ZIONS BANCORPORATION NATIONAL ASSOCIATION UT
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
ZION$64.76-0.3%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-23.
0000109380-24-000061
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-25.
0000109380-25-000040
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 113 current paragraphs.
37 unchanged; 61 reworded; 10 added; 4 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
We have developed comprehensive policies, procedures, and controls to address these risks. However, we cannot guarantee that our actions will effectively prevent or mitigate the impact of these risks on our business or performance. Although not comprehensive, below we describe some of our material risk factors.
Current report
Due to this geographic concentration, our financial performance is largely influenced by economic conditions in these markets. Consequently, any deterioration in economic conditions, including those triggered by climate change or natural disasters, could disproportionately impact these states, leading to higher credit losses and significantly affecting our overall operations and financial results.
Current report
Our primary source of liquidity is deposits from our customers, which can be influenced by market-related forces such as increased competition and other factors. For example, we, like many other banks, experienced heightened volatility in deposit levels and funding costs following the notable bank closures in 2023. If we are unable to fund assets through customer deposits or access other funding sources on favorable terms, or if we face increased borrowing costs or FDIC insurance assessments, or fail to manage liquidity effectively, our liquidity, operating margins, financial condition, and results of operations could be materially and adversely affected.
Current report
Moreover, developments in our and third parties’ use of generative artificial intelligence, as well as the use of mobile and cloud technologies, could heighten these and other operational risks, as certain aspects of the security of such technologies may be complex, unpredictable, or beyond our control. The types of attacks these threat actors use include, but are not limited to, exploiting customer or system vulnerabilities or misconfigurations, denial-of-service, ransomware, compromising business emails, deceiving employees through email phishing or social engineering, and compromising any of our suppliers. Such threats may be difficult to detect over extended periods and could be further exacerbated through threat actors' use of artificial intelligence.
Current report
Political developments, including those arising from transitions in administration and shifts in congressional control, may create volatility and uncertainty, potentially resulting in significant changes in the size, scope, and effectiveness of government agencies and services.
Current report
Political developments, such as those recently announced or enacted by the new administration, may result in sudden changes in laws, policies, and government operations. For example, the administration has taken steps or indicated plans to (1) change leadership of, and potentially combine or eliminate, various regulatory agencies; (2)
Current report
alter the purpose, funding, or enforcement powers of certain agencies; (3) significantly reduce the size of the federal government and workforce; and (4) modify, reinterpret, replace, or repeal various laws, regulations and regulatory guidance.
Current report
These actions may create uncertainties and volatility in U.S. and global markets, potentially affecting the government's ability to provide services at historical levels. They may also impact our ability to obtain guidance and support from the government in addressing existing and emerging risks, such as climate change, cyber attacks, financial privacy, artificial intelligence, and public safety. Many of these actions are being legally challenged or require further legislative action before implementation. The extent and timing of these changes are uncertain, as are their potential impacts, whether beneficial or adverse, on our business, financial performance, and customers.
Current report
The corporate and securities laws governing us are less developed than those for state-chartered corporations, potentially impacting our ability to execute corporate transactions efficiently and optimally.
Current report
There has been an increased focus by politicians, investors, and other stakeholders regarding practices related to environmental and social issues. For example, the new administration has issued executive orders designed to prohibit or limit certain activities often referred to as “diversity, equity, and inclusion” by government agencies, federal contractors, and others. Due to the varying perspectives among stakeholders on these issues, we face an increased risk that any action or inaction on our part may be perceived negatively by some stakeholders, potentially adversely impacting our business and reputation.
Removed paragraphs (4)
Previous report
Our primary source of liquidity is deposits from our customers, which may be impacted by market-related forces such as increased competition for these deposits and a variety of other factors. Deposits across the banking industry have fluctuated in recent quarters in large part due to the increased interest rate environment and prominent bank closures. We, like many other banks, experienced deposit outflows as customers spread deposits among several different banks to maximize their amount of FDIC insurance, moved deposits to institutions offering higher rates or removed deposits from the U.S. financial system entirely. Since the FDIC insurance limit is not inflation-indexed and has not increased since 2008, the percent of our and other regional bank uninsured deposits has steadily increased, and may continue to increase without additional congressional action to increase the FDIC insurance limits.
Previous report
Although our deposit levels have increased during the latter half of 2023, our cost of funds has also increased, primarily as a result of declining noninterest-bearing deposits, growth in interest-bearing deposits, and a higher interest rate environment. The potential for greater volatility and further increased costs remains, particularly if there is negative news surrounding the banking industry or perceived risks regarding bank safety and soundness. In such an environment, some depositors may be more likely to believe that there is greater safety in maintaining large, uninsured deposits at banks deemed “too big to fail,” which may contribute to further deposit runoff and increased deposit costs of community and regional institutions, including the Bank. If we are unable to continue to fund assets through customer bank deposits or access other funding sources on favorable terms, or if we experience continued increases in borrowing costs or FDIC insurance assessments, or otherwise fail to manage liquidity effectively, our liquidity, operating margins, financial condition, and results of operations may be materially and adversely affected.
Previous report
Political developments may also result in substantial changes in tax, international trade, immigration, and other policies. The extent and timing of any such changes are uncertain, as are the potential direct and indirect impacts, whether beneficial or adverse. Regulations and laws may be modified or repealed, and new legislation may be enacted that will affect us and our subsidiaries. The ultimate impact of these proposals cannot be predicted as it is unclear which, if any, may be enacted.
Previous report
The corporate and securities laws applicable to us are not as well-developed as those applicable to a state-chartered corporation, which may impact our ability to effect corporate transactions in an efficient and optimal manner.
Reworded paragraphs (61)
Previous wording
We generate revenue and grow our businesses by taking prudent and appropriately priced and managed risks. These risks are outlined in our Risk Management Framework. Our Board has established an Audit Committee, a Compensation Committee, a Risk Oversight Committee (“ROC”), and appointed an Enterprise Risk Management Committee (“ERMC”) to oversee and implement the Risk Management Framework. The ERMC is comprised of senior management and is chaired by the Chief Risk Officer. These committees monitor the following risk areas: credit risk, interest rate and market risk; liquidity risk; strategic and business risk; operational risk; technology risk; cybersecurity risk; capital/financial reporting risk; legal/compliance risk (including regulatory risk); and reputational risk, as outlined in our risk taxonomy. We have developed policies, procedures, and controls designed to address these risks, but there can be no certainty that our actions will be effective to prevent or limit the effects of these risks on our business or performance. Although not comprehensive, risk factors that are material to us are described below.
Current wording
We generate revenue and grow our businesses by taking prudent and well-managed risks. These risks are outlined in our Risk Management Framework. The Board has established an Audit Committee, a Compensation Committee, a Risk Oversight Committee (“ROC”), and appointed an Enterprise Risk Management Committee (“ERMC”) to oversee and implement the Risk Management Framework. The ERMC is comprised of senior management and is chaired by the Chief Risk Officer. These committees monitor various risk areas, such as credit, interest rate and market, liquidity, strategic and business, operational, technology, cybersecurity, capital/financial reporting, legal/compliance (including regulatory), and reputational risks, as outlined in our risk taxonomy.
Previous wording
Credit risk is one of our most significant risks. Rising interest rates, increased market volatility, or a decline in the strength of the U.S. economy in general or the local economies in which we conduct operations could result in, among other things, deterioration in credit quality and reduced demand for credit, including a resultant adverse effect on the income from our loan and investment portfolios, an increase in charge-offs, and an increase in the allowance for credit losses (“ACL”).
Current wording
Credit risk is one of our most significant risks. Rising interest rates, increased market volatility, or a weakening U.S. economy, both nationally and in the local markets where we operate, could result in, among other things, deterioration in credit quality and reduced demand for credit. This, in turn, may adversely impact the income generated from our loan and investment portfolios, result in higher charge-offs, and necessitate an increase in the allowance for credit losses.
Previous wording
Concentrations of risk from counterparties could adversely affect us, and risk across our loan and investment securities portfolios could pose significant additional credit risk to us due to similar exposures between the two asset types. Concentrations with counterparties on derivative or securities financing transactions could pose additional credit risk.
Current wording
Concentrations of risk from counterparties could adversely affect us. Similar exposures across our loan and investment securities portfolios could pose additional credit risk. Additionally, concentrations with counterparties in derivative or securities financing transactions could further elevate this risk.
Previous wording
We have concentration of risk from counterparties and risk in our loan portfolio, including, but not limited to, loans secured by real estate, oil and gas-related lending, and leveraged and enterprise value lending, which may have unique risk characteristics that may adversely affect our results.
Current wording
We have a concentration of risk in our loan portfolio, including, but not limited to, loans secured by real estate, oil and gas-related lending, and leveraged and enterprise value lending. These loans may have unique risk characteristics that may adversely affect our results.
Previous wording
We engage in commercial real estate (“CRE”) term and construction lending, primarily in our Western states footprint. Certain CRE collateral types, particularly office CRE, continue to experience increased vacancy rates, declining property values, and pressures from rising interest rates, which could result in increased delinquencies and defaults. We also engage in oil and gas-related lending, and we provide leveraged and enterprise value loans across our entire footprint. Certain of these loans may be subject to specific risks, including governmental and social responses to environmental issues and climate change, volatility, and potential significant and prolonged declines in collateral-values and activity levels. Any decline in these portfolios could cause increased credit losses and reduced loan demand, which could adversely affect our business and that of our customers. We may have other unidentified risks in our loan portfolio.
Current wording
Additionally, we engage in oil and gas-related lending, and provide leveraged and enterprise value loans across our entire footprint. These loans may be subject to specific risks, including governmental and social responses to environmental issues and climate change, volatility, and potential significant and prolonged declines in collateral-values and activity levels. Any decline in these portfolios could result in increased credit losses and reduced loan demand, adversely affecting our business and that of our customers. There may also be other unidentified risks within our loan portfolio.
Previous wording
Our business is highly correlated to local economic conditions in a specific geographic region of the U.S.
Current wording
Our business is highly correlated with local economic conditions in a specific geographic region of the U.S.
Previous wording
We provide a wide range of banking products and related services through our local management teams and unique brands in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. At December 31, 2023, loan balances associated with our banking operations in Utah, Idaho, Texas, and California comprised 77%, 69%, and 70% of the commercial, CRE, and consumer lending portfolios, respectively. As a result of this geographic concentration, our financial performance depends largely upon economic conditions in these market areas. Accordingly, deterioration in economic conditions, including those caused by climate change or natural disasters, may specifically affect these states, and could result in higher credit losses and significantly affect our consolidated operations and financial results.
Current wording
We provide a wide range of banking products and related services through our local management teams and distinctive brands across Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. At December 31, 2024, loan balances from our banking operations in Utah, Idaho, Texas, and California accounted for 77% of the commercial lending portfolio, 70% of the CRE lending portfolio, and 70% of the consumer lending portfolio.
Previous wording
Adverse economic conditions pose significant risks to our business, including our loan and investment portfolios, capital levels, results of operations, and financial condition. A slowing economy and uncertainty related to inflationary pressures, including related changes in monetary and fiscal policies and actions, rising interest rates, and decreased values of our fixed-rate assets, can increase these risks and lead to lower demand for loans, higher credit losses, and lower fee income, among other negative effects.
Current wording
Adverse economic conditions present significant risks to our business, impacting our loan and investment portfolios, capital levels, results of operations, and financial condition. A slowing economy, combined with inflationary pressures, changes in monetary and fiscal policies, rising interest rates, and declining values of our fixed-rate assets, as well as tariffs, sanctions, and other policies and actions impacting domestic and global trade, can increase these risks. These factors may lead to reduced loan demand, increased credit losses, and lower fee income, among other negative effects.
Previous wording
Net interest income is the largest component of our revenue. Factors beyond our control can significantly influence the interest rate environment and increase our risk. These factors include changes in the prevailing interest rate environment, competitive pricing pressures for our loans and deposits, adverse shifts in the mix of deposits and other funding sources, and volatile market interest rates resulting from general economic conditions and the policies of governmental and regulatory agencies, in particular the FRB. Most components of our balance sheet are sensitive to rising and falling rates, and mismatches in rate sensitivity between assets and liabilities may result in unanticipated changes in both asset and liability values and related income and expense. Additionally, asset and liability values may be significantly impacted by customer behavior, as customers may choose to withdraw certain deposits or prepay certain loans at any time, which may significantly affect our expected cash flows.
Current wording
Net interest income is the largest component of our revenue. Factors beyond our control can significantly influence the interest rate environment and increase our risk. These factors include changes in the prevailing interest rate environment, competitive pricing pressures for our loans and deposits, adverse shifts in the mix of deposits and other funding sources, and volatile market interest rates resulting from general economic conditions and the policies of governmental and regulatory agencies, particularly the FRB.
Previous wording
Changes in levels and sources of liquidity and capital, including the resulting effects of recent events in the banking industry, may limit our operations and potential growth.
Current wording
Changes in the levels and sources of liquidity and capital may limit our operations and potential growth.
Previous wording
The Federal Reserve’s tightened monetary policy has contributed to a decline in the value of our fixed-rate loans and investment securities that are pledged as collateral to support short-term borrowings. Other economic conditions may also affect (or continue to affect) our liquidity and efforts to manage associated risks. The Federal Home Loan Bank (“FHLB”) system and Federal Reserve have been, and continue to be, a significant source of additional liquidity and funding. Changes in FHLB or Federal Reserve funding programs could adversely affect our liquidity and management of associated risks.
Current wording
The Federal Reserve’s tightened monetary policy has resulted in a decline in the value of our fixed-rate loans and investment securities pledged as collateral for short-term borrowings. Additionally, other economic conditions may continue to impact our liquidity and associated risk management efforts. The Federal Home Loan Bank (“FHLB”) system and Federal Reserve have been, and remain, significant sources of additional liquidity and funding. However, borrowing from the FHLB is subject to requirements and conditions, and may not always be available as a source of liquidity. Changes in FHLB or Federal Reserve funding programs could also adversely affect our liquidity and management of associated risks.
Previous wording
We and the holders of our securities could be adversely affected by unfavorable rating actions from rating agencies.
Current wording
Unfavorable rating actions from rating agencies could adversely affect both us and the holders of our securities.
Previous wording
We access capital markets to augment our funding. This access is affected by the ratings assigned to us by rating agencies. The rates we pay on our securities are also influenced by, among other things, the credit ratings that we and our securities receive from recognized rating agencies. Ratings downgrades to us or our securities could increase our costs or otherwise have a negative effect on our liquidity position, financial condition, or the market prices of our securities.
Current wording
We access capital markets to supplement our funding. This access is influenced by the ratings assigned to us by rating agencies. The rates we pay on our securities are also affected by, among other factors, the credit ratings assigned to us and our securities by recognized rating agencies. Ratings downgrades to us or our securities could increase our costs or otherwise negatively impact our liquidity position, financial condition, or the market prices of our securities.
Previous wording
Problems encountered by other financial institutions could adversely affect financial markets generally and have indirect adverse effects on us.
Current wording
Challenges faced by other financial institutions could adversely affect financial markets as a whole and have indirect adverse effects on us.
Previous wording
The soundness and stability of many financial institutions may be closely interrelated as a result of credit, trading, clearing, or other relationships between the institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses, or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms, and exchanges, with which we interact on a daily basis, and therefore, could adversely affect us. This phenomenon has been evident in the recent events affecting the banking industry (such as the prominent bank closures), as financial institutions like us have been impacted by concerns regarding the soundness or creditworthiness of other financial institutions or reports of the risk of systemic deterioration in asset classes, such as commercial real estate. This has caused substantial and cascading disruptions within the financial markets and deposits environment, increased expenses, reduced bank fees, and adversely impacted the market price and volatility of our common stock.
Current wording
The soundness and stability of many financial institutions may be closely interrelated due to credit, trading, clearing, or other relationships between these institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses, or defaults by other institutions. This phenomenon, sometimes referred to as “systemic risk,” may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms, and exchanges, with which we interact on a daily basis, and therefore, could adversely affect us.
Previous wording
We may not be able to hire or retain qualified personnel or effectively promote our corporate culture, and recruiting and compensation costs may increase as a result of changes in the workplace, marketplace, economy, and regulatory environment.
Current wording
We may not be able to hire or retain qualified personnel or effectively promote our corporate culture, and recruiting and compensation costs may increase due to changes in the workplace, marketplace, economy, and regulatory environment.
Previous wording
Our ability to execute our strategy, provide services, and remain competitive may suffer if we are unable to recruit or retain qualified people, or if the costs of employee compensation and benefits increase substantially. Bank regulatory agencies have published regulations and guidance that limit the manner and amount of compensation that banking organizations provide to employees. These regulations and guidance may adversely affect our ability to attract and retain key personnel. Some of these limitations may not apply to institutions with which we compete for talent, in particular, as we are more frequently competing for personnel with financial technology providers and other entities that may not have the same limitations on compensation as we do. If we were to suffer such adverse effects with respect to our employees, our business, financial condition and results of operations could be adversely or materially affected.
Current wording
Our ability to execute our strategy, provide services, and remain competitive may be compromised if we are unable to recruit or retain qualified personnel, or if employee compensation and benefits costs increase substantially. Bank regulatory agencies have issued regulations and guidance that limit the manner and amount of compensation that banking organizations can provide to employees. These regulations and guidance may adversely affect our ability to attract and retain key personnel. Some of these limitations may not apply to institutions with which we compete for talent, particularly as we increasingly compete with financial technology providers and other entities that may not be subject to the same compensation limitations. If we experience such adverse effects with respect to our employees, our business, financial condition, and results of operations could be adversely or materially impacted.
Previous wording
Our ability to retain talent may also be adversely affected by changes in the economy and workforce trends, priorities, migration, modes of delivery and other considerations, such as the increased ability of employees to work from anywhere in many industries. This growth in remote work and other changing priorities and benefits has led to an increase in compensation and related expenses and workplace challenges, such as fewer opportunities for face-to-face interactions, training and mentoring new employees, promoting a cohesive corporate culture, and increased competition for experienced labor, especially in high-demand and highly skilled categories. Inflationary pressures have also increased our compensation costs and are likely to continue to do so in the future.
Current wording
Our ability to retain talent may also be adversely affected by changes in the economy and workforce trends, priorities, migration, modes of delivery and other considerations, such as the increased ability of employees to work remotely across many industries. This growth in remote work, along with changing priorities and benefits, has led to increased compensation and related expenses, as well as workplace challenges. These challenges include fewer opportunities for face-to-face interactions, training and mentoring new employees, promoting a cohesive corporate culture, and increased competition for experienced labor, particularly in high-demand and highly skilled categories. Additionally, inflationary pressures have increased our compensation costs and are likely to continue to do so in the future.
Previous wording
We have made, and are continuing to make, significant changes that include, among other things, organizational restructurings, efficiency initiatives, and replacement or upgrades of technology systems to improve our operating efficiency and control environment. The ultimate success and completion of these changes, and their effects on us, may vary significantly from intended results, which could materially adversely affect us.
Current wording
We have implemented and are continuing to implement significant changes, including organizational restructurings, efficiency initiatives, and the replacement or upgrading of technology systems to improve our operating efficiency and control environment. The ultimate success and completion of these changes, and their effects on us, may vary significantly from intended results, which could materially adversely affect us.
Previous wording
We continue to invest in a variety of strategic projects designed to improve our products and services and to simplify how we do business. These initiatives and other significant changes continue to be implemented and are in various stages of completion. By their very nature, projections of duration, cost, expected savings, expected efficiencies, and related items are subject to change and significant variability. There can be no certainty that we will achieve the expected benefits or other intended results associated with these projects.
Current wording
In July 2024, we successfully completed the final phase of our multi-year project to replace our core loan and deposit banking systems. We continue to invest in a variety of strategic projects designed to enhance our products and services and simplify our business operations. These initiatives and other significant changes are ongoing and at various stages of completion. By their nature, projections regarding duration, cost, expected savings, expected efficiencies, and related items are subject to change and significant variability. There is no certainty that we will achieve the expected benefits or other intended results associated with these projects.
Previous wording
We could be adversely affected by our ability to develop, adopt, implement, and deliver technology advancements.
Current wording
Our ability to develop, adopt, implement, and deliver technological advancements could adversely affect us.
Previous wording
Our ability to remain competitive is increasingly dependent upon our ability to maintain critical technological capabilities, and to identify and develop new, value-added products for existing and future customers. These technological competitive pressures arise from both traditional banking and nontraditional sources. Larger banks may have greater resources and economies of scale attendant to maintaining existing capabilities and developing digital and other technologies. Fintechs and other technology platform companies continue to emerge and compete with traditional financial institutions across a wide variety of products and services. Industry experimentation with, and adoption of, artificial intelligence (“AI”), the expansion of blockchain technologies, and digital currencies, including the potential creation and adoption of central bank digital currencies, present similar risks. Our failure to remain technologically competitive could impede our competitive market position and reduce customer satisfaction, product accessibility, and relevance.
Current wording
Our ability to remain competitive increasingly depends on maintaining critical technological capabilities, and identifying and developing new, value-added products for existing and future customers. These technological competitive pressures arise from both traditional banking and nontraditional sources. Larger banks may have greater resources and economies of scale for maintaining existing capabilities and developing or adopting digital and other technologies. Fintechs and other technology platform companies continue to emerge and compete with traditional financial institutions across a wide variety of products and services. Experimentation with, and adoption of, artificial intelligence, quantum computing, the expansion of blockchain technologies and digital currencies, including the potential creation and adoption of central bank digital currencies, as well as the increasing use and mainstream acceptance of such digital currencies, may fundamentally change the business of banking and present similar risks.
Previous wording
Our operations could be disrupted by the effects of new and ongoing projects and initiatives.
Current wording
Our operations could be disrupted by the impact of new and ongoing projects and initiatives.
Previous wording
We may encounter significant operational disruptions arising from our numerous projects and initiatives. These may include significant time delays, cost overruns, loss of key people, technological problems, and processing failures. We may also experience operational disruptions due to capacity constraints, service level failures and inadequate performance, and certain replacement costs. Any or all of these issues could result in disruptions to our systems, processes, control environment, procedures, employees, and customers. The ultimate effect of any significant disruption to our business could subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability, any of which could materially affect us, including our control environment, operating efficiency, and results of operations.
Current wording
We may encounter significant operational disruptions arising from our numerous projects and initiatives. These disruptions may include significant time delays, cost overruns, loss of key personnel, technological issues, and processing failures. Additionally, we may experience operational disruptions due to capacity constraints, service level failures, inadequate performance, and certain replacement costs. Any or all of these issues could disrupt our systems, processes, control environment, procedures, employees, and customers. The ultimate effect of any significant disruption to our business could subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability, any of which could materially impact us, including our control environment, operating efficiency, and results of operations.
Previous wording
We could be adversely affected by failure in our internal controls.
Current wording
We could be adversely affected by failures in our internal controls.
Previous wording
Because of their inherent limitations, our internal controls may not prevent or detect the risk of operational failures, misstatements in our financial statements, or capital arising from inadequate or failed internal processes or systems, human errors or misconduct, or other adverse external events. A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators, and investors may have of us and adversely affect our business and our stock price.
Current wording
Due to their inherent limitations, our internal controls may not prevent or detect operational failures or misstatements in our financial statements arising from inadequate or failed internal processes and systems, human errors or misconduct, or other adverse external events. A failure in our internal controls could significantly negatively impact our earnings, and the perception that customers, regulators, and investors may have of us, thereby adversely affecting our business and stock price.
Previous wording
Attempts to commit fraud both internally and externally are becoming increasingly more sophisticated and may increase in an adverse economic environment. We have experienced losses in the past as a result of these attempts and schemes and may not be able to identify, prevent, or otherwise mitigate all instances of fraud in the future that have the potential to result in material losses. These attempts may go undetected by the systems and procedures that we have in place to monitor our operations.
Current wording
Attempts to commit fraud, both internally and externally, are becoming increasingly sophisticated and may rise in an adverse economic environment. We have experienced losses in the past due to these attempts and schemes and may not be able to identify, prevent, or mitigate all instances of fraud in the future that could result in material losses. These attempts may go undetected by the systems and procedures we have in place to monitor our operations.
Previous wording
Climate-related and other catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, floods, prolonged drought, and pandemics may adversely affect us, our customers, and the general economy, financial and capital markets, and specific industries.
Current wording
Climate-related and other catastrophic events, including but not limited to, hurricanes, tornadoes, earthquakes, wildfires, floods, mudslides, prolonged drought, and pandemics may adversely affect us, our customers, the general economy, financial and capital markets, and specific industries.
Previous wording
The occurrence of pandemics, natural disasters, and other climate-related or catastrophic events could materially and adversely affect our operations and financial results. We have significant operations and customers in Utah, Texas, California, and other regions where natural and other disasters have occurred, and are likely to continue to occur. These regions are known for being vulnerable to natural disasters and other risks, such as hurricanes, tornadoes, earthquakes, fires, floods, prolonged droughts, and other weather-related events, some of which may be exacerbated by climate change and become more frequent and intense. These types of catastrophic events at times have posed physical risks to our property and have disrupted the local economy, our business, and customers, including decreased access to insurance and other services. In addition, catastrophic events occurring in other regions of the world may have an impact on us and our customers.
Current wording
The occurrence of pandemics, natural disasters, and other climate-related or catastrophic events could materially and adversely affect our operations and financial results. We have significant operations and customers in Utah, Texas, California, and other regions where natural and other disasters have occurred, and are likely to continue to occur. These regions are known for being vulnerable to natural disasters and other risks, such as hurricanes, tornadoes, earthquakes, wildfires, floods, mudslides, prolonged droughts, and other weather-related events, some of which may be exacerbated by climate change and become more frequent and intense. These types of catastrophic events, including the recent wildfires in Southern California, have posed physical risks to our property and disrupted the local economy, our business, and customers, including decreased access to insurance and other services. Additionally, catastrophic events occurring in other regions of the world may have an impact on us and our customers.
Previous wording
We use models in the management of the Bank. There is risk that these models are inaccurate in various ways, which may cause us to make suboptimal decisions.
Current wording
We utilize models in the management of the Bank. There is a risk that these models are inaccurate in various ways, potentially leading to suboptimal decisions.
Previous wording
We rely on models in the management of the Bank. For example, we use models to inform our estimate of the allowance for credit losses, to manage interest rate and liquidity risk, to project stress losses in various segments of our loan and investment portfolios, and to project net revenue under stress. Models are inherently imperfect and cannot perfectly predict outcomes. Management decisions that are largely informed by such models, therefore, may be suboptimal. For example, with the recent prominent bank closures during the first half of 2023, customer deposit behavior deviated from modeled behaviors, and as a result, we redeveloped our deposit models, which are currently used by management. For more information about our deposit models, see “Interest Rate and Market Risk Management” in MD&A on page 63.
Current wording
We rely on models in the management of the Bank. For example, we use models to inform our estimate of the allowance for credit losses, manage interest rate and liquidity risk, project stress losses in various segments of our loan and investment portfolios, and forecast net revenue under stress. However, models cannot perfectly predict outcomes, and management decisions based on these models may therefore be suboptimal. For example, due to the prominent bank closures in 2023, customer deposit behavior deviated from modeled behaviors, prompting us to redevelop our deposit models, which are currently used by management. For more information about our deposit models, see “Interest Rate and Market Risk Management” in MD&A on page 70.
Previous wording
We outsource various operations to third-party vendors, which could adversely impact our business and operational performance.
Current wording
We outsource various operations to third-party suppliers, which could adversely impact our business and operational performance.
Previous wording
We rely on various vendors to perform operational activities to conduct our business. Although there are benefits in entering into these relationships, there are risks associated with such activities. Our operational controls and third-party management programs may not provide adequate oversight and control. Inadequate performance by third parties can adversely affect our ability to deliver products and services to our customers and conduct our business. Replacing or finding alternatives for vendors who do not perform adequately can be difficult and costly, and may also adversely impact our customers and other operations, particularly when circumstances require us to make changes under tight time constraints. Many of our vendors have experienced adverse effects upon their operations, supply chains, personnel, and businesses arising from inflationary pressures, wars and geopolitical conflicts, cyber vulnerabilities, and other events, all of which can impact our operations as well.
Current wording
We rely on various suppliers to perform operational activities essential to our business. While these relationships offer benefits, they also present risks. These risks vary based on several factors, such as the type and amount of data our suppliers may access or process, the concentration of services they provide to us, and the national and international locations from which they operate. Our operational controls and third-party management programs may not always provide adequate oversight and control. Inadequate performance by third parties can adversely affect our ability to deliver products and services to our customers and conduct our business. Replacing or finding alternatives for underperforming suppliers can be difficult and costly, potentially adversely impacting our customers and other operations, especially when circumstances require us to make changes under tight time constraints. Many of our suppliers have experienced adverse effects on their operations, supply chains, personnel, and businesses due to inflationary pressures, wars and geopolitical conflicts, cyber vulnerabilities, natural disasters, and other events, all of which can impact our operations as well.
Previous wording
We could be adversely impacted by system vulnerabilities, failures, or outages impacting operations and customer services such as online and mobile banking.
Current wording
Our operations and customer services could be adversely impacted by system vulnerabilities, failures, or outages.
Previous wording
We rely on various information technology systems that work together in supporting internal operations and customer services. Vulnerabilities in, or a failure or outage of, one or many of these systems could impact the ability to perform internal operations and provide services to customers, such as online banking, mobile banking, remote deposit capture, treasury and payment services, and other services dependent on system processing. These risks increase as systems and software approach the end of their useful life or require more frequent updates and modifications. We cannot guarantee that such occurrences will not have a significant operational or customer impact.
Current wording
We rely on various information technology systems that support our internal operations and customer services. Vulnerabilities in, or a failure or outage of, one or more of these systems could impact our ability to perform internal operations and provide services to customers, such as online banking, mobile banking, remote deposit capture, treasury and payment services, and other services dependent on system processing. These risks increase as systems and software approach the end of their useful life or require more frequent updates and modifications. We have well-established business continuity, disaster recovery, and crisis management protocols that may not be sufficient to restore our operations in the event of system failure or other outages. We cannot guarantee that such occurrences will not have a significant operational or customer impact.
Previous wording
For information regarding risks associated with the replacement or upgrades of our core technology systems, see “Strategic and Business Risk” in Risk Factors on page 16. For information about how we manage technology risk, see “Operational, Technology, and Cybersecurity Risk Management” in MD&A on page 70.
Current wording
For information regarding risks associated with the replacement or upgrades of our technology systems, see “Strategic and Business Risk” in Risk Factors on page 16. For information about how we manage technology risk, see “Operational, Technology, and Cybersecurity Risk Management” in MD&A on page 76.
Previous wording
We are subject to a variety of information system failure and cybersecurity risks that could adversely affect our business and financial performance.
Current wording
We are subject to various information system failures and cybersecurity risks that could adversely affect our business and financial performance.
Previous wording
We rely heavily on communications and information systems to conduct our business. We process and maintain on our systems certain information that is confidential, proprietary, personal, or otherwise sensitive, including financial and other confidential business information. We, our customers, and other financial institutions with which we interact, are subject to ongoing, continuous attempts by threat actors, such as organized cybercrime, hackers, and state-sponsored organizations to penetrate key systems. Information security risks for us and other large financial institutions have increased significantly in recent years, in part because of the proliferation of new technologies, the ubiquity of internet connections, and the increased sophistication and activities of threat actors. The types of attacks these threat actors may use include, but are not limited to: exploiting customer or system vulnerabilities or misconfigurations, deceiving employees through email phishing or social engineering, and compromising any of our suppliers.
Current wording
We rely heavily on communications and information systems to conduct our business. Our systems process and maintain information that is confidential, proprietary, personal, or otherwise sensitive, including financial and other confidential business information. We, our customers, and other financial institutions with which we interact, are subject to ongoing, continuous attempts by threat actors, such as organized cybercrime, hackers, and state-sponsored organizations, to penetrate key systems. Information security risks for us and other large financial institutions have increased significantly in recent years, partly due to the proliferation of new technologies, including artificial intelligence, the ubiquity of internet connections, and the increased sophistication and activities of threat actors.
Previous wording
Third parties, including our suppliers and their subcontractors, also present operational and information security risks to us, including security incidents or failures of their own systems and downstream systems. In incidents involving third parties, we may not be informed promptly of any effect on our services or our data, or be able to participate in any related investigation, notification, or remediation that occurs. The possibility of third-party or employee error, failure to follow security procedures, or malfeasance also presents these risks.
Current wording
Third parties, including our suppliers and their subcontractors, also present operational and information security risks to us, including security incidents or failures of their own systems and downstream systems. In incidents involving third parties, we may not be informed promptly of any effect on our services or our data, nor be able to participate in any related investigation, notification, or remediation. The possibility of third-party or employee error, failure to follow security procedures, or malfeasance also presents these risks.
Previous wording
As cybersecurity threats continue to evolve, we will be required to expend additional resources to continue to modify or enhance our defenses or to investigate or remediate any information security vulnerabilities. We, and our third-party suppliers, have experienced cybersecurity incidents in the past that have not had material impact to our data, customers, or operations, but there can be no assurance that any such failure, interruption, or significant security breach will not occur in the future, or, if any future occurrences will be adequately addressed. It is impossible to determine the severity or potential effects of these incidents with any certainty.
Current wording
As cybersecurity threats continue to evolve, we allocate necessary resources to modify or enhance our defenses and investigate or remediate any information security vulnerabilities. While we and our third-party suppliers have experienced cybersecurity incidents in the past that have not materially impacted our data, customers, or operations, there can be no assurance that future failures, interruptions, or significant security breaches will not occur or that they will be adequately addressed. It is impossible to determine the severity or potential effects of these incidents with any certainty.
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Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
We have a concentration of risk from counterparties, which may have unique risk characteristics that may adversely affect our results.
Current report — wording carried from elsewhere
We engage in commercial real estate (“CRE”) term and construction lending, primarily within our Western states footprint. Certain CRE collateral types, particularly multifamily, industrial, and office properties, continue to experience increased vacancy rates, declining property values, rent concessions, elevated costs, and pressures from higher interest rates. These factors could lead to increased delinquencies and defaults.
Current report — wording carried from elsewhere
Most components of our balance sheet are sensitive to fluctuations in interest rates. Mismatches in rate sensitivity between assets and liabilities may result in unanticipated changes in their values, as well as related income and expense. Additionally, customer behavior can significantly impact asset and liability values, as customers may choose to withdraw certain deposits or prepay certain loans at any time, affecting our expected cash flows.
Current report — wording carried from elsewhere
This phenomenon has been evident in recent times, as financial institutions like ours were impacted by concerns regarding the soundness or creditworthiness of other financial institutions or reports of systemic deterioration in asset classes, such as commercial real estate. These concerns caused substantial and cascading disruptions within the financial markets and deposits environment, increased expenses, reduced bank fees, and adversely impacted the market price and volatility of our common stock.
Current report — wording carried from elsewhere
Our failure to remain technologically competitive could impede our market position and reduce customer satisfaction, product accessibility, and relevance.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Changes in applicable tax laws, regulations, macroeconomic conditions, or market conditions may adversely affect our financial results, and there can be no assurance that we will be able to fully realize our deferred tax assets.