Zions Bancorporation, National Association (ZION, NASDAQ)
Industry: Banks - Regional
Annual report, fiscal year 2009


## EMERGING FROM
A CHALLENGING
ENVIRONMENT

09
YEAR IN REVIEW

ZIONS BANCORPORATION



# THE BEST FOOTPRINT FOR LONG-TERM GROWTH

Zions operates in growing markets and, with its collection of great banks, has a franchise



(in millions)
Zions Bank

Salt Lake City, UT
A. Scott Anderson, CEO

$17,652 assets
$13,823 deposits

5 Nevada State Bank
Las Vegas, NV
Dallas E. Haun, CEO
(in millions)
$4,187 assets
$3,526 deposits

California Bank & Trust
San Diego, CA
David E. Blackford, CEO

$11,097 assets
$ 9,760 deposits

6 Vectra Bank Colorado
Denver, CO
Bruce K. Alexander, CEO
$2,440 assets
$2,005 deposits

Amegy Bank of Texas
Houston, TX
Scott J. McLean, CEO

$11,145 assets
$ 8,880 deposits

7 The Commerce Bank of Washington
Seattle, WA
Stanley D. Savage, CEO
$ 835 assets
$ 632 deposits

National Bank of Arizona
Phoenix, AZ
Keith D. Maio, CEO
$ 4,524 assets
$ 3,784 deposits

8 The Commerce Bank of Oregon
Portland, OR
Larry B. Ogg, CEO
$ 64 assets
$ 47 deposits



## 2009 GREENWICH EXCELLENCE AWARDS IN SMALL BUSINESS AND MIDDLE MARKET BANKING

## Small Business Banking

• Overall Satisfaction

• Relationship Manager Performance

## Middle Market Banking

• Overall Satisfaction

• Personal Banking

• Relationship Manager Performance

• Credit Policy

• Financial Stability

• Overall Treasury Management

• Financial Stability

• Overall Treasury Management

• Accuracy of Operations

• Customer Service

• Treasury Product Capabilities

Source: Greenwich Associates

COMMON EQUITY PER SHARE (TANGIBLE)



Source: SNL Financial

Zions' tangible net worth has grown at a rate more than three times that of the peer group from 2000-2009.

NET INTEREST MARGIN



Net interest income accounted for approximately 75% of 2009 net revenue.
Source: SNL Financial

<table><tr><td></td><td colspan="6">CAPITAL RATIOS</td></tr><tr><td></td><td></td><td></td><td></td><td rowspan="2">Regulatory Standard for &quot;Well Capitalized&quot; (%)</td><td rowspan="2">Capital In Excess of &quot;Well Capitalized&quot; Threshold (2009)</td><td></td></tr><tr><td>Year end</td><td>2006</td><td>2007</td><td>2008</td><td>2009</td></tr><tr><td>Tangible Common Equity \( ^{(1)} \)</td><td>5.98%</td><td>5.70%</td><td>5.89%</td><td>6.12%</td><td>ND</td><td></td></tr><tr><td>Tier 1 Common \( ^{(2)} \)</td><td>6.37</td><td>6.12</td><td>6.28</td><td>6.73</td><td>ND</td><td></td></tr><tr><td>Total Tier 1 \( ^{(2)} \)</td><td>7.98</td><td>7.57</td><td>10.22</td><td>10.53</td><td>6.00</td><td>$2.3 Billion</td></tr><tr><td>Total Capital \( ^{(2)} \)</td><td>12.29</td><td>11.68</td><td>14.32</td><td>13.28</td><td>10.00</td><td>$1.7 Billion</td></tr></table>

ND = Not defined – these ratios are not specifically defined in regulatory guidelines for capitalization standards

(1) Tangible assets is the denominator for this ratio

(2) Regulatory risk-weighted assets is the denominator for this ratio



STABLE CORE
PROFITABILITY [6-7]
CAPITAL [8-9]
SHAREHOLDER
DILUTION [10-11]
CREDIT QUALITY [12-14]

“I understood the considerable value Vectra brings to its customers when they provided Remote Deposits to the Red Cross during their response to the 2005 Tsunami and other disasters since then. As a member of the executive board, I believe the Red Cross would not have been able to process and deliver their donations as quickly without the aid of Vectra’s Treasury Management Services. Vectra has been a great partner in so many ways.”

- RHONDA KAY, CHIEF FINANCIAL OFFICER, GH PHIPPS VECTRA BANK COLORADO CUSTOMER



## To Our Shareholders:

Our disappointing 2009 financial results reflect the continuing strain on the Company and on much of the commercial banking industry of the “Great Recession,” and its accompanying downward pressure on residential and commercial real estate values. Nevertheless, near the end of the year we began to see stabilizing and improving trends in the economy and in our business, and we are optimistic that we will continue to see improvement and new opportunities in the year ahead. Our “core” earnings before credit costs remain very strong, and we have a unique franchise in the western United States that allows us to compete very effectively with both strong local management and exceptionally strong customer relationships.

Nationally, median home prices declined 33% from their peak in July 2006 through the apparent trough in April 2009. In some of our most hard-hit markets, the damage has been more severe. The Phoenix, Arizona market experienced home price declines of 55% between June 2006 and May 2008; in Las Vegas, Nevada, prices fell 56% between August 2006 and November 2009. \( ^{1} \)  Commercial real estate values have also fallen precipitously, with a broad measure of prices for commercial properties declining 40% between the second quarter of 2007 and the end of 2009. \( ^{2} \)  Such price declines are larger than any experienced since the Great Depression, and resulted in contractions in consumer and business spending, and the highest levels of unemployment since 1982.

The near-collapse of the financial system in September 2008 led to massive levels of government intervention through both fiscal and monetary policies; federal stimulus spending and investment programs were paired with the greatest intervention in financial markets by the Federal Reserve System since its creation in 1913 to create economic demand and financial liquidity.

At present, it appears that this unprecedented intervention is having the desired stabilizing effect on the economy, as evidenced by a deceleration of real estate price declines and recent signs of improvement in the unemployment picture. Consumers and businesses are also de-leveraging by paying down debt and saving more, and equity markets have rallied significantly over the past year. Nevertheless, large federal and state deficits may be expected to pressure credit markets in the years ahead; and the exploding unfunded liabilities arising from federal entitlement programs – the present value of which currently equal nearly twice the sum of total net federal, state, local and household debt – further threaten the economy’s long-term vitality.



Throughout the last two very challenging years, we’ve worked hard to provide needed financing to credit-worthy customers, and to work through difficult situations with borrowers whose businesses are stressed or no longer viable. At the same time, we’ve continued to strengthen our balance sheet to ensure our own long-term success, while working very diligently to protect our shareholders’ investment in the Company. We’ve maintained a solid core business, with strong and stable pretax, pre-credit-cost margins and income. And we’ve remained very focused on continuing to build a business with a foundation consisting of the very strongest customer relationships in the industry.

## Overview of Financial Results

The Company reported a 2009 net loss applicable to common shareholders of $1,234.4 million or $9.92 per diluted common share, as compared to a net loss of $290.7 million or $2.68 per diluted common share for 2008. Over half of the 2009 loss resulted from non-cash charges of $636 million to write down the intangible “goodwill” attributable primarily to Amegy Bank. Excluding these charges, and similar but smaller charges at other subsidiaries in 2008, the Company lost $582 million in 2009 but was slightly profitable in 2008. Some of the major elements of 2009 financial performance are as follows:

• Average earning assets increased modestly to $48.8 billion in 2009 from $47.7 billion in 2008; average net loans and leases outstanding increased to $41.5 billion in 2009 from $40.8 billion the prior year.

• Total average deposits increased 14% to $42.8 billion in 2009 from $37.6 billion in 2008; total average noninterest-bearing demand deposits increased 21% to $11.1 billion in 2009, up from $9.1 billion in 2008.

• Taxable-equivalent net interest income decreased 4% to $1,920 million in 2009, from $1,995 million the prior year, reflecting a net interest margin of 3.94% in 2009 compared to 4.18% in 2008.

• Charges to earnings to build our credit loss reserves increased from $650 million in 2008 to $2,082 million in 2009.

• Impairment losses on investment securities, consisting primarily of bank and insurance company trust preferred CDOs, totaled $281 million, an 8% improvement from the $304 million loss in 2008.
• Valuation losses on securities purchased, primarily from securities acquired from Lockhart Funding LLC and reflecting then-current market values, totaled $212 million in 2009 compared to $13 million in 2008. Lockhart was dissolved in 2009, so these charges will not recur in future years.

• Gains arising from the acquisition of three failed banks in FDIC-assisted transactions totaled $169 million. No gains from such transactions were realized in 2008.

• Expenses related to the acquisition, valuation and disposition of foreclosed properties (“OREO” expense) increased 120% in 2009 to $111 million from $50 million in 2008; and FDIC deposit insurance premiums increased 406% in 2009 to $101 million from $20 million in 2008, primarily reflecting higher premium rates and a special “one-time” industry assessment.

• We took a number of measures to reduce and control costs during the year, including significant staff reductions. These were partly offset by additional costs and staff increases from acquired institutions. Excluding credit loss provisions, OREO expense and FDIC insurance premiums, operating expenses decreased slightly to $1,395 million in 2009 from $1,403 million in 2008.

• Results for 2009 included a variety of other unusual gains and losses that resulted both from the extraordinary economic conditions and a number of actions the Company took to preserve and further strengthen its financial condition, including modifications of subordinated debt and the redemption of preferred stock or the exchange of such preferred stock into common shares.

As has historically been the case in other recessionary periods, loan demand from credit-worthy borrowers was very weak in 2009. In many cases, businesses and individuals with the strongest credit profiles were very focused on reducing their indebtedness. Consequently, average loans grew a very modest 2% during the year, and only due to loans added as a result of bank acquisitions. Construction and land development loans decreased 26% over the course of the year, reflecting the stagnant development market; and commercial and industrial loans decreased 13% as borrowers reduced inventories and paid down debt.



As many of our customers increased their own liquidity during the year, the result was an increase in liquidity on our own balance sheet and a significant improvement in the composition of our funding sources. Total average deposits increased 14% to $42.8 billion in 2009, with the strongest growth achieved in noninterest-bearing demand deposits, the average balances of which increased 21% during the year. Deposit growth was facilitated in part by higher levels of FDIC insurance coverage at the account level, including unlimited coverage on demand deposits throughout 2009. However, we believe our significant and sustained investment in treasury management products and services also contributed to this strong growth. The increased low-cost deposit funding allowed us to reduce higher-cost funding sources, such as brokered deposits and borrowings from the Federal Home Loan Bank system.

We have not invested this increased liquidity in longer-term securities because we believe that the risks posed by the possibility of higher interest rates and the expiration of unlimited FDIC insurance on demand deposits warrants holding greater liquidity and positioning the Company for a higher interest rate environment.

Total revenue increased nearly 25% in 2009 to $2.7 billion from $2.2 billion in 2008, with the increase due primarily to gains arising from the modification of subordinated debt, gains and reclassifications related to interest rate swaps, and gains related to acquisitions. Total operating expenses increased 13% to $1.7 billion from $1.5 billion in 2008, primarily as a result of increased FDIC premiums, provisions for unfunded lending commitments, and expenses related to the acquisition, valuation and disposition of foreclosed real estate. Significant efforts were made to reduce “core” operating expenses during 2009, and the total full-time equivalent size of our workforce at the end of the year was down 4.4% from the prior year, despite the completion of three bank acquisitions with nearly $3 billion in assets.

## Credit Quality and Loss Reserves

Credit conditions continued to deteriorate through most of 2009, as evidenced by higher levels of nonperforming loans, securities and other assets, and by higher levels of losses recognized in those assets during the year. Nonperforming lending-related assets, excluding assets acquired from the FDIC in conjunction with the purchase of failed banks (and on which the FDIC bears 80% to 95% of any loss), totaled $2.4 billion at the end of 2009 compared to $1.1 billion the prior year. Nonperforming assets, excluding FDIC-supported assets, as a percentage of net loans, leases and other real estate owned, totaled 6.00% at the end of 2009 compared to 2.71% at the end of 2008.

Net charge-offs doubled to $1,173 million or 2.9% of average loans in 2009 from $394 million or 0.96% in 2008. The greatest source of loss in 2009 continued to be construction and land development loans including construction loans made directly to consumers. These loans, which constituted only 15% of total loans at December 31, 2009, generated 55% of net loan losses. Losses were disproportionately realized in the Nevada and Arizona markets, which produced 50% of the Company's total loan losses. At the same time, several loan categories in which one might have expected to see very high levels of losses performed relatively well during the year. Home equity credit lines, for example, experienced a net charge-off rate of 0.75%. Commercial owner-occupied loans also performed reasonably well, with net charge-offs of 0.70%.

While digesting significantly higher levels of loan losses in 2009, we also substantially strengthened the Company’s loss reserves. We added $910 million to our combined allowance for future credit losses, a 254% increase over the addition made in 2008. Our allowance for credit losses at year-end was at its highest level in decades, at 4.25% of loans (excluding loans supported by the FDIC).

## Securities Portfolio

The market for many types of securities remained dysfunctional throughout 2009, reflecting a lack of liquidity and trading activity for many securities. This was particularly the case for many classes of asset-backed securities, and resulted in the recognition of significant valuation and credit losses during the year.



During 2008 and 2009, liquidity in the commercial paper market declined dramatically; therefore, pursuant to a liquidity agreement provided by Zions Bank, we purchased securities with a book value of $678 million from Lockhart Funding LLC during the year, which had previously been funded by commercial paper. The securities, all of which had either been government agency securities or had been originally rated AAA, were recorded at their fair value, resulting in a valuation loss of $188 million. We also repurchased auction rate securities with a book value of $255 million, recognizing a valuation loss of $24 million. We expect the largest portion of these write-downs will be recovered over the life of the securities.

Collateralized Debt Obligations (“CDOs”) backed primarily by bank and insurance company trust preferred securities and held in our portfolios experienced net impairment losses of $280.5 million in 2009 as a result of high rates of actual and expected community bank failures. An additional net $688 million of loss has been deducted directly from shareholders’ equity in the comprehensive income account, reflecting the instruments’ illiquidity and uncertainty with respect to future losses. We have $2,683 million in par amount of such securities, which we’re carrying on our books at 58% of par, including $1,262 million of securities with at least one investment grade rating. We anticipate further losses to be recognized in the income statement as bank failure rates remain high, but expect that the largest portion of such losses has already been deducted from shareholders’ equity.

## Capital and Dividends

In response to the recent financial crisis, most banks have strengthened their balance sheets by increasing reserves, charging off loans and strengthening their capital positions. Zions has been no exception. Since the second quarter of 2008 through year-end 2009, we've raised a total of over $2.4 billion of net new Tier 1 regulatory capital. Over $1 billion of this amount resulted from the Company's actions to augment its capital apart from the federal government's TARP Capital Purchase Program. These actions included the issuance of additional shares of common equity, exchanging preferred stock for common stock, redeeming preferred stock and modifying subordinated debt. In light of the need to strengthen the Company's balance sheet during this period of economic stress, when high levels of loan charge-offs, securities impairments and increased loss reserve requirements have produced net losses, we substantially reduced the dividend on common shares to $0.04 per quarter in the first half of 2009, and to $0.01 per quarter in the second half. These capital and dividend actions, in combination with the Company's operating results, produced capital ratios that were higher at the end of 2009 than before the current crisis began.

## Acquisitions

We acquired three failed banks during 2009, in each case with loss-sharing arrangements with the FDIC. In February, we acquired Alliance Bank, with five offices in southern California, assets of $1.1 billion and deposits of $1.0 billion. In April, we acquired Great Basin Bank, with five offices in northern Nevada, $212 million in assets and $209 million in deposits. And in July, we acquired Vineyard Bank, with sixteen offices located primarily in eastern Los Angeles and western San Bernardino counties. The Vineyard Bank transaction included assets of approximately $1.6 billion and deposits of $1.5 billion.

In each of these purchases, we entered into agreements with the FDIC that provided for an up-front payment and credit-loss indemnification under which the FDIC absorbs 80% of losses to a stated threshold, and 95% thereafter. We realized a total of $169 million in pretax gains resulting from the acquisition of assets that had fair values in excess of the fair value of liabilities assumed in these transactions.

## Looking Forward

Although the past two years have been exceptionally challenging, Zions Bancorporation’s fundamental strengths remain intact. We operate in markets that are expected to experience the largest share of the nation’s population and job growth over the next two decades and beyond, and we have a diverse franchise across those markets that is unique in the regional banking sector.



We operate one of the very strongest core deposit franchises in the banking industry. One measure of this is the fact that combined noninterest-bearing demand deposits, savings deposits and interest-on-checking deposit balances increased 29% over the course of the past year, and constituted 43% of total deposits at the end of 2009. This exceptional deposit base is a major factor in our achieving one of the strongest net interest margins among our regional peer commercial banking companies.

Perhaps most importantly, our success in building strong customer relationships is nearly unmatched in the industry. Recent findings from a survey of nearly 13,000 middle-market businesses across the United States and published by Greenwich Associates, a highly regarded national financial services research and consulting firm, recognized Zions Bancorporation as providing distinctive quality in eleven of the twelve categories cited, including personal banking, relationship manager performance, customer service, overall treasury management and treasury product capabilities, accuracy of operations, and overall customer satisfaction. Zions was one of only 33 banking organizations so recognized, out of 750 banks named in the survey as providing services to middle-market firms; and Zions was cited for distinction more frequently than all but one other bank in the United States. This is a reflection of our organizational structure that puts a premium on local decision-making and engagement in the communities we serve, and on the quality of the banking professionals – both on the front line and in the “back office” – who serve our customers.

Much has been said and written in the media and by political leaders about the need for banks to extend credit to small businesses. During 2009, we continued to be recognized as being among the nation's foremost providers of small business credit, including credit guaranteed or otherwise supported by the U.S. Small Business Administration. Many small businesses have seen their balance sheets weakened by the recent recession, and legislation enacted by Congress in 2009 provided for America's Recovery Capital ("ARC") loans to provide an immediate infusion of capital to small but viable businesses. Zions became the first financial institution in the nation to receive authorization by the SBA to extend a new ARC loan to a small business client on June 15, 2009, and subsequently provided such assistance to many small businesses.

As a result of the tumultuous events in financial markets and institutions in 2008-2009, Congress is considering a number of proposals to revamp the current regulatory structure for the nation's banking system. Our hope is that any such efforts will recognize the need to establish rules that are applied evenly across the financial system, as opposed to simply adding additional layers of regulation and red tape to the commercial banking sector. Much of the recent turmoil resulted from unregulated or lightly-regulated activity outside of commercial banking – and particularly outside the realm of community and regional banking companies like Zions. Any new rules that fail to reflect that reality will leave the financial system vulnerable to repeated crises, and very likely on a larger scale than recently experienced. While new regulations will likely add new burdens to our business, we also expect that they may “level the playing field” between regional institutions like Zions and large nationwide banking organizations in terms of capital requirements and other competitive factors.

We expect 2010 to be a year in which we will make meaningful progress in reducing problem assets and continuing to build a solid base for the future. We greatly appreciate your support during what has been an extraordinary period in our nation’s economic history, and we look forward to better times ahead.

Respectfully,



HARRIS H. SIMMONS
Chairman, President and CEO
February 27, 2010






## STABLE CORE PROFITABILITY
CAPITAL
SHAREHOLDER DILUTION
CREDIT QUALITY

“We came to Nevada State Bank from a competing, large national bank about four years ago and it has been black and white…the difference between how we were treated as a customer with the previous bank and how we are treated by Nevada State Bank. They really took the time to meet with us and listen so that they understood what we were about, what our business model is and what kind of funding we may or may not need.”

– SHAUNA FORSYTHE, PRESIDENT & CEO, ALLIANCE AIRPORT ADVERTISING
NEVADA STATE BANK CUSTOMER



# ZIONS' EARNINGS BEFORE CREDIT COSTS
HAVE BEEN VERY RESILIENT THROUGHOUT
THE CYCLE.

Can you provide a status update for Zions? We are pleased with our relationship with your bank, but wonder about its financial strength and how that might affect us as a customer.

To address this concern, we must address both our capital strength and our core earnings power. The capital in each of the locally managed (i.e., affiliate) banks has been significantly strengthened recently. We strengthened our capital by $2.4 billion since the beginning of the recession and our capital ratios are stronger today than at the beginning of the recession. Additionally, in 2009 we added approximately $1 billion in loan loss reserves, which acts as a buffer against future losses. Similar to past economic cycles, as losses peak and start to come down (we believe that our losses already have stabilized and begun to decline), the need to maintain reserves at the present elevated levels will subside and profitability should return. We believe that our balance sheet is as strong as it's been in a long time. In fact, the affiliate banks are better able to accommodate growth in their businesses than they have been in years.



Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion at September 30, 2009, plus footprint competitors WFC and USB. Source: SNL – Estimated where data were unavailable

Noninterest-bearing deposits are considered by many industry experts to be the best benchmark of the value of a banking franchise.
Additionally, Zions' earnings results have shown that important measures of the Company's resiliency, including the net interest margin and the core pretax, pre-credit expense earnings, have remained relatively strong. Overall, we are pleased with the stability in the earnings power of the Company and the strength of our capital ratios, both of which should provide investors, employees and customers increased confidence in Zions' ability to emerge from the current extremely difficult economic environment.



STABLE CORE PROFITABILITY
CAPITAL
SHAREHOLDER DILUTION
CREDIT QUALITY

“My relationship with California Bank & Trust grew from a relationship with my personal banker. The relationship I’ve built with them enables me to prosper in my business and they are cognizant of the role they play in achieving my company goals. Their team provides a personal level of service and remains dedicated to my business needs.”

- HARDY GREWAL, CEO/OWNER, OHCAI FOODS
CALIFORNIA BANK & TRUST CUSTOMER



# ZIONS' CAPITAL LEVELS REMAIN
SIGNIFICANTLY ABOVE REGULATORY
“WELL-CAPITALIZED” LEVELS.

Why haven’t you repaid the TARP funds you received? When are you planning to pay them back? Because the economic, political and regulatory environment remains in flux, management believes it would be prudent to repay the $1.4 billion of TARP funds after credit quality and economic trends show further signs of stabilizing, and more clarity exists on the regulatory environment. We fully expect to repay all of the TARP capital, with interest, within a reasonable period of time.

What are you doing about compensation packages for your executives? Compensation for the highest paid people at Zions is, on average, down more than 40% compared to 2006 levels. We believe in aligning the majority of the senior officer target compensation with measures and incentives that create long-term shareholder value, including a significant weighting toward restricted stock.

TIER 1 CAPITAL PLUS LOAN LOSS RESERVES TO TOTAL LOANS



Data as of 12/31/2009.

Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion at September 30, 2009, plus footprint competitors WFC and USB. Source: SNL – Estimated where data were unavailable

Zions' capital, in addition to its allowance for loan losses, is within a healthy range of its peer group.

<table><tr><td colspan="5">CAPITAL RATIOS</td></tr><tr><td></td><td>12/31/08</td><td>9/30/09</td><td>12/31/09</td><td>&quot;Well-Capitalized&quot;</td></tr><tr><td>Tangible Common Equity</td><td>5.89%</td><td>5.76%</td><td>6.12%</td><td>ND%</td></tr><tr><td>Tier 1 Common</td><td>6.28</td><td>6.59</td><td>6.73</td><td>ND</td></tr><tr><td>Total Tier 1</td><td>10.22</td><td>10.34</td><td>10.53</td><td>6.00</td></tr><tr><td>Total Capital</td><td>14.32</td><td>13.08</td><td>13.28</td><td>10.00</td></tr></table>



## STABLE CORE PROFITABILITY
CAPITAL
SHAREHOLDER DILUTION
CREDIT QUALITY

“The Commerce Bank of Washington (TCBW) has been a steadfast supporter in helping SCIDpda improve the quality of life in the Chinatown/International District. As a critical financing partner in the renovation of two historic buildings, TCBW consistently demonstrated the patience, flexibility and creativity necessary to accomplish even the most complicated projects.”

- MAIKO WINKLER CHIN, EXECUTIVE DIRECTOR
SEATTLE CHINATOWN INTERNATIONAL DISTRICT
PRESERVATION AND DEVELOPMENT AUTHORITY
COMMERCE BANK OF WASHINGTON CUSTOMER



# ZIONS' APPROACH TO STRENGTHENING
CAPITAL RESULTED IN LESS DILUTION TO
EXISTING SHAREHOLDERS COMPARED
TO PEER BANKS.

Will you need to raise capital through a sale of additional common stock? How would such a move affect existing shareholders? Assuring that our capital levels remain strong while avoiding dilution to our shareholders has been the primary consideration in determining the approach to capital raising in 2009. In the chart shown below, Zions was more efficient in raising capital than the majority of regional bank peers; efficiency is measured by dollars raised versus shares issued. However, we expect to raise additional capital, including common equity, during 2010.

When might you increase the dividend again? We understand that the dividend has been a steady source of income for investors in our stock for many years and we look forward to the day when it will return to a more substantial level. However, Zions reduced the dividend significantly in 2009 to ensure the long-term strength of the Company and limit shareholder dilution as much as possible. The decision to reduce the dividend was difficult but necessary, and similar reductions were taken at many other banks across the country for similar reasons. The Company's board of directors intends to maintain dividends at a level that conserves and protects capital and liquidity during this uncertain economic and regulatory environment. Due to the continued economic weakness and the related impact on the Company, we do not expect to increase the dividend in 2010, but as profitability returns and economic conditions improve, we expect to revisit the dividend level.

CAPITAL CREATION – ZIONS' EQUITY
RAISES LESS DILUTIVE TO SHAREHOLDERS
Dilution from Capital Raises as a % of Year-end 2007
Tangible Common Equity and Shares Outstanding



TCE: Tangible Common Equity
Source: Credit Suisse



STABLE CORE PROFITABILITY
CAPITAL
SHAREHOLDER DILUTION
CREDIT QUALITY

“Your management group here at Amegy in Houston is stellar. We enjoy doing business with you guys; we appreciate you and we have been here over 20 years and we hope to be here another 20 years.”

- MICHAEL S. TAPICK, PRESIDENT & CEO, MARTIN PREFERRED FOODS, LP
AMERGY BANK OF TEXAS CUSTOMER



# NEAR THE END OF 2009, CREDIT QUALITY
BEGAN TO STABILIZE AND IMPROVEMENT
IN THESE TRENDS CONTINUES INTO 2010.

How is the commercial real estate (CRE) portfolio performing? What do you see as the trends going forward in your CRE exposure? We have carefully reviewed the CRE portfolio and stress-tested the value of the collateral behind each loan; we have concluded that the potential loss from this portfolio is very manageable relative to our current earnings power, reserve levels and capital. This is a testament to our strong underwriting and the caution that we exercised in originating loans. In fact, Zions' losses on term CRE (e.g., office, retail, industrial, etc.) loans are running significantly below the U.S. Treasury's "Stress Test" estimate of losses for similar loans. Additionally, various indices that track CRE prices have signaled that prices have begun to stabilize after declining nearly 40% from peak levels, which bodes well for our future credit costs.

You’ve indicated that you believe the credit costs have peaked and are on the decline. What evidence do you have of that? We have seen our classified loans – or loans with a “well-defined weakness” – stabilizing in recent months, with meaningful improvement in the most severely stressed geographies and loan types. The new loans moving into that category are generally ones with better collateral supporting the loan than in the classified loan balances that we saw a year ago. As shown in the graph below, Zions’ nonperforming assets (including loans 90+ days past due) showed clear signs of stabilizing in the fourth quarter, and this trend has continued into 2010. It is important to note that Zions’ credit quality performance has been generally similar to regional bank peers.

STRESS TEST (MORE ADVERSE CASE)
Zions' Performance Superior to U.S. Treasury's Estimated Levels



 \( ^{*} \) End of 2009 represented the mid-point of the two-year stress test period.

Although Zions was not required to take the stress test that was announced in the Spring of 2009, management has measured Zions' performance against the Treasury's expected loan loss levels, by loan type, using the mid-point of the Treasury's expected loss ratios. The results at the end of the first year of a two-year test show that Zions' loan portfolio is performing better in all categories, with notable outperformance in Residential Mortgage and Other Commercial Real Estate, which includes office, retail, industrial and apartment building loans.

NONPERFORMING ASSETS
As a Percentage of Loans and Other Real Estate Owned
Zions' credit performance has been similar to regional bank peers



Note: Peer group includes U.S. regional banks with assets greater than $20 billion and less than $200 billion plus footprint competitors WFC and USB.
Nonperforming assets include loans 90+ days past due; Zions' ratios exclude the effect of FDIC-supported assets.
Source: SNL Financial



What is your view on what will happen in the residential real estate market this year? Prices in the residential real estate sector appear to have begun to stabilize, and much of the damage in the housing market has likely already occurred. Indeed, the lower prices may lead to more mobility, particularly as the job market begins to improve, and this could be a positive for the high growth areas in our footprint.

What is Zions doing to help small businesses? Zions is a leader in small business lending and has been so for quite some time. In particular, we are in the top ten nationally in Small Business Administration loans. We believe that we are more adept than any larger bank would be in working with small businesses. Many of our large clients began their relationship with us with a small business loan. Many business customers have told us that they value the personal relationships they have with their local bankers, but also appreciate the broad range of products and services we are able to offer.

How much have you set aside for future loan losses? In 2009, we added more than $900 million to our allowance for credit losses, in addition to the nearly $1 billion of capital raised. The increase in the allowance cost us about $4.60 per share during the year. There are two important points to be made about this: first, with the allowance for credit losses at 4.25% of total loans, we believe we have used a very conservative approach in calculating the allowance, so that it will cover many quarters and potentially even years of additional credit losses. Secondly, because the allowance is so strong, we expect further reserve increases to be modest, dramatically reducing the most significant pressure on earnings that we experienced in 2009.

LOAN PORTFOLIO PERFORMANCE





 \( ^{*} \) May not sum to 100%, due to rounding.



2009 Net Charge-offs by Bank \( ^{*} \)



<table><tr><td colspan="7">FINANCIAL HIGHLIGHTS</td></tr><tr><td colspan="7">(In millions, except per share amounts)</td></tr><tr><td>FOR THE YEAR</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net interest income</td><td>-4%</td><td>$ 1,897.5</td><td>1,971.6</td><td>1,882.0</td><td>1,764.7</td><td>1,361.4</td></tr><tr><td>Noninterest income</td><td>+322%</td><td>804.1</td><td>190.7</td><td>412.3</td><td>551.2</td><td>436.9</td></tr><tr><td>Total revenue</td><td>+25%</td><td>2,701.6</td><td>2,162.3</td><td>2,294.3</td><td>2,315.9</td><td>1,798.3</td></tr><tr><td>Provision for loan losses</td><td>+211%</td><td>2,016.9</td><td>648.3</td><td>152.2</td><td>72.6</td><td>43.0</td></tr><tr><td>Noninterest expense</td><td>+13%</td><td>1,671.5</td><td>1,475.0</td><td>1,404.6</td><td>1,330.4</td><td>1,012.8</td></tr><tr><td>Impairment loss on goodwill</td><td>+80%</td><td>636.2</td><td>353.8</td><td>-</td><td>-</td><td>0.6</td></tr><tr><td>Income (loss) before income taxes</td><td>-416%</td><td>(1,623.0)</td><td>(314.8)</td><td>737.5</td><td>912.9</td><td>741.9</td></tr><tr><td>Income taxes (benefit)</td><td>-825%</td><td>(401.3)</td><td>(43.4)</td><td>235.8</td><td>318.0</td><td>263.4</td></tr><tr><td>Net income (loss)</td><td>-350%</td><td>(1,221.7)</td><td>(271.4)</td><td>501.7</td><td>594.9</td><td>478.5</td></tr><tr><td>Net income (loss) applicable to noncontrolling interests</td><td>-10%</td><td>(5.6)</td><td>(5.1)</td><td>8.0</td><td>11.8</td><td>(1.6)</td></tr><tr><td>Net income (loss) applicable to controlling interests</td><td>-357%</td><td>(1,216.1)</td><td>(266.3)</td><td>493.7</td><td>583.1</td><td>480.1</td></tr><tr><td>Net earnings (loss) applicable to common shareholders</td><td>-325%</td><td>(1,234.4)</td><td>(290.7)</td><td>479.4</td><td>579.3</td><td>480.1</td></tr><tr><td>PER COMMON SHARE</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net earnings (loss) - diluted</td><td>-270%</td><td>(9.92)</td><td>(2.68)</td><td>4.40</td><td>5.35</td><td>5.16</td></tr><tr><td>Net earnings (loss) - basic</td><td>-270%</td><td>(9.92)</td><td>(2.68)</td><td>4.45</td><td>5.45</td><td>5.26</td></tr><tr><td>Dividends declared</td><td>-94%</td><td>0.10</td><td>1.61</td><td>1.68</td><td>1.47</td><td>1.44</td></tr><tr><td>Book value \( ^{1} \)</td><td>-35%</td><td>27.85</td><td>42.65</td><td>47.17</td><td>44.48</td><td>40.30</td></tr><tr><td>Market price - end</td><td></td><td>12.83</td><td>24.51</td><td>46.69</td><td>82.44</td><td>75.56</td></tr><tr><td>Market price - high \( ^{2} \)</td><td></td><td>25.52</td><td>57.05</td><td>88.56</td><td>85.25</td><td>77.67</td></tr><tr><td>Market price - low</td><td></td><td>5.90</td><td>17.53</td><td>45.70</td><td>75.13</td><td>63.33</td></tr><tr><td>AT YEAR-END</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Assets</td><td>-7%</td><td>51,123</td><td>55,093</td><td>52,947</td><td>46,970</td><td>42,780</td></tr><tr><td>Net loans and leases</td><td>-4%</td><td>40,189</td><td>41,659</td><td>38,880</td><td>34,415</td><td>29,871</td></tr><tr><td>Deposits</td><td>+1%</td><td>41,841</td><td>41,316</td><td>36,923</td><td>34,982</td><td>32,642</td></tr><tr><td>Long-term borrowings</td><td>-22%</td><td>2,033</td><td>2,622</td><td>2,591</td><td>2,495</td><td>2,746</td></tr><tr><td>Shareholders&#x27; equity:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Preferred equity</td><td>-5%</td><td>1,503</td><td>1,582</td><td>240</td><td>240</td><td>-</td></tr><tr><td>Common equity</td><td>-15%</td><td>4,190</td><td>4,920</td><td>5,053</td><td>4,747</td><td>4,237</td></tr><tr><td>Noncontrolling interests</td><td>-37%</td><td>17</td><td>27</td><td>31</td><td>43</td><td>28</td></tr><tr><td>PERFORMANCE RATIOS</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Return on average assets</td><td></td><td>(2.25)%</td><td>(0.50)%</td><td>1.01%</td><td>1.32%</td><td>1.43%</td></tr><tr><td>Return on average common equity</td><td></td><td>(28.35)%</td><td>(5.69)%</td><td>9.57%</td><td>12.89%</td><td>15.86%</td></tr><tr><td>Efficiency ratio</td><td></td><td>61.34%</td><td>67.47%</td><td>60.53%</td><td>56.85%</td><td>55.67%</td></tr><tr><td>Net interest margin</td><td></td><td>3.94%</td><td>4.18%</td><td>4.43%</td><td>4.63%</td><td>4.58%</td></tr><tr><td>CAPITAL RATIOS \( ^{1} \)</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Equity to assets</td><td></td><td>11.17%</td><td>11.85%</td><td>10.06%</td><td>10.71%</td><td>9.97%</td></tr><tr><td>Tier 1 leverage</td><td></td><td>10.38%</td><td>9.99%</td><td>7.37%</td><td>7.86%</td><td>8.16%</td></tr><tr><td>Tier 1 risk-based capital</td><td></td><td>10.53%</td><td>10.22%</td><td>7.57%</td><td>7.98%</td><td>7.52%</td></tr><tr><td>Tangible common equity</td><td></td><td>13.28%</td><td>14.32%</td><td>11.68%</td><td>12.29%</td><td>12.23%</td></tr><tr><td>Tangible equity</td><td></td><td>6.12%</td><td>5.89%</td><td>5.70%</td><td>5.98%</td><td>5.28%</td></tr><tr><td></td><td></td><td>9.16%</td><td>8.91%</td><td>6.23%</td><td>6.61%</td><td>5.35%</td></tr><tr><td>SELECTED INFORMATION</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Average common and common-equivalent shares (in thousands)</td><td></td><td>124,443</td><td>108,908</td><td>108,408</td><td>107,957</td><td>92,994</td></tr><tr><td>Common dividend payout ratio</td><td></td><td>na</td><td>na</td><td>37.82%</td><td>27.10%</td><td>27.14%</td></tr><tr><td>Full-time equivalent employees</td><td></td><td>10,529</td><td>11,011</td><td>10,933</td><td>10,618</td><td>10,102</td></tr><tr><td>Commercial banking offices</td><td></td><td>491</td><td>513</td><td>508</td><td>470</td><td>473</td></tr><tr><td>ATMs</td><td></td><td>602</td><td>625</td><td>627</td><td>578</td><td>600</td></tr></table>

 \( ^{1} \)  At year-end.

 \( ^{2} \)  The actual high price for 2008 was $107.21. However, this trading price was an anomaly resulting from electronic orders at the opening of the market on September 19, 2008 in response to the SEC's announcement (prior to the market opening that day) of its temporary emergency action suspending short selling in financial companies. The closing price on September 19, 2008 was $52.83.

 \( ^{3} \)  Amounts for 2005 include Amegy Corporation at December 31, 2005 and for the month of December 2005. Amegy was acquired on December 3, 2005.



## ZIONS BANCORPORATION



THE COMPLETE LISTS OF 2009 OFFICERS & DIRECTORS
FOR ZIONS BANCORPORATION AND ITS SUBSIDIARIES ARE
AVAILABLE AT WWW.ZIONSBANCORPORATION.COM.

## CORPORATE OFFICERS

Harris H. Simmons
Chairman, President
and Chief Executive Officer

Doyle L. Arnold
Vice Chairman and
Chief Financial Officer

Executive Vice Presidents

Bruce K. Alexander
CEO, Vectra Bank Colorado

A. Scott Anderson
CEO, Zions First
National Bank

David E. Blackford
CEO, California Bank & Trust

Danne L. Buchanan
CEO, NetDeposit, LLC

Gerald J. Dent
Credit Administration

George M. Feiger
Wealth Management

Dallas E. Haun
CEO, Nevada State Bank

W. David Hemingway
Capital Markets and Investments

John T. Itokazu
Operations and
Information Systems

Thomas E. Laursen
General Counsel

Connie Linardakis
Human Resources

Keith D. Maio
CEO, National Bank of Arizona

Dean L. Marotta
Risk Management

## BOARD OF DIRECTORS

Scott J. McLean
CEO, Amegy Bank of Texas

Stanley D. Savage
CEO, The Commerce Bank
of Washington

Steven D. Stephens
President, Amegy Bank of Texas

Senior Vice Presidents
James R. Abbott
Investor Relations

Nolan Bellon
Controller
(retired 3/2010)

Alexander J. Hume
Controller
(effective 3/2010)

Ronald L. Johnson
Credit Examination

Alvin Lee
Corporate Development

Norman W. Merritt
Compliance

Jennifer A. Smith
Internal Audit

H. Walter Young
Corporate Finance

Vice Presidents

Jennifer R. Jolley
Melvin D. Leibsla
John A. Payne

Jerry C. Atkin \( ^{1,2,5} \) 
Chairman, President and
Chief Executive Officer
Skywest Airlines
St. George, Utah

R. D. Cash \( ^{3,4,5} \) 
Retired/Former Chairman,
President
and Chief Executive Officer
Questar Corporation
Lubbock, Texas

Patricia Frobes \( ^{1,3,4} \) 
Retired/Former
Senior Vice President
The Irvine Company
Newport Beach, California

J. David Heaney \( ^{2,4} \) 
Chairman
Heaney Rosenthal, Inc.
Houston, Texas

Roger B. Porter \( ^{1,3,5} \) 
IBM Professor of Business
and Government,
Harvard University
Cambridge, Massachusetts

Stephen D. Quinn \( ^{1,2,4} \) 
Retired/Former Managing
Director and General Partner
Goldman, Sachs & Co.
New Canaan, Connecticut

Harris H. Simmons \( ^{1} \) 
Chairman, President and
Chief Executive Officer
of the Company and
Chairman of the Board of
Zions First National Bank
Salt Lake City, Utah

L. E. Simmons \( ^{4} \) 
President
SCF Partners, LP
Houston, Texas

Shelley Thomas Williams \( ^{2,3} \) 
Communications Consultant
Sun Valley, Idaho

Steven C. Wheelwright \( ^{1,3,5} \) 
President
Brigham Young
University-Hawaii
Laie, Hawaii

 \( ^{1} \)  Member, Executive Committee
 \( ^{2} \)  Member, Audit Committee
 \( ^{3} \)  Member, Compensation Committee
 \( ^{4} \)  Member, Credit Review Committee
 \( ^{5} \)  Member, Nominating and Corporate Governance Committee



## CORPORATE INFORMATION

## EXECUTIVE OFFICES

One South Main Street
Salt Lake City, Utah 84133-1109
801-524-4787

## ANNUAL SHAREHOLDERS' MEETING

Friday, May 28, 2010, 1:00 p.m.
Zions Bancorporation
Founders Room, 18th Floor
One South Main Street
Salt Lake City, Utah 84133-1109

## TRANSFER AGENT

Zions First National Bank
Corporate Trust Department
One South Main Street, 12th Floor
Salt Lake City, Utah 84133-1109
801-844-7545 or 888-416-5176

## REGISTRAR

Zions First National Bank
One South Main Street, 12th Floor
Salt Lake City, Utah 84133-1109

## AUDITORS

Ernst & Young LLP
178 S Rio Grande Street, Suite 400
Salt Lake City, Utah 84101

## NUMBER OF COMMON SHAREHOLDERS

6,272 as of December 31, 2009

## NASDAQ GLOBAL SELECT

MARKET SYMBOL

ZION

## OTHER LISTED SECURITIES

Series A Preferred Stock – NYSE:

ZBPRA

Zions Capital Trust B – NYSE: ZBPRB

Series C Preferred Stock – NYSE: ZBPRC

## DIVIDEND REINVESTMENT PLAN

Shareholders can reinvest their cash dividends in additional shares of our common stock at the market price on dividend payment date. Shareholders, as well as brokers and custodians who hold our common stock for clients, can obtain a prospectus of the plan on the Zions Bancorporation Web site (www.zionsbancorporation.com) or by writing to:

Zions Bancorporation
Dividend Reinvestment Plan
P.O. Box 30880
Salt Lake City, Utah 84130-0880

## CREDIT RATINGS

Credit ratings are updated regularly and may be found on the Zions Bancorporation Web site (www.zionsbancorporation.com).

## OPTION MARKET MAKERS

Chicago Board Options Exchange
Philadelphia Stock Exchange

## SELECTED INDEX MEMBERSHIPS

S&P 500
S&P Global 1200
KBW Bank
NASDAQ Financial 100

## INVESTOR RELATIONS

For financial information about the Corporation, analysts, investors and news media representatives should contact:
James R. Abbott
801-844-7637
James.Abbott@zionsbancorp.com

## ZIONS BANCORPORATION
NEWS RELEASES

Our news releases are available on our Web site at:
www.zionsbancorporation.com.
To be added to the email distribution list, please visit
www.zionsbancorporation.com
and click on “E-mail Notification.”

## INTERNET SITES

Zions Bancorporation:
www.zionsbancorporation.com

Zions First National Bank:
www.zionsbank.com

California Bank & Trust:
www.calbanktrust.com

Amegy Bank:
www.amegybank.com

National Bank of Arizona:
www.nbarizona.com

Nevada State Bank:
www.nsbank.com

Vectra Bank Colorado:
www.vectrabank.com

The Commerce Bank of Washington:
www.tcbwa.com

The Commerce Bank of Oregon:
www.tcboregon.com

Contango Capital Advisors, Inc.:
www.contangocapitaladvisors.com

NetDeposit, LLC:
www.netdeposit.com

Zions Direct, Inc.:
www.zionsdirect.com



ZIONS BANCORPORATION

ONE SOUTH MAIN STREET - SALT LAKE CITY, UTAH 84133
WWW.ZIONSBANCORPORATION.COM