NOTE: On December 06, 2021, the press release was corrected as follows: In the debt list, the following was added as the sixth item in the “On Review for Upgrade” section under issuer “Zions Bancorporation, National Association”: “....LT Counterparty Risk Rating (Local Currency), Placed on Review for Upgrade, currently Baa1.” Revised release follows.
New York, November 30, 2021 -- Moody's Investors Service (Moody's) has placed the ratings
and assessments of Zions Bancorporation, National Association (Zions),
including its baa1 standalone Baseline Credit Assessment (BCA),
A2 long-term deposit rating and Baa2 long-term issuer rating,
on review for upgrade. The bank's Prime-1 short-term
deposit rating and Prime-2 short-term Counterparty Risk
Rating were affirmed.
RATINGS RATIONALE
The review for upgrade reflects Zions' improved asset risk profile
and sound capitalization relative to higher-rated, large
US regional bank peers. During the review, Moody's will assess
whether these positive credit trends are likely to be sustained.
Zions has maintained strong asset quality performance since the onset
of the coronavirus pandemic, as indicated by its low problem loans/gross
loans ratios of 1.1% as of 30 September 2021 and net charge-offs
of 1 basis point for the nine months ended 30 September 2021. Zions'
financial profile has benefitted from enhancements to its risk management
over the last several years, which has resulted in lower concentrations
and a stronger balance sheet. Zions has built a centralized enterprise
risk management function under its chief risk officer and expanded its
risk staff, established more robust risk limits and risk oversight
committees at the corporate and affiliate levels, and made board
oversight more comprehensive.
For the last several years, Zions has kept its commercial real estate
(CRE) loan portfolio equal to just about twice its Moody's tangible
common equity (TCE) and the riskier construction component, which
was a source of outsized losses historically, equaled only 58%
of TCE or 7% of loans as of 30 September 2021. At its peak,
Zions' CRE loans represented more than six times its TCE,
with more than half in construction. Additionally, Zions
has showed conservativism in its loan growth in the years leading up to
the pandemic.
During the review, Moody's will also assess Zions' capitalization,
which is currently sound and above the median of other large US regional
banks with a Common Equity Tier 1 (CET1) capital ratio of 10.9%
as of 30 September 2021. Since 2018, when Zions became exempt
from the annual public Federal Reserve supervisory stress tests,
it has determined its capital actions each quarter. Positively,
Zions' management has stated that it uses its own stress testing
to inform these decisions and intends to maintain above-peer capitalization.
The bank resumed share repurchases in 2021 after suspending activity in
the first quarter of 2020 in response to the pandemic.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The BCA and ratings could be upgraded upon conclusion of the review if
Moody's views that the improvements in Zions' asset risk profile
will endure, strengthening the company's credit profile,
and that capitalization will remain sound and above the peer median.
The BCA and ratings could be confirmed at their current levels upon conclusion
of the review if Moody's views that Zions' asset risk has not been
permanently strengthened and that recent positive trends are likely to
reverse.
The direction of the review indicates that the BCA and ratings are unlikely
to be downgraded over the next 12-18 months. However,
the ratings could be downgraded if there is a rebuilding of asset concentrations,
a significant decline in capitalization, or if asset quality improvements
reverse. Weakening of Zions' strong funding and liquidity from
pre-pandemic levels would also be negative for the BCA and the
ratings.
The principal methodology used in these ratings was Banks Methodology
published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
On Review for Upgrade:
..Issuer: Zions Bancorporation, National Association
....Adjusted Baseline Credit Assessment,
Placed on Review for Upgrade, currently baa1
....Baseline Credit Assessment, Placed
on Review for Upgrade, currently baa1
....LT Counterparty Risk Assessment,
Placed on Review for Upgrade, currently A3(cr)
....ST Counterparty Risk Assessment,
Placed on Review for Upgrade, currently P-2(cr)
....LT Counterparty Risk Rating (Foreign Currency),
Placed on Review for Upgrade, currently Baa1
....LT Counterparty Risk Rating (Local Currency), Placed on Review for Upgrade, currently Baa1
....LT Issuer Rating, Placed on Review
for Upgrade, currently Baa2, Ratings Under Review from Stable
....LT Deposit Rating (Local Currency),
Placed on Review for Upgrade, currently A2, Ratings Under
Review from Stable
..Issuer: Zions Bancorporation
....Pref. Stock Non-cumulative
(Local Currency), Placed on Review for Upgrade, currently
Ba1 (hyb)
Affirmations:
..Issuer: Zions Bancorporation, National Association
....ST Counterparty Risk Rating (Foreign Currency),
Affirmed P-2
....ST Counterparty Risk Rating (Local Currency),
Affirmed P-2
....ST Deposit Rating (Local Currency),
Affirmed P-1
Outlook Actions:
..Issuer: Zions Bancorporation, National Association
....Outlook, Changed To Rating Under
Review From Stable
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain 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.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
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These ratings are solicited. Please refer to Moody's Policy
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Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
available on www.moodys.com.
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.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Joseph Pucella
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Andrea Usai
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
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JOURNALISTS: 1 212 553 0376
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