New York, March 07, 2022 -- Moody's Investors Service (Moody's) has upgraded the ratings
and assessments of Zions Bancorporation, National Association (Zions),
including its standalone Baseline Credit Assessment (BCA) to a3 from baa1,
its long-term deposit rating to A1 from A2, and its long-term
issuer rating to Baa1 from Baa2. The bank's Prime-1
short-term deposit rating and Prime-2 short-term
Counterparty Risk Rating were affirmed. Following the ratings upgrade,
the outlook is stable. Today's action concludes the rating review
that commenced on 30 November 2021 in response to Zions' improved financial
performance.
A complete list of affected ratings and assessments can be found at the
end of this press release.
RATINGS RATIONALE
The upgrade of Zions' BCA and ratings reflects the benefits to creditors
from improvements in the bank's asset risk profile, which
Moody's believes are sustainable, as well as the bank's sound
capitalization and strong funding profile.
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 0.9% as of 31 December 2021 and net charge-offs
of one basis point for all of 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. Moody's believes these risk
management enhancements support a sustained improvement in the bank's
asset risk profile.
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 total loans as of 31 December 2021. Additionally,
Zions showed conservativism in its loan growth in recent years,
including leading up to the pandemic.
The ratings upgrade also reflects Zions' sound capitalization,
which is currently above the median of other large US regional banks with
a Common Equity Tier 1 (CET1) capital ratio of 10.2% as
of 31 December 2021. Since 2018, when Zions became exempt
from the annual public Federal Reserve supervisory stress tests because
of its size, management has determined its capital distributions
each quarter. Positively, Zions' management has stated
that it uses its own stress testing to inform these decisions and intends
to maintain above-peer-median capitalization. The
bank resumed share repurchases in 2021 after suspending activity in the
first quarter of 2020 in response to the pandemic.
Zions' strong funding profile was also a consideration in the rating
upgrade. Zions benefits from ample core deposit funding and a large
pool of liquid assets, which results in minimal market funding reliance
and therefore limited refinancing risk, protecting the bank against
market shocks. The bank's market funds to tangible banking
assets ratio was a very low 1.7% as of 31 December 2021.
The stable outlook reflects Moody's view that Zions' credit profile will
remain unchanged over the next 12-18 months, including the
maintenance of a CET1 capital ratio above the median for large US regional
bank peers.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating upgrade and stable outlook indicate that Zions' ratings
and assessments are unlikely to be upgraded over the next 12-18
months. However, Moody's could upgrade the ratings and assessments
if the bank diversifies its business mix, thereby reducing its CRE
concentration, improves its core profitability, and maintains
low credit costs and better-than-peer average capitalization.
Zions' ratings and assessments could be downgraded if asset concentrations
are rebuilt or capitalization declines significantly.
Upgrades:
..Issuer: Zions Bancorporation, National Association
....Adjusted Baseline Credit Assessment,
Upgraded to a3 from baa1
....Baseline Credit Assessment, Upgraded
to a3 from baa1
....LT Counterparty Risk Assessment,
Upgraded to A2(cr) from A3(cr)
....ST Counterparty Risk Assessment,
Upgraded to P-1(cr) from P-2(cr)
....LT Counterparty Risk Rating (Foreign Currency),
Upgraded to A3 from Baa1
....LT Counterparty Risk Rating (Local Currency),
Upgraded to A3 from Baa1
....LT Issuer Rating, Upgraded to Baa1
from Baa2, Stable from Ratings Under Review
....LT Deposit Rating (Local Currency),
Upgraded to A1 from A2, Stable from Ratings Under Review
..Issuer: Zions Bancorporation
....Pref. Stock Non-cumulative
(Local Currency), Upgraded to Baa3(hyb) from 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 Stable From
Rating Under Review
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.
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
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
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
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
