Moody's Reviews Zions for Downgrade (Holdco Snr at A2)
New York, November 20, 2007 -- Moody's Investors Service placed the ratings of Zions Bancorporation
(senior at A2) and its affiliates, including its lead bank,
Zions First National Bank (financial strength at B- and long term
bank deposits at A1) under review for possible downgrade. The Prime-1
ratings at Zions' subsidiary banks were affirmed by Moody's.
Moody's said the review will focus on the extent to which a further
downturn in Zions' commercial real estate (CRE) portfolio would
impact the Company's profitability and capital metrics. The
action reflects the deteriorating trend in Zions' asset quality
indicators coupled with the bank's sizable concentration in CRE,
residential construction and land loans in particular. Although
nonperforming assets as a percentage of tangible common equity plus reserves
remain a manageable 7.4%, Zions faces a challenging
residential housing market, particularly given its presence in some
of the more troubled Western markets.
Zions' third quarter results were negatively affected by a tripling
of the provision from the second quarter of 2007 to $55 million.
The increased provision reflects continued weakening in residential construction
and development sectors in Arizona, Southern California and Nevada,
which in total account for 16% of Zions' CRE portfolio.
Net charge-offs and nonperforming assets also doubled in the third
quarter, again reflecting the continued weakening in residential
construction and land values in the Southwest.
These events underscore Moody's previously noted concern that Zions
has a significant CRE exposure that accounts for over 4.5 times
tangible common equity, with construction lending comprising nearly
2/3 of CRE (absent owner-occupied). A lower rating could
result from the view that the company could suffer disproportionately
higher losses in a severe market correction than those like-rated
entities with lower exposures.
On Review for Possible Downgrade:
..Issuer: Amegy Bank National Association
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently B-
....Issuer Rating, Placed on Review
for Possible Downgrade, currently A1
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently A1
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently A1
..Issuer: Amegy Corporation
....Issuer Rating, Placed on Review
for Possible Downgrade, currently A2
..Issuer: California Bank & Trust
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently B-
....Issuer Rating, Placed on Review
for Possible Downgrade, currently A1
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently A1
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently A1
..Issuer: Nevada State Bank
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently B-
....Issuer Rating, Placed on Review
for Possible Downgrade, currently A1
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently A1
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently A1
..Issuer: Zions Bancorporation
....Multiple Seniority Shelf, Placed
on Review for Possible Downgrade, currently (P)Baa1
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently Baa1
....Subordinate Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently A3
....Senior Unsecured Commercial Paper,
Placed on Review for Possible Downgrade, currently P-1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Downgrade, currently A2
..Issuer: Zions Capital Trust B
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently A3
..Issuer: Zions Capital Trust C
....Preferred Stock Shelf, Placed on
Review for Possible Downgrade, currently (P)A3
..Issuer: Zions Capital Trust D
....Preferred Stock Shelf, Placed on
Review for Possible Downgrade, currently (P)A3
..Issuer: Zions First National Bank
....Bank Financial Strength Rating,
Placed on Review for Possible Downgrade, currently B-
....Issuer Rating, Placed on Review
for Possible Downgrade, currently A1
....OSO Senior Unsecured OSO Rating,
Placed on Review for Possible Downgrade, currently A1
....Senior Unsecured Deposit Rating,
Placed on Review for Possible Downgrade, currently A1
..Issuer: Zions Institutional Capital Trust A
....Preferred Stock Preferred Stock,
Placed on Review for Possible Downgrade, currently A3
Outlook Actions:
..Issuer: Amegy Bank National Association
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Amegy Corporation
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: California Bank & Trust
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Nevada State Bank
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Zions Bancorporation
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Zions Capital Trust B
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Zions Capital Trust C
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Zions Capital Trust D
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Zions First National Bank
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Zions Institutional Capital Trust A
....Outlook, Changed To Rating Under
Review From Stable
Zions, headquartered in Salt Lake City, UT, had assets
of $50 billion as of September 30, 2007.
New York
Gregory W. Bauer
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Gregory Frank
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653