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UBS Investment Research Zions Bancorporation 4Q Miss Due to Credit; Pressures to Persist Worse-than-expected credit results drove the 4Q miss ZION reported EPS of ($0.62), missing UBSe & cons. estimates of ($0.45) & ($0.36), resp. NII came in higher, but credit costs offset. We increase ’11E (to a loss of $0.40 from a loss of $1.00) & ‘12E (to $0.80 from $0.75) due to faster LLR release and to acc’t for the NII beat. Credit recovery likely, but pace to disappoint Credit losses were 5% higher than our estimate. Worse-than-expected term CRE & const. trends offset better results within resi RE. Const recovery will likely improve losses, but we believe cont’d duress w/in term CRE & resi RE will keep levels elevated. We are lowering our ’11 (to 160bp from 175bp) & ’12 loss est. (to 80bp from 85bp ) to account for this qtr’s resi RE beat. Fortunately, we believe ZION still has meaningful credit leverage ahead (LLR ratio = 3.9%). Lending revs to trend down in the near-term Lending revs trended flat and were 2% above our forecast. Earning asset bals exceeded our est. given less dep attrition, and the NIM came in 3bp above as mgmt shifted cash into higher-yielding secs. Cont’d mix-shift will likely enhance the core NIM, but it will unlikely offset the decline in loans. As such, we are forecasting a 5% decline in NII for ’11. Maintain Sell Rating; expectations remain elevated ZION trades at 29x our ’12E vs. our 13x target multiple. Our three-prong valuation methodology (P/E, P/TBV, and DCF) drives our price target to $17 from $16. Highlights (US$m) 12/09 12/10 12/11E 12/12E 12/13E Revenues 2,072 2,161 2,156 2,282 2,526 Pre-tax profits (1,609) (452) 161 529 599 Net income (1,069) (444) (74) 156 220 EPS (UBS, US$) (8.59) (2.68) (0.40) 0.80 1.10 Net DPS (UBS, US$) 0.10 0.04 0.04 0.04 0.04 Profitability & Valuation 5-yr hist av. 12/10 12/11E 12/12E 12/13E ROE % 2.9 -10.1 -1.6 3.1 4.2 P/Op x 6.7 8.0 10.1 7.8 5.8 P/BVPS x 1.3 0.9 1.0 0.9 0.9 PE (UBS) x 37.9 -8.1 -59.5 29.7 21.6 Net dividend yield % 2.2 0.2 0.2 0.2 0.2 Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$23.75 on 24 Jan 2011 19:42 EST Heather Wolf, CFA Analyst [email protected] +1-212-713 4290 Elena Kim Associate Analyst [email protected] +1 212 713 4057 Joshua Rogers Associate Analyst [email protected] +1-212-713 2364 Global Equity Research Americas Banks, Ex-S&L 12-month rating Sell Unchanged 12m price target US$17.00 Prior: US$16.00 Price US$23.75 RIC: ZION.O BBG: ZION US 25 January 2011 Trading data 52-wk range US$30.00-17.49 Market cap. US$3.57bn Shares o/s 150m (COM) Free float 94% Avg. daily volume ('000) 3,577 Avg. daily value (m) US$79.8 Balance sheet data 12/11E Common equity US$4.62bn P/BVPS x 1.0 Tier one capital ratio 15.7% Forecast returns Forecast price appreciation -28.4% Forecast dividend yield 0.2% Forecast stock return -28.2% Market return assumption 5.6% Forecast excess return -33.8% EPS (UBS, US$) 12/11E 12/10 From To Cons. Actual Q1E (0.44) (0.25) (0.14) (0.72) Q2E (0.45) (0.25) 0.01 (0.84) Q3E (0.09) 0.06 0.16 (0.52) Q4E (0.03) 0.04 0.27 (0.62) 12/11E (1.00) (0.40) 0.38 12/12E 0.75 0.80 1.91 Performance (US$) 01/08 04/08 07/08 10/08 01/09 04/09 07/09 10/09 01/10 04/10 07/10 10/10 01/11 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0 20 40 60 80 100 120 140 Price Target (US$) (LHS) Stock Price (US$) (LHS) Rel. S & P 500 (RHS) Stock Price (US$) Rel. S & P 500 Source: UBS www.ubs.com/investmentresearch This report has been prepared by UBS Securities LLC ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 10. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. ab
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Transcript of 01 25 11-11 42 27 am
UBS Investment Research
Zions Bancorporation
4Q Miss Due to Credit; Pressures to Persist
Worse-than-expected credit results drove the 4Q miss ZION reported EPS of ($0.62), missing UBSe & cons. estimates of ($0.45) &($0.36), resp. NII came in higher, but credit costs offset. We increase ’11E (to aloss of $0.40 from a loss of $1.00) & ‘12E (to $0.80 from $0.75) due to faster LLRrelease and to acc’t for the NII beat.
Credit recovery likely, but pace to disappoint Credit losses were 5% higher than our estimate. Worse-than-expected term CRE & const. trends offset better results within resi RE. Const recovery will likelyimprove losses, but we believe cont’d duress w/in term CRE & resi RE will keeplevels elevated. We are lowering our ’11 (to 160bp from 175bp) & ’12 loss est. (to80bp from 85bp ) to account for this qtr’s resi RE beat. Fortunately, we believeZION still has meaningful credit leverage ahead (LLR ratio = 3.9%).
Lending revs to trend down in the near-term Lending revs trended flat and were 2% above our forecast. Earning asset balsexceeded our est. given less dep attrition, and the NIM came in 3bp above as mgmtshifted cash into higher-yielding secs. Cont’d mix-shift will likely enhance the core NIM, but it will unlikely offset the decline in loans. As such, we are forecasting a5% decline in NII for ’11.
Maintain Sell Rating; expectations remain elevated ZION trades at 29x our ’12E vs. our 13x target multiple. Our three-prong valuation methodology (P/E, P/TBV, and DCF) drives our price target to $17 from $16.
Highlights (US$m) 12/09 12/10 12/11E 12/12E 12/13ERevenues 2,072 2,161 2,156 2,282 2,526Pre-tax profits (1,609) (452) 161 529 599Net income (1,069) (444) (74) 156 220EPS (UBS, US$) (8.59) (2.68) (0.40) 0.80 1.10Net DPS (UBS, US$) 0.10 0.04 0.04 0.04 0.04 Profitability & Valuation 5-yr hist av. 12/10 12/11E 12/12E 12/13EROE % 2.9 -10.1 -1.6 3.1 4.2P/Op x 6.7 8.0 10.1 7.8 5.8P/BVPS x 1.3 0.9 1.0 0.9 0.9PE (UBS) x 37.9 -8.1 -59.5 29.7 21.6Net dividend yield % 2.2 0.2 0.2 0.2 0.2 Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$23.75 on 24 Jan 2011 19:42 EST Heather Wolf, CFA Analyst [email protected] +1-212-713 4290
Elena Kim Associate Analyst [email protected] +1 212 713 4057
Joshua Rogers Associate Analyst [email protected] +1-212-713 2364
Global Equity Research Americas
Banks, Ex-S&L
12-month rating Sell Unchanged 12m price target US$17.00 Prior: US$16.00
Price US$23.75 RIC: ZION.O BBG: ZION US
25 January 2011 Trading data 52-wk range US$30.00-17.49Market cap. US$3.57bnShares o/s 150m (COM)Free float 94%Avg. daily volume ('000) 3,577Avg. daily value (m) US$79.8 Balance sheet data 12/11E Common equity US$4.62bnP/BVPS x 1.0Tier one capital ratio 15.7% Forecast returns Forecast price appreciation -28.4%Forecast dividend yield 0.2%Forecast stock return -28.2%Market return assumption 5.6%Forecast excess return -33.8% EPS (UBS, US$) 12/11E 12/10 From To Cons. ActualQ1E (0.44) (0.25) (0.14) (0.72)Q2E (0.45) (0.25) 0.01 (0.84)Q3E (0.09) 0.06 0.16 (0.52)Q4E (0.03) 0.04 0.27 (0.62)12/11E (1.00) (0.40) 0.3812/12E 0.75 0.80 1.91 Performance (US$)
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Price Target (US$) (LHS) Stock Price (US$) (LHS)Rel. S & P 500 (RHS)
Stock Price (US$) Rel. S & P 500
Source: UBS www.ubs.com/investmentresearch
This report has been prepared by UBS Securities LLCANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 10. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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Zions Bancorporation 25 January 2011
UBS 2
Table 1: ZION Valuation Summary
ZION WeightingTheoretical Valuation
($ in MM, except for per share data)
TARGET P/TBVAssumption Value
Current P/TBV 1.2
Price / Tangible Book value 1.0
Trough TBV Estimate $19.08
Theoretical value implied by Price / Tangible Book va $19 50% $10
Discounted Cash FlowAssumption Value
Stage 1 (2009 - 2013)
Net Income Growth NM
B/S Growth 2.0
TCE / TA Target 6.9
Beta 1.8
Stage 2 (2014 - 2018)
Net Income Growth 10.0
B/S Growth 2.0
TCE / TA Target 8.0
Beta 1.5
Theoretical value Implied by DCF $20 25% $5
Target P/EAssumption Value
Current P/E NM
10-year average P/E 13.8
Target Sustainable P/E 13.0
Year: 2012
2012 EPS Estimate $0.80
2012 EPS Estimate (PV) $0.71
Avg of theoretical values implied by Target P/E $9 25% $2
Price Target $17
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 3
Table 2: ZION Variance Table Zions BancorporationEARNINGS RESULTS AND FORECAST($ Millions, Except As Noted)
Actual Estimate New Old New Old New Old New Old New OldKEY FORECAST VARIABLES: 3Q10 4Q10 4Q10E Variance 2010E 2010E Variance 2011E 2011E Variance 2012E 2012E Variance 2013E 2013E Variance 2014E 2014E VarianceEOP Loans $37,887 $37,074 $37,269 -1% $37,074 $37,269 -1% $37,278 $37,594 -1% $37,728 $37,799 0% $38,860 $39,311 -1% $40,414 $41,669 -3%Average Loans $37,864 $37,294 $37,578 -1% $38,157 $38,206 0% $37,162 $37,247 0% $37,559 $37,696 0% $38,294 $38,555 -1% $39,637 $40,490 -2%Average Earning Assets $47,242 $46,849 $46,180 1% $46,863 $46,696 0% $46,380 $44,998 3% $45,462 $44,194 3% $46,094 $45,942 0% $47,992 $48,729 -2%Net Interest Margin (%) 3.84 3.49 3.46 3bp 3.73 3.73 1bp 3.58 3.55 3bp 3.82 3.79 3bp 4.25 4.25 0bp 4.40 4.40 0bp
Net Interest Income (FTE) 457.2 412.0 402.8 2% 1,749.1 1,739.9 1% 1,660.8 1,599.1 4% 1,737.1 1,675.4 4% 1,959.0 1,952.5 0% 2,111.6 2,144.1 -2%
Loan Loss Provision 184.7 173.2 153.0 13% 852.1 831.9 2% 250.0 392.0 -36% 41.0 19.0 116% 200.0 249.0 -20% 200.0 202.0 -1%
Noninterest Revenues 112.7 125.0 127.2 -2% 492.4 494.6 0% 518.2 527.1 -2% 544.7 538.9 1% 567.1 550.0 3% 595.6 562.3 6%Securities Transactions (16.4) (11.7) (15.0) -22% (80.3) (83.6) -4% (23.0) (45.0) -49% 0.0 0.0 NA 0.0 0.0 NA 0.0 0.0 NA Tot. Revenue 553 525 515 2% 2,161 2,151 0% 2,156 2,081 4% 2,282 2,214 3% 2,526 2,503 1% 2,707 2,706 0%
Staff Expenses 207.9 207.3 209.6 -1% 825.3 827.7 0% 829.1 838.9 -1% 837.4 854.0 -2% 854.1 883.8 -3% 878.0 919.2 -4%OREO Expenses 44.3 25.5 42.0 -39% 144.8 161.3 -10% 106.0 127.3 -17% 47.2 64.7 -27% 25.5 35.1 -27% 12.2 16.8 -27%Other Expenses 203.8 210.6 192.2 10% 768.8 750.5 2% 809.5 761.3 6% 826.8 776.5 6% 847.5 802.1 6% 877.2 834.2 5% Total Expenses 456.0 443.4 443.8 0% 1,739.0 1,739.5 0% 1,744.6 1,727.4 1% 1,711.4 1,695.2 1% 1,727.1 1,721.0 0% 1,767.4 1,770.2 0%
Pre-Tax Income (FTE) (87.2) (91.4) (81.9) -12% (429.9) (420.5) -2% 161.4 (38.2) 523% 529.4 500.1 6% 599.1 532.5 12% 739.8 734.2 1%FTE Tax Rate (%) 35.2 20.8 45.0 -24pp 23.7 28.5 -5pp 34.4 69.9 -36pp 35.0 40.0 -5pp 35.0 35.0 0pp 35.0 35.0 0ppNet Income (56.5) (72.4) (45.0) 61% (327.9) (300.5) 9% 105.9 (11.5) -1023% 344.1 300.1 15% 389.4 346.2 12% 480.9 477.2 1% Available For Common (89.5) (110.3) (79.9) -30mn (444.0) (413.7) -30mn (73.8) (183.6) 110mn 155.8 144.9 11mn 220.2 212.7 7mn 311.6 343.8 -32mn
Op. EARNINGS PER SHARE (F.D.) ($0.52) ($0.62) ($0.45) -39% ($2.68) ($2.49) -8% ($0.40) ($1.00) 60% $0.80 $0.75 6% $1.10 $1.05 4% $1.55 $1.70 -9%GAAP EPS (F.D.) ($0.47) ($0.62) ($0.45) -39% ($2.49) ($2.30) -8% ($0.40) ($1.00) 60% $0.80 $0.75 6% $1.10 $1.05 4% $1.55 $1.70 -9%
Book Value Per Share $26.07 $25.11 $25.93 ($0.81) $25.11 $25.93 ($0.81) $24.93 $25.09 ($0.16) $25.62 $25.43 $0.18 $26.67 $26.45 $0.23 $28.19 $28.11 $0.08Tangible Book Value Per Share $19.81 $19.08 $20.40 ($1.32) $19.08 $20.40 ($1.32) $19.11 $19.78 ($0.66) $20.36 $20.72 ($0.36) $21.53 $21.85 ($0.32) $23.12 $23.58 ($0.46)Dividends Per Share $0.01 $0.01 $0.01 $0.00 $0.04 $0.04 $0.00 $0.04 $0.04 $0.00 $0.04 $0.04 $0.00 $0.04 $0.04 $0.00 $0.04 $0.04 $0.00Average Fully-Diluted Shares 172.9 178.1 179.2 -1mn 166.0 166.2 0mn 185.1 183.4 2mn 194.9 192.9 2mn 200.6 202.0 -1mn 200.6 202.0 -1mn
CAPITAL RATIOS:EOP Common Equity/Assets (%) 9.05 8.99 9.28 -29bp 8.99 9.28 -29bp 9.20 9.58 -38bp 10.36 10.45 -10bp 10.47 10.35 11bp 10.59 10.38 21bpTang. Common Equity/Assets (%) 7.03 6.98 7.45 -46 6.98 7.45 -46 7.21 7.71 -50 8.41 8.68 -27 8.62 8.71 -9 8.85 8.85 0Tangible Common Equity/RWA (%) 8.03 7.98 8.53 -55 7.98 8.53 -55 8.24 8.82 -58 9.61 9.94 -33 9.87 9.99 -12 10.14 10.16 -3Tier 1 Common/RWA (%) 8.66 8.59 8.91 -32 8.59 8.91 -32 8.80 9.17 -36 10.13 10.22 -9 10.32 10.20 11 10.54 10.34 20Tier 1/RWA (%) 14.15 15.01 14.62 39 15.01 14.62 39 15.73 16.32 -59 14.62 13.63 99 14.67 13.44 123 14.71 13.39 132
PROFITABILITY RATIOS:Return On Assets (%) (0.4) (0.6) (0.4) -21 (0.6) (0.6) -5 0.2 (0.0) 23 0.7 0.6 8 0.8 0.7 9 0.9 0.9 2Return On Common Equity (%) (7.7) (9.5) (6.8) -271 (10.1) (9.3) -71 (1.6) (4.0) 234 3.1 3.0 19 4.2 4.0 13 5.6 6.2 -58Return On Tangible Common Equity (%) (9.7) (12.0) (8.4) -353 (12.7) (11.6) -110 (1.6) (4.8) 318 4.5 4.1 37 5.6 5.3 30 7.2 7.7 -53Operating Expenses/Revenues (%) 80.0 82.6 83.8 -118 77.6 77.8 -27 80.1 81.2 -118 75.0 76.6 -155 68.4 68.8 -40 65.3 65.4 -12
BALANCE SHEET ITEMS: EOP Total Assets $51,048 $51,035 $50,608 1% $51,035 $50,608 1% $50,241 $48,112 4% $49,618 $49,153 1% $51,127 $51,608 -1% $53,412 $54,726 -2% EOP Equity $6,495 $6,647 $6,722 -1% $6,647 $6,722 -1% $7,154 $7,111 1% $6,597 $6,122 8% $6,810 $6,326 8% $7,113 $6,662 7% EOP Preferred Equity $1,875 $2,057 $2,025 2% $2,057 $2,025 2% $2,532 $2,500 1% $1,459 $983 48% $1,459 $983 48% $1,459 $983 48% EOP Common Equity $4,619 $4,591 $4,697 -2% $4,591 $4,697 -2% $4,622 $4,611 0% $5,139 $5,138 0% $5,351 $5,343 0% $5,654 $5,679 0% EOP Tangible Common Equity $3,510 $3,487 $3,695 -6% $3,487 $3,695 -6% $3,544 $3,634 -2% $4,084 $4,185 -2% $4,320 $4,414 -2% $4,637 $4,763 -3%
CREDIT QUALITY INDICATORS: Net Charge-Offs $236 $251 $238 5% $969 $956 1% $595 $650 -8% $301 $319 -6% $250 $249 0% $200 $202 -1% % Average Loans 2.47 2.67 2.51 16bp 2.54 2.50 4bp 1.60 1.75 -14bp 0.80 0.85 -4bp 0.65 0.65 1bp 0.50 0.50 1bp Nonperforming Assets $2,293 $1,828 $2,141 -15% $1,828 $2,141 -15% $1,590 $1,940 -18% $1,272 $1,670 -24% $882 $1,270 -31% $583 $851 -31% % EOP Loans + OREO 6.00 4.89 5.69 -80bp 4.89 5.69 -80bp 4.24 5.12 -88bp 3.36 4.39 -104bp 2.26 3.22 -95bp 1.44 2.04 -60bp Nonperforming Loans $1,586 $1,162 $1,427 -19% $1,162 $1,427 -19% $946 $1,250 -24% $771 $1,113 -31% $539 $890 -39% $378 $623 -39% % EOP Loans (excl. OREO) 4.19 3.13 3.83 -70bp 3.13 3.83 -70bp 2.54 3.33 -79bp 2.04 2.94 -90bp 1.39 2.26 -88bp 0.93 1.50 -56bp Loan Loss Reserve $1,530 $1,440 $1,445 0% $1,440 $1,445 0% $1,095 $1,187 -8% $835 $887 -6% $785 $887 -11% $785 $887 -11% % EOP Loans 4.04 3.89 3.88 1bp 3.89 3.88 1bp 2.94 3.16 -22bp 2.21 2.35 -13bp 2.02 2.26 -24bp 1.94 2.13 -19bp % Nonperforming Loans 79.02 94.22 80.65 1357 94.22 80.65 1357 81.06 71.83 923 74.93 60.97 1396 100.64 78.53 2211 150.40 115.68 3472
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 4
Table 3: ZION Earnings Model Zions BancorporationEARNINGS RESULTS AND FORECAST($ Millions, Except As Noted)
KEY FORECAST VARIABLES: 1Q10 2Q10 3Q10 4Q10 1Q11E 2Q11E 3Q11E 4Q11E 1Q12E 2Q12E 3Q12E 4Q12E 2009 2010E 2011E 2012E 2013E 2014E 2015E 4Q/3Q 4Q/4Q 10E/09 11E/10E 12E/11E 13E/12E 14E/13E 15E/14EEOP Loans $39,313 $38,354 $37,887 $37,074 $37,074 $37,111 $37,185 $37,278 $37,390 $37,502 $37,615 $37,728 $40,535 $37,074 $37,278 $37,728 $38,860 $40,414 $42,435 (2.1) (8.5) (8.5) 0.6 1.2 3.0 4.0 5.0Average Loans 39,883 38,813 37,864 37,294 37,074 37,093 37,148 37,232 37,334 37,446 37,559 37,671 41,663 38,157 37,162 37,559 38,294 39,637 41,424 (1.5) (8.9) (8.4) (2.6) 1.1 2.0 3.5 4.5Average Earning Assets 46,405 46,956 47,242 46,849 46,784 46,492 46,123 46,018 46,011 45,400 44,957 45,257 48,928 46,863 46,380 45,462 46,094 47,992 50,556 (0.8) (2.7) (4.2) (1.0) (2.0) 1.4 4.1 5.3Net Interest Margin (%) 4.03 3.58 3.84 3.49 3.72 3.41 3.66 3.53 3.79 3.76 3.85 3.78 3.93 3.73 3.58 3.82 4.25 4.40 4.50 (9.1) (8.4) (19) (15) 24 43 15 10
Net Interest Income (FTE) 461.0 419.0 457.2 412.0 429.7 395.6 425.8 409.8 440.0 430.2 435.8 431.2 1,921.0 1,749.1 1,660.8 1,737.1 1,959.0 2,111.6 2,275.0 (9.9) (10.9) (8.9) (5.0) 4.6 12.8 7.8 7.7
Loan Loss Provision 265.6 228.7 184.7 173.2 115.0 85.0 30.0 20.0 13.0 3.0 10.0 15.0 2,016.9 852.1 250.0 41.0 200.0 200.0 165.0 (6.2) (55.7) (57.8) (70.7) (83.6) 387.8 0.0 (17.5)
Noninterest Revenues 126.3 128.4 112.7 125.0 128.7 128.4 130.6 130.5 135.2 135.3 136.9 137.3 625.1 492.4 518.2 544.7 567.1 595.6 627.6 10.9 (21.6) (21.2) 5.2 5.1 4.1 5.0 5.4Securities Transactions (33.2) (19.0) (16.4) (11.7) (10.0) (8.0) (5.0) 0.0 0.0 0.0 0.0 0.0 (474.0) (80.3) (23.0) 0.0 0.0 0.0 0.0 - - - - - - - - Tot. Revenue 554 528 553 525 548 516 551 540 575 566 573 568 2,072 2,161 2,156 2,282 2,526 2,707 2,903 (5.1) 2.3 4.3 (0.2) 5.8 10.7 7.2 7.2
Staff Expenses 204.3 205.8 207.9 207.3 208.3 206.2 206.2 208.3 208.3 208.3 208.3 212.5 818.8 825.3 829.1 837.4 854.1 878.0 908.8 (0.3) 0.2 0.8 0.5 1.0 2.0 2.8 3.5OREO Expenses 32.6 42.4 44.3 25.5 34.2 27.0 25.7 19.1 14.4 13.0 10.4 9.4 110.8 144.8 106.0 47.2 25.5 12.2 6.4 (42.5) (33.5) 30.7 (26.8) (55.4) (46.1) (52.0) (47.5)Other Expenses 172.2 182.1 203.8 210.6 201.1 201.1 202.1 205.2 205.2 205.2 207.2 209.3 714.8 768.8 809.5 826.8 847.5 877.2 910.5 3.3 6.2 7.6 5.3 2.1 2.5 3.5 3.8 Total Expenses 409.2 430.4 456.0 443.4 443.6 434.4 434.1 432.6 427.9 426.4 426.0 431.2 1,644.4 1,739.0 1,744.6 1,711.4 1,727.1 1,767.4 1,825.7 (2.8) 0.0 5.7 0.3 (1.9) 0.9 2.3 3.3
Pre-Tax Income (FTE) (120.7) (130.7) (87.2) (91.4) (10.3) (3.4) 87.4 87.7 134.3 136.2 136.8 122.3 (1,589.2) (429.9) 161.4 529.4 599.1 739.8 912.0 (4.7) 71.5 72.9 137.5 228.1 13.2 23.5 23.3FTE Tax Rate (%) 29.0 13.2 35.2 20.8 45.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0 39.1 23.7 34.4 35.0 35.0 35.0 35.0 (1,449) (1,833.7) (1,538) 1,063 64 (0) 0 0Net Income (85.6) (113.4) (56.5) (72.4) (5.6) (2.2) 56.8 57.0 87.3 88.5 88.9 79.5 (967.7) (327.9) 105.9 344.1 389.4 480.9 592.8 (28.1) 63.0 66.1 132.3 224.9 13.2 23.5 23.3 Available For Common (109.0) (135.2) (89.5) (110.3) (46.5) (45.5) 10.4 7.8 35.1 34.6 48.7 37.4 (1,068.6) (444.0) (73.8) 155.8 220.2 311.6 423.6 (23.2) 49.6 58.4 83.4 311.1 41.3 41.5 35.9
Op. EARNINGS PER SHARE (F.D.) ($0.72) ($0.84) ($0.52) ($0.62) ($0.25) ($0.25) $0.06 $0.04 $0.19 $0.18 $0.24 $0.19 ($8.59) ($2.68) ($0.40) $0.80 $1.10 $1.55 $2.11 (19.6) 60.4 68.9 85.1 300.5 37.3 41.5 35.9GAAP EPS (F.D.) ($0.57) ($0.84) ($0.47) ($0.62) ($0.25) ($0.25) $0.06 $0.04 $0.19 $0.18 $0.24 $0.19 ($9.93) ($2.49) ($0.40) $0.80 $1.10 $1.55 $2.11 (33.0) 50.9 75.0 84.0 300.5 37.3 41.5 35.9
Book Value Per Share $26.98 $26.62 $26.07 $25.11 $25.11 $24.85 $24.90 $24.93 $25.11 $25.21 $25.44 $25.62 $27.97 $25.11 $24.93 $25.62 $26.67 $28.19 $30.10 (3.7) (10.2) (10.2) (0.7) 2.7 4.1 5.7 6.8Tangible Book Value Per Share $19.98 $20.18 $19.81 $19.08 $19.19 $18.97 $19.05 $19.11 $19.33 $19.89 $20.15 $20.36 $20.47 $19.08 $19.11 $20.36 $21.53 $23.12 $25.03 (3.7) (6.8) (6.8) 0.2 6.5 5.8 7.4 8.3Dividends Per Share $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.10 $0.04 $0.04 $0.04 $0.04 $0.04 $0.20 0.0 0.0 (60.0) 0.0 0.0 0.0 0.0 400.0Average Fully-Diluted Shares 151.1 161.8 172.9 178.1 184.1 185.4 185.4 185.4 185.4 193.0 200.6 200.6 124.4 166.0 185.1 194.9 200.6 200.6 200.6 3.0 27.3 33.4 11.5 5.3 2.9 0.0 0.0
CAPITAL RATIOS:EOP Common Equity/Assets (%) 8.36 8.85 9.05 8.99 9.14 9.13 9.20 9.20 9.28 10.32 10.35 10.36 8.23 8.99 9.20 10.36 10.47 10.59 10.73 (5) 76.5 76 20 116 11 12 15Tang. Common Equity/Assets (%) 6.33 6.86 7.03 6.98 7.14 7.13 7.19 7.21 7.30 8.32 8.38 8.41 6.16 6.98 7.21 8.41 8.62 8.85 9.09 (4) 82.6 83 22 120 21 23 24Tangible Common Equity/RWA (%) 6.56 7.34 8.03 7.98 8.16 8.14 8.22 8.24 8.34 9.50 9.58 9.61 5.99 7.98 8.24 9.61 9.87 10.14 10.42 (5) 198.4 198 26 137 25 27 28Tier 1 Common/RWA (%) 7.14 7.91 8.66 8.59 8.76 8.73 8.80 8.80 8.89 10.06 10.11 10.13 6.73 8.59 8.80 10.13 10.32 10.54 10.80 (6) 186.5 186 21 133 19 22 26Tier 1 /RWA (%) 11.19 13.76 14.15 15.01 14.68 15.05 15.38 15.73 15.99 14.20 14.40 14.62 10.53 15.01 15.73 14.62 14.67 14.71 14.76 86 448.0 448 72 (111) 5 4 5
PROFITABILITY RATIOS:Return On Assets (%) (0.7) (0.9) (0.4) (0.6) (0.0) (0.0) 0.4 0.5 0.7 0.7 0.7 0.6 (1.8) (0.6) 0.2 0.7 0.8 0.9 1.1 (13) 89.6 115 84 48 8 15 16Return On Common Equity (%) (10.7) (12.4) (7.7) (9.5) (4.1) (4.0) 0.9 0.7 3.0 2.8 3.8 2.9 (24.8) (10.1) (1.6) 3.1 4.2 5.6 7.2 (180) 1,142.4 1,476 844 476 103 147 158Return On Tangible Common Equity (%) (14.2) (16.7) (10.2) (12.5) (5.4) (5.2) 1.2 0.9 3.9 3.6 4.8 3.7 (32.8) (13.1) (2.1) 4.0 5.2 6.9 8.8 (234) 1,608.6 1,979 1,100 606 121 173 182Operating Expenses/Revenues (%) 69.7 78.6 80.0 82.6 79.4 82.9 78.0 80.1 74.4 75.4 74.4 75.9 64.6 77.6 80.1 75.0 68.4 65.3 62.9 254 1,129.9 1,300 248 (506) (663) (308) (239)
BALANCE SHEET ITEMS: EOP Total Assets $51,713 $52,147 $51,048 $51,035 $50,924 $50,451 $50,185 $50,241 $50,172 $49,019 $49,286 $49,618 $51,123 $51,035 $50,241 $49,618 $51,127 $53,412 $56,256 (0.0) (0.2) (0.2) (1.6) (1.2) 3.0 4.5 5.3 EOP Equity 5,857 6,421 6,495 6,647 6,786 6,889 6,998 7,154 7,257 6,348 6,465 6,597 5,710 6,647 7,154 6,597 6,810 7,113 7,497 2.4 16.4 16.4 7.6 (7.8) 3.2 4.5 5.4 EOP Preferred Equity 1,532 1,807 1,875 2,057 2,132 2,282 2,382 2,532 2,602 1,292 1,362 1,459 1,503 2,057 2,532 1,459 1,459 1,459 1,459 9.7 36.9 36.9 23.1 (42.4) 0.0 0.0 0.0 EOP Common Equity 4,325 4,614 4,619 4,591 4,655 4,607 4,616 4,622 4,655 5,057 5,103 5,139 4,207 4,591 4,622 5,139 5,351 5,654 6,038 (0.6) 9.1 9.1 0.7 11.2 4.1 5.7 6.8 EOP Tangible Common Equity 3,203 3,499 3,510 3,487 3,558 3,517 3,532 3,544 3,583 3,990 4,043 4,084 3,079 3,487 3,544 4,084 4,320 4,637 5,020 (0.6) 13.3 13.3 1.6 15.2 5.8 7.4 8.3
CREDIT QUALITY INDICATORS: Net Charge-Offs $227 $255 $236 $251 $215 $175 $110 $95 $88 $78 $70 $65 $1,175 $969 $595 $301 $250 $200 $165 6.5 (14.8) (17.5) (38.6) (49.4) (16.9) (20.0) (17.5) % Average Loans 2.31 2.64 2.47 2.67 2.35 1.89 1.17 1.01 0.94 0.83 0.74 0.68 2.82 2.54 1.60 0.80 0.65 0.50 0.40 20.0 (18.3) (28.1) (93.8) (80.0) (14.9) (14.8) (10.6) Nonperforming Assets $2,785 $2,547 $2,293 $1,828 $1,766 $1,708 $1,650 $1,590 $1,503 $1,421 $1,344 $1,272 $2,769 $1,828 $1,590 $1,272 $882 $583 $371 (20.3) (34.0) (34.0) (13.0) (20.0) (30.6) (33.9) (36.5) % EOP Loans + OREO 7.01 6.57 6.00 4.89 4.73 4.57 4.41 4.24 4.00 3.77 3.56 3.36 6.77 4.89 4.24 3.36 2.26 1.44 0.87 (110.4) (187.5) (187.5) (65.3) (88.2) (109.2) (82.3) (56.9) Nonperforming Loans $2,031 $1,794 $1,582 $1,162 $1,103 $1,048 $996 $946 $899 $854 $811 $771 $2,081 $1,162 $946 $771 $539 $378 $227 (26.6) (44.2) (44.2) (18.5) (18.5) (30.0) (30.0) (40.0) % EOP Loans (excl. OREO) 5.17 4.68 4.17 3.13 2.98 2.82 2.68 2.54 2.40 2.28 2.16 2.04 5.13 3.13 2.54 2.04 1.39 0.93 0.53 (104.2) (200.0) (200.0) (59.5) (49.5) (65.4) (45.4) (40.0) Loan Loss Reserve $1,582 $1,564 $1,530 $1,440 $1,340 $1,250 $1,170 $1,095 $1,020 $945 $885 $835 $1,433 $1,440 $1,095 $835 $785 $785 $785 (5.9) (5.9) 0.5 (24.0) (23.7) (6.0) 0.0 0.0 % EOP Loans 4.02 4.08 4.04 3.89 3.62 3.37 3.15 2.94 2.73 2.52 2.35 2.21 3.78 3.89 2.94 2.21 2.02 1.94 1.85 (15.3) 10.7 10.7 (94.7) (72.4) (19.3) (7.8) (9.3) % Nonperforming Loans 66.70 73.28 79.02 94.22 90.46 86.96 84.00 81.06 79.23 77.02 75.69 74.93 64.36 94.22 81.06 74.93 100.64 150.40 239.62 1,520.1 2,986.2 2,986.2 (1,316.3) (612.4) 2,570.7 4,976.5 8,921.3
Forecast Forecast
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 5
Table 4: ZION Net Interest Margin Model
ZIONVolume Inputs 3Q10(1) 4Q10(1) 2011E(2) 2012E(2)
Growth InputsLoan growth (20%) (6%) (0%) 1%
NPL growth (38%) (59%) (6%) (1%)
Noninterest bearing deposit growth 40% (5%) (1%) (1%)
Interest bearing core deposit growth (10%) (1%) (2%) (2%)
Shareholders' Equity growth 46% 0% 7% (0%)
RatiosLoan/Deposit 91% 91% 92% 95%
NPL/Loans 5.96% 4.00% 3.79% 3.72%
Cash & Cash Equiv./Earn. Asset 11.0% 10.7% 9.2% 8.4%
Inv. Sec./Earn. Asset 8.7% 9.5% 10.5% 9.0%
Rate Inputs 3Q10(1) 4Q10(1) 2011E(2) 2012E(2)
Date 9/30/2010 12/31/2010 12/31/2011 12/31/2012
Loans% of Fixed Rate Loans - Total 27% NA 27% 27%
C&I (Fixed Rate)% of Fixed Rate Loans in C&I NA NA 30% 30%
Duration of Fixed Rate C&I Loans NA NA 2.3 2.3
Reinvestment Risk in Fixed Rate C&I NA NA 1.00% 0.50%
C&I (Variable Rate)Years to Reprice Variable Rate C&I NA NA 2.3 2.3
Yield Compression on Variable Rate C&I NA NA 1.00% 0.50%
CRE% of Fixed Rate Loans in CRE NA NA 30% 30%
Duration of Fixed Rate CRE Loans NA NA 5.0 5.0
Reinvestment Risk in CRE NA NA 0.50% 0.40%
Resi RE% of Fixed Rate Loans in Resi RE NA NA 35% 35%
Duration of Fixed Rate Resi RE Loans NA NA 7.0 7.0
Reinvestment Risk in Resi RE NA NA 0.50% 0.40%
Other Cons / Auto% of Fixed Rate Loans in Cons NA NA 5% 5%
Duration of Fixed Rate Cons Loans NA NA 1.5 1.5
Reinvestment Risk in Cons NA NA 0.10% 0.00%
Investment Securities% of Agency RMBS 9% 9% 9% 9%
RMBSDuration of Agency RMBS Securities Portfolio NA 3.0 3.0 3.0
Agency RMBS Securities Reinvestment Risk (%) NA 0.00% 0.00% 0.00%
Other SecuritiesDuration of Other Securities Portfolio NA 6.0 6.0 6.0
Other Securities Reinvestment Risk (%) NA 1.25% 1.25% 1.00%
DepositsInterest Bearing Core Deposit Rate (%) 0.54% 0.48% 0.45% 0.40%
CD Rate (%) 1.07% 1.00% 0.90% 1.00%
Other LiabilitiesOther Interest-bearing liabilities rate (%) 7.28% 7.24% 7.30% 7.50%
(1) Current growth trends reflect QoQ annualized rates(2) 2011E & 2012E growth trends reflect YoY rates
Zions Bancorporation 25 January 2011
UBS 6
Average Balance Sheet
3Q10 4Q10E 2011E 2012E
Avg BalInterest Inc/Exp
Yield/Rate Avg BalInterest Inc/Exp
Yield/Rate Avg Bal Interest Inc/Exp Yield/Rate Avg Bal Interest Inc/Exp Yield/Rate
Cash and Cash Equivalents 5,193 4 0.27% 5,023 3 0.27% 4,267 12 0.27% 3,802 10 0.27%
Agency RMBS 356 3 2.98% 386 3 2.98% 421 13 2.98% 354 11 2.98%
Other Investment Securities 3,769 28 2.98% 4,085 31 3.00% 4,447 124 2.79% 3,743 98 2.63%
Total Investment Securities 9,318 35 1.47% 9,494 37 1.56% 9,135 148 1.62% 7,898 119 1.51%
Performing loans 35,607 552 6.15% 35,801 542 6.00% 35,754 2084 5.83% 36,161 2083 5.76%
NPL 2,258 0 0.00% 1,493 0 0.00% 1,409 0 0.00% 1,398 0 0.00%
Total Loans 37,864 552 5.78% 37,294 542 5.76% 37,162 2084 5.61% 37,559 2083 5.55%
Other Earning Assets 59 1 4.50% 61 1 3.56% 61 2 3.56% 61 2 3.56%
Total Earning Assets 47,242 587 4.93% 46,849 579 4.91% 46,358 2235 4.82% 45,518 2205 4.84%#N/A #N/AOther Assets 4,537 4,458 4,458 4,458
Total Assets 51,779 51,307 50,816 49,976
Interest bearing core deposits 21,771 30 0.54% 21,718 26 0.48% 21,325 96 0.45% 20,880 84 0.40%
CDs 6,130 17 1.07% 5,845 15 1.00% 5,367 48 0.90% 5,159 52 1.00%
Total interest-bearing deposits 27,901 46 0.66% 27,563 41 0.59% 26,692 144 0.54% 26,039 135 0.52%
Other Interest-bearing liabilities 3,069 56 7.28% 2,969 54 7.24% 2,969 217 7.30% 2,969 223 7.50%
Total interest-bearing liab & deps 30,970 103 1.31% 30,532 95 1.24% 29,660 361 1.22% 29,008 358 1.23%#N/A #N/ANoninterest bearing deposits 13,787 13,607 13,498 13,336Other liabilities 601 601 601 601Stockholders' equity 6,421 6,567 7,057 7,032
Total liab & stockholders' equity 51,779 51,307 50,816 49,976
NII/NIM 485 4.07% 484 4.10% 1874 4.04% 1847 4.06%0%
Loan Detail
Avg BalInterest Inc/Exp
Yield/Rate Avg BalInterest Inc/Exp
Yield/Rate Avg Bal Interest Inc/Exp Yield/Rate Avg Bal Interest Inc/Exp Yield/Rate
Commercial and Industrial 9,388 9,647 9,888 10,482
Leasing 401 412 465 486
Total C&I Loans 9,790 10,059 10,354 10,968
Construction and land development 4,200 3,582 3,313 3,313
Construction and other consumer real estate 365 344 319 319
Term 7,539 7,614 7,461 7,325
Owner Occupied 8,333 8,251 8,086 7,939
Total CRE Loans 20,437 19,791 19,180 18,896
1-4 family residential 3,504 3,514 3,584 3,763
Home equity credit line 2,154 2,151 2,172 2,216
Total Resi RE Loans 5,658 5,665 5,756 5,979
Bankcard and other revolving plans 287 298 295 309
Other 271 234 248 260
Foreign Loans 84 - - -
Total Other Cons/ Auto Loans 641 532 543 569
Total net loans held for investment ex. FDIC 36,525 515 5.60% 36,047 505 5.56% 35,833 1,973 5.51% 36,412 1,994 5.48%
FDIC-Supported Loans 1,150 35 11.93% 1,034 34 13.08% 931 93 10.00% 838 75 9.00%
Loans Held for Sale 189 2 4.67% 213 2 4.49% 399 18 4.49% 309 14 4.49%
Total Loans 37,864 552 5.79% 37,294 542 5.76% 37,162 2,084 5.61% 37,559 2,083 5.55%
3Q10 4Q10E 2011E 2012E
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 7
Table 5:ZION Credit Loss Projections (Summary) Zions Bancorpora 2009 Loss Forecast 2010E Loss Forecast
Loan Category 2008 Balance% of
LoansFreq. Severity
NPL (%)
NCO Rate (bp)
$ Losses2009
Growth2009 Balance
% of Loans
Freq. SeverityNPL (%)
NCO Rate (bp)
Losses ($)2010
Growth2010 Balance
% of Loans
Freq. SeverityNPL (%)
NCO Rate (bp)
$ Losses
Residential R/E $6,209,824 15% 1.5% 19% 0.6% 29 $18,269 4% $6,489,941 16% 2.9% 52% 2.1% 151 $97,813 -3% $6,307,956 16.5% 2.7% 52% 2.8% 138 $87,000 Revolving $1,947,183 5% 0.4% 22% 0.1% 9 $1,705 15% $2,237,345 5% 0.9% 77% 0.4% 70 $15,576 0% $2,260,102 5.9% 1.6% 70% 0.7% 112 $25,247 First lien $3,860,669 9% 2.0% 19% 0.8% 37 $14,331 0% $3,905,900 9% 3.8% 45% 3.2% 171 $66,639 -5% $3,756,403 9.8% 3.3% 45% 4.1% 145 $54,454 Second lien $401,973 1% 2.5% 22% 1.2% 56 $2,233 -16% $346,696 1% 5.3% 86% 2.2% 450 $15,598 -17% $291,451 0.8% 3.0% 85% 2.3% 250 $7,300
Commercial R/E $22,628,005 55% 4.0% 30% 2.2% 119 $268,953 1% $23,168,441 56% 8.1% 42% 6.9% 337 $781,331 -11% $20,897,664 54.8% 6.9% 42% 7.3% 307 $641,344 Construction $8,907,130 22% 8.8% 32% 4.5% 282 $251,204 -21% $7,386,488 18% 17.1% 50% 14.4% 848 $626,098 -38% $4,739,204 12.4% 15.9% 48% 15.4% 755 $357,825 Multifamily $661,049 2% 2.6% 56% 1.1% 146 $9,684 31% $872,318 2% 6.2% 21% 5.4% 128 $11,162 4% $911,303 2.4% 3.5% 34% 4.5% 162 $14,794 Nonfarm, nonres'l $12,907,566 31% 0.8% 7% 0.7% 3 $7,581 14% $14,724,408 35% 3.8% 26% 2.7% 138 $144,208 1% $15,055,676 39.5% 4.3% 35% 4.8% 253 $267,133 Farmland $152,260 0% 4.0% 8% 2.9% 32 $484 22% $185,228 0% 15.0% 0% 16.7% -7 ($137) 3% $191,481 0.5% 4.7% 5% 14.8% 83 $1,592 Foreign property $0 0% NA 0% NA - $0 NA $0 0% 0.0% 0% NA NA $0 NA $0 0.0% 0.0% 0% NA NA $0
C&I $11,206,002 27% 2.4% 32% 1.0% 75 $83,700 -7% $10,541,083 25% 4.0% 62% 2.6% 248 $260,955 -8% $9,785,969 25.6% 3.0% 69% 2.8% 217 $212,389
Credit Cards $114,184 0% 2.9% 100% 0.2% 286 $3,271 0% $117,513 0% 5.3% 95% 0.3% 503 $5,906 5% $126,769 0.3% 5.8% 100% 0.0% 580 $7,353 Other Consumer $655,094 2% 2.8% 100% 0.4% 278 $18,228 -13% $584,727 1% 5.3% 85% 0.8% 453 $26,463 -18% $487,370 1.3% 3.0% 85% 1.1% 253 $12,347
Leases $411,336 1% 2.0% 14% 1.3% 28 $1,134 -7% $382,051 1% 1.1% 47% 1.8% 52 $1,984 -5% $365,764 1.0% 4.0% 50% 3.3% 201 $7,353 Agricultural Loans $200,252 0% 1.0% 0% 0.1% 5 $106 -1% $198,628 0% 1.5% 15% 1.9% 22 $445 -9% $182,329 0.5% 4.5% 15% 5.2% 67 $1,215
Total $41,424,696 100% 3.1% 31% 1.60% 95 $393,661 -1% $41,482,382 100% 6.1% 46% 4.9% 283 $1,174,897 -9% $38,153,821 100% 5.1% 47% 5.2% 254 $969,000
Zions 2012E Loss Forecast
Loan Category2011E
Growth2011E
Balance% of
LoansFreq. Severity
NPL (%)
NCO Rate (bp)
$ Losses2012E
Growth2012E
Balance% of Loans
Freq. SeverityNPL (%)
NCO Rate (bp)
$ Losses
Residential R/E 0% $6,332,734 17% 2.4% 54% 2.3% 127 $80,488 3% $6,526,581 17% 1.9% 46% 1.7% 85 $55,284 Revolving 0% $2,269,953 6% 1.5% 75% 0.7% 114 $25,797 1% $2,302,196 6% 0.8% 70% 0.4% 52 $11,977 First lien 1% $3,803,760 10% 2.9% 45% 3.2% 130 $49,526 4% $3,967,947 11% 2.5% 40% 2.4% 98 $38,830 Second lien -12% $259,021 1% 2.4% 85% 2.7% 199 $5,165 -2% $256,439 1% 2.2% 80% 1.2% 175 $4,478 Commercial R/E -7% $19,537,309 53% 4.5% 38% 5.9% 184 $360,414 -3% $19,107,371 51% 2.5% 36% 5.2% 89 $170,475 Construction -23% $3,739,439 10% 8.9% 42% 10.5% 372 $139,019 -7% $3,486,433 9% 3.4% 40.3% 5.8% 138 $48,125 Multifamily -2% $903,552 2% 4.1% 36% 5.0% 149 $13,468 -1% $898,222 2% 3.5% 35% 5.9% 119 $10,646 Nonfarm, nonres'l -3% $14,703,633 40% 3.5% 36% 5.3% 147 $201,592 -2% $14,527,698 39% 2.3% 34% 6.0% 92 $108,402 Farmland -2% $190,685 1% 4.7% 30% 9.4% 332 $6,335 1% $195,019 1% 6.0% 30% 7.7% 169 $3,301 Foreign property NA $0 0% 0.0% 0% NA NA $0 NA $0 0% 0.0% 0% NA NA $0 C&I 3% $10,105,684 27% 2.0% 65% 1.5% 129 $130,346 5% $10,683,104 28% 0.9% 65% 0.7% 55 $59,175 Credit Cards 0% $129,247 0% 4.5% 100% 0.0% 450 $5,816 1% $132,656 0% 3.0% 100% 0.0% 295 $3,913 Other Consumer 2% $500,444 1% 2.5% 85% 0.8% 212 $10,589 3% $519,907 1% 2.0% 90% 0.4% 181 $9,397
Leases 1% $372,950 1% 3.5% 40% 3.4% 138 $5,155 4% $388,891 1% 2.0% 15% 3.0% 30 $1,152 Agricultural Loans -1% $181,722 0% 3.5% 10% 5.2% 36 $648 5% $190,468 1% 3.0% 5% 4.8% 15 $280
Total -3% $37,160,091 100% 3.4% 45% 3.9% 160 $593,456 1% $37,548,979 100% 1.9% 42% 3.2% 80 $299,676
Loan CategoryNCO
Rate (bp)NCO
Rate (bp)Residential R/E 385 222Revolving 349 181First lien 543 310Second lien 1011 660
Commercial R/E 959 614Construction 1597 1332Multifamily 660 285Nonfarm, nonres'l 490 273Farmland 594 76Foreign property NA NAC&I 617 449
Credit Cards 1979 1046Other Consumer 1120 664Leases 386 244Agricultural Loans 130 84
Total 800 507
Cumulative Loss Forecasts (2009 - 2010)Cumulative Loss Forecasts (2008 - 2012)
2011E Loss Forecast
68% $40,823
5.6% 14% $1,660
10.4% 42% $2,103,074
7.8% 85% $38,810 4.9% 40% $9,337
10.7% 0% $13,259 6.6% 58% $473,344
18.4% 4% $1,455 NA NA $0
9.4% 29% $25,956 7.9% 32% $411,341
13.6% 38% $1,422,675 25.0% 43% $983,923
6.9% 39% $121,093 7.7% 72% $22,898
Cumulative Freq. (%) LS (%) $ Losses
5.4% 36% $143,990
12.0% 11% $2,693
18.0% 44% $3,350,388
12.6% 89% $77,024 10.9% 35% $16,778
20.0% 99% $26,259 10.4% 59% $746,565
31.1% 19% $11,574 NA NA $0
18.6% 36% $59,754 14.2% 34% $728,917
23.3% 41% $2,222,517 34.3% 47% $1,422,271
13.4% 41% $223,779 14.0% 72% $34,773
Cumulative Freq. (%)Loss Severity
(%)$ Losses
10.7% 36% $258,553
3%
11%
3%-8%1%
NA
15%
1%24%18%
3%
3%11%
2008 Losses
2008E Growth
6%
-1%26%
$80,301 5.0% 70% 2.5%
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 8
Table 6: ZION Construction Credit Loss Projections (Detail)
% of Const Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Resi Constr 2% $180,212 22.0% 35% 15.5% 770 $13,876 1% $75,088 6.0% 30% 4.3% 180 $1,352 2% $173,537 10.0% 35% 6.7% 350 $6,074 1% $60,071 18.0% 40% 11.6% 720 $4,325 1% $128,484 3.0% 15% 2.6% 45 $578 3% $285,335 2.0% 8% 1.8% 16 $457 2% $176,874 12.0% 18% 10.1% 216 $3,820 1% $100,118 3.0% 1% 3.0% 2 $15 13% $1,179,719 9.0% 29% 6.6% 259 $30,497 Resi Land 6% $523,949 30.0% 54% 16.3% 1634 $85,595 1% $81,763 12.0% 44% 7.1% 528 $4,317 2% $206,910 15.0% 48% 8.5% 713 $14,744 2% $168,531 25.0% 50% 14.3% 1250 $21,066 1% $101,786 6.0% 39% 3.7% 236 $2,403 6% $492,245 3.0% 15% 2.6% 45 $2,215 5% $438,849 17.0% 29% 12.7% 488 $21,398 1% $93,443 5.0% 1% 5.0% 5 $49 24% $2,107,476 16.1% 45% 9.6% 720 $151,787 Total Resi 8% $704,161 28.0% 51% 16.1% 1413 $99,471 2% $156,851 9.1% 40% 5.7% 361 $5,669 4% $380,447 12.7% 43% 7.7% 547 $20,817 3% $228,602 23.2% 48% 13.6% 1111 $25,391 3% $230,271 4.3% 30% 3.1% 129 $2,982 9% $777,580 2.6% 13% 2.3% 34 $2,672 7% $615,723 15.6% 26% 12.0% 410 $25,218 2% $193,561 4.0% 1% 3.9% 3 $64 37% $3,287,195 13.6% 41% 8.5% 555 $182,284 Comm'l Const 6% $547,310 12.0% 25% 9.3% 300 $16,419 1% $118,473 3.0% 15% 2.6% 45 $533 4% $397,133 4.0% 20% 3.2% 80 $3,177 5% $455,535 12.5% 10% 11.4% 120 $5,470 1% $83,431 1.0% 10% 0.9% 10 $83 14% $1,291,517 1.0% 5% 1.0% 5 $646 3% $265,312 5.0% 12% 4.4% 60 $1,592 7% $617,392 0.3% 0% 0.3% 0 $0 42% $3,776,103 4.5% 16% 3.8% 74 $27,921 Comm'l Land 3% $250,294 19.0% 35% 13.2% 665 $16,645 0% $16,686 7.0% 30% 5.0% 210 $350 1% $96,780 8.0% 35% 5.3% 280 $2,710 5% $405,476 20.0% 20% 16.7% 400 $16,219 1% $73,420 4.0% 25% 3.0% 100 $734 8% $679,131 1.5% 12% 1.3% 18 $1,217 2% $195,229 8.0% 20% 6.5% 160 $3,124 1% $126,816 1.5% 0% 1.5% 0 $0 21% $1,843,833 9.1% 24% 7.1% 222 $40,999 Total Comm'l 9% $797,604 14.2% 29% 10.5% 415 $33,064 2% $135,159 3.5% 19% 2.9% 65 $884 6% $493,914 4.8% 25% 3.6% 119 $5,887 10% $861,011 16.0% 16% 13.9% 252 $21,689 2% $156,851 2.4% 22% 1.9% 52 $818 22% $1,970,648 1.2% 8% 1.1% 9 $1,863 5% $460,541 6.3% 16% 5.3% 102 $4,716 8% $744,208 0.5% 0% 0.5% 0 $0 63% $5,619,935 6.0% 20% 4.9% 123 $68,920 Total Const 17% $1,501,764 20.6% 43% 13.0% 883 $132,535 3% $292,010 6.5% 34% 4.4% 224 $6,552 10% $874,360 8.2% 37% 5.3% 305 $26,704 12% $1,089,613 17.5% 25% 13.8% 432 $47,081 4% $387,121 3.5% 28% 2.6% 98 $3,799 31% $2,748,228 1.6% 10% 1.4% 17 $4,535 12% $1,076,264 11.6% 24% 9.1% 278 $29,934 11% $937,768 1.2% 1% 1.2% 1 $64 100% $8,907,130 8.8% 32% 6.2% 282 $251,204 Note: Comm'l const consists of 25% retail, 17% apartments, 12% office, 5% industrial, 3% medical, 3% hotel, and 2% other)
2008 Avg Construction 8,907,130
% of Const Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Resi Constr 1% $78,543 18.5% 58% 31.5% 1415 $11,115 0% $5,236 15.0% 35% 56.3% 512 $268 1% $83,779 25.0% 40% 26.7% 943 $7,898 0% $13,963 50.0% 64% 57.5% 2884 $4,027 2% $143,122 8.2% 25% 7.9% 220 $3,152 3% $235,628 18.0% 15% 17.3% 278 $6,554 2% $116,941 17.0% 45% 19.3% 1017 $11,889 1% $97,742 1.0% 25% 2.7% 88 $860 10% $774,953 15.3% 34% 16.9% 591 $45,764 Resi Land 4% $331,624 38.0% 83% 26.6% 3099 $102,772 1% $54,107 20.0% 48% 19.6% 912 $4,933 2% $179,775 35.0% 50% 28.3% 1634 $29,383 2% $116,941 56.0% 85% 31.4% 4567 $53,408 2% $111,705 12.0% 40% 10.3% 468 $5,231 7% $499,181 35.0% 35% 27.4% 1242 $61,977 5% $338,606 19.0% 65% 16.8% 1563 $52,910 1% $40,144 2.0% 30% 8.5% 338 $1,355 23% $1,672,083 31.0% 59% 23.2% 1,866 $311,968 Total Resi 6% $410,166 34.3% 80% 27.8% 2777 $113,887 1% $59,343 19.6% 47% 22.9% 876 $5,201 4% $263,554 31.8% 48% 27.7% 1415 $37,281 2% $130,904 55.4% 83% 34.9% 4388 $57,435 3% $254,827 9.9% 33% 9.0% 329 $8,383 10% $734,809 29.5% 31% 23.9% 933 $68,530 6% $455,547 18.5% 61% 17.5% 1422 $64,799 2% $137,886 1.3% 27% 4.4% 161 $2,216 33% $2,447,036 26.0% 54% 21.0% 1,462 $357,732 Comm'l Const 5% $403,185 7.7% 40% 13.5% 439 $17,687 2% $132,650 8.9% 23% 8.7% 216 $2,866 5% $335,115 15.0% 23% 14.8% 351 $11,751 5% $399,694 35.0% 49% 27.9% 1969 $78,697 2% $158,830 5.0% 15% 4.7% 77 $1,218 17% $1,289,843 9.0% 5% 9.3% 45 $5,757 4% $310,679 7.0% 30% 7.5% 263 $8,179 7% $495,691 1.0% 10% 1.1% 13 $626 48% $3,525,686 10.9% 29% 10.5% 360 $126,782 Comm'l Land 3% $188,502 12.5% 52% 18.2% 796 $15,011 0% $15,709 16.0% 35% 15.0% 557 $876 1% $94,251 18.0% 38% 16.1% 667 $6,283 3% $233,882 45.0% 74% 32.0% 3818 $89,298 1% $83,779 8.0% 30% 7.8% 246 $2,059 7% $495,691 14.0% 20% 12.8% 287 $14,243 3% $225,155 7.5% 55% 6.7% 557 $12,533 1% $76,797 3.0% 33% 3.4% 167 $1,282 19% $1,413,765 17.2% 51% 14.1% 1,001 $141,584 Total Comm'l 8% $591,687 9.2% 45% 14.9% 553 $32,698 2% $148,358 9.6% 25% 9.3% 252 $3,742 6% $429,366 15.7% 27% 15.0% 420 $18,033 9% $633,576 38.7% 60% 29.2% 2652 $167,995 3% $242,609 6.0% 22% 5.7% 135 $3,278 24% $1,785,533 10.4% 11% 10.3% 112 $20,001 7% $535,835 7.2% 41% 7.2% 387 $20,712 8% $572,488 1.3% 17% 1.4% 33 $1,907 67% $4,939,452 12.7% 37% 11.5% 543 $268,366
Total Const 14% $1,001,853 19.5% 75% 19.4% 1,463 $146,585 3% $207,701 12.5% 35% 13.0% 431 $8,943 9% $692,920 21.8% 37% 19.6% 798 $55,314 10% $764,481 41.5% 71% 30.0% 2,949 $225,430 7% $497,436 8.0% 29% 7.4% 234 $11,661 34% $2,520,342 16.0% 22% 14.0% 351 $88,531 13% $991,381 12.4% 70% 11.6% 863 $85,511 10% $710,373 1.3% 46% 2.0% 58 $4,123 100% $7,386,488 17.1% 50% 14.4% 848 $626,098 Note: Comm'l const consists of 29% retail, 34% apartments, 15% office, 5% industrial, 5% medical, 6% hotel, and 6% other) Nevada State Bank Prob ln NPL (%) Losses ($) Vectra Prob ln NPL (%) Losses ($) Amegy Prob ln NPL (%) Losses ($) Zions First Prob ln NPL (%) Losses ($)
2009 Avg Construction 7,386,488 2009 Growth -17% 412009 Decay Rate 15% Nevada State Bank Vectra Amegy Bank NA 10.25 Zions First 0
Balance Problem loan NPL losses Balance Problem loan NPL losses Balance Prob ln NPL Balance Prob ln NPL Losses Balance Prob ln NPL Losses Balance Prob ln NPL Losses
% of Const Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Resi Constr 1% $48,900 12.0% 65% 19.2% 768 $3,755 0% $3,418 5.0% 40% 30.2% 286 $98 1% $53,486 10.0% 65% 14.2% 895 $4,787 0% $8,006 18.0% 65% 32.4% 903 $723 2% $94,836 3.5% 35% 6.0% 159 $1,503 3% $155,675 12.0% 30% 15.9% 461 $7,181 2% $74,368 7.0% 45% 13.4% 285 $2,119 1% $65,199 6.0% 30% 5.6% 185 $1,203 11% $503,887 8.7% 42% 12.7% 424 $21,369 Resi Land 4% $187,760 15.0% 85% 14.8% 1153 $21,645 1% $34,599 10.0% 60% 13.0% 658 $2,278 2% $110,606 10.0% 85% 11.4% 1207 $13,347 1% $60,459 18.0% 85% 16.1% 1353 $8,181 2% $73,090 6.0% 65% 6.2% 501 $3,659 7% $313,689 14.0% 50% 18.9% 807 $25,309 4% $209,141 9.0% 65% 11.6% 538 $11,251 1% $26,442 11.0% 50% 9.3% 613 $1,622 21% $1,015,786 12.2% 67% 14.3% 859 $87,292 Total Resi 5% $236,659 14.4% 82% 15.8% 1073 $25,400 1% $38,018 9.6% 59% 14.6% 625 $2,376 3% $164,092 10.0% 78% 12.4% 1105 $18,134 1% $68,465 18.0% 83% 18.1% 1301 $8,904 4% $167,926 4.6% 52% 6.1% 307 $5,162 10% $469,364 13.3% 44% 17.9% 692 $32,490 6% $283,509 8.5% 61% 12.1% 472 $13,370 2% $91,641 7.4% 39% 6.6% 308 $2,825 32% $1,519,674 11.0% 61% 13.8% 715 $108,661 Comm'l Const 6% $264,209 22.0% 45% 19.7% 953 $25,192 2% $87,915 12.0% 30% 12.7% 375 $3,299 5% $220,590 13.0% 35% 15.3% 508 $11,214 5% $241,431 32.0% 60% 27.8% 1810 $43,704 2% $106,008 7.0% 20% 7.9% 149 $1,576 18% $862,266 15.0% 25% 15.3% 454 $39,150 4% $205,415 15.0% 35% 13.8% 523 $10,744 7% $331,903 10.0% 30% 7.7% 310 $10,292 49% $2,319,738 16.2% 37% 15.2% 626 $145,172 Comm'l Land 3% $121,268 22.0% 60% 18.8% 1273 $15,433 0% $10,231 14.0% 40% 15.9% 555 $568 1% $61,044 12.0% 45% 14.4% 553 $3,376 3% $126,786 42.0% 80% 27.7% 3007 $38,130 1% $55,442 10.0% 35% 10.4% 356 $1,974 7% $327,341 24.0% 30% 23.4% 739 $24,184 3% $146,656 20.0% 60% 12.4% 1177 $17,258 1% $51,025 15.0% 40% 11.2% 602 $3,070 19% $899,792 23.3% 52% 19.1% 1,156 $103,992 Total Comm'l 8% $385,476 22.0% 50% 19.4% 1054 $40,626 2% $98,146 12.2% 31% 13.0% 394 $3,867 6% $281,634 12.8% 37% 15.1% 518 $14,590 8% $368,218 35.4% 68% 27.7% 2222 $81,834 3% $161,450 8.0% 26% 8.7% 220 $3,550 25% $1,189,607 17.5% 27% 17.5% 532 $63,333 7% $352,071 17.1% 47% 13.2% 795 $28,002 8% $382,928 10.7% 32% 8.1% 349 $13,362 68% $3,219,530 18.2% 43% 16.2% 774 $249,164 Total Const 13% $622,136 19.1% 56% 18.0% 1,061 $66,025 3% $136,164 11.5% 40% 13.4% 459 $6,243 9% $445,726 11.8% 62% 14.1% 734 $32,724 9% $436,683 32.7% 64% 26.1% 2,078 $90,738 7% $329,376 6.3% 42% 7.4% 265 $8,713 35% $1,658,971 16.3% 35% 17.6% 578 $95,824 13% $635,579 13.2% 49% 12.7% 651 $41,372 10% $474,569 10.0% 34% 7.8% 341 $16,187 100% $4,739,204 15.9% 48% 15.4% 755 $357,825
2010E Growth -33%2010E Decay Rate 65%
% of Const Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Resi Constr 1% $38,558 5.0% 65% 8.6% 303 $1,169 0% $2,763 4.0% 40% 13.2% 143 $39 1% $41,896 7.0% 65% 7.6% 432 $1,812 0% $6,269 10.0% 65% 15.3% 577 $361 2% $77,149 2.0% 35% 3.5% 68 $528 3% $124,709 6.0% 30% 9.8% 170 $2,117 2% $60,113 2.5% 45% 6.2% 107 $644 1% $52,970 2.5% 25% 3.9% 61 $324 9% $404,426 4.3% 42% 7.0% 173 $6,994 Resi Land 4% $145,088 6.0% 85% 6.3% 484 $7,022 1% $27,437 6.0% 70% 6.1% 447 $1,226 2% $85,225 8.0% 85% 5.4% 653 $5,569 1% $46,222 10.0% 85% 7.5% 803 $3,714 2% $58,434 3.5% 65% 3.5% 222 $1,300 7% $246,849 7.0% 50% 10.2% 327 $8,066 4% $166,883 5.0% 65% 6.0% 312 $5,201 1% $21,018 5.0% 50% 5.9% 242 $508 17% $797,155 6.3% 68% 7.2% 409 $32,605 Total Resi 5% $183,647 5.8% 81% 6.8% 446 $8,191 1% $30,200 5.8% 68% 6.8% 419 $1,265 3% $127,120 7.7% 79% 6.2% 581 $7,380 1% $52,491 10.0% 83% 8.4% 776 $4,075 4% $135,583 2.6% 52% 3.5% 135 $1,828 10% $371,558 6.7% 44% 10.1% 274 $10,183 6% $226,995 4.3% 62% 6.0% 257 $5,844 2% $73,988 3.2% 36% 4.4% 113 $832 25% $1,201,581 5.7% 61% 7.1% 330 $39,599 Comm'l Const 6% $206,322 12.5% 45% 14.0% 524 $10,810 2% $70,738 8.0% 30% 10.1% 229 $1,621 5% $176,286 7.0% 35% 10.0% 232 $4,084 5% $180,055 20.0% 55% 19.2% 999 $17,995 2% $86,280 3.5% 20% 5.6% 68 $587 18% $691,007 10.0% 25% 12.9% 236 $16,331 4% $164,035 8.0% 35% 10.1% 266 $4,367 7% $267,941 5.0% 25% 6.5% 122 $3,257 39% $1,842,665 9.7% 35% 11.6% 320 $59,052 Comm'l Land 2% $93,112 15.0% 60% 13.1% 842 $7,844 0% $8,157 11.0% 40% 12.4% 415 $339 1% $48,672 8.0% 45% 9.6% 342 $1,662 2% $88,332 20.0% 80% 14.1% 1467 $12,956 1% $44,653 6.0% 35% 7.7% 202 $903 7% $258,504 13.0% 30% 17.2% 358 $9,253 3% $113,182 9.0% 60% 8.1% 517 $5,852 1% $40,582 10.0% 40% 10.1% 384 $1,559 15% $695,193 12.5% 50% 13.2% 581 $40,368 Total Comm'l 8% $299,434 13.3% 50% 13.7% 623 $18,654 2% $78,894 8.3% 31% 10.4% 248 $1,959 6% $224,958 7.2% 37% 9.9% 255 $5,746 7% $268,387 20.0% 63% 17.6% 1153 $30,951 4% $130,933 4.4% 27% 6.3% 114 $1,489 25% $949,511 10.8% 27% 14.0% 269 $25,585 7% $277,217 8.4% 46% 9.3% 369 $10,219 8% $308,522 5.7% 28% 7.0% 156 $4,816 54% $2,537,857 10.5% 40% 12.0% 392 $99,420
Total Const 13% $483,081 10.4% 53% 11.0% 556 $26,845 3% $109,095 7.6% 39% 9.4% 296 $3,224 9% $352,078 7.4% 51% 8.6% 373 $13,126 9% $320,877 18.4% 59% 16.0% 1,092 $35,027 7% $266,516 3.5% 36% 4.9% 124 $3,317 35% $1,321,069 9.6% 28% 12.9% 271 $35,768 13% $504,212 6.6% 48% 7.8% 319 $16,064 10% $382,510 5.2% 28% 6.5% 148 $5,648 79% $3,739,439 8.9% 42% 10.5% 372 $139,019
2011E Growth -18%2011E Decay Rate 70%
% of Const Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)% of
ConstBalance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Resi Constr 1% $36,075 1.0% 55% 3.6% 53 $192 0% $2,606 2.0% 30% 6.2% 57 $15 1% $38,940 1.0% 55% 3.2% 53 $208 0% $5,784 2.0% 55% 6.4% 104 $60 2% $73,041 1.0% 25% 2.0% 25 $180 3% $117,468 1.0% 20% 4.4% 19 $227 2% $56,801 1.0% 35% 2.9% 34 $194 1% $50,167 0.5% 20% 1.8% 10 $49 8% $380,883 1.0% 32% 3.2% 30 $1,126Resi Land 4% $134,498 2.0% 75% 2.8% 147 $1,972 1% $25,483 3.0% 60% 3.4% 176 $449 2% $78,318 2.0% 75% 2.5% 147 $1,152 1% $42,147 3.0% 75% 3.4% 219 $923 1% $54,895 2.0% 55% 2.2% 109 $596 6% $230,675 2.0% 40% 4.9% 77 $1,777 4% $156,068 2.0% 55% 3.1% 108 $1,680 1% $19,726 1.5% 40% 3.0% 59 $116 16% $741,810 2.1% 58% 3.5% 117 $8,664Total Resi 5% $170,574 1.8% 73% 2.9% 127 $2,164 1% $28,089 2.9% 58% 3.7% 165 $463 3% $117,259 1.7% 71% 2.7% 116 $1,360 1% $47,930 2.9% 73% 3.8% 205 $983 3% $127,935 1.4% 43% 2.1% 61 $776 9% $348,143 1.7% 36% 4.7% 58 $2,003 6% $212,870 1.7% 52% 3.0% 88 $1,874 2% $69,893 0.8% 31% 2.2% 24 $165 24% $1,122,693 1.7% 53% 3.4% 87 $9,791Comm'l Const 5% $190,871 6.0% 45% 8.4% 256 $4,895 2% $66,431 3.0% 30% 5.8% 87 $576 4% $165,532 3.0% 30% 5.7% 87 $1,436 4% $162,505 8.0% 55% 10.5% 410 $6,670 2% $81,688 1.0% 20% 2.9% 20 $160 17% $648,699 4.0% 25% 7.6% 95 $6,183 4% $153,759 3.0% 35% 5.6% 101 $1,555 7% $252,997 2.0% 25% 3.9% 49 $1,235 36% $1,722,482 3.9% 35% 6.7% 132 $22,710Comm'l Land 2% $84,730 7.0% 60% 7.6% 401 $3,394 0% $7,588 5.0% 40% 7.5% 191 $145 1% $45,448 4.0% 45% 5.7% 174 $790 2% $77,761 8.0% 80% 6.7% 609 $4,739 1% $41,992 2.0% 35% 4.1% 68 $286 6% $241,184 5.0% 30% 9.6% 141 $3,393 3% $104,743 4.0% 60% 4.6% 233 $2,441 1% $37,812 3.0% 40% 5.4% 116 $437 14% $641,258 5.1% 50% 7.3% 244 $15,625Total Comm'l 7% $275,602 6.3% 50% 8.1% 301 $8,289 2% $74,019 3.2% 32% 5.9% 97 $721 6% $210,981 3.2% 34% 5.7% 105 $2,225 6% $240,265 8.0% 63% 9.3% 475 $11,409 3% $123,679 1.3% 28% 3.3% 36 $446 24% $889,883 4.3% 27% 8.2% 108 $9,576 7% $258,502 3.4% 47% 5.2% 155 $3,996 8% $290,809 2.1% 28% 4.1% 57 $1,672 50% $2,363,740 4.2% 40% 6.9% 162 $38,334
Total Const 12% $446,175 4.6% 51% 6.1% 234 $10,454 3% $102,109 3.1% 37% 5.3% 116 $1,184 9% $328,239 2.7% 41% 4.6% 109 $3,586 8% $288,196 7.1% 60% 8.4% 430 $12,393 7% $251,614 1.4% 35% 2.7% 49 $1,222 33% $1,238,026 3.5% 26% 7.2% 94 $11,580 13% $471,372 2.7% 47% 4.2% 125 $5,870 10% $360,702 1.9% 27% 3.7% 51 $1,837 74% $3,486,433 3.4% 40% 5.8% 138 $48,125
2012E Growth -5%2012E Decay rate 65%
Freq Severity Freq Severity Freq Severity Freq Severity Freq Severity
Loss
Rate
(bp)
Freq Severity Freq Severity Freq Severity Freq Severity
Resi Constr 32% 53% 7% 34% 25% 48% 28% 57% 16% 29% 25% 23% 26% 41% 9% 26% 23% 39%Resi Land 56% 74% 31% 53% 52% 60% 67% 77% 26% 50% 50% 41% 36% 58% 10% 38% 46% 60%Total Resi 50% 71% 19% 49% 40% 56% 57% 75% 20% 41% 41% 37% 33% 54% 10% 32% 38% 56%Comm'l Const 33% 41% 27% 27% 27% 29% 64% 52% 24% 18% 26% 20% 30% 33% 9% 27% 30% 34%Comm'l Land 44% 53% 37% 37% 37% 41% 57% 70% 25% 33% 29% 27% 38% 56% 13% 38% 37% 50%Total Comm'l 37% 45% 29% 29% 29% 32% 61% 60% 24% 25% 27% 22% 34% 44% 10% 29% 32% 40%
Total Const 43% 59% 24% 38% 34% 45% 60% 63% 22% 34% 31% 28% 33% 50% 10% 30% 34% 47%$724,205
$1,422,271 1,289
1,597
$381,636 $342,568
1,0111,858
$592,317 $698,067
2,8112,124
Total
Losses ($)
$105,750
Loss Rate (bp)
896
292 $21,757
297 $27,859
250 $15,409 501 $6,348
391 $3,650 315 $6,102
Other (incl. WA)
Loss Rate (bp) Losses ($)
245 $2,452
1,469 $67,645
1,661 $178,750
996 $26,438 2,111 $41,207
2,106 $92,439 1,804 $111,105
UT & ID
Loss Rate (bp) Losses ($)
1,055 $18,666
611 $120,358
860 $236,237
527 $68,068 770 $52,291
2,018 $99,344 1,490 $115,879
TX
Loss Rate (bp) Losses ($)
579 $16,535
611 $9,581
742 $28,712
434 $3,625 811 $5,956
1,296 $13,189 831 $19,131
CO
Losses ($)
462 $5,942
3,645 $313,879
3,769 $410,668
3,349 $152,537 3,979 $161,342
5,180 $87,293 4,234 $96,789
NV
Loss Rate (bp) Losses ($)
1,581 $9,497
941 $46,481
1,503 $131,454
797 $31,661 1,531 $14,820
3,103 $64,194 2,234 $84,973
So. CA
Loss Rate (bp) Losses ($)
1,197 $20,779
827 $11,173
895 $26,147
751 $8,895 1,365 $2,278
1,615 $13,202 955 $14,974
$382,444
Loss Rate (bp)
16714180
13702330
3538
1672
2547
$75,003 $58,327
$249,113
$133,331
Cumulative Construction Loss Forecasts (2008 - 2012E)
Losses ($)
$30,107 $219,006
AZ No. CA
Loss Rate (bp) Losses ($)
236 $1,772
2009 Construction Loss ForecastTotalOther (inc. WA)UT & ID
2012E Construction Loss ForecastAZ Northern California Southern California NV CO Texas UT & ID Other (inc. WA) Total
UT & ID Other (inc. WA) Total
UT & ID Other (inc. WA) TotalTexas
TexasNV
UT & ID
CO2010 Construction Losses
AZ Northern California Southern California
Other (inc. WA) TotalAZ Northern California Southern California TexasCO
Southern California TexasNV CO
2008 Construction Losses
2011E Construction Loss ForecastAZ Northern California Southern California NV CO
NV
AZ Northern California
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 9
Table 7: ZION Term CRE Credit Loss Projections (Detail)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Non-owner occupied 5% $689,054 0.2% 0% 0.2% 0 $0 4% $577,840 0.2% 12% 0.2% 3 $152 9% $1,202,175 0.2% 40% 0.1% 10 $1,181 15% $2,013,939 0.5% 4% 0.5% 2 $400 2% $333,151 0.1% 0% 0.1% 0 $0 3% $362,850 0.2% (1%) 0.3% 0 ($9) 1% $68,920 0.5% 13% 0.4% 6 $40 39% $5,247,928 0.3% 10% 0.3% 3 $1,764 Multifamily 0% $22,332 0.0% 0% 0.0% 0 $0 1% $92,579 9.9% 100% 0.0% 991 $9,171 1% $174,798 0.0% 0% 0.0% 0 $0 2% $242,562 2.2% 9% 2.0% 20 $493 0% $40,254 0.0% 0% 0.0% 0 $0 1% $85,611 3.1% 1% 3.1% 2 $20 0% $2,914 0.0% 0% 0.0% 0 $0 5% $661,049 2.6% 56% 1.1% 146 $9,684 Owner-occupied 6% $805,078 0.6% 31% 0.4% 19 $1,520 3% $430,878 0.6% 0% 0.6% 0 $0 11% $1,541,619 1.1% 2% 1.0% 2 $279 31% $4,163,196 1.4% 6% 1.3% 9 $3,711 2% $289,535 0.1% 0% 0.1% 0 $0 3% $384,736 0.7% 12% 0.6% 8 $307 0% $44,596 0.0% 0% 0.0% 0 $0 56% $7,659,638 1.1% 7% 1.0% 8 $5,817
Total term CRE 11% $1,516,464 0.3% 31.0% 0.3% 348 $1,520 8% $1,101,297 1.2% 71% 0.3% 85 $9,323 22% $2,918,593 1% 8% 0.6% 5 $1,460 47% $6,419,697 1% 6% 1.1% 7 $4,604 5% $662,940 0.0% 0.0% 0.1% 0 $0 6% $833,196 1% 5% 0.7% 4 $318 1% $116,430 0% 13% 0.2% 3 $40 100% $13,568,615 1% 14% 0.8% 13 $17,265
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Non-owner occupied 6% $777,315 1.5% 57% 0.8% 88 $6,856 5% $625,930 15.2% 62% 6.6% 934 $58,468 12% $1,631,413 3.6% 15% 3.2% 54 $8,741 18% $2,399,882 2.7% 25% 2.4% 68 $16,247 2% $334,725 1.7% 70% 0.6% 121 $4,048 4% $538,221 0.6% 9% 0.7% 6 $306 1% $82,431 11.5% (70%) 18.3% -803 ($6,621) 41% $6,389,916 3.9% 35% 2.7% 138 $88,045 Multifamily 0% $14,705 0.0% 0% 0.0% 0 $0 1% $108,623 6.4% 24% 5.0% 151 $1,640 2% $341,947 4.1% 0% 4.1% 0 $0 2% $238,124 5.1% 34% 5.0% 170 $4,054 0% $39,825 0.6% 0% 0.6% 0 $0 1% $121,283 17.3% 26% 13.4% 451 $5,468 0% $7,812 0.0% 0% 0.0% 0 $0 6% $872,318 6.2% 21% 5.4% 128 $11,162 Owner-occupied 5% $799,811 3.5% 29% 2.8% 101 $8,105 3% $461,128 4.8% 43% 3.3% 205 $9,467 12% $1,870,961 3.7% 14% 3.9% 53 $9,826 28% $4,351,381 3.8% 14% 4.3% 51 $22,089 2% $297,077 2.5% 0% 2.6% 0 $0 3% $496,242 2.5% 0% 2.9% 1 $55 0% $57,893 16.3% 70% 5.5% 1144 $6,621 53% $8,334,492 3.8% 18% 3.9% 67 $56,163
Total term CRE 11% $1,591,831 2.5% 37% 1.8% 94 $14,961 8% $1,195,680 10.4% 56% 5.1% 582 $69,575 26% $3,844,320 3.7% 13% 3.6% 48 $18,567 47% $6,989,386 3.4% 18% 3.6% 61 $42,390 5% $671,627 2.0% 0.0% 1.5% 60 $4,048 8% $1,155,746 3.2% 16% 2.9% 50 $5,829 1% $148,136 12.8% 0% 12.9% 0 $0 100% $15,596,725 4.0% 25% 3.5% 100 $155,370
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Non-owner occupied 5% $776,209 2.4% 30% 2.2% 72 $5,558 4% $578,795 17.5% 60% 12.5% 1003 $58,025 11% $1,692,124 3.5% 30% 4.3% 135 $22,812 15% $2,372,624 5.2% 30% 5.2% 162 $38,367 2% $355,990 5.5% 55% 3.0% 301 $10,725 4% $683,346 5.0% 50% 2.8% 265 $18,112 1% $98,603 1.2% 35% 0.2% 1252 $12,341 41% $6,557,691 5.5% 42% 4.8% 253 $165,939 Multifamily 0% $14,749 4.5% 25% 3.4% 113 $166 1% $104,568 3.0% 30% 5.4% 110 $1,150 2% $355,624 4.0% 30% 4.7% 199 $7,094 1% $234,208 5.0% 40% 6.3% 216 $5,052 0% $42,612 1.3% 20% 1.3% 33 $142 1% $150,558 1.3% 45% 1.6% 78 $1,167 0% $8,984 1.0% 25% 0.8% 25 $22 6% $911,303 3.5% 34% 4.5% 162 $14,794 Owner-occupied 5% $798,146 2.2% 40% 3.1% 108 $8,637 3% $442,702 5.0% 40% 5.4% 194 $8,586 12% $1,940,690 2.5% 25% 4.2% 90 $17,397 27% $4,305,613 3.4% 25% 5.2% 117 $50,317 2% $317,872 3.2% 15% 4.2% 73 $2,314 4% $630,192 7.3% 25% 6.7% 218 $13,761 0% $62,770 1.2% 25% 4.0% 29 $182 53% $8,497,985 3.4% 27% 4.8% 119 $101,194
Total term CRE 10% $1,589,103 2.3% 35% 2.7% 90 $14,361 7% $1,126,065 11.2% 56% 8.9% 602 $67,761 25% $3,988,438 3.1% 28% 4.3% 119 $47,303 43% $6,912,446 4.1% 28% 5.2% 136 $93,735 4% $716,475 4.2% 0.0% 3.4% 184 $13,181 9% $1,464,096 5.6% 36% 4.4% 226 $33,041 1% $170,357 1.2% 31% 1.7% 736 $12,546 100% $15,966,980 4.3% 35% 4.8% 177 $281,927
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Non-owner occupied 5% $757,961 2.0% 35% 2.5% 75 $5,714 3% $516,795 10.0% 40% 13.0% 372 $19,245 11% $1,680,718 3.5% 35% 4.5% 131 $22,064 14% $2,259,304 4.5% 30% 6.1% 131 $29,592 2% $350,628 4.0% 40% 4.0% 157 $5,520 5% $741,719 4.0% 40% 3.8% 158 $11,704 1% $97,054 1.5% 35% 1.1% 52 $509 41% $6,404,179 4.3% 35% 5.3% 147 $94,349 Multifamily 0% $14,372 4.5% 40% 4.4% 205 $295 1% $97,754 4.0% 40% 5.3% 187 $1,823 2% $352,077 4.0% 35% 5.1% 149 $5,257 1% $222,415 7.0% 35% 8.2% 236 $5,254 0% $42,541 1.5% 30% 1.7% 52 $221 1% $164,971 1.0% 35% 1.4% 35 $573 0% $9,422 1.5% 30% 1.4% 47 $44 6% $903,552 4.1% 36% 5.0% 149 $13,468 Owner-occupied 5% $777,951 2.0% 50% 2.6% 116 $8,985 3% $412,105 4.5% 45% 5.5% 212 $8,725 12% $1,931,991 2.0% 35% 3.4% 91 $17,653 26% $4,109,237 3.0% 35% 4.6% 131 $54,002 2% $316,715 2.5% 30% 3.7% 107 $3,403 4% $685,643 5.0% 35% 6.3% 202 $13,880 0% $65,812 1.5% 40% 2.7% 90 $596 53% $8,299,454 2.9% 37% 4.3% 129 $107,244
Total term CRE 10% $1,550,285 2.0% 43% 2.5% 33 $14,994 7% $1,026,654 7.2% 41% 9.2% 290 $29,794 25% $3,964,787 2.8% 35% 4.0% 113 $44,974 42% $6,590,955 3.6% 33% 5.2% 135 $88,849 5% $709,884 1261.8% 0.0% 3.7% 129 $9,144 10% $1,592,333 4.1% 37% 4.6% 164 $26,157 1% $172,288 1.5% 37% 1.7% 67 $1,149 100% $15,607,185 3.5% 36% 4.7% 138 $215,060
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. SeverityNPL
(%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
% of
Term
CRE
Balance Freq. Severity NPL (%)
Loss
Rate
(bp)
Losses ($)
Non-owner occupied 5% $755,104 2.3% 35% 3.3% 77 $5,836 3% $491,958 4.0% 35% 12.3% 126 $6,210 11% $1,669,686 2.5% 35% 5.0% 85 $14,121 14% $2,199,617 4.0% 30% 7.4% 114 $25,169 2% $347,868 2.0% 30% 4.4% 59 $2,052 5% $772,660 2.0% 30% 4.1% 58 $4,511 1% $101,639 1.5% 35% 1.7% 52 $530 41% $6,338,532 3.0% 32% 6.0% 92 $58,427 Multifamily 0% $14,225 4.0% 40% 5.6% 155 $220 1% $93,937 3.0% 40% 5.8% 115 $1,082 2% $349,449 4.0% 35% 6.4% 135 $4,708 1% $215,392 5.0% 35% 9.4% 164 $3,537 0% $42,431 1.3% 30% 2.2% 37 $157 1% $172,919 1.5% 35% 2.0% 52 $899 0% $9,869 1.5% 30% 2.1% 45 $44 6% $898,222 3.5% 35% 5.9% 119 $10,646 Owner-occupied 5% $773,458 0.8% 50% 2.3% 37 $2,845 3% $395,510 2.0% 45% 5.3% 86 $3,411 12% $1,923,165 2.0% 35% 3.8% 68 $13,124 26% $4,000,591 2.0% 35% 4.8% 68 $27,023 2% $315,014 1.0% 30% 3.4% 29 $919 5% $712,638 1.0% 35% 5.1% 33 $2,384 0% $68,790 1.0% 40% 2.5% 39 $270 53% $8,189,166 1.7% 36% 4.3% 61 $49,975
Total term CRE 10% $1,542,787 1.5% 39% 2.8% 46 $8,901 6% $981,404 3.1% 38% 8.9% 109 $10,702 26% $3,942,300 2.4% 35% 4.5% 81 $31,952 42% $6,415,600 2.8% 33% 5.8% 87 $55,728 5% $705,312 530.7% 0.0% 3.8% 44 $3,128 11% $1,658,217 1.5% 32% 4.3% 47 $7,793 1% $180,299 1.3% 36% 2.1% 47 $843 100% $15,425,920 2.4% 34% 5.1% 77 $119,049
Cumulative Construction Loss Forecasts (2008 - 2012E)
Freq Severity Freq Severity Freq Severity Freq Severity Freq SeverityLoss Rate
(bp)Freq Severity Freq Severity Freq Severity
Non-owner occupied 8% 38% 45% 55% 13% 32% 16% 29% 13% 48% 12% 42% 14% 49% 16% 39% $408,524
Multifamily 13% 37% 25% 58% 15% 0% 23% 34% 5% 27% 20% 27% 4% 29% 18% 35% $59,754
Owner-occupied 9% 42% 16% 42% 11% 28% 13% 28% 9% 23% 16% 30% 19% 65% 12% 30% $320,393
Total term CRE 9% 40% 32% 53% $187,155 12% 30% $144,256 14% 29% $285,306 11% 38% $29,501 15% 34% $73,138 15% 56% $14,578 14% 0%482 377
0412 500$6,636 $30,387 $7,669
$17,059 $58,278
413
628
122209
$109,774
$18,390 $157,142
2455
1422682
407
480
$142,099
$14,867 $30,189 300
1662
690
1231222
856362
463
785365
$68,919
377
309
344 $54,737 $30,092
$23,964
$681 462
2012E Term CRE LossesAZ NV CA UT & ID CO TX Other (inc. WA) Total
2011E Term CRE LossesAZ NV CA UT & ID CO TX Other (inc. WA) Total
2010 Term CRE LossesAZ NV CA UT & ID CO TX Other (inc. WA) Total
CA2009 Term CRE Losses
CONVAZ TotalOther (inc. WA)TXUT & ID
2008 Term CRE LossesCAAZ NV COUT & ID TX TotalOther (inc. WA)
AZ NV CA UT & ID CO TX
Losses ($)
TotalOther (inc. WA)
Loss Rate (bp) Losses ($) Loss Rate (bp) Losses ($) Loss Rate (bp) Loss Rate (bp) Losses ($) Losses ($) Losses ($)Loss Rate (bp)Loss Rate (bp) Losses ($) Loss Rate (bp) Losses ($)
656
$22,345
$521
$34,624
$8,127
507
540
$6,799
$111
623
Source: Company Filings, UBS Estimates
Zions Bancorporation 25 January 2011
UBS 10
Zions Bancorporation
Zions Bancorporation is a Salt Lake City-based bank holding company with a balance sheet in excess of $50 billion. Zions operates in Utah, Arizona, Nevada, Texas, California, New Mexico, Colorado, Oregon, and Washington. The company's outstanding loans include commercial real estate (39%), C&I (24%), construction (18%), and residential real estate (15%). In early 2009, Zions issued ~$255 million as part of the US Treasury's TARP program.
Statement of Risk
Upside risks to our Sell rating include: 1) a more robust economic recovery, which would translate into lower losses in commercial and CRE loans; 2) Fed tightening that is either or both greater and faster than anticipated, driving lending margins upward; and 3) more aggressive reserve drawdown, enhancing credit leverage to normalized EPS.
Analyst Certification
Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.
Zions Bancorporation 25 January 2011
UBS 11
Required Disclosures This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS.
For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission.
UBS Investment Research: Global Equity Rating Allocations
UBS 12-Month Rating Rating Category Coverage1 IB Services2
Buy Buy 49% 40%Neutral Hold/Neutral 42% 35%Sell Sell 8% 21%UBS Short-Term Rating Rating Category Coverage3 IB Services4
Buy Buy less than 1% 14%Sell Sell less than 1% 0%
1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 31 December 2010. UBS Investment Research: Global Equity Rating Definitions
UBS 12-Month Rating Definition Buy FSR is > 6% above the MRA. Neutral FSR is between -6% and 6% of the MRA. Sell FSR is > 6% below the MRA. UBS Short-Term Rating Definition
Buy Buy: Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.
Sell Sell: Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.
Zions Bancorporation 25 January 2011
UBS 12
KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months. EXCEPTIONS AND SPECIAL CASES UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece. Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities LLC: Heather Wolf, CFA; Elena Kim; Joshua Rogers. Company Disclosures
Company Name Reuters 12-mo rating Short-term rating Price Price date Zions Bancorporation2, 4, 6a, 6b, 6c, 7, 16 ZION.O Sell N/A US$23.75 24 Jan 2011
Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 2. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of
this company/entity or one of its affiliates within the past 12 months. 4. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking
services from this company/entity. 6a. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking
services are being, or have been, provided. 6b. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment
banking securities-related services are being, or have been, provided. 6c. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities
services are being, or have been, provided. 7. Within the past 12 months, UBS Securities LLC has received compensation for products and services other than
investment banking services from this company/entity. 16. UBS Securities LLC makes a market in the securities and/or ADRs of this company. Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.
Zions Bancorporation 25 January 2011
UBS 13
Zions Bancorporation (US$)
01-J
an-0
6
01-A
pr-0
6
01-J
ul-06
01-O
ct-0
6
01-J
an-0
7
01-A
pr-0
7
01-J
ul-07
01-O
ct-0
7
01-J
an-0
8
01-A
pr-0
8
01-J
ul-08
01-O
ct-0
8
01-J
an-0
9
01-A
pr-0
9
01-J
ul-09
01-O
ct-0
9
01-J
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0
01-A
pr-1
0
01-J
ul-10
01-O
ct-1
0
01-J
an-1
1
020406080
100120
Price Target (US$) Stock Price (US$)
Buy 1Buy
NeutralSell
No Rating
Source: UBS; as of 24 Jan 2011 Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6% above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 = FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA, lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6% below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities. A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities. From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.
Zions Bancorporation 25 January 2011
UBS 14
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