New York, December 08, 2011 -- Moody's Investors Service upgraded the debt and deposit ratings of Zions
Bancorporation (Zions; subordinate to B1 from B3) and its subsidiaries,
including the long-term ratings and unsupported bank financial
strength (BFSR) rating of its lead bank, Zions First National Bank
(unsupported BFSR to D+ from D-, mapping to a Ba1 on
the long-term scale, and long-term deposits to Ba1
from Ba3). Following these rating actions, Moody's
outlook on Zions and its subsidiaries is stable.
RATINGS RATIONALE
Moody's rating action reflects the company's improved asset quality
which has driven Zions' return to profitability. The decline
in Zions' provisions since the second quarter of 2010 follows improvement
in the level of nonperforming assets (NPAs, including 90+ and
accruing TDRs, but excluding FDIC covered assets) which were down
40% from the time of our last rating action to 4.79%
of loans plus OREO at September 30, 2011. The reduced provision
allowed the company to return to profitability in 2011. Today's
rating action also reflects Zions' improved capital position which
has benefitted by approximately $715 million of conversions and
issuances over the past 5 quarters.
While Zions' concentration in CRE is down from prior levels,
at $11.2 billion, or approximately 2.3 times
Moody's adjusted tangible common equity (TCE), with 30% comprised
of construction and land, this remains a key credit concentration.
In addition to CRE, Zions' also has a concentration in CDOs
which consist primarily of non-investment grade bank trust preferred
securities. Moody's notes the correlation between CRE and bank
trust preferred CDOs, and that in the event of a further downturn
in the economy, we believe it is likely these two portfolios will
move together. Combined, the CRE and CDO portfolios total
2.7 times TCE. While Zions' regulatory capital position
has benefitted over the past 5 quarters, a harsher economic environment
would lead to heightened losses in these portfolios and would negatively
affect Zions' Tier 1 Common ratio which was 9.5% at
September 30, 2011.
Moody's notes that while Zions has returned to profitability,
reserve release accounts for a significant component of pre-tax
earnings. Further, after adjusting for non-recurring
events, Zions' risk adjusted profitability, as measured
by pre-provision, pre-tax earnings, is below
that of similarly rated banks. Zions' core earnings are constrained
by its somewhat narrow product mix, and further pressuring profitability
is that asset generation challenges persist with decreased demand for
loans, particularly in the CRE sector, which accounts for
30% of Zions' portfolio. Upwards rating pressure could
result from improved profitability, including a transition to less
reliance on spread income and the continued reduction of problem assets.
Moody's last rating action on Zions was on November 1, 2010 when
it affirmed the BFSR and downgraded the long-term deposit and debt
ratings at the banking subsidiaries, including Zions First National
Bank, to Ba3 from Ba2, and B1 from Ba3, respectively,
as a result of a reduction in Moody's systemic support assumptions
for Zions.
The methodologies used in this rating were "Bank Financial Strength Ratings:
Global Methodology", published in February 2007, "Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology", published in March 2007, and "Moody's Guidelines
for Rating Bank Hybrid Securities and Subordinated Debt", published
in November 2009. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
Zions Bancorporation, headquartered in Salt Lake City, UT,
reported total assets of $51.5 billion at September 30,
2011.
Upgrades:
..Issuer: Amegy Bank National Association
.... Bank Financial Strength Rating,
Upgraded to D+ from D-
.... Issuer Rating, Upgraded to Ba2
from B1
....OSO Senior Unsecured OSO Rating,
Upgraded to Ba2 from B1
....Senior Unsecured Deposit Rating,
Upgraded to Ba1 from Ba3
..Issuer: Amegy Corporation
.... Issuer Rating, Upgraded to Ba3
from B2
..Issuer: California Bank & Trust
.... Bank Financial Strength Rating,
Upgraded to D+ from D-
.... Issuer Rating, Upgraded to Ba2
from B1
....OSO Senior Unsecured OSO Rating,
Upgraded to Ba2 from B1
....Senior Unsecured Deposit Rating,
Upgraded to Ba1 from Ba3
..Issuer: Nevada State Bank
.... Bank Financial Strength Rating,
Upgraded to D+ from D-
.... Issuer Rating, Upgraded to Ba2
from B1
....OSO Senior Unsecured OSO Rating,
Upgraded to Ba2 from B1
....Senior Unsecured Deposit Rating,
Upgraded to Ba1 from Ba3
..Issuer: Zions Bancorporation
....Pref. Stock Non-cumulative
Preferred Stock, Upgraded to B3 from Caa3
....Subordinate Regular Bond/Debenture,
Upgraded to B1 from B3
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)Ba3 from (P)B2
..Issuer: Zions Capital Trust B
....Pref. Stock Preferred Stock,
Upgraded to B2 from Caa1
..Issuer: Zions First National Bank
.... Bank Financial Strength Rating,
Upgraded to D+ from D-
.... Issuer Rating, Upgraded to Ba2
from B1
....OSO Senior Unsecured OSO Rating,
Upgraded to Ba2 from B1
....Senior Unsecured Deposit Rating,
Upgraded to Ba1 from Ba3
Outlook Actions:
..Issuer: Amegy Bank National Association
....Outlook, Changed To Stable From
Positive
..Issuer: Amegy Corporation
....Outlook, Changed To Stable From
Positive
..Issuer: California Bank & Trust
....Outlook, Changed To Stable From
Positive
..Issuer: Nevada State Bank
....Outlook, Changed To Stable From
Positive
..Issuer: Zions Bancorporation
....Outlook, Changed To Stable From
Positive
..Issuer: Zions Capital Trust B
....Outlook, Changed To Stable From
Positive
..Issuer: Zions First National Bank
....Outlook, Changed To Stable From
Positive
REGULATORY DISCLOSURES
Although these credit ratings have been issued in a non-EU country
which has not been recognized as endorsable at this date, the credit
ratings are deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 31 January
2012. ESMA may extend the use of credit ratings for regulatory
purposes in the European Community for three additional months,
until 30 April 2012, if ESMA decides that exceptional circumstances
arise that may imply potential market disruption or financial instability.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following :
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
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an auditor and cannot in every instance independently verify or validate
information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
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Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
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Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
before Moody's ratings were fully digitized and accurate data may not
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Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Gregory Frank
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Upgrades Zions (LT Deposits to Ba1), outlook stable
