Press Release

DBRS Downgrades Zions Bancorporation’s Senior Debt to BBB; Under Review with Negative Implications

Banking Organizations
April 22, 2009

DBRS has today downgraded the ratings of Zions Bancorporation (Zions or the Company) and its related entities, including its issuer and senior debt rating to BBB from A (low). At the same time, DBRS downgraded Zions’ banking subsidiaries’ Deposits and Senior debt ratings to BBB (high) from A. With the exception of its AAA rated FDIC guaranteed debt, which remains on Stable trend, all ratings were placed Under Review with Negative Implications.

The downgrade reflects the significant downturn and projected pressure in Zions’ financial performance. Zions continues to struggle with heightened credit costs, securities impairment, and valuation losses. Further pressuring ratings, the Company’s financial flexibility has been somewhat impaired, due to recent market events. Even excluding the goodwill impairment charges reported during the past two quarters, Zion’s results have been impacted by elevated credit costs related to continued deterioration within its sizeable construction and development portfolio. The Company has also suffered large securities impairment losses in its substantial bank and insurance company trust preferred collateralized debt obligations. Additionally, Zion’s bottom line has been pressured by securities purchases and corresponding valuation losses from Lockhart Funding (Lockhart), as part of Zion’s liquidity agreement with this Qualified Special Purpose Entity.

The ongoing review will focus on Zions’ ability to work through its loan quality and securities issues, its ability to raise additional capital to absorb future credit costs, and its ability to maintain its funding profile and protect its deposit franchise, in light of recent market events.

DBRS notes that positive ratings pressure may arise if Zions’ augments its capital position, limits its credit costs, mitigates its securities impairment risk and demonstrates sustainable profitability. Conversely, the inability of Zions’ to sustain its franchise, improve its financial flexibility and protect its deposit franchise could result in negative ratings pressure.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are Rating Banks and Bank Holding Companies Operating in the United States, and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.

Ratings

Amegy Bank, NA
Amegy Trust I
Amegy Trust II
Amegy Trust III
CSBI Capital Trust I
California Bank & Trust
Commerce Bank of Oregon, The
Commerce Bank of Washington, NA, The
GB Capital Trust
Intercontinental Statutory Trust
National Bank of Arizona
Nevada State Bank
Stockmen's Trust II
Stockmen's Trust III
Vectra Bank Colorado, NA
ZB, N.A.
Zions Bancorporation
Zions Capital Trust B
  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating

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