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, 2006

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	84111
(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
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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x        Accelerated filer  ¨        Non-accelerated filer  ¨

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, 2006	$	7,939,764,713
Number of Common Shares Outstanding at February 16, 2007		109,997,378 shares

Documents Incorporated by Reference:

Portions of the Company’s Proxy Statement (to be dated approximately March 16, 2007) for the Annual Meeting of Shareholders to be held May 4, 2007 – Incorporated into Part III

FORM 10-K TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business.	4
Item 1A.	Risk Factors.	9
Item 1B.	Unresolved Staff Comments.	10
Item 2.	Properties.	10
Item 3.	Legal Proceedings.	10
Item 4.	Submission of Matters to a Vote of Security Holders.	10
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	11
Item 6.	Selected Financial Data.	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	100
Item 8.	Financial Statements and Supplementary Data.	101
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	162
Item 9A.	Controls and Procedures.	162
Item 9B.	Other Information.	162
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	162
Item 11.	Executive Compensation.	162
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	162
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	163
Item 14.	Principal Accounting Fees and Services.	163
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	164
Signatures		170

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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 and its subsidiaries (collectively “the Company”);

• 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 economic effects of terrorist attacks against the United States and related events;

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

• fluctuations in the equity and fixed-income markets;

• 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. Treasury and the Federal Reserve Board;

• continuing consolidation in the financial services industry;

• 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;

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

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

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

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.

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 470 offices at year-end 2006. 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 10,618 at year-end 2006. For further information about the Company’s industry segments, see “Business Segment Results” 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” in MD&A. The “Executive Summary” in MD&A provides further information about the Company.

PRODUCTS AND SERVICES

The Company focuses on maintaining community-minded 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; and 6) 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, student and 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”) that was launched in 2004.

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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 U.S. 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 the nation’s top originator 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, Inc. (“NetDeposit”) and P5, Inc. (“P5”) subsidiaries are national leaders in the provision of check imaging and clearing software and of web-based medical claims tracking and cash management services, respectively.

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.

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.

SUPERVISION AND REGULATION

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, a company must satisfy certain ongoing criteria.

The GLB Act also provides federal regulations dealing with privacy for nonpublic personal information of individual customers, with which the Company must comply. In addition, the Company is subject to various other federal and state laws that deal with the use and disclosure of nonpublic personal information.

The Parent is a financial holding company and, as such, is subject to the BHC Act. The BHC Act requires the prior approval 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 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. The BHC Act does not place territorial restrictions on the activities of nonbank subsidiaries of financial holding companies.

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The Company’s banking subsidiaries are also subject to various requirements and restrictions contained in both the laws of the United States and the states in which the banks operate. These include restrictions on:

• transactions with affiliates;

• the amount of loans to a borrower and its affiliates;

• the nature and amount of any investments;

• their ability to act as an underwriter of securities;

• the opening of branches; and

• the acquisition of other financial entities.

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 Federal Deposit Insurance Corporation (“FDIC”). They are also under the supervision of, and are subject to periodic examination by, the OCC or their respective state banking departments, the FRB, and the FDIC.

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. Failure to meet capital requirements could subject the Company 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 supervisory policies they apply. The BCBS has been working for a number of years on revisions to Basel I and in June 2004 released the final version of its proposed new capital framework with an update in November 2005 (“Basel II”). Basel II provides two approaches for setting capital standards for credit risk – an internal ratings-based approach tailored to individual institutions’ circumstances (which for many asset classes is itself broken into a “foundation” approach and an “advanced” or “A-IRB” approach, the availability of which is subject to additional restrictions) 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 would set capital requirements for operational risk and refine the existing capital requirements for market risk exposures. However, U.S. regulatory authorities consistently have taken the position that U.S. banks would not be permitted to utilize the “foundation” approach. Operational risk is defined by the proposal 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.

In September 2006, the U.S. banking and thrift agencies issued an interagency Advance Notice of Proposed Rulemaking (“NPR”) setting forth a definitive proposal for implementing Basel II in the United States that would apply only to internationally active banking organizations – defined as those with consolidated total assets of $250 billion or more or consolidated on-balance sheet

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foreign exposures of $10 billion or more – but that other U.S. banking organizations could elect, but would not be required to apply. We do not currently expect to be an early “opt in” bank holding company, as the Company does not have in place the data collection and analytical capabilities necessary to adopt Basel II. However, we believe that the competitive advantages afforded to companies that do adopt the framework will make it necessary for the Company to elect to “opt in” at some point, and we have begun investing in the required capabilities.

Also, in December 2006, the agencies issued another NPR for modifications to the Basel I framework for those banks not adopting Basel II, called Basel IA. The Basel IA NPR will allow non-Basel II banking organizations the choice of adopting all of the revisions suggested in the proposed NPR or continuing the use of existing risk-based capital rules. The agencies have indicated their intent to have the A-IRB provisions for internationally active U.S. banking organizations first become effective in March 2009 and that those provisions and the Basel IA provisions for others will be implemented on similar time frames.

Dividends payable by the subsidiary banks to the Parent are subject to various legal and regulatory restrictions. These restrictions and the amount available for the payment of dividends at year-end are summarized in Note 19 of the Notes to Consolidated Financial Statements.

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 provides that the Company’s bank subsidiaries are liable for any loss incurred by the FDIC in connection with the failure of an affiliated insured bank.

The Federal Deposit Insurance Corporation Improvement Act of 1991 prescribes standards for the safety and soundness of insured banks. These standards relate to internal controls, information systems, internal audit systems, 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 regulatory agencies.

The Community Reinvestment Act (“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. The GLB Act requires “satisfactory” or higher CRA compliance for insured depository institutions and their financial holding companies for them to engage in new financial activities. If one of the Company’s banks should receive a CRA rating of less than satisfactory, the Company could lose its status as a financial holding company.

On October 26, 2001, the President signed into law comprehensive anti-terrorism legislation known as the USA PATRIOT Act of 2001 (the “USA Patriot Act”). Title III of the 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 mutual funds 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.

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The Company has adopted appropriate policies, procedures and controls to address compliance with the requirements of these acts and will continue to make appropriate revisions to reflect any changes required.

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

On July 30, 2002, the Senate and the House of Representatives of the United States (Congress) enacted the Sarbanes-Oxley Act of 2002, a law that addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. The 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 system of strong 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, Executive 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.)

GOVERNMENT MONETARY POLICIES

The earnings and business of the Company are affected not only by general economic conditions, but also by fiscal and other 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 methods of monetary policy available to the FRB include:

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

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

• imposing or changing reserve requirements against bank deposits.

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:

• Credit risk is one of our most significant risks. Over the last three years we have experienced historically high levels of credit quality. We do not see any indications that credit quality will deteriorate significantly, but it is unlikely that we will be able to maintain credit quality at these levels indefinitely. Economic conditions in the high growth geographical areas in which our banks operate have been strong, but events could result in weaker economic conditions including deterioration of property values that could significantly increase the Company’s credit risk.

• 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 interest rate 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 and volatile market interest rates subject to general economic conditions and the polices of governmental and regulatory agencies, in particular the FRB.

• 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 therefore pose an ongoing risk.

• 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.

• We have a number of business initiatives that, while we believe they will ultimately produce profits for our shareholders, currently generate expenses in excess of revenues. Two significant initiatives are Contango, a wealth management business started in 2004, and NetDeposit, a subsidiary that provides electronic check processing systems. Our management of these businesses takes into account the development of revenues and control of expenses so that results of operations are not adverse to an extent that is not warranted by the expected opportunities these businesses provide.

• As noted previously, U.S. and international regulators have proposed new capital standards commonly known as Basel II. These standards would apply to a number of our largest competitors and potentially give them a significant competitive advantage over

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banks that do not adopt these standards. Sophisticated systems and data are required to adopt Basel II standards; the Company does not yet have these systems and data. While the Company is developing some of the systems, data, and analytical capabilities required to adopt Basel II, adoption is difficult and the Company has not yet decided that it will or can adopt Basel II. More recently, U.S. banking regulators issued another NPR which might reduce competitive inequities for modifications to the Basel I framework for those banks not adopting Basel II, called Basel IA. The Basel IA NPR will allow non-Basel II banking organizations the choice of adopting all of the revisions suggested in the proposed NPR or continuing the use of existing risk-based capital rules. However, our initial analysis indicates that a significant risk of competitive inequity would persist between banks operating under Basel IA and those using Basel II by potentially allowing Basel II banks to operate with lower levels of capital for certain lines of business.

• 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 and 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 has established an Enterprise-Wide Risk Management policy and appointed an Enterprise Risk Management Committee to oversee and implement the policy. In addition to credit and interest rate risk, the Committee also oversees and monitors the following risk areas: market risk, liquidity risk, operational risk, information technology risk, strategic risk, and reputation risk.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

At year-end 2006, the Company operated 470 domestic branches, of which 225 are owned and 245 are on leased premises. The Company also leases its headquarter offices in Salt Lake City, Utah. Other operations 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 16, 2007 was $87.56 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:

	2006			2005
	High		Low	High	Low
1st Quarter	$	85.25	75.13	70.45	63.33
2nd Quarter		84.18	76.28	75.17	66.25
3rd Quarter		84.09	75.25	74.00	68.45
4th Quarter		83.15	77.37	77.67	66.67

As of February 16, 2007, there were 6,982 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
2006	$	0.36	0.36	0.36	0.39
2005		0.36	0.36	0.36	0.36

On January 26, 2007, the Company’s Board of Directors approved a dividend of $0.39 per common share payable on February 21, 2007 to shareholders of record on February 7, 2007. 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.

On December 7, 2006, we issued 240,000 shares of our Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock with an aggregate liquidation preference of $240 million, or $1,000 per share. The preferred stock was offered 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. In general, preferred shareholders are entitled to receive asset distributions before common shareholders; however, preferred shareholders have no preemptive or conversion rights, and only limited voting rights pertaining generally to amendments to the terms of the preferred stock or the issuance of senior preferred stock as well as the right to elect two directors in the event of certain defaults. The preferred stock is not redeemable prior to December 15, 2011, but will be redeemable subsequent to that date at the Company’s option at the liquidation preference value plus any declared but unpaid dividends. The preferred stock dividend reduces earnings available

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to common shareholders and is computed at an annual rate equal to the greater of three-month LIBOR plus 0.52%, or 4.0%. Dividend payments are made quarterly in arrears on the 15^th day of March, June, September, and December, commencing on March 15, 2007.

Under the terms of the preferred stock agreements, in December 2006 the Company was required to declare the full quarterly dividend of $3.8 million and set aside the funds before it could resume the repurchase of its common shares.

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 2006:

Period	Total number of shares repurchased (1)	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 (2)
October	1,057	$	80.68	–	$	59,253,657
November	365		79.27	–		59,253,657
December	311,987		81.06	308,359		375,006,404
Fourth quarter	313,409		81.05	308,359

(1) Includes 4,435 shares tendered for exercise of stock options and 615 shares to cover payroll taxes on the vesting of restricted stock.

(2) On December 11, 2006, the Company’s Board of Directors authorized the repurchase of up to $400 million of its common stock and the Company thus resumed the repurchase of its common stock. Prior to December, the Company had suspended the repurchase of its shares since July 2005 in conjunction with the acquisition of Amegy Bancorporation, Inc.

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 KBW50 Index. The KBW50 Index is a market-capitalization weighted bank stock index developed and published by Keefe, Bruyette & Woods, Inc., a national recognized brokerage and investment banking firm specializing in bank stocks. The index is composed of 50 of the nation’s largest banking companies. The stock performance graph is based upon an initial investment of $100 on December 31, 2001 and assumes reinvestment of dividends.

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ITEM 6. SELECTED FINANCIAL DATA

FINANCIAL HIGHLIGHTS

(In millions, except per share amounts)	2006/2005 CHANGE	2006		2005 (3)	2004	2003	2002
FOR THE YEAR
Net interest income	+30%	$	1,764.7	1,361.4	1,160.8	1,084.9	1,025.7
Noninterest income	+26%		551.2	436.9	431.5	500.7	386.2
Total revenue	+29%		2,315.9	1,798.3	1,592.3	1,585.6	1,411.9
Provision for loan losses	+69%		72.6	43.0	44.1	69.9	71.9
Noninterest expense	+31%		1,330.4	1,012.8	923.2	893.9	858.9
Impairment loss on goodwill	-100%		–	0.6	0.6	75.6	–
Income from continuing operations before     income taxes and minority interest	+23%		912.9	741.9	624.4	546.2	481.1
Income taxes	+21%		318.0	263.4	220.1	213.8	167.7
Minority interest	+817%		11.8	(1.6)	(1.7)	(7.2)	(3.7)
Income from continuing operations	+21%		583.1	480.1	406.0	339.6	317.1
Loss on discontinued operations	–		–	–	–	(1.8)	(28.4)
Cumulative effect adjustment	–		–	–	–	–	(32.4)
Net income	+21%		583.1	480.1	406.0	337.8	256.3
Net earnings applicable to common     shareholders	+21%		579.3	480.1	406.0	337.8	256.3
PER COMMON SHARE
Earnings from continuing operations – diluted	+4%		5.36	5.16	4.47	3.74	3.44
Net earnings – diluted	+4%		5.36	5.16	4.47	3.72	2.78
Net earnings – basic	+4%		5.46	5.27	4.53	3.75	2.80
Dividends declared	+2%		1.47	1.44	1.26	1.02	0.80
Book value (1)	+10%		44.48	40.30	31.06	28.27	26.17
Market price – end			82.44	75.56	68.03	61.34	39.35
Market price – high			85.25	77.67	69.29	63.86	59.65
Market price – low			75.13	63.33	54.08	39.31	34.14
AT YEAR-END
Assets	+10%		46,970	42,780	31,470	28,558	26,566
Net loans and leases	+15%		34,668	30,127	22,627	19,920	19,040
Loans sold being serviced (2)	-24%		2,586	3,383	3,066	2,782	2,476
Deposits	+7%		34,982	32,642	23,292	20,897	20,132
Long-term borrowings	-9%		2,495	2,746	1,919	1,843	1,310
Shareholders’ equity	+18%		4,987	4,237	2,790	2,540	2,374
PERFORMANCE RATIOS
Return on average assets			1.32%	1.43%	1.31%	1.20%	0.97%
Return on average common equity			12.89%	15.86%	15.27%	13.69%	10.95%
Efficiency ratio			56.85%	55.67%	57.22%	55.65%	63.40%
Net interest margin			4.63%	4.58%	4.27%	4.41%	4.52%
CAPITAL RATIOS (1)
Equity to assets			10.62%	9.90%	8.87%	8.89%	8.94%
Tier 1 leverage			7.86%	8.16%	8.31%	8.06%	7.56%
Tier 1 risk-based capital			7.98%	7.52%	9.35%	9.42%	9.26%
Total risk-based capital			12.29%	12.23%	14.05%	13.52%	12.94%
SELECTED INFORMATION
Average common and common-equivalent     shares (in thousands)			108,028	92,994	90,882	90,734	92,079
Common dividend payout ratio			27.10%	27.14%	28.23%	27.20%	28.58%
Full-time equivalent employees			10,618	10,102	8,026	7,896	8,073
Commercial banking offices			470	473	386	412	415
ATMs			578	600	475	553	588

(1) At year-end.

(2) Amount represents the outstanding balance of loans sold and being serviced by the Company, excluding conforming first mortgage residential real estate loans.

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

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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 $47 billion financial holding company headquartered in Salt Lake City, Utah. The Company is the twenty-second largest domestic bank in terms of deposits, operating banking businesses through 470 offices and 578 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 S&P 500 and NASDAQ Financial 100 indices.

In operating its banking businesses, the Company seeks to combine the 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.

Banking Businesses

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

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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 three key factors: (1) focus on high growth markets; (2) keep decisions about customers local; and (3) centralize technology and operations to achieve economies of scale.

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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 the fastest growing states as projected by the U.S. Census Bureau. In addition, in the recent past these states have experienced relatively high levels of population growth compared to the rest of the country.

SCHEDULE 1

DEMOGRAPHIC PROFILE

BY STATE

(Dollar amounts in thousands)	Number of branches 12/31/2006	Deposits in market at 12/31/2006 (1)		Percent of Zions’ deposit base	Estimated 2006 total population (2)	Estimated population % change 2000-2006 (2)	Projected population % change 2006-2011 (2)	Estimated median household income 2006 (2)		Estimated household income % change 2000-2006 (2)	Projected household income % change 2006-2011 (2)
Utah	112	$	9,531,472	27.25%	2,551,534	14.26%	12.43%	$	56.4	23.38%	18.39%
California	91		8,351,369	23.87	37,236,136	9.93	8.00		57.8	21.32	16.95
Texas	77		7,329,258	20.95	23,786,899	14.08	10.96		49.3	23.35	17.56
Arizona	53		3,675,458	10.51	6,135,872	19.59	16.09		51.3	26.44	21.27
Nevada	72		3,378,945	9.66	2,575,444	28.88	22.95		55.1	23.42	18.06
Colorado	38		1,665,988	4.76	4,821,136	12.09	9.08		58.5	23.82	18.03
Idaho	24		519,211	1.48	1,475,700	14.05	11.75		46.6	23.59	17.88
Washington	1		504,918	1.44	6,396,653	8.53	6.36		56.5	23.38	18.35
New Mexico	1		16,385	0.05	1,956,417	7.55	6.07		41.5	21.56	16.62
Oregon	1		8,742	0.03	3,694,335	7.98	6.28		50.1	22.23	17.56
Zions’ weighted average						15.12	12.33		54.7	23.28	18.21
Aggregate national					303,582,361	7.87	6.66		51.5	22.25	17.77

(1) Excludes intercompany deposits.

(2) Data Source: SNL Financial Database

The Company seeks to grow both organically and through acquisitions in these banking markets. In 2005 we acquired Amegy Bank in Texas, which continued to enjoy very strong organic growth through 2006. In September 2006, we announced the pending acquisition of The Stockmen’s Bancorp, Inc. (“Stockmen’s”), a bank holding company with $1.2 billion in assets headquartered in Kingman, Arizona. On January 17, 2007, this acquisition was completed and Stockmen’s banking subsidiary, The Stockmen’s Bank, was merged into our NBA affiliate bank.

Within each of the states that the Company operates, we focus on the market segments that we believe present the best opportunities for us. We believe that these states have experienced higher rates of growth, business formation, and expansion than other states. We also believe that these states will continue to experience higher rates of commercial real estate development as local businesses strive to provide housing, shopping, business facilities, and other amenities for their growing populations. As a result, 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 many cases, the Company’s relationship with its customers is primarily driven by the goal to satisfy their needs for credit to finance their expanding business opportunities. In addition to our commercial business, we also provide a broad base of consumer financial products in selected markets, including home mortgages, home equity lines, auto loans, and credit cards. This mix of business often leads to loan balances growing faster than internally generated deposits. 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.

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Keep Decisions About Customers Local

The Company operates eight different community/regional banks, each under a different name, each with its own charter, and each with its own 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, all 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 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.

Specialty Financial Services and Technology Businesses

In addition to its community and regional banking businesses, the Company operates a number of specialized businesses that in many cases are national in scope. These include a number of businesses in which the Company believes it ranks in the top ten institutions nationally such as SBA 7(a) loan originations, SBA 504 lending, public finance advisory and underwriting services, software and cash management services related to the electronic imaging of checks pursuant to the Check 21 Act, and the origination of farm mortgages sold to Farmer Mac.

High growth market opportunities are not always geographically defined. The Company continues to invest in several expanded or new initiatives that we believe present unusual opportunities for us, including the following:

National Real Estate Lending

This business consists of making SBA 504 and similar low loan-to-value, primarily owner-occupied, first mortgage small business commercial loans. During both 2006 and 2005, the Company originated directly and purchased from correspondents approximately $1.2 billion of these loans. During 2005 we securitized $707 million of these loans; no securitization was completed during 2006. A qualifying special-purpose entity (“QSPE”), Lockhart Funding, LLC (“Lockhart”), purchases the resultant securities after credit enhancement and funds them through the issuance of commercial paper.

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NetDeposit and Related Services

NetDeposit, Inc. (“NetDeposit”) is a subsidiary of the Parent that was created to develop and sell software and processes that facilitate electronic check clearing. With the implementation of the Check 21 Act late in 2004, this company and its products are well positioned to take advantage of the revolution in check processing now underway in America. During 2006, NetDeposit reduced earnings by $0.07 per diluted share, compared to $0.08 per share in 2005. Revenues for 2006 increased almost 90% from 2005 and we have continued to increase our investment in this business.

The Company generates revenues in several ways from this business. First, NetDeposit licenses software, sells consulting services, and resells scanners to other banks and processors. Newly announced customers since January 1, 2006 include BOK Financial Corporation, Deutsche Bank, First National Bank of Arizona, and National City Bank. These activities initially generate revenue from scanner sales, consulting, and licensing fees. Deployment-related fees related to work station site licenses and check processing follow, but have been slower to increase than expected as deployment throughout the industry has been slower than expected.

Second, NetDeposit has licensed its software to the Company’s banks, which use the capabilities of the software to provide state-of-the art cash management services to business customers and to correspondent banks. At year-end, over 4,500 Zions affiliate bank cash management customers were using NetDeposit, and we processed over $8.5 billion of imaged checks from our cash management customers in the month of December.

Third, Zions Bank uses NetDeposit software to provide check-clearing services to correspondent banks. Zions Bank has contracts and co-marketing agreements with a number of bank processors and resellers, both domestically and abroad.

NetDeposit seeks to protect its intellectual property in business methods related to the electronic processing and clearing of checks. It has applied for several patents and was recently notified by the United States Patent and Trademark Office that it has been granted two patents.

Treasury Management

With the acquisition of Amegy Bank, Zions’ cash, or treasury, management capabilities were significantly enhanced. Zions believes that it has a significant opportunity to increase its treasury management penetration of commercial customers in its geographic territory, and increased its investment in these capabilities in 2006. An increased level of investment in treasury management, both in technology and service and in sales, is expected to continue in 2007.

In addition to enhancing its general treasury management capabilities, Zions has made significant investments specifically in creating enhanced capabilities in services related to claims processing and reconciliation for medical providers. Included among these investments was the acquisition of the remaining minority interests in P5, Inc. (“P5”); Zions had for several years owned a majority interest in this start-up provider of web-based claims reconciliation services. At year-end 2006, P5 provided these services to over 800 medical practitioners, mostly pharmacy outlets. The Company is in the process of integrating P5’s services and other payment processing services into its more traditional treasury management products and services for the medical provider industry.

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Wealth Management

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. As a result, the Company established a wealth management business, Contango Capital Advisors, Inc. (“Contango”), and launched the business in the latter half of 2004. The business offers 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 $885 million of client assets under management and a strong pipeline of referrals from our affiliate banks as compared to over $170 million at December 31, 2005. At December 31, 2006, the Company had total discretionary assets under management of $2.1 billion, including assets managed by Contango, Amegy, and Western National Trust Company, a wholly owned subsidiary of Zions Bank. During 2006, Contango generated net losses of $0.07 per diluted share, unchanged from 2005. We expect that net losses will decline in 2007 and that the business will approach break-even late in 2007 or in 2008.

Employee Stock Option Appreciation Rights

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. We have developed a market-based method for the valuation of employee stock options for SFAS 123R purposes. This method uses an online auction to price a tracking instrument that measures the fair value of the option grant. On January 25, 2007, we received notice from the Office of the Chief Accountant of the Securities and Exchange Commission (“SEC”) that they concur with our view that our tracking instrument, with modifications described in the notification, is sufficiently designed to be used for SFAS 123R. Zions did not use this method to value its 2006 grant; however we intend to use the method to value our 2007 option grant. We also intend to market this method as a service to other SEC registrants.

MANAGEMENT’S OVERVIEW OF 2006 PERFORMANCE

The Company’s primary or “core” business consists of providing community and regional banking services to both individuals and businesses in ten Western and Southwestern states. We believe that this core banking business performed well during 2006. The Company experienced strong organic loan growth of over 15%, continued to experience excellent credit quality, and maintained a high and stable net interest margin in a difficult rate environment.

On December 3, 2005 we completed our acquisition of Amegy Bancorporation, Inc. The merger was accounted for under the purchase method of accounting and, accordingly, results of operations for 2005 include the results of Amegy only for the month of December. All comparisons to 2005 and prior periods reflect the impact of the acquisition. In May 2006 the conversion of Amegy’s major systems to the Zions technology and operations platform was completed.

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In September 2006 the Company announced the acquisition of The Stockmen’s Bancorp, Inc. headquartered in Kingman, Arizona. This acquisition was completed on January 17, 2007; consequently 2006 results were not impacted by the acquisition of Stockmen’s, but the acquisition will increase loans, deposits, revenue and expenses in 2007. As previously announced, the Company expects this acquisition to be about $0.03 dilutive to earnings per share in 2007, excluding merger related costs.

The Company reported record earnings for 2006 of $579.3 million or $5.36 per diluted common share. This compares with $480.1 million or $5.16 per diluted share for 2005 and $406.0 million or $4.47 per share for 2004. Return on average common equity was 12.89% and return on average assets was 1.32% in 2006, compared with 15.86% and 1.43% in 2005 and 15.27% and 1.31% in 2004.

The key drivers of the Company’s performance during 2006 were as follows:

SCHEDULE 2

KEY DRIVERS OF PERFORMANCE

2006 COMPARED TO 2005

Driver	2006		2005	Change
	(in billions)
Average net loans and leases	$	32.4	24.0	35%
Average total noninterest-bearing deposits		9.5	7.4	28%
Average total deposits		32.8	24.9	32%
	(in millions)
Net interest income	$	1,764.7	1,361.4	30%
Provision for loan losses		72.6	43.0	69%
Net interest margin		4.63%	4.58%	5bp
Nonperforming assets as a percentage of net loans and leases and other real estate owned		0.24%	0.30%	(6)bp
Efficiency ratio		56.85%	55.67%	118bp

As illustrated by the previous schedule, the Company’s earnings growth in 2006 compared to 2005 reflected the following:

• The acquisition of Amegy, which closed in December 2005, and resulted in significant increases in most balance sheet and income statement line items, and improvement in Amegys’ pre-acquisition efficiency ratio;

• Strong organic loan growth;

• Lagging organic deposit growth, resulting in a greater dependence on market rate funds;

• A stable net interest margin in a difficult interest rate environment, and pricing pressure on both loans and funding costs;

• An increased provision for loan losses mainly attributable to strong loan growth, but a continued high level of credit quality; and

• A higher ratio of expenses to revenue (“efficiency ratio”), which increased as a result of the Amegy acquisition, but declined through the year as integration efficiencies were attained.

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We believe that the performance the Company experienced in 2006 was a direct result of our focusing on five primary objectives: 1) organic loan and deposit growth, 2) maintaining credit quality at high levels, 3) managing interest rate risk, 4) completing the conversion of Amegy onto Zions’ systems, and 5) controlling expenses.

Organic Loan and Deposit Growth

Since 2002, the Company has experienced steady and strong loan growth and moderate deposit growth, augmented in 2005 and 2006 by the Amegy acquisition. We consider this performance to be a direct result of steadily improving economic conditions throughout most of our geographical footprint, and of effectively executing our operating strategies. Chart 3 depicts this growth.

The Company experienced strong loan growth in all of its markets early in 2006, however, declining rates of residential housing development and construction in the West resulted in significantly slower rates of loan growth in its CB&T, NBA, and NSB subsidiaries in the latter half of the year. In fact, total loans outstanding in CB&T and NSB actually declined in the fourth quarter compared to the third quarter of 2006. The Company expects that the slower rate of residential development and construction lending will continue to result in much slower or no net loan growth in CB&T, NBA, and NSB in at least the first half of 2007. However, commercial lending strengthened during 2006 particularly in Zions Bank and Amegy, but also in our Vectra and TCBW bank subsidiaries, and remained very strong in the latter half of the year. The result was net loan growth of $4.5 billion, or 15.1%, from year-end 2006 compared to year-end 2005, and a mix shift away from commercial real estate and towards commercial lending sectors in new loan originations.

Reflecting trends throughout the banking industry, the Company’s deposit growth in 2006 slowed significantly. Core deposits grew only $552 million from year-end 2005, a rate of 1.8% – significantly lagging the growth rate of loans. In addition, noninterest-bearing

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demand deposits only increased by $56 million from year-end 2005. Thus, the Company increased its reliance on more costly sources of funding during the year.

Maintaining Credit Quality at High Levels

The ratio of nonperforming assets to net loans and other real estate owned improved to 0.24% at year-end, compared to 0.30% at the end of 2005. Net loan charge-offs for 2006 were $46 million, compared to $25 million for 2005. The provision for loan losses during 2006 significantly increased relative to 2005, driven in significant part by strong loan growth and the Amegy acquisition. The Company believes that it is unlikely that credit quality will improve further from these year-end levels; however, it also sees little sign of significant deterioration in credit quality.

Note: Peer group is defined as bank holding companies with assets > $10 billion.

Peer data source: SNL Financial Database

Peer information for 2006 is from 3rd quarter 2006.

Managing Interest Rate Risk

Our focus in managing interest rate risk is not to 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 tend to reprice slightly more quickly than our liabilities. 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 5.

Taxable-equivalent net interest income in 2006 increased 29.4% over 2005. Excluding Amegy from 2006 and December 2005, taxable-equivalent net interest income increased 9.1%. The net interest margin increased to 4.63% for 2006, up from 4.58% for 2005. The Company was able to achieve this performance despite the challenges of a flat-to-inverted yield curve, and significant pressures on both loan pricing and funding costs that resulted in fairly steady compression of the net interest spread (the difference between the average yield on all interest-earning assets and the average cost of all interest-bearing funding sources).

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See the section “Interest Rate Risk” on page 87 for more information regarding the Company’s asset-liability management (“ALM”) philosophy and practice and our interest rate risk management.

Controlling Expenses

During 2006 the Company’s efficiency ratio increased to 56.9% compared to 55.7% for 2005. The efficiency ratio is the relationship between noninterest expense and total taxable-equivalent revenue. The efficiency ratio deteriorated following the close of the Amegy acquisition, both due to Amegy’s higher pre-merger efficiency ratio relative to Zions and due to acquisition and integration related costs. However, after peaking in the first quarter, the efficiency ratio improved as cost synergies were realized.

Note: Peer group is defined as bank holding companies with assets > $10 billion.

Peer data source: SNL Financial Database

Peer information for 2006 is from 3rd quarter 2006.

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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 met the “well capitalized” guidelines at December 31, 2006. 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 2006 the Company’s tangible common equity ratio increased to 5.98% compared to 5.28% at the end of 2005. In December 2006 the Company issued $240 million of non-cumulative perpetual preferred stock; this additional capital raised the Company’s tangible equity ratio to 6.51% at year-end. The Company announced in the fourth quarter that it would target a tangible equity ratio of 6.25 - 6.50%, replacing the previously announced tangible common equity ratio target at the same level. In conjunction with these actions, the Company’s Board of Directors authorized a $400 million common stock buyback program, and the Company repurchased $25.0 million of its common stock in December 2006.

The Company continues to believe that capital in excess of that required to support the risks of the business in which it engages should be returned to the shareholders. In addition to dividends, the Company currently expects to use the remaining $375 million stock buyback authorization during 2007.

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In addition, we believe that the Company should engage or invest in business activities that provide attractive returns on equity. Chart 9 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 has improved in recent years. The decline in 2006 is due to the additional common equity held due to additional intangible assets (primarily goodwill and core deposit intangibles) that resulted from the premium paid to acquire Amegy.

As depicted in Chart 10, tangible return on average tangible common equity further improved in 2006 as the Company continued to improve its core operating results.

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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 detailed in Schedule 2 on page 21, several factors combined to improve the Company’s performance in 2006 from 2005. The Company continued to experience strong loan growth, but deposit growth lagged. The improving economic conditions that began in 2004 continued through 2005 and 2006, and spread to include essentially all of our markets during the past year. However, as noted, growth in residential real estate development and construction slowed considerably in the second half of 2006 in Arizona, Southern California, and Southern Nevada. Credit quality remained exceptional during the year as nonperforming assets and net charge-off percentages remained at historically low levels. The Company was able to slightly improve its net interest margin year over year during a period when other financial institutions were experiencing significant margin compression due to the challenging interest rate environment.

As we enter 2007, we see several significant challenges to improving performance.

We expect that commercial real estate loans, which declined in CB&T and NSB in the fourth quarter, may continue to decline in our Southwestern markets throughout the first half of 2007. However, commercial loan growth has been accelerating, particularly in Zions Bank, Amegy and Vectra, which has kept aggregate loan growth robust.

Over the last two years, the Company has experienced historically high levels of credit quality. While we do not see any indications that loan quality will deteriorate significantly, it is unlikely we will be able to maintain credit quality at these levels for an indefinite period of time. The 2006 annual provision for loan losses was $73 million, an increase from 2005 of $30 million, and we expect that loan loss provisions may continue in 2007 at levels similar to 2006 if loan growth remains strong.

During 2006 we saw increased pressure on the pricing of both loans and deposits as the economy continued to expand and competition for good business increased. In particular, deposit rates repriced upward at an increasing rate in the latter half of 2005 and first half of 2006, the Federal Reserve continued to raise short-term interest rates, and the competition for deposits intensified.

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We expect these pressures to continue in 2007, although perhaps not as severely if the Federal Reserve does not raise interest rates further. For more information on our asset-liability management processes, see “Interest Rate and Market Risk Management” on page 86.

We anticipate that economic conditions will continue to be strong in our geographic footprint during 2007, with weakness in residential real estate as previously discussed. However, any number of unforeseen events could result in a weaker economy that in turn could negatively impact loan growth and credit quality.

Excluding the impact of the Stockmen’s acquisition, we expect to see moderate growth in both revenues and expenses during 2007, and believe that controlling operating expenses will continue to be an important factor in improving our overall performance. We will continue to see increased expense levels during 2007 for systems conversions at Stockmen’s and CB&T, but we expect these conversions to result in ongoing expense savings when completed. We are also investing in creating systems, data and processes that may enable us to qualify for the proposed Basel II capital requirements.

Compliance with regulatory requirements pose an ongoing challenge. 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 these complex regulations.

We have a number of business initiatives that, while we believe they will ultimately produce profits for our shareholders, currently generate expenses in excess of revenues. Three significant initiatives are Contango, a wealth management business started in 2004, NetDeposit, our subsidiary that provides electronic check processing systems, and the increased investments in treasury management and medical claims capabilities discussed in the Executive Summary. We will need to manage these businesses carefully to ensure that expenses and revenues develop in a planned way and that profits are not impaired to an extent that is not warranted by the opportunities these businesses provide.

Finally, competition from credit unions continues to pose a significant challenge. The aggressive expansion of some credit unions, far beyond the traditional concept of a common bond, presents a competitive threat to Zions and many other banking companies. While this is an issue in all of our markets, it is especially acute in Utah where two of the five largest financial institutions (measured by local deposits) are credit unions that are exempt from all state and federal income tax.

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

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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.

Securitization Transactions

The Company from time to time enters into securitization transactions that involve transfers of loans or other receivables to off-balance-sheet QSPEs. In most instances, we provide the servicing on these loans as a condition of the sale. In addition, as part of these transactions, the Company may retain a cash reserve account, an interest-only strip, or in some cases a subordinated tranche, all of which are considered to be retained interests in the securitized assets.

Whenever we initiate a securitization, the first determination that we must make in connection with the transaction is whether the transfer of the assets constitutes a sale under U.S. generally accepted accounting principles. If it does, the assets are removed from the Company’s consolidated balance sheet with a gain or loss recognized. Otherwise, the transfer is considered a financing, resulting in no gain or loss being recognized and the recording of a liability on the Company’s consolidated balance sheet. The financing treatment could have unfavorable financial implications including an adverse effect on Zions’ results of operations and capital ratios. However, all of the Company’s securitizations have been structured to meet the existing criteria for sale treatment.

Another determination that must be made is whether the special-purpose entity involved in the securitization is independent from the Company or whether it should be included in its consolidated financial statements. If the entity’s activities meet certain criteria for it to be considered a QSPE, no consolidation is required. Since all of the Company’s securitizations have been with entities that have met the requirements to be treated as QSPEs, they have met the existing accounting criteria for nonconsolidation.

Finally, we must make assumptions to determine the amount of gain or loss resulting from the securitization transaction as well as the subsequent carrying amount for the retained interests. In determining the gain or loss, we use assumptions that are based on the facts surrounding each securitization. Using alternatives to these assumptions could affect the amount of gain or loss recognized on the transaction and, in turn, the Company’s results of operations. In valuing the retained interests, since quoted market prices of these interests are generally not available, we must estimate their value based on the present value of the future cash flows associated with the securitizations. These value estimations require the Company to make a number of assumptions including:

• the method to use in computing the prepayments of the securitized loans;

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• the annualized prepayment speed of the securitized loans;

• the weighted average life of the loans in the securitization;

• the expected annual net credit loss rate; and

• the discount rate for the residual cash flows.

Quarterly, the Company reviews its valuation assumptions for retained beneficial interests under the rules contained in Emerging Issues Task Force Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets, (“EITF 99-20”). These rules require the Company to periodically update its assumptions used to compute estimated cash flows for its retained beneficial interests and compare the net present value of these cash flows to the carrying value. The Company complies with EITF 99-20 by quarterly evaluating and updating its assumptions including the default assumption as compared to the historical credit losses and the credit loss expectation of the portfolio, and its prepayment speed assumption as compared to the historical prepayment speeds and prepayment rate expectation. Changes in certain 2006 assumptions from 2005 for securizations were made in accordance with this process.

Schedule 3 summarizes the key economic assumptions that we used for measuring the values of the retained interests at the date of sale for securitizations during 2006, 2005, and 2004.

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SCHEDULE 3

KEY ECONOMIC ASSUMPTIONS USED TO VALUE

RETAINED INTERESTS

	Home equity loans	Small business loans
2006:
Prepayment method	na(1)	na(2)
Annualized prepayment speed	na(1)	na(2)
Weighted average life (in months)	11	na(2)
Expected annual net loss rate	0.10%	na(2)
Residual cash flows discounted at	15.0%	na(2)
2005:
Prepayment method	na(1)	CPR(3)
Annualized prepayment speed	na(1)	4 - 15 Ramp in 25 months(4)
Weighted average life (in months)	12	69
Expected annual net loss rate	0.10%	0.40%
Residual cash flows discounted at	15.0%	15.0%
2004:
Prepayment method	na(1)	CPR(3)
Annualized prepayment speed	na(1)	10, 15 Ramp-up(5)
Weighted average life (in months)	11	64
Expected annual net loss rate	0.10%	0.50%
Residual cash flows discounted at	15.0%	15.0%

(1) The weighted average life assumption includes consideration of prepayment to determine the fair value of the capitalized residual cash flows.

(2) No small business loan securitization sales occurred in 2006.

(3) “Constant Prepayment Rate.”

(4) Annualized prepayment speed begins at 4% and increases at equal increments to 15% in 25 months.

(5) Annualized prepayment speed is 10% in the first year and 15% thereafter.

Schedule 4 sets forth the sensitivity of the current fair value of the capitalized residual cash flows at December 31, 2006 to immediate 10% and 20% adverse changes to those key assumptions that reflect the current portfolio assumptions.

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SCHEDULE 4

SENSITIVITY OF RESIDUAL CASH FLOWS TO ADVERSE CHANGES

OF CURRENT PORTFOLIO KEY VALUATION ASSUMPTIONS

(In millions of dollars and annualized percentage rates)		Home equity loans			Small business loans
Carrying amount/fair value of capitalized residual cash flows		$	4.5		78.6
Weighted average life (in months)			11		32 - 62
Prepayment speed assumption			na	(1)	12.5% - 28.0%(2)
Decrease in fair value due to adverse change	10%	$	0.1		3.0
	20%	$	0.1		5.7
Expected credit losses			0.10	%	0.20% - 0.50%
Decrease in fair value due to adverse change	10%	$	0.1		1.3
	20%	$	0.1		2.5
Residual cash flows discount rate			12.0	%	13.0% - 13.8%
Decrease in fair value due to adverse change	10%	$	0.1		2.4
	20%	$	0.1		4.7

(1) The weighted average life assumption includes consideration of prepayment to determine the fair value of the capitalized residual cash flows.

(2) The prepayment speed assumption at December 31, 2006 for the small business loan securitizations transacted in 2005 and 2004 was 12.5 - 15 Ramp-up in 24 months and 13.5 - 15 Ramp-up in 10 months, respectively.

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. These factors are based on a migration analysis technique 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, current economic conditions, concentrations of credit risk, and the experience and abilities of lending personnel are also taken into consideration.

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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 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.

For consumer loans, we use a forecasting model based on internally generated portfolio delinquencies that employs “roll rates” to calculate losses. “Roll rates” are the rates at which accounts 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 it with updated data, the model establishes projected losses for a new twelve-month period each month, segmenting the portfolio into nine product groupings with similar risk profiles.

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.

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 $250 million of nonclassified loans were to be immediately classified as special mention, substandard and doubtful in the same proportion as the existing portfolio, the amount of the allowance for loan losses at December 31, 2006 would increase by approximately $16 million. In addition, since the allowance for loan losses is assigned to the Company’s business segments that have loan portfolios, any earnings impact resulting from actual results differing from our estimates would have the largest impact on those segments with the largest loan portfolios, namely Zions Bank, CB&T and Amegy. 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 loans may have on the allowance estimation process. We believe that given the procedures that 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 2007 and 2008.

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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 that 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, 2006, the Company’s total investment in nonmarketable equity securities not accounted for using the equity method was $117.6 million, of which its equity exposure to investments held by the SBICs, net of related minority interest of $41.2 million and SBA debt of $7.0 million, was $55.5 million. In addition, exposure to non-SBIC equity investments not accounted for by the equity method was $13.9 million.

The values that 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.

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 call for 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

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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 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.

If step 1 indicates a potential impairment of a reporting unit, step 2 requires us to estimate the “implied fair value” 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. If the 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.

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 2006, we performed our annual goodwill impairment evaluation for the entire organization, effective October 1, 2006. 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 that are similar in size and location to Zions’ subsidiary banks and then used valuation multiples developed from the 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 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 no potential impairment existed for any of the Company’s reporting units. In reaching this conclusion, we determined that the fair values of goodwill exceeded the recorded values of goodwill. Since this evaluation process required us to make estimates and assumptions with regard to the fair value of the Company’s reporting units, actual values may differ significantly from these estimates. Such differences could result in future impairment of goodwill

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that would, in turn, negatively impact the Company’s results of operations and the business segments where the goodwill is recorded. However, had our estimated fair values been 10% lower, there would still have been no indication of impairment for any of our reporting units.

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. In addition, the Company has a program to provide derivative financial instruments to certain customers, acting as an intermediary in the transaction. Upon issuance, all of these customer derivatives are immediately “hedged” by offsetting derivative contracts, such that the Company has no net interest rate risk exposure resulting from the transaction.

All derivative instruments are carried on the balance sheet at fair value. As of December 31, 2006, the recorded amounts of derivative assets, classified in other assets, and derivative liabilities, classified in other liabilities, were $51.7 million and $63.2 million, respectively. Since there are no market value quotes for the specific derivative instruments that the Company holds, we must estimate their fair values. Generally this estimate is 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. As a result, the estimated values of these derivatives will typically 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. However, based on the nature and limited purposes of the derivatives that the Company employs, fluctuations in interest rates have only a modest effect on its results of operations.

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 No. 133, Accounting for Derivative Instruments and Hedging Activities, 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. During 2006, no hedge ineffectiveness was required to be reported in earnings on the Company’s cash flow hedging relationships. Further, new interpretations and guidance related to SFAS 133 continue to be issued and we cannot predict the possible impact that they will have on our use of derivative instruments in the future.

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, 2006 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.

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Pension Accounting

As explained in detail in Note 20 of the Notes to Consolidated Financial Statements, we have a noncontributory defined benefit pension plan that is available to employees who have met specific eligibility requirements. Also as explained in the Note, as of January 1, 2003, no new employees are eligible to participate in the plan and future benefit accruals were eliminated for most participants.

In accounting for the plan, we must determine the obligation associated with the plan benefits and compare that with the assets that the plan owns. This requires us to incorporate numerous assumptions, including the expected rate of return on plan assets, the projected rate of increase of the salaries of the eligible employees and the discount rates to use in estimating the fair value of the liability. The expected rate of return on plan assets 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 of those underlying investments, the diversification of those investments, and the re-balancing strategy employed. The projected rates of salary increases are management’s estimate of future pay increases that the remaining eligible employees will receive until their retirement. 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, which is December 31 of each year.

The annual pension expense is sensitive to the expected rate of return on plan assets. For example, for the year 2006 the expected rate of return on plan assets was 8.50%. For each 25 basis point change in this rate, the Company’s pension expense would change by approximately $300 thousand. In applying the expected rate of return on plan assets to our pension accounting, we base our calculations on the fair value of plan assets, using an arithmetic method to calculate the expected return on the plan assets.

The annual pension expense is not significantly sensitive to the projected rate of increase of salaries of the eligible employees. This is due to the limited number of employees who continue to actively accrue benefits within the plan.

The annual pension expense is also sensitive to the discount rate employed. For example, the discount rate used in the 2006 pension expense calculation was 5.60%. If this rate were 25 basis points lower, the pension expense would increase by approximately $280 thousand. If the rate were 25 basis points higher, the pension expense would decrease by approximately $270 thousand.

In estimating the annual pension expense and funded status associated with the defined benefit plan, we must make a number of assumptions and estimates based upon our judgment and also on information that we receive from an independent actuary. These assumptions and estimates are closely monitored and are reviewed at least annually for any adjustments that may be required.

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In addition, we assumed obligations of a defined benefit plan when we acquired Amegy. That plan resulted from a previous acquisition by Amegy. The plan is also frozen and we are in the process of terminating it. The planned termination was considered in remeasuring the acquired plan projected benefit obligation at the date of the Amegy acquisition. The acquired plan projected benefit obligation exceeded the fair value of the plan assets by $2.1 million and was recorded as part of the purchase price allocation.

Share-Based Compensation

As discussed in Note 17 of the Notes to Consolidated Financial Statements, effective January 1, 2006, we adopted SFAS No. 123R, 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. SFAS 123R 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. While under prior guidance we elected not to expense share-based compensation, we have disclosed in Note 17 the pro forma effect on net income as if our share-based compensation had been expensed.

We adopted SFAS 123R using the “modified prospective” transition method. Under this transition method, compensation expense is recognized beginning January 1, 2006 based on the requirements of SFAS 123R 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. Results of operations for prior years have not been restated.

The Company has used the Black-Scholes option-pricing model to estimate the value of stock options and the pro forma expense for share-based compensation. 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.

The most significant assumptions impacted by management’s judgment are the weighted average expected life and the expected volatility. The Company performed a sensitivity analysis of the impact of increasing and decreasing expected volatility 10% as well as the impact of increasing and decreasing the weighted average expected life by one year. The Company performed this analysis on the stock options granted in 2006. The following table shows the impact of these changes on the Company’s stock option expense for the options granted in 2006:

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SCHEDULE 5

SENSITIVITY OF BLACK-SCHOLES ASSUMPTIONS ON STOCK OPTION EXPENSE

(In thousands)

Actual stock option expense for 2006 grants	$	3,037
Stock option expense increase (decrease) under the following assumption changes:
Volatility decreased 10% (18% to 8%)		(1,006)
Volatility increased 10% (18% to 28%)		1,079
Average life decreased 1 year		(429)
Average life increased 1 year		388

The adoption of SFAS 123R decreased income before income taxes by $17.5 million and net income by approximately $12.6 million for 2006, or $0.12 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 reinterpretation 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. The Company has tax reserves at December 31, 2006 of approximately $39 million for uncertain tax positions primarily for various state tax contingencies in several jurisdictions.

In July 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes. Under the guidance of FIN 48, management estimates that these reserves may decrease by approximately $9 million to $13 million, which is subject to revision when management completes an analysis of the impact of FIN 48. As required by FIN 48 upon adoption on January 1, 2007, this difference will be recorded in retained earnings as a cumulative effect adjustment. See Note 15 of the Notes to Consolidated Financial Statements for additional information on income taxes.

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RESULTS OF OPERATIONS

As previously disclosed, the Company completed its acquisition of Amegy Bancorporation, Inc. in December 2005. All comparisons of 2006 to 2005 and prior periods reflect the effects of the Amegy acquisition.

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 2006, it was 76.4% of our taxable-equivalent revenues, compared to 76.0% for 2005 and 73.3% in 2004. On a taxable-equivalent basis, net interest income for 2006 was up $406.6 million or 29.4% from 2005, which was up $200.3 million or 16.9% from 2004. The increase in taxable-equivalent net interest income for 2006 was driven by the significant increase in both earning assets and core deposits resulting from the Amegy acquisition, strong organic loan growth, and the impact of increasing short-term interest rates on Zions’ asset-sensitive balance sheet, which resulted in a 5 basis point increase in the net interest margin compared to 2005. The net interest margin for 2005 was up 31 basis points from 2004. 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 86 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 consistently 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 4.63% in 2006 compared with 4.58% in 2005 and 4.27% in 2004. The slightly increased margin for 2006 results mainly from an improved earning asset mix and from the impact of increasing short-term interest rates on Zions’ asset-sensitive balance sheet. In addition we significantly improved Amegy’s pre-acquisition earning asset mix and net interest margin by applying Zions interest rate risk management strategies. Higher yielding average loans and leases increased $8.4 billion from 2005 while lower yielding average money market investments and securities increased $128 million. For the fourth quarter of 2006, the Company’s net interest margin was 4.60%. However the Company’s funding mix actually shifted in an unfavorable direction in 2006 as core deposit growth slowed and earning asset growth was funded from more expensive sources. For example, average noninterest-bearing deposits were 29.8% of total average deposits for 2005, compared to 29.0% for 2006. Over the same period, average time deposits greater than $100,000 increased from 6.9% to 10.0% of total average deposits.

The increased margin for 2005 compared to 2004 resulted mainly from an improved asset and liability mix and from the impact of increasing short-term interest rates on Zions’ asset-sensitive balance sheet. Higher yielding average loans and leases increased $3.0 billion from 2004 while lower yielding average money market investments and securities decreased $0.5 billion. The net increase in interest-earnings assets was mainly funded by increases in lower cost average interest-bearing deposits which increased $1.6 billion and average noninterest-bearing deposits which increased $1.1 billion, while average borrowed funds decreased $0.5 billion from 2004.

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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.

Schedule 6 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 6

DISTRIBUTION OF ASSETS, LIABILITIES, AND SHAREHOLDERS’ EQUITY

AVERAGE BALANCE SHEETS, YIELDS AND RATES

	2006				2005
(Amounts in millions)	Average balance		Amount of interest(1)	Average rate	Average balance		Amount of interest(1)	Average rate
ASSETS:
Money market investments	$	479	24.7	5.16%	$	988	31.7	3.21%
Securities:
Held to maturity		645	44.1	6.83		639	44.2	6.93
Available for sale		4,992	285.5	5.72		4,021	207.7	5.16
Trading account		157	7.7	4.91		497	19.9	4.00
Total securities		5,794	337.3	5.82		5,157	271.8	5.27
Loans:
Loans held for sale		261	16.5	6.30		205	9.8	4.80
Net loans and leases(2)		32,134	2,463.9	7.67		23,804	1,618.0	6.80
Total loans and leases		32,395	2,480.4	7.66		24,009	1,627.8	6.78
Total interest-earning assets		38,668	2,842.4	7.35		30,154	1,931.3	6.40
Cash and due from banks		1,476				1,123
Allowance for loan losses		(349)				(285)
Goodwill		1,887				746
Core deposit and other intangibles		181				66
Other assets		2,379				1,799
Total assets	$	44,242			$	33,603
LIABILITIES:
Interest-bearing deposits:
Savings and NOW	$	5,129	75.3	1.47	$	4,347	36.7	0.84
Money market		10,721	330.0	3.08		9,131	183.9	2.01
Time under $100,000		2,065	77.4	3.75		1,523	41.7	2.74
Time $100,000 and over		3,272	142.6	4.36		1,713	54.7	3.19
Foreign		2,065	95.5	4.62		737	23.3	3.16
Total interest-bearing deposits		23,252	720.8	3.10		17,451	340.3	1.95
Borrowed funds:
Securities sold, not yet purchased		66	3.0	4.57		475	17.7	3.72
Federal funds purchased and security repurchase agreements		2,838	124.7	4.39		2,307	63.6	2.76
Commercial paper		220	11.4	5.20		149	5.0	3.36
FHLB advances and other borrowings:
One year or less		479	25.3	5.27		204	5.9	2.90
Over one year		148	8.6	5.80		228	11.5	5.05
Long-term debt		2,491	159.6	6.41		1,786	104.9	5.88
Total borrowed funds		6,242	332.6	5.33		5,149	208.6	4.05
Total interest-bearing liabilities		29,494	1,053.4	3.57		22,600	548.9	2.43
Noninterest-bearing deposits		9,508				7,417
Other liabilities		697				533
Total liabilities		39,699				30,550
Minority interest		34				26
Shareholders’ equity:
Preferred equity		16				–
Common equity		4,493				3,027
Total shareholders’ equity		4,509				3,027
Total liabilities and shareholders’ equity	$	44,242			$	33,603
Spread on average interest-bearing funds				3.78%				3.97%
Taxable-equivalent net interest income and net yield on interest-earning assets			1,789.0	4.63%			1,382.4	4.58%

(1) Taxable-equivalent rates used where applicable.

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

42

2004			2003				2002
Average balance	Amount of interest(1)	Average rate	Average balance		Amount of interest(1)	Average rate	Average balance		Amount of interest(1)	Average rate
$    1,463	16.4	1.12%	$	1,343	13.0	0.97%	$	1,199	18.6	1.55%
500	34.3	6.86		–	–			43	2.3	5.34
3,968	174.5	4.40		3,736	171.5	4.59		3,209	170.0	5.30
732	29.6	4.04		711	24.7	3.47		611	22.1	3.62
5,200	238.4	4.59		4,447	196.2	4.41		3,863	194.4	5.03
159	5.1	3.16		220	8.3	3.77		210	9.4	4.50
20,887	1,252.8	6.00		19,105	1,194.2	6.25		17,904	1,245.4	6.96
21,046	1,257.9	5.98		19,325	1,202.5	6.22		18,114	1,254.8	6.93
27,709	1,512.7	5.46		25,115	1,411.7	5.62		23,176	1,467.8	6.33
1,026				953				939
(272)				(282)				(267)
648				711				744
65				77				98
1,760				1,630				1,606
$  30,936			$	28,204			$	26,296
$    4,245	24.4	0.58	$	3,810	23.4	0.62	$	3,308	34.6	1.05
8,572	96.8	1.13		8,064	88.2	1.09		7,268	130.0	1.79
1,436	27.5	1.92		1,644	36.9	2.25		1,911	62.1	3.25
1,244	29.2	2.35		1,290	33.3	2.58		1,487	50.5	3.40
338	4.4	1.30		186	1.7	0.89		106	1.5	1.42
15,835	182.3	1.15		14,994	183.5	1.22		14,080	278.7	1.98
625	24.2	3.86		538	20.4	3.80		394	16.4	4.17
2,682	32.2	1.20		2,605	25.5	0.98		2,528	39.1	1.55
201	3.0	1.51		215	3.0	1.41		359	7.5	2.09
252	2.9	1.14		145	1.9	1.32		533	10.3	1.93
230	11.7	5.08		237	12.3	5.19		240	12.4	5.18
1,659	74.3	4.48		1,277	57.3	4.48		874	56.3	6.45
5,649	148.3	2.62		5,017	120.4	2.40		4,928	142.0	2.88
21,484	330.6	1.54		20,011	303.9	1.52		19,008	420.7	2.21
6,269				5,259				4,522
501				444				404
28,254				25,714				23,934
23				22				21
–				–				–
2,659				2,468				2,341
2,659				2,468				2,341
$  30,936			$	28,204			$	26,296
		3.92%				4.10%				4.12%
	1,182.1	4.27%			1,107.8	4.41%			1,047.1	4.52%

Schedule 7 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.

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SCHEDULE 7

ANALYSIS OF INTEREST CHANGES DUE TO VOLUME AND RATE

	2006 over 2005				2005 over 2004
	Changes due to			Total changes	Changes due to		Total changes
(In millions)	Volume		Rate(1)		Volume	Rate(1)
INTEREST-EARNING ASSETS:
Money market investments	$	(16.3)	9.3	(7.0)	(5.3)	20.6	15.3
Securities:
Held to maturity		0.5	(0.6)	(0.1)	9.6	0.3	9.9
Available for sale		53.7	24.1	77.8	2.5	30.7	33.2
Trading account		(13.6)	1.4	(12.2)	(9.4)	(0.3)	(9.7)
Total securities		40.6	24.9	65.5	2.7	30.7	33.4
Loans:
Loans held for sale		3.2	3.5	6.7	1.6	3.1	4.7
Net loans and leases(2)		619.1	226.8	845.9	186.8	178.4	365.2
Total loans and leases		622.3	230.3	852.6	188.4	181.5	369.9
Total interest-earning assets	$	646.6	264.5	911.1	185.8	232.8	418.6
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits:
Savings and NOW	$	7.4	31.2	38.6	0.8	11.5	12.3
Money market		35.8	110.3	146.1	6.8	80.3	87.1
Time under $100,000		17.5	18.2	35.7	1.8	12.4	14.2
Time $100,000 and over		62.7	25.2	87.9	13.1	12.4	25.5
Foreign		57.5	14.7	72.2	8.6	10.3	18.9
Total interest-bearing deposits		180.9	199.6	380.5	31.1	126.9	158.0
Borrowed funds:
Securities sold, not yet purchased		(15.2)	0.5	(14.7)	(5.6)	(0.9)	(6.5)
Federal funds purchased and security repurchase agreements		17.2	43.9	61.1	(4.5)	35.9	31.4
Commercial paper		3.0	3.4	6.4	(0.8)	2.8	2.0
FHLB advances and other borrowings:
One year or less		12.1	7.3	19.4	(0.5)	3.5	3.0
Over one year		(4.0)	1.1	(2.9)	(0.1)	(0.1)	(0.2)
Long-term debt		44.5	10.2	54.7	6.0	24.6	30.6
Total borrowed funds		57.6	66.4	124.0	(5.5)	65.8	60.3
Total interest-bearing liabilities	$	238.5	266.0	504.5	25.6	192.7	218.3
Change in taxable-equivalent net interest income	$	408.1	(1.5)	406.6	160.2	40.1	200.3

(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. The provision for unfunded lending commitments is used to maintain the allowance for unfunded lending commitments at an adequate level. In determining adequate levels of the allowances, 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 77 for more information on how we determine the appropriate level for the allowances for loan and lease losses and unfunded lending commitments.

For the year 2006, the provision for loan losses was $72.6 million, compared to $43.0 million for 2005 and $44.1 million for 2004. Net loan and lease charge-offs increased from $25 million in 2005 to $46 million in 2006. Both the increased net charge-offs and provisions reflect the Company’s increased size after the Amegy acquisition. In addition, the higher provision for 2006 reflects the increased provisioning resulting from $4.5 billion of loan growth in 2006. In the fourth quarter, we incurred a loss on an equipment lease related to an alleged accounting fraud at a water bottling company; our NBA affiliate had a $17.1 million participation in this lease. We recorded a charge-off of approximately $10.9 million during the fourth quarter related to this lease.

The lower provisions for both 2005 and 2004 reflect improvements in various credit quality factors used in determining the appropriate level of the allowance for loan losses, including decreased levels of criticized and classified loans. Including the provision for unfunded lending commitments, the total provision for credit losses was $73.8 million for 2006, $46.4 million for 2005, and $44.5 million for 2004. From period to period, the amounts of unfunded lending commitments may be subject to sizeable fluctuation due to changes in the timing and volume of loan originations and associated funding.

Noninterest Income

Noninterest income represents revenues that the Company earns for products and services that have no interest rate or yield associated with them. Noninterest income for 2006 comprised 23.6% of taxable-equivalent revenues compared to 24.0% for 2005 and 26.7% for 2004. Schedule 8 presents a comparison of the major components of noninterest income for the past three years.

The increases in total and individual categories of noninterest income for 2006 compared to 2005 were mainly due to the Amegy acquisition. Significant changes and trends in noninterest income categories not resulting from the Amegy acquisition are discussed as follows.

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SCHEDULE 8

NONINTEREST INCOME

(Amounts in millions)	2006		Percent change	2005		Percent change	2004
Service charges and fees on deposit accounts	$	166.7	29.4 %	$	128.8	(2.2)%	$	131.7
Loan sales and servicing income		54.2	(30.3)		77.8	(1.6)		79.1
Other service charges, commissions and fees		166.8	49.9		111.3	18.9		93.6
Trust and wealth management income		27.5	26.1		21.8	(22.1)		28.0
Income from securities conduit		32.2	(8.0)		35.0	(0.6)		35.2
Dividends and other investment income		39.9	33.0		30.0	(5.7)		31.8
Market making, trading and nonhedge derivative income		18.5	17.8		15.7	(10.8)		17.6
Equity securities gains (losses), net		17.8	1,469.2		(1.3)	86.7		(9.8)
Fixed income securities gains, net		6.4	700.0		0.8	(68.0)		2.5
Other		21.2	24.7		17.0	(22.0)		21.8
Total	$	551.2	26.2 %	$	436.9	1.3 %	$	431.5

Noninterest income for 2006 increased $114.3 million or 26.2% compared to 2005. The largest components of this increase, excluding the impact of the Amegy acquisition, was in net equity securities gains, which were $17.8 million in 2006 compared with net losses of $1.3 million in 2005 and net gains from fixed income securities, which increased $5.6 million. Noninterest income for 2005 increased $5.4 million or 1.3% compared to 2004. The most significant changes were in other service charges, commissions and fees which increased $17.7 million and equity securities losses which decreased $8.5 million.

Service charges and fees on deposit accounts increased significantly in 2006 and declined moderately in 2005. The increase for 2006 was mainly as a result of the acquisition of Amegy. However, deposit service charges and fees increased in each quarter of 2006, reflecting the Company’s efforts to promote treasury management services to its customers, including NetDeposit remote deposit capture services. The 2005 decrease was mainly caused by higher earnings credits on commercial deposit accounts as market interest rates rose.

Loan sales and servicing income includes revenues from securitizations of loans as well as from revenues that we earn through servicing loans that have been sold to third parties. For 2006 loan sales and servicing income decreased 30.3% compared to 2005. The decrease was due to no small business loan securitization sale transactions in 2006, lower servicing fees from lower loan balances, and $7.1 million in retained interest write downs. These write downs resulted primarily from higher than expected loan prepayments and changes in the interest rate environment as determined from our periodic evaluation of beneficial interests as required by EITF 99-20. For 2005, loan sales and servicing income decreased 1.6% compared to 2004. The decrease was mainly due to decreased gains from the sale of conforming residential loans sold servicing released and from the sale of home equity credit lines. See Note 6 of the Notes to Consolidated Financial Statements for additional information on the Company’s securitization programs.

46

Other service charges, commissions, and fees, which is comprised of fiscal agent fees, Automated Teller Machine (“ATM”) fees, insurance commissions, bankcard merchant fees, debit card interchange fees and other miscellaneous fees, increased $55.5 million, or 49.9% from 2005, which was up 18.9% from 2004. The 2006 increase was primarily due to the Amegy acquisition. The increase for 2005 included $3.7 million of fees earned by Amegy. Other significant increases for 2005 included increases in debit card interchange fees resulting from increased volumes, increased letter of credit fees and customer swap fees, and increased fees from the Company’s municipal finance business.

Trust and wealth management income for 2006 increased 26.1% compared to 2005, which was down 22.1% compared to 2004. The increase for 2006 in fees is from the Amegy acquisition and increased fees 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. Excluding the Amegy acquisition, trust and wealth management income for 2006 increased 4.1% compared to 2005.

Income from securities conduit represents fees that we receive from Lockhart, a QSPE securities conduit, in return for liquidity management, an interest rate agreement, and administrative services that Zions Bank provides to the entity in accordance with a servicing agreement. The 8.0% decrease in income for 2006 compared to 2005 resulted from lower servicing fees on the investment holdings in Lockhart’s securities portfolio. See “Liquidity Management Actions” on page 93 and Note 6 of the Notes to Consolidated Financial Statements for further information regarding securitizations and Lockhart.

Dividends and other investment income consist of revenue from the Company’s bank-owned life insurance program, dividends on securities holdings, and equity in earnings from other investments. Revenue from bank-owned life insurance programs was $26.6 million in 2006, $18.9 million in 2005, and $18.5 million in 2004. The increase for 2006 is due to Amegy. Revenues from investments include dividends on Federal Home Loan Bank (“FHLB”), Federal Reserve Bank stock, and equity earnings in unconsolidated affiliates and were $13.3 million in 2006, $11.1 million in 2005, and $13.3 million in 2004.

Market making, trading and nonhedge derivative income consists of the following:

SCHEDULE 9

MARKET MAKING, TRADING AND NONHEDGE DERIVATIVE INCOME

(Amounts in millions)	2006		Percent change		2005		Percent change		2004
Market making and trading income	$	17.9	9.8	%	$	16.3	(4.7	)%	$	17.1
Nonhedge derivative income		0.6	200.0			(0.6)	(220.0	)		0.5
Total	$	18.5			$	15.7			$	17.6

Market making and trading income increased $1.6 million or 9.8% as compared to 2005. Excluding Amegy, market making and trading income decreased $5.2 million during 2006 mainly due to a decision made to close our London trading office in the fourth quarter of 2005 and reduce the amount of the Company’s trading assets in response to margin pressures. Trading revenue for 2005

47

declined mainly due to lower margins from the odd-lot electronic bond trading business. Nonhedge derivative income was $0.6 million for 2006 compared to a loss of $0.6 million in 2005, which included losses of $0.9 million from two ineffective cash flow hedges.

Net equity securities gains in 2006 were $17.8 million as compared to net losses of $1.3 million in 2005 and $9.8 million in 2004. The increase was primarily due to $19.7 million of net gains on venture capital investments recognized in 2006. Net of related minority interest of $10.0 million, income taxes and other expenses, venture capital investments contributed $4.1 million to net income in 2006, compared to losses of $2.2 million for 2005 and $4.5 million for 2004.

Other noninterest income for 2006 was $21.2 million, compared to $17.0 million for 2005, and $21.8 million for 2004. The increase in 2006 was primarily due to the acquisition of Amegy and NetDeposit related revenue from scanner sales. Other noninterest income for 2004 included $5.3 million of litigation settlements.

Noninterest Expense

Noninterest expense for 2006 increased 31.4% over 2005, which was 9.7% higher than in 2004. The percentage changes are impacted by the acquisition of Amegy, $20.5 million of merger related expenses, and debt extinguishment costs of $7.3 million in 2006. Schedule 10 summarizes the major components of noninterest expense and provides a comparison of the components over the past three years. The increases in total and individual categories of noninterest expense for 2006 compared to 2005 were mainly due to the Amegy acquisition. Significant changes and trends in noninterest expense categories not resulting from the Amegy acquisition are discussed as follows.

SCHEDULE 10

NONINTEREST EXPENSE

(Amounts in millions)	2006		Percent change	2005		Percent change	2004
Salaries and employee benefits	$	751.7	31.0 %	$	573.9	8.0%	$	531.3
Occupancy, net		99.6	28.7		77.4	5.0		73.7
Furniture and equipment		88.7	30.1		68.2	3.6		65.8
Legal and professional services		40.1	15.2		34.8	7.4		32.4
Postage and supplies		33.1	23.0		26.9	4.7		25.7
Advertising		26.5	23.8		21.4	8.6		19.7
Debt extinguishment cost		7.3	–		–	–		–
Impairment losses on long-lived assets		1.3	(58.1)		3.1	342.9		0.7
Restructuring charges		–	(100.0)		2.4	118.2		1.1
Merger related expense		20.5	521.2		3.3	–		–
Amortization of core deposit and other intangibles		43.0	154.4		16.9	19.9		14.1
Provision for unfunded lending commitments		1.2	(64.7)		3.4	580.0		0.5
Other		217.4	20.0		181.1	14.5		158.2
Total	$	1,330.4	31.4 %	$	1,012.8	9.7%	$	923.2

48

The Company’s efficiency ratio was 56.9% for 2006 compared to 55.7% for 2005 and 57.2% for 2004.

Salary costs for 2006 increased 31.0% over 2005, which were up 8.0% from 2004. The increases for 2006 and 2005 resulted primarily from the acquisition of Amegy, and from increased incentive plan costs and additional staffing related to the build out of our wealth management business, NetDeposit, and to other business expansion. The increase for 2006 also included increased share-based compensation expense of approximately $22.6 million, mainly related to the adoption of SFAS 123R. Employee benefits for 2006 increased 26.8% from 2005 which increased 7.5% from 2004. The increase for 2006 resulted primarily from the acquisition of Amegy. The increase in employee benefits for 2005 is mainly the result of increased contributions to our profit sharing plan and increased employee matching contributions to our 401(k) plan. The profit sharing plan was enhanced as a replacement for a broad-based employee stock option plan that was discontinued in 2005. Salaries and employee benefits are shown in greater detail in Schedule 11.

SCHEDULE 11

SALARIES AND EMPLOYEE BENEFITS

(Dollar amounts in millions)	2006		Percent change	2005		Percent change	2004
Salaries and bonuses	$	641.1	31.7%	$	486.7	8.1%	$	450.2
Employee benefits:
Employee health and insurance		31.4	10.2		28.5	1.1		28.2
Retirement		37.8	35.0		28.0	23.9		22.6
Payroll taxes and other		41.4	34.9		30.7	1.3		30.3
Total benefits		110.6	26.8		87.2	7.5		81.1
Total salaries and employee benefits	$	751.7	31.0%	$	573.9	8.0%	$	531.3
Full-time equivalent employees (“FTEs”) at December 31		10,618	5.1%		10,102	25.9%		8,026

Legal and professional services increased 15.2% when compared to 2005, which were up 7.4% from 2004. The increase in 2006 was primarily the result of the acquisition of Amegy and the ongoing consulting and contract IT professional costs related to the planned CB&T systems conversion. The increases in 2005 were primarily a result of additional consulting services associated with various ongoing projects relating to systems conversions and upgrades.

Merger related expenses for 2006 and 2005 are mainly incremental costs associated with the integration and system conversions of Amegy. See Note 3 of the Notes to Consolidated Financial Statements for additional information on merger related expenses.

The $26.1 million increase in amortization of core deposit and other intangibles is mainly related to the Amegy acquisition.

49

Other noninterest expense grew 20.0% over the amount in 2005, which was up 14.5% from 2004. The increase for 2006 resulted primarily from the acquisition of Amegy. The increase in 2005 resulted from higher bankcard expenses due to increased activity, increased operational losses which were unusually low for 2004, increased scanner costs for the NetDeposit product, increased data processing costs and travel expense resulting from the Company’s major systems projects, and increased fidelity insurance premiums.

Impairment Losses on Goodwill

During the fourth quarter of 2006 and 2005, the Company completed the annual goodwill impairment analysis as required by SFAS 142 and concluded there was no impairment on the goodwill balances.

As previously disclosed, during the third quarter of 2004, the Company made the decision to reorganize the operations at Zions Bank International Ltd. (formerly Van der Moolen UK Ltd.) (“ZBI”) as a result of disappointing operating performance. The decision resulted in terminating the Euro-denominated bond trading operations and downsizing the U.S. dollar-denominated bond trading operations. This reorganization also resulted in restructuring charges in 2004 of $1.0 million, an impairment write-down of goodwill of $0.6 million and impairment of other intangibles of $0.2 million. During the fourth quarter of 2005, the Company closed the London office of ZBI and recognized restructuring charges of $2.4 million and an impairment write-down of goodwill of $0.6 million.

Foreign Operations

Zions Bank and Amegy both operate foreign branches in Grand Cayman, Grand Cayman Islands, B.W.I. The branches only accept deposits from qualified customers. While deposits in these branches are not subject to Federal Reserve Board reserve requirements or Federal Deposit Insurance Corporation 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, 2006, 2005, and 2004 totaled $2.6 billion, $2.2 billion and $0.4 billion, respectively, and averaged $2.1 billion for 2006, $0.7 billion for 2005, and $0.3 billion for 2004. All of these foreign deposits were related to domestic customers of the banks. See Schedule 30 on page 73 for foreign loans outstanding.

In addition to the Grand Cayman branch, Zions Bank, through its wholly-owned subsidiary ZBI, had an office in the United Kingdom that provided sales support for its U.S. Dollar trading operations. The office was closed during the fourth quarter of 2005.

Income Taxes

The Company’s income tax expense for 2006 was $318.0 million compared to $263.4 million for 2005 and $220.1 million for 2004. The Company’s effective income tax rates, including the effects of minority interest, were 35.3% in 2006, 35.4% in 2005, and 35.2% in 2004. See Note 15 of the Notes to Consolidated Financial Statements for more information on income taxes.

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 $90 million as of December 31, 2006, in a wholly-owned subsidiary, which makes qualifying loans and investments. In

50

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 $60 million in its subsidiary in 2004, an additional $20 million in 2005, and another $10 million during 2006. Zions expects to fund the remaining $10 million during 2007. Income tax expense was reduced by $4.5 million for 2006, $4.0 million for 2005, and $3.0 million for 2004 as 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 the years 2004 through 2013.

51

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, 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.

The Company previously had a program where interest rate swaps were recorded and managed by Zions Bank for the benefit of other banking subsidiaries and hedge income was allocated to the other banking subsidiaries. Starting in 2003, new interest rate swaps were recorded directly by the banking subsidiaries. For 2006, the amount of hedge income allocated (from) to Zions Bank on hedges remaining from the previous program was $0.6 million compared to $(0.2) million in 2005 and $(15.4) million in 2004. In the following schedules presenting operating segment information, the hedge income allocated to participating banking subsidiaries and the hedge income recognized directly by these banking subsidiaries are presented as separate line items.

Zions Bank and Subsidiaries

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 second largest full-service commercial bank in Utah and the 11th largest in Idaho, as measured by deposits booked in the state. Zions Bank also includes some or all of the Company’s Capital Markets operations, which include Zions Direct, Inc., fixed income trading, correspondent banking, public finance and trust, and investment advisory, liquidity and hedging services for Lockhart. Contango Capital Advisors, Inc., a wealth management business launched in the latter half of 2004, and Western National Trust Company, which together constitute the Wealth Management Group, are also included in Zions Bank.

52

SCHEDULE 12

ZIONS BANK AND SUBSIDIARIES

(In millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	473.9	405.8	340.5
Hedge income (expense) recorded directly at subsidiary		(2.2)	2.3	18.7
Allocated hedge income (expense)		0.6	(0.2)	(15.4)
Net interest income		472.3	407.9	343.8
Noninterest income		263.7	269.2	265.9
Total revenue		736.0	677.1	609.7
Provision for loan losses		19.9	26.0	24.7
Noninterest expense		426.1	391.1	350.4
Impairment loss on goodwill		–	0.6	0.6
Income before income taxes and minority interest		290.0	259.4	234.0
Income tax expense		98.1	85.4	77.6
Minority interest		0.1	(0.1)	(0.3)
Net income	$	191.8	174.1	156.7
YEAR-END BALANCE SHEET DATA
Total assets	$	14,823	12,651	11,880
Net loans and leases		10,702	8,510	7,876
Allowance for loan losses		108	107	99
Goodwill, core deposit and other intangibles		27	27	30
Noninterest-bearing demand deposits		2,320	1,986	1,606
Total deposits		10,450	9,213	8,192
Common equity		972	836	756

Net income for Zions Bank increased 10.2% to $191.8 million for 2006 compared to $174.1 million for 2005 and $156.7 million for 2004. Results include the Wealth Management group which had after-tax net losses of $7.9 million in 2006, $6.2 million in 2005 and $3.9 million in 2004. Results for 2006 also include allocated interest income from hedges of $0.6 million compared with allocated interest expense of $0.2 million in 2005 and $15.4 million in 2004.

The increase in earnings at Zions Bank for 2006 was driven by a 15.8%, or $64.4 million, increase in net interest income. This increase resulted from strong loan growth of $2.2 billion, strong deposit growth, and an improved net interest margin. Balance sheet growth reflected strong economic conditions in Zions Bank’s primary markets, the bank’s successful sales efforts, and our decision not to securitize and sell any small business loans in 2006. The net interest margin increased to 3.89% for 2006, compared to 3.68% for 2005 and 3.21% for 2004.

Noninterest income decreased 2.0% to $263.7 million compared to $269.2 million for 2005 and $265.9 million for 2004. Loan sales and servicing income declined $22.6 million as a result of prepayments, margin compression, no small business loan securitization in 2006, and $7.1 million in pretax impairment charges on retained interests as previously discussed. A $9.5 million increase in net gains on equity securities related to venture and other equity investments helped offset this decline, as did debit card interchange fees, which increased $8.7 million in 2006. Service charges increased $5.3 million as a result of increased analysis fees on commercial accounts. Income generated from providing services to Lockhart declined by $2.8 million this year to $32.2 million. Trading income declined by $5.5 million due to the restructuring of trading operations previously discussed.

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Noninterest expense for 2006 increased $35.0 million or 8.9% from 2005. Increases for 2006 included a $15.3 million or 8.7% increase in salaries and benefits, of which $4.6 million was related to the expensing of stock options and restricted stock grants. Debt extinguishment costs related to the early retirement of trust-preferred debt accounted for $7.3 million of the increase. Bankcard expenses increased $4.8 million primarily because of volume increases in debit and credit card transactions.

Year-end deposits for 2006 increased 13.4% from 2005 or $1.2 billion compared to growth of $1.0 billion or 12.5% over 2004. Both the branch network and Internet Banking deposit products have contributed to this growth. In 2006, the mix of deposits improved with noninterest-bearing-demand deposits increasing 16.8%.

SCHEDULE 13

ZIONS BANK AND SUBSIDIARIES

	2006	2005	2004
PERFORMANCE RATIOS
Return on average assets	1.39%	1.40%	1.29%
Return on average common equity	21.47%	22.22%	21.24%
Efficiency ratio	57.15%	56.95%	56.46%
Net interest margin	3.89%	3.68%	3.21%
OTHER INFORMATION
Full-time equivalent employees	2,687	2,517	2,563
Domestic offices:
Traditional branches	107	104	102
Banking centers in grocery stores	29	30	31
Foreign office	1	1	2
Total offices	137	135	135
ATMs	165	178	183

Nonperforming assets for Zions Bank were $17.1 million at December 31, 2006, down from $22.1 million at December 31, 2005. Accruing loans past due 90 days or more increased to $8.5 million compared to $4.4 million at year-end 2005. Net loan and lease charge-offs for 2006 were $18.9 million compared with $17.5 million for 2005. For 2006, Zions Bank’s loan loss provision was $19.9 million compared with $26.0 million for 2005 and $24.7 million for 2004. The decreased provision for 2006 was mainly driven by improved credit quality.

During 2004, Zions Investment Securities, Inc. introduced its new “Zions Direct” online trading platform and in 2005 the name of the company was changed to Zions Direct, Inc. Through Zions Direct, retail customers can execute online stock and bond trades for $10.95 per trade. Zions Direct customers also have access to more than 9,000 mutual funds and the ability to search one of the largest inventories of bonds through “Bonds for Less.” Zions Direct provides convenient access, free education and real-time information for executing trades, monitoring portfolios and conducting research.

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During 2006, Zions Bank ranked as Utah’s top SBA 7(a) lender for the thirteenth consecutive year and ranked first in Idaho’s Boise District for the fifth consecutive year. Zions Bank also expanded its National Real Estate Group, which makes real estate-secured loans at low loan-to-value ratios to small businesses across the country. The Group funded nearly $1.2 billion in new loans in both 2006 and 2005. Also, in 2006 Zions Bank expanded its treasury management product offering and has seen positive results from this expansion.

California Bank & Trust

CB&T is a full service commercial bank headquartered in San Diego and is the fourteenth largest financial institution in California measured by deposits booked in the state. It operates 91 traditional branch offices and 7 loan production offices throughout the state, and 7 loan production offices in other states. 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.

SCHEDULE 14

CALIFORNIA BANK & TRUST

(In millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	487.9	451.0	396.4
Hedge income (expense) recorded directly at subsidiary		(18.5)	0.4	13.8
Net interest income		469.4	451.4	410.2
Noninterest income		80.7	75.0	77.5
Total revenue		550.1	526.4	487.7
Provision for loan losses		15.0	9.9	10.7
Noninterest expense		244.6	243.9	234.1
Income before income taxes		290.5	272.6	242.9
Income tax expense		117.9	109.7	97.1
Net income	$	172.6	162.9	145.8
YEAR-END BALANCE SHEET DATA
Total assets	$	10,416	10,896	10,186
Net loans and leases		8,092	7,671	7,132
Allowance for loan losses		95	91	86
Goodwill, core deposit and other intangibles		400	408	419
Noninterest-bearing demand deposits		2,824	2,952	2,652
Total deposits		8,410	8,896	8,329
Common equity		1,123	1,072	1,031

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Net income increased 6.0% to $172.6 million in 2006 compared with $162.9 million for 2005, and $145.8 million for 2004. Loan growth, interest rate risk management, credit management, customer profitability management and expense control were the primary contributors to the positive results of operations for 2006 while the loss of deposits and higher cost of funding negatively impacted earnings.

Net interest income for 2006 increased $18.0 million or 4.0% to $469.4 million compared to $451.4 million for 2005 and $410.2 million for 2004. CB&T’s net interest margin was 4.81%, 4.91% and 4.78% for 2006, 2005 and 2004, respectively. The bank strives to maintain a slightly asset-sensitive position with regard to interest rate risk management, meaning that when market interest rates rise, the net interest margin increases. Net interest income in 2006 increased although the margin narrowed due to the flattening yield curve and the competitive pressures of increases in interest rates on deposits and increased reliance on higher cost nondeposit funding.

The efficiency ratio has improved in each of the past three years: 44.4% for 2006, 46.3% for 2005, and 47.9% for 2004. CB&T continues to focus on managing operating efficiencies and costs in relation to revenue. Total revenue was $550.1 million, an increase of 4.5% over $526.4 million in 2005. Noninterest expense grew to $244.6 million, an increase of 0.3% over $243.9 million in 2005. This modest expense growth was primarily due to strong controls over staffing levels and other variable expenses. Full-time equivalent employees declined to 1,659 in December, 2006 from 1,673 in December, 2005.

SCHEDULE 15

CALIFORNIA BANK & TRUST

	2006	2005	2004
PERFORMANCE RATIOS
Return on average assets	1.59%	1.59%	1.51%
Return on average common equity	15.40%	15.53%	14.52%
Efficiency ratio	44.42%	46.29%	47.93%
Net interest margin	4.81%	4.91%	4.78%
OTHER INFORMATION
Full-time equivalent employees	1,659	1,673	1,722
Domestic offices:
Traditional branches	91	91	91
ATMs	103	105	107

Net loans and leases grew $421 million or 5.5% in 2006 compared to 2005. Commercial, small business, real estate construction, and commercial real estate loans grew modestly in 2006 compared to 2005, while consumer loans declined and residential real estate loans remained flat. CB&T does not expect overall loan growth in 2007 to be much different than 2006 given the tenuous business climate particularly in its primary Southern California commercial and residential real estate construction and development markets.

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Total deposits declined $486 million or 5.5% in 2006 compared to 2005. The ratio of noninterest-bearing deposits to total deposits was 33.6% and 33.2% for 2006 and 2005, respectively. Reflecting general banking conditions in California, CB&T was challenged in its deposit growth in 2006 and expects to continue to be challenged in 2007.

Nonperforming assets were $27.1 million at December 31, 2006 compared to $20.0 million one year ago. Nonperforming assets to net loans and other real estate owned at December 31, 2006 was 0.34% compared to 0.26% at December 31, 2005. Net loan and lease charge-offs were $10.9 million for 2006 compared with $4.9 million for 2005. CB&T’s loan loss provision was $15.0 million for 2006 compared to $9.9 million for 2005. The ratio of the allowance for loan losses to nonperforming loans was 360.3% at year-end 2006 compared to 512.1% at year-end 2005. The ratio of the allowance for loan losses to net loans and leases was 1.17% and 1.18% at December 31, 2006 and 2005, respectively.

Amegy Corporation

Amegy is headquartered in Houston, Texas and operates Amegy Bank, the tenth largest full-service commercial bank in Texas measured by deposits in the state. Amegy operates 64 full-service traditional branches and 8 banking centers in grocery stores in the Houston metropolitan area, and five traditional branches and one loan production office in the Dallas metropolitan area. During the first quarter of 2007, Amegy continued its expansion into the attractive markets in Texas by opening its first location in San Antonio, a loan production office to serve the Central Texas market. Amegy also operates a broker-dealer (Amegy Investments, Inc), a trust and private bank group, and a mortgage bank (Amegy Mortgage Company).

The Texas economy is the eleventh largest in the world with two-thirds of all state economic activity occurring in Amegy’s primary markets in Houston and Dallas. Houston has a diversified economy driven by energy, healthcare, and international business, and in 2006 it added 75,500 jobs for a total of 2.5 million jobs. Dallas also has a diversified economy driven by the telecommunications, distribution and transportation industries. The Dallas-Fort Worth metroplex added 80,400 jobs in 2006 for a total of 2.9 million jobs. The San Antonio economy added approximately 27,000 jobs in 2006 based on strong growth in healthcare, tourism, and trade with a growing manufacturing sector. In 2007 Amegy plans to continue its expansion in its primary markets and plans to open 5 traditional branches in the Houston market, 2 in the Dallas/Ft. Worth metroplex, and expand its branch presence in San Antonio.

In 2006, Amegy completed its first full year as part of the Company with record levels of performance in many key areas. Net income for the year was $87.0 million. The earnings performance for the year was driven by record levels of loan growth and strong asset quality, record level of fee income in three of the fee income groups, and improved levels of net interest margin and operating expenses.

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SCHEDULE 16

AMEGY CORPORATION

(In millions)	2006			2005 (1)
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	306.0		25.5
Hedge expense recorded directly at subsidiary		(1.3	)	–
Net interest income		304.7		25.5
Noninterest income		114.9		9.0
Total revenue		419.6		34.5
Provision for loan losses		7.8		–
Noninterest expense		283.5		23.7
Income before income taxes and minority interest		128.3		10.8
Income tax expense		39.5		3.3
Minority interest		1.8		–
Net income	$	87.0		7.5
YEAR-END BALANCE SHEET DATA
Total assets	$	10,366		9,350
Net loans and leases		6,352		5,389
Allowance for loan losses		55		49
Goodwill, core deposit and other intangibles		1,370		1,404
Noninterest-bearing demand deposits		2,245		2,145
Total deposits		7,329		6,905
Common equity		1,805		1,768

(1) Amounts for 2005 include Amegy at December 31, 2005 and for the month of December 2005. Amegy was acquired on December 3, 2005.

Net income was driven by net interest income. The net interest margin for the year was 4.36%, resulting from strong loan growth, improved liability pricing, and an improved earning asset mix. Amegy maintained its strong sales culture, and 2006 was a record year in terms of new loan originations with period end loan growth of $963 million, or a 17.9% increase. The increase in the loan portfolio was primarily focused in the commercial and industrial sector with continued growth in the real estate lending groups; this growth reflected the vibrant Texas economy, and a stable and talented corps of relationship officers.

Noninterest income was $114.9 million for the year. Record fee income was produced by each of the Capital Markets, Letter of Credit, and Retail Services groups.

During 2006, Amegy converted to the Zions operating systems platform. Noninterest expenses were impacted by costs related to merger, severance, and conversion activities. Total operating expenses for 2006 were $283.5 million. Merger related expenses incurred by Amegy during the year were $11.7 million. In addition to the merger related expenses incurred, amortization of core deposit and other intangibles totaled $28.4 million in 2006. Reflecting the impact of these merger related items, the efficiency ratio was 66.8% for 2006.

Deposits grew by 6.1% or $424 million to $7.3 billion, including $100 million of growth in noninterest-bearing demand deposits.

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SCHEDULE 17

AMEGY CORPORATION

	2006	2005 (1)
PERFORMANCE RATIOS
Return on average assets	0.93%	0.97%
Return on average common equity	4.87%	4.97%
Efficiency ratio	66.79%	68.03%
Net interest margin	4.36%	4.44%
OTHER INFORMATION
Full-time equivalent employees	1,599	1,983
Domestic offices:
Traditional branches	69	67
Banking centers in grocery stores	8	15
Foreign office	1	1
Total offices	78	83
ATMs	129	130

(1) Amounts for 2005 include Amegy at December 31, 2005 and for the month of December 2005. Amegy was acquired on December 3, 2005.

Fiscal year 2006 was also one of Amegy’s best years in terms of asset quality. Net loan and lease charge-offs for the year were $1.9 million or 3 basis points of average outstanding loans. Nonaccrual loans and other real estate owned totaled $15.7 million at year-end, or 0.25% of net loans and other real estate owned.

National Bank of Arizona

NBA, the Company’s financial institution responsible for operations in Arizona, is the fourth largest full-service commercial bank in Arizona measured by deposits booked in the state. NBA’s branch network is presently located in 36 communities spanning the entire state. Arizona’s population growth continues to be one the strongest in the entire country and the state is currently ranked the 16^th largest in the nation by population. Population in the state exceeds 6.2 million residents; the Phoenix and Tucson metropolitan areas together comprise over 80% of the state’s population – over 5 million people. The Arizona job market remains robust and among the leaders in the nation with annual growth nearing the 5% mark in 2006, which followed a year in which the growth exceeded this level.

Housing has fueled a large portion of the Arizona economy for a number of years. The housing market did experience a 23% decline in 2006 as related to residential building permits, yet this followed a number of years with double digit increases. Despite the slowdown in the residential housing market, residential building permits were 66,062 for 2006, compared to 85,835 in 2005, and 87,834 in 2004. The commercial real estate activity was not affected by the softening of the residential activity, as vacancy rates declined and per square foot rental rates increased in the metropolitan marketplaces. NBA is a recognized leader in real estate lending in Arizona.

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The continued strength of the Arizona economy, coupled with the consistent growth in the balance sheet of NBA, produced another record breaking year in terms of financial performance and growth for the organization. With the exception of housing starts, home prices, and the rate of existing home sales, most drivers of the Arizona economy are expected to remain strong for 2007. Thus the Arizona economy is expected to grow in 2007, but more moderately than in the prior two years.

SCHEDULE 18

NATIONAL BANK OF ARIZONA

(In millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	218.4	186.2	139.0
Hedge income (expense) recorded directly at subsidiary		(3.3)	1.3	0.6
Allocated hedge income (expense)		(0.2)	0.1	4.0
Net interest income		214.9	187.6	143.6
Noninterest income		25.4	21.5	21.6
Total revenue		240.3	209.1	165.2
Provision for loan losses		16.3	5.2	4.0
Noninterest expense		103.0	97.8	86.1
Income before income taxes		121.0	106.1	75.1
Income tax expense		47.8	42.1	29.7
Net income	$	73.2	64.0	45.4
YEAR-END BALANCE SHEET DATA
Total assets	$	4,599	4,209	3,592
Net loans and leases		4,066	3,698	3,129
Allowance for loan losses		43	38	33
Goodwill, core deposit and other intangibles		66	68	70
Noninterest-bearing demand deposits		1,160	1,191	930
Total deposits		3,695	3,599	3,046
Common equity		346	299	264

NBA’s net income in 2006 rose by 14.4% to $73.2 million, following a 41.0% growth in earnings in 2005. Net interest income increased by 14.6% compared to 2005. This increase in the net interest income is directly attributable to the growth in earning assets, coupled with consistent strength in the net interest margin. The net interest margin declined only slightly to 5.20% in 2006 compared to 5.23% in 2005. The compression primarily reflects the increased reliance on noncore deposit funding to support continued loan growth. Funding costs for core deposits grew at a slightly slower pace than the increase in yields on earning assets.

Noninterest income increased 18.1% in 2006 compared to 2005, which in turn was essentially flat compared to 2004. The noninterest income increases were primarily impacted by increases in business and personal credit and debit card activity, favorable changes in service charge rates, and gains in venture fund investments. Despite the slowdown experienced in the residential real estate market, fees charged for residential development and construction lending remained flat compared to 2005.

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Noninterest expense increased at a moderate pace of 5.3% over 2005 to $103.0 million, yielding positive operating leverage for 2006. Commensurate with the expanding opportunities and revenue growth in the retail and commercial banking areas, NBA expanded its work force to take advantage of these opportunities. Increased compensation costs related to these additional employees comprised the largest component of the noninterest expense increases. Overall NBA’s efficiency ratio improved nearly 4% in 2006 to 42.8% compared to 46.7% for 2005.

SCHEDULE 19

NATIONAL BANK OF ARIZONA

	2006	2005	2004
PERFORMANCE RATIOS
Return on average assets	1.66%	1.65%	1.40%
Return on average common equity	22.49%	22.62%	18.34%
Efficiency ratio	42.81%	46.67%	51.94%
Net interest margin	5.20%	5.23%	4.83%
OTHER INFORMATION
Full-time equivalent employees	911	871	843
Domestic offices:
Traditional branches	53	53	54
ATMs	55	53	53

Net loans grew by $368 million for the year, an increase of 10.0%, following an 18.2% growth rate in 2005. Combined, the two years’ growth totals $937 million. Loan growth remained strong in all sectors of NBA’s loan portfolio; the strongest growth was in the commercial real estate area, reflecting the Arizona economy’s strength. Deposit growth, totaling $96 million, slowed appreciably when compared to 2005. Competitive pressures and the entry of new financial institutions into the market during the year placed pressure on attracting and retaining deposits.

Nonperforming assets increased to $12.2 million at December 31, 2006, compared to $9.7 million at year-end 2005. Nonaccrual loans at December 31, 2006 equaled $6.0 million, down slightly when compared to balances at the end of 2005. Net charge-offs were $11.3 million for 2006, compared with $0.4 million for 2005. The provision for loan losses significantly increased to $16.3 million compared to $5.2 million in the prior year. This is a direct result of a single lease charge-off totaling approximately $10.9 million on a $17.1 million participation in an equipment lease, as previously disclosed on page 45 in the discussion of “Provisions for Credit Losses”. The remaining $6.2 million value of the impaired asset is included in NBA’s nonperforming assets at the end of the year.

Nevada State Bank

NSB, headquartered in Las Vegas, Nevada, is the fourth largest full-service commercial bank in the state measured by deposits booked in the state. Travel and tourism, construction and mining are Nevada’s three largest industries. All sectors of the Silver State economy continue to enjoy sound economic conditions, although indicators point to Nevada having a more modest expansion in the

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near future due to some slowdown in the residential housing sector. Nevada should continue to rank among the better performing state economies, with job growth that is well above the national level. The economic outlook for the state remains positive for 2007.

SCHEDULE 20

NEVADA STATE BANK

(In millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	201.4	170.4	140.2
Hedge income (expense) recorded directly at subsidiary		(3.9)	0.9	1.7
Allocated hedge income		–	–	1.5
Net interest income		197.5	171.3	143.4
Noninterest income		31.2	31.0	31.6
Total revenue		228.7	202.3	175.0
Provision for loan losses		8.7	(0.4)	3.4
Noninterest expense		110.8	106.2	96.4
Income before income taxes		109.2	96.5	75.2
Income tax expense		38.1	33.4	25.8
Net income	$	71.1	63.1	49.4
YEAR-END BALANCE SHEET DATA
Total assets	$	3,916	3,681	3,339
Net loans and leases		3,214	2,846	2,549
Allowance for loan losses		35	28	29
Goodwill, core deposit and other intangibles		21	22	22
Noninterest-bearing demand deposits		1,002	1,122	1,032
Total deposits		3,401	3,171	2,951
Common equity		273	244	220

NSB’s net income for 2006 increased 12.7% to $71.1 million compared to $63.1 million for 2005 and $49.4 million for 2004. Net interest income grew to $197.5 million, or 15.3% from 2005, which was up 19.5% from 2004. The increase for both years reflects the growth in the loan portfolio, along with improved net interest margins for the last two years.

Noninterest income for 2006 was $31.2 million, which was essentially unchanged compared to both 2005 and 2004.

Noninterest expense increased by 4.3% compared to 2005, which was up 10.2% from 2004. Salaries and benefits were the leading component of the increase in 2006, driven by the opening of new offices and expansion of lending departments. Salaries were also the primary cause of the increase in 2005. NSB’s efficiency ratio was 48.4% for 2006, 52.4% for 2005 and 54.9% for 2004. The bank continues to focus on managing operating costs to improve its efficiency.

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SCHEDULE 21

NEVADA STATE BANK

	2006	2005	2004
PERFORMANCE RATIOS
Return on average assets	1.82%	1.78%	1.55%
Return on average common equity	27.68%	27.35%	23.61%
Efficiency ratio	48.37%	52.37%	54.86%
Net interest margin	5.46%	5.26%	4.94%
OTHER INFORMATION
Full-time equivalent employees	875	811	796
Domestic offices:
Traditional branches	37	34	33
Banking centers in grocery stores	35	35	34
Total offices	72	69	67
ATMs	79	78	77

Even though residential development and construction have slowed in Southern Nevada, the construction industry is still benefiting from commercial building demand. Net loans grew by $368 million or 12.9% in 2006 compared to 2005, which was up 11.7% from 2004. Loan growth was primarily in the construction lending area.

Total deposits grew by $230 million or 7.3% in 2006 compared to 2005. Deposit growth continues to be a challenge as NSB competes with national retail banks. The ratio of interest-bearing deposits to total deposits continues to increase – 70.5% at December 31, 2006 compared with 64.6% at December 31, 2005. NSB has expanded its business development groups and their core business relationship focus in order to try to increase noninterest-bearing deposits in 2007.

Credit quality at NSB remained at a very high level during 2006. Net loan and lease charge-offs were $1.0 million for 2006 compared with $0.5 million for 2005. Nonperforming assets were $0.6 million at December 31, or 0.02% of net loans and leases and other real estate owned. The provision for loan losses in 2006 was $8.7 million for 2006 compared to $(0.4) million for 2005; the increase was largely due to loan growth, as credit quality indicators remain strong.

Vectra Bank Colorado

Vectra is headquartered in Denver, Colorado and is the eleventh largest full-service commercial bank in Colorado as measured by deposits booked in the state. Vectra operates 38 branches in Colorado and one branch office in Farmington, New Mexico. Colorado experienced a steady economic climate during 2006 and 2005. Colorado’s job growth of 2.1% in both years exceeded the national rate of 1.4%, but lags that of neighboring Rocky Mountain States including Arizona, Idaho, Nevada and Utah. Colorado’s economy continues to diversify with employment gains made in a broad range of industries covering both the service and goods producing sectors.

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In 2005 and 2004, Vectra repositioned its delivery system to better serve corporate and business customers. As part of this restructuring, in 2004 Vectra sold two regional branch networks in agricultural areas, which resulted in a reduction in loan balances of approximately $130 million and deposit balances of approximately $165 million. Vectra recorded a pretax gain of $0.7 million on these transactions in 2004. During 2006, Vectra continued to realize benefits from this repositioning strategy as it consolidated locations to improve bank efficiency.

SCHEDULE 22

VECTRA BANK COLORADO

(In millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	100.5	88.1	79.0
Hedge income (expense) recorded directly at subsidiary		(6.0)	0.9	5.8
Allocated hedge income (expense)		(0.3)	0.1	7.3
Net interest income		94.2	89.1	92.1
Noninterest income		26.8	26.6	29.6
Total revenue		121.0	115.7	121.7
Provision for loan losses		4.2	1.6	(0.7)
Noninterest expense		85.0	86.8	92.6
Income before income taxes		31.8	27.3	29.8
Income tax expense		11.7	9.7	10.6
Net income	$	20.1	17.6	19.2
YEAR-END BALANCE SHEET DATA
Total assets	$	2,385	2,324	2,319
Net loans and leases		1,725	1,539	1,465
Allowance for loan losses		24	21	20
Goodwill, core deposit and other intangibles		154	156	158
Noninterest-bearing demand deposits		510	541	486
Total deposits		1,712	1,636	1,577
Common equity		314	299	322

Net income increased 14.2% to $20.1 million in 2006, up from $17.6 million in 2005 and $19.2 million in 2004. Net interest income increased 5.7% to $94.2 million, up from $89.1 million in 2005 and $92.1 million in 2004. The increases in net interest income and net interest margin in 2006 were primarily due to an improved earning asset mix. Vectra experienced growth in average loan balances that had higher yields than money market investments and securities, which declined in 2006.

Noninterest expense was down $1.8 million or 2.1% to $85.0 million from $86.8 million in 2005 and $92.6 million in 2004. Vectra’s efficiency ratio of 70.0% improved compared to an efficiency ratio of 74.7% in 2005 and 75.8% in 2004. The bank continues to focus on revenue generation and expense management as a means of improving operational efficiency.

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SCHEDULE 23

VECTRA BANK COLORADO

	2006	2005	2004
PERFORMANCE RATIOS
Return on average assets	0.87%	0.76%	0.80%
Return on average common equity	6.63%	5.68%	5.45%
Efficiency ratio	69.99%	74.72%	75.80%
Net interest margin	4.73%	4.57%	4.51%
OTHER INFORMATION
Full-time equivalent employees	575	621	662
Domestic offices:
Traditional branches	37	40	38
Banking centers in grocery stores	2	2	2
Total offices	39	42	40
ATMs	47	56	55

Net loans increased by 12.1% to $1,725 million from $1,539 million in 2005 and $1,465 million in 2004. Deposits increased to $1,712 million from $1,636 million in 2005 and $1,577 million in 2004. The bank experienced growth in its core business groups including commercial and real estate lending units.

Credit quality has continued to remain relatively strong at Vectra. Nonperforming assets declined to $9.3 million in 2006 from $10.9 million in 2005 and $13.4 million in 2004. Net loan and lease charge-offs in 2006 were $1.7 million, up from $0.9 million in 2005 and down from $4.5 million in 2004. Despite a slight increase in net loan and lease charge-offs in 2006, net charge-offs as a percentage of average loans was only 0.10%. The provision for loan losses in 2006 was $4.2 million compared to $1.6 million in 2005 reflecting the loan growth in 2006.

The Commerce Bank of Washington

TCBW consists of a single office operating in the Seattle, Washington area. 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 area by using couriers, bank by mail, remote deposit image capture and other technology in lieu of a branch network. TCBW had strong earnings growth in 2006 due primarily to the increase in the net interest margin from 2005 to 2006.

Credit quality improved and net charge-offs were $212 thousand in 2006, down from $942 thousand in 2005, reflecting the improved Western Washington economy.

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SCHEDULE 24

THE COMMERCE BANK OF WASHINGTON

(In millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest income excluding hedge income	$	35.5	29.7	23.2
Hedge income (expense) recorded directly at subsidiary		(1.8)	(0.1)	1.6
Allocated hedge income (expense)		(0.1)	–	2.6
Net interest income		33.6	29.6	27.4
Noninterest income		2.0	1.6	2.2
Total revenue		35.6	31.2	29.6
Provision for loan losses		0.5	1.0	2.0
Noninterest expense		13.9	12.6	11.4
Income before income taxes		21.2	17.6	16.2
Income tax expense		7.0	5.5	4.9
Net income	$	14.2	12.1	11.3
YEAR-END BALANCE SHEET DATA
Total assets	$	808	789	726
Net loans and leases		428	402	379
Allowance for loan losses		5	4	4
Goodwill, core deposit and other intangibles		–	1	1
Noninterest-bearing demand deposits		120	130	125
Total deposits		513	442	417
Common equity		56	50	50

Net income for TCBW was $14.2 million for 2006, an increase over the $12.1 million earned in 2005 and $11.3 million in 2004. The 17.4% earnings increase for 2006 resulted from continued growth in loans and deposits, a significant increase in net interest margin, and an improvement in credit quality. Operational efficiencies also improved resulting in an efficiency ratio of 38.4%. Net interest income for 2006 increased 13.5% over 2005 while the net interest margin increased to 4.53% compared to 4.16% for 2005.

SCHEDULE 25

THE COMMERCE BANK OF WASHINGTON

	2006	2005	2004
PERFORMANCE RATIOS
Return on average assets	1.78%	1.57%	1.61%
Return on average common equity	27.11%	24.26%	22.89%
Efficiency ratio	38.38%	39.25%	37.31%
Net interest margin	4.53%	4.16%	4.18%
OTHER INFORMATION
Full-time equivalent employees	56	61	57
Domestic offices:
Traditional branches	1	1	1
ATMs	–	–	–

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TCBW continued to grow in 2006 as total assets increased to $808 million, up from $789 million at December 31, 2005. Net loans increased to $428 million, up from $402 million at year-end 2005 and total deposits increased to $513 million from $442 million at the end of 2005. TCBW anticipates another year of steady balance sheet growth in 2007 with a stable net interest margin.

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.

For 2006 and 2005 the segment also includes TCBO, which was opened during the fourth quarter of 2005 and did not have a significant impact on the Company’s balance sheet and income statement for either year. TCBO consists of a single office operating in the Portland, Oregon area. Its business strategies focus on serving the financial needs of businesses, professional service firms, executives and professionals. TCBO has performed well in its first year of operation. At December 31, 2006 TCBO had net loans of $12.0 million and deposits of $8.7 million. Also, the Other segment includes P5, Inc., a company that provides medical claims imaging, lockbox and web-based reconciliation and tracking services. The remaining minority interest of P5 was acquired in the fourth quarter of 2006 which is the main reason for the increased goodwill and other intangibles in the Other segment.

The net loss applicable to common shareholders for the Other segment was $50.7 million in 2006 compared to a net loss of $21.2 million in 2005 and $21.8 million for 2004. Net interest loss for the other segment increased $20.9 million from 2005 mainly due to a $23.9 million increase at the Parent reflecting increased borrowings related to the Amegy acquisition and other Parent cash flow requirements. Noninterest expense for the Other segment increased $12.8 million from 2005. The increase includes a $7.2 million increase in merger related expenses related to the Amegy systems conversions and $2.6 million of increased expense for TCBO. See page 99 of the “Capital Management Section” for an explanation of the preferred stock dividend.

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SCHEDULE 26

OTHER

(Amounts in millions)	2006		2005	2004
CONDENSED INCOME STATEMENT
Net interest expense excluding hedge income	$	(18.9)	(2.4)	(1.8)
Hedge income (expense) recorded directly at subsidiary		(3.0)	1.4	2.1
Net interest income (expense)		(21.9)	(1.0)	0.3
Noninterest income		6.5	3.0	3.1
Total revenue		(15.4)	2.0	3.4
Provision for loan losses		0.2	(0.3)	–
Noninterest expense		63.5	50.7	52.2
Loss before income taxes and minority interest		(79.1)	(48.4)	(48.8)
Income tax benefit		(42.1)	(25.7)	(25.6)
Minority interest		9.9	(1.5)	(1.4)
Net loss		(46.9)	(21.2)	(21.8)
Preferred stock dividend		3.8	–	–
Net loss applicable to common shareholders	$	(50.7)	(21.2)	(21.8)
YEAR-END BALANCE SHEET DATA
Total assets	$	(343)	(1,120)	(572)
Net loans and leases		89	72	97
Allowance for loan losses		–	–	–
Goodwill, core deposit and other intangibles		25	1	(2)
Noninterest-bearing demand deposits		(171)	(113)	(9)
Total deposits		(528)	(1,220)	(1,220)
Preferred equity		240	–	–
Common equity		(142)	(331)	147
OTHER INFORMATION
Full-time equivalent employees		2,256	1,565	1,383
Domestic offices:
Traditional branches		1	1	–

The Company has invested in start-up and early-stage ventures through a variety of entities. Through certain subsidiary banks, the Company has principally made nonmarketable investments in a number of companies using four Small Business Investment Companies (“SBICs”). No new SBICs have been started since 2001. The Company recognized gains on these venture capital SBIC investments, net of expenses, income taxes and minority interest, of $4.1 million in 2006, compared to losses of $2.2 million and $4.5 million in 2005 and 2004, respectively. These amounts are included in results reported by the respective subsidiary banks and the Other segment.

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The Company also selectively makes investments in financial services and financial technology ventures, either through acquisition or through internal funding initiatives. 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. The Company subscribed to $5.0 million of an equity funding round of approximately $20 million that closed in 2005. IdenTrust continues to post operating losses and the Company recorded pretax charges of $2.2 million, $1.8 million and $4.1 million in 2006, 2005, and 2004, respectively, to reduce its recorded investment in the company. The Other segment includes IdenTrust related losses of $2.1 million, $1.2 million and $1.0 million and Zions Bank included pretax losses of $0.1 million, $0.6 million, and $3.1 million for 2006, 2005 and 2004, respectively.

The Company continues to selectively invest in new, innovative products and ventures. Most notably the Company has funded the development of NetDeposit, Inc., a family of innovative check imaging and clearing products and services. See page 19 of the “Executive Summary” for a description of NetDeposit and related services. For 2006 net after tax losses of NetDeposit included in the Other segment were $7.5 million compared to losses of $7.4 million for 2005 and $5.7 million for 2004.

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BALANCE SHEET ANALYSIS

As previously discussed, the Company completed its acquisition of Amegy Bancorporation, Inc. in December 2005. The Company’s consolidated balance sheets at December 31, 2006 and December 31, 2005 include Amegy; however, average balances in 2005 will only reflect Amegy for one month.

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. Schedule 6, 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 2006 increased 28.2 % to $38.7 billion from $30.2 billion in 2005 reflecting both the impact of the Amegy acquisition and of organic growth. Average interest-earning assets comprised 87.4% of total average assets in 2006 compared with 89.7% in 2005; the decline in 2006 reflected the impact of the goodwill and other intangible assets recorded in accounting for the Amegy acquisition. Average interest-earning assets in 2006 were 91.7% of average tangible assets compared with 92.0% in 2005.

Investment Securities Portfolio

We invest in securities both to generate revenues for the Company and to manage liquidity. Schedule 27 presents a profile of the Company’s investment portfolios at December 31, 2006, 2005, and 2004. 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. The estimated market values are the amounts that we believe the securities could be sold for as of the dates indicated.

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SCHEDULE 27

INVESTMENT SECURITIES PORTFOLIO

	December 31,
	2006			2005		2004
(In millions)	Amortized cost		Estimated market value	Amortized cost	Estimated market value	Amortized cost	Estimated market value
HELD TO MATURITY:
Municipal securities	$	652	648	650	642	642	642
Other debt securities		1	1	–	–	–	–
		653	649	650	642	642	642
AVAILABLE FOR SALE:
U.S. Treasury securities		43	42	42	43	36	36
U.S. government agencies and corporations:
Small Business Administration loan-backed securities		907	901	786	782	712	711
Other agency securities		782	774	688	683	275	277
Municipal securities		226	227	266	267	95	96
Mortgage/asset-backed and other debt securities		2,930	2,908	3,311	3,308	2,743	2,760
		4,888	4,852	5,093	5,083	3,861	3,880
Other securities:
Mutual funds		193	193	217	216	301	301
Stock		3	6	7	7	6	8
		196	199	224	223	307	309
		5,084	5,051	5,317	5,306	4,168	4,189
Total	$	5,737	5,700	5,967	5,948	4,810	4,831

The amortized cost of investment securities at year-end 2006 decreased $230 million from 2005. The decrease was mainly the result of an increase in maturing securities in 2006 and pay downs of mortgage-backed securities.

Schedule 28 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, 2006, 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 mortgage/asset-backed securities are variable rate and their repricing periods are significantly less than their contractual maturities. Also see “Liquidity Risk” on page 91 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 28

MATURITIES AND AVERAGE YIELDS ON SECURITIES

AT DECEMBER 31, 2006

	Total securities			Within one year			After one but within five years			After five but within ten years			After ten years
(Amounts in millions)	Amount		Yield*	Amount		Yield*	Amount		Yield*	Amount		Yield*	Amount		Yield*
HELD TO MATURITY:
Municipal securities	$	652	6.8%	$	57	6.4%	$	203	6.7%	$	189	6.6%	$	203	7.3%
Other debt securities		1	5.1		–			1	5.1		–			–
		653	6.8		57	6.4		204	6.7		189	6.6		203	7.3
AVAILABLE FOR SALE:
U.S. Treasury securities		43	4.4		20	4.5		22	4.1		1	8.4		–
U.S. government agencies and corporations:
Small Business Administration loan-backed securities		907	6.0		227	5.9		451	6.0		178	6.0		51	5.9
Other agency securities		782	4.9		342	5.0		252	4.8		4	6.5		184	5.1
Municipal securities		226	5.8		13	5.0		10	6.8		45	6.0		158	5.7
Mortgage/asset-backed and other debt securities		2,930	6.0		219	5.0		480	5.0		259	5.7		1,972	6.4
		4,888	5.8		821	5.2		1,215	5.3		487	5.8		2,365	6.2
Other securities:
Mutual funds		193	4.7		193	4.7		–			–			–
Stock		3	1.5		–			–			–			3	1.5
		196	4.7		193	4.7		–			–			3	1.5
		5,084	5.8		1,014	5.1		1,215	5.3		487	5.8		2,368	6.2
Total	$	5,737	5.9%	$	1,071	5.2%	$	1,419	5.5%	$	676	6.1%	$	2,571	6.3%

* Taxable-equivalent rates used where applicable.

The investment securities portfolio at December 31, 2006 includes $1.0 billion of nonrated, fixed-income securities. Nonrated municipal securities held in the portfolio were underwritten by Zions Bank’s Public Finance Department. This department includes operations in Utah, Idaho, Boston, and Dallas, and also the operations of Kelling, Northcross, and Nobriga in California, NSB Public Finance in Nevada, and the public finance department of NBA in Arizona.

SCHEDULE 29

NONRATED SECURITIES

	December 31,
(Book value in millions)	2006		2005
Municipal securities	$	630	625
Asset-backed subordinated tranches, created from Zions’ loans		194	207
Asset-backed subordinated tranches, not created from Zions’ loans		32	120
Other nonrated debt securities		104	83
	$	960	1,035

In addition to the nonrated municipal securities, the portfolio includes nonrated, asset-backed subordinated tranches. The asset-backed subordinated tranches created from the Company’s loans are mainly the subordinated retained interests of small business loan securitizations (the senior tranches of these securitizations are sold to Lockhart, a QSPE securities conduit described further in “Off-Balance-Sheet Arrangements” on page 76). At December 31, 2006, these comprised $194 million of the $214 million set forth in Schedule 31. The tranches not created from the Company’s loans are tranches of bank and insurance company Trust Preferred

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Collateral Debt Obligations. Investment securities also include other nonrated debt securities, the majority of which were created by Zions Bank. 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, 2006, net loans and leases accounted for 73.8% of total assets and 77.2% of tangible assets as compared to 70.4% of total assets and 74.0% of tangible assets at December 31, 2005. Schedule 30 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, 2006. 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 87.

SCHEDULE 30

LOAN PORTFOLIO BY TYPE AND MATURITY

	December 31, 2006						December 31,
(In millions)	One year or less		One year through five years		Over five years	Total
							2005	2004	2003	2002
Loans held for sale	$	8		79	166	253	256	197	177	289
Commercial lending:
Commercial and industrial		4,479		2,871	1,072	8,422	7,192	4,643	4,111	4,124
Leasing		28		322	93	443	373	370	377	384
Owner occupied		491		927	4,842	6,260	4,825	3,790	3,319	3,018
Total commercial lending		4,998		4,120	6,007	15,125	12,390	8,803	7,807	7,526
Commercial real estate:
Construction and land development		4,872		2,205	406	7,483	6,065	3,536	2,867	2,947
Term		937		1,351	2,664	4,952	4,640	3,998	3,402	3,175
Total commercial real estate		5,809		3,556	3,070	12,435	10,705	7,534	6,269	6,122
Consumer:
Home equity credit line and other consumer real estate		246		402	1,202	1,850	1,831	1,104	838	651
1-4 family residential		152		519	3,521	4,192	4,130	4,234	3,874	3,209
Bankcard and other revolving plans		172		114	9	295	207	225	198	205
Other		102		281	74	457	537	532	749	1,000
Total consumer		672		1,316	4,806	6,794	6,705	6,095	5,659	5,065
Foreign loans		1		2	–	3	5	5	15	5
Other receivables		126		41	42	209	191	98	90	126
Total loans	$	11,614		9,114	14,091	34,819	30,252	22,732	20,017	19,133
Loans maturing in more than one year:
With fixed interest rates			$	3,624	3,515	7,139
With variable interest rates				5,490	10,576	16,066
Total			$	9,114	14,091	23,205

Note: During 2006, the Company reclassified certain balances between construction and land development, home equity credit line and other consumer real estate, and 1-4 family residential. Information to reclassify the loans for years prior to 2005 is not available.

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Loan growth was strong in most of the banking subsidiaries during 2006, particularly Zions Bank and Amegy, as previously discussed in “Business Segment Results” beginning on page 52. We expect that loan growth will continue in 2007 in most of our subsidiary banks. However, the rate of growth began to slow during the second half of 2006 and even turned negative in CB&T and NSB in the fourth quarter; the average growth experienced in 2006 may not be sustainable throughout 2007.

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 31

SOLD LOANS BEING SERVICED

	2006			2005		2004
(In millions)	Sales		Outstanding at year-end	Sales	Outstanding at year-end	Sales	Outstanding at year-end
Home equity credit lines	$	153	261	408	456	296	447
Small business loans		–	1,790	707	2,341	605	2,001
SBA 7(a) loans		22	128	16	179	53	230
Farmer Mac		43	407	69	407	42	388
Total	$	218	2,586	1,200	3,383	996	3,066
	Residual interests on balance sheet at December 31, 2006				Residual interests on balance sheet at December 31, 2005
(In millions)	Subordinated retained interests		Capitalized residual cash flows	Total	Subordinated retained interests	Capitalized residual cash flows	Total
Home equity credit lines	$	8	5	13	13	7	20
Small business loans		214	78	292	221	101	322
SBA 7(a) loans		–	2	2	–	4	4
Farmer Mac		–	5	5	–	6	6
Total	$	222	90	312	234	118	352

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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 31 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 2006 decreased approximately $1.0 billion compared to 2005. The Company did not complete a small business loans securitization during 2006 and also discontinued selling new home equity credit lines originations during the fourth quarter. Small business, consumer and other sold loans being serviced totaled $2.6 billion at the end of 2006 compared to $3.4 billion at the end of 2005. See Notes 1 and 6 of the Notes to Consolidated Financial Statements for additional information on asset securitizations. In addition, at December 31, 2006, conforming long-term first mortgage real estate loans being serviced for others was $1,251 million compared with $1,274 million at the same date in 2005.

Although it performs the servicing, the Company exerts no control nor does it have any equity interest in any of the trusts that own the securitized loans. However, as of December 31, 2006, the Company had recorded assets in the amount of $312 million in connection with sold loans being serviced of $2.6 billion. As is a common practice with securitized transactions, the Company had subordinated retained interests in the securitized assets amounting to $222 million at December 31, 2006, representing junior positions to the other investors in the trust securities. The capitalized residual cash flows, which is sometimes referred to as “excess servicing,” of $90 million primarily represent the present value of the excess cash flows that have been projected over the lives of the sold loans. These excess cash flows are subject to prepayment risk, which is the risk that a loan will be paid prior to its contractual maturity. When this occurs, any remaining excess cash flows that are associated with the loan must be reduced. See Note 6 of the Notes to Consolidated Financial Statements for more information on asset securitizations.

Other Earning Assets

As of December 31, 2006, the Company had $1,022 million of other noninterest-bearing investments compared with $939 million in 2005. The increase in other noninterest-bearing investments resulted mainly from regulatory required increases in Federal Reserve stock at Amegy and increases in the SBIC and bank-owned life insurance investments.

SCHEDULE 32

OTHER NONINTEREST-BEARING INVESTMENTS

	December 31,
(In millions)	2006		2005
Bank-owned life insurance	$	627	605
Federal Home Loan Bank and Federal Reserve stock		189	153
SBIC investments(1)		104	80
Non-SBIC investment funds		37	27
Other public companies		37	39
Other nonpublic companies		14	15
Trust preferred securities		14	20
	$	1,022	939

(1) Amounts include minority investors’ interests in Zions’ managed SBIC investments of approximately $41 million and $27 million as of the respective dates.

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The investments in publicly traded companies are accounted for using the equity method of accounting and are set forth in Schedule 33.

SCHEDULE 33

INVESTMENTS IN OTHER PUBLIC COMPANIES

		December 31, 2006
(In millions)	Symbol	Carrying value		Market value	Unrealized gain (loss)
COMPANY
Federal Agricultural Mortgage Corporation (Farmer Mac)	AGM/A	$	7	6	(1)
Federal Agricultural Mortgage Corporation (Farmer Mac)	AGM		20	23	3
Insure.com, Inc.	NSUR		10	9	(1)
Total publicly traded equity investments		$	37	38	1

Deposits and Borrowed Funds

Deposits, both interest-bearing and noninterest-bearing, are a primary source of funding for the Company. Schedule 6 summarizes the average deposit balances for the past five years, along with their respective interest costs and average interest rates. Average noninterest-bearing deposits increased 28.2% in 2006 over 2005, while interest-bearing deposits increased 33.2% during the same time period. The increased average balances reflect the impact of the acquisition of Amegy.

Total deposits at December 31, 2006 increased $2.3 billion to $35.0 billion, or 7.2% over the balances reported at December 31, 2005. Core deposits increased $552 million to $30.7 billion, or 1.8%, compared to $30.1 billion at December 31, 2005. The increase in total deposits included approximately $270 million of time deposits placed by The Stockmen’s Bank with two affiliate banks of the Company in October 2006. The Company’s acquisition of Stockmen’s was announced on September 11, 2006 and was completed on January 17, 2007.

See “Liquidity Risk” on page 91 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 Arrangements

Zions Bank provides a Liquidity Facility for a fee to a QSPE securities conduit, Lockhart, which purchases U.S. Government and AAA-rated securities, which are funded through the issuance of its commercial paper. At December 31, 2006 approximately 38% of the AAA-rated securities held by Lockhart were created by the Company’s securitization of small business loans, as previously discussed. Zions Bank also receives a fee in exchange for providing hedge support and administrative and investment advisory services. Under the terms of the Liquidity Facility, if certain conditions arise, Zions Bank is required to purchase securities from Lockhart to provide funds and enable it to repay maturing commercial paper. Lockhart has been an important source of funding for the Company’s loans and is not consolidated in the Company’s financial statements. See “Liquidity Management Actions” on page 93 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 other on- and off-balance-sheet credit instruments.

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 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 exception to the policy. Historically, only a limited number of such exceptions 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 has 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 arrangement between Zions Bank and its counterparty. In every case, the amount of the collateral required to secure the exposed party in the derivative transaction is determined by the mark-to-market exposure 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 an “AAA” rating would be obligated to provide less collateral to secure a major credit exposure to Zions Bank than one with an “A” rating. All derivative gains and losses between Zions Bank and a single counterparty are netted to determine the net credit exposure and therefore the collateral required.

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Another aspect of the Company’s credit risk management strategy is to pursue the diversification of the loan portfolio. The Company maintains a diversified loan portfolio with some emphasis in real estate. As displayed in Schedule 34, at year-end 2006 no single loan type exceeded 24.2% of the Company’s total loan portfolio.

SCHEDULE 34

LOAN PORTFOLIO DIVERSIFICATION

	December 31, 2006			December 31, 2005
(Amounts in millions)	Amount		% of total loans	Amount		% of total loans
Commercial lending:
Commercial and industrial	$	8,422	24.2%	$	7,192	23.8%
Leasing		443	1.3		373	1.2
Owner occupied		6,260	18.0		4,825	15.9
Commercial real estate:
Construction and land development		7,483	21.5		6,065	20.0
Term		4,952	14.2		4,640	15.3
Consumer:
Home equity credit line and other consumer real estate		1,850	5.3		1,831	6.1
1-4 family residential		4,192	12.1		4,130	13.7
Bankcard and other revolving plans		295	0.8		207	0.7
Other		457	1.3		537	1.8
Other receivables		465	1.3		452	1.5
Total loans	$	34,819	100.0%	$	30,252	100.0%

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In addition, as reflected in Schedule 35, as of December 31, 2006, the commercial real estate loan portfolio totaling $12.4 billion is also well diversified by property type and collateral location.

SCHEDULE 35

COMMERCIAL REAL ESTATE PORTFOLIO BY PROPERTY TYPE AND COLLATERAL LOCATION

(REPRESENTS PERCENTAGES BASED UPON OUTSTANDING COMMERCIAL REAL ESTATE LOANS)

AT DECEMBER 31, 2006

	Collateral Location									Product as a % of total CRE	Product as a % of loan type
Loan Type	Arizona	Northern California	Southern California	Nevada	Colorado	Texas (Amegy) (1)	Utah / Idaho	Washington	Other
Commercial term:
Industrial	0.66%	0.43	1.73	0.03	0.07	0.19	0.11	0.17	0.10	3.49	8.49
Office	1.04	0.58	2.24	1.67	1.56	1.80	1.55	0.14	1.26	11.84	28.81
Retail	0.80	0.60	1.41	1.08	0.28	1.08	0.25	0.11	0.11	5.72	13.90
Hotel/motel	1.04	0.09	0.75	0.36	0.49	0.02	1.07	0.12	2.03	5.97	14.52
Acquisition and development	–	0.05	0.18	0.27	0.05	0.01	0.21	0.09	–	0.86	2.11
Medical	0.41	0.19	0.34	0.40	0.01	0.03	0.15	0.01	0.06	1.60	3.90
Recreation/restaurant	0.35	0.04	0.31	0.10	0.07	0.01	0.08	0.01	0.26	1.23	3.04
Multifamily	0.17	0.42	1.31	0.34	0.31	0.59	0.57	0.07	0.38	4.16	10.15
Other	0.89	0.12	1.65	0.64	0.30	0.01	0.60	0.05	1.93	6.19	15.08
Total commercial term	5.36	2.52	9.92	4.89	3.14	3.74	4.59	0.77	6.13	41.06	100.00
Residential construction:
Single family housing	4.75	1.15	3.90	0.62	0.78	2.00	2.05	0.02	0.29	15.56	46.19
Acquisition and development	5.86	1.16	3.10	1.76	0.81	2.20	2.39	0.17	0.67	18.12	53.81
Total residential construction	10.61	2.31	7.00	2.38	1.59	4.20	4.44	0.19	0.96	33.68	100.00
Commercial construction:
Industrial	0.38	0.03	0.31	1.54	0.30	0.73	0.13	0.08	–	3.50	13.87
Office	0.51	0.09	0.26	0.77	0.08	0.32	0.20	0.21	0.07	2.51	9.87
Retail	1.28	0.03	0.56	1.13	0.39	2.71	0.43	0.02	0.13	6.68	26.42
Hotel/motel	0.19	–	0.08	0.03	0.02	–	0.09	–	0.09	0.50	1.96
Acquisition and development	1.33	0.01	0.36	1.01	0.07	2.84	0.26	0.14	–	6.02	23.85
Medical	0.10	–	0.03	0.02	0.03	0.16	0.09	–	0.02	0.45	1.80
Recreation/restaurant	0.05	–	0.01	0.02	–	–	0.02	–	–	0.10	0.39
Other	0.08	–	0.26	0.14	0.01	0.09	0.10	0.07	0.27	1.02	4.10
Apartments	0.40	0.30	0.74	0.56	0.38	1.48	0.12	0.32	0.18	4.48	17.74
Total commercial construction	4.32	0.46	2.61	5.22	1.28	8.33	1.44	0.84	0.76	25.26	100.00
Total construction	14.93	2.77	9.61	7.60	2.87	12.53	5.88	1.03	1.72	58.94	100.00
Total commercial real estate	20.29%	5.29	19.53	12.49	6.01	16.27	10.47	1.80	7.85	100.00

(1) Includes all Amegy loans. The Company is in the process of determining the collateral location for Amegy loans.

Note: Excludes approximately $537 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 June 30, 2006, detailed in Schedule 35, was approximately 58.6%. This estimate is based on the most current appraisals, generally obtained as of the date of origination or renewal of the loans.

We believe the Company’s potential risk from concentration in owner occupied commercial loans is reduced by the emphasis we place on lending programs sponsored by the SBA. On these types of loans, the SBA bears a major portion of the credit risk. In addition, the Company attempts to avoid the risk of an undue concentration of credits in a particular industry, trade

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group, or property type. The Company also has no significant exposure to highly-leveraged transactions and the majority of the Company’s business activity is with customers within the geographical footprint of its banking subsidiaries. Finally, the Company has no significant exposure to any individual customer or counterparty. See “Credit Risk Management” on page 77 for a discussion of counterparty risk associated with the Company’s derivative transactions. See Note 5 of the Notes to Consolidated Financial Statements for further information on concentrations of credit risk.

Nonperforming Assets

Nonperforming assets include nonaccrual loans, restructured loans, and other real estate owned. At December 31, 2006, nonperforming assets also included $6.2 million of equipment related to the participation in an equipment lease by NBA as previously discussed. 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 a nonaccrual status, inasmuch as they are generally charged off when they become 120 days past due. Loans also 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. Other real estate owned is acquired primarily through or in lieu of foreclosure on loans secured by real estate.

The Company’s nonperforming assets as a percentage of net loans and leases and other real estate owned continued to improve during 2006. The percentage was 0.24% at December 31, 2006 compared with 0.30% on December 31, 2005. Total nonperforming assets were $82 million at year-end 2006, compared to $89 million at December 31, 2005 and $84 million at December 31, 2004. Internal loan classification measures also have continued to reflect strong credit quality during 2006.

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SCHEDULE 36

NONPERFORMING ASSETS

	December 31,
(Amounts in millions)	2006		2005	2004	2003	2002
Nonaccrual loans:
Commercial lending:
Commercial and industrial	$	25	21	24	36	29
Leasing		–	–	1	2	11
Owner occupied		13	16	22	15	14
Commercial real estate:
Construction		14	17	1	7	7
Term		8	3	4	3	4
Consumer:
Real estate		5	9	13	11	11
Other		2	2	4	3	4
Other		–	1	3	1	2
Restructured loans:
Commercial real estate:
Construction		–	–	–	1	1
Term		–	–	–	–	1
Other real estate owned:
Commercial:
Improved		5	8	9	12	23
Unimproved		2	3	–	4	3
1-4 family residential		2	9	3	3	6
Other assets		6	–	–	–	–
Total	$	82	89	84	98	116
% of net loans* and leases and other real estate owned		0.24%	0.30%	0.37%	0.49%	0.61%
Accruing loans past due 90 days or more:
Commercial lending	$	17	7	6	10	13
Commercial real estate		22	4	2	3	10
Consumer		5	6	8	11	12
Other receivables		–	–	–	–	2
Total	$	44	17	16	24	37
% of net loans* and leases		0.13%	0.06%	0.07%	0.12%	0.20%

* 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 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 market value of the loan, or the fair value of the collateral securing the loan.

The Company’s total recorded investment in impaired loans was $47 million at December 31, 2006 and $31 million at December 31, 2005. Estimated losses on impaired loans are included in the allowance for loan losses. At December 31, 2006, the allowance included $6 million for impaired loans with a recorded investment of $18 million. At December 31, 2005, the allowance

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for loan losses included $3 million for impaired loans with a recorded investment of $14 million. See Note 5 of the Notes to Consolidated Financial Statements for additional information on impaired loans.

Allowances 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 based on a migration analysis technique 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.

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.

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The methodology used by Amegy to estimate its allowance for loan losses has not yet been conformed to the process used by the other affiliate banks. However, the process used by Amegy is not significantly different than the process used by our other affiliate banks.

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 expects to begin implementing this updated methodology in 2007, and to complete the implementation in 2008.

Schedule 37 summarizes the Company’s loan loss experience by major portfolio segment.

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SCHEDULE 37

SUMMARY OF LOAN LOSS EXPERIENCE

(Amounts in millions)	2006			2005		2004		2003		2002
Loans* and leases outstanding on December 31, (net of unearned income)	$	34,668		30,127		22,627		19,920		19,040
Average loans* and leases outstanding (net of unearned income)	$	32,395		24,009		21,046		19,325		18,114
Allowance for loan losses:
Balance at beginning of year	$	338		271		269		280		260
Allowance of companies acquired		–		49		–		–		1
Allowance associated with repurchased revolving securitized loans		–		–		–		–		10
Allowance of loans sold with branches		–		–		(2	)	–		–
Provision charged against earnings		73		43		44		70		72
Loans and leases charged-off:
Commercial lending		(46	)	(20	)	(35	)	(56	)	(54	)
Commercial real estate		(5	)	(3	)	(1	)	(3	)	(10	)
Consumer		(14	)	(19	)	(23	)	(27	)	(20	)
Other receivables		(1	)	(1	)	(1	)	–		–
Total		(66	)	(43	)	(60	)	(86	)	(84	)
Recoveries:
Commercial lending		11		12		15		12		14
Commercial real estate		2		1		–		–		3
Consumer		7		5		5		5		4
Total		20		18		20		17		21
Net loan and lease charge-offs		(46	)	(25	)	(40	)	(69	)	(63	)
		365		338		271		281		280
Reclassification of allowance for unfunded lending commitments		–		–		–		(12	)	–
Balance at end of year	$	365		338		271		269		280
Ratio of net charge-offs to average loans and leases		0.14%		0.10%		0.19%		0.36%		0.35%
Ratio of allowance for loan losses to net loans and leases outstanding on December 31,		1.05%		1.12%		1.20%		1.35%		1.47%
Ratio of allowance for loan losses to nonperforming loans on December 31,		548.53%		489.74%		374.42%		338.31%		332.37%
Ratio of allowance for loan losses to nonaccrual loans and accruing loans past due 90 days or more on December 31,		331.56%		394.08%		307.61%		262.21%		234.14%

* Includes loans held for sale.

Schedule 38 provides a breakdown of the allowance for loan losses and the allocation among the portfolio segments. No significant changes took place in the past four years in the allocation of the allowance for loan losses by portfolio segment.

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SCHEDULE 38

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

AT DECEMBER 31,

	2006			2005			2004			2003			2002
(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	43.5%		179	41.2%		166	39.0%		134	39.2%		130	39.4%		133
Commercial real estate	35.8		143	35.5		128	33.2		95	31.4		90	32.0		91
Consumer	20.1		40	22.7		41	27.4		41	29.0		47	27.9		44
Other receivables	0.6		3	0.6		3	0.4		1	0.4		2	0.7		2
Total loans	100.0%			100.0%			100.0%			100.0%			100.0%
Off-balance-sheet unused commitments and standby letters of credit (1)			–			–			–			–			10
Total allowance for loan losses		$	365		$	338		$	271		$	269		$	280

(1) In 2003 the potential credit losses related to undrawn commitments to extend credit were reclassified and included in other liabilities.

As reflected in Schedule 38, the allowance for loan losses at December 31, 2006 increased by $27 million from year-end 2005. For 2006, the amount of the allowance allocated for criticized and classified commercial loans increased $3.1 million compared to $0.2 million for 2005. The level of the allowance for noncriticized and classified commercial loans increased $24 million for 2006 compared to an increase of $23 million for 2005. The increase in level of the allowance indicated for noncriticized and classified loans for both 2006 and 2005 was mainly a result of $4.5 billion of new commercial and commercial real estate loan growth during 2006 and $7.5 billion of growth during 2005, including $5.2 billion of acquired Amegy loans. At December 31, 2006, the ratio of the allowance for loan losses to net loans and leases outstanding decreased to 1.05% compared to 1.12% at December 31, 2005. This decrease reflects improved trends in both historical loss experience and nonaccrual loans as previously discussed.

The increased allowance for loan losses at December 31, 2005 compared to December 31, 2004 included a $49 million Amegy allowance acquired. In addition to the changes above, excluding Amegy, the allowance for consumer loans at year-end 2005 decreased $5 million compared to 2004 mainly due to a decrease in outstanding consumer loans primarily as a result of a decision to exit indirect auto lending.

Allowance for Unfunded Lending Commitments: The Company also estimates an allowance for potential losses associated with off-balance-sheet commitments and standby letters of credit. Prior to December 31, 2003, this allowance was included in the overall allowance for loan losses. It is now included with other liabilities in the Company’s consolidated balance sheet, with any related increases or decreases in the allowance included in noninterest expense in the statement of income.

We determine the allowance 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.

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Schedule 39 sets forth the allowance for unfunded lending commitments.

SCHEDULE 39

ALLOWANCE FOR UNFUNDED LENDING COMMITMENTS

	December 31,
(In thousands)	2006		2005
Balance at beginning of year	$	18,120	12,682
Allowance of company acquired		–	2,013
Provision charged against earnings		1,248	3,425
Balance at end of year	$	19,368	18,120

Schedule 40 sets forth the combined allowances for credit losses.

SCHEDULE 40

COMBINED ALLOWANCES FOR CREDIT LOSSES

	December 31,
(In thousands)	2006		2005	2004
Allowance for loan losses	$	365,150	338,399	271,117
Allowance for unfunded lending commitments		19,368	18,120	12,682
Total allowances for credit losses	$	384,518	356,519	283,799

Interest Rate and Market Risk Management

Interest rate risk is the potential for loss 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 the prices 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 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;

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• 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.

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 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 market 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 market value of each instrument assuming interest rates sustain immediate and parallel movements up 1% and down 1%. The average of these two changes in market 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 market 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.

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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 duration of equity is 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 durations, we view the duration of equity as falling within a range of possibilities.

For income simulation, Company policy requires that interest sensitive income from a static balance sheet is expected to decline by 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 41 shows the Company’s estimated range of duration of equity, duration of equity simulation, and percentage change in interest sensitive income in the first year after the rate 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 41

DURATION OF EQUITY AND INTEREST SENSITIVE INCOME

	December 31, 2006		December 31, 2005
	Low	High	Low	High
Duration of equity:
Range (in years)	–	1.6	-0.2	2.3
Duration of equity simulation – change in years:
Increase interest rates by 200 bp	0.8	2.4	1.2	3.8
Income simulation – change in interest sensitive income:
Increase interest rates by 200 bp	-0.9%	1.5%	-1.1%	2.4%
Decrease interest rates by 200 bp	-3.6%	-1.3%	-4.5%	-0.7%

We attempt to minimize the negative impact changes in interest rates will have 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 London Interbank Offer Rate (“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.

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 2006, approximately 75% of the Company’s commercial loan and commercial real estate portfolios were floating rate and 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 naturally “asset-sensitive” position.

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It is our belief that the Company’s core banking business leads naturally to a position that is more asset-sensitive than is desirable. The Company attempts to mitigate this tendency toward asset sensitivity primarily through the use of interest rate swaps. We have contracted to convert most of the Company’s fixed-rate debt into floating-rate debt through the use of interest rate swaps (see fair value hedges in Schedule 42). More importantly, we engage in an ongoing program of swapping prime-based and LIBOR-based loans and other variable-rate assets for “receive fixed” contracts. At year-end 2006, the Company had a notional amount of approximately $3.3 billion of such cash flow hedge contracts. The Company expects to continue to add new “receive fixed” swap contracts as its prime-based loan portfolio grows. 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 77.

Schedule 42 presents a profile of the current interest rate swap portfolio. For additional information regarding derivative instruments, including fair values at December 31, 2006, refer to Notes 1 and 7 of the Notes to Consolidated Financial Statements.

SCHEDULE 42

INTEREST RATE SWAPS – YEAR-END BALANCES AND AVERAGE RATES

(Amounts in millions)	2007		2008	2009	2010	2011	Thereafter
Cash flow hedges(1):
Notional amount	$	3,275	3,145	2,285	1,475	225
Weighted average rate received		7.31%	7.33	7.66	7.85	7.78
Weighted average rate paid		7.62	7.50	7.73	7.61	7.99
Fair value hedges(1):
Notional amount	$	1,400	1,400	1,400	1,400	1,400	1,400
Weighted average rate received		5.71%	5.71	5.71	5.71	5.71	5.71
Weighted average rate paid		4.97	4.89	5.03	4.97	5.18	5.01
Nonhedges:
Receive fixed rate/pay variable rate:
Notional amount	$	189
Weighted average rate received		4.55%
Weighted average rate paid		5.28
Receive variable rate/pay fixed rate:
Notional amount	$	189
Weighted average rate received		5.28%
Weighted average rate paid		4.55
Basis Swaps:
Notional amount	$	3,030	2,900	2,190	1,380	225
Weighted average rate received		7.83%	7.72	7.85	7.79	7.99
Weighted average rate paid		7.81	7.69	7.81	7.78	7.95
Net notional	$	7,705	7,445	5,875	4,255	1,850	1,400

(1) Receive fixed rate/pay variable rate

Note: Balances are based upon the portfolio at December 31,2006. Excludes interest rate swap products that we provide as a service to our customers.

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Market Risk – Fixed Income

The Company engages in trading and market making of U.S. Treasury, U.S. Government Agency, municipal, and corporate securities. This trading and market making exposes the Company to a risk of loss arising from adverse changes in the prices of these fixed income securities held by the Company.

During the last quarter of 2005, the Company closed its London trading office and substantially reduced the size of its trading assets in response to continued narrow margins in its odd-lot electronic bond trading business. At December 31, 2006, trading account assets had been reduced to $63.4 million and securities sold, not yet purchased were $50.4 million.

At year-end 2006, the Company made a market in 823 fixed income securities through Zions Bank and its wholly-owned subsidiary, Zions Direct, Inc. During 2006, 74% of all trades were executed electronically. The Company is an odd-lot securities dealer, which means that most U.S. Treasury and Government Agency trades are for less than $5 million and most corporate security trades are for less than $250,000.

Subsequent to year-end, the Company transferred the fixed income U.S. Treasury and Government Agency portion of this business to Diawa Securities.

The Company monitors risk in fixed income trading and market making through Value-at-Risk (“VAR”). VAR is the worst-case loss expected within a specified confidence level, based on statistical models using historical data. Value-at-Risk information is not disclosed due to the limited risk in fixed income trading and market making after the reductions in the scale of the Company’s trading operations.

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 these market prices or values 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.

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The Company generally conducts minority investing in pre-public venture capital companies in which it does not have strategic involvement, through four funds collectively referred to as Wasatch Venture Funds (“Wasatch”). Wasatch screens investment opportunities and makes investment decisions based on its assessment of business prospects and potential returns. After an investment is made, Wasatch actively monitors the performance of the companies in which it has invested, and often has representation on the board of directors of the company. Net of expenses, income tax effects and minority interest, gains were $4.1 million in 2006, and losses were $2.2 million in 2005 and $4.5 million in 2004. The Company’s remaining equity exposure to investments held by Wasatch, net of related minority interest and SBA debt, at December 31, 2006 was approximately $49.1 million, compared to approximately $40.9 million at December 31, 2005.

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, 2006 was $19.6 million as compared to $23.7 million at December 31, 2005. The Company has a total remaining funding commitment of $102.9 million to SBIC, non-SBIC hedge fund, and private equity investments as of December 31, 2006. This funding commitment is primarily at Amegy, totaling $93.5 million.

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 of these investments include ICAP plc. and Lending Tree, which were both sold at substantial gains in 2003. Other examples include Contango, NetDeposit, and P5 all of which are majority or wholly-owned by the Company, and Insure.com, IdenTrust, and Roth Capital, in which the Company owns a significant, but minority position.

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.

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

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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 sell/purchase Federal Funds to/from Zions Bank. 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 43 summarizes the Company’s contractual obligations at December 31, 2006.

SCHEDULE 43

CONTRACTUAL OBLIGATIONS

(In millions)	One year or less		Over one year through three years	Over three years through five years	Over five years	Indeterminable maturity (1)	Total
Deposits	$	6,820	546	138	1	27,477	34,982
Commitments to extend credit		6,494	5,455	1,991	2,775		16,715
Standby letters of credit:
Performance		207	102	21			330
Financial		789	236	119	13		1,157
Commercial letters of credit		130	3				133
Commitments to make venture and other noninterest-bearing investments (2)		103					103
Commitments to Lockhart (3)		4,104					4,104
Federal funds purchased and security repurchase agreements		2,928					2,928
Other short-term borrowings		789					789
Long-term borrowings (4)		3	402	107	1,960		2,472
Operating leases, net of subleases		41	76	59	160		336
	$	22,408	6,820	2,435	4,909	27,477	64,049

(1) Indeterminable maturity includes noninterest-bearing demand, savings and money market, 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 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.

As of December 31, 2006, there were no minimum required pension plan contributions and no discretionary or noncash contributions are currently planned. As a result, no amounts have been included in the schedule above for future pension plan contributions. During 2006, the Company made a $10 million contribution to the plan based on actuarial recommendation.

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.

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The Company also enters into derivative contracts under which we are 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.

Pension Obligations

As of December 31, 2006, the market value of the Company’s pension plan assets was $141.3 million and the benefit obligation as of that date was $155.1 million, as measured with an annual discount rate of 5.65%. This means that the pension plan is underfunded in the amount of $13.8 million. This underfunding is recorded as a liability on the Company’s balance sheet. Since no new employees can be added to the plan and future benefit accruals were eliminated for most participants effective January 1, 2003, this unfunded condition should decrease over time as the market value of plan assets is expected to appreciate faster than the benefit obligation, although fluctuations in plan asset values could cause the unfunded amount to either increase or decrease over shorter time periods. As a result, the Company does not anticipate a need to make any cash contributions to the plan in the near future. However, certain changes to federal laws and regulations governing defined benefit plans could change the Company’s need to make future cash contributions.

Liquidity Management Actions

The Parent’s cash requirements consist primarily of debt service, investment in and advances to subsidiaries, operating expenses, income taxes, dividends to shareholders, and share repurchases. The Parent’s cash needs are routinely met through dividends from its subsidiaries, investment income, subsidiaries’ proportionate share of current income taxes, management and other fees, bank lines, equity contributed through the exercise of stock options, commercial paper, and long-term debt and equity issuances. The subsidiaries’ 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 2006 operations contributed $1.0 billion toward these needs. As a result, the Company utilizes other sources at its disposal to manage its liquidity needs.

During 2006, the Parent received $431.6 million in dividends from various subsidiaries. At December 31, 2006, the banking subsidiaries could pay $403.8 million of dividends to the Parent under regulatory guidelines without the need for regulatory approval. The amounts of dividends the banking subsidiaries can pay the Parent are restricted by earnings and risk-based capital requirements. The dividend capacity is dependent on the continued profitability of the subsidiary banks and no significant changes in the current regulatory environment. While we have no current expectation that these two conditions will change, should a change take place to either in the future, this source of funding to the Parent may become more limited or even unavailable. See Note 19 of the Notes to Consolidated Financial Statements for details of dividend capacities and limitations.

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For the year 2006, repayments of long-term debt exceeded issuances of medium-term and long-term debt, resulting in net cash outflows of $142.8 million from debt financing activities. Specific long-term debt-related activities for 2006 are as follows:

• On March 31, 2006, the Company filed an “automatic shelf registration statement” with the Securities and Exchange Commission as a “well-known seasoned issuer.” This new type of shelf registration does not require us to specify a maximum amount of securities that may be issued. The shelf registration replaced a previous shelf registration and covers securities of the Company, Zions Capital Trust C, and Zions Capital Trust D.

• On April 27, 2006 under the new shelf registration, we issued $250 million of floating rate senior notes due April 15, 2008. The notes require quarterly interest payments at three-month LIBOR plus 0.12%. They are not redeemable prior to maturity and are not listed on any national securities exchange. Proceeds from the notes were used to retire the $150 million of 2.70% senior notes due May 1, 2006 and the remaining $104.2 million of 6.95% subordinated notes due May 15, 2011 and redeemable May 15, 2006.

• On September 28, 2006 under the new shelf registration, we issued $145 million of floating rate senior notes due September 15, 2008. The notes require quarterly interest payments at three-month LIBOR plus 0.12%. They are not redeemable prior to maturity and are not listed on any national securities exchange. Proceeds from the notes were used to retire all of the remaining $98.4 million of 6.50% subordinated notes due October 15, 2011 and redeemed October 15, 2006, and applied to the redemption of the $176.3 million of 8.536% trust preferred securities (Zions Institutional Capital Trust A) on December 15, 2006. The Company incurred a premium of $7.3 million on the redemption of the trust preferred securities, which was charged to the statement of income in the fourth quarter of 2006.

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

On December 7, 2006 the Company issued $240 million of Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock. See “Capital Management” beginning on page 97 for further details of this issuance.

On a consolidated basis, fundings from short-term borrowings exceeded repayments (excluding short-term FHLB borrowings) and resulted in a $683.3 million source of cash in 2006. The Parent has a program to issue short-term commercial paper and at December 31, 2006, outstanding commercial paper was $220.5 million. In addition, the Parent has a $40 million secured revolving credit facility with a subsidiary bank. No amount was outstanding on this facility at December 31, 2006.

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 had the following ratings as of December 31, 2006:

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SCHEDULE 44

CREDIT RATINGS

Rating agency	Outlook	Long-term issuer/ senior debt rating	Subordinated debt rating	Short-term/ commercial paper rating
S&P	Stable	BBB+	BBB	A-2
Moody’s	Stable	A3	Baa1	Not Rated
Fitch	Positive	A-	BBB+	F1
Dominion	Stable	A (low)	BBB (high)	R-1 (low)

Any downgrade in these ratings could negatively impact the Parent’s ability to borrow, including higher costs of funds and access to fewer funding sources.

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, 2006, these core deposits, in aggregate, constituted 87.7% of consolidated deposits, compared with 92.3% of consolidated deposits at December 31, 2005. For 2006, deposit increases resulted in net cash inflows of $2.3 billion which primarily resulted from a $1.8 billion increase in noncore deposit “Jumbo CDs” or time deposits greater than $100,000.

The FHLB system is also a significant source of liquidity for each of 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 2006, the activity in short-term FHLB borrowings resulted in a net cash inflow of $499.1 million. Amounts of unused lines of credit available for additional FHLB advances totaled $6.1 billion at December 31, 2006, subject to availability of collateral and certain requirements. Borrowings from the FHLB may increase in the future, depending on availability of funding from other sources such as deposits. However, the subsidiary banks must maintain their FHLB memberships to continue accessing this source of funding.

As explained earlier, the Company has used asset securitizations to sell loans, which also provides an alternative source of funding for the subsidiaries and enhances flexibility in meeting funding needs. During 2006, loan sales (other than proceeds from loans held for sale included in cash flows from operating activities) provided $218 million in cash inflows.

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At December 31, 2006, the Company managed approximately $2.6 billion of securitized assets that were originated or purchased by its subsidiary banks. Of these, approximately $1.6 billion were credit-enhanced by a third party insurance provider and held in Lockhart, which is a QSPE securities conduit and has been an important source of funding for the Company’s loans. Zions Bank provides a Liquidity Facility for a fee to Lockhart, which purchases floating-rate U.S. Government and AAA-rated securities with funds from the issuance of commercial paper. Zions Bank also provides interest rate hedging support and administrative and investment advisory services for a fee. Pursuant to the Liquidity Facility, Zions Bank is required to purchase securities from Lockhart to provide funds for it to repay maturing commercial paper upon Lockhart’s inability to access the commercial paper market, 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 Facility, if any security in Lockhart is downgraded below 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. At any given time, the maximum commitment of Zions Bank is the book value of Lockhart’s securities portfolio, which is not allowed to exceed the size of the Liquidity Facility.

At December 31, 2006, the book value of Lockhart’s securities portfolio was $4.1 billion, which approximated market value, and the size of the Liquidity Facility commitment was $6.12 billion. No amounts were outstanding under this Liquidity Facility at December 31, 2006 or December 31, 2005. Lockhart is limited in size by program agreements and by the size of the Liquidity Facility.

In June 2005 under the Liquidity Facility contract, Zions Bank repurchased for the first time a bond from Lockhart at its book value of $12.4 million because of a rating downgrade. Zions Bank recognized an impairment loss of $1.6 million, which was included in fixed income securities gains (losses) for 2005. In June 2006, this security was sold and Zions Bank recovered $0.8 million of the loss.

The FASB has recently issued two accounting pronouncements that amend SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. These amendments did not impact the operating activities of Lockhart; however other proposals to further amend SFAS No. 140 may require changes to the operating activities of QSPEs and other aspects relating to the transfer of financial assets. As a result of these proposals, Lockhart’s operations may need to be modified to preserve its off-balance sheet status. Further discussion of Lockhart can be found in the section entitled “Off-Balance-Sheet Arrangements” on page 76 and in Note 6 of the Notes to Consolidated Financial Statements.

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 2006, investment securities activities resulted in net cash inflows of $229 million.

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 2006, loan growth resulted in a net cash outflow of $4.9 billion as compared to $3.6 billion in 2005. We expect that loans will continue to be a use of funding rather than a source in 2007.

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 an Operating Risk Management Group, whose responsibility is to help Company management identify 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.

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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. We expect to continue efforts to improve the Company’s oversight of operational risk in 2007.

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. Other major CMC responsibilities include:

• Setting overall capital targets within the Board approved policy, monitoring performance and recommending changes to capital including dividends, 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

• 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.

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It is our belief that capital not considered necessary to support current and anticipated business should be returned to the Company’s shareholders through dividends and repurchases of its shares.

In December 2006, the Company resumed its stock repurchase plan, which had been suspended since July 2005 because of the Amegy acquisition. The Board authorized a $400 million repurchase program. The Company repurchased and retired 308,359 shares of its common stock in 2006 at a total cost of $25.0 million and an average per share price of $81.05 under this share repurchase authorization. In 2005, common stock repurchases under repurchase plans totaled 1,159,522 shares at a total cost of $80.7 million and in 2004 repurchases were 1,734,055 shares at a cost of $104.9 million. The Company also repurchased $1.5 million of shares related to the Company’s restricted stock employee compensation program in both 2006 and 2005.

During its January 2007 meeting, the Board of Directors declared a dividend of $0.39 per common share payable on February 21, 2007 to shareholders of record on February 7, 2007. The Company paid dividends in 2006 of $1.47 per common share compared with $1.44 and $1.26 per share in 2005 and 2004, respectively.

In 2006, the Company paid $157.0 million in common stock dividends and used $26.5 million to repurchase common stock shares of the Company. In total, we returned to shareholders $183.5 million out of total net income of $583.1 million or 31.5%. The Company paid $130.3 million in common stock dividends in 2005, and used $82.2 million to repurchase shares of the Company’s common stock. In total, we returned to shareholders $212.5 million out of total net income of $480.1 million, or 44.3%.

Total shareholders’ equity at December 31, 2006 increased to $5.0 billion, an increase of 17.7% over the $4.2 billion at December 31, 2005, resulting mainly from retained earnings and the issuance of preferred stock. Tangible equity was $2.9 billion at the end of 2006 and $2.2 billion at the end of 2005.

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On December 7, 2006 the Company issued $240 million of Depositary Shares. The 9,600,000 Depositary Shares each represent a 1/40th ownership interest in a share of Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock. The issuance was priced at an annual rate equal to the greater of three-month LIBOR plus 0.52%, or 4%. The Series A Preferred Stock is not redeemable prior to December 15, 2011. On and after that date, the Series A Preferred Stock will be redeemable, in whole at any time or in part from time to time, at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

The Company declared a preferred stock dividend of $3.8 million in December 2006 for the quarterly dividend to be paid to shareholders on March 15, 2007. Under the terms of the Zions Series A Preferred Stock, this dividend had to be declared and funds set aside to pay the dividend before Zions could begin repurchasing common shares under the $400 million repurchase authorization announced on December 11, 2006.

The Company’s capital ratios were as follows at December 31, 2006 and 2005:

SCHEDULE 45

CAPITAL RATIOS

	December 31,		Percentage required to be well capitalized
	2006	2005
Tangible equity ratio	6.51%	5.28%	na
Tangible common equity ratio	5.98	5.28	na
Average equity to average assets	10.19	9.01	na
Risk-based capital ratios:
Tier 1 leverage	7.86	8.16	5.00%
Tier 1 risk-based capital	7.98	7.52	6.00
Total risk-based capital	12.29	12.23	10.00

The increased tangible equity ratio at December 31, 2006 reflects the impact of the perpetual preferred stock issuance previously discussed. The increases in the capital ratios reflect the increased earnings for 2006 and the suspension of the Company’s share repurchase programs for most of 2006.

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. Final rules are expected to be published by mid-year 2007. The regulators have previously stated that approximately the ten largest U.S. bank holding companies will be required to adopt the new standard, and that others may elect to “opt in.” We do not currently expect to be an early “opt in” bank holding company, as the Company does not have in place the data collection and analytical capabilities necessary to adopt Basel II. However, we believe that the competitive advantages afforded to companies that do adopt the framework 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.

Also, in December 2006, the U.S. banking regulators issued another NPR for modifications to the Basel IA framework for those banks not adopting Basel II. The regulatory agencies are currently evaluating the numerous comments received on this proposal, which is commonly referred to as Basel IA. As proposed, Basel IA would appear to narrow somewhat the regulatory capital disparities between Basel II and the existing Basel I framework for some lines of business. However, given the Company’s mix of business, it does not expect to derive a significant capital benefit if Basel IA is adopted substantially as proposed.

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 86 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, 2006 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, 2006, and has also issued an attestation report, which is included herein, on internal control over financial reporting under Auditing Standard No. 2 of the Public Company Accounting Oversight Board (“PCAOB”).

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 management’s assessment, included in the accompanying Report on Management’s Assessment of Internal Control over Financial Reporting, that Zions Bancorporation and subsidiaries maintained effective internal control over financial reporting as of December 31, 2006, 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. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of 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, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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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. 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, management’s assessment that Zions Bancorporation and subsidiaries maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Zions Bancorporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, 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, 2006 and 2005, 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, 2006 and our report dated February 28, 2007 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

February 28, 2007

102

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, 2006 and 2005, 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, 2006. 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, 2006 and 2005, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

As discussed in Notes 1, 14, and 17 to the financial statements, during 2006 Zions Bancorporation and subsidiaries adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Zions Bancorporation and subsidiaries’ internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2007 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

February 28, 2007

103

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2006 AND 2005

(In thousands, except share amounts)	2006		2005
ASSETS
Cash and due from banks	$	1,938,810	1,706,590
Money market investments:
Interest-bearing deposits		43,203	22,179
Federal funds sold		55,658	414,281
Security resell agreements		270,415	230,282
Investment securities:
Held to maturity, at cost (approximate market value $648,828 and $642,258)		653,124	649,791
Available for sale, at market		5,050,907	5,305,859
Trading account, at market (includes $34,494 and $43,444 transferred as collateral under repurchase agreements)		63,436	101,562
		5,767,467	6,057,212
Loans:
Loans held for sale		252,818	256,236
Loans and leases		34,566,118	29,996,022
		34,818,936	30,252,258
Less:
Unearned income and fees, net of related costs		151,380	125,322
Allowance for loan losses		365,150	338,399
Loans and leases, net of allowance		34,302,406	29,788,537
Other noninterest-bearing investments		1,022,383	938,515
Premises and equipment, net		609,472	564,745
Goodwill		1,900,517	1,887,588
Core deposit and other intangibles		162,134	199,166
Other real estate owned		9,250	19,966
Other assets		888,511	950,578
	$	46,970,226	42,779,639
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	10,010,310	9,953,833
Interest-bearing:
Savings and money market		15,858,887	16,055,754
Time under $100,000		2,257,967	1,938,789
Time $100,000 and over		4,302,056	2,514,596
Foreign		2,552,526	2,179,436
		34,981,746	32,642,408
Securities sold, not yet purchased		50,416	64,654
Federal funds purchased		1,993,483	1,255,662
Security repurchase agreements		934,057	1,027,658
Other liabilities		747,499	592,599
Commercial paper		220,507	167,188
Federal Home Loan Bank advances and other borrowings:
One year or less		517,925	18,801
Over one year		137,058	234,488
Long-term debt		2,357,721	2,511,366
Total liabilities		41,940,412	38,514,824
Minority interest		42,791	27,551
Shareholders’ equity:
Capital stock:
Preferred stock, without par value, authorized 3,000,000 shares:
Series A (liquidation preference $1,000 per share); issued and outstanding 240,000 shares		240,000	–
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 106,720,884 and 105,147,562 shares		2,230,303	2,156,732
Retained earnings		2,602,189	2,179,885
Accumulated other comprehensive loss		(75,849)	(83,043)
Deferred compensation		(9,620)	(16,310)
Total shareholders’ equity		4,987,023	4,237,264
	$	46,970,226	42,779,639

See accompanying notes to consolidated financial statements.

104

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

(In thousands, except per share amounts)	2006		2005	2004
Interest income:
Interest and fees on loans	$	2,438,324	1,595,916	1,229,721
Interest on loans held for sale		16,442	9,814	5,038
Lease financing		18,290	16,079	16,839
Interest on money market investments		24,714	31,682	16,355
Interest on securities:
Held to maturity – taxable		8,861	7,331	5,467
Held to maturity – nontaxable		22,909	24,005	18,742
Available for sale – taxable		272,252	201,628	160,621
Available for sale – nontaxable		8,630	3,931	9,062
Trading account		7,699	19,870	29,615
Total interest income		2,818,121	1,910,256	1,491,460
Interest expense:
Interest on savings and money market deposits		405,269	220,604	121,189
Interest on time and foreign deposits		315,569	119,720	61,177
Interest on short-term borrowings		164,335	92,149	62,311
Interest on long-term debt		168,224	116,433	85,965
Total interest expense		1,053,397	548,906	330,642
Net interest income		1,764,724	1,361,350	1,160,818
Provision for loan losses		72,572	43,023	44,067
Net interest income after provision for loan losses		1,692,152	1,318,327	1,116,751
Noninterest income:
Service charges and fees on deposit accounts		166,644	128,796	131,683
Loan sales and servicing income		54,193	77,822	79,081
Other service charges, commissions and fees		166,824	111,268	93,617
Trust and wealth management income		27,511	21,850	27,966
Income from securities conduit		32,206	34,966	35,185
Dividends and other investment income		39,918	30,040	31,812
Market making, trading and nonhedge derivative income		18,501	15,714	17,565
Equity securities gains (losses), net		17,841	(1,312)	(9,765)
Fixed income securities gains, net		6,416	845	2,510
Other		21,155	16,964	21,821
Total noninterest income		551,209	436,953	431,475
Noninterest expense:
Salaries and employee benefits		751,679	573,902	531,303
Occupancy, net		99,607	77,393	73,716
Furniture and equipment		88,725	68,190	65,781
Legal and professional services		40,134	34,804	32,390
Postage and supplies		33,076	26,839	25,679
Advertising		26,465	21,364	19,747
Debt extinguishment cost		7,261	–	–
Impairment losses on long-lived assets		1,304	3,133	712
Restructuring charges		17	2,443	1,068
Merger related expense		20,461	3,310	–
Amortization of core deposit and other intangibles		43,000	16,905	14,129
Provision for unfunded lending commitments		1,248	3,425	467
Other		217,460	181,083	158,241
Total noninterest expense		1,330,437	1,012,791	923,233
Impairment loss on goodwill		–	602	602
Income before income taxes and minority interest		912,924	741,887	624,391
Income taxes		317,950	263,418	220,126
Minority interest		11,849	(1,652)	(1,722)
Net income		583,125	480,121	405,987
Preferred stock dividend		3,835	–	–
Net earnings applicable to common shareholders	$	579,290	480,121	405,987
Weighted average common shares outstanding during the year:
Basic shares		106,057	91,187	89,663
Diluted shares		108,028	92,994	90,882
Net earnings per common share:
Basic	$	5.46	5.27	4.53
Diluted		5.36	5.16	4.47

See accompanying notes to consolidated financial statements.

105

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AND

    COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

	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, 2003	$	–	89,840,638	$	985,904	1,538,677	19,041	(3,599)	2,540,023
Comprehensive income:
Net income						405,987			405,987
Other comprehensive loss, net of tax:
Net realized and unrealized holding losses on investments and retained interests							(3,622)
Foreign currency translation							803
Reclassification for net realized gains on investments recorded in operations							(1,422)
Net unrealized losses on derivative instruments							(20,209)
Minimum pension liability							(2,523)
Other comprehensive loss							(26,973)		(26,973)
Total comprehensive income									379,014
Stock redeemed and retired			(1,734,055)		(104,881)				(104,881)
Net stock options exercised			1,723,364		91,042				91,042
Cash dividends on common stock, $1.26 per share						(114,600)			(114,600)
Change in deferred compensation								(619)	(619)
Balance, December 31, 2004		–	89,829,947		972,065	1,830,064	(7,932)	(4,218)	2,789,979
Comprehensive income:
Net income						480,121			480,121
Other comprehensive loss, net of tax:
Net realized and unrealized holding losses on investments and retained interests							(28,380)
Foreign currency translation							(1,507)
Reclassification for net realized gains on investments recorded in operations							(659)
Net unrealized losses on derivative instruments							(40,771)
Minimum pension liability							(3,794)
Other comprehensive loss							(75,111)		(75,111)
Total comprehensive income									405,010
Stock redeemed and retired			(1,178,880)		(82,211)				(82,211)
Net stock options exercised and restricted stock issued			2,001,876		113,290				113,290
Common and restricted stock issued and stock options assumed in acquisition			14,494,619		1,153,588			(3,906)	1,149,682
Cash dividends on common stock, $1.44 per share						(130,300)			(130,300)
Change in deferred compensation								(8,186)	(8,186)
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, 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			(326,639)		(26,483)				(26,483)
Net stock options exercised and restricted stock issued			1,899,961		91,647				91,647
Reclassification of deferred compensation, adoption of SFAS 123R					(11,111)			11,111	–
Share-based compensation					23,685				23,685
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

See accompanying notes to consolidated financial statements.

106

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

(In thousands)	2006		2005	2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	583,125	480,121	405,987
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment losses on goodwill and long lived assets		1,304	3,735	1,314
Debt extinguishment cost		7,261	–	–
Provision for loan losses		72,572	43,023	44,067
Depreciation of premises and equipment		75,603	61,163	59,479
Amortization		58,168	39,504	35,298
Deferred income tax expense (benefit)		9,368	(32,362)	(21,914)
Share-based compensation		24,358	–	–
Excess tax benefits from share-based compensation		(15,707)	–	–
Gain (loss) allocated to minority interest		11,849	(1,652)	(1,722)
Equity securities losses (gains), net		(17,841)	1,312	9,765
Fixed income securities gains, net		(6,416)	(845)	(2,510)
Net decrease in trading securities		38,126	188,508	245,471
Principal payments on and proceeds from sales of loans held for sale		1,150,692	987,324	735,392
Additions to loans held for sale		(1,119,723)	(911,287)	(707,320)
Net gains on sales of loans, leases and other assets		(26,548)	(50,191)	(53,317)
Increase in cash surrender value of bank-owned life insurance		(26,638)	(18,921)	(18,478)
Change in accrued income taxes		27,305	15,611	(4,292)
Change in accrued interest receivable		(42,498)	(22,922)	(12,890)
Change in other assets		89,164	(98,903)	147,075
Change in other liabilities		114,288	65,505	(198,285)
Change in accrued interest payable		31,020	10,085	1,469
Other, net		8,155	(4,614)	(2,217)
Net cash provided by operating activities		1,046,987	754,194	662,372
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in money market investments		297,466	89,273	212,169
Proceeds from maturities of investment securities held to maturity		128,358	129,916	133,859
Purchases of investment securities held to maturity		(131,356)	(137,844)	(138,859)
Proceeds from sales of investment securities available for sale		671,706	601,836	1,399,445
Proceeds from maturities of investment securities available for sale		2,338,383	882,576	614,818
Purchases of investment securities available for sale		(2,777,647)	(1,327,688)	(2,408,902)
Proceeds from sales of loans and leases		218,104	1,200,692	996,249
Net increase in loans and leases		(4,863,838)	(3,619,401)	(3,888,410)
Net increase in other noninterest-bearing investments		(28,864)	(15,294)	(35,093)
Proceeds from sales of premises and equipment		3,632	5,331	11,301
Purchases of premises and equipment		(122,432)	(67,995)	(72,289)
Proceeds from sales of other real estate owned		39,607	16,768	16,231
Net cash paid to acquire minority interest in nonbank subsidiary		(11,454)	–	–
Net cash received from (paid for) acquisitions		(1,691)	(173,642)	1,076
Net cash paid for net liabilities on branches sold		–	(16,076)	(17,746)
Net cash used in investing activities		(4,240,026)	(2,431,548)	(3,176,151)

107

ZIONS BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

(In thousands)	2006		2005	2004
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	2,339,338	2,995,165	2,560,653
Net change in short-term funds borrowed		1,182,425	(933,191)	(232,677)
Proceeds from FHLB advances and other borrowings over one year		4,962	3,285	–
Payments on FHLB advances and other borrowings over one year		(102,392)	(2,233)	(3,288)
Proceeds from issuance of long-term debt		395,000	595,134	300,000
Debt issuance costs		(597)	(3,468)	(2,025)
Payments on long-term debt		(529,963)	(35)	(240,006)
Debt extinguishment cost		(7,261)	–	–
Proceeds from issuance of preferred stock		235,833	–	–
Proceeds from issuance of common stock		79,511	90,800	82,250
Payments to redeem common stock		(26,483)	(82,211)	(104,881)
Excess tax benefits from share-based compensation		15,707	–	–
Dividends paid on preferred stock		(3,835)	–	–
Dividends paid on common stock		(156,986)	(130,300)	(114,600)
Net cash provided by financing activities		3,425,259	2,532,946	2,245,426
Net increase (decrease) in cash and due from banks		232,220	855,592	(268,353)
Cash and due from banks at beginning of year		1,706,590	850,998	1,119,351
Cash and due from banks at end of year	$	1,938,810	1,706,590	850,998
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	1,022,260	529,010	321,677
Income taxes		273,154	257,850	240,773
Noncash items:
Loans transferred to securities resulting from securitizations		–	42,431	36,282
Loans transferred to other real estate owned and other assets		29,342	17,127	9,903
Investment securities available for sale transferred to investment securities held to maturity		–	–	636,494
Acquisition of Amegy Bancorporation, Inc.
Common stock issued		–	1,089,440	–
Assets acquired		–	8,886,049	–
Liabilities assumed		–	7,126,844	–

See accompanying notes to consolidated financial statements.

108

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 effective December 3, 2005 as discussed in Note 3. 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, including NetDeposit, Inc. (“NetDeposit”) and P5, Inc. (“P5”).

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.

Financial Accounting Standards Board (“FASB”) Interpretation No. 46R (“FIN 46R”), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51, as revised from FIN 46, requires consolidation of a variable interest entity (“VIE”) when a company is the primary beneficiary of the VIE. Upon adoption of FIN 46R beginning in 2004, we deconsolidated the trusts involved in our trust preferred borrowing arrangements. We have not consolidated or deconsolidated any other entity as a result of adopting FIN 46R. The analyses required of our variable interests have concluded in each case that we are not the primary beneficiary as defined by FIN 46R. Ongoing reviews of our variable interests have not identified any events that would change our previous conclusions. As described in Note 6, Zions Bank holds variable interests in securitization structures. All of these structures are qualifying special-purpose entities, which are exempt from the consolidation requirements of FIN 46R.

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. 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.

109

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 market 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 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, 2006, we held approximately $270 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 $300 million during 2006, and the maximum amount outstanding at any month-end during 2006 was $368 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 cost, net of unamortized premiums and unaccreted discounts. Upon purchase, 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 are recorded at fair value. Unrealized gains and losses, after applicable taxes, are recorded as a component of other comprehensive income. 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 declines takes into account the severity and duration of the impairment, recent events specific to the issuer or industry, 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 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 market values of available for sale and trading securities are generally based on quoted market prices or dealer quotes. If a quoted market price is not available, market value is estimated using quoted market prices for comparable securities or a discounted cash flow model based on established market rates.

Loans

Loans are reported at the principal amount outstanding, net of unearned income. Unearned income, which includes deferred fees net of deferred direct incremental 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 market 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. Generally, consumer loans are not placed on nonaccrual status inasmuch as they are normally charged off when they become 120 days past due. 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.

110

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 market 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.

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 market (less any selling costs) based on property appraisals at the time of transfer.

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 based on 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 expected 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 market 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 sell receivables in securitizations of home equity loans and small business loans, we may retain a cash reserve account, an interest-only strip, and in some cases a subordinated tranche, all of which are retained interests in the securitized receivables. Gain or loss on sale of the receivables depends 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 are generally not available for retained interests. To obtain fair values, we estimate 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 where 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 further discussion in Note 3.

Goodwill and Identifiable Intangible Assets

Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, requires that goodwill and intangible assets deemed to have indefinite lives are no longer amortized. Such assets are now subject to annual specified impairment tests. 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 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 have no net interest rate risk as a result of the transaction. 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, when indistinguishable from the underlying funded loan, is considered in our determination of the allowance for loan losses. Other liabilities in the balance sheet include the portion of the allowance that was distinguishable and related to undrawn commitments to extend credit.

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. 123R, Share-Based Payment, which we adopted effective January 1, 2006 using the “modified prospective” transition method. All share-based payments are recognized 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.

Net Earnings per Common Share

Net earnings per common share is based on net earnings applicable to common shareholders which is net of the preferred stock dividend. 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.

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2.     OTHER RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No. 159, Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The fair value option may be applied instrument by instrument with certain exceptions and is applied generally on an irrevocable basis to the entire instrument. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is permitted under certain circumstances. Management is evaluating the impact this Statement may have on the Company’s financial statements.

In September 2006, the Emerging Issues Task Force (“EITF”) of the FASB ratified EITF Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, and EITF Issue No. 06-5, Accounting for Purchases of Life Insurance – Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life Insurance. EITF 06-4 provides that an employer should recognize a liability for future benefits based on the substantive agreement with the employee. The Issue should be applied to fiscal years beginning after December 15, 2007, with earlier application permitted. EITF 06-5 provides that in determining the amount recognized as an asset, a policyholder should consider the cash surrender value as well as any additional amounts included in the contractual terms of the policy that will be paid upon surrender. The amount that could be realized should be calculated at the individual policy level and consider any probable contractual limitations, including the exclusion of any additional amounts paid for the surrender of an entire group of policies. The Issue is effective for fiscal years beginning after December 15, 2006. Certain banking subsidiaries of the Company have life insurance arrangements; however, we have determined that the adoption of these issues will not have a material impact on the Company’s financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities and expands disclosures about fair value measurements. The Statement applies under other accounting pronouncements that require or permit fair value measurements; however, it does not expand the use of fair value measurements in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Early adoption is permitted. Management is evaluating the impact this Statement may have on the Company’s financial statements.

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

3.    MERGER AND ACQUISITION ACTIVITY

Effective December 3, 2005, we acquired 100% of the outstanding stock of Amegy Bancorporation, Inc. headquartered in Houston, Texas. The tax-free merger was accomplished according to the Agreement and Plan of Merger (“the Merger Agreement”) dated July 5, 2005, and included the formation of a new holding company, Amegy Corporation, which became a wholly-owned subsidiary of the Company. The merger expanded the Company’s banking presence into Texas. Amegy’s results for the month of December 2005 were included with the Company’s results of operations for 2005.

As provided by the Merger Agreement and based on valuation amounts determined as of the merger date, approximately 70.89 million shares of Amegy common stock were exchanged for $600 million in cash and 14.35 million shares of the Company’s common stock at a calculated exchange ratio of 0.3136. The exchange of shares represented approximately 16% of the Company’s outstanding common stock as of the merger date.

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The merger was accounted for under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Accordingly, the purchase price was allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the merger date as summarized below (in thousands, except share and per share amounts):

Purchase price
Number of shares of the Company’s common stock issued for Amegy common stock		14,351,115
Average share price of the Company’s common stock three days prior to close on December 3, 2005	$	75.9133
Total stock consideration			$	1,089,440
Fair value of Amegy stock options and restricted stock converted to the Company’s stock options and restricted stock				60,242
Total common and restricted stock issued and stock options assumed				1,149,682
Cash consideration, including fractional shares				600,032
Total stock and cash consideration				1,749,714
Acquisition costs:
Direct costs of acquisition				9,491
Total purchase price and acquisition costs				1,759,205
Allocation of purchase price
Amegy shareholders’ equity	$	604,787
Amegy goodwill		(150,426)
Amegy core deposit intangible assets, net of tax		(12,852)
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Securities		(697)
Loans		(43,723)
Identified intangibles		157,855
Other assets		(42,599)
Deposits		(16)
Other liabilities		(364)
Fair value of net assets acquired				511,965
Goodwill resulting from the merger			$	1,247,240

The appropriate amounts and adjustments shown were recorded by Amegy and included in its reporting segment. Adjustments to asset and liability amounts during the year subsequent to the merger date reduced goodwill by approximately $0.8 million. These adjustments primarily related to the tax deductibility of certain merger related expenses. Valuations of certain assets and liabilities of Amegy were performed with the assistance of independent valuation consultants. None of the resulting goodwill is expected to be deductible for tax purposes.

The following unaudited pro forma condensed combined financial information presents the Company’s results of operations for 2005 assuming the merger had taken place as of January 1, 2005 (in thousands, except share and per share amounts):

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Net interest income	$	1,574,660
Provision for loan losses		51,154
Noninterest income		530,397
Merger related expense		3,310
Other noninterest expense		1,294,983
Income before income taxes and minority interest		755,608
Net income		493,764
Net earnings per common share:
Basic	$	4.73
Diluted		4.63
Weighted average common shares outstanding during the year:
Basic		104,349
Diluted		106,714

These pro forma amounts do not reflect cost savings or revenue enhancements anticipated from the acquisition, and are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the year presented, nor are they necessarily indicative of future consolidated results.

For 2006 and 2005, merger related expense of $20.5 million and $3.3 million, respectively, related primarily to costs associated with this merger and consisted of systems integration and related charges of approximately $11.1 million and $1.4 million, employee-related costs of $9.1 million and $1.2 million, and other costs of $0.3 million and $0.7 million, respectively.

As of the merger date, approximately $15.2 million of liabilities for Amegy’s exit and termination costs as a result of the merger were recorded as purchase accounting adjustments resulting in an increase to goodwill. These costs consist of employee-related costs of $12.2 million and other exit costs of $3.0 million. As of December 31, 2006, Amegy’s unpaid accrual for these costs was approximately $2.3 million.

Additional costs from the merger for employment and retention agreements to be charged to operations by Amegy subsequent to December 31, 2006 as the employees render service are $2.8 million in 2007 and $1.0 million in 2008.

In October 2006, we acquired the remaining minority interests of P5, a provider of web-based claims reconciliation services. 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.

On January 17, 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 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 the Company’s NBA subsidiary.

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4.     INVESTMENT SECURITIES

Investment securities are summarized as follows (in thousands):

	December 31, 2006
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Estimated market value
Held to maturity
Municipal securities	$	652,624	3,521	7,817	648,328
Other debt securities		500	–	–	500
	$	653,124	3,521	7,817	648,828
Available for sale
U.S. Treasury securities	$	42,546	268	375	42,439
U.S. Government agencies and corporations:
Small Business Administration loan-backed securities		907,372	2,387	8,355	901,404
Other agency securities		782,480	235	9,241	773,474
Municipal securities		225,839	1,651	134	227,356
Mortgage/asset-backed and other debt securities		2,930,006	21,009	43,299	2,907,716
		4,888,243	25,550	61,404	4,852,389
Other securities:
Mutual funds		192,635	–	–	192,635
Stock		3,426	2,457	–	5,883
	$	5,084,304	28,007	61,404	5,050,907
	December 31, 2005
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Estimated market value
Held to maturity
Municipal securities	$	649,791	4,148	11,681	642,258
Available for sale
U.S. Treasury securities	$	42,572	304	320	42,556
U.S. Government agencies and corporations:
Small Business Administration loan-backed securities		785,882	2,669	6,727	781,824
Other agency securities		687,632	1,121	5,413	683,340
Municipal securities		266,501	1,041	177	267,365
Mortgage/asset-backed and other debt securities		3,310,839	37,478	40,400	3,307,917
		5,093,426	42,613	53,037	5,083,002
Other securities:
Mutual funds		217,084	–	1,481	215,603
Stock		6,422	2,123	1,291	7,254
	$	5,316,932	44,736	55,809	5,305,859

The amortized cost and estimated market value of investment debt securities as of December 31, 2006 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):

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	Held to maturity			Available for sale
	Amortized cost		Estimated market value	Amortized cost	Estimated market value
Due in one year or less	$	57,165	57,035	820,975	807,344
Due after one year through five years		203,616	201,433	1,215,072	1,194,259
Due after five years through ten years		189,019	188,493	487,689	493,475
Due after ten years		203,324	201,867	2,364,507	2,357,311
	$	653,124	648,828	4,888,243	4,852,389

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

	December 31, 2006
	Less than 12 months			12 months or more		Total
	Gross unrealized losses		Estimated market value	Gross unrealized losses	Estimated market value	Gross unrealized losses	Estimated market value
Held to maturity
Municipal securities	$	762	81,497	7,055	291,781	7,817	373,278
Available for sale
U.S. Treasury securities	$	32	21,648	343	19,712	375	41,360
U.S. Government agencies and corporations:
Small Business Administration loan-backed securities		3,031	337,503	5,324	324,998	8,355	662,501
Other agency securities		1,088	284,179	8,153	255,988	9,241	540,167
Municipal securities		39	15,564	95	2,597	134	18,161
Mortgage/asset-backed and other debt securities		6,132	517,502	37,167	1,252,554	43,299	1,770,056
	$	10,322	1,176,396	51,082	1,855,849	61,404	3,032,245
	December 31, 2005
	Less than 12 months			12 months or more		Total
	Gross unrealized losses		Estimated market value	Gross unrealized losses	Estimated market value	Gross unrealized losses	Estimated market value
Held to maturity
Municipal securities	$	6,414	228,902	5,267	130,207	11,681	359,109
Available for sale
U.S. Treasury securities	$	292	19,753	28	2,040	320	21,793
U.S. Government agencies and corporations:
Small Business Administration loan-backed securities		3,671	318,535	3,056	173,286	6,727	491,821
Other agency securities		1,998	267,359	3,415	86,546	5,413	353,905
Municipal securities		136	48,782	41	2,286	177	51,068
Mortgage/asset-backed and other debt securities		25,657	1,295,398	14,743	423,502	40,400	1,718,900
		31,754	1,949,827	21,283	687,660	53,037	2,637,487
Other securities:
Mutual funds		1,481	90,329	–	–	1,481	90,329
Stock		–	–	1,291	2,805	1,291	2,805
	$	33,235	2,040,156	22,574	690,465	55,809	2,730,621

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The preceding disclosure of unrealized losses and the following discussion are presented pursuant to FASB Staff Position (“FSP”) FAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, issued in November 2005, and EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. FSP FAS 115-1 replaces the impairment evaluation guidance (paragraphs 10-18) of EITF 03-1; however, the disclosure requirements of EITF 03-1 remain in effect. The FSP addresses the determination of when an investment is considered impaired, whether the impairment is considered 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.

U.S. Treasury Securities: Unrealized losses relate to U.S. Treasury notes and were caused by interest rate increases. The contractual terms of these investments range from less than one year to ten years. 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, 2006.

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 market 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, 2006.

Other Agency Securities: Unrealized losses were caused by interest rate increases. The other 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, Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”). 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. Because the decline in market value is 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, 2006.

Municipal Securities: We classify these securities issued by state and political subdivisions as held to maturity (“HTM”) and available for sale (“AFS”). 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. Market 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 market 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, 2006.

Mortgage/Asset-Backed and Other Debt Securities: The mortgage-backed securities are comprised largely of fixed and variable rate residential mortgage-backed securities issued by the Government National Mortgage Association (“GNMA”), FAMC, FHLMC, or FNMA. The mortgage-backed securities are also comprised of variable rate unrated commercial mortgage-backed securities from small business loan securitizations by Zions Bank. Unrealized losses on the residential mortgage-backed securities were caused by interest rate increases. These securities are purchased at premiums or discounts. The asset-backed securities are investment grade

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rated pools of trust preferred securities and other corporate debt. The asset-backed securities include both fixed and variable rate securities. Unrealized losses on the fixed rate securities were cause largely by interest rate increases. The asset-backed securities and commercial mortgage-backed securities from the small business loan securitizations are reviewed quarterly to assess credit quality and determine if any impairment is other than temporary. The following factors are considered: 1) credit migration and credit structure/subordination; 2) cash flow performance and expectation; 3) market prices and/or recovery assumptions; 4) severity and duration of impairment; 5) sector trends; and 6) price volatility. Because of the above analysis 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, 2006.

We review all investment securities for impairment on an ongoing basis according to our policy described in Note 1. In 2006, as a result of our review on an equity investment, we recorded an impairment loss of approximately $2.5 million, which was included in equity securities gains (losses) in the statement of income. At December 31, 2006 and 2005, respectively, 1,552 and 1,505 HTM and 623 and 660 AFS investment securities were in an unrealized loss position.

The following summarizes realized gains and losses recognized in the statement of income as equity securities gains (losses) and fixed income securities gains (in millions):

	2006			2005		2004
	Gross gains		Gross losses	Gross gains	Gross losses	Gross gains	Gross losses
Investment securities:
Available for sale	$	18.5	(17.4)	3.9	(2.8)	4.2	(0.8)
Other noninterest-bearing investments:
Securities held by consolidated SBICs		26.3	(6.6)	6.1	(8.5)	15.4	(22.5)
Other		3.5	–	0.9	(0.1)	1.0	(4.6)
	$	48.3	(24.0)	10.9	(11.4)	20.6	(27.9)

Adjusted for expenses, minority interest, and income taxes, consolidated net income includes income (losses) from consolidated Small Business Investment Companies (“SBICs”) of approximately $4.1 million in 2006, $(2.2) million in 2005, and $(4.5) million in 2004. The carrying value of securities held by these SBICs was $97.3 million and $74.5 million at December 31, 2006 and 2005, respectively.

As of December 31, 2006 and 2005, securities with an amortized cost of $2.9 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):

	2006		2005
Loans held for sale	$	252,818	256,236
Commercial lending:
Commercial and industrial		8,422,094	7,192,112
Leasing		442,440	372,647
Owner occupied		6,260,224	4,825,375
Total commercial lending		15,124,758	12,390,134
Commercial real estate:
Construction and land development		7,482,896	6,065,250
Term		4,951,654	4,639,869
Total commercial real estate		12,434,550	10,705,119
Consumer:
Home equity credit line and other consumer real estate		1,850,371	1,830,344
1-4 family residential		4,191,953	4,130,167
Bankcard and other revolving plans		295,314	206,724
Other		456,942	536,927
Total consumer		6,794,580	6,704,162
Foreign loans		2,814	5,211
Other receivables		209,416	191,396
Total loans	$	34,818,936	30,252,258

Owner occupied and commercial term loans included unamortized premium of approximately $97.1 million and $43.1 million at December 31, 2006 and 2005, respectively.

As of December 31, 2006 and 2005, loans with a carrying value of $3.7 billion and $3.1 billion, respectively, were included as blanket pledges of security for FHLB advances. Actual FHLB advances against these pledges were $631 million and $228 million at December 31, 2006 and 2005, respectively.

We sold loans totaling $1,014 million in 2006, $885 million in 2005, and $687 million in 2004 that were previously classified as held for sale. Income from loans sold, excluding servicing, of both loans held for sale and loan securitizations was $28.5 million in 2006, $53.9 million in 2005, and $55.3 million in 2004.

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

	2006		2005	2004
Balance at beginning of year	$	338,399	271,117	268,506
Allowance of loans sold with branches		–	–	(2,067)
Allowance for loan losses of companies acquired		–	49,217	–
Additions:
Provision for loan losses		72,572	43,023	44,067
Recoveries		19,971	17,811	20,265
Deductions:
Loan charge-offs		(65,792)	(42,769)	(59,654)
Balance at end of year	$	365,150	338,399	271,117

Nonaccrual loans were $66 million and $69 million at December 31, 2006 and 2005, respectively. Loans past due 90 days or more as to interest or principal and still accruing interest were $44 million and $17 million at December 31, 2006 and 2005, respectively.

Our recorded investment in impaired loans was $47 million and $31 million at December 31, 2006 and 2005, respectively. Impaired loans of $18 million and $14 million at December 31, 2006 and 2005 required an allowance of $6 million and $3 million, respectively, which is included in the allowance for loan losses.

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Contractual interest due on impaired loans was $3.3 million in 2006, $2.6 million in 2005, and $3.6 million in 2004. Interest collected on these loans and included in interest income was $0.6 million in 2006, $0.3 million in 2005, and $0.6 million in 2004. The average recorded investment in impaired loans was $39 million in 2006, $33 million in 2005, and $49 million in 2004.

In December 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-3 (“SOP 03-3”), Accounting for Certain Loans or Debt Securities Acquired in a Transfer. SOP 03-3 requires acquired impaired loans for which it is probable that the investor will be unable to collect all contractually required payments receivable to be recorded at the present value of amounts expected to be received and prohibits carrying over or creating valuation allowances in the initial accounting for these loans. Loans carried at fair value, mortgage loans held for sale, and loans to borrowers in good standing under revolving credit agreements are excluded from the scope of SOP 03-3. The guidance is effective for loans acquired in fiscal years beginning after December 15, 2004.

We acquired approximately $14.1 million of impaired loans in the Amegy acquisition which closed on December 3, 2005. These loans were recorded at their fair value of $13.5 million with no associated allowance for loan losses in accordance with the provisions of SOP 03-3. Additional disclosures under SOP 03-3 are not provided because the amounts are not significant.

Concentrations of credit risk from financial instruments (whether on- or off-balance sheet) occur when groups of customers or counterparties having similar economic characteristics are unable to meet contractual obligations when 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 13 major industry classification groupings based on Standard Industrial Classification codes. As of December 31, 2006, the larger concentrations of risk in the commercial loan and leasing portfolios are represented by the real estate and construction and services groupings. We have no significant exposure to highly-leveraged transactions. See discussion in Note 18 regarding commitments to extend additional credit.

6.    ASSET SECURITIZATIONS

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.

We sold home equity loans for cash to a revolving securitization structure for which we retained servicing responsibilities and receive servicing fees. On an annualized basis, these fees approximate 0.5% of the outstanding loan balances. We recognized pretax gains from these securitizations of $4.7 million in 2006, $6.3 million in 2005, and $8.7 million in 2004. In December 2006, we discontinued selling these loans to the securitization structure.

We retain subordinated tranche interests or cash reserve accounts that serve as credit enhancements on the securitizations. These retained interests provide us with rights to future cash flows arising after the investors in the securitizations have received the return for which they contracted, and after administrative and other expenses have been paid. The investors and the securitization vehicles have no recourse to other assets of the Company for failure of debtors to pay when due. Our retained interests are subject to credit, prepayment, and interest rate risks on the transferred loans and receivables.

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The gain or loss on the sale of loans and receivables is the difference between the proceeds from the sale and the basis of the assets sold. The basis is 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 are 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.

We have also sold small business loans to securitization structures prior to 2006. Except for the revolving features, the general characteristics of the securitizations and rights of the Company described previously also pertain to these transactions. Annualized servicing fees approximate 1% of the outstanding loan balances. For most small business loan sales, we do not establish a servicing asset because the lack of an active market does not make it practicable to estimate the fair value of servicing. For sales previous to 2006, we recognized pretax gains of $2.6 million in 2005 and $0.8 million in 2004.

Key economic assumptions used for measuring the retained interests at the date of sale for securitizations are as follows:

	Home equity loans	Small business loans
2006:
Prepayment method	na(1)	na(2)
Annualized prepayment speed	na(1)	na(2)
Weighted average life (in months)	11	na(2)
Expected annual net loss rate	0.10%	na(2)
Residual cash flows discounted at	15.0%	na(2)
2005:
Prepayment method	na(1)	CPR(3)
Annualized prepayment speed	na(1)	4 - 15 Ramp in 25 months(4)
Weighted average life (in months)	12	69
Expected annual net loss rate	0.10%	0.40%
Residual cash flows discounted at	15.0%	15.0%
2004:
Prepayment method	na(1)	CPR(3)
Annualized prepayment speed	na(1)	10, 15 Ramp-up(5)
Weighted average life (in months)	11	64
Expected annual net loss rate	0.10%	0.50%
Residual cash flows discounted at	15.0%	15.0%

(1) The weighted average life assumption includes consideration of prepayment to determine the fair value of the capitalized residual cash flows.

(2) No small business loan securitization sales were made in 2006.

(3) “Constant Prepayment Rate.”

(4) Annualized prepayment speed begins at 4% and increases at equal increments to 15% in 25 months.

(5) Annualized prepayment speed is 10% in the first year and 15% thereafter.

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Certain cash flows between the Company and the securitization structures are summarized as follows (in millions):

	2006		2005	2004
Proceeds from new securitizations	$	–	707	605
Proceeds from loans sold into revolving securitizations		174	412	294
Servicing fees received		23	23	20
Other cash flows received on retained interests(1)		94	86	95
Total	$	291	1,228	1,014

(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 recognize interest income on retained interests in securitizations in accordance with the provisions of EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets. Interest income thus recognized, excluding revolving securitizations which are accounted for similar to trading securities, was $12.7 million in 2006, $17.7 million in 2005, and $22.5 million in 2004.

In 2006, we adjusted our valuation assumptions for retained interests from certain previous securitizations. EITF 99-20 requires periodic updates of the assumptions used to compute estimated cash flows for retained interests and to compare the net present value of these cash flows to the carrying value. We comply with EITF 99-20 by quarterly evaluating and updating our assumptions including the default assumptions as compared to historical credit losses and the credit loss expectation of the portfolio, and our prepayment speed assumptions as compared to historical prepayment speeds and the prepayment rate expectation. During this reevaluation, we also decreased the discount rate from 15% to a range of 12% - 14% on retained interest securities based on the analysis required by EITF 99-20. An impairment charge is required if the estimated market yield is lower than the current accretable yield and the security has a market value less than its carrying value. Based on adjustments to prepayment speeds, discount rates, and expected credit losses, we recorded impairment losses totaling $7.1 million on the value of the retained interests from certain small business loan securitizations. The primary factor that influenced the impairment was higher prepayment speeds than previously estimated.

Servicing fee income on all securitizations was $23.3 million in 2006, $22.7 million in 2005, and $20.4 million in 2004. All amounts of pretax gains, impairment losses, interest income, and servicing fee income are included in loan sales and servicing income in the statement of income.

Key economic assumptions for all securitizations outstanding at December 31, 2006 and the sensitivity of the current fair value of capitalized residual cash flows to immediate 10% and 20% adverse changes in those assumptions are as follows at December 31, 2006 (in millions of dollars and annualized percentage rates):

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		Home equity loans		Small business loans
Carrying amount/fair value of capitalized residual cash flows		$	4.5	78.6
Weighted average life (in months)			11	32 - 62
Prepayment speed assumption			na(1)	12.5% - 28.0%(2)
Decrease in fair value due to adverse change	10%	$	0.1	3.0
	20%	$	0.1	5.7
Expected credit losses			0.10%	0.20% - 0.50%
Decrease in fair value due to adverse change	10%	$	0.1	1.3
	20%	$	0.1	2.5
Residual cash flows discount rate			12.0%	13.0% - 13.8%
Decrease in fair value due to adverse change	10%	$	0.1	2.4
	20%	$	0.1	4.7

(1) The weighted average life assumption includes consideration of prepayment to determine the fair value of the capitalized residual cash flows.

(2) The prepayment speed assumption at December 31, 2006 for the small business loan securitizations transacted in 2005 and 2004 was 12.5 - 15 Ramp-up in 24 months and 13.5 - 15 Ramp-up in 10 months, respectively.

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on variations in assumptions cannot be extrapolated, as the relationship of the change in assumption to the change of fair value may not be linear. Also, the effect of a variation in one assumption is in reality, likely to further cause changes in other assumptions, which might magnify or counteract the sensitivities.

At December 31, 2006 and 2005, the weighted average expected static pool credit losses for small business loans were 0.95% and 1.66%. Static pool losses are calculated by summing the actual and projected future credit losses and dividing them by the original balance of each pool of assets.

The following table presents quantitative information about delinquencies and net credit losses for those categories of loans for which securitizations existed at December 31. The Company only securitizes loans originated or purchased by Zions Bank. Therefore, only loans and related delinquencies and net credit losses of commonly managed Zions Bank loans are included (in millions):

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	Principal balance December 31,			Principal balance of loans past due 30+ days(1) December 31,		Net credit losses(2)
	2006		2005	2006	2005	2006	2005	2004
Home equity loans	$	726.0	663.1	0.4	0.9	0.2	(0.1)	0.2
Small business loans		3,677.0	3,282.8	37.8	27.7	3.2	2.3	(0.4)
Total loans managed or securitized – Zions Bank		4,403.0	3,945.9	38.2	28.6	3.4	2.2	(0.2)
Less loans securitized – Zions Bank(3)		2,051.0	2,796.4
Loans held in portfolio – Zions Bank	$	2,352.0	1,149.5

(1) Loans greater than 30 days past due based on end of period total loans.

(2) Net credit losses are charge-offs net of recoveries and are based on total loans outstanding.

(3) Represents the principal amount of the loans. Interest-only strips and other retained interests held for securitized assets are excluded because they are recognized separately.

Zions Bank provides a liquidity facility (“Liquidity Facility”) for a fee to Lockhart Funding, LLC (“Lockhart”), a qualifying special-purpose entity (“QSPE”) securities conduit. Lockhart purchases floating rate U.S. Government and AAA-rated securities with funds from the issuance of commercial paper. Zions Bank also provides interest rate hedging support and administrative and investment advisory services for a fee. Pursuant to the Liquidity Facility contract, Zions Bank is required to purchase securities from Lockhart to provide funds for Lockhart to repay maturing commercial paper upon Lockhart’s inability to access 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-, 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. At any given time, the maximum commitment of Zions Bank is the book value of Lockhart’s securities portfolio, which is not allowed to exceed the size of the Liquidity Facility commitment. At December 31, 2006, the book value of Lockhart’s securities portfolio was $4.1 billion, which approximated market value, and the size of the Liquidity Facility commitment was $6.12 billion. No amounts were outstanding under the Liquidity Facility at December 31, 2006.

In June 2005 under the Liquidity Facility contract, Zions Bank repurchased for the first time a bond security from Lockhart at its book value of $12.4 million because of a rating downgrade. In 2005, Zions Bank recognized an impairment loss of $1.6 million, and in 2006, recognized a gain of $0.8 million when the security was sold. The amounts are included in fixed income securities gains in the statement of income for their respective years.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140. This Statement amends SFAS 133 to require evaluation of all interests in securitized financial assets under SFAS 133, eliminating a previous exemption under SFAS 133 for such financial instruments. Entities must now distinguish interests that are freestanding derivatives, hybrid financial instruments containing embedded derivatives requiring bifurcation, or hybrid financial instruments containing embedded derivatives that do not require bifurcation. In addition, the Statement permits fair value remeasurement for any hybrid instrument (on an instrument-by-instrument basis) that contains an embedded derivative that would otherwise require bifurcation. The Statement also amends SFAS 140 by eliminating the prohibition on a QSPE from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

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In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140. This Statement permits entities to choose to either subsequently measure recorded servicing rights at fair value and report changes in fair value in earnings, or amortize servicing rights in proportion to the estimated net servicing income or loss and assess the rights for impairment or the need for an increased obligation. In addition, the Statement, among other things, clarifies when a servicer should separately recognize servicing assets and liabilities, and requires initial fair value measurement, if practicable, of such recognized assets and liabilities.

In general, both SFAS 155 and SFAS 156 are effective as of the beginning of an entity’s fiscal year after September 15, 2006, or January 1, 2007 for calendar year-end companies. Management has concluded that the adoption of these Statements will not have a material effect on the Company’s financial statements.

The FASB continues to deliberate other projects that propose to amend SFAS 140 in addition to SFAS 155 and SFAS 156. These include criteria for legal isolation of transferred assets and restrictions on permitted activities of QSPEs. The proposed amendments, among other things, may require changes to the operating activities of QSPEs and other aspects relating to the transfer of financial assets. Subject to the requirements of any final standards when they are issued, Lockhart’s operations may need to be modified to preserve its off-balance sheet status.

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. See Note 6 for a discussion of SFAS 155.

As required by SFAS 133, we record all derivatives on the balance sheet at fair value. 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 necessary, and to manage exposure to interest rate movements or other identified risks. To accomplish this objective, we use interest rate swaps as part of our cash flow hedging strategy. The derivatives are used to hedge the variable cash flows associated with designated commercial loans and investment securities. We use fair value hedges to manage interest rate exposure to certain long-term debt. As of December 31, 2006, no derivatives were designated for hedges of investments in foreign operations.

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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.

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 fair values, and related income (expense) of derivative instruments is summarized as follows (in thousands):

	December 31, 2006				Year ended December 31, 2006			December 31, 2005			Year ended December 31, 2005
	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	$	3,275,000	7,942	44,385	(39,984)			3,036,000	246	69,375	7,094
Basis swaps		–	–	–	–			–	–	–	7
		3,275,000	7,942	44,385	(39,984)			3,036,000	246	69,375	7,101
Nonhedges
Interest rate swaps		385,948	2,258	2,258		(369)		355,629	3,038	2,828		(2,610)
Interest rate swaps for customers		1,108,225	9,198	9,198		2,442		725,361	4,794	4,794		2,402
Energy commodity swaps for customers		320,725	7,302	7,302		504		–	–	–		–
Basis swaps		3,030,000	2,652	48		1,008		2,575,000	3,340	115		2,333
		4,844,898	21,410	18,806		3,585		3,655,990	11,172	7,737		2,125
Fair value hedges
Long-term debt and other borrowings		1,400,000	22,397	–			1,018	1,450,000	41,638	868			8,906
Total	$	9,519,898	51,749	63,191	(39,984)	3,585	1,018	8,141,990	53,056	77,980	7,101	2,125	8,906

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 has no net interest rate risk exposure resulting from the transaction. 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 derivatives is included in market making, trading and nonhedge derivative 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.

The amount charged to market making, trading and nonhedge derivative income in the statement of income for hedge ineffectiveness was approximately $0.9 million in 2005. This resulted when the hedge accounting for two cash flow derivative contracts was discontinued because it was probable that the original forecasted transactions would not occur as originally expected. During 2006 and 2004, no hedge ineffectiveness was required to be reported in earnings on the Company’s cash flow hedging relationships.

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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 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 investment securities. 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 2007, we estimate that an additional $38 million of losses will be reclassified.

8.    PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows at December 31 (in thousands):

	2006		2005
Land	$	151,997	137,231
Buildings		346,389	326,200
Furniture and equipment		485,712	434,131
Leasehold improvements		108,861	103,280
Total		1,092,959	1,000,842
Less accumulated depreciation and amortization		483,487	436,097
Net book value	$	609,472	564,745

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
	2006		2005	2006	2005	2006	2005
Core deposit intangibles	$	262,674	263,547	(134,292)	(102,309)	128,382	161,238
Customer relationships and other intangibles		46,246	40,188	(12,494)	(2,260)	33,752	37,928
	$	308,920	303,735	(146,786)	(104,569)	162,134	199,166

In 2005 as a result of the acquisition of Amegy, we recorded approximately $124.1 million of core deposit intangibles and $33.8 million of customer relationships and other intangibles. At the acquisition date, the weighted average amortization period for the Amegy intangibles was approximately 5.0 years and 3.4 years, respectively.

The amount of amortization expense of core deposit and other intangible assets is separately reflected in the statement of income. At December 31, 2006, 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, 2006, which does not include amounts from the Stockmen’s acquisition discussed in Note 3 (in thousands):

2007	$	38,299
2008		27,515
2009		20,892
2010		17,866
2011		12,757

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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 January 1, 2005	$	21,901	385,831	–	62,397	21,051	151,465	–	–	642,645
Goodwill acquired during the year				1,248,070					1,187	1,249,257
Impairment losses		(602)								(602)
Goodwill reclassified to other liabilities			(3,712)							(3,712)
Balance as of December 31, 2005		21,299	382,119	1,248,070	62,397	21,051	151,465	–	1,187	1,887,588
Goodwill acquired during the year		600							17,457	18,057
Tax benefit realized from share-based awards converted in acquisition				(4,298)						(4,298)
Purchase accounting adjustments				(830)						(830)
Balance as of December 31, 2006	$	21,899	382,119	1,242,942	62,397	21,051	151,465	–	18,644	1,900,517

See Note 3 for a discussion of the Amegy acquisition, the determination of the amount of goodwill, and subsequent purchase accounting adjustments affecting goodwill. See Note 17 for a discussion of the exercise of stock options converted in the Amegy acquisition.

See Note 3 for a discussion of the P5 acquisition and the $17.5 million of goodwill shown in the “Other” segment.

During the fourth quarter of 2006, we completed the annual goodwill impairment review required by SFAS 142 and did not recognize any impairment losses for 2006.

The 2005 impairment loss on goodwill of $0.6 million removed all of the goodwill related to Zions Bank International Ltd. (“ZBI”), an odd-lot bond trading operation, due to the Company’s decision to restructure and ultimately close the London office in 2005. The restructuring charges of $2.4 million in 2005 and $1.1 million in 2004 relate to the ZBI restructuring.

The reduction in CB&T goodwill of $3.7 million in 2005 resulted from the recognition of a portion of acquired state net operating loss carryforward benefits. This accounting follows the guidance of SFAS No. 109, Accounting for Income Taxes. There was no impact on net income.

10.    DEPOSITS

At December 31, 2006, the scheduled maturities of all time deposits were as follows (in thousands):

2007	$	6,820,397
2008		421,952
2009		123,781
2010		73,328
2011		64,931
Thereafter		878
	$	7,505,267

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At December 31, 2006, the contractual maturities of domestic time deposits with a denomination of $100,000 and over were as follows: $1,863 million in 3 months or less, $1,125 million over 3 months through 6 months, $1,046 million over 6 months through 12 months, and $268 million over 12 months.

Domestic time deposits $100,000 and over were $4.3 billion and $2.5 billion at December 31, 2006 and 2005, respectively. Foreign time deposits $100,000 and over were $945 million and $980 million at December 31, 2006 and 2005, respectively.

Deposit overdrafts reclassified as loan balances were $48 million and $43 million at December 31, 2006 and 2005, respectively.

11.    SHORT-TERM BORROWINGS

Selected information for short-term borrowings is as follows (in thousands):

	2006		2005	2004
Federal funds purchased:
Average amount outstanding	$	1,747,256	1,456,531	1,393,344
Weighted average rate		5.06%	3.02%	1.33%
Highest month-end balance	$	2,586,072	1,683,509	1,841,092
Year-end balance	$	1,993,483	1,255,662	1,841,092
Weighted average rate on outstandings at year-end		5.16%	3.97%	2.19%
Security repurchase agreements:
Average amount outstanding	$	1,090,452	850,510	1,288,982
Weighted average rate		3.33%	2.30%	1.06%
Highest month-end balance	$	1,225,107	1,027,658	1,363,420
Year-end balance	$	934,057	1,027,658	683,984
Weighted average rate on outstandings at year-end		3.60%	2.62%	1.44%

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, 2006, overnight security repurchase agreements were $833 million and term security repurchase agreements were $101 million.

12.    FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

FHLB advances and other borrowings over one year are summarized as follows at December 31 (in thousands):

	2006		2005
FHLB advances, 3.66% – 7.30%	$	130,058	227,488
SBA notes payable, 5.49% – 8.64%		7,000	7,000
	$	137,058	234,488

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The SBA notes payable are owed by a consolidated venture capital subsidiary. The weighted average interest rate on FHLB advances outstanding at December 31, 2006 and 2005 was 5.7% and 4.9%, respectively.

The FHLB advances are borrowed by banking subsidiaries under their lines of credit, which are secured under blanket pledge arrangements. The subsidiaries maintain unencumbered collateral with a carrying amount adjusted for the types of collateral pledged, equal to at least 100% of outstanding advances. At December 31, 2006, amounts of unused lines of credit available for additional FHLB advances totaled $6.1 billion, subject to availability of collateral and certain requirements.

Interest expense on FHLB advances and other borrowings over one year was $8.6 million in 2006, $11.5 million in 2005, and $11.7 million in 2004.

Maturities of FHLB advances and other borrowings with original maturities over one year are as follows at December 31, 2006 (in thousands):

2007	$	2,217
2008		3,171
2009		3,227
2010		103,619
2011		2,592
Thereafter		22,232
	$	137,058

13.    LONG-TERM DEBT

Long-term debt at December 31 is summarized as follows (in thousands):

	2006		2005
Junior subordinated debentures related to trust preferred securities	$	467,850	645,459
Subordinated notes		1,492,082	1,713,296
Senior notes		394,984	149,112
Capital lease obligations and other		2,805	3,499
	$	2,357,721	2,511,366

The preceding amounts represent the par value of the debt adjusted for any unamortized premium or discount or other basis adjustments related to hedging the debt with derivative instruments.

Junior subordinated debentures related to trust preferred securities include GB Capital Trust (“GBCT”), CSBI Capital Trust I (“CSBICT”), Zions Capital Trust B (“ZCTB”), and Statutory Trusts I, II and III (“Statutory I, II or III”) as follows at December 31, 2006 (in thousands):

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	Balance		Interest rate	Early redemption/ maturity	Interest distributions
GBCT	$	2,382	10.25%	Jan 2007/ Jan 2027	Semiannually
CSBICT		22,437	11.75%	Jun 2007/ Jun 2027	Quarterly
ZCTB		293,545	8.00%	Sep 2007/ Sep 2032	Quarterly
Statutory I		51,547	3mL+2.85%(1)  (8.21%)	Dec 2008/ Dec 2033	Quarterly
Statutory II		36,083	3mL+1.90%(1)  (7.27%)	Oct 2009/ Oct 2034	Quarterly
Statutory III		61,856	3mL+1.78%(1)  (7.14%)	Dec 2009/ Dec 2034	Quarterly
	$	467,850

(1) Designation of “3mL” is three-month LIBOR (London Interbank Offer Rate); effective interest rate at December 31, 2006 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 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 requires the approval of banking regulators. The debentures for GBCT, CSBICT, and ZCTB are direct and unsecured obligations of the Company and are subordinate to other indebtedness and general creditors. The debentures for Statutory I, II and III are direct and unsecured obligations of Amegy Corporation and are subordinate to other indebtedness and general creditors. The Company has unconditionally guaranteed the obligations of GBCT, CSBICT, and ZCTB with respect to their respective series of trust preferred securities to the extent set forth in the applicable guarantee agreements. Amegy Corporation has unconditionally guaranteed the obligations of Statutory I, II and III with respect to their respective series of trust preferred securities to the extent set forth in the applicable guarantee agreements.

The GBCT debentures were redeemed in January 2007. We hedged the ZCTB debentures with a LIBOR-based floating interest rate swap whose recorded fair value was $(0.3) million and $0.7 million at December 31, 2006 and 2005, 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.

As discussed in Note 14, proceeds from the issuance of preferred stock in December 2006 were used to redeem all of the $176.3 million trust preferred securities issued by Zions Institutional Capital Trust A. The Company incurred a debt extinguishment cost of $7.3 million for the call premium on the early redemption of this debt, which has been separately reflected in the statement of income.

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Subordinated notes consist of the following at December 31, 2006 (in thousands):

Interest rate	Balance		Par amount	Maturity
5.65%	$	306,466	300,000	May 2014
6.00%		514,745	500,000	Sep 2015
5.50%		595,871	600,000	Nov 2015
3mL+1.25%(1)     (6.625%)		75,000	75,000	Sep 2014
	$	1,492,082

(1) Designation of “3mL” is three-month LIBOR; effective interest rate at December 31, 2006 is shown in parenthesis.

The notes are not redeemable prior to maturity and interest is payable semiannually. We hedged the 5.65%, 6.00%, and 5.50% notes with LIBOR-based floating interest rate swaps whose recorded fair values were, respectively, $6.8 million, $15.5 million, and $0.2 million at December 31, 2006 and $6.3 million, $24.5 million, and $10.8 million at December 31, 2005. We issued the 5.50% notes in November 2005 in connection with our acquisition of Amegy, as discussed in Note 3. The three-month LIBOR notes are issued by Amegy Corporation.

In March 2006, we filed an “automatic shelf registration statement” with the Securities and Exchange Commission (“SEC”) as a “well-known seasoned issuer.” The shelf registration replaced a previous shelf registration and covers security issuances of the Company, Zions Capital Trust C and Zions Capital Trust D. Under the new shelf registration, we issued the following floating rate senior notes (in thousands):

Interest rate	Balance		Par amount	Maturity
3mL+0.12%(1)     (5.494%)	$	249,984	250,000	Apr 2008
3mL+0.12%(1)     (5.48%)		145,000	145,000	Sep 2008
	$	394,984

(1) Designation of “3mL” is three-month LIBOR; effective interest rate at December 31, 2006 is shown in parenthesis.

The notes are not redeemable prior to maturity and interest is payable quarterly. Proceeds from the issuance of these notes were used to retire previous indebtedness of senior and subordinated notes.

Interest expense on long-term debt was $159.6 million in 2006, $104.9 million in 2005, and $74.3 million in 2004. Interest expense was reduced by $1.0 million in 2006, $8.9 million in 2005, and $29.2 million in 2004 as a result of the associated hedges.

Maturities on long-term debt are as follows for the years succeeding December 31, 2006 (in thousands):

	Consolidated		Parent only
2007	$	557
2008		395,577	394,983
2009		650
2010		655
2011		104
Thereafter		1,938,049	1,719,394
	$	2,335,592	2,114,377

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These maturities do not include the associated hedges. The Parent only maturities at December 31, 2006 include $324.7 million of subordinated debt payable to GBCT, CSBICT, and ZCTB after 2011.

14.    SHAREHOLDERS’ EQUITY

On December 7, 2006, we issued 240,000 shares of our Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock with an aggregate liquidation preference of $240 million, or $1,000 per share. The preferred stock was offered 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. In general, preferred shareholders are entitled to receive asset distributions before common shareholders; however, preferred shareholders have no preemptive or conversion rights, and only limited voting rights pertaining generally to amendments to the terms of the preferred stock or the issuance of senior preferred stock as well as the right to elect two directors in the event of certain defaults. The preferred stock is not redeemable prior to December 15, 2011, but will be redeemable subsequent to that date at the Company’s option at the liquidation preference value plus any declared but unpaid dividends. The preferred stock dividend reduces earnings available to common shareholders and is computed at an annual rate equal to the greater of three-month LIBOR plus 0.52%, or 4.0%. Dividend payments are made quarterly in arrears on the 15^th day of March, June, September, and December, commencing on March 15, 2007.

Under the terms of the preferred stock agreements, the Company was required to declare the full quarterly dividend of $3.8 million and set aside the funds before it could resume the repurchase of common shares under a $400 million repurchase authorization approved by the Board of Directors on December 11, 2006. The stock repurchase program had been suspended since July 2005 upon the announcement of our acquisition of Amegy. Under this new authorization, we repurchased 308,359 common shares in December 2006 at a cost of $25.0 million. We repurchased 1,159,522 common shares in 2005 at a cost of $80.7 million and 1,734,055 common shares in 2004 at a cost of $104.9 million. Repurchased shares are included in stock redeemed and retired in the statements of changes in shareholders’ equity and comprehensive income. In both 2006 and 2005, we also repurchased $1.5 million 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 at December 31, 2003	$	24,015	10,716	(15,690)		19,041
Other comprehensive loss, net of tax:
Net realized and unrealized holding losses, net of income tax benefit of $2,244		(3,622)				(3,622)
Foreign currency translation		803				803
Reclassification for net realized gains recorded in operations, net of income tax expense of $881		(1,422)				(1,422)
Net unrealized losses on derivative instruments, net of reclassification to operations of $44,290 and income tax benefit of $12,574			(20,209)			(20,209)
Minimum pension liability, net of income tax benefit of $1,579				(2,523)		(2,523)
Other comprehensive loss		(4,241)	(20,209)	(2,523)		(26,973)
Balance at December 31, 2004		19,774	(9,493)	(18,213)		(7,932)
Other comprehensive loss, net of tax:
Net realized and unrealized holding losses, net of income tax benefit of $17,580		(28,380)				(28,380)
Foreign currency translation		(1,507)				(1,507)
Reclassification for net realized gains recorded in operations, net of income tax expense of $408		(659)				(659)
Net unrealized losses on derivative instruments, net of reclassification to operations of $7,101 and income tax benefit of $25,474			(40,771)			(40,771)
Minimum pension liability, net of income tax benefit of $2,426				(3,794)		(3,794)
Other comprehensive loss		(30,546)	(40,771)	(3,794)		(75,111)
Balance at December 31, 2005		(10,772)	(50,264)	(22,007)		(83,043)
Other comprehensive income, 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	(1)	6,245
Other comprehensive income (loss)		(7,599)	8,548	6,245		7,194
Balance at December 31, 2006	$	(18,371)	(41,716)	(15,762)		(75,849)

(1) Includes the net effect of $18 thousand from adopting SFAS 158, as discussed in Note 20.

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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 financial statements. At December 31, 2006 and 2005, total invested assets were approximately $54.8 million and $38.2 million and total obligations were approximately $64.4 million and $43.3 million, respectively.

At December 31, 2005, deferred compensation also included $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 issued by the Company during 2005. As discussed in Note 17, we reclassified the total of these amounts, or $11.1 million, from deferred compensation to common stock upon the adoption of SFAS 123R.

15.    INCOME TAXES

Income taxes (benefit) are summarized as follows (in thousands):

	2006		2005	2004
Federal:
Current	$	259,759	250,280	203,852
Deferred		9,368	(32,362)	(21,914)
State		48,823	45,500	38,188
	$	317,950	263,418	220,126

Income tax expense computed at the statutory federal income tax rate of 35% reconciles to actual income tax expense as follows (in thousands):

	2006		2005	2004
Income tax expense at statutory federal rate	$	319,523	259,660	218,537
State income taxes, net		31,734	29,575	24,821
Nondeductible expenses		5,299	2,138	1,714
Nontaxable income		(25,905)	(19,905)	(19,595)
Tax credits and other taxes		(5,999)	(5,722)	(4,902)
Other		(6,702)	(2,328)	(449)
	$	317,950	263,418	220,126

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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):

	2006		2005
Gross deferred tax assets:
Book loan loss deduction in excess of tax	$	142,117	131,938
Pension and postretirement		13,343	17,386
Deferred compensation		42,050	39,101
Deferred loan fees		3,040	3,326
Accrued severance costs		3,023	2,050
Loan sales		23,467	33,138
Security investments and derivative market adjustments		7,270	7,460
Equity investments		2,286	14,125
Other		10,336	20,074
		246,932	268,598
Valuation allowance		(4,510)	–
Total deferred tax assets		242,422	268,598
Gross deferred tax liabilities:
Core deposits and purchase accounting		(39,749)	(46,729)
Premises and equipment, due to differences in depreciation		(6,395)	(11,926)
FHLB stock dividends		(13,781)	(14,107)
Leasing operations		(79,490)	(79,251)
Prepaid expenses		(5,583)	(4,965)
Prepaid pension reserves		(4,387)	(915)
Other		(9,549)	(10,933)
Total deferred tax liabilities		(158,934)	(168,826)
Net deferred tax assets	$	83,488	99,772

The amount of net deferred tax assets is included with other assets in 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 Company’s acquisition of the remaining minority interests of P5, as discussed in Note 3, included approximately $11.8 million of net operating loss carryforwards. The tax effect of these carryforwards has been included in deferred tax assets. We have established a valuation allowance of approximately $4.5 million for these carryforwards based on an analysis of P5’s operating history using the above criteria. We have also determined that a valuation allowance is not required for any other deferred tax assets.

In 2004, we signed an agreement that confirmed and implemented our 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, we may invest up to $100 million in a wholly-owned subsidiary, which will make qualifying loans and investments. In return, we will receive federal income tax credits that will be 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, 2006 and 2005, we had invested $90 million and $80 million, respectively, which resulted in tax credits that reduced income tax expense by approximately $4.5 million in 2006 and $4.0 million in 2005.

In July 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes. FIN 48 creates a single model to address accounting for uncertainty in tax positions. It clarifies the accounting for income taxes by prescribing that tax positions shall initially be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by taxing authorities. Such tax positions shall initially and subsequently be measured as the largest amount of benefit that is more than 50% likely of being

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realized upon ultimate settlement. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition. In addition, FIN 48 removes income taxes from the scope of SFAS No. 5, Accounting for Contingencies. FIN 48 is effective for fiscal years beginning after December 15, 2006, or January 1, 2007 for calendar year-end companies. We have tax reserves at December 31, 2006 of approximately $39 million for uncertain tax positions primarily for various state tax contingencies in several jurisdictions. Under the guidance of FIN 48, management estimates that these reserves may decrease by approximately $9 million to $13 million, which is subject to revision when management completes an analysis of the impact of FIN 48. As required by FIN 48 upon adoption on January 1, 2007, this difference will be recorded in retained earnings as a cumulative effect adjustment.

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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):

	2006		2005	2004
Basic:
Net earnings applicable to common shareholders	$	579,290	480,121	405,987
Weighted average common shares outstanding		106,057	91,187	89,663
Net earnings per common share	$	5.46	5.27	4.53
Diluted:
Net earnings applicable to common shareholders	$	579,290	480,121	405,987
Weighted average common shares outstanding		106,057	91,187	89,663
Effect of dilutive common stock options and other stock awards		1,971	1,807	1,219
Weighted average diluted common shares outstanding		108,028	92,994	90,882
Net earnings per common share	$	5.36	5.16	4.47

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. The total shares authorized under the plan are 8,900,000 of which 6,630,337 shares are available for future grant as of December 31, 2006.

Prior to January 1, 2006, we accounted for share-based compensation under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), Accounting for Stock Issued to Employees, and related Interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation. Accordingly, we did not record any compensation expense for stock options, as the exercise price of the option was equal to the quoted market price of the stock on the date of grant.

Effective January 1, 2006, we adopted SFAS No. 123R, 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 123R using the “modified prospective” transition method. Under this transition method, compensation expense is recognized beginning January 1, 2006 based on the requirements of SFAS 123R 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. Results of operations for prior years have not been restated.

The adoption of SFAS 123R, compared to the previous accounting for share-based compensation under APB 25, reduced the Company’s income before income taxes and minority interest and net income along with the related basic and diluted per common share amounts for 2006 as follows (in thousands, except per share amounts):

Reduction in:
Income before income taxes and minority interest	$	17,542
Net income		12,574
Net earnings per common share:
Basic	$	0.12
Diluted		0.12

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The impact on net income and net earnings per common share if we had applied the provisions of SFAS 123 to stock options for 2005 and 2004 was as follows (in thousands, except per share amounts):

	2005			2004
Net income, as reported	$	480,121		405,987
Deduct: Total share-based compensation expense determined under fair value based method for
stock options, net of related tax effects		(9,793	)	(12,503	)
Pro forma net income	$	470,328		393,484
Net earnings per common share:
Basic – as reported	$	5.27		4.53
Basic – pro forma		5.16		4.39
Diluted – as reported		5.16		4.47
Diluted – pro forma		5.08		4.33

SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation expense resulting from the exercise of share-based awards to be reported as a financing cash flow. For 2006, this requirement reduced net operating cash flows and increased net financing cash flows by approximately $15.7 million.

As required by SFAS 123R, upon adoption, we reclassified $11.1 million of unearned compensation related to restricted stock from deferred compensation to common stock.

We classify all share-based awards as equity instruments and recognize the vesting of the awards ratably over their respective terms. As of December 31, 2006, compensation expense not yet recognized for nonvested share-based awards was approximately $44.2 million, which is expected to be recognized over a weighted average period of 1.3 years.

Stock Options

Options granted to employees vest at the rate of one third each year and expire seven years after the date of grant. 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.

In 2005, we discontinued our broad-based employee stock option plan under which options were made available to substantially all employees; however, existing options continue to vest at the rate of one third each year and expire four years after the date of grant.

For 2006, the additional compensation expense of $17.5 million for stock options under SFAS 123R is included in salaries and employee benefits in the statements of income with the corresponding increase, excluding the effects of stock option expense on subsidiary stock, included in common stock in shareholders’ equity. The related tax benefit recognized as a reduction of income tax expense was $5.0 million.

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During 2006, the amount of cash received from the exercise of stock options was $79.5 million and the tax benefit realized as a reduction of income taxes payable was $17.3 million. Of this amount, $4.2 million reduced goodwill for the tax benefit of vested share-based awards converted in the Amegy acquisition that were exercised during 2006, $11.8 million was included in common stock as part of net stock options exercised, and the remainder reduced deferred tax assets and current income tax expense.

For 2005 and 2004, the tax benefit realized as a reduction of income taxes payable and included in common stock was $13.5 million and $8.8 million, respectively.

Compensation expense was determined from the estimates of fair values of stock options granted using the Black-Scholes option-pricing model. The following summarizes the weighted average of fair value and the significant assumptions used in applying the Black-Scholes model for options granted:

	2006		2005	2004
Weighted average of fair value for options granted	$	15.02	15.33	11.85
Weighted average assumptions used:
Expected dividend yield		2.0%	2.0%	2.0%
Expected volatility		18.0%	25.0%	26.8%
Risk-free interest rate		4.95%	3.95%	3.11%
Expected life (in years)		4.1	4.1	3.8

The methodology used to estimate the fair values of stock options is consistent with the estimates used for the pro forma presentation in years prior to the adoption of SFAS 123R. 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 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.

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The following summarizes our stock option activity for the three years ended December 31, 2006:

	Number of shares	Weighted average exercise price
Balance at December 31, 2003	7,570,645	$	49.51
Granted	2,279,621		57.28
Exercised	(1,812,594)		48.32
Expired	(170,662)		52.54
Forfeited	(233,235)		51.59
Balance at December 31, 2004	7,633,775		51.98
Granted	912,905		71.37
Assumed in acquisition	1,559,693		47.44
Exercised	(1,872,753)		50.00
Expired	(519,521)		66.53
Forfeited	(216,533)		55.46
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
Outstanding options exercisable as of:
December 31, 2006	4,409,971	$	50.73
December 31, 2005	4,663,707		49.04
December 31, 2004	3,711,405		51.02

We issue new authorized shares for the exercise of stock options. During 2006, the total intrinsic value of options exercised was approximately $50.8 million.

Additional selected information on stock options at December 31, 2006 follows:

	Outstanding options				Exercisable 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	76,164	$	11.63	0.9(1)	76,164	$	11.63
$  20.00 to $  39.99	190,986		27.44	2.2	190,986		27.44
$  40.00 to $  44.99	1,290,243		42.23	2.6	1,290,243		42.23
$  45.00 to $  49.99	356,590		48.30	4.6	356,590		48.30
$  50.00 to $  54.99	1,011,382		53.72	2.4	1,006,735		53.71
$  55.00 to $  59.99	1,550,516		56.92	4.5	917,585		57.03
$  60.00 to $  64.99	172,390		61.51	2.7	102,522		61.72
$  65.00 to $  69.99	198,253		67.30	6.4	146,699		67.42
$  70.00 to $  74.99	759,814		70.86	5.5	255,919		70.91
$  75.00 to $  79.99	116,126		75.92	6.0	57,528		75.84
$  80.00 to $  82.92	964,325		81.14	6.4	9,000		80.65
	6,686,789		57.62	4.2(1)	4,409,971		50.73

(1) The weighted average remaining contractual life excludes 35,023 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 outstanding options at December 31, 2006, the aggregate intrinsic value was $166.0 million. For exercisable options at December 31, 2006, the aggregate intrinsic value was $139.9 million and the weighted average remaining contractual life was 3.4 years, excluding the stock options previously noted without a fixed expiration date.

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The previous tables do not include options for employees to purchase common stock of our subsidiaries, TCBO and NetDeposit. At December 31, 2006 for TCBO, there were options to purchase 87,000 shares at an exercise price of $20.00. At December 31, 2006, there were 1,038,000 issued and outstanding shares of TCBO common stock. For NetDeposit, there were options to purchase 11,739,920 shares at exercise prices from $0.42 to $1.00. At December 31, 2006, there were 100,536,568 issued and outstanding shares of NetDeposit common stock. TCBO and NetDeposit options are included in the previous pro forma disclosure.

Restricted Stock

Restricted stock granted vests over four years. During the vesting period, the holder has full voting rights and receives dividend equivalents. For 2006, compensation expense recognized for issuances of restricted stock and included in salaries and employee benefits in the statement of income was $6.8 million. The related amount for 2005 was $1.7 million and was not significant for 2004. The corresponding increase to shareholders’ equity was included in common stock. Compensation expense was determined based on the number of restricted shares granted and the market price of our common stock at the grant date.

The following summarizes our restricted stock activity for the three years ended December 31, 2006:

	Number of shares	Weighted average grant price
Nonvested restricted shares at December 31, 2004	10,000	$	61.07
Granted	168,134		70.81
Assumed in acquisition	143,504		57.45
Vested	(114,162)		56.41
Forfeited	(3,493)		70.90
Nonvested restricted shares at December 31, 2005	203,983		68.99
Granted	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

The total fair value of restricted stock vesting during 2006 was $4.3 million. Related amounts for 2005 and 2004 were not significant. During 2006, the amount of tax benefit realized as a reduction of income taxes payable from the vesting of restricted stock was $1.9 million.

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 Note 7.

FASB Interpretation No. 45 (“FIN 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.

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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):

	2006		2005
Commitments to extend credit	$	16,714,742	13,682,763
Standby letters of credit:
Financial		1,157,205	1,015,019
Performance		330,056	240,763
Commercial letters of credit		132,615	136,472

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, 2006, $6.5 billion of commitments expire in 2007. 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 $996 million expiring in 2007 and $491 million expiring thereafter through 2026. 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, 2006, the carrying value recorded by the Company as a liability for these guarantees was $5.1 million.

Certain mortgage loans sold have limited recourse provisions for periods ranging from 3 months to one year. The amount of losses resulting from the exercise of these provisions has not been significant.

At December 31, 2006, we had commitments to make venture and other noninterest-bearing investments of $103.0 million. These obligations have no stated maturity.

As a market maker in U.S. Government, agency, corporate, and municipal securities, we enter into agreements to purchase and sell such securities. As of December 31, 2006 and 2005, we had outstanding commitments to purchase securities of $10 million and $30 million and outstanding commitments to sell securities of $5 million and $22 million, respectively. These agreements at December 31, 2006 have remaining terms of one month or less.

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, 2006 and 2005, the regulatory risk-weighted values assigned to all off-balance sheet financial instruments and derivative instruments described herein were $6.7 billion and $6.1 billion, respectively.

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At December 31, 2006, we were required to maintain cash balances of $44.9 million with the Federal Reserve Banks to meet minimum balance requirements in accordance with Federal Reserve Board regulations.

As of December 31, 2006, the Parent has guaranteed approximately $306.0 million of debt issued by our subsidiaries, as discussed in Note 13. See Note 6 for the discussion of Zions Bank’s commitment of $6.12 billion at December 31, 2006 to Lockhart, which is a QSPE conduit.

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.

We have commitments for leasing premises and equipment under the terms of noncancelable capital and operating leases expiring from 2007 to 2031. Premises leased under capital leases at December 31, 2006 were $2.7 million and accumulated amortization was $2.6 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, 2006 are as follows (in thousands):

2007	$	41,609
2008		40,321
2009		36,081
2010		31,079
2011		27,673
Thereafter		159,645
	$	336,408

Future aggregate minimum rental payments have been reduced by noncancelable subleases as follows: $1.9 million in 2007, $1.7 million in 2008, $1.1 million in 2009, $0.6 million in 2010, $0.4 million in 2011, and $0.6 million thereafter. Aggregate rental expense on operating leases amounted to $51.5 million in 2006, $41.6 million in 2005, and $40.6 million in 2004.

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

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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 I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). We believe, as of December 31, 2006, that we meet all capital adequacy requirements to which we are subject.

As of December 31, 2006, 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 I risk-based, and Tier I 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 banking subsidiaries 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 banking subsidiaries at the well capitalized level. At December 31, 2006, our banking subsidiaries had approximately $403.8 million available for the payment of dividends under the foregoing restrictions.

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The actual capital amounts and ratios for the Company and its significant banking subsidiaries 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, 2006:
Total capital (to risk-weighted assets)
The Company	$	5,293,253	12.29%	$	3,445,531	8.00%	$	4,306,914	10.00%
Zions First National Bank		1,469,553	11.30		1,040,178	8.00		1,300,223	10.00
California Bank & Trust		1,200,874	11.50		835,632	8.00		1,044,541	10.00
Amegy Bank N.A.		916,454	10.35		708,239	8.00		885,299	10.00
Tier I capital (to risk-weighted assets)
The Company		3,437,413	7.98		1,722,766	4.00		2,584,148	6.00
Zions First National Bank		944,487	7.26		520,089	4.00		780,134	6.00
California Bank & Trust		751,100	7.19		417,816	4.00		626,724	6.00
Amegy Bank N.A.		636,517	7.19		354,120	4.00		531,180	6.00
Tier I capital (to average assets)
The Company		3,437,413	7.86		1,312,658	3.00		2,187,763	5.00
Zions First National Bank		944,487	6.50		435,736	3.00		726,227	5.00
California Bank & Trust		751,100	7.36		306,240	3.00		510,401	5.00
Amegy Bank N.A.		636,517	7.64		249,864	3.00		416,441	5.00
As of December 31, 2005:
Total capital (to risk-weighted assets)
The Company	$	4,602,772	12.23%	$	3,010,880	8.00%	$	3,763,600	10.00%
Zions First National Bank		1,234,862	11.06		893,483	8.00		1,116,854	10.00
California Bank & Trust		1,086,594	10.90		797,474	8.00		996,843	10.00
Amegy Bank N.A.		609,400	8.65		563,895	8.00		704,869	10.00
Tier I capital (to risk-weighted assets)
The Company		2,830,419	7.52		1,505,440	4.00		2,258,160	6.00
Zions First National Bank		807,615	7.23		446,742	4.00		670,113	6.00
California Bank & Trust		692,103	6.94		398,737	4.00		598,106	6.00
Amegy Bank N.A.		559,364	7.94		281,948	4.00		422,922	6.00
Tier I capital (to average assets)
The Company		2,830,419	8.16		1,040,785	3.00		1,734,642	5.00
Zions First National Bank		807,615	6.35		381,662	3.00		636,104	5.00
California Bank & Trust		692,103	6.81		304,711	3.00		507,852	5.00
Amegy Bank N.A.		559,364	8.10		207,246	3.00		345,410	5.00

20.    RETIREMENT PLANS

In September 2006, the FASB issued 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). SFAS 158 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. While the Statement does not change the determination of net periodic benefit cost included in net income, it does expand disclosure requirements about certain effects on net periodic benefit cost that may arise in subsequent fiscal years. The recognition requirements are effective for fiscal years ending after December 15, 2006 for public entities. The Statement also requires an entity to measure the funded status of a plan as of the date of its year-end balance sheet, with limited exceptions. The measurement requirement is effective for fiscal years ending after December 15, 2008.

We have adopted the recognition and measurement requirements at December 31, 2006 for all of the Company’s pension and postretirement plans. The incremental pretax effect on certain financial statement items was as follows (in thousands):

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	Before application of SFAS 158		Adjustments				After application of SFAS 158
			Qualified pension	Supplemental retirement	Postretirement medical	Net
Intangible assets	$	938		(938)		(938)	–
Liability for pension/postretirement benefits		(33,716)	(385)		1,341	956	(32,760)
Accumulated other comprehensive loss		25,893	385	938	(1,341)	(18)	25,875

The liability for pension/postretirement benefits is included in other liabilities in the balance sheet.

We have a qualified noncontributory defined benefit pension plan which was amended January 1, 2003 after which new employees were not allowed to participate. All service-related benefit accruals for existing participants ceased as of that date with certain grandfathering exceptions. Benefits vest 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):

	2006		2005
Change in benefit obligation:
Benefit obligation at beginning of year	$	157,404	148,962
Service cost		499	557
Interest cost		8,624	8,630
Actuarial (gain) loss		(3,242)	7,589
Benefits paid		(8,201)	(8,334)
Benefit obligation at end of year		155,084	157,404
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		124,288	122,444
Actual return on plan assets		15,207	10,178
Employer contribution		10,000	–
Benefits paid		(8,201)	(8,334)
Fair value of plan assets at end of year		141,294	124,288
Funded status	$	(13,790)	(33,116)
Amounts recognized in balance sheet:
Liability for pension benefits	$	(13,790)	(32,590)
Accumulated other comprehensive loss		25,221	34,894
Accumulated other comprehensive loss consists of:
Net loss	$	25,221	34,894

The amount of net loss in accumulated other comprehensive loss at December 31, 2006 expected to be recognized as an expense component of net periodic benefit cost in 2007 is approximately $1.0 million. The accumulated benefit obligation for the pension plan was $154.7 million and $156.9 million as of December 31, 2006 and 2005, respectively. Future contributions to the plan will be based on actuarial recommendation utilizing pension regulations.

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The following presents the components of net periodic benefit cost for the plan (in thousands):

	2006		2005	2004
Service cost	$	499	557	598
Interest cost		8,624	8,630	8,430
Expected return on plan assets		(10,250)	(10,211)	(9,650)
Amortization of net actuarial loss		1,999	1,850	1,179
Net periodic benefit cost	$	872	826	557

Weighted average assumptions for the plan are as follows:

	2006	2005	2004
Used to determine benefit obligation at year-end:
Discount rate	5.65%	5.60%	5.75%
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	5.60	5.75	6.25
Expected long-term return on plan assets	8.50	8.60	8.60
Rate of compensation increase	4.25	4.25	4.00

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 of these underlying investments, the diversification of these investments, and the rebalancing strategy 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:

	2006	2005
Equity securities	5%	5%
Mutual funds:
Equity funds	14	14
Debt funds	18	17
Other:
Insurance company separate accounts – equity investments	60	59
Guaranteed deposit account	3	5
	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. Current target allocation percentages are 75% invested in equities and 25% invested in fixed income assets.

Equity securities consist of 91,606 shares of Company common stock with a fair value of $7.6 million at December 31, 2006 and 89,957 shares with a fair value of $6.8 million at December 31, 2005. Dividends received by the plan were approximately $143 thousand in 2006 and $130 thousand in 2005.

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Benefit payments to pension plan participants, which reflect expected future service as appropriate, are estimated as follows for the years succeeding December 31, 2006 (in thousands):

2007	$	8,513
2008		8,361
2009		9,168
2010		9,976
2011		9,021
Years 2012 - 2016		51,733

Amegy also has a defined benefit pension plan which has been frozen and will be terminated. The recorded liability for pension benefits of approximately $1.4 million at December 31, 2006 is considered actuarially sufficient for termination purposes.

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):

	2006		2005
Change in benefit obligation:
Benefit obligation at beginning of year	$	13,415	13,155
Interest cost		719	730
Actuarial (gain) loss		(236)	269
Benefits paid		(846)	(739)
Benefit obligation at end of year		13,052	13,415
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		–	–
Employer contributions		846	739
Benefits paid		(846)	(739)
Fair value of plan assets at end of year		–	–
Funded status	$	(13,052)	(13,415)
Amounts recognized in balance sheet:
Liability for pension benefits	$	(13,052)	(13,415)
Accumulated other comprehensive loss		1,995	1,283
Accumulated other comprehensive loss consists of:
Net loss	$	1,057	na
Prior service cost		922	na
Transition liability		16	na
	$	1,995	1,283

The amounts in accumulated other comprehensive loss at December 31, 2006 expected to be recognized as an expense component of net periodic benefit cost in 2007 are estimated as follows (in thousands):

Net gain	$	(12)
Prior service cost		124
Transition liability		16
	$	128

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The following presents the components of net periodic benefit cost for these plans (in thousands):

	2006		2005	2004
Interest cost	$	719	730	766
Amortization of net actuarial gain		(10)	(16)	(32)
Amortization of prior service cost		124	124	124
Amortization of transition liability		16	16	16
Net periodic benefit cost	$	849	854	874

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, 2006 (in thousands):

2007	$	1,642
2008		1,288
2009		1,142
2010		1,171
2011		1,233
Years 2012 - 2016		5,094

We are also obligated under several other supplemental retirement plans for certain current and former employees. At December 31, 2006 and 2005, our liability was $5.4 million and $5.5 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. Reductions in our obligations to provide benefits resulting from cost sharing changes have been applied to reduce the plan’s unrecognized transition obligation. In 2000, we increased our contribution toward retiree medical coverage and permanently froze our contributions. Retirees pay the difference between the full premium rates and our capped contribution.

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):

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	2006		2005
Change in benefit obligation:
Benefit obligation at beginning of year	$	6,454	6,539
Service cost		101	118
Interest cost		326	357
Actuarial (gain) loss		(337)	91
Benefits paid		(625)	(651)
Benefit obligation at end of year		5,919	6,454
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		–	–
Employer contributions		625	651
Benefits paid		(625)	(651)
Fair value of plan assets at end of year		–	–
Funded status	$	(5,919)	(6,454)
Amounts recognized in balance sheet:
Liability for postretirement benefits	$	(5,919)	(7,791)
Accumulated other comprehensive loss		(1,341)	–
Accumulated other comprehensive loss consists of:
Net gain	$	(1,341)	–

The amount of net gain in accumulated other comprehensive loss at December 31, 2006 expected to be recognized as a component of net periodic benefit cost in 2007 is approximately $268 thousand.

The following presents the components of net periodic benefit cost for the plan (in thousands):

	2006		2005	2004
Service cost	$	101	118	103
Interest cost		326	357	385
Amortization of prior service cost		–	–	85
Amortization of net actuarial gain		(333)	(357)	(512)
Net periodic benefit cost	$	94	118	61

Weighted average assumptions for the plan are as follows:

	2006	2005	2004
Used to determine benefit obligation at year-end:
Discount rate	5.65%	5.60%	5.75%
Used to determine net periodic benefit cost for the years ended December 31:
Discount rate	5.60	5.75	6.25

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, 2006 (in thousands):

2007	$	593
2008		571
2009		552
2010		536
2011		519
Years 2012 - 2016		2,351

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We have a 401(k) and employee stock ownership plan (“Payshelter”) under which employees select from several investment alternatives excluding the Company’s common stock. Effective in July 2006, employees can contribute up to 80% of their earnings to the Payshelter plan which will be matched 100% by the Company for the first 3% of employee contributions and 50% for the next 2% of employee contributions. Our matching contributions are invested in the Company’s common stock and amounted to $17.3 million in 2006, $12.4 million in 2005, and $11.3 million in 2004.

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 2006 and 2005, the contribution percentage was 4% for each year, and the related profit sharing expense was $17.9 million and $13.2 million, respectively. Our profit sharing contribution is also invested in the Company’s common stock. The range and resulting contribution percentage were increased in 2005 because we discontinued the broad-based employee stock option plan, as discussed in Note 17. Amegy’s 401(k) plan was merged into the Payshelter plan in July 2006.

21.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value and estimated fair value of principal financial instruments are summarized as follows (in thousands):

	December 31, 2006			December 31, 2005
	Carrying value		Estimated fair value	Carrying value	Estimated fair value
Financial assets:
Cash and due from banks	$	1,938,810	1,938,810	1,706,590	1,706,590
Money market investments		369,276	369,276	666,742	666,742
Investment securities		5,767,467	5,763,171	6,057,212	6,049,679
Loans and leases, net of allowance		34,302,406	34,311,063	29,788,537	29,798,159
Derivatives (included in other assets)		51,749	51,749	53,056	53,056
Total financial assets	$	42,429,708	42,434,069	38,272,137	38,274,226
Financial liabilities:
Demand, savings, and money market deposits	$	25,869,197	25,869,197	26,009,587	26,009,587
Time deposits		6,560,023	6,574,080	4,453,385	4,452,249
Foreign deposits		2,552,526	2,551,651	2,179,436	2,183,726
Securities sold, not yet purchased		50,416	50,416	64,654	64,654
Federal funds purchased and security repurchase agreements		2,927,540	2,927,540	2,283,320	2,283,320
Derivatives (included in other liabilities)		63,191	63,191	77,980	77,980
Commercial paper, FHLB advances and other borrowings		875,490	880,630	420,477	429,900
Long-term debt		2,357,721	2,384,806	2,511,366	2,541,620
Total financial liabilities	$	41,256,104	41,301,511	38,000,205	38,043,036

Financial Assets

The estimated fair value approximates the carrying value of cash and due from banks and money market investments. For investment securities, the fair value is based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments or a discounted cash flow model based on established market rates. The fair value of fixed-rate loans is estimated by discounting future cash flows using the LIBOR yield curve adjusted by a factor which reflects the credit and interest rate risk inherent in the loan. Variable-rate loans reprice with changes in market rates. As such, their carrying amounts are deemed to approximate fair value.

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Financial Liabilities

The estimated fair value of demand, savings, and money market deposits is the amount payable on demand at the reporting date. SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires the use of the carrying value because the accounts have no stated maturity and the customer has the ability to withdraw funds immediately. The estimated fair value of securities sold not yet purchased, federal funds purchased, and security repurchase agreements also approximates the carrying value. The fair value of time and foreign deposits is estimated by discounting future cash flows using the LIBOR yield curve. Commercial paper is issued for short terms of duration. The fair value of fixed rate FHLB advances 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 their fair value. Other borrowings are not significant. The estimated fair value of long-term debt is based on discounting cash flows using the LIBOR yield curve plus credit spreads.

Derivative Instruments

The fair value of the derivatives reflects the estimated amounts that we would receive or pay to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information. Interest rate swaps are valued using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates derived from observed market interest rate curves.

Off-Balance-Sheet Financial Instruments

The fair value of commitments to extend credit and letters of credit, based on fees currently charged for similar commitments, is not significant.

Limitations

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 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.

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, 2006, 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, certain nonbank financial service and financial technology subsidiaries, other smaller nonbank operating units, TCBO (see Note 1), and eliminations of transactions between segments. Results for Amegy in 2005 only include the month of December.

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 Company previously had a program where interest rate swaps were recorded and managed by Zions Bank for the benefit of other banking subsidiaries and hedge income was appropriately allocated. Starting in 2003, new interest rate swaps were recorded directly by the banking subsidiaries. In 2006 and 2005 for hedges remaining from the previous program, the amount of hedge income allocated to/from Zions Bank was not material. In the following tables presenting operating segment information, hedge income allocated to/from participating banking subsidiaries and hedge income recognized directly by these banking subsidiaries are presented as separate line items.

The following is a summary of selected operating segment information for the years ended December 31, 2006, 2005 and 2004 (in millions):

	Zions Bank		CB&T	Amegy	NBA	NSB	Vectra	TCBW	Other	Consolidated Company
2006:
Net interest income excluding hedge income	$	473.9	487.9	306.0	218.4	201.4	100.5	35.5	(18.9)	1,804.7
Hedge expense recorded directly at subsidiary		(2.2)	(18.5)	(1.3)	(3.3)	(3.9)	(6.0)	(1.8)	(3.0)	(40.0)
Allocated hedge income (expense)		0.6	–	–	(0.2)	–	(0.3)	(0.1)	–	–
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 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 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 leases(1)		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

156

	Zions Bank		CB&T	Amegy	NBA	NSB	Vectra	TCBW	Other	Consolidated Company
2005:
Net interest income excluding hedge income	$	405.8	451.0	25.5	186.2	170.4	88.1	29.7	(2.4)	1,354.3
Hedge income (expense) recorded directly at subsidiary		2.3	0.4	–	1.3	0.9	0.9	(0.1)	1.4	7.1
Allocated hedge income (expense)		(0.2)	–	–	0.1	–	0.1	–	–	–
Net interest income		407.9	451.4	25.5	187.6	171.3	89.1	29.6	(1.0)	1,361.4
Provision for loan losses		26.0	9.9	–	5.2	(0.4)	1.6	1.0	(0.3)	43.0
Net interest income after provision for loan losses		381.9	441.5	25.5	182.4	171.7	87.5	28.6	(0.7)	1,318.4
Noninterest income		269.2	75.0	9.0	21.5	31.0	26.6	1.6	3.0	436.9
Noninterest expense		391.1	243.9	23.7	97.8	106.2	86.8	12.6	50.7	1,012.8
Impairment loss on goodwill		0.6	–	–	–	–	–	–	–	0.6
Income (loss) before income taxes and minority interest		259.4	272.6	10.8	106.1	96.5	27.3	17.6	(48.4)	741.9
Income tax expense (benefit)		85.4	109.7	3.3	42.1	33.4	9.7	5.5	(25.7)	263.4
Minority interest		(0.1)	–	–	–	–	–	–	(1.5)	(1.6)
Net income (loss)	$	174.1	162.9	7.5	64.0	63.1	17.6	12.1	(21.2)	480.1
Assets	$	12,651	10,896	9,350	4,209	3,681	2,324	789	(1,120)	42,780
Net loans and leases(1)		8,510	7,671	5,389	3,698	2,846	1,539	402	72	30,127
Deposits		9,213	8,896	6,905	3,599	3,171	1,636	442	(1,220)	32,642
Shareholder’s equity		836	1,072	1,768	299	244	299	50	(331)	4,237
2004:
Net interest income excluding hedge income	$	340.5	396.4	–	139.0	140.2	79.0	23.2	(1.8)	1,116.5
Hedge income recorded directly at subsidiary		18.7	13.8	–	0.6	1.7	5.8	1.6	2.1	44.3
Allocated hedge income (expense)		(15.4)	–	–	4.0	1.5	7.3	2.6	–	–
Net interest income		343.8	410.2	–	143.6	143.4	92.1	27.4	0.3	1,160.8
Provision for loan losses		24.7	10.7	–	4.0	3.4	(0.7)	2.0	–	44.1
Net interest income after provision for loan losses		319.1	399.5	–	139.6	140.0	92.8	25.4	0.3	1,116.7
Noninterest income		265.9	77.5	–	21.6	31.6	29.6	2.2	3.1	431.5
Noninterest expense		350.4	234.1	–	86.1	96.4	92.6	11.4	52.2	923.2
Impairment loss on goodwill		0.6	–	–	–	–	–	–	–	0.6
Income (loss) before income taxes and minority interest		234.0	242.9	–	75.1	75.2	29.8	16.2	(48.8)	624.4
Income tax expense (benefit)		77.6	97.1	–	29.7	25.8	10.6	4.9	(25.6)	220.1
Minority interest		(0.3)	–	–	–	–	–	–	(1.4)	(1.7)
Net income (loss)	$	156.7	145.8	–	45.4	49.4	19.2	11.3	(21.8)	406.0
Assets	$	11,880	10,186	–	3,592	3,339	2,319	726	(572)	31,470
Net loans and leases(1)		7,876	7,132	–	3,129	2,549	1,465	379	97	22,627
Deposits		8,192	8,329	–	3,046	2,951	1,577	417	(1,220)	23,292
Shareholder’s equity		756	1,031	–	264	220	322	50	147	2,790

(1) Net of unearned income and fees, net of related costs.

157

23.    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Financial information by quarter for 2006 and 2005 is as follows (in thousands, except per share amounts):

	Quarters
	First		Second	Third	Fourth	Year
2006:
Gross interest income	$	638,655	686,616	731,553	761,297	2,818,121
Net interest income		422,847	436,327	446,511	459,039	1,764,724
Provision for loan losses		14,512	17,022	14,363	26,675	72,572
Noninterest income:
Securities gains, net		801	3,392	14,743	5,321	24,257
Other noninterest income		127,687	134,119	130,586	134,560	526,952
Noninterest expense		324,455	333,028	330,028	342,926	1,330,437
Income before income taxes and minority interest		212,368	223,788	247,449	229,319	912,924
Net income		137,633	145,310	153,674	146,508	583,125
Preferred stock dividend		–	–	–	3,835	3,835
Net earnings applicable to common shareholders		137,633	145,310	153,674	142,673	579,290
Net earnings per common share:
Basic	$	1.30	1.37	1.45	1.34	5.46
Diluted		1.28	1.35	1.42	1.32	5.36
2005:
Gross interest income	$	422,841	455,736	483,277	548,402	1,910,256
Net interest income		314,951	330,928	340,652	374,819	1,361,350
Provision for loan losses		9,383	11,417	12,107	10,116	43,023
Noninterest income:
Securities gains (losses), net		(54)	(3,965)	1,365	2,187	(467)
Other noninterest income		102,953	109,897	109,130	115,440	437,420
Noninterest expense		239,238	242,046	247,718	283,789	1,012,791
Impairment loss on goodwill		–	–	–	602	602
Income before income taxes and minority interest		169,229	183,397	191,322	197,939	741,887
Net income		110,234	118,810	122,970	128,107	480,121
Net income per common share:
Basic	$	1.23	1.32	1.37	1.35	5.27
Diluted		1.20	1.30	1.34	1.32	5.16

158

24.    PARENT COMPANY FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

DECEMBER 31, 2006 AND 2005

(In thousands)	2006		2005
ASSETS
Cash and due from banks	$	1,907	2,057
Interest-bearing deposits		183,497	101,000
Investment securities – available for sale, at market		422,041	581,128
Other noninterest-bearing investments		62,830	68,861
Investments in subsidiaries:
Commercial banks and bank holding company		4,899,646	4,586,756
Other operating companies		58,266	25,069
Nonoperating – Zions Municipal Funding, Inc.(1)		429,126	412,868
Receivables from subsidiaries:
Commercial banks		1,294,452	617,702
Other		13,420	6,095
Other assets		83,432	106,731
	$	7,448,617	6,508,267
LIABILITIES AND SHAREHOLDERS’ EQUITY
Other liabilities	$	104,312	95,854
Commercial paper		220,507	167,188
Subordinated debt to affiliated trusts		324,709	324,709
Long-term debt		1,812,066	1,683,252
Total liabilities		2,461,594	2,271,003
Shareholders’ equity:
Preferred stock		240,000	–
Common stock		2,230,303	2,156,732
Retained earnings		2,602,189	2,179,885
Accumulated other comprehensive loss		(75,849)	(83,043)
Deferred compensation		(9,620)	(16,310)
Total shareholders’ equity		4,987,023	4,237,264
	$	7,448,617	6,508,267

(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.

159

CONDENSED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

(In thousands)	2006		2005	2004
Interest income:
Commercial bank subsidiaries	$	62,146	30,485	13,320
Other subsidiaries and affiliates		1,245	1,168	1,265
Other loans and securities		32,881	37,025	30,943
Total interest income		96,272	68,678	45,528
Interest expense:
Affiliated trusts		25,964	25,966	25,971
Other borrowed funds		112,726	61,277	33,304
Total interest expense		138,690	87,243	59,275
Net interest loss		(42,418)	(18,565)	(13,747)
Provision for loan losses		(8)	(37)	(29)
Net interest loss after provision for loan losses		(42,410)	(18,528)	(13,718)
Other income:
Dividends from consolidated subsidiaries:
Commercial banks		431,000	261,250	296,250
Other operating companies		600	300	–
Equity and fixed income securities gains, net		8,180	1,534	1,116
Other income		2,730	3,522	5,601
		442,510	266,606	302,967
Expenses:
Salaries and employee benefits		14,841	14,078	17,431
Other operating expenses		23,388	18,001	15,520
		38,229	32,079	32,951
Income before income tax benefit and undistributed income of consolidated subsidiaries		361,871	215,999	256,298
Income tax benefit		29,541	21,207	20,095
Income before equity in undistributed income of consolidated subsidiaries		391,412	237,206	276,393
Equity in undistributed income of consolidated subsidiaries:
Commercial banks and bank holding company		190,756	239,821	130,987
Other operating companies		(15,302)	(12,081)	(13,860)
Nonoperating – Zions Municipal Funding, Inc.		16,259	15,175	12,467
Net income		583,125	480,121	405,987
Preferred stock dividend		3,835	–	–
Net earnings applicable to common shareholders	$	579,290	480,121	405,987

160

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

(In thousands)	2006		2005	2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	583,125	480,121	405,987
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed net income of consolidated subsidiaries		(191,713)	(242,915)	(129,594)
Equity and fixed income securities gains, net		(8,180)	(1,534)	(1,116)
Other		34,160	40,048	12,351
Net cash provided by operating activities		417,392	275,720	287,628
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits		(82,497)	3,774	(69,091)
Collection of advances to subsidiaries		18,706	28,320	28,782
Advances to subsidiaries		(702,581)	(131,600)	(163,442)
Proceeds from sales and maturities of equity and fixed income securities		166,085	42,958	394,118
Purchases of investment securities		–	(42,221)	(334,466)
Increase of investment in subsidiaries		(137,206)	(32,280)	(87,500)
Cash paid for acquisition		–	(609,523)	–
Other		(7,983)	(8,255)	(18,101)
Net cash used in investing activities		(745,476)	(748,827)	(249,700)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in commercial paper and other borrowings under one year		53,319	1,741	39,303
Proceeds from issuance of long-term debt		395,000	595,134	300,000
Payments on long-term debt		(248,425)	–	(240,000)
Proceeds from issuance of preferred stock		235,833	–	–
Proceeds from issuance of common stock		79,511	90,800	82,250
Payments to redeem common stock		(26,483)	(82,211)	(104,881)
Dividends paid on preferred stock		(3,835)	–	–
Dividends paid on common stock		(156,986)	(130,300)	(114,600)
Net cash provided by (used in) financing activities		327,934	475,164	(37,928)
Net increase (decrease) in cash and due from banks		(150)	2,057	–
Cash and due from banks at beginning of year		2,057	–	–
Cash and due from banks at end of year	$	1,907	2,057	–

The Parent has a $40 million line of credit available from CB&T, which was unused as of December 31, 2006. Interest is at a variable rate based on specified indices. Any amount loaned requires collateral of cash or securities.

The Parent paid interest of $135.0 million in 2006, $80.5 million in 2005, and $56.5 million in 2004.

161

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, 2006, 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 2006 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 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.

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 dated approximately March 16, 2007.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the Company’s Proxy Statement to be dated approximately March 16, 2007.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2006 with respect to the shares of the Company’s common stock that may be issued under existing equity compensation plans:

162

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	1,822,194	$    76.60	6,630,337
Zions Bancorporation 1996 Non-Employee     Directors Stock Option Plan	174,289	53.78	–
Zions Bancorporation Key Employee Incentive     Stock Option Plan	2,838,696	52.16	–
Equity Compensation Plans Not Approved by Security Holders:
1998 Non-Qualified Stock Option and Incentive Plan	330,443	57.74	–
Total	5,165,622		6,630,337

(1) The table does not include information for equity compensation plans assumed by the Company in mergers. A total of 1,521,167 shares of common stock with a weighted average exercise price of $45.49 were issuable upon exercise of options granted under plans assumed in mergers and outstanding at December 31, 2006. The Company cannot grant additional awards under these assumed plans. Column (a) also excludes 420,133 shares of restricted stock. The 6,630,337 shares available for future issuance can be in the form of an option, under the Zions Bancorporation 2005 Stock Option and Incentive Plan, or in restricted stock.

Other information required by Item 12 is incorporated by reference from the Company’s Proxy Statement to be dated approximately March 16, 2007.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference from the Company’s Proxy Statement to be dated approximately March 16, 2007.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated by reference from the Company’s Proxy Statement to be dated approximately March 16, 2007.

163

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 Form 10-K under Item 8, Financial Statements and Supplementary Data:
		Consolidated balance sheets – December 31, 2006 and 2005
		Consolidated statements of income – Years ended December 31, 2006, 2005, and 2004
		Consolidated statements of changes in shareholders’ equity and comprehensive income – Years ended December 31, 2006, 2005, and 2004
		Consolidated statements of cash flows – Years ended December 31, 2006, 2005, and 2004
		Notes to consolidated financial statements – December 31, 2006
	(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-K for the year ended December 31, 2002.	*
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.	*

164

3.6	Articles of Merger of The Stockmen’s Bancorp, Inc. with and into Zions Bancorporation, effective January 17, 2007 (filed herewith).
3.7	Restated Bylaws of Zions Bancorporation dated January 27, 2006, incorporated by reference to Exhibit 3.1 of Form 8-K filed on February 2, 2006.	*
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.	*
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 Senior Management Value Sharing Plan, Award Period 2002-2005, incorporated by reference to Exhibit 10.7 of Form 10-K for the year ended December 31, 2002.	*
10.2	Zions Bancorporation 2003-2005 Value Sharing Plan, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended March 31, 2003.	*
10.3	Form of Zions Bancorporation 2003-2005 Value Sharing Plan, Subsidiary Banks, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarter ended March 31, 2003.	*
10.4	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.	*
10.5	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.	*
10.6	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.	*
10.7	Zions Bancorporation Restated Deferred Compensation Plan (Effective January 1, 2005), incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended September 30, 2006.	*

165

10.8	Zions Bancorporation Second Restated Deferred Compensation Plan for Directors (Effective January 1, 2005), incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarter ended September 30, 2006.	*
10.9	Zions Bancorporation Restated Excess Benefit Plan (Effective January 1, 2005), incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended September 30, 2006.	*
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 (filed herewith).
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 (filed herewith).
10.13	Zions Bancorporation Deferred Compensation Plans Master Trust between Zions Bancorporation and Fidelity Management Trust Company, effective September 1, 2006 (filed herewith).
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 (filed herewith).
10.15	Zions Bancorporation Restated Pension Plan effective January 1, 2001, including amendments adopted through January 31, 2002, incorporated by reference to Exhibit 10.17 of Form 10-K for the year ended December 31, 2001.	*
10.16	Amendment dated December 31, 2002 to Zions Bancorporation Restated Pension Plan, incorporated by reference to Exhibit 10.14 of Form 10-K for the year ended December 31, 2002.	*
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.	*

166

10.20	Zions Bancorporation Executive Management Pension Plan, incorporated by reference to Exhibit 10.8 of Form 10-K for the year ended December 31, 2002.	*
10.21	Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, Established and Restated Effective January 1, 2003, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2003.	*
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 (filed herewith).
10.29	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.	*
10.30	Amended and Restated Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan, incorporated by reference to Exhibit 10.18 of Form 10-Q for the quarter ended June 30, 2002.	*

167

10.31	Zions Bancorporation 1998 Non-Qualified Stock Option and Incentive Plan, as amended April 25, 2003, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarter ended March 31, 2003.	*
10.32	Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 4.7 of Form S-8 filed on May 6, 2005.	*
10.33	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.	*
10.34	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.	*
10.35	Standard Restricted Stock Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.7 of Form 10-Q for the quarter ended March 31, 2005.	*
10.36	Amegy Bancorporation 1996 Stock Option Plan, as amended and restated as of June 4, 2002, incorporated by reference to Exhibit 10.1 to Amegy Bancorporation’s Form 10-Q for the period ended June 30, 2002.	*
10.37	Fourth Amended and Restated Amegy Bancorporation, Inc. Non-Employee Directors Deferred Fee Plan, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarter ended September 30, 2006.	*
10.38	Amegy Bancorporation 2004 Omnibus Incentive Plan, incorporated by reference to Appendix B to Amegy Bancorporation’s Definitive Proxy Statement filed on March 25, 2004.	*
10.39	Form of Change in Control Agreement between the Company and Certain Executive Officers, including Harris H. Simmons, Doyle L. Arnold, and Stanley D. Savage, (filed herewith).
10.40	Employment Agreement between the Company and Paul B. Murphy (filed herewith).
10.41	Employment Agreement between the Company and Scott J. McLean (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).

168

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.

169

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.

	ZIONS BANCORPORATION
March 1, 2007	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.

March 1, 2007

/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

170

EX-3.6

EXHIBIT 3.6

EFFECTIVE DATE AND TIME:

January 17, 2007, 6:01 p.m. MST

ARTICLES OF MERGER

of

THE STOCKMEN’S BANCORP, INC.

with and into

ZIONS BANCORPORATION

These ARTICLES OF MERGER are executed and submitted for filing as of January 17, 2007, by ZIONS BANCORPORATION, a corporation organized and existing under the laws of the State of Utah, with its principal office in Salt Lake City, County of Salt Lake, State of Utah (“Zions Bancorporation”), with respect to its merger with THE STOCKMEN’S BANCORP, INC., a corporation organized and existing under the laws of the State of Arizona, with its principal office located in Kingman, County of Mohave, State of Arizona (“TS Bancorp”), pursuant to the requirements of Utah Code Ann. § 16-10a-1105. The terms and conditions of the merger of Zions Bancorporation and TS Bancorp (the “Merger”) are set forth in the Amended and Restated Plan of Merger dated January 10, 2007, by and between Zions Bancorporation and TS Bancorp, attached as Exhibit A (the “Merger Agreement”).

1. Pursuant to the Merger Agreement, TS Bancorp shall be merged with and into Zions Bancorporation. The corporation resulting from the Merger shall be Zions Bancorporation which shall continue to operate under its current articles of incorporation, bylaws and title, from the principal office address set forth below:

Zions Bancorporation

One South Main, Suite 1380

Salt Lake City, Utah 84111

2. Pursuant to Utah Code Ann. § 16-10a-1103, approval of the Merger Agreement by shareholders of Zions Bancorporation is not required.

3. The number of shares of stock outstanding of TS Bancorp, the number of shares entitled to vote with respect to the adoption of the Merger Agreement and the designation of shares entitled to vote as a class with respect thereto, are set forth below:

Class of Shares	Total Number of Shares Outstanding	Number of Shares Entitled to Vote	Designation of Shares Entitled to Vote as a Class
Common Stock, no par value	348,713	348,713	none

4. The number of shares of stock of TS Bancorp voted for and against the Merger Agreement at a special meeting of shareholders held on January 12, 2007 is set forth below:

Class of Shares	Number of Shares Voted For	Number of Shares Voted Against	Number of Shares Abstaining
Common Stock, no par value	324,936	146	864

The number of votes cast in favor of the Merger Agreement by shareholders of TS Bancorp is sufficient for its approval.

5. The Merger Agreement and the performance of its terms by Zions Bancorporation and TS Bancorp, respectively, have been duly authorized by all action required by its terms, the laws of the United States and the States of Utah and Arizona and the articles of incorporation and bylaws of the respective corporations.

6. The effective time of the Merger shall be 6:01 p.m. Mountain Standard Time on January 17, 2007.

The undersigned hereby affirms that he has read the foregoing Articles of Merger, is familiar with their contents, and verifies and affirms their truthfulness.

IN WITNESS WHEREOF, Zions Bancorporation has caused these Articles of Merger to be executed on its behalf by its officer, as of the date first written above.

ZIONS BANCORPORATION
By:	/s/ Doyle L. Arnold
	Doyle L. Arnold
	Vice Chairman and Chief Financial Officer

- 2 -

EXHIBIT A

PLAN OF MERGER

AMENDED AND RESTATED PLAN OF MERGER

This Amended and Restated Plan of Merger is made and entered into as of January 10, 2007, between THE STOCKMEN’S BANCORP, INC. (“TS Bancorp”), a corporation organized under the laws of the State of Arizona, and ZIONS BANCORPORATION (“Zions”), a corporation organized under the laws of the State of Utah. TS Bancorp and Zions are hereinafter sometimes individually called a “Constituent Corporation” and collectively called the “Constituent Corporations.”

RECITALS

TS Bancorp is a corporation duly organized, validly existing, and in good standing under the laws of the State of Arizona. As of June 30, 2006 the authorized capital stock of TS Bancorp consisted of 1,000,000 shares of Common Stock, no par value, of which 336,835 shares were issued and outstanding.

Zions is a corporation duly organized, validly existing, and in good standing under the laws of the State of Utah. As of June 30, 2006, the authorized capital stock of Zions consisted of 3,000,000 shares of Preferred Stock, without par value, of which no shares were issued and outstanding, and 350,000,000 shares of Common Stock, without par value, of which 106,611,731 shares were issued and outstanding.

Zions, TS Bancorp, National Bank of Arizona, and The Stockmen’s Bank have entered into an Agreement and Plan of Reorganization, dated September 8, 2006 and amended as of September 25, 2006 (the “Plan of Reorganization”), setting forth certain representations, warranties, and agreements in connection with the transactions therein and herein contemplated, which contemplates the merger of TS Bancorp with and into Zions (the “Merger”) in accordance with this Amended and Restated Plan of Merger (the “Plan”). A Plan of Merger was made and entered into as of September 8, 2006 between the Constituent Corporations and is amended and restated hereby to conform its terms to those to which the Constituent Corporations agreed in the September 25, 2006 amendment to the Plan of Reorganization.

The Boards of Directors of each of TS Bancorp and Zions deem the Merger advisable and in the best interests of each corporation and its shareholders. The Boards of Directors of each of TS Bancorp and Zions, by resolutions duly adopted, have approved the Plan of Reorganization and this Plan. The Board of Directors of TS Bancorp, by resolutions duly adopted, has directed that this Plan, and authorization for the transactions contemplated hereby, be submitted to shareholders of TS Bancorp for approval. Pursuant to the Utah Revised Business Corporation Act, action by the shareholders of Zions is not required.

At the Effective Time (as defined in article 1) shares of TS Bancorp common stock shall be converted into the right to receive shares of the common stock of Zions, without par value (the “Zions Stock”), as provided herein.

- i -

In consideration of the premises and the mutual covenants and agreements herein contained and subject to the terms and conditions of this Plan, the parties hereto hereby covenant and agree as follows:

Article 1.

MERGER.

TS Bancorp shall be merged with and into Zions on the date and at the time to be specified in the Articles of Merger to be filed with the Division of Corporations and Commercial Code of the State of Utah pursuant to section 16-10a-1105 of the Utah Revised Business Corporation Act and with the Arizona Corporation Commission pursuant to section 10-1105 of the Arizona Business Corporation Act (the “Effective Time”).

Article 2.

EFFECT OF THE MERGER.

(a) TS Bancorp and Zions shall be a single corporation, which shall be Zions. Zions is hereby designated as the surviving corporation in the Merger and is hereinafter sometimes called the “Surviving Corporation.”

(b) The separate existence of TS Bancorp shall cease.

(c) Zions shall have all the rights, privileges, immunities, and powers and shall assume and be subject to all the duties and liabilities of a corporation organized under the Utah Revised Business Corporation Act.

(d) The Surviving Corporation shall thereupon and thereafter possess all of the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of the Constituent Corporations; and all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares and all other choses in action, and all and every other interest of and belonging to or due to each of the Constituent Corporations shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and the title to any real estate, or any interest therein, vested in either of the Constituent Corporations shall not revert or be in any way impaired by reason of the Merger.

(e) The Surviving Corporation shall thenceforth be responsible and liable for all the liabilities and obligations of each of the Constituent Corporations; and any claim existing or action or proceeding pending by or against either of the Constituent Corporations may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in its place. The Surviving Corporation expressly assumes and agrees to perform all of TS Bancorp’s liabilities and obligations. Neither the rights of creditors nor any liens upon the property of either Constituent Corporation shall be impaired by the Merger.

- ii -

(f) Any taxes, penalties, and public accounts of the State of Utah and the State of Arizona, claimed against either of the Constituent Corporations but not settled, assessed, or determined prior to the Merger shall be settled, assessed, or determined against the Surviving Corporation and, together with interest thereon, shall be a lien against the franchises and property, both real and personal, of the Surviving Corporation.

(g) The articles of incorporation of Zions as they exist immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Corporation until later amended pursuant to Utah law.

(h) The bylaws of Zions as they exist immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until later amended pursuant to Utah law.

(i) The authorized shares of capital stock of Zions as of the Effective Time shall be 3,000,000 shares of Preferred Stock, without par value, and 350,000,000 shares of Common Stock, without par value.

(j) Subject to the terms, conditions, and limitations set forth herein, at the Effective Time and until surrendered for exchange and payment, each outstanding stock certificate that, prior to the Effective Time, represented shares of TS Bancorp Stock, other than any shares of TS Bancorp Stock held by Zions (other than in a fiduciary, representative, or custodial capacity), which shall be canceled without any payment therefor, shall, by virtue of this Agreement and without any action on the part of the holder or holders, cease to represent an issued and existing share and shall be converted into a right to receive from Zions, and shall for all purposes represent the right to receive, upon surrender of the certificate formerly representing such shares, a certificate representing the number of shares of Zions Stock equal to the product of the number of TS Bancorp Shares formerly represented by that certificate and the Exchange Ratio.

(k) With respect to any matters relating to stock certificates representing Zions Shares, Zions may rely conclusively upon the record of shareholders maintained by TS Bancorp containing the names and addresses of the holders of record of TS Bancorp Shares at the Effective Time.

(l) The terms set forth below are used in this Plan with the following meanings:

(i) “Business Day” shall mean any day that is not a Saturday, a Sunday, or a day on which banks are required or authorized by law to be closed in the State of Arizona.

(ii) “Exchange Ratio” shall mean the fraction, rounded to the nearest ten-thousandths of an integer, obtained by dividing the Issuable Zions Shares by the number of shares of the Common Stock of TS Bancorp that shall be issued and outstanding at the Effective Time.

- iii -

(iii) “Issuable Zions Shares” shall mean the Purchase Price divided by the Zions Divisor.

(iv) “Purchase Price” shall mean $210 million as increased or reduced in accordance with the subsections (A) and (B) of this section 2(l)(iv).

(A) The Purchase Price shall be increased by $2,325,198.

(B) The tax-effected excess of the value of liabilities and obligations of TS Bancorp and TS Bank at the Effective Time to make future payments in connection with TS Bank’s Supplemental Executive Retirement Plan and related agreements over the expense accrual on the books of TS Bancorp and TS Bank as of June 30, 2006 for such liabilities and obligations shall be a reduction of the $210 million purchase price. The Constituent Corporations stipulate and agree that the tax-effected amount of such excess for purposes of this section 2(l)(iv)(B) is $1,498,000.

(v) “Zions Divisor” shall mean $81.08.

(vi) “Zions Stock” shall mean the common stock of Zions, without par value.

(m) Notwithstanding anything to the contrary herein, no shares of Zions Stock shall be issued in respect of any shares of TS Bancorp Stock the holders of which shall object to the Merger in writing and demand payment of the value of their shares pursuant to article 13 of title 10 of the Arizona Business Corporation Act, and as a result payment therefor is made, such holders to have only the rights provided by article 13 of title 10 of the Arizona Business Corporation Act.

(n) Zions will, promptly after the Effective Time, issue and deliver to Zions Bank, in its capacity as the Exchange Agent designated as such pursuant to section 6(a), the share certificates representing shares of Zions Stock (each a “New Certificate”) to be remitted to holders of TS Bancorp Shares in accordance with this Plan.

(o) At the Effective Time, each stock option to purchase TS Bancorp Stock not exercised prior to the Effective Time, whether vested or unvested, shall automatically be cancelled and shall cease to represent a purchase right of any nature. Zions hereby expressly declines to assume any TS Bancorp stock options, to substitute options to purchase Zions Stock in place of any TS Bancorp stock options, or to assume any obligations under any stock plans under which TS Bancorp stock options have been or may be issued.

- iv -

Article 3.

ACTS TO CARRY OUT PLAN.

(a) TS Bancorp and its officers and directors shall do all such acts and things as may be necessary or proper to vest, perfect, or confirm title to such property or rights in Zions and otherwise to carry out the purposes of this Plan.

(b) If, at any time after the Effective Time, Zions shall consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable to (i) vest, perfect, or confirm, of record or otherwise, in Zions its right, title, or interest in or under any of the rights, properties, or assets of TS Bancorp acquired or to be acquired by Zions as a result of, or in connection with, the Merger, or (ii) otherwise carry out the purposes of this Plan, TS Bancorp and its officers and directors shall be deemed to have granted to Zions an irrevocable power of attorney to execute and deliver all such proper deeds, assignments, and assurances in law and to do all acts necessary or proper to vest, perfect, or confirm title to and possession of such rights, properties, or assets in Zions and otherwise to carry out the purposes of this Plan; and the officers and directors of Zions are fully authorized in the name of TS Bancorp or otherwise to take any and all such action.

Article 4.

FRACTIONAL SHARES.

Zions will not issue fractional shares of its stock. In lieu of fractional shares of Zions Stock, if any, each shareholder of TS Bancorp who is entitled to a fractional share of Zions Stock shall receive an amount of cash equal to the product of such fraction times the average of the last sale price of Zions Stock as reported in the Wall Street Journal or, if no such sale price is so reported, the last sale price as reported by such other source upon which Zions and TS Bancorp shall mutually agree, or if no such sale takes place, the mean (unrounded) of the closing bid and asked prices of Zions Stock as reported on the Nasdaq Global Select Market, or in its absence by such other source upon which Zions and TS Bancorp shall mutually agree, during the twenty consecutive trading days ending on and including the trading day that is the eighth Business Day preceding the Effective Time, if that day is a trading day, or, if that day is not a trading day, the subsequent calendar day that is a trading day; provided that if during the period that comprises those twenty consecutive trading days Zions shall publicly release its quarterly earnings, the twenty consecutive trading days most immediately prior to that release shall instead be used. Such fractional share interest shall not include the right to vote or to receive dividends or any interest thereon.

Article 5.

DIVIDENDS; INTEREST.

No shareholder of TS Bancorp entitled to receive Zions Stock in the Merger will be entitled to receive dividends on his or her Zions Stock until he or she exchanges his or her certificates representing TS Bancorp Shares for Zions Stock. Any dividends declared

- v -

on Zions Stock to holders of record on or after the Effective Time shall, with respect to stock to be delivered pursuant to this Plan to such shareholders of TS Bancorp who are entitled to exchange and have not exchanged their certificates representing TS Bancorp Shares for Zions Stock, be paid to the Exchange Agent as designated in article 6 of this Plan and, upon receipt from such a former TS Bancorp shareholder of certificates representing TS Bancorp Shares, the Exchange Agent shall forward to such former TS Bancorp shareholder (a) certificates representing his or her shares of Zions Stock, (b) dividends declared thereon subsequent to the Effective Time (without interest), (c) the cash value of any fractional shares determined in accordance with article 4 of this Plan, and (d) the cash portion of the consideration to which such shareholder is entitled.

Article 6.

DESIGNATION OF EXCHANGE AGENT.

(a) The parties hereto hereby designate Zions First National Bank, a national banking association with its head office in Salt Lake City, Utah (“Zions Bank”), as Exchange Agent to effect the exchanges contemplated by this Plan.

(b) If any share certificate representing shares of Zions Stock is to be issued in a name other than that in which the corresponding certificate which, immediately prior to the effectiveness of the Merger, had represented Zions Shares (an “Old Certificate”) surrendered for exchange was issued, the Old Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and the person requesting such exchange shall pay to Zions Bank any transfer or other taxes required by reason of the issuance of the share certificate representing shares of Zions Stock in any name other than that of the registered holder of the Old Certificate surrendered, or establish to the satisfaction of Zions Bank that such tax has been paid or is not payable.

(c) If Old Certificates are not surrendered and exchanged for New Certificates prior to two years after the Effective Time (or, in any particular case, prior to the date before the second anniversary of the Effective Time on which the whole shares of TS Bancorp Stock, the dividends and other distributions, if any, and cash in lieu of fractional shares described below would otherwise escheat to or become the property of any Governmental Authority), (i) the number of whole shares of Zions Stock into and for which the shares of TS Bancorp Stock theretofore represented by such Old Certificates shall have been converted, (ii) the amount of dividends and other distributions, if any, which theretofore have become payable to holders of record at or after the Effective Time with respect to such number of whole shares of Zions Stock, (iii) the amount of dividends and other distributions, if any, declared by TS Bancorp payable to holders of record of shares of TS Bancorp Stock at a time prior to the Effective Time but payable subsequent to the Effective Time, (iv) the amount of dividends and other distributions, if any, which subsequently become payable with respect to such number of whole shares of Zions Stock, and (v) the amount of cash in lieu of fractional shares which would have been payable with respect to the shares of TS Bancorp Stock theretofore represented by such Old Certificates, shall become the property of Zions

- vi -

(and, to the extent not in its possession, shall be paid over to it), free and clear of all claims or interest of any other Person previously entitled thereto. Notwithstanding the foregoing, neither Zions nor its agents or any other Person shall be liable to any former holder of TS Bancorp Stock for any property delivered to a public official pursuant to applicable abandoned property, escheat, or similar laws.

Article 7.

COUNTERPARTS.

This Plan may be executed in two or more counterparts each of which shall be deemed to constitute an original, but such counterparts together shall be deemed to be one and the same instrument and to become effective when one or more counterparts have been signed by each of the parties hereto. It shall not be necessary in making proof of this Plan or any counterpart of this Plan to produce or account for the other counterpart or counterparts.

Article 8.

INTERPRETATION.

Article titles, headings to articles, and any table of contents are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Plan. Exhibits referred to in this Plan shall be construed with and as an integral part of this Plan to the same extent as if they were set forth verbatim in this Plan. As used in this Plan, “include,” “includes,” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import; “writing,” “written,” and comparable terms refer to printing, typing, lithography, and other means of reproducing words in a visible form; references to a person are also to his, her, or its successors and assigns; except as the context may otherwise require, “hereof,” “herein,” “hereunder,” and comparable terms refer to the entirety of this Plan and not to any particular article, section, or other subdivision of this Plan or attachment to this Plan; references to any gender include the other; except as the context may otherwise require, the singular includes the plural and vice versa; references to any agreement or other document are to such agreement or document as amended and supplemented from time to time; references to “article,” “section,” or another subdivision or to an “Exhibit” or “Schedule” are to an article, section, or subdivision of this Plan or an “Exhibit” or “Schedule” to this Plan. The parties hereto acknowledge that each party and its counsel have reviewed and revised this Plan and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation, construction, and enforcement of this Plan or any amendment, schedule, or exhibit to this Plan.

- vii -

Article 9.

CHOICE OF LAW AND VENUE.

This Plan shall be governed by, construed, and enforced in accordance with the laws of the State of Utah, without giving effect to the principles of conflict of law thereof. The parties hereby designate Salt Lake County, Utah to be the proper jurisdiction and venue for any suit or action arising out of this Plan. Each of the parties consents to personal jurisdiction in such venue for such a proceeding and agrees that it may be served with process in any action with respect to this Plan or the transactions contemplated by this Plan by certified or registered mail, return receipt requested, or to its registered agent for service of process in the State of Utah. Each of the parties irrevocably and unconditionally waives and agrees, to the fullest extent permitted by law, not to plead any objection that it may now or hereafter have to the laying of venue or the convenience of the forum of any action or claim with respect to this Plan or the transactions contemplated thereby brought in the courts aforesaid.

Article 10.

ADJUSTMENTS FOR CERTAIN EVENTS.

Anything in this Plan to the contrary notwithstanding, all prices per share and exchange ratios referred to in this Plan shall be appropriately adjusted to account for stock dividends, for split-ups, and for reclassifications that are caused by mergers, recapitalizations, combinations, conversions, exchanges of shares or the like, but not for issuances of stock other than in connection with the foregoing and not for normal and recurring cash dividends declared or paid in a manner consistent with the established practice of the payer or for the dividend addressed in section 8.08(b) of the Plan of Reorganization.

Article 11.

BINDING AGREEMENT.

This Plan shall be binding upon the parties and their respective successors and assigns.

Article 12.

AMENDMENT.

To the extent permitted by law, this Plan may be amended, supplemented, or interpreted at any time prior to the Effective Time by written instrument duly authorized and executed by each of the parties, provided that this Plan may not be amended after the action by shareholders of TS Bancorp in any respect that would prejudice the economic interests of such TS Bancorp shareholders, or any of them, except as specifically provided herein or by like action of such shareholders.

- viii -

Article 13.

TERMINATION.

This Plan shall terminate and be abandoned upon (i) termination of the Plan of Reorganization or (ii) the mutual consent of TS Bancorp and Zions at any time prior to the Effective Time, and there shall be no liability on the part of either of the parties hereto (or any of their respective officers or directors) except to the extent provided in the Plan of Reorganization.

IN WITNESS WHEREOF, the parties have executed this Plan as of the date first above written.

ZIONS BANCORPORATION
By:	DOYLE L. ARNOLD
	Doyle L. Arnold
	Vice Chairman and Chief Financial Officer
THE STOCKMEN’S BANCORP, INC.
By:	FARREL HOLYOAK
	Farrel Holyoak
	President and Chief Operating Officer

- ix -

EX-10.10

EXHIBIT 10.10

TRUST AGREEMENT

establishing

the

ZIONS BANCORPORATION DEFERRED COMPENSATION PLAN

TRUST

by and between

ZIONS BANCORPORATION

and

CIGNA BANK & TRUST COMPANY, FSB

TABLE OF CONTENTS

		PAGE
Section 1	Establishment of Trust	1
Section 2	Payments to Plan Participants and Their Beneficiaries	2
Section 3	Trustee Responsibility Regarding Payments to Trust Beneficiary When Company is Insolvent	3
Section 4	Payments to Company	4
Section 5	Investment Authority	4
Section 6	Disposition of Income	4
Section 7	Accounting by Trustee	4
Section 8	Responsibility of Trustee	5
Section 9	Compensation and Expenses of Trustee	6
Section 10	Resignation and Removal of Trustee	6
Section 11	Appointment of Successor	7
Section 12	Amendment or Termination	7
Section 13	Miscellaneous	7
Section 14	Effective Date	8

(a) This Agreement made this 1^st day of October, 2002, by and between Zions Bancorporation (the “Company”) and CIGNA Bank & Trust Company, FSB, a federal savings bank with its principal office and place of business in Hartford, Connecticut (the “Trustee”);

(b) WHEREAS, Company has adopted the Zions Bancorporation Deferred Compensation Plan (the “Plan”);

(c) WHEREAS, Company has incurred or expects to incur liability under the terms of such Plan with respect to the individuals participating in such Plan;

(d) WHEREAS, the Company wishes to establish the Zions Bancorporation Deferred Compensation Plan Trust (hereinafter called “Trust”or “Trust Fund”) and to contribute to the Trust assets that shall be held herein, subject to the claims of Company’s creditors in the event of Company’s insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plan;

(e) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation and/or benefits for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974;

(f) WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist in the meeting of its liabilities under the Plan.

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows:

Section 1. Establishment of Trust.

(a) Company hereby deposits with Trustee in trust certain good and valuable consideration, which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement.

(b) The Trust hereby established shall be irrevocable.

(c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly.

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(d) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of Company’s general creditors under federal and state law in the event of insolvency, as defined in Section 3(a) herein.

(e) Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan participant or beneficiary shall have any right to compel such additional deposits.

Section 2. Payments to Plan Participants and Their Beneficiaries.

(a) Company shall deliver to Trustee a schedule (the “Payment Schedule”) that indicates the amounts payable in respect of each Plan participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule. The Trustee shall make provisions for reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by Company.

(b) The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plan shall be determined by Company or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan.

(c) Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plan. Company shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. Trustee shall require Company to provide reasonable written documentation that such payments have been made directly to such participant or beneficiary. In addition, if the principal

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of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, Company shall make the balance of each such payment as it falls due. Trustee shall notify Company where principal and earnings are not sufficient.

Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary When Company is Insolvent.

(a) Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is insolvent. Company shall be considered “insolvent” for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due, (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code, or (iii) Company is determined to be insolvent.

(b) At all times during the continuance of this Trust, as provided in Section l(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below.

(1) The Board of Directors and the Chief Executive Officer of Company shall have the duty to inform Trustee in writing of Company’s insolvency. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become insolvent, Trustee shall determine whether Company is insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries.

(2) Unless Trustee has actual knowledge of Company’s insolvency, or has received notice from Company or a person claiming to be a creditor alleging that Company is insolvent, Trustee shall have no duty to inquire whether Company is insolvent. Trustee may in all events rely on such evidence concerning Company’s solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company’s solvency.

(3) If at any time Trustee has determined that Company is insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of Company’s general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of Company with respect to benefits due under the Plan or otherwise.

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(4) Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company is not insolvent (or is no longer insolvent).

(c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants and their beneficiaries by Company in lieu of the payments provided for hereunder during any such period of discontinuance.

Section 4. Payments to Company.

Except as provided in Section 3 hereof, after the Trust has become irrevocable, Company shall have no right or power to direct Trustee to return to Company or to divert to others any of the Trust assets before all payment[s] of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plan.

Section 5. Investment Authority.

Trustee shall have the power to invest the assets of the Trust Fund in such investment vehicles as directed by the Company, including insurance policies or securities (including stock or rights to acquire stock) or obligations issued by Company. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee pursuant to the Company’s direction, and shall in no event be exercisable by or rest with Plan participants.

Section 6. Disposition of Income.

During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested.

Section 7. Accounting by Trustee.

The Trustee has accepted this Trust on the condition that the Company has entered or is entering into a service agreement with Connecticut General Life Insurance Company (‘Connecticut General”) whereby Connecticut General will provide recordkeeping services for all assets held pursuant to this Trust Agreement. The Trustee shall be required to forward to the Company, or require Connecticut General to forward to the Company, the recordkeeping reports and related financial information provided by Connecticut General, but the Trustee shall not otherwise be required to provide Trust accounts.

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Section 8. Responsibility of Trustee.

(a) Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company or any delegate appointed by the Company which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by Company or its delegate. In the event of a dispute between Company and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute.

(b) If Trustee undertakes or defends any litigation arising in connection with this Trust, Company agrees to indemnify Trustee against Trustee’s costs, expenses and liabilities (including, without limitation, attorneys’ fees and expenses) relating thereto and to be primarily liable for such payments. If Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust.

(c) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder, including recordkeeping, reporting, custody of assets or proxy voting. Such agents may include affiliates of the Trustee.

(d) Trustee shall have, without exclusion, all powers conferred in Trustees in accordance with applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor trustee, or to loan to any person the proceeds of any borrowing against such policy.

(e) The Company shall indemnify and hold harmless the Trustee from and against any and all claims, losses, damages, expenses (including reasonable counsel fees) and liability to which the Trustee may be subject by reason of any act done or omitted to be done, except where the same is finally adjudicated to be due to the negligence or willful misconduct of the Trustee.

(f) In addition to and in no way in limitation of the indemnification of paragraph (e) of this section, the Company hereby agrees to indemnify and hold harmless the Trustee from and against any claims, losses, damages, expenses (including reasonable counsel fees) and liability to which the Trustee may be subject by reason of any act or omission of any prior, subsequent or existing trustee of the Plan.

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(g) The Trustee shall be responsible only for such assets as are actually received by it as Trustee hereunder. The Trustee shall have no duty or authority to ascertain whether any contributions should be made to it pursuant to the Plan or to bring any action to enforce any obligation to make any such contribution, nor shall it have any responsibility concerning the amount of any contribution or the application of the Plan’s contribution formula. The Trustee shall have no responsibility for any assets not held under this Trust, even if those assets are held as assets of the Plan under a separate trust agreement. Responsibility for any such assets shall be solely that of the trustees named in such separate trust agreement, or, in the event no such separate trust exists, the Company.

Section 9. Compensation and Expenses of Trustee.

Company shall pay all administrative and Trustees’ fees and expenses in accordance with a fee schedule provided to the Company. In addition, Trustee shall be paid its reasonable expenses, including reasonable expenses of counsel and other agents employed by the Trustee, incurred in connection with administration of the Trust Fund. If the Trustee proposes an amended fee schedule and the Company fails to object thereto within ninety (90) days of its receipt, the amended fee schedule shall be deemed accepted by the Company. If not paid, the fees and expenses shall be paid from the Trust.

Section 10. Resignation and Removal of Trustee.

(a) Trustee may resign at any time by written notice to Company, which shall be effective 30 (thirty) days after receipt of such notice unless Company and Trustee agree otherwise.

(b) Trustee may be removed by Company on 30 (thirty) days notice or upon shorter notice accepted by Trustee.

(c) The Trustee’s service pursuant to this Agreement is conditioned upon the existence of one or more contracts between the Company and Connecticut General providing for full Plan recordkeeping services. In the event the contract providing for such recordkeeping services is discontinued or terminated, this Trust Agreement shall be terminated as well with no further notice from either party to the other as of the date of discontinuance or termination of the contract providing for Plan recordkeeping services.

(d) Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within 30 days after receipt of notice of resignation, removal or transfer, unless Company extends the time limit.

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(e) If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraph(s) (a), (b) or (c) of this section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

Section 11. Appointment of Successor.

If Trustee resigns or is removed in accordance with Section 10(a), (b) or (c) hereof, Company may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by Company or the successor Trustee to evidence the transfer.

Section 12. Amendment or Termination.

(a) This Trust Agreement may be amended by a written instrument executed by Trustee and Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plan or shall make the Trust revocable after it has become irrevocable in accordance with Section l(b) hereof.

(b) The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plan. Upon termination of the Trust any assets remaining in the Trust shall be returned to Company.

Section 13. Miscellaneous.

(a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.

(b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process.

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(c) This Trust Agreement and the Trust hereby created shall be governed, construed, administered and regulated in all respects in accordance with the laws of Connecticut.

(d) This Trust Agreement shall be binding upon the respective successors and assigns of the Employer and the Trustee.

(e) In the event of any conflict between provisions of the Plan and those of this Trust Agreement, this Trust Agreement shall prevail.

Section 14. Effective Date.

The effective date of this Trust Agreement shall be October 1, 2002.

Attest:	ZIONS BANCORPORATION
	By	/s/    W. David Hemingway
	Its
	Date	8-9-2002
Attest:	CIGNA BANK & TRUST COMPANY, FSB
	By	/s/    Lori Thielen
	Its
	Date	8-9-2002

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EX-10.12

EXHIBIT 10.12

AMENDMENT TO THE TRUST AGREEMENT

Establishing the

ZIONS BANCORPORATION DEFERRED COMPENSATION PLANS TRUST

WHEREAS, the Zions Bancorporation Deferred Compensation Plans Trust (hereinafter called the “Trust”) was established by and between Zions Bancorporation (hereinafter called the “Employer”), and Prudential Bank & Trust, FSB, a federal savings bank with its principal office and place of business in the City of Hartford, Connecticut; in connection with and as part of the Zions Bancorporation Deferred Compensation Plans (hereinafter called the “Plan”); and

WHEREAS, effective September 1, 2006, the Employer wishes to amend the Schedule of Covered Plans (Exhibit A of the Trust Agreement) to remove plans held under the trust;

NOW THEREFORE, the Trust Agreement is hereby amended effective September 1, 2006 as follows:

1. The Schedule of Covered Plans (Exhibit A of the Trust Agreement) is deleted in its entirety and replaced by the updated Schedule of Covered Plans attached hereto and forms a part hereof.

IN WITNESS WHEREOF, this amendment has been executed on the dates indicated below.

EMPLOYER		PRUDENTIAL BANK & TRUST, FSB
By:	/s/ Diana M. Anderson	By:	/s/ Andrew Levesque
Its:	SVP, Director fo Corp. Benefits	Its:	Trust Officer
Date:	2/15/2007	Date:	2/16/2007

EXHIBIT A

SCHEDULE OF COVERED PLANS

1. Zions Bancorporation Excess Benefit Plan

2. Zions Bancorporation Post 2004 Excess Benefit Plan

EX-10.13

EXHIBIT 10.13

MASTER TRUST AGREEMENT

Between

ZIONS BANCORPORATION

And

FIDELITY MANAGEMENT TRUST COMPANY

ZIONS BANCORPORATION DEFERRED COMPENSATION

PLANS MASTER TRUST

Dated as of September 1, 2006

TABLE OF CONTENTS

Section 1.	Definitions	2
Section 2.	Trust	6
(a)	Establishment	6
(b)	Grantor Trust	7
(c)	Trust Assets	7
(d)	Non-Assignment	7
Section 3.	Payments to Sponsor	7
Section 4.	Disbursements	7
(a)	Directions from Administrator	7
(b)	Limitations	8
Section 5.	Investment of Trust	8
(a)	Selection of Investment Options	8
(b)	Available Investment Options	8
(c)	Investment Directions	8
(d)	Unfunded Status of Plan	8
(e)	Mutual Funds	9
	(i)       Execution of Purchases and Sales	9
	(ii)      Voting	9
(f)	Zions Common Stock in the Zion Bancorporation Restated Deferred Compensation Plan	9
	(i)       Acquisition Limit	10
	(ii)      Duty	10
	(iii)     Purchases and Sales of Zions Common Stock	10
	(iv)     Execution of Purchases and Sales of Units	11
	(v)      Securities Law Reports	11
	(vi)     Voting and Tender Offers	11
	(vii)    General	12
	(viii)  Conversion	12
(g)	Zions Preferred Stock in the Zion Bancorporation Restated Deferred Compensation Plan	12
	(i)       Acquisition Limit	12
	(ii)      Duty	12
	(iii)     Purchases and Sales of Zions Preferred Stock	13
	(iv)     Execution of Purchases and Sales of Units	14
	(v)      Securities Law Reports	14
	(vi)     Voting and Tender Offers	14
	(vii)    General	15
	(viii)  Conversion	15
(h)	Zions Common Stock in the Zions Bancorporation Restated Deferred Compensation Plan for Directors and the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan	15
	(i)       Acquisition Limit	15
	(ii)      Purchases and Sales of Zions Common Stock for Batch Activity	15
	(iii)     Purchases and Sales of Zions Common Stock for Participant-Initiated Exchanges (“Real Time” Trading)	16
	(iv)     Use of an Affiliated Broker	17
	(v)      Securities Law Reports	17
	(vi)     Voting and Tender Offers	17
	(vii)    General	17
	(viii)  Conversion	17
	(ix)     Nasdaq Subscriber Agreement	18
	(i)       Trustee Powers	18

Fidelity Confidential

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Section 6.	Recordkeeping and Administrative Services to Be Performed	19
(a)	General	19
(b)	Accounts	19
(c)	Inspection and Audit	19
(d)	Notice of Plan Amendment	19
(e)	Returns, Reports and Information	19
Section 7.	Compensation and Expenses	20
Section 8.	Directions and Indemnification	20
(a)	Identity of the Sponsor and the Administrator	20
(b)	Directions from the Sponsor and the Administrator	20
(c)	Directions from Participants	20
(d)	Indemnification	20
(e)	Survival	21
Section 9.	Resignation or Removal of Trustee	21
(a)	Resignation and Removal	21
(b)	Termination	21
(c)	Notice Period	21
(d)	Transition Assistance	21
(e)	Failure to Appoint Successor	22
Section 10.	Successor Trustee	22
(a)	Appointment	22
(b)	Acceptance	22
(c)	Corporate Action	22
Section 11.	Resignation, Removal, and Termination Notices	22
Section 12.	Duration	22
Section 13.	Insolvency of Sponsor	23
Section 14.	Amendment or Modification	23
Section 15.	Electronic Services	23
Section 16.	Assignment	25
Section 17.	Force Majeure	25
Section 18.	Confidentiality	25
Section 19.	General	25
(a)	Performance by Trustee, its Agents or Affiliates	25
(b)	Entire Agreement	26
(c)	Waiver	26
(d)	Successors and Assigns	26
(e)	Partial Invalidity	26
(f)	Section Headings	26
(g)	Communications	26
(h)	Survival	26
(i)	Merger	27
Section 20.	Use of Data	27
Section 21.	Governing Law	27
(a)	Massachusetts Law Controls	27
(b)	Trust Agreement Controls	27

Fidelity Confidential

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SCHEDULES		29
Schedule “A”	Recordkeeping and Administrative Services .	29
Schedule “B”	Fee Schedule	32
Schedule “C”	Investment Options	33
Schedule “D”	Operational Guidelines for Non-Fidelity Mutual Funds	35
Schedule “E”	Availabel Liquidity Procedures for Unitized Stock Funds	37

Fidelity Confidential

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TRUST AGREEMENT, dated as of the first day of September, 2006, between ZIONS BANCORPORATION, a Utah corporation, having an office at One Main Street, Salt Lake City, Utah 84111 (the “Sponsor”), and FIDELITY MANAGEMENT TRUST COMPANY, a Massachusetts trust company, having an office at 82 Devonshire Street, Boston, Massachusetts 02109 (the “Trustee”).

WITNESSETH:

WHEREAS, the Sponsor is the sponsor of the Zions Bancorporation Restated Deferred Compensation Plan, the Zions Bancorporation Restated Deferred Compensation Plan for Directors, and the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan (collectively and individually, the “Plan”); and

WHEREAS, the Sponsor wishes to establish an irrevocable trust and to contribute to the Trust assets that shall be held therein, subject to the claims of Sponsor’s creditors in the event of Sponsor’s Insolvency, as herein defined, until paid to Participants and their beneficiaries in such manner and at such times as specified in the Plan; and

WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of1974(“ERISA”);and

WHEREAS, it is the intention of the Sponsor to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan; and

WHEREAS, the Trustee is willing to hold and invest the aforesaid plan assets in trust among several investment options selected by the Sponsor; and

WHEREAS, the Sponsor also wishes to have the Trustee perform certain ministerial recordkeeping and administrative functions under the Plan; and

WHEREAS, the Trustee is willing to perform recordkeeping and administrative services for the Plan if the services are ministerial in nature and are provided within a framework of plan provisions, guidelines and interpretations conveyed in writing to the Trustee by the Administrator (as defined herein).

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth below, the Sponsor and the Trustee agree as follows:

Section 1. Definitions.

The following terms as used in this Trust Agreement have the meaning indicated unless the context clearly requires otherwise:

(a) “Administrator”

“Administrator” shall mean the Sponsor.

(b) “Agreement”

“Agreement” shall mean this Trust Agreement, and the Schedules and/or Exhibits attached hereto, as the same may be amended and in effect from time to time.

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(c) “Available Liquidity”

“Available Liquidity” shall mean the amount of short-term investments held in the Stock Fund decreased by any outgoing cash for expenses then due including payables for loan principals and obligations for pending stock purchases, and increased by incoming cash (such as contributions, exchanges in) and to the extent credit is available and allocable to the Stock Fund, receivables for pending stock sales.

(d) “Business Day”

“Business Day” shall mean each day the NYSE is open. The closing of a Business Day shall mean the NYSE’s normal closing time of 4:00 p.m.(ET), however, in the event the NYSE closes before such time or alters its closing time, all references to the NYSE closing time shall mean the actual or altered closing time of the NYSE.

(e) “Closing Price”

“Closing Price” shall mean either (1) the closing price of the stock on the principal national securities exchange on which the stock is traded or, in the case of stocks traded over the counter, the last sale price of the day; or if (1) is unavailable, (2) the latest available price as reported by the principal national securities exchange on which the stock is traded or, for an over the counter stock, the last bid price prior to the close of the New York Stock Exchange (generally 4.00 p.m. Eastern time).

(f) “Code”

“Code” shall mean the Internal Revenue Code of 1986, as it has been or may be amended from time to time.

(g) “Confidential Information”

“Confidential Information” shall mean (individually and collectively) proprietary information of the parties to this Trust Agreement, including but not limited to, their inventions, know how, trade secrets, business affairs, prospect lists, product designs, product plans, business strategies, finances, fee structures, etc.

(h) “EDT”

“EDT” shall mean electronic data transfer.

(i) “Electronic Services”

“Electronic Services” shall mean communication and services made available via electronic media.

(j) “ERISA”

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it has been or may be amended from time to time.

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(k) “External Account Information”

“External Account Information” shall mean account information, including retirement savings account information, from third party websites or other websites maintained by Fidelity or its affiliates.

(I) “Fidelity Mutual Fund”

“Fidelity Mutual Fund” shall mean any investment company advised by Fidelity Management & Research Company or any of its affiliates.

(m) “FIFO”

“FIFO” shall mean First In First Out.

(n) “FIIOC”

“FIIOC” shall mean Fidelity Investments Institutional Operations Company, Inc.

(o) “ln Good Order”

“In Good Order” shall mean in a state or condition acceptable to the Trustee in its sole discretion, which the Trustee determines is reasonably necessary for accurate execution of the intended transaction.

(p) “lnsolvency”

“Insolvency” shall mean (i) Sponsor is unable to pay its debts as they become due, or (ii) Sponsor is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

(q) “Insolvent”

“Insolvent” shall mean (i) Sponsor is unable to pay its debts as they become due, or (ii) Sponsor is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

(r) “Losses”

“Losses” shall mean any and all loss, damage, penalty, liability, cost and expense, including without limitation, reasonable attorney’s fees and disbursements.

(s) “Mutual Fund”

“Mutual Fund” shall refer both to Fidelity Mutual Funds and Non-Fidelity Mutual Funds.

(t) “NAV”

“NAV” shall mean Net Asset Value.

(u) “NFSLLC”

“NFSLLC” shall mean National Financial Services LLC.

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(v) “Non-Fidelity Mutual Fund”

“Non-Fidelity Mutual Fund” shall mean certain investment companies not advised by Fidelity Management & Research Company or any of its affiliates.

(w) “NYSE”

“NYSE” shall mean the New York Stock Exchange.

(x) “Participant”

“Participant” shall mean, with respect to the Plan, any employee (or former employee) with an account under the Plan, which has not yet been fully distributed and/or forfeited, and shall include the designated beneficiary(ies) with respect to the account of any deceased employee (or deceased former employee) until such account has been fully distributed and/or forfeited.

(y) “Participant Recordkeeping Reconciliation Period”

“Participant Recordkeeping Reconciliation Period” shall mean the period beginning on the date of the initial transfer of assets to the Trust and ending on the date of the completion of the reconciliation of Participant records.

(z) “PIN”

“PIN” shall mean personal identification number.

(aa) “Plan”

“Plan” shall mean, collectively and individually, the Zions Bancorporation Restated Deferred Compensation Plan, the Zions Bancorporation Restated Deferred Compensation Plan for Directors, and the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan.

(bb) “Plan Administration Manual”

“Plan Administration Manual” shall mean the document which sets forth the administrative and recordkeeping duties and procedures to be followed by the Trustee in administering the Plan, as such document may be amended and in effect from time to time.

(cc) “Plan Sponsor Webstation”

“Plan Sponsor Webstation” shall mean the graphical windows based application that provides current Plan and Participant information including indicative data, account balances, activity and history.

(dd) “Reporting Date”

“Reporting Date” shall mean the last day of each fiscal quarter of the Plan and, if not on the last day of fiscal quarter, the date as of which the Trustee resigns or is removed pursuant to this Agreement or the date as of which this Agreement terminates pursuant to Section 9 hereof.

(ee) “SEC”

“SEC” shall mean the Securities and Exchange Commission.

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(ff) “Specified Hierarchy”

“Specified Hierarchy” shall mean the Stock Fund processing order set forth in Schedule “E”, that gives precedence to distributions, and withdrawals, and otherwise on a FIFO basis.

(gg) “Sponsor”

“Sponsor” shall mean Zions Bancorporation, a Utah corporation, or any successor to all or substantially all of its businesses which, by agreement, operation of law or otherwise, assumes the responsibility of the Sponsor under this Agreement.

(hh) “Trust”

“Trust” shall mean the Zions Bancorporation Deferred Compensation Plans Master Trust, being the trust established by the Sponsor and the Trustee pursuant to the provisions of this Agreement.

(ii) “Trustee”

“Trustee” shall mean Fidelity Management Trust Company, a Massachusetts trust company and any successor to all or substantially all of its trust business as described in Section 10. The term Trustee shall also include any successor trustee appointed pursuant to Section 10 to the extent such successor agrees to serve as Trustee under this Agreement.

(jj) “VRS”

“VRS” shall mean Voice Response System.

(kk) “Zions Common Stock”

“Zions Common Stock” shall mean the common stock of the Sponsor, or such other publicly-traded stock of the Sponsor, or such other publicly-traded stock of the Sponsor’s affiliates.

(ll) “Zions Preferred Stock”

“Zions Preferred Stock” shall mean the preferred stock of the Sponsor, or such other publicly-traded stock of the Sponsor, or such other publicly-traded stock of the Sponsor’s affiliates.

(mm) “Zions Common Stock Fund”

“Zions Common Stock Fund” shall mean the investment option consisting primarily of Zions Common Stock and cash or short-term liquid investments.

(nn) “Zions Preferred Stock Fund”

“Zions Preferred Stock Fund” shall mean the investment option consisting primarily of Zions Preferred Stock and cash or short-term liquid investments.

Section 2. Trust.

(a) Establishment.

The Sponsor hereby establishes the Trust with the Trustee. The Trust shall consist of money or other property acceptable to the Trustee in its sole discretion, as contributed by the Sponsor or transferred from a previous trustee under the Plan, such additional sums

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of money or other property as shall from time to time be delivered to the Trustee under the Plan, all investments made therewith and proceeds thereof, and all earnings and profits thereon, less the payments that are made by the Trustee as provided herein, without distinction between principal and income. The Trustee hereby accepts the Trust on the terms and conditions set forth in this Agreement. In accepting this Trust, the Trustee shall be accountable for the assets received by it, subject to the terms and conditions of this Agreement.

(b) Grantor Trust.

The Trust is intended to be a grantor trust, of which the Sponsor is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code, as amended, and shall be construed accordingly.

(c) Trust Assets.

The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Sponsor and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants and their beneficiaries shall have no claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Agreement shall be mere unsecured contractual rights of Participants and their beneficiaries against the Sponsor. Any assets held by the Trust will be subject to the claims of the Sponsor’s general creditors under federal and state law in the event of Sponsor’s Insolvency.

(d) Non-Assignment.

Benefit payments to Participants and their beneficiaries funded under this Trust may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered, or subjected to attachment, garnishment, levy, execution, or other legal or equitable process.

Section 3. Payments to Sponsor.

Except as provided under this Agreement, the Sponsor shall have no right to retain or divert to others any of the Trust assets before all payment of benefits have been made to Participants pursuant to the terms of the Plan.

Section 4. Disbursements.

(a) Directions from Administrator.

The Trustee shall disburse monies for benefit payments in the amounts that the Administrator directs from time to time in writing to: (i) employee Participants and their beneficiaries; and (ii) non-employee directors and their beneficiaries. The Trustee shall: (i) not disburse monies to any non-employees or other persons not described in this subsection (a), including but not limited to non-resident alien participants, who are required to receive any form other than IRS Form W-2 or IRS Form 1099; and (ii) not be responsible for ascertaining whether the Administrator’s direction complies with the terms of the Plan or of any applicable law. The Trustee shall be responsible for Federal or State income tax reporting or withholding with respect to such Plan benefits and shall provide, as appropriate, an IRS Form W-2 (Wage and Tax Statement), 1099-R, 1099-Misc or 1042-S. However, the Sponsor shall be required to properly identify any Participants and update appropriate Participant indicative data fields relating to the special tax status of any Participant who receives any of the above-referenced forms other than an IRS Form W-2. The Trustee shall not be responsible for FICA (Social Security and Medicare), or any Federal or State unemployment or local tax with respect to Plan distributions.

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(b) Limitations.

The Trustee shall not be required to make any disbursement in excess of the net realizable value of the assets of the Trust at the time of the disbursement. The Trustee shall not be required to make any disbursement in cash or shares unless the Administrator has provided a written direction as to the assets to be converted to cash or shares for the purpose of making the disbursement.

Section 5. Investment of Trust.

(a) Selection of Investment Options.

The Trustee shall have no responsibility for the selection of investment options under the Trust and shall not render investment advice to any person in connection with the selection of such options.

(b) Available Investment Options.

The Sponsor shall direct the Trustee as to what investment options the Trust shall be invested in (i) during the Participant Recordkeeping Reconciliation Period, and (ii) following the Participant Recordkeeping Reconciliation Period, subject to the following limitations. The Sponsor may determine to offer as investment options only (i) Mutual Funds, (ii) Zions Common Stock; and (iii) Zions Preferred Stock; provided, however, that the Trustee shall not be considered a fiduciary with investment discretion. The Sponsor may add or remove investment options with the consent of the Trustee to reflect administrative concerns, including but not limited to platform incapability, and upon mutual amendment of this Agreement and the Schedules thereto, to reflect such additions.

(c) Investment Directions.

The Sponsor shall direct the Trustee as to how to invest the assets held in the Trust. In order to provide for an accumulation of assets comparable to the contractual liabilities accruing under the Plan, the Sponsor may direct the Trustee in writing to invest the assets held in the Trust to correspond to the hypothetical investments made for Participants in accordance with their direction under the Plan. In such cases, Participants may provide directions with respect to their hypothetical investments under the Plan by use of the system maintained for such purposes by the Trustee or its agents, as may be agreed upon from time to time by the Sponsor and the Trustee, and shall be processed in accordance with the fund exchange provisions set forth in the Plan Administration Manual. The Trustee shall not be liable for any loss or expense that arises from a Participant’s exercise or non-exercise of rights under this Section 5(c) over the assets in the Participant’s hypothetical accounts. In the event that the Trustee fails to receive a proper direction, the assets in question shall be invested in the investment option set forth for such purpose on Schedule “C” until the Trustee receives a proper direction.

(d) Unfunded Status of Plan

The Sponsor’s designation of available investment options, the maintenance of hypothetical accounts for each Participant, the crediting of investments gains (or losses) to such accounts, and the exercise by Participants of any powers relating to investments under this Agreement are solely for the purpose of providing a mechanism for measuring the obligation of the Sponsor to any particular Participant under the applicable Plan. As provided in this Agreement, no Participant will have any preferential claim to or beneficial ownership interest in any asset or investment held in the Trust, and the rights of any Participant under the applicable Plan and this Agreement are solely those of an unsecured general creditor of the Sponsor with respect to the benefits of the Participant under the Plan.

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(e) Mutual Funds.

On the effective date of this Agreement, in lieu of receiving a printed copy of the prospectus for each Fidelity Mutual Fund selected by the Sponsor as a Plan investment option or short-term investment fund, the Sponsor hereby consents to receiving such documents electronically. The Sponsor shall access each prospectus on the internet after receiving notice from the Trustee that a current version is available online at a website maintained by the Trustee or its affiliate. Trustee represents that on the effective date of this Agreement, a current version of each such prospectus is available at https://www.fidelity.com or such successor website as Trustee may notify the Sponsor of in writing from time to time. The Sponsor represents that it has accessed/will access each such prospectus as of the effective date of this Agreement at https://www.fidelity.com or such successor website as Trustee may notify the Sponsor of in writing from time to time. Transactions involving Non-Fidelity Mutual Funds shall be executed in accordance with the operational guidelines set forth in Schedule “D” attached hereto.

Trust investments in Mutual Funds shall be subject to the following limitations:

(i) Execution of Purchases and Sales.

Purchases and sales of Mutual Funds (other than for exchanges) shall be made on the date on which the Trustee receives from the Sponsor In Good Order all information and documentation necessary to accurately effect such transactions and (if applicable) wire transfer of funds.

Exchanges of Mutual Funds shall be processed in accordance with the fund exchange provisions set forth in the Plan Administration Manual.

(ii) Voting.

At the time of mailing of notice of each annual or special stockholders’ meeting of any Mutual Fund, the Trustee shall send a copy of the notice and all proxy solicitation materials to the Sponsor, together with a voting direction form for return to the Trustee or its designee. The Trustee shall vote the shares held in the Trust in the manner as directed by the Sponsor. The Trustee shall not vote shares for which it has received no corresponding directions from the Sponsor. The Sponsor shall also have the right to direct the Trustee as to the manner in which all shareholder rights, other than the right to vote, shall be exercised. The Trustee shall have no further duty to solicit directions from the Sponsor.

(f) Zions Common Stock in the Zion Bancorporation Restated Deferred Compensation Plan.

Trust investments in Zions Common Stock shall be made via the Zions Common Stock Fund. Investments in the Zions Common Stock Fund shall consist primarily of shares of Zions Common Stock. The Zions Common Stock Fund shall also include cash or short-term liquid investments, in accordance with this paragraph, in amounts designed to satisfy daily Participant exchange or withdrawal requests. Such holdings will include Colchester Street Trust: Money Market Portfolio: Class I or such other Mutual Fund as agreed to in writing by the Sponsor and Trustee. The Sponsor shall, after consultation with the Trustee, establish and communicate to the Trustee in writing a target percentage for such short-term liquid investments. Subject to its ability to execute open-market trades in Zions Common Stock or to otherwise trade with the Sponsor, the Trustee shall be responsible for ensuring that the short-term investments held in the Zions Common Stock Fund falls within the agreed upon range over time. Each Participant’s hypothetical interest in the Zions Common Stock Fund under the Plan shall be measured in units of participation, rather than shares of Zions Common Stock. Such units shall represent a hypothetical proportionate interest in all of the assets of the Zions Common Stock Fund,

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which includes shares of Zions Common Stock, short-term investments and at times, receivables and payables (such as receivables and payables arising out of unsettled stock trades). The Trustee shall determine a NAV for each unit outstanding of the Zions Common Stock Fund. Valuation of the Zions Common Stock Fund shall be based upon: (a) the Closing Price, or; (b) the price determined in good faith by the Trustee. The NAV shall be adjusted for gains or losses realized on sales of Zions Common Stock, appreciation or depreciation in the value of those shares owned, dividends paid on Zions Common Stock to the extent not used to purchase additional units of the Zions Common Stock Fund for affected participants, and interest on the short-term investments held by the Zions Common Stock Fund, payables and receivables for pending stock trades, receivables for dividends not yet distributed, and payables for other expenses of the Zions Common Stock Fund, including principal obligations, if any, and expenses that, pursuant to Sponsor direction, the Trustee accrues or pays from the Zions Common Stock Fund.

(i) Acquisition Limit.

Pursuant to the Plan, the Trust may be invested in Zions Common Stock to the extent necessary to comply with investment directions under this Agreement. The Sponsor shall be responsible for providing specific direction on any acquisition limits required by the Plan or applicable law.

(ii) Duty.

The Sponsor shall continually monitor the suitability of acquiring and holding Zions Common Stock. The Trustee shall not be liable for any loss or expense which arises from the directions of the Sponsor with respect to the acquisition and holding of Zions Common Stock, unless it is clear on their face that the actions to be taken under those directions would be prohibited by any applicable law or would be contrary to the terms of this Agreement.

(iii) Purchases and Sales of Zions Common Stock.

Unless otherwise directed by the Sponsor in writing pursuant to directions that the Trustee can administratively implement, the following provisions shall govern purchases and sales of Zions Common Stock.

(A) Open Market Purchases and Sales.

Purchase and sales of Zions Common Stock shall be made on the open market in accordance with the Trustee’s standard trading guidelines, as they may be amended by the Trustee from time to time, as necessary to honor exchange and withdrawal activity and to maintain the target cash percentage for the Zions Common Stock Fund, provided that:

(1) If the Trustee is unable to purchase or sell the total number of shares required to be purchased or sold on such day as a result of market conditions; or

(2) If the Trustee is prohibited by the SEC, the NYSE or principal exchange on which the Zions Common Stock is traded, or any other judicial or regulatory body from purchasing or selling any or all of the shares required to be purchased or sold on such day,

then, under the circumstances set forth in either (1) or (2), the Trustee shall purchase or sell such shares as soon thereafter as administratively feasible.

(B) Purchases and Sales from or to Sponsor.

If directed by the Sponsor in writing prior to the trading date, the Trustee may purchase or sell Zions Common Stock from or to the Sponsor if the purchase or sale is for adequate consideration and no commission is charged. If Sponsor contributions (employer) or contributions made by the Sponsor to hypothetical Participants’ accounts under the Plan are to be invested in Zions Common Stock, the Sponsor may transfer Zions Common Stock in lieu of cash to the Trust.

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(C) Use of Brokers.

The Sponsor hereby directs the Trustee to use brokers unaffiliated with the Trustee as the Trustee deems appropriate to provide brokerage services in connection with any purchase or sale of Zions Common Stock to correspond with directions provided by Participants with respect to the Participant’s proportional hypothetical investment in the Zions Common Stock Fund under the Plan. Commissions on the purchase and sale of Zions Common Stock shall be charged back to the Zions Common Stock Fund.

(iv) Execution of Purchases and Sales of Units

Unless otherwise directed in writing pursuant to directions that the Trustee can administratively implement, purchases and sales of units shall be made as follows:

(A) Subject to subparagraphs (B) and (C) below, purchases and sales of units in the Zions Common Stock Fund (other than for exchanges) shall be made on the date on which the Trustee receives from the Administrator In Good Order all information, documentation, and wire transfers of funds (if applicable), necessary to accurately effect such transactions. Exchange transaction requests received before the close of the market (generally 4:00 p.m. (ET)) on any Business Day will receive that day’s trade date if Available Liquidity is sufficient to honor the trade after Specified Hierarchy rules are applied. Requests received after the close of the market on any Business Day (or on any day other than a Business Day) will be processed on a next Business Day basis, subject to Available Liquidity for such day after application of Specified Hierarchy rules.

(B) Aggregate sales of units in the Zions Common Stock Fund on any day shall be limited to the Zions Common Stock Fund’s Available Liquidity for that day. In the event that the requested sales exceed the Available Liquidity, then transactions shall be processed giving precedence to distributions and withdrawals, and otherwise on a FIFO basis, as provided in Schedule “E” (the “Specified Hierarchy”). So long as the Zions Common Stock Fund is open for such transactions, sales of units that are requested but not processed on a given day due to insufficient Available Liquidity shall be suspended until Available Liquidity is sufficient to honor such transactions in accordance with the Specified Hierarchy.

(C) The Trustee shall close the Zions Common Stock Fund to sales or purchases of units, as applicable, on any date on which trading in the Zions Common Stock has been suspended or substantial purchase or sale orders are outstanding and cannot be executed.

(v) Securities Law Reports.

The Sponsor shall be responsible for filing all reports required under Federal or state securities laws with respect to the Trust’s ownership of Zions Common Stock, including, without limitation, any reports required under section 13 or 16 of the Securities Exchange Act of 1934, and shall immediately notify the Trustee in writing of any requirement to stop purchases or sales of Zions Common Stock pending the filing of any report. The Trustee shall provide to the Sponsor such information on the Trust’s ownership of Zions Common Stock as the Sponsor may reasonably request in order to comply with Federal or state securities laws.

(vi) Voting and Tender Offers.

Notwithstanding any other provision of this Agreement, the provisions of this Section shall govern the voting and tendering of Sponsor Stock held under the Trust. The Sponsor shall provide direction to the Trustee with respect to any proxy voting, any tender or

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exchange offer, or any other similar shareholder right, and the Trustee shall vote, tender or exchange shares of Sponsor Stock in accordance with timely, written direction from the Sponsor. Unless otherwise required by applicable law, the Trustee shall not take any action with respect to a vote, tender, exchange or similar shareholder right in the absence of instruction from the Sponsor. For these purposes, a timely direction is one that is received at a time that reasonably allows the Trustee to exercise shareholder rights, through a custodian, if applicable.

(vii) General.

With respect to all shareholder rights, the Trustee shall follow the directions of the Sponsor in accordance with the procedures described in (vi) above.

(viii) Conversion.

All provisions in this Section 5(f) shall also apply to any securities received as a result of a conversion of Zions Common Stock.

(g) Zions Preferred Stock in the Zion Bancorporation Restated Deferred Compensation Plan.

Trust investments in Zions Preferred Stock shall be made via the Zions Preferred Stock Fund. Investments in the Zions Preferred Stock Fund shall consist primarily of shares of Zions Preferred Stock. The Zions Preferred Stock Fund shall also include cash or short-term liquid investments, in accordance with this paragraph, in amounts designed to satisfy daily Participant exchange or withdrawal requests. Such holdings will include Colchester Street Trust: Money Market Portfolio: Class I or such other Mutual Fund as agreed to in writing by the Sponsor and Trustee. The Sponsor shall, after consultation with the Trustee, establish and communicate to the Trustee in writing a target percentage for such short-term liquid investments. Subject to its ability to execute open-market trades in Zions Preferred Stock or to otherwise trade with the Sponsor, the Trustee shall be responsible for ensuring that the short-term investments held in the Zions Preferred Stock Fund falls within the agreed upon range over time. Each Participant’s hypothetical interest in the Zions Preferred Stock Fund under the Plan shall be measured in units of participation, rather than shares of Zions Preferred Stock. Such units shall represent a hypothetical proportionate interest in all of the assets of the Zions Preferred Stock Fund, which includes shares of Zions Preferred Stock, short-term investments and at times, receivables and payables (such as receivables and payables arising out of unsettled stock trades). The Trustee shall determine a NAV for each unit outstanding of the Zions Preferred Stock Fund. Valuation of the Zions Preferred Stock Fund shall be based upon: (a) the Closing Price, or; (b) the price determined in good faith by the Trustee. The NAV shall be adjusted for gains or losses realized on sales of Zions Preferred Stock, appreciation or depreciation in the value of those shares owned, dividends paid on Zions Preferred Stock to the extent not used to purchase additional units of the Zions Preferred Stock Fund for affected participants, and interest on the short-term investments held by the Zions Preferred Stock Fund, payables and receivables for pending stock trades, receivables for dividends not yet distributed, and payables for other expenses of the Zions Preferred Stock Fund, including principal obligations, if any, and expenses that, pursuant to Sponsor direction, the Trustee accrues or pays from the Zions Preferred Stock Fund.

(i) Acquisition Limit.

Pursuant to the Plan, the Trust may be invested in Zions Preferred Stock to the extent necessary to comply with investment directions under this Agreement. The Sponsor shall be responsible for providing specific direction on any acquisition limits required by the Plan or applicable law.

(ii) Duty.

The Sponsor shall continually monitor the suitability of acquiring and holding Zions Preferred Stock. The Trustee shall not be

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liable for any loss or expense which arises from the directions of the Sponsor with respect to the acquisition and holding of Zions Preferred Stock, unless it is clear on their face that the actions to be taken under those directions would be prohibited by any applicable law or would be contrary to the terms of this Agreement.

(iii) Purchases and Sales of Zions Preferred Stock.

Unless otherwise directed by the Sponsor in writing pursuant to directions that the Trustee can administratively implement, the following provisions shall govern purchases and sales of Zions Preferred Stock.

(A) Open Market Purchases and Sales.

Purchase and sales of Zions Preferred Stock shall be made on the open market in accordance with the Trustee’s standard trading guidelines, as they may be amended by the Trustee from time to time, as necessary to honor exchange and withdrawal activity and to maintain the target cash percentage for the Zions Preferred Stock Fund, provided that:

(1) If the Trustee is unable to purchase or sell the total number of shares required to be purchased or sold on such day as a result of market conditions; or

(2) If the Trustee is prohibited by the SEC, the NYSE or principal exchange on which the Zions Preferred Stock is traded, or any other judicial or regulatory body from purchasing or selling any or all of the shares required to be purchased or sold on such day,

then, under the circumstances set forth in either (1) or (2), the Trustee shall purchase or sell such shares as soon thereafter as administratively feasible.

(B) Purchases and Sales from or to Sponsor.

If directed by the Sponsor in writing prior to the trading date, the Trustee may purchase or sell Zions Preferred Stock from or to the Sponsor if the purchase or sale is for adequate consideration and no commission is charged. If Sponsor contributions (employer) or contributions made by the Sponsor to hypothetical Participants’ accounts under the Plan are to be invested in Zions Preferred Stock, the Sponsor may transfer Zions Preferred Stock in lieu of cash to the Trust.

(C) Use of an Affiliated Broker.

The Sponsor hereby directs the Trustee to use Fidelity Capital Markets, a division of NFSLLC, to provide brokerage services in connection with any purchase or sale of Zions Preferred Stock on the open market, except in circumstances where the Trustee has determined, in accordance with its standard trading guidelines or pursuant to Sponsor direction, to seek expedited settlement of the trades. Fidelity Capital Markets shall execute such directions directly or through its affiliates. The provision of brokerage services shall be subject to the following:

(1) The Trustee will provide the Sponsor with periodic reports which summarize all securities transaction-related charges incurred with respect to trades of Zions Preferred Stock for such Plan.

(2) Any successor organization of Fidelity Capital Markets, through reorganization, consolidation, merger or similar transactions, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this direction provision.

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(3) The Trustee and Fidelity Capital Markets shall continue to rely on this direction provision until notified to the contrary. The Sponsor reserves the right to terminate this direction upon written notice to Fidelity Capital Markets (or its successor) and the Trustee, in accordance with this Agreement.

(iv) Execution of Purchases and Sales of Units

Unless otherwise directed in writing pursuant to directions that the Trustee can administratively implement, purchases and sales of units shall be made as follows:

(A) Subject to subparagraphs (B) and (C) below, purchases and sales of units in the Zions Preferred Stock Fund (other than for exchanges) shall be made on the date on which the Trustee receives from the Administrator In Good Order all information, documentation, and wire transfers of funds (if applicable), necessary to accurately effect such transactions. Exchange transaction requests received before the close of the market (generally 4:00 p.m. (ET)) on any Business Day will receive that day’s trade date if Available Liquidity is sufficient to honor the trade after Specified Hierarchy rules are applied. Requests received after the close of the market on any Business Day (or on any day other than a Business Day) will be processed on a next Business Day basis, subject to Available Liquidity for such day after application of Specified Hierarchy rules.

(B) Aggregate sales of units in the Zions Preferred Stock Fund on any day shall be limited to the Zions Preferred Stock Fund’s Available Liquidity for that day. In the event that the requested sales exceed the Available Liquidity, then transactions shall be processed giving precedence to distributions and withdrawals, and otherwise on a FIFO basis, as provided in Schedule “E” (the “Specified Hierarchy”). So long as the Zions Preferred Stock Fund is open for such transactions, sales of units that are requested but not processed on a given day due to insufficient Available Liquidity shall be suspended until Available Liquidity is sufficient to honor such transactions in accordance with the Specified Hierarchy.

(C) The Trustee shall close the Zions Preferred Stock Fund to sales or purchases of units, as applicable, on any date on which trading in the Zions Preferred Stock has been suspended or substantial purchase or sale orders are outstanding and cannot be executed.

(v) Securities Law Reports.

The Sponsor shall be responsible for filing all reports required under Federal or state securities laws with respect to the Trust’s ownership of Zions Preferred Stock, including, without limitation, any reports required under section 13 or 16 of the Securities Exchange Act of 1934, and shall immediately notify the Trustee in writing of any requirement to stop purchases or sales of Zions Preferred Stock pending the filing of any report. The Trustee shall provide to the Sponsor such information on the Trust’s ownership of Zions Preferred Stock as the Sponsor may reasonably request in order to comply with Federal or state securities laws.

(vi) Voting and Tender Offers.

Notwithstanding any other provision of this Agreement, the provisions of this Section shall govern the voting and tendering of Sponsor Stock held under the Trust. The Sponsor shall provide direction to the Trustee with respect to any proxy voting, any tender or exchange offer, or any other similar shareholder right, and the Trustee shall vote, tender or exchange shares of Sponsor Stock in accordance with timely, written direction from the Sponsor. Unless otherwise required by applicable law, the Trustee shall not take any action with respect to a vote, tender, exchange or similar shareholder right in the absence of instruction from the Sponsor. For these purposes, a timely direction is one that is received at a time that reasonably allows the Trustee to exercise shareholder rights, through a custodian, if applicable.

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(vii) General.

With respect to all shareholder rights, the Trustee shall follow the directions of the Sponsor in accordance with the procedures described in (vi) above.

(viii) Conversion.

All provisions in this Section 5(g) shall also apply to any securities received as a result of a conversion of Zions Preferred Stock.

(h) Zions Common Stock in the Zions Bancorporation Restated Deferred Compensation Plan for Directors and the Restated Amegy Bancorporation. Inc. Non-Employees Directors Deferred Fee Plan.

Trust investments in Zions Common Stock shall be made via the Zions Common Stock Fund. For the Zions Bancorporation Restated Deferred Compensation Plan for Directors only, dividends received on shares of Zions Common Stock shall be reinvested in additional shares of Zions Common Stock and allocated to Participants’ accounts.

(i) Acquisition Limit.

Pursuant to the Plan, the Trust may be invested in Zions Common Stock to the extent necessary to comply with investment directions under this Agreement. The Sponsor shall be responsible for providing specific direction on any acquisition limits required by the Plan or applicable law.

(ii) Purchases and Sales of Zions Common Stock for Batch Activity.

Unless otherwise directed by the Sponsor in writing pursuant to directions that the Trustee can administratively implement, the following provisions shall govern purchases and sales of Zions Common Stock for contributions, loan repayments, distributions, loans, withdrawals, or any other purchase or sale of Zions Common Stock related to a transaction that the Sponsor has directed the Trustee in writing to implement on a batch basis (“batch activity”).

(A) Open Market Purchases and Sales. Purchases and sales of Zions Common Stock shall be made on the open market in accordance with the Trustee’s standard trading guidelines, as they may be amended from time to time, as necessary to honor batch activity. Such general rules shall not apply in the following circumstances:

(1) If the Trustee is unable to purchase or sell the total number of shares required to be purchased or sold on such day as a result of market conditions; or

(2) If the Trustee is prohibited by the SEC, the NYSE or principal exchange on which the Zions Common Stock is traded, or any other regulatory or judicial body from purchasing or selling any or all of the shares required to be purchased or sold on such day.

In the event of the occurrence of a circumstance described in (1) or (2) above, the Trustee shall purchase or sell such shares as soon thereafter as administratively feasible, and shall determine the price of such purchases or sales to be the average purchase or sales price of all such shares purchased or sold, respectively. The Trustee may follow written directions from the Sponsor to deviate from the above purchase and sale procedures.

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(iii) Purchases and Sales of Zions Common Stock for Participant-Initiated Exchanges (“Real Time” Trading)

Unless otherwise directed by the Sponsor in writing pursuant to directions that the Trustee can administratively implement, the following provisions shall govern purchases and sales of Zions Common Stock for Participant-initiated exchanges.

(A) Purchases and Sales of Zions Common Stock. Purchases and sales of Zions Common Stock associated with individual Participant-initiated exchanges into or out of the Zions Common Stock Fund shall be made on the open market pursuant to order types selected by the Participant in accordance with the Trustee’s procedures for “Real Time Trading.” The Sponsor may instruct the Trustee to limit the order types available to Participants.

(1) Automated Order Entry. Zions Common Stock trades associated with Participant-initiated exchanges shall be sent to market as soon as administratively feasible during regular trading hours via an electronic order entry system, unless such trade is treated as a block trade. Such electronic order entry system shall be deemed an Electronic Service for purposes of Section 15 of this Agreement.

(2) Limitations on Trades: Cancellation of Exchange Requests. Trades rejected under rules of the applicable securities exchange will not be executed. The Trustee will not submit orders (or will cancel orders) for stock trades that violate the Trustee’s procedures for “Real Time Trading”. The Trustee shall not submit any trade order associated with a Participant-initiated exchange at any time when the Zions Common Stock Fund has been closed to such activity. Trades associated with Participant-initiated exchanges shall not be transacted at any time when the regular market is closed, or when the SEC, the NYSE or principal exchange on which the Zions Common Stock is traded, or any other regulatory or judicial body has prohibited purchases or sales of any or all of the shares requested to be traded pursuant to the Participant-initiated exchange. An exchange requested by the Participant shall be rejected or cancelled, as the case may be, to the extent any accompanying trade is not submitted, not executed or cancelled.

(B) Reserve Requirements for Exchanges Into Zions Common Stock Fund and Corrective Sales. The Participant’s ability to initiate exchanges into the Zions Common Stock Fund shall be subject to standard reserve requirements applicable to the investment options used to fund the exchange, as established by the Trustee from time to time (or such higher reserve requirements as may be established by the Sponsor in written direction to the Trustee). Requests to exchange into the Zions Common Stock Fund that exceed such reserves, and accompanying trade orders, may be rejected or cancelled. In the event that a buy trade associated with a request to exchange into Zions Common Stock is executed, and there are insufficient assets to fund the trade in the designated account which has been created to reflect such Participant’s investment requests, the Trustee will liquidate investment options (including those held in other sources eligible for liquidation) in the account which has been created to reflect such Participant’s investment requests, pro rata. In the event that there are sufficient assets in any other investment option within the account which has been created to reflect such Participant’s investment requests, the Trustee shall initiate a corrective sale, and shall debit the costs of such corrective trade from the such account.

(C) Fractional Shares. Participants will be entitled to exchange out fractional shares in the Zions Common Stock Fund only in connection with a request to exchange out the entire balance in the account created to reflect such Participant’s Zions Common Stock Fund holdings (or the entire balance in a particular source, as applicable). Fractional shares will be transacted at the price determined by the stock trade order selected by the Participant.

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(iv) Use of an Affiliated Broker.

For all purchases and sales of Zions Common Stock on the open market, whether Participant-initiated or otherwise, the Sponsor hereby directs the Trustee to use FBSLLC to provide brokerage services. Subject to the provisions of this agreement, FBSLLC shall execute such trades directly or through any of its affiliates. The provision of brokerage services shall be subject to the following:

(1) Any successor organization of FBSLLC, through reorganization, consolidation, merger or similar transactions, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this direction provision. FBSLLC may assign its rights and obligations under this agreement to any affiliate, provided that the assignee is bound by the terms hereof, including the provisions concerning remuneration.

(2) The Trustee and FBSLLC shall continue to rely on this direction provision until notified to the contrary. The Sponsor reserves the right to terminate this direction upon written notice to FBSLLC (or its successors or assigns) and the Trustee, in accordance with Section 11 of this Agreement.

(3) The Plan Sponsor acknowledges that FBSLLC (and its successors and assigns) may rely upon this Trust Agreement in establishing an account in the name of the Trustee for the Plan which reflects the investment choices of each Participant, and in allowing each Participant to exercise limited trading authorization over such account, to the extent of the balance in such account in the Zions Common Stock Fund.

(v) Securities Law Reports.

The Named Fiduciary shall be responsible for filing all reports required under Federal or state securities laws with respect to the Trust’s ownership of Zions Common Stock, including, without limitation, any reports required under section 13 or 16 of the Securities Exchange Act of 1934, and shall immediately notify the Trustee in writing of any requirement to stop purchases or sales of Zions Common Stock pending the filing of any report. The Trustee shall provide to the Sponsor such information on the Trust’s ownership of Zions Common Stock as the Sponsor may reasonably request in order to comply with Federal or state securities laws.

(vi) Voting and Tender Offers.

Notwithstanding any other provision of this Agreement, the provisions of this Section shall govern the voting and tendering of Zions Common Stock held under the Trust. The Sponsor shall provide direction to the Trustee with respect to any proxy voting, any tender or exchange offer, or any other similar shareholder right, and the Trustee shall vote, tender or exchange shares of Zions Common Stock in accordance with timely, written direction from the Sponsor. Unless otherwise required by applicable law, the Trustee shall not take any action with respect to a vote, tender, exchange or similar shareholder right in the absence of instruction from the Sponsor. For these purposes, a timely direction is one that is received at a time that reasonably allows the Trustee to exercise shareholder rights, through a custodian, if applicable.

(vii) General.

With respect to all shareholder rights, in the case of Zions Common Stock, the Trustee shall follow the procedures set forth in subsection (A), above.

(viii) Conversion.

All provisions in this Section 5(h) shall also apply to any securities received as a result of a conversion of Zions Common Stock.

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(ix) Nasdaq Subscriber Agreement.

The Sponsor represents that it has returned a properly executed “Nasdaq Subscriber Agreement” to the Trustee. The Nasdaq Subscriber Agreement is required by Nasdaq and allows Participants to receive information originating from Nasdaq on a “real-time” basis, through devices controlled by the Trustee or its affiliates.

(i) Trustee Powers.

The Trustee shall have the following powers and authority:

(i) Subject to this Section 5, to sell, exchange, convey, transfer, or otherwise dispose of any property held in the Trust, by private contract or at public auction. No person dealing with the Trustee shall be bound to see to the application of the purchase money or other property delivered to the Trustee or to inquire into the validity, expediency, or propriety of any such sale or other disposition.

(ii) To cause any securities or other property held as part of the Trust to be registered in the Trustee’s own name, in the name of one or more of its nominees, or in the Trustee’s account with the Depository Trust Company of New York and to hold any investments in bearer form, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust.

(iii) To keep that portion of the Trust in cash or cash balances as the Sponsor or Administrator may, from time to time, deem to be in the best interest of the Trust.

(iv) To make, execute, acknowledge, and deliver any and all documents of transfer or conveyance and to carry out the powers herein granted.

(v) To the extent a unitized option is included in the Plan, to borrow funds from a bank or other financial institution not affiliated with the Trustee in order to provide sufficient liquidity to process Plan transactions in a timely fashion, provided that the cost of borrowing shall be allocated in a reasonable fashion to the investment fund(s) in need of liquidity. The Sponsor acknowledges that it has received the disclosure on the Trustee’s line of credit program and credit allocation policy and a copy of the text of Prohibited Transaction Exemption 2002-55 prior to executing this Agreement if applicable.

(vi) To settle, compromise, or submit to arbitration any claims, debts, or damages due to or arising from the Trust; to commence or defend suits or legal or administrative proceedings; to represent the Trust in all suits and legal and administrative hearings; and to pay all reasonable expenses arising from any such action, from the Trust if not paid by the Sponsor.

(vii) To employ legal, accounting, clerical, and other assistance as may be required in carrying out the provisions of this Agreement and to pay their reasonable expenses and compensation from the Trust if not paid by the Sponsor.

(viii) To do all other acts, although not specifically mentioned herein, as the Trustee may deem necessary to carry out any of the foregoing powers and the purposes of the Trust.

Notwithstanding any powers granted to Trustee pursuant to this Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code. The Trustee will file an annual fiduciary return to the extent required by law.

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Section 6. Recordkeepinq and Administrative Services to Be Performed.

(a) General.

The Trustee shall perform those recordkeeping and administrative functions described in Schedule “A” attached hereto. These recordkeeping and administrative functions shall be performed within the framework of the Administrator’s written directions regarding the Plan’s provisions, guidelines and interpretations.

(b) Accounts.

The Trustee shall keep accurate accounts of all investments, receipts, disbursements, and other transactions hereunder, and shall report the value of the assets held in the Trust as of the last day of each Reporting Date. Within thirty (30) days following each Reporting Date or within sixty (60) days in the case of a Reporting Date caused by the resignation or removal of the Trustee, or the termination of this Agreement, the Trustee shall file with the Administrator a written account setting forth all investments, receipts, disbursements, and other transactions effected by the Trustee between the Reporting Date and the prior Reporting Date, and setting forth the value of the Trust as of the Reporting Date. The Administrator shall use all reasonable efforts to bring to the Trustee’s attention, as soon as possible, any concerns or objections it may have relating to the accounts. Nothwithstanding the previous sentence, and except as otherwise required under applicable law, upon the expiration of six (6) months from the date of filing such account, the Trustee shall have no liability or further accountability to anyone with respect to the propriety of its acts or transactions shown in such account, except with respect to such acts or transactions as to which a written objection shall have been filed with the Trustee within such six (6) month period.

(c) Inspection and Audit.

Prior to the termination of this Agreement, all records generated by the Trustee in accordance with paragraphs (a) and (b) shall be open to inspection and audit, by the Administrator or any persons designated by the Administrator, during the Trustee’s regular business hours. Upon the resignation or removal of the Trustee or the termination of this Agreement, the Trustee shall provide to the Sponsor, at no expense to the Sponsor, in the format regularly provided to the Sponsor, a statement of each Participant’s account as of the resignation, removal, or termination, and the Trustee shall provide to the Sponsor or the Plan’s new recordkeeper such further records as are reasonable, at the Sponsor’s expense.

(d) Notice of Plan Amendment.

The Trustee’s provision of the recordkeeping and administrative services set forth in this Section shall be conditioned on the Sponsor delivering to the Trustee a copy of any amendment to the Plan as soon as administratively feasible following the amendment’s adoption, and on the Administrator providing the Trustee, on a timely basis, with all the information the Trustee deems necessary for the Trustee to perform the recordkeeping and administrative services and such other information as the Trustee may reasonably request.

(e) Returns, Reports and Information.

Except as set forth in the Plan Reporting section of Schedule “A”, the Administrator shall be responsible for the preparation and filing of all returns, reports, and information required of the Trust or Plan by law. The Trustee shall provide the Administrator with such information as the Administrator may reasonably request to make these filings. The Administrator shall also be responsible for making any disclosures to Participants required by law.

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Section 7. Compensation and Expenses.

Sponsor shall pay to Trustee, within thirty (30) days of receipt of the Trustee’s bill, the fees for services in accordance with Schedule “B.” Fees for services are specifically outlined in Schedule “B” and are based on any assumptions identified therein. The Trustee shall maintain its fees for three (3) years; provided, however, in the event that the Plan characteristics referenced in the assumptions outlined in Schedule “B” change significantly by either falling below or exceeding current or projected levels, such fees may be subject to revision, upon mutual renegotiation. To reflect increased operating costs, Trustee may once each calendar year, but not prior to September 1, 2009, amend Schedule “B” without the Sponsor’s consent upon six months prior notice to the Sponsor.

All reasonable expenses of Plan administration as shown on Schedule “B” attached hereto, as amended from time to time, shall be a charge against and paid from the appropriate Participants’ accounts, except to the extent such amounts are paid by the Sponsor in a timely manner.

All expenses of the Trustee relating directly to the acquisition and disposition of investments constituting part of the Trust, and all taxes of any kind whatsoever that may be levied or assessed under existing or future laws upon or in respect of the Trust or the income thereof, shall be a charge against and paid from the appropriate Participants’ accounts.

Section 8. Directions and Indemnification.

(a) Identity of the Sponsor and the Administrator.

The Trustee shall be fully protected in relying on the fact that the Sponsor and the Administrator under the Plan are the individual or persons named as such above or such other individuals or persons as the Sponsor may notify the Trustee in writing.

(b) Directions from the Sponsor and the Administrator.

Whenever the Sponsor and the Administrator provides a direction to the Trustee, the Trustee shall not be liable for any loss or expense arising from the direction if the direction is contained in a writing provided by any individual whose name has been submitted (and not withdrawn) in writing to the Trustee by the Sponsor or the Administrator unless it is clear on the direction’s face that the actions to be taken under the direction would be contrary to the terms of this Agreement. The Trustee may rely without further duty of inquiry on the authority of any such individual to provide direction to the Trustee on behalf of the Sponsor.

For purposes of this Section, such Direction may also be made via EDT, facsimile or such other secure electronic means in accordance with procedures agreed to by the Sponsor and the Trustee and, in any such case the Trustee shall be fully protected in relying on such Direction as if it were a Direction made in writing by the Sponsor.

(c) Directions from Participants.

The Trustee shall not be liable for any loss which arises from any Participant’s exercise or non-exercise of rights under the Plan over the assets in the Participants’ hypothetical accounts.

(d) Indemnification.

The Sponsor shall indemnify the Trustee against, and hold the Trustee harmless from, any and all Losses that may be incurred by, imposed upon, or asserted against the Trustee by reason of any claim, regulatory proceeding, or litigation arising from any act done or omitted to be done by any individual or person with respect to the Plan or Trust, excepting only any and all Losses arising solely from the Trustee’s negligence, bad faith, or breach of this Agreement.

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The Trustee shall also indemnify the Sponsor against, and hold the Sponsor harmless from, any and all Losses that may be incurred by, imposed upon, or asserted against the Sponsor by reason of any claim, regulatory proceeding, or litigation arising from Trustee’s negligence, bad faith, or breach of this Agreement.

The Trustee shall also indemnify the Sponsor against and hold the Sponsor harmless from any and all such Losses that may be incurred by, imposed upon, or asserted against the Sponsor solely as a result of: i) any defects in the investment methodology embodied in the target asset allocation or model portfolio provided through Portfolio Review, except to the extent that any such Losses arise from information provided by the Participant, the Sponsor or third parties; or ii) any prohibited transactions resulting from the provision of Portfolio Review by the Trustee.

For purpose of this Section 8(d), any reference to the Sponsor and the Trustee shall be deemed to include their respective directors, employees, officers, agents, attorneys, affiliates, subsidiaries, subcontractors, carriers and vendors.

(e) Survival.

The provisions of this Section shall survive the termination of this Agreement.

Section 9. Resignation or Removal of Trustee.

(a) Resignation and Removal.

The Trustee may resign at any time in accordance with the notice provisions set forth below. The Sponsor may remove the Trustee at any time in accordance with the notice provisions set forth below.

(b) Termination.

This Agreement may be terminated in full, or with respect to only a portion of the Plan (i.e. a “partial deconversion”) at any time by the Sponsor upon prior written notice to the Trustee in accordance with the notice provisions set forth below.

(c) Notice Period.

In the event either party desires to terminate this Agreement or any Services hereunder, the party shall provide at least one-hundred and eighty days (180) prior written notice of the termination date to the other party; provided, however, that the receiving party may agree, in writing, to a shorter notice period.

(d) Transition Assistance.

In the event of termination of this Agreement, if requested by Sponsor, the Trustee shall assist Sponsor in developing a plan for the orderly transition of the Plan data, cash and assets then constituting the Trust and services provided by the Trustee hereunder to Sponsor or its designee. The Trustee shall provide such assistance for a period not extending beyond sixty (60) days from the termination date of this Agreement. The Trustee shall provide to Sponsor, or to any person designated by Sponsor, at a mutually agreeable time, one file of the Plan data prepared and maintained by the Trustee in the ordinary course of business, in the Trustee’s format. The Trustee may provide other or additional transition assistance as mutually determined for additional fees, which shall be due and payable by the Sponsor prior to any termination of this Agreement.

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(e) Failure to Appoint Successor.

If, by the termination date, the Sponsor has not notified the Trustee in writing as to the individual or entity to which the assets and cash are to be transferred and delivered, the Trustee may bring an appropriate action or proceeding for leave to deposit the assets and cash in a court of competent jurisdiction. The Trustee shall be reimbursed by the Sponsor for all costs and expenses of the action or proceeding including, without limitation, reasonable attorneys’ fees and disbursements.

Section 10. Successor Trustee.

(a) Appointment.

If the office of Trustee becomes vacant for any reason, the Sponsor may in writing appoint a successor trustee under this Agreement. The successor trustee shall have all of the rights, powers, privileges, obligations, duties, liabilities, and immunities granted to the Trustee under this Agreement. The successor trustee and predecessor trustee shall not be liable for the acts or omissions of the other with respect to the Trust.

(b) Acceptance.

As of the date the successor trustee accepts its appointment under this Agreement, title to and possession of the Trust assets shall immediately vest in the successor trustee without any further action on the part of the predecessor trustee, except as may be required to evidence such transition. The predecessor trustee shall execute all instruments and do all acts that may be reasonably necessary and requested in writing by the Sponsor or the successor trustee to vest title to all Trust assets in the successor trustee or to deliver all Trust assets to the successor trustee.

(c) Corporate Action.

Any successor of the Trustee or successor trustee, either through sale or transfer of the business or trust department of the Trustee or successor trustee, or through reorganization, consolidation, or merger, or any similar transaction of either the Trustee or successor trustee, shall, upon consummation of the transaction, become the successor trustee under this Agreement.

Section 11. Resignation. Removal, and Termination Notices.

All notices of resignation, removal, or termination under this Agreement must be in writing and mailed to the party to which the notice is being given by certified or registered mail, return receipt requested, to the Sponsor c/o Senior Vice President Corporate Benefits Director, Zions Bancorporation, One South Main Street, Suite 600, Salt Lake City, Utah 84111, and to the Trustee c/o FESCo Business Compliance, Attn: Contracts, Fidelity Investments, 82 Devonshire Street, MM3H, Boston, Massachusetts 02109, or to such other addresses as the parties have notified each other of in the foregoing manner.

Section 12. Duration.

This Trust shall continue in effect without limit as to time, subject, however, to the provisions of this Agreement relating to amendment, modification, and termination thereof.

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Section 13. Insolvency of Sponsor.

(a) Trustee shall cease disbursement of funds for payment of benefits to Participants if the Sponsor is Insolvent.

(b) All times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Sponsor under federal and state law as set forth below.

(i) The Board of Directors and the Chief Executive Officer of the Sponsor shall have the duty to inform Trustee in writing of Sponsor’s Insolvency. If a person claiming to be a creditor of the Sponsor alleges in writing to Trustee that Sponsor has become Insolvent, Trustee shall determine whether Sponsor is Insolvent and, pending such determination, Trustee shall discontinue disbursements for payment of benefits to Participants.

(ii) Unless Trustee has actual knowledge of Sponsor’s Insolvency, or has received notice from Sponsor or a person claiming to be a creditor alleging that Sponsor is Insolvent, Trustee shall have no duty to inquire whether Sponsor is Insolvent. Trustee may in all events rely on such evidence concerning Sponsor’s solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Sponsor’s solvency.

(iii) If at any time Trustee has determined that Sponsor is Insolvent, Trustee shall discontinue disbursements for payments to Participants and shall hold the assets of the trust for the benefit of Sponsor’s general creditors. Nothing in this Agreement shall in any way diminish any rights of Participants to pursue their rights as general creditors of Sponsor with respect to benefits due under the Plan or otherwise.

(iv) Trustee shall resume disbursement for the payment of benefits to Participants in accordance with this Agreement only after Trustee has determined that Sponsor is not Insolvent (or is no longer Insolvent).

(c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to (a) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Participants by Sponsor in lieu of the payments provided for hereunder during any such period of discontinuance.

Section 14. Amendment or Modification.

This Agreement may be amended or modified at any time and from time to time only by an instrument executed by both the Sponsor and the Trustee. The individuals authorized to sign such instrument shall be those authorized by the Sponsor.

Section 15. Electronic Services.

(a) The Trustee may provide communications and Electronic Services via electronic media, including, but not limited to NetBenefits, eWorkplace and Fidelity Plan Sponsor WebStation. The Sponsor agrees to use such Electronic Services only in the course of reasonable administration of or participation in the Plan and to keep confidential and not alter, publish, copy, broadcast, retransmit, reproduce, frame-in, link to, commercially exploit or otherwise redisseminate the Electronic Services, any content

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associated therewith, or any portion thereof (including, without limitation, any trademarks and service marks associated therewith), without the written consent of the Trustee. Notwithstanding the foregoing, the Trustee acknowledges that certain Electronic Services may, by their nature, be intended for noncommercial, personal use by Participants or their beneficiaries, with respect to their participation in the Plan, or for their other retirement or employee benefit planning purposes, and certain content may be intended or permitted to be modified by the Sponsor in connection with the administration of the Plan. In such cases, the Trustee will notify the Sponsor of such fact, and any requirements or guidelines associated with such usage or modification no later than the time of initial delivery of such Electronic Services. To the extent permission is granted to make Electronic Services available to administrative personnel designated by the Sponsor, it shall be the responsibility of the Sponsor to keep the Trustee informed as to which of the Sponsor personnel are authorized to have such access. Except to the extent otherwise specifically agreed by the parties, the Trustee reserves the right, upon notice when reasonably feasible, to modify or discontinue Electronic Services, or any portion thereof, at any time.

(b) Without limiting the responsibilities of the Trustee or the rights of the Sponsor stated elsewhere in this Agreement, Electronic Services shall be provided to the Sponsor without acceptance of legal liability related to or arising out of the electronic nature of the delivery or provision of such Services provided, however, the Trustee shall defend, indemnify and hold the Sponsor harmless from any claims brought by third parties based upon infringement of any patent, copyright, trademark, trade secret or other proprietary right in connection with the Electronic Services furnished under the Agreement. The Sponsor shall promptly notify the Trustee in writing of any such claim. The Sponsor shall give reasonable assistance to the Trustee in defense of any claim, at the Trustee’s expense. The Trustee shall have sole control of the defense of any such claim. To the extent that any Electronic Services utilize Internet services to transport data or communications, the Trustee will take, and the Sponsor agrees to follow, reasonable security precautions. However, the Trustee disclaims any liability for interception of any such data or communications. The Trustee reserves the right not to accept data or communications transmitted electronically or via electronic media by the Sponsor or a third party if it determines that the method of delivery does not provide adequate data security, or if it is not administratively feasible for the Trustee to use the data security provided. The Trustee shall not be responsible for, and makes no warranties regarding access, speed or availability of Internet or network services, or any other service required for electronic communication, nor does the Trustee make any warranties, express or implied, and specifically disclaims all warranties of merchantability, fitness for a particular purpose, or non-infringement. The Trustee shall not be responsible for any loss or damage related to or resulting from any changes or modifications to the Electronic Services made in violation of this Agreement.

(c) The Sponsor acknowledges that certain web sites through which the Electronic Services are accessed may be protected by passwords or require a login and the Sponsor agrees that neither the Sponsor nor, where applicable, Participants, will obtain or attempt to obtain unauthorized access to such Services or to any other protected materials or information, through any means not intentionally made available by the Trustee for the specific use of the Sponsor. To the extent that a PIN is necessary for access to the Electronic Services, the Sponsor and/or its Participants, as the case may be, are solely responsible for all activities that occur in connection with such PINs.

(d) The Trustee will provide to Participants the FullView^SM service via NetBenefits, through which Participants may elect to consolidate and manage any retirement account information available through NetBenefits as well as External Account Information. To the extent not provided by the Trustee or its affiliates, the data aggregation service will be provided by Yodlee.com, Inc. or such other independent provider as the Trustee may select, pursuant to a contract that requires the provider to take appropriate steps to protect the privacy and confidentiality of information furnished by users of the service. The Sponsor acknowledges that Participants who elect to use FullView^SM must provide passwords and PINs to the provider of data aggregation services. The Trustee

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will use External Account Information to furnish and support FullView^SM or other services provided pursuant to this Agreement, and as otherwise directed by the Participant. The Trustee will not furnish External Account Information to any third party, except pursuant to subpoena or other applicable law. The Sponsor agrees that the information accumulated through FullView^SM shall not be made available to the Sponsor, provided, however, that the Trustee shall provide to the Sponsor, upon request, aggregate usage data that contains no personally identifiable information.

(e) The Trustee will use best efforts to maintain security and confidentiality of all data retained on electronic systems.

Section 16. Assignment.

This Agreement, and any of its rights and obligations hereunder, may not be assigned by any party without the prior written consent of the other party(ies), and such consent may be withheld in any party’s sole discretion. Notwithstanding the foregoing, Trustee may assign this Agreement in whole or in part, and any of its rights and obligations hereunder, to a subsidiary or affiliate of Trustee without consent of the Sponsor. All provisions in this Agreement shall extend to and be binding upon the parties hereto and their respective successors and permitted assigns.

Section 17. Force Maieure.

No party shall be deemed in default of this Agreement to the extent that any delay or failure in performance of its obligation(s) results, without its fault or negligence, from any cause beyond its reasonable control, such as acts of God, acts of civil or military authority, acts of terrorism, whether actual or threatened, quarantines, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, power outages or strikes. This clause shall not excuse any of the parties to the Agreement from any liability which results from failure to have in place reasonable disaster recovery and safeguarding plans adequate for protection of all data each of the parties to the Agreement are responsible for maintaining for the Plan.

Section 18. Confidentiality.

Both parties to this Agreement recognize that in the course of implementing and providing the services described herein, each party may disclose to the other Confidential Information. All such Confidential Information, individually and collectively, and other proprietary information disclosed by either party shall remain the sole property of the party disclosing the same, and the receiving party shall have no interest or rights with respect thereto if so designated by the disclosing party to the receiving party. Each party agrees to maintain all such Confidential Information in trust and confidence to the same extent that it protects its own proprietary information, and not to disclose such Confidential Information to any third party without the written consent of the other party. Each party further agrees to take all reasonable precautions to prevent any unauthorized disclosure of Confidential Information. In addition, each party agrees not to disclose or make public to anyone, in any manner, the terms of this Agreement, except as required by law, without the prior written consent of the other party.

Section 19. General.

(a) Performance bv Trustee, its Agents or Affiliates.

The Sponsor acknowledges and authorizes that the services to be provided under this Agreement shall be provided by the Trustee, its agents or affiliates, and that certain of such services may be provided pursuant to one or more other contractual agreements or relationships.

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(b) Entire Agreement.

This Agreement, together with the Schedules referenced herein, contains all of the terms agreed upon between the parties with respect to the subject matter hereof. This Agreement supersedes any and all other agreements, written or oral, made by the parties with respect to the services.

(c) Waiver.

No waiver by either party of any failure or refusal to comply with an obligation hereunder shall be deemed a waiver of any other obligation hereunder or subsequent failure or refusal to comply with any other obligation hereunder.

(d) Successors and Assigns.

The stipulations in this Agreement shall inure to the benefit of, and shall bind, the successors and assigns of the respective parties.

(e) Partial Invalidity.

If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

(f) Section Headings.

The headings of the various sections and subsections of this Agreement have been inserted only for the purposes of convenience and are not part of this Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement.

(g) Communications.

In the event that the Sponsor retains any responsibility for delivering Participant communications to some or all Participants and beneficiaries, the Sponsor agrees to furnish the communications to such Participants in a timely manner as determined under applicable law. The Sponsor also represents that such communications will be delivered to such Participants and beneficiaries in a manner permitted by applicable law, including electronic delivery that is consistent with applicable regulations regarding electronic transmission (for example, DOL Regulation §2520.104b-1). The Trustee and its affiliates shall have no responsibility or liability for any Losses resulting from the failure of the Sponsor to furnish any such communications in a manner which is timely and consistent with applicable law.

The provisions of this Agreement shall apply to all information provided and all Participant communications prepared and delivered by the Sponsor or the Trustee during the implementation period prior to the execution date of this Agreement and throughout the term set forth in this Agreement.

(h) Survival.

Trustee’s and Sponsor’s respective obligations under this Agreement, which by their nature would continue beyond the termination of this Agreement, including but not limited to those contained in Sections 6(c), 8(d), 18, and 20, shall survive any termination of the Agreement.

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(i) Merger.

The Trustee possesses the specific authority to, at the direction of the Sponsor, execute any instrument necessary to affect Plan asset transfers with trustees of other trusts whether or not sponsored by the Sponsor and to accept the direct transfer of Plan assets, or to transfer Plans assets, as a party to any such agreement, provided that the Trustee shall not be obligated to receive any direct transfer unless prior thereto or coincident therewith, as the Trustee may specify to the Sponsor in writing, the Trustee has received such reconciliation, allocation, investment or other information concerning such direction, contribution or representation with respect to the contribution or transfer or the source thereof as the Trustee may require.

At the direction of the Sponsor, this Trust may be merged or consolidated with, or its assets or liabilities may be transferred to, any other trust.

Section 20. Use of Data.

In order to fulfill its obligations under this Agreement, the Trustee may receive personal data, including but not limited to, compensation, benefits, tax, marital/family status and other similar information, about Participants (“Personal Data”). With respect to Personal Data it receives, the Trustee agrees to (i) safeguard Personal Data in accordance with its privacy policy, and (ii) exercise the same standard of care in safeguarding such Personal Data that it uses to protect the personal data of its own employees. Notwithstanding the foregoing, the Sponsor may monitor the Trustee’s interactions with Participants and the Sponsor authorizes the Trustee to permit third-party prospects of the Trustee to monitor Participants’ interactions for the purpose of evaluating Trustee’s services.

Section 21. Governing Law.

(a) Massachusetts Law Controls.

This Agreement is being made in the Commonwealth of Massachusetts, and the Trust shall be administered as a Massachusetts trust. The validity, construction, effect, and administration of this Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, except to the extent those laws are superseded under section 514 of ERISA.

(b) Trust Agreement Controls.

The Trustee is not a party to the Plan, and in the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of this Agreement shall control with respect to the responsibilities of the Trustee. In all other cases, the provisions of the Plan shall control.

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By signing below, the undersigned represent that they are authorized to execute this document on behalf of the respective parties. Each party may rely without duty of inquiry on the foregoing representation.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

ZIONS BANCORPORATION
By:	/s/    Diana M. Andersen
	Authorized Signatory
Name:	Diana M. Andersen
Title:
Date:

FIDELITY MANAGEMENT TRUST COMPANY
By:	/s/    Stephanie Sheehan
	Authorized Signatory
Name:	Stephanie Sheehan
Date:	9/20/06

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SCHEDULES

Schedule “A” Recordkeepinq and Administrative Services

Administration

* Establishment and maintenance of Participant account and election percentages.

* Maintenance of the Plan investment options set forth on Schedule “C”.

* Maintenance of the money classifications set forth in the Plan Administration Manual.

* The Trustee will provide the recordkeeping and administrative services set forth on this Schedule “A” or as otherwise agreed to in writing (or by means of a secure electronic medium) between Sponsor and Trustee. The Trustee may unilaterally add or enhance services, provided such addition or enhancement is made globally across the Trustee’s client base and provided there is no impact on fees set forth in Schedule “B.”

A) Participant Services

1) Participant service representatives are available each Business Day at the times set forth in the Plan Administration Manual via toll free telephone service for Participant inquiries and transactions.

2) Through the automated voice response system and on-line account access via the world wide web, Participants also have virtually 24 hour account inquiry and transaction capabilities.

3) For security purposes, all calls are recorded. In addition, several levels of security are available including the verification of a PIN or such other personal identifier as may be agreed to from time to time by the Sponsor and the Trustee.

4) The following services are available via the telephone or such other electronic means as may be agreed upon from time to time by the Sponsor and the Trustee and will be provided as soon as administratively feasible or within such other timeline as may be agreed upon in writing between the Sponsor and Trustee:

• Process Participant enrollments, in accordance with the procedures set forth in the Plan Administration Manual.

• Provide Plan investment option information consisting of, but not limited, to prospectus and performance summaries.

• Provide and maintain information and explanations about Plan provisions.

• Respond to and provide requests for literature.

• Maintain and process changes to Participants’ contribution allocations for all money sources, if applicable.

• Process exchanges (transfers) between investment options on a daily basis.

• Process in-service withdrawals, hardship withdrawals, and full distributions in accordance with the procedures set forth in the Plan Administration Manual.

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B) Plan Accounting

1) Process consolidated payroll contributions according to the Sponsor’s payroll frequency via EDT, consolidated magnetic tape or diskette. The data format will be provided by the Trustee via EDT, PSW, or as otherwise agreed upon in writing. If there is a change in data format, the Trustee will provide reasonably advanced notification to Sponsor.

2) Maintain and update employee data necessary to support Plan administration. The data will be submitted according to payroll frequency.

3) Provide daily Plan and Participant level accounting for all Plan investment options.

4) Provide daily Plan and Participant level accounting for all money classifications for the Plan.

5) Audit and reconcile the Plan and Participant accounts daily.

6) Reconcile and process Participant withdrawal requests and distributions in accordance with the procedures set forth in the Plan Administration Manual. All requests are paid based on the current market values of Participants’ accounts, not advanced or estimated values. A distribution report will accompany each check.

7) Maintain and process changes to Participants’ existing hypothetical investment mix elections.

C) Participant Reporting

1) Provide confirmation to Participants of all Participant initiated transactions either online or via the mail, as selected by the Participant. Online confirms are generated upon submission of a transaction and mail confirms are available by mail generally within five (5) calendar days of the transaction.

2) Provide Participant statements in accordance with the procedures set forth in the Plan Administration Manual.

D) Plan Reporting

1) Prepare, reconcile and deliver a monthly Trial Balance Report presenting all money classes and investments. This report is based on the market value as of the last business day of the month. The report will be delivered not later than ten (10) calendar days after the end of each month in the absence of unusual circumstances.

E) Government Reporting

1) Provide federal and state tax reporting and withholding on benefit payments made to Participants and beneficiaries in accordance with this Agreement.]

2) Provide Mutual Fund tax reporting (Forms 1099 DIV. and 1099-B) to the Sponsor.

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F) Communication & Education Services

1) Design, produce and distribute a customized comprehensive communications program for employees. The program may include multimedia informational materials, investment education and planning materials, access to Fidelity’s homepage on the internet and STAGES magazine. Additional fees for such services may apply as mutually agreed upon between Sponsor and Trustee.

G) Other

1) Plan Sponsor Webstation: The Fidelity Participant Recordkeeping System is available on-line to the Sponsor via the Plan Sponsor Webstation. PSW is a graphical, Windows- based application that provides current Plan and Participant-level information, including indicative data, account balances, activity and history. The Sponsor agrees that PSW access will not be granted to third parties without the prior consent of the Trustee.

2) Change of Address by Telephone: The Trustee shall allow Participants as directed by the Sponsor and documented in the Plan Administration Manual, to make address changes via Fidelity’s toll-free telephone service.

ZIONS BANCORPORATION			FIDELITY MANAGEMENT TRUST COMPANY
By:	/s/    Diana M. Andersen	8/18/06	By:	/s/    Stephanie Sheehan	9/20/06
	Authorized Signatory	Date		Authorized Signatory	Date

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Schedule “B” Fee Schedule

Annual Recordkeeping Fee:	Fee waived.
Non-Fidelity Mutual Funds:	Fees paid directly to Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Or its affiliates by Non-Fidelity Mutual Fund Vendors shall be posted and updated quarterly on Plan Sponsor Webstation at https://psw.fidelity.com or successor site.

Zions Preferred Stock:

Commissions:

For the Zions Bancorporation Restated Deferred Compensation Plan, Fidelity Capital Markets shall be entitled to remuneration in an amount of no more than three and one-fifth cents ($.032) commission on each share of Zions Preferred Stock. Any increase in such remuneration may be made only by a signed agreement between the Sponsor and Trustee.

Other Fees:

• Other Fees: separate charges may apply for extraordinary expenses resulting from large numbers of simultaneous manual transactions, from errors not caused by Fidelity, reports not contemplated in this Agreement, corporate actions, or the provision of communications materials in hard copy which are also accessible to participants via electronic services in the event that the provision of such material in hard copy would result in an additional expense deemed to be material. The Administrator may withdraw reasonable administrative fees from the Trust by written direction to Fidelity.

ZIONS BANCORPORATION			FIDELITY MANAGEMENT TRUST COMPANY
By:	/s/    Diana M. Andersen	8/18/06	By:	/s/    Stephanie Sheehan	9/20/06
	Authorized Signatory	Date		Authorized Signatory	Date

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Schedule “C” Investment Options

In accordance with Section 5(b), the Sponsor hereby directs the Trustee that Participants’ individual hypothetical accounts may be invested in the following investment options:

For the Zions Bancorporation Restated Deferred Compensation Plan:

• Fidelity Capital & Income Fund

• Fidelity Freedom 2000 Fund^®

• Fidelity Freedom 2005 Fund^®

• Fidelity Freedom 2010 Fund^®

• Fidelity Freedom 2015 Fund^®

• Fidelity Freedom 2020 Fund^®

• Fidelity Freedom 2025 Fund^®

• Fidelity Freedom 2030 Fund^®

• Fidelity Freedom 2035 Fund^®

• Fidelity Freedom 2040 Fund^®

• Fidelity Freedom Income Fund^®

• Fidelity Retirement Money Market Portfolio

• Fidelity U.S. Bond Index Fund

• AllianceBernstein International Value Fund - Advisor Class

• American Beacon Large Cap Value Fund - PlanAhead Class

• BlackRock International Opportunities Fund - Institutional Class

• Columbia Acorn USA Fund - Class Z

• Evergreen Special Values Fund - Institutional Class

• Janus Mid Cap Value Fund - Investor Class

• Julius Baer International Equity Fund - Class A

• Lazard Emerging Markets Portfolio - Institutional Class

• Legg Mason Partners Aggressive Growth Fund - Class A

• Loomis Sayles Bond - Institutional Class

• Loomis Sayles Global Bond - Institutional Class

• Morgan Stanley Institutional International Real Estate Portfolio - Class A

• PIMCO Commodity Real Return Strategy Fund - Institutional Class

• PIMCO Total Return Fund - Institutional Class

• Rainier Small/Mid Cap Equity Portfolio - Investor Class

• Spartan® International Index Fund - Investor Class

• Spartan® Total Market Index Fund - Investor Class

• Spartan® U.S. Equity Index Fund - Investor Class

• Vanguard Mid-Cap Index Fund - Admiral Class

• Vanguard REIT Index Fund - Admiral Class

• Vanguard Small-Cap Index Fund - Admiral Class

• Victory Diversified Stock Fund - Class A

• Wasatch Core Growth Fund

• Wasatch Small Cap Value Fund

• Zions Common Stock Fund

• Zions Preferred Stock Fund

For the Zions Bancorporation Restated Deferred Compensation Plan, the Sponsor hereby directs that the investment option referred to in Section 5(c), Section 5(f)(vi)(B)(5), and Section 5(g)(vi)(B)(5) shall be Fidelity Retirement Money Market Portfolio.

For the Zions Bancorporation Restated Deferred Compensation Plan for Directors

• Fidelity Retirement Money Market Portfolio

• Zions Common Stock Fund

For the Zions Bancorporation Restated Deferred Compensation Plan for Directors, the Sponsor hereby directs that the investment option referred to in Section 5(c) and Section 5(f)(vi)(B)(5) shall be Fidelity Retirement Money Market Portfolio.

For the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan

• Zions Common Stock Fund

For the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan, the Sponsor hereby directs that the investment option referred to in Section 5(f)(vi)(B)(5) shall be the Zions Common Stock Fund.

ZIONS BANCORPORATION
By:	/s/    Connie Linardakis	9/13/06
	Authorized Signatory	Date

Schedule “D” Operational Guidelines for Non-Fidelity Mutual Funds

Pricing

By 7:00 p.m. Eastern Time (“ET”) each Business Day, the Non-Fidelity Mutual Fund Vendor (“Fund Vendor”) will input the following information (“Price Information”) into the Fidelity Participant Recordkeeping System (“FPRS”) via the remote access price screen that FIIOC, an affiliate of the Trustee, has provided to the Fund Vendor: (1) the NAV for each Fund at the Close of Trading, (2) the change in each Fund’s NAV from the Close of Trading on the prior Business Day, and (3) in the case of an income fund or funds, the daily accrual for interest rate factor (“mil rate”). FIIOC must receive Price Information each Business Day. If on any Business Day the Fund Vendor does not provide such Price Information to FIIOC, FIIOC shall pend all associated transaction activity in the FPRS until the relevant Price Information is made available by Fund Vendor.

Trade Activity and Wire Transfers

By 7:00 a.m. ET each Business Day following Trade Date (“Trade Date Plus One”), FIIOC will provide, via facsimile, to the Fund Vendor a consolidated report of net purchase or net redemption activity that occurred in each of the Funds up to 4:00 p.m. ET on the prior Business Day. The report will reflect the dollar amount of assets and shares to be invested or withdrawn for each Fund. FIIOC will transmit this report to the Fund Vendor each Business Day, regardless of processing activity. In the event that data contained in the 7:00 a.m. ET facsimile transmission represents estimated trade activity, FIIOC shall provide a final facsimile to the Fund Vendor by no later than 9:00 a.m. ET. Any resulting adjustments shall be processed by the Fund Vendor at the net asset value for the prior Business Day.

The Fund Vendor shall send via regular mail to FIIOC transaction confirms for all daily activity in each of the Funds. The Fund Vendor shall also send via regular mail to FIIOC, but no later than the fifth Business Day following calendar month close, a monthly statement for each Fund. FIIOC agrees to notify the Fund Vendor of any balance discrepancies within twenty (20) Business Days of receipt of the monthly statement.

For purposes of wire transfers, FIIOC shall transmit a daily wire for aggregate purchase activity and the Fund Vendor shall transmit a daily wire for aggregate redemption activity, in each case including all activity across all Funds occurring on the same day.

Prospectus Delivery

FIIOC shall be responsible for the timely delivery of Fund prospectuses and periodic Fund reports (“Required Materials”) to Participants, and shall retain the services of a third-party vendor to handle such mailings. The Fund Vendor shall be responsible for all materials and production costs, and hereby agrees to provide the Required Materials to the third-party vendor selected by FIIOC. The Fund Vendor shall bear the costs of mailing annual Fund reports to Participants. FIIOC shall bear the costs of mailing prospectuses to Participants.

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Proxies

The Fund Vendor shall be responsible for all costs associated with the production of proxy materials. FIIOC shall retain the services of a third-party vendor to handle proxy solicitation mailings and vote tabulation. Expenses associated with such services shall be billed directly the Fund Vendor by the third-party vendor.

Participant Communications

The Fund Vendor shall provide internally prepared fund descriptive information approved by the Funds’ legal counsel for use by FIIOC in its written Participant communication materials. FIIOC shall utilize historical performance data obtained from third-party vendors (currently Morningstar, Inc., FACTSET Research Systems and Lipper Analytical Services) in telephone conversations with Participants and in quarterly Participant statements. The Sponsor hereby consents to FIIOC’s use of such materials and acknowledges that FIIOC is not responsible for the accuracy of third-party information. FIIOC shall seek the approval of the Fund Vendor prior to retaining any other third-party vendor to render such data or materials under this Agreement.

Compensation

FIIOC shall be entitled to fees as set forth in a separate agreement with the Fund Vendor.

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Schedule “E” Available Liquidity Procedures for Unitized Stock Funds

The following procedures shall govern sales of the Stock Funds requested for a day on which Available Liquidity is insufficient:

1. Withdrawals and distributions will be aggregated and placed first in the hierarchy. If Available Liquidity is sufficient for the aggregate of such transactions, all such withdrawals and distributions will be honored. If Available Liquidity is not sufficient for the aggregate of such transactions, then such transactions will be suspended, and no transactions requiring a sale of Stock Fund units shall be honored for that day.

2. If Available Liquidity has not been exhausted by the aggregate of withdrawals and distributions, then all remaining transactions involving a sale of units in the Stock Funds (exchanges out) shall be grouped on the basis of when such requests were received, in accordance with standard procedures maintained by the Trustee for such grouping as they may be amended from time to time. To the extent of Available Liquidity, groups of exchanges out of the Stock Funds shall be honored, by group, on a FIFO basis. If Available Liquidity is insufficient to honor all exchanges out within a group, then none of the exchanges out in such group shall be honored, and no exchanges out in a later group shall be honored.

3. Transactions not honored on a particular day due to insufficient Available Liquidity shall be honored, using the hierarchy specified above, on the next Business Day on which there is Available Liquidity.

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EX-10.14

EXHIBIT 10.14

Schedule “C” Investment Options

In accordance with Section 5(b), the Sponsor hereby directs the Trustee that Participants’ individual hypothetical accounts may be invested in the following investment options:

For the Zions Bancorporation Restated Deferred Compensation Plan:

• Fidelity Capital & Income Fund

• Fidelity Freedom 2000 Fund^®

• Fidelity Freedom 2005 Fund^®

• Fidelity Freedom 2010 Fund^®

• Fidelity Freedom 2015 Fund^®

• Fidelity Freedom 2020 Fund^®

• Fidelity Freedom 2025 Fund^®

• Fidelity Freedom 2030 Fund^®

• Fidelity Freedom 2035 Fund^®

• Fidelity Freedom 2040 Fund^®

• Fidelity Freedom Income Fund^®

• Fidelity Retirement Money Market Portfolio

• Fidelity U.S. Bond Index Fund

• AllianceBernstein International Value Fund – Advisor Class

• American Beacon Large Cap Value Fund – PlanAhead Class

• BlackRock International Opportunities Fund – Institutional Class

• Columbia Acorn USA Fund – Class Z

• Evergreen Special Values Fund – Institutional Class

• Janus Mid Cap Value Fund – Investor Class

• Julius Baer International Equity Fund – Class A

• Lazard Emerging Markets Portfolio – Institutional Class

• Legg Mason Partners Aggressive Growth Fund – Class A

• Loomis Sayles Bond – Institutional Class

• Loomis Sayles Global Bond – Institutional Class

• Morgan Stanley Institutional International Real Estate Portfolio – Class A

• PIMCO Commodity Real Return Strategy Fund – Institutional Class

• PIMCO Total Return Fund – Institutional Class

• Rainier Small/Mid Cap Equity Portfolio – Investor Class

• Spartan^® International Index Fund – Investor Class

• Spartan^® Total Market Index Fund– Investor Class

• Spartan^® U.S. Equity Index Fund– Investor Class

• Vanguard Mid-Cap Index Fund – Admiral Class

• Vanguard REIT Index Fund – Admiral Class

• Vanguard Small-Cap Index Fund – Admiral Class

• Victory Diversified Stock Fund – Class A

• Wasatch Core Growth Fund

• Wasatch Small Cap Value Fund

• Zions Common Stock Fund

• Zions Preferred Stock Fund

For the Zions Bancorporation Restated Deferred Compensation Plan, the Sponsor hereby directs that the investment option referred to in Section 5(c), Section 5(f)(vi)(B)(5), and Section 5(g)(vi)(B)(5) shall be Fidelity Retirement Money Market Portfolio.

For the Zions Bancorporation Restated Deferred Compensation Plan for Directors

• Fidelity Retirement Money Market Portfolio

• Zions Common Stock Fund

For the Zions Bancorporation Restated Deferred Compensation Plan for Directors, the Sponsor hereby directs that the investment option referred to in Section 5(c) and Section 5(f)(vi)(B)(5) shall be Fidelity Retirement Money Market Portfolio.

For the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan

• Zions Common Stock Fund

For the Restated Amegy Bancorporation, Inc. Non-Employees Directors Deferred Fee Plan, the Sponsor hereby directs that the investment option referred to in Section 5(f)(vi)(B)(5) shall be the Zions Common Stock Fund.

ZIONS BANCORPORATION
By:	/s/    Connie Linardakis	9/13/06
	Authorized signatory	Date

EX-10.28

EXHIBIT 10.28

SEVENTH AMENDMENT

TO THE

Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan

This Seventh Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan (the “Plan”) is made and as of 24th day of July, 2006, by Zions Bancorporation Benefits Committee (“Committee”) 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 amended and restated in its entirety effective for the Plan Year commencing on January 1, 2003, and for all plan years thereafter; and

WHEREAS, the Employer has reserved the right to amend the Plan in whole or in part; and

WHEREAS, the Committee, for and on behalf of the Employer and consistent with the power and authority granted to it, and as a result of the transfer of record keeping and trustee responsibilities to Fidelity Management Trust Company and the merger of the Amegy Bank 401(k) Savings Plan (“Amegy Plan”) into the Plan has found it necessary to amend the Plan in the following particulars: to allow Participants to have a standing election, which may be changed at any time in accordance with procedures adopted by the Committee, as to whether they wish to receive dividends on employer securities in cash or in kind; to provide that for former participants in the Amegy Plan have an unlimited right to diversify employer securities which were allocated to a participant’s account in the Amegy Plan on or before December 31, 2005; to provide that two protected inservice withdrawal provisions are preserved for certain former Amegy Plan participants with respect to amounts in their accounts which were transferred from the Amegy Plan; to allow certain dividend diversification rights; and to provide that and participant may defer up to 80% of his/her compensation under a 401(k) elective deferral.

WHEREAS, the Committee of has been given authority to amend the Plan on behalf of the Employer.

NOW THEREFORE, in consideration of the foregoing premises the Committee adopts the following amendments to the Plan (amended language is in bold italics):

(Right to Defer Up Eighty Percent of Participant Compensation)

1. Section 5.01 (a) is amended as follows:

(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 eighty percent (80%) 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:

(Adjustment of Accounts and Dividends on Employer Securities)

2. Sections 6.03(e)(l), (2), (3), and (4) are amended as follows:

(1) The Participant shall have the right to elect, no less often than annually, to invest the allocable share of dividends in Employer Securities or withdraw 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 until July 24, 2006 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 until July 24, 2006 the annual election period shall commence on the Participant’s Entry Date and end on the one month anniversary thereof. Beginning July 24, 2006, Participants shall have the right to make a standing election whether to invest such Participant’s allocable share of dividends in Employer Securities or withdraw as cash.

(3) If the Participant fails to make an election to withdraw his allocable share of dividends in cash, his share shall be invested automatically in Employer Securities.

(4) The Participant may elect and revoke any prior election without limitation at any time and in accordance with procedures established by the Committee. 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

(Employer Securities Diversification Rights for Amegy Participants)

3. Section 6.06 is amended by adding a new section 6.06(f) as follows:

(f) The following rules shall apply to former Participants in the Amegy Bank 401(k) Savings Plan (“Amegy Participant”).

(1) With respect to that portion of an Amegy Participant’s Employer Securities Account which consists of Employer Securities and dividends from such Employer Securities which were allocated to the Amegy Participant’s Employer Securities Account not later than as of December 31, 2005, such Amegy Participant may direct up to one hundred percent (100%) of that portion of his/her Employer Securities Account into the General Investments Account.

(2) That portion of an Amegy Participant’s Employer Securities Account which consists of Employer Securities and dividends from such Employer Securities which were allocated to the Amegy Participant’s Employer Securities Account as of January 1, 2006 or later, shall be subject to same rules as other participants as set forth in this Section 6.06..

(Preservation of Distribution Rights)

3. Section 8.04 is amended as follows:

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).

For those Participants with contributions designated in the Amegy 401(k) Savings Plan (which was merged into the Plan on July 24, 2006) as Employer Match and Non-Elective contributions allocated and funded through the Southwest Bank of Texas 401(k) Saving Plan prior to June 1, 2003, such contributions will be subject to the 24-month and 60-month in-service withdrawal rights.

For those Participants with contributions designated in the Amegy 401(k) Savings Plan (which was merged into the Plan on July 24, 2006) as Employer Match and Non-Elective contributions allocated and funded through the Lone Star Bank Profit Sharing and Salary Deferral Plan and Trust prior to April 1, 2004, such contributions will be subject to the 24-month and 60-month in-service withdrawal rights.

(Investment Direction with Respect to Dividends)

5. Section 18.04 is amended as follows:

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). All dividends attributable to Employer Securities shall be subject to the same Participant investment direction rights as the Employer Securities which were the source of the dividend.

6. Unless a separate date is specified in any section hereof, the Effective Date of the forgoing amendments is July 24, 2006.

7. In all other respects the Plan is ratified and approved.

Dated this 28^th day of December, 2006.

Zions Bancorporation Benefits Committee
By	/s/ Diana M. Andersen
	Diana M. Andersen

EX-10.39

EXHIBIT 10.39

[FORM OF AGREEMENT]

ZIONS BANCORPORATION

CHANGE IN CONTROL AGREEMENT

SENIOR EXECUTIVES

The Company is a party to Change in Control Agreements with certain executive officers in the form attached hereto.

[FORM OF AGREEMENT]

ZIONS BANCORPORATION

CHANGE IN CONTROL AGREEMENT

SENIOR EXECUTIVES

[Date of Agreement]

[Name]

[Address]

[Address]

Dear [First Name]:

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 determined that it is in the best interests of the Company and its shareholders 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 event of any threat or occurrence 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, 2004; provided, however, that commencing on March 1, 2003 and on each March 1 thereafter, the term of this

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Agreement shall automatically be extended for one (1) additional year unless, not later than March 1 of that preceding year, the Company shall have given written notice to you that it does not wish to extend this Agreement; provided, further, that if a Change in Control 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.

2. Change in Control. No benefits shall be payable under Section 5 of this Agreement unless there has been a Change in Control. A “Change in Control” shall mean:

(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 the event described in this subsection (a) shall not be deemed a Change in Control by virtue of any of the following acquisitions: (i) by the Company or any corporation controlled by the Company, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iii) by any underwriter temporarily holding securities pursuant to an offering of such securities, (iv) pursuant to a Non-Qualifying Transaction (as defined in subsection (c) below), (v) pursuant to any acquisition by you or any group of persons including you (or any entity controlled by you or any group of persons including you), (vi) a transaction (other than one described in subsection (c) below) in which Outstanding Company Voting Securities are acquired from the Company, if a majority of the Continuing Directors (as defined in subsection (b) below) approve a resolution providing expressly that the acquisition pursuant to this clause (vi) does not constitute a Change in Control under this subsection (a) for any or all purposes of this Agreement or (vii) 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) individuals who, on August 19, 2002, constitute the Board (“Continuing Directors”), cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to such date whose election or nomination for election was approved by a vote of at least a majority of the Continuing Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be a Continuing Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors

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or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be a Continuing Director;

(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (i) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (iii) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination are Continuing Directors (any Business Combination which satisfies all of the criteria specified in (i), (ii) and (iii) above shall be deemed to be a “Non-Qualifying Transaction”); provided, however, that if Continuing Directors constitute a majority of the Board immediately following the occurrence of a Business Combination, then a majority of Continuing Directors in office prior to the consummation of the Business Combination may approve a resolution providing expressly that such Business Combination does not constitute a Change in Control under this subsection (c) for any or all purposes of this Agreement;

(d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company; or

(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 Company or such surviving entity outstanding immediately after such sale or disposition.

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3. Accelerated Vesting Upon a Change in Control.

(a) All outstanding options, if any, granted to you by the Board under any of the Company’s stock option plans, incentive plans, or other similar plans (or options substituted therefor covering the stock of a successor corporation) shall become fully vested and exercisable upon a 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 upon a Change in Control.

(b) All unpaid awards under the Senior Management Value Sharing Plan (“Value Sharing Plan”) 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 (as such term is defined in the Value Sharing Plan) and the average Tangible Return on Equity (as such term is defined in the Value Sharing Plan) from the inception of each Plan Period (as such term is defined in the Value Sharing Plan) 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 Value Sharing Plan.

4. Termination of Employment Following a Change in Control.

(a) General. During the term of this Agreement, if 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)).

(b) Disability. Your employment may be terminated for Disability. “Disability” means your absence from the full-time performance of your duties with the Company for six (6) consecutive months as a result of your incapacity due to physical or mental illness as determined by a physician selected by the Company and acceptable to you or by the company that administers the Company’s long-term disability plan in which you are participating. If the Company determines in good faith that your Disability has occurred, it may give you written notice in accordance with Section 7 of its intention to terminate your employment. In such event, your employment shall terminate effective on the thirtieth (30th) day after your receipt of such notice (the “Disability Effective Date”) unless within the thirty (30) days after such receipt, you shall not have returned to the full-time performance of your duties.

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(c) Cause. Termination by the Company of your employment for “Cause” shall mean termination (i) upon your willful and continued failure to substantially perform your duties with the Company (other than any such failure resulting from your Disability or any such actual or anticipated failure after your issuance of a Notice of Termination (as defined in Section 4(e)) for Good Reason (as defined in Section 4(d))), after a written demand for substantial performance is delivered to you by the Board, which demand specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (ii) upon your willful and continued failure to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board (other than any such failure resulting from your Disability or any such actual or anticipated failure after your issuance of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to you by the Board, which demand specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (iii) upon your commission of an act of fraud or dishonesty resulting in material economic or financial injury to the Company or (iv) upon your engagement in illegal conduct or gross misconduct, in each case which is materially and demonstrably injurious to the Company. For purposes of this subsection (c), no act or failure to act shall be considered “willful” unless done or omitted to be done in bad faith and without reasonable belief that your action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel for the Company or upon the instructions of the Company’s chief executive officer shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. Cause shall not exist unless and until the Company has delivered to you a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding you if you are a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clause (i), (ii), (iii) or (iv) has occurred and specifying the particulars thereof in detail. The Company must notify you of any event constituting Cause within ninety (90) days following the Company’s knowledge of its existence or such event shall not constitute Cause under this Agreement.

(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:

(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;

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(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) (1) the relocation of the Company’s offices at which you are principally employed immediately prior to the Change in Control (your “Principal Location”) which results in the one-way commuting distance for you increasing by more than fifty (50) miles from your primary residence immediately prior to a Change in Control, (2) the Company’s requiring you to be based anywhere other than your Principal Location or (3) the Company’s requiring you to travel on the Company’s business to an extent substantially greater than your business travel obligations immediately prior to the Change in Control;

(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 (1) any material employee benefit plan, compensation plan, or material fringe 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 (2) your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount and cost of benefits provided and the level of your participation relative to other participants, as existed immediately prior to the Change in Control;

(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, which purported termination shall not constitute a termination for purposes of this Agreement; or

(vii) the failure of the Company to obtain the assumption agreement from any successor as contemplated in Section 6(a).

Notwithstanding the foregoing, the Company placing you on a paid leave of up to ninety (90) days, pending the determination of whether there is a basis to terminate you for Cause, shall not constitute a “Good Reason” event; provided, that if you are subsequently terminated for Cause, then you shall repay any amounts paid by the Company to you during such leave period.

An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by you shall not constitute a Good Reason event. Your right to terminate employment for Good Reason shall not be affected by your incapacity due to mental or physical illness, and your continued

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employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that you must provide a Notice of Termination within ninety (90) days following your knowledge of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

(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 (i) indicate the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated and (iii) specify the Date of Termination (as defined in Section 4(f)). The failure by you or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any of your or the Company’s rights hereunder or preclude you or the Company from asserting such fact or circumstance in enforcing your or the Company’s rights hereunder.

(f) Date of Termination. “Date of Termination” shall mean (i) if your employment is terminated due to your death, the date of your death, (ii) if your employment is terminated for Disability, the Disability Effective Date, or (iii) if your employment is terminated pursuant to Section 4(c) or (d) 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 more than thirty (30) days after 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 after the date such Notice of Termination is given), provided that the Company may accelerate the Date of Termination to an earlier date by providing you with notice of such action, or, alternatively, the Company may place you on paid leave during such period.

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 your Disability, 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 your employment 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, paid and provided under the Company’s retirement, insurance and other benefit and compensation programs then in effect in accordance with the terms of such programs.

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(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) within thirty (30) days following the Date of Termination a lump sum cash amount equal to the sum of (A) your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given plus (B) the unpaid portion, if any, of any annual bonus for any prior year and (2) all other amounts to which you are entitled under any benefit or 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) within ten (10) days following the Date of Termination a lump sum cash amount equal to the sum of (A) your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given plus (B) 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 (2) all other amounts to which you are entitled under any benefit or compensation plan of the Company at the time such payments are due;

(ii) the Company shall pay as severance pay to you within ten (10) days following the Date of Termination a lump sum cash severance payment equal to three (3) times the sum of (1) your annual base salary as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater plus (2) your targeted annual bonus as in effect as of the Date of Termination or the average annual bonus received by you 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, the Company shall continue to provide you and your eligible family members, based on the cost sharing arrangement between you and the Company in effect 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 such benefits shall be secondary to any other coverage obtained by you and provided, further, that if the Company’s welfare plans do not permit such coverage, the Company will provide you and your eligible family members with medical and dental health benefits (with the same after-tax effect) outside of such plans. At the termination of the benefits coverage under the preceding sentence, you and your eligible family members 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

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law, to the extent required by such laws, as if you had terminated employment with the Company on the date such benefits coverage terminates;

(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; and

(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 to you within thirty (30) days following the Date of Termination a lump sum cash payment equal to the sum of (1) the value of such unvested accrued benefits in lieu of accelerating the vesting of your benefits plus (2) 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.

(vi) (1) Notwithstanding anything in this Agreement to the contrary, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for your benefit (whether pursuant to the terms of this Agreement or otherwise) (“Payments”) would be subject to the excise tax (“Excise Tax”) under Section 4999 of the Code, then the amounts payable to you under this Agreement shall be reduced (reducing first the payments under Section 5(c)(ii), unless you elect an alternative method of reduction) to the maximum amount as will result in no portion of the Payments being subject to such excise tax (“Safe Harbor Cap”). For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable to you under this Agreement (and no other Payments) shall be reduced, unless consented to by you.

(2) All determinations required to be made under this Section 5(c)(vi) shall be made by the public accounting firm that is retained by the Company to audit the financial statements of the Company as of the date immediately prior to the Change in Control (“Accounting Firm”) which shall provide detailed supporting calculations both to the Company and you within fifteen (15) business days of the receipt of notice from the

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Company or you that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, you may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to you that you are not required to report any Excise Tax on your federal income tax return. All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Company. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and you (except as provided in subsection (3) below).

(3) If it is established pursuant to a final determination of a court or Internal Revenue Service (“IRS”) proceeding which has been finally and conclusively resolved, that Payments have been made to, or provided for the benefit of, you by the Company, which are in excess of the limitations provided in this Section 5(c)(vi) (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be a loan to you made on the date you received the Excess Payment and you shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of your receipt of such Excess Payment until the date of such repayment. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the determination, it is possible that Payments which will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made under this Section 5. In the event that it is determined (A) by the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS or (B) pursuant to a determination by a court, that an Underpayment has occurred, the Company shall pay an amount equal to such Underpayment to you within ten (10) days of such determination together with interest on such amount at the applicable federal rate from the date such amount would have been paid to you until the date of payment.

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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, upon your written request, 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 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 and Non-Solicitation Covenants.

(a) Confidentiality. You hereby agree that commencing on the Date of Termination, 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). 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

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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-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(b).

9. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed 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 modification, waiver 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. The section headings contained in this Agreement are for convenience only, and shall not affect the interpretation of this Agreement.

12. Withholding Taxes. The Company may withhold from all payments due to you (or your estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.

13. 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.

14. 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.

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15. Legal Fees. In addition to all other amounts payable to you under this Agreement, the Company shall pay to you all 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 you shall not be entitled to recover such fees and costs if the court or other tribunal or body hearing the dispute determines that you brought the claim in bad faith or that the claim was frivolous.

16. At-Will Employment. Nothing in the foregoing diminishes or alters the Company’s policy of at-will employment for all employees, where both the Company and you may terminate the employment relationship at any time and for any reason, with or without cause or notice. If your employment with the Company shall terminate prior to a Change in Control, you shall have no further rights under this Agreement; provided, however, that any termination of your employment during the term of this Agreement and within the two (2) year period immediately following a Change in Control shall be subject to all of the provisions of this Agreement.

17. Full Settlement. The Company’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to you under any other severance agreement between you and the Company, and any severance plan of the Company. The Company’s obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against you or others. In no event shall you be obligated to seek other employment or take other action by way of mitigation of the amounts payable to you under any of the provisions of this Agreement and, except as provided in Section 5(c)(iii), such amounts shall not be reduced whether or not you obtain other employment.

18. Survival. The respective obligations and benefits afforded to the Company and you as provided in Sections 3, 5 (to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of this Agreement), 6, 8, 12, 15 and 17 shall survive the termination of this Agreement.

19. Entire Agreement. 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. Except as otherwise specifically provided in this Agreement, any of your rights hereunder 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 Company sponsored employee benefit plans and stock options plans and provisions of this Agreement shall not in any way abrogate your rights under such other plans and agreements.

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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:
Its:	Chairman and CEO

Agreed to this      day

of                     .

[Name]

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EX-10.40

EXHIBIT 10.40

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of the 5th day of July, 2005, between Independence Merger Company, Inc. a Texas corporation (the “Company”) and Paul B. Murphy (the “Employee”).

WHEREAS, the Employee currently serves as the Chief Executive Officer of Amegy Bancorporation, Inc., a Texas corporation (the “Seller”);

WHEREAS, Zions Bancorporation, the parent of the Company, has entered into an Agreement and Plan of Merger with the Seller, dated as of the 5th day of July, 2005 (the “Merger Agreement”);

WHEREAS, the Company recognizes the Employee’s substantial contribution to the growth and success of the Seller and desires to provide for the continued employment of the Employee after the “Effective Time” (as defined in the Merger Agreement), which the Board of Directors of Zions Bancorporation (the “Board”) has determined will reinforce and encourage the continued attention and dedication to the Seller and the Company of the Employee as a member of their senior management in the best interests of the Seller and the Company and their shareholders;

WHEREAS, the Employee is willing to serve the Company, and the Company is willing to employ the Employee, on the terms and conditions set forth below;

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Employment Period. The Company hereby agrees to employ the Employee, and the Employee hereby agrees to work in the employ of the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Time (the “Effective Date”) and ending on the third anniversary of the Effective Date (the “Employment Period”).

2. Terms of Employment.

(a) Position and Duties.

(i) During the Employment Period, the Employee shall serve as Chief Executive Officer of Independence Merger Company, Inc. in Texas with responsibilities for the Company’s corporate banking activities in the Texas metropolitan markets (e.g., Houston, Dallas/Ft. Worth, Austin, and San Antonio). Employee shall have the appropriate authority, duties and responsibilities attendant to such position. Employee shall report to the Chairman of the Board and Chief Executive Officer of Zions Bancorporation.

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote substantially all of his business attention and time to the business and affairs of the Company and to use the Employee’s reasonable best efforts to perform such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Employee, if consistent with the code of conduct of the Company, to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures or fulfill speaking engagements and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Employee’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Employee’s responsibilities to the Company.

(b) Compensation.

(i) Annual Base Salary. During the Employment Period, the Employee shall receive an annual base salary (“Annual Base Salary”) of $475,000, which shall be subject to annual review for increases. No increase in Annual Base Salary shall limit or reduce any other right of or obligation to the Employee under this Agreement. Annual Base Salary shall not be reduced at any time (including after any such increase).

(ii) Annual Bonus. During the Employment Period, the Employee shall be eligible to be paid an annual cash bonus (“Annual Bonus”) with a target level of not less than 100% of Annual Base Salary, or such greater amount as determined by the Compensation Committee (the “Compensation Committee”) of the Board payable in accordance with the procedures applicable to other similarly situated senior officers of the Company; provided, however, Employee’s annual cash bonus for calendar 2006 shall not be less than $475,000 and for subsequent calendar years shall not be less than 50% of Annual Base Salary. Any bonus amounts payable pursuant to the Merger Agreement shall be taken into account as part of the Employee’s Annual Bonus under this Agreement (to avoid duplication).

(iii) Effective Date Payment. Within 10 days after the Effective Date, the Company will pay the Employee a one-time lump sum cash payment in the amount of $1,162,500. In addition, subject to the Employee’s continued compliance with the restrictive covenants in Section 7, the Company will make an additional annual lump sum cash payment to the

Employee, in the amount of $484,375, on each of the three succeeding anniversaries of the Effective Date (“Annual Payments”)- The Employee recognizes and affirms that the additional payments are contingent upon his compliance with the restrictive covenants in Section 7, even after termination of employment and expiration of the 12 month period referred to in Section 7, and even if those restrictive covenants are held or found invalid or unenforceable for any reason whatsoever. Notwithstanding the foregoing, in no event shall such amounts be taken into consideration for purposes of any compensation or benefit plan of the Company or any of its affiliates.

(iv) Annual Equity Grants. The Company or Zions Bancorporation shall grant the Employee annual stock options, restricted stock or other equity awards with a target level of 70% of Annual Base Salary with the actual award to be based upon the share price of Zions Bancorporation common stock and applying the Black Scholes valuation method. Such grants shall be in amounts no less than, and at times and on terms that are the same as, those provided to other similarly situated senior officers of the Company. On the Effective Date, the Company or Zions Bancorporation shall grant to Employee an option for approximately 24,000 shares of Zions Bancorporation common stock with full vesting, subject to the Employee’s continued employment with the Company through the applicable vesting date and Section 4(a)(iii), in three years (50% vesting on first anniversary of the Effective Date and 25% on the second and third anniversaries, respectively) and for each subsequent year the value of the annual equity grants shall in no event be less than 52.5% of Annual Base Salary.

(c) Benefits.

(i) Employee Benefit Plans. During the Employment Period, the Employee shall (A) participate in all employee benefit and other plans, practices, policies and programs and fringe benefits on a basis no less favorable than that provided to other similarly situated senior officers of the Company and (B) continue to receive all perquisites currently received from the Seller; provided, however, that the Employee shall not be entitled to participate in the Value Sharing Plans of the Company or Zions Bancorporation during the Employment Period. Employee shall be eligible to participate immediately in the Zions Bancorporation non-qualified deferred compensation plans generally available to similarly situated senior officers of the Company.

(ii) Indemnification. To the extent permitted by law, the Company will indemnify the Employee against any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, arising by reason of the Employee’s status as a director, officer, employee and/or agent of the Seller or the Company during the Employee’s

employment. In addition, to the extent permitted by law, the Company will pay or reimburse any expenses, including reasonable attorney’s fees, the Employee incurs in investigating and defending any actual or threatened action, suit or proceeding for which the Employee may be entitled to indemnification under this Section 2(c)(ii). However, the Employee agrees to repay any expenses paid or reimbursed by the Company if it is ultimately determined that the Employee is not legally entitled to be indemnified by the Company.

(iii) Change in Control Benefits. Immediately after the Effective Date, the Employee will be eligible to participate in the change in control plans of Zions Bancorporation at levels no less favorable than those applicable to similarly situated senior officers of Zions Bancorporation and the Company as determined by the Compensation Committee.

3. Termination of Employment.

(a) Death or Disability. The Employee’s employment shall terminate automatically upon the Employee’s death during the Employment Period. If the Company or Zions Bancorporation determines in good faith that the Disability of the Employee has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Employee written notice in accordance with Section 10(b) of its intention to terminate the Employee’s employment. In such event, the Employee’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Employee (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Employee shall not have returned to full- time performance of the Employee’s duties. For purposes of this Agreement, “Disability” shall mean that the Employee is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The Employee agrees to provide such medical evidence as may be requested by the Company or Zions Bancorporation and/or to be evaluated by a licensed physician of the Company’s or Zions Bancorporation’s choice. If the Employee’s condition constitutes total disability under the federal Social Security Acts, he shall be deemed disabled.

(b) Cause. At any time more than 30 days after the Effective Date, the Company or Zions Bancorporation may terminate the Employee’s employment during the Employment Period with or without Cause. For purposes of this Agreement, “Cause” shall mean that the Employee shall have committed:

(i) intentional misconduct in connection with his duties or in the course of his employment with the Company;

(ii) an act of fraud, embezzlement or intentional theft in connection with his duties or in the course of his employment with the Company;

(iii) intentional wrongful damage to property of the Company;

(iv) intentional wrongful disclosure of secret processes or confidential information of the Company;

(v) an act leading to a conviction of a felony or a misdemeanor involving moral turpitude; or

(vi) intentional wrongful engagement in any Competitive Activity.

For purposes of this Agreement, no act, or failure to act, on the part of the Employee shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with the Employee’s counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Employee had committed an act set forth above in this Section 3(b) and specifying the particulars thereof in detail. Nothing herein shall limit the right of the Employee or his legal representatives to contest the validity or propriety of any such determination.

(c) Good Reason. The Employee’s employment may be terminated by the Employee with or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of a written consent of the Employee:

(i) a material and adverse change in the Employee’s position with the Company after the Effective Time as set forth in Section 2(a)(i) or the failure to provide the Employee with authorities, responsibilities and reporting relationships consistent with such position;

(ii) any failure by the Company to comply with any of the provisions of Section 2(b) or 2(c), other than insubstantial or inadvertent failures not in bad faith which are remedied by the Company promptly (but in no event more than 15 days) after receipt of notice thereof given by the Employee;

(iii) any purported termination by the Company or Zions Bancorporation of the Employee’s employment otherwise than as expressly permitted by this Agreement;

(iv) a relocation of the Employee’s principal place of employment to a location outside of a 50-mile radius from the Employee’s current principal place of employment;

(v) a requirement that the Employee travel or perform a majority of the Employee’s duties outside of or away from the Employee’s principal place of employment for a period of time (in terms of either consecutive days or aggregate days in any calendar year) that is significantly greater than what is currently required of the Employee; or

(vi) any failure by the Company to comply with and satisfy Section 8(c).

(d) Notice of Termination. Any termination by the Company, Zions Bancorporation or by the Employee shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(b). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the Date of Termination.

(e) Date of Termination. “Date of Termination” means the date specified in the Notice of Termination which shall not be less than 30 days nor more than 60 days after the date such notice is given, provided, however, that, if the Employee’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Employee or the Disability Effective Date, as the case may be.

4. Obligations of the Company upon Termination.

(a) Other Than for Cause; For Good Reason. If, during the Employment Period, the Company or Zions Bancorporation shall terminate the Employee’s employment other than for Cause or Disability, or the Employee shall terminate employment for Good Reason, the Company shall have no further obligations to the Employee other than:

(i) the Company shall pay to the Employee in a lump sum in cash within 10 days after the Date of Termination an amount equal to the sum of (A) the amount equal to the Employee’s Annual Base Salary, earned but unused vacation time accrued through the Date of Termination and any earned Annual Bonus for a completed prior year to the extent theretofore unpaid plus (B) the amount equal to (1) the highest Annual Bonus earned by the Employee (including annual bonuses earned

from the Seller prior to the Effective Date) in the three years immediately prior to the Date of Termination times (2) a fraction, the numerator of which is the number of days in the current fiscal year of the Company through the Date of Termination and the denominator of which is 365 plus (C) the amount equal to three times the sum of (1) the Employee’s Annual Base Salary plus (2) the highest Annual Bonus earned by the Employee (including annual bonuses earned from the Seller prior to the Effective Date) in the three years immediately prior to the Date of Termination;

(ii) for 36 months following the Date of Termination, the Company shall continue to provide medical, life insurance, dental and other welfare benefits to the Employee, his spouse and his eligible dependents on the same basis and at the same cost as such benefits are then currently provided to the Employee (the “Welfare Benefits”); provided that such benefits shall be secondary to any other coverage obtained by the Employee; provided, however, that if the Company’s welfare plans do not permit such coverage, the Company will provide the Employee the Welfare Benefits with the same after tax effect;

(iii) all Company stock options, restricted stock and other equity awards shall become immediately vested;

(iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Employee any other amounts or benefits required to be paid or provided or which the Employee is eligible to receive under any plan, program, policy or practice or other contract or agreement of the Company and its affiliated companies through the Date of Termination other than any severance plan, program, policy, agreement or other arrangement of the Company and its affiliates, (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

(v) the Company’s obligation to pay the Annual Payments required under Section 2(b)(iii), subject to the terms and conditions of that section.

(b) Death; Disability. If, during the Employment Period, the Employee’s employment shall terminate on account of death or Disability, the Company shall have no further obligations to the Employee other than to provide the Employee (or his estate) (i) the Employee’s Annual Base Salary and earned but unused vacation time accrued through the Date of Termination to the extent theretofore unpaid, (ii) the Welfare Benefits, (iii) the Other Benefits, and (iv) the Annual Payments required under Section 2(b)(iii), subject to the terms and conditions of that section.

(c) For Cause; Other than For Good Reason. If, during the Employment Period, the Company or Zions Bancorporation shall terminate the Employee’s employment for Cause or the Employee terminates his employment without

Good Reason, the Company shall have no further obligations to the Employee other than the obligation to pay to the Employee (i) the Employee’s Annual Base Salary and earned but unused vacation time accrued through the Date of Termination to the extent theretofore unpaid, (ii) the Other Benefits, and (iii) the Annual Payments required under Section 2(b)(iii), subject to the terms and conditions of that section.

(d) Release of Claims.

The Company’s obligation to provide the benefits described in Section 4(a)(i)(C) shall be subject to the Employee’s execution, delivery and nonrevocation (within any applicable revocation period) of a general release of claims in form reasonably satisfactory to the Company providing for a full release of any claims the Employee may have against the Company and its affiliates and their officers, directors, employees, stockholders and agents.

5. Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may otherwise have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Employee obtains other employment.

6. Section 280G Gross-Up and Cutback. The provisions of Annex A shall apply.

7. Covenants Not to Compete or Solicit Clients and Employees. The Company (and one or more of its affiliates or subsidiaries) shall provide Employee upon employment with confidential information that Employee acknowledges is necessary in order for Employee to perform his job responsibilities under this Agreement and shall provide its goodwill to the Employee, and in consideration of the disclosure by the Company (or one or more of its affiliates or subsidiaries) of confidential and proprietary information, as more fully described in Section 7(c) below, on and after the date hereof, the payment by the Company of the Compensation set forth in Section 2 hereof, and other good and valuable consideration, including its goodwill, the receipt and sufficiency of which are hereby acknowledged, Employee and the Company, intending to be legally bound, hereby agree as follows:

(a) Non-Compete. During the Employee’s employment with the Company, and for a 12 month period after the date the Employee’s employment is terminated for any reason, the Employee shall not, without the prior written consent of the Company and Zions Bancorporation, directly or indirectly engage in the business of commercial and/or retail banking in competition with the

business of the Company within the state of Texas nor will the Employee engage, within this geographical area, in the design, development, distribution, or sale of a product or service in competition with any product or service being marketed or planned by the Company at such time, the plans, designs or specifications of which have been revealed to the Employee. The Employee agrees to waive any objection to the validity of this covenant and acknowledges that these limited prohibitions are reasonable as to time, geographical area and scope of activities to be restrained and that these limited prohibitions do not impose a greater restraint than is necessary to protect the Company’s goodwill, proprietary information and other business interests. “Competitive Activity” shall mean the prohibitions set forth above in this Section 7(a); provided, however, that notwithstanding anything contained in the foregoing provisions of this Section 7(a) to the contrary, “Competitive Activity” shall not include (i) the mere ownership of securities in any enterprise and the exercise of rights appurtenant thereto, or (ii) participation in the management of any enterprise or the business operations thereof other than in connection with the competitive operations of such enterprise.

(b) Non-Solicit. During the Employee’s employment with the Company, and for a 12 month period after the date the Employee’s employment is terminated for any reason, the Employee shall not, without the prior written consent of the Company and Zions Bancorporation, directly or indirectly: (i) solicit or attempt to solicit, or interfere with or attempt to interfere with, the Company’s or any Subsidiary’s relationships with any of its or their customers, (ii) cause, induce, solicit, encourage, or aid, or attempt to do so, any employee of the Company or any Subsidiary to terminate employment with the Company or any Subsidiary or to accept employment with any business, operation, corporation, partnership, limited liability company, association, agency or any other person or entity with which the Employee may be employed or otherwise associated or (iii) interfere or attempt to interfere with any employee’s employment relationship with the Company or any Subsidiary. “Subsidiary” shall mean any corporation, partnership, limited liability company or other entity that is, directly or indirectly, owned in whole or in part by Zions Bancorporation or the Company.

(c) At the execution of this Agreement and throughout Employee’s employment during the Employment Period, the Company (or one or more of its affiliates or subsidiaries) shall provide confidential information to Employee and, Employee agrees, during the term of his employment and thereafter, not to use, divulge, or make accessible to any third party, company, corporation or other organization (including, but not limited to, customers, competitors, or governmental agencies), without the Company’s and Zions Bancorporation’s prior written consent, any trade secrets, customer lists, information regarding customers, information regarding the Company’s relationships with specific existing or prospective customers, customer goodwill associated with the Company’s trade name, or other valuable confidential and proprietary information concerning the Company or its business, including without limitation, confidential methods of operation and organization, trade secrets, confidential matters related to pricing, markups,

commissions and customer lists. Employee agrees that such information remains confidential even if committed to Employee’s memory. Employee warrants and agrees that every customer whom Employee services in any way while employed at the Company is a customer of the Company and not a customer of Employee, individually.

(d) Employee and the Company recognize that the Company, Zions Bancorporation, and any subsidiaries or affiliates of the Company which employ Employee are third-party beneficiaries to this Agreement that are intended to be protected by the covenants in this Agreement and that, except as otherwise expressly provided in this Agreement, any successor or assign of the Company, Zions Bancorporation or one of the other third-party beneficiaries to this Agreement may enforce the covenants in this Agreement as if it were a party to these covenants. Moreover, Employee and the Company acknowledge and agree that the Company has legitimate business interests to protect relative to Employee, including trade secrets, other valuable confidential and proprietary business information, substantial relationships with specific prospective and existing customers, substantial relationships with other employees of the Company, Company and customer goodwill associated with the Company’s trade name, and the Company’s servicing of specific markets provided to Employee. Employee agrees that the restrictions contained in this Section 7 are necessary and reasonable for the protection of the legitimate business interests and goodwill of the Company described above, and Employee agrees to waive any objection to the enforcement of this covenant and that any breach of this Section 7 will cause the Company substantial and irrevocable damage and, therefore, the Company shall have the right, in addition to any other remedies it may have (including the right to discontinue the Annual Payments under Section 2(b)(iii)), to seek specific performance and injunctive relief, without the need to post a bond or other security. Employee agrees that the period during which the covenant contained in this Section 7 shall be effective shall be computed by excluding from such computation any time during which Employee is in violation of any provision of Section 7. Employee agrees that if any covenant contained in Section 7 of this Agreement is found by a court of competent jurisdiction to contain limitations as to time, geographical area, or scope of activity that are not reasonable and impose a greater restraint than is necessary to protect the goodwill or other business interest of the Company, then the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time, geographical area, and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and other business interests of the Company and to enforce the covenant as reformed.

(e) Employee specifically recognizes and affirms that each of the covenants contained in (a), (b) and (c) of this Section 7 is a material and important term of this Agreement which has induced the Company to provide for the award of the Compensation provided hereunder, the disclosure of confidential information referenced herein, and the other promises made by the Company herein.

(f) Not withstanding anything to the contrary in any stock option, restricted stock, other equity award or other incentive award from the Company or Zions Bancorporation, the covenants contained in this Section 7 shall be the only restrictive covenants applicable to the Employee during the Employment Period and shall be the only restrictive covenants applicable to any such awards granted during the Employment Period.

8. Successors.

(a) This Agreement is personal to the Employee and without the prior written consent of the Company and Zions Bancorporation shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company, Zions Bancorporation and their successors.

(c) 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 assume expressly 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. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid.

9. Disputes.

(a) Mandatory Arbitration. Subject to the provisions of this Section 9, any controversy or claim between the Employee and the Company arising out of or relating to or concerning this Agreement (including the covenants contained in Section 7, except for any such controversy or claim arising out of or relating to or concerning injunctive relief for the Employee’s breach or purported breach of Section 7, which the Company shall have the right, in addition to any other remedies it may have, to seek specific performance and injunctive relief with a court of competent jurisdiction, without the need to post a bond or other security) or any aspect of the Employee’s employment with the Company or the Seller or the termination of that employment (together, an “Employment Matter”) shall be finally settled by binding arbitration in Houston, Texas administered by the American Arbitration Association (the “AAA”) under its Commercial Arbitration Rules then in effect. A decision must be rendered within 10 days after the parties’ closing statements or submission of post-hearing briefs and all expenses of arbitration shall be borne by the Company.

(b) Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Texas applicable to contracts made and to be performed entirely within that State. The Employee agrees to exclusive venue and jurisdiction in Houston, Texas.

(c) Costs. To the extent permitted by law, the Company shall pay or reimburse any reasonable expenses, including reasonable attorney’s fees, the Employee incurs as a result of any Employment Matter, provided, however, that if in any such arbitration proceeding, litigation proceeding or other legal action, the arbitrator or court determines that the Employee has presented or defended any issue in such proceeding or action in bad faith, such arbitrator or court, as the case may be, may allocate the portion of such costs and expenses relating to such issue between the Company and the Employee in any other manner deemed fair, equitable and reasonable by such arbitrator or court; provided further, however, that in no event shall the Employee be required to reimburse the Company for any of the Company’s costs and expenses relating to any such proceeding or action.

(d) Interest. If any payment under this Agreement is delayed as a result of an Employment Matter, upon final resolution of such matter it shall be paid together with interest at the applicable federal rate.

(e) Payments Pending Resolution. The Company shall continue to make the payments, and provide the benefits, specified in Section 2(b) and 2(c) pending the resolution of any Employment Matter; provided, however, that the payment of the Annual Payments under Section 2(b)(iii) may be suspended pending resolution of any matter involving the Employee’s breach or purported breach of Section 7.

10. Miscellaneous.

(a) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by Zions Bancorporation and the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee, at the Employee’s address last shown on the Company’s records.

If to the Company:

Independence Merger Company, Inc.

Attention: Thomas E. Laursen

One South Main Street, Suite 1134

Salt Lake City, Utah

Telecopy Number: (801)844-8502

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) The Employee’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Employee or the Company may have hereunder, including, without limitation, the right of the Employee to terminate employment for Good Reason pursuant to Section 3(c) or the Company’s right to terminate the Employee for Cause pursuant to Section 3(b), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) From and after the Effective Date, this Agreement shall supersede any other employment, severance or change in control agreement between the parties, including, without limitation, the Change in Control Agreement between the Employee and the Seller dated January 1, 2000 (and the Employee shall not be eligible for severance benefits under any plan, program or policy of the Company). In the event the Merger Agreement is terminated pursuant to its terms, this Agreement shall be null and void.

(g) Any reference to a Section herein is a reference to a section of this Agreement unless otherwise stated.

(h) This Agreement is intended to comply with the requirements of Section 409A of the Code (to the extent applicable) and the Company agrees to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply with such requirements and without resulting in any diminution in the value of payments or benefits to the Employee. To the extent that any payments to be provided to the Employee under this Agreement result in the deferral of compensation under Section 409A of the Code, and if the Employee is a “Key Employee” as defined in Section 416(i) of the Code, then any such payments shall instead be transferred to a rabbi trust (which shall be created by the Company, on terms reasonably acceptable to the Employee, before the Effective Date) and such amounts (together with earnings thereon in accordance with the terms of the trust agreement) shall be transferred from the trust to the Employee upon the earlier of (i) six months and one day after the Employee’s Termination Date or (ii) any other date permitted under Section 409A(a)(2) and 409A(a)(3) of the Code.

IN WITNESS WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the authorization from its Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

PAUL B. MURPHY
/s/ Paul B. Murphy
INDEPENDENCE MERGER COMPANY, INC.
By:	/s/ Doyle L. Arnold
Name:	Doyle L. Arnold
Title:	President

Annex A

Section 12. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment or distribution by, or benefit from, the Seller, the Company or any of their Affiliates to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (any such payments, distributions or benefits being individually referred to herein as a “Payment,” and any two or more of such payments, distributions or benefits being referred to herein as “Payments”), would be subject to the excise tax imposed by Section 4999 of the Code (such excise tax, together with any interest thereon, any penalties, additions to tax, or additional amounts with respect to such excise tax, and any interest in respect of such penalties, additions to tax or additional amounts, being collectively referred herein to as the “Excise Tax”), and (ii) the aggregate present value of the Payments that are subject to the excise tax imposed by Section 4999 of the Code is equal to or greater than an amount equal to the product of 345% multiplied by the Employee’s base amount (as determined under Section 280G(b)(3)(A) of the Code), then this Section 12 shall be applicable (and Section 13 shall not be applicable) and the Employee shall be entitled to receive an additional payment or payments (individually referred to herein as a “Gross-Up Payment” and any two or more of such additional payments being referred to herein as “Gross-Up Payments”) in an amount such that after payment by the Employee of all taxes (as defined in Section 12(k)) imposed upon the Gross-Up Payment, the Employee retains an amount of such Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes of this Section 12, present value shall be determined in accordance with Section 280G(d)(4) of the Code.

(b) Subject to the provisions of Section 12(c) through (i), any determination (individually, a “Determination”) required to be made under this Section 12(b), including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall initially be made, at the Company’s expense, by nationally recognized tax counsel mutually acceptable to the Company and the Employee (“Tax Counsel). Tax Counsel shall provide detailed supporting legal authorities, calculations, and documentation both to the Company and the Employee within 15 business days of the termination of the Employee’s employment, if applicable, or such other time or times as is reasonably requested by the Company or the Employee. If Tax Counsel makes the initial Determination that no Excise Tax is payable by the Employee with respect to a Payment or Payments, it shall furnish the Employee with an opinion reasonably acceptable to the Employee that no Excise Tax will be imposed with respect to any such Payment or Payments. The Employee shall have the right to dispute any Determination (a “Dispute”) within 15 business days after delivery of Tax Counsel’s opinion with respect to such Determination. The Gross-Up Payment, if any, as determined pursuant to such Determination shall,

at the Company’s expense, be paid by the Company to the Employee within five business days of the Employee’s receipt of such Determination. The existence of a Dispute shall not in any way affect the Employee’s right to receive the Gross-Up Payment in accordance with such Determination. If there is no Dispute, such Determination shall be binding, final and conclusive upon the Company and the Employee, subject in all respects, however, to the provisions of Section 12(c) through (i) below. As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that Gross-Up Payments (or portions thereof) which will not have been made by the Company should have been made (“Gross-Up Underpayment”), and if upon any reasonable written request from the Employee or the Company to Tax Counsel, or upon Tax Counsel’s own initiative, Tax Counsel, at the Company’s expense, thereafter determines that the Employee is required to make a payment of any Excise Tax or any additional Excise Tax, as the case may be, Tax Counsel shall, at the Company’s expense, determine the amount of the Gross-Up Underpayment that has occurred and any such Gross-Up Underpayment shall be promptly paid by the Company to the Employee.

(c) The Company shall defend, hold harmless, and indemnify the Employee on a fully grossed-up after tax basis from and against any and all claims, losses, liabilities, obligations, damages, impositions, assessments, demands, judgments, settlements, costs and expenses (including reasonable attorneys’, accountants’, and experts’ fees and expenses) with respect to any tax liability of the Employee resulting from any Final Determination (as defined in Section 12(j)) that any Payment is subject to the Excise Tax.

(d) If a party hereto receives any written or oral communication with respect to any question, adjustment, assessment or pending or threatened audit, examination, investigation or administrative, court or other proceeding which, if pursued successfully, could result in or give rise to a claim by the Employee against the Company under this Section 12 (“Claim”), including, but not limited to, a claim for indemnification of the Employee by the Company under Section 12(c), then such party shall promptly notify the other party hereto in writing of such Claim (“Tax Claim Notice”).

(e) If a Claim is asserted against the Employee (“Employee Claim”), the Employee shall take or cause to be taken such action in connection with contesting such Employee Claim as the Company shall reasonably request in writing from time to time, including the retention of counsel and experts as are reasonably designated by the Company (it being understood and agreed by the parties hereto that the terms of any such retention shall expressly provide that the Company shall be solely responsible for the payment of any and all fees and disbursements of such counsel and any experts) and the execution of powers of attorney, provided, that:

(i) within 30 calendar days after the Company receives or delivers, as the case may be, the Tax Claim Notice relating to such Employee Claim (or such earlier date that any payment of the taxes claimed is due from the Employee, but in no

event sooner than five calendar days after the Company receives or delivers such Tax Claim Notice), the Company shall have notified the Employee in writing (“Election Notice”) that the Company does not dispute its obligations (including, but not limited to, its indemnity obligations) under this Agreement and that the Company elects to contest, and to control the defense or prosecution of, such Employee Claim at the Company’s sole risk and sole cost and expense; and

(ii) the Company shall have advanced to the Employee on an interest-free basis, the total amount of the tax claimed in order for the Employee, at the Company’s request, to pay or cause to be paid the tax claimed, file a claim for refund of such tax and, subject to the provisions of the last sentence of Section 12(g), sue for a refund of such tax if such claim for refund is disallowed by the appropriate taxing authority (it being understood and agreed by the parties hereto that the Company shall only be entitled to sue for a refund and the Company shall not be entitled to initiate any proceeding in, for example, United States Tax Court) and shall indemnify and hold the Employee harmless, on a fully grossed-up after tax basis, from any tax imposed with respect to such advance or with respect to any imputed income with respect to such advance; and

(iii) the Company shall reimburse the Employee for any and all costs and expenses resulting from any such request by the Company and shall indemnify and hold the Employee harmless, on fully grossed-up after-tax basis, from any tax imposed as a result of such reimbursement.

(f) Subject to the provisions of Section 12(e) hereof, the Company shall have the right to defend or prosecute, at the sole cost, expense and risk of the Company, such Employee Claim by all appropriate proceedings, which proceedings shall be defended or prosecuted diligently by the Company to a Final Determination; provided, however, that (i) the Company shall not, without the Employee’s prior written consent, enter into any compromise or settlement of such Employee Claim that would adversely affect the Employee, (ii) any request from the Company to the Employee regarding any extension of the statute of limitations relating to assessment, payment, or collection of taxes for the taxable year of the Employee with respect to which the contested issues involved in, and amount of, the Employee Claim relate is limited solely to such contested issues and amount, and (iii) the Company’s control of any contest or proceeding shall be limited to issues with respect to the Employee Claim and the Employee shall be entitled to settle or contest, in his sole and absolute discretion, any other issue raised by the Internal Revenue Service or any other taxing authority. So long as the Company is diligently defending or prosecuting such Employee Claim, the Employee shall provide or cause to be provided to the Company any information reasonably requested by the Company that relates to such Employee Claim, and shall otherwise cooperate with the Company and its representatives in good faith in order to contest effectively such Employee Claim. The Company shall keep the Employee informed of all developments and events relating to any such Employee Claim (including, without

limitation, providing to the Employee copies of all written materials pertaining to any such Employee Claim), and the Employee or his authorized representatives shall be entitled, at the Employee’s expense, to participate in all conferences, meetings and proceedings relating to any such Employee Claim.

(g) If, after actual receipt by the Employee of an amount of a tax claimed (pursuant to an Employee Claim) that has been advanced by the Company pursuant to Section 12(e)(ii) hereof, the extent of the liability of the Company hereunder with respect to such tax claimed has been established by a Final Determination, the Employee shall promptly pay or cause to be paid to the Company any refund actually received by, or actually credited to, the Employee with respect to such tax (together with any interest paid or credited thereon by the taxing authority and any recovery of legal fees from such taxing authority related thereto), except to the extent that any amounts are then due and payable by the Company to the Employee, whether under the provisions of this Agreement or otherwise. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 12(e)(ii), a determination is made by the Internal Revenue Service or other appropriate taxing authority that the Employee shall not be entitled to any refund with respect to such tax claimed and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of any Gross-Up Payments and other payments required to be paid hereunder.

(h) With respect to any Employee Claim, if the Company fails to deliver an Election Notice to the Employee within the period provided in Section 12(e)(i) hereof or, after delivery of such Election Notice, the Company fails to comply with the provisions of Sections 12(e)(ii) and (e)(iii) and (f) hereof, then the Employee shall at any time thereafter have the right (but not the obligation), at his election and in his sole and absolute discretion, to defend or prosecute, at the sole cost, expense and risk of the Company, such Employee Claim. The Employee shall have full control of such defense or prosecution and such proceedings, including any settlement or compromise thereof. If requested by the Employee, the Company shall cooperate, and shall cause its Affiliates to cooperate, in good faith with the Employee and his authorized representatives in order to contest effectively such Employee Claim. The Company may attend, but not participate in or control, any defense, prosecution, settlement or compromise of any Employee Claim controlled by the Employee pursuant to this Section 12(h) and shall bear its own costs and expenses with respect thereto. In the case of any Employee Claim that is defended or prosecuted by the Employee, the Employee shall, from time to time, be entitled to current payment, on a folly grossed-up after tax basis, from the Company with respect to costs and expenses incurred by the Employee in connection with such defense or prosecution.

(i) In the case of any Employee Claim that is defended or prosecuted to a Final Determination pursuant to the terms of this Section 12(i), the Company shall pay, on a fully grossed-up after tax basis, to the Employee in immediately available funds the full amount of any taxes arising or resulting from or incurred in connection with such Employee Claim that have not theretofore been paid by the Company to the Employee, together with the costs and expenses, on a fully grossed-up after tax basis, incurred in connection therewith that have not theretofore been paid by the Company to the Employee, within ten calendar days after such Final Determination. In the case of any Employee Claim not covered by the preceding sentence, the Company shall pay, on a fully grossed-up after tax basis, to the Employee in immediately available funds the full amount of any taxes arising or resulting from or incurred in connection with such Employee Claim at least ten calendar days before the date payment of such taxes is due from the Employee, except where payment of such taxes is sooner required under the provisions of this Section 12(i), in which case payment of such taxes (and payment, on a fully grossed-up after tax basis, of any costs and expenses required to be paid under this Section 12(i)) shall be made within the time and in the manner otherwise provided in this Section 12(i).

(j) For purposes of this Agreement, the term “Final Determination” shall mean (A) a decision, judgment, decree or other order by a court or other tribunal with appropriate jurisdiction, which has become final and non-appealable; (B) a final and binding settlement or compromise with an administrative agency with appropriate jurisdiction, including, but not limited to, a closing agreement under Section 7121 of the Code; (C) any disallowance of a claim for refund or credit in respect to an overpayment of tax unless a suit is filed on a timely basis; or (D) any final disposition by reason of the expiration of all applicable statutes of limitations.

(k) For purposes of this Agreement, the terms “tax” and “taxes” mean any and all taxes of any kind whatsoever (including, but not limited to, any and all Excise Taxes, income taxes, and employment taxes), together with any interest thereon, any penalties, additions to tax, or additional amounts with respect to such taxes and any interest in respect of such penalties, additions to tax, or additional amounts.

(1) For purposes of this Agreement, the terms “Affiliate” and “Affiliates” mean, when used with respect to any entity, individual, or other person, any other entity, individual, or other person which, directly or indirectly, through one or more intermediaries controls, or is controlled by, or is under common control with such entity, individual or person.

Section 13. Reduction of Payments in Certain Circumstances.

(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any Payment would be subject to the excise tax imposed by Section 4999 of the Code, and (ii) the aggregate present value of the Payments

that are subject to the excise tax imposed by Section 4999 of the Code is less than an amount equal to the product of 345% multiplied by the Employee’s base amount (as determined under Section 280G(b)(3)(A) of the Code), then this Section 13 shall be applicable (and Section 12 shall not be applicable) and the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the excise tax imposed by Section 4999 of the Code. Anything to the contrary notwithstanding, if the Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment will nevertheless be subject to the excise tax imposed by Section 4999 of the Code, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be subject to the excise tax imposed by Section 4999 of the Code. For purposes of this Section 13, present value shall be determined in accordance with Section 280G(d)(4) of the Code.

(b) All determinations required to be made under this Section 13 shall be made by Tax Counsel, which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) days after the termination of the Employee’s employment (or such earlier or other time as is requested by the Company) and an opinion to the Employee that he has substantial authority not to report any excise tax imposed under section 4999 of the Code on his federal income tax return with respect to any Payments (as eliminated or reduced, if applicable, under such initial determination). Any such determination by Tax Counsel shall be binding upon the Company and the Employee. If the Agreement Payments are to be eliminated or reduced under such initial determination, the Employee shall determine which and how much of the Agreement Payments or Payments, as the case may be, shall be eliminated or reduced consistent with the requirements of this Section 13, provided that, if the Employee does not make such determination within ten (10) days of the receipt of the calculations made by Tax Counsel, the Company shall elect which and how much of the Agreement Payments or Payments, as the case may be, shall be eliminated or reduced consistent with the requirements of this Section 13 and shall notify the Employee promptly of such election. Within five (5) days thereafter, the Company shall pay to or distribute to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement.

(c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by Tax Counsel hereunder, it is possible that Agreement Payments or Payments, as the case may be, will have been made by the Company which should not have been made (“Overpayment”) or that additional Agreement Payments or Payments, as the case may

be, which will not have been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculations required to be made hereunder. In the event that Tax Counsel, based upon the assertion of a deficiency by the Internal Revenue Service against the Employee which Tax Counsel believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Employee shall be treated for all purposes as a loan ab initio to the Employee which the Employee shall repay to the Company together with interest at the applicable federal rate provided for in Section 1274(d) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by the Employee to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Employee is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. If upon any reasonable written request from the Employee or the Company to Tax Counsel, or upon Tax Counsel’s own initiative, Tax Counsel, at the Company’s expense and based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the applicable federal rate provided for in Section 1274(d) of the Code.

EX-10.41

EXHIBIT 10.41

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of the 5th day of July, 2005, between Independence Merger Company, Inc., a Texas corporation (the “Company”) and Scott J. McLean (the “Employee”).

WHEREAS, the Employee currently serves as the President of Amegy Bancorporation, Inc., a Texas corporation (the “Seller”);

WHEREAS, Zions Bancorporation, the parent of the Company, has entered into an Agreement and Plan of Merger with the Seller, dated as of the 5th day of July, 2005 (the “Merger Agreement”);

WHEREAS, the Company recognizes the Employee’s substantial contribution to the growth and success of the Seller and desires to provide for the continued employment of the Employee after the “Effective Time” (as defined in the Merger Agreement), which the Board of Directors of Zions Bancorporation (the “Board”) has determined will reinforce and encourage the continued attention and dedication to the Seller and the Company of the Employee as a member of their senior management in the best interests of the Seller and the Company and their shareholders;

WHEREAS, the Employee is willing to serve the Company, and the Company is willing to employ the Employee, on the terms and conditions set forth below;

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Employment Period. The Company hereby agrees to employ the Employee, and the Employee hereby agrees to work in the employ of the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Time (the “Effective Date”) and ending on the third anniversary of the Effective Date (the “Employment Period”).

2. Terms of Employment.

(a) Position and Duties.

(i) During the Employment Period, the Employee shall serve as President of Independence Merger Company, Inc. in Texas. Employee shall have the appropriate authority, duties and responsibilities attendant to such position. Employee shall report to the Chief Executive Officer of the Company.

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote substantially all of his business attention and time to the business and

affairs of the Company and to use the Employee’s reasonable best efforts to perform such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Employee, if consistent with the code of conduct of the Company, to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures or fulfill speaking engagements and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Employee’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Employee’s responsibilities to the Company.

(b) Compensation.

(i) Annual Base Salary. During the Employment Period, the Employee shall receive an annual base salary (“Annual Base Salary”) of $400,000, which shall be subject to annual review for increases. No increase in Annual Base Salary shall limit or reduce any other right of or obligation to the Employee under this Agreement. Annual Base Salary shall not be reduced at any time (including after any such increase).

(ii) Annual Bonus. During the Employment Period, the Employee shall be eligible to be paid an annual cash bonus (“Annual Bonus”) with a target level of not less than 75% of Annual Base Salary, or such greater amount as determined by the Compensation Committee (the “Compensation Committee”) of the Board payable in accordance with the procedures applicable to other similarly situated senior officers of the Company; provided, however, Employee’s annual cash bonus for calendar 2006 shall not be less than $300,000 and for subsequent calendar years shall not be less than 37.5% of Annual Base Salary. Any bonus amounts payable pursuant to the Merger Agreement shall be taken into account as part of the Employee’s Annual Bonus under this Agreement (to avoid duplication).

(iii) Effective Date Payment. Within 10 days after the Effective Date, the Company will pay the Employee a one-time lump sum cash payment in the amount of $975,000. In addition, subject to the Employee’s continued compliance with the restrictive covenants in Section 7, the Company will make an additional annual lump sum cash payment to the Employee, in the amount of $406,250, on each of the three succeeding anniversaries of the Effective Date (“Annual Payments”). The Employee recognizes and affirms that the additional payments are contingent upon his compliance with the restrictive covenants

in Section 7, even after termination of employment and expiration of the 12 month period referred to in Section 7, and even if those restrictive covenants are held or found invalid or unenforceable for any reason whatsoever. Notwithstanding the foregoing, in no event shall such amounts be taken into consideration for purposes of any compensation or benefit plan of the Company or any of its affiliates.

(iv) Annual Equity Grants. The Company or Zions Bancorporation shall grant the Employee annual stock options, restricted stock or other equity awards with a target level of 70% of Annual Base Salary with the actual award to be based upon the share price of Zions Bancorporation common stock and applying the Black Scholes valuation method. Such grants shall be in amounts no less than, and at times and on terms that are the same as, those provided to other similarly situated senior officers of the Company. On the Effective Date, the Company or Zions Bancorporation shall grant to Employee an option for approximately 20,000 shares of Zions Bancorporation common stock with full vesting, subject to the Employee’s continued employment with the Company through the applicable vesting date and Section 4(a)(iii), in three years (50% vesting on first anniversary of the Effective Date and 25% on the second and third anniversaries, respectively) and for each subsequent year the value of the annual equity grants shall in no event be less than 52.5% of Annual Base Salary.

(c) Benefits.

(i) Employee Benefit Plans. During the Employment Period, the Employee shall (A) participate in all employee benefit and other plans, practices, policies and programs and fringe benefits on a basis no less favorable than that provided to other similarly situated senior officers of the Company and (B) continue to receive all perquisites currently received from the Seller; provided, however, that the Employee shall not be entitled to participate in the Value Sharing Plans of the Company or Zions Bancorporation during the Employment Period. Employee shall be eligible to participate immediately in the Zions Bancorporation non-qualified deferred compensation plans generally available to similarly situated senior officers of the Company.

(ii) Indemnification. To the extent permitted by law, the Company will indemnify the Employee against any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, arising by reason of the Employee’s status as a director, officer, employee and/or agent of the Seller or the Company during the Employee’s employment. In addition, to the extent permitted by law, the Company will pay or reimburse any expenses, including reasonable attorney’s fees, the Employee incurs in investigating and defending any actual or threatened action, suit or proceeding for which

the Employee may be entitled to indemnification under this Section 2(c)(ii). However, the Employee agrees to repay any expenses paid or reimbursed by the Company if it is ultimately determined that the Employee is not legally entitled to be indemnified by the Company.

(iii) Change in Control Benefits. Immediately after the Effective Date, the Employee will be eligible to participate in the change in control plans of Zions Bancorporation at levels no less favorable than those applicable to similarly situated senior officers of Zions Bancorporation and the Company as determined by the Compensation Committee.

3. Termination of Employment.

(a) Death or Disability. The Employee’s employment shall terminate automatically upon the Employee’s death during the Employment Period. If the Company or Zions Bancorporation determines in good faith that the Disability of the Employee has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Employee written notice in accordance with Section 10(b) of its intention to terminate the Employee’s employment. In such event, the Employee’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Employee (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Employee shall not have returned to full- time performance of the Employee’s duties. For purposes of this Agreement, “Disability” shall mean that the Employee is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The Employee agrees to provide such medical evidence as may be requested by the Company or Zions Bancorporation and/or to be evaluated by a licensed physician of the Company’s or Zions Bancorporation’s choice. If the Employee’s condition constitutes total disability under the federal Social Security Acts, he shall be deemed disabled.

(b) Cause. At any time more than 30 days after the Effective Date, the Company or Zions Bancorporation may terminate the Employee’s employment during the Employment Period with or without Cause. For purposes of this Agreement, “Cause” shall mean that the Employee shall have committed:

(i) intentional misconduct in connection with his duties or in the course of his employment with the Company;

(ii) an act of fraud, embezzlement or intentional theft in connection with his duties or in the course of his employment with the Company;

(iii) intentional wrongful damage to property of the Company;

(iv) intentional wrongful disclosure of secret processes or confidential information of the Company;

(v) an act leading to a conviction of a felony or a misdemeanor involving moral turpitude; or

(vi) intentional wrongful engagement in any Competitive Activity.

For purposes of this Agreement, no act, or failure to act, on the part of the Employee shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with the Employee’s counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Employee had committed an act set forth above in this Section 3(b) and specifying the particulars thereof in detail. Nothing herein shall limit the right of the Employee or his legal representatives to contest the validity or propriety of any such determination.

(c) Good Reason. The Employee’s employment may be terminated by the Employee with or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of a written consent of the Employee:

(i) a material and adverse change in the Employee’s position with the Company after the Effective Time as set forth in Section 2(a)(i) or the failure to provide the Employee with authorities, responsibilities and reporting relationships consistent with such position;

(ii) any failure by the Company to comply with any of the provisions of Section 2(b) or 2(c), other than insubstantial or inadvertent failures not in bad faith which are remedied by the Company promptly (but in no event more than 15 days) after receipt of notice thereof given by the Employee;

(iii) any purported termination by the Company or Zions Bancorporation of the Employee’s employment otherwise than as expressly permitted by this Agreement;

(iv) a relocation of the Employee’s principal place of employment to a location outside of a 50-mile radius from the Employee’s current principal place of employment;

(v) a requirement that the Employee travel or perform a majority of the Employee’s duties outside of or away from the Employee’s principal place of employment for a period of time (in terms of either consecutive days or aggregate days in any calendar year) that is significantly greater than what is currently required of the Employee; or

(vi) any failure by the Company to comply with and satisfy Section 8(c).

(d) Notice of Termination. Any termination by the Company, Zions Bancorporation or by the Employee shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(b). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the Date of Termination.

(e) Date of Termination. “Date of Termination” means the date specified in the Notice of Termination which shall not be less than 30 days nor more than 60 days after the date such notice is given, provided, however, that, if the Employee’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Employee or the Disability Effective Date, as the case may be.

4. Obligations of the Company upon Termination.

(a) Other Than for Cause; For Good Reason. If, during the Employment Period, the Company or Zions Bancorporation shall terminate the Employee’s employment other than for Cause or Disability, or the Employee shall terminate employment for Good Reason, the Company shall have no further obligations to the Employee other than:

(i) the Company shall pay to the Employee in a lump sum in cash within 10 days after the Date of Termination an amount equal to the sum of (A) the amount equal to the Employee’s Annual Base Salary, earned but unused vacation time accrued through the Date of Termination, and any earned Annual Bonus for a completed prior year to the extent theretofore unpaid, plus (B) the amount equal to (1) the highest Annual Bonus earned by the Employee (including annual bonuses earned

from the Seller prior to the Effective Date) in the three years immediately prior to the Date of Termination times (2) a fraction, the numerator of which is the number of days in the current fiscal year of the Company through the Date of Termination and the denominator of which is 365 plus (C) the amount equal to three times the sum of (1) the Employee’s Annual Base Salary plus (2) the highest Annual Bonus earned by the Employee (including annual bonuses earned from the Seller prior to the Effective Date) in the three years immediately prior to the Date of Termination;

(ii) for 36 months following the Date of Termination, the Company shall continue to provide medical, life insurance, dental and other welfare benefits to the Employee, his spouse and his eligible dependents on the same basis and at the same cost as such benefits are then currently provided to the Employee (the “Welfare Benefits”);provided that such benefits shall be secondary to any other coverage obtained by the Employee; provided, however, that if the Company’s welfare plans do not permit such coverage, the Company will provide the Employee the Welfare Benefits with the same after tax effect;

(iii) all Company stock options, restricted stock and other equity awards shall become immediately vested;

(iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Employee any other amounts or benefits required to be paid or provided or which the Employee is eligible to receive under any plan, program, policy or practice or other contract or agreement of the Company and its affiliated companies through the Date of Termination other than any severance plan, program, policy, agreement or other arrangement of the Company and its affiliates, (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

(v) the Company’s obligation to pay the Annual Payments required under Section 2(b)(iii), subject to the terms and conditions of that section.

(b) Death; Disability. If, during the Employment Period, the Employee’s employment shall terminate on account of death or Disability, the Company shall have no further obligations to the Employee other than to provide the Employee (or his estate) (i) the Employee’s Annual Base Salary and earned but unused vacation time accrued through the Date of Termination to the extent theretofore unpaid, (ii) the Welfare Benefits, (iii) the Other Benefits, and (iv) the Annual Payments required under Section 2(b)(iii), subject to the terms and conditions of that section.

(c) For Cause; Other than For Good Reason. If, during the Employment Period, the Company or Zions Bancorporation shall terminate the Employee’s employment for Cause or the Employee terminates his employment without Good

Reason, the Company shall have no further obligations to the Employee other than the obligation to pay to the Employee (i) the Employee’s Annual Base Salary and earned but unused vacation time accrued through the Date of Termination to the extent theretofore unpaid, (ii) the Other Benefits, and (iii) the Annual Payments required under Section 2(b)(iii), subject to the terms and conditions of that section.

(d) Release of Claims.

The Company’s obligation to provide the benefits described in Section 4(a)(i)(C) shall be subject to the Employee’s execution, delivery and nonrevocation (within any applicable revocation period) of a general release of claims in form reasonably satisfactory to the Company providing for a full release of any claims the Employee may have against the Company and its affiliates and their officers, directors, employees, stockholders and agents.

5. Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may otherwise have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Employee obtains other employment.

6. Section 280G Gross-Up and Cutback. The provisions of Annex A shall apply.

7. Covenants Not to Compete or Solicit Clients and Employees. The Company (and one or more of its affiliates or subsidiaries) shall provide Employee upon employment with confidential information that Employee acknowledges is necessary in order for Employee to perform his job responsibilities under this Agreement and shall provide its goodwill to the Employee, and in consideration of the disclosure by the Company (or one or more of its affiliates or subsidiaries) of confidential and proprietary information, as more fully described in Section 7(c) below, on and after the date hereof, the payment by the Company of the Compensation set forth in Section 2 hereof, and other good and valuable consideration, including its goodwill, the receipt and sufficiency of which are hereby acknowledged, Employee and the Company, intending to be legally bound, hereby agree as follows:

(a) Non-Compete. During the Employee’s employment with the Company, and for a 12 month period after the date the Employee’s employment is terminated for any reason, the Employee shall not, without the prior written consent of the Company and Zions Bancorporation, directly or indirectly engage in the business of commercial and/or retail banking in competition with the

business of the Company within the state of Texas nor will the Employee engage, within this geographical area, in the design, development, distribution, or sale of a product or service in competition with any product or service being marketed or planned by the Company at such time, the plans, designs or specifications of which have been revealed to the Employee. The Employee agrees to waive any objection to the validity of this covenant and acknowledges that these limited prohibitions are reasonable as to time, geographical area and scope of activities to be restrained and that these limited prohibitions do not impose a greater restraint than is necessary to protect the Company’s goodwill, proprietary information and other business interests. “Competitive Activity” shall mean the prohibitions set forth above in this Section 7(a); provided, however, that notwithstanding anything contained in the foregoing provisions of this Section 7(a) to the contrary, “Competitive Activity” shall not include (i) the mere ownership of securities in any enterprise and the exercise of rights appurtenant thereto, or (ii) participation in the management of any enterprise or the business operations thereof other than in connection with the competitive operations of such enterprise.

(b) Non-Solicit. During the Employee’s employment with the Company, and for a 12 month period after the date the Employee’s employment is terminated for any reason, the Employee shall not, without the prior written consent of the Company and Zions Bancorporation, directly or indirectly: (i) solicit or attempt to solicit, or interfere with or attempt to interfere with, the Company’s or any Subsidiary’s relationships with any of its or their customers, (ii) cause, induce, solicit, encourage, or aid, or attempt to do so, any employee of the Company or any Subsidiary to terminate employment with the Company or any Subsidiary or to accept employment with any business, operation, corporation, partnership, limited liability company, association, agency or any other person or entity with which the Employee may be employed or otherwise associated or (iii) interfere or attempt to interfere with any employee’s employment relationship with the Company or any Subsidiary. “Subsidiary” shall mean any corporation, partnership, limited liability company or other entity that is, directly or indirectly, owned in whole or in part by Zions Bancorporation or the Company.

(c) At the execution of this Agreement and throughout Employee’s employment during the Employment Period, the Company (or one or more of its affiliates or subsidiaries) shall provide confidential information to Employee and, Employee agrees, during the term of his employment and thereafter, not to use, divulge, or make accessible to any third party, company, corporation or other organization (including, but not limited to, customers, competitors, or governmental agencies), without the Company’s and Zions Bancorporation’s prior written consent, any trade secrets, customer lists, information regarding customers, information regarding the Company’s relationships with specific existing or prospective customers, customer goodwill associated with the Company’s trade name, or other valuable confidential and proprietary information concerning the Company or its business, including without limitation, confidential methods of operation and organization, trade secrets, confidential matters related to pricing, markups,

commissions and customer lists. Employee agrees that such information remains confidential even if committed to Employee’s memory. Employee warrants and agrees that every customer whom Employee services in any way while employed at the Company is a customer of the Company and not a customer of Employee, individually.

(d) Employee and the Company recognize that the Company, Zions Bancorporation, and any subsidiaries or affiliates of the Company which employ Employee are third-party beneficiaries to this Agreement that are intended to be protected by the covenants in this Agreement and that, except as otherwise expressly provided in this Agreement, any successor or assign of the Company, Zions Bancorporation or one of the other third-party beneficiaries to this Agreement may enforce the covenants in this Agreement as if it were a party to these covenants. Moreover, Employee and the Company acknowledge and agree that the Company has legitimate business interests to protect relative to Employee, including trade secrets, other valuable confidential and proprietary business information, substantial relationships with specific prospective and existing customers, substantial relationships with other employees of the Company, Company and customer goodwill associated with the Company’s trade name, and the Company’s servicing of specific markets provided to Employee. Employee agrees that the restrictions contained in this Section 7 are necessary and reasonable for the protection of the legitimate business interests and goodwill of the Company described above, and Employee agrees to waive any objection to the enforcement of this covenant and that any breach of this Section 7 will cause the Company substantial and irrevocable damage and, therefore, the Company shall have the right, in addition to any other remedies it may have (including the right to discontinue the Annual Payments under Section 2(b)(iii)), to seek specific performance and injunctive relief, without the need to post a bond or other security. Employee agrees that the period during which the covenant contained in this Section 7 shall be effective shall be computed by excluding from such computation any time during which Employee is in violation of any provision of Section 7. Employee agrees that if any covenant contained in Section 7 of this Agreement is found by a court of competent jurisdiction to contain limitations as to time, geographical area, or scope of activity that are not reasonable and impose a greater restraint than is necessary to protect the goodwill or other business interest of the Company, then the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time, geographical area, and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and other business interests of the Company and to enforce the covenant as reformed.

(e) Employee specifically recognizes and affirms that each of the covenants contained in (a), (b) and (c) of this Section 7 is a material and important term of this Agreement which has induced the Company to provide for the award of the Compensation provided hereunder, the disclosure of confidential information referenced herein, and the other promises made by the Company herein.

(f) Not withstanding anything to the contrary in any stock option, restricted stock, other equity award or other incentive award from the Company or Zions Bancorporation, the covenants contained in this Section 7 shall be the only restrictive covenants applicable to the Employee during the Employment Period and shall be the only restrictive covenants applicable to any such awards granted during the Employment Period.

8. Successors.

(a) This Agreement is personal to the Employee and without the prior written consent of the Company and Zions Bancorporation shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company, Zions Bancorporation and their successors.

(c) 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 assume expressly 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. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid.

9. Disputes.

(a) Mandatory Arbitration. Subject to the provisions of this Section 9, any controversy or claim between the Employee and the Company arising out of or relating to or concerning this Agreement (including the covenants contained in Section 7, except for any such controversy or claim arising out of or relating to or concerning injunctive relief for the Employee’s breach or purported breach of Section 7, which the Company shall have the right, in addition to any other remedies it may have, to seek specific performance and injunctive relief with a court of competent jurisdiction, without the need to post a bond or other security) or any aspect of the Employee’s employment with the Company or the Seller or the termination of that employment (together, an “Employment Matter”) shall be finally settled by binding arbitration in Houston, Texas administered by the American Arbitration Association (the “AAA”) under its Commercial Arbitration Rules then in effect. A decision must be rendered within 10 days after the parties’ closing statements or submission of post-hearing briefs and all expenses of arbitration shall be borne by the Company.

(b) Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Texas applicable to contracts made and to be performed entirely within that State. The Employee agrees to exclusive venue and jurisdiction in Houston, Texas.

(c) Costs. To the extent permitted by law, the Company shall pay or reimburse any reasonable expenses, including reasonable attorney’s fees, the Employee incurs as a result of any Employment Matter, provided, however, that if in any such arbitration proceeding, litigation proceeding or other legal action, the arbitrator or court determines that the Employee has presented or defended any issue in such proceeding or action in bad faith, such arbitrator or court, as the case may be, may allocate the portion of such costs and expenses relating to such issue between the Company and the Employee in any other manner deemed fair, equitable and reasonable by such arbitrator or court; provided further, however, that in no event shall the Employee be required to reimburse the Company for any of the Company’s costs and expenses relating to any such proceeding or action.

(d) Interest. If any payment under this Agreement is delayed as a result of an Employment Matter, upon final resolution of such matter it shall be paid together with interest at the applicable federal rate.

(e) Payments Pending Resolution. The Company shall continue to make the payments, and provide the benefits, specified in Section 2(b) and 2(c) pending the resolution of any Employment Matter; provided, however, that the payment of the Annual Payments under Section 2(b)(iii) may be suspended pending resolution of any matter involving the Employee’s breach or purported breach of Section 7.

10. Miscellaneous.

(a) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by Zions Bancorporation and the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee, at the Employee’s address last shown on the Company’s records.

If to the Company:

Independence Merger Company, Inc.

Attention: Thomas E. Laursen

One South Main Street, Suite 1134

Salt Lake City, Utah

Telecopy Number: (801) 844-8502

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) The Employee’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Employee or the Company may have hereunder, including, without limitation, the right of the Employee to terminate employment for Good Reason pursuant to Section 3(c) or the Company’s right to terminate the Employee for Cause pursuant to Section 3(b), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) From and after the Effective Date, this Agreement shall supersede any other employment, severance or change in control agreement between the parties, including, without limitation, the Change in Control Agreement between the Employee and the Seller dated July 15, 2002 (and the Employee shall not be eligible for severance benefits under any plan, program or policy of the Company). In the event the Merger Agreement is terminated pursuant to its terms, this Agreement shall be null and void.

(g) Any reference to a Section herein is a reference to a section of this Agreement unless otherwise stated.

(h) This Agreement is intended to comply with the requirements of Section 409A of the Code (to the extent applicable) and the Company agrees to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply with such requirements and without resulting in any diminution in the value of payments or benefits to the Employee. To the extent that any payments to be provided to the Employee under this Agreement result in the deferral of compensation under Section 409A of the Code, and if the Employee is a “Key Employee” as defined in Section 416(i) of the Code, then any such payments shall instead be transferred to a rabbi trust (which shall be created by the Company, on terms reasonably acceptable to the Employee, before the Effective Date) and such amounts (together with earnings thereon in accordance with the terms of the trust agreement) shall be transferred from the trust to the Employee upon the earlier of (i) six months and one day after the Employee’s Termination Date or (ii) any other date permitted under Section 409A(a)(2) and 409A(a)(3) of the Code.

IN WITNESS WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the authorization from its Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

SCOTT J. MCLEAN
/s/ Scott J. McLean
INDEPENDENCE MERGER COMPANY, INC.
By:	/s/ Doyle L. Arnold
Name:	Doyle L. Arnold
Title:	President

Annex A

Section 12. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment or distribution by, or benefit from, the Seller, the Company or any of their Affiliates to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (any such payments, distributions or benefits being individually referred to herein as a “Payment” and any two or more of such payments, distributions or benefits being referred to herein as “Payments”), would be subject to the excise tax imposed by Section 4999 of the Code (such excise tax, together with any interest thereon, any penalties, additions to tax, or additional amounts with respect to such excise tax, and any interest in respect of such penalties, additions to tax or additional amounts, being collectively referred herein to as the “Excise Tax”), and (ii) the aggregate present value of the Payments that are subject to the excise tax imposed by Section 4999 of the Code is equal to or greater than an amount equal to the product of 345% multiplied by the Employee’s base amount (as determined under Section 280G(b)(3)(A) of the Code), then this Section 12 shall be applicable (and Section 13 shall not be applicable) and the Employee shall be entitled to receive an additional payment or payments (individually referred to herein as a “Gross-Up Payment” and any two or more of such additional payments being referred to herein as “Gross-Up Payments”) in an amount such that after payment by the Employee of all taxes (as defined in Section 12(k)) imposed upon the Gross-Up Payment, the Employee retains an amount of such Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes of this Section 12, present value shall be determined in accordance with Section 280G(d)(4) of the Code.

(b) Subject to the provisions of Section 12(c) through (i), any determination (individually, a “Determination”) required to be made under this Section 12(b), including whether a Gross-Up Payment is required and the amount of such Gross- Up Payment, shall initially be made, at the Company’s expense, by nationally recognized tax counsel mutually acceptable to the Company and the Employee (“Tax Connsel’). Tax Counsel shall provide detailed supporting legal authorities, calculations, and documentation both to the Company and the Employee within 15 business days of the termination of the Employee’s employment, if applicable, or such other time or times as is reasonably requested by the Company or the Employee. If Tax Counsel makes the initial Determination that no Excise Tax is payable by the Employee with respect to a Payment or Payments, it shall furnish the Employee with an opinion reasonably acceptable to the Employee that no Excise Tax will be imposed with respect to any such Payment or Payments. The Employee shall have the right to dispute any Determination (a “Dispute”) within 15 business days after delivery of Tax Counsel’s opinion with respect to such Determination. The Gross-Up Payment, if any, as determined pursuant to such Determination shall, at

the Company’s expense, be paid by the Company to the Employee within five business days of the Employee’s receipt of such Determination. The existence of a Dispute shall not in any way affect the Employee’s right to receive the Gross-Up Payment in accordance with such Determination. If there is no Dispute, such Determination shall be binding, final and conclusive upon the Company and the Employee, subject in all respects, however, to the provisions of Section 12(c) through (i) below. As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that Gross-Up Payments (or portions thereof) which will not have been made by the Company should have been made (“Gross-Up Underpayment”), and if upon any reasonable written request from the Employee or the Company to Tax Counsel, or upon Tax Counsel’s own initiative, Tax Counsel, at the Company’s expense, thereafter determines that the Employee is required to make a payment of any Excise Tax or any additional Excise Tax, as the case may be, Tax Counsel shall, at the Company’s expense, determine the amount of the Gross-Up Underpayment that has occurred and any such Gross-Up Underpayment shall be promptly paid by the Company to the Employee.

(c) The Company shall defend, hold harmless, and indemnify the Employee on a fully grossed-up after tax basis from and against any and all claims, losses, liabilities, obligations, damages, impositions, assessments, demands, judgments, settlements, costs and expenses (including reasonable attorneys’, accountants’, and experts’ fees and expenses) with respect to any tax liability of the Employee resulting from any Final Determination (as defined in Section 12(j)) that any Payment is subject to the Excise Tax.

(d) If a party hereto receives any written or oral communication with respect to any question, adjustment, assessment or pending or threatened audit, examination, investigation or administrative, court or other proceeding which, if pursued successfully, could result in or give rise to a claim by the Employee against the Company under this Section 12 (“Claim”), including, but not limited to, a claim for indemnification of the Employee by the Company under Section 12(c), then such party shall promptly notify the other party hereto in writing of such Claim (“Tax Claim Notice”).

(e) If a Claim is asserted against the Employee (“Employee Claim”), the Employee shall take or cause to be taken such action in connection with contesting such Employee Claim as the Company shall reasonably request in writing from time to time, including the retention of counsel and experts as are reasonably designated by the Company (it being understood and agreed by the parties hereto that the terms of any such retention shall expressly provide that the Company shall be solely responsible for the payment of any and all fees and disbursements of such counsel and any experts) and the execution of powers of attorney, provided, that:

(i) within 30 calendar days after the Company receives or delivers, as the case may be, the Tax Claim Notice relating to such Employee Claim (or such earlier date that any payment of the taxes claimed is due from the Employee, but in no

event sooner than five calendar days after the Company receives or delivers such Tax Claim Notice), the Company shall have notified the Employee in writing (“Election Notice”) that the Company does not dispute its obligations (including, but not limited to, its indemnity obligations) under this Agreement and that the Company elects to contest, and to control the defense or prosecution of, such Employee Claim at the Company’s sole risk and sole cost and expense; and

(ii) the Company shall have advanced to the Employee on an interest-free basis, the total amount of the tax claimed in order for the Employee, at the Company’s request, to pay or cause to be paid the tax claimed, file a claim for refund of such tax and, subject to the provisions of the last sentence of Section 12(g), sue for a refund of such tax if such claim for refund is disallowed by the appropriate taxing authority (it being understood and agreed by the parties hereto that the Company shall only be entitled to sue for a refund and the Company shall not be entitled to initiate any proceeding in, for example, United States Tax Court) and shall indemnify and hold the Employee harmless, on a fully grossed-up after tax basis, from any tax imposed with respect to such advance or with respect to any imputed income with respect to such advance; and

(iii) the Company shall reimburse the Employee for any and all costs and expenses resulting from any such request by the Company and shall indemnify and hold the Employee harmless, on fully grossed-up after-tax basis, from any tax imposed as a result of such reimbursement.

(f) Subject to the provisions of Section 12(e) hereof, the Company shall have the right to defend or prosecute, at the sole cost, expense and risk of the Company, such Employee Claim by all appropriate proceedings, which proceedings shall be defended or prosecuted diligently by the Company to a Final Determination; provided, however, that (i) the Company shall not, without the Employee’s prior written consent, enter into any compromise or settlement of such Employee Claim that would adversely affect the Employee, (ii) any request from the Company to the Employee regarding any extension of the statute of limitations relating to assessment, payment, or collection of taxes for the taxable year of the Employee with respect to which the contested issues involved in, and amount of, the Employee Claim relate is limited solely to such contested issues and amount, and (iii) the Company’s control of any contest or proceeding shall be limited to issues with respect to the Employee Claim and the Employee shall be entitled to settle or contest, in his sole and absolute discretion, any other issue raised by the Internal Revenue Service or any other taxing authority. So long as the Company is diligently defending or prosecuting such Employee Claim, the Employee shall provide or cause to be provided to the Company any information reasonably requested by the Company that relates to such Employee Claim, and shall otherwise cooperate with the Company and its representatives in good faith in order to contest effectively such Employee Claim. The Company shall keep the Employee informed of all developments and events relating to any such Employee Claim (including, without

limitation, providing to the Employee copies of all written materials pertaining to any such Employee Claim), and the Employee or his authorized representatives shall be entitled, at the Employee’s expense, to participate in all conferences, meetings and proceedings relating to any such Employee Claim.

(g) If, after actual receipt by the Employee of an amount of a tax claimed (pursuant to an Employee Claim) that has been advanced by the Company pursuant to Section 12(e)(ii) hereof, the extent of the liability of the Company hereunder with respect to such tax claimed has been established by a Final Determination, the Employee shall promptly pay or cause to be paid to the Company any refund actually received by, or actually credited to, the Employee with respect to such tax (together with any interest paid or credited thereon by the taxing authority and any recovery of legal fees from such taxing authority related thereto), except to the extent that any amounts are then due and payable by the Company to the Employee, whether under the provisions of this Agreement or otherwise. If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 12(e)(ii), a determination is made by the Internal Revenue Service or other appropriate taxing authority that the Employee shall not be entitled to any refund with respect to such tax claimed and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of any Gross-Up Payments and other payments required to be paid hereunder.

(h) With respect to any Employee Claim, if the Company fails to deliver an Election Notice to the Employee within the period provided in Section 12(e)(i) hereof or, after delivery of such Election Notice, the Company fails to comply with the provisions of Sections 12(e)(ii) and (e)(iii) and (f) hereof, then the Employee shall at any time thereafter have the right (but not the obligation), at his election and in his sole and absolute discretion, to defend or prosecute, at the sole cost, expense and risk of the Company, such Employee Claim. The Employee shall have full control of such defense or prosecution and such proceedings, including any settlement or compromise thereof. If requested by the Employee, the Company shall cooperate, and shall cause its Affiliates to cooperate, in good faith with the Employee and his authorized representatives in order to contest effectively such Employee Claim. The Company may attend, but not participate in or control, any defense, prosecution, settlement or compromise of any Employee Claim controlled by the Employee pursuant to this Section 12(h) and shall bear its own costs and expenses with respect thereto. In the case of any Employee Claim that is defended or prosecuted by the Employee, the Employee shall, from time to time, be entitled to current payment, on a fully grossed-up after tax basis, from the Company with respect to costs and expenses incurred by the Employee in connection with such defense or prosecution.

(i) In the case of any Employee Claim that is defended or prosecuted to a Final Determination pursuant to the terms of this Section 12(i), the Company shall pay, on a fully grossed-up after tax basis, to the Employee in immediately available funds the full amount of any taxes arising or resulting from or incurred in connection with such Employee Claim that have not theretofore been paid by the Company to the Employee, together with the costs and expenses, on a fully grossed-up after tax basis, incurred in connection therewith that have not theretofore been paid by the Company to the Employee, within ten calendar days after such Final Determination. In the case of any Employee Claim not covered by the preceding sentence, the Company shall pay, on a fully grossed-up after tax basis, to the Employee in immediately available funds the full amount of any taxes arising or resulting from or incurred in connection with such Employee Claim at least ten calendar days before the date payment of such taxes is due from the Employee, except where payment of such taxes is sooner required under the provisions of this Section 12(i), in which case payment of such taxes (and payment, on a fully grossed-up after tax basis, of any costs and expenses required to be paid under this Section 12(i)) shall be made within the time and in the manner otherwise provided in this Section 12(i).

(j) For purposes of this Agreement, the term “Final Determination” shall mean (A) a decision, judgment, decree or other order by a court or other tribunal with appropriate jurisdiction, which has become final and non-appealable; (B) a final and binding settlement or compromise with an administrative agency with appropriate jurisdiction, including, but not limited to, a closing agreement under Section 7121 of the Code; (C) any disallowance of a claim for refund or credit in respect to an overpayment of tax unless a suit is filed on a timely basis; or (D) any final disposition by reason of the expiration of all applicable statutes of limitations.

(k) For purposes of this Agreement, the terms “tax” and “taxes” mean any and all taxes of any kind whatsoever (including, but not limited to, any and all Excise Taxes, income taxes, and employment taxes), together with any interest thereon, any penalties, additions to tax, or additional amounts with respect to such taxes and any interest in respect of such penalties, additions to tax, or additional amounts.

(l) For purposes of this Agreement, the terms “Affiliate” and “Affiliates” mean, when used with respect to any entity, individual, or other person, any other entity, individual, or other person which, directly or indirectly, through one or more intermediaries controls, or is controlled by, or is under common control with such entity, individual or person.

Section 13. Reduction of Payments in Certain Circumstances.

(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any Payment would be subject to the excise tax imposed by Section 4999 of the Code, and (ii) the aggregate present value of the Payments that

are subject to the excise tax imposed by Section 4999 of the Code is less than an amount equal to the product of 345% multiplied by the Employee’s base amount (as determined under Section 280G(b)(3)(A} of the Code), then this Section 13 shall be applicable (arid Section 12 shall not be applicable) and the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as”Agreement Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the excise tax imposed by Section 4999 of the Code. Anything to the contrary notwithstanding, if me Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment will nevertheless be subject to the excise tax imposed by Section 4999 of the Code, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be subject to the excise tax imposed by Section 4999 of the Code. For purposes of this Section 13, present value shall be determined in accordance with Section 280G(d)(4) of the Code.

(b) All determinations required to be made under this Section 13 shall be made by Tax Counsel, which shall provide detailed supporting calculations both to the Company and the Employee within fifteen (15) days after the termination of the Employee’s employment (or such earlier or other time as is requested by the Company) and an opinion to the Employee that he has substantial authority not to report any excise tax imposed under section 4999 of the Code on his federal income tax return with respect to any Payments (as eliminated or reduced, if applicable, under such initial determination). Any such determination by Tax Counsel shall be binding upon the Company and the Employee. If the Agreement Payments are to be eliminated or reduced under such initial determination, the Employee shall determine which and how much of the Agreement Payments or Payments, as the case may be, shall be eliminated or reduced consistent with the requirements of this Section 13, provided that, if the Employee does not make such determination within ten (10) days of the receipt of the calculations made by Tax Counsel, the Company shall elect which and how much of the Agreement Payments or Payments, as the case may be, shall be eliminated or reduced consistent with the requirements of this Section 13 and shall notify the Employee promptly of such election. Within five (5) days thereafter, the Company shall pay to or distribute to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement.

(c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by Tax Counsel hereunder, it is possible that Agreement Payments or Payments, as the case may be, will have been made by the Company which should not have been made (“Overpayment”) or that additional Agreement Payments or Payments, as the case may

be, which will not have been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculations required to be made hereunder. In the event that Tax Counsel, based upon the assertion of a deficiency by the Internal Revenue Service against the Employee which Tax Counsel believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Employee shall be treated for all purposes as a loan ab initio to the Employee which the Employee shall repay to the Company together with interest at the applicable federal rate provided for in Section 1274(d) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by the Employee to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Employee is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. If upon any reasonable written request from the Employee or the Company to Tax Counsel, or upon Tax Counsel’s own initiative, Tax Counsel, at the Company’s expense and based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the applicable federal rate provided for in Section 1274(d) of the Code.

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 dividend. Fixed charges represent interest expense, a portion of rent expense representative of interest, trust-preferred securities related expense, and amortization of debt issuance costs.

	Year ended December 31,
(In thousands, except ratio amounts)	2006		2005	2004	2003	2002
Fixed Charges:
Interest expense excluding deposits	$	303,689	195,169	143,447	116,606	134,797
Portion of rents representative of an interest factor		17,182	13,871	13,528	12,825	10,782
Fixed charges excluding interest on deposits		320,871	209,040	156,975	129,431	145,579
Interest on deposits		749,708	353,737	187,195	187,288	285,980
Fixed charges including interest on deposits	$	1,070,579	562,777	344,170	316,719	431,559
Fixed Charges and Preferred Stock Dividend:
Interest expense excluding deposits	$	303,689	195,169	143,447	116,606	134,797
Portion of rents representative of an interest factor		17,182	13,871	13,528	12,825	10,782
Preferred stock dividend requirement		5,927	–	–	–	–
Fixed charges and preferred stock dividend excluding interest on deposits		326,798	209,040	156,975	129,431	145,579
Interest on deposits		749,708	353,737	187,195	187,288	285,980
Fixed charges and preferred stock dividend including interest on deposits	$	1,076,506	562,777	344,170	316,719	431,559
Earnings:
Income from continuing operations before income taxes	$	912,924	741,887	624,391	546,159	481,149
Equity in undistributed earnings of unconsolidated subsidiaries		(5,800)	(7,161)	(6,943)	(8,748)	(12,047)
Fixed charges excluding interest on deposits		320,871	209,040	156,975	129,431	145,579
Earnings excluding interest on deposits		1,227,995	943,766	774,423	666,842	614,681
Interest on deposits		749,708	353,737	187,195	187,288	285,980
Earnings including interest on deposits	$	1,977,703	1,297,503	961,618	854,130	900,661
Ratio of earnings to fixed charges:
Excluding interest on deposits		3.83	4.51	4.93	5.15	4.22
Including interest on deposits		1.85	2.31	2.79	2.70	2.09
Ratio of earnings to fixed charges and preferred stock dividend:
Excluding interest on deposits		3.76	4.51	4.93	5.15	4.22
Including interest on deposits		1.84	2.31	2.79	2.70	2.09

EX-21

EXHIBIT 21

LIST OF SUBSIDIARIES

ZIONS BANCORPORATION

AT DECEMBER 31, 2006

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
CSBI Capital Trust I (not consolidated)	Delaware
GB Capital Trust (not consolidated)	Delaware
Great Western Financial Corporation	Utah
MP Technology, Inc.	Utah
NetDeposit, Inc.	Nevada
P5, 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 28, 2007, with respect to the consolidated financial statements of Zions Bancorporation, Zions Bancorporation management’s assessment of the effectiveness of internal control over financial reporting, 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, 2006:

(i) Registration Statement (Form S-3 No. 033-58801) and related Prospectus pertaining to the Zions Bancorporation Dividend Reinvestment and Common Stock Purchase Plan;

(ii) 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;

(iii) Registration Statement (Form S-8 No. 333-68461) and related Prospectus pertaining to Aspen Bancshares, Inc. 1993 Non-Qualified Stock Option Plan for Directors, Aspen Bancshares, Inc. 1990 Incentive Stock Option Plan, Vectra Banking Corporation Employees’ Equity Incentive Stock Option Plan, Second Amended and Restated 1988 Stock Option Plan of FP Bancorp, Inc., The Commerce Bancorporation 1995 Restated Incentive Compensation Plan;

(iv) Registration Statement (Form S-8 No. 333-74179) and related Prospectus pertaining to Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan;

(v) Registration Statement (Form S-8 No. 333-79699) and related Prospectus pertaining to Zions Key Employee Incentive Stock Option Plan;

(vi) Registration Statement (Form S-8 No. 333-88477) and related Prospectus pertaining to Zions 1998 Non-Qualified Stock Option and Incentive Plan;

(vii) Registration Statement (Form S-8 No. 333-89611) and related Prospectus pertaining to Pioneer Bancorporation Non-Qualified Stock Option Plan;

(viii) Registration Statement (Form S-8 No. 333-54986) and related Prospectus pertaining to Eldorado Bancshares, Inc. 1997 Stock Option Plan;

(ix) Registration Statement (Form S-8 No. 333-124696) and related Prospectus pertaining to Zions Bancorporation 2005 Stock Option and Incentive Plan;

(x) 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 401(k) Savings Plan, as Amended and Restated, Amegy Bancorporation Incentive and Nonqualified Stock Option Plan, 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

(xi) 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 28, 2007

EX-31.1

EXHIBIT 31.1

CERTIFICATION

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: March 1, 2007	/s/ Harris H. Simmons
	Harris H. Simmons, Chairman, President
	and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

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: March 1, 2007	/s/ Doyle L. Arnold
	Doyle L. Arnold, Vice Chairman and
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION

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, 2006 (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: March 1, 2007	/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.