $ 74,713 $ 69,570
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Savings and money market $ 30,360 $ 53 0.23 % $ 26,418 $ 120 0.61 %
Time 3,968 39 1.33 4,889 72 1.97
Total interest-bearing deposits 34,328 92 0.36 31,307 192 0.82
Borrowed funds:
Federal funds purchased and other short-term borrowings 2,073 10 0.61 5,394 100 2.46
Long-term debt 1,611 30 2.50 1,117 32 3.83
Total borrowed funds 3,684 40 1.44 6,511 132 2.70
Total interest-bearing liabilities 38,012 132 0.46 37,818 324 1.14
Noninterest-bearing demand deposits 27,825 23,214
Other liabilities 1,299 974
Total liabilities 67,136 62,006
Shareholders’ equity:
Preferred equity 566 566
Common equity 7,011 6,998
Total shareholders’ equity 7,577 7,564
Total liabilities and shareholders’ equity $ 74,713 $ 69,570
Spread on average interest-bearing funds 3.02 % 3.09 %
Net impact of noninterest-bearing sources of funds 0.21 0.47
Net interest margin $ 1,686 3.23 $ 1,732 3.56
Memo: total loans and leases, excluding PPP loans $ 48,756 1,470 4.03 $ 48,114 1,742 4.84
Memo: total cost of deposits 0.20 0.47
Memo: total deposits and interest-bearing liabilities 65,837 132 0.26 61,032 324 0.70

1 Rates are calculated using amounts in thousands and the statutory taxable-equivalent rates where applicable. The taxable-equivalent rates used are the rates that were applicable at the time of each respective reporting period.

2 ~~Interest on total securities includes $80 million and $96 million of taxable-equivalent premium amortization for the first nine months of 2020 and 2019, respectively.~~

3 ~~Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.~~

~~Table of Contents~~

~~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 over the contractual term of 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, including changes in net charge-offs, are recorded inas the provision for loan and lease losses and the provision for unfunded lending commitments in the income ~~statement, respectively.~~statement. The ACL for debt securities is estimated separately from loans.

The provision for credit losses, which is the combination of both the provision for loan losses and the provision for unfunded lending commitments, was ~~$55~~a negative $132 million in the ~~third~~first quarter of 2021, compared with negative $67 million in the fourth quarter of 2020, ~~compared with $10~~and a positive $258 million in the ~~third quarter of 2019, and $168 million in the second~~first quarter of 2020. The ACL ~~increased $345 million to $917~~was $695 million at ~~September 30, 2020,~~March 31, 2021, compared with ~~$572~~$835 million at ~~September 30, 2019.~~December 31, 2020, and $777 million at March 31, 2020. The year-over-year ~~increase~~decrease in the ACL ~~is almost entirely~~was primarily due to ~~experienced and expected~~an improvement in the economic ~~stress caused by~~outlook, compared with the more stressed economic outlook at the outset of the COVID-19 pandemic. The ratio of allowance for credit losses to net loans and leases (excluding PPP loans) was 1.48%, 1.74%, and 1.56% at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. The annualized ratio of net charge-offs to average loans ~~during~~(excluding PPP) was 0.07%, 0.13%, and 0.06% for the ~~third quarter of 2020 was 0.38%, compared with 0.01% during the third quarter of 2019. The provision for credit losses for debt securities was less than $1 million in the third quarter of 2020.~~same periods.

1713

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The total ACL was ~~$917~~$695 million at ~~September 30, 2020,~~March 31, 2021, compared with ~~$914~~$835 million at ~~June 30,~~December 31, 2020. The bar chart above ~~shows~~illustrates the broad categories of change. The second bar represents the change in economic ~~forecast.~~forecasts. The ~~$50~~$110 million ~~increase~~decrease from the prior quarter is our estimate of the change in expected credit losses due to ~~slower~~improvements in both realized economic ~~recovery than previously forecast. Our base forecast shows~~results and economic ~~improvement beginning in late 2020, gradually stabilizing by 2022. Credit~~forecasts. The third bar represents credit quality factors ~~represented by the third bar include~~and includes risk-grade migration and specific reserves against loans, which, when combined, ~~add $24 million to~~decreased the ACL ~~when compared with the prior quarter, showing moderate~~by $15 million, indicating moderately improved credit ~~quality deterioration. Lastly,~~quality. The fourth bar represents loan portfolio changes, driven by declining non-PPP loan balances, ~~declining,~~ the aging of the portfolio, decreased utilization, and other similar factors. These factors ~~generated~~resulted in a ~~$71~~$15 million reduction in the ACL.

On January 1, 2020, we adopted ASU 2016-13, or CECL. Upon adoption of the ASU, we recorded the full amount of the ACL for loans and leases of $526 million, compared with $554 million at December 31, 2019, resulting in an after-tax increase to retained earnings of $20 million. The impact of the adoption of CECL for our securities portfolio was less than $1 million. As a result of this new accounting standard, our ACL has becomeFor more ~~volatile and we expect this to continue primarily because, under the new process, the allowance is subject to economic forecasts that may change materially from period to period.~~

~~Note 6 of our 2019 Annual Report on Form 10-K and “Credit Risk Management” on page 24 contains~~ information on how we determine the appropriate level ~~for~~of the ALLL and the ~~RULC. Also, for more information~~RULC, see ~~“Critical Accounting Policies and Significant Estimates”~~“Credit Risk Management” on page ~~41.~~20 and Note 6 of our 2020 Form 10-K.

Noninterest Income

Noninterest income represents ~~revenues~~revenue we earn ~~for~~from products and services that generally have no associated interest rate or ~~yield. We believe a subtotal of~~yield and is classified as either customer-related or noncustomer-related income. Customer-related fees ~~provides a better view of income over which we have more direct near-term control. It excludes~~exclude items such as ~~dividends, insurance-related income,~~ mark-to-market adjustments on certain ~~derivatives,~~derivatives; dividends; insurance-related income; and securities gains and losses. ~~Growing~~

Total noninterest income ~~is a key strategic priority, and several strategic initiatives are underway~~increased by $35 million, or 26%, to ~~support this effort. We are working to leverage our focus on commercial and small business customers to accelerate sales~~$169 million in the first quarter of ~~capital markets products, treasury management, and wealth advisory services.~~2021, compared with $134 million in the first quarter of 2020. Noninterest income accounted for ~~22%~~24% and 20% of net revenue during the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

1814

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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

NONINTEREST INCOME


		Three Months Ended September 30,				Amount change				Percent change				Nine Months Ended September 30,									Amount change			Percent change			Three Months Ended March 31,								Amount change			Percent change
(Dollar amounts in millions)	(Dollar amounts in millions)	2020		2019								2020				2019				(Dollar amounts in millions)		2021								2020

Commercial account fees	Commercial account fees	$	32	$	31			$	1			3	%			$	93			$	90				$	3			3		%	Commercial account fees	$	32		$			31		$	1	3	%
Card fees	Card fees	21		24		(3)				(13)				61				70					(9)			(13)		Card fees	21					21			—			—
Retail and business banking fees	Retail and business banking fees	17		20		(3)				(15)				50				58					(8)			(14)		Retail and business banking fees	17					19			(2)			(11)
Loan-related fees and income	Loan-related fees and income	32		21		11				52				84				55					29			53		Loan-related fees and income	25					26			(1)			(4)
Capital markets and foreign exchange fees	Capital markets and foreign exchange fees	16		23		(7)				(30)				58				59					(1)			(2)		Capital markets and foreign exchange fees	15					24			(9)			(38)
Wealth management and trust fees		14		16		(2)				(13)				46				45					1			2
Wealth management fees																												Wealth management fees	12					11			1			9
Other customer-related fees	Other customer-related fees	7		5		2				40				19				15					4			27		Other customer-related fees	11					11			—			—
Customer-related fees	Customer-related fees	139		140		(1)				(1)				411				392					19			5		Customer-related fees	133					143			(10)			(7)
Fair value and nonhedge derivative income (loss)	Fair value and nonhedge derivative income (loss)	8		(6)		14				NM				(15)				(15)					—			—		Fair value and nonhedge derivative income (loss)	18					(11)			29			NM
Dividends and other income	Dividends and other income	6		10		(4)				(40)				17				33					(16)			(48)		Dividends and other income	7					8			(1)			(13)
Securities gains (losses), net	Securities gains (losses), net	4		2		2				NM				(5)				—					(5)			NM		Securities gains (losses), net	11					(6)			17			NM
Total noninterest income	Total noninterest income	$	157	$	146	$	11			8	%			$	408			$	410				$	(2)		—	%	Total noninterest income	$	169				$	134		$	35		26		%

~~Total noninterest income for the third quarter of 2020 increased by $11 million, or 8%, to $157 million for the third quarter of 2020, from $146 million for the third quarter of 2019.~~ Customer-related fees

Total customer-related fees decreased ~~slightly~~ to ~~$139~~$133 million for the ~~third~~first quarter of ~~2020,~~2021, from ~~$140~~$143 million for the ~~third~~first quarter of ~~2019. Loan-related fees and income increased $11 million due to residential mortgage loan originations and sales for~~2020. Although most categories were generally stable when compared with the same prior year period, ~~which benefited from the reduction in benchmark interest rates and our enhanced customer-facing digital fulfillment process. Capital~~capital markets and foreign exchange fees decreased ~~by $7~~$9 million, ~~in the third quarter of 2020, from the third quarter of 2019,~~primarily due ~~largely~~ to ~~reduced income from arranging~~lower customer interest rate ~~hedges for our loan customers. Retail and business banking~~swap fees.

Noncustomer-related fees decreased by $3 million in the third quarter of 2020, from the third quarter of 2019, due to waiving of fees as a result of the COVID-19 pandemic. Card fees also decreased by $3 million during this same period from reduced economic activity and transactions volume in the third quarter of 2020.

In the ~~third~~first quarter of ~~2020,~~2021, we recognized ~~an $8~~a positive $18 million ~~positive~~ credit valuation adjustment (“CVA”) on client-related interest rate swaps, compared with a ~~$12~~negative $11 million ~~negative~~ CVA in the ~~second~~first quarter of 2020. This change reflects a significant decline in the total exposure of client swaps, primarily due to an increase in benchmark interest rates during the quarter and improvements in the credit quality of the customer counterparties associated with the swaps.

Securities gains increased by $17 million, primarily as a result of an $11 million gain on the sale of remaining Farmer Mac Class C stock in the first quarter of 2021. The first quarter of 2020 ~~and a~~was negatively impacted by $6 million ~~negative CVA in the prior year period. Dividends and other income decreased~~of unrealized losses related to ~~$6 million in the third quarter of 2020 from $10 million in the third quarter of 2019, primarily due to lower dividends received from the Federal Home Loan Bank~~Small Business Investment Company (“~~FHLB”~~SBIC”)~~, reflecting less FHLB activity stock held by the Bank.~~ investments.

Customer-related fees for the first nine months of 2020 increased by $19 million, or 5%, primarily from loan-related fees and income and other customer-related fees, and was partially offset by a decrease in card fees and retail and business banking fees.

Noninterest Expense

Noninterest expense increased by $27 million, or 7%, infrom the ~~third~~first quarter of ~~2020, from the third quarter of 2019.~~2020. Adjusted noninterest expense increased ~~$25~~$33 million, or 6%8%, ~~over~~from the same ~~time~~prior year period. The following schedule presents ~~a comparison of~~ the major components of noninterest expense.

1915

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

NONINTEREST EXPENSE


		Three Months Ended September 30,				Amount change				Percent change				Nine Months Ended September 30,									Amount change			Percent change			Three Months Ended March 31,								Amount change			Percent change
(Dollar amounts in millions)	(Dollar amounts in millions)	2020		2019								2020				2019				(Dollar amounts in millions)		2021								2020

Salaries and employee benefits	Salaries and employee benefits	$	269	$	273			$	(4)			(1)	%			$	810			$	835				$	(25)			(3)		%	Salaries and employee benefits	$	288		$			274		$	14	5	%
Occupancy, net	Occupancy, net	33		34		(1)				(3)				97				99					(2)			(2)		Occupancy, net	33					33			—			—
Furniture, equipment and software, net	Furniture, equipment and software, net	32		34		(2)				(6)				97				101					(4)			(4)		Furniture, equipment and software, net	32					32			—			—
Other real estate expense, net		—		(2)		2				NM				—				(3)					3			NM

Credit-related expense	Credit-related expense	6		2		4				NM				16				16					—			—		Credit-related expense	6					4			2			50
Professional and legal services	Professional and legal services	12		10		2				20				34				33					1			3		Professional and legal services	20					12			8			67
Advertising	Advertising	7		6		1				17				13				17					(4)			(24)		Advertising	5					3			2			67
FDIC premiums	FDIC premiums	7		7		—				—				18				19					(1)			(5)		FDIC premiums	7					5			2			40
Other	Other	76		51		25				49				194				153					41			27		Other	44					45			(1)			(2)
Total noninterest expense	Total noninterest expense	$	442	$	415	$	27			7	%			$	1,279			$	1,270				$	9		1	%	Total noninterest expense	$	435				$	408		$	27		7		%
Adjusted noninterest expense 1	Adjusted noninterest expense 1	$	440	$	415	$	25			6	%			$	1,249			$	1,269				$	(20)		(2)	%	Adjusted noninterest expense 1	$	440				$	407		$	33		8		%

1 For information on non-GAAP financial measures, see “GAAP to Non-GAAP Reconciliations” on page 6.4.

Total noninterest expense for the first quarter of 2021 increased by $27 million, or 7%, to $435 million, from $408 million for the first quarter of 2020. Salaries and benefits expense increased $14 million, or 5%, and professional and legal services expense increased $8 million, or 67%, from the same prior year period.

The ~~$27~~$14 million increase in ~~noninterest~~salaries and employee benefits reflected increases in long-term incentive compensation, including $7 million related to our Value Sharing Plan and share-based compensation, and $6 million of contributions to our employee 401(k) plan. The increases in these expense categories were relative to the depressed levels reported in the prior year period, when uncertainties resulting from the ~~third quarter of 2019~~pandemic led to the third quarter of 2020 was attributable to a $30 million charitable contribution to our foundation, which was associated with the PPP lending activity, and was reflected in other noninterest expense. Thisreduced expenses. The increase in ~~other noninterest~~salaries and employee benefits expense was partially offset by a $5 million ~~decline~~decrease in ~~travel and entertainment expenses. Salaries and employee benefits expense declined $4 million from the third quarter of 2019~~base salaries due to ~~the third quarter of 2020, and includes $3 million of PPP-related bonuses.~~reduced headcount. Full-time equivalent employees decreased ~~from 10,255~~ to ~~9,726 from~~9,682 in the ~~third~~first quarter of ~~2019 to~~2021, from 9,879 in the ~~third~~first quarter of ~~2020,~~2020. The $8 million increase in professional and legal services was primarily ~~as a result of the 5% workforce~~ ~~reduction~~ ~~announced in October 2019.~~ ~~Credit-related expense increased by $4 million during the same time from increased appraisal and other fees. During the third quarter of 2020, advertising expense included $3 million~~related to third-party assistance associated with ~~our efforts to retain "new to Bank"~~ PPP ~~recipients.~~loan forgiveness.

Adjusted noninterest expense for the ~~third~~first quarter of ~~2020~~2021 increased ~~$25~~$33 million, or 6%8%, to $440 million, ~~and includes the previously discussed $30 million charitable contribution,~~ compared with ~~$415~~$407 million for the same prior year period. The efficiency ratio was 62.2% in the third quarter of 2020, compared with 57.3% for both the second quarter of 2020 and the third quarter of 2019. Excluding the $30 million charitable contribution, the efficiency ratio for the third quarter of 2020 would have been 58.0%. The efficiency ratio and adjusted noninterest expense exclude certain expense items (see “GAAP to Non-GAAP Reconciliations” on page 6 for more information regarding the calculation of the efficiency ratio).

~~Noninterest expense for both the first nine months of 2020 and 2019 was $1.3 billion. Other noninterest expense increased by $41 million,~~period, primarily due to the reasons previously mentioned $30 million charitable contribution in the third quarter of 2020 and a $28 million pension plan termination-related expense in the second quarter of 2020. These increases were partially offset by a $25 million decrease in salaries and employee benefitsdiscussed for ~~the same time period.~~noninterest expense.

Income Taxes

Income tax expense for the ~~third~~first quarter of ~~2020~~2021 was ~~$40~~$89 million, compared with ~~$66~~$2 million for the same prior year ~~period as a result of lower pretax income during the third quarter of 2020.~~period. The effective income tax rates were ~~18.6%~~21.7% and 22.9% for the third quarters of 2020 and 2019, respectively, as a result of the proportional increase in nontaxable items and tax credits relative to pretax income as compared with the prior year period.

~~Income tax expense~~12.5% for the first ~~nine months~~quarter of ~~2020 was $58 million, compared with $185 million for the first nine months of 2019. The effective tax rates for these year-to-date periods were 18.5%~~2021 and ~~22.6%,~~2020, respectively. Note 1312 of the Notes to Consolidated Financial Statements contains additional information about the factors that influenced the income tax rates and information about deferred income tax assets and liabilities.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Preferred Stock Dividends

Preferred stock dividends ~~have been consistent over the past year and~~ were $8 million for both the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019 and $25 million for both the first nine months 2020 and 2019.~~2020.

BALANCE SHEET ANALYSIS

Interest-Earning Assets

Interest-earning assets are those assets that have interest rates or yields associated with ~~them. One~~them, and generally consist of ~~our goals is~~money market investments, securities, loans, and leases. We strive to maintain a high level of interest-earning assets relative to total ~~assets while keeping non-earning assets at a minimum. Interest-earning assets consist of money market investments, securities, loans, and leases.~~assets.

For more information regarding the average balances of our interest-earning assets, the amount of revenue generated by them, and their respective yields, see the ~~average balance sheet~~Consolidated Average Balance Sheet on page ~~15.~~12.

~~Average interest-earning assets were $69.8 billion for the first nine months~~

Table of ~~2020, compared with $65.0 billion for the first nine months of 2019. Average interest-earning assets as a percentage of total average assets for the first nine months of 2020 and 2019 were both 93%.~~Contents

Average loans were $52.7 billion and $48.1 billion for the first nine months of 2020 and 2019, respectively. Average loans as a percentage of total average assets for the first nine months of 2020 were 71%, compared with 69% in the same prior year period.ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Average money market investments, consisting of interest-bearing deposits, federal funds sold, and security resell agreements, increased by 71% to $2.3 billion for the first nine months of 2020, compared with $1.3 billion for the first nine months of 2019. Average securities decreased by 5% for the first nine months of 2020, compared with the first nine months of 2019.

Investment Securities Portfolio

We invest in securities to ~~actively~~ manage liquidity and interest rate risk, in addition to generating ~~revenue for the Bank.~~revenue. Refer to the “Liquidity Risk Management” section on page 3730 for additional information on management of liquidity and funding. The following schedule presents ~~a profile~~the components of our investment securities portfolio. The amortized cost amounts represent the original cost of the investments, adjusted for related accumulated amortization or accretion of any yield adjustments, and for any impairment losses, including credit-related impairment. The estimated fair value measurement levels and methodology are discussed in Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K.

INVESTMENT SECURITIES PORTFOLIO

September 30, 2020 December 31, 2019
(In millions) Par value Amortized
cost Estimated
fair
value Par value Amortized
cost Estimated
fair
value
Held-to-maturity
Municipal securities $ 592 $ 592 $ 596 $ 592 $ 592 $ 597
Available-for-sale
U.S. Treasury securities 205 195 199 25 25 25
U.S. Government agencies and corporations:
Agency securities 1,058 1,058 1,093 1,301 1,301 1,302
Agency guaranteed mortgage-backed securities 10,314 10,461 10,736 9,406 9,518 9,559
Small Business Administration loan-backed securities 1,177 1,277 1,239 1,414 1,535 1,495
Municipal securities 1,154 1,254 1,320 1,175 1,282 1,319
Other debt securities 75 75 75 25 25 25
Total available-for-sale 13,983 14,320 14,662 13,346 13,686 13,725
Total investment securities $ 14,575 $ 14,912 $ 15,258 $ 13,938 $ 14,278 $ 14,322

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


	March 31, 2021				December 31, 2020
(In millions)	Par value		Amortized cost		Estimated fair value		Par value		Amortized cost		Estimated fair value
Held-to-maturity
Municipal securities	$	583	$	583	$	584	$	636	$	636	$	640



Available-for-sale
U.S. Treasury securities	205		205		168		205		205		192
U.S. Government agencies and corporations:
Agency securities	1,044		1,044		1,077		1,051		1,051		1,091
Agency guaranteed mortgage-backed securities	12,431		12,618		12,653		11,259		11,439		11,693
Small Business Administration loan-backed securities	1,047		1,134		1,101		1,103		1,195		1,160
Municipal securities	1,375		1,520		1,570		1,237		1,352		1,420
Other debt securities	75		75		75		175		175		175







Total available-for-sale	16,177		16,596		16,644		15,030		15,417		15,731
Total investment securities	$	16,760	$	17,179	$	17,228	$	15,666	$	16,053	$	16,371

The amortized cost of investment securities at ~~September 30, 2020~~March 31, 2021 increased by 4%7% from ~~the balances at~~ December 31, ~~2019.~~2020. Approximately ~~26%~~20% of the investment securities are floating rate as of ~~September 30, 2020.~~March 31, 2021.

The investment securities portfolio includes ~~$337~~$419 million of net premium that is distributed across various ~~asset classes as illustrated in the preceding schedule. Premium~~security classes. Tax-equivalent premium amortization for the ~~three months ended September 30, 2020,~~first quarter of 2021 was ~~$26~~$30 million, compared with ~~$33~~$28 million for the same prior year period in ~~2019.~~2020.

As of ~~September 30, 2020, under~~March 31, 2021, in accordance with the GAAP fair value ~~accounting~~ hierarchy, ~~1.4%~~1.0% of the ~~$14.7~~$16.6 billion fair value of the AFS securities portfolio was valued at Level 1, ~~98.6%~~and 99.0% was valued at Level 2,2. This compares with 1.2% and ~~there~~98.8%, respectively, at December 31, 2020. There were no Level 3 AFS ~~securities. At December 31, 2019, 0.2% of the $13.7 billion fair value of AFS~~ securities ~~portfolio was valued at Level 1, 99.8% was valued at Level 2, and there were no Level 3 AFS securities.~~for either period. See Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K for further discussion of fair value accounting.

Exposure to ~~State and Local Governments~~Municipalities

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

MUNICIPALITIES


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Loans and leases	Loans and leases	$	2,706	$	2,393	Loans and leases	$	3,234	$	2,951
Held-to-maturity – municipal securities	Held-to-maturity – municipal securities	592		592		Held-to-maturity – municipal securities	583		636
Available-for-sale – municipal securities	Available-for-sale – municipal securities	1,321		1,319		Available-for-sale – municipal securities	1,570		1,420

Trading account – municipal securities	Trading account – municipal securities	168		107		Trading account – municipal securities	172		149
Unfunded lending commitments	Unfunded lending commitments	310		200		Unfunded lending commitments	403		359
Total direct exposure to municipalities	Total direct exposure to municipalities	$	5,097	$	4,611	Total direct exposure to municipalities	$	5,962	$	5,515

~~Most~~

Table of ~~the~~Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The municipal loan and lease portfolio is generally secured by real estate, or equipment, or is a general obligation of a municipal entity. Our municipal loans and securities ~~and loans are~~ primarily ~~from~~relate to municipalities located within our geographic footprint. At ~~September 30, 2020,~~March 31, 2021, no municipal loans were on nonaccrual. Municipal securities are internally graded, similar to loans, using risk-grading systems which vary based on the size and type of credit risk exposure. The internal risk grades assigned to our municipal securities follow our definitions of Pass, Special Mention, and Substandard, which are consistent with published definitions of regulatory risk classifications. As of ~~September 30, 2020,~~March 31, 2021, all municipal securities were classified 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.

~~Foreign Exposure and Operations~~

Our credit exposure to foreign sovereign risks and total foreign credit exposure is not significant. We also do not have significant foreign exposure to derivative counterparties. We had no foreign deposits at September 30, 2020 and December 31, 2019.

Loan and Lease Portfolio

For the first ~~nine months~~quarter of ~~2020~~2021 and ~~2019,~~2020, average loans accounted for ~~71%~~65% and ~~69%~~70%, respectively, of total average assets. As presented in the following schedule, the largest category was commercial and industrial loans, which constituted ~~25%~~24% of our loan portfolio at ~~September 30, 2020.~~

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

March 31, 2021.

LOAN AND LEASE PORTFOLIO


		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
(Dollar amounts in millions)	(Dollar amounts in millions)	Amount		% of total loans		Amount		% of total loans		(Dollar amounts in millions)	Amount		% of total loans		Amount		% of total loans
Commercial:	Commercial:									Commercial:
Commercial and industrial	Commercial and industrial	$	13,543	24.7	%	$	14,760	30.3	%	Commercial and industrial	$	12,843	24.0	%	$	13,444	25.1	%
PPP	PPP	6,810		12.4		—		—		PPP	6,465		12.1		5,572		10.5
Leasing	Leasing	319		0.6		334		0.7		Leasing	310		0.6		320		0.6
Owner-occupied	Owner-occupied	8,136		14.9		7,901		16.2		Owner-occupied	8,112		15.2		8,185		15.3
Municipal	Municipal	2,706		4.9		2,393		4.9		Municipal	3,234		6.0		2,951		5.5
Total commercial	Total commercial	31,514		57.5		25,388		52.1		Total commercial	30,964		57.9		30,472		57.0
Commercial real estate:	Commercial real estate:									Commercial real estate:
Construction and land development	Construction and land development	2,298		4.2		2,211		4.5		Construction and land development	2,443		4.6		2,345		4.4
Term	Term	9,729		17.8		9,344		19.2		Term	9,617		18.0		9,759		18.2
Total commercial real estate	Total commercial real estate	12,027		22.0		11,555		23.7		Total commercial real estate	12,060		22.6		12,104		22.6
Consumer:	Consumer:									Consumer:
Home equity credit line	Home equity credit line	2,797		5.1		2,917		6.0		Home equity credit line	2,695		5.0		2,745		5.2
1-4 family residential	1-4 family residential	7,209		13.2		7,568		15.6		1-4 family residential	6,630		12.4		6,969		13.0
Construction and other consumer real estate	Construction and other consumer real estate	633		1.2		624		1.3		Construction and other consumer real estate	589		1.1		630		1.2
Bankcard and other revolving plans	Bankcard and other revolving plans	431		0.8		502		1.0		Bankcard and other revolving plans	409		0.8		432		0.8
Other	Other	134		0.2		155		0.3		Other	125		0.2		124		0.2
Total consumer	Total consumer	11,204		20.5		11,766		24.2		Total consumer	10,448		19.5		10,900		20.4
Total net loans and leases	Total net loans and leases	$	54,745	100.0	%	$	48,709	100.0	%	Total net loans and leases	$	53,472	100.0	%	$	53,476	100.0	%

~~Loan~~The loan and lease portfolio ~~growth~~remained relatively stable during the first ~~nine months~~quarter of ~~2020 was~~2021, primarily due to ~~the origination of~~an increase in PPP ~~loans~~loan originations across our geographic footprint. Excluding PPP loans, commercial ~~and industrial~~ loans decreased $401 million, as the stressed economic environment adversely impacted demand for these loans. ~~This~~Within commercial loans, a $601 million decrease in commercial and industrial loans was partially offset by ~~increases~~a $283 million increase in municipal ~~loans and commercial owner-occupied~~ loans. Term commercial real estate loans decreased $142 million, while commercial real estate construction and land development loans increased ~~primarily due to the conversion of construction loans to term loans.~~$98 million. Consumer loans decreased ~~mainly because of increased refinancing activity away from the Bank. The growth in the~~$452 million, which was spread across all consumer loan ~~portfolio during the first nine months of 2020 was primarily at CB&T, Amegy Bank, and Zions Bank.~~subcategories.

Other Noninterest-Bearing Investments

During the first ~~nine months~~quarter of ~~2020, we decreased our short-term borrowings with~~2021, the ~~FHLB by $1 billion. This decrease also led to a $40 million decrease in FHLB activity stock. The~~ value of our SBIC investments ~~decreased~~increased by ~~$23~~$10 million ~~during the same period~~ as a result of ~~lower valuations and disposition~~increased investments. During this same period, the value of ~~investments.~~our Farmer Mac stock decreased by $12 million, primarily from the sale of our remaining Farmer Mac Class C stock. Aside from these ~~decreases,~~fluctuations, other noninterest-bearing investments remained relatively stable as illustrated in the following schedule.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

OTHER NONINTEREST-BEARING INVESTMENTS


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Bank-owned life insurance	Bank-owned life insurance	$	534	$	525	Bank-owned life insurance	$	534	$	532
Federal Home Loan Bank stock	Federal Home Loan Bank stock	10		50		Federal Home Loan Bank stock	11		11
Federal Reserve stock	Federal Reserve stock	97		107		Federal Reserve stock	97		98
Farmer Mac stock1	Farmer Mac stock1	44		47		Farmer Mac stock1	16		28
SBIC investments	SBIC investments	131		154		SBIC investments	145		135
Non-SBIC investment funds	Non-SBIC investment funds	11		12		Non-SBIC investment funds	10		10
Other	Other	3		3		Other	2		3
Total other noninterest-bearing investments	Total other noninterest-bearing investments	$	830	$	898	Total other noninterest-bearing investments	$	815	$	817

1 As a result of the merger of our former bank holding company into the Bank, we agreed to dispose of our Farmer Mac Class C stock to resolve questions about the permissibility of national bank investments in such shares, and ~~initiated sales~~we completed this disposition as of ~~the stock in the first quarter of 2020.~~March 31, 2021.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Premises, Equipment, and Software

Net premises, equipment, and software increased ~~$45~~$27 million, or ~~3.9%~~2%, during the first ~~nine months~~quarter of ~~2020. In 2017, we implemented~~2021. We are in the ~~first~~final phase of a three-phase project to replace our core ~~lending~~loan and deposit banking systems, replacement project, which replaced our primary consumer lending systems. During the first quarter of 2019, we successfully implemented the second phase of this project by replacing our primary commercial and ~~CRE lending systems. With this milestone reached, we now have substantially all in-scope retail, commercial and CRE loans on a new modern core platform. We~~ are well underway ~~with the project~~ to convert our deposit servicing system by ~~2022.~~2023. The total core replacement project spend amount is comprised of both capitalized amounts and amounts that are expensed as incurred. The useful life for most of the capitalized costs is 10 years. The following schedule shows the total amount of costs capitalized, less accumulated depreciation, by phase for the core replacement project.


		September 30, 2020									March 31, 2021
(In millions)	(In millions)	Phase 1		Phase 2		Phase 3		Total		(In millions)	Phase 1		Phase 2		Phase 3		Total
Capitalized costs for the core replacement project	Capitalized costs for the core replacement project									Capitalized costs for the core replacement project
Total amount capitalized, less accumulated depreciation	Total amount capitalized, less accumulated depreciation	$	48	$	76	$	87	$	211	Total amount capitalized, less accumulated depreciation	$	44	$	71	$	112	$	227

Deposits

Deposits ~~both interest-bearing and noninterest-bearing,~~ are a primary source of our funding. Average total deposits for the first ~~nine months~~quarter of ~~2020~~2021 increased by ~~14%~~26%, compared with the first ~~nine months~~quarter of ~~2019,~~2020, with average interest-bearing deposits increasing by ~~10%~~13% and average noninterest-bearing deposits increasing by ~~20%~~43%. The average interest rate paid for interest-bearing deposits was 4652 bps lower during the first ~~nine months~~quarter of ~~2020,~~2021, compared with the first ~~nine months~~quarter of ~~2019.~~2020.

Demand, savings, and money market deposits ~~were 95%~~combined represented 97% and ~~92%~~96% of total deposits at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively. At September 30,~~ 2020, respectively, and ~~December 31, 2019,~~ total deposits included ~~$1.4 billion~~$435 million and ~~$2.3 billion, respectively,~~$813 million of brokered ~~deposits.~~deposits for the same periods. See “Liquidity Risk Management” on page 3730 for additional information on funding and borrowed funds.

RISK ~~ELEMENTS~~MANAGEMENT

~~Since risk is inherent in substantially all of our operations,~~Risk management ~~of risk~~ is an integral part of our operations and is ~~also~~ a key determinant of our overall performance. ~~The~~We apply various strategies to mitigate the risks to which our operations are exposed, including credit risk, interest rate and market risk, liquidity risk, strategic risk, business and corporate governance risk, operational/technology risk, cyber risk, capital/financial reporting risk, legal/compliance risk (including regulatory risk), and reputational risk. These risks are overseen by the various management committees of which the Enterprise Risk Management Committee is the focal point for the monitoring and review of enterprise risk. For a more comprehensive discussion of these risks, see “Risk Factors” in our 2020 Form 10-K.

In support of management's efforts, the Board of Directors has appointed a Risk Oversight Committee (“ROC”) that consists of appointed Board members who oversee ~~the Bank’s~~our risk management processes. The ROC meets on a regular basis to monitor and review Enterprise Risk Management (“ERM”) activities. As required by its charter, the ROC performs oversight for various ERM activities and approves ERM policies and activities as detailed in the ROC charter.

Management applies various strategies to reduce the risks to which the Bank’s operations are exposed, including credit risk, interest rate and market risk, liquidity risk, strategic risk, business and corporate governance risk, operational/technology risk, cyber risk, capital/financial reporting risk, legal/compliance risk (including regulatory risk); and reputational risk. These risks are overseen by the various management committees

Table of which the Enterprise Risk Management Committee is the focal point for the monitoring and review of enterprise risk. For a more comprehensive discussion of these risks, see “Risk Factors” in our 2019 Annual Report on Form 10-K.Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Credit Risk Management

Credit risk is the possibility of loss from the failure of a borrower, guarantor, or another obligor to fully perform under the terms of a credit-related contract. Credit risk arises primarily from our lending activities, as well as from off-balance sheet credit instruments. For a more comprehensive discussion of our credit risk management, see “Credit Risk Management” in our ~~2019 Annual Report on~~2020 Form 10-K.

Government Agency Guaranteed Loans

We participate in various guaranteed lending programs sponsored by U.S. government agencies, such as the ~~Small Business Administration (“SBA”),~~SBA, Federal Housing Authority, Veterans’ Administration, Export-Import Bank of

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

the U.S., and the U.S. Department of Agriculture. As of ~~September 30, 2020,~~March 31, 2021, the principal balance of these loans was ~~$7.4~~$7.0 billion, ~~and the~~of which $6.9 billion was guaranteed ~~portion of these loans was $7.2 billion. Most of these loans were guaranteed~~(mostly by the ~~SBA.~~SBA). The following schedule presents the composition of government agency guaranteed loans and includes ~~$6.8~~$6.5 billion of the ~~previously-mentioned~~previously mentioned PPP loans.

GOVERNMENT GUARANTEES


(Dollar amounts in millions)	(Dollar amounts in millions)	September 30, 2020		Percent guaranteed		December 31, 2019		Percent guaranteed		(Dollar amounts in millions)	March 31, 2021		Percent guaranteed		December 31, 2020		Percent guaranteed

Commercial	Commercial	$	7,369	98	%	$	555	74	%	Commercial	$	7,015	98	%	$	6,116	98	%
Commercial real estate	Commercial real estate	18		78		18		78		Commercial real estate	17		76		18		72
Consumer	Consumer	6		100		7		100		Consumer	6		100		5		100
Total loans	Total loans	$	7,393	98	%	$	580	75	%	Total loans	$	7,038	98	%	$	6,139	98	%

Commercial Lending

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

COMMERCIAL LENDING BY INDUSTRY GROUP


		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
(Dollar amounts in millions)	(Dollar amounts in millions)	Amount		Percent		Amount		Percent		(Dollar amounts in millions)	Amount		Percent		Amount		Percent

Retail trade										Retail trade	$	2,749	8.9	%	$	2,736	9.0	%
Healthcare and social assistance	Healthcare and social assistance	$	2,814	8.9	%	$	1,916	7.5	%	Healthcare and social assistance	2,733		8.8		2,686		8.8
Retail trade		2,799		8.9		2,606		10.3
Manufacturing	Manufacturing	2,686		8.5		2,160		8.5		Manufacturing	2,553		8.2		2,480		8.1
Real estate, rental and leasing	Real estate, rental and leasing	2,393		7.6		2,401		9.5		Real estate, rental and leasing	2,486		8.0		2,408		7.9
Construction	Construction	2,129		6.8		1,158		4.6		Construction	2,028		6.5		2,001		6.6
Finance and insurance	Finance and insurance	2,113		6.7		1,837		7.2		Finance and insurance	1,901		6.2		2,115		6.9
Hospitality and food services										Hospitality and food services	1,791		5.8		1,545		5.1
Professional, scientific, and technical services										Professional, scientific, and technical services	1,713		5.5		1,598		5.2
Wholesale trade	Wholesale trade	1,827		5.8		1,639		6.4		Wholesale trade	1,707		5.5		1,735		5.7
Professional, scientific, and technical services		1,808		5.7		950		3.7
Hospitality and food services		1,625		5.2		983		3.9
Public administration										Public administration	1,680		5.4		1,512		5.0
Transportation and warehousing	Transportation and warehousing	1,587		5.0		1,454		5.7		Transportation and warehousing	1,505		4.9		1,526		5.0
Utilities1	Utilities1	1,563		5.0		1,411		5.6		Utilities1	1,467		4.8		1,507		4.9
Public Administration		1,329		4.2		1,189		4.7
Other services (except public administration)										Other services (except public administration)	1,269		4.1		1,207		4.0
Mining, quarrying, and oil and gas extraction	Mining, quarrying, and oil and gas extraction	1,314		4.2		1,429		5.6		Mining, quarrying, and oil and gas extraction	1,180		3.8		1,236		4.1
Other Services (except Public Administration)		1,291		4.1		890		3.5
Other2	Other2	4,236		13.4		3,365		13.3		Other2	4,202		13.6		4,180		13.7
Total	Total	$	31,514	100.0	%	$	25,388	100.0	%	Total	$	30,964	100.0	%	$	30,472	100.0	%

1 Includes primarily utilities, power, and renewable energy.

2 No other industry group exceeds 3.8%.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~Oil and Gas-Related Exposure~~

Various industries represented in the previous schedule, including mining, quarrying and oil and gas extraction, manufacturing, and transportation and warehousing, contain certain loans we categorize as oil and gas-related. At September 30, 2020, we had approximately $4.3 billion of total oil and gas-related credit exposure. The distribution of oil and gas-related loans by customer market segment is shown in the following schedule:

~~OIL AND GAS-RELATED EXPOSURE~~ 1

(Dollar amounts in millions) September 30, 2020 December 31, 2019 December 31, 2014
Loans and leases Amount Percent Amount Percent Amount Percent
Upstream $ 965 39 % $ 1,041 42 % $ 1,107 36 %
Midstream 853 35 863 34 579 19
Oil and gas services 417 17 439 18 1,277 41
Downstream 210 9 158 6 110 4
Total loan and lease balances 2,445 100 % 2,501 100 % 3,073 100 %
Unfunded lending commitments 1,884 2,171 2,700
Total oil and gas-related credit exposure $ 4,329 $ 4,672 $ 5,773

1 ~~Because many borrowers operate in multiple businesses, judgment has been applied in characterizing a borrower as oil and~~

~~gas-related, including a particular segment of oil and gas-related activity, e.g., upstream or midstream; typically, 50% of~~

~~revenues coming from the oil and gas sector is used as a guide.~~

At September 30, 2020, oil and gas-related loans represented approximately 5% of the total loan portfolio, compared with 8% at December 31, 2014, or the beginning of the last energy cycle. Due to active risk management of the portfolio, the mix of oil and gas-related loans at September 30, 2020 consists of 39% upstream, 35% midstream, 17% oil and gas-related services, and 9% downstream, compared with 36%, 19%, 41%, and 4%, respectively, at December 31, 2014.

We use disciplined underwriting practices to mitigate risk. Upstream loans are made to reserve-based borrowers where approximately 82% of those loans are collateralized by the value of the borrower’s oil and gas reserves. The following schedule presents certain credit quality measures of our oil and gas-related loan portfolio.

September 30, 2020 December 31, 2019
Credit quality measures
Classified loan ratio 10.6 % 2.2 %
Nonaccrual loan ratio 3.2 % 0.7 %
Ratio of nonaccrual loans that are current 74.4 % 66.7 %
Net charge-offs, annualized1
3.4 % 0.5 %
Ratio of allowance for credit losses to oil and gas-related loans, at period end 5.4 % 3.1 %

1 ~~Calculated as the ratio of annualized net charge-offs for each respective period to loan balances at each period end.~~

Oil and gas-related net charge-offs for the third quarter of 2020 were $21 million, compared with $3 million for the fourth quarter of 2019. For the third quarter of 2020, the classified oil and gas-related loan ratio was 10.6%, the annualized net charge-off ratio was 3.4%, and the ACL related to oil and gas-related loans was 5.4%.

2620

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Commercial Real Estate Loans

Select information ~~indicative of credit quality~~ regarding our CRE loan portfolio is presented in the following schedule.

COMMERCIAL REAL ESTATE PORTFOLIO BY LOAN TYPE AND COLLATERAL LOCATION


(Dollar amounts in millions)	(Dollar amounts in millions)		Collateral Location																														(Dollar amounts in millions)		Collateral Location
Loan type	Loan type	As of date	Arizona			California			Colorado			Nevada			Texas			Utah/ Idaho			Wash-ington			Other 1			Total			% of total CRE			Loan type	As of date	Arizona			California			Colorado			Nevada			Texas			Utah/ Idaho			Wash-ington			Other 1			Total			% of total CRE
Commercial term	Commercial term																																Commercial term
Balance outstanding	Balance outstanding	9/30/2020	$	1,187		$	3,190		$	620		$	671		$	1,586		$	1,436		$	529		$	510		$	9,729		80.9		%	Balance outstanding	3/31/2021	$	1,173		$	3,179		$	602		$	656		$	1,584		$	1,437		$	516		$	470		$	9,617		79.8	%
% of loan type	% of loan type		12.2		%	32.8		%	6.4		%	6.9		%	16.3		%	14.8		%	5.4		%	5.2		%	100.0		%				% of loan type		12.2		%	33.1		%	6.2		%	6.8		%	16.5		%	14.9		%	5.4		%	4.9		%	100.0		%
Delinquency rates 2:	Delinquency rates 2:																														Delinquency rates 2:
30-89 days	30-89 days	9/30/2020	0.1		%	0.1		%	—		%	—		%	0.4		%	—		%	—		%	0.2		%	0.1		%				30-89 days	3/31/2021	2.1		%	0.3		%	—		%	—		%	—		%	—		%	—		%	0.2		%	0.4		%
		12/31/2019	0.1		%	0.1		%	—		%	0.2		%	—		%	0.1		%	—		%	0.2		%	0.1		%					12/31/2020	0.7		%	1.1		%	—		%	—		%	0.7		%	—		%	—		%	0.2		%	0.6		%
≥ 90 days	≥ 90 days	9/30/2020	—		%	0.2		%	0.3		%	—		%	—		%	0.3		%	—		%	0.2		%	0.1		%				≥ 90 days	3/31/2021	—		%	0.1		%	—		%	—		%	0.1		%	0.2		%	—		%	—		%	0.1		%
		12/31/2019	—		%	0.1		%	—		%	—		%	—		%	—		%	—		%	0.2		%	—		%					12/31/2020	0.1		%	0.2		%	—		%	—		%	—		%	0.2		%	—		%	0.2		%	0.1		%
Accruing loans past due 90 days or more	Accruing loans past due 90 days or more	9/30/2020	$	—		$	—		$	2		$	—		$	—		$	—		$	—		$	—		$	2					Accruing loans past due 90 days or more	3/31/2021	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
		12/31/2019	—			—			—			—			—			—			—			—			—							12/31/2020	—			4			—			—			—			—			—			—			4
Nonaccrual loans	Nonaccrual loans	9/30/2020	$	—		$	9		$	—		$	—		$	19		$	7		$	—		$	2		$	37					Nonaccrual loans	3/31/2021	$	—		$	5		$	—		$	—		$	18		$	5		$	—		$	3		$	31
		12/31/2019	—			3			—			—			3			6			—			4			16							12/31/2020	1			5			—			—			18			6			—			1			31
Residential construction and land development	Residential construction and land development																																Residential construction and land development
Balance outstanding	Balance outstanding	9/30/2020	$	52		$	162		$	49		$	—		$	191		$	113		$	9		$	3		$	579		4.8		%	Balance outstanding	3/31/2021	$	41		$	136		$	33		$	—		$	166		$	124		$	9		$	24		$	533		4.4	%
% of loan type	% of loan type		9.0		%	28.0		%	8.5		%	—		%	33.0		%	19.5		%	1.5		%	0.5		%	100.0		%				% of loan type		7.7		%	25.5		%	6.2		%	—		%	31.1		%	23.3		%	1.7		%	4.5		%	100.0		%
Delinquency rates 2:	Delinquency rates 2:																														Delinquency rates 2:
30-89 days	30-89 days	9/30/2020	—		%	1.9		%	—		%	—		%	—		%	—		%	—		%	—		%	0.5		%				30-89 days	3/31/2021	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
		12/31/2019	—		%	1.2		%	—		%	—		%	—		%	—		%	—		%	—		%	0.4		%					12/31/2020	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
≥ 90 days	≥ 90 days	9/30/2020	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%				≥ 90 days	3/31/2021	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
		12/31/2019	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%					12/31/2020	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
Accruing loans past due 90 days or more	Accruing loans past due 90 days or more	9/30/2020	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—					Accruing loans past due 90 days or more	3/31/2021	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
		12/31/2019	—			—			—			—			—			—			—			—			—							12/31/2020	—			—			—			—			—			—			—			—			—
Nonaccrual loans	Nonaccrual loans	9/30/2020	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—					Nonaccrual loans	3/31/2021	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
		12/31/2019	—			—			—			—			—			—			—			—			—							12/31/2020	—			—			—			—			—			—			—			—			—
Commercial construction and land development	Commercial construction and land development																																Commercial construction and land development
Balance outstanding	Balance outstanding	9/30/2020	$	114		$	313		$	59		$	115		$	467		$	512		$	96		$	43		$	1,719		14.3		%	Balance outstanding	3/31/2021	$	137		$	340		$	66		$	80		$	559		$	540		$	147		$	41		$	1,910		15.8	%
% of loan type	% of loan type		6.6		%	18.2		%	3.4		%	6.7		%	27.2		%	29.8		%	5.6		%	2.5		%	100.0		%				% of loan type		7.2		%	17.8		%	3.5		%	4.2		%	29.3		%	28.2		%	7.7		%	2.1		%	100.0		%
Delinquency rates 2:	Delinquency rates 2:																														Delinquency rates 2:
30-89 days	30-89 days	9/30/2020	—		%	1.3		%	—		%	—		%	—		%	—		%	—		%	—		%	0.2		%				30-89 days	3/31/2021	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
		12/31/2019	—		%	0.4		%	—		%	—		%	—		%	0.2		%	—		%	—		%	0.1		%					12/31/2020	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
≥ 90 days	≥ 90 days	9/30/2020	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%				≥ 90 days	3/31/2021	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
		12/31/2019	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%					12/31/2020	—		%	—		%	—		%	—		%	—		%	—		%	3.9		%	—		%	0.2		%
Accruing loans past due 90 days or more	Accruing loans past due 90 days or more	9/30/2020	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—					Accruing loans past due 90 days or more	3/31/2021	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
		12/31/2019	—			—			—			—			—			—			—			—			—							12/31/2020	—			—			—			—			—			—			4			—			4
Nonaccrual loans	Nonaccrual loans	9/30/2020	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—					Nonaccrual loans	3/31/2021	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
		12/31/2019	—			—			—			—			—			—			—			—			—							12/31/2020	—			—			—			—			—			—			—			—			—
Total construction and land development	Total construction and land development	9/30/2020	$	166		$	475		$	108		$	115		$	658		$	625		$	105		$	46		$	2,298					Total construction and land development	3/31/2021	$	178		$	476		$	99		$	80		$	725		$	664		$	156		$	65		$	2,443
Total commercial real estate	Total commercial real estate	9/30/2020	$	1,353		$	3,665		$	728		$	786		$	2,244		$	2,061		$	634		$	556		$	12,027		100.0		%	Total commercial real estate	3/31/2021	$	1,351		$	3,655		$	701		$	736		$	2,309		$	2,101		$	672		$	535		$	12,060		100.0	%

1 No other geography exceeds ~~$92~~$67 million for all three loan types.

2 Delinquency rates include nonaccrual loans.

At ~~September 30, 2020,~~March 31, 2021, our CRE construction and land development and term loan portfolios represent approximately ~~22%~~23% of the total loan portfolio. The majority of our CRE loans are secured by real estate located within our ~~geographical~~geographic footprint. Approximately ~~24%~~22% of the CRE loan portfolio matures in the next 12 months.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Construction and land development loans generally mature in 18 to 36 months and contain full or partial recourse guarantee

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

structures with ~~one~~one- to five-year extension options or roll-to-perm options that often result in term debt. Term CRE loans generally mature within a ~~three~~three- to seven-year period and consist of full, partial, and non-recourse guarantee structures. Typical term CRE loan structures include ~~annually-tested~~annually tested operating covenants that require loan rebalancing based on minimum debt service coverage, debt yield, or loan-to-value tests.

Approximately ~~$119~~$161 million, or 5%7%, of the construction and land development portfolio at ~~September 30, 2020~~March 31, 2021 consists of land acquisition and development loans. Most of these land acquisition and development loans are secured by specific retail, apartment, office, or other projects. For a more comprehensive discussion of CRE loans, see the “Commercial Real Estate Loans” section in our ~~2019 Annual Report on~~2020 Form 10-K.

Consumer Loans

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

We ~~are~~ also ~~engaged in Home Equity Credit Line~~originate home equity credit lines (“HECL”) ~~lending.~~. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, our HECL portfolio totaled ~~$2.8 billion and $2.9 billion, respectively.~~$2.7 billion. The following schedule ~~describes the composition of~~presents our HECL portfolio by lien status.

HECL PORTFOLIO BY LIEN STATUS


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Secured by first deeds of trust		$	1,365	$	1,392
Secured by first liens						Secured by first liens	$	1,353	$	1,354
Secured by second (or junior) liens	Secured by second (or junior) liens	1,432		1,525		Secured by second (or junior) liens	1,342		1,391
Total	Total	$	2,797	$	2,917	Total	$	2,695	$	2,745

At ~~September 30, 2020,~~March 31, 2021, loans representing less than 1% of the outstanding balance in the HECL portfolio were estimated to have combined loan-to-value ratios (“CLTV”) above 100%. An estimated CLTV ratio is the ratio of our loan plus any prior lien amounts divided by the estimated current collateral value. At origination, underwriting standards for the HECL portfolio generally include a maximum 80% CLTV with high credit ~~scores at origination.~~scores.

Approximately ~~90%~~92% of our HECL portfolio is still in the draw period, and approximately ~~18%~~17% of those loans are scheduled to begin amortizing within the next five years. We regularly analyze the risk of borrower default in the event of a loan becoming fully amortizing and the risk of higher interest rates. The analysis indicates that the risk of loss from this factor is minimal in the current economic environment. The annualized ratio of net charge-offs to average balances for the first ~~nine months~~quarter of ~~2020~~2021 and ~~2019~~2020 for the HECL portfolio was ~~(0.01)~~(0.03)% and ~~(0.02)%~~0.00%, respectively. See Note 6 of the Notes to Consolidated Financial Statements for additional information on the credit quality of this portfolio.

Nonperforming Assets

Nonperforming assets as a percentage of loans and leases and other real estate owned (“OREO”) ~~increased~~decreased to ~~0.68%~~0.61% at ~~September 30, 2020,~~March 31, 2021, compared with ~~0.51%~~0.69% at December 31, ~~2019.~~2020.

Total nonaccrual loans at ~~September 30, 2020 increased $123~~March 31, 2021 decreased to $324 million from $367 million at December 31, ~~2019,~~2020, primarily in the commercial and industrial and 1-4 family residential loan ~~portfolio.~~portfolios.

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

2822

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following schedule presents our nonperforming assets:

NONPERFORMING ASSETS


(Dollar amounts in millions)	(Dollar amounts in millions)	September 30, 2020			December 31, 2019			(Dollar amounts in millions)	March 31, 2021			December 31, 2020

Nonaccrual loans 1	Nonaccrual loans 1	$	366		$	243		Nonaccrual loans 1	$	324		$	367
Other real estate owned	Other real estate owned	6			8			Other real estate owned	3			4
Total nonperforming assets	Total nonperforming assets	$	372		$	251		Total nonperforming assets	$	327		$	371
Ratio of nonperforming assets to net loans and leases1 and other real estate owned	Ratio of nonperforming assets to net loans and leases1 and other real estate owned	0.68		%	0.51		%	Ratio of nonperforming assets to net loans and leases1 and other real estate owned	0.61		%	0.69		%
Accruing loans past due 90 days or more	Accruing loans past due 90 days or more	$	9		$	10		Accruing loans past due 90 days or more	$	9		$	12
Ratio of accruing loans past due 90 days or more to loans and leases1	Ratio of accruing loans past due 90 days or more to loans and leases1	0.02		%	0.02		%	Ratio of accruing loans past due 90 days or more to loans and leases1	0.02		%	0.02		%
Nonaccrual loans and accruing loans past due 90 days or more	Nonaccrual loans and accruing loans past due 90 days or more	$	375		$	253		Nonaccrual loans and accruing loans past due 90 days or more	$	333		$	379
Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans and leases1	Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans and leases1	0.68		%	0.52		%	Ratio of nonaccrual loans and accruing loans past due 90 days or more to loans and leases1	0.62		%	0.71		%
Accruing loans past due 30-89 days	Accruing loans past due 30-89 days	$	58		$	75		Accruing loans past due 30-89 days	$	100		$	112
Nonaccrual loans1 current as to principal and interest payments	Nonaccrual loans1 current as to principal and interest payments	56.3		%	53.1		%	Nonaccrual loans1 current as to principal and interest payments	63.0		%	58.3		%

1 Includes loans held for sale.

Restructured Loans

Troubled debt restructurings (“TDRs”) are loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for whom we have granted a concession that we would not otherwise consider. TDRs increased ~~$128~~$103 million, or ~~84%~~33%, ~~during~~to $414 million at March 31, 2021, compared with $311 million at December 31, 2020, primarily in the ~~first nine months of 2020.~~commercial and industrial and term commercial real estate loan portfolios. Commercial loans may be modified to provide the borrower more time to complete the project, to achieve a higher lease-up percentage, to sell the property, or for other reasons. Consumer loan TDRs represent loan modifications in which a concession has been granted to the borrower who is unable to refinance the loan with another lender, or who is experiencing economic hardship. Such consumer loan TDRs may include first-lien residential mortgage loans and home equity loans.

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

ACCRUING AND NONACCRUING TROUBLED DEBT RESTRUCTURED LOANS


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Restructured loans – accruing	Restructured loans – accruing	$	197	$	78	Restructured loans – accruing	$	280	$	198
Restructured loans – nonaccruing	Restructured loans – nonaccruing	84		75		Restructured loans – nonaccruing	134		113
Total	Total	$	281	$	153	Total	$	414	$	311

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

2923

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

TROUBLED DEBT RESTRUCTURED LOANS ROLLFORWARD


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020

Balance at beginning of period	Balance at beginning of period	$	285	$	176	$	153	$	202	Balance at beginning of period	$	311	$	153
New identified TDRs and principal increases	New identified TDRs and principal increases	50		27		222		47		New identified TDRs and principal increases	120		27
Payments and payoffs	Payments and payoffs	(13)		(21)		(35)		(60)		Payments and payoffs	(14)		(10)
Charge-offs	Charge-offs	(33)		—		(48)		(5)		Charge-offs	(2)		—
No longer reported as TDRs	No longer reported as TDRs	—		—		(2)		—		No longer reported as TDRs	—		(2)
Sales and other	Sales and other	(8)		—		(9)		(2)		Sales and other	(1)		(1)
Balance at end of period	Balance at end of period	$	281	$	182	$	281	$	182	Balance at end of period	$	414	$	167

COVID-19 Modifications and Deferrals

~~As described previously,~~In early 2020, we ~~developed various debt relief programs~~began providing payment deferrals or other payment modifications for our borrowers ~~that have~~who had been adversely impacted by the COVID-19 pandemic. These ~~programs primarily began in the second quarter of 2020 and~~modifications generally consisted of ~~short-term, or 90-day,~~ principal and interest loan payment ~~deferrals. Consistent with accounting and regulatory guidance, loan modifications provided to borrowers experiencing financial difficulties exclusively related to~~deferrals of 90 days or less. As of March 31, 2021, the COVID-19 pandemic, in which we provided these short-term modifications or payment deferrals, are not classified as TDRs. Other loan modifications above and beyond these short-term modifications or payment deferrals were assessed for TDR classification.

~~During the first nine months of 2020, we provided payment deferrals or other payment modifications related to COVID-19 hardships, representing about $4.3 billion of total loan balances. Of this~~ amount ~~$3.6 billion, or 84%, had payments deferred, and the remaining $0.7 billion, or 16%, had their regularly scheduled payments otherwise modified. At September 30, 2020, less than $300 million, or 0.6%,~~ of total non-PPP loan balances that were actively in deferral including re-deferrals. Of the $4.0 billion of total loan balances at September 30, 2020 that, at one point, had their payments deferred or otherwise modified, approximately $40 million, or 1.0%, were 30 days or more past due.was not significant.

Allowance for Credit Losses

~~In analyzing~~The ACL includes the ~~adequacy~~ALLL and the RULC. The ACL represents our estimate of current expected credit losses over the contractual term of the ~~ALLL, we utilize a comprehensive~~ loan ~~grading system to determine the risk potential in the~~and lease portfolio and ~~also consider~~unfunded lending commitments as of the ~~results~~balance sheet date. We determine our ACL as the best estimate within a range of ~~independent internal credit reviews.~~estimated current expected losses over the contractual remaining life of each loan. To determine the adequacy of the allowance, we segment our loan and lease portfolio ~~is broken into segments~~ based on loan type.

The following schedule shows the changes in the allowance for credit losses and a summary of credit loss experience:

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~The following schedule shows the changes in the allowance for loan losses and a summary of loan loss experience:~~

SUMMARY OF ~~LOAN~~CREDIT LOSS EXPERIENCE


(Dollar amounts in millions)	(Dollar amounts in millions)	Nine Months Ended September 30, 2020			Twelve Months Ended December 31, 2019			Nine Months Ended September 30, 2019			(Dollar amounts in millions)	Three Months Ended March 31, 2021			Twelve Months Ended December 31, 2020			Three Months Ended March 31, 2020

Loans and leases outstanding (net of unearned income)	Loans and leases outstanding (net of unearned income)	$	54,745		$	48,709		$	48,835		Loans and leases outstanding (net of unearned income)	$	53,472		$	53,476		$	49,927
Average loans and leases outstanding (net of unearned income)	Average loans and leases outstanding (net of unearned income)	$	52,694		$	48,265		$	48,114		Average loans and leases outstanding (net of unearned income)	$	53,665		$	53,016		$	48,797
Allowance for loan losses:	Allowance for loan losses:										Allowance for loan losses:
Balance at beginning of period1		$	497		$	495		$	495
Balance at beginning of period											Balance at beginning of period	$	777		$	497		$	497
Provision for loan losses	Provision for loan losses	446			37			30			Provision for loan losses	(123)			385			240
Charge-offs:	Charge-offs:										Charge-offs:
Commercial	Commercial	95			57			33			Commercial	18			113			10
Commercial real estate	Commercial real estate	1			4			1			Commercial real estate	—			1			—
Consumer	Consumer	11			17			12			Consumer	3			14			3
Total	Total	107			78			46			Total	21			128			13
Recoveries:	Recoveries:										Recoveries:
Commercial	Commercial	11			25			19			Commercial	10			14			4
Commercial real estate	Commercial real estate	—			6			4			Commercial real estate	—			—			—
Consumer	Consumer	6			10			8			Consumer	3			9			2
Total	Total	17			41			31			Total	13			23			6
Net loan and lease charge-offs (recoveries)		90			37			15
Net loan and lease charge-offs											Net loan and lease charge-offs	8			105			7
Balance at end of period	Balance at end of period	$	853		$	495		$	510		Balance at end of period	$	646		$	777		$	730
Ratio of annualized net charge-offs to average loans and leases		0.23		%	0.08		%	0.04		%
Ratio of allowance for loan losses to net loans2 and leases, at period end		1.56		%	1.02		%	1.04		%
Ratio of allowance for loan losses to nonaccrual loans2, at period end		242		%	204		%	219		%
Ratio of allowance for loan losses to nonaccrual loans and accruing loans past due 90 days or more, at period end		236		%	196		%	213		%

Reserve for unfunded lending commitments:											Reserve for unfunded lending commitments:
Balance at beginning of period											Balance at beginning of period	$	58		$	29		$	29
Provision for unfunded lending commitments											Provision for unfunded lending commitments	(9)			29			18
Balance at end of period											Balance at end of period	$	49		$	58		$	47

Total allowance for credit losses:											Total allowance for credit losses:
Allowance for loan losses											Allowance for loan losses	$	646		$	777		$	730
Reserve for unfunded lending commitments											Reserve for unfunded lending commitments	49			58			47
Total allowance for credit losses											Total allowance for credit losses	$	695		$	835		$	777

Annualized ratio of net charge-offs to average loans and leases 1											Annualized ratio of net charge-offs to average loans and leases 1	0.06		%	0.11		%	0.06		%
Ratio of allowance for credit losses to net loans and leases, at period end 2											Ratio of allowance for credit losses to net loans and leases, at period end 2	1.30		%	1.56		%	1.56		%
Ratio of allowance for credit losses to nonaccrual loans, at period end											Ratio of allowance for credit losses to nonaccrual loans, at period end	215		%	228		%	284		%
Ratio of allowance for credit losses to nonaccrual loans and accruing loans past due 90 days or more, at period end											Ratio of allowance for credit losses to nonaccrual loans and accruing loans past due 90 days or more, at period end	209		%	220		%	276		%

1 ~~Beginning balances~~The annualized ratio of net charge-offs to average loans and leases (excluding PPP loans) was 0.07% and 0.13% at ~~January 1,~~March 31, 2021 and December 31, 2020, ~~for the~~respectively.

2The ratio of allowance for ~~loan~~credit losses ~~do not agree~~ to ~~their respective ending balances~~net loans and leases (excluding PPP loans) was 1.48% and 1.74% at March 31, 2021 and December 31, ~~2019 because of the adoption of the CECL accounting standard.~~

2 ~~Does not include loans held for sale.~~2020, respectively.

The total ~~ALLL increased~~ACL decreased during the first ~~nine months~~quarter of ~~2020~~2021 by ~~$358~~$140 million, primarily ~~as a result~~due to an improvement in the economic outlook, compared with the more stressed economic outlook at the outset of ~~experienced and expected economic stress caused by~~ the COVID-19 ~~pandemic and stress in the oil and gas-related sector.~~pandemic.

The RULC represents a reserve for potential losses associated with off-balance sheet commitments and standby letters of credit. The reserve is separately shown in the balance sheet and any related increases or decreases in the reserve are shown separately in the statement of income. At ~~September 30, 2020,~~March 31, 2021, the reserve was ~~$64~~$49 million, ~~an increase of $5~~compared with $58 million and $2$47 million ~~from~~at December 31, ~~2019,~~2020 and ~~September 30, 2019,~~March 31, 2020, respectively.

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

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Interest Rate and Market Risk Management

Interest rate and market risk are managed centrally. Interest rate risk is the potential for reduced net interest income and other rate-sensitive income resulting from adverse changes in the level of interest rates. Market risk is the potential for loss arising from adverse changes in the fair value of fixed-income securities, equity securities, other earning assets, and derivative financial instruments as a result of changes in interest rates or other factors. As a financial institution that engages in transactions involving ~~an array of~~various financial products, we are exposed to both interest rate risk and market risk. For a more comprehensive discussion of our interest rate and market risk management, see “Interest Rate and Market Risk Management” in our 2020 Form 10-K.

Interest Rate Risk

Average total deposits increased 26% from March 31, 2020, and a significant portion of the deposits were invested in money market investments, resulting in increased asset sensitivity to rising rates. The higher asset sensitivity to rising rates is dependent upon the assumptions we used for deposit runoff and repricing behavior, which is more uncertain given the higher level of new deposits. We are less asset-sensitive to declining rates than rising rates due to the limited amount that the spread between the cost of deposits and the yield on money market investments could compress. Due to our concentration in noninterest-bearing deposits and the low interest rates paid on our interest-bearing deposits, there is reduced opportunity to lower the cost of deposits.

The following schedule presents derivatives utilized in our asset-liability management (“ALM”) activities that are designated in qualifying hedging relationships as defined by GAAP as of March 31, 2021 and December 31, 2020. The schedule includes the notional amount, fair value, and the weighted-average receive-fixed or pay-fixed rate for each category of interest rate derivatives. The following schedules present cash flow and fair value hedges by their contractual maturities.

ASSET LIABILITY MANAGEMENT DERIVATIVE POSITIONS


	March 31, 2021
	Contractual Maturity
(Dollar amounts in millions)	Total			2021			2022			2023			2024			2025			Thereafter			Matured in 2021
Cash flow hedges
Receive-fixed interest rate swaps
Net fair value 1	$	77		$	—		$	44		$	12		$	23		$	—		$	(2)		$	—
Total notional amount	3,450			50			2,400			300			400			—			300			—
Weighted-average fixed-rate	2.03		%	1.81		%	2.06		%	2.35		%	2.35		%	—		%	1.06		%	—		%

Fair value hedges				2025			2030			2035			2040			2050			Thereafter
Fair value debt hedges 2
Net fair value1	$	2		$	—		$	2		$	—		$	—		$	—		$	—		$	—
Total notional amount	500			—			500			—			—			—			—			—
Weighted-average fixed-rate	1.70		%	—		%	1.70		%	—		%	—		%	—		%	—		%	—		%

Fair value asset hedges 2,3
Net fair value1	$	69		$	—		$	—		$	29		$	—		$	40		$	—		$	—
Total notional amount	383			—			—			228			—			155			—			—
Weighted-average fixed-rate	1.05		%	—		%	—		%	1.05		%	—		%	1.04		%	—		%	—		%

Total ALM fair value hedges
Net fair value 1	$	71		$	—		$	2		$	29		$	—		$	40		$	—		$	—
Total notional amount	883			—			500			228			—			155			—			—

3126

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Our Board of Directors is responsible for approving the overall policies relating to the management of our financial risk, including interest rate and market risk management. The Board has established the Asset/Liability Committee (“ALCO”) consisting of members of management, to which it has delegated the responsibility of managing our interest rate and market risk. ALCO establishes and periodically revises policy limits and reviews with the ROC the limits and limit exceptions reported by management.

~~Interest Rate Risk~~

Interest rate risk is one of the most significant risks to which we are regularly exposed. In general, our goal in managing interest rate risk is to manage balance sheet sensitivity to reduce net income volatility due to changes in interest rates.

Over the course of the last several years, we have actively reduced the level of asset sensitivity through the purchase of short-to-medium duration agency pass-through securities and funding these purchases by reducing money market investments and increasing short-term borrowings. This repositioning of the investment portfolio has increased current net interest income while dampening the impact of lower rates on net interest income contraction. We anticipate moderately lower net interest income in the current rate environment as the rates earned on our assets continue to decline. Due to our concentration in noninterest-bearing deposits as well as the low interest rates paid on our interest-bearing deposits, there is little room to reduce deposit costs.

At December 31, 2019, we had $1.5 billion of fixed-to-floating interest rate swaps hedging long-term debt (effectively converting the fixed-rate debt into floating-rate debt). In late March 2020, we terminated $1.0 billion of swaps (i.e. two $500 million swaps with maturities in August 2021 and February 2022) with a combined fair value of $36 million that adjusted the carrying value of the debt by the same amount. The basis adjustment will be amortized as an adjustment to interest expense through the maturity of the debt, thereby reducing the effective interest rate. For more information on derivatives designated as qualifying hedges, see ~~Note 7 – Derivative Instruments and Hedging Activities~~.

The following schedule presents all derivatives utilized in our asset-liability management ("ALM") activities that are designated in qualifying hedging relationships as defined by GAAP as of September 30, 2020 and December 31, 2019. The schedule includes the notional amount, fair value, and the weighted-average receive-fixed rate for each category of interest rate derivatives. The schedule for the current quarter has cash flow hedges shown by maturity for the next five years. Fair value hedges are shown by maturity every five to ten years, while the previous year's schedule has all categories shown by maturity for the next five years.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

September 30, 2020
Contractual Maturity
(Dollar amounts in millions) Total 2020 2021 2022 2023 2024 Thereafter Maturities-to-date 2020
Cash flow hedges
Receive-fixed interest rate swaps
Net fair value1
$ 115 $ — $ 1 $ 67 $ 16 $ 31 $ — $ —
Total notional amount 3,200 50 50 2,400 300 400 — 388
Weighted-average fixed-rate 2.11 % 1.26 % 1.81 % 2.06 % 2.35 % 2.35 % — % 1.59 %
Fair value hedges 2025 2030 2035 2040 2050 Thereafter
Fair value debt hedges3
Net fair value1
$ 45 $ — $ 45 $ — $ — $ — $ — $ —
Total notional amount 500 — 500 — — — — —
Weighted-average fixed-rate 1.70 % — % 1.70 % — % — % — % — % — %
Fair value asset hedges2,3
Net fair value1
$ 4 $ — $ — $ 1 $ — $ 3 $ — $ —
Total notional amount 316 — — 161 — 155 — —
Weighted-average fixed-rate 1.41 % — % — % 1.76 % — % 1.04 % — % — %
Total ALM fair value hedges
Net fair value1
$ 49 $ — $ 45 $ 1 $ — $ 3 $ — $ —
Total notional amount 816 — 500 161 — 155 — —


		December 31, 2019																									December 31, 2020
					Contractual Maturity																						Contractual Maturity
(Dollar amounts in millions)	(Dollar amounts in millions)	Total			2020			2021			2022			2023			2024			Thereafter			Matured in 2019			(Dollar amounts in millions)	Total			2021			2022			2023			2024			2025			Thereafter			Matured in 2020
Cash flow hedges	Cash flow hedges																									Cash flow hedges

Receive-fixed interest rate swaps	Receive-fixed interest rate swaps																									Receive-fixed interest rate swaps
Net fair value1	Net fair value1	$	48		$	—		$	—		$	27		$	8		$	13		$	—		$	—		Net fair value 1	$	98		$	—		$	56		$	14		$	28		$	—		$	—		$	—
Total notional amount	Total notional amount	3,588			438			50			2,400			300			400			—			200			Total notional amount	3,150			50			2,400			300			400			—			—			438
Weighted-average fixed-rate	Weighted-average fixed-rate	2.05		%	1.56		%	1.81		%	2.06		%	2.35		%	2.35		%	—		%	1.62		%	Weighted-average fixed-rate	2.12		%	1.81		%	2.06		%	2.35		%	2.35		%	—		%	—		%	1.41		%

Fair value hedges	Fair value hedges																									Fair value hedges				2025			2030			2035			2040			2050			Thereafter
Receive-fixed interest rate swaps
Fair value debt hedges 2																										Fair value debt hedges 2
Net fair value1	Net fair value1	$	9		$	—		$	10		$	9		$	—		$	—		$	(10)		$	—		Net fair value 1	$	37		$	—		$	37		$	—		$	—		$	—		$	—		$	—
Total notional amount	Total notional amount	1,500			—			500			500			—			—			500			—			Total notional amount	500			—			500			—			—			—			—			—
Weighted-average fixed-rate	Weighted-average fixed-rate	2.39		%	—		%	2.99		%	2.46		%	—		%	—		%	1.70		%	—		%	Weighted-average fixed-rate	1.70		%	—		%	1.70		%	—		%	—		%	—		%	—		%	—		%

Total ALM interest rate derivatives
Fair value asset hedges 2,3																										Fair value asset hedges 2,3
Net fair value1	Net fair value1	$	57		$	—		$	10		$	36		$	8		$	13		$	(10)		$	—		Net fair value 1	$	21		$	—		$	—		$	7		$	—		$	14		$	—		$	—
Total notional amount	Total notional amount	5,088			438			550			2,900			300			400			500			200			Total notional amount	383			—			—			228			—			155			—			—
Weighted-average fixed-rate																										Weighted-average fixed-rate	1.05		%	—		%	—		%	1.05		%	—		%	1.04		%	—		%	—		%

Total ALM fair value hedges																										Total ALM fair value hedges
Net fair value 1																										Net fair value 1	$	58		$	—		$	37		$	7		$	—		$	14		$	—		$	—
Total notional amount																										Total notional amount	883			—			500			228			—			155			—			—

1Fair values shown in the schedule above are presented net and exclude the effects of collateral settlements for centrally cleared derivatives.

2~~Fair value asset hedges consist of pay-fixed swaps hedging AFS fixed-rate securities executed during the third quarter of 2020.~~

3Fair value hedges of both our ~~fixed rate~~fixed-rate debt and AFS securities are longer dated than traditional cash flow hedges. Consequently, the maturity schedule above aggregates trades maturing in each column to include all trades maturing after the end of year of the previous column and prior to or during the year of the column the amounts are contained within.

~~Table~~Fair value asset hedges consist of ~~Contents~~pay-fixed swaps hedging AFS fixed-rate securities.

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~Interest Rate Risk Measurement~~

We monitor interest rate risk through the use of two complementary measurement methods: net interest income simulation, or Earnings at Risk (“EaR”), and Economic Value of Equity at Risk (“EVE”). EaR analyzes the expected change in near term (one year) net interest income in response to changes in interest rates. In the EVE method, we measure the expected changes in the fair value of equity in response to changes in interest rates.

EaR is an estimate of the change in total net interest income that would be recognized under different interest rate environments over a one-year period. This simulated impact to net interest income due to a change in rates uses as its base a modeled net interest income that is not necessarily the same as the most recent quarter's or year's reported net interest income. Rather, EaR employs estimated net interest income under an unchanged interest rate scenario as the basis for comparison. The EaR process then simulates changes to the base net interest income under several interest rate scenarios, including parallel and nonparallel interest rate shifts across the yield curve, taking into account deposit repricing assumptions and estimates of the possible exercise of embedded options within the portfolio (e.g., a borrower’s ability to refinance a loan under a lower-rate environment). The EaR model does not contemplate changes in fee income that are amortized into interest income (e.g. premiums, discounts, origination points and costs, etc.). Our policy contains a trigger for a 10% decline in rate-sensitive income as well as a risk capacity of a 13% decline if rates were to immediately rise or fall in parallel by 200 bps. As of December 31, 2018 the EaR declined by 12% for a 200 bps decline in rates. This trigger violation informed our decision to move to a less asset-sensitive position throughout 2019 and into 2020. As of September 30, 2020 the EaR declined by 1% for a 200 bps decline in rates.

EVE is calculated as the fair value of all assets minus the fair value of liabilities. We measure changes in the dollar amount of EVE for parallel shifts in interest rates. Due to embedded optionality and asymmetric rate risk, changes in EVE can be useful in quantifying risks not apparent for small rate changes. Examples of such risks may include out-of-the-money interest rate caps (or limits) on loans, which have little effect under small rate movements but may become important if large rate changes were to occur, or substantial prepayment deceleration for low-rate mortgages in a higher-rate environment. Our policy contains a trigger for an 8% decline in EVE as well as a risk capacity of a 10% decline if rates were to immediately rise or fall in parallel by 200 bps. Exceptions to the EVE limits are subject to notification and approval by the ROC.

Estimating the impact on net interest income and EVE requires that we assess a number of variables and make various assumptions in managing our exposure to changes in interest rates. The assessments address deposit withdrawals and deposit product migration (e.g., customers moving money from checking accounts to certificates of deposit), competitive pricing (e.g., existing loans and deposits are assumed to roll into new loans and deposits at similar spreads relative to benchmark interest rates), loan and security prepayments, and the effects of other similar embedded options. As a result of uncertainty about the maturity and repricing characteristics of both deposits and loans, we also calculate the sensitivity of EaR and EVE results to key assumptions. As most of our liabilities are comprised of indeterminate maturity and managed rate deposits, the modeled results are highly sensitive to the assumptions used for these deposits, such as checking, savings and money market accounts, and also to prepayment assumptions used for loans with prepayment options. We use historical regression analysis as a guide for setting such assumptions; however, due to the current low interest rate environment, which has little historical precedent, estimated deposit behavior may not reflect actual future results. Additionally, competition for funding in the marketplace has and may again result in changes to deposit pricing on interest-bearing accounts that are greater or less than changes in benchmark interest rates such as LIBOR or the federal funds rate.

Under most rising interest rate environments, we ~~would~~ expect some customers to move balances from demand deposits to interest-bearing accounts such as money market, savings, or certificates of deposit. The models are particularly sensitive to the assumption about the rate of such migration.

In addition, we assume certain correlation rates, often referred to as a “deposit beta,” of interest-bearing deposits, wherein the rates paid to customers change at a different pace when compared with changes in average benchmark interest rates. Generally, certificates of deposit are assumed to have a high correlation rate, while interest-on-checking accounts are assumed to have a lower correlation rate. Actual results may differ materially due to factors

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

including the shape of the yield curve, competitive pricing, money supply, our credit worthiness, ~~of the Bank,~~ and so forth; however, we use our historical experience as well as industry data to inform our assumptions.

~~The previously mentioned migration and correlation assumptions result in deposit durations presented in~~We used the following ~~schedule.~~deposit behavioral assumptions in our interest risk assessment for the period presented.

DEPOSIT ASSUMPTIONS


		September 30, 2020					March 31, 2021
Product	Product	Effective duration (unchanged)		Effective duration (+200 bps)		Product	Effective duration (unchanged)		Effective duration (+200 bps)

Demand deposits	Demand deposits	4.9	%	3.0	%	Demand deposits	3.2	%	2.9	%
Money market	Money market	3.7	%	1.5	%	Money market	2.3	%	1.6	%
Savings and interest-on-checking	Savings and interest-on-checking	3.1	%	2.4	%	Savings and interest-on-checking	2.8	%	2.3	%

As of the dates indicated and incorporating the assumptions previously described, the following schedule shows EaR, or percentage change in net interest income, based on a static balance sheet size, in the first year after the interest rate change if interest rates were to sustain immediate parallel changes ranging from -100 bps to +300 bps.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

INCOME SIMULATION – CHANGE IN NET INTEREST INCOME


		September 30, 2020											March 31, 2021
		Parallel shift in rates (in bps)1											Parallel shift in rates (in bps)1
Repricing scenario	Repricing scenario	-100		0		+100		+200		+300		Repricing scenario	-100		0		+100		+200		+300

Earnings at Risk	Earnings at Risk	(1.4)	%	—	%	8.5	%	16.2	%	23.6	%	Earnings at Risk	(4.5)	%	—	%	9.8	%	19.8	%	29.5	%

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

For non-maturity interest-bearing deposits, the weighted average modeled beta is ~~23%~~28%. If the weighted average deposit beta were to increase 6%7%, the EaR in the +100 bps rate shock would change from ~~8.5%~~9.8% to ~~7.7%~~8.6%.

For comparative purposes, the December 31, ~~2019~~2020 measures are presented in the following schedule.


		December 31, 2019											December 31, 2020
		Parallel shift in rates (in bps)1											Parallel shift in rates (in bps)1
Repricing scenario	Repricing scenario	-100		0		+100		+200		+300		Repricing scenario	-100		0		+100		+200		+300

Earnings at Risk	Earnings at Risk	(4.6)	%	—	%	3.0	%	6.0	%	8.9	%	Earnings at Risk	(2.9)	%	—	%	9.2	%	18.0	%	26.4	%

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

The asset sensitivity as measured by EaR increased quarter over quarter primarily due to changes in the deposit beta for money market accounts. The lower beta is consistent with our prior experience with the federal funds target rate in the range of 0%-0.25%.

The EaR analysis focuses on parallel rate ~~shocks~~ramps across the term structure of rates. The yield curve typically does not move in a parallel manner. If we consider a ~~flattening~~steepener rate ~~shock~~ramp where the short-term rate ~~moves +200 bps~~declines to zero but the ten-year rate ~~only~~ moves ~~+30~~to +200 bps, the increase in EaR is ~~18%~~71% less over 24 months compared with the parallel +200 bps rate ~~shock.~~ramp.

CHANGES IN ECONOMIC VALUE OF EQUITY

As of the dates indicated, the following schedule shows our estimated percentage change in EVE under parallel interest rate changes ranging from -100 bps to +300 bps. For non-maturity interest-bearing deposits, the weighted average modeled beta is ~~23%~~28%. If the weighted average deposit beta were to increase 6%7%, it would change the EVE in the +100 bps rate shock from ~~15.5%~~1.9% to ~~14.4%~~1.2%. In the -100 bps rate shock, the EVE would increase ~~due to the fact that~~because we cap the value of our indeterminate deposits at their par value, or equivalently, we assume no premium would be required to dispose of these liabilities given that depositors could be repaid at par. Since our assets increase in value as rates fall and the majority of our liabilities are ~~indeterminate~~comprised of indeterminate-maturity deposits, EVE increases disproportionately.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


		September 30, 2020											March 31, 2021
		Parallel shift in rates (in bps)1											Parallel shift in rates (in bps)1
Repricing scenario	Repricing scenario	-100		0		+100		+200		+300		Repricing scenario	-100		0		+100		+200		+300

Economic Value of Equity	Economic Value of Equity	13.1	%	—	%	15.5	%	18.1	%	18.9	%	Economic Value of Equity	13.9	%	—	%	1.9	%	2.6	%	3.0	%

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

For comparative purposes, the December 31, ~~2019~~2020 measures are presented in the following schedule. The changes in EVE measures from December 31, ~~2019~~2020 are primarily driven by the behavior of the deposit models. For non-maturity deposits, the deposit premium (or discount below par value) is floored at zero in a low-rate environment.


		December 31, 2019											December 31, 2020
		Parallel shift in rates (in bps)1											Parallel shift in rates (in bps)1
Repricing scenario	Repricing scenario	-100		0		+100		+200		+300		Repricing scenario	-100		0		+100		+200		+300

Economic Value of Equity	Economic Value of Equity	8.0	%	—	%	1.1	%	0.4	%	(0.6)	%	Economic Value of Equity	13.0	%	—	%	12.0	%	14.4	%	16.1	%

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

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Our focus on business banking also plays a significant role in determining the nature of our asset-liability management posture. At ~~September 30, 2020,~~March 31, 2021, $21 billion of our commercial lending and CRE loan balances were scheduled to reprice in the next six months. Of these variable-rate loans, approximately ~~97%~~98% are tied to either the prime rate or LIBOR. For these variable-rate loans, we have executed ~~$3.2~~$3.5 billion of cash flow hedges by receiving fixed rates on interest rate ~~swaps or through purchased interest rate floors.~~swaps. Additionally, asset sensitivity is reduced due to $4$5 billion of variable-rate loans being priced at floored rates at ~~September 30, 2020,~~March 31, 2021, which were above the “index plus spread” rate by an average of 6966 bps. At ~~September 30, 2020,~~March 31, 2021, we also had $3 billion of variable-rate consumer loans scheduled to reprice in the next three months. Of these variable-rate consumer loans, approximately $1 billion were priced at floored rates, which were above the “index plus spread” rate by an average of 3634 bps.

See Notes 3 and 7 of the Notes to Consolidated Financial Statements for additional information regarding derivative instruments.

LIBOR Exposure

In July 2017, the Financial Conduct Authority (“FCA”), the authority regulating LIBOR, along with various other regulatory bodies, announced that LIBOR would likely be discontinued at the end of 2021. Subsequent to that announcement, in November 2020, the FCA announced that many tenors of LIBOR would continue to be published through June 2023. Bank regulators, including the OCC, have instructed banks to discontinue new originations referencing LIBOR as soon as possible, but no later than December 2021. To facilitate the transition process, we have instituted an enterprise-wide program to identify, assess, and monitor risks associated with the expected discontinuance or unavailability of LIBOR, which includes active engagement with industry working groups and regulators. This program includes active involvement of senior management with regular engagement from the Enterprise Risk Management Committee and seeks to minimize client and internal business operational impacts, while providing reporting transparency, consistency, and a central governance model that aligns with FASB, IRS, and other regulatory guidance.

We focus on operational readiness, as well as instituting processes and systems to validate that contract risk is clearly identified and understood. New originations and any modifications or renewals of LIBOR-based contracts contain fallback language to assist in an orderly transition to an alternative reference rate. For our contracts that have a duration beyond December 31, 2021, and that reference LIBOR, all fallback provisions and variations are currently being identified and sorted into classifications based upon those provisions. Upon classification, the contracts will be remediated and monitored through defined workflow paths. We strive to clearly understand fallback provisions by loan and to have the entire portfolio in a state that simplifies ultimate conversion to a replacement index.

We have a significant number of assets and liabilities that reference ~~LIBOR such as commercial loans, commercial real estate term loans, adjustable-rate mortgage loans, unfunded loan commitments, derivatives, and debt securities.~~LIBOR. As of ~~September 30, 2020,~~March 31, 2021, we had ~~more than~~approximately $38 billion of ~~assets, consisting mostly of~~loans (mainly commercial ~~loans, that reference~~loans), unfunded lending commitments, and securities referencing LIBOR. The amount of borrowed funds ~~that reference~~referencing LIBOR as of ~~September 30, 2020~~March 31, 2021 was less than $1 billion. These amounts exclude derivative assets and liabilities on our consolidated balance sheet. As of ~~September 30, 2020,~~March 31, 2021, the notional amount of our LIBOR-referenced interest rate derivative contracts was more than ~~$15~~$16 billion, of which more than $9$11 billion related to contracts with central counterparty clearinghouses.

In April 2021, we announced our intent to adopt AMERIBOR as our preferred replacement index for LIBOR. AMERIBOR is an index created by the American Financial Exchange. It represents the volume-weighted actual borrowing costs of thousands of banks across the United States and is compliant with International Organization of Securities Commissions (“IOSCO”) standards. We plan to adopt AMERIBOR in many of our new lending contracts beginning the summer of 2021. Amending certain outstanding contracts indexed to LIBOR may require consent from the counterparties, which could be difficult and costly to obtain. Each of the LIBOR-referenced amounts discussed above will vary in future periods as current contracts expire with potential replacement contracts using ~~either LIBOR~~AMERIBOR or an alternative reference rate. ~~We, and other industry participants, continue~~While AMERIBOR will be our preferred index for lending agreements, we are positioned to ~~review~~accommodate several alternative reference rates and anticipate that ~~could~~a variety of indices may be ~~utilized as a replacement for LIBOR.~~

We manage interest rate and market risk centrally and are actively working to address any impacted contracts, but realize that amending certain contracts indexed to LIBOR may require consent from the counterparties, which could be difficult and costly to obtain in certain limited circumstances.used by other lenders. For more information on the transition from LIBOR, see Risk Factors in our ~~2019~~2020 Form 10-K.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Market Risk – Fixed Income

We engage in the underwriting and trading of municipal securities. This trading activity exposes us to a risk of loss arising from adverse changes in the prices of these fixed-income securities.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

At ~~September 30, 2020,~~March 31, 2021, we had ~~a relatively small amount, $198~~$189 million of trading assets and ~~$71~~$142 million of securities sold, not yet purchased, compared with ~~$182~~$266 million and ~~$66~~$61 million, respectively, at December 31, ~~2019.~~2020.

We are exposed to market risk through changes in fair value. We are also exposed to market risk for interest rate swaps used to hedge interest rate risk. Changes in the fair value of AFS securities and in interest rate swaps that qualify as cash flow hedges are included in accumulated other comprehensive income (“AOCI”) for each financial reporting period. During the ~~third~~first quarter of ~~2020,~~2021, the after-tax change in AOCI attributable to AFS securities decreased by ~~$13~~$164 million, due largely to changes in the interest rate environment, compared with a ~~$19~~$147 million increase in the same prior year period.

Market Risk – Equity Investments

Through our equity investment activities, we own equity securities that are publicly-traded. In addition, we own equity securities in companies and governmental entities, e.g., the Federal Reserve Bank and an FHLB, that are not publicly-traded. The accounting for equity investments may use the cost, fair value, equity, or full consolidation methods of accounting, depending on our ownership position and degree of involvement in influencing the investees’ affairs. Regardless of the accounting method, the value of our investment is subject to fluctuation. Because the fair value of these securities may fall below our investment costs, we are exposed to the possibility of loss. Equity investments in private and public companies are approved, monitored and evaluated by our Equity Investment Committee consisting of members of management.

We hold both direct and indirect investments in predominantly pre-public companies, primarily through various ~~small business investment company ("SBIC")~~SBIC venture capital funds. Our equity exposure to these investments was ~~$131~~$145 million and ~~$154~~$135 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. On occasion, some of the companies within our SBIC investments may issue an initial public ~~offering.~~offering (“IPO”). In this case, the fund is generally subject to a lockout period before liquidating the investment, which can introduce additional market risk. Subsequent to March 31, 2021, one of our SBIC investments, Recursion Pharmaceuticals, Inc., completed an IPO. See Note 3 of the Notes to Consolidated Financial Statements for additional information regarding this subsequent event and the impact to the financial statements.

Liquidity Risk Management

Overview

Liquidity refers to our capacity to meet our cash and collateral obligations and to manage both expected and unexpected cash flows without adversely impacting our operations or financial strength. Sources of liquidity include ~~both traditional forms of funding, such as~~ deposits, borrowings, and equity, ~~and~~as well as unencumbered assets, such as marketable loans and securities.

~~Since~~ For a more comprehensive discussion of our liquidity risk ~~is closely linked to both credit risk and market risk, many of~~management, see “Liquidity Risk Management” in our 2020 Form 10-K.

Strong deposit growth over the ~~previously discussed risk control mechanisms also apply to the monitoring and management of~~past several quarters has increased our overall liquidity risk. We manage our liquidity to provide adequate funds for our customers’ credit needs, capital plan actions, anticipated financial and contractual obligations, which include withdrawals by depositors, debt and capital service requirements, and lease obligations.

~~We continue to perform liquidity stress tests and assess our portfolio of highly liquid assets (sufficient to cover 30-day funding needs under the stress scenarios).~~position. At ~~September 30, 2020,~~March 31, 2021, our investment securities portfolio of ~~$15.5~~$17.4 billion and cash and money market investments of ~~$4.2~~$10.3 billion collectively comprised ~~25%~~33% of total assets.

Liquidity Management Actions

Our consolidated cash, interest-bearing deposits held as investments, and security resell agreements increased significantly and were ~~$4.2~~$10.2 billion at ~~September 30, 2020,~~March 31, 2021, compared with ~~$1.8~~$7.3 billion at December 31, ~~2019,~~2020, and ~~$2.3~~$2.5 billion at ~~September 30, 2019.~~March 31, 2020. During the first ~~nine months~~quarter of ~~2020,~~2021, the primary sources of cash were from an increase in deposits and net cash provided by operating activities. Uses of cash during the same period were primarily from (1) ~~loan originations and purchases~~an increase in investment securities, (2) a decrease in short-term borrowings, (3) ~~an increase in investment securities, (3) repayment of long-term debt, (4)~~ dividends on common and preferred stock, and ~~(5)~~(4) repurchases of our common stock.

Total deposits were ~~$67.1~~$73.9 billion at ~~September 30, 2020,~~March 31, 2021, compared with ~~$57.1~~$69.7 billion at December 31, ~~2019~~2020 and ~~$56.1~~$57.5 billion at ~~September 30, 2019.~~March 31, 2020. The increase for the first ~~nine months~~quarter of ~~2020~~2021 was a result of a ~~$7.8~~$3.4 billion and ~~$3.5~~$1.2 billion increase in noninterest-bearing demand deposits and savings and money market deposits, respectively, partially offset by a ~~$1.3~~$0.4 billion decrease in time deposits. The funding of PPP loan proceeds into customer deposit accounts contributed meaningfully to overall deposit growth. Our core deposits, consisting of noninterest-bearing demand deposits, savings and money market deposits, and time deposits under $250,000, were $73.0 billion at March 31, 2021, compared with $68.2 billion at December 31, 2020, and $54.8 billion at March 31, 2020.

3730

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~demand deposits, savings and money market deposits, and time deposits under $250,000, were $64.8 billion at September 30, 2020, compared with $53.9 billion at December~~At March 31, ~~2019 and $52.8 billion at September 30, 2019.~~

~~At September 30, 2020,~~2021, maturities of our long-term senior and subordinated debt ranged from August 2021 to October 2029.

Our cash payments for interest, reflected in operating expenses, decreased to ~~$164~~$22 million during the first ~~nine months~~quarter of ~~2020~~2021, from ~~$315~~$88 million during the first ~~nine months~~quarter of ~~2019.~~2020. This decrease iswas primarily due to lower interest rates paid on deposits and borrowed funds, ~~and lower~~as well as a reduced amount of borrowed funds. Additionally, we paid ~~approximately $195~~$66 million of dividends on preferred stock and common stock for both the first ~~nine months~~quarters of ~~2020, compared with $196 million for the first nine months of 2019.~~2021 and 2020. Dividends paid per common share were $0.34 in the first quarter of 2021, which has been unchanged since the third quarter of ~~2019 and have remained at $0.34 during 2020.~~2019. In ~~October 2020,~~April 2021, the Board approved a quarterly common dividend of $0.34 per share.

General financial market and economic conditions impact our access to and cost of external financing. Access to funding markets is also directly affected by the credit ratings received from various rating agencies. The ratings not only influence the costs associated with the borrowings, but can also influence the sources of the borrowings. All of the credit rating agencies rate our debt at an investment-grade level. Although ourOur credit ratings did not change during the first ~~nine months~~quarter of ~~2020, Fitch~~2021 and ~~S&P revised their outlook to Negative from Stable due to disruption in economic activity and financial markets from the COVID-19 pandemic and our oil and gas exposure. Our credit ratings and outlooks~~ are presented in the following schedule.

CREDIT RATINGS

as of ~~October 31, 2020:~~April 30, 2021:

Rating agency

Outlook

Long-term issuer/senior
debt rating

Subordinated debt rating

Short-term debt rating

Kroll

Stable

A-

BBB+

S&P

Negative

BBB+

BBB

Fitch

Negative

BBB+

BBB

Moody's

Stable

Baa2

The ~~FHLB~~Federal Home Loan Bank (“FHLB”) system and Federal Reserve Banks have been, and ~~are~~continue to be, a significant source of back-up liquidity and ~~a significant source of~~ funding. Zions Bancorporation, N.A., is a member of the FHLB of Des Moines. The FHLB allows member banks to borrow against their eligible loans and securities to satisfy liquidity and funding requirements. We are required to invest in FHLB and Federal Reserve stock to maintain our borrowing capacity. At March 31, 2021, our total investment in FHLB and Federal Reserve stock was $11 million and $97 million, respectively, compared with $11 million and $98 million at December 31, 2020.

The amount available for additional FHLB and Federal Reserve borrowings ~~was~~decreased to approximately ~~$17.6~~$14.7 billion at ~~September 30, 2020,~~March 31, 2021, compared with ~~$15.3~~$17.1 billion at December 31, ~~2019 and $14.5 billion at September 30, 2019.~~2020, primarily due to the decline in non-PPP loan balances. Loans with a carrying value of approximately ~~$26.3~~$22.8 billion at ~~September 30, 2020~~March 31, 2021 have been pledged at the FHLB ~~of Des Moines~~ and the Federal Reserve as collateral for current and potential borrowings, compared with ~~$21.5~~$24.7 billion at December 31, ~~2019.~~2020. At ~~September 30,~~both March 31, 2021 and December 31, 2020, we had no FHLB or Federal Reserve borrowings outstanding, compared with $1.0 billion of short-term FHLB borrowings and no long-term FHLB or Federal Reserve borrowings outstanding at December 31, 2019. At September 30, 2020, our total investment in FHLB and Federal Reserve stock was $10 million and $97 million, respectively, compared with $50 million and $107 million at December 31, 2019.outstanding.

During ~~the second quarter of~~ 2020, the Federal Reserve established the ~~Payroll~~Paycheck Protection Program Liquidity Facility (“PPPLF”). Under the PPPLF, we can obtain term financing for PPP loans by pledging them to the ~~FRB~~Federal Reserve before ~~December~~June 30, 2021. At March 31, ~~2020.~~2021, we had less than $1 million of funding through the PPPLF. We also have the ability to increase our borrowing capacity at the FHLB ~~of Des Moines~~ by pledging the PPP loans. The ability to pledge PPP loans to the FHLB ~~of Des Moines~~ does not have a defined expiry, and funding terms may vary.

We regularly manage our short-term funding needs through secured borrowing with the securities pledged as collateral. Our AFS investment securities are primarily held as a source of contingent liquidity. During the first quarter of 2021, our AFS securities balances increased by $913 million. We target securities that can be easily ~~turned into cash through sale or repurchase agreements~~monetized and whose value remains relatively stable during market disruptions.

Our loan to total deposit ratio was 72% at March 31, 2021, compared with 77% at December 31, 2020, reflecting higher deposit growth in the first quarter of 2021 relative to loan growth.

We may, at times, rely on more expensive wholesale funding sources to support loan growth when other lower cost sources of funding are not sufficient or readily available. Our use of borrowed funds (both short- and long-term) decreased by $577 million during the first quarter of 2021, as our loan balances were stable and we had a $4.2 billion increase in deposits. We used surplus deposit funding to increase short-term investments and investment securities, which increased $2.9 billion and $783 million, respectively, from December 31, 2020.

3831

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

market disruptions. We regularly manage our short-term funding needs through secured borrowing with the securities pledged as collateral. Interest rate risk management is another consideration for selection of investment securities. Our AFS securities balances increased by $937 million during the first nine months of 2020.

Our loan to total deposit ratio was 82% at September 30, 2020, compared with 85% at December 31, 2019, indicating a higher deposit growth pattern compared with the loan growth pattern for the first nine months of 2020. If our operating, investing and deposit activity do not provide the loan funding required, we may rely on more expensive wholesale funding for a portion of our loan growth. Our use of borrowed funds (both short- and long-term) decreased by $1.2 billion during the first nine months of 2020 as our deposit growth funded average loan growth over the period. Due to the increase in average deposits of $3.5 billion during the third quarter of 2020 and with average loans only increasing $725 million, the surplus cash went to paying down borrowings and increasing short-term investments, which increased $1.5 billion from the second quarter of 2020.

We may also, from time to time, issue additional preferred stock, senior or subordinated notes or other forms of capital or debt instruments, depending on our capital, funding, asset-liability management or other needs as market conditions warrant and subject to any required regulatory approvals. ~~Management believes~~We believe that the sources of available liquidity are adequate to meet all reasonably foreseeable short-term and intermediate-term demands. ~~A more comprehensive discussion of liquidity risk management, including certain contractual obligations, is contained in our 2019 Annual Report on Form 10-K.~~

~~Operational/Technology and Cyber~~

Capital Risk Management

Operational risk is the risk to current or anticipated earnings or capital arising from inadequate or failed internal processes or systems, human errors or misconduct, or adverse external events. In our ongoing efforts to identify and manage operational risk, we have an ERM department whose responsibility is to help employees, management and the Board of Directors to assess, understand, measure, manage, and monitor risk in accordance with our Risk Appetite Framework. We have documented both controls and the Control Self-Assessment related to financial reporting under the 2013 framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and the FDICIA.

To manage and minimize our operational risk, we have in place transactional documentation requirements; systems and procedures to monitor transactions and positions; systems and procedures to detect and mitigate attempts to commit fraud, penetrate our systems or telecommunications, access customer data, and/or deny normal access to those systems to our legitimate customers; regulatory compliance reviews; and periodic reviews by our Compliance Risk Management, Internal Audit and Credit Examination departments.

The number and sophistication of attempts to disrupt or penetrate our systems, sometimes referred to as hacking, cyber fraud, cyberattacks, or other similar names continues to grow. To combat the ever increasing sophistication of cyberattacks, we have upgraded key detection software and expanded the number of staff and expertise to monitor and manage cyberattacks. In addition, we have elevated our oversight and internal reporting to the Board and respective committees. We have also implemented an advisory group made up of cyber industry and academic experts, and from time-to-time, we may hire consultants to assist us in better managing this critical risk.

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, we have experienced security breaches due to cyberattacks in the past and there can be no assurance that any such failure, interruption or security breach will not occur in the future, or, if they do occur, that they will be adequately addressed. It is impossible to determine the potential effects of these events with any certainty but any such breach could result in material adverse consequences for us and our customers.

~~For a more comprehensive discussion of operational/technology and cyber risk management see our 2019 Annual Report on Form 10-K.~~

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~CAPITAL MANAGEMENT~~

Overview

We believe that a strong capital position is vital to continued profitability and to promoting depositor and investor confidence. We ~~have a fundamental financial objective~~strive to consistently improve risk-adjusted returns on our shareholders’ capital. We entered the economic downturn ~~resulting from the COVID-19 pandemic~~in 2020 with a strong capital ~~position.~~position and have improved our position during the last several quarters with our common equity tier 1 capital increasing to 11.2% at March 31, 2021, compared with 10.0% at March 31, 2020.

~~Our~~Certain capital transactions may be subject to the approval of the OCC, who is our primary ~~regulator is the OCC.~~regulator. We also continue to be subject to examinations by the CFPB with respect to consumer financial regulations. ~~Under the National Bank Act and OCC regulations, certain capital transactions may be subject to the approval of the OCC.~~

We continue to utilize stress testing as the primary mechanism to inform our decisions on the appropriate level of capital and capital actions, based upon actual and ~~hypothetically-stressed~~hypothetically stressed economic conditions. The results of our internal stress tests are publicly available on our website. The timing and amount of capital actions are subject to various factors, including our financial performance, business needs, prevailing and anticipated economic conditions, stress testing, and OCC approval. For a more comprehensive discussion of our capital risk management, see “Capital Management” in our 2020 Form 10-K.

Capital Management Actions

Weighted average diluted shares outstanding decreased by ~~0.6~~9.1 million ~~and 9.2 million from the second and first quarters of 2020 to the third quarter of 2020, respectively. The decrease~~ from the first quarter of 2020, which was primarily due to ~~a lower average Bank common share price and~~ the expiration of ~~common stock warrants. On May 22, 2020,~~ 29.2 million out-of-the-money common stock warrants (NASDAQ: ZIONW) ~~expired, with an exercise price~~in the second quarter of ~~$33.31. Each common stock warrant was convertible into 1.10 shares.~~2020.

Total shareholders’ equity ~~has increased moderately and~~ was ~~$7.7~~$7.9 billion at ~~September 30,~~both March 31, 2021 and December 31, 2020, compared with ~~$7.4 billion at December 31, 2019 and~~ $7.5 billion at ~~September 30, 2019. The increase~~March 31, 2020. Total shareholders’ equity remained stable during the first ~~nine months~~quarter of ~~2020 was primarily due to~~2021, as net income of ~~$255~~$322 million ~~and~~was partially offset by a ~~$229~~$164 million after-tax increase in unrealized ~~gains~~losses on AFS securities, which was due largely to changes in the interest rate ~~environment. The increase was partially offset by $195~~environment, $66 million of common and preferred stock dividends paid, and ~~$75~~the $50 million repurchase of ~~repurchases of Bank~~ common ~~stock from publicly announced plans.~~shares outstanding. Common stock and additional paid-in capital decreased ~~$55~~$33 million, or 2%1%, during the first ~~nine months~~quarter of ~~2020~~2021, primarily due to the common stock repurchases.

During the first quarter of ~~2020,~~2021, we repurchased ~~1.7~~1.0 million common shares ~~of common stock, or 1% of common stock~~ outstanding ~~as of December 31, 2019,~~ for ~~$75~~$50 million at an average price of ~~$45.02~~$49.78 per share. ~~Beginning in~~In April 2021, the Board approved a plan to repurchase up to $100 million of common shares outstanding during the second quarter of ~~2020, we suspended share repurchase activity until visibility on earnings is improved. We expect to maintain the appropriate amount of capital to cover inherent risk.~~2021. The timing and amount of any additional common ~~share~~stock repurchases will be subject to various factors, including our financial performance, business needs, prevailing economic conditions, stress testing, and OCC approval. The magnitude, timing, and form of capital return will be determined by ~~the~~our Board. Shares may be repurchased occasionally in the open market, through privately negotiated transactions, utilizing Rule 10b5-1 plans or otherwise.

Under the OCC’s “Earnings Limitation Rule,” our dividend payments are restricted to an amount equal to the sum of the total of (1) our net income for that year, and (2) retained earnings for the preceding two years, unless the OCC approves the declaration and payment of dividends in excess of such amount. As of March 31, 2021, we had $1.0 billion of retained net profits available for distribution.

We paid common dividends of ~~$169~~$56 million during both the first ~~nine months~~quarter of ~~2020, compared with $170 million during the first nine months of 2019.~~2021 and 2020. In ~~October 2020~~April 2021, the Board of Directors declared a quarterly dividend of $0.34 per common share, payable on ~~November 19, 2020~~May 20, 2021 to shareholders of record on ~~November 12, 2020.~~May 13, 2021. We also paid dividends on preferred stock of ~~$26~~$10 million for both the first ~~nine months~~quarter of ~~2020~~2021 and ~~2019.~~2020. In April 2021, the Board approved the redemption of our Series H perpetual preferred shares, subject to

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

the completion of notification requirements. At March 31, 2021, the total amount of Series H shares outstanding was $126 million, and had an annual dividend of $7 million. See Note 9 for additional detail about capital management transactions during the first ~~nine months~~quarter of ~~2020.~~2021.

CECL

We elected to phase-in the regulatory capital effects of the adoption of CECL, as allowed by federal bank agencies, and as described in Note 15 of the Notes to Consolidated Financial Statements of our 2020 Form 10-K. At March 31, 2021, the application of these provisions improved our CET1, Tier 1 risk-based and Total risk-based capital ratios by 4 bps each, and our Tier 1 leverage capital ratio by 2 bps.

Basel III ~~Capital Requirements~~

We are subject to Basel III capital requirements to maintain adequate levels of capital as measured by several regulatory capital ratios. We met all capital adequacy requirements under the Basel III Capital Rules as of ~~September 30,~~March 31, 2021. At March 31, 2021, Basel III regulatory tier 1 risk-based capital and total risk-based capital was $6.8 billion and $8.0 billion, compared with $6.6 billion and $7.9 billion, respectively, at December 31, 2020. The following schedule presents our capital and performance ratios as of ~~September 30, 2020,~~March 31, 2021, December 31, ~~2019~~2020, and ~~September 30, 2019.~~March 31, 2020. The "Supervision and Regulation" section of our 2020 Form 10-K and Note 15 of the Notes to Consolidated Financial Statements contains more detail information about Basel III capital requirements and our compliance.

CAPITAL RATIOS


	March 31, 2021		December 31, 2020		March 31, 2020

Tangible common equity ratio1	7.6	%	7.8	%	8.4	%
Tangible equity ratio1	8.2		8.5		9.2
Average equity to average assets (three months ended)	9.5		9.7		10.7
Basel III risk-based capital ratios2:
Common equity tier 1 capital	11.2		10.8		10.0
Tier 1 leverage	8.3		8.3		9.0
Tier 1 risk-based	12.2		11.8		11.0
Total risk-based	14.5		14.1		13.2
Return on average common equity (three months ended)	17.4		15.3		0.3
Return on average tangible common equity (three months ended)1	20.2		17.8		0.4

1 See “GAAP to Non-GAAP Reconciliations” on page 4 for more information regarding these ratios.

2Based on the applicable phase-in periods.

4033

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

A final rule adopted by the federal banking agencies in February 2019 provides banking organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the adoption of CECL. On March 27, 2020, the federal banking agencies issued an interim final rule that gives banking organizations that implement CECL before the end of 2020 the option to reduce for two years a portion of CECL’s adverse effect on regulatory capital. This is in addition to the three-year transition period already in place, resulting in an optional five-year transition. We adopted the provisions of this guidance beginning with the first quarter 2020 financial statements. As a result, we will delay recognizing the full amount of the September 30, 2020 impact of the ACL on regulatory capital until after a two-year deferral period, which for us extends through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred estimated capital impact of the ACL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. At September 30, 2020, the application of these provisions improved our CET1, Tier 1 risk-based and Total risk-based capital ratios by 14 bps each, and improved our Tier 1 leverage capital ratio by 9 bps.

~~CAPITAL RATIOS~~

September 30,
2020 December 31,
2019 September 30,
2019
Tangible common equity ratio1
7.9 % 8.5 % 8.5 %
Tangible equity ratio1
8.6 9.3 9.4
Average equity to average assets (three months ended) 9.8 10.7 10.8
Basel III risk-based capital ratios:
Common equity tier 1 capital 10.4 10.2 10.4
Tier 1 leverage 8.3 9.2 9.3
Tier 1 risk-based 11.4 11.2 11.4
Total risk-based 13.7 13.2 12.6
Return on average common equity (three months ended) 9.4 10.1 12.1
Return on average tangible common equity (three months ended)1
11.0 11.8 14.2

1 ~~See “GAAP to Non-GAAP Reconciliations” on page 6 for more information regarding these ratios.~~

At September 30, 2020, Basel III regulatory tier 1 risk-based capital and total risk-based capital was $6.4 billion and $7.7 billion, respectively, compared with $6.3 billion and $7.4 billion, respectively, at December 31, 2019. A more detailed discussion of capital management and Basel III requirements, including implications for the Bank, is contained in “Capital Standards – Basel Framework” under Part 1, Item 1, “Capital Management," and Note 15 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

~~CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES~~

The CECL allowance is calculated based on quantitative models and management qualitative judgment based on many factors over the life of loan. The primary assumptions of the CECL quantitative model are the economic forecast, the length of the reasonable and supportable forecast period, the length of the reversion period, prepayment rates, and the credit quality of the portfolio.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

As a result of this accounting standard, our ACL has become more volatile and we expect this to continue primarily because, under the new methodology, the allowance is subject to economic forecasts that may change materially from period to period. Although we believe that our methodology for determining an appropriate level for the allowance adequately addresses the various components that could potentially result in credit losses, the processes and their elements include features that may be susceptible to significant change. Any unfavorable differences between the actual outcome of credit-related events and our estimates could require an additional provision for credit losses.

We estimate CECL over the contractual remaining life of each loan, which considers historical credit loss experience, current conditions, and reasonable and supportable forecasts about the future. We use the following two types of credit loss estimation models:

•Econometric loss models, which rely on statistical analyses of our historical loss experience, are dependent upon economic factors and other loan-level characteristics. Statistically relevant economic factors vary depending upon the type of loan, but include variables such as unemployment, real estate price indices, energy prices, GDP, etc.

•Loss models that are based on our long-term average historical credit loss experience since 2008, which rely on statistical analyses of our historical loss experience dependent upon loan-level characteristics.

Estimated credit losses during the first 12 months of a loan’s contractual remaining life, or reasonable and supportable period, are derived from the econometric loss models. Over a subsequent 12-month reversion period, we blend the estimated credit losses from the two models on a straight-line basis. For the remaining life of the loan, the estimated credit losses are derived from the long-term average historical credit loss models.

In addition to our quantitative allowance for loan losses, we also consider other qualitative and environmental factors related to current conditions and reasonable and supportable forecasts that may indicate current expected credit losses may differ from the historical information reflected in our quantitative models. Although the qualitative process is subjective, it represents our best estimate of qualitative factors impacting the determination of the ACL as of the financial reporting date.

Note 6 of the Notes to Consolidated Financial Statements and “Credit Risk Management” on page 24 contain further information and more specific descriptions of the processes and methodologies used to estimate the allowance for credit losses.

~~Table of Contents~~

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

CONSOLIDATED BALANCE SHEETS


(In millions, shares in thousands)	(In millions, shares in thousands)	September 30, 2020		December 31, 2019		(In millions, shares in thousands)	March 31, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	576	$	705	Cash and due from banks	$	576	$	543
Money market investments:	Money market investments:					Money market investments:
Interest-bearing deposits	Interest-bearing deposits	856		743		Interest-bearing deposits	8,427		1,074
Federal funds sold and security resell agreements	Federal funds sold and security resell agreements	2,804		484		Federal funds sold and security resell agreements	1,315		5,765
Investment securities:	Investment securities:					Investment securities:
Held-to-maturity, at amortized cost (approximate fair value $596 and $597)		592		592
Held-to-maturity, at amortized cost (approximate fair value $584 and $640)						Held-to-maturity, at amortized cost (approximate fair value $584 and $640)	583		636
Available-for-sale, at fair value	Available-for-sale, at fair value	14,662		13,725		Available-for-sale, at fair value	16,644		15,731
Trading account, at fair value	Trading account, at fair value	198		182		Trading account, at fair value	189		266

Total securities	Total securities	15,452		14,499		Total securities	17,416		16,633
Loans held for sale	Loans held for sale	89		129		Loans held for sale	77		81
Loans and leases, net of unearned income and fees	Loans and leases, net of unearned income and fees	54,745		48,709		Loans and leases, net of unearned income and fees	53,472		53,476
Less allowance for loan losses	Less allowance for loan losses	853		495		Less allowance for loan losses	646		777
Loans held for investment, net of allowance	Loans held for investment, net of allowance	53,892		48,214		Loans held for investment, net of allowance	52,826		52,699
Other noninterest-bearing investments	Other noninterest-bearing investments	830		898		Other noninterest-bearing investments	815		817
Premises, equipment and software, net	Premises, equipment and software, net	1,187		1,142		Premises, equipment and software, net	1,236		1,209
Goodwill and intangibles	Goodwill and intangibles	1,016		1,014		Goodwill and intangibles	1,016		1,016
Other real estate owned	Other real estate owned	6		8		Other real estate owned	3		4
Other assets	Other assets	1,649		1,336		Other assets	1,414		1,638
Total Assets	Total Assets	$	78,357	$	69,172	Total Assets	$	85,121	$	81,479
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:	Deposits:					Deposits:
Noninterest-bearing demand	Noninterest-bearing demand	$	31,338	$	23,576	Noninterest-bearing demand	$	35,882	$	32,494
Interest-bearing:	Interest-bearing:					Interest-bearing:
Savings and money market	Savings and money market	32,305		28,790		Savings and money market	35,762		34,571
Time	Time	3,451		4,719		Time	2,209		2,588

Total deposits	Total deposits	67,094		57,085		Total deposits	73,853		69,653
Federal funds purchased and other short-term borrowings	Federal funds purchased and other short-term borrowings	1,252		2,053		Federal funds purchased and other short-term borrowings	1,032		1,572
Long-term debt	Long-term debt	1,347		1,723		Long-term debt	1,299		1,336
Reserve for unfunded lending commitments	Reserve for unfunded lending commitments	64		59		Reserve for unfunded lending commitments	49		58
Other liabilities	Other liabilities	932		899		Other liabilities	955		974
Total liabilities	Total liabilities	70,689		61,819		Total liabilities	77,188		73,593
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred stock, without par value; authorized 4,400 shares	Preferred stock, without par value; authorized 4,400 shares	566		566		Preferred stock, without par value; authorized 4,400 shares	566		566
Common stock ($0.001 par value; authorized 350,000 shares; issued and outstanding 164,009 and 165,057 shares) and additional paid-in capital		2,680		2,735
Common stock ($0.001 par value; authorized 350,000 shares; issued and outstanding 163,800 and 164,090 shares) and additional paid-in capital						Common stock ($0.001 par value; authorized 350,000 shares; issued and outstanding 163,800 and 164,090 shares) and additional paid-in capital	2,653		2,686
Retained earnings	Retained earnings	4,090		4,009		Retained earnings	4,566		4,309
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	332		43		Accumulated other comprehensive income (loss)	148		325

Total shareholders’ equity	Total shareholders’ equity	7,668		7,353		Total shareholders’ equity	7,933		7,886
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	78,357	$	69,172	Total liabilities and shareholders’ equity	$	85,121	$	81,479

See accompanying notes to consolidated financial statements.

4334

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

~~(Unaudited)~~


(In millions, except shares and per share amounts)		Three Months Ended September 30,				Nine Months Ended September 30,
										(Unaudited)	Three Months Ended March 31,
(In millions, except shares and per share amounts)	(In millions, except shares and per share amounts)	2020		2019		2020		2019		(In millions, except shares and per share amounts)	2021		2020
										Interest income:
Interest and fees on loans	Interest and fees on loans	$	505	$	581	$	1,551	$	1,731	Interest and fees on loans	$	488	$	532
Interest on money market investments	Interest on money market investments	2		8		11		26		Interest on money market investments	3		8
Interest on securities	Interest on securities	74		88		235		279		Interest on securities	71		82
Total interest income	Total interest income	581		677		1,797		2,036		Total interest income	562		622
Interest expense:	Interest expense:									Interest expense:
Interest on deposits	Interest on deposits	18		69		92		192		Interest on deposits	9		51
Interest on short- and long-term borrowings	Interest on short- and long-term borrowings	8		41		40		131		Interest on short- and long-term borrowings	8		23
Total interest expense	Total interest expense	26		110		132		323		Total interest expense	17		74
Net interest income	Net interest income	555		567		1,665		1,713		Net interest income	545		548
Provision for credit losses:	Provision for credit losses:									Provision for credit losses:
Provision for loan losses	Provision for loan losses	45		8		446		30		Provision for loan losses	(123)		240
Provision for unfunded lending commitments	Provision for unfunded lending commitments	10		2		35		5		Provision for unfunded lending commitments	(9)		18

Total provision for credit losses	Total provision for credit losses	55		10		481		35		Total provision for credit losses	(132)		258
Net interest income after provision for credit losses	Net interest income after provision for credit losses	500		557		1,184		1,678		Net interest income after provision for credit losses	677		290
Noninterest income:	Noninterest income:									Noninterest income:
Commercial account fees	Commercial account fees	32		31		93		90		Commercial account fees	32		31
Card fees	Card fees	21		24		61		70		Card fees	21		21
Retail and business banking fees	Retail and business banking fees	17		20		50		58		Retail and business banking fees	17		19
Loan-related fees and income	Loan-related fees and income	32		21		84		55		Loan-related fees and income	25		26
Capital markets and foreign exchange fees	Capital markets and foreign exchange fees	16		23		58		59		Capital markets and foreign exchange fees	15		24
Wealth management and trust fees		14		16		46		45
Wealth management fees										Wealth management fees	12		11

Other customer-related fees	Other customer-related fees	7		5		19		15		Other customer-related fees	11		11
Customer-related fees	Customer-related fees	139		140		411		392		Customer-related fees	133		143
Fair value and nonhedge derivative gain (loss)	Fair value and nonhedge derivative gain (loss)	8		(6)		(15)		(15)		Fair value and nonhedge derivative gain (loss)	18		(11)
Dividends and other investment income	Dividends and other investment income	6		10		17		33		Dividends and other investment income	7		8
Securities gains (losses), net	Securities gains (losses), net	4		2		(5)		0		Securities gains (losses), net	11		(6)
Total noninterest income	Total noninterest income	157		146		408		410		Total noninterest income	169		134
Noninterest expense:	Noninterest expense:									Noninterest expense:
Salaries and employee benefits	Salaries and employee benefits	269		273		810		835		Salaries and employee benefits	288		274
Occupancy, net	Occupancy, net	33		34		97		99		Occupancy, net	33		33
Furniture, equipment and software, net	Furniture, equipment and software, net	32		34		97		101		Furniture, equipment and software, net	32		32
Other real estate expense, net	Other real estate expense, net	0		(2)		0		(3)		Other real estate expense, net	0		0
Credit-related expense	Credit-related expense	6		2		16		16		Credit-related expense	6		4
Professional and legal services	Professional and legal services	12		10		34		33		Professional and legal services	20		12
Advertising	Advertising	7		6		13		17		Advertising	5		3
FDIC premiums	FDIC premiums	7		7		18		19		FDIC premiums	7		5
Other	Other	76		51		194		153		Other	44		45
Total noninterest expense	Total noninterest expense	442		415		1,279		1,270		Total noninterest expense	435		408
Income before income taxes	Income before income taxes	215		288		313		818		Income before income taxes	411		16
Income taxes	Income taxes	40		66		58		185		Income taxes	89		2
Net income	Net income	175		222		255		633		Net income	322		14

Preferred stock dividends	Preferred stock dividends	(8)		(8)		(25)		(25)		Preferred stock dividends	(8)		(8)

Net earnings applicable to common shareholders	Net earnings applicable to common shareholders	$	167	$	214	$	230	$	608	Net earnings applicable to common shareholders	$	314	$	6
Weighted average common shares outstanding during the period:	Weighted average common shares outstanding during the period:									Weighted average common shares outstanding during the period:
Basic shares (in thousands)	Basic shares (in thousands)	163,608		173,160		163,764		178,985		Basic shares (in thousands)	163,551		164,143
Diluted shares (in thousands)	Diluted shares (in thousands)	163,779		181,870		166,029		188,895		Diluted shares (in thousands)	163,887		172,998
Net earnings per common share:	Net earnings per common share:									Net earnings per common share:
Basic	Basic	$	1.01	$	1.23	$	1.40	$	3.38	Basic	$	1.90	$	0.04
Diluted	Diluted	1.01		1.17		1.38		3.20		Diluted	1.90		0.04

See accompanying notes to consolidated financial statements.

4435

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020

Net income for the period	Net income for the period	$	175	$	222	$	255	$	633	Net income for the period	$	322	$	14
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Net unrealized holding gains (losses) on investment securities	Net unrealized holding gains (losses) on investment securities	(13)		19		229		257		Net unrealized holding gains (losses) on investment securities	(164)		147

Net unrealized gains (losses) on other noninterest-bearing investments		2		(3)		(4)		(6)
Net unrealized gains on other noninterest-bearing investments										Net unrealized gains on other noninterest-bearing investments	2		2
Net unrealized holding gains (losses) on derivative instruments	Net unrealized holding gains (losses) on derivative instruments	(1)		6		75		45		Net unrealized holding gains (losses) on derivative instruments	(4)		69
Reclassification adjustment for (increase) decrease in interest income recognized in earnings on derivative instruments		(11)		1		(24)		3
Reclassification to earnings for termination of pension plan		0		0		13		0
Reclassification adjustment for increase in interest income recognized in earnings on derivative instruments										Reclassification adjustment for increase in interest income recognized in earnings on derivative instruments	(11)		(2)

Other comprehensive income (loss)	Other comprehensive income (loss)	(23)		23		289		299		Other comprehensive income (loss)	(177)		216
Comprehensive income	Comprehensive income	$	152	$	245	$	544	$	932	Comprehensive income	$	145	$	230

See accompanying notes to consolidated financial statements.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


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

Balance at June 30, 2020		$	566	163,978	$	0			$	2,675				$	3,979			$	355					$	7,575
Balance at December 31, 2020																						Balance at December 31, 2020	$	566		164,090	$	0	$	2,686	$	4,309		$	325	$	7,886
Net income for the period	Net income for the period										175									175		Net income for the period									322					322
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax															(23)				(23)		Other comprehensive loss, net of tax												(177)		(177)

Net activity under employee plans and related tax benefits				31			5													5
Dividends on preferred stock											(9)									(9)
Dividends on common stock, $0.34 per share											(56)									(56)
Change in deferred compensation											1									1
Balance at September 30, 2020		$	566	164,009	$	0	$	2,680			$	4,090				$	332			$	7,668

Balance at June 30, 2019		$	566	176,935	$	0	$	3,271			$	3,737				$	25			$	7,599
Net income for the period											222									222
Other comprehensive income, net of tax																24				24

Bank common stock repurchased	Bank common stock repurchased			(6,638)			(275)													(275)		Bank common stock repurchased				(1,012)			(50)							(50)

Net activity under employee plans and related tax benefits	Net activity under employee plans and related tax benefits			76			6													6		Net activity under employee plans and related tax benefits				722			17							17
Dividends on preferred stock	Dividends on preferred stock										(8)									(8)		Dividends on preferred stock									(8)					(8)
Dividends on common stock, $0.34 per share	Dividends on common stock, $0.34 per share										(60)									(60)		Dividends on common stock, $0.34 per share									(57)					(57)
Change in deferred compensation											1									1
Balance at September 30, 2019		$	566	170,373	$	0	$	3,002			$	3,892				$	49			$	7,509

Balance at March 31, 2021																						Balance at March 31, 2021	$	566		163,800	$	0	$	2,653	$	4,566		$	148	$	7,933

Balance at December 31, 2019																						Balance at December 31, 2019	$	566		165,057	$	0	$	2,735	$	4,009		$	43	$	7,353
Net income for the period																						Net income for the period									14					14
Other comprehensive income, net of tax																						Other comprehensive income, net of tax												216		216
Cumulative effect adjustment, adoption of ASU 2016-13, Credit Losses: Measurement of Credit Losses on Financial Instruments																						Cumulative effect adjustment, adoption of ASU 2016-13, Credit Losses: Measurement of Credit Losses on Financial Instruments									20					20
Bank common stock repurchased																						Bank common stock repurchased				(1,669)			(75)							(75)
Net shares issued from stock warrant exercises																						Net shares issued from stock warrant exercises				1
Net activity under employee plans and related tax benefits																						Net activity under employee plans and related tax benefits				463			8							8
Dividends on preferred stock																						Dividends on preferred stock									(8)					(8)
Dividends on common stock, $0.34 per share																						Dividends on common stock, $0.34 per share									(56)					(56)

Balance at March 31, 2020																						Balance at March 31, 2020	$	566		163,852	$	0	$	2,668	$	3,979		$	259	$	7,472

~~Table of Contents~~

(In millions, except shares
and per share amounts) Preferred
stock Common stock Accumulated paid-in capital Retained earnings Accumulated other
comprehensive income (loss) Total
shareholders’ equity
Shares
(in thousands)
Amount
Balance at December 31, 2019 $ 566 165,057 $ 0 $ 2,735 $ 4,009 $ 43 $ 7,353
Net income for the period 255 255
Other comprehensive income, net of tax 289 289
Cumulative effect adjustment, adoption of ASU 2016-13, Credit Losses: Measurement of Credit Losses on Financial Instruments
20 20
Bank common stock repurchased (1,680) (75) (75)
Net shares issued from stock warrant exercises 1
Net activity under employee plans and related tax benefits 631 20 20
Dividends on preferred stock (25) (25)
Dividends on common stock, $1.02
per share
(169) (169)
Balance at September 30, 2020 $ 566 164,009 $ 0 $ 2,680 $ 4,090 $ 332 $ 7,668
Balance at December 31, 2018 $ 566 187,554 $ 0 $ 3,806 $ 3,456 $ (250) $ 7,578
Net income for the period 633 633
Other comprehensive income, net of tax 299 299
Cumulative effect adjustment, adoption of ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities
(3) (3)
Bank common stock repurchased (18,001) (826) (826)
Net shares issued from stock warrant exercises 8
Net activity under employee plans and related tax benefits 812 22 22
Dividends on preferred stock (25) (25)
Dividends on common stock, $0.94
per share
(169) (169)
Balance at September 30, 2019 $ 566 170,373 $ 0 $ 3,002 $ 3,892 $ 49 $ 7,509

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

(In millions) Nine Months Ended
September 30,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period $ 255 $ 633
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 481 35
Depreciation and amortization 75 143
Share-based compensation 22 23
Deferred income tax benefit (97) (2)
Net increase in trading securities (16) (174)
Net increase in loans held for sale (2) (77)
Change in other liabilities 31 (66)
Change in other assets (185) (146)
Other, net (16) (23)
Net cash provided by operating activities 548 346
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in money market investments (2,433) 426
Proceeds from maturities and paydowns of investment securities held-to-maturity 250 311
Purchases of investment securities held-to-maturity (250) (195)
Proceeds from sales, maturities and paydowns of investment securities available-for-sale 3,198 2,222
Purchases of investment securities available-for-sale (3,907) (1,271)
Net change in loans and leases (6,004) (2,085)
Purchases and sales of other noninterest-bearing investments 56 83
Purchases of premises and equipment (123) (94)
Other, net 32 0
Net cash used in investing activities (9,181) (603)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 10,008 2,039
Net change in short-term funds borrowed (801) (1,074)
Proceeds from the issuance of long-term debt 0 497
Redemption of long-term debt (429) 0
Proceeds from the issuance of common stock 5 8
Dividends paid on common and preferred stock (195) (196)
Bank common stock repurchased (76) (826)
Other, net (8) (9)
Net cash provided by financing activities 8,504 439
Net increase (decrease) in cash and due from banks (129) 182
Cash and due from banks at beginning of period 705 614
Cash and due from banks at end of period $ 576 $ 796
Cash paid for interest $ 164 $ 315
Net cash paid for income taxes 148 179
Noncash activities are summarized as follows:
Loans held for investment transferred to other real estate owned 2 7
Loans held for investment reclassified to loans held for sale, net (21) 63

See accompanying notes to consolidated financial statements.

4836

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(In millions)	Three Months Ended March 31,
		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period		$	322	$	14
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses		(132)		258
Depreciation and amortization		(3)		45
Share-based compensation		14		13
Deferred income tax expense (benefit)		70		(46)
Net decrease in trading securities		76		22
Net increase in loans held for sale		(3)		(18)
Change in other liabilities		(54)		(13)
Change in other assets		212		(120)
Other, net		(18)		(2)
Net cash provided by operating activities		484		153
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in money market investments		(2,903)		(547)
Proceeds from maturities and paydowns of investment securities held-to-maturity		167		24
Purchases of investment securities held-to-maturity		(114)		(17)
Proceeds from sales, maturities and paydowns of investment securities available-for-sale		1,370		828
Purchases of investment securities available-for-sale		(2,546)		(1,164)
Net change in loans and leases		56		(1,211)
Purchases and sales of other noninterest-bearing investments		12		(29)
Purchases of premises and equipment		(53)		(28)

Other, net		13		19
Net cash used in investing activities		(3,998)		(2,125)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		4,200		433
Net change in short-term funds borrowed		(540)		1,712






Proceeds from the issuance of common stock		11		2
Dividends paid on common and preferred stock		(66)		(66)
Bank common stock repurchased		(50)		(75)
Other, net		(8)		(9)
Net cash provided by financing activities		3,547		1,997
Net increase in cash and due from banks		33		25
Cash and due from banks at beginning of period		543		705
Cash and due from banks at end of period		$	576	$	730
Cash paid for interest		$	22	$	88
Net cash paid for income taxes		0		1
Noncash activities are summarized as follows:
Loans held for investment transferred to other real estate owned		1		0
Loans held for investment reclassified to loans held for sale, net		(7)		7

See accompanying notes to consolidated financial statements.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~September 30, 2020~~March 31, 2021

1. BASIS OF PRESENTATION

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

Operating results for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ are not necessarily indicative of the results that may be expected in future periods. In preparing the consolidated financial statements, we are required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated balance sheet at December 31, ~~2019~~2020 is from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in ~~the Bank’s 2019 Annual Report on~~our 2020 Form 10-K. Certain prior period amounts have been reclassified to conform with the current period presentation. These reclassifications did not affect net income or shareholders’ equity. Additionally, effective October 1, 2019, we made certain financial reporting changes and reclassifications to noninterest income in our Consolidated Statements of Income. These changes and reclassifications were adopted on a retrospective basis. The changes and reclassifications reflect changes only to noninterest income in the Consolidated Statements of Income and do not impact net income, net interest income or noninterest expense.

Zions Bancorporation, N.A. is a commercial bank headquartered in Salt Lake City, Utah. ~~The Bank provides~~We provide a ~~full~~wide range of banking products and related services in 11 Western and Southwestern states through 7 separately managed “affiliates,” or “affiliate banks,” each with its own local branding and ~~branded units as follows:~~management team, including Zions Bank, in Utah, Idaho and Wyoming; Amegy Bank (“Amegy”), in Texas; California Bank & Trust (“CB&T”); National Bank of Arizona (“NBAZ”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; and The Commerce Bank of Washington (“TCBW”) which operates under that name in Washington and under the name The Commerce Bank of Oregon in Oregon.

4938

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

2. RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

Accounting Standard Updates

Description

Date of adoption

Effect on the financial statements or other significant matters

Updates adopted by the Bank during 2020

ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference

Rate Reform on Financial Reporting

As part of reference rate reform, the London Interbank Offered Rate ~~("LIBOR"~~(“LIBOR”) is expected to be discontinued ~~by December 31, 2021~~ and ~~is being~~ replaced by observable or transaction-based alternative reference rates. This ASU addresses certain operational accounting concerns of modifying contracts such as debt, lease, and derivative agreements that reference LIBOR, or another rate, that is expected to be discontinued due to reference rate reform.

The ASU provides temporary optional expedients and exceptions to the accounting requirements for contract modifications for contracts that reference LIBOR. This ASU also provides for a one-time election to sell or transfer to available-for-sale or trading certain qualifying held-to-maturity ~~("HTM"~~(“HTM”) debt securities. Additionally, this guidance provides various optional expedients for hedging relationships affected by reference rate reform.

April 1, 2020

We adopted ASU 2020-04 on April 1, 2020; the impact upon adoption was not significant as no practical expedients were applied in 2020 or in the current period, but will be applied in future periods.

To date, ~~the Bank has~~we have identified a significant number of contracts referencing LIBOR across various business units and ~~contract types.~~contracts. Additionally, ~~the Bank’s~~our designated hedging relationships utilize LIBOR-indexed derivatives and hedge the LIBOR exposure of floating-rate commercial loans and ~~the Bank’s~~our fixed-rate debt. Remediation of these LIBOR exposures will constitute a significant operational effort. While the full impact of reference rate reform is still being determined, the application of the ASU and its practical expedients will significantly reduce the operational and financial statement impact of ~~the Bank’s~~our remediation efforts.

~~ASU 2016-13,~~

~~Credit Losses~~

~~(Topic 326):~~

~~Measurement of~~

~~Credit Losses on~~

~~Financial~~

~~Instruments and subsequent related ASUs~~

This ASU, and subsequent updates, significantly changes how entities will measure credit losses for virtually all financial assets and certain other instruments that are not measured at fair value through net income that have the contractual right to receive cash. The update replaces the “incurred loss” approach with a current expected credit loss ("CECL") model for instruments such as loans and HTM securities that are measured at amortized cost. The ASU requires credit losses relating to available-for sale (“AFS”) debt securities to be recorded through an allowance for credit loss (“ACL”) rather than a reduction of the carrying amount and replaces the historically required other-than-temporary impairment (“OTTI”) analysis. It also changes the accounting for purchased credit-impaired debt securities and loans.

The ASU retains many of the current disclosure requirements in U.S. GAAP and expands other disclosure requirements. The new guidance is effective for calendar year-end public companies beginning January 1, 2020.

~~January 1, 2020~~

~~We adopted~~ ~~ASU 2016-13~~ ~~and its subsequent updates on January 1, 2020; the impact upon adoption was an after-tax increase to retained earnings of approximately $20 million.~~

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~Accounting Standard Updates~~

~~Description~~

~~Date of adoption~~

~~Effect on the financial statements or other significant matters~~

~~Updates adopted by the Bank during 2020~~

~~ASU 2017-04,~~

~~Intangibles –~~

~~Goodwill and~~

~~Other (Topic 350):~~

~~Simplifying the~~

~~Test for Goodwill~~

~~Impairment~~

This ASU removes the requirements in step two of the current goodwill impairment model, eliminating the requirement to calculate and compare the implied fair value of the reporting entity with the carrying amount of that entity, including goodwill, to measure any impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its implied fair value of goodwill (i.e., measure the charge based on step one of the current guidance).

The ASU also continues to allow entities to perform an optional qualitative goodwill impairment assessment before determining whether to proceed to the quantitative step one. The Update is effective for the Bank as of January 1, 2020. Early adoption is allowed for any goodwill impairment test performed after January 1, 2017.

~~January 1, 2020~~

~~We adopted ASU 2017-04 on January 1, 2020; the impact upon adoption was not significant. The transition and adoption provisions were applied prospectively.~~

5139

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

3. FAIR VALUE

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For a discussion of ~~the Bank’s~~our valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K.

Quantitative Disclosure by Fair Value Hierarchy

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


(In millions)	(In millions)	September 30, 2020								(In millions)	March 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
ASSETS	ASSETS									ASSETS
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:
U.S. Treasury, agencies and corporations	U.S. Treasury, agencies and corporations	$	199	$	13,068	$	0	$	13,267	U.S. Treasury, agencies and corporations	$	168	$	14,831	$	0	$	14,999
Municipal securities	Municipal securities			1,320				1,320		Municipal securities			1,570				1,570

Other debt securities	Other debt securities			75				75		Other debt securities			75				75
Total Available-for-sale	Total Available-for-sale	199		14,463		0		14,662		Total Available-for-sale	168		16,476		0		16,644
Trading account	Trading account	26		172				198		Trading account	14		175				189
Other noninterest-bearing investments:	Other noninterest-bearing investments:									Other noninterest-bearing investments:
Bank-owned life insurance	Bank-owned life insurance			534				534		Bank-owned life insurance			534				534
Private equity investments1		6				81		87
Private equity investments										Private equity investments					83		83
Other assets:	Other assets:									Other assets:
Agriculture loan servicing and interest-only strips	Agriculture loan servicing and interest-only strips					17		17		Agriculture loan servicing and interest-only strips					15		15
Deferred compensation plan assets	Deferred compensation plan assets	109						109		Deferred compensation plan assets	133						133
Derivatives:	Derivatives:									Derivatives:

Derivatives designated as hedges										Derivatives designated as hedges			15				15
Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Interest rate	Interest rate			464				464		Interest rate			247				247

Foreign exchange	Foreign exchange	3						3		Foreign exchange	3						3
Total Assets	Total Assets	$	343	$	15,633	$	98	$	16,074	Total Assets	$	318	$	17,447	$	98	$	17,863
LIABILITIES	LIABILITIES									LIABILITIES
Securities sold, not yet purchased	Securities sold, not yet purchased	$	71	$	0	$	0	$	71	Securities sold, not yet purchased	$	142	$	0	$	0	$	142
Other liabilities:	Other liabilities:									Other liabilities:
Derivatives:	Derivatives:									Derivatives:

Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Interest rate	Interest rate			34				34		Interest rate			66				66

Foreign exchange	Foreign exchange	2						2		Foreign exchange	3						3

Total Liabilities	Total Liabilities	$	73	$	34	$	0	$	107	Total Liabilities	$	145	$	66	$	0	$	211

1 ~~The level 1 PEI amount relates to the portion of our SBIC investments that is now publicly traded.~~

5240

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


(In millions)	(In millions)	December 31, 2019								(In millions)	December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
ASSETS	ASSETS									ASSETS
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:
U.S. Treasury, agencies and corporations	U.S. Treasury, agencies and corporations	$	25	$	12,356	$	0	$	12,381	U.S. Treasury, agencies and corporations	$	192	$	13,944	$	0	$	14,136
Municipal securities	Municipal securities			1,319				1,319		Municipal securities			1,420				1,420

Other debt securities	Other debt securities			25				25		Other debt securities			175				175

Total Available-for-sale	Total Available-for-sale	25		13,700		0		13,725		Total Available-for-sale	192		15,539		0		15,731
Trading account	Trading account	65		117				182		Trading account	111		155				266
Other noninterest-bearing investments:	Other noninterest-bearing investments:									Other noninterest-bearing investments:
Bank-owned life insurance	Bank-owned life insurance			525				525		Bank-owned life insurance			532				532
Private equity investments1		9				107		116
Private equity investments										Private equity investments	0				80		80
Other assets:	Other assets:									Other assets:
Agriculture loan servicing and interest-only strips	Agriculture loan servicing and interest-only strips					18		18		Agriculture loan servicing and interest-only strips					16		16
Deferred compensation plan assets	Deferred compensation plan assets	113						113		Deferred compensation plan assets	120						120
Derivatives:	Derivatives:									Derivatives:

Derivatives designated as hedges										Derivatives designated as hedges			3				3
Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Interest rate	Interest rate			149				149		Interest rate			411				411

Foreign exchange	Foreign exchange	4						4		Foreign exchange	4						4
Total Assets	Total Assets	$	216	$	14,491	$	125	$	14,832	Total Assets	$	427	$	16,640	$	96	$	17,163
LIABILITIES	LIABILITIES									LIABILITIES
Securities sold, not yet purchased	Securities sold, not yet purchased	$	66	$	0	$	0	$	66	Securities sold, not yet purchased	$	61	$	0	$	0	$	61
Other liabilities:	Other liabilities:									Other liabilities:
Derivatives:	Derivatives:									Derivatives:

Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Interest rate	Interest rate			15				15		Interest rate			34				34

Foreign exchange	Foreign exchange	4						4		Foreign exchange	4						4

Total Liabilities	Total Liabilities	$	70	$	15	$	0	$	85	Total Liabilities	$	65	$	34	$	0	$	99

1 ~~The level 1 PEI amount relates to the portion of our SBIC investments that is now publicly traded.~~

Level 3 Valuations

~~The Bank’s~~Our Level 3 holdings include private equity investments (“PEIs”), agriculture loan servicing, and interest-only strips. For additional information regarding the financial instruments measured under Level 3, and the methods and significant assumptions used to estimate their fair value, see Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K.

Subsequent to March 31, 2021, one of our SBIC investments measured under Level 3, Recursion Pharmaceuticals, Inc., completed an initial public offering (“IPO”) at $18 per share. This resulted in our holding 2,097,647 shares of common stock in our SBIC. As of March 31, 2021, this investment had a carrying value of $14 million, or $6.71 per share. As of April 30, 2021, the unrealized gain for this investment was approximately $56 million. This unrealized gain may significantly change, depending on the fair value of the underlying shares at the end of the second quarter of 2021. Additionally, our shares are subject to a 180 day lock-up period, and therefore, we will continue to record unrealized gains/losses related to this investment at each quarter end through the lock-up period, and potentially longer, depending on when we ultimately sell our shares.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~Reconciliation~~Rollforward of Level 3 Fair Value Measurements

The following ~~reconciles~~schedule presents the ~~beginning and ending balances of~~changes to the assets and liabilities ~~that are~~ measured at fair value by class on a recurring basis using Level 3 inputs:


		Level 3 Instruments																Level 3 Instruments
		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30, 2020				September 30, 2019				September 30, 2020				September 30, 2019									March 31, 2021			March 31, 2020
(In millions)	(In millions)	Private equity investments		Ag loan svcg and int-only strips		Private equity investments		Ag loan svcg and int-only strips		Private equity investments		Ag loan svcg and int-only strips		Private equity investments		Ag loan svcg and int-only strips											(In millions)	Private equity investments		Ag loan servicing and int-only strips		Private equity investments		Ag loan servicing and int-only strips

Balance at beginning of period	Balance at beginning of period	$	77	$	17	$	105	$	19	$	107	$	18	$	102	$	18										Balance at beginning of period	$	80	$	16	$	107	$	18

Securities gains (losses), net		1		0		1		0		(8)		0		0		0
Unrealized securities gains (losses), net																				Unrealized securities gains (losses), net	1	0		(20)	0
Other noninterest income (expense)	Other noninterest income (expense)	0		0		0		0		0		(1)		0		1											Other noninterest income (expense)	0		(1)		0		(1)
Purchases	Purchases	3		0		1		0		7		0		5		0											Purchases	4		0		1		0
Cost of investments sold																				Cost of investments sold	(2)	0		(9)	0

Other		0		0		0		0		(25)		0		0		0
Balance at end of period	Balance at end of period	$	81	$	17	$	107	$	19	$	81	$	17	$	107	$	19										Balance at end of period	$	83	$	15	$	79	$	17

The ~~reconciliation~~schedule of Level 3 instruments includes 0$1 million in realized ~~gains or~~ losses in the income statement ~~of income~~ during the three months ended ~~September 30, 2020,~~March 31, 2021, and $9$15 million in realized ~~losses~~gains during the same ~~period in 2019. During the nine months ended September 30, realized gains in the statement of income was $15 million in 2020 and $9 million in realized losses during the same period in 2019.~~prior year period.

Nonrecurring Fair Value Measurements

~~Included in~~The following schedule presents the ~~balance sheet amounts are the following amounts~~balances of assets at period end that had fair value changes measured on a nonrecurring basis. During the three months ended March 31, 2021 and 2020, we had less than $1 million of gains or losses from fair value changes.


(In millions)	(In millions)	Fair value at September 30, 2020								Fair value at December 31, 2019								(In millions)	Fair value at March 31, 2021								Fair value at December 31, 2020
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
ASSETS	ASSETS																	ASSETS
Private equity investments	Private equity investments	$	0	$	0	$	1	$	1	$	0	$	0	$	1	$	1	Private equity investments	$	0	$	0	$	0	$	0	$	0	$	0	$	1	$	1
Collateral-dependent loans	Collateral-dependent loans	0		1		0		1		0		0		0		0		Collateral-dependent loans	0		4		0		4		0		14		0		14
Other real estate owned	Other real estate owned	0		4		0		4		0		0		0		0		Other real estate owned	0		0		0		0		0		1		0		1
Total	Total	$	0	$	5	$	1	$	6	$	0	$	0	$	1	$	1	Total	$	0	$	4	$	0	$	4	$	0	$	15	$	1	$	16

The previous schedule of fair values may not be current as of the dates indicated, but rather as of the date the fair value change occurred, such as a charge for impairment. Accordingly, carrying values may not equal current fair value.

Gains (losses) from fair value changes
(In millions) Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
ASSETS
Private equity investments $ 0 $ (1) $ 0 $ (1)
Collateral-dependent loans 1 0 1 (9)
Other real estate owned 0 0 0 (1)
Total $ 1 $ (1) $ 1 $ (11)

During the three months ended ~~September 30,~~March 31, we recognized less than $1 ~~million and $2~~ million of net gains in ~~2020~~2021 and ~~2019~~2020 from the sale of other real estate owned (“OREO”) ~~properties. During the nine months ended September 30, we recognized approximately $1 million and $3 million of net gains in 2020 and 2019 from the sale of OREO~~ properties that had a carrying value, at the time of sale, of $3$1 million and $4$2 million during these same periods.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Prior to their sale, we recognized ~~an insignificant amount of~~0 impairment on these properties during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

Private equity investments (“PEIs”) carried at cost were measured at fair value for impairment purposes according to the methodology previously discussed for these investments. Amounts of PEIs carried at cost were $6 million at March 31, 2021 and $8 million at ~~both September 30, 2020 and~~ December 31, ~~2019.~~2020. Amounts of other noninterest-bearing investments carried at cost were ~~$108~~$109 million at ~~September 30, 2020~~March 31, 2021 and ~~$157 million at~~ December 31, ~~2019,~~2020, which were comprised of Federal Reserve and ~~Federal Home Loan Bank (“FHLB”)~~FHLB stock. Private equity investments accounted for using the equity method were ~~$50~~$68 million at ~~September 30, 2020~~March 31, 2021 and ~~$45~~$61 million at December 31, ~~2019.~~2020.

Loans that are collateral-dependent were measured at the lower of amortized cost or the fair value of the collateral. OREO was measured initially at fair value based on collateral appraisals at the time of transfer and subsequently at the lower of cost or fair value. For additional information regarding the measurement of fair value for impaired loans, collateral-dependent loans, and OREO, see Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Fair Value of Certain Financial Instruments

Following is a summary of the carrying values and estimated fair values of certain financial instruments:


		September 30, 2020					December 31, 2019						March 31, 2021					December 31, 2020
(In millions)	(In millions)	Carrying value		Estimated fair value		Level	Carrying value		Estimated fair value		Level	(In millions)	Carrying value		Estimated fair value		Level	Carrying value		Estimated fair value		Level
Financial assets:	Financial assets:											Financial assets:
HTM investment securities	HTM investment securities	$	592	$	596	2	$	592	$	597	2	HTM investment securities	$	583	$	584	2	$	636	$	640	2
Loans and leases (including loans held for sale), net of allowance	Loans and leases (including loans held for sale), net of allowance	53,981		54,154		3	48,343		47,958		3	Loans and leases (including loans held for sale), net of allowance	52,903		53,391		3	52,780		53,221		3
Financial liabilities:	Financial liabilities:											Financial liabilities:
Time deposits	Time deposits	3,451		3,471		2	4,719		4,725		2	Time deposits	2,209		2,219		2	2,588		2,603		2

Other short-term borrowings												Other short-term borrowings	1		1		2	0		0		2
Long-term debt	Long-term debt	1,347		1,332		2	1,723		1,751		2	Long-term debt	1,299		1,333		2	1,336		1,346		2

This summary excludes financial assets and liabilities for which carrying value approximates fair value and financial instruments that are recorded at fair value on a recurring basis. For additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value, see Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K.

4. OFFSETTING ASSETS AND LIABILITIES

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


		September 30, 2020													March 31, 2021
(In millions)	(In millions)							Gross amounts not offset in the balance sheet						(In millions)							Gross amounts not offset in the balance sheet
Description	Description	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments		Cash collateral received/pledged		Net amount		Description	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments		Cash collateral received/pledged		Net amount
Assets:	Assets:													Assets:
Federal funds sold and security resell agreements	Federal funds sold and security resell agreements	$	2,809	$	(5)	$	2,804	$	0	$	0	$	2,804	Federal funds sold and security resell agreements	$	1,315	$	0	$	1,315	$	0	$	0	$	1,315
Derivatives (included in other assets)	Derivatives (included in other assets)	467		0		467		(1)		(1)		465		Derivatives (included in other assets)	265		0		265		(17)		1		249
Total assets	Total assets	$	3,276	$	(5)	$	3,271	$	(1)	$	(1)	$	3,269	Total assets	$	1,580	$	0	$	1,580	$	(17)	$	1	$	1,564
Liabilities:	Liabilities:													Liabilities:
Federal funds purchased and other short-term borrowings	Federal funds purchased and other short-term borrowings	$	1,257	$	(5)	$	1,252	$	0	$	0	$	1,252	Federal funds purchased and other short-term borrowings	$	1,032	$	0	$	1,032	$	0	$	0	$	1,032
Derivatives (included in other liabilities)	Derivatives (included in other liabilities)	36		0		36		(1)		(30)		5		Derivatives (included in other liabilities)	71		0		71		(17)		(5)		49
Total Liabilities		$	1,293	$	(5)	$	1,288	$	(1)	$	(30)	$	1,257
Total liabilities														Total liabilities	$	1,103	$	0	$	1,103	$	(17)	$	(5)	$	1,081

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


		December 31, 2019													December 31, 2020
(In millions)	(In millions)							Gross amounts not offset in the balance sheet						(In millions)							Gross amounts not offset in the balance sheet
Description	Description	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments		Cash collateral received/pledged		Net amount		Description	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments		Cash collateral received/pledged		Net amount
Assets:	Assets:													Assets:
Federal funds sold and security resell agreements	Federal funds sold and security resell agreements	$	694	$	(210)	$	484	$	0	$	0	$	484	Federal funds sold and security resell agreements	$	6,457	$	(692)	$	5,765	$	0	$	0	$	5,765
Derivatives (included in other assets)	Derivatives (included in other assets)	153		0		153		(6)		0		147		Derivatives (included in other assets)	418		0		418		(3)		(3)		412
Total assets	Total assets	$	847	$	(210)	$	637	$	(6)	$	0	$	631	Total assets	$	6,875	$	(692)	$	6,183	$	(3)	$	(3)	$	6,177
Liabilities:	Liabilities:													Liabilities:
Federal funds purchased and other short-term borrowings	Federal funds purchased and other short-term borrowings	$	2,263	$	(210)	$	2,053	$	0	$	0	$	2,053	Federal funds purchased and other short-term borrowings	$	2,264	$	(692)	$	1,572	$	0	$	0	$	1,572
Derivatives (included in other liabilities)	Derivatives (included in other liabilities)	19		0		19		(6)		(10)		3		Derivatives (included in other liabilities)	38		0		38		(3)		(26)		9
Total Liabilities		$	2,282	$	(210)	$	2,072	$	(6)	$	(10)	$	2,056
Total liabilities														Total liabilities	$	2,302	$	(692)	$	1,610	$	(3)	$	(26)	$	1,581

Security repurchase and reverse repurchase (“resell”) agreements are offset, when applicable, in the balance sheet according to master netting agreements. Security repurchase agreements are included with “Federal funds purchased

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

and other short-term borrowings.” Derivative instruments may be offset under their master netting agreements; however, for accounting purposes, we present these items on a gross basis in ~~the Bank’s~~our balance sheet. See Note 7 for further information regarding derivative instruments.

5. INVESTMENTS

Investment Securities

~~Securities~~Investment securities are classified as HTM, AFS, or trading. HTM securities, which management has the intent and ability to hold until maturity, are carried at amortized cost. AFS securities are carried at fair value and unrealized gains and losses are reported as net increases or decreases to accumulated other comprehensive income (“AOCI”). Trading securities are carried at fair value with gains and losses recognized in current period earnings. The carrying values of our securities do not include accrued interest receivables of $51 million and ~~$58~~$54 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. These receivables are presented in the Consolidated Balance Sheet within the ~~Other Assets~~“Other Assets” line item.

~~The purchase premiums~~ See Note 5 of our 2020 Form 10-K for ~~callable debt securities classified as HTM or AFS are amortized at an effective yield~~more information related to ~~the earliest call date. The purchase premiums and discounts~~our accounting for ~~all other HTM and AFS securities are recognized in interest income over the contractual life of the security using the~~effective yield method. As principal repayments are received on securities, a proportionate amount of the related premium or discount is recognized in income so that the effective yield on the remaining portion of the security continues unchanged.investment securities. See also Note 3 of our ~~2019 Annual Report on~~2020 Form 10-K ~~discusses the~~for discussion on our process to estimate fair value for investment securities.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


		September 30, 2020									March 31, 2021
(In millions)	(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Held-to-maturity	Held-to-maturity									Held-to-maturity
Municipal securities	Municipal securities	$	592	$	4	$	0	$	596	Municipal securities	$	583	$	4	$	3	$	584
Available-for-sale	Available-for-sale									Available-for-sale
U.S. Treasury securities	U.S. Treasury securities	195		4		0		199		U.S. Treasury securities	205		0		37		168
U.S. Government agencies and corporations:	U.S. Government agencies and corporations:									U.S. Government agencies and corporations:
Agency securities	Agency securities	1,058		37		2		1,093		Agency securities	1,044		33		0		1,077
Agency guaranteed mortgage-backed securities	Agency guaranteed mortgage-backed securities	10,461		280		5		10,736		Agency guaranteed mortgage-backed securities	12,618		188		153		12,653
Small Business Administration loan-backed securities	Small Business Administration loan-backed securities	1,277		1		39		1,239		Small Business Administration loan-backed securities	1,134		0		33		1,101
Municipal securities	Municipal securities	1,254		66		0		1,320		Municipal securities	1,520		55		5		1,570
Other debt securities	Other debt securities	75		0		0		75		Other debt securities	75		0		0		75
Total available-for-sale debt securities		14,320		388		46		14,662
Total available-for-sale										Total available-for-sale	16,596		276		228		16,644
Total investment securities	Total investment securities	$	14,912	$	392	$	46	$	15,258	Total investment securities	$	17,179	$	280	$	231	$	17,228


		December 31, 2019									December 31, 2020
(In millions)	(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Held-to-maturity	Held-to-maturity									Held-to-maturity
Municipal securities	Municipal securities	$	592	$	5	$	0	$	597	Municipal securities	$	636	$	5	$	1	$	640
Available-for-sale	Available-for-sale									Available-for-sale
U.S. Treasury securities	U.S. Treasury securities	25		0		0		25		U.S. Treasury securities	205		0		13		192
U.S. Government agencies and corporations:	U.S. Government agencies and corporations:									U.S. Government agencies and corporations:
Agency securities	Agency securities	1,301		5		4		1,302		Agency securities	1,051		40		0		1,091
Agency guaranteed mortgage-backed securities	Agency guaranteed mortgage-backed securities	9,518		83		42		9,559		Agency guaranteed mortgage-backed securities	11,439		262		8		11,693
Small Business Administration loan-backed securities	Small Business Administration loan-backed securities	1,535		1		41		1,495		Small Business Administration loan-backed securities	1,195		0		35		1,160
Municipal securities	Municipal securities	1,282		37		0		1,319		Municipal securities	1,352		68		0		1,420
Other debt securities	Other debt securities	25		0		0		25		Other debt securities	175		0		0		175
Total available-for-sale debt securities		13,686		126		87		13,725
Total available-for-sale										Total available-for-sale	15,417		370		56		15,731

Total investment securities	Total investment securities	$	14,278	$	131	$	87	$	14,322	Total investment securities	$	16,053	$	375	$	57	$	16,371

Maturities

The following schedule shows the amortized cost and weighted average yields of investment debt securities by contractual maturity of principal payments as of ~~September 30, 2020.~~March 31, 2021. Actual principal payments may differ from

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

contractual or expected principal payments because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


		September 30, 2020																					March 31, 2021
		Total debt investment securities				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years					Total debt investment securities				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years
(Dollar amounts in millions)	(Dollar amounts in millions)	Amortized cost		Avg yield		Amortized cost		Avg yield		Amortized cost		Avg yield		Amortized cost		Avg yield		Amortized cost		Avg yield		(Dollar amounts in millions)	Amortized cost		Avg yield		Amortized cost		Avg yield		Amortized cost		Avg yield		Amortized cost		Avg yield		Amortized cost		Avg yield

Held-to-maturity	Held-to-maturity																					Held-to-maturity
Municipal securities 1	Municipal securities 1	$	592	3.55	%	$	158	2.80	%	$	198	3.69	%	$	129	3.70	%	$	107	4.20	%	Municipal securities 1	$	583	2.98	%	$	117	2.06	%	$	180	3.36	%	$	169	2.89	%	$	117	3.45	%
Available-for-sale	Available-for-sale																					Available-for-sale
U.S. Treasury securities	U.S. Treasury securities	195		0.99		50		0.14		0		0		0		0		145		1.28		U.S. Treasury securities	205		0.99		50		0.07		0		0		0		0		155		1.28
U.S. Government agencies and corporations:	U.S. Government agencies and corporations:																					U.S. Government agencies and corporations:
Agency securities	Agency securities	1,058		2.37		0		0		151		1.01		392		2.57		515		2.62		Agency securities	1,044		2.14		0		0		385		1.38		264		2.59		395		2.57
Agency guaranteed mortgage-backed securities	Agency guaranteed mortgage-backed securities	10,461		2.05		1		4.40		284		1.49		774		1.79		9,402		2.09		Agency guaranteed mortgage-backed securities	12,618		1.72		0		0		373		1.46		734		1.71		11,511		1.73
Small Business Administration loan-backed securities	Small Business Administration loan-backed securities	1,277		1.46		0		0		33		1.27		146		1.50		1,098		1.46		Small Business Administration loan-backed securities	1,134		1.43		0		0		57		1.42		128		1.56		949		1.41
Municipal securities 1	Municipal securities 1	1,254		2.51		89		1.78		595		2.34		448		2.77		122		2.97		Municipal securities 1	1,520		2.33		101		1.98		638		2.41		509		2.26		272		2.40
Other debt securities	Other debt securities	75		2.22		0		0		0		0		60		2.03		15		3.00		Other debt securities	75		2.17		0		0		0		0		60		1.97		15		2.94
Total available-for-sale debt securities		14,320		2.05		140		1.21		1,063		1.89		1,820		2.18		11,297		2.05
Total available-for-sale securities																						Total available-for-sale securities	16,596		1.77		151		1.35		1,453		1.85		1,695		2.01		13,297		1.74
Total investment securities	Total investment securities	$	14,912	2.11	%	$	298	2.05	%	$	1,261	2.17	%	$	1,949	2.28	%	$	11,404	2.07	%	Total investment securities	$	17,179	1.82	%	$	268	1.66	%	$	1,633	2.02	%	$	1,864	2.09	%	$	13,414	1.76	%

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

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


		September 30, 2020													March 31, 2021
		Less than 12 months				12 months or more				Total					Less than 12 months				12 months or more				Total
(In millions)	(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity	Held-to-maturity													Held-to-maturity
Municipal securities	Municipal securities	$	0	$	55	$	0	$	16	$	0	$	71	Municipal securities	$	3	$	141	$	0	$	13	$	3	$	154

Available-for-sale	Available-for-sale													Available-for-sale

U.S. Treasury securities														U.S. Treasury securities	37		118		0		0		37		118
U.S. Government agencies and corporations:	U.S. Government agencies and corporations:													U.S. Government agencies and corporations:
Agency securities	Agency securities	1		68		1		63		2		131		Agency securities	0		114		0		2		0		116
Agency guaranteed mortgage-backed securities	Agency guaranteed mortgage-backed securities	3		704		2		201		5		905		Agency guaranteed mortgage-backed securities	152		5,852		1		135		153		5,987
Small Business Administration loan-backed securities	Small Business Administration loan-backed securities	0		19		39		1,141		39		1,160		Small Business Administration loan-backed securities	0		14		33		1,011		33		1,025
Municipal securities	Municipal securities	0		54		0		0		0		54		Municipal securities	5		326		0		0		5		326
Other	Other	0		50		0		0		0		50		Other	0		0		0		0		0		0

Total available-for-sale	Total available-for-sale	4		895		42		1,405		46		2,300		Total available-for-sale	194		6,424		34		1,148		228		7,572

Total investment securities	Total investment securities	$	4	$	950	$	42	$	1,421	$	46	$	2,371	Total investment securities	$	197	$	6,565	$	34	$	1,161	$	231	$	7,726

5845

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


		December 31, 2019													December 31, 2020
		Less than 12 months				12 months or more				Total					Less than 12 months				12 months or more				Total
(In millions)	(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity	Held-to-maturity													Held-to-maturity
Municipal securities	Municipal securities	$	0	$	73	$	0	$	45	$	0	$	118	Municipal securities	$	1	$	96	$	0	$	12	$	1	$	108

Available-for-sale	Available-for-sale													Available-for-sale
U.S. Treasury securities														U.S. Treasury securities	13		142		0		0		13		142
U.S. Government agencies and corporations:	U.S. Government agencies and corporations:													U.S. Government agencies and corporations:
Agency securities	Agency securities	2		222		2		359		4		581		Agency securities	0		6		0		2		0		8
Agency guaranteed mortgage-backed securities	Agency guaranteed mortgage-backed securities	4		1,173		38		3,215		42		4,388		Agency guaranteed mortgage-backed securities	7		1,197		1		179		8		1,376
Small Business Administration loan-backed securities	Small Business Administration loan-backed securities	1		172		40		1,215		41		1,387		Small Business Administration loan-backed securities	0		15		35		1,068		35		1,083
Municipal securities	Municipal securities	0		50		0		5		0		55		Municipal securities	0		19		0		0		0		19
Other	Other	0		0		0		0		0		0		Other	0		150		0		0		0		150

Total available-for-sale	Total available-for-sale	7		1,617		80		4,794		87		6,411		Total available-for-sale	20		1,529		36		1,249		56		2,778

Total investment securities	Total investment securities	$	7	$	1,690	$	80	$	4,839	$	87	$	6,529	Total investment securities	$	21	$	1,625	$	36	$	1,261	$	57	$	2,886

~~At September 30, 2020~~Approximately 162 and ~~December 31, 2019, respectively, 68 and 146~~119 HTM and ~~587~~1,062 and ~~849~~549 AFS investment securities were in an unrealized loss ~~position.~~position at March 31, 2021, and December 31, 2020, respectively.

Impairment

~~Ongoing Policy~~

We review investment securities quarterly on ~~a quarterly~~an individual security basis for the presence of impairment. For ~~AFS~~additional information on our policy and impairment evaluation process for investment securities, ~~we assess whether impairment is present on an individual security basis when the fair value~~see Note 5 of a debt security is less than its amortized cost basis at the balance sheet date. When determining if the fair value of an investment is less than the amortized cost basis we have elected to exclude accrued interest from the amortized cost basis of the investment. If we have an intent to sell an identified security, or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, then we recognize an impairment equal to any existing allowance written off against the security.our 2020 Form 10-K.

If we do not have the intent to sell a security, and it is more likely than not that we will not be required to sell a security prior to recovery of its amortized cost basis, then we determine whether there is any impairment attributable to credit-related factors. We analyze certain factors, primarily internal and external credit ratings, to determine if the decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. If a credit impairment is determined to exist, then we measure the amount of credit loss and recognize an allowance for the credit loss. In measuring the credit loss, we generally compare the present value of cash flows expected to be collected from the security to the amortized cost basis of the security. These cash flows are credit adjusted using, among other things, assumptions for default probability and loss severity. Certain other unobservable inputs such as prepayment rate assumptions are also utilized. In addition, certain internal models may be utilized. To determine the credit-related portion of impairment we use the security-specific effective interest rate when estimating the present value of cash flows. If the present value of cash flows is less than the amortized cost basis of the security, then this amount is recorded as an allowance for credit loss, limited to the amount that the fair value is less than the amortized cost basis (i.e., the credit impairment cannot result in the security being carried at an amount lower than its fair value). The assumptions used to estimate the expected cash flows depends on the particular asset class, structure and credit rating of the security. Declines in fair value that are not recorded in the allowance are recorded in other comprehensive income, net of applicable taxes.

AFS Impairment Conclusions

~~The Bank~~We did not recognize any impairment on ~~its~~our AFS investment securities portfolio during the first ~~nine months~~quarter of ~~2020.~~2021. Unrealized losses relate to changes in interest rates subsequent to purchase and are not attributable to credit. At ~~September 30, 2020,~~March 31, 2021, we had not initiated any sales of AFS securities, nor did we have an intent to sell any identified securities with unrealized ~~losses, and we~~losses. We do not believe it is more likely than not we would be required to sell such securities before recovery of their amortized cost basis.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

HTM ~~Credit Quality~~Impairment Conclusions

For HTM securities, the ~~allowance for credit losses ("ACL")~~ACL is assessed consistent with the approach ~~discussed~~described in Note 6 for loans carried at amortized cost. The ACL on HTM securities was less than $1 million at ~~September 30, 2020.~~March 31, 2021. All HTM securities were risk-graded as ~~"pass"~~“pass” in terms of credit quality and none were past due as of ~~September 30, 2020.~~March 31, 2021. The amortized cost basis of HTM securities categorized by year of issuance is summarized as follows:


		September 30, 2020															March 31, 2021
		Amortized cost basis by year of issuance															Amortized cost basis by year of issuance
(In millions)	(In millions)	2020		2019		2018		2017		2016		Prior		Total Securities		(In millions)	2021		2020		2019		2018		2017		Prior		Total Securities
Held-to-maturity	Held-to-maturity	$	116	$	18	$	1	$	34	$	183	$	240	$	592	Held-to-maturity	$	114	$	138	$	18	$	0	$	10	$	303	$	583

Securities Gains and Losses Recognized in Income

The following summarizes gains and losses that were recognized in the statement of income:


		Three Months Ended September 30,								Nine Months Ended September 30,										Three Months Ended March 31,
		2020				2019				2020				2019							2021			2020
(In millions)	(In millions)	Gross gains		Gross losses		Gross gains		Gross losses		Gross gains		Gross losses		Gross gains		Gross losses							(In millions)	Gross gains		Gross losses		Gross gains		Gross losses
																		(In millions)	Gross gains	Gross losses	Gross gains	Gross losses

Other noninterest-bearing investments	Other noninterest-bearing investments	$	5	$	1	$	2	$	0	$	13	$	18	$	7	$	7						Other noninterest-bearing investments	$	14	$	3	$	5	$	11

Net gains (losses) 1	Net gains (losses) 1			$	4			$	2			$	(5)			$	0						Net gains (losses) 1			$	11			$	(6)

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

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Interest income by security type is as follows:


		Three Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
(In millions)	(In millions)	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total		(In millions)	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total
Investment securities:	Investment securities:													Investment securities:
Held-to-maturity	Held-to-maturity	$	2	$	3	$	5	$	3	$	3	$	6	Held-to-maturity	$	3	$	2	$	5	$	2	$	3	$	5
Available-for-sale	Available-for-sale	61		6		67		74		7		81		Available-for-sale	57		7		64		69		6		75
Trading	Trading	0		2		2		0		1		1		Trading	0		2		2		0		2		2
Total securities	Total securities	$	63	$	11	$	74	$	77	$	11	$	88	Total securities	$	60	$	11	$	71	$	71	$	11	$	82

Nine Months Ended September 30,
2020 2019
(In millions) Taxable Nontaxable Total Taxable Nontaxable Total
Investment securities:
Held-to-maturity $ 7 $ 8 $ 15 $ 7 $ 11 $ 18
Available-for-sale 196 19 215 238 19 257
Trading 0 5 5 0 4 4
Total $ 203 $ 32 $ 235 $ 245 $ 34 $ 279

Investment securities with a carrying value of ~~$2.2~~approximately $2.1 billion and ~~$2.0~~$2.3 billion at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, were pledged to secure public and trust deposits, advances, and for other purposes as required by law. Securities are also pledged as collateral for security repurchase agreements.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

6. LOANS, LEASES, AND ALLOWANCE FOR CREDIT LOSSES

Loans, Leases, and Loans Held for Sale

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


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Loans held for sale	Loans held for sale	$	89	$	129	Loans held for sale	$	77	$	81
Commercial:	Commercial:					Commercial:
Commercial and industrial	Commercial and industrial	$	13,543	$	14,760	Commercial and industrial	$	12,843	$	13,444
PPP	PPP	6,810		0		PPP	6,465		5,572
Leasing	Leasing	319		334		Leasing	310		320
Owner-occupied	Owner-occupied	8,136		7,901		Owner-occupied	8,112		8,185
Municipal	Municipal	2,706		2,393		Municipal	3,234		2,951
Total commercial	Total commercial	31,514		25,388		Total commercial	30,964		30,472
Commercial real estate:	Commercial real estate:					Commercial real estate:
Construction and land development	Construction and land development	2,298		2,211		Construction and land development	2,443		2,345
Term	Term	9,729		9,344		Term	9,617		9,759
Total commercial real estate	Total commercial real estate	12,027		11,555		Total commercial real estate	12,060		12,104
Consumer:	Consumer:					Consumer:
Home equity credit line	Home equity credit line	2,797		2,917		Home equity credit line	2,695		2,745
1-4 family residential	1-4 family residential	7,209		7,568		1-4 family residential	6,630		6,969
Construction and other consumer real estate	Construction and other consumer real estate	633		624		Construction and other consumer real estate	589		630
Bankcard and other revolving plans	Bankcard and other revolving plans	431		502		Bankcard and other revolving plans	409		432
Other	Other	134		155		Other	125		124
Total consumer	Total consumer	11,204		11,766		Total consumer	10,448		10,900

Total loans and leases	Total loans and leases	$	54,745	$	48,709	Total loans and leases	$	53,472	$	53,476

Loans and leases are presented at their amortized cost basis, which includes net unamortized purchase premiums, discounts, and deferred loan fees and costs totaling ~~$191~~$215 million and ~~$60~~$149 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Amortized cost basis does not include accrued interest receivables of ~~$197~~$199 million and ~~$164~~$200 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. These receivables are presented in the Consolidated Balance Sheet within the ~~Other Assets~~“Other Assets” line item.

Municipal loans generally include loans to state and local governments (“municipalities”) with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.

Land acquisition and development loans included in the construction and land development loan portfolio were ~~$119~~$161 million at ~~September 30, 2020~~March 31, 2021 and ~~$158~~$156 million at December 31, ~~2019.~~2020.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Loans with a carrying value of ~~$26.3~~$22.8 billion at ~~September 30, 2020~~March 31, 2021 and ~~$21.5~~$24.7 billion at December 31, ~~2019~~2020 have been pledged at the Federal Reserve orand the FHLB of Des Moines as collateral for current and potential borrowings.

We sold loans totaling ~~$463~~$423 million and ~~$1.4 billion for the three and nine months ended September 30, 2020 and $278 million and $527~~$299 million for the three ~~and nine~~ months ended ~~September 30, 2019~~, March 31, 2021 and 2020, respectively, that were classified as loans held for sale. The sold loans were derecognized from the balance sheet. Loans classified as loans held for sale primarily consist of conforming residential mortgages and the guaranteed portion of ~~Small Business Administration (“SBA”)~~SBA loans, and does not consist of loans from the SBA's ~~Payroll~~Paycheck Protection Program. The loans are ~~mainly~~ sold primarily to U.S. government agencies or participated to third parties. At times, we have continuing involvement in the ~~transferred~~sold loans in the form of servicing rights or a guarantee from the respective issuer. Amounts added to loans held for sale during these same periods were ~~$480~~$426 million and ~~$1.4 billion for the three and nine months ended September 30, 2020 and $316~~$315 million, ~~and $579 million for the three and nine months ended September 30, 2019~~, respectively. See Note 5 for further information regarding guaranteed securities.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

The principal balance of sold loans for which we retain servicing was approximately ~~$2.5~~$2.8 billion at ~~September 30, 2020~~March 31, 2021, and ~~$1.7~~$2.7 billion at December 31, ~~2019.~~2020. Income from loans sold, excluding servicing, was ~~$18 million and $44 million for the three and nine months ended September 30, 2020, and $8~~$11 million and $13 million for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2021, and 2020, respectively.

Allowance for Credit Losses

The allowance for credit losses (“ACL”), which consists of the allowance for loan and lease losses ~~("ALLL"~~(“ALLL”) and the reserve for unfunded lending commitments (“RULC”), represents our estimate of current expected credit losses over the contractual term of the loan and lease portfolio and unfunded lending commitments as of the balance sheet date. For additional information regarding our policies and methodologies used to estimate the ACL, see Note 6 of our 2020 Form 10-K.

The ACL for AFS and HTM debt securities is estimated separately from loans. For HTM securities, the ACL is ~~assessed~~estimated consistent with the approach for loans carried at amortized cost. See Note 5 for further discussion on our ~~assessment~~estimate of expected credit losses on AFS securities and disclosures related to AFS and HTM securities.

We determine our ACL as the best estimate within a range of estimated current expected losses by using the loan’s amortized cost basis (principal balance, net of unamortized premiums, discounts, and deferred fees and costs). We do not estimate the ACL for accrued interest receivables because we reverse or write-off uncollectible accrued interest receivable balances in a timely manner, generally within one month.

The methodologies we use to estimate the ACL depend upon the type of loan, the age and contractual term of the loan, expected payments (both contractual and assumed prepayments), credit quality indicators, economic forecasts, and the evaluation method (whether individually or collectively evaluated). Expected loan extensions, renewals, or modifications are not consideredChanges in the ACL ~~unless they~~ are ~~included in the original or modified contract at the reporting date and are not unconditionally cancellable, or we reasonably expect them to result in a TDR.~~summarized as follows:

Losses are charged to the ACL when recognized. Generally, commercial and commercial real estate (“CRE”) loans are charged off or charged down when they are determined to be uncollectible in whole or in part, or when 180 days past due, unless the loan is well-secured and in process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end consumer loans that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due.

We establish the amount of the ACL by analyzing the portfolio at least quarterly, and we adjust the provision for loan losses and unfunded lending commitments to ensure the ACL is at an appropriate level at the balance sheet date.

For commercial and CRE loans with commitments greater than $1 million, we assign internal risk grades using a comprehensive loan grading system based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. The credit quality indicators discussed subsequently are based on this grading system. Estimated credit losses on all loan segments, including consumer and small commercial and CRE loans with commitments less than or equal to $1 million that are evaluated on a collective basis, are derived from statistical analyses of our historical default and loss experience since January 2008.

We estimate current expected credit losses over the contractual remaining life of each loan, which considers historical credit loss experience, current conditions, and reasonable and supportable forecasts about the future. We use the following two types of credit loss estimation models:


	Three Months Ended March 31, 2021
(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses


Balance at beginning of period	$	464	$	171	$	142	$	777
Provision for loan losses	(94)		(19)		(10)		(123)
Gross loan and lease charge-offs	18		0		3		21
Recoveries	10		0		3		13
Net loan and lease charge-offs (recoveries)	8		0		0		8
Balance at end of period	$	362	$	152	$	132	$	646

Reserve for unfunded lending commitments


Balance at beginning of period	$	30	$	20	$	8	$	58
Provision for unfunded lending commitments	(6)		(3)		0		(9)
Balance at end of period	$	24	$	17	$	8	$	49
Total allowance for credit losses at end of period
Allowance for loan losses	$	362	$	152	$	132	$	646
Reserve for unfunded lending commitments	24		17		8		49
Total allowance for credit losses	$	386	$	169	$	140	$	695

•Econometric loss models, which rely on statistical analyses of our historical loss experience dependent upon economic factors and other loan-level characteristics. Statistically relevant economic factors vary depending upon the type of loan, but include variables such as unemployment, real estate price indices, energy prices, GDP, etc. The results associated with several economic scenarios are weighted to produce the credit loss estimate from these models.

6248

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

For loans that do not share risk characteristics with other loans, we estimate lifetime expected credit losses on an individual basis. We consider individually-evaluated loans to be nonaccrual loans with a balance greater than $1 million; TDR loans, including TDRs that subsequently default; a loan no longer reported as a TDR; or a loan where we reasonably expect it to become a TDR. When a loan is individually-evaluated for expected credit losses, we estimate a specific reserve for the loan based on the projected present value of the loan’s future cash flows discounted at the loan’s effective interest rate, or the observable market price of the loan, or the fair value of the loan’s underlying collateral.

The process of estimating future cash flows also incorporates the same determining factors discussed subsequently under nonaccrual loans. When we base the specific reserve on the fair value of the loan’s underlying collateral, we generally charge off the portion of the balance that is greater than fair value. For these loans, subsequent to the charge-off, if the fair value of the loan's underlying collateral increases according to an updated appraisal, we hold a negative reserve up to the lesser of the amount of the charge-off or the updated fair value.

The methodologies described above generally rely on historical loss information to help determine our quantitative portion of the ACL. However, we also consider other qualitative and environmental factors related to current conditions and reasonable and supportable forecasts that may indicate current expected credit losses may differ from the historical information reflected in our quantitative models. Thus, after applying historical loss experience, as described above, we review the quantitative portion of ACL for each segment using qualitative criteria, and we use those criteria to determine our qualitative estimate. We monitor various risk factors that influence our judgment regarding the level of the ACL across the portfolio segments. These factors primarily include:

•~~Actual and expected changes in international, national, regional, and local economic and business conditions and developments;~~

•~~The volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;~~

•~~Lending policies and procedures, including changes in underwriting standards and practices for collection, charge-off, and recovery;~~

•~~The experience, ability, and depth of lending management and other relevant staff;~~

•~~The nature and volume of the portfolio;~~

•~~The quality of the credit review function;~~

•~~The existence, growth, and effect of any concentration of credit;~~

•~~The effect of other external factors such as regulatory, legal, and technological environments; fiscal and monetary actions; competition; and events such as natural disasters and pandemics.~~

The magnitude of the impact of these factors on our qualitative assessment of the ACL changes from quarter to quarter according to changes made by management in its assessment of these factors, the extent these factors are already reflected in quantitative loss estimates, and the extent changes in these factors diverge from one to another. We also consider the uncertainty and imprecision inherent in the estimation process when evaluating the ACL.

~~Off-Balance-Sheet Credit Exposures~~

As previously discussed, we estimate current expected credit losses for off-balance-sheet loan commitments, including standby letters of credit, that are not unconditionally cancellable. This estimate uses the same procedures and methodologies described previously for loans and is calculated by taking the difference between the estimated current expected credit loss and the funded balance, if greater than zero.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~Changes in the Allowance for Credit Losses~~

~~On January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13,~~ ~~Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~, and its subsequent updates, often referred to as the Current Expected Credit Loss ("CECL") standard. Due to the adoption of the standard, the ACL methodology explained above has significantly changed from the prior period. For more information on our previous ACL methodology, see Note 6 in our 2019 Annual Report on Form 10-K.

The ACL was $917 million at September 30, 2020, compared with $914 million at June 30, 2020. During the third quarter of 2020, our estimate of current expected credit losses increased primarily due to the ongoing economic impact related to the effects of the COVID-19 pandemic.

~~Changes in the ACL are summarized as follows:~~

Three Months Ended September 30, 2020
(In millions) Commercial Commercial
real estate Consumer Total
Allowance for loan losses
Balance at beginning of period $ 571 $ 144 $ 145 $ 860
Provision for loan losses 41 6 (2) 45
Gross loan and lease charge-offs 54 1 3 58
Recoveries 4 0 2 6
Net loan and lease charge-offs (recoveries) 50 1 1 52
Balance at end of period $ 562 $ 149 $ 142 $ 853
Reserve for unfunded lending commitments
Balance at beginning of period $ 27 $ 20 $ 7 $ 54
Provision for unfunded lending commitments 14 (4) 0 10
Balance at end of period $ 41 $ 16 $ 7 $ 64
Total allowance for credit losses at end of period
Allowance for loan losses $ 562 $ 149 $ 142 $ 853
Reserve for unfunded lending commitments 41 16 7 64
Total allowance for credit losses $ 603 $ 165 $ 149 $ 917

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Nine Months Ended September 30, 2020
(In millions) Commercial Commercial
real estate Consumer Total
Allowance for loan losses
Balance at December 31, 2019 $ 341 $ 101 $ 53 $ 495
Adjustment for change in accounting standard (59) (32) 93 2
Balance at beginning of period (January 1, 2020) 282 69 146 497
Provision for loan losses 364 81 1 446
Gross loan and lease charge-offs 95 1 11 107
Recoveries 11 0 6 17
Net loan and lease charge-offs (recoveries) 84 1 5 90
Balance at end of period $ 562 $ 149 $ 142 $ 853
Reserve for unfunded lending commitments
Balance at December 31, 2019 $ 39 $ 20 $ 0 $ 59
Adjustment for change in accounting standard (28) (8) 6 (30)
Balance at beginning of period (January 1, 2020) 11 12 6 29
Provision for unfunded lending commitments 30 4 1 35
Balance at end of period $ 41 $ 16 $ 7 $ 64
Total allowance for credit losses at end of period
Allowance for loan losses $ 562 $ 149 $ 142 $ 853
Reserve for unfunded lending commitments 41 16 7 64
Total allowance for credit losses $ 603 $ 165 $ 149 $ 917

Three Months Ended September 30, 2019
(In millions) Commercial Commercial
real estate Consumer Total
Allowance for loan losses
Balance at beginning of period $ 338 $ 114 $ 51 $ 503
Provision for loan losses 9 (6) 5 8
Gross loan and lease charge-offs 6 0 5 11
Recoveries 7 1 2 10
Net loan and lease charge-offs (recoveries) (1) (1) 3 1
Balance at end of period $ 348 $ 109 $ 53 $ 510
Reserve for unfunded lending commitments
Balance at beginning of period $ 41 $ 19 $ 0 $ 60
Provision for unfunded lending commitments 0 2 0 2
Balance at end of period $ 41 $ 21 $ 0 $ 62
Total allowance for credit losses at end of period
Allowance for loan losses $ 348 $ 109 $ 53 $ 510
Reserve for unfunded lending commitments 41 21 0 62
Total allowance for credit losses $ 389 $ 130 $ 53 $ 572

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~


		Nine Months Ended September 30, 2019									Three Months Ended March 31, 2020
(In millions)	(In millions)	Commercial		Commercial real estate		Consumer		Total		(In millions)	Commercial		Commercial real estate		Consumer		Total
Allowance for loan losses	Allowance for loan losses									Allowance for loan losses

Balance at beginning of period	Balance at beginning of period	$	331	$	110	$	54	$	495	Balance at beginning of period	$	282	$	69	$	146	$	497
Provision for loan losses	Provision for loan losses	31		(4)		3		30		Provision for loan losses	137		59		44		240
Gross loan and lease charge-offs	Gross loan and lease charge-offs	33		1		12		46		Gross loan and lease charge-offs	10		0		3		13
Recoveries	Recoveries	19		4		8		31		Recoveries	4		0		2		6
Net loan and lease charge-offs (recoveries)	Net loan and lease charge-offs (recoveries)	14		(3)		4		15		Net loan and lease charge-offs (recoveries)	6		0		1		7
Balance at end of period	Balance at end of period	$	348	$	109	$	53	$	510	Balance at end of period	$	413	$	128	$	189	$	730

Reserve for unfunded lending commitments	Reserve for unfunded lending commitments									Reserve for unfunded lending commitments

Balance at beginning of period	Balance at beginning of period	$	40	$	17	$	0	$	57	Balance at beginning of period	$	11	$	12	$	6	$	29
Provision for unfunded lending commitments	Provision for unfunded lending commitments	1		4		0		5		Provision for unfunded lending commitments	5		11		2		18
Balance at end of period	Balance at end of period	$	41	$	21	$	0	$	62	Balance at end of period	$	16	$	23	$	8	$	47
Total allowance for credit losses at end of period	Total allowance for credit losses at end of period									Total allowance for credit losses at end of period
Allowance for loan losses	Allowance for loan losses	$	348	$	109	$	53	$	510	Allowance for loan losses	$	413	$	128	$	189	$	730
Reserve for unfunded lending commitments	Reserve for unfunded lending commitments	41		21		0		62		Reserve for unfunded lending commitments	16		23		8		47
Total allowance for credit losses	Total allowance for credit losses	$	389	$	130	$	53	$	572	Total allowance for credit losses	$	429	$	151	$	197	$	777

Nonaccrual Loans

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

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

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


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



Commercial:
Commercial and industrial	$	27	$	92	$	119	$	20


Owner-occupied	35		39		74		3

Total commercial	62		131		193		23
Commercial real estate:

Term	12		19		31		4
Total commercial real estate	12		19		31		4
Consumer:
Home equity credit line	5		14		19		4
1-4 family residential	15		65		80		8

Bankcard and other revolving plans	0		1		1		1

Total consumer loans	20		80		100		13
Total	$	94	$	230	$	324	$	40

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~The amortized cost~~


	December 31, 2020
	Amortized cost basis				Total amortized cost basis
(In millions)	with no allowance		with allowance				Related allowance



Commercial:
Commercial and industrial	$	73	$	67	$	140	$	22


Owner-occupied	38		38		76		4

Total commercial	111		105		216		26
Commercial real estate:

Term	12		19		31		3
Total commercial real estate	12		19		31		3
Consumer:
Home equity credit line	2		14		16		3
1-4 family residential	14		89		103		9

Bankcard and other revolving plans	0		1		1		1

Total consumer loans	16		104		120		13
Total	$	139	$	228	$	367	$	42

For accruing loans, interest is accrued, and interest payments are recognized into interest income according to the contractual loan agreement. For nonaccruing loans, the accrual of interest is discontinued, any uncollected or accrued interest is reversed or written-off from interest income in a timely manner (generally within one month), and any payments received on these loans are not recognized into interest income, but are applied as a reduction to the principal outstanding. For the three months ended March 31, 2021 and 2020, there was 0 interest income recognized on a cash basis ofduring the period the loans were on ~~nonaccrual status are summarized as follows:~~

September 30, 2020
Amortized cost basis Total amortized cost basis
(In millions) with no allowance with allowance Related allowance
Loans held for sale $ 14 $ 0 $ 14 $ 0
Commercial:
Commercial and industrial $ 48 $ 110 $ 158 $ 21
PPP 0 0 0 0
Leasing 0 1 1 0
Owner-occupied 41 40 81 3
Municipal 0 0 0 0
Total commercial 89 151 240 24
Commercial real estate:
Construction and land development 0 0 0 0
Term 13 24 37 1
Total commercial real estate 13 24 37 1
Consumer:
Home equity credit line 2 14 16 3
1-4 family residential 7 52 59 4
Construction and other consumer real estate 0 0 0 0
Bankcard and other revolving plans 0 0 0 1
Other 0 0 0 0
Total consumer loans 9 66 75 8
Total $ 111 $ 241 $ 352 $ 33
nonaccrual.

The amount of accrued interest receivables ~~written off~~written-off by reversing interest income during the period is summarized by loan portfolio segment as follows:


(In millions)	(In millions)	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020		(In millions)	Three Months Ended March 31,
							2021		2020
Commercial	Commercial	$	5	$	13	Commercial	$	3	$	4
Commercial real estate	Commercial real estate	1		2		Commercial real estate	1		0
Consumer	Consumer	0		0		Consumer	0		0
Total	Total	$	6	$	15	Total	$	4	$	4

Past Due Loans

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

6750

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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


		September 30, 2020															March 31, 2021
(In millions)	(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1		(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1

Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	$	13,467	$	27	$	49	$	76	$	13,543	$	3	$	106	Commercial and industrial	$	12,770	$	32	$	41	$	73	$	12,843	$	6	$	81
PPP	PPP	6,810		0		0		0		6,810		0		0		PPP	6,465		0		0		0		6,465		0		0
Leasing	Leasing	319		0		0		0		319		0		1		Leasing	310		0		0		0		310		0		0
Owner-occupied	Owner-occupied	8,084		20		32		52		8,136		3		45		Owner-occupied	8,057		38		17		55		8,112		2		45
Municipal	Municipal	2,706		0		0		0		2,706		0		0		Municipal	3,234		0		0		0		3,234		0		0
Total commercial	Total commercial	31,386		47		81		128		31,514		6		152		Total commercial	30,836		70		58		128		30,964		8		126
Commercial real estate:	Commercial real estate:															Commercial real estate:
Construction and land development	Construction and land development	2,291		7		0		7		2,298		0		0		Construction and land development	2,443		0		0		0		2,443		0		0
Term	Term	9,703		12		14		26		9,729		2		18		Term	9,575		36		6		42		9,617		0		25
Total commercial real estate	Total commercial real estate	11,994		19		14		33		12,027		2		18		Total commercial real estate	12,018		36		6		42		12,060		0		25
Consumer:	Consumer:															Consumer:
Home equity credit line	Home equity credit line	2,788		6		3		9		2,797		0		9		Home equity credit line	2,686		4		5		9		2,695		0		11
1-4 family residential	1-4 family residential	7,164		9		36		45		7,209		0		19		1-4 family residential	6,582		17		31		48		6,630		0		40
Construction and other consumer real estate	Construction and other consumer real estate	633		0		0		0		633		0		0		Construction and other consumer real estate	589		0		0		0		589		0		0
Bankcard and other revolving plans	Bankcard and other revolving plans	427		3		1		4		431		1		1		Bankcard and other revolving plans	407		1		1		2		409		1		0
Other	Other	133		1		0		1		134		0		0		Other	125		0		0		0		125		0		0
Total consumer loans	Total consumer loans	11,145		19		40		59		11,204		1		29		Total consumer loans	10,389		22		37		59		10,448		1		51
Total	Total	$	54,525	$	85	$	135	$	220	$	54,745	$	9	$	199	Total	$	53,243	$	128	$	101	$	229	$	53,472	$	9	$	202


		December 31, 2019															December 31, 2020
(In millions)	(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1		(In millions)	Current		30-89 days past due		90+ days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current 1

Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	$	14,665	$	57	$	38	$	95	$	14,760	$	8	$	54	Commercial and industrial	$	13,388	$	26	$	30	$	56	$	13,444	$	2	$	109
PPP	PPP	0		0		0		0		0		0		0		PPP	5,572		0		0		0		5,572		0		0
Leasing	Leasing	334		0		0		0		334		1		0		Leasing	320		0		0		0		320		0		1
Owner-occupied	Owner-occupied	7,862		20		19		39		7,901		0		44		Owner-occupied	8,129		34		22		56		8,185		0		48
Municipal	Municipal	2,393		0		0		0		2,393		0		0		Municipal	2,951		0		0		0		2,951		0		0
Total commercial	Total commercial	25,254		77		57		134		25,388		9		98		Total commercial	30,360		60		52		112		30,472		2		158
Commercial real estate:	Commercial real estate:															Commercial real estate:
Construction and land development	Construction and land development	2,206		5		0		5		2,211		0		1		Construction and land development	2,341		0		4		4		2,345		4		0
Term	Term	9,333		8		3		11		9,344		0		10		Term	9,692		57		10		67		9,759		4		13
Total commercial real estate	Total commercial real estate	11,539		13		3		16		11,555		0		11		Total commercial real estate	12,033		57		14		71		12,104		8		13
Consumer:	Consumer:															Consumer:
Home equity credit line	Home equity credit line	2,908		6		3		9		2,917		0		7		Home equity credit line	2,733		8		4		12		2,745		0		9
1-4 family residential	1-4 family residential	7,532		12		24		36		7,568		0		13		1-4 family residential	6,891		12		66		78		6,969		0		33
Construction and other consumer real estate	Construction and other consumer real estate	624		0		0		0		624		0		0		Construction and other consumer real estate	630		0		0		0		630		0		0
Bankcard and other revolving plans	Bankcard and other revolving plans	499		2		1		3		502		1		0		Bankcard and other revolving plans	428		2		2		4		432		2		1
Other	Other	154		1		0		1		155		0		0		Other	123		1		0		1		124		0		0
Total consumer loans	Total consumer loans	11,717		21		28		49		11,766		1		20		Total consumer loans	10,805		23		72		95		10,900		2		43
Total	Total	$	48,510	$	111	$	88	$	199	$	48,709	$	10	$	129	Total	$	53,198	$	140	$	138	$	278	$	53,476	$	12	$	214

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

6851

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Credit Quality Indicators

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

~~Definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:~~

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

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

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

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

The balance of loans classified as Doubtful was less than $1 million as of ~~September 30, 2020~~March 31, 2021 and was $4 million as of December 31, ~~2019 was insignificant.~~2020.

We generally assign internal risk grades to commercial and CRE loans with commitments greater than $1 million based on financial and statistical models, individual credit analysis, and loan officer experience and judgment. For these larger loans, we assign one of multiple risk grades within the Pass classification or one of the ~~following four grades: Special Mention, Substandard, Doubtful, and Loss. Loss indicates that the outstanding balance has been charged off.~~risk classifications described previously. We confirm our internal risk grades quarterly, or as soon as we identify information that affects the credit risk of the loan.

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

The following schedule presents the amortized cost basis of loans and leases categorized by year of origination and risk classification as monitored by management. The year of origination is generally represented by the year the loan was either originated or the year in which the loan was renewed or restructured.

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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


	March 31, 2021
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2021		2020		2019		2018		2017		Prior						Total loans
Commercial:
Commercial and industrial
Pass	$	507	$	1,637	$	1,665	$	1,013	$	516	$	430	$	5,631	$	66	$	11,465
Special Mention	0		56		98		63		33		30		259		1		540
Accruing Substandard	9		60		178		109		36		23		303		1		719
Nonaccrual	15		16		2		4		8		27		38		9		119
Total commercial and industrial	531		1,769		1,943		1,189		593		510		6,231		77		12,843
PPP
Pass	2,460		4,005		0		0		0		0		0		0		6,465



Total PPP	2,460		4,005		0		0		0		0		0		0		6,465
Leasing
Pass	2		45		88		80		52		29		0		0		296
Special Mention	0		1		1		2		1		6		0		0		11
Accruing Substandard	0		1		1		0		0		1		0		0		3
Nonaccrual	0		0		0		0		0		0		0		0		0
Total leasing	2		47		90		82		53		36		0		0		310
Owner-occupied
Pass	331		1,563		1,129		1,130		878		2,181		154		35		7,401
Special Mention	4		66		62		52		29		87		7		4		311
Accruing Substandard	0		12		64		66		42		130		11		1		326
Nonaccrual	0		6		12		19		9		27		1		0		74
Total owner-occupied	335		1,647		1,267		1,267		958		2,425		173		40		8,112
Municipal
Pass	336		1,033		802		328		406		279		1		0		3,185
Special Mention	0		0		0		0		0		34		0		0		34
Accruing Substandard	0		9		0		0		0		6		0		0		15
Nonaccrual	0		0		0		0		0		0		0		0		0
Total municipal	336		1,042		802		328		406		319		1		0		3,234
Total commercial	3,664		8,510		4,102		2,866		2,010		3,290		6,405		117		30,964
Commercial real estate:
Construction and land development
Pass	114		656		935		204		42		4		445		4		2,404
Special Mention	1		2		2		0		0		0		5		0		10
Accruing Substandard	3		0		26		0		0		0		0		0		29
Nonaccrual	0		0		0		0		0		0		0		0		0
Total construction and land development	118		658		963		204		42		4		450		4		2,443
Term
Pass	537		2,383		1,729		1,396		648		1,884		254		16		8,847
Special Mention	49		102		54		140		38		103		0		3		489
Accruing Substandard	0		36		34		95		29		54		0		2		250
Nonaccrual	0		0		5		0		2		24		0		0		31
Total term	586		2,521		1,822		1,631		717		2,065		254		21		9,617
Total commercial real estate	704		3,179		2,785		1,835		759		2,069		704		25		12,060

September 30, 2020
Term Loans Revolving loans amortized cost basis Revolving loans converted to term loans amortized cost basis
Amortized cost basis by year of origination
(In millions) 2020 2019 2018 2017 2016 Prior Total
loans
Commercial:
Commercial and industrial
Pass $ 1,613 $ 3,192 $ 2,082 $ 994 $ 372 $ 284 $ 3,405 $ 85 $ 12,027
Special Mention 50 212 181 99 7 44 98 1 692
Accruing Substandard 98 110 222 76 18 17 120 5 666
Nonaccrual 42 7 8 37 2 17 35 10 158
Total commercial and industrial 1,803 3,521 2,493 1,206 399 362 3,658 101 13,543
PPP
Pass 6,810 0 0 0 0 0 0 0 6,810
Special Mention 0 0 0 0 0 0 0 0 0
Accruing Substandard 0 0 0 0 0 0 0 0 0
Nonaccrual 0 0 0 0 0 0 0 0 0
Total leasing 6,810 0 0 0 0 0 0 0 6,810
Leasing
Pass 64 117 47 36 17 8 0 0 289
Special Mention 0 11 3 2 1 6 0 0 23
Accruing Substandard 2 2 1 1 0 0 0 0 6
Nonaccrual 0 0 0 0 1 0 0 0 1
Total leasing 66 130 51 39 19 14 0 0 319
Owner-occupied
Pass 1,083 1,312 1,234 956 664 1,956 154 17 7,376
Special Mention 55 50 50 75 56 40 12 2 340
Accruing Substandard 25 50 62 38 35 111 17 1 339
Nonaccrual 5 14 16 12 7 25 1 1 81
Total owner-occupied 1,168 1,426 1,362 1,081 762 2,132 184 21 8,136
Municipal
Pass 663 868 374 442 76 242 3 0 2,668
Special Mention 0 0 0 0 0 10 0 0 10
Accruing Substandard 0 0 21 0 0 7 0 0 28
Nonaccrual 0 0 0 0 0 0 0 0 0
Total municipal 663 868 395 442 76 259 3 0 2,706
Total commercial 10,510 5,945 4,301 2,768 1,256 2,767 3,845 122 31,514

7053

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


		September 30, 2020																			March 31, 2021
		Term Loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis					Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
		Amortized cost basis by year of origination																			Amortized cost basis by year of origination
(In millions)	(In millions)	2020		2019		2018		2017		2016		Prior						Total loans		(In millions)	2021		2020		2019		2018		2017		Prior						Total loans
Commercial real estate:
Construction and land development
Pass		467		871		388		52		1		7		407		3		2,196
Special Mention		28		32		10		0		0		0		7		0		77
Accruing Substandard		0		4		0		21		0		0		0		0		25
Nonaccrual		0		0		0		0		0		0		0		0		0
Total construction and land development		495		907		398		73		1		7		414		3		2,298
Term
Pass		1,862		1,886		1,840		917		866		1,438		75		22		8,906
Special Mention		93		139		163		54		17		100		0		0		566
Accruing Substandard		55		25		63		31		16		30		0		0		220
Nonaccrual		0		5		0		3		1		27		1		0		37
Total term		2,010		2,055		2,066		1,005		900		1,595		76		22		9,729
Total commercial real estate		2,505		2,962		2,464		1,078		901		1,602		490		25		12,027

Consumer:	Consumer:																			Consumer:
Home equity credit line	Home equity credit line																			Home equity credit line
Pass	Pass	0		0		0		0		0		0		2,640		130		2,770		Pass	0		0		0		0		0		0		2,564		109		2,673
Special Mention																				Special Mention	0		0		0		0		0		0		1		0		1
Accruing Substandard	Accruing Substandard	0		0		0		0		0		0		10		1		11		Accruing Substandard	0		0		0		0		0		0		2		0		2
Nonaccrual	Nonaccrual	0		0		0		0		0		0		11		5		16		Nonaccrual	0		0		0		0		0		0		10		9		19
Total home equity credit line	Total home equity credit line	0		0		0		0		0		0		2,661		136		2,797		Total home equity credit line	0		0		0		0		0		0		2,577		118		2,695
1-4 family residential	1-4 family residential																			1-4 family residential
Pass	Pass	889		1,085		915		1,209		1,288		1,758		0		0		7,144		Pass	260		1,160		921		745		971		2,490		0		0		6,547
Special Mention																				Special Mention	0		0		0		0		0		1		0		0		1
Accruing Substandard	Accruing Substandard	0		0		1		0		1		4		0		0		6		Accruing Substandard	0		0		0		0		0		2		0		0		2
Nonaccrual	Nonaccrual	0		2		4		10		6		37		0		0		59		Nonaccrual	0		3		11		5		12		49		0		0		80
Total 1-4 family residential	Total 1-4 family residential	889		1,087		920		1,219		1,295		1,799		0		0		7,209		Total 1-4 family residential	260		1,163		932		750		983		2,542		0		0		6,630
Construction and other consumer real estate	Construction and other consumer real estate																			Construction and other consumer real estate
Pass	Pass	119		339		141		20		1		13		0		0		633		Pass	13		251		241		64		11		9		0		0		589
Special Mention																				Special Mention	0		0		0		0		0		0		0		0		0
Accruing Substandard	Accruing Substandard	0		0		0		0		0		0		0		0		0		Accruing Substandard	0		0		0		0		0		0		0		0		0
Nonaccrual	Nonaccrual	0		0		0		0		0		0		0		0		0		Nonaccrual	0		0		0		0		0		0		0		0		0
Total construction and other consumer real estate	Total construction and other consumer real estate	119		339		141		20		1		13		0		0		633		Total construction and other consumer real estate	13		251		241		64		11		9		0		0		589
Bankcard and other revolving plans	Bankcard and other revolving plans																			Bankcard and other revolving plans
Pass	Pass	0		0		0		0		0		0		425		2		427		Pass	0		0		0		0		—		0		404		2		406
Special Mention																				Special Mention	0		0		0		0		0		0		0		0		0
Accruing Substandard	Accruing Substandard	0		0		0		0		0		0		4		0		4		Accruing Substandard	0		0		0		0		0		0		2		0		2
Nonaccrual	Nonaccrual	0		0		0		0		0		0		0		0		0		Nonaccrual	0		0		0		0		0		0		0		1		1
Total bankcard and other revolving plans	Total bankcard and other revolving plans	0		0		0		0		0		0		429		2		431		Total bankcard and other revolving plans	0		0		0		0		0		0		406		3		409
Other consumer	Other consumer																			Other consumer
Pass	Pass	46		42		27		12		5		2		0		0		134		Pass	28		36		30		18		8		5		0		0		125
Special Mention																				Special Mention	0		0		0		0		0		0		0		0		0
Accruing Substandard	Accruing Substandard	0		0		0		0		0		0		0		0		0		Accruing Substandard	0		0		0		0		0		0		0		0		0
Nonaccrual	Nonaccrual	0		0		0		0		0		0		0		0		0		Nonaccrual	0		0		0		0		0		0		0		0		0
Total other consumer	Total other consumer	46		42		27		12		5		2		0		0		134		Total other consumer	28		36		30		18		8		5		0		0		125
Total consumer	Total consumer	1,054		1,468		1,088		1,251		1,301		1,814		3,090		138		11,204		Total consumer	301		1,450		1,203		832		1,002		2,556		2,983		121		10,448
Total loans	Total loans	$	14,069	$	10,375	$	7,853	$	5,097	$	3,458	$	6,183	$	7,425	$	285	$	54,745	Total loans	$	4,669	$	13,139	$	8,090	$	5,533	$	3,771	$	7,915	$	10,092	$	263	$	53,472

7154

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


	December 31, 2020
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2020		2019		2018		2017		2016		Prior						Total loans
Commercial:
Commercial and industrial
Pass	$	2,585	$	2,743	$	1,903	$	829	$	296	$	228	$	3,298	$	109	$	11,991
Special Mention	79		152		183		98		4		43		110		1		670
Accruing Substandard	123		157		129		44		26		17		141		6		643
Nonaccrual	57		2		10		8		2		15		36		10		140
Total commercial and industrial	2,844		3,054		2,225		979		328		303		3,585		126		13,444
PPP
Pass	5,572		0		0		0		0		0		0		0		5,572



Total PPP	5,572		0		0		0		0		0		0		0		5,572
Leasing
Pass	87		121		44		34		14		5		0		0		305
Special Mention	1		0		2		1		0		6		0		0		10
Accruing Substandard	2		1		1		1		0		0		0		0		5
Nonaccrual	0		0		0		0		0		0		0		0		0
Total leasing	90		122		47		36		14		11		0		0		320
Owner-occupied
Pass	1,588		1,205		1,167		895		585		1,806		161		11		7,418
Special Mention	72		65		60		60		51		41		9		3		361
Accruing Substandard	28		64		61		37		35		98		6		1		330
Nonaccrual	8		11		15		11		6		23		2		0		76
Total owner-occupied	1,696		1,345		1,303		1,003		677		1,968		178		15		8,185
Municipal
Pass	1,031		827		359		419		68		227		3		0		2,934
Special Mention	0		0		0		0		0		8		0		0		8
Accruing Substandard	0		0		0		0		0		9		0		0		9
Nonaccrual	0		0		0		0		0		0		0		0		0
Total municipal	1,031		827		359		419		68		244		3		0		2,951
Total commercial	11,233		5,348		3,934		2,437		1,087		2,526		3,766		141		30,472
Commercial real estate:
Construction and land development
Pass	558		933		267		41		1		6		423		3		2,232
Special Mention	24		43		11		0		0		0		5		0		83
Accruing Substandard	0		30		0		0		0		0		0		0		30
Nonaccrual	0		0		0		0		0		0		0		0		0
Total construction and land development	582		1,006		278		41		1		6		428		3		2,345
Term
Pass	2,524		1,858		1,639		761		778		1,291		73		20		8,944
Special Mention	110		89		177		42		23		85		0		5		531
Accruing Substandard	41		34		96		30		18		34		0		0		253
Nonaccrual	3		5		0		2		1		20		0		0		31
Total term	2,678		1,986		1,912		835		820		1,430		73		25		9,759
Total commercial real estate	3,260		2,992		2,190		876		821		1,436		501		28		12,104

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


	December 31, 2020
	Term loans												Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis
	Amortized cost basis by year of origination
(In millions)	2020		2019		2018		2017		2016		Prior						Total loans














Consumer:
Home equity credit line
Pass	0		0		0		0		0		0		2,606		115		2,721
Special Mention	0		0		0		0		0		0		2		0		2
Accruing Substandard	0		0		0		0		0		0		6		0		6
Nonaccrual	0		0		0		0		0		0		11		5		16
Total home equity credit line	0		0		0		0		0		0		2,625		120		2,745
1-4 family residential
Pass	1,185		1,017		833		1,081		1,174		1,570		0		0		6,860
Special Mention	0		0		0		0		0		2		0		0		2
Accruing Substandard	0		0		1		0		2		1		0		0		4
Nonaccrual	2		12		7		19		15		48		0		0		103
Total 1-4 family residential	1,187		1,029		841		1,100		1,191		1,621		0		0		6,969
Construction and other consumer real estate
Pass	200		296		106		16		1		11		0		0		630
Special Mention	0		0		0		0		—		0		0		0		0
Accruing Substandard	0		0		0		0		0		0		0		0		0
Nonaccrual	0		0		0		0		0		0		0		0		0
Total construction and other consumer real estate	200		296		106		16		1		11		0		0		630
Bankcard and other revolving plans
Pass	0		0		0		0		0		0		426		2		428
Special Mention	0		0		0		0		0		0		0		0		0
Accruing Substandard	0		0		0		0		0		0		3		0		3
Nonaccrual	0		0		0		0		0		0		0		1		1
Total bankcard and other revolving plans	0		0		0		0		0		0		429		3		432
Other consumer
Pass	51		35		22		10		4		2		0		0		124
Special Mention	0		0		0		0		0		0		0		0		0
Accruing Substandard	0		0		0		0		0		0		0		0		0
Nonaccrual	0		0		0		0		0		0		0		0		0
Total other consumer	51		35		22		10		4		2		0		0		124
Total consumer	1,438		1,360		969		1,126		1,196		1,634		3,054		123		10,900
Total loans	$	15,931	$	9,700	$	7,093	$	4,439	$	3,104	$	5,596	$	7,321	$	292	$	53,476

Modified and Restructured Loans

Loans may be modified in the normal course of business for competitive reasons or to strengthen ~~the Bank’s~~our collateral position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. Loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for which ~~the Bank has~~we have granted a concession that itwe would not otherwise consider, are considered troubled debt restructurings (“TDRs”).

Consistent with recent accounting and regulatory guidance, loan modifications provided to borrowers experiencing financial difficulties exclusively related to the COVID-19 pandemic, in which we provide certain short-term modifications or payment deferrals, are not classified as TDRs. The TDRs disclosed subsequently do not include

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

these loan modifications. Other loan modifications above and beyond these short-term modifications or payment deferrals were assessed for TDR classification.

For further discussion of our policies and processes regarding TDRs, see Note 6 of our ~~2019 Annual Report on~~2020 Form 10-K.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

Selected information on TDRs, ~~that includes~~including the recorded investment on an accruing and nonaccruing basis by loan class and modification type is summarized in the following schedules:


		September 30, 2020															March 31, 2021
		Recorded investment resulting from the following modification types:															Recorded investment resulting from the following modification types:
(In millions)	(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total		(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total
Accruing	Accruing															Accruing
Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	$	0	$	1	$	0	$	1	$	8	$	4	$	14	Commercial and industrial	$	0	$	0	$	0	$	0	$	21	$	19	$	40
Owner-occupied	Owner-occupied	5		1		0		3		4		9		22		Owner-occupied	5		3		0		1		9		14		32

Total commercial	Total commercial	5		2		0		4		12		13		36		Total commercial	5		3		0		1		30		33		72
Commercial real estate:	Commercial real estate:															Commercial real estate:

Term	Term	2		0		0		7		94		24		127		Term	1		18		0		35		94		22		170
Total commercial real estate	Total commercial real estate	2		0		0		7		94		24		127		Total commercial real estate	1		18		0		35		94		22		170
Consumer:	Consumer:															Consumer:
Home equity credit line	Home equity credit line	0		1		7		0		1		2		11		Home equity credit line	0		1		6		0		0		2		9
1-4 family residential	1-4 family residential	1		1		4		0		1		16		23		1-4 family residential	7		1		3		0		1		17		29
Construction and other consumer real estate		0		0		0		0		0		0		0

Total consumer loans	Total consumer loans	1		2		11		0		2		18		34		Total consumer loans	7		2		9		0		1		19		38
Total accruing	Total accruing	8		4		11		11		108		55		197		Total accruing	13		23		9		36		125		74		280
Nonaccruing	Nonaccruing															Nonaccruing
Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	0		0		0		2		31		20		53		Commercial and industrial	17		1		0		2		9		51		80
Owner-occupied	Owner-occupied	5		0		0		1		3		7		16		Owner-occupied	5		0		0		3		0		15		23

Total commercial	Total commercial	5		0		0		3		34		27		69		Total commercial	22		1		0		5		9		66		103
Commercial real estate:	Commercial real estate:															Commercial real estate:

Term	Term	0		0		0		1		3		2		6		Term	2		0		0		13		3		5		23
Total commercial real estate	Total commercial real estate	0		0		0		1		3		2		6		Total commercial real estate	2		0		0		13		3		5		23
Consumer:	Consumer:															Consumer:
Home equity credit line	Home equity credit line	0		0		1		0		0		1		2		Home equity credit line	0		0		2		0		0		0		2
1-4 family residential	1-4 family residential	0		0		1		0		1		5		7		1-4 family residential	1		1		0		0		0		4		6

Total consumer loans	Total consumer loans	0		0		2		0		1		6		9		Total consumer loans	1		1		2		0		0		4		8
Total nonaccruing	Total nonaccruing	5		0		2		4		38		35		84		Total nonaccruing	25		2		2		18		12		75		134
Total	Total	$	13	$	4	$	13	$	15	$	146	$	90	$	281	Total	$	38	$	25	$	11	$	54	$	137	$	149	$	414

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

2 Includes TDRs that resulted from a combination of any of the previous modification types.

7357

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


		December 31, 2019															December 31, 2020
		Recorded investment resulting from the following modification types:															Recorded investment resulting from the following modification types:
(In millions)	(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total		(In millions)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other1		Multiple modification types2		Total
Accruing	Accruing															Accruing
Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	$	1	$	2	$	0	$	0	$	8	$	5	$	16	Commercial and industrial	$	0	$	0	$	0	$	0	$	3	$	4	$	7
Owner-occupied	Owner-occupied	3		1		0		0		4		7		15		Owner-occupied	5		1		0		4		4		8		22
Total commercial	Total commercial	4		3		0		0		12		12		31		Total commercial	5		1		0		4		7		12		29
Commercial real estate:	Commercial real estate:															Commercial real estate:

Term	Term	2		0		0		1		0		3		6		Term	1		0		0		16		94		23		134
Total commercial real estate	Total commercial real estate	2		0		0		1		0		3		6		Total commercial real estate	1		0		0		16		94		23		134
Consumer:	Consumer:															Consumer:
Home equity credit line	Home equity credit line	0		2		7		0		0		2		11		Home equity credit line	0		1		7		0		0		2		10
1-4 family residential	1-4 family residential	1		1		4		0		1		22		29		1-4 family residential	4		1		3		0		2		15		25
Construction and other consumer real estate		0		1		0		0		0		0		1

Total consumer loans	Total consumer loans	1		4		11		0		1		24		41		Total consumer loans	4		2		10		0		2		17		35
Total accruing	Total accruing	7		7		11		1		13		39		78		Total accruing	10		3		10		20		103		52		198
Nonaccruing	Nonaccruing															Nonaccruing
Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	0		4		0		20		4		22		50		Commercial and industrial	0		0		0		3		10		52		65
Owner-occupied	Owner-occupied	5		0		0		0		1		4		10		Owner-occupied	5		0		0		3		0		10		18

Total commercial	Total commercial	5		4		0		20		5		26		60		Total commercial	5		0		0		6		10		62		83
Commercial real estate:	Commercial real estate:															Commercial real estate:

Term	Term	1		0		0		0		3		3		7		Term	2		0		0		13		3		2		20
Total commercial real estate	Total commercial real estate	1		0		0		0		3		3		7		Total commercial real estate	2		0		0		13		3		2		20
Consumer:	Consumer:															Consumer:
Home equity credit line	Home equity credit line	0		0		2		0		0		0		2		Home equity credit line	0		0		2		0		0		0		2
1-4 family residential	1-4 family residential	0		0		1		0		1		4		6		1-4 family residential	1		1		0		0		0		6		8

Total consumer loans	Total consumer loans	0		0		3		0		1		4		8		Total consumer loans	1		1		2		0		0		6		10
Total nonaccruing	Total nonaccruing	6		4		3		20		9		33		75		Total nonaccruing	8		1		2		19		13		70		113
Total	Total	$	13	$	11	$	14	$	21	$	22	$	72	$	153	Total	$	18	$	4	$	12	$	39	$	116	$	122	$	311

2 Includes TDRs that resulted from a combination of any of the previous modification types.

Unfunded lending commitments on TDRs ~~amounted to $4~~totaled $12 million and $5$3 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

The total recorded investment of all TDRs in which interest rates were modified below market was ~~$62~~$110 million at ~~September 30, 2020~~March 31, 2021 and ~~$73~~$76 million at December 31, ~~2019.~~2020. These loans are included in the previous schedule in the columns for interest rate below market and multiple modification types.

The net financial impact on interest income due to interest rate modifications below market for accruing TDRs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was not significant.

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

7458

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The recorded investment of accruing and nonaccruing TDRs that had a payment default during the ~~period listed below (and~~three months ended March 31, 2021 and 2020, which are still in default at period ~~end)~~end, and are within 12 months or less of being modified as TDRs ~~is as follows:~~

Three Months Ended
September 30, 2020 Three Months Ended
September 30, 2019
(In millions) Accruing Nonaccruing Total Accruing Nonaccruing Total
Commercial and industrial $ 0 $ 3 $ 3 $ 0 $ 1 $ 1
Total $ 0 $ 3 $ 3 $ 0 $ 1 $ 1
Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
(In millions) Accruing Nonaccruing Total Accruing Nonaccruing Total
Commercial and industrial $ 0 $ 6 $ 6 $ 0 $ 2 $ 2
Owner-occupied 0 0 0 0 1 1
Total commercial 0 6 6 0 3 3
Total $ 0 $ 6 $ 6 $ 0 $ 3 $ 3

~~Note:~~was approximately $1 million for both periods, primarily in the commercial and industrial loan portfolio. Total loans modified as TDRs during the 12 months previous to ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ were ~~$190~~$331 million and ~~$73~~$59 million,, respectively.

Collateral-Dependent Loans

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

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

September 30, 2020

March 31, 2021

(In millions)

Amortized Cost

Major Types of Collateral

Weighted Average LTV1

(In millions)

Amortized cost

Major types of collateral

Weighted average LTV1

Commercial:

Commercial and industrial

Single family residential, Agriculture

53%

Commercial and industrial

Single family residential, Agriculture

48%

Owner-occupied

Office Building

46%

Owner-occupied

Office building

39%

Commercial real estate:

Term

Multi-family, Hotel/Motel, Retail

60%

Term

Multi-family, Hotel/Motel, Retail

47%

Consumer:

Home equity credit line

Single family residential

33%

Home equity credit line

Single family residential

46%

1-4 family residential

Single family residential

52%

1-4 family residential

Single family residential

62%

Total

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


	December 31, 2020
(In millions)	Amortized cost		Major types of collateral	Weighted average LTV1
Commercial:
Commercial and industrial	$	20	Single family residential, Agriculture	55%

Owner-occupied	10		Office Building	47%


Commercial real estate:

Term	12		Multi-family, Hotel/Motel, Retail	58%

Consumer:
Home equity credit line	3		Single family residential	34%
1-4 family residential	2		Single family residential	60%




Total	$	47

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

Foreclosed Residential Real Estate

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, the amount of~~2020, we did 0t have any foreclosed residential real estate ~~property held by the Bank was less than $1 million for both periods.~~property. The amortized cost basis of consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $7$8 million and $8$10 million for the same periods, respectively.

~~Concentrations of Credit Risk~~

Credit risk is the possibility of loss from the failure of a borrower, guarantor, or another obligor to fully perform under the terms of a credit-related contract. We perform an ongoing analysis of our loan portfolio to evaluate whether there is any significant exposure to any concentrations of credit risk. See Note 6 of our 2019 Annual Report

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

on Form 10-K for further discussion of our evaluation of credit risk concentrations. See also Note 7 of our 2019 Annual Report on Form 10-K for a discussion of counterparty risk associated with the Bank’s derivative transactions.

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Objectives and Accounting

~~The Bank is exposed to certain risks arising from both its business operations and economic conditions.~~ Our ~~objectives in~~primary objective for using derivatives ~~are~~is to ~~add stability~~manage risks, primarily interest rate risk. We use derivatives to manage volatility in interest income, orinterest expense, earnings, and capital by adjusting our interest rate sensitivity

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

to minimize the impact of fluctuations in interest rates. Derivatives are used to stabilize forecasted interest income from variable-rate assets and to modify the coupon or the duration of ~~specific~~fixed-rate financial assets or liabilities as we consider ~~advisable,~~advisable. We also use derivatives as a product for our customers to manage ~~exposure to interest rate movements or other identified risks, and/or to directly offset derivatives sold to our customers.~~their risks. For a more detailed discussion of the use of and accounting policies regarding derivative instruments, see Note 7 of our ~~2019 Annual Report on~~2020 Form 10-K.

Fair Value Hedges – ~~The Bank generally uses interest rate swaps designated as fair value hedges to hedge changes in the fair value~~ of fixed-rate assets and liabilities for specific risks (e.g., interest rate risk resulting from changes in a benchmark interest rate). The Bank used both received-fixed, pay-floating and pay-fixed, receive floating interest rate swaps to effectively convert the fixed-rate assets and liabilities to floating rates. In qualifying fair value hedges, changes in value of the derivative hedging instrument are recognized in current period earnings in the same line item affected by the hedged item. Similarly, the periodic changes in value of the hedged item, for the risk being hedged, are recognized in current period earnings, thereby offsetting all, or a significant majority, of the change in the value of the derivative hedging instrument. Interest accruals on both the derivative hedging instrument and the hedged item are recorded in the same line item, effectively converting the designated fixed-rate assets or liabilities to a floating rate. Generally, the designated risk being hedged in all of the Bank's fair value hedges is the change in fair value of the London Interbank Offered Rate (“LIBOR”) benchmark swap rate component of the contractual coupon cash flows of the fixed-rate assets or liabilities. The swaps are structured to match the critical terms of the hedged items, maximizing the economic (and accounting) effectiveness of the hedging relationships and resulting in the expectation that the swaps will be highly effective as a hedging instrument. All interest rate swaps designated as fair value hedges were highly effective and met all other requirements to remain designated and part of qualifying hedge accounting relationships as of the balance sheet date.

~~Fair value hedges of liabilities~~Liabilities – As of ~~September 30, 2020, the Bank~~March 31, 2021, we had 1 receive-fixed interest rate swap with ~~an aggregate~~a notional amount of $500 million designated in a qualifying fair value hedge relationship of fixed-rate debt. The receive-fixed interest rate swap effectively converts the interest on our fixed-rate debt to floating.

~~At December 31, 2019 we had $1.5 billion~~ During the first quarter of ~~fixed-to-floating interest rate swaps~~2021, derivatives designated as fair value hedges of ~~long-term~~ debt ~~(effectively converting the fixed-rate debt into floating-rate debt). In late March 2020, we terminated $1 billion of swaps (i.e., 2 $500~~decreased in value by $35 million ~~swaps with maturities~~which was offset by changes in ~~August 2021 and February 2022). As a result, the cumulative basis adjustment on the debt at the time of the terminations (which was equal to~~ the fair value of the ~~swaps at~~hedged debt instruments as shown in the ~~termination date) will be amortized as an adjustment to interest expense through the maturity of the debt, thereby reducing the effective interest rate.~~schedules below. During the ~~third~~first quarter of ~~2020, the Bank~~2021, we amortized $3 million of ~~the outstanding~~cumulative unamortized debt basis ~~adjustment. The Bank has $15~~adjustments related to previously terminated fair value hedges of debt. We had $9 million of unamortized debt basis adjustments from previously ~~designed~~designated fair value hedges remaining.

Fair ~~value hedges~~Value Hedges of ~~assets~~Assets – ~~During the third quarter~~As of ~~2020, the Bank began hedging certain newly acquired fixed-rate AFS securities using~~March 31, 2021, we had pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $383 million designated as fair value hedges of certain AFS securities. These swaps effectively ~~converting~~convert the fixed interest income to a floating rate on the hedged portion of the securities. Additionally, during the quarter, two of these hedges were restructured slightly to better match the terms of the hedged securities requiring these hedges to be redesignated. Changes in the fair value of the hedged securities prior to the redesignations were recognized in the amortized cost basis of the securities and, similar to the terminated debt hedges noted above, the unamortized basis adjustments will be amortized to interest income through the originally designated maturity of the hedging relationships. Both hedges were designated as hedges of 30-year US Treasury securities and hedged for the full life of the securities. The cumulative unamortized basis adjustments at the time of the redesignations was $7 million,

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~which will be amortized as an adjustment to interest income through the end of 2050, thereby increasing the effective interest rate recognized on these securities.~~

As of September 30, 2020, the Bank had qualifying fair value hedging relationships of fixed-rate AFS securities being hedged by pay-fixed, receive floating interest rate swaps with an aggregate notional amount of $315 million. During the ~~third~~first quarter of ~~2020,~~2021, derivatives designated as fair value hedges of fixed-rate AFS securities increased in value by ~~$11~~$48 million, which was offset by changes in value of the hedged securities, as shown in the schedules below. We had $7 million of unamortized basis adjustments to AFS securities from previously designated fair value hedges.

Cash Flow Hedges – For derivatives designated as qualifying cash flow hedges, periodic changes in fair value are deferred in AOCI. Amounts deferred in AOCI are reclassified into earnings in the periods in which the hedged forecast transactions (i.e., the hedged floating-rate commercial loan interest receipts) are recognized in earnings or become probable not to occur.

As of ~~September 30, 2020, the Bank~~March 31, 2021, we had ~~$3.2~~$3.5 billion notional amount of receive-fixed interest rate swaps designated as cash flow hedges of pools of floating-rate commercial loans. During the ~~third~~first quarter of ~~2020, the Bank's~~2021, our cash flow hedge portfolio decreased in value by ~~$17~~$20 million, which was recorded in AOCI. The amounts deferred in AOCI are reclassified into earnings in the periods in which the interest payments occur (i.e., when the hedged ~~forecast~~forecasted transactions affect earnings).

Collateral and Credit Risk

Exposure to credit risk arises from the possibility of nonperformance by counterparties. No significant losses on derivative instruments have occurred as a result of counterparty nonperformance. For a more detailed discussion of collateral and credit risk related to our derivative contracts, see Note 7 of our ~~2019 Annual Report on~~2020 Form 10-K.

Our derivative contracts require us to pledge collateral for derivatives that are in a net liability position at a given balance sheet date. Certain of these derivative contracts contain credit-risk-related contingent features that include the requirement to maintain a minimum debt credit rating. We may be required to pledge additional collateral if a credit-risk-related feature were triggered, such as a downgrade of our credit rating. However, in past situations, not all counterparties have demanded that additional collateral be pledged when provided for by the contractual terms. At ~~September 30, 2020,~~March 31, 2021, the fair value of our derivative liabilities was ~~$471~~$284 million, for which we were required to pledge cash collateral of ~~$114~~$76 million in the normal course of business. If our credit rating were downgraded one notch by either Standard & Poor’s (“S&P”) or Moody’s at ~~September 30, 2020,~~March 31, 2021, there would likely be $2 million of additional collateral required to be pledged. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), all newly eligible derivatives entered into are cleared through a central clearinghouse. Derivatives that are centrally cleared do not have credit-risk-related features that require additional collateral if our credit rating were downgraded.

7760

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Derivative Amounts

Selected information with respect to notional amounts and recorded gross fair values at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, is summarized as follows:


		September 30, 2020						December 31, 2019							March 31, 2021						December 31, 2020
		Notional amount		Fair value				Notional amount		Fair value					Notional amount		Fair value				Notional amount		Fair value
(In millions)	(In millions)			Other assets		Other liabilities				Other assets		Other liabilities		(In millions)			Other assets		Other liabilities				Other assets		Other liabilities
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:													Derivatives designated as hedging instruments:
Cash flow hedges of floating rate assets:
Cash flow hedges of floating-rate assets:														Cash flow hedges of floating-rate assets:
Purchased interest rate floors	Purchased interest rate floors	$	0	$	0	$	0	$	0	$	0	$	0	Purchased interest rate floors	$	0	$	0	$	0	$	0	$	0	$	0
Receive-fixed interest rate swaps	Receive-fixed interest rate swaps	3,200		0		0		3,588		0		0		Receive-fixed interest rate swaps	3,450		0		0		3,150		0		0
Fair value hedges:	Fair value hedges:													Fair value hedges:
Debt hedges: Receive-fixed interest rate swaps	Debt hedges: Receive-fixed interest rate swaps	500		0		0		1,500		0		0		Debt hedges: Receive-fixed interest rate swaps	500		0		0		500		0		0
Asset hedges: Pay-fixed interest rate swaps	Asset hedges: Pay-fixed interest rate swaps	315		0		0								Asset hedges: Pay-fixed interest rate swaps	383		15		0		383		3		0
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments	4,015		0		0		5,088		0		0		Total derivatives designated as hedging instruments	4,333		15		0		4,033		3		0
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:													Derivatives not designated as hedging instruments:
Customer-facing interest rate derivatives 1, 2	Customer-facing interest rate derivatives 1, 2	5,529		439		0		4,409		146		5		Customer-facing interest rate derivatives 1, 2	6,229		228		47		5,986		390		2
Offsetting interest rate derivatives 2	Offsetting interest rate derivatives 2	5,530		0		465		4,422		5		157		Offsetting interest rate derivatives 2	6,229		52		233		5,986		3		409
Other interest rate derivatives	Other interest rate derivatives	1,766		25		4		726		3		1		Other interest rate derivatives	1,542		14		1		1,649		20		3
Foreign exchange derivatives	Foreign exchange derivatives	204		3		2		385		4		4		Foreign exchange derivatives	268		3		3		223		4		4
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments	13,029		467		471		9,942		158		167		Total derivatives not designated as hedging instruments	14,268		297		284		13,844		417		418
Total derivatives	Total derivatives	$	17,044	$	467	$	471	$	15,030	$	158	$	167	Total derivatives	$	18,601	$	312	$	284	$	17,877	$	420	$	418

1 Customer-facing interest rate derivatives ~~in an asset position~~ include a ~~$26~~net CVA that was less than $1 million as of March 31, 2021, and an ~~$11~~$18 million net credit valuation adjustment reducing the fair value ~~amounts~~amount as of ~~September 30, 2020 and~~ December 31, ~~2019, respectively. There was no significant debit valuation adjustment for derivative liabilities.~~2020. These adjustments are required to reflect both our nonperformance risk and that of the respective counterparty.

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


		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
(In millions)	(In millions)	Other assets		Other liabilities		Other assets		Other liabilities		(In millions)	Other assets		Other liabilities		Other assets		Other liabilities
Customer-facing interest rate derivatives	Customer-facing interest rate derivatives	$	439	$	0	$	141	$	5	Customer-facing interest rate derivatives	$	228	$	47	$	390	$	2
Offsetting interest rate derivatives	Offsetting interest rate derivatives	0		30		5		9		Offsetting interest rate derivatives	5		20		1		29

The amount of derivative gains (losses) from cash flow and fair value hedges that was deferred in OCI or recognized in earnings for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ is shown in the schedules below. ~~As of September 30, 2020, the gain (losses) from fair value hedges of assets were not significant.~~

Amount of derivative gain (loss) recognized/reclassified
Three Months Ended September 30, 2020
(In millions) Effective Portion of Derivatives Gain/(Loss) Deferred in OCI Excluded Components Deferred in OCI (Amortization Approach) Amount of Gain/(Loss) Reclassified From OCI into Income Interest on Fair Value Hedges Hedge Ineffectiveness / OCI Reclass due to Missed Forecast
Cash flow hedges of floating-rate assets:1
Purchased interest rate floors $ 0 $ 0 $ 3 $ 0 $ 0
Interest rate swaps (1) 0 13 0 0
Fair value hedges of liabilities:
Receive-fixed interest rate swaps 0 0 0 1 0
Basis amortization on terminated hedges 2, 3
0 0 0 3 0
Total derivatives designated as hedging instruments $ (1) $ 0 $ 16 $ 4 $ 0


	Amount of derivative gain (loss) recognized/reclassified
	Three Months Ended March 31, 2021
(In millions)	Effective Portion of Derivatives Gain/(Loss) Deferred in OCI		Excluded Components Deferred in OCI (Amortization Approach)		Amount of Gain/(Loss) Reclassified from OCI into Income		Interest on Fair Value Hedges		Hedge Ineffectiveness / OCI Reclass due to Missed Forecast
Cash flow hedges of floating-rate assets:1
Purchased interest rate floors	$	0	$	0	$	3	$	0	$	0
Interest rate swaps	(5)		0		12		0		0
Fair value hedges of liabilities:
Receive-fixed interest rate swaps	0		0		0		2		0
Basis amortization on terminated hedges 2, 3	0		0		0		3		0
Fair value hedges of assets:
Pay-fixed interest rate swaps	0		0		0		(1)		0
Basis amortization on terminated hedges 2, 3	0		0		0		0		0
Total derivatives designated as hedging instruments	$	(5)	$	0	$	15	$	4	$	0

7861

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


		Amount of derivative gain (loss) recognized/reclassified											Amount of derivative gain (loss) recognized/reclassified
		Three Months Ended September 30, 2019											Three Months Ended March 31, 2020
(In millions)	(In millions)	Effective Portion of Derivatives Gain/(Loss) Deferred in OCI		Excluded Components Deferred in OCI (Amortization Approach)		Amount of Gain/(Loss) Reclassified From OCI into Income		Interest on Fair Value Hedges		Hedge Ineffectiveness / OCI Reclass due to Missed Forecast		(In millions)	Effective Portion of Derivatives Gain/(Loss) Deferred in OCI		Excluded Components Deferred in OCI (Amortization Approach)		Amount of Gain/(Loss) Reclassified from OCI into Income		Interest on Fair Value Hedges		Hedge Ineffectiveness / OCI Reclass due to Missed Forecast
Cash flow hedges of floating-rate assets:1	Cash flow hedges of floating-rate assets:1											Cash flow hedges of floating-rate assets:1
Purchased interest rate floors	Purchased interest rate floors	$	(2)	$	10	$	1	$	0	$	0	Purchased interest rate floors	$	0	$	0	$	3	$	0	$	0
Interest rate swaps	Interest rate swaps	1		0		(2)		0		0		Interest rate swaps	92		0		1		0		0
Fair value hedges of liabilities:	Fair value hedges of liabilities:											Fair value hedges of liabilities:
Receive-fixed interest rate swaps	Receive-fixed interest rate swaps	0		0		0		1		0		Receive-fixed interest rate swaps	0		0		0		2		0
Basis amortization on terminated hedges 2,3	Basis amortization on terminated hedges 2,3	0		0		0		0		0		Basis amortization on terminated hedges 2,3	0		0		0		0		0
Fair value hedges of assets:												Fair value hedges of assets:
Pay-fixed interest rate swaps												Pay-fixed interest rate swaps	0		0		0		0		0
Basis amortization on terminated hedges 2, 3												Basis amortization on terminated hedges 2, 3	0		0		0		0		0
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments	$	(1)	$	10	$	(1)	$	1	$	0	Total derivatives designated as hedging instruments	$	92	$	0	$	4	$	2	$	0

Amount of derivative gain (loss) recognized/reclassified
Nine Months Ended September 30, 2020
(In millions) Effective Portion of Derivatives Gain/(Loss) Deferred in OCI Excluded Components Deferred in OCI (Amortization Approach) Amount of Gain/(Loss) Reclassified From OCI into Income Interest on Fair Value Hedges Hedge Ineffectiveness / OCI Reclass due to Missed Forecast
Cash flow hedges of floating-rate assets:1
Purchased interest rate floors $ 0 $ 0 $ 8 $ 0 $ 0
Interest rate swaps 101 0 24 0 0
Fair value hedges of liabilities:
Receive-fixed interest rate swaps 0 0 0 4 0
Basis amortization on terminated hedges 2, 3
0 0 0 10 0
Total derivatives designated as hedging instruments $ 101 $ 0 $ 32 $ 14 $ 0

Amount of derivative gain (loss) recognized/reclassified
Nine Months Ended September 30, 2019
(In millions) Effective Portion of Derivatives Gain/(Loss) Deferred in OCI Excluded Components Deferred in OCI (Amortization Approach) Amount of Gain/(Loss) Reclassified From OCI into Income Interest on Fair Value Hedges Hedge Ineffectiveness / OCI Reclass due to Missed Forecast
Cash flow hedges of floating-rate assets1:
Purchased interest rate floors $ 0 $ 27 $ 0 $ 0 $ 0
Interest rate swaps 33 0 (6) 0 0
Fair value hedges of liabilities:
Receive-fixed interest rate swaps 0 0 0 2 0
Basis amortization on terminated swaps2,3
0 0 0 0 0
Total derivatives designated as hedging instruments $ 33 $ 27 $ (6) $ 2 $ 0

Note: These schedules are not intended to present, at any given time, ~~the Bank’s~~our long/short position with respect to ~~its~~our derivative contracts.

1 Amounts recognized in OCI and reclassified from AOCI represent the effective portion of the derivative gain (loss). For the 12 months following ~~September 30, 2020,~~March 31, 2021, we estimate that ~~$60~~$57 million will be reclassified from AOCI into interest income.

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

3The cumulative unamortized basis adjustment from previously terminated or redesignated fair value hedges as of ~~September 30, 2020~~March 31, 2021 is ~~$14~~$9 million and $7 million of terminated fair value debt and asset hedges, respectively. The amortization of the cumulative unamortized basis adjustment from asset hedges is not shown in the schedules because it is not significant.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

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


		Noninterest (Other) Income/(Expense)									Other Noninterest Income/(Expense)
(In millions)	(In millions)	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019		(In millions)	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:									Derivatives not designated as hedging instruments:
Customer-facing interest rate derivatives	Customer-facing interest rate derivatives	$	4	$	350	$	68	$	200	Customer-facing interest rate derivatives	$	(182)	$	312
Offsetting interest rate derivatives	Offsetting interest rate derivatives	9		(343)		(65)		(195)		Offsetting interest rate derivatives	206		(313)
Other interest rate derivatives	Other interest rate derivatives	3		14		2		1		Other interest rate derivatives	(4)		9
Foreign exchange derivatives	Foreign exchange derivatives	4		16		6		16		Foreign exchange derivatives	5		7
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments	$	20	$	37	$	11	$	22	Total derivatives not designated as hedging instruments	$	25	$	15

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


		Gain/(loss) recorded in income													Gain/(loss) recorded in income
		Three Months Ended September 30, 2020						Three Months Ended September 30, 2019							Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(In millions)	(In millions)	Derivatives2		Hedged items		Total income statement impact		Derivatives2		Hedged items		Total income statement impact		(In millions)	Derivatives2		Hedged items		Total income statement impact		Derivatives2		Hedged items		Total income statement impact
Debt: Receive-fixed interest rate swaps1, 2	Debt: Receive-fixed interest rate swaps1, 2	$	(3)	$	3	$	0	$	1	$	(1)	$	0	Debt: Receive-fixed interest rate swaps1, 2	$	(35)	$	35	$	0	$	71	$	(71)	$	0
Assets: Pay-fixed interest rate swaps 1, 2	Assets: Pay-fixed interest rate swaps 1, 2	11		(11)		0		0		—		0		Assets: Pay-fixed interest rate swaps 1, 2	48		(48)		0		0		0		0

Gain/(loss) recorded in income
Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
(In millions)
Derivatives2
Hedged items Total income statement impact
Derivatives2
Hedged items Total income statement impact
Debt: Receive-fixed interest rate swaps1, 2
$ 72 $ (72) $ 0 $ 19 $ (19) $ 0
Assets: Pay-fixed interest rate swaps 1, 2
11 (11) 0 0 0 0

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

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

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following schedule provides selected information regarding ~~the long-term debt in the statement of financial position in which the~~basis adjustments for hedged ~~item is included.~~items.

Par value of hedged assets/(liabilities)
Carrying amount of the hedged assets/(liabilities)1
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities)
(In millions) September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
Long-term fixed-rate debt 1, 2
$ (500) $ (1,500) $ (545) $ (1,510) $ (45) $ (10)
Fixed-rate AFS securities 1, 2
315 0 311 0 (4) 0


	Par value of hedged assets/(liabilities)				Carrying amount of the hedged assets/(liabilities)1				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item
(In millions)	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Long-term fixed-rate debt	$	(500)	$	(500)	$	(502)	$	(537)	$	(2)	$	(37)
Fixed-rate AFS securities	383		383		314		362		(69)		(21)

1 Carrying amounts displayed above exclude issuance and purchase discounts or premiums and unamortized issuance/acquisition ~~costs.~~

2 ~~The carrying amount of the hedged items shown above (long-term fixed-rate debt~~costs and ~~fixed-rate AFS securities) excludes~~also exclude amounts related to terminated fair value hedges.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

8. LEASES

We determine if a contract is a lease or contains a lease at inception. The right to use leased assets for the lease term are considered ROU assets. Operating lease assets are included in “Other assets,” and finance lease assets are included in “Premises, equipment and software, net.” Lease liabilities for operating leases are included in “Other liabilities,” and finance leases are included in “Long-term debt” on our consolidated balance sheet. For a more detailed discussion of our lease policies, see Note 8 of our ~~2019 Annual Report on~~2020 Form 10-K.

We have operating and finance leases for branches, corporate offices, and data centers. Our equipment leases are not material. At ~~September 30, 2020,~~March 31, 2021, we had ~~422~~420 branches, of which ~~274~~272 are owned and 148 are leased. We lease our headquarters in Salt Lake City, Utah, and other office or data centers are either owned or leased.

~~The Bank~~We may enter into certain lease arrangements with a term of 12 months or less, and we have elected to exclude these from capitalization. The length of our commitments for leases ranges from ~~2020~~2021 to 2062, some of which include options to extend or terminate the leases.

Assets recorded under operating leases were ~~$217~~$204 million at ~~September 30, 2020,~~March 31, 2021, and ~~$218~~$213 million at December 31, ~~2019,~~2020, while assets recorded under finance leases were $4 million ~~at both of those dates.~~for the same periods. We utilized a secured incremental borrowing rate based on the remaining term of the lease as of the effective date for the discount rate to determine our lease right-of-use (“ROU”) assets and liabilities. The following schedule presents lease-related assets and liabilities, their weighted average remaining life, and the weighted average discount rate.


(Dollar amounts in millions)	(Dollar amounts in millions)	September 30, 2020			December 31, 2019			(Dollar amounts in millions)	March 31, 2021			December 31, 2020

Operating assets and liabilities	Operating assets and liabilities							Operating assets and liabilities
Operating right-of-use assets, net of amortization	Operating right-of-use assets, net of amortization	$	217		$	218		Operating right-of-use assets, net of amortization	$	204		$	213
Operating lease liabilities	Operating lease liabilities	246			246			Operating lease liabilities	231			240
Weighted average remaining lease term (years)	Weighted average remaining lease term (years)							Weighted average remaining lease term (years)
Operating leases	Operating leases	9.0			9.1			Operating leases	8.8			8.9
Finance leases	Finance leases	19.5			20.2			Finance leases	19.0			19.2
Weighted average discount rate	Weighted average discount rate							Weighted average discount rate
Operating leases	Operating leases	3.0		%	3.2		%	Operating leases	2.9		%	2.9		%
Finance leases	Finance leases	3.1		%	3.1		%	Finance leases	3.1		%	3.1		%

The components of lease expense are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2020 2019 2020 2019
Operating lease costs $ 12 $ 12 $ 37 $ 36
Variable lease costs 12 14 36 40
Total lease cost $ 24 $ 26 $ 73 $ 76

~~Supplemental cash flow information related to leases is as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2020 2019 2020 2019
Cash paid for amounts in the measurement of lease liabilities:
Operating cash disbursements from operating leases $ 13 $ 13 $ 38 $ 37

~~ROU assets obtained in exchange for lease liabilities:~~


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020

New operating lease liabilities		$	0	$	6	$	6	$	10
Operating lease costs										Operating lease costs	$	12	$	12

Variable lease costs										Variable lease costs	12		12

Total lease cost										Total lease cost	$	24	$	24

8163

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Supplemental cash flow information related to leases is as follows:


	Three Months Ended March 31,
(In millions)	2021		2020

Cash paid for amounts in the measurement of lease liabilities:
Operating cash disbursements from operating leases	$	12	$	13

ROU assets obtained in exchange for lease liabilities:


	Three Months Ended March 31,
(In millions)	2021		2020

New operating lease liabilities	$	0	$	3

Maturities analysis for operating lease liabilities as of ~~September 30, 2020~~March 31, 2021 is as follows (contractual undiscounted lease payments):


(In millions)	(In millions)			(In millions)

2020 1		$	12
2021		48
2021 1				2021 1	$	37
2022	2022	44		2022	46
2023	2023	38		2023	40
2024	2024	29		2024	30
2025				2025	21
Thereafter	Thereafter	116		Thereafter	95
Total	Total	$	287	Total	$	269

1 Contractual maturities for the ~~three~~nine months remaining in ~~2020.~~2021.

~~The Bank enters~~We enter into certain lease agreements where ~~it is~~we are the lessor of real estate. Real estate leases are made from bank-owned and subleased property to generate cash flow from the property, including from leasing vacant suites in which ~~the Bank occupies~~we occupy portions of the building. Operating lease income was $3 million for both the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019, and $9 million for both the first nine months of 2020 and 2019.~~2020.

~~The Bank also has a lending division that makes~~We make equipment leases, considered to be sales-type leases or direct financing leases, totaling ~~$319~~$310 million and ~~$334~~$320 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. ~~The Bank uses leasing of equipment as a venue for customers to access equipment without purchasing upfront. The Bank~~We recorded income of $3 million on these leases for both the ~~third quarters~~first quarter of ~~2020~~2021 and ~~2019, and $10 million and $11 million for the first nine months of 2020 and 2019, respectively.~~2020.

9. LONG-TERM DEBT AND SHAREHOLDERS’ EQUITY

Long-Term Debt

Long-term debt is summarized as follows:


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Subordinated notes	Subordinated notes	$	627	$	572	Subordinated notes	$	584	$	619
Senior notes	Senior notes	716		1,147		Senior notes	711		713

Finance lease obligations	Finance lease obligations	4		4		Finance lease obligations	4		4
Total	Total	$	1,347	$	1,723	Total	$	1,299	$	1,336

The preceding carrying values represent the par value of the debt adjusted for any unamortized premium or discount, unamortized debt issuance costs, and basis adjustments for interest rate swaps designated as fair value hedges. The change in outstanding senior and subordinated debt balances from December 31, 2019 to September 30, 2020 was primarily a result of the repurchase and retirement of senior notes that had adjustments to their carrying values from being in designated hedge relationships with interest rate swaps. During the second quarter of 2020, the Bank repurchased and retired $219 million of senior notes with an interest rate of 3.50% and $210 million of senior notes with an interest rate of 3.35%.

~~During the first quarter of 2020, the Bank terminated 2 receive-fixed interest rate swaps designated as hedges on senior notes,~~ ~~resulting in one outstanding receive-fixed interest rate swap designated as a hedge on a $500 million subordinated note with an interest rate of 3.25% at September 30, 2020~~. The outstanding swap constitutes a qualifying fair value hedging relationship. The terminated interest rate swaps adjusted the carrying value of the debt and this adjustment will be amortized into earnings until the original maturity date. For more information on derivatives designated as qualifying fair value hedges, see ~~Note 7 – Derivative Instruments and Hedging Activities~~.

Common Stock

~~The Bank’s~~Our common stock is traded on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) Global Select Market. As of ~~September 30, 2020,~~March 31, 2021, there were 164.0 million shares of ~~0.001~~$0.001 par value common stock outstanding. The balance of common stock and additional paid-in capital was $2.7 billion at March 31, 2021, and decreased $33 million, or 1%, from December 31, 2020, primarily due to common stock repurchases. During the

8264

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

common stock outstanding. The balance of common stock and additional paid-in capital was $2.7 billion at September 30, 2020, and decreased $55 million, or 2%, from December 31, 2019, primarily due to Bank common stock repurchases. During the first quarter of ~~2020, the Bank~~2021, we repurchased ~~1.7~~1.0 million common shares ~~of common stock~~ outstanding ~~with a fair value of $75~~for $50 million at an average price of ~~$45.02~~$49.78 per share.

~~On May 22, 2020, 29.2 million common stock warrants (NASDAQ: ZIONW), with an exercise price of $33.31, expired unexercised. Each common stock warrant was convertible into~~ ~~1.10~~ ~~shares and the exercise of the common stock warrants was cashless as the warrants were settled on a net share basis.~~

Accumulated Other Comprehensive Income

Accumulated other comprehensive income ~~improved~~decreased to ~~$332~~$148 million at ~~September 30, 2020~~March 31, 2021, from ~~$43~~$325 million at December 31, ~~2019~~2020, primarily as a result of ~~increases~~decreases in the fair value of AFS securities due to changes in interest rates. Changes in AOCI by component are as follows:

(In millions) Net unrealized gains (losses) on investment securities Net unrealized gains (losses) on derivatives and other Pension and post-retirement Total
Nine Months Ended September 30, 2020
Balance at December 31, 2019 $ 29 $ 28 $ (14) $ 43
OCI before reclassifications, net of tax 228 72 13 313
Amounts reclassified from AOCI, net of tax 0 (24) 0 (24)
OCI 228 48 13 289
Balance at September 30, 2020 $ 257 $ 76 $ (1) $ 332
Income tax expense included in OCI $ 75 $ 16 $ 4 $ 95
Nine Months Ended September 30, 2019
Balance at December 31, 2018 $ (228) $ (1) $ (21) $ (250)
OCI before reclassifications, net of tax 257 39 0 296
Amounts reclassified from AOCI, net of tax 0 3 0 3
OCI 257 42 0 299
Balance at September 30, 2019 $ 29 $ 41 $ (21) $ 49
Income tax expense included in OCI $ 84 $ 14 $ 0 $ 98

Amounts reclassified
from AOCI 1
Amounts reclassified
from AOCI 1
Statement of income (SI)
(In millions) Three Months Ended
September 30, Nine Months Ended
September 30,
Details about AOCI components 2020 2019 2020 2019 Affected line item
Net unrealized gains (losses) on derivative instruments $ 16 $ (1) $ 32 $ (4) SI Interest and fees on loans
Income tax expense (benefit) 4 0 8 (1)
Amounts Reclassified from AOCI 12 (1) 24 (3)


(In millions)	Net unrealized gains (losses) on investment securities		Net unrealized gains (losses) on derivatives and other		Pension and post-retirement		Total
Three Months Ended March 31, 2021
Balance at December 31, 2020	$	258	$	69	$	(2)	$	325

OCI (loss) before reclassifications, net of tax	(165)		(1)		0		(166)
Amounts reclassified from AOCI, net of tax	0		(11)		0		(11)
Other comprehensive income (loss)	(165)		(12)		0		(177)
Balance at March 31, 2021	$	93	$	57	$	(2)	$	148
Income tax benefit included in other comprehensive income (loss)	$	(53)	$	(4)	$	0	$	(57)
Three Months Ended March 31, 2020
Balance at December 31, 2019	$	29	$	28	$	(14)	$	43

OCI before reclassifications, net of tax	147		71		0		218
Amounts reclassified from AOCI, net of tax	0		(2)		0		(2)
Other comprehensive income	147		69		0		216
Balance at March 31, 2020	$	176	$	97	$	(14)	$	259
Income tax expense included in OCI	$	48	$	23	$	0	$	71


	Amounts reclassified from AOCI 1				Statement of income (SI)
(In millions)	Three Months Ended March 31,
Details about AOCI components	2021		2020				Affected line item











Net unrealized gains on derivative instruments	$	15	$	3		SI	Interest and fees on loans
Income tax expense	4		1
Amounts Reclassified from AOCI	11		2

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

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

10. COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES

Commitments and Guarantees

Contractual amounts of off-balance sheet financial instruments used to meet the financing needs of our customers are as follows:


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020

Net unfunded commitments to extend credit 1	Net unfunded commitments to extend credit 1	$	24,123	$	23,099	Net unfunded commitments to extend credit 1	$	24,654	$	24,217
Standby letters of credit:	Standby letters of credit:					Standby letters of credit:
Financial	Financial	526		631		Financial	571		531
Performance	Performance	182		192		Performance	237		167
Commercial letters of credit	Commercial letters of credit	14		5		Commercial letters of credit	25		34
Total unfunded lending commitments	Total unfunded lending commitments	$	24,845	$	23,927	Total unfunded lending commitments	$	25,487	$	24,949

1 Net of participations

~~The Bank’s 2019 Annual Report on~~

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

Our 2020 Form 10-K contains further information about these commitments and guarantees including their terms and collateral requirements. At ~~September 30, 2020, the Bank~~March 31, 2021, we had recorded $8$5 million as a liability for the guarantees associated with the standby letters of credit, which consisted of $6$2 million attributable to the RULC and $2$3 million of deferred commitment fees.

Legal Matters

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

As of ~~September 30, 2020,~~March 31, 2021, we were subject to the following material litigation or governmental inquiries:

•a civil suit, JTS Communities, Inc. et. al v. CB&T, Jun Enkoji and Dawn Satow, brought against us in the Superior Court for Sacramento County, California in June 2017. In this case four investors in our former customer, International Manufacturing Group (“IMG”) seek to hold us liable for losses arising from their investments in that company, alleging that we conspired with and knowingly assisted IMG and its principal in furtherance of an alleged Ponzi scheme. This case is in the discovery phase with dispositive motion practice having been completed. ~~The previously~~Currently, trial is scheduled ~~May 2020~~for June 2021; however, the Court and parties intend to reschedule the trial ~~setting has been vacated~~ to ~~be reset in~~occur during the ~~future due to the COVID-19 pandemic.~~October through December 2021 time frame.

•a civil class action lawsuit, Evans v. CB&T, brought against us in the United States District Court for the Eastern District of California in May 2017. This case was filed on behalf of a class of up to 50 investors in IMG and seeks to hold us liable for losses of class members arising from their investments in IMG, alleging that we conspired with and knowingly assisted IMG and its principal in furtherance of an alleged Ponzi scheme. In December 2017, the District Court dismissed all claims against the Bank. In January 2018, the plaintiff filed an appeal with the Court of Appeals for the Ninth Circuit. The appeal was heard in early April 2019 with the Court of Appeals reversing the trial court’s dismissal. This case is in the post-pleading phase and trial will not occur for a substantial period of time.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

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

•a civil class action lawsuit, Gregory, et. al. v. Zions Bancorporation, brought against us in the United States District Court for Utah in January 2019. This case was filed on behalf of investors in Rust Rare Coin, Inc., alleging that we aided and abetted a Ponzi scheme fraud perpetrated by Rust Rare Coin, a Zions Bank customer. The case follows civil actions and the establishment of a receivership for Rust Rare Coin by The Commodities Futures Trading Commission and the Utah Division of Securities in November 2018, as well as a separate suit brought by the SEC against Rust Rare Coin and its principal, Gaylen Rust. During the third quarter of 2020, the Court granted our motion to dismiss the plaintiffs' claims in part, dismissing claims relating to fraud and fiduciary duty, but allowing a claim for aiding and abetting conversion to proceed. The case is in the early discovery phase. Trial has not been scheduled.

~~During the third quarter~~

Table of ~~2020, the plaintiffs in three civil class action lawsuits,~~ Contents~~Fahmia Inc.v. Zions Bancorporation, et. al., ImpAcct LLC v. JPMorgan Chase, et. al., andManoloff v. Bank of America, et. al.,~~ voluntarily agreed to dismiss their actions against us. These cases alleged that we wrongly failed to pay agents of borrowers receiving loans from us under the Government's Paycheck Protection Program fees that were allegedly owed to them under the program.

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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

In our review, we also assess whether we can determine the range of reasonably possible losses for significant matters in which we are unable to determine that the likelihood of a loss is remote. Because of the difficulty of predicting the outcome of legal matters, discussed subsequently, we are able to meaningfully estimate such a range only for a limited number of matters. Based on information available as of ~~September 30, 2020,~~March 31, 2021, we estimated that the aggregate range of reasonably possible losses for those matters to be from $0 million to roughly ~~$35~~$40 million in excess of amounts accrued. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those matters for which a meaningful estimate is not possible are not included within this estimated range and, therefore, this estimated range does not represent our maximum loss exposure.

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

Any estimate or determination relating to the future resolution of litigation, arbitration, governmental or self-regulatory examinations, investigations or actions or similar matters is inherently uncertain and involves significant judgment. This is particularly true in the early stages of a legal matter, when legal issues and facts have not been well articulated, reviewed, analyzed, and vetted through discovery, preparation for trial or hearings, substantive and productive mediation or settlement discussions, or other actions. It is also particularly true with respect to class action and similar claims involving multiple defendants, matters with complex procedural requirements or

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

substantive issues or novel legal theories, and examinations, investigations and other actions conducted or brought by governmental and self-regulatory agencies, in which the normal adjudicative process is not applicable. Accordingly, we usually are unable to determine whether a favorable or unfavorable outcome is remote, reasonably likely, or probable, or to estimate the amount or range of a probable or reasonably likely loss, until relatively late in the course of a legal matter, sometimes not until a number of years have elapsed. Accordingly, our judgments and estimates relating to claims will change from time to time in light of developments and actual outcomes will differ from our estimates. These differences may be material.

11. REVENUE RECOGNITION

We derive our revenue primarily from interest income on loans and securities, which was ~~more than three-quarters~~approximately 76% of our ~~revenue~~total income in the ~~third~~first quarter of ~~2020.~~2021. Only noninterest income is considered to be revenue from contracts with customers in scope of ASC 606. For a discussion of ~~the Bank’s~~our revenue recognition from contracts, and the implementation of ASC 606, see Note 17 of our ~~2019 Annual Report on~~2020 Form 10-K.

Disaggregation of Revenue

We provide services across different geographical areas, primarily in 11 Western U.S. States, under banking operations that have their own individual brand names, including Zions Bank, Amegy Bank, California Bank & Trust, National Bank of Arizona, Nevada State Bank, Vectra Bank Colorado,The schedule below presents noninterest income and ~~The Commerce Bank of Washington. The~~net revenue by operating ~~segment listed as “Other” includes certain non-bank financial services subsidiaries, centralized back-office functions,~~business segments for the three months ended March 31, 2021 and ~~eliminations of transactions between segments.~~2020. Certain prior period amounts have been reclassified to conform with the current period presentation. These reclassifications did not affect net income or shareholders’ equity.

~~The following schedule presents the noninterest income and net revenue by operating segments for the three months ended September 30, 2020 and 2019:~~

Zions Bank Amegy CB&T
(In millions) 2020 2019 2020 2019 2020 2019
Commercial account fees $ 11 $ 10 $ 9 $ 8 $ 6 $ 6
Card fees 12 13 6 7 3 4
Retail and business banking fees 5 6 4 5 3 3
Capital markets and foreign exchange fees 0 0 1 2 0 0
Wealth management and trust fees 6 4 4 3 1 1
Other customer-related fees 1 1 0 0 0 1
Total noninterest income from contracts with customers (ASC 606) 35 34 24 25 13 15
Other noninterest income (Non-ASC 606 customer related) 5 5 8 12 8 7
Total customer-related fees 40 39 32 37 21 22
Other noninterest income (non-customer related) 0 0 0 0 1 1
Total noninterest income 40 39 32 37 22 23
Other real estate owned gain from sale 0 1 0 0 1 0
Net interest income 162 172 121 123 129 127
Total income less interest expense $ 202 $ 212 $ 153 $ 160 $ 152 $ 150


	Zions Bank				Amegy				CB&T
(In millions)	2021		2020		2021		2020		2021		2020

Commercial account fees	$	11	$	11	$	9	$	9	$	6	$	6
Card fees	13		12		6		6		4		4

8667

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES


		NBAZ				NSB				Vectra
(In millions)		2020		2019		2020		2019		2020		2019

Commercial account fees		$	2	$	2	$	2	$	2	$	2	$	2
Card fees		2		3		3		3		1		2
Retail and business banking fees	Retail and business banking fees	2		2		2		3		1		1		Retail and business banking fees	5		5		4		4		3		3

Capital markets and foreign exchange fees	Capital markets and foreign exchange fees	0		0		0		0		0		0		Capital markets and foreign exchange fees	0		0		1		2		0		0
Wealth management and trust fees		1		1		1		1		1		0
Wealth management fees														Wealth management fees	5		4		3		3		1		1

Other customer-related fees	Other customer-related fees	0		0		0		0		0		0		Other customer-related fees	1		2		1		2		1		2
Total noninterest income from contracts with customers (ASC 606)	Total noninterest income from contracts with customers (ASC 606)	7		8		8		9		5		5		Total noninterest income from contracts with customers (ASC 606)	35		34		24		26		15		16
Other noninterest income (Non-ASC 606 customer related)	Other noninterest income (Non-ASC 606 customer related)	2		2		2		2		3		2		Other noninterest income (Non-ASC 606 customer related)	5		5		8		9		8		8
Total customer-related fees	Total customer-related fees	9		10		10		11		8		7		Total customer-related fees	40		39		32		35		23		24
Other noninterest income (non-customer related)		0		0		0		0		0		0
Other noninterest income (noncustomer-related)														Other noninterest income (noncustomer-related)	(1)		(1)		0		1		1		1
Total noninterest income	Total noninterest income	9		10		10		11		8		7		Total noninterest income	39		38		32		36		24		25
Other real estate owned gain from sale	Other real estate owned gain from sale	0		0		0		1		0		0		Other real estate owned gain from sale	0		0		0		0		0		0
Net interest income	Net interest income	54		56		37		37		34		34		Net interest income	157		163		116		120		131		124
Total income less interest expense	Total income less interest expense	$	63	$	66	$	47	$	49	$	42	$	41	Total income less interest expense	$	196	$	201	$	148	$	156	$	155	$	149

		TCBW				Other				Consolidated Bank					NBAZ				NSB				Vectra
(In millions)	(In millions)	2020		2019		2020		2019		2020		2019		(In millions)	2021		2020		2021		2020		2021		2020

Commercial account fees	Commercial account fees	$	0	$	1	$	0	$	0	$	32	$	31	Commercial account fees	$	2	$	2	$	2	$	2	$	2	$	2
Card fees	Card fees	0		0		1		0		28		32		Card fees	2		3		3		3		1		1
Retail and business banking fees	Retail and business banking fees	0		0		0		0		17		20		Retail and business banking fees	2		2		3		3		1		1

Capital markets and foreign exchange fees	Capital markets and foreign exchange fees	0		0		2		1		3		3		Capital markets and foreign exchange fees	0		0		0		0		0		0
Wealth management and trust fees		0		0		0		5		14		15
Wealth management fees														Wealth management fees	1		1		1		1		0		0

Other customer-related fees	Other customer-related fees	0		0		6		3		7		5		Other customer-related fees	0		0		0		0		1		1
Total noninterest income from contracts with customers (ASC 606)	Total noninterest income from contracts with customers (ASC 606)	0		1		9		9		101		106		Total noninterest income from contracts with customers (ASC 606)	7		8		9		9		5		5
Other noninterest income (Non-ASC 606 customer related)	Other noninterest income (Non-ASC 606 customer related)	1		0		9		4		38		34		Other noninterest income (Non-ASC 606 customer related)	4		3		4		2		3		3
Total customer-related fees	Total customer-related fees	1		1		18		13		139		140		Total customer-related fees	11		11		13		11		8		8
Other noninterest income (non-customer related)		0		0		17		5		18		6
Other noninterest income (noncustomer-related)														Other noninterest income (noncustomer-related)	0		0		0		0		0		0
Total noninterest income	Total noninterest income	1		1		35		18		157		146		Total noninterest income	11		11		13		11		8		8
Other real estate owned gain from sale	Other real estate owned gain from sale	0		0		0		0		1		2		Other real estate owned gain from sale	0		0		0		0		0		0
Net interest income	Net interest income	13		13		5		5		555		567		Net interest income	52		54		37		35		34		33
Total income less interest expense	Total income less interest expense	$	14	$	14	$	40	$	23	$	713	$	715	Total income less interest expense	$	63	$	65	$	50	$	46	$	42	$	41

															TCBW				Other				Consolidated Bank
(In millions)														(In millions)	2021		2020		2021		2020		2021		2020

Commercial account fees														Commercial account fees	$	1	$	1	$	(1)	$	(2)	$	32	$	31
Card fees														Card fees	0		0		0		1		29		30
Retail and business banking fees														Retail and business banking fees	0		0		(1)		1		17		19

Capital markets and foreign exchange fees														Capital markets and foreign exchange fees	0		0		1		1		2		3
Wealth management fees														Wealth management fees	0		0		0		0		11		10

Other customer-related fees														Other customer-related fees	0		0		7		4		11		11
Total noninterest income from contracts with customers (ASC 606)														Total noninterest income from contracts with customers (ASC 606)	1		1		6		5		102		104
Other noninterest income (Non-ASC 606 customer related)														Other noninterest income (Non-ASC 606 customer related)	0		0		(1)		9		31		39
Total customer-related fees														Total customer-related fees	1		1		5		14		133		143
Other noninterest income (noncustomer-related)														Other noninterest income (noncustomer-related)	0		0		36		(10)		36		(9)
Total noninterest income														Total noninterest income	1		1		41		4		169		134
Other real estate owned gain from sale														Other real estate owned gain from sale	0		0		0		0		0		0
Net interest income														Net interest income	13		12		5		7		545		548
Total income less interest expense														Total income less interest expense	$	14	$	13	$	46	$	11	$	714	$	682

~~The following schedule presents the noninterest income and net revenue by operating segments for the nine months ended September 30, 2020 and 2019:~~d

Zions Bank Amegy CB&T
(In millions) 2020 2019 2020 2019 2020 2019
Commercial account fees $ 32 $ 30 $ 28 $ 25 $ 17 $ 17
Card fees 36 38 18 21 10 12
Retail and business banking fees 15 18 11 13 8 10
Capital markets and foreign exchange fees (1) 0 4 4 0 0
Wealth management and trust fees 16 12 12 9 6 3
Other customer-related fees 2 2 1 1 1 1
Total noninterest income from contracts with customers (ASC 606) 100 100 74 73 42 43
Other noninterest income (Non-ASC 606 customer related) 17 9 25 32 23 19
Total customer-related fees 117 109 99 105 65 62
Other noninterest income (non-customer related) (1) 1 0 0 1 1
Total noninterest income 116 110 99 105 66 63
Other real estate owned gain from sale 0 3 0 0 1 0
Net interest income 492 517 368 368 381 387
Total income less interest expense $ 608 $ 630 $ 467 $ 473 $ 448 $ 450

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

NBAZ NSB Vectra
(In millions) 2020 2019 2020 2019 2020 2019
Commercial account fees $ 5 $ 5 $ 6 $ 6 $ 5 $ 5
Card fees 7 8 7 9 4 5
Retail and business banking fees 6 6 7 8 3 3
Capital markets and foreign exchange fees 0 0 0 0 0 0
Wealth management and trust fees 2 1 3 3 3 1
Other customer-related fees 1 1 0 1 0 0
Total noninterest income from contracts with customers (ASC 606) 21 21 23 27 15 14
Other noninterest income (Non-ASC 606 customer related) 9 9 8 5 9 5
Total customer-related fees 30 30 31 32 24 19
Other noninterest income (non-customer related) 0 1 0 0 0 0
Total noninterest income 30 31 31 32 24 19
Other real estate owned gain from sale 0 0 0 1 0 0
Net interest income 162 169 110 111 101 102
Total income less interest expense $ 192 $ 200 $ 141 $ 144 $ 125 $ 121
TCBW Other Consolidated Bank
(In millions) 2020 2019 2020 2019 2020 2019
Commercial account fees $ 1 $ 1 $ (1) $ 1 $ 93 $ 90
Card fees 1 1 0 1 83 95
Retail and business banking fees 0 0 0 0 50 58
Capital markets and foreign exchange fees 0 0 6 5 9 9
Wealth management and trust fees 1 1 1 12 44 42
Other customer-related fees 0 0 14 7 19 13
Total noninterest income from contracts with customers (ASC 606) 3 3 20 26 298 307
Other noninterest income (Non-ASC 606 customer related) 1 1 21 5 113 85
Total customer-related fees 4 4 41 31 411 392
Other noninterest income (non-customer related) 0 0 (3) 15 (3) 18
Total noninterest income 4 4 38 46 408 410
Other real estate owned gain from sale 0 0 0 0 1 4
Net interest income 39 40 12 19 1,665 1,713
Total income less interest expense $ 43 $ 44 $ 50 $ 65 $ 2,074 $ 2,127

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

~~12. RETIREMENT PLANS~~

~~The following discloses the net periodic cost (benefit) and its components for the Bank’s pension and other retirement plans:~~

(In millions) Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Interest cost $ 0 $ 1 $ 2 $ 4
Expected return on plan assets 0 (2) (3) (6)
Pension termination-related expense 0 0 28 1
Amortization of net actuarial loss 0 1 0 1
Net periodic cost $ 0 $ 0 $ 27 $ 0

In October 2018, the Bank announced its intention to terminate the defined benefit pension plan subject to obtaining necessary regulatory approval. The Bank received an IRS letter of determination on March 31, 2020. Plan participants made elections for lump-sum distributions or annuity benefits. Lump-sum distributions were completed in May 2020, and the annuity purchase was completed in June 2020. As a result of the pension termination, the Bank incurred $28 million of expense, which was recognized in Other noninterest expense. The pension plan

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

~~termination expense included a loss of $17 million that was reclassified out of accumulated other comprehensive income, resulting in a pre-tax decrease in shareholders’ equity of $11 million.~~

~~13.~~12. INCOME TAXES

The effective income tax rate of ~~18.6%~~21.7% for the ~~third~~first quarter of ~~2020~~2021 was ~~lower~~higher than the ~~2019 third~~2020 first quarter rate of ~~22.9%~~12.5%. ~~The effective tax rates for the first nine months of 2020 and 2019 were 18.5% and 22.6%, respectively.~~ The income tax rates for ~~2020~~2021 and ~~2019~~2020 were reduced by nontaxable municipal interest income and nontaxable income from certain bank-owned life insurance, and were increased by the non-deductibility of Federal Deposit Insurance Corporation (“FDIC”) premiums, certain executive compensation, and other fringe benefits. Further, the 2020 tax ~~rates were~~rate was reduced as a result of the proportional ~~increases~~increase in nontaxable items and tax credits relative to pretax book income aswhen compared with ~~the prior year periods.~~2021.

We had a net deferred tax ~~asset~~liability (“~~DTA”~~DTL”) balance of ~~$32~~$16 million at ~~September 30, 2020,~~March 31, 2021, compared with ~~$37~~$3 million at December 31, ~~2019.~~2020. The ~~decrease~~increase in ~~the~~ net ~~DTA~~DTL resulted primarily from ~~the decrease of accrued compensation and an increase in unrealized gains in other comprehensive income ("OCI") related to securities. An increase in~~net charge-offs exceeding the provision for loan losses and a decrease in ~~excess of net charge-offs,~~accrued compensation. A decrease in unrealized gains in OCI, related to securities, offset some of the overall ~~decrease~~increase in ~~DTA.~~DTL.

~~There is~~We had 0 valuation allowance at ~~September 30, 2020~~March 31, 2021 or December 31, ~~2019, respectively.~~2020. We evaluate the DTAs on a regular basis to determine whether a valuation allowance is required. In conducting this evaluation, we have considered all available evidence, both positive and negative, based on the more likely than not criteria that such assets will be realized. This evaluation includes, but is not limited to: (1) available carryback potential to prior tax years; (2) potential future reversals of existing deferred tax liabilities, which historically have a reversal pattern generally consistent with DTAs; (3) potential tax planning strategies; and (4) future projected taxable income. Based on this evaluation, and considering the weight of the positive evidence compared with the negative evidence, we have concluded that a valuation allowance iswas not required as of ~~September 30, 2020.~~March 31, 2021.

~~14.~~13. NET EARNINGS PER COMMON SHARE

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions, except shares and per share amounts)	(In millions, except shares and per share amounts)	2020		2019		2020		2019		(In millions, except shares and per share amounts)	2021		2020

Basic:	Basic:									Basic:
Net income	Net income	$	175	$	222	$	255	$	633	Net income	$	322	$	14
Less common and preferred dividends	Less common and preferred dividends	64		67		193		194		Less common and preferred dividends	64		64
Undistributed earnings	Undistributed earnings	111		155		62		439		Undistributed earnings	258		(50)
Less undistributed earnings applicable to nonvested shares	Less undistributed earnings applicable to nonvested shares	1		1		1		2		Less undistributed earnings applicable to nonvested shares	2		0
Undistributed earnings applicable to common shares	Undistributed earnings applicable to common shares	110		154		61		437		Undistributed earnings applicable to common shares	256		(50)
Distributed earnings applicable to common shares	Distributed earnings applicable to common shares	56		59		168		168		Distributed earnings applicable to common shares	56		57
Total earnings applicable to common shares	Total earnings applicable to common shares	$	166	$	213	$	229	$	605	Total earnings applicable to common shares	$	312	$	7
Weighted average common shares outstanding (in thousands)	Weighted average common shares outstanding (in thousands)	163,608		173,160		163,764		178,985		Weighted average common shares outstanding (in thousands)	163,551		164,143
Net earnings per common share	Net earnings per common share	$	1.01	$	1.23	$	1.40	$	3.38	Net earnings per common share	$	1.90	$	0.04

Diluted:	Diluted:									Diluted:
Total earnings applicable to common shares	Total earnings applicable to common shares	$	166	$	213	$	229	$	605	Total earnings applicable to common shares	$	312	$	7
Weighted average common shares outstanding (in thousands)	Weighted average common shares outstanding (in thousands)	163,608		173,160		163,764		178,985		Weighted average common shares outstanding (in thousands)	163,551		164,143
Dilutive effect of common stock warrants (in thousands)	Dilutive effect of common stock warrants (in thousands)	0		8,187		2,027		9,293		Dilutive effect of common stock warrants (in thousands)	0		7,810

Dilutive effect of restricted stock awards and units (in thousands)										Dilutive effect of restricted stock awards and units (in thousands)	0		665
Dilutive effect of stock options (in thousands)	Dilutive effect of stock options (in thousands)	171		523		238		617		Dilutive effect of stock options (in thousands)	336		380
Weighted average diluted common shares outstanding (in thousands)	Weighted average diluted common shares outstanding (in thousands)	163,779		181,870		166,029		188,895		Weighted average diluted common shares outstanding (in thousands)	163,887		172,998
Net earnings per common share	Net earnings per common share	$	1.01	$	1.17	$	1.38	$	3.20	Net earnings per common share	$	1.90	$	0.04

8969

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

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


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
(In thousands)	(In thousands)	2020	2019	2020	2019	(In thousands)	2021	2020

Restricted stock and restricted stock units	Restricted stock and restricted stock units	1,316	1,348	1,347	1,406	Restricted stock and restricted stock units	1,414	627
Stock options	Stock options	923	596	878	451	Stock options	377	766

~~15.~~14. OPERATING SEGMENT INFORMATION

We manage our operations and prepare management reports and other information with a primary focus on ~~geographical~~geographic area. ~~Our banking~~We conduct our operations ~~are~~primarily through 7 separately managed ~~under their~~affiliate banks, each with its own ~~individual brand names,~~local branding and management team, including Zions Bank, Amegy Bank, California Bank & Trust, National Bank of Arizona, Nevada State Bank, Vectra Bank Colorado, and The Commerce Bank of Washington. These affiliate banks comprise our primary business segments. Performance assessment and resource allocation are based upon this ~~geographical~~geographic structure. The operating segment identified as “Other” includes certain non-bank financial service subsidiaries, centralized back-office functions, and eliminations of transactions between segments.

We allocate the cost of centrally provided services to the business segments based upon estimated or actual usage of those services. We also allocate capital based on the risk-weighted assets held at each business segment. We use an internal funds transfer pricing (“FTP”) allocation system and process to report results of operations for business ~~segments. This process~~segments, which is continually refined. In ~~the third quarter of 2019, we made changes to the FTP process to more accurately reflect the cost of funds for loans. Additionally, in~~ the third quarter of 2020, we allocated the net interest income associated with our Treasury department to the ~~affiliates.~~business segments. Historically, this amount was presented in the ~~"Other"~~“Other” segment. Prior period amounts have been revised to reflect the impact of ~~these changes~~this change had ~~they~~it been instituted ~~for~~in the periods presented. Total average loans and deposits presented for the ~~banking~~business segments include insignificant intercompany amounts between ~~banking~~business segments and may also include deposits with the ~~Other~~“Other” segment.

As of ~~September 30, 2020, our banking business is conducted through 7 locally managed and branded segments in distinct geographical areas.~~March 31, 2021, Zions Bank ~~operates~~operated 95 branches in Utah, 25 branches in Idaho, and 1 branch in Wyoming. Amegy ~~operates~~operated 76 branches in Texas. CB&T ~~operates 85~~operated 84 branches in California. NBAZ ~~operates~~operated 56 branches in Arizona. NSB ~~operates 46~~operated 45 branches in Nevada. Vectra ~~operates~~operated 34 branches in Colorado and 1 branch in New Mexico. TCBW ~~operates~~operated 2 branches in Washington and 1 branch in Oregon.

The accounting policies of the individual ~~operating~~business segments are the same as those of the Bank. Transactions between ~~operating~~business segments are primarily conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations.

The following schedules do not present total assets or income tax expense for each operating segment, but instead present average loans, average deposits, and income before income taxes because we use these ~~are the~~ metrics ~~that management uses~~ when evaluating performance and making decisions pertaining to the ~~operating~~business segments. The condensed statement of income identifies the components of income and expense which affect the operating amounts presented in the ~~Other~~“Other” segment.

9070

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

The following schedule presents selected operating segment information for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


		Zions Bank				Amegy				CB&T					Zions Bank				Amegy				CB&T
(In millions)	(In millions)	2020		2019		2020		2019		2020		2019		(In millions)	2021		2020		2021		2020		2021		2020
SELECTED INCOME STATEMENT DATA	SELECTED INCOME STATEMENT DATA													SELECTED INCOME STATEMENT DATA
Net interest income	Net interest income	$	162	$	172	$	121	$	123	$	129	$	127	Net interest income	$	157	$	163	$	116	$	120	$	131	$	124
Provision for credit losses	Provision for credit losses	(10)		1		6		18		36		(6)		Provision for credit losses	(11)		53		(53)		103		(37)		38
Net interest income after provision for credit losses	Net interest income after provision for credit losses	172		171		115		105		93		133		Net interest income after provision for credit losses	168		110		169		17		168		86
Noninterest income	Noninterest income	40		39		32		37		22		23		Noninterest income	39		38		32		36		24		25
Noninterest expense	Noninterest expense	111		114		82		84		74		75		Noninterest expense	117		110		85		82		80		77
Income (loss) before income taxes	Income (loss) before income taxes	$	101	$	96	$	65	$	58	$	41	$	81	Income (loss) before income taxes	$	90	$	38	$	116	$	(29)	$	112	$	34
SELECTED AVERAGE BALANCE SHEET DATA	SELECTED AVERAGE BALANCE SHEET DATA													SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	Total average loans	$	14,237	$	13,229	$	13,476	$	12,438	$	12,954	$	10,819	Total average loans	$	13,730	$	13,001	$	12,704	$	12,399	$	13,051	$	11,022
Total average deposits	Total average deposits	19,283		15,736		13,628		11,842		14,462		11,565		Total average deposits	21,711		15,930		14,243		11,664		15,183		12,129

		NBAZ				NSB				Vectra					NBAZ				NSB				Vectra
(In millions)	(In millions)	2020		2019		2020		2019		2020		2019		(In millions)	2021		2020		2021		2020		2021		2020
SELECTED INCOME STATEMENT DATA	SELECTED INCOME STATEMENT DATA													SELECTED INCOME STATEMENT DATA
Net interest income	Net interest income	$	54	$	56	$	37	$	37	$	34	$	34	Net interest income	$	52	$	54	$	37	$	35	$	34	$	33
Provision for credit losses	Provision for credit losses	6		0		(2)		1		18		(3)		Provision for credit losses	(10)		20		(18)		12		0		25
Net interest income after provision for credit losses	Net interest income after provision for credit losses	48		56		39		36		16		37		Net interest income after provision for credit losses	62		34		55		23		34		8
Noninterest income	Noninterest income	9		10		10		11		8		7		Noninterest income	11		11		13		11		8		8
Noninterest expense	Noninterest expense	37		39		35		35		27		27		Noninterest expense	38		36		36		35		28		27
Income (loss) before income taxes	Income (loss) before income taxes	$	20	$	27	$	14	$	12	$	(3)	$	17	Income (loss) before income taxes	$	35	$	9	$	32	$	(1)	$	14	$	(11)
SELECTED AVERAGE BALANCE SHEET DATA	SELECTED AVERAGE BALANCE SHEET DATA													SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	Total average loans	$	5,305	$	4,769	$	3,310	$	2,708	$	3,542	$	3,161	Total average loans	$	5,108	$	4,736	$	3,247	$	2,716	$	3,451	$	3,102
Total average deposits	Total average deposits	5,996		5,028		5,704		4,547		3,838		2,866		Total average deposits	6,544		5,103		6,069		4,828		4,279		2,988

		TCBW				Other				Consolidated Bank					TCBW				Other				Consolidated Bank
(In millions)	(In millions)	2020		2019		2020		2019		2020		2019		(In millions)	2021		2020		2021		2020		2021		2020
SELECTED INCOME STATEMENT DATA	SELECTED INCOME STATEMENT DATA													SELECTED INCOME STATEMENT DATA
Net interest income	Net interest income	$	13	$	13	$	5	$	5	$	555	$	567	Net interest income	$	13	$	12	$	5	$	7	$	545	$	548
Provision for credit losses	Provision for credit losses	1		(2)		0		1		55		10		Provision for credit losses	(3)		5		0		2		(132)		258
Net interest income after provision for credit losses	Net interest income after provision for credit losses	12		15		5		4		500		557		Net interest income after provision for credit losses	16		7		5		5		677		290
Noninterest income	Noninterest income	1		1		35		18		157		146		Noninterest income	1		1		41		4		169		134
Noninterest expense	Noninterest expense	5		5		71		36		442		415		Noninterest expense	6		6		45		35		435		408
Income (loss) before income taxes	Income (loss) before income taxes	$	8	$	11	$	(31)	$	(14)	$	215	$	288	Income (loss) before income taxes	$	11	$	2	$	1	$	(26)	$	411	$	16
SELECTED AVERAGE BALANCE SHEET DATA	SELECTED AVERAGE BALANCE SHEET DATA													SELECTED AVERAGE BALANCE SHEET DATA
Total average loans	Total average loans	$	1,550	$	1,235	$	619	$	469	$	54,993	$	48,828	Total average loans	$	1,573	$	1,258	$	801	$	563	$	53,665	$	48,797
Total average deposits	Total average deposits	1,316		1,097		2,275		2,603		66,502		55,284		Total average deposits	1,398		1,047		2,019		3,220		71,446		56,909

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

~~The following schedule presents selected operating segment information for the nine months ended September 30, 2020 and 2019:~~

Zions Bank Amegy CB&T
(In millions) 2020 2019 2020 2019 2020 2019
SELECTED INCOME STATEMENT DATA
Net interest income $ 492 $ 517 $ 368 $ 368 $ 381 $ 387
Provision for credit losses 84 27 133 (5) 120 6
Net interest income after provision for credit losses 408 490 235 373 261 381
Noninterest income 116 110 99 105 66 63
Noninterest expense 332 351 243 258 225 239
Income (loss) before income taxes $ 192 $ 249 $ 91 $ 220 $ 102 $ 205
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans $ 13,821 $ 13,079 $ 13,149 $ 12,186 $ 12,170 $ 10,745
Total average deposits 17,735 15,406 12,775 11,549 13,375 11,408
NBAZ NSB Vectra
(In millions) 2020 2019 2020 2019 2020 2019
SELECTED INCOME STATEMENT DATA
Net interest income $ 162 $ 169 $ 110 $ 111 $ 101 $ 102
Provision for credit losses 41 5 49 0 41 3
Net interest income after provision for credit losses 121 164 61 111 60 99
Noninterest income 30 31 31 32 24 19
Noninterest expense 109 116 105 109 80 82
Income (loss) before income taxes $ 42 $ 79 $ (13) $ 34 $ 4 $ 36
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans $ 5,097 $ 4,788 $ 3,066 $ 2,594 $ 3,379 $ 3,107
Total average deposits 5,608 4,990 5,313 4,428 3,497 2,833
TCBW Other Consolidated Bank
(In millions) 2020 2019 2020 2019 2020 2019
SELECTED INCOME STATEMENT DATA
Net interest income $ 39 $ 40 $ 12 $ 19 $ 1,665 $ 1,713
Provision for credit losses 10 0 3 (1) 481 35
Net interest income after provision for credit losses 29 40 9 20 1,184 1,678
Noninterest income 4 4 38 46 408 410
Noninterest expense 16 17 169 98 1,279 1,270
Income (loss) before income taxes $ 17 $ 27 $ (122) $ (32) $ 313 $ 818
SELECTED AVERAGE BALANCE SHEET DATA
Total average loans $ 1,431 $ 1,183 $ 581 $ 432 $ 52,694 $ 48,114
Total average deposits 1,216 1,075 2,634 2,832 62,153 54,521

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

~~The Bank’s~~Our management, with the participation of ~~the Bank’s~~our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of ~~the Bank’s~~our disclosure controls and procedures as of ~~September 30, 2020.~~March 31, 2021. Based on that evaluation, ~~the Bank’s~~our Chief Executive Officer and Chief Financial Officer concluded that ~~the Bank’s~~our disclosure controls and procedures were effective as of ~~September 30, 2020.~~March 31, 2021. There were no changes in our internal control over financial reporting during the ~~Bank’s~~first quarter of 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

9271

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

internal control over financial reporting during the third quarter of 2020 that have materially affected, or are reasonably likely to materially affect, the Bank’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1.A RISK FACTORS

~~In addition to~~We believe there have been no material changes in the risk factors included in Zions Bancorporation, National ~~Association’s 2019 Annual Report on~~Association's 2020 Form ~~10-K, we have added the following risk factor:~~10-K.

~~Our business, financial condition, liquidity and results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic.~~

The COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, our business, financial condition, liquidity, capital and results of operations. The extent to which the COVID-19 pandemic will continue to negatively affect our business, financial condition, liquidity and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the continued effectiveness of our business continuity plan, the direct and indirect impact of the pandemic on our employees, customers, communities, counterparties and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic.

~~The COVID-19 pandemic has contributed to the following, any of which could have an adverse effect on our business, financial condition, liquidity and results of operations:~~

•~~Increased unemployment and decreased consumer confidence and business generally, leading to an increased risk of delinquencies, defaults and foreclosures.~~

•Ratings downgrades, credit deterioration and defaults in many sectors and industries, including, but not limited to, states and municipalities, retail, oil and gas, hotels and casinos, restaurants, telecommunications/media, real estate/construction, airlines and transportation, leisure and recreation.

•~~A sudden and significant reduction in the valuation of the equity, fixed-income and commodity markets and the significant increase in the volatility of those markets.~~

•~~A decrease in the rates and yields on U.S. Treasury and other securities, which may lead to decreased net interest income.~~

•~~Increased demands on capital and liquidity.~~

•~~A reduction in the value of the assets that the Bank manages or otherwise administers or services for others, affecting related fee income and demand for the Bank’s services.~~

•~~Heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements.~~

We are prioritizing the safety of our customers, communities and employees, and have limited branch activity to be occupied by a specified number of individuals at any given time, drive-through services or in-office appointments. Additionally, the majority of employees are working remotely. If these measures are not effective in serving our customers or affect the productivity of our associates, they may lead to significant disruptions in our business operations.

Many of our counterparties and third-party service providers have also been, and may further be, affected by “stay-at-home” orders, market volatility and other factors that increase their risks of business disruption or that may otherwise affect their ability to perform under the terms of any agreements with us or provide essential services. As a result, our operational and other risks are generally expected to increase until the pandemic subsides.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

We are offering special financial assistance to support customers who are experiencing financial hardships related to the COVID-19 pandemic, including waivers of certain withdrawal fees from CDs and savings and money market accounts, loan payment deferrals and extensions, credit card payment extensions, temporary consumer mortgage payment forbearance and payment deferment, suspending initiation of new repossessions of automobiles and other vehicles and suspending new residential property foreclosures on consumer real estate loans. If such measures are not effective in mitigating the effects of the COVID-19 pandemic on borrowers, we may experience higher rates of default and increased credit losses in future periods.

Certain segments and industries where the Bank has credit exposure, including, but not limited to, states and municipalities, retail, oil and gas, hotels and casinos, restaurants, telecommunications/media, real estate/construction, airlines and transportation, leisure and recreation, have experienced significant operational challenges as a result of the COVID-19 pandemic. In some cases, the COVID-19 pandemic accelerated deterioration in industries, such as oil and gas, that were already experiencing increased volatility and stress. These negative effects may result in a number of clients making higher than usual draws on outstanding lines of credit, which may negatively affect our liquidity if current economic conditions persist. These assistance efforts may adversely affect our revenue and results of operations. In addition, the effects of the COVID-19 pandemic may also cause our municipal and commercial customers to be unable to pay their loans as they come due or decrease the value of collateral, which we expect would cause significant increases in our credit losses.

Net interest income is the largest component of the Bank’s revenue. Net interest income is significantly affected by market rates of interest. The significant reductions to the federal funds rate has led to a decrease in the rates and yields on U.S. Treasury securities, in some cases declining below zero. If interest rates are reduced further in response to the COVID-19 pandemic, we expect that our net interest income will decline, perhaps significantly. The overall effect of lower interest rates on the economic environment cannot be predicted at this time and depends on future actions the Federal Reserve may take to increase or reduce the targeted federal funds rate in response to the COVID-19 pandemic, and resulting economic conditions.

Governmental authorities have taken unprecedented measures to provide economic assistance to individual households and businesses, stabilize the markets and support economic growth. The success of these measures is unknown and they may not be sufficient to fully mitigate the negative impact of the COVID-19 pandemic. Additionally, some measures, such as a suspension of mortgage and other loan payments and foreclosures, may have a negative impact on the Bank’s business, financial condition, liquidity and results of operations. We also face an increased risk of litigation and governmental and regulatory scrutiny as a result of the effects of the COVID-19 pandemic on market and economic conditions and actions governmental authorities take in response to those conditions.

The length of the pandemic and the efficacy of the extraordinary measures being put in place to address it are unknown. Until the pandemic subsides, the Bank expects continued draws on lines of credit, reduced revenues and increased customer and client defaults. Even after the pandemic subsides, the U.S. economy may experience a recession which may be prolonged, which could materially and adversely affect the Bank’s business, financial condition, liquidity and capital. To the extent the COVID-19 pandemic adversely affects our business, financial condition, liquidity, capital or results of operations, it may also have the effect of heightening many of the other risks described in the section entitled “Risk Factors” in the Bank’s 2019 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q.

~~Table of Contents~~

~~ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES~~

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

The following schedule summarizes ~~the Bank’s~~our share repurchases for the ~~third~~first quarter of ~~2020:~~2021:

SHARE REPURCHASES

Period
Total number
of shares
repurchased 1
Average
price paid
per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be
purchased under the plan (in millions)
July — $ — — $ —
August 364 32.08 — —
September — — — —
Third quarter 364 32.08 —


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

January		822	$	50.02		—
February		1,009,396	49.79			1,004,005
March		1,925	56.44			—
First quarter		1,012,143	49.81			1,004,005

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

9572

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

ITEM 6. EXHIBITS

a.Exhibits


Exhibit Number	Description

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

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

~~10.1~~	~~Fourth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated September 11, 2020, effective January 1, 2020 (filed herewith).~~

~~10.2~~	~~Fifth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated September 11, 2020, effective January 1, 2020 (filed herewith).~~

~~10.3~~	~~Sixth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated September 11, 2020, effective October 1, 2020 (filed herewith).~~

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

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

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

101	Pursuant to Rules 405 and 406 of Regulation S-T, the following information is formatted in Inline XBRL (i) the Consolidated Balance Sheets as of ~~September 30, 2020~~March 31,2021 and December 31, ~~2019,~~2020, (ii) the Consolidated Statements of Income for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020, ~~and September 30, 2019 and the nine months ended September 30, 2020 and September 30, 2019,~~ (iii) the Consolidated Statements of Comprehensive Income for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020, ~~and September 30, 2019 and the nine months ended September 30, 2020 and September 30, 2019,~~ (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020, ~~and September 30, 2019 and the nine months ended September 30, 2020 and September 30, 2019,~~ (v) the Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and March 31, 2020 ~~and September 30, 2019~~ and (vi) the Notes to Consolidated Financial Statement (filed herewith).

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

* Incorporated by reference

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

9673

Table of Contents

ZIONS BANCORPORATION, NATIONAL ASSOCIATION AND SUBSIDIARIES

SIGNATURES

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



ZIONS BANCORPORATION, NATIONAL ASSOCIATION

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

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

Date: ~~November 4, 2020~~May 6, 2021

9774


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4334

	Consolidated Balance Sheets	4334
	Consolidated Statements of Income	4435
	Consolidated Statements of Comprehensive Income	4536
	Consolidated Statements of Changes in Shareholders’ Equity	4636
	Consolidated Statements of Cash Flows	4837
	Notes to Consolidated Financial Statements	4938

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9271

Item 4.	Controls and Procedures	9271

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	9372

Item 1A.	Risk Factors	9372

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9572

Item 6.	Exhibits	9673

Signatures		9774


(Unaudited)	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollar amounts in millions)	Average balance		Amount of interest 1		Average yield/rate		Average balance		Amount of interest 1		Average yield/rate
ASSETS
Money market investments	$	2,250	$	11	0.65	%	$	1,315	$	26	2.59	%
Securities:
Held-to-maturity	632		17		3.56		736		20		3.69
Available-for-sale	13,967		220		2.11		14,597		262		2.40
Trading account	157		5		4.29		138		5		4.49
Total securities 2	14,756		242		2.19		15,471		287		2.48
Loans held for sale	106		4		4.19		74		1		2.65
Loans and leases 3
Commercial - excluding PPP loans	25,398		794		4.18		24,899		919		4.94
Commercial - PPP loans	3,938		91		3.08		—		—		—
Commercial real estate	11,800		351		3.98		11,656		454		5.21
Consumer	11,558		325		3.75		11,559		369		4.26
Total loans and leases	52,694		1,561		3.96		48,114		1,742		4.84
Total interest-earning assets	69,806		1,818		3.48		64,974		2,056		4.23
Cash and due from banks	625						588
Allowance for loan losses	(692)						(499)
Goodwill and intangibles	1,014						1,014
Other assets	3,960						3,493
Total assets	$	74,713					$	69,570
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Savings and money market	$	30,360	$	53	0.23	%	$	26,418	$	120	0.61	%
Time	3,968		39		1.33		4,889		72		1.97

Total interest-bearing deposits	34,328		92		0.36		31,307		192		0.82
Borrowed funds:
Federal funds purchased and other short-term borrowings	2,073		10		0.61		5,394		100		2.46
Long-term debt	1,611		30		2.50		1,117		32		3.83
Total borrowed funds	3,684		40		1.44		6,511		132		2.70
Total interest-bearing liabilities	38,012		132		0.46		37,818		324		1.14
Noninterest-bearing demand deposits	27,825						23,214
Other liabilities	1,299						974
Total liabilities	67,136						62,006
Shareholders’ equity:
Preferred equity	566						566
Common equity	7,011						6,998
Total shareholders’ equity	7,577						7,564
Total liabilities and shareholders’ equity	$	74,713					$	69,570
Spread on average interest-bearing funds					3.02	%					3.09	%
Net impact of noninterest-bearing sources of funds					0.21						0.47
Net interest margin			$	1,686	3.23				$	1,732	3.56
Memo: total loans and leases, excluding PPP loans	$	48,756	1,470		4.03		$	48,114	1,742		4.84

Memo: total cost of deposits					0.20						0.47
Memo: total deposits and interest-bearing liabilities	65,837		132		0.26		61,032		324		0.70


	September 30, 2020		December 31, 2019
Credit quality measures
Classified loan ratio	10.6	%	2.2	%
Nonaccrual loan ratio	3.2	%	0.7	%
Ratio of nonaccrual loans that are current	74.4	%	66.7	%
Net charge-offs, annualized1	3.4	%	0.5	%
Ratio of allowance for credit losses to oil and gas-related loans, at period end	5.4	%	3.1	%


	Gains (losses) from fair value changes
(In millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
ASSETS
Private equity investments	$	0	$	(1)	$	0	$	(1)
Collateral-dependent loans	1		0		1		(9)
Other real estate owned	0		0		0		(1)
Total	$	1	$	(1)	$	1	$	(11)