10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

COMMISSION FILE NUMBER 001-12307

ZIONS BANCORPORATION

(Exact name of Registrant as specified in its charter)

UTAH	87-0227400
(State or other jurisdiction of incorporation or organization)	(Internal Revenue Service Employer Identification Number)
One South Main, 15th Floor Salt Lake City, Utah	84133
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (801) 524-4787

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Guarantee related to 8.00% Capital Securities of Zions Capital Trust B	New York Stock Exchange
6% Subordinated Notes due September 15, 2015	New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock	New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series C 9.5% Non-Cumulative Perpetual Preferred Stock	New York Stock Exchange
Common Stock, without par value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x      Accelerated filer  ¨      Non-accelerated filer  ¨      Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  x

Aggregate Market Value of Common Stock Held by Non-affiliates at June 30, 2008	$	3,226,459,704
Number of Common Shares Outstanding at February 20, 2009		115,337,627 shares

Documents Incorporated by Reference:

Portions of the Company’s Proxy Statement – Incorporated into Part III

FORM 10-K TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business.	6
Item 1A.	Risk Factors.	11
Item 1B.	Unresolved Staff Comments.	13
Item 2.	Properties.	13
Item 3.	Legal Proceedings.	13
Item 4.	Submission of Matters to a Vote of Security Holders.	13
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	14
Item 6.	Selected Financial Data.	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	122
Item 8.	Financial Statements and Supplementary Data.	123
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	186
Item 9A.	Controls and Procedures.	186
Item 9B.	Other Information.	186
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	186
Item 11.	Executive Compensation.	186
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	186
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	187
Item 14.	Principal Accounting Fees and Services.	187
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	188
Signatures		193

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PART I

FORWARD-LOOKING INFORMATION

Statements in this Annual Report on Form 10-K that are based on other than historical data are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and include, among others:

• statements with respect to the beliefs, plans, objectives, goals, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of Zions Bancorporation (“the parent”) and its subsidiaries (collectively “the Company,” “Zions,” “we,” “our,” “us”);

• statements preceded by, followed by or that include the words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “projects,” or similar expressions.

These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this Annual Report on Form 10-K, including, but not limited to, those presented in the Management’s Discussion and Analysis. Factors that might cause such differences include, but are not limited to:

• the Company’s ability to successfully execute its business plans, manage its risks, and achieve its objectives;

• changes in political and economic conditions, including the political and economic effects of the current economic crisis and other major developments, including wars, military actions and terrorist attacks;

• changes in financial market conditions, either internationally, nationally or locally in areas in which the Company conducts its operations, including without limitation, reduced rates of business formation and growth, commercial and residential real estate development and real estate prices;

• fluctuations in markets for equity, fixed-income, commercial paper and other securities, including availability, market liquidity levels, and pricing;

• changes in interest rates, the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows and competition;

• acquisitions and integration of acquired businesses;

• increases in the levels of losses, customer bankruptcies, claims and assessments;

• changes in fiscal, monetary, regulatory, trade and tax policies and laws, including policies of the U.S. Department of Treasury and the Federal Reserve Board;

• the Company’s participation or lack of participation in governmental programs implemented under the Emergency Economic Stabilization Act (“EESA”) and the American Recovery and Reinvestment Act (“ARRA”), including without limitation the Troubled Asset Relief Program (“TARP”), the Capital Purchase Program (“CPP”), and the Temporary Liquidity Guarantee Program (“TLGP”) and the impact of such programs and related regulations on the Company and on international, national, and local economic and financial markets and conditions;

• the impact of the EESA and the ARRA and related rules and regulations on the business operations and competitiveness of the Company and other participating American financial institutions, including the impact of the executive compensation limits of these acts, which may impact the ability of the Company and other American financial institutions to retain and recruit executives and other personnel necessary for their businesses and competitiveness;

• the impact of certain provisions of the EESA and ARRA and related rules and regulations on the attractiveness of governmental programs to mitigate the effects of the current economic crisis, including the risks that certain financial institutions may elect not to participate in such programs, thereby decreasing the effectiveness of such programs;

• continuing consolidation in the financial services industry;

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• new litigation or changes in existing litigation;

• success in gaining regulatory approvals, when required;

• changes in consumer spending and savings habits;

• increased competitive challenges and expanding product and pricing pressures among financial institutions;

• demand for financial services in the Company’s market areas;

• inflation and deflation;

• technological changes and the Company’s implementation of new technologies;

• the Company’s ability to develop and maintain secure and reliable information technology systems;

• legislation or regulatory changes which adversely affect the Company’s operations or business;

• the Company’s ability to comply with applicable laws and regulations;

• changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; and

• increased costs of deposit insurance and changes with respect to Federal Deposit Insurance Corporation (“FDIC”) insurance coverage levels.

The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

AVAILABILITY OF INFORMATION

We also make available free of charge on our website, www.zionsbancorporation.com, annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission.

GLOSSARY OF ACRONYMS

ABS – Asset-Backed Security

AFS – Available-for-Sale

ALCO – Asset/Liability Committee

ALM – Asset-Liability Management

AML – Anti-Money Laundering

ARM – Adjustable Rate Mortgage

ARRA – American Recovery and Reinvestment Act

ATM – Automated Teller Machine

BCBS – Basel Committee on Banking Supervision

BSA – Bank Secrecy Act

CDARS – Certificate of Deposit Account Registry System

CDO – Collateralized Debt Obligation

CMC – Capital Management Committee

COSO – Committee of Sponsoring Organizations of the Treadway Commission

CPFF – Commercial Paper Funding Facility

CPP – Capital Purchase Program

CRA – Community Reinvestment Act

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CRE – Commercial Real Estate

EESA – Emergency Economic Stabilization Act

EITF – Emerging Issues Task Force

ESOARS – Employee Stock Option Appreciation Rights Securities

FAMC – Federal Agricultural Mortgage Corporation

FASB – Financial Accounting Standards Board

FDIC – Federal Deposit Insurance Corporation

FHLB – Federal Home Loan Bank

FHLMC – Federal Home Loan Mortgage Corporation

FIN – FASB Interpretation

FINRA – Financial Industry Regulatory Authority

FNMA – Federal National Mortgage Association

FRB – Federal Reserve Board

FSP – FASB Staff Position

FTE – Full-Time Equivalent

GNMA – Government National Mortgage Association

HTM – Held-to-Maturity

ISDA – International Swap Dealer Association

LIBOR – London Inter-Bank Offering Rate

LTV – Loan-to-Value

MD&A – Management’s Discussion and Analysis

NPR – Notice of Proposed Rulemaking

NRSRO – Nationally Recognized Statistical Rating Organization

OCC – Office of the Comptroller of the Currency

OCI – Other Comprehensive Income

OREO – Other Real Estate Owned

OTC – Over-the-Counter

OTTI – Other-Than-Temporary-Impairment

PCAOB – Public Company Accounting Oversight Board

PDs – Probabilities of Default

QSPE – Qualifying Special-Purpose Entity

REIT – Real Estate Investment Trust

SBA – Small Business Administration

SBIC – Small Business Investment Company

SEC – Securities and Exchange Commission

SFAS – Statement of Financial Accounting Standards

TAF – Term Auction Facility

TARP – Troubled Asset Relief Program

TLGP – Temporary Liquidity Guarantee Program

VIE – Variable Interest Entity

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ITEM 1. BUSINESS

DESCRIPTION OF BUSINESS

Zions Bancorporation (“the Parent”) is a financial holding company organized under the laws of the State of Utah in 1955, and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). The Parent and its subsidiaries (collectively “the Company”) own and operate eight commercial banks with a total of 513 domestic branches at year-end 2008. The Company provides a full range of banking and related services through its banking and other subsidiaries, primarily in Utah, California, Texas, Arizona, Nevada, Colorado, Idaho, Washington, and Oregon. Full-time equivalent employees totaled 11,011 at year-end 2008. For further information about the Company’s industry segments, see “Business Segment Results” on page 60 in Management’s Discussion and Analysis (“MD&A”) and Note 22 of the Notes to Consolidated Financial Statements. For information about the Company’s foreign operations, see “Foreign Operations” on page 58 in MD&A. The “Executive Summary” on page 18 in MD&A provides further information about the Company.

PRODUCTS AND SERVICES

The Company focuses on providing community banking services by continuously strengthening its core business lines of 1) small, medium-sized business and corporate banking; 2) commercial and residential development, construction and term lending; 3) retail banking; 4) treasury cash management and related products and services; 5) residential mortgage; 6) trust and wealth management; and 7) investment activities. It operates eight different banks in ten Western and Southwestern states with each bank operating under a different name and each having its own board of directors, chief executive officer, and management team. The banks provide a wide variety of commercial and retail banking and mortgage lending products and services. They also provide a wide range of personal banking services to individuals, including home mortgages, bankcard, other installment loans, home equity lines of credit, checking accounts, savings accounts, time certificates of various types and maturities, trust services, safe deposit facilities, direct deposit, and 24-hour ATM access. In addition, certain banking subsidiaries provide services to key market segments through their Women’s Financial, Private Client Services, and Executive Banking Groups. We also offer wealth management services through a subsidiary, Contango Capital Advisors, Inc. (“Contango”), and online brokerage services through Zions Direct.

In addition to these core businesses, the Company has built specialized lines of business in capital markets, public finance, and certain financial technologies, and is also a leader in Small Business Administration (“SBA”) lending. Through its eight banking subsidiaries, the Company provides SBA 7(a) loans to small businesses throughout the United States and is also one of the largest providers of SBA 504 financing in the nation. The Company owns an equity interest in the Federal Agricultural Mortgage Corporation (“Farmer Mac”) and is one of the nation’s top originators of secondary market agricultural real estate mortgage loans through Farmer Mac. The Company is a leader in municipal finance advisory and underwriting services. The Company also controls four venture capital funds that provide early-stage capital primarily for start-up companies located in the Western United States. Finally, the Company’s NetDeposit subsidiary is a leader in the provision of check imaging and clearing software.

COMPETITION

The Company operates in a highly competitive environment. The Company’s most direct competition for loans and deposits comes from other commercial banks, thrifts, and credit unions, including institutions that do not have a physical presence in our market footprint but solicit via the Internet and other means. In addition, the Company competes with finance companies, mutual funds, brokerage firms, securities dealers, investment banking companies, financial technology firms, and a variety of other types of companies. Many of these companies have fewer regulatory constraints and some have lower cost structures or tax burdens.

The primary factors in competing for business include pricing, convenience of office locations and other delivery methods, range of products offered, and the level of service delivered. The Company must compete effectively along all of these parameters to remain successful.

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SUPERVISION AND REGULATION

The Parent is a bank holding company that has elected to become a financial holding company under the BHC Act. The Gramm-Leach-Bliley Act of 1999 (“the GLB Act”) provides a regulatory framework for financial holding companies, which have as their umbrella regulator the Federal Reserve Board (“FRB”). The functional regulation of the separately regulated subsidiaries of a holding company is conducted by each subsidiary’s primary functional regulator. To qualify for and maintain status as a financial holding company, the Parent must satisfy certain ongoing criteria.

In addition, the Company’s subsidiary banks are subject to the provisions of the National Bank Act or the banking laws of their respective states, as well as the rules and regulations of the Office of the Comptroller of the Currency (“OCC”), the FRB, and the FDIC. They are also under the supervision of, and are continually subject to periodic examination by, the OCC or their respective state banking departments, the FRB, and the FDIC. Many of our nonbank subsidiaries are also subject to regulation by the FRB and other applicable federal and state agencies. Our brokerage and investment advisory subsidiaries are regulated by the Securities and Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”) and/or state securities regulators. Our other nonbank subsidiaries may be subject to the laws and regulations of the federal government and/or the various states in which they conduct business.

The Company is subject to various requirements and restrictions contained in both the laws of the United States and the states in which its banks and other subsidiaries operate. These regulations include but are not limited to the following:

• Laws and regulations regarding the availability, requirements and restrictions of a number of recently enacted governmental programs in which the Company participates, including the TARP and its associated CPP, the TLGP, the Term Auction Facility (“TAF”) and the Commercial Paper Funding Facility (“CPFF”), as well as certain conditions imposed by the EESA and ARRA and programs thereunder, including limitations on dividends on common stock in the CPP, and on executive compensation contained in the ARRA. Some of these programs, including specifically the CPP, contain provisions that allow the U.S. Government to unilaterally modify any term or provision of contracts executed under the program.

• Requirements for approval of acquisitions and activities. The prior approval is required, in accordance with the BHC Act of the FRB, for a financial holding company to acquire or hold more than 5% voting interest in any bank. The BHC Act allows, subject to certain limitations, interstate bank acquisitions and interstate branching by acquisition anywhere in the country. The BHC Act also requires approval for certain nonbanking acquisitions and restricts the Company’s nonbanking activities to those that are permitted for financial holding companies or that have been determined by the FRB to be financial in nature, incidental to financial activities, or complementary to a financial activity.

• Capital requirements. The FRB has established capital guidelines for financial holding companies. The OCC, the FDIC, and the FRB have also issued regulations establishing capital requirements for banks. Additional capital requirements, including taking additional capital from the U.S. Treasury in amounts and on terms yet to be defined, to be determined by “stress tests” not yet designed, may be required by the U.S. Treasury for banks larger than the Company, and could become required of the Company. There also is a risk that regional bank companies like Zions which are not deemed to be systemically important will be disadvantaged by not being allowed to participate in future government capital programs. The federal bank regulatory agencies have adopted and are proposing risk-based capital rules described below. Failure to meet capital requirements could subject the Parent and its subsidiary banks to a variety of restrictions and enforcement remedies. See Note 19 of the Notes to Consolidated Financial Statements for information regarding capital requirements.

The U.S. federal bank regulatory agencies’ risk-based capital guidelines are based upon the 1988 capital accord (“Basel I”) of the Basel Committee on Banking Supervision (the “BCBS”). The BCBS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines that each country’s supervisors can use to determine the

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supervisory policies they apply. The BCBS has been working for a number of years on revisions to Basel I. In December 2007, U.S. banking regulators published the final rule for Basel II implementation, requiring banks with over $250 billion in consolidated total assets or on-balance sheet foreign exposure of $10 billion (core banks) to adopt the Advanced Approach of Basel II while allowing other banks to elect to “opt in.”

Basel II provides two approaches for setting capital standards for credit risk – an internal ratings-based approach tailored to individual institutions’ circumstances and a standardized approach that bases risk weightings on external credit assessments to a much greater extent than permitted in existing risk-based capital guidelines. Basel II also sets capital requirements for operational risk and refines the existing capital requirements for market risk exposures. Operational risk is defined to mean the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems, or from external events. Basel I does not include separate capital requirements for operational risk.

We are not currently an “opt in” bank holding company, as the Company does not have in place the data collection and analytical capabilities necessary to adopt the Advanced Approach. However, we believe that the competitive advantages afforded to companies that do adopt the Advanced Approach may make it necessary for the Company to elect to “opt in” at some point. Whether or not this scenario emerges, our risk management will be well served by our continuing investment in more sophisticated analytical capabilities and in an enhanced data environment.

In July 2008, the U.S. banking regulators issued a proposed rule that would provide “non-core” banks with the option to adopt the Standardized Approach proposed in Basel II, replacing the previously proposed Basel 1A framework. While the Advanced Approach uses sophisticated mathematical models to measure and assign capital to specific risks, the Standardized Approach categorizes risks by type and then assigns capital requirements. We are evaluating the benefit of adopting the Standardized Approach and will make a decision following publication of the final rule.

Additional modifications of the Basel II regime continue to be proposed or adopted, but the requirements of the CPP and the ARRA appear to be “overriding” for the time being on any Basel II issues as they might apply to the Company.

• Requirements that the Parent serve as a source of strength for its banking subsidiaries. The FRB has a policy that a bank holding company is expected to act as a source of financial and managerial strength to each of its bank subsidiaries and, under appropriate circumstances, to commit resources to support each subsidiary bank. In addition, the OCC may order an assessment of the Parent if the capital of one of its national bank subsidiaries were to fall below capital levels required by the regulators.

• Limitations on dividends payable by subsidiaries. A substantial portion of the Parent’s cash, which is used to pay dividends on our common and preferred stock and to pay principal and interest on our debt obligations, is derived from dividends paid by the Parent’s subsidiary banks. These dividends are subject to various legal and regulatory restrictions as summarized in Note 19 of the Notes to Consolidated Financial Statements.

• Cross-guarantee requirements. All of the Parent’s subsidiary banks are insured by the FDIC. Each commonly controlled FDIC-insured bank can be held liable for any losses incurred, or reasonably expected to be incurred, by the FDIC due to another commonly controlled FDIC-insured bank being placed into receivership, and for any assistance provided by the FDIC to another commonly controlled FDIC-insured bank that is subject to certain conditions indicating that receivership is likely to occur in the absence of regulatory assistance.

• Safety and soundness requirements. Federal and state laws require that our banks be operated in a safe and sound manner. We are subject to additional safety and soundness standards prescribed in the Federal Deposit Insurance Corporate Improvement Act of 1991, including standards related to internal controls, information systems, internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, as well as other operational and management standards deemed appropriate by the federal banking agencies.

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• Limitations on the amount of loans to a borrower and its affiliates.

• Limitations on transactions with affiliates.

• Restrictions on the nature and amount of any investments and ability to underwrite certain securities.

• Requirements for opening of branches and the acquisition of other financial entities.

• Fair lending and truth in lending requirements to provide equal access to credit and to protect consumers in credit transactions.

• Provisions of the GLB Act and other federal and state laws dealing with privacy for nonpublic personal information of individual customers.

• Community Reinvestment Act (“CRA”) requirements. The CRA requires banks to help serve the credit needs in their communities, including credit to low and moderate income individuals. Should the Company or its subsidiaries fail to adequately serve their communities, penalties may be imposed including denials of applications to add branches, relocate, add subsidiaries and affiliates, and merge with or purchase other financial institutions.

• Anti-money laundering regulations. The Bank Secrecy Act (“BSA”) and other federal laws require financial institutions to assist U.S. Government agencies to detect and prevent money laundering. Specifically, the BSA requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. Title III of the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”) substantially broadens the scope of U.S. anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, defining new crimes and related penalties, and expanding the extra-territorial jurisdiction of the United States. The U.S. Treasury Department has issued a number of implementing regulations, which apply various requirements of the USA Patriot Act to financial institutions. The Company’s bank and broker-dealer subsidiaries and private investment companies advised or sponsored by the Company’s subsidiaries must comply with these regulations. These regulations also impose new obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing.

The Parent is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both as administered by the SEC. As a company quoted on the NASDAQ Stock Market LLC (“Nasdaq”) Global Select Market, the Parent is subject to Nasdaq listing standards for quoted companies.

The Company is subject to the Sarbanes-Oxley Act of 2002, which addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. Nasdaq has also adopted corporate governance rules, which are intended to allow shareholders and investors to more easily and efficiently monitor the performance of companies and their directors.

The Board of Directors of the Parent has implemented a comprehensive system of corporate governance practices. This system includes Corporate Governance Guidelines, a Code of Business Conduct and Ethics for Employees, a Directors Code of Conduct, and charters for the Audit, Credit Review, Compensation, and Nominating and Corporate Governance Committees. More information on the Company’s corporate governance practices is available on the Company’s website at www.zionsbancorporation.com. (The Company’s website is not part of this Annual Report on Form 10-K.)

The Company has adopted policies, procedures and controls to address compliance with the requirements of the banking, securities and other laws and regulations described above or otherwise applicable to the Company. The Company intends to make appropriate revisions to reflect any changes required.

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Regulators, Congress, and state legislatures continue to enact rules, laws, and policies to regulate the financial services industry and public companies and to protect consumers and investors. The nature of these laws and regulations and the effect of such policies on future business and earnings of the Company cannot be predicted.

GOVERNMENT MONETARY POLICIES

The earnings and business of the Company are affected not only by general economic conditions, but also by policies adopted by various governmental authorities. The Company is particularly affected by the monetary policies of the FRB, which affect short-term interest rates and the national supply of bank credit. The tools available to the FRB which may be used to implement monetary policy include:

• open-market operations in U.S. Government securities;

• adjustment of the discount rates or cost of bank borrowings from the FRB;

• imposing or changing reserve requirements against bank deposits;

• term auction facilities collateralized by bank loans; and

• other programs to purchase assets and inject liquidity directly in various segments of the economy.

These methods are used in varying combinations to influence the overall growth or contraction of bank loans, investments and deposits, and the interest rates charged on loans or paid for deposits.

In view of the changing conditions in the economy and the effect of the FRB’s monetary policies, it is difficult to predict future changes in loan demand, deposit levels and interest rates, or their effect on the business and earnings of the Company. FRB monetary policies have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future.

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ITEM 1A. RISK FACTORS

The following list describes several risk factors which are significant to the Company including but not limited to:

• The United States and other countries are facing a severe economic crisis. In response the United States and other governments have established a variety of programs and policies designed to mitigate the effects of the crisis. Many of these programs and policies are unprecedented and untested and may not be effective or may have adverse consequences, whether anticipated or unanticipated. If these programs and policies are ineffective or result in substantial adverse developments, the economic crisis may become more severe or may continue for a substantial period of time. Any increase in the severity or duration of the economic crisis would adversely affect the Company.

• The Company has chosen to participate in a number of new programs sponsored by the U.S. Government during the current financial and economic crisis, and in the future may elect to or be required to participate in these or other, as not yet enacted, programs. The company is therefore subject to the risk that these programs may not be available in the future, or that it will be forced to participate in programs that it does not believe to be in its best interest or that of its shareholders. These programs, including the TARP and its associated CPP, the TLGP, the TAF, and the CPFF, as well as the ARRA and EESA, contain important limitations on the Company’s conduct of its business, including limitations on dividends, repurchases of common stock, acquisitions, and executive compensation contained in the CPP and the ARRA. These limitations may adversely impact the Company’s ability to attract nongovernmental capital and to recruit and retain executive management and other personnel and its ability to compete with other American and foreign financial institutions. One of these programs, the CPP, contains provisions that allow the U.S. Government to unilaterally modify any term or provision of contracts executed under the program.

• Certain provisions of the ESSA and ARRA and related rules and regulations may lead certain financial institutions to elect not to participate in governmental programs designed to mitigate the current economic crisis, thereby decreasing the effectiveness of such programs and creating additional stresses on employees and customers of and investors in American financial institutions.

• Credit risk is one of our most significant risks. The Company’s level of credit quality continued to weaken during 2008. The deterioration in credit quality is mainly related to the weakness in residential development and construction activity in the Southwest that started in the latter half of 2007. Although not to the degree experienced in the Southwestern states (generally Arizona, Nevada and California), some signs of deterioration began to surface in Utah and Idaho during the first quarter of 2008 and in the Texas market in the fourth quarter of 2008. Residential construction and land development loans in Arizona and Nevada remain the most troubled segments of the portfolio and account for the most meaningful declines in commercial real estate credit quality during the last half of 2008. We expect continued credit quality deterioration over the next few quarters. With the economy continuing to weaken, there is a risk that credit quality could be adversely impacted throughout our geographic footprint and for other loan types.

• Net interest income is the largest component of the Company’s revenue. The management of interest rate risk for the Company and all bank subsidiaries is centralized and overseen by an Asset Liability Management Committee appointed by the Company’s Board of Directors. The Company has been successful in its interest rate risk management as evidenced by its achieving a relatively stable net interest margin over the last several years when interest rates have been volatile and the rate environment challenging. Factors beyond the Company’s control can significantly influence the interest rate environment and increase the Company’s risk. These factors include competitive pricing pressures for our loans and deposits, adverse shifts in the mix of deposits and other funding sources, and volatile market interest rates subject to general economic conditions and the policies of governmental and regulatory agencies, in particular the FRB.

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• Funding availability, as opposed to funding cost, became a more important risk factor in the latter half of 2007 and in 2008, as a global liquidity crisis affected financial institutions generally, including the Company, and is expected to remain an issue in 2009. However, this global liquidity crisis was partially mitigated as the Company strengthened its capital and liquidity during the latter half of 2008, including raising approximately $300 million of common and preferred equity, a capital investment of $1.4 billion from the U.S. Treasury as part of the Treasury’s CPP, as well as its participation in the TAF, and the TLGP. See “Capital Management” on page 119 in MD&A and Notes 11 and 14 of the Notes to Consolidated Financial Statements for further information on funding availability.

• It is expected that liquidity stresses will continue to be a risk factor in 2009 for the Company, the Parent and its affiliate banks, and for Lockhart Funding, LLC (“Lockhart”). Lockhart’s participation in the CPFF has mitigated these stresses for it; however, this program is currently scheduled to expire in October 2009.

• Zions Bank sponsors an off-balance sheet qualifying special-purpose entity (“QSPE”), Lockhart, which funds its assets by issuing asset-backed commercial paper. Its assets include securities which are rated AAA and AA or guaranteed by the U.S. Government. Factors beyond the Company’s control can significantly influence whether Lockhart will remain as an off-balance sheet QSPE and whether the Company will be required to purchase, and possibly incur losses, on securities from Lockhart under the provisions of a Liquidity Agreement the Company provides to Lockhart. These factors include Lockhart’s inability to issue asset-backed commercial paper, expiration of the Federal Reserve’s CPFF without sufficient offsetting market demand for Lockhart’s commercial paper, rating agency downgrades of securities, and instability in the credit markets.

• The Company’s on-balance sheet asset-backed securities investment portfolio includes collateralized debt obligations (“CDOs”) collateralized by trust preferred securities issued by banks, insurance companies, and real estate investment trusts (“REITs”) that may have some exposure to the subprime market and/or to other categories of distressed assets. In addition, asset-backed securities also include structured asset-backed collateralized debt obligations (“ABS CDOs”) (also known as diversified structured finance CDOs) purchased from Lockhart which have minimal exposure to subprime and home equity mortgage securitizations. Factors beyond the Company’s control can significantly influence the fair value of these securities and potential adverse changes to the fair value of these securities. These factors include but are not limited to rating agency downgrades of securities, defaults of debt issuers, lack of market pricing of securities, rating agency downgrades of monoline insurers that insure certain asset-backed securities, and continued instability in the credit markets. See “Investment Securities Portfolio” on page 85 for further details.

• The Company is exposed to accounting, financial reporting, and regulatory/compliance risk. The Company provides to its customers a number of complex financial products and services. Estimates, judgments and interpretations of complex and changing accounting and regulatory policies are required in order to provide and account for these products and services. Identification, interpretation and implementation of complex and changing accounting standards as well as compliance with regulatory requirements, including the BSA and various Know Your Customer, Identity Theft Red Flag, and Anti-Money Laundering regulations, therefore pose an ongoing risk.

• The Company is subject to risks associated with legal claims and litigation. The Company’s exposure to claims and litigation may increase as a result of stresses on customers, counterparties and others arising from the current economic crisis.

• A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors may have of the Company. We continue to devote a significant amount of effort, time and resources to improving our controls and ensuring compliance with complex accounting standards and regulations.

• As noted previously, U.S. and international regulators have adopted new capital standards commonly known as Basel II. As a bank holding company with less than $250 billion in consolidated total assets

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and on-balance sheet foreign exposure of less than $10 billion, we can but are not required to adopt the Advanced Approach of Basel II. We have not as yet chosen to adopt it. However, these standards would apply to a number of our largest competitors and potentially give them a competitive advantage over banks that do not adopt these standards. Whether or not this competitive disparity emerges, the Company is continuing to develop systems, data and analytical capabilities that both enhance our internal risk management process and help facilitate Basel II adoption, if we choose to do so in the future.

• From time to time the Company makes acquisitions. The success of any acquisition depends, in part, on our ability to realize the projected cost savings from the merger and on the continued growth and profitability of the acquisition target. We have been successful with most prior mergers, but it is possible that the merger integration process with an acquisition target could result in the loss of key employees, disruptions in controls, procedures and policies, or other factors that could affect our ability to realize the projected savings and successfully retain and grow the target’s customer base.

The Company’s Board of Directors established an Enterprise-Wide Risk Management policy and appointed an Enterprise Risk Management Committee in 2005 to oversee and implement the policy. In addition to credit and interest rate risk, the Committee also monitors the following risk areas: market risk, liquidity risk, operational risk, compliance risk, information technology risk, strategic risk, and reputation risk.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

At December 31, 2008, the Company operated 513 domestic branches, of which 269 are owned and 244 are leased. The Company also leases its headquarter offices in Salt Lake City, Utah. Other operation facilities are either owned or leased. The annual rentals under long-term leases for leased premises are determined under various formulas and factors, including operating costs, maintenance, and taxes. For additional information regarding leases and rental payments, see Note 18 of the Notes to Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

The information contained in Note 18 of the Notes to Consolidated Financial Statements is incorporated by reference herein.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

The Company’s common stock is traded on the Nasdaq Global Select Market under the symbol “ZION.” The last reported sale price of the common stock on Nasdaq on February 20, 2009 was $9.00 per share.

The following table sets forth, for the periods indicated, the high and low sale prices of the Company’s common stock, as quoted on Nasdaq:

	2008				2007
	High			Low	High	Low
1st Quarter	$	57.05		39.31	88.56	81.18
2nd Quarter		51.15		29.46	86.00	76.59
3rd Quarter		107.21	1	17.53	81.43	67.51
4th Quarter		47.94		21.07	73.00	45.70

¹ 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.

During September 8-11, 2008, the Company issued $250 million of new common stock consisting of 7,194,079 shares at an average price of $34.75 per share. Net of issuance costs and fees, this issuance added $244.9 million to common stock.

As of February 20, 2009, there were 6,224 holders of record of the Company’s common stock.

DIVIDENDS

The frequency and amount of common stock dividends paid during the last two years are as follows:

	1st Quarter		2nd Quarter	3rd Quarter	4th Quarter
2008	$	0.43	0.43	0.43	0.32
2007		0.39	0.43	0.43	0.43

On January 26, 2009, the Company’s Board of Directors approved a dividend of $0.04 per common share payable on February 25, 2009 to shareholders of record on February 11, 2009. This is a reduction from prior dividend levels in response to the deteriorating outlook for the Company and generally for the industry and the economy as a whole. The Company expects to continue its policy of paying regular cash dividends on a quarterly basis, although there is no assurance as to future dividends because they depend on future earnings, capital requirements, and financial condition.

We have 3,000,000 authorized shares of preferred stock without par value and with a liquidation preference of $1,000 per share. As of December 31, 2008, 240,000, 46,949, and 1,400,000 of preferred shares series A, C, and D, respectively, have been issued. In general, preferred shareholders may receive asset distributions before common shareholders; however, preferred shareholders have only limited voting rights generally with respect to certain provisions of the preferred stock, the issuance of senior preferred stock, and the election of directors. Preferred stock dividends reduce earnings available to common shareholders and are paid quarterly in arrears. The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. The series A and C shares are registered with the SEC.

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The Series D Fixed-Rate Cumulative Perpetual Preferred Stock was issued on November 14, 2008 to the U.S. Department of the Treasury for $1.4 billion in a private placement exempt from registration. The EESA authorized the U.S. Treasury to appropriate funds to eligible financial institutions participating in the TARP Capital Purchase Program. The capital investment includes the issuance of preferred shares of the Company and a warrant to purchase common shares pursuant to a Letter Agreement and a Securities Purchase agreement (collectively “the Agreement”). The preferred shares are ranked pari passu with the Series A and C preferred shares. The dividend rate of 5% increases to 9% after the first five years. Dividend payments are made on the 15 ^th day of February, May, August, and November. The warrant allows the U.S. Treasury to purchase up to 5,789,909 shares of the Company’s common stock exercisable over a 10-year period at a price per share of $36.27. The preferred shares and the warrant qualify for Tier 1 regulatory capital. The Agreement subjects the Company to certain restrictions and conditions including those related to common dividends, share repurchases, executive compensation, and corporate governance.

We recorded the total $1.4 billion of the preferred shares and the warrant at their relative fair values of $1,292.2 million and $107.8 million, respectively. The difference from the par amount of the preferred shares is accreted to preferred stock over five years using the interest method with a corresponding adjustment to preferred dividends.

The Company cannot increase the common stock dividend above $0.32 per share without the consent of the U.S. Treasury until the third anniversary of the date of the investment, or November 14, 2011, unless prior to such third anniversary the senior preferred stock series D is redeemed in whole or the U.S. Treasury has transferred all of the senior preferred stock series D to third parties.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The information contained in Item 12 of this Form 10-K is incorporated by reference herein.

SHARE REPURCHASES

The following table summarizes the Company’s share repurchases for the fourth quarter of 2008:

Period	Total number of shares repurchased1	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plan
October	100	$	34.99	–	$	56,250,315
November	387		29.50	–		56,250,315
December	8,918		25.97	–		56,250,315
Fourth quarter	9,405		26.21	–

¹ All share repurchases during the fourth quarter of 2008 were made to pay for payroll taxes upon the vesting of restricted stock.

The Company has not repurchased any shares under the Common Stock Repurchase Plan since August 16, 2007. It is prohibited from repurchasing any common shares by terms of the CPP until the Company’s CPP capital has been repaid.

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PERFORMANCE GRAPH

The following stock performance graph compares the five-year cumulative total return of Zions Bancorporation’s common stock with the Standard & Poor’s 500 Index and the KBW Bank Index which includes Zions Bancorporation. The KBW Bank Index is a market capitalization-weighted bank stock index developed and published by Keefe, Bruyette & Woods, Inc., a nationally recognized brokerage and investment banking firm specializing in bank stocks. The index is composed of 24 geographically diverse stocks representing national money center banks and leading regional financial institutions. The stock performance graph is based upon an initial investment of $100 on December 31, 2003 and assumes reinvestment of dividends.

	2003	2004	2005	2006	2007	2008
Zions Bancorporation	100.0	113.3	128.4	142.7	82.7	45.1
KBW Bank Index	100.0	110.3	113.7	133.0	104.1	54.9
S&P 500	100.0	110.8	116.3	134.6	142.0	89.5

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ITEM 6. SELECTED FINANCIAL DATA

Financial Highlights

(In millions, except per share amounts)	2008/2007 Change		2008			2007		2006		20054		2004
For the Year
Net interest income	+5	%	$	1,971.6		1,882.0		1,764.7		1,361.4		1,160.8
Noninterest income	-54	%		190.7		412.3		551.2		436.9		431.5
Total revenue	-6	%		2,162.3		2,294.3		2,315.9		1,798.3		1,592.3
Provision for loan losses	+326	%		648.3		152.2		72.6		43.0		44.1
Noninterest expense	+5	%		1,475.0		1,404.6		1,330.4		1,012.8		923.2
Impairment loss on goodwill				353.8		–		–		0.6		0.6
Income (loss) before income taxes and minority interest	-143	%		(314.8	)	737.5		912.9		741.9		624.4
Income taxes (benefit)	-118	%		(43.4	)	235.8		318.0		263.4		220.1
Minority interest	-163	%		(5.1	)	8.0		11.8		(1.6	)	(1.7	)
Net income (loss)	-154	%		(266.3	)	493.7		583.1		480.1		406.0
Net earnings (loss) applicable to common shareholders	-161	%		(290.7	)	479.4		579.3		480.1		406.0
Per Common Share
Net earnings (loss) – diluted	-160	%		(2.66	)	4.42		5.36		5.16		4.47
Net earnings (loss) – basic	-160	%		(2.67	)	4.47		5.46		5.27		4.53
Dividends declared	-4	%		1.61		1.68		1.47		1.44		1.26
Book value1	-10	%		42.65		47.17		44.48		40.30		31.06
Market price – end				24.51		46.69		82.44		75.56		68.03
Market price – high2				57.05		88.56		85.25		77.67		69.29
Market price – low				17.53		45.70		75.13		63.33		54.08
At Year-End
Assets	+4	%		55,093		52,947		46,970		42,780		31,470
Net loans and leases	+7	%		41,859		39,088		34,668		30,127		22,627
Sold loans being serviced3	-69	%		578		1,885		2,586		3,383		3,066
Deposits	+12	%		41,316		36,923		34,982		32,642		23,292
Long-term borrowings	+1	%		2,622		2,591		2,495		2,746		1,919
Shareholders’ equity:
Preferred equity	+559	%		1,582		240		240		–		–
Common equity	-3	%		4,920		5,053		4,747		4,237		2,790
Performance Ratios
Return on average assets				(0.50	)%	1.01	%	1.32	%	1.43	%	1.31	%
Return on average common equity				(5.69	)%	9.57	%	12.89	%	15.86	%	15.27	%
Efficiency ratio				67.47	%	60.53	%	56.85	%	55.67	%	57.22	%
Net interest margin				4.18	%	4.43	%	4.63	%	4.58	%	4.27	%
Capital Ratios1
Equity to assets				11.80	%	10.00	%	10.62	%	9.90	%	8.87	%
Tier 1 leverage				9.99	%	7.37	%	7.86	%	8.16	%	8.31	%
Tier 1 risk-based capital				10.22	%	7.57	%	7.98	%	7.52	%	9.35	%
Total risk-based capital				14.32	%	11.68	%	12.29	%	12.23	%	14.05	%
Tangible common equity				5.89	%	5.70	%	5.98	%	5.28	%	6.80	%
Tangible equity				8.86	%	6.17	%	6.51	%	5.28	%	6.80	%
Selected Information
Average common and common-equivalent shares (in thousands)				109,145		108,523		108,028		92,994		90,882
Common dividend payout ratio				na		37.82	%	27.10	%	27.14	%	28.23	%
Full-time equivalent employees				11,011		10,933		10,618		10,102		8,026
Commercial banking offices				513		508		470		473		386
ATMs				625		627		578		600		475

¹ At year-end.

² The actual high price 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 Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans.

⁴ Amounts for 2005 include Amegy Corporation at December 31, 2005 and for the month of December 2005.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

Company Overview

Zions Bancorporation (“the Parent”) and subsidiaries (collectively “the Company,” “Zions,” “we,” “our,” “us”) together comprise a $55 billion financial holding company headquartered in Salt Lake City, Utah. As of September 30, 2008, the Company was the 19^th largest domestic bank holding company in terms of deposits. At December 31, 2008, the Company operated banking businesses through 513 domestic branches and 625 ATMs in ten Western and Southwestern states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, and Washington. Our banking businesses include: Zions First National Bank (“Zions Bank”), in Utah and Idaho; California Bank & Trust (“CB&T”); Amegy Corporation (“Amegy”) and its subsidiary, Amegy Bank, in Texas; National Bank of Arizona (“NBA”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; The Commerce Bank of Washington (“TCBW”); and The Commerce Bank of Oregon (“TCBO”).

The Company also operates a number of specialty financial services and financial technology businesses that conduct business on a regional or national scale. The Company is a national leader in Small Business Administration (“SBA”) lending, public finance advisory services, and software sales and cash management services related to “Check 21 Act” electronic imaging and clearing of checks. In addition, Zions is included in the Standard and Poor’s 500 (“S&P 500”) and NASDAQ Financial 100 indices.

In operating its banking businesses, the Company seeks to combine the front office or customer facing advantages that it believes can result from decentralized organization and branding, with those that can come from centralized risk management, capital management and operations. In its specialty financial services and technology businesses, the Company seeks to develop a competitive advantage in a particular product, customer, or technology niche.

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Distribution of Loans and Deposits

As shown in Charts 1 and 2 the Company’s loans and core deposits are widely diversified among the banking franchises the Company operates.

Note: Core deposits are defined as total deposits excluding

brokered deposits and time deposits $100,000 and over.

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The Company’s loan portfolio also is diversified as to type of loan. However, as shown in Chart 3, it does have a significant concentration of exposure to commercial real estate, including residential land, acquisition and development lending in Arizona, Nevada, and to a lesser degree, California and the Intermountain West, that have been under severe stress due to the ongoing declines in housing-related prices and in residential building.

Business Strategies

We believe that the Company distinguishes itself by having a strategy for growth in its banking businesses that is unique for a bank holding company of its size. This growth strategy is driven by four key factors: (1) focus on high growth markets; (2) keep decisions that affect customers local; (3) centralize technology and operations to achieve economies of scale; and (4) centralize and standardize policies and management controlling key risks. These strategies are more fully set forth as follows:

Focus on High Growth Markets

Each of the states in which the Company conducts its banking businesses has experienced relatively high levels of historical economic growth and each ranks among the top one-third of states as ranked by population and household income growth projected by the U.S. Census Bureau. Despite slowdowns in population, employment, and key indicators of economic growth in some of these markets in 2008, which is expected to persist through much of 2009, the Company believes that over the medium to longer term all of these markets will continue to be among the fastest growing in the country.

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Schedule 1

DEMOGRAPHIC PROFILE

BY STATE

(Dollar amounts in thousands)	Number of branches 12/31/2008	Deposits at 12/31/20081		Percent of Zions’ deposit base		Estimated 2008 total population2	Estimated population % change 2000-20082		Projected population % change 2008-20132		Estimated median household income 20082		Estimated household income % change 2000-20082		Projected household income % change 2008-20132
Utah	116	$	13,825,330	33.46	%	2,677,229	19.23	%	12.57	%	$	60.3	30.76	%	16.05	%
California	90		7,933,186	19.20		37,873,407	11.44		6.84			61.8	28.71		16.17
Texas	83		8,625,056	20.88		24,627,546	17.51		11.32			52.4	30.15		18.32
Arizona	79		3,896,531	9.43		6,630,722	28.24		17.47			55.3	34.92		20.13
Nevada	77		3,512,195	8.50		2,730,425	35.35		20.00			58.1	29.19		16.17
Colorado	40		2,071,894	5.01		4,962,478	14.87		9.04			62.5	31.06		16.75
Idaho	25		781,523	1.89		1,549,062	19.06		12.67			50.4	32.55		20.34
Washington	1		602,731	1.46		6,628,203	12.06		7.98			60.8	31.75		15.96
New Mexico	1		32,647	0.08		2,029,633	11.21		7.66			44.7	29.69		18.71
Oregon	1		35,403	0.09		3,814,725	11.13		7.61			53.5	29.54		17.71
Zions’ weighted average							16.56		10.33			61.8	32.14		18.41
Aggregate national						309,299,265	9.59		6.30			54.7	28.82		16.97

¹ Excludes intercompany deposits.

² Data Source: SNL Financial Database

The Company seeks to grow both organically and through acquisitions in these banking markets. Within each of the states where the Company operates, we focus on the market segments that we believe present the best opportunities for us. We believe that these states over time have experienced higher rates of growth, business formation, and expansion than other states. We also believe that over the long term these states will continue to experience higher rates of commercial real estate development as businesses provide housing, shopping, business facilities and other amenities for their growing populations. However, in the near term growth in many of our geographies and market segments has slowed markedly due to weakening economic conditions and loan demand. We have recently experienced net portfolio shrinkage in distressed residential real estate markets in the Southwest.

A common focus of all of Zions’ subsidiary banks is small and middle market business banking (including the personal banking needs of the executives and employees of those businesses) and commercial real estate development. In addition to our commercial business, we also provide a broad base of consumer financial products in selected markets, including home mortgages, home equity credit lines, auto loans, and credit cards. This mix of business often leads to loan balances growing faster than internally generated deposits; this was particularly true in much of 2008 as loan growth significantly outpaced low cost core deposit growth. In addition, it has important implications for the Company’s management of certain risks, including interest rate and liquidity risks, which are discussed further in later sections of this document.

Keep Decisions That Affect Customers Local

The Company operates eight different community/regional banks, each under a different name, and each with its own charter, chief executive officer and management team. This structure helps to ensure that decisions related to customers are made at a local level. In addition, each bank controls, among other things, most decisions related to its branding, market strategies, customer relationships, product pricing, and credit decisions (within the limits of established corporate policy). In this way we are able to differentiate our banks from much larger, “mass market” banking competitors that operate regional or national franchises under a common brand and often

21

around “vertical” product silos. We believe that this approach allows us to attract and retain exceptional management, and that it also results in providing service of the highest quality to our targeted customers. In addition, we believe that over time this strategy generates superior growth in our banking businesses.

Centralize Technology and Operations to Achieve Economies of Scale

We seek to differentiate the Company from smaller banks in two ways. First, we use the combined scale of all of the banking operations to create a broad product offering without the fragmentation of systems and operations that would typically drive up costs. Second, for certain products for which economies of scale are believed to be important, the Company “manufactures” the product centrally or outsources it from a third party. Examples include cash management, credit card administration, mortgage servicing, and deposit operations. In this way the Company seeks to create and maintain efficiencies while generating superior growth.

Centralize and Standardize Policies and Management Controlling Key Risks

We seek to standardize policies and practices related to the management of key risks in order to assure a consistent risk profile in an otherwise decentralized management model. Among these key risks and functions are credit, interest rate, liquidity, and market risks. Although credit decisions are made locally within each affiliate bank, these decisions are made within the framework of a corporate credit policy that is standard among all of our affiliate banks. Each bank may amend the policy in a more conservative direction; however, it may not amend the policy in a more liberal direction. In that case, it must request a specific waiver from the Company’s Chief Credit Officer; in practice only a limited number of waivers have been granted. Similarly, the Credit Examination function is a corporate activity, reporting to the Credit Review Committee of the Board of Directors, and administratively reporting to the Director of Enterprise Risk Management, who reports to the Company’s CEO. This assures a reasonable consistency of loan quality grading and loan loss reserving practices among all affiliate banks.

Interest rate risk management, liquidity and market risk, and portfolio investments also are managed centrally by a Board-designated Asset Liability Management Committee pursuant to corporate policies regarding interest rate risk, liquidity, investments and derivatives.

Internal Audit also is a centralized, corporate function reporting to the Audit Committee of the Board of Directors, and administratively reporting to the Director of Enterprise Risk Management, who reports to the Company’s CEO.

Finally, the Board established an Enterprise Risk Management Committee in late 2005, which is supported by the Director of Enterprise Risk Management. This Committee seeks to monitor and mitigate as appropriate these and other key operating and strategic risks throughout the Company.

MANAGEMENT’S OVERVIEW OF 2008 PERFORMANCE

The “sub-prime mortgage” crisis became a financial crisis in the latter half of 2007 and the economy entered into an increasingly severe economic recession during 2008. In 2008, both financing and capital became increasingly expensive and difficult for the Company to obtain as the year went on. Finally, in mid-September, which saw in rapid succession the effective nationalization of Fannie Mae and Freddie Mac, the failure of Lehman Brothers, and the Federal “rescue” of insurance giant, American International Group Inc (“AIG”), essentially all capital and financial markets world-wide became extremely disrupted.

As this crisis unfolded and became more severe, the Federal Reserve Board (“FRB”) and later the U.S. Treasury took a series of increasingly strong and less conventional actions to try to mitigate the crisis. Starting in mid-2007 the FRB aggressively lowered short term interest rates; after a brief pause in mid-2008, this aggressive reduction resumed and left the target Fed Funds rate at an all-time low of 0-0.25% at year-end 2008. In 2008 the FRB introduced a number of programs to directly provide greater liquidity to a financial system under severe stress, including trying to formally remove any stigma from Discount Window borrowings, followed by a series of

22

programs to inject liquidity directly into the banking system, such as the Term Auction Facility (“TAF”), and later into financial markets more broadly. As capital levels in the banking system became increasingly strained, active and possibly abusive short-selling of financial stocks, including that of the Company, rose to unprecedented levels. This activity made it increasingly difficult for financial companies to raise additional capital without causing existing shareholders to incur high levels of ownership dilution, and led the Securities and Exchange Commission (“SEC”) to enact a series of temporary bans on short-selling of financial stocks and certain abusive short-selling practices in the fall of 2008. The Treasury’s Troubled Asset Relief Program (“TARP”) Capital Purchase Program (“CPP”) to invest in preferred stock of financial institutions was launched in September, followed by the FRB’s Commercial Paper Funding Facility (“CPFF”) program and the Federal Deposit Insurance Corporation’s (“FDIC”) Temporary Liquidity Guarantee Program (“TLGP”) in November. The CPP provided for the direct investment of $350 billion of preferred equity into the banking system, while the TLGP provided a way for banks with maturing unsecured senior debt to refinance that debt with a guarantee provided by the FDIC. These programs and actions had the objective of preserving a functioning banking and financial system that could continue to finance economic activity during a time of severe financial and economic stress.

On October 3, 2008, the FDIC increased deposit insurance to $250,000 through December 31, 2009. In addition, the FDIC implemented a program to provide full deposit insurance coverage for noninterest-bearing transaction deposit accounts through December 31, 2009, unless insured banks elect to opt out of the program. The Company did not opt out of this program.

The crisis clearly adversely impacted the Company’s performance and management focused a great deal of attention on managing the impact of the crisis.

The Company reported a net loss of $266.3 million for 2008 as compared to net income of $493.7 million for 2007. Net loss applicable to common shareholders for 2008 was $290.7 million or $2.66 per diluted common share. This compares with net earnings applicable to common shareholders of $479.4 million or $4.42 per diluted share for 2007 and $579.3 million or $5.36 per share for 2006. Return on average common equity was (5.69)% and return on average assets was (0.50)% in 2008, compared with 9.57% and 1.01% in 2007 and 12.89% and 1.32% in 2006.

The key drivers of the Company’s performance during 2008 were as follows:

Schedule 2

KEY DRIVERS OF PERFORMANCE

2008 COMPARED TO 2007

Driver	2008			2007		Change better/(worse)
	(In billions)
Average net loans and leases	$	41.0		36.8		11	%
Average total noninterest-bearing deposits		9.1		9.4		(3	)%
Average total deposits		37.6		35.8		5	%
	(In millions)
Net interest income	$	1,971.6		1,882.0		5	%
Provision for loan losses		(648.3	)	(152.2	)	(326	)%
Impairment and valuation losses on securities		(317.1	)	(158.2	)	(100	)%
Goodwill Impairment		(353.8	)	–		nm
Net interest margin		4.18	%	4.43	%	(25	)bp
Ratio of nonperforming assets to net loans and leases and other real estate owned		2.71	%	0.73	%	(198	)bp
Efficiency ratio		67.47	%	60.53	%	(694	)bp

nm – not meaningful

bp – basis points

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The Company’s performance in 2008 compared to 2007 reflected the following:

• Strong loan growth, in the first half of the year, followed by restrained loan growth throughout most of the second half of the year;

• Lagging organic deposit growth, particularly the lack of noninterest-bearing deposit growth until late in the year, resulting in a greater dependence on market rate funds;

• Net interest margin deterioration until the fourth quarter of the year, mainly due to financing loan growth with a more expensive mix of funding, the addition of lower net interest spread Lockhart Funding, LLC (“Lockhart”) commercial paper to the balance sheet, and pricing pressure on deposits in a difficult liquidity environment experienced by most of the domestic financial system;

• An increased provision for loan losses stemming mainly from credit-quality deterioration in our Southwestern residential land acquisition, development and construction lending portfolios, but also some heightened provisions related to emerging credit quality stresses in other markets;

• Significant impairment charges on the Company’s investment securities deemed “other-than-temporarily impaired” and valuation losses associated with securities purchased from Lockhart, a qualifying special-purpose entity (“QSPE”) securities conduit, pursuant to the Liquidity Agreement between Lockhart and Zions Bank. See “Off-Balance Sheet Arrangement” on page 96 for further details on Lockhart;

• Goodwill impairment charges. In the fourth quarter the Company determined 100% of the goodwill at its NBA, NSB, and Vectra banking subsidiaries and nearly all of the goodwill at NetDeposit, LLC (“NetDeposit”) from merged company P5, Inc., (a small medical payments technology and services company) to be impaired.

We continue to focus on managing four primary drivers of our business performance: 1) loan and deposit growth, 2) credit quality, 3) interest rate risk, and 4) controlling expenses. However, in 2008 results also were significantly and adversely impacted by the effects of the global financial crisis on the Company’s securities portfolio, liquidity and capital levels.

Loan and Deposit Growth

Since 2004, the Company has experienced steady and strong loan growth and moderate deposit growth, augmented in 2005 and 2006 by the Amegy acquisition, in 2007 by the Stockmen’s acquisition, and in 2008 by the Silver State acquisition (deposits only). From 2004 through 2006, we consider this performance to be primarily a result of strong economic conditions throughout most of our geographical footprint, and of effectively executing our operating strategies. The continued strong organic loan growth in the latter half of 2007 may also have begun to reflect the increasing lack of nonbank sources of credit as global credit market conditions deteriorated sharply. Chart 4 depicts this growth.

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The Company experienced little or no net organic loan growth in 2008 in its three Southwestern banks (CB&T, NBA, and NSB), which were most heavily impacted by deteriorating conditions in the residential real estate markets. In these banks repayments and charge-offs of residential acquisition and development loans largely offset some growth in other types of lending.

Despite credit quality deterioration and net loan portfolio shrinkage in these three banks, the Company experienced actual period-end to period-end loan growth of 7.1% in 2008. However, $1.2 billion of the total loan growth of $2.8 billion reflected the required purchase from Lockhart of small business loans made and securitized in prior years. These loans were purchased due to Lockhart’s inability to sell commercial paper and a ratings downgrade that resulted not from deterioration in the loans, but rather from a downgrade of bond insurance company MBIA, which provided the credit enhancement of the AAA-rated securitization tranches. Excluding these purchases, all of this organic loan growth totaled $1.6 billion, or 4.1%. All of this growth occurred in the first half of 2008. In the third quarter the Company actively held down net loan growth to mitigate the funding and capital strains mentioned earlier. In the fourth quarter, after funding strains and capital positions improved, the Company relaxed these self-imposed growth constraints. However, fourth quarter growth in many loan categories was offset by repayments and charge-offs in the Southwest residential acquisition and development portfolio. In 2008 net loan growth in our CB&T, NBA, and NSB subsidiaries was negative due to these repayments and charge-offs of real estate secured loans.

Reflecting trends throughout the banking industry, average core deposits grew only $1.8 billion or 5.7% from year-end 2007, including the effect of the Silver State acquisition, which lagged the growth rate of loans. In addition, average noninterest-bearing demand deposits decreased by $0.3 billion from year-end 2007. Thus, the Company increased its reliance on more costly sources of funding during the year.

In 2008 the Company reviewed opportunities to augment organic growth by the potential acquisition of several distressed and failed banks, but concluded only one—the purchase in September from the FDIC of the insured deposits and a minimal amount of loans of the failed Silver State Bank in Nevada. In February, 2009, the Company was the successful bidder in the FDIC disposition of the loans and deposits of the failed Alliance Bank in Southern California. This bid was made after the Company had conducted due diligence on the Alliance credit portfolio, and involved a credit loss sharing agreement with the FDIC. The Company believes that current economic stresses affecting a number of banking companies may result in more opportunities in 2009 to acquire distressed or failed banks, where risk can be mitigated, but this cannot be assured.

Credit Quality

The ratio of nonperforming assets to net loans and other real estate owned (“OREO”) increased to 2.71% at year-end, compared to 0.73% at the end of 2007. Net loan charge-offs for 2008 were $393.7 million, or 0.96% of average loans, compared to $63.6 million or 0.17% of average loans for 2007. Charts 7 and 8 highlight net charge-offs by loan purpose and bank affiliate. The provision for loan losses during 2008 increased significantly to $648.3 million compared to $152.2 million for 2007. While the Company’s ratio of nonperforming assets to net loans and OREO is now higher than peer averages (see Chart 5), its net charge-off rate remains well below peer averages (see Chart 6). We believe that both of these trends reflect the collateral secured nature of many of the Company’s problem loans, which lead to higher nonaccrual levels and lower net losses than, for example, portfolios of peers with large unsecured credit card or other consumer loan concentrations.

All of these trends largely reflect the impact of deteriorating credit quality conditions in residential land acquisition and development and construction lending in the Southwest. In addition in the latter part of 2008, the Company began to see evidence of spillover (as evidenced by, for example, rising delinquency rates) of this deterioration into other geographies and components of its portfolio, including some segments of its residential first mortgage portfolio, commercial and industrial lending, and nonresidential commercial real estate construction lending. Due to the continuing and worsening recessionary economic conditions that unfolded late in 2008 and into 2009, we believe that stresses on our credit portfolio likely will continue at least in the first half of 2009 and possibly throughout the year and into 2010.

25

Note: Peer group is defined as bank holding companies

with assets > $10 billion excluding banks providing

primarily trust services.

Peer data source: SNL Financial Database

Note: Peer group is defined as bank holding companies

with assets > $10 billion excluding banks providing

primarily trust services.

Peer data source: SNL Financial Database

26

Interest Rate Risk

Our focus in managing interest rate risk is to not take positions based upon management’s forecasts of interest rates, but rather to maintain a position of slight “asset-sensitivity.” This means that our assets, primarily loans, tend to reprice slightly more quickly than our liabilities, primarily deposits. The Company makes extensive use of interest rate swaps to hedge interest rate risk in order to seek to achieve this desired position. This practice has enabled us to achieve a relatively stable net interest margin during periods of volatile interest rates, which is depicted in Chart 9. However, due to changes in newly originated and renewed loan spreads, changes in the relationship between the prime rate and London Inter-Bank Offer Rate (“LIBOR”), changes in the pattern of prime rate behavior in several of our banks, and other factors, our hedging strategy was more difficult to conduct in 2008. In particular we incurred nonhedge derivative losses in noninterest income, and a number of our interest

27

rate swaps became ineffective under the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, and were terminated. Nonetheless, on the whole our interest rate risk management believes its actions continued to result in one of the highest and most stable net interest margins in the industry. We believe that our risk position at December 31, 2008 was more “asset sensitive” than has typically been the case, reflecting in part a lessening of hedging activity due to the historically low interest rate environment.

Taxable-equivalent net interest income in 2008 increased 4.6% over 2007. The net interest margin declined to a still high 4.18% for 2008, down from 4.43% for 2007. The Company was able to achieve this performance despite rising levels of nonaccrual loans and other nonperforming assets, adverse changes in its funding mix, and significant pressures on funding costs. These factors resulted in a fairly steady compression, until the fourth quarter, of the net interest margin.

Note: Peer group is defined as bank holding companies

with assets > $10 billion excluding banks providing

primarily trust services.

Peer data source: SNL Financial Database

Throughout 2008 the relationships among a number of interest rates that are key drivers of the Company’s business deviated significantly, and for long periods, from normal. Of particular significance were the relationships between deposit rates, the prime rate, and LIBOR. Due to liquidity strains throughout the banking industry, rates on bank deposits remained higher than would have been expected despite the unprecedented FRB actions to reduce rates. In some cases deposit rates in the Company’s markets appear to have remained high in part due to the particular stresses being felt by several large institutions that later failed or were sold. These pressures, combined with the lack of lower cost core deposit growth, kept the Company’s cost of funding its loans and other assets higher than might have been expected. These same stresses were felt world-wide, and until very late in 2008 LIBOR rates stayed unusually high in relation to risk-free rates, and in relation to lending rates, which generally followed the Fed Funds rates down as the FRB aggressively pushed that rate lower.

Strong loan growth in the first half of 2008 thus was funded primarily with interest-bearing deposits and nondeposit funding. Noninterest-bearing deposits, as noted, actually declined during the year, which pressured the net interest margin. Mitigating these funding cost pressures were somewhat improved loan pricing spreads relative to LIBOR and prime rates during the year.

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See the section “Interest Rate Risk” on page 111 for more information regarding the Company’s asset-liability management (“ALM”) philosophy and practice and our interest rate risk management.

Controlling Expenses

During 2008, the Company’s efficiency (expense-to-revenue) ratio increased to 67.5% from 60.5% for 2007. The efficiency ratio is the relationship between noninterest expense and total taxable-equivalent revenue. The increase in the efficiency ratio to 67.5% for 2008 was primarily due to the effect on revenue of the impairment and valuation losses on securities as previously discussed. Because of the significant securities impairment and valuation losses, the Company believes that its efficiency ratio is not a particularly useful measure of how well operating expenses were contained in 2007 and 2008; nor does it believe that this measure is particularly useful for its peers, many of which also experienced large losses and impairment charges as a result of market turmoil and deteriorating credit conditions. The Company’s efficiency ratio was 58.9% and 56.7% if the impairment and valuation losses on securities are excluded for 2008 and 2007, respectively. Noninterest expense increased 5.0% in 2008 compared to 2007. Over half of this increase resulted from further charge-downs of OREO and OREO expense; excluding the effects of changes in OREO expense, noninterest expense grew 1.7% in 2008 compared to 2007.

Note: Peer group is defined as bank holding companies

with assets > $10 billion excluding banks providing

primarily trust services.

Peer data source: SNL Financial Database

Effects of Global Financial Crisis on the Company

It is now well recognized that during the period of roughly 2004-2006 a speculative bubble developed in residential housing in some of the Company’s key markets (including Arizona, Southern Nevada, and parts of California), and elsewhere in the United States. The volume of mortgage debt outstanding grew at unprecedented rates, fueled by record low interest rates and increasingly lax lending standards as reflected by so-called subprime, Alt-A, and other alternative mortgages. Median housing prices and housing starts both increased to record levels during this period. Home equity lending standards also deteriorated as lenders were lulled by low default rates and rising home prices.

The Company itself never originated subprime mortgages, had almost no direct exposure to these loans, and never offered residential option adjustable rate mortgage (“ARM”) or “negative amortization” loans. However, the Company has a significant business in financing residential land acquisition, development and construction

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activity. The FRB began raising interest rates in 2005-2007 as it became increasingly apparent that the prevailing levels of housing activity were unsustainable. New housing starts hit a record of over 2 million units in each of 2005 and 2006. By December 2007, they had fallen to a revised annualized rate of approximately 1.1 million nationally, and by December 2008 had fallen further to about 550,000. This precipitous decline in housing activity has placed significant stress on a number of the Company’s homebuilder customers, and therefore on the Company’s loan portfolio in this sector. This portfolio peaked in mid-2006 as a percentage of the total loan portfolio and declined as a percentage of the total loan portfolio thereafter. Additionally, the portfolio began to shrink in dollar terms in the latter half of 2007 in the Southwestern markets, and continued to shrink throughout 2008 as a result of pay-downs, loan sales, charge-offs and foreclosures. Nonaccrual loans and provisions for loan losses began to increase significantly in late summer 2007, and continued to increase in 2008, as it became clearer that this housing slump would likely be longer and deeper than originally believed. It also became clear that in the latter months of 2008 the economic recession began to deepen and also became global, and likely would persist and possibly continue to deepen well into 2009. The Company therefore believes that nonaccrual loans, the provision for loan losses, and net charge-offs will likely remain elevated throughout this period.

A number of previously successful and respected financial institutions failed, were “rescued,” or acquired with governmental assistance in 2008, including in the United States: Bear Stearns in March, IndyMac Bank in July, Fannie Mae, Freddie Mac, Merrill Lynch and Lehman Brothers in September, and Wachovia and Washington Mutual in October. As this crisis unfolded, capital and funding markets became increasingly strained and eventually essentially ceased to function worldwide in mid-September. Market values of financial institutions globally, including that of the Company, plummeted, and issuance of new funding and capital became increasingly expensive or impossible.

Traditional markets for underwritten offerings of holding company unsecured senior debt effectively became closed to regional banking companies like Zions in the last few months of 2007 and remained closed through 2008. During this time, Zions had several hundred million dollars of senior debt funding that matured and needed to be replaced with new funding unless cash reserves were to be depleted. Zions successfully refunded or newly issued a total of $560 million of medium term senior notes from the second half of 2007 through August 2008 using its broker-dealer subsidiary, Zions Direct. During this time, it was one of a very few, if any, regional banking companies to successfully issue this type of debt financing. Similarly, the market for underwritten perpetual preferred stock offerings essentially closed to all regional banking companies after May 2008, but Zions again used Zions Direct to issue approximately $47 million of noncumulative perpetual preferred stock in July. Finally, in early September Zions became the last U.S. regional banking company to issue any significant amount of common equity in 2008 when it issued $250 million of common stock.

Beginning in January 2008, several of the Company’s affiliate banks began to bid for funds in the FRB’s TAF program and at a peak in December 2008, the Company had a total of $2.1 billion of such funds. By year-end this amount had declined to $1.8 billion and further declined to $0.5 billion by mid-February 2009. Lockhart also elected to participate in the FRB’s CPFF program, and at year-end had sold $80 million of its commercial paper to the FRB. In October the Company submitted an application for $1.4 billion of preferred capital under the Treasury’s CPP program, near the maximum $1.48 billion for which it was eligible. This application was approved and funded in November. In early December the Company and each of its affiliate banks elected to participate in the FDIC’s TLGP, and in January 2009 the Company issued the maximum amount of such debt for which it was eligible, $254.9 million. Taken together, these and other actions taken by the Company significantly improved both its holding company and bank liquidity and capital positions, and at year-end left the Company in a much stronger position to manage through the continuing economic downturn. However, as many normal capital and funding markets remained highly disrupted at the end of 2008, further stresses in 2009 may be anticipated.

These capital market stresses also had a significant impact on the Company’s investment securities portfolio. A total of $317 million of other-than-temporary-impairment (“OTTI”) and valuation charges were taken against earnings during 2008, compared to $158 million in 2007. In addition, reductions in fair value of

30

this portfolio that were recorded in Other Comprehensive Income (“OCI”) totaled $246 million in 2008, compared to $111 million in 2007. Collateralized debt obligation (“CDO”) securities became increasingly difficult to value in 2008 as normal markets for them ceased to exist, and under the provisions of SFAS 157, the Company switched to Level 3 model valuations for the great majority of them by year-end 2008 (see page 37 for further discussion of the Company’s valuation of these securities). Since the weakening economy continues to place stress on the underlying bank, insurance, and real estate exposures in many of these securities, the Company believes it is possible that further impairment charges and/or OCI impact may occur in 2009.

Capital and Return on Capital

As regulated financial institutions, the Parent and its subsidiary banks are required to maintain adequate levels of capital as measured by several regulatory capital ratios. One of our goals is to maintain capital levels that are at least “well capitalized” under regulatory standards. The Company and each of its banking subsidiaries exceeded the “well capitalized” guidelines at December 31, 2008. In addition, the Parent and certain of its banking subsidiaries have issued various debt securities that have been rated by the principal rating agencies. As a result, another goal is to maintain capital at levels consistent with an “investment grade” rating for these debt securities. The Company has maintained its “investment grade” debt ratings as have those of its bank subsidiaries that have ratings.

At year-end 2008, the Company’s tangible common equity ratio increased to 5.89% compared to 5.70% at the end of 2007. As noted previously, amid very difficult capital market conditions in the latter half of 2008, the Company strengthened its capital position by issuing $47 million of noncumulative perpetual preferred stock and $250 million of common equity. In November 2008 the Company participated in the CPP (also known as TARP capital), and issued $1.4 billion of cumulative perpetual preferred stock with a common stock warrant attached to the U.S. Treasury. Further, in October 2008 the Company reduced the quarterly dividend on its common stock from $0.43 to $0.32 per share, and in January 2009 again reduced this dividend to $0.04 per share, in order to conserve capital in a highly uncertain environment.

This series of actions resulted in capital ratios at Zions at year-end that were higher than in over a decade for all ratios except the tangible common equity ratio. At December 31, 2008, the Company’s tangible common equity ratio was 5.89% and its tangible equity ratio was 8.86%.

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The Company expects that it (and the banking industry as a whole) may be required by market forces and/or regulation to operate with higher capital ratios than in the recent past. In addition, the CPP capital preferred dividend increases from 5% to 9% in 2013, making it much more expensive as a source of capital if not redeemed at or prior to that time. Thus, in addition to maintaining higher levels of capital, the Company’s capital structure may be subject to greater variation over the next few years than has been true historically.

In addition, we believe that the Company should engage or invest in business activities that provide attractive returns on equity. Chart 13 illustrates that as a result of earnings improvement, the exit of underperforming businesses and returning unneeded capital to the shareholders, the Company’s return on average common equity improved from 2004 to 2005. The decline in 2006 resulted from the additional common equity held due to the acquisition of Amegy. The further decline in the return on average common equity in 2007 and again in 2008 resulted primarily from goodwill impairment, securities impairment charges, and larger provision for loan losses discussed previously, as well as from the additional common equity issued to acquire Stockmen’s.

32

As depicted in Chart 14, tangible return on average tangible common equity further improved in 2006 as the Company continued to improve its core operating results. However, it deteriorated significantly in 2007 and 2008 primarily as a result of the securities impairment and valuation losses and the increased provision for loan losses discussed previously.

Note: Tangible return is net earnings applicable to common

shareholders plus after-tax amortization of core deposit and

other intangibles and impairment losses on goodwill.

Challenges to Operations

As we enter 2009, we see a number of significant challenges confronting the industry and our company.

Global capital and funding markets remain under significant stress, and most observers believe that the current U.S. and global economic recession may grow more severe at least through the first half of 2009. This continued economic weakness may lead to:

• Further declines in value and potential OTTI charges on CDO securities we own that are largely collateralized by junior debt and trust preferred debt issued by banks and insurance companies.

• Continued weakness in the residential housing construction markets, particularly in Arizona, Nevada and California, but also in Utah and Idaho, resulting in continued high levels of net charge-offs, loan loss provisions and nonperforming assets, as well as higher levels of OREO expense due to continued declines in real estate collateral values.

• A spread of weaker credit conditions to other geographies served by the Company and to other types of loans. In the latter half of 2008, we began to see increasing delinquency rates in some parts of the loan portfolio, including some parts of the residential first mortgage portfolio, nonresidential commercial real estate construction, and commercial and industrial loans. These indications of weakness had not yet resulted in significantly higher levels of net charge-offs by year-end 2008, but continued weakness may lead to higher levels of provisions and losses in 2009.

Capital and funding markets remain highly disrupted as we enter 2009. Some funding markets improved somewhat late in 2008, but these improvements may be largely due to the unprecedented efforts of the FRB and FDIC to inject liquidity into the financial system. It is highly uncertain how those markets will develop in 2009 and how they will react if and when this governmental support begins to be withdrawn. While the Company by many measures has higher levels of capital and funding than it has had in a very long time, the Company, like all financial institutions, at some point may need to access capital and funding markets to support its operations. The conditions under which the Company can access those markets may remain highly uncertain in 2009.

These challenges and others are more fully discussed under “Risk Factors” on page 11.

33

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

The Notes to Consolidated Financial Statements contain a summary of the Company’s significant accounting policies. We believe that an understanding of certain of these policies, along with the related estimates that we are required to make in recording the financial transactions of the Company, is important in order to have a complete picture of the Company’s financial condition. In addition, in arriving at these estimates, we are required to make complex and subjective judgments, many of which include a high degree of uncertainty. The following is a discussion of these critical accounting policies and significant estimates related to these policies. We have discussed each of these accounting policies and the related estimates with the Audit Committee of the Board of Directors.

We have included sensitivity schedules and other examples to demonstrate the impact of the changes in estimates made for various financial transactions. The sensitivities in these schedules and examples are hypothetical and should be viewed with caution. Changes in estimates are based on variations in assumptions and are not subject to simple extrapolation, as the relationship of the change in the assumption to the change in the amount of the estimate may not be linear. In addition, the effect of a variation in one assumption is in reality likely to cause changes in other assumptions, which could potentially magnify or counteract the sensitivities.

Fair Value Accounting

Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 157 defines fair value, establishes a consistent framework for measuring fair value, and enhances disclosures about fair value measurements. Adoption of SFAS 157 for the measurement of all nonfinancial assets and nonfinancial liabilities was delayed one year until January 1, 2009. The adoption of SFAS 157 did not have a material effect on the Company’s consolidated financial statements, but significantly expanded the disclosure requirements for fair value measurements.

SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, SFAS 157 has established a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities; includes certain U.S. Treasury and other U.S. Government and agency securities actively traded in over-the-counter markets; certain securities sold, not yet purchased; and certain derivatives.

Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data. This category generally includes certain U.S. Government and agency securities; certain CDO securities; corporate debt securities; certain private equity investments; certain securities sold, not yet purchased; and certain derivatives. See “Accounting for Derivatives” on page 44 for further details on fair value accounting for derivatives.

Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Additionally, observable inputs such as nonbinding single dealer quotes that are not corroborated by observable market data are included in this category. This category generally includes certain private equity investments and certain CDO securities.

34

The Company uses models when quotations are not available for certain securities or in markets where trading activity has slowed or ceased. When quotations are not available, and are not provided by third party pricing services, management judgment is necessary to determine fair value. In situations involving management judgment, fair value is determined using discounted cash flow analysis or other valuation models, which incorporate available market information, including appropriate benchmarking to similar instruments, analysis of default and recovery rates, estimation of prepayment characteristics and implied volatilities.

At December 31, 2008, approximately 6.0% of total assets, or $3.3 billion, consisted of financial instruments recorded at fair value on a recurring basis. Of this amount, $2.4 billion of these financial instruments used valuation methodologies involving market-based or market-derived information, collectively Level 1 and 2 measurements, to measure fair value. Approximately $895 million of these financial assets are measured using model-based techniques or nonbinding single dealer quotes, both of which constitute Level 3 measurements. At December 31, 2008, approximately 0.45% of total liabilities, or $221 million, consisted of financial instruments recorded at fair value on a recurring basis. At December 31, 2008, approximately 0.50% of total assets, or $276 million of financial assets were valued on a nonrecurring basis at Level 2.

Fair Value Option

SFAS 159 allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but is on an irrevocable basis. On January 1, 2008, the Company applied the fair value option to one available-for-sale real estate investment trust (“REIT”) trust preferred CDO security and three retained interests on selected small business loan securitizations. The REIT CDO and retained interests were valued using Level 3 models. The cumulative effect of adopting SFAS 159 reduced the beginning balance of retained earnings at January 1, 2008 by approximately $11.5 million, comprised of a decrease of $11.7 million for the REIT CDO and an increase of $0.2 million for the three retained interests. During 2008, the net change in fair value decreased pretax earnings by approximately $9.2 million, consisting of $7.1 million for the REIT CDO security and $2.1 million for the retained interests. These adjustments to fair value are included in fair value and nonhedge derivative income (loss) in the statement of income.

The Company elected the fair value option for the REIT CDO security as part of a directional hedging program in an effort to hedge the credit exposure the Company has to homebuilders in its REIT CDO portfolio. Management selected this security because it had the most exposure to the homebuilder market compared to the other REIT CDO securities in the Company’s portfolio, both in dollar amount and as a percentage, and was therefore considered the most suitable for hedging. The fair value option adoption for the REIT CDO allows the Company to avoid the complex hedge accounting provisions under SFAS 133 associated with the implemented hedging program.

On June 23, 2008, Zions Bank purchased $787 million of securities from Lockhart, which comprised the entire remaining small business loan securitizations created by Zions Bank and held by Lockhart. As a result, the three small business securitization retained interests elected under the fair value option were included in this transaction and were part of the premium amount recorded with the loan balances at Zions Bank. See “Off-Balance Sheet Arrangement” on page 96 for further discussion of these securities purchased.

Estimates of Fair Value

The Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments, available-for-sale and trading securities, and private equity investments. Additionally, fair value is used on a nonrecurring basis to evaluate assets or liabilities for impairment or for disclosure purposes in accordance with SFAS No. 107, Disclosures about Fair Value of Financial Instruments. Examples of these nonrecurring uses of fair value include loans held for sale accounted

35

for at the lower of cost or fair value, impaired loans, long-lived assets, goodwill, and core deposit and other intangible assets. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating the instrument’s fair value. These valuation techniques and assumptions are in accordance with SFAS 157.

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. If observable market prices are not available, then fair value is estimated using modeling techniques such as discounted cash flow analyses. These modeling techniques utilize assumptions that market participants would use in pricing the asset or the liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. To increase consistency and comparability in fair value measures, SFAS 157 established a three-level hierarchy to prioritize the inputs used in valuation techniques between observable inputs that reflect quoted prices in active markets, inputs other than quoted prices with observable market data, and unobservable data such as the Company’s own data or single dealer nonbinding pricing quotes.

Fair values for investment securities, trading assets, and most derivative financial instruments are based on independent, third party market prices, or if identical market prices are not available they are based on the market prices of similar instruments if available. If market prices of similar instruments are not available, instruments are valued based on the best available data, some of which may not be readily observable in the market. The fair values of loans held for sale are typically based on quotes from market participants. The fair values of OREO and other repossessed assets are typically determined based on appraisals by third parties, less estimated selling costs.

Estimates of fair value are also required when performing an impairment analysis of long-lived assets, goodwill, and core deposit and other intangible assets. The Company reviews goodwill for impairment at the reporting unit level on an annual basis, or more often if events or circumstances indicate the carrying value may not be recoverable. The goodwill impairment test compares the fair value of the reporting unit with its carrying value. If the carrying amount of the Company’s investment in the reporting unit exceeds its fair value, an additional analysis must be performed to determine the amount, if any, by which goodwill is impaired. In determining the fair value of the Company’s reporting units, management uses discounted cash flow models which require assumptions about growth rates of the reporting units and the cost of equity. To the extent that adequate data is available, other valuation techniques relying on market data may be incorporated into the estimate of a reporting unit’s fair value. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the amount that is most representative of fair value. For long-lived assets and intangible assets subject to amortization, an impairment loss is recognized if the carrying amount of the asset is not likely to be recoverable and exceeds its fair value. In determining the fair value, management uses models which require assumptions about growth rates, the life of the asset, and/or the fair value of the assets. The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

36

Valuation of Collateralized Debt Obligations

The Company values CDO available-for-sale and held-to-maturity securities using several methodologies based on the appropriate fair value hierarchy consistent with currently available market information. At December 31, 2008, the Company valued substantially all of the CDO portfolio using Level 3 pricing methods as follows:

Schedule 3

CDO FAIR VALUES

	Held-to-maturity			Available-for-sale
(In millions)	Amortized cost		Estimated fair value	Amortized cost	Estimated fair value
Trust preferred securities – bank and insurance:
Internal model	$	1,180	671	779	638
Third party models		8	6
Dealer quotes				16	12
Level 2				12	11
		1,188	677	807	661
Trust preferred securities – real estate investment trusts:
Third party models		36	21	27	24
		36	21	27	24
Other:
Third party models		76	51	4	4
Dealer quotes				21	10
Monoline CDS spreads				72	53
Level 2				5	5
		76	51	102	72
Total	$	1,300	749	936	757

Internal Model

Four developments during 2008 influenced the Company to use a level 3 cash flow modeling approach to value essentially all of its bank and insurance trust preferred securities at December 31, 2008.

• Market activity in the sector became increasingly limited, illiquid, disordered and dominated by, if not limited to, distressed or forced sellers. It became increasingly difficult to substantiate actual trading levels and the “willingness” of sellers executing at those levels. The determination of inactivity/ illiquidity was based on discussion with dealers and CDO managers specializing in the sector as well as a review of bid lists, execution levels of forced trades, and any other information available on trades.

• Bank failures and announced deferrals of interest payments on trust preferred securities contained within the CDOs impacted differently each tranche of each CDO held. Each tranche is unique in the amount of performing, deferring and defaulting collateral, remaining collateral quality and cash flow waterfall mechanics.

• Rating agency watch listing and downgrading of CDO tranches occurred in May, July, August, and November. Each of S&P, Moody’s and Fitch either revised or were in the process of reassessing their ratings model assumptions. This resulted in an increasing lack of consistency in rating levels for CDO tranches. The matrix pricing methodology used from September 2007 to June of 2008 was dependent on securities being substantially similar. In management’s judgment, an operational definition of

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“substantially similar” securities capable of supporting the requirements of Level 2 pricing could no longer be created without the addition of significant adjustments based on unobservable inputs beginning in July of 2008 and continuing through year-end 2008.

• Finally, a joint statement of the SEC Office of the Chief Accountant and the FASB staff on September 30, 2008 and FASB’s October 10, 2008 issuance of FASB Staff Position (“FSP”) FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, provided additional guidance on determining fair value of financial assets when the market for such assets is not active. These statements clarified when and how an entity might, given an inactive market, appropriately determine that the use of an income approach valuation technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs may be equally or more representative of fair value than a market approach valuation.

In the third quarter of 2008, the Company began using a licensed third party model to value bank and insurance trust preferred CDOs. The model uses market-based estimates of expected loss for the individual pieces of underlying collateral to arrive at a pool-level expected loss rate for each CDO. These loss assumptions are applied to the CDO’s structure to generate cash flow projections for each tranche of the CDO. The fair value of each tranche is determined by discounting its resultant loss-adjusted cash flows with appropriate market based discount rates. At December 31, 2008, the discount rate determination referenced several market inputs including current collateralized loan obligation spreads obtained from a third party.

The method for deriving loss expectation for collateral underlying the CDOs depends on whether the collateral is from a public or private company. For public companies, a term structure of Probabilities of Default (“PDs”) is obtained from a commercially available service. The service estimates PDs using a proprietary reduced form model derived using logistic regression on a historical default database. Because the service’s model requires equity valuation related inputs (along with other macro and firm specific inputs) to produce default probabilities, the service does not produce results for private firms and some very small public firms that do not have readily available market data.

For private companies (and the few small public companies not evaluated by the service) PDs are estimated based on credit ratings. The credit ratings come from two external rating sources; one specific to banks, and the other to insurers. The Company has credit ratings for each piece of collateral whether private or public. Using the PD data on the public companies obtained from the commercial service, the Company calculates the average PD for each credit rating level by industry. The rating level average is then applied to all corresponding credits within each rating level that do not have a PD from the commercial service.

The PDs for the underlying collateral are then used to develop CDO deal-level expected loss curves. An external service which models the unique cash-flow waterfall and structure of each CDO deal is used to generate tranche-level cash flows using the Company’s derived CDO deal-level loss assumptions (along with other relevant assumptions). The resultant cash-flows are discounted using current market spreads approximated from related product markets; these spreads differ depending upon the rating agency ratings (usually the Fitch rating) of the CDO, with higher spreads being applied to lower rated CDOs.

The Company did find evidence of one forced trade during the third quarter of 2008 in a tranche of a CDO that is owned by the Company. The forced trade occurred at a price of 35% of face value. This particular deal had amortized down considerably from issuance and the tranche was currently the most senior in the CDO. At the time of the trade the underlying collateral consisted of only five bank obligations and a Freddie Mac zero-coupon principal-only security strip due 2031. Two of the five bank obligations were from Wells Fargo Corporation, which also has publicly available secondary market trading levels on a similar public trust preferred issuance. Even under the assumption that all three of the non-Wells Fargo obligations in the CDO immediately defaulted with no recovery, the projected tranche cash-flows, discounted at the yield of the public Wells Fargo trust preferred issue, resulted in a value of 68% of face value. Based on this analysis, the observed trade at 35% does

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not reflect the level at which an informed market participant would value the security. As a comparison, the Company’s model produced a price of 58%. The Company feels that the difference between the model price of 58% and the above outlined scenario price of 68% reflects an appropriate liquidity discount given the lack of activity in CDO markets compared to publicly traded trust preferred markets; this particular security is valued at December 31, 2008 by the Company at 55%.

The following schedule sets forth the sensitivity of the current CDO fair values using an internal model to changes in the most significant assumptions utilized in the model:

Schedule 4

SENSITIVITY OF BANK AND INSURANCE CDO VALUATIONS TO ADVERSE CHANGES OF CURRENT MODEL KEY VALUATION ASSUMPTIONS

			Bank and insurance CDOs at Level 3
(Amounts in millions)			Held-to- maturity			Available- for-sale
Fair value balance at December 31, 2008			$	671		$	638
Expected cumulative credit losses1
Weighted average:
Current defaulted or deferring securities2				7.9	%		10.0	%
1-year				12.1	%		14.5	%
5-year				17.7	%		20.6	%
30-year				25.3	%		28.6	%
Decrease in fair value due to adverse change	20	%	$	(22.6	)	$	(1.6	)
	50	%		(61.2	)		(4.3	)
Discount rate3
Weighted average spread				761bp			311bp
Decrease in fair value due to adverse change	+100	bp	$	(64.7	)	$	(67.2	)
	+200	bp		(120.0	)		(123.5	)

¹ The Company uses an expected credit loss model which specifies cumulative losses at the 1-year, 5-year, and 30-year points from the data of valuation.

² Weighted average percentage of collateral that is defaulted due to bank failures or deferring payment as allowed under the terms of security.

³ The discount rate is a spread over the LIBOR swap yield curve at the date of valuation.

The adverse changes in expected cumulative credit losses resulted in a larger decrease in fair value for held-to-maturity (“HTM”) than available-for-sale (“AFS”) securities because the AFS portfolio is composed primarily of more senior CDO tranches. In general these senior tranches receive accelerated principal payments under scenarios of high credit losses provided that the credit losses do not exceed the available subordination in the CDO deal. By contrast more junior tranches which are in our HTM portfolio absorb credit losses and defer principal and interest payments upon increasing credit losses.

Third Party Models

At December 31, 2008, the Company utilized third party valuation services for sixteen securities with an aggregate amortized cost of $151 million in the Asset-Backed Security (“ABS”) CDO and trust preferred asset classes. These securities continued to have insufficient observable market data available to directly determine prices. The Company reviewed the methodologies employed by third party models. This included a review of all relevant data inputs and the appropriateness of key model assumptions. These assumptions included, but were not limited to, probability of default, collateral recovery rates, discount rates, over-collateralization levels, and rating transition probability matrices from rating agencies. The model valuations obtained from third party services

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were evaluated for reasonableness including quarter to quarter changes in assumptions and comparison to other available data which included third party and internal model results and valuations. A range of value estimates is not provided because third party vendors utilized point estimates.

Dealer Quotes

The $37 million of asset-backed securities at amortized cost are valued using nonbinding and unadjusted dealer quotes. Multiple quotes are not available and the values provided are based on a combination of proprietary dealer quotes. Broker disclosure levels vary and the Company seeks to minimize dependence on this Level 3 source. Of the $37 million of securities, approximately $18 million are AAA rated.

Monoline CDS Spreads

A total of $72 million at amortized cost of insured securities purchased out of Lockhart were valued using the relevant monoline insurers’ credit derivative levels.

See Note 4 of the Notes to Consolidated Financial Statements and “Investment Securities Portfolio” on page 85 for further information.

Other-than-Temporary-Impairment – Debt Investment Securities

We review investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. OTTI losses on individual investment securities are recognized as a realized loss through earnings when it is probable that the Company will not collect all of the contractual cash flows or the Company is unable to hold the securities to recovery. OTTI losses include credit losses and a discount for liquidity.

The Company’s OTTI evaluation process conforms with the rules contained in Emerging Issues Task Force (“EITF”) Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets, FSP No. EITF 99-20-1, Amendments to the Impairment Guidance of EITF Issue No. 99-20, and SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. These rules require the Company to take into consideration current market conditions, fair value in relationship to cost, extent and nature of change in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, all available information relevant to the collectability of debt securities, our ability and intent to hold investments until a recovery of fair value, which may be maturity, and other factors when evaluating for the existence of OTTI in our securities portfolio.

On January 12, 2009, the FASB issued FSP EITF 99-20-1, Amendments to the Impairment Guidance of EITF Issue No. 99-20. This FSP is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. The FSP amends EITF 99-20 by eliminating the requirement that a holder’s best estimate of cash flows be based upon those that “a market participant” would use. Instead, the FSP requires that OTTI be recognized as a realized loss through earnings when it is “probable” there has been an adverse change in the holder’s estimated cash flows from the cash flows previously projected, which is consistent with the impairment model in SFAS 115.

The Company recognized pretax OTTI losses of $304.0 million during 2008 and $108.6 million during 2007 on investment debt securities. All of the impairment for 2008 related to securities valued using Level 3 inputs. Management estimates that approximately $135 million of the impairment for 2008 related to credit impairment.

The decision to deem these securities OTTI was based on a specific analysis of the structure of each security and an evaluation of the underlying collateral using information and industry knowledge available to the Company. Future reviews for OTTI will consider the particular facts and circumstances during the reporting period in review.

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Allowance and Reserve for Credit Losses

Allowance for loan losses

The allowance for loan losses represents our estimate of the losses that are inherent in the loan and lease portfolios. The determination of the appropriate level of the allowance is based on periodic evaluations of the portfolios along with other relevant factors. These evaluations are inherently subjective and require us to make numerous assumptions, estimates and judgments.

In analyzing the adequacy of the allowance for loan losses, we utilize a comprehensive loan grading system to determine the risk potential in the portfolio and also consider the results of independent internal credit reviews. To determine the adequacy of the allowance, the Company’s loan and lease portfolio is broken into segments based on loan type. For commercial loans, we use historical loss experience factors by loan segment, adjusted for changes in trends and conditions, to help determine an indicated allowance for each segment based on individual loan grades. These factors are evaluated and updated using migration analysis techniques and other considerations based on the makeup of the specific portfolio segment. The other considerations used in our analysis include volumes and trends of delinquencies, levels of nonaccrual loans, repossessions and bankruptcies, trends in criticized and classified loans, and expected losses on loans secured by real estate. In addition, new credit products and policies, economic conditions, concentrations of credit risk, and the experience and abilities of lending personnel are also taken into consideration.

In addition to the segment evaluations, nonaccrual loans graded substandard or doubtful with an outstanding balance of $500 thousand or more are individually evaluated in accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, to determine the level of impairment and establish a specific reserve. A specific allowance may also be established for adversely graded loans below $500 thousand when it is determined that the risk associated with the loan differs significantly from the risk factor amounts established for its loan segment and risk grade.

The allowance for consumer loans is determined using historically developed loss experience “roll rates” at which loans migrate from one delinquency level to the next higher level. Using average roll rates for the most recent twelve-month period and comparing projected losses to actual loss experience, the model estimates the expected losses in dollars for the forecasted period. By refreshing the model with updated data, it is able to project losses for a new twelve-month period each month, segmenting the portfolio into nine product groupings with similar risk profiles. This methodology is an accepted industry practice, and the Company believes it has a sufficient volume of information to produce reliable projections.

As a final step to the evaluation process, we perform an additional review of the adequacy of the allowance based on the loan portfolio in its entirety. This enables us to mitigate, but not eliminate, the imprecision inherent in loan- and segment-level estimates of expected credit losses. This review of the allowance includes our judgmental consideration of any adjustments necessary for subjective factors such as economic uncertainties and concentration risks.

There are numerous components that enter into the evaluation of the allowance for loan losses. Some are quantitative while others require us to make qualitative judgments. Although we believe that our processes for determining an appropriate level for the allowance adequately address all of the components that could potentially result in credit losses, the processes and their elements include features that may be susceptible to significant change. Any unfavorable differences between the actual outcome of credit-related events and our estimates and projections could require an additional provision for credit losses, which would negatively impact the Company’s results of operations in future periods. As an example, if a total of $1.0 billion of nonclassified loans were to be immediately classified as special mention, substandard and doubtful in the same proportion as the existing portfolio of the criticized and classified loans, the amount of the allowance for loan losses at December 31, 2008 would increase by approximately $64 million. This sensitivity analysis is hypothetical and has been provided only to indicate the potential impact that changes in the level of the criticized and classified

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loans may have on the allowance estimation process. We believe that given the procedures we follow in determining the potential losses in the loan portfolio, the various components used in the current estimation processes are appropriate.

We are in the process of developing potential changes to enhance our methodology for determining the allowance for loan losses. The potential changes include incorporating a two-factor grading system to include probability of default and loss given default. We currently anticipate that these changes will be phased in during 2009. Regardless of the methodology employed, we expect current economic conditions may result in increases to the ALLL throughout 2009.

Reserve for unfunded lending commitments

The Company has historically maintained a reserve for unfunded commitments, recorded in other liabilities. During the fourth quarter of 2008 refinements to this process were implemented to include all unfunded commitments, including the unfunded portions of partially funded credits, which were previously reserved for as part of the allowance for loan losses.

Nonmarketable Equity Securities

The Company either directly, through its banking subsidiaries or through its Small Business Investment Companies (“SBIC”), owns investments in venture funds and other capital securities that are not publicly traded and are not accounted for using the equity method. Since these nonmarketable securities have no readily ascertainable fair values, they are reported at amounts we have estimated to be their fair values. In estimating the fair value of each investment, we must apply judgment using certain assumptions. Initially, we believe that an investment’s cost is the best indication of its fair value, provided that there have been no significant positive or negative developments subsequent to its acquisition that indicate the necessity of an adjustment to a fair value estimate. If and when such an event takes place, we adjust the investment’s cost by an amount that we believe reflects the nature of the event. In addition, any minority interests in the Company’s SBICs reduce its share of any gains or losses incurred on these investments.

As of December 31, 2008, the Company’s total investment in nonmarketable equity securities not accounted for using the equity method was $133.0 million, of which its equity exposure to investments held by the SBICs, net of related minority interest of $26.4 million, was $39.2 million. In addition, exposure to non-SBIC equity investments not accounted for by the equity method was $67.4 million.

The values we have assigned to these securities where no market quotations exist are based upon available information and may not necessarily represent amounts that ultimately will be realized on these securities. Key information used in valuing these securities include the projected financial performance of these companies, the evaluation of the investee company’s management team, and other industry, economic and market factors. If there had been an active market for these securities, the carrying value may have been significantly different from the amounts reported. In addition, since Zions Bank and Amegy are the principal business segments holding these investments, they would experience the largest impact of any changes in the fair values of these securities.

Accounting for Goodwill

Goodwill arises from business acquisitions and represents the value attributable to the unidentifiable intangible elements in our acquired businesses. Goodwill is initially recorded at fair value and is subsequently evaluated at least annually for impairment in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. The Company performs this annual test as of October 1 of each year. Evaluations are also performed on a more frequent basis if events or circumstances indicate impairment could have taken place. Such events could include, among others, a significant adverse change in the business climate, an adverse action by a regulator, an unanticipated change in the competitive environment, and a decision to change the operations or dispose of a reporting unit.

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The first step in this evaluation process is to determine if a potential impairment exists in any of the Company’s reporting units and, if required from the results of this step, a second step measures the amount of any impairment loss. The computations required by steps 1 and 2 require us to make a number of estimates and assumptions. In completing step 1, we determine the fair value of the reporting unit that is being evaluated. In determining the fair value, we generally calculate value using a combination of up to three separate methods: comparable publicly traded financial service companies in the Western and Southwestern states; comparable acquisitions of financial services companies in the Western and Southwestern states; and the discounted present value of management’s estimates of future cash or income flows. Critical assumptions that are used as part of these calculations include:

• selection of comparable publicly traded companies, based on location, size, and business composition;

• selection of market comparable acquisition transactions, based on location, size, business composition, and date of the transaction;

• the discount rate applied to future earnings, based on an estimate of the cost of capital;

• the potential future earnings of the reporting unit;

• the relative weight given to the valuations derived by the three methods described;

• the control premium associated with reporting units.

We use a similar methodology in evaluating impairment in nonbank subsidiaries but generally use companies and acquisition transactions nationally in the analysis.

If step 1 indicates a potential impairment of a reporting unit, step 2 requires us to estimate the “implied fair value” of the goodwill of the reporting unit. This process estimates the fair value of the unit’s individual assets and liabilities in the same manner as if a purchase of the reporting unit were taking place. To do this, we must determine the fair value of the assets, liabilities and identifiable intangible assets of the reporting unit based upon the best available information. We estimate the fair market value of all of the tangible assets, identifiable intangible assets and liabilities of the associated reporting units in accordance with the principals of SFAS 157. Loans, deposits with maturities, and debt are fair valued using standard software and assumptions used by Zions in its interest rate risk management processes and using other estimates such as credit assumptions to comply with SFAS 157. Deposits with no maturities are valued at book value. Larger occupied properties are appraised, while for smaller properties and furniture, fixtures and equipment, it is assumed that depreciated book value approximates fair market value. If the implied fair value of goodwill calculated in step 2 is less than the carrying amount of goodwill for the reporting unit, an impairment is indicated and the carrying value of goodwill is written down to the calculated value.

The Company applies a control premium to the market comparables pricing metrics used in the model to determine the reporting units’ equity values. Control premiums represents the ability of a controlling shareholder to benefit from synergies and other intangible assets that arise from control that might cause the fair value of a reporting unit as a whole to exceed its market capitalization. Based on a review of recent bank transactions within the Company’s geographic footprint, comparing market values 30 days prior to the announced transaction to the deal value, the Company determined that a control premium of 25% was appropriate.

Since estimates are an integral part of the impairment computations, changes in these estimates could have a significant impact on any calculated impairment amount. Factors that may significantly affect the estimates include, among others, competitive forces, customer behaviors and attrition, changes in revenue growth trends, cost structures and technology, changes in discount rates, changes in stock and mergers and acquisitions market values, and changes in industry or market sector conditions.

During the fourth quarter of 2008, we performed our annual goodwill impairment evaluation for the entire organization, effective October 1, 2008, and we also rolled forward our goodwill impairment evaluation to December 31, 2008 due to Company’s performance deterioration and market decline from October 1, 2008. This

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roll-forward resulted in the recognition of additional impairment in the fourth quarter, compared to the impairment if only the October 1 analysis had been used. Step 1 was performed by using both market value and transaction value approaches for all reporting units and, in certain cases, the discounted cash flow approach was also used. In the market value approach, we identified a group of publicly traded banks using primarily size, location and business mix compared to Zions’ subsidiary banks. We then used valuation multiples, including a control premium, developed from this group to apply to our subsidiary banks. In the transaction value approach, we reviewed the purchase price paid in recent mergers and acquisitions of banks similar in size, location and business mix to Zions’ subsidiary banks. From these purchase prices we developed a set of valuation multiples, which we applied to our subsidiary banks. In instances where the discounted cash flow approach was used, we discounted projected cash flows to their present value to arrive at our estimate of fair value.

Upon completion of step 1 of the evaluation process, we concluded that potential impairment existed at the Company’s NBA, Vectra, NSB, and P5 reporting units. Step 2 was completed with the assistance of an independent valuation consultant and the Company’s internal valuation resources and resulted in $353.8 million of impairment losses. All the goodwill associated with NBA, Vectra and NSB and essentially all the goodwill at P5 was determined to be impaired. This evaluation process required us to make estimates and assumptions with regard to the fair value of the Company’s reporting units and actual values may differ significantly from these estimates. Such differences could result in future impairment of goodwill that would, in turn, negatively impact the Company’s results of operations and the business segments where the goodwill is recorded. Significant remaining amounts of goodwill at December 31, 2008 were as follows: Amegy – $1,249 million, CB&T – $379 million, and Zions Bank – $20 million.

At December 31, 2008, the Company’s book value exceeded the market value by approximately $2.1 billion. The Company reconciled book equity and market equity values as of December 31, 2008 in our year-end evaluation of any potential additional impairment by attempting to identify items priced into the market equity value but not in the book value of the Company. These reconciling items were based on market expectation of fair value between book and market equity including discounts to the loan portfolio, the Company’s exposure to Lockhart holding unrealized losses related to the off-balance sheet securities, and unrecognized and unrealized losses related to HTM securities held on balance sheet. We believe applying a 25% control premium associated with Company or reporting units and the above mentioned factors explains the $2.1 billion difference between book and market equity values.

We expect that the current disrupted market conditions may require us to evaluate goodwill more frequently, including quarterly, as the circumstances warrant. Any differences between estimated fair values and carrying values could result in future impairment of goodwill.

Accounting for Derivatives

Our interest rate risk management strategy involves hedging the repricing characteristics of certain assets and liabilities so as to mitigate adverse effects on the Company’s net interest margin and cash flows from changes in interest rates. While we do not participate in speculative derivatives trading, we consider it prudent to use certain derivative instruments to add stability to the Company’s interest income and expense, to modify the duration of specific assets and liabilities, and to manage the Company’s exposure to interest rate movements.

Additionally, the Company executes derivative instruments, including interest rate swaps and options, forward currency exchange contracts, and energy commodity swaps, with commercial banking customers to facilitate their respective risk management strategies. Those derivatives are immediately hedged by offsetting derivative contracts, such that the Company minimizes its net risk exposure resulting from such transactions. The Company does not use credit default swaps in its investment or hedging operations.

As of December 31, 2008, the recorded amounts of derivative assets, classified in other assets, and derivative liabilities, classified in other liabilities, were $642.3 million and $178.1 million, respectively. When quoted market prices are not available, the valuation of derivative instruments is determined using widely

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accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, commodity prices, and implied volatilities. The estimates of fair value are made by an independent third party using a standardized methodology that nets the discounted expected future cash receipts and cash payments (based on observable market inputs). These future net cash flows, however, are susceptible to change due primarily to fluctuations in interest rates (most significantly), foreign exchange rates, and commodity prices. As a result, the estimated values of these derivatives will change over time as cash is received and paid and also as market conditions change. As these changes take place, they may have a positive or negative impact on our estimated valuations. Based on the nature and limited purposes of the derivatives that the Company employs, fluctuations in interest rates have only had a modest effect on its results of operations. As such, fluctuations are generally expected to be countered by offsetting changes in income, expense and/or values of assets and liabilities. However, the Company retains basis risk due to changes between the prime rate and LIBOR on nonhedge derivative basis swaps.

In addition to making the valuation estimates, we also face the risk that certain derivative instruments that have been designated as hedges and currently meet the strict hedge accounting requirements of SFAS 133, may not qualify in the future as “highly effective,” as defined by the Statement, as well as the risk that hedged transactions in cash flow hedging relationships may no longer be considered probable to occur. Further, new interpretations and guidance related to SFAS 133 may be issued in the future, and we cannot predict the possible impact that such guidance may have on our use of derivative instruments going forward.

Although the majority of the Company’s hedging relationships have been designated as cash flow hedges, for which hedge effectiveness is assessed and measured using a “long haul” approach, the Company also had five fair value hedging relationships outstanding as of December 31, 2008 that were designated using the “shortcut” method, as described in SFAS 133, paragraph 68. The Company believes that the shortcut method continues to be appropriate for those hedges because we have precisely complied with the documentation requirements and each of the applicable shortcut criteria described in paragraph 68. During 2008, an immaterial amount of hedge ineffectiveness was required to be reported in earnings on the Company’s outstanding cash flow hedging relationships. In addition, the Company reclassified a loss of $1.7 million from other comprehensive income to earnings during 2008, as the hedged forecasted transactions related to certain terminated cash flow hedging relationships became probable not to occur. This loss is included in fair value and nonhedge derivative income (loss).

Derivative contracts can be exchange-traded or over-the-counter (“OTC”). The Company’s exchange-traded derivatives consist of forward currency exchange contracts, which are part of the Company’s services provided to commercial customers. Exchange-traded derivatives are classified as Level 1 in the fair value hierarchy, as the values of these derivatives are obtained from quoted prices in active markets for identical contracts.

The Company’s OTC derivatives consist of interest rate swaps and options, as well as energy commodity derivatives for customers. The Company has classified its OTC derivatives in Level 2 of the fair value hierarchy, as the significant inputs to the overall valuations are based on market-observable data or information derived from or corroborated by market-observable data, including market-based inputs to models, model calibration to market-clearing transactions, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment.

To comply with the provisions of SFAS 157, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in

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the fair value measurements of its OTC derivatives. The credit valuation adjustments are calculated by determining the total expected exposure of the derivatives (which incorporates both the current and potential future exposure) and then applying each counterparty’s credit spread to the applicable exposure. For derivatives with two-way exposure, such as interest rate swaps, the counterparty’s credit spread is applied to the Company’s exposure to the counterparty, and the Company’s own credit spread is applied to the counterparty’s exposure to the Company, and the net credit valuation adjustment is reflected in the Company’s derivative valuations. The total expected exposure of a derivative is derived using market-observable inputs, such as yield curves and volatilities. For the Company’s own credit spread and for counterparties having publicly available credit information, the credit spreads over LIBOR used in the calculations represent implied credit default swap spreads obtained from a third party credit data provider. For counterparties without publicly available credit information, which are primarily commercial banking customers, the credit spreads over LIBOR used in the calculations are estimated by the Company based on current market conditions, including consideration of current borrowing spreads for similar customers and transactions, review of existing collateralization or other credit enhancements, and changes in credit sector and entity-specific credit information. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, current threshold amounts, mutual puts, and guarantees. Additionally, the Company actively monitors counterparty credit ratings for significant changes.

As of December 31, 2008, the net credit valuation adjustments reduced the settlement values of the Company’s derivative assets and liabilities by $12.5 million and $5.0 million, respectively. During 2008, the Company recognized a loss of $3.1 million related to credit valuation adjustments on nonhedge derivative instruments, which is included in noninterest income. Various factors impact changes in the credit valuation adjustments over time, including changes in the credit spreads of the parties to the contracts, as well as changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2008, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has classified its OTC derivative valuations in Level 2 of the fair value hierarchy.

When appropriate, valuations are also adjusted for various factors such as liquidity and bid/offer spreads, which factors were deemed immaterial by the Company as of December 31, 2008.

Share-Based Compensation

As discussed in Note 17 of the Notes to Consolidated Financial Statements, effective January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of income based on their fair values.

The Company used the Black-Scholes option-pricing model to estimate the value of stock options for all stock option grants prior to 2007 and off cycle stock option grants during 2007 and 2008. The assumptions used to apply this model include a weighted average risk-free interest rate, a weighted average expected life, an expected dividend yield, and an expected volatility. Use of these assumptions is subjective and requires judgment as described in Note 17.

From April 24–25, 2008, the Company successfully conducted an auction of its Employee Stock Option Appreciation Rights Securities (“ESOARS”). As allowed by SFAS 123(R), the Company used the results of that auction to value its primary grant of employee stock options issued on April 24, 2008. The value established was $5.73 per option, which the Company estimates is approximately 24% below its Black-Scholes model valuation

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on that date. The Company recorded the related estimated future settlement obligation of ESOARS as a liability in the balance sheet. The 2008 stock option expense for these grants was $2.2 million. If the ESOARS value was 10% lower, the expense would be $2.0 million and if the ESOARS value was 10% higher, the expense would be $2.4 million. Additionally, the primary grant of options in 2007 was valued with the results of an ESOARS auction in 2007. The number of stock options granted at the primary grant date on May 4, 2007 and April 24, 2008 were 963,680 and 1,542,238, respectively, or 91.4% and 60.8% of the total stock options granted in 2007 and 2008, respectively.

On October 22, 2007, the Company announced it had received notification from the SEC that its ESOARS are sufficiently designed as a market-based method for valuing employee stock options under SFAS 123(R). The SEC staff did not object to the Company’s view that the market-clearing price of ESOARS in the Company’s auction was a reasonable estimate of the fair value of the underlying employee stock options.

The accounting for stock option compensation under SFAS 123(R) decreased income before income taxes by $13.1 million and net income by approximately $9.2 million for 2008, or $0.08 per diluted share. See Note 17 for additional information on stock options and restricted stock.

Income Taxes

The Company is subject to the income tax laws of the United States, its states and other jurisdictions where it conducts business. These laws are complex and subject to different interpretations by the taxpayer and the various taxing authorities. In determining the provision for income taxes, management must make judgments and estimates about the application of these inherently complex laws, related regulations, and case law. In the process of preparing the Company’s tax returns, management attempts to make reasonable interpretations of the tax laws. These interpretations are subject to challenge by the tax authorities upon audit or to re-interpretation based on management’s ongoing assessment of facts and evolving case law.

On a quarterly basis, management assesses the reasonableness of its effective tax rate based upon its current best estimate of net income and the applicable taxes expected for the full year. Deferred tax assets and liabilities are also reassessed on a quarterly basis if business events or circumstances warrant. Reserves for contingent tax liabilities are reviewed quarterly for adequacy based upon developments in tax law and the status of examinations or audits. During 2008, the Company reduced its liability for unrecognized tax benefits by approximately $9.6 million, net of any federal and/or state tax benefits. Of this reduction, $5.2 million decreased the Company’s tax provision for 2008 and $4.4 million reduced tax-related balance sheet accounts. The Company has tax reserves at December 31, 2008 of approximately $6.6 million, net of federal and/or state benefits, for uncertain tax positions primarily for various state tax contingencies in several jurisdictions.

Pending Adoption of Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“141(R)”), which replaces SFAS No. 141, Business Combinations. SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any resulting goodwill, and any noncontrolling interest in the acquiree. SFAS 141(R) will require the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred, and does not permit certain restructuring activities previously allowed under EITF Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination, to be recorded as a component of purchase accounting. SFAS 141(R) also provides for disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for the first annual reporting period beginning on or after December 15, 2008 and must be applied prospectively to business combinations completed on or after that date. The Company will adopt SFAS 141(R) as of January 1, 2009, as required. We have not determined the effect that the adoption of SFAS 141(R) will have on our consolidated financial statements, but the effect will generally be limited to future acquisitions in 2009, except for certain tax treatment of previous acquisitions.

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SFAS 141(R) amended SFAS No. 109, Accounting for Income Taxes, and FASB Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes. Previously, SFAS 109 and FIN 48, respectively, generally required post-acquisition adjustments to business combination related deferred tax asset valuation allowances and liabilities related to uncertain tax positions to be recorded as an increase or decrease to goodwill. SFAS 141(R) does not permit this accounting and generally will require any such changes to be recorded in current period income tax expense. Thus, after SFAS 141(R) is adopted, all changes to valuation allowances and liabilities related to uncertain tax positions established in acquisition accounting (whether the combination was accounted for under SFAS 141 or SFAS 141(R)) must be recognized in current period income tax expense.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51, which establishes accounting and reporting standards for noncontrolling interests (“minority interests”) in subsidiaries. SFAS 160 clarifies that a noncontrolling interest in a subsidiary should be accounted for as a component of equity (separate) from the parent’s equity, rather than in the liability or mezzanine section between liabilities and equity. Upon adoption, at December 31, 2008 and 2007 the Company will reclassify $27.3 million and $30.9 million respectively, from minority interest to a new line item, noncontrolling interests, to be in included in shareholders’ equity. Additionally, SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. SFAS 160 also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. Currently, net income attributable to the noncontrolling interest generally is reported as an expense or other deduction in arriving at consolidated net income. SFAS 160 is effective for the first annual reporting period beginning on or after December 15, 2008 and must be applied prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. The Company will adopt SFAS 160 as of January 1, 2009, as required. Other than the reclassification described above, the Company does not anticipate that SFAS 160 will have a material effect on the Company’s consolidated financial statements.

In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, with respect to nonfinancial assets and nonfinancial liabilities which are not recognized or disclosed at fair value in the financial statements on a recurring basis. Therefore, we have deferred application of SFAS 157 to such nonfinancial assets and nonfinancial liabilities until January 1, 2009.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133, which establishes enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 requires contextual discussion of the objectives and strategies for using derivative instruments for risk management purposes in terms of primary underlying risk, disclosure of volume of derivative activity, and enhanced credit risk disclosures. Also, SFAS 161 requires additional tabular disclosures of fair value amounts, financial performance, financial position, and gains and losses on derivative and related hedged items. The Company will adopt SFAS 161 as of January 1, 2009, as required.

In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. This FSP was issued to clarify that unvested share-based payment awards with a right to receive nonforfeitable dividends are participating securities. This FSP also provides guidance on how to allocate earnings to participating securities and compute basic earnings per share using the two-class method. This FSP is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company will adopt the FSP as of January 1, 2009, as required.

RESULTS OF OPERATIONS

Net Interest Income, Margin and Interest Rate Spreads

Net interest income is the difference between interest earned on assets and interest incurred on liabilities. Taxable-equivalent net interest income is the largest component of Zions’ revenue. For the year 2008, it was 91.3% of our taxable-equivalent revenues, compared to 82.2% in 2007 and 76.4% in 2006. The increased

48

percentage for 2008 and 2007 was mainly due to the impairment and valuation losses on securities which reduced total taxable-equivalent revenues by $317.1 million and $158.2 million, respectively. On a taxable-equivalent basis, net interest income for 2008 was up $87.3 million or 4.6% from 2007, which was up $119.1 million or 6.7% from 2006. The increase in taxable-equivalent net interest income for 2008 and 2007 was mainly due to increased interest-earning assets driven by loan growth partially offset by declines of 25 basis points in the net interest margin for 2008 and 20 basis points during 2007. The incremental tax rate used for calculating all taxable-equivalent adjustments was 35% for all years discussed and presented.

By its nature, net interest income is especially vulnerable to changes in the mix and amounts of interest-earning assets and interest-bearing liabilities. In addition, changes in the interest rates and yields associated with these assets and liabilities significantly impact net interest income. See “Interest Rate and Market Risk Management” on page 110 for a complete discussion of how we manage the portfolios of interest-earning assets and interest-bearing liabilities and associated risk.

A gauge that we use to measure the Company’s success in managing its net interest income is the level and stability of the net interest margin. The net interest margin was 4.18% in 2008 compared with 4.43% in 2007 and 4.63% in 2006. For the fourth quarter of 2008, the Company’s net interest margin was 4.20%, which benefited primarily from the capital investment from the U.S. Treasury, reduced deposit rates, and significantly lower borrowing costs.

The decreased net interest margin for 2008 compared to 2007 resulted from increased nonperforming assets reducing average asset yields, loan yields dropping more than deposit rates, a decline in noninterest-bearing demand deposits, competitive pricing pressures, and purchases of low yielding Lockhart commercial paper. Average loans and leases increased $4.2 billion and average money market investments increased $1.1 billion due to the impact of the capital investment from the U.S. Treasury and purchases of commercial paper from Lockhart. Average interest-bearing deposits increased $2.0 billion from 2007, with the increase being driven primarily by higher cost Internet money market, brokered deposits and foreign deposits. Average borrowed funds increased $3.0 billion compared to 2007 primarily due to increased borrowing from the Federal Home Loan Bank (“FHLB”) and the Federal Reserve. Average noninterest-bearing deposits declined $257 million compared to 2007 and were 24.3% of total average deposits for 2008, compared to 26.2% for 2007.

The margin compression for 2007 compared to 2006 resulted from the Company’s strong loan growth being funded mainly by higher cost deposit products and nondeposit borrowings, a decline in noninterest-bearing demand deposits, competitive pricing pressures, and purchases of Lockhart commercial paper. Higher yielding average loans and leases increased $4.4 billion from 2006 while lower yielding average money market investments and securities decreased slightly by $32.4 million. Average interest-bearing deposits increased $3.2 billion from 2006 with most of the increase in higher cost Internet money market, time and foreign deposits. Average borrowed funds increased $850 million compared to 2006.

The Company expects to continue its efforts to maintain a slightly “asset-sensitive” position with regard to interest rate risk. However, our estimates of the Company’s actual position are highly dependent upon changes in both short-term and long-term interest rates, modeling assumptions, and the actions of competitors and customers in response to those changes.

Throughout 2008, the FRB lowered the federal funds rate seven times by approximately 400 basis points. This decrease had a rapid impact on loans tied to LIBOR and the prime rate as these rates were lowered. Competitive pressures on deposit rates impeded our ability to fully reprice deposits as the FRB lowered rates, and rates paid to consumers for their deposits were lowered less than 400 basis points. This rate compression between loans and deposits had a negative impact on the net interest margin during 2008. We expect that these competitive pricing pressures may continue into 2009. See “Interest Rate Risk” on page 111 for further information.

Schedule 5 summarizes the average balances, the amount of interest earned or incurred and the applicable yields for interest-earning assets and the costs of interest-bearing liabilities that generate taxable-equivalent net interest income.

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Schedule 5

DISTRIBUTION OF ASSETS, LIABILITIES, AND SHAREHOLDERS’ EQUITY

AVERAGE BALANCE SHEETS, YIELDS AND RATES

	2008						2007
(Amounts in millions)	Average balance			Amount of interest1	Average rate		Average balance			Amount of interest1	Average rate
ASSETS:
Money market investments	$	1,889		47.8	2.53	%	$	834		43.7	5.24	%
Securities:
Held-to-maturity		1,516		101.3	6.68			684		47.7	6.97
Available-for-sale		3,266		162.1	4.97			4,661		269.2	5.78
Trading account		43		1.9	4.41			61		3.3	5.40
Total securities		4,825		265.3	5.50			5,406		320.2	5.92
Loans:
Loans held for sale		182		10.1	5.52			233		14.9	6.37
Net loans and leases2		40,795		2,674.4	6.56			36,575		2,852.7	7.80
Total loans and leases		40,977		2,684.5	6.55			36,808		2,867.6	7.79
Total interest-earning assets		47,691		2,997.6	6.29			43,048		3,231.5	7.51
Cash and due from banks		1,380						1,477
Allowance for loan losses		(546	)					(391	)
Goodwill		1,937						2,005
Core deposit and other intangibles		137						181
Other assets		3,163						2,527
Total assets	$	53,762					$	48,847
LIABILITIES:
Interest-bearing deposits:
Savings and NOW	$	4,446		35.6	0.80		$	4,443		41.4	0.93
Money market		13,739		335.0	2.44			11,962		437.9	3.66
Time under $100,000		2,695		96.2	3.57			2,529		110.7	4.38
Time $100,000 and over		4,382		161.9	3.69			4,779		231.2	4.84
Foreign		3,166		84.2	2.66			2,710		130.5	4.81
Total interest-bearing deposits		28,428		712.9	2.51			26,423		951.7	3.60
Borrowed funds:
Securities sold, not yet purchased		33		1.5	4.82			30		1.4	4.56
Federal funds purchased and security repurchase agreements		2,733		53.3	1.95			3,211		148.5	4.62
Commercial paper		110		4.2	3.84			256		13.8	5.41
FHLB advances and other borrowings:
One year or less		4,589		119.8	2.61			1,099		55.0	5.00
Over one year		128		7.4	5.73			131		7.6	5.77
Long-term debt		2,449		103.1	4.21			2,365		145.4	6.15
Total borrowed funds		10,042		289.3	2.88			7,092		371.7	5.24
Total interest-bearing liabilities		38,470		1,002.2	2.61			33,515		1,323.4	3.95
Noninterest-bearing deposits		9,145						9,401
Other liabilities		578						647
Total liabilities		48,193						43,563
Minority interest		29						36
Shareholders’ equity:
Preferred equity		432						240
Common equity		5,108						5,008
Total shareholders’ equity		5,540						5,248
Total liabilities and shareholders’ equity	$	53,762					$	48,847
Spread on average interest-bearing funds					3.68	%					3.56	%
Taxable-equivalent net interest income and net yield on interest-earning assets				1,995.4	4.18	%				1,908.1	4.43	%

¹ Taxable-equivalent rates used where applicable.

² Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

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2006						2005						2004
Average balance			Amount of interest1	Average rate		Average balance			Amount of interest1	Average rate		Average balance			Amount of interest1	Average rate
$	479		24.7	5.16	%	$	988		31.7	3.21	%	$	1,463		16.4	1.12	%
	645		44.1	6.83			639		44.2	6.93			500		34.3	6.86
	4,992		285.5	5.72			4,021		207.7	5.16			3,968		174.5	4.40
	157		7.7	4.91			497		19.9	4.00			732		29.6	4.04
	5,794		337.3	5.82			5,157		271.8	5.27			5,200		238.4	4.59
	261		16.5	4.80			205		9.8	4.80			159		5.1	3.16
	32,134		2,463.9	6.80			23,804		1,618.0	6.80			20,887		1,252.8	6.00
	32,395		2,480.4	6.78			24,009		1,627.8	6.78			21,046		1,257.9	5.98
	38,668		2,842.4	6.40			30,154		1,931.3	6.40			27,709		1,512.7	5.46
	1,476						1,123						1,026
	(349	)					(285	)					(272	)
	1,887						746						648
	181						66						65
	2,379						1,799						1,760
$	44,242					$	33,603					$	30,936
$	5,129		75.3	1.47		$	4,347		36.7	0.84		$	4,245		24.4	0.58
	10,721		330.0	3.08			9,131		183.9	2.01			8,572		96.8	1.13
	2,065		77.4	3.75			1,523		41.7	2.74			1,436		27.5	1.92
	3,272		142.6	4.36			1,713		54.7	3.19			1,244		29.2	2.35
	2,065		95.5	4.62			737		23.3	3.16			338		4.4	1.30
	23,252		720.8	3.10			17,451		340.3	1.95			15,835		182.3	1.15
	66		3.0	4.57			475		17.7	3.72			625		24.2	3.86
	2,838		124.7	4.39			2,307		63.6	2.76			2,682		32.2	1.20
	220		11.4	5.20			149		5.0	3.36			201		3.0	1.51
	479		25.3	5.27			204		5.9	2.90			252		2.9	1.14
	148		8.6	5.80			228		11.5	5.05			230		11.7	5.08
	2,491		159.6	6.41			1,786		104.9	5.88			1,659		74.3	4.48
	6,242		332.6	5.33			5,149		208.6	4.05			5,649		148.3	2.62
	29,494		1,053.4	3.57			22,600		548.9	2.43			21,484		330.6	1.54
	9,508						7,417						6,269
	697						533						501
	39,699						30,550						28,254
	34						26						23
	16						–						–
	4,493						3,027						2,659
	4,509						3,027						2,659
	$44,242					$	33,603					$	30,936
				3.78	%					3.97	%					3.92	%
			1,789.0	4.63	%				1,382.4	4.58	%				1,182.1	4.27	%

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Schedule 6 analyzes the year-to-year changes in net interest income on a fully taxable-equivalent basis for the years indicated. For purposes of calculating the yields in these schedules, the average loan balances also include the principal amounts of nonaccrual and restructured loans. However, interest received on nonaccrual loans is included in income only to the extent that cash payments have been received and not applied to principal reductions. In addition, interest on restructured loans is generally accrued at reduced rates.

Schedule 6

ANALYSIS OF INTEREST CHANGES DUE TO VOLUME AND RATE

	2008 over 2007							2007 over 2006
	Changes due to					Total changes		Changes due to				Total changes
(Amounts in millions)	Volume			Rate1				Volume		Rate1
INTEREST-EARNING ASSETS:
Money market investments	$	26.7		(22.6	)	4.1		18.6		0.4		19.0
Securities:
Held to maturity		55.6		(2.0	)	53.6		2.7		0.9		3.6
Available for sale		(69.5	)	(37.6	)	(107.1	)	(18.9	)	2.6		(16.3	)
Trading account		(0.8	)	(0.6	)	(1.4	)	(4.7	)	0.3		(4.4	)
Total securities		(14.7	)	(40.2	)	(54.9	)	(20.9	)	3.8		(17.1	)
Loans:
Loans held for sale		(2.8	)	(2.0	)	(4.8	)	(1.7	)	0.1		(1.6	)
Net loans and leases2		275.1		(453.4	)	(178.3	)	345.7		43.1		388.8
Total loans and leases		272.3		(455.4	)	(183.1	)	344.0		43.2		387.2
Total interest-earning assets	$	284.3		(518.2	)	(233.9	)	341.7		47.4		389.1
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits:
Savings and NOW	$	–		(5.8	)	(5.8	)	(6.3	)	(27.6	)	(33.9	)
Money market		43.2		(146.1	)	(102.9	)	41.1		66.8		107.9
Time under $100,000		5.9		(20.4	)	(14.5	)	19.0		14.3		33.3
Time $100,000 and over		(14.4	)	(54.9	)	(69.3	)	71.5		17.1		88.6
Foreign		12.1		(58.4	)	(46.3	)	31.0		4.0		35.0
Total interest-bearing deposits		46.8		(285.6	)	(238.8	)	156.3		74.6		230.9
Borrowed funds:
Securities sold, not yet purchased		0.1		–		0.1		(1.6	)	–		(1.6	)
Federal funds purchased and security repurchase agreements		(9.3	)	(85.9	)	(95.2	)	17.1		6.7		23.8
Commercial paper		(5.6	)	(4.0	)	(9.6	)	1.9		0.5		2.4
FHLB advances and other borrowings:
One year or less		91.1		(26.3	)	64.8		31.0		(1.3	)	29.7
Over one year		(0.1	)	(0.1	)	(0.2	)	(1.0	)	–		(1.0	)
Long-term debt		3.5		(45.8	)	(42.3	)	(7.8	)	(6.4	)	(14.2	)
Total borrowed funds		79.7		(162.1	)	(82.4	)	39.6		(0.5	)	39.1
Total interest-bearing liabilities	$	126.5		(447.7	)	(321.2	)	195.9		74.1		270.0
Change in taxable-equivalent net interest income	$	157.8		(70.5	)	87.3		145.8		(26.7	)	119.1

¹ Taxable-equivalent income used where applicable.

² Net of unearned income and fees, net of related costs. Loans include nonaccrual and restructured loans.

In the analysis of interest changes due to volume and rate, changes due to the volume/rate variance are allocated to volume with the following exceptions: when volume and rate both increase, the variance is allocated proportionately to both volume and rate; when the rate increases and volume decreases, the variance is allocated to the rate.

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Provisions for Credit Losses

The provision for loan losses is the amount of expense that, based on our judgment, is required to maintain the allowance for loan losses at an adequate level based upon the inherent risks in the portfolio. The provision for unfunded lending commitments is used to maintain the reserve for unfunded lending commitments at an adequate level. In determining adequate levels of the allowance and reserve, we perform periodic evaluations of the Company’s various portfolios, the levels of actual charge-offs, and statistical trends and other economic factors. See “Credit Risk Management” on page 99 for more information on how we determine the appropriate level for the allowance for loan and lease losses and the reserve for unfunded lending commitments.

For the year 2008, the provision for loan losses was $648.3 million, compared to $152.2 million for 2007 and $72.6 million for 2006. The increased provision for 2008 resulted mainly from significant deterioration in our credit quality, particularly from our exposure to residential land development and construction activity in the Southwest, with Arizona, California, and Nevada being most severely impacted, and also weakening in commercial loan portfolios. See “Nonperforming Assets” and “Allowance and Reserve for Credit Losses” on pages 104 and 106 for further details. Net loan and lease charge-offs increased to $393.7 million in 2008 up from $63.6 million in 2007 and $45.8 million in 2006. The $330.1 million increase during 2008 was driven by increased charge-offs of $133.6 million at NBA, $68.9 million at NSB, $61.4 million at Zions Bank and $38.7 million at CB&T, primarily related to residential land development and construction loans. Including the provision for unfunded lending commitments, the total provision for credit losses was $649.7 million for 2008, $154.0 million for 2007, and $73.8 million for 2006. The provision for loan losses was $285.2 million for the fourth quarter of 2008 and net charge-offs for the quarter were $179.7 million.

The Company’s expectation is that credit conditions will continue to soften in most of our markets due to continued weakening in general economic conditions. We expect provisioning and net charge-offs to continue at elevated levels for at least the next several quarters.

Noninterest Income

Noninterest income represents revenues the Company earns for products and services that have no interest rate or yield associated with them. Noninterest income for 2008 comprised 8.7% of taxable-equivalent revenues reflecting the $317.1 million of impairment and valuation losses on securities which reduced noninterest income for 2008, compared to 17.8% for 2007 and 23.6% for 2006. Schedule 7 presents a comparison of the major components of noninterest income for the past three years.

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Schedule 7

NONINTEREST INCOME

(Amounts in millions)	2008			Percent change		2007			Percent change		2006
Service charges and fees on deposit accounts	$	207.0		12.7	%	$	183.6		14.2	%	$	160.8
Other service charges, commissions and fees		167.7		(1.7	)		170.6		13.6			150.2
Trust and wealth management income		37.7		3.3			36.5		21.7			30.0
Capital markets and foreign exchange		49.9		14.4			43.6		10.4			39.5
Dividends and other investment income		46.4		(8.8	)		50.9		27.6			39.9
Loan sales and servicing income		24.4		(36.6	)		38.5		(29.0	)		54.2
Income from securities conduit		5.5		(69.8	)		18.2		(43.5	)		32.2
Fair value and nonhedge derivative income (loss)		(48.0	)	(235.7	)		(14.3	)	(2,483.3	)		0.6
Equity securities gains, net		0.8		(95.5	)		17.7		(0.6	)		17.8
Fixed income securities gains, net		0.8		(73.3	)		3.0		(53.1	)		6.4
Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding		(317.1	)	(100.4	)		(158.2	)	–			–
Other		15.6		(29.7	)		22.2		13.3			19.6
Total	$	190.7		(53.7	)%	$	412.3		(25.2	)%	$	551.2

Noninterest income for 2008 decreased $221.6 million or 53.7% compared to 2007. The largest component of this decrease was the $158.9 million increase in impairment and valuation losses on securities. Other significant components contributing to the noninterest income decrease in 2008 included loan sales and servicing income, income from securities conduit, fair value and nonhedge derivative loss, and net equity securities gains. Noninterest income for 2007 decreased $138.9 million or 25.2% compared to 2006 also reflecting the impact of $158.2 million of impairment and valuation losses on securities.

Service charges and fees on deposit accounts increased $23.4 million in 2008 and $22.8 million in 2007. The increase was mainly due to the impact of fee increases across the Company, and reduced deposit account earnings credits due to lower interest rates. The increase in 2007 was mainly due to the impact of fee increases across the Company and the acquisition of Stockmen’s.

Other service charges, commissions, and fees, which is comprised of Automated Teller Machine (“ATM”) fees, insurance commissions, bankcard merchant fees, debit card interchange fees, cash management fees, lending commitments, syndication and servicing fees and other miscellaneous fees, decreased $2.9 million, or 1.7% from 2007, which was up 13.6% from 2006. The decrease in 2008 was principally due to lower lending related fees and official check fees offset by increased accounts receivable factoring fees, debit card fees, and cash management related fees. The cash management fees include remote check imaging fees, third-party ACH transaction fees, and web-based medical claims transaction fees. The increase in 2007 was primarily driven by debit card fees, and cash management related fees. The increase was offset by decreased insurance income of $5.0 million resulting from the sale of the Company’s Grant Hatch insurance agency and certain other insurance assets completed during the first quarter of 2007.

Trust and wealth management income for 2008 increased 3.3% compared to 2007, which was up 21.7% compared to 2006. The modest increase for 2008 was from slower organic growth in the trust and wealth management business and declines in fees due to lower balances of assets under management, primarily as a result of declines in market values of a number of asset classes. The increase for 2007 was from organic growth in the trust and wealth management business, including growth related to our Contango wealth management and associated trust business, as well as growth in the Amegy trust and wealth management business.

Capital markets and foreign exchange include trading income, public finance fees, foreign exchange income, and other capital market related fees and increased 14.4% from 2007, which was up 10.4% from 2006.

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The increase in 2008 was primarily driven by increased trading income partially offset by lower public finance fees. The increase in 2007 was primarily the result of higher public finance fees.

Dividends and other investment income consist of revenue from the Company’s bank-owned life insurance program and revenues from other investments. Revenues from other investments include dividends on FHLB stock, Federal Reserve Bank stock, and earnings from unconsolidated affiliates including certain alternative venture investments, and were $15.6 million in 2008, $23.0 million in 2007, and $13.3 million in 2006. The decreased income from other investments in 2008 is primarily due to a $14.1 million decrease in equity in earnings of Farmer Mac offset by a $6.0 million increase in earnings from Amegy’s alternative investments program. The decrease in earnings from Farmer Mac is mainly due to their losses in securities holdings in Lehman Brothers and Fannie Mae. Revenue from bank-owned life insurance programs was $30.7 million in 2008, $27.9 million in 2007, and $26.6 million in 2006.

Loan sales and servicing income includes revenues from securitizations of loans, gains and losses from sales of loans, as well as revenues that we earn through servicing loans that we sold to third parties. For 2008, loan sales and servicing income decreased 36.6% compared to 2007 and decreased 29.0% between 2007 and 2006. The decreased income for 2008 is mainly due to reduced servicing fees on securitized small business loans. Upon dissolution of securitization trusts as described in “Off-Balance Sheet Arrangement” on page 96, these loans were recorded on Zions Bank’s balance sheet and not serviced for investors. The decrease for 2007 compared to 2006 mainly resulted from lower servicing fees from lower loan balances, and retained interest impairment write-downs of $12.6 million in 2007. These write-downs resulted primarily from higher than expected loan prepayments, increased default assumptions, and changes in the interest rate environment as determined from our periodic evaluation of beneficial interests as required by EITF 99-20. As of December 31, 2008, the Company had no retained interests in small business securitizations recorded on the balance sheet. See Note 6 of the Notes to Consolidated Financial Statements for additional information on the Company’s securitization programs.

Income from securities conduit decreased $12.7 million or 69.8% for 2008 compared to 2007 and decreased 43.5% between 2007 and 2006. This income represents fees we receive from Lockhart, a QSPE securities conduit. The decrease in income is due to the higher cost of asset-backed commercial paper used to fund Lockhart resulting from the disruptions in the credit markets which began in August of 2007 and a decrease in the size of Lockhart’s securities portfolio. The book value of Lockhart’s securities portfolio declined to $738 million at December 31, 2008 from $2.1 billion at December 31, 2007, and from $4.1 billion at December 31, 2006 due to Zions’ required purchase of securities out of Lockhart and repayments of principal. We expect that the book value of the Lockhart portfolio will continue to decrease. Income from securities conduit will depend both on the amount of securities held in the portfolio and on the cost of the commercial paper used to fund those securities. See “Off-Balance Sheet Arrangement” on page 96, “Liquidity Management Actions” on page 116, and Note 6 of the Notes to Consolidated Financial Statements for further information regarding securitizations and Lockhart.

Fair value and nonhedge derivative income (loss) consists of the following:

Schedule 8

FAIR VALUE AND NONHEDGE DERIVATIVE INCOME (LOSS)

(Amounts in millions)	2008			Percent change		2007			Percent change		2006
Nonhedge derivative income (loss)	$	(36.2	)	(139.7	)%	$	(15.1	)	(2,257.1	)%	$	0.7
Fair value decreases on SFAS 159 instruments		(9.2	)	–			–		–			–
Derivative fair value credit adjustments		(3.1	)	–			–		–			–
Other		0.5		(37.5	)		0.8		900.0			(0.1	)
Total	$	(48.0	)	(235.7	)%	$	(14.3	)	(2,483.3	)%	$	0.6

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The losses on nonhedge derivatives for 2008 and 2007 resulted from decreasing spreads between LIBOR and the prime rate during the second half of 2007. In an effort to employ the most liquid instrument available for Zions’ hedging program and execute transactions with the most economically favorable terms, it has been Zions’ practice to use LIBOR as the floating index on swaps executed with external counterparties. As a significant portion of the Company’s loan assets are prime rate floating loans, many of the Company’s swaps are structured with a prime floating rate. In conjunction with the execution of swaps in which the Company receives a fixed rate and pays prime, Zions also executes a swap in which it pays LIBOR plus a spread and receives prime. The Company therefore has chosen to retain the prime-LIBOR basis risk in this hedging activity.

Net equity securities gains in 2008 were $0.8 million compared to net gains of $17.7 million in 2007 and $17.8 million in 2006. Net gains for 2008 included a $12.4 million gain on the VISA stock offering, a $7.7 million gain on the sale of an interest in a mutual fund management company, an $11.0 million impairment loss on the Company’s investment in Farmer Mac, and net losses of $8.4 million on venture capital equity investments. Net gains for 2007 included a $2.5 million gain on the sale of an investment in a community bank and net gains on venture capital equity investments of $15.4 million. Net of related minority interest of $5.4 million, income taxes and other expenses, venture capital investments contributed $2.6 million to net losses in 2008, compared to net income of $3.4 million for 2007 and $4.1 million for 2006.

Impairment losses on investment securities and valuation losses on securities purchased from Lockhart were $317.1 million in 2008 compared to $158.2 million in 2007. The 2008 losses consisted of impairment losses of $304.0 million on ABS, REIT trust preferred, and bank and insurance trust preferred CDOs and valuation losses of $13.1 million on securities purchased from Lockhart. During 2007 impairment losses on REIT trust preferred CDO securities were $108.6 million and valuation losses on securities purchased from Lockhart were $49.6 million. See “Other-than-Temporary-Impairment – Debt Investment Securities” on page 40, “Investment Securities Portfolio” on page 85 , and “Off-Balance Sheet Arrangement” on page 96 for further discussion.

Other noninterest income for 2008 was $15.6 million, compared to $22.2 million for 2007 and $19.6 million for 2006. The decrease in 2008 included reduced scanner sales to third party financial institutions. The increase in 2007 included a $2.9 million gain on the sale of the Company’s insurance business during 2007.

Noninterest Expense

Noninterest expense for 2008 increased 5.0% over 2007, which was 5.6% higher than in 2006. The 2008 increase was impacted by the increased other real estate expense due to the deterioration in the Company’s loan credit quality. Excluding other real estate expense noninterest expense increased $24.4 million or 1.7% over 2007. Schedule 9 summarizes the major components of noninterest expense and provides a comparison of the components over the past three years.

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Schedule 9

NONINTEREST EXPENSE

(Amounts in millions)	2008		Percent change		2007		Percent change		2006
Salaries and employee benefits	$	810.5	1.3	%	$	799.9	6.4	%	$	751.7
Occupancy, net		114.2	6.3			107.4	7.8			99.6
Furniture and equipment		100.1	3.7			96.5	8.8			88.7
Other real estate expense		50.4	1,045.5			4.4	4,300.0			0.1
Legal and professional services		45.5	3.9			43.8	9.2			40.1
Postage and supplies		37.5	2.7			36.5	10.3			33.1
Advertising		30.7	14.1			26.9	1.5			26.5
FDIC premiums		19.9	206.2			6.5	20.4			5.4
Impairment losses on long-lived assets		3.1	–			–	nm			1.3
Merger related expense		1.6	(69.8	)		5.3	(74.1	)		20.5
Amortization of core deposit and other intangibles		33.2	(26.1	)		44.9	4.4			43.0
Other		228.3	(1.8	)		232.5	5.5			220.4
Total	$	1,475.0	5.0	%	$	1,404.6	5.6	%	$	1,330.4

nm – not meaningful

The Company’s efficiency ratio was 67.5% for 2008 compared to 60.5% for 2007 and 56.9% for 2006. The increase in the efficiency ratio for 2008 and 2007 was primarily due to the previously discussed impairment and valuation losses on securities. The efficiency ratio was 58.9% for 2008 and 56.7% for 2007 excluding the impairment and valuation losses on securities.

Salary costs for 2008 increased 4.2% over 2007, which were up 5.8% from 2006. The increases for 2008 resulted mainly from merit pay salary increases offset by reductions in variable pay. The salary costs for 2008 also included share-based compensation expense of approximately $31.8 million, up from $28.3 million for 2007. The increases for 2007 resulted mainly from merit pay salary increases and increased staffing related to other business expansion. Employee health and insurance benefits for 2008 decreased 10.5% from 2007, which increased 24.2% from 2006. Employee health and insurance expense for 2008 included an adjustment which reduced expense by approximately $3.0 million to reflect the elimination of a health insurance benefit. Retirement expense for 2008 decreased primarily because no accrual was required for the Company’s profit sharing plan. Salaries and employee benefits are shown in greater detail in Schedule 10.

Schedule 10

SALARIES AND EMPLOYEE BENEFITS

(Dollar amounts in millions)	2008		Percent change		2007		Percent change		2006
Salaries and bonuses	$	706.5	4.2	%	$	678.1	5.8	%	$	641.1
Employee benefits:
Employee health and insurance		37.7	(10.5	)		42.1	24.2			33.9
Retirement		20.6	(43.3	)		36.3	(4.0	)		37.8
Payroll taxes and other		45.7	5.3			43.4	11.6			38.9
Total benefits		104.0	(14.6	)		121.8	10.1			110.6
Total salaries and employee benefits	$	810.5	1.3	%	$	799.9	6.4	%	$	751.7
Full-time equivalent (“FTE”) employees at December 31		11,011	0.7	%		10,933	3.0	%		10,618

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Occupancy expense increased $6.8 million or 6.3% compared to 2007 which was up 7.8% from 2006. The 2008 increase was impacted by higher facilities rent expense and higher facilities maintenance and includes $1.7 million of expense associated with damage to branches and other facilities caused by Hurricane Ike in the third quarter of 2008. The 2007 increase was impacted by higher facilities rent expense, higher facilities maintenance and utilities expense, and the impact of the acquisition of Stockmen’s.

Furniture and equipment expense for 2008 increased $3.6 million or 3.7% compared to 2007, which was up 8.8% from 2006. The increase in 2007 was mainly due to increased maintenance contract costs related to technology and operational assets.

Other real estate expense increased to $50.4 million compared $4.4 million for 2007 and $0.1 million for 2006. The increase is primarily due to increased OREO balances and write-downs resulting from declining property values, mainly in Arizona and Nevada.

Advertising expense was $30.7 million in 2008, $26.9 million in 2007 and $26.5 million in 2006. The increased expense in 2008 included increased Internet related advertising expenses.

FDIC premiums for 2008 increased $13.4 million or 206.2% compared to 2007, which was up 20.4% from 2006. We expect this expense to increase in 2009.

Other noninterest expense for 2008 decreased $4.2 million or 1.8% compared to 2007, which was up 5.5% from 2006. The increase in 2007 included an $8.1 million Visa litigation accrual and a $4.0 million write-down on repossessed equipment, which was collateral for an equipment lease. The Visa litigation accrual represents an estimate of the Company’s proportionate share of a contingent obligation to indemnify Visa Inc. for certain litigation matters. During 2008 the Company reduced the Visa accrual by $5.6 million as a result of Visa funding a litigation escrow account and settling certain covered litigation.

Impairment Losses on Goodwill

During the fourth quarter of 2008, 2007 and 2006, the Company completed the annual goodwill impairment analysis as required by SFAS 142. The annual goodwill impairment analysis completed in the fourth quarter of 2008 resulted in total impairment losses on goodwill of $353.8 million at the NBA, Vectra, NSB, and P5 reporting units.

The primary causes of the impairment losses on goodwill in three of our reporting units as of December 31, 2008 were declines in market values of comparable companies, declines in acquisition transaction values, and reduced earnings at the reporting units, which resulted primarily from deterioration in credit quality of loan portfolios. See “Accounting for Goodwill” on page 42 for further discussion of the goodwill impairment.

Foreign Operations

Six of our subsidiary banks each operate a foreign branch in Grand Cayman, Grand Cayman Islands, B.W.I. The branches only accept deposits from qualified domestic customers. While deposits in these branches are not subject to FRB reserve requirements or FDIC insurance requirements, there are no federal or state income tax benefits to the Company or any customers as a result of these operations.

Foreign deposits at December 31, 2008, 2007 and 2006 totaled $2.6 billion, $3.4 billion and $2.6 billion, respectively, and averaged $3.2 billion for 2008, $2.7 billion for 2007, and $2.1 billion for 2006. All of these foreign deposits were related to domestic customers of the banks. See Schedule 32 on page 93 for foreign loans outstanding.

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Income Taxes

The Company’s income tax benefit for 2008 was $43.4 million compared to income tax expense of $235.7 million for 2007 and $318.0 million for 2006. The Company’s effective income tax rates, including the effects of minority interest, were 14.0% in 2008, 32.3% in 2007, and 35.3% in 2006. See Note 15 of the Notes to Consolidated Financial Statements for more information on income taxes.

The average effective tax rate in 2008 was lower than in prior years mainly because of the nondeductible goodwill impairment charges. Also increased securities impairment charges, loan loss provision, and OREO charge-downs recorded in 2008 affected taxable revenue, thereby increasing the proportion of nontaxable income relative to total income. During 2008, the Company reduced its liability for unrecognized tax benefits by approximately $9.6 million, net of any federal and/or state tax benefits. Of this reduction, $5.2 million decreased the Company’s tax provision for 2008 and $4.4 million reduced tax-related balance sheet accounts.

During the fourth quarter of 2007, the Company reduced its liability for unrecognized tax benefits by approximately $12.2 million, net of any federal and/or state tax benefits. Of this reduction, $9.1 million decreased the Company’s tax provision for 2007 and $3.1 million reduced goodwill. The primary cause of the decrease was the closing of various state statutes of limitations and tax examinations. As a result of the recognition of certain tax benefits, accrued interest payable on unrecognized tax benefits was also reduced by approximately $2.8 million, net of any federal and/or state benefits. Since the Company classifies interest and penalties related to tax matters as a component of tax expense, the reduction in interest on unrecognized tax benefits also resulted in a decrease to the Company’s tax provision for 2007. The average effective tax rate in 2007 also was lower than in prior years because the securities impairment charges recorded in 2007 affected taxable revenue, thereby increasing the proportion of nontaxable income relative to total income.

In 2004, the Company signed an agreement that confirmed and implemented its award of a $100 million allocation of tax credit authority under the Community Development Financial Institutions Fund set up by the U.S. Government. Under the program, Zions has invested $100 million as of December 31, 2008, in a wholly-owned subsidiary which makes qualifying loans and investments. In return, Zions receives federal income tax credits that will be recognized over seven years, including the year in which the funds were invested in the subsidiary. Zions invested $10 million in its subsidiary in 2006 and a final contribution of $10 million under the terms of our agreement during 2007. Income tax expense was reduced by $5.8 million for 2008, $5.6 million for 2007, and $4.5 million for 2006 as a result of these tax credits. We expect that we will be able to reduce the Company’s federal income tax payments by a total of $39 million over the life of this award, which is expected to be for the years 2004 through 2013.

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BUSINESS SEGMENT RESULTS

The Company manages its banking operations and prepares management reports with a primary focus on geographical area. Segments, other than the “Other” segment that are presented in the following discussion are based on geographical banking operations. The Other segment includes the Parent, Zions Management Services Company (“ZMSC”), nonbank financial service and financial technology subsidiaries, other smaller nonbank operating units, TCBO, which was opened during the fourth quarter of 2005 and is not yet significant, and eliminations of intercompany transactions.

Operating segment information is presented in the following discussion and in Note 22 of the Notes to Consolidated Financial Statements. The accounting policies of the individual segments are the same as those of the Company. The Company allocates centrally provided services to the business segments based upon estimated or actual usage of those services.

Zions Bank

Zions Bank is headquartered in Salt Lake City, Utah and is primarily responsible for conducting the Company’s operations in Utah and Idaho. Zions Bank is the 2nd largest full-service commercial bank in Utah and the 6^th largest in Idaho, as measured by domestic deposits in the state. Zions Bank operates 112 full-service traditional branches and 29 banking centers in grocery stores. During the third quarter of 2008, Zions Bank entered into an agreement to exit 21 banking centers in grocery stores during the first quarter of 2009. The leases on these banking centers are being assumed by another bank and all loans and deposits will be transferred to nearby Zions Bank branch locations. Zions Bank includes most of the Company’s Capital Markets operations, which include Zions Direct, Inc., fixed income trading, correspondent banking, public finance, trust and investment advisory, liquidity and hedging services for Lockhart. Zions Bank also includes Western National Trust Company. On January 1, 2008, Welman Holdings, Inc. (“Welman”), the parent of Contango Capital Advisors, Inc. (“Contango”), became a subsidiary of the Parent. Results of operations for Zions Bank for 2007 and 2006 include Welman. In 2007 and 2006, Welman experienced after tax losses of $8.8 million and $7.9 million, respectively.

During 2008, the Utah economy added 2,500 new jobs or 0.2%, which was a much slower rate of increase than in the prior several years. Utah’s overall unemployment rate increased from 2.7% in 2007 to 3.7% in 2008. The goods production sector, including construction, contributed to the increased unemployment rate. Utah’s service sector did far better, adding approximately 12,000 jobs during 2008. Other growth areas in employment included education, health services and government and professional business services. Idaho ended 2008 with an unemployment rate of 6.6% and a loss of 27,000 non-farm jobs. Both Utah and Idaho still significantly outperformed the national unemployment rate of 7.2% as of December 2008. Softening home prices and slower real estate sales in both states contributed to the economic decline in 2008 and are expected to continue to be challenging through 2009.

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Schedule 11

ZIONS BANK

(In millions)	2008			2007		2006
CONDENSED INCOME STATEMENT
Net interest income	$	662.5		551.4		472.3
Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding		(92.5	)	(59.7	)	–
Other noninterest income		207.3		236.8		263.7
Total revenue		777.3		728.5		736.0
Provision for loan losses		163.1		39.1		19.9
Noninterest expense		463.4		463.2		426.1
Income before income taxes and minority interest		150.8		226.2		290.0
Income tax expense		44.0		72.2		98.1
Minority interest		0.1		0.2		0.1
Net income	$	106.7		153.8		191.8
YEAR-END BALANCE SHEET DATA
Total assets	$	20,778		18,446		14,823
Total securities		1,698		2,039		1,360
Net loans and leases		14,734		12,997		10,702
Allowance for loan losses		214		133		108
Goodwill, core deposit and other intangibles		20		24		27
Noninterest-bearing demand deposits		2,198		2,445		2,320
Total deposits		16,118		11,644		10,450
Preferred equity		250		–		–
Common equity		1,044		1,048		972

Net income for Zions Bank decreased 30.6% to $106.7 million for 2008 compared to $153.8 million for 2007 and $191.8 million for 2006. The increase in the provision for loan losses of $124.0 million and the increase in impairment and valuation losses on securities of $32.8 million were the main factors causing the decrease in net income.

Nonperforming assets were $412.4 million at December 31, 2008 compared to $45.0 million one year ago, an increase of $367.4 million or 816.4%. This deterioration can be attributed to real estate secured loans which account for 79% of nonperforming loans. The ratio of nonperforming assets to net loans and other real estate owned at December 31, 2008 was 2.79% compared to 0.35% at December 31, 2007.

Net loan and lease charge-offs were $75.4 million for 2008 compared to $14.0 million for 2007 and $18.9 million for 2006. Total real estate secured net loan charge-offs were $35.3 million or 46.8% of total net charge-offs, including $29.9 million of net charge-offs related to construction and land development loans. Remaining net charge-offs are composed of $26.9 million in commercial loans and $13.2 million in consumer loans. The loan loss provision was $163.1 million for 2008 compared to $39.1 million for 2007 and $19.9 million for 2006.

The ratio of the allowance for loan losses to net loans and leases was 1.45%, 1.02% and 1.01% at December 31, 2008, 2007 and 2006, respectively.

Net interest income at Zions Bank for 2008 increased 20.1%, or $111.1 million. Average earning assets in 2008 compared to 2007 are up $3.4 billion or 23.8%. During 2008, $1.2 billion in securities were purchased and recorded on the balance sheet as loans, as required by the Liquidity Agreement between Zions Bank and Lockhart. The primary trigger for these repurchases was the ratings downgrade of the monoline insurer that

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provided the credit enhancement on the senior tranche of securitized small business loans. A smaller amount of securities were repurchased as required due to downgrades of the securities themselves. Finally, during 2008 Zions Bank also purchased varying amounts of commercial paper issued by Lockhart to fund its assets. Purchasing these securities and commercial paper contributed to the growth in average earning assets. The net interest margin was 3.77% for 2008, compared to 3.90% for 2007 and 3.89% for 2006. The biggest impact on margin compression has been the increase in nonperforming assets and increased cost of deposits.

Noninterest income decreased 35.2% to $114.8 million compared to $177.1 million for 2007 and $263.7 million for 2006. The bank recognized impairment and valuation losses on securities of $92.5 million in 2008 and $59.7 million in 2007. Loan sales and servicing income declined to $17.3 million in 2008 compared to $30.6 million in 2007, due to a decrease in average loans sold and serviced. Fair value and nonhedge derivative loss was $28.6 million in 2008 compared to a loss of $15.0 million in 2007 and a gain of $0.7 million in 2006. The declines were mainly due to decreasing spreads between LIBOR and the prime rate which decreased nonhedge derivative income. Income from securities conduit was $5.5 million in 2008 compared to $18.2 million in 2007 and $32.2 million in 2006. The decrease in this income can be attributed to smaller spreads and average assets of the conduit being down significantly year over year. Trading income increased $8.6 million in 2008 over 2007 primarily caused by the increased spreads on corporate bond trading.

Noninterest expense was $463.4 million in 2008, $463.2 million in 2007 and $426.1 million in 2006. Noninterest expense in 2007 and 2006 included $17.6 million and $14.3 million, respectively from Welman. Salaries and employee benefits are down $17.8 million in 2008 compared to 2007. Welman’s salary and benefits expense was $12.0 million in 2007. Reductions in variable pay and employee benefits also contributed to this year over year decrease. Credit and OREO expenses are up $8.8 million. FDIC insurance increased $4.7 million. This is due to increased rates charged by FDIC as well as overall deposit growth. Bankcard expense increased $4.9 million caused by an increase in transaction volume as more customers utilize electronic payment methods. The efficiency ratio was 59.04% for 2008, as compared to 62.82% for 2007 and 57.15% for 2006.

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Schedule 12

ZIONS BANK

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		0.55	%	0.98	%	1.39	%
Return on average common equity		9.90	%	15.04	%	21.47	%
Tangible return on average tangible common equity		10.12	%	15.49	%	22.27	%
Efficiency ratio		59.04	%	62.82	%	57.15	%
Net interest margin		3.77	%	3.90	%	3.89	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		6.91	%	6.22	%	6.50	%
Tier 1 risk-based capital		8.32	%	6.84	%	7.26	%
Total risk-based capital		11.33	%	10.75	%	11.30	%
CREDIT QUALITY
Provision for loan losses	$	163.1		39.1		19.9
Net loan and lease charge-offs		75.4		14.0		18.9
Ratio of net charge-offs to average loans and leases		0.53	%	0.12	%	0.20	%
Allowance for loan losses	$	214		133		108
Ratio of allowance for loan losses to net loans and leases		1.45	%	1.02	%	1.01	%
Nonperforming assets	$	412.4		45.0		17.1
Ratio of nonperforming assets to net loans and leases and other real estate owned		2.79	%	0.35	%	0.16	%
Accruing loans past due 90 days or more	$	83.5		36.5		8.5
Ratio of accruing loans past due 90 days or more to net loans and leases		0.57	%	0.28	%	0.08	%
OTHER INFORMATION
Full-time equivalent employees		2,525		2,668		2,687
Domestic offices:
Traditional branches		112		109		107
Banking centers in grocery stores		29		29		29
Foreign office		1		1		1
Total offices		142		139		137
ATMs		176		184		165

Net loans and leases grew $1.7 billion or 13.4%. Commercial lending increased $1.1 billion, commercial real estate loans are up $0.5 billion and consumer loans are up $0.1 billion in 2008 over 2007. Growth numbers include purchased securities that were recorded on balance sheet as loans as previously discussed.

Total deposits increased $4.5 billion or 38.4% in 2008 compared to 2007. $2.6 billion or 59.1% of this increase came from brokered deposits, inter-bank affiliate CDs were up $0.5 billion and money market deposits were up $0.9 billion over 2007. Our retail branch network saw significant improvement as well in growth during 4^th quarter of 2008. The ratio of noninterest-bearing deposits to total deposits was 13.6% in 2008 and 21.0% in 2007.

Total securities declined $341 million or 16.7% in 2008 compared to 2007. This decrease is mainly due to OTTI losses taken on securities that were subsequently sold to the Parent at fair value.

The total risk-based capital ratio at December 31, 2008 was 11.33% compared to 10.75% and 11.30% at December 31, 2007 and December 31, 2006, respectively. The increase in the total risk-based capital ratio for 2008 was mainly due to the issuance of qualifying tier 1 capital preferred stock of $250 million to the Parent in December 2008, a $159 million net decrease of qualifying tier 2 capital subordinated debt due to the Parent, and net income of $106.7 million.

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During 2008, Zions Bank ranked as Utah’s top SBA 7(a) lender for the 15^th consecutive year and ranked 1^st in Idaho’s Boise District for the seventh consecutive year. US Banker Magazine awarded Zions Bank the #2 Women’s Banking Team in the nation. Zions Bank received Greenwich Excellence Awards in Overall Satisfaction (national and western region) and Overall Satisfaction with Treasury Management (national and western region).

California Bank & Trust

California Bank & Trust is headquartered in San Diego, California, and is the eleventh largest full-service commercial bank in California as measured by domestic deposits in the state. CB&T operates 90 full-service traditional branches throughout the state. CB&T manages its branch network by a regional structure, allowing decision-making to remain as close as possible to the customer. These regions include San Diego, Los Angeles, Orange County, San Francisco, Sacramento, and the Central Valley. In addition to the regional structure, core businesses are managed functionally. These functions include retail banking, corporate and commercial banking, construction and commercial real estate financing, and SBA lending. CB&T plans to continue its emphasis on relationship banking providing commercial, real estate and consumer lending, depository services, international banking, cash management, and community development services.

California represents about 13% of the nation’s GDP. Like other parts of the Southwest, it has been experiencing significant declines in real estate values and the adverse effects of a recessionary economy. The state faces a serious budget shortfall that has been estimated at more than $40 billion. Its unemployment rate is 9.3% as of December 31, 2008. Any turnaround in economic prospects is not likely to happen quickly. Unemployment, home foreclosures, and bank credit problems are all increasing. CB&T is focused on maintaining its underwriting and pricing standards as it endeavors to develop new customer relationships among small business and middle market companies.

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Schedule 13

CALIFORNIA BANK & TRUST

(In millions)	2008			2007		2006
CONDENSED INCOME STATEMENT
Net interest income	$	414.3		434.8		469.4
Impairment losses on investment securities		(118.0	)	(79.2	)	–
Other noninterest income		82.6		87.3		80.7
Total revenue		378.9		442.9		550.1
Provision for loan losses		82.9		33.5		15.0
Noninterest expense		239.0		230.8		244.6
Income before income taxes		57.0		178.6		290.5
Income tax expense		18.4		71.2		117.9
Net income	$	38.6		107.4		172.6
YEAR-END BALANCE SHEET DATA
Total assets	$	10,137		10,156		10,416
Total securities		654		951		1,255
Net loans and leases		7,867		7,792		8,092
Allowance for loan losses		116		105		95
Goodwill, core deposit and other intangibles		386		390		400
Noninterest-bearing demand deposits		2,338		2,509		2,824
Total deposits		7,964		8,082		8,410
Preferred equity		158		–		–
Common equity		1,097		1,067		1,123

Net income for CB&T decreased 64.1% to $38.6 million for 2008 compared to $107.4 million for 2007 and $172.6 million for 2006. The decrease in net income was primarily due to recognition of impairment losses on investment securities, increased provision for loan losses and to a lesser extent a decrease in net interest income.

Nonperforming assets were $147.0 million at December 31, 2008 compared to $62.4 million one year ago, an increase of $84.6 million or 135.6%. Nonperforming assets include $135.0 million of nonperforming loans and $12.0 million of OREO for 2008 compared to $62.3 million of nonperforming loans and no OREO for 2007. The majority of the increase in nonperforming loans is attributable to deterioration of commercial real estate, construction, and land development loans. CB&T experienced moderate increases in nonperforming commercial and mortgage loans. The ratio of nonperforming assets to net loans and other real estate owned at December 31, 2008 was 1.87% compared to 0.80% at December 31, 2007.

Net loan and lease charge-offs were $61.8 million for 2008 compared with $23.1 million for 2007 and $10.9 million for 2006. Net charge-offs in 2008 were primarily construction, land and commercial real estate loans. The loan loss provision was $82.9 million for 2008 compared to $33.5 million for 2007 and $15.0 million for 2006. The ratio of the allowance for loan losses to net loans and leases was 1.48% and 1.35% at December 31, 2008 and 2007, respectively.

Net interest income at CB&T for 2008 decreased 4.7%, or $20.5 million. This decrease was caused by the yield on earning assets declining more than the rate on interest-bearing funding sources. Average earning assets were $9.2 billion for 2008, essentially unchanged from $9.1 billion for 2007. Average interest-bearing deposits and borrowings grew modestly, being $6.7 billion and $6.4 billion for 2008 and 2007, respectively. The net interest margin was 4.51% for 2008, compared to 4.76% for 2007 and 4.81% for 2006. Considering that the Federal Funds rate declined by 400 basis points during 2008, CB&T’s net interest margin was relatively stable decreasing only 25 basis points compared to 2007. The margin stability was achieved through managing interest rate risk by utilizing interest rate swaps as hedges and pro-active product management.

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Noninterest income, excluding impairment losses on securities, decreased 5.4% to $82.6 million compared to $87.3 million for 2007 which was up from $80.7 million for 2006. The bank recognized OTTI losses on securities of $118.0 million for 2008 compared to $79.2 million for 2007. The Parent purchased the impaired securities at fair value.

Noninterest expense for 2008 increased $8.2 million or 3.6% to $239.0 million from $230.8 million for 2007 and $244.6 million for 2006. At the time of CB&T’s data processing conversion to the Zion’s platform in August 2007, many functions were transferred to ZMSC. Primarily as a result of the transfer of personnel, centralization of functions and termination of outsourced data processing contracts, salaries and employee benefits, occupancy, and data processing for 2008 in aggregate decreased by $12.5 million to $151.4 million compared to $163.9 million for 2007. This decrease was offset by an increase in other expenses, including allocated affiliate services, of $20.7 million. Furniture and equipment and amortization of core deposit and other intangibles in aggregate decreased $4.8 million in 2008 compared to 2007 while advertising and OREO expense in aggregate increased $4.8 million in 2008 compared to 2007. The efficiency ratio was 63.03% for 2008 compared to 52.07% for 2007 and 44.42% for 2006. The pro forma efficiency ratio without the impairment losses on securities was 48.07% for 2008 and 44.18% for 2007.

Schedule 14

CALIFORNIA BANK & TRUST

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		0.38	%	1.06	%	1.59	%
Return on average common equity		3.59	%	9.83	%	15.40	%
Tangible return on average tangible common equity		5.95	%	16.02	%	24.68	%
Efficiency ratio		63.03	%	52.07	%	44.42	%
Net interest margin		4.51	%	4.76	%	4.81	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		8.77	%	6.97	%	7.36	%
Tier 1 risk-based capital		8.33	%	7.33	%	7.19	%
Total risk-based capital		11.05	%	11.58	%	11.50	%
CREDIT QUALITY
Provision for loan losses	$	82.9		33.5		15.0
Net loan and lease charge-offs		61.8		23.1		10.9
Ratio of net charge-offs to average loans and leases		0.78	%	0.29	%	0.14	%
Allowance for loan losses	$	116		105		95
Ratio of allowance for loan losses to net loans and leases		1.48	%	1.35	%	1.17	%
Nonperforming assets	$	147.0		62.4		27.1
Ratio of nonperforming assets to net loans and leases and other real estate owned		1.87	%	0.80	%	0.34	%
Accruing loans past due 90 days or more	$	7.4		13.0		3.5
Ratio of accruing loans past due 90 days or more to net loans and leases		0.09	%	0.17	%	0.04	%
OTHER INFORMATION
Full-time equivalent employees		1,474		1,572		1,659
Domestic offices:
Traditional branches		90		90		91
Foreign office		1		–		–
Total offices		91		90		91
ATMs		103		103		103

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Net loans and leases marginally increased $75 million or 1.0% in 2008 compared to 2007. Commercial loans, commercial real estate term loans, and consumer home equity loans grew $175 million, $188 million and $32 million, respectively, in 2008 compared to 2007, while construction and land development and 1-4 family residential loans declined $218 million and $95 million, respectively, for the same periods. Changing the mix of these major loan categories helped CB&T diversify its credit risks, particularly lowering the concentration in land and construction loans. CB&T continues to emphasize growing the commercial and small business loan portfolios and managing the run-off of construction and land development loans.

Total deposits declined $118 million or 1.5% in 2008 compared to 2007. The ratio of noninterest-bearing deposits to total deposits was 29.4% in 2008 and 31.0% in 2007. CB&T’s goal of relationship banking includes providing customers with checking accounts, treasury management services, sweep accounts and other deposit products. CB&T generally does not rely on noncore deposits such as brokered funds.

Total securities declined $297 million or 31.2% in 2008 compared to 2007. The change was driven primarily by the sales of the impaired securities to the Parent.

At December 31, 2008 tier 1 leverage, tier 1 risk-based and total risk-based capital ratios were 8.77%, 8.33% and 11.05%, respectively, compared to 6.97%, 7.33% and 11.58%, respectively, at December 31, 2007. The improvement in the tier 1 ratios was primarily due to the issuance of preferred stock to the Parent of $157.5 million in December 2008. Tier 1 capital was $873 million at the end of 2008 compared to $689 million at 2007. Total risk-based capital was $1.2 billion at the end of 2008 compared to $1.1 billion at 2007. This small change was due to the offsetting effects of the issuance of the preferred stock and the net redemption of $132.5 million of subordinated debt (which qualified as tier 2 capital) due to the Parent. The total risk-based capital ratio decreased due to an increase of risk-weighted assets to $10.5 billion compared to $9.4 billion at the end of 2008 and 2007, respectively.

Subsequent to year-end, on February 6, 2009, CB&T was the winning bidder for the assets and deposits of the failed Alliance Bank in Southern California. Alliance operated five branches and CB&T acquired approximately $1.1 billion of loans and $0.9 billion of deposits (including $0.4 billion of brokered deposits that we do not expect to retain) from the FDIC under a loss sharing agreement that affords significant credit risk protection to CB&T.

Amegy Corporation

Amegy is headquartered in Houston, Texas and operates Amegy Bank, the 8th largest full-service commercial bank in Texas as measured by domestic deposits in the state. Amegy offers 69 full-service traditional branches and three banking centers in grocery stores in the Houston metropolitan area, six traditional branches in the Dallas metropolitan area and five traditional branches in San Antonio. Amegy also operates a mortgage company (“Amegy Mortgage Company”), a broker-dealer (“Amegy Investments”), an insurance agency (“Amegy Insurance Agency”), and a trust and private banking group.

The Texas economy continued to outperform the nation with employers adding 153,600 jobs in the past 12 months, compared with job losses of 2.6 million nationwide during the same period. Among the 15 states that reported employment growth from November 2007 to November 2008, Texas accounted for 71% of entire job gains. Amegy’s three primary markets – Houston, Dallas and San Antonio – continued to experience job growth in 2008, as well. Together, they and other markets in Texas, have kept the state’s unemployment rate at or below the national average for 24 consecutive months. Recognized as an international business leader, the Houston Metropolitan Statistical Area (“MSA”) gained 57,300 jobs from December 2007 to December 2008, growing 2.2% to a total of more than 2.6 million jobs. Houston outperformed the state, which grew 1.5%. The Dallas-Fort Worth-Arlington MSA, driven by the trade, transportation and utilities industries, had job growth of 1.4% to a total of more than 3 million. A strong and growing healthcare industry helped San Antonio increase jobs by 1.8% to nearly 860,000 jobs.

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Schedule 15

AMEGY CORPORATION

(In millions)	2008		2007	2006
CONDENSED INCOME STATEMENT
Net interest income	$	370.1	331.3	304.7
Noninterest income		192.9	126.7	114.9
Total revenue		563.0	458.0	419.6
Provision for loan losses		71.9	21.2	7.8
Noninterest expense		305.2	295.6	283.5
Income before income taxes and minority interest		185.9	141.2	128.3
Income tax expense		60.5	46.7	39.5
Minority interest		0.3	0.1	1.8
Net income	$	125.1	94.4	87.0
YEAR-END BALANCE SHEET DATA
Total assets	$	12,406	11,675	10,366
Total securities		693	895	1,266
Net loans and leases		9,129	7,902	6,352
Allowance for loan losses		116	68	55
Goodwill, core deposit and other intangibles		1,334	1,355	1,370
Noninterest-bearing demand deposits		2,709	2,243	2,245
Total deposits		8,625	8,058	7,329
Preferred equity		80	–	–
Common equity		2,049	1,932	1,805

Net income for Amegy increased 32.5% to $125.1 million for 2008 compared to $94.4 million for 2007 and $87.0 million for 2006. The increase in net income was primarily due to continued robust loan growth, gains realized on the termination of interest rate swap contracts (which were recognized immediately at the bank level, but which are being amortized over the remaining life of the contracts at the consolidated Zions Bancorporation level as described in the “Other” segment on page 82), strong fee income generation and only moderate increases in operating expenses. These positive factors were partially offset by an increased provision for loan losses and a decrease in the net interest margin.

Nonperforming assets were $56.7 million at December 31, 2008 compared to $45.6 million one year ago, an increase of $11.1 million or 24.3%. The increase in nonperforming assets was due to deterioration in the segment of the loan portfolio related to home builders, lot developers, and income producing property developers. Nonperforming assets to net loans and other real estate owned at December 31, 2008 was 0.62% compared to 0.58% at December 31, 2007.

Net loan and lease charge-offs were $24.1 million for 2008 compared with $9.0 million for 2007 and $1.9 million for 2006. Net loan and lease charge-offs in 2008 were primarily in the commercial and industrial loan portfolio. The loan loss provision was $71.9 million for 2008 compared to $21.2 million for 2007 and $7.8 million for 2006. The ratio of the allowance for loan losses to net loans and leases was 1.27% at December 31, 2008 and 0.86% and 0.87% at December 31, 2007 and 2006, respectively.

Net interest income increased by 11.7% for 2008 due to a 17.1%, or $1.4 billion increase in average earning assets and a reduction in the cost of funds. The net interest margin was 3.92% for 2008, compared to 4.13% for 2007 and 4.36% for 2006.

Noninterest income increased 52.2% to $192.9 million compared to $126.7 million for 2007 and $114.9 million for 2006. The largest increases in noninterest income were due to the income received from

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ineffectiveness and the early termination of interest rate hedges of $36.6 million, an $11.8 million or 28.9% increase in service charge income and a $5.9 million or 189.7% increase in income on other equity investments.

Noninterest expense was actively managed during 2008 increasing only $9.6 million or 3.2% from 2007. Increases for 2008 included a $6.2 million or 4.7% increase in salaries and benefits, a $3.4 million increase in the cost of FDIC insurance and $1.7 million in expenses related to the recovery from Hurricane Ike in September. The efficiency ratio improved to 53.80% in 2008 from 63.83% in 2007 and 66.79% in 2006. The change in the efficiency ratio was largely due to the gains realized on the termination of interest rate swap contracts as well as from strict expense management and the benefits derived from the sharing of technology resources with Zions.

Schedule 16

AMEGY CORPORATION

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		1.04	%	0.91	%	0.93	%
Return on average common equity		6.28	%	5.10	%	4.87	%
Tangible return on average tangible common equity		21.43	%	22.46	%	26.25	%
Efficiency ratio		53.80	%	63.83	%	66.79	%
Net interest margin		3.92	%	4.13	%	4.36	%
RISK-BASED CAPITAL RATIOS1
Tier 1 leverage		8.67	%	7.58	%	7.64	%
Tier 1 risk-based capital		8.10	%	6.90	%	7.19	%
Total risk-based capital		11.13	%	10.94	%	10.35	%
CREDIT QUALITY
Provision for loan losses	$	71.9		21.2		7.8
Net loan and lease charge-offs		24.1		9.0		1.9
Ratio of net charge-offs to average loans and leases		0.28	%	0.13	%	0.03	%
Allowance for loan losses	$	116		68		55
Ratio of allowance for loan losses to net loans and leases		1.27	%	0.86	%	0.87	%
Nonperforming assets	$	56.7		45.6		15.7
Ratio of nonperforming assets to net loans and leases and other real estate owned		0.62	%	0.58	%	0.25	%
Accruing loans past due 90 days or more	$	5.5		3.8		9.7
Ratio of accruing loans past due 90 days or more to net loans and leases		0.06	%	0.05	%	0.15	%
OTHER INFORMATION
Full-time equivalent employees		1,756		1,694		1,599
Domestic offices:
Traditional branches		80		79		70
Banking centers in grocery stores		3		8		8
Foreign office		1		1		1
Total offices		84		88		79
ATMs		140		142		129

¹ Capital ratios are for Amegy Bank N.A.

Net loans and leases expanded $1.2 billion or 15.5% to $9.1 billion in 2008 compared to $7.9 billion in 2007. Most categories of loans grew in 2008 compared to 2007, with over half of the total growth concentrated in the commercial lending portfolio. Amegy continues to be active in new loan originations by seeking borrowers meeting both its pricing and credit criteria.

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Total deposits grew $567 million or 7.0% in 2008 compared to 2007, $466 million of this growth was in noninterest-bearing deposits. The ratio of noninterest-bearing deposits to total deposits was 31.4% in 2008 and 27.8% in 2007. Amegy continues to be a leader in providing treasury management services to commercial clients and in serving the retail and small business enterprises through its branch network.

Total securities declined $202 million or 22.6% in 2008 compared to 2007 through maturities, calls and principal pay-downs. This change was driven by a continuing effort to maximize balance sheet efficiency. Amegy did not recognize any impairment or valuation losses in its securities portfolio in either 2008 or 2007.

The total risk-based capital ratio at December 31, 2008 was 11.13% compared to 10.94% and 10.35% at December 31, 2007 and December 31, 2006, respectively. The increase in the total risk-based capital ratio for 2008 was mainly due to the issuance of qualifying tier 1 capital preferred stock of $80 million to the Parent in December 2008, a $133 million net decrease of qualifying tier 2 capital subordinated debt due to the Parent and net income of $125.1 million.

National Bank of Arizona

National Bank of Arizona is headquartered in Tucson, Arizona, and is the 4^th largest full-service commercial bank in Arizona as measured by domestic deposits in the state. NBA operates 79 full-service traditional branches and provides a full range of banking services to its customers. During 2008, NBA expanded its depository base through the acquisition of certain Arizona depository customers held by Silver State Bank branches, a failed financial institution. The acquisition comprised less than 5% of the total deposit balance of NBA at the date of purchase.

The Arizona economy has been contracting since the 3^rd quarter of 2007. Normally, the state’s economy follows the national economy; however, in this current recession, Arizona, along with many Western states lead this decline. The decline continued to be fairly severe during 2008. The state’s unemployment grew by over 56% to 6.1% in the twelve months ending October 31, 2008. The state’s population grew slightly in the same twelve month period by 1.6% to over 6.4 million. However, the pace of quarterly net migration into the state slowed to just over 8,000 in the third quarter of 2008, nearly a fourth of the level experienced in the same quarter in 2007. Statewide residential building permits dropped to just over 27,000, a decline of 43% in the fiscal year. Indications are that 2009 will remain challenging, as unemployment is expected to rise to nearly 8%, population growth is anticipated to decline to 1.2% and residential building permits are expected to decline approximately 22%. Projections for 2010 and beyond reflect a more positive trend, although remain modest in comparison to factors experienced by the state during a growth period of 2003-2006.

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Schedule 17

NATIONAL BANK OF ARIZONA

(In millions)	2008			2007	2006
CONDENSED INCOME STATEMENT
Net interest income	$	219.5		250.8	214.9
Noninterest income		46.8		33.4	25.4
Total revenue		266.3		284.2	240.3
Provision for loan losses		211.8		30.5	16.3
Noninterest expense		161.2		142.4	103.0
Impairment loss on goodwill		168.6		–	–
Income (loss) before income taxes		(275.3	)	111.3	121.0
Income tax expense (benefit)		(56.7	)	43.5	47.8
Net income (loss)	$	(218.6	)	67.8	73.2
YEAR-END BALANCE SHEET DATA
Total assets	$	4,864		5,279	4,599
Total securities		204		258	199
Net loans and leases		4,146		4,585	4,066
Allowance for loan losses		124		65	43
Goodwill, core deposit and other intangibles		22		195	66
Noninterest-bearing demand deposits		916		1,100	1,160
Total deposits		3,923		3,871	3,695
Preferred equity		430		–	–
Common equity		355		581	346

NBA experienced a net loss of $218.6 million in 2008, compared to net income of $67.8 million for 2007 and $73.2 million for 2006. The decrease in the net results for NBA was primarily due to recognition of goodwill impairment totaling $168.6 million. As of December 31, 2008 all of NBA’s goodwill has been written off. Additionally, with the worsening economic trends in Arizona, as noted above, credit-related costs increased significantly in the year. During the year, the Company recorded a total loan loss provision of $211.8 million, and nearly doubled to $124 million the allowance for loan losses at year-end.

As clearly reflected in the year’s loan loss provision, NBA’s credit quality worsened in the year. The steady decline in almost every sector of the Arizona economy, especially notable in the real estate sector, caused stress on the bank’s portfolio. Nonperforming assets were $273.0 million at December 31, 2008 compared to $76.1 million one year prior, an increase of $196.9 million or 258.7%. The bank’s exposure to real estate lending, both commercial and residential, contributed to the majority of the increase in nonperforming assets for the year. Nonperforming assets to net loans and other real estate owned at December 31, 2008 was 6.49% compared to 1.66% at December 31, 2007.

Net loan and lease charge-offs were $147.2 million for 2008 compared with $13.6 million for 2007 and $11.3 million for 2006. Net loan and lease charge-offs in 2008 were primarily related to the bank’s real estate portfolio, including real estate construction, land development and land loans. The loan loss provision was $211.8 million for 2008 compared to $30.5 million for 2007 and $16.3 million for 2006. The ratio of the allowance for loan losses to net loans and leases was 2.98% and 1.42% at December 31, 2008 and 2007, respectively.

Net interest income at NBA for 2008 declined by 12.5%, or $31.3 million as compared to 2007. This decrease resulted from a 4.5% decline in NBA’s average earning assets, compression in the net margin arising from a highly competitive marketplace for deposit acquisition and retention, and increased nonperforming loans.

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The net interest margin was 4.64% for 2008, compared to 5.08% for 2007 and 5.20% for 2006. Most short-term benchmark interest rates declined during the year; however, our ability to reduce customer deposit rates in tandem was hampered by heightened bank competition for liquidity.

Noninterest income increased 40.1% to $46.8 million compared to $33.4 million for 2007 and $25.4 million for 2006. This increase is principally due to the recognition of income from interest rate swaps which became ineffective during the year. The bank maintains swap positions to hedge against interest rate risks, hedged against certain portfolio loans. When these positions are deemed ineffective, the swap is cancelled and the income or loss is recognized in noninterest income. During 2008, the income from this activity was $14.4 million compared with a minor loss in 2007. Additionally, noninterest income includes fees earned from customers on their transaction accounts, offset by customer earnings credit. With the interest rate market decline, the net fees earned by the bank increased. Bank service charges, which include net charges on transaction accounts and other fees, increased to $17.0 million, an increase of 15.5% when compared with 2007.

Noninterest expense for 2008 increased $18.8 million or 13.2% from 2007. The increase is principally the result of increases in OREO expense of $27.6 million and increased credit and collection costs of $2.8 million. The increase in OREO expense was primarily the result of continued declines in the value of foreclosed properties. Other significant components of noninterest expense include salaries and employee benefits, occupancy costs, and advertising, all of which were near or below levels experienced in 2007. The efficiency ratio was 60.45% for 2008, as compared to 49.90% for 2007 and 42.81% for 2006.

Schedule 18

NATIONAL BANK OF ARIZONA

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		(4.25	)%	1.25	%	1.66	%
Return on average common equity		(39.40	)%	11.36	%	22.49	%
Tangible return on average tangible common equity		(15.44	)%	18.55	%	28.76	%
Efficiency ratio		60.45	%	49.90	%	42.81	%
Net interest margin		4.64	%	5.08	%	5.20	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		15.19	%	7.29	%	6.37	%
Tier 1 risk-based capital		17.49	%	7.51	%	7.03	%
Total risk-based capital		18.76	%	10.95	%	10.83	%
CREDIT QUALITY
Provision for loan losses	$	211.8		30.5		16.3
Net loan and lease charge-offs		147.2		13.6		11.3
Ratio of net charge-offs to average loans and leases		3.34	%	0.29	%	0.29	%
Allowance for loan losses	$	124		65		43
Ratio of allowance for loan losses to net loans and leases		2.98	%	1.42	%	1.06	%
Nonperforming assets	$	273.0		76.1		12.2
Ratio of nonperforming assets to net loans and leases and other real estate owned		6.49	%	1.66	%	0.30	%
Accruing loans past due 90 days or more	$	17.0		11.8		2.3
Ratio of accruing loans past due 90 days or more to net loans and leases		0.41	%	0.26	%	0.06	%
OTHER INFORMATION
Full-time equivalent employees		1,100		1,137		911
Domestic offices:
Traditional branches		79		76		53
Foreign office		1		–		–
Total offices		80		76		53
ATMs		73		69		55

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Net loans and leases contracted $439 million or 9.6% in 2008 compared to 2007. Over 75% of this contraction occurred in commercial real estate loans as the bank reduced its exposure to real estate related transactions during 2008. NBA expects a similar decrease during 2009 as compared with 2008, due to continued reductions in commercial real estate loan exposure and lack of demand in this sector. The allowance for loan losses grew by $59 million for the year taking into account the challenging local economic conditions. The bank expects to continue its management and focus its attention on controlling its real estate portfolio exposure, while maintaining a positive and growing influence in the commercial sector of the market.

Total deposits increased by $52 million or 1.3% in 2008 compared to 2007. The ratio of noninterest-bearing deposits to total deposits was 23.3% in 2008 and 28.4% in 2007. During the year, the bank increased its level of brokered deposits to $136.6 million, which represents approximately 3.5% of total deposits for the organization. The bank anticipates a reasonable level of growth in deposits in 2009, despite its plan to reduce the level of brokered deposits.

The total risk-based capital ratio at December 31, 2008 was 18.76% compared to 10.95% and 10.83% at December 31, 2007 and December 31, 2006, respectively. The increase in the total risk-based capital ratio for 2008 was mainly due to the issuance of qualifying tier 1 capital preferred stock of $430 million to the Parent in December 2008, a $110 million decrease of qualifying tier 2 capital subordinated debt due to the Parent and the net loss of $64.2 million, excluding the after-tax goodwill impairment.

Nevada State Bank

Nevada State Bank is headquartered in Las Vegas, Nevada, and is the fifth largest full-service commercial bank in Nevada as measured by domestic deposits in the state. Nevada State Bank operates 44 full-service traditional branches and 32 banking centers in grocery stores throughout the State of Nevada and provides banking services to Nevada’s small and mid-sized businesses as well as retail consumers, with a focus on relationship banking.

During the third quarter of 2008 NSB entered into an agreement to exit 28 grocery store banking centers during the first quarter of 2009, with an eye towards improving our efficiencies and controlling costs while maintaining a vibrant branch network to service our customer base. The leases on these banking centers are being assumed by another bank and all loans and deposits will be transferred to nearby NSB branch locations. To compensate for the reduction of branch locations, we entered into an agreement with a national retailer to place ATMs at 45 of their locations and planned additions of 5 branches in proximity to former grocery store locations that had heavy customer volume.

During 2008, NSB acquired the insured deposits of Silver State Bank in an FDIC-assisted transaction. Total deposits acquired through this acquisition were $563 million, including certificates of deposits totaling $465 million. NSB retained 5 former Silver State Bank branches in the Las Vegas area.

The markets in which we operate are heavily dependent on travel/tourism and construction. During spring 2008, financial conditions in these sectors began to deteriorate dramatically. As of December 2008 and compared to December 2007, gaming revenues are down 22.3%, airline passenger count is down 13.3% and visitor volume is down 10.2%. During the same period in Clark County and Washoe County, NSB’s two biggest market areas, residential construction permits have declined 87.7% and 57.4%, respectively, and commercial construction permits declined 55.0% and 52.9%, respectively. These declining metrics have led to an increase in the Nevada unemployment rate to 7.9% at November 2008 compared to 5.3% one year earlier and a decline in the overall employment numbers of 1.2% during the same period. The consensus outlook for 2009 is that Nevada’s economy will remain challenged as residential foreclosures continue to mount and overall consumer spending, which correlates to travel and tourism spending, is expected to remain suppressed given nationwide higher unemployment and general uncertainty about the economy.

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Schedule 19

NEVADA STATE BANK

(In millions)	2008			2007	2006
CONDENSED INCOME STATEMENT
Net interest income	$	159.0		182.5	197.5
Impairment losses on investment securities		(2.0	)	–	–
Other noninterest income		42.8		32.9	31.2
Total revenue		199.8		215.4	228.7
Provision for loan losses		100.3		23.3	8.7
Noninterest expense		137.9		111.8	110.8
Impairment loss on goodwill		21.0		–	–
Income (loss) before income taxes		(59.4	)	80.3	109.2
Income tax expense (benefit)		(13.6	)	27.9	38.1
Net income (loss)	$	(45.8	)	52.4	71.1
YEAR-END BALANCE SHEET DATA
Total assets	$	4,063		3,903	3,916
Total securities		194		412	415
Net loans and leases		3,200		3,231	3,214
Allowance for loan losses		82		56	35
Goodwill, core deposit and other intangibles		8		21	21
Noninterest-bearing demand deposits		912		929	1,002
Total deposits		3,514		3,304	3,401
Preferred equity		260		–	–
Common equity		259		261	273

NSB had a net loss of $45.8 million for 2008 compared to net income of $52.4 million for 2007 and $71.1 million for 2006. The decrease in net income was primarily attributable to declining market conditions in the state of Nevada, as evidenced by increased loan loss provisioning, write downs of other real estate owned and a goodwill impairment charge. The net interest margin also declined, due to an adverse change in the deposit funding mix, the relatively lower value of noninterest-bearing deposits in a low rate environment, and an increase in nonperforming assets. Additionally, NSB experienced several non-recurring charges related to the acquisition of Silver State Bank and the planned exit from the 28 grocery store branches.

Nonperforming assets were $222.0 million at December 31, 2008 compared to $44.2 million one year ago, an increase of $177.8 million or 402.3%. The majority of the increase is attributable to deterioration of real estate construction, land development and land loans, particularly those loans with exposure to the residential market. Nonperforming assets to net loans and other real estate owned at December 31, 2008 was 6.85% compared to 1.37% at December 31, 2007. NSB expects stress in the loan portfolio to increase in 2009 and for nonperforming assets to continue to increase as market conditions remain challenging.

Net loan and lease charge-offs were $71.6 million for 2008 compared with $2.7 million for 2007 and $1.0 million for 2006. Net loan and lease charge-offs in 2008 were primarily related to construction and land development loans, and to a lesser extent declining collateral values underlying residential and multi-family loans. The loan loss provision was $100.3 million for 2008 compared to $23.3 million for 2007 and $8.7 million for 2006. The ratio of the allowance for loan losses to net loans and leases was 2.58%, 1.73% and 1.10% at December 31, 2008, 2007 and 2006, respectively. Charge-offs are expected to continue in 2009, especially as nonperforming assets are disposed through sale or write-down.

74

NSB’s net interest income decreased in 2008 by 12.9%, or $23.5 million, due primarily to an overall reduction in the interest rate environment, but increases in nonperforming assets also pressured the margin. Also, the majority of growth in our deposit portfolio, which is our primary source of funding, was in interest-bearing deposits such as money market accounts. The net interest margin was 4.43% for 2008, compared to 5.06% for 2007 and 5.46% for 2006.

NSB recognized OTTI losses on investment securities of $2.0 million. In December 2008 the Parent purchased the impaired securities at fair value.

Other noninterest income increased 30.1% to $42.8 million compared to $32.9 million for 2007 and $31.2 million for 2006. The majority of the increase is attributable to gains on terminated interest rate swaps totaling $8.0 million, while service charges and fees on deposit accounts increased $1.5 million, or 8.3%, due to management’s focus on reducing service charge waivers and cross-selling of treasury management products.

Noninterest expense for 2008 increased $26.1 million or 23.3% from 2007. The largest driver of this increase was an increase of $11.8 million in OREO expense. Management has remained proactive in obtaining updated appraisals and marking down OREO holdings as property values have declined in NSB’s markets. Other increases for 2008 included a $3.9 million or 7.8% increase in salaries and benefits attributed to a modest increase in the number of FTE and payroll costs incurred due to the acquisition of Silver State Bank, much of which is nonrecurring. Additionally, salaries and benefits for 2007 included a reversal of certain variable compensation accruals. NSB also incurred several non-recurring, non-salaries charges related to the acquisition of Silver State Bank and the planned exit from the 28 grocery store branches. Finally, legal and credit collection costs increased along with the increase in nonperforming assets. The efficiency ratio was 68.96% for 2008, as compared to 51.82% for 2007 and 48.37% for 2006.

NSB incurred a goodwill impairment loss of $21.0 million during 2008, due to a decline in market values of banking companies in general and degradation in the short-term earnings potential of NSB. As of December 31, 2008, all of the goodwill has been written off.

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Schedule 20

NEVADA STATE BANK

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		(1.18	)%	1.35	%	1.82	%
Return on average common equity		(15.61	)%	19.90	%	27.68	%
Tangible return on average tangible common equity		(9.04	)%	21.70	%	30.35	%
Efficiency ratio		68.96	%	51.82	%	48.37	%
Net interest margin		4.43	%	5.06	%	5.46	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		12.75	%	5.95	%	6.56	%
Tier 1 risk-based capital		14.31	%	6.59	%	7.37	%
Total risk-based capital		15.58	%	11.05	%	11.63	%
CREDIT QUALITY
Provision for loan losses	$	100.3		23.3		8.7
Net loan and lease charge-offs		71.6		2.7		1.0
Ratio of net charge-offs to average loans and leases		2.23	%	0.09	%	0.03	%
Allowance for loan losses	$	82		56		35
Ratio of allowance for loan losses to net loans and leases		2.58	%	1.73	%	1.10	%
Nonperforming assets	$	222.0		44.2		0.6
Ratio of nonperforming assets to net loans and leases and other real estate owned		6.85	%	1.37	%	0.02	%
Accruing loans past due 90 days or more	$	14.5		8.9		18.3
Ratio of accruing loans past due 90 days or more to net loans and leases		0.45	%	0.28	%	0.57	%
OTHER INFORMATION
Full-time equivalent employees		863		854		875
Domestic offices:
Traditional branches		45		39		37
Banking centers in grocery stores		32		35		35
Total offices		77		74		72
ATMs		85		81		79

Net loans and leases contracted $31 million or 1.0% in 2008 compared to 2007. The decline was primarily due to reductions in construction and land development loan balances of $129 million due to management’s intent to diversify the loan portfolio and the challenging market conditions present in Nevada. Commercial loans increased $63 million, partially offsetting the decline in construction and land development loans. Management intends to continue this trend of diversifying the loan portfolio into 2009 and expects construction loans to continue to decline.

Total deposits increased $210 million or 6.4% in 2008 compared to 2007, with the majority of growth occurring in savings and money market accounts. The ratio of noninterest-bearing deposits to total deposits was 26.0% in 2008 and 28.1% in 2007 with the decline caused by a general slowdown in the real estate industry in Nevada, and thus many of NSB’s customers carrying lower operating account balances. Brokered deposits consisted of $60.3 million of Certificate of Deposit Account Registry System (“CDARS”) CD’s at year-end, as the bank took back from CDARS balances equal to the amount of customer funds placed into them.

Total securities declined $218 million or 52.9% in 2008 compared to 2007. The majority of the decline was caused by the maturity or sale of agency or U.S. Government sponsored agency securities. The proceeds from the sale and maturity of these securities were generally not reinvested due to balance sheet management considerations.

76

The total risk-based capital ratio at December 31, 2008 was 15.58% compared to 11.05% and 11.63% at December 31, 2007 and December 31, 2006, respectively. The increase in the total risk-based capital ratio for 2008 was mainly due to the issuance of qualifying tier 1 capital preferred stock of $260 million to the Parent in December 2008, a $112.5 million redemption of qualifying tier 2 capital subordinated debt due to the Parent and the net loss of $24.8 million, excluding the goodwill impairment.

Vectra Bank Colorado

Vectra Bank is headquartered in Denver, Colorado, and is the tenth largest full-service commercial bank in Colorado as measured by domestic deposits in the state. Vectra Bank operates 38 full-service traditional branches and two banking centers in grocery stores throughout the state of Colorado and one full-service traditional branch in Farmington, New Mexico.

The Colorado economy has experienced slower growth during 2008, reflecting the impact of the economic downturn on the state. Job growth has slowed but the state still added 5,000 new jobs between November 2007 and November 2008 – an employment growth rate of 0.2%. Weaker employment growth resulted in a jobless rate of 5.8% in November 2008, as compared to 4.0% a year earlier. While home prices have declined in Colorado, the housing market has faired better than many parts of the nation. According to an S&P/Case-Shiller measure of home values, housing prices in Denver (the largest housing market in the state) fell 5.2% year over year – one of the three smallest declines of 20 cities nation-wide measured in the index. Most regional economists expect Colorado to continue performing better than the nation as a whole. While the energy, education and health services sectors are expected to grow in 2009, the jobless rate will rise as the construction, financial and information sectors continue to deteriorate.

Schedule 21

VECTRA BANK COLORADO

(In millions)	2008			2007	2006
CONDENSED INCOME STATEMENT
Net interest income	$	103.6		96.9	94.2
Impairment losses on investment securities		(6.4	)	–	–
Other noninterest income		29.9		28.1	26.8
Total revenue		127.1		125.0	121.0
Provision for loan losses		15.9		4.0	4.2
Noninterest expense		85.9		86.3	85.0
Impairment loss on goodwill		151.5		–	–
Income (loss) before income taxes		(126.2	)	34.7	31.8
Income tax expense		8.8		12.5	11.7
Net income (loss)	$	(135.0	)	22.2	20.1
YEAR-END BALANCE SHEET DATA
Total assets	$	2,722		2,667	2,385
Total securities		267		329	336
Net loans and leases		2,065		1,987	1,725
Allowance for loan losses		27		26	24
Goodwill, core deposit and other intangibles		–		152	154
Noninterest-bearing demand deposits		460		485	510
Total deposits		2,127		1,752	1,712
Preferred equity		10		–	–
Common equity		191		329	314

77

Vectra had a net loss of $135.0 million for 2008 compared to net income of $22.2 million for 2007 and $20.1 million for 2006. The net loss was due to an impairment loss on goodwill of $151.5 million. This impairment of all of the goodwill at Vectra is due to a decline in market values of banking companies in general and a decrease in the short-term earnings potential of Vectra. The write-off is a non-cash accounting adjustment that does not impact operations, liquidity or regulatory and tangible capital ratios of the bank. Additionally, the bank recognized a $6.4 million OTTI loss on a security during the fourth quarter of 2008. Excluding the goodwill and securities impairment charges, the bank had a profit of approximately $20.4 million on core operations. This performance also reflects elevated provision levels of $15.9 million in 2008, as compared to $4.0 million in 2007 and $4.2 million in 2006.

Given the difficult economic environment, credit quality, while stressed, remained relatively strong at Vectra. Nonperforming assets were $27.1 million at December 31, 2008 compared to $10.4 million one year ago, an increase of $16.7 million. The ratio of nonperforming assets to net loans and other real estate owned at December 31, 2008 was 1.31% compared to 0.52% at December 31, 2007. Net loan and lease charge-offs were $13.6 million for 2008 compared with $1.3 million for 2007 and $1.7 million for 2006. The ratio of the allowance for loan losses to net loans and leases was 1.31% compared to 1.32% at December 31, 2007 and 1.37% at the end of 2006.

Net interest income at Vectra increased 6.9% to $103.6 million in 2008 due to a 12.6%, or $271 million increase in average earning assets and a reduction in the cost of funds. The net interest margin was 4.31% for 2008, compared to 4.53% for 2007 and 4.73% for 2006. The margin declined during 2008 as yields on earning assets declined while competitive pressures on deposit pricing limited the reduction in funding costs.

Other noninterest income increased 6.4% to $29.9 million compared to $28.1 million for 2007 and $26.8 million for 2006. Other noninterest income rose year over year due to higher generation of deposit service fees.

Noninterest expense for 2008 decreased $0.4 million or 0.5% from 2007. Salaries and employee benefits had a modest increase of $0.8 million or 1.9%, the majority of which related to annual merit increases and a modest increase in staff levels. Expense increases in other categories were more than offset by a decrease in core deposit intangible amortization in 2008 of $1.9 million. As a result of disciplined expense management, the bank continued to improve its efficiency ratio which was 67.19% for 2008, as compared to 68.78% for 2007 and 69.99% for 2006.

78

Schedule 22

VECTRA BANK COLORADO

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		(4.98	)%	0.90	%	0.87	%
Return on average common equity		(45.35	)%	6.97	%	6.63	%
Tangible return on average tangible common equity		9.04	%	14.25	%	14.39	%
Efficiency ratio		67.19	%	68.78	%	69.99	%
Net interest margin		4.31	%	4.53	%	4.73	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		7.16	%	7.27	%	7.54	%
Tier 1 risk-based capital		7.82	%	7.15	%	7.53	%
Total risk-based capital		11.23	%	10.54	%	11.17	%
CREDIT QUALITY
Provision for loan losses	$	15.9		4.0		4.2
Net loan and lease charge-offs		13.6		1.3		1.7
Ratio of net charge-offs to average loans and leases		0.66	%	0.07	%	0.10	%
Allowance for loan losses	$	27		26		24
Ratio of allowance for loan losses to net loans and leases		1.31	%	1.32	%	1.37	%
Nonperforming assets	$	27.1		10.4		9.3
Ratio of nonperforming assets to net loans and leases and other real estate owned		1.31	%	0.52	%	0.54	%
Accruing loans past due 90 days or more	$	1.7		3.4		1.4
Ratio of accruing loans past due 90 days or more to net loans and leases		0.08	%	0.17	%	0.08	%
OTHER INFORMATION
Full-time equivalent employees		568		551		575
Domestic offices:
Traditional branches		39		39		37
Banking centers in grocery stores		2		2		2
Foreign office		1		–		–
Total offices		42		41		39
ATMs		48		48		47

Net loans and leases expanded $78 million, or 3.9%, to $2,065 million in 2008 compared to $1,987 million in 2007. The growth was primarily in commercial lending, partially offset by declines in commercial real estate loans. The bank’s liquidity position improved in 2008 as a result of moderate loan growth, and significant increases in deposit balances. Total deposits increased $375 million, or 21.4%, to $2,127 million in 2008 compared to $1,752 million in 2007. Increases in certificates of deposits and brokered funds account for the majority of deposit growth in 2008 reducing the ratio of noninterest-bearing deposits to total deposits to 21.6% in 2008, down from 27.7% in 2007. The bank continues to focus on its relationship banking model, supporting its target small and medium sized business and consumer segments by offering full service banking products tailored to meet their needs.

Total securities declined $62 million, or 18.8%, to $267 million, in 2008 compared to $329 million in 2007. The change included the sale of a $13 million CDO security to the Parent, on which Vectra recognized an OTTI loss of $6.4 million, and normal prepayment and payoff activity on the securities portfolio.

The total risk-based capital ratio at December 31, 2008 was 11.23% compared to 10.54% and 11.17% at December 31, 2007 and December 31, 2006, respectively. The increase in the total risk-based capital ratio for 2008 was mainly due to the issuance of qualifying tier 1 capital preferred stock of $10 million to the Parent in December 2008.

79

The Commerce Bank of Washington

The Commerce Bank of Washington is headquartered in Seattle, Washington, and operates out of a single office located in the Seattle central business district. Its business strategy focuses on serving the financial needs of commercial businesses, including professional service firms, and individuals by providing a high level of customer service delivered by seasoned professionals. TCBW has been successful in serving this market within the greater Seattle/Puget Sound region by using couriers, bank by mail, remote deposit image capture, and other technology in lieu of a branch network.

The Pacific Northwest economy, which normally lags the general U.S. economy by 12 to 18 months, entered a recessionary period in the fourth quarter of 2008, as evidenced by job losses across nearly all industry sectors, increased unemployment, continuing declines in housing prices and home sale activity, and weakening in the commercial real estate markets. Foreclosures have risen dramatically, as well as personal bankruptcies. 2009 is expected to be a very challenging year in the region.

Schedule 23

THE COMMERCE BANK OF WASHINGTON

(In millions)	2008			2007	2006
CONDENSED INCOME STATEMENT
Net interest income	$	33.8		35.1	33.6
Impairment losses on investment securities		(1.3	)	–	–
Other noninterest income		4.4		2.5	2.0
Total revenue		36.9		37.6	35.6
Provision for loan losses		1.1		0.3	0.5
Noninterest expense		14.8		14.4	13.9
Income before income taxes		21.0		22.9	21.2
Income tax expense		7.0		7.5	7.0
Net income	$	14.0		15.4	14.2
YEAR-END BALANCE SHEET DATA
Total assets	$	880		947	808
Total securities		199		326	336
Net loans and leases		588		509	428
Allowance for loan losses		6		5	5
Noninterest-bearing demand deposits		185		145	120
Total deposits		603		608	513
Common equity		75		67	56

Net income for TCBW decreased 9.1% to $14.0 million for 2008 compared to $15.4 million for 2007 and $14.2 million for 2006. The decrease in net income was primarily due to a decline in the net interest margin caused by the accelerated drop in the prime rate. In December TCBW terminated its ineffective interest rate swap portfolio which resulted in a pretax gain of $2.0 million. TCBW also incurred a $1.3 million pretax OTTI charge for a bank trust preferred CDO security.

Credit quality was strong for the year. TCBW did not have any nonperforming assets at December 31, 2008 compared to $0.2 million at year-end 2007. However, some deterioration in other credit quality metrics occurred in the fourth quarter, reflecting the rapidly weakening Pacific Northwest economy.

Net interest income at TCBW by $1.3 million, or 3.7% for 2008 compared to 2007. The net interest margin was 4.05 % for 2008, compared to 4.41% for 2007 and 4.53% for 2006. The reduction in the margin and net

80

interest income was primarily due to the heavy concentration of variable rate loans and securities on the balance sheet resulting in sensitivity to sharply declining interest rates.

Other noninterest income increased 76.0% to $4.4 million compared to $2.5 million for 2007 and $2.0 million for 2006. The increase is due to a pretax gain of $2.0 million from ineffective interest rate swaps that were subsequently terminated.

Noninterest expense for 2008 increased $0.4 million or 2.8% from 2007. Increases for 2008 included a $0.3 million increase in FDIC insurance and an overall decrease in salaries and employee benefits of $0.4 million, or 3.8%. The efficiency ratio was 39.52% for 2008, as compared to 37.68% for 2007 and 38.38% for 2006.

Schedule 24

THE COMMERCE BANK OF WASHINGTON

(Dollar amounts in millions)	2008			2007		2006
PERFORMANCE RATIOS
Return on average assets		1.57	%	1.82	%	1.78	%
Return on average common equity		20.11	%	25.89	%	27.11	%
Tangible return on average tangible common equity		20.11	%	25.89	%	27.68	%
Efficiency ratio		39.52	%	37.68	%	38.38	%
Net interest margin		4.05	%	4.41	%	4.53	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		8.66	%	7.45	%	7.38	%
Tier 1 risk-based capital		10.33	%	10.36	%	10.84	%
Total risk-based capital		13.32	%	13.46	%	14.50	%
CREDIT QUALITY
Provision for loan losses	$	1.1		0.3		0.5
Net loan and lease charge-offs (recoveries)		(0.1	)	(0.1	)	0.2
Ratio of net charge-offs to average loans and leases		(0.03	)%	(0.02	)%	0.05	%
Allowance for loan losses	$	6		5		5
Ratio of allowance for loan losses to net loans and leases		1.05	%	1.01	%	1.11	%
Nonperforming assets	$	–		0.2		–
Ratio of nonperforming assets to net loans and leases and other real estate owned		–		0.04	%	–
Accruing loans past due 90 days or more	$	–		–		–
Ratio of accruing loans past due 90 days or more to net loans and leases		–		–		–
OTHER INFORMATION
Full-time equivalent employees		69		60		56
Domestic offices:
Traditional branches		1		1		1
Foreign office		1		–		–
Total offices		2		1		1

Net loans and leases grew by $79 million or 15.5% in 2008 compared to 2007. The commercial lending portfolio grew by $55 million and commercial real estate loans grew by $24 million. TCBW continues to emphasize growing the commercial and small business loan portfolios, as well as private banking relationships

Total deposits decreased $5 million or 0.8% in 2008 compared to 2007; however average deposits increased by 6.4% or $34 million over the same period. The ratio of noninterest-bearing deposits to total deposits increased to 30.7% in 2008 from 23.8% in 2007, partially due to the FDIC program to provide unlimited insurance on non-interest bearing demand deposits.

81

Total securities declined $127 million or 39.0% in 2008 compared to 2007. The change was driven by the maturity of short term agency securities no longer needed to collateralize the repurchase agreement portfolio and the Parent’s purchase of an impaired security at fair value.

The bank continued to be well capitalized in 2008, with a total risk-based capital ratio of 13.32% at 2008, compared to 13.46% at 2007 and 14.50% at 2006. The modest decline was due to strong loan growth in 2007 and 2008.

Other

“Other” includes the Parent and other various nonbanking subsidiaries, including nonbank financial services and financial technology subsidiaries and other smaller nonbank operating units, along with the elimination of transactions between segments.

The Other segment also includes ZMSC, which provides internal technology and operational services to affiliated operating businesses of the Company. ZMSC has 2,352 of the 2,656 FTE employees in the Other segment. ZMSC charges most of its costs to the affiliates on an approximate break-even basis.

The Other segment also includes TCBO, which was opened during the fourth quarter of 2005 and has not had a significant impact on the Company’s balance sheet and income statement. TCBO consists of a single banking office operating in the Portland, Oregon area. Its business strategies focus on serving the financial needs of businesses, professional service firms, executives and professionals. At December 31, 2008, TCBO had net loans of $46 million compared to $26 million at the end of 2007 and deposits of $35 million compared to $23 million at the end of 2007.

Also, the Other segment includes NetDeposit and Welman. NetDeposit is the merged company of P5, Inc. and NetDeposit, Inc. NetDeposit generates revenues by selling hardware, software and services related to remote imaging, electronic capture and clearing of paper checks, and providing medical claims imaging, lockbox and web-based reconciliation and tracking services. NetDeposit protects, with patents, its intellectual property in business methods related to the electronic processing, clearing of checks, key aspects of Internet-based medical claims processing, and lending against medical claims submitted through the Internet.

Welman, including Contango, is a wealth management company that became a direct subsidiary of the Parent on January 1, 2008. We have extensive relationships with small and middle-market businesses and business owners that we believe present an unusual opportunity to offer wealth management services. Welman provides financial and tax planning, trust and inheritance services, over-the-counter, exchange-traded and synthetic derivative and hedging strategies, quantitative asset allocation and risk management and a global array of investment strategies from equities and bonds through alternative and private equity investments. At year-end, Contango had over $1.0 billion of client assets under management and a strong pipeline of referrals from our affiliate banks, as compared to over $1.3 billion under management at December 31, 2007; the decline is primarily due to declines in market value of assets, as Contango continued to increase its customer base during the year. In years prior to 2008, Welman was a subsidiary of Zions Bank.

82

Schedule 25

OTHER

(Dollar amounts in millions)	2008			2007		2006
CONDENSED INCOME STATEMENT
Net interest income	$	8.8		(0.8	)	(21.9	)
Impairment losses on investment securities		(96.9	)	(19.3	)	–
Other noninterest income		(98.9	)	22.8		6.5
Total revenue		(187.0	)	2.7		(15.4	)
Provision for loan losses		1.3		0.3		0.2
Noninterest expense		67.6		60.1		63.5
Impairment loss on goodwill		12.7		–		–
Income (loss) before income taxes and minority interest		(268.6	)	(57.7	)	(79.1	)
Income tax expense (benefit)		(111.8	)	(45.7	)	(42.1	)
Minority interest		(5.5	)	7.7		9.9
Net income (loss)		(151.3	)	(19.7	)	(46.9	)
Preferred stock dividend		24.4		14.3		3.8
Net loss applicable to common shareholders	$	(175.7	)	(34.0	)	(50.7	)
YEAR-END BALANCE SHEET DATA
Total assets	$	(757	)	(126	)	(343	)
Total securities		600		651		600
Net loans and leases		130		85		89
Allowance for loan losses		2		1		–
Goodwill and other intangibles		7		22		25
Noninterest-bearing demand deposits		(35	)	(238	)	(171	)
Total deposits		(1,558	)	(396	)	(528	)
Preferred equity		394		240		240
Common equity		(150	)	(232	)	(142	)
OTHER INFORMATION
Full-time equivalent employees		2,656		2,397		2,256
Domestic offices:
Traditional branches		1		1		1

The net loss applicable to common shareholders for the Other segment was $175.7 million in 2008 compared to net losses of $34.0 million in 2007 and $50.7 million in 2006. The increased net loss applicable to common shareholders for 2008 is mainly due to increased impairment losses on investment securities, goodwill impairment losses on P5 goodwill, intercompany hedge ineffectiveness eliminations, and increased preferred stock dividends mainly related to the U.S. Treasury’s $1.4 billion preferred stock investment. Impairment losses on investment securities increased to $96.9 million from $19.3 million for 2007, mainly due to impairment losses on bank and insurance trust preferred CDO securities. See further discussion in “Noninterest Income” on page 53. See “Capital Management” on page 119 for an explanation of preferred stock dividends.

Other noninterest income was $(98.9) million in 2008 compared to $22.8 million in 2007. This decline in other noninterest income is mainly due to $59.6 million in hedge ineffectiveness income eliminations in 2008 for ineffective hedges at the subsidiary banks that were not ineffective for the consolidated Company. Other reasons for the decrease include $15.4 million for intercompany derivative credit valuation income eliminations, $30.2 million for declines in net equity securities gains, $4.2 million for declines in net fixed income securities gains, $7.1 million of fair value decrease for a security accounted for at fair value, and $7.7 million for declines in income from other equity investments.

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The Company selectively makes investments in financial services and financial technology ventures. The Company owns a significant position in IdenTrust, Inc. (“IdenTrust”), a company in which two unrelated venture capital firms also own significant positions, and which provides, among other services, online identity authentication services and infrastructure. IdenTrust continues to post operating losses and the Company recorded pretax charges of $1.7 million in 2008 and $2.2 million in both 2007 and 2006, which reduced our recorded investment in the Company. The Other segment includes IdenTrust-related losses of $1.6 million in 2008 and $2.1 million in both 2007 and 2006.

The Company continues to selectively invest in new, innovative products and ventures. Most notably the Company has funded the continued development of NetDeposit (formerly NetDeposit, Inc. and P5). NetDeposit losses, including P5 related losses, included in the Other segment were $18.1 million for 2008 compared to losses of $8.3 million in 2007 and $8.1 million in 2006. Excluding the goodwill impairment loss of $12.7 million, the net loss for 2008 was $5.4 million.

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BALANCE SHEET ANALYSIS

Interest-Earning Assets

Interest-earning assets are those with interest rates or yields associated with them. One of our goals is to maintain a high level of interest-earning assets, while keeping nonearning assets at a minimum.

Interest-earning assets consist of money market investments, securities, and loans and leases. Schedule 5, which we referred to in our discussion of net interest income, includes the average balances of the Company’s interest-earning assets, the amount of revenue generated by them, and their respective yields. As shown in the schedule, average interest-earning assets in 2008 increased 10.8% to $47.7 billion from $43.0 billion in 2007 mainly driven by loan growth. Average interest-earning assets comprised 88.7% of total average assets in 2008 compared with 88.1% in 2007. Average interest-earning assets were 92.3% of average tangible assets in both 2008 and 2007.

Average money market investments, consisting of interest-bearing deposits and commercial paper, federal funds sold, and security resell agreements increased 126.5% in 2008 to $1,889 million from $834 million in 2007. The increase in average money market investments is mainly due to asset-backed commercial paper that the Company purchased from Lockhart during 2008. The average commercial paper purchased from Lockhart was $865 million for 2008 compared to $251 million for 2007. Also, average interest-earning balances due from the Federal Reserve were $315 million for 2008 due in part to the impact of the Company receiving TARP funds in the fourth quarter. Average investment securities decreased 10.8% for 2008 compared to 2007. Average net loans and leases for 2008 increased 11.3% compared to 2007.

Investment Securities Portfolio

We invest in securities both to generate revenues for the Company and to manage liquidity. Schedules 26 and 27 presents a profile of the Company’s investment portfolios at December 31, 2008. Schedule 28 presents a profile of the Company’s investment portfolios at December 31, 2007 and 2006. The amortized cost amounts represent the Company’s original cost for the investments, adjusted for accumulated amortization or accretion of any yield adjustments related to the security and impairment losses. The estimated fair values are the amounts that we believe most accurately reflect assumptions that other participants in the market place would use in pricing the securities as of the dates indicated.

Schedule 26 presents the Company’s asset-backed securities, classified by the highest of the ratings from any of Moody’s Investors Service, Fitch Ratings or Standard & Poors. Schedule 27 presents the asset-backed securities classified by the lowest of the ratings from any of these ratings agencies. During 2008, the Company observed greater divergence of ratings on these securities due to more and greater securities downgrades by one or two of the agencies compared to the other(s). The majority of these securities had “negative outlook” or “negative watch” designations by one of more rating agency at December 31, 2008.

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Schedule 26

INVESTMENT SECURITIES PORTFOLIO

ASSET-BACKED SECURITIES CLASSIFIED AT HIGHEST CREDIT RATING¹

As of December 31, 2008

(In millions)	Par value		Amortized cost	Net unrealized gains (losses) recognized in OCI2		Carrying value	Net unrealized gains (losses) not recognized in OCI2		Estimated fair value
HELD-TO-MATURITY:
Municipal securities	$	700	697	–		697	(2	)	695
Asset-backed securities:
Trust preferred securities – banks and insurance
AA rated		10	10	(1	)	9	(3	)	6
A rated		1,191	1,049	(157	)	892	(292	)	600
BBB rated		173	129	(26	)	103	(32	)	71
		1,374	1,188	(184	)	1,004	(327	)	677
Trust preferred securities – real estate investment trusts
AAA rated		20	18	(5	)	13	(2	)	11
A rated		25	18	(4	)	14	(4	)	10
		45	36	(9	)	27	(6	)	21
Other
AAA rated		23	22	–		22	(7	)	15
AA rated		25	22	(1	)	21	(5	)	16
BBB rated		44	27	(12	)	15	–		15
Noninvestment grade		13	5	–		5	–		5
		105	76	(13	)	63	(12	)	51
		2,224	1,997	(206	)	1,791	(347	)	1,444
AVAILABLE-FOR-SALE:
U.S. Treasury securities		29	28	1		29			29
U.S. Government agencies and corporations:
Agency securities		323	323	2		325			325
Agency guaranteed mortgage-backed securities		408	406	4		410			410
Small Business Administration loan-backed securities		645	693	(26	)	667			667
Municipal securities		177	178	2		180			180
Asset-backed securities:
Trust preferred securities – banks and insurance
AAA rated		761	730	(120	)	610			610
A rated		53	48	(21	)	27			27
BBB rated		7	3	–		3			3
Not rated		26	26	(5	)	21			21
		847	807	(146	)	661			661
Trust preferred securities – real estate investment trusts
A rated		15	6	–		6			6
BBB rated		35	12	(2	)	10			10
Noninvestment grade		71	9	(1	)	8			8
		121	27	(3	)	24			24
Other
AAA rated		47	47	(13	)	34			34
A rated		50	48	(15	)	33			33
BBB rated		3	3	(2	)	1			1
Noninvestment grade		30	4	–		4			4
		130	102	(30	)	72			72
		2,680	2,564	(196	)	2,368			2,368
Other securities:
Mutual funds and stock		308	308	–		308			308
		2,988	2,872	(196	)	2,676			2,676
Total	$	5,212	4,869	(402	)	4,467	(347	)	4,120

¹ Ratings categories include the entire range. For example, “A rated” includes A+, A and A-. Split rated securities with more than one rating are categorized at the highest rating level.

² Other comprehensive income. All amounts reported are pretax.

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Schedule 27

INVESTMENT SECURITIES PORTFOLIO

ASSET-BACKED SECURITIES CLASSIFIED AT LOWEST CREDIT RATING¹

As of December 31, 2008

(In millions)	Par value		Amortized cost	Net unrealized gains (losses) recognized in OCI2		Carrying value	Net unrealized gains (losses) not recognized in OCI2		Estimated fair value
HELD-TO-MATURITY:
Municipal securities	$	700	697	–		697	(2	)	695
Asset-backed securities:
Trust preferred securities – banks and insurance
A rated		388	388	(89	)	299	(90	)	209
BBB rated		268	201	(32	)	169	(45	)	124
Noninvestment grade		718	599	(63	)	536	(192	)	344
		1,374	1,188	(184	)	1,004	(327	)	677
Trust preferred securities – real estate investment trusts
AA rated		20	18	(5	)	13	(2	)	11
A rated		25	18	(4	)	14	(4	)	10
		45	36	(9	)	27	(6	)	21
Other
AAA rated		5	5	–		5	–		5
AA rated		18	16	–		16	(6	)	10
A rated		21	19	–		19	(6	)	13
BBB rated		4	4	(1	)	3	–		3
Noninvestment grade		57	32	(12	)	20	–		20
		105	76	(13	)	63	(12	)	51
		2,224	1,997	(206	)	1,791	(347	)	1,444
AVAILABLE-FOR-SALE:
U.S. Treasury securities		29	28	1		29			29
U.S. Government agencies and corporations:
Agency securities		323	323	2		325			325
Agency guaranteed mortgage-backed securities		408	406	4		410			410
Small Business Administration loan-backed securities		645	693	(26	)	667			667
Municipal securities		177	178	2		180			180
Asset-backed securities:
Trust preferred securities – banks and insurance
AAA rated		206	200	(39	)	161			161
AA rated		143	138	(22	)	116			116
A rated		176	169	(32	)	137			137
BBB rated		187	176	(18	)	158			158
Not rated		26	26	(5	)	21			21
Noninvestment grade		109	98	(30	)	68			68
		847	807	(146	)	661			661
Trust preferred securities – real estate investment trusts
Noninvestment grade		121	27	(3	)	24			24
		121	27	(3	)	24			24
Other
AAA rated		46	46	(13	)	33			33
BBB rated		54	52	(17	)	35			35
Noninvestment grade		30	4	–		4			4
		130	102	(30	)	72			72
		2,680	2,564	(196	)	2,368			2,368
Other securities:
Mutual funds and stock		308	308	–		308			308
		2,988	2,872	(196	)	2,676			2,676
Total	$	5,212	4,869	(402	)	4,467	(347	)	4,120

¹ Ratings categories include the entire range. For example, “A rated” includes A+, A and A-. Split rated securities with more than one rating are categorized at the lowest rating level.

² Other comprehensive income. All amounts reported are pretax.

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Schedule 28

INVESTMENT SECURITIES PORTFOLIO

	December 31,
	2007			2006
(In millions)	Amortized cost		Estimated fair value	Amortized cost	Estimated fair value
HELD-TO-MATURITY:
Municipal securities	$	704	702	653	649
AVAILABLE-FOR-SALE:
U.S. Treasury securities		52	53	43	42
U.S. Government agencies and corporations:
Agency securities		629	626	782	774
Agency guaranteed mortgage-backed securities		765	763	901	894
Small Business Administration loan-backed securities		789	771	907	901
Municipal securities		220	222	226	227
Asset-backed securities:
Trust preferred securities – banks and insurance		2,123	2,019	1,624	1,610
Trust preferred securities – real estate investment trusts		156	94	204	201
Small business loan-backed		183	182	194	194
Other		226	231	7	9
		5,143	4,961	4,888	4,852
Other securities:
Mutual funds and stock		174	174	196	199
		5,317	5,135	5,084	5,051
Total	$	6,021	5,837	5,737	5,700

The amortized cost of investment securities at year-end 2008 decreased $1,152 million from 2007. The change was largely due to security sales, security paydowns, and OTTI write-downs, offset in part by Zions Bank purchasing securities from Lockhart. See further discussion of securities purchases from Lockhart in “Off-Balance Sheet Arrangement” on page 96. As discussed further in “Market Risk – Fixed Income” on page 113, changes in fair value on available-for-sale securities have been reflected in shareholders’ equity through accumulated other comprehensive income (“OCI”).

During the second quarter of 2008, the Company reassessed the classification of certain asset-backed and trust preferred CDOs. On April 28, 2008, the Company reclassified approximately $1.2 billion at fair value of these available-for-sale securities to held-to-maturity. The related unrealized pretax loss of approximately $273 million included in OCI remained in OCI and is being amortized as a yield adjustment through earnings over the remaining terms of the securities. On December 24, 2008, the Company reclassified an additional available-for-sale security with a fair value of approximately $5.1 million to held-to-maturity. No gain or loss was recognized at the time of reclassifications. The Company considers the held-to-maturity classification to be more appropriate because it has the ability and the intent to hold these securities to maturity.

Included in asset-backed securities at December 31, 2008 are CDOs collateralized by trust preferred securities issued by banks, insurance companies, or REITs. The REIT CDOs have some exposure to the subprime market. In addition, the $135 million carrying value of held-to-maturity and available-for-sale “Asset-backed securities – Other” includes $63 million of certain structured asset-backed collateralized debt obligations (“ABS CDOs”) (also known as diversified structured finance CDOs) purchased from Lockhart, which have non-Zions’ originated subprime and home equity mortgage securitizations. The $63 million of ABS CDOs includes approximately $11 million of subprime mortgage securities and $7 million of home equity credit line securities. See further discussion of certain CDOs held by Lockhart in “Off-Balance Sheet Arrangement” on page 96.

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At December 31, 2008, 1% of the $2.7 billion of fair value of available-for-sale securities portfolio as shown previously was valued at Level 1, 71% was valued at Level 2, and 28% was valued at Level 3 under the SFAS 157 valuation hierarchy. See “Fair Value Accounting” on page 34 and Note 21 of the Notes to Consolidated Financial Statements for further discussion of fair value accounting.

The amortized cost of available-for-sale investment securities valued at Level 3 was $929 million and the fair value of these securities was $750 million. The securities valued at Level 3 were comprised of CDOs. For these Level 3 securities, net pretax unrealized loss recognized in OCI in 2008 was $179 million. As of December 31, 2008, we believe that the par amounts of the Level 3 available-for-sale securities for which no OTTI has been recognized do not differ from the amounts we currently anticipate realizing on settlement or maturity. See “Valuation of Collateralized Debt Obligations” on page 37 for further details about the CDO securities pricing methodologies.

Schedule 29 presents a summary of all securities with OTTI losses in 2008 and 2007 including selected information for remaining securities at December 31, 2008.

Schedule 29

OTTI INVESTMENT SECURITIES PORTFOLIO

	OTTI losses			December 31, 2008
				Par value	Amortized cost	Net unrealized gains (losses) recognized in OCI		Carrying value	Net unrealized gains (losses) not recognized in OCI		Estimated fair value
(In millions)	2008		2007
HELD-TO-MATURITY:
Asset-backed securities:
Trust preferred securities – banks and insurance	$	187.7	–	341.6	153.7	(1.4	)	152.3	(1.2	)	151.1
Other		20.0	–	31.6	9.3	–		9.3	–		9.3
		207.7	–	373.2	163.0	(1.4	)	161.6	(1.2	)	160.4
AVAILABLE-FOR-SALE:
Asset-backed securities:
Trust preferred securities – banks and insurance		15.6	–	17.2	7.9	–		7.9			7.9
Trust preferred securities – real estate investment trusts1		64.8	108.6	120.6	26.9	(3.0	)	23.9			23.9
Other		15.9	–	30.0	4.4	–		4.4			4.4
		96.3	108.6	167.8	39.2	(3.0	)	36.2			36.2
Total	$	304.0	108.6	541.0	202.2	(4.4	)	197.8	(1.2	)	196.6

¹ Amounts at December 31, 2008 reflect the sale in December 2008 of certain REIT CDOs with a par value of $84 million and an amortized cost of $1 million.

We review investment securities on an ongoing basis for the presence of OTTI, taking into consideration current market conditions, estimated credit impairment, if any, fair value in relationship to cost, extent and nature of change in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, our ability and intent to hold investments until a recovery of fair value, which may be maturity, and other factors. Future reviews for OTTI will consider the particular facts and circumstances during the reporting period in review. See “Other-than-Temporary-Impairment – Debt Investment Securities” on page 40 for further details about the OTTI accounting policy.

89

The Company also recognized valuation losses during 2008 of $13.1 million on securities purchased from Lockhart under the terms of the Liquidity agreement. During 2007 the Company recognized valuation losses of $49.6 million on securities purchased from Lockhart. The securities purchased from Lockhart in 2008 and 2007 consisted of REIT CDOs and bank and insurance trust preferred CDOs. See “Off-Balance Sheet Arrangement” on page 96 for further details about Lockhart.

Schedule 30 also presents information regarding the investment securities portfolio. This schedule presents the maturities of the different types of investments that the Company owned as of December 31, 2008, and the corresponding average interest rates that the investments will yield if they are held to maturity. It should be noted that most of the SBA loan-backed securities and asset-backed securities are variable rate and their repricing periods are significantly less than their contractual maturities. Also see “Liquidity Risk” on page 114 and Notes 1, 4 and 7 of the Notes to Consolidated Financial Statements for additional information about the Company’s investment securities and their management.

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Schedule 30

MATURITIES AND AVERAGE YIELDS ON SECURITIES

AT DECEMBER 31, 2008

(Amounts in millions)	Total securities				Within one year				After one but within five years				After five but within ten years				After ten years
	Amortized cost		Yield*		Amortized cost		Yield*		Amortized cost		Yield*		Amortized cost		Yield*		Amortized cost		Yield*
HELD-TO-MATURITY:
Municipal securities	$	697	7.5	%	$	68	6.5	%	$	298	6.9	%	$	190	8.3	%	$	141	8.0	%
Asset-backed securities:
Trust preferred securities – banks and insurance		1,188	5.2			9	0.3			2	1.3			18	2.1			1,159	5.3
Trust preferred securities – real estate investment trusts		36	4.9			–				–				–				36	4.9
Other		76	6.2			–				–				9	19.0			67	4.4
		1,997	6.1			77	5.8			300	6.9			217	8.2			1,403	5.6
AVAILABLE FOR SALE:
U.S. Treasury securities		28	3.2			12	2.0			15	3.9			1	8.4			–
U.S. Government agencies and corporations:
Agency securities		323	5.0			181	5.0			129	5.1			12	5.0			1	4.7
Agency guaranteed mortgage-backed securities		406	4.7			112	4.8			210	4.7			67	4.6			17	4.2
Small Business Administration loan-backed securities		693	2.2			139	2.2			329	2.2			157	2.2			68	2.2
Municipal securities		178	6.1			10	4.6			35	5.2			78	6.4			55	6.5
Asset-backed securities
Trust preferred securities – banks and insurance		807	4.1			10	3.4			46	3.7			50	3.7			701	4.1
Trust preferred securities – real estate investment trusts		27	9.5			13				–				14	19.0			–
Other		102	3.3			1	4.7			1	4.7			89	3.4			11	2.5
		2,564	3.9			478	3.9			765	3.7			468	4.2			853	4.1
Other securities:
Mutual funds and stock		308	1.6			308	1.6			–				–				–
		2,872	3.7			786	3.0			765	3.7			468	4.2			853	4.1
Total	$	4,869	4.7	%	$	863	3.2	%	$	1,065	4.6	%	$	685	5.5	%	$	2,256	5.0	%

* Taxable-equivalent rates used where applicable based on a statutory rate of 35%.

The investment securities portfolio at December 31, 2008 includes $707 million of nonrated, fixed-income securities compared to $908 million at December 31, 2007 as shown in Schedule 31. Nonrated municipal securities held in the portfolio were underwritten as to credit by Zions Bank’s Municipal Credit Department in accordance with its established municipal credit standards.

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Schedule 31

NONRATED SECURITIES

	December 31,
(Book value in millions)	2008		2007
Municipal securities	$	681	691
Asset-backed subordinated tranches, created from Zions’ loans		–	183
Other nonrated debt securities		26	34
	$	707	908

The asset-backed subordinated tranches shown in 2007 created from the Company’s loans were mainly the subordinated retained interests of small business loan securitizations. During 2008, Zions Bank was required to purchase from Lockhart senior tranches of these securitizations. Upon dissolution of related securitization trusts the Company recorded the previously securitized loans on its balance sheet as loans. See “Off-Balance Sheet Arrangement” on page 96 for further information on Lockhart and the security purchases. Although the credit quality of these nonrated securities generally is high, it would be difficult to market them in a short period of time since they are not rated and there is no active trading market for them.

Loan Portfolio

As of December 31, 2008, net loans and leases accounted for 76.0% of total assets compared to 73.8% at year-end 2007, and 78.5% of tangible assets as compared to 77.0% at December 31, 2007. Schedule 32 presents the Company’s loans outstanding by type of loan as of the five most recent year-ends. The schedule also includes a maturity profile for the loans that were outstanding as of December 31, 2008. However, while this schedule reflects the contractual maturity and repricing characteristics of these loans, in certain cases the Company has hedged the repricing characteristics of its variable-rate loans as more fully described in “Interest Rate Risk” on page 111.

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Schedule 32

LOAN PORTFOLIO BY TYPE AND MATURITY

(In millions)	December 31, 2008
	One year or less		One year through five years		Over five years	Total	December 31,
							2007	2006	2005	2004
Loans held for sale	$	29		25	146	200	208	253	256	197
Commercial lending:
Commercial and industrial		6,037		3,962	1,449	11,448	10,407	8,422	7,192	4,643
Leasing		23		321	87	431	503	443	373	370
Owner occupied		628		1,044	7,071	8,743	7,545	6,260	4,825	3,790
Total commercial lending		6,688		5,327	8,607	20,622	18,455	15,125	12,390	8,803
Commercial real estate:
Construction and land development		5,115		2,150	251	7,516	7,869	7,483	6,065	3,536
Term		841		1,545	3,810	6,196	5,334	4,952	4,640	3,998
Total commercial real estate		5,956		3,695	4,061	13,712	13,203	12,435	10,705	7,534
Consumer:
Home equity credit line		24		42	1,939	2,005	1,608	1,850	1,831	1,104
1-4 family residential		84		406	3,387	3,877	3,975	4,192	4,130	4,234
Construction and other consumer real estate		373		246	155	774	945	–	–	–
Bankcard and other revolving plans		257		106	11	374	347	295	207	225
Other		84		246	55	385	460	457	537	532
Total consumer		822		1,046	5,547	7,415	7,335	6,794	6,705	6,095
Foreign loans		39		4	–	43	51	3	5	5
Other receivables		–		–	–	–	–	209	191	98
Total loans	$	13,534		10,097	18,361	41,992	39,252	34,819	30,252	22,732
Loans maturing in more than one year:
With fixed interest rates			$	4,436	3,322	7,758
With variable interest rates				5,661	15,039	20,700
Total			$	10,097	18,361	28,458

During 2008 the Company completed a loan classification project and amounts for 2008 and 2007 reflect reclassifications resulting from that project. Information to reclassify loans for periods prior to 2007 is not available.

Net loans and leases increased $2.8 billion during 2008 compared to $4.4 billion during 2007. The increase in loans includes $1.2 billion of loans resulting from the purchase of certain securities from Lockhart, as discussed in “Off-Balance Sheet Arrangement” on page 96. These securities were backed by loans originated or underwritten by Zions Bank and are reflected on the Company’s balance sheet primarily as owner occupied commercial loans. Loan growth slowed considerably during 2008 at Zions Bank, Amegy, and Vectra. CB&T experienced modest loan growth during 2008 after contracting during 2007. NBA and NSB experienced a reduction in outstanding loans due to very challenging economic times in their markets.

We expect that while net loan growth may continue in 2009 in most of our subsidiary banks, growth will continue to be limited at NBA, NSB and CB&T until conditions in the residential real estate sector improve. It appears that loan demand may be slowing in many of our markets due to weakening economic conditions and we believe that continued repayments and charge-offs of residential real estate acquisition and development loans in some markets may offset growth of other loan types and growth in other geographies.

93

Sold Loans Being Serviced

The Company performs loan servicing operations on both loans that it holds in its portfolios as well as loans that are owned by third party investor-owned trusts. Servicing loans includes:

• collecting loan and, in certain instances, insurance and property tax payments from the borrowers;

• monitoring adequate insurance coverage;

• maintaining documentation files in accordance with legal, regulatory, and contractual guidelines; and

• remitting payments to third party investor trusts and, where required, for insurance and property taxes.

The Company receives a fee for performing loan servicing for third parties. Failure by the Company to service the loans in accordance with the contractual requirements of the servicing agreements may lead to the termination of the servicing contract and the loss of future servicing fees.

Schedule 33

SOLD LOANS BEING SERVICED

	2008			2007		2006
(In millions)	Sales		Outstanding at year-end	Sales	Outstanding at year-end	Sales	Outstanding at year-end
Home equity credit lines	$	–	–	–	71	153	261
Small business loans		–	–	–	1,331	–	1,790
SBA 7(a) loans		31	98	–	90	22	128
Farmer Mac		74	403	64	393	43	407
Leases		86	77	–	–	–	–
Total	$	191	578	64	1,885	218	2,586
	Residual interests on balance sheet at December 31, 2008				Residual interests on balance sheet at December 31, 2007
(In millions)	Subordinated retained interests		Capitalized residual cash flows	Total	Subordinated retained interests	Capitalized residual cash flows	Total
Home equity credit lines	$	–	–	–	7	1	8
Small business loans		–	–	–	203	50	253
SBA 7(a) loans		–	1	1	–	1	1
Farmer Mac		–	5	5	–	5	5
Total	$	–	6	6	210	57	267

The Company has securitized and sold a portion of the loans that it originated and purchased. In many instances, we agreed to provide the servicing on these loans as a condition of the sale. Schedule 33 summarizes the sold loans (other than conforming long-term first mortgage real estate loans) that the Company was servicing as of the dates indicated and the related loan sales activity. As reflected in the schedule, sales for 2008 increased approximately $127 million compared to 2007, which were down $154 million from 2006. The Company did not complete a small business loans securitization during 2008 or 2007 and also discontinued selling new home equity credit lines originations during the fourth quarter of 2006. During 2008, the Company purchased small business securitization related securities from Lockhart and upon dissolution of related securitization trusts recorded the related loans on its balance sheet. See “Off-Balance Sheet Arrangement” on page 96 for further discussion. Also during 2008 the Company completed a “cleanup” call on its home equity credit line securitization. Small business, consumer and other sold loans being serviced totaled $0.6 billion at the end of 2008 compared to $1.9 billion at the end of 2007. In addition, at December 31, 2008, conforming long-term first mortgage real estate loans being serviced for others was $1,173 million compared with $1,232 million at year-end 2007.

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Although it performed the servicing, the Company exerted no control nor had any equity interest in any of the trusts that owned the securitized small business and home equity credit line loans. As is a common practice with securitized transactions, the Company had subordinated retained interests in the securitized assets, representing junior positions to the other investors in the trust securities. See Notes 1 and 6 of the Notes to Consolidated Financial Statements for more information on asset securitizations and “Off-Balance Sheet Arrangement” on page 96.

Other Earning Assets

As of December 31, 2008, the Company had $1,044 million of other noninterest-bearing investments compared with $1,034 million in 2007. The increase in other noninterest-bearing investments resulted mainly from increases in bank-owned life insurance and increases in non-SBIC investment funds.

Schedule 34

OTHER NONINTEREST-BEARING INVESTMENTS

	December 31,
(In millions)	2008		2007
Bank-owned life insurance	$	623	601
Federal Home Loan Bank and Federal Reserve stock		220	227
SBIC investments1		66	73
Non-SBIC investment funds		106	65
Other public companies		12	38
Other nonpublic companies		3	16
Trust preferred securities		14	14
	$	1,044	1,034

¹ Amounts include minority investors’ interests in Zions’ managed SBIC investments of approximately $26 million and $29 million as of the respective dates.

Bank-owned life insurance investments increased $22 million during 2008 mainly representing the increase in cash surrender value of the policies, which is not taxable since it is anticipated that the bank-owned life insurance will be held until the eventual death of the insured employees.

SBIC investments decreased $7 million from December 31, 2007 due to losses and write downs on investments in our venture funds.

Non-SBIC investment funds increased $41 million during 2008 primarily as a result of increased investment in funds within new and existing investment commitments and appreciation on investments.

Other public company investments declined $26 million during 2008 primarily due to impairment write downs of approximately $11.0 million on Farmer Mac and $2.0 million on Insure.com and equity in losses of Farmer Mac of $11.8 million.

Deposits and Borrowed Funds

Deposits, both interest-bearing and noninterest-bearing, are a primary source of funding for the Company. Intense competition for deposits during much of the year resulted in core deposit growth lagging the Company’s loan growth and also impeded our ability to reprice our deposits as the Federal Reserve lowered rates during the second half of the year. However, there were indications of improved deposit pricing and some improvement in deposit growth late in the year.

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Schedule 5 summarizes the average deposit balances for the past five years along with their respective interest costs and average interest rates. Average noninterest-bearing deposits decreased 2.7% in 2008 from 2007, while interest-bearing deposits increased 7.6% during the same time period.

Total deposits at December 31, 2008 increased $4.4 billion to $41.3 billion, or 11.9% over the balances reported at December 31, 2007. Core deposits increased $1.4 billion to $33.8 billion, or 4.3%, compared to $32.5 billion at December 31, 2007. Noninterest-bearing demand deposits at December 31, 2008 increased $0.1 billion to $9.7 billion compared to $9.6 billion at December 31, 2007. Demand, savings and money market deposits comprised 74.9% of total deposits at December 31, 2008, compared with 72.0% as of December 31, 2007. The increase was mainly driven by increased brokered deposits and Internet money market deposits during 2008.

During 2008, the Company increased brokered deposit programs and Internet money market accounts to serve as an additional source of liquidity for the Company and reduce its reliance on FHLB advances and other short-term borrowings. At December 31, 2008, total deposits included $3.3 billion of brokered deposits compared to $77 million at December 31, 2007 and Internet money market deposits were $2.5 billion compared to $2.2 billion at December 31, 2007. Money market brokered deposits comprised $2.6 billion of the increase in brokered deposits. The average balance of brokered deposits was $653 million for 2008 and $77 million for 2007.

See “Liquidity Risk” on page 114 for information on funding and borrowed funds. Also, see Notes 11, 12 and 13 of the Notes to Consolidated Financial Statements for additional information on borrowed funds.

Off-Balance Sheet Arrangement

The Company administers one QSPE securities conduit, Lockhart, which was established in 2000. Lockhart was structured to purchase securities that are collateralized by small business loans originated or purchased by Zions Bank; such loans were originated during and prior to 2005. Lockhart obtains funding through the issuance of asset-backed commercial paper and holds securities, which include U.S. Government agency securities collateralized by small business loans and AAA/AA-rated securities. In November 2008, Lockhart elected to participate in the Federal Reserve’s CPFF, and as of December 31, 2008 had sold $80 million of commercial paper to the Federal Reserve under this program.

Liquidity Agreement

Zions Bank is the sole provider of a liquidity facility to Lockhart. Pursuant to the Liquidity Agreement, Zions Bank is required to purchase nondefaulted securities from Lockhart to provide funds to repay maturing commercial paper upon Lockhart’s inability to access the commercial paper market for sufficient funding, or upon a commercial paper market disruption, as specified in the governing documents of Lockhart. In addition, pursuant to the governing documents, including the Liquidity Agreement, if any security in Lockhart is downgraded to below AA- or the downgrade of one or more securities results in more than ten securities having ratings of AA+ to AA-, Zions Bank must either 1) place its letter of credit on the security, 2) obtain a credit enhancement on the security from a third party, or 3) purchase the security from Lockhart at book value.

The maximum amount of liquidity that Zions Bank can be required to provide pursuant to the Liquidity Agreement is limited to the total amount of securities held by Lockhart. This maximum amount was $738 million at December 31, 2008, $2.1 billion at December 31, 2007, $4.1 billion at December 31, 2006, and $5.3 billion at December 31, 2005.

In addition to providing the Liquidity Agreement, Zions Bank receives a fee in exchange for providing hedge support and administrative and investment advisory services to Lockhart.

A hedge agreement between Lockhart and Zions Bank provides for the bank to pay Lockhart should Lockhart’s monthly cost of funds exceed its monthly asset yield. Due to the extreme dislocation in short term

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LIBOR, Lockhart’s cost of funds exceeded its asset yield for the first time in September of 2008. The spread between Lockhart’s monthly asset yield and cost of funds has been volatile as a result of decreasing asset yields and to a lesser extent commercial paper rates resulting from the ongoing contraction, disruption, and volatility in the credit markets. While this spread has again been positive since November, it is possible that this hedge agreement may be triggered in the future.

In addition to rating agency downgrades of securities held by Lockhart that would require Zions Bank to purchase securities from Lockhart, downgrades of Lockhart’s commercial paper below P-1 by Moody’s or below F1 by Fitch would prevent issuance of commercial paper by Lockhart and result in security purchases under the Liquidity Agreement.

During 2008, certain assets held by Lockhart were downgraded by rating agencies and Lockhart was unable to sell varying amounts of commercial paper, due to continued deterioration in the asset-backed commercial paper markets. These events caused purchases by Zions Bank of securities from Lockhart, as follows.

On November 5, 2008, Ambac Assurance Corporation was downgraded by Moody’s to Baa1, resulting in the downgrade of a $78 million security held by Lockhart. Zions Bank purchased the security at book value on November 6, 2008 and recorded the related pretax write-down of $7.9 million in adjusting the security to fair value.

On June 19, 2008, MBIA, Inc. was downgraded by Moody’s to below AA-, and as a result the MBIA, Inc. insured assets held by Lockhart were downgraded to below AA-. Therefore, on June 23, 2008, Zions Bank purchased $787 million of securities from Lockhart as required by the Liquidity Agreement. The purchases comprised the entire remaining small business loan securitizations created by Zions Bank and held by Lockhart. No gain or loss was recognized on these purchases. Upon dissolution of the securitization trusts (including $87 million of related securities owned by the Parent), the Company recorded $897 million of loans on its balance sheet including $23 million of premium. The retained interests related to the securities purchased were included in the purchase transaction and recorded with the premium amount.

On March 5, 2008, Lockhart was unable to sell sufficient commercial paper to fund commercial paper maturities and Zions Bank purchased $85 million of MBIA-insured securities and a $75 million bank trust preferred CDO from Lockhart. The MBIA-insured securities consisted of securitizations of small business loans from Zions Bank and their purchase resulted in no gain or loss. Upon dissolution of the securitization trusts, the loans were recorded on Zions Bank’s balance sheet. A pretax write-down of $4.4 million was recorded by Zions Bank in adjusting the bank trust preferred CDO security to fair value.

On February 5, 2008, a $5 million security held by Lockhart was downgraded by Moody’s from Aa1 to Baa1. Zions Bank purchased this security at book value and recorded the related pretax write-down of $0.8 million in adjusting the security to fair value. In addition, Lockhart was unable to sell sufficient commercial paper to fund commercial paper maturities and Zions Bank purchased $115 million of MBIA-insured securities from Lockhart. These securities consisted of securitizations of small business loans from Zions Bank and their purchase resulted in no gain or loss. Upon dissolution of the securitization trusts, the loans were recorded on Zions Bank’s balance sheet.

If Lockhart is unable to issue additional commercial paper to finance maturing commercial paper, or if additional assets of Lockhart are downgraded below the ratings described above, Zions Bank will be obligated to purchase additional assets from Lockhart. Because these purchases are transacted at book value, Zions Bank may incur losses if the assets’ book value exceeds their fair value. At December 31, 2008, the $738 million book value of Lockhart’s assets exceeded their fair value by approximately $119 million. The Company does not expect Lockhart’s securities portfolio to ever again exceed $738 million.

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Subsequent Event

On January 14, 2009, a $25 million REIT trust preferred security held by Lockhart was downgraded by Fitch from AA to BB. Zions Bank purchased this security at book value under the Liquidity Agreement. The related pretax write-down of $8.9 million was recorded by Zions Bank in marking the security to fair value.

Assets Held by Lockhart

The following schedule summarizes Lockhart’s assets by category, related amortized cost, estimated fair value and ratings.

Schedule 35

LOCKHART FUNDING, LLC ASSETS

	December 31, 2008
(In millions)	Amortized cost		Estimated fair value	Rating range
U.S. Government agencies and corporations:
Small Business Administration loan-backed securities1	$	191	187	Guaranteed by SBA
Asset-backed securities2:
Trust preferred securities – banks and insurance		504	405	AAA to AA
Trust preferred securities – real estate investment trusts		36	22	AAA to AA
Other		7	5	AA
Total	$	738	619

¹ The Company originated 42% of these Small Business Administration loan-backed securities.

² A majority of these securities had a negative watchlisting designation by one or more rating agencies.

At December 31, 2008, the weighted average interest rate reset of Lockhart’s assets was 3.4 months and the weighted average life of Lockhart’s assets was estimated at 17.8 years. The weighted average life of Lockhart’s asset-backed commercial paper was 13 days.

Possible Consolidation of Lockhart

As a QSPE currently defined by the provisions of SFAS 140, Lockhart remains off-balance sheet and is not consolidated in the Company’s financial statements. Should the Parent and its subsidiaries together own more than 90% of the outstanding commercial paper (beneficial interest) of Lockhart, Lockhart would cease to be a QSPE and would be required to be consolidated. In November of 2008, Lockhart sold approximately 10% of its outstanding commercial paper into the CPFF. The CPFF will terminate on October 31, 2009 unless it is further extended.

At December 31, 2008, Lockhart’s assets totaled $738 million at book value and the Company owned $412 million of Lockhart commercial paper.

If Zions Bank had been required to purchase all of Lockhart’s assets with a book value of $738 million at December 31, 2008, including the effect of the fair value loss on those assets, its consolidated total risk-based capital ratio as of December 31, 2008 would have been reduced by approximately 11 basis points and its consolidated tangible equity ratio as of December 31, 2008 would have been reduced by approximately 17 basis points. The Company has adequate liquidity and borrowing capacity to fund the net additional $0.3 billion necessary to purchase the Lockhart assets if it were required. Given that the Company has $55 billion of assets, the potential consolidation of Lockhart would not be significant to the Company.

See “Liquidity Management Actions” on page 116 and Note 6 of the Notes to Consolidated Financial Statements for additional information on Lockhart.

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RISK ELEMENTS

Since risk is inherent in substantially all of the Company’s operations, management of risk is integral to those operations and is also a key determinant of the Company’s overall performance. We apply various strategies to reduce the risks to which the Company’s operations are exposed, including credit, interest rate and market, liquidity, and operational risks.

Credit Risk Management

Credit risk is the possibility of loss from the failure of a borrower or contractual counterparty to fully perform under the terms of a credit-related contract. Credit risk arises primarily from the Company’s lending activities, as well as from off-balance sheet credit instruments.

Credit risk is managed centrally through a uniform credit policy, credit administration, and credit exam functions at the Parent. Effective management of credit risk is essential in maintaining a safe, sound and profitable financial institution. We have structured the organization to separate the lending function from the credit administration function, which has added strength to the control over, and independent evaluation of, credit activities. Formal loan policies and procedures provide the Company with a framework for consistent underwriting and a basis for sound credit decisions. In addition, the Company has a well-defined set of standards for evaluating its loan portfolio, and management utilizes a comprehensive loan grading system to determine the risk potential in the portfolio. Further, an independent internal credit examination department periodically conducts examinations of the Company’s lending departments. These examinations are designed to review credit quality, adequacy of documentation, appropriate loan grading administration and compliance with lending policies, and reports thereon are submitted to management and to the Credit Review Committee of the Board of Directors.

Both the credit policy and the credit examination functions are managed centrally. Each bank is able to modify corporate credit policy to be more conservative; however, corporate approval must be obtained if a bank wishes to create a more liberal policy. Historically, only a limited number of such modifications have been approved. This entire process has been designed to place an emphasis on strong underwriting standards and early detection of potential problem credits so that action plans can be developed and implemented on a timely basis to mitigate any potential losses.

With regard to credit risk associated with counterparties in off-balance sheet credit instruments, Zions Bank and Amegy have International Swap Dealer Association (“ISDA”) agreements in place under which derivative transactions are entered into with major derivative dealers. Each ISDA agreement details the collateral arrangements between Zions Bank and Amegy and their counterparties. In every case, the amount of the collateral required to secure the exposed party in the derivative transaction is determined by the fair value on the derivative and the credit rating of the party with the obligation. The credit rating used in these situations is provided by either Moody’s or Standard & Poor’s. This means that a counterparty with a “AAA” rating would be obligated to provide less collateral to secure a major credit exposure than one with an “A” rating. All derivative gains and losses between Zions Bank or Amegy and a single counterparty are netted to determine the net credit exposure and therefore the collateral required. We have no exposure to credit default swaps.

The Company also has off-balance sheet credit risk associated with a Liquidity Agreement provided by Zions Bank to the QSPE securities conduit, Lockhart. See “Off-Balance Sheet Arrangement” page 96 for further details on Lockhart.

The Company attempts to avoid the risk of an undue concentration of credits in a particular property type or with an individual customer or counterparty. The majority of the Company’s business activity is with customers located within the geographical footprint of its banking subsidiaries. See Note 5 of the Notes to Consolidated Financial Statements for further information on concentrations of credit risk.

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The Company’s credit risk management strategy includes diversification of its loan portfolio. The Company maintains a diversified loan portfolio with some emphasis in real estate. As displayed in Schedule 36, at year-end 2008 no single loan type exceeded 27.3% of the Company’s total loan portfolio.

Schedule 36

LOAN PORTFOLIO DIVERSIFICATION

	December 31, 2008				December 31, 2007
(Amounts in millions)	Amount		% of total loans		Amount		% of total loans
Commercial lending:
Commercial and industrial	$	11,448	27.3	%	$	10,407	26.5	%
Leasing		431	1.0			503	1.3
Owner occupied		8,743	20.8			7,545	19.2
Commercial real estate:
Construction and land development		7,516	17.9			7,869	20.0
Term		6,196	14.8			5,334	13.6
Consumer:
Home equity credit line		2,005	4.8			1,608	4.1
1-4 family residential		3,877	9.2			3,975	10.1
Construction and other consumer real estate		774	1.8			945	2.4
Bankcard and other revolving plans		374	0.9			347	0.9
Other		385	0.9			460	1.2
Other		243	0.6			259	0.7
Total loans	$	41,992	100.0	%	$	39,252	100.0	%

In addition, as reflected in Schedule 37, as of December 31, 2008, the commercial real estate loan portfolio is also well diversified by property type, purpose and collateral location.

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Schedule 37

COMMERCIAL REAL ESTATE PORTFOLIO BY PROPERTY TYPE AND COLLATERAL LOCATION

(REPRESENTS PERCENTAGES BASED UPON OUTSTANDING COMMERCIAL REAL ESTATE LOANS)

AT DECEMBER 31, 2008

(Dollar amounts in millions)			Collateral Location										Product as a% of total CRE	Product as a% of loan type
Loan Type	Balance1		Arizona		Northern California	Southern California	Nevada	Colorado	Texas	Utah / Idaho	Wash- ington	Other
Commercial term:
Industrial			0.63	%	0.65	1.57	0.25	0.21	0.30	0.28	0.15	0.18	4.22	9.05
Office			1.24		0.66	1.81	1.33	0.78	1.22	1.44	0.30	1.45	10.23	21.94
Retail			0.94		0.89	1.99	1.77	0.59	1.23	0.39	0.17	1.01	8.98	19.27
Hotel/motel			1.72		0.81	0.99	0.64	0.70	1.00	1.43	0.15	3.75	11.19	24.00
Acquisition and development			–		0.03	–	–	–	–	–	0.05	–	0.08	0.18
Medical			0.49		0.22	0.36	0.57	0.04	0.14	0.10	0.01	0.02	1.95	4.18
Recreation/restaurant			0.46		0.04	0.19	0.16	0.09	0.12	0.15	0.01	0.25	1.47	3.15
Multifamily			0.38		0.24	1.79	0.28	0.28	1.12	0.52	0.11	0.53	5.25	11.27
Other			0.55		0.19	0.75	0.53	0.09	0.09	0.58	0.06	0.41	3.25	6.96
Total commercial term	$	6,182.2	6.41		3.73	9.45	5.53	2.78	5.22	4.89	1.01	7.60	46.62	100.00
Residential construction:
Single family housing			1.08		0.45	1.04	0.36	0.77	1.71	1.06	0.24	0.36	7.07	35.87
Acquisition and development			3.14		0.49	1.24	1.01	0.61	2.95	2.63	0.14	0.42	12.63	64.13
Total residential construction		2,612.8	4.22		0.94	2.28	1.37	1.38	4.66	3.69	0.38	0.78	19.70	100.00
Commercial construction:
Industrial			0.37		–	0.37	0.03	0.02	0.79	0.06	0.01	0.02	1.67	4.95
Office			0.65		0.02	0.68	0.84	0.12	0.58	0.53	0.09	0.47	3.98	11.81
Retail			1.12		0.04	0.42	1.20	0.16	4.06	0.52	0.02	0.75	8.29	24.63
Hotel/motel			0.13		0.19	0.11	0.14	0.02	0.27	0.11	–	0.09	1.06	3.16
Acquisition and development			1.50		0.10	0.58	2.43	0.44	4.07	1.17	0.07	0.69	11.05	32.82
Medical			0.17		–	0.10	0.19	0.07	0.04	0.09	–	0.49	1.15	3.37
Recreation/restaurant			0.10		–	0.01	–	–	–	–	–	–	0.11	0.33
Other			0.17		–	0.22	0.13	0.02	0.02	0.08	0.02	0.04	0.70	2.08
Apartments			0.57		0.46	0.47	0.20	0.09	1.98	0.20	0.38	1.32	5.67	16.85
Total commercial construction		4,465.7	4.78		0.81	2.96	5.16	0.94	11.81	2.76	0.59	3.87	33.68	100.00
Total construction		7,078.5	9.00		1.75	5.24	6.53	2.32	16.47	6.45	0.97	4.65	53.38
Total commercial real estate	$	13,260.7	15.41	%	5.48	14.69	12.06	5.10	21.69	11.34	1.98	12.25	100.00

¹ Excludes approximately $507 million of unsecured loans outstanding, but related to the real estate industry.

Loan-to-value (“LTV”) ratios are another key determinant of credit risk in commercial real estate lending. The Company estimates that the weighted average LTV ratio on the total commercial real estate portfolio at December 31, 2008, detailed in year-end amounts in Schedule 37, was approximately 57%; however, continued declines in property values in many of our distressed markets may understate the actual current LTV levels. This estimate is based on the most current appraisals, generally obtained as of the date of origination, downgrade or renewal of the loans.

Lending to finance residential land acquisition, development and construction is a core business for the Company. In some geographic markets, significant declines in the availability of mortgage financing to buyers of newly constructed homes, declining home values and general uncertainty in the residential real estate market are having an adverse impact on the operations of many of the Company’s developer and builder customers.

As discussed throughout this document, the Company’s level of credit quality continued to weaken during 2008. The deterioration in credit quality is mainly related to the weakness in residential development and construction activity in the Southwest that started in the latter half of 2007. Although not to the degree as experienced in the Southwestern states, some signs of deterioration also surfaced in Utah/Idaho during the first quarter of 2008 and in the Texas market in the fourth quarter of 2008. Residential construction and land development loans in Arizona and Nevada remains the most troubled segment of the portfolio and account for the most meaningful declines in commercial real estate credit quality during the last half of 2008. The Company experienced increased criticized and classified loans in its commercial loan portfolio during the year in Utah and Texas, and increased loan delinquencies in segments of its residential mortgage portfolio in Utah and Idaho. We expect continued credit quality deterioration over the next few quarters.

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The Company does not pursue subprime residential mortgage lending, including option ARM and negative amortization loans. It does have approximately $576 million of high FICO (a credit score developed by the Fair Isaac Corporation) stated income loans, including “one-time close” loans to finance the construction of a home, which convert into a permanent jumbo mortgage. This portfolio began to show significant credit quality deterioration in the second half of 2008.

Commercial Real Estate Loans

Selected information regarding our commercial real estate (“CRE”) loan portfolio is presented in the following table:

Schedule 38

COMMERCIAL REAL ESTATE PORTFOLIO BY LOAN TYPE AND GEOGRAPHY

AT DECEMBER 31, 2008

(Amounts in millions)		Arizona			Northern California		Southern California		Nevada		Colorado		Texas		Utah/ Idaho		Wash- ington		Other1		Total		% of total CRE
Commercial term:
Balance outstanding	12/31/08	$	841.2		317.6		1,430.6		735.5		445.0		686.0		646.1		165.0		943.4		6,210.4		45.1	%
% of loan type			13.5	%	5.1	%	23.0	%	11.8	%	7.2	%	11.1	%	10.4	%	2.7	%	15.2	%	100.0	%
Delinquency rates2:
30-89 days	12/31/08		0.5	%	0.9	%	0.4	%	1.8	%	–		0.7	%	1.8	%	–		4.4	%	1.4	%
	12/31/07		0.9	%	0.2	%	0.2	%	–		–		0.3	%	0.3	%	–		1.1	%	0.4	%
³ 90 days	12/31/08		0.2	%	0.9	%	0.1	%	1.2	%	–		0.2	%	1.0	%	–		3.0	%	0.8	%
	12/31/07		–		–		–		–		0.1	%	0.5	%	–		–		–		0.1	%
Accruing past due
90 days	12/31/08	$	1.9		–		–		2.4		–		–		–		–		7.5		11.8
	12/31/07		0.1		–		0.2		–		–		0.6		–		–		0.1		1.0
Nonaccrual loans	12/31/08		0.5		2.8		2.0		6.7		0.4		4.5		6.4		–		20.3		43.6
	12/31/07		–		–		0.1		–		0.4		3.6		–		–		–		4.1
Commercial construction:
Balance outstanding	12/31/08		653.0		81.7		467.7		708.0		273.0		1,684.2		425.0		99.1		410.7		4,802.4		34.9	%
% of loan type			13.6	%	1.7	%	9.7	%	14.7	%	5.7	%	35.1	%	8.8	%	2.1	%	8.6	%	100.0	%
Delinquency rates2:
30-89 days	12/31/08		2.8	%	–		2.4	%	10.5	%	0.5	%	2.1	%	6.6	%	1.8	%	6.1	%	4.1	%
	12/31/07		–		–		0.1	%	–		0.6	%	–		–		58.6	%	2.2	%	0.7	%
³ 90 days	12/31/08		0.7	%	–		–		8.5	%	0.5	%	0.2	%	2.9	%	–		6.1	%	2.2	%
	12/31/07		0.2	%	–		–		–		0.5	%	–		–		–		–		0.1	%
Accruing past due
90 days	12/31/08	$	1.8		–		–		25.4		–		–		8.1		–		18.6		53.9
	12/31/07		6.3		–		15.9		13.2		–		0.1		–		–		32.2		67.7
Nonaccrual loans	12/31/08		27.4		–		11.1		66.2		1.4		14.0		4.3		–		6.3		130.7
	12/31/07		–		–		–		5.7		1.3		–		–		–		–		7.0
Residential construction:
Balance outstanding	12/31/08		591.3		113.7		327.4		199.2		185.4		666.8		479.7		50.5		141.0		2,755.0		20.0	%
% of loan type			21.5	%	4.2	%	11.9	%	7.2	%	6.7	%	24.2	%	17.4	%	1.8	%	5.1	%	100.0	%
Delinquency rates2:
30-89 days	12/31/08		16.7	%	7.3	%	9.3	%	38.8	%	6.9	%	3.3	%	20.4	%	0.5	%	8.6	%	13.1	%
	12/31/07		0.9	%	1.0	%	–		5.5	%	0.4	%	0.4	%	2.7	%	–		–		1.4	%
³ 90 days	12/31/08		12.3	%	2.3	%	7.7	%	20.9	%	5.6	%	2.4	%	18.8	%	0.5	%	4.5	%	9.6	%
	12/31/07		3.5	%	–		0.4	%	0.8	%	1.3	%	0.1	%	0.4	%	–		–		1.6	%
Accruing past due
90 days	12/31/08	$	7.2		–		–		1.0		–		0.7		9.6		0.3		–		18.8
	12/31/07		12.3		0.2		–		–		2.3		1.3		1.9		–		–		18.0
Nonaccrual loans	12/31/08		99.3		5.8		45.6		50.5		15.0		18.6		88.7		–		19.3		342.8
	12/31/07		46.5		11.9		16.2		36.2		–		0.2		1.4		–		7.5		119.9
Total construction and land development	12/31/08		1,244.3		195.4		795.1		907.2		458.4		2,351.0		904.7		149.6		551.7		7,557.4
Total CRE balance outstanding	12/31/08		2,085.5		513.0		2,225.7		1,642.7		903.4		3,037.0		1,550.8		314.6		1,495.1		13,767.8		100.0	%
Less loans held for sale in commercial real estate			(29.4	)	–		–		–		–		(26.7	)	–		–		–		(56.1	)
Total commercial real estate excluding loans held for sale		$	2,056.1		513.0		2,225.7		1,642.7		903.4		3,010.3		1,550.8		314.6		1,495.1		13,711.7

¹ No other geography exceeded $189 million for all three loan types.

² Delinquency rates include nonaccrual loans.

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Approximately 30% of the commercial term loans consist of mini-perm loans on which construction is complete and the project is either in the process of stabilization or has stabilized, and the owner is waiting to seek permanent financing given the current volatile conditions in the financial markets. Mini-perm loans generally have maturities of 3 to 7 years. The remaining 70% are term loans with initial maturities generally of 15 to 20 years. Stabilization criteria differ by product and are dependent on cash flow created by lease-up for office, industrial and retail products and occupancy for retail and apartment products.

Approximately 31% of the commercial construction and land development portfolio is designated as acquisition and development. Most of these acquisition and development properties are tied to specific retail, apartment, office or other projects. Underwriting on commercial properties is primarily based on the economic viability of the project with heavy consideration given to the creditworthiness of the sponsor. The owners’ equity is always expected to be injected prior to bank advances. Re-margining requirements are often included in the loan agreement along with guarantees of the sponsor. Recognizing that debt is paid via cash flow, the projected economics of the project are primary in the underwriting because it determines the ultimate value of the property and the ability to service debt. Therefore, in most projects (with the exception of multi-family projects) we look for substantial pre-leasing in our underwriting and we generally require a minimum projected stabilized debt service ratio of 1.20.

Although residential construction and development deals with a different product type, many of the requirements previously mentioned, such as creditworthiness of the developer, up-front injection of the developer’s equity, re-margining requirements, and the viability of the project are also important in underwriting a residential development loan. Heavy consideration is given to market acceptance of the product, location, strength of the developer, and the ability of the developer to stay within budget. Progress inspections performed by qualified independent inspectors are routinely performed before disbursements are made. Loan agreements generally include limitations on the number of model homes and homes built on a spec basis, with preference given to pre-sold homes.

Real estate appraisals are ordered independently of the credit officer and the borrower, generally by the banks’ appraisal review function, which is staffed by qualified appraisers. Appraisals are ordered from outside appraisers at the inception, renewal, or for CRE loans, upon the occurrence of any event causing a “criticized” or “classified” grade to be assigned to the credit. The frequency for obtaining updated appraisals for these adversely graded credits is increased when declining market conditions exist. Advance rates will vary based on the viability of the project and the credit-worthiness of the sponsor, but corporate guidelines generally limit advances to 50-65% for raw land, 65-75% for land development, 65-75% for finished commercial lots, 75-80% for finished residential lots, 80% for pre-sold homes, 75-80% for models and spec homes, and 75-80% for commercial properties. Exceptions may be granted on a case-by-case basis.

Loan agreements require regular financial information on the project and the sponsor in addition to lease schedules, rent rolls, and on construction projects, independent progress inspection reports. The receipt of these schedules is closely monitored and calculations are made to determine adherence to the covenants set forth in the loan agreement. Additionally, the frequency of loan-by-loan reviews has been increased to a quarterly basis for all commercial and residential land acquisition, development, and construction loans at California Bank & Trust, National Bank of Arizona, and Nevada State Bank.

Interest reserves are generally established as an expense item in the budget for a real estate construction or development loan. It has proven preferable for the borrower to put their total amount of available equity into the project at the inception of the construction, rather than holding enough of their available funds to pay the interest during the construction period. This enables the bank to maximize the amount of equity obtained and control the amount of money set aside to pay interest on the construction loan. The Company’s practice is to monitor the construction, sales and/or leasing progress to determine whether or not the project remains viable. At any time during the life of the credit that the project is determined not to be viable, the bank has the ability to discontinue the use of the interest reserve and take appropriate action to protect its collateral position via negotiation and/or

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legal action as deemed appropriate. At year-end 2008, Zions affiliates have 1,898 loans with an outstanding balance of $3.6 billion where available interest reserves amount to $190 million. In instances where projects have been determined unviable, the interest reserves have been frozen.

We have not been involved to any meaningful extent with insurance arrangements, credit derivatives, or any other default agreements as a mitigation strategy for commercial real estate loans. However, we do make use of personal or other guarantees as risk mitigation strategies.

The Company stress tests its CRE loan portfolio on a quarterly basis. This testing is back tested and the results of the testing are reviewed quarterly with the rating agencies and banking regulators. The stress testing methodology includes a loan-by-loan Monte Carlo simulation, which is an approach that measures potential loss of principal and related revenues. The Monte Carlo simulation stresses the probability of default and loss given default for CRE loans based on a variety of factors including regional economic factors, loan grade, loan-to-value, collateral type, and geography.

Nonperforming Assets

Nonperforming assets include nonaccrual loans, loans restructured at other than market terms, other real estate owned and other nonperforming assets. Loans are generally placed on nonaccrual status when the loan is 90 days or more past due as to principal or interest, unless the loan is both well secured and in the process of collection. Consumer loans are not normally placed on nonaccrual status. Generally, closed-end non-real estate secured consumer loans are charged off when they become 120 days past due. Open-end consumer loans are charged off when they become 180 days past due unless they are adequately secured by real estate at which point they are placed on nonaccrual status. Loans occasionally may be restructured to provide a reduction or deferral of interest or principal payments. This generally occurs when the financial condition of a borrower deteriorates to the point where the borrower needs to be given temporary or permanent relief from the original contractual terms of the loan. OREO is acquired primarily through or in lieu of foreclosure on loans secured by real estate.

As reflected in Schedule 39, the Company’s nonperforming assets as a percentage of net loans and leases and OREO increased significantly during 2008. The percentage was 2.71% at December 31, 2008 compared with 0.73% on December 31, 2007 and 0.24% on December 31, 2006. Total nonperforming assets were $1,140 million at year-end 2008, compared to $284 million at December 31, 2007 and $82 million at December 31, 2006.

Total nonaccrual loans at December 31, 2008 increased $687 million from the balances at December 31, 2007, which included increases of $296 million for commercial construction and land development loans, $227 million for commercial and industrial and owner occupied loans, and $84 million for consumer real estate loans. The increase in nonaccrual construction and land development loans was primarily in Arizona, California, Nevada, and Utah reflecting the weakness in residential development and construction activity in those states. We expect this weakness to continue in 2009.

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Schedule 39

NONPERFORMING ASSETS

	December 31,
(Amounts in millions)	2008			2007		2006		2005		2004
Nonaccrual loans:
Loans held for sale	$	30		–		–		–		–
Commercial lending:
Commercial and industrial		148		58		25		21		24
Leasing		8		–		–		–		1
Owner occupied		158		21		13		16		22
Commercial real estate:
Construction and land development		457		161		14		17		1
Term		44		4		8		3		4
Consumer:
Real estate		97		13		5		9		13
Other		4		2		2		2		4
Other		–		–		–		1		3
Total nonaccrual loans		946		259		67		69		72
Restructured loans:
Commercial lending:
Owner occupied		2		10		–		–		–
Total restructured loans		2		10		–		–		–
Other real estate owned:
Commercial:
Commercial properties		36		8		5		3		9
Developed land		7		–		–		5		–
Land		2		2		2		3		–
Residential:
1-4 family residential		40		4		2		9		3
Developed land		71		1		–		–		–
Land		36		–		–		–		–
Total other real estate owned		192		15		9		20		12
Other assets		–		–		6		–		–
Total nonperforming assets	$	1,140		284		82		89		84
% of net loans* and leases and other real estate owned		2.71	%	0.73	%	0.24	%	0.30	%	0.37	%
Accruing loans past due 90 days or more:
Commercial lending	$	50		38		17		7		6
Commercial real estate		48		28		22		4		2
Consumer		32		11		5		6		8
Total	$	130		77		44		17		16
% of net loans* and leases		0.31	%	0.20	%	0.13	%	0.06	%	0.07	%

* Includes loans held for sale.

Included in nonaccrual loans are loans that we have determined to be impaired. Loans, other than those included in large groups of smaller-balance homogeneous loans, are considered impaired when, based on current

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information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the loan agreement, including scheduled interest payments. The amount of the impairment is measured based on either the present value of expected cash flows, the observable fair value of the loan, or the fair value of the collateral securing the loan.

The Company’s total recorded investment in impaired loans was $770 million at December 31, 2008 and $226 million at December 31, 2007. Estimated losses on impaired loans are included in the allowance for loan losses. At December 31, 2008, the allowance included $52 million for impaired loans with a recorded investment of $306 million. At December 31, 2007, the allowance for loan losses included $21 million for impaired loans with a recorded investment of $103 million. See Note 5 of the Notes to Consolidated Financial Statements for additional information on impaired loans.

Allowance and Reserve for Credit Losses

Allowance for Loan Losses: In analyzing the adequacy of the allowance for loan losses, we utilize a comprehensive loan grading system to determine the risk potential in the portfolio and also consider the results of independent internal credit reviews. To determine the adequacy of the allowance, the Company’s loan and lease portfolio is broken into segments based on loan type.

For commercial loans, we use historical loss experience factors by loan segment, adjusted for changes in trends and conditions, to help determine an indicated allowance for each portfolio segment. These factors are evaluated and updated using migration analysis techniques and other considerations based on the makeup of the specific segment. These other considerations include:

• volumes and trends of delinquencies;

• levels of nonaccruals, repossessions, and bankruptcies;

• trends in criticized and classified loans;

• expected losses on real estate secured loans;

• new credit products and policies;

• economic conditions;

• concentrations of credit risk; and

• experience and abilities of the Company’s lending personnel.

In addition to the segment evaluations, nonaccrual loans graded substandard or doubtful with an outstanding balance of $500 thousand or more are individually evaluated in accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, to determine the level of impairment and establish a specific reserve. A specific allowance is established for loans adversely graded below $500 thousand when it is determined that the risk associated with the loan differs significantly from the risk factor amounts established for its loan segment.

The allowance for consumer loans is determined using historically developed experience rates at which loans migrate from one delinquency level to the next higher level. Using average roll rates for the most recent twelve-month period and comparing projected losses to actual loss experience, the model estimates expected losses in dollars for the forecasted period. By refreshing the model with updated data, it is able to project losses for a new twelve-month period each month, segmenting the portfolio into nine product groupings with similar risk profiles. This methodology is an accepted industry practice, and the Company believes it has a sufficient volume of information to produce reliable projections.

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As a final step to the evaluation process, we perform an additional review of the adequacy of the allowance based on the loan portfolio in its entirety. This enables us to mitigate the imprecision inherent in most estimates of expected credit losses. This review of the allowance includes our judgmental consideration of any adjustments necessary for subjective factors such as economic uncertainties and excessive concentration risks.

The Company has initiated a comprehensive review of its allowance for loan losses methodology with a view toward updating and conforming this methodology across all of its banking subsidiaries. The Company began implementing this updated methodology in 2007 and expects that these changes will be phased in during 2009.

Schedule 40 summarizes the Company’s loan loss experience by major portfolio segment.

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Schedule 40

SUMMARY OF LOAN LOSS EXPERIENCE

(Amounts in millions)	2008			2007		2006		2005		2004
Loans* and leases outstanding on December 31, (net of unearned income)	$	41,859		39,088		34,668		30,127		22,627
Average loans* and leases outstanding (net of unearned income)	$	40,977		36,808		32,395		24,009		21,046
Allowance for loan losses:
Balance at beginning of year	$	459		365		338		271		269
Allowance of companies acquired		–		8		–		49		–
Allowance associated with purchased securitized loans		2		–		–		–		–
Allowance of loans and leases sold		(1	)	(2	)	–		–		(2	)
Provision charged against earnings		648		152		73		43		44
Loans and leases charged-off:
Commercial lending		(100	)	(37	)	(46	)	(20	)	(35	)
Commercial real estate		(269	)	(24	)	(5	)	(3	)	(1	)
Consumer		(45	)	(16	)	(14	)	(19	)	(23	)
Other receivables		–		(2	)	(1	)	(1	)	(1	)
Total		(414	)	(79	)	(66	)	(43	)	(60	)
Recoveries:
Commercial lending		9		8		11		12		15
Commercial real estate		7		1		2		1		–
Consumer		5		5		7		5		5
Other receivables		–		1		–		–		–
Total		21		15		20		18		20
Net loan and lease charge-offs		(393	)	(64	)	(46	)	(25	)	(40	)
		715		459		365		338		271
Reclassification to reserve for unfunded lending commitments		(28	)	–		–		–		–
Balance at end of year	$	687		459		365		338		271
Ratio of net charge-offs to average loans and leases		0.96	%	0.17	%	0.14	%	0.10	%	0.19	%
Ratio of allowance for loan losses to net loans and leases outstanding on December 31,		1.64	%	1.18	%	1.05	%	1.12	%	1.20	%
Ratio of allowance for loan losses to nonperforming loans on December 31,		72.42	%	170.99	%	548.53	%	489.74	%	374.42	%
Ratio of allowance for loan losses to nonaccrual loans and accruing loans past due 90 days or more on December 31,		63.84	%	136.75	%	331.56	%	394.08	%	307.61	%

* Includes loans held for sale.

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Schedule 41 provides a breakdown of the allowance for loan losses and the allocation among the portfolio segments. No significant changes took place in the past five years in the allocation of the allowance for loan losses by portfolio segment.

Schedule 41

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

AT DECEMBER 31,

	2008				2007				2006				2005				2004
(Amounts in millions)	% of total loans		Allocation of allowance		% of total loans		Allocation of allowance		% of total loans		Allocation of allowance		% of total loans		Allocation of allowance		% of total loans		Allocation of allowance
Type of Loan
Commercial lending	49.5	%	$	319	47.4	%	$	190	44.1	%	$	182	41.8	%	$	169	39.4	%	$	135
Commercial real estate	32.8			291	33.8			215	35.8			143	35.5			128	33.2			95
Consumer	17.7			77	18.8			54	20.1			40	22.7			41	27.4			41
Total	100.0	%	$	687	100.0	%	$	459	100.0	%	$	365	100.0	%	$	338	100.0	%	$	271

The total allowance for loan losses at December 31, 2008 increased $228 million from the level at year-end 2007. For 2008, the increase in the allowance for loan losses for commercial lending reflects $2.2 billion of loan growth mainly at Zions Bank and Amegy. The increase also reflects deterioration of credit quality in this portfolio due to the worsening recessionary economic conditions during 2008. The $76 million increase in the allowance for commercial real estate loans largely reflects the impact of deteriorating credit quality conditions primarily in the residential construction and land acquisition and development portfolios in the Southwest and in Utah.

Reserve for Unfunded Lending Commitments: The Company also estimates a reserve for potential losses associated with off-balance sheet commitments and standby letters of credit. The reserve is included with other liabilities in the Company’s consolidated balance sheet, with any related increases or decreases in the reserve included in noninterest expense in the statement of income.

We determine the reserve for unfunded lending commitments using a process that is similar to the one we use for commercial loans. Based on historical experience, we have developed experience-based loss factors that we apply to the Company’s unfunded lending commitments to estimate the potential for loss in that portfolio. These factors are generated from tracking commitments that become funded and develop into problem loans.

The Company has historically maintained a reserve for unfunded commitments, recorded in other liabilities. During the fourth quarter of 2008 refinements to this process were implemented to include unfunded commitments, including unfunded portions of partially funded credits. This action resulted in the reclassification of $27.9 million from the allowance for loan losses to the reserve for unfunded lending commitments.

Schedule 42 sets forth the reserve for unfunded lending commitments.

Schedule 42

RESERVE FOR UNFUNDED LENDING COMMITMENTS

	December 31,
(In thousands)	2008		2007
Balance at beginning of year	$	21,530	19,368
Reserve of company acquired		–	326
Reclassification from allowance for loan losses		27,937	–
Provision charged against earnings		1,467	1,836
Balance at end of year	$	50,934	21,530

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Schedule 43 sets forth the combined allowance and reserve for credit losses.

Schedule 43

TOTAL ALLOWANCE AND RESERVE FOR CREDIT LOSSES

	December 31,
(In thousands)	2008		2007	2006
Allowance for loan losses	$	686,999	459,376	365,150
Reserve for unfunded lending commitments		50,934	21,530	19,368
Total allowance and reserve for credit losses	$	737,933	480,906	384,518

Interest Rate and Market Risk Management

Interest rate and market risk are managed centrally. Interest rate risk is the potential for reduced income resulting from adverse changes in the level of interest rates on the Company’s net interest income. Market risk is the potential for loss arising from adverse changes in fair value of fixed income securities, equity securities, other earning assets, and derivative financial instruments as a result of changes in interest rates or other factors. As a financial institution that engages in transactions involving an array of financial products, the Company is exposed to both interest rate risk and market risk.

The Company’s Board of Directors is responsible for approving the overall policies relating to the management of the financial risk of the Company. The Boards of Directors of the Company’s subsidiary banks are also required to review and approve these policies. In addition, the Board must understand the key strategies set by management for managing risk, establish and periodically revise policy limits, and review reported limit exceptions. The Board has established the management Asset/Liability Committee (“ALCO”) to which it has delegated the functional management of interest rate and market risk for the Company. ALCO’s primary responsibilities include:

• recommending policies to the Board and administering Board-approved policies that govern and limit the Company’s exposure to all interest rate and market risk, including policies that are designed to limit the Company’s exposure to changes in interest rates;

• approving the procedures that support the Board-approved policies;

• maintaining management’s policies dealing with interest rate and market risk;

• approving all material interest rate risk management strategies, including all hedging strategies and actions taken pursuant to managing interest rate risk and monitoring risk positions against approved limits;

• approving limits and all financial derivative positions taken at both the Parent and subsidiaries for the purpose of hedging the Company’s interest rate and market risks;

• providing the basis for integrated balance sheet, net interest income, and liquidity management;

• calculating the duration and dollar duration of each class of assets, liabilities, and net equity, given defined interest rate scenarios;

• managing the Company’s exposure to changes in net interest income and duration of equity due to interest rate fluctuations; and

• quantifying the effects of hedging instruments on the duration of equity and net interest income under defined interest rate scenarios.

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Interest Rate Risk

Interest rate risk is one of the most significant risks to which the Company is regularly exposed. In general, our goal in managing interest rate risk is to have the net interest margin increase slightly in a rising interest rate environment. We refer to this goal as being slightly “asset-sensitive.” This approach is based on our belief that in a rising interest rate environment, the market cost of equity, or implied rate at which future earnings are discounted, would also tend to rise.

We attempt to minimize the impact of changing interest rates on net interest income primarily through the use of interest rate swaps, and by avoiding large exposures to fixed rate interest-earning assets that have significant negative convexity. The prime lending rate and the LIBOR curves are the primary indices used for pricing the Company’s loans. The interest rates paid on deposit accounts are set by individual banks so as to be competitive in each local market.

We monitor this risk through the use of two complementary measurement methods: duration of equity and income simulation. In the duration of equity method, we measure the expected changes in the fair values of equity in response to changes in interest rates. In the income simulation method, we analyze the expected changes in income in response to changes in interest rates.

Duration of equity is derived by first calculating the dollar duration of all assets, liabilities and derivative instruments. Dollar duration is determined by calculating the fair value of each instrument assuming interest rates sustain immediate and parallel movements up 1% and down 1%. The average of these two changes in fair value is the dollar duration. Subtracting the dollar duration of liabilities from the dollar duration of assets and adding the net dollar duration of derivative instruments results in the dollar duration of equity. Duration of equity is computed by dividing the dollar duration of equity by the fair value of equity.

Income simulation is an estimate of the net interest income that would be recognized under different rate environments. Net interest income is measured under several parallel and nonparallel interest rate environments and deposit repricing assumptions, taking into account an estimate of the possible exercise of options within the portfolio.

Both of these measurement methods require that we assess a number of variables and make various assumptions in managing the Company’s exposure to changes in interest rates. The assessments address loan and security prepayments, early deposit withdrawals, and other embedded options and noncontrollable events. As a result of uncertainty about the maturity and repricing characteristics of both deposits and loans, the Company estimates ranges of duration and income simulation under a variety of assumptions and scenarios. The Company’s interest rate risk position changes as the interest rate environment changes and is managed actively to try to maintain a consistent slightly asset-sensitive position. However, positions at the end of any period may not be reflective of the Company’s position in any subsequent period.

We should note that estimated duration of equity and the income simulation results are highly sensitive to the assumptions used for deposits that do not have specific maturities, such as checking, savings, and money market accounts and also to prepayment assumptions used for loans with prepayment options. Given the uncertainty of these estimates, we view both the duration of equity and the income simulation results as falling within a range of possibilities.

For income simulation, Company policy requires that interest sensitive income from a static balance sheet be limited to a decline of no more than 10% during one year if rates were to immediately rise or fall in parallel by 200 basis points.

As of the dates indicated, Schedule 44 shows the Company’s estimated range of duration of equity and percentage change in interest sensitive income, based on a static balance sheet, in the first year after the rate

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change if interest rates were to sustain an immediate parallel change of 200 basis points; the “low” and “high” results differ based on the assumed speed of repricing of administered-rate deposits (money market, interest-on-checking, and savings):

Schedule 44

DURATION OF EQUITY AND INTEREST SENSITIVE INCOME

	December 31,         2008				December 31,         2007
	Low		High		Low		High
Duration of equity:
Range (in years)
Base case	-2.5		0.9		0.0		2.5
Increase interest rates by 200 bp	-2.4		0.7		0.9		3.4
Income simulation – change in interest sensitive income:
Increase interest rates by 200 bp	-1.1	%	1.5	%	-1.3	%	1.1	%
Decrease interest rates by 200 bp	-2.4	%	-1.8	%	-2.3	%	-0.2	%

The Company believes that the dynamic balance sheet changes during 2008, including changes in the mix of deposits and other funding sources, have tended to have a somewhat larger effect on the net interest spread and net interest margin than has the Company’s interest rate risk position. In addition, competitive pressures on deposit rates impeded our ability to reprice deposits, which had a negative impact on the net interest margin during 2008. Market disruptions and funding pressures experienced by many financial institutions kept market deposit prices from falling as much as expected when the Federal Reserve Board began reducing short-term interest rates. Finally, continued changes in loan pricing spreads and other interest rate behaviors have made it more difficult to implement the Company’s normal interest rate risk management activities using interest rate swaps. Approximately $1.0 billion of receive-fixed interest rate swaps were terminated during 2008 and were not replaced in this period of historically low interest rates. At the same time, the Company’s subsidiary banks made increasing use of interest rate floors on new loans. As a result, the Company ended 2008 with an interest rate risk position that was more asset-sensitive than at the end of 2007, as shown in Schedule 44.

Our focus on business banking also plays a significant role in determining the nature of the Company’s asset-liability management posture. At the end of 2008, approximately 78% of the Company’s commercial loan and commercial real estate portfolios were floating rate and primarily tied to either prime or LIBOR. In addition, certain of our consumer loans also have floating interest rates. This means that these loans reprice quickly in response to changes in interest rates – more quickly on average than does their funding base. This posture results in a natural position that is more “asset-sensitive” than the Company believes is desirable.

The Company attempts to mitigate this tendency toward asset sensitivity through the use of interest rate floors on loans to protect against declining rates, and more importantly through the use of interest rate swaps. We have also contracted to convert most of the Company’s long-term fixed-rate debt into floating-rate debt through the use of interest rate swaps (see “fair value hedges” in Schedule 45). More importantly, we engage in an ongoing program of swapping prime-based and LIBOR-based loans for “receive-fixed” contracts. At year-end 2008, the Company had a notional amount of approximately $2.4 billion of such cash flow hedge contracts. This notional amount is approximately $1.0 billion less than at year-end 2007; this reduction primarily reflects the termination of a number of swaps in 2008, and the Company’s decision not to replace those swaps in a historically low interest rate environment. These swaps also expose the Company to counterparty risk, which is a type of credit risk. The Company’s approach to managing this risk is discussed in “Credit Risk Management” on page 99. The Company retains basis risk due to changes between the prime rate and LIBOR on nonhedge derivative basis swaps. See “Accounting for Derivatives” on page 44 for further details about our derivative instruments.

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Schedule 45 presents a profile of the current interest rate derivatives portfolio. For additional information regarding derivative instruments, including fair values at December 31, 2008, refer to Notes 1 and 7 of the Notes to Consolidated Financial Statements.

Schedule 45

INTEREST RATE DERIVATIVES – YEAR-END BALANCES AND AVERAGE RATES

(Amounts in millions)	2009			2010	2011	2012	2013	Thereafter
Cash flow hedges1:
Notional amount	$	2,405		2,080	1,140	330
Weighted average expected receive rate		7.05	%	6.99	6.83	6.21
Weighted average expected pay rate		3.20		4.01	4.27	3.61
Cash flow floors:
Notional amount	$	255		255
Weighted average strike price		3.53		3.53
Fair value hedges1:
Notional amount	$	1,400		1,400	1,400	1,400	1,400	1,400
Weighted average expected receive rate		5.71	%	5.71	5.71	5.71	5.71	5.71
Weighted average expected pay rate		1.83		2.70	2.91	3.22	3.22	3.02
Nonhedges:
Receive fixed rate/pay variable rate:
Notional amount	$	130		71
Weighted average expected receive rate		4.89	%	4.82
Weighted average expected pay rate		1.71		2.42
Receive variable rate/pay fixed rate:
Notional amount	$	130		71
Weighted average expected receive rate		1.71	%	2.42
Weighted average expected pay rate		4.89		4.82
Basis swaps:
Notional amount	$	1,795		1,470	725	130
Weighted average expected receive rate		3.81	%	4.86	5.33	5.51
Weighted average expected pay rate		4.22		4.86	5.34	5.57
Net notional	$	5,855		5,205	3,265	1,860	1,400	1,400

¹ Receive fixed rate/pay variable rate

Note: Balances are based upon the portfolio at December 31, 2008. Excludes interest rate swap products that we provide as a service to our customers.

Market Risk – Fixed Income

The Company engages in the underwriting and trading of municipal and corporate securities. This trading activity exposes the Company to a risk of loss arising from adverse changes in the prices of these fixed income securities held by the Company.

At December 31, 2008, trading account assets had been reduced to $42.1 million and securities sold, not yet purchased were $35.7 million.

At year-end 2008, the Company made a market in 480 fixed income securities through Zions Bank and its wholly-owned subsidiary, Zions Direct, Inc. During 2008, 62% of all trades were executed electronically. The Company is an odd-lot securities dealer, which means that most corporate security trades are for less than $250,000.

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The Company is exposed to market risk through changes in fair value and OTTI of HTM and AFS securities. The Company also is exposed to market risk for interest rate swaps used to hedge interest rate risk. Changes in fair value in available-for-sale securities and interest rate swaps are included in OCI each quarter. During 2008, the after-tax change in OCI attributable to AFS securities was $(11.2) million. The after-tax change in OCI attributable to HTM securities transferred from AFS in the second quarter and fourth quarter of 2008 was $(123.9) million. The change attributable to interest rate swaps was $131.4 million, for a net decrease to shareholders’ equity of $3.7 million. If any of the AFS securities or HTM securities transferred from AFS becomes other than temporarily impaired, any loss in OCI is reversed and the impairment is charged to operations. See “Investment Securities Portfolio” on page 85 for additional information on OTTI.

Market Risk – Equity Investments

Through its equity investment activities, the Company owns equity securities that are publicly traded and subject to fluctuations in their market prices or values. In addition, the Company owns equity securities in companies that are not publicly traded, that are accounted for under cost, fair value, equity, or full consolidation methods of accounting, depending upon the Company’s ownership position and degree of involvement in influencing the investees’ affairs. In any case, the value of the Company’s investment is subject to fluctuation. Since the fair value of these securities may fall below the Company’s investment costs, the Company is exposed to the possibility of loss. These equity investments are approved, monitored and evaluated by the Company’s Equity Investment Committee.

The Company also invests in prepublic venture capital companies through various venture funds. Net of expenses, income tax effects and minority interest, losses were $3.0 million in 2008 and gains were $3.9 million in 2007 and $4.0 million in 2006 from these venture funds. The Company’s remaining equity exposure to these venture funds, net of related minority interest at December 31, 2008 was approximately $54.4 million, compared to approximately $64.0 million at December 31, 2007.

In addition to the program described above, Amegy has in place an alternative investments program. These investments are primarily directed towards equity buyout and mezzanine funds with a key strategy of deriving ancillary commercial banking business from the portfolio companies. Early stage venture capital funds generally are not part of the strategy since the underlying companies are typically not credit worthy. The carrying value of the investments at December 31, 2008 was $54.6 million compared to $37.4 million at December 31, 2007. The Company has a total remaining nonfinancial funding commitment of $100.2 million to SBIC, non-SBIC funds, and private equity investments as of December 31, 2008; $77.1 million of this total funding commitment is at Amegy.

The Company also, from time to time, either starts and funds businesses of a strategic nature, or makes significant investments in companies of strategic interest. These investments may result in either minority or majority ownership positions, and usually give the Parent or its subsidiaries board representation. These strategic investments are in companies that are financial services or financial technologies providers. Examples include Contango and NetDeposit, which are majority or wholly-owned by the Company, and Insure.com and IdenTrust, in which the Company owns significant, but minority positions.

Liquidity Risk

Overview

Liquidity risk is the possibility that the Company’s cash flows may not be adequate to fund its ongoing operations and meet its commitments in a timely and cost-effective manner. Since liquidity risk is closely linked to both credit risk and market risk, many of the previously discussed risk control mechanisms also apply to the monitoring and management of liquidity risk. We manage the Company’s liquidity to provide adequate funds to meet its anticipated financial and contractual obligations, including withdrawals by depositors, debt service requirements and lease obligations, as well as to fund customers’ needs for credit.

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Overseeing liquidity management is the responsibility of ALCO, which implements a Board-adopted corporate Liquidity and Funding Policy that is adhered to by the Parent and the subsidiary banks. This policy includes guidelines by which liquidity and funding are managed. These guidelines address maintaining liquidity needs, diversifying funding positions, monitoring liquidity at consolidated as well as subsidiary levels, and anticipating future funding needs. The policy also includes liquidity ratio guidelines that are used to monitor the liquidity positions of the Parent and bank subsidiaries.

Managing liquidity and funding is performed centrally by Zions Bank’s Capital Markets/Investment Division under the direction of the Company’s Chief Investment Officer, with oversight by ALCO. The Chief Investment Officer is responsible for making any recommended changes to existing funding plans, as well as to the policy guidelines. These recommendations must be submitted for approval to ALCO and potentially to the Company’s Board of Directors. The subsidiary banks only have authority to price deposits, borrow from their FHLB and the Federal Reserve, and sell/purchase Federal Funds to/from Zions Bank and/or correspondent banks. The banks may also make liquidity and funding recommendations to the Chief Investment Officer, but are not involved in any other funding decision processes.

Contractual Obligations

Schedule 46 summarizes the Company’s contractual obligations at December 31, 2008.

Schedule 46

CONTRACTUAL OBLIGATIONS

(In millions)	One year or less		Over one year through three years	Over three years through five years	Over five years	Indeterminable maturity1	Total
Deposits	$	7,395	642	195	3	33,081	41,316
Commitments to extend credit		5,831	4,197	1,442	2,670		14,140
Standby letters of credit:
Financial		835	272	118	69		1,294
Performance		197	53	1			251
Commercial letters of credit		56	1	9			66
Commitments to make venture and other noninterest-bearing investments2		103					103
Commitments to Lockhart3		738					738
Federal funds purchased and security repurchase agreements		1,866					1,866
Other short-term borrowings		2,091					2,091
Long-term borrowings4		298	133	3	1,952		2,386
Operating leases, net of subleases		41	82	63	157		343
Visa litigation		1				1	2
Unrecognized tax benefits, FIN 48						9	9
	$	19,452	5,380	1,831	4,851	33,091	64,605

¹ Indeterminable maturity on deposits includes noninterest-bearing demand, savings and money market deposits, and nontime foreign deposits.

² Commitments to make venture investments do not have defined maturity dates. They have therefore been considered due on demand, maturing in one year or less.

³ See “Off-Balance Sheet Arrangement” and Note 6 of the Notes to Consolidated Financial Statements for details of the commitments to Lockhart.

⁴ The maturities on long-term borrowings do not include the associated hedges.

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In addition to the commitments specifically noted in the previous schedule, the Company enters into a number of contractual commitments in the ordinary course of business. These include software licensing and maintenance, telecommunications services, facilities maintenance and equipment servicing, supplies purchasing, and other goods and services used in the operation of our business. Generally, these contracts are renewable or cancelable at least annually, although in some cases to secure favorable pricing concessions, the Company has committed to contracts that may extend to several years.

The Company also enters into derivative contracts under which it is required either to receive cash or pay cash, depending on changes in interest rates. These contracts are carried at fair value on the balance sheet with the fair value representing the net present value of the expected future cash receipts and payments based on market rates of interest as of the balance sheet date. The fair value of the contracts changes daily as interest rates change. For further information on derivative contracts, see Note 7 of the Notes to Consolidated Financial Statements.

Liquidity Management Actions

The Parent’s cash requirements consist primarily of debt service, investments in and advances to subsidiaries, operating expenses, income taxes, and dividends to preferred and common shareholders, including the CPP preferred equity issued to the Treasury. The Parent’s cash needs are routinely met through dividends from its subsidiaries, interest and investment income, subsidiaries’ proportionate share of current income taxes, management and other fees, equity contributed through the exercise of stock options, commercial paper, and long-term debt and equity issuances. The Parent also maintains internal back-up liquidity lines with several of its subsidiary banks that are secured by pledged collateral. The subsidiary banks’ primary source of funding is their core deposits. Operational cash flows, while constituting a funding source for the Company, are not large enough to provide funding in the amounts that fulfill the needs of the Parent and the bank subsidiaries. For 2008, operations contributed $1,174 million toward these needs. As a result, the Company utilizes other sources at its disposal to manage its liquidity needs.

During 2008, the Parent received $106 million in cash dividends from various subsidiaries. At December 31, 2008, the banking subsidiaries could pay $374 million of dividends to the Parent under regulatory guidelines without the need for regulatory approval. The amounts of dividends the banking subsidiaries can pay to the Parent are restricted by earnings, retained earnings, and risk-based capital requirements. This source of funding to the Parent may become more limited or even unavailable if the operating performance of subsidiary banks deteriorates under continued weak economic conditions or changes in regulation or law. See Note 19 of the Notes to Consolidated Financial Statements for details of dividend capacities and limitations.

For the year 2008, issuances of senior medium-term debt exceeded repayments of long-term debt, resulting in net cash inflows of $109 million as follows:

• In April 2008 the Company redeemed $18 million of senior notes at maturity.

• Throughout 2008, fixed-rate notes were sold via the Company’s online auction process and direct sales; we issued a total of $264 million of these unsecured notes that have been issued under a shelf registration filed with the SEC.

• During the third quarter of 2008, the Company redeemed $137 million of senior notes at maturity.

On January 15, 2009, we issued approximately $255 million of senior floating rate notes due June 21, 2012 at a coupon rate of three-month LIBOR plus 37 basis points. The debt is guaranteed under the FDIC’s TLGP that became effective on November 21, 2008.

See Note 13 of the Notes to Consolidated Financial Statements for a complete summary of the Company’s long-term borrowings.

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On a consolidated basis, repayments of short-term borrowings exceeded fundings (excluding short-term FHLB borrowings) and resulted in a $2,367 million use of cash in 2008. The Parent has a program to issue short-term commercial paper; however, current market conditions have severely constrained activity in this program, and at December 31, 2008, outstanding commercial paper was $15 million.

The Parent has secured revolving credit facilities totaling $395 million with five subsidiary banks. These revolving credit facilities are limited to the total of pledged securities owned by the Parent and municipal securities owned by a nonbank subsidiary and hypothecated to the Parent. No amount was outstanding on these facilities at December 31, 2008.

Access to funding markets for the Parent and subsidiary banks is directly tied to the credit ratings they receive from various rating agencies. The ratings not only influence the costs associated with the borrowings but can also influence the sources of the borrowings. The Parent and its three largest banking subsidiaries had the following ratings as of December 31, 2008:

Schedule 47

CREDIT RATINGS

Parent Company:

Rating agency	Outlook	Long-term issuer/ senior debt rating	Subordinated debt rating	Short-term/ commercial paper rating
S&P	Negative	BBB+	BBB	A-2
Moody’s	Negative	A3	Baa1	P-2
Fitch	Stable	A-	BBB+	F1
Dominion	Stable	A(low)	BBB(high)	R-1(low)

Three Largest Banking Subsidiaries:

Rating agency	Outlook	Long-term issuer/ senior debt rating	Subordinated debt rating	Short-term/ commercial paper rating	Certificate of deposit rating
S&P	NR	NR	na	NR	NR
Moody’s	Negative	A2	na	P-1	A2
Fitch	Stable	A-	na	F1	A
Dominion	Stable	NR	na	R-1(low)	A

NR – not rated

On February 28, 2008, Moody’s downgraded its ratings for the Parent on long-term issuer/senior debt to A3, on subordinated debt to Baa1, and on short-term/commercial paper to P-2; it also changed its outlook from Negative to Stable. Also, Moody’s downgraded its ratings for the three largest banking subsidiaries on long-term issuer/senior debt and certificate of deposit to A2, affirmed the short-term/commercial paper rating of P-1, and changed its outlook from Negative to Stable.

On August 11, 2008 Moody’s changed its rating outlook to Watch Negative for the Parent and the three largest subsidiary banks. On December 3, 2008, Moody’s reaffirmed its current ratings and changed its long-term issuer ratings outlook to Outlook Negative for the Parent. On September 3, 2008, S&P reaffirmed its current ratings and changed its long term issuer ratings outlook to Outlook Negative for the Parent and the largest subsidiary bank.

The subsidiaries’ primary source of funding is their core deposits, consisting of demand, savings and money market deposits, time deposits under $100,000, and foreign deposits. At December 31, 2008, these core deposits, in aggregate, constituted 81.9% of consolidated deposits, compared with 87.9% of consolidated deposits at

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December 31, 2007. At December 31, 2008, total brokered deposits were $3.3 billion, up from $77 million at December 31, 2007. For 2008, deposit increases resulted in net cash inflows of $3,662 million which primarily resulted from a $3,192 million increase in brokered deposits.

On October 3, 2008, the FDIC increased deposit insurance to $250,000 through December 31, 2009. In addition, the FDIC implemented a program to provide full deposit insurance coverage for noninterest-bearing transaction deposit accounts through December 31, 2009, unless insured banks elect to opt out of the program. The Company did not opt out of this program.

The FHLB system is a significant source of liquidity for the Company’s subsidiary banks. Zions Bank and TCBW are members of the FHLB of Seattle. CB&T, NSB, and NBA are members of the FHLB of San Francisco. Vectra is a member of the FHLB of Topeka and Amegy is a member of the FHLB of Dallas. The FHLB allows member banks to borrow against their eligible loans to satisfy liquidity requirements. For 2008, the activity in short-term FHLB borrowings resulted in a net cash outflow of $2,725 million. Amounts of unused lines of credit available for additional FHLB advances totaled $8.8 billion at December 31, 2008. Borrowings from the FHLB may increase in the future, depending on availability of funding from other sources such as deposits. The subsidiary banks must maintain their FHLB memberships to continue accessing this source of funding. The Company is aware of recent news reports and FHLB member bank press releases regarding the financial strength of the FHLB system. The Company is actively monitoring its ability to borrow from the FHLB banks and took actions in the fourth quarter of 2008 to reduce its borrowings from the FHLB banks.

In December 2007, the Federal Reserve Board announced a new program, the Term Auction Facility (“TAF”), to make 28 day loans to banks in the United States and to foreign banks through foreign central banks. These loans are made using an auction process. Zions Bank is currently participating in the TAF and may continue to do so as long as money can be borrowed at an attractive rate. The amount that can be borrowed is based upon the amount of collateral that has been pledged to the Federal Reserve Bank. At December 31, 2008, $1.8 billion in borrowings were outstanding under this program as compared to $450 million at December 31, 2007. However, by February 13, 2009, the TAF borrowings outstanding had been reduced to $500 million. At December 31, 2008, the amount available for additional Federal Reserve borrowings was approximately $4.3 billion, which had increased to $5.7 billion by February 13, 2009. An additional $1.3 billion could be borrowed at December 31, 2008 upon the pledging of additional available collateral.

At December 31, 2008, the Company’s subsidiary banks had a total of $13.1 billion of immediately available, unused borrowing capacity at the Fed and various FHLBs, which had increased to $14.3 billion as of February 13, 2009.

Zions Bank has in prior years used asset securitizations to sell loans and provide a flexible alternative source of funding. As a QSPE securities conduit sponsored by Zions Bank, Lockhart has purchased and held credit-enhanced securitized assets resulting from certain small business loan securitizations. Zions Bank provides a liquidity facility to Lockhart for a fee. Lockhart purchases floating-rate U.S. Government and AAA-rated securities with funds from the issuance of commercial paper.

Due to the disruptions in the asset-backed commercial paper markets that began in August 2007 and continued into 2008, Lockhart was unable to issue commercial paper sufficient to fund its assets and the Company and its subsidiary banks purchased Lockhart commercial paper and held it on their balance sheets. The Company was also required to purchase assets under the Liquidity Agreement due to security ratings downgrades and the inability of Lockhart to issue commercial paper. See “Off-Balance Sheet Arrangement” beginning on page 96 for information about Lockhart and the Liquidity Agreement. This includes details of the purchase of commercial paper and securities and the possible effect on the Company’s liquidity and capital ratios if Lockhart was required to be consolidated or the Company was required to purchase its remaining securities. In November, 2008, Lockhart also diversified its funding sources by electing to participate in the Federal Reserve’s CPFF program, and at December 31, 2008 had $80 million outstanding under the program. The CPFF program currently is scheduled to terminate on October 31, 2009.

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While not considered a primary source of funding, the Company’s investment activities can also provide or use cash, depending on the asset-liability management posture that is being observed. For 2008, investment securities activities resulted in net cash inflows of $0.8 billion.

Maturing balances in the various loan portfolios also provide additional flexibility in managing cash flows. In most cases, however, loan growth has resulted in net cash outflows from a funding standpoint. For 2008, loan growth resulted in a net cash outflow of $2.5 billion compared to $3.9 billion in 2007. We expect that loans will continue to be a use of funding rather than a source in 2009.

Operational Risk Management

Operational risk is the potential for unexpected losses attributable to human error, systems failures, fraud, or inadequate internal controls and procedures. In its ongoing efforts to identify and manage operational risk, the Company has created a Corporate Risk Management Department whose responsibility is to help Company management identify and assess key risks and monitor the key internal controls and processes that the Company has in place to mitigate operational risk. We have documented controls and the Control Self Assessment related to financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and the Federal Deposit Insurance Corporation Improvement Act of 1991.

To manage and minimize its operating risk, the Company has in place transactional documentation requirements, systems and procedures to monitor transactions and positions, regulatory compliance reviews, and periodic reviews by the Company’s internal audit and credit examination departments. In addition, reconciliation procedures have been established to ensure that data processing systems consistently and accurately capture critical data. Further, we maintain contingency plans and systems for operations support in the event of natural or other disasters. Efforts are continually underway to improve the Company’s oversight of operational risk, including enhancement of risk-control self assessments and of antifraud measures.

CAPITAL MANAGEMENT

The Board of Directors is responsible for approving the policies associated with capital management. The Board has established the Capital Management Committee (“CMC”) whose primary responsibility is to recommend and administer the approved capital policies that govern the capital management of the Company and its subsidiary banks. Other major CMC responsibilities include:

• Setting overall capital targets within the Board approved policy, monitoring performance and recommending changes to capital including dividends, common stock repurchases, subordinated debt, or to major strategies to maintain the Company and its bank subsidiaries at well capitalized levels; and

• Reviewing agency ratings of the Parent and its bank subsidiaries and establishing target ratings.

The CMC, in managing the capital of the Company, may set capital standards that are higher than those approved by the Board, but may not set lower limits.

The Company has a fundamental financial objective to consistently produce superior risk-adjusted returns on its shareholders’ capital. We believe that a strong capital position is vital to continued profitability and to promoting depositor and investor confidence. Specifically, it is the policy of the Parent and each of the subsidiary banks to:

• Maintain sufficient capital at not less than the “well capitalized” threshold as defined by federal banking regulators to support current needs and to ensure that capital is available to support anticipated growth;

• Take into account the desirability of receiving an “investment grade” rating from major debt rating agencies on senior and subordinated unsecured debt when setting capital levels;

• Develop capabilities to measure and manage capital on a risk-adjusted basis and to maintain economic capital consistent with an “investment grade” risk level; and

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• Return excess capital to shareholders through dividends and repurchases of common stock.

See Note 19 of the Notes to Consolidated Financial Statements for additional information on risk-based capital.

During 2008, the Company took several actions to raise additional capital in order to maintain a strong capital position as follows:

• On November 14, 2008, the Company received a capital investment of $1.4 billion from the U.S. Department of the Treasury under the Treasury’s Capital Purchase Program announced on October 14, 2008. The capital investment is in the form of nonvoting senior preferred shares pari passu with the Company’s existing preferred shares. The Company also issued to the Treasury warrants exercisable for 10 years to purchase 5,789,909 of the Company’s common shares at a total exercise cost of $210 million. The preferred shares qualify for regulatory Tier 1 capital and may be redeemed at any time that regulatory approval can be obtained. They have a dividend rate of 5% for the first five years, increasing to 9% thereafter. Among other things, the Company is subject to restrictions and conditions including those related to common dividends, share repurchases, executive compensation, and corporate governance. The Company expects to deploy this new capital mainly to support prudent new lending in its markets throughout the western United States; it may also pursue the acquisition of failed banks being offered by the FDIC.

• During September 8-11, 2008, the Company issued $250 million of new common stock consisting of 7,194,079 shares at an average price of $34.75 per share. Net of issuance costs and fees, this added $244.9 million to common equity.

• On July 2, 2008, the Company completed a $47 million offering of 9.50% Series C Fixed-Rate Non-Cumulative Perpetual Preferred Stock. The Company issued 46,949 shares in the form of 1,877,971 depositary shares with each depositary share representing a 1/40^th ownership interest in a share of the preferred stock. Terms and conditions, except for the dividend amount, are generally similar to the existing $240 million Series A floating rate preferred stock issued in December 2006. The offering was sold via Zions’ online auction process and direct sales primarily by the Company’s broker/dealer subsidiary.

These actions increased total shareholders’ equity at December 31, 2008 to $6.5 billion, an increase of 22.8% over the $5.3 billion at December 31, 2007. Tangible equity, including preferred stock, was $4.7 billion at the end of 2008 and $3.1 billion at the end of 2007. Tangible common equity was $3.1 billion, an increase of 8.6% from $2.9 billion at year-end 2007.

As of December 31, 2008, the Company had $56.3 million of remaining authorization from its Board of Directors for the repurchase of common stock. The Company has not repurchased any shares since August 2007 and in compliance with the conditions of the Capital Purchase Program, the Company will not repurchase any common shares during the period the senior preferred shares are outstanding without permission from the U.S. Department of the Treasury.

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During its January 2009 meeting, the Board of Directors declared a dividend of $0.04 per common share payable on February 25, 2009 to shareholders of record on February 11, 2009. This is a reduction from the prior quarter dividend of $0.32 per common share. The Company paid dividends in 2008 of $1.61 per common share compared with $1.68 per share in 2007 and $1.47 per share in 2006. Under the terms of the Capital Purchase Program, the Company may not increase the dividend on its common stock above $0.32 per share per quarter during the period the senior preferred shares are outstanding without permission from the U.S. Department of the Treasury.

The Company paid $173.9 million in dividends on common stock in 2008, and used $2.9 million to repurchase shares of the Company’s common stock.

The Company recorded preferred stock dividends of $24.4 million during 2008 compared to $14.3 million during 2007.

The Company has not stated target capital ratio levels for the period when more normal financial conditions resume, but has stated 1) that its long-term target range is likely to be higher than the previously articulated tangible equity target range of 6.25% to 6.50%, and 2) that during current distressed financial market and economic conditions, the Company believes that maintaining capital ratios above that range is appropriate. The Company’s capital ratios were as follows at December 31, 2008 and 2007:

Schedule 48

CAPITAL RATIOS

	December 31,				Percentage required to be well capitalized
	2008		2007
Tangible common equity ratio	5.89	%	5.70	%	na
Tangible equity ratio	8.86		6.17		na
Average equity to average assets	10.30		10.74		na
Risk-based capital ratios:
Tier 1 leverage	9.99		7.37		na	1
Tier 1 risk-based capital	10.22		7.57		6.00	%
Total risk-based capital	14.32		11.68		10.00

¹ There is no Tier 1 leverage ratio component in the definition of a well capitalized bank holding company.

The increased capital ratios at December 31, 2008 compared to December 31, 2007, reflect the impact of the issuance of common and preferred stock during the year offset by loan growth, increased after tax unrealized losses of $135.2 million on investment securities included in OCI, and the net loss applicable to common shareholders for 2008. The Parent and its subsidiary banks are required to maintain adequate levels of capital as measured by several regulatory capital ratios. As of December 31, 2008, the Company and each of its subsidiary banks exceeded the “well capitalized” guidelines under regulatory standards.

The U.S. federal bank regulatory agencies’ risk-capital guidelines are based upon the 1988 capital accord (“Basel I”) of the Basel Committee on Banking Supervision (the “BCBS”). The BCBS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines that each country’s supervisors can use to determine the supervisory policies they apply. In January 2001, the BCBS released a proposal to replace Basel I with a new capital framework (“Basel II”) that would set capital requirements for operational risk and materially change the existing capital requirements for credit risk and market risk exposures. Operational risk is defined by the proposal as the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems, or from external events. Basel I does not include separate capital requirements for operational risk.

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In September 2006, the U.S. banking regulators issued an interagency Advance Notice of Proposed Rulemaking (“NPR”) with regard to the U.S. implementation of the Basel II framework. Published in December 2007, the final rule requires banks with over $250 billion in consolidated total assets or on-balance sheet foreign exposure of $10 billion (core banks) to adopt the Advanced Approach of Basel II while allowing other banks to elect to “opt in.” We are not an “opt in” bank holding company, as the Company does not have in place the data collection and analytical capabilities necessary to adopt the Advanced Approach. However, we believe that the competitive advantages afforded to companies that do adopt the Advanced Approach may make it necessary for the Company to elect to “opt in” at some point, and we have begun investing in the required capabilities and required data. Whether or not this scenario emerges, our risk management will be well served by our continuing investment in more sophisticated analytical capabilities and in an enhanced data environment.

In July 2008, the U.S. banking regulators issued a proposed rule that would provide “noncore” banks with the option to adopt the Standardized Approach proposed in Basel II, replacing the previously proposed Basel 1A framework. While the Advanced Approach uses sophisticated mathematical models to measure and assign capital to specific risks, the Standardized Approach categorizes risks by type and then assigns capital requirements. We are evaluating the benefit of adopting the Standardized Approach.

However, in the near-term we believe that capital issued under the CPP and the potential for capital to be issued after a regulatory “stress test” administered pursuant to ARRA may override any consideration of any Basel II capital approach.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this Item is included in “Interest Rate and Market Risk Management” in MD&A beginning on page 110 and is hereby incorporated by reference.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT ON MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Zions Bancorporation and subsidiaries (“the Company”) is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined by Exchange Act Rules 13a-15 and 15d-15.

The Company’s management has used the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of the Company’s internal control over financial reporting.

The Company’s management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 and has concluded that such internal control over financial reporting is effective. There are no material weaknesses in the Company’s internal control over financial reporting that have been identified by the Company’s management.

Ernst & Young LLP, an independent registered public accounting firm, has audited the consolidated financial statements of the Company for the year ended December 31, 2008, and has also issued an attestation report, which is included herein, on internal control over financial reporting under Auditing Standard No. 5 of the Public Company Accounting Oversight Board (“PCAOB”).

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REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Audit Committee of the Board of Directors and Shareholders of Zions Bancorporation

We have audited Zions Bancorporation and subsidiaries’ internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Zions Bancorporation and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because management’s assessment and our audit were conducted to also meet the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA), management’s assessment and our audit of Zions Bancorporation and subsidiaries’ internal control over financial reporting included controls over the preparation of financial statements in accordance with the instructions for the preparation of Consolidated Financial Statements for Bank Holding Companies (Form FR Y-9C). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Zions Bancorporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Zions Bancorporation and subsidiaries as of December 31, 2008 and 2007 and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2008 and our report dated February 27, 2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

February 27, 2009

124

REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

Audit Committee of the Board of Directors and Shareholders of Zions Bancorporation

We have audited the accompanying consolidated balance sheets of Zions Bancorporation and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Zions Bancorporation and subsidiaries at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Notes 1 and 15 to the financial statements, Zions Bancorporation and subsidiaries adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, during 2007.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Zions Bancorporation and subsidiaries’ internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

February 27, 2009

125

CONSOLIDATED BALANCE SHEETS

ZIONS BANCORPORATION AND SUBSIDIARIES

DECEMBER 31, 2008 AND 2007

(In thousands, except share amounts)	2008			2007
ASSETS
Cash and due from banks	$	1,475,976		1,855,155
Money market investments:
Interest-bearing deposits and commercial paper		2,332,759		726,446
Federal funds sold		83,451		102,225
Security resell agreements		286,707		671,537
Investment securities:
Held-to-maturity, at adjusted cost (approximate fair value $1,443,555 and $702,148)		1,790,989		704,441
Available-for-sale, at fair value		2,676,255		5,134,610
Trading account, at fair value (includes $538 and $741 transferred as collateral under repurchase agreements)		42,064		21,849
		4,509,308		5,860,900
Loans:
Loans held for sale		200,318		207,943
Loans and leases		41,791,237		39,044,163
		41,991,555		39,252,106
Less:
Unearned income and fees, net of related costs		132,499		164,327
Allowance for loan losses		686,999		459,376
Loans and leases, net of allowance		41,172,057		38,628,403
Other noninterest-bearing investments		1,044,092		1,034,412
Premises and equipment, net		687,096		655,712
Goodwill		1,651,377		2,009,513
Core deposit and other intangibles		125,935		149,493
Other real estate owned		191,792		15,201
Other assets		1,532,241		1,238,417
	$	55,092,791		52,947,414
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	9,683,385		9,618,300
Interest-bearing:
Savings and NOW		4,452,919		4,507,837
Money market		16,826,846		12,467,239
Time under $100,000		2,974,566		2,562,363
Time $100,000 and over		4,756,218		4,391,588
Foreign		2,622,562		3,375,426
		41,316,496		36,922,753
Securities sold, not yet purchased		35,657		224,269
Federal funds purchased		965,835		2,463,460
Security repurchase agreements		899,751		1,298,112
Other liabilities		669,111		644,375
Commercial paper		15,451		297,850
Federal Home Loan Bank advances and other borrowings:
One year or less		2,039,853		3,181,990
Over one year		128,253		127,612
Long-term debt		2,493,368		2,463,254
Total liabilities		48,563,775		47,623,675
Minority interest		27,320		30,939
Shareholders’ equity:
Preferred stock		1,581,834		240,000
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 115,344,813 and 107,116,505 shares		2,599,916		2,212,237
Retained earnings		2,433,363		2,910,692
Accumulated other comprehensive income (loss)		(98,958	)	(58,835	)
Deferred compensation		(14,459	)	(11,294	)
Total shareholders’ equity		6,501,696		5,292,800
	$	55,092,791		52,947,414

See accompanying notes to consolidated financial statements.

126

CONSOLIDATED STATEMENTS OF INCOME

ZIONS BANCORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands, except per share amounts)	2008			2007		2006
Interest income:
Interest and fees on loans	$	2,646,112		2,823,382		2,438,324
Interest on loans held for sale		10,074		14,867		16,442
Lease financing		22,099		21,683		18,290
Interest on money market investments		47,780		43,699		24,714
Interest on securities:
Held-to-maturity – taxable		62,282		8,997		8,861
Held-to-maturity – nontaxable		25,368		25,150		22,909
Available-for-sale – taxable		151,139		255,039		272,252
Available-for-sale – nontaxable		7,170		9,200		8,630
Trading account		1,875		3,309		7,699
Total interest income		2,973,899		3,205,326		2,818,121
Interest expense:
Interest on savings and money market deposits		370,568		479,366		405,269
Interest on time and foreign deposits		342,325		472,353		315,569
Interest on short-term borrowings		178,875		218,696		164,335
Interest on long-term borrowings		110,485		152,959		168,224
Total interest expense		1,002,253		1,323,374		1,053,397
Net interest income		1,971,646		1,881,952		1,764,724
Provision for loan losses		648,269		152,210		72,572
Net interest income after provision for loan losses		1,323,377		1,729,742		1,692,152
Noninterest income:
Service charges and fees on deposit accounts		206,988		183,550		160,774
Other service charges, commissions and fees		167,669		170,564		150,204
Trust and wealth management income		37,752		36,532		29,970
Capital markets and foreign exchange		49,898		43,588		39,444
Dividends and other investment income		46,362		50,914		39,918
Loan sales and servicing income		24,379		38,503		54,193
Income from securities conduit		5,502		18,176		32,206
Fair value and nonhedge derivative income (loss)		(47,976	)	(14,256	)	620
Equity securities gains, net		793		17,719		17,841
Fixed income securities gains, net		849		3,019		6,416
Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding		(317,112	)	(158,208	)	–
Other		15,588		22,243		19,623
Total noninterest income		190,692		412,344		551,209
Noninterest expense:
Salaries and employee benefits		810,501		799,884		751,679
Occupancy, net		114,175		107,438		99,607
Furniture and equipment		100,136		96,452		88,725
Other real estate expense		50,378		4,391		107
Legal and professional services		45,517		43,829		40,134
Postage and supplies		37,455		36,512		33,076
Advertising		30,731		26,920		26,465
FDIC premiums		19,858		6,514		5,429
Impairment losses on long-lived assets		3,134		–		1,304
Merger related expense		1,608		5,266		20,461
Amortization of core deposit and other intangibles		33,162		44,895		43,000
Other		228,308		232,487		220,450
Total noninterest expense		1,474,963		1,404,588		1,330,437
Impairment loss on goodwill		353,804		–		–
Income (loss) before income taxes and minority interest		(314,698	)	737,498		912,924
Income taxes (benefit)		(43,365	)	235,737		317,950
Minority interest		(5,064	)	8,016		11,849
Net income (loss)		(266,269	)	493,745		583,125
Preferred stock dividends		24,424		14,323		3,835
Net earnings (loss) applicable to common shareholders	$	(290,693	)	479,422		579,290
Weighted average common shares outstanding during the year:
Basic shares		108,908		107,365		106,057
Diluted shares		109,145		108,523		108,028
Net earnings (loss) per common share:
Basic	$	(2.67	)	4.47		5.46
Diluted		(2.66	)	4.42		5.36

See accompanying notes to consolidated financial statements.

127

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

ZIONS BANCORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

	Preferred stock		Common stock					Retained earnings		Accumulated other comprehensive income (loss)		Deferred compensation		Total shareholders’ equity
(In thousands, except share and per share amounts)
			Shares		Amount
BALANCE, DECEMBER 31, 2005	$	–	105,147,562		$	2,156,732		2,179,885		(83,043	)	(16,310	)	4,237,264
Comprehensive income:
Net income								583,125						583,125
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses on investments and retained interests										(7,684	)
Foreign currency translation										715
Reclassification for net realized gains on investments recorded in operations										(630	)
Net unrealized gains on derivative instruments										8,548
Pension and postretirement										6,245
Other comprehensive income										7,194				7,194
Total comprehensive income														590,319
Issuance of preferred stock		240,000				(4,167	)							235,833
Stock redeemed and retired			(308,359	)		(24,994	)							(24,994	)
Net stock issued under employee plans and related tax benefits			1,881,681			113,843								113,843
Reclassification of deferred compensation, adoption of SFAS 123R						(11,111	)					11,111		–
Dividends declared on preferred stock								(3,835	)					(3,835	)
Cash dividends on common stock, $1.47 per share								(156,986	)					(156,986	)
Change in deferred compensation												(4,421	)	(4,421	)
BALANCE, DECEMBER 31, 2006		240,000	106,720,884			2,230,303		2,602,189		(75,849	)	(9,620	)	4,987,023
Cumulative effect of change in accounting principle, adoption of FIN 48								10,408						10,408
Comprehensive income:
Net income								493,745						493,745
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses on investments and retained interests										(151,200	)
Foreign currency translation										(6	)
Reclassification for net realized losses on investments recorded in operations										60,811
Net unrealized gains on derivative instruments										106,929
Pension and postretirement										480
Other comprehensive income										17,014				17,014
Total comprehensive income														510,759
Common stock issued in acquisition			2,600,117			206,075								206,075
Stock redeemed and retired			(3,933,128	)		(318,756	)							(318,756	)
Net stock issued under employee plans and related tax benefits			1,728,632			94,615								94,615
Dividends declared on preferred stock								(14,323	)					(14,323	)
Cash dividends on common stock, $1.68 per share								(181,327	)					(181,327	)
Change in deferred compensation												(1,674	)	(1,674	)
BALANCE, DECEMBER 31, 2007		240,000	107,116,505			2,212,237		2,910,692		(58,835	)	(11,294	)	5,292,800
Cumulative effect of change in accounting principle, adoption of SFAS 159								(11,471	)	11,471				–
Comprehensive loss:
Net loss								(266,269	)					(266,269	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses on investments and retained interests										(333,095	)
Foreign currency translation										(5	)
Reclassification for net realized losses on investments recorded in operations										181,524
Net unrealized gains on derivative instruments										131,443
Pension and postretirement										(31,461	)
Other comprehensive loss										(51,594	)			(51,594	)
Total comprehensive loss														(317,863	)
Issuance of preferred stock		1,339,185				(580	)							1,338,605
Issuance of common stock and warrants			7,194,079			352,653								352,653
Stock issued under dividend reinvestment plan			39,857			1,261								1,261
Net stock issued under employee plans and related tax benefits			994,372			34,345								34,345
Dividends on preferred stock		2,649						(24,424	)					(21,775	)
Dividends on common stock, $1.61 per share								(175,165	)					(175,165	)
Change in deferred compensation												(3,165	)	(3,165	)
BALANCE, DECEMBER 31, 2008	$	1,581,834	115,344,813		$	2,599,916		2,433,363		(98,958	)	(14,459	)	6,501,696

See accompanying notes to consolidated financial statements.

128

CONSOLIDATED STATEMENTS OF CASH FLOWS

ZIONS BANCORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)	2008			2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(266,269	)	493,745		583,125
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairment and valuation losses on securities, goodwill, and long lived assets		674,050		158,208		1,304
Debt extinguishment cost		–		89		7,261
Provision for loan losses		648,269		152,210		72,572
Depreciation of premises and equipment		73,166		76,436		75,603
Amortization		67,035		48,537		49,445
Deferred income tax expense (benefit)		(231,241	)	(158,702	)	9,368
Share-based compensation		31,850		28,274		24,358
Excess tax benefits from share-based compensation		(1,059	)	(11,815	)	(14,689	)
Gain (loss) allocated to minority interest		(5,064	)	8,016		11,849
Equity securities gains, net		(793	)	(17,719	)	(17,841	)
Fixed income securities gains, net		(849	)	(3,019	)	(6,416	)
Net decrease (increase) in trading securities		(12,114	)	41,587		38,126
Principal payments on and proceeds from sales of loans held for sale		1,125,840		1,166,724		1,150,692
Additions to loans held for sale		(1,135,131	)	(1,230,790	)	(1,119,723	)
Net losses (gains) on sales of loans, leases and other assets		29,238		(17,243	)	(26,548	)
Income from increase in cash surrender value of bank-owned life insurance		(25,236	)	(26,560	)	(26,638	)
Change in accrued income taxes		(128,793	)	20,176		27,305
Change in accrued interest receivable		34,288		(7,521	)	(42,498	)
Change in other assets		307,783		44,177		89,164
Change in other liabilities		8,915		(7,697	)	114,288
Change in accrued interest payable		(10,765	)	(3,576	)	31,020
Other, net		(9,171	)	(20,637	)	8,155
Net cash provided by operating activities		1,173,949		732,900		1,039,282
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in money market investments		(1,202,709	)	(829,632	)	297,466
Proceeds from maturities of investment securities held-to-maturity		98,924		112,670		128,358
Purchases of investment securities held-to-maturity		(128,570	)	(140,460	)	(131,356	)
Proceeds from sales of investment securities available-for-sale		575,811		795,915		671,706
Proceeds from maturities of investment securities available-for-sale		3,308,703		3,355,414		2,338,383
Purchases of investment securities available-for-sale		(3,009,274	)	(4,537,371	)	(2,777,647	)
Proceeds from sales of loans and leases		294,480		68,579		218,104
Securitized loans purchased		(1,186,188	)	–		–
Net increase in loans and leases		(2,482,320	)	(3,907,965	)	(4,855,115	)
Net decrease (increase) in other noninterest-bearing investments		(674	)	62,234		(28,864	)
Proceeds from sales of premises and equipment and other assets		12,148		12,137		3,632
Purchases of premises and equipment		(114,164	)	(103,223	)	(122,432	)
Proceeds from sales of other real estate owned		72,629		9,977		39,607
Net cash received from (paid for) acquisitions		688,940		27,263		(13,145	)
Net cash received for net assets/liabilities on branches sold		–		11,174		–
Net cash received from sale of subsidiary		–		6,995		–
Net cash used in investing activities		(3,072,264	)	(5,056,293	)	(4,231,303	)

129

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

ZIONS BANCORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)	2008			2007		2006
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	3,661,680		931,098		2,339,338
Net change in short-term funds borrowed		(3,509,300	)	3,743,292		1,182,425
Proceeds from FHLB advances and other borrowings over one year		3,500		–		4,962
Payments on FHLB advances and other borrowings over one year		(2,859	)	(9,446	)	(102,392	)
Proceeds from issuance of long-term debt		28,495		296,289		395,000
Debt issuance and extinguishment costs		(675	)	(151	)	(7,858	)
Payments on long-term debt		(157,111	)	(274,957	)	(529,963	)
Proceeds from issuance of preferred stock		1,338,605		–		235,833
Proceeds from issuance of common stock and warrants		354,302		59,473		79,511
Payments to redeem common stock		(2,881	)	(322,025	)	(26,483	)
Excess tax benefits from share-based compensation		1,059		11,815		14,689
Dividends paid on preferred stock		(21,775	)	(14,323	)	(3,835	)
Dividends paid on common stock		(173,904	)	(181,327	)	(156,986	)
Net cash provided by financing activities		1,519,136		4,239,738		3,424,241
Net increase (decrease) in cash and due from banks		(379,179	)	(83,655	)	232,220
Cash and due from banks at beginning of year		1,855,155		1,938,810		1,706,590
Cash and due from banks at end of year	$	1,475,976		1,855,155		1,938,810
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	1,011,719		1,318,356		1,022,260
Income taxes		303,180		355,685		273,154
Noncash items:
Investment securities available-for-sale transferred to investment securities held-to-maturity		1,231,979		–		–
Loans transferred to other real estate owned		297,228		22,701		29,342
Acquisitions:
Common stock issued		–		206,075		–
Assets acquired		66,192		1,348,233		–
Liabilities assumed		737,116		1,142,158		–

See accompanying notes to consolidated financial statements.

130

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ZIONS BANCORPORATION AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Zions Bancorporation (“the Parent”) is a financial holding company headquartered in Salt Lake City, Utah, which provides a full range of banking and related services through its banking subsidiaries in ten Western and Southwestern states as follows: Zions First National Bank (“Zions Bank”), in Utah and Idaho; California Bank & Trust (“CB&T”); Amegy Corporation (“Amegy”) and its subsidiary, Amegy Bank, in Texas; National Bank of Arizona (“NBA”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; The Commerce Bank of Washington (“TCBW”); and The Commerce Bank of Oregon (“TCBO”). Amegy and its parent, Amegy Bancorporation, Inc., were acquired in December 2005. TCBO was opened in October 2005 and is not expected to have a material effect on consolidated operations for several years. The Parent also owns and operates certain nonbank subsidiaries that engage in the development and sale of financial technologies and related services. Two of these subsidiaries, NetDeposit, Inc. and P5, Inc. (“P5”), were merged in 2008 to form NetDeposit, LLC (“NetDeposit”). Another subsidiary whose ownership was transferred from Zions Bank to the Parent in 2008, Welman Holdings, Inc. (“Welman”), provides wealth management services.

BASIS OF FINANCIAL STATEMENT PRESENTATION

The consolidated financial statements include the accounts of the Parent and its majority-owned subsidiaries (“the Company,” “we,” “our,” “us”). Unconsolidated investments in which there is a greater than 20% ownership are accounted for by the equity method of accounting; those in which there is less than 20% ownership are accounted for under cost, fair value, or equity methods of accounting. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in prior years have been reclassified to conform to the current year presentation.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and prevailing practices within the financial services industry. This includes the guidance in Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 46(R), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51, as revised from FIN 46. FIN 46(R) requires consolidation of a variable interest entity (“VIE”) when a company is the primary beneficiary of the VIE. See Note 6 for discussion regarding current and proposed accounting rules amending FIN 46(R).

In preparing the consolidated financial statements, we are required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

STATEMENT OF CASH FLOWS

For purposes of presentation in the consolidated statements of cash flows, “cash and cash equivalents” are defined as those amounts included in cash and due from banks in the consolidated balance sheets.

SECURITY RESELL AGREEMENTS

Security resell agreements represent overnight and term agreements, the majority maturing within 30 days. These agreements are generally treated as collateralized financing transactions and are carried at amounts at which the securities were acquired plus accrued interest. Either the Company or, in some instances, third parties on our behalf take possession of the underlying securities. The fair value of such securities is monitored throughout the contract term to ensure that asset values remain sufficient to protect against counterparty default. We are permitted by contract to sell or repledge certain securities that we accept as collateral for security resell

131

agreements. If sold, our obligation to return the collateral is recorded as a liability and included in the balance sheet as securities sold, not yet purchased. As of December 31, 2008, we held approximately $287 million of securities for which we were permitted by contract to sell or repledge. The majority of these securities have been either pledged or otherwise transferred to others in connection with our financing activities, or to satisfy our commitments under short sales. Security resell agreements averaged approximately $514 million during 2008, and the maximum amount outstanding at any month-end during 2008 was $768 million.

INVESTMENT SECURITIES

We classify our investment securities according to their purpose and holding period. Gains or losses on the sale of securities are recognized using the specific identification method and recorded in noninterest income.

Held-to-maturity debt securities are stated at adjusted cost, net of unamortized premiums and unaccreted discounts. Adjusted cost is used due to the transfer during 2008 of certain available-for-sale securities to held-to-maturity. The Company has the intent and ability to hold such securities to maturity. Debt securities held for investment and marketable equity securities not accounted for under the equity method of accounting are classified as available-for-sale and recorded at fair value. Unrealized gains and losses of available-for-sale securities, after applicable taxes, are recorded as a component of other comprehensive income (“OCI”). Any declines in the value of debt securities and marketable equity securities that are considered other-than-temporary are recorded in noninterest income. The review for other-than-temporary impairment takes into account the severity and duration of the impairment, recent events specific to the issuer or industry, fair value in relationship to cost, extent and nature of change in fair value, creditworthiness of the issuer including external credit ratings and recent downgrades, trends and volatility of earnings, current analysts’ evaluations, and other key measures. In addition, we assess the Company’s intent and ability to hold the security for a period of time sufficient for a recovery in value, which may be maturity, taking into account our balance sheet management strategy and consideration of current and future market conditions.

Securities acquired for short-term appreciation or other trading purposes are classified as trading securities and are recorded at fair value. Realized and unrealized gains and losses are recorded in trading income.

The fair values of investment securities are estimated according to Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements, as discussed in Note 21.

LOANS

Loans are reported at the principal amount outstanding, net of unearned income. Unearned income, which includes deferred fees net of deferred direct loan origination costs, is amortized to interest income over the life of the loan using the interest method. Interest income is recognized on an accrual basis.

Loans held for sale are carried at the lower of aggregate cost or fair value. Gains and losses are recorded in noninterest income based on the difference between sales proceeds and carrying value.

NONACCRUAL LOANS

Loans are generally placed on a nonaccrual status when principal or interest is past due 90 days or more unless the loan is both well secured and in the process of collection or when, in the opinion of management, full collection of principal or interest is unlikely. Consumer loans are not normally placed on nonaccrual status. Generally, closed-end non-real estate secured consumer loans are charged off when they become 120 days past due. Open-end consumer loans are charged off when they become 180 days past due unless they are adequately secured by real estate at which point they are placed on nonaccrual status. A nonaccrual loan may be returned to accrual status when all delinquent interest and principal become current in accordance with the terms of the loan agreement or when the loan becomes both well secured and in the process of collection.

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IMPAIRED LOANS

Loans are considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments.

When a loan has been identified as being impaired, the amount of impairment will be measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, when appropriate, the loan’s observable fair value or the fair value of the collateral (less any selling costs) if the loan is collateral-dependent.

If the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net of deferred loan fees or costs and unamortized premium or discount), an impairment is recognized by creating or adjusting an existing allocation of the allowance for loan losses, or by charging down the loan to its value determined under the provisions of SFAS No. 114, Accounting by Creditors for Impairment of a Loan.

RESTRUCTURED LOANS

In cases where a borrower experiences financial difficulty and we make certain concessionary modifications to contractual terms, the loan is classified as a restructured (accruing) loan. Loans restructured at a rate equal to or greater than that of a new loan with comparable risk at the time the contract is modified may be excluded from the impairment assessment and may cease to be considered impaired loans in the calendar years subsequent to the restructuring if they are not impaired based on the modified terms.

Generally, a nonaccrual loan that is restructured remains on nonaccrual for a period of six months to demonstrate that the borrower can meet the restructured terms. However, performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan.

OTHER REAL ESTATE OWNED

Other real estate owned consists principally of commercial and residential real estate obtained in partial or total satisfaction of loan obligations. Amounts are recorded at the lower of cost or fair value (less any selling costs) based on property appraisals at the time of transfer and periodically thereafter.

ALLOWANCE FOR LOAN LOSSES

In analyzing the adequacy of the allowance for loan losses, we utilize a comprehensive loan grading system to determine the risk potential in the portfolio and also consider the results of independent internal credit reviews. To determine the adequacy of the allowance, our loan and lease portfolio is broken into segments based on loan type.

For commercial loans, we use historical loss experience factors by segment, adjusted for changes in trends and conditions, to help determine an indicated allowance for each portfolio segment. These factors are evaluated and updated using migration analysis techniques and other considerations based on the makeup of the specific segment. Other considerations include volumes and trends of delinquencies, levels of nonaccrual loans, repossessions and bankruptcies, criticized and classified loan trends, expected losses on real estate secured loans, new credit products and policies, current economic conditions, concentrations of credit risk, and experience and abilities of the Company’s lending personnel.

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In addition to the segment evaluations, nonaccrual loans graded substandard or doubtful with an outstanding balance of $500 thousand or more are individually evaluated as impaired loans based on the facts and circumstances of the loan to determine if a specific allowance amount may be necessary. Specific allowances may also be established for loans whose outstanding balances are below the above threshold when it is determined that the risk associated with the loan differs significantly from the risk factor amounts established for its loan segment.

For consumer loans, we develop historical rates at which loans migrate from one delinquency level to the next higher level. Comparing these average roll rates to actual losses, the model establishes projected losses for rolling twelve-month periods with updated data broken down by product groupings with similar risk profiles.

After a preliminary allowance for credit losses has been established for the loan portfolio segments, we perform an additional review of the adequacy of the allowance based on the loan portfolio in its entirety. This enables us to mitigate the imprecision inherent in most estimates of incurred credit losses and also supplements the allowance. This supplemental portion of the allowance includes our judgmental consideration of any additional amounts necessary for subjective factors such as economic uncertainties and excess concentration risks.

NONMARKETABLE SECURITIES

Nonmarketable securities are included in other noninterest-bearing investments on the balance sheet. These securities include certain venture capital securities and securities acquired for various debt and regulatory requirements. Nonmarketable venture capital securities are reported at estimated fair values, in the absence of readily ascertainable fair values. Changes in fair value and gains and losses from sales are recognized in noninterest income. The values assigned to the securities where no market quotations exist are based upon available information and may not necessarily represent amounts that will ultimately be realized. Such estimated amounts depend on future circumstances and will not be realized until the individual securities are liquidated. The valuation procedures applied include consideration of economic and market conditions, current and projected financial performance of the investee company, and the investee company’s management team. We believe that the cost of an investment is initially the best indication of estimated fair value unless there have been significant subsequent positive or negative developments that justify an adjustment in the fair value estimate. Other nonmarketable securities acquired for various debt and regulatory requirements are accounted for at cost.

ASSET SECURITIZATIONS

When we sold receivables in securitizations of home equity loans and small business loans, we generally retained a cash reserve account, an interest-only strip, and in some cases a subordinated tranche, all of which were retained interests in the securitized receivables. Gain or loss on sale of the receivables depended in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair values at the date of transfer. Quoted market prices were generally not available for retained interests. To obtain fair values, we estimated the present value of future expected cash flows using our best judgment of key assumptions, including credit losses, prepayment speeds and methods, forward yield curves, and discount rates commensurate with the risks involved.

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation, computed primarily on the straight-line method, is charged to operations over the estimated useful lives of the properties, generally from 25 to 40 years for buildings and from 3 to 10 years for furniture and equipment. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever are shorter.

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BUSINESS COMBINATIONS

Business combinations are accounted for under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Under this guidance, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition. Any excess of the cost of acquisition over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. Results of operations of the acquired business are included in the statement of income from the date of acquisition. See Note 2 for a discussion of SFAS 141 (revised 2007) and SFAS 160, which significantly change the financial accounting and reporting of business combination transactions and noncontrolling (or minority) interest in consolidated financial statements.

GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

SFAS No. 142, Goodwill and Other Intangible Assets, requires that goodwill and intangible assets deemed to have indefinite lives are not amortized. As required by SFAS 142, we subject these assets to annual specified impairment tests as of the beginning of the fourth quarter and more frequently if changing conditions warrant. Core deposit assets and other intangibles with finite useful lives are generally amortized on an accelerated basis using an estimated useful life of up to 12 years.

DERIVATIVE INSTRUMENTS

We use derivative instruments including interest rate swaps and floors and basis swaps as part of our overall asset and liability duration and interest rate risk management strategy. These instruments enable us to manage desired asset and liability duration and to reduce interest rate exposure by matching estimated repricing periods of interest-sensitive assets and liabilities. We also execute derivative instruments with commercial banking customers to facilitate their risk management strategies. These derivatives are immediately hedged by offsetting derivatives such that we minimize our net risk exposure as a result of such transactions. As required by SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, we record all derivatives at fair value in the balance sheet as either other assets or other liabilities. See further discussion in Note 7.

COMMITMENTS AND LETTERS OF CREDIT

In the ordinary course of business, we enter into commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for loan losses. The reserve for unfunded lending commitments is included in other liabilities in the balance sheet.

SHARE-BASED COMPENSATION

Share-based compensation generally includes grants of stock options and restricted stock to employees and nonemployee directors. We account for share-based payments, including stock options, in accordance with SFAS No. 123(R), Share-Based Payment, and recognize them in the statement of income based on their fair values. See further discussion in Note 17.

INCOME TAXES

Deferred tax assets and liabilities are determined based on temporary differences between financial statement asset and liability amounts and their respective tax bases and are measured using enacted tax laws and rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are recognized subject to management’s judgment that realization is more-likely-than-not.

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Unrecognized tax benefits for uncertain tax positions relate primarily to state tax contingencies and are accounted for and disclosed in accordance with FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. We adopted FIN 48 effective January 1, 2007. See further discussion in Note 15.

NET EARNINGS PER COMMON SHARE

Net earnings per common share is based on net earnings applicable to common shareholders which is net of preferred stock dividends. Basic net earnings per common share is based on the weighted average outstanding common shares during each year. Diluted net earnings per common share is based on the weighted average outstanding common shares during each year, including common stock equivalents. Diluted net earnings per common share excludes common stock equivalents whose effect is antidilutive.

2. OTHER RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No 141 (revised 2007), Business Combinations, and SFAS No. 160, Accounting and Reporting of Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. These new standards will significantly change the financial accounting and reporting of business combination transactions and noncontrolling (or minority) interests in consolidated financial statements. Among the most significant changes, SFAS 141(R) eliminates the step acquisition model under SFAS 141. Upon initially obtaining control, the acquirer will recognize 100% of all acquired assets (including goodwill) and all assumed liabilities regardless of the percentage owned. Certain transaction and restructuring costs must be expensed as incurred. Changes to the acquirer’s existing income tax valuation allowances and uncertainty accruals from a business combination must be recognized as an adjustment to current income tax expense and not to goodwill over the subsequent annual period. SFAS 160 changes the presentation of noncontrolling (or minority) interests in that all operating amounts attributable to a noncontrolling interest are included in the statement of income and remaining balances are included as a separate component of equity. Also required is the allocation of losses to a noncontrolling interest even when such losses result in a negative carrying balance. Retrospective application is required for comparative presentation. Both Statements are effective for the interim and annual reporting periods beginning after December 15, 2008. Management is currently evaluating the impact these Statements may have on the Company’s financial statements as they relate to future acquisitions, including the pending February 2009 acquisition related to Alliance Bank as discussed in Note 3. Minority interest of $27.3 million at December 31, 2008 will be reclassified to shareholders’ equity as of January 1, 2009 and reported as noncontrolling interests.

In June 2008, the FASB issued FASB Staff Position (“FSP”) No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. This FSP clarifies that unvested share-based payment awards with rights to receive nonforfeitable dividends are participating securities and should be included in the computation of earnings per share. It is effective for interim and annual periods beginning after December 15, 2008 and requires prior period earnings per share information to be adjusted retrospectively. Management does not expect this FPS to have a significant impact on earnings per share information.

Additional recent accounting pronouncements are discussed where applicable throughout the Notes to Consolidated Financial Statements.

3. MERGER AND ACQUISITION ACTIVITY

Effective September 5, 2008, we acquired from the Federal Deposit Insurance Corporation (“FDIC”) the insured deposits and certain assets of the failed Silver State Bank, headquartered in Henderson, Nevada. The acquisition was made through our NSB and NBA subsidiaries and included approximately $737 million of deposits and $66 million of assets. The assets consisted primarily of deposit-secured loans, furniture, fixtures and equipment, and certain branch assets.

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In September 2007, Amegy completed its acquisition for cash of Intercontinental Bank Shares Corporation (“Intercon”), including three branches located in San Antonio, Texas. Approximately $8.5 million in goodwill, $58 million in loans, and $105 million in deposits, including $98 million in core deposits, were added to the Company’s balance sheet.

In January 2007, we completed the acquisition of The Stockmen’s Bancorp, Inc. (“Stockmen’s”), headquartered in Kingman, Arizona. As of the date of acquisition, Stockmen’s had approximately $1.2 billion of total assets, $1.1 billion of total deposits, and a total of 43 branches—32 in Arizona and 11 in central California. Consideration of approximately $206.1 million consisted of 2.6 million shares of the Company’s common stock plus a small amount of cash paid for fractional shares. Stockmen’s parent company merged into the Parent and Stockmen’s banking subsidiary merged into NBA. Effective November 2, 2007, NBA completed the sale of the 11 California branches, which included approximately $169 million of loans and $190 million of deposits, resulting in no gain or loss. As of December 31, 2007, after giving effect to the sale of the branches, the acquisition resulted in approximately $106.1 million of goodwill and $30.6 million of core deposit and other intangibles.

In October 2006, we acquired the remaining minority interests of P5, a previous nonbank subsidiary (see Note 1). We had previously owned a majority interest in this investment. Net cash consideration of approximately $23.5 million was allocated $17.5 million to goodwill and $6.0 million to other intangible assets.

For the Stockmen’s and P5 acquisitions, Note 9 discusses the impairment losses in 2008 that reduced the recorded balances of goodwill at December 31, 2008.

Merger related expense of $1.6 million for 2008 included approximately $1.0 million for certain employee-related agreements from the Amegy acquisition in 2005. For 2007, merger related expense of $5.3 million related to the Amegy, Intercon and Stockmen’s acquisitions. For 2006, substantially all of the $20.5 million related to the Amegy acquisition.

On February 6, 2009, our CB&T subsidiary agreed to acquire from the FDIC the banking operations of the failed Alliance Bank, headquartered in Culver City, California. The acquisition includes approximately $1.1 billion of assets, including the entire loan portfolio, $1.0 billion of deposits, and five branches. The FDIC will assume certain amounts of credit losses under a loss sharing arrangement.

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4. INVESTMENT SECURITIES

Investment securities are summarized as follows (in thousands):

	December 31, 2008
			Recognized in OCI 1			Not recognized in OCI 1
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Carrying value	Gross unrealized gains	Gross unrealized losses	Estimated fair value
Held-to-maturity
Municipal securities	$	696,653	–	–	696,653	7,661	9,231	695,083
Asset-backed securities:
Trust preferred securities – banks and insurance		1,187,804	53	184,195	1,003,662	4,380	332,006	676,036
Trust preferred securities – real estate investment trusts		36,013	–	8,671	27,342	–	6,271	21,071
Other		76,323	48	13,139	63,232	644	12,611	51,265
Other debt securities		100	–	–	100	–	–	100
	$	1,996,893	101	206,005	1,790,989	12,685	360,119	1,443,555
Available-for-sale
U.S. Treasury securities	$	27,973	1,148	–	29,121			29,121
U.S. Government agencies and corporations:
Agency securities		323,371	2,813	975	325,209			325,209
Agency guaranteed mortgage-backed securities		406,462	5,308	1,655	410,115			410,115
Small Business Administration loan-backed securities		692,634	35	25,992	666,677			666,677
Municipal securities		177,938	2,312	252	179,998			179,998
Asset-backed securities:
Trust preferred securities – banks and insurance		806,537	3,457	149,367	660,627			660,627
Trust preferred securities – real estate investment trusts		26,880	–	2,983	23,897			23,897
Other		102,671	–	30,194	72,477			72,477
		2,564,466	15,073	211,418	2,368,121			2,368,121
Other securities:
Mutual funds and stock		308,134	–	–	308,134			308,134
	$	2,872,600	15,073	211,418	2,676,255			2,676,255

¹ Other comprehensive income

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	December 31, 2007
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Estimated fair value
Held-to-maturity
Municipal securities	$	704,441	5,811	8,104	702,148
Available-for-sale
U.S. Treasury securities	$	52,281	731	12	53,000
U.S. Government agencies and corporations:
Agency securities		629,240	1,684	5,002	625,922
Agency guaranteed mortgage-backed securities		764,771	4,523	6,284	763,010
Small Business Administration loan-backed securities		788,509	505	18,134	770,880
Municipal securities		220,159	1,881	71	221,969
Asset-backed securities:
Trust preferred securities – banks and insurance		2,123,090	6,369	110,332	2,019,127
Trust preferred securities – real estate investment trusts		155,935	–	61,907	94,028
Small business loan-backed		182,924	318	1,168	182,074
Other		226,460	4,374	176	230,658
		5,143,369	20,385	203,086	4,960,668
Other securities:
Mutual funds and stock		173,922	20	–	173,942
	$	5,317,291	20,405	203,086	5,134,610

As part of our ongoing review of the investment securities portfolio, we reassessed the classification of certain asset-backed and trust preferred collateralized debt obligation (“CDO”) securities. In the second and fourth quarters of 2008, we reclassified an aggregate of approximately $1.2 billion at fair value of available-for-sale (“AFS”) securities to held-to-maturity (“HTM”). The related unrealized pretax loss of approximately $273 million included in OCI remained in OCI and is being amortized as a yield adjustment through earnings over the remaining terms of the securities. No gain or loss was recognized at the time of reclassification. We consider the HTM classification to be more appropriate because we have the ability and the intent to hold these securities to maturity.

The amortized cost and estimated fair value of investment debt securities as of December 31, 2008 by contractual maturity are shown as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	Held-to-maturity			Available-for-sale
	Amortized cost		Estimated fair value	Amortized cost	Estimated fair value
Due in one year or less	$	76,870	73,883	477,028	470,173
Due after one year through five years		299,428	298,562	765,614	755,668
Due after five years through ten years		217,171	209,861	467,750	431,460
Due after ten years		1,403,424	861,249	854,074	710,820
	$	1,996,893	1,443,555	2,564,466	2,368,121

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The following is a summary of the amount of gross unrealized losses and the estimated fair value by length of time that the securities have been in an unrealized loss position (in thousands):

	December 31, 2008
	Less than 12 months			12 months or more		Total
	Gross unrealized losses		Estimated fair value	Gross unrealized losses	Estimated fair value	Gross unrealized losses	Estimated fair value
Held-to-maturity
Municipal securities	$	5,121	141,135	4,110	36,207	9,231	177,342
Asset-backed securities:
Trust preferred securities – banks and insurance		13,991	19,239	502,210	511,103	516,201	530,342
Trust preferred securities – real estate investment trusts		–	–	14,942	21,072	14,942	21,072
Other		7,214	26,621	18,536	20,541	25,750	47,162
	$	26,326	186,995	539,798	588,923	566,124	775,918
Available-for-sale
U.S. Government agencies and corporations:
Agency securities	$	191	41,950	784	60,725	975	102,675
Agency guaranteed mortgage-backed securities		1,336	103,721	319	32,960	1,655	136,681
Small Business Administration loan-backed securities		2,523	170,443	23,469	483,628	25,992	654,071
Municipal securities		224	16,303	28	2,286	252	18,589
Asset-backed securities:
Trust preferred securities – banks and insurance		27,378	114,721	121,989	454,094	149,367	568,815
Trust preferred securities – real estate investment trusts		2,983	10,783	–	–	2,983	10,783
Other		24,050	40,337	6,144	20,750	30,194	61,087
	$	58,685	498,258	152,733	1,054,443	211,418	1,552,701
	December 31, 2007
	Less than 12 months			12 months or more		Total
	Gross unrealized losses		Estimated fair value	Gross unrealized losses	Estimated fair value	Gross unrealized losses	Estimated fair value
Held-to-maturity
Municipal securities	$	6,308	49,252	1,796	167,971	8,104	217,223
Available-for-sale
U.S. Treasury securities	$	12	18,904	–	–	12	18,904
U.S. Government agencies and corporations:
Agency securities		19	15,219	4,983	153,465	5,002	168,684
Agency guaranteed mortgage-backed securities		571	82,323	5,713	345,593	6,284	427,916
Small Business Administration loan-backed securities		1,571	132,774	16,563	544,872	18,134	677,646
Municipal securities		10	1,745	61	3,729	71	5,474
Asset-backed securities:
Trust preferred securities – banks and insurance		80,340	1,530,433	29,992	403,463	110,332	1,933,896
Trust preferred securities – real estate investment trusts		61,907	60,869	–	–	61,907	60,869
Small business loan-backed		289	61,472	879	41,405	1,168	102,877
Other		176	188,247	–	–	176	188,247
	$	144,895	2,091,986	58,191	1,492,527	203,086	3,584,513

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We review investment debt securities on an ongoing basis for the presence of other-than-temporary-impairment (“OTTI”) with formal reviews performed quarterly. OTTI losses on individual investment securities are recognized as a realized loss through earnings when it is probable that we will not collect all of the contractual cash flows or we determine we will be unable to hold the securities until a recovery of fair value, which may be maturity. OTTI losses include incurred credit losses and liquidity losses.

Our OTTI evaluation process follows the guidance of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, Emerging Issues Task Force (“EITF”) Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets, and FSP No. EITF 99-20-1, Amendments to the Impairment and Interest Income Measurement Guidance of EITF Issue No. 99-20. This guidance requires the Company to take into consideration current market conditions, fair value in relationship to cost, extent and nature of change in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, all available information relevant to the collectibility of debt securities, our ability and intent to hold investments until a recovery of fair value, which may be maturity, and other factors when evaluating for the existence of OTTI in our securities portfolio. FSP EITF 99-20-1 was issued on January 12, 2009 and is effective for reporting periods ending after December 15, 2008. This FSP amends EITF 99-20 by eliminating the requirement that a holder’s best estimate of cash flows be based upon those that “a market participant” would use. Instead, the FSP requires that OTTI be recognized as a realized loss through earnings when it is “probable” there has been an adverse change in the holder’s estimated cash flows from the cash flows previously projected. This requirement is consistent with the impairment model in SFAS 115.

In addition, our disclosure and related discussion of unrealized losses is presented pursuant to FSP FAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, and EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. FSP FAS 115-1 replaces certain impairment evaluation guidance of EITF 03-1; however, the disclosure requirements of EITF 03-1 remain in effect. This FSP addresses the determination of when an investment is considered impaired, whether the impairment is considered to be other-than-temporary, and the measurement of an impairment loss. The FSP also supersedes EITF Topic No. D-44, Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value, and clarifies that an impairment loss should be recognized no later than when the impairment is deemed other-than-temporary, even if a decision to sell an impaired security has not been made.

Municipal securities

The HTM securities are purchased directly from the municipalities and are generally not rated by a credit rating agency. The AFS securities are rated as investment grade by various credit rating agencies. Both the HTM and AFS securities are at fixed and variable rates with maturities from one to 25 years. Fair values of these securities are highly driven by interest rates. We perform annual or more frequent credit quality reviews as appropriate on these issues. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because we have the ability and intent to hold those investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at December 31, 2008.

Asset-backed securities

Trust preferred securities—banks and insurance: These CDO securities are both fixed and variable rate pools of trust preferred securities related to banks and insurance companies. They are rated by one or more Nationally Recognized Statistical Rating Organizations (“NRSROs”) which are rating agencies registered with the Securities and Exchange Commission (“SEC”). They were purchased generally at par. Unrealized losses were caused mainly by the following factors: (1) collateral deterioration due to bank failures and credit concerns across the banking sector; (2) widening of credit spreads for asset-backed securities; and (3) general illiquidity in the market for CDOs. Our ongoing review of these securities in accordance with the

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previous discussion and our policy in Note 1 determined that OTTI should be recorded on certain of these securities. See subsequent summary.

Trust preferred securities—real estate investment trusts (“REIT”): These CDO securities are both fixed and variable rate pools of trust preferred securities related to real estate investment trusts, and rated by one or more NRSROs. They were purchased generally at par. Unrealized losses were caused mainly by severe deterioration in mortgage REITs and homebuilder credit in addition to the same factors previously discussed for banks and insurance CDOs. Our ongoing review of these securities in accordance with the previous discussion and our policy in Note 1 determined that OTTI should be recorded on certain of these securities. See subsequent summary.

Other asset-backed securities: The majority of these CDO securities were purchased from Lockhart Funding, LLC (“Lockhart”) as discussed in Note 6 and were adjusted to fair value. Approximately $63 million consist of certain structured asset-backed CDOs (“ABS CDOs”) (also known as diversified structured finance CDOs) which have some exposure to subprime and home equity mortgage securitizations. Approximately $11 million of the collateral backing the ABS CDOs is subprime mortgage securitizations and $7 million is home equity credit line securitizations. Our ongoing review of these securities in accordance with the previous discussion and our policy in Note 1 determined that OTTI should be recorded on certain of these securities. See subsequent summary.

U.S. Government agencies and corporations

Agency securities: Unrealized losses were caused by changes in interest rates. The agency securities consist of discount notes and medium term notes issued by the Federal Agricultural Mortgage Corporation (“FAMC”), Federal Home Loan Bank (“FHLB”), Federal Farm Credit Bank and Federal Home Loan Mortgage Corporation (“FHLMC”). These securities are fixed rate and were purchased at premiums or discounts. They have maturity dates from one to 30 years and have contractual cash flows guaranteed by agencies of the U.S. Government. In the latter half of 2008, the U.S. Government provided substantial liquidity to FHLMC to bolster its creditworthiness. Because the decline in fair value is generally attributable to interest rates and not credit quality, and because we have the ability and intent to hold these investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at December 31, 2008.

Agency guaranteed mortgage-backed securities: Unrealized losses were caused by changes in interest rates. The agency mortgage-backed securities are comprised largely of fixed and variable rate residential mortgage-backed securities issued by the Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”), FAMC or FHLMC. They have maturity dates from one to 30 years and have contractual cash flows guaranteed by agencies of the U.S. Government. In the latter half of 2008, the U.S. Government provided substantial liquidity to both FNMA and FHLMC to bolster their creditworthiness. Because the decline in fair value is generally attributable to changes in interest rates and not credit quality, and because we have the ability and intent to hold these investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at December 31, 2008.

Small Business Administration (“SBA”) loan-backed securities: These securities were generally purchased at premiums with maturities from five to 25 years and have principal cash flows guaranteed by the SBA. Because the decline in fair value is not attributable to credit quality, and because we have the ability and intent to hold these investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at December 31, 2008.

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The following summarizes the amounts of recognized OTTI according to the previously discussed categories (in millions):

	2008							2007
	HTM			AFS		Total		HTM	AFS		Total
Asset-backed securities:
Trust preferred securities – banks and insurance	$	(187.7	)	(15.6	)	(203.3	)	–	–		–
Trust preferred securities – real estate investment trusts		–		(64.8	)	(64.8	)	–	(108.6	)	(108.6	)
Other (including ABS CDOs)		(20.0	)	(15.9	)	(35.9	)	–	–		–
	$	(207.7	)	(96.3	)	(304.0	)	–	(108.6	)	(108.6	)

At December 31, 2008 and 2007, respectively, 632 and 807 HTM and 739 and 774 AFS investment securities were in an unrealized loss position.

The following summarizes gains and losses, including OTTI, that are recognized in the statement of income (in millions):

	2008					2007			2006
	Gross gains		Gross losses			Gross gains	Gross losses		Gross gains	Gross losses
Investment securities:
Held-to-maturity	$	–		208.5		–	–		–	–
Available-for-sale		4.6		110.2		6.5	159.5		18.5	17.4
Other noninterest-bearing investments:
Securities held byconsolidated SBICs		10.5		18.9		20.1	4.7		26.3	6.6
Other		20.1		13.1		0.4	0.3		3.5	–
		35.2		350.7		27.0	164.5		48.3	24.0
Net gains (losses)			$	(315.5	)		(137.5	)		24.3
Statement of income information:
Impairment losses on investment securities			$	(304.0	)		(108.6	)
Valuation losses on securities purchased from Lockhart Funding				(13.1	)		(49.6	)
				(317.1	)		(158.2	)
Equity securities gains, net				0.8			17.7			17.9
Fixed income securities gains, net				0.8			3.0			6.4
Net gains (losses)			$	(315.5	)		(137.5	)		24.3

The valuation losses from purchases of certain Lockhart securities are discussed in Note 6.

As of December 31, 2008 and 2007, securities with an amortized cost of $1.8 billion and $2.7 billion, respectively, were pledged to secure public and trust deposits, advances, and for other purposes as required by law. As described in Note 11, securities are also pledged as collateral for security repurchase agreements.

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5. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are summarized as follows at December 31 (in thousands):

	2008		2007
Loans held for sale	$	200,318	207,943
Commercial lending:
Commercial and industrial		11,447,370	10,406,882
Leasing		431,139	502,601
Owner occupied		8,742,809	7,544,918
Total commercial lending		20,621,318	18,454,401
Commercial real estate:
Construction and land development		7,515,584	7,868,928
Term		6,196,165	5,334,385
Total commercial real estate		13,711,749	13,203,313
Consumer:
Home equity credit line		2,004,631	1,608,009
1-4 family residential		3,876,964	3,974,925
Construction and other consumer real estate		774,158	945,293
Bankcard and other revolving plans		373,972	347,248
Other		385,032	459,768
Total consumer		7,414,757	7,335,243
Foreign loans		43,413	51,206
Total loans	$	41,991,555	39,252,106

Owner occupied and commercial term loans included unamortized premium of approximately $155.1 million and $127.6 million at December 31, 2008 and 2007, respectively.

As of December 31, 2008 and 2007, loans with a carrying value of $9.4 billion and $6.4 billion, respectively, were included as blanket pledges of security for FHLB advances. Actual FHLB advances against these pledges were $128 million and $2,853 million at December 31, 2008 and 2007, respectively.

We sold loans totaling $950 million in 2008, $1,125 million in 2007, and $1,014 million in 2006 that were previously classified as held for sale. Income from loans sold, excluding servicing, was $9.7 million in 2008, $24.2 million in 2007, and $35.5 million in 2006. These income amounts include loans held for sale and loan securitizations, and exclude impairment losses on retained interests from loan securitizations.

Changes in the allowance for loan losses are summarized as follows (in thousands):

	2008			2007		2006
Balance at beginning of year	$	459,376		365,150		338,399
Allowance of companies acquired		–		7,639		–
Allowance associated with purchased securitized loans		1,756		–		–
Allowance of loans and leases sold		(804	)	(2,034	)	–
Additions:
Provision for loan losses		648,269		152,210		72,572
Recoveries		21,026		15,095		19,971
Deductions:
Loan charge-offs		(414,687	)	(78,684	)	(65,792	)
Reclassification to reserve for unfunded lending commitments		(27,937	)	–		–
Balance at end of year	$	686,999		459,376		365,150

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The reclassification reflects a refinement in the reserving process to include in the reserve for unfunded lending commitments the reserves for all unfunded lending commitments, including unfunded portions of partially funded credits previously reserved for as part of the allowance for loan losses. The reserve is included in other liabilities in the balance sheet and was increased by the reclassification during the fourth quarter of 2008.

Nonaccrual loans were $946 million and $259 million at December 31, 2008 and 2007, respectively. Loans past due 90 days or more as to interest or principal and still accruing interest were $130 million and $77 million at December 31, 2008 and 2007, respectively.

Our recorded investment in impaired loans was $770 million and $226 million at December 31, 2008 and 2007, respectively. Impaired loans of $306 million and $103 million at December 31, 2008 and 2007 required an allowance of $52 million and $21 million, respectively, which is included in the allowance for loan losses. Contractual interest due on impaired loans was $38.9 million in 2008, $9.9 million in 2007, and $3.3 million in 2006. Interest collected on these loans and included in interest income was $4.7 million in 2008, $1.9 million in 2007, and $0.6 million in 2006. The average recorded investment in impaired loans was $499 million in 2008, $135 million in 2007, and $39 million in 2006.

Concentrations of credit risk from financial instruments (whether on- or off-balance sheet) occur when groups of customers or counterparties have similar economic characteristics and are similarly affected by changes in economic or other conditions. Credit risk includes the loss that would be recognized subsequent to the reporting date if counterparties failed to perform as contracted. We have no significant exposure to any individual borrower. See Note 7 for a discussion of counterparty risk associated with the Company’s derivative transactions.

Most of our business activity is with customers located in the states of Utah, California, Texas, Arizona, Nevada, Colorado, Idaho, and Washington. The commercial loan portfolio is well diversified, consisting of nine major industry classification groupings based on Standard Industrial Classification codes. As of December 31, 2008, the larger concentrations of risk were in the commercial, real estate, and construction portfolios. See discussion in Note 18 regarding commitments to extend additional credit.

6. ASSET SECURITIZATIONS AND OFF-BALANCE SHEET ARRANGEMENT

SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and related accounting pronouncements, provides accounting and reporting guidance for sales, securitizations, and servicing of receivables and other financial assets, secured borrowing and collateral transactions, and the extinguishment of liabilities.

On September 15, 2008, the FASB issued a proposed amendment, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140, that among other things, would remove the concept of a qualifying special-purpose entity (“QSPE”) and remove the exception from applying FIN 46(R) to QSPEs. The proposed amendment would be effective for calendar-year companies beginning in 2010. Management is monitoring these developments as they relate to the operations and existence of Lockhart.

On December 11, 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, Disclosures about Transfers of Financial Assets and Interest in Variable Interest Entities. This FSP is currently effective for December 31, 2008 reporting by public companies. It amends SFAS 140 and FIN 46(R) to expedite the effective date of the disclosure requirements in the proposed amendment to SFAS 140 discussed previously. The FSP requires additional disclosures regarding, among other things, a transferor’s continuing involvement in financial assets transferred to a special-purpose entity or a VIE and the impact of such involvement on its financial statements. The following disclosures include these additional requirements; however, as of December 31, 2008, our activity regarding the transfer of financial assets under SFAS 140 was not considered significant.

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Zions Bank previously sold small business loans to securitization trusts held by Lockhart, an off-balance sheet QSPE securities conduit. Zions Bank had also sold home equity loans to a revolving securitization structure. No small business loans were sold during 2008, 2007 or 2006 and the sale of home equity loans was discontinued in December 2006. Zions Bank also had retained subordinated interests from these loan securitizations and the Company included them with other assets in the balance sheet.

The gain or loss on the sale of loans and receivables was the difference between the proceeds from the sale and the basis of the assets sold. The basis was determined by allocating the previous carrying amount between the assets sold and the retained interests, based on their relative fair values at the date of transfer. Fair values were based upon market prices at the time of sale for the assets and the estimated present value of future cash flows for the retained interests. Income recognized from previous securitizations, excluding servicing fees, was $2.3 million in 2007 and $4.7 million in 2006.

For these loan securitizations, Zions Bank retained servicing responsibilities and received servicing fees. A servicing asset was not established for most small business loan sales because the lack of an active market did not make it practicable to estimate the fair value of servicing.

As subsequently discussed in greater detail, during 2008, Zions Bank completed the purchase of all retained interests for prior years’ small business loan securitizations and recorded the previously sold loans on its balance sheet. Zions Bank also exercised its “cleanup call” rights and redeemed the remaining stated balances plus accrued interest of all home equity loans previously securitized. No gain or loss was recognized on any of these purchases or redemptions.

Certain cash flows between Zions Bank and the securitization structures are summarized as follows (in millions):

	2008			2007	2006
Proceeds from loans sold into revolving securitizations	$	–		–	174
Purchases of loans previously securitized		(1,180	)	–	–
Servicing fees received		6		17	23
Other cash flows received on retained interests1		317		84	94
Total	$	(857	)	101	291

¹ Represents total cash flows received from retained interests other than servicing fees. Other cash flows include cash from interest-only strips and cash above the minimum required level in cash collateral accounts.

We recognized interest income on retained interests in small business loan securitizations in accordance with EITF 99-20. Interest income recognized on the retained interests up to the time of their purchase was $0.6 million in 2008, $10.6 million in 2007, and $12.7 million in 2006. These amounts did not include interest income on revolving securitizations which were accounted for similar to trading securities.

EITF 99-20 requires periodic updates of the assumptions used to compute estimated cash flows for retained interests and a comparison of the net present value of these cash flows to the carrying value. An impairment charge is required if the estimated fair value of the retained interests is less than carrying value. Based on adjustments to assumptions for prepayment speeds, discount rates, and expected credit losses, Zions Bank recorded impairment losses totaling $12.6 million in 2007 and $7.1 million in 2006 on the value of the retained interests from certain small business loan securitizations.

Servicing fee income on all securitizations was $6.1 million in 2008, $17.2 million in 2007, and $23.3 million in 2006. All amounts of interest income, impairment losses, and servicing fee income are included in loan sales and servicing income in the statement of income.

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Zions Bank provides a liquidity facility for a fee to Lockhart, which was structured to purchase floating rate U.S. Government and AAA-rated securities with funds from the issuance of asset-backed commercial paper. Zions Bank also provides interest rate hedging support and administrative and investment advisory services for a fee.

Pursuant to the Liquidity Agreement, Zions Bank is required to purchase nondefaulted securities from Lockhart to provide funds for Lockhart to repay maturing commercial paper upon Lockhart’s inability to access a sufficient amount of funding in the commercial paper market, or upon a commercial paper market disruption as specified in governing documents for Lockhart. Pursuant to the governing documents, including the Liquidity Agreement, if any security in Lockhart is downgraded below AA-, or the downgrade of one or more securities results in more than ten securities having ratings of AA+ to AA-, Zions Bank must either 1) place its letter of credit on the security, 2) obtain credit enhancement from a third party, or 3) purchase the security from Lockhart at book value. Zions Bank may incur losses if it is required to purchase securities from Lockhart when the fair value of the securities at the time of purchase is less than book value.

During 2008 and the fourth quarter of 2007, Zions Bank purchased an aggregate of $1,145 million and $895 million, respectively, of securities at book value from Lockhart. Of these purchases, $870 million and $55 million, respectively, were required by the Liquidity Agreement when the securities, and MBIA Inc. which insured certain of the securities, were downgraded below AA-. The remaining $275 million and $840 million, respectively, were due to the inability of Lockhart to issue a sufficient amount of commercial paper.

As a result of these purchases, Zions Bank recorded valuation losses of approximately $13.1 million in 2008 and $49.6 million in 2007, which were included in the statement of income with the $317.1 million in 2008 and $158.2 million in 2007 of “Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding.”

The securities purchased in 2008 included $987 million which comprised the entire remaining small business loan securitizations created by Zions Bank and held by Lockhart. Upon dissolution of the securitization trusts (including a total of $170 million of related securities owned by the Parent), Zions Bank recorded $1,180 million of loans on its balance sheet including $23 million of premium. See further discussion of this premium in Note 21.

At December 31, 2008, the book value of Lockhart’s securities portfolio was approximately $738 million which exceeded the fair value by approximately $119 million. The securities portfolio consisted of $191 million of SBA loan-backed securities, $504 million of bank and insurance trust preferred CDOs, $36 million of REIT trust preferred CDOs, and $7 million of other securities.

The commitment of Zions Bank to Lockhart cannot exceed the book value of Lockhart’s securities portfolio. Lockhart is limited in size by program agreements, agreements with rating agencies, and the size of the liquidity facility.

As permitted by the governing documents, the Company has also purchased asset-backed commercial paper from Lockhart and held approximately $412 million on its balance sheet at December 31, 2008. The average amount of Lockhart commercial paper included in money market investments for 2008 was approximately $865 million. These purchases were made to provide liquidity to Lockhart due to ongoing contraction and disruptions in the asset-backed commercial paper markets. In November 2008, Lockhart elected to participate in the Federal Reserve’s Commercial Paper Funding Facility (“CPFF”) Program. The CPFF is currently expected to expire on October 31, 2009. If at any given time the Company were to own more than 90% of Lockhart’s outstanding commercial paper (beneficial interest), Lockhart would cease to be a QSPE and the Company would be required to consolidate Lockhart in its financial statements. However, such consolidation would not be considered significant to the financial position of the Company.

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7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

SFAS 133, as currently amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. SFAS 161, among other things, requires greater transparency in disclosing information about derivatives including the objectives for their use, the volume of derivative activity, tabular disclosure of financial statement amounts, and any credit-risk-related features. The Statement is effective for annual and interim financial statements beginning after November 15, 2008. Management does not expect the requirements of this Statement to have a significant impact on the Company’s financial statements and related disclosures.

In June 2008, the FASB issued a proposed amendment, Accounting for Hedging Activities, an amendment of FASB Statement No. 133, that would change current practices for hedge accounting. The “highly effective” hedging requirement would be replaced by a “reasonably effective” requirement. However, the shortcut method to assess effectiveness for interest rate swaps would be eliminated. The proposal is expected to take effect for annual and interim periods after June 15, 2009. Management is evaluating the impact this proposal may have on its hedging activities.

As required by SFAS 133, we record all derivatives on the balance sheet at fair value. See Note 21 for a discussion of the application of SFAS 157 in determining the fair value of derivatives. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For derivatives designated as fair value hedges, changes in the fair value of the derivative are recognized in earnings together with changes in the fair value of the related hedged item. The net amount, if any, representing hedge ineffectiveness, is reflected in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative are recorded in other comprehensive income and recognized in earnings when the hedged transaction affects earnings. The ineffective portion of changes in the fair value of cash flow hedges is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows on the derivative hedging instrument with the changes in fair value or cash flows on the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

Our objective in using derivatives is to add stability to interest income or expense, to modify the duration of specific assets or liabilities as we consider advisable, and to manage exposure to interest rate movements or other identified risks. To accomplish this objective, we use interest rate swaps and floors as part of our cash flow hedging strategy. These derivatives are used to hedge the variable cash flows associated with designated commercial loans. We use fair value hedges to manage interest rate exposure to certain long-term debt. As of December 31, 2008, no derivatives were designated for hedges of investments in foreign operations.

Exposure to credit risk arises from the possibility of nonperformance by counterparties. These counterparties primarily consist of financial institutions that are well established and well capitalized. We control this credit risk through credit approvals, limits, pledges of collateral, and monitoring procedures. No losses on derivative instruments have occurred as a result of counterparty nonperformance. Nevertheless, the related credit risk is considered and measured when and where appropriate. We have no significant exposure to credit default swaps.

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Interest rate swap agreements designated as cash flow hedges involve the receipt of fixed-rate amounts in exchange for variable-rate payments over the life of the agreements without exchange of the underlying principal amount. Fair value hedges are used to swap certain long-term debt from fixed-rate to floating rate. Derivatives not designated as hedges, including basis swap agreements, are not speculative and are used to manage our exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements of SFAS 133.

Selected information with respect to notional amounts, recorded gross fair values, and related income (expense) of derivative instruments is summarized as follows (in thousands):

	December 31, 2008				Year ended December 31, 2008				December 31, 2007			Year ended December 31, 2007
	Notional amount		Fair value		Interest income (expense)	Other income (expense)		Offset to interest expense	Notional amount	Fair value		Interest income (expense)		Other income (expense)		Offset to interest expense
			Asset	Liability						Asset	Liability
Cash flow hedges
Interest rate swaps	$	2,405,000	237,912	–	67,134				3,400,000	133,954	–	(39,114	)
Interest rate floors		255,000	8,106	–	392				–	–	–	–
		2,660,000	246,018	–	67,526				3,400,000	133,954	–	(39,114	)
Nonhedges
Interest rate swaps		266,726	6,375	6,093		(18,984	)		323,934	508	508			(123	)
Interest rate swaps for customers		2,739,173	104,100	107,270		2,436			1,924,115	28,752	28,752			4,049
Energy commodity swaps for customers		645,417	50,063	50,065		390			1,047,928	66,393	66,393			710
Basis swaps		1,795,000	–	14,693		(18,332	)		2,815,000	409	8,349			(14,629	)
		5,446,316	160,538	178,121		(34,490	)		6,110,977	96,062	104,002			(9,993	)
Fair value hedges
Long-term debt		1,400,000	235,704	–				35,074	1,400,000	77,436	–					1,989
Total	$	9,506,316	642,260	178,121	67,526	(34,490	)	35,074	10,910,977	307,452	104,002	(39,114	)	(9,993	)	1,989

At December 31, 2008 in accordance with SFAS 157, the fair values of derivative assets and liabilities were reduced by net credit valuation adjustments of $12.5 million and $5.0 million, respectively. These adjustments are required to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.

Effective January 1, 2008, we adopted the provisions of FSP FIN 39-1, Offsetting of Amounts Related to Certain Contracts. FSP FIN 39-1 permits entities to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against recognized fair value amounts of derivatives executed with the same counterparty under a master netting arrangement. At December 31, 2008, cash collateral was used to reduce recorded amounts of derivative assets by approximately $247 million and derivative liabilities by approximately $2 million.

Interest rate swaps and energy commodity swaps for customers result from a service we provide. Upon issuance, all of these customer swaps are immediately “hedged” by offsetting derivative contracts, such that the Company minimizes its net risk exposure resulting from such transactions. Fee income from customer swaps is included in other service charges, commissions and fees. As with other derivative instruments, we have credit risk for any nonperformance by counterparties.

Other income (expense) from nonhedge interest rate and basis swaps is included in fair value and nonhedge derivative income (loss) in the statement of income. Interest income on fair value hedges is used to offset interest expense on long-term debt. The change in net unrealized gains or losses for derivatives designated as cash flow hedges is separately disclosed in the statement of changes in shareholders’ equity and comprehensive income.

Amounts for hedge ineffectiveness on the Company’s cash flow hedging relationships are included in fair value and nonhedge derivative income (loss). For 2008 and 2006, these amounts were immaterial. For 2007, the amount was a gain of approximately $0.3 million. During 2008, we also included a loss of $1.7 million that was reclassified from other comprehensive income when it became probable that the hedged forecasted transactions would not occur.

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The remaining balances of any derivative instruments terminated prior to maturity, including amounts in accumulated other comprehensive income for swap hedges, are accreted or amortized generally on a straight-line basis to interest income or expense over the period to their previously stated maturity dates.

Amounts reported in accumulated other comprehensive income related to derivatives are reclassified to interest income as interest payments are received on variable rate loans and as amounts for terminated hedges are amortized to earnings. The change in net unrealized gains or losses on cash flow hedges discussed above reflects a reclassification of net unrealized gains or losses from accumulated other comprehensive income to interest income, as disclosed in Note 14. For 2009, we estimate that an additional $124 million of gains and accretion/amortization will be reclassified.

8. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows at December 31 (in thousands):

	2008		2007
Land	$	181,849	169,941
Buildings		412,026	380,337
Furniture and equipment		574,162	528,411
Leasehold improvements		117,432	117,822
Total		1,285,469	1,196,511
Less accumulated depreciation and amortization		598,373	540,799
Net book value	$	687,096	655,712

9. GOODWILL AND OTHER INTANGIBLE ASSETS

Core deposit and other intangible assets and related accumulated amortization are as follows at December 31 (in thousands):

	Gross carrying amount			Accumulated amortization				Net carrying amount
	2008		2007	2008		2007		2008	2007
Core deposit intangibles	$	226,700	287,973	(119,650	)	(167,102	)	107,050	120,871
Customer relationships and other intangibles		52,350	52,350	(33,465	)	(23,728	)	18,885	28,622
	$	279,050	340,323	(153,115	)	(190,830	)	125,935	149,493

The amount of amortization expense of core deposit and other intangible assets is separately reflected in the statement of income. At December 31, 2008, we had $0.8 million of other intangible assets with indefinite lives.

Estimated amortization expense for core deposit and other intangible assets is as follows for the five years succeeding December 31, 2008 (in thousands):

2009	$	26,362
2010		22,716
2011		17,249
2012		14,570
2013		12,402

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Changes in the carrying amount of goodwill by operating segment are as follows (in thousands):

	Zions Bank			CB&T		Amegy		NBA		NSB		Vectra		TCBW	Other		Consolidated Company
Balance as of December 31, 2006	$	21,899		382,119		1,242,942		62,397		21,051		151,465		–	18,644		1,900,517
Goodwill acquired during the year		1,624				8,477		106,128									116,229
Goodwill of subsidiary sold		(1,785	)														(1,785	)
Tax benefit realized from share-based awards converted in acquisition						(2,069	)										(2,069	)
Goodwill reclassified				(3,095	)	(284	)										(3,379	)
Balance as of December 31, 2007		21,738		379,024		1,249,066		168,525		21,051		151,465		–	18,644		2,009,513
Goodwill of subsidiary transferred		(2,224	)												2,224		–
Purchase accounting adjustments								45									45
Impairment losses								(168,570	)	(21,051	)	(151,465	)		(12,718	)	(353,804	)
Tax benefit realized from share-based awards converted in acquisition						(120	)										(120	)
Goodwill reclassified						4									(4,261	)	(4,257	)
Balance as of December 31, 2008	$	19,514		379,024		1,248,950		–		–		–		–	3,889		1,651,377

The acquisitions in 2007 of Intercon (by Amegy) and Stockmen’s (by NBA) resulted in goodwill of $8.5 million and $106.1 million, respectively, and are discussed further in Note 3. The tax benefits realized from share-based awards are discussed in Note 17.

In 2008, the $4.3 million reclassification of goodwill from the other segment related to the release of the valuation allowance established for the acquired P5 net operating loss carryforwards, as further discussed in Note 15. In 2007, the $3.1 million reclassification of goodwill at CB&T was to other liabilities and resulted from the recognition under FIN 48 of the remaining acquired state net operating loss carryforward benefits following the completion of a state tax examination.

The transfer of $2.2 million of goodwill resulted when the Parent acquired Welman from Zions Bank.

The impairment losses totaling $353.8 million reflect our company-wide annual impairment testing as of October 1, 2008 that was updated to December 31, 2008 due to continued market deterioration in the fourth quarter. The losses reflect impairment of all of the goodwill at the three subsidiary bank reporting segments and substantially all of the goodwill at P5 which is included in the other segment. The amount of the losses was determined based on the calculation process specified in SFAS 142, which compares carrying value to the estimated fair values of assets and liabilities. These fair values were estimated with the assistance of independent valuation consultants utilizing the provisions of SFAS 157. The estimation process took into account both market value and transaction value approaches including management estimates of projected discounted cash flow. Where applicable, we used recent valuations and transactions from banks similar in size, operations and geography to our subsidiary banks.

10. DEPOSITS

At December 31, 2008, the scheduled maturities of all time deposits were as follows (in thousands):

2009	$	7,395,140
2010		458,080
2011		183,930
2012		96,626
2013		98,616
Thereafter		2,564
	$	8,234,956

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At December 31, 2008, the contractual maturities of domestic time deposits with a denomination of $100,000 and over were as follows: $1,817 million in 3 months or less, $978 million over 3 months through 6 months, $1,590 million over 6 months through 12 months, and $371 million over 12 months.

Domestic time deposits $100,000 and over were $4.8 billion and $4.4 billion at December 31, 2008 and 2007, respectively. Foreign time deposits $100,000 and over were $504 million and $1,113 million at December 31, 2008 and 2007, respectively.

Deposit overdrafts reclassified as loan balances were $39 million and $35 million at December 31, 2008 and 2007, respectively.

11. SHORT-TERM BORROWINGS

Selected information for certain short-term borrowings is as follows (in thousands):

	2008			2007		2006
Federal funds purchased:
Average amount outstanding	$	1,768,782		2,166,652		1,747,256
Weighted average rate		2.20	%	5.06	%	5.06	%
Highest month-end balance	$	2,379,055		2,865,076		2,586,072
Year-end balance		965,835		2,463,460		1,993,483
Weighted average rate on outstandings at year-end		0.33	%	3.84	%	5.16	%
Security repurchase agreements:
Average amount outstanding	$	964,801		1,044,465		1,090,452
Weighted average rate		1.50	%	3.73	%	3.33	%
Highest month-end balance	$	1,218,507		1,298,112		1,225,107
Year-end balance		899,751		1,298,112		934,057
Weighted average rate on outstandings at year-end		0.41	%	3.07	%	3.60	%

These short-term borrowings generally mature in less than 30 days. Our participation in security repurchase agreements is on an overnight or term basis. Certain overnight agreements are performed with sweep accounts in conjunction with a master repurchase agreement. In this case, securities under our control are pledged for and interest is paid on the collected balance of the customers’ accounts. For term repurchase agreements, securities are transferred to the applicable counterparty. The counterparty, in certain instances, is contractually entitled to sell or repledge securities accepted as collateral. As of December 31, 2008, overnight security repurchase agreements were $605 million and term security repurchase agreements were $295 million.

FHLB short-term advances and other borrowings one year or less are summarized as follows at December 31 (in thousands):

	2008		2007
FHLB short-term advances	$	–	2,725,000
Other borrowings, one-year senior medium-term notes, 4.5% - 5.65%		235,489	–
Federal Reserve auction borrowings, 0.42% - 1.39%		1,800,000	450,000
Other		4,364	6,990
	$	2,039,853	3,181,990

The senior medium term notes mature at various dates through August 2009 (see also Note 13). At December 31, 2008, the average remaining maturities of Federal Reserve borrowings were 33 days.

The FHLB advances were borrowed by subsidiary banks under their lines of credit that are secured under blanket pledge arrangements. The subsidiary banks maintain unencumbered collateral with carrying amounts

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adjusted for the types of collateral pledged, equal to at least 100% of the outstanding advances. At December 31, 2008, the amount available for FHLB advances was approximately $8.8 billion. An additional $666 million could be borrowed upon the pledging of additional available collateral.

The Federal Reserve borrowings were made by subsidiary banks through the Term Auction Facility. Amounts that the subsidiary banks can borrow are based upon the amount of collateral pledged to a Federal Reserve Bank. At December 31, 2008, the amount available for additional Federal Reserve borrowings was approximately $4.3 billion. An additional $1.3 billion could be borrowed upon the pledging of additional available collateral.

The Company also had short-term commercial paper outstanding at December 31, 2008 of $15.5 million at rates ranging from 0.46% to 3.55% and $297.9 million at December 31, 2007.

12. FEDERAL HOME LOAN BANK LONG-TERM ADVANCES AND OTHER BORROWINGS

FHLB long-term advances over one year are as follows at December 31 (in thousands):

	2008		2007
FHLB long-term advances, 3.66% - 7.30%	$	128,253	127,612

The weighted average interest rate on FHLB advances outstanding was 5.6% and 5.7% at December 31, 2008 and 2007, respectively.

Interest expense on FHLB advances and other borrowings over one year was $7.4 million in 2008, $7.5 million in 2007, and $8.6 million in 2006.

Maturities of FHLB advances with original maturities over one year are as follows at December 31, 2008 (in thousands):

2009	$	1,795
2010		101,619
2011		2,592
2012		1,521
2013		1,941
Thereafter		18,785
	$	128,253

13. LONG-TERM DEBT

Long-term debt at December 31 is summarized as follows (in thousands):

	2008		2007
Junior subordinated debentures related to trust preferred securities	$	461,888	462,033
Subordinated notes		1,706,603	1,547,727
Senior medium-term notes		324,125	450,655
Capital lease obligations and other		752	2,839
	$	2,493,368	2,463,254

The preceding amounts represent the par value of the debt adjusted for any unamortized premium or discount or other basis adjustments including the value of associated hedges.

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Junior subordinated debentures related to trust preferred securities primarily include Zions Capital Trust B (“ZCTB”), Amegy Statutory Trusts I, II and III (“Amegy Trust I, II or III”), and Stockmen’s Statutory Trusts II and III (“Stockmen’s Trust II or III”) as follows at December 31, 2008 (in thousands):

	Balance		Interest rate	Early redemption	Maturity
ZCTB	$	293,815	8.00%	Currently	Sep 2032
				redeemable
Amegy Trust I		51,547	3mL+2.85%1	Currently	Dec 2033
			(4.72%)	redeemable
Amegy Trust II		36,083	3mL+1.90%1	Oct 2009	Oct 2034
			(6.72%)
Amegy Trust III		61,856	3mL+1.78%1	Dec 2009	Dec 2034
			(3.78%)
Stockmen’s Trust II		7,732	3mL+3.15%1	Currently	Mar 2033
			(4.62%)	redeemable
Stockmen’s Trust III		7,754	3mL+2.89%1	Mar 2009	Mar 2034
			(4.76%)
Intercontinental Statutory Trust I		3,101	3mL+2.85%1	Mar 2009	Mar 2034
			(4.72%)
	$	461,888

¹ Designation of “3mL” is three-month LIBOR (London Interbank Offer Rate); effective interest rate at the beginning of the accrual period commencing on or before December 31, 2008 is shown in parenthesis.

The junior subordinated debentures are issued by the Company and relate to a corresponding series of trust preferred security obligations issued by the trusts. The trust obligations are in the form of capital securities subject to mandatory redemption upon repayment of the junior subordinated debentures by the Company. The sole assets of the trusts are the junior subordinated debentures.

Interest distributions are made quarterly at the same rates earned by the trusts on the junior subordinated debentures; however, we may defer the payment of interest on the junior subordinated debentures. Early redemption of the debentures begins at the date indicated and requires the approval of banking regulators. The debentures for ZCTB are direct and unsecured obligations of the Company and are subordinate to other indebtedness and general creditors. The debentures for Amegy Trust I, II and III are direct and unsecured obligations of Amegy and are subordinate to other indebtedness and general creditors. The debentures for Stockmen’s Trust II and III are unsecured obligations assumed by the Company in connection with the acquisition of Stockmen’s by NBA. The Company has unconditionally guaranteed the obligations of ZCTB with respect to its trust preferred securities to the extent set forth in the applicable guarantee agreement. Amegy has unconditionally guaranteed the obligations of Amegy Trust I, II and III with respect to their respective series of trust preferred securities to the extent set forth in the applicable guarantee agreements.

Subordinated notes consist of the following at December 31, 2008 (in thousands):

Interest rate	Balance		Par amount	Maturity
5.65%	$	346,308	300,000	May 2014
6.00%		590,606	500,000	Sep 2015
5.50%		694,689	600,000	Nov 2015
3mL+1.25%1		75,000	75,000	Sep 2014
(2.75%)
	$	1,706,603

¹ Designation of “3mL” is three-month LIBOR; effective interest rate at the beginning of the accrual period commencing on or before December 31, 2008 is shown in parenthesis.

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These notes are unsecured and are not redeemable prior to maturity. Interest is payable semiannually. We hedged the fixed-rate notes with LIBOR-based floating interest rate swaps whose recorded fair values aggregated $235.7 million and $77.4 million at December 31, 2008 and 2007, respectively. We account for all swaps associated with long-term debt as fair value hedges in accordance with SFAS 133, as discussed in Note 7. The floating rate notes were issued by Amegy.

Senior medium-term notes consist of the following at December 31, 2008 (in thousands):

Interest rate	Balance		Interest payments	Early redemption	Maturity
3mL+1.5%1	$	295,630	Quarterly	Currently	Dec 2009
(3.69%)				redeemable
5.25% - 5.45%		28,495	Semiannually	na	May - June 2010
	$	324,125

¹ Designation of “3mL” is three-month LIBOR; effective interest rate at the beginning of the accrual period commencing on or before December 31, 2008 is shown in parenthesis.

These unsecured notes have been issued under a shelf registration filed with the SEC. The fixed-rate two-year notes were sold via the Company’s online auction process and direct sales.

Interest expense on long-term debt was $103.1 million in 2008, $145.4 million in 2007, and $159.6 million in 2006. Interest expense was reduced by $35.1 million in 2008, $2.0 million in 2007, and $1.0 million in 2006 as a result of the associated hedges.

Maturities on long-term debt are as follows for the years succeeding December 31, 2008 (in thousands):

	Consolidated		Parent only
2009	$	295,920	295,630
2010		28,712	28,495
2011		–	–
2012		–	–
2013		–	–
Thereafter		1,933,001	1,707,932
	$	2,257,633	2,032,057

These maturities do not include basis adjustments and the associated hedges. The Parent only maturities at December 31, 2008 include $309.3 million of junior subordinated debentures payable to ZCTB and Stockmen’s Trust II and III after 2013.

On January 15, 2009, we issued $254.9 million of senior floating rate notes due June 21, 2012 at a coupon rate of three-month LIBOR plus 37 basis points. The debt is guaranteed under the FDIC’s Temporary Liquidity Guarantee Program that became effective on November 21, 2008.

14. SHAREHOLDERS’ EQUITY

We have 3,000,000 authorized shares of preferred stock without par value and with a liquidation preference of $1,000 per share. In general, preferred shareholders may receive asset distributions before common shareholders; however, preferred shareholders have only limited voting rights generally with respect to certain provisions of the preferred stock, the issuance of senior preferred stock, and the election of directors. Preferred stock dividends reduce earnings available to common shareholders and are paid quarterly in arrears. Redemption of the preferred stock is at the Company’s option. The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. The Series A and C shares are registered with the SEC.

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Preferred stock at December 31 is summarized as follows (dollar amounts in thousands):

	Rate	Earliest redemption date	Shares outstanding	Carrying value
				2008		2007
Series A	Floating	December 15, 2011	240,000	$	240,000	240,000
Series C	9.50%	September 15, 2013	46,949		46,949	–
Series D, TARP Capital Purchase Program	5.00%	November 15, 2011	1,400,000		1,294,885	–
				$	1,581,834	240,000

The Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock was issued in December 2006 in the form of 9,600,000 depositary shares with each depositary share representing a 1/40^th ownership interest in a share of the preferred stock. Dividends are computed at an annual rate equal to the greater of three-month LIBOR plus 0.52%, or 4.0%. Dividend payments are made on the 15^th day of March, June, September, and December.

The Series C 9.50% Non-Cumulative Perpetual Preferred Stock offering was completed on July 2, 2008. The offering was issued in the form of 1,877,971 depositary shares representing a 1/40^th ownership interest in a share of the preferred stock. The offering was sold primarily by Zions Direct, Inc., the Company’s broker/dealer subsidiary, via an online auction process and by direct sales. Generally, the other terms and conditions, including the dividend payment dates, are the same as the Series A preferred stock.

The Series D Fixed-Rate Cumulative Perpetual Preferred Stock was issued on November 14, 2008 to the U.S. Department of the Treasury for $1.4 billion. The Emergency Economic Stabilization Act of 2008 authorized the U.S. Treasury to appropriate funds to eligible financial institutions participating in the Troubled Asset Relief Program (“TARP”) Capital Purchase Program. The capital investment includes the issuance of preferred shares of the Company and a warrant to purchase common shares pursuant to a Letter Agreement and a Securities Purchase agreement (collectively “the Agreement”). The preferred shares are ranked pari passu with the Series A and C preferred shares. The dividend rate of 5% increases to 9% after the first five years. Dividend payments are made on the 15^th day of February, May, August, and November. The warrant allows the U.S. Treasury to purchase up to 5,789,909 shares of the Company’s common stock exercisable over a 10-year period at a price per share of $36.27. The preferred shares and the warrant qualify for Tier 1 regulatory capital. The Agreement subjects the Company to certain restrictions and conditions including those related to common dividends, share repurchases, executive compensation, and corporate governance.

We recorded the total $1.4 billion of the preferred shares and the warrant at their relative fair values of $1,292.2 million and $107.8 million, respectively. The difference from the par amount of the preferred shares is accreted to preferred stock over five years using the interest method with a corresponding adjustment to preferred dividends.

During September 8-11, 2008, the Company issued $250 million of new common stock consisting of 7,194,079 shares at an average price of $34.75 per share. Net of issuance costs and fees, this issuance added $244.9 million to common stock.

In 2007 and 2006 under our stock repurchase plan, we repurchased 3,933,128 common shares at a cost of $318.8 million and 308,359 common shares at a cost of $25.0 million, respectively. Repurchased shares were included in stock redeemed and retired in the statements of changes in shareholders’ equity and comprehensive income. We also repurchased $2.9 million in 2008, $3.2 million in 2007, and $1.5 million in 2006 of common shares related to the Company’s restricted stock employee incentive program.

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Changes in accumulated other comprehensive income (loss) are summarized as follows (in thousands):

	Net unrealized gains (losses) on investments, retained interests and other			Net unrealized gains (losses) on derivative instruments		Pension and post- retirement		Total
BALANCE, DECEMBER 31, 2005	$	(10,772	)	(50,264	)	(22,007	)	(83,043	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses, net of income tax benefit of $4,759		(7,684	)					(7,684	)
Foreign currency translation		715						715
Reclassification for net realized gains recorded in operations, net of income tax expense of $391		(630	)					(630	)
Net unrealized gains on derivative instruments, net of reclassification to operations of $(39,984) and income tax expense of $4,572				8,548				8,548
Pension and postretirement, net of income tax expense of $4,055						6,245		6,245
Other comprehensive income (loss)		(7,599	)	8,548		6,245		7,194
BALANCE, DECEMBER 31, 2006		(18,371	)	(41,716	)	(15,762	)	(75,849	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses, net of income tax benefit of $93,658		(151,200	)1					(151,200	)
Foreign currency translation		(6	)					(6	)
Reclassification for net realized losses recorded in operations, net of income tax benefit of $42,541		60,811	1					60,811
Net unrealized gains on derivative instruments, net of reclassification to operations of $(39,114) and income tax expense of $67,375				106,929				106,929
Pension and postretirement, net of income tax expense of $395						480		480
Other comprehensive income (loss)		(90,395	)	106,929		480		17,014
BALANCE, DECEMBER 31, 2007		(108,766	)	65,213		(15,282	)	(58,835	)
Cumulative effect of change in accounting principle, adoption of SFAS 159		11,471						11,471
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses, net of income tax benefit of $215,384		(333,095	)1					(333,095	)
Foreign currency translation		(5	)					(5	)
Reclassification for net realized losses recorded in operations, net of income tax benefit of $119,597		181,524	1					181,524
Net unrealized gains on derivative instruments, net of reclassification to operations of $65,862 and income tax expense of $82,653				131,443				131,443
Pension and postretirement, net of income tax benefit of $20,401						(31,461	)	(31,461	)
Other comprehensive income (loss)		(151,576	)	131,443		(31,461	)	(51,594	)
BALANCE, DECEMBER 31, 2008	$	(248,871	)	196,656		(46,743	)	(98,958	)

¹ Includes the net after-tax effect of approximately $183.4 million in 2008 and $64.1 million in 2007 from impairment losses on securities, as discussed in Note 4.

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As discussed in Note 21, we adopted the SFAS 159 fair value option as of January 1, 2008 for certain securities. The cumulative effect of this adoption decreased retained earnings and increased accumulated other comprehensive income by $11.5 million.

Deferred compensation at year-end consists of the cost of the Company’s common stock held in rabbi trusts established for certain employees and directors. We consolidate the fair value of invested assets of the trusts along with the total obligations and include them in other assets and other liabilities, respectively, in the balance sheet. At December 31, 2008 and 2007, total invested assets were approximately $53.7 million and $74.3 million and total obligations were approximately $68.1 million and $85.6 million, respectively.

Upon the adoption of SFAS 123(R) in 2006, we reclassified deferred compensation of $11.1 million to common stock. This consisted of $3.9 million for the value of Amegy’s nonvested restricted stock and stock options and $7.2 million for the unearned portion of restricted stock previously issued by the Company.

15. INCOME TAXES

Income taxes (benefit) are summarized as follows (in thousands):

	2008			2007		2006
Federal:
Current	$	170,268		351,215		261,423
Deferred		(198,145	)	(132,541	)	7,705
		(27,877	)	218,674		269,128
State:
Current		17,608		43,224		47,158
Deferred		(33,096	)	(26,161	)	1,664
		(15,488	)	17,063		48,822
	$	(43,365	)	235,737		317,950

Income tax expense (benefit) computed at the statutory federal income tax rate of 35% reconciles to actual income tax expense (benefit) as follows (in thousands):

	2008			2007		2006
Income tax expense at statutory federal rate	$	(110,144	)	258,124		319,523
State income taxes, net		(4,883	)	19,696		31,734
Uncertain state tax positions under FIN 48, including interest and penalties		(5,184	)	(8,605	)	–
Nondeductible goodwill impairment		115,774		–		–
Other nondeductible expenses		3,461		4,141		5,299
Nontaxable income		(27,763	)	(25,268	)	(25,905	)
Tax credits and other taxes		(7,766	)	(7,267	)	(5,999	)
Other		(6,860	)	(5,084	)	(6,702	)
	$	(43,365	)	235,737		317,950

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The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 are presented below (in thousands):

	2008			2007
Gross deferred tax assets:
Book loan loss deduction in excess of tax	$	275,427		178,874
Pension and postretirement		31,367		12,536
Deferred compensation		58,255		55,563
Deferred loan fees		3,661		2,897
Other real estate owned		11,695		510
Accrued severance costs		2,654		2,799
Loan sales		6,047		15,819
Security investments and derivative fair value adjustments		212,365		95,546
Equity investments		21,343		6,868
Other		21,964		11,757
		644,778		383,169
Valuation allowance		–		(4,261	)
Total deferred tax assets		644,778		378,908
Gross deferred tax liabilities:
Core deposits and purchase accounting		(46,199	)	(52,963	)
Premises and equipment, due to differences in depreciation		(3,530	)	(1,713	)
FHLB stock dividends		(15,168	)	(14,179	)
Leasing operations		(87,939	)	(81,794	)
Prepaid expenses		(7,076	)	(5,680	)
Prepaid pension reserves		(5,540	)	(4,930	)
Other		(29	)	(6,394	)
Total deferred tax liabilities		(165,481	)	(167,653	)
Net deferred tax assets	$	479,297		211,255

The amount of net deferred tax assets is included with other assets on the balance sheet. We analyze the deferred tax assets to determine whether a valuation allowance is required based on the more-likely-than-not criteria that such assets will be realized principally through future taxable income. This criteria takes into account the history of growth in earnings and the prospects for continued growth and profitability. The $4.3 million valuation allowance at December 31, 2007 was for net operating loss carryforwards included in our 2006 acquisition of the remaining minority interests of P5, as discussed in Note 3. The merger of P5 into NetDeposit during 2008 will allow the Company to utilize the benefits of the acquired P5 net operating loss carryforwards, thus eliminating the requirement for a valuation allowance at December 31, 2008. As discussed in Note 9, the release of this valuation allowance during 2008 was reclassified from goodwill. The Company used $6.3 million during 2008 of the $11.1 million in carryforwards that existed at December 31, 2007, resulting in $4.8 million in carryforwards remaining at December 31, 2008, which expire through 2025. We have also determined that a valuation allowance is not required for any other deferred tax assets.

We have an agreement that awarded us a $100 million allocation of tax credit authority under the Community Development Financial Institutions Fund established by the U.S. Government. The program allows us to invest up to $100 million in a wholly-owned subsidiary, which makes qualifying loans and investments. In return, we receive federal income tax credits that are recognized over seven years, including the year in which the funds were invested in the subsidiary. We recognize these tax credits for financial reporting purposes in the same year the tax benefit is recognized in our tax return. As of December 31, 2007, we had invested the entire $100 million allocation. The resulting tax credits which reduced income tax expense were approximately $5.8 million in 2008, $5.6 million in 2007, and $4.5 million in 2006.

159

Effective January 1, 2007, we adopted FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. FIN 48, as amended, prescribes a more-likely-than-not threshold for the financial statement recognition of uncertain tax positions and clarifies the definition of settlement with the taxing authority. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

We have a FIN 48 liability for unrecognized tax benefits relating to uncertain tax positions primarily for various state tax contingencies in several jurisdictions. As a result of adopting FIN 48, we reduced this liability by approximately $10.4 million at January 1, 2007 and recognized a cumulative effect adjustment as an increase to retained earnings. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits subsequent to the cumulative effect adjustment is as follows (in thousands):

	2008			2007
Balance at beginning of year	$	29,717		46,341
Tax positions related to current year:
Additions		676		1,708
Reductions		–		–
Tax positions related to prior years:
Additions		–		–
Reductions		(7,641	)	(8,277	)
Settlements with taxing authorities		(5,675	)	–
Lapses in statutes of limitations		–		(10,055	)
Balance at end of year	$	17,077		29,717

At December 31, 2008 and 2007, the FIN 48 liability included approximately $10.8 million and $19.1 million, respectively, (net of the federal tax benefit on state issues) related to unrecognized tax benefits that, if recognized, would affect the effective tax rate. Gross unrecognized tax benefits that may decrease during the 12 months subsequent to December 31, 2008 could range up to approximately $400 thousand as a result of the resolution of various tax positions.

During 2008, we reduced the FIN 48 liability, net of any federal and/or state tax benefits, by a net amount of approximately $9.6 million. Of this reduction, $5.2 million, including interest, reduced income tax expense and was primarily the result of a settlement with taxing authorities during the second quarter of 2008. The remaining $4.4 million resulted from the net effect of settlement payments. During 2007 in addition to increases to the FIN 48 liability, certain state tax issues were resolved through the closing of various state statutes of limitations and tax examinations. This allowed us to reduce the FIN 48 liability and recognize the tax benefit in operations. For 2007, the net reduction to income tax expense, including related interest and penalties, was approximately $8.6 million.

Interest and penalties related to unrecognized tax benefits are included in income tax expense in the statement of income. The net amount of interest and penalties recognized in the statement of income was a benefit of approximately $0.7 million in 2008 and $1.7 million in 2007. At December 31, 2008 and 2007, accrued interest and penalties recognized in the balance sheet, net of any federal and/or state tax benefits, were approximately $2.7 million and $4.1 million, respectively.

The Company and its subsidiaries file income tax returns in U.S. federal and various state jurisdictions. The Company is no longer subject to income tax examinations for years prior to 2005 for federal returns, and generally prior to 2004 for state returns.

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16. NET EARNINGS PER COMMON SHARE

Basic and diluted net earnings per common share based on the weighted average outstanding shares are summarized as follows (in thousands, except per share amounts):

	2008			2007	2006
Basic:
Net earnings (loss) applicable to common shareholders	$	(290,693	)	479,422	579,290
Weighted average common shares outstanding		108,908		107,365	106,057
Net earnings (loss) per common share	$	(2.67	)	4.47	5.46
Diluted:
Net earnings (loss) applicable to common shareholders	$	(290,693	)	479,422	579,290
Weighted average common shares outstanding		108,908		107,365	106,057
Effect of dilutive common stock options and other stock awards		178		1,158	1,971
Effect of common stock warrant		59		–	–
Weighted average diluted common shares outstanding		109,145		108,523	108,028
Net earnings (loss) per common share	$	(2.66	)	4.42	5.36

17. SHARE-BASED COMPENSATION

We have a stock option and incentive plan which allows us to grant stock options and restricted stock to employees and nonemployee directors. Total shares authorized under the plan are 8,900,000 of which no shares remained authorized under the plan for future grants of stock options as of December 31, 2008. Our agreement with the U.S. Treasury under the TARP Capital Purchase Program includes conditions related to the issuance of common stock. See further discussion in Note 14.

Effective January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of income based on their fair values. This accounting utilizes a “modified grant-date” approach in which the fair value of an equity award is estimated on the grant date without regard to service or performance vesting conditions. We adopted SFAS 123(R) using the “modified prospective” transition method. Under this transition method, compensation expense is recognized beginning January 1, 2006 based on the requirements of SFAS 123(R) for all share-based payments granted after December 31, 2005, and based on the requirements of SFAS 123 for all awards granted to employees prior to January 1, 2006 that remain unvested as of that date.

The adoption of SFAS 123(R), compared to the previous accounting for share-based compensation under APB 25, reduced 2006 income before income taxes and minority interest by $17.5 million, net income by $12.5 million, and both basic and diluted net earnings per common share by $0.12.

Compensation expense and the related tax benefit for all share-based awards were as follows (in thousands):

	2008		2007	2006
Compensation expense	$	31,850	28,274	24,358
Reduction of income tax expense		11,080	9,386	7,232

Compensation expense is included in salaries and employee benefits in the statement of income with the corresponding increase included in common stock in shareholders’ equity.

As required by SFAS 123(R) and discussed further in Note 14, upon adoption in 2006, we reclassified $11.1 million of unearned compensation related to restricted stock from deferred compensation to common stock.

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We classify all share-based awards as equity instruments. Substantially all awards have graded vesting which is recognized on a straight-line basis over the vesting period. As of December 31, 2008, compensation expense not yet recognized for nonvested share-based awards was approximately $61.6 million, which is expected to be recognized over a weighted average period of 1.4 years.

The tax benefit (shortfall) realized from the exercise of stock options and the vesting of restricted stock was as follows (in thousands):

	2008			2007	2006
Reduction of goodwill for tax benefit of vested stock options converted in the Amegy acquisition and exercised during the year	$	120		2,069	4,298
Tax benefit (shortfall) included in common stock in net stock issued under employee plans and related tax benefits		(2,288	)	10,806	12,135
Tax benefit from disqualifying dispositions of incentive stock options		–		317	307
Total tax benefit (shortfall)	$	(2,168	)	13,192	16,740

Stock Options

Stock options granted to employees generally vest at the rate of one third each year and expire seven years after the date of grant. Stock options granted to nonemployee directors vest in increments from six months to three and a half years and expire ten years after the date of grant.

We have used the results of the April 24-25, 2008 and May 4-7, 2007 auctions of our Employee Stock Option Appreciation Rights Securities (“ESOARS”) to value our employee stock options granted on April 24, 2008 and May 4, 2007. In October 2007, we received notification from the SEC that our ESOARS was sufficiently designed as a market-based method to value employee stock options under SFAS 123(R). The SEC staff did not object to our view that the market clearing price of ESOARS in the May 2007 auction was a reasonable estimate of the fair value of the underlying employee stock options.

Information from the results of these auctions was as follows:

	Grant date
	April 24, 2008			May 4, 2007
ESOARS per share auction fair value used for employee stock option grants	$	5.73		12.06
Percentage that auction fair value is below comparable Black-Scholes model valuation		24	%	14	%
Number of stock options granted		1,542,238		963,680
Percentage of stock options granted to total stock options granted during the applicable year		61	%	91	%

We used the ESOARS values for the remainder of 2008 and 2007 to determine compensation expense for these stock options and we recorded the related estimated future ESOARS settlement obligations as a liability in the balance sheet.

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For all other stock options granted in 2008, 2007 and 2006, we used the Black-Scholes option pricing model to estimate the fair values of stock options in determining compensation expense. The following summarizes the weighted average of fair value and the significant assumptions used in applying the Black-Scholes model for options granted:

	2008			2007		2006
Weighted average of fair value for options granted	$	4.85		15.15		15.02
Weighted average assumptions used:
Expected dividend yield		4.7	%	2.0	%	2.0	%
Expected volatility		26.8	%	17.0	%	18.0	%
Risk-free interest rate		2.99	%	4.42	%	4.95	%
Expected life (in years)		4.7		5.4		4.1

The assumptions for expected dividend yield, expected volatility and expected life reflect management’s judgment and include consideration of historical experience. Expected volatility is based in part on historical volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.

The following summarizes our stock option activity for the three years ended December 31, 2008:

	Number of shares		Weighted average exercise price
Balance at December 31, 2005	7,497,566		$	52.79
Granted	979,274			81.14
Exercised	(1,631,012	)		49.43
Expired	(52,398	)		50.00
Forfeited	(106,641	)		62.89
Balance at December 31, 2006	6,686,789			57.62
Granted	1,054,772			82.82
Exercised	(1,681,742	)		80.88
Expired	(136,805	)		58.37
Forfeited	(112,031	)		75.00
Balance at December 31, 2007	5,810,983			64.82
Granted	2,537,438			40.43
Exercised	(52,072	)		30.58
Expired	(536,643	)		56.72
Forfeited	(85,108	)		66.18
Balance at December 31, 2008	7,674,598			57.53
Outstanding stock options exercisable as of:
December 31, 2008	4,221,713		$	62.15
December 31, 2007	3,866,627			57.15
December 31, 2006	4,409,971			50.73

We issue new authorized shares for the exercise of stock options. The total intrinsic value of stock options exercised was approximately $0.9 million in 2008, $59.0 million in 2007, and $50.8 million in 2006. Cash received from the exercise of stock options was $1.6 million in 2008, $59.5 million in 2007, and $79.5 million in 2006.

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Additional selected information on stock options at December 31, 2008 follows:

	Outstanding stock options					Exercisable stock options
Exercise price range	Number of shares	Weighted average exercise price		Weighted average remaining contractual life (years)		Number of shares	Weighted average exercise price
$0.32 to $19.99	33,271	$	5.91	0.1	1	33,271	$	5.91
$20.00 to $39.99	992,763		28.16	6.1		91,763		29.49
$40.00 to $49.99	2,253,636		46.45	5.2		664,839		44.57
$50.00 to $54.99	502,598		53.37	1.0		502,225		53.37
$55.00 to $59.99	1,051,452		56.88	3.0		1,032,985		56.86
$60.00 to $64.99	40,656		63.06	3.3		37,183		63.00
$65.00 to $69.99	157,690		67.34	4.6		157,455		67.34
$70.00 to $74.99	684,197		70.91	3.7		666,224		70.88
$75.00 to $79.99	115,938		75.92	4.0		115,081		75.89
$80.00 to $81.99	885,721		81.14	4.5		592,397		81.13
$82.00 to $83.38	956,676		83.25	5.4		328,290		83.25
	7,674,598		57.53	4.5	1	4,221,713		62.15

¹ The weighted average remaining contractual life excludes 31,077 stock options that do not have a fixed expiration date. They expire between the date of termination and one year from the date of termination, depending upon certain circumstances.

For both outstanding and exercisable stock options at December 31, 2008 and 2007, the aggregate intrinsic value was $0.6 million and $5.7 million, respectively. The weighted average remaining contractual life was 3.2 years and 3.3 years at December 31, 2008 and 2007, respectively, excluding the stock options previously noted without a fixed expiration date.

The previous tables do not include stock options for employees to purchase common stock of our TCBO subsidiary. At December 31, 2008, there were options to purchase 115,000 TCBO shares at exercise prices from $17.85 to $20.58. At December 31, 2008, there were 1,038,000 issued and outstanding shares of TCBO common stock.

During the fourth quarter of 2008, our NetDeposit subsidiary terminated its stock option plan, canceled all associated options, and recognized all unearned stock option expense. As part of the termination, NetDeposit made a payment to option holders of $0.10 per outstanding option, which totaled approximately $0.9 million.

Restricted Stock

Restricted stock issued vests generally over four years. During the vesting period, the holder has full voting rights and receives dividend equivalents. Compensation expense is determined based on the number of restricted shares issued and the market price of our common stock at the issue date.

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The following summarizes our restricted stock activity for the three years ended December 31, 2008:

	Number of shares		Weighted average issue price
Nonvested restricted shares at December 31, 2005	203,983		$	68.99
Issued	293,650			80.14
Vested	(53,471	)		71.29
Forfeited	(24,029	)		76.09
Nonvested restricted shares at December 31, 2006	420,133			77.54
Issued	357,961			71.91
Vested	(115,852	)		76.95
Forfeited	(27,180	)		76.42
Nonvested restricted shares at December 31, 2007	635,062			74.54
Issued	849,156			37.64
Vested	(191,605	)		74.92
Forfeited	(43,332	)		68.43
Nonvested restricted shares at December 31, 2008	1,249,281			49.61

The total fair value of restricted stock vesting during the year was $8.5 million in 2008, $9.4 million in 2007, and $4.3 million in 2006.

18. COMMITMENTS, GUARANTEES, CONTINGENT LIABILITIES, AND RELATED PARTIES

We use certain derivative instruments and other financial instruments in the normal course of business to meet the financing needs of our customers, to reduce our own exposure to fluctuations in interest rates, and to make a market in U.S. Government, agency, corporate, and municipal securities. These financial instruments involve, to varying degrees, elements of credit, liquidity, and interest rate risk in excess of the amount recognized in the balance sheet. Derivative instruments are discussed in Notes 7 and 21.

FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, establishes guidance for guarantees and related obligations. Financial and performance standby letters of credit are guarantees that come under the provisions of FIN 45.

Contractual amounts of the off-balance sheet financial instruments used to meet the financing needs of our customers are as follows at December 31 (in thousands):

	2008		2007
Commitments to extend credit	$	14,140,429	16,648,056
Standby letters of credit:
Financial		1,293,729	1,317,304
Performance		250,836	351,150
Commercial letters of credit		65,889	49,346

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the counterparty. Types of collateral vary, but may include accounts receivable, inventory, property, plant and equipment, and income-producing properties.

While establishing commitments to extend credit creates credit risk, a significant portion of such commitments is expected to expire without being drawn upon. As of December 31, 2008, $5.8 billion of

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commitments expire in 2009. We use the same credit policies and procedures in making commitments to extend credit and conditional obligations as we do for on-balance sheet instruments. These policies and procedures include credit approvals, limits, and monitoring.

We issue standby and commercial letters of credit as conditional commitments generally to guarantee the performance of a customer to a third party. The guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Standby letters of credit include remaining commitments of $1,032 million expiring in 2009 and $513 million expiring thereafter through 2049. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. We generally hold marketable securities and cash equivalents as collateral supporting those commitments for which collateral is deemed necessary. At December 31, 2008, the carrying value recorded by the Company as a liability for these guarantees was $5.8 million.

Certain mortgage loans sold have limited recourse provisions for periods ranging from three months to one year. The amount of losses resulting from the exercise of these provisions has not been significant.

At December 31, 2008, we had commitments to make venture and other noninterest-bearing investments of $103.0 million. These obligations have no stated maturity.

The contractual or notional amount of financial instruments indicates a level of activity associated with a particular class of financial instrument and is not a reflection of the actual level of risk. As of December 31, 2008 and 2007, the regulatory risk-weighted values assigned to all off-balance sheet financial instruments and derivative instruments described herein were $5.3 billion and $7.0 billion, respectively.

At December 31, 2008, we were required to maintain cash balances of $35.0 million with the Federal Reserve Banks to meet minimum balance requirements in accordance with Federal Reserve Board regulations.

As of December 31, 2008, the Parent has guaranteed approximately $300.3 million of debt issued by our subsidiaries, as discussed in Note 13. See Note 6 for the discussion of Zions Bank’s commitment to Lockhart, which is a QSPE conduit.

In October 2007, Visa Inc. (“Visa”) completed a reorganization in contemplation of its initial public offering (“IPO”) and as part of that reorganization, certain of the Company’s subsidiary banks received shares of common stock of Visa. During the first quarter of 2008, the banks recorded an aggregate pretax cash gain of approximately $12.4 million from the partial redemption of their equity interests in Visa upon completion of the IPO. The gain is included in equity securities gains, net in the statement of income. The Company’s subsidiary banks are also obligated as member banks under indemnification agreements to share in losses from certain litigation (“Covered Litigation”) of Visa. Guidance from the SEC staff requires Visa member banks to record a liability for the fair value of any contingent obligation under the Covered Litigation which is not funded into a litigation escrow account by Visa. At December 31, 2007, the Company had recorded a total accrual of approximately $8.1 million as an estimate of the fair value of the contingent obligation. In March 2008, Visa funded the litigation escrow upon completion of the IPO and in December 2008 additional funding of the escrow account was made in relation to a settlement of certain Covered Litigation. As a result, the Company reversed approximately $5.6 million of the litigation accrual during 2008 resulting in an accrual of $2.5 million at December 31, 2008. The litigation escrow account funding reduced the Company’s ownership interests in VISA. The original accrual and the reversal are included in other noninterest expense in the statement of income. Also, in accordance with generally accepted accounting principles and the SEC guidance, the Company’s subsidiary banks have not recognized any value for their remaining investments in Visa.

We are a defendant in various legal proceedings arising in the normal course of business. We do not believe that the outcome of any such proceedings will have a material effect on our results of operations, financial position, or liquidity.

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We have commitments for leasing premises and equipment under the terms of noncancelable capital and operating leases expiring from 2009 to 2046. Premises leased under capital leases at December 31, 2008 were $1.7 million and accumulated amortization was $1.3 million. Amortization applicable to premises leased under capital leases is included in depreciation expense.

Future aggregate minimum rental payments under existing noncancelable operating leases at December 31, 2008 are as follows (in thousands):

2009	$	40,963
2010		43,058
2011		38,660
2012		33,804
2013		29,435
Thereafter		156,863
	$	342,783

Future aggregate minimum rental payments have been reduced by noncancelable subleases as follows: $2.1 million in 2009, $2.7 million in 2010, $2.2 million in 2011, $2.2 million in 2012, $2.1 million in 2013, and $8.7 million thereafter. Aggregate rental expense on operating leases amounted to $57.3 million in 2008, $54.0 million in 2007, and $51.5 million in 2006.

We have a lease agreement on our corporate headquarters which provided for a rent holiday through December 31, 2006 while the building was being reconstructed. The reconstruction began in March 2005 and the lease term of this operating lease began in October 2005. We recorded and deferred rent expense during the rent holiday at applicable lease rates based on our occupancy of the building. We also recorded leasehold improvements funded by the landlord incentive and amortize them over their estimated useful lives or the term of the lease, whichever is shorter. The amount of deferred rent, including the leasehold improvements, is amortized using the straight-line method over the term of the lease, in accordance with applicable accounting and other SEC guidance.

We have no material related party transactions requiring disclosure. In the ordinary course of business, the Company and its banking subsidiaries extend credit to related parties, including executive officers, directors, principal shareholders, and their associates and related interests. These related party loans are made in compliance with applicable banking regulations under substantially the same terms as comparable third-party lending arrangements.

19. REGULATORY MATTERS

We are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). We believe, as of December 31, 2008, that we exceed all capital adequacy requirements to which we are subject.

As discussed further in Note 14, the preferred shares and warrant to purchase common stock issued to the U.S. Treasury under the TARP Capital Purchase Program qualify for Tier 1 capital.

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As of December 31, 2008, our capital ratios exceeded the minimum capital levels, and we are considered well capitalized under the regulatory framework for prompt corrective action. Our subsidiary banks also met the well capitalized minimum. To be categorized as well capitalized, we must maintain minimum Total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events that we believe have changed our regulatory category.

Dividends declared by our subsidiary banks in any calendar year may not, without the approval of the appropriate federal regulator, exceed their net earnings for that year combined with their net earnings less dividends paid for the preceding two years. We are also required to maintain the subsidiary banks at the well capitalized level. At December 31, 2008, our subsidiary banks had approximately $373.8 million available for the payment of dividends under the foregoing restrictions.

The actual capital amounts and ratios for the Company and its three largest subsidiary banks are as follows (in thousands):

	Actual				Minimum for capital adequacy purposes				To be well capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2008:
Total capital (to risk-weighted assets)
The Company	$	7,385,958	14.32	%	$	4,125,223	8.00	%	$	5,156,529	10.00	%
Zions First National Bank		1,920,176	11.33			1,356,314	8.00			1,695,393	10.00
California Bank & Trust		1,158,262	11.05			838,538	8.00			1,048,172	10.00
Amegy Bank N.A.		1,290,617	11.13			927,404	8.00			1,159,255	10.00
Tier 1 capital (to risk-weighted assets)
The Company		5,269,330	10.22			2,062,612	4.00			3,093,917	6.00
Zions First National Bank		1,410,797	8.32			678,157	4.00			1,017,236	6.00
California Bank & Trust		872,714	8.33			419,269	4.00			628,903	6.00
Amegy Bank N.A.		939,442	8.10			463,702	4.00			695,553	6.00
Tier 1 capital (to average assets)
The Company		5,269,330	9.99			1,583,071	3.00			na	na	1
Zions First National Bank		1,410,797	6.91			612,479	3.00			1,020,799	5.00
California Bank & Trust		872,714	8.77			298,587	3.00			497,645	5.00
Amegy Bank N.A.		939,442	8.67			325,140	3.00			541,899	5.00
As of December 31, 2007:
Total capital (to risk-weighted assets)
The Company	$	5,547,973	11.68	%	$	3,801,256	8.00	%	$	4,751,570	10.00	%
Zions First National Bank		1,622,137	10.75			1,206,859	8.00			1,508,574	10.00
California Bank & Trust		1,088,798	11.58			752,253	8.00			940,316	10.00
Amegy Bank N.A.		1,178,538	10.94			861,581	8.00			1,076,977	10.00
Tier 1 capital (to risk-weighted assets)
The Company		3,596,234	7.57			1,900,628	4.00			2,850,942	6.00
Zions First National Bank		1,032,562	6.84			603,430	4.00			905,144	6.00
California Bank & Trust		689,380	7.33			376,126	4.00			564,190	6.00
Amegy Bank N.A.		742,630	6.90			430,791	4.00			646,186	6.00
Tier 1 capital (to average assets)
The Company		3,596,234	7.37			1,463,464	3.00			na	na	1
Zions First National Bank		1,032,562	6.22			498,409	3.00			830,681	5.00
California Bank & Trust		689,380	6.97			296,545	3.00			494,242	5.00
Amegy Bank N.A.		742,630	7.58			294,038	3.00			490,064	5.00

¹ There is no Tier 1 leverage ratio component in the definition of a well capitalized bank holding company.

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20. RETIREMENT PLANS

SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R), requires an entity to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in the balance sheet and to recognize changes in that funded status through other comprehensive income in the years in which changes occur.

On December 30, 2008, the FASB issued FSP 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets. The FSP, among other things, requires additional disclosure about pension plan assets including certain disclosure requirements in accordance with SFAS No. 157, Fair Value Measurements. It is effective for fiscal years ending after December 15, 2009. Accordingly, we will adopt the FSP for our financial statements ending December 31, 2009.

We have a qualified noncontributory defined benefit pension plan that has been frozen to new participation. No service-related benefits accrue for existing participants except for those with certain grandfathering provisions. Benefits vested under the plan upon completion of five years of vesting service. Plan assets consist principally of corporate equity securities, mutual fund investments, and cash investments. Plan benefits are defined as a lump-sum cash value or an annuity at retirement age.

The following presents the change in benefit obligation, change in fair value of plan assets, and funded status of the pension plan and amounts recognized in the balance sheet as of the measurement date of December 31 (in thousands):

	2008			2007
Change in benefit obligation:
Benefit obligation at beginning of year	$	152,813		155,084
Service cost		288		384
Interest cost		8,849		8,564
Actuarial (gain) loss		1,137		(2,328	)
Benefits paid		(10,283	)	(8,891	)
Benefit obligation at end of year		152,804		152,813
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		141,235		141,294
Actual return on plan assets		(41,778	)	8,832
Employer contribution		1,000		–
Benefits paid		(10,283	)	(8,891	)
Fair value of plan assets at end of year		90,174		141,235
Funded status	$	(62,630	)	(11,578	)
Amounts recognized in balance sheet:
Liability for pension benefits	$	(62,630	)	(11,578	)
Accumulated other comprehensive loss		77,679		24,591
Accumulated other comprehensive loss consists of:
Net loss		77,679		24,591

The liability for pension/postretirement benefits is included in other liabilities in the balance sheet.

The amount of net loss in accumulated other comprehensive loss at December 31, 2008 expected to be recognized as an expense component of net periodic benefit cost in 2009 is approximately $6.6 million. The accumulated benefit obligation for the pension plan was $152.6 million and $152.5 million as of December 31, 2008 and 2007, respectively. Contributions to the plan are based on actuarial recommendation and pension regulations.

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The following presents the components of net periodic benefit cost (credit) for the plan (in thousands):

	2008			2007		2006
Service cost	$	288		384		499
Interest cost		8,849		8,564		8,624
Expected return on plan assets		(11,235	)	(11,618	)	(10,250	)
Amortization of net actuarial loss		1,063		1,089		1,999
Net periodic benefit cost (credit)	$	(1,035	)	(1,581	)	872

Weighted average assumptions for the plan are as follows:

	2008		2007		2006
Used to determine benefit obligation at year-end:
Discount rate	6.00	%	6.00	%	5.65	%
Rate of compensation increase	4.25		4.25		4.25
Used to determine net periodic benefit cost for the years ended December 31:
Discount rate	6.00		5.65		5.60
Expected long-term return on plan assets	8.30		8.30		8.50
Rate of compensation increase	4.25		4.25		4.25

The discount rate reflects the yields available on long-term, high-quality fixed income debt instruments with cash flows similar to the obligations of the plan, reset annually on the measurement date. The expected long-term rate of return on plan assets is based on a review of the target asset allocation of the plan. This rate is intended to approximate the long-term rate of return that we anticipate receiving on the plan’s investments, considering the mix of the assets that the plan holds as investments, the expected return on these underlying investments, the diversification of these investments, and the rebalancing strategies employed. An expected long-term rate of return is assumed for each asset class and an underlying inflation rate assumption is determined. The projected rate of compensation increases is management’s estimate of future pay increases that the remaining eligible employees will receive until their retirement.

Weighted average asset allocations at December 31 for the plan are as follows:

	2008		2007
Equity securities	5	%	3	%
Mutual funds:
Equity funds	9		12
Debt funds	23		19
Insurance company separate accounts:
Equity investments	42		60
Short-term fund	11		–
Guaranteed deposit account	9		6
Other	1		–
	100	%	100	%

The plan’s investment strategy is predicated on its investment objectives and the risk and return expectations of asset classes appropriate for the plan. Investment objectives have been established by considering the plan’s liquidity needs and time horizon and the fiduciary standards under ERISA. The asset allocation strategy is developed to meet the plan’s long-term needs in a manner designed to control volatility and to reflect risk tolerance. Target investment allocation percentages as of December 31, 2008 are 62.5% in equity and 37.5% in fixed income assets.

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Equity securities consist of 169,973 shares of Company common stock with a fair value of $4.2 million at December 31, 2008 and 93,808 shares with a fair value of $4.4 million at December 31, 2007. Dividends received by the plan were approximately $222 thousand in 2008 and $161 thousand in 2007.

Benefit payments to pension plan participants, which reflect expected future service as appropriate, are estimated as follows for the years succeeding December 31, 2008 (in thousands):

2009	$	9,398
2010		10,122
2011		8,945
2012		10,249
2013		10,070
Years 2014 - 2018		51,868

We also have unfunded nonqualified supplemental retirement plans for certain current and former employees. The following presents the change in benefit obligation, change in fair value of plan assets, and funded status of these plans and amounts recognized in the balance sheet as of the measurement date of December 31 (in thousands):

	2008			2007
Change in benefit obligation:
Benefit obligation at beginning of year	$	11,795		13,052
Interest cost		680		693
Actuarial gain		(113	)	(205	)
Benefits paid		(904	)	(904	)
Settlements		–		(841	)
Benefit obligation at end of year		11,458		11,795
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		–		–
Employer contributions		904		1,745
Benefits paid and settlements		(904	)	(1,745	)
Fair value of plan assets at end of year		–		–
Funded status	$	(11,458	)	(11,795	)
Amounts recognized in balance sheet:
Liability for pension benefits	$	(11,458	)	(11,795	)
Accumulated other comprehensive loss		1,290		1,500
Accumulated other comprehensive loss consists of:
Net loss	$	617		702
Prior service cost		673		798
	$	1,290		1,500

The amounts in accumulated other comprehensive loss at December 31, 2008 expected to be recognized as an expense component of net periodic benefit cost in 2009 are estimated as follows (in thousands):

Net gain	$	(29	)
Prior service cost		124
	$	95

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The following presents the components of net periodic benefit cost for these plans (in thousands):

	2008			2007	2006
Interest cost	$	680		693	719
Amortization of net actuarial (gain) loss		(27	)	149	(10	)
Amortization of prior service cost		124		124	124
Amortization of transition liability		–		16	16
Net periodic benefit cost	$	777		982	849

Weighted average assumptions applicable for these plans are the same as the pension plan. Each year, Company contributions to these plans are made in amounts sufficient to meet benefit payments to plan participants. These benefit payments are estimated as follows for the years succeeding December 31, 2008 (in thousands):

2009	$	1,889
2010		1,087
2011		1,153
2012		1,082
2013		948
Years 2014 - 2018		4,075

We are also obligated under several other supplemental retirement plans for certain current and former employees. At December 31, 2008 and 2007, our liability was $5.4 million and $5.1 million, respectively, for these plans.

We also sponsor an unfunded defined benefit health care plan that provides postretirement medical benefits to certain full-time employees who met minimum age and service requirements. The plan is contributory with retiree contributions adjusted annually, and contains other cost-sharing features such as deductibles and coinsurance. Plan coverage is provided by self-funding or health maintenance organizations (HMOs) options. Our contribution towards the retiree medical premium has been permanently frozen. Retirees pay the difference between the full premium rates and our capped contribution.

Effective June 1, 2008, we amended the plan and curtailed coverage for certain participants, primarily those with post-65 coverage. The effect of this curtailment on the change in the plan’s benefit obligation and determination of net periodic benefit cost (credit) for 2008 was determined in accordance with applicable accounting standards.

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The following table presents the change in benefit obligations, change in fair value of plan assets, and funded status of the plan and amounts recognized in the balance sheet as of the measurement date of December 31 (in thousands):

	2008			2007
Change in benefit obligation:
Benefit obligation at beginning of year	$	5,728		5,919
Service cost		56		105
Interest cost		181		318
Plan amendment/settlement		(4,239	)	–
Actuarial gain		(96	)	(18	)
Benefits paid		(530	)	(596	)
Benefit obligation at end of year		1,100		5,728
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		–		–
Employer contributions		530		596
Benefits paid		(530	)	(596	)
Fair value of plan assets at end of year		–		–
Funded status	$	(1,100	)	(5,728	)
Amounts recognized in balance sheet:
Liability for postretirement benefits	$	(1,100	)	(5,728	)
Accumulated other comprehensive loss		(2,105	)	(1,090	)
Accumulated other comprehensive loss consists of:
Net gain	$	(980	)	(1,090	)
Prior service cost		(1,125	)	–
	$	(2,105	)	(1,090	)

The amount of net gain in accumulated other comprehensive loss at December 31, 2008 expected to be recognized as a component of net periodic benefit cost in 2009 is approximately $440 thousand.

The following presents the components of net periodic benefit cost (credit) for the plan (in thousands):

	2008			2007		2006
Service cost	$	56		105		101
Interest cost		181		318		326
Amortization of prior service cost (credit)		(142	)	–		–
Amortization of net actuarial gain		(206	)	(268	)	(333	)
Plan amendment/settlement gain		(2,973	)	–		–
Net periodic benefit cost (credit)	$	(3,084	)	155		94

Weighted average assumptions for the plan are as follows:

	2008		2007		2006
Used to determine benefit obligation at year-end:
Discount rate	6.00	%	6.00	%	5.65	%
Used to determine net periodic benefit cost for the years ended December 31:
Discount rate	6.00		5.65		5.60

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Because our contribution rate is capped, there is no effect on the plan from assumed increases or decreases in health care cost trends. Each year, Company contributions to the plan are made in amounts sufficient to meet benefit payments to plan participants. These benefit payments are estimated as follows for the years succeeding December 31, 2008 (in thousands):

2009	$	97
2010		110
2011		120
2012		127
2013		126
Years 2014 - 2018		601

We have a 401(k) and employee stock ownership plan (“Payshelter”) under which employees select from several investment alternatives. Employees can contribute up to 80% of their earnings subject to the annual maximum allowed contribution. The Company matches 100% of the first 3% of employee contributions and 50% of the next 2% of employee contributions. Matching contributions are invested in the Company’s common stock and amounted to $20.6 million in 2008, $19.8 million in 2007, and $17.3 million in 2006.

The Payshelter plan also has a noncontributory profit sharing feature which is discretionary and may range from 0% to 6% of eligible compensation based upon the Company’s return on average common equity for the year. For 2008, no profit sharing expense was accrued. For 2007, the profit sharing expense was $17.0 million computed at a contribution rate of 3.25%. The profit sharing contribution is invested in the Company’s common stock.

21. FAIR VALUE

Effective January 1, 2008, we adopted SFAS No. 157, Fair Value Measurements, and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. Both Standards address the application of fair value accounting and reporting.

Fair Value Measurements

SFAS 157 defines fair value, establishes a consistent framework for measuring fair value, and enhances disclosures about fair value measurements. In February 2008, the FASB amended SFAS 157 with the issuance of FSP FAS 157-1, which excludes with certain exceptions SFAS No. 13, Accounting for Leases, from the scope of SFAS 157, and FSP FAS 157-2, which delayed the adoption of SFAS 157 for one year for the measurement of nonfinancial assets and nonfinancial liabilities. In addition, the FASB issued FSP FAS 157-c, Measuring Liabilities under FASB Statement No. 157, which is a proposal that would provide further clarification for applying SFAS 157 principles to the measurement of certain liabilities, including derivatives. There was no material effect from the adoption of SFAS 157 on the Company’s consolidated financial statements.

SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, SFAS 157 has established a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities; includes certain U.S. Treasury and other U.S. Government and agency securities actively traded in over-the-counter markets; certain securities sold, not yet purchased; and certain derivatives.

Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; also includes derivative contracts whose value is determined using a pricing model with

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observable market inputs or can be derived principally from or corroborated by observable market data. This category generally includes certain U.S. Government and agency securities; certain CDO securities; corporate debt securities; certain private equity investments; certain securities sold, not yet purchased; and certain derivatives.

Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single dealer quotes not corroborated by observable market data. This category generally includes certain CDO securities and certain private equity investments.

We use fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting. This is done primarily for AFS and trading investment securities; private equity investments; securities sold, not yet purchased; and derivatives. Fair value is used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values, such as for loans held for sale, impaired loans, and other real estate owned. Fair value is also used when evaluating impairment on certain assets, including HTM and AFS securities, goodwill, and core deposit and other intangibles, long-lived assets, and for annual disclosures required by SFAS No. 107, Disclosures about Fair Value of Financial Instruments.

AFS and trading investment securities are fair valued under Level 1 using quoted market prices when available for identical securities. When quoted prices are not available, fair values are determined under Level 2 using quoted prices for similar securities or independent pricing services that incorporate observable market data when possible. AFS securities include certain CDOs that consist of trust preferred securities related to banks and insurance companies and to REITs. Where possible, the fair value of these CDOs is priced under Level 2 using a whole market price quote method that incorporates matrix pricing and uses the prices of securities of similar type and rating to value comparable securities held by us. If sufficient information is not available for matrix pricing, fair value is determined under Level 3 using nonbinding single dealer quotes or the model pricing discussed subsequently.

Because of market disruptions during the latter half of 2008, both the SEC on September 30, 2008 (Release No. 2008-234) and the FASB on October 10, 2008 (FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active) issued additional guidance on fair value accounting when markets become distressed and inactive. In general, this guidance clarifies under such market conditions when and how an entity might appropriately determine fair value using unobservable inputs under Level 3 rather than using observable inputs under Level 2, particularly when significant adjustments become necessary under Level 2 and extensive judgment must be employed to evaluate inputs and results in estimating fair value.

As a result of the above, we determined during the latter half of 2008 that substantially all CDOs previously fair valued under a Level 2 matrix approach would be more appropriately fair valued under a Level 3 cash flow modeling approach. Additional investment securities previously fair valued with Level 3 single dealer quotes were also moved to a Level 3 cash flow modeling approach.

We value our CDO portfolio using several methodologies that primarily include internal and third party models and to a lesser extent dealer quotes and pricing services. A licensed third party model is used internally to fair value bank and insurance trust preferred CDOs. This model uses estimated values of expected losses on underlying collateral and applies market-based discount rates on resultant cash flows to estimate fair value. Third party models are used to fair value certain REIT and ABS CDOs. These models utilize relevant data assumptions, which we evaluate for reasonableness. These assumptions include but are not limited to probability of default, collateral recovery rates, discount rates, over-collateralization levels, and rating transition probability matrices from rating agencies. The model prices obtained from third party services were evaluated for reasonableness

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including quarter to quarter changes in assumptions and comparison to other available data which included third party and internal model results and valuations. Our decision to use Level 3 model pricing for certain CDOs was made due to continued trading contraction of these securities and the lack of observable market inputs to value such securities.

Private equity investments valued under Level 2 on a recurring basis are investments in partnerships that invest in financial institutions. Fair values are determined from net asset values provided by the partnerships. Private equity investments valued under Level 3 on a recurring basis are recorded initially at acquisition cost, which is considered the best indication of fair value unless there have been significant subsequent positive or negative developments that justify an adjustment in the fair value estimate. Subsequent adjustments to recorded fair values are based as necessary on current and projected financial performance, recent financing activities, economic and market conditions, market comparables, market liquidity, sales restrictions, and other factors.

Derivatives are fair valued according to their classification as either exchange-traded or over-the-counter (“OTC”). Exchange-traded derivatives consist of forward currency exchange contracts that have been fair valued under Level 1 because they are traded in active markets. OTC derivatives consist of interest rate swaps and options as well as energy commodity derivatives for customers. These derivatives are fair valued primarily under Level 2 using third party services. Observable market inputs include yield curves, option volatilities, counterparty credit risk, and other related data. Credit valuation adjustments are required to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. These adjustments are determined generally by applying a credit spread for the counterparty or the Company as appropriate to the total expected exposure of the derivative. Amounts disclosed in the following table are also net of the cash collateral offsets pursuant to the guidance of FSP FIN 39-1, as discussed in Note 7.

Securities sold, not yet purchased are fair valued under Level 1 when quoted prices are available for the securities involved. Those under Level 2 are fair valued similar to trading account investment securities.

Assets and liabilities measured at fair value on a recurring basis, including those elected under SFAS 159, are summarized as follows at December 31, 2008 (in thousands):

	Level 1		Level 2	Level 3		Total
ASSETS
Investment securities:
Available-for-sale	$	27,756	1,898,082	750,417		2,676,255
Trading account			41,108	956	1	42,064
Other noninterest-bearing investments:
Private equity			29,037	143,511		172,548
Other assets:
Derivatives		9,922	395,272			405,194
	$	37,678	2,363,499	894,884		3,296,061
LIABILITIES
Securities sold, not yet purchased	$		35,657			35,657
Other liabilities:
Derivatives		8,812	175,670			184,482
Other				527		527
	$	8,812	211,327	527		220,666

¹ Elected under SFAS 159 for fair value option, as discussed subsequently.

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The following reconciles the beginning and ending balances of assets and liabilities for 2008 that are measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Level 3 Instruments
	Year Ended December 31, 2008
	Investment securities					Retained interests from securitizations1		Private equity investments		Other liabilities
	Available- for-sale			Trading account1
Balance at January 1, 2008	$	337,338		8,100		42,426		116,657		(44	)
Total net gains (losses) included in:
Statement of income2:
Dividends and other investment income								6,880
Fair value and nonhedge derivative loss				(7,144	)	(2,098	)
Equity securities gains (losses), net								(7,580	)
Impairment losses on AFS securities and valuation losses on securities purchased from Lockhart Funding		(112,131	)
Other noninterest expense										517
Other comprehensive loss		(165,694	)
Proceeds from ESOARS auction										(1,000	)
Fair value of AFS securities transferred to HTM		(206,020	)
Purchases, sales, issuances, and settlements, net		68,158				(13,593	)	27,554
Net transfers in (out)		828,766		–		(26,735	)			–
Balance at December 31, 2008	$	750,417		956		–		143,511		(527	)

¹ Elected under SFAS 159 for fair value option, as discussed subsequently.

² All amounts are unrealized except for realized gains of $5.9 million in dividends and other investment income and $11.2 million in equity securities gains (losses), net.

Assets measured at fair value on a nonrecurring basis are summarized as follows (in thousands):

						Gains (losses) from fair value changes
	Fair value at December 31, 2008					Year Ended December 31, 2008
	Level 1		Level 2	Level 3	Total
Loans held for sale	$		21,518		21,518	34
Impaired loans			254,743		254,743	(53,259	)
	$	–	276,261	–	276,261	(53,225	)

Loans held for sale relate to loans purchased under the SBA 7(a) program. They are fair valued under Level 2 based on quotes of comparable instruments.

Impaired loans that are collateral-dependent are fair valued under Level 2 based on the fair value of the collateral, which is determined when appropriate from appraisals and other observable market data.

Fair Value Option

SFAS 159 allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but is on an irrevocable basis. As of January 1, 2008, we elected the fair value option for one AFS trust preferred REIT CDO security and three retained interests on selected small business loan

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securitizations. The cumulative effect of adopting SFAS 159 decreased retained earnings at January 1, 2008 as follows (in thousands):

	Carrying value ending balance at December 31, 2007		Adjustment gain (loss)			Fair value beginning balance at January 1, 2008
Investment securities, available-for-sale, asset-backed trust preferred REIT CDO1	$	27,000		(18,900	)	8,100
Other assets, retained interests on certain small business loan securitizations		42,103		323		42,426
Cumulative effect adjustment, pretax				(18,577	)
Deferred income tax impact				7,106
Cumulative effect adjustment, after-tax, decrease to retained earnings			$	(11,471	)

¹ Subsequently classified as trading account.

The REIT trust preferred CDO was selected as part of a directional hedging program to hedge the credit exposure we have to homebuilders in our REIT CDO portfolio. This allows us to avoid the complex hedge accounting provisions associated with the implemented hedging program. Management selected this security because it had the most exposure to the homebuilder market compared to the other REIT CDOs in our portfolio, both in dollar amount and as a percentage, and was therefore considered the most suitable for hedging.

The retained interests were selected to more appropriately reflect their fair value and to account for increases and decreases in their fair value through earnings. Net decreases in fair value of approximately $2.1 million during 2008 were recognized in fair value and nonhedge derivative loss in the statement of income. However as discussed in Note 6, during 2008, Zions Bank purchased securities from Lockhart that comprised the entire remaining small business loan securitizations created by Zions Bank and held by Lockhart. These retained interests related to the securities purchased and, as part of the purchase transaction, were included with the $23 million premium amount recorded with the loan balances at Zions Bank.

As required by SFAS 107, the following is a summary of the carrying values and estimated fair values of certain financial instruments (in thousands):

	December 31, 2008			December 31, 2007
	Carrying value		Estimated fair value	Carrying value	Estimated fair value
Financial assets:
HTM investment securities	$	1,790,989	1,443,555	704,441	702,148
Loans and leases, net of allowance		41,172,057	40,646,816	38,628,403	38,975,714
Financial liabilities:
Time deposits	$	7,730,784	7,923,883	6,953,951	7,017,862
Foreign deposits		2,622,562	2,625,869	3,375,426	3,374,886
FHLB advances and other borrowings		2,168,106	2,179,562	3,607,452	3,613,520
Long-term debt		2,257,633	1,838,555	2,463,254	2,493,832

This summary excludes financial assets and liabilities for which carrying value approximates fair value. For financial assets, these include cash and due from banks and money market investments. For financial liabilities, these include demand, savings, and money market deposits, federal funds purchased, and security repurchase agreements. The estimated fair value of demand, savings, and money market deposits is the amount payable on demand at the reporting date. SFAS 107 requires the use of carrying value because the accounts have no stated maturity and the customer has the ability to withdraw funds immediately. Also excluded from the summary are financial instruments recorded at value fair on a recurring basis, as previously described.

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The fair value of loans is estimated by discounting future cash flows on ‘pass’ grade loans using the LIBOR yield curve adjusted by a factor which reflects the credit and interest rate risk inherent in the loan. These future cash flows are then reduced by the estimated ‘life-of-the-loan’ aggregate credit losses in the loan portfolio. These adjustments for lifetime future credit losses are highly judgmental because the Company does not have a validated model to estimate lifetime losses on large portions of its loan portfolio. Loans accounted for under SFAS 114 are not included in this credit adjustment as they are already considered to be held at fair value. Loans, other than those held for sale, are not normally purchased and sold by the Company, and there are no active trading markets for most of this portfolio.

The fair value of time and foreign deposits, FHLB advances, and other borrowings is estimated by discounting future cash flows using the LIBOR yield curve. Variable rate FHLB advances reprice with changes in market rates; as such, their carrying amounts approximate fair value. The estimated fair value of long-term debt is based on discounting cash flows using the LIBOR yield curve plus credit spreads.

These fair value disclosures represent our best estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of the various instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.

Further, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements. Therefore, the fair value amounts shown in the table do not, by themselves, represent the underlying value of the Company as a whole.

On January 30, 2009, the FASB issued a proposed amendment to SFAS 107, FSP FAS 107-b and APB 28-a, Interim Disclosure about Fair Value of Financial Instruments. The FSP would extend the annual fair value disclosure requirements of SFAS 107 to interim financial statements. If finalized, the proposed FSP would be effective for interim and annual reporting periods ending after March 15, 2009.

22. OPERATING SEGMENT INFORMATION

We manage our operations and prepare management reports and other information with a primary focus on geographical area. As of December 31, 2008, we operate eight community/regional banks in distinct geographical areas. Performance assessment and resource allocation are based upon this geographical structure. The operating segment identified as “Other” includes the Parent, Zions Management Services Company (“ZMSC”), certain nonbank financial service and financial technology subsidiaries, other smaller nonbank operating units, TCBO (see Note 1), and eliminations of transactions between segments.

ZMSC provides internal technology and operational services to affiliated operating businesses of the Company. ZMSC charges most of its costs to the affiliates on an approximate break-even basis.

The accounting policies of the individual operating segments are the same as those of the Company as described in Note 1. Transactions between operating segments are primarily conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations. Operating segments pay for centrally provided services based upon estimated or actual usage of those services.

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The following is a summary of selected operating segment information for the years ended December 31, 2008, 2007 and 2006 (in millions):

	Zions Bank			CB&T		Amegy	NBA		NSB		Vectra		TCBW		Other		Consolidated Company
2008:
Net interest income	$	662.5		414.3		370.1	219.5		159.0		103.6		33.8		8.8		1,971.6
Provision for loan losses		163.1		82.9		71.9	211.8		100.3		15.9		1.1		1.3		648.3
Net interest income after provision for loan losses		499.4		331.4		298.2	7.7		58.7		87.7		32.7		7.5		1,323.3
Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding		(92.5	)	(118.0	)	–	–		(2.0	)	(6.4	)	(1.3	)	(96.9	)	(317.1	)
Other noninterest income		207.3		82.6		192.9	46.8		42.8		29.9		4.4		(98.9	)	507.8
Noninterest expense		463.4		239.0		305.2	161.2		137.9		85.9		14.8		67.6		1,475.0
Impairment loss on goodwill		–		–		–	168.6		21.0		151.5		–		12.7		353.8
Income (loss) before income taxes (benefit) and minority interest		150.8		57.0		185.9	(275.3	)	(59.4	)	(126.2	)	21.0		(268.6	)	(314.8	)
Income tax expense (benefit)		44.0		18.4		60.5	(56.7	)	(13.6	)	8.8		7.0		(111.8	)	(43.4	)
Minority interest		0.1		–		0.3	–		–		–		–		(5.5	)	(5.1	)
Net income (loss)		106.7		38.6		125.1	(218.6	)	(45.8	)	(135.0	)	14.0		(151.3	)	(266.3	)
Preferred stock dividend		–		–		–	–		–		–		–		24.4		24.4
Net earnings (loss) applicable to common shareholders	$	106.7		38.6		125.1	(218.6	)	(45.8	)	(135.0	)	14.0		(175.7	)	(290.7	)
Assets	$	20,778		10,137		12,406	4,864		4,063		2,722		880		(757	)	55,093
Net loans and leases1		14,734		7,867		9,129	4,146		3,200		2,065		588		130		41,859
Deposits		16,118		7,964		8,625	3,923		3,514		2,127		603		(1,558	)	41,316
Shareholder’s equity:
Preferred equity		250		158		80	430		260		10		–		394		1,582
Common equity		1,044		1,097		2,049	355		259		191		75		(150	)	4,920
Total shareholder’s equity		1,294		1,255		2,129	785		519		201		75		244		6,502
2007:
Net interest income	$	551.4		434.8		331.3	250.8		182.5		96.9		35.1		(0.8	)	1,882.0
Provision for loan losses		39.1		33.5		21.2	30.5		23.3		4.0		0.3		0.3		152.2
Net interest income after provision for loan losses		512.3		401.3		310.1	220.3		159.2		92.9		34.8		(1.1	)	1,729.8
Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding		(59.7	)	(79.2	)	–	–		–		–		–		(19.3	)	(158.2	)
Other noninterest income		236.8		87.3		126.7	33.4		32.9		28.1		2.5		22.8		570.5
Noninterest expense		463.2		230.8		295.6	142.4		111.8		86.3		14.4		60.1		1,404.6
Income (loss) before income taxes (benefit) and minority interest		226.2		178.6		141.2	111.3		80.3		34.7		22.9		(57.7	)	737.5
Income tax expense (benefit)		72.2		71.2		46.7	43.5		27.9		12.5		7.5		(45.7	)	235.8
Minority interest		0.2		–		0.1	–		–		–		–		7.7		8.0
Net income (loss)		153.8		107.4		94.4	67.8		52.4		22.2		15.4		(19.7	)	493.7
Preferred stock dividend		–		–		–	–		–		–		–		14.3		14.3
Net earnings (loss) applicable to common shareholders	$	153.8		107.4		94.4	67.8		52.4		22.2		15.4		(34.0	)	479.4
Assets	$	18,446		10,156		11,675	5,279		3,903		2,667		947		(126	)	52,947
Net loans and leases1		12,997		7,792		7,902	4,585		3,231		1,987		509		85		39,088
Deposits		11,644		8,082		8,058	3,871		3,304		1,752		608		(396	)	36,923
Shareholder’s equity:
Preferred equity		–		–		–	–		–		–		–		240		240
Common equity		1,048		1,067		1,932	581		261		329		67		(232	)	5,053
Total shareholder’s equity		1,048		1,067		1,932	581		261		329		67		8		5,293

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	Zions Bank		CB&T	Amegy	NBA	NSB	Vectra	TCBW	Other		Consolidated Company
2006:
Net interest income	$	472.3	469.4	304.7	214.9	197.5	94.2	33.6	(21.9	)	1,764.7
Provision for loan losses		19.9	15.0	7.8	16.3	8.7	4.2	0.5	0.2		72.6
Net interest income after provision for loan losses		452.4	454.4	296.9	198.6	188.8	90.0	33.1	(22.1	)	1,692.1
Noninterest income		263.7	80.7	114.9	25.4	31.2	26.8	2.0	6.5		551.2
Noninterest expense		426.1	244.6	283.5	103.0	110.8	85.0	13.9	63.5		1,330.4
Income (loss) before income taxes (benefit) and minority interest		290.0	290.5	128.3	121.0	109.2	31.8	21.2	(79.1	)	912.9
Income tax expense (benefit)		98.1	117.9	39.5	47.8	38.1	11.7	7.0	(42.1	)	318.0
Minority interest		0.1	–	1.8	–	–	–	–	9.9		11.8
Net income (loss)		191.8	172.6	87.0	73.2	71.1	20.1	14.2	(46.9	)	583.1
Preferred stock dividend		–	–	–	–	–	–	–	3.8		3.8
Net earnings (loss) applicable to common shareholders	$	191.8	172.6	87.0	73.2	71.1	20.1	14.2	(50.7	)	579.3
Assets	$	14,823	10,416	10,366	4,599	3,916	2,385	808	(343	)	46,970
Net loans and leases1		10,702	8,092	6,352	4,066	3,214	1,725	428	89		34,668
Deposits		10,450	8,410	7,329	3,695	3,401	1,712	513	(528	)	34,982
Shareholder’s equity:
Preferred equity		–	–	–	–	–	–	–	240		240
Common equity		972	1,123	1,805	346	273	314	56	(142	)	4,747
Total shareholder’s equity		972	1,123	1,805	346	273	314	56	98		4,987

¹ Net of unearned income and fees, net of related costs.

181

23. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Financial information by quarter for 2008 and 2007 is as follows (in thousands, except per share amounts):

	Quarters
	First			Second		Third		Fourth		Year
2008:
Gross interest income	$	790,115		722,932		735,652		725,200		2,973,899
Net interest income		486,458		484,743		492,003		508,442		1,971,646
Provision for loan losses		92,282		114,192		156,606		285,189		648,269
Noninterest income:
Impairment losses on investment securities and valuation losses on securities purchased from Lockhart Funding		(45,989	)	(38,761	)	(28,022	)	(204,340	)	(317,112	)
Securities gains (losses), net		11,843		(8,043	)	13,106		(15,264	)	1,642
Other noninterest income		145,146		119,176		104,526		137,314		506,162
Noninterest expense		350,103		354,417		372,276		398,167		1,474,963
Impairment loss on goodwill		–		–		–		353,804		353,804
Income (loss) before income taxes (benefit) and minority interest		155,073		88,506		52,731		(611,008	)	(314,698	)
Net income (loss)		106,749		72,198		37,760		(482,976	)	(266,269	)
Preferred stock dividends		2,453		2,454		4,409		15,108		24,424
Net earnings (loss) applicable to common shareholders		104,296		69,744		33,351		(498,084	)	(290,693	)
Net earnings (loss) per common share:
Basic	$	0.98		0.65		0.31		(4.37	)	(2.67	)
Diluted		0.98		0.65		0.31		(4.36	)	(2.66	)
2007:
Gross interest income	$	770,451		789,614		817,742		827,519		3,205,326
Net interest income		457,083		469,347		476,637		478,885		1,881,952
Provision for loan losses		9,111		17,763		55,354		69,982		152,210
Noninterest income:
Impairment losses on available-for-sale securities and valuation losses on securities purchased from Lockhart Funding		–		–		–		(158,208	)	(158,208	)
Securities gains, net		8,899		113		11,130		596		20,738
Other noninterest income		136,515		141,228		134,693		137,378		549,814
Noninterest expense		351,979		347,612		352,031		352,966		1,404,588
Income before income taxes and minority interest		241,407		245,313		215,075		35,703		737,498
Net income		153,258		159,214		135,732		45,541		493,745
Preferred stock dividend		3,603		3,607		3,770		3,343		14,323
Net earnings applicable to common shareholders		149,655		155,607		131,962		42,198		479,422
Net earnings per common share:
Basic	$	1.38		1.44		1.24		0.40		4.47
Diluted		1.36		1.43		1.22		0.39		4.42

182

24. PARENT COMPANY FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

DECEMBER 31, 2008 AND 2007

(In thousands)	2008			2007
ASSETS
Cash and due from banks	$	2,135		2,003
Interest-bearing deposits		980,528		85,399
Investment securities:
Held-to-maturity, at adjusted cost (approximate fair value $191,952)		197,841		–
Available-for-sale, at fair value		59,153		388,045
Trading account, at fair value		956		–
Loans, net of unearned fees of $379 and $33 and allowance for loan losses of $643 and $52		22,901		475
Other noninterest-bearing investments		76,219		72,427
Investments in subsidiaries:
Commercial banks and bank holding company		6,266,229		5,293,994
Other operating companies		69,291		81,087
Nonoperating – Zions Municipal Funding, Inc.1		464,570		446,785
Receivables from subsidiaries:
Commercial banks		760,500		1,407,500
Other		14,800		1,865
Other assets		411,584		179,552
	$	9,326,707		7,959,132
LIABILITIES AND SHAREHOLDERS’ EQUITY
Other liabilities	$	252,519		95,698
Commercial paper:
Due to affiliates		55,996		–
Due to others		15,451		337,840
Other short-term borrowings		235,550		–
Subordinated debt to affiliated trusts		309,300		309,412
Long-term debt		1,956,195		1,923,382
Total liabilities		2,825,011		2,666,332
Shareholders’ equity:
Preferred stock		1,581,834		240,000
Common stock		2,599,916		2,212,237
Retained earnings		2,433,363		2,910,692
Accumulated other comprehensive loss		(98,958	)	(58,835	)
Deferred compensation		(14,459	)	(11,294	)
Total shareholders’ equity		6,501,696		5,292,800
	$	9,326,707		7,959,132

¹ Zions Municipal Funding, Inc. is a wholly-owned nonoperating subsidiary whose sole purpose is to hold a portfolio of municipal bonds, loans and leases.

183

CONDENSED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)	2008			2007		2006
Interest income:
Commercial bank subsidiaries	$	68,642		90,504		62,146
Other subsidiaries and affiliates		781		852		1,245
Other loans and securities		20,585		27,870		32,881
Total interest income		90,008		119,226		96,272
Interest expense:
Affiliated trusts		24,391		25,925		25,964
Other borrowed funds		79,208		116,520		112,726
Total interest expense		103,599		142,445		138,690
Net interest loss		(13,591	)	(23,219	)	(42,418	)
Provision for loan losses		605		50		(8	)
Net interest loss after provision for loan losses		(14,196	)	(23,269	)	(42,410	)
Other income:
Dividends from consolidated subsidiaries:
Commercial banks and bank holding company		110,500		460,200		431,000
Other operating companies		500		560		600
Equity and fixed income securities gains (losses), net		(11,220	)	2,882		8,180
Impairment losses on investment securities		(96,890	)	(19,281	)	–
Other income (loss)		(7,611	)	8,498		2,730
		(4,721	)	452,859		442,510
Expenses:
Salaries and employee benefits		11,673		14,781		14,841
Other operating expenses		16,962		20,328		23,388
		28,635		35,109		38,229
Income (loss) before income tax benefit and undistributed income (losses) of consolidated subsidiaries		(47,552	)	394,481		361,871
Income tax benefit		71,837		40,422		29,541
Income before equity in undistributed income (losses) of consolidated subsidiaries		24,285		434,903		391,412
Equity in undistributed income (losses) of consolidated subsidiaries:
Commercial banks and bank holding company		(272,963	)	52,962		190,756
Other operating companies		(35,377	)	(11,778	)	(15,302	)
Nonoperating – Zions Municipal Funding, Inc.		17,786		17,658		16,259
Net income (loss)		(266,269	)	493,745		583,125
Preferred stock dividends		24,424		14,323		3,835
Net earnings (loss) applicable to common shareholders	$	(290,693	)	479,422		579,290

184

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)	2008			2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(266,269	)	493,745		583,125
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Undistributed net (income) losses of consolidated subsidiaries		290,554		(58,842	)	(191,713	)
Equity and fixed income securities (gains) losses, net		11,220		(2,882	)	(8,180	)
Impairment losses on investment securities		96,890		19,281		–
Other		93,859		(15,582	)	34,160
Net cash provided by operating activities		226,254		435,720		417,392
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits		(895,129	)	98,098		(82,497	)
Collection of advances to subsidiaries		816,184		97,333		18,706
Advances to subsidiaries		(184,731	)	(201,862	)	(702,581	)
Proceeds from sales and maturities of equity and fixed income securities		264,528		82,439		166,085
Purchase of investment securities		(241,846	)	(140,786	)	–
Increase of investment in subsidiaries		(1,292,821	)	(47,500	)	(137,206	)
Other		(29,281	)	(3,147	)	(7,983	)
Net cash used in investing activities		(1,563,096	)	(115,425	)	(745,476	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in commercial paper and other borrowings under one year		(30,843	)	117,333		53,319
Proceeds from issuance of long-term debt		28,495		295,627		395,000
Payments on long-term debt		(155,025	)	(274,957	)	(248,425	)
Proceeds from issuance of preferred stock		1,338,605		–		235,833
Proceeds from issuance of common stock and warrants		354,302		59,473		79,511
Payments to redeem common stock		(2,881	)	(322,025	)	(26,483	)
Dividends paid on preferred stock		(21,775	)	(14,323	)	(3,835	)
Dividends paid on common stock		(173,904	)	(181,327	)	(156,986	)
Net cash provided by (used in) financing activities		1,336,974		(320,199	)	327,934
Net increase (decrease) in cash and due from banks		132		96		(150	)
Cash and due from banks at beginning of year		2,003		1,907		2,057
Cash and due from banks at end of year	$	2,135		2,003		1,907

As of December 31, 2008, the Parent has lines of credit totaling $395 million with five of its subsidiary banks. No amounts were outstanding at December 31, 2008. Interest on these lines is at a variable rate based on specified indices. Actual amounts that may be borrowed at any given time are based on determined collateral requirements.

The Parent paid interest of $99.5 million in 2008, $141.9 million in 2007, and $135.0 million in 2006.

185

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

An evaluation was carried out by the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2008, these disclosure controls and procedures were effective. There have been no changes in the Company’s internal control over financial reporting during the fourth quarter of 2008 that have materially affected or are reasonably likely to affect the Company’s internal control over financial reporting. See “Report on Management’s Assessment of Internal Control over Financial Reporting” included in Item 8 on page 123 for management’s report on the adequacy of internal control over financial reporting. Also see “Report on Internal Control over Financial Reporting” issued by Ernst & Young LLP included in Item 8 on page 124.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

186

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2008 with respect to the shares of the Company’s common stock that may be issued under existing equity compensation plans:

Plan Category 1	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights	(b) Weighted average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity Compensation Plans Approved by Security Holders:
Zions Bancorporation 2005 Stock
Option and Incentive Plan	5,142,499	$	60.16	–
Zions Bancorporation 1996
Non-Employee Directors Stock Option Plan	136,000		55.06	–
Zions Bancorporation Key Employee
Incentive Stock Option Plan	1,657,327		52.77	–
Total	6,935,826			–

¹ The table does not include information for equity compensation plans assumed by the Company in mergers. A total of 738,772 shares of common stock with a weighted average exercise price of $50.31 were issuable upon exercise of options granted under plans assumed in mergers and outstanding at December 31, 2008. The Company cannot grant additional awards under these assumed plans. Column (a) also excludes 1,249,281 shares of unvested restricted stock.

Other information required by Item 12 is incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

187

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)	(1)	Financial statements—The following consolidated financial statements of Zions Bancorporation and subsidiaries are filed as part of this Form10-K under Item 8, Financial Statements and Supplementary Data:
		Consolidated balance sheets—December 31, 2008 and 2007
		Consolidated statements of income—Years ended December 31, 2008, 2007 and 2006
		Consolidated statements of changes in shareholders’ equity and comprehensive income—Years ended December 31, 2008, 2007 and 2006
		Consolidated statements of cash flows—Years ended December 31, 2008, 2007 and 2006
		Notes to consolidated financial statements—December 31, 2008
	(2)	Financial statement schedules—All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, the required information is contained elsewhere in the Form 10-K, or the schedules are inapplicable and have therefore been omitted.
	(3)	List of Exhibits:

Exhibit Number	Description
3.1	Restated Articles of Incorporation of Zions Bancorporation dated November 8, 1993, incorporated by reference to Exhibit 3.1 of Form S-4 filed on November 22, 1993.	*
3.2	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated April 30, 1997, incorporated by reference to Exhibit 3.2 of Form 10-Q for the quarter ended March 31, 2008.	*
3.3	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated April 24, 1998, incorporated by reference to Exhibit 3.3 of Form 10-K for the year ended December 31, 2003.	*
3.4	Articles of Amendment to Restated Articles of Incorporation of Zions Bancorporation dated April 25, 2001, incorporated by reference to Exhibit 3.6 of Form S-4 filed July 13, 2001.	*
3.5	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated December 5, 2006, incorporated by reference to Exhibit 3.1 of Form 8-K filed December 7, 2006.	*
3.6	Articles of Merger of The Stockmen’s Bancorp, Inc. with and into Zions Bancorporation, effective January 17, 2007, incorporated by reference to Exhibit 3.6 of Form 10-K for the year ended December 31, 2006.	*
3.7	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated July 7, 2008, incorporated by reference to Exhibit 3.1 of Form 8-K filed July 8, 2008.	*
3.8	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated November 12, 2008, incorporated by reference to Exhibit 3.1 of Form 8-K filed November 17, 2008.	*
3.9	Amended and Restated Bylaws of Zions Bancorporation dated May 4, 2007, incorporated by reference to Exhibit 3.2 of Form 8-K filed on May 9, 2007.	*
4.1	Senior Debt Indenture dated September 10, 2002 between Zions Bancorporation and J.P. Morgan Trust Company, N.A., as trustee, with respect to senior debt securities of Zions Bancorporation, incorporated by reference to Exhibit 4.1 of Form S-3ARS filed March 31, 2006.	*

188

Exhibit Number	Description
4.2	Subordinated Debt Indenture dated September 10, 2002 between Zions Bancorporation and J.P. Morgan Trust Company, N.A., as trustee, with respect to subordinated debt securities of Zions Bancorporation, incorporated by reference to Exhibit 4.2 of Form S-3ARS filed March 31, 2006.	*
4.3	Junior Subordinated Indenture dated August 21, 2002 between Zions Bancorporation and J.P. Morgan Trust Company, N.A., as trustee, with respect to junior subordinated debentures of Zions Bancorporation, incorporated by reference to Exhibit 4.3 of Form S-3ARS filed March 31, 2006.	*
10.1	Zions Bancorporation 2006-2008 Value Sharing Plan, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 2006.	*
10.2	First amendment to the Zions Bancorporation 2006-2008 Value Sharing Plan (filed herewith).
10.3	Form of Zions Bancorporation 2006-2008 Value Sharing Plan, Subsidiary Banks, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 2006.	*
10.4	Amegy Bank of Texas 2007-2008 Value Sharing Plan, incorporated by reference to Exhibit 10.7 of Form 10-Q for the quarter ended June 30, 2007.	*
10.5	2005 Management Incentive Compensation Plan, incorporated by reference to Appendix II of the Proxy Statement contained in the Company’s Schedule 14A filed on April 4, 2005.	*
10.6	Zions Bancorporation Second Restated and Revised Deferred Compensation Plan (filed herewith).
10.7	Zions Bancorporation Third Restated Deferred Compensation Plan for Directors (filed herewith).
10.8	Fifth Amended and Restated Amegy Bancorporation, Inc. Non-Employee Directors Deferred Fee Plan (filed herewith).
10.9	Zions Bancorporation First Restated Excess Benefit Plan (filed herewith).
10.10	Trust Agreement establishing the Zions Bancorporation Deferred Compensation Plan Trust by and between Zions Bancorporation and Cigna Bank & Trust Company, FSB effective October 1, 2002, incorporated by reference to Exhibit 10.10 of Form 10-K for the year ended December 31, 2006.	*
10.11	Amendment to the Trust Agreement establishing the Zions Bancorporation Deferred Compensation Plan Trust by and between Zions Bancorporation and Cigna Bank & Trust Company, FSB substituting Prudential Bank & Trust, FSB as the trustee, dated January 6, 2005, incorporated by reference to Exhibit 10.13 of Form 10-K for the year ended December 31, 2004.	*
10.12	Amendment to Trust Agreement Establishing the Zions Bancorporation Deferred Compensation Plans Trust, effective September 1, 2006, incorporated by reference to Exhibit 10.12 of Form 10-K for the year ended December 31, 2006.	*
10.13	Zions Bancorporation Deferred Compensation Plans Master Trust between Zions Bancorporation and Fidelity Management Trust Company, effective September 1, 2006, incorporated by reference to Exhibit 10.13 of Form 10-K for the year ended December 31, 2006.	*
10.14	Revised schedule C to Zions Bancorporation Deferred Compensation Plans Master Trust between Zions Bancorporation and Fidelity Management Trust Company, effective September 13, 2006, incorporated by reference to Exhibit 10.14 of Form 10-K for the year ended December 31, 2006.	*
10.15	Zions Bancorporation Restated Pension Plan effective January 1, 2001, including amendments adopted through January 31, 2002, incorporated by reference to Exhibit 10.20 of Form 10-K for the year ended December 31, 2007.	*

189

Exhibit Number	Description
10.16	Amendment dated December 31, 2002 to Zions Bancorporation Restated Pension Plan (filed herewith).
10.17	Second Amendment to the Restated and Amended Zions Bancorporation Pension Plan dated September 4, 2003, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2005.	*
10.18	Third Amendment to the Zions Bancorporation Pension Plan dated September 4, 2003, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended March 31, 2005.	*
10.19	Fourth Amendment to the Restated and Amended Zions Bancorporation Pension Plan dated March 28, 2005, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarter ended March 31, 2005.	*
10.20	Zions Bancorporation Executive Management Pension Plan (filed herewith).
10.21	Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, Established and Restated Effective January 1, 2003 (filed herewith).
10.22	First Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated November 20, 2003, incorporated by reference to Exhibit 10.19 of Form 10-K for the year ended December 31, 2004.	*
10.23	Second Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated December 31, 2003, incorporated by reference to Exhibit 10.20 of Form 10-K for the year ended December 31, 2004.	*
10.24	Third Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated June 1, 2004, incorporated by reference to Exhibit 10.21 of Form 10-K for the year ended December 31, 2004.	*
10.25	Fourth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated March 18, 2005, incorporated by reference to Exhibit 10.31 of Form 10-Q for the quarter ended March 31, 2005.	*
10.26	Fifth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated February 28, 2006, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2006.	*
10.27	Sixth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated July 31, 2006, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarter ended June 30, 2006.	*
10.28	Seventh Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated December 28, 2006, incorporated by reference to Exhibit 10.28 of Form 10-K for the year ended December 31, 2006.	*
10.29	Eighth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated May 14, 2007, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarter ended June 30, 2007.	*
10.30	Ninth Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, dated July 19, 2007, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarter ended June 30, 2007.	*
10.31	Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust Agreement between Zions Bancorporation and Fidelity Management Trust Company, dated July 3, 2006, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2007.	*

190

Exhibit Number	Description
10.32	Amended and Restated Zions Bancorporation Key Employee Incentive Stock Option Plan, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 2004.	*
10.33	Amended and Restated Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan, incorporated by reference to Exhibit 10.38 of Form 10-K for the year ended December 31, 2007.	*
10.34	Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 4.7 of Form S-8 filed on May 6, 2005.	*
10.35	Amendment No. 1 to Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June30, 2007.	*
10.36	Standard Stock Option Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.5 of Form 10-Q for the quarter ended March 31, 2005.	*
10.37	Standard Directors Stock Option Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.6 of Form 10-Q for the quarter ended March 31, 2005.	*
10.38	Restated Standard Restricted Stock Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 2007.	*
10.39	Amegy Bancorporation (formerly Southwest Bancorporation of Texas, Inc.)1996 Stock Option Plan, as amended and restated as of June 4, 2002, incorporated by reference to Exhibit 10.45 of Form 10-K for the year ended December 31, 2007.	*
10.40	Amegy Bancorporation 2004 Omnibus Incentive Plan, incorporated by reference to Appendix B to Amegy Bancorporation’s Definitive Proxy Statement filed on March 25, 2004.	*
10.41	Form of Change in Control Agreement between the Company and Certain Executive Officers, including Harris H. Simmons, Doyle L. Arnold, Bruce K. Alexander, and A. Scott Anderson, incorporated by reference to Exhibit 10.39 of Form 10-K for the year ended December 31, 2006.	*
10.42	Form of Change in Control Agreement between the Company and Certain Executive Officers, including Paul B. Murphy and Scott J. McLean, incorporated by reference to Exhibit 10.48 of Form 10-K for the year ended December 31, 2007.	*
10.43	Addendum to Change in Control Agreement (filed herewith).
10.44	Stock Purchase and Shareholder Agreement dated June 1, 2004 among Welman Holdings, Inc., the Company, Zions First National Bank and PSC Wealth Management, LLC, incorporated by reference to Exhibit 99.2 of Form 8-K filed April 1, 2005.	*
10.45	Employment Agreement dated as of June 1, 2004 between the Company and George M. Feiger, incorporated by reference to Exhibit 99.1 of Form 8-K filed April 1, 2005.	*
10.46	Employment Agreement between the Company and Paul B. Murphy, incorporated by reference to Exhibit 10.40 of Form 10-K for the year ended December 31, 2006.	*
10.47	Employment Agreement between the Company and Scott J. McLean, incorporated by reference to Exhibit 10.41 of Form 10-K for the year ended December 31, 2006.	*
10.48	Employment Agreement between the Company and Dallas Haun, incorporated by reference to Exhibit 10.53 of Form 10-K for the year ended December 31, 2007.	*
10.49	Warrant to purchase up to 5,789,909 shares of Common Stock, issued on November 14, 2008, incorporated by reference to Exhibit 4.2 of Form 8-K filed November 17, 2008.	*

191

Exhibit Number	Description
10.50	Performance stock agreement between Zions Bancorporation and Paul B. Murphy, dated August 15, 2008 (filed herewith).
10.51	Performance stock agreement between Zions Bancorporation and Scott McLean, dated August 15, 2008 (filed herewith).
10.52	Form of Change in Control Agreement between the Company and Dallas E. Haun, dated May 23, 2008 (filed herewith).
12	Ratio of Earnings to Fixed Charges (filed herewith).
21	List of Subsidiaries of Zions Bancorporation (filed herewith).
23	Consent of Independent Registered Public Accounting Firm (filed herewith).
31.1	Certification by Chief Executive Officer required by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (filed herewith).
31.2	Certification by Chief Financial Officer required by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (filed herewith).
32	Certification by Chief Executive Officer and Chief Financial Officer required by Sections 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and 18 U.S.C. Section 1350 (furnished herewith).

* Incorporated by reference

Certain instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.

192

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

February 27, 2009	ZIONS BANCORPORATION
	By	/s/    HARRIS H. SIMMONS
		HARRIS H. SIMMONS, Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

February 27, 2009

/s/    HARRIS H. SIMMONS	/s/    DOYLE L. ARNOLD
HARRIS H. SIMMONS, Director, Chairman, President and Chief Executive Officer (Principal Executive Officer)	DOYLE L. ARNOLD, Vice Chairman and Chief Financial Officer (Principal Financial Officer)
/s/    NOLAN BELLON	/s/    JERRY C. ATKIN
NOLAN BELLON, Controller (Principal Accounting Officer)	JERRY C. ATKIN, Director
/s/    R. D. CASH	/S/    PATRICIA FROBES
R. D. CASH, Director	PATRICIA FROBES, Director
/s/    J. DAVID HEANEY	/s/    ROGER B. PORTER
J. DAVID HEANEY, Director	ROGER B. PORTER, Director
/s/    STEPHEN D. QUINN	/s/    L. E. SIMMONS
STEPHEN D. QUINN, Director	L. E. SIMMONS, Director
/s/    STEVEN C. WHEELWRIGHT	/s/    SHELLEY THOMAS WILLIAMS
STEVEN C. WHEELWRIGHT, Director	SHELLEY THOMAS WILLIAMS, Director

193

EX-10.2

EXHIBIT 10.2

FIRST AMENDMENT

TO THE

Zions Bancorporation 2006-2008 Value Sharing Plan

This First Amendment to the Zions Bancorporation 2006-2008 Value Sharing Plan (the “Plan”) is made effective as of the 1st day of January, 2006, by Zions Bancorporation Benefits Committee (“Committee”) on behalf of Zions Bancorporation, hereinafter referred to as the “Company.”

W I T N E S S E T H:

WHEREAS, the Company has heretofore entered into the Plan; and

WHEREAS, the Company has reserved the right to amend the Plan in whole or in part and has delegated amendment authority to the Committee; and

WHEREAS, the Company wishes to amend the Plan to comply with the final regulations issued Internal Revenue Service under Section 409A of the Code; and

WHEREAS, these amendments are within the authority granted to the Committee by the Committee.

NOW THEREFORE, in consideration of the foregoing premises the Committee adopts the following amendments to the Plan (amended language is in bold italics):

(Objective)

1. The section titled “Objective” is amended as follows:

The purpose of the 2006–2008 Zions Bancorporation Value Sharing Plan (the “Plan”) is to provide a three-year incentive plan for selected members of the senior management group and other key managers of Zions Bancorporation and its subsidiaries (the “Company”). It is designed to create long-term shareholder value by focusing the Participant’s attention on improving the Company’s financial results over a three-year period. The Plan is intended to provide for incentive bonus payments, determined as provided herein, which qualify as performance based compensation paid on a short term deferral basis, within the meaning of the regulations and guidance issued by the Internal Revenue Service pursuant to Section 409A of the Internal Revenue Code (“IRS Guidance”). The Company also intends that the compensation payable under the Plan shall be subject to and available for deferral under the terms of the Zions Bancorporation Restated Deferred Compensation Plan (“Zions DC Plan”).

(Eligibility)

2. The Section titled “Eligibility” is amended as follows:

Selected key members of the senior management group and other key managers in the Company its subsidiaries as determined by the Zions Bancorporation Board of Directors (the “Board”) or its Executive Compensation Committee (the “Committee”). In connection with the Plan, the Company shall maintain a written list of those eligible to participate in the Plan who shall be referred to herein as “Participants.”

(Frequency of Awards)

3. The titled “Frequency of Awards” is amended as follows:

Except as provided herein, the incentive bonus payments, if any, earned under this Plan will be paid no later than the 15^th day of the third month following the conclusion of the Award Period.

(Other Administrative Provisions)

4. Section 4, Other Administrative Provisions is amended as follows:

(3) Except as provided in sub-paragraph 4 below, Participants will not vest in any benefits available under the Plan until the conclusion of the Award Period.

(4) In order to receive any payment under the Plan, Participants must be employed by the Company or one of its subsidiaries at the time payment is actually made. This rule shall apply regardless of whether the payment is the initial payment made following the conclusion of the Award Period or the deferred payment described below. Nevertheless, in the event a Participant attains a separation from service on account of death, permanent disability, or normal or early retirement (unless following termination of employment on or after early retirement age the Participant becomes employed by an entity which competes with Zions Bancorporation or any of its subsidiaries), Participant (or his/her estate) shall be eligible to receive a pro-rata incentive payment at the conclusion of the Award Period. This award will be based upon the Participant’s calculated incentive award as approved by the Board or Committee for the performance achieved for the number of full calendar quarters the Participant was employed as an officer of the Company and was a Participant in the Plan prior to death, permanent disability or retirement. For purposes of this Plan, a Participant will not be considered to have terminated employment on account of early retirement before age 55, or on account of normal retirement before age 65, unless otherwise approved by the

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Committee in advance of termination by the Committee. For purposes of the Plan, permanent disability means a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company.

(5) If the amount of the incentive bonus payment due a Participant at the conclusion of the Award Period exceeds 100% of his/her base salary as in effect at December 31, 2008, or at such earlier date on which the Participant’s termination of employment with the Company occurs, then payment of the excess amount shall be deferred and paid following the first anniversary of the conclusion of the Award Period, but in no event later than March 15, 2010. Receipt of the excess incentive bonus payment amount is expressly conditioned on the Participant satisfying the employment conditions established in (4). Nevertheless, if a Participant timely and properly elects, as permitted under the Zions DC Plan, to defer any incentive bonus payment or any excess incentive bonus payment that would otherwise be payable under (4) or (5), the Participant shall be required to be continuously employed by the Company or one of its subsidiaries only through the actual date the payment would have been made under this Plan, but for the Participant’s deferral election made under the Zions DC Plan.

(6) The Company shall retain the right to withhold payment of incentive bonus compensation to Participants in the event of a significant deterioration in the Company’s financial condition, or if so required by regulatory authorities, or for any other reason considered valid by the Board in its sole discretion.

(7) Designation as a Participant in the Plan does not create a contract of employment for any specified time, nor shall such act to alter or amend the Company’s “at-will” policy of employment.

(8) In the event a Participant transfers within the Company during the Award Period, he/she may be eligible to receive a pro-rata award from each participating Zions entity based on the number of months of Participant’s employment in each entity and each entity’s financial performance.

(9) In the event of a change in control of the Company, the Plan will be terminated and payments shall be made in accordance with the provisions of section 3 (b) of the Change in Control Plan (except using the definition of Change of Control set forth herein). Change of control means a change in ownership or effective control of the Company as defined in IRC Regulation 1.409A-3i(5).

(10) This document is intended solely to create a program for the creation and distribution of incentive bonus compensation on a short term deferral basis to a select

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group of management or highly compensated employees. Nothing herein creates a contractual obligation binding on the Board, and no Participant shall have any legal rights with respect to an Award until such Award is actually distributed, whether from this Plan or if deferred, from the Zions DC Plan.

(11) Any distribution under this Plan or the Zions DC Plan which goes to a Specified Employee may not be made before the date which is six months after the date of separation from service (or, if earlier, the date of death of the employee). Specified Employee means a participant who, as of the date of such participant’s Separation from Service is a key employee of the Company (or a member of the control group) if the participant meets the requirements of section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding section 416(i)(5))at any time during the 12 month period ending December 31. The determination date of Specified Employees shall be made as of each January 1. If a participant is a key employee as of January 1, the participant is treated as a key employee for the entire 12 month period beginning on January 1 and ending on December 31.

(12) Separation from service means a participant who is an employee of the Company has died, retired or otherwise has a termination of employment. However, the employment relationship is treated as continuing intact while the employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Company under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the employee will return to perform services for the Company. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29 month period may, at the Company’s discretion, be substituted for such six month period.

(13) Termination of employment occurs when the facts and circumstances indicate that an employee of the Company reasonably anticipate that no further services would be performed after a certain date (whether as an employee or as an independent contractor) or that the level of bona fide services the employee would perform after such date (whether as an employee or an independent contractor) would permanently decrease to no more than 40 percent of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding 36 month period (or the full period services to Company if the employee has been providing services to the Company less than 36 months and in accordance with applicable guidance issued by the Internal Revenue Service.

5. In all other respects the Plan is ratified and approved.

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EX-10.6

EXHIBIT 10.6

ZIONS BANCORPORATION

SECOND RESTATED AND REVISED DEFERRED COMPENSATION PLAN

Restated and Revised Effective as of January 1, 2005

ZIONS BANCORPORATION

SECOND RESTATED AND REVISED

DEFERRED COMPENSATION PLAN

(Effective January 1, 2005)

ARTICLE I

INTRODUCTION

1.1 Restatement of Existing Plan. Zions Bancorporation previously established the Zions Bancorporation Deferred Compensation Plan effective as of January 1, 2001, which Plan was restated in its entirety effective January 1, 2003, and subsequently restated effective January 1, 2004, and restated again in the Zions Bancorporation Restated and Revised Deferred Compensation Plan effective January 1, 2005 (the “First Restatement”). This Second Restated and Revised Deferred Compensation Plan (“Second Restatement”) has the same effective date (January 1, 2005) as the First Restatement. The purpose of the Second Restatement is limited to make those changes necessary to comply with the final regulations issued under Section 409A of the Code (“409A”) which were not anticipated in the First Restatement. The January 1, 2004 restatement is hereinafter referred to as the “Prior Plan”. It was the purpose of the First Restatement and is a purpose of this Second Restatement to have those amounts which were 100% vested and credited to a Deferral Account prior to January 1, 2005 (“Grandfather Amounts”) be governed by the applicable laws and rules governing deferred compensation arrangements, prior to the enactment of Section 409A of the Code (“409A”) together with the provisions of the Prior Plan. Notwithstanding the foregoing, there shall only be one Plan which will include a Deferral Account for Grandfather Amounts and a Deferral Account for post December 31, 2004 deferrals. Accordingly, the provisions of the Prior Plan shall govern that portion of a Participant’s Deferral Account which consists of Grandfather Amounts. Unless specifically provided herein, the provisions of this Plan Document where different from the Prior Plan shall apply only to amounts deferred or vested after December 31, 2004. If the application of any provision of this Plan document, would constitute a “material modification” with respect to Grandfather Amounts under guidance issued by the Service under 409A, then such provision will not be applied to any Grandfather Amounts and the provision of the Prior Plan will control. By this document the Prior Plan is restated and revised as of the Effective Date and to read as set forth hereafter.

1.2 Purpose of Plan. Zions Bancorporation has established this Plan as a continuation of the prior Plan to provide select employees with the opportunity to defer the receipt of compensation and a vehicle through which to do so. Zions Bancorporation intends to maintain the Plan primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Plan will be interpreted in a manner consistent with these intentions.

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1.3 Combined Plans and Successor Plan. With the prior restatement effective January 1, 2003, Zions Bancorporation combined and merged certain plans which provided for deferred compensation. The plans which were combined and merged into the Prior Plan (and jointly referred to hereafter as the “Merged Plans”) are:

Zions Bancorporation Deferred Compensation Plan for Value-Sharing Participants

Zions Bancorporation Executive Management Plan (“SERP”)

Grossmont Bank Deferred Compensation Plan for Key Employees

With the January 1, 2004 restatement and revision those portions of the Merged Plans which provided for continuing contributions from the Company (as hereafter defined) and which were preserved in the Prior Plan (including all related benefits and liabilities) were transferred to the Zions Bancorporation Excess Benefit Plan, which plan has been created by the Company for that purpose. From and after January 1, 2004 no further benefits attributable to Company contributions are available from or accrue under this Plan. All benefits previously provided under the Prior Plan and attributable to Company contributions shall only be payable by and available from the Zions Bancorporation Excess Benefit Plan according to its terms, regardless of the time or manner such benefits may have been previously payable under the Merged Plans or the Prior Plan.

ARTICLE II

DEFINITIONS

Definitions are contained in this article and throughout other sections of the Plan. The location of a definition is for convenience only and should not be given any significance. A word or term defined in this article (or in any other article) will have the same meaning throughout the Plan unless the context clearly requires a different meaning.

2.1 Base Salary means (i) the employee’s base salary paid for each payroll period, including any periodic payment which constitutes a draw or advance against future potential commission payments, and (ii) in the case of an employee whose compensation from the Company contains a commission element, the amount of the commission as paid, excluding any draw or advance received, and without regard to any Bonus(es) or other additional amount(s) paid or payable to the employee.

2.2 Beneficiary means the individual(s) or entity(ies) designated by a Participant, or by the Plan, to receive any benefit payable upon the death of a Participant or Beneficiary. A Beneficiary designation must be signed by the Participant and delivered to the Committee on a form specified by the Committee for that purpose. In the absence of a valid or effective Beneficiary designation, the Beneficiary will be the Participant’s surviving spouse, or if there is no surviving spouse, the Participant’s estate.

2.3 Board means the Board of Directors of the Company.

2.4 Bonus means any periodic or non-periodic payment to the Participant which is not part of the Participant’s Base Salary, including incentive pay, discretionary bonuses and any amount

2

denominated and paid by the Company as a value sharing payment, and which is not otherwise excluded from the definition of Compensation contained in this Plan. For purposes of this Section “discretionary bonus” means any one time annual payment (typically paid in February of each year) and not included in any incentive plan, “incentive pay” means any payment (excluding commissions) made to compensate for meeting established goals or production levels set forth in documented performance plans and value sharing payments means monies paid according to long term based (more than one year) plans.

2.5 Code means the Internal Revenue Code of 1986, as amended from time to time.

2.6 Committee means the Zions Bancorporation Benefits Committee. The Committee will serve as the “plan administrator” to manage and control the operation and administration of the Plan, within the meaning of ERISA Section 3(16)(A).

2.7 Company means Zions Bancorporation, any successor of Zions Bancorporation, and any subsidiary or affiliate of Zions Bancorporation which elects, with the approval of Zions Bancorporation, to become a participating employer under this Plan. Regardless of the adoption of or participation in this Plan by one or more affiliates of Zions Bancorporation, all rights, duties and responsibilities for operation of this Plan, including all rights reserved to amend, alter, supplement or terminate this Plan, shall remain exclusively with and be exercised solely by the Board of Directors of Zions Bancorporation, unless such rights or duties are specifically allocated or assigned under this Plan by the Board to the Committee or by Zions Bancorporation to one or more participating employers.

2.8 Compensation means the employee’s Base Salary, Bonus(es) and any amounts withheld by salary reduction under Code §§125 or 401(k), or under this Plan. Compensation excludes any other form of remuneration paid or payable to an Eligible Employee, such as restricted stock, stock options, proceeds from stock options or stock appreciation rights, severance payments, moving expenses, car or other special allowances, and any other amounts, whether or not included in an Eligible Employee’s taxable income. Deferral elections under Article III and Company contribution credits under Article IV shall be computed before taking into account any reduction in an Eligible Employee’s Compensation by salary reduction election under Code §§125 or 401(k), or deferral election under this Plan.

2.9 Deferral Account means a bookkeeping account established for and maintained on behalf of a Participant to which Compensation amounts are deferred, and net income (or losses) thereon, are credited under this Plan. The Participant’s Deferral Account shall also include and reflect all amounts previously credited to the Participant under any of the Merged Plans in which the Participant had a credit amount as of the day before the Effective Date, as well as all amounts credited under the Prior Plan on the day before the Effective Date, but only to the extent such amounts are attributable to deferrals under a Deferred Compensation Agreement or similar arrangement provided in a Merged Plan.

2.10 Deferred Compensation Agreement means an agreement described in Section 3.4 and entered into by a Participant and the Company to reduce the Participant’s Compensation for a specified period of time and to credit such amounts to the Plan for distribution at a specified time in the future in accordance with Article III.

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2.11 Disability means a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company. This definition of Disability shall apply to Grandfather Amounts.

2.12 Effective Date means January 1, 2005, the date this Plan, as restated and revised, shall be effective. The original effective date of the Plan is January 1, 2001. Notwithstanding the foregoing, amounts deferred and vested under the Plan prior to January 1, 2005 shall not be subject to any amendments to the Plan with an effective date subsequent to December 31, 2004.

2.12 Eligible Employee means a common law employee of the Company who:

(a) on the day before the Effective Date was a participant in this Plan; or

(b) has or is projected to have Compensation in excess of $130,000 or such other amount established by the Committee for the Plan Year commencing on the Effective Date and for any Plan Year thereafter (or such greater dollar amount as determined and announced by the Committee from year to year); and

(c) having satisfied (a) or (b), is identified by the Committee and designated as eligible to participate in the Plan;

For purposes of determining as of any given date whether the Eligible Employee’s Compensation will satisfy (b) above, the Committee may project the Eligible Employee’s current rate of Compensation on a Plan Year basis. The Committee may adjust the dollar amount in (b) above from year to year consistent with any index selected by the Committee for this purpose, without further written amendment to this Plan. Except as otherwise provided in Section 3.1 (concerning an individual who ceases to be an Eligible Employee) and Section 3.3 (concerning an individual who first becomes an Eligible Employee on or after the first day of a Plan Year), an individual’s status as an Eligible Employee for a Plan Year shall be determined immediately prior to the first day of the Plan Year. An individual’s status who becomes an Eligible Employee on or after the first day of a Plan Year but prior to the next calendar quarter shall be determined prior to that calendar quarter. Notwithstanding the foregoing, the Committee may determine in writing that an otherwise Eligible Employee shall not be eligible to participate in this Plan.

2.13 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.14 Excess Benefit Plan means the Zions Bancorporation Excess Benefit Plan, which plan has been created by the Company effective January 1, 2004, as the partial successor to the

4

Merged Plans for the sole purpose of providing benefits to certain Employees which are determined through the Merged Plans, but through means other than deferral of Compensation under a Deferred Compensation Agreement.

2.15 Hardship means an unforeseeable emergency which is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in section 152 of the Code without regard to section 152(b)(1), (b)(2) and (d)(1)(b)); loss of the Participant’s property due to casualty (including a need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an unforeseeable emergency. In addition, the need to pay medical expenses, including nonrefundable deductibles, as well as for the costs of prescription drug medication may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse, a beneficiary, or a dependent (as defined in section 152 of the Code without regard to section 152(b)(1), (b)(2) and (d)(1)(b)) may also constitute an unforeseeable emergency. Generally the purchase of a home or the payment of college tuition are not unforeseeable emergencies. Whether a Participant is faced with an unforeseeable emergency is to be determined based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of assets would not cause severe financial hardship, or by cessation of deferrals under the plan. A Hardship and any resulting distribution will be determined in accordance with section 409A of the Code and guidance issued by the Service there under. The Committee will have sole discretion to determine whether a Hardship condition exists and the amount of the distribution. The Committee’s determination will be final.

A Participant must submit a written request for a distribution based on Hardship to the Committee on the form and in the manner prescribed by the Committee. The Hardship request must: (i) describe and certify the Hardship condition substantiating the severe unforeseeable emergency and all circumstances necessary to meet the definition of Hardship; (ii) state the amount the Participant requests as a withdrawal of all or a portion of his Deferral Account; and (iii) demonstrate the amounts requested to be distributed do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay any federal, state, local, or foreign income taxes or penalties reasonably anticipated as a result of the distribution. Determinations of amounts necessary to satisfy an emergency must take into account any additional compensation that will be made available due to the restriction on further deferrals set forth below in this Section. The Committee will have sole discretion to determine whether a Hardship exists and to determine the appropriate action, if any, provided however, in no event will the Committee approve a Hardship distribution request for expenses related to any medical condition or expenses related to the death of any person unless the request for distribution is submitted to the Committee and approved by the Committee for Hardship distribution prior to the date on which the expense is incurred. The Committee, in its sole discretion, may make exception to the foregoing rule if it determines that the circumstances creating the expense for which

5

reimbursement is sought were not reasonably foreseeable. Regardless of whether the Participant desires to reduce or cease any Compensation amounts to be deferred after the Hardship request is made, the Participant will be precluded from deferring Compensation for the remainder of the Plan Year in which a Hardship is approved by the Committee.

2.16 Insolvent means the Company is (i) unable to pay its debts as they become due or (ii) subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

2.17 Investment Options means the investments designated by the Committee as the basis for determining the earnings return to be allocated to Participants’ Deferral Accounts. The Committee may change Investment Options at such times as it deems appropriate.

2.18 Participant means an Eligible Employee who is eligible to participate in the Plan as provided in Section 3.1 and who has made an election to defer Compensation pursuant to Section 3.2.

2.19 Plan means the Zions Bancorporation Restated Deferred Compensation Plan, as set forth in this document, as amended from time to time.

2.20 Plan Year means the Company’s fiscal year, beginning January 1 and ending December 31.

2.21 Retirement Age means, while employed by the Company, attainment of age 55 with 10 Years of Service (“Early Retirement Age”), or attainment of age 65, without regard to Years of Service.

2.22 Service means the Internal Revenue Service of the United States.

2.23 Specified Employee means a Participant who, as the date of such Participant’s Separation from Service is a key employee of the Company if the Participant meets the requirements of section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding section 416(i)(5))at any time during the 12 month period ending December 31. The determination date of Specified Employees shall be made as of each January 1. If a Participant is a key employee as of January 1, the Participant is treated as a key employee for the entire 12 month period beginning on January 1 and ending on December 31.

2.24 Year of Service means, with respect to a Participant, a calendar year during which the Eligible Employee was in full time employment with the Company for the entire year. Full time employment shall be determined according to the rules adopted and utilized by the Company to classify full time employees.

2.25 Separation from Service means a Participant who is an employee of the Company has died, retired or otherwise has a Termination of Employment. However, the employment relationship is treated as continuing intact while the employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Company under an

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applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the employee will return to perform services for the Company. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29 month period may, at the Company’s discretion, be substituted for such six month period.

Section 2.26 Termination of Employment occurs when the facts and circumstances indicate that an employee and the Company reasonably anticipate that no further services would be performed after a certain date (whether as an employee or as an independent contractor) or that the level of bona fide services the employee would perform after such date (whether as an employee or an independent contractor) would permanently decrease to no more than 40 percent of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding 36 month period (or the full period services to the Company if the employee has been providing services to the Company less than 36 months) and in accordance with applicable guidance issued by the Internal Revenue Service.

ARTICLE III

PARTICIPATION

3.1 Eligibility. An Eligible Employee of the Company shall participate in the Plan only to the extent and for the period that the Eligible Employee satisfies the definition of Eligible Employee in this Plan, is selected by the Committee to participate and is a member of a select group of management or highly compensated employees, as such group is described under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. An individual who is an Eligible Employee as of the first day of the Plan Year but who ceases to be an Eligible Employee during the Plan Year shall continue to participate in the Plan with respect to any Deferred Compensation Agreements in effect for the Plan Year, but shall terminate participation as of the end of such Plan Year. The Participant shall not be permitted to enter into any new Deferred Compensation Agreements with the Company unless and until the individual again becomes an Eligible Employee.

3.2 Participation. An Eligible Employee who participates in the Plan may elect to defer the receipt of compensation earned by the Eligible Employee by executing an agreement as described in Section 3.4. The Eligible Employee shall make the election in accordance with Section 3.3. The Company shall withhold amounts deferred by the Participant in accordance with this election. The Participant’s deferred amounts shall be credited to the Deferral Account as provided in Article V and distributed in accordance with Article VI. An election to defer receipt of Compensation shall continue in effect for a given Plan Year unless the Participant separates from employment.

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3.3 Election Procedure. An election to defer Compensation under an agreement described in Section 3.4 shall be made prior to the beginning of each Plan Year and must be made by completing a Deferred Compensation Agreement in accordance with procedures prescribed by the Committee. The Agreement must be completed during the election period established by the Committee which shall require that the Deferred Compensation Agreement be completed prior to the first day of the Plan Year for which Compensation shall be earned. Provided however, that an individual who becomes an Eligible Employee for the first time on or after the first day of a Plan Year shall be permitted to make an election to defer Compensation by completing a Deferred Compensation Agreement in accordance with procedures prescribed by the Committee, no later than the 30^th day after such person becomes eligible to participate in the Plan. The deferral shall commence as soon as practicable under procedures established by the Committee. An Eligible Employee or a Participant who fails to timely complete a Deferred Compensation Agreement in accordance with the procedures prescribed by the Committee shall not participate in the Plan for the year for which the failure occurs.

3.4 Deferred Compensation Agreement. A Deferred Compensation Agreement shall remain in effect only for the Plan Year for which it is executed. The Deferred Compensation Agreement shall apply to all Compensation as defined in Section 2.8 and earned after the date on which the Agreement is effective. The Agreement shall state the amount of Compensation that shall be deferred for the Plan Year, and the time and manner of distribution. The Agreement may permit the Participant to elect different deferral amounts for Base Salary and various Bonus components, such as discretionary bonuses, incentive pay and long-term based bonuses (value sharing bonuses) payable to the Eligible Employee for the Plan Year, subject to the following:

(a) Base Salary. A Participant shall be permitted to defer a maximum of fifty (50%) of Base Salary earned in a Plan Year. In the case of a Participant whose Base Salary contains a commission element, the Participant shall be permitted to defer a maximum of fifty percent (50%) of all commissions earned in the Plan Year.

(b) Bonus. A participant shall be permitted to defer a maximum of one hundred (100%) of all amounts otherwise includible as Bonus pay (as defined in Section 2.4) with respect to a Plan Year.

(c) No Minimum Deferral. There shall be no minimum deferral percentage which may be elected by an Eligible Employee, whether applicable to Base Salary, Bonus or both. Nevertheless, the Committee may, in its discretion, establish without further written amendment to this Plan a minimum deferral percentage amount, incremental deferral percentage or minimum dollar amount applicable to Base Salary or Bonus(es) for any given Plan Year.

(d) Hardship Withdrawal Request. All deferrals by an Eligible Employee for the remainder of the Plan Year shall cease in the event the Committee approves a request of the Eligible Employee for a Hardship withdrawal for that Plan Year. No cessation of deferrals shall affect any limit established pursuant to Section 3.4(c)

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above, and no deferral amounts so reduced or not made shall be required to be made in addition to any future deferrals that are not affected by the Hardship request. This rule shall also apply in the same manner if the hardship withdrawal is made by the Eligible Employee from the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan.

3.5 Irrevocable Election. A Participant’s Deferred Compensation Agreement for a given Plan Year cannot be amended by the Participant and, except as provided in Section 3.4(d) and this Section 3.5, is irrevocable. Any change as to the timing or manner of payment of benefits already credited to a Participant’s Deferral Account (i) must be accomplished by a Participant in accordance with procedures prescribed by the Committee; (ii) will not take effect sooner than the earliest date allowable under 409A; (iii) with respect to a postponement of a distribution (excluding payments for death, Disability or Hardship) the amended election must be completed in accordance with procedures prescribed by the Committee at least 12 months prior to the date the distribution was scheduled to begin; and (iv) no acceleration in payment of a distribution may occur in violation of 409A. The Company reserves the right to modify any Deferred Compensation Agreement to reflect a change in Plan provisions or for administrative convenience, so long as such change complies with section 409A of the Code and does not affect amounts deferred prior to January 1, 2005.

A Participant’s election to defer Compensation under the Deferred Compensation Agreement shall become null and void upon the Participant’s termination from employment with the Company, and no Compensation that may be payable after the Participant terminates from employment with the Company and otherwise would be subject to such Agreements shall be deferred under this Plan.

Until December 31, 2007 or such other time as allowed by the Internal Revenue Service, a Participant may amend an existing Deferred Compensation Agreement or complete a new Deferred Compensation Agreement modifying the time and/or form of payment of all or a portion of such Participant’s Deferral Account without regard to the requirement in Section 409A(a)(4) that postponement in starting date for a distribution be for a minimum of five years from the previously selected payment start date. Any such amendment or new election must be made on or before December 31, 2007(or such other date as allowed by the Internal Revenue Service) and must not take effect earlier than 12 months from the date of such amendment .

ARTICLE IV

COMPANY CONTRIBUTIONS

4.1 No Company Contributions. The Company shall not make or credit any contributions to the Plan beyond the amounts determined under each Participant’s Deferral Compensation Agreement.

4.2 Vesting. A Participant’s interest in the amounts in his or her Deferral Account attributable to (i) Compensation deferred pursuant to Sections 3.2 through 3.4 of the Plan and (ii)

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any earnings credited to the Participant’s Deferral Account pursuant to Section 5.5, shall be at all times fully vested and nonforfeitable. Notwithstanding the foregoing, all amounts in a Participant’s Deferral Account, including earnings thereon, shall be subject to offset as described in the next paragraph.

The amounts in the Participant’s Deferral Account, including earnings thereon, shall be subject to offset (without regard to prior vested status or whether payment of such amounts has commenced under Article 6) in the event and to the extent that the Company obtains through arbitration, a court proceeding or a combination of both, an award/judgment against such Participant. In the event that proceedings have been instituted to allow the Company to obtain an award or judgment against such Participant, such Participant’s account will be frozen and no payments will be made until the proceedings have been completed. If the Company is successful in obtaining a judgment/award against such Participant, the Company shall have a right of offset against such Participant’s account for the full amount of the judgment/award including costs and attorney’s fees.

ARTICLE V

PARTICIPANT ACCOUNT BALANCES

5.1 Establishment of Accounts. The Committee may select an independent record keeper (who may be an affiliate of the Company) to establish and maintain a Deferral Account on behalf of each Participant. Contributions and net income (or losses) will be credited to each Deferral Account in accordance with the provision of this Article.

5.2 Bookkeeping. Deferral Accounts will be primarily for accounting purposes and will not restrict the operation of the Plan or require separate earmarked assets to be allocated to any account. The establishment of a Deferral Account will not give any Participant the right to receive any asset held by the Company in connection with the Plan or otherwise.

5.3 Crediting Deferred Compensation. The Committee will credit to a Participant’s Deferral Account any amount deferred by the Participant as soon as practicable following the pay period to which such amount would have been paid to the Participant absent a Deferred Compensation Agreement.

5.4 Establishment of Investment Options. The Committee, in its sole discretion, will establish one or more Investment Options which will be maintained for the purpose of determining the amount of investment earnings to be credited to a Participant’s Deferral Account. The Committee may change from time to time the number, identity or composition of the Investment Options or discontinue the availability of any Investment Option. The Investment Options will reflect investment choices which are available in the marketplace for self directed accounts in retirement plans and may be (but need not be) the same investment choices available through any qualified retirement plan sponsored by the Company.

Pursuant to rules adopted by the Committee each Participant will indicate the Investment Options to which contributions under Section 5.3 and any existing Deferral Account balances

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shall be deemed credited. Investment Option elections of Participants must be made in whole percentage increments and at such times and in such manner as the Committee will specify. A Participant may change his or her Investment Option at any time and in such manner as the Committee shall specify. Each Participant shall be provided from time to time with the earnings “results” from the selected Investment Options. The Company’s liability to the Participant for amounts in the Deferred Compensation Account will include gains and losses attributed to the Investment Options selected by the Participant.

5.5 Crediting Investment Results. A Participant’s Deferral Account balance will be credited with the earnings of the Investment Options selected by the Participant and will be increased or decreased to reflect investment results, as they occur. While the credited investment return to the Participant’s Deferral Account is intended to reflect the actual performance of the Investment Options, net of any investment or management fees, in which the Participant is deemed invested, nevertheless, no provision of this Plan shall be interpreted to require the Company to actually invest any amounts in any particular Investment Option or any other fund, whether or not the fund is one of the Investment Options available for selection by Participants in the Plan.

5.6 Notification to Participants. The Committee shall notify each Participant with respect to the status of the Participant’s Deferral Account as soon as practicable after the end of each Plan Year. Neither the Company nor the Committee to any extent warrants, guarantees or represents that the value of any Participant’s Deferral Account at any time will equal or exceed the amount previously allocated or contributed thereto.

ARTICLE VI

DISTRIBUTION OF ACCOUNTS

6.1 Distribution Upon Separation from Service or Attainment of Retirement Age. A Participant who has a Separation from Service, whether before or after attaining Retirement Age, shall receive his vested Deferral Account upon Separation from Service unless a later date is elected by the Participant in the Deferred Compensation Agreement.

6.2 Time of Payment. A Participant’s vested Deferral Account balance shall be paid (or commence to be paid) not later than the later of December 31 of the year in which such Participant right to payment occurred or the 15th day of the third month following such date.

6.3 Manner of Payment. A Participant’s vested Deferral Account will be paid in accordance with the election the Participant made in the Deferred Compensation Agreement. The Deferred Compensation Agreement shall provide the Participant a right to elect a lump sum cash payment, or a series of substantially equal separate monthly payments over a period of five (5), ten (10), fifteen (15) or twenty (20) years. If no election has been made by the Participant, the Deferral Account will be paid in a series of substantially equal monthly payments over a period of five years. The final monthly installment payment shall be the remaining balance in the Participant’s Deferral Account on the date the payment is made.

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6.4 Distribution of Small Accounts Upon Separation from Service. A Participant who has a Separation from Service and who, at the time of Separation from Service has a balance in his or her Deferral Account which is not more than Ten Thousand Dollars ($10,000.00) shall receive the amounts credited to his/her Deferral Account in a lump sum cash payment only. The lump sum shall be paid not later than the later of December 31 of the year in which such Participant terminated or the 15th day of the third month following such Participant’s separation from service. For purposes of this Section 6.4, the value of a Participant’s Deferral Account to be distributed shall be determined as of the date the payment is made, and shall be credited with earnings through that date.

6.5 Distribution Upon Death. In the event a Participant dies prior to receiving all of his or her vested Deferral Account, the Participant’s Beneficiary shall receive the unpaid portion of the Participant’s Deferral Account in same manner as had been elected by the Participant prior to his/her death. For purposes of this Section 6.5, the value of a Participant’s Deferral Account to be distributed shall be determined as of the date the payment is made, and shall be credited with earnings through such date and, in the case of a Participant who dies while employed with the Company, any deferred amounts that would have been credited to the account if the Participant had continued employment with the Company through such date.

6.6 Distribution in the Event of Hardship. Prior to a distribution under Sections 6.1 or 6.5, payment of all or a portion of a Participant’s vested Deferral Account may be made in the event of Hardship. The amount of any Hardship distribution will not exceed the amounts allowable under IRS Guidelines. A Hardship distribution shall be made in a single sum cash payment as soon as practicable after the Committee approves the Hardship withdrawal request.

6.7 Cash Payments Only. All distributions under the Plan will be made in cash by check, unless in the sole discretion of the Company it determines to make a distribution in kind (or partly in kind and partly in cash) from the account, if any, which the Company has established to provide a source of payment for the benefits due a Participant. In the event of a distribution of property, the property will be valued at fair market value as of the date of distribution.

6.8 Disability. For the purposes of Sections 6.4 and 6.5, in the event of a Participant’s Disability, the Participant will be considered to have attained a Termination of Employment as of the first day the Participant first meets the definition of Disability.

6.9 Specified Employee. Notwithstanding any other provision of this Article VI, any distribution to a Specified Employee may not be made before the date which is 6 months after the date of Separation from Service (or, if earlier, the date of death of the Specified Employee).

6.10 Grandfather Amounts. Grandfather amounts shall be governed by the plan language which was effective prior to January 1, 2005.

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ARTICLE VII

PLAN ADMINISTRATION

7.1 Plan Administrator. This Plan shall be administered by the Committee, which will be the Plan Administrator. The Committee members shall be appointed by and serve at the pleasure of the Board.

7.2 Amendment or Termination. To the extent permitted under this Plan or authorized by the Board of Directors of Zions Bancorporation, the Committee may amend any provision of this Plan at any time and for any reason. Only the Board of Directors of Zions Bancorporation may terminate the Plan in its entirety. No amendment or termination of the Plan will reduce any Participant’s Deferral Account balance as of the effective date of such amendment or termination. Upon termination of the Plan in its entirety, each Participant’s Deferral Account shall be distributed to the Participant at the times and in accordance with the distribution rules set forth in Article VI. Notwithstanding the foregoing, no amendment shall be made to the Plan with respect to any amount deferred and vested prior to January 1, 2005 unless such amendment explicitly provides that it is applicable to such amount; and except as the Committee otherwise determines in writing, no distribution shall be made upon termination of the Plan if such distribution shall be subject to the excise tax applicable under section 409A of the Code.

7.3 Administration of the Plan. The Committee shall have the sole authority to control and manage the operation and administration of the Plan and have all powers, authority and discretion necessary or appropriate to carry out the Plan provisions, and to interpret and apply the terms of the Plan to particular cases or circumstances. All decisions, determinations and interpretations of the Committee will be binding on all interested parties, subject to the claims and appeal procedure necessary to satisfy the minimum standard of ERISA Section 503, and will be given the maximum deference allowed by law. The Committee may delegate in writing its responsibilities as it sees fit.

Committee members who are Participants will abstain from voting on any Plan matters that relate primarily to themselves or that would cause them to be in constructive receipt of amounts credited to their respective Deferral Account. The Board will identify three or more individuals to serve as a temporary replacement of the Committee members in the event that all three members must abstain from voting.

7.4 Indemnification. The Company will and hereby does indemnify and hold harmless any of its employees, officers, directors or members of the Committee who have fiduciary or administrative responsibilities with respect to the Plan from and against any and all losses, claims, damages, expenses and liabilities (including reasonable attorneys’ fees and amounts paid, with the approval of the Board, in settlement of any claim) arising out of or resulting from the implementation of a duty, act or decision with respect to the Plan, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

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7.5 Claims Procedure. A Participant or his Beneficiary (the “Claimant”) may file a written claim for benefits under the Plan with the Committee. Within sixty (60) days of the filing of the claim, the Committee shall notify the Claimant of the Committee’s decision whether to approve the claim. Such notice shall include specific reasons for any denial of the claim. Within sixty (60) days of the date the Claimant was notified of the denial of a claim, the Claimant may appeal the Committee’s decision by making a written submission containing any pertinent information. Any decision not appealed within such sixty (60)-day period shall be final, binding and conclusive. The Committee shall review information submitted with an appeal and render a decision within sixty (60) days of the submission of the appeal. If it is not feasible for the Committee to render a decision on an appeal within the prescribed sixty (60)-day period, the period may be extended to a one hundred twenty (120)-day period.

7.6 Limitations of Actions on Claims. The delivery to the Participant of the final decision of the Committee with respect to a claim for benefits which has been reviewed and considered under the appeal procedures of Section 7.5 shall commence the period during which the Participant may bring legal action for judicial review of the Committee’s decision. No civil action with respect to the claim for benefits or the subject matter thereof may be commenced by the Participant, whether such action is pursued through litigation, arbitration or otherwise, prior to the completion of the claims and claims review process set forth in Section 7.5, nor following the expiration of two (2) years from the date of delivery of the final decision of the Committee to the Participant under Section 7.5.

ARTICLE VIII

MISCELLANEOUS

8.1 Trust for Deferral Accounts. The Committee shall determine the amounts it deems necessary or appropriate to satisfy the Company’s obligation to pay the Deferral Accounts at the appropriate time to Participants and Beneficiaries. Such amounts shall be held in a trust established by the Company for this purpose with a trustee selected by the Committee. The trust shall be an asset of the Company and shall be earmarked to pay benefits under the terms of the Plan.

The trust shall provide that its assets may not be diverted to, or used for, any purpose except payments to Participants and Beneficiaries under the terms of the Plan or, if the Company is Insolvent, to pay the Company’s creditors. Participants and Beneficiaries will have no right against the Company or the trust with respect to the payment of any portion of the Participant’s Deferral Account, except as a general unsecured creditor of the Company.

8.2 Non-alienation. No benefit or interest of any Participant or Beneficiary under this Plan will be subject to any manner of assignment, alienation, anticipation, sale transfer, pledge or encumbrance, whether voluntary or involuntary. Notwithstanding the foregoing, the Committee will honor community property or other marital property rights, but only to the extent required by law. Prior to distribution to a Participant or Beneficiary, no Deferral Account balance will be

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in any manner subject to the debts, contracts, liabilities, engagements or torts of the Participant or Beneficiary. Assets held in trust to fund this Plan may, however, be diverted to pay the Company’s creditors, if the Company is Insolvent.

8.3 Domestic Relations Order. In the event the Committee receives a Domestic Relations Order from a potential Alternate Payee, the Committee shall promptly notify the Participant, or Beneficiary whose benefit is the subject of such order and provide him/her with information concerning the Plan’s procedures for administering QDROs. Unless and until the order is set aside, the following provisions shall apply:

(a) Committee Determination. The Committee shall within a reasonable time determine whether the order is a QDRO and shall notify the Participant or Beneficiary whose benefit is the subject of the order, of its determination. The Committee may designate a representative to carry out its duties under this provision.

(b) Compliance with Section 409A. Nothing in this Section 8.3(b) shall be deemed to allow payment under a QDRO to an Alternate Payee of any benefit which would violate Section 409A of the Code and any regulations promulgated hereunder and no payment shall occur prior to the date that the Participant whose benefits are subject to the QDRO would have been entitled to receive payment in accordance with any Deferred Compensation Agreement in existence as of the date of the QDRO. In the event that the QDRO applies to deferrals which occur after the date of the QDRO, the Alternate Payee shall be entitled to a distribution on such future deferrals on the date that the Participant would have been entitled to receive payment

8.4 QDRO definitions. For purposes of 5 the following definitions and rules shall apply:

(a) “Alternate Payee” shall mean any spouse, former spouse, child or other dependent of a Participant who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant.

(b) “Domestic Relations Order” shall mean any judgment, decree, or order (including approval of a property settlement agreement) which:

(i) relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Participant; and

(ii) is made pursuant to a state domestic relations law (including a community property law).

(c) “Qualified Domestic Relations Order” shall mean any Domestic Relations Order which satisfies the criteria set forth as a QDRO under policies established by the Committee.

8.5 Limitation of Rights. Nothing in this Plan will be construed to give a Participant the right to continue in the employ of the Company at any particular position or to interfere with

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the right of the Company to discharge, lay off or discipline a Participant at any time and for any reason, or to give the Company the right to require any Participant to remain in its employ or to interfere with the Participant’s right to terminate his or her employment.

8.6 Section 409A. This Plan is intended to meet the requirements of 409A, and shall be administered in a manner that is intended to meet those requirements and shall be construed and interpreted in accordance with such intent. To the extent that a distribution, payment, or the settlement or deferral thereof, is subject to 409A, except as the Committee otherwise determines in writing, the award shall be granted, paid, settled or deferred in a manner that will meet the requirements of 409A, including regulations or other guidance issued with respect thereto, such that the grant, payment, settlement or deferral shall not be subject to the excise tax applicable under 409A. Any provision of this Agreement that would cause the award or the payment, settlement or deferral thereof to fail to satisfy 409A shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under 409A. Notwithstanding foregoing, where allowable under 409A, Grandfather Amounts will not be subject to 409A.

8.7 Governing Law. To the extent that state law applies, the provisions of this Plan will be construed, enforced and administered in accordance with the laws of the state of Utah, except to the extent pre-empted by ERISA.

8.8 Grandfather Amounts. Grandfather amounts shall be governed by the plan language which was effective December 31, 2004

8.9 Reorganization. The Company shall not merge or consolidate into or with another entity, or reorganize, or sell substantially all its assets to another entity or undergo a change of control as defined in section 409A or any existing change of control agreement until the successor entity agrees to assume and discharge the obligations of the Company under this Plan and any Deferred Compensation Agreement under this Plan.

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EX-10.7

EXHIBIT 10.7

ZIONS BANCORPORATION

THIRD RESTATED DEFERRED COMPENSATION PLAN FOR DIRECTORS

(Effective January 1, 2005)

ARTICLE I

INTRODUCTION

1.1 Restatement of Existing Plan. Zions Bancorporation previously established the Zions Bancorporation Deferred Compensation Plan for Directors effective April 23, 1986 (“Original Plan”). The Original Plan was amended effective as of May 1, 1991 and again effective July 1, 2003 (“Prior Plan”) and amended effective January 1, 2005 (“Second Restated Plan”). It is a purpose of this Plan to have those amounts which were 100% vested and credited to a Deferral Account prior to January 1, 2005 (“Grandfather Amounts”) be governed by the applicable laws and rules governing deferred compensation arrangements, prior to the enactment of Section 409A of the Code (“409A”) together with the provisions of the Prior Plan. Notwithstanding the foregoing, there shall only be one Plan which will include a Deferral Account for Grandfather Amounts and a Deferral Account for post December 31, 2004 deferrals. Accordingly, the provisions of the Prior Plan shall govern that portion of a Participant’s Deferral Account which consists of Grandfather Amounts. Unless specifically provided herein, the provisions of this Plan Document where different from the Prior Plan shall apply only to amounts deferred and vested after December 31, 2004. If the application of any provision of this Plan document, would constitute a “material modification” with respect to Grandfather Amounts under guidance issued by the Service under 409A, then such provision will not be applied to any Grandfather Amounts and the provision of the Prior Plan will control. By this document the Second Restated Plan is restated and revised as of the Effective Date and to read as set forth hereafter.

1.2 Purpose of Plan. Zions Bancorporation has established this Plan to provide members of the Board of Directors of Zions Bancorporation and members of the Board of Directors of participating subsidiaries of Zions Bancorporation the opportunity to defer the receipt of compensation paid to them for their services as members of the respective Boards of Directors until such time as they are entitled to receive the compensation under the provisions of this Plan. Zions Bancorporation intends to maintain the Plan solely for the foregoing purpose and to comply at all times with Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Plan will be interpreted in a manner consistent with these intentions.

ARTICLE II

DEFINITIONS

Definitions are contained in this article and throughout other sections of the Plan. The location of a definition is for convenience only and should not be given any significance. A word or term defined in this article (or in any other article) will have the same meaning throughout the Plan unless the context clearly requires a different meaning.

2.1 Beneficiary means the individual(s) or entity(ies) designated by a Participant, or by the Plan, to receive any benefit payable upon the death of a Participant or Beneficiary. A Beneficiary designation must be executed by the Participant and delivered to the Committee pursuant to procedures specified by the Committee for that purpose. In the absence of a valid or effective Beneficiary designation, the Beneficiary will be the Participant’s surviving spouse, or if there is no surviving spouse, the Participant’s estate.

2.2 Board means the Board of Directors of the Company or the Board of Directors of a participating affiliate or subsidiary of the Company.

2.3 Code means the Internal Revenue Code of 1986, as amended from time to time.

2.4 Committee means the Zions Bancorporation Benefits Committee. The Committee will serve as the “plan administrator” to manage and control the operation and administration of the Plan, within the meaning of ERISA Section 3(16)(A).

2.5 Company means Zions Bancorporation, any successor to Zions Bancorporation, and any subsidiary or affiliate of Zions Bancorporation which elects, with the approval of Zions Bancorporation, to participate in this Plan. In the event one or more affiliates or subsidiaries of Zions Bancorporation participate in this Plan, all rights, duties and responsibilities for operation of this Plan, including all rights reserved to amend, alter, supplement or terminate this Plan, shall remain exclusively with and be exercised solely by Zions Bancorporation, unless specifically allocated by Zions Bancorporation to one or more of the participating affiliates or subsidiaries.

2.6 Compensation means the remuneration paid to a Director for the services provided by the Director to the Company in the capacity as a member of the Board, including remuneration for services on any sub-committee or division of the Board, but excluding (i) any amount paid solely to reimburse the Director for expenses incurred, and (ii) any amounts credited as earnings under this Plan. Deferral elections under this Plan shall be computed on the amount of the Director’s Compensation.

2.7 Deferral Account means a bookkeeping account established for and maintained on behalf of a Participant to which Compensation amounts are deferred, and net income (or losses) thereon, are credited under this Plan.

2.8 Deferred Compensation Agreement means an agreement described in Section 3.4 and entered into by a Participant and the Company to reduce the Participant’s Compensation for a specified period and contribute such amounts to the Plan, in accordance with Article III.

2.9 Director means a member of the Board of Zions Bancorporation or any other participating Company.

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2.10 Disability means “disability” (or similar term) a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company.

2.11 Effective Date means January 1, 2005, the date this Plan, as restated, shall be deemed effective. The original effective date is April 23, 1986. Notwithstanding the foregoing, amounts deferred and vested under the Plan prior to January 1, 2005 shall not be subject to any amendments to the Plan with an effective date subsequent to December 31, 2004.

2.12 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.13 Hardship means an unforeseeable emergency which is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in section 152 of the Code without regard to section 152(b)(1), (b)(2) and (d)(1)(b)); loss of the Participant’s property due to casualty (including a need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an unforeseeable emergency. In addition, the need to pay medical expenses, including nonrefundable deductibles, as well as for the costs of prescription drug medication may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse, a beneficiary, or a dependent (as defined in section 152 of the Code without regard to section 152(b)(1), (b)(2) and (d)(1)(b)) may also constitute an unforeseeable emergency. Generally the purchase of a home or the payment of college tuition are not unforeseeable emergencies. Whether a Participant is faced with an unforeseeable emergency is to be determined based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of assets would not cause severe financial hardship, or by cessation of deferrals under the plan. A Hardship and any resulting distribution will be determined in accordance with section 409A of the Code and guidance issued by the Service there under. The Committee will have sole discretion to determine whether a Hardship condition exists and the amount of the distribution. The Committee’s determination will be final.

A Participant must submit a written request for a distribution based on Hardship to the Committee on the form and in the manner prescribed by the Committee. The Hardship request must: (i) describe and certify the Hardship condition substantiating the severe unforeseeable emergency and all circumstances necessary to meet the definition of Hardship; (ii) state the amount the Participant requests as a withdrawal of all or a portion of his Deferral Account; and

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(iii) demonstrate the amounts requested to be distributed do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay any federal, state, local, or foreign income taxes or penalties reasonably anticipated as a result of the distribution. Determinations of amounts necessary to satisfy an emergency must take into account any additional compensation that will be made available due to the restriction on further deferrals set forth below in this Section. The Committee will have sole discretion to determine whether a Hardship exists and to determine the appropriate action, if any, provided however, in no event will the Committee approve a Hardship distribution request for expenses related to any medical condition or expenses related to the death of any person unless the request for distribution is submitted to the Committee and approved by the Committee for Hardship distribution prior to the date on which the expense is incurred. The Committee, in its sole discretion, may make exception to the foregoing rule if it determines that the circumstances creating the expense for which reimbursement is sought were not reasonably foreseeable. Regardless of whether the Participant desires to reduce or cease any Compensation amounts to be deferred after the Hardship request is made, the Participant will be precluded from deferring Compensation for the remainder of the Plan Year in which a Hardship is approved by the Committee.

2.14 Insolvent means the Company is (i) unable to pay its debts as they become due or (ii) subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

2.15 Investment Fund or Funds means the investment funds designated by the Committee as the basis for determining the investment return to be allocated to Participants’ Deferral Accounts. The Committee may change the Investment Funds at such times as it deems appropriate.

2.16 Participant means a Director who is eligible to participate in the Plan as provided in Section 3.1 and who has made an election to defer Compensation pursuant to the Plan.

2.17 Plan means the Zions Bancorporation Second Restated Deferred Compensation Plan for Directors, as set forth in this document, and as further amended from time to time.

2.18 Plan Year means the Company’s fiscal year, beginning January 1 and ending December 31.

ARTICLE III

PARTICIPATION

3.1 Eligibility. A Director shall be eligible to participate in the Plan only to the extent and for the period that the Director continues as a member of the Board and receives Compensation. An individual who is a Director as of the first day of the Plan Year but who ceases to be a Director during the Plan Year shall continue to participate in the Plan with respect to any Deferred Compensation Agreements in effect for the Plan Year, but shall terminate participation as of the end of the Plan Year. The Participant shall not be permitted to enter into any new Deferred Compensation Agreements with the Company unless and until the individual again becomes a Director.

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3.2 Participation. A Director who participates in the Plan may elect to defer the receipt of Compensation earned by the Director by completing an agreement as described in Section 3.4. The Director shall make the election in accordance with Section 3.3. The Company shall withhold amounts deferred by the Participant in accordance with this election. The Participant’s deferred amounts shall be credited to the Deferral Account as provided in Article V and distributed in accordance with Article VI. An election to defer receipt of Compensation shall continue in effect for a given Plan Year unless the Participant terminates as a Director.

3.3 Election Procedure. The Director shall elect to defer Compensation under an agreement described in Section 3.4 by completing a Deferred Compensation Agreement in the form and in the manner prescribed by the Committee. The Agreement must be properly completed in accordance with procedures prescribed by the Committee prior to the first day of the Plan Year for which Compensation shall be earned, provided however, that an individual who becomes a Director for the first time on or after the first day of a Plan Year may within thirty (30) days of the effective date of his appointment make an election to defer Compensation that will be earned after the date such Director by executes a Deferred Compensation Agreement.

3.4 Deferred Compensation Agreement. A Deferred Compensation Agreement shall remain in effect for the Plan Year and for all subsequent Plan years until amended or revoked by the Participant or terminated by the Company as provided in Section 3.5. The Deferred Compensation Agreement shall be applicable only to Compensation as defined in this Plan and which is earned after the date on which the Agreement is effective. The Agreement shall define the amount of Compensation that shall be deferred for the Plan Year, and for all subsequent Plan Years and the manner of distribution. The minimum deferral percentage which may be elected by a Director shall be five percent (5%) and all deferral percentages shall be in five percent (5%) increments. The Committee may, in its discretion, establish a greater minimum deferral percentage amount or incremental deferral percentage for any given Plan Year.

3.5 Irrevocable Election. A Participant’s Deferred Compensation Agreement for a given Plan Year cannot be amended by the Participant and, except as provided in Section 3.4 and this Section 3.5, is irrevocable. Any change as to the timing or manner of payment of benefits already credited to a Participant’s Deferral Account (i) must be accomplished by a Participant in accordance with procedures prescribed by the Committee; (ii) will not take effect sooner than the earliest date allowable under 409A; (iii) with respect to a postponement of a distribution (excluding payments for death, Disability or Hardship) the amended election must be completed in accordance with procedures prescribed by the Committee at least 12 months prior to the date the distribution was scheduled to begin; and (iv) no acceleration in payment of a distribution may occur in violation of 409A. The Company reserves the right to modify any Deferred Compensation Agreement to reflect a change in Plan provisions or for administrative convenience, so long as such change complies with section 409A of the Code and does not affect amounts deferred prior to January 1, 2005.

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Until December 31, 2007 or such other time as allowed by the Internal Revenue Service, a Participant may amend an existing Deferred Compensation Agreement or complete a new Deferred Compensation Agreement modifying the time and/or form of payment of all or a portion of such Participant’s Deferral Account without regard to the requirement in Section 409A(a)(4) that postponement in starting date for a distribution be for a minimum of five years from the previously selected payment start date. Any such amendment or new election must be made on or before December 31, 2007 (or such other date as allowed by the Internal Revenue Service) and must not take effect earlier than 12 months from the date of such amendment.

A Participant’s election to defer Compensation under the Deferred Compensation Agreement shall become null and void upon the Participant’s termination or retirement from the Board. No Compensation that may be payable after the Participant terminates or retires from the Board and otherwise would be subject to such Agreements shall be deferred under this Plan.

ARTICLE IV

COMPANY CONTRIBUTIONS

4.1 No Company Contributions. The Company shall not make or credit any additional contributions to the Plan beyond the amounts determined under each Participant’s Deferral Compensation Agreement.

4.2 Vesting. A Participant’s interest in (i) the Compensation deferred to his or her Deferral Account pursuant to Sections 3.2 through 3.4 of the Plan and (ii) any earnings credited to the Participant’s Deferral Account pursuant to Section 5.5 of the Plan, shall be at all times fully vested and nonforfeitable.

ARTICLE V

PARTICIPANT ACCOUNT BALANCES

5.1 Establishment of Accounts. The Committee may select an independent record keeper (who may be an affiliate of the Company) to establish and maintain a Deferral Account on behalf of each Participant. Contributions and net income (or losses) will be credited to each Deferral Account in accordance with the provisions of this Article.

5.2 Bookkeeping. Deferral Accounts will be primarily for accounting purposes and will not restrict the operation of the Plan or require separate earmarked assets to be allocated to any account. The establishment of a Deferral Account will not give any Participant the right to receive any asset held by the Company in connection with the Plan or otherwise.

5.3 Crediting Deferred Compensation. Amounts deferred by a Participant will be credited to the Participant’s Deferral Account no later than the first business day of the calendar quarter following the date as of which the amount would have been paid to the Participant absent a Deferred Compensation Agreement. This Plan is a restatement of the Prior Plan and includes accounts for all amounts previously deferred under the Prior Plan. Notwithstanding the foregoing, amounts credited and 100% vested to a Deferral Account, will be governed by the language of the Prior Plan.

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5.4 Establishment of Investment Funds. The Committee shall establish two (2) Investment Funds which will be maintained for the purpose of determining the investment return to be credited to a Participant’s Deferral Account. As of the Effective Date the Investment Funds shall consist of an Employer Securities Investment Fund and a Guaranteed Income Investment Fund. The Committee may change from time to time the number, identity or composition of the Investment Funds or discontinue the availability of any Investment Fund. The investment vehicle for the Guaranteed Income Investment Fund shall be determined solely in the discretion of the Committee.

Pursuant to rules adopted by the Committee, each Participant will indicate the Investment Fund or Funds to which credits under Section 5.3 and any existing Deferral Account balance are to be credited. Investment Fund elections by Participants must be made in five percent (5%) increments and at such times and in such manner as the Committee will specify. A Participant may change his or her Investment Fund at any time and in such manner as the Committee may specify. Each Participant shall be provided from time to time with the investment “results” of the selected Investment Funds. The Company’s liability to the Participant for amounts in the Deferred Compensation Account will include gains and losses attributed to the Investment Funds selected by the Participant.

5.5 Crediting Investment Results. A Participant’s Deferral Account balance will be increased or decreased to reflect investment results, as they occur. Deferral Accounts will be credited with the investment return of the Investment Funds in which the Participant elected to be deemed to participate. The credited investment return is intended to reflect the actual performance of the Investment Funds net of any investment or management fees. Nevertheless, no provision of this Plan shall be interpreted to require the Company to actually invest any amounts in any particular fund, whether or not such fund is one of the Investment Funds available for selection by Participants in the Plan.

5.6 Notification to Participants. The Committee shall notify each Participant with respect to the status of the Participant’s Deferral Account as soon as practicable after the end of each Plan Year. Neither the Company nor the Committee to any extent warrants, guarantees or represents that the value of any Participant’s Deferral Account at any time will equal or exceed the amount previously allocated or contributed thereto.

5.7 Employer Securities. The Employer Securities in the Employer Securities Investment Fund shall consist of common stock issued by Zions Bancorporation which is readily tradeable on an established securities market. Noncallable preferred stock shall be deemed to be “Employer Securities” if such stock is convertible at any time into stock which constitutes “Employer Securities” hereunder and if such conversion is at a conversion price which (as of the date recorded and booked by the Plan) is reasonable. Preferred stock shall be treated as noncallable if after the call there will be a reasonable opportunity for a conversion which meets the above requirement.

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ARTICLE VI

DISTRIBUTION OF ACCOUNTS

6.1 Distribution upon Termination or Retirement from the Board. A Participant who terminates or retires from the Board shall receive his vested Deferral Account in the manner elected by the Participant from the distribution options available under the Plan. An election regarding manner of payment of the Participant’s Deferral Account balance (including all future years’ contributions) shall be made at the time the Participant first commences participation in the Plan and may be amended thereafter at the election of the Participant in accordance with the provisions of Article III.

(a) Time of Payment. A Participant’s vested Deferral Account balance shall be paid (or commence to be paid) no later than forty-five (45) days following the date of termination or retirement from the Board.

(b) Manner of Payment. Participant’s vested Deferral Account will be paid in accordance with such Participant’s Deferred Compensation Agreement(s). The choices granted to a Participant shall be a lump sum cash payment, or in four separate annual payments. If no election has been made by the Participant, the Deferral Account will be paid in a lump sum. In the event a Participant fails to elect a manner of payment, the benefit under this plan will be paid in a lump sum.

(c) Lump Sum Value of Deferred Account Balance. The value of a Participant’s Deferral Account to be distributed in a lump sum shall be determined as of the date the payment is made.

(d) Calculation of Installment Amounts. To the extent payment is made in four separate annual payments, the amount of the annual payment for a particular calendar year shall be determined by valuing the Participant’s Deferral Account as of the last day of the previous year, after all charges and adjustments for gains and losses through that date. Future annual payments shall be determined each subsequent calendar year in the same manner and shall be adjusted to take into account the value of the Participant’s Deferral Account as of the end of each previous calendar year and the number of remaining years over which the separate annual payments are to be made. In the final calendar year (or in any earlier calendar year, if applicable) the separate annual payment shall be adjusted to reflect any earnings or losses on the Participant’s Deferral Account in the year of payment, if the effect of continuing payments would be to exhaust the Participant’s Deferral Account prior to final payment. Any excess in the Participant’s Deferral Account at the final payment shall be made with the final payment.

6.2 Distribution Upon Death. In the event a Participant dies prior to receiving all of his or her vested Deferral Account, the Participant’s Beneficiary shall receive the unpaid portion of the Participant’s Deferral Account in the form of a lump sum cash payment or in four (4) substantially equal annual payments, according to the election(s) of the Participant under Section 6.1.

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Payment shall commence no later than forty-five (45) days after the Participant dies and the Committee has been provided with written proof of the Participant’s death. If distribution is made in a lump sum, then for purposes of this Section 6.2, the value of a Participant’s Deferral Account to be distributed shall be determined as of the date the payment is made, and shall be credited with earnings through such date. In the case of a Participant who dies while employed with the Company, the Deferral Account shall be credited with any deferred amounts that would have been credited to the account if the Participant had continued employment with the Company through such date.

6.3 Cash Payments Only. All distributions under the Plan will be made in cash by check, unless in the sole discretion of the Company it determines to make a distribution in kind (or partly in kind and partly in cash) from the account, if any, which the Company has established to provide a source of payment for the benefits due a Participant. In the event of a distribution of property, the property will be valued at fair market value as of the date of distribution.

6.4 Disability. For the purposes of Sections 6.2 and 6.3, in the event of a Participant’s Disability, the Participant will be considered to have separated from employment as of the first day the Participant meets the definition of Disability.

6.5 Distribution Upon Hardship. In the event a Participant is entitled to receive a distribution on account of Hardship, the distribution shall be made in the form of a lump sum cash payment. The amount of any Hardship distribution will not exceed the amounts allowable under IRS Guidelines. Payment shall commence as soon as administratively feasible after the Participant’s request for hardship distribution has been approved by the Committee.

6.6 Specified Employee. Notwithstanding any other provision of this Article VI, any distribution to a person who is a “specified employee” as defined under Section 409A(a)(2)(b)(i) of the Code may not be made before the date which is 6 months after the date such person ceases being a member of the Board (or, if earlier, the date of death of the Specified Employee).

6.7 Grandfather Amounts. Grandfather amounts shall be governed by the plan language in this Article which was effective prior to January 1, 2005.

ARTICLE VII

PLAN ADMINISTRATION

7.1 Plan Administrator. This Plan shall be administered by the Committee, which will be the Plan Administrator. The Committee members shall be appointed by and serve at the pleasure of the Board.

7.2 Administration of the Plan. The Committee shall have the sole authority to control and manage the operation and administration of the Plan and have all powers, authority and discretion necessary or appropriate to carry out the Plan provisions, and to interpret and

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apply the terms of the Plan to particular cases or circumstances. The Committee may also select and appoint such advisors, consultants and legal counsel as the Committee shall deem appropriate to aid it in carrying out its responsibilities and duties. All decisions, determinations and interpretations of the Committee will be binding on all interested parties, subject to the claims and appeal procedure necessary to satisfy the minimum standard of ERISA Section 503, and will be given the maximum deference allowed by law. The Committee may delegate in writing its responsibilities as it sees fit.

Committee members who are Participants will abstain from voting on any Plan matters that relate primarily to themselves or that would cause them to be in constructive receipt of amounts credited to their respective Deferral Account. The Board will identify three or more individuals to serve as a temporary replacement of the Committee members in the event that all three members must abstain from voting.

7.3 Indemnification. The Company will and hereby does indemnify and hold harmless any of its employees, officers, directors or members of the Committee who have discretionary or administrative responsibilities with respect to the Plan from and against any and all losses, claims, damages, expenses and liabilities (including reasonable attorneys’ fees and amounts paid, with the approval of the Board, in settlement of any claim) arising out of or resulting from the implementation of a duty, act or decision with respect to the Plan, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

7.4 Claims Procedure. A Participant or his Beneficiary (the “Claimant”) may file a written claim for benefits under the Plan with the Committee. Within sixty (60) days of the filing of the claim, the Committee shall notify the Claimant of the Committee’s decision whether to approve the claim. Such notice shall include specific reasons for any denial of the claim. Within sixty (60) days of the date the Claimant was notified of the denial of a claim, the Claimant may appeal the Committee’s decision by making a written submission containing any pertinent information. Any decision not appealed within such sixty (60)-day period shall be final, binding and conclusive. The Committee shall review information submitted with an appeal and render a decision within sixty (60) days of the submission of the appeal. If it is not feasible for the Committee to render a decision on an appeal within the prescribed sixty (60)-day period, the period may be extended to a one hundred twenty (120)-day period.

ARTICLE VIII

AMENDMENT AND TERMINATION

8.1 Authority to Amend Plan Termination. The Committee has the power and authority in its sole discretion to adopt amendments and make further changes to the Plan, to the extent that:

(a) the amendment or change is designed to clarify a provision or provisions of the Plan; or

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(b) the amendment is designed or intended to maintain or to bring the Plan into compliance with applicable Federal or state law; or

(c) the amendment will not create or result in a significant increase in the cost to the Company or any subsidiary thereof of maintaining or operating the Plan or have a material, substantive effect on the rights or obligations of the Company or any subsidiary thereof with respect to the Plan.

8.2 Residual Authority to Amend or Terminate the Plan. Any amendment to the Plan which would create or result in a significant increase in the cost to the Company or any subsidiary thereof to maintain or operate the Plan, which would have a material, substantive effect on the rights or obligations of the Company or any subsidiary thereof, which would decrease or substantially or materially increase the benefits of any Director, Participant or Beneficiary, or which is not permitted to be made by the Committee under Section 8.1 must be adopted or ratified by the Board.

The Board has sole authority to terminate the Plan in its entirety, which it may do at any time and for any reason. No termination of the Plan will reduce or eliminate any Participant’s Deferral Account balance as of the date of the termination or any other date. Upon termination of the Plan, each Participant’s Deferral Account shall be distributed to the Participant at the times and in accordance with the distribution rules set forth in Article VI.

ARTICLE IX

MISCELLANEOUS

9.1 Funding Arrangements. The Committee shall determine the amounts it deems necessary or appropriate to fund the Company’s obligation to pay Deferral Accounts. Such amounts shall be held in trust by a trustee selected by the Committee, and shall be earmarked to pay benefits under the terms of the Plan. The Committee will direct the Company to make periodic contributions to the trust at such times and in such amounts as the Committee deems appropriate.

Trust assets cannot be diverted to, or used for, any purpose except payments to Participants and Beneficiaries under the terms of the Plan or, if the Company is Insolvent, to pay the Company’s creditors. Participants and Beneficiaries will have no right against the Company with respect to the payment of any portion of the Participant’s Deferral Account, except as a general unsecured creditor of the Company.

9.2 Nonalienation. No benefit or interest of any Participant or Beneficiary under this Plan will be subject to any manner of assignment, alienation, anticipation, sale transfer, pledge or encumbrance, whether voluntary or involuntary. Notwithstanding the foregoing, the Committee will honor community property or other marital property rights, but only to the extent required by law. Prior to distribution to a Participant or Beneficiary, no Deferral Account balance will be in any manner subject to the debts, contracts, liabilities, engagements or torts of the Participant or Beneficiary. Assets held in trust to fund this Plan may, however, be diverted to pay the Company’s creditors, if the Company is Insolvent.

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9.3 Domestic Relations Order. In the event the Committee receives a Domestic Relations Order from a potential Alternate Payee, the Committee shall promptly notify the Participant, or Beneficiary whose benefit is the subject of such order and provide him/her with information concerning the Plan’s procedures for administering QDROs. Unless and until the order is set aside, the following provisions shall apply:

(a) Committee Determination. The Committee shall within a reasonable time determine whether the order is a QDRO and shall notify the Participant or Beneficiary whose benefit is the subject of the order, of its determination. The Committee may designate a representative to carry out its duties under this provision.

(b) Compliance with Section 409A. Nothing in this Section 9.3(b) shall violate Section 409A of the Code and any regulations promulgated hereunder and no payment shall occur prior to the date that the Participant whose benefits are subject to the QDRO would have been entitled to receive payment in accordance with any Deferred Compensation Agreement in existence as of the date of the QDRO. In the event that the QDRO applies to deferrals which occur after the date of the QDRO, the Alternate Payee shall be entitled to a distribution on such future deferrals on the date that the Participant would have been entitled to receive payment.

9.4 QDRO definitions. For purposes of Section 9.3 the following definitions and rules shall apply:

(a) “Alternate Payee” shall mean any spouse, former spouse, child or other dependent of a Participant who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant.

(b) “Domestic Relations Order” shall mean any judgment, decree, or order (including approval of a property settlement agreement) which:

(i) relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Participant; and

(ii) is made pursuant to a state domestic relations law (including a community property law).

(c) “Qualified Domestic Relations Order” shall mean any Domestic Relations Order which satisfies the criteria set forth as a QDRO under policies established by the Committee.

9.5 Limitation of Rights. Nothing in this Plan will be construed to give a Participant the right to continue as a member of any Board or at any particular position or to interfere with the right of the Company to terminate a Participant from the board at any time and for any reason.

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9.6 Section 409A. This Plan is intended to meet the requirements of Section 409A of the Code, and shall be administered in a manner that is intended to meet those requirements and shall be construed and interpreted in accordance with such intent. To the extent that a distribution, payment, or the settlement or deferral thereof, is subject to Section 409A of the Code, except as the Committee otherwise determines in writing, the Deferral Account shall be paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, including regulations or other guidance issued with respect thereto, such that the payment, settlement or deferral shall not be subject to the excise tax applicable under Section 409A of the Code. Any provision of this Plan that would cause the Deferral Account or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.

9.7 Governing Law. To the extent that state law applies, the provisions of this Plan will be construed, enforced and administered in accordance with the laws of the state of Utah, except to the extent pre-empted by ERISA.

9.8 Grandfather Amounts. The provisions of Sections 9.3, 9.4, and 9.6 shall apply to Grandfather Amounts.

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EX-10.8

EXHIBIT 10.8

AMEGY BANCORPORATION, INC.

FIFTH AMENDED AND RESTATED NON-EMPLOYEE DIRECTORS

DEFERRED FEE PLAN

1. Purpose. The purpose of the Plan is to provide Non-Employee Directors an opportunity to defer payment of all or a portion of their Director’s Fees in accordance with the terms and conditions set forth herein.

2. Definitions. For the purposes of the Plan, the following capitalized words shall have the meanings set forth below:

“Advisory Director” means an advisory director of the Bank Board and any member of any advisory board of directors or similar group or committee that may be constituted from time to time by the Board, the Bank Board, or management of the Company or the Bank.

“Bank” means Amegy Bank N.A., a wholly-owned subsidiary of the Company.

“Bank Board” means the Board of Directors of the Bank.

“Board” means the Board of Directors of the Company.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Committee” means the Benefits Committee of the Company.

“Common Stock” means the common stock of the Company.

“Company” means Zions Bancorporation.

“Deferral Election Form” means the form which may be electronic or written as determined by the Committee, pursuant to which a Non-Employee Director makes a deferral election under the Plan.

“Deferral Period” means each calendar year. The first Deferral Period under the Plan shall commence January 1, 2002. If an individual becomes eligible to participate in the Plan after the commencement of a Deferral Period, the Deferral Period for that individual shall be the remainder of such Deferral Period following his Election Date.

“Deferred Benefit” means an amount that will be paid on a deferred basis under the Plan.

“Deferred Compensation Account” means the bookkeeping account established for each Non-Employee Director for purposes of measuring his or her Deferred Benefit and shall include subaccounts for Deferred Benefits that are to be paid at different times and/or in a different manner.

“Director’s Fee” means the cash portion of the annual retainer fee and any other fees payable for service on the Bank Board, including, without limitation, any meeting fees or fees for serving as a chair of any committee of the Bank Board or any fees received as an Advisory Director.

“Election Date” means the day immediately preceding the commencement of a Deferral Period. If an individual first becomes eligible to participate in the Plan after the start of a Deferral Period, the Election Date shall be not later than the thirtieth day following the initial date such individual became a Non-Employee Director.

“Fair Market Value” means the closing sales price of a share of Common Stock on the applicable date (or, if there was no trading in the shares on such date, on the next preceding date on which there was trading) on the principal exchange or system on which the shares are sold, as reported in The Wall Street Journal or other reporting service approved by the Committee.

“Non-Employee Director” means a member of the Bank Board and an Advisory Director who is not an employee of the Company or any of its subsidiaries.

“Plan” means this Amegy Bancorporation, Inc. Non-Employee Directors Deferred Fee Plan as amended or restated from time to time.

3. Administration.

(a) The Plan shall be administered by the Committee.

(b) The Committee shall have the sole authority to control and manage the operation and administration of the Plan and have all powers, authority and discretion necessary or appropriate to carry out the Plan provisions, and to interpret and apply the terms of the Plan to particular cases or circumstances. To the extent permitted under this Plan or authorized by the Board, the Committee may amend any provision of this Plan at any time and for any reason. The Committee may also select and appoint such advisors, consultants and legal counsel as the Committee shall deem appropriate to aid it in carrying out its responsibilities and duties. All decisions, determinations and interpretations of the Committee will be binding on all interested parties, subject to the claims and appeal procedure necessary to satisfy the minimum standard of ERISA Section 503, and will be given the maximum deference allowed by law. The Committee may delegate in writing its responsibilities as it sees fit.

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Committee members who are Participants will abstain from voting on any Plan matters that relate primarily to themselves or that would cause them to be in constructive receipt of amounts credited to their respective Deferred Compensation Account. The Board will identify three or more individuals to serve as a temporary replacement of the Committee members in the event that all three members must abstain from voting.

(c) Each member of the Committee and each other person acting at the direction of or on behalf of the Committee shall not be liable for any determination or anything done or omitted to be done by him or by any other member of the Committee or any other such individual in connection with the Plan, except for his own gross negligence or willful misconduct or as expressly provided by statute, and to the extent permitted by law and the bylaws of the Company, shall be fully indemnified and protected by the Company with respect to such determination, act or omission.

4. Shares Available. The Company is authorized to credit up to 125,000 Stock Units and to issue up to 125,000 shares of Common Stock, respectively, under the Plan (the “Plan Limit”). Such shares of Common Stock may be newly issued shares of Common Stock or reacquired shares of Common Stock held in the treasury of the Company.

5. Deferral of Director’s Fees.

(a) Deferral Elections.

(i) General Provisions. Unless the Committee provides otherwise, Non-Employee Directors may elect to defer all, one-half or none of their Director’s Fees with respect to a Deferral Period in the manner provided in this Section 5. A Non-Employee Director’s Deferred Benefit is at all times nonforfeitable.

(ii) Deferral Election Forms. In order for a Non-Employee Director to participate in the Plan for a given Deferral Period, a Deferral Election Form, completed and delivered to the Company in accordance with procedures established by the Committee on or prior to the applicable Election Date or such earlier date specified by the Committee. A Deferral Election Form shall remain in effect only for the Deferral Period for that Election Date. A Non-Employee Director electing to participate in the Plan shall indicate on his Deferral Election Form:

(A) the percentage of the Director’s Fees for the Deferral Period to be deferred, which election shall be irrevocable for such Deferral Period, and

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(B) the timing and manner of payment of the Director’s Fees deferred for that Deferral Period. Any subsequent change as to the timing and manner of payment of Deferred Benefits already credited to the Non-Employee Director’s Deferred Compensation Account must (i) be made at least 12 months prior to the date of the scheduled payment or commencement of payment; (ii) delay the subsequent payment or commencement of payment at least five years after the date on which such payment or commencement of payment would otherwise have been made or commenced; and shall not be effective for 12 months following the change. Until December 31, 2007 or such other time as allowed by the Internal Revenue Service, a Participant may amend an existing Deferred Compensation Agreement or complete a new Deferred Compensation Agreement modifying the time and/or form of payment of all or a portion of such Participant’s Deferral Account without regard to the requirement in Section 409A(a)(4) that postponement in starting date for a distribution be for a minimum of five years from the previously selected payment start date. Any such amendment or new election must be made on or before December 31, 2007(or such other date as allowed by the Internal Revenue Service) and must not take effect earlier than 12 months from the date of such amendment.

(iii) Time and/or Manner of Distribution. All distributions shall commence at such time the Non-Employee Director ceases to be a director and in the form of a lump sum unless a different time and/or manner of distribution is specified in a properly completed and delivered Deferral Election Form.

(iv) Effect of No Deferral Election. A Non-Employee Director who does not have a completed Deferral Election Form on file with the Company on or prior to the applicable Election Date for a Deferral Period may not defer his Director’s Fees for such Deferral Period.

(b) Establishment of Deferred Compensation Accounts. A Non-Employee Director’s deferrals will be credited to a Deferred Compensation Account set up for that Non-Employee Director by the Company in accordance with the provisions of this Section 5.

(c) Crediting of Stock Units to Deferred Compensation Accounts.

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(i) Number of Stock Units. The portion of the Director’s Fees that a Non-Employee Director elects to defer shall be credited to the Participant’s Deferral Account no later than the first business day of the calendar quarter following the date as of which the amount would have been paid to the Participant absent a Deferral Election Form. The number of Stock Units to be credited to the Deferred Compensation Account shall be determined by dividing (1) the amount of the Director’s Fees deferred during such quarter by (2) the Fair Market Value of a share of Common Stock as of the date of crediting, and (3) multiplying such result by 1.25.

(ii) Dividends. No adjustment or credit will be made to a Deferred Compensation Account by reason of the making of any distribution in respect of the Common Stock, other than a transaction described in Section 7(b).

(iii) No Rights as Stockholder. The crediting of Stock Units to a Non-Employee Director’s Deferred Compensation Account shall not confer on the Non-Employee Director any rights as a stockholder of the Company.

(iv) Conversion of Stock Units. The conversion of Stock Units based on stock of Amegy Bancorporation, Inc. to stock of the Company shall be determined by the Company.

(d) Written Statements of Account. The Company will furnish each Non-Employee Director with a statement setting forth the value of such Non-Employee Director’s Deferred Compensation Account as of the end of each Deferral Period and all credits to and payments from the Deferred Compensation Account during the Deferral Period. Such statement will be furnished as soon as reasonably practical after the end of the Deferral Period.

(e) Manner of Payment of Deferred Benefit. Payment of the Deferred Benefits shall be in shares of Common Stock. Payment shall be made either in a single lump sum or in a series of five or fewer annual installments, as elected by the Non-Employee Director at the time of the deferral. The amount of each installment payment to a Non-Employee Director shall be determined in accordance with the formula B/(N-P), where “B” is the total value of the Deferred Compensation Account as of the installment calculation date, “N” is the number of installments elected by the Non-Employee Director and “P” is the number of installments previously paid to the Non-Employee Director. Any partial unit resulting in the calculation above will be settled in cash.

(f) Commencement of Payment of Deferred Benefit. Payment of a Non-Employee Director’s Deferred Compensation Account, including subaccounts, shall commence as soon as reasonably practicable after the earlier to occur of:

(i) his or her termination as a Non-Employee Director; and

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(ii) the date specified in the Deferral Election Form executed by the Non-Employee Director;

(iii) in no event will the payment or commencement of payment be not later than the later of December 31 of the year in which such Participant’s right to payment began or the 15th day of the third month following such date.

provided, however, that if the Non-Employee Director is employed by the Company or the Bank following his or her termination as a Non-Employee Director, then payment of such account shall not commence until his or her separation from service with the Company or the Bank; and, provided further, that if he or she is a “specified employee’ as defined under Section 409A of the Code or the regulations promulgated thereunder, payment of a such participant’s Non-Employee Director’s Deferred Compensation Account cannot be made before the earlier of (i) the date that is six months after the date of the specified employee’s separation from service; or (ii) the date of the specified employee’s death.

(g) Death. In the event of a Non-Employee Director’s death, the Non-Employee Director’s entire Deferred Benefit will be distributed in a lump sum to the Non-Employee Director’s beneficiary as soon as reasonably practicable after the date of death.

(h) Restrictions on Transfer. The Company shall pay all Deferred Benefits payable under the Plan only to the Non-Employee Director or beneficiary designated under the Plan to receive such amounts. Neither a Non-Employee Director nor his beneficiary shall have any right to anticipate, alienate, sell, transfer, assign, pledge, encumber or change any benefits to which he may become entitled under the Plan, and any attempt to do so shall be void. A Deferred Benefit shall not be subject to attachment, execution by levy, garnishment, or other legal or equitable process for a Non-Employee Director’s or beneficiary’s debts or other obligations.

(i) Domestic Relations Order. In the event the Committee receives a Domestic Relations Order from a potential Alternate Payee, the Committee shall promptly notify the Non-Employee Director, Former Non-Employee Director or Beneficiary whose benefit is the subject of such order and provide him/her with information concerning the Plans’ procedures for administering QDROs. Unless and until the order is set aside, the following provisions shall apply:

(i) The Committee shall within a reasonable time determine whether the order is a QDRO and shall notify the Non-Employee Director, Former Non-Employee Director or Beneficiary whose benefit is the subject of the order, of its determination. The Committee may designate a representative to carry out its duties under this provision.

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(ii) Nothing in this Section 5(i) shall be deemed to allow payment under a QDRO to an Alternate Payee of any benefit which would violate Section 409A of the Code and any regulations promulgated hereunder and no payment shall occur prior to the date that the Non-Employee Director or Former Non-Employee Director whose benefits are subject to the QDRO would have been entitled to receive payment in accordance with any Deferral Election in existence as of the date of the QDRO. In the event that the QDRO applies to deferrals which occur after the date of the QDRO, the Alternate Payee shall be entitled to a distribution on such future deferrals on the date that the Non-Employee Director or Former Non-Employee Director would have been entitled to receive payment

(j) QDRO definitions. For purposes of 5(i) the following definitions and rules shall apply:

(i) “Alternate Payee” shall mean any spouse, former spouse, child or other dependent of a Non-Employee Director or Former Non-Employee Director who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Non-Employee Director or Former Non-Employee Director.

(ii) “Domestic Relations Order” shall mean any judgment, decree, or order (including approval of a property settlement agreement) which:

A. relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Non-Employee Director or Former Non-Employee Director and

B. is made pursuant to a state domestic relations law (including a community property law).

(iii) “Qualified Domestic Relations Order” shall mean any Domestic Relations Order which satisfies the criteria set forth as a QDRO under policies established by the Committee.

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(k) Change in Ownership or Effective Control. In the event there is a “Change in Ownership or Effective Control” regarding the Company, then notwithstanding any the terms of any Deferral Election, all Deferred Benefits under this Plan shall become due and payable upon the date established by the Committee as the effective date of the change of control. Notwithstanding the foregoing, with respect to “Specified Employees” as defined under Section 409A of the Code, Specified Employee’s benefits will be payable 6 months after the date non Specified Employee’s Deferred Benefits are payable under this Section 5(k). For purposes of this paragraph, “Change in Ownership or Effective Control” shall mean a change in ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company as determined under Section 409A of the Code or regulations promulgated there under.

6. Designation of Beneficiary.

(a) Beneficiary Designations. Each Non-Employee Director may designate a beneficiary to receive any Deferred Benefit due under the Plan on the Non-Employee Director’s death by executing a beneficiary designation form provided by the Company.

(b) Change of Beneficiary Designation. A Non-Employee Director may change an earlier beneficiary designation by executing a later beneficiary designation form and delivering it to the Company. The execution of a beneficiary designation form and its receipt by the Company revokes and rescinds any prior beneficiary designation form.

7. Recapitalization or Reorganization.

(a) Authority of the Company and Stockholders. The existence of the Plan shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks having rights superior to or affecting the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(b) Change in Capitalization. Notwithstanding any other provision of the Plan, in the event of any change in the outstanding Common Stock by reason of a stock dividend, recapitalization, reclassification, reorganization, merger, consolidation, stock split, combination, exchange of shares or other transaction:

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(i) such proportionate adjustments as may be necessary (as determined by the Committee in its sole discretion) to reflect such change shall be made to prevent dilution or enlargement of the rights of Non-Employee Directors under the Plan with respect to the aggregate number of shares of Common Stock authorized to be awarded under the Plan and the number of Stock Units credited to a Non-Employee Director’s Deferred Compensation Account, and (ii) the Committee may make such other adjustments, consistent with the foregoing, as it deems appropriate in its sole discretion.

(c) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company and to the extent permitted by Section 409A of the Code, all Deferred Benefits credited to the Non-Employee Director’s Deferred Compensation Account as of the date of the consummation of a proposed dissolution or liquidation shall be paid in cash to the Non-Employee Director or, in the event of death of the Non-Employee Director prior to payment, to the beneficiary thereof on the date of the consummation of such proposed action. The cash amount paid for each Stock Unit shall be the Fair Market Value of a share of Common Stock as of the date of the consummation of such proposed action.

8. Plan Limit, Termination and Amendment of the Plan.

(a) Plan Limit. If the Plan Limit has been reached, no additional Director Fees may be deferred after that date and any dividend equivalents credited thereafter shall be credited as a bookkeeping “cash” amount, rather than as Stock Units, and shall be credited with interest, until paid in cash, at the Company’s prime rate of interest each valuation date.

(b) General Power of Board. Notwithstanding anything herein to the contrary, the Board may at any time and from time to time terminate, modify, suspend or amend the Plan in whole or in part and, upon termination of the Plan, immediately settle all Stock Units in shares of Common Stock notwithstanding any deferral elections to the contrary; provided, however, that no such termination, modification, suspension or amendment shall be effective without stockholder approval if such approval is required to comply with any applicable law or stock exchange rule; and, provided further, that the Board may not, without stockholder approval, increase the maximum number of shares issuable under the Plan, except as provided in Section 7(b) above.

Notwithstanding anything herein to the contrary, (i) no amendment shall be made to the Plan with respect to any amount deferred and vested prior to January 1, 2005 unless such amendment explicitly provides that it is applicable to such amount; and (ii) except as the Committee otherwise determines in writing, no distribution shall be made upon termination of the Plan if such distribution shall be subject to the excise tax applicable under Section 409A of the Code.

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9. Miscellaneous.

(a) No Right to Reelection. Nothing in the Plan shall be deemed to create any obligation on the part of the Board or Bank Board to nominate any of its members for reelection by the Company’s stockholders, nor confer upon any Non-Employee Director the right to remain a member of the Board or Bank Board or an Advisory Director for any period of time, or at any particular rate of compensation.

(b) Unfunded Plan.

(i) Generally. This Plan is unfunded. Amounts payable under the Plan will be satisfied solely out of the general assets of the Bank subject to the claims of the Bank’s creditors, except to the extent the Company determines to create a Rabbi Trust to hold assets to satisfy any amounts due participants under this Plan. In such event the assets of the Rabbi Trust shall be available to general creditors of the Bank in the event of bankruptcy or insolvency or as otherwise required by law.

(ii) Deferred Benefits. A Deferred Benefit represents at all times an unfunded and unsecured contractual obligation of the Bank and each Non-Employee Director or beneficiary will be a general unsecured creditor of the Bank. No Non-Employee Director, beneficiary or an other person shall have any interest in any fund or in any specific asset of the Bank by reason of any amount credited to him hereunder, nor shall any Non-Employee Director, beneficiary or any other person have any right to receive any distribution under the Plan except as, and to the extent, expressly provided in the Plan.

(c) Other Compensation Arrangements. Benefits received by a Non-Employee Director pursuant to the provisions of the Plan shall not be included in, nor have any effect on, the determination of benefits under any other arrangement provided by the Bank or the Company.

(d) Securities Law Restrictions. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission or any exchange upon which the Common Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. No shares of Common Stock shall be issued hereunder unless the Company shall have determined that such issuance is in compliance with, or pursuant to an exemption from, all applicable federal and state securities laws.

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(e) Expenses. The costs and expenses of administering the Plan shall be borne by the Bank.

(f) Applicable Law. Except as to matters of federal law, the Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to conflicts of law principles.

(g) Effective Date. It is the intent of this Plan to preserve pre 409A rights with respect to those amounts deferred and vested prior to January 1, 2005. The Plan was effective as of January 1, 2002, with amendments effective as of November 5, 2003. Each of the Second, Third, Fourth and Fifth Amended and Restated versions of the Plan were effective January 1, 2005 and were intended to make the Plan compliant with 409A requirements as they became known and are be effective only with respect to amounts deferred and vested on or after January 1, 2005.

(h) Section 409A. This Plan is intended to meet the requirements of Section 409A of the Code, and shall be administered in a manner that is intended to meet those requirements and shall be construed and interpreted in accordance with such intent. To the extent that an award or payment, or the settlement or deferral thereof, is subject to Section 409A of the Code, except as the Committee otherwise determines in writing, the award shall be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, including regulations or other guidance issued with respect thereto, such that the grant, payment, settlement or deferral shall not be subject to the excise tax applicable under Section 409A of the Code. Any provision of this Agreement that would cause the award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.

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EX-10.9

EXHIBIT 10.9

ZIONS BANCORPORATION

FIRST RESTATED EXCESS BENEFIT PLAN

Effective as of January 1, 2005

ZIONS BANCORPORATION

FIRST RESTATED EXCESS BENEFIT PLAN

(Effective January 1, 2005)

ARTICLE I

INTRODUCTION

1.1 Continuation of Existing Plan Benefits. Zions Bancorporation previously established the Zions Bancorporation Deferred Compensation Plan effective as of January 1, 2001, which Plan was restated in its entirety effective January 1, 2003 (“Deferred Compensation Plan”). Effective January 1, 2004 certain benefits previously provided in the Deferred Compensation began to be provided instead through this Plan. It is a purpose of this January 1, 2005 First Restatement to have those amounts which were 100% vested and credited to a Benefit Account in this Plan prior to January 1, 2005 (“409A Grandfather Amounts”) be governed by the applicable laws and rules governing deferred compensation arrangements, prior to the enactment of Section 409A of the Code (“409A”) together with the provisions of the January 1, 2004 version of this Plan (“Prior Plan”). Notwithstanding the foregoing, there shall only be one Plan which will include a Benefit Account for 409A Grandfather Amounts and a Benefit Account for post December 31, 2004 benefits. Accordingly, the provisions of the Prior Plan shall govern that portion of a Participant’s Benefit Account which consists of 409A Grandfather Amounts. Unless specifically provided herein, the provisions of this restated Plan Document where different from the Prior Plan shall apply only to amounts credited and 100% vested to a Benefit Account after December 31, 2004. If the application of any provision of this Plan document would constitute a “material modification” with respect to 409A Grandfather Amounts under guidance issued by the Service under 409A, then such provision will not be applied to any 409A Grandfather Amounts and the provision of the Prior Plan will control. By this document the Prior Plan is restated and revised as of the Effective Date and to read as set forth hereafter.

1.2 Purpose of Plan. Zions Bancorporation has established this Plan as a means to continue providing certain benefits to select employees which were previously provided through the Deferred Compensation Plan. Zions Bancorporation intends to maintain the Plan primarily for the purpose of providing benefits for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Plan will be interpreted in a manner consistent with these intentions.

1.3 Combined Plans and Successor Plan. With the Deferred Compensation Plan as restated effective January 1, 2003, Zions Bancorporation combined and merged certain other plans which also provided for deferred compensation. The plans which were combined and merged into the Deferred Compensation Plan (and jointly referred to hereafter as the “Merged Plans”) were:

Zions Bancorporation Deferred Compensation Plan for Value-Sharing Participants

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Zions Bancorporation Executive Management Plan (“SERP”)

Grossmont Bank Deferred Compensation Plan for Key Employees

Those portions of the Merged Plans which provided for continuing contributions from the Company (as hereafter defined) and which were preserved in the Deferred Compensation Plan (including all related benefits and liabilities) were transferred to and assumed by this Plan, which was created by the Company for that purpose. From and after the January 1, 2004 no further benefits attributable to Company contributions are available from or accrue under the Deferred Compensation Plan. All benefits previously provided under the Deferred Compensation Plan which were attributable to Company contributions shall only be payable by and available from this Plan according to its terms, regardless of the time or manner such benefits may have been previously payable under the Merged Plans or the Deferred Compensation Plan.

ARTICLE II

DEFINITIONS

Definitions are contained in this article and throughout other sections of the Plan. The location of a definition is for convenience only and should not be given any significance. A word or term defined in this article (or in any other article) will have the same meaning throughout the Plan unless the context clearly requires a different meaning.

2.1 Base Salary means the employee’s base salary paid for each payroll period, including any periodic payment which constitutes a draw or advance against future potential commission payments, and (ii) in the case of an employee whose compensation from the Company contains a commission element, the amount of the commission as paid, excluding any draw or advance received, and without regard to any Bonus(es) or other additional amount(s) paid or payable to the employee.

2.2 Beneficiary means the individual(s) or entity(ies) designated by a Participant, or by the Plan, to receive any benefit payable upon the death of a Participant or Beneficiary. A Beneficiary designation must be signed by the Participant and delivered to the Committee on a form specified by the Committee for that purpose. In the absence of a valid or effective Beneficiary designation, the Beneficiary will be the Participant’s surviving spouse, or if there is no surviving spouse, the Participant’s estate.

2.3 Board means the Board of Directors of the Company.

2.4 Bonus means any periodic or non-periodic payment to the Participant which is not part of the Participant’s Base Salary, including incentive pay, discretionary bonuses and any amount denominated and paid by the Company as a value sharing payment, and which is not otherwise excluded from the definition of Compensation contained in this Plan. For purposes of this Section “discretionary bonus” means any one time annual payment (typically paid in February of each year) and not included in any incentive plan, “incentive pay” means any payment (excluding commissions) made to compensate for meeting established goals or production levels set forth in documented performance plans and value sharing payments means monies paid according to long term based (more than one year) plans.

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2.5 Code means the Internal Revenue Code of 1986, as amended from time to time.

2.6 Committee means the Zions Bancorporation Benefits Committee. The Committee will serve as the “plan administrator” to manage and control the operation and administration of the Plan, within the meaning of ERISA Section 3(16)(A).

2.7 Company means Zions Bancorporation, any successor of Zions Bancorporation, and any subsidiary or affiliate of Zions Bancorporation which elects, with the approval of Zions Bancorporation, to become a participating employer under this Plan. Regardless of the adoption of or participation in this Plan by one or more affiliates of Zions Bancorporation, all rights, duties and responsibilities for operation of this Plan, including all rights reserved to amend, alter, supplement or terminate this Plan, shall remain exclusively with and be exercised solely by the Board of Directors of Zions Bancorporation, unless such rights or duties are specifically allocated or assigned under this Plan to the Committee or by Zions Bancorporation to one or more participating employers.

2.8 Compensation means the employee’s Base Salary, Bonus(es) and any amounts withheld by salary reduction under Code §§125 or 401(k), or under the Deferred Compensation Plan. Compensation excludes any other form of remuneration paid or payable to an Eligible Employee, such as restricted stock, stock options, proceeds from stock options or stock appreciation rights, severance payments, moving expenses, car or other special allowances, and any other amounts, whether or not included in an Eligible Employee’s taxable income. Company contribution credits under Article IV shall be computed before taking into account any reduction in an Eligible Employee’s Compensation by salary reduction election under Code §§125 or 401(k), or deferral election under the Deferred Compensation Plan.

2.9 Benefit Account means a bookkeeping account established for and maintained on behalf of a Participant, which shall include and credit all amounts previously credited to the Participant under any of the Merged Plans as well as all amounts attributable to Company contributions and credited under the Deferred Compensation Plan as of December 31, 2003. To determine the amount to be credited under this Plan based upon the Participant’s benefit under the SERP as of the day before that amount was transferred to the Deferred Compensation Plan, this Plan shall calculate the lump sum present value on that date of the Participant’s accrued benefit, as defined in section 3.1 of the SERP. For this purpose this Plan shall utilize the actuarial factors described in the Zions Bancorporation Pension Plan (“Pension Plan”) as applicable when calculating lump sum payment amounts. The Benefit Account shall also include net income (or losses) thereon, as have been credited under the Deferred Compensation Plan and are credited under this Plan.

2.10 Deferred Compensation Plan means the Zions Bancorporation Restated Deferred Compensation Plan, as restated effective January 1, 2004 as amended from time to time. The Deferred Compensation Plan shall provide benefits to certain Eligible Employees as determined through their deferral of Compensation.

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2.11 Disability means a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company.

2.12 Effective Date means January 1, 2005, the date this Plan, as restated, shall be effective. The Prior Plan was effective January 1, 2004. The original effective date of the Deferred Compensation Plan is January 1, 2001. Notwithstanding the foregoing, unless specifically provide herein, amounts deferred and vested under the this Plan, the Prior Plan or the Deferred Compensation Plan prior to January 1, 2005 shall not be subject to any amendments with an effective date subsequent to December 31, 2004

2.13 Eligible Employee means a common law employee of the Company who:

(a) on the day before to January 1, 2004 was a participant in the Deferred Compensation Plan; or

(b) has or is projected to have Compensation in excess of $90,000 for the Plan Year commencing on the January 1, 2004 and for any Plan Year thereafter (or such greater dollar amount as determined and announced by the Committee from year to year); and

(c) having satisfied (a) or (b), is identified by the Committee and designated as eligible to participate in the Plan;

For purposes of determining as of any given date whether the Eligible Employee’s Compensation will satisfy (b) above, the Committee may project the Eligible Employee’s current rate of Compensation on a Plan Year basis. The Committee may adjust the dollar amount in (b) above from year to year consistent with any index selected by the Committee for this purpose, without further written amendment to this Plan. Except as otherwise provided in Section 3.1 (concerning an individual who ceases to be an Eligible Employee), an individual’s status as an Eligible Employee for a Plan Year shall be determined immediately prior to the first day of the Plan Year. An individual’s status who becomes an Eligible Employee on or after the first day of a Plan Year but prior to the next calendar quarter shall be determined prior to that calendar quarter. Notwithstanding the foregoing, the Committee may determine in writing that an otherwise Eligible Employee shall not be eligible to participate in this Plan.

2.14 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.15 Hardship means an unforeseeable emergency which is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in section 152 of the Code without regard to section 152(b)(1), (b)(2) and (d)(1)(b)); loss of the Participant’s property due

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to casualty (including a need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an unforeseeable emergency. In addition, the need to pay medical expenses, including nonrefundable deductibles, as well as for the costs of prescription drug medication may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse, a beneficiary, or a dependent (as defined in section 152 of the Code without regard to section 152(b)(1), (b)(2) and (d)(1)(b)) may also constitute an unforeseeable emergency. Generally the purchase of a home or the payment of college tuition are not unforeseeable emergencies. Whether a Participant is faced with an unforeseeable emergency is to be determined based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of assets would not cause severe financial hardship, or by cessation of deferrals under the plan. A Hardship and any resulting distribution will be determined in accordance with section 409A of the Code and guidance issued by the Service there under. The Committee will have sole discretion to determine whether a Hardship condition exists and the amount of the distribution. The Committee’s determination will be final.

A Participant must submit a written request for a distribution based on Hardship to the Committee on the form and in the manner prescribed by the Committee. The Hardship request must: (i) describe and certify the Hardship condition substantiating the severe unforeseeable emergency and all circumstances necessary to meet the definition of Hardship; (ii) state the amount the Participant requests as a withdrawal of all or a portion of his Deferral Account; and (iii) demonstrate the amounts requested to be distributed do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay any federal, state, local, or foreign income taxes or penalties reasonably anticipated as a result of the distribution. Determinations of amounts necessary to satisfy an emergency must take into account any additional compensation that will be made available due to the restriction on further deferrals set forth below in this Section. The Committee will have sole discretion to determine whether a Hardship exists and to determine the appropriate action, if any, provided however, in no event will the Committee approve a Hardship distribution request for expenses related to any medical condition or expenses related to the death of any person unless the request for distribution is submitted to the Committee and approved by the Committee for Hardship distribution prior to the date on which the expense is incurred. The Committee, in its sole discretion, may make exception to the foregoing rule if it determines that the circumstances creating the expense for which reimbursement is sought were not reasonably foreseeable. Regardless of whether the Participant desires to reduce or cease any Compensation amounts to be deferred after the Hardship request is made, the Participant will be precluded from deferring Compensation for the remainder of the Plan Year in which a Hardship is approved by the Committee.

2.16 Insolvent means the Company is (i) unable to pay its debts as they become due or (ii) subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

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2.17 Investment Options means the investments designated by the Committee as the basis for determining the earnings return to be allocated to Participants’ Benefit Accounts. The Committee may change Investment Options at such times as it deems appropriate.

2.18 Participant means an Eligible Employee who is eligible to participate in the Plan as provided in Section 3.1 and who is entitled to Company contribution credits under Article IV.

2.19 Plan means the Zions Bancorporation First Restated Excess Benefit Plan, as set forth in this document, as amended from time to time.

2.20 Plan Year means the Company’s fiscal year, beginning January 1 and ending December 31.

2.21 Retirement Age means, while employed by the Company, attainment of age 55 with 10 Years of Service (“Early Retirement Age”), or attainment of age 65, without regard to Years of Service.

2.22 Year of Service means, with respect to a Participant, a calendar year during which the Eligible Employee was in full time employment with the Company for the entire year. Full time employment shall be determined according to the rules adopted and utilized by the Company to classify full time employees.

2.23 Separation from Service means a Participant who is an employee of the Company has died, retired or otherwise has a Termination of Employment. However, the employment relationship is treated as continuing intact while the employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Company under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the employee will return to perform services for the Company. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29 month period may, at the Company’s discretion, be substituted for such six month period.

Section 2.24 Termination of Employment occurs when the facts and circumstances indicate that an employee and the Company reasonably anticipate that no further services would be performed after a certain date (whether as an employee or as an independent contractor) or that the level of bona fide services the employee would perform after such date (whether as an employee or an independent contractor) would permanently decrease to no more than 40 percent of the average level of bona fide services performed (whether as an employee or independent

6

contractor) over the immediately preceding 36 month period (or the full period services to the Company if the employee has been providing services to the Company less than 36 months) and in accordance with applicable guidance issued by the Internal Revenue Service.

ARTICLE III

PARTICIPATION

3.1 Eligibility. An Eligible Employee of the Company shall participate in the Plan only to the extent and for the period that the Eligible Employee satisfies the definition of Eligible Employee in this Plan, is selected by the Committee to participate and is a member of a select group of management or highly compensated employees, as such group is described under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. An individual who is an Eligible Employee as of the first day of the Plan Year but who ceases to be an Eligible Employee during the Plan Year shall terminate participation as of the end of the Plan Year. The Participant shall not be permitted to re-enter the Plan unless and until the individual again becomes an Eligible Employee.

ARTICLE IV

COMPANY CONTRIBUTION CREDITS

4.1 Limited Company Contributions. Except as specifically provided in this Article IV the Company shall not make or credit any contributions to the Plan.

4.2 Vesting. Except as otherwise provided in this Section, a Participant’s interest in the amounts in his or her Benefit Account attributable to (i) Company contribution credits made pursuant to this Article IV, and (ii) any earnings credited to the Participant’s Benefit Account pursuant to Section 5.6, shall be at all times fully vested and nonforfeitable. Notwithstanding the foregoing, the following amounts credited to a Participant’s Benefit Account, including earnings thereon, shall be subject to the vesting and forfeiture provisions outlined hereafter:

(a) all amounts which have been credited under this Plan based upon the Participant’s benefit credited under the SERP as of December 31, 2002;

(b) all amounts which have been credited under this Plan based upon the Participant’s benefit credited under the Grossmont Bank Deferred Compensation Plan for Key Employees as of December 31, 2002;

(c) all amounts which are credited under Section 4.3; and

(d) all amounts which are credited under Section 4.4.

The amounts described in (a), (c) and (d), including earnings thereon, shall become vested under the same rules which apply to accrued benefits under the Pension Plan, without

7

regard to whether the Pension Plan would be treated as a frozen plan or otherwise deemed to provide fully vested benefits due to its current status. The amounts described in (a), (b), (c) and (d), including earnings thereon, shall also be subject to immediate forfeiture and loss (without regard to prior vested status or whether payment of such amounts has commenced under Article 6) if any of the following events occurs:

(e) the Company terminates the Participant’s employment for any act of willful malfeasance, gross misconduct or gross negligence in the performance of his or her duties; or

(f) the Participant enters into competition with the Company without the prior written permission of the Board of Zions Bancorporation.

4.3 SERP Participants Company Contribution Credit. An Eligible Employee who has a Benefit Account in the Plan by virtue of his or her participation in the SERP on December 31, 2002 (“SERP Participant”) shall continue to receive Company contribution credits under this Plan on an annual basis from and after January 1, 2004 according to the following rules, as applicable.

(a) Great Grandfather Benefits. A SERP Participant who continues to receive a benefit accrual under Section 4.4 of the Pension Plan shall receive Company contribution credits to his or her Benefit Account at a rate equal to the actuarial equivalent of the annual benefit accrual under the Pension Plan, but only on the amount of Compensation (as defined in this Plan) which exceeds the level taken into account under the Pension Plan.

(b) Grandfather Benefits. A SERP Participant who continues to receive a benefit accrual under Section 4.8 of the Pension Plan shall receive Company contribution credits to his or her Benefit Account at a rate equal to the annual benefit accrual rate described in section 3.2(g) of the Pension Plan, but only on the amount of Compensation (as defined in this Plan) which exceeds the level taken into account under the Pension Plan. The Company contribution credit hereunder shall not include any equivalent amount for interest credits which may be provided under section 3.3 of the Pension Plan.

(c) Other SERP Participant Benefits. A SERP Participant, whether or not entitled to a Company contribution credit under (a) or (b) above, shall receive Company contribution credits under this Plan on an annual basis at a rate equal to the rate of the employer non-elective contribution made to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan (“Payshelter ESOP”) under section 5.07 thereof, but only on the amount of Compensation (as defined in this Plan) which exceeds the level taken into account under the Payshelter ESOP.

4.4 Company Contribution Credits for Executive Management Committee Members. An Eligible Employee who does not receive Company contribution credits under Section 4.3 but

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who is an executive management committee member shall receive Company contribution credits under this Plan on an annual basis at a rate equal to the rate of the employer non-elective contribution made to the Payshelter ESOP under section 5.07 thereof, but only on the amount of Compensation which exceeds the level taken into account under the Payshelter ESOP.

4.5 Company Contribution Credits for All Other Participants. A Participant who does not receive Company contribution credits under either Sections 4.3 or 4.4 but who participates in the Payshelter ESOP, shall receive Company contribution credits under this Plan on an annual basis at a rate equal to the rate of the employer non-elective contribution made to the Payshelter ESOP under section 5.07 thereof, but only on the amount of the Participant’s Compensation which exceeds the level taken into account under the Payshelter ESOP but does not exceed the dollar limit under Code §401(a)(17) which is applicable for the plan year.

ARTICLE V

PARTICIPANT BENEFIT ACCOUNT BALANCES

5.1 Establishment of Benefit Accounts. The Committee may select an independent record keeper (who may be an affiliate of the Company) to establish and maintain a Benefit Account under this Plan on behalf of each Participant. Contribution credits and credit for net income (or losses) will be allocated to each Benefit Account in accordance with the provision of this Article.

5.2 Bookkeeping. Benefit Accounts will be maintained primarily for accounting purposes and will not restrict the operation of the Plan or require separate earmarked assets to be allocated to any account. The establishment of a Benefit Account will not give any Participant the right to receive any asset held by the Company in connection with the Plan or otherwise.

5.3 Crediting Benefit Accounts. The Committee will credit to a Participant’s Benefit Account the amount determined by the Company under the terms of this Plan at the time designated by the Company. To the extent the amount to be credited is based on a calculation of the Company’s contribution to the Pension Plan or Payshelter ESOP, the amount shall be credited at the time the Company makes its contribution to the Pension Plan or Payshelter ESOP, as applicable.

5.4 Establishment of Investment Options. The Committee, in its sole discretion, will establish one or more Investment Options which will be maintained for the purpose of determining the investment return to be credited to a Participant’s Benefit Account. The Committee may change from time to time the number, identity or composition of the Investment Options or discontinue the availability of any Investment Option. The Investment Options will reflect investment choices which are available in the marketplace for self directed accounts in retirement plans and may be (but need not be) the same investment choices available through any qualified retirement plan sponsored by the Company.

Pursuant to rules adopted by the Committee each Participant will indicate the Investment Options to which contribution credits under Article IV and any existing Benefit Account balances shall be deemed allocated. Investment Option elections of Participants must be made in

9

whole percentage increments and at such times and in such manner as the Committee will specify. A Participant may change his or her Investment Options at any time and in such manner as the Committee shall specify. Each Participant shall be provided from time to time with the earnings “results” of the selected Investment Options. The Company’s liability to the Participant for amounts in his or her Benefit Account will include gains and losses attributed to the Investment Options selected by the Participant.

5.5 Crediting Investment Results. A Participant’s Benefit Account balance will be increased or decreased to reflect investment results, as they occur. While the credited investment return to the Participant’s Benefit Account is intended to reflect the actual performance of the Investment Options, net of any investment or management fees, in which the Participant is deemed invested, nevertheless, no provision of this Plan shall be interpreted to require the Company to actually invest any amounts in any particular Investment Option or any other fund, whether or not the fund is one of the Investment Options available for selection by Participants in the Plan.

5.6 Notification to Participants. The Committee shall notify each Participant with respect to the status of the Participant’s Benefit Account as soon as practicable after the end of each Plan Year. Neither the Company nor the Committee to any extent warrants, guarantees or represents that the value of any Participant’s Benefit Account at any time will equal or exceed the amount previously allocated or contributed thereto.

ARTICLE VI

DISTRIBUTION OF ACCOUNTS

6.1 Distribution Upon Separation from Service or Attainment of Retirement Age. A Participant who attains a Separation from Service, whether before or after attaining Retirement Age, shall receive his vested Benefit Account at the time and in the manner elected by the Participant pursuant to his/her election(s) provided to the Committee. An election regarding the time and manner of payment of the Participant’s Benefit Account balance (including all future years’ contribution credits) shall be made at the time the Participant first commences participation in the Plan and in accordance with rules established by the Committee. The distribution election may be amended any time thereafter in the discretion of the Participant and in accordance with rules established by the Committee. However, any change in a Participant’s distribution election, unless specifically provided in the amended election shall be prospective only and take effect with respect to amounts credited to such Participant’s account for plan years beginning after the year in which the amended distribution election was executed. To the extent the Participant specifically elects to have an amended distribution election modify the timing and/or manner of the of payment of sums credited to such Participants account prior to and through the year in which the amended distribution election is executed, such amended distribution election shall be applied only as allowed under 409A including but not limited to the requirements that a change in time and/or manner must be executed at least twelve months prior to the date the payment would have been made; there shall be no acceleration of any payment in contravention of 409A; and any postponement of a distribution shall be for a minimum of five years from the date the distribution was to have been made. However, until December 31, 2007 or such other time as allowed by the Internal Revenue Service, a Participant may amend an

10

existing Deferred Compensation Agreement or complete a new Deferred Compensation Agreement modifying the time and/or form of payment of all or a portion of such Participant’s Deferral Account without regard to the requirement in Section 409A(a)(4) that postponement in starting date for a distribution be for a minimum of five years from the previously selected payment start date. Any such amendment or new election must be made on or before December 31, 2007 (or such other date as allowed by the Internal Revenue Service) and must not take effect earlier than 12 months from the date of such amendment.

(a) Time of Payment. A Participant’s vested Deferral Account balance shall be paid (or commence to be paid) as soon as administratively feasible but not later than the later of December 31 of the year in which such Participant right to payment occurred or the 15th day of the third month following such date.

(b) Manner of Payment. A Participant’s vested Deferral Account will be paid in accordance with the election the Participant made in the Deferred Compensation Agreement. The Deferred Compensation Agreement shall provide the Participant a right to elect a lump sum cash payment, or a series of substantially equal separate monthly payments over a period of five (5), ten (10), fifteen (15) or twenty (20) years. If no election has been made by the Participant, the Deferral Account will be paid in a series of substantially equal monthly payments over a period of five years. The final monthly installment payment shall be the remaining balance in the Participant’s Deferral Account on the date the payment is made.

(c) Value of Benefit Account Balance. The value of a Participant’s Benefit Account to be distributed shall be determined as of the date a payment is made, and shall be charged with distributions and adjusted for gains and losses, through such date.

6.2 Distribution of Small Accounts Upon Separation of Employment. A Participant who separates from employment with the Company for any reason and who, at the time of separation has a balance in his or her Benefit Account which is less than Ten Thousand Dollars ($10,000.00) shall receive the amounts credited to his vested Benefit Account in a lump sum cash payment only, commencing at the time specified in Section 6.1(a). For purposes of this Section 6.2, the value of a Participant’s Benefit Account to be distributed shall be determined as of the date the payment is made, and shall be credited with earnings through that date.

6.3 Distribution Upon Death. In the event a Participant dies prior to receiving all of his or her vested Benefit Account, the Participant’s Beneficiary shall receive the unpaid portion of the Participant’s Benefit Account in the form of lump sum cash payment at the time specified in Section 6.1(a) after written proof of the Participant’s death. For purposes of this Section 6.3, the value of a Participant’s Benefit Account to be distributed shall be determined as of the date the payment is made, and shall be credited with earnings through such date and, in the case of a Participant who dies while employed with the Company, any contribution credits that would have been allocated to the Benefit Account if the Participant had continued employment with the Company through such date.

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6.4 Distribution in the Event of Hardship. Prior to a distribution under Sections 6.1 or 6.3, payment of all or a portion of a Participant’s vested Deferral Account may be made in the event of Hardship. The amount of any Hardship distribution will not exceed the amounts allowable under IRS Guidelines. A Hardship distribution shall be made in a single sum cash payment as soon as practicable after the Committee approves the Hardship withdrawal request.

6.5 Cash Payments Only. All distributions under the Plan will be made in cash by check, unless in the sole discretion of the Company it determines to make a distribution in kind (or partly in kind and partly in cash) from the account, if any, which the Company has established to provide a source of payment for the benefits due a Participant. In the event of a distribution of property, the property will be valued at fair market value as of the date of distribution.

6.6 Disability. In the event of a Participant’s Disability, the Participant will be considered to have separated from employment as of the first day the Participant first meets the definition of Disability.

6.7 Specified Employee. Notwithstanding any other provision of this Article VI, any distribution to a specified employee (as defined in 409A) may not be made before the date which is 6 months after the date of Separation from Service (or, if earlier, the date of death of the Specified Employee).

6.8 409A Grandfather Amounts. Grandfather amounts shall be governed by the plan language which was effective prior to January 1, 2005.

ARTICLE VII

PLAN ADMINISTRATION

7.1 Plan Administrator. This Plan shall be administered by the Committee, which will be the Plan Administrator. The Committee members shall be appointed by and serve at the pleasure of the Board.

7.2 Amendment or Termination. To the extent permitted under this Plan or authorized by the Board of Directors of Zions Bancorporation, the Committee may amend any provision of this Plan at any time and for any reason. Only the Board of Directors of Zions Bancorporation may terminate the Plan in its entirety. No amendment or termination of the Plan will reduce any Participant’s Benefit Account balance as of the effective date of such amendment or termination. Upon termination of the Plan in its entirety, each Participant’s Benefit Account shall be distributed to the Participant at the times and in accordance with the distribution rules set forth in Article VI. Notwithstanding the foregoing, no amendment shall be made to the Plan with respect to any amount deferred and vested prior to January 1, 2005 unless such amendment explicitly provides that it is applicable to such amount; and except as the Committee otherwise determines in writing, no distribution shall be made upon termination of the Plan if such distribution shall be subject to the excise tax applicable under section 409A of the Code.

12

7.3 Administration of the Plan. The Committee shall have the sole authority to control and manage the operation and administration of the Plan and have all powers, authority and discretion necessary or appropriate to carry out the Plan provisions, and to interpret and apply the terms of the Plan to particular cases or circumstances. All decisions, determinations and interpretations of the Committee will be binding on all interested parties, subject to the claims and appeal procedure necessary to satisfy the minimum standard of ERISA Section 503, and will be given the maximum deference allowed by law. The Committee may delegate in writing its responsibilities as it sees fit.

Committee members who are Participants will abstain from voting on any Plan matters that relate primarily to themselves or that would cause them to be in constructive receipt of amounts credited to their respective Benefit Accounts. The Board will identify three or more individuals to serve as a temporary replacement of the Committee members in the event that all three members must abstain from voting.

7.4 Indemnification. The Company will and hereby does indemnify and hold harmless any of its employees, officers, directors or members of the Committee who have fiduciary or administrative responsibilities with respect to the Plan from and against any and all losses, claims, damages, expenses and liabilities (including reasonable attorneys’ fees and amounts paid, with the approval of the Board, in settlement of any claim) arising out of or resulting from the implementation of a duty, act or decision with respect to the Plan, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

7.5 Claims Procedure. A Participant or his Beneficiary (the “Claimant”) may file a written claim for benefits under the Plan with the Committee. Within sixty (60) days of the filing of the claim, the Committee shall notify the Claimant of the Committee’s decision whether to approve the claim. Such notice shall include specific reasons for any denial of the claim. Within sixty (60) days of the date the Claimant was notified of the denial of a claim, the Claimant may appeal the Committee’s decision by making a written submission containing any pertinent information. Any decision not appealed within such sixty (60)-day period shall be final, binding and conclusive. The Committee shall review information submitted with an appeal and render a decision within sixty (60) days of the submission of the appeal. If it is not feasible for the Committee to render a decision on an appeal within the prescribed sixty (60)-day period, the period may be extended to a one hundred twenty (120)-day period.

7.6 Limitations of Actions on Claims. The delivery to the Participant of the final decision of the Committee with respect to a claim for benefits which has been reviewed and considered under the appeal procedures of Section 7.5 shall commence the period during which the Participant may bring legal action for judicial review of the Committee’s decision. No civil action with respect to the claim for benefits or the subject matter thereof may be commenced by the Participant, whether such action is pursued through litigation, arbitration or otherwise, prior to the completion of the claims and claims review process set forth in Section 7.5, nor following the expiration of two (2) years from the date of delivery of the final decision of the Committee to the Participant under Section 7.5.

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ARTICLE VIII

MISCELLANEOUS

8.1 Trust for Benefit Accounts. The Committee shall determine the amounts it deems necessary or appropriate to satisfy the Company’s obligation to pay the Benefit Accounts at the appropriate time to Participants and Beneficiaries. Such amounts shall be held in a trust established by the Company for this purpose with by a trustee selected by the Committee. The trust shall be an asset of the Company and shall be earmarked to pay benefits under the terms of the Plan.

The trust shall provide that its assets may not be diverted to, or used for, any purpose except payments to Participants and Beneficiaries under the terms of the Plan or, if the Company is Insolvent, to pay the Company’s creditors. Participants and Beneficiaries will have no right against the Company or the trust with respect to the payment of any portion of the Participant’s Benefit Account, except as a general unsecured creditor of the Company.

8.2 Non-alienation. No benefit or interest of any Participant or Beneficiary under this Plan will be subject to any manner of assignment, alienation, anticipation, sale transfer, pledge or encumbrance, whether voluntary or involuntary. Notwithstanding the foregoing, the Committee will honor community property or other marital property rights, but only to the extent required by law or as specifically provided in this Plan. Prior to distribution to a Participant or Beneficiary, no Benefit Account balance will be in any manner subject to the debts, contracts, liabilities, engagements or torts of the Participant or Beneficiary. Assets held in trust to fund this Plan may, however, be diverted to pay the Company’s creditors, if the Company is Insolvent.

8.3 Domestic Relations Order. In the event the Committee receives a Domestic Relations Order from a potential Alternate Payee, the Committee shall promptly notify the Participant, or Beneficiary whose benefit is the subject of such order and provide him/her with information concerning the Plan’s procedures for administering QDROs. Unless and until the order is set aside, the following provisions shall apply:

(a) Committee Determination. The Committee shall within a reasonable time determine whether the order is a QDRO and shall notify the Participant or Beneficiary whose benefit is the subject of the order, of its determination. The Committee may designate a representative to carry out its duties under this provision.

(b) Compliance with Section 409A. Nothing in this Section 8.3(b) shall be would violate Section 409A of the Code and any regulations promulgated hereunder and no payment shall occur prior to the date that the Participant whose benefits are subject to the QDRO would have been entitled to receive payment in accordance with any Deferred Compensation Agreement in existence as of the date of the QDRO. In the event that the QDRO applies to deferrals which occur after the date of the QDRO, the Alternate Payee shall be entitled to a distribution on such future deferrals on the date that the Participant would have been entitled to receive payment

14

8.4 QDRO definitions. For purposes of Section 8.3 the following definitions and rules shall apply:

(a) “Alternate Payee” shall mean any spouse, former spouse, child or other dependent of a Participant who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant.

(b) “Domestic Relations Order” shall mean any judgment, decree, or order (including approval of a property settlement agreement) which:

(i) relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Participant; and

(ii) is made pursuant to a state domestic relations law (including a community property law).

(c) “Qualified Domestic Relations Order” shall mean any Domestic Relations Order which satisfies the criteria set forth as a QDRO under policies established by the Committee.

8.5 Limitation of Rights. Nothing in this Plan will be construed to give a Participant the right to continue in the employ of the Company at any particular position or to interfere with the right of the Company to discharge, lay off or discipline a Participant at any time and for any reason, or to give the Company the right to require any Participant to remain in its employ or to interfere with the Participant’s right to terminate his or her employment.

8.6 Section 409A. This Plan is intended to meet the requirements of Section 409A of the Code, and shall be administered in a manner that is intended to meet those requirements and shall be construed and interpreted in accordance with such intent. To the extent that a distribution, payment, or the settlement or deferral thereof, is subject to Section 409A of the Code, except as the Committee otherwise determines in writing, the award shall be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, including regulations or other guidance issued with respect thereto, such that the grant, payment, settlement or deferral shall not be subject to the excise tax applicable under Section 409A of the Code. Any provision of this Agreement that would cause the award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.

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8.7 Governing Law. To the extent that state law applies, the provisions of this Plan will be construed, enforced and administered in accordance with the laws of the state of Utah, except to the extent pre-empted by ERISA.

8.8 409A Grandfather Amounts. Sections 8.3. and 8.4 shall apply to 409A Grandfather Amounts.

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EX-10.16

EXHIBIT 10.16

AMENDMENT

TO THE

ZIONS BANCORPORATION

PENSION PLAN

This Amendment to the restated and amended Zions Bancorporation Pension Plan (the “Plan”) is made and approved this 31 day of December, 2002, by the Zions Bancorporation Benefits Committee (“Benefits Committee”), for and on behalf of Zions Bancorporation, hereinafter referred to as the “Employer.”

W I T N E S S E T H:

WHEREAS, the Employer has heretofore entered into the Plan, which Plan has been most recently restated and amended in its entirety effective January 1, 2001, and

WHEREAS, the Employer has reserved the right to amend the Plan in whole or in part, and

WHEREAS, the Employer, by action of its Board of Directors, has authorized the Zions Bancorporation Benefits Committee to make certain amendments to the Plan for the purpose of ceasing generally all benefit accruals under the Plan;

NOW THEREFORE, in consideration of the foregoing premises the Benefits Committee, for and on behalf of the Employer adopts the following amendments to the Plan:

1. Section 2.1 is amended by adding a new sub-section (h) to read as follows:

(h) From and after December 31, 2002, no Employee (whether or not an Eligible Employee) who is not already a Participant in the Plan as of December 31, 2002, shall become a Participant in the Plan or be eligible to commence participation in the Plan.

2. Section 3.2 is amended by adding a new sub-section (f) to read as follows:

(f) Unless otherwise provided by further amendment, from and after

December 31, 2002, no Cash Balance Account of any Participant shall accrue any further contribution or earnings credit under this Section 3.2.

3. This Amendment shall be effective for all Plan Years commencing after December 31, 2002.

4. In all other respects the Plan is ratified and approved.

IN WITNESS WHEREOF, the Benefits Committee has caused this Amendment to the Plan to be duly executed as of the date and year first above written.

ZIONS BANCORPORATION BENEFITS COMMITTEE
By:	/s/ Diana Andersen

EX-10.20

EXHIBIT 10.20

ZIONS BANCORPORATION

EXECUTIVE MANAGEMENT PENSION PLAN

Effective January 1, 1994

TABLE OF CONTENTS

			Page
Introduction			1
Article	1-	Definitions	2
	1.1	Accrued Benefit	2
	1.2	Code	2
	1.3	Committee	2
	1.4	Company	2
	1.5	Effective Date	2
	1.6	ERISA	2
	1.7	Executive Management Plan Benefit	2
	1.8	Executive Management Retirement Income	2
	1.9	Participant	2
	1.10	Pension Plan	2
	1.11	Pension Plan Benefit	2
	1.12	Plan	2
	1.13	Retirement Date	2
	1.14	Unrestricted Pension Plan Benefit	2
Article	2-	Participation	3
	2.1	Participants	3
Article	3-	Executive Management Retirement Income	4
	3.1	Amount of Accrued Benefit	4
	3.2	Executive Management Retirement Income	4
	3.3	Forms of Retirement Income	4
Article	4-	Termination and Vesting	5
	4.1	Vesting	5
Article	5-	Disability Benefits	6
	5.1	Payment of Disability Benefit	6
Article	6-	Death Benefits	7
	6.1	Preretirement Death Benefit	7
	6.2	Postretirement Death Benefit	7
Article	7-	General Provisions	8
	7.1	Unfunded Obligation	8
	7.2	Administration	8
	7.3	Employment Status	8
	7.4	Amendment and Termination of Plan	8
	7.5	Provision Against Anticipation	8
	7.6	Facility of Payment	8
	7.7	Withholding Taxes	9
	7.8	Applicable Law	9

Introduction

Zions Bancorporation recognizes the value of services performed by its executives and desires to provide them with full pension benefits even when those benefits exceed the limits on benefits which can be provided by Zions Bancorporation Pension Plan. This reflects Zions Bancorporation’s recognition that the value of services provided by its executives may not be adequately reflected in the retirement benefits provided under its tax qualified retirement plans.

Accordingly, this Executive Management Pension Plan is established supplement benefits provided to executives under the tax qualified Zions Bancorporation Pension Plan.

1

Article 1

Definitions

1.1 Accrued Benefit means the monthly amount of benefit credited to a Participant in accordance with Section 3.1.

1.2 Code means the Internal Revenue Code of 1986, as amended.

1.3 Committee means the Retirement Committee appointed to administer the Pension Plan.

1.4 Company means Zions Bancorporation and any affiliate or subsidiary which adopts this Plan with the consent of the Board of Directors of Zions Bancorporation.

1.5 Effective Date means January 1, 1994.

1.6 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

1.7 Executive Management Plan Benefit means a Participant’s monthly accrued benefit under this Plan determined in accordance with Section 3.1.

1.8 Executive Management Retirement Income means a Participant’s monthly retirement income under this Plan determined in accordance with Article 3.

1.9 Participant means an employee or former employee of the Company who is eligible for an Executive Management Plan Benefit in accordance with Article 2.

1.10 Pension Plan means the Zions Bancorporation Pension Plan as it may be amended from time to time.

1.11 Pension Plan Benefit means a Participant’s monthly accrued benefit under the Pension Plan.

1.12 Plan means the Zions Bancorporation Executive Management Pension Plan.

1.13 Retirement Date means a Participant’s normal, early, late, or disability retirement date determined under the Pension Plan.

1.14 Unrestricted Pension Plan Benefit means a Participant’s monthly accrued benefit under the Pension Plan, determined without regard to the limitations on benefits imposed by Code Section 415 or the limitation on compensation taken into account under the Pension Plan imposed under Code Section 401(a)(17).

2

Article 2

Participation

2.1 Participants

The Board of Directors shall determine the Participants in this Plan, provided that each Participant shall be an employee of the Company who is an active participant in the Pension Plan on or after the Effective Date and who meets the following requirements:

(a) the employee is, or has been, a member of the Company’s Executive Management Committee on or after the Effective Date, and

(b) the employee is (1) employed in a management position with the Company having principal responsibility for the management, direction and success of the Company as a whole or a particular business unit thereof, or (2) a highly compensated employee of the Company within the meaning of ERISA Section 401.

3

Article 3

Executive Management Retirement Income

3.1 Amount of Accrued Benefit A Participant’s Executive Management Plan Benefit is equal to the excess of the Participant’s Unrestricted Pension Plan Benefit over the Participant’s Pension Plan Benefit.

3.2 Executive Management Retirement Income A Participant’s monthly Executive Management Retirement Income commencing on his or her retirement Date will be equal to his or her Executive Management Plan Benefit as of such date adjusted to reflect the form of retirement income elected and, in the case of an early retirement date, adjusted to reflect the age of the Participant on the date benefit payments commence.

3.3 Forms of Retirement Income The forms of retirement income available under this Plan are the same as those described in the Pension Plan. A Participant’s election of any form of retirement income or benefit commencement date under the Pension Plan will be deemed to apply to any Executive Management Retirement Income under this Plan.

4

Article 4

Termination and Vesting

4.1 Vesting

The Company will provide an Executive Management Plan Benefit to a Participant who terminates employment with the Company equal to his or her vested Accrued Benefit. A Participant’s vested interest in his or her Accrued Benefit will be equal to the Accrued Benefit multiplied by the Participant’s vested percentage under the Pension Plan.

All rights to any Executive Management Plan Benefit payable under this Plan, including the payment of any unpaid benefit installments, will be immediately forfeited if any of the following events occur:

(a) The Company terminates the Participant’s employment for any act of willful malfeasance or gross negligence in the performance of his or her duties.

(b) The Participant enters into competition with the Company without the prior written permission of Company’s Board of Directors.

5

Article 5

Disability Benefits

5.1 Payment of Disability Benefit

A Participant who is eligible for disability retirement income under the Pension Plan shall be entitled to disability retirement income under this Plan to the extent the Participant’s Unrestricted Pension Plan Benefit exceeds the Participant’s Pension Plan Benefit. The provisions of the Pension Plan shall apply for determining disability, eligibility, and disability retirement income.

6

Article 6

Death Benefits

6.1 Preretirement Death Benefit

A Participant’s spouse or other beneficiary who qualifies for a preretirement death benefit under the Pension Plan shall be entitled to a preretirement death benefit under this Plan. The amount of such benefit, if any, will be based on the Participant’s vested interest in his or her Accrued Benefit under this Plan and will be determined in the same manner as set forth in the applicable section of the Pension Plan. In addition, such benefit will be payable as provided under the Pension Plan.

6.2 Postretirement Death Benefit

Death benefits payable after a Participant’s retirement shall be determined according to the form of retirement income elected by the Participant upon retirement.

7

Article 7

General Provisions

7.1 Unfunded Obligation

The benefits provided by this Plan shall be an unfunded obligation of the Company. The Company is not required to segregate any monies from its general funds, to create any trusts, or to make any special deposits with respect to this obligation. Title to and beneficial ownership of any investments which the Company may make to fulfill its obligation shall at all times remain in the Company.

7.2 Administration

The Committee shall have complete control of the administration of the Plan, subject to the provisions hereof, with all powers necessary to enable it to carry out its duties properly in that respect. In addition, it will have the power to construe the terms of the Plan and to determine all questions that may arise hereunder, including all questions relating to the eligibility of employees to participate in the Plan and the amount of benefit to which any Participant or beneficiary may become entitled. The Committee’s decisions upon all matters within the scope of its authority will be final.

7.3 Employment Status

Nothing contained in the Plan will be deemed to give any employee the right to be retained in the employ of the Company or to interfere with the rights of the Company to discharge any employee at any time.

7.4 Amendment and Termination of Plan

The Company may amend, suspend or terminate the Plan at any time. No amendment, suspension or termination may impair the right of a Participant or his or her beneficiary to receive benefits accrued under the Plan as of the date the amendment, suspension or termination if adopted.

7.5 Provision Against Anticipation

No benefit under the Plan shall be subject any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge or other legal process, and any attempt to do so shall be void.

7.6 Facility of Payment

If any Participant or beneficiary is physically or mentally incapable of giving a valid receipt for any payment due him or her and no legal representative has been appointed for such Participant or beneficiary, the Committee may make such payment to any person or institution maintaining such Participant or beneficiary, and the release of such person or institution will be a valid and complete discharge for such payment. Any final payment or distribution to any Participant, the legal representative of the Participant, or to any beneficiaries of such Participant in accordance with the provision herein will be in full satisfaction of all claims against the Company arising under or by virtue of the Plan.

8

7.7 Withholding Taxes

Appropriate tax withholding shall be made from payments to Participants pursuant to this Plan or from other wages of Participants as required under applicable law.

7.8 Applicable Law

This Plan shall be interpreted and enforced in accordance with the laws of the State of Utah.

Executed this 16^th day of December, 1994 at Salt Lake City, Utah.

ZIONS BANCORPORATION
by	/s/ Harris H. Simmons
	President

ATTEST:

/s/ Gary L. Anderson

Secretary

9

EX-10.21

EXHIBIT 10.21

ZIONS BANCORPORATION

PAYSHELTER 401(k) AND EMPLOYEE

STOCK OWNERSHIP PLAN

ESTABLISHED AND RESTATED EFFECTIVE JANUARY 1, 2003

TABLE OF CONTENTS

ARTICLE	TITLE	PAGE NO.
ARTICLE I		-1-
ESTABLISHMENT		-1-
1.01	Establishment	-1-
1.02	History	-1-
1.03	Intent	-1-
1.04	Transferee Plan	-2-
1.05	Limitation on Applicability	-2-
1.06	EGTRRA	-2-
ARTICLE II		-3-
DEFINITIONS OF TERMS		-3-
2.01	“Account”	-3-
2.02	“Accrued Benefit”	-4-
2.03	“Administrator” or “Plan Administrator”	-4-
2.04	“Affiliated Group”	-5-
2.05	“Age”	-5-
2.06	“Anniversary Date”	-5-
2.07	“Beneficiary”	-5-
2.08	“Board of Directors”	-5-
2.09	“Code”	-5-
2.10	“Compensation” or “Annual Compensation”	-5-
2.11	“Contingent Beneficiary”	-7-
2.12	“Disability”	-7-
2.13	“Disqualified Person”	-7-
2.14	“Distribution Date”	-7-
2.15	“Effective Date”	-7-
2.16	“Elective Deferral”	-7-
2.17	“Eligible Employee”	-7-
2.18	“Employee”	-7-
2.19	“Employer” or “Zions Employer”	-7-
2.20	“Employer Contribution”	-8-
2.21	“Employer Securities”	-8-
2.22	“Entry Date”	-8-
2.23	“ERISA”	-8-
2.24	“Excluded Employee”	-8-
2.25	“Exempt Loan”	-9-
2.26	“Fiduciary”	-9-
2.27	“Highly Compensated Employee”	-10-
2.28	“Inactive Participant”	-10-
2.29	“Investment Fund”	-10-

2.30	“Investment Manager”	-11-
2.31	“K-Test Average Contribution Percentage”	-11-
2.32	“K-Test Contribution Percentage”	-11-
2.33	“K-Test Contributions”	-11-
2.34	“Leased Employee”	-12-
2.35	“Leveraged Employer Securities”	-12-
2.36	“Limitation Year”	-12-
2.37	“M-Test Average Contribution Percentage”	-12-
2.38	“M-Test Contribution Percentage”	-12-
2.39	“M-Test Contributions”	-12-
2.40	“Matching Contribution”	-13-
2.41	“Named Fiduciary”	-13-
2.42	“Net Profit”	-13-
2.43	“Non-Highly Compensated Employee”	-13-
2.44	“Normal Retirement Age”	-13-
2.45	“Normal Retirement Date”	-13-
2.46	“Participant”	-13-
2.47	“Paysop”	-14-
2.48	“Plan”	-14-
2.49	“Plan Sponsor”	-14-
2.50	“Plan Year”	-14-
2.51	“Predecessor Plan”	-14-
2.52	“Prior Plan”	-14-
2.53	“Qualified Matching Contribution”	-14-
2.54	“Qualified Non-Elective Contribution”	-14-
2.55	“Transferred Benefits”	-14-
2.56	“Trust”	-15-
2.57	“Trust Fund”	-15-
2.58	“Trustee”	-15-
2.59	“Valuation Date”	-15-
2.60	“Vested Interest” or “Vested Accrued Benefit”	-15-
2.61	“Voluntary Contributions”	-15-
ARTICLE III		-16-
SERVICE DEFINITIONS AND RULES		-16-
3.01	“Eligibility Computation Period”	-16-
3.02	“Eligibility Service”	-16-
3.03	“Employment Commencement Date”	-16-
3.04	“Hour of Service”	-16-
3.05	“One Year Break in Service”	-18-
3.06	“Re-employment Commencement Date”	-19-
3.07	“Termination of Employment”	-19-
3.08	“Vesting Computation Period”	-19-
3.09	“Year of Service”	-19-
3.10	“Year of Vesting Service”	-19-
3.11	Special Rules for Crediting Service	-20-
3.12	Qualified Military Service Rules	-20-

ARTICLE IV		-23-
ELIGIBILITY AND PARTICIPATION		-23-
4.01	Age and Service Requirements	-23-
4.02	Eligibility Information	-23-
4.03	Information to be Provided by Employee	-23-
4.04	Reclassification of an Eligible Employee or Excluded Employee	-24-
4.05	Re-employment and Commencement of Participation	-24-
4.06	No Waiver of Participation	-24-
4.07	Effect of Participation	-24-
ARTICLE V		-25-
PARTICIPANT AND EMPLOYER CONTRIBUTIONS		-25-
5.01	Elective Deferrals	-25-
5.02	Payment to Trustee	-26-
5.03	Suspension of Deferrals	-26-
5.04	After-tax Contributions by Participants	-27-
5.05	Rollover Contributions by Participants	-27-
5.06	Safe Harbor Employer Matching Contributions	-27-
5.07	Employer Non-Elective Contributions	-29-
5.08	Time and Method of Payment	-29-
5.09	Employer Contribution Accounts	-29-
5.10	Limitations on Contributions	-30-
5.11	Excess Contributions	-31-
5.12	Correction of Excess Contributions	-32-
ARTICLE VI		-34-
ALLOCATIONS TO ACCOUNT		-34-
6.01	Revaluation of Assets	-34-
6.02	Allocation of Contributions and Forfeitures	-34-
6.03	Adjustment of Accounts and Dividends on Employer Securities	-35-
6.04	Eligibility for Allocation of Employer Matching and Non-Elective Contributions	-38-
6.05	Restriction on Certain Allocations	-39-
6.06	Participant Diversification of Investments	-39-
ARTICLE VII		-42-
LIMITATIONS ON ALLOCATIONS		-42-
7.01	Special Definitions	-42-
7.02	Coordination With Other Plans	-46-
7.03	Order of Limitations	-46-
7.04	Aggregation of Plans	-47-
7.05	Suspense Account	-47-

ARTICLE VIII		-48-
IN-SERVICE AND HARDSHIP WITHDRAWALS		-48-
8.01	In-Service Withdrawals, Withdrawals of Rollover Contributions and Withdrawals Due to Attainment of Age 59 1/2, Disability or Hardship	-48-
8.02	Financial Hardship Distribution Rules	-49-
8.03	Determination of Immediate and Heavy Financial Need	-49-
8.04	In Service Withdrawals of Voluntary Contributions	-50-
8.05	Determination of Available Withdrawal Amount	-50-
8.06	Withdrawal of Rollover Contributions	-50-
ARTICLE IX		-52-
RETIREMENT BENEFITS		-52-
9.01	Normal or Late Retirement	-52-
9.02	Disability Retirement	-52-
9.03	Method of Payment	-52-
9.04	Time of Payment	-53-
9.05	Minimum Distribution Requirements	-53-
9.06	No Annuity Benefits	-56-
9.07	Distribution of Employer Securities	-57-
9.08	Special Distribution Rules	-57-
9.09	Distribution of Transferred Benefits	-58-
ARTICLE X		-59-
DEATH BENEFITS		-59-
10.01	Death Benefits Payable	-59-
10.02	Designation of Beneficiary	-59-
10.03	Death Benefit Payment Procedure	-60-
10.04	Required Distributions Upon Death	-60-
ARTICLE XI		-64-
BENEFITS UPON OTHER TERMINATION OF EMPLOYMENT		-64-
11.01	Vested Amounts	-64-
11.02	Distribution of Vested Interest	-64-
11.03	Distribution of Small Amounts	-66-
11.04	Eligible Rollover Distributions	-66-
11.05	Breaks in Service and Vesting	-67-
11.06	No Increase in Pre-break Vesting	-67-
11.07	Disposition of Forfeitures	-67-
11.08	Distribution to Participants Who Are Less Than 100% Vested in Their Entire Account	-68-
11.09	Repayment of Distribution	-69-
11.10	Restoration of Accounts	-69-
11.11	Amendments to the Vesting Schedule	-70-

ARTICLE XII		-71-
FIDUCIARY DUTIES		-71-
12.01	General Fiduciary Duty	-71-
12.02	Allocation of Responsibilities	-71-
12.03	Delegation of Responsibilities	-71-
12.04	Liability for Allocation or Delegation of Responsibilities	-71-
12.05	Liability for Co-Fiduciaries	-72-
12.06	Same Person May Serve in More than One Capacity	-72-
12.07	Indemnification	-72-
ARTICLE XIII		-73-
THE PLAN ADMINISTRATOR		-73-
13.01	Appointment of Plan Administrator	-73-
13.02	Acceptance by Plan Administrator	-73-
13.03	Signature of Plan Administrator	-73-
13.04	Appointment of an Investment Manager	-73-
13.05	Duties of the Plan Administrator	-73-
13.06	Claims Procedure	-74-
13.07	Claims Review Procedure	-75-
13.08	Limitations of Actions on Claims	-75-
13.09	Compensation and Expenses of Plan Administrator	-75-
13.10	Removal or Resignation	-76-
13.11	Records of Plan Administrator	-76-
13.12	Other Responsibilities	-76-
ARTICLE XIV		-77-
THE TRUSTEE		-77-
14.01	Appointment of Trustee	-77-
14.02	Acceptance by Trustee	-77-
14.03	Provisions of Trust Agreement	-77-
14.04	Participant Voting Rights	-79-
14.05	Investment Committee	-79-
14.06	Payment of Plan Expenses	-80-
14.07	Payment From the Trust Fund	-80-
ARTICLE XV		-81-
THE EMPLOYER		-81-
15.01	Notification	-81-
15.02	Record Keeping	-81-
15.03	Bonding	-81-
15.04	Signature of Employer	-81-
15.05	Plan Counsel and Expenses	-81-
15.06	Other Responsibilities	-81-
15.07	Affiliated Groups	-81-
15.08	Employer Contributions	-82-

ARTICLE XVI		-83-
PLAN AMENDMENT OR MERGER		-83-
16.01	Power to Amend	-83-
16.02	Limitations on Amendments	-83-
16.03	Method of Amendment	-83-
16.04	Notice of Amendment	-84-
16.05	Merger or Consolidation	-84-
ARTICLE XVII		-85-
TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS		-85-
17.01	Right to Terminate	-85-
17.02	Effect of Termination	-85-
17.03	Manner of Distribution	-85-
17.04	No Reversion	-86-
17.05	Termination of an Employer	-86-
17.06	Partial Termination	-86-
17.07	Effect of Partial Termination	-86-
ARTICLE XVIII		-87-
FUNDING POLICY FOR PLAN BENEFITS		-87-
18.01	Funding Method	-87-
18.02	Investment Policy	-87-
18.03	No Purchase of Life Insurance Contracts	-88-
18.04	General Investments and Dividend Accounts	-88-
18.05	Non-transferability of Annuity Contracts	-88-
18.06	Establishment of Separate Funds	-88-
ARTICLE XIX		-91-
TOP-HEAVY PROVISIONS		-91-
19.01	Application	-91-
19.02	Special Definitions	-91-
19.03	Top-Heavy or Super Top-Heavy Minimum Required Allocation	-96-
19.04	Non-forfeitability of Minimum Top-Heavy Allocation	-97-
19.05	Top Heavy Compensation Limitation	-98-
19.06	Minimum Vesting Provision	-98-
19.07	Adjustments to Limitations	-98-
19.08	Participant Elective Deferrals	-99-
19.09	EGTRRA Modification of Top-Heavy Rules	-99-
ARTICLE XX		-101-
PROVISIONS AFFECTING BENEFITS		-101-
20.01	Availability of Loans	-101-

20.02	Loan Administration	-101-
20.03	Amount of Loan	-101-
20.04	Collateral Requirements	-102-
20.05	Loan Terms	-102-
20.06	Accounting for Loans	-102-
20.07	Effect of Termination of Employment or Plan	-102-
20.08	No Spousal Consent	-103-
20.09	Anti-Alienation	-103-
20.10	Qualified Domestic Relations Orders	-103-
20.11	QDRO Definitions	-104-
ARTICLE XXI		-105-
MULTIPLE EMPLOYER PROVISIONS		-105-
21.01	Adoption by Other Zions Employers	-105-
21.02	Requirements of Participating Zions Employers	-105-
21.03	Designation of Agent	-105-
21.04	Employee Transfers	-105-
21.05	Amendment	-106-
21.06	Discontinuance of Participation	-106-
21.07	Administrator’s Authority	-106-
21.08	Participating Employer Contributions	-106-
ARTICLE XXII		-107-
PURCHASE OF EMPLOYER SECURITIES		-107-
22.01	No Put option	-107-
22.01	Purchase Price For Employer Securities	-107-
ARTICLE XXIII		-108-
MISCELLANEOUS		-108-
23.01	Participant’s Rights	-108-
23.02	Actions Consistent with Terms of Plan	-108-
23.03	Performance of Duties	-108-
23.04	Validity of Plan	-108-
23.05	Legal Action	-108-
23.06	Gender and Number	-108-
23.07	Uniformity	-108-
23.08	Headings	-109-
23.09	Receipt and Release for Payments	-109-
23.10	Payments to Minors, Incompetents	-109-
23.11	Missing Persons	-109-
23.12	Prohibition Against Diversion of Funds	-110-
23.13	Applicability of Plan	-110-
23.14	Misstatement of Age	-110-
23.15	Return of Contributions to the Employer	-110-
23.16	Counterparts	-110-

ARTICLE I

ESTABLISHMENT

1.01 Establishment: This Plan is an amendment and restatement in full of the Zions Bancorporation Payshelter 401(k) Plan. This Plan is signed and executed on the day set forth at the end of this Plan, effective for all purposes (except as specifically set forth hereafter) as of January 1, 2003. This Plan is maintained by Zions Bancorporation, a corporation organized and existing under the laws of the State of Utah, with principal offices located at Salt Lake City, Utah, hereinafter referred to as the “Plan Sponsor,” for the benefit of its Employees and the Employees of those affiliated entities who also participate herein. With the consent of Zions Bancorporation this Plan may be adopted by other Employers affiliated with it.

1.02 History: Effective as of July 1, 1984, Zions Utah Bancorporation, as the sponsoring employer, established the Zions Utah Bancorporation Salary Reduction Arrangement Plan and executed a funding arrangement with Zions First National Bank as Trustee to provide retirement benefits for eligible Employees. The name of the Plan was changed effective July 17, 1987, to the Zions Bancorporation Salary Reduction Arrangement Plan. Effective December 29, 1988, Zions Bancorporation amended the Zions Bancorporation Payroll Stock Ownership Plan and merged that plan into the Zions Bancorporation Salary Reduction Arrangement Plan. Effective January 1, 1989, Zions Bancorporation further amended and restated the Plan and renamed the Plan the Zions Bancorporation Employee Investment Savings Plan. Effective September 18, 1998, Zions Bancorporation terminated the Zions Bancorporation Profit Sharing Plan and on July 22, 1999, that plan was merged into this Plan. Effective as of December 31, 2001, Zions Bancorporation merged the Zions Bancorporation Employee Stock Savings Plan into the Zions Bancorporation Employee Investment Savings Plan, which merger further served to restate and amend both the Zions Bancorporation Employee Stock Savings Plan and the Zions Bancorporation Employee Investment Savings Plan to comply with and satisfy GUST. With the merger and amendment Zions Bancorporation also changed the name of the Plan effective January 1, 2002, to the Zions Bancorporation Payshelter 401(k) Plan. The Zions Bancorporation Payshelter 401(k) Plan as merged and combined is referred to herein as the “Prior Plan.”

1.03 Intent: Zions Bancorporation intends by this Plan to restate in full the Prior Plan, as it previously existed following the merger which was effective December 31, 2001, and continue in part the retirement benefit program it has previously established for the benefit of its Employees who shall meet the eligibility requirements hereinafter set forth and for the benefit of the beneficiaries of such Employees, respectively, as hereinafter provided. Zions Bancorporation has designed this Plan to permit Employee Deferrals and Employer Matching Contributions which satisfy the “safe harbor” requirements of Code §§401(k)(12) and 401(m)(11). Zions Bancorporation also intends that this Plan shall be an employee stock ownership plan within the meaning of Code §4975(e)(7) and shall

–1–

meet all other applicable requirements of the Internal Revenue Code of 1986 (“Code”) and the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan shall be interpreted, wherever possible, to comply with the terms of the Code and ERISA and all formal regulations and rulings issued thereunder.

1.04 Transferee Plan: This Plan may include assets transferred from one or more other Plans (“Predecessor Plan” or “Plans”) sponsored by Zions Bancorporation or by a member of an Affiliated Group with Zions Bancorporation. In that event certain provisions of this Plan shall apply for purposes of insuring that the Predecessor Plan has complied and continues to comply with all requirements of recent legislation, known collectively as “GUST.”

1.05 Limitation on Applicability: The provisions of this Plan shall apply to all persons, whether or not employed by Zions Bancorporation or a member of an Affiliated Group on the Effective Date, who have an account in the Plan on or after the Effective Date. Prior to the Effective Date the terms of the Prior Plan shall govern.

1.06 EGTRRA: This Plan includes language which reflects certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). These provisions are intended as good faith compliance with the requirements of EGTRRA and are to be construed in accordance with EGTRRA and guidance issued thereunder. Unless otherwise provided, provisions included in this Plan in compliance with EGTRRA shall be effective as of the Effective Date of this Plan. Provisions included in this Plan conforming to EGTRRA shall supersede all other provisions of the Plan to the extent those provisions are inconsistent with EGTRRA.

–2–

ARTICLE II

DEFINITIONS OF TERMS

As used in this Plan the following words and phrases shall have the meanings indicated, unless the context clearly requires another meaning.

2.01 “Account” shall mean the Account established and maintained by the Plan Administrator for a Participant with respect to the Participant’s interest in the Investment Fund. Each Participant’s Account shall be credited or charged with contributions, distributions, expenses, earnings and losses as provided herein. The following separate sub-accounts shall be established for each Participant, as applicable, and in the aggregate they shall constitute the Participant’s Account:

(a) “Participant Elective Deferral Account” shall mean the sub-Account which is attributable to the contributions made by the Employer pursuant to an election by the Participant under Section 5.01.

(b) “Participant Rollover Account” shall mean the sub-Account which is attributable to contributions received pursuant to Section 5.05.

(c) “Employer Matching Contribution Account” shall mean the sub-Account which is attributable to matching contributions made by the Employer pursuant to Section 5.06.

(d) “Employer Non-Elective Contribution Account” shall mean the sub-Account which is attributable to the Non-Elective Contributions made by the Employer pursuant to Section 5.07.

(e) “Participant Voluntary Contribution Account” shall mean the sub-Account which is attributable to Voluntary Contributions made by the Employee prior to the Effective Date. This sub-Account shall also reflect the Participant’s Voluntary Contributions used previously to acquire Company Stock.

(f) “Paysop Account” shall mean the sub-Account which is attributable to all amounts transferred to this Plan from the Paysop pursuant to that certain trust to trust transfer agreement effective December 29, 1988.

(g) “Employer Securities Account” shall mean the sub-Account maintained for each Participant to hold the Participant’s share of Employer Securities (including fractional shares) held by the Plan, regardless of origin to the Plan or contribution source,

–3–

including, without limitation, Employer Securities purchased and paid for by the Trust or contributed in kind by the Employer to the Trust, forfeitures of Employer Securities and stock dividends on Employer Securities. To the extent it holds Employer Securities the Dividend Account shall also be treated as part of the Employer Securities Account for all Plan purposes, including diversification under Section 6.06, but excepting vesting under Section 11.01.

(h) “General Investments Account” shall mean the Account which is attributable to all contributions made to the Plan for the benefit of the Participant which are not comprised of Employer Securities or used to purchase Employer Securities, together with all forfeitures, earnings and accruals thereon. This sub-Account shall hold all non-Employer Securities investments, regardless of origin to the Plan or contribution source.

(i) “Dividend Account” shall mean the Account which is maintained for the purpose of receiving and holding cash dividends paid by the Plan Sponsor on Employer Securities held by the Plan until distributed or invested in Employer Securities. Upon investment in Employer Securities, the Dividend Account shall be deemed a part of and treated in the same manner as the Employer Securities Account for all Plan purposes, including diversification under Section 6.06, but excepting vesting under Section 11.01.

(j) “Segregated Investment Account” shall mean the Account which is maintained for the benefit of a Participant pursuant to Section 6.06.

(k) “Predecessor Plan Account” shall mean the Account which is attributable to assets transferred from a Predecessor Plan (“Transferred Benefits”).

Certain sub-Accounts may include or incorporate assets from other sub-Accounts. The maintenance of separate sub-Accounts is for Plan accounting purposes only and segregation of the assets of the Plan shall not be required.

2.02 “Accrued Benefit” shall mean, as of any date, the sum of the values in a Participant’s Account as of the most recent preceding Valuation Date, plus any contributions to and minus any distributions from the Account since the Valuation Date.

2.03 “Administrator” or “Plan Administrator” shall mean the person, persons, or corporation administering this Plan, as provided in Article XIII hereof, and any successor or successors thereto.

–4–

2.04 “Affiliated Group” shall mean a group of corporations, trades or businesses which constitutes a controlled group of corporations, trades or businesses as defined in Code §§414(b) and (c) and shall also include a group of corporations, partnerships or other organizations which constitutes an affiliated service group as defined in Code §414(m) or is treated as a single employer under Code §414(o) and the regulations thereunder.

2.05 “Age” shall mean a person’s attained age in completed years and months as of the date determined.

2.06 “Anniversary Date” shall be the first day of each Plan Year.

2.07 “Beneficiary” shall mean any person, persons, or trust designated by a Participant on a form as the Plan Administrator may prescribe to receive any death benefit that may be payable hereunder if such person or persons survive the Participant. This designation may be revoked at any time in similar manner and form. In the event of the death of the designated Beneficiary prior to the death of the Participant, the Contingent Beneficiary shall be entitled to receive any death benefit.

2.08 “Board of Directors” shall mean:

(a) In the case of a corporation, its Board of Directors; or

(b) In the case of a partnership or joint venture, its controlling partners.

2.09 “Code” shall mean the Internal Revenue Code of 1986, as amended.

2.10 “Compensation” or “Annual Compensation” shall mean the Participant’s wages, salaries, fees for professional service and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company to the extent that the amounts are includable in gross income (including, but not limited to, commission paid salesmen, compensation for services on insurance premiums, tips, and bonuses). Compensation will also include Participant contributions to any insurance program and elective contributions made by the Company on behalf of its Participants which are not includable in gross income under Code Sections 125, 402(e)(3), 402(h) or 403(b).

The term “Compensation” does not include:

(a) Company contributions to a plan of deferred compensation (other than elective contributions described above) to the extent that, before the application of the Code Section 415 limitations to that plan, the contributions are not includible in the gross income of the Participant for the taxable year in which contributed. Additionally, any

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distributions from a plan of deferred compensation are not considered as Compensation regardless of whether such amounts are includible in the gross income of the Participant when distributed. However, any amounts received by a Participant pursuant to an unfunded nonqualified plan may be considered as Compensation in the year such amounts are includible in the gross income of the Participant;

(b) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by a Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

(c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option;

(d) Other amounts which receive special tax benefits, such as premiums for group term life insurance (without regard to whether the premiums are includible in the gross income of the Participant);

(e) Reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, parking or public transportation payments not includable in gross income by reason of Code §132(f)(4), welfare benefits, and any lump sum amounts paid at termination of employment (on account of such termination), such as severance pay, vacation and sick leave cash-outs; and

(f) Directors fees, if any, paid to Highly Compensated Employees.

The Participant’s Annual Compensation taken into account for any Plan Year shall not exceed one hundred fifty thousand dollars ($150,000), or such greater amount adjusted each Plan Year as provided in Code §401(a)(17)(B). Effective for Plan Years commencing on and after January 1, 1997, aggregation of family members’ compensation shall not be required or allowed when determining Annual Compensation.

Effective for Plan Years commencing on and after January 1, 2002, Annual Compensation of each Participant taken into account in determining allocations for any Plan Year shall not exceed two hundred thousand dollars ($200,000), as adjusted for cost-of-living increases in accordance with Code §401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to Annual Compensation for the Plan Year that begins with or within the calendar year.

For any short Plan Year the Annual Compensation limit shall be an amount equal to the Annual Compensation limit for the calendar year in which the Plan Year begins, multiplied by the ratio obtained by dividing the number of full months in the short Plan Year by twelve (12).

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2.11 “Contingent Beneficiary” shall mean the person, persons, or trust duly designated by the Participant to receive any death benefit from the Plan in the event the designated Beneficiary does not survive the Participant.

2.12 “Disability” shall mean when applied to any Participant who has not yet attained Normal Retirement Age, an impairment occurring due to sickness or injury which prevents the Participant from performing his or her material and substantial duties as an Employee and which can be expected (a) to last for a long-continued, indefinite period and (b) result in the Participant being unable to perform the duties of any gainful occupation for which he or she is reasonably fitted by education, training or experience. The Plan Administrator shall determine the existence of Disability under this Section by applying of foregoing standard in a manner consistent with the determination of disability under the long term disability plan sponsored by the Plan Sponsor. Eligibility to receive Social Security disability payments shall not automatically deem the Participant to be disabled without further determination by the Plan Administrator.

2.13 “Disqualified Person” shall mean a person defined under Code §4975(e)(2).

2.14 “Distribution Date” shall mean the first day of the first month for which an amount is payable, or the date on which a benefit is actually paid or begins to be paid.

2.15 “Effective Date” shall mean January 1, 2003. All provisions of this Plan shall be effective as of that date unless an alternative date is specifically provided.

2.16 “Elective Deferral” shall mean a contribution to the Plan under a cash or deferred arrangement as defined in Code §401(k) to the extent not includable in gross income, which is made pursuant to an election and authorization by a Participant through a Salary Deferral Agreement consistent with the provisions of Section 5.01.

2.17 “Eligible Employee” shall mean any Employee who is not an Excluded Employee.

2.18 “Employee” shall mean any individual who performs personal services directly for and with the consent and supervision of a Zions Employer in a capacity other than solely as a director. The term “Employee” shall also include a Leased Employee.

2.19 “Employer” or “Zions Employer” shall mean the Plan Sponsor and any other entity who, with the authorization of the Plan Sponsor, may adopt this Plan. Solely for purposes of determining Eligibility Service, Years of Vesting Service and One Year Breaks in Service, any entity not adopting this Plan which, together with the Plan Sponsor, is a member of an Affiliated Group shall also be treated as an Employer for the period of time during which the entity was a part of the Affiliated Group. Each Zions Employer participating in this Plan shall be identified on a list attached as an addendum to this Plan or through separate participation agreements reflecting adoption of this Plan by the Zions Employer.

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2.20 “Employer Contribution” shall mean any Employer contribution made to this Plan on behalf of an Employee.

2.21 “Employer Securities” shall mean common stock issued by the Plan Sponsor (or by a corporation which is a member of the controlled group of corporations of which the Plan Sponsor is a member) which is readily tradeable on an established securities market. Noncallable preferred stock shall be deemed to be “Employer Securities” if such stock is convertible at any time into stock which constitutes “Employer Securities” hereunder and if such conversion is at a conversion price which (as of the date of the acquisition by the Plan) is reasonable. Preferred stock shall be treated as noncallable if after the call there will be a reasonable opportunity for a conversion which meets the above requirement.

2.22 “Entry Date” shall mean, solely for purposes of participation under Article IV, the date an Employee became or becomes a Participant in the Plan. Under the Prior Plan Entry Dates occurred on January 1 April 1, July 1 and October 1 of each Plan Year. Effective January 1, 2002, the Prior Plan was amended to provide that Entry Dates occur on each day of the Plan Year. The Effective Date shall also be an Entry Date for this Plan.

2.23 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations issued thereunder.

2.24 “Excluded Employee” shall mean a member of that class of Employees who are not eligible to participate in the Plan or accrue any benefit under the Plan, regardless of the number of hours worked. The class of such Employees includes:

(a) Employees whose employment is governed by the terms of a collective bargaining agreement between Employee representatives and the Employer under which retirement benefits were the subject of good faith bargaining between the Employee representatives and the Employer.

(b) Employees who are non-resident aliens and who receive no earned income (within the meaning of Code §911(b)) from an Employer which constitutes income from sources within the United States.

(c) Employees whose services for the Employer are performed outside of the United States or whose principal base of operations is outside of the United States.

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(d) Employees who are designated by the Employer to be in either of the following classifications:

(i) independent contractor, or

(ii) temporary employee or Leased Employee,

It is expressly intended that an individual identified by the Employer to be in one of the above classifications shall be ineligible to participate in the Plan without regard to whether a court or administrative agency subsequently determines that the individual was not or is not in fact in that classification.

(e) Employees who are employed by an entity which is part of a Affiliated Group with a Zions Employer, but which entity has not adopted and does not participate in this Plan.

2.25 “Exempt Loan” shall mean a loan made to this Plan by a Disqualified Person, or a loan to this Plan which a Disqualified Person guarantees, provided the loan satisfies the requirements of Treas. Reg. §54.4975-7(b).

2.26 “Fiduciary” shall mean and include the Trustee, Plan Administrator, Plan Sponsor, Investment Manager, and any other person or corporation who:

(a) Exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets;

(b) Renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the Plan, or has any authority or responsibility to do so;

(c) Has any discretionary authority or discretionary responsibility in the administration of the Plan; or

(d) Is described as a “fiduciary” in Sections 3(14) or (21) of ERISA or is designated to carry out fiduciary responsibilities pursuant to this agreement to the extent permitted by Section 405(c)(1)(B) of ERISA.

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2.27 “Highly Compensated Employee” shall mean, for any Plan Year, an Employee, other than a non-resident alien receiving no earned income from the Employer from sources within the United States, who:

(a) was at any time during the Plan Year or the Look-back Year a Five Percent Owner (as defined in Section 19.02(c)); or

(b) received Compensation from the Employer in the Look-back Year in excess of ninety thousand dollars ($90,000) and was in the Top Paid Group for the Look-back Year.

“Look-back Year” means the Plan Year immediately preceding the Plan Year for which the determination is being made. An Employee is in the “Top Paid Group” if the Employee is in the group consisting of the top twenty percent (20%) of Employees when ranked on the basis of Compensation paid during the Look Back Year. When calculating the number of Employees in the Top Paid Group the following Employees shall be excluded: (i) Employees who have not completed 6 months of service; (ii) Employees who normally work less than 17 ¹/2 hours per week; (iii) Employees who normally work not more than 6 months during any year; (iv) Employees who have not attained Age 21; and (v) Employees who are Excluded Employees by reason of Section 2.24(a). If permitted by IRS regulations or rulings, the Employer may use shorter periods and hours and a lower age when calculating the Top Paid Group. The ninety thousand dollar ($90,000) amount in (b) above shall be adjusted for cost of living as provided under Code §415(d), except that the base period shall be the calendar quarter ending September 30, 1996.

A former Employee who was a Highly Compensated Employee upon Termination of Employment or at any time after attaining Age fifty-five (55) shall be treated as a Highly Compensated Employee. For any Plan Year, including the Look-back Year, no family aggregation rules shall apply when determining who is a Highly Compensated Employee and no Employee who is a family member of any Highly Compensated Employee shall be required or considered to be a single Employee with the Highly Compensated Employee.

For purposes of this Section, Compensation is defined as in Section 7.01(b) of this Plan, but shall include contributions made by the Employer to a plan of deferred compensation otherwise excluded in Section 7.01(b).

2.28 “Inactive Participant” shall mean an individual who retains and is entitled to receive an Accrued Benefit under the Plan, but who is not currently eligible to make Elective Deferral Contributions or receive an allocation of Employer Contributions or forfeitures, without regard to whether the individual has incurred a Termination of Employment.

2.29 “Investment Fund” shall mean all assets of the Trust Fund.

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2.30 “Investment Manager” shall mean any Fiduciary (other than a Trustee or Named Fiduciary) who:

(a) Has the power to manage, acquire or dispose of any asset of the Plan;

(b) Is (1) registered as an investment advisor under the Investment Advisors Act of 1940; (2) a bank as defined in that Act; or (3) is an insurance company qualified to perform services described in Subsection (a) above under the laws of more than one state; and

(c) Has acknowledged in writing that he is a Fiduciary with respect to the Plan.

2.31 “K-Test Average Contribution Percentage” shall mean the average (expressed as a percentage) of the K-Test Contribution Percentages of the Participants in a group.

2.32 “K-Test Contribution Percentage” shall mean the ratio (expressed as a percentage) of a Participant’s K-Test Contributions for a Plan Year to the Participant’s Compensation for the Plan Year. The K-Test Contribution Percentage for a Participant who is a Highly Compensated Employee shall be determined by combining all cash or deferred arrangements under which the Highly Compensated Employee is eligible to participate (other than those which may not be permissively aggregated) with this Plan as though they were a single arrangement. For this purpose, Compensation is defined as in Section 7.01(b) of the Plan. The K-Test Contribution Percentage for a Participant who has made no Elective Deferral contributions and who is not credited with any K-Test Contributions for the Plan Year shall be zero (0).

2.33 “K-Test Contributions” shall mean, for any Plan Year, a Participant’s Elective Deferrals, plus, if so elected by the Employer, part or all of the Qualified Non-Elective Contributions and Qualified Matching Contributions allocated to the Participant for such year, provided that, any Qualified Non-Elective Contributions included as K-Test Contributions shall not increase the difference between the K-Test Average Contribution Percentage for Highly Compensated Employees and the K-Test Average Contribution Percentage for Non-Highly Compensated Employees; and, further provided that, no Qualified Non-Elective Contributions or Qualified Matching Contributions included as K-Test Contributions shall be included as M-Test Contributions. In determining the amount of a Participant’s Elective Deferrals under this Section the Plan Administrator shall take into account elective deferrals made by the Participant under any other plan which is aggregated with this Plan for purposes of Code §401(a)(4) or Code §410(b) (other than Code §410(b)(2)(A)(ii)) and any other plan satisfying Code §401(k)(3) and Reg. §1.401(k)-1(b)(3) which the Employer elects to permissively aggregate with this Plan, by treating all such plans and this Plan as a single plan.

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2.34 “Leased Employee” shall mean any person who, pursuant to an agreement between the Zions Employer and the Plan Sponsor or any other person or organization (leasing organization), has performed services for the Zions Employer (or for the Zions Employer and related persons determined in accordance with Code §414(n)(6)) and such services are performed under the primary direction or control of the Zions Employer.

2.35 “Leveraged Employer Securities” shall mean Employer Securities acquired by the Trust with the proceeds of an Exempt Loan and which satisfy the definition of “qualifying employer securities” under Code §4975(e)(8).

2.36 “Limitation Year” shall mean the Plan Year, unless the Employer elects a different twelve (12) month period.

2.37 “M-Test Average Contribution Percentage” shall mean the average (expressed as a percentage) of the M-Test Contribution Percentages of the Participants in a group.

2.38 “M-Test Contribution Percentage” shall mean the ratio (expressed as a percentage) of a Participant’s M-Test Contributions for a Plan Year to the Participant’s Compensation for the Plan Year. The M-Test Contribution Percentage for a Participant who is a Highly Compensated Employee shall be determined by combining all plans subject to Code §401(m) under which the Highly Compensated Employee is eligible to participate (other than those which may not be permissively aggregated) with this Plan as though they were a single plan. For this purpose, Compensation is defined as in Section 7.01(b) of the Plan. The M-Test Contribution Percentage for a Participant who has made no Elective Deferral contributions and who is not credited with any M-Test Contributions for the Plan Year shall be zero (0).

2.39 “M-Test Contributions” shall mean for any Plan Year Matching Contributions made pursuant to Section 5.06 less any of the Participant’s Qualified Matching Contributions included as K-Test Contributions. If so elected by the Employer, part or all of the Qualified Non-Elective Contributions allocated to the Participant for such year shall be included as an M-Test Contribution, provided that any Qualified Non-Elective Contributions included as M-Test Contributions shall not increase the difference between the M-Test Average Contribution Percentage for Highly Compensated Employees and the M-Test Average Contribution Percentage for Non-Highly Compensated Employees; and, further provided that, no Qualified Non-Elective Contributions included as M-Test Contributions shall be included as K-Test Contributions. In determining the amount of M-Test Contributions under this Section the Plan Administrator shall take into account all employee voluntary contributions made by the Participant and all matching contributions made by the Employer under any other plan which is aggregated with this Plan for purposes of Code §401(a)(4) or Code §410(b) (other than Code §410(b)(2)(A)(ii)) and any other plan satisfying Code §401(k)(3) and Reg. §1.401(k)-1(b)(3) which the Employer elects to permissively aggregate with this Plan, by treating all such plans and this Plan as a single plan.

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2.40 “Matching Contribution” shall mean any Employer contribution made to the Plan on behalf of an Employee on account of an Employee’s Elective Deferral, but excluding, for Plan Years beginning after December 31, 1988, any contribution used to meet the minimum required allocation under Section 19.03. For Plan Years commencing after December 31, 2001, Matching Contributions may be used to satisfy the minimum required contribution requirements of Section 19.03 to the extent provided in Section 19.09, if the Employer fails to or elects not to provide benefits to Participants under this Plan on a safe harbor basis, as defined herein.

2.41 “Named Fiduciary” shall mean the Plan Administrator and any Committee appointed and so designated by the Plan Administrator.

2.42 “Net Profit” for any year shall mean the current and accumulated earnings of the Employer as reflected by its books of account for the particular fiscal year prior to the provision for federal and state income tax, without increase or decrease due to corrections or adjustments subsequently made, but excluding the cost of contributions made under this Plan or any other qualified plan.

2.43 “Non-Highly Compensated Employee” shall mean an Employee who is not a Highly Compensated Employee.

2.44 “Normal Retirement Age” shall mean Age sixty-five (65).

2.45 “Normal Retirement Date” shall mean the first day of the calendar month coinciding with or next following a Participant’s Normal Retirement Age.

2.46 “Participant” shall mean any Eligible Employee who has satisfied all of the Age and service requirements of Section 4.01. Such an Eligible Employee shall be deemed to be a Participant in the Plan for purposes of any applicable non-discrimination test, including the K-Test and M-Test defined in this Plan, without regard to whether he has executed a Salary Reduction Agreement and agreed to have contributions made to this Plan through Elective Deferrals. A Participant may nevertheless be considered “active” or “inactive” depending on whether he is eligible to make Elective Deferral Contributions or receive an allocation of Employer Contributions. A Participant who has an Account in the Plan but is an Inactive Participant because he or she has incurred a Termination of Employment shall not be treated as a Participant in the Plan for purposes of any applicable non-discrimination test, including the K-Test and M-Test defined in this Plan in any Plan Year following the Plan Year in which the Participant’s Termination of Employment has occurred.

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2.47 “Paysop” shall mean the Zions Bancorporation Payroll Stock Ownership Plan, a tax-credit employee stock ownership plan within the meaning of Code §409(a), which was merged into this Plan pursuant to that certain trust to trust transfer agreement effective December 29, 1988.

2.48 “Plan” shall mean the Plan as stated herein and as may be amended from time to time, denominated the “Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan.” The Employer intends the Plan to satisfy the requirements of Code Section 401(k) and to be an employee stock ownership plan within the meaning of Code §4975(e)(7), for all purposes of the Code

2.49 “Plan Sponsor” shall mean Zions Bancorporation.

2.50 “Plan Year” shall mean the one year period commencing each January 1 and ending the following December 31.

2.51 “Predecessor Plan” shall mean any Plan which has been previously amended or restated for GUST and whose assets have been transferred to this Plan pursuant to a merger or trust to trust transfer. The benefits which are funded by the transferred assets shall be protected benefits within the meaning of Code §411(d)(6) and the regulations thereunder and prior to their transfer to this Plan shall be subject to all provisions of the Predecessor Plan, including any transitional rules required by prior legislation such as GUST and applicable IRS regulations.

2.52 “Prior Plan” shall mean the Zions Bancorporation Payshelter 401(k) Plan, as it existed immediately prior to the Effective Date.

2.53 “Qualified Matching Contribution” shall mean a Matching Contribution with respect to which the requirements of Reg. §1.401(k)-1(b)(5) and Code §§401(k)(2)(B) and (C) are met.

2.54 “Qualified Non-Elective Contribution” shall mean any Employer contribution to the Plan other than a Matching Contribution with respect to which the Employee may not elect to have the contribution paid to the Employee in cash instead of being contributed to the Plan and (if treated as K-test Contributions) the requirements of Reg. §1.401(k)-1(b)(5) and Code §§401(k)(2)(B) and (C) are met or (if treated as M-Test Contributions) the requirements of Reg. §1.401(m)-1(b)(5) are met.

2.55 “Transferred Benefits” shall mean those benefits funded by assets transferred to the Plan from a Predecessor Plan. Transferred Benefits shall include all optional forms of benefits available under the Predecessor Plan(s) from which the Transferred Benefits were received, unless otherwise provided in this Plan.

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2.56 “Trust” shall mean the Trust originally created in conjunction with the Plan, previously named effective January 1, 2002, the Zions Bancorporation Payshelter 401(k) Plan Trust. As of the Effective Date the Trust is designated as the “Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust.”

2.57 “Trust Fund” shall mean all cash, Employer Securities, securities, annuity contracts, real estate and any other property held by the Trustee pursuant to the terms of the Trust and this Plan, together with investment earnings or losses thereon, less any applicable expenses of the Plan and Trust.

2.58 “Trustee” shall mean the bank, trust company or other corporation possessing trust powers under applicable state or federal law, or one or more individuals, or any combination thereof named as Trustee or Trustees under the Trust.

2.59 “Valuation Date” shall mean the date on which the Trust Fund and Accounts are valued, as provided in this Plan. The following shall be Valuation Dates:

(a) the last day of each Plan Year (the “Annual Valuation Date”), and

(b) every other business day during the Plan Year on which trading activity occurs or could occur with respect to the Employer Securities held by the Plan. The Plan Administrator shall interpret this Section as it deems necessary or advisable to provide for the orderly and equitable administration of the Plan.

2.60 “Vested Interest” or “Vested Accrued Benefit” shall mean the portion of a Participant’s Accrued Benefit which is non-forfeitable.

2.61 “Voluntary Contributions” shall mean after-tax contributions previously made by a Participant under a Salary Reduction Agreement with the Employer. As of the Effective Date Voluntary Contributions are no longer permitted to be made to the Plan.

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ARTICLE III

SERVICE DEFINITIONS AND RULES

3.01 “Eligibility Computation Period” shall mean the period used to measure Eligibility Service and Breaks in Service for purposes of eligibility to begin and maintain participation in the Plan. As of January 1, 2002, the Plan does not apply any minimum Eligibility Computation Period.

3.02 “Eligibility Service” shall mean service for any period during which an Employee receives credit for Hours of Service for a Zions Employer.

3.03 “Employment Commencement Date” shall mean the date on which the Employee first performs an Hour of Service for a Zions Employer.

3.04 “Hour of Service” shall mean and be determined as follows:

(a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer. These hours shall be credited to the Employee for the year or years in which the duties are performed.

(b) Each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or Leave of Absence. Notwithstanding the preceding sentence:

(1) No more than five hundred and one (501) Hours of Service are required to be credited under this paragraph during which the Employee performs no duties (whether or not such period occurs in a single computation period);

(2) An hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker’s compensation or unemployment compensation or disability insurance laws; and

(3) Hours of Service are not required to be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee.

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For purposes of this paragraph (b), a payment shall be deemed to be made by or due from an Employer regardless of whether such payment is made by or due from the Employer directly, or indirectly through, among others, a trust fund or insurer to which Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate. Hours under this paragraph (b) shall be calculated and credited pursuant to DOL Reg. §2530.200b-2, paragraphs (b) and (c), which are incorporated herein by this reference.

(c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service shall not be credited both under paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c). These hours shall be credited to the Employee for the year or years to which the award or agreement pertains rather than the year in which the award, agreement or payment is made.

(d) Hours of Service shall be determined on the basis of actual hours for which an Employee is paid, entitled to payment or for which back pay is awarded or agreed to.

(e) In the case of an Employee who is absent from work for any period:

(1) By reason of the pregnancy of the Employee;

(2) By reason of the birth of a child of the Employee;

(3) By reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee; or

(4) For purposes of caring for such child for a period beginning immediately following such birth or placement;

Hours of Service shall include the Hours of Service which otherwise would normally have been credited to such Employee but for such absence; or in any case in which the Plan is unable to determine the Hours of Service to be credited, eight (8) Hours of Service for each regularly scheduled work day of such absence. The total number of hours treated as Hours of Service under this Section by reason of any pregnancy or placement shall not exceed five hundred and one (501) hours less the number of Hours of Service credited to an Employee pursuant to Subsections (a) through (e) above, for an absence described in this Subsection (f). The hours

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described in this Subsection (f) shall be treated as Hours of Service only in the computation period in which the absence from work begins, if an Employee would be prevented from incurring a One-Year Break in Service in such computation period solely because the period of absence is treated as Hours of Service as provided herein; or in any other case, in the immediately following computation period. Notwithstanding the foregoing, no credit will be given pursuant to this Subsection (f) unless the Employee furnishes to the Plan Administrator such timely information as the Plan Administrator may reasonably require to establish that the absence from work is for reasons referred to herein, and the number of days for which there was such an absence.

(f) Hours of Service shall be aggregated for service with all Zions Employers, however, in no event shall duplicate credit be given for the same Hours of Service.

(g) The Plan Administrator may use any records to determine Hours of Service which it considers an accurate reflection of the facts.

(h) When crediting Hours of Service for Employees who are paid on an hourly basis the Plan Administrator shall use the “actual” method. For purposes of the Plan, “actual” method shall mean the determination of Hours of Service from records of hours worked and hours for which the Employer makes payment or for which payment is due from the Employer. When crediting Hours of Service for Employees who are not paid on an hourly basis, the Plan Administrator shall use the “salaried earnings” method. With respect to an Employee whose Compensation consists primarily of periodic salary payments, “salaried earnings” method shall mean the determination of Hours of Service from records showing payments made to the Employee or payments due to the Employee from the Employer. In applying the “salaried earnings” method, an Employee who has at least four hundred thirty five (435) hours or eight hundred seventy (870) hours shall be credited with five hundred (500) Hours of Service and one thousand (1000) Hours of Service, respectively.

3.05 “One Year Break in Service” shall mean a twelve (12) consecutive month period during which an Employee has not completed more than five hundred (500) Hours of Service, regardless of whether the Employee has incurred a Termination of Employment. For purposes of vesting, such twelve (12) consecutive month periods shall be measured on the same basis as Years of Vesting Service. For purposes of eligibility to participate, the Plan shall not apply any break in service rule. The following types of absence shall not constitute a One-Year Break in Service:

(a) Temporary leave of absence granted by the Employer for sickness, or extended vacation, provided that persons under similar circumstances shall be treated alike;

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(b) Absence due to illness or accident while regular remuneration is paid;

(c) Absence for military service or significant civilian service for the United States, provided that with respect to civilian service, the absent Employee returns to service with the Employer within thirty (30) days of his release from the civilian service or any longer period during which his right to re-employment is protected by law and with respect to military service, the absent Employee returns to service within the period described in Section 3.12, or any longer period during which his right to re-employment is protected by law.

3.06 “Re-employment Commencement Date” shall mean the date on which an Employee, who has both incurred a Termination of Employment from the Employer and has had a One Year Break in Service as a result of that termination, first performs an Hour of Service for the Employer following such Break in Service.

3.07 “Termination of Employment” with respect to any Employee or Participant shall occur upon the separation from service (effective January 1, 2002, severance from employment) of the Employee or Participant due to the resignation, discharge, death, retirement, failure to return to active work at the end of an authorized leave of absence or the authorized extension(s) thereof, failure to return to active work when duly called following a temporary layoff, or upon the happening of any other event or circumstance which, under the then current policy of the Zions Employer results in the termination of the employer-employee relationship. Termination of Employment shall not be deemed to occur merely because of a transfer between Zions Employers.

3.08 “Vesting Computation Period” shall mean the twelve (12) consecutive month period used to measure Years of Vesting Service and Breaks in Service for purposes of vesting. The twelve (12) consecutive month period used for the Vesting Computation Period shall be the Plan Year.

3.09 “Year of Service” shall mean a twelve (12) consecutive month period during which an Employee has completed at least one thousand (1000) Hours of Service.

3.10 “Year of Vesting Service” shall mean a Vesting Computation Period during which an Employee has completed at least one thousand (1000) Hours of Service. Subject to Section 11.05 a Participant’s Years of Vesting Service shall be determined based on all Vesting Computation Periods containing or beginning after his Employment Commencement Date or Re-employment Commencement Date, provided that service prior to the date an Employee has attained Age 18 shall not be taken into account. Any individual who was a Leased Employee and who subsequently becomes an Eligible Employee shall be credited with all Years of Service as a Leased Employee for purposes of determining Years of Vesting Service.

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3.11 Special Rules for Crediting Service. In crediting Service under the Plan for any Employee who is or was employed by a Participating Employer the rules for crediting Service as set forth in each respective Participation Agreement or as set forth in this Section shall apply. When crediting service under the Plan for Employees who are employed by certain members of an Affiliated Group or who are former employees of entities acquired by the Employer, the following special rules for crediting service shall apply:

(a) Discount Corporation of New York: Each Employee of Discount Corporation of New York (“Discount”) who, as of August 10, 1993, satisfied the Plan’s minimum age and service requirements shall be eligible to participate in the Plan on August 11, 1993 (which shall be deemed a “Plan Entry Date” for this purpose) or on any subsequent Plan Entry Date if employed by the Employer or any member of the Affiliated Group who participate in the Plan on that date. All service of the Employee with Discount and any member of the affiliated Group shall be credited for purposes of the above participation rule. For purposes of benefit accrual, no prior service with Discount shall be taken into account.

3.12 Qualified Military Service Rules: The following rules shall apply to an Employee who has Qualified Military Service while employed by the Employer.

(a) “Qualified Military Service” shall mean service by an Employee in the uniformed services of the United States (as defined in chapter 43 title 38 of the United States Code), provided:

(1) the employee provides advance notice of the service to the Zions Employer, when such notice is practical;

(2) the employee is not dishonorably discharged;

(3) the employee is re-employed by the Zions Employer within thirty (30) days following the completion of the service or any longer period during which his or her or her right to re-employment is protected by law; and

(4) the cumulative length of the Employee’s absence from employment due to the service does not exceed five (5) years.

(b) An Employee’s Qualified Military Service shall be treated as service for the Employer for all purposes under the Plan. An Employee’s imputed Hours of Service during Qualified Military Service shall be:

(1) the Hours of Service the Employee would have worked but for his or her or her Qualified Military Service; and

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(2) if the Hours of Service cannot reasonably be determined, the Hours of Service the Employee would have worked had he or she worked during his or her or her Qualified Military Service at his or her or her average rate during the twelve (12) month period immediately preceding his or her or her Qualified Military Service or, if shorter, his or her or her entire period of employment preceding the Qualified Military Service.

(c) Compensation (as defined in Section 2.10) shall include imputed compensation during an Employee’s Qualified Military Service. Imputed compensation shall be:

(1) the compensation the Employee would have received but for his or her or her Qualified Military Service; or

(2) if the compensation is not reasonably certain, the compensation the Employee would have received had he or she received compensation during his or her qualified Military Leave at his or her or her average rate during the twelve (12) month period immediately preceding his or her or her Qualified Military Service, or, if shorter, his or her or her entire period of employment preceding his or her or her Qualified Military Service.

(d) A Participant who returns to employment after any Qualified Military Service shall be entitled to make additional Elective Deferrals to the Plan up to the maximum amount of the Elective Deferrals the Participant would have been permitted to make based upon his or her or her imputed compensation during the Qualified Military Service, taking into account any other Elective Deferrals made by the Participant during the Qualified Military Service. The period during which the additional Elective Deferrals may be made shall commence on the date the Participant returns to employment and shall extend until the expiration of the lesser of (i) the period which is three (3) times the length of the Participant’s Qualified Military Service or (ii) five (5) years. Payment of Matching Contributions attributable to Elective Deferrals of imputed compensation during Qualified Military Service shall be made at the same time as other Matching Contributions, based on the time the Elective Deferrals are actually paid to the Plan. The Matching Contributions need not include earnings which would have accrued had the Participant continued performing his or her or her duties for the Employer during Qualified Military Service.

(e) Elective Deferrals of a Participant’s imputed compensation during his or her or her Qualified Military Service shall be treated as Elective Deferrals and as K-Test

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Contributions with respect to the Plan Year to which the imputed compensation relates, if this Plan Year is not the same Plan Year in which the Elective Deferrals are received by the Plan. Any Matching Contributions based on Elective Deferrals of a Participant’s imputed compensation during his or her or her Qualified Military Service shall be treated as M-Test Contributions with respect to the Plan Year to which the Elective Deferrals relate, if this Plan Year is not the same Plan Year in which the Elective Deferrals are received by the Plan.

(f) Repayment of any Participant loan from the Plan shall be suspended during Qualified Military Service and the loan repayment period shall be extended by the length of the Qualified Military Service. Interest shall continue to accrue on the loan during the suspension period at a rate equal to the lesser of the current rate on the loan or the maximum rate allowed by applicable law. Upon recommencing loan payments the additional accrued interest shall be taken into account in determining the total amount remaining and due on the loan.

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ARTICLE IV

ELIGIBILITY AND PARTICIPATION

4.01 Age and Service Requirements: From and after the Effective Date an Eligible Employee shall be eligible initially to participate in this Plan on the first Entry Date coincident with or next following the date on which he satisfies the following requirements:

(a) attains age twenty-one (21), and

(b) is employed on the Entry Date.

An Eligible Employee who has satisfied the requirements above shall commence participation in the Plan on the applicable Entry Date. An Eligible Employee who has attained Age twenty-one (21) and is employed on the Effective Date shall participate in this Plan on the Effective Date, without regard to the other requirements of this Section. Prior to the Effective Date Eligible Employees shall participate as provided in the Prior Plan.

An Eligible Employee who becomes a Participant and who also executes a Salary Deferral Agreement in the manner set forth in procedures issued by the Plan Administrator (which may include use of electronic technologies) shall be considered to be an active Participant. An Eligible Employee shall not be required to execute a Salary Deferral Agreement in order to be considered a Participant in the Plan, however, as a condition to participation in Salary Deferral Contributions the Eligible Employee shall first execute a written Salary Deferral Agreement in the manner set forth in procedures issued by the Plan Administrator. An Employee who is a Participant in a Predecessor Plan on the day before the effective date of the merger of the Predecessor Plan into this Plan shall continue as a Participant in this Plan on the effective date of merger.

4.02 Eligibility Information: As soon as practicable after the date each Employee’s Employment Commencement Date, the Plan Administrator shall verify the Entry Date when the Employee shall first become eligible to participate in the Plan and shall notify each Employee of his/her eligibility, and of any application or other requirements for participation.

4.03 Information to be Provided by Employee: At the request of the Plan Administrator, each Eligible Employee shall furnish such information as is not available from the Employer. As a condition to participation in making Elective Deferrals to the Plan, the Employee shall first complete, execute and deliver a written Salary Deferral Agreement as reasonably required by the Plan Administrator.

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4.04 Reclassification of an Eligible Employee or Excluded Employee: Any Eligible Employee, whether or not he has previously participated in the Plan, who was previously classified as an Excluded Employee and is reclassified as an Eligible Employee shall be eligible to enter the Plan as an active Participant on the later of the date of his reclassification or the Entry Date he would otherwise join if he had not been classified as an Excluded Employee, provided he has otherwise satisfied the requirements of Section 4.01.

Any Participant who is reclassified as an Excluded Employee shall be treated as an Excluded Employee on the date of reclassification for purposes of determining his eligibility for any Employer Contributions in the Plan Year of reclassification. If, prior to the date of reclassification, the Participant had executed a Salary Deferral Agreement and is deferring Compensation in the Plan Year in which the reclassification occurs, the Participant’s Salary Deferral Agreement and all Elective Deferrals thereunder shall automatically terminate as of the last day of the payroll period which commenced immediately prior to the date the Participant is reclassified as an Excluded Employee.

4.05 Re-employment and Commencement of Participation: An Eligible Employee who had met the requirements of Section 4.01(a) and (b) but terminated employment prior to his Entry Date shall be eligible to become a Participant on the date he is re-employed by the Employer, but in no event earlier than the Entry Date he would have joined had he not ceased employment. An Eligible Employee who was a Participant shall again become a Participant on the date he is re-employed by the Employer.

4.06 No Waiver of Participation: An Eligible Employee who has satisfied all criteria for participation in this Plan shall be deemed a Participant and may not waive or reject participation.

4.07 Effect of Participation: A Participant who has satisfied all eligibility criteria and commenced active participation in this Plan shall be conclusively deemed to have assented to this Plan and to any subsequent amendments, and shall be bound thereby with the same force and effect as if he had formally executed this Plan.

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ARTICLE V

PARTICIPANT AND EMPLOYER CONTRIBUTIONS

5.01 Elective Deferrals:

(a) Each Participant may elect to defer any percentage of the Participant’s Compensation described in subsection (1) below, subject to a minimum of one percent (1%) of the Participant’s Compensation per pay period. The maximum percentage amount shall be fifty percent (50%) of the Participant’s Compensation. The amount of the deferral shall be contingent on the Participant electing and authorizing the Elective Deferral amount through a Salary Deferral Agreement. The Salary Deferral Agreement and the Participant’s authorization thereunder may be evidenced by a document executed by the Participant and filed with the Administrator in the manner prescribed for this purpose, which may include a Salary Deferral Agreement completed and executed by the Participant through any approved electronic means. The Salary Deferral Agreement shall be subject to the following rules:

(1) The Salary Deferral Agreement shall apply to each payroll period during which it is in effect and has not been rescinded. The Salary Deferral Agreement shall be applicable to all forms of the Participant’s Annual Compensation, regardless of how paid or characterized.

(2) The amount by which the Participant’s Annual Compensation is reduced under the Salary Deferral Agreement may be changed (increased, decreased or ceased) by a Participant at any time during the Plan Year. A change shall be evidenced by a written document, by oral instructions directly from the Participant with written confirmation in accordance with rules and procedures established by the Administrator or through any electronic means or method approved by the Plan Administrator.

(3) A Salary Deferral Agreement and or an amendment to a Salary Deferral Agreement shall be effective as soon as administratively feasible after the Salary Deferral Agreement or the amendment is executed, orally authorized or electronically completed by the Participant and received and confirmed by the Administrator.

(4) The Administrator may amend or revoke a Salary Reduction Agreement with any Participant at any time if the Administrator determines that a revocation or amendment is necessary to ensure that the Participant’s Elective Deferral for any Plan Year will not exceed any Plan limitations.

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(5) The Administrator may revoke its Salary Reduction Agreements with all Participants or amend its Salary Reduction Agreements with all Participants on a uniform basis if it determines that such action is necessary in order to comply with the terms of the Plan or any applicable law or regulation.

(b) The Elective Deferral amounts designated by the Participant in the Salary Deferral Agreement shall be withheld and contributed to the Plan by the Employer without regard to Net Profits to the Participant’s Elective Deferral Account. Unless otherwise approved by the Plan Administrator, Elective Deferrals made through payroll deductions shall be pursuant to the Salary Deferral Agreement executed by the Participant or orally authorized by the Participant and confirmed by the Plan Administrator or authorized by any other electronic means or method approved by the Plan Administrator.

(c) Commencing January 1, 2002, and for all Plan Years thereafter an Employee who is eligible to make Elective Deferrals under this Plan and who attains age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code §414(v). Catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code §§402(g) and 415. The Plan Administrator shall not treat catch up contributions as failing to satisfy any provisions of the Plan implementing the requirements of Code §§401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable.

5.02 Payment to Trustee: The Employer shall transmit to the Trustee the amounts withheld by it pursuant to Section 5.01 above as soon as administratively feasible, but in no event later than the fifteenth (15th) business day of the month following the month in which the amounts are withheld or received by the Employer. However, the Employer shall not transmit to the Trustee any amounts withheld by it during the Plan Year pursuant to a deferral election under Section 5.01, which in the Plan Administrator’s opinion would cause the Plan to fail to meet the limitations described in Section 5.10 for that Plan Year. Such amounts withheld and not transmitted to the Trustee shall be returned by the Employer to the respective Participants.

5.03 Suspension of Deferrals: A Participant may notify the Plan Administrator electronically, orally (with written confirmation) or in writing of his intention to suspend his election to have a portion of his Annual Compensation deferred. The suspension shall be effective as soon as administratively feasible after the date the notice of suspension is received shall apply to each payroll period thereafter, until a new Salary Deferral Agreement is entered into by the Participant. The Participant shall be considered a Participant hereunder for all other purposes if his employment continues, however, he shall not be considered to be an active Participant.

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5.04 After-tax Contributions by Participants: From and after the Effective Date no Participant shall be permitted or required to make after-tax or Voluntary Contributions to the Plan.

5.05 Rollover Contributions by Participants: A Participant (or an Employee who is expected to become a Participant) may make a rollover contribution directly to this Plan of an “eligible rollover distribution,” as that term is defined under Code §401(a)(31)). The Plan will accept participant rollover contributions and/or direct rollovers of distributions made after December 31, 2001, from any qualified plan described in Code §401(a) or Code §403(a), an annuity contract described in Code §403(b) or an eligible plan under Code §457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. The Plan will also accept a participant rollover contribution of the portion of a distribution from an individual retirement account or annuity described in Code §408(a) or (b) that is eligible to be rolled over and would otherwise be includable in gross income. The Plan will not accept rollovers which include after-tax employee contributions. The rollover amount shall be credited to his Participant Rollover Contribution Account, provided:

(a) The Participant provides adequate evidence to the Plan Administrator that the amount satisfies the requirements of Code §402(c) regarding amounts that may be rolled over;

(b) If the amount is rolled over indirectly to this Plan through an individual retirement account, annuity, or bond, the amount does not include life insurance policies, amounts contributed (or deemed to have been contributed) by the Participant or amounts distributed from a Plan not described above; and

(c) It is received by this Plan as a direct transfer pursuant to Code §402(e)(6) or rolled over after distribution to the Participant within sixty (60) days following its distribution.

5.06 Safe Harbor Employer Matching Contributions: For each Plan Year the Employer may contribute to the Plan an amount, determined without regard to Net Profits, which will be sufficient to credit the Employer Matching Contribution Account of each Participant who is a Non-Highly Compensated Employee and who satisfies the requirements of Section 6.04, with amounts which satisfy the Employer’s Matching Contribution percentage as determined by the Employer on a discretionary basis for the Plan Year. In no event however, shall the Employer Matching Contribution for any Participant who is a Non-Highly Compensated Employee in a Plan Year, when determined as a percentage of the Participant’s Compensation for the Plan Year, ever be less than the percentage amounts shown in the following table:

Participant’s Elective Deferral percentage:	Percentage of Employer Matching Contribution:
0%	0.0%
1%	1.0%
2%	2.0%
3%	3.0%
4%	3.5%
5%	4.0%

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The Employer may also contribute to the Plan an amount, determined without regard to Net Profits, which will be sufficient to credit the Employer Matching Contribution Account of each Participant who is a Highly Compensated Employee and who satisfies the requirements of Section 6.04, with amounts which satisfy the Employer’s Matching Contribution percentage as determined by the Employer on a discretionary basis for the Plan Year. In no event however, shall the rate of Matching Contributions with respect to Elective Deferrals made by any Highly Compensated Employee exceed the rate of Matching Contributions with respect to Elective Deferrals made by any Participant who is a Non-Highly Compensated Employee. Excess Matching Contributions for Employees of the Sponsoring Employer or a Participating Zions Employer shall be determined each Plan Year by the Sponsoring Employer and each Participating Zions Employer respectively, or shall be as set forth in the Supplemental Participation Agreement executed by the Participating Zions Employer. If the Employer or Participating Zions Employer makes a Matching Contribution in excess of that set forth in the table in this Section, in no event shall the rate of Matching Contributions increase as the rate of the Participant’s Elective Deferrals increase.

The Employer Matching Contribution amount shall be determined solely by reference to the ratio percentage of the Participant’s Elective Deferral compared to the aggregate of the forms of the Participant’s Compensation which are subject to the Salary Deferral Agreement as specified in Section 5.01. If the Employer makes a Matching Contribution to the Plan at any time during the Plan Year (such as on a calendar quarter basis), any limit on the amount of Employer Matching Contribution shall not be determined by reference to Annual Compensation for the Plan Year, but by reference to Compensation paid only during the period to which the Matching Contribution relates. Notwithstanding the previous sentence, no contribution in excess of the maximum amount which would constitute an allowable deduction for federal income tax purposes under the applicable provisions of the Code, as now in force or hereafter amended, shall be required to be made by the Employer under this Section.

The Employer Matching Contribution may be made in cash or in kind, provided however, that if the Matching Contribution is made in cash the Plan shall immediately acquire Employer Securities with the entire amount of the contribution and if the Matching Contribution is made in kind, it shall be made in the form of Employer Securities only.

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5.07 Employer Non-Elective Contributions: The Employer may contribute, without regard to Net Profits, an amount determined by its Board of Directors as an Employer Non-Elective Contribution. The Employer may make the Non-Elective Contribution in cash or in kind, provided however, that if the Non-Elective Contribution is made in cash the Plan shall immediately acquire Employer Securities with the entire amount of the contribution and if the Non-Elective Contribution is made in kind, it shall be made in the form of Employer Securities only. The Employer reserves the right to increase or decrease the amount from year to year of the Non-Elective Contribution, as determined by the Board of Directors. Notwithstanding the previous sentence, no contribution in excess of the maximum amount which would constitute an allowable deduction for federal income tax purposes under the applicable provisions of the Code, as now in force or hereafter amended, shall be required to be made by the Employer under this Section.

The amount of the contribution to be credited to the Employer Non-Elective Contribution Accounts of the Participants may be stated in terms of a gross contribution, in which case the amount shall be reduced by any non-vested forfeitures from Employer Non-Elective Contribution Accounts of the Participants to be allocated during the Plan Year pursuant to Section 11.05; or the amount may be stated in terms of a net contribution, in which case the amount shall be in addition to any such non-vested forfeitures. In the absence of a direction as to whether the amount of the contribution is in terms of a gross contribution or a net contribution, it shall be deemed to be a gross contribution.

5.08 Time and Method of Payment: All payments of Employer Matching and Non-Elective Contributions shall be made directly to the Trustee and shall be paid no later than the time prescribed by law (including any extensions) for filing the Employer’s federal income tax return for the Plan Year for which they are made. The Employer may in its sole discretion, at any time during the Plan Year, make one or more partial payments to the Trustee on an estimated basis. Any amount so paid in advance shall be applied against the amount thereafter determined to be payable by the Employer and shall be credited by the Plan Administrator to the Participants’ Employer Contribution Accounts as of the end of the calendar quarter for which the payment is made.

5.09 Employer Contribution Accounts: The Plan Administrator shall establish and maintain an Employer Matching Contribution Account, as defined in Section 2.01(c) and an Employer Non-Elective Contribution Account as defined in Section 2.01(d) for each Participant eligible to receive an Employer Matching Contribution and an Employer Non-Elective Contribution. The establishment of the accounts is for record keeping purposes only, and a physical segregation of assets shall not be required.

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5.10 Limitations on Contributions: All Elective Deferral Contributions to this Plan shall be subject to the limitations in subsection (a). Notwithstanding any other provisions of this Plan, if for any Plan Year the Elective Deferral and Matching Contributions to the Plan do not satisfy the requirements of Code §§401(k)(12) and 401(m)(11), then the Elective Deferral and Matching Contributions to this Plan shall be subject to the further limitations in subsections (b) and (c) below.

(a) The total amount of a Participant’s Elective Deferrals during any calendar year shall not exceed twelve thousand dollars ($12,000), which amount shall be adjusted annually, consistent with the provisions of Code §402(g) and thereafter indexed at the same time and in the same manner as the dollar limitation for defined benefit plans in Code §415(b)(1)(A). For this purpose a Participant’s Elective Deferrals to this Plan plus the Participant’s elective deferrals pursuant to any other Code §401(k) arrangement, elective deferrals under a simplified employee pension plan and salary reduction contributions to a tax-sheltered annuity, irrespective of whether the Employer or any member of an Affiliated Group to which the Employer belongs maintains the arrangement, plan or annuity, shall be aggregated.

(b) The K-Test Average Contribution Percentage of Participants who are Highly Compensated Employees shall not exceed in any Plan Year the greater of:

(1) The K-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by 1.25; or

(2) The lesser of the K-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by two (2) or the K-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees plus two (2).

(c) The M-Test Average Contribution Percentage for Participants who are Highly Compensated Employees shall not exceed in any Plan Year the greater of:

(1) The M-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by 1.25; or

(2) The lesser of the M-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by two (2) or the M-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees plus two (2).

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For purposes of applying the tests in (b) and (c) above in any Plan Year, the K-Test Average Contribution Percentage and the M-Test Average Contribution Percentage for Participants who are Non-Highly Compensated Employees shall be based on the prior Plan Year. The Employer may not aggregate this Plan with any other plan when applying the tests in (b) and (c) above.

5.11 Excess Contributions: In accordance with the limitations on contributions described in Section 5.10, the following amounts shall be treated as excess contributions under this Plan:

(a) Excess Deferrals: with respect to any calendar year, amounts identified as Excess Deferrals, whether determined by the Administrator or designated by a Participant in writing no later than March 1 following the end of the calendar year, in accordance with such procedures as the Plan Administrator shall specify, less any Excess K-Test Contributions previously distributed or recharacterized for the Plan Year beginning in the calendar year in which the Excess Deferral is made, pursuant to Section 5.12(b).

(b) Excess K-Test Contributions: with respect to any Plan Year, the excess of the aggregate amount of K-Test Contributions actually made on behalf of Highly Compensated Employees for such Plan Year over the maximum amount of such contributions permitted under Section 5.10(b). The Excess K-Test Contributions of an individual Highly Compensated Employee shall be determined (i) by calculating the total dollar amount resulting from a reduction of the K-Test Contributions made on behalf of Highly Compensated Employees in order of the K-Test Contribution Percentages, beginning with the highest percentage, until the limitations of Section 5.10(b) are met, and (ii) by reducing the K-Test Contributions made on behalf of Highly Compensated Employees in order of the dollar amount of K-Test Contributions for each Highly Compensated Employee, beginning with the highest dollar amount, and subtracting such amounts from the total dollar amount determined in (i) above until the total dollar amount is exhausted. The Excess K-Test Contributions allocated to a Participant shall be reduced by any Excess Deferrals previously distributed for the calendar year ending with or within the Plan Year in which the Excess K-Test Contributions arose, pursuant to Section 5.12(a).

(c) Excess M-Test Contributions: with respect to any Plan Year, the excess of the aggregate amount of M-Test Contributions actually made on behalf of Highly Compensated Employees for such Plan Year over the maximum amount of such contributions permitted under Section 5.10(c). Effective January 1, 1997, the Excess M-Test Contributions of an individual Highly Compensated Employee shall be

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determined (i) by calculating the total dollar amount resulting from a reduction of the M-Test Contributions made on behalf of Highly Compensated Employees in order of the M-Test Contribution Percentages, beginning with the highest percentage, until the limitations of Section 5.10(c) are met, and (ii) by reducing the M-Test Contributions made on behalf of Highly Compensated Employees in order of the dollar amount of M-Test Contributions for each Highly Compensated Employee, beginning with the highest dollar amount, and subtracting such amounts from the total dollar amount determined in (i) above until the total dollar amount is exhausted.

5.12 Correction of Excess Contributions: The Plan provides the following methods for correcting excess contributions as described in Section 5.11:

(a) Excess Deferrals: The Plan Administrator shall direct the Trustee to distribute to a Participant from his Participant Elective Deferral Account an amount equal to the Participant’s Excess Deferral plus income, if any, allocable thereto. Such distribution shall be designated by the Plan Administrator as a distribution of an Excess Deferral and shall be made not earlier than the date on which the Trustee receives the Excess Deferral and not later than the first April 15 following the end of the calendar year in which the Excess Deferral is made.

(b) Excess K-Test Contributions: The Plan Administrator shall direct the Trustee to distribute to a Participant his Excess K-Test Contribution plus income, if any, allocable thereto. The distribution shall be designated by the Plan Administrator as a distribution of an excess contribution and shall be made any time during or after the Plan Year in which the excess contribution arose, but within twelve (12) months after the end of the Plan Year.

If the Employer has made a Matching Contribution attributable to any portion of the Participant’s Excess K-Test Contribution distributed to the Participant pursuant to the above, the Plan Administrator shall treat the Matching Contribution as a forfeiture. The forfeited amount shall be used to reduce the Employer’s Matching Contribution otherwise required for the Plan Year or for any subsequent Plan Year.

(c) Excess M-Test Contributions: The Plan Administrator shall direct the Trustee to hold the excess M-Test Contribution Amount and shall use this Amount to reduce any future Matching Contribution obligation of the Employer to the Plan.

For purposes of the above, income shall include realized and unrealized gains and losses for the Plan Year and for the period from the end of the Plan Year to the date of distribution (the “gap period”) and shall be allocated to excess contributions in accordance with all

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appropriate Code and Regulation provisions. Distributions of excess contributions pursuant to the above shall be made without regard to any consent by the Participant otherwise required under this Plan.

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ARTICLE VI

ALLOCATIONS TO ACCOUNTS

6.01 Revaluation of Assets: Not less frequently than as of the Annual Valuation Date each year, the Plan Administrator shall re-value the net assets of all Participants’ General Investments Accounts and Employer Securities Accounts in the Investment Fund. The valuation shall determine the current fair market value. At the Plan Administrator’s discretion, applied on a consistent basis, the Plan Administrator may similarly re-value the Investment Fund at the end of a semi-annual, quarterly, monthly or more frequent period, which may be as frequent as the close of each business day. The last day of each valuation period shall be referred to as an Interim Valuation Date. The net investment income or loss on the Investment Fund since the previous Annual or Interim Valuation Date shall then be determined. An independent appraiser meeting requirements similar to those prescribed by Treasury regulations under Code §170(a)(1) must perform all valuations of Employer Securities which are not readily tradeable on an established securities market. The valuation requirement of the immediately preceding sentence applies to all Employer Securities acquired by the Plan.

6.02 Allocation of Contributions and Forfeitures: Contributions and forfeitures for any period shall be credited to the Accounts of Participants in the following manner:

(a) With respect to Elective Deferral contributions made pursuant to Section 5.01, an amount equal to the Participant’s Elective Deferral since the previous Annual or Interim Valuation Date shall be allocated and credited to his Elective Deferral Account.

(b) Matching Contributions made pursuant to Section 5.06, if any, shall be allocated on each Annual Valuation Date (or if the Employer makes Matching Contributions on a calendar quarter or other periodic basis, on the last day of each calendar quarter or other period) to each Participant’s Account who satisfies the requirements of Section 6.04(a), in an amount equal to the Employer Matching Contribution percentage determined by the Employer for the Plan Year, but in no event less than the percentage required under Section 5.06. If the Employer makes a Matching Contribution to the Plan at any time during the Plan Year, any limit on the percentage amount shall not be determined by reference to Annual Compensation for the Plan Year, but by reference to Compensation paid only during the period to which the Matching Contribution relates.

(c) Employer Non-Elective Contributions made pursuant to Section 5.07 shall be allocated on each Annual Valuation Date to each Participant’s Account who satisfies

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the requirements of Section 6.04(b). The Employer’s Non-Elective Contribution shall be credited to the Accounts of eligible Participants in an amount equal to that percentage of each annual Employer Non-Elective Contribution to this Plan which is in the same proportion that each Participant’s Annual Compensation for the Plan Year for which the Employer makes the Non-Elective Contribution bears to the total Annual Compensation of all Participants for the Plan Year. For purposes of this Section 6.02(c) only Compensation paid to the Employee during the portion of the Plan Year during which the Employee is a Participant in the Plan shall be taken into account. At the time the Employer makes its Non-Elective Contribution the Employer shall designate to the Administrator the Plan Year for which the Non-Elective Contribution shall be deemed to have been made (which may be the current Plan Year or the immediately prior Plan Year, as the Employer deems appropriate). If the Employer makes no designation, the Employer’s Non-Elective Contribution shall be deemed to have been made for the Plan Year which begins concurrent with or within the taxable year of the Employer for which the Employer claims a deduction under Code §404.

(d) Forfeitures from Employer Non-Elective Contribution Accounts to be reallocated pursuant to Section 11.06, shall be allocated as of each Annual Valuation Date to each Participant who satisfies the requirements of Section 6.04(b). Subject to Section 5.07 such allocated amounts shall be credited to the Non-Elective Contribution Accounts of such Participants in the same manner provided for allocation of Employer Non-Elective Contributions in Section 6.02(c) above.

(f) With respect to Rollover Contributions made pursuant to Section 5.05, an amount equal to the Participant’s rollover contributions since the previous Annual or Interim Valuation Date shall be credited to the Participant’s Rollover Contribution Account.

(g) Contributions by the Employer of Employer Securities or of cash which is immediately used to purchase Employer Securities shall be allocated solely to the Employer Securities Account. All other contributions, whether by the Employer or any Participant, shall be allocated solely to the General Investments Account.

6.03 Adjustment of Accounts and Dividends on Employer Securities: As of each Annual or Interim Valuation Date all Participants’ and Former Participants’ Accounts shall be adjusted to reflect contributions, income and dividends received, profits and losses, distributions from and expenses of the Trust Fund since the previous Annual or Interim Valuation Date. The adjustments shall be made in the following manner and order:

(a) Each Account shall be charged with all forfeitures, withdrawals and distributions from the Account since the previous Annual or Interim Valuation Date. In making a

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forfeiture reduction under this Section 6.03(a) the Plan Administrator, to the extent possible, first must forfeit from a Participant’s General Investments Account before making a forfeiture from his Employer Securities Account.

(b) Each Account shall be charged with any administrative costs or expenses incurred and paid by the Plan which are allocable to the Account since the previous Annual or Interim Valuation Date. All administrative costs and expenses, to the extent possible, shall be paid from a Participant’s General Investments Account before being paid from his Employer Securities Account

(c) Each Participant’s General Investments Account which has a non-zero balance after the application of (a) and (b) above, shall be credited (or charged) with its proportionate share of the net investment income (or loss) and expenses since the previous Annual or Interim Valuation Date. The amount to be credited or charged to each Account shall be determined based on the ratio that: (i) the balance in the Account on the previous Annual or Interim Valuation Date less any forfeitures, withdrawals or distributions from the Account since that date bears to (ii) the total of such amounts determined for all Accounts. Notwithstanding the previous sentence, in the sole discretion of the Plan Administrator, the method of allocating the net investment income (or loss) of the General Investment Account may be adjusted to reflect the effect of cash flows into and out of such Accounts (such as contributions, payments on Participant loans, distributions, etc.) based on the length of time between the date of such cash flow and the current Annual or Interim Valuation Date. Any such adjustment pursuant to the previous sentence shall be made in a uniform and non-discriminatory manner among Participants and/or the types of Accounts.

(d) Each Account shall be credited with the contributions allocated to it since the previous Annual or Interim Valuation Date, subject to the following rules:

(1) The Employer Securities Account maintained for each Participant shall be credited with the Participant’s allocable share of Employer Securities (including fractional shares) purchased and paid for by the Trust or contributed in kind to the Trust, with any forfeitures of Employer Securities and with any stock dividends on Employer Securities allocated to his Employer Securities Account. Employer Securities acquired with an Exempt Loan under Section 14.03 shall be allocated in accordance with that Section, subject however, to the provisions of this Section 6.03. Except as otherwise specifically provided in Section 14.03, the Plan Administrator will base allocations to the Participant’s Employer Securities Account on dollar values expressed as shares of Employer Securities or on the basis of actual shares, assuming there is only a single class of Employer Securities.

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(2) The General Investments Account maintained for each Participant shall be credited with the Participant’s allocable share of Elective Deferrals and any Employer Contribution not attributable to Employer Securities, according to the provisions of Section 6.02.

(e) Cash dividends the Employer pays with respect to Employer Securities held by the Plan shall be allocated pro-rata to the Dividend Account of each Participant according to the number of Employer Securities in the Participant’s Employer Securities Account as of the dividend date of record, less any Employer Securities allocated to or acquired for the Participant’s Employer Securities Account on or after the immediately preceding ex-dividend date. The Plan Administrator will not allocate to a Dividend Account any cash dividends the Employer directs the Trustee to apply to the payment of an Exempt Loan nor any cash dividends the Employer directs the Trustee to distribute directly to a Participant in accordance with Section 9.07.

Each Participant who is entitled to receive an allocation of a cash dividend to his Dividend Account shall have the option to invest all or any portion of the cash dividend in Employer Securities or withdraw from the Plan the portion of the cash dividend not so invested. The Participant’s election shall be subject to the following rules:

(1) The Participant shall have an annual election during each Plan Year to invest the allocable share of dividends in Employer Securities or withdraw as cash.

(2) The initial period during which a Participant may exercise the annual election shall extend from April 15, 2003, to May 15, 2003, for all individuals who are Participants in the Plan on April 15, 2003. Commencing January 1, 2004, and for each Plan Year thereafter the annual election period shall extend from January 1 to January 31 for all individuals who are Participants in the Plan on January 1. For an Employee who becomes a Participant in the Plan on any day after April 15, 2003, during the 2003 Plan Year or after January 1 in any subsequent Plan Year the annual election period shall commence on the Participant’s Entry Date and end on the one month anniversary thereof.

(3) If the Participant does not choose by the expiration of the election period to withdraw his allocable share of dividends in cash, his share shall be invested automatically in Employer Securities. Upon expiration of the election period the Participant’s election (or failure to elect) shall become irrevocable for all dividends declared or paid during the Plan Year.

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(4) The Participant may elect and revoke any prior election without limitation during the election period. The Participant shall indicate his election by any means acceptable to the Plan Sponsor, which may include electronic notice or written notification delivered or, if mailed, post-marked no later than the last day of the election period.

(5) Dividends to be invested in Employer Securities shall be so invested as soon as administratively feasible following their receipt by the Plan. Withdrawal of any cash dividends must occur no later than ninety (90) days after the close of the Plan Year in which the dividends were paid.

(6) Until invested in Employer Securities or distributed in cash, dividends in a Dividend Account shall be held and invested as provided in Section 18.04.

If the Employer directs the Trustee to apply cash dividends on Employer Securities to the payment of an Exempt Loan, the Plan Administrator will first allocate the released Employer Securities to the Participants’ Employer Securities Accounts in the same ratio, determined on the dividend declaration date, that Employer Securities allocated to a Participant’s Employer Securities Account bear to the Employer Securities allocated to all Employer Securities Accounts. This first allocation of released Employer Securities must equal the greater of: (1) the shares of released Employer Securities equal to the fair market value of the cash dividends attributable to the allocated Employer Securities; or (2) the number of shares of all released Employer Securities attributable to the cash dividends on allocated Employer Securities. If any released Employer Securities remain unallocated after the first allocation, the Plan Administrator will allocate these remaining released Employer Securities as if the Employer has made an Employer Contribution equal to the amount of the cash dividend attributable to the unallocated Employer Securities.

6.04 Eligibility for Allocation of Employer Matching and Non-Elective Contributions: The eligibility of Participants to receive allocations of Employer Matching and Non-Elective Contributions for each Plan Year shall be determined in the following manner:

(a) The Administrator shall determine allocations of Matching Contributions on the basis of the Plan Year, unless the Employer makes its Matching Contributions during the Plan Year on a periodic basis, such as monthly or according to payroll periods, in which case the Matching Contribution shall be allocated during the Plan year on the same periodic basis as made. That is, in allocating Matching Contributions to a Participant’s Account, the Administrator shall take into account only the Compensation paid the Participant during the specific period during the Plan Year to which the allocation applies and a valid, executed Salary Reduction Agreement is in

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effect and on file with the Administrator for the period, subject, however, to the maximum amount of Annual Compensation which may be taken into account under Code §401(a)(17). Matching Contributions, whether or not made on a periodic basis during the Plan Year, shall be allocated to Accounts of Participants without regard to any minimum Service or specific day employment requirement.

(b) Except as otherwise provided in this Section 6.04, the Administrator shall determine allocations of Employer Non-Elective Contributions on the basis of the Plan Year. In allocating Employer Non-Elective Contributions to a Participant’s Account, the Administrator shall take into account only Compensation paid the Employee during the period he is a Participant in the Plan. Employer Non-Elective Contributions shall be allocated only to Accounts of Participants who complete at least one thousand (1000) Hours of Service during the Plan Year and who are employed by the Employer on the last day of the Plan Year.

6.05 Restriction on Certain Allocations: To the extent a shareholder sells Employer Securities to the Trust and is eligible for and elects (with the consent of the Employer) non-recognition of gain under Code §1042, the Plan Administrator will not, either directly or indirectly, allocate under the Plan at any time any portion of the purchased Employer Securities to:

(a) the selling shareholder,

(b) the selling shareholder’s spouse, brothers or sisters (whether by the whole or half blood), ancestors or lineal descendants; or

(c) any shareholder owning (as determined under Code §318(a)) more than 25% in value of any class of Employer Securities.

For purposes of this Section 6.05 the term “shareholder” includes the shareholder’s executor and the term “purchased Employer Securities” includes any dividends or other income attributable to the purchased Employer Securities. A shareholder of Employer Securities of a Zions Employer shall not be eligible to elect non-recognition of gain under Code §1042 as long as the Employer Securities are readily tradeable on an established securities market.

6.06 Participant Diversification of Investments: Except as specifically provided in this Section 6.06 and in Section 18.06, the Plan does not permit individual direction of investment by Participants of their Employer Securities Accounts.

(a) Each Qualified Participant may direct the investment into a Segregated Investment Account of up to twenty five percent (25%) of the value of the Participant’s Eligible

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Account within 90 days after the Accounting Date of each Plan Year (to the extent a direction amount exceeds the amount to which a prior direction under this Section 6.06 applies) during the Participant’s Qualified Election Period. For the last Plan Year in the Participant’s Qualified Election Period, “fifty percent (50%)” shall be substituted for “twenty five percent (25%)” in the immediately preceding sentence. The Qualified Participant must make his direction in writing or in another form acceptable to the Plan Administrator, which may include any approved electronic means. The direction may be effective no later than 180 days after the close of the Plan Year to which the direction applies, and the direction must specify which, if any, of the investment options the Participant selects.

(b) A Qualified Participant may choose one of the following alternative investment options:

(1) The distribution of the portion of his Eligible Accrued Benefit covered by the election. The Administrator will direct the distribution within 90 days after the last day of the period during which the Qualified Participant may make the election. The provisions of this Plan applicable to a distribution of Employer Securities, including the put option requirements of Article XI, apply to this investment option.

(2) The liquidation and transfer of the portion of his Eligible Accrued Benefit covered by the election to the General Investment Account in the Plan. The Trustee will make the transfer no later than 90 days after the last day of the period during which the Qualified Participant may make the election.

(c) The Participant’s Segregated Investment Account shall alone receive all income it earns and bear all expense or loss it incurs.

(d) For purposes of this Section 6.06 the following definitions apply:

(1) “Eligible Account” shall mean that portion of the Participant’s total Account which consists of the Employer Securities Account.

(2) “Qualified Participant” means a Participant who has attained age 55 and who has completed at least 10 years of participation in the Plan (without regard to the Participant’s years of participation in a Predecessor Plan, but taking into account the Participant’s years of participation in the Prior Plan). A “year of participation” means a Plan Year in which the Participant was eligible for an allocation of Employer contributions, irrespective of whether the Employer actually contributed to the Plan for that Plan Year.

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(3) “Qualified Election Period” means the six-Plan-Year period beginning with the Plan Year in which the Participant first becomes a Qualified Participant.

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ARTICLE VII

LIMITATIONS ON ALLOCATIONS

7.01 Special Definitions: The following terms shall be defined as follows:

(a) “Annual Additions” shall mean the sum of the following amounts allocated on behalf of a Participant for a Limitation Year:

(1) Employer contributions; and

(2) Employee contributions; and

(3) Forfeitures available for reallocation, if applicable.

Participant Elective Deferrals shall be considered to be Employer contributions. Amounts reapplied to reduce Employer contributions and amounts reapplied from a suspense account (if any) under Section 7.02 as well as contributions allocated to any Individual Medical Benefit Account which is part of a defined benefit plan shall also be included as Annual Additions.

For purposes of this Article, an Annual Addition is credited to the Account of a Participant for a particular Limitation Year if it is allocated to the Participant’s Account as of any day within such Limitation Year. Employer contributions will not be deemed credited to a Participant unless the contributions are actually made to the Plan no later than the end of the period described in Code §404(a)(6) applicable to the taxable year with or within which the particular Limitation Year ends.

“Annual Additions” do not include any Employer Contributions applied by the Plan Administrator (not later than the due date, including extensions, for filing the Employer’s federal income tax return for the Plan Year) to pay interest (charged to a Participant’s Account) on an Exempt Loan, and any Leveraged Employer Securities the Plan Administrator allocates as forfeitures; provided however, the provisions of this sentence do not apply in a Limitation Year for which the Plan Administrator allocates more than one-third of the Employer Contributions applied to pay principal and interest on an Exempt Loan to Highly Compensated Employee-Participants. The Plan Administrator may reallocate the Employer Contributions in accordance with Section 6.02 to the Accounts of non-Highly Compensated Employee-Participants to the extent necessary in order to satisfy this special limitation.

(b) “Compensation” for purposes of this Article VII (compliance with Code §415) and for purposes of compliance with any applicable non-discrimination test, including the determination of an Employee’s status as a Highly Compensated Employee and the K-Test and M-Test procedures described in Section 5.10, shall mean and be determined as follows:

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(1) The term “Compensation” shall include:

(A) The Participant’s wages, salaries, fees for professional service and other amounts received (whether or not paid in cash) for personal services actually rendered in the course of employment with an Employer maintaining the plan (including, but not limited to, commissions paid to salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements and expense allowances).

(B) In the case of a Participant who is an employee within the meaning of Code §401(c)(1), the Participant’s earned income as described in Code §401(c)(2).

(C) Any amounts contributed by the Employer or received by the Participant pursuant to an unfunded, non-qualified plan of deferred compensation to the extent such amounts are includable in the gross income of the Participant for the Limitation Year.

(D) Any amount contributed or deferred by the Employer at the election of the Participant and which is not includable in the gross income of the Participant by reason of Code §§125, 401(k), 403(b) or 457.

(E) Elective amounts that are not includable in the gross income of the Employee by reason of Code §132(f)(4).

(2) The term “Compensation” does not include items such as:

(A) Except as provided in subparagraph (1)(D) above, any Employer contributions to a qualified retirement plan and any Employer contributions to any other retirement plan which receive special tax benefits to the extent the contributions are not includable in the gross income of the Participant for the taxable year in which made; and any distributions from any qualified retirement plan, regardless of whether the distributions are includable in the gross income of the Participant.

(B) Employer contributions made on behalf of a Participant to a simplified employee pension described in Code §408(k) to the extent such contributions are deductible by the Employer under Code §219(b)(7).

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(C) Except as provided in subparagraph (1)(D) above, other forms of compensation which receive special tax benefits, such as premiums for group health insurance and group term life insurance (but only to the extent that the compensation is not includable in the gross income of the Participant).

(D) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by a Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture (see Code §83 and the regulations thereunder).

(E) Amounts realized from the sale, exchange, or other disposition of stock acquired under a qualified stock option.

(F) Compensation in excess of two hundred thousand dollars ($200,000), or such greater amount as adjusted by the Secretary of the Treasury for increases in the cost of living in accordance with Code §401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to determine the Compensation limit for the Limitation Year that begins with or within such calendar year.

(3) Compensation actually paid or made available to a Participant within the Limitation Year shall be the Compensation used for the purposes of applying the limitations of this Article and Code §415. In the case of a group of Employers which constitutes an Affiliated Group, all Employers shall apply this same rule.

(c) “Defined Contribution Dollar Limitation” shall mean the lesser of:

(1) forty thousand dollars ($40,000), as adjusted for increases in the cost-of-living under Code §415(d), or

(2) one hundred percent (100%) of the Participant’s Compensation, as defined in this Section 7.01, for the Limitation Year. The Compensation limit referred to in this sub-section 7.01(c)(2) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code §401(h) or Code §419A(f)(2)) which is otherwise treated as an Annual Addition.

(d) “Employer” shall mean the Employer that adopts this Plan and, in the case of a group of employers which constitutes an Affiliated Group, all such employers shall be considered a single Employer for purposes of applying the limitations of this Article.

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(e) “Excess Amount” shall mean the excess of the Participant’s Annual Additions for the Limitation Year over the Maximum Permissible Amount for such Limitation Year.

(f) “Individual Medical Benefit Account” shall mean any separate account which is established for a Participant under a defined benefit plan and from which benefits described in Code §401(h) are payable solely to such Participant, his spouse or his dependents.

(g) “Limitation Year” shall mean the twelve (12) consecutive month period specified in Article II.

The Limitation Year may be changed by amending the election previously made by the Employer. Any change in the Limitation Year must be a change to a twelve (12) month period commencing with any day within the current Limitation Year. The limitations of this Article (and Code §415) are to be separately applied to a limitation period which begins with the first day of the current Limitation Year and which ends on the day before the first day of the first Limitation Year for which the change is effective.

The dollar limitation on Annual Additions with respect to this limitation period is determined by multiplying the applicable dollar limitation for the calendar year in which the limitation period ends by a fraction, the numerator of which is the number of months (computed to the nearest whole month) in the limitation period and the denominator of which is twelve (12).

The Limitation Year for all years prior to the effective date of Code §415 shall, as applied to this Plan, be the twelve (12) consecutive month period selected as the Limitation Year for the first Limitation Year after the effective date of Code §415.

(h) “Maximum Permissible Amount” shall mean, for a given Limitation Year, the Defined Contribution Dollar Limitation. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different twelve (12) consecutive month period, the Maximum Permissible Amount for such short Limitation Year shall not exceed the amount in (1) above multiplied by a fraction, the numerator of which is the number of months in the short Limitation Year (computed to the nearest whole month) and the denominator of which is twelve (12).

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7.02 Coordination With Other Plans:

(a) If the Employer maintains any other qualified cash or deferred arrangement (“401(k) Plan”) covering Participants in this Plan and if the Annual Additions to a Participant’s Account in this Plan and the annual additions to the Participant’s account in the 401(k) Plan would result in the allocation on an allocation date of this Plan which coincides with an allocation date of the 401(k) Plan of an Excess Amount, the Excess Amount attributed to this Plan shall be determined by the Plan Administrator on a uniform and non-discriminatory basis, considering the amount of elective deferrals and Employer contributions made to each Participant’s account in the 401(k) Plan, and the anticipated allocation of the Employer Contribution to this Plan. The Plan Administrator shall coordinate its actions with those of the plan administrator of the 401(k) Plan to provide for the maximum possible allocation to all Participants in both plans, taking into account the provisions of the 401(k) Plan allowing for distribution of elective deferrals to reduce an Excess Amount. In this regard, the Plan Administrator, whenever possible, shall allow for the allocation and distribution of elective deferrals from the 401(k) Plan so as to eliminate or reduce the possibility of creating a suspense account under this Plan or under the 401(k) Plan. If, after distributing all amounts which may be distributed from the 401(k) Plan, there still remains an Excess Amount, the Plan Administrator will attribute the total Excess Amount to the 401(k) Plan.

(b) If the Employer maintains another qualified defined contribution plan during any Limitation Year which covers Participants in this Plan and as a consequence of the requirements of Section 7.04 an Excess Amount is allocated to a Participant’s Account in this Plan on an allocation date which coincides with an allocation date in the other plan, the total Excess Amount shall be deemed allocated to the other plan.

7.03 Order of Limitations: If, pursuant to this Article, it is necessary to limit or reduce the amount of Contributions credited to a Participant under this Plan during a Limitation Year, the limitation or reduction shall be made:

(a) First, from the Participant’s General Investment Account, in the following order:

(1) Unmatched Participant Elective Deferrals;

(2) Employer Matching Contributions (if any have been allocated to the General Investments Account);

(3) Matched Participant Elective Deferrals;

(4) Employer Non-Elective Contributions.

(b) Second, from Employer Non-Elective Contributions to the Participant’s Employer Securities Account.

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7.04 Aggregation of Plans: For purposes of applying the limitations of this Article applicable to a Participant for a particular Limitation Year, all qualified defined contribution plans ever maintained by the Employer shall be treated as one defined contribution plan and any Employee contributions to a defined benefit plan shall be treated as a defined contribution plan.

7.05 Suspense Account: If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant’s Compensation for the Limitation Year, or under other limited facts and circumstances allowed under Reg. §1.415-6(b), the Annual Additions to this Plan would cause an allocation to the Account of a Participant in excess of the Maximum Permissible Amount for the Limitation Year, the Plan Administrator shall deal with the Excess Amount as follows:

(a) First, the Plan Administrator shall distribute to the Participant his Elective Deferrals for the Limitation Year to the extent that the distribution reduces the Excess Amount, provided that the Plan Administrator shall not distribute any Elective Deferral to the Participant which would cause the Plan to make a concurrent reduction in the amount of Employer Matching Contributions allocated to the Participant’s Account. A distribution under this provision shall include earnings or gains attributable to the returned Elective Deferrals. All distributions shall be made no later than and in the manner provided in Section 5.10(d).

(b) Second, to the extent there remains an Excess Amount after application of Section 7.05(a), the Plan Administrator shall hold the Excess Amount in a suspense account and allocate and reallocate the amount in the suspense account in the following Limitation Year (and in succeeding Limitation Years, if necessary) to reduce Employer Non-Elective Contributions, Employer Matching Contributions and Elective Deferrals (in that order) to the Account of that Participant if that Participant is covered by the Plan as of the end of the Limitation Year. If the Participant is not covered, the excess amount shall be allocated and reallocated in the next Limitation Year to all Participants’ Accounts in the Plan before any Employer Non-Elective Contributions, Employer Matching Contributions and Elective Deferrals (in that order) which would constitute Annual Additions are made to the Plan for the Limitation Year, or at the option of the Zions Employer, the Excess Amount shall be used to reduce Employer Non-Elective Contributions and Employer Matching Contributions to the Plan for the Limitation Year by the amount in the suspense account which is allocated and reallocated during the Limitation Year. The suspense account shall be an unallocated account equal to the sum of all Excess Amounts for all Participants in the Plan during the Limitation Year. The suspense account shall not share in any earnings or losses of the Trust Fund. The Plan may not distribute any amounts in the suspense account to any Participant whether before or after Termination of Employment or termination of the Plan.

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ARTICLE VIII

IN-SERVICE AND HARDSHIP WITHDRAWALS

8.01 In-Service Withdrawals, Withdrawals of Rollover Contributions and Withdrawals Due to Attainment of Age 59 ¹/2, Disability or Hardship: Subject to the provisions of Article XXII and except as otherwise provided in this Section 8.01 and Section 8.04, no amounts may be withdrawn by a Participant from any Account held for his benefit prior to termination of employment with the Employer.

(a) A Participant may make in-service withdrawals from his Voluntary Contribution Account to the extent permitted in Section 8.04.

(b) A Participant who has attained Age 59 ¹/2 may withdraw all or any portion of his Account.

(c) A Participant who suffers a Disability as defined in Section 2.13 may withdraw all or any portion of his Account without regard to the Participant’s Age or whether he has incurred a Termination of Employment.

(d) A Participant may elect to withdraw an amount credited to his Elective Deferral Account without regard to the Participant’s Age, but only if he obtains prior approval from the Plan Administrator, which approval shall be granted only upon a determination of Financial Hardship. In the case of a withdrawal due to Financial Hardship, the amount of the withdrawal shall be limited to the total amount in the Participant’s Elective Deferral Account, including income allocable thereto as of December 31, 1988. A Participant shall be entitled to a withdrawal from his Participant Elective Deferral Account under this Plan only after receiving as a hardship withdrawal all amounts available first, from his Rollover Account and second, from his Voluntary Contribution Account. Upon granting approval, the Plan Administrator shall direct the Trustee to distribute the indicated portion of the Participant’s Elective Deferral Account to the Participant.

(e) In the event a Participant has previously made any Rollover Contribution to the Plan, the Participant shall, upon written notice to the Plan Administrator, be entitled to withdraw at any time, without regard to the Participant’s Age, any amount up to the balance of the Rollover Contributions held in his Rollover Contribution Account. Withdrawals shall have no effect upon any benefits provided under any other provisions of this Plan.

(f) Whenever a withdrawal is permitted from more than one sub-account under this Section 8.01 the withdrawal shall be made (to the extent permitted under Code §72) in the following order: first, from the Participant Voluntary Contribution Account

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and second, from the Participant Elective Deferral Account. Withdrawals shall also be made from a Participant’s General Investments Account before being taken from his Employer Securities Account whenever possible.

8.02 Financial Hardship Distribution Rules: The Plan adopts the deemed hardship distribution standards set forth in Reg. §1.041(k)-1(d)(2)(iv). As a consequence, the Plan Administrator shall not approve any distribution on account of Financial Hardship unless the distribution is determined by the Administrator to be necessary to meet an immediate and heavy financial need of the Participant. The distribution will be deemed necessary if:

(a) The distribution is not in excess of the amount of the immediate and heavy financial need of the Participant, including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution; and

(b) Other resources of the Participant are not reasonably available to meet this need.

The condition in (b) above is deemed to be met if the Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer, provided however, if in the judgment of the Plan Administrator the issuance of a loan from the Plan to the Participant will result in further financial hardship to the Participant, all loans currently available from the Plan shall be deemed to have been made. A participant who has received or who receives a distribution on account of Financial Hardship shall be prohibited from making Elective Deferrals under this and all other plans of the Employer (as set forth above) until (6) months after receipt of the distribution.

8.03 Determination of Immediate and Heavy Financial Need: For purposes of Section 8.02, a distribution shall be deemed to be on account of an immediate and heavy financial need if the distribution is for:

(a) Expenses for medical care described in Code §213(d) incurred by the Participant, the Participant’s spouse or any dependent of the Participant or expenses necessary for these persons to obtain such medical care;

(b) Payment of tuition and related educational fees for the next twelve (12) months of post-secondary education for the Participant, the Participant’s spouse or any dependent of the Participant;

(c) Costs directly related to purchase (excluding mortgage payments) a principal residence for the Participant; or

(d) Payments necessary to prevent the eviction of the Participant from his principal residence or foreclosure of the mortgage on that residence.

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8.04 In Service Withdrawals of Voluntary Contributions: Notwithstanding any other provisions of this Article VIII a Participant may withdraw in the manner and at the times provided in this Section 8.04 all or any part of his Accrued Benefit attributable to Voluntary Contributions which were made to the Plan before October 1, 1992, together with earnings accrued thereon after December 31, 1986. To effect a withdrawal under this Section 8.04 the Participant shall notify the Plan Administrator in writing of his request at least fifteen (15) days prior to any Entry Date. The Plan Administrator shall notify the Trustee to make distribution as soon as administratively feasible after those dates. A Participant may not exercise his withdrawal right under this Section 8.04 more than once during any Plan Year. The determination of the amount available for withdrawal shall be made in accordance with the requirements of Section 8.05.

If the Participant’s Accrued Benefit is not more than five thousand dollars ($5,000), without regard to whether the amount in the Participant’s Account has ever exceeded that amount at the time of any prior distribution, the withdrawal shall be permitted without regard to any Participant consent requirement or the requirements of Section 9.06. For purposes of the foregoing sentence the amount of the Accrued Benefit in the Participant’s Account shall be determined without regard to that portion of the Account that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code §§402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).

8.05 Determination of Available Withdrawal Amount: The amount which a Participant may withdraw under Section 8.04 shall be the total of the Participant’s Voluntary Contributions to the Plan as of December 31, 1986, including earnings thereon, plus the Participant’s Voluntary Contributions to the Plan after that date but prior to October 1, 1992, together with earnings thereon. No Voluntary Contributions after September 30, 1992 or earnings thereon shall be available for in-service withdrawal or included in any calculation of amount available for withdrawal. Upon any withdrawal pursuant to Section 8.04 the Plan shall first charge the amount (to the extent possible) to the balance of Voluntary Contributions determined as of December 31, 1986, which shall be considered a return of Voluntary Contributions under the “grandfather rule” of Notice 87-13, Q&A-13. All Voluntary Contributions to the Plan after December 31, 1986 and prior to October 1, 1992 together with earnings thereon, shall be considered by the Plan to be a “separate contract” within the meaning of Code §72(d). Allocations between investment in the contract and earnings with respect to any withdrawal including amounts attributable to the “separate contract” shall be made in accordance with Code §72(e)(8) and Notice 87-13. The Plan Administrator shall maintain such records of a Participant’s Voluntary Contributions as may be necessary to ensure compliance with this Section 8.05.

8.06 Withdrawal of Rollover Contributions: If a Participant has a Rollover Contribution Account in the Plan, and if the Participant’s Accrued Benefit is not more than five thousand dollars ($5,000), without regard to whether the amount in the Participant’s Account has ever exceeded that amount at the time of any prior distribution, the withdrawal shall be permitted without regard to any Participant consent requirement or the requirements of Section 9.06. Withdrawals from the Rollover Contribution Account on account of hardship shall have no effect upon any benefits provided under any other provisions of this Plan. All hardship distributions from the Rollover Contribution Account shall be administered in a uniform and non-discriminatory manner.

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The amount withdrawn shall be distributed to the Participant in the manner and form provided in Section 11.02 as if the amount were distributed on account of the Participant’s Termination of Employment or, if the Participant is eligible for Normal Retirement, in the manner and form provided in Article IX as if the amount were distributed on account of the Participant’s Retirement. If the spousal consent rules of Section 9.06 apply to any amount in the Participant’s Account, then no amount shall be withdrawn unless prior to the withdrawal the Participant’s spouse, if any, consents to the withdrawal.

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ARTICLE IX

RETIREMENT BENEFITS

9.01 Normal or Late Retirement: A Participant shall be eligible for Normal Retirement on reaching his Normal Retirement Date. A Participant who has not become an Excluded Employee may continue in the service of the Employer as a Participant hereunder beyond his Normal Retirement Date. In the event such a Participant continues in the service of the Employer, he shall continue to be treated in all respects as a Participant until his actual retirement. When any Participant has a Termination of Employment following his Normal Retirement Date he shall be considered a retired Participant and he shall be entitled to receive the entire amount of his Accrued Benefit, distributed as set forth below.

9.02 Disability Retirement: Upon any Participant incurring a Disability, he shall be considered a disabled Participant and entitled to begin receiving his Vested Accrued Benefit, without regard to whether he has also incurred a Termination of Employment. Such amount shall be distributed as provided in Section 9.03, or deferred until such later date as elected by the disabled Participant and then distributed as provided in Section 9.03.

9.03 Method of Payment: Subject to the rules of Section 9.07, upon receipt of a claim for benefits a retired or disabled Participant’s Vested Accrued Benefit shall be payable, as elected in writing or other appropriate electronic means by the Participant, in one or a combination of the following forms:

(a) A single lump sum payment. The amount of the lump sum payment shall be equal to the entire Vested Interest of the Participant in his Account on the date payment is made.

(b) Substantially equal monthly, quarterly or annual installments over any period not exceeding the life expectancy of the Participant or the Participant and his or her spouse, if longer, until the Participant’s Vested Accrued Benefit has been fully distributed. Fractional share installment amounts of Employer Securities shall be withheld and accumulated until a whole share of Employer Securities can be distributed. Any fractional share remaining upon payment of the final installment shall be paid in cash.

Not less than thirty (30) days nor more than ninety (90) days before the Distribution Date, the Plan Administrator shall notify the Participant of the terms, conditions and forms of payment available from the Plan, including a description of the election procedures under this Section and a general explanation of the financial effect on a Participant’s Accrued Benefit of the election. The minimum thirty (30) day waiting period after the notification is provided until the Distribution Date may be disregarded if the Plan Administrator informs the Participant of his or her right to the full minimum thirty (30) day waiting period, and the Participant elects in writing (or by other means acceptable to the Plan Administrator) to waive the minimum thirty (30) day waiting period.

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If a Participant fails to elect a form of payment, payment of the Participant’s benefits shall be paid in the form of a lump sum. Except as permitted in Section 9.04, no payment shall be made to a Participant prior to his Normal Retirement Age unless the Participant consents in writing (or by other means acceptable to the Plan Administrator) to the payment not more than ninety (90) days prior to his Distribution Date.

If the lump sum amount that would be payable to a Participant (whether disabled or retired) is not more than five thousand dollars ($5,000), without regard to whether the amount in the Participant’s Account has ever exceeded that amount at the time of any prior distribution, the benefit shall be paid as a single lump sum payment as soon as administratively feasible following the end of the month in which his Termination of Employment occurs without any requirement of participant consent. However, a single lump sum payment shall not be made to a Participant after his Distribution Date unless the Participant consents in writing to the payment. If the Participant dies prior to the complete distribution of the Participant’s Accrued Benefit to him, then the Plan Administrator, upon notice of the Participant’s death, shall direct the Trustee to make payment in accordance with the provisions of Article X.

9.04 Time of Payment: Payment of the retired or disabled Participant’s Vested Accrued Benefit shall commence as soon as administratively feasible following the Participant’s Termination of Employment on account of retirement or disability, or if later, as soon as administratively feasible following the date a claim for benefits is submitted by the Participant to the Plan Administrator. Unless a Participant elects otherwise (and failure to submit a claim for benefits shall be deemed such an election) payment of benefits under this Plan will commence not later than sixty (60) days after the close of the Plan Year in which the latest of the following events occurs:

(a) The attainment by the Participant of Age sixty-five (65); or

(b) The tenth (10th) anniversary of the Participant’s Entry Date; or

(c) The date the Participant has a Termination of Employment from the Employer.

If the amount of the payment required to commence on the date determined above cannot be ascertained by such date, or if it is not possible to make such payment on such date because the Plan Administrator has been unable to locate the Participant after making reasonable efforts to do so, a payment retroactive to such date may be made no later than sixty (60) days after the earliest date on which the amount of such payment can be ascertained or the date the Participant is located, whichever is applicable.

9.05 Minimum Distribution Requirements: This Section 9.05 and Section 10.04 shall take precedence over any inconsistent provisions of this Plan. All distributions required to be made under this Section 9.05 (life distributions) or under Section 10.04 (death distributions) will be determined and made in accordance with the Treasury regulations under Code §401(a)(9).

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(a) Effective Date. This Section and Section 10.04 will apply for purposes of determining required minimum distributions for all calendar years beginning with the Effective Date. Required minimum distributions for the 2002 calendar year under this Section and Section 10.04 will be determined as follows. If the total amount of 2002 required minimum distributions under the Plan made to a Participant or Beneficiary prior to the effective date of this Section equals or exceeds the required minimum distributions determined under this Section, then no additional distributions will be required to be made for the 2002 calendar year on or after such date to the Participant or Beneficiary. If the total amount of the 2002 calendar year required minimum distributions under the Plan made to the Participant or Beneficiary prior to the effective date of this Section is less than the amount determined under this Section, then required minimum distributions for the 2002 calendar year on and after such date will be determined so that the total amount of required minimum distributions for the 2002 calendar year made to the Participant or Beneficiary will be the amount determined under this Section.

(b) Time and Manner of Distribution.

(1) Required Beginning Date. The Participant’s entire Vested Accrued Benefit will be distributed, or begin to be distributed, to the Participant no later than the participant’s Required Beginning Date.

(2) Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant’s entire Vested Accrued Benefit will be distributed, or begin to be distributed, as provided in Section 10.04.

(3) Forms of Distribution. Unless the participant’s interest has been distributed in the form of a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Section 9.05(c).

(c) Required Minimum Distributions During Participant’s Lifetime

(1) Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the participant’s lifetime, the minimum amount that will be distributed for each Distribution Calendar Year is the lesser of:

(A) the quotient obtained by dividing the Participant’s Account Balance by the distribution period in the Uniform Lifetime Table set forth in Treas. Reg. Section 1.401(a)(9)-9, using the Participant’s age as of the Participant’s birthday in the Distribution Calendar Year; or

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(B) if the Participant’s sole Designated Beneficiary for the Distribution Calendar Year is the Participant’s spouse, the quotient obtained by dividing the Participant’s Account Balance by the number in the Joint and Last Survivor Table set forth in Treas. Reg. Section 1.401(a)(9)-9, using the Participant’s and spouse’s attained ages as of the participant’s and spouse’s birthdays in the Distribution Calendar Year.

(2) Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death. Required minimum distributions will be determined under this Section 9.05(c) beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes the Participant’s date of death.

(d) Definitions. For purposes of this Section 9.05 and Section 10.04 the following definitions shall apply.

(1) “Designated Beneficiary” shall mean the individual who is designated as the Beneficiary under Section 10.02 of the Plan and is the Designated Beneficiary under Code §401(a)(9) Treas. Reg. Section 1.401(a)(9)-1, Q&A-4.

(2) “Distribution Calendar Year” shall mean a calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant’s Required Beginning Date. For distributions beginning after the Participant’s death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin under Section 10.04. The required minimum distribution for the Participant’s first Distribution Calendar Year will be made on or before the Participant’s Required Beginning Date. The required minimum distribution for other Distribution Calendar Years, including the required minimum distribution for the Distribution Calendar Year in which the Participant’s Required Beginning Date occurs, will be made on or before December 31 of that Distribution Calendar Year.

(3) “Life Expectancy” shall mean Life Expectancy as computed by use of the Single Life Table in Treas. Reg.§1.401(a)(9)-9.

(4) “Participant’s Account Balance” shall mean the balance in the Participant’s Account as of the last valuation date in the calendar year immediately

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preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the Distribution Calendar Year if distributed or transferred in the valuation calendar year.

(5) “Required Beginning Date” shall mean, if a Participant is a more than five percent (5%) owner in the Plan Year ending in or with the calendar year in which the Participant attains Age 70 ¹/2, April 1st following that calendar year. For any other Participant the Required Beginning Date is April 1st following the close of the calendar year in which the Participant attains Age 70 ¹/2, or, if later, April 1st following the close of the calendar year in which the Participant has a Termination of Employment.

(6) “Five percent (5%) owner” shall have the meaning set forth in Reg. §1.401(a)(9)-1, Q&A-2(c).

(e) Form of Benefit Payment. If payment of the Participant’s Accrued Benefit commences under this Section 9.05, it shall be distributed to the Participant (consistent with the Participant’s election and the requirements of Section 9.03):

(1) In the form of a cash lump sum payment of the Participant’s entire Accrued Benefit; or

(2) In the form of minimum annual cash installment payments over a period not extending beyond the life expectancy of the Participant, or the joint life expectancy of the Participant and his Beneficiary.

(f) Redetermination of Life Expectancy. For purposes of determining the amount of any minimum annual cash installment payments the life expectancy of the Participant and his spouse, but not of his non-spouse Beneficiary, shall be redetermined annually, unless otherwise elected by the Participant. Notwithstanding the above, any distribution required under the incidental death benefit requirements of Code §401(a) shall be treated as a required distribution.

9.06 No Annuity Benefits: Accrued Benefits payable from this Plan shall not be paid in any form of annuity.

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9.07 Distribution of Employer Securities and Cash:

(a) If so elected by the Participant, distributions of benefits from the Plan may be made entirely in Employer Securities, valued at fair market value at the time of distribution, or, effective March 1, 2003, entirely in cash. If the Participant elects a distribution which is part cash and part Employer Securities, the distribution shall be consist only of the Employer Securities in the Employer Securities Account and the cash value of the General Investments Account at the time the payment is made. A Participant who elects a distribution method other than a lump sum may designate prior to payment of the first installment the amount of the first and each subsequent installment which will be Employer Securities and which will be cash. Any fractional security share to which a Participant or his Beneficiary is entitled shall be paid in cash. If the Participant makes no election, then the Participant’s Account shall be distributed in cash and in Employer Securities, according to the ratio of investment in the Participant’s Account in the General Investments and Employer Securities Accounts, respectively.

(b) Notwithstanding the provisions of Section 9.07(a), if a Participant has elected under Section 6.03(e) to withdraw (rather than reinvest) the cash dividends on Employer Securities allocated or allocable to his Account, the Plan Administrator shall direct the Trustee to pay to the Participant in cash the cash dividends on Employer Securities so allocated or allocable to the Participant’s Employer Securities Account, irrespective of whether the Participant is fully vested in his Employer Securities Account. The Plan Administrator’s direction must state whether the Trustee is to pay the cash dividend distributions currently, or within the 90 day period following the close of the Plan Year in which the Employer pays the dividends to the Trust. The Plan Administrator may also request the Employer to pay cash dividends on Employer Securities directly to Participants.

9.08 Special Distribution Rules: Unless the Participant elects in writing other distribution provisions of the Plan or unless other distribution provisions of the Plan require earlier distribution of the Participant’s Accrued Benefit, the Participant shall commence receiving the portion of the Participant’s Accrued Benefit attributable to Employer Securities (the “Eligible Portion”) at the time prescribed by this Section 9.08, irrespective of any other provision of the Plan. The distribution provisions of this Section 9.08 are subject to the consent and form of distribution requirements of Section 9.03.

(a) If the Participant incurs a Termination of Employment after attainment of Age 65 or by reason of death or disability, distribution of the Eligible Portion shall commence not later than one (1) year after the close of the Plan Year in which the applicable event occurs.

(b) If the Participant incurs a Termination of Employment for any reason not specified in (a), distribution of the Eligible Portion shall commence not later than one (1) year

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after the close of the fifth (5th) Plan Year following the Plan Year in which the Participant incurred the Termination of Employment. If the Participant resumes employment with the Employer on or before the last day of the fifth (5th) Plan Year following the Plan Year of his separation from Service, the mandatory distribution provisions of this paragraph (b) do not apply.

For purposes of this Section 9.08, a distribution to a Participant of the Eligible Portion shall not include any Employer Securities acquired with the proceeds of an Exempt Loan until the close of the Plan Year in which the Exempt Loan is paid in full.

The distributions required under this Section 9.08 shall be made over a period not exceeding five (5) years unless the Participant otherwise elects under the other distribution provisions of the Plan. If a Participant’s Eligible Portion exceeds $500,000, the maximum payment period, subject to a contrary election by the Participant, is five years plus one additional year (but no more than five additional years) for each $100,00 (or fraction of $100,000) by which the Eligible Portion exceeds $500,000. The $500,000 and $100,000 amounts set forth in this Section shall be adjusted at the same time and in the same manner as the factor prescribed by the Secretary of the Treasury under Code §415(d). In no event will the distribution period exceed the period permitted under Section 9.05 of the Plan.

9.09 Distribution of Transferred Benefits: To the extent not already provided under the terms of this Plan, and notwithstanding any other provisions to the contrary, this Plan guarantees to each Participant whose Account includes Transferred Benefits (and to each Beneficiary thereof) the right to receive all Transferred Benefits in any optional form of benefit (including time, manner and method of distribution) protected under Code §411(d)(6). The extent and nature of the optional forms of benefits so protected shall be determined by reference to the Predecessor Plan(s).

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ARTICLE X

DEATH BENEFITS

10.01 Death Benefits Payable: If a Participant who has not received a distribution of his entire Vested Interest dies, whether before or after his Distribution Date, the death benefit payable to the Beneficiary, Contingent Beneficiary or estate (as the case may be) of the Participant shall be all amounts credited (or to be credited) to his Accounts then held by the Trustee for the Participant’s benefit, without regard to the Participant’s Vested Percentage and which have yet to be distributed. If an Inactive Participant who has not received a distribution of his entire Vested Interest dies, whether before or after his Distribution Date, the death benefit payable to the Beneficiary, Contingent Beneficiary or estate (as the case may be) of the Inactive Participant shall be the remaining Vested Interest in the Inactive Participant’s Accounts then held by the Trustee for the Inactive Participant’s benefit.

10.02 Designation of Beneficiary: Each Participant or Inactive Participant may designate a Beneficiary and Contingent Beneficiary who shall be entitled to receive the death benefit payable under Section 10.01. From time to time the Participant or Inactive Participant may file with the Plan Administrator a new or revised designation, provided that his or her spouse shall be his or her Beneficiary unless his or her spouse has consented in writing to the designation of a Beneficiary other than his or her spouse or it is established to the satisfaction of the Plan Administrator that the consent of the spouse may not be obtained because there is no spouse, the spouse cannot be located or because of such other circumstances as may be set forth in Regulations issued pursuant to Code §417(a)(2)(B). The change in marital status of a Participant from married to unmarried or vice versa shall void any outstanding beneficiary designation and require the completion and execution of a new beneficiary designation consistent with the provisions of this Section. Beneficiary designations shall be completed in the manner approved by the Plan Administrator or set forth in writing on a form provided by the Plan Administrator.

If upon the Participant’s death his designated Beneficiary does not survive him, the Contingent Beneficiary shall become the Beneficiary and any death benefit payable under Section 10.01 shall be paid to him or her. If a deceased Participant is not survived by a designated Beneficiary or Contingent Beneficiary, or if no Beneficiary was designated, the benefits shall be paid to the person (or in equal shares to the persons) in the first of the following classes of successive preference beneficiaries then surviving: the Participant’s (a) widow or widower, (b) children per stirpes, (c) parents, (d) brothers and sisters, (e) executor or administrator of his estate. For purposes of determining the right of a Beneficiary, Contingent Beneficiary, surviving spouse or other survivor to receive a benefit on account of the death of a Participant, he or she shall not be deemed to have survived the Participant unless he or she shall survive the Participant by at least thirty (30) days.

If the Beneficiary, Contingent Beneficiary or surviving spouse survives the Participant and is entitled to receive benefits under this Section 10.02, but dies prior to receiving the entire death benefit payable to him or her, the remaining portion of the death benefit shall be paid to the person’s named beneficiary or, if none, to the person’s estate subject to the right of commutation.

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10.03 Death Benefit Payment Procedure: Upon receipt of a claim for benefits, the Participant’s death benefit shall be paid by the Trustee to the Beneficiary designated by the Participant pursuant to Section 10.02. The Beneficiary of a Participant may elect to receive death benefits payable hereunder in any form of payment provided in Section 9.03, subject to the right to receive the distribution in cash or in Employer Securities as provided in Section 9.07. The Beneficiary’s election to receive distribution shall be made in the same manner provided under Articles IX and XI for distribution to Participants. Subject to the small benefit distribution rules in the next paragraph of this Section 10.03, the Plan shall distribute the death benefit according to the required distribution rules in Section 10.04.

If the lump sum benefit otherwise payable to the Beneficiary is not more than five thousand dollars ($5,000) and payment of benefits to the deceased Participant has not previously commenced, the benefit shall be paid as a single lump sum payment, subject to the distribution rules of Section 9.07. Payment of any death benefits under this paragraph shall commence as soon as administratively feasible following the Participant’s date of death. However, if the amount of the benefit required to be paid on the date determined above cannot be ascertained by that date, or if it is not possible to make the payment on that date because the Plan Administrator has been unable to ascertain or locate the Beneficiary after making reasonable efforts to do so, a payment retroactive to such date may be made as soon as administratively feasible after the earliest date on which the Beneficiary or amount of the payment can be ascertained or the date the Beneficiary is located, whichever is applicable.

10.04 Required Distributions Upon Death: Notwithstanding any other provisions of this Plan, payment of death benefits shall be subject to the following rules:

(a) Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant’s entire Vested Accrued Benefit will be distributed, or begin to be distributed no later than as follows:

(1) If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, then unless otherwise provided herein, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 ¹/2, if later.

(2) If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, then except as otherwise provided herein, distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

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(3) If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire Vested Accrued Benefit will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(4) If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section 10.04(a), other than sub-Section (a)(1), will apply as if the surviving spouse were the Participant.

For purposes of this Section 10.04(a) and Sections 10.04(e) and (f), unless Section 10.04(a)(4) applies, distributions are considered to begin on the participant’s Required Beginning Date. If Section 10.04(a)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section 10.04(a)(1).

(b) Forms of Distribution. Unless the participant’s interest has been distributed in the form of a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections 10.04(e) and (f).

(c) Beneficiaries’ Election of Five Year Rule. Beneficiaries may elect on an individual basis whether the five year rule or the Life Expectancy rule in Sections 10.04(a) and (f) applies to distributions after the death of a Participant who has a Designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under Section 10.04(a) or by September 30 of the calendar year which contains the fifth anniversary of the Participant’s (or, if applicable, surviving spouse’s) death. If neither the Participant nor Beneficiary makes an election under this sub-Section, distributions will be made in accordance with Sections 10.04(a) and (f).

(d) Transition Rule for Designated Beneficiary Receiving Distributions Under Five Year Rule to Elect Life Expectancy Distributions. A Designated Beneficiary who is receiving payments under the five year rule may make a new election to receive payments under the Life Expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the Life Expectancy rule for all Distribution Calendar Years before 2004 are distributed by the earlier of December 31, 2003, or the end of the five year period.

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(e) Death On or After Date Distributions Begin.

(1) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the longer of the remaining Life Expectancy of the Participant or the remaining Life Expectancy of the Participant’s Designated Beneficiary, determined as follows:

(A) The Participant’s remaining Life Expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(B) If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, the remaining Life Expectancy of the surviving spouse is calculated for each Distribution Calendar Year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For Distribution Calendar Years after the year of the surviving spouse’s death, the remaining Life Expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.

(C) If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, the Designated Beneficiary’s remaining Life Expectancy is calculated using the age of the Beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(2) No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no Designated Beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the Participant’s remaining Life Expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(f) Death Before Date Distributions Begin.

(1) Participant Survived by Designated Beneficiary. If the Participant dies before the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year

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after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the remaining Life Expectancy of the Participant’s Designated Beneficiary, determined as provided in Section 10.04(e).

(2) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(3) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 10.04(a)(1), this Section 10.04(f) will apply as if the surviving spouse were the Participant.

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ARTICLE XI

BENEFITS UPON OTHER TERMINATION OF EMPLOYMENT

11.01 Vested Amounts: A Participant shall become one hundred (100%) vested in his Accrued Benefit on attainment of Normal Retirement Age while employed by a Zions Employer. Prior to his Normal Retirement Age a Participant shall have a Vested Interest in his Accrued Benefit equal to the sum of the following:

(a) One hundred percent (100%) of the balance in his Participant Elective Deferral Account and in his Employer Matching Contribution Account, as adjusted for any contributions or distributions since the preceding Valuation Date; and

(b) One hundred percent (100%) of the balance in his Participant Rollover Contribution Account and in his Voluntary Contribution Account, if any, as adjusted for any contributions or distributions since the preceding Valuation Date; and

(c) One hundred percent (100%) of the balance in his Dividend Account if any (whether cash or Employer Securities), as adjusted for any contributions or distributions since the preceding Valuation Date; and

(d) His vested percentage of the balance in his Employer Non-Elective Contribution Account, as adjusted for any contributions or distributions since the preceding Valuation Date, according to the Participant’s Years of Vesting Service, and consistent with the following schedule:

Years of Vesting Service	Percent of Vested Accrued Benefit
Less than five (5) years	none
At least five (5) years	100	%

(e) A Participant’s Predecessor Plan Account (if any) shall be vested pursuant to the vesting rules set forth in the Predecessor Plan Account.

The percentage of the Participant’s Accrued Benefit attributable to the Participant’s Employer Contribution and Predecessor Plan Accounts in which he is not vested shall be forfeited by him as provided in Section 11.06.

11.02 Distribution of Vested Interest: Subject to the rules of Section 9.07, a Participant who incurs a Termination of Employment for any reason other than retirement, death or disability may elect in writing or other appropriate electronic means one or a combination of the following forms of distribution of his Vested Interest:

(a) A single lump sum payment. The amount of the lump sum payment shall be equal to the Participant’s Vested Interest in his or her Account on the date payment is made.

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(b) Substantially equal monthly, quarterly or annual installments over any period not exceeding the life expectancy of the Participant or the Participant and his or her spouse, if longer, until the Participant’s Vested Accrued Benefit has been fully distributed. Fractional share installment amounts of Employer Securities shall be withheld and accumulated until a whole share of Employer Securities can be distributed. Any fractional share remaining upon payment of the final installment shall be paid in cash.

Distribution shall commence no later than the time specified in Section 9.08 unless the Participant fails to elect a form or time of payment or elects a deferred payment, then payment of the Participant’s Accrued Benefit shall be deferred to the subsequent date elected by the Participant, which may be no later than the latest date permitted under Section 9.05, and then distributed in accordance with the provisions of Section 9.03. If the Participant elects later payment of the Participant’s Vested Accrued Benefit, distribution shall commence as soon as administratively feasible following the date a claim for benefits is submitted by the Participant to the Plan Administrator, which may be no later than the earlier of the date permitted under Sections 9.04 and 9.05. If at that time the Participant has attained Normal Retirement Age or incurred a disability, or if the Participant dies before his Normal Retirement Age or if earlier, before his Distribution Date, the Plan Administrator, upon notice of the attainment of Retirement Age or of death, shall direct the Trustee to make payment of the Participant’s Vested Interest to him (or to his Beneficiary if the Participant is deceased) in accordance with the provisions of Article X in the case of death, or Section 9.03 in the case of disability or attainment of Normal Retirement Age.

Not less than thirty (30) days nor more than ninety (90) days before the Distribution Date, the Plan Administrator shall notify the Participant of the terms, conditions and forms of payment available from the Plan, including a description of the election procedures under this Section and a general explanation of the financial effect on a Participant’s Accrued Benefit of the election. The minimum thirty (30) day waiting period after the notification is provided until the Distribution Date may be disregarded if the Plan Administrator informs the Participant of his or her right to the full minimum thirty (30) day waiting period, and the Participant elects in writing (or by other means acceptable to the Plan Administrator) to waive the minimum thirty (30) day waiting period.

If the Participant elects immediate distribution following Termination of Employment, whether as a single lump sum payment or term certain payments, payment shall be made as soon as administratively feasible following Termination of Employment. However, if a Participant terminates employment in a month that is the end of a quarter of the calendar year (i.e., March, June, September, December), then the distribution of the Participant’s Account shall be made on the 25th day of the second month following the Participant’s Termination of Employment. If the Former Participant dies or incurs a Disability before his Normal Retirement Date, the Plan Administrator, upon notice of the death or Disability, shall direct the Trustee to make payment of the Participant’s Vested Interest to him (or to his Beneficiary if the Participant is deceased) in accordance with the provisions of Article X in the case of death, or Section 9.02 in the case of Disability.

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Notwithstanding the above, if a terminated Participant is re-employed by the Employer prior to distribution of his Vested Interest, distribution shall not be made until his employment is again terminated or until the occurrence of another event permitting distribution under the terms of the Plan.

11.03 Distribution of Small Amounts: Notwithstanding the provisions of Section 11.02 if a Participant incurs a Termination of Employment for any reason other than retirement, death or disability and if the Vested Accrued Benefit that would be payable to a Participant is not more than five thousand dollars ($5,000), without regard to whether the amount in the Participant’s Account has ever exceeded that amount at the time of any prior distribution, then the Plan shall make distribution to the Participant in a single lump sum cash payment pursuant to the provisions of Sections 9.07 and 9.08 without first obtaining the Participant’s written consent.

11.04 Eligible Rollover Distributions: Notwithstanding any provision of this Plan to the contrary, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. For purposes of this Section 11.04 the following definitions shall apply:

(a) “Eligible Rollover Distribution” shall mean any distribution of all or any portion of the balance to the credit in the Account of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code §401(a)(9), and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Any amount that is distributed on account of hardship (without regard to whether the hardship withdrawal is attributable to Elective Deferrals) shall not be an eligible rollover distribution and the Distributee may not elect to have any portion of such a distribution paid directly to an eligible retirement plan.

(b) “Eligible Retirement Plan” shall mean an individual retirement account described in Code §408(a), an individual retirement annuity described in Code §408(b), an annuity plan described in Code §403(a), a qualified trust described in Code §401(a), that accepts the Distributee’s Eligible Rollover Distribution, an annuity contract described in Code §403(b) and an eligible plan under Code §457(b) which is maintained by a state, political subdivision of a state, or any agency or

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instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. This definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Code §414(p).

(c) “Distributee” shall mean an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code §414(p), are Distributees with regard to the interest of the spouse or former spouse.

(d) “Direct Rollover” shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

11.05 Breaks in Service and Vesting: If a Participant has a One Year Break in Service, the Participant’s Years of Vesting Service before the One Year Break in Service shall not be included in computing Years of Vesting Service until the Participant shall have completed one Year of Vesting Service after the One Year Break in Service. If an Employee terminated employment prior to becoming a Participant and incurred a One Year Break in Service, or if a Participant did not have any Vested Interest derived from Employer contributions prior to a One Year Break in Service, Years of Vesting Service before a One Year Break in Service shall not be included in Years of Vesting Service calculated after the Participant’s One Year Break in Service if the number of consecutive One Year Breaks in Service equals or exceeds the greater of five (5) or the aggregate number of such Years of Vesting Service before the One Year Break in Service.

Solely for the purpose of determining the vested percentage of a Participant’s Accrued Benefit derived from Employer contributions which accrued prior to a five (5) consecutive one (1) year Break in Service period, the Plan shall disregard any Year of Service subsequent to such five (5) consecutive one (1) year Breaks in Service period.

If a Participant has a One Year Break in Service, and the break does not arise on account of Termination of Employment, the Participant shall not be credited with a Year of Vesting Service for that Plan Year. However, no amounts in the Participant’s Accounts shall be forfeited.

11.06 No Increase in Pre-break Vesting: For purposes of Section 11.01, Years of Vesting Service after a Termination of Employment which resulted in five (5) consecutive One Year Breaks in Service shall not increase the vested percentage of a Participant’s Account which was earned before such five (5) consecutive One Year Breaks in Service.

11.07 Disposition of Forfeitures: Amounts forfeited by terminated Participants from their Employer Non-Elective Contribution Accounts shall be used to reduce the amount of the Employer’s Non-Elective Contribution otherwise made pursuant to Section 5.07. The forfeited amounts shall be allocated in accordance with Section 6.02(c).

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To the extent possible, the Plan Administrator must forfeit from a Participant’s General Investments Account before making a forfeiture from his Employer Securities Account.

Forfeiture of the Participant’s non-vested interest in his or her Employer Non-Elective Contribution Account shall occur:

(a) In the case of a Participant who receives a lump sum distribution of his Vested Interest on account of Termination of Employment, on the day the Participant receives the distribution.

(b) In the case of a Participant who has a Vested Interest derived from Employer Contributions and does not receive a total distribution of such Vested Interest, on the last day of the Plan Year in which the Participant incurs five (5) consecutive One Year Breaks in Service.

(c) In the case of a Participant who has no Vested Interest derived from Employer Contributions, regardless of the sub-Account to which the Employer Contributions have been allocated, on the day the Participant incurs the Termination of Employment.

Non-vested interests of terminated Participants shall be held by the Trustee in the respective Accounts of the Participant until the date determined above and shall then be forfeited by the Participant and allocated in accordance with this Section.

11.08 Distribution to Participants Who Are Less Than 100% Vested in Their Entire Account: In the event a Participant who is less than one hundred percent (100%) vested hereunder incurs a Termination of Employment and returns to the employ of the Employer before a forfeiture of his non-vested interest shall have occurred, and prior to his re-employment was paid a portion of his Vested Interest, a separate account for the Participant’s remaining interest in the Plan as of the time of the distribution shall be maintained. At any relevant time, the Participant’s vested portion of the separate account shall be an amount “X” determined by the following formula:

X = P (AB+(RxD)) - (RxD)

For purposes of applying the formula:

P is the vested percentage at the relevant time;

AB is the account balance at the relevant time;

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D is the amount of the distribution;

R is the ratio of the account balance at the relevant time to the account balance after distribution.

In the event a Participant who is less than one hundred percent (100%) vested hereunder incurs a Termination of Employment and returns to the employ of the Employer after a forfeiture of his non-vested interest but prior to incurring five (5) consecutive One Year Breaks in Service, and prior to his re-employment was paid his Vested Interest, the non-vested portion of his Accrued Benefit which was forfeited by the Participant shall be disregarded in computing his Accrued Benefit after re-entry into the Plan, unless the Participant repays, pursuant to Section 11.08, the amounts distributed from his Account from which an amount was forfeited. If a Participant does repay the distribution, the balance in such Account shall be restored as provided in Section 11.09.

In the event a Participant who had no Vested Interest in his Employer Regular Contribution Account separated from service and returns to the employ of the Employer after a forfeiture of his non-vested interest but prior to incurring five (5) consecutive One Year Breaks in Service, any non-vested amounts forfeited by the Participant shall be restored, as provided in Section 11.09, to the Account from which an amount was forfeited.

11.09 Repayment of Distribution: A Participant described in the second paragraph of Section 11.07 who received a lump sum distribution of less than one hundred percent (100%) of his Accrued Benefit shall be entitled to repay the amount so distributed from the Employer Contribution Account in which he was less than one hundred percent (100%) vested. The repayment must be for the full amount distributed from the Account and must be made not later than the earlier of:

(a) The date on which the Participant incurs five (5) consecutive One Year Breaks in Service after the date of distribution.

(b) The end of the five (5) year period beginning with the date the Participant is re-employed by the Employer.

Any repayment shall not be included in applying the limitations of Article V or Article VIII hereunder.

11.10 Restoration of Accounts: Any amount repaid pursuant to Section 11.08 shall be credited to the Participant’s Accounts for which it is repaid, with credit to be made as of the date of repayment. The Account shall also be credited with the amount previously forfeited from the Account, with credit to be made as of the last day of the Plan Year in which repayment is made.

In the case of a Participant to whom the third paragraph of Section 11.07 applies, the Participant’s Accounts from which amounts were previously forfeited shall be credited with the amount so forfeited, with credit to be made as of the last day of the Plan Year in which the Participant resumes participation in the Plan.

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Any previously forfeited amounts which are credited to Participants’ Accounts pursuant to this Section shall be derived from the following sources in the following order of priority:

(a) First, the amount, if any, to be credited to such types of Accounts for the Plan Year pursuant to Section 11.05;

(b) Second, Employer contributions for the Plan Year, if any, which are not required to be credited to such types of Accounts for other Participants; and

(c) Third, an additional Employer contribution for the Plan Year, regardless of whether the Employer has any Net Profits for the year.

If for any Plan Year, the Accounts of more than one Participant are required to be restored, then restorations shall be derived from the above sources in the same proportion that the amount to be restored to each Participant bears to the total amount to be restored to all such Participants for the Plan Year. Any such amounts credited to a Participant’s Accounts shall not be included in applying the limitations of Article V or Article VIII hereunder.

11.11 Amendments to the Vesting Schedule: No amendment to the vesting schedule or provisions of Section 11.01, or to this Plan which directly or indirectly affects the computation of a Participant’s Accrued Benefit, shall deprive a Participant of a vested right to the benefits accrued to the effective date of the amendment. Furthermore, if the vesting schedule or provisions of Section 11.01 are amended, each Participant with at least three (3) Years of Vesting Service (determined as of the later of the date the amendment is adopted or the date the amendment is effective) may elect to have his vesting percentage computed under the Plan without regard to the amendment. The period during which the election may be made shall commence with the date the amendment is adopted and shall end on the latest of:

(a) Sixty (60) days after the amendment is adopted;

(b) Sixty (60) days after the amendment becomes effective; or

(c) Sixty (60) days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator.

In the absence of any written notice under (c) above, any Participant who has at least three (3) Years of Vesting Service (as determined above) shall at all times receive a Vested Interest under whichever vesting schedule provides the greatest Vested Interest.

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ARTICLE XII

FIDUCIARY DUTIES

12.01 General Fiduciary Duty: A Fiduciary, whether or not a Named Fiduciary, shall discharge his duties solely in the interest of the Participants and their Beneficiaries hereunder. All assets of this Plan shall be devoted to the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan. Each Fiduciary, whether or not a Named Fiduciary, shall discharge his duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Each Fiduciary shall also discharge his duties in a manner consistent with the documents and instruments governing the Plan to the extent such documents and instruments are consistent with law. No Fiduciary, whether or not a Named Fiduciary, shall engage in any prohibited transactions with a Disqualified Person or party-in-interest as those terms and transactions are defined herein and by ERISA.

12.02 Allocation of Responsibilities: Each Named Fiduciary shall have only those duties and responsibilities expressly allocated under the terms of this Plan. No other duties or responsibilities shall be implied.

12.03 Delegation of Responsibilities: Each Named Fiduciary may delegate the fiduciary responsibilities other than Trustee responsibilities allocated to such Fiduciary under this Plan to any person other than a Named Fiduciary. If any duties or responsibilities are delegated under this section, the person to whom the duties or responsibilities are delegated shall acknowledge the fact in writing and shall specify in writing the duties and responsibilities so delegated. All other duties and responsibilities shall be deemed not to have been delegated.

12.04 Liability for Allocation or Delegation of Responsibilities: A Named Fiduciary shall not be liable for the acts or omissions of a person to whom responsibilities or duties are allocated or delegated in accordance with Section 12.02 or Section 12.03 except to the extent such Named Fiduciary breaches his obligation under Section 12.01:

(a) With respect to the allocation or delegation;

(b) With respect to establishing or implementing a procedure for allocation or delegation; or

(c) By continuing the allocation or delegation.

Nothing in this section shall relieve a Fiduciary from liability incurred under Section 12.05.

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12.05 Liability for Co-Fiduciaries: In addition to the liability a Fiduciary may incur for the breach of his duty under Section 12.01 or 12.04, a Fiduciary shall be liable for a breach of Fiduciary duty committed by another Fiduciary in the following circumstances:

(a) If he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other Fiduciary knowing such act or omission is a breach;

(b) If, by his failure to comply with Section 12.01 he has enabled such other Fiduciary to commit a breach;

(c) If he has knowledge of a breach by such other Fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.

12.06 Same Person May Serve in More than One Capacity: Nothing herein shall prevent any person from serving in more than one Fiduciary capacity.

12.07 Indemnification: The Plan Sponsor shall hold harmless and indemnify to the fullest extent permitted by ERISA each non-Trustee Fiduciary of the Plan with respect to the consequences of all actions or failures to act of the Fiduciary while carrying out his or her responsibilities under the Plan. The Plan Sponsor shall further hold harmless and indemnify each Fiduciary who is subjected to any claim or action or who is made a party in any threatened, pending or completed proceeding, including, without limitation, any proceeding brought by or in the name of the Plan or by any participant thereof or by any governmental agency. The Employer’s indemnification shall include any and all expenses (including attorney’s and/or consultant’s fees), costs, damages, judgments, fines, interest, penalties (including any which may be imposed under ERISA §502(l)) and/or amounts paid in settlement and that are actually and reasonably incurred by a Fiduciary in connection with the investigation, defense, settlement, preparation for trial, trial, or appeal of any proceeding, claim or action. Notwithstanding the foregoing, the Employer shall not be obligated to hold harmless or indemnify a Fiduciary of the Plan if indemnification is inconsistent with applicable law or if the act(s) or omission(s) of the Fiduciary to be indemnified are determined to have involved intentional misconduct, gross negligence or a knowing violation of ERISA or other applicable law by the Fiduciary.

To the extent a Fiduciary is a named insured under any policy of liability insurance maintained by the Plan or the Employer, the policy and the payment obligations of the insurance company under the policy shall be deemed primary and in lieu of the Employer’s obligations under this Section 12.07, but only to the extent of the coverage provided in the policy. No insurer under any policy shall claim any right to reimbursement or refund from the Employer and no obligation of the Employer hereunder shall be deemed to inure to the benefit of any third party.

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ARTICLE XIII

THE PLAN ADMINISTRATOR

13.01 Appointment of Plan Administrator: The Board of Directors of the Plan Sponsor shall appoint the Plan Administrator, which may be the Plan Sponsor. If the Plan Sponsor is appointed as Plan Administrator, the Plan Sponsor may appoint one or more Committees to carry out the duties of the Plan Administrator under this Plan. In that event all references in the Plan to the Plan Administrator shall be deemed to refer to the appointed Committee. The duties of the Committees shall be divided as the Plan Administrator deems appropriate and may be designated by separate instrument. The Committees shall act by majority vote except that they shall act by unanimous vote at any time when there are only two members comprising the Committee.

13.02 Acceptance by Plan Administrator: The Plan Administrator shall accept its appointment by joining with the Employer in the execution of this Agreement.

13.03 Signature of Plan Administrator: All persons dealing with the Plan Administrator may rely on any document executed by the Plan Administrator; or, in the event of appointment of a Committee or Committees, such persons may rely on any document executed by at least one member of the appropriate Committee as being the act of the Plan Administrator.

13.04 Appointment of an Investment Manager: The Plan Administrator may appoint an Investment Manager or Managers to manage, acquire and dispose of any assets of the Plan. In the event responsibility for appointment of Investment Managers is delegated by the Plan Administrator to a named Committee, that delegation shall carry with it the authority of the Committee to act as a Named Fiduciary for purposes of ERISA in appointing an Investment Manager. The Investment Manager shall accept his appointment by written agreement executed by the Plan Administrator and Investment Manager. This written agreement shall specify the Plan assets for which the Investment Manager is responsible and such written instrument shall be kept with the other documents governing the operation of the Plan. The Trustee shall be entitled to rely on written instructions from the Investment Manager and shall be under no obligation to invest or otherwise manage any asset of the Plan subject to the management of the Investment Manager.

13.05 Duties of the Plan Administrator: The Plan Administrator shall be responsible for the general administration of the Plan including, but not limited to, the following:

(a) To prepare an annual report, summary plan description and modifications thereto, and summary annual report;

(b) To complete and file the various reports and tax forms with the appropriate government agencies as required by law;

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(c) To distribute to Plan Participants and/or their Beneficiaries the summary plan description and reports sufficient to inform such Participants or Beneficiaries of their Accrued Benefit and their Vested Accrued Benefit as required by law;

(d) To determine annually, or more frequently if necessary, which Employees are eligible to participate in the Plan;

(e) To determine the benefits to which Participants and their Beneficiaries are entitled and to approve or deny claims for benefits;

(f) To provide Plan Participants with a written explanation of the effect of electing an optional form of benefit payment;

(g) To retain copies of all documents or instruments under which the Plan operates in its own office, the principal place of business of the Plan Sponsor and such other place as the Secretary of Labor or his delegate may by regulation prescribe; to make all such documents and instruments governing the operation of the Plan available for inspection by Plan Participants and/or their Beneficiaries; and to furnish copies of such documents or instruments to Plan Participants and/or their Beneficiaries on request, charging only the cost thereof as prescribed by regulation of the Secretary of Labor or his delegate;

(h) To interpret Plan provisions as needed and in this regard to have complete and total discretion in the interpretation of the Plan; and

(i) To act as the Plan’s agent for the service of legal process, unless another agent is designated by the Plan Sponsor and to act on behalf of the Plan in all matters in which the Plan is or may be a party.

13.06 Claims Procedure: A claim for benefits under the Plan may be filed with the Plan by any Participant or Beneficiary on a form supplied by the Plan Sponsor for that purpose or through any other communication medium approved by the Plan Administrator. Written notice of the disposition of a claim shall be furnished to the claimant within ninety (90) days after the application thereof is filed. In the event the claim is denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how the claimant may perfect the claim shall be provided. In addition, the claimant shall be furnished with an explanation of the Plan’s claim review procedure.

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13.07 Claims Review Procedure: Any Participant or Beneficiary whose benefit claim submitted pursuant to Section 13.06 has been denied (whether in full or in part) shall be entitled to request further consideration to his claim by filing an appeal with the Plan Administrator, which may be in the form of a request for reconsideration. The request, together with a written statement of the reasons why the claimant believes his appeal should be allowed, shall be filed with the Plan Administrator no later than sixty (60) days after receipt of the written notification provided for in Section 13.06. The Plan Administrator shall conduct the review of the appeal. The Plan Administrator, in its sole discretion, may order a hearing at which the claimant may be represented by an attorney or any other representative of his choosing and at which the claimant shall have an opportunity to submit written and oral evidence and arguments in support of his claim. During the appeal review period or at the hearing (upon five (5) business days prior written notice to the Plan Administrator) the claimant or his representative shall have an opportunity to review all documents in the possession of the Plan which are pertinent to the claim at issue and its disallowance. A final decision on the claim shall be made by the Plan Administrator within sixty (60) days of receipt of the appeal unless (i) because of special circumstances there has been an extension of sixty (60) days which has been communicated in writing to the claimant, or (ii) a hearing is held, in which event the final decision shall be made within one hundred twenty (120) days of receipt of the appeal. The communication containing the Plan Administrator’s decision shall be in writing and shall be written in a manner calculated to be understood by the claimant. The communication shall include specific reasons for the Plan Administrator’s decision and specific references to the pertinent Plan provisions on which the decision is based. The communication shall also inform the claimant of the limitation on any further action by the claimant set forth in Section 13.08.

13.08 Limitations of Actions on Claims: The delivery to the claimant of the final decision of the Plan Administrator with respect to a claim for benefits under Section 13.06 which has been reviewed and considered under the appeal procedures of Section 13.07 shall commence the period during which the claimant may bring legal action under ERISA for judicial review of the Plan Administrator’s decision. No civil action with respect to the claim for benefits or the subject matter thereof may be commenced by the claimant, whether such action is pursued through litigation, arbitration or otherwise, prior to the completion of the claims and claims review process set forth in Sections 13.06 and 13.07, nor following the expiration of two (2) years from the date of delivery of the final decision of the Plan Administrator to the claimant under Section 13.07.

13.09 Compensation and Expenses of Plan Administrator: The Plan Administrator may engage the services of any person, including counsel, whose services, in the opinion of the Plan Administrator, are necessary to assist it in carrying out its responsibilities under the Plan. The Employer may direct the Trustee to pay any expenses properly and actually incurred for such services from the Trust Fund, including such reasonable compensation for services provided by the Plan Administrator as shall have been agreed upon between them, or, alternatively, the Employer may pay such expenses or compensation directly; provided, however, that no individual acting as Plan Administrator shall receive any compensation if he already receives full-time pay from the Employer.

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13.10 Removal or Resignation: A Plan Administrator may be removed by the Board of Directors of the Plan Sponsor upon thirty (30) days written notice, and may resign upon thirty (30) days written notice to the Board of Directors. Upon such removal or resignation, or the inability of the Plan Administrator for any other reason to act as Plan Administrator, the Board of Directors shall appoint a successor Plan Administrator. The successor Plan Administrator, upon written acceptance, shall have all the duties and responsibilities of a Plan Administrator herein. The former Plan Administrator shall deliver to the successor Plan Administrator all records and documents which it holds relating to the Plan upon removal or resignation.

13.11 Records of Plan Administrator: The Plan Sponsor shall have access, upon request, to all the records of the Plan Administrator that relate to the Plan.

13.12 Other Responsibilities: Nothing in this Article shall be construed to limit the responsibilities and duties allocated to the Plan Administrator in other Articles of this Plan.

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ARTICLE XIV

THE TRUSTEE

14.01 Appointment of Trustee: The Board of Directors of the Plan Sponsor shall appoint the Trustee. Nothing in this Plan shall prevent the Plan Sponsor from appointing multiple Trustees or creating multiple Trust Funds, each with separate Trustees. If more than one person is appointed as Trustee of a single Trust Fund, they shall act by majority vote; provided, however, that they shall act by unanimous vote at any time when there are only two Trustees. In the event there is more than one Trustee, the reference to Trustee shall be deemed to refer to all the Trustees.

14.02 Acceptance by Trustee: The Trustee shall accept its appointment by executing a separate trust agreement in a form acceptable to the Trustee and Employer. Subject to Section 14.03, the provisions of the separate Trust Agreement shall control over those in this Plan, to the extent such provisions define the duties of the Trustee with respect to the Trust Fund.

14.03 Provisions of Trust Agreement: The separate Trust Agreement shall authorize and empower the Trustee to invest up to one hundred percent (100%) of the Trust Fund in Employer Securities. The Trust Agreement shall also authorize and empower the Trustee to engage in Exempt Loan transactions on behalf of the Plan. An Exempt Loan transaction is a loan to the Trust which satisfies the following terms and conditions:

(a) The Trustee will use the proceeds of the loan, within a reasonable time after receipt, only for any or all of the following purposes: (i) to acquire Employer Securities, (ii) to repay such loan, or (iii) to repay a prior Exempt Loan. Except as provided under Article XXII, no Employer Security acquired with the proceeds of an Exempt Loan may be subject to a put, call or other option, or buy-sell or similar arrangement while held by and when distributed from this Plan, whether or not this Plan is then an employee stock ownership plan.

(b) The interest rate of the Exempt Loan may not be more than a reasonable rate of interest.

(c) Any collateral the Trustee pledges to the creditor must consist only of the assets purchased by the borrowed funds and those assets the Trust used as collateral on the prior Exempt Loan repaid with the proceeds of the current Exempt Loan.

(d) The creditor may have no recourse against the Trust under the Exempt Loan except with respect to such collateral given for the Exempt Loan, contributions (other than contributions of Employer Securities) that the Employer makes to the Trust to meet its obligations under the Exempt Loan, and earnings attributable to such collateral and the investment of such contributions. The payment made with respect to an Exempt Loan by the Plan during a Plan Year must not exceed an amount equal to the

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sum of such contributions and earnings received during or prior to the year less such payments in prior years. The Advisory Committee and the Trustee must account separately for such contributions and earnings in the books of account of the Plan until the Trust repays the Exempt Loan.

(e) In the event of default upon the loan, the value of Plan assets transferred in satisfaction of the Exempt Loan must not exceed the amount of the default, and if the lender is a Disqualified Person, the Exempt Loan must provide for transfer of Plan assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of the Exempt Loan.

(f) The Trustee must add and maintain all assets acquired with the proceeds of an Exempt Loan in a Suspense Account. In withdrawing assets from the Suspense Account, the Trustee will apply the provisions of Treas. Reg. §§54.4975-7(b)(8) and (15) as if all securities in the Suspense Account were encumbered. Upon the payment of any portion of the loan, the Trustee will effect the release of assets in the Suspense Account from encumbrances. For each Plan Year during the duration of the Exempt Loan, the number of Employer Securities released must equal the number of encumbered Employer Securities held immediately before release for the current Plan Year multiplied by a fraction. The numerator of the fraction is the amount of principal and interest paid for the Plan Year. The denominator of the fraction is the sum of the numerator plus the principal and interest to be paid for all future Plan Years. The number of future Plan Years under the loan must be definitely ascertainable and must be determined without taking into account any possible extension or renewal periods. If the interest rate under the Exempt Loan is variable, the interest to be paid in future Plan Years must be computed by using the interest rate applicable as of the end of the Plan Year. If collateral includes more than one class of Employer Securities, the number of Employer Securities of each class to be released for a Plan Year must be determined by applying the same fraction to each such class. The Plan Administrator will allocate assets withdrawn from the Suspense Account to the Accounts of Participants who otherwise share in the allocation of the Employer’s Contribution for the Plan Year for which the Trustee has paid the portion of the Exempt Loan resulting in the release of the assets. The Plan Administrator will make this allocation consistently as of each Accounting Date on the basis of non-monetary units, taking into account the relative Compensation of all such Participants for such Plan Year.

(g) The loan must be for a specific term and may not be payable at the demand of any person except in the case of default.

(h) Notwithstanding the fact this Plan ceases to be an employee stock ownership plan, Employer Securities acquired with the proceeds of an Exempt Loan will continue after the Trustee repays the loan to be subject to the provisions of Treas. Reg.

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§§54.4975-7(b)(4), (10), (11) and (12) relating to put, call or other options and to buy-sell or similar arrangements, except to the extent these regulations are inconsistent with Code §409(h).

14.04 Participant Voting Rights: The separate Trust Agreement shall provide for voting Employer Securities by Participants in the following manner.

(a) With respect to the voting of Employer Securities which are not part of a registration-type class of securities (as defined in Code §409(e)(4)), a Participant (or Beneficiary) has the right to direct the Trustee regarding the voting of such Employer Securities allocated to his Employer Securities Account with respect to any corporate matter which involves the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business, or such similar transaction as the Treasury may prescribe in regulations.

(b) With respect to Employer Securities allocated to the Participant’s Employer Securities Account which are part of a registration type class of securities, a Participant’s right to direct the Trustee to vote such Employer Securities shall extend to all corporate matters requiring a vote of stockholders. The Plan Administrator shall cause to be prepared and delivered to each Participant a notice of the stockholders’ meeting with a descriptive statement of the items upon which the Participant may exercise his right to direct the Trustee’s vote. Each Participant shall be given notice that if he fails to exercise his voting rights, the Trustee may elect to vote the Employer Securities allocated to the Participant’s Account.

The Trustee may vote any Employer Securities described in subsection (b) as to which a Participant (or Beneficiary) fails to direct a vote as authorized by this Section 14.04. The Trustee shall not vote any Employer Securities described in subsection (a) as to which a Participant is entitled to direct the Trustee to vote and the Trustee receives no direction from the Participant.

14.05 Investment Committee: In the event of appointment of an Investment Committee by the Plan Administrator, then except to the extent responsibility for certain Plan assets has been allocated to an Investment Manager as provided in Section 13.04, the Investment Committee is authorized and empowered to direct investment of the Trust Fund, consistent with the terms of the separate Trust Agreement. The Investment Committee shall direct investment and reinvestment of the Trust Fund to keep the Trust Fund invested without distinction between principal and income and in such securities or property, real or personal, wherever situated, as the Committee shall deem advisable consistent with the investment policy of the Plan established under Article XVIII. The Committee shall give due regard to any limitations imposed by the Code or ERISA so that at all times this Plan may qualify as a qualified Plan and Trust.

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14.06 Payment of Plan Expenses: The Plan specifically permits the payment of Plan administration and operation expenses from the Plan’s Trust Fund. The Plan Sponsor shall determine in its sole discretion the extent to which Plan administration and operation expenses shall be paid from the Trust Fund, provided that all such payments shall comply with ERISA and all regulations and other guidance issued by the Department of Labor. Further, the Plan Sponsor shall be entitled to reimbursement from the Plan for payment of all Plan expenses advanced by the Plan Sponsor which are reasonably subject to reimbursement pursuant to ERISA and DOL regulations and other guidance.

14.07 Payment From the Trust Fund: At the direction of the Plan Administrator, the Trustee shall, from time to time, in accordance with the terms of the Plan, make payments out of the Trust Fund. The Trustee shall not be responsible in any way for the application of such payments.

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ARTICLE XV

THE EMPLOYER

15.01 Notification: The Plan Sponsor shall notify the Plan Administrator and the Trustee in writing if a new Plan Administrator or Trustee has been appointed hereunder.

15.02 Record Keeping: Each participating Zions Employer shall maintain records with respect to each Employee sufficient to enable the Plan Administrator and Trustee to fulfill their duties and responsibilities under the Plan.

15.03 Bonding: The Plan Administrator shall procure bonding to insure the Plan against risk of loss. The persons to be bonded and the amount necessary shall be determined in accordance with ERISA and regulations thereunder. No bonding shall be required pursuant to state law.

15.04 Signature of Employer: All persons dealing with the Plan may rely on any document executed in the name of the Plan Sponsor by its corporate President, Vice-President, or other duly authorized corporate officer, or by any other individual duly authorized by its Board of Directors, whether retroactive or prospective.

15.05 Plan Counsel and Expenses: The Plan Sponsor may engage the service of any person or organization, including counsel, whose services, in the opinion of the Plan Sponsor are necessary for the establishment or maintenance of this Plan. The expenses incurred or charged by a person or organization engaged by the Plan Sponsor pursuant to the previous sentence shall be paid by the Plan Sponsor, or alternatively, the Plan Sponsor may direct the Trustee to pay such expenses from the Trust Fund.

15.06 Other Responsibilities: Nothing in this Article shall be construed to limit the responsibilities or duties allocated to the Plan Sponsor and Zions Employers in other Articles of the Plan.

15.07 Affiliated Groups:

(a) For purposes of crediting Hours of Service, all employees of all corporations or entities which are members of an Affiliated Group and all employees of any other entity required to be aggregated with the Employer pursuant to regulations under Code §414(o) shall be treated as employed by a single Employer for purposes of Article III (Service), Article IV (Eligibility), Article V (Contributions) and Article XI, (Vesting). Except as provided in Section 7.01, all employees of all corporations or entities which are members of an Affiliated Group and all employees of any other entity required to be aggregated with the Employer pursuant to regulations under Code §414(o) shall be treated as employed by a single Employer.

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(b) If the Employer is a member of a Affiliated Group and if such group maintains more than one qualified retirement plan that is integrated with Social Security, only a single integration level shall be applicable to each Participant who is a Participant in one or more integrated plans. The integration level for each Participant shall be prorated in each integrated plan in the ratio that the Annual Compensation received by the Participant from the member of the group maintaining the integrated plan bears to the Annual Compensation received by the Participant from all members of the group maintaining all such integrated plans.

(c) If more than one Employer has adopted this Plan and if all such Employers are members of the same Affiliated Group:

(1) The provisions of Articles XVI and XVII shall be applicable to each adopting Employer as an individual Employer;

(2) The provisions of Section 15.07(a) through (c) shall not be applicable to such adopting Employers; and

(3) The “effective date” for any adopting Employer who adopts this Plan on other than the Effective Date shall be the first day of the Plan Year in which such adopting Employer shall first elect to be covered by this Plan.

15.08 Employer Contributions: Each participating Zions Employer shall contribute to the Plan that Employer’s share of Employer Contributions, as determined by the Plan Administrator.

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ARTICLE XVI

PLAN AMENDMENT OR MERGER

16.01 Power to Amend: The Plan Sponsor and the Plan Administrator shall each have the power to amend, alter, or wholly revise the Plan, prospectively or retrospectively, at any time, and the interest of every Participant is subject to the power so reserved. The Plan Administrator shall not exercise its power to amend without consent of the Plan Sponsor unless the Plan Sponsor has ceased to operate as a viable business entity or has filed or is subject to a petition under Chapter 7 of the U.S. Bankruptcy Code.

16.02 Limitations on Amendments: Upon execution of any amendment, the Employer, Plan Administrator, Trustees, Participants and their Beneficiaries shall be bound thereby; provided, however, that no amendment:

(a) Shall enlarge the duties or responsibilities of the Plan Administrator or Trustee without its consent; or

(b) Shall cause any part of the assets contributed to the Plan to be diverted to any use or purpose other than for the exclusive benefit of the Participants and their Beneficiaries (including the reasonable cost of administering the Plan) prior to the satisfaction of all liabilities (fixed and contingent) under the Plan to Participants and their Beneficiaries; or

(c) Shall reduce the vesting percentage of any Participant, Former Participant, or Beneficiary; or

(d) Shall reduce or restrict the Account Balance of any Participant, Former Participant or Beneficiary; or

(e) Shall eliminate an optional form of benefit, with respect to benefits attributable to service before the amendment.

Notwithstanding the above, any amendment may be made which may be or become necessary in order that the Plan will conform to the requirements of Code §401(a), or of any generally similar successor provision, or in order that all of the provisions of the Plan will conform to all valid requirements of applicable federal and state laws.

16.03 Method of Amendment: If the Plan is amended by the Plan Sponsor, the amendment shall be stated in an instrument in writing signed in the name of the Plan Sponsor by a duly authorized corporate officer, or by any other individual duly authorized by the Plan Sponsor, whether retroactive or prospective. If the Plan is amended by the Plan Administrator, the amendment shall be stated in an instrument in writing signed in the name of the Plan Administrator by the individual duly authorized by the Plan Administrator for that purpose, whether retroactive or prospective.

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16.04 Notice of Amendment: Written notice of each amendment shall be given promptly by the Plan Sponsor to any other Employers, the Plan Administrator and the Trustee.

16.05 Merger or Consolidation: This Plan and Trust may be merged or consolidated with, or its assets or liabilities may be transferred to, any other plan only if the benefits which would be received by each Participant of this Plan, in the event of a termination of the Plan immediately after such merger, consolidation or transfer, are at least equal to the benefits the Participant would have received if the Plan had terminated immediately before the merger, consolidation or transfer. The Trustee possesses the specific authority to enter into merger agreements or direct transfer of assets agreements with the Trustees of other retirement plans described in Code §401(a) and to accept the direct transfer of Plan assets, or to transfer Plan assets, as a party to any such agreement. Notwithstanding the foregoing, this Plan shall not enter into any merger or transfer agreement to transfer assets to this Plan from a plan which is subject to the provisions of Code §417.

The Trustee may accept a direct transfer of Plan assets on behalf of an Employee prior to the date the Employee satisfies the Plan’s eligibility condition(s). If the Trustee accepts such a direct transfer of Plan assets, the Advisory Committee and Trustee shall treat the Employee as a Participant for all purposes of the Plan except the Employee may not make Elective Deferral contributions under Article V nor shall the Employee share in Employer contributions or Participant forfeitures under Article VI until he actually becomes a Participant in the Plan.

The Trustee shall hold, administer and distribute the transferred assets as a part of the Trust Fund and the Trustee shall maintain a separate Predecessor Plan Account for the benefit of the Employee on whose behalf the Trustee accepted the transfer in order to reflect the value of the transferred assets.

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ARTICLE XVII

TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS

17.01 Right to Terminate: The Plan Sponsor may terminate the Plan at any time by a written resolution by the Board of Directors specifying the termination date. The Plan Sponsor shall promptly notify the Plan Administrator, Trustee and any other Employers of such action. Further, the Plan Sponsor shall notify all Participants and Former Participants of such action, and shall file all required reports with federal agencies, in accordance with applicable regulations.

17.02 Effect of Termination: In the event of a Plan termination or a complete discontinuance of Employer Contributions, the rights of all affected Participants to their Accrued Benefits as of the date of such termination shall be fully vested and shall not thereafter be subject to forfeiture, except to the extent that law or regulation may preclude such vesting in order to prohibit discrimination in favor of officers, shareholders, or highly compensated Employees. For purposes of the preceding sentence, a Participant who has terminated employment with the Employer and incurred five consecutive One Year Breaks in Service as of the termination date shall not be considered to be affected by such Plan termination, and shall be vested in his Accrued Benefit only to the extent provided in the other applicable Articles of this Plan. All rights of Participants in this Plan affecting Employer Securities held in trust for the benefit of Participants shall continue notwithstanding any Plan termination.

17.03 Manner of Distribution: In the event of a Plan termination, the Plan Administrator shall direct the Trustee to distribute the Accrued Benefits of all Participants, Former Participants, and Beneficiaries in accordance with Article IX or Article XI.

Notwithstanding the above, no payment shall be made to a Participant from his Participant Elective Deferral Account (or any other Account the contributions to which have been included in the Deferral Account for the Participant) unless or until such time as the Participant:

(a) Is eligible for Retirement Benefits as provided in Article IX;

(b) Dies;

(c) Has a severance from employment;

(d) Attains the age of fifty-nine and one-half (59 ¹/2);

(e) Incurs a Disability; or

(f) Incurs a Financial Hardship.

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All Elective Deferral Accounts shall be maintained by the Trustee and distributed at such time and in such manner as previously provided herein. Alternatively, the balance in such Accounts may be transferred to another plan maintained or established by the Employer which qualifies under Code §401(a) as provided above, but only if such other plan contains the same restrictions on the distribution of such transferred amounts as described in the preceding paragraph.

17.04 No Reversion: No termination or amendment of this Plan and Trust and no other action shall divert any part of the funds to any purpose other than the exclusive benefit of Participants, Former Participants or their Beneficiaries except, and notwithstanding any other provision of this Plan to the contrary, any amount held in an unallocated suspense account which cannot be allocated to any Participant due to the limitations of Article VIII may be returned to the Employer upon termination of the Plan.

17.05 Termination of an Employer: An Employer, other than the Plan Sponsor, may terminate its participation in the Plan at any time by a written resolution by the Board of Directors specifying the termination date. The Employer shall promptly notify the Plan Sponsor, Plan Administrator and Trustee of any such action or direction. The participation of an Employer in the Plan shall also terminate in the event of a complete discontinuance of contributions by such Employer.

17.06 Partial Termination: A partial termination of the Plan may be deemed to have occurred if a significant percentage of Participants are excluded from coverage by reason of amendment of the Plan, severance by an Employer or termination of an Employer, or if the Plan is amended to adversely affect the rights of employees to vest in benefits under the Plan or to reduce or eliminate future benefit accruals under the Plan. The determination of whether a partial termination has occurred shall be made on the basis of the facts and circumstances in a particular case.

17.07 Effect of Partial Termination: In the event of a partial termination of the Plan, the provisions of Section 17.02 shall apply to those Participants affected by the partial termination.

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ARTICLE XVIII

FUNDING POLICY FOR PLAN BENEFITS

18.01 Funding Method: The benefits provided by this Plan shall be funded by contributions of the Employer. Employer Non-Elective contributions may consist entirely of Employer Securities. Elective Deferral Contributions and Employer Matching Contributions shall be made in cash only. All Employer Contribution amounts shall be determined as provided in this Plan.

18.02 Investment Policy: This Plan has been established for the sole purpose of providing benefits to the Participants and their Beneficiaries. In determining investment directions hereunder, the Investment Committee shall take account the investment policy rules and limitations provided in the Plan, the advice provided by the Plan Administrator as to funding policy, and the short and long-range needs of the Plan based on the evident and probable requirements of the Plan as to the time benefits shall be payable and the requirements therefor. Benefits may be provided through any combination of investment media designed to provide the requisite liquidity, growth and security appropriate to this Plan.

The following rules shall apply as of the Effective Date with respect to the investment of contributions to the Plan (regardless of source) and existing Accounts in the Plan.

(a) No Participant shall direct investment into or out of Employer Securities in any Account.

(b) Contributions to the Participant Elective Deferral Account shall be invested exclusively in the General Investments Account. Amounts in a Participant Elective Deferral Account as of the Effective Date, including earnings and dividends thereon, may not be transferred between the General Investments Account and Employer Securities Account.

(c) Contributions to the Employer Matching Contribution Account shall be invested exclusively in the Employer Securities Account.

(d) Contributions to the Participant Voluntary Contribution Account shall be invested exclusively in the Employer Securities Account.

(e) Contributions to the Participant Rollover Account shall be invested exclusively in the General Investments Account. Amounts in the Participant Rollover Account as of the Effective Date, including earnings and dividends thereon, may not be transferred between the General Investments Account and Employer Securities Account.

(f) Amounts in the Paysop Account as of the Effective Date, including earnings and dividends thereon, shall remain in the Employer Securities Account and may not be transferred between the General Investments Account and Employer Securities Account.

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(g) Contributions to the Employer Non-Elective Contribution Account shall be invested exclusively in the Employer Securities Account.

18.03 No Purchase of Life Insurance Contracts: Unless authorized by the Plan Sponsor pursuant to amendment to this Article XVIII, no insurance contracts shall be purchased by the Trustee on the life of any Participant.

18.04 General Investments and Dividend Accounts: Benefits for Participants, to the extent not funded through Employer Securities, shall be funded through the General Investments and Dividend Accounts. The General Investments Account may consist of any investment media offered by the Trustee or through the purchase of shares in any regulated investment company as defined in Code §851(a), or through any investment proper and appropriate to be made by the Trustee in accordance with Article XIV, or through any combination of such investments other than Employer Securities. Rules and procedures for the operation of the General Investments Account and Participant direction of investment therein are set forth in Section 18.06.

All cash dividends received and held in a Participant’s Dividend Account shall be invested in the stable asset fund described in section 18.06(b) until invested in Employer Securities or distributed in cash pursuant to the Participant’s election under Section 6.03(e). Except to determine whether the Dividend Account shall be distributed in cash or invested in Employer Securities, a Participant shall have no investment direction right with respect to the Dividend Account.

18.05 Non-transferability of Annuity Contracts: In the event the assets of the Trust Fund include allocated annuity contracts, all incidents of ownership in such contracts may be exercised by the Trustee, as directed by the Plan Administrator, except to the extent any death benefits payable thereunder may be paid to the Beneficiary designated by the Participant. All such contracts shall provide that the owner may not change the ownership of the contract, nor may it be sold, assigned or pledged as collateral for a loan, as security for the performance of an obligation, or for any other purpose to anyone. No annuity contract may be delivered to a Participant as a distribution from the Plan.

18.06 Establishment of Separate Funds: There is hereby reserved to the Plan Administrator (or the Committee designated by the Plan Administrator for this purpose) the right to direct the Trustee to establish separate investment funds within the General Investments Account. The Plan Administrator (or Committee) may follow different investment policies with respect to each investment fund so established. In the sole discretion of the Sponsoring Employer a Participant, Inactive Participant, Beneficiary or Alternate Payee shall be allowed to direct the Trustee to invest the amounts in his or her General Investments Account, consistent with the rules in this Section 18.06, in any or all of the investment Funds. The following administrative rules shall apply if such Funds are established:

(a) Income, gains and losses from each investments Fund will be reinvested in the same Fund and credited only to the General Investments Accounts of those Participants who have a balance in such Fund, in a manner consistent with Section 6.03.

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(b) At least one Fund shall be a stable asset fund which invests in cash equivalent securities and contracts. For this purpose “cash equivalent securities and contracts” shall mean short term U. S. Government obligations, prime commercial paper, certificates of deposit, savings accounts in banks or savings and loan associations, guaranteed interest contracts and pooled funds which invest exclusively in some or all of the foregoing.

(c) Each Participant shall be entitled to direct the portion of the contributions made to his General Investments Account which are to be invested in each of the Funds available. Upon the occurrence of any event which results in the deletion of any Fund, which replaces any Fund with another Fund, or which adds a new Fund, and each new Participant upon entry in the Plan shall direct the Plan Administrator in writing as to the portion of his General Investments Account and the portion of the contributions made to his General Investments Account which are to be invested in each of the Funds then available. Until specific direction is made by the Participant, or Beneficiary (including any Beneficiary by virtue of a Qualified Domestic Relations Order) or if specific direction is not made, all contributions shall be invested in the Fund described in (b) above.

(d) Each Participant shall have the right to change the portion of succeeding contributions to be invested in each Fund and the right to direct that the asset balance or any portion thereof in any Funds in his General Investments Account be liquidated and the proceeds thereof transferred to any other Fund. Changes in Fund investments pursuant to Participant direction shall be made effective as provided under procedures negotiated between the Plan and the Trustee (or custodian, if appointed by the Plan Administrator or Trustee), which procedures may include daily movement of General Investment Account moneys between Funds, provided valuation of the Funds is also conducted daily.

(e) A Participant may not direct any investment into the Employer Securities Account or the liquidation or sale of any Employer Securities in that Account.

(f) The Plan Administrator may establish reasonable rules regarding:

(1) The number and types of Funds which shall be available to the General Investments Account.

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(2) The maximum number of Funds which may be utilized by an individual Participant or by the General Investments Account.

(3) The minimum, maximum and incremental percentages of contributions which may be invested in a particular Fund.

(4) The minimum, maximum and incremental percentages of the current balance in the General Investments Account in any Fund which may be transferred to another Fund.

These rules shall be in writing and shall be administered in a uniform and non-discriminatory manner.

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ARTICLE XIX

TOP-HEAVY PROVISIONS

19.01 Application: If this Plan is or becomes Top-Heavy for any Plan Year, the provisions of this Article shall supersede any conflicting provisions contained in any other Article of this Plan.

19.02 Special Definitions: For purposes of this Article and related Plan provisions, the following terms shall have the following meanings unless a different meaning is plainly required by the context:

(a) “Determination Date” shall mean, for any plan year subsequent to the first plan year, the last day of the preceding plan year for such plan; for the first plan year of a plan, the last day of that plan year.

(b) “Determination Period” shall mean the plan year containing the Determination Date and the four (4) preceding plan years for such plan.

(c) “Five Percent Owner” shall mean:

(1) If the Employer is a corporation, any person who owns (or is considered as owning within the meaning of Code §318) more than five percent (5%) of the outstanding stock of the corporation or stock possessing more than five percent (5%) of the total combined voting power of all stock of the corporation.

(2) If the Employer is not a corporation, any person who owns more than five percent (5%) of the capital or profits interest in the Employer.

(d) “Key Employee” shall mean any Employee or former Employee (and any Beneficiary of such Employee) who at any time during the Determination Period was:

(1) An officer of the Employer during a Plan Year in which he received Top-Heavy Compensation greater than fifty percent (50%) of the amount in effect under Code §415(b)(1)(A) for such Plan Year. For purposes of this Paragraph, no more than fifty (50) Employees (or, if lesser, the greater of three (3) or ten percent (10%) of the number of Employees) shall be treated as officers; or

(2) One of the ten (10) Employees owning (or considered as owning within the meaning of Code §318) both more than one-half percent ( ¹/2%) interest and the largest interests in the Employer during a Plan Year in which he received Top-Heavy Compensation greater than the amount in effect under Code §415(c)(1)(A) for such Plan Year; or

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(3) A Five Percent Owner of the Employer; or

(4) A One Percent Owner of the Employer during a plan year in which he received Top-Heavy Compensation greater than one hundred fifty thousand dollars ($150,000).

The determination of who is a Key Employee shall be made in accordance with Code §416(i)(1) and the Regulations thereunder. For purposes of determining who is a One Percent Owner, Five Percent Owner, or ten largest owner, the rules of Code §414(b), (c) and (m) shall not apply. Beneficiaries of Employees shall be treated as a Key Employee or Non-Key Employee based on the Key Employee status of such Employee; inherited benefits shall retain the Key Employee or Non-Key Employee status of the Employee.

The term “Non-Key Employee” shall mean any Employee or former Employee (and any Beneficiary of such Employee) who is not a Key Employee. Non-Key Employees include Employees who are former Key Employees.

(e) “One Percent Owner” shall mean:

(1) If the Employer is a corporation, any person who owns (or is considered as owning within the meaning of Code §318) more than one percent (1%) of the outstanding stock of the corporation or stock possessing more than one percent (1%) of the total combined voting power of all stock of the corporation; or

(2) If the Employer is not a corporation, any person who owns more than one percent (1%) of the capital or profits interest in the Employer.

(f) “Permissive Aggregation Group” shall mean the Required Aggregation Group of plans plus any other plan or plans of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code §§401(a)(4) and 410.

(g) “Present Value” shall mean the actuarial present value of an amount or series of amounts determined based on the Top-Heavy determination provisions of a defined benefit plan that is part of a Required Aggregation Group or Permissive Aggregation Group with this Plan.

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(h) “Required Aggregation Group” shall mean:

(1) Each qualified plan of the Employer including any plan terminated within the last five years ending on the determination date, in which at least one Key Employee participates in the plan year containing the determination date, or any of the four preceding plan years; and

(2) Any other qualified plan of the Employer which enables a plan described in Item (1) to meet the requirements of Code §§401(a)(4) or 410.

(i) “Super Top-Heavy”: This Plan is Super Top-Heavy if the Plan would be Top-Heavy if “ninety percent (90%)” were substituted for “sixty percent (60%)” each place it appears in Subsection (j) below.

(j) “Top-Heavy”: This Plan is Top-Heavy if any of the following conditions apply:

(1) If the Top-Heavy Ratio for this Plan exceeds sixty percent (60%) and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans.

(2) If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggregation Group of plans exceeds sixty percent (60%).

(3) If this Plan is a part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds sixty percent (60%).

(k) “Top Heavy Average Monthly Compensation” shall mean one-twelfth (1/12th) of the average of a Participant’s Top-Heavy Compensation during the five (5) consecutive Plan Years (or the total number of such years of the Participant’s employment, if less than five (5)) which produces the highest average, but taking into account only Top-Heavy Compensation for years that this Plan was Top-Heavy and any years preceding a year that this Plan was Top-Heavy.

(l) “Top-Heavy Compensation” shall have the same meaning as the term ‘Compensation’ defined in Section 7.01(b), but shall include contributions made by the Employer to a plan of deferred compensation otherwise excluded in Section 7.01(b).

(m) “Top-Heavy Ratio” shall mean and be determined as follows:

(1) If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer has never maintained any defined benefit plan which has covered or could cover a Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date and the denominator of which is the sum of all account balances of all Participants as of the Determination Date. Both the numerator and denominator of the Top-Heavy Ratio shall be adjusted to reflect any part of any account balance distributed in the five (5) year period ending on the Determination Date and any contribution which is due but unpaid as of the Determination Date. In the case of a defined contribution plan which is not subject to Code §412, the adjustment for contributions due but unpaid is generally the amount of any contributions actually made after the Top-Heavy Valuation Date but on or before the Determination Date; however, for the first plan year of such a plan, the adjustment shall also reflect the amount of any contributions made after the Top-Heavy Valuation Date that are allocated as of a date in that first plan year. In the case of a defined contribution plan that is subject to Code §412, the account balances shall include contributions that would be allocated as of a date not later than the Determination Date, even though those amounts are not yet required to be contributed; furthermore, the adjustment for contributions due but unpaid shall reflect the amount of any contribution actually made (or due to be made) after the Top-Heavy Valuation Date but before the expiration date of the extended payment period in Code §412(c)(10).

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(2) If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer maintains or has maintained one or more defined benefit plans which have covered or could cover a Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of account balances under the defined contribution plans for all Key Employees and the Present Value of accrued benefits under the defined benefit plans for all Key Employees, and the denominator of which is the sum of the account balances under the defined contribution plans for all Participants and the Present Value of accrued benefits under the defined benefit plans for all Participants. Both the numerator and denominator of the Top-Heavy Ratio are adjusted for any part of any account balance or accrued benefit distributed in the five (5) year period ending on the Determination Date and any contribution to a defined contribution plan due but unpaid as of the Determination Date. In the case of a defined contribution plan which is not subject to Code §412, the adjustment for contributions due but unpaid is generally the amount of any contributions actually made after the Top-Heavy Valuation Date but on or before the

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Determination Date; however, for the first plan year of such a plan, the adjustment shall also reflect the amount of any contributions made after the Top-Heavy Valuation Date that are allocated as of a date in that first plan year. In the case of a defined contribution plan that is subject to Code §412, the account balances shall include contributions that would be allocated as of a date not later than the Determination Date, even though those amounts are not yet required to be contributed; furthermore, the adjustment for contributions due but unpaid shall reflect the amount of any contribution actually made (or due to be made) after the Top-Heavy Valuation Date but before the expiration date of the extended payment period in Code §412(c)(10).

(3) For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits shall be determined as of the most recent Top-Heavy Valuation Date that falls within or ends with the twelve month period ending on the Determination Date and shall exclude any amounts in a Participant’s Account attributable to deductible employee contributions. The account balances and accrued benefits of a Participant who is not a Key Employee but who was a Key Employee in a prior year shall be disregarded. The account balances and accrued benefits of any Participant who has not performed any service for the Employer at any time during the five (5) year period ending on the Determination Date shall be disregarded. In the case of a defined benefit plan, the Present Value of Accrued Benefits shall not reflect any proportional subsidies and shall reflect any non-proportional subsidies provided by the plan. The calculations of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account shall be made in accordance with Code §416 and the Regulations thereunder. In the case of unrelated rollovers and transfers: (1) the plan making the distribution or transfer shall count the distribution as part of an accrued benefit distributed; and (2) the plan accepting the rollover or transfer shall not consider the rollover or transfer as part of the accrued benefit. In the case of related rollovers and transfers, the plan making the distribution or transfer shall not count the distribution or transfer as part of an accrued benefit distributed, and the plan accepting the rollover or transfer shall count the rollover or transfer as part of the accrued benefit. Deductible employee contributions shall not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.

For purposes of the above, a Participant’s Accrued Benefit in a defined benefit plan shall be determined under a uniform accrual method which

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applies for all defined benefit plans maintained by the Employer or, if there is no such method, under the method described in Code §411(b)(1)(C) which provides the slowest rate of accrual.

(n) “Top-Heavy Valuation Date” shall mean the date as of which the Present Value of accrued benefits under a defined benefit plan or account balances under a defined contribution plan, which is part of a Permissive Aggregation Group or Required Aggregation Group, is determined for calculating the Top-Heavy Ratio. For a defined benefit plan, such date shall be the same as the actuarial valuation date used for computing plan costs under Code §412, regardless of whether an actuarial valuation is performed that year. For a defined contribution plan, such date shall be the last day of the plan year.

19.03 Top-Heavy or Super Top-Heavy Minimum Required Allocation: For any Plan Year in which the Plan is Top-Heavy or Super Top-Heavy:

(a) Except as otherwise provided below, the Employer contributions and forfeitures allocated on behalf of any Participant who is a Non-Key Employee shall not be less than the lesser of:

(1) three percent (3%) of such Participant’s Top-Heavy Compensation if the Plan is Top-Heavy and five percent (5%) of such Participant’s Top-Heavy Compensation if the Plan is Super Top-Heavy ; or

(2) In the case where the Employer has no defined benefit plan which designates this Plan to satisfy Code §§401 and 416(c), the largest percentage of Employer contributions and forfeitures, as a percentage of the first two hundred thousand dollars ($200,000), (or such larger amount as may be prescribed by the Secretary of the Treasury or his delegate) of the Key Employee’s Top-Heavy Compensation, allocated on behalf of any Key Employee for that year. In calculating this percentage all amounts contributed by the Employer to the Key Employee’s Elective Deferral Account pursuant to a Salary Deferral Agreement shall be treated as Employer contributions. For Plan Years beginning after December 31, 1993, the Plan shall substitute the amount “one hundred fifty thousand dollars ($150,000)” for the amount “two hundred thousand dollars ($200,000)” wherever it appears in this Section. The one hundred fifty thousand dollar amount shall be adjusted each Plan Year as provided in Code §401(a)(17)(B). For any period during which the Plan Year is not or was not coincident with the calendar year, the dollar adjustment in the Annual Compensation limit for the Plan Year shall be based on the amount in effect as of January 1st for the Plan Year beginning within that calendar year.

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(b) The minimum allocation shall be determined without regard to any Social Security contribution by the Employer. This minimum allocation shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the Plan Year because of:

(1) The Participant’s failure to complete one thousand (1000) Hours of Service (or any equivalent provided in the Plan);

(2) The Participant’s failure to make mandatory employee contributions to the Plan;

(3) Compensation less than a stated amount;

(4) The Employer having no Net Profits; or

(5) In the case of a plan qualified under Code §401(k), the Participant’s failure to make elective contributions to such plan.

If a Participant is required to receive a minimum allocation under this Subsection and such amount exceeds the amount that the Participant would receive under other Plan provisions, the Employer shall make an additional contribution for such Participant. Such additional contribution shall be allocated to the Employer Contribution Account of such Participant in the same manner as regular Employer contributions, pursuant to Article VII.

(c) The provisions in Subsections (a) and (b) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year.

(d) The provisions in Subsections (a) and (b) above shall not apply to a Participant if such Participant is covered under a defined contribution plan designated by the Employer to provide the Top-Heavy minimum benefits, and such Participant receives an allocation of Employer contributions and forfeitures under that plan during the subject Plan Year which is at least as great as the amount otherwise required under (a) and (b) above. If the amount of Employer contributions and forfeitures allocated to such a Participant under that plan during the subject Plan Year is less than the amount required under (a) and (b) above, the amount otherwise required under (a) and (b) above shall be reduced by the amount so allocated under that plan.

19.04 Non-forfeitability of Minimum Top-Heavy Allocation: The minimum allocation of Employer contributions or forfeitures required under Section 19.03 (to the extent required to be non-forfeitable under Code §416(b)) shall not be forfeited in the case of a suspension of benefits under Code §411(a)(3)(B) or a withdrawal of mandatory employee contributions under Code §411(a)(3)(D).

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19.05 Top Heavy Compensation Limitation: For any Plan Year in which the Plan is Top-Heavy, only the first one hundred fifty thousand dollars ($150,000) of a Participant’s Annual Compensation or Top-Heavy Compensation shall be taken into account for purposes of this Plan. Notwithstanding the previous sentence, no such limitation shall be imposed for purposes of Sections 5.07 and 7.01. The one hundred fifty thousand dollar amount shall be adjusted each Plan Year as provided in Code §401(a)(17)(B).

Effective for Plan Years commencing on and after January 1, 2002, Top Heavy Compensation of each Participant taken into account under this Article XIX shall not exceed two hundred thousand dollars ($200,000), as adjusted for cost-of-living increases in accordance with Code §401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to Top Heavy Compensation for the Plan Year that begins with or within such calendar year.

19.06 Minimum Vesting Provision: For any Plan Year in which this Plan is Top-Heavy, the following vesting schedule shall automatically apply to each Participant in the Plan, unless under Section 11.01 the Participant would be entitled to a larger vested benefit, in which case the benefit as provided in Section 11.01 shall apply to such Participant:

Years of Vesting Service	Vesting Percentage
Less than 3	0	%
3 or more	100	%

This vesting schedule applies to all accrued benefits within the meaning of Code §411(a)(7), except those attributable to employee contributions, including benefits accrued before the effective date of Code §416 and benefits accrued before the Plan became Top-Heavy. Further, no reduction in vested benefits may occur in the event the Plan’s status as Top-Heavy changes for any Plan Year and any change in the Plan’s vesting schedule due to a change in Top-Heavy status shall be subject to the provision of Section 11.10. However, this Section does not apply to the Accrued Benefit of any Employee who does not have an Hour of Service after the Plan has initially become Top Heavy; such Employee’s Vested Interest attributable to Employer contributions and forfeitures shall be determined without regard to this Section.

19.07 Adjustments to Limitations: For any Plan Year in which the Plan is Top-Heavy, the following adjustments shall be made to the denominators of the Defined Benefit Fraction and Defined Contribution Fraction as defined in Section 7.01.

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(a) Super Top-Heavy: In any Plan Year in which the Plan is Super Top-Heavy the denominators shall be computed by substituting “one hundred percent (100%)” for “one hundred twenty-five percent (125%)” each place it appears in such definitions.

(b) Not Super Top-Heavy: In any Plan Year in which the Plan is Top-Heavy but not Super Top-Heavy the denominators shall be computed by substituting “one hundred percent (100%)” for “one hundred twenty-five percent (125%)” each place it appears in such definitions.

For Limitation Years commencing after December 31, 1999, this Section 19.07 shall not apply.

19.08 Participant Elective Deferrals: Elective Deferrals shall not be taken into account in determining under Section 19.03(b) the amount of Employer contributions to be allocated to a Participant who is a Non-key Employee.

19.09 EGTRRA Modification of Top-Heavy Rules: Notwithstanding any other provision of this Article XIX, this Section shall apply for purposes of determining whether the Plan is a top-heavy plan under Code §416(g) for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code §416(c) for such years.

(a) Determination of top-heavy status / Key Employee. Key employee means any Employee or Former Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having Annual Compensation greater than $130,000 (as adjusted under Code §416(i)(1)for Plan Years beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of the Employer having annual compensation of more than $150,000. For this purpose, Annual Compensation means Compensation within the meaning of Section 7.01(b). The determination of who is a key employee will be made in accordance with Code 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

(b) Determination of present values and amounts. This sub-section 19.09(b) shall apply for purposes of determining the present values of Accrued Benefits and the amounts of Account balances of Employees as of the determination date.

(1) Distributions during year ending on the determination date. The present values of Accrued Benefits and the amounts of Account balances of an employee as of the determination date shall be

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increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Code §416(g)(2) during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code §416(g)(2)(A)(i). In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting “5-year period” for “1-year period.”

(2) Employees not performing services during year ending on the determination date. The Accrued Benefits and Accounts of any individual who has not performed services for the Employer during the 1-year period ending on the determination date shall not be taken into account.

(c) Minimum benefits.

(1) Matching contributions. Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code §416(c)(2) and the Plan. The preceding sentence shall apply with respect to matching contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code §401(m).

(2) Contributions under other plans. The minimum benefit requirement of this Section 19.09 shall be met through contributions to this Plan regardless of whether the Employer maintains any other plan (including another plan which may consist solely of a cash or deferred arrangement which meets the requirements of Code §401(k)(12) and matching contributions with respect to which the requirements of Code §401(m)(11) are met).

(d) So long as this Plan satisfies the requirements for a safe harbor plan under Code §410(k)(12) for Plan Years after December 31, 2001, the provisions of Code §416 and this Article XIX shall not apply.

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ARTICLE XX

PROVISIONS AFFECTING BENEFITS

20.01 Availability of Loans: Upon acceptance of an application by a Participant who is an active Employee, the Plan Administrator shall direct the Trustee to make a loan to the Participant from his Plan Accounts (including any Rollover Accounts, but excluding his Employer Securities Account and his Dividend Account), subject to the provisions of this Article. In considering a Participant’s application for a loan, the Plan Administrator shall base its decision whether to grant a loan on a uniform and non-discriminatory policy, without regard to the race, color, religion, sex, age or national origin of the applicant.

20.02 Loan Administration: The Employer shall prepare and adopt a written Participant Loan Administration Policy Statement, whose provisions shall be made part of this Plan. The Policy Statement shall set forth:

(a) the identity of the person or persons authorized to administer the loan program;

(b) the procedure for applying for a loan;

(c) the basis on which loans will be approved or denied;

(d) limitations, if any, on the types and amounts of loans offered;

(e) the procedure for determining a reasonable rate of interest;

(f) the types of collateral which may secure a loan; and

(g) the events constituting default and the steps to be taken to preserve plan assets in the event of a default.

20.03 Amount of Loan: The amount of any loan to a Participant shall not be less than one thousand dollars ($1,000). When added to the outstanding balance of any previous loans made to a Participant pursuant to this Article or under any other qualified plan maintained by the Employer, the amount of any loan shall not exceed the lesser of:

(a) Fifty percent (50%) of the Vested Interest in his Plan Accounts (including any Rollover Accounts, but excluding his Employer Securities Account); or

(b) $50,000, reduced by the excess (if any) of:

(1) the highest outstanding balance of loans from the plan during the 1-year period ending on the day before the date on which such loan was made, over

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(2) the outstanding balance of loans from the plan on the date on which such loan was made.

20.04 Collateral Requirements: Any loan to a Participant shall be secured solely by the balance in his Plan Account (including any Rollover Accounts, but excluding his Employer Securities Account). In the event of default on the loan, however, foreclosure and attachment of the security shall not occur until a distributable event occurs under the Plan.

20.05 Loan Terms: Any loan made to a Participant by the Trustee shall be evidenced by a promissory note of the Participant drawn in favor of the Trust. The note shall bear a reasonable rate of interest and shall be amortized in level installments payable at least quarterly within a specified period of time not to exceed five (5) years, unless the loan is used to acquire a dwelling unit which, within a reasonable period of time (determined at the time the loan is made), will be used as the principal residence of the Participant, in which case the specified period of time shall not exceed ten (10) years. Effective January 1, 2002, repayment of a loan to a Participant who is on a leave of absence may be suspended for the shorter of (i) one year or (ii) the term of the leave of absence, provided that upon commencement of repayments, the loan shall continue to satisfy all requirements of the Plan and all applicable laws and regulations. Suspension of loan repayments shall also be governed by the rules in Section 3.13(f) with respect to any Qualified Military Service.

20.06 Accounting for Loans: Any loan to a Participant pursuant to this Article shall be treated as a directed investment of his Participant Accounts (excluding his Employer Security Account). For purposes of allocating income in the General Investments Account of the Trust Fund pursuant to Section 6.03(c), the balance in his General Investments Account shall be treated as equal to the actual balance in the Account minus the outstanding balance of any loans. Furthermore, for purposes of Section 6.03, repayments of principal and interest on the loan shall be treated as deposits to the adjusted balance (determined pursuant to the preceding sentence) of his General Investments Account.

20.07 Effect of Termination of Employment or Plan: If a Participant terminates employment with the Employer for any reason, the outstanding balance of any loans made to him shall become fully payable no later than the last day of the calendar quarter following the calendar quarter in which his Termination of Employment occurs, or, if earlier, on his Distribution Date. In the event of a termination of the Plan, any outstanding loans shall be due and fully payable within ninety (90) days of the effective date of such termination, or the date the Participant or Beneficiary is notified of such termination. If the Participant or Beneficiary has not fully repaid any loan as of the date full payment is due, any unpaid balance shall be deducted from his Vested Accrued Benefit prior to determining the amount of any immediate or deferred benefit payable to the Participant or Beneficiary, his spouse or his Beneficiary and applied toward repayment of the loan. The deduction shall be applied only against the Participant’s General Investments Account.

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20.08 No Spousal Consent: No spousal consent shall be required for any loan from any Account in the Plan.

20.09 Anti-Alienation: Except as specifically provided in Section 20.10 no benefit which shall be payable out of the Trust Fund to any person (including a Participant, Former Participant or Beneficiary) shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. No benefit shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person, nor shall it be subject to attachment or legal process for or against person, and the same shall not be recognized by the Trustee, except to such extent as may be required by law.

20.10 Qualified Domestic Relations Orders: Section 20.09 shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant, Former Participant or Beneficiary pursuant to a Domestic Relations Order, unless such Domestic Relations Order is determined to be a Qualified Domestic Relations Order (“QDRO”). In the event the Plan, the Trustee, or the Plan Administrator receives a Domestic Relations Order, the Plan Administrator shall promptly notify the Participant, Former Participant or Beneficiary whose benefit is the subject of such order and provide him with a copy of the Plan’s written procedures for administering QDROs. Unless and until the order is set aside, the following provisions shall apply:

(a) The Plan Administrator shall establish reasonable procedures to determine whether an order received by it or the Trustee is a QDRO and to administer distributions pursuant to said order. The procedures shall set forth all rules to be applied by the Plan for notice to affected parties, suspension of Account activity, including distributions, investment direction and participant loans, and payment of benefits based upon the QDRO or the failure of the Domestic Relations Order to be a QDRO.

(b) The Plan Administrator shall within a reasonable time determine whether the order is a QDRO and shall notify the Participant, Former Participant or Beneficiary whose benefit is the subject of the order, of its determination. The Plan Administrator may designate a representative to carry out its duties under this Section 20.10.

(c) Nothing in this Section 20.10 shall be deemed to allow payment under a QDRO to an Alternate Payee of any benefit prior to the first day of the month following the date the Participant or Former Participant whose benefits are subject to the QDRO terminates employment or attains age fifty (50), unless (i) earlier distribution is specifically provided under the terms of the QDRO and (ii) if the value of the Alternate Payee’s benefit exceeds $5,000, the Alternate Payee consents to any distribution occurring prior to the Participant’s attainment of earliest retirement age.

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20.11 QDRO Definitions: For purposes of Section 20.10 the following definitions and rules shall apply:

(a) “Alternate Payee” shall mean any spouse, former spouse, child or other dependent of a Participant or Former Participant who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant or Former Participant.

(b) “Domestic Relations Order” shall mean any judgment, decree, or order (including approval of a property settlement agreement) which:

(1) relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Participant or Former Participant and

(2) is made pursuant to a state domestic relations law (including a community property law).

(c) “Qualified Domestic Relations Order” shall mean any Domestic Relations Order which satisfies the criteria set forth in the QDRO procedures established by the Plan Administrator.

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ARTICLE XXI

MULTIPLE EMPLOYER PROVISIONS

21.01 Adoption by Other Zions Employers: With the consent of the Sponsoring Employer and by a properly executed document evidencing the intent and will of the adopting Zions Employer, any other Zions Employer may adopt this Plan and all of the provisions hereof and participate herein and be known as a Participating Employer.

21.02 Requirements of Participating Zions Employers:

(a) Each Participating Zions Employer shall be required to use the Trustee determined by the Plan Sponsor or Plan Administrator.

(b) The Trustee may, but shall not be required to, commingle, hold and invest as one Trust Fund all contributions made by Participating Zions Employers, as well as all increments thereof. The assets of the Plan shall, on an ongoing basis, be available to pay benefits to all Participants and Beneficiaries under the Plan without regard to the Participating Zions Employer who contributed such assets.

(c) The transfer of any Participant from or to Zions Employer participating in this Plan, whether he is an Employee of the Sponsoring Employer or a Participating Zions Employer, shall not affect the Participant’s rights under the Plan, and the Participant’s Accounts, as well as all accumulated service with the transferor or predecessor, shall continue to his credit.

(d) Any expenses of the Trust and Plan which are to be paid by the Employer or borne by the Trust Fund, including funding of benefits, shall be paid by each Participating Zions Employer in the same proportion that the total amount of the Accounts standing to the credit of all Participants employed by such Zions Employer bears to the total of the Accounts standing to the credit of all Participants.

21.03 Designation of Agent: Each Participating Zions Employer shall be deemed to be a part of this Plan. With respect to all of its relations with the Trustee and Plan Administrator for the purpose of this Plan, each Participating Zions Employer shall be deemed to have designated irrevocably the Sponsoring Employer as its agent. Unless the context of the Plan clearly indicates the contrary, the word “Employer” shall be deemed to include each Participating Zions Employer as related to its adoption of the Plan.

21.04 Employee Transfers: It is anticipated that an Employee may be transferred between Participating Zions Employers, and in the event of any transfer, the Employee involved shall carry with him all of his accumulated service and eligibility. No transfer shall effect a termination of

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employment hereunder, and the Participating Zions Employer to which the Employee is transferred shall thereupon become obligated hereunder with respect to such Employee in the same manner as was the Participating Zions Employer from whom the Employee was transferred.

21.05 Amendment: The Sponsoring Employer may amend this Plan at any time without regard to whether there are Participating Zions Employers hereunder. No written action of a Participating Zions Employer shall be required to validate an amendment.

21.06 Discontinuance of Participation: A Participating Zions Employer shall be permitted to discontinue or revoke its participation in the Plan. At the time of any discontinuance or revocation, satisfactory evidence thereof and of any applicable conditions imposed shall be delivered to the Trustee. If so directed by the Plan Administrator, the Trustee shall transfer, deliver and assign Contracts and other Fund assets allocable to the Participants of such Participating Zions Employer to the new Trustee as shall have been designated by the Participating Zions Employer, in the event that it has established a separate pension plan for its Employees. No such transfer shall be made if the result is the elimination or reduction of any Code §411(d)(6) protected benefits. If no successor is designated, the Trustee shall retain the assets for the Employees of the Participating Zions Employer pursuant to the provisions of the Plan. In no event shall any part of the corpus or income of the Trust as it relates to the Participating Zions Employer be used for or diverted for purposes other than for the exclusive benefit of the Employees of the Participating Zions Employer.

21.07 Administrator’s Authority: The Plan Administrator shall have authority to make any and all necessary rules or regulations, binding upon all Participating Zions Employers and all Participants, to effectuate the purposes of this Article.

21.08 Participating Employer Contributions: All contributions made by a Participating Zions Employer, as provided for in this Plan, shall be determined separately for each Participating Zions Employer, and shall be allocated only among Participants eligible to share who are Employees of the Participating Zions Employer making the contribution. The Administrator shall keep separate books and records concerning the affairs of each Participating Zions Employer hereunder and as to the accounts and credits of the Employees of each Participating Zions Employer. The Trustee may, but need not, register Contracts so as to evidence that a particular Participating Zions Employer is the interested Employer hereunder. In the event of an Employee transfer from one Participating Zions Employer to another, the employing Employer shall immediately notify the Administrator.

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ARTICLE XXII

PURCHASE OF EMPLOYER SECURITIES

22.01 No Put option: The Plan may not obligate itself to acquire Employer Securities from a particular holder thereof at any indefinite time determined upon the happening of an event such as the death of the holder. So long as all Employer Securities held by the Plan are tradable on an established market, the Plan may not obligate itself to acquire Employer Securities under a put option binding upon the Plan.

22.01 Purchase Price For Employer Securities: All purchases of Employer Securities shall be made at a price which, in the judgment of the Plan Administrator, does not exceed the fair market value thereof. All sales of Employer Securities shall be made at a price which, in the judgment of the Plan Administrator, is not less than the fair market value thereof.

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ARTICLE XXIII

MISCELLANEOUS

23.01 Participant’s Rights: This plan shall not be deemed to constitute a contract between the Employer and any Participant or to be a consideration or an inducement for the employment of any Participant or Employee. Nothing contained in this Plan shall be deemed to give any Participant or Employee the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any Participant or Employee at any time regardless of the effect which such discharge shall have upon him as a Participant of this Plan.

23.02 Actions Consistent with Terms of Plan: All actions taken by the Employer, Plan Administrator or Trustee with respect to Trust assets shall be in accordance with the terms of the Plan and Trust.

23.03 Performance of Duties: All parties to this Plan and Trust, or those claiming any interest hereunder, agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Plan and Trust or any of its provisions.

23.04 Validity of Plan: This Plan shall be construed in a way that is consistent with ERISA and regulations thereunder, the Internal Revenue Code and regulations thereunder, and, to the extent state law has not been preempted by federal law, the laws of the State in which the Plan Sponsor has its principal office. In case any provision of this Plan shall be held illegal or invalid for any reason, such determination shall not affect the remaining provisions of the Plan; but the Plan shall be construed and enforced as if such provision had never been included therein.

23.05 Legal Action: In the event any claim, suit, or proceeding is brought regarding the Trust and/or Plan established hereunder to which the Trustee or the Plan Administrator may be a party, and such claim, suit, or proceeding is resolved in favor of the Trustee or Plan Administrator, they shall be entitled to be reimbursed from the Trust Fund for any and all costs, attorney’s fees, and other expenses pertaining thereto incurred by them for which they shall have become liable.

23.06 Gender and Number: Wherever any words are used herein in the masculine, feminine or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply, and whenever any words are used herein in the singular or plural form, they shall be construed as though they were also used in the other form in all cases where they would so apply.

23.07 Uniformity: All provisions of this Plan shall be interpreted and applied in a uniform, nondiscriminatory manner.

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23.08 Headings: The headings and subheadings of this Agreement have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof.

23.09 Receipt and Release for Payments: Any payment to any Participant, his legal representative, Beneficiary, or to any guardian or committee appointed for such Participant or Beneficiary in accordance with the provisions of the Plan, shall, to the extent thereof, be in full satisfaction of all claims against the Trustee and the Employer, either of whom may require such Participant, legal representative, Beneficiary, guardian or committee, as a condition precedent to such payment, to execute a receipt and release thereof in such form as shall be determined by the Trustee or Employer.

23.10 Payments to Minors, Incompetents: In the event the Plan Administrator must direct a payment from the Plan to or for the benefit of any minor or incompetent Participant or Beneficiary, the Plan Administrator, in its sole and absolute discretion may, but need not, order the Trustee to make distribution to any of the following: a legal or natural guardian of the minor or other relative or adult with whom the minor temporarily or permanently resides, a court-appointed conservator of any incompetent, a relative or adult with whom the incompetent temporarily or permanently resides, a residential care facility, rest home, sanitarium or similar entity with which the incompetent temporarily or permanently resides, a person or entity which has applied for and been designated by the United States Government as the recipient or custodian for Social Security benefits for the minor or incompetent. The Plan Administrator may also make payment as directed by the attorney-in-fact of an incompetent Participant when such direction is pursuant to an unrevoked and valid durable power of attorney. Any guardian, conservator, relative, attorney-in-fact, other person or entity shall have full authority and discretion to expend the distribution for the use and benefit of the minor or incompetent. The receipt of the distribution by the guardian, conservator, relative, attorney-in-fact, other person or entity shall be a complete discharge to the Plan, Plan Administrator and Trustee, without any responsibility on the part of the Trustee or the Plan Administrator to see to the application thereof. A Participant shall be deemed incompetent if he or she is incapable of properly using, expending, investing, or otherwise disposing of the distribution, and a court order or the written opinion of a qualified physician, psychiatrist or psychologist setting forth facts consistent with the standards outlined in this Section is presented to the Plan Administrator.

23.11 Missing Persons: Notwithstanding any provision in this Plan and Trust to the contrary, if the Plan Administrator is unable to locate any Former Participant who is entitled to benefits under this Plan within three (3) years of the date he becomes entitled to a distribution from the Trust Fund, any amounts being held for his behalf shall be forfeited and used to reduce the Employer’s contributions to the Plan and Trust. The Plan Administrator shall proceed with due diligence in attempting to locate any Former Participant. In the Plan Administrator’s sole discretion, due diligence may include inquiry of any Beneficiary or Alternate Payee of the Former Participant whose names and addresses are known to the Plan Administrator or use by the Plan Administrator of a commercial locator service. Provided, however, no forfeiture shall occur until the Plan Administrator has mailed the Former Participant a notice of the benefits and the provisions of this section to his last known address, via U.S. Mail postage prepaid, return receipt requested. And,

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provided further, if the Former Participant is located subsequent to such forfeiture, the forfeited amount shall be reinstated and the Former Participant shall receive a distribution of his Vested Interest in accordance with the provisions of the Plan.

23.12 Prohibition Against Diversion of Funds: It shall be impossible by operation of the Plan or of the Trust, by termination of either, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by any other means, for any part of the corpus or income of any trust fund maintained pursuant to the Plan or any funds contributed thereto to be used for, or diverted to, purposes other than the exclusive benefit of Participants, Former Participants or their Beneficiaries, except as provided in Sections 17.04 and 21.19.

23.13 Applicability of Plan: The provisions of this Plan shall apply only to persons who are or who become Participants in this Plan on or after the Effective Date or with respect to Plan provisions with alternate effective dates, such alternate dates. Except as specifically provided in this Plan, the provisions of the Prior Plan will continue to apply to persons who are Former Participants or who are not employed by a Zions Employer on the Effective Date or as applicable, alternate effective dates, unless and until such time as such persons may again become Participants in this Plan.

23.14 Misstatement of Age: If a Participant or Beneficiary misstates or misrepresents his Age, date of birth or any other material information to the Employer, Plan Administrator or Trustee, the amount, terms and conditions of any benefits payable from the Plan which are attributable to periods prior to the discovery of such misstatement or misrepresentation shall be limited to the lesser (or more restrictive) of: the amount, terms and conditions determined based on the misstated information; or the amount, terms and conditions determined based on the correct information. The Plan Administrator shall have sole and absolute authority for applying the preceding sentence.

23.15 Return of Contributions to the Employer: Notwithstanding any provision of this Plan to the contrary, if any contribution (or portion thereof) by the Employer to the Trust is made as a result of a mistake of fact, or if any contribution (or part thereof) by the Employer to the Trust Fund that is conditioned upon the deductibility of the contribution by the Employer under the Code is disallowed, whether by agreement within the Internal Revenue Service or by final decision of a court of competent jurisdiction, the Employer may demand repayment of the mistaken or disallowed amount. The Trustee shall return the mistaken or disallowed contribution within one (1) year following the time the mistaken contribution was made or the disallowed contribution was disallowed. Investment earnings attributable to the mistaken or disallowed amount shall not be returned, but any investment losses attributable thereto shall reduce the amount so returned.

23.16 Counterparts: This Plan and Trust may be executed in any number of counterparts, each of which shall be deemed to be an original, and the counterparts shall constitute one and the same instrument.

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EX-10.43

EXHIBIT 10.43

Addendum to Change in Control Agreement

This Addendum sets forth certain amendments to your Change in Control Agreement with Zions Bancorporation (the “Change in Control Agreement”). Section 409A of the Internal Revenue Code is a new tax law provision that governs “non-qualified deferred compensation arrangements” that could impose an additional tax and penalties on some of the existing payments and benefits to which you could become entitled under your Change in Control Agreement unless we amend those entitlements before the end of 2008. The purpose of this Addendum is to amend these entitlements to comply with, or be exempt from, Section 409A.

1. Amendments

A. Timing of Single-Trigger Change in Control Payment of Senior Management Value Sharing Awards

If a Change in Control event does not qualify as a “change in control event” within the meaning of Treas. Reg. 1.409A-3(i)(5)(i), then payment of any Senior Management Value Sharing Awards will vest upon the Change in Control and will be made on the first permissible payment event under Section 409A following the Change in Control (e.g. termination of employment, death or disability).

B. Timing of Double-Trigger Change in Control Payments

Unless otherwise provided in your Change in Control Agreement, any payments and benefits owed to you in connection with the termination of your employment will be paid to you in a lump sum within 30 days following the termination of your employment.

C. Timing of Change in Control Payments to “Specified Employees”

Notwithstanding anything to the contrary in this Agreement or elsewhere, if you are a “specified employee” as determined pursuant to Section 409A of the Code (“Section 409A) as of the date of your “separation from service” (within the meaning of Final Treasury Regulation 1.409A-1(h)) and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise provided without subjecting you to “additional tax”, interest or penalties under Section 409A, then any such payment or benefit that is payable during the first six months following your “separation from service” shall be paid or provided to you in a cash lump-sum, with interest at LIBOR, on the first business day of the seventh calendar month following the month in which your “separation from service” occurs. In addition, any payment or benefit due upon a termination of your employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to you upon a “separation from service”.

D. Excise Tax Cut-Back

In the event that the payments and benefits payable to you would be reduced because of the imposition of the excise tax imposed by Section 4999 of the Internal Revenue Code as provided in your Change in Control Agreement and none of the payments or benefits are “non-qualified deferred compensation” subject to Section 409A, then such reduction shall occur in the manner you elect in writing prior to the date of payment. If any payment or benefit is “non-qualified deferred compensation” subject to Section 409A or you fail to elect an order pursuant to the preceding sentence, then the reduction will be determined in a manner which has the least economic cost to you and, to the extent the economic cost is equivalent, such payments or benefits will be reduced in the inverse order of when the payments or benefits would have been made to you until the reduction specified is achieved.

E. Reimbursement of Legal Fees

Any dispute resolution payment (including related reimbursable expenses, fees and other costs) that is not a “legal settlement” for purposes of Section 409A shall be paid by the Company to you not later than the last day of your taxable year following the year in which the dispute is resolved.

F. Disability

For purposes of your Change in Control Agreement, “Disability” will have the meaning prescribed to it in Section 409A(a)(2)(C) of the Internal Revenue Code.

2. Other Actions

It is our intention that the payments and benefits to which you could become entitled under your Change in Control Agreement, as amended by this Addendum, comply with, or are exempt from, the requirements of Section 409A. If you or the Company believes, at any time, that any of such benefit or right does not comply, it will promptly advise the other and will negotiate reasonably and in good faith to amend the terms of such arrangement such that it complies (with the most limited possible economic effect on you and on the Company). The Company shall have no liability to you or otherwise if any amounts or benefits paid or provided under your agreement, as amended by this Addendum, are subject to the additional tax and penalties under Section 409A.

3. General Provisions

This Addendum amends your Change in Control Agreement with the Company and, except as specifically amended hereby, your Change in Control Agreement is hereby ratified and confirmed in all respects and remains in full force and effect.

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EX-10.50

EXHIBIT 10.50

ZIONS BANCORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

PERFORMANCE RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of the date set forth on Exhibit A (the “Grant Date”) by and between Zions Bancorporation, a Utah corporation (the “Company”), and the person named on Exhibit A (the “Grantee”) pursuant to the Company’s 2005 Stock Option and Incentive Plan (the “Plan”). Capitalized terms not defined in this Agreement have the meanings ascribed to them in the Plan.

1. Grant of Restricted Stock. Pursuant and subject to the Plan and this Agreement, the Company hereby grants to Grantee the number of shares (the “Restricted Stock”) of the Company’s Common Stock (the “Common Stock”) set forth on Exhibit A. Grantee’s ownership of and rights with respect to the Restricted Stock are limited by the terms and conditions of the Plan and this Agreement, including restrictions on Grantee’s right to transfer the Restricted Stock and Grantee’s obligation to forfeit and surrender the Restricted Stock upon the occurrence of certain circumstances.

2. Transfer Restriction. Until lapse of the transfer restriction, the Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the Plan or this Agreement. Additional shares of Common Stock or other property distributed to the Grantee in respect of the Restricted Stock, as dividends or otherwise, shall be subject to the same restrictions applicable to the Restricted Stock (the term “Restricted Stock” shall also be deemed to include such other shares and property). The Restricted Stock shall be held by the Company in escrow for so long as the Restricted Stock is subject to transfer restrictions under this Section 2 and the Plan. The Company may direct its stock transfer agent to legend or place a stop transfer order on the Restricted Stock and any certificate issued evidencing shares of the Restricted Stock shall remain in the possession of the Company until such shares are free of any restriction specified in the Plan or this Agreement.

3. Lapse of Transfer Restrictions. The transfer restrictions set forth in Section 2 above shall lapse on the dates set forth on Exhibit A (the “Lapse Dates”); provided that Grantee has satisfied all of the provisions of Section 6 below.

4. Termination of Employment. In the event of Grantee’s Termination of Employment for any reason other than death of Disability, shares of Restricted Stock that remain subject to transfer restrictions as of the date of such termination shall immediately and automatically be forfeited, surrendered and canceled without consideration and without any further action by Grantee.

5. Death or Disability. In the event of Grantee’s death or Disability during the term of this Agreement, the Grantee or his estate shall become vested in the Restricted Stock in an amount equal to the total grant of Restricted Shares multiplied by a fraction, the numerator of which is the number of full months elapsed between December 31, 2008 and the date of death or Disability, and the denominator of which is 48. Any shares of Restricted Stock which vest pursuant to the terms of this Section shall remain subject to the Conditions to Lapse of Transfer Restrictions in Section 5.

6. Conditions to Lapse of Transfer Restrictions.

6.1 Performance Targets. The lapse of transfer restrictions shall be contingent on the attainment by Amegy Bank of net income after tax of not less than the following periodic amounts (“Threshold NIAT Targets”) at the completion of each Measurement Period:

Measurement Period	Corresponding Threshold NIAT Target		Corresponding Threshold Cumulative NIAT Target
1st year ending December 31, 2009	$	113,300,000	$	113,300,000
2nd year ending December 31, 2010	$	119,000,000	$	232,300,000
3rd year ending December 31, 2011	$	124,900,000	$	357,200,000
4th year ending December 31, 2012	$	131,100,000	$	488,300,000

In the event the Threshold NIAT Target has not been attained by Amegy Bank at the conclusion of any of the corresponding Measurement Periods ending on or before December 31, 2011, then the lapse of transfer restrictions with respect to any of the shares which would otherwise have been subject to the lapse of transfer restrictions on the next following Lapse Date, as set forth on Exhibit A, shall be deferred. If the Threshold Cumulative NIAT Target has been attained at the conclusion of any subsequent corresponding Measurement Period, then any previously deferred lapse of transfer restrictions shall be lifted. If the Threshold Cumulative NIAT Target has not been attained at the conclusion of the Measurement Period ending on December 31, 2012, then any shares still subject to transfer restrictions shall be forfeited, surrendered and cancelled without consideration and without any further action by Grantee.

For purposes of calculating Amegy Bank’s net income after tax, adjustments will be made in a manner consistent with those made for other incentive plans administered by the Committee (including the Amegy Bank Value Sharing Plan) or which, in the sole discretion of the Committee are necessary to reasonably and fairly compare changes in cumulative net income after tax during the four years ending December 31, 2012 with net income during the year ending December 31, 2008, which may include, without limitation, changes in policies with respect to capitalization, significant changes in inter-company expense or income allocation methodologies and other similar factors.

6.2 Tax Withholding. Prior to the lapse of transfer restriction on the Restricted Stock, Grantee must pay, or otherwise provide for to the satisfaction of the Company, any applicable federal or state withholding obligations of the Company. Unless the Committee permits otherwise, Grantee shall provide for payment of withholding taxes upon lapse of the transfer restriction by hereby allowing and directing the Company to retain shares of Restricted Stock with a Fair Market Value (determined as of the applicable Lapse Date) equal to the statutory minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of shares of Restricted Stock to the Grantee by deducting the shares retained from the total number of shares of Restricted Stock that are no longer subject to transfer restrictions.

6.3 Compliance with Laws. The transfer restrictions set fourth in Section 2 above shall not lapse unless such lapse and the issuance or release of the related shares of Restricted Stock is in compliance, to the reasonable satisfaction of the Committee, with all applicable federal and state securities laws, as they are in effect on the date of the lapse of restrictions.

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6.4 Other Conditions. The Committee may require that Grantee comply with such other procedures relating to the lapse of transfer restrictions on the Restricted Stock and the release of shares of Restricted Stock to Grantee as the Committee may determine, including the use of specified broker-dealers and the manner in which Grantee shall satisfy tax withholding obligations with respect to shares of Restricted Stock released from transfer restrictions.

6.5 Release of Shares. As promptly as is practicable after the lapse of transfer restrictions and satisfaction of Sections 5.1 through 5.3 above, the Company shall release the shares of Restricted Stock registered in the name of Grantee, Grantee’s authorized assignee or Grantee’s legal representative. The Company may postpone such release until it receives satisfactory proof that the release of such shares will not violate any of the provisions of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, any rules or regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder, or the requirements of applicable state law relating to authorization, issuance or sale of securities, or until there has been compliance with the provisions of such acts or rules. Grantee understands that the Company is under no obligation to register or qualify the Restricted Stock or Common Stock with the SEC, any state securities commission or any stock exchange to effect such compliance.

7. Right of Offset. The Company shall have the right to offset against the obligation to release shares of Restricted Stock, any outstanding amounts then owed by Grantee to the Company.

8. Nontransferability of Agreement. The rights conferred by this Agreement shall not be assignable or transferable by Grantee other than by will or by the laws of descent and distribution, and shall be exercisable during the life of the Grantee only by the Grantee or the Grantee’s legal representative and any such attempted assignment, transfer or exercise in contravention of this Section 7 shall be void.

9. Privileges of Stock Ownership. Grantee shall have the rights of a stockholder with respect to the voting of the Restricted Stock and cash dividends paid by the Company. All regular dividends on shares of the Restricted Stock shall be paid directly to Grantee and shall not be held in escrow (such distributions may, however, be delivered to an address at the Company for delivery to Grantee).

10. No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Grantee any right to continue in the employ of, or to continue or establish any other relationship with, the Company or any Related Entity, or limit in any way the right of the Company or any Related Entity to terminate Grantee’s employment or other relationship at any time, with or without Cause.

11. Change in Control. Subject to the terms of the Plan, Grantee shall be entitled to the benefits of Section 3.7 of the Plan with respect to the Restricted Stock. In addition to the provisions of Section 3.7(a) of the Plan, for purposes of this Agreement the sale by the Company of more than a majority of the assets or stock of Amegy Bank shall be deemed to constitute a change in control.

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12. Non-Solicitation Covenant. Grantee hereby agrees that, for a period of six months following any Termination of Employment, he shall not, either on his own or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any person, firm or corporation, directly or indirectly solicit or attempt to solicit away from the Company (i) any of its officers or employees or offer employment to any person who is an officer or employee of the Company; and (ii) any of its customers; provided, however, that a general advertisement which does not reference Grantee, and to which an employee or customer responds, shall not be deemed to result in a breach of this Section 11. The period of non-solicitation provided for in this Section shall, in any event, terminate after August 1, 2013.

13. Entire Agreement. This Option is granted pursuant to the Plan and this Option and Agreement are subject to the terms and conditions of the Plan. The Plan is incorporated herein by reference. This Agreement, the Plan and such other documents as may be executed in connection with this Restricted Stock grant constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter. Any action taken or decision made by the Committee arising out of or in connection with the construction, administration, interpretation or effect of this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on the Grantee and all persons claiming under or through the Grantee.

14. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Grantee shall be in writing and addressed to Grantee at the address indicated below or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

15. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement and the Plan shall be binding upon Grantee and Grantee’s heirs, executors, administrators, legal representatives, successors and assigns.

16. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah without regard to that body of law pertaining to choice of law or conflict of laws.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date noted above.

ZIONS BANCORPORATION	GRANTEE
/s/ Harris H. Simmons	/s/ Paul B. Murphy
By: Harris H. Simmons	Paul B. Murphy, Jr.

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EXHIBIT A

Grant Date: August 15, 2008

Name of Grantee: Paul B. Murphy Jr.

Number of Shares of Restricted Stock: 50,000

Lapse of Transfer Restrictions: The transfer restriction set forth in Section 2 of the Restricted Stock Award Agreement shall lapse with respect to the following amounts of the Restricted Stock on the following dates:

Vesting Date	Number of Shares
February 1, 2010	12,500
February 1, 2011	12,500
February 1, 2012	12,500
February 1, 2013	12,500

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EX-10.51

EXHIBIT 10.51

ZIONS BANCORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

PERFORMANCE RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of the date set forth on Exhibit A (the “Grant Date”) by and between Zions Bancorporation, a Utah corporation (the “Company”), and the person named on Exhibit A (the “Grantee”) pursuant to the Company’s 2005 Stock Option and Incentive Plan (the “Plan”). Capitalized terms not defined in this Agreement have the meanings ascribed to them in the Plan.

1. Grant of Restricted Stock. Pursuant and subject to the Plan and this Agreement, the Company hereby grants to Grantee the number of shares (the “Restricted Stock”) of the Company’s Common Stock (the “Common Stock”) set forth on Exhibit A. Grantee’s ownership of and rights with respect to the Restricted Stock are limited by the terms and conditions of the Plan and this Agreement, including restrictions on Grantee’s right to transfer the Restricted Stock and Grantee’s obligation to forfeit and surrender the Restricted Stock upon the occurrence of certain circumstances.

2. Transfer Restriction. Until lapse of the transfer restriction, the Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the Plan or this Agreement. Additional shares of Common Stock or other property distributed to the Grantee in respect of the Restricted Stock, as dividends or otherwise, shall be subject to the same restrictions applicable to the Restricted Stock (the term “Restricted Stock” shall also be deemed to include such other shares and property). The Restricted Stock shall be held by the Company in escrow for so long as the Restricted Stock is subject to transfer restrictions under this Section 2 and the Plan. The Company may direct its stock transfer agent to legend or place a stop transfer order on the Restricted Stock and any certificate issued evidencing shares of the Restricted Stock shall remain in the possession of the Company until such shares are free of any restriction specified in the Plan or this Agreement.

3. Lapse of Transfer Restrictions. The transfer restrictions set forth in Section 2 above shall lapse on the dates set forth on Exhibit A (the “Lapse Dates”); provided that Grantee has satisfied all of the provisions of Section 6 below.

4. Termination of Employment. In the event of Grantee’s Termination of Employment for any reason other than death of Disability, shares of Restricted Stock that remain subject to transfer restrictions as of the date of such termination shall immediately and automatically be forfeited, surrendered and canceled without consideration and without any further action by Grantee.

5. Death or Disability. In the event of Grantee’s death or Disability during the term of this Agreement, the Grantee or his estate shall become vested in the Restricted Stock in an amount equal to the total grant of Restricted Shares multiplied by a fraction, the numerator of which is the number of full months elapsed between December 31, 2008 and the date of death or Disability, and the denominator of which is 48. Any shares of Restricted Stock which vest pursuant to the terms of this Section shall remain subject to the Conditions to Lapse of Transfer Restrictions in Section 5.

6. Conditions to Lapse of Transfer Restrictions.

6.1 Performance Targets. The lapse of transfer restrictions shall be contingent on the attainment by Amegy Bank of net income after tax of not less than the following periodic amounts (“Threshold NIAT Targets”) at the completion of each Measurement Period:

Measurement Period	Corresponding Threshold NIAT Target		Corresponding Threshold Cumulative NIAT Target
1st year ending December 31, 2009	$	113,300,000	$	113,300,000
2nd year ending December 31, 2010	$	119,000,000	$	232,300,000
3rd year ending December 31, 2011	$	124,900,000	$	357,200,000
4th year ending December 31, 2012	$	131,100,000	$	488,300,000

In the event the Threshold NIAT Target has not been attained by Amegy Bank at the conclusion of any of the corresponding Measurement Periods ending on or before December 31, 2011, then the lapse of transfer restrictions with respect to any of the shares which would otherwise have been subject to the lapse of transfer restrictions on the next following Lapse Date, as set forth on Exhibit A, shall be deferred. If the Threshold Cumulative NIAT Target has been attained at the conclusion of any subsequent corresponding Measurement Period, then any previously deferred lapse of transfer restrictions shall be lifted. If the Threshold Cumulative NIAT Target has not been attained at the conclusion of the Measurement Period ending on December 31, 2012, then any shares still subject to transfer restrictions shall be forfeited, surrendered and cancelled without consideration and without any further action by Grantee.

For purposes of calculating Amegy Bank’s net income after tax, adjustments will be made in a manner consistent with those made for other incentive plans administered by the Committee (including the Amegy Bank Value Sharing Plan) or which, in the sole discretion of the Committee are necessary to reasonably and fairly compare changes in cumulative net income after tax during the four years ending December 31, 2012 with net income during the year ending December 31, 2008, which may include, without limitation, changes in policies with respect to capitalization, significant changes in inter-company expense or income allocation methodologies and other similar factors.

6.2 Tax Withholding. Prior to the lapse of transfer restriction on the Restricted Stock, Grantee must pay, or otherwise provide for to the satisfaction of the Company, any applicable federal or state withholding obligations of the Company. Unless the Committee permits otherwise, Grantee shall provide for payment of withholding taxes upon lapse of the transfer restriction by hereby allowing and directing the Company to retain shares of Restricted Stock with a Fair Market Value (determined as of the applicable Lapse Date) equal to the statutory minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of shares of Restricted Stock to the Grantee by deducting the shares retained from the total number of shares of Restricted Stock that are no longer subject to transfer restrictions.

6.3 Compliance with Laws. The transfer restrictions set fourth in Section 2 above shall not lapse unless such lapse and the issuance or release of the related shares of Restricted Stock is in compliance, to the reasonable satisfaction of the Committee, with all applicable federal and state securities laws, as they are in effect on the date of the lapse of restrictions.

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6.4 Other Conditions. The Committee may require that Grantee comply with such other procedures relating to the lapse of transfer restrictions on the Restricted Stock and the release of shares of Restricted Stock to Grantee as the Committee may determine, including the use of specified broker-dealers and the manner in which Grantee shall satisfy tax withholding obligations with respect to shares of Restricted Stock released from transfer restrictions.

6.5 Release of Shares. As promptly as is practicable after the lapse of transfer restrictions and satisfaction of Sections 5.1 through 5.3 above, the Company shall release the shares of Restricted Stock registered in the name of Grantee, Grantee’s authorized assignee or Grantee’s legal representative. The Company may postpone such release until it receives satisfactory proof that the release of such shares will not violate any of the provisions of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, any rules or regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder, or the requirements of applicable state law relating to authorization, issuance or sale of securities, or until there has been compliance with the provisions of such acts or rules. Grantee understands that the Company is under no obligation to register or qualify the Restricted Stock or Common Stock with the SEC, any state securities commission or any stock exchange to effect such compliance.

7. Right of Offset. The Company shall have the right to offset against the obligation to release shares of Restricted Stock, any outstanding amounts then owed by Grantee to the Company.

8. Nontransferability of Agreement. The rights conferred by this Agreement shall not be assignable or transferable by Grantee other than by will or by the laws of descent and distribution, and shall be exercisable during the life of the Grantee only by the Grantee or the Grantee’s legal representative and any such attempted assignment, transfer or exercise in contravention of this Section 7 shall be void.

9. Privileges of Stock Ownership. Grantee shall have the rights of a stockholder with respect to the voting of the Restricted Stock and cash dividends paid by the Company. All regular dividends on shares of the Restricted Stock shall be paid directly to Grantee and shall not be held in escrow (such distributions may, however, be delivered to an address at the Company for delivery to Grantee).

10. No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Grantee any right to continue in the employ of, or to continue or establish any other relationship with, the Company or any Related Entity, or limit in any way the right of the Company or any Related Entity to terminate Grantee’s employment or other relationship at any time, with or without Cause.

11. Change in Control. Subject to the terms of the Plan, Grantee shall be entitled to the benefits of Section 3.7 of the Plan with respect to the Restricted Stock. In addition to the provisions of Section 3.7(a) of the Plan, for purposes of this Agreement the sale by the Company of more than a majority of the assets or stock of Amegy Bank shall be deemed to constitute a change in control.

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12. Non-Solicitation Covenant. Grantee hereby agrees that, for a period of six months following any Termination of Employment, he shall not, either on his own or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any person, firm or corporation, directly or indirectly solicit or attempt to solicit away from the Company (i) any of its officers or employees or offer employment to any person who is an officer or employee of the Company; and (ii) any of its customers; provided, however, that a general advertisement which does not reference Grantee, and to which an employee or customer responds, shall not be deemed to result in a breach of this Section 11. The period of non-solicitation provided for in this Section shall, in any event, terminate after August 1, 2013.

13. Entire Agreement. This Option is granted pursuant to the Plan and this Option and Agreement are subject to the terms and conditions of the Plan. The Plan is incorporated herein by reference. This Agreement, the Plan and such other documents as may be executed in connection with this Restricted Stock grant constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter. Any action taken or decision made by the Committee arising out of or in connection with the construction, administration, interpretation or effect of this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on the Grantee and all persons claiming under or through the Grantee.

14. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Grantee shall be in writing and addressed to Grantee at the address indicated below or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

15. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement and the Plan shall be binding upon Grantee and Grantee’s heirs, executors, administrators, legal representatives, successors and assigns.

16. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah without regard to that body of law pertaining to choice of law or conflict of laws.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date noted above.

ZIONS BANCORPORATION	GRANTEE
/s/ Harris H. Simmons	/s/ Scott J. McLean
By: Harris H. Simmons	Scott J. McLean

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EXHIBIT A

Grant Date: August 15, 2008

Name of Grantee: Scott J. McLean.

Number of Shares of Restricted Stock: 25,000

Lapse of Transfer Restrictions: The transfer restriction set forth in Section 2 of the Restricted Stock Award Agreement shall lapse with respect to the following amounts of the Restricted Stock on the following dates:

Vesting Date	Number of Shares
February 1, 2010	6,250
February 1, 2011	6,250
February 1, 2012	6,250
February 1, 2013	6,250

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EX-10.52

EXHIBIT 10.52

ZIONS BANCORPORATION

CHANGE IN CONTROL AGREEMENT

SENIOR EXECUTIVES (3X)

May 23, 2008

Dallas Haun

750 E. Warm Springs Road, 4th F1

Las Vegas, NV 89119

Dear Dallas:

Zions Bancorporation (the “Company”) considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel. In connection with this, the Company’s Board of Directors (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that the uncertainty and questions that it may raise among management Could result in the departure or distraction of management personnel to the detriment of the Company and its shareholders.

The Board has decided to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without the distraction arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Company or any of its affiliates (collectively, the “Company”), the Company hereby agrees that after this letter agreement (this “Agreement”) has been fully executed, you shall receive the severance benefits set forth in Section 5 of this Agreement in the event your employment with the Company is terminated under the circumstances described in Section 4 of this Agreement subsequent to a Change in Control (as defined in Section 2).

1. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect through December 31, 2009; provided, however, that commencing on March 1, 2009 and on each March 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than March 1 of that preceding year, the Company shall have given notice that it does not wish to extend this Agreement; provided, further, that if a Change in Control (as defined in Section 2), occurs during the original or any extended term of this Agreement, the term of this Agreement shall continue in effect for a period of not less than thirty-six (36) months beyond the month in which such Change in Control occurred.

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2. Change in Control. No benefits shall be payable or provided under Section 3, 4 or 5 of this Agreement unless there has been a Change in Control. For purposes of this Agreement, a Change in Control shall not be deemed to have occurred if the Board consisting of a majority of Continuing Directors as defined in Section (b) determines that, in their reasonable judgment, a change in control has not occurred. Without such a determination, a change in control will be deemed to have occurred if:

(a) any Person (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities (“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following shall not constitute a Change in Control: (i) any acquisition by the Company or any corporation controlled by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iii) any acquisition by a Person of 20% of the Outstanding Company Voting Securities as a result of an acquisition of common stock of the Company by the Company which, by reducing the number of shares of common stock of the Company outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Outstanding Company Voting Securities; provided, however, that if a Person shall become the beneficial owner of 20% or more of the Outstanding Company Voting Securities by reason of a share acquisition by the Company as described above and shall, after such share acquisition by the Company, become the beneficial owner of any additional shares of common stock of the Company, then such acquisition shall constitute a Change in Control;

(b) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with Company to effect a transaction described in Sections 2(b), (d), (e) or (f)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (hereinafter referred to as “Continuing Directors”), cease for any reason to constitute at least a majority thereof;

(c) the consummation by the Company of a merger or consolidation of Company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 20% of the Outstanding Company Voting Securities shall not constitute a Change in Control;

(d) the stockholders of the Company approve a plan of complete liquidation of the Company; or

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(e) the consummation of an agreement (or agreements) providing for the sale or disposition by the Company of all or substantially all of the Company’s assets other than a sale or disposition which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent 50% or more of the combined voting power of the acquiring entity outstanding immediately after such sale or disposition.

3. Accelerated Vesting Upon a Change in Control.

(a) All outstanding options, if any, granted to you by the Board (“Options”) under any of the Company’s stock option plans, incentive plans, or other similar plans (or options substituted therefore covering the stock of a successor corporation) shall become fully vested and exercisable immediately prior to the Change in Control as to all shares of stock covered thereby, and the restricted period with respect to any restricted stock or any other equity award granted to you thereunder shall lapse and such shares shall be distributed to you immediately prior to the Change in Control.

(b) all unpaid Senior Management Value Sharing Awards will be payable at the higher of their target value as established by the Executive Compensation Committee of the Board (the “Committee”) or their value calculated under the terms of the Value Sharing Plan based on the average annual growth in Earnings per Share and the average Tangible Return on Equity from the inception of each Plan Period through the fiscal quarter ending prior to the effective date of the Change of Control. Any such payments will be pro-rated based on multiplying them times a fraction, the numerator of which is the number of quarters completed in the performance cycle and the denominator of which is the original number of quarters in the performance cycle called for in the plan. The payments described in this Section 3(b) shall be paid in a single lump sum within 30 days following the Change in Control (with the actual payment date during such 30-day period to be determined in the Company’s sole discretion).

4. Termination of Employment Following a Change in Control.

(a) General. During the term of this Agreement, if any of the events described in Section 2 constituting a Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 5(c) upon the subsequent termination of your employment, provided that such termination occurs during the term of this Agreement and within the two (2) year period immediately following the date of such Change in Control, unless such termination is (i) because of your death or Disability (as defined in Section 4(b)), (ii) by the Company for Cause (as defined in Section 4(c)), or (iii) by you other than for Good Reason (as defined in Section 4(d). In the event that you are entitled to such benefits, such benefits shall be paid notwithstanding the subsequent expiration of the term of this Agreement.

(b) Disability. Your employment may be terminated for “Disability,” as that term is defined in ¶ 3(a) of the July 20, 2007 Employment Agreement entered into between you and the Company (“Employment Agreement”).

(c) Cause. Your employment may be terminated for “Cause,” as that term is defined in defined in ¶ 3(b) of the Employment Agreement.

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(d) Good Reason. You shall be entitled to terminate your employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without your express written consent, the occurrence after a Change in Control of any of the following circumstances unless (except in the case of Sections 4(d)(iv)), such circumstances are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination (as defined in Section 4(f)) specified in the Notice of Termination given in respect thereof:

(i) the assignment to you of any duties materially inconsistent with the position in the Company that you held immediately prior to the Change in Control, a significant adverse alteration in the nature or status of your responsibilities or the conditions of your employment from those in effect immediately prior to such Change in Control, or any other action by the Company that results in a material diminution in your position, authority, duties or responsibilities;

(ii) the Company’s reduction by more than 10% of your annual total compensation as in effect on the date hereof or as the same may be increased from time to time;

(iii) the relocation of the Company’s offices at which you are principally employed immediately prior to the date of the Change in Control (your “Principal Location”) which results in the one-way commuting distance for you increasing by more than thirty (30) miles from such location, or the Company’s requiring you, without your written consent, to be based anywhere other than your Principal Location, except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations;

(iv) the Company’s failure to pay to you any portion of your current compensation or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days after the date such compensation is due;

(v) the Company’s failure to continue in effect any material compensation or benefit plan in which you participate immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the Company’s failure to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the Change in Control; or

(vi) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 4(e) hereof (and, if applicable, the requirements of Section 4(c) hereof), which purported termination shall not be effective for purposes of this Agreement.

Notwithstanding the foregoing, if you do not provide the Company with written notice of the occurrence of an act or circumstance of a type described above in this Section 4 within sixty (60) days of your having knowledge thereof occurrence of a type described above in this Section 4, such act or occurrence shall no longer constitute a basis for an event of termination for “Good

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Reason”. Your right to terminate your employment pursuant to this Section 4(d) shall not be affected by your incapacity due to physical or mental illness. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

(e) Notice of Termination. Any purported termination of your employment by the Company or by you (other than termination due to death which shall terminate your employment automatically) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7. “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(f) Date of Termination, Etc. “Date of Termination” shall mean (a) if your employment is terminated due to your death, the date of your death; (b) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30)-day period), and (c) if your employment is terminated pursuant to Section 4(c), Section 4(d) or Section 4(e) or for any other reason (other than death or Disability), the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than thirty (30) days from the date such Notice of Termination is given, and in the case of a termination for Good Reason shall not be less than fifteen (15) nor more than sixty (60) days from the date such Notice of Termination is given).

5. Compensation Upon Termination or During Disability Following A Change in Control. Following a Change in Control during the term of this Agreement, you shall be entitled to the benefits described below during a period of disability, or upon termination of your employment, as the case may be, provided that such period or termination occurs during the term of this Agreement and within the two (2) year period immediately following the date of such Change in Control. The benefits to which you are entitled, subject to the terms and conditions of this Agreement, are:

(a) During any period during which you fail to perform your full-time duties with the Company as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary at the rate in effect at the commencement of any such period, together with all compensation payable to you under the Company’s disability plan or program or other similar plan during such period, until this Agreement is terminated pursuant to Section 4(b) hereof. Thereafter, or in the event your employment is terminated by reason of your death, your benefits shall be determined under the Company’s retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.

(b) If your employment shall be terminated (i) by the Company for Cause or (ii) by you other than for Good Reason, the Company shall pay you (1) your full base salary, when due, through the Date of Termination at the rate in effect at the time Notice of Termination is given, (2) the unpaid portion, if any, of any annual bonus for any prior year, and (3) all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

(c) If your employment by the Company shall be terminated by you for Good Reason or by the Company other than for Cause or Disability, then you shall be entitled to the benefits provided below:

(i) the Company shall pay to you (1) your full base salary, when due, through the Date of Termination at the rate

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in effect at the time Notice of Termination is given, at the time specified in Section 5(e), (2) the unpaid portion, if any, of any annual bonus, plus an amount equal to your targeted annual bonus, pro rated from January 1 of the termination year through the Date of Termination, and (3) all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due;

(ii) in lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay as severance pay to you, at the time specified in Section 5(e), a lump sum severance payment equal to the sum of three (3) times your annual base salary as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater, and three (3) times your targeted annual bonus as in effect as of the Date of Termination or the average annual bonus awarded to you (without reduction by reason of any arrangement to defer payment of such bonus) with respect to the three (3) years immediately prior to the Change in Control, whichever is greater;

(iii) for a period of three (3) years following the Date of Termination, the Company shall continue to provide you and your eligible family members, based on the cost sharing arrangement between you and the Company on the date of the Change in Control, with medical and dental health benefits at least equal to those which would have been provided to you and them if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter, provided, however, that if you become re-employed with another employer and are eligible to receive medical and dental health benefits under another employer’s plans, the Company’s obligations under this Section 5(c)(iii) shall be reduced to the extent comparable benefits are actually received by you, and any such benefits actually received by you shall be reported to the Company. In the event you are ineligible under the terms of such benefit plans or programs to continue to be so covered, in such event, the Company shall provide you with substantially equivalent coverage through other sources or will provide you with quarterly payments (on the first business day of each calendar quarter, in advance) in such amounts that, after all taxes on such amounts, shall be equal to the cost to you of providing yourself such benefit coverage. At the termination of the benefits coverage under the second preceding sentence, you, your spouse and your dependents shall be entitled to continuation coverage pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), Sections 601-608 of the Employee Retirement Income Security Act of 1974, as amended, and under any other applicable law, to the extent required by such laws, as if you had terminated employment with the Company on the date such benefits coverage terminates. The lump sum shall be determined on a present value basis using the interest rate provided in Section 1274(b)(2)(B) of the Code on the Date of Termination. In each case, (other than a benefit plan providing for reimbursement of expenses referred to in Section 105(b) of the Code relating to amounts expended for medical care), the amount of benefits and payments to be provided under this clause (iii) during a calendar year shall not affect the amount of benefits and payments to be provided in any other taxable year and any such benefits and payments shall not be subject to liquidation or exchange for another benefit;

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(iv) for a period of two (2) years following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with outplacement services, the scope and provider of which shall be selected by you in your sole discretion, at an aggregate cost to the Company not to exceed twenty five percent (25%) of your annual base salary as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater. Except as otherwise expressly provided herein, to the extent any expense reimbursement under this clause (iv) is determined to be subject to Section 409A (as defined below), the amount of any such expenses eligible for reimbursement in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year, in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement be subject to liquidation or exchange for another benefit;

(v) you shall be fully vested in your accrued benefits under any qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plans maintained by the Company for your benefit, except to the extent that the acceleration of vesting of such benefits would violate any applicable law or require the Company to accelerate the vesting of the accrued benefits of all participants in such plan or plans, in which case the Company may elect to pay you a lump sum payment at the time specified in Section 5(e) in an amount equal to the value of such unvested accrued benefits in lieu of accelerating the vesting of your benefits. In addition, the Company shall pay to you an amount equal to the amount the Company would have contributed to your account under the Company’s 401(k) plan as a matching contribution had you remained employed by the Company for three (3) years after your Date of Termination and had you made the maximum elected deferral contributions. The matching contributions described in the immediately preceding sentence shall be paid in a single lump sum within 30 days following the Date of Termination (with the actual payment date during such 30-day period to be determined in the Company’s sole discretion);

(vi) (1) anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution to you or for your benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code by reason of being “contingent on a change in the ownership or control” of the Company, within the meaning of Section 280G of the Code or to any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest or penalties, are collectively referred to as the “Excise Tax”), then your total payment or distribution will be reduced to such extent as required to not trigger the excise tax. The determination of which payments or benefits to reduce to comply with this provision will be made by you.

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(2) for the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax.

6. Successors; Binding Agreement.

(a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to terminate your employment and receive compensation from the Company in the same amount and on the same terms to which you would be entitled hereunder if you terminate your employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. Unless expressly provided otherwise, “Company” as used herein shall mean the Company as defined in this Agreement and any successor to its business and/or assets as aforesaid.

(b) This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

7. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

8. Confidentiality, Non-Competition and Non-Solicitation Covenants.

(a) Confidentiality. You hereby agree that you shall not, directly or indirectly, disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below).

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You agree that, upon termination of your employment with the Company, all Confidential Information in your possession that is in written or other tangible form (together with all copies or duplicates thereof, including computer files) shall be returned to the Company and shall not be retained by you or furnished to any third party, in any form except as provided herein; provided, however, that you shall not be obligated to treat as confidential, or return to the Company copies of any Confidential Information that (i) was publicly known at the time of disclosure to you, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by any person or entity, or (iii) is lawfully disclosed to you by a third party. As used in this Agreement, the term “Confidential Information” means: information disclosed to you or known by you as a consequence of or through your relationship with the Company, about the customers, employees, business methods, public relations methods, organization, procedures or finances, including, without limitation, information of or relating to customer lists, of the Company.

(b) Non-Compete. You hereby agree that, for the period commencing on the Date of Termination and terminating on the first anniversary thereof, you shall:

(i) not, directly or indirectly (whether as principal, agent, independent contractor, consultant, employee or otherwise), own, manage, operate, join, control or otherwise carry on, participate in the ownership, management, operation or control of, provide services to, or be engaged in or concerned with, any business competitive with that of the Company or any of its affiliates, which business is located within, or does business within, 50 miles of your primary work location at the time of termination of your employment (for purposes of the foregoing, any business competitive with the Company or any of its affiliates shall include any organizational activities with respect to a business that would be so competitive once such business is organized and operating and shall include, but not be limited to, a bank, a savings and loan, a credit union, a broker-dealer or an entity providing investment advisory services) (a “Competing Business”), provided that you shall not be prohibited from owning passively less than 5% of a Competing Business;

(ii) inform any person which seeks to engage your services that you are bound by this Section 8(b) and the other terms of this Agreement.

(c) Non-Solicitation. You hereby agree that, for the period commencing on the Date of Termination and terminating on the first anniversary thereof, you shall not, either on your own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or corporation, directly or indirectly solicit or attempt to solicit away from the Company any of its officers or employees or offer employment to any person who is an officer or employee of the Company; provided, however, that a general advertisement to which an employee of the Company responds shall in no event be deemed to result in a breach of this Section 8(c).

(d) Survival. Any termination of your employment or of this Agreement (or breach of this Agreement by you or the Company) shall have no effect on the continuing operation of this Section 8.

(e) Validity. The parties hereto acknowledge that the potential restrictions on your future employment imposed by this Section 8 are reasonable in both duration and geographic scope and in all other respects. If for any reason any court of

9

competent jurisdiction shall find any provisions of this Section 8 unreasonable in duration or geographic scope or otherwise, you and the Company hereby agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction.

(f) Consideration. The parties acknowledge that this Agreement would not have been entered into and the benefits described in Sections 3 and 5 would not have been promised in the absence of your promises under this Section 8.

9. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed on a non-exclusive basis by the laws of the State of Utah without giving effect to its conflicts of laws rules.

10. Joint and Several Liability. Any successors or assigns shall be jointly and severally liable with the Company under this Agreement.

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. Any obligations of the Company under Sections 5 and 6 shall survive the expiration of the term of this Agreement. The section headings contained in this Agreement are for convenience only, and shall not affect the interpretation of this Agreement.

Notwithstanding anything to be contrary contained in Section 1 or this Section 11, the Company may amend, supplement or terminate the Agreement at any time by giving you at least seven calendar days prior written notice of amendment, supplementation or termination; provided, however, that the Company may amend, supplement or terminate this Agreement under this Section 11 only if,

(a) (i) the Board or Compensation Committee of the Board has determined generally to amend or supplement the terms and conditions of outstanding change in control agreements or generally to terminate outstanding change in control agreements and replace them with new, modified change in control agreements, and (ii) concurrently with the amendment, supplementation or termination of this Agreement the Company provides you with an executed amendment or supplement or new change in control agreement containing terms and conditions substantially the same as those contained in the general amendments, supplements or new agreements (it being understood that the multiples contained in Section 5(c) of this Agreement and the terms of years contained in Sections 4, 5 or 8 of this Agreement will remain the same in the amendment, supplement or new agreement provided to you); and

(b) (i) a Change in Control has not occurred prior to the effective date of the amendment, supplementation or termination of this Agreement and (ii) the Company is not then or at such effective date, or within three months of such effective

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date does not become, a party to a definitive agreement providing for transactions which, if consummated, would constitute a Change in Control.

12. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

14. Legal Fees. In addition to all other amounts payable to you under this Agreement, the Company shall pay to you all reasonable legal fees and expenses incurred by you in connection with any Dispute arising out of or relating to this Agreement or the interpretation thereof (including, without limitation, all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or in seeking to obtain or enforce any right or benefit provided by this Agreement, or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder), regardless of the outcome of such proceeding; provided, however, that in the event you commence such action, you shall not be entitled to recover such fees and costs if the court determines that you brought the claim in bad faith or the claim was frivolous.

15. Effectiveness; Entire Agreement. This Agreement shall become effective only upon our receipt from you prior to June 30, 2008 of a copy of this Agreement executed by you and the Company. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein, including, without limitation, any prior severance agreements, is hereby terminated and cancelled. Any of your rights hereunder are supplementary and shall be in addition to any rights you may otherwise have under benefit plans or agreements of the Company to which you are a party or in which you are a participant, including, but not limited to any rights you have under the Employment Agreement (including but not limited to compensation rights under §4(a) of the Employment Agreement), any Company sponsored employee benefit plans and stock options plans. Provisions of this Agreement shall not in any way abrogate your rights under such other plans and agreements including under the Employment Agreement. Any conflicts between the terms of this Agreement and the terms of the Employment Agreement shall be resolved by providing you, in your sole discretion, the option to elect under which agreement benefits are to be provided.

16. Section 409A. Notwithstanding anything to the contrary in this Agreement or elsewhere, if you are a “specified employee” as determined pursuant to Section 409A of the Code (“Section 409A”) as of the date of your “separation from service” (within the meaning of Final Treasury Regulation 1.409A-1 (h)) and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise provided without subjecting you to “additional tax”, interest or penalties under Section 409A, then any such payment or benefit that is payable during the first six months following your “separation from service” shall be paid or provided to you in a cash lump-sum, with interest at LIBOR, on the first business day of the seventh calendar month following the

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month in which your “separation from service” occurs. In addition, any payment or benefit due upon a termination of your employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to you upon a “separation from service”.

If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which shall then constitute our agreement on this subject.

Sincerely,
ZIONS BANCORPORATION
By:	/s/     Harris H. Simmons
Its:	Chmn, Pres & CEO

Agreed to this 4 day

of Feb, 2009

/s/    Dallas Haun

Dallas Haun

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EX-12

EXHIBIT 12

RATIOS OF EARNINGS TO FIXED CHARGES

AND EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

The following table sets forth certain information regarding our consolidated ratios of earnings to fixed charges and earnings to fixed charges and preferred stock dividends. Fixed charges represent interest expense, a portion of rent expense representative of interest, trust-preferred securities related expense and amortization of debt issuance costs.

(In thousands, except ratio amounts)	Year Ended December 31,
	2008			2007		2006		2005		2004
Fixed Charges:
Interest expense excluding deposits	$	281,993		346,022		303,689		195,169		143,447
Portion of rents representative of an interest factor		19,093		17,994		17,182		13,871		13,528
Fixed charges excluding interest on deposits		301,086		364,016		320,871		209,040		156,975
Interest on deposits		720,260		977,352		749,708		353,737		187,195
Fixed charges including interest on deposits	$	1,021,346		1,341,368		1,070,579		562,777		344,170
Fixed Charges and Preferred Stock Dividends:
Interest expense excluding deposits	$	281,993		346,022		303,689		195,169		143,447
Portion of rents representative of an interest factor		19,093		17,994		17,182		13,871		13,528
Preferred stock dividend requirements		24,424		21,157		5,927		—		—
Fixed charges and preferred stock dividends excluding interest on deposits		325,511		385,173		326,798		209,040		156,975
Interest on deposits		720,260		977,352		749,708		353,737		187,195
Fixed charges and preferred stock dividends including interest on deposits	$	1,045,771		1,362,525		1,076,506		562,777		344,170
Earnings:
Income from continuing operations before income taxes	$	(314,698	)	737,498		912,924		741,887		624,391
Equity in undistributed earnings of unconsolidated subsidiaries		(10,105	)	(11,731	)	(5,800	)	(7,161	)	(6,943	)
Fixed charges excluding interest on deposits		301,086		364,016		320,871		209,040		156,975
Earnings excluding interest on deposits		(23,717	)	1,089,783		1,227,995		943,766		774,423
Interest on deposits		720,260		977,352		749,708		353,737		187,195
Earnings including interest on deposits	$	696,543		2,067,135		1,977,703		1,297,503		961,618
Ratio of earnings to fixed charges:
Excluding interest on deposits		(0.08	)	2.99		3.83		4.51		4.93
Including interest on deposits		0.68		1.54		1.85		2.31		2.79
Ratio of earnings to fixed charges and preferred stock dividends:
Excluding interest on deposits		(0.07	)	2.83		3.76		4.51		4.93
Including interest on deposits		0.67		1.52		1.84		2.31		2.79

EX-21

EXHIBIT 21

LIST OF SUBSIDIARIES

ZIONS BANCORPORATION

AT DECEMBER 31, 2008

SUBSIDIARY	STATE OR JURISDICTION OF INCORPORATION/ORGANIZATION
Zions First National Bank	Federally chartered doing business in Utah and Idaho
California Bank & Trust	California
Amegy Corporation	Texas
National Bank of Arizona	Federally chartered doing business in Arizona
Nevada State Bank	Nevada
Vectra Bank Colorado	Federally chartered doing business in Colorado and New Mexico
The Commerce Bank of Washington	Federally chartered doing business in Washington
The Commerce Bank of Oregon	Oregon
Cash Access, Inc.	Utah
Great Western Financial Corporation	Utah
MP Technology, Inc.	Utah
NetDeposit, LLC	Nevada
Stockmen’s (AZ) Statutory Trust II (not consolidated)	Connecticut
Stockmen’s (AZ) Statutory Trust III (not consolidated)	Connecticut
Welman Holdings, Inc.	Utah
Zions Capital Trust B (not consolidated)	Delaware
Zions Insurance Agency, Inc.	Utah
Zions Management Services Company	Utah
Zions Municipal Funding, Inc.	Utah

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of Zions Bancorporation of our reports dated February 27, 2009, with respect to the consolidated financial statements of Zions Bancorporation and the effectiveness of internal control over financial reporting of Zions Bancorporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2008:

(i) Registration Statement (Form S-8 No. 333-36205) and related Prospectus pertaining to Zions Bancorporation Employee Investment Savings Plan, now known as the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan;

(ii) Registration Statement (Form S-8 No. 333-74179) and related Prospectus pertaining to Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan;

(iii) Registration Statement (Form S-8 No. 333-79699) and related Prospectus pertaining to Zions Key Employee Incentive Stock Option Plan;

(iv) Registration Statement (Form S-8 No. 333-89611) and related Prospectus pertaining to Pioneer Bancorporation Non-Qualified Stock Option Plan;

(v) Registration Statement (Form S-8 No. 333-124696) and related Prospectus pertaining to Zions Bancorporation 2005 Stock Option and Incentive Plan;

(vi) Registration Statement (Form S-8 No. 333-130222) and related Prospectus pertaining to Amegy Bancorporation 1989 Stock Option Plan, Amegy Bancorporation 1993 Stock Option Plan, as Amended and Restated, Amegy Bancorporation 1996 Stock Option Plan, as Amended and Restated, Amegy Bancorporation 1993 Stock Option and Incentive Plan, Amegy Bancorporation Restricted Stock Plan, Amegy Bancorporation Second Amended and Restated Non-Employee Directors Deferred Fee Plan, and Amegy Bancorporation 2004 Omnibus Incentive Plan; and

(vii) Registration Statement (Form S-3 No. 333-132868) and related Prospectus pertaining to the offering of debt and equity securities of Zions Bancorporation.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

February 27, 2009

EX-31.1

EXHIBIT 31.1

C E R T I F I C A T I O N

Principal Executive Officer

I, Harris H. Simmons, certify that:

1. I have reviewed this annual report on Form 10-K of Zions Bancorporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2009	/s/ Harris H. Simmons
	Harris H. Simmons, Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

C E R T I F I C A T I O N

Principal Financial Officer

I, Doyle L. Arnold, certify that:

1. I have reviewed this annual report on Form 10-K of Zions Bancorporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2009	/s/ Doyle L. Arnold
	Doyle L. Arnold, Vice Chairman and Chief Financial Officer

EX-32

EXHIBIT 32

C E R T I F I C A T I O N

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. §1350, the undersigned officers of Zions Bancorporation (the “Company”) hereby certify that, to the best of their knowledge, the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 27, 2009	/s/ Harris H. Simmons
	Name:	Harris H. Simmons
	Title:	Chairman, President and Chief Executive Officer
	/s/ Doyle L. Arnold
	Name:	Doyle L. Arnold
	Title:	Vice Chairman and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.