On April 20, 2009, Zions Bancorporation, the holding company for Zions Bank, reported a loss of $832.2 million, or $7.29 per diluted common share. Reflected in these results are the continued effects of the worst financial and economic downturn our country has seen in many years.

While the reported loss for the first quarter is significant, it is important to take a look inside the results to get an accurate picture of the strength of the company’s core banking business. Of the reported loss, $634 million ($5.55 per common share) is a noncash accounting matter — writing off an intangible asset called “goodwill.” The writing off of goodwill occurred in Zions’ Texas affiliate, Amegy Bank, and primarily reflects the decline in market values of peer banks in Texas and a weaker economic outlook for the state. Amegy Bank itself continues to demonstrate solid performance.

An additional $249 million ($1.35 per common share) of the loss reflects valuation losses in Zions’ securities portfolio. As was announced earlier in the quarter, Zions Bank purchased most of the assets of Lockhart Funding during the first quarter (and we expect to purchase the remaining assets in Lockhart in the second quarter). While the impact of buying these securities, as well as the impairment charges on other securities, resulted in additional loss for the company, the consolidation of Lockhart eliminates some uncertainty surrounding Zions’ future performance and is likely to be viewed as a positive event by the investment community.

Excluding these two noncore banking items, the loss from Zions Bancorporation’s core banking operations was $0.39 per diluted common share.

Zions Bank had “core bank” net earnings of $11.8 million for the first quarter, as the core banking business of Zions remains strong. We are experiencing solid growth in our deposits. During the first quarter, Zions Bank’s total deposits grew by $1.7 billion. We are also actively making loans — in fact, Zions Bank originated $500 million in new loans in the first three months of 2009.

Our capital position remains strong, with many capital ratios higher now than they’ve been in years, and our liquidity has been significantly strengthened in recent months. In fact, we have repaid essentially all of our short-term debt, resulting in considerable borrowing power in addition to our cash balances.

Zions Bank also continues to build reserves against potential future loan losses. During the first quarter, Zions Bank put aside $65 million as a provision for potential loan losses. During that same period, the bank experienced $42.2 million in actual loan losses. This means that Zions Bank reserved 1.54 times more for losses than was actually experienced in the quarter.

You may have also seen the announcement by Zions Bancorporation in April that our Nevada State Bank affiliate acquired the failed Great Basin Bank in Nevada. This transaction serves as yet another example of the FDIC’s confidence in our strength and stability. This follows FDIC-supported acquisitions by Zions affiliates of Alliance Bank in California in February 2009 and the acquisition of the insured deposits of Silver State Bank in Nevada in September 2008.

While it is likely that economic conditions will remain difficult throughout this year, and that it will continue to be a challenging year for the banking industry, we remain optimistic about our future. Zions Bank’s 135-year history demonstrates our ability to weather economic storms when they arise. We have been through challenging times before. Not only have we met the challenges that have come, we have emerged from them stronger and more competitive. I remain confident that Zions Bank will similarly emerge from the current economic challenges.

Thank you for choosing to do business with Zions Bank. We are committed to our clients and we are committed to our communities. While these are challenging economic times, we are well positioned to weather the storm, and to help you do the same.

A. Scott Anderson is President and Chief Executive Officer of Zions First National Bank

Featured in the May/June 2009 issue of Zions Bank’s Community magazine.

*Artwork from vinicius.cipriano under Creative Commons license at Flickr.com.

One of the things I enjoy most about my job is the interaction I have with you — our clients. Whether the interaction is face-to-face, on the phone or through e-mail, I appreciate hearing from you.

Over the past few weeks, I have received a number of questions and comments regarding Zions Bancorporation’s participation in the U.S. Treasury’s TARP Capital Purchase Program. As we have reported, in mid-November 2008, Zions Bancorporation sold $1.4 billion of senior preferred stock and warrants to the U.S. Treasury as part of the CPP. Since many of the comments I have received center on misperceptions related to the CPP, I’d like to address the facts related to the program.

The Treasury’s CPP was designed to restore confidence in the financial system by strengthening the capital ratios of well-managed banks during this very uncertain economy so that those banks can make loans available to credit-worthy borrowers without being constrained by capital ratios. From its inception, the CPP has been available only to healthy banks.

While Zions did not contribute to the current turbulence in our economy — we never originated or purchased the subprime mortgage loans that are at the root of the crises — we believe we can play a part in helping to resolve the current economic slowdown by making loans available as a result of our infusion of TARP capital.

The term “bailout” has been mistakenly used in connection with discussions on the Treasury’s CPP. As opposed to a bailout, which implies that free money was given to rescue troubled banks, the CPP provides for federal investments in healthy banks. These investments will be repaid, and participating banks will pay dividends to the Treasury until they are repaid. The initial dividend rate is 5 percent per year for the first five years and increases to 9 percent per year thereafter. The Treasury also receives warrants to purchase either common or preferred stock depending on whether the financial institution is a public or privately held organization.

The fact of the matter is that the Treasury is expected to make millions of dollars on its investments under the TARP CPP. The net cash inflow to the Treasury from its investment is estimated to exceed $30 billion. In addition, the warrants issued to the Treasury are conservatively valued at between $10 billion and $15 billion. The total return to the government is likely to be somewhere between $40 billion and $45 billion. So the Treasury’s Capital Purchase Program is a true “win-win” — healthy banks, like Zions, are able to strengthen capital at a time when normal capital markets are closed, taxpayers get a good return on their investment, and the entire economy benefits.

Some have questioned whether banks are lending, and some have even implied that banks that have received capital under the TARP CPP program are sitting on those funds. However, the evidence proves otherwise. Zions has money to lend, and we have been aggressively soliciting loans from credit-worthy consumers and businesses.

While this is a challenging environment for Zions and the industry, we continue to successfully extend new credit and serve our clients. In the fourth quarter of 2008 alone, Zions Bancorporation originated $4.6 billion of credit, including $2.7 billion of new loans. We have money to lend.

For more than 135 years, Zions Bank’s goal has been to create value, and we believe our participation in the Treasury’s CPP reflects our continued efforts to achieve this goal by making credit available to creditworthy individuals and businesses. This, in turn, will help them — you — weather this economic storm and strengthen the economy.

A. Scott Anderson is President and Chief Executive Officer of Zions First National Bank

Featured in the March/April 2009 issue of Zions Bank’s Community magazine.

*Artwork from vinicius.cipriano under Creative Commons license at Flickr.com.

ZIONS BANCORPORATION AND AFFILIATES IN THE NEWS |

Regional and national publications and community leaders have once again turned to Zions Bancorporation and affiliate executives to help give understanding and perspective about our current economic environment. See the links below for more information.

Les Roka of Utah CEO Magazine writes in “Clear the Fog from Annual Reports” of CEO Harris Simmons’ “straightforward approach” when speaking with shareholders.

February 27, 2009
“With a sputtering economy and soaring unemployment numbers, some may question whether now is a good time to be starting a new business. Scott Anderson, President and CEO of Zions Bank, wants to ensure that it is.”

February 12, 2009
George Feiger tells SNL Financial that while funds of funds have been outperforming the market, “they have broken the promise that they won’t go down.”

February 7, 2009
Mike Freeman at The San Diego Union-Tribune reports that “California Bank & Trust will acquire the branches, deposits and loan pool of Alliance Bank.”

January 23, 2009
George Feiger expects economic losses to continue through 2009, the Daily Camera reported.

December 2008
Vectra Bank President and CEO Bruce Alexander tells Jeff Rundles that Vectra is continuing to “make loans” while “being careful and prudent.”

December 5, 2008
Brice Wallace of the Deseret News quotes Contango CEO George Feiger when writing that “the longterm ramifications of the downturn will ‘reshape the topography’ of American retail.”

December 18, 2008
Bruce Alexander, President/CEO, Vectra Bank Colorado, has been picked to take part in a leadership team to “help draft an economic stimulus plan for Denver.”

November 14, 2008
Katie Kuehner-Hebert of American Banker quotes from CFO Doyle Arnold’s presentation at a Merrill Lynch & Co. conference, during which he discussed Zions participation in the Treasury Department’s Capital Purchase Program (article: “Treasury Funds Secured, Zions Looks Outward”)

*Artwork created by City On Fire at Flickr.com.

MANAGING THROUGH “INTERESTING TIMES” |

“May you live in interesting times,” often referred to euphemistically as the Chinese curse, is reputed to be the English translation of an ancient Chinese proverb and curse. If ever we were living in interesting times, it would be now.

To say that the current economic times are challenging might seem like an understatement. With the unprecedented events in the market over the past several months, people everywhere are concerned about protecting and preserving their money. While this uncertainty can leave all of us feeling uneasy, it can also bring forward the need for all of us to be proactive about our personal finances and manage our money with care.

Since early in 2008, the President’s Advisory Council on Financial Literacy has been working to develop policies and programs to promote financial literacy. Their goal is to provide substantive guidance and resources that can help people make smart financial choices during both good times and bad.

Last month, the council offered a series of tips for managing your money in challenging times. I offer a few of these tips below, along with information on additional available resources.

1. Understand how your deposits are insured. As we’ve discussed in previous articles, the FDIC insures all deposits at insured banks up to at least $250,000. In addition, Zions Bank is participating in the FDIC’s voluntary Temporary Liquidity Guarantee Program. This program insures 100 percent of deposits that are held in noninterest bearing deposit transaction accounts at Zions Bank (including NOW accounts with interest rates of 0.5 percent or less), regardless of the dollar amount, through Dec. 31, 2009. For additional information on how to maximize your FDIC insurance coverage visit zionsbank.com.

2. Understand how your investments are protected. Brokerage firms are required to be members of the Securities Investor Protection Corporation, which insures customer securities accounts up to $500,000, including $100,000 in cash claims, when a brokerage firm fails. To learn more about these protections, visit www.sec.gov/answers/investoralert.htm.

3. Protect your credit score. Only put on your credit cards what you can afford to pay back. For other hints on improving your credit score, visit www.controlyourcredit.gov. Also, to protect against identity theft, get a free copy of your credit report at www.annualcreditreport.com.

4. Make sure you have a rainy day fund. Keep an emergency fund worth three to six months of your monthly expenses in an insured account. If you don’t have an emergency fund, try to start one. Visit “Managing Your Money” at the Zions Bank education center to access budgeting calculators, savings calculators and more.

5. If it sounds too good to be true, it probably is. Watch out for scams trying to take advantage of all of the recent changes in our nation’s financial markets. Educate yourself at www.FTC.gov.

As we begin 2009, we can all feel a little more secure in our financial situation as we become more proactive in managing our personal finances.

Zions Bank continues its commitment to helping you through these “interesting times” with innovative products and services, as well as the financial advice and information you need to make informed decisions. We haven’t forgotten who keeps us in business, and together we will weather this storm.

A. Scott Anderson is President and Chief Executive Officer of Zions First National Bank

Featured as “The Last Word” in the January/February 2009 issue of Zions Bank’s Community magazine.

*Artwork from Rob Sheridan under Creative Commons license at Flickr.com.