Zions’ stock plummets in wake of SVB collapse, but here’s why Utah bank’s CEO says your money is safe

President Scott Anderson says the Salt Lake City-based institution “remains strong” with “access to tens of billions of dollars of readily available liquidity.”

Shares in Utah-based Zions Bancorp plunged Monday as effects from the collapse of two other large banks rippled through the U.S. financial system.

In a personal letter sent to bank customers Monday, Zions Bank President and CEO Scott Anderson acknowledged the failures of Silicon Valley Bank in California and New York City’s Signature Bank “have rattled the markets as well as many people’s nerves,” but he said that Zions remained in strong financial condition, with “access to tens of billions of dollars of readily available liquidity.”

[Read more: ‘Could have been devastating’: Utah prepared to help businesses impacted by Silicon Valley Bank collapse.]

Zions’ share price nonetheless fell 44.1% early Monday as markets opened, declining from $40.35 to $22.55, and trading in its shares, along with those of three other regional banks, was temporarily halted amid the volatility. Zions closed the day at $29.97, down 25.7%.

First Republic Bank, a regional bank based in San Francisco; PacWest Bancorp, headquartered in Beverly Hills; and Regions Financial, headquartered in Alabama, also saw their trading suspended and shares battered as part of a wider negative reaction by jittery investors to the tumult in the financial sector.

As the broader sector fell Monday and federal regulators moved to take over the two collapsed banks, President Joe Biden also sought to reassure Americans the U.S. banking industry was safe and that customers’ deposits will “be there when you need them.”

Anderson noted in his letter that Treasury Department and federal banking regulators had swiftly stepped in to protect depositors in the two bank failures and to prevent problems from spreading. That, he said, “should put to rest concerns about the ability of the banking industry to fully and timely meet their obligations to every depositor.”

The two collapsed institutions also had unique features, he pointed out, that made them unstable amid rising interest rates — qualities Zions does not share. What set SVB and Signature Bank “apart was their extremely high growth rates in recent years,” the CEO said, “and their concentrations of large, uninsured deposits from clients in the technology and cryptocurrency industries, respectively.”

[More: What the Silicon Valley Bank failure means for Utah startups, according to a VC partner.]

Zions’ deposits, Anderson said, are held in 1.4 million accounts with sums overwhelmingly smaller in size than the average balance at Silicon Valley Bank, which made the Santa Clara-based institution “much more susceptible to the kinds of outflows they experienced last week. The situation was similar at Signature Bank.”

Zions, according to Anderson, has access to billion in liquidity, “without having to sell securities. The credit quality of our loan and securities portfolios has been outstanding in recent years, and our capital remains strong.”

Headquartered in Salt Lake City, the bank holding company serves customers primarily in Utah, Idaho and Wyoming, with nearly 10,000 full-time equivalent employees as of the end of last year. It reported annual net revenue of $3.2 billion in 2022 and total assets of approximately $90 billion.

According to its annual report, it operates seven affiliate banks, including Zions as well as California Bank & Trust, Amegy Bank of Texas, National Bank of Arizona, Nevada State Bank, Vectra Bank Colorado, and The Commerce Bank of Washington. The bank holding company reported more than a million customers at the end of 2022, served via 416 branches.

An analyst with Dow Jones & Co. published a report Saturday saying some of SVB’s underlying problems stemmed from its tight focus on the technology sector and from maintaining “a balance sheet heavy with [investment] securities and relatively light on loans” — just as interest rates rose and depositors in the tech industry ran light on cash.

Among other red flags, according to the report published by Morningstar, SVB had “a troubling pattern” of what appeared to be a relatively high percentage of certain losses on securities relative to its total capital assets. And of 108 banks with assets of at least $10 billion last year, the report said, Zions Bancorp also has a high ratio of such losses to its total equity capital.

“To be sure,” it noted, “these numbers don’t mean that a bank is in trouble or that it will be forced to sell securities for big losses.”

The Zions CEO sought to assuage customers further with a more nuanced view, saying the average account balance at SVB was “about 22 times the size of the average balance in a Zions account.” Quoting another industry analyst, at Bloomberg, Anderson said it was important “to view deposit granularity, or having lower balances per deposit, as a sign of more funding stability.”

Zions and Regions Financial, he said, have led its peers on that measure.

In a late February report to regulators, Zions managers said the bank had “granular, stable deposit funding” and, because most deposits come from household and business accounts, “their duration is generally long, compared with the short duration of our loan portfolio.”