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, 2010

OR

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

For the transition period from              to             

COMMISSION FILE NUMBER 001-12307

ZIONS BANCORPORATION

(Exact name of Registrant as specified in its charter)

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

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

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

Title of Each Class	Name of Each Exchange on Which Registered
Guarantee related to 8.00% Capital Securities of Zions Capital Trust B	New York Stock Exchange
Convertible 6% Subordinated Notes due September 15, 2015	New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock	New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series C 9.5% Non-Cumulative Perpetual Preferred Stock	New York Stock Exchange
Depositary Shares each representing a 1/40th ownership interest in a share of Series E Fixed-Rate Resettable 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

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

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

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

Aggregate Market Value of Common Stock Held by Non-affiliates at June 30, 2010	$	3,595,533,800
Number of Common Shares Outstanding at February 16, 2011		183,017,092 shares

Documents Incorporated by Reference:

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

FORM 10-K TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business.		6
Item 1A.	Risk Factors.		13
Item 1B.	Unresolved Staff Comments.		18
Item 2.	Properties.		18
Item 3.	Legal Proceedings.		18
Item 4.	(Reserved)
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		19
Item 6.	Selected Financial Data.		22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.		90
Item 8.	Financial Statements and Supplementary Data.		91
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.		171
Item 9A.	Controls and Procedures.		171
Item 9B.	Other Information.		171
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.		172
Item 11.	Executive Compensation.		172
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.		172
Item 13.	Certain Relationships and Related Transactions, and Director Independence.		172
Item 14.	Principal Accounting Fees and Services.		172
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.		173
Signatures			178

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PART I

FORWARD-LOOKING INFORMATION

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

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

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

These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, 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 without limitation the political and economic effects of the current economic crisis, delay of recovery from the current economic crisis, and other major developments, including wars, military actions, and terrorist attacks;

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

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

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

• acquisitions and integration of acquired businesses;

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

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

• the Company’s participation or lack of participation in, or exit from, governmental programs implemented under the EESA and the ARRA, including without limitation the TARP and the CPP and the impact of such programs and related regulations on the Company and on international, national, and local economic and financial markets and conditions;

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

• the impact of the financial reform bill, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, and rules and regulations thereunder, most of which have not yet been promulgated;

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• new capital and liquidity requirements, which U.S. regulatory agencies are expected to establish in response to new international standards known as Basel III;

• 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;

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

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

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

• increased costs of deposit insurance and changes with respect to FDIC insurance coverage levels.

Except to the extent required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

AVAILABILITY OF INFORMATION

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

GLOSSARY OF ACRONYMS

ABS	Asset-Backed Security
ACL	Allowance for Credit Losses
AFS	Available-for-Sale
ALCO	Asset/Liability Committee
ALLL	Allowance for Loan and Lease Losses
Amegy	Amegy Corporation
AOCI	Accumulated Other Comprehensive Income
ARM	Adjustable Rate Mortgage
ARRA	American Recovery and Reinvestment Act

ASC	Accounting Standards Codification
ASU	Accounting Standards Update
ATM	Automated Teller Machine
BCBS	Basel Committee on Banking Supervision
BHC	Bank Holding Company Act of 1956
BSA	Bank Secrecy Act
CB&T	California Bank & Trust
CD	Certificate of Deposit
CDARS	Certificate of Deposit Account Registry System

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CDO	Collateralized Debt Obligation
CDR	Constant Default Rate
CET1	Common Equity Tier 1
CFPB	Consumer Financial Protection Bureau
CI	Commercial and Industrial
CMC	Capital Management Committee
Contango	Contango Capital Advisor’s, Inc.
COSO	Committee of Sponsoring Organizations of the Treadway Commission
CPP	Capital Purchase Program
CRA	Community Reinvestment Act
CRE	Commercial Real Estate
DB	Deutsche Bank AG
DBRS	Dominion Bond Rating Service
DIF	Deposit Insurance Fund
DTA	Deferred Tax Asset
DTL	Deferred Tax Liability
EESA	Emergency Economic Stabilization Act
EFTA	Electronic Fund Transfer Act
ESOARS	Employee Stock Option Appreciation Rights Securities
FAMC	Federal Agricultural Mortgage Corporation
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
FHLB	Federal Home Loan Bank
FHLMC	Federal Home Loan Mortgage Corporation
FINRA	Financial Industry Regulatory Authority
FNMA	Federal National Mortgage Association
FRB	Federal Reserve Board
FSOC	Financial Stability Oversight Council
FTE	Full-Time Equivalent
GAAP	Generally Accepted Accounting Principles
GDP	Gross Domestic Product
GLB	Gramm-Leach-Bliley Act of 1999
GNMA	Government National Mortgage Association
HTM	Held-to-Maturity

ISDA	International Swap Dealer Association
LCR	Liquidity Coverage Ratio
LIBOR	London Inter-Bank Offering Rate
MD&A	Management’s Discussion and Analysis
NASDAQ	NASDAQ Stock Market, LLC
NBA	National Bank of Arizona
NRSRO	Nationally Recognized Statistical Rating Organization
NSB	Nevada State Bank
NSFR	Net Stable Funding Ratio
OCC	Office of the Comptroller of the Currency
OCI	Other Comprehensive Income
OREO	Other Real Estate Owned
OTC	Over-the-Counter
OTTI	Other-Than-Temporary-Impairment
Parent	Zions Bancorporation
PCAOB	Public Company Accounting Oversight Board
PD	Probability of Default
PIK	Payment in Kind
QSPE	Qualifying Special-Purpose Entity
REIT	Real Estate Investment Trust
RULC	Reserve for Unfunded Lending Commitments
S&P	Standard and Poor’s
SBA	Small Business Administration
SBIC	Small Business Investment Company
SEC	Securities and Exchange Commission
SFAS	Statement of Financial Accounting Standards
TARP	Troubled Asset Relief Program
TCBO	The Commerce Bank of Oregon
TCBW	The Commerce Bank of Washington
TDR	Troubled Debt Restructuring
TRS	Total Return Swap
VIE	Variable Interest Entity
ZCTB	Zions Capital Trust B
ZMSC	Zions Management Services Company

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ITEM 1. BUSINESS

DESCRIPTION OF BUSINESS

Zions Bancorporation (“the Parent”) is a financial holding company organized under the laws of the State of Utah in 1955, and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). The Parent and its subsidiaries (collectively “the Company”) own and operate eight commercial banks with a total of 495 domestic branches at year-end 2010. 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 10,524 at year-end 2010. For further information about the Company’s industry segments, see “Business Segment Results” on page 46 in MD&A and Note 22 of the Notes to Consolidated Financial Statements. For information about the Company’s foreign operations, see “Foreign Operations” on page 46 in MD&A. The “Executive Summary” on page 23 in MD&A provides further information about the Company.

PRODUCTS AND SERVICES

The Company focuses on providing community banking services by continuously strengthening its core business lines of 1) small and medium-sized business and corporate banking; 2) commercial and residential development, construction and term lending; 3) retail banking; 4) treasury cash management and related products and services; 5) residential mortgage; 6) trust and wealth management; and 7) investment activities. It operates eight different banks in ten Western and Southwestern states with each bank operating under a different name and each having its own board of directors, chief executive officer, and management team. The banks provide a wide variety of commercial and retail banking and mortgage lending products and services. They also provide a wide range of personal banking services to individuals, including home mortgages, bankcard, other installment loans, home equity lines of credit, checking accounts, savings accounts, time certificates of deposits 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, and online brokerage services through Zions Direct.

In addition to these core businesses, the Company has built specialized lines of business in capital markets and public finance, and is a leader in 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 Farmer Mac and is one of the nation’s top originators of secondary market agricultural real estate mortgage loans through Farmer Mac. The Company is a leader in municipal finance advisory and underwriting services.

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, and a variety of other types of companies. Many of these companies have fewer regulatory constraints and some have lower cost structures or tax burdens.

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

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SUPERVISION AND REGULATION

The banking and financial services business in which we engage is highly regulated. Such regulation is intended, among other things, to improve the stability of banking and financial companies and to protect the interests of customers, including depositors. These regulations are not, however, generally charged with protecting the interests of our shareholders or creditors. Described below are the material elements of selected laws and regulations applicable to the Company. The descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described. Changes in applicable law or regulations, and in their application by regulatory agencies, cannot be predicted, but they may have a material effect on the business and results of the Company.

The Parent is a bank holding company and a financial holding company as provided by the GLB. The BHC Act, and other federal statutes as modified by the GLB Act and the Dodd-Frank Act, provide the regulatory framework for bank holding companies and financial holding companies which have as their umbrella regulator the Federal Reserve Board. The functional regulation of the separately regulated subsidiaries of a bank holding company is conducted by each subsidiary’s primary functional regulator. To qualify for and maintain status as a financial holding company, the Parent and its subsidiary banks must satisfy certain ongoing criteria. The Company currently engages in only limited activities for which financial holding company status is required.

The Parent’s subsidiary banks are subject to the provisions of the National Bank Act or other statutes governing national banks and the banking laws of their various states, as well as the rules and regulations of the OCC, the FRB, and the FDIC. They are also under the supervision of, and are continually subject to periodic examination by, the OCC or their respective state banking departments, the FRB, and the FDIC. Many of our nonbank subsidiaries are also subject to regulation by the FRB and other applicable federal and state agencies. Our brokerage and investment advisory subsidiaries are regulated by the SEC, FINRA and/or state securities regulators.

The Dodd-Frank Act

The events of the past few years have led to numerous new laws in the United States and internationally for financial institutions. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “Dodd-Frank”), which was enacted in July 2010, is one of the most far reaching legislative actions affecting the financial services industry in decades and significantly restructures the financial regulatory regime in the United States. Among other major things, it creates a new systemic risk oversight body, the FSOC. The FSOC will oversee and coordinate the efforts of the primary U.S. financial regulatory agencies (including the FRB, the SEC, the Commodity Futures Trading Commission and the FDIC) in establishing regulations to address financial stability concerns. The Dodd-Frank Act directs the FSOC to make recommendations to the FRB as to supervisory requirements and heightened prudential standards applicable to large bank holding companies, such as Zions, including capital, leverage, liquidity and risk-management requirements.

In addition, the Dodd-Frank Act broadly affects the financial services industry by creating a resolution authority, mandating higher capital and liquidity requirements and requiring banks to pay increased fees to regulatory agencies, and through numerous other provisions aimed at strengthening the sound operation of the financial services sector. Among other things affecting capital standards, the Dodd-Frank Act provides that:

• the requirements applicable to large bank holding companies be more stringent than those applicable to other financial companies;

• standards applicable to bank holding companies be no less stringent than those applied to insured depository institutions; and

• bank regulatory agencies implement countercyclical elements in their capital requirements.

These provisions will require us to maintain greater levels of capital and will limit the forms of capital that we will be able to rely upon for regulatory purposes. For example, provisions of the Dodd-Frank Act require us

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to deduct, over three years beginning July 21, 2011, all trust preferred securities from our Tier 1 capital. Some of the Act’s provisions affecting the fees we must pay to regulatory agencies and pricing of our products and services include:

• changes in the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital, the elimination of the ceiling on the size of the DIF and an increase in the floor of the size of the DIF, which will generally increase the amount of assessments for depository institutions;

• a repeal of federal prohibitions on the payment of interest on business transaction accounts; and

• amendments to the EFTA, giving the FRB the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory standard that such fees be reasonable and proportional to the actual cost of a transaction to the issuer.

The Dodd-Frank Act also creates a new CFPB, which will be responsible for promulgating regulations designed to protect consumers’ financial interests and examining financial institutions for compliance with, and enforcing, those regulations. The Dodd-Frank Act will subject national banks to further regulation by restricting the preemption of state laws by federal laws, which currently enables national banks and their subsidiaries to comply with federal regulatory requirements without complying with various state laws. In addition, the Act gives greater power to state attorneys general to pursue legal actions against banking organizations for violations of federal law.

As discussed further throughout this section, many aspects of Dodd-Frank are subject to further rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact on the Company or across the industry.

Capital Standards – Basel Framework

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. These 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.

In 2004, the BCBS proposed a new capital accord (“Basel II”) to replace Basel I. Basel II provides two approaches for setting capital standards for credit risk – an advanced internal ratings-based approach tailored to individual institutions’ circumstances and a standardized approach that bases risk weightings on external credit assessments to a much greater extent than permitted in existing guidelines. Basel II also sets capital requirements for operational risk and refines the existing capital requirements for market risk exposures.

In December 2007, U.S. banking regulators published the final rule for Basel II implementation, requiring banks with over $250 billion in consolidated total assets or on-balance sheet foreign exposure of $10 billion (core banks) to adopt the advanced approaches of Basel II while allowing other banks to elect to “opt in.” The Parent is not required to comply with the Basel II. In July 2008, the agencies issued a proposed rule that would give banking organizations that do not use the advanced approaches the option to implement a new risk-based capital framework which would adopt the standardized approach of Basel II for credit risk, the basic indicator approach of Basel II for operational risk and related disclosure requirements. A definitive rule has not been issued.

In December 2010, the BCBS released its final framework for strengthening international capital and liquidity regulation, now officially identified by the BCBS as “Basel III”. Basel III, when implemented by the

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U.S. banking agencies and fully phased-in, will require bank holding companies and their bank subsidiaries to maintain substantially more capital, with a greater emphasis on common equity. The Basel III final capital framework, among other things:

• introduces as a new capital measure “Common Equity Tier 1”, or “CET1”, which specifies that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, defines CET1 narrowly by requiring that most adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expands the scope of the adjustments as compared to existing regulations;

• when fully phased in on January 1, 2019, requires banks to maintain:

• as a newly adopted international standard, a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%);

• a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation);

• a minimum ratio of Total (that is, Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation); and

• as a newly adopted international standard, a minimum leverage ratio of 3%, calculated as the ratio of Tier 1 capital to balance sheet exposures plus certain off-balance sheet exposures (as the average for each quarter of the month-end ratios for the quarter); and

• provides for a “countercyclical capital buffer”, generally to be imposed when national regulators determine that excess aggregate credit growth becomes associated with a buildup of systemic risk, that would be a CET1 add-on to the capital conservation buffer in the range of 0% to 2.5% when fully implemented (potentially resulting in total buffers of between 2.5% and 5%).

The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the short fall.

The implementation of the Basel III final framework is expected to commence January 1, 2013. On that date, banking institutions will be required to meet the following minimum capital ratios:

• 3.5% CET1 to risk-weighted assets;

• 4.5% Tier 1 capital to risk-weighted assets; and

• 8.0% Total capital to risk-weighted assets.

The Basel III final framework provides for a number of new deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1. Implementation of the deductions and other adjustments to CET1 will begin on January 1, 2014 and will be phased-in over a five-year period (20% per year). The implementation of the capital conservation buffer will begin on January 1, 2016 at 0.625% and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).

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The U.S. banking agencies have indicated informally that they expect to propose regulations implementing Basel III in mid-2011 with final adoption of implementing regulations in mid-2012. Given that the Basel III rules are subject to change, and the scope and content of capital regulations that the U.S. banking agencies may adopt under Dodd-Frank is uncertain, we cannot be certain of the impact new capital regulations will have on our capital ratios.

Historically, regulation and monitoring of bank and bank holding company liquidity has been addressed as a supervisory matter, both in the U.S. and internationally, without required formulaic measures. The Basel III framework proposes that banks and bank holding companies measure their liquidity against specific liquidity tests that, although similar in some respects to liquidity measures historically applied by banks and regulators for management and supervisory purposes, going forward will be required by regulation. One proposed test, referred to as the LCR, would be designed to ensure that the banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30-day time horizon (or, if greater, 25% of its expected total cash outflow) under an acute liquidity stress scenario. The other measure, referred to as the NSFR, would be designed to promote more medium- and long-term funding of the assets and activities of banking entities over a one-year time horizon. These requirements will incent banking entities to increase their holdings of U.S. Treasury securities and other sovereign debt as a component of assets and increase the use of long-term debt as a funding source. The LCR would be implemented subject to an observation period beginning in 2011, but would not be introduced as a requirement until January 1, 2015, and the NSFR would not be introduced as a requirement until January 1, 2018. These new standards are subject to further rulemaking and their terms may well change before implementation.

Other Regulation

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

• Laws and regulations regarding the availability, requirements and restrictions of a number of recently enacted governmental programs in which the Company participates. These programs include, without limitation, the TARP and its associated CPP, as well as certain requirements and limitations imposed by the EESA and ARRA and programs and regulations thereunder, including without limitation, limitations on dividends on common stock in the CPP, and on executive compensation contained in the EESA, ARRA, and the Dodd-Frank Act. One of these programs, the CPP, contains provisions that allow the U.S. Government to unilaterally modify any term or provision of contracts executed under the program.

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

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

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

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• Limitations on dividends payable to shareholders. The Parent’s ability to pay dividends on both its common and preferred stock may be subject to regulatory restrictions. See discussion under “Liquidity Management Actions” on page 80.

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

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

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

• Limitations on transactions with affiliates. The Dodd-Frank Act significantly expands the coverage and scope of the limitations on affiliate transactions within a banking organization.

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

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

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

• Broker-dealer regulations. Certain of our subsidiaries are broker-dealers that engage in securities underwriting and other broker-dealer activities. These companies are registered with the SEC and are members of FINRA.

• Investment advisory regulations. Certain of our subsidiaries are registered investment advisers under the Investment Advisers Act of 1940, as amended, and as such are supervised by the SEC. They are also subject to various U.S. Federal and state laws and regulations. These laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws.

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

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

• Anti-money laundering regulations. BSA and other federal laws require financial institutions to assist U.S. Government agencies to detect and prevent money laundering. Specifically, the BSA requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. Title III of the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”) substantially broadens the scope of U.S. anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, defining new crimes and related penalties, and expanding the extra-territorial jurisdiction of the United

11

States. The U.S. Treasury Department has issued a number of implementing regulations, which apply various requirements of the USA Patriot Act to financial institutions. The Company’s bank and broker-dealer subsidiaries and private investment companies advised or sponsored by the Company’s subsidiaries must comply with these regulations. These regulations also impose obligations on financial institutions to maintain appropriate policies, procedures and controls designed to detect, prevent and report money laundering and terrorist financing.

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

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

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

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

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

GOVERNMENT MONETARY POLICIES

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

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

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

• imposing or changing reserve requirements against bank deposits;

• term auction facilities collateralized by bank loans; and

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

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

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

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ITEM 1A. RISK FACTORS

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

The Company has been and could continue to be negatively affected by adverse economic conditions.

The United States and many other countries recently faced a severe economic crisis, including a major recession. These adverse economic conditions have negatively affected, and are likely to continue for some time to adversely affect, the Company’s assets, including its loans and securities portfolios, capital levels, results of operations, and financial condition. In response to the economic crisis, the United States and other governments established a variety of programs and policies designed to mitigate the effects of the crisis. These programs and policies appear to have stabilized the severe financial crisis that occurred in the second half of 2008, but the extent to which these programs and policies will assist in an economic recovery or may lead to adverse consequences, whether anticipated or unanticipated, is still unclear. If these programs and policies are ineffective in bringing about an economic recovery or result in substantial adverse developments, the economic conditions may again become more severe, or adverse economic conditions may continue for a substantial period of time. Any increase in the severity or duration of adverse economic conditions, including a double dip recession or delay in the recovery, would adversely affect the Company.

The limitations on incentive compensation contained in the ARRA, the implementing of its regulations, and other bank regulations may adversely affect our ability to retain our highest performing employees.

Because we have not yet repurchased the U.S. Treasury’s CPP investment, we remain subject to the restrictions on incentive compensation contained in the ARRA. On June 10, 2009, the U.S. Treasury released its interim final rules implementing the provisions of the ARRA and limiting the compensation practices at institutions in which the U.S. Treasury is invested. The U.S. Treasury has since revised such rules and released written guidance interpreting and expanding on ARRA and the interim final rules. Financial institutions which have repurchased the U.S. Treasury’s CPP investment are relieved of the restrictions imposed by the ARRA and its implementing regulations and related guidance. Due to these restrictions, we may not be able to successfully compete with financial institutions that have repurchased the U.S. Treasury’s investment to attract, retain and appropriately incentivize high performing employees. In addition, bank regulatory agencies have published guidance and proposed regulations which limit the manner and amount of compensation that banking organizations provide to employees. These regulations and guidance may adversely affect our ability to retain key personnel. If we were to suffer such adverse effects with respect to our employees, our business, financial condition and results of operations could be adversely affected, perhaps materially.

Our participation in the CPP and other government programs imposes restrictions and obligations on us that limit our ability to increase dividends, repurchase shares of our stock, and access the equity capital markets.

The Company has chosen to participate in a number of new programs sponsored by the U.S. Government during the current financial and economic crisis. These programs, including without limitation, the TARP and its associated CPP, as well as the ARRA and EESA and regulations thereunder, contain important limitations on the Company’s conduct of its business, including limitations on dividends, repurchases of common stock, acquisitions, and executive compensation. These limitations may adversely impact the Company’s ability to attract nongovernmental capital and to recruit and retain executive management and other personnel and its ability to compete with other American and foreign financial institutions. One of these programs, the CPP, contains provisions that allow the U.S. Government to unilaterally modify any term or provision of contracts executed under the program.

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Recently adopted financial reform legislation will impose significant new limitations on our business activities and subject us to increased regulation and additional costs.

The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted on July 21, 2010 will have material implications for the Company and the entire financial services industry. The Act results in the Company being defined as “systemically important,” which brings significant additional regulatory oversight and requirements. In addition, among other things, the Act will or potentially could:

• Affect the levels of capital and liquidity with which the Company must operate and how it plans capital and liquidity levels (including a phased-in elimination of the Company’s existing trust preferred securities as Tier 1 capital);

• Subject the Company to new and/or higher fees paid to various regulatory entities, including but not limited to deposit insurance fees to the FDIC;

• Impact the Company’s ability to invest in certain types of entities or engage in certain activities;

• Impact a number of the Company’s business and risk management strategies;

• Regulate the pricing of certain of our products and services and restrict the revenue that the Company generates from certain businesses;

• Subject the Company to new capital planning actions, including stress testing or similar actions and timing expectations for capital-raising;

• Subject the Company to a new Consumer Financial Protection Bureau, with very broad rule-making and enforcement authorities;

• Grant authority to state agencies to enforce state and federal laws against national banks;

• Subject the Company to new and different litigation and regulatory enforcement risks; and

• Limit the amount and manner of compensation paid to executive officers and employees generally.

As the Act requires that many studies be conducted and that hundreds of regulations be written in order to fully implement it, the full impact of this legislation on the Company, its business strategies, and financial performance cannot be known at this time, and may not be known for a number of years. In addition, the current political environment may lead, in the near future, to the adoption of new laws and regulations affecting financial institutions.

U.S. regulatory agencies, in response to the adoption of Basel III, may require us to raise our capital and liquidity to levels that may exceed those that the market may otherwise consider to be optimal.

Basel III was adopted in December 2010 by the BCBS. New capital and liquidity requirements are expected to be established by U.S. regulatory agencies in response to Basel III which are higher than previous levels. Maintaining higher capital and liquidity levels may reduce our profitability and performance measures.

Economic and other circumstances, including pressure to repay CPP preferred stock, may require us to raise capital at times or in amounts that are unfavorable to the Company.

The Company’s subsidiary banks must maintain certain risk-based and leverage capital ratios as required by their banking regulators which can change depending upon general economic conditions and their particular condition, risk profile and growth plans. Compliance with capital requirements may limit the Company’s ability to expand and has required, and may require, capital investment from the Parent. In 2008, we issued shares of preferred stock and a warrant to purchase shares of the Company’s common stock to the U.S. Treasury for $1.4 billion under TARP. There may be increasing market, regulatory or political pressure on the

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Company to raise capital to enable it to repay the preferred stock issued to the U.S. Treasury under TARP at a time or in amounts that may be unfavorable to the Company’s shareholders. These uncertainties and risks created by the legislative and regulatory uncertainties discussed above may themselves increase the Company’s cost of capital and other financing costs.

Negative perceptions associated with our continued participation in the U.S. Treasury’s CPP may adversely affect our ability to retain customers, attract investors, and compete for new business opportunities.

Several financial institutions which also participated in the CPP have repurchased their TARP preferred stock. There can be no assurance as to the timing or manner in which the Company may repurchase its Series D Preferred Stock from the U.S. Treasury. Our customers, employees and counterparties in our current and future business relationships could draw negative implications regarding the strength of the Company as a financial institution based on our continued participation in the CPP following the exit of one or more of our competitors or other financial institutions. Any such negative perceptions could impair our ability to effectively compete with other financial institutions for business or to retain high performing employees. If this were to occur, our business, financial condition, and results of operations may be adversely affected.

Credit quality has adversely affected us and may continue to adversely affect us.

Credit risk is one of our most significant risks. The Company’s credit quality continued at a weakened level during 2010 in most loan types and markets in which the Company operates. Although most credit quality indicators improved during latter half of 2010, we expect continued credit quality weakness over the next few quarters.

Weakness in the economy and in the real estate market, including specific weakness within the markets where our subsidiary banks do business and within certain of our loan products, has adversely affected us and may continue to adversely affect us.

Our credit exposure is one of our most significant risks. The company’s level of problem credits remained high as of December 31, 2010. The deterioration in credit quality that started in the latter half of 2007 has most significantly affected the construction and land development segment of our portfolio. Although virtually all of our markets and lending segments have been adversely affected by the economic recession, the distress has been mostly concentrated in construction and land development loans in the Southwest states (generally, Arizona, California, and Nevada), which markets have been particularly adversely affected by job losses, declines in residential and commercial sale volumes and real estate values, and declines in new construction activity.

Subsequent to the initial deterioration in construction and land development loans, credit quality deterioration occurred in most loan types and geographies in which the Company operated through the first half of 2010 as general economic conditions weakened throughout the country.

If the strength of the U.S. economy in general and the strength of the local economies in which we and our subsidiary banks conduct operations decline further, this could result in, among other things, further deterioration in credit quality and/or continued reduced demand for credit, including a resultant adverse effect on the income from our loan portfolio, an increase in charge-offs and an increase in the allowance for loan and lease losses; if such developments occur, we may be required to raise additional capital.

Failure to effectively manage our interest rate risk could adversely affect us.

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. We have been successful in our interest rate risk

15

management as evidenced by achieving a relatively stable net interest margin over the last several years when interest rates have been volatile and the rate environment challenging; however, a failure to effectively manage our interest rate risk could adversely affect us. Factors beyond the Company’s control can significantly influence the interest rate environment and increase the Company’s risk. These factors include competitive pricing pressures for our loans and deposits, adverse shifts in the mix of deposits and other funding sources, and volatile market interest rates subject to general economic conditions and the policies of governmental and regulatory agencies, in particular the FRB.

Our ability to maintain required capital levels and adequate sources of funding and liquidity has been and may continue to be adversely affected by market conditions.

We are required to maintain certain capital levels in accordance with banking regulations and any capital requirements imposed by our regulators. We must also maintain adequate funding sources in the normal course of business to support our operations and fund outstanding liabilities. Our ability to maintain capital levels, sources of funding, and liquidity has been and could continue to be impacted by changes in the capital markets in which we operate and deteriorating economic and market conditions.

Each of our subsidiary banks must remain well-capitalized and meet certain other requirements for us to retain our status as a financial holding company. Failure to comply with those requirements could result in a loss of our financial holding company status if such conditions are not corrected within 180 days or such longer period as may be permitted by the Federal Reserve, although we do not believe that the loss of such status would have an appreciable effect on our operations or financial results. In addition, failure by our bank subsidiaries to meet applicable capital guidelines or to satisfy certain other regulatory requirements can result in certain activity restrictions or a variety of enforcement remedies available to the federal regulatory authorities that include limitations on the ability to pay dividends, the issuance by the regulatory authority of a capital directive to increase capital and the termination of deposit insurance by the FDIC.

Funding availability improved during 2010 as compared to 2009, as the Company took a number of actions during the year to augment its capital and liquidity. More emphasis was placed upon low-cost funding during 2010 than merely funding availability (See “Capital Management” on page 84 in MD&A and Notes 12 and 13 of the Notes to Consolidated Financial Statements for further information on funding availability). However, because liquidity stresses are often a consequence of the materialization of other risks, they will continue to be a risk factor in 2011 and beyond for the Company, the Parent and its affiliate banks.

The quality and liquidity of our asset-backed investment securities portfolio has adversely affected us and may continue to adversely affect us.

The Company’s asset-backed investment securities portfolio includes CDOs collateralized by trust preferred securities issued by banks, insurance companies, and REITs that may have some exposure to construction loan, commercial real estate, and the subprime markets and/or to other categories of distressed assets. In addition, asset-backed securities also include structured asset-backed CDOs (also known as diversified structured finance CDOs) which have exposure to subprime and home equity mortgage securitizations. Factors beyond the Company’s control can significantly influence the fair value and impairment status of these securities. These factors include, but are not limited to, defaults, deferrals, and restructurings by debt issuers, rating agency downgrades of securities, lack of market pricing of securities, or the return of market pricing that varies from the Company’s current model valuations, and changes in prepayment rates and future interest rates. See “Investment Securities Portfolio” on page 52 for further details.

We have been unprofitable and may continue to be unprofitable, and such lack of profitability could have particular adverse effects on us, such as restricting our ability to pay dividends or requiring a valuation allowance against our deferred tax asset.

We are a holding company that conducts substantially all of its operations through its banking and other subsidiaries. As a result, our ability to make dividend payments on our common stock will depend primarily

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upon the receipt of dividends and other distributions from our subsidiaries. We and certain of our subsidiaries have been unprofitable during the last three annual reporting periods. During 2009 and 2010, the noncash accelerated amortization expense caused by subordinated debt holders converting their debt to preferred stock has contributed to our unprofitability. Future conversions of subordinated debt into preferred stock may continue to contribute to unprofitability. The ability of the Company and our subsidiary banks to pay dividends is restricted by regulatory requirements, including profitability and the need to maintain required levels of capital. Continuing lack of profitability exposes us to the risk that regulators could restrict the ability of our subsidiary banks to pay dividends and our ability to declare and pay dividends on our common stock, preferred stock or trust preferred securities. It also increases the risk that the Company may have to establish a “valuation allowance” against its net DTA. The Parent and some of its subsidiary banks already have some disallowed DTA for regulatory capital purposes.

We and/or the holders of our securities could be adversely affected by unfavorable rating actions from rating agencies.

Our ability to access the capital markets is important to our overall funding profile. This access is affected by the ratings assigned by rating agencies to us, certain of our affiliates, and particular classes of securities that we and our affiliates issue. The interest rates that we pay on our securities are also influenced by, among other things, the credit ratings that we, our affiliates, and/or our securities receive from recognized rating agencies. In the past, rating agencies have downgraded our credit ratings. Further downgrades to us, our affiliates, or our securities could increase our costs or otherwise have a negative effect on our results of operations or financial condition or the market prices of our securities.

We could be adversely affected by accounting, financial reporting, and regulatory and compliance risk.

The Company is exposed to accounting, financial reporting, and regulatory/compliance risk. The Company provides to its customers, and uses for its own capital, funding and risk management needs, 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.

We could be adversely affected by legal and governmental proceedings.

The Company is subject to risks associated with legal claims, fines, litigation, and regulatory proceedings. The Company’s exposure to these proceedings has increased and may further increase as a result of stresses on customers, counterparties and others arising from the current economic environment; new regulations promulgated under recently adopted statutes; and the creation of new examination and enforcement bodies.

We could be adversely affected by failure in our internal controls.

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 could be adversely affected as a result of acquisitions.

From time to time the Company makes acquisitions including the acquisition of assets and liabilities of failed banks from the FDIC acting as a receiver. The FDIC-supported transactions are subject to loan loss sharing agreements. Failure to comply with the terms of the agreements could result in the loss of indemnification from the FDIC. The success of any acquisition depends, in part, on our ability to realize the projected cost

17

savings from the acquisition and on the continued growth and profitability of the acquisition target. We have been successful with most prior acquisitions, but it is possible that the merger integration process with an acquired company 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 Risk Management policy and has appointed an Enterprise Risk Management Committee to oversee and implement the policy. In addition to credit and interest rate risk, the Committee also monitors the following risk areas: market risk, liquidity risk, operational risk, compliance risk, information technology risk, strategic risk, compensation-related risk, and reputation risk.

ITEM 1B. UNRESOLVED STAFF COMMENTS

There are no unresolved written comments that were received from the SEC’s staff 180 days or more before the end of the Company’s fiscal year relating to our periodic or current reports filed under the Securities Exchange Act of 1934.

ITEM 2. PROPERTIES

At December 31, 2010, the Company operated 495 domestic branches, of which 287 are owned and 208 are leased. The Company also leases its headquarters 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.

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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, 2011 was $24.63 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:

	2010				2009
	High		Low		High		Low
1st Quarter	$	23.85	$	12.88	$	25.52	$	5.90
2nd Quarter		30.29		21.22		20.97		8.88
3rd Quarter		24.39		17.91		20.36		10.25
4th Quarter		24.58		18.84		19.03		12.50

During 2010 the Company issued $633.3 million of new common stock consisting of 29.6 million shares at an average price of $21.43 per share. Net of commissions and fees, the issuances added $623.5 million to common stock. We also issued 29.3 million common stock warrants during 2010 adding $214.6 million to common stock. Each and all of the warrants can be exercised for a share of common stock at an initial price of $36.63 through May 22, 2020. See Note 14 of the Notes to Consolidated Financial Statements for further information regarding equity transactions during 2010.

As of February 16, 2011, there were 6,068 holders of record of the Company’s common stock.

EQUITY CAPITAL AND DIVIDENDS

We have 4,400,000 authorized shares of preferred stock without par value and with a liquidation preference of $1,000 per share. As of December 31, 2010, 59,440, 453,237, 1,400,000, and 142,500 of preferred shares series A, C, D and E, respectively, have been issued and are outstanding. In addition, holders of $0.8 billion of the Company’s subordinated debt have the right to convert that debt into either Series A or C preferred stock. In general, preferred shareholders may receive asset distributions before common shareholders; however, preferred shareholders have only limited voting rights generally with respect to certain provisions of the preferred stock, the issuance of senior preferred stock, and the election of directors. Preferred stock dividends reduce earnings available to common shareholders and are paid quarterly in arrears. The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. The series A, C, and E shares are registered with the SEC. The Series D Fixed-Rate Cumulative Perpetual Preferred Stock was issued on November 14, 2008 to the U.S. Department of the Treasury for $1.4 billion in a private placement exempt from registration. See Note 14 of the Notes to Consolidated Financial Statements for further information regarding the Company’s preferred stock.

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
2010	$	0.01	$	0.01	$	0.01	$	0.01
2009		0.04		0.04		0.01		0.01

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The Company’s Board of Directors approved a dividend of $0.01 per common share payable on February 28, 2011 to shareholders of record on February 22, 2011. 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.

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

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

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

SHARE REPURCHASES

The following table summarizes the Company’s share repurchases for the fourth quarter of 2010:

Period	Total number of shares repurchased1		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased under the plan
October		242	$	21.25		–	$	–
November		404		19.99		–		–
December		12,188		23.04		–		–
Fourth quarter		12,834		22.91		–

¹ Represents common shares acquired from employees in connection with the Company’s stock compensation plan. Shares were acquired from employees to pay for their payroll taxes upon the vesting of restricted stock under the “withholding shares” provision of an employee share-based compensation plan.

The Company has not repurchased any shares under the Common Stock Repurchase Plan since August 16, 2007. It is prohibited from repurchasing any common shares through an authorized share repurchase program by terms of the CPP until the Company’s Series D preferred stock has been fully repaid or the U.S. Treasury otherwise ceases to own any such preferred stock.

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PERFORMANCE GRAPH

The following stock performance graph compares the five-year cumulative total return of Zions Bancorporation’s common stock with the Standard & Poor’s 500 Index and the KBW Bank Index which include Zions Bancorporation. The KBW Bank Index is a market capitalization-weighted bank stock index developed and published by Keefe, Bruyette & Woods, Inc., a nationally recognized brokerage and investment banking firm specializing in bank stocks. The index is composed of 24 geographically diverse stocks representing national money center banks and leading regional financial institutions. The stock performance graph is based upon an initial investment of $100 on December 31, 2005 and assumes reinvestment of dividends.

	2005		2006		2007		2008		2009		2010
Zions Bancorporation		100.0		111.1		64.4		35.4		18.7		35.3
KBW Bank Index		100.0		117.0		91.5		48.0		47.2		58.3
S&P 500		100.0		115.8		122.1		77.0		97.3		112.0

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ITEM 6. SELECTED FINANCIAL DATA

FINANCIAL HIGHLIGHTS

(In millions, except per share amounts)	2010/2009 Change			2010			2009			2008			2007			2006
For the Year
Net interest income		-9	%	$	1,727.4		$	1,897.5		$	1,971.6		$	1,882.0		$	1,764.7
Noninterest income		-45	%		440.5			804.1			190.7			412.3			551.2
Total revenue		-20	%		2,167.9			2,701.6			2,162.3			2,294.3			2,315.9
Provision for loan losses		-58	%		852.1			2,016.9			648.3			152.2			72.6
Noninterest expense		+3	%		1,718.9			1,671.5			1,475.0			1,404.6			1,330.4
Impairment loss on goodwill		-100	%		–			636.2			353.8			–			–
Income (loss) before income taxes		+75	%		(403.1	)		(1,623.0	)		(314.8	)		737.5			912.9
Income taxes (benefit)		+73	%		(106.8	)		(401.3	)		(43.4	)		235.8			318.0
Net income (loss)		+76	%		(296.3	)		(1,221.7	)		(271.4	)		501.7			594.9
Net income (loss) applicable to noncontrolling interests		+36	%		(3.6	)		(5.6	)		(5.1	)		8.0			11.8
Net income (loss) applicable to controlling interest		+76	%		(292.7	)		(1,216.1	)		(266.3	)		493.7			583.1
Net earnings (loss) applicable to common shareholders		+67	%		(412.5	)		(1,234.4	)		(290.7	)		479.4			579.3
Per Common Share
Net earnings (loss) – diluted		+75	%		(2.48	)		(9.92	)		(2.68	)		4.40			5.35
Net earnings (loss) – basic		+75	%		(2.48	)		(9.92	)		(2.68	)		4.45			5.45
Dividends declared		-60	%		0.04			0.10			1.61			1.68			1.47
Book value1		-10	%		25.12			27.85			42.65			47.17			44.48
Market price – end					24.23			12.83			24.51			46.69			82.44
Market price – high2					30.29			25.52			57.05			88.56			85.25
Market price – low					12.88			5.90			17.53			45.70			75.13
At Year-End
Assets		–			51,035			51,123			55,093			52,947			46,970
Net loans and leases		-9	%		36,747			40,189			41,659			38,880			34,415
Deposits		-2	%		40,935			41,841			41,316			36,923			34,982
Long-term debt		-4	%		1,943			2,033			2,622			2,591			2,495
Shareholders’ equity:
Preferred equity		+37	%		2,057			1,503			1,582			240			240
Common equity		+10	%		4,591			4,190			4,920			5,053			4,747
Noncontrolling interests		-106	%		(1	)		17			27			31			43
Performance Ratios
Return on average assets					(0.57	)%		(2.25	)%		(0.50	)%		1.01	%		1.32	%
Return on average common equity					(9.26	)%		(28.35	)%		(5.69	)%		9.57	%		12.89	%
Net interest margin					3.73	%		3.94	%		4.18	%		4.43	%		4.63	%
Capital Ratios1
Equity to assets					13.02	%		11.17	%		11.85	%		10.06	%		10.71	%
Tier 1 leverage					12.56	%		10.38	%		9.99	%		7.37	%		7.86	%
Tier 1 risk-based capital					14.78	%		10.53	%		10.22	%		7.57	%		7.98	%
Total risk-based capital					17.15	%		13.28	%		14.32	%		11.68	%		12.29	%
Tangible common equity					6.99	%		6.12	%		5.89	%		5.70	%		5.98	%
Tangible equity					11.10	%		9.16	%		8.91	%		6.23	%		6.61	%
Selected Information
Average common and common-equivalent shares (in thousands)					166,054			124,443			108,908			108,408			107,957
Common dividend payout ratio					na			na			na			37.82	%		27.10	%
Full-time equivalent employees					10,524			10,529			11,011			10,933			10,618
Commercial banking offices					495			491			513			508			470
ATMs					601			602			625			627			578

¹ At year-end.

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

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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 $51 billion financial holding company headquartered in Salt Lake City, Utah. The Company is a “systemically important” financial institution, under the Dodd-Frank Act.

• As of December 31, 2010, the Company was the 18^th largest domestic bank holding company in terms of deposits and is included in the Standard and Poor’s 500 (“S&P 500”) and NASDAQ Financial 100 indices. It is the largest independent regional bank in the Western U.S.

• At December 31, 2010, the Company operated banking businesses through 495 domestic branches in ten Western and Southwestern states.

• The Company is a national leader in Small Business Administration (“SBA”) lending, public finance advisory services, and treasury management services.

• The Company provides wealth management and brokerage services.

• Revenues and profits are primarily driven by commercial customers.

Core Long-Term Strategy

We strive to maintain a local community bank approach for customer-facing elements of our business. We believe that our target customers, consisting largely of small and mid-sized businesses, appreciate local branding, product customization, and speedy decision-making by local management. By retaining a significant degree of autonomy in product offerings and pricing, we believe our banks have a sustainable competitive advantage over larger national banks where loan and deposit products are often homogeneous. However, we strive to centralize non-customer facing operations, such as risk and capital management, technology and operations. By centralizing many of these functions, we believe we can generally achieve greater economies of scale and stronger risk management, and that our portfolio of community banks has superior access to the capital markets, investment portfolio, treasury management, and liquidity resources, and technological advances than do smaller independent community banks.

Our growth strategy is driven by four key factors:

• focus on growth markets;

• maintain a sustainable competitive advantage over large national and global banks by keeping decisions that affect customers local;

• maintain a sustainable competitive advantage over community banks through superior products, productivity, efficiency and a lower cost of capital; and

• centralize and standardize policies and management controlling key risks.

Focus on Growth Markets

The Company seeks to grow both organically and through acquisitions in growth markets. The states in our geographic footprint have experienced higher rates of economic growth than other states. Our footprint is well diversified by industry, strong business formation rates, real estate development and general economic expansion. While some states in our footprint have experienced a significant slowing in economic activity during the recent recession, others have experienced above-average growth and stronger resistance to the economic

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downturn. We believe that the Company can continue to experience above-average revenue growth in the long term, in part because the majority of our footprint is concentrated in states that have above average GDP, population, and job growth, and where the economies are well diversified.

• GDP growth in our footprint has exceeded nominal U.S. GDP by an average of 1.0% per year (compounded) over the last ten years; i.e. from 2000-2009, nominal US GDP grew by 4.1%, while nominal GDP in Zions’ footprint (weighted by assets) grew by 5.1%.

• Population growth rates have exceeded U.S. population growth rates by 1.1% per year (compounded) over the last ten years; i.e. nationally, the U.S. population increased by 10.6% during the last decade, while Zions’ footprint (weighted average) grew by 23.2% during the same period.

• Job creation within the Zions footprint greatly exceeded the national rate during the past 10 years. U.S. non-farm payroll jobs declined by 1.7% during the last decade; however, job creation in Zions’ footprint increased by 5.1%.

Keep Decisions That Affect Customers Local

We believe that over the long term, ensuring that local management teams retain the authority over decisions that affect their customers is a strategy that ultimately generates superior growth in our banking businesses, as supported by stronger organic loan and deposit growth relative to other banks.

• We operate eight different community/regional banks, each under a different name, and each with its own charter, chief executive officer and management team.

• We believe that this approach allows us to attract and retain exceptional management, and provides service of the highest quality to our targeted customers. The results of this service are evident in the results of the Greenwich Associates annual survey, wherein the Company consistently ranks “Excellent” for overall satisfaction among small and middle-market businesses.

• This structure helps to ensure that decisions related to customers are made at a local level:

• branding and marketing strategies;

• product offerings and pricing; and

• credit decisions (within the limits of established corporate policy).

Maintain a Sustainable Competitive Advantage Over Community Banks

To create a sustainable competitive advantage over other smaller community banks, we focus on achieving superior product selection, productivity, economies of scale, availability of liquidity, and a lower cost of capital. Compared to community banks:

• We use the combined scale of all of our banking operations to create a broad product offering at a lower marginal cost.

• Our larger capital base allows us to lend to business customers of all sizes, from start-up companies to large Fortune 100 companies.

• For certain products for which economies of scale are believed to be important, the Company “manufactures” the product centrally or is able to obtain services from third-party vendors at lower costs due to volume-driven pricing power.

• Our combined size and diversification affords us superior access to the capital markets for debt and equity financing; over the long term, this advantage has historically, and should in the future, result in a lower cost of capital.

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Centralize and Standardize Policies and Management Controlling Key Risks

We seek to standardize policies and practices related to the management of key risks in order to assure a consistent risk profile in an otherwise decentralized management model. Among these key risks and functions are credit, interest rate, liquidity, and market risks.

• The Company conducts regular stress testing of the loan portfolio using multiple economic scenarios. Such tests help to identify pockets of risk and enable management to reduce risk.

• The Company oversees credit risk using specialists in business, commercial real estate, and consumer lending.

• The Company regularly measures interest rate and liquidity risk and uses capital markets instruments to adjust risks to within Board-approved targets.

• The Company centrally monitors and oversees operational risk.

MANAGEMENT’S OVERVIEW OF 2010 PERFORMANCE

The Company worked aggressively in 2010 to reduce the risk within the loan portfolio, reduce problem credits, and meaningfully improve various capital ratios. The Company reported a net loss applicable to common shareholders for 2010 of $412.5 million or $2.48 per diluted common share compared to a net loss of $1,234.4 million or $9.92 per diluted common share for 2009.

Although we reported a net loss for 2010, we note that the trends that drive profitability have shown considerable signs of improvement, as detailed below.

Significant 2010 Accomplishments

• While net interest income fluctuated during the year, “core net interest income” remained at a relatively stable level. (See chart 1.) Additionally, key noninterest expense items such as salaries and employee benefits, occupancy, and furniture and equipment remained relatively stable.

• Criticized loans, the broadest category of loans having an elevated probability of default, declined 35.3% from one year ago, a significant reversal compared to the prior year’s increase of 67.4%.

• Nonperforming lending-related assets declined 34.0% compared to December 31, 2009. (See chart 2.)

• Net impairment losses on investment securities declined 69.6% compared to 2009.

• Capital levels increased significantly. (See chart 3.) The Tier 1 common capital ratio increased approximately 33.0% from the prior year to a record high level of 8.95%. Based upon information currently available, management believes the Company already exceeds the new Basel III guidelines published in 2010; such guidelines are not scheduled to be fully phased in until January 2019.

• Significantly enhanced risk management, including additional oversight on credit risk and sophistication of stress testing.

• Rebalanced and reduced the risk of the loan portfolio. During 2010, construction and land development loans declined 35.8% and now account for less than 10% of the loan portfolio, down from 21.8% at its peak.

• These loans have been the primary source of loan losses during this credit cycle, and the concentration reduction represents reduced risk for the total portfolio.

• A significant percentage of the remaining construction and land development portfolio consists of loans against recently-completed projects where leases fully cover the debt service burden.

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• Improved on-balance sheet liquidity. Cash, money market investments, and certain securities (U.S. Treasury securities, U.S. Government agencies and corporations, and mutual funds) increased to 16.5% of tangible assets compared to 7.8% at December 31, 2009.

* The reconciliation of net interest income to core net interest income is found in the GAAP to non-GAAP reconciliation on page 88.

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The reconciliation of controlling interest shareholders’ equity to Tier 1 common equity is found in the GAAP to non-GAAP reconciliation on page 88. Reserves consist of the allowance for loan losses and the reserve for unfunded lending commitments.

Areas experiencing weakness in 2010

• Loan balances, the Company’s primary source of revenue, declined 8.6%, compared to a 4.1% decline for the commercial banking industry which was adjusted for changes to off-balance sheet loan accounting. However, approximately 57.4% of the Company’s loan portfolio decline is attributable to construction and land development, therefore representing a significant reduction in risk. Additionally, approximately 13.7% of the Company’s decline in total loans is attributable to FDIC-supported loans.

• Net loan charge-offs of 2.53% of average loans remained significantly above long-term averages.

• Revenues from nonsufficient funds and overdrafts were adversely impacted by changes to Regulation E.

• FDIC premiums, other real estate expense, and credit-related expenses had a significantly adverse effect on total noninterest expense.

Areas of focus for 2011

• Further reduce nonaccrual and classified loans.

• Deploy excess liquidity into loans.

• Increase penetration within consumer lending, including residential mortgage. Residential mortgage loans (including 1-4 family residential loans and home equity credit lines) account for 15.3% of our loan portfolio, approximately half the concentration of the commercial banking industry.

• Leverage the Small Business Jobs Act of 2010, which significantly expanded the SBA lending program limits.

• Continue to control noninterest expense and to enhance risk management capabilities through the deployment of new technology systems.

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The key drivers of the Company’s performance during 2010 were as follows:

Schedule 1

KEY DRIVERS OF PERFORMANCE

2010 COMPARED TO 2009

Driver	2010			2009			Change better/(worse)
		(In billions)
Average net loans and leases	$	38.3		$	41.5			(8	)%
Average noninterest-bearing deposits		13.3			11.1			20	%
Average total deposits		41.7			42.8			(3	)%
		(In millions)
Net interest income	$	1,727.4		$	1,897.5			(9	)%
Provision for loan losses		(852.1	)		(2,016.9	)		58	%
Net impairment and valuation losses on securities		(85.4	)		(492.6	)		83	%
Impairment loss on goodwill		–			(636.2	)		100	%
Nonaccrual loans		1,528.7			2,379.4			36	%
Net interest margin		3.73	%		3.94	%		(21	)bp
Core net interest margin		4.12	%		4.07	%		5	bp
Ratio of nonperforming assets to net loans and leases and other real estate owned		4.91	%		6.79	%		188	bp
Ratio of total allowance for credit losses to net loans and leases outstanding		4.22	%		4.10	%		12	bp
Tier 1 common to risk-weighted assets		8.95	%		6.73	%		222	bp
		(In millions of shares)
Net common shares issued		32.4			35.1			(8	)%

bp – basis point

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Note 1 of the Notes to Consolidated Financial Statements contains a summary of the Company’s significant accounting policies. Further explanations of significant accounting policies are included where applicable in the remaining Notes to Consolidated Financial Statements. Discussed below are certain significant accounting policies that we consider critical to the Company’s financial statements. These critical accounting policies were selected because the amounts affected by them are significant to the financial statements. Any changes to these amounts, including changes in estimates, may also be significant to the financial statements. We believe that an understanding of certain of these policies, along with the related estimates we are required to make in recording the financial transactions of the Company, is important to have a complete picture of the Company’s financial condition. In addition, in arriving at these estimates, we are required to make complex and subjective judgments, many of which include a high degree of uncertainty. The following discussion of these critical accounting policies includes the 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 where applicable in this document 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.

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Fair Value Estimates

The Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. To increase consistency and comparability in fair value measures, ASC 820 establishes a three-level hierarchy to prioritize the valuation inputs among (1) observable inputs that reflect quoted prices in active markets, (2) inputs other than quoted prices with observable market data, and (3) unobservable data such as the Company’s own data or single dealer nonbinding pricing quotes.

When observable market prices are not available, fair value is estimated using modeling techniques such as discounted cash flow analyses. These modeling techniques utilize assumptions that market participants would use in pricing the asset or the liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, the related life of the asset and applicable growth rate, the risk of nonperformance, and other related assumptions.

The selection and weighting of the various fair value techniques may result in a fair value higher or lower than carrying value. Considerable judgment may be involved in determining the amount that is most representative of fair value.

Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary measure of accounting. Fair value is used on a nonrecurring basis to measure certain assets or liabilities for impairment or for disclosure purposes in accordance with ASC 825, Financial Instruments.

Impairment analysis generally relates to long-lived assets, goodwill, and core deposit and other intangible assets. An impairment loss is recognized if the carrying amount of the asset is not likely to be recoverable and exceeds its fair value. In determining the fair value, management uses models and applies the techniques and assumptions previously discussed.

Investment securities are valued using several methodologies which depend on the nature of the security, availability of current market information, and other factors. Certain CDOs are valued using an internal model and the assumptions are analyzed for sensitivity. “Investment Securities Portfolio” on page 52 provides more information regarding this analysis.

Investment securities are reviewed formally on a quarterly basis for the presence of OTTI. The evaluation process takes into account current market conditions, fair value of the security, and many other factors. The decision to deem these securities OTTI is based on a specific analysis of the structure of each security and an evaluation of the underlying collateral. Future reviews for OTTI consider the particular facts and circumstances during the reporting period in review.

Notes 1, 5, 8, 10 and 21 of the Notes to Consolidated Financial Statements and “Investment Securities Portfolio” on page 52 contain further information regarding the use of fair value estimates.

Allowance for Credit Losses

The allowance for credit losses includes the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses provides for probable losses that have been identified with specific customer relationships and for probable losses believed to be inherent in the loan portfolio, but which have not been specifically identified. The determination of the appropriate level of the allowance is based on periodic evaluations of the portfolios along with other relevant factors. This process includes a quantitative analysis, as well as a qualitative review of its results. The qualitative review requires a significant amount of judgement, and is described in more detail in Note 6 of the Notes to Consolidated Financial Statements.

The reserve for unfunded lending commitments provides for potential losses associated with off-balance sheet lending commitments and standby letters of credit. The reserve is estimated using the same procedures and methodologies as for the allowance for loan losses.

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There are numerous components that enter into the evaluation of the allowance for loan losses, which includes a quantitative and a qualitative process. Although we believe that our processes for determining an appropriate level for the allowance adequately address the various 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. As an example, if a total of $1.5 billion of Pass grade loans were to be immediately classified as Special Mention, Substandard or Doubtful (as defined in Note 6 of the Notes to Consolidated Financial Statements) in the same proportion as the existing criticized and classified loans to the whole portfolio, the quantitatively determined amount of the allowance for loan losses at December 31, 2010 would increase by approximately $78 million. This sensitivity analysis is hypothetical and has been provided only to indicate the potential impact that changes in the level of the criticized and classified loans may have on the allowance estimation process.

Although the qualitative process is subjective, it represents the Company’s best estimate of qualitative factors impacting the determination of the allowance for loan losses. Such factors include but are not limited to national and regional economic trends and indicators. We believe that given the procedures we follow in determining the allowance for loan losses for the loan portfolio, the various components used in the current estimation processes are appropriate.

Note 6 of the Notes to Consolidated Financial Statements and “Credit Risk Management” on page 62 contain further information and more specific descriptions of the processes and methodologies used to estimate the allowance for credit losses.

Accounting for Goodwill

Goodwill is initially recorded at fair value and is subsequently evaluated at least annually for impairment in accordance with ASC 350, Intangibles – Goodwill and Other. We perform this annual test as of October 1 of each year, or more often if events or circumstances indicate that carrying value may not be recoverable. The goodwill impairment test for a given reporting unit compares its fair value with its carrying value. If the carrying amount exceeds fair value, an additional analysis must be performed to determine the amount, if any, by which goodwill is impaired.

To determine 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 (“Market Value”); comparable acquisitions of financial services companies in the western and southwestern states (“Transaction Value”); and the discounted present value of management’s estimates of future cash or income flows. Critical assumptions that are used as part of these calculations include:

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

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

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

• the potential future earnings of the reporting unit;

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

• the control premium associated with reporting units.

We apply a control premium in the Market Value approach to determine the reporting units’ equity values. Control premiums represent the ability of a controlling shareholder to benefit from synergies and other intangible assets that arise from control that might cause the fair value of a reporting unit as a whole to exceed its market capitalization. Based on a review of historical recent bank transactions within the Company’s geographic footprint, comparing market values 30 days prior to the announced transaction to the deal value, we have determined that a control premium of 25% was appropriate.

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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, loan losses, changes in revenue growth trends, cost structures and technology, changes in discount rates, changes in equity market values and merger and acquisition valuations, and changes in industry conditions. As an example, if the discount rate applied to future earnings were increased by 100 basis points, then the fair values of Amegy, CB&T, and Zions Bank would only exceed their carrying values by 4%, 8%, and 5%, respectively. This sensitivity analysis is hypothetical and has been provided only to indicate the potential impact of a discount rate assumption change.

During the fourth quarter of 2010, we performed our annual goodwill impairment evaluation of the entire organization, effective October 1, 2010. Upon completion of the evaluation process, we concluded that none of our subsidiary banks was impaired. Additionally, we determined that the fair values of Amegy, CB&T, and Zions Bank exceeded their carrying values by 12%, 14% and 17%, respectively.

Notes 1, 2 and 10 of the Notes to Consolidated Financial Statements contain additional information, including recently issued accounting guidance that affects the calculation process.

Accounting for Derivatives

Our interest rate risk management strategy involves the use of hedging to mitigate our exposure to potential adverse effects from changes in interest rates.

The derivative contracts used by the Company are exchange-traded or over-the-counter (“OTC”). Exchange-traded derivatives consist of forward currency exchange contracts, which are part of the Company’s services provided to commercial customers. OTC derivatives consist of interest rate swaps, options and futures contracts, and, through the third quarter of 2010, commodity derivatives for customers.

We record all derivatives at fair value on the balance sheet in accordance with ASC 815, Derivative and Hedging. When quoted market prices are not available, the valuation of derivative instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. These future net cash flows, however, are susceptible to change due primarily to fluctuations in interest rates (most significantly), foreign exchange rates, and commodity prices. As a result, the estimated values of these derivatives will change over time as cash is received and paid and as market conditions change. As these changes take place, they may have a positive or negative impact on our estimated valuations.

We incorporate credit valuation adjustments to appropriately reflect both the Company’s own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements of its OTC derivatives. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, current threshold amounts, mutual puts, and guarantees. Additionally, we actively monitor counterparty credit ratings for significant changes.

Notes 1, 8 and 21 of the Notes to Consolidated Financial Statements and “Interest Rate and Market Risk Management” on page 74 contain further information on our use of derivatives and the methodologies used to estimate fair value.

Income Taxes

The Company is subject to the income tax laws of the United States, its states and other jurisdictions where the Company 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 laws and related regulations. In the process of preparing the Company’s tax returns, management attempts to make reasonable interpretations of the tax laws. These interpretations are subject to challenge by the tax authorities upon audit or to re-interpretation based on management’s ongoing assessment of facts and evolving case law.

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The Company had net deferred tax assets (“DTAs”) of $540 million at December 31, 2010, compared to $498 million at December 31, 2009. The most significant portions of the deductible temporary differences relate to (1) the allowance for loan losses and (2) fair value adjustments or impairment write-downs related to securities. No valuation allowance has been recorded as of December 31, 2010 related to DTAs except for a full valuation reserve related to certain acquired net operating losses from an immaterial nonbank subsidiary. In assessing the need for a valuation allowance, both the positive and negative evidence about the realization of DTAs were evaluated. Despite the negative evidence of the past three years of losses, the ultimate realization of DTAs is based on the Company’s ability to (1) carry back net operating losses to prior tax periods, (2) implement tax planning strategies that are prudent and feasible, (3) utilize the reversal of deductible temporary differences that can be offset by taxable temporary differences, and (4) generate future taxable income.

The Company has available carryback potential to offset federal tax of approximately $100 million in the 2008 tax year. During 2010, the Company does anticipate a net operating loss for tax purposes that will largely offset the taxable income for the 2008 tax year.

Tax planning strategies represent a source of positive evidence that must be considered when assessing the need for a valuation allowance. Tax planning strategies must be prudent and feasible (and within the control of a company), something that a company might not ordinarily implement, but would implement to prevent an operating loss or tax credit carryforward from expiring unused, and would result in the realization of DTAs. The Company has evaluated a number of tax planning strategies that, if implemented, could result in the realization of a majority of the net DTA balance that exists at December 31, 2010. These strategies mainly involve the sale of highly appreciated assets (e.g., certain fixed assets, publicly-traded securities and insurance policies). Management would not expect that the execution of any of the actions would involve a significant amount of expense.

The Company has taxable temporary differences, or deferred tax liabilities (“DTLs”) that will reverse and offset DTAs in the periods prior to the expiration of any benefits. Based on our analysis and experience, the general reversal pattern of DTLs against DTAs would be somewhat similar in character and timing. Because of this generally consistent reversal pattern, we believe it is appropriate to reduce our gross DTAs by our DTLs.

The Company has a strong history of positive earnings and has generated significant levels of net income in 42 out of the previous 46 years. While the recent economic downturn has been severe, the Company has consistently maintained strong levels of “core net interest income”. The Company is well positioned in the highest growth areas in the country and is fundamentally strong in its capital, liquidity, business practices, and has actually grown its customer base during the current economic downturn. The Company has a long history of profitability and is expected to be profitable again in the near future. The Company is relying on future taxable income to realize some of its DTA and expects to generate this income beginning in 2011.

After evaluating all of the factors previously summarized and considering the weight of the positive evidence compared to the negative evidence, management has concluded it is more likely than not that the Company will realize the existing DTAs and that an additional valuation allowance is not needed.

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 regular basis. 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, 2010 of approximately $5.3 million, net of federal and/or state benefits, for uncertain tax positions primarily for various state tax contingencies in several jurisdictions.

Note 15 of the Notes to Consolidated Financial Statements and “Income Taxes” on page 46 contain additional information.

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RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

Note 2 of the Notes to Consolidated Financial Statements discusses the expected impact of accounting pronouncement(s) recently issued but not yet required to be adopted. Where applicable, the other Notes to Consolidated Financial Statements and MD&A discuss new accounting pronouncements adopted during 2010 to the extent they materially affect the Company’s financial condition, results of operations, or liquidity.

RESULTS OF OPERATIONS

The Company reported a net loss applicable to common shareholders for 2010 of $412.5 million, or $2.48 per diluted share, compared to a net loss applicable to common shareholders of $1,234.4 million, or $9.92 per diluted share for 2009. The significant reduction in net loss was mainly caused by the following favorable changes:

• $1,164.8 million decline in the provision for loan losses;

• $636.2 million decrease in impairment loss on goodwill;

• $212.1 million decrease in valuation losses on securities purchased;

• $195.1 million reduction in net impairment losses on investment securities;

• $70.2 million decline in the provision for unfunded lending commitments;

• $14.5 million gain on subordinated debt exchange; and

• $6.4 million improvement in dividends and other investment income.

The impact of these items was partially offset by the following:

• $508.9 million reduction in gain on subordinated debt modification;

• $294.5 million decrease in income tax benefit;

• $169.2 million decline in acquisition related gains;

• $136.7 million increase in accelerated convertible subordinated debt discount amortization recognized in interest expense;

• $129.6 million reduction in fair value and nonhedge derivative income;

• $48.8 million growth in other noninterest expense;

• $34.0 million increase in other real estate expense; and

• $26.2 million rise in credit related expense.

The Company reported a net loss applicable to common shareholders for 2009 of $1,234.4 million, or $9.92 per diluted share, compared to a net loss applicable to common shareholders of $290.7 million, or $2.68 per diluted share for 2008. The significant increase in net loss was mainly caused by:

• $1,368.7 million increase in the provision for loan losses;

• $282.4 million increase in impairment loss on goodwill;

• $199.0 million increase in valuation losses on securities purchased;

• $80.7 million increase in FDIC premiums;

• $64.0 million increase in the provision for unfunded lending commitments;

• $60.4 million increase in other real estate expense;

• $35.7 million increase in accelerated convertible subordinated debt discount amortization; and

• $20.9 million rise in credit related expense.

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The impact of these unfavorable changes was partially offset by the following:

• $508.9 million gain on subordinated debt modification;

• $358.0 million increase in income tax benefit;

• $169.2 million in acquisition related gains;

• $161.8 million increase in fair value and nonhedge derivative income; and

• $23.6 million reduction in net impairment losses on investment securities.

During 2009, the Company executed a subordinated debt modification and exchange transaction. The original discount on the convertible subordinated debt was $679 million and the remaining discount at December 31, 2010 was $386 million. It included the following components:

• The fair value discount on the debt; and

• The value of the beneficial conversion feature added the right of the debt holder to convert the debt into preferred stock.

The discount associated with the convertible subordinated debt is amortized to interest expense, a noncash expense, using the interest method over the remaining terms of the subordinated debt. When holders of the convertible subordinated notes convert to preferred stock, the rate of amortization is accelerated by immediately expensing any unamortized discount associated with the converted debt.

Excluding the impact of these noncash expenses and the 2009 gain on subordinated debt modification, the loss before income taxes decreased to $172.8 million in 2010 from $2,069.3 million in 2009, and has improved each quarter since the fourth quarter of 2009.

Schedule 2

IMPACT OF CONVERTIBLE SUBORDINATED DEBT

	Year Ended			Three Months Ended
(In millions)	December 31, 2010			December 31, 2010			September 30, 2010			June 30, 2010			March 31, 2010
Income (loss) before income taxes (GAAP)	$	(403.2	)	$	(96.5	)	$	(78.6	)	$	(136.3	)	$	(91.8	)
Convertible subordinated debt discount amortization		58.0			13.8			14.7			14.7			14.8
Accelerated convertible subordinated debt discount amortization		172.4			73.3			27.4			60.5			11.2
Income (loss) before income taxes and subordinated debt modification and conversions (non-GAAP)	$	(172.8	)	$	(9.4	)	$	(36.5	)	$	(61.1	)	$	(65.8	)

34

	Year Ended			Three Months Ended
(In millions)	December 31, 2009			December 31, 2009			September 30, 2009			June 30, 2009			March 31, 2009
Income (loss) before income taxes (GAAP)	$	(1,623.0	)	$	(311.3	)	$	(257.7	)	$	(75.7	)	$	(978.3	)
Gain on subordinated debt modification		(508.9	)		(15.2	)					(493.7	)
Convertible subordinated debt discount amortization		26.9			13.7			13.2			–			–
Accelerated convertible subordinated debt discount amortization		35.7			20.0			15.7			–			–
Income (loss) before income taxes and subordinated debt modification and conversions (non-GAAP)	$	(2,069.3	)	$	(292.8	)	$	(228.8	)	$	(569.4	)	$	(978.3	)

The impact of the conversion of subordinated debt into preferred stock is further detailed in “Capital Management” on page 84.

Net Interest Income, Margin and Interest Rate Spreads

Net interest income is the difference between interest earned on interest-bearing assets and interest incurred on interest-bearing liabilities. Taxable-equivalent net interest income is the largest component of Zions’ revenue. For the year 2010, it was 79.9% of our taxable-equivalent revenues, compared to 70.5% in 2009 and 91.3% in 2008. The change in the percentage from the prior year for 2010 and 2009 was primarily due to the 2009 gain on subordinated debt modification of $508.9 million and acquisition related gains of $169.2 million which increased total taxable-equivalent revenues in 2009. For the year 2010, taxable-equivalent net interest income was $1,749.1 million, compared to $1,920.8 million in 2009 and $1,995.4 million in 2008. The fluctuation between 2010 and 2009 reflects the effect of many factors, including a decrease in loans and leases, lower balances of and lower rates earned on securities, and higher noncash periodic and accelerated discount amortization (totaling $230.4 million in 2010) on convertible subordinated debt, partially offset by lower balances of and lower interest rates paid on interest bearing deposits, increased money market investments, as well as better-than-expected performance of loans acquired from the FDIC. Even though nonaccrual loans decreased by 35.8 % between 2009 and 2010, their positive impact only partially offset the adverse impact of continued pay-downs and charge-offs on earning assets. The decrease between 2008 and 2009 was largely the result of increased nonaccrual loans, securities on nonaccrual status, and higher average money market balances that were earning lower interest rates. 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 can significantly impact net interest income. During 2010, customer deposits declined by a smaller amount than did loan balances. The Company has undertaken efforts to actively reduce the excess liquidity while preserving key customer relationships. See “Interest Rate and Market Risk Management” on page 74 for further discussion of how we manage the portfolios of interest-earning assets, interest-bearing liabilities, and associated risk.

A gauge that we use to measure the Company’s success in managing its net interest income is the level and stability of the net interest margin. The Company also considers the “core net interest margin” to be relevant to ongoing operating results. The net interest margin was 3.73% for 2010, compared to 3.94% in 2009 and 4.18% in 2008. During 2010, the net interest margin was negatively impacted by 37 basis points by the accelerated discount amortization resulting from the conversion of convertible subordinated debt to preferred stock, and by 12 basis points for the discount amortization related to the convertible subordinated debt. This unfavorable

35

impact was partially mitigated by increased interest income resulting from the accretion on acquired loans based on increased projected cash flows, and by the low cost of noninterest-bearing deposit funding.

The decreased net interest margin for 2010 compared to 2009 resulted from the impact of the discount amortization on the modified subordinated debt, including the effect of the conversion of subordinated debt into preferred stock; increased nonaccrual loans and securities; and higher money market investment balances earning lower rates. This was offset in part by a lower cost mix of deposit funding, lower rates paid on interest-bearing deposits, and larger incremental spreads on new loan generation. Average loans and leases decreased $3.3 billion due to loan payoffs and charge-offs, and average money market investments increased $1.7 billion as the Company chose not to invest excess liquidity in longer-duration securities. Average interest-bearing deposits decreased $3.4 billion from 2009, with the decrease being driven primarily by time and money market deposits. Average borrowed funds decreased $1.6 billion compared to 2009, primarily due to reduced amounts of federal funds purchased and security repurchase agreements along with conversions of subordinated debt into preferred stock. Average noninterest-bearing deposits increased $2.3 billion compared to 2009 and were 31.9% of total average deposits for 2010, compared to 25.8% for 2009.

The decreased net interest margin for 2009 compared to 2008 resulted from increased nonaccrual loans and securities; the impact of the discount amortization on the modified subordinated debt, including the effect of the conversion of subordinated debt into Series C preferred stock; and higher money market investment balances earning lower rates. This was offset in part by a lower cost mix of deposit funding, lower rates paid on interest-bearing deposits, and larger incremental spreads on new loan generation. Average loans and leases increased $0.7 billion due to the acquisition of FDIC-supported loans, and average money market investments increased $0.5 billion due to strong growth in certain deposit categories, which the Company chose not to invest in longer-duration securities. Average interest-bearing deposits increased $3.4 billion from 2008, with the increase being driven primarily by money market and savings deposits. Average borrowed funds decreased $5.3 billion compared to 2008, primarily due to decreased borrowing from the FHLB and the Federal Reserve. Average noninterest-bearing deposits increased $1.9 billion compared to 2008 and were 25.8% of total average deposits for 2009, compared to 24.3% for 2008. The net interest margin for 2009 was unfavorably impacted by 6 basis points for the discount amortization on the modified subordinated debt and an additional 7 basis points from the impact of accelerated debt discount amortization resulting from the conversion of subordinated debt into Series C preferred stock.

The Company believes that its “core net interest margin” is more reflective of its operating performance than the reported net interest margin. The “core net interest margin” is calculated by excluding the impact of discount amortization on convertible subordinated debt, accelerated discount amortization on convertible subordinated debt, and additional accretion of interest income on loans acquired in FDIC-assisted transactions from the net interest margin. The “core net interest margin” was 4.12%, 4.07%, and 4.18% for 2010, 2009, and 2008 respectively. See “GAAP to non-GAAP Reconciliation” on page 88 for a reconciliation between the GAAP net interest margin and the non-GAAP “core net interest margin”.

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Chart 4 illustrates recent trends of the net interest margin, “core net interest margin”, and the average federal funds rate.

The spread on average interest-bearing funds for 2010 was 3.12%, compared to 3.52% for 2009 and 3.68% for 2008. The spread on average interest-bearing funds for 2010 was affected by the same factors that had an impact on the net interest margin.

The net interest margin may continue to be adversely affected in future quarters due to the level of nonperforming assets and the periodic amortization of debt discount related to the debt modification transactions. The discount on the convertible subordinated debt was $386 million as of December 31, 2010, or 48.1% of the total $803 million of remaining outstanding convertible subordinated notes and will be amortized as interest expense over the remaining life of the debt using the interest method. The net interest margin may also be negatively impacted in future periods if debt holders exercise their option to convert debt securities into preferred stock. The Company will be required to amortize the remaining discount related to the converted debt at the time of conversion.

The Company expects to continue its efforts over the long run to maintain a slightly “asset-sensitive” position with regard to interest rate risk. However, because of the current low interest rate environment, the Company has allowed its balance sheet to become more asset-sensitive than has historically been the case. With interest rates at historically low levels, there is also a reduced need to protect against falling interest rates. Our estimates of the Company’s actual rate risk position are highly dependent upon a number of assumptions regarding the re-pricing behavior of various deposit and loan types in response to changes in both short-term and long-term interest rates, balance sheet composition, and other modeling assumptions, as well as the actions of competitors and customers in response to those changes. Further detail on interest rate risk is discussed in “Interest Rate Risk” on page 75.

Schedule 3 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. Note that the “amount of interest” and the “average rate” paid on long-term debt in 2009 and 2010 reflect the impacts of the amortization and accelerated amortization of the discount on the modified subordinated debt.

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Schedule 3

DISTRIBUTION OF ASSETS, LIABILITIES, AND SHAREHOLDERS’ EQUITY

AVERAGE BALANCE SHEETS, YIELDS AND RATES

	2010								2009
(Amounts in millions)	Average balance			Amount  of interest1		Average rate			Average balance			Amount  of interest1		Average rate
ASSETS:
Money market investments	$	4,085		$	11.0		0.27	%	$	2,380		$	7.9		0.33	%
Securities:
Held-to-maturity		866			44.3		5.12			1,263			66.9		5.29
Available-for-sale		3,416			91.5		2.68			3,313			104.1		3.14
Trading account		61			2.2		3.64			75			2.7		3.65
Total securities		4,343			138.0		3.18			4,651			173.7		3.73
Loans held for sale		187			8.9		4.78			226			11.0		4.88
Loans:
Net loans and leases excluding FDIC-supported loans2		37,040			2,069.3		5.59			40,455			2,281.6		5.64
FDIC-supported loans		1,210			114.4		9.46			1,058			64.4		6.09
Total loans and leases		38,250			2,183.7		5.71			41,513			2,346.0		5.65
Total interest-earning assets		46,865			2,341.6		5.00			48,770			2,538.6		5.21
Cash and due from banks		1,214								1,245
Allowance for loan losses		(1,555	)							(1,104	)
Goodwill		1,015								1,174
Core deposit and other intangibles		101								125
Other assets		3,987								3,838
Total assets	$	51,627							$	54,048
LIABILITIES:
Interest-bearing deposits:
Savings and NOW	$	6,138			20.5		0.33		$	5,035			21.6		0.43
Money market		15,901			106.0		0.67			17,513			216.4		1.24
Time under $100,000		2,178			28.4		1.30			2,908			69.5		2.39
Time $100,000 and over		2,568			31.4		1.22			4,327			98.5		2.28
Foreign		1,627			9.8		0.60			2,011			18.7		0.93
Total interest-bearing deposits		28,412			196.1		0.69			31,794			424.7		1.34
Borrowed funds:
Securities sold, not yet purchased		40			1.8		4.50			41			2.2		5.22
Federal funds purchased and security repurchase agreements		920			1.5		0.16			1,923			5.7		0.30
Other short-term borrowings		189			9.3		4.93			305			6.8		2.24
Long-term debt		1,980			383.8		19.38			2,438			178.4		7.32
Total borrowed funds		3,129			396.4		12.67			4,707			193.1		4.10
Total interest-bearing liabilities		31,541			592.5		1.88			36,501			617.8		1.69
Noninterest-bearing deposits		13,318								11,053
Other liabilities		576								558
Total liabilities		45,435								48,112
Shareholders’ equity:
Preferred equity		1,732								1,558
Common equity		4,452								4,354
Controlling interest shareholders’ equity		6,184								5,912
Noncontrolling interests		8								24
Total shareholders’ equity		6,192								5,936
Total liabilities and shareholders’ equity	$	51,627							$	54,048
Spread on average interest-bearing funds							3.12	%							3.52	%
Taxable-equivalent net interest income and net yield on interest-earning assets				$	1,749.1		3.73	%				$	1,920.8		3.94	%

¹ Taxable-equivalent rates used where applicable.

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

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2008								2007								2006
Average balance			Amount  of interest1		Average rate			Average balance			Amount  of interest1		Average rate			Average balance			Amount  of interest1		Average rate
$	1,889		$	47.8		2.53	%	$	834		$	43.7		5.24	%	$	479		$	24.7		5.16	%
	1,516			101.3		6.68			684			47.7		6.97			645			44.1		6.83
	3,266			162.1		4.97			4,661			269.2		5.78			4,992			285.5		5.72
	43			1.9		4.41			61			3.3		5.40			157			7.7		4.91
	4,825			265.3		5.50			5,406			320.2		5.92			5,794			337.3		5.82
	182			10.1		5.52			233			14.9		6.37			261			16.5		6.30
	40,795			2,674.4		6.56			36,575			2,852.7		7.80			32,134			2,463.9		7.67
	–			–		–			–			–		–			–			–		–
	40,795			2,674.4		6.56			36,575			2,852.7		7.80			32,134			2,463.9		7.67
	47,691			2,997.6		6.29			43,048			3,231.5		7.51			38,668			2,842.4		7.35
	1,380								1,477								1,476
	(546	)							(391	)							(349	)
	1,937								2,005								1,887
	137								181								181
	3,163								2,527								2,379
$	53,762							$	48,847							$	44,242
$	4,446			35.6		0.80		$	4,443			41.4		0.93		$	4,180			30.8		0.74
	13,739			335.0		2.44			11,962			437.9		3.66			11,670			374.5		3.21
	2,695			96.2		3.57			2,529			110.7		4.38			2,065			77.4		3.75
	4,382			161.9		3.69			4,779			231.2		4.84			3,272			142.6		4.36
	3,166			84.2		2.66			2,710			130.5		4.81			2,065			95.5		4.62
	28,428			712.9		2.51			26,423			951.7		3.60			23,252			720.8		3.10
	33			1.5		4.82			30			1.4		4.56			66			3.0		4.57
	2,733			53.3		1.95			3,211			148.5		4.62			2,838			124.7		4.39
	4,699			124.0		2.64			1,355			68.8		5.08			699			36.7		5.25
	2,577			110.5		4.29			2,496			153.0		6.13			2,639			168.2		6.37
	10,042			289.3		2.88			7,092			371.7		5.24			6,242			332.6		5.33
	38,470			1,002.2		2.61			33,515			1,323.4		3.95			29,494			1,053.4		3.57
	9,145								9,401								9,508
	578								647								697
	48,193								43,563								39,699
	432								240								16
	5,108								5,008								4,493
	5,540								5,248								4,509
	29								36								34
	5,569								5,284								4,543
$	53,762							$	48,847							$	44,242
						3.68	%							3.56	%							3.78	%
			$	1,995.4		4.18	%				$	1,908.1		4.43	%				$	1,789.0		4.63	%

39

Schedule 4 analyzes the year-to-year changes in net interest income on a fully taxable-equivalent basis for the years indicated. For purposes of calculating the yields in these schedules, the average loan balances also include the principal amounts of nonaccrual and restructured loans. However, interest received on nonaccrual loans is included in income only to the extent that cash payments have been received and not applied to principal reductions. In addition, interest on restructured loans is generally accrued at reduced rates.

Schedule 4

ANALYSIS OF INTEREST CHANGES DUE TO VOLUME AND RATE

	2010 over 2009									2009 over 2008
	Changes due to						Total changes			Changes due to						Total changes
(Amounts in millions)	Volume			Rate1						Volume			Rate1
INTEREST-EARNING ASSETS
Money market investments	$	4.5		$	(1.4	)	$	3.1		$	1.6		$	(41.5	)	$	(39.9	)
Securities:
Held-to-maturity		(20.4	)		(2.2	)		(22.6	)		(13.3	)		(21.1	)		(34.4	)
Available-for-sale		2.7			(15.3	)		(12.6	)		1.6			(59.6	)		(58.0	)
Trading account		(0.5	)		–			(0.5	)		1.1			(0.3	)		0.8
Total securities		(18.2	)		(17.5	)		(35.7	)		(10.6	)		(81.0	)		(91.6	)
Loans held for sale		(1.9	)		(0.2	)		(2.1	)		2.1			(1.2	)		0.9
Loans:
Net loans and leases excluding FDIC-supported loans2		(192.1	)		(20.2	)		(212.3	)		(19.2	)		(373.6	)		(392.8	)
FDIC-supported loans		10.3			39.7			50.0			64.4			–			64.4
Total loans and leases		(181.8	)		19.5			(162.3	)		45.2			(373.6	)		(328.4	)
Total interest-earning assets		(197.4	)		0.4			(197.0	)		38.3			(497.3	)		(459.0	)
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Savings and NOW		3.9			(5.0	)		(1.1	)		2.4			(16.4	)		(14.0	)
Money market		(11.4	)		(99.0	)		(110.4	)		46.0			(164.6	)		(118.6	)
Time under $100,000		(9.4	)		(31.7	)		(41.1	)		5.1			(31.8	)		(26.7	)
Time $100,000 and over		(21.4	)		(45.7	)		(67.1	)		(1.4	)		(62.0	)		(63.4	)
Foreign		(2.3	)		(6.6	)		(8.9	)		(10.7	)		(54.8	)		(65.5	)
Total interest-bearing deposits		(40.6	)		(188.0	)		(228.6	)		41.4			(329.6	)		(288.2	)
Borrowed funds:
Securities sold, not yet purchased		(0.1	)		(0.3	)		(0.4	)		0.5			0.2			0.7
Federal funds purchased and security repurchase agreements		(1.6	)		(2.6	)		(4.2	)		(2.5	)		(45.1	)		(47.6	)
Other short-term borrowings		(2.6	)		5.1			2.5			(98.0	)		(19.2	)		(117.2	)
Long-term debt		(33.4	)		238.8			205.4			(6.8	)		74.7			67.9
Total borrowed funds		(37.7	)		241.0			203.3			(106.8	)		10.6			(96.2	)
Total interest-bearing liabilities		(78.3	)		53.0			(25.3	)		(65.4	)		(319.0	)		(384.4	)
Change in taxable-equivalent net interest income	$	(119.1	)	$	(52.6	)	$	(171.7	)	$	103.7		$	(178.3	)	$	(74.6	)

¹ Taxable-equivalent income used where applicable.

² Net of unearned income and fees. 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, in our judgment, is required to maintain the allowance for loan losses at an adequate level based upon our estimate of losses inherent in the loan portfolio. The provision for unfunded lending commitments is used to maintain the reserve for unfunded lending commitments at an adequate level based upon the inherent risks associated with such commitments. In determining adequate levels of the allowance and reserve, we perform periodic evaluations of the Company’s various portfolios, the levels of actual charge-offs, and statistical trends and other economic factors. See Note 6 of the Notes to the Consolidated Financial Statements and “Credit Risk Management” on page 62 for more information on how we determine the appropriate level for the allowance for loan and lease losses and the reserve for unfunded lending commitments.

The provision for loan losses for the year ended December 31, 2010 was $852.1 million compared to $2,016.9 million in 2009, and $648.3 million in 2008. The decrease in the provision for 2010 reflected an improvement in the credit quality metrics of the loan portfolio, including lower levels of criticized and classified loans, lower realized loss content in the loan segments and lower balances in construction and land development loans, which declined by 35.8% from 2009. The increased provision for 2009 was attributable to a higher level of criticized and classified loans, higher realized loss content in these loan segments, and continued deterioration in collateral values primarily in construction and land development loans.

Net loan and lease charge-offs fell to $968.9 million in 2010, compared to $1,172.6 million in 2009, and $393.7 million in 2008. See Note 6 of the Notes to the Consolidated Financial Statements, “Nonperforming Assets” on page 69, and “Allowance and Reserve for Credit Losses” on page 73 for further details.

The provision for unfunded lending commitments was $(4.7) million for 2010, as a result of improving credit quality of such commitments. The provision was $65.5 million in 2009 and $1.4 million in 2008. From period to period, the amounts of unfunded lending commitments may be subject to sizeable fluctuations due to changes in the timing and volume of loan commitments, originations, and funding, as well as historical loss experience.

Although the quality of the loan portfolio continues to be a concern, most measures of credit quality showed significant improvement in the second half of 2010, but with variations among geographies and loan types. In 2010, the Company also experienced a decrease in special mention, classified, nonaccrual, and past due loans, as well as improvements in other credit metrics. The Company’s expectation is that credit costs will improve in 2011 due to significant reductions in loan balances in loan categories that have exhibited higher loss rates, such as construction and land development loans. We also anticipate reductions in criticized and classified loans of most types, and expect stabilization of economic conditions. As a result, we expect continued reduction in the levels of provisioning and net charge-offs for at least the next several quarters, compared to the recent elevated levels.

Noninterest Income

Noninterest income represents revenues the Company earns for products and services that have no interest rate or yield associated with them. Noninterest income for 2010 was $440.5 million, compared to $804.1 million and $190.7 million for 2009 and 2008, respectively. Schedule 5 presents a comparison of the major components of noninterest income for the past three years.

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Schedule 5

NONINTEREST INCOME

(Amounts in millions)	2010			Percent change			2009			Percent change			2008
Service charges and fees on deposit accounts	$	199.7			(6.1	)%	$	212.6			2.7	%	$	207.0
Other service charges, commissions and fees		165.3			5.6			156.5			(6.7	)		167.7
Trust and wealth management income		27.5			(8.3	)		30.0			(20.4	)		37.7
Capital markets and foreign exchange		37.6			(25.2	)		50.3			0.8			49.9
Dividends and other investment income		33.1			24.4			26.6			(42.7	)		46.4
Loan sales and servicing income		29.4			31.8			22.3			(8.6	)		24.4
Fair value and nonhedge derivative income (loss)		(15.8	)		(113.9	)		113.8			337.1			(48.0	)
Equity securities gains (losses), net		(6.0	)		(233.3	)		(1.8	)		(325.0	)		0.8
Fixed income securities gains (losses), net		11.1			392.1			(3.8	)		(575.0	)		0.8
Impairment losses on investment securities:
Impairment losses on investment securities		(156.5	)		72.5			(569.9	)		(87.5	)		(304.0	)
Noncredit-related losses on securities not expected to be sold (recognized in other comprehensive income)		71.1			(75.4	)		289.4			100.0			–
Net impairment losses on investment securities		(85.4	)		69.6			(280.5	)		7.7			(304.0	)
Valuation losses on securities purchased		–			100.0			(212.1	)		(1,519.1	)		(13.1	)
Gain on subordinated debt modification		–			(100.0	)		508.9			100.0			–
Gain on subordinated debt exchange		14.5			100.0			–			–			–
Acquisition related gains		–			(100.0	)		169.2			100.0			–
Other		29.5			143.8			12.1			(42.7	)		21.1
Total	$	440.5			(45.2	)	$	804.1			321.7		$	190.7

Service charges and fees on deposit accounts decreased by $12.9 million, or 6.1% from 2009. This decline is a reflection of the decrease in deposits, as well as a decrease in nonsufficient-funds and overdraft fees due to changes in Regulation E. Service charges and fees on deposit accounts increased by $5.6 million between 2008 and 2009, largely due to the additional accounts obtained through the acquisition of three failed banks from the FDIC, as well as reduced business deposit account earnings credits caused by lower interest rates.

Other service charges, commissions, and fees, which are comprised of ATM fees, insurance commissions, bankcard merchant fees, debit card interchange fees, cash management fees, lending commitment fees, syndication and servicing fees and other miscellaneous fees increased by $8.8 million, or 5.6% from 2009. The increase was mostly due to increased loan, ATM, debit card, and bankcard fees, partially offset by decreased licensing fees and mutual fund commissions. The decrease in licensing fees is primarily attributable to the sale of NetDeposit’s assets.

Other service charges, commissions, and fees decreased $11.2 million, or 6.7% during 2009 compared to 2008. This was mostly due to lower lending related fees, official check fees, mutual fund commission fees and cash management related fees, offset by increased accounts receivable factoring fees.

Capital markets and foreign exchange includes trading income, public finance fees, foreign exchange income, and other capital market related fees. In 2010 this income decreased to $37.6 million from $50.3 million and $49.9 million earned in 2009 and 2008, respectively. Most of the decline from 2009 to 2010 was caused by decreases in commissions and trading income. The fluctuation from 2008 to 2009 was primarily driven by increased trading income, partially offset by lower public finance fees.

Dividends and other investment income consist of revenue from the Company’s bank-owned life insurance program and revenues from other investments. Revenues from other investments include dividends on FHLB

42

stock, Federal Reserve Bank stock, and earnings from unconsolidated affiliates including certain alternative venture investments. Dividends and other investment income increased by $6.5 million in 2010 compared to 2009. For the most part, the increase was caused by increased income from investments in several unconsolidated affiliates, and an increase in dividends on Federal Reserve stock, partially offset by decreased income from bank-owned life insurance contracts. Income from bank-owned life insurance decreased due to the Company surrendering certain life insurance contracts during 2010.

Dividends and other investment income was $26.6 million in 2009 and $46.4 million in 2008. The decline in 2009 was primarily due to a $14.7 million decrease in earnings from Amegy’s alternative investments program, a $14.4 million decrease in earnings from two investment funds, and a $5.7 million decrease in dividends on FHLB stock. Additionally, revenue from bank-owned life insurance programs decreased to $25.1 million during 2009 from $30.7 million in 2008. These decreases were somewhat offset by a $13.6 million increase in equity in earnings of Farmer Mac and a $7.1 million increase in dividends and equity in earnings on other investments.

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

Schedule 6

FAIR VALUE AND NONHEDGE DERIVATIVE INCOME (LOSS)

(Amounts in millions)	2010			Percent change			2009			Percent change			2008
Nonhedge derivative income (loss)	$	10.5			(90.6	)%	$	111.9			409.1	%	$	(36.2	)
Total return swap		(22.8	)		(100.0	)		–			–			–
Fair value decreases on instruments elected under fair value option		–			100.0			(0.9	)		90.2			(9.2	)
Derivative fair value credit adjustments		(3.5	)		(216.7	)		3.0			196.8			(3.1	)
Other		–			100.0			(0.2	)		(140.0	)		0.5
Total	$	(15.8	)		113.9		$	113.8			337.1		$	(48.0	)

During 2010, the Company terminated fewer cash flow hedges than in 2009. Nonhedge derivative income included $9.0 million in 2010 and $104.7 million in 2009 due to the acceleration of income from OCI to earnings for certain terminated cash flow hedges. The amount accelerated in 2009 was due to declining loan balances, which caused the reclassification to earnings of 100% of the OCI balances for many of the terminated hedges. There were fewer reclassifications in 2010. In 2010 the Company also recorded $22.8 million of negative fair value on the TRS agreement entered into during the third quarter.

Net gains from fixed income securities were $11.1 million in 2010, compared to a net loss of $3.8 million in 2009. Most of the gains realized in 2010 are attributable to the sale of certain auction rate securities, which were redeemed from customers in 2009. These securities were previously written down, but sold at par.

The Company recognized net impairment losses on investment securities of $85.4 million during 2010 compared to $280.5 million and $304.0 million in 2009 and 2008, respectively. The total impairment loss for 2010 was $156.5 million and included $71.1 million of noncredit-related OTTI which was charged against OCI. These OTTI losses were primarily from certain CDOs, including bank and insurance CDOs. See “Investment Securities Portfolio” on page 52 for additional information, including certain changes in modeling assumptions.

Valuation losses on securities purchased in 2009 consisted of $187.9 million from purchases of securities from Lockhart, prior to fully consolidating Lockhart in June 2009, and $24.2 million for valuation adjustments to auction rate securities which were purchased from customers during the first quarter of 2009.

In 2009, the Company recorded a gain on subordinated debt modification of $508.9 million. The Company exchanged approximately $200 million of subordinated notes for new notes with the same terms. The remaining $1.2 billion of subordinated notes were modified to permit conversion on a par for par basis into either the Company’s Series A or Series C preferred stock.

43

Acquisition related gains of $169.2 million in 2009 resulted from the Company’s acquisition of failed banks from the FDIC with loss sharing agreements. The Company recognized $146.5 million of gains resulting from the acquisition of Vineyard Bank, acquired from the FDIC on July 17, 2009. The remaining $22.7 million of acquisition related gains were from the acquisitions of the failed Alliance Bank on February 6, 2009 by CB&T and Great Basin Bank on April 17, 2009 by NSB. The gains resulted from the acquisition of assets that had fair values in excess of the fair value of liabilities assumed.

During 2010, the Company exchanged $55.6 million of nonconvertible subordinated debt for 2,165,391 shares of common stock, resulting in a $14.5 million gain.

Other noninterest income in 2010 reached $29.5 million, compared to $12.1 million in 2009 and $21.1 million in 2008. The increase in 2010 included a $13.7 million pre-tax gain from the sale of substantially all of the assets of a wholly-owned subsidiary, NetDeposit, LLC to BServ, Inc.

Noninterest Expense

Noninterest expense grew by only 2.8% from 2009, which was 13.3% higher than in 2008. The Company was successful in controlling many operational expense categories, which helped in offsetting the impact of increased costs incurred in credit management and resolution of problem loans. Schedule 7 presents a comparison of the major components of noninterest expense for the past three years.

Schedule 7

NONINTEREST EXPENSE

(Amounts in millions)	2010			Percent change			2009		Percent change			2008
Salaries and employee benefits	$	825.3			0.8	%	$	818.8		1.0	%	$	810.5
Occupancy, net		113.6			1.2			112.2		(1.8	)		114.2
Furniture and equipment		101.1			1.2			99.9		(0.2	)		100.1
Other real estate expense		144.8			30.7			110.8		119.8			50.4
Credit related expense		71.2			58.2			45.0		86.7			24.1
Provision for unfunded lending commitments		(4.7	)		(107.2	)		65.5		4,578.6			1.4
Legal and professional services		39.5			6.2			37.2		(18.2	)		45.5
Advertising		24.8			7.8			23.0		(25.1	)		30.7
FDIC premiums		102.0			1.5			100.5		405.0			19.9
Amortization of core deposit and other intangibles		25.5			(19.6	)		31.7		(4.5	)		33.2
Other		275.8			21.6			226.9		(7.4	)		245.0
Total	$	1,718.9			2.8		$	1,671.5		13.3		$	1,475.0

During 2010 salary costs increased by only 2.5% from 2009. Base salaries remained constant but the Company’s employees earned higher bonuses and incentives. In 2009 salary costs were 2.0% lower than in 2008, mainly from reduced variable pay and staff reductions. The salary costs for 2009 also included share-based compensation expense of approximately $29.8 million, down from $31.8 million for 2008. Employee health and insurance benefits declined by 17.1% during 2010, mostly caused by a reduction in the accrual for incurred-but-not-yet-reported health care claims. The 2009 expense increased by 37.9% from 2008 mainly due to higher health care costs from catastrophic claims.

Salaries and employee benefits are shown in greater detail in Schedule 8.

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Schedule 8

SALARIES AND EMPLOYEE BENEFITS

(Dollar amounts in millions)	2010		Percent change			2009		Percent change			2008
Salaries and bonuses	$	709.5		2.5	%	$	692.3		(2.0	)%	$	706.5
Employee benefits:
Employee health and insurance		43.1		(17.1	)		52.0		37.9			37.7
Retirement		26.9		(10.3	)		30.0		45.6			20.6
Payroll taxes and other		45.8		2.9			44.5		(2.6	)		45.7
Total benefits		115.8		(8.5	)		126.5		21.6			104.0
Total salaries and employee benefits	$	825.3		0.8		$	818.8		1.0		$	810.5
Full-time equivalent (“FTE”) employees at December 31,		10,524		–			10,529		(4.4	)		11,011

Other real estate expense increased to $144.8 million in 2010 compared to $110.8 million in 2009 and $50.4 million in 2008. The increase is primarily due to higher volumes of foreclosed properties added to OREO, and continued declines in real estate values, which resulted in increased write-downs of OREO during work-out, partially offset by an increase in net gains from some property sales. OREO expenses increased at Zions Bank, Amegy, NBA, and Vectra, and decreased at NSB and CB&T.

Credit related expense includes costs incurred during the foreclosure process prior to the Company obtaining title to collateral and recording an asset in OREO, as well as other out-of-pocket costs related to the management of problem loans and other assets. These costs were $71.2 million in 2010, compared to $45.0 million and $24.1 million in 2009 and 2008, respectively. The increased costs during these three years are a reflection of the Company’s higher levels of problem loans and its efforts to resolve them.

FDIC premiums were essentially unchanged between 2009 and 2010. During 2009 these premiums increased $80.6 million or 405.0% compared to 2008, due to increased premium rates and a “one-time” special assessment charged by the FDIC.

Other noninterest expense for 2010 amounted to $275.8 million compared to $226.9 million and $245.0 million during 2009 and 2008, respectively. The increase was mostly caused by a one-time structuring fee related to the TRS transaction, and write-downs of the FDIC indemnification asset attributable to loans purchased from the FDIC during 2009. FDIC-supported loans have performed better than expected, and therefore the indemnification asset has declined in value. Also, during 2010 we accrued $8.0 million for an expected non-tax deductible civil money penalty related to alleged violations of the Bank Secrecy Act expected to be assessed by the OCC and the U.S. Treasury Department’s FinCEN bureau. A penalty of this amount was consented to by the Company and announced by the OCC and FinCEN on February 11, 2011.

Impairment Losses on Goodwill

The Company performed a goodwill impairment analysis in the fourth quarter of 2010, and concluded that no impairment losses existed. In 2009 the Company recorded $636.2 million of impairment losses, almost entirely at Amegy. During 2008, impairment losses totaled $353.8 million and occurred at NBA, Vectra, NSB, and other reporting units.

The primary causes of the impairment losses on goodwill in 2009 and 2008 at the Company’s banking reporting units were declines in market values of comparable companies and reduced earnings at the reporting units, which resulted primarily from deterioration in credit quality of the loan portfolios. See Note 10 of the Notes to Consolidated Financial Statements and “Accounting for Goodwill” on page 30 for additional information.

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Foreign Operations

Zions Bank, CB&T, Amegy, Vectra, and CBW operate foreign branches in Grand Cayman, Grand Cayman Islands, B.W.I. The branches only accept deposits from qualified domestic customers. While deposits in these branches are not subject to FRB reserve requirements or FDIC insurance premiums, 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, 2010, 2009, and 2008 totaled $1.7 billion, $1.7 billion, and $2.6 billion, respectively, and averaged $1.6 billion for 2010, $2.0 billion for 2009, and $3.2 billion for 2008. All of these foreign deposits were related to domestic customers of the banks. In addition the Company had foreign loan balances totaling $110 million, $65 million, and $43 million at December 31, 2010, 2009, and 2008, respectively.

Income Taxes

The Company’s income tax benefit for 2010 was $106.8 million compared to an income tax benefit of $401.3 million and $43.4 million for 2009 and 2008, respectively. The Company’s effective income tax rates, including the effects of noncontrolling interests, were 26.7% in 2010, 24.8% in 2009 and 14.0% in 2008. The tax benefit rate for 2010 was reduced by the taxable surrender of certain bank-owned life insurance policies and the nondeductibility of a portion of the accelerated discount amortization from the conversion of subordinated debt to preferred stock during the year. The lower tax rates for both 2009 and 2008 are mainly due to nondeductible goodwill impairment charges incurred during the year. The 2009 effective tax rate was higher than in 2008 primarily due to the smaller impact of nondeductible goodwill impairment charges in proportion to overall loss before income taxes. During 2008, the Company reduced its liability for unrecognized tax benefits by approximately $9.6 million, net of any federal and/or state tax benefits. Of this reduction, $5.2 million decreased the Company’s tax expense for 2008 and $4.4 million reduced tax-related balance sheet accounts.

As discussed in previous filings, the Company has received federal income tax credits under the U.S. Government’s Community Development Financial Institutions Fund that are recognized over a seven-year period from the year of investment. The effect of these tax credits was to increase income tax benefit by $6.0 million in 2010, $5.9 million in 2009, and $5.8 million in 2008.

The Company had a DTA balance of approximately $540 million at December 31, 2010, compared to $498 million at December 31, 2009. The increase in the net DTA resulted primarily from items related to nonaccruing loans, OREO, and the decrease in deferred tax liabilities related to FDIC-supported transaction items and the nondeductibility of a portion of the accelerated discount amortization from the conversion of subordinated debt to preferred stock. The Company did not record a valuation allowance for GAAP purposes as of December 31, 2010. See Note 15 of the Notes to Consolidated Financial Statements and “Critical Accounting Policies and Significant Estimates” on page 28 for more information.

BUSINESS SEGMENT RESULTS

The Company manages its banking operations and prepares management reports with a primary focus on its subsidiary banks and the geographies in which they operate. As discussed in the Executive Summary, most of the lending and other decisions affecting customers are made at the local level. Each subsidiary bank holds its own banking charter. Those with national bank charters are subject to regulatory oversight by the OCC. Those with state charters are overseen by the FDIC and applicable state authorities. In addition to its banking businesses, the Company has an Other segment, which includes the Parent, ZMSC, TCBO, and nonbank financial service subsidiaries. These entities are not considered significant to the Company as a whole.

The accounting policies of the individual segments are the same as those of the Company. The Company allocates the cost of centrally provided services to the business segments based upon estimated or actual usage of those services. Note 22 of the Notes to Consolidated Financial Statements contains selected information from the respective balance sheets and statements of income for all segments.

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Schedule 9

SELECTED SEGMENT INFORMATION

(Dollar amounts in millions)	Zions Bank									CB&T									Amegy									NBA
	2010			2009			2008			2010			2009			2008			2010			2009			2008			2010			2009			2008
KEY FINANCIAL INFORMATION
Total assets	$	16,157		$	17,652		$	20,778		$	10,766		$	11,097		$	10,137		$	11,406		$	11,145		$	12,406		$	4,397		$	4,524		$	4,864
Total deposits		13,631			13,823			16,118			9,219			9,760			7,964			8,906			8,880			8,625			3,696			3,784			3,923
Net income (loss) applicable to controlling interest		(48.4	)		(202.9	)		106.7			58.8			(50.2	)		38.6			58.6			(780.4	)		125.1			(7.9	)		(144.2	)		(218.6	)
Net interest margin		4.39	%		3.68	%		3.77	%		5.04	%		4.88	%		4.51	%		3.98	%		3.90	%		3.92	%		4.30	%		3.95	%		4.64	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		10.43	%		8.84	%		6.91	%		9.94	%		8.81	%		8.77	%		13.84	%		11.79	%		8.67	%		12.71	%		11.59	%		15.19	%
Tier 1 risk-based capital		11.66	%		10.29	%		8.32	%		12.40	%		10.25	%		8.33	%		15.60	%		12.29	%		8.10	%		16.90	%		14.46	%		17.49	%
Total risk-based capital		12.88	%		11.52	%		11.33	%		13.68	%		11.51	%		11.05	%		16.89	%		13.57	%		11.13	%		18.19	%		15.76	%		18.76	%
CREDIT QUALITY
Provision for loan losses	$	350.6		$	400.4		$	163.1		$	149.9		$	251.5		$	82.9		$	118.7		$	406.1		$	71.9		$	53.4		$	291.7		$	211.8
Net loan and lease charge-offs		321.8			255.1			75.4			140.7			144.4			61.8			157.9			143.2			24.1			111.8			214.2			147.2
Ratio of net loan and lease charge-offs to average loans		2.39	%		1.77	%		0.53	%		1.64	%		1.65	%		0.78	%		2.02	%		1.65	%		0.28	%		3.33	%		5.54	%		3.35	%
Allowance for loan losses	$	388		$	359		$	214		$	258		$	223		$	116		$	340		$	379		$	116		$	143		$	201		$	124
Ratio of allowance for loan losses to net loans and leases, at year-end		3.01	%		2.57	%		1.45	%		3.05	%		2.50	%		1.48	%		4.55	%		4.58	%		1.28	%		4.36	%		5.57	%		3.01	%
Nonperforming lending-related assets	$	563.0		$	772.7		$	412.4		$	273.6		$	657.7		$	147.0		$	409.2		$	549.5		$	56.7		$	209.9		$	320.2		$	273.0
Ratio of nonperforming lending-related assets to net loans and leases and other real estate owned		4.31	%		5.45	%		2.79	%		3.22	%		7.28	%		1.87	%		5.40	%		6.52	%		0.62	%		6.22	%		8.66	%		6.49	%
Accruing loans past due 90 days or more	$	8.9		$	53.0		$	83.5		$	123.4		$	67.8		$	7.4		$	7.8		$	14.4		$	5.5		$	1.6		$	14.2		$	17.0
Ratio of accruing loans past due 90 days or more to net loans and leases		0.07	%		0.38	%		0.57	%		1.46	%		0.76	%		0.09	%		0.10	%		0.17	%		0.06	%		0.05	%		0.39	%		0.41	%

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	NSB									Vectra									TCBW
	2010			2009			2008			2010			2009			2008			2010			2009			2008
KEY FINANCIAL INFORMATION
Total assets	$	4,017		$	4,187		$	4,063		$	2,299		$	2,440		$	2,722		$	850		$	835		$	880
Total deposits		3,424			3,526			3,514			1,923			2,005			2,127			662			632			603
Net income (loss) applicable to controlling interest		(70.3	)		(352.0	)		(45.8	)		6.6			(25.6	)		(135.0	)		(0.5	)		1.6			14.0
Net interest margin		3.60	%		3.50	%		4.43	%		5.02	%		4.52	%		4.31	%		3.84	%		4.06	%		4.05	%
RISK-BASED CAPITAL RATIOS
Tier 1 leverage		12.66	%		13.10	%		12.75	%		12.05	%		10.91	%		7.16	%		10.62	%		10.57	%		8.66	%
Tier 1 risk-based capital		21.12	%		18.71	%		14.31	%		12.55	%		10.93	%		7.82	%		12.90	%		12.60	%		10.33	%
Total risk-based capital		22.48	%		20.07	%		15.58	%		13.83	%		12.21	%		11.23	%		14.16	%		13.86	%		13.32	%
CREDIT QUALITY
Provision for loan losses	$	133.3		$	563.7		$	100.3		$	28.2		$	78.5		$	15.9		$	17.4		$	22.5		$	1.1
Net loan and lease charge-offs		187.7			366.4			71.6			32.3			31.8			13.6			15.7			15.3			(0.1	)
Ratio of net loan and lease charge-offs to average loans		7.37	%		11.87	%		2.23	%		1.72	%		1.57	%		0.66	%		2.72	%		2.59	%		(0.03	)%
Allowance for loan losses	$	226		$	280		$	82		$	70		$	74		$	27		$	15		$	13		$	6
Ratio of allowance for loan losses to net loans and leases, at year-end		9.42	%		10.17	%		2.58	%		3.84	%		3.72	%		1.32	%		2.65	%		2.32	%		1.05	%
Nonperforming lending-related assets	$	250.6		$	333.4		$	222.0		$	100.3		$	105.9		$	25.0		$	20.9		$	29.5		$	–
Ratio of nonperforming lending-related assets to net loans and leases and other real estate owned		10.31	%		11.88	%		6.85	%		5.44	%		5.29	%		1.21	%		3.64	%		5.09	%		–
Accruing loans past due 90 days or more	$	0.2		$	12.5		$	14.4		$	0.2		$	1.4		$	1.7		$	–		$	–		$	–
Ratio of accruing loans past due 90 days or more to net loans and leases		0.01	%		0.45	%		0.45	%		0.01	%		0.07	%		0.08	%		–			–			–

The above amounts do not include intercompany eliminations.

Zions Bank

Zions Bank is headquartered in Salt Lake City, Utah and is primarily responsible for conducting the Company’s operations in Utah and Idaho. Zions Bank is the 2^nd largest full-service commercial bank in Utah and the 3^rd largest in Idaho, as measured by domestic deposits in the state. Zions Bank includes most of the Company’s Capital Markets operations, which include Zions Direct, Inc., fixed income securities trading, correspondent banking, public finance, trust and investment advisory services, and Western National Trust Company.

The net interest margin increased substantially to 4.39% in 2010 from 3.68% in 2009. Nonperforming lending-related assets decreased by 27.1% from the prior year due to extensive efforts to work out problem loans and to sell OREO properties. The loan portfolio decreased by $1.1 billion during 2010, which included a $0.6 billion decrease in commercial lending and a $0.3 billion decrease in commercial construction and land development loans. Accruing loans past due 90 days or more decreased to $8.9 million at December 31, 2010 compared to $53.0 million at December 31, 2009. Total deposits at December 31, 2010 were lower than at December 31, 2009.

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California Bank & Trust

California Bank & Trust is the 13^th largest full-service commercial bank in California as measured by domestic deposits in the state.

CB&T’s core business is built on relationship banking by providing commercial, real estate and consumer lending, depository services, international banking, cash management, and community development services. In 2009, CB&T acquired certain assets and liabilities of Alliance Bank and Vineyard Bank from the FDIC as receiver of these failed banks. The loans and other real estate acquired are covered by loss sharing agreements with the FDIC.

During 2010, CB&T’s net interest margin and net operating results exceeded our other subsidiary banks. Most notable in 2010 was the better-than-expected performance of the acquired loans from the failed banks. CB&T was also able to significantly reduce its nonperforming lending-related assets, which declined by 58.4% from the prior year. Total deposits at December 31, 2010 were 5.5% lower than at December 31, 2009. The provision for loan losses decreased by 40.4% during 2010 and the ratio of nonperforming lending-related assets to net loans and leases and OREO decreased to 3.22% from 7.28%. In 2010, the composition of CB&T’s loan portfolio experienced a $0.3 billion decrease in commercial construction and land development loans and a $0.2 billion increase in commercial real estate term loans, as well as a $0.4 billion decrease in the balances of the loans acquired from the failed banks.

Amegy Corporation

Amegy is headquartered in Houston, Texas and operates Amegy Bank, Amegy Mortgage Company, Amegy Investments, and Amegy Insurance Agency. Amegy Bank is the 6^th largest full-service commercial bank in Texas as measured by domestic deposits in the state.

Over the past three years, Amegy has been able to maintain a relatively constant net interest margin and achieved profitability in 2010 after experiencing a loss in 2009. Nonperforming lending-related assets decreased by 25.5% from the prior year. Total deposits increased from 2009 by 0.3%. During 2010, Amegy’s portfolio of commercial construction and land development loans decreased by $0.8 billion from 2009, while commercial real estate term loans grew by $0.1 billion.

National Bank of Arizona

National Bank of Arizona is the 4^th largest full-service commercial bank in Arizona as measured by domestic deposits in the state.

NBA’s 2010 net loss of $7.9 million was a significant improvement from substantial losses incurred in the previous two years. Nonperforming lending-related assets decreased by 34.4% from the prior year. Accruing loans past due 90 days or more decreased to $1.6 million at December 31, 2010 from $14.2 million at December 31, 2009. During 2010, NBA was able to grow its commercial lending and commercial real estate term loans by $39 million and $23 million, respectively. Its portfolio of construction and land development loans decreased by $273 million and consumer lending decreased by $123 million. Total deposits at December 31, 2010 were 2.3% lower than in the prior year, as NBA decreased interest rates paid on CDs and certain other accounts in an effort to decrease excess customer deposits.

Nevada State Bank

Nevada State Bank is the 4^th largest full-service commercial bank in Nevada as measured by domestic deposits in the state. NSB focuses on serving small and mid-sized businesses as well as retail consumers, with an emphasis in relationship banking.

49

During 2009, NSB acquired the banking operations of the former Great Basin Bank of Elko, Nevada, in an FDIC-assisted transaction. The acquisition consisted of approximately $212 million of assets, including the entire loan portfolio. The loan portfolio is covered by a loss sharing agreement with the FDIC.

The markets in which NSB operates are dependent on tourism and construction, and were severely impacted by the recent recession. At December 31, 2010, Nevada’s unemployment rate was one of the highest in the nation, and its housing market continued to suffer from a high rate of foreclosures. The contraction of NSB’s loan portfolio by $353 million was primarily due to decreased commercial real estate lending.

Despite the economic challenges in the local market, some of NSB’s 2010 results improved over the previous year. The net loss of $70.3 million in 2010 was substantially down from $352.0 million in 2009. The net interest margin increased slightly during 2010 after declining during 2009. Nonperforming lending-related assets decreased by 24.8% from the prior year. Net loan and lease charge-offs declined by 48.8% and at December 31, 2010, accruing loans past due 90 days or more were $0.2 million compared to $12.5 million at December 31, 2009. NSB’s total deposits at December 31, 2010 were 2.9% lower than at December 31, 2009.

Vectra Bank Colorado

Vectra Bank Colorado, N.A. is the 10^th largest full-service commercial bank in Colorado as measured by domestic deposits in the state.

Vectra returned to profitability in 2010 with net income of $6.6 million, even though it continued to struggle with the effects of the recent recession on its loan portfolio. Nonperforming lending-related assets decreased slightly to $100.3 million at December 31, 2010 from $105.9 million at December 31, 2009. Vectra’s loan portfolio declined by $169 million from 2009 including a $92 million decrease in commercial lending and an $84 million decrease in commercial construction and land development loans. Total deposits at December 31, 2010 were 4.1% lower than at December 31, 2009.

The Commerce Bank of Washington

The Commerce Bank of Washington is headquartered in Seattle, Washington, and operates out of a single office located in the Seattle central business district. Its business strategy focuses on serving the financial needs of commercial businesses, including professional services firms. TCBW has been successful in serving the greater Seattle/Puget Sound region without requiring extensive investments into a traditional branch network. It has been innovative in effectively utilizing couriers, bank by mail, remote deposit image capture, and other technologies.

TCBW had a net loss of $0.5 million in 2010, following net income of $1.6 million in 2009 and $14.0 million in 2008. Nonperforming lending-related assets decreased by 29.2% in 2010 from the prior year. The commercial lending portfolio decreased by $13 million, but commercial real estate term loans increased by $14 million. Total deposits were 4.7% higher at December 31, 2010 than at December 31, 2009.

50

BALANCE SHEET ANALYSIS

Interest-Earning Assets

Interest-earning assets are those assets that have interest rates or yields associated with them. One of our goals is to maintain a high level of interest-earning assets relative to total assets, while keeping nonearning assets at a minimum. Interest-earning assets consist of money market investments, securities, loans, and leases. Schedule 3, 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. Another one of our goals is to maintain a higher-yielding mix of interest earning assets, such as loans, relative to lower-yielding assets, such as money market investments and securities. The current period of slow economic growth, accompanied by low demand throughout 2009 and much of 2010, has made it difficult to consistently achieve these goals.

Average interest-earning assets declined by 3.9% to $46.9 billion in 2010 compared to $48.8 billion in 2009, mainly driven by decreases in the average loan and securities portfolios. However, average interest-earning assets as a percentage of total average assets increased slightly during 2010 to 90.8% compared to 90.2% in 2009.

Average money market investments, consisting of interest-bearing deposits and federal funds sold and security resell agreements, increased by 71.6% to $4.1 billion in 2010 compared to $2.4 billion in 2009. The increase in average money market investments reflects the increase in the Company’s liquidity during 2010. Average securities decreased by 6.6%, and average net loans and leases decreased by 7.9% for 2010 when compared to 2009. These changes are primarily the result of weak customer demand for new and refinanced loans.

Chart 5 illustrates recent trends in loan and deposit balances.

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Investment Securities Portfolio

We invest in securities both to generate revenues for the Company and to manage liquidity. The following schedules present a profile of the Company’s investment portfolios with asset-backed securities classified by credit ratings. The amortized cost amounts represent the Company’s original cost for the investments, adjusted for accumulated amortization or accretion of any yield adjustments related to the security and credit impairment losses. The estimated fair value measurement levels and methodology are discussed in detail in Note 21 of the Notes to Consolidated Financial Statements.

Schedules 10 and 11 present the Company’s asset-backed securities, classified by the highest of the ratings and the lowest of the ratings from any of Moody’s Investors Service, Fitch Ratings or Standard & Poors.

In the discussion of our investment portfolio below, we have included certain credit rating information because the information is one indication of the degree of credit risk to which we are exposed, and significant changes in ratings classifications for our investment portfolio could indicate an increased level of risk for the Company.

52

Schedule 10

INVESTMENT SECURITIES PORTFOLIO

ASSET-BACKED SECURITIES CLASSIFIED AT HIGHEST CREDIT RATING*

AT DECEMBER 31, 2010

(In millions)	Par value		Amortized cost		Net unrealized gains (losses) recognized in OCI1			Carrying value			Net unrealized gains (losses) not recognized in OCI1			Estimated fair value
Held-to-maturity:
Municipal securities	$	580	$	578	$	–		$	578		$	4		$	582
Asset-backed securities:
Trust preferred securities – predominantly bank
Noninvestment grade		88		88		(10	)		78			(24	)		54
Noninvestment grade – OTTI/PIK’d2		1		–		(1	)		(1	)		1			–
		89		88		(11	)		77			(23	)		54
Trust preferred securities – predominantly insurance
Noninvestment grade		175		175		(13	)		162			(27	)		135
		175		175		(13	)		162			(27	)		135
Other
AAA rated		2		2		–			2			–			2
Noninvestment grade		20		19		(1	)		18			(7	)		11
Noninvestment grade – OTTI/PIK’d2		12		7		(3	)		4			–			4
		34		28		(4	)		24			(7	)		17
		878		869		(28	)		841			(53	)		788
Available-for-sale:
U.S. Treasury securities		706		705		1			706						706
U.S. Government agencies and corporations:
Agency securities		201		201		7			208						208
Agency guaranteed mortgage-backed securities		548		566		10			576						576
Small Business Administration loan-backed securities		813		867		1			868						868
Municipal securities		158		156		2			158						158
Asset-backed securities:
Trust preferred securities – predominantly bank
AAA rated		8		8		(1	)		7						7
AA rated		114		78		15			93						93
A rated		309		245		(11	)		234						234
BBB rated		309		261		(52	)		209						209
Noninvestment grade		351		317		(105	)		212						212
Noninvestment grade – OTTI/PIK’d2		966		718		(483	)		235						235
		2,057		1,627		(637	)		990						990
Trust preferred securities – predominantly insurance
AA rated		76		69		–			69						69
A rated		32		31		(4	)		27						27
Not rated		1		–		2			2						2
Noninvestment grade		194		194		(62	)		132						132
		303		294		(64	)		230						230
Trust preferred securities – single banks
A rated		1		1		–			1						1
Not rated		25		25		(3	)		22						22
		26		26		(3	)		23						23
Trust preferred securities – real estate investment trusts
Noninvestment grade		25		16		(2	)		14						14
Noninvestment grade – OTTI/PIK’d2		70		30		(25	)		5						5
		95		46		(27	)		19						19
Auction rate securities
AAA rated		117		111		(1	)		110						110
		117		111		(1	)		110						110
Other
AAA rated		26		24		1			25						25
AA rated		14		14		(5	)		9						9
A rated		27		27		–			27						27
Noninvestment grade		6		5		(2	)		3						3
Noninvestment grade – OTTI/PIK’d2		97		33		(16	)		17						17
		170		103		(22	)		81						81
		5,194		4,702		(733	)		3,969						3,969
Mutual funds and stock		237		237		–			237						237
		5,431		4,939		(733	)		4,206						4,206
Total	$	6,309	$	5,808	$	(761	)	$	5,047		$	(53	)	$	4,994

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

¹ Other comprehensive income. All amounts reported are pretax.

² Consists of securities determined to have OTTI and/or securities whose most recent interest payment was capitalized as opposed to being paid in cash, as permitted under the terms of the security. This capitalization feature is known as “PIK” and where exercised the security is called PIK’d.

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Schedule 11

INVESTMENT SECURITIES PORTFOLIO

ASSET-BACKED SECURITIES CLASSIFIED AT LOWEST CREDIT RATING*

AT DECEMBER 31, 2010

(In millions)	Par value		Amortized cost		Net unrealized gains (losses) recognized in OCI1			Carrying value			Net unrealized gains (losses) not recognized in OCI1			Estimated fair value
Held-to-maturity:
Municipal securities	$	580	$	578	$	–		$	578		$	4		$	582
Asset-backed securities:
Trust preferred securities – predominantly bank
Noninvestment grade		88		88		(10	)		78			(24	)		54
Noninvestment grade – OTTI/PIK’d2		1		–		(1	)		(1	)		1			–
		89		88		(11	)		77			(23	)		54
Trust preferred securities – predominantly insurance
Noninvestment grade		175		175		(13	)		162			(27	)		135
		175		175		(13	)		162			(27	)		135
Other
A rated		2		2		–			2			–			2
Noninvestment grade		20		19		(1	)		18			(7	)		11
Noninvestment grade – OTTI/PIK’d2		12		7		(3	)		4			–			4
		34		28		(4	)		24			(7	)		17
		878		869		(28	)		841			(53	)		788
Available-for-sale:
U.S. Treasury securities		706		705		1			706						706
U.S. Government agencies and corporations:
Agency securities		201		201		7			208						208
Agency guaranteed mortgage-backed securities		548		566		10			576						576
Small Business Administration loan-backed securities		813		867		1			868						868
Municipal securities		158		156		2			158						158
Asset-backed securities:
Trust preferred securities – predominantly bank
A rated		1		1		–			1						1
BBB rated		114		78		15			93						93
Noninvestment grade		976		830		(169	)		661						661
Noninvestment grade – OTTI/PIK’d2		966		718		(483	)		235						235
		2,057		1,627		(637	)		990						990
Trust preferred securities – predominantly insurance
AA rated		71		64		1			65						65
A rated		4		5		(1	)		4						4
Not rated		1		–		2			2						2
Noninvestment grade		227		225		(66	)		159						159
		303		294		(64	)		230						230
Trust preferred securities – single banks
BBB rated		1		1		–			1						1
Not rated		25		25		(3	)		22						22
		26		26		(3	)		23						23
Trust preferred securities – real estate investment trusts
Noninvestment grade		25		16		(2	)		14						14
Noninvestment grade – OTTI/PIK’d2		70		30		(25	)		5						5
		95		46		(27	)		19						19
Auction rate securities
AAA rated		117		111		(1	)		110						110
		117		111		(1	)		110						110
Other
AAA rated		8		7		2			9						9
AA rated		31		30		(6	)		24						24
A rated		27		27		–			27						27
BBB rated		1		1		–			1						1
Noninvestment grade		6		5		(2	)		3						3
Noninvestment grade – OTTI/PIK’d2		97		33		(16	)		17						17
		170		103		(22	)		81						81
		5,194		4,702		(733	)		3,969						3,969
Mutual funds and stock		237		237		–			237						237
		5,431		4,939		(733	)		4,206						4,206
Total	$	6,309	$	5,808	$	(761	)	$	5,047		$	(53	)	$	4,994

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

¹ Other comprehensive income. All amounts reported are pretax.

² Consists of securities determined to have OTTI and/or securities whose most recent interest payment was capitalized as opposed to being paid in cash, as permitted under the terms of the security. This capitalization feature is known as PIK and where exercised the security is called PIK’d.

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Schedule 12

INVESTMENT SECURITIES PORTFOLIO

	December 31, 2010						December 31, 2009						December 31, 2008
(In millions)	Amortized cost		Carrying value		Estimated fair value		Amortized cost		Carrying value		Estimated fair value		Amortized cost		Carrying value		Estimated fair value
HELD-TO-MATURITY
Municipal securities	$	578	$	578	$	582	$	606	$	606	$	609	$	697	$	697	$	695
Asset-backed securities:
Trust preferred securities – banks and insurance		263		239		189		265		239		208		1,188		1,004		677
Trust preferred securities – real estate investment trusts		–		–		–		–		–		–		36		27		21
Other		28		24		17		30		25		16		76		63		51
		869		841		788		901		870		833		1,997		1,791		1,444
AVAILABLE-FOR-SALE
U.S. Treasury securities		705		706		706		26		26		26		28		29		29
U.S. Government agencies and corporations:
Agency securities		201		208		208		243		249		249		323		325		325
Agency guaranteed mortgage-backed securities		566		576		576		374		385		385		406		410		410
Small Business Administration loan-backed securities		867		868		868		782		768		768		693		667		667
Municipal securities		156		158		158		237		242		242		178		180		180
Asset-backed securities:
Trust preferred securities – banks and insurance		1,947		1,243		1,243		2,023		1,361		1,361		807		661		661
Trust preferred securities – real estate investment trusts		46		19		19		56		24		24		27		24		24
Auction rate securities		111		110		110		160		160		160		–		–		–
Other		103		81		81		127		77		77		102		72		72
		4,702		3,969		3,969		4,028		3,292		3,292		2,564		2,368		2,368
Mutual funds and stock		237		237		237		364		364		364		308		308		308
		4,939		4,206		4,206		4,392		3,656		3,656		2,872		2,676		2,676
Total	$	5,808	$	5,047	$	4,994	$	5,293	$	4,526	$	4,489	$	4,869	$	4,467	$	4,120

The amortized cost of investment securities at December 31, 2010 increased by 9.7% from the previous year. This was primarily due to increased investments in short term U.S. Treasury Securities, agency guaranteed mortgage-backed securities, and Small Business Administration loan-backed securities, partially offset by decreased investments in auction rate securities, mutual funds and stocks, as well as municipal securities.

The amortized cost of investment securities increased by 8.7% during 2009. This change was largely due to Zions Bank purchasing securities from Lockhart ($678 million), the Company purchasing auction rate securities from customers ($237 million), securities acquired in the FDIC-assisted acquisitions of the failed Alliance, Great Basin, and Vineyard banks ($182 million), and the impact of the 2009 provisions of ACS 320 ($230 million) offset by OTTI credit impairment, valuation losses on security purchases, and security maturity paydowns.

At December 31, 2010, 22.2% of the $4.2 billion of fair value of available-for-sale securities portfolio was valued at Level 1, 43.0% was valued at Level 2, and 34.8% was valued at Level 3 under the GAAP fair value accounting valuation hierarchy. A year earlier the fair value of available-for-sale securities totaled $3.7 billion, of which 10.4% was valued at Level 1, 43.9% at Level 2, and 45.7% at Level 3. See Note 21 of the Notes to Consolidated Financial Statements for further discussion of fair value accounting.

55

The amortized cost of available-for-sale investment securities valued at Level 3 was $2,217 million at December 31, 2010, and the fair value of these securities was $1,462 million. The securities valued at Level 3 were comprised of ABS CDOs and auction rate securities. For these Level 3 securities, net pretax unrealized loss recognized in OCI at the end of 2010 was $755 million. As of December 31, 2010, we believe that we will receive on settlement or maturity the amortized cost amounts of the Level 3 available-for-sale securities for which no OTTI was recognized.

At the end of 2009 the securities valued at Level 3 also included ABS CDOs and auction rate securities. The amortized cost of these investments was $2,413 million, their fair value was $1,670 million, and the related net pretax unrealized loss which was recognized in OCI at December 31, 2009 amounted to $743 million.

Valuation and Sensitivity Analysis of Level 3 Bank and Insurance CDOs

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

Schedule 13

SENSITIVITY OF INTERNAL MODEL

			Bank and Insurance CDOs at Level 3
(Amounts in millions)			Held-to-maturity						Available-for-sale
Fair value balance at December 31, 2010			$	189					$	1,212
Currently Modeled Assumptions			Incremental			Cumulative			Incremental			Cumulative
Expected collateral credit losses1
Loss percentage from currently defaulted or deferring collateral2							4.2	%					20.2	%
Projected loss percentage from currently performing collateral
1-year				0.1	%		4.4	%		0.5	%		20.7	%
years 2-5				0.7	%		5.1	%		0.8	%		21.6	%
years 6-30				6.5	%		11.6	%		4.8	%		26.3	%
Discount rate3
Weighted average spread over LIBOR				515 b	p					867 bp
Sensitivity of Modeled Assumptions
Decrease in fair value
due to increase in projected loss percentage	25	%		$    (0.1	)				$	(6.6	)
from currently performing collateral 4	50	%		(0.3	)					(10.9	)
	100	%		(0.7	)					(20.7	)
Decrease in fair value
due to increase in projected loss percentage	25	%		$    (3.3	)				$	(148.6	)
from currently performing collateral 4 and the	50	%		(3.7	)					(154.1	)
immediate default of all deferring collateral with no recovery	100	%		(4.7	)					(164.6	)
Decrease in fair value due to increase in discount rate	+ 100 bp			$  (17.0	)				$	(88.0	)
	+ 200 bp			(32.0	)					(164.4	)

¹ The Company uses an expected credit loss model which specifies cumulative losses at the 1-year, 5-year, and 30-year points from the date of valuation. These current and projected losses are reflected in the CDO’s fair value.

² Weighted average percentage of collateral that is defaulted due to bank failures or deferring payment as allowed under the terms of the security, including a 0% recovery rate on defaulted collateral and a credit specific probability of default on deferring collateral which ranges from 4.84% to 100%.

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

⁴ Percentage increase is applied to incremental projected loss percentages from currently performing collateral. For example, the 50% and 100% stress scenarios for AFS securities would result in cumulative 30 year losses of 29.4% =26.3% + 50% (0.5%+0.8%+4.8%) and 32.4% = 26.3% + 100% (0.5%+0.8%+4.8%) respectively.

56

The 2010 sensitivity analysis of valuation assumptions, when compared to the same projection for 2009, was consistent with changes the Company experienced in the loss percentage from currently defaulted or deferring collateral. The changes were driven by loss experience due to default as well as generally lower future loss projections from deferring institutions. This was offset by an assumption change which raised annual default rates to a minimum of 0.30% per year for years 6 to maturity to be consistent with the long term historical bank failure rate.

During 2010, the Company recognized credit-related net impairment losses on CDOs of $85.4 million, compared to losses of $280.5 million and $304.0 million for 2009 and 2008, respectively. The Dodd-Frank Act became effective during the third quarter of 2010, and it disallows the inclusion of trust preferred securities in Tier 1 capital. We believe that this may prompt certain issuing banks to redeem their trust preferred securities early, and have therefore changed some of our assumptions used in estimating the fair values of CDO securities. Of the $85.4 million net impairment losses recognized in 2010, $11.6 million were the result of this change in modeling assumptions.

Schedules 14 and 15 provide additional information on the below-investment-grade rated bank and insurance trust preferred CDOs’ portion of the AFS and HTM portfolios. The schedules include aggregate data on those securities which have been determined to not have OTTI at December 31, 2010 and those which have been determined to be other-than-temporarily impaired at or prior to December 31, 2010. The schedules utilize the lowest rating to identify those securities below investment grade. The schedules segment the securities by original ratings level to provide granularity on the seniority level of the securities and the distribution of unrealized losses, and on pool-level performance and projections. The best and worst pool-level statistic for each original ratings subgroup is presented, not the best and worst single security within the original ratings grouping. The number of issuers and number of currently performing issuers noted in Schedule 15 are from the same security. The remaining statistics may not be from the same security.

Schedule 14

BELOW-INVESTMENT-GRADE RATED BANK AND INSURANCE TRUST PREFERRED CDOS BY ORIGINAL RATINGS LEVEL

AT DECEMBER 31, 2010

						Total								Average holding1
(Dollar amounts in millions)	Number of securities		% of portfolio			Par value		Amortized cost		Estimated fair value		Unrealized gain (loss)		Par value		Amortized cost		Estimated fair value		Unrealized gain (loss)
Original ratings of securities, non-OTTI:
Original AAA		28		40.7	%	$	991	$	844	$	678		$      (166)	$	34	$	29	$	23		$      (6)
Original A		22		19.8			482		482		329		(153)		16		16		11		(5)
Original BBB		6		2.4			59		58		33		(25)		10		10		6		(4)
Total non-OTTI				62.9			1,532		1,384		1,040		(344)
Original ratings of securities, OTTI:
Original AAA		1		2.1			50		43		20		(23)		50		43		20		(23)
Original A		40		32.4			789		586		180		(406)		16		12		4		(8)
Original BBB		6		2.6			62		23		4		(19)		10		4		1		(3)
Total OTTI				37.1			901		652		204		(448)
Total noninvestment grade bank and insurance CDOs				100.0	%	$	2,433	$	2,036	$	1,244		$      (792)

¹ The Company may have more than one holding of the same security.

57

Schedule 15

POOL LEVEL PERFORMANCE AND PROJECTIONS FOR BELOW-INVESTMENT-GRADE RATED

BANK AND INSURANCE TRUST PREFERRED CDOs

AT DECEMBER 31, 2010

	Current lowest rating		# of issuers in collateral pool		# of issuers currently performing1		% of original collateral defaulted2			% of original collateral deferring3			Subordination as a % of performing collateral4			Collateralization %5			Present value of expected cash flows discounted at coupon rate as a % of par6			Lifetime additional projected loss from performing collateral7
Original ratings of securities, non-OTTI:
Original AAA
Best		BB		25		24		–			2.62	%		87.21	%		781.64	%		100	%		–
Weighted average				55		37		14.69	%		14.27			41.50			255.92			100	8		5.92	%
Worst		CC		19		6		28.71			28.10			13.97			151.99			96			8.47
Original A
Best		B		36		36		–			–			27.26			306.75			100			5.45
Weighted average				32		29		2.77			6.29			10.63			136.78			100			7.35
Worst		C		6		4		11.96			26.74			-5.93	9		82.13	10		100			7.96
Original BBB
Best		CCC		36		36		–			–			15.93			396.66			100			7.43
Weighted average				17		16		1.24			3.33			7.82			202.39			100			7.72
Worst		C		43		39		6.03			5.33			-3.08	9		47.52			100			7.96
Original ratings of securities, OTTI:
Original AAA
Single security		CCC		43		29		15.37			17.46			31.35			252.88			89			7.30
Original A
Best		CCC		42		34		–			1.89			58.17			239.07			100			–
Weighted average				39		23		14.71			17.78			-12.07			67.89			81			5.76
Worst		C		3				20.57			29.85			-59.36			16.25			52			8.47
Original BBB
Best		C		74		52		9.25			11.69			-8.54			77.44			100			5.29
Weighted average				35		23		13.28			21.79			-19.35			-113.93			47			6.34
Worst		C		37		19		16.76			29.85			-26.92			-193.17			1			7.30

¹ Excludes both defaulted issuers and issuers that have elected to defer payment of current interest.

² Collateral is identified as defaulted when a regulator closes an issuing bank.

³ Collateral is identified as deferring when the Company becomes aware that an issuer has announced or elected to defer interest payment on trust preferred debt.

⁴ Utilizes the Company’s loss assumption of 100% on defaulted collateral and the Company’s issuer specific loss assumption of from 4.84% to 100% dependent on credit for each deferring piece of collateral. “Subordination” in the schedule includes the effects of seniority level within the CDOs’ liability structure, the Company’s loss and recovery rate assumption for deferring but not defaulted collateral and a 0% recovery rate for defaulted collateral. The numerator is all collateral less the sum of (i) 100% of the defaulted collateral, (ii) the sum of the projected net loss amounts for each piece of deferring but not defaulted collateral and (iii) the amount of each CDO’s debt which is either senior to or pari passu with our security’s priority level. The denominator is all collateral less the sum of (i) 100% of the defaulted collateral and (ii) the sum of the projected net loss amounts for each piece of deferring but not defaulted collateral.

⁵ Utilizes the Company’s loss assumption of 100% on defaulted collateral and the Company’s issuer specific loss assumption of from 4.84% to 100% dependent on credit for each deferring piece of collateral. “Collateralization” in the schedule identifies the portion of a CDO tranche that is backed by nondefaulted collateral. The numerator is all collateral less the sum of (i) 100% of the defaulted collateral, (ii) the sum of the projected net loss amounts for each piece of deferring but not defaulted collateral and (iii) the amount of each CDO’s debt which is senior to our security’s priority level. The denominator is the par amount of the tranche. Par is defined as the original par less any principal paydowns.

⁶ For OTTI securities, this statistic approximates the extent of OTTI credit losses taken.

⁷ This is the same statistic presented in the preceding sensitivity schedule and incorporated in the fair value and OTTI calculations. The statistic is the sum of incremental projected loss percentages from currently paying collateral for year one, years two through five and years six through thirty.

⁸ Although cash flows project a return of less than par, they project full recovery of amortized cost and therefore no OTTI exists.

⁹ Negative subordination is projected to be remedied by excess spread prior to maturity.

¹⁰ Collateralization shortfall is projected to be remedied by excess spread prior to maturity.

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The Company’s loss and recovery experience as of December 31, 2010 (and our Level 3 modeling assumption) is essentially a 100% loss on defaults, although we have, to date, received several, generally small, recoveries on defaults. Our experience with deferring bank collateral has been that of all collateral that has elected to defer beginning in 2007 or thereafter, 45.3% has defaulted and approximately 52.1% remains within the allowable deferrable period. Older deferrals are more likely to have defaulted. Approximately 86% of the bank collateral which first deferred prior to January 1, 2009 had defaulted by December 31, 2010. For bank collateral which first deferred on or after January 1, 2009, 29% had defaulted by December 31, 2010. Seven issuing banks, with collateral aggregating to 2.6% of all deferrals, have come current and resumed interest payments on their trust preferred securities after previously deferring some payments. New deferrals peaked in 2009. In 2008, 9.2% of collateral performing at the start of the year elected to defer by year end. This contrasts with 19.1% in 2009, and 10.0% in 2010.

Schedule 16 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, 2010, and the corresponding average interest rates that the investments will yield if they are held to maturity. It should be noted that most of the SBA loan-backed securities and asset-backed securities are variable rate and their repricing periods are significantly less than their contractual maturities. Also see “Liquidity Risk” on page 79 and Notes 1, 5 and 8 of the Notes to Consolidated Financial Statements for additional information about the Company’s investment securities and their management.

Schedule 16

MATURITIES AND AVERAGE YIELDS ON SECURITIES

AT DECEMBER 31, 2010

	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	$	578		6.6	%	$	60		5.8	%	$	229		6.6	%	$	136		6.6	%	$	153		6.9	%
Asset-backed securities:
Trust preferred securities – banks and insurance		263		2.6			–					–		0.0			45		2.3			218		2.6
Other		28		1.1			–					7		1.3			10		1.3			11		0.8
		869		5.2			60		5.8			236		6.5			191		5.3			382		4.3
AVAILABLE-FOR-SALE:
U.S. Treasury securities		705		0.2			704		0.2			1		8.5			–					–
U.S. Government agencies and corporations:
Agency securities		201		5.1			25		5.1			73		5.1			68		5.0			35		5.4
Agency guaranteed mortgage-backed securities		566		3.1			83		3.1			233		3.1			136		3.1			114		3.1
Small Business Administration loan-backed securities		867		2.2			173		2.2			412		2.2			204		2.2			78		2.2
Municipal securities		156		6.9			6		5.2			36		6.9			77		7.8			37		5.1
Asset-backed securities:
Trust preferred securities – banks and insurance		1,947		2.1			29		2.6			109		2.9			348		2.5			1,461		1.9
Trust preferred securities – real estate investment trusts		46		0.7			–					–					17		0.8			29		0.7
Auction rate securities		111		0.9			–					–					–					111		0.9
Other		103		1.5			20		1.9			30		1.8			–					53		1.2
		4,702		2.2			1,040		1.0			894		2.9			850		3.2			1,918		2.0
Other securities:
Mutual funds and stock		237		0.1			237		0.1			–					–					–
		4,939		2.1			1,277		0.8			894		2.9			850		3.2			1,918		2.0
Total	$	5,808		2.5		$	1,337		1.0		$	1,130		3.7		$	1,041		3.6		$	2,300		2.4

* Taxable-equivalent rates used where applicable.

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As shown in Schedule 17 below, the investment securities portfolio at December 31, 2010 includes $612 million of nonrated, fixed-income securities compared to $654 million at December 31, 2009. Nonrated municipal securities held in the portfolio were underwritten by Zions Bank’s Municipal Credit Department in accordance with its established municipal credit standards.

Schedule 17

NONRATED SECURITIES

	December 31,
(In millions)	2010		2009
Municipal securities	$	566	$	594
Other nonrated debt securities		46		60
	$	612	$	654

Loans Held for Sale

Loans held for sale, consisting primarily of consumer mortgage and small business loans to be sold in the secondary market, were $206 million at December 31, 2010, compared with $209 million at December 31, 2009. The consumer loans are primarily fixed rate mortgages that are originated and sold to third parties.

Loan Portfolio

As of December 31, 2010, net loans and leases accounted for 72.0% of total assets compared to 78.6% at the end of 2009. Schedule 18 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, 2010. 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 75.

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Schedule 18

LOAN PORTFOLIO BY TYPE AND MATURITY

	December 31, 2010								December 31,
(Amounts in millions)	One year or less		One year through five years		Over five years		Total
									2009		2008		2007		2006
Commercial lending:
Commercial and industrial	$	5,005	$	3,244	$	918	$	9,167	$	9,631	$	11,202	$	10,182	$	8,071
Leasing		40		297		73		410		466		431		503		443
Owner occupied		381		1,391		6,446		8,218		8,752		8,743		7,545		6,260
Municipal		31		104		304		439		356		288		274		352
Total commercial lending		5,457		5,036		7,741		18,234		19,205		20,664		18,504		15,126
Commercial real estate:
Construction and land development		2,127		1,128		312		3,567		5,552		7,516		7,869		7,483
Term		1,045		2,716		3,821		7,582		7,255		6,196		5,336		4,954
Total commercial real estate		3,172		3,844		4,133		11,149		12,807		13,712		13,205		12,437
Consumer:
Home equity credit line		22		151		1,969		2,142		2,135		2,005		1,608		1,850
1-4 family residential		72		246		3,181		3,499		3,642		3,877		3,975		4,192
Construction and other consumer real estate		124		54		165		343		459		774		945		–
Bankcard and other revolving plans		169		115		13		297		341		374		347		295
Other		47		151		35		233		293		385		460		457
Total consumer		434		717		5,363		6,514		6,870		7,415		7,335		6,794
FDIC-supported loans		204		313		454		971		1,445		–		–		–
Other receivables		–		–		–		–		–		–		–		209
Total loans	$	9,267	$	9,910	$	17,691	$	36,868	$	40,327	$	41,791	$	39,044	$	34,566
Loans maturing in more than one year:
With fixed interest rates			$	4,085	$	3,163	$	7,248
With variable interest rates				5,825		14,528		20,353
Total			$	9,910	$	17,691	$	27,601

During 2008 the Company completed a loan classification project. Information to reclassify loans for periods prior to 2007 is not available.

As of December 31, 2010, net loans and leases were $36.7 billion, reflecting an 8.6% decline from 2009. The decrease is primarily due to pay-downs and charge-offs, which continue to more than offset new loan originations.

Most of the loan portfolio contraction during 2010 occurred in commercial real estate construction and land development loans, owner occupied, and FDIC-supported loans. The Company focused its efforts to reduce exposure to high risk construction and land development loans, and the demand for such loans has decreased due to the current economic conditions. The largest reductions occurred principally at Amegy, Zions Bank, NBA, and CB&T. The Company also experienced significant decreases in commercial lending balances, principally at Zions Bank, Vectra and CB&T.

We expect that construction and land development loans will continue to decline, as the Company has intentionally reduced lending for these types of projects and demand remains weak.

Other Noninterest-Bearing Investments

As of December 31, 2010, the Company had $858 million of other noninterest-bearing investments compared with $1,100 million in 2009. The decrease resulted mainly from decreased investments in bank-owned life insurance contracts and in SBIC investments. The life insurance contracts were surrendered as a part of the Company’s strategy to become more asset sensitive, and to reduce its investment in very long-term illiquid assets at affiliate banks.

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Schedule 19

OTHER NONINTEREST-BEARING INVESTMENTS

	December 31,
(In millions)	2010		2009
Bank-owned life insurance	$	428	$	620
Federal Home Loan Bank stock		125		136
Federal Reserve stock		128		122
SBIC investments1		38		65
Non-SBIC investment funds and other		96		102
Investments in ADC arrangements2		17		19
Other public companies		12		22
Trust preferred securities		14		14
	$	858	$	1,100

¹ Amounts include noncontrolling investors’ interests in Zions’ managed SBIC investments of approximately $18 million at December 31, 2009. As of December 31, 2010, such investments have been either liquidated or deconsolidated.

² Investments in ADC arrangements are loans that do not qualify for loan accounting under GAAP; therefore these loans are accounted for as noninterest-bearing investments.

Deposits

Deposits, both interest-bearing and noninterest-bearing, are a primary source of funding for the Company. Average total deposits decreased by 2.6% during 2010, with average interest-bearing deposits decreasing by 10.6% and average noninterest-bearing deposits increasing by 20.5%. The decline in deposits resulted from actions by the Company to reduce higher cost deposits, including time deposits and brokered deposits, as well as to reduce excess noninterest-bearing deposits held by some large customers through the use of off-balance sheet sweep products. Core deposits at December 31, 2010, which exclude time deposits larger than $100,000 and brokered deposits, increased by 2.5%, or $915 million, from December 31, 2009. The fluctuation was due to increases in noninterest-bearing deposits, and savings and NOW deposits, partially offset by decreases in money market, and time deposits under $100,000.

Demand, savings and money market deposits comprised 85.8% of total deposits at the end of 2010, compared with 82.6% at December 31, 2009.

During 2010, the Company reduced brokered deposits due to excess liquidity and weak loan demand. At December 31, 2010, total deposits included $435 million of brokered deposits compared to $1,608 million at December 31, 2009.

See Notes 11 and 12 of the Notes to Consolidated Financial Statements and “Liquidity Risk” on page 79 for additional information on funding and borrowed funds.

RISK ELEMENTS

Since risk is inherent in substantially all of the Company’s operations, management of risk is an integral part of its operations and is also a key determinant of its 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, guarantor, or another obligor to fully perform under the terms of a credit-related contract. Credit risk arises primarily from the Company’s lending activities, as well as from off-balance sheet credit instruments.

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

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

With regard to credit risk associated with counterparties to off-balance sheet credit instruments, Zions Bank and Amegy have ISDA agreements in place under which derivative transactions are entered into with major derivative dealers. Each ISDA agreement details the cash collateral arrangements between Zions Bank and Amegy and their counterparties. In every case, the amount of the cash collateral required to secure the exposed party in the derivative transaction is determined by the fair value of 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, in like transactions, a counterparty with a “AAA” rating would be obligated to provide less collateral to secure a major credit exposure than one with an “A” rating. All derivative gains and losses between Zions Bank or Amegy and a single counterparty are netted to determine the net credit exposure and therefore the collateral required. Any derivative transactions for affiliate banks other than Zions Bank or Amegy, as well as certain derivatives transactions entered into by Amegy after its acquisition by the Company, are handled through intercompany ISDA agreements such that the relevant affiliate faces Zions Bank and in turn Zions Bank faces the derivatives dealer.

The Company’s credit risk management strategy includes diversification of its loan portfolio. The Company maintains a diversified loan portfolio, which includes commercial real estate loans. The Company attempts to avoid the risk of an undue concentration of credits in a particular collateral type or with an individual customer or counterparty. During 2009, the Company adopted new concentration limits on various types of commercial real estate lending, particularly construction and land development lending, which have contributed to further reducing the Company’s exposure to this type of lending. The majority of the Company’s business activity is with customers located within the geographical footprint of its banking subsidiaries.

As displayed in Schedule 20, at the end of 2010, no single loan type exceeded 24.9% of the Company’s total loan portfolio. During 2010, construction and land development decreased to 9.7% of total loans, compared to 13.8% at the end of 2009.

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Schedule 20

LOAN PORTFOLIO DIVERSIFICATION

	December 31, 2010					December 31, 2009
(Amounts in millions)	Amount		% of total loans			Amount		% of total loans
Commercial lending:
Commercial and industrial	$	9,167		24.9	%	$	9,631		23.9	%
Leasing		410		1.1			466		1.2
Owner occupied		8,218		22.3			8,752		21.7
Municipal		439		1.2			356		0.9
Total commercial lending		18,234					19,205
Commercial real estate:
Construction and land development		3,567		9.7			5,552		13.8
Term		7,582		20.6			7,255		18.0
Total commercial real estate		11,149					12,807
Consumer:
Home equity credit line		2,142		5.8			2,135		5.3
1-4 family residential		3,499		9.5			3,642		9.0
Construction and other consumer real estate		343		0.9			459		1.1
Bankcard and other revolving plans		297		0.8			341		0.8
Other		233		0.6			293		0.7
Total consumer		6,514					6,870
FDIC-supported loans		971		2.6			1,445		3.6
Total loans	$	36,868		100.0	%	$	40,327		100.0	%

The Company’s loan portfolio includes loans that were acquired from failed banks: Alliance Bank, Great Basin Bank, and Vineyard Bank. These loans include nonperforming loans and other loans with characteristics indicative of a high credit risk profile, including substantial concentrations in California and Nevada, loans with homebuilders, and other construction finance loans. Most of these loans are covered under loss sharing agreements with the FDIC for which the FDIC generally will assume 80% of the first $275 million of credit losses for the Alliance Bank assets, $40 million of credit losses for the Great Basin Bank assets, and $465 million of credit losses for the Vineyard Bank assets and 95% of any credit losses in excess of those amounts. Therefore, the Company’s financial exposure to losses from these assets is substantially limited, and during 2010 the acquired loans performed better than expected. FDIC-supported loans represented approximately 2.6% and 3.6% of the Company’s total loan portfolio at the end of 2010 and 2009, respectively.

The credit quality of the Company’s loan portfolio began to show signs of stabilization and improvement during the latter half of 2010. Nonperforming lending related assets decreased by 34.0% from December 31, 2009. Gross charge-offs dropped to $1,074 million, compared to $1,256 million in 2009. Net charge-offs, in turn, decreased to $969 million in 2010 from $1,173 million in 2009.

Lending to finance residential land acquisition, development and construction has historically been an important business for the Company. However, during 2010, the Company intentionally reduced its portfolio of these types of loans. Stricter mortgage qualification standards, high unemployment, declining home values, and general uncertainty in the residential real estate market continues to have an adverse impact on the operations of many of the Company’s developer and builder customers.

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Commercial Lending

Schedule 21 provides selected information regarding our commercial lending portfolio regarding lending concentrations to certain industries.

Schedule 21

COMMERCIAL LENDING BY INDUSTRY GROUP

	December 31, 2010
(Amounts in millions)	Amount		Percent
Real estate and rental and leasing	$	2,488		13.6	%
Manufacturing		1,984		10.9
Retail trade		1,585		8.7
Wholesale trade		1,500		8.2
Mining, quarrying, and oil and gas extraction		1,346		7.4
Healthcare and social assistance		1,264		6.9
Construction		1,110		6.1
Professional, scientific, and technical services		966		5.3
Finance and insurance		963		5.3
Transportation and warehousing		866		4.8
Accommodation and food services		809		4.4
Other1		3,353		18.4
Total	$	18,234		100.0	%

¹ No other industry group exceeded 5%.

Commercial Real Estate Loans

As reflected in Schedule 22 the commercial real estate loan portfolio is also well diversified by property type, purpose and collateral location.

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Schedule 22

COMMERCIAL REAL ESTATE PORTFOLIO BY PROPERTY TYPE AND COLLATERAL LOCATION

(REPRESENTS PERCENTAGES BASED UPON OUTSTANDING COMMERCIAL REAL ESTATE LOANS)

AT DECEMBER 31, 2010

(Amounts in millions)			Collateral Location																											Product as a  % of total CRE			Product as a % of loan type
Loan Type	Balance1		Arizona			Northern California			Southern California			Nevada			Colorado			Texas			Utah / Idaho			Wash- ington			Other
Commercial term:
Industrial				0.60	%		0.29	%		1.80	%		0.18	%		0.21	%		0.40	%		0.28	%		0.10	%		0.18	%		4.04	%		5.85	%
Office				2.29			0.75			3.88			1.50			1.74			1.95			1.67			0.52			1.29			15.59			22.56
Retail				1.35			0.90			3.41			1.80			1.05			3.49			0.98			0.40			1.48			14.86			21.49
Hotel/motel				2.06			0.73			1.70			0.62			0.73			1.28			1.64			0.27			3.65			12.68			18.34
Acquisition and development				0.06			–			–			–			–			–			0.11			0.01			–			0.18			0.26
Medical				0.77			0.05			0.38			0.92			0.12			0.30			0.11			0.09			0.35			3.09			4.46
Recreation/ restaurant				0.59			0.08			0.56			0.33			0.18			0.28			0.20			0.02			0.54			2.78			4.04
Multifamily				0.80			0.38			3.24			0.80			0.43			1.77			0.76			0.12			0.96			9.26			13.40
Other				0.91			0.41			2.06			0.54			0.15			0.55			1.09			0.21			0.72			6.64			9.60
Total commercial term	$	7,509.2		9.43			3.59			17.03			6.69			4.61			10.02			6.84			1.74			9.17			69.12			100.00
Residential construction and land development
Single family housing				0.07			0.09			0.30			0.06			0.24			0.68			0.28			0.04			0.05			1.81			18.01
Acquisition and development				0.43			0.10			0.42			0.32			0.49			1.99			1.34			0.02			0.49			5.60			55.63
Loan lot investor				0.59			0.09			0.12			0.06			0.08			0.30			0.29			–			0.04			1.57			15.59
Condo				0.01			–			0.07			–			0.42			0.35			0.04			–			0.19			1.08			10.77
Total residential construction and land development		1,093.2		1.10			0.28			0.91			0.44			1.23			3.32			1.95			0.06			0.77			10.06			100.00
Commercial construction and land development
Industrial				0.02			–			0.05			–			–			0.23			0.03			–			0.03			0.36			1.75
Office				0.36			0.01			0.53			0.24			0.34			1.00			0.98			0.07			–			3.53			16.94
Retail				1.02			0.02			0.13			0.57			0.30			1.17			0.24			–			0.06			3.51			16.85
Hotel/motel				–			0.19			0.10			–			0.10			0.49			0.10			–			0.14			1.12			5.37
Acquisition and development				0.69			0.11			0.38			0.91			0.76			2.17			1.02			0.03			0.10			6.17			29.66
Medical				0.05			–			–			–			–			0.10			0.01			0.02			–			0.18			0.85
Multi family				0.37			0.01			0.98			–			0.23			2.22			0.21			0.37			0.39			4.78			22.98
Other				0.05			–			0.19			0.29			0.06			0.41			0.08			0.01			0.08			1.17			5.60
Total commercial construction and land development		2,262.1		2.56			0.34			2.36			2.01			1.79			7.79			2.67			0.50			0.80			20.82			100.00
Total construction and land development		3,355.3		3.66			0.62			3.27			2.45			3.02			11.11			4.62			0.56			1.57			30.88			100.00
Total commercial real estate	$	10,864.5		13.09			4.21			20.30			9.14			7.63			21.13			11.46			2.30			10.74			100.00

¹ Excludes approximately $284 million of unsecured loans outstanding, but related to the real estate industry.

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Selected information regarding our CRE loan portfolio is presented in Schedule 23.

Schedule 23

COMMERCIAL REAL ESTATE PORTFOLIO BY LOAN TYPE AND COLLATERAL LOCATION

AT DECEMBER 31, 2010

(Amounts in millions)			Collateral Location																											Total			% of total CRE
Loan Type	As of Date		Arizona			Northern California			Southern California			Nevada			Colorado			Texas			Utah / Idaho			Wash- ington			Other1
Commercial term
Balance outstanding		12/31/10	$	1,041.6		$	387.9		$	1,880.7		$	749.6		$	501.4		$	1,099.5		$	782.9		$	224.7		$	913.1		$	7,581.4			68.0	%
% of loan type				13.8	%		5.1	%		24.8	%		9.9	%		6.6	%		14.5	%		10.3	%		3.0	%		12.0	%		100.0	%
Delinquency rates2:
30-89 days		12/31/10		1.6	%		1.5	%		1.7	%		3.7	%		8.2	%		2.7	%		2.1	%		0.3	%		7.3	%		3.1	%
		12/31/09		1.8	%		2.4	%		2.4	%		7.6	%		1.4	%		4.3	%		2.4	%		0.3	%		9.2	%		4.0	%
³ 90 days		12/31/10		1.1	%		1.5	%		0.9	%		2.8	%		1.4	%		1.6	%		1.8	%		–			3.9	%		1.7	%
		12/31/09		1.4	%		1.6	%		1.6	%		3.9	%		0.8	%		3.3	%		1.1	%		–			5.6	%		2.5	%
Accruing loans past due 90 days or more		12/31/10		–			–			0.2			–			–			4.0			–			–			0.3			4.5
		12/31/09		1.2			–			0.6			0.5			–			1.2			0.6			–			2.6			6.7
Nonaccrual loans		12/31/10		23.4			6.2			36.3			70.5			19.4			32.8			20.1			1.0			53.9			263.6
		12/31/09		14.5			6.5			30.3			60.9			6.5			36.3			10.0			1.4			62.1			228.5
Residential construction and land development
Balance outstanding		12/31/10		165.4			30.0			105.6			50.3			134.3			380.6			213.0			2.6			85.3			1,167.1			10.5	%
% of loan type				14.1	%		2.6	%		9.1	%		4.3	%		11.5	%		32.6	%		18.3	%		0.2	%		7.3	%		100.0	%
Delinquency rates2:
30-89 days		12/31/10		9.8	%		6.0	%		5.3	%		55.6	%		1.4	%		19.9	%		13.6	%		–			9.6	%		14.3	%
		12/31/09		20.9	%		8.3	%		6.2	%		18.0	%		12.7	%		14.2	%		20.1	%		0.2	%		15.8	%		15.5	%
³ 90 days		12/31/10		8.6	%		6.0	%		3.4	%		55.6	%		0.4	%		19.2	%		10.0	%		–			5.0	%		12.6	%
		12/31/09		17.9	%		8.3	%		4.6	%		5.6	%		11.1	%		7.3	%		19.7	%		–			6.9	%		11.3	%
Accruing loans past due 90 days or more		12/31/10		0.8			–			–			–			–			0.1			0.6			–			0.1			1.6
		12/31/09		6.2			–			–			–			–			0.1			1.9			–			0.1			8.3
Nonaccrual loans		12/31/10		29.9			1.8			8.1			30.3			41.4			81.2			39.1			–			8.3			240.1
		12/31/09		66.2			4.8			33.7			44.5			23.0			103.4			100.1			–			19.8			395.5
Commercial construction and land development
Balance outstanding		12/31/10		285.9			37.5			257.6			223.1			199.0			898.9			325.5			78.7			93.9			2,400.1			21.5	%
% of loan type				11.9	%		1.6	%		10.7	%		9.3	%		8.2	%		37.5	%		13.6	%		3.3	%		3.9	%		100.0	%
Delinquency rates2:
30-89 days		12/31/10		5.0	%		–			0.5	%		23.7	%		8.1	%		5.7	%		6.4	%		2.7	%		12.4	%		7.1	%
		12/31/09		12.9	%		–			3.9	%		23.4	%		7.9	%		9.4	%		14.5	%		24.6	%		4.1	%		11.3	%
³ 90 days		12/31/10		4.2	%		–			0.5	%		16.4	%		8.1	%		4.3	%		4.2	%		–			12.4	%		5.5	%
		12/31/09		7.3	%		–			3.0	%		19.1	%		1.6	%		5.5	%		7.7	%		–			4.1	%		6.9	%
Accruing loans past due 90 days or more		12/31/10		–			–			–			–			–			–			0.2			–			0.1			0.3
		12/31/09		4.1			–			–			9.1			0.8			0.9			3.0			–			0.1			18.0
Nonaccrual loans		12/31/10		18.9			–			2.2			73.9			19.8			91.9			35.7			–			11.6			254.0
		12/31/09		57.1			–			12.8			107.2			4.7			198.8			37.0			–			11.8			429.4
Total construction and land development		12/31/10		451.3			67.5			363.2			273.4			333.3			1,279.5			538.5			81.3			179.2			3,567.2
Total commercial real estate		12/31/10	$	1,492.9		$	455.4		$	2,243.9		$	1,023.0		$	834.7		$	2,379.0		$	1,321.4		$	306.0		$	1,092.3		$	11,148.6			100.0	%

¹ No other geography exceeded $148 million for all three loan types.

² Delinquency rates include nonaccrual loans.

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Approximately 33% of the commercial real estate term loans consist of mini-perm loans. For such loans, construction has been completed and the project has stabilized to a level that supports the granting of a mini-perm loan in accordance with our underwriting standards. Mini-perm loans generally have initial maturities of 3 to 7 years. The remaining 67% of commercial real estate loans are term loans with initial maturities generally of 15 to 20 years. The stabilization criteria for a project to qualify for a term loan differ by product type and includes, for example, criteria related to the cash flow created by the project and occupancy rates.

Approximately 29.7% of the commercial construction and land development portfolio’s balance consists of acquisition and development loans. Most of these acquisition and development properties are tied to specific retail, apartment, office, or other projects. Underwriting on commercial properties is primarily based on the economic viability of the project with heavy consideration given to the creditworthiness of the sponsor. We generally require that the owner’s equity be injected prior to bank advances. Re-margining requirements are often included in the loan agreement along with guarantees of the sponsor. Recognizing that debt is paid via cash flow, the projected economics of the project are primary in the underwriting because these determine the ultimate value of the property and its ability to service debt. Therefore, in most projects (with the exception of multi-family projects) we look for substantial pre-leasing in our underwriting and we generally require a minimum projected stabilized debt service coverage ratio of 1.20.

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

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

Loan agreements require regular financial information on the project and the sponsor in addition to lease schedules, rent rolls, and on construction projects, independent progress inspection reports. The receipt of these schedules is closely monitored and calculations are made to determine adherence to the covenants set forth in the loan agreement. Additionally, the frequency of loan-by-loan reviews of pass grade loans has been increased to quarterly for all commercial and residential construction and land development loans at Zions Bank, CB&T, Amegy, NBA, NSB, and Vectra.

Interest reserves generally are established as an expense item in the budget for real estate construction or development loans. We generally require the borrower to put their equity into the project at the inception of the construction. This enables the bank to ensure the availability of equity in the project. The Company’s practice is to monitor the construction, sales and/or leasing progress to determine whether or not the project remains viable. If at any time during the life of the credit the project is determined not to be viable, the bank takes appropriate action to protect its collateral position via negotiation and/or legal action as deemed necessary. The bank then usually evaluates the proper use of interest reserves. At December 31, 2010, Zions’ affiliates had 341 loans with

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outstanding balances of $423 million where available interest reserves amounted to $42 million. At the end of 2009, they had had 416 loans with outstanding balances of $1.0 billion and related available interest reserves of $106 million. In instances where projects have been determined not to be viable, the interest reserves and other appropriate disbursements have been frozen.

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

The Company periodically stress tests its CRE loan portfolio using a loan-by-loan Monte Carlo simulation that stresses the probability of default and loss given default for CRE loans based on a variety of factors including regional economic factors, loan grade, loan-to-value, collateral type, and geography. This testing is back tested and the results are reviewed regularly with management, rating agencies and various banking regulators.

Consumer Loans

The Company did not pursue subprime residential mortgage lending, including option ARM and negative amortization loans. It does have approximately $383 million of stated income loans with generally high FICO scores at origination, including “one-time close” loans to finance the construction of a home, which convert into permanent jumbo mortgages. As of December 31, 2010, approximately $56 million of the $383 million of stated income loans had FICO scores of less than 620. These totals exclude held-for-sale loans. Stated income loans account for approximately $19 million, or 35%, of our credit losses in 1-4 family residential first mortgage loans during 2010, and were primarily in Utah and Arizona.

The Company has mainly been an originator of first and second mortgages, generally considered to be of prime quality. Its practice historically has been to sell “conforming” fixed rate loans to third parties, including Fannie Mae and Freddie Mac, for which it makes representations and warranties as to meeting certain underwriting and collateral documentation standards. It has also been the Company’s practice historically to hold variable rate loans in its portfolio. In the past two years, Fannie Mae and Freddie Mac have successfully “put back” to the Company’s subsidiary banks fewer than ten loans due to deficiencies in underwriting or loan documentation. In addition, the Company has not made use of so-called “robo-signers” in foreclosing on residential real estate, and it has not been subject to any foreclosure moratorium – whether self-imposed or imposed by others. The Company does not estimate that it has any material financial risk as a result of loan put-backs or its foreclosure practices, and has not established any reserves related to these items.

The Company is engaged in home equity credit line lending. Approximately $931 million of the Company’s $2.1 billion portfolio is secured by first deeds of trust, while the remaining balance is secured by junior liens. As of December 31, 2010, loans representing approximately 14.8% of the outstanding balance in this portfolio were estimated to have loan-to-value ratios above 100%. Of the total home equity credit line portfolio 0.41% was 90 or more days past due at December 31, 2010 as compared to 0.42% as of December 31, 2009. During 2010, the Company modified a nominal number of home equity loans. The credit losses for this portfolio were 129 basis points for the year ended December 31, 2010.

Nonperforming Assets

Total nonperforming lending related assets were $1,828 million at December 31, 2010 compared to $2,769 million at December 31, 2009 and $1,138 million at December 31, 2008.

As reflected in Schedule 24, the Company’s nonperforming assets as a percentage of net loans and leases and OREO decreased substantially during 2010. The percentage was 4.91% at December 31, 2010, compared with 6.79% on December 31, 2009 and 2.71% on December 31, 2008.

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Total nonaccrual loans, excluding FDIC-supported loans, at December 31, 2010 decreased by $530 million from December 31, 2009. The decrease included $331 million for construction and land development loans, $132 million for owner occupied loans, and $95 million for commercial and industrial loans. This positive impact was partially offset by a $36 million increase in commercial real estate term loans. The decrease in nonaccrual loans occurred primarily at Zions Bank, Amegy, and NBA.

Schedule 24

NONPERFORMING LENDING-RELATED ASSETS

	December 31,
(Amounts in millions)	2010			2009			2008			2007			2006
Nonaccrual loans:
Loans held for sale	$	–		$	–		$	30		$	–		$	–
Commercial lending:
Commercial and industrial		224			319			148			58			25
Leasing		1			11			8			–			–
Municipal		2			–			–			–			–
Owner occupied		342			474			158			21			13
Commercial real estate:
Construction and land development		494			825			457			161			14
Term		264			228			44			4			8
Consumer:
Real estate		163			162			97			13			5
Other		3			4			4			2			2
Nonaccrual loans, excluding FDIC-supported loans		1,493			2,023			946			259			67
Other real estate owned:
Commercial:
Commercial properties		99			85			36			8			5
Developed land		6			14			7			–			–
Land		33			35			2			2			2
Residential:
1-4 family		53			50			40			4			2
Developed land		50			119			71			1			–
Land		18			33			36			–			–
Other real estate owned, excluding FDIC-supported assets		259			336			192			15			9
Other assets		–			–			–			–			6
Total nonperforming lending-related assets, excluding FDIC-supported assets		1,752			2,359			1,138			274			82
FDIC-supported nonaccrual loans		36			356			–			–			–
FDIC-supported other real estate owned		40			54			–			–			–
FDIC-supported nonperforming lending-related assets		76			410			–			–			–
Total nonperforming lending-related assets	$	1,828		$	2,769		$	1,138		$	274		$	82
Ratio of nonperforming assets to net loans and leases* and other real estate owned		4.91	%		6.79	%		2.71	%		0.70	%		0.24	%
Accruing loans past due 90 days or more:
Commercial lending	$	11		$	53		$	50		$	38		$	17
Commercial real estate		7			33			48			28			22
Consumer		5			21			32			11			5
Total excluding FDIC-supported loans		23			107			130			77			44
FDIC-supported loans		119			56			–			–			–
Total	$	142		$	163		$	130		$	77		$	44
Ratio of accruing loans past due 90 days or more to net loans and leases*		0.38	%		0.40	%		0.31	%		0.20	%		0.13	%

* Includes loans held for sale.

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TDR Loans

Nonaccrual loans also include nonperforming loans which have been restructured and classified as troubled debt restructured loans.

TDRs are loans which have been modified to accommodate a borrower who is experiencing financial difficulties, and for which the Company has granted a concession that it would not otherwise consider. These modifications are structured on a loan-by-loan basis, and depending on the circumstances, may include extended payment terms, a modified interest rate, forgiveness of principal (on occasion), or other concessions. However, not all modifications are TDRs; modifications are also performed in the normal course of business for borrowers that are not experiencing financial difficulty, wherein we meet the customer’s specific needs, comply with contractual commitments, as well as for competitive reasons.

We consider many factors in determining whether to agree to a loan modification involving concessions, and seek a solution that will both minimize potential loss to the Company and attempt to help the borrower. We evaluate the borrower’s current and forecasted future cash flows, their ability and willingness to make current contractual or proposed modified payments, the value of the underlying collateral (if applicable), the possibility of obtaining additional security, and the potential costs related to a repossession or foreclosure and the subsequent sale of the collateral.

TDRs are classified as either accrual or nonaccrual loans. If a nonaccrual loan is restructured as a TDR, it will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Most often, loans are classified as nonaccrual according to our nonaccrual policy when restructured as a TDR.

Schedule 25 provides the outstanding balances of our TDR loans.

Schedule 25

ACCRUING AND NONACCRUING TROUBLED DEBT RESTRUCTURED LOANS

	December 31,
(In millions)	2010		2009
Restructured loans – accruing	$	388	$	204
Restructured loans – nonaccruing		367		299
Total	$	755	$	503

Commercial loan TDRs

Commercial loans (commercial lending (“C&I”) and commercial real estate (“CRE”)) may be modified to provide the borrower more time to complete the project, to achieve a higher lease-up percentage, to sell the property, or for other reasons. When it is in the best interest of the Company and the borrower to agree to a concession, we modify the loan rather than to try to pursue collection through foreclosure or other means.

For certain troubled debt restructurings, we split the loan into two new notes – A and B notes. The A note is structured to comply with our current lending standards at current market rates, and is tailored to suit the customer’s ability to make timely interest and principal payments. The B note represents the concession granted to the borrower and varies by situation, but usually we defer principal and interest payments until the A note has been paid in full. The B note is often charged-off soon after the restructuring has been completed, and any payments collected are accounted for as recoveries.

At December 31, 2010, the Company had classified $159 million and $532 million of C&I and CRE loans as TDRs, respectively.

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Consumer loan TDRs

Consumer loan TDRs represent loan modifications in which a concession has been granted to the borrower who is unable to refinance the loan with a new loan from another lender, or who is experiencing economic hardship. Such TDRs may include first-lien residential mortgage loans and home equity loans. At December 31, 2010, the Company had classified $64 million of consumer loans as TDRs.

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Other

In addition to the lending related nonperforming assets, the Company had $195 million in carrying value of investments in debt securities that were on nonaccrual status at December 31, 2010, which compared to $171 million at December 31, 2009.

Allowance and Reserve for Credit 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.

Schedule 26 summarizes the Company’s loan loss experience by major portfolio segment.

Schedule 26

SUMMARY OF LOAN LOSS EXPERIENCE

(Amounts in millions)	2010			2009			2008			2007			2006
Loans and leases outstanding on December 31, (net of unearned income)	$	36,747		$	40,189		$	41,659		$	38,880		$	34,415
Average loans and leases outstanding, (net of unearned income)	$	38,250		$	41,513		$	40,795		$	36,575		$	32,134
Allowance for loan losses:
Balance at beginning of year	$	1,531		$	687		$	459		$	365		$	338
Allowance of companies acquired		–			–			–			8			–
Allowance associated with purchased securitized loans		–			–			2			–			–
Allowance of loans and leases sold		–			–			(1	)		(2	)		–
Provision charged against earnings		852			2,017			648			152			73
Change in allowance covered by FDIC indemnification		26			–			–			–			–
Charge-offs:
Commercial lending		(417	)		(373	)		(100	)		(39	)		(47	)
Commercial real estate		(517	)		(713	)		(269	)		(24	)		(5	)
Consumer		(140	)		(170	)		(45	)		(16	)		(14	)
Total		(1,074	)		(1,256	)		(414	)		(79	)		(66	)
Recoveries:
Commercial lending		35			51			9			9			12
Commercial real estate		44			21			7			1			1
Consumer		12			9			5			5			7
Total		91			81			21			15			20
Charge-offs recoverable from FDIC		14			2			–			–			–
Net loan and lease charge-offs		(969	)		(1,173	)		(393	)		(64	)		(46	)
Reclassification to reserve for unfunded lending commitments		–						(28	)		–			–
Balance at end of year	$	1,440		$	1,531		$	687		$	459		$	365
Ratio of net charge-offs to average loans and leases		2.53	%		2.82	%		0.96	%		0.17	%		0.14	%
Ratio of allowance for loan losses to net loans and leases, on December 31,		3.92	%		3.81	%		1.65	%		1.18	%		1.06	%
Ratio of allowance for loan losses to nonperforming loans, on December 31,		94.22	%		64.36	%		72.58	%		177.70	%		549.88	%
Ratio of allowance for loan losses to nonaccrual loans and accruing loans past due 90 days or more, on December 31,		86.21	%		60.22	%		63.84	%		136.75	%		331.56	%

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Schedule 27 provides a breakdown of the allowance for loan losses and the allocation among the portfolio segments.

Schedule 27

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

AT DECEMBER 31,

	2010					2009					2008					2007					2006
(Amounts in millions)	% of total loans			Allocation of allowance		% of total loans			Allocation of allowance		% of total loans			Allocation of allowance		% of total loans			Allocation of allowance		% of total loans			Allocation of allowance
Type of Loan
Commercial lending		49.5	%	$	761		47.6	%	$	613		49.5	%	$	319		47.4	%	$	190		44.1	%	$	182
Commercial real estate		30.2			487		31.8			753		32.8			291		33.8			215		35.8			143
Consumer		17.7			154		17.0			165		17.7			77		18.8			54		20.1			40
FDIC-supported loans		2.6			38		3.6			–
Total		100.0	%	$	1,440		100.0	%	$	1,531		100.0	%	$	687		100.0	%	$	459		100.0	%	$	365

The total allowance for loan losses at December 31, 2010 decreased by $91 million from the level at year-end 2009. For 2010, the $148 million increase in the allowance for loan losses for commercial lending reflects deterioration of borrower credit quality due to difficult economic conditions, reductions in collateral values, and increases in realized loss rates that increased our quantitative loss factors for commercial real estate and consumer portfolios as well. The $266 million decrease in the allowance for commercial real estate loans largely reflects the decrease in loans outstanding for the construction and land development portfolio and improving credit quality measures across the Company.

The reserve for unfunded lending commitments represents a reserve for potential losses associated with off-balance sheet commitments and standby letters of credit. The December 31, 2010 balance decreased by $5 million from December 31, 2009. This decrease is primarily due to an improvement in credit quality measures including a reduction of criticized and classified commitments. See Note 6 of the Notes to Consolidated Financial Statements for additional information related to the allowance for credit losses.

Interest Rate and Market Risk Management

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

The Company’s Board of Directors is responsible for approving the overall policies relating to the management of the financial risk of the Company. The Boards of Directors of the Company’s subsidiary banks are also required to review and approve these policies. In addition, the Board establishes and periodically revises policy limits, and reviews limit exceptions reported by management. The Board has established the management 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;

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

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

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

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

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

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

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

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. The Company has positioned its December 31, 2010 balance sheet to be more asset sensitive than it was at December 31, 2009.

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

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

Duration of equity is derived by first calculating the dollar duration of all assets, liabilities and derivative instruments. Dollar duration is determined by calculating the fair value of each instrument assuming interest rates sustain immediate and parallel movements up 1% and down 1%. The average of these two changes in fair value is the dollar duration. Subtracting the dollar duration of liabilities from the dollar duration of assets and adding the net dollar duration of derivative instruments results in the dollar duration of equity. Duration of equity is computed by dividing the dollar duration of equity by the fair value of equity. The Company’s policy is generally to maintain duration of equity between -3 years to +7 years. However, in the current low interest rate environment, the Company is operating with a duration of equity of slightly less than - -3 years in some scenarios.

Income simulation is an estimate of the net interest income and total rate sensitive income that would be recognized under different rate environments. Net interest income and total rate sensitive income are 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. For income simulation, Company policy requires that interest sensitive income from a static balance sheet be limited to a decline of no more than 10% during one year if rates were to immediately rise or fall in parallel by 200 basis points.

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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 slightly asset-sensitive position. However, positions at the end of any period may not be reflective of the Company’s position in any subsequent period.

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

As of the dates indicated, Schedule 28 shows the Company’s estimated range of duration of equity and percentage change in interest sensitive income, based on a static balance sheet, in the first year after the rate change if interest rates were to sustain an immediate parallel change of 200 basis points; the “fast” and “slow” results differ based on the assumed speed of repricing of administered-rate deposits (money market, interest-on-checking, and savings).

Schedule 28

DURATION OF EQUITY AND INTEREST SENSITIVE INCOME

	December 31, 2010						December 31, 2009
	Low			High			Low			High
Duration of equity:
Range (in years)
Base case		-3.1			-1.2			-2.9			-0.8
Increase interest rates by 200 bp		-3.0			-1.4			-2.7			-0.8
	Deposit repricing response
	Fast			Slow			Fast			Slow
Income simulation – change in interest sensitive income:
Increase interest rates by 200 bp		3.1	%		6.0	%		2.2	%		5.0	%
Decrease interest rates by 200 bp1		-2.5	%		-2.7	%		-4.1	%		-4.3	%

¹ In the event that a 200 basis point rate parallel decrease cannot be achieved, the applicable rate changes are limited to lesser amounts such that interest rates cannot be less than zero.

During 2010, the duration of equity became shorter as compared to December 31, 2009, primarily driven by an increase in noninterest-bearing demand deposits, a decline in loans, and an increase in money market instruments. Noninterest-bearing demand deposits increased to 30.8% of total liabilities at December 31, 2010, compared to 27.1% at the end of 2009.

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 2010 and 2009, approximately 77% and 78%, respectively, of the Company’s commercial lending and commercial real estate portfolios were variable rate and primarily tied to either the prime rate or LIBOR. In addition, certain of our consumer loans also have variable interest rates.

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The Company had historically used interest rate swaps to convert most of its long-term fixed-rate debt into floating-rate debt. In 2009, these swaps were terminated when management decided to position the Company to be more asset sensitive in light of historically low short-term interest rates and unprecedented “quantitative easing” monetary policy actions by the Federal Reserve. We have also traditionally engaged in an ongoing program of swapping prime-based and LIBOR-based loans for “receive-fixed” contracts. However, during 2010 we terminated and did not replace a number of such swaps with the objective of positioning the Company’s balance sheet to be more asset sensitive. At year-end 2010 and 2009, the Company held a notional amount of approximately $0.5 billion and $0.9 billion, respectively, of such cash flow hedge contracts. 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 62. The Company retains basis risk due to changes between the prime rate and LIBOR on nonhedge derivative basis swaps. See “Accounting for Derivatives” on page 31 for further details about our derivative instruments. Finally, the Company’s subsidiary banks made increasing use of interest rate floors on new loans. As of December 31, 2010, approximately 48.4% of all of the Company’s variable rate loan balances contain floors. Of the loans with floors, approximately 75.5% of the balances are priced at the floor rates, which were above the “index plus spread” rate by an average of 1.22% on that date. At the end of the previous year, 26.3% of the Company’s variable rate loans were priced at floors that were above the “index plus spread” rate by an average of 1.55% on that date.

In the latter half of 2010, the Company began to mitigate the asset sensitivity of its balance sheet by purchasing a combination of Eurodollar futures contracts and put options for some of these same contracts. The Eurodollar futures are intended to mitigate the potential impact that declining interest rates could have on the Company’s future earnings, while the purpose of the put options is to limit the exposure in an environment of rising interest rates. Also in the latter half of 2010, the Company deployed some of its excess liquidity by purchasing floating rate Agency mortgage-backed securities, with the same objective of mitigating asset sensitivity.

Schedule 29 presents a profile of the current interest rate derivatives portfolio. For additional information regarding derivative instruments, including fair values at December 31, 2010, refer to Notes 1 and 8 of the Notes to Consolidated Financial Statements.

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Schedule 29

INTEREST RATE SWAPS – YEAR-END BALANCES AND AVERAGE RATES*

(Amounts in millions)	2011			2012			Thereafter
Cash flow hedges1:
Notional amount	$	335		$	150			–
Weighted average expected receive rate		5.24	%		4.14	%		–
Weighted average expected pay rate		1.90			3.45			–
Nonhedges:
Receive fixed rate/pay variable rate:
Notional amount	$	46		$	46			–
Weighted average expected receive rate		4.01	%		4.01	%		–
Weighted average expected pay rate		1.09			2.08			–
Receive variable rate/pay fixed rate:
Notional amount	$	46		$	46			–
Weighted average expected receive rate		1.09	%		2.08	%		–
Weighted average expected pay rate		4.01			4.01			–
Basis swaps:
Notional amount	$	85			–			–
Weighted average expected receive rate		3.37	%		–			–
Weighted average expected pay rate		3.58			–			–
Net notional	$	420		$	150			–

¹ Receive fixed rate/pay variable rate

* Balances are based upon the portfolio at December 31, 2010. Excludes interest rate swap products that we provide as a service to our customers.

Market Risk – Fixed Income

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

At December 31, 2010, the Company had $49 million of trading assets and $43 million of securities sold, not yet purchased, compared with $24 million and $43 million on December 31, 2009, respectively.

The Company is exposed to market risk through changes in fair value and OTTI of HTM and AFS securities. The Company also is exposed to market risk for interest rate swaps and Eurodollar and Federal Funds futures contracts used to hedge interest rate risk. Changes in fair value of AFS securities and in interest rate swaps that qualify as cash flow hedges are included in OCI each quarter. During 2010, the after-tax change in OCI attributable to HTM and AFS securities was $4.1 million, and the change attributable to interest rate swaps was $(37.4) million. If any of the AFS or HTM securities transferred from AFS become other than temporarily impaired, any credit loss in OCI is reversed and the impairment is charged to operations. See “Investment Securities Portfolio” on page 52 for additional information on OTTI.

Market Risk – Equity Investments

Through its equity investment activities, the Company owns equity securities that are publicly traded and subject to fluctuations in their market prices or values. In addition, the Company owns equity securities in

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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 either case, the value of the Company’s investment is subject to fluctuation. Since the fair value of these securities may fall below the Company’s investment costs, the Company is exposed to the possibility of loss. These equity investments are approved, monitored and evaluated by the Company’s Equity Investment Committee.

The Company also invests in pre-public venture capital companies through various venture funds. The Company’s remaining equity exposure to these investments, net of related noncontrolling interests at December 31, 2010 was approximately $48 million, compared to approximately $56 million at December 31, 2009.

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 creditworthy. The carrying value of the investments was $68 million and $63 million at December 31, 2010 and 2009, respectively. At December 31, 2010, and 2009 the Company has a total remaining funding commitment of $56 million and $78 million, respectively, to SBIC, non-SBIC funds, and private equity investments. Of these commitments, approximately $41 million and $53 million, respectively, were at Amegy.

Under the provisions of the Dodd-Frank Act, the Company is allowed to fund remaining unfunded portions of existing private equity fund commitments, but is not allowed to make any additional commitments to invest in private equity funds.

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. This Policy addresses maintaining adequate liquidity, diversifying funding positions, monitoring liquidity at consolidated as well as subsidiary bank levels, and anticipating future funding needs. The policy also includes liquidity ratio guidelines, for example, the ‘time to required funding’ and fixed charges coverage ratios, that are used to monitor the liquidity positions of the Parent and bank subsidiaries, as well as various stress test and liquid asset measurements for Parent and bank liquidity.

The management of 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 recommending 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 have authority to price deposits, borrow from their FHLB and the Federal Reserve, and sell/purchase Federal Funds to/from Zions Bank and/or correspondent banks. The banks may also make liquidity and funding recommendations to the Chief Investment Officer, but are not involved in any other funding decision making processes.

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Contractual Obligations

Schedule 30 summarizes the Company’s contractual obligations at December 31, 2010.

Schedule 30

CONTRACTUAL OBLIGATIONS

(In millions)	One year or less		Over one year through three years		Over three years through five years		Over five years		Indeterminable maturity1		Total
Deposits	$	3,655	$	560	$	254	$	2	$	36,464	$	40,935
Commitments to extend credit		4,582		3,555		1,176		2,196				11,509
Standby letters of credit:
Financial		624		165		49		83				921
Performance		149		35		2		–				186
Commercial letters of credit		38		9								47
Commitments to make venture and other noninterest-bearing investments2		56										56
Securities sold, not yet purchased		43										43
Federal funds purchased and security repurchase agreements		722										722
Other short-term borrowings		166										166
Long-term debt3		8		360		1,078		483				1,929
Operating leases, net of subleases		47		88		69		145				349
Unrecognized tax benefits, ASC 740		2		2		1				2		7
	$	10,092	$	4,774	$	2,629	$	2,909	$	36,466	$	56,870

¹ Indeterminable maturity deposits include noninterest-bearing demand, savings and money market deposits, and non-time foreign deposits.

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

³ The maturities on long-term borrowings do not include the associated hedges.

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

The Company also enters into derivative contracts under which it is required either to receive cash or pay cash, depending on changes in interest rates. These contracts are carried at fair value on the balance sheet with the fair value representing the net present value of the expected future cash receipts and payments based on market rates of interest as of the balance sheet date. The fair value of the contracts changes daily as interest rates change. For further information on derivative contracts, see Note 8 of the Notes to Consolidated Financial Statements.

Liquidity Management Actions

Consolidated cash and interest-bearing deposits at the Parent and its subsidiaries increased to $5.5 billion at December 31, 2010 from $2.0 billion at December 31, 2009. During 2010 we had a significant increase in cash mainly due to our capital raising transactions and a net decrease in loans, partially offset by a decrease in total deposits.

Parent Company Liquidity: The Parent’s cash requirements consist primarily of debt service, investments in and advances to subsidiaries, operating expenses, income taxes, and dividends to preferred and common

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shareholders, including the CPP preferred equity issued to the U.S. Department of the Treasury. The Parent’s cash needs are usually met through dividends from its subsidiaries, interest and investment income, subsidiaries’ proportionate share of current income taxes, equity contributed through the exercise of stock options, and long-term debt and equity issuances.

During 2010, the Parent did not receive dividends on common or preferred stock from its banking subsidiaries. The amount of dividends the banking subsidiaries can pay to the Parent are restricted by current and historical earnings levels, retained earnings, risk-based capital requirements, and other regulatory capital requirements. Several of the Company’s subsidiary banks returned to profitability over the course of 2010, and most are expected to be profitable in 2011. This may permit the payment of some dividends by the banks to the Parent, or a return of some capital to the Parent in 2011. However, if the operating performance of the subsidiary banks deteriorates under renewed weak economic conditions or changes in regulation or law in 2011, the banks may not be able to pay dividends to the Parent. See Note 19 of the Notes to Consolidated Financial Statements for details of dividend capacities and limitations.

Also, earnings on the Parent’s investment securities portfolio have been reduced. Therefore, cash receipts from subsidiaries and investments currently do not cover the Parent’s interest and dividend payments and may not cover these payments in 2011. In addition, the Parent had to increase its investment in several of its bank subsidiaries in 2009 and in the first quarter of 2010 in order to maintain capital levels appropriate to current weak economic and credit quality conditions. The Company does not anticipate any need to make further capital investments in its bank subsidiaries in 2011. The Company has reduced the dividend on its common stock to $0.01 per share per quarter, due to lack of earnings and in order to conserve both capital and cash.

Federal Reserve Board Supervisory Letter SR 09-4, dated February 24, 2009 (as revised March 27, 2009), reiterates and expands previous guidance to bank holding companies regarding the payment of common dividends, preferred dividends, and dividends on more senior capital instruments in times of stress on earnings and capital ratios. On November 17, 2010 the Federal Reserve Board issued a revised temporary addendum to this letter stating that bank holding companies should consult with the Federal Reserve staff before taking any capital actions, including actions that could result in a diminished capital base, such as increasing dividends, implementing common stock repurchase programs, or redeeming or repurchasing capital instruments.

General financial market and economic conditions, both of which have been highly stressed since mid-2008 or earlier, as well as the Company’s debt ratings, have adversely impacted the Company’s access to external financing. Access to funding markets for the Parent and subsidiary banks is directly impacted by 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. One rating agency, Moody’s, rates the Company’s senior debt as B2 or noninvestment grade, while Standard & Poor’s, Fitch and DBRS all rate the Company’s senior debt at a low investment grade level. In addition, all four rating agencies rate the Company’s subordinated debt as noninvestment grade. In August 2010, Moody’s changed its outlook for the Company to positive from negative, while in December 2010, Fitch downgraded the Company’s senior debt rating one “notch” to BBB-, but changed its outlook from negative to stable. The other two agencies have a negative outlook for the Company.

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The Parent had the following ratings as of December 31, 2010:

Schedule 31

CREDIT RATINGS

Rating agency	Outlook	Long-term issuer/ senior debt rating	Subordinated debt rating	Short-term/ commercial paper rating
S&P	Negative	BBB-	BB+	A-3
Moody’s	Positive	B2	B3	NP
Fitch	Stable	BBB-	BB+	F3
DBRS	Negative	BBB (low)	BB (high)	R-2 (low)

During 2010, the primary sources of additional cash to the Parent in the capital markets were (1) $623 million from the issuance of new shares of common stock, (2) $139 million from the issuance of new shares of Series E preferred stock, (3) $215 million from the issuance of common stock warrants, (4) $267 million from the issuance of unsecured 1.0-2.5 year senior notes, and (5) $40 million from the issuance of five-year 7.75% unsecured senior notes. In total these sources added approximately $1,284 million to the Parent’s liquid assets. The Parent had a cash balance of $500 million and $700 million of U.S. Treasury Bills at December 31, 2010 compared to a cash balance of $542 million and no highly liquid securities at December 31, 2009.

During 2010 and 2009, the Parent’s operating expenses included cash payments for interest of approximately $147 million and $123 million, respectively. Additionally, the Parent paid $109.3 million and $96.3 million of dividends on preferred and common stock, respectively, for the same applicable periods. Note 24 of the Notes to Consolidated Financial Statements contains the Parent’s statements of income and statements of cash flows for the years ended December 31, 2010, 2009, and 2008 as well as its balance sheets at December 31, 2010 and December 31, 2009.

During 2010, issuances by the Parent of long-term debt exceeded repayments. Cash received from the issuance of long-term debt during 2010 included $40 million from the issuance of additional 7.75% unsecured notes due September 23, 2014 and $106 million from the issuance of senior medium-term notes due between October 2012 and February 2013.

Short-term borrowings by the Parent exceeded repayments, which resulted in $113 million of cash inflows during 2010. During 2010 the Company issued $161 million of one-year senior medium-term notes.

At December 31, 2010, maturities of the Company’s senior and subordinated debt ranged from August 2011 to November 2015 with effective interest rates from 0.66% to 7.75%.

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

Subsidiary Bank Liquidity: 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, 2010, these core deposits, excluding brokered deposits, in aggregate, constituted 93.5% of consolidated deposits, compared with 89.3% of consolidated deposits at December 31, 2009. On a consolidated basis, the Company’s net loan to total deposit ratio is historically low at 89.8%, another measure of strong bank liquidity.

Historically, the Company’s subsidiary banks have also obtained brokered deposits to serve as an additional source of liquidity, which is currently not needed. Given the strong levels of affiliate liquidity, the Company has

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aggressively lowered its brokered deposit usage. During 2010, total brokered deposits declined $1.2 billion to only $0.4 billion at year-end 2010, down from $1.6 billion at December 31, 2009. Brokered deposits are currently 1.1% of total deposits.

Total deposits decreased by $906 million during 2010 due to our efforts to reduce excess liquidity, which primarily resulted in decreases in time and money market deposits, partially offset by increases in noninterest-bearing demand and savings and NOW deposits. We also worked with a number of business and governmental customers to help them move excess cash balances into sweep accounts at third-party money market funds, which prevented the growth in demand balances from being even larger. We will continue to reduce non-core and non-relationship deposits to improve profitability and return on capital as loans continue to run-off, but as loan demand improves we anticipate bringing these deposits back onto the balance sheet.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act made permanent the maximum deposit insurance amount of $250,000. On November 9, 2010 the FDIC issued a final rule providing temporary unlimited insurance coverage for noninterest-bearing transaction accounts at all FDIC-insured depository institutions, effective December 31, 2010 through December 31, 2012.

The FHLB system, has, from time to time, been 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 Bank is a member of the FHLB of Dallas. The FHLB allows member banks to borrow against their eligible loans to satisfy liquidity requirements. Borrowings from the FHLB may increase in the future, depending on availability of funding from other sources such as deposits. The subsidiary banks are required to invest in FHLB stock to maintain their borrowing capacity. At December 31, 2010 and December 31, 2009 the Company had $20 million and $16 million, respectively, of long-term borrowings outstanding from the FHLB, but did not have any short-term borrowings outstanding from the FHLB for the same applicable periods. At December 31, 2010 and December 31, 2009 the subsidiary banks’ total investment in FHLB stock was approximately $125 million and $136 million, respectively.

At December 31, 2010, the amount available for additional FHLB and Federal Reserve borrowings was approximately $12.5 billion. As of year-end 2010, these sources of liquidity would be able to fund all unfunded commercial and consumer loan commitments.

Zions Bank has in prior years used asset securitizations to sell loans and to provide a flexible alternative source of funding. As a QSPE securities conduit sponsored by Zions Bank, Lockhart Funding purchased and held credit-enhanced securitized assets resulting from certain small business loan securitizations. During 2009, Zions Bank purchased $678 million of securities from Lockhart at book value under the terms of a liquidity facility Zions Bank provided to Lockhart. During the second quarter of 2009, Lockhart was consolidated onto the books of Zions Bank as a result of Zions Bank holding over 90% of Lockhart’s asset backed commercial paper, and in September 2009 Lockhart was terminated. See Note 7 of the Notes to Consolidated Financial Statements for information about Lockhart and the Liquidity Agreement.

While not considered a primary source of funding, the Company’s investment activities can provide or use cash, depending on the asset-liability management posture that is being taken. For 2010, investment securities activities resulted in an increase in investment securities holdings and a net decrease of cash in the amount of $565 million, primarily due to the purchase of approximately $700 million of 3-9 month U.S. Treasury Bills with excess cash in the fourth quarter of 2010.

During 2010, several of the Company’s subsidiary banks surrendered certain bank-owned life insurance contracts and received cash of $211 million for the settlement of the cash surrender values of the policies.

Maturing balances in our subsidiary banks’ loan portfolios also provide additional flexibility in managing cash flows. During 2010 and 2009, organic loan activity resulted in a net cash inflow of $1.8 billion and $1.4 billion, respectively, as a result of pay-downs and decreased loan demand.

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During 2010, the Company received net cash income tax refunds of $325 million, the majority of which was for the benefit of our subsidiary banks and the remainder for the benefit of the Parent.

Operational Risk Management

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

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

CAPITAL MANAGEMENT

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

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

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

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

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

• Maintain sufficient capital as defined by federal banking regulators to support current needs (see Note 19 of the Notes to Consolidated Financial Statements) 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.

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In addition, the CMC oversees the Company’s capital “stress testing” under a variety of adverse economic and market scenarios.

The Company’s debt and equity issuances during 2010, along with the TRS originated in 2010 with regard to certain of the Company’s CDO investments, have significantly bolstered the Company’s capital position and ratios. However, the Company anticipates that it may continue to raise additional common equity in amounts sufficient to cover losses and dividends until it returns to profitability in order to preserve this capital position.

Total controlling interest shareholders’ equity at December 31, 2010 was $6,648 million compared to $5,693 million at December 31, 2009, an increase of 16.8%. The increase in total controlling interest shareholders’ equity from December 31, 2009 is primarily due to the previously discussed capital actions partially offset by a net loss for 2010 and dividends paid on common and preferred stock for the same applicable period.

Note 19 of the Notes to Consolidated Financial Statements provides additional information on risk-based capital. In addition, “Liquidity Risk” on page 79 and Notes 13 and 14 of the Notes to Consolidated Financial Statements discuss the Company’s debt and equity transactions during 2010.

Conversions of convertible subordinated debt into preferred stock have augmented the Company’s capital position and reduced future refinancing needs. From the original modification in June 2009 through December 2010, $406 million of debt has been extinguished and $474 million of preferred capital has been added. Schedule 32 shows the effect the conversions had on Tier 1 capital and outstanding convertible subordinated debt.

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Schedule 32

IMPACT OF CONVERTIBLE SUBORDINATED DEBT

	Year Ended			Three Months Ended
(In millions)	December  31, 2010			December 31, 2010			September 30, 2010			June 30, 2010			March 31, 2010
Preferred equity
Convertible subordinated debt converted to preferred stock	$	343		$	151		$	54		$	117		$	21
Beneficial conversion feature reclassified from common to preferred stock		57			25			9			19			4
Change in preferred equity		400			176			63			136			25
Common equity
Accelerated convertible subordinated debt amortization, net of tax		(148	)		(60	)		(22	)		(59	)		(7	)
Beneficial conversion feature reclassified from common to preferred stock		(57	)		(25	)		(9	)		(19	)		(4	)
Change in common equity		(205	)		(85	)		(31	)		(78	)		(11	)
Net impact on Tier 1 capital	$	195		$	91		$	32		$	58		$	14
Convertible subordinated debt outstanding	$	803		$	803		$	955		$	1,009		$	1,125
	Year Ended			Three Months Ended
(In millions)	December  31, 2009			December 31, 2009			September 30, 2009			June 30, 2009
Preferred equity
Convertible subordinated debt converted to preferred stock	$	63		$	35		$	28		$	–
Beneficial conversion feature reclassified from common to preferred stock		11			6			5			–
Change in preferred equity		74			41			33			–
Common equity
Gain on subordinated debt modification, net of tax		314			9						305
Accelerated convertible subordinated debt amortization, net of tax		(22	)		(12	)		(10	)		–
Beneficial conversion feature added to common stock		203			2						201
Beneficial conversion feature reclassified from common to preferred stock		(11	)		(6	)		(5	)		–
Change in common equity		484			(7	)		(15	)		506
Net impact on Tier 1 capital	$	558		$	34		$	18		$	506
Convertible subordinated debt outstanding	$	1,146		$	1,146		$	1,142		$	1,170

The Company’s various issuances of new common stock and warrants to purchase common stock added $838 million of common equity in 2010, which far more than offset the $205 million decrease in common equity resulting from subordinated debt conversions.

On February 15, 2011, the Company filed a Form 8-K disclosing that holders of subordinated notes elected to convert a combined $85.8 million principal amount of these notes into the Company’s preferred stock. The Company expects that an additional 85,829 shares of Series C and 20 shares of Series A preferred stock will be

86

issued on March 15, 2011 unless the elections are revoked prior to that date. Also $14.6 million of the original beneficial conversion feature will be reclassified into preferred stock from common stock as a result of this conversion. The expected accelerated discount amortization attributable to the conversions was approximately $41.0 million in the first quarter of 2011 and $73.3 million in the fourth quarter of 2010.

The Company paid $6.7 million in dividends on common stock in 2010. The Board of Directors declared a dividend of $0.01 per common share payable on February 28, 2011 to shareholders of record on February 22, 2011. This is unchanged from the rate paid since the third quarter of 2009. Under the terms of the CPP, the Company may not increase the dividend on its common stock above $0.32 per share per quarter during the period the senior preferred shares are outstanding without adversely impacting the Company’s interest in the program or without permission from the U.S. Department of the Treasury.

The Company recorded preferred stock dividends of $122.9 million and $103.0 million during 2010 and 2009, respectively. Preferred dividends for 2010 and 2009 include $90.2 million and $88.6 million, respectively, related to the TARP preferred stock issued to the U.S. Department of the Treasury, consisting of cash payments of $70.0 million in both 2010 and 2009 and accretion of $20.2 million and $18.6 million in 2010 and 2009, respectively, for the difference between the fair value and par amount of the TARP preferred stock when issued.

Banking organizations are required under published regulations to maintain adequate levels of capital as measured by several regulatory capital ratios. The Company’s capital ratios were as follows:

Schedule 33

CAPITAL RATIOS

	December 31,
	2010			2009			2008
Tangible common equity ratio		6.99	%		6.12	%		5.89	%
Tangible equity ratio		11.10			9.16			8.91
Average equity to average assets		11.99			10.98			10.36
Risk-based capital ratios:
Tier 1 common to risk-weighted assets		8.95			6.73			6.28
Tier 1 leverage		12.56			10.38			9.99
Tier 1 risk-based capital		14.78			10.53			10.22
Total risk-based capital		17.15			13.28			14.32

The Company expects that it (and the banking industry as a whole) will be required by market forces and/or regulation, including new standards promulgated in December 2010 by the Basel Committee on Banking Supervision, to operate with higher capital ratios than in the recent past. In addition, the CPP capital preferred dividend is scheduled to increase from 5% to 9% in 2013, making it more expensive as a source of capital if not redeemed at or prior to that time. Thus, in addition to maintaining higher levels of capital, the Company’s capital structure may continue to be subject to greater variation over the next few years than has been true historically, due to the still highly uncertain economic and regulatory environments. Therefore, in 2011, continuing to preserve and augment capital in response to these uncertainties and in preparation for the eventual repayment of TARP CPP preferred stock are likely to take precedence over making capital investments to expand the business, or returning capital to shareholders in the form of higher dividends or share repurchases.

At December 31, 2010, regulatory Tier 1 risk-based capital and total risk-based capital were $6,350 million and $7,364 million compared to $5,407 million and $6,823 million at December 31, 2009.

87

GAAP to NON-GAAP RECONCILIATION

1. Tier 1 common equity

Traditionally, the Federal Reserve and other banking regulators have assessed a bank’s capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. Regulators have begun supplementing their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. The Tier 1 common equity ratio is the core capital component of the Basel III standards, and we believe that it increasingly is becoming a key ratio considered by both regulators and investors. Because Tier 1 common equity is not formally defined by GAAP or codified in the federal banking regulations, this measure is considered to be a non-GAAP financial measure and other entities may calculate them differently than Zions’ disclosed calculations. Since investors and banking regulators may assess Zions’ capital adequacy using Tier 1 common equity, Zions believes that it is useful to provide investors the ability to assess Zions’ capital adequacy on this same basis.

Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a bank’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad “Basel I” risk categories for banks, like our banking subsidiaries, that have not adopted the Basel II “Advanced Measurement Approach.” The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio. The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements.

The Schedule below provides a reconciliation of controlling interest shareholders’ equity (GAAP) to Tier 1 capital (regulatory) and to Tier 1 common equity (non-GAAP) using current U.S. regulatory treatment, not proposed Basel III calculations.

Schedule 34

TIER 1 COMMON EQUITY (NON-GAAP)

	December 31,
(Amounts in millions)	2010			2009			2008
Controlling interest shareholders’ equity (GAAP)	$	6,648		$	5,693		$	6,501
Accumulated other comprehensive (income) loss		461			437			99
Non-qualifying goodwill and intangibles		(1,103	)		(1,129	)		(1,777	)
Disallowed deferred tax assets		(106	)		(43	)		–
Other regulatory adjustments		2			1			(2	)
Qualifying trust preferred securities		448			448			448
Tier 1 capital (regulatory)		6,350			5,407			5,269
Qualifying trust preferred securities		(448	)		(448	)		(448	)
Preferred stock		(2,057	)		(1,503	)		(1,582	)
Tier 1 common equity (non-GAAP)	$	3,845		$	3,456		$	3,239
Risk-weighted assets (regulatory)	$	42,950		$	51,360		$	51,565
Tier 1 common to risk-weighted assets (non-GAAP)		8.95	%		6.73	%		6.28	%

88

2. Core net interest margin and core net interest income

This Annual Report on Form 10-K presents a “core net interest margin” and a “core net interest income” which excludes the effects of the (1) periodic discount amortization on convertible subordinated debt; (2) accelerated discount amortization on convertible subordinated debt which has been converted; and (3) additional accretion of interest income on acquired loans based on increased projected cash flows (hereinafter collectively referred to as the “net interest margin/income adjustments”). The net interest margin/income adjustments are included in financial results presented in accordance with GAAP. Management considers the net interest margin/income adjustments to be relevant to ongoing operating results.

The Company believes the exclusion of these net interest margin/income adjustments to present a core net interest margin/income provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. As non-GAAP financial measures, core net interest margin/income are used by management and the Board of Directors to assess the performance of the Company’s business for the following purposes:

• evaluation of bank reporting segment performance; and

• presentations of Company performance to investors.

The Company believes that presenting the core net interest margin/income will permit investors to assess the performance of the Company on the same basis as that applied by management and the Board of Directors.

Schedules 35 and 36 provide a reconciliation of net interest margin/income (GAAP) to core net interest margin/income (non-GAAP).

Schedule 35

NET INTEREST MARGIN TO CORE NET INTEREST MARGIN

	December 31,
	2010			2009			2008
Net interest margin as reported (GAAP)		3.73	%		3.94	%		4.18	%
Discount amortization on convertible subordinated debt		0.12			0.06			–
Accelerated discount amortization on convertible subordinated debt		0.37			0.07			–
Additional accretion of interest income on acquired loans		-0.10			–			–
Core net interest margin (non-GAAP)		4.12	%		4.07	%		4.18	%

Schedule 36

NET INTEREST INCOME TO CORE NET INTEREST INCOME

	December 31,
(In millions)	2010			2009		2008
Net interest income (GAAP)	$	1,727.4		$	1,897.6	$	1,971.6
Discount amortization on convertible subordinated debt		58.0			26.9		–
Accelerated discount amortization on convertible subordinated debt		172.4			35.7		–
Additional accretion of interest income on acquired loans		(46.8	)		–		–
Core net interest income (non-GAAP)	$	1,911.0		$	1,960.2	$	1,971.6

89

3. Income (loss) before income taxes and subordinated debt modification and conversions

This Annual Report on Form 10-K also presents “Income (loss) before income taxes and subordinated debt modification and conversions” which excludes the effects of the (1) discount amortization on convertible subordinated debt, (2) accelerated discount amortization on convertible subordinated debt, and (3) gain on subordinated debt modification. The adjustments are included in financial results presented in accordance with GAAP. Management considers the income (loss) adjustments to be relevant to ongoing operating results.

The Company believes the exclusion of these adjustments to present income (loss) before income taxes and subordinated debt modification and conversions provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. As a non-GAAP financial measure, income (loss) before income taxes and subordinated debt modification and conversions is used by management and the Board of Directors to assess the performance of the Company’s business for the following purposes:

• evaluation of bank reporting segment performance; and

• presentations of Company performance to investors.

The Company believes that presenting the income (loss) before income taxes and subordinated debt modification and conversions will permit investors to assess the performance of the Company on the same basis as that applied by management and the Board of Directors. Schedule 2 on page 34 provides a reconciliation of income (loss) before income taxes (GAAP) to Income (loss) before income taxes and subordinated debt modification and conversions (non-GAAP).

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.

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 74 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, 2010 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, 2010, and has also issued an attestation report, which is included herein, on internal control over financial reporting under Auditing Standard No. 5 of the Public Company Accounting Oversight Board (“PCAOB”).

91

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 and Subsidiaries

We have audited Zions Bancorporation and subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Zions Bancorporation and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

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

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

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

In our opinion, Zions Bancorporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, 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, 2010 and 2009 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, 2010 of Zions Bancorporation and subsidiaries and our report dated March 1, 2011 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

March 1, 2011

92

REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

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

We have audited the accompanying consolidated balance sheets of Zions Bancorporation and subsidiaries as of December 31, 2010 and 2009, 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, 2010. 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, 2010 and 2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

During 2009, the Company changed its method of accounting for impairment losses on investment securities (see Note 5 to the financial statements).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Zions Bancorporation and subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2011 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

March 1, 2011

93

CONSOLIDATED BALANCE SHEETS

ZIONS BANCORPORATION AND SUBSIDIARIES

	December 31,
(In thousands, except share amounts)	2010			2009
ASSETS
Cash and due from banks	$	924,126		$	1,370,189
Money market investments:
Interest-bearing deposits		4,576,008			652,964
Federal funds sold and security resell agreements		130,305			78,541
Investment securities:
Held-to-maturity, at adjusted cost (approximate fair value $788,354 and $833,455)		840,642			869,595
Available-for-sale, at fair value		4,205,742			3,655,619
Trading account, at fair value		48,667			23,543
		5,095,051			4,548,757
Loans held for sale		206,286			208,567
Loans:
Loans and leases excluding FDIC-supported loans		35,896,395			38,882,083
FDIC-supported loans		971,377			1,444,594
		36,867,772			40,326,677
Less:
Unearned income and fees, net of related costs		120,341			137,697
Allowance for loan losses		1,440,341			1,531,332
Loans and leases, net of allowance		35,307,090			38,657,648
Other noninterest-bearing investments		858,367			1,099,961
Premises and equipment, net		720,985			710,534
Goodwill		1,015,161			1,015,161
Core deposit and other intangibles		87,898			113,416
Other real estate owned		299,577			389,782
Other assets		1,814,032			2,277,487
	$	51,034,886		$	51,123,007
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	13,653,929		$	12,324,247
Interest-bearing:
Savings and NOW		6,362,138			5,843,573
Money market		15,090,833			16,378,874
Time under $100,000		1,941,211			2,497,395
Time $100,000 and over		2,232,238			3,117,472
Foreign		1,654,651			1,679,028
		40,935,000			41,840,589
Securities sold, not yet purchased		42,548			43,404
Federal funds purchased and security repurchase agreements		722,258			786,015
Other short-term borrowings		166,394			121,273
Long-term debt		1,942,622			2,032,942
Reserve for unfunded lending commitments		111,708			116,445
Other liabilities		467,142			472,082
Total liabilities		44,387,672			45,412,750
Shareholders’ equity:
Preferred stock, without par value, authorized 4,400,000 shares		2,056,672			1,502,784
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 182,784,086, and 150,425,070 shares		4,163,619			3,318,417
Retained earnings		889,284			1,308,356
Accumulated other comprehensive income (loss)		(461,296	)		(436,899	)
Controlling interest shareholders’ equity		6,648,279			5,692,658
Noncontrolling interests		(1,065	)		17,599
Total shareholders’ equity		6,647,214			5,710,257
	$	51,034,886		$	51,123,007

See accompanying notes to consolidated financial statements.

94

CONSOLIDATED STATEMENTS OF INCOME

ZIONS BANCORPORATION AND SUBSIDIARIES

	Year Ended December 31,
(In thousands, except per share amounts)	2010			2009			2008
Interest income:
Interest and fees on loans	$	2,185,239		$	2,350,050		$	2,678,285
Interest on money market investments		10,946			7,914			47,780
Interest on securities:
Held-to-maturity		33,405			54,327			87,650
Available-for-sale		88,035			100,307			158,309
Trading account		2,220			2,728			1,875
Total interest income		2,319,845			2,515,326			2,973,899
Interest expense:
Interest on deposits		196,112			424,684			712,893
Interest on short-term borrowings		12,561			14,720			178,875
Interest on long-term debt		383,783			178,390			110,485
Total interest expense		592,456			617,794			1,002,253
Net interest income		1,727,389			1,897,532			1,971,646
Provision for loan losses		852,138			2,016,927			648,269
Net interest income after provision for loan losses		875,251			(119,395	)		1,323,377
Noninterest income:
Service charges and fees on deposit accounts		199,748			212,562			206,988
Other service charges, commissions and fees		165,341			156,539			167,669
Trust and wealth management income		27,452			29,949			37,752
Capital markets and foreign exchange		37,636			50,313			49,898
Dividends and other investment income		33,074			26,631			46,362
Loan sales and servicing income		29,382			22,261			24,379
Fair value and nonhedge derivative income (loss)		(15,827	)		113,779			(47,976	)
Equity securities gains (losses), net		(5,993	)		(1,825	)		793
Fixed income securities gains (losses), net		11,055			(3,846	)		849
Impairment losses on investment securities:
Impairment losses on investment securities		(156,452	)		(569,866	)		(304,040	)
Noncredit-related losses on securities not expected to be sold (recognized in other comprehensive income)		71,097			289,403			–
Net impairment losses on investment securities		(85,355	)		(280,463	)		(304,040	)
Valuation losses on securities purchased		–			(212,092	)		(13,072	)
Gain on subordinated debt modification		–			508,945			–
Gain on subordinated debt exchange		14,471			–			–
Acquisition related gains		–			169,186			–
Other		29,478			12,162			21,090
Total noninterest income		440,462			804,101			190,692
Noninterest expense:
Salaries and employee benefits		825,344			818,837			810,501
Occupancy, net		113,559			112,201			114,175
Furniture and equipment		101,061			99,878			100,136
Other real estate expense		144,815			110,800			50,378
Credit related expense		71,205			44,979			24,092
Provision for unfunded lending commitments		(4,737	)		65,511			1,467
Legal and professional services		39,540			37,197			45,517
Advertising		24,820			22,982			30,731
FDIC premiums		101,990			100,517			19,858
Amortization of core deposit and other intangibles		25,517			31,674			33,162
Other		275,767			226,934			244,946
Total noninterest expense		1,718,881			1,671,510			1,474,963
Impairment loss on goodwill		–			636,216			353,804
Income (loss) before income taxes		(403,168	)		(1,623,020	)		(314,698	)
Income taxes (benefit)		(106,819	)		(401,343	)		(43,365	)
Net income (loss)		(296,349	)		(1,221,677	)		(271,333	)
Net income (loss) applicable to noncontrolling interests		(3,621	)		(5,566	)		(5,064	)
Net income (loss) applicable to controlling interest		(292,728	)		(1,216,111	)		(266,269	)
Preferred stock dividends		(122,884	)		(102,969	)		(24,424	)
Preferred stock redemption		3,107			84,633			–
Net earnings (loss) applicable to common shareholders	$	(412,505	)	$	(1,234,447	)	$	(290,693	)
Weighted average common shares outstanding during the year:
Basic shares		166,054			124,443			108,908
Diluted shares		166,054			124,443			108,908
Net earnings (loss) per common share:
Basic	$	(2.48	)	$	(9.92	)	$	(2.68	)
Diluted		(2.48	)		(9.92	)		(2.68	)

See accompanying notes to consolidated financial statements.

95

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

ZIONS BANCORPORATION AND SUBSIDIARIES

	Preferred stock			Common stock					Retained earnings			Accumulated other comprehensive income (loss)			Noncontrolling interests			Total shareholders’ equity
(In thousands, except share and per share amounts)				Shares		Amount
Balance at December 31, 2007	$	240,000			107,116,505	$	2,212,237		$	2,899,398		$	(58,835	)	$	30,939		$	5,323,739
Cumulative effect of change in accounting principle, adoption of fair value option under ASC 825										(11,471	)		11,471						–
Comprehensive loss:
Net loss										(266,269	)					(5,064	)		(271,333	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses on investments and retained interests													(333,095	)
Foreign currency translation													(5	)
Reclassification for net losses on investments included in earnings													181,524
Net unrealized gains on derivative instruments													131,443
Pension and postretirement													(31,461	)
Other comprehensive loss													(51,594	)					(51,594	)
Total comprehensive loss																			(322,927	)
Issuance of preferred stock		1,339,185					(580	)											1,338,605
Issuance of common stock and warrant					7,194,079		352,653												352,653
Stock issued under dividend reinvestment plan					39,857		1,261												1,261
Net activity under employee plans and related tax benefits					994,372		34,345												34,345
Dividends on preferred stock		2,649								(24,424	)								(21,775	)
Dividends on common stock, $1.61 per share										(175,165	)								(175,165	)
Change in deferred compensation										(3,165	)								(3,165	)
Other changes in noncontrolling interests																1,445			1,445
Balance at December 31, 2008		1,581,834			115,344,813		2,599,916			2,418,904			(98,958	)		27,320			6,529,016
Cumulative effect of change in accounting principle, adoption of new OTTI guidance under ASC 320										137,462			(137,462	)					–
Comprehensive loss:
Net loss										(1,216,111	)					(5,566	)		(1,221,677	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses on investments and retained interests													(65,037	)
Reclassification for net losses on investments included in earnings													162,206
Noncredit-related impairment losses on securities not expected to be sold													(174,244	)
Accretion of securities with noncredit-related impairment losses not expected to be sold													996
Net unrealized losses on derivative instruments													(128,597	)
Pension and postretirement													4,197
Other comprehensive loss													(200,479	)					(200,479	)
Total comprehensive loss																			(1,422,156	)
Preferred stock redemption		(100,511	)				1,763			52,266									(46,482	)
Preferred stock exchanged for common stock		(71,537	)		2,816,834		38,486			32,367									(684	)
Subordinated debt converted to preferred stock		74,438					(10,998	)											63,440
Issuance of common stock					31,741,425		464,110												464,110
Subordinated debt modification							202,814												202,814
Net activity under employee plans and related tax benefits					521,998		22,326												22,326
Dividends on preferred stock		18,560								(102,969	)								(84,409	)
Dividends on common stock, $0.10 per share										(11,862	)								(11,862	)
Change in deferred compensation										(1,701	)								(1,701	)
Other changes in noncontrolling interests																(4,155	)		(4,155	)

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME—(Continued)

ZIONS BANCORPORATION AND SUBSIDIARIES

(In thousands, except share and per share amounts)	Preferred stock			Common stock					Retained earnings			Accumulated other comprehensive income (loss)			Noncontrolling interests			Total shareholders’ equity
				Shares		Amount
Balance at December 31, 2009		1,502,784			150,425,070		3,318,417			1,308,356			(436,899	)		17,599			5,710,257
Comprehensive loss:
Net loss										(292,728	)					(3,621	)		(296,349	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding gains on investments													4,248
Reclassification for net losses on investments included in earnings													45,689
Noncredit-related impairment losses on securities not expected to be sold													(43,920	)
Accretion of securities with noncredit-related impairment losses not expected to be sold													131
Net unrealized losses on derivative instruments													(37,357	)
Pension and postretirement													6,812
Other comprehensive loss													(24,397	)					(24,397	)
Total comprehensive loss																			(320,746	)
Subordinated debt converted to preferred stock		399,785					(56,834	)											342,951
Issuance of preferred stock		142,500					(3,843	)											138,657
Preferred stock exchanged for common stock		(8,615	)		224,903		5,508			3,107									–
Issuance of common stock warrants							214,563												214,563
Subordinated debt exchanged for common stock					2,165,391		46,902												46,902
Issuance of common stock					29,553,957		623,469												623,469
Net activity under employee plans and related tax benefits					414,765		15,437												15,437
Dividends on preferred stock		20,218								(122,884	)								(102,666	)
Dividends on common stock, $0.04 per share										(6,650	)								(6,650	)
Change in deferred compensation										83									83
Other changes in noncontrolling interests																(15,043	)		(15,043	)
Balance at December 31, 2010	$	2,056,672			182,784,086	$	4,163,619		$	889,284		$	(461,296	)	$	(1,065	)	$	6,647,214

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

ZIONS BANCORPORATION AND SUBSIDIARIES

	Year Ended December 31,
(In thousands)	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(296,349	)	$	(1,221,677	)	$	(271,333	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Impairment and valuation losses on investment securities, goodwill, and long-lived assets		87,105			1,128,771			674,050
Gains on subordinated debt modification and exchange		(14,471	)		(508,945	)		–
Gains from acquisitions and divestitures		(13,703	)		(169,186	)		–
Provision for credit losses		847,401			2,082,438			649,736
Depreciation and amortization		372,754			213,040			140,201
Deferred income tax benefit		(28,665	)		(15,071	)		(231,241	)
Net decrease (increase) in trading securities		(25,124	)		18,521			(12,114	)
Net increase in loans held for sale		(32,953	)		(396	)		(9,291	)
Net write-down of and losses from sales of other real estate owned		136,232			92,920			45,858
Change in other liabilities		241,936			(423,154	)		(132,110	)
Change in other assets		220,441			(146,722	)		342,071
Other, net		(33,610	)		7,925			(11,285	)
Net cash provided by operating activities		1,460,994			1,058,464			1,184,542
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in short term investments		(3,974,808	)		1,975,107			(1,202,709	)
Proceeds from maturities and paydowns of investment securities held-to-maturity		154,906			166,808			98,924
Purchases of investment securities held-to-maturity		(86,568	)		(76,322	)		(128,570	)
Proceeds from sales, maturities, and paydowns of investment securities available-for-sale		1,084,074			1,261,655			3,881,596
Purchases of investment securities available-for-sale		(1,717,518	)		(1,852,711	)		(3,009,274	)
Proceeds from sales of loans and leases		154,428			104,304			294,480
Securitized loans purchased		–			–			(1,186,188	)
Net loan and lease collections (originations)		1,753,525			1,412,754			(2,482,320	)
Proceeds from surrender of bank-owned life insurance contracts		210,726			–			–
Net decrease (increase) in other noninterest-bearing investments		29,493			(19,580	)		(8,349	)
Net purchases of premises and equipment		(79,071	)		(97,135	)		(102,016	)
Proceeds from sales of other real estate owned		523,967			315,229			72,629
Net cash from acquisitions and divestitures		21,149			452,192			688,940
Net cash provided by (used in) investing activities		(1,925,697	)		3,642,301			(3,082,857	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		(903,224	)		(2,154,495	)		3,661,680
Net change in short-term funds borrowed		(19,541	)		(3,007,062	)		(3,509,300	)
Repayments of debt over 90 days and up to one year		–			(236,811	)		–
Proceeds from issuance of long-term debt		150,413			704,022			31,995
Repayments of long-term debt		(73,558	)		(408,531	)		(159,970	)
Cash paid for preferred stock redemption		–			(47,166	)		–
Proceeds from the issuance of preferred stock, common stock, and common stock warrants		977,145			464,110			1,692,907
Dividends paid on common and preferred stock		(109,316	)		(96,271	)		(195,679	)
Other, net		(3,279	)		(24,348	)		(2,497	)
Net cash provided by (used in) financing activities		18,640			(4,806,552	)		1,519,136
Net decrease in cash and due from banks		(446,063	)		(105,787	)		(379,179	)
Cash and due from banks at beginning of year		1,370,189			1,475,976			1,855,155
Cash and due from banks at end of year	$	924,126		$	1,370,189		$	1,475,976
Cash paid for interest	$	358,156		$	577,799		$	1,011,719
Net cash paid (refund received) for income taxes		(324,804	)		(131,187	)		303,180

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ZIONS BANCORPORATION AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Zions Bancorporation (“the Parent”) is a financial holding company headquartered in Salt Lake City, Utah, which provides a full range of banking and related services through its banking subsidiaries in ten Western and Southwestern states as follows: Zions First National Bank (“Zions Bank”), in Utah and Idaho; California Bank & Trust (“CB&T”); Amegy Corporation (“Amegy”) and its subsidiary, Amegy Bank, in Texas; National Bank of Arizona (“NBA”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; The Commerce Bank of Washington (“TCBW”); and The Commerce Bank of Oregon (“TCBO”). The Parent also owns and operates certain nonbank subsidiaries that engage in financial related services. One of these subsidiaries, Welman Holdings, Inc. (“Welman”), provides wealth management services.

Basis of Financial Statement Presentation

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

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and prevailing practices within the financial services industry. This includes the guidance under Accounting Standards Codification (“ASC”) 810, Consolidation, which requires consolidation of a variable interest entity (“VIE”) when a company is the primary beneficiary of the VIE. Effective January 1, 2010, we adopted Accounting Standards Update (“ASU”) No. 2009-17, Amendments to FASB Interpretation No. 46(R), (formerly Statement of Financial Accounting Standards (“SFAS”) No. 167). This new accounting guidance under ASC 810 requires that a continuous analysis be performed on a qualitative rather than a quantitative basis to determine the primary beneficiary of a VIE. The new rules amend previous guidance to determine whether an entity is a VIE. Upon adoption, we reconsidered our consolidation conclusions for all entities with which we are involved and concluded that there was not a significant impact on the Company’s financial statements.

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

Statement of Cash Flows

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

Security Resell Agreements

Security resell agreements represent overnight and term agreements with 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 its behalf take possession of the underlying securities. The fair value of such securities is monitored throughout the contract term to ensure that asset values remain sufficient to protect against counterparty default.

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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. At December 31, 2010, we held approximately $55 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 $166 million during 2010, and the maximum amount outstanding at any month-end during 2010 was $318 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 (“HTM”) debt securities are stated at adjusted cost, net of unamortized premiums and unaccreted discounts. The Company has the intent and ability to hold such securities until recovery of their amortized cost basis.

Available-for-sale (“AFS”) securities are stated at fair value and generally consist of debt securities held for investment and marketable equity securities not accounted for under the equity method. Unrealized gains and losses of AFS securities, after applicable taxes, are recorded as a component of other comprehensive income (“OCI”).

We review quarterly our investment securities portfolio for any declines in value that are considered to be other-than-temporary impairment (“OTTI”). The process, methodology and factors considered to evaluate securities for OTTI is discussed further in Note 5. Credit-related OTTI is recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in OCI. OTTI is recognized as a realized loss through earnings when there has been an adverse change in the holder’s best estimate of cash flows expected to be collected such that the entire amortized cost basis will not be received.

Trading securities are stated at fair value and consist of securities acquired for short-term appreciation or other trading purposes. Realized and unrealized gains and losses are recorded in trading income, which is included in capital markets and foreign exchange.

The fair values of investment securities are estimated according to ASC 820, Fair Value Measurements and Disclosures, as discussed in Notes 8 and 21.

Loans and Allowance for Credit Losses

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

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

Loans that become other than current with respect to contractual payments due may be accounted for separately depending on the status of the loan, which is determined from certain credit quality indicators applied under the circumstances. The loan status includes past due, nonaccrual, impaired, modified, and restructured (including troubled debt restructurings). Our accounting policies for these loan types are discussed further in Note 6.

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Certain purchased loans require separate accounting procedures that are also discussed in Note 6.

The allowance for credit losses includes the allowance for loan losses and the reserve for unfunded lending commitments, and represents our estimate of losses inherent in the loan portfolio that may be recognized from loans and lending commitments that are not recoverable. Further discussion of our estimation process for the allowance for credit losses is included in Note 6.

Other Real Estate Owned

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

Nonmarketable Securities

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

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 is shorter.

Business Combinations

Business combinations are accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations, which was modified effective January 1, 2009. Upon initially obtaining control, we recognize 100% of all acquired assets and all assumed liabilities regardless of the percentage owned. The assets and liabilities are recorded at their estimated fair values, with goodwill being recorded when such fair values are less than the cost of acquisition. Certain transaction and restructuring costs are expensed as incurred. Changes to our tax valuation allowances and uncertainty accruals from a business combination must be recognized as an adjustment to current income tax expense and not to goodwill over the subsequent annual period. Results of operations of the acquired business are included in our statement of income from the date of acquisition.

Goodwill and Identifiable Intangible Assets

Goodwill and intangible assets deemed to have indefinite lives are not amortized. As required under ASC 350, Intangibles – Goodwill and Other, we subject these assets to annual specified impairment tests as of the

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beginning of the fourth quarter and more frequently if changing conditions warrant. Core deposit assets and other intangibles with finite useful lives are generally amortized on an accelerated basis using an estimated useful life of up to 12 years.

Derivative Instruments

We use derivative instruments including interest rate swaps and floors and basis swaps as part of our overall asset and liability duration and interest rate risk management strategy. These instruments enable us to manage to desired asset and liability duration and to reduce interest rate exposure by matching estimated repricing periods of interest-sensitive assets and liabilities. We also execute derivative instruments with commercial banking customers to facilitate their risk management strategies. These derivatives are immediately hedged by offsetting derivatives such that we minimize our net risk exposure as a result of such transactions. We record all derivatives at fair value in the balance sheet as either other assets or other liabilities. See further discussion in Note 8.

Commitments and Letters of Credit

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

Share-Based Compensation

Share-based compensation generally includes grants of stock options, restricted stock, and other awards to employees and nonemployee directors. We account for share-based awards in accordance with ASC 718, Compensation – Stock Compensation, and recognize them in the statement of income based on their fair values. See further discussion in Note 17.

Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences between financial statement asset and liability amounts and their respective tax bases and are measured using enacted tax laws and rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are recognized subject to management’s judgment that realization is more-likely-than-not. Unrecognized tax benefits for uncertain tax positions relate primarily to state tax contingencies. See further discussion in Note 15.

Net Earnings Per Common Share

Net earnings per common share is based on net earnings applicable to common shareholders which is net of preferred stock dividends. Unvested share-based awards with rights to receive nonforfeitable dividends are considered participating securities and included in the computation of diluted earnings per share. 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 (such as warrants, stock options and restricted stock). Diluted net earnings per common share excludes common stock equivalents whose effect is antidilutive.

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2. OTHER RECENT ACCOUNTING PRONOUNCEMENT

On December 17, 2010, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts, which amends certain key provisions of ASC 350. This ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. In these situations, an entity is required to perform Step 2 of the goodwill impairment test if it is “more likely than not” that a goodwill impairment exists. The ASU eliminates an entity’s ability to assert that a reporting unit is not required to perform Step 2 because the carrying amount of the reporting unit is zero or negative despite the existence of qualitative factors indicating that goodwill is more likely than not impaired. The ASU is effective for fiscal years and interim periods beginning after December 15, 2010. We do not expect that our adoption of this new guidance on January 1, 2011 will have a significant impact 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

On September 3, 2010, we sold substantially all of the assets of our wholly-owned subsidiary, NetDeposit, to BServ, Inc. (dba BankServ), a privately-owned company. Both companies specialize in remote deposit capture and electronic payment technologies. We recognized a pretax gain on the sale of approximately $13.7 million, which was included in other noninterest income.

In July 2009, CB&T acquired the banking operations of the failed Vineyard Bank from the Federal Deposit Insurance Corporation (“FDIC”) as receiver. The acquisition consisted of approximately $1.6 billion of assets, including $1.4 billion of loans, $1.5 billion of deposits, and 16 branches mostly located in the Inland Empire area of Southern California. CB&T assumed Vineyard’s deposit obligations other than brokered deposits, and purchased most of Vineyard’s assets, including all loans. CB&T received approximately $87.5 million in cash from the FDIC.

In April 2009, NSB acquired the banking operations of the failed Great Basin Bank of Nevada headquartered in Elko, Nevada, from the FDIC as receiver. The acquisition consisted of approximately $212 million of assets, including the entire loan portfolio, $209 million of deposits, and five branches in Northern Nevada. NSB received approximately $17.8 million in cash from the FDIC.

In February 2009, CB&T acquired the banking operations of the failed Alliance Bank headquartered in Culver City, California from the FDIC as receiver. The acquisition consisted of approximately $1.1 billion of assets, including the entire loan portfolio, $1.0 billion of deposits, and five branches. CB&T received approximately $10 million in cash from the FDIC.

In connection with the 2009 acquisitions, CB&T and NSB entered into loss sharing agreements for the purchased loans, as discussed further in Note 6. Because the fair value of net assets acquired exceeded cost, and taking into consideration the amounts of cash received from the FDIC, we recognized acquisition related gains of $169.2 million.

In September 2008, our NSB and NBA subsidiaries acquired from the FDIC the insured deposits and certain assets of the failed Silver State Bank, headquartered in Henderson, Nevada. The acquisition included approximately $737 million of deposits and $66 million of assets. The assets consisted primarily of deposit-secured loans, furniture, fixtures and equipment, and certain branch assets.

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4. SUPPLEMENTAL CASH FLOW INFORMATION

Noncash activities are summarized as follows:

(In thousands)	Year Ended December 31,
	2010		2009		2008
Amortized cost of investment securities held-to-maturity transferred to investment securities available-for-sale	$	–	$	1,058,159	$	–
Fair value of investment securities available-for-sale transferred to investment securities held-to-maturity		–		–		1,231,979
Loans transferred to other real estate owned		607,886		553,415		297,228
Beneficial conversion feature of modified subordinated debt recorded in common stock		–		202,814		–
Beneficial conversion feature transferred from common stock to preferred stock as a result of subordinated debt conversions		56,834		10,998		–
Subordinated debt exchanged for common stock		46,902		–		–
Subordinated debt converted to preferred stock		342,951		63,439		–
Preferred stock exchanged for common stock		5,508		38,486		–
Acquisitions:
Assets acquired		–		2,981,335		66,192
Liabilities assumed		–		2,929,448		737,116

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5. INVESTMENT SECURITIES

Investment securities are summarized as follows:

	December 31, 2010
	Amortized cost		Recognized in OCI1				Carrying value		Not recognized in OCI				Estimated fair value
(In thousands)			Gross unrealized gains		Gross unrealized losses				Gross unrealized gains		Gross unrealized losses
Held-to-maturity:
Municipal securities	$	577,527	$	–	$	–	$	577,527	$	8,715	$	3,606	$	582,636
Asset-backed securities:
Trust preferred securities – banks and insurance		263,621		–		24,243		239,378		–		50,434		188,944
Other		27,671		–		4,034		23,637		897		7,860		16,674
Other debt securities		100		–		–		100		–		–		100
	$	868,919	$	–	$	28,277	$	840,642	$	9,612	$	61,900	$	788,354
Available-for-sale:
U.S. Treasury securities	$	705,321	$	329	$	24	$	705,626					$	705,626
U.S. Government agencies and corporations:
Agency securities		201,356		7,179		137		208,398						208,398
Agency guaranteed mortgage-backed securities		565,963		12,289		1,864		576,388						576,388
Small Business Administration loan-backed securities		867,506		6,703		6,324		867,885						867,885
Municipal securities		155,583		2,534		409		157,708						157,708
Asset-backed securities:
Trust preferred securities – banks and insurance		1,947,129		46,821		750,553		1,243,397						1,243,397
Trust preferred securities – real estate investment trusts		45,687		–		26,522		19,165						19,165
Auction rate securities		110,548		649		1,588		109,609						109,609
Other		103,047		1,784		24,125		80,706						80,706
		4,702,140		78,288		811,546		3,968,882						3,968,882
Mutual funds and stock		236,779		81		–		236,860						236,860
	$	4,938,919	$	78,369	$	811,546	$	4,205,742					$	4,205,742

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	December 31, 2009
	Amortized cost		Recognized in OCI1				Carrying value		Not recognized in OCI				Estimated fair value
(In thousands)			Gross unrealized gains		Gross unrealized losses				Gross unrealized gains		Gross unrealized losses
Held-to-maturity:
Municipal securities	$	606,074	$	–	$	–	$	606,074	$	8,724	$	5,451	$	609,347
Asset-backed securities:
Trust preferred securities – banks and insurance		264,712		–		25,920		238,792		–		31,115		207,677
Other		30,482		–		5,853		24,629		551		8,848		16,332
Other debt securities		100		–		–		100		–		1		99
	$	901,368	$	–	$	31,773	$	869,595	$	9,275	$	45,415	$	833,455
Available-for-sale:
U.S. Treasury securities	$	25,651	$	493	$	–	$	26,144					$	26,144
U.S. Government agencies and corporations:
Agency securities		242,609		6,904		114		249,399						249,399
Agency guaranteed mortgage-backed securities		374,118		11,849		692		385,275						385,275
Small Business Administration loan-backed securities		782,385		3,050		17,796		767,639						767,639
Municipal securities		237,057		4,823		386		241,494						241,494
Asset-backed securities:
Trust preferred securities – banks and insurance		2,022,998		54,449		716,347		1,361,100						1,361,100
Trust preferred securities – real estate investment trusts		56,265		–		32,247		24,018						24,018
Auction rate securities		159,649		321		530		159,440						159,440
Other		127,210		1,355		51,413		77,152						77,152
		4,027,942		83,244		819,525		3,291,661						3,291,661
Mutual funds and stock		363,958		–		–		363,958						363,958
	$	4,391,900	$	83,244	$	819,525	$	3,655,619					$	3,655,619

¹ The gross unrealized losses recognized in OCI resulted from the transfer of AFS securities to HTM in 2008.

During the first half of 2009, we reassessed the classification of certain asset-backed and trust preferred collateralized debt obligation (“CDO”) securities as part of our ongoing review of the investment securities portfolio. We reclassified approximately $596 million at fair value of HTM securities to AFS. Unrealized losses added to OCI at the time of these transfers were $128.9 million. The reclassifications were made subsequent to ratings downgrades, as permitted under ASC 320, Investments – Debt and Equity Securities. No gain or loss was recognized in the statement of income at the time of reclassification.

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The amortized cost and estimated fair value of investment debt securities are shown subsequently as of December 31, 2010 by expected maturity distribution for structured asset-backed CDOs (“ABS CDOs”) and by contractual maturity distribution for other debt securities. Actual maturities may differ from expected or contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

	Held-to-maturity				Available-for-sale
(In thousands)	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
Due in one year or less	$	60,284	$	60,604	$	1,039,623	$	1,030,609
Due after one year through five years		235,089		234,275		894,319		864,186
Due after five years through ten years		191,040		175,071		849,722		728,223
Due after ten years		382,506		318,404		1,918,476		1,345,864
	$	868,919	$	788,354	$	4,702,140	$	3,968,882

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

	December 31, 2010
	Less than 12 months				12 months or more				Total
(In thousands)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity:
Municipal securities	$	574	$	27,600	$	3,032	$	23,828	$	3,606	$	51,428
Asset-backed securities:
Trust preferred securities – banks and insurance		–		–		74,677		188,944		74,677		188,944
Other		–		–		11,894		16,674		11,894		16,674
Other debt securities		–		–		–		–		–		–
	$	574	$	27,600	$	89,603	$	229,446	$	90,177	$	257,046
Available-for-sale:
U.S. Treasury securities	$	24	$	400,778	$	–	$	–	$	24	$	400,778
U.S. Government agencies and corporations:
Agency securities		111		11,317		26		970		137		12,287
Agency guaranteed mortgage-backed securities		1,864		235,531		–		–		1,864		235,531
Small Business Administration loan-backed securities		432		116,101		5,892		400,447		6,324		516,548
Municipal securities		405		14,928		4		391		409		15,319
Asset-backed securities:
Trust preferred securities – banks and insurance		1,969		87,973		748,584		850,437		750,553		938,410
Trust preferred securities – real estate investment trusts		–		–		26,522		19,165		26,522		19,165
Auction rate securities		1,588		68,178		–		–		1,588		68,178
Other		–		–		24,125		44,628		24,125		44,628
	$	6,393	$	934,806	$	805,153	$	1,316,038	$	811,546	$	2,250,844

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	December 31, 2009
	Less than 12 months				12 months or more				Total
(In thousands)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity:
Municipal securities	$	1,051	$	40,006	$	4,400	$	28,152	$	5,451	$	68,158
Asset-backed securities:
Trust preferred securities – banks and insurance		–		–		57,035		207,676		57,035		207,676
Other		–		–		14,701		16,332		14,701		16,332
Other debt securities						1		99		1		99
	$	1,051	$	40,006	$	76,137	$	252,259	$	77,188	$	292,265
Available-for-sale:
U.S. Government agencies and corporations:
Agency securities	$	40	$	5,300	$	74	$	2,231	$	114	$	7,531
Agency guaranteed mortgage-backed securities		690		44,259		2		163		692		44,422
Small Business Administration loan-backed securities		2,345		60,624		15,451		506,866		17,796		567,490
Municipal securities		383		15,342		3		676		386		16,018
Asset-backed securities:
Trust preferred securities – banks and insurance		5,578		62,172		710,769		897,513		716,347		959,685
Trust preferred securities – real estate investment trusts		20,808		2,253		11,439		21,766		32,247		24,019
Auction rate securities		530		122,148		–		–		530		122,148
Other		2,089		6,210		49,324		56,238		51,413		62,448
	$	32,463	$	318,308	$	787,062	$	1,485,453	$	819,525	$	1,803,761

At December 31, 2010 and 2009, respectively, 92 and 131 HTM and 628 and 717 AFS investment securities were in an unrealized loss position.

We conduct a formal review of investment securities on a quarterly basis for the presence of other-than-temporary impairment (“OTTI”). Our review was made under ASC 320, which includes new guidance that we adopted effective January 1, 2009. We assess whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the balance sheet date. Under these circumstances, OTTI is considered to have occurred if (1) we intend to sell the security; (2) it is more likely than not we will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. The more likely than not criteria is a lower threshold than the “probable” criteria under the previous guidance.

The new guidance requires that credit-related OTTI is recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in OCI. Noncredit-related OTTI is based on other factors, including illiquidity. Presentation of OTTI is made in the statement of income on a gross basis with an offset for the amount of OTTI recognized in OCI. For securities classified as HTM, the amount of noncredit-related OTTI recognized in OCI is accreted to the credit-adjusted expected cash flow amounts of the securities over future periods. Noncredit-related OTTI recognized in earnings previous to January 1, 2009 was reclassified from retained earnings to accumulated OCI as a cumulative effect adjustment.

Our OTTI evaluation process takes into consideration current market conditions; fair value in relationship to cost; extent and nature of change in fair value; severity and duration of the impairment; recent events specific to

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the issuer or industry; creditworthiness of the issuer, including external credit ratings, changes, recent downgrades, and trends; volatility of earnings and trends; current analysts’ evaluations, all available information relevant to the collectibility of debt securities; and other key measures. In addition, we determine that we do not intend to sell the securities and it is not more likely than not that we will be required to sell the securities before recovery of their amortized cost basis. We consider any other relevant factors before concluding our evaluation for the existence of OTTI in our securities portfolio.

Additionally, under ASC 325-40, Beneficial Interests in Securitized Financial Assets, OTTI is recognized as a realized loss through earnings when there has been an adverse change in the holder’s best estimate of cash flows expected to be collected such that the entire amortized cost basis will not be received. This is a change from previous guidance that a holder’s best estimate of cash flows should be based upon those that “a market participant” would use.

For all security types discussed below where we believe that no OTTI should be recorded at December 31, 2010, we have applied the criteria discussed previously. Our conclusions from our OTTI evaluation are presented below:

Municipal securities

The HTM securities are purchased directly from the municipalities and are generally not rated by a credit rating agency. The AFS securities are rated as investment grade by various credit rating agencies. Both the HTM and AFS securities are at fixed and variable rates with maturities from one to 25 years. Fair values of these securities are largely driven by interest rates. We perform credit quality reviews on these securities at each reporting period. Because the decline in fair value is not attributable to credit quality, no OTTI was recorded for these securities at December 31, 2010.

Asset-backed securities

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

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

Auction rate securities: These debt instruments primarily relate to auction market preferred stock and certain corporate and municipal bonds for which the interest rate was determined through an auction process. They had previously been sold to customers by certain Company subsidiaries. Due to the failure of these auctions and attendant illiquidity of the securities, we voluntarily purchased these securities at par in 2009 and recorded them at fair value. Adjustments to fair value when purchased from customers were included in valuation losses on securities purchased in 2009. Because subsequent declines in fair value were not attributable to credit quality, no OTTI was recorded for these securities at December 31, 2010.

Other asset-backed securities: Most of these CDO securities were purchased in 2009 from Lockhart at their carrying values and were then adjusted to fair value. Certain of these CDOs consist of ABS CDOs (also

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known as diversified structured finance CDOs). Unrealized losses since acquisition were caused mainly by deterioration in collateral quality. Our ongoing review of these securities in accordance with the previous discussion determined that OTTI should be recorded on certain of these securities.

U.S. Government agencies and corporations

Agency securities: These 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. The U.S. Government has provided substantial liquidity to FNMA and FHLMC to bolster their creditworthiness. Because the decline in fair value is not attributable to credit quality, no OTTI was recorded for these securities at December 31, 2010.

Agency guaranteed mortgage-backed securities: These securities are comprised largely of fixed and variable rate residential and agricultural mortgage-backed securities issued by the Government National Mortgage Association (“GNMA”), FNMA, FAMC, or FHLMC. They have maturity dates from one to 30 years and have contractual cash flows guaranteed by agencies of the U.S. Government. The U.S. Government has provided substantial liquidity to both FNMA and FHLMC to bolster their creditworthiness. Because the decline in fair value is not attributable to credit quality, no OTTI was recorded for these securities at December 31, 2010.

Small Business Administration (“SBA”) loan-backed securities: These securities were generally purchased at premiums with maturities from five to 25 years and have principal cash flows guaranteed by the SBA. Because the decline in fair value is not attributable to credit quality, no OTTI was recorded for these securities at December 31, 2010.

The following is a tabular rollforward of the total amount of credit-related OTTI, including amounts recognized in earnings:

	2010									2009
(In thousands)	HTM			AFS			Total			HTM			AFS			Total
Balance of credit-related OTTI at beginning of year	$	(5,206	)	$	(269,251	)	$	(274,457	)	$	(1,905	)	$	(100,194	)	$	(102,099	)
Additions:
Credit-related OTTI not previously recognized1		–			(3,899	)		(3,899	)		(682	)		(117,069	)		(117,751	)
Credit-related OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis2		(151	)		(81,305	)		(81,456	)		(2,619	)		(160,093	)		(162,712	)
Subtotal of amounts recognized in earnings		(151	)		(85,204	)		(85,355	)		(3,301	)		(277,162	)		(280,463	)
Reductions for securities sold during the year		–			18,773			18,773			–			108,105			108,105
Balance of credit-related OTTI at end of year	$	(5,357	)	$	(335,682	)	$	(341,039	)	$	(5,206	)	$	(269,251	)	$	(274,457	)

¹ Relates to securities not previously impaired.

² Relates to additional impairment on securities previously impaired.

To determine the credit component of OTTI for all security types, we utilize projected cash flows as the best estimate of fair value. These cash flows are credit adjusted using, among other things, assumptions for default probability assigned to each portion of performing collateral. The credit adjusted cash flows are discounted at a security specific coupon rate to identify any OTTI, and then at a market rate for valuation purposes.

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Noncredit-related OTTI on securities not expected to be sold, and for which it is not more likely than not that we will be required to sell the securities before recovery of their amortized cost basis, was recognized in OCI as follows:

(In thousands)	2010		2009
Noncredit-related OTTI, pretax:
HTM	$	–	$	583
AFS		71,097		288,820
Total	$	71,097	$	289,403
Total noncredit-related OTTI, after-tax	$	43,920	$	174,244

As of January 1, 2009, we reclassified to OCI $137.5 million after-tax as a cumulative effect adjustment for the noncredit-related portion of OTTI losses previously recognized in earnings.

Nontaxable interest income on securities was $26.7 million in 2010, $30.4 million in 2009, and $32.5 million in 2008.

The following summarizes gains and losses, including OTTI, that were recognized in the statement of income:

	2010					2009					2008
(In thousands)	Gross gains		Gross losses			Gross gains		Gross losses			Gross gains		Gross losses
Investment securities:
Held-to-maturity	$	–	$	151		$	–	$	3,301		$	–	$	208,515
Available-for-sale		11,153		85,302			9,976		499,970			4,565		110,244
Other noninterest-bearing investments:
Nonmarketable equity securities		4,826		11,214			3,613		6,320			10,554		18,907
Other		395		–			1,306		3,530			20,079		13,002
		16,374		96,667			14,895		513,121			35,198		350,668
Net gains (losses)			$	(80,293	)			$	(498,226	)			$	(315,470	)
Statement of income information:
Net impairment losses on investment securities			$	(85,355	)			$	(280,463	)			$	(304,040	)
Valuation losses on securities purchased				–					(212,092	)				(13,072	)
				(85,355	)				(492,555	)				(317,112	)
Equity securities gains (losses), net				(5,993	)				(1,825	)				793
Fixed income securities gains (losses), net				11,055					(3,846	)				849
Net gains (losses)			$	(80,293	)			$	(498,226	)			$	(315,470	)

Valuation losses on securities purchased primarily relate to purchases by Zions Bank from Lockhart and are discussed further in Note 7. Included in the 2009 amount is $24.2 million when we voluntarily purchased all of the $255.3 million of auction rate securities previously sold to customers by certain Company subsidiaries.

Securities with a carrying value of $1.6 billion and $1.8 billion at December 31, 2010 and 2009, respectively, were pledged to secure public and trust deposits, advances, and for other purposes as required by law. Securities are also pledged as collateral for security repurchase agreements.

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6. LOANS AND ALLOWANCE FOR CREDIT LOSSES

On July 21, 2010, the FASB issued ASU No. 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This new accounting guidance under ASC 310, Receivables, requires disclosure of additional information about the credit quality of an entity’s financing receivables and the allowance for credit losses.

The new guidance only relates to financial statement disclosures and does not affect the Company’s financial condition or results of operations. The following disclosures and the policy disclosures in Note 1 incorporate the new guidance.

Loans

Loans are summarized as follows according to major portfolio segment and specific loan class:

	December 31,
(In thousands)	2010		2009
Commercial lending:
Commercial and industrial	$	9,167,001	$	9,631,445
Leasing		410,174		466,492
Owner occupied		8,217,363		8,751,983
Municipal		438,985		355,579
Total commercial lending		18,233,523		19,205,499
Commercial real estate:
Construction and land development		3,567,220		5,551,963
Term		7,581,377		7,255,124
Total commercial real estate		11,148,597		12,807,087
Consumer:
Home equity credit line		2,141,740		2,135,172
1-4 family residential		3,499,149		3,642,403
Construction and other consumer real estate		343,257		459,039
Bankcard and other revolving plans		296,936		340,428
Other		233,193		292,455
Total consumer		6,514,275		6,869,497
FDIC-supported loans		971,377		1,444,594
Total loans	$	36,867,772	$	40,326,677

FDIC-supported loans were acquired during 2009 and are supported by the FDIC under loss sharing agreements, as discussed subsequently under purchased loans.

Owner occupied and commercial real estate loans include unamortized premiums of approximately $88.4 million and $117.6 million at December 31, 2010 and 2009, respectively.

Municipal loans generally include loans to municipalities with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.

As of December 31, 2010 and 2009, loans with a carrying value of approximately $20.4 billion and $21.6 billion, respectively, were pledged as collateral for current and potential borrowings.

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We sold loans totaling $1,692 million in 2010, $1,934 million in 2009, and $950 million in 2008, that were previously classified as held for sale. The amount sold in 2010 approximately equaled the amount added to loans held for sale. Income from loans sold, excluding servicing, was $17.8 million in 2010, $11.2 million in 2009, and $9.7 million in 2008. The 2008 amount included income from loan securitizations.

Allowance for Credit Losses

The allowance for credit losses (“ACL”) consists of the allowance for loan and lease losses (“ALLL,” also referred to as the allowance for loan losses) and the reserve for unfunded lending commitments (“RULC”).

Allowance for Loan and Lease Losses – The ALLL represents our estimate of losses inherent in the loan and lease portfolio as of the balance sheet date. Losses are charged to the ALLL when recognized. Generally, commercial loans are charged-off or charged down at the point at which they are determined to be uncollectible in whole or in part, or when 180 days past due unless the loan is well secured and in the process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end loans, i.e., those with a maturity date, that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due.

We establish the amount of the ALLL by analyzing the portfolio at least quarterly using accounting standards in ASC 450, Contingencies, ASC 310, and SEC Staff Accounting Bulletin (“SAB”) No. 102. We also utilize regulatory guidance issued by U.S. financial institution regulatory agencies, including the guidance contained in Supervision and Regulation (“SR”) 01-17, Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions, and SR 06-17, Interagency Policy Statement on the Allowance for Loan and Lease Losses. Upon establishing an appropriate ALLL, we adjust the provisions for loan losses so the ALLL is at an appropriate level at the balance sheet date.

The methodologies we use to estimate the ALLL depend upon the impairment status and portfolio segment of the loan. For the commercial lending and commercial real estate segments, we use a comprehensive loan grading system to assign probability of default and loss given default grades to each loan. The credit quality indicators discussed subsequently are based on this grading system. Probability of default and loss given default grades are based on both financial and statistical models and loan officers’ qualitative risk assessments. We create groupings of these grades for each subsidiary bank and loan class and calculate historic loss rates using a loss migration analysis that attributes historic realized losses to historic loan grades over the time period of the loss migration analysis. For each grade grouping, subsidiary bank, and loan class, we calculate three loss migration rates using loan loss information from the most recent 6, 12, and 18-month periods and utilize the highest of the three results as the estimated loss for each portfolio. As noted below, we adjusted this loss migration period in the fourth quarter of 2010 and may adjust it again in the future, based on management’s judgment of which historic periods are the most important indicators of the loss content in the loan portfolio on the balance sheet date. We currently use a loss emergence period of 18 months for the commercial lending and commercial real estate segments.

For the consumer loan segment, we use roll rate models to forecast probable inherent losses. Roll rate models measure the rate at which consumer loans migrate from one delinquency bucket to the next worse delinquency bucket, and eventually to loss. We estimate roll rates for consumer loans using the most recent six months of delinquency and loss histories. These roll rates are then applied to current delinquency levels to estimate losses over the following 12 months.

For FDIC-supported loans purchased with evidence of credit deterioration, we determine the ALLL according to ASC 310-30. The accounting for these loans, including the allowance calculation, is described in the purchased loans section following.

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After applying historic loss experience, as described above, we review the quantitatively derived level of ALLL for each segment using qualitative criteria according to the guidance provided in the regulatory documents SR 01-17, SR 06-17, and SAB 102. We track various risk factors that influence our judgment regarding the level of the ALLL across the portfolio segments. Primary qualitative factors that may not be reflected in our quantitative models include:

• Asset quality trends

• Risk management and loan administration practices

• Risk identification practices

• Effect of changes in the nature and volume of the portfolio

• Existence and effect of any portfolio concentrations

• National economic and business conditions

• Regional and local economic and business conditions

• Data reliability

We review changes in these factors to ensure that changes in the level of the ALLL are consistent with changes in these factors. The magnitude of the impact of each of these factors on our qualitative assessment of the ALLL changes from quarter to quarter according to the extent these factors are already reflected in historic loss rates and according to the extent these factors diverge from one another.

In addition to the qualitative factor review, we review trends in several credit ratios including the ratios of the ALLL to nonaccrual loans, to historic net charge-offs, and to classified loans. We compare these ratios to peer levels where available. While ratio analysis does not drive the level of the ALLL, we do use ratios to confirm that our overall level of ALLL is appropriate and adequate. We also consider the uncertainty inherent in the estimation process when evaluating the ALLL.

Reserve for Unfunded Lending Commitments – The Company also estimates a reserve for potential losses associated with off-balance sheet commitments and standby letters of credit. We determine the RULC using the same procedures and methodologies that we use for the ALLL. The loss factors used in the RULC are the same as the loss factors used in the ALLL, and the qualitative adjustments used in the RULC are the same as the qualitative adjustments used in the ALLL. We adjust the Company’s unfunded lending commitments that are not unconditionally cancelable to an outstanding amount equivalent using credit conversion factors and we apply the loss factors to the outstanding equivalents.

Changes in ACL Assumptions – During the fourth quarter of 2010, we changed certain assumptions in our loss migration model that we use to estimate the ALLL and RULC for the commercial and commercial real estate segments. Prior to the fourth quarter of 2010, we used loss migration models based on the most recent 6 or 12 months of loss data to estimate probable losses for the portions of the segments that were collectively evaluated for impairment. We added an 18 month loss look-back period during the fourth quarter of 2010, which increased the quantitative portion of the ACL by approximately $115 million as of December 31, 2010 over what it would have been had only 6 and 12 months been used. We considered these assumption changes in assessing our qualitative adjustments. We made the change in order to continue to capture losses during the worst part of this credit cycle, as we believe the high level of loss severity rates that occurred during that period are still relevant to estimating probable inherent losses in those segments. The above refinements in the ACL calculation did not have a material effect on the overall level of the ACL or the provision for loan losses.

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Changes in the allowance for credit losses are summarized as follows:

(In thousands)	2010			2009			2008
Allowance for loan losses:
Balance at beginning of year	$	1,531,332		$	686,999		$	459,376
Allowance associated with purchased securitized loans		–			–			1,756
Allowance of loans and leases sold		–			–			(804	)
Additions:
Provision for loan losses		852,138			2,016,927			648,269
Change in allowance as a result of FDIC indemnification		25,778			–			–
Deductions:
Gross loan and lease charge-offs		(1,073,813	)		(1,255,652	)		(414,687	)
Net charge-offs recoverable from FDIC		14,046			2,303			–
Recoveries		90,860			80,755			21,026
Net loan and lease charge-offs		(968,907	)		(1,172,594	)		(393,661	)
Reclassification to reserve for unfunded lending commitments		–			–			(27,937	)
Balance at end of year	$	1,440,341		$	1,531,332		$	686,999
Reserve for unfunded lending commitments:
Balance at beginning of year	$	116,445		$	50,934		$	21,530
Provision (credited) charged to earnings		(4,737	)		65,511			1,467
Reclassification from allowance for loan losses		–			–			27,937
Balance at end of year	$	111,708		$	116,445		$	50,934
Total allowance for credit losses:
Allowance for loan losses	$	1,440,341		$	1,531,332		$	686,999
Reserve for unfunded lending commitments		111,708			116,445			50,934
Total allowance for credit losses	$	1,552,049		$	1,647,777		$	737,933

The reclassification of $27.9 million in 2008 included in the RULC the reserves for the unfunded portions of partially funded credits previously reserved for as part of the ALLL.

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The ALLL and outstanding loan balances according to the Company’s impairment method are summarized as follows at December 31, 2010:

(In thousands)	Commercial lending		Commercial real estate		Consumer		FDIC- supported		Total
Allowance for loan losses:
Individually evaluated for impairment	$	53,237	$	37,545	$	6,335	$	–	$	97,117
Collectively evaluated for impairment		707,870		449,690		147,991		30,684		1,336,235
Purchased loans with evidence of credit deterioration		–		–		–		6,989		6,989
Total	$	761,107	$	487,235	$	154,326	$	37,673	$	1,440,341
Outstanding loan balances:
Individually evaluated for impairment	$	544,243	$	1,003,402	$	137,928	$	–	$	1,685,573
Collectively evaluated for impairment		17,689,280		10,145,195		6,376,347		791,587		35,002,409
Purchased loans with evidence of credit deterioration		–		–		–		179,790		179,790
Total	$	18,233,523	$	11,148,597	$	6,514,275	$	971,377	$	36,867,772

Nonaccrual and Past Due Loans

Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or 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.

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, the loan is well secured, the borrower has paid according to the contractual terms for a minimum of six months, and analysis of the borrower indicates a reasonable assurance of the ability to maintain payments. Payments received on nonaccrual loans are applied as a reduction to the principal outstanding.

Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credit such as charge-card plans and other revolving credit plans are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multipayment obligations (i.e., quarterly, semiannual, etc.), single payment, and demand notes are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more.

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Accruing loans, including past due loans, and nonaccrual loans are as follows at December 31, 2010:

	Accruing loans								Nonaccrual		Total		Nonaccrual loans that are current1
(In thousands)	Current		30-89 days past due		90+ days past due		Total past  due
Commercial lending:
Commercial and industrial	$	8,860,714	$	74,255	$	7,533	$	81,788	$	224,499	$	9,167,001	$	77,406
Leasing		407,992		1,315		66		1,381		801		410,174		23
Owner occupied		7,813,666		57,354		3,876		61,230		342,467		8,217,363		91,527
Municipal		436,983		–		–		–		2,002		438,985		2,002
Total commercial lending		17,519,355		132,924		11,475		144,399		569,769		18,233,523		170,958
Commercial real estate:
Construction and land development		3,039,790		32,069		1,916		33,985		493,445		3,567,220		200,864
Term		7,255,658		56,657		4,757		61,414		264,305		7,581,377		112,447
Total commercial real estate		10,295,448		88,726		6,673		95,399		757,750		11,148,597		313,311
Consumer:
Home equity credit line		2,124,281		3,412		–		3,412		14,047		2,141,740		2,224
1-4 family residential		3,348,995		22,718		2,966		25,684		124,470		3,499,149		34,425
Construction and other consumer real estate		312,252		6,754		532		7,286		23,719		343,257		10,089
Bankcard and other revolving plans		290,568		3,838		1,572		5,410		958		296,936		311
Other		226,695		4,342		–		4,342		2,156		233,193		959
Total consumer loans		6,302,791		41,064		5,070		46,134		165,350		6,514,275		48,008
FDIC-supported loans		789,959		27,156		118,425		145,581		35,837		971,377		15,136
Total	$	34,907,553	$	289,870	$	141,643	$	431,513	$	1,528,706	$	36,867,772	$	547,413

¹ Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is still not expected.

Credit Quality Indicators

In addition to the past due and nonaccrual criteria, we also analyze loans using a loan grading system. We generally assign internal loan grades to consumer, commercial lending, and commercial real estate loans with commitments less than $500,000 based on the performance of those loans. Performance-based grades follow our definitions of Pass, Special Mention, Substandard, and Doubtful.

We generally assign internal loan grades to commercial lending and commercial real estate loans with commitments equal to or greater than $500,000 based on financial/statistical models and loan officer judgment. For these larger loans, we assign one of fourteen probability of default grades and one of twelve loss given default grades. We use the ten Pass probability of default grades for loans that do not meet one of the grades listed subsequently. The other four grades follow our definitions of Special Mention, Substandard, Doubtful, and Loss. Loss indicates that the outstanding balance has been charged-off. The definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:

Pass: A Pass asset is higher quality and does not fit any of the other categories described below. The likelihood of loss is considered remote.

Special Mention: A Special Mention asset has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the bank is currently protected and loss is considered unlikely and not imminent.

Substandard: A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well defined weaknesses and are characterized by the distinct possibility that the bank may sustain some loss if deficiencies are not corrected.

Doubtful: A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable.

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Outstanding loan balances categorized by these credit quality indicators are summarized as follows at December 31, 2010:

	Accruing loans
(In thousands)	Pass		Special Mention		Classified1		Nonaccrual		Total		Total allowance
Commercial lending:
Commercial and industrial	$	8,200,417	$	254,202	$	487,883	$	224,499	$	9,167,001
Leasing		395,081		1,170		13,122		801		410,174
Owner occupied		7,341,843		147,525		385,528		342,467		8,217,363
Municipal		436,983		–		–		2,002		438,985
Total commercial lending		16,374,324		402,897		886,533		569,769		18,233,523	$	761,107
Commercial real estate:
Construction and land development		1,988,956		465,489		619,330		493,445		3,567,220
Term		6,698,554		252,814		365,704		264,305		7,581,377
Total commercial real estate		8,687,510		718,303		985,034		757,750		11,148,597		487,235
Consumer:
Home equity credit line		2,098,366		855		28,472		14,047		2,141,740
1-4 family residential		3,310,696		7,274		56,709		124,470		3,499,149
Construction and other consumer real estate		310,172		3,424		5,942		23,719		343,257
Bankcard and other revolving plans		282,206		4,535		9,237		958		296,936
Other		226,828		111		4,098		2,156		233,193
Total consumer loans		6,228,268		16,199		104,458		165,350		6,514,275		154,326
FDIC-supported loans		644,192		45,338		246,010		35,837		971,377		37,673
Total	$	31,934,294	$	1,182,737	$	2,222,035	$	1,528,706	$	36,867,772	$	1,440,341

¹ Classified loans include those in the Substandard and Doubtful categories.

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 in accordance with the contractual terms of the loan agreement, including scheduled interest payments. If a nonaccrual loan has a balance greater than $500,000 or if a loan is a troubled debt restructuring (“TDR”), we consider the loan to be impaired and estimate a specific reserve for the loan according to ASC 310. Smaller nonaccrual loans are pooled for ALLL estimation purposes. When loans are impaired, we estimate the amount of the balance that is impaired and assign a specific reserve to the loan based on the estimated present value of the loan’s future cash flows discounted at the loan’s effective interest rate, the observable market price of the loan, or the fair value of the loan’s underlying collateral less the cost to sell. When we base the impairment amount on the fair value of the loan’s underlying collateral, we generally charge-off the portion of the balance that is impaired, such that these loans do not have a specific reserve in the ALLL. Payments received on impaired loans that are accruing are recognized in interest income, according to the contractual loan agreement. Payments received on impaired loans that are on nonaccrual are not recognized in interest income, but are applied as a reduction to the principal outstanding.

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Information on impaired loans is summarized as follows at December 31, 2010:

	Unpaid principal balance		Recorded investment				Total recorded investment		Related allowance
(In thousands)			with no allowance		with allowance
Commercial lending:
Commercial and industrial	$	293,699	$	95,316	$	114,959	$	210,275	$	38,021
Leasing		–		–		–		–		–
Owner occupied		404,146		233,418		98,548		331,966		14,743
Municipal		2,002		–		2,002		2,002		473
Total commercial lending		699,847		328,734		215,509		544,243		53,237
Commercial real estate:
Construction and land development		804,080		478,181		118,663		596,844		16,964
Term		475,239		251,745		154,813		406,558		20,581
Total commercial real estate		1,279,319		729,926		273,476		1,003,402		37,545
Consumer:
Home equity credit line		4,135		3,152		630		3,782		180
1-4 family residential		136,381		91,721		23,811		115,532		5,456
Construction and other consumer real estate		24,931		16,682		1,369		18,051		465
Bankcard and other revolving plans		30		–		30		30		30
Other		628		–		533		533		204
Total consumer loans		166,105		111,555		26,373		137,928		6,335
FDIC-supported		547,566		131,680		48,110		179,790		6,989
Total	$	2,692,837	$	1,301,895	$	563,468	$	1,865,363	$	104,106

Our recorded investment in impaired loans was $1,925 million at December 31, 2009. Impaired loans of $435 million at December 31, 2009 required an allowance of $105 million, which is included in the ALLL. Interest collected on impaired loans and included in interest income was $13.8 million in 2010, $4.0 million in 2009, and $4.7 million in 2008. The average recorded investment in impaired loans was $1,961 million in 2010, $1,374 million in 2009, and $499 million in 2008.

Modified and Restructured Loans

Loans may be modified in the normal course of business for competitive reasons or to strengthen the Company’s position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. These modifications are structured on a loan-by-loan basis, and depending on the circumstances, may include extended payment terms, a modified interest rate, forgiveness of principal, or other concessions. When this occurs, the loan may be considered a TDR. 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. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. 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.

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Concentrations of Credit Risk

We perform an ongoing analysis of our loan portfolio to evaluate whether there is any significant exposure to an individual borrower or group(s) of borrowers as a result of any concentrations of credit risk. Such credit risks (whether on- or off-balance sheet) may occur when groups of borrowers or counterparties have similar economic characteristics and are similarly affected by changes in economic or other conditions. Credit risk also includes the loss that would be recognized subsequent to the reporting date if counterparties failed to perform as contracted. Our analysis as of December 31, 2010 has concluded that no significant exposure exists from such credit risks. See Note 8 for a discussion of counterparty risk associated with the Company’s derivative transactions.

Most of our business activity is with customers located in the states of Utah, California, Texas, Arizona, Nevada, Colorado, Idaho, and Washington. The commercial loan portfolio is well diversified, consisting of nine major industry classification groupings based on codes under the North American Industry Classification System. As of December 31, 2010, the larger concentrations of risk were in the commercial, real estate, and construction portfolios. See discussion in Note 18 regarding commitments to extend additional credit.

Purchased Loans

We purchase loans in the ordinary course of business and account for them and the related interest income in accordance with ASC 310-20, Nonrefundable Fees and Other Costs, or ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, as appropriate. Interest income is recognized based on contractual cash flows under ASC 310-20 and on expected cash flows under ASC 310-30.

On April 29, 2010, the FASB issued ASU No. 2010-18, Receivables, Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset. This ASU clarifies that modifications of loans accounted for within a pool under ASC 310-30 would not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring. Loans may be removed from the pool as a result of sale, foreclosure, or other events. We adopted this new guidance beginning in the third quarter of 2010 as required. The adoption did not significantly impact our accounting for purchased loans.

During 2009, CB&T and NSB acquired failed banks from the FDIC as receiver and entered into loss sharing agreements with the FDIC for the acquired loans and foreclosed assets. The FDIC assumes 80% of credit losses up to a threshold specified for each acquisition and 95% above the threshold for a period of up to ten years. The loans acquired from the FDIC are presented separately in the Company’s balance sheet as “FDIC-supported loans.”

Upon acquisition, in accordance with applicable accounting guidance, the acquired loans were recorded at their fair value without a corresponding ALLL. The acquired foreclosed assets and subsequent real estate foreclosures were included with other real estate owned in the balance sheet and amounted to $40.0 million and $54.1 million at December 31, 2010 and 2009, respectively.

Acquired loans which have evidence of credit deterioration and for which it is probable that not all contractual payments will be collected are accounted for as loans under ASC 310-30. Certain acquired loans (including loans with revolving privileges) without evidence of credit deterioration are accounted for under ASC 310-20 and are excluded from the following tables.

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The outstanding balances of all contractually required payments and the related carrying amounts for loans under ASC 310-30 are as follows:

	December 31,
(In thousands)	2010		2009
Commercial lending	$	413,783	$	605,399
Commercial real estate		746,206		1,176,313
Consumer		79,393		114,678
Outstanding balance	$	1,239,382	$	1,896,390
Carrying amount	$	877,857	$	1,304,251
ALLL1		35,123		–
Carrying amount, net	$	842,734	$	1,304,251

¹ The ALLL was determined subsequent to acquisition and was considered for all of the periods presented. See discussion that follows regarding the “gross” presentation of this allowance amount, which is included in the overall ALLL on the balance sheet, and the amount recoverable under the FDIC loss sharing agreements, which is included in other assets.

At the time of acquisition, we determine the loan’s contractually required payments in excess of all cash flows expected to be collected as an amount that should not be accreted (nonaccretable difference). With respect to the cash flows expected to be collected, the portion representing the excess of the loan’s expected cash flows over our initial investment (accretable yield) is accreted into interest income on a level yield basis over the remaining expected life of the loan or pool of loans. The effects of estimated prepayments are considered in estimating the expected cash flows.

Changes in the accretable yield are as follows:

(In thousands)	2010			2009
Balance at beginning of year	$	161,977		$	–
Additions					201,747
Accretion		(99,225	)		(56,837	)
Reclassification from nonaccretable difference		183,912
Disposals and other		30,341			17,067
Balance at end of year	$	277,005		$	161,977

Over the life of the loan or pool, we continue to estimate cash flows expected to be collected. We evaluate at the balance sheet date whether the estimated present value of these loans using the effective interest rates has decreased below their carrying value, and if so, we record a provision for loan losses. The present value of any subsequent increase in these loans’ actual or expected cash flows is used first to reverse any existing ALLL. Such reversal did not occur for the years presented herein. For any remaining increases in cash flows expected to be collected, we increase the amount of accretable yield on a prospective basis over the remaining life of the loan and recognize such increase in interest income. Additionally, with respect to FDIC-supported loans, when changes in expected cash flows occur, to the extent applicable, we adjust the amount recoverable from the FDIC (also referred to as the FDIC indemnification asset) through a charge or credit (depending on whether there was an increase or decrease in expected cash flows) to other noninterest expense.

The determination of the ALLL for FDIC-supported loans follows the same process described previously. However, this allowance is only established for credit deterioration subsequent to the date of acquisition and represents our estimate of the inherent losses in excess of the book value of FDIC-supported loans. The allowance for loan losses for loans acquired in FDIC-supported transactions is determined without giving

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consideration to the amounts recoverable through loss sharing agreements (since the loss sharing agreements are separately accounted for and thus presented “gross” on the balance sheet). The provision for loan losses is reported net of changes in the amounts recoverable under the loss sharing agreements.

Certain acquired loans within the scope of ASC 310-30 are not accounted for as previously described because the estimation of cash flows to be collected involves a high degree of uncertainty. As allowed under ASC 310-30 in these circumstances, interest income is recognized on a cash basis similar to the cost recovery methodology used for nonaccrual loans. The carrying amounts in the preceding table also include the amount for these loans. At December 31, 2010 and 2009, the net carrying amount of these loans was approximately $76.1 million and $198.4 million, respectively.

During 2010, we increased the ALLL for all FDIC-acquired loans by a charge to the provision for loan losses of $55.8 million. As described subsequently and in accordance with the loss sharing agreements, portions of these amounts are recoverable from the FDIC and comprise the FDIC indemnification asset. Charge-offs net of recoveries for 2010 were $18.1 million. No provision or charge-offs were applicable in 2009.

Changes in the FDIC indemnification asset are as follows:

(In thousands)	2010			2009
Balance at beginning of year	$	293,308		$	–
Initial valuation		–			473,314
Amounts filed with the FDIC and collected or in process		(95,664	)		(180,006	)
Net change in asset balance due to reestimation of projected cash flows		(439	)		–
Other		(1,689	)		–
Balance at end of year	$	195,516		$	293,308

The amount of the FDIC indemnification asset was initially recorded at fair value using projected cash flows based on credit adjustments for each loan class and the loss sharing reimbursement of 80% or 95%, as appropriate. The timing of the cash flows was adjusted to reflect our expectations to receive the FDIC reimbursements within the estimated loss period. Discount rates were based on U.S. Treasury rates or the AAA composite yield on investment grade bonds of similar maturity. The amount is adjusted as actual loss experience is developed and estimated losses covered under the loss sharing agreements are updated. Estimated loan losses, if any, in excess of the amounts recoverable are reflected as period expenses through the provision for loan losses.

7. ASSET SECURITIZATIONS AND OFF-BALANCE SHEET ARRANGEMENT

In June 2009, Zions Bank fully consolidated Lockhart, which previously functioned as an off-balance sheet qualifying special-purpose entity (“QSPE”) securities conduit. As of September 30, 2009, Lockhart was legally terminated. Prior to this consolidation, Zions Bank purchased securities at book value from Lockhart amounting to $678 million in 2009 and $1,145 million in 2008. Valuation losses resulting from these purchases were $187.9 million in 2009 and $13.1 million in 2008. The purchases of securities from Lockhart were made due to investment downgrades as required under a liquidity agreement between Zions Bank and Lockhart, and due to the inability of Lockhart to issue a sufficient amount of commercial paper.

The securities purchased in 2008 included $987 million which comprised the entire remaining small business loan securitizations created by Zions Bank and held by Lockhart. Upon dissolution of the securitization trusts (including a total of $170 million of related securities owned by the Parent), Zions Bank recorded $1,180 million of loans on its balance sheet including $23 million of premium.

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Certain cash flows between Zions Bank and the securitization structures were as follows in 2008:

(In millions)
Purchases of loans previously securitized	$	(1,180	)
Servicing fees received		6
Other cash flows received on retained interests1		317
Total	$	(857	)

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.

Interest income recognized on the retained interests up to the time of their purchase was $0.6 million in 2008. Servicing fee income on all securitizations was $6.1 million in 2008. These amounts are included in loan sales and servicing income in the statement of income.

Effective January 1, 2010, we adopted ASU No. 2009-16, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140, (formerly SFAS No. 166). This new accounting guidance under ASC 860, Transfers and Servicing, modifies the accounting for transfers of financial assets and removes the concept of a QSPE. Because we dissolved Lockhart and our remaining activities related to transfers of financial assets are not material, adoption of this new guidance was not significant to the Company’s financial statements.

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We record all derivatives on the balance sheet at fair value in accordance with ASC 815, Derivatives and Hedging. Note 21 discusses the determination of fair value for derivatives, except for the Company’s total return swap which is discussed subsequently. 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. Derivatives used to manage the exposure to credit risk, which can include total return swaps, are considered credit derivatives. When put in place after purchase of the asset(s) to be protected, these derivatives generally may not be designated as accounting hedges. See discussion following regarding the total return swap.

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. In previous periods, we used fair value hedges to manage interest rate exposure to certain long-term debt. During the first quarter of 2009, we terminated all fair value hedges and are amortizing their remaining balances into earnings, as discussed subsequently.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative are recorded in OCI 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.

No derivatives have been designated for hedges of investments in foreign operations.

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 accounting hedges, changes in fair value are recognized in earnings.

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Our objectives in using derivatives are to add stability to interest income or expense, to modify the duration of specific assets or liabilities as we consider advisable, to manage exposure to interest rate movements or other identified risks, and/or to directly offset derivatives sold to our customers. To accomplish these objectives, we use interest rate swaps and floors as part of our cash flow hedging strategy. These derivatives are used to hedge the variable cash flows associated with designated commercial loans.

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. Derivatives not designated as accounting hedges, including basis swap agreements, are not speculative and are used to economically manage our exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements.

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Selected information with respect to notional amounts and recorded gross fair values at December 31, 2010 and 2009, and the related gain (loss) of derivative instruments for 2010 and 2009 is summarized as follows:

							Year Ended December 31, 2010															Year Ended December 31, 2009
							Amount of derivative gain (loss) recognized/reclassified															Amount of derivative gain (loss) recognized/reclassified
	December 31, 2010															December 31, 2009
	Notional amount		Fair value				OCI		Reclassified from AOCI to interest income		Noninterest income (expense)			Offset to interest expense		Notional amount		Fair value				OCI		Reclassified from AOCI to interest income		Noninterest income (expense)			Offset to interest expense
(In thousands)			Other assets		Other liabilities													Other assets		Other liabilities
Derivatives designated as hedging instruments under ASC 815
Asset derivatives
Cash flow hedges1:
Interest rate swaps	$	520,000	$	24,266	$	310	$	13,286	$	63,030						$	865,000	$	52,539	$	–	$	11,457	$	112,847
Interest rate floors		95,000		1,229		–		888		2,944							170,000		4,249		–		3,016		5,550
Terminated swaps and floors											$	8,962														$	104,706
		615,000		25,495		310		14,174		65,974		8,962	3				1,035,000		56,788		–		14,473		118,397		104,706	3
Liability derivatives
Fair value hedges:
Terminated swaps on long-term debt														$	3,141														$	26,170
Total derivatives designated as hedging instruments		615,000		25,495		310		14,174		65,974		8,962			3,141		1,035,000		56,788		–		14,473		118,397		104,706			26,170
Derivatives not designated as hedging instruments under ASC 815
Interest rate swaps		169,982		2,978		3,016						(418	)				210,354		3,966		4,011						(983	)
Interest rate swaps for customers2		3,006,723		64,509		68,141						745					3,234,378		69,008		69,382						7,585
Energy commodity swaps for customers2												(289	)				125,895		12,483		12,194						600
Basis swaps		175,000		29		–						308					505,000		131		53						8,014
Futures contracts		9,529,000		–		–						(219	)				4,386,000		–		–						508
Options contracts		3,015,000		3,576		–						1,934
Total return swap		1,159,686		–		15,925						(22,795	)
Total derivatives not designated as hedging instruments		17,055,391		71,092		87,082						(20,734	)				8,461,627		85,588		85,640						15,724
Total derivatives	$	17,670,391	$	96,587	$	87,392	$	14,174	$	65,974	$	(11,772	)	$	3,141	$	9,496,627	$	142,376	$	85,640	$	14,473	$	118,397	$	120,430		$	26,170

Note: These tables are not intended to present at any given time the Company’s long/short position with respect to its derivative contracts.

¹ Amounts recognized in OCI and reclassified from accumulated OCI (“AOCI”) represent the effective portion of the derivative gain (loss).

² Amounts include both the customer swaps and the offsetting derivative contracts.

³ Amounts for 2010 and 2009 of $8,962 and $104,706, respectively, which reflect the acceleration of OCI amounts reclassified to income that related to previously terminated hedges, together with the reclassification amounts of $65,974 and $118,397, or a total of $74,936 and $223,103, respectively, are the amounts of reclassification included in the changes in OCI presented in Note 14.

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At December 31, the fair values of derivative assets and liabilities were reduced (increased) by net credit valuation adjustments of $3.5 million and $(0.3) million in 2010, and $2.0 million and $1.6 million in 2009, respectively. These adjustments are required to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.

Fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) have been offset against recognized fair value amounts of derivatives executed with the same counterparty under a master netting arrangement. In the balance sheet, cash collateral was used to reduce recorded amounts of derivative assets and liabilities by $0 and $0.8 million at December 31, 2010, and $8.0 million and $14.0 million at December 31, 2009, respectively.

We offer to our customers interest rate swaps and, through the third quarter of 2010, energy commodity swaps to assist them in managing their exposure to fluctuating interest rates and energy prices. Upon issuance, all of these customer swaps are immediately “hedged” by offsetting derivative contracts, such that the Company minimizes its net risk exposure resulting from such transactions. Fee income from customer swaps is included in other service charges, commissions and fees. As with other derivative instruments, we have credit risk for any nonperformance by counterparties.

Futures and options contracts primarily consist of: (1) Eurodollar futures contracts that allow us to extend the duration of certain Federal Reserve account balances. These contracts reference the 90-day LIBOR rate. Options contracts are used to economically hedge certain rate exposures of the underlying Eurodollar futures contracts. (2) Highly liquid federal funds futures contracts that are traded to manage interest rate risk on certain CDO securities. These identified mixed straddle contracts are executed to convert primarily three- and six-month fixed cash flows into cash flows that vary with daily fluctuations in interest rates. The accounts for both types of futures contracts are cash settled daily.

The remaining balances of any derivative instruments terminated prior to maturity, including amounts in AOCI for swap hedges, are accreted or amortized to interest income or expense over the period to their previously stated maturity dates.

Amounts in AOCI are reclassified to interest income as interest is earned on variable rate loans and as amounts for terminated hedges are accreted or amortized to earnings. For the 12 months following December 31, 2010, we estimate that additional projected gains of $22 million and accretion/amortization of $21 million, or a total of $43 million, will be reclassified.

Total Return Swap

On July 28, 2010, we entered into a total return swap and related interest rate swaps (“TRS”) with Deutsche Bank AG (“DB”) relating to a portfolio of $1.16 billion notional amount of our bank and insurance trust preferred CDOs. As a result of the TRS, DB assumed all of the credit risk of this CDO portfolio, providing timely payment of all scheduled payments of interest and principal when contractually due to the Company (without regard to acceleration or deferral events). Contractual due dates for principal are at each individual security’s maturity, which ranges from 2030 to 2042. We can cancel the TRS quarterly after the first year and remove individual securities on or after the end of the sixth year. Additionally, with the consent of DB, we can transfer the TRS to a third party in part or in whole. DB cannot cancel the TRS except in the event of nonperformance by the Company and under certain other circumstances customary to ISDA swap agreements.

This transfer of credit risk reduced the Company’s regulatory capital risk weighting for these investments. The underlying securities were originally rated primarily A and BBB but later downgraded, and carry some of the highest risk-weightings of the securities in the Company’s portfolio. As a result, the transaction reduced regulatory risk-weighted assets and improved the Company’s risk-based capital ratios.

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This transaction did not qualify for hedge accounting and did not change the accounting for the underlying securities, including the quarterly analysis of OTTI and OCI. As a result, future potential OTTI, if any, associated with the underlying securities may not be offset by any valuation adjustment on the swap in the quarter in which OTTI is recognized and OTTI changes could result in reductions in our regulatory capital ratios, which could be material.

During the third quarter of 2010, we recorded a negative initial value for the TRS of $22.8 million, which is included in fair value and nonhedge derivative income (loss), and structuring costs of $11.6 million, which are included in other noninterest expense. The negative initial value is approximately equal to the first-year fees we will incur for the TRS (that is, during the period we are unable to cancel the transaction). The fair value of the TRS derivative liability was $15.9 million at December 31, 2010.

Both the fair value of the securities and the fair value of the TRS are dependent upon the projected credit-adjusted cash flows of the securities. Absent major changes in these projected cash flows, we expect the value of the TRS to become less negative compared to the negative initial value as the period that we are unable to cancel the transaction shortens.

After the first year of the transaction, we expect to incur subsequent net quarterly costs of approximately $5.3 million under the TRS, including related interest rate swaps and scheduled payments of interest on the underlying CDOs, as long as the TRS remains in place for this CDO portfolio. The payments under the transaction generally include or arise from (1) payments by DB to the Company of all scheduled payments of interest and principal when contractually due to the Company, and payment by the Company to DB of a fixed quarterly or semiannual guarantee fee based on the notional amount of the CDO portfolio in the transaction; (2) an interest rate swap pursuant to which DB pays the Company a fixed interest rate and the Company pays to DB a floating interest rate (generally three-month LIBOR) on the notional amount of the CDO portfolio in the transaction; and (3) a third swap between the Company and DB included in the transaction in order to hedge each party’s exposure to change in interest rates over the life of the transaction. In addition, under the terms of the transaction, payments from the CDOs will continue to be made to the Company and retained by the Company; this recovery amount, plus assumed reinvestment earnings at an imputed interest rate, generally three-month LIBOR, will offset principal payments that DB would otherwise be required to make.

The net result of the payment streams described in the preceding paragraph is the approximate $5.3 million expense per quarter noted previously. Our estimated quarterly expense amount would be impacted by, among other things, changes in the composition of the CDO portfolio included in the transaction and changes over time in the forward LIBOR rate curve. Payments under the third swap began on the second payment date of each covered security. If the forward interest rates projected in mid-July 2010 occur, no net payment will be due by either party under this third swap. If rates increase more than projected, the payment will be to the Company from DB and if less than projected the payment will be the reverse. The Company’s costs are also subject to adjustment in the event of future changes in regulatory requirements applicable to DB, if we do not then elect to terminate the transaction. Should such cost increases occur in the first year, we may cancel the transaction with no payment due beyond the liability already incurred. Termination by the Company for such regulatory changes applicable to DB after year one will result in no payment by the Company.

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At December 31, 2010, we completed a valuation process which resulted in an estimated fair value for the TRS under Level 3. The process utilized valuation inputs from two sources:

1) The Company built on its fair valuation process for the underlying CDO portfolio and utilized those same projected cash flows to quantify the extent and timing of payments to be received from the Trustee related to each CDO and in aggregate. These cash flows, plus assumed reinvestment earnings constitute an estimated recovery amount, the extent of which will offset DB’s required principal payments. The internal valuation utilized the Company’s estimate of each of the cash flows to/from each leg of the derivative and from each covered CDO through maturity and also through the first date on which we may terminate. For valuation purposes, we assumed that a market participant would cancel the TRS at the first opportunity if the TRS did not have a positive value based on the best estimates of cash flows through maturity. Consequently, the fair value approximated the amount of required payments up to the earliest termination date.

2) A valuation from a market participant in possession of all relevant terms and costs of the TRS structure.

We considered the observable input or inputs from market participants as well as the results of our internal modeling to estimate the fair value of the TRS. We expect to continue the use of this methodology in subsequent periods.

9. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

	December 31,
(In thousands)	2010		2009
Land	$	191,612	$	185,806
Buildings		475,830		445,632
Furniture and equipment		581,464		586,648
Leasehold improvements		119,030		115,096
Total		1,367,936		1,333,182
Less accumulated depreciation and amortization		646,951		622,648
Net book value	$	720,985	$	710,534

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Core deposit and other intangible assets and related accumulated amortization are as follows at December 31:

	Gross carrying amount				Accumulated amortization						Net carrying amount
(In thousands)	2010		2009		2010			2009			2010		2009
Core deposit intangibles	$	215,138	$	225,766	$	(135,632	)	$	(123,618	)	$	79,506	$	102,148
Customer relationships and other intangibles		33,974		33,974		(25,582	)		(22,706	)		8,392		11,268
	$	249,112	$	259,740	$	(161,214	)	$	(146,324	)	$	87,898	$	113,416

The amount of amortization expense of core deposit and other intangible assets is separately reflected in the statement of income. In 2009, this amortization expense included approximately $2.6 million for the impairment of certain amounts for customer relationships and other intangibles.

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Estimated amortization expense for core deposit and other intangible assets is as follows for the five years succeeding December 31, 2010:

(In thousands)
2011	$	20,014
2012		16,962
2013		14,553
2014		11,105
2015		9,380

Changes in the carrying amount of goodwill by operating segment are as follows:

(In thousands)	Zions Bank		CB&T		Amegy			NBA		NSB		Vectra		Other			Consolidated Company
Balance as of December 31, 2008	$	19,514	$	379,024	$	1,248,950		$	–	$	–	$	–	$	3,889		$	1,651,377
Impairment losses		–		–		(633,327	)		–		–		–		(2,889	)		(636,216	)
Balance as of December 31, 2009		19,514		379,024		615,623			–		–		–		1,000			1,015,161
Impairment losses		–		–		–			–		–		–		–			–
Balance as of December 31, 2010	$	19,514	$	379,024	$	615,623		$	–	$	–	$	–	$	1,000		$	1,015,161

Amounts for impairment losses reflect our Company-wide annual impairment testing conducted as of October 1 of each year and updated on a more frequent basis when events or circumstances indicate that impairment could have taken place. In 2009, the Amegy goodwill impairment resulted from an evaluation performed for Amegy and CB&T that was completed in February 2009 as a result of the Company’s performance deterioration and declines in bank market values from December 31, 2008. Impairment losses in the other segment for 2009 related primarily to Welman.

The amounts of the impairment losses were determined based on the calculation process specified in ASC 350, which compares carrying value to the estimated fair values of assets and liabilities. These fair values were estimated with the assistance of independent valuation consultants utilizing the provisions of ASC 820. The estimation process took into account both market value and transaction value approaches including management estimates of projected discounted cash flows. Where applicable, we used recent market valuations and transactions from banks similar in size, operations and geography to our subsidiary banks. The analysis considered the continued market deterioration and weaker economic outlook for the applicable states.

11. DEPOSITS

At December 31, 2010, the scheduled maturities of all time deposits were as follows:

(In thousands)
2011	$	3,655,080
2012		359,969
2013		199,690
2014		135,004
2015		118,523
Thereafter		2,435
	$	4,470,701

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At December 31, 2010, the contractual maturities of domestic time deposits with a denomination of $100,000 and over were as follows: $626 million in 3 months or less, $497 million over 3 months through 6 months, $714 million over 6 months through 12 months, and $395 million over 12 months.

Domestic time deposits $100,000 and over were $2.2 billion and $3.1 billion at December 31, 2010 and 2009, respectively. Foreign time deposits $100,000 and over were $297 million and $276 million at December 31, 2010 and 2009, respectively.

Deposit overdrafts reclassified as loan balances were $39 million and $19 million at December 31, 2010 and 2009, respectively.

12. SHORT-TERM BORROWINGS

Selected information for certain short-term borrowings is as follows:

(Dollars in thousands)	2010			2009			2008
Federal funds purchased:
Average amount outstanding	$	465,661		$	1,290,140		$	1,768,782
Weighted average rate		0.22	%		0.30	%		2.20	%
Highest month-end balance	$	814,264		$	1,659,303		$	2,379,055
Year-end balance		310,727			208,669			965,835
Weighted average rate on outstandings at year-end		0.15	%		0.21	%		0.33	%
Security repurchase agreements:
Average amount outstanding	$	454,288		$	632,756		$	964,801
Weighted average rate		0.08	%		0.30	%		1.50	%
Highest month-end balance	$	615,170		$	784,182		$	1,218,507
Year-end balance		411,531			577,346			899,751
Weighted average rate on outstandings at year-end		0.07	%		0.16	%		0.41	%
Federal funds purchased and security repurchase agreements at year-end	$	722,258		$	786,015		$	1,865,586

These short-term borrowings generally mature in less than 30 days. Our participation in security repurchase agreements is on an overnight or term basis (i.e., 30 or 60 days). 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, 2010, overnight security repurchase agreements were $373 million and term security repurchase agreements were $39 million.

Other short-term borrowings are summarized as follows:

	December 31,
(In thousands)	2010		2009
Senior medium-term notes	$	160,636	$	117,134
Commercial paper		2,647		1,084
Other		3,111		3,055
	$	166,394	$	121,273

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The unsecured senior medium-term notes mature at various dates through December 2011 at interest rates ranging from 3.00% to 5.75% at December 31, 2010. See also Note 13.

Our subsidiary banks may borrow from the FHLB under their lines of credit that are secured under blanket pledge arrangements. The subsidiary banks maintain unencumbered collateral with carrying amounts adjusted for the types of collateral pledged, equal to at least 100% of the outstanding advances. At December 31, 2010, the amount available for FHLB advances was approximately $8.8 billion. At December 31, 2010, no short-term FHLB advances were outstanding.

Our subsidiary banks also borrow from the Federal Reserve through the Term Auction Facility. Amounts that can be borrowed are based upon the amount of collateral pledged to a Federal Reserve Bank. At December 31, 2010, the amount available for additional Federal Reserve borrowings was approximately $3.7 billion.

13. LONG-TERM DEBT

Long-term debt is summarized as follows:

	December 31,
(In thousands)	2010		2009
Junior subordinated debentures related to trust preferred securities	$	461,858	$	461,858
Convertible subordinated notes		417,643		530,186
Subordinated notes		223,057		288,394
Senior medium-term notes		819,174		736,309
FHLB advances		20,132		15,722
Capital lease obligations and other		758		473
	$	1,942,622	$	2,032,942

The preceding amounts represent the par value of the debt adjusted for any unamortized premium or discount or other basis adjustments, including the value of associated hedges.

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Trust Preferred Securities

Junior subordinated debentures related to trust preferred securities primarily include debentures issued to Zions Capital Trust B (“ZCTB”), Amegy Statutory Trusts I, II and III (“Amegy Trust I, II or III”), and Stockmen’s Statutory Trusts II and III (“Stockmen’s Trust II or III”) as follows at December 31, 2010:

(Dollars in thousands)	Balance		Interest rate			Maturity
ZCTB	$	293,815		8.00	%		Sep 2032
Amegy Trust I		51,547		3mL+2.85	%1		Dec 2033
				(3.15	%)
Amegy Trust II		36,083		3mL+1.90	%1		Oct 2034
				(2.19	%)
Amegy Trust III		61,856		3mL+1.78	%1		Dec 2034
				(2.08	%)
Stockmen’s Trust II		7,732		3mL+3.15	%1		Mar 2033
				(3.45	%)
Stockmen’s Trust III		7,732		3mL+2.89	%1		Mar 2034
				(3.19	%)
Intercontinental Statutory Trust I		3,093		3mL+2.85	%1		Mar 2034
				(3.15	%)
	$	461,858

¹ Designation of “3mL” is three-month LIBOR (London Interbank Offer Rate); effective interest rate at the beginning of the accrual period commencing on or before December 31, 2010 is shown in parenthesis.

The junior subordinated debentures are issued or have been assumed by the Parent or Amegy. Each series of junior subordinated debentures was issued to and is held by a trust, which has issued a corresponding series of trust preferred security obligations. The trust obligations are in the form of capital securities subject to mandatory redemption upon repayment of the junior subordinated debentures by the Parent or Amegy, as the case may be. The sole assets of the trusts are the junior subordinated debentures.

Interest distributions are made quarterly at the same rates earned by the trusts on the junior subordinated debentures; however, we may defer the payment of interest on the junior subordinated debentures. Early redemption is currently possible on all of the debentures and requires the approval of banking regulators.

The debentures for ZCTB are direct and unsecured obligations of the Parent and are subordinate to other indebtedness and general creditors. The debentures for Amegy Trust I, II and III are direct and unsecured obligations of Amegy and are subordinate to other indebtedness and general creditors. The debentures for Stockmen’s Trust II and III are unsecured obligations of Stockmen’s assumed by the Parent in connection with the acquisition of Stockmen’s by NBA. The Parent has unconditionally guaranteed the obligations of ZCTB with respect to its trust preferred securities to the extent set forth in the applicable guarantee agreement. Amegy has unconditionally guaranteed the obligations of Amegy Trust I, II and III with respect to their respective series of trust preferred securities to the extent set forth in the applicable guarantee agreements. The Parent has assumed Stockmen’s unconditional guarantees of the obligations of Stockmen’s Trust II and III with respect to their respective series of trust preferred securities to the extent set forth in the applicable guarantee agreements.

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Subordinated Notes and Subordinated Debt Modification

Subordinated notes consist of the following at December 31, 2010:

(Dollars in thousands)	Convertible subordinated notes				Subordinated notes
Interest rate	Balance		Par amount		Balance		Par amount			Maturity
5.65%	$	115,679	$	213,691	$	32,985	$	30,173			May 2014
6.00%		170,003		333,126		46,871		42,303			Sep 2015
5.50%		131,961		256,657		68,201		62,078			Nov 2015
3mL+1.25%1 (1.56%)						75,000		75,000	2		Sep 2014
	$	417,643	$	803,474	$	223,057	$	209,554

¹ Designation of “3mL” is three-month LIBOR; effective interest rate at the beginning of the accrual period commencing on or before December 31, 2010 is shown in parenthesis.

² Issued by Amegy.

These notes are unsecured and are not redeemable prior to maturity. Interest is payable semiannually.

In June and December 2009, we exchanged a total of approximately $190.1 million par value of the subordinated notes for new notes with the same terms. The remaining $1,210.0 million par value of the subordinated notes was modified to permit conversion on a par-for-par basis into either the Company’s Series A or Series C preferred stock. The carrying value of the subordinated notes included associated terminated fair value hedges. Holders of the convertible subordinated debt are allowed to convert on the interest payment dates of the debt. Net of issuance costs and debt discount on the previous debt, the total pretax gain recognized in the statement of income from these subordinated debt modifications was $508.9 million. The gain was calculated as the difference between the fair value of the modified convertible subordinated notes and the carrying value of the extinguished debt on the transaction dates.

In connection with these subordinated debt modifications, we also recorded the intrinsic value of the beneficial conversion feature directly in common stock, as discussed in Note 14.

Subordinated notes converted to preferred stock amounted to $343.0 million in 2010 and $63.4 million in 2009.

The convertible debt discount recorded in connection with the subordinated debt modifications is amortized to interest expense using the interest method over the remaining terms of the convertible subordinated notes. When holders of the convertible subordinated notes convert to preferred stock, the rate of amortization is accelerated by immediately expensing any unamortized discount associated with the converted debt. Amortization of the convertible debt discount is summarized as follows:

(In thousands)	2010			2009
Balance at beginning of year	$	616,240		$	–
Convertible debt discount from debt modifications					678,924
Discount amortization on convertible subordinated debt		(57,963	)		(26,955	)
Accelerated discount amortization on convertible subordinated debt		(172,446	)		(35,729	)
Total amortization		(230,409	)		(62,684	)
Balance at end of year	$	385,831		$	616,240

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During the first quarter of 2009, as discussed in Note 8, we terminated all fair value hedges that had been used for the subordinated notes. The remaining value of $13.8 million and $23.7 million at December 31, 2010 and 2009, respectively, is amortized as a reduction of interest expense over the periods to the previously stated maturity dates of the notes.

In March 2010, we exchanged $55.6 million of nonconvertible subordinated debt into shares of the Company’s common stock, as discussed further in Note 14. The net pretax gain on subordinated debt exchange included in the statement of income was approximately $14.5 million, and represented the difference between the carrying value of the debt exchanged and the fair value of the common stock issued, net of commissions and fees.

Senior Medium-term Notes

Senior medium-term notes consist of the following at December 31, 2010:

(Dollars in thousands)
Interest rate	Balance		Par amount		Interest payments	Maturity
3mL+0.37% (0.66%)	$	254,553	$	254,893	Quarterly		Jun 2012
7.75%		450,685		499,655	Semiannually		Sep 2014
4.00% - 6.00%		113,936		114,013	Semiannually		Aug 2011 - Feb 2013
	$	819,174

¹ Designation of “3mL” is three-month LIBOR; effective interest rate at the beginning of the accrual period commencing on or before December 31, 2010 is shown in parenthesis.

These notes are unsecured and are not redeemable prior to maturity. The variable rate notes are guaranteed under the FDIC’s Temporary Liquidity Guarantee Program that became effective in November 2008. The remaining notes were issued under a shelf registration filed with the SEC. The $113.9 million of notes were sold via the Company’s online auction process and direct sales.

FHLB Advances

The FHLB advances were issued by Amegy with maturities from June 2014 to October 2030, at interest rates from 2.81% to 6.98%. The weighted average interest rate on advances outstanding was 4.6% and 5.0% at December 31, 2010 and 2009, respectively.

Interest Expense and Maturities

Interest expense on long-term debt included in the statement of income was reduced by $3.1 million in 2010, $26.2 million in 2009, and $35.1 million in 2008 as a result of the associated hedges.

Maturities on long-term debt are as follows for the years succeeding December 31, 2010:

(In thousands)	Consolidated		Parent only
2011	$	8,067	$	8,030
2012		342,070		342,030
2013		18,226		18,184
2014		671,878		596,770
2015		406,132		406,066
Thereafter		482,454		309,278
	$	1,928,827	$	1,680,358

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These maturities do not include the associated hedges. The $309.3 million of Parent only maturities at December 31, 2010 are for the junior subordinated debentures payable to ZCTB and Stockmen’s Trust II and III after 2015.

Subsequent Event

As of February 14, 2011, holders of approximately $85.8 million of subordinated convertible notes elected to convert their debt into depositary shares of the Company’s preferred stock. This anticipated conversion will add 20 shares of Series A and 85,829 shares of Series C to the Company’s preferred stock.

14. SHAREHOLDERS’ EQUITY

Preferred Stock

Preferred stock is without par value and has a liquidation preference of $1,000 per share. In May 2010, Company shareholders approved an increase in the number of authorized preferred shares from 3,000,000 to 4,400,000.

In general, preferred shareholders may receive asset distributions before common shareholders; however, preferred shareholders have only limited voting rights generally with respect to certain provisions of the preferred stock, the issuance of senior preferred stock, and the election of directors. Preferred stock dividends reduce earnings available to common shareholders and are paid quarterly. Redemption of the preferred stock is at the Company’s option after the expiration of any applicable redemption restrictions. The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. Additional redemption provisions for the Series D preferred stock are discussed subsequently.

The Series A, C and E shares were issued in the form of depositary shares with each depositary share representing a 1/40^th ownership interest in a share of the preferred stock. Dividend payments are made on the 15^th day of March, June, September, and December. The shares are registered with the SEC.

Preferred stock is summarized as follows:

								Carrying value
(Dollar amounts in thousands)	Rate	Earliest redemption date		Shares at December 31, 2010				December 31,
				Authorized		Outstanding		2010		2009
Series A	Floating		December 15, 2011		140,000		59,440	$	59,457	$	67,952
Series C	9.5%		September 15, 2013		1,400,000		453,237		521,051		121,386
Series D, TARP Capital
Purchase Program	5.0%		November 15, 2011		1,400,000		1,400,000		1,333,664		1,313,446
Series E	11.0%		June 15, 2012		250,000		142,500		142,500		–
								$	2,056,672	$	1,502,784

The Series A Floating-Rate Non-Cumulative Perpetual Preferred Stock was sold through underwriters. Dividends are computed at an annual rate equal to the greater of three-month LIBOR plus 0.52%, or 4.0%.

The Series C 9.50% Non-Cumulative Perpetual Preferred Stock offering was completed in July 2008. It was sold for $46.9 million primarily by Zions Direct, Inc., the Company’s broker/dealer subsidiary, via an online auction process and by direct sales.

The Series D Fixed-Rate Cumulative Perpetual Preferred Stock was issued in November 2008 to the U.S. Department of the Treasury for $1.4 billion. The Emergency Economic Stabilization Act of 2008 authorized the

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U.S. Treasury to appropriate funds to eligible financial institutions participating in the Troubled Asset Relief Program (“TARP”) Capital Purchase Program. The capital investment includes the issuance of preferred shares of the Company and a warrant to purchase common shares pursuant to a Letter Agreement and a Securities Purchase agreement (collectively “the Agreement”). The dividend rate of 5% increases to 9% after the first five years. Dividend payments are made on the 15^th day of February, May, August, and November. The warrant allows the U.S. Treasury to purchase up to 5,789,909 shares of the Company’s common stock exercisable over a 10-year period at a price per share of $36.27. The preferred shares and the warrant qualify for Tier 1 regulatory capital. The Agreement subjects the Company to certain restrictions and conditions including those related to common dividends, share repurchases, executive compensation, and corporate governance. In addition, the Series D TARP preferred stock must be redeemed in full before any other preferred stock may be redeemed. Further, redemption of the Series D TARP preferred stock is subject to regulatory approval.

We recorded the total $1.4 billion of the Series D preferred shares and the warrant at their relative fair values of $1,292.2 million and $107.8 million, respectively. The difference from the par amount of the preferred shares is accreted to preferred stock over five years using the interest method with a corresponding adjustment to preferred dividends. This accretion amounted to $20.2 million in 2010, $18.6 million in 2009, and $2.6 million in 2008.

The Series E Fixed-Rate Resettable Non-Cumulative Perpetual Preferred Stock offering was sold for $142.5 million in June 2010 through underwriters, including Zions Direct, Inc. Associated commissions and fees amounted to $3.8 million. The initial dividend rate of 11% is resettable beginning June 15, 2012 and every two years thereafter at the then current two-year U.S. Treasury rate, plus 10.22%.

In connection with the subordinated debt modifications discussed in Note 13, we recorded $202.8 million after-tax directly in common stock for the intrinsic value of the beneficial conversion feature of the modified subordinated debt. The Company has “no par” common stock and all additional paid-in capital transactions are recorded in common stock. The intrinsic value of the beneficial conversion feature was calculated as the difference between the fair value of the preferred stock into which the debt is convertible (multiplied by the number of related shares) and the fair value of the modified convertible debt on the commitment dates. The commitment date is defined as the date when both parties are bound to the terms of the transaction, which was the expiration of the exchange offer and corresponded with the transaction date. At the time of each conversion of the convertible debt to preferred stock, a proportional amount of the intrinsic value of the beneficial conversion feature is transferred from common stock to preferred stock.

As discussed in Note 13, approximately $343.0 million in 2010 and $63.4 million in 2009 of convertible subordinated notes were converted into preferred stock. As a result, approximately $56.8 million in 2010 and $11.0 million in 2009 of the intrinsic value of the beneficial conversion feature was transferred from common stock to preferred stock. The remaining balance included in common stock was approximately $135.0 million and $191.8 million at December 31, 2010 and 2009, respectively.

In June 2009, through a tender offer, we purchased 4,020,435 depositary shares of Series A preferred stock at a price of $11.50 per depositary share, or an aggregate amount of $46.4 million including accrued dividends. At a $25 per depositary share liquidation preference, the purchase reduced the $240 million carrying value of the Series A preferred stock by approximately $100.5 million. Net of related costs, the preferred stock redemption resulted in a $54.0 million increase to common shareholders’ equity. The purchase price of $11.50 per depositary share was determined based on a modified “Dutch auction” pricing mechanism.

Common Stock

We issued $633.3 million in 2010 and $472.7 million in 2009 of new common stock under common equity distribution agreements. The issuances consisted of approximately 29.6 million shares in 2010 at an average price of $21.43 and 31.7 million shares in 2009 at an average price of $14.89 per share. Net of commissions and fees, these issuances added $623.5 million in 2010 and $464.1 million in 2009 to common stock.

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During 2010, we sold a total of 29.3 million common stock warrants for $221.8 million. The sales consisted of 7.0 million warrants for $36.8 million, or $5.25 per warrant, in September 2010, and 22.3 million for $185.0 million, or $8.3028 per warrant, in June 2010. Each of the warrants can be exercised for a share of common stock at an initial price of $36.63 through May 22, 2020. Net of commissions and fees, the total issuance added $214.6 million to common stock.

In June 2010, $8.6 million of Series A preferred stock was exchanged for 224,903 shares of the Company’s common stock at the then fair value of $23.82 per share. The result of the $5.5 million of common stock issued in this preferred stock redemption increased retained earnings by approximately $3.1 million.

In March 2010, we issued approximately 2.2 million shares of common stock, or $46.9 million net of commissions and fees, in exchange for $55.6 million of nonconvertible subordinated debt. The number of shares issued was determined using an exchange ratio based on a common stock price of $22.5433 per share. This per share amount was calculated based on the defined weighted average price of our common stock for each of the five consecutive days ending on the March 24, 2010 expiration date of our exchange offer.

In December 2009, we completed the exchange of approximately $71.5 million of Series A preferred stock into approximately 2.8 million shares of common stock. The number of shares was determined based on an exchange ratio calculation specified in the exchange offer. Among other things, the calculation of the exchange ratio included a defined weighted average price of our common shares for each of the five consecutive days ending on the December 17, 2009 expiration date, or $13.2056 per share. Approximately $32.4 million, which is net of $0.7 million of issuance costs, was included in retained earnings as the difference between the $37.2 million fair value of the common shares on the date of exchange plus the $1.2 million original issuance costs of the preferred stock and the carrying value of the preferred stock exchanged.

In September 2008, we issued $250 million of new common stock consisting of approximately 7.2 million shares at an average price of $34.75 per share. Net of commissions and fees, this issuance added $244.9 million to common stock.

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Accumulated Other Comprehensive Income

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, 2007	$	(108,766	)	$	65,213		$	(15,282	)	$	(58,835	)
Cumulative effect of change in accounting principle, adoption of ASC 825 for fair value option		11,471									11,471
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses,net of income tax benefit of $215,384		(333,095	)								(333,095	)
Foreign currency translation		(5	)								(5	)
Reclassification for net losses included in earnings, net of income tax benefit of $119,597		181,524									181,524
Net unrealized gains, net of reclassification to earnings of $65,862 and income tax expense of $82,653					131,443						131,443
Pension and postretirement, net of income tax benefit of $20,401								(31,461	)		(31,461	)
Other comprehensive income (loss)		(151,576	)		131,443			(31,461	)		(51,594	)
Balance at December 31, 2008		(248,871	)		196,656			(46,743	)		(98,958	)
Cumulative effect of change in accounting principle, adoption of new OTTI guidance in ASC 320		(137,462	)								(137,462	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding losses net of income tax benefit of $40,454		(65,037	)								(65,037	)
Reclassification for net losses included in earnings, net of income tax benefit of $102,284		162,206									162,206
Noncredit-related impairment losses on securities not expected to be sold, net of income tax benefit of $115,159		(174,244	)								(174,244	)
Accretion of securities with noncredit-related impairment losses not expected to be sold, net of income tax expense of $673		996									996
Net unrealized losses, net of reclassification to earnings of $223,103 and income tax benefit of $80,033					(128,597	)					(128,597	)
Pension and postretirement, net of income tax expense of $2,694								4,197			4,197
Other comprehensive income (loss)		(76,079	)		(128,597	)		4,197			(200,479	)
Balance at December 31, 2009		(462,412	)		68,059			(42,546	)		(436,899	)
Other comprehensive income (loss), net of tax:
Net realized and unrealized holding gains, net of income tax expense of $2,230		4,248									4,248
Reclassification for net losses included in earnings, net of income tax benefit of $28,611		45,689									45,689
Noncredit-related impairment losses on securities not expected to be sold, net of income tax benefit of $27,177		(43,920	)								(43,920	)
Accretion of securities with noncredit-related impairment losses not expected to be sold, net of income tax expense of $81		131									131
Net unrealized losses, net of reclassification to earnings of $74,936 and income tax benefit of $23,405					(37,357	)					(37,357	)
Pension and postretirement, net of income tax expense of $4,440								6,812			6,812
Other comprehensive income (loss)		6,148			(37,357	)		6,812			(24,397	)
Balance at December 31, 2010	$	(456,264	)	$	30,702		$	(35,734	)	$	(461,296	)

As discussed in Note 5, we adopted new guidance under ASC 320 as of January 1, 2009 related to the accounting for noncredit-related impairment losses on investment securities not expected to be sold. In addition to the ongoing effect on AOCI, the cumulative effect of adopting this new guidance increased retained earnings and decreased AOCI by $137.5 million.

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Deferred Compensation

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. At December 31, 2010 and 2009, the cost of the common stock was approximately $16.1 million and $16.2 million, respectively, and was included in retained earnings. We consolidate the fair value of invested assets of the trusts along with the total obligations and include them in other assets and other liabilities, respectively, in the balance sheet. At December 31, 2010 and 2009, total invested assets were approximately $70.5 million and $58.0 million and total obligations were approximately $86.6 million and $74.2 million, respectively.

Noncontrolling Interests

In June 2010, we liquidated our ownership of certain consolidated venture funds. We also changed the ownership structure of another venture fund such that we are no longer required to consolidate it under the accounting guidance in ASC 810. The effect of these transactions decreased the amount of noncontrolling interests by approximately $15 million. The consolidated financial statements were not otherwise significantly affected.

Subsequent Event

On February 10, 2011, we announced a new equity distribution agreement to sell $200 million of shares of the Company’s common stock. This agreement supersedes prior programs, including the latest program announced August 18, 2010 under which approximately $6.5 million could still be sold as of December 31, 2010.

15. INCOME TAXES

Income taxes (benefit) are summarized as follows:

(In thousands)	2010			2009			2008
Federal:
Current	$	(80,914	)	$	(375,610	)	$	170,268
Deferred		(15,210	)		24,171			(198,145	)
		(96,124	)		(351,439	)		(27,877	)
State:
Current		2,760			(10,662	)		17,608
Deferred		(13,455	)		(39,242	)		(33,096	)
		(10,695	)		(49,904	)		(15,488	)
	$	(106,819	)	$	(401,343	)	$	(43,365	)

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

(In thousands)	2010			2009			2008
Income tax expense (benefit) at statutory federal rate	$	(141,109	)	$	(568,057	)	$	(110,144	)
State income taxes, net		(6,952	)		(32,437	)		(4,883	)
Uncertain state tax positions, including interest and penalties		–			–			(5,184	)
Nondeductible goodwill impairment		–			220,852			115,774
Other nondeductible expenses		52,004			4,380			3,461
Nontaxable income		(21,662	)		(24,863	)		(27,763	)
Surrender of bank-owned life insurance		28,923			2,772			–
Tax credits and other taxes		(9,007	)		(7,946	)		(7,766	)
Valuation allowance for federal tax purposes on acquired net operating losses		–			3,899			–
Other		(9,016	)		57			(6,860	)
	$	(106,819	)	$	(401,343	)	$	(43,365	)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

(In thousands)	2010			2009
Gross deferred tax assets:
Book loan loss deduction in excess of tax	$	563,880		$	612,818
Pension and postretirement		25,426			31,009
Deferred compensation		60,854			58,496
Other real estate owned		35,237			18,497
Accrued severance costs		2,617			2,985
Security investments and derivative fair value adjustments		247,952			248,487
Equity investments		12,821			15,610
Net operating losses and tax credits		56,381			49,947
Other		37,879			20,787
		1,043,047			1,058,636
Valuation allowance		(4,261	)		(4,261	)
Total deferred tax assets		1,038,786			1,054,375
Gross deferred tax liabilities:
Core deposits and purchase accounting		(33,139	)		(40,322	)
Premises and equipment, due to differences in depreciation		(9,363	)		(5,913	)
FHLB stock dividends		(17,746	)		(18,708	)
Leasing operations		(110,054	)		(94,644	)
Prepaid expenses		(6,462	)		(7,290	)
Prepaid pension reserves		(20,869	)		(3,231	)
Subordinated debt modification		(247,272	)		(296,366	)
Deferred loan fees		(19,864	)		(17,770	)
FDIC-supported transactions		(30,669	)		(58,408	)
Other		(3,285	)		(13,474	)
Total deferred tax liabilities		(498,723	)		(556,126	)
Net deferred tax assets	$	540,063		$	498,249

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The amount of net deferred tax assets is included with other assets in the balance sheet. The $4.3 million valuation allowance at December 31, 2010 and 2009 was for certain acquired net operating loss carryforwards included in our acquisition of the remaining interests in a less significant subsidiary. At December 31, 2010, excluding the $4.3 million, the tax effect of remaining net operating loss and tax credit carryforwards was approximately $45.7 million expiring through 2030 and $6.4 million expiring through 2031.

We evaluate the net deferred tax assets on a regular basis to determine whether an additional valuation allowance is required. In conducting this evaluation, we have considered all available evidence, both positive and negative, based on the more-likely-than-not criteria that such assets will be realized. This evaluation includes, but is not limited to: (1) available carryback potential to offset federal tax of approximately $100 million in the 2008 tax year; during 2010, the Company had a net operating loss for tax purposes that will largely offset the taxable income for the 2008 tax year; (2) potential future reversals of existing deferred tax liabilities, which historically have a reversal pattern generally consistent with deferred tax assets; (3) potential tax planning strategies; and (4) future projected taxable income. Based on this evaluation, and considering the weight of the positive evidence compared to the negative evidence, we have concluded that an additional valuation allowance is not required as of December 31, 2010.

We have an agreement that awarded us a $100 million allocation of tax credit authority under the Community Development Financial Institutions Fund established by the U.S. Government. We have invested the $100 million in a wholly-owned subsidiary which makes qualifying loans and investments. In return, we receive federal income tax credits that are recognized over seven years, including the year in which the funds were invested in the subsidiary. We recognize these tax credits for financial reporting purposes in the same year the tax benefit is recognized in our tax return. The resulting tax credits which reduced income tax expense were approximately $6.0 million in 2010, $5.9 million in 2009, and $5.8 million in 2008.

We have a liability for unrecognized tax benefits relating to uncertain tax positions primarily for various state tax contingencies in several jurisdictions. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

(In thousands)	2010			2009			2008
Balance at beginning of year	$	16,677		$	17,077		$	29,717
Tax positions related to current year:
Additions		–			–			676
Reductions		–			–			–
Tax positions related to prior years:
Additions		–			–			–
Reductions		–			–			(7,641	)
Settlements with taxing authorities		–			–			(5,675	)
Lapses in statutes of limitations		(1,311	)		(400	)		–
Balance at end of year	$	15,366		$	16,677		$	17,077

At December 31, 2010 and 2009, the liability for unrecognized tax benefits included approximately $10.0 million and $10.8 million, respectively, (net of the federal tax benefit on state issues) that, if recognized, would affect the effective tax rate. Gross unrecognized tax benefits that may decrease during the 12 months subsequent to December 31, 2010 could range up to approximately $1.6 million as a result of the resolution of various state tax positions.

We reduced this liability, net of any federal and/or state tax benefits, and reduced income tax expense by a net amount including interest of $949 thousand in 2010 and $366 thousand in 2009 due to lapses in statutes of limitations. We reduced this liability in 2008 by approximately $9.6 million due to a $5.2 million settlement with taxing authorities and to $4.4 million from the net effect of settlement payments.

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Interest and penalties related to unrecognized tax benefits are included in income tax expense in the statement of income. At December 31, 2010 and 2009, accrued interest and penalties recognized in the balance sheet, net of any federal and/or state tax benefits, were approximately $2.7 million and $2.8 million, respectively.

The Company and its subsidiaries file income tax returns in U.S. federal and various state jurisdictions. The Company is no longer subject to income tax examinations for years prior to 2007 for federal returns, and generally prior to 2006 for state returns.

16. NET EARNINGS PER COMMON SHARE

ASC 260, Earnings Per Share, includes new guidance adopted January 1, 2009 which clarifies that unvested share-based awards with rights to receive nonforfeitable dividends are considered participating securities and should be included in the computation of earnings per share. Adoption of this guidance required retrospective adjustment of earnings per share information, which was not significant to any prior year included in the accompanying financial statements.

Basic and diluted net earnings per common share based on the weighted average outstanding shares are summarized as follows:

	Year Ended December 31,
(In thousands, except per share amounts)	2010			2009			2008
Basic:
Net income (loss) applicable to controlling interest	$	(292,728	)	$	(1,216,111	)	$	(266,269	)
Common and preferred dividends		(126,427	)		(30,198	)		(199,589	)
Undistributed earnings (loss)		(419,155	)		(1,246,309	)		(465,858	)
Less undistributed earnings applicable to nonvested restricted shares		–			–			–
Undistributed earnings (loss) applicable to common shares		(419,155	)		(1,246,309	)		(465,858	)
Distributed earnings applicable to common shares		6,565			11,773			173,963
Total earnings (loss) applicable to common shares	$	(412,590	)	$	(1,234,536	)	$	(291,895	)
Weighted average common shares outstanding		166,054			124,443			108,908
Net earnings (loss) per common share	$	(2.48	)	$	(9.92	)	$	(2.68	)
Diluted:
Total earnings (loss) applicable to common shares	$	(412,590	)	$	(1,234,536	)	$	(291,895	)
Additional undistributed earnings allocated to incremental option shares		–			–			–
Diluted earnings (loss) applicable to common shares	$	(412,590	)	$	(1,234,536	)	$	(291,895	)
Weighted average common shares outstanding		166,054			124,443			108,908
Additional weighted average dilutive option shares		–			–			–
Weighted average diluted common shares outstanding		166,054			124,443			108,908
Net earnings (loss) per common share	$	(2.48	)	$	(9.92	)	$	(2.68	)

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17. SHARE-BASED COMPENSATION

We have a stock option and incentive plan which allows us to grant stock options, restricted stock, and other awards to employees and nonemployee directors. Total shares authorized under the plan were 13,200,000 at December 31, 2010, of which 3,069,113 were available for future grants of stock options or restricted stock. Our agreement with the U.S. Treasury under the TARP Capital Purchase Program includes conditions related to the issuance of share-based awards. See further discussion in Note 14.

All share-based payments to employees, including grants of employee stock options, are recognized in the statement of income based on their fair values. The fair value of an equity award is estimated on the grant date without regard to service or performance vesting conditions.

Compensation expense and the related tax benefit for all share-based awards were as follows:

(In thousands)	2010		2009		2008
Compensation expense	$	26,834	$	29,789	$	31,850
Reduction of income tax expense		9,315		10,433		11,080

Compensation expense is included in salaries and employee benefits in the statement of income with the corresponding increase included in common stock in shareholders’ equity.

We classify all share-based awards as equity instruments. Substantially all awards have graded vesting which is recognized on a straight-line basis over the vesting period. As of December 31, 2010, compensation expense not yet recognized for nonvested share-based awards was approximately $34.8 million, which is expected to be recognized over a weighted average period of 1.2 years.

The tax shortfall recognized from the exercise of stock options and the vesting of restricted stock was approximately $8.4 million in 2010, $6.1 million in 2009, and $2.2 million in 2008. These amounts are included in the statement of changes in shareholders’ equity under common stock and primarily relate to the net activity under employee plans and related tax benefits.

Stock Options

Stock options granted to employees generally vest at the rate of one third each year and expire seven years after the date of grant. Stock options granted to nonemployee directors vest in increments from six months to three and a half years and expire ten years after the date of grant.

We used the results of the April 2008 auction of our Employee Stock Option Appreciation Rights Securities (“ESOARS”) to value our employee stock options granted at that same time. We had previously received notification from the SEC that our ESOARS was sufficiently designed as a market-based method to value employee stock options under ASC 718. Information from the results of the April 2008 auction was as follows:

ESOARS per share auction fair value used for employee stock option grants	$	5.73
Percentage that auction fair value is below comparable
Black-Scholes model valuation		24	%
Number of stock options granted		1,542,238
Percentage of stock options granted to total stock options granted during the year		61	%

We used the ESOARS values for the remainder of 2008 to determine compensation expense for these stock options and we included the related estimated future ESOARS settlement obligations in other liabilities in the balance sheet.

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For all stock options granted in 2010 and 2009 and all other stock options granted in 2008, we used the Black-Scholes option pricing model to estimate the fair values of stock options in determining compensation expense. The following summarizes the weighted average of fair value and the significant assumptions used in applying the Black-Scholes model for options granted:

	2010			2009			2008
Weighted average of fair value for options granted	$	6.59		$	4.09		$	4.85
Weighted average assumptions used:
Expected dividend yield		1.0	%		1.0	%		4.7	%
Expected volatility		33.0	%		33.0	%		26.8	%
Risk-free interest rate		1.89	%		2.24	%		2.99	%
Expected life (in years)		4.5			4.5			4.7

The assumptions for expected dividend yield, expected volatility, and expected life reflect management’s judgment and include consideration of historical experience. Expected volatility is based in part on historical volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.

The following summarizes our stock option activity for the three years ended December 31, 2010:

	Number of shares			Weighted average exercise price
Balance at December 31, 2007		5,810,983		$	64.82
Granted		2,537,438			40.43
Exercised		(52,072	)		30.58
Expired		(536,643	)		56.72
Forfeited		(85,108	)		66.18
Balance at December 31, 2008		7,674,598			57.53
Granted		714,085			14.64
Exercised		(316	)		5.82
Expired		(599,405	)		56.35
Forfeited		(59,932	)		62.99
Balance at December 31, 2009		7,729,030			53.61
Granted		846,013			23.90
Exercised		(32,645	)		13.18
Voluntarily surrendered		(1,051,174	)		78.60
Expired		(841,529	)		48.73
Forfeited		(280,456	)		31.45
Balance at December 31, 2010		6,369,239			47.37
Outstanding stock options exercisable as of:
December 31, 2010		4,230,690		$	57.21
December 31, 2009		4,911,239			62.72
December 31, 2008		4,221,713			62.15

During 2010, certain option holders voluntarily surrendered stock options that were fully vested. All of the associated compensation expense had been previously recognized. These options were granted between May 2005 and September 2007, with exercise prices between $70.79 and $83.25 and expiration dates between May 2012 and September 2014. No replacement options or other replacement equity-based compensation was granted to these option holders.

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We issue new authorized shares for the exercise of stock options. The total intrinsic value of stock options exercised was approximately $0.3 million in 2010, $3 thousand in 2009, and $0.9 million in 2008. Cash received from the exercise of stock options was $0.4 million in 2010, $2 thousand in 2009, and $1.6 million in 2008.

Additional selected information on stock options at December 31, 2010 follows:

	Outstanding stock options							Exercisable stock options
Exercise price range	Number of shares		Weighted average exercise price		Weighted average remaining contractual life (years)			Number of shares		Weighted average exercise price
$0.32 to $19.99		666,769	$	14.18		5.4	1		212,804	$	13.38
$20.00 to $39.99		1,507,805		25.76		5.6			305,082		28.06
$40.00 to $49.99		1,661,468		47.24		4.1			1,182,160		47.24
$50.00 to $54.99		83,743		52.82		1.2			83,743		52.82
$55.00 to $59.99		969,980		56.85		1.0			969,980		56.85
$60.00 to $64.99		29,549		63.32		1.5			29,549		63.32
$65.00 to $69.99		104,963		67.08		3.1			104,963		67.08
$70.00 to $74.99		331,653		70.89		1.7			329,100		70.88
$75.00 to $79.99		58,700		75.98		2.0			58,700		75.98
$80.00 to $81.99		452,863		81.11		2.5			452,863		81.11
$82.00 to $83.38		501,746		83.24		3.5			501,746		83.24
		6,369,239		47.37		3.7	1		4,230,690		57.21

¹ The weighted average remaining contractual life excludes 26,429 stock options without a fixed expiration date that were acquired with the Amegy acquisition by the Company in 2005. They expire between the date of termination and one year from the date of termination, depending upon certain circumstances.

The aggregate intrinsic value of outstanding stock options at December 31, 2010 and 2009 was $35.0 million and $265 thousand, respectively, while the aggregate intrinsic value of exercisable options was $8.5 million and $243 thousand. For exercisable options, the weighted average remaining contractual life was 2.9 years and 3.1 years at December 31, 2010 and 2009, respectively, excluding the stock options previously noted without a fixed expiration date.

The previous schedules do not include stock options for employees of our TCBO subsidiary to purchase common stock of TCBO. At December 31, 2010, there were options to purchase 60,000 TCBO shares at exercise prices from $17.85 to $20.58. At December 31, 2010, there were 1,038,000 issued and outstanding shares of TCBO common stock.

Restricted Stock

Restricted stock issued vests generally over four years. Nonemployee directors were granted restricted stock of 27,216 shares in 2010 and 43,002 shares in 2009, which vested over six months. During the vesting period, the holder has full voting rights and receives dividend equivalents. Compensation expense is determined based on the number of restricted shares issued and the market price of our common stock at the issue date.

145

The following summarizes our restricted stock activity for the three years ended December 31, 2010:

	Number of shares			Weighted average issue price
Nonvested restricted shares at December 31, 2007		635,062		$	74.54
Issued		849,156			37.64
Vested		(191,605	)		74.92
Forfeited		(43,332	)		68.43
Nonvested restricted shares at December 31, 2008		1,249,281			49.61
Issued		698,311			14.64
Vested		(349,186	)		56.13
Forfeited		(73,756	)		42.64
Nonvested restricted shares at December 31, 2009		1,524,650			32.44
Issued		644,504			23.85
Vested		(428,593	)		43.88
Forfeited		(128,918	)		28.19
Nonvested restricted shares at December 31, 2010		1,611,643			26.30

The total fair value of restricted stock vesting during the year was $10.4 million in 2010, $4.7 million in 2009, and $8.5 million in 2008.

18. COMMITMENTS, GUARANTEES, CONTINGENT LIABILITIES, AND RELATED PARTIES

We use certain derivative instruments and other financial instruments in the normal course of business to meet the financing needs of our customers, to reduce our own exposure to fluctuations in interest rates, and to make a market in U.S. Government, agency, corporate, and municipal securities. These financial instruments involve, to varying degrees, elements of credit, liquidity, and interest rate risk in excess of the amount recognized in the balance sheet. Derivative instruments are discussed in Notes 8 and 21.

Contractual amounts of the off-balance sheet financial instruments used to meet the financing needs of our customers are as follows:

	December 31,
(In thousands)	2010		2009
Commitments to extend credit	$	11,509,212	$	11,610,156
Standby letters of credit:
Financial		921,257		1,071,851
Performance		185,854		182,423
Commercial letters of credit		46,627		30,179

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, 2010, $4.6 billion of commitments expire in 2011. 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.

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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 $773 million expiring in 2011 and $334 million expiring thereafter through 2027. 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, 2010, the Company had recorded approximately $14.9 million as a liability for these guarantees, which consisted of $8.8 million attributable to the reserve for unfunded lending commitments and $6.1 million of deferred commitment fees.

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

At December 31, 2010, we had commitments to make venture and other noninterest-bearing investments of $55.6 million. These obligations have no stated maturity.

The contractual or notional amount of financial instruments indicates a level of activity associated with a particular class of financial instrument and is not a reflection of the actual level of risk. As of December 31, 2010 and 2009, the regulatory risk-weighted values assigned to all off-balance sheet financial instruments and derivative instruments described herein were $3.9 billion and $4.0 billion, respectively.

At December 31, 2010, we were required to maintain cash balances of $28.6 million with the Federal Reserve Banks to meet minimum balance requirements in accordance with Federal Reserve Board regulations.

As of December 31, 2010, the Parent has guaranteed approximately $300.0 million of debt issued by our subsidiaries, as discussed in Note 13.

We have commitments for leasing premises and equipment under the terms of noncancelable capital and operating leases expiring from 2011 to 2046. Premises leased under capital leases at December 31, 2010 were $1.7 million and accumulated amortization was $1.0 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, 2010 are as follows:

(In thousands)
2011	$	47,389
2012		46,397
2013		41,317
2014		36,054
2015		32,470
Thereafter		145,306
	$	348,933

Future aggregate minimum rental payments have been reduced by noncancelable subleases as follows: $1.8 million in 2011, 2012, and 2013, $1.1 million in 2014, $0.7 million in 2015, and $6.4 million thereafter. Aggregate rental expense on operating leases amounted to $59.7 million in 2010, $59.2 million in 2009, and $57.3 million in 2008.

We are subject to litigation in court and arbitral proceedings, as well as proceedings and other actions brought or considered by governmental and self-regulatory agencies. Based on our current knowledge and consultations with legal counsel, we believe that current reserves for these matters, determined in accordance

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with ASC 450-20, Loss Contingencies, are adequate and that the amount of any incremental liability arising from litigation and governmental and self-regulatory actions will not have a material adverse effect on our consolidated financial condition, cash flows, or results of operations. However, it is possible that the ultimate resolution of our litigation and governmental and self-regulatory actions may differ from our current assessments, based on facts and legal theories not currently known or fully appreciated, unpredicted decisions by courts, arbitrators or governmental or self-regulatory agencies, or other factors, and could have a material adverse effect on our results of operations for a particular reporting period depending, in part, on our results for that period.

We have no material related party transactions requiring disclosure. In the ordinary course of business, the Company and its subsidiary banks extend credit to related parties, including executive officers, directors, principal shareholders, and their associates and related interests. These related party loans are made in compliance with applicable banking regulations under substantially the same terms as comparable third-party lending arrangements.

19. REGULATORY MATTERS

We are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the following schedule) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). As of December 31, 2010, we exceeded all capital adequacy requirements to which we are subject.

As discussed further in Note 14, the preferred shares and warrant to purchase common stock issued to the U.S. Treasury under the TARP Capital Purchase Program qualify for Tier 1 capital.

As of December 31, 2010, all capital ratios of the Company and each of its subsidiary banks exceeded the “well capitalized” levels under the regulatory framework for prompt corrective action. However, in response to the recent severe economic crisis, the determination of appropriate capital levels, particularly for the Company and other “systemically important” financial institutions as determined pursuant to the Dodd-Frank Act, increasingly is being driven by the results of comprehensive “stress tests” performed by each financial institution and its regulators. Such tests seek to comprehensively measure all risks to which the institution is exposed, including credit, liquidity, market, operating and other risks, the losses that could result from those risk exposures under adverse scenarios, and the institution’s resulting capital levels. The results of these institution-specific tests as well as the Basel III capital framework being implemented are driving the Company and most other systemically important financial institutions to hold capital considerably in excess of “well capitalized” regulatory standards, and in excess of historical levels. Regulators have indicated that these stress test results will also be an important factor in determining whether an institution can pay or increase dividends.

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The actual capital amounts and ratios for the Company and its three largest subsidiary banks are as follows:

	Actual					To be well capitalized
(Dollar amounts in thousands)	Amount		Ratio			Amount		Ratio
As of December 31, 2010:
Total capital (to risk-weighted assets)
The Company	$	7,363,984		17.15	%	$	4,295,020		10.00	%
Zions First National Bank		1,962,050		12.88			1,523,237		10.00
California Bank & Trust		1,171,253		13.68			856,252		10.00
Amegy Bank N.A.		1,565,707		16.89			926,936		10.00
Tier 1 capital (to risk-weighted assets)
The Company		6,349,789		14.78			2,577,012		6.00
Zions First National Bank		1,775,857		11.66			913,942		6.00
California Bank & Trust		1,062,085		12.40			513,751		6.00
Amegy Bank N.A.		1,446,462		15.60			556,161		6.00
Tier 1 capital (to average assets)
The Company		6,349,789		12.56			na		na	1
Zions First National Bank		1,775,857		10.43			851,233		5.00
California Bank & Trust		1,062,085		9.94			534,114		5.00
Amegy Bank N.A.		1,446,462		13.84			522,708		5.00
As of December 31, 2009:
Total capital (to risk-weighted assets)
The Company	$	6,822,713		13.28	%	$	5,135,981		10.00	%
Zions First National Bank		2,017,910		11.52			1,751,736		10.00
California Bank & Trust		1,081,079		11.51			939,090		10.00
Amegy Bank N.A.		1,404,939		13.57			1,035,160		10.00
Tier 1 capital (to risk-weighted assets)
The Company		5,406,796		10.53			3,081,588		6.00
Zions First National Bank		1,803,166		10.29			1,051,041		6.00
California Bank & Trust		962,121		10.25			563,454		6.00
Amegy Bank N.A.		1,271,949		12.29			621,096		6.00
Tier 1 capital (to average assets)
The Company		5,406,796		10.38			na		na	1
Zions First National Bank		1,803,166		8.84			1,020,234		5.00
California Bank & Trust		962,121		8.81			546,132		5.00
Amegy Bank N.A.		1,271,949		11.79			539,216		5.00

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

20. RETIREMENT PLANS

Defined Benefit Plans

Pension – This qualified noncontributory defined benefit plan has been frozen to new participation. No service-related benefits accrue for existing participants except for those with certain grandfathering provisions. 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 paid as a lump-sum cash value or an annuity at retirement age. Contributions to the plan are based on actuarial recommendation and pension regulations. The funded status of the plan improved during 2010 due to contributions of $50.8 million and increases in the value of plan assets.

Supplement Retirement – These unfunded nonqualified plans are for certain current and former employees. Each year, Company contributions to these plans are made in amounts sufficient to meet benefit payments to plan participants.

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Postretirement – This unfunded defined benefit health care plan provides postretirement medical benefits to certain full-time employees who met minimum age and service requirements. The plan is contributory with retiree contributions adjusted annually, and contains other cost-sharing features such as deductibles and coinsurance. Plan coverage is provided by self-funding or health maintenance organizations (HMOs) options. Our contribution towards the retiree medical premium has been permanently frozen. Retirees pay the difference between the full premium rates and our capped contribution.

In June 2008, we amended the postretirement plan and curtailed coverage for certain participants, primarily those with post-65 coverage. The effect of this curtailment on the change in the plan’s benefit obligation and determination of net periodic benefit cost (credit) for 2008 was determined in accordance with applicable accounting standards.

Because our contribution rate is capped, there is no effect on the postretirement 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.

The following presents the change in benefit obligation, change in fair value of plan assets, and funded status, of the plans and amounts recognized in the balance sheet as of the measurement date of December 31:

	Pension						Supplemental Retirement						Postretirement
(In thousands)	2010			2009			2010			2009			2010			2009
Change in benefit obligation:
Benefit obligation at beginning of year	$	160,039		$	152,804		$	11,453		$	11,458		$	1,140		$	1,100
Service cost		180			229			–			–			35			34
Interest cost		8,597			8,889			613			661			61			63
Actuarial (gain) loss		5,470			6,618			648			233			(31	)		40
Settlements		–			–			(286	)		–			–			–
Benefits paid		(8,550	)		(8,501	)		(1,198	)		(899	)		(110	)		(97	)
Benefit obligation at end of year	$	165,736		$	160,039		$	11,230		$	11,453		$	1,095		$	1,140
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	98,739		$	90,174		$	–		$	–		$	–		$	–
Actual return on plan assets		19,773			14,566			–			–			–			–
Employer contributions		50,794			2,500			1,198			899			110			97
Benefits paid		(8,550	)		(8,501	)		(1,198	)		(899	)		(110	)		(97	)
Fair value of plan assets at end of year		160,756			98,739			–			–			–			–
Funded status	$	(4,980	)	$	(61,300	)	$	(11,230	)	$	(11,453	)	$	(1,095	)	$	(1,140	)
Amounts recognized in balance sheet:
Liability for pension/postretirement benefits	$	(4,980	)	$	(61,300	)	$	(11,230	)	$	(11,453	)	$	(1,095	)	$	(1,140	)
Accumulated other comprehensive income (loss)		(58,344	)		(70,170	)		(1,641	)		(1,428	)		1,264			1,625
Accumulated other comprehensive income (loss) consists of:
Net gain (loss)	$	(58,344	)	$	(70,170	)	$	(1,217	)	$	(879	)	$	626		$	744
Prior service credit (cost)		–			–			(424	)		(549	)		638			881
	$	(58,344	)	$	(70,170	)	$	(1,641	)	$	(1,428	)	$	1,264		$	1,625

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The liability for pension/postretirement benefits is included in other liabilities in the balance sheet. The accumulated benefit obligation for the pension plan was $165.7 million and $160.0 million at December 31, 2010 and 2009, respectively.

The amounts in accumulated other comprehensive income (loss) at December 31, 2010 expected to be recognized as an expense component of net periodic benefit cost in 2011 for the plans are estimated as follows:

(In thousands)	Pension			Supplemental Retirement			Postretirement
Net gain (loss)	$	(5,221	)	$	5		$	125
Prior service credit (cost)					(124	)		243
	$	(5,221	)	$	(119	)	$	368

The following presents the components of net periodic benefit cost (credit) for the plans:

(In thousands)	Pension									Supplemental Retirement									Postretirement
	2010			2009			2008			2010			2009			2008			2010			2009			2008
Service cost	$	180		$	229		$	288		$	–		$	–		$	–		$	35		$	34		$	56
Interest cost		8,597			8,889			8,849			613			661			680			61			63			181
Expected return on plan assets		(8,211	)		(7,074	)		(11,235	)
Amortization of net actuarial (gain) loss		5,735			6,635			1,063			(19	)		(29	)		(27	)		(149	)		(196	)		(206	)
Amortization of prior service (credit) cost											124			124			124			(243	)		(243	)		(142	)
Settlement loss											42			–			–
Plan amendment/settlement gain																				–			–			(2,973	)
Net periodic benefit cost (credit)	$	6,301		$	8,679		$	(1,035	)	$	760		$	756		$	777		$	(296	)	$	(342	)	$	(3,084	)

Weighted average assumptions based on the pension plan are the same where applicable for each of the plans and are as follows:

	2010			2009			2008
Used to determine benefit obligation at year-end:
Discount rate		5.20	%		5.60	%		6.00	%
Rate of compensation increase		3.50			4.25			4.25
Used to determine net periodic benefit cost for the years ended December 31:
Discount rate		5.60			6.00			6.00
Expected long-term return on plan assets		8.00			8.30			8.30
Rate of compensation increase		3.50			4.25			4.25

The discount rate reflects the yields available on long-term, high-quality fixed income debt instruments with cash flows similar to the obligations of the pension plan, reset annually on the measurement date. The expected long-term rate of return on plan assets is based on a review of the target asset allocation of the plan. This rate is intended to approximate the long-term rate of return that we anticipate receiving on the plan’s investments, considering the mix of the assets that the plan holds as investments, the expected return on these underlying investments, the diversification of these investments, and the rebalancing strategies employed. An expected long-term rate of return is assumed for each asset class and an underlying inflation rate assumption is determined. The projected rate of compensation increases is management’s estimate of future pay increases that the remaining eligible employees will receive until their retirement.

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Benefit payments to the plans’ participants, which reflect expected future service as appropriate, are estimated as follows for the years succeeding December 31, 2010:

(In thousands)	Pension		Supplemental Retirement		Postretirement
2011	$	9,642	$	2,304	$	97
2012		10,878		1,059		106
2013		9,919		958		105
2014		9,766		855		108
2015		9,735		798		107
Years 2016 - 2020		52,332		4,101		541

We are also obligated under other supplemental retirement plans for certain current and former employees. Our liability for these plans was $5.4 million and $5.3 million at December 31, 2010 and 2009, respectively.

For the pension plan, the investment strategy is predicated on its investment objectives and the risk and return expectations of asset classes appropriate for the plan. Investment objectives have been established by considering the plan’s liquidity needs and time horizon and the fiduciary standards under ERISA. The asset allocation strategy is developed to meet the plan’s long-term needs in a manner designed to control volatility and to reflect risk tolerance. Target investment allocation percentages as of December 31, 2010 are 64.5% in equity, 30.5% in fixed income and cash, and 5.0% in real estate assets.

The following presents the fair values of pension plan investments according to the fair value hierarchy described in Note 21, and the weighted average allocations:

	December 31, 2010										December 31, 2009
(In thousands)	Level 1		Level 2		Level 3		Total		%		Level 1		Level 2		Level 3		Total		%
Company common stock	$	5,268					$	5,268		3	$	4,017					$	4,017		4
Mutual funds:
Equity		4,348						4,348		3		3,358						3,358		3
Debt		3,716						3,716		2		3,481						3,481		4
Insurance company pooled separate accounts:
Equity investments			$	103,802				103,802		64			$	55,462				55,462		56
Debt investments				24,931				24,931		16				18,899				18,899		19
Real estate				5,138				5,138		3
Short-term fund				–				–						4,428				4,428		4
Guaranteed deposit account					$	10,918		10,918		7					$	7,595		7,595		8
Limited partnerships						2,635		2,635		2						1,499		1,499		2
	$	13,332	$	133,871	$	13,553	$	160,756		100	$	10,856	$	78,789	$	9,094	$	98,739		100

Valuation methodologies used to measure pension plan investments at fair value are as follows:

Company common stock – Shares of the Company’s common stock are valued at the last reported sales price on the last business day of the plan year.

Mutual funds – These funds are valued at quoted market prices which represent the net asset values of shares held by the plan at year-end.

Insurance company pooled separate accounts – Participation units in these accounts are valued at quoted redemption values on the last business day of the plan year.

Guaranteed deposit account – This account is stated at book value as determined by the trustee, which approximates fair value. The account is credited with earnings from the underlying investments and charged for participants’ withdrawals and administrative expenses.

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Limited partnerships – These partnerships are stated at book value, which approximates fair value and is determined from the partnership’s capital account balance for the plan’s proportional interest. The capital account is credited with realized and unrealized earnings from the underlying investments and charged for operating expenses and distributions.

Shares of Company common stock were 217,398 and 283,405 at December 31, 2010 and 2009, respectively. Dividends received by the plan were approximately $12 thousand in 2010 and $18 thousand in 2009.

The following reconciles the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs:

	Level 3 Instruments
	Year Ended December 31,
	2010				2009
(In thousands)	Guaranteed deposit account		Limited partnerships		Guaranteed deposit account			Limited partnerships
Balance at beginning of year	$	7,595	$	1,499	$	8,197		$	818
Net increases (decreases) included in plan statement of changes in net assets available for benefits:
Net appreciation (depreciation) in fair value of investments:
Realized		–		–		–			–
Unrealized		–		311		–			(82	)
Interest and dividends		463		–		325			–
Purchases, sales, issuances, and settlements, net		2,860		825		(927	)		763
Balance at end of year	$	10,918	$	2,635	$	7,595		$	1,499

Defined Contribution Plan

Payshelter – This is a 401(k) and employee stock ownership plan under which employees select from several investment alternatives. Employees can contribute up to 80% of their earnings subject to the annual maximum allowed contribution. The Company matches 100% of the first 3% of employee contributions and 50% of the next 2% of employee contributions. Matching contributions are invested in the Company’s common stock and amounted to $19.3 million in 2010, $19.8 million in 2009, and $20.6 million in 2008.

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. No profit sharing expense has been accrued since 2007. The profit sharing contribution is invested in the Company’s common stock.

21. FAIR VALUE

Fair Value Measurements

Effective January 1, 2010, we adopted ASU No. 2010-06, Improving Disclosures about Fair Value Measurements. This new accounting guidance under ASC 820 requires additional disclosures including, among other things, (1) the amounts and reasons for certain significant transfers among the three hierarchy levels of inputs, (2) the gross, rather than net, basis for certain Level 3 rollforward information, (3) use of a “class” basis rather than a “major category” basis for assets and liabilities, and (4) valuation techniques and inputs used to estimate Level 2 and Level 3 fair value measurements. The following information incorporates these new disclosure requirements except for the Level 3 rollforward information which is not required until the first quarter of 2011.

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Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

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

Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data. This category generally includes U.S. Government and agency securities; municipal securities; CDO securities; mutual funds and stock; private equity investments; securities sold, not yet purchased; and derivatives.

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

We use fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting. This is done primarily for AFS and trading investment securities; private equity investments; securities sold, not yet purchased; and derivatives. Fair value is used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values, such as for loans held for sale, impaired loans, and other real estate owned. Fair value is also used when evaluating impairment on certain assets, including HTM and AFS securities, goodwill, core deposit and other intangibles, long-lived assets, and for disclosures of certain financial instruments.

Available-for-sale and trading

AFS and trading investment securities are fair valued under Level 1 using quoted market prices when available for identical securities. When quoted prices are not available, fair values are determined under Level 2 using quoted prices for similar securities or independent pricing services that incorporate observable market data when possible. The largest portion of AFS securities include certain CDOs backed by trust preferred securities issued by banks and insurance companies and, to a lesser extent, by REITs. These securities are fair valued primarily under Level 3.

U.S. Treasury, agencies and corporations

Valuation inputs utilized by the independent pricing service for those U.S. Treasury, agency and corporation securities under Level 2 include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data including market research publications. Also included are data from the vendor trading platform.

Municipal securities

Valuation inputs utilized by the independent pricing services for those municipal securities under Level 2 include the same inputs used for U.S. Treasury, agency and corporation securities. Also included are reported trades and material event notices from the Municipal Securities Rulemaking Board, plus new issue data. Municipal securities under Level 3 are fair valued similar to the auction rate securities discussed subsequently.

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Trust preferred collateralized debt obligations

Substantially all the CDO portfolio is fair valued under Level 3 using an income-based cash flow modeling approach incorporating several methodologies that primarily include internal and third party models. In addition, each quarter we seek to obtain information for all actual trades of securities in this asset class. We consider this information to determine whether the comparability of the security and the orderliness of the trades make such reported prices suitable for inclusion as or consideration in our fair value estimates in accordance with ASU 2010-06.

Trust preferred CDO internal model – A licensed third party cash flow model, which requires the Company to input its own default assumptions, is used to estimate fair values of bank and insurance trust preferred CDOs. For privately owned banks, we utilize a statistical regression of quarterly regulatory ratios that we have identified as predictive of future bank failures to create a credit-specific probability of default (“PD”) for each issuer. The inputs are updated quarterly to include the most recent available financial ratios and the regression formula is updated periodically to utilize those financial ratios which have best predicted bank failures during this credit cycle (“ratio-based approach”).

For publicly traded banks, we first utilize a licensed third party proprietary reduced form model derived using logistic regression on a historical default database to produce PDs. This model requires equity valuation related inputs (along with other macro and issuer-specific inputs) to produce PDs, and therefore cannot be used for privately owned banks.

Nearly all of the failures within our predominantly bank CDO pools have come from those banks that have previously deferred the payment of interest on their trust preferred securities. The terms of the securities within the CDO pools generally allow for deferral of current interest for five years without causing default.

We have found that for publicly traded deferring banks, the ratio-based approach generally resulted in higher PDs than did the licensed third party proprietary reduced model for banks that subsequently failed. To better project publicly traded bank failures, we utilized the higher of the PDs from our ratio-based approach and those from the licensed third party model for publicly traded deferring banks. At December 31, 2010, we began utilizing the same approach for publicly traded performing banks. Our ratio-based approach, while generally referencing trailing quarter regulatory ratios, seeks to incorporate the most recent available information. In 2010, we utilized pro forma capital ratios for eight deferring publicly traded banks in order to reflect the significant capital raises completed by these banks in either the third or fourth quarter. These capital raises were or will be included in these banks’ normal regulatory filings in the subsequent quarter.

After identifying collateral level PDs, we modify the PDs of deferring collateral by a calibration adjustment. The calibration adjustment was calculated as the average difference between the actual 100% default probability for all banks failing in the previous three quarters (both CDO and non-CDO banks) and the PD generated for each deferring bank using the ratio-based approach. Ratio-based PDs for deferring banks were first used in the fourth quarter of 2009 when the adjustment upward was 7.8%. The calibration adjustments upward for 2010 were 6.6% for the first and second quarters, 5.1% for the third quarter, and 4.8% for the fourth quarter, from the level produced by the collateral level PD in the relevant quarter. The resulting effective PDs at December 31, 2010 ranged from 100% for the “worst” deferring banks to 4.8% for the “best” deferring banks. The weighted average assumed loss rate on deferring collateral was 30% and 44% at December 31, 2010 and 2009, respectively.

The licensed third party cash flow model projects the expected cash flows for CDO tranches. Estimates of expected loss for the individual pieces of underlying collateral are aggregated to arrive at a pool-level expected loss rate for each CDO. These loss assumptions are applied to the CDO’s structure to generate cash flow projections for each tranche of the CDO. The presence of OTTI is identified and the amount of the credit component of OTTI is calculated by discounting the resulting loss-adjusted cash flows at each tranche’s coupon rate and comparing that value to the Company’s amortized cost of the tranche. The fair value of each tranche is determined by discounting its resultant loss-adjusted cash flows with appropriate current market-based discount rates.

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The discount rate assumption used for valuation purposes for each CDO tranche is derived from trading yields on publicly traded trust preferred securities and projected PDs on the underlying issuers. The data set includes a publicly traded trust preferred security which is in deferral with regard to the payment of current interest. The effective yields on the traded securities, including the deferring security, are used to determine a relationship between the effective yield and expected losses, which relationship is then considered along with other third party or market data in order to identify appropriate discount rates to be applied to the CDOs.

Our December 31, 2010 valuations utilized a discount rate range of LIBOR+3.77% for the highest quality/most over-collateralized tranches and LIBOR+46.8% for the lowest credit quality tranche in order to reflect market level assumptions for structured finance securities. These discount rates are in addition to the credit-related discounts applied to the cash flows for each tranche. The range of the projected cumulative credit loss of the CDO pools varies extensively across pools and at December 31, 2010 ranged between 8.4% and 78.6%.

In the third quarter of 2010, we changed certain modeling assumptions which included increasing prepayment speeds due to the probable early redemption by larger investment grade rated issuing banks of their trust preferred securities. The Dodd-Frank Act includes a phased-in disallowance of certain trust preferred securities as Tier 1 capital. The effect of the assumption changes was not significant to the fair value of these securities, but did account for $11.6 million of the $85.4 million of OTTI discussed in Note 5.

CDO tranches with greater uncertainty in their cash flows are discounted at higher rates than those that market participants would use for tranches with more stable expected cash flows (e.g., as a result of more subordination and/or better credit quality in the underlying collateral). The high end of the discount rate spectrum was applied to tranches in which minor changes in future default assumptions produced substantial deterioration in tranche cash flows. These discount rates are applied to credit-stressed cash flows, which constitute each tranche’s expected cash flows; discount rates are not applied to a hypothetical contractual cash flow.

Certain REIT and ABS CDOs are fair valued by third party services using their proprietary models. These models utilize relevant data assumptions, which we evaluate for reasonableness. These assumptions include, but are not limited to, discount rates, PDs, loss-given-default rates, over-collateralization levels, and rating transition probability matrices from rating agencies. See subsequent discussion regarding key model inputs and assumptions. The model prices obtained from third party services were evaluated for reasonableness including quarter to quarter changes in assumptions and comparison to other available data, which included third party and internal model results and valuations.

Auction rate securities

Auction rate securities are fair valued under Level 3 using a market approach based on various market data inputs, including AAA municipal and corporate bond yield curves, credit ratings and leverage of each closed-end fund, and market yields for municipal bonds and commercial paper.

Private equity investments

Private equity investments valued under Level 2 on a recurring basis are investments in partnerships that invest in certain financial services and real estate companies, some of which are publicly traded. Fair values are determined from net asset values, or their equivalents, provided by the partnerships. These fair values are determined on the last business day of the month using values from the primary exchange. In the case of illiquid or nontraded assets, the partnerships obtain fair values from independent sources. We have no unfunded commitments to these partnerships and redemption is available annually.

Private equity investments valued under Level 3 on a recurring basis are recorded initially at acquisition cost, which is considered the best indication of fair value unless there have been material subsequent positive or negative developments that justify an adjustment in the fair value estimate. Subsequent adjustments to recorded fair values are based as necessary on current and projected financial performance, recent financing activities, economic and market conditions, market comparables, market liquidity, sales restrictions, and other factors.

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Derivatives

Derivatives are fair valued according to their classification as either exchange-traded or over-the-counter (“OTC”). Exchange-traded derivatives consist of forward currency exchange contracts that have been fair valued under Level 1 because they are traded in active markets. OTC derivatives, including those for customers, consist of interest rate swaps and options and, in 2009, energy commodity derivatives. These derivatives are fair valued under Level 2 using third party services. Observable market inputs include yield curves (the LIBOR swap curve and applicable basis swap curves), foreign exchange rates, commodity prices, option volatilities, counterparty credit risk, and other related data. Credit valuation adjustments are required to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. These adjustments are determined generally by applying a credit spread for the counterparty or the Company as appropriate to the total expected exposure of the derivative. Amounts disclosed in the following schedules include the foreign currency exchange contracts that are not included in Note 8 in accordance with ASC 815. The amounts are also presented net of the cash collateral offsets discussed in Note 8. Also see the discussion in Note 8 for the determination of fair value of the total return swap.

Securities sold, not yet purchased

Securities sold, not yet purchased are fair valued under Level 1 when quoted prices are available for the securities involved. Those under Level 2 are fair valued similar to trading account investment securities.

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Assets and liabilities measured at fair value by class on a recurring basis are summarized as follows:

	December 31, 2010
(In thousands)	Level 1		Level 2		Level 3		Total
ASSETS
Investment securities:
Available-for-sale:
U.S. Treasury, agencies and corporations	$	704,170	$	1,654,127			$	2,358,297
Municipal securities				135,419	$	22,289		157,708
Asset-backed securities:
Trust preferred – banks and insurance				1,703		1,241,694		1,243,397
Trust preferred – real estate investment trusts						19,165		19,165
Auction rate						109,609		109,609
Other (including ABS CDOs)				11,076		69,630		80,706
Mutual funds and stock		230,264		6,596				236,860
		934,434		1,808,921		1,462,387		4,205,742
Trading account				48,667				48,667
Other noninterest-bearing investments:
Private equity				4,916		141,690		146,606
Other assets:
Derivatives:
Interest rate related and other				32,087				32,087
Interest rate swaps for customers				64,509				64,509
Foreign currency exchange contracts		3,796						3,796
		3,796		96,596				100,392
	$	938,230	$	1,959,100	$	1,604,077	$	4,501,407
LIABILITIES
Securities sold, not yet purchased	$	9,719	$	32,829			$	42,548
Other liabilities:
Derivatives:
Interest rate related and other				2,577				2,577
Interest rate swaps for customers				68,141				68,141
Foreign currency exchange contracts		3,385						3,385
Total return swap					$	15,925		15,925
		3,385		70,718		15,925		90,028
Other						561		561
	$	13,104	$	103,547	$	16,486	$	133,137

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	December 31, 2009
(In thousands)	Level 1		Level 2		Level 3		Total
ASSETS
Investment securities:
Available-for-sale:
U.S. Treasury and agencies	$	24,777	$	1,403,680			$	1,428,457
Municipal securities				177,180	$	64,314		241,494
Asset-backed securities:
Trust preferred – banks and insurance				1,656		1,359,444		1,361,100
Trust preferred – real estate investment trusts						24,018		24,018
Auction rate						159,440		159,440
Other				14,722		62,430		77,152
Mutual funds and stock		357,175		6,783				363,958
Trading account				23,543				23,543
Other noninterest-bearing investments:
Private equity				22,850		158,941		181,791
Other assets:
Derivatives		2,976		134,020				136,996
	$	384,928	$	1,784,434	$	1,828,587	$	3,997,949
LIABILITIES
Securities sold, not yet purchased			$	43,404			$	43,404
Other liabilities:
Derivatives	$	2,833		71,842				74,675
Other					$	522		522
	$	2,833	$	115,246	$	522	$	118,601

Selected additional information regarding key model inputs and assumptions used to fair value certain asset-backed securities by class under Level 3 include the following at December 31, 2010:

(Dollars in thousands)	Fair value at December 31, 2010			Valuation approach		Constant default rate (“CDR”)		Loss severity			Prepayment rate
Asset-backed securities:
Trust preferred – predominantly banks	$	1,044,382			Income		Pool specific3		100	%		Pool specific7
Trust preferred – predominantly insurance		364,878			Income		Pool specific4		100	%		5.5% per year
Trust preferred – individual banks		23,082			Market
		1,432,342	1
Trust preferred – real estate investment trusts		19,165			Income		Pool specific5		10-100	%		0% per year
Other (including ABS CDOs)		97,388	2		Income		Collateral specific6		0-100	%		Collateral weighted average life

¹ Includes $1,243.4 million of AFS securities and $188.9 million of HTM securities.

² Includes $80.7 million of AFS securities and $16.7 million of HTM securities.

³ CDR ranges: yr 1 – 0% to 27.4%; yrs 2-5 – 0% to 1.12%; yrs 6 to maturity – 0.30%.

⁴ CDR ranges: yr 1 – 0.94% to 4.032%; yrs 2-5 – 0.14% to 0.21%; yrs 6 to maturity – 0.30%.

⁵ CDR ranges: yr 1 – 4.6% to 8.7%; yrs 2-3 – 2.6% to 5.9%; yrs 4-6 – 1.0%; yrs 6 to maturity – 0.50%.

⁶ These are predominantly ABS CDOs whose collateral is rated. CDR and loss severities are built up from the loan level and vary by collateral ratings, asset class, and vintage.

⁷ CPR ranges: yrs 1-3 – 0% to 4.9%; yrs 4-5 – 0% to 14.97%; yrs 6 to maturity – 0.20%.

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In the following discussion of our investment portfolio, we have included certain credit rating information because the information is one indication of the degree of credit risk to which we are exposed, and significant changes in ratings classifications for our investment portfolio could indicate an increased level of risk for us.

The following presents the percentage of total fair value of predominantly bank trust preferred CDOs by vintage year (origination date) according to original rating:

(Dollars in thousands)	Fair value at December 31, 2010		Percentage of total fair value									Percentage of total fair value by vintage
Vintage year			AAA			A			BBB
2001	$	118,160		10.4	%		0.9	%		0.0	%		11.3	%
2002		240,012		20.8			2.2			0.0			23.0
2003		386,763		27.8			9.1			0.2			37.1
2004		172,074		7.2			9.2			0.0			16.4
2005		17,188		1.0			0.5			0.1			1.6
2006		73,680		2.6			3.9			0.6			7.1
2007		36,505		3.5			0.0			0.0			3.5
	$	1,044,382		73.3	%		25.8	%		0.9	%		100.0	%

The following reconciles the beginning and ending balances of assets and liabilities that are measured at fair value by class on a recurring basis using Level 3 inputs:

	Level 3 Instruments
	Year Ended December 31, 2010
(In thousands)	Municipal securities			Trust preferred – banks and insurance			Trust preferred – REIT			Auction rate			Other asset- backed			Private equity investments			Derivatives			Other liabilities
Balance at January 1, 2010	$	64,314		$	1,359,444		$	24,018		$	159,440		$	62,430		$	158,941		$	–		$	(522	)
Total net gains (losses) included in:
Statement of income:
Dividends and other investment income																	6,856
Fair value and nonhedge derivative loss																				(22,795	)
Equity securities losses, net																	(6,388	)
Fixed income securities gains, net		4,157			2,369						3,815			358
Net impairment losses on investment securities					(68,002	)		(10,628	)					(6,773	)
Other noninterest expense																							(39	)
Other comprehensive income (loss)		(1,157	)		(41,933	)		5,725			(603	)		27,501
Purchases, sales, issuances, and settlements, net		(45,025	)		(10,184	)		50			(53,043	)		(13,886	)		(17,719	)		6,870
Balance at December 31, 2010	$	22,289		$	1,241,694		$	19,165		$	109,609		$	69,630		$	141,690		$	(15,925	)	$	(561	)

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	Level 3 Instruments
	Year Ended December 31, 2009
(In thousands)	Municipal securities			Trust preferred – banks and insurance			Trust preferred – REIT			Auction rate			Other asset- backed			Trading account1			Private equity investments			Other liabilities
Balance at January 1, 2009	$	–		$	659,253		$	23,897		$	1,710		$	65,557		$	956		$	143,511		$	(527	)
Total net gains (losses) included in:
Statement of income:
Dividends and other investment loss																				(10,626	)
Fair value and nonhedge derivative loss																	(956	)
Equity securities gains, net																				109
Fixed income securities gains (losses), net		16			(10,491	)					2,126			95
Net impairment losses on investment securities					(130,898	)		(87,867	)					(11,110	)
Valuation losses on securities purchased		(6,977	)		(172,729	)		(8,945	)		(17,265	)		(1,774	)
Other noninterest expense																							5
Other comprehensive income (loss)		1,376			(41,582	)		56,480			(239	)		7,537
Fair value of HTM securities transferred to AFS					565,282			15,280						15,674
Purchases, sales, issuances, and settlements, net		66,624			490,609			25,173			167,928			(13,549	)					25,947
Net transfers in		3,275									5,180
Balance at December 31, 2009	$	64,314		$	1,359,444		$	24,018		$	159,440		$	62,430		$	–		$	158,941		$	(522	)

¹ Elected under fair value option, as discussed subsequently.

The preceding reconciling amounts using Level 3 inputs include the following realized gains (losses):

(In thousands)	Year Ended December 31,
	2010			2009
Dividends and other investment income	$	8,215		$	1,427
Equity securities losses, net		(1,366	)		–
Fixed income securities gains (losses), net		10,699			(8,254	)
Net impairment losses on investment securities sold		–			(76,686	)

Assets with fair value changes that are measured at fair value by class on a nonrecurring basis are summarized as follows:

	Fair value at December 31, 2010								Gains (losses) from fair value changes Year Ended December 31, 2010
	Level 1		Level 2		Level 3		Total
ASSETS
HTM securities adjusted for OTTI	$	–	$	–	$	3,502	$	3,502	$	(151	)
Impaired loans				–		97,352		97,352		(128,072	)
Other real estate owned				132,350		–		132,350		(148,595	)
	$	–	$	132,350	$	100,854	$	233,204	$	(276,818	)

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	Fair value at December 31, 2009								Gains (losses) from fair value changes Year Ended December 31, 2009
	Level 1		Level 2		Level 3		Total
ASSETS
HTM securities adjusted for OTTI	$	–	$	–	$	3,100	$	3,100	$	(3,301	)
Loans held for sale				15,571		–		15,571		60
Impaired loans				–		250,035		250,035		(234,534	)
Other real estate owned				143,541		–		143,541		(118,641	)
	$	–	$	159,112	$	253,135	$	412,247	$	(356,416	)

Loans held for sale relate to loans purchased under the Small Business Administration 7(a) program. They are fair valued under Level 2 based on quotes of comparable instruments.

Impaired loans that are collateral-dependent are fair valued under Level 3 based on the fair value of the collateral. At December 31, 2010, approximately $26 million of impaired loans that began making payments during the year were reclassified from collateral-dependent to noncollateral-dependent. The loan valuations were therefore based on the present value of future cash flows discounted at the expected coupon rates over the lives of the loans. Because the loans were not discounted at market interest rates, the valuations do not represent fair value under ASC 820, and have been excluded from the nonrecurring fair value balance in the preceding table for 2010.

Other real estate owned is fair valued under Level 2 at the lower of cost or fair value based on property appraisals at the time the property is recorded in OREO and as appropriate thereafter.

Fair Value Option

ASC 825, Financial Instruments, allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The fair value option may be applied instrument by instrument, but is on an irrevocable basis. The one AFS REIT trust preferred CDO security indicated previously was sold in December 2009.

Fair Value of Certain Financial Instruments

Following is a summary of the carrying values and estimated fair values of certain financial instruments:

	December 31, 2010				December 31, 2009
(In thousands)	Carrying value		Estimated fair value		Carrying value		Estimated fair value
Financial assets:
HTM investment securities	$	840,642	$	788,354	$	869,595	$	833,455
Loans and leases (including loans held for sale), net of allowance		35,513,376		35,203,799		38,866,215		38,355,658
Financial liabilities:
Time deposits	$	4,173,449	$	4,216,371	$	5,614,867	$	5,675,127
Foreign deposits		1,654,651		1,655,852		1,679,028		1,679,568
Other short-term borrowings		166,394		168,221		121,273		121,791
Long-term debt (less fair value hedges)		1,928,827		2,367,542		2,009,230		2,157,297

This summary excludes financial assets and liabilities for which carrying value approximates fair value. For financial assets, these include cash and due from banks and money market investments. For financial liabilities, these include demand, savings and money market deposits, and federal funds purchased and security repurchase agreements. The estimated fair value of demand, savings and money market deposits is the amount payable on

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demand at the reporting date. Carrying value is used because the accounts have no stated maturity and the customer has the ability to withdraw funds immediately. Also excluded from the summary are financial instruments recorded at fair value on a recurring basis, as previously described.

The fair value of loans is estimated by discounting future cash flows on “pass” grade loans using the LIBOR yield curve adjusted by a factor which reflects the credit and interest rate risk inherent in the loan. These future cash flows are then reduced by the estimated “life-of-the-loan” aggregate credit losses in the loan portfolio. These adjustments for lifetime future credit losses are highly judgmental because the Company does not have a validated model to estimate lifetime credit losses on large portions of its loan portfolio. The estimate of lifetime credit losses is adjusted quarterly as necessary to reflect the most recent loss experience during the current prolonged cycle of economic weakness. Impaired loans are not included in this credit adjustment as they are already considered to be held at fair value. Loans, other than those held for sale, are not normally purchased and sold by the Company, and there are no active trading markets for most of this portfolio.

The fair value of time and foreign deposits, and other short-term borrowings, is estimated by discounting future cash flows using the LIBOR yield curve. The estimated fair value of long-term debt is based on actual market trades (i.e., an asset value) when available or discounting cash flows using the LIBOR yield curve adjusted for credit spreads.

These fair value disclosures represent our best estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of the various instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.

Further, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements. Therefore, the fair value amounts shown in the schedule 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, 2010, we operate eight community/regional banks in distinct geographical areas. Performance assessment and resource allocation are based upon this geographical structure. The operating segment identified as “Other” includes the Parent, Zions Management Services Company (“ZMSC”), certain nonbank and financial service subsidiaries, TCBO, and eliminations of transactions between segments.

ZMSC provides internal technology and operational services to affiliated operating businesses of the Company. ZMSC charges most of its costs to the affiliates on an approximate break-even basis.

The accounting policies of the individual operating segments are the same as those of the Company as described in Note 1. Transactions between operating segments are primarily conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations. Operating segments pay for centrally provided services based upon estimated or actual usage of those services.

During 2010 and 2009, certain subsidiary banks sold investment securities to the Parent at their current fair value, which was less than carrying value. The “Loss on sale of investment securities to Parent” is shown separately in the following schedules as a component of other noninterest income. The amounts are eliminated in consolidation in the Other segment.

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The following is a summary of selected operating segment information:

(In millions)	Zions Bank									CB&T								Amegy
	2010			2009			2008			2010		2009			2008			2010		2009			2008
Net interest income	$	724.7		$	690.4		$	662.5		$	495.6	$	465.3		$	414.3		$	392.3	$	385.7		$	370.1
Provision for loan losses		350.6			400.4			163.1			149.9		251.5			82.9			118.7		406.1			71.9
Net interest income after provision for loan losses		374.1			290.0			499.4			345.7		213.8			331.4			273.6		(20.4	)		298.2
Net impairment losses on investment securities		–			(35.2	)		(79.4	)		–		(31.8	)		(118.0	)		–		–			–
Loss on sale of investment securities to Parent		(54.8	)		(75.8	)		–			–		(288.1	)		–			–		–			–
Valuation losses on securities purchased		–			(203.0	)		(13.1	)		–		–			–			–		(7.5	)		–
Gain on subordinated debt modification		–			–			–			–		–			–			–		–			–
Acquisition related gains		–			–			–			–		152.7			–			–		–			–
Other noninterest income		193.9			199.3			207.3			100.3		152.8			82.6			143.0		136.1			192.9
Total revenue		513.2			175.3			614.2			446.0		199.4			296.0			416.6		108.2			491.1
Noninterest expense		576.8			522.5			463.4			346.9		295.2			239.0			334.9		345.6			305.2
Impairment loss on goodwill		–			–			–			–		–			–			–		633.3			–
Income (loss) before income taxes		(63.6	)		(347.2	)		150.8			99.1		(95.8	)		57.0			81.7		(870.7	)		185.9
Income tax expense (benefit)		(15.3	)		(144.4	)		44.0			40.3		(45.6	)		18.4			23.1		(90.3	)		60.5
Net income (loss)		(48.3	)		(202.8	)		106.8			58.8		(50.2	)		38.6			58.6		(780.4	)		125.4
Net income (loss) applicable to noncontrolling interests		0.1			0.1			0.1			–		–			–			–		–			0.3
Net income (loss) applicable to controlling interest		(48.4	)		(202.9	)		106.7			58.8		(50.2	)		38.6			58.6		(780.4	)		125.1
Preferred stock dividends		–			–			–			–		(0.9	)		–			–		(1.5	)		–
Preferred stock redemption and conversion		–			–			–			–		–			–			–		–			–
Net earnings (loss) applicable to common shareholders	$	(48.4	)	$	(202.9	)	$	106.7		$	58.8	$	(51.1	)	$	38.6		$	58.6	$	(781.9	)	$	125.1
Total assets	$	16,157		$	17,652		$	20,778		$	10,766	$	11,097		$	10,137		$	11,406	$	11,145		$	12,406
Net loans and leases1		12,898			13,990			14,684			8,444		8,951			7,861			7,466		8,262			9,027
Total deposits		13,631			13,823			16,118			9,219		9,760			7,964			8,906		8,880			8,625
Shareholder’s equity:
Preferred equity		480			460			250			262		262			158			488		376			80
Common equity		1,269			1,282			1,044			1,174		1,120			1,097			1,493		1,435			2,049
Noncontrolling interests		–			–			1			–		–			–			–		–			–
Total shareholder’s equity		1,749			1,742			1,295			1,436		1,382			1,255			1,981		1,811			2,129

164

	NBA									NSB									Vectra
(In millions)	2010			2009			2008			2010			2009			2008			2010			2009			2008
Net interest income	$	177.4		$	179.1		$	219.5		$	138.4		$	140.0		$	159.0		$	108.5		$	105.3		$	103.6
Provision for loan losses		53.4			291.7			211.8			133.3			563.7			100.3			28.2			78.5			15.9
Net interest income after provision for loan losses		124.0			(112.6	)		7.7			5.1			(423.7	)		58.7			80.3			26.8			87.7
Net impairment losses on investment securities		–			–			–			–			(3.3	)		(2.0	)		(1.3	)		(5.3	)		(6.4	)
Loss on sale of investment securities to Parent		–			–			–			–			(11.8	)		–			–			–			–
Valuation losses on securities purchased		–			–			–			–			–			–			–			–			–
Gain on subordinated debt modification		–			–			–			–			–			–			–			–			–
Acquisition related gains		–			–			–			–			16.5			–			–			–			–
Other noninterest income		32.9			44.0			46.8			38.4			60.8			42.8			29.5			31.4			29.9
Total revenue		156.9			(68.6	)		54.5			43.5			(361.5	)		99.5			108.5			52.9			111.2
Noninterest expense		169.9			170.0			161.2			152.0			180.6			137.9			92.5			96.4			85.9
Impairment loss on goodwill		–			–			168.6			–			–			21.0			–			–			151.5
Income (loss) before income taxes		(13.0	)		(238.6	)		(275.3	)		(108.5	)		(542.1	)		(59.4	)		16.0			(43.5	)		(126.2	)
Income tax expense (benefit)		(5.1	)		(94.4	)		(56.7	)		(38.2	)		(190.1	)		(13.6	)		9.4			(17.9	)		8.8
Net income (loss)		(7.9	)		(144.2	)		(218.6	)		(70.3	)		(352.0	)		(45.8	)		6.6			(25.6	)		(135.0	)
Net income (loss) applicable to noncontrolling interests		–			–			–			–			–			–			–			–			–
Net income (loss) applicable to controlling interest		(7.9	)		(144.2	)		(218.6	)		(70.3	)		(352.0	)		(45.8	)		6.6			(25.6	)		(135.0	)
Preferred stock dividends		–			–			–			–			–			–			–			(0.2	)		–
Preferred stock redemption and conversion		–			–			–			–			–			–			–			–			–
Net earnings (loss) applicable to common shareholders	$	(7.9	)	$	(144.2	)	$	(218.6	)	$	(70.3	)	$	(352.0	)	$	(45.8	)	$	6.6		$	(25.8	)	$	(135.0	)
Total assets	$	4,397		$	4,524		$	4,864		$	4,017		$	4,187		$	4,063		$	2,299		$	2,440		$	2,722
Net loans and leases1		3,277			3,609			4,108			2,399			2,752			3,200			1,812			1,981			2,059
Total deposits		3,696			3,784			3,923			3,424			3,526			3,514			1,923			2,005			2,127
Shareholder’s equity:
Preferred equity		305			405			430			360			360			260			70			65			10
Common equity		322			228			355			225			296			259			200			199			191
Noncontrolling interests		–			–			–			–			–			–			–			–			–
Total shareholder’s equity		627			633			785			585			656			519			270			264			201

165

	TCBW									Other									Consolidated Company
(In millions)	2010			2009			2008			2010			2009			2008			2010			2009			2008
Net interest income	$	30.0		$	32.1		$	33.8		$	(339.5	)	$	(100.4	)	$	8.8		$	1,727.4		$	1,897.5		$	1,971.6
Provision for loan losses		17.4			22.5			1.1			0.6			2.5			1.3			852.1			2,016.9			648.3
Net interest income after provision for loan losses		12.6			9.6			32.7			(340.1	)		(102.9	)		7.5			875.3			(119.4	)		1,323.3
Net impairment losses on investment securities		(0.7	)		(1.1	)		(1.3	)		(83.4	)		(203.8	)		(96.9	)		(85.4	)		(280.5	)		(304.0	)
Loss on sale of investment securities to Parent		–			–			–			54.8			375.7			–			–			–			–
Valuation losses on securities purchased		–			–			–			–			(1.6	)		–			–			(212.1	)		(13.1	)
Gain on subordinated debt modification		–			–			–			–			508.9			–			–			508.9			–
Acquisition related gains		–			–			–			–			–			–			–			169.2			–
Other noninterest income		2.6			9.4			4.4			(14.7	)		(15.2	)		(98.9	)		525.9			618.6			507.8
Total revenue		14.5			17.9			35.8			(383.4	)		561.1			(188.3	)		1,315.8			684.7			1,514.0
Noninterest expense		15.6			15.9			14.8			30.3			45.3			67.6			1,718.9			1,671.5			1,475.0
Impairment loss on goodwill		–			–			–			–			2.9			12.7			–			636.2			353.8
Income (loss) before income taxes		(1.1	)		2.0			21.0			(413.7	)		512.9			(268.6	)		(403.1	)		(1,623.0	)		(314.8	)
Income tax expense (benefit)		(0.6	)		0.4			7.0			(120.4	)		181.0			(111.8	)		(106.8	)		(401.3	)		(43.4	)
Net income (loss)		(0.5	)		1.6			14.0			(293.3	)		331.9			(156.8	)		(296.3	)		(1,221.7	)		(271.4	)
Net income (loss) applicable to noncontrolling interests		–			–			–			(3.7	)		(5.7	)		(5.5	)		(3.6	)		(5.6	)		(5.1	)
Net income (loss) applicable to controlling interest		(0.5	)		1.6			14.0			(289.6	)		337.6			(151.3	)		(292.7	)		(1,216.1	)		(266.3	)
Preferred stock dividends		–			–			–			(122.9	)		(100.3	)		(24.4	)		(122.9	)		(102.9	)		(24.4	)
Preferred stock redemption and conversion		–			–			–			3.1			84.6			–			3.1			84.6			–
Net earnings (loss) applicable to common shareholders	$	(0.5	)	$	1.6		$	14.0		$	(409.4	)	$	321.9		$	(175.7	)	$	(412.5	)	$	(1,234.4	)	$	(290.7	)
Total assets	$	850		$	835		$	880		$	1,143		$	(757	)	$	(757	)	$	51,035		$	51,123		$	55,093
Net loans and leases1		572			578			588			(121	)		66			132			36,747			40,189			41,659
Total deposits		662			632			603			(526	)		(569	)		(1,558	)		40,935			41,841			41,316
Shareholder’s equity:
Preferred equity		15			15			–			77			(440	)		394			2,057			1,503			1,582
Common equity		69			69			75			(161	)		(439	)		(150	)		4,591			4,190			4,920
Noncontrolling interests		–			–			–			(1	)		17			26			(1	)		17			27
Total shareholder’s equity		84			84			75			(85	)		(862	)		270			6,647			5,710			6,529

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

166

23. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Financial information by quarter for 2010 and 2009 is as follows:

(In thousands, except per share amounts)	Quarters
	First			Second			Third			Fourth			Year
2010:
Gross interest income	$	580,135		$	583,738		$	581,934		$	574,038		$	2,319,845
Net interest income		455,300			413,346			451,875			406,868			1,727,389
Provision for loan losses		265,565			228,663			184,668			173,242			852,138
Noninterest income:
Net impairment losses on investment securities		(31,263	)		(18,060	)		(23,712	)		(12,320	)		(85,355	)
Securities gains (losses), net		(1,909	)		(970	)		7,346			595			5,062
Other noninterest income		140,782			128,443			126,566			124,964			520,755
Noninterest expense		389,126			430,355			456,044			443,356			1,718,881
Loss before income taxes		(91,781	)		(136,259	)		(78,637	)		(96,491	)		(403,168	)
Net loss		(63,137	)		(113,361	)		(47,457	)		(72,394	)		(296,349	)
Net loss applicable to controlling interest		(60,210	)		(112,993	)		(47,325	)		(72,200	)		(292,728	)
Preferred stock dividends		(26,311	)		(25,342	)		(33,144	)		(38,087	)		(122,884	)
Preferred stock redemption		–			3,107			–			–			3,107
Net loss applicable to common shareholders		(86,521	)		(135,228	)		(80,469	)		(110,287	)		(412,505	)
Net loss per common share:
Basic	$	(0.57	)	$	(0.84	)	$	(0.47	)	$	(0.62	)	$	(2.48	)
Diluted		(0.57	)		(0.84	)		(0.47	)		(0.62	)		(2.48	)
2009:
Gross interest income	$	639,702		$	637,696		$	631,802		$	606,126		$	2,515,326
Net interest income		474,775			493,688			472,180			456,889			1,897,532
Provision for loan losses		297,624			762,654			565,930			390,719			2,016,927
Noninterest income:
Net impairment losses on investment securities and valuation losses on securities purchased		(283,064	)		(53,670	)		(56,515	)		(99,306	)		(492,555	)
Gain on subordinated debt modification		–			493,725			–			15,220			508,945
Acquisition related gains		–			22,977			146,153			56			169,186
Securities gains (losses), net		2,958			825			95			(9,549	)		(5,671	)
Other noninterest income		134,844			148,879			181,007			159,466			624,196
Noninterest expense		376,205			419,469			434,707			441,129			1,671,510
Impairment loss on goodwill		633,992			–			–			2,224			636,216
Loss before income taxes		(978,308	)		(75,699	)		(257,717	)		(311,296	)		(1,623,020	)
Net loss		(826,581	)		(51,938	)		(157,671	)		(185,487	)		(1,221,677	)
Net loss applicable to controlling interest		(826,041	)		(50,729	)		(155,277	)		(184,064	)		(1,216,111	)
Preferred stock dividends		(26,286	)		(25,447	)		(26,603	)		(24,633	)		(102,969	)
Preferred stock redemption and conversion		–			52,418			–			32,215			84,633
Net loss applicable to common shareholders		(852,327	)		(23,758	)		(181,880	)		(176,482	)		(1,234,447	)
Net loss per common share:
Basic	$	(7.47	)	$	(0.21	)	$	(1.43	)	$	(1.26	)	$	(9.92	)
Diluted		(7.47	)		(0.21	)		(1.43	)		(1.26	)		(9.92	)

167

24. PARENT COMPANY FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

(In thousands)	December 31,
	2010			2009
ASSETS
Cash and due from banks	$	1,848		$	2,254
Interest-bearing deposits		547,665			539,874
Investment securities:
Held-to-maturity, at adjusted cost (approximate fair value $4,056 and $2,633)		3,593			2,633
Available-for-sale, at fair value		1,146,797			432,761
Loans, net of unearned fees of $0 and $45 and allowance for loan losses of $71 and $112		2,852			6,292
Other noninterest-bearing investments		55,560			83,780
Investments in subsidiaries:
Commercial banks and bank holding company		6,739,699			6,579,075
Other operating companies		70,272			66,254
Nonoperating – ZMFU II, Inc.1		93,003			92,184
Receivables from subsidiaries:
Other		1,150			2,050
Other assets		253,773			76,574
	$	8,916,212		$	7,883,731
LIABILITIES AND SHAREHOLDERS’ EQUITY
Other liabilities	$	182,094		$	233,550
Commercial paper:
Due to affiliates		45,991			49,991
Due to others		2,647			1,084
Other short-term borrowings:
Due to affiliates		72,204			–
Due to others		160,604			117,263
Subordinated debt to affiliated trusts		309,278			309,278
Long-term debt:
Due to affiliates		110,208			–
Due to others		1,384,907			1,479,907
Total liabilities		2,267,933			2,191,073
Shareholders’ equity:
Preferred stock		2,056,672			1,502,784
Common stock		4,163,619			3,318,417
Retained earnings		889,284			1,308,356
Accumulated other comprehensive loss		(461,296	)		(436,899	)
Total shareholders’ equity		6,648,279			5,692,658
	$	8,916,212		$	7,883,731

¹ ZMFU II, Inc. is a wholly-owned nonoperating subsidiary whose sole purpose is to hold a portfolio of municipal bonds, loans and leases.

168

CONDENSED STATEMENTS OF INCOME

(In thousands)	Year Ended December 31,
	2010			2009			2008
Interest income:
Commercial bank subsidiaries	$	5,665		$	18,939		$	68,642
Other subsidiaries and affiliates		69			326			781
Other loans and securities		14,450			15,735			20,585
Total interest income		20,184			35,000			90,008
Interest expense:
Affiliated trusts		24,032			24,094			24,391
Other borrowed funds		363,981			150,695			79,208
Total interest expense		388,013			174,789			103,599
Net interest loss		(367,829	)		(139,789	)		(13,591	)
Provision for loan losses		(41	)		(531	)		605
Net interest loss after provision for loan losses		(367,788	)		(139,258	)		(14,196	)
Other income:
Dividends from consolidated subsidiaries:
Commercial banks and bank holding company		–			4,603			110,500
Other operating companies		450			425			500
Equity and fixed income securities gains (losses), net		386			(11,042	)		(11,220	)
Net impairment losses on investment securities		(70,306	)		(191,351	)		(96,890	)
Gain on subordinated debt modification		–			508,945			–
Other income (loss)		(3,802	)		2,737			(7,611	)
		(73,272	)		314,317			(4,721	)
Expenses:
Salaries and employee benefits		14,720			21,663			11,673
Other operating expenses		11,465			2,882			16,962
		26,185			24,545			28,635
Income (loss) before income tax benefit and undistributed income (losses) of consolidated subsidiaries		(467,245	)		150,514			(47,552	)
Income taxes (benefit)		(141,983	)		27,939			(71,837	)
Income before equity in undistributed income (losses) of consolidated subsidiaries		(325,262	)		122,575			24,285
Equity in undistributed income (losses) of consolidated subsidiaries:
Commercial banks and bank holding company		34,820			(1,325,678	)		(272,963	)
Other operating companies		(3,271	)		(21,995	)		(35,377	)
Nonoperating – ZMFU II, Inc.		985			8,987			17,786
Net income (loss)		(292,728	)		(1,216,111	)		(266,269	)
Preferred stock dividends		(122,884	)		(102,969	)		(24,424	)
Preferred stock redemption and conversion to common stock		3,107			84,633			–
Net earnings (loss) applicable to common shareholders	$	(412,505	)	$	(1,234,447	)	$	(290,693	)

169

CONDENSED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(In thousands)	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(292,728	)	$	(1,216,111	)	$	(266,269	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Undistributed net losses (income) of consolidated subsidiaries		(32,534	)		1,338,686			290,554
Unrealized equity securities losses, net		–			3,530			9,913
Net impairment losses on investment securities		70,306			191,351			96,890
Gain on subordinated debt modification		–			(508,946	)		–
Other, net		(2,699	)		171,173			93,859
Net cash provided by (used in) operating activities		(257,655	)		(20,317	)		224,947
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in interest-bearing deposits		(7,791	)		440,654			(895,129	)
Collection of advances to subsidiaries		2,900			779,550			816,184
Advances to subsidiaries		(2,000	)		(6,970	)		(184,731	)
Proceeds from sales and maturities of equity and fixed income securities		23,218			9,895			265,835
Purchases of investment securities		(807,441	)		(297,877	)		(241,846	)
Increase of investment in subsidiaries		(141,550	)		(1,509,150	)		(1,292,821	)
Other, net		29,549			15,392			(29,281	)
Net cash used in investing activities		(903,115	)		(568,506	)		(1,561,789	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term funds borrowed		113,108			(138,659	)		(30,843	)
Proceeds from issuance of long-term debt		255,845			703,932			28,495
Repayments of long-term debt		(72,923	)		(295,630	)		(155,025	)
Proceeds from issuance of preferred stock		138,657			–			1,338,605
Proceeds from issuance of common stock and warrants		838,488			464,110			354,302
Payments to redeem and convert preferred stock		–			(47,166	)		–
Dividends paid on preferred stock		(102,666	)		(84,408	)		(21,775	)
Dividends paid on common stock		(6,650	)		(11,863	)		(173,904	)
Other, net		(3,495	)		(1,374	)		(2,881	)
Net cash provided by financing activities		1,160,364			588,942			1,336,974
Net increase (decrease) in cash and due from banks		(406	)		119			132
Cash and due from banks at beginning of year		2,254			2,135			2,003
Cash and due from banks at end of year	$	1,848		$	2,254		$	2,135

As of December 31, 2010, the Parent had $182 million of loans outstanding with three of its subsidiary banks. No loans were outstanding at December 31, 2009. Maturities vary up to June 2013 at variable interest rates. The loans are secured by Parent deposits at the subsidiary banks.

The Parent paid interest of $147.2 million in 2010, $122.8 million in 2009, and $99.5 million in 2008.

170

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Offer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2010. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Offer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2010. There were no material changes in the Company’s internal control over financial reporting during the fourth quarter of 2010. See “Report on Management’s Assessment of Internal Control over Financial Reporting” included in Item 8 on page 91 for management’s report on the adequacy of internal control over financial reporting. Also see “Report on Internal Control over Financial Reporting” issued by Ernst & Young LLP included in Item 8 on page 92.

ITEM 9B. OTHER INFORMATION

None.

171

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

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

EQUITY COMPENSATION PLAN INFORMATION

The following schedule provides information as of December 31, 2010 with respect to the shares of the Company’s common stock that may be issued under existing equity compensation plans:

Plan Category1	(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		4,965,101	$	45.05		3,057,780
Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan		104,000		53.53		–
Zions Bancorporation Key Employee Incentive Stock Option Plan		820,002		56.76		–
Total		5,889,103				3,057,780

¹ The schedule does not include information for equity compensation plans assumed by the Company in mergers. A total of 489,670 shares of common stock with a weighted average exercise price of $53.27 were issuable upon exercise of options granted under plans assumed in mergers and outstanding at December 31, 2010. The Company cannot grant additional awards under these assumed plans. Column (a) also excludes 1,604,156 shares of unvested restricted stock and 109,748 salary stock units (each unit representing the right to one share of common stock).

Other information required by Item 12 is incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

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

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated by reference from the Company’s Proxy Statement to be subsequently filed.

172

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)	(1)    Financial statements – The following consolidated financial statements of Zions Bancorporation and subsidiaries are filed as part of this Form10-K under Item 8, Financial Statements and Supplementary Data:
	Consolidated balance sheets – December 31, 2010 and 2009
	Consolidated statements of income – Years ended December 31, 2010, 2009 and 2008
	Consolidated statements of changes in shareholders’ equity and comprehensive income – Years ended December 31, 2010, 2009 and 2008
	Consolidated statements of cash flows – Years ended December 31, 2010, 2009 and 2008
	Notes to consolidated financial statements – December 31, 2010
	(2)    Financial statement schedules – All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, the required information is contained elsewhere in the Form 10-K, or the schedules are inapplicable and have therefore been omitted.
	(3)    List of Exhibits:

Exhibit Number	Description
3.1	Restated Articles of Incorporation of Zions Bancorporation dated November 8, 1993, incorporated by reference to Exhibit 3.1 of Form S-4 filed on November 22, 1993.	*
3.2	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated April 30, 1997, incorporated by reference to Exhibit 3.2 of Form 10-Q for the quarter ended March 31, 2008.	*
3.3	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated April 24, 1998, incorporated by reference to Exhibit 3.3 of Form 10-Q for the quarter ended March 31, 2009.	*
3.4	Articles of Amendment to Restated Articles of Incorporation of Zions Bancorporation dated April 25, 2001, incorporated by reference to Exhibit 3.6 of Form S-4 filed July 13, 2001.	*
3.5	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated December 5, 2006, incorporated by reference to Exhibit 3.1 of Form 8-K filed December 7, 2006.	*
3.6	Articles of Merger of The Stockmen’s Bancorp, Inc. with and into Zions Bancorporation, effective January 17, 2007, incorporated by reference to Exhibit 3.6 of Form 10-K for the year ended December 31, 2006.	*
3.7	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated July 7, 2008, incorporated by reference to Exhibit 3.1 of Form 8-K filed July 8, 2008.	*
3.8	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated November 12, 2008, incorporated by reference to Exhibit 3.1 of Form 8-K filed November 17, 2008.	*

173

Exhibit Number	Description
3.9	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation, dated June 30, 2009, incorporated by reference to Exhibit 3.1 of Form 8-K filed July 2, 2009.	*
3.10	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated June 30, 2009, incorporated by reference to Exhibit 3.10 of Form 10-Q for the quarter ended June 30, 2009.	*
3.11	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated June 1, 2010, incorporated by reference to Exhibit 3.1 of Form 8-K filed June 3, 2010.	*
3.12	Articles of Amendment to the Restated Articles of Incorporation of Zions Bancorporation dated June 14, 2010, incorporated by reference to Exhibit 3.1 of Form 8-K filed June 15, 2010.	*
3.13	Amended and Restated Bylaws of Zions Bancorporation dated May 4, 2007, incorporated by reference to Exhibit 3.2 of Form 8-K filed on May 9, 2007.	*
4.1	Senior Debt Indenture dated September 10, 2002 between Zions Bancorporation and The Bank of New York Mellon Trust Company, N.A. as successor to 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 The Bank of New York Mellon Trust Company, N.A. as successor to 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 The Bank of New York Mellon Trust Company, N.A. as successor to 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.	*
4.4	Warrant Agreement, between Zions Bancorporation and Zions First National Bank, and Warrant Certificate, incorporated by reference to Exhibit 4.1 of Form 10-Q for the quarter ended September 30, 2010.	*
10.1	Zions Bancorporation 2006-2008 Value Sharing Plan, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 2006.	*
10.2	First amendment to the Zions Bancorporation 2006-2008 Value Sharing Plan, incorporated by reference to Exhibit 10.2 of Form 10-K for the year ended December 31, 2008.	*
10.3	Form of Zions Bancorporation 2006-2008 Value Sharing Plan, Subsidiary Banks, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 2006.	*
10.4	Amegy Bank of Texas 2007-2008 Value Sharing Plan, incorporated by reference to Exhibit 10.7 of Form 10-Q for the quarter ended June 30, 2007.	*
10.5	Zions Bancorporation 2009-2011 Value Sharing Plan, incorporated by reference to Exhibit 10.5 of Form 10-K for the year ended December 31, 2009.	*
10.6	2005 Management Incentive Compensation Plan (filed herewith).
10.7	Zions Bancorporation Second Restated and Revised Deferred Compensation Plan, incorporated by reference to Exhibit 10.6 of Form 10-K for the year ended December 31, 2008.	*
10.8	Zions Bancorporation Third Restated Deferred Compensation Plan for Directors, incorporated by reference to Exhibit 10.7 of Form 10-K for the year ended December 31, 2008.	*

174

Exhibit Number	Description
10.9	Fifth Amended and Restated Amegy Bancorporation, Inc. Non-Employee Directors Deferred Fee Plan, incorporated by reference to Exhibit 10.8 of Form 10-K for the year ended December 31, 2008.	*
10.10	Zions Bancorporation First Restated Excess Benefit Plan, incorporated by reference to Exhibit 10.9 of Form 10-K for the year ended December 31, 2008.	*
10.11	Trust Agreement establishing the Zions Bancorporation Deferred Compensation Plan Trust by and between Zions Bancorporation and Cigna Bank & Trust Company, FSB effective October 1, 2002, incorporated by reference to Exhibit 10.10 of Form 10-K for the year ended December 31, 2006.	*
10.12	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 (filed herewith).
10.13	Amendment to Trust Agreement Establishing the Zions Bancorporation Deferred Compensation Plans Trust, effective September 1, 2006, incorporated by reference to Exhibit 10.12 of Form 10-K for the year ended December 31, 2006.	*
10.14	Zions Bancorporation Deferred Compensation Plans Master Trust between Zions Bancorporation and Fidelity Management Trust Company, effective September 1, 2006, incorporated by reference to Exhibit 10.13 of Form 10-K for the year ended December 31, 2006.	*
10.15	Revised schedule C to Zions Bancorporation Deferred Compensation Plans Master Trust between Zions Bancorporation and Fidelity Management Trust Company, effective September 13, 2006, incorporated by reference to Exhibit 10.14 of Form 10-K for the year ended December 31, 2006.	*
10.16	Zions Bancorporation Restated Pension Plan effective January 1, 2002, including amendments adopted through December 31, 2010 (filed herewith).
10.17	Zions Bancorporation Executive Management Pension Plan, incorporated by reference to Exhibit 10.20 of Form 10-K for the year ended December 31, 2008.	*
10.18	Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, Restated and Amended effective January 1, 2002, including amendments adopted thru December 31, (filed herewith).
10.19	Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust Agreement between Zions Bancorporation and Fidelity Management Trust Company, dated July 3, 2006, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2007.	*
10.20	First Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust Agreement between Zions Bancorporation and Fidelity Management Trust Company, dated April 5, 2010, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 2010.	*
10.21	Second Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust Agreement between Zions Bancorporation and Fidelity Management Trust Company, dated April 5, 2010, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 2010.	*
10.22	Third Amendment to the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust Agreement between Zions Bancorporation and Fidelity Management Trust Company, dated April 30, 2010, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarter ended June 30, 2010.	*

175

Exhibit Number	Description
10.23	Amended and Restated Zions Bancorporation Key Employee Incentive Stock Option Plan, incorporated by reference to Exhibit 10.38 of Form 10-K for the year ended December 31, 2010.	*
10.24	Amended and Restated Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan, incorporated by reference to Exhibit 10.38 of Form 10-K for the year ended December 31, 2007.	*
10.25	Amended and Restated Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 2009.	*
10.26	Standard Stock Option Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended June 30, 2009.	*
10.27	Standard Restricted Stock Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarter ended June 30, 2009.	*
10.28	Standard Directors Restricted Stock Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.4 of Form 10-Q for the quarter ended June 30, 2009.	*
10.29	Standard Directors Stock Option Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan (filed herewith).
10.30	Standard Salary Stock Unit Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan, incorporated by reference to Exhibit 10.1 of Form 8-K filed December 28, 2009.	*
10.31	Standard Deferred Salary Stock Unit Award Agreement, Zions Bancorporation 2005 Stock Option and Incentive Plan (filed herewith).
10.32	Amegy Bancorporation (formerly Southwest Bancorporation of Texas, Inc.) 1996 Stock Option Plan, as amended and restated as of June 4, 2002, incorporated by reference to Exhibit 10.45 of Form 10-K for the year ended December 31, 2007.	*
10.33	Amegy Bancorporation 2004 (formerly Southwest Bancorporation of Texas, Inc.) Omnibus Incentive Plan, incorporated by reference to Exhibit 10.47 of Form 10-K for the year ended December 31, 2009.	*
10.34	Form of Change in Control Agreement between the Company and Certain Executive Officers, incorporated by reference to Exhibit 10.39 of Form 10-K for the year ended December 31, 2006.	*
10.35	Form of Change in Control Agreement between the Company and Scott J. McLean, incorporated by reference to Exhibit 10.48 of Form 10-K for the year ended December 31, 2007.	*
10.36	Addendum to Change in Control Agreement, incorporated by reference to Exhibit 10.43 of Form 10-K for the year ended December 31, 2008.	*
10.37	Form of Change in Control Agreement between the Company and Kenneth E. Peterson (filed herewith).
10.38	Stock Purchase and Shareholder Agreement dated June 1, 2004 among Welman Holdings, Inc., the Company, Zions First National Bank and PSC Wealth Management, LLC (filed herewith).
10.39	Employment Agreement between the Company and Scott J. McLean, incorporated by reference to Exhibit 10.41 of Form 10-K for the year ended December 31, 2006.	*

176

Exhibit Number	Description
10.40	Employment Agreement between the Company and Dallas Haun, incorporated by reference to Exhibit 10.53 of Form 10-K for the year ended December 31, 2007.	*
10.41	Employment agreement between the Company and Kenneth E. Peterson, incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2010.	*
10.42	Warrant to purchase up to 5,789,909 shares of Common Stock, issued on November 14, 2008, incorporated by reference to Exhibit 4.2 of Form 8-K filed November 17, 2008.	*
10.43	Performance stock agreement between Zions Bancorporation and Scott McLean, dated August 15, 2008, incorporated by reference to Exhibit 10.51 of Form 10-K filed December 31, 2008.	*
10.44	Form of Change in Control Agreement between the Company and Dallas E. Haun, dated May 23, 2008, incorporated by reference to Exhibit 10.52 of Form 10-K filed December 31, 2008.	*
12	Ratio of Earnings to Fixed Charges (filed herewith).
21	List of Subsidiaries of Zions Bancorporation (filed herewith).
23	Consent of Independent Registered Public Accounting Firm (filed herewith).
31.1	Certification by Chief Executive Officer required by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (filed herewith).
31.2	Certification by Chief Financial Officer required by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (filed herewith).
32	Certification by Chief Executive Officer and Chief Financial Officer required by Sections 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and 18 U.S.C. Section 1350 (furnished herewith).
99.1	Certification by Chief Executive Officer required by 111(b)(4) of the Emergency Economic Stabilization Act (filed herewith).
99.2	Certification by Chief Financial Officer required by 111(b)(4) of the Emergency Economic Stabilization Act (filed herewith).
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 2010 and December 31, 2009, (ii) the Consolidated Statements of Income for the years ended December 31, 2010, December 31, 2009, and December 31, 2008, (iii) the Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2010, December 31, 2009, and December 31, 2008, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2010, December 31, 2009, and December 31, 2008 and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text (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.

177

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.

March 1, 2011	ZIONS BANCORPORATION
	By	/s/    HARRIS H. SIMMONS
		HARRIS H. SIMMONS, Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

March 1, 2011

/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/    ALEXANDER J. HUME	/s/    JERRY C. ATKIN
ALEXANDER J. HUME, 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

178

EX-10.6

EXHIBIT 10.6

ZIONS BANCORPORATION

2005 MANAGEMENT INCENTIVE COMPENSATION PLAN

1. PURPOSE

The purpose of the Plan is to promote the interests of the Company and its affiliates by attracting and retaining an outstanding senior executive management team. Awards payable under this Plan are designed to be qualified performance-based compensation within the meaning of Section 162(m) of the Code.

2. DEFINITIONS

(a) “Adjusted Operating Income” means, for any Plan year, the Company’s consolidated income from continuing operations before income taxes and minority interest, as determined in accordance with GAAP.

(b) “Affiliate” means any corporation, partnership, limited liability company or other entity that is an “affiliate” of the Company within the meaning of Rule 12b-2 under the Exchange Act.

(c) “Award” means that portion, if any, of a Maximum Award that is granted by the Committee to a Covered Employee with respect to a Plan Year.

(d) “Board” means the Company’s Board of Directors.

(e) “CEO” means the Company’s chief executive officers during each Plan Year. If more than one person serves as the Company’s chief executive officer during a Plan Year, the term “CEO” shall mean each of such persons.

(f) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(g) “Committee” means the Executive Compensation Committee of the Board or such other committee or sub-committee consisting of two or more members of the Board, selected by the Board, each of which members shall be an “Outside Director” for purposes of Section 162(m) of the Code.

(h) “Company” means Zions Bancorporation.

(i) “Covered Employee” means (i) the CEO, and (ii) the four (4) most highly compensated executive officers of the Company (as defined in Rule 3b-7 under the Exchange Act) other than the CEO on the last day of each Plan Year. Covered Employees may be officers of the Company or its Affiliates.

(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k) “GAAP” means United States generally accepted accounting principles.

(l) “Maximum Award” for each Covered Employee means 1% of Adjusted Operating Income.

(m) “Plan” refers to this 2005 Management Incentive Compensation Plan of the Company.

(n) “Plan Year” refers to each annual fiscal year of the Company.

3. ADMINISTRATION

The Plan will be administered by the Committee. The Committee will be determine the amount of Awards, if any, to be granted under the Plan to the Covered Employees for the Plan Year subject to the terms and conditions set forth

in the Plan and to other terms and conditions established by the Committee that are consistent with the purpose and provisions of the Plan.

The Committee may prescribe, amend or rescind such rules, regulations, policies, interpretations and guides as deemed appropriate for the proper and effective administration of the Plan.

No member of the Committee or employee of the Company will be personally liable for any action, failure to act, determination or interpretation made in good faith with respect to the Plan or any transaction under the Plan. All decisions, determinations and interpretations of the Committee will be final and binding.

4. DETERMINATION OF ADJUSTED OPERATING INCOME AND MAXIMUM AWARDS

After the end of each Plan Year, the Company shall compute the Adjusted Operating Income for that Plan Year and the Maximum Award for each Covered Employee for that Plan Year. The Committee will certify, in writing and prior to the grant of any Awards for a given Plan Year, the Maximum Award for each Covered Employee and the total amount of Adjusted Operating Income for the Plan Year.

5. GRANT OF AWARDS

After the computations, reports and certifications prescribed under Section 4 have been made, the Committee, in its sole discretion, shall determine the amounts, if any, of the Maximum Award to be granted to each of the Covered Employees as an Award for that Plan Year taking into account such factors as it deems relevant, including, without limitation: (i) the Adjusted Operating Income for the Plan Year; and (ii) a subjective evaluation of various factors, including salaries paid to senior managers with comparable qualifications, experiences and responsibilities at other institutions, individual job performance, local market conditions and the Committee’s perception of the overall financial performance of the Company (particularly operating results).

In no event shall any Award to a Covered Employee under the Plan in any Plan Year exceed such Covered Employee’s Maximum Award. The Committee shall have no obligation to disburse the full amount of a Maximum Award for any Plan Year, and amounts of a Covered Employee’s Maximum Award for a Plan Year that are not actually granted as an Award may not be re-allocated to other Covered Employees or utilized for Awards in other Plan Years.

6. PAYMENT OF AWARDS

The Award, if any, earned by and granted to a Covered Employee will paid following the close of the applicable Plan Year and the certification by the Committee described in Section 4 above and at approximately the same time discretionary annual bonuses are paid to other executive officers of the Company.

7. DEFERRAL OF AWARDS

A Covered Employee may elect in writing to defer receipt of all or a portion of an Award earned for a specified time as permitted under the terms of any Company sponsored plan that permits a Covered Employee to defer the Award provided herein.

8. TERMINATION OF EMPLOYMENT

In the event of termination of employment of a Covered Employee, voluntarily or by the actions of the Company, with or without cause, for any reason, at any time before payment of the Award, the Covered Employee will forfeit all rights to any Award, except to the extent (a) the Covered Employee is entitled to payment of the Award pursuant to any change in control, employment or similar agreement to which the Company or an Affiliate is party or (b) the Committee in its sole discretion determines otherwise.

9. ADJUSTMENTS UPON CERTAIN CORPORATE TRANSACTIONS

In the event of a reorganization, merger, consolidation or similar transaction in which the Company is not the surviving corporation, or upon the sale of substantially all the assets of the Company to another corporation, or upon the dissolution or liquidation of the Company, then the Company or a successor corporation, if any, may continue the Plan and, if not, the Plan will terminate on the effective date of such transaction. Provision will be made for determining the amount of cash payable for all Awards for a Plan Year which will end after such event based on the portion of the Plan Year occurring prior to such event, unless provisions are made for the continuance of the Plan and the assumption or substitution for such Awards of an equivalent value by the successor corporation or the Committee in its sole discretion determines otherwise.

Adjustments under this section will be made by the Committee whose determination as to what adjustments will be made will be final, binding and conclusive.

10. GENERAL PROVISIONS

(a) No Right to Participate. Nothing in the Plan will be deemed to give a Covered Employee, his or her legal representative or any other person or entity claiming under or through a Covered Employee, any contract or right to participate in the benefits of the Plan.

(b) No Employment Right. Participation in the Plan will not be construed as constituting a commitment, guarantee, agreement or understanding of any kind that the Company will continue to employ any individual.

(c) Nontransferability. Neither a Covered Employee nor any designated beneficiary of a Covered Employee shall have any right to assign, transfer, attach or hypothecate any benefits or payments under the Plan.

(d) Withholding. The Company has the right to deduct any amount required to be withheld under applicable federal, state or local tax laws with respect to the payment of any Award.

(e) Restricted Liability. Payments held by the Company before distribution will not be liable for the debts, contracts or obligations of any Covered Employee or beneficiary, or be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding.

(f) Nonexclusive. This Plan does not constitute the exclusive means by which Covered Employees may receive incentive compensation.

(g) Change in Control Agreements. Compensation under the Plan shall be treated in the same manner as annual bonuses for all purposes of any change in control, employment or similar agreement between the Company and a Covered Employee.

11. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN

Subject to Section 12 below, the Company may amend, suspend or terminate the Plan at any time. The Committee will determine the effect on Awards that may be affected by such event and make adjustments and/or payments as it, in its sole discretion, determines appropriate.

12. EFFECTIVE DATE AND STOCKHOLDER APPROVAL

Upon its approval by stockholders at the Company’s 2005 annual meeting, this Plan will become effective retroactively as of January 1, 2005. Awards granted to Covered Employees shall be subject to, and contingent upon, the disclosure to the stockholders of the Company of the material terms of this Plan and stockholder approval of such terms. Such stockholder approval shall be required each time the Committee changes the definitions of Covered Employee, Adjusted Operating Income or Maximum Award under this Plan or changes other material terms under this Plan that would cause the Maximum Award to not continue to be considered a performance goal under Section 162(m) of the Code.

EX-10.12

EXHIBIT 10.12

AMENDMENT TO THE TRUST AGREEMENT

Establishing the

ZIONS BANCORPORATION DEFERRED COMPENSATION PLANS TRUST

WHEREAS, effective October 1, 2002, the Zions Bancorporation Deferred Compensation Plan Trust (hereinafter called the “Trust”) was established by and between Zions Bancorporation (hereinafter called the “Employer”), and CIGNA Bank & Trust Company, 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 Plan (hereinafter called the “Plan”); and

WHEREAS, effective April 1, 2004, in connection with the sale of CIGNA’s retirement business to Prudential Financial, Inc., CIGNA Bank & Trust Company, FSB merged with another banking institution owned by Prudential Financial, Inc. to form Prudential Bank & Trust, FSB (hereinafter called the “Trustee”); and

WHEREAS, effective December 31, 2004, the Employer wishes to amend the Trust Agreement and create a Schedule of Covered Plans (Exhibit A of the Trust Agreement) to include in the Trust additional plans the Employer has added under its Group Annuity Contract as a result of non-qualified deferred compensation legislative changes;

NOW THEREFORE, the Trust Agreement is hereby amended effective April 1, 2004 as follows:

1. The face page of the Trust Agreement is amended by deleting the name of the Trustee, CIGNA Bank & Trust Company, FSB, and by replacing it in its entirety with Prudential Bank & Trust, FSB.

2. The first paragraph of the Trust Agreement is amended by deleting the name of the Trustee and by replacing it in its entirety with Prudential Bank & Trust, FSB, a federally-chartered thrift with its principal office and place of business in the City of Hartford, Connecticut.

NOW THEREFORE, the Trust Agreement is hereby amended effective December 31, 2004 as follows:

1. A Schedule of Covered Plans (Exhibit A of the Trust Agreement) is created and attached hereto and forms a part hereof.

2. The name of the Plan, Zions Bancorporation Deferred Compensation Plan, in the second paragraph of the Trust Agreement is deleted and replaced in its entirety by Zions Bancorporation Deferred Compensation Plans.

3. The face page and Section 1(d) of the Trust Agreement is amended by deleting the name of the Trust, Zions Bancorporation Deferred Compensation Plan Trust, and by replacing it in its entirety with Zions Bancorporation Deferred Compensation Plans Trust.

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

EMPLOYER		PRUDENTIAL BANK & TRUST, FSB
By	/s/ Diana M. Andersen	By	/s/ Andrew F. Levesque
Its V.P. & Dir – Corp Benefits		Its	Trust Officer
Date	12/30/2004	Date	1/6/2005
Attest		Attest	/s/ Joan M. Bobbitt

EXHIBIT A

SCHEDULE OF COVERED PLANS

1. Zions Bancorporation Deferred Compensation Plan

2. Zions Bancorporation Post 2004 Deferred Compensation Plan

3. Zions Bancorporation Excess Benefit Plan

4. Zions Bancorporation Post 2004 Excess Benefit Plan

EX-10.16

Exhibit 10.16

ZIONS BANCORPORATION PENSION PLAN

Restated Effective January 1, 2002

Including Amendments Adopted Through December 31, 2010

December 31, 2010 Edition

ARTICLE I	3
DEFINITIONS	3
1.1 “Accrued Benefit”	3
1.2 “Accrued Benefit Attributable to the Old Plan Account”	3
1.3 “Accrued Benefit Attributable to Company Contributions”	3
1.5 “Affiliate” or “Subsidiary Affiliate” or “Subsidiary”	3
1.6 “Authorized Period of Absence”	4
1.7 Beneficiary	4
1.8 “Break in Service”	5
1.9 “Cash Balance Account”	5
1.10 “Code	5
1.11 “Commerce Participant”	5
1.12 “Commerce Plan	5
1.13 “Committee or Retirement Committee”	5
1.14 “Company	5
1.15 “Compensation”	5
1.16 “Disability Retirement Date”	6
1.17 “Early Retirement Date”	6
1.18 Earnings	6
1.19 “Eligibility Computation Period,”	8
1.20 Eligible Employee	8
1.21 “Eligible Spouse”	9
1.22 “Eligibility Computation Period	9
1.23 “Employee”	9
1.25 “Employment Date”	9
1.26 “ERISA	9
1.27 “Grossmont Participant”	9
1.28 “Grossmont Plan”	10
1.30 “Investment Manager	11
1.31 “Late Retirement Date	11
1.32 Nonvested Former Participant”	11
1.33 “Normal Retirement Age”	11
1.34 “Normal Retirement Date”	12
1.35 “Old Plan Account”	12
1.36 “Participant”	12
1.37 “Participation Date”	12
1.38 “Plan”	12
1.39 “Plan Year”	12
1.40 “Qualified Domestic Relations Order”	12
1.41 “Qualified Service”	13
1.42 “Retirement Date”	13
1.43 “Single Life Annuity”	13
1.44 “Sumitomo Participant”	13
1.45 “Sumitomo Plan”	14
1.46 “Termination of Employment	14
1.47 “Trust Agreement”	14
1.48 “Trust Fund”	14
1.49 “Trustee”	14
1.50 “Year of Vesting Service	14
1.51 “Zions”	15
ARTICLE II	16
PARTICIPATION	16

ii

2.1 Participation Date	16
2.2 Reinstatement of Active Participation	17
ARTICLE III	18
ESTABLISHMENT AND MAINTENANCE OF CASH BALANCE ACCOUNT	18
3.1 Initial Establishment of Cash Balance	18
3.2 Earnings Credits	20
3.3 Interest Credits	21
3.4 Maintenance of Account after Termination of Employment until Benefit Commencement	22
3.5 Establishment of New Account if Re-employed After Benefit Commencement	22
3.6 Market Rate of Interest	23
ARTICLE IV	24
ACCRUED BENEFIT	24
4.1 Accrued Benefit	24
4.2 Cash Balance Accrued Benefit	24
4.3 Minimum Accrued Benefit	25
4.4 Grandfathered Minimum Accrued Benefit	25
4.5 Accrued Benefit Attributable to the Old Plan Account	25
4.6 Accrued Benefit Attributable to Company Contributions	25
4.7 Old Plan Account	25
ARTICLE V	27
AMOUNT OF RETIREMENT INCOME	27
5.1 Monthly Retirement Income	27
5.2 Normal Retirement Income	27
5.4 Late Retirement Income	28
5.5 Disability Retirement Income is described in Section 7.4	28
5.6 Application for Retirement Income	28
5.7 Forms of Retirement Income	30
5.8 Payment of Small Benefits	34
5.9 Eligible Rollover Distribution	34
5.10 Re-employment After Retirement	35
5.11 Commencement of Benefits	35
5.12 Delay of Payment Due to Administrative Error	37
5.13 Suspension of Benefits for Active Participants at Normal Retirement Date	37
5.14 Benefits Under a Qualified Domestic Relations Order (QDRO)	38
5.15 Death or Disability While Performing Qualified Military Service	39
5.16 Non-spouse Beneficiary Rollover	39
ARTICLE VI	40
TERMINATION AND VESTING	40
6.1 Vesting	40
6.3 Re-employment After Termination of Employment	41
6.4 Termination Benefits and Re-employment for Commerce Participants	41
6.5 Special Termination Benefit for Sumitomo Participants	42
ARTICLE VII	43
DISABILITY BENEFITS	43
7.1 Determination of Disability	43
7.2 Eligibility for Disability Benefits	43
7.3 Disability Retirement Date	43
7.4 Disability Retirement Income	43
ARTICLE VIII	44
DEATH BENEFITS	44

iii

8.1 Death after Commencement of Benefits	44
8.2 Death Prior to Commencement of Benefits	44
8.3 Effect of Old Plan Account	45
8.4 Return of Old Plan Account	45
ARTICLE IX	46
FINANCING THE PLAN	46
9.1 Company Contributions	46
9.2 Return of Company Contributions	46
ARTICLE X	47
TERMINATION OF THE PLAN	47
10.1 Termination of Plan	47
10.2 Procedures Upon Termination of Plan	47
ARTICLE XI	48
INTERNAL REVENUE CODE LIMITATIONS ON BENEFITS	48
11.1 Earnings Limitation under Code Section 401(a)(17)	48
11.2 Maximum Retirement Benefit under Code Section 415	48
11.3 Additional Benefit Limits for Highly Compensated Employees	55
11.4 Top-Heavy Provisions	56
11.5 Benefit Restrictions Due to Application of Code §436	59
ARTICLE XII	66
ADMINISTRATION OF THE PLAN	66
12.1 Administration	66
12.2 Records	66
12.3 Payment of Expenses	67
12.4 Delegation of Authority	67
12.5 Information Available	67
12.6 Claims and Appeals Procedure	67
12.7 Fiduciary Capacity	68
12.8 Committee Liability	68
12.9 Limitations of Actions on Claims	68
ARTICLE XIII	69
GENERAL PROVISIONS	69
13.1 Amendment of Plan	69
13.2 Employment Status	69
13.3 Mergers or Consolidations	69
13.4 Provision Against Anticipation	69
13.5 Facility of Payment	69
13.6 Construction	70
13.7 Legal Actions	70

iv

INTRODUCTION

The Zions Bancorporation Pension Plan became effective on January 1, 1968. The Plan has been amended and restated from time to time.

Prior to this restatement the most recent restatement of the Plan was effective January 1,2001. That restatement is referred to herein as the “Prior Plan.” All provisions of the Prior Plan were effective as of January 1, 2001; except that (1) provisions pertaining to the establishment and maintenance of Cash Balance Accounts were effective April 1, 1997; (2) provisions pertaining to Grossmont Participants and former participants of the Grossmont Plan were effective January 1, 1998; (3) provisions pertaining to Sumitomo Participants and former participants of the Sumitomo Plan were effective October 1, 1998; and (4) provisions pertaining to Commerce Participants and former participants of the Commerce Plan were effective January 1, 1999.

The Prior Plan restated the Plan document which was effective as of April 1, 1997. That document included the terms and conditions of a cash balance account feature, which was established as of January 1, 1997, for Active and Disabled Participants in the Plan as of March 31, 1997.

The Prior Plan restatement incorporated the terms of Amendments 1 through 4 to the April 1, 1997 restatement and other modifications approved by Zions Bancorporation through January 31, 2002. The Prior Plan restatement furthermore incorporated modifications resulting from changes in the Internal Revenue Code (the “Code”) and other provisions of federal law that were enacted or became effective on various dates from 1994 through 2000 (sometimes referred to collectively as “GUST” changes in law). Moreover, effective January 1,2002, the Prior Plan restatement incorporated less restrictive legal limitations on pension benefits, as authorized by the Economic Growth and Tax Reduction Reconciliation Act of 200 1 (“EGTRRA”).

Effective at the close of business December 31, 1997, the Grossmont Bank Restated Defined Benefit Pension Plan and Trust (the “Grossmont Plan”), restated effective January 1, 1996, was merged into this Plan. Nothing in this Plan shall be construed to provide a benefit to a Participant under this Plan for a period of service for which he or she has received a benefit under the Grossmont Plan. The eligibility for and the amount of benefit of a former employee who terminated or retired under the Grossmont Bank Restated Defined Benefit Pension Plan and Trust prior to January 1, 1998, and who does not participate in this Plan on or after January 1, 1998, shall be determined exclusively by the provisions of the Grossmont Plan that were in effect as of the earlier of the former employee’s date of termination or retirement, except as specifically stated otherwise in the Grossmont Plan. With respect to the merger of the Plans, this Plan shall be interpreted and administered to comply with ERISA Section 204(g) and Code Sections 411(d)(6) and 414(1).

Effective at the close of business October 31, 1998, the Sumitomo Bank of California Pension Plan (“Sumitomo Plan”), restated effective January 1, 1989, was merged into this Plan, Nothing in this Plan shall be construed to provide a benefit under this Plan for a period of service for which he or she has received a benefit under the Sumitomo Plan. The eligibility for and the amount of benefit of a former employee who terminated under the Sumitomo Plan prior to October 1, 1998, and who does not actively participate in this Plan on or after October 1, 1998, shall be determined exclusively by the provisions of that plan. With respect to the merger of the Plans, this Plan shall be interpreted and administered to comply with ERISA Section 204(g) and Code Sections 411(d)(6) and 414(1).

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Effective at the close of business December 31, 1998, the Commerce Bancorporation Defined Benefit Pension Plan (“Commerce Plan”), restated effective July 21, 1994, was merged into this Plan. Nothing in this Plan shall be construed to provide a benefit under this Plan for a period of service for which he or she has received a benefit under the Commerce Plan. The eligibility for and the amount of benefit of a former employee who terminated under the Commerce Plan before January 1, 1999 and who does not actively participate in this Plan on or after January 1, 1999, shall be determined exclusively by the provisions of that plan. With respect to the merger of the Plans, this Plan shall be interpreted and administered to comply with ERISA Section 204(g) and Code Sections 411(d)(6) and 414(1).

The Plan and Trust thereunder are created and maintained for the primary purpose of providing retirement benefits for eligible employees of Zions Bancorporation and its affiliates. It is intended that the Plan and Trust qualify under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, and that they meet the requirements of the Employee Retirement Income Security Act of 1974, as amended.

Except for other dates provided herein for certain Plan provisions, this Plan is effective as of January 1, 2002. This Plan includes amendments adopted to reflect certain provisions of EGTRRA, which were intended as good faith compliance with the requirements of EGTRRA. They are to be construed in accordance with EGTRRA and guidance issued thereunder. Unless otherwise provided, amendments included in this Plan in compliance with EGTRRA are effective as of the first day of the first plan year beginning after December 31, 2001. Provisions included in this Plan as amendments conforming to EGTRRA supersede all other provisions of the Plan to the extent that those provisions are inconsistent with such amendments. Moreover, this Plan has been amended to comply with all legislation and applicable guidance enacted and issued subsequent to EGTRRA, including the Pension Protection Act of 2006. This Plan shall be interpreted at ail times so as to comply with the requirements of the Code and of ERISA as so amended.

Except as specifically provided in the Plan, the rights and benefits of any Participant who terminates, dies or retires prior to the effective date of this restatement or any other amendment to the Plan will be determined pursuant to the provisions of the Plan in effect on the earlier of his or her date of retirement, death or termination.

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ARTICLE I

DEFINITIONS

1.1 “Accrued Benefit” means the monthly amount of benefit credited to a Participant in accordance with Article 4 on the basis of an annuity payable for life beginning on his or her Normal Retirement Date, or the current date, if later.

1.2 “Accrued Benefit Attributable to the Old Plan Account” is defined in Section 4.5.

1.3 “Accrued Benefit Attributable to Company Contributions” is defined in Section 4.6.

1.4 “Actuarial Equivalence” or “Actuarial Equivalent” means equality in value of the aggregate amounts expected to be received under different forms of payment computed on the following bases:

(a) For purposes of determining (i) the monthly annuity benefits under Sections 4.2, 4.5, 5.3(b) and 8.2, and (ii) the value of lump sum payments under Sections 5.7(d), 5.8 and 5.12(b), Actuarial Equivalence will be calculated in accordance with Appendix II. Unless specifically provided otherwise in this Plan, the value of a benefit payable in any other non-annuity form shall be determined by applying the Actuarial Equivalence factors specified for lump sums in (ii) above.

(b) For purposes of determining the maximum retirement benefit in Section 11.2, Actuarial Equivalence will be calculated using the following bases:

(1) The mortality assumption is the “Applicable Mortality Table as defined in subsection (a) of Appendix II.

(2) Except as otherwise specified in Section 11.2, effective on or after January 1, 1995, for a benefit in the form of an annuity, the interest assumption (to adjust for age and for the form of the benefit) shall be 5%.

Notwithstanding any provision of Section 11.2 to the contrary, for a benefit payment after May 31, 1995 that is in a form that is subject to Code Section 417(e) (for example, a lump sum), the interest assumption to adjust for age will be the “Applicable Interest Rate” specified in subsection (b) of Appendix II, and the interest assumption to adjust for the form of the benefit shall be 5%.

(c) For the purposes of determining the maximum retirement benefit in Section 11.2 for a Grossmont Participant who retires between January 1, 1998 and December 31, 1998, Actuarial Equivalence will never be less than the amount the Grossmont Participant would have received under the Grossmont Plan.

(d) Except as otherwise specified in the Plan, for all other purposes actuarial equivalency will be calculated using the following basis:

(1) The mortality assumption will be the 1984 Unisex Pensioners Mortality Table.

(2) The interest assumption will be 6%.

1.5 “Affiliate” or “Subsidiary Affiliate” or “Subsidiary” means Zions Bancorporation and each member of a controlled group of corporations (as defined in Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C)), a group of trades or businesses (whether incorporated or not) which are under common control within the meaning of Code Section 414(c), or an affiliated service group (as defined in Code Sections

3

414(m) or 414(0)), of which Zions Bancorporation is a part. With respect to the Maximum Retirement Benefit defined in Section 11.2, in determining whether a corporation is a member of a controlled group of corporations the phrase “more than 50 percent” will be substituted for the phrase “at least 80 percent” each place it appears in Code Section 1563(a)(1).

1.6 “Authorized Period of Absence” means an absence authorized by the Company for one or more of the following reasons:

(a) Approved leave of absence;

(b) Pregnancy;

(c) Jury duty;

(d) Qualified Military Service; or

(e) Illness or injury, including disability, and including a period of absence legally authorized to be taken, under the facts and circumstances applicable to the Participant, in accordance with the terms of the Family and Medical Leave Act.

Any discretion of the Company under the provisions of this definition will be exercised without discrimination and in accordance with definitely established rules uniformly applicable to Employees or Participants whose approved periods of absence were occasioned by similar circumstances.

1.7 Beneficiary

(a) Beneficiary of Retirement Income of a Married Participant For purposes of a post-retirement survivor benefit for a Participant who is married to an Eligible Spouse on the date of commencing his or her Retirement mcome, the Beneficiary shall be the Eligible Spouse, except to the extent that either: (a) the benefit is payable pursuant to the mandatory lump sum provisions of Section 5.8 (in which case there shall be no Beneficiary), (b) the Participant, with the written and notarized consent of the Eligible Spouse, elects to receive a benefit in the form of a Single Life Annuity (with or without a Level Income Option) or a lump sum (in which case there shall be no Beneficiary), or (c) is eligible for and elects a form of benefit under subsection (e)(2) or (f)(1) of Section 5.7 with a designated Beneficiary other than the Eligible Spouse (in which case the Beneficiary shall be the person (or persons, under Section 5.7(e)(1) or (e)(2» designated by the Participant with the consent of the Eligible Spouse at the time of commencing the Retirement Income).

(b) Beneficiary of Retirement Income of an Unmarried Participant For purposes of a Retirement Income benefit for a Participant who has no Eligible Spouse on the date of commencing his or her Retirement Income, the Beneficiary means either (a) the living person designated by the Participant at the time of commencing his or her Retirement Income, if the Participant is eligible for and elects a form of benefit pursuant to Section 5.7(e)(1), (e)(2) or (f)(1) (in which case the Beneficiary shall be the person (or persons, under Section 5.7 (e)(1) or (e )(2» designated by the Participant, or (b) there shall be no Beneficiary if either the benefit is payable pursuant to the mandatory lump-sum provisions of Section 5.8 or the Participant elects to receive a benefit in the form of a Single Life Annuity or lump sum.

4

(c) Beneficiary of a Pre-Retirement Survivor’s Death Benefit For purposes of any preretirement death benefit which may be payable under Section 8.2 of the Plan, Beneficiary means the Eligible Spouse (if any, as of the date of the Participant’s death prior to receiving Retirement Income under this Plan), or, if no Eligible Spouse survives the Participant, then the benefit under Section 8.2 shall be paid in a lump sum to the Participant’s estate.

(d) Beneficiary of Unpaid Balance of Old Plan Account In the case of any death benefit which may be applicable under the terms of Section 8.4, Beneficiary means the person or persons designated by a Participant for such purpose, or, if no Beneficiary is designated (or if any and all designated Beneficiaries fail to survive the Participant and the Eligible Spouse, if any), any death benefit payable under Section 8.4 shall be payable to the estate of the last to die of the Participant or Eligible Spouse (if any).

1.8 “Break in Service” means an interruption in service due to a person’s failure to complete at least 501 Hours of Service during a calendar year or during an Eligibility Computation Period. A Break in Service will not occur during an Authorized Period of Absence unless the Employee fails to return to work for at least 30 days with the Company or any member of the Employer after the expiration of the Authorized Period of Absence (or, in the case of an absence due to Qualified Military Service, unless the Employee fails to return to work within the applicable period of time allowed pursuant to Code Section 414(u».

1.9 “Cash Balance Account” means the separate bookkeeping account established and maintained for each Participant as provided in Article 3.

1.10 “Code” means the Internal Revenue Code of 1986, as amended.

1.11 “Commerce Participant” means a Participant in the Commerce Plan who became a Participant in this Plan on January 1, 1999 as the result of the December 31, 1998 merger of the Commerce Plan into-this Plan. Based upon his or her status in the Commerce Plan on December 31, 1998, and based upon whether or not he or she became an Eligible Employee on January 1, 1999, a Commerce Participant described in this Section shall be deemed an Active Participant, an Inactive Participant, a Terminated Vested Participant, a Disabled Participant or a Retired Participant in this Plan, as defined in Section 1.36, on January 1, 1999.

1.12 “Commerce Plan” means the Commerce Bancorporation Defined Benefit Plan as in effect immediately prior to January 1, 1999.

1.13 “Committee or Retirement Committee” means the Committee which will administer the plan as described in Article 12.

1.14 “Company” means Zions Bancorporation and any Affiliate or Subsidiary which adopts this Plan with the consent of the Board of Directors of Zions Bancorporation. The Affiliates and Subsidiaries listed on Appendix V, as it may be revised from time to time, have adopted this Plan and are, as of the date or dates stated on Appendix V, a participating Company in the Plan.

1.15 “Compensation” for any tax year has the meaning set forth in Treasury Regulations Section 1.415-2(d) (Treasury Regulations Section 1.415(c)-2, for Plan Years commencing after July 1, 2007) . Effective January 1, 1998, Compensation shall also include any elective deferrals as defined in Code Section 402(g)(3) made by the Participant during a

5

Plan Year and any pre-tax Employee contributions made by the Employer on behalf of the Employee for the Plan Year, pursuant to Code Section 125 and/or Code Section 132(f)(4).

For Plan Years prior to January 1, 1997, in determining the Compensation of a Participant for purposes of determining whether he or she is a Highly Compensated Employee (as defined in Section 11.3(a)(3», the family aggregation rules of former Code Section 414(q)(6) shall apply, except that in applying such rules, the term “family” shall include only the Eligible Spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year.

1.16 “Disability Retirement Date” is defined in Section 7.3.

1.17 “Early Retirement Date” shall have the meaning stated in subsections (a) through (d) below, whichever is applicable to a particular Participant. “Earliest Retirement Date” means the earliest date that would satisfy all of the conditions of the definition of Early Retirement Date that is applicable to the Participant.

(a) Except as otherwise provided in subsections (b ), (c) and (d), a Participant may retire prior to his or her Normal Retirement Date on an Early Retirement Date which, subject to his or her election, may be the first day of any month coincident with or following the latest of:

(1) the Participant’s 55th birthday,

(2) the date on which the Participant completes 10 Years of Vesting Service, or

(3) the date of the Participant’s Termination of Employment.

(b) A Grossmont Participant may retire prior to his or her Normal Retirement Date on an Early Retirement Date which, subject to his or her election, may be the first day of any month coincident with or following the date of his or her Termination of Employment on or after reaching age 55 and completing three Years of Vesting Service.

(c) A Sumitomo Participant may retire prior to his or her Normal Retirement Date on an Early Retirement Date, which subject to his or her election, may be the first day of any month coincident with or following the date of his or her Termination of Employment on or after reaching age 55 and completing five Years of Vesting Service.

(d) A Commerce Participant may retire prior to his or her Normal Retirement Date and receive his or her entire Accrued Benefit on an Early Retirement Date which, subject to his or her election, may be the first day of any month coincident with or following the date of his or her Termination of Employment on or after reaching age 55 and completing three Years of Vesting Service.

1.18 Earnings

(a) Earnings for a Participant for a Plan Year includes the sum of:

(1) the Participant’s wages, salaries, fees for professional service and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company to the extent that the amounts are includible in gross

6

income (including, but not limited to, commissions paid salesmen, compensation for services on insurance premiums, tips, and bonuses);

(2) the Participant’s “elective deferrals” (as defined in Code Section 402(g)) to a plan with a Code Section 401 (k) cash or deferral arrangement maintained by an Affiliate or Subsidiary;

(3) the Participant’s pre-tax contributions to any health or welfare benefit program under Code Section 125 or any qualified public transit and parking program under Code Section 132(f)(4);

(4) effective on and after January 1, 2001, compensation that the Participant elects to defer to a nonqualified deferred compensation plan maintained by an Affiliate or Subsidiary, but under no circumstances shall the amount of Earnings that is recognized under this paragraph (a)(4) cause the Participant’s overall Earnings for the Plan Year to increase by more than 15% of the amount of Earnings determined without reference to this paragraph (a)(4), nor shall it cause overall Earnings to exceed the applicable limitation under subsection (c) below; and

(5) for each month in which a Participant is entitled to credit for Qualified Military Service, the Participant will be considered, for purposes of determining the Accrued Benefit under this Plan, to have Earnings equal to the Participant’s average monthly Earnings during the 12 months (or, if less, the number of months of prior employment with the Employer) immediately preceding his or her period of Qualified Military Service.

(b) The term “Earnings” does not include the types of remuneration described in the following paragraphs.

(1) except to the extent included in Earnings under clause (a)(2) or (a)(4) above,

(A) Company contributions to a plan of deferred compensation to the extent that, before the application of the Code Section 415 limitations to that plan, the contributions are not includible in the gross income of the Participant for the taxable year in which contributed; and

(B) any distributions from a plan of deferred compensation regardless of whether such amounts are includible in the gross income of the Participant when distributed.

(2) amounts realized from the exercise of a nonqualified stock option, or income realized when restricted stock (or property) held by the Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

(3) amounts realized by the Participant from the sale, exchange or other disposition of stock acquired under a qualified stock option;

(4) except to the extent included in Earnings pursuant to Code Section 125 or 132(f)(4) in accordance with clause (a)(3) above,

7

(A) other amounts which receive special tax benefits, such as premiums for group term life insurance (without regard to whether the premiums are includible in the gross income of the Participant); and

(B) reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, welfare benefits, and any lump sum amounts paid at Termination of Employment (on account of such Termination), such as severance pay, vacation and sick leave cash-outs; and (5) fees for service as a member of a board of directors, if any, paid to “Highly Compensated Employees” (as defined in Section 1 1.3 (a)(3)).

(c) Limitations on Earnings under Code Section 401 (a)(17). For each Plan Year, the amount of annual Earnings that shall be taken into account for purposes of determining benefit accruals under the Plan shall not exceed the limit that is in effect for that Plan Year under Code Section 401 (a)(17), after taking into account any amendment of that Code Section that is enacted into law and any adjustment to that limit that is authorized by the Secretary of the Treasury for the calendar year that coincides with that Plan Year (for example, the limit shall be $170,000 for Plan Year 2001 and $200,000 for Plan Year 2002).

If a period over which Earnings is determined under the Plan (determination period) is less than 12 months, the otherwise applicable dollar limit under Code Section 401(a)(17) for that calendar year will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12, determined in a manner consistent with Treas. Reg. Section 1.401 (a)(l7)-1 (b)(3).

1.19 “Eligibility Computation Period,” for purposes of determining under Section 2.1 (b) whether an Employee has accrued 1,000 Hours of Service during such a period in order to become eligible to participate in the Plan, means the period of 12 consecutive months commencing on the Employment Date and ending on the first anniversary of such date, or, if 1,000 Hours of Service are not accrued during that 12-month period, the Eligibility Computation Period shall be the 12-month period commencing on the first day of each Plan Year that occurs after the Employment Date.

1.20 Eligible Employee. Subject to the exclusions stated in the following paragraph, Eligible Employee means an Employee of the Company.

“Eligible Employee” does not include:

(a) an Employee of an Affiliate or Subsidiary that is not a Company that has adopted the Plan and is participating in the Plan;

(b) an Employee who is covered under a collective bargaining agreement where retirement benefits were the subject of good faith bargaining which does not provide for retirement benefits under this Plan;

(c) a person who performs services for a Company but is compensated for such services by means of the payroll of a third party employee leasing organization;

(d) any “leased employee” within the meaning of Code Section 414(n)(2), or

(e) a person who is not treated by the Participating Company as an employee for payroll tax purposes, whether or not such person is subsequently determined by a

8

government agency, by the conclusion or settlement of threatened or pending litigation, or otherwise to be (or to have been) a common law employee of the Company.

“Leased employee” shall mean, effective January 1, 1997, any person who, pursuant to an agreement between the Company and any other person or organization (leasing organization), has performed services for the Company (or for any Affiliate or Subsidiary of the Company) and such services are performed under the primary direction or control of the Company, Affiliate or Subsidiary.

In the event of any determination by any court, governmental agency or other party that a person excluded under clause “(c)”, “(d)” or “(e)” should be treated as a common-law employee of the Company for payroll tax purposes, the individual shall not be treated as an Eligible Employee unless and until the date on which the individual is first recharacterized as an Employee for payroll tax

purposes on the payroll system of the Company, and not as of any retroactive effective date of such recharacterization.

1.21 “Eligible Spouse” means the legal spouse of the Participant at the time the Participant commences his or her Retirement Income under the Plan (or the Participant’s date of death, if earlier), or, if applicable, a former spouse who is designated as the alternate payee with the right to be treated as the spouse Beneficiary of a Participant according to the terms of a Qualified Domestic Relations Order.

1.22 “Eligibility Computation Period” means a 12-consecutive-month period beginning on an Employee’s Employment Date. However, if such Employee fails to complete at least 1,000 Hours of Service during his or her initial 12-consecutive-month period, the Eligibility Computation Period becomes the Plan Year commencing with the Plan Year in which such initial period ends.

1.23 “Employee” means any person who is employed as a common law employee by any Affiliate or Subsidiary, and any “leased employee” within the meaning of Code Section 414(n)(2); provided, however, if leased employees constitute 20% or less of the Employer’s non-highly compensated work force, the term “Employee” shall not include a leased employee who is covered by a plan maintained by the leasing organization which meets the requirements of Code Section 414(n)(5).

1.24 “Employer” means, collectively, any and all companies that satisfy the definition of an “Affiliate or Subsidiary” (as defined in Section 1.5). All Employees of the Employer will be treated as employed by a single employing company for purposes of applying the requirements for qualification of the Plan under Code Section 401(a).

1.25 “Employment Date” means the date on which an Employee first performs an Hour of Service for any member of the Employer.

1.26 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.27 “Grossmont Participant” means a participant in the Grossmont Plan who became a Participant in this Plan effective January 1, 1998 as a result of the merger of the Grossmont Plan into this Plan.

Based upon his or her status in the Grossmont Plan on December 31, 1997, and based on whether or not the Grossmont Participant becomes an Eligible Employee on January 1, 1998, a Grossmont Participant shall, as of January 1, 1998, be either an Active Participant,

9

an Inactive Participant, a Terminated Vested Participant, a Disabled Participant or a Retired Participant in this Plan (as those terms are defined in Section 1.36).

1.28 “Grossmont Plan” means the Grossmont Bank Restated Defined Benefit Pension Plan and Trust, restated effective January 1, 1996, according to the terms and conditions of that plan which existed as of the close of business on December 31, 1997 when assets and benefits for Grossmont Participants were transferred to and merged into this Plan.

1.29 “Hour of Service” means:

(a) each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Company;

(b) each hour for which an Employee is paid, or entitled to payment, by the Company on account of a period of time during which no duties are performed (whether or not the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence; provided, however, that an Employee will not be credited with more than 501 Hours of Service under this sentence for any continuous period during which he or she performs no duties for the Company. Notwithstanding the preceding provisions of this paragraph, no credit will be given:

(1) for an Hour of Service for which the individual is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed if such payment is made or due under a plan maintained solely for the purpose of complying with applicable workers’ compensation, unemployment compensation or disability insurance laws (except as specifically provided for in Article 7); or

(2) for an Hour of Service for which a payment is made which solely reimburses the individual for medical or medically related expenses incurred;

(c) each hour not otherwise credited under the Plan for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Company.

(d) Effective December 12, 1994, Qualified Military Service shall be credited for purposes of eligibility under Section 2.1 (b) and for Years of Vesting Service. For a Participant returning from Qualified Military Service on or after January 1, 2001, for purposes of satisfying the 1,000 Hours of Service requirement of Section 2.1 (b) during an Eligibility Computation Period, and for purposes of determining Years of Vesting Service, a Participant will receive 190 Hours of Service for each full or partial month during which the Participant is engaged in Qualified Military Service.

(e) Hours of Service will be credited for employment as an Employee of any Affiliate or Subsidiary.

(f) Solely for purposes of determining whether a Break in Service has occurred, an individual who is absent from work will receive credit for the Hours of Service which would have been credited to the individual but for such absence if the absence is (1) because of the pregnancy of the individual, (2) because of the birth of a child of the individual, (3) because of the placement of a child with the individual in connection with the adoption of such child by such individual, (4) for purposes of caring for such child for a period beginning immediately following such birth or placement, or (5) for family or medical leave required to be provided under the Family and Medical

10

Leave Act of 1993. Where such hours cannot be determined, eight Hours of Service per day of such absence will be used, The Hours of Service credited under this paragraph will be credited in the computation period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period, ill all other cases, such hours will be credited in the following computation period.

(g) The foregoing notwithstanding, Participants whose pay is solely on a commission basis will be credited with Hours of Service as follows:

(1) If the Participant’s Earnings for a Plan Year are at least 750 multiplied by the lowest hourly rate of compensation payable to employees in the same job classification as the Participant, then the Participant will be credited with 1,000 Hours of Service for that Plan Year.

(2) If the Participant’s Earnings for a Plan Year are less than 750 multiplied by the lowest hourly rate of compensation payable to employees in the same job classification as the Participant, then the Participant will not be credited with any Hours of Service for that Plan Year.

(h) The crediting of Hours of Service under this Plan will be performed in accordance with applicable provisions of the Department of Labor Regulations 2530.200b-2 and 2530.200b-3 (including, by way of example, the equivalency rules which may be applied in the event that a Participant’s actual Hours of Service cannot be determined), and such regulations are incorporated by reference herein.

1.30 “Investment Manager” shall have the meaning stated in Section 3(38) of ERISA.

1.31 “Late Retirement Date” – If a Participant continues in the service of the Company or any Affiliate or Subsidiary beyond his or her Normal Retirement Date, then his or her Late Retirement Date will be the first day of any month coincident with or following the date of the Participant’s Termination of Employment. A Participant’s Late Retirement Date will not be later than the required beginning date described in Section 5.11(c) even if his or her employment continues after such date.

1.32 Nonvested Former Participant” means a prior Participant who has incurred a Termination of Employment and who does not have a vested interest in his or her Accrued Benefit in accordance with Section 6.1.

Nonvested Former Participant also means a prior participant in the Grossmont Plan who has incurred a Termination of Employment under that plan and who did not have a vested interest in that plan on December 31, 1997.

Nonvested Former Participant also means a prior participant in the Sumitomo Plan who has incurred a Termination of Employment under that plan and who did not have a vested interest in that plan on September 30, 1998.

Nonvested Former Participant also means a prior participant in the Commerce Plan who has incurred a Termination of Employment under that plan and who did not have a vested interest in that plan on December 31, 1998.

1.33 “Normal Retirement Age” – If the Participant’s Participation Date is on or after July 1, 1994, his or her “Normal Retirement Age” is the later of:

(a) his or her 65th birthday, or

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(b) the earlier of:

(1) the date the Participant completes five Years of Vesting Service, or

(2) the fifth anniversary of his or her Participation Date provided the Participant is an Employee on or after the later of such date or his or her 65th birthday and earns at least one Year of Vesting Service after any Break in Service. If the Participant first participated in the Plan before July 1, 1994, the Participant’s Normal Retirement Age is 65.

Notwithstanding the foregoing, the Normal Retirement Age for a Commerce Participant is his or her 65th birthday.

1.34 “Normal Retirement Date” – A Participant’s Normal Retirement Date will be the first day of the month coincident with or next following the date of attaining his or her Normal Retirement Age.

1.35 “Old Plan Account” is defined in Section 4.7.

1.36 “Participant” means an Active Participant, Inactive Participant, Terminated Vested Participant, Disabled Participant, or Retired Participant, as defined below:

(a) “Active Participant” means an Eligible Employee who has met the requirements for participation described in Article 2.

(b) “Inactive Participant” means a prior Active Participant who is on an Authorized Period of Absence, or who is employed by an Affiliate or Subsidiary other than a Company that is then a participating Company in the Plan, or who is employed by the Company but is not an Eligible Employee.

(c) “Terminated Vested Participant” means a former Eligible Employee who has incurred a Termination of Employment, who retains a vested interest in accordance with Section 6.1, and who is not currently receiving benefit payments under the Plan.

(d) “Disabled Participant” means a former Active Participant who has a total and permanent disability as determined under Article 7.

(e) “Retired Participant” means a former Eligible Employee who is receiving benefit payments under the Plan.

1.37 “Participation Date” means the date as of which an Eligible Employee becomes a Participant in the Plan, in accordance with the terms stated in Article 2,

1.38 “Plan” means the Zions Bancorporation Pension Plan.

1.39 “Plan Year” means a calendar year.

1.40 “Qualified Domestic Relations Order” or “QDRO” means a judgment, decree or order of a court with authority under state law for domestic relations matters, which is issued for the benefit of a named “alternate payee” in connection with divorce, marital property rights or alimony, and which complies with all requirements of Code Section 414(P). As further described in Section 5.13, a QDRO may expressly provide either for (a) a division of a Participant’s Accrued Benefit between the Participant and an alternate payee, (b) a

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distribution to an alternate payee, (c) the right of an alternate payee to elect to receive one or more distributions on or after a specified date or occurrence of a specified event, or (d) the designation of an alternate payee as beneficiary for some or all of the Participant’s benefit upon the Participant’s death. A QDRO shall identify (i) the name and last known mailing address of the Participant and of each alternate payee (who shall be either a Participant’s spouse, former spouse, child or other dependent); ii) the amount or percentage of the Participant’s benefit to be paid by the Plan to each alternate payee, or the manner in which such percentage is to be determined; iii) the number of payments or period to which such order applies; and (iv) the name of each benefit plan of the Employer to which it applies. A domestic relations order shall not be treated as an enforceable QDRO under this Plan unless and until the Administrative Committee (or a person or administrator designated by that Committee) has determined that the domestic relations order conforms to the requirements of Code Section 414(P), describes benefits that are consistent with the terms of this Plan, and satisfies the requirements of any QDRO guidelines maintained by the Administrative Committee or its designee.

1.41 “Qualified Service” shall have the meaning stated in Code Section 414(u)(5), and shall refer to an individual’s service in the uniformed services of the United States to the extent the individual, on or after December 12, 1994, is entitled to re-employment rights (sometimes referred to as “USERRA” rights) and returns to employment in a timely manner following such service according to chapter 43 of title 38 of the United Stated Code.

1.42 “Retirement Date” means the date the Participant’s benefits commence. Benefits may begin at the Participant’s Early, Normal, Late or Disability Retirement Date. Whenever restrictions on benefits are imposed under Section 11.5, the Participant has a Termination of Employment prior to the date on which benefit restrictions are imposed and the Participant has elected a benefit payable in a form other than as an annuity, the Retirement Date shall be the date the Participant would have received his or her benefit had the Participant elected distribution in the form of an annuity, regardless of when actually paid.

1.43 “Single Life Annuity” means an annuity providing level monthly payments over the life of the annuitant.

1.44 “Sumitomo Participant” means:

(a) A Participant in the Sumitomo Plan who became a Participant in this Plan on October 1, 1998 in connection with the October 31, 1998 merger of the Sumitomo Plan into this Plan, or

(b) (b) An employee of Sumitomo Bank of California on September 30, 1998 who becomes eligible to participate in this Plan on or before December 31, 1999.

Based upon his or her status in the Sumitomo Plan on September 30, 1998, and based upon whether or not he or she became an Eligible Employee on October 1, 1998, a Sumitomo Participant described in subsection (a) shall be deemed an Active Participant, an Inactive Participant, a Terminated Vested Participant, a Disabled Participant or a Retired Participant in this Plan, as defined in Section 1.36, on October 1, 1998.

1.45 “Sumitomo Plan” means the Sumitomo Bank of California Pension Plan as in effect immediately prior to November 1, 1998.

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1.46 “Termination of Employment” means cessation of employment with the Company or any member of the Employer due to:

(a) voluntary or involuntary termination or separation of employment, or

(b) failure to return to work for at least 30 days upon the expiration of any Authorized Period of Absence from the Company or any member of the Employer, in which event cessation of active work will be deemed to have occurred at the time such Authorized Period of Absence expired.

Transfer of employment, without interruption, between members of the Employer will not be deemed a Termination of Employment.

1.47 “Trust Agreement” means the agreement between the Company and the Trustee.

1.48 “Trust Fund” means all money or property held by the Trustee pursuant to the Trust Agreement.

1.49 “Trustee” means the trustee appointed by the Board of Directors of the Company and named as such in the Trust Agreement.

1.50 “Year of Vesting Service” means a calendar year after December 31, 1988 during which an Employee completes 1,000 or more Hours of Service except as follows:

(a) For Plan Years from December 31,1994 to December 31, 1997, an Employee shall be credited with a partial Year of Vesting Service (measured in calendar months) in a Plan Year in which the Employee completes less than 1,000 Hours of Service but in which the Employee has a Benefit Service Date or in which the Employee retires, dies, or incurs a Termination of Employment if the Employee completes 83.33 Hours of Service multiplied by the number of calendar months during such Plan Year in which the Employee completes at least one Hour of Service. The Employee will be credited with months of Service equal to the number of calendar months during the Plan Year in which the Employee completes at least one Hour of Service. Twelve months of Service will equal a Year of Vesting Service,

(b) Year of Vesting Service also include Years of Vesting Service earned before January 1, 1989 under the terms of the Plan in effect as of December 31, 1988.

(c) A Participant shall be credited in the 1989 calendar year with 190 Hours of Service for each month in which the Participant earned at least one Hour of Service in his or her partial Year of Vesting Service (if any) ending on December 31, 1988.

(d) The foregoing notwithstanding, a Participant must be at least age 18 before he or she can earn a Year of Vesting Service.

(e) The foregoing notwithstanding, if a Participant who has no vested interest in the Plan incurs a Break in Service, Years of Vesting Service will not include:

(1) service prior to a Break in Service which is not followed by a Year of Vesting Service, and

(2) service prior to five or more consecutive one year Breaks in Service if the number of consecutive one year Breaks in Service equals or exceeds the number of prior Years of Vesting Service.

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This subsection (e) shall not apply to a Sumitomo Participant who failed to earn 501 hours of service under the Sumitomo Plan in any Plan Year ending prior to November 1, 1998, or to a nonvested former participant in the Sumitomo Plan who incurred a Termination of Employment under that plan on or prior to September 30, 1998.

(f) Years of Vesting Service earned by Grossmont Participants prior to December 31, 1997 shall be calculated as defined under the provisions of the Grossmont Plan.

(g) Special Rules Applicable to Sumitomo Participants:

(1) Years of Vesting Service earned by a Sumitomo Participant prior to November 1, 1998 shall be calculated as defined under the provisions of the Sumitomo Plan,

(2) A Sumitomo Participant who earns 1,000 or more Hours of Service in the Plan Year beginning on January 1, 1998 and ending on December 31, 1998, shall be credited with one Year of Vesting Service.

(3) After December 31, 1998, a Sumitomo Participant shall be credited with one Year of Vesting Service for each calendar year in which he or she completes 1,000 or more Hours of Service.

(4) In no event will a Sumitomo Participant’s Years of Vesting Service be less than what the Sumitomo Participant would have earned under the Sumitomo Plan through his or her anniversary year ending in the calendar year ending on December 31, 2000.

(h) Years of Vesting Service earned by Commerce Participants prior to January 1, 1999 shall be credited as determined under the provisions of the Commerce Plan.

(i) Effective April 1, 1997, for a former employee of an acquired company listed on Appendix IV who becomes an Eligible Employee as of the Acquisition Effective Date listed in that Appendix, the Eligible Employee’s prior service as an employee of the acquired company (or of any affiliate or subsidiary of the acquired company) shall be credited for purposes of determining Years of Vesting Service under this Plan.

(j) Effective January 1, 1997, any individual who was a leased employee (as defined in Section 1.20) and who subsequently becomes an Eligible Employee shall be credited with all years of service as a leased employee for purposes of determining Years of Vesting Service.

1.51 “Zions” means Zions Bancorporation, which is the sponsor of this Plan and the ultimate parent corporation of the Employer.

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ARTICLE II

PARTICIPATION

2.1 Participation Date means the date a Participant first becomes an Active Participant, pro-vided that the Participation Date of a Nonvested Former Participant who is reinstated under Section 2.2 after five or more consecutive one year Breaks in Service shall be the date of reinstatement.

(a) An Eligible Employee who was an Active Participant in the Plan on March 31, 1997 will continue to be an Active Participant on April 1, 1997.

(b) Except as provided in subsections (c) through (f) below, any other Eligible Employee will become an Active Participant in the Plan on the January 1 or July I coinciding with or next following the later of (1) the date on which the Employee completes an Eligibility Computation Period during which he or she completes at least 1,000 Hours of Service, or (2) the Employee’s 21st birthday.

(c) Effective April 1, 1997, in the case of an Employee who has a period of employment as an Employee or leased employee (as defined in Section 1.20) of an Affiliate or Subsidiary during which he or she is not an Eligible Employee (either because of the individual’s employment status or because the employing company is not a participating Company), which is followed (without a Break in Service) by a transition to Eligible Employee status (either because of a change of individual employment status or because the employing company has become a participating Company in this Plan), then the Employee’s Hours of Service prior to becoming an Eligible Employee shall be credited toward meeting the eligibility service requirement of subsection (b) above, and the Eligible Employee will become an Active Participant on the first day of the month coinciding with or next following the later of the dates referred to in clause (1) and (2) of subsection (b) above.

(d) An Eligible Employee who was an active participant in the Grossmont Plan on December 31, 1997 shall become a Participant in this Plan on January 1, 1998 (or, if later, the date (if any) on which he or she becomes an Eligible Employee).

(e) An Eligible Employee who was an Active Participant in the Sumitomo Plan on September 30, 1998, shall become a Participant in this Plan effective October 1, 1998. Effective on or before December 31, 1999, any other employee of Sumitomo Bank of California on September 30, 1998 shall become a Participant in this Plan on the first of the month coinciding with or next following the later of (1) the date on which the Employee completes an Eligibility Computation Period during which he or she completes at least 1,000 Hours of Service, or (2) the Employee’s 21 st birthday.

(f) An Eligible Employee who was an Active Participant in the Commerce Plan on December 31, 1998, shall become a Participant in this Plan effective (g) January 1, 1999.

(g) Effective April 1, 1997, for a former employee of an acquired company listed on Appendix IV who becomes an Eligible Employee as of the Acquisition Effective Date listed in that Appendix, the Eligible Employee’s prior service as an employee of the acquired company (or of any affiliate or subsidiary of the acquired company) shall be credited for purposes of eligibility to become an Active Participant in the Plan. If such Eligible Employee had accrued at least 1,000 hours of service (according to

16

the records maintained by the acquired company) in the 12-month period ending on the Acquisition Effective Date (and had attained age 21 on or before such date), the Eligible Employee shall become an Active Participant in this Plan as of the first day of the calendar month coinciding with or first following the Acquisition Effective Date. Otherwise, the Participation Date shall be the first day of the calendar month coinciding with or first following the date on which the sum of the pre-acquisition service and post-acquisition Hours of Service satisfy the Eligibility Computation Period requirements of subsection (b) above (and the Eligible Employee has attained at least age 21).

(h) From and after December 31, 2002, no Employee (whether or not an Eligible Employee) who is not already a Participant in the Plan as of December 31, 2002, shall become a Participant in the Plan or be eligible to commence participation in the Plan.

2.2 Reinstatement of Active Participation. A Terminated Vested Participant, a Retired Participant, an Inactive Participant, or a Nonvested Former Participant who again becomes an Eligible Employee or who returns from an Authorized Period of Absence will be reinstated as an Active Participant on the day he or she is reinstated as an Eligible Employee or returns from such Authorized Period of Absence.

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ARTICLE III

ESTABLISHMENT AND MAINTENANCE OF CASH BALANCE ACCOUNT

Except as otherwise stated, this Article shall be effective as of April 1, 1997.

3.1 Initial Establishment of Cash Balance Account.

(a) A Cash Balance Account will be established for each Participant on the date he or she first becomes a Participant. The initial balance in the Cash Balance Account will be zero, With respect to each person who is an Active Participant or a Disabled Participant on March 31, 1997, a Cash Balance Account will be established as of January 1, 1997. The initial balance in the Participant’s Cash Balance Account will equal the present value of the Active or Disabled Participant’s accrued benefit under the Plan as of December 31, 1996, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate and the Participant’s age on December 31, 1996, and the Applicable Mortality Table described in Section 1.4(b)(1) which is in effect as of such date.

(b) With respect to each Inactive Participant and Terminated Vested Participant on March 31, 1997 who becomes an Active Participant on or after April 1, 1997 and each Nonvested Former Participant on March 31, 1997 who becomes an Active Participant and does not lose his or her prior vested interest in accordance with Section 1.50(e), a Cash Balance Account will be established on the date he or she again becomes an Active Participant. The initial balance in the Participant’s Cash Balance Account will equal the present value of the Participant’s accrued benefit under the Plan as of December 31, 1996, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate, the Participant’s age on the date he or she again becomes an Active Participant, and the Applicable Mortality Table described in Section 1.4(b)(1) which is in effect as of such date.

(c) A Cash Balance Account will be established for each Grossmont Participant who becomes an Active Participant in this Plan on January 1, 1998. The initial balance in the Grossmont Participant’s Cash Balance Account will equal the present value of his or her accrued benefit under the Grossmont Plan as of December 31, 1997, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate, the Participant’s age on December 31, 1997, and the Applicable Mortality Table described in Section 1.4(b)(1) which is in effect as of such date.

(d) With respect to each Inactive Participant and Terminated Vested Participant (as defined in Sections 1.27 and 1.36 of this Plan) in the Grossmont Plan on December 31, 1997 who becomes an Active Participant in this Plan or after January 1, 1998 and each Nonvested Former Participant in the Grossmont Plan on December 31, 1997 who becomes an Active Participant in this Plan and does not lose his or her prior vested interest in accordance with Section 1.50, a Cash Balance Account will be established on the date he or she becomes an Active Participant in this Plan. The initial balance in the Grossmont Participant’s Cash Balance Account will equal the present value of his or her accrued benefit under the Grossmont Plan as of December 31, 1997, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate, the Grossmont Participant’s age on the date he or she again becomes a Participant, and the Applicable Mortality Table described in Section 1.4(b)(1) which is in effect as of such date.

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(e) A Cash Balance Account will be established for each Sumitomo Participant who becomes an Active Participant in this Plan on October 1, 1998, The initial balance in the Sumitomo Participant’s Cash Balance Account will equal the present value of his or her accrued benefit under the Sumitomo Plan as of September 30, 1998, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate and the Participant’s age on September 30, 1998, and the Applicable Mortality Table described in Section 1.4(b)(1) which is in effect as of such date.

(f) With respect to each inactive participant and terminated vested participant in the Sumitomo Plan on September 30, 1998 who becomes an Active Participant in this Plan after October 1, 1998, and each nonvested former participant in the Sumitomo Plan who becomes an Active Participant in this Plan after October 1, 1998, a Cash Balance Account will be established on the date such Employee becomes an Active Participant in this Plan. The initial balance in the Sumitomo Participant’s Cash Balance Account will equal the present value of his or her accrued benefit under the Sumitomo Plan as of September 30, 1998, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate, the Sumitomo Participant’s age on the date he or she again becomes an Active Participant, and the Applicable Mortality Table described in Section IA(b )(1) which is in effect as of such date.

Notwithstanding the foregoing, the initial balance in the Cash Balance Account of a Sumitomo Participant who receives a distribution of the actuarial equivalent of his or her full accrued benefit from the Sumitomo Plan on or before October 31, 1998 shall be zero,

(g) A Cash Balance Account will be established for each Commerce Participant who becomes an Active Participant in this Plan on January 1, 1999. The initial balance in the Commerce Participant’s Cash Balance Account will equal the present value of his or her accrued benefit under the Commerce Plan as of December 31, 1998, expressed in the form of a Single Life Annuity. The present value will be determined using the Participant’s age on December 31, 1998, and the interest and mortality basis specified in the Commerce Bancorporation Defined Benefit Plan (as that plan was in effect on December 31, 1998) for terminations occurring during the 1999 plan year,

(h) With respect to each inactive participant and terminated vested participant in the Commerce Plan on December 31, 1998 who becomes an Active Participant in this Plan after January 1, 1999, and each nonvested former participant in the Commerce Plan who becomes an Active Participant in this Plan after January 1, 1999, a Cash Balance Account will be established on the date such Employee becomes an Active Participant in this Plan. The initial balance in the Commerce Participant’s Cash Balance Account will equal the present value of his or her accrued benefit under the Commerce Plan as of December 31, 1998, expressed in the form of a Single Life Annuity. The present value will be determined using a 7% interest rate, the Commerce Participant’s age on the date he or she again becomes an Active Participant, and the Applicable Mortality Table described in Section 1.4(b)( 1) which is in effect as of such date.

Notwithstanding the foregoing, the initial balance in the Cash Balance Account of a Commerce Participant who receives a distribution of the actuarial equivalent of his

19

or her full accrued benefit from the Commerce Plan on or before December 31,1998 shall be zero.

3.2 Earnings Credits.

(a) General Rule for Earnings Credits. As of the last day of each Plan Year the Cash Balance Account of each Participant who is employed on that date and who has completed at least 1,000 Hours of Service during the Plan Year will be credited with an amount equal to the product obtained by multiplying the Participant’s Earnings for the Plan Year by a percentage from the following table, which percentage is based upon the Participant’s age as of the last day of the Plan Year:

Attained Age	Percentage
Fewer than 30 years		2.25	%
At least 30 years, but fewer than 40 Years		3.00	%
At least 40 years, but fewer than 50 years		4.00	%
At least 50 years, but fewer than 55 years		5.25	%
At least 55 years, but fewer than 60 years		7.00	%
60 or more years		9.25	%

(b) Acquisitions and Reinstatements in a Year of At Least 1,000 Hours. Notwithstanding the foregoing, in the Plan Year containing a Participant’s Participation Date (or date of reinstatement as an Active Participant), where the Participation Date (or reinstatement date) is later than January 1 of the Plan Year, but where the Participant accrues 1,000 Hours of Service for the Plan Year, then:

(1) If the Participant received Earnings as an Employee for the period from January 1 of such Plan Year to the Participation Date (or reinstatement date), the Earnings Credit for that Plan Year shall be the product of the amount determined under Section 3.2(a) times a fraction, the numerator of which is the number of completed months of Plan participation as an Active Participant during the Plan Year, and the denominator of which is 12 (or, if less, the number of months from January 1 to the date of the Participant’s Termination of Employment; and

(2) If the Participant did not receive Earnings as an Employee prior to his or her Participation Date (for example, if a Participant has a right to an immediate Participation Date upon an Acquisition Date as described in Section 3.2(c), or a right to an immediate reinstatement of Participation following a Break in Service or Period of Authorized Absence as described in Section 2.2), then the Earnings Credit shall be determined as described in 3.2(a) taking into account the Earnings from the Participation Date through December 31 (or, if earlier, the date of the Participant’s Termination of Employment, as described in Section 3.2(c)).

(c) Acquisitions in a Year of Less Than 1,000 Hours. This subsection shall apply to a Participant who becomes a Participant in this Plan as the result of an acquisition with an “Acquisition Effective Date” (as stated in Appendix N) other than January 1 of a Plan Year, and who fails to complete 1,000 Hours of Service in the Plan Year containing the Acquisition Effective Date. Such a Participant shall be entitled to an Earnings Credit for such Plan Year, if such Participant’s Hours of Service earned following the Acquisition Effective Date, when annualized, equal or exceed 1,000. The annualized hours shall be the product of the Participant’s actual Hours of

20

Service times a fraction, the numerator of which is 12 and the denominator of which is the number of completed months as an Active Participant during the said Plan Year. The Earnings Credit for such Plan Year shall be as stated in Section 3.2(b)(2). For this purpose, Earnings will not include amounts earned prior to the Acquisition Effective Date.

(d) Earnings Credit If Employment Terminates Prior to Year End. Subject to the terms of subsection (e), the Cash Balance Account of a Participant who is not an Employee on the last day of the Plan Year but who has completed at least 1,000 Hours of Service during the Plan Year will be credited as of the last day of the Plan Year or, if earlier, as of the date on which the Participant’s benefit is paid or commences to be paid, with an amount calculated in the manner described in the applicable subsection of this Section 3.2, but based upon the Participant’s Earnings for the Plan Year and the age of the Participant as of the date on which he or she incurs a Termination of Employment.

(e) Terminations of Employment in Plan Year 2000. Effective January 1, 2000, in the case of a Participant who had a Termination of Service for any reason between January 1, 2000 and December 31, 2000, the Participant shall be entitled to an Earnings Credit for the 2000 Plan Year if the Hours of Service he or she accrued prior to the Termination of Employment, when annualized, equal or exceed 1,000. The annualized hours shall be the product of the Participant’s actual Hours of Service times a fraction, the numerator of which is 12 and the denominator of which is the number of completed months as an Employee during the said Plan Year.

(f) Unless otherwise provided by further amendment, from and after December 31, 2002, no Cash Balance Account of any Participant shall accrue any further contribution or earnings credit under this Section 3.2.

(g) Earnings Credits for Grandfather Participants. As of the last day of each Plan Year the Cash Balance Account of each Grandfather Participant (as defined in Section 4.8(b)) who is employed on that date and who has completed at least 1,000 Hours of Service during the Plan Year will be credited with an amount equal to the product obtained by multiplying the Grandfather Participant’s Earnings for the Plan Year by a percentage from the following table, which percentage is based upon the Grandfather Participant’s age as of the last day of the Plan Year:

Attained Age	Percentage
At least 55 years, but less than 60 years		4.00	%
60 or more years		6.25	%

3.3 Interest Credits.

(a) General Rule for Quarterly Interest Crediting. For calendar quarters commencing on and after April 1, 1997, as of the last day of each calendar quarter, the Cash Balance Account of each Participant who has a Cash Balance Account on that date will be credited with interest on the balance in the account as of the first day of the Plan Year. Interest will be credited at the rate of 25% of the annual rate of interest on 30-year Treasury securities for November of the previous Plan Year. If a Participant’s benefit commences prior to the end of a calendar quarter, no interest will be credited for the quarter. Notwithstanding the provisions of Section 3.2(f), Interest

21

Credits shall continue to accrue as provided in Section 3.3 for each Participant who has a Cash Balance Account in the Plan as of January 1, 2003.

(b) If An Account Balance Is Established During a Plan Year. Notwithstanding the prior paragraph, the terms of this subsection shall apply to a Participant who, on a date subsequent to April 1, 1997, has a right to have a Cash Balance Account established during the course of a Plan Year with an opening balance greater than zero, either in the case of a reinstatement of Active Participant status as described in Section 3.1(b) or 3.5(a), or in the case of an initial Participation Date of a former employee of an acquired company described in Section 3.1 (d), 3.1(e), 3.1(f) or 3.1(h). In such a case, the Participant’s Cash Balance Account shall be credited with interest during the remainder of such a Plan Year (subject to the terms of Section 3.4, if applicable), as follows.

(1) As of the last day of the calendar quarter in which the Cash Balance Account is established, the interest for such initial calendar quarter shall be the product of the opening balance of the Cash Balance Account, times 25% of the annual rate of interest (as stated subsection (a) above), times a fraction, the numerator of which is the number of complete calendar months from the effective date of the establishment of the Cash Balance Account to the end of the calendar quarter, and the denominator of which is three.

(2) In any subsequent calendar quarter during the same Plan Year, interest shall be credited as stated in Section 3.1(a), except that the principal amount shall be the opening balance of the Cash Balance Account rather than the balance as of January 1 of the Plan Year.

3.4 Maintenance of Account after Termination of Employment until Benefit Commencement.

(a) After Termination of Employment. After Termination of Employment, a Participant’s Cash Balance Account will continue to be maintained and credited with interest pursuant to Section 3.3, until the Participant’s benefit commences to be paid or is deemed to be paid under Section 6.3(b).

(b) If Re-Employed with an Existing Cash Balance Account Prior to Benefit Commencement. This subsection shall apply to a Terminated Vested Participant who (i) is reemployed as an Eligible Employee of the Company, (ii) is reinstated to Active Participant status as of such re-employment date according to Section 2.2, and (iii) has an existing Cash Balance Account. In such a case, on and after the date of reinstatement of Active Participant status, the Cash Balance Account will continue to be credited with interest on a quarterly basis, and the Active Participant shall have a right to receive Earnings Credits to the extent provided in Section 3.2(b).

3.5 Establishment of New Account if Re-employed After Benefit Commencement.

(a) If a Nonvested Former Participant’s Cash Balance Account has ceased to be maintained due to the deemed zero-dollar “cash-out” distribution (under Section 6.3(b» of his or her entire interest under the Plan, he or she becomes an Active Participant prior to incurring five consecutive Breaks in Service, and he or she completes a Year of Vesting Service following the date of re-employment, then, as of the date of becoming an Active Participant (but contingent upon satisfying the said Year of Service requirement), the Participant’s Cash Balance Account will be restored to the balance in the Cash Balance Account as of the previous Termination of Employment

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date, increased for interest in accordance with Section 3.3 for the period from the Termination of Employment date to the date the Participant again became an Active Participant.

(b) If a Retired Participant is re-employed by the Company and again becomes an Active Participant in the Plan after his or her Cash Balance Account has ceased to be maintained pursuant to Section 3.4, a new Cash Balance Account, with an initial balance of zero, will be established as of the last day of the Plan Year in which he or she again becomes an Active Participant. The Cash Balance Account will be credited with earnings and interest as provided in Sections 3.2 and 3.3. Any Retirement Income which is being paid as a monthly benefit to the Retired Participant as of the date of his or her re-employment shall not be suspended and shall be unaffected by the resumption of employment. The benefit accrued by the Participant from the date of re-employment to the subsequent Termination of Employment shall be subject to an election by the Participant with respect to the form and timing of the benefit which is separate and independent from the election that was applicable to the benefit that commenced on the prior Retirement Date. Moreover, to the extent that a spousal consent is applicable to the benefit that accrued subsequent to the re-employment date, the person with the right to consent shall be the Eligible Spouse (if any) to whom the Participant is legally married at the time of the commencement of the benefit that accrued subsequent to the re-employment date, and not the Eligible Spouse as of the first Retirement Date.

3.6 Market Rate of Interest. With respect to any distribution made from a Participant’s Cash Balance Account after August 17, 2006, the interest rate used for accumulating a Participant’s Cash Balance Account shall not exceed a market rate of return. Regardless of the rate specified in the Plan an interest credit (or equivalent amount) of less than zero shall in no event result in the Cash Balance Account or similar amount being less than the aggregate amount of contributions credited to the Cash Balance Account. Notwithstanding the foregoing, upon termination of the Plan:

(a) If the interest credit rate (or an equivalent amount) under the Plan is a variable rate, then the rate of interest used to determine a Participant’s Cash Balance Accrued Benefit under the Plan shall be equal to the average of the rates of interest used under the Plan during the 5-year period ending on the termination date; and

(b) The interest rate and mortality table used to determine the amount of any Cash Balance Accrued Benefit under the Plan payable in the form of an annuity at normal retirement age shall be the rate and table specified under the Plan for such purpose as of the termination date, except that if the interest rate is a variable rate, the interest rate shall be determined under the rules of subsection (a) above.

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ARTICLE IV

ACCRUED BENEFIT

4.1 Accrued Benefit. A Participant’s Accrued Benefit is equal to the largest of the benefits described in Sections 4.2, 4.3, or 4.4. Notwithstanding anything to the contrary herein, in no event will the benefit payable to a Participant be less than the following:

(a) The Accrued Benefit of a Participant who was a Participant in the Plan on March 31, 1997, shall not be less than the benefit accrued by such Participant under the Plan on March 31, 1997.

(b) The Accrued Benefit of a Grossmont Participant shall not be less than the benefit accrued by such Grossmont Participant under the Grossmont Plan on December 31, 1997.

(c) The Accrued Benefit of a Sumitomo Participant shall not be less than the benefit accrued by such Sumitomo Participant under the terms of the Sumitomo Plan (as in effect on September 30, 1998) with benefit accruals based on the earlier of the Participant’s Termination of Employment or December 31, 1999.

(d) The Accrued Benefit of a Commerce Participant shall not be less than the benefit accrued by such Commerce Participant calculated as of December 31, 1998 under the terms of the Commerce Plan.

(e) Notwithstanding the provisions of Section 3.2(f), the account balance of a Participant who was a Participant in the Plan on December 31, 2002, and which is used to calculate the Cash Balance Account shall never be smaller than the account balance as of December 31, 2002. If greater than the foregoing, the Accrued Benefit calculated under Section 2.3 of Appendix III for a Participant who is a Great Grandfather Participant (as defined in Section 4.4) shall never be less than the Accrued Benefit determined under that Section for the Participant on December 31, 2002.

4.2 Cash Balance Accrued Benefit. A Participant’s cash balance accrued benefit is a monthly benefit in the form of a Single Life Annuity commencing on his or her Normal Retirement Date, or the current date, if later, which is the Actuarial Equivalent of the balance in the Participant’s Cash Balance . Account as of his or her Normal Retirement Date, or the current date, if later. For purposes of determining a Participant’s cash balance accrued benefit:

(a) The balance in the Participant’s Cash Balance Account as of the Participant’s Normal Retirement Date, if the Participant has not yet reached that date, will be determined by projecting the balance in the Participant’s Cash Balance Account at the determination date to the Participant’s Normal Retirement Date. The projection will be accomplished by applying the interest credits specified in Section 3.3 from the determination date (the date on which benefits are being determined) to the Participant’s benefit commencement date (the date on which benefits commence) and by applying the interest credit in Section 3.3 during the year of benefit commencement for each year from the benefit commencement date to the Participant’s Normal Retirement Date.

(b) The monthly benefit in the form of a Single Life Annuity will be determined by using the assumptions for Actuarial Equivalence described in Section 1.4(a) and the age

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of the Participant as of his or her Normal Retirement Date, or the current date, if later.

4.3 Minimum Accrued Benefit. A Participant’s minimum accrued benefit is the monthly benefit accrued by such Participant under the Plan on March 31, 1997, as defined in Section 2.2 of Appendix Ill.

4.4 Grandfathered Minimum Accrued Benefit. Any Active Participant or Disabled Participant on March 31, 1997 who, as of December 31, 1997, has attained 55 years of age and has completed 10 Years of Vesting Service is eligible to receive a grandfathered minimum accrued benefit described in Section 2.3 of Appendix III. An Active Participant who satisfies the requirements of the first sentence of this Section 4.4 on December 31, 2002, (a “Great Grandfather Participant”) shall continue effective January 1, 2003, to accrue all benefits which were available to such Great Grandfather Participant under this Plan as of December 31, 2002, and the provisions of Section 3.2(f) shall not apply to such Great Grandfather Participant.

4.5 Accrued Benefit Attributable to the Old Plan Account. The Accrued Benefit Attributable to the Old Plan Account as of the Participant’s Normal Retirement Date, or current date if later, will be equal to the Participant’s Old Plan Account expressed as a monthly benefit under a Single Life Annuity commencing on his or her Normal Retirement Date, or current date if later, using Actuarial Equivalence as provided in Section 1.4(a).

The Accrued Benefit Attributable to the Old Plan Account as of the Participant’s Early Retirement Date will be equal to the monthly benefit determined under the foregoing paragraph and, reduced by 5/9 of 1 % for each of the first 60 months by which the Early Retirement Date precedes his or her Normal Retirement Date and by 5/18 of 1 % for each of the next 60 such months.

4.6 Accrued Benefit Attributable to Company Contributions. The Accrued Benefit Attributable to Company Contributions will be equal to the excess, if any, of the Accrued Benefit over the Accrued Benefit Attributable to the Old Plan Account.

4.7 Old Plan Account. A Participant’s Old Plan Account is his or her individual account balance under this Plan which resulted from the transfer of funds from a terminated plan formerly sponsored by the Company. The Old Plan Account shall include interest from the transfer date to the earlier of the Participant’s Retirement Date or the date on which the Participant’s Old Plan Account is otherwise payable pursuant to the provisions of this Plan (the determination date) as follows: The rate of interest shall be compounded annually. For Plan Years beginning before January 1, 1988 and continuing to the determination date, the interest rate shall be 5%, For each Plan Year beginning on or after January 1, 1988 and continuing to the determination date, the interest rate shall be 120% of the federal mid-term rate (as defined in Code Section 1274) in effect on the first day of such Plan Year. For purposes of determining the Accrued Benefit Attributable to the Old Plan Account, the Old Plan Account shall also include interest, compounded annually, at the Actuarial Equivalent interest rate (Section 1.4(a)) applicable to the determination date year, for each Plan Year from the determination date to the Participant’s Normal Retirement Date. In no event can a Participant’s Old Plan Account be withdrawn prior to Termination of Employment, death or retirement. This section is effective January 1, 1995.

4.8 Continuing Accrual of Benefits for Grandfather Participants.

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(a) Notwithstanding the provisions of Section 3.2(f), a Participant who was an Active Participant in the Plan on December 31, 2002, and who satisfies the definition of “Grandfather Participant” in 4.8(b) on that date shall continue to accrue all benefits available to such Grandfather Participant under this Plan as of December 31, 2002, except that Earnings Credits for the Grandfather Participant’s Cash Balance Account after December 31, 2002, shall accrue and be determined by reference to Section 3.2(g) and not Section 3.2(a).

(b) “Grandfather Participant” shall mean for purposes of Section 4.8(a) an Active Participant on December 31, 2002, who:

(1) had attained at least age fifty-five (55), and

(2) was credited with at least ten (10) Years of Vesting Service.

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ARTICLE V

AMOUNT OF RETIREMENT INCOME

5.1 Monthly Retirement Income. A Participant’s monthly retirement income commencing on his or her Normal Retirement Date, Early Retirement Date, Late Retirement Date, or Disability Retirement Date will be equal to his or her benefit described in Section 5.2,5.3, 5.4, or 5.5.

5.2 Normal Retirement Income. The monthly amount of retirement income payable to a participant retiring on his or her Normal Retirement Date will be equal to the Accrued Benefit earned to his or her Normal Retirement Date. This amount is reduced by the Accrued Benefit Attributable to the Old Plan Account if the Participant has previously taken a lump sum payment of the Old Plan Account under Section 5.7(d). This Retirement Income will be subject to adjustment depending on the Form of Retirement Income elected in accordance with Section 5.7.

5.3 Early Retirement Income.

(a) The Early Retirement Income amounts described in this Section 5.3 will be subject to adjustment depending on the Form of Payment elected in accordance with Section 5.7,

(b) The monthly amount of retirement income payable to a Participant retiring on an Early Retirement Date is the greater of:

(1) The Actuarial Equivalent value of the Participant’s Cash Balance Account as of the Early Retirement Date using the assumptions for Actuarial Equivalence described in Section 1.4(a) and the age of the Participant as of the Early Retirement Date.

(2) The Minimum Early Retirement Benefit as described in Article 3 of Appendix III.

The above amount is reduced by the Accrued Benefit Attributable to the Old Plan Account as of the Participant’s Early Retirement Date, as determined under Section 4.5 if the Participant has taken a lump sum payment of the Old Plan Account under Section 5.7(d).

(c) A Grossmont Participant’s minimum early retirement benefit shall be at least equal to the Actuarial Equivalent of his or her Accrued Benefit determined as of December 31, 1997. Actuarial Equivalent shall be calculated using:

(1) Interest at a rate of 7% per annum, compounded annually, and

(2) Mortality determined in accordance with the Unisex Pension 1984 Mortality Table, set back three years for both males and females.

(d) A Sumitomo Participant’s minimum early retirement benefit payable on an Early Retirement Date shall be equal to the Sumitomo Participant’s Accrued Benefit described in Section 4.1 (c) multiplied by an early retirement factor from the table below:

Participant’s Age At Commencement	Factor
55		.4912
56		.5236

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57	.5572
58	.5956
59	.6364
60	.6820
61	.7336
62	.7888
63	.8524
64	.9220
65	1.000

Interpolation shall be used to determine the Factor applicable to the minimum benefit calculation of a Participant who retires in any month other than his or her month of birth.

(e) A Commerce Participant’s early retirement benefit shall be at least equal to the Actuarial Equivalent of his or her Accrued Benefit determined as of December 31, 1998 under the terms of the Commerce Plan. For the purpose of this subsection (e) Actuarial Equivalent for a Commerce Participant, shall be calculated using the 1984 Uniform Pensioners Mortality Table and an interest rate equal to the lesser of 100% of the Pension Benefit Guaranty Corporation’s immediate interest rate in effect on the first day of the Plan Year in which the Commerce Participant retires or 4%.

5.4 Late Retirement Income.

(a) The monthly amount of Retirement Income payable to a Participant retiring on a Late Retirement Date will be equal to the Participant’s Accrued Benefit earned to the Late Retirement Date. The amount determined according to the previous sentence is reduced by the Accrued Benefit Attributable to the Old Plan Account if the Participant has previously taken a lump sum payment of the Old Plan Account under Section 5.7(d). This Retirement Income will be subject to adjustment depending on the Form of Retirement Income elected in accordance with Section 5.7.

(b) The minimum late retirement benefit of a Grossmont Participant shall be at least equal to the Actuarial Equivalent of his or her Accrued Benefit determined as of December 31, 1997, and taking into account his or her years of benefit service and final average monthly earnings, as defined in the Grossmont Plan, as of December 31, 1997. Actuarial Equivalent shall be calculated using:

(1) Interest at a rate of 7% per annum, compounded annually, and

(2) Mortality determined in accordance with the 1984 Unisex Pensioners Mortality Table, set back three years for both males and females.

(c) The minimum late retirement benefit of a Sumitomo Participant shall never be less than his or her Accrued Benefit determined under Section 4.1 (c).

5.5 Disability Retirement Income is described in Section 7.4.

5.6 Application for Retirement Income. Each Participant must notify the Committee in writing of his or her intent to retire. Upon receipt of such notification, each Participant will receive a written explanation of the terms and conditions of the various Forms of Retirement Income and the financial effect of electing each Form of Retirement Income. A Participant will have the right to elect or revise a previously elected Form of Retirement Income at any time during his or her Election Period.

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A Participant’s Election Period is the 90 day period ending on the date his or her Retirement Income is to begin. The Committee will make Election Information available to a Participant within a reasonable period of time prior to the date Retirement Income is to begin. In no event will a Participant’s Election Period end prior to the 30th day next following the day on which Election Information and the information provided in accordance with the first paragraph of this Section 5.6 are first made available to him.

For purposes of this Section, Election Information will include:

(a) a written explanation of each form of Retirement Income and the relative financial effect of the payment of Monthly Retirement Income in that form;

(b) a statement of the right to consider the benefit election for at least 30 days; and

(c) a notification that Retirement Income payments will be made in the 50% Spouse Option form (or the Life Annuity Form if the Participant is not married) unless he or she elects otherwise during the Election Period and his or her spouse consents to such election.

The Participant must elect a form of payment in writing. An election of a form of payment other than a Spouse Option will not be valid without the written consent of the Participant’s spouse. The spouse’s consent must acknowledge the effect of the election and must be witnessed by a plan representative or notary public. The Participant may change his or her election at any time, and any number of times, during the 90 day period ending on the date his or her Retirement Income is to begin. The Participant may not change the form of payment without further spousal consent unless the spouse expressly permits such changes. The requirement for spouse’s consent will be waived if the participant establishes to the satisfaction of the Committee that such consent cannot be obtained because there is no spouse, the spouse cannot be located or because of such other circumstances as the Secretary of the Treasury may by regulations prescribe.

The election by the Participant and the consent of the spouse must be obtained no more than 90 days prior to the annuity starting date (as defined in the previous paragraph).

If the spouse of a Participant who has elected a Spouse Option dies before Retirement Income payments begin, the Retirement Income will be paid to the Participant in the form of the Single Life Annuity.

For any Election Period and any distribution notice issued or Election Information relative thereto provided under this Section or any other Plan Section in Plan Years beginning after December 31, 2006, any reference to a 90-day maximum notice or election period shall be changed to 180 days. Notices and Election Information given to Participants pursuant to Code §41i(a)(ll) in Plan Years beginning after December 31, 2006, shall include a description of how much larger benefits will be if the commencement of distributions is deferred. Notices to Participants shall include the relative values of the various optional forms of benefit, if any, under the Plan as provided in Treas. Reg. §1.417(a)-3. This provision is effective for qualified pre-retirement survivor annuity explanations first provided on or after July 1, 2004; for qualified joint and survivor annuity explanations with respect to any distribution with a Retirement Date on or after February 1, 2006; and on or after October 2, 2004, with respect to any optional form of benefit subject to the requirements of Code §417(e)(3), if the actuarial present value of that optional form is less than the actuarial present value as determined under Code §417(e)(3).

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5.7 Forms of Retirement Income. A Participant retiring on his or her Normal, Early, Late, or Disability Retirement Date may elect one of the following Forms of Retirement Income payment:

(a) A Spouse Option provides for a monthly payment during the Participant’s life. After the Participant’s death, a percentage of the Participant’s Retirement Income will be paid for life to the Participant’s Eligible Spouse. The percentage to be paid to the Participant’s Eligible Spouse will be 50%, 662/3% (for Plan Years after December 31, 2007, 75%) or 100% as elected by the Participant, The monthly payment under the Spouse Option will be equal to the Actuarial Equivalent of the amount payable under the Life Annuity form using the factors from Appendix I.

(b) The Life Annuity form provides for a monthly payment during the Participant’s life, with the last payment being made for the month in which the Participant’s death occurs.

(c) Lump Sum Payment Option provides for a single payment equal to the greater of the balance in the Participant’s Cash Balance Account as of the Participant’s Retirement Date or the Lump Sum value of his or her Accrued Benefit using the Actuarial Equivalent basis for lump sums provided under Section 1.4(a). If a Participant took a lump sum payment of his or her Old Plan Account before retirement, the Lump Sum Payment Option shall be based on the Accrued Benefit Attributable to Company Contributions as described in Section 4.6. If a Participant maintains an Old Plan Account on his or her Retirement date, the lump sum shall not be less than the sum of the Old Plan Account on the Retirement Date and the Lump Sum Payment Option amount using the Accrued Benefit Attributable to Company Contributions as described in Section 4.6.

(d) Lump Sum Payment of Old Plan Account Option provides for a lump sum payment of the Participant’s Old Plan Account. The Participant’s Accrued Benefit Attributable to Company Contributions is paid in a Life Annuity, Spouse Option, or Lump Sum Payment Option form as elected by the Participant. This form of payment is available to a Participant only one time, at the earlier of his or her retirement or Termination of Employment.

(e) Options Available Only to Grossmont Participants. In addition to the forms described in subsections (a) through (d) above, the following additional forms of benefit are available only to Grossmont Participants:

(1) Ten Year Certain and Life Thereafter Option. The Ten Year Certain and Life Thereafter Option provides a reduced monthly Retirement Income commencing on the Grossmont Participant’s Retirement Date and ceasing with the payment for the month in which the Grossmont Participant’s death occurs. The Ten Year Certain and Life Thereafter Option shall be the Actuarial Equivalent of a Single Life Annuity Option. If a Grossmont Participant’s death should occur before 120 monthly payments have been made, such payment shall continue to his or her Beneficiary(ies) until the earlier of (a) the Beneficiary(ies) death(s), or (b) a total of 120 monthly Retirement Income payments to the Grossmont Participant and his or her Beneficiary(ies) have been made.

If a Grossmont Participant designates joint Beneficiaries, upon the Grossmont Participant’s death prior to the payment of 120 monthly payments, any surviving Beneficiaries shall share equally.

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In the event that the (or all) Beneficiary(ies) and the Grossmont Participant die prior to the payment of a total of 120 monthly Retirement Income payments to the Grossmont Participant and/or his or her Beneficiary(ies); the balance of such 120 monthly payments shall be payable to the estate of the last survivor.

In the event the Grossmont Participant and his or her Beneficiary(ies) die prior to the date the Grossmont Participant’s benefits are scheduled to commence, the rights of all persons shall be the same as if the option had not been elected,

(2) The Ten Year Certain Option provides a monthly Retirement Income commencing on the Grossmont Participant’s Retirement Date and ceasing after 120 monthly payments have been made. The Ten Year Certain Option shall be the Actuarial Equivalent of a Single Life Annuity Option.

If a Grossmont Participant’s death should occur before 120 monthly payments have been made, such payment shall continue to his or her Beneficiary(ies) until the earlier of (a) the Beneficiary(ies’) death(s), or (b) a total of 120 monthly Retirement Income payments to the Grossmont Participant and/or his or her Beneficiary(ies) have been made.

If a Grossmont Participant designates joint Beneficiaries, upon the Grossmont Participant’s death prior to the payment of 120 monthly payments, any surviving Beneficiaries shall share equally.

In the event that the (or all) Beneficiary(ies) and the Grossmont Participant die prior to the payment of a total of 120 monthly Retirement Income payments to the Grossmont Participant and/or his or her Beneficiary(ies), the balance of such 120 monthly payments shall be payable to the estate of the last survivor.

In the event the Grossmont Participant and his or her Beneficiary(ies) die prior to the date the Grossmont Participant’s benefits are scheduled to commence, the rights of all persons shall be the same as if the option had not been elected.

(3) For the purpose of this subsection (e), Actuarial Equivalent shall be calculated using:

(A) Interest at a rate of 7% per annum, compounded annually, and

(B) Mortality determined in accordance with the 1984 Unisex Pensioners Mortality Table, set back three years for both males and females.

(4) This subsection (e) shall only apply to the portion of a Grossmont Participant’s Accrued Benefit earned prior to January 1, 1998. The portion of a Grossmont Participant’s Accrued Benefit earned on or after December 31, 1997 shall be paid in one of the forms described in subsections (a) through (d) of this Section 5.7.

(5) A Grossmont Participant’s Accrued Benefit payable under any form described in this Section 5.7(e) shall never be less than his or her Accrued Benefit calculated as of December 31, 1997 under the terms of the Grossmont Plan.

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(f) Options Available to Sumitomo Participants: In addition to the forms described in subsections (a) through (d), the following additional forms of benefit are available only to Sumitomo Participants:

(1) Joint and Survivor Annuity. A Sumitomo Participant may elect to have a fraction, either 50% or 100%, of his or her Life Annuity continue after his or her death to the Sumitomo Participant’s Beneficiary for life, if the Beneficiary survives the Sumitomo Participant, A Joint and Survivor Annuity payable to a Sumitomo Participant who receives a benefit under Section 4.1 (c) shall be the Actuarial Equivalent of the benefit otherwise payable as a Single Life Annuity (taking into account whichever 50% or 100% option is elected), and using the following Actuarial assumptions: (A) 4% interest, and (B) the 1984 Unisex Pension mortality table with a four-year setback for the age of the Participant and no set-back for the age of the Beneficiary, and (C) the respective ages (in completed months as of the benefit commencement date) of the Participant and Beneficiary. The Beneficiary must be irrevocably designated before benefits commence.

(2) Level Income Option. A Sumitomo Participant who retires prior to his or her Normal Retirement Date and whose benefit is paid in the form of a Life Annuity may elect to receive his or her benefits in a greater amount during the period before Social Security benefits could first be paid and a correspondingly reduced amount after such benefits first become payable, such that the total income (including the adjusted benefit payable under the Plan and the Social Security benefit to which the Sumitomo Participant is entitled) shall be as nearly uniform as possible both before and after commencement of Social Security benefits. The amount of the adjustment to the Sumitomo Participant’s benefit shall be calculated using the factors in Appendix III of the Sumitomo Plan, provided that in no event shall value of the benefit payable under this subsection ever be less than that determined by applying the Actuarial Equivalence factors for lumps sum payments described in Section 1.4(a)(ii).

(3) This subsection (f) shall only apply to the portion of the Sumitomo Participant’s Accrued Benefit attributable to Section 4. 1 (c). The portion of a Sumitomo Participant’s Accrued Benefit not attributable to Section 4.1 (c) shall be paid in one of the forms described in subsections (a) through (d) of this Section 5.7.

(4) A Sumitomo Participant’s Accrued Benefit payable in any form under this Section 5.7 shall never be less than his or her Accrued Benefit calculated as of December 31, 1999 under the terms of the Sumitomo Plan.

(g) Options Available to Commerce Participants. In addition to the forms described in subsections (a) through (d), the following additional forms of benefit are available only to Commerce Participants:

(1) The Post-retirement 75% Spouse Option provides a monthly payment during the Commerce Participant’s life. After the Commerce Participant’s death 75% of the Commerce Participant’s Retirement Income will be paid for life to the Commerce Participant’s Eligible Spouse. The initial monthly payment under the 75% Spouse Option will be equal to the Actuarial Equivalent of the amount payable under the Life Annuity form. For the purpose of this paragraph (1), Actuarial Equivalent shall be calculated using the 1984 Uniform

32

Pensioners Mortality Table and an interest rate equal to the greater of 100% of the Pension Benefit Guaranty Corporation immediate interest rate in effect on the first day of the Plan Year in which the Commerce Participant retires or 6.5%.

This paragraph (1) shall only apply to the portion of the Commerce Participant’s Accrued Benefit earned prior to January 1, 1999 under the terms of the Commerce Plan, The portion of a Commerce Participant’s Accrued Benefit earned on or after January 1, 1999 shall be paid in one of the forms described in subsections (a) through (d) of this Section 5.7.

(2) The Pre-retirement Spouse Options provide a “monthly payment during the Commerce Participant’s life starting on the first of any month following his or her Termination of Employment, which date shall be considered the Annuity Starting Date for the purpose of this form of benefit, and prior to his or her Early Retirement Date as described in Section 1.17. After the Commerce Participant’s death 50%, 75% or 100% of the Commerce Participant’s Retirement Income will be paid for life to the Commerce Participant’s Eligible Spouse. The initial monthly payment under the Preretirement Spouse Option will be equal to the Actuarial Equivalent of the amount payable under the Life Annuity form. For the purpose of this paragraph, Actuarial Equivalent shall be calculated using the 1984 Uniform Pensioners Mortality Table and an interest rate equal to the greater of 100% of the Pension Benefit Guaranty Corporation immediate interest rate in effect on the first day of the Plan Year in which the Commerce Participant’s Annuity Starting Date occurs or 6.5%.

This paragraph (2) shall only apply to the portion of the Commerce Participant’s Accrued Benefit earned prior to January 1, 1999 under the terms of the Commerce Plan. The portion of a Commerce Participant’s Accrued Benefit earned on or after January 1, 1999 shall be paid in one of the forms described in subsections (a) through (d) of this Section 5.7.

(3) Commerce Lump Sum Option. A Commerce Participant may elect to receive the Actuarial Equivalent of his or her Accrued Benefit earned before January 1, 1999 in the form of a single payment effective on the first of any month following Termination of Employment, which date shall be considered the Annuity Starting Date for the purpose of this form of benefit. For the purpose of this paragraph (3) Actuarial Equivalent shall be calculated using the 1984 Uniform Pensioners Mortality Table and an interest rate equal to 100% of the Pension Benefit Guaranty Corporation’s (PBGC) interest rates in effect on the first day of the Plan Year in which the Commerce Participant’s Annuity Starting Date occurs. If the lump sum value using this basis exceeds $25,000 then Actuarial Equivalent shall be calculated using the 1984 Uniform Pensioners Mortality Table and an interest rate equal to 120% of the PBGC rates, For the period of time prior to the Commerce Participant’s Normal Retirement Date, pre-retirement mortality shall not be used.

The portion of a Commerce Participant’s Accrued Benefit earned on or after January 1, 1999 shall be paid on the retirement date elected by the Commerce Participant in one of the forms described in subsections (a) through (d) of this Section 5,7.

(4) A Commerce Participant’s Accrued Benefit payable under any of the forms described in this Section 5.7(g) shall never be less than his or her Accrued

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Benefit calculated as of December 31,1998 under the terms of the Commerce Plan.

(h) In the event the benefit restrictions of Section 11.5 apply at the time the Participant would otherwise be eligible to elect a lump sum and prevent such an election, then any election period for the lump sum payment shall be suspended and shall commence or recommence on the earliest possible date following the date the benefit restrictions no longer prevent the Participant from electing a lump sum distribution.

5.8 Payment of Small Benefits. Effective for payments to Participants first commencing after September 18, 1998, if a Participant has a Termination of Employment or dies and the Actuarial Equivalent value of the benefit payable under the Plan to such Participant or his or her Beneficiary does not exceed $5,000 ($3,500, for payments commencing prior to September 18, 1998), the Committee will pay the Actuarial Equivalent value of such benefit to the Participant or Beneficiary in a lump sum. If a lump sum payment is made, no other benefit under the Plan will be due to the Participant or Beneficiary. However, if the Participant receives less than the Actuarial Equivalent of his or her full Accrued Benefit, such Accrued Benefit and related service shall be reinstated if the Participant repays the distributed lump sum with interest at one hundred and twenty percent (120%) of the Federal midterm rate as in effect for the first month of the Plan Year. Such repayment must be made prior to the earlier of (1) the fifth anniversary of the Participant’s reemployment date, or (2) the date the Participant incurs a five-year Break in Service.

If the Participant’s Vested Percentage is zero, the Participant will be deemed to have received a distribution of the Vested Percentage of his or her Accrued Benefit and to have forfeited the nonvested percentage of his or her Accrued Benefit.

If the Actuarial Equivalent value of the Participant’s benefit at the time of a distribution exceeds $5,000 (or $3,500, whichever is applicable), then such value at any subsequent time will be deemed to exceed $5,000 (or $3,500, whichever is applicable). For any distribution subject to this Section 5.8 commencing on or after March 28, 2005, which is greater than $1,000, if the Participant does not elect to have the distribution paid in a direct rollover to an “eligible retirement plan” (as defined in Section 5.9(b)(2)) specified by the Participant or to receive the distribution directly in a lump sum cash payment, then the Committee shall cause the Plan to pay the distribution in a direct rollover to an individual retirement plan designated by the Committee.

5.9 Eligible Rollover Distribution.

(a) This Section 5.9 applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee’s election under this Section 5.9, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

(b) Definitions.

(1) Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the amount payable by the Plan to a distributee, except that an eligible rollover distribution does not include: (A) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the

34

distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period often years or more; (B) any distribution to the extent such distribution is required under Code Section 401(a)(9); or (C) the portion of any distribution that is not includible in gross income.

(2) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401 (a) that accepts the distributee’s eligible rollover distribution. However, in the case of an eligible rollover distribution prior to January 1, 2002, that is payable to the surviving Eligible Spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.

Effective for distributions occurring on or after January 1, 2002, an “eligible retirement plan” for any distributee (including a surviving Eligible Spouse) shall include, in addition to the plans and programs mentioned in the first sentence of the previous paragraph, any tax-deferred annuity program under Code Section 403(b) and any deferred compensation plan of a governmental entity under Code Section 457.

For distributions made after December 31, 2007, an eligible retirement plan shall also mean a Roth IRA described in Code Section 408A(b).

(3) Distributee: A distributee includes a Participant or an Eligible Spouse.

(4) Direct rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee.

5.10 Re-employment After Retirement. In order to retire, a Participant must have a Termination of Employment. Effective January 1, 1992, if a Retired Participant is rehired by the Company, his or her Retirement Income, if being paid in a Life Annuity form, will not be suspended. The Retired Participant may earn additional benefits as provided in Article 3. The benefit attributable to service during the Participant’s re-employment that is not yet in payment status will be paid, or commence to be paid upon the earlier of the Participant’s subsequent retirement or the Participant’s required beginning date described in Section 5.11(c). Such benefit may be paid in any form elected by the Participant, which form may be different from the form in which benefits are currently being paid.

If the Participant dies during such period of re-employment, any death benefits attributable to service during the Participant’s re-employment will be determined in accordance with Article 8. Any death benefit attributable to service before the Retired Participant’s re-employment will be determined in accordance with the provisions of the applicable Form of Retirement Income elected at his or her original retirement,

5.11 Commencement of Benefits.

(a) Retirement Income payments will begin on the later of the Retirement Date elected by the Participant or the first day of the month following the date on which the Participant applies for a retirement benefit.

(b) Unless a Participant elects otherwise, Retirement Income payments will begin not later than the 60th day after the end of the Plan Year in which:

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(1) the Participant’s Normal Retirement Age, or

(2) the Participant’s Termination of Employment occurs, whichever is later.

(c) The required beginning date described in this paragraph (c) will apply regardless of any election made by the Participant.

(1) Except as provided by subparagraphs (2), (3) and (4) below, Retirement Income payments will begin not later than April 1 of the calendar year following the calendar year in which the Participant attains age 70~ whether or not such Participant’s employment has terminated. Effective for Plan Years commencing on or after January 1, 1999, for a Participant who is not a 5% owner and who attains age 70-112 on or after January 1, 1999, Retirement Income payments will begin not later than April 1 following the calendar year in which the Participant attains age 70-112 or, if later, April 1 following the calendar year in which the Participant incurs a Termination of Employment.

(2) A Participant who attained age 70 in 1988, who is not a 5% owner, and who has not retired by January 1, 1989, will be treated as having retired on January 1, 1989. Retirement Income payments will begin not later than April 1, 1990 for such Participants.

(3) Retirement Income payments for a Participant who attained age 70 before January 1, 1988, and who is not a 5% owner will begin not later than April of the calendar year following the later of (A) the calendar year in which the Participant attained age 70~, or (8) the calendar year in which the Participant retires.

(4) Retirement Income payments for a Participant who attained age 70 before January 1, 1988, and who is a 5% owner will begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the Participant attained age 70~, or (B) the earlier of (i) the calendar year within which ends the Plan Year in which the Participant becomes a 5% owner, or (ii) the calendar year in which the Participant retires.

(5) A Participant is treated as a 5% owner for purposes of this paragraph (c), if such Participant is a 5% owner as defined in Code Section 416(i) at any time during the Plan Year ending within the calendar year in which such owner attains age 66 or any subsequent Plan Year. Once a Participant is described in this subparagraph, distributions will continue to such Participant even if such Participant ceases to own more than 5% of the Company in a subsequent year. Effective January 1, 1999, a Participant is treated as a 5% owner if the Participant is a “5 percent owner” (as defined in Code Section 416(i)(1)(B)(i)) at any time during the calendar year in which the Participant attains age 70-112.

(6) If a Participant receives payments under this paragraph (c), such payments will be determined as if the Participant’s Late Retirement Date were the date by which Retirement Income payments must be made under this paragraph (c). If the Participant continues to earn additional Accrued Benefits after this date, his or her Monthly Retirement Income will be redetermined on each January 1 following the date benefit payments commence. This re-determined benefit will be payable under the Form of Retirement Income elected as of the Late Retirement Date in accordance with Section 5.7.

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(7) Effective January 1, 1999, for a Participant whose continued active employment results in the deferral of Retirement Income to a date later than April I following the calendar year the Participant attains age 70-112 (the “Base Date”), the Accrued Benefit for such a Participant shall be Actuarially adjusted to reflect the deferral period from the Base Date to the date the Participant commences payment of Retirement Income. The Actuarial adjustment shall be based on the factors stated in Section IA(d).

5.12 Delay of Payment Due to Administrative Error.

(a) Delay in Commencing Annuity Payments. In the event Retirement Income payments to a Participant are delayed for more than 60 days beyond his or her Retirement Date due to an administrative error, or such other event designated by the Committee, the affected Participant shall be entitled to Retirement Income payments retroactive to his or her Retirement Date, plus interest at a rate of 6% per year on the portion of the delayed payment which is more than 60 days late.

(b) Delay in Payment of Lump-Sum. Effective on and after November 1, 1998, the provisions of this paragraph shall apply if a Participant or Beneficiary becomes entitled to receive a lump-sum Retirement Income payment pursuant to Section 5.7 or 5.8, and if the payment of such lump-sum is delayed due to an administrative error for more than 60 days. In such a case, if the Participant or Beneficiary has a right to receive a lump-sum based on the balance of his or her Cash Balance Account (or other account balance under the Plan which is expressed as a single sum), then the amount payable on the delayed date shall be the balance of such account after crediting of interest applicable to the account through the end of month immediately preceding the delayed payment date. However, if the Participant or Beneficiary has a right to receive a lump-sum based on the Actuarial present value of an Accrued Benefit expressed in the form of an annuity, the lump-sum which shall be payable to the Participant or Beneficiary as soon as administratively practical after the administrative error has been detected shall be an amount that is equal to the greater of:

(1) the sum of: (A) the Actuarial present value of the Accrued Benefit based on the age, mortality and interest rate factors in effect as of the 60th day following the earliest date on which the benefit could have been paid in accordance with the terms of the Plan, plus (B) interest at 6% per annum for the whole and/or partial years from the said 60th day to the payment date; or

(2) a lump-sum based on the Accrued Benefit on the date of Termination (or death, if applicable), but with the Actuarial present value based on the age, mortality and interest rate factors in effect as of the actual payment date.

5.13 Suspension of Benefits for Active Participants at Normal Retirement Date.

(a) Permissible Suspension. For a Participant who has not previously commenced receiving monthly benefits and who continues in active service as an Employee after attaining his or her Normal Retirement Date, the right to receive payment of benefits shall be suspended so long as such employment continues, but not later than any required beginning date applicable to the Participant under Section 5.11(c), at which time the benefit shall commence. For any period of suspension between the Normal Retirement Date and April 1 following the year the Participant attains age 70-112 there shall be no Actuarial adjustment to the Participant’s

37

benefit attributable to the suspension of the benefit. For any period of suspension that continues past such date, the terms of Section 5.11 (c )(7) shall apply.

Any such suspension shall not apply to a Participant who has attained age 65 and performs no more than 40 Hours of Service per month. The benefit for such a Participant shall commence on the later of the Normal Retirement Date or the first day of the month following the date the Participant performs 40 or fewer Hours of Service per month.

(b) Notice of Suspension of Benefits. A Participant whose benefit payment rights are suspended as described in the previous paragraph shall be notified in writing of such suspension as soon as administratively practical following the date as of which such payments are withheld. Such notice shall, among other things, advise the Participant of his or her right to request a review of the suspension, in accordance with the procedures in Section 12.6.

(c) Participant’s Duty to Notify Plan Administrator. Each such Participant shall have the duty to notify the Plan Administrator if and when the Participant modifies his or her regular work schedule to less than 40 Hours of Service per month, in which case the suspension shall cease, subject to verification by the Committee.

(d) Benefits Paid in Error May Offset Future Benefits. In the event that benefits are mistakenly paid to a Participant during a period for which benefit payments should have been suspended under this Section, the amount mistakenly paid may be offset against benefits which become properly payable in the future, provided that such offset shall not exceed 25 percent of the benefit payable in each subsequent month.

5.14 Benefits Under a Qualified Domestic Relations Order (QDRO). A domestic relations order, if (but only if) it is determined by the Committee (or the Committee’s designated QDRO administrator) to be a Qualified Domestic Relations Order, may provide, as of a stated date (or upon the occurrence of a stated event pertaining to the Participant), either:

(a) the division of a Participant’s Accrued Benefit between the Participant and a named alternate payee, in portions or amounts stated in the QDRO;

(b) the distribution to a named alternate payee of a stated portion (or dollar amount) of the Participant’s benefit, in an amount not greater than the value of the Participant’s Accrued Benefit that is vested at such time; or

(c) a right for a named alternate payee to be treated as Beneficiary for all or a stated portion of a Participant’s death benefit.

Notwithstanding any other provision of this Section, a QDRO may not (1) require a form of benefit distribution not provided under the terms of this Plan, (2) cause any unvested benefit to be vested, (3) cause a Participant’s Accrued Benefit to have a value greater than the value determined under the terms of this Plan, (4) provide for a distribution to commence from an alternate payee’s benefit at a time later than the latest date or age as of which a benefit distribution may commence under this Plan, or (5) otherwise state terms which are inconsistent with the terms of this Plan.

The Committee (or QDRO administrator) shall determine whether a domestic relations order meets the requirements of this Section within a reasonable period after it is received by the Committee (or QDRO administrator). The Committee (or QDRO administrator) shall notify the Participant and any alternate payee that a domestic relations order has been received. Any amounts due the alternate payee under the domestic relations

38

order which, in its absence, would be paid to the Participant or a beneficiary, shall be held during the period while the domestic relations order’s qualified status is being determined. If a domestic relations order is not affirmatively determined to be a QDRO, then such restriction shall lapse on the earlier of the (a) the date the order is determined not to be a QDRO and appeal rights under Section 12.6(c) or (d) (whichever is applicable) have expired or been exhausted, or (b) 18 months after such restriction is imposed.

5.15 Death or Disability While Performing Qualified Military Service. The Plan treats a Participant who, on or after January 1, 2007, dies or becomes disabled (as defined under the terms of the Plan) while performing qualified military service (as defined in Code §414(u)) with respect to the Employer as if the Participant had resumed employment in accordance with the Participant’s re-employment rights under USERRA, on the day preceding death or disability (as the case may be) and terminated employment on the actual date of death or disability.

5.16 Non-spouse Beneficiary Rollover. For distributions first commencing after December 31, 2009, a non-spouse beneficiary who is a “designated beneficiary” under Code §401(a)(9)(E) and the regulations thereunder may roll over by a direct trustee-to-trustee transfer (“direct rollover”), all or any portion of his or her distribution to an Individual Retirement Account (IRA) the beneficiary establishes for purposes of receiving the distribution, In order to be able to roll over the distribution, the distribution must otherwise satisfy the definition of an “eligible rollover distribution” under Code §401(a)(31) and the provisions of Section 5.9 and this Section.

(a) If a non-spouse beneficiary receives a distribution from the Plan, the distribution will not be eligible for a 60-day (non-direct) rollover.

(b) If the Participant’s named beneficiary is a trust, the Plan may make a direct rollover to an IRA on behalf of the trust, provided the trust satisfies the requirements to be a designated beneficiary within the meaning of Code §401(a)(9)(E).

(c) A non-spouse beneficiary may not roll over an amount that is a required minimum distribution, as determined under applicable Regulations and other guidance. If the Participant dies before his or her required beginning date and the non-spouse beneficiary rolls over to an IRA the maximum amount eligible for rollover, the beneficiary may elect to use either the five-year rule or the life expectancy rule, pursuant to Treas. Reg. §1.40I(a)(9)-3, Q&A-4(c), in determining the required minimum distributions from the IRA that receives the non-spouse beneficiary’s distribution.

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ARTICLE VI

TERMINATION AND VESTING

6.1 Vesting.

(a) Except as described in subsection (b), a Participant’s vested Accrued Benefit will be equal to the sum of (1) and (2) below:

(1) The Participant’s Accrued Benefit Attributable to the Old Plan Account determined in accordance with Section 4.5.

(2) Effective January 1, 1989, the Participant’s Accrued Benefit Attributable to Company Contributions (determined in accordance with Section 4.6) multiplied by the vested percentage shown in the following table:

Years of Vesting Service	Vested Percentage
Less than 5		0	%
5 or more		100	%

(b) A Grossmont Participant’s, and a Commerce Participant’s, Accrued Benefit will be equal to his or her Accrued Benefit Attributable to Company Contributions (determined in accordance with Section 4.1) multiplied by the vested percentage shown in the following table:

Years of Vesting Service	Vested Percentage
Less than 3 years		0	%
3 years but less than 4		20	%
4 years but less than 5		40	%
5 or more years		100	%

(c) In addition, a Participant’s Accrued Benefit will be 100% vested if and when the Participant attains his or her Normal Retirement Age while an active Employee.

(d) Effective December 12, 1994, a Participant will receive vesting credit for any and all years and partial years of Qualified Military Service.

(e) The vested percentage of Cash Balance Accrued Benefit for each Participant who has at least one Hour of Service after December 31, 2007, shall be determined according to the following table:

Years of Vesting Service	Vested Percentage
Less than 3		0	%
3 or more		100	%

6.2 Termination Benefit.

(a) A Terminated Vested Participant will have the option of:

(1) withdrawing his or her Old Plan Account, in which event the Participant would be entitled to his or her vested Accrued Benefit Attributable to Company Contributions commencing on his or her Normal or Early Retirement Date, or

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(2) leaving his or her Old Plan Account in the Plan, in which event the Participant would be entitled to his or her vested Accrued Benefit commencing on his or her Normal or Early Retirement Date.

(b) The monthly amount of Retirement Income payable to a Terminated Vested Participant who commences his or her benefit on the Normal Retirement Date will be equal to the vested Accrued Benefit (or, if the Old Plan Account has been withdrawn, the vested Accrued Benefit Attributable to Company Contributions) earned to the date of Termination of Employment. This Retirement Income will be subject to adjustment depending on the Form of Retirement Income elected in accordance with Section 5.7.

(c) The monthly amount of Retirement Income payable to a Terminated Vested Participant who commences his or her benefit on an Early Retirement Date is equal to the Early Retirement Income described in Section 5.3.

(d) Except as provided in Section 5.8, the Old Plan Account of a Participant will not be distributed pursuant to this Section unless the Participant elects such distribution and the Eligible Spouse of the Participant consents to the distribution not more than 90 days prior to the date of such distribution. The Eligible Spouse’s consent must acknowledge the effect of the election and must be witnessed by a plan representative or notary public. The requirement for consent of the Eligible Spouse will be waived if the Participant establishes to the satisfaction of the Committee that such consent cannot be obtained because there is no Eligible Spouse, the Eligible Spouse cannot be located or because of such other circumstances as the Secretary of the Treasury may by regulations prescribe.

6.3 Re-employment After Termination of Employment.

(a) If a Terminated Vested Participant is subsequently reinstated as an Active Participant, his or her Retirement Income subsequent to his or her eventual Termination of Employment following the second period of employment will be based on the Participant’s Accrued Benefit under the provisions of the Plan in effect as of such subsequent Termination of Employment, except that it may not be less than the Participant’s Accrued Benefit as of the date of any prior Termination of Employment.

(b) If a Participant’s employment with the Company terminates prior to the Participant’s becoming partially or fully vested in his or her Accrued Benefit, the Participant will be deemed to have received a distribution of his or her entire vested interest under the Plan. The Participant’s unvested Accrued Benefit will be forfeited on the date of his or her Termination of Employment. A Participant whose benefit has been so forfeited will be deemed “cashed out” from the Plan. If the former Participant is re-employed before incurring five consecutive Breaks in Service and after completing a Year of Vesting Service, his or her Cash Balance Account and Accrued Benefit will be restored in accordance with Sections 3.5(a) and 4.1 respectively.

6.4 Termination Benefits and Re-employment for Commerce Participants.

(a) A Commerce Participant may elect to receive the portion of his or her Accrued Benefit earned prior to January 1, 1999 on the first day of any month coincident with or following his or her Termination of Employment (“Termination Benefit”). The Termination Benefit is the Actuarial Equivalent of the Accrued Benefit earned

41

prior to January 1, 1999. For early retirement reduction, Actuarial Equivalent shall be calculated as described in Section 5.3(e). For benefit form adjustment, Actuarial Equivalent shall be calculated as described in Sections 5.7(g)(2) and 5.7(g)(3). Upon meeting the requirements of Section 1.17(d), a Commerce Participant may receive the remainder of his or her Accrued Benefit earned on or after January 1, 1999.

(b) In the event a vested Commerce Participant who terminated after December 31, 1998 and before his or her Early Retirement Date, received a distribution upon Termination of Employment, and becomes re-employed, which means he or she has at least 40 Hours of Service with the Employer during any calendar month, his or her Termination Benefit or Retirement Income shall be determined and paid as described below:

(1) In the event a Commerce Participant has commenced annuity payments and is subsequently re-employed, such annuity payments shall continue upon reemployment;

(2) In the event a Commerce Participant received a lump sum distribution under Section 5.7(g)(3) upon Termination of Employment and becomes re-employed prior to incurring five consecutive one-year Breaks-In-Service, he or she may repay such benefit with interest, at 120% of the Federal mid-term rate as in effect for the first month of the Plan Year, to the Plan within five years after reemployment.

The Accrued Benefit of a Commerce Participant who makes such repayment shall be determined as if no prior distribution occurred.

(3) The additional benefit earned during re-employment may be paid in any form elected by the Participant pursuant to Sections 5.7(a) to (d).

6.5 Special Termination Benefit for Sumitomo Participants. This Section applies to a Sumitomo Participant who (a) had a Termination of Employment for any reason between October 1, 1998 and September 30, 1999, (b) was not a Highly Compensated Employee (as defined in this Plan) for the Plan Year in which the Termination of Employment occurred, and (c) elected to receive severance benefits in connection with his or her separation from the Company under either the Sumitomo Severance Benefit Program, the Executive Retention and Severance Benefit Agreement and/or the Key Contributor Retention and Severance Agreement (which are plans and programs that are not part of this Plan and are not funded by the Trust Fund). In the case of each Sumitomo Participant who met all of the conditions of the previous sentence, the minimum benefit under Section 4.1(c) of this Plan as of his or her Termination of Employment shall be increased by 6.5%.

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ARTICLE VII

DISABILITY BENEFITS

7.1 Determination of Disability. A Participant has a “total and permanent disability” if, while employed by the Company, the Participant ceases to perform the duties assigned to him or her by the Company due to a disability that meets the following eligibility criteria:

(a) the Participant is entitled to disability retirement income payments under Title II of the Federal Social Security Act; provided, however, that this criterion in this clause “(a)” shall cease to be applicable to the definition of “total and permanent disability” on or after March 1, 2002, and

(b) the Participant is eligible for disability benefits under the Company’s long term disability plan.

It will be the responsibility of the Participant to submit proof of disability, as described in clause (a) and (b) above, satisfactory to the Committee.

7.2 Eligibility for Disability Benefits. A Disabled Participant or former Disabled Participant may retire on a Disability Retirement Date if the Participant has completed five Years of Vesting Service as of the date first disabled under Section 7.1.

7.3 Disability Retirement Date. If the Participant’s total and permanent disability continues until the Participant’s Normal Retirement Date, the Participant’s Disability Retirement Date shall be the Normal Retirement Date (or the first day of the month following Termination of Service, if later). If a Disabled Participant’s total and permanent disability ends before the Normal Retirement Date, the Participant may retire on an Early or Normal Retirement Date, whichever applies, and such date will be his or her Disability Retirement Date.

7.4 Disability Retirement Income. A Disabled Participant will be entitled to a monthly Disability Retirement Income beginning on his or her Disability Retirement Date. The amount will be equal to the retirement income from Section 5.2,5.3, or 5.4 on the Disability Retirement Date. While a Participant’s total and permanent disability continues, until the earliest of the Participant’s attaining his or her Normal Retirement Date, death, or the Participant’s Disability Retirement Date, Earnings will be credited (in accordance with Section 3.2, as though the Participant were continuing to accrue 1,000 or more Hours of Service per year) in the amount equal to Earnings in the most recent year prior to the year of initial disability in which 1,000 Hours of Service were worked. Disability Retirement Income will be subject to adjustment depending on the Form of Retirement Income elected in accordance with Section 5.7.

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ARTICLE VIII

DEATH BENEFITS

8.1 Death after Commencement of Benefits. Death Benefits for a Retired Participant will be determined in accordance with the provisions of the applicable Form of Retirement Income elected.

8.2 Death Prior to Commencement of Benefits. This Section 8.2 shall be effective April 1, 1997, except as otherwise stated below.

(a) If a Participant, whose vested Accrued Benefit is calculated under Section 4.2, dies before his or her Retirement Date, the Participant’s Eligible Spouse, if any, will receive a benefit commencing on the first day of the month following the Participant’s death. The Eligible Spouse may elect to defer payment until the first day of any month on or before the Participant’s Normal Retirement Date. The Eligible Spouse will receive a monthly benefit equal to the Actuarial Equivalent amount, as of the date the benefit commences, of the Participant’s Cash Balance Account, based upon the Eligible Spouse’s age as of the date the benefit commences. This benefit will continue to the death of the Eligible Spouse. Instead of receiving the benefit in the form of a Life Annuity, the Eligible Spouse may elect to receive the benefit in the Lump Sum Payment Option, described in Section 5.7(c), If the Participant does not have an Eligible Spouse who survives him or her, the Cash Balance Account as of the Participant’s death will be paid on the first of the month following death to the Participant’s estate.

For a Participant who is survived by an Eligible Spouse, the amount of the monthly benefit payable to the Eligible Spouse, as described in this subsection (a) (the “Cash Balance Annuity”), shall in no event be less than any of the following minimum benefits (assuming a benefit commencement date that is the same as the actual benefit commencement date under the prior paragraph) to the extent that any of the following minimum benefit rules is applicable to the deceased Participant:

(1) For Participant with a Minimum Accrued Benefit as defined in Section 4.3 or a Grandfathered Minimum Accrued Benefit as defined in Section 4.4, the Cash Balance Annuity shall not be less than the Minimum Death Benefit that would be payable to the Eligible Spouse as described in Article 4 of Appendix ill.

(2) Effective January 1, 1998, for a Grossmont Participant who has a minimum benefit described in Section 4.1 (b), the Cash Balance Annuity shall not be less than the monthly amount that would be payable as a 50% pre-retirement survivor annuity to the Eligible Spouse with respect to that minimum benefit, in accordance with the actuarial factors and other terms of the Grossmont Plan that were in effect on December 31, 1997.

(3) Effective October 1, 1998, for a Sumitomo Participant who has a minimum benefit described in Section 4. 1 (c), the Cash Balance Annuity shall not be less than the monthly amount that would be payable as a 50% pre-retirement survivor annuity to his or her Eligible Spouse with respect to that minimum benefit, in accordance with the actuarial factors and other terms of the Sumitomo Plan that were in effect on September 30, 1998.

(4) Effective January 1, 1999, for a Commerce Participant who has a minimum benefit described in Section 4. 1 (d), the Cash Balance Annuity shall not be

44

less than the monthly amount that would be payable as a 50% pre-retirement survivor annuity to the Eligible Spouse with respect to that minimum benefit, in accordance with the actuarial factors and other terms of the Commerce Plan that were in effect on December 31, 1998.

(b) If a Participant, whose vested Accrued Benefit is calculated under Plan provisions in effect prior to April 1, 1997, dies before his or her Retirement Date, the Participant’s Eligible Spouse, if any, will receive a death benefit in accordance with the prior provisions.

8.3 Effect of Old Plan Account. The Eligible Spouse of a Participant who has an Old Plan Account at death may elect to receive it in a lump sum immediately following death. If the Eligible Spouse elects to receive monthly payments in addition to this lump sum in accordance with Section 8.2(a), the monthly amount payable will equal the monthly amount before consideration of the Old Plan Account reduced by the Accrued Benefit Attributable to the Old Plan Account, as described in Section 4.5. For Participants who die with 10 or more Years of Vesting Service, the Accrued Benefit Attributable to the Old Plan Account commencing prior to the first of the month following what would have been the Participant’s earliest Early Retirement Date is the Actuarial Equivalent of the Accrued Benefit Attributable to the Old Plan Account at that earliest Early Retirement Date.

8.4 Return of Old Plan Account. Upon the death of the Participant or, if later, the death of the Eligible Spouse entitled to payments under Section 8.1 or 8.2, the Participant’s remaining Old Plan Account, if any, will be paid to the Participant’s Beneficiary. For purposes of this Section 8.4, the Participant’s remaining Old Plan Account will be equal to the excess, if any, of:

(a) the Participant’s Old Plan Account as of his or her date of death or, if earlier, Retirement Date over

(b) the sum of all amounts previously paid from the Trust Fund on such Participant’s behalf.

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ARTICLE IX

FINANCING THE PLAN

9.1 Company Contributions.

(a) The Company expects to make the contributions necessary to provide the benefits of the Plan. Such contributions will not be less than the amount necessary to meet the minimum funding standards of ERISA.

(b) All contributions will be deposited in the Trust Fund and will be disbursed in accordance with the provisions of the Plan and the Trust Agreement. All benefit payments under the Plan will be paid from the Trust Fund. No person will have any interest in, or right to, any part of the assets of the Plan except as expressly provided in the Plan.

(c) Gains arising from experience under the Plan will not serve to increase the benefits otherwise due any Participant, but will be used to reduce future Company contributions.

9.2 Return of Company Contributions,

(a) Except as provided below and in Section 10.2, the assets of the Plan will never inure to the benefit of the Company and will be held for the exclusive purposes of providing benefits to Participants of the Plan and their Beneficiaries and defraying reasonable expenses of administering the Plan.

(b) If a contribution is made by the Company by a mistake of fact, such contribution will be returned to the Company provided this is done within one year after the payment of such contribution. Earnings attributable to the excess contribution may not be returned, but losses attributable thereto shall reduce the amount to be returned.

(c) Contributions are conditioned upon their current deductibility under Code Section 404. If a contribution deduction is disallowed, to the extent the deduction is disallowed, such contribution will be returned to the Company within one year after the disallowance.

9.3 Employee Contributions. The Company pays the entire cost of the Plan. No employee contributions or rollovers are required or permitted.

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ARTICLE X

TERMINATION OF THE PLAN

10.1 Termination of Plan. The Company expects to continue the Plan indefinitely but reserves the right to terminate the Plan in whole or in part.

10.2 Procedures Upon Termination of Plan. Upon termination of the Plan, the following provisions will apply:

(a) Upon complete termination of the Plan, the Accrued Benefit of each Active or fuactive Participant will become fully vested and nonforfeitable (to the extent funded). No additional Employees will become Participants.

Upon partial termination of the Plan, the Accrued Benefit of each Active or fuactive Participant who is affected by such partial termination will become fully vested and nonforfeitable (to the extent funded).

(b) The assets of the Plan available to provide benefits will be allocated among Participants and their Beneficiaries in the manner and order prescribed by ERISA Section 4044.

If any assets of the Plan remain after all liabilities of the Plan to Participants and their Beneficiaries have been satisfied or provided for, any residual assets will be paid to the Company, provided such payment does not contravene any provision of law.

(c) Upon termination of the Plan, benefits of missing Participants shall be treated in accordance with ERISA Section 4050.

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ARTICLE XI

INTERNAL REVENUE CODE LIMITATIONS ON BENEFITS

11.1 Earnings Limitation under Code Section 401(a)(17). A Member’s “Earnings”, for purposes of determining his or her Accrued Benefit under this Plan, shall be subject to the limitations of Code Section 401 (a)(l7), as stated in Section 1.18( c) of this Plan.

11.2 Maximum Retirement Benefit under Code Section 415.

(a) For purposes of this Section 11.2 only, the following definitions will apply:

(1) “Annual Benefit” means a retirement benefit payable annually in the form of a straight life annuity. A benefit payable in a form other than a straight life annuity will be adjusted to be the Actuarial Equivalent of a straight life annuity before applying the limitations of this Section 11.2. However, no Actuarial adjustment will be made for the value of a qualified joint and survivor annuity or the value of benefits that are not directly related to retirement benefits.

(2) “Annual Benefit Dollar Limit” means the dollar limit for the applicable Plan Year, as stated in paragraph (b)( 1) of this Section 11.2, after taking account of any annual adjustment to that limit as stated in that paragraph.

(3) “Compensation” has the meaning stated in Section 1.15, except that effective for Limitation Years commencing on or after January 1, 2008, the following additional rules shall apply.

(A) The term “Compensation” shall include payments of Post-Severance Compensation made to a Participant by the latest of (i) two and one-half (2 ¹/2) months from the date of Termination of Employment, (ii) the end of the Limitation Year for which the Employer is required to furnish the Participants a written statement under Code §§6041(d), 6051(a)(3) and 6052 or (iii) the last day of the Plan Year.

(B) The term “Compensation” shall not include any payment to a Participant by the Employer after the Participant’s Termination of Employment that is not Post-Severance Compensation as defined in (C) below, even if payment of the amount is made within the time period specified in 11.2(a)(3)(A)(i) above.

(C) “Post-Severance Compensation” shall mean any amount received as regular pay after Termination of Employment if:

(i) the payment is regular remuneration for services during the Participant’s regular working hours, or remuneration for services outside the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments; and

(ii) the payment would have been paid to the Participant prior to a Termination of Employment if the Participant had continued in employment with the Employer.

(D) For Limitation Years beginning after December 31, 2008, Compensation shall not include any differential wage payment, as defined in Code §3401(h)(2).

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(4) “Limitation Year” means a Plan Year, which coincides with the calendar year.

(5) “Social Security Retirement Age” means the age used as the retirement age for a Participant under Section 216(1) of the Social Security Act except that such section shall be applied without regard to the age increase factor, and as if the early retirement age under Section 216(1)(2) of such Act were 62.

(b) The Annual Benefit of a Participant who commences his or her benefit on a date within a Limitation Year may not at any time within a Limitation Year exceed the lesser of (1) or (2) below:

(1) The dollar limit set forth in Code Section 415(b)(1)(A), as that limit may be modified for the applicable Limitation Year either by amendment of Code Section 415(b )(1) or as a result of an adjustment approved by the Secretary of the Treasury pursuant to Section 415(d) (for example, the limit shall be $140,000 in Plan Year 2001 and $160,000 in Plan Year 2002) Effective each January 1, this limitation will be automatically adjusted to the new dollar limitation prescribed by the Secretary of the Treasury for that calendar year.

(2) 100% of the annual average of the Participant’s Compensation from the Employer for the three consecutive Limitation Years (or all Limitation Years, if fewer than three), during which he or she participated in the Plan and which give the highest average.

(c) If the Annual Benefit payable to a Participant under this Plan and all other defined benefit plans of the Company does not exceed $10,000 and the Employer has not maintained a defined contribution plan in which the Participant participated, the maximum otherwise imposed by this Section 11.2 will not apply.

(d) Service or participation less than ten years

(1) If a Participant has completed less than ten years of participation in the Plan, the Annual Benefit Dollar Limit will be multiplied by the ratio of the Participant’s years (or part thereof) of participation in the Plan to ten. This ratio will not be less than one- tenth.

(2) If a Participant has completed less than ten Years of Vesting Service, the limits otherwise imposed by Sections 11.2(b )(2) and 11.2( c) will be multiplied by the ratio of the Participant’s Years of Vesting Service (or part thereof) to ten. This ratio will not be less than one-tenth.

(3) To the extent required by regulations under Code Section 415, this Section 11.2(d) will be applied separately with respect to each change in the benefit structure of the Plan.

(e) The provisions of this subsection (e) shall apply to Participants whose benefit commencement date occurs in any Plan Year beginning prior to January 1, 2002.

(1) If the Participant’s benefit payments are to commence at or after age 62 and the Participant’s Social Security Retirement Age is 65, the Annual Benefit Dollar Limit will be reduced by five-ninths of one percent for each month by which benefits commence before the month in which the Participant attains age 65 or,

49

(2) If the Participant’s benefit payments are to commence at or after age 62 and the Participant’s Social Security Retirement Age is greater than 65, the Annual Benefit Dollar Limit will be reduced by five-ninths of one percent for each of the first 36 months and five-twelfths of one percent for each of the additional months (up to 24) by which benefits commence before the month in which the Participant attains Social Security Retirement Age.

(3) If the Participant’s benefit payments are to commence prior to the month in which the Participant attains age 62, the Annual Benefit Dollar Limit shall be reduced for each month by which benefits commence prior to the date of attaining age 62, as follows. First, the limit at age 62 (the “Age 62 Limit”) shall be determined pursuant to paragraph (1) or (2) above (whichever is applicable to the Participant). Second, the Age 62 Limit shall be reduced to the lesser of:

(A) the product of (i) the Age 62 Limit, times (ii) the “implied early retirement factor” (as hereafter defined), or

(B) the Actuarial Equivalent of the Age 62 Limit, based upon a 5% interest rate and the Applicable Mortality Table.

The “implied early retirement factor” shall mean the ratio of: (1) the early retirement reduction factor determined under Section 5.3 as applied to the Participant’s age on his or her actual benefit commencement date, to (2) the early retirement reduction factor determined under Section 5.3 which would apply if the Participant elected to defer the commencement of his or her benefit to age 62.

(4) If a Participant’s benefit payments are to commence after the Participant’s Social Security Retirement Age, the Annual Benefit Dollar Limit will be increased to the Actuarial Equivalent of the limit as of the Participant’s Social Security Retirement Age, but the mortality factor of the Actuarial Equivalence calculation shall be ignored.

(f) The provisions of this subsection (f) shall apply to Participants whose benefit commencement date occurs in any Plan Year beginning on or after January 1, 2002.

(1) If the Participant’s benefit commences prior to age 62, the Annual Benefit Dollar Limit shall be reduced to the lower of the following two amounts:

(A) the Actuarially Equivalent dollar amount that reflects the number of months by which the benefit commencement date precedes the date of attaining age 62, based on an interest rate equal to five percent (5%); or

(B) the dollar amount that reflects the applicable reduction factor that would apply under the terms of the Plan.

(2) If a Participant’s benefit commencement date occurs between the date of attaining age 62 and 65, the Annual Benefit Dollar Limit shall not be adjusted on account of early commencement.

(3) If the Participant’s benefit commencement date occurs after attaining age 65 under circumstances resulting in a right to receive an Actuarial adjustment in the benefit payable under the Plan, the Annual Benefit Dollar Limit shall be

50

increased by means of an Actuarial adjustment based on either (A) an interest rate of 5% (applied solely to the period that is subject to Actuarial adjustment under the Plan), or (B) the Actuarial adjustment factor that is applicable to the Participant’s benefit under the Plan, whichever produces the lower limitation amount. When calculating the adjustment of the Annual Benefit Dollar Limit according to this paragraph, mortality shall be ignored.

(g) If the Accrued Benefit of any Participant as of the close of the last Limitation Year beginning before January 1, 1987 exceeds the benefit limitations under Code Section 415(b) then, for purposes of Code Section 415(b) (and 415(e) for periods prior to January 1, 2000) such Participant’s defined benefit dollar limitation under Code Section 415(b)(1) will be equal to his or her Accrued Benefit, determined as of such date as if the Participant had separated from service on that date. For purposes of this paragraph, any changes in the terms and conditions of the Plan or cost of living adjustments occurring after May 5, 1986 will be disregarded.

(h) All defined benefit plans of the Employer, terminated or not, will be considered as one plan for purposes of the limitations specified under this Section 11.2, and all Affiliates and Subsidiaries of the Employer will be considered as one employing company.

(i) The terms of this subsection shall not apply to any benefit which commences on or after January 1, 2000. In any case in which a person is a Participant in both a defined benefit plan and a defined contribution plan maintained by any Affiliate or Subsidiary of the Company, the sum of (1) and (2) below for any Limitation Year may not exceed 1.0:

(1) The defined benefit plan fraction for such Limitation Year is equal to the quotient of (A) divided by (B) below:

(A) The Annual Benefit of the Participant under the Plan and all other defined benefit plans (determined as of the close of such Limitation Year).

(B) The lesser of 125% of the Annual Benefit Dollar Limit and 140% of the amount described in Section 11.2(b)(2).

If the Employee was a participant in one or more defined benefit plans maintained by any Affiliate or Subsidiary, which were in existence on May 5, 1986, the amount calculated in (B) will not be less than 125% of the Employee’s accrued benefit under such defined benefit plans as of December 31, 1986, determined without regard to any change in the terms or conditions of the plan made after May 5, 1986, and without regard to any cost of living adjustment occurring after May 5, 1986. The preceding sentence only applies If the defined benefit plans individually and in the aggregate satisfied the requirement of Code Section 415 as in effect on December 31, 1986.

(2) The defined contribution plan fraction for such Limitation Year is equal to the quotient of (A) divided by (B) below:

(A) The aggregate of the annual additions to the Participant’s account under said defined contribution plan as of the close of such Limitation Year.

(B) The lesser of 125% of the maximum annual additions to such account for all Years of Vesting Service with the Employer, or 1.4 multiplied by

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25% of the Participant’s Compensation for all Years of Vesting Service with the Employer.

If the Plan satisfied the applicable requirements of Code Section 415 as in effect for the last Plan Year beginning before January 1, 1987, an amount will be subtracted from the amount calculated in (A) (but not reducing the amount in (A) to less than zero) so that the sum of the defined benefit fraction and defined contribution fraction computed under Code Section 415(e)(1) does not exceed 1.0 for such Plan Year (determined as if the changes to Code Section 415 made by the Tax Reform Act of 1986 and any technical corrections to such act were in effect for such Plan Year).

(3) If the sum of (1) and (2) exceeds 1.0, the Annual Benefit under this Plan will be limited to such amount as will reduce such sum to 1.0.

(j) Adjustments for Distribution Other than as a Straight Life Annuity.

(1) Effective for Limitation Years commencing after June 30, 2007, a retirement benefit that is payable in any form other than a straight life annuity and that is not subject to Code §417(e)(3) must be adjusted to an actuarially equivalent straight life annuity that equals the greater of the annual amount of the straight life annuity (if any) payable under the Plan at the same Annuity Starting Date, and the annual amount of a straight life annuity commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit computed using an interest rate of 5% and the Applicable Mortality Table.

(2) For Limitation Years commencing before July 1, 2007, a retirement benefit that is payable in any form other than a straight life annuity and that is not subject to Code §417(e)(3) must be adjusted to an actuarially equivalent straight life annuity that equals the annual amount of a straight life annuity commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit computed using whichever of the following produces the greater annual amount: (i) the interest rate and mortality table or other tabular factor specified in the Plan for adjusting benefits in the same form; and (ii) a 5% interest rate assumption and the Applicable Mortality Table.

(3) A retirement benefit that is payable in any form other than a straight life annuity and that is subject to Code §417(e)(3) must be adjusted so as to equal the actuarially equivalent straight life annuity, determined according to the Annuity Starting Date, as provided in the following rules.

(A) If the Annuity Starting Date is in a Plan Year beginning after 2005, the annual amount of the straight life annuity commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit using whichever of the following produces the greatest annual amount: (i) the interest rate and the mortality table or other tabular factor specified in the Plan for adjusting benefits in the same form; (ii) a 5.5% interest rate assumption and the Applicable Mortality Table; and (iii) the applicable interest rate under Code §417(e)(3) and the Applicable Mortality Table, divided by 1.05.

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(B) If the Annuity Starting Date is in a Plan Year beginning in 2004 or 2005, the annual amount of the straight life annuity commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit using whichever of the following produces the greater annual amount: (i) the interest rate and the mortality table or other tabular factor specified in the Plan for adjusting benefits in the same form; and (ii) a 5.5% interest rate assumption and the Applicable Mortality Table.

(C) If the Annuity Starting Date is on or after the first day of the first Plan Year beginning in 2004 and before December 31, 2004, and the Plan applies the transition rule in section 101(d)(3) of PFEA ‘04 in lieu of the rule in (B) above, the annual amount of the straight life annuity commencing at the same Annuity Starting Date that has the same actuarial present value as the Participant’s form of benefit determined in accordance with Notice 2004-78.

(k) Adjustments for Distributions Commencing Before Age 62:

(1) if the benefit commences prior to the Participant’s attainment of age 62 and if the Annuity Starting Date is in a Limitation Year beginning before July 1, 2007, the annual amount of the benefit payable in the form of a straight life annuity commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the dollar limitation under Code §415(b)(l)(A) (as adjusted under Code §415(d)), with actuarial equivalence computed using which ever of the following produces the smaller annual amount:

(A) the interest rate and the mortality table or other tabular factor specified in the Plan for determining actuarial equivalence for early retirement purposes; or

(B) a 5% interest rate assumption and the Applicable Mortality Table,

(2) if the benefit commences prior to the Participant’s attainment of age 62 and if the Annuity Starting Date is in a Limitation Year beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the dollar limitation under Code §415(b)(l)(A) (as adjusted under Code §415(d)), with actuarial equivalence computed using a 5% interest rate assumption and the Applicable Mortality Table and expressing the Participant’s age based on completed calendar months as of the annuity starting date.

(3) if the benefit commences prior to the Participant’s attainment of age 62 and if the Annuity Starting Date is in a Limitation Year beginning on or after July 1, 2007, and the Plan has an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the lesser of

(A) the adjusted dollar limitation determined according to (2) above; and

(B) the product of the dollar limitation under Code §415(b)(l)(A) (as adjusted under Code §415(d)) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the

53

Plan at the Participant’s Annuity Starting Date to the annual amount of the immediately commencing straight life annuity under the Plan at age 62, both determined without applying the limitations of Code §415.

(l) Adjustment When Benefit Commences After the Social Security Retirement Age.

(1) if the benefit commences after the Participant’s attainment of age 65 and if the Annuity Starting Date is in a Limitation Year beginning before July 1, 2007, the annual amount of the benefit payable in the form of a straight life annuity commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the dollar limitation under Code §415(b)(l)(A) (as adjusted under Code §415(d)), with actuarial equivalence computed using which ever of the following produces the smaller annual amount:

(A) the interest rate and the mortality table or other tabular factor specified in the Plan for determining actuarial equivalence for delayed retirement purposes; or

(B) a 5% interest rate assumption and the Applicable Mortality Table.

(2) if the benefit commences after the Participant’s attainment of age 65 and if the Annuity Starting Date is in a Limitation Year beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant’s Annuity Starting Date that is the actuarial equivalent of the dollar limitation under Code §415(b)(l)(A) (as adjusted under Code §415(d)), with actuarial equivalence computed using a 5% interest rate assumption and the Applicable Mortality Table and expressing the Participant’s age based on completed calendar months as of the annuity starting date.

(3) if the benefit commences after the Participant’s attainment of age 65 and if the Annuity Starting Date is in a Limitation Year beginning on or after July 1, 2007, and the Plan has an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the lesser of

(A) the adjusted dollar limitation determined according to (2) above; and

(B) the product of the dollar limitation under Code §415(b)(l)(A) (as adjusted under Code §415(d)) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the Plan at the Participant’s Annuity Starting Date to the annual amount of the immediately commencing straight life annuity under the Plan at age 65, both determined without applying the limitations of §415.

(m) For purposes of the foregoing subsections (j), (k) and (I) the following definitions apply:

(1) “Applicable Mortality Table” means the table described in Revenue Ruling 2001-62, or such other table applicable under Code §417(e) as may be published from time to time by the Internal Revenue Service.

(2) “Annuity Starting Date” means the first day of the month for which an amount is payable as an annuity. In the case of a benefit not payable in the

54

form of an annuity, the Annuity Starting Date shall be the date on which the benefit is actually paid or begins to be paid.

11.3 Additional Benefit Limits for Highly Compensated Employees.

(a) For purposes of this Section 11.3 only, the following definitions will apply:

(1) “Benefit” means benefits under the Plan and includes any annual periodic income, any withdrawal values payable to a living Employee and any death benefits not provided by insurance on the Employee’s life.

(2) “Current Liabilities” is defined in Code Section 412(1)(7) provided that the Company may elect to use the value of current liabilities as reported on Schedule B of the Plan’s most recent timely filed Form 5500 or Form 5500 CIR. Alternatively, the Company may determine current liabilities as of a later date.

(3) Effective January 1, 1997, “Highly Compensated Employee” means:

(A) Any Employee who performs services for an Affiliate or Subsidiary of the Employer during the determination year and who received Compensation in excess of the dollar amount stated in Code Section 414(q)(l )(B)(i) (as adjusted by the Secretary or the Treasury) during the lookback year (for example, the said adjusted amount shall be $85,000 for the 2001 look-back year and $90,000 for the 2002 look-back year). Provided, however, that, for Plan Years 1998 and thereafter, such an Employee shall not be, considered a Highly Compensated Employee unless he or she has Compensation from the Employer during the lookback year that causes him or her to be among the highest paid 20% of the Employees of the Employer for a year in which the 20% limitation is in effect under the defined contribution plans maintained by the Employer.

(B) Any Employee who is a 5% owner (as defined in code Section 416(i)(I)(B)(i)) of the Employer at any time during the look -back year or the determination year.

(C) For purposes of this Section, the following definitions apply. The determination year is the Plan Year. The look-back year is the 12- month period immediately preceding the determination year.

(4) “Highly Compensated Former Employee” means any former Employee who was a Highly Compensated Employee for a separation year (as defined in Treasury Regulation Section 1.414(q)-IT) or for any determination year ending on or after the Employee attains age 55, as provided by Code Section 414( q)(9) and the regulations thereunder.

(5) “Restricted Amount” is the excess of the accumulated amount of distributions to a Restricted Employee over the accumulated amount of the payments that would have been paid under:

(A) a straight life annuity that is the actuarial equivalent of the Restricted Employee’s Benefit (other than a social security supplement), plus

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(B) the amount of the payments that the Restricted Employee is entitled to receive under a social security supplement.

For this purpose, an “accumulated amount” is the amount of a payment increased by a reasonable amount of interest from the date the payment was made (or would have been made) until the date for the determination of the Restricted Amount.

(6) “Restricted Employee” for any Plan Year means one of the 25 Highly Compensated Employees or Highly Compensated Former Employees with the greatest compensation.

(b) In the event the Plan is terminated, the Benefit payable to any Highly Compensated Employee and any Highly Compensated Former Employee will be limited to a benefit which is nondiscriminatory under Code Section 401 (a)(4).

(c) Prior to Plan termination, the annual payment to a Restricted Employee under the Plan will be limited to an amount equal to the annual payment that would have been paid under a straight life annuity that is the actuarial equivalent to the Restricted Employee’s Benefit (not including any social security supplement) plus the amount of any social security supplement payments the Restricted Employee is entitled to receive.

(d) Subsection (c) above will not apply if:

(1) payment of all Benefits to the Restricted Employee, the value of Plan assets is 110% or more of the value of Current Liabilities,

(2) the value of Benefits payable to the Restricted Employee is less than one percent of the value of Current Liabilities, or

(3) the present value of the Benefits payable to the Restricted Employee is $5,000 or less, or

(4) upon receipt of a distribution from the Plan, the Restricted Employee deposits in escrow property having a fair market value equal to at least 125% of the Restricted Amount or, alternatively, posts a bond or letter of credit in an amount equal to at least 100% of the Restricted Amount.

11.4 Top-Heavy Provisions.

(a) Top-Heavy Plan. Notwithstanding any other provision of this Plan to the contrary, this Section will apply if the Plan is a Top-Heavy Plan for any Plan Year after December 31, 2001. For Plan Years prior to that date the provisions of the Prior Plan will apply.

The Plan will be a Top-Heavy Plan if, as of the Determination Date, the present value of the cumulative accrued benefits of Key Employees exceeds sixty percent of the present value of the cumulative accrued benefits under the Plan of all Participants and Beneficiaries (but excluding the value of the accrued benefits of former Key Employees and individuals who have not performed any services for the Company during the one year period ending on the Determination Date), This percentage will be computed in accordance with Code §416(g).

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In determining whether this Plan is a Top-Heavy Plan, all employers that are aggregated under Code §§414(b), (c) and (m) will be treated as a single employer. In addition, all plans that are part of the Aggregation Group will be treated as a single plan. In determining present values, mortality will be based on the 1984 Unisex Pension Mortality Table and the interest rate utilized will be five percent.

(b) Definition of Terms. For purposes of this Section 11.4 only, the following terms will have the following meanings:

(1) “Aggregation Group” means the Required Aggregation Group or, at the election of the Company, the Permissive Aggregation Group.

(2) “Average Compensation” means the Participant’s Compensation averaged over the five consecutive Plan Years in which the Participant earned a Year of Vesting Service (if such Year of Vesting Service is not disregarded pursuant to subsection (d) below) and in which the Participant’s aggregate Compensation was the greatest. If the Participant received Compensation in fewer than five such Plan Years, his or her Compensation will be averaged over such lesser number of Plan Years.

(3) “Compensation” shall be as defined in Section 1.15, subject to the limitations imposed by Code §401(a)(l7), as amended by law and as adjusted by the Secretary of the Treasury.

(4) “Determination Date” means the last day of the preceding Plan Year. This date will also be the valuation date for determining present values.

(5) “Key Employee” means an Employee or former Employee (and, in the case of a deceased former Employee, his or her Beneficiary under the Plan) where the Employee or former Employee, during the Plan Year containing the Determination Date, is either:

(A) an officer of the Employer whose annual Compensation from the Employer exceeds $130,000 (adjusted in the manner stated in Code §416(i), provided that no more than 50 Employees shall be considered officers;

(B) a five-percent owner of the Employer (as defined above); or

(C) a one-percent owner of the Employer (as defined above) whose annual Compensation from the Employer exceeds $150,000.

For purposes of paragraphs (B) and (C) above, an Employee will be deemed to own stock held for his or her benefit by a partnership, estate, trust or corporation to the extent provided under Code §318(a)(2), but subparagraph (C) of that Code Section shall be applied by substituting 5% instead of 50%.

(6) “Non-key Employee” means an Employee (and any Beneficiary of an Employee) who is not a Key Employee.

(7) “Permissive Aggregation Group” means the Required Aggregation Group of plans plus any other plan or plans of the Company which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code §§401(a)(4) and 410.

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(8) “Required Aggregation Group” means:

(A) Each stock bonus, pension, or profit sharing plan of the Employer in which a Key Employee participates in the Plan Year containing the Determination Date which is intended to qualify under Code §401(a); and

(B) Each other such stock bonus, pension or profit sharing plan of an employer which enables any plan in which a Key Employee participates to meet the requirements of Code §§401(a)(4) or 410.

(9) “Top-Heavy Group” means the Aggregation Group if the sum of (A) and (B) below exceeds 60% of a similar sum determined for all Employees (excluding former Key Employees and individuals who have not performed any services for the Employer during the one year period ending on the Determination Date):

(A) The present value of the cumulative accrued benefit for Key Employees under all defined benefit plans included in such group.

(B) The aggregate of the accounts of Key Employees under all defined contribution plans included in such group.

In a Top-Heavy Group, all plans in the Required Aggregation Group are Top-Heavy regardless of whether or not the individual plans are Top-Heavy.

(c) Modification of Vesting Schedule. If the Plan is a Top-Heavy Plan in a Plan Year, a Participant who is credited with an Hour of Service in such Plan Year will have his or her Vested Percentage for Accrued Benefit Attributable to Company Contributions determined in accordance with the following schedule if it produces a higher Vested Percentage than the schedule in Section 6.1.

Years of Vesting Service	Vested Percentage
Less than 2		0	%
2		20	%
3		40	%
4		60	%
5		80	%
6 or more		100	%

Effective for Plan Years commencing after December 31, 2007, the vesting schedule in Section 6.1(e) shall always apply.

A Participant’s vested Accrued Benefit Attributable to Company Contributions will not be less than that determined as of the last day of the last Plan Year in which the Plan was a Top-Heavy Plan.

If the Plan ceases to be Top-Heavy, each Participant with three or more Years of Vesting Service (determined as of the first day of the Plan Year in which the Plan ceases to be Top- Heavy) will continue to have his or her Vested Percentage for Accrued Benefit Attributable to Company Contributions determined in accordance with this subsection (c).

(d) Minimum Benefit. If the Plan is Top-Heavy in a Plan Year, the Accrued Benefit as of the last day of such Plan Year for any Participant who is not a Key Employee, but who is employed or on an Authorized Period of Absence in such Plan Year, will not

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be less than the Actuarial Equivalent of an annual benefit payable in the form of a straight life annuity beginning on the Participant’s Normal Retirement Date equal to the lesser of (i) two percent of the Participant’s Average Compensation multiplied by Years of Vesting Service or (ii) twenty percent of the Participant’s Average Compensation. For purposes of this subsection (d), any Years of Vesting Service will be disregarded if:

(1) the Plan was not a Top-Heavy Plan for any Plan Year ending during such Years of Vesting Service, or

(2) such Year of Vesting Service ended in a Plan Year beginning before January 1, 1984.

A Participant’s Accrued Benefit as of any subsequent date will not be less than that determined as of the last day of the Plan Year in which the Plan was a Top-Heavy Plan.

(3) Collective Bargaining Agreements The provisions of subsections (c) and (d) shall not apply to any Employee included in a group of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, including the Employer, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and such empioyer(s).

11.5 Benefit Restrictions Due to Application of Code §436. Effective for Plan Years commencing after December 31, 2007, this Section shall take precedence over any contrary Plan provisions.

Application. This Section shall apply so long as the Plan is not a multi-employer plan within the meaning of Code §414(f) and is not maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers, For purposes of this subsection, the term Plan shall include any predecessor plan. To the extent required the provisions of Code §436 and all regulations thereunder are incorporated herein by reference. If the Plan has a valuation date other than the first day of the Plan Year, the provisions of Code §436 and this Section will applied in accordance with regulations.

(a) Funding-Based Limitation on Shutdown Benefits and Other Unpredictable Contingent Event Benefits.

(1) In general. If a Participant is entitled to an “unpredictable contingent event benefit” payable with respect to any event occurring during any Plan Year, then the benefit may not be provided if the “adjusted funding target attainment percentage” for the Plan Year

(A) is less than 60% or

(B) would be less than 60% taking into account the occurrence.

(2) Exemption. Paragraph (1) shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Employer of a contribution (in addition to any minimum required contribution under Code Section 430) equal to:

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(A) in the case of (b)(1)(A) above, the amount of the increase in the funding target of the Plan (under Code §430) for the Plan Year attributable to the occurrence referred to in paragraph (1), and

(B) in the case of (b)(1)(B) above, the amount sufficient to result in an “adjusted funding target attainment percentage” of 60%.

(3) Unpredictable contingent event benefit. For purposes of this subsection, the term “unpredictable contingent event benefit” means any benefit payable solely by reason of:

(A) a plant shutdown (or similar event, as determined by the Secretary of the Treasury), or

(B) an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or occurrence of death or disability.

(b) Limitations on Plan Amendments Increasing Liability for Benefits.

(1) In general. No amendment that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable may take effect during any Plan Year if the adjusted funding target attainment percentage for the Plan Year is:

(A) less than 80% or

(B) would be less than 80% taking into account the amendment.

(2) Exemption. Paragraph (c)(1) shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year (or if later, the effective date of the amendment), upon payment by the Employer of a contribution (in addition to any minimum required contribution under Code §430) equal to:

(A) in the case of paragraph (c)(1)(A) above, the amount of the increase in the funding target of the Plan (under Code §430) for the Plan Year attributable to the amendment, and

(B) in the case of paragraph (c)(1)(B) above, the amount sufficient to result in an adjusted funding target attainment percentage of 80%.

(3) Exception for certain benefit increases. Paragraph (c)(1) shall not apply to any amendment that provides for an increase in benefits under a formula that is not based on a Participant’s Compensation, but only if the rate of such increase is not in excess of the contemporaneous rate of increase in average wages of Participants covered by the amendment.

(c) Limitations on Accelerated Benefit Distributions.

(1) Funding percentage less than 60%. If the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60%, then the Plan may not pay any “prohibited payment” after the valuation date for the Plan Year.

(2) Bankruptcy. During any period in which the Employer is a debtor in a case under Title 11 of the United States Code, or similar Federal or State law, the

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Plan may not pay any “prohibited payment,” The preceding sentence shall not apply on or after the date on which the enrolled actuary of the Plan certifies that the adjusted funding target attainment percentage of the Plan is not less than 100%.

(3) Limited payment if percentage at least 60% but less than 80% percent.

(A) In general. If the Plan’s adjusted funding target attainment percentage for a Plan Year is 60% or greater but less than 80%, then the Plan may not pay any “prohibited payment” after the valuation date for the Plan Year to the extent the amount of the payment exceeds the lesser of:

(i) fifty percent (50%) of the amount of the payment that could be made without regard to this subsection, or

(ii) the present value (determined under guidance prescribed by the Pension Benefit Guaranty Corporation, using the interest and mortality assumptions under Code §417(e)) of the maximum guarantee with respect to the participant under ERISA §4022.

(B) One-time application.

(i) In general. Only one “prohibited payment” meeting the requirements of subparagraph (A) may be made with respect to any Participant during any period of consecutive Plan Years to which the limitations under either paragraph (1) or (2) or this paragraph applies.

(ii) Treatment of beneficiaries. For purposes of this subparagraph, a Participant and any Beneficiary (including an alternate payee, as defined in Code §414(p)(8)) shall be treated as one Participant. If the Accrued Benefit of a Participant is allocated to an alternate payee and one or more other persons, the amount under subparagraph (A) shall be allocated among those persons in the same manner as the Accrued Benefit is allocated unless the qualified domestic relations order (as defined in Code §414(p)(1)(A)) provides otherwise.

(4) Exception. This subsection shall not apply for any Plan Year if the terms of the Plan (as in effect for the period beginning on September 1, 2005 and ending with such Plan Year) provide for no benefit accruals with respect to any Participant during such period.

(5) “Prohibited payment.” For purposes of this subsection, the term “prohibited payment” means:

(A) any payment in excess of the monthly amount paid under a single life annuity (plus any Social Security supplements described in the last sentence of Code §411(a)(9)) to a Participant or Beneficiary whose Annuity Starting Date occurs during any period a limitation under paragraph (d)(1) or (2) is in effect,

(B) any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and

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(C) any other payment specified by the Secretary by Regulations.

“Prohibited payment” shall not include the payment of a benefit that under Code §411(a)(11) may be immediately distributed without the consent of the Participant.

(d) Limitation on Benefit Accruals for Plans with Severe Funding Shortfalls.

(1) In general. If the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60%, benefit accruals under the Plan shall cease as of the valuation date for the Plan Year.

(2) Exemption. Paragraph (e)(1) shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Employer of a contribution (in addition to any minimum required contribution under Code §430) equal to the amount sufficient to result in an adjusted funding target attainment percentage of 60%.

(3) Temporary modification of limitation. In the case of the first Plan Year beginning during the period beginning on October 1 ,2008, and ending on September 30, 2009, the provisions of (e)(1) above shall be applied by substituting the Plan’s adjusted funding target attainment percentage for the preceding Plan Year for the percentage for the Plan Year, but only if the adjusted funding target attainment percentage for the preceding year is greater.

(e) Rules Relating to Contributions Required to Avoid Benefit Limitations.

(1) Security may be provided:

(A) In general. For purposes of this section, the adjusted funding target attainment percentage shall be determined by treating as an asset of the Plan any security provided by the Employer in a form meeting the requirements of subparagraph (B).

(B) Form of security. The security required under subparagraph (A) shall consist of:

(i) a bond issued by a corporate surety company that is an acceptable surety for purposes of ERISA §412,

(ii) cash or United States obligations that mature in three years or fewer, held in escrow by a bank or similar financial institution, or

(iii) such other form of security as is satisfactory to the Secretary and the parties involved.

(C) Enforcement. Any security provided under subparagraph (A) may be perfected and enforced at any time after the earlier of:

(i) the date on which the Plan terminates;

(ii) if there is a failure to make a payment of the minimum required contribution for any Plan Year beginning after the security is provided, the due date for the payment under Code §430(j); or

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(iii) if the adjusted funding target attainment percentage is less than 60% for seven consecutive years, the valuation date for the last year in the period.

(D) Release of security. The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at such time as the Secretary may prescribe in Regulations, including Regulations for partial releases of the security by reason of increases in the adjusted funding target attainment percentage.

(2) Pre-funding balance or funding standard carryover balance may not be used. No pre-funding balance or funding standard carryover balance under Code §430(f) may be used under subsection (b), (c), or (e) to satisfy any payment an Employer may make under any such subsection to avoid or terminate the application of any limitation under such subsection.

(3) Deemed reduction of funding balances:

(A) In general. Subject to subparagraph (B), in any case in which a benefit limitation under subsection (b), (c), (d), or (e) would (but for this subparagraph and determined without regard to subsection (b)(2), (c)(2), or (e)(2)) apply to the Plan for the Plan Year, the Employer shall be treated for purposes of this Section 19.5 as having made an election under Code §430(f) to reduce the pre-funding balance or funding standard carryover balance by the amount necessary for the benefit limitation not to apply to the Plan for the Plan Year.

(B) Exception for insufficient funding balances. Subparagraph (A) shall not apply with respect to a benefit limitation for any Plan Year if the application of subparagraph (A) would not result in the benefit limitation not applying for such Plan Year.

(f) Presumed Underfunding for Purposes of Benefit Limitations.

(1) Presumption of continued underfunding. In any case in which a benefit limitation under subsection (b), (c), (d), or (e) has been applied to a Plan with respect to the Plan Year preceding the current Plan Year, the adjusted funding target attainment percentage of the Plan for the current Plan Year shall be presumed to be equal to the adjusted funding target attainment percentage of the Plan for the preceding Plan Year until the enrolled actuary of the Plan certifies the actual adjusted funding target attainment percentage of the Plan for the current Plan Year.

(2) Presumption of underfunding after 10th month. In any case in which no certification of the adjusted funding target attainment percentage for the current Plan Year is made with respect to the Plan before the first day of the 10th month of such year, for purposes of subsections (b), (c), (d), and (e), such first day shall be deemed, for purposes of such subsection, to be the valuation date of the Plan for the current Plan Year and the Plan’s adjusted funding target attainment percentage shall be conclusively presumed to be less than 60% as of the first day.

(3) Presumption of underfunding after 4th month for nearly underfunded plans. In any case in which:

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(A) a benefit limitation under subsection (b), (c), (d), or (e) did not apply to a Plan with respect to the Plan Year preceding the current Plan Year, but the adjusted funding target attainment percentage of the Plan for the preceding Plan Year was not more than 10 percentage points greater than the percentage that would have caused the subsection to apply to the Plan with respect to the preceding Plan Year, and

(B) as of the first day of the 4th month of the current Plan Year, the enrolled actuary of the Plan has not certified the actual adjusted funding target attainment percentage of the Plan for the current Plan Year, until the enrolled actuary so certifies, the first day shall be deemed, for purposes of the subsection, to be the valuation date of the Plan for the current Plan Year and the adjusted funding target attainment percentage of the Plan as of such first day shall, for purposes of the subsection, be presumed to be equal to 10 percentage points less than the adjusted funding target attainment percentage of the Plan for the preceding Plan Year.

(g) Treatment of Plan as of Close of Prohibited or Cessation Period. Payments and accruals will resume effective as of the day following the close of the period for which any limitation of payment or accrual of benefits under subsection (d) or (e) applies. Nothing in this subsection shall be construed as affecting the Plan’s treatment of benefits that would have been paid or accrued but for this Section 19.5.

(h) Definitions.

(1) “Funding target attainment percentage” shall have the same meaning given that term by Code §430(d)(2), except as otherwise provided herein. However, in the case of Plan Years beginning in 2008, the funding target attainment percentage for the preceding Plan Year may be determined using such methods of estimation as the Secretary may provide.

(2) “Adjusted funding target attainment percentage” means the funding target attainment percentage that is determined under paragraph (1) by increasing each of the amounts under subparagraphs (A) and (B) of Code §430(d)(2) by the aggregate amount of purchases of annuities for employees other than Highly Compensated Employees that were made by the Plan during the preceding two Plan Years.

(3) Application to plans that are fully funded without regard to reductions for funding balances.

(A) In general. If in any Plan Year the funding target attainment percentage is 100% or more (determined and without regard to the reduction in the value of assets under Code §430(f)(4)), the funding target attainment percentage for purposes of paragraphs (1) and (2) shall be determined without regard to the reduction.

(B) Transition rule. Subparagraph (A) shall be applied to Plan Years beginning after 2007 and before 2011 by substituting for 100% the applicable percentage determined in accordance with the following table:

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In the case of Plan Year	The applicable percentage is:
2008		92	%
2009		94	%
2010		96	%

(C) Subparagraph (B) shall not apply with respect to any Plan Year beginning after 2008 unless the funding target attainment percentage (determined without regard to the reduction in the value of assets under Code §430(f)(4)) of the Plan for each preceding Plan Year beginning after 2007 was not less than the applicable percentage with respect to such preceding Plan Year determined under subparagraph (B).

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ARTICLE XII

ADMINISTRATION OF THE PLAN

12.1 Administration.

(a) The Retirement Committee (“Committee”) will consist of three or more individuals who will be appointed by the Board of Directors of Zions. The Committee will serve as Plan “administrator” (as that term is defined by ERISA). The Committee will have complete control of the administration of the Plan, subject to the provisions hereof, with all powers necessary to enable it to carry out its duties properly in that respect. Not in limitation, but in amplification of the foregoing, it will have the power to interpret the Plan and to determine all questions that may arise hereunder, including all questions relating to the eligibility of Employees to participate in the Plan and the amount of benefit to which any Participant or Beneficiary may become entitled. Its decisions upon all matters within the scope of its authority will be final.

(b) The Committee will establish rules and procedures to be followed by Participants and Beneficiaries in filing applications for benefits, in furnishing and verifying proofs necessary to determine age or marital status, and in any other matters required to administer the Plan.

(c) The Committee will receive all applications for benefits and will determine all facts necessary to establish the right of the applicant to benefits under the provisions of the Plan and the amount thereof.

(d) The Committee will maintain accounts showing the fiscal transactions of the Plan, and will keep data required for the valuation of the assets and liabilities of the Plan. The Committee will also prepare an annual report showing in reasonable detail the assets and liabilities of the Plan and giving a brief account of the operation of the Plan for each year. The Committee will make the annual report available to each Participant as required by law.

(e) The Committee will appoint an enrolled actuary to make actuarial valuations of the liabilities of the Plan, to recommend the amount of contributions to be made by the Company and to perform such other services as the Committee will deem necessary or desirable in connection with the administration of the Plan. The Committee may also appoint such accountants, counsel, consultants and other persons the Committee deems necessary or desirable in connection with the administration of the Plan.

(f) The Committee will have the power to appoint or remove any Investment Manager or Managers and to manage (including the power to acquire and dispose of) a.”1yassets of the Plan.

(g) The Committee will have the power to appoint or remove the Trustee.

(h) The Committee will be entitled to rely upon all tables, valuations, certificates and reports furnished by the accountant, consultant, administrator or actuary appointed by the Committee and upon all opinions given by any counsel selected or approved by it.

12.2 Records. All acts and determinations of the Committee and the Company regarding this Plan will be duly recorded and all such records, together with such other documents as may be necessary for the administration of the Plan, will be preserved in the custody of the Committee (or a designee appointed by the Committee).

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12.3 Payment of Expenses. All expenses that arise in connection with the administration of the Plan, including, but not limited to, the compensation of any enrolled actuary, accountant, legal counsel, consultant or other person who will be employed by the Committee in connection with the administration thereof, may, to the extent that it is lawful to do so under ERISA, be paid from the assets of the Plan.

12.4 Delegation of Authority. The administrative duties and responsibilities set forth in Section 12.1 may be delegated by the Committee in whatever manner and extent it chooses to such person or persons as it selects. It will notify Zions and the Trustee of the authority conferred upon such person or persons.

12.5 Information Available. Any Participant in the Plan or any Beneficiary receiving benefits under the Plan may examine copies of the summary plan description, latest annual report, any bargaining agreement, the Plan document, the Trust Agreement or any other governing instruments u:nder which the Plan is operated. The Committee will maintain all of these items in its office, or in such other place or places as it may designate from time to time for examination during reasonable business hours. Upon the written request of a Participant or Beneficiary receiving benefits under the Plan, the Committee will furnish a copy of any item listed in this Section. The Committee may make a reasonable charge to the requesting person for the copy furnished.

12.6 Claims and Appeals Procedure.

(a) The Committee will adopt procedures for the resolving of claims for benefits and for the appeal and review of the denial of such claims by the Committee. Detailed information regarding such procedures may be obtained by writing to the Retirement Committee.

(b) Each claim for benefits will be decided by one or more persons, a committee or other claims administrator designated by the Committee (such designated party is referred to in this Section as the “Claims Administrator”). The Claims Administrator will give the claimant written notice of the disposition of a claim within 90 days after the claim has been filed, unless special circumstances require an extension of time for processing, in which case such notice of disposition shall be given within 180 days after the application has been filed. If a claim is denied in whole or in part, the Claims Administrator shall give the claimant a written explanation of the reasons for the denial.

(c) A claimant wishing a review of a denied claim may submit an appeal in writing in a manner acceptable to the “Appeals Administrator”, which shall be the Committee or a person, committee or other administrator designated by the Committee, The deadline for submitting any such appeal to the Appeals Administrator shall be 60 days after receipt of the written notification of the denial of the claim, as described above.

(d) Within 60 days following the receipt of the notice of appeal, the Appeals Administrator will give the claimant either (i) a written notice of the decision of the Appeals Administrator, or (ii) if special circumstances require an extension of time for review, a notice of a 60-day extension of the review period. In the latter case, the notice of the decision of the Appeals Administrator shall be delivered to the claimant within 120 days after the appeal has been delivered by the claimant. Effective January 1, 2002, the one or more individuals who act as Appeals Administrator and who decide the appeal shall not include any person who decided the initial claim,

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but a person who decided the initial claim may participate in the discussion of the appeal.

(e) The Plan hereby delegates full and complete discretion to the Claims Administrator and the Appeals Administrator;

(1) to make findings of fact pertaining to a claim or appeal;

(2) to interpret the Plan as applied to the facts; and

(3) to decide all aspects of the claim or appeal.

(f) The decision of the Appeals Administrator upon such a review of a denied claim, (or, If the claimant fails to submit a timely appeal to the Appeals Administrator, the decision of the Claims Administrator) will be final, subject to any remedies which may be provided by law.

12.7 Fiduciary Capacity. Any person may serve in more than one fiduciary capacity with respect to this Plan.

12.8 Committee Liability. The members of the Committee will use ordinary care and diligence in the performance of their duties, but no member will be personally liable by virtue of any contract, agreement, or other instrument made or executed as a member of the Committee, nor for any mistake of judgment made by him or her or by any other member, nor for any loss unless resulting from willful misconduct or failure to exercise good faith. No member of the Committee will be liable for the neglect, omission, or wrongdoing of any other member or of the agents or counsel of the Committee. Zions will indemnify (or cause one or more of the participating Companies to indemnify) each member of the Committee against, and hold him or her harmless from any and all expenses and liabilities arising out of any act or omission to act as a member of the Committee, except such liabilities and expenses as are due to willful misconduct or failure to exercise good faith.

12.9 Limitations of Actions on Claims. The delivery to the claimant of the final decision of the Plan Administrator with respect to a claim for benefits under Section 12.6 that has been reviewed and considered under the appeal procedures of that section shall commence the period during which the claimant may bring legal action under ERISA for judicial review of the Appeals Administrator’s decision. No civil action with respect to the claim for benefits or the subject matter thereof may be commenced by the claimant, whether such action is pursued through litigation, arbitration or otherwise, prior to the completion of the claims and claims review process set forth in Section 12.6, nor following the expiration of two years from the date of delivery of the final decision of the Appeals Administrator to the claimant.

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ARTICLE XIII

GENERAL PROVISIONS

13.1 Amendment of Plan.

(a) Zions may amend the Plan at any time. In addition to the authority to amend the Plan in other respects, Zions shall furthermore have the authority to adopt any remedial retroactive changes to comply with the requirements of any law or regulation issued by any governmental agency to which the Plan is subject. No amendment will diminish or adversely affect any accrued interest or benefit of Participants or their Beneficiaries, except as may be required to comply with the requirements of any law or regulation issued by any governmental agency to which the Company is subject.

(b) If any amendment to the Plan changes the vesting schedule, each Participant who is an Employee with at least three Years of Vesting Service may elect to remain under the vesting schedule of the Plan prior to such amendment. If the Participant does not make the election within a reasonable time (as may be determined pursuant to governmental regulations from time to time), such Participant will be subject to the vesting schedule under the Plan as amended. In no event will the vesting percentage of the Participant’s Accrued Benefit be reduced below the percentage attained by the Participant prior to such amendment.

(c) In no event will a Participant who terminates or retires on or after the date any amendment to the Plan is effective receive less than his or her vested percentage multiplied by the Accrued Benefit prior to such date. This amount will be adjusted for the date of retirement and form of payment on the basis in effect prior to such amendment. This paragraph (c) shall not apply to the amendment to the basis for determining the Actuarial Equivalent value for purposes of Section 5.8 effective June 1, 1995.

(d) If any amendment to the Plan eliminates an optional form of payment, a Participant may continue to elect such form of payment with respect to any Accrued Benefit earned prior to the effective date of such amendment.

13.2 Employment Status. Nothing contained in the Plan will be deemed to give any Employee the right to be retained in the employ of the Employer or to interfere with the rights of the Employer to discharge any Employee at any time.

13.3 Mergers or Consolidations. If this Plan merges or consolidates with, or transfers its assets or liabilities to any other qualified plan of deferred compensation, no Participant will, as a result of such merger, consolidation or transfer, be entitled to a benefit on the day following such event which is less than the benefit to which he or she is entitled on the day preceding such event. For purposes of this Section, the benefit to which a Participant is entitled will be calculated based upon the assumption that a Plan termination and distribution of assets occurred on the day as of which the Participant’s entitlement is being determined.

13.4 Provision Against Anticipation. No benefit under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge or other legal process, and any attempt to do so will be void. The preceding sentence will not apply to a Qualified Domestic Relations Order pursuant to Code Section 414(P).

13.5 Facility of Payment. If any Participant or Beneficiary is physically or mentally incapable of giving a valid receipt for any payment due him and no legal representative has been

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appointed for such Participant or Beneficiary, the Committee may direct the Trustee to make such payment to any person or institution maintaining such Participant or Beneficiary and the release of such person or institution will be a valid and complete discharge for such payment. Any final payment or distribution to any Participant, the legal representative of the Participant, or to any Beneficiaries of such Participant in accordance with the provisions herein will be in full satisfaction of all claims against the Plan, the Committee, the Trustee and the Company arising under or by virtue of the Plan.

13.6 Construction. The validity of the Plan or any of its provisions will be determined under and will be construed according to federal law and, to the extent permissible, according to the laws of the State of Utah. If any provision of the Plan is held illegal or invalid for any reason, such determination will not affect the remaining provisions of the Plan and the Plan will be construed and enforced as if said illegal or invalid provision had never been included.

13.7 Legal Actions. The Committee will be the necessary party to any action or proceeding involving the assets held with respect to the Plan or the administration thereof. No Employee, Participant, former Participant or their Beneficiaries, or any other person having or claiming to have an interest in the Plan will be entitled to any notice or process. Any final judgment that may be entered in any such action or proceeding will be binding and conclusive on all persons having or claiming to have any interest in the Plan.

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SIGNATURE PAGE

This Zions Bancorporation Pension Plan, as restated effective as of January 1,2002, is hereby approved this 30th day of November, 2010, at Salt Lake City, Utah.

ZIONS BANCORPORATION
By:	/s/ Diana M. Andersen
Name:	Diana M. Andersen
Title:	SVP & Dir. of Corp. Benefits

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APPENDIX I:

FACTORS FOR SPOUSE OPTION UNDER SECTION 5.7(A)

A Participant retiring at any age with a benefit in the form of a Spouse Option (as described in Section 5.7(a) will have the following factors applied to his or her Accrued Benefit.

	Joint & Survivor Option
	50%		75%		100%
Spouse same age as Employee		.880		.835		.790
For each year the Spouse is younger than the Employee subtract		.005		.0065		.008
For each year the Spouse is older than the Employee add		.005		.0065		.008

The Maximum adjustment for age differential is limited to 20 years

72

APPENDEX II:

ACTUARIAL EQUIVALENCE FOR MONTHLY BENEFITS AND LUMP SUMS

For the purpose of computing the annuity value of a Participant’s cash balance account, the annuity value of a Participant’s Old Plan Account, and lump sums:

(a) The mortality assumption is the “Applicable Mortality Table” (as defined below) which is prescribed from time to time by the Secretary of the Treasury under Code Section 417(e)(3).

(1) For benefit commencement dates on and after June 1, 1995 and prior to December 31, 2002, the “Applicable Mortality Table” shall mean the applicable mortality table prescribed by the Secretary of the Treasury in Rev. Rul. 95-6, which is the 1983 Group Annuity Mortality Table, weighted 50% male and 50% female (commonly referred to as “GAM 83”).

(2) For benefit commencement dates on and after December 31, 2002, the “Applicable Mortality Table” shall mean the applicable mortality table prescribed by the Secretary of the Treasury in Rev. Rul. 2001-62,

(b) The interest assumption shall be the “Applicable Interest Rate”, which shall be the average annual yield on 30-year U.S. Treasury constant maturities, as shown in the Federal Reserve Statistical Release H.15 for the reference month. The reference month shall be the month of -November of the calendar year prior to the Plan Year in which the lump sum is paid or the monthly benefit commences,

(c) In no event shall such lump sum be less than the present value as of December 31, 1985 of a Participant’s Accrued Benefit as of December 31, 1985 on the basis of the following actuarial factors used prior to December 31, 1985 for purposes of valuing a deferred annuity of $1 per year commencing at age 65 and payable in monthly installments:

Age	Factor		Age		Factor
32		0.6404		49		2.4180
33		0.6920		50		2.6182
34		0.7479		51		2.8357
35		0,8082		52		3.0721
36		0.8735		53		3.3292
37		0.9441		54		3.6090
38		1.0205		55		3.9138
39		1.1031		56		4.2458
40		1.1925		57		4.6080
41		1.2892		58		5.0034
42		1.3939		59		5.4356
43		1.5073		60		5.9088

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44	1.6301	61	6.4279
45	1.7632	62	6.9983
46	1.9075	63	7.6261
47	2.0639	64	8.3184
48	2.2337	65	9.0836

(d) The minimum value of a lump sum distribution to a Grossmont Participant who retires between January 1,1998 and December 31, 1998 shall be determined under subsections (a) and (1) above, except that the annual rate of interest on 30- year Treasury securities described in subsection (1) shall be determined as of December 1997.

REVISED ACTUARIAL EQUIVALENCE PROVISIONS RESULTING FROM THE

PENSION FUNDING EQUITY ACT AND SUBSEQUENT LEGISLATION

2.1 General Rules.

(a) Effective date. These revised provisions reflect certain provisions of the Pension Funding Equity Act of 2004 (PFEA), as modified by the Pension Protection Act of 2006 and the Worker, Retiree and Employer Recovery Act of 2008. Unless otherwise provided herein, all required determinations of actuarial equivalence for forms of benefit other than a straight life annuity shall be made in accordance with these revised provisions effective for distributions in Plan Years beginning after December 31, 2003, Nevertheless, these provisions do not supersede any prior election to apply the transition rule of section 101(d)(3) of PFEA as described in Notice 2004-78,

(b) “Applicable Mortality Table” for purposes of these revised provisions shall mean the applicable mortality table within the meaning of Code §417(e)(3)(B).

2.2 Benefit Forms Not Subject to the Present Value Rules of Code §417(e)(3).

(a) Form of benefit. The straight life annuity that is actuarially equivalent to the Participant’s form of benefit shall be determined under this Section 2.2 if the form of the Participant’s benefit is either:

(1) A non-decreasing annuity (other than a straight life annuity) payable for a period of not less than the life of the Participant (or, in the case of a qualified pre-retirement survivor annuity, the life of the surviving spouse), or

(2) An annuity that decreases during the life of the Participant merely because of:

(A) The death of the survivor annuitant (but only if the reduction is not below 50% of the benefit payable before the death of the survivor annuitant), or

(B) The cessation or reduction of Social Security supplements or qualified disability payments (as defined in Code §401(a)(11)).

(b) Limitation Years beginning before July 1, 2007. For Limitation Years beginning before July 1, 2007, the actuarially equivalent straight life annuity is equal to the

74

annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit computed using whichever of the following produces the greater annual amount:

(1) the interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; and

(2) a 5 percent interest rate assumption and the “applicable mortality table” defined in the Plan for that annuity starting date,

(c) Limitation Years beginning on or after July 1, 2007. For Limitation Years beginning on or after July 1, 2007, the actuarially equivalent straight life annuity is equal to the greater of:

(1) The annual amount of the straight life annuity (if any) payable to the Participant under the Plan commencing at the same annuity starting date as the Participant’s form of benefit; and

(2) The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using a 5 percent interest rate assumption and the applicable mortality table defined in the Plan for that annuity starting date.

2.3 Benefit Forms Subject to the Present Value Rules of Code Section 417(e)(3).

(a) Form of benefit. The straight life annuity that is actuarially equivalent to the Participant’s form of benefit shall be determined as indicated under this Section 2.3 if the form of the Participant’s benefit is other than a benefit form described in Section 2.2(a).

(b) Annuity Starting Date in Plan Years Beginning After 2005. If the annuity starting date of the Participant’s form of benefit is in a Plan Year beginning after December 31, 2005, the actuarially equivalent straight life annuity is equal to the greatest of:

(1) The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using the interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form;

(2) The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using a 5.5 percent interest rate assumption and the applicable mortality table for the distribution under Treasury Regulations Section 1.417(e)-l(d)(2) (determined in accordance with Article XIV for Plan Years after the effective date of that Article); and

(3) The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed for the distribution under Treasury Regulations Section 1.417(e)-1(d)(3) (but determined according to the assumptions in Section 2.4 after the effective date thereof) and the applicable mortality table for the distribution under Treasury Regulations Section 1.41

75

7(e)-1(d)(2) (determined according to the assumptions in Section 2,4 after the effective date thereof), divided by 1.05.

(c) Annuity Starting Date in Plan Years Beginning in 2004 or 2005. If the annuity starting date of the Participant’s form of benefit is in a Plan Year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using whichever of the following produces the greater annual amount:

(1) The interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; and

(2) A 5.5 percent interest rate assumption and the applicable mortality table for the distribution under Treasury Regulations Section 1.417(e)-1 (d)(2).

However, the foregoing does not supersede any prior election to apply the transition rule of PFEA §101(d)(3) as described in Notice 2004-78.

2.4 Revised Assumptions Effective date. The assumptions in ths Section 2.4 shall apply in determining the amount payable to a Participant having an annuity starting date in a Plan Year beginning on or after January 1, 2008, unless otherwise provided by the Pension Benefit Guaranty Corporation (PBGC) and IRS.

(a) Applicable interest rate. For purposes of the Plan’s provisions relating to the calculation of the present value of a benefit payment that is subject to Code §417(e), any provision prescribing the use of the annual rate of interest on 30-year U.S. Treasury securities shall be implemented by instead using the rate of interest determined by the applicable interest rate described by Code §417(e) after its amendment by the Pension Protection Act. Specifically, the applicable interest rate shall be the adjusted first, second, and third segment rates applied under the rules similar to the rules of Code §430(h)(2)(C) for the second calendar month (lookback month) before the first day of the Plan Year in which the annuity starting state occurs (stability period). For this purpose, the first, second, and third segment rates are the first, second, and third segment rates which would be determined under Code §430(h)(2)(C) if:

(1) Code §430(h)(2)(D) were applied by substituting the average yields for the month described in the preceding paragraph for the average yields for the 24-month period described in such section, and

(2) Code §430(h)(2)(G)(i)(II) were applied by substituting “§417(e)(3)(A)(ii)(II) for “§412(b)(5)(B)(ii)(II),” and

(3) The applicable percentage under Code §430(h)(2)(G) is treated as being 20% in 2008, 40% in 2009, 60% in 2010, and 80% in 2011.

(b) Applicable mortality assumption. For purposes of the Plan’s provisions relating to the calculation of the present value of a benefit payment that is subject to Code §417(e), any provision directly or indirectly prescribing the use of the mortality table described in Revenue Ruling 2001-62 shall be amended to prescribe the use of the applicable annual mortality table within the meaning of Code §417(e)(3)(B), as initially described in Revenue Ruling 2007-67.

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APPENDIX III:

MINIMUM ACCRUED BENEFIT

Article 1

Definitions

Whenever used in this Appendix ill, the following terms will have the meanings set forth below, unless a different meaning is clearly required by the context. Any capitalized terms that are used in this Appendix ill, but that are not defined below, will have the meaning set forth in Article 1 of the Plan, unless a different meaning is clearly required by the context. References in this Appendix to “Article” and “Section,” unless indicated otherwise, mean Articles and Sections appearing in this Appendix ill.

1.1 Covered Compensation. Covered Compensation for a Plan Year means the average of the Social Security Taxable Wage Bases for each year in the 35-year period ending with the last day of the year in which the Participant attains (or will attain) Social Security Retirement Age as determined under the exact tables provided by the Commissioner of Internal Revenue.

Covered Compensation for any Plan Year after 1991 will be equal to 1991 Covered Compensation. Social Security Taxable Wage Base means the contribution and benefit base in effect under Section 230 of the Social Security Act for the specified calendar year.

For purposes of this Section 1.1, a Participant’s Social Security Retirement Age is determined based on the following table:

Year of Birth	Social Security Retirement Age
Before 1938	65
1983 to 1954	66
1955 and after	67

1.2 Credited Service.

Credited Service means service used to determine a Participant’s Accrued Benefit and is determined as follows:

(a) Credited Service shall be measured in calendar years and months, Each month shall be equal to one-twelfth of a year of Credited Service. Except as otherwise stated in this Section 1.2, Credited Service for Plan Years beginning after December 31, 1988 means the sum of an Employee’s calendar years and months (or parts thereof) as an Eligible Employee during the period beginning on his or her Benefit Service Date, For purposes of this section, Benefit Service Date means the later of:

(1) the Participant’s employment date,

(2) the first day of the month following the Participant’s 21st birthday, or

(3) in the case of an Employee who is not credited with at least 1,000 Hours of Service in his or her first Eligibility Computation Period, the first day of the first Plan Year in which the Employee is credited with at least 1,000 Hours of Service.

77

(b) No Credited Service will be earned during a Plan Year beginning after December 31, 1988 unless the Employee completes at least 1,000 Hours of Service during that Plan Year except as follows: (1) through the period ending on December 31, 1997 and for Plan Year 2000, in order to earn Credited Service during the Plan Year in which the Employee has a Benefit Service Date or during the Plan Year in which the Employee retires or dies, the Employee must complete 83,33 Hours of Service multiplied by the number of calendar months during such Plan Year in which the Employee completes at least one Hour of Service; and (2) effective for the 1995-1997 and the 2000 Plan Years, the foregoing sentence shall also apply to a Plan Year in which the Employee incurs a Termination of Employment.

(c) Except as otherwise stated in this Section 1.2, Credited Service for Plan Years beginning before January 1, 1989 means benefit service as defined under the terms of the Plan in effect on December 31, 1988.

(d) Effective on and after December 12, 1994, in any year in which a Participant accrues at least 1,000 Hours of Service, a Participant shall earn 190 Hours of Service, and one month of Credited Service, for each month of the Participant’s Qualified Military Service.

(e) Credited Service will not include service earned during a period for which Years of Vesting Service are disregarded pursuant to Section 1.50(e) of the Plan.

(f) In the case of an Employee who is employed by an Affiliate or Subsidiary which either adopts this Plan with the consent of the Company or merges with the Company, Credited Service will not include service prior to the date of merger or adoption unless an earlier date is specifically designated for this purpose by the Board of Directors of Zions.

1.3 Final Average Earnings.

Final Average Earnings means the average of the Participant’s Earnings as an Eligible Employee for the period of five consecutive calendar years ending on or before December 31, 1991 which produces the highest average. If the Participant has not been an Eligible Employee for five years, Final Average Earnings means the average of the Participant’s Earnings over the Participant’s full period of employment as an Eligible Employee before December 31, 1991.

In determining Final Average Earnings, Plan Years after 1988 during which the Participant earns fewer than 1,000 Hours of Service will be disregarded while allowing the immediately prior Plan Year and immediately subsequent Plan Year to be treated as though they are consecutive years.

In determining Final Average Earnings, Earnings will be annualized in the Plan Year of hire if the employee earned 1,000 Hours of Service during the one-year period beginning on the Employee’s Employment Date. Earnings are annualized by dividing actual earnings for the Plan Year (excluding bonuses) by the number of months of actual earnings, then multiplying the result by 12 then adding bonuses.

For purposes of calculating Final Average Earnings, the $200,000 Earnings limitation that applies under Code Section 401 (a)(l 7) for Plan Year 2002 and thereafter (subject to annual adjustment in years following 2002) shall not be applied retroactively to any Plan Year prior to 2002.

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Article 2

Accrued Benefits

2.1 Prior Plan Benefit Formula.

A Participant’s monthly retirement income is equal to one twelfth of the greater of:

(a) the sum of:

(1) the sum of the following (determined by applying the Code Section 401 (a)(l7) limitations, as adjusted, that were in effect in the respective year in which Earnings were received, and not the $150,000 limitation which became effective thereafter):

(A) 1.65% of Final Average Earnings determined as of December 31, 1991 multiplied by Credited Service earned as of December 31, 1991, and

(B) 1.65% of Earnings for each Plan Year beginning after December 31, 1991 and before January 1, 1994 in which the Participant earns a full or partial year of Credited Service.

(2) 1.65% of Earnings (determined by applying the Code Section 401 (a)(l 7) limitations, as adjusted, that were in effect in the respective year in which Earnings were received) for each Plan Year after December 31, 1993 in which the Participant earns a full or partial year of Credited Service.

(b) the sum of the following (determined by applying the Code Section 401(a)(17) limitations, as adjusted, that were in effect in the respective year in which Earnings were received, and not the $150,000 limitation which became effective thereafter):

(1) 1.15% of Final Average Earnings up to Covered Compensation multiplied by Credited Service up to 35 years.

(2) 1.65% of Final Average Earnings in excess of Covered Compensation multiplied by Credited Service up to 35 years.

(3) 1.0% of Final Average Earnings multiplied by Credited Service in excess of 35 years.

(c) the annual accrued benefit on December 31, 1988 under the terms of the Plan as then in effect determined without regard to the $200,000 or $150,000 limitations under Section l.I8( c) of the Plan.

A Participant will receive an Accrued Benefit for any full or partial years of Qualified Military Service.

2.2 Minimum Accrued Benefit.

The minimum accrued benefit is the amount determined under Section 2.1 of this Appendix, for Credited Service before January 1, 1998, except Earnings for 1997 will be Earnings during the period from January 1, 1997 to March 31, 1997.

2.3 Grandfathered Minimum Accrued Benefit. The minimum grandfathered accrued benefit is the amount determined under Section 2.1 of this Appendix; provided, however, that the minimum grandfathered accrued benefit shall take into account any Credited Service and Earning s which may be accrued or earned by an Active Participant until the earlier

79

of the Participant’s Termination of Employment or the date of any termination of, or cessation of accruals under, the Plan.

Article 3

Minimum Early Retirement Benefits

The minimum early retirement benefit equals the greater of the amount in Section 2.2 and 2.3 of this Appendix, reduced by 113 of 1 % for each month by which the Early Retirement Date precedes the Normal Retirement Date.

Article 4

Minimum Death Benefit

4.1 Death After Eligibility for Retirement.

If a Participant (other than a Retired Participant) dies on or after the earliest date on which he or she could retire in accordance under the Plan, his or her Eligible Spouse, if any, will receive a monthly benefit equal to the amount the Eligible Spouse would have been entitled to under Article 2 of this Appendix if the Participant had elected the 50% Spouse Option and retired on the first day of the month coinciding with or following the date of death. This benefit will be payable monthly to the Eligible Spouse beginning on the first day of the month coinciding with or next following the Participant’s death and will continue until the death of the Eligible Spouse.

4.2 Death Before Eligibility for Retirement.

If a Participant who has a vested interest in his or her Accrued Benefit dies prior to the earliest date on which the Participant could retire under the Plan, his or her Eligible Spouse, if any, will receive a monthly benefit equal to the amount the Eligible Spouse would have been entitled to under Article 2 of this Appendix if the Participant had:

(a) terminated employment on his or her date of death (if the Participant was an Employee on the date of death),

(b) survived to the earliest date on which he or she could retire in accordance with Article 3 of this Appendix (the “Earliest Retirement Date”),

(c) elected the 50% Spouse Option and retired on such Earliest Retirement Date, and

(d) died immediately after retiring.

This benefit will be payable monthly to the Eligible Spouse beginning on the Participant’s Earliest Retirement Date and will continue until the death of the Eligible Spouse.

4.3 Alternate Death Benefit For Old Plan Accounts,

In lieu of the benefit described in Sections 4.1 or 4.2 of this Appendix, the Eligible Spouse of a Participant who has an Old Plan Account may elect to receive payment of the Old Plan Account as a lump sum payment as soon a practicable after the Participant’s death. The Participant’s Accrued Benefit Attributable to Company Contributions will be paid in accordance with (a) or (b) of Section 4.4 of this Appendix below, whichever applies.

4.4 Other.

(a) Benefits under this Article will be paid as soon as practicable after the Participant’s death except that the Eligible Spouse may elect to defer commencement of the

80

benefit described in Sections 4.1, 4.2, or 4.3 of this Appendix until any date which is before the Participant’s Normal Retirement Date. An Eligible Spouse who makes an election under Section 4.3 of this Appendix may not defer receipt of the Old Plan Account.

(b) The benefit under Sections 4.1 or 4.2 of this Appendix will apply to Terminated Vested Participants even if their Termination of Employment occurred prior to the effective date of these paragraphs.

81

APPENDIX IV:

ACQUISITION EFFECTIVE DATES

“Acquisition Effective Date” means the date described below:

Acquisition	Effective Date
Southern Arizona Bancorp, Inc.	May 31, 1996
Farm Investment Division	January 3, 1997
Howerth	January 17, 1997
Aspen Bancshares, Inc.	May 16, 1997
Pitkin County Bank	May 19, 1997
Centennial Savings Bank	May 19, 1997
Valley National Bank	May 19, 1997
Kelling, Northcross, & Nobriga, Inc.	July 7, 1997
Tri-State Bank	July 11, 1997
Wells Fargo Bank (branches)	July 19, 1997
Sun-State Bank	October 17, 1997
Grossmont Bank	January 1, 1998
Vectra Banking Corporation	January 6, 1998
Sky Valley Bank Corporation	January 23, 1998
Tri-State Financial Corporation	February 27, 1998
FP Bancorp, Inc.	May 26, 1998
SBT Bankshares, Inc.	June 1, 1998
Routt County National Bank Corporation	June 1, 1998
Kersey Bancorp	August 31, 1998
Eagle Bank	August 31, 1998
Commerce Bancorporation	January 1, 1999
Sumitomo Bank of California	October 1, 1998
Mountain Financial Holding Co.	October 30, 1998
Citizens Banco, Inc.	December 1, 1998
Barlow Insurance, Inc.	January 14, 1999
TradeWave	May 6, 1999
Regency Bancorp	October 6, 1999
Pioneer Bancorporation	October 18, 1999
County Bank	July 28, 2000
Draper Bancorp	January 26, 2001
Eldorado Bancshares, Inc.	March 30, 2001
Antelope Valley Bank	March 30, 2001
Pacific Century Financial Corporation	April 2, 2001
icormXpress	July 19, 2001
thinkXML	July 19, 2001
E-Lock Technologies	July 19, 2001
Leifer Capital	September 4, 2001
(Branches of) Washington Federal, Inc.	October 25, 2001
Minnequa Bancorp, Inc.	November 9, 2001

82

APPENDIX V:

DEFINITION OF “COMPANY”

As stated in Section 1.14 of the Plan, the term “Company” means each of the following corporations or partnerships, each of which has adopted this Plan, and is, as of January 1, 2002, a participating Company in the Plan:

California Bank and Trust

Commerce Bank of Washington National Association

Digital Signature Trust Co.

Lexign Inc.

National Bank of Arizona

Nevada State Bank

Phaos Technology

Corporation Vectra Bank of Colorado National Association

Zions Bancorporation

Zions First National Bank

Zions Credit Corporation

Zions Insurance Agency, Inc.

Zions Investment Securities, Inc.

Zions Management Services Company

83

EX-10.18

EXHIBIT 10.18

ZIONS BANCORPORATION

PAYSHELTER 401(k) AND EMPLOYEE

STOCK OWNERSHIP PLAN

RESTATED AND AMENDED EFFECTIVE JANUARY 1, 2002

Prepared for

ZIONS BANCORPORATION

by

CALLISTER NEBEKER & McCULLOUGH

TABLE OF CONTENTS

ARTICLE AND TITLE		PAGE NO.
ARTICLE I
ESTABLISHMENT AND RESTATEMENT		-1-
1.1	Establishment and Restatement:	-1-
1.2	History	-1-
1.3	Intent	-1-
1.4	Transferee Plan	-2-
1.5	Limitation on Applicability	-2-
1.6	EGTRRA	-2-
ARTICLE II
DEFINITIONS OF TERMS		-3-
2.1	“Account”	-3-
2.2	“Accrued Benefit”	-4-
2.3	“Administratively Feasible”	-4-
2.4	“Administrator” or “Plan Administrator”	-5-
2.5	“Affiliated Group”	-5-
2.6	“Age”	-5-
2.7	“Anniversary Date”	-5-
2.8	“Beneficiary”	-5-
2.9	“Board of Directors”	-5-
2.10	“Code”	-5-
2.11	“Compensation” or “Annual Compensation”	-5-
2.12	“Contingent Beneficiary”	-7-
2.13	“Disability”	-7-
2.14	“Disqualified Person”	-7-
2.15	“Distribution Date”	-7-
2.16	“Effective Date”	-7-
2.17	“Elective Deferral”	-7-
2.18	“Eligible Employee”	-7-
2.19	“Employee”	-7-
2.20	“Employer” or “Zions Employer”	-7-
2.21	“Employer Contribution”	-8-
2.22	“Employer Securities”	-8-
2.23	“Entry Date”	-8-
2.24	“ERISA”	-8-
2.25	“Excluded Employee”	-8-
2.26	“Exempt Loan”	-9-
2.27	“Fiduciary”	-9-
2.28	“Highly Compensated Employee”	-9-
2.29	“Inactive Participant”	-10-

i

ARTICLE AND TITLE		PAGE NO.
2.30	“Investment Fund”	-10-
2.31	“Investment Manager”	-10-
2.32	“K-Test Average Contribution Percentage”	-10-
2.33	“K-Test Contribution Percentage”	-10-
2.34	“K-Test Contributions”	-11-
2.35	“Leased Employee”	-11-
2.36	“Leveraged Employer Securities”	-11-
2.37	“Limitation Year”	-11-
2.38	“M-Test Average Contribution Percentage”	-11-
2.39	“M-Test Contribution Percentage”	-11-
2.40	“M-Test Contributions”	-11-
2.41	“Matching Contribution”	-12-
2.42	“Named Fiduciary”	-12-
2.43	“Net Profit”	-12-
2.44	“Non-Highly Compensated Employee”	-12-
2.45	“Normal Retirement Age”	-12-
2.46	“Normal Retirement Date”	-12-
2.47	“Participant”	-12-
2.48	“Paysop”	-13-
2.49	“Plan”	-13-
2.50	“Plan Sponsor”	-13-
2.51	“Plan Year”	-13-
2.52	“Predecessor Plan”	-13-
2.53	“Prior Plan”	-13-
2.54	“Qualified Matching Contribution”	-13-
2.55	“Qualified Non-Elective Contribution”	-13-
2.56	“Transferred Benefits”	-13-
2.57	“Trust”	-13-
2.58	“Trust Fund”	-13-
2.59	“Trustee”	-14-
2.60	“Valuation Date”	-14-
2.61	“Vested Interest” or “Vested Accrued Benefit”	-14-
2.62	“Voluntary Contributions”	-14-
ARTICLE III
SERVICE DEFINITIONS AND RULES		-15-
3.1	“Eligibility Computation Period”	-15-
3.2	“Eligibility Service”	-15-
3.3	“Employment Commencement Date”	-15-
3.4	“Hour of Service”	-15-
3.5	“One Year Break in Service”	-17-
3.6	“Re-employment Commencement Date”	-17-
3.7	“Termination of Employment”	-17-

ii

ARTICLE AND TITLE		PAGE NO.
3.8	“Vesting Computation Period”	-18-
3.9	“Year of Service”	-18-
3.10	“Year of Vesting Service”	-18-
3.11	Special Rules for Crediting Service	-19-
3.12	Qualified Military Service Rules	-19-
3.13	Elapsed Time Method for Determining Years of Vesting Service	-22-
ARTICLE IV
ELIGIBILITY AND PARTICIPATION		-24-
4.1	Age and Service Requirements	-24-
4.2	Eligibility Information	-24-
4.3	Information to be Provided by Employee	-24-
4.4	Reclassification of an Eligible Employee or Excluded Employee	-24-
4.5	Re-employment and Commencement of Participation	-25-
4.6	No Waiver of Participation	-25-
4.7	Effect of Participation	-25-
ART1CLE V
PARTICIPANT AND EMPLOYER CONTRIBUTIONS		-26-
5.1	Elective Deferrals	-26-
5.2	Payment to Trustee	-27-
5.3	Suspension of Deferrals	-27-
5.4	After-tax Contributions by Participants	-27-
5.4A	Roth Elective Deferrals	-27-
5.5	Rollover Contributions by Participants	-29-
5.6	Safe Harbor Employer Matching Contributions	-30-
5.7	Employer Non-Elective Contributions	-31-
5.8	Time and Method of Payment	-32-
5.9	Employer Contribution Accounts	-32-
5.10	Limitations on Contributions	-32-
5.11	Excess Contributions	-33-
5.12	Correction of Excess Contributions	-34-
ART1CLE VI
ALLOCATIONS TO ACCOUNTS		-36-
6.1	Revaluation of Assets	-36-
6.2	Allocation of Contributions and Forfeitures	-36-
6.3	Adjustment of Accounts and Dividends on Employer Securities	-37-
6.4	Eligibility for Allocation of Employer Matching and Non-Elective Contributions	-40-
6.5	Restriction on Certain Allocations	-40-
6.6	Participant Diversification of Investments	-41-

iii

ARTICLE AND TITLE		PAGE NO.
ARTICLE VII
LIMITATIONS ON ALLOCATIONS		-44-
7.1	Special Definitions	-44-
7.2	Coordination With Other Plans	-47-
7.3	Limitations on Allocations and Order of Limitations	-48-
7.4	Aggregation of Plans	-48-
7.5	Suspense Account	-49-
ARTICLE VIII
IN-SERVICE AND HARDSHIP WITHDRAWALS		-50-
8.1	In-Service Withdrawals, Withdrawals of Rollover Contributions and Withdrawals Due to Attainment of Age 59 1/2, Disability or Hardship	-50-
8.2	Financial Hardship Distribution Rules	-51-
8.3	Determination of Immediate and Heavy Financial Need	-51-
8.4	In Service Withdrawals of Voluntary Contributions	-52-
8.5	Determination of Available Withdrawal Amount	-53-
8.6	Withdrawal of Rollover Contributions	-53-
8.7	Determination of Five Plan Year Period	-54-
ARTICLE IX
RETIREMENT BENEFITS		-55-
9.1	Normal or Late Retirement	-55-
9.2	Disability Retirement	-55-
9.3	Method of Payment	-55-
9.4	Time of Payment:	-56-
9.5	Minimum Distribution Requirements	-56-
9.6	No Annuity Benefits	-59-
9.7	Distribution of Employer Securities and Cash	-59-
9.8	Special Distribution Rules	-60-
9.9	Distribution of Transferred Benefits	-60-
ARTICLE X
DEATH BENEFITS		-62-
10.1	Death Benefits Payable	-62-
10.2	Designation of Beneficiary	-62-
10.3	Death Benefit Payment Procedure	-63-
10.4	Required Distributions Upon Death	-63-
ARTICLE XI
BENEFITS UPON OTHER TERMINATION OF EMPLOYMENT		-67-
11.1	Vested Amounts	-67-
11.2	Distribution of Vested Interest	-68-
11.3	Distribution of Small Amounts	-69-

iv

ARTICLE AND TITLE		PAGE NO.
11.4	Eligible Rollover Distributions	-69-
11.5	Breaks in Service and Vesting	-71-
11.6	No Increase in Pre-break Vesting	-71-
11.7	Occurrence and Disposition of Forfeitures	-71-
11.8	Distribution to Participants Who Are Less Than 100% Vested in Their Entire Account	-72-
11.9	Repayment of Distribution	-73-
11.10	Restoration of Accounts	-73-
11.11	Amendments to the Vesting Schedule	-74-
ARTICLE XII
FIDUCIARY DUTIES		-75-
12.1	General Fiduciary Duty	-75-
12.2	Allocation of Responsibilities	-75-
12.3	Delegation of Responsibilities	-75-
12.4	Liability for Allocation or Delegation of Responsibilities	-75-
12.5	Liability for Co-Fiduciaries	-75-
12.6	Same Person May Serve in More than One Capacity	-76-
12.7	Indemnification	-76-
ARTICLE XIII
THE PLAN ADMINISTRATOR		-77-
13.1	Appointment of Plan Administrator	-77-
13.2	Acceptance by Plan Administrator	-77-
13.3	Signature of Plan Administrator	-77-
13.4	Appointment of an Investment Manager	-77-
13.5	Duties of the Plan Administrator	-77-
13.6	Claims Procedure	-78-
13.7	Claims Review Procedure	-78-
13.8	Limitations of Actions on Claims	-79-
13.9	Compensation and Expenses of Plan Administrator	-79-
13.10	Removal or Resignation	-79-
13.11	Records of Plan Administrator	-79-
13.12	Other Responsibilities	-79-
ARTICLE XIV
THE TRUSTEE		-80-
14.1	Appointment of Trustee	-80-
14.2	Acceptance by Trustee	-80-
14.3	Provisions of Trust Agreement	-80-
14.4	Participant Voting Rights	-81-
14.5	Investment Committee	-82-
14.6	Liability for Plan Expenses	-82-

v

ARTICLE AND TITLE		PAGE NO.
14.7	Payment From the Trust Fund	-83-
ARTICLE XV
THE EMPLOYER		-84-
15.1	Notification	-84-
15.2	Record Keeping	-84-
15.3	Bonding	-84-
15.4	Signature of Employer	-84-
15.5	Plan Counsel and Expenses	-84-
15.6	Other Responsibilities	-84-
15.7	Affiliated Groups	-84-
15.8	Employer Contributions	-85-
ARTICLE XVI
PLAN AMENDMENT OR MERGER		-86-
16.1	Power to Amend	-86-
16.2	Limitations on Amendments	-86-
16.3	Method of Amendment	-86-
16.4	Notice of Amendment	-86-
16.5	Merger or Consolidation	-87-
ARTICLE XVII
TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS		-88-
17.1	Right to Terminate	-88-
17.2	Effect of Termination	-88-
17.3	Manner of Distribution	-88-
17.4	No Reversion	-88-
17.5	Termination of an Employer	-89-
17.6	Partial Termination	-89-
17.7	Effect of Partial Termination	-89-
ARTICLE XVIII
FUNDING POLICY FOR PLAN BENEFITS		-90-
18.1	Funding Method	-90-
18.2	Investment Policy	-90-
18.3	No Purchase of Life Insurance Contracts	-91-
18.4	General Investments and Dividend Accounts	-91-
18.5	Non-transferability of Annuity Contracts	-91-
18.6	Establishment of Separate Funds	-91-
ART1CLE XIX
TOP-HEAVY PROVISIONS		-94-
19.1	Application	-94-

vi

ARTICLE AND TITLE		PAGE NO.
19.2	Special Definitions	-94-
19.3	Top Heavy Status	-98-
19.4	Top-Heavy Minimum Required Allocation	-98-
19.5	Non-forfeitability of Minimum Top Heavy Allocation	-99-
19.6	Minimum Vesting Provision	-99-
19.7	Participant Elective Deferrals	-100-
ARTICLE XX
PROVISIONS AFFECTING BENEFITS		-101-
20.1	Availability of Loans	-101-
20.2	Loan Administration	-101-
20.3	Amount of Loan	-101-
20.4	Collateral Requirements	-102-
20.5	Loan Terms	-102-
20.6	Accounting for Loans	-102-
20.7	Effect of Termination of Employment or Plan	-102-
20.8	No Spousal Consent	-102-
20.9	Anti-Alienation	-102-
20.10	Qualified Domestic Relations Orders	-103-
20.11	QDRO Definitions	-103-
ARTICLE XXI
MULTIPLE EMPLOYER PROVISIONS		-105-
21.1	Adoption by Other Zions Employers	-105-
21.2	Requirements of Participating Zions Employers	-105-
21.3	Designation of Agent	-105-
21.4	Employee Transfers	-105-
21.5	Amendment	-106-
21.6	Discontinuance of Participation	-106-
21.7	Administrator’s Authority	-106-
21.8	Participating Employer Contributions	-106-
ARTICLE XXII
PURCHASE OF EMPLOYER SECURITIES		-107-
22.1	No Put option	-107-
22.2	Purchase Price For Employer Securities	-107-
ARTICLE XXIII
MISCELLANEOUS		-108-
23.1	Participant’s Rights	-108-
23.2	Actions Consistent with Terms of Plan	-108-
23.3	Performance of Duties	-108-
23.4	Validity of Plan	-108-

vii

23.5	Legal Action	-108-
23.6	Gender and Number	-108-
23.7	Uniformity	-108-
23.8	Headings	-108-
23.9	Receipt and Release for Payments	-108-
23.10	Payments to Minors, Incompetents	-109-
23.11	Missing Persons	-109-
23.12	Prohibition Against Diversion of Funds	-110-
23.13	Applicability of Plan	-110-
23.14	Misstatement of Age	-110-
23.15	Return of Contributions to the Employer	-110-
23.16	Correction of Incorrect Benefit Payments	-110-
23.17	Counterparts	-111-

viii

ARTICLE I

ESTABLISHMENT AND RESTATEMENT

1.1 Establishment and Restatement: This Plan is an amendment and restatement in full of the Zions Bancorporation Payshelter 401(k) Plan. This Plan is signed and executed on the day set forth at the end of this Plan, effective for all purposes (except as specifically set forth hereafter) as of January 1, 2002. This Plan is maintained by Zions Bancorporation, a corporation organized and existing under the laws of the state of Utah, with principal offices located at Salt Lake City, Utah, hereinafter referred to as the “Plan Sponsor,” for the benefit of its Employees and the Employees of those affiliated entities who also participate herein. With the consent of Zions Bancorporation this Plan may be adopted by other Employers affiliated with it.

1.2 History: Effective as of July 1, 1984, Zions Utah Bancorporation, as the sponsoring employer, established the Zions Utah Bancorporation Salary Reduction Arrangement Plan and executed a funding arrangement with Zions First National Bank as Trustee to provide retirement benefits for eligible Employees. The name of the Plan was changed, effective July 17, 1987, to the Zions Ban-corporation Salary Reduction Arrangement Plan. Effective December 29, 1988, Zions Bancorporation amended the Zions Bancorporation Payroll Stock Ownership Plan and merged that plan into the Zions Bancorporation Salary Reduction Arrangement Plan. Effective January 1, 1989, Zions Bancorporation further amended and restated the Plan and renamed the Plan the Zions Bancorporation Employee Investment Savings Plan. Effective September 18, 1998, Zions Bancorporation terminated the Zions Bancorporation Profit Sharing Plan and on July 22, 1999, that plan was merged into this Plan. Effective December 31, 2001, Zions Bancorporation merged the Zions Bancorporation Employee Stock Savings Plan into the Zions Bancorporation Employee Investment Savings Plan, which merger further served to restate and amend both the Zions Bancorporation Employee Stock Savings Plan and the Zions Bancorporation Employee Investment Savings Plan to comply with and satisfy GUST. With the merger and amendment, Zions Bancorporation also changed the name of the Plan, effective January 1, 2002, to the Zions Bancorporation Payshelter 401(k) Plan (the “GUST Plan”). Effective as of January 1, 2003, Zions Bancorporation amended and restated the Plan to be known as the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan. The Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan as merged and combined is referred to herein as the “Prior Plan.”

1.3 Intent: Zions Bancorporation intends by this Plan to restate in full the Prior Plan, as it previously existed following the merger that was effective December 31, 2001, and continue in part the retirement benefit program it has previously established for the benefit of its Employees who shall meet the eligibility requirements hereinafter set forth and for the benefit of the beneficiaries of such Employees, respectively, as hereinafter provided. Zions Bancorporation has designed this Plan to permit Employee Deferrals and Employer Matching Contributions that satisfy the “safe harbor” requirements of Code §§401(k)(12) and 401(m)(11). Zions Bancorporation also intends that this Plan shall be an employee stock ownership plan within the meaning of Code §4975(e)(7) and shall meet all other applicable requirements of the Internal Revenue Code of 1986 (“Code”) and the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan shall be interpreted, wherever possible, to comply with the terms of the Code and ERISA and all formal regulations and rulings issued thereunder.

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1.4 Transferee Plan: This Plan may include assets transferred from one or more other Plans (“Predecessor Plan” or “Plans”) sponsored by Zions Bancorporation or by a member of an Affiliated Group with Zions Bancorporation. In that event certain provisions of this Plan shall apply for purposes of insuring that the Predecessor Plan has complied and continues to comply with all requirements of recent legislation, known collectively as “GUST.”

1.5 Limitation on Applicability: The provisions of this Plan shall apply to all persons, whether or not employed by Zions Bancorporation or a member of an Affiliated Group on the Effective Date, who have an account in the Plan on or after the Effective Date, Prior to the Effective Date the terms of the Prior Plan shall govern.

1.6 EGTRRA: This Plan includes language that reflects certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). These provisions are intended as good faith compliance with the requirements of EGTRRA and are to be construed in accordance with EGTRRA and guidance issued thereunder. Unless otherwise provided, provisions included in this Plan in compliance with EGTRRA shall be effective as of the Effective Date of this Plan, Provisions included in this Plan conforming to EGTRRA shall supersede all other provisions of the Plan to the extent those provisions are inconsistent with EGTRRA.

-2-

ARTICLE II

DEFINITIONS OF TERMS

As used in this Plan the following words and phrases shall have the meanings indicated, unless the context clearly requires another meaning.

2.1 “Account” shall mean the Account established and maintained by the Plan Administrator for a Participant with respect to the Participant’s interest in the Investment Fund. Each Participant’s Account shall be credited or charged with contributions, distributions, expenses, earnings and losses as provided herein. The following separate sub-accounts shall be established for each Participant, as applicable, and in the aggregate they shall constitute (he Participant’s Account;

(a) “Participant Elective Deferral Account” shall mean the sub-account that is attributable to the contributions made by the Employer pursuant to an election by the Participant under Section 5.1.

(b) “Participant Rollover Account” shall mean the sub-account that is attributable to contributions received pursuant to Section 5.5. Effective June 1, 2007, any amount in the Participant Rollover Account that is attributable to a rollover from another plan of Roth elective deferrals pursuant to Section 5.4A(e) shall be accounted for separately.

(c) “Employer Matching Contribution Account” shall mean the sub-account that is attributable to matching contributions made by the Employer pursuant to Section 5,6.

(d) “Employer Non-Elective Contribution Account” shall mean the sub-account that is attributable to the Non-Elective Contributions made by the Employer pursuant to Section 5.7.

(e) “Participant Voluntary Contribution Account” shall mean the sub-account that is attributable to Voluntary Contributions made by the Employee prior to the Effective Date. This sub-account shall also reflect the Participant’s Voluntary Contributions used previously to acquire Company Stock.

(f) “Paysop Account” shall mean the sub-account that is attributable to all amounts transferred to this Plan from the Paysop pursuant to that certain trust to trust transfer agreement effective December 29, 1988.

(g) “Employer Securities Account” shall mean the sub-account maintained for each Participant to hold the Participant’s share of Employer Securities (including fractional shares) held by the Plan, regardless of origin to the Plan or contribution source, including, without limitation, Employer Securities purchased and paid for by the Trust or contributed in kind by the Employer to the Trust, forfeitures of Employer Securities and stock dividends on Employer Securities. To the extent it holds Employer Securities the Dividend Account shall also be treated as part of the Employer Securities Account for all Plan purposes, including diversification under Section 6.6, but excepting vesting under Section 11.1.

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(h) “General Investments Account” shall mean the sub-account that is attributable to all contributions made to the Plan for the benefit of the Participant that are not comprised of Employer Securities or used to purchase Employer Securities, together with all forfeitures, earnings and accruals thereon. This sub-account shall hold all non-Employer Securities investments, regardless of origin to the Plan or contribution source.

(i) “Dividend Account” shall mean the sub-account that is maintained for the purpose of receiving and holding cash dividends paid by the Plan Sponsor on Employer Securities held by the Plan until distributed or invested in Employer Securities. Upon investment in Employer Securities, the Dividend Account shall be deemed a part of and treated in the same manner as the Employer Securities Account for all Plan purposes, including diversification under Section 6.6, but excepting vesting under Section 11.1.

(j) “Segregated Investment Account” shall mean the sub-account that is maintained for the benefit of a Participant pursuant to Section 6.6. Effective January 1, 2004, this Account shall be the same as the Participant’s General Investments Account as described in subsection (h).

(k) “Predecessor Plan Account” shall mean the sub-account that is attributable to assets transferred from a Predecessor Plan (“Transferred Benefits”).

(1) “Roth Elective Deferral Account” shall mean the sub-account that is attributable to contributions to the Plan made pursuant to an election by the Participant under Section 5.4A.

(m) “In-plan Roth Rollover Account” shall mean the sub-account that is attributable to an in-plan Roth rollover which is made pursuant to the requirements of Section 5.4A(e).

Certain sub-accounts may include or incorporate assets from other sub-accounts. The maintenance of separate sub-accounts is for Plan accounting purposes only and segregation of the assets of the Plan shall not be required.

2.2 “Accrued Benefit” shall mean, as of any date, the sum of the values in a Participant’s Account as of the most recent preceding Valuation Date, plus any contributions to and minus any distributions from the Account since the Valuation Date.

2.3 “Administratively Feasible” shall mean, when determining the date by which a Participant may receive a distribution of his or her Accrued Benefit from the Plan, a date that reasonably follows the final determination by the Plan Administrator of all factors that affect the value or amount of the balance in the Participant’s Account. Such factors shall include the valuation of the assets attributable to the Account and the determination of all costs and expenses associated with the Account and the assets attributable thereto that must be paid before or in connection with the distribution. The Plan Administrator shall not make any distribution before the Plan Administrator shall have determined, within its sole and reasonable discretion, that a correct and complete valuation of the Account has been accomplished and that all attributable costs and expenses have been determined and applied, or in the alternative, provision for their application has been made. In regard to providing for application of costs and expenses, whenever any attributable cost or expense has not or cannot be determined

-4-

within a reasonable time following a request for distribution, the Plan Administrator may establish a reasonable maximum percentage that can be distributed from the Participant’s Account until such time as the Plan Administrator has determined (and applied, as appropriate) all additional costs applicable to the Participant’s Account. If so elected by the Participant, he or she shall receive distribution of that percentage portion of his or her Account that the Plan Administrator has confirmed as distributable. The remainder shall be distributed once the Plan Administrator has determined and applied all additional costs deductible from the Participant’s Account. The Plan Administrator shall provide any required notice to the Participant and comply with all applicable laws and regulations when determining and setting the maximum distribution percentage.

With respect to any distribution to a Participant that the Plan may or would be entitled to offset by application of ERISA §206(d)(4), no such distribution shall be Administratively Feasible before the date on which a final order or judgment is entered or could be entered, or a settlement agreement is executed, with respect to the circumstances giving rise to the possible application of that Section.

2.4 “Administrator” or “Plan Administrator” shall mean the person, persons, or corporation administering this Plan, as provided in Article XIII hereof, and any successor or successors thereto.

2.5 “Affiliated Group” shall mean a group of corporations, trades or businesses that constitutes a controlled group of corporations, trades or businesses as defined in Code §§414(b) and (c) and shall also include a group of corporations, partnerships or other organizations that constitutes an affiliated service group as defined in Code §414(m) or is treated as a single employer under Code §414(o) and the regulations thereunder.

2.6 “Age” shall mean a person’s attained age in completed years and months as of the date determined.

2.7 “Anniversary Date” shall be the first day of each Plan Year.

2.8 “Beneficiary” shall mean any person, persons, or trust designated by a Participant on a form as the Plan Administrator may prescribe to receive any death benefit that may be payable hereunder if such person or persons survive the Participant. This designation may be revoked at any time in similar manner and form. In the event of the death of the designated Beneficiary before the death of the Participant, the Contingent Beneficiary shall be entitled to receive any death benefit.

2.9 “Board of Directors” shall mean:

(a) in the case of a corporation, its Board of Directors; or

(b) in the case of a partnership or joint venture, its controlling partners.

2.10 “Code” shall mean the Internal Revenue Code of 1986, as amended.

2.11 “Compensation” or “Annual Compensation” shall mean the Participant’s wages, salaries, fees for professional service and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the

-5-

Company to the extent that the amounts are includable in gross income (including, but not limited to, commission paid salesmen, compensation for services on insurance premiums, tips, and bonuses). Compensation will also include Participant contributions to any insurance program and elective contributions made by the Company on behalf of its Participants that are not includable in gross income under Code Sections 125, 402(e)(3), 402(h) or 403(b).

The term “Compensation” does not include:

(a) Company contributions to a plan of deferred compensation (other than elective contributions described above) to the extent that, before the application of the Code Section 415 limitations to that plan, the contributions are not includible in the gross income of the Participant for the taxable year in which contributed. Additionally, any distributions from a plan of deferred compensation are not considered as Compensation regardless of whether such amounts are includible in the gross income of the Participant when distributed. However, any amounts received by a Participant pursuant to an unfunded nonqualified plan may be considered as Compensation in the year such amounts are includible in the gross income of the Participant;

(b) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by a Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

(c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option;

(d) Other amounts that receive special tax benefits, such as premiums for group term life insurance (without regard to whether the premiums are includible in the gross income of the Participant);

(e) Reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, parking or public transportation payments not includable in gross income by reason of Code §132(f)(4), welfare benefits, and any lump sum amounts paid at termination of employment (on account of such termination), such as severance pay, vacation and sick leave cash-outs; and

(f) Directors fees, if any, paid to Highly Compensated Employees.

Effective for Plan Years commencing on and after January 1, 2002, Annual Compensation of each Participant taken into account in determining allocations for any Plan Year shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code §401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to Annual Compensation for the Plan Year that begins with or within the calendar year,

For any short Plan Year the Annual Compensation limit shall be an amount equal to the Annual Compensation limit for the calendar year in which the Plan Year begins, multiplied by the ratio obtained by dividing the number of full months in the short Plan Year by 12.

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2.12 “Contingent Beneficiary” shall mean the person, persons, or trust duly designated by the Participant to receive any death benefit from the Plan in the event the designated Beneficiary does not survive the Participant.

2.13 “Disability” shall mean when applied to any Participant who has not yet attained Normal Retirement Age, an impairment occurring due to sickness or injury that prevents the Participant from performing his or her material and substantial duties as an Employee and that can be expected (a) to last for a long-continued, indefinite period and (b) result in the Participant being unable to perform the duties of any gainful occupation for which he or she is reasonably fitted by education, training or experience. The Plan Administrator shall determine the existence of Disability under this Section by applying of foregoing standard in a manner consistent with the determination of disability under the long term disability plan sponsored by the Plan Sponsor. Eligibility to receive Social Security disability payments shall not automatically deem the Participant to be disabled without further determination by the Plan Administrator.

2.14 “Disqualified Person” [Reserved].

2.15 “Distribution Date” shall mean the first day of the first month for which an amount is payable, or the date on which a benefit is actually paid or begins to be paid.

2.16 “Effective Date” shall mean generally January 1, 2002, the effective date of this restated Plan. All provisions of this Plan shall be effective as of that date unless an alternative dale is specifically provided. The Prior Plan was restated effective as of January 1, 2003. This document replaces and supersedes the Prior Plan retroactive to January 1, 2002.

2.17 “Elective Deferral” shall mean a contribution to the Plan under a cash or deferred arrangement as defined in Code §401(k) to the extent not includable in gross income, which is made pursuant to an election and authorization by a Participant through a Salary Deferral Agreement consistent with the provisions of Section 5.1. Effective June 1, 2007, an Elective Deferral may also be referred to in this Plan as a “pre-tax Elective Deferral,” in order to distinguish it from a Roth Elective Deferral that is permitted under Section 5.4A. Unless specifically referred to as a Roth Elective Deferral, any reference to an Elective Deferral under this Plan shall mean Elective Deferral as defined in the first sentence of this Section.

2.18 “Eligible Employee” shall mean any Employee who is not an Excluded Employee.

2.19 “Employee” shall mean any individual who performs personal services directly for and with the consent and supervision of a Zions Employer in a capacity other than solely as a director. The term “Employee” shall also include a Leased Employee.

2.20 “Employer” or “Zions Employer” shall mean the Plan Sponsor and any other entity who, with the authorization of the Plan Sponsor, may adopt this Plan. Solely for purposes of determining Eligibility Service, Years of Vesting Service and One Year Breaks in Service, any entity not adopting this Plan that, together with the Plan Sponsor, is a member of an Affiliated Group shall also be treated as an Employer for the period of time during which the entity was a part of the Affiliated Group. Each Zions Employer participating in this Plan shall be identified on a list attached as an addendum to this

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Plan or through separate participation agreements reflecting adoption of this Plan by the Zions Employer.

2.21 “Employer Contribution” shall mean any Employer contribution made to this Plan on behalf of an Employee.

2.22 “Employer Securities” shall mean common stock issued by the Plan Sponsor (or by a corporation that is a member of the controlled group of corporations of which the Plan Sponsor is a member) that is readily tradeable on an established securities market. Noncallable preferred stock shall be deemed to be “Employer Securities” if such stock is convertible at any time into stock that constitutes “Employer Securities” hereunder and if such conversion is at a conversion price that (as of the date of the acquisition by the Plan) is reasonable. Preferred stock shall be treated as noncallable if after the call there will be a reasonable opportunity for a conversion that meets the above requirement.

2.23 “Entry Date” shall mean, solely for purposes of participation under Article IV, the date an Employee became or becomes a Participant in the Plan. Under the GUST Plan Entry Dates occurred on January 1 April 1, July 1 and October 1 of each Plan Year. Effective January 1, 2002, the GUST Plan was amended to provide that Entry Dates occur on each day of the Plan Year. The Effective Date shall also be an Entry Date for this Plan.

2.24 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations issued thereunder.

2.25 “Excluded Employee” shall mean a member of that class of Employees who are not eligible to participate in the Plan or accrue any benefit under the Plan, regardless of the number of hours worked. The class of such Employees includes:

(a) Employees whose employment is governed by the terms of a collective bargaining agreement between Employee representatives and the Employer under which retirement benefits were the subject of good faith bargaining between the Employee representatives and the Employer.

(b) Employees who are non-resident aliens and who receive no earned income (within the meaning of Code §911(b)) from an Employer that constitutes income from sources within the United States.

(c) Employees whose services for the Employer are performed outside of the United States or whose principal base of operations is outside of the United States.

(d) Employees who are designated by the Employer to be in either of the following classifications:

(1) independent contractor, or

(2) temporary employee or Leased Employee,

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It is expressly intended that an individual identified by the Employer to be in one of the above classifications shall be ineligible to participate in the Plan without regard to whether a court or administrative agency subsequently determines that the individual was not or is not in fact in that classification.

(e) Employees who are employed by an entity that is part of a Affiliated Group with a Zions Employer, but which entity has not adopted and does not participate in this Plan.

2.26 “Exempt Loan” shall mean a loan to this Plan that satisfies the Exempt Loan transaction provisions of Section 14.3.

2.27 “Fiduciary” shall mean and include the Trustee, Plan Administrator, Plan Sponsor, Investment Manager, and any other person or corporation who:

(a) exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets;

(b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the Plan, or has any authority or responsibility to do so;

(c) has any discretionary authority or discretionary responsibility in the administration of the Plan; or

(d) is described as a “fiduciary” in Sections 3(14) or (21) of ERISA or is designated to carry out fiduciary responsibilities pursuant to this agreement to the extent permitted by Section 405(e)(1)(B) of ERISA.

2.28 “Highly Compensated Employee” shall mean, for any Plan Year, an Employee, other than a non-resident alien receiving no earned income from the Employer from sources within the United States, who:

(a) was at any time during the Plan Year or the Look-back Year a Five Percent Owner (as defined in Section 19.2(b)); or

(b) received Compensation from the Employer in the Look-back Year in excess of $85,000 and was in the Top Paid Group for the Look-back Year.

“Look-back Year” means the Plan Year immediately preceding the Plan Year for which the determination is being made. An Employee is in the “Top Paid Group” if the Employee is in the group consisting of the top 20% of Employees when ranked on the basis of Compensation paid during the Look Back Year. When calculating the number of Employees in the Top Paid Group the following Employees shall be excluded: (i) Employees who have not completed six months of service; (ii) Employees who normally work fewer than 17 ¹/2 hours per week; (iii) Employees who normally work not more than 6 months during any year; (iv) Employees who have not attained age 21; and (v) Employees who are Excluded Employees by reason of Section 2.25(a). If permitted by IRS regulations

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or rulings, the Employer may use shorter periods and hours and a lower age when calculating the Top Paid Group. The ($85,000) amount in (b) above shall be adjusted for cost of living as provided under Code §415(d), except that the base period shall be the calendar quarter ending September 30, 1996.

A former Employee who was a Highly Compensated Employee upon Termination of Employment or at any time after attaining age 55 shall be treated as a Highly Compensated Employee. For any Plan Year, including the Look-back Year, no family aggregation rules shall apply when determining who is a Highly Compensated Employee and no Employee who is a family member of any Highly Compensated Employee shall be required or considered to be a single Employee with the Highly Compensated Employee.

For purposes of this Section, Compensation is defined as in Section 7.1(b) of this Plan, but shall include contributions made by the Employer to a plan of deferred compensation otherwise excluded in Section 7.1(b).

2.29 “Inactive Participant” shall mean a Participant who retains and is entitled to receive an Accrued Benefit under the Plan, but who is not currently eligible to make Elective Deferral Contributions or receive an allocation of Employer Contributions or forfeitures because the Participant has incurred a Termination of Employment.

2.30 “Investment Fund” shall mean all assets of the Trust Fund.

2.31 “Investment Manager” shall mean any Fiduciary (other than a Trustee or Named Fiduciary) who:

(a) has the power to manage, acquire or dispose of any asset of the Plan;

(b) is (1) registered as an investment advisor under the Investment Advisors Act of 1940; (2) a bank as defined in that Act; or (3) is an insurance company qualified to perform services described in subsection (a) above under the laws of more than one state; and

(c) has acknowledged in writing that he is a Fiduciary with respect to the Plan.

2.32 “K-Test Average Contribution Percentage” shall mean the average (expressed as a percentage) of the K-Test Contribution Percentages of the Participants in a group.

2.33 “K-Test Contribution Percentage” shall mean the ratio (expressed as a percentage) of a Participant’s K-Test Contributions for a Plan Year to the Participant’s Compensation for the Plan Year. The K-Test Contribution Percentage for a Participant who is a Highly Compensated Employee shall be determined by combining all cash or deferred arrangements under which the Highly Compensated Employee is eligible to participate (other than those that may not be permissively aggregated) with this Plan as though they were a single arrangement. For this purpose, Compensation is defined as in Section 7.1 (b) of the Plan. The K-Test Contribution Percentage for a Participant who has made no Elective Deferral contributions and who is not credited with any K-Test Contributions for the Plan Year shall be zero.

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2.34 “K-Test Contributions” shall mean, for any Plan Year, a Participant’s Elective Deferrals, plus, if so elected by the Employer, part or all of the Qualified Non-Elective Contributions and Qualified Matching Contributions allocated to the Participant for such year, provided that, any Qualified Non-Elective Contributions included as K-Test Contributions shall not increase the difference between the K-Test Average Contribution Percentage for Highly Compensated Employees and the K-Test Average Contribution Percentage for Non-Highly Compensated Employees; and, further provided that, no Qualified Non-Elective Contributions or Qualified Matching Contributions included as K-Test Contributions shall be included as M-Test Contributions. In determining the amount of a Participant’s Elective Deferrals under this Section the Plan Administrator shall take into account elective deferrals made by the Participant under any other plan that is aggregated with this Plan for purposes of Code §401(a)(4) or Code §410(b) (other than Code §410(b)(2)(A)(ii)) and any other plan satisfying Code §401(k)(3) and Reg. §1.401(k)-1(b)(3) that the Employer elects to permissively aggregate with this Plan, by treating all such plans and this Plan as a single plan.

2.35 “Leased Employee” shall mean any person who, pursuant to an agreement between the Zions Employer and the Plan Sponsor or any other person or organization (leasing organization), has performed services for the Zions Employer (or for the Zions Employer and related persons determined in accordance with Code §414(n)(6)) and such services are performed under the primary direction or control of the Zions Employer.

2.36 “Leveraged Employer Securities” shall mean Employer Securities acquired by the Trust with the proceeds of an Exempt Loan.

2.37 “Limitation Year” shall mean the Plan Year, unless the Employer elects a different 12 month period.

2.38 “M-Test Average Contribution Percentage” shall mean the average (expressed as a percentage) of the M-Test Contribution Percentages of the Participants in a group.

2.39 “M-Test Contribution Percentage” shall mean the ratio (expressed as a percentage) of a Participant’s M-Test Contributions for a Plan Year to the Participant’s Compensation for the Plan Year. The M-Test Contribution Percentage for a Participant who is a Highly Compensated Employee shall be determined by combining all plans subject to Code §401(m) under which the Highly Compensated Employee is eligible to participate (other than those that may not be permissively aggregated) with this Plan as though they were a single plan. For this purpose, Compensation is defined as in Section 7.1(b) of the Plan. The M-Test Contribution Percentage for a Participant who has made no Elective Deferral contributions and who is not credited with any M-Test Contributions for the Plan Year shall be zero.

2.40 “M-Test Contributions” shall mean for any Plan Year Matching Contributions made pursuant to Section 5.6 less any of the Participant’s Qualified Matching Contributions included as K-Test Contributions. If so elected by the Employer, part or all of the Qualified Non-Elective Contributions allocated to the Participant for such year shall be included as an M-Test Contribution, provided that any Qualified Non-Elective Contributions included as M-Test Contributions shall not increase the difference between the M-Test Average Contribution Percentage for Highly Compensated Employees and the M-Test Average Contribution Percentage for Non-Highly Compensated Employees; and,

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further provided that, no Qualified Non-Elective Contributions included as M-Test Contributions shall be included as K-Test Contributions. In determining the amount of M-Test Contributions under this Section the Plan Administrator shall take into account all employee voluntary contributions made by the Participant and all matching contributions made by the Employer under any other plan that is aggregated with this Plan for purposes of Code §401(a)(4) or Code §410(b) (other than Code §410(b)(2)(A)(ii)) and any other plan satisfying Code §401(k)(3) and Reg. §1.401(k)-1(b)(3) which the Employer elects to permissively aggregate with this Plan, by treating all such plans and this Plan as a single plan.

2.41 “Matching Contribution” shall mean any Employer contribution made to the Plan on behalf of an Employee on account of an Employee’s Elective Deferral, but excluding, for Plan Years beginning after December 31, 1988, any contribution used to meet the minimum required allocation under Section 19.3. For Plan Years commencing after December 31, 2001, Matching Contributions may be used to satisfy the minimum required contribution requirements of Section 19.3 to the extent provided in Section 19.9, if the Employer fails to or elects not to provide benefits to Participants under this Plan on a safe harbor basis, as defined herein.

2.42 “Named Fiduciary” shall mean the Plan Administrator and any Committee appointed and so designated by the Plan Administrator.

2.43 “Net Profit” for any year shall mean the current and accumulated earnings of the Employer as reflected by its books of account for the particular fiscal year before the provision for federal and state income tax, without increase or decrease due to corrections or adjustments subsequently made, but excluding the cost of contributions made under this Plan or any other qualified plan.

2.44 “Non-Highly Compensated Employee” shall mean an Employee who is not a Highly Compensated Employee.

2.45 “Normal Retirement Age” shall mean age 65.

2.46 “Normal Retirement Date” shall mean the first day of the calendar month coinciding with or next following a Participant’s Normal Retirement Age.

2.47 “Participant” shall mean any Eligible Employee who has satisfied all of the age and service requirements of Section 4.1. Such an Eligible Employee shall be deemed to be a Participant in the Plan for purposes of any applicable non-discrimination test, including the K-Test and M-Test defined in this Plan, without regard to whether he has executed a Salary Reduction Agreement and agreed to have contributions made to this Plan through Elective Deferrals. A Participant may nevertheless be considered “active” or “inactive” depending on whether he is eligible to make Elective Deferral Contributions or receive an allocation of Employer Contributions. A Participant who has an Account in the Plan but is an Inactive Participant because he or she has incurred a Termination of Employment shall not be treated as a Participant in the Plan for purposes of any applicable nondiscrimination lest, including the K-Test and M-Test defined in this Plan in any Plan Year following the Plan Year in which the Participant’s Termination of Employment has occurred.

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2.48 “Paysop” shall mean the Zions Bancorporation Payroll Stock Ownership Plan, a tax-credit employee stock ownership plan within the meaning of Code §409(a), which was merged into this Plan pursuant to that certain trust to trust transfer agreement effective December 29, 1988.

2.49 “Plan” shall mean the Plan as stated herein and as may be amended from time to time, denominated the “Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan.” The Employer intends the Plan to satisfy the requirements of Code Section 401(k) and to be an employee stock ownership plan within the meaning of Code §4975(e)(7), for all purposes of the Code.

2.50 “Plan Sponsor” shall mean Zions Bancorporation.

2.51 “Plan Year” shall mean the one year period commencing each January 1 and ending the following December 31.

2.52 “Predecessor Plan” shall mean any Plan that has been previously amended or restated for GUST and whose assets have been transferred to this Plan pursuant to a merger or trust to trust transfer. The benefits that are funded by the transferred assets shall be protected benefits within the meaning of Code §411(d)(6) and the regulations thereunder and before their transfer to this Plan shall be subject to all provisions of the Predecessor Plan, including any transitional rules required by prior legislation such as GUST and applicable IRS regulations.

2.53 “Prior Plan” shall mean the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan, as it existed immediately before the Effective Date.

2.54 “Qualified Matching Contribution” shall mean a Matching Contribution with respect to which the requirements of Reg. §1.401(k)-1(b)(5) and Code §§401(k)(2)(B) and (C) are met.

2.55 “Qualified Non-Elective Contribution” shall mean any Employer contribution to the Plan other than a Matching Contribution with respect to which the Employee may not elect to have the contribution paid to the Employee in cash instead of being contributed to the Plan and (if treated as K-test Contributions) the requirements of Reg. §1.401(k)-1(b)(5) and Code §§401(k)(2)(B) and (C) are met or (if treated as M-Test Contributions) the requirements of Reg. §1.401(m)-1(b)(5) are met.

2.56 “Transferred Benefits” shall mean those benefits funded by assets transferred to the Plan from a Predecessor Plan. Transferred Benefits shall include all optional forms of benefits available under the Predecessor Plan(s) from which the Transferred Benefits were received, unless otherwise provided in this Plan.

2.57 “Trust” shall mean the Trust originally created in conjunction with the Plan, previously named effective January 1, 2002, the Zions Bancorporation Payshelter 401(k) Plan Trust. As of the Effective Date the Trust is designated as the “Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan Trust.”

2.58 “Trust Fund” shall mean all cash, Employer Securities, securities, annuity contracts, real estate and any other property held by the Trustee pursuant to the terms of the Trust and this Plan, together with investment earnings or losses thereon, less any applicable expenses of the Plan and Trust.

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2.59 “Trustee” shall mean the bank, trust company or other corporation possessing trust powers under applicable state or federal law, or one or more individuals, or any combination thereof named as Trustee or Trustees under the Trust.

2.60 “Valuation Date” shall mean the date on which the Trust Fund and Accounts are valued, as provided in this Plan. The following shall be Valuation Dates:

(a) the last day of each Plan Year (the “Annual Valuation Date”), and

(b) every other business day during the Plan Year on which trading activity occurs or could occur with respect to the Employer Securities held by the Plan. The Plan Administrator shall interpret this Section as it deems necessary or advisable to provide for the orderly and equitable administration of the Plan.

2.61 “Vested Interest” or “Vested Accrued Benefit” shall mean the portion of a Participant’s Accrued Benefit that is non-forfeitable.

2.62 “Voluntary Contributions” shall mean after-tax contributions previously made by a Participant under a Salary Reduction Agreement with the Employer. As of the Effective Date Voluntary Contributions are no longer permitted to be made to the Plan.

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ARTICLE III

SERVICE DEFINITIONS AND RULES

3.1 “Eligibility Computation Period” shall mean the period used to measure Eligibility Service and Breaks in Service for purposes of eligibility to begin and maintain participation in the Plan. As of January 1, 2002, the Plan does not apply any minimum Eligibility Computation Period.

3.2 “Eligibility Service” shall mean service for any period during which an Employee receives credit for Hours of Service for a Zions Employer.

3.3 “Employment Commencement Date” shall mean the date on which the Employee first performs an Hour of Service for a Zions Employer.

3.4 “Hour of Service” shall mean and be determined as follows;

(a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer. These hours shall be credited to the Employee for the year or years in which the duties are performed.

(b) Each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or Leave of Absence. Notwithstanding the preceding sentence:

(1) No more than 501 Hours of Service are required to be credited under this paragraph during which the Employee performs no duties (whether or not such period occurs in a single computation period);

(2) An hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker’s compensation or unemployment compensation or disability insurance laws; and

(3) Hours of Service are not required to be credited for a payment that solely reimburses an Employee for medical or medically related expenses incurred by the Employee.

For purposes of this paragraph (b), a payment shall be deemed to be made by or due from an Employer regardless of whether such payment is made by or due from the Employer directly, or indirectly through, among others, a trust fund or insurer to which Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate. Hours under this paragraph (b)

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shall be calculated and credited pursuant to DOL Reg. §2530.200b-2, paragraphs (b) and (c), which are incorporated herein by this reference.

(c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service shall not be credited both under paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c). These hours shall be credited to the Employee for the year or years to which the award or agreement pertains rather than the year in which the award, agreement or payment is made.

(d) Hours of Service shall be determined on the basis of actual hours for which an Employee is paid, entitled to payment or for which back pay is awarded or agreed to.

(e) In the case of an Employee who is absent from work for any period:

(1) by reason of the pregnancy of the Employee;

(2) by reason of the birth of a child of the Employee;

(3) by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee; or

(4) for purposes of caring for such child for a period beginning immediately following such birth or placement;

Hours of Service shall include the Hours of Service that otherwise would normally have been credited to such Employee but for such absence; or in any case in which the Plan is unable to determine the Hours of Service to be credited, eight Hours of Service for each regularly scheduled work day of such absence, The total number of hours treated as Hours of Service under this Section by reason of any pregnancy or placement shall not exceed 501 hours less the number of Hours of Service credited to an Employee pursuant to subsections (a) through (e) above, for an absence described in this subsection (f). The hours described in this subsection (f) shall be treated as Hours of Service only in the computation period in which the absence from work begins, if an Employee would be prevented from incurring a One-Year Break in Service in such computation period solely because the period of absence is treated as Hours of Service as provided herein; or in any other case, in the immediately following computation period. Notwithstanding the foregoing, no credit will be given pursuant to this subsection (f) unless the Employee furnishes to the Plan Administrator such timely information as (he Plan Administrator may reasonably require to establish that the absence from work is for reasons referred to herein, and the number of days for which there was such an absence.

(f) Hours of Service shall be aggregated for service with all Zions Employers, however, in no event shall duplicate credit be given for the same Hours of Service.

(g) The Plan Administrator may use any records to determine Hours of Service that it considers an accurate reflection of the facts.

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(h) When crediting Hours of Service for Employees who are paid on an hourly basis the Plan Administrator shall use the “actual” method. For purposes of the Plan, “actual” method shall mean the determination of Hours of Service from records of hours worked and hours for which the Employer makes payment or for which payment is due from the Employer. When crediting Hours of Service for Employees who are not paid on an hourly basis, the Plan Administrator shall use the “salaried earnings” method. With respect to an Employee whose Compensation consists primarily of periodic salary payments, “salaried earnings” method shall mean the determination of Hours of Service from records showing payments made to the Employee or payments due to the Employee from the Employer. In applying the “salaried earnings” method, an Employee who has at least 435 hours or 870 hours shall be credited with 500 Hours of Service and 1,000 Hours of Service, respectively.

3.5 “One Year Break in Service” shall mean a 12 consecutive month period during which an Employee has not completed more than 500 Hours of Service, regardless of whether the Employee has incurred a Termination of Employment. For purposes of vesting, such 12 consecutive month periods shall be measured on the same basis as Years of Vesting Service. Effective January 1, 2006, except as otherwise provided in Section 3.13, the provisions of this Section shall no longer apply for purposes of determining Years of Vesting Service. For purposes of eligibility to participate, the Plan shall not apply any break in service rule. The following types of absence shall not constitute a One-Year Break in Service:

(a) extended vacation, provided that persons under similar circumstances shall be treated alike;

(b) Absence due to illness or accident while regular remuneration is paid;

(c) Absence for military service or significant civilian service for the United States, provided that with respect to civilian service, the absent Employee returns to service with the Employer within 30 days of his release from the civilian service or any longer period during which his right to re-employment is protected by law and with respect to military service, the absent Employee returns to service within the period described in Section 3.12, or any longer period during which his right to re-employment is protected by law.

3.6 “Re-employment Commencement Date” shall mean the date on which an Employee, who has both incurred a Termination of Employment from the Employer and has had a One Year Break in Service as a result of that termination, first performs an Hour of Service for the Employer following such Break in Service.

3.7 “Termination of Employment” with respect to any Employee or Participant shall occur upon the separation from service (effective January 1, 2002, severance from employment) of the Employee or Participant due to the resignation, discharge, death, retirement, failure to return to active work at the end of an authorized leave of absence or the authorized extension(s) thereof, failure to return to active work when duly called following a temporary layoff, or upon the happening of any other event or circumstance that, under the then current policy of the Zions Employer results in the termination of the employer-employee relationship. Termination of Employment shall not be deemed to occur merely because of a transfer between Zions Employers.

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3.8 “Vesting Computation Period” shall mean the 12 consecutive month period used to measure Years of Vesting Service and Breaks in Service for purposes of vesting. The 12 consecutive month period used for the Vesting Computation Period shall be the Plan Year. Effective January 1, 2006, except as otherwise provided in Section 3.13, the provisions of (his Section shall no longer apply for purposes of determining Vesting Service.

3.9 “Year of Service” shall mean a 12 consecutive month period during which an Employee has completed at least 1,000 Hours of Service.

3.10 “Year of Vesting Service” shall mean:

(a) for Plan Years commencing prior to January 1, 2002, a Vesting Computation Period during which an Employee has completed at least one Hour of Service. For Plan Years commencing on or after January 1, 2002, “Year of Vesting Service” shall mean a Vesting Computation Period during which an Employee has completed at least 1,000 Hours of Service. Subject to Section 11.5 a Participant’s Years of Vesting Service shall be determined based on all Vesting Computation Periods containing or beginning after his Employment Commencement Date or Re-employment Commencement Date, provided that service prior to the date an Employee has attained age 18 shall not be taken into account. Any individual who was a Leased Employee and who subsequently becomes an Eligible Employee shall be credited with all Years of Service as a Leased Employee for purposes of determining Years of Vesting Service. Effective January 1, 2006, except as otherwise provided in Section 3.13, the provisions of this subsection (a) shall no longer apply for purposes of determining Years of Vesting Service.

(b) with respect to a Merged Employee for Plan Years commencing prior to the Merger Dale, a calendar year during which the Merged Employee has completed at least one hour of service for the Merged Employer. For Plan Years commencing on or after the Merger Date, “Year of Vesting Service” shall mean a Vesting Computation Period during which the Merged Employee completes at least 1,000 Hours of Service. Effective January 1, 2006, except as otherwise provided in Section 3.13, the preceding sentence shall no longer apply and “Years of Vesting Service” after the Merger Date shall be credited to a Merged Employee as provided in Section 3.13. All creditable Years of Vesting Service determined under the above rules for a Merged Employee shall be credited under this Plan as of the Merged Employee’s Employment Commencement Date. For purposes of this Section 3.10(b):

(1) “Merged Employee” shall mean an Employee who immediately prior to his Employment Commencement Date, was employed by a Merged Employer.

(2) “Merged Employer” shall mean an entity that was acquired by (whether as a slock or asset acquisition) or merged into the Plan Sponsor or another Employer who has adopted this Plan.

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(3) “Merger Date” shall mean the date designated in any agreement or contract of merger, sale or acquisition as the date on which the acquisition of the Merged Employer by the Plan Sponsor or Employer is considered complete.

3.11 Special Rules for Crediting Service. In crediting Service under the Plan for any Employee who is or was employed by a Participating Employer the rules for crediting Service as set forth in each respective Participation Agreement or as set forth in this Section shall apply. When crediting service under the Plan for Employees who are employed by certain members of an Affiliated Group or who are former employees of entities acquired by the Employer, the following special rules for crediting service shall apply:

(a) Discount Corporation of New York: Each Employee of Discount Corporation of New York (“Discount”) who, as of August 10, 1993, satisfied the Plan’s minimum age and service requirements shall be eligible to participate in the Plan on August 11, 1993 (which shall be deemed a “Plan Entry Date” for this purpose) or on any subsequent Plan Entry Date if employed by the Employer or any member of the Affiliated Group who participate in the Plan on that date. All service of the Employee with Discount and any member of the affiliated Group shall be credited for purposes of the above participation rule. For purposes of benefit accrual, no prior service with Discount shall be taken into account.

3.12 Qualified Military Service Rules: The following rules shall apply to an Employee who has Qualified Military Service while employed by the Employer.

(a) “Qualified Military Service” shall mean service by an Employee in the uniformed services of the United States (as defined in chapter 43 title 38 of the United States Code), provided:

(1) the employee provides advance notice of the service to the Zions Employer, when such notice is practical;

(2) the employee is not dishonorably discharged;

(3) the employee is re-employed by the Zions Employer within 30 days following the completion of the service or any longer period during which his or her or her right to re-employment is protected by law; and

(4) the cumulative length of the Employee’s absence from employment due to the service does not exceed five years.

(b) An Employee’s Qualified Military Service shall be treated as service for the Employer for all purposes under the Plan. An Employee’s imputed Hours of Service during Qualified Military Service shall be:

(1) the Hours of Service the Employee would have worked but for his or her or her Qualified Military Service; and

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(2) if the Hours of Service cannot reasonably be determined, the Hours of Service the Employee would have worked had he or she worked during his or her or her Qualified Military Service at his or her or her average rate during the 12 month period immediately preceding his or her or her Qualified Military Service or, if shorter, his or her or her entire period of employment preceding the Qualified Military Service.

For vesting purposes under Section 11.01 the Employee shall also be credited with Hours of Service (without regard to whether the Employee has returned to service with the Employer) if the Employee incurs a Disability while performing the Qualified Military Service on or after January 1, 2007, and cannot return to service with the Employer as a consequence of the Disability.

(c) Compensation (as defined in Section 2.11) shall include imputed compensation during an Employee’s Qualified Military Service. Imputed compensation shall be:

(1) the compensation the Employee would have received but for his or her or her Qualified Military Service; or

(2) if the compensation is not reasonably certain, the compensation the Employee would have received had he or she received compensation during his or her qualified Military Leave at his or her or her average rate during the 12 month period immediately preceding his or her or her Qualified Military Service, or, if shorter, his or her or her entire period of employment preceding his or her or her Qualified Military Service.

(d) A Participant who returns to employment after any Qualified Military Service shall be entitled to make additional Elective Deferrals to the Plan up to the maximum amount of the Elective Deferrals the Participant would have been permitted to make based upon his or her or her imputed compensation during the Qualified Military Service, taking into account any other Elective Deferrals made by the Participant during the Qualified Military Service. The period during which the additional Elective Deferrals may be made shall commence on the date the Participant returns to employment and shall extend until the expiration of the lesser of (i) the period which is three times the length of the Participant’s Qualified Military Service or (ii) five years. Payment of Matching Contributions attributable to Elective Deferrals of imputed compensation during Qualified Military Service shall be made at the same time as other Matching Contributions, based on the time the Elective Deferrals are actually paid to the Plan. The Matching Contributions need not include earnings that would have accrued had the Participant continued performing his or her or her duties for the Employer during Qualified Military Service.

(e) Elective Deferrals of a Participant’s imputed compensation during his or her or her Qualified Military Service shall be treated as Elective Deferrals and as K-Test Contributions with respect to the Plan Year to which the imputed compensation relates, if this Plan Year is not the same Plan Year in which the Elective Deferrals are received by the Plan. Any Matching Contributions based on Elective Deferrals of a Participant’s imputed compensation during his or her or her Qualified Military Service shall be treated as M-Test Contri-

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butions with respect to the Plan Year to which the Elective Deferrals relate, if this Plan Year is not the same Plan Year in which the Elective Deferrals are received by the Plan.

(f) Repayment of any Participant loan from the Plan shall be suspended during Qualified Military Service and the loan repayment period shall be extended by the length of the Qualified Military Service. Interest shall continue to accrue on the loan during the suspension period at a rate equal to the lesser of the current rate on the loan or the maximum rate allowed by applicable law. Upon recommencing loan payments the additional accrued interest shall be taken into account in determining the total amount remaining and due on the loan.

(g) Effective June 1, 2007, a Participant who is eligible under this Section 3.12 to make an Elective Deferral to the Plan upon return from Qualified Military Service may designate any portion thereof as a Roth Elective Deferral and may designate the Plan Year for which the Roth Elective Deferral is to be credited, which may include a Plan Year that is before the Plan Year in which the Roth Elective Deferral is actually made. In that event the Plan shall treat the Roth Elective Deferral as having been made in the Plan Year of Qualified Military Service to which the contribution relates (but not earlier than January 1, 2006), as designated by the Participant. A Participant may also identify the Plan Year of Qualified Military Service for which a Roth Elective Deferral is deemed made for other purposes as well, such as for entitlement to an Employer Matching Contribution, and the determination of the five-taxable-year period of participation rule. In the absence of any designation, for purposes of determining the first year of the five years of participation rule under Code §402A(d)(2)(B), the Roth Elective Deferral shall be treated as relating to the first year of Qualified Military Service for which the Participant could have made a Roth Elective Deferral under the Plan, but not earlier than January 1, 2006. Notwithstanding the foregoing, each Participant who may make an Elective Deferral to the Plan under this Section 3.12 and who makes an Elective Deferral shall be deemed to have made a Roth Elective Deferral to the Plan from his or her Elective Deferral contributions in the sum of $1.00, unless the Participant has specifically elected a larger Roth Elective Deferral contribution amount. The Roth Elective Deferral shall be deemed made to the Plan for the earliest possible Plan Year, according to the rules of this subsection.

(h) If is determined at the time the Employee commences Qualified Military Service that the length of the service will be either (i) more than 179 days in duration or (ii) of indefinite duration and if the Employee is called to such Qualified Military Service because the Employee is a member of a military reserve unit ordered to active duty after September 11,2001, then notwithstanding the provisions of Section 8.01, the Employee may elect to withdraw any amount in the Employee’s Elective Deferral and Matching Contribution Accounts. Any such withdrawal must be made after the date of the order or call to active duty and prior to the end or close of the active duty period. The withdrawal shall also be deemed to be an Eligible Rollover Distribution under Section 11.04, except that it shall not be subject to any income tax withholding requirement that may otherwise apply under Code §72(t).

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(i) Effective for Plan Years commencing after December 31, 2008, an Employee who commences Qualified Military Service which will exceed 30 days in length may be deemed, if so elected by the Employee solely for the purpose of receiving a distribution from the Plan, to have incurred a Termination of Employment. If an Employee returns to employment after receiving a distribution from the Plan on account of an election made pursuant to this subsection, but the Employee has not satisfied the requirements of subsection (h) above, then the Employee may not make Elective Deferrals or Roth Elective Deferrals to the Plan until the expiration of 6 months from the date of the last distribution from the Plan made on account of this subsection.

3.13 Elapsed Time Method for Determining Years of Vesting Service. Effective January 1, 2006, the Plan adopts the Elapsed Time method for determining Years of Vesting Service. This method of counting Service does not track actual Hours of Service worked by an Employee, but instead measures the length of time an individual is an Employee of a Zions Employer.

(a) In determining Years of Vesting Service for an Employee, the following shall apply:

(1) An Employee’s Service taken into account for purposes of vesting shall be the time period beginning with the Employee’s Employment Commencement Date and ending on the date the Employee incurs a Termination of Employment.

(2) An Employee who incurs a Termination of Employment by reason of resignation, discharge or retirement and who then performs an Hour of Service within 12 months of that date will be credited with Service for the period in which he was not employed. An Employee who is absent for any other reason and then resigns, is discharged or retires and who preforms an Hour of Service within 12 months of his initial absence will be credited with Service for the period in which he was not employed, provided the service is not counted under the first sentence of this subsection. An Employee who is absent from Service with the Employer for over 12 months shall receive no credit for any absence following the date the Employee incurs the Termination of Employment.

(b) In determining an Employee’s Years of Vesting Service fractional years will be rounded to the nearest one twelfth of a year. Periods of Service will be based on full calendar months, crediting an Employee with a full month if the Employee works at least one Hour of Service during the month. An Employee with more than one period of Service will have all such periods aggregated and the Employee’s total Service will be used for purposes of determining Years of Vesting Service.

(c) For the Plan Year commencing January 1, 2006 only, the Plan shall credit Vesting Service according to the following rules:

(1) For each Employee of a Zions Employer who was employed by the Zions Employer on December 31, 2005, and continued to be employed on January 1, 2006, the Plan shall either apply the rules of this Section 3.13, treating January 1, 2006 as the Employment Commencement Date, or apply the previous vesting credit rules of this

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Plan without regard to this Section 3.13, crediting the Employee with Vesting Service credit according to the method that provides the greater credit.

(2) For each Employee of a Zions Employer whose Employment Commencement Date was after January 1, 2006, but prior to July 24, 2006, the Plan shall either apply the rules of this Section 3.13, or apply the previous vesting credit rules of this Plan without regard to this Section 3.13, crediting the Employee with Vesting Service credit according to the method that provides the greater credit.

(3) For each Employee of a Zions Employer whose Employment Commencement Date is after July 23, 2006, the Plan shall apply the rules of this Section 3.13 only.

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ARTICLE IV

ELIGIBILITY AND PARTICIPATION

4.1 Age and Service Requirements: From and after the Effective Date an Eligible Employee shall be eligible initially to participate in this Plan on the first Entry Date coincident with or next following the date on which he satisfies the following requirements:

(a) attains age 21, and

(b) is employed on the Entry Date.

An Eligible Employee who has satisfied the requirements above shall commence participation in the Plan on the applicable Entry Date. An Eligible Employee who has attained age 21 and is employed on the Effective Date shall participate in this Plan on the Effective Date, without regard to the other requirements of this Section. Prior to the Effective Date Eligible Employees shall participate as provided in the Prior Plan.

An Eligible Employee who becomes a Participant and who also executes a Salary Deferral Agreement in the manner set forth in procedures issued by the Plan Administrator (which may include use of electronic technologies) shall be considered to be an active Participant. An Eligible Employee shall not be required to execute a Salary Deferral Agreement in order to be considered a Participant in the Plan, however, as a condition to participation in Salary Deferral Contributions the Eligible Employee shall first execute a written Salary Deferral Agreement in the manner set forth in procedures issued by the Plan Administrator, An Employee who is a Participant in a Predecessor Plan on the day before the effective date of the merger of the Predecessor Plan into this Plan shall continue as a Participant in this Plan on the effective date of merger.

4.2 Eligibility Information: As soon as practicable after the date each Employee’s Employment Commencement Date, the Plan Administrator shall verify the Entry Date when the Employee shall first become eligible to participate in the Plan and shall notify each Employee of his/her eligibility, and of any application or other requirements for participation.

4.3 Information to be Provided by Employee: At the request of the Plan Administrator, each Eligible Employee shall furnish such information as is not available from the Employer. As a condition to participation in making Elective Deferrals to the Plan, the Employee shall first complete, execute and deliver a written Salary Deferral Agreement as reasonably required by the Plan Administrator.

4.4 Reclassification of an Eligible Employee or Excluded Employee: Any Eligible Employee, whether or not he has previously participated in the Plan, who was previously classified as an Excluded Employee and is reclassified as an Eligible Employee shall be eligible to enter the Plan as an active Participant on the later of the date of his reclassification or the Entry Date he would otherwise join if he had not been classified as an Excluded Employee, provided he has otherwise satisfied the requirements of Section 4.1.

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Any Participant who is reclassified as an Excluded Employee shall be treated as an Excluded Employee on the date of reclassification for purposes of determining his eligibility for any Employer Contributions in the Plan Year of reclassification. If, prior to the date of reclassification, the Participant had executed a Salary Deferral Agreement and is deferring Compensation in the Plan Year in which the reclassification occurs, the Participant’s Salary Deferral Agreement and all Elective Deferrals thereunder shall automatically terminate as of the last day of the payroll period that commenced immediately prior to the date the Participant is reclassified as an Excluded Employee.

4.5 Re-employment and Commencement of Participation: An Eligible Employee who had met the requirements of Section 4.1(a) and (b) but terminated employment prior to his Entry Date shall be eligible to become a Participant on the date he is re-employed by the Employer, but in no event earlier than the Entry Date he would have joined had he not ceased employment. An Eligible Employee who was a Participant shall again become a Participant on the date he is re-employed by the Employer.

4.6 No Waiver of Participation: An Eligible Employee who has satisfied all criteria for participation in this Plan shall be deemed a Participant and may not waive or reject participation.

4.7 Effect of Participation: A Participant who has satisfied all eligibility criteria and commenced active participation in this Plan shall be conclusively deemed to have assented to this Plan and to any subsequent amendments, and shall be bound thereby with the same force and effect as if he had formally executed this Plan.

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ARTICLE V

PARTICIPANT AND EMPLOYER CONTRIBUTIONS

5.1 Elective Deferrals:

(a) Each Participant may elect to defer any percentage of the Participant’s Compensation described in subsection (1) below, subject to a minimum of 1% of the Participant’s Compensation per pay period. The maximum percentage amount shall be 50% of the Participant’s Compensation. Effective for Plan Years commencing on or after July 24, 2006, the maximum percentage amount shall be 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:

(1) The Salary Deferral Agreement shall apply to each payroll period during which it is in effect and has not been rescinded. The Salary Deferral Agreement shall be applicable to all forms of the Participant’s Annual Compensation, regardless of how paid or characterized, and effective June 1, 2007, shall designate Elective Deferrals as pre-tax Elective Deferrals, Roth Elective Deferrals or both, in the percentage specified. An Elective Deferral contribution to the Plan shall be treated as a Roth Elective Deferral only when so specifically designated by the Participant in advance of the date the Roth Elective Deferral is first made to the Plan.

(2) The amount by which the Participant’s Annual Compensation is reduced under the Salary Deferral Agreement may be changed (increased, decreased or ceased and effective June 1, 2007, change between pre-tax and Roth Elective Deferrals) by a Participant at any time during the Plan Year. A change shall be evidenced by a written document, by oral instructions directly from the Participant with written confirmation in accordance with rules and procedures established by the Administrator or through any electronic means or method approved by the Plan Administrator.

(3) A Salary Deferral Agreement and or an amendment to a Salary Deferral Agreement shall be effective as soon as Administratively Feasible after the Salary Deferral Agreement or the amendment is executed, orally authorized or electronically completed by the Participant and received and confirmed by the Administrator.

(4) The Administrator may amend or revoke a Salary Reduction Agreement with any Participant at any time if the Administrator determines that a revocation or amendment is necessary to ensure that the Participant’s Elective Deferral for any Plan Year will not exceed any Plan limitations.

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(5) The Administrator may revoke its Salary Reduction Agreements with all Participants or amend its Salary Reduction Agreements with all Participants on a uniform basis if it determines that such action is necessary in order to comply with the terms of the Plan or any applicable law or regulation.

(b) The Elective Deferral amounts designated by the Participant in the Salary Deferral Agreement shall be withheld and contributed to the Plan by the Employer without regard to Net Profits to the Participant’s Elective Deferral Account. Unless otherwise approved by the Plan Administrator, Elective Deferrals made through payroll deductions shall be pursuant to the Salary Deferral Agreement executed by the Participant or orally authorized by the Participant and confirmed by the Plan Administrator or authorized by any other electronic means or method approved by the Plan Administrator.

(c) Commencing January 1, 2002, and for all Plan Years thereafter an Employee who is eligible to make Elective Deferrals under this Plan and who attains age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code §414(v). Catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code §§402(g) and 415. The Plan Administrator shall not treat catch up contributions as failing to satisfy any provisions of the Plan implementing the requirements of Code §§401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable. Effective June 1, 2007, Catch-up contributions may consist of either pre-tax or Roth Elective Deferrals.

5.2 Payment to Trustee: The Employer shall transmit to the Trustee the amounts withheld by it pursuant to Section 5.1 above as soon as Administratively Feasible, but in no event later than the fifteenth (15th) business day of the month following the month in which the amounts are withheld or received by the Employer. However, the Employer shall not transmit to the Trustee any amounts withheld by it during the Plan Year pursuant to a deferral election under Section 5.1, which in the Plan Administrator’s opinion would cause the Plan to fail to meet the limitations described in Section 5.10 for that Plan Year. Such amounts withheld and not transmitted to the Trustee shall be returned by the Employer to the respective Participants.

5.3 Suspension of Deferrals: A Participant may notify the Plan Administrator electronically, orally (with written confirmation) or in writing of his intention to suspend his election to have a portion of his Annual Compensation deferred, The suspension shall be effective as soon as Administratively Feasible after the date the notice of suspension is received shall apply to each payroll period thereafter, until a new Salary Deferral Agreement is entered into by the Participant. The Participant shall be considered a Participant hereunder for all other purposes if his employment continues, however, he shall not be considered to be an active Participant.

5.4 After-tax Contributions by Participants: From and after the Effective Dale no Participant shall be permitted or required to make after-tax or Voluntary Contributions to the Plan,

5.4A Roth Elective Deferrals: Effective June 1, 2007, and for each Plan Year thereafter, the Plan will accept Roth Elective Deferrals made on behalf of Participants. A Participant’s Roth Elective Deferrals will be allocated to a separate account maintained for such deferrals as described in this

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Section 5.4A. Unless specifically slated otherwise, Roth Elective Deferrals will be treated as Elective Deferrals for all purposes under the Plan, including the determination and allocation of Employer Matching Contributions. Notwithstanding any other provision of the Plan to the contrary, all issues involving contribution and allocation of Roth Elective Deferrals and earnings thereon and distribution of Roth Elective Deferrals shall be determined according to the provisions of this Section 5.4A, unless specifically provided otherwise in this Section.

(a) Contributions and withdrawals of Roth Elective Deferrals will be credited and debited solely to the Roth Elective Deferral Account maintained for each Participant. The Plan will maintain a record of the amount of Roth Elective Deferrals in each Participant’s Account. The Plan shall employ the same procedures set forth in Section 5.1 in determining when and how a Participant may elect to make or change an election of Roth Elective Deferrals, and may provide for designation by the Employee of pre-tax and Roth Elective Deferrals in the same Salary Deferral Agreement. For purposes of implementing this provision the term “Elective Deferrals” in Section 5.1 shall be interpreted to mean both pre-tax and Roth Elective Deferrals, as appropriate.

(b) Gains, losses, and other credits or charges must be separately allocated on a reasonable and consistent basis to each Participant’s Roth Elective Deferral Account and to the Participant’s other Accounts under the Plan. For this purpose the Plan may apply the Account adjustment provisions of Section 6.3 to the Roth Elective Deferral Account.

(c) No contributions other than Roth Elective Deferrals and properly attributable earnings shall be credited to each Participant’s Roth Elective Deferral Account.

(d) Notwithstanding Section 11.4, a direct rollover of a distribution from the Roth Elective Deferral Account will only be made to another Roth elective deferral account under an applicable retirement plan described in Code §402A(e)(l) or to a Roth IRA described in Code §408A, and only to the extent the rollover is permitted under the rules of Code §402(c).

(e) Notwithstanding Section 5.5, the Plan will accept a rollover contribution to the Roth Elective Deferral Account only if it is a direct rollover from another Roth elective deferral account under an applicable retirement plan described in Code §402A(e)(1) and only to the extent the rollover is permitted under the rules of Code §402(c). Effective for any distribution from the Plan first commenced after September 27, 2010, the Plan will also accept a rollover contribution to the In-plan Roth Rollover Account, provided that it is a direct rollover of amounts previously held in the Participant’s Account in the Plan (excluding amounts held in the Participant’s Roth Elective Deferral Account). The Plan will accept the rollover only if it is on account of a distribution that complies with all Plan distribution rules and is an Eligible Rollover Distribution within the meaning of Section 11.4. The Participant’s election to make an In-Plan Roth Rollover shall be irrevocable, once it has been accepted and so accounted for by the Plan.

(f) The Plan will not provide for a direct rollover for distributions from a Participant’s Roth Elective Deferral Account if the amount of the distributions that are eligible rollover

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distributions are reasonably expected to total less than $200 during a year. In addition, any distribution from a Participant’s Roth Elective Deferral Account shall not be taken into account in determining whether distributions from a Participant’s other Accounts are reasonably expected to total less than $200 during a year. However, eligible rollover distributions from a Participant’s Roth Elective Deferral Account shall be taken into account in determining whether the total amount of the Participant’s Account balances under the Plan exceeds $1,000 for purposes of mandatory distributions from the Plan. Any provision of the Plan that allows a Participant to elect a direct rollover of only a portion of an eligible rollover distribution but only if the amount rolled over is at least $500 shall be applied by treating any amount distributed from the Participant’s Roth Elective Deferral Account as a separate distribution from any amount distributed from the Participant’s other Accounts in the Plan, even if the amounts are distributed at the same time.

(g) In the case of any distribution of excess contributions under Section 5.12, a Highly Compensated Employee shall be permitted to designate the extent to which the excess amount is composed of pre-tax Elective Deferrals and Roth Elective Deferrals but only to the extent such types of deferrals were made for the year. If the Highly Compensated Employee does not designate which type of Elective Deferrals are to be distributed, the Plan will distribute pre-tax Elective Deferrals first.

(h) In the case of any distribution to a Participant under Articles IX or XI that is other than a lump sum distribution, the Participant shall be permitted to designate the extent to which the distribution is composed of Roth Elective Deferrals and other contributions, but only to the extent the Participant’s Account includes Roth Elective Deferrals. If the Participant does not designate the composition of Roth Elective Deferrals in a distribution, the Plan will distribute Roth Elective Deferrals until the Participant’s Roth Elective Deferral Account is exhausted prior to distributing any other contributions.

(i) For purposes of this Section 5.4A, a Roth Elective Deferral is an Elective Deferral that is:

(1) Designated irrevocably by the Participant at the time of the cash or deferred election as a Roth Elective Deferral that is being made in lieu of all or a portion of any pre-tax Elective Deferrals the Participant is otherwise eligible to make under the Plan; and

(2) Treated by the Employer as includible in the Participant’s income at the time the Participant would have received that amount in cash if the Participant had not made a cash or deferred election.

5.5 Rollover Contributions by Participants: A Participant (or an Employee who is expected to become a Participant) may make a rollover contribution directly to this Plan of an “eligible rollover distribution,” as that term is defined under Code §401(a)(31)). The Plan will accept participant rollover contributions and/or direct rollovers of distributions made after December 31, 2001, from any qualified plan described in Code §401(a) or Code §403(a), an annuity contract described in Code §403(b) or an eligible plan under Code §457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of

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a state. The Plan will also accept a participant rollover contribution of the portion of a distribution from an individual retirement account or annuity described in Code §408(a) or (b) that is eligible to be rolled over and would otherwise be includable in gross income. The Plan will not accept rollovers that include after-tax employee contributions. The rollover amount shall be credited to his Participant Rollover Contribution Account, provided:

(a) The Participant provides adequate evidence to the Plan Administrator that the amount satisfies the requirements of Code §402(c) regarding amounts that may be rolled over;

(b) If the amount is rolled over indirectly to this Plan through an individual retirement account, annuity, or bond, the amount does not include life insurance policies, amounts contributed (or deemed to have been contributed) by the Participant or amounts distributed from a Plan not described above; and

(c) It is received by this Plan as a direct transfer pursuant to Code §402(e)(6) or rolled over after distribution to the Participant within 60 days following its distribution.

5.6 Safe Harbor Employer Matching Contributions: For each Plan Year the Employer may contribute to the Plan an amount, determined without regard to Net Profits, which will be sufficient to credit the Employer Matching Contribution Account of each Participant who is a Non-Highly Compensated Employee and who satisfies the requirements of Section 6.4, with amounts that satisfy the Employer’s Matching Contribution percentage as determined by the Employer on a discretionary basis for the Plan Year. In no event however, shall the Employer Matching Contribution for any Participant who is a Non-Highly Compensated Employee in a Plan Year, when determined as a percentage of the Participant’s Compensation for the Plan Year, ever be less than the percentage amounts shown in the following table:

Participant’s Elective Deferral percentage:	Percentage of Employer Matching Contribution:
0%	0.0%
1%	1.0%
2%	2.0%
3%	3.0%
4%	3.5%
5%	4.0%

The Employer may also contribute to the Plan an amount, determined without regard to Net Profits, that will be sufficient to credit the Employer Matching Contribution Account of each Participant who is a Highly Compensated Employee and who satisfies the requirements of Section 6.4, with amounts that satisfy the Employer’s Matching Contribution percentage as determined by the Employer on a discretionary basis for the Plan Year. In no event however, shall the rate of Matching Contributions with respect to Elective Deferrals made by any Highly Compensated Employee exceed the rate of Matching Contributions with respect to Elective Deferrals made by any Participant who is a Non-Highly Compensated Employee. Excess Matching Contributions for Employees of the Sponsoring Employer or a Participating Zions Employer shall be determined each Plan Year by the Sponsoring Employer and each Participating Zions Employer respectively, or shall be as set forth in the Supple-

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mental Participation Agreement executed by the Participating Zions Employer. If the Employer or Participating Zions Employer makes a Matching Contribution in excess of that set forth in the table in this Section, in no event shall the rate of Matching Contributions increase as the rate of the Participant’s Elective Deferrals increase.

The Employer Matching Contribution amount shall be determined solely by reference to the ratio percentage of the Participant’s Elective Deferral (and effective June 1, 2007, the aggregate of the Participant’s pre-tax Elective Deferrals and Roth Elective Deferrals) compared to the aggregate of the forms of the Participant’s Compensation that are subject to the Salary Deferral Agreement as specified in Section 5.1. If the Employer makes a Matching Contribution to the Plan at any time during the Plan Year (such as on a calendar quarter basis), any limit on the amount of Employer Matching Contribution shall not be determined by reference to Annual Compensation for the Plan Year, but by reference to Compensation paid only during the period to which the Matching Contribution relates. Notwithstanding the previous sentence, no contribution in excess of the maximum amount that would constitute an allowable deduction for federal income tax purposes under the applicable provisions of the Code, as now in force or hereafter amended, shall be required to be made by the Employer under this Section, Effective January 1, 2006, and for all Plan Years thereafter the Employer Matching Contribution amount shall be based on the total Elective Deferral (and effective June 1, 2007, the aggregate of the Participant’s pre-tax Elective Deferrals and Roth Elective Deferrals) and the total Compensation of the Participant for the Plan Year without regard to when during the Plan Year the Participant’s pretax Elective Deferrals and Roth Elective Deferrals have been made. Notwithstanding the previous sentence, no contribution in excess of the maximum amount that would constitute an allowable deduction for federal income lax purposes under the applicable provisions of the Code, as now in force or hereafter amended, shall be required to be made by the Employer under this Section.

The Employer Matching Contribution may be made in cash or in kind, provided however, that if the Matching Contribution is made in cash the Plan shall immediately acquire Employer Securities with the entire amount of the contribution and if the Matching Contribution is made in kind, it shall be made in the form of Employer Securities only.

5.7 Employer Non-Elective Contributions: The Employer may contribute, without regard to Net Profits, an amount determined by its Board of Directors as an Employer Non-Elective Contribution. The Employer may make the Non-Elective Contribution in cash or in kind, provided however, that if the Non-Elective Contribution is made in cash the Plan shall immediately acquire Employer Securities with the entire amount of the contribution and if the Non-Elective Contribution is made in kind, it shall be made in the form of Employer Securities only. The Employer reserves the right to increase or decrease the amount from year to year of the Non-Elective Contribution, as determined by the Board of Directors. Notwithstanding the previous sentence, no contribution in excess of the maximum amount that would constitute an allowable deduction for federal income tax purposes under the applicable provisions of the Code, as now in force or hereafter amended, shall be required to be made by the Employer under this Section.

The amount of the contribution to be credited to the Employer Non-Elective Contribution Accounts of the Participants may be stated in terms of a gross contribution, in which case the amount shall be reduced by any non-vested forfeitures from Employer Non-Elective Contribution Accounts of the Participants to be allocated during the Plan Year pursuant to Section 11.5; or the amount may be

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stated in terms of a net contribution, in which case the amount shall be in addition to any such non-vested forfeitures. In the absence of a direction as to whether the amount of the contribution is in terms of a gross contribution or a net contribution, it shall be deemed to be a gross contribution.

5.8 Time and Method of Payment: All payments of Employer Matching and Non-Elective Contributions shall be made directly to the Trustee and shall be paid no later than the lime prescribed by law (including any extensions) for filing the Employer’s federal income tax return for the Plan Year for which they are made. The Employer may in its sole discretion, at any time during the Plan Year, make one or more partial payments to the Trustee on an estimated basis. Any amount so paid in advance shall be applied against the amount thereafter determined to be payable by the Employer and shall be credited by the Plan Administrator to the Participants’ Employer Contribution Accounts as of the end of the calendar quarter for which the payment is made.

5.9 Employer Contribution Accounts: The Plan Administrator shall establish and maintain an Employer Matching Contribution Account, as defined in Section 2.1(c) and an Employer Non-Elective Contribution Account as defined in Section 2.1 (d) for each Participant eligible to receive an Employer Matching Contribution and an Employer Non-Elective Contribution. The establishment of the accounts is for record keeping purposes only, and a physical segregation of assets shall not be required.

5.10 Limitations on Contributions: All Elective Deferral Contributions to this Plan shall be subject to the limitations in subsection (a). Notwithstanding any other provisions of this Plan, if for any Plan Year the Elective Deferral and Matching Contributions to the Plan do not satisfy the requirements of Code §§401(k)(12) and 401(m)(11), then the Elective Deferral and Matching Contributions to this Plan shall be subject to the further limitations in subsections (b) and (c) below.

(a) The total amount of a Participant’s Elective Deferrals during any calendar year shall not exceed $11,000 which amount shall be adjusted annually, consistent with the provisions of Code §402(g) and thereafter indexed at the same time and in the same manner as the dollar limitation for defined benefit plans in Code §415(b)(l)(A). For this purpose a Participant’s Elective Deferrals to this Plan plus the Participant’s elective deferrals pursuant to any other Code §401(k) arrangement, elective deferrals under a simplified employee pension plan and salary reduction contributions to a tax-sheltered annuity, irrespective of whether the Employer or any member of an Affiliated Group to which the Employer belongs maintains the arrangement, plan or annuity, shall be aggregated.

(b) The K-Test Average Contribution Percentage of Participants who are Highly Compensated Employees shall not exceed in any Plan Year the greater of:

(1) The K-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by 1.25; or

(2) The lesser of the K-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by two (2) or the K-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees plus two.

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(c) The M-Test Average Contribution Percentage for Participants who are Highly Compensated Employees shall not exceed in any Plan Year the greater of:

(1) The M-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by 1.25; or

(2) The lesser of the M-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees multiplied by two (2) or the M-Test Average Contribution Percentage for the prior Plan Year of Participants who are Non-Highly Compensated Employees plus two.

For purposes of applying the tests in (b) and (c) above in any Plan Year, the K-Test Average Contribution Percentage and the M-Test Average Contribution Percentage for Participants who are Non-Highly Compensated Employees shall be based on the prior Plan Year. The Employer may not aggregate this Plan with any other plan when applying the tests in (b) and (c) above.

5.11 Excess Contributions: In accordance with the limitations on contributions described in Section 5.10, the following amounts shall be treated as excess contributions under this Plan:

(a) Excess Deferrals: with respect to any calendar year, amounts identified as Excess Deferrals, whether determined by the Administrator or designated by a Participant in writing no later than March 1 following the end of the calendar year, in accordance with such procedures as the Plan Administrator shall specify, less any Excess K-Test Contributions previously distributed or recharacterized for the Plan Year beginning in the calendar year in which the Excess Deferral is made, pursuant to Section 5.12(b).

(b) Excess K-Test Contributions: with respect to any Plan Year, the excess of the aggregate amount of K-Test Contributions actually made on behalf of Highly Compensated Employees for such Plan Year over the maximum amount of such contributions permitted under Section 5.10(b). The Excess K-Test Contributions of an individual Highly Compensated Employee shall be determined (i) by calculating the total dollar amount resulting from a reduction of the K-Test Contributions made on behalf of Highly Compensated Employees in order of the K-Test Contribution Percentages, beginning with the highest percentage, until the limitations of Section 5.10(b) are met, and (ii) by reducing the K-Test Contributions made on behalf of Highly Compensated Employees in order of the dollar amount of K-Test Contributions for each Highly Compensated Employee, beginning with the highest dollar amount, and subtracting such amounts from the total dollar amount determined in (i) above until the total dollar amount is exhausted. The Excess K-Test Contributions allocated to a Participant shall be reduced by any Excess Deferrals previously distributed for the calendar year ending with or within the Plan Year in which the Excess K-Test Contributions arose, pursuant to Section 5.12(a).

(e) Excess M-Test Contributions: with respect to any Plan Year, the excess of the aggregate amount of M-Test Contributions actually made on behalf of Highly Compensated Employees for such Plan Year over the maximum amount of such contributions permitted under Section 5.10(c). Effective January 1, 1997, the Excess M-Test Contributions of an individual Highly Compensated Employee shall be determined (i) by calculating the total

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dollar amount resulting from a reduction of the M-Test Contributions made on behalf of Highly Compensated Employees in order of the M-Test Contribution Percentages, beginning with the highest percentage, until the limitations of Section 5.10(c) are met, and (ii) by reducing the M-Test Contributions made on behalf of Highly Compensated Employees in order of the dollar amount of M-Test Contributions for each Highly Compensated Employee, beginning with the highest dollar amount, and subtracting such amounts from the total dollar amount determined in (i) above until the total dollar amount is exhausted.

5.12 Correction of Excess Contributions: The Plan provides the following methods for correcting excess contributions as described in Section 5.11;

(a) Excess Deferrals: The Plan Administrator shall direct the Trustee to distribute to a Participant from his Participant Elective Deferral Account an amount equal to the Participant’s Excess Deferral plus income, if any, allocable thereto. Such distribution shall be designated by the Plan Administrator as a distribution of an Excess Deferral and shall be made not earlier than the dale on which the Trustee receives the Excess Deferral and not later than the first April 15 following the end of the calendar year in which the Excess Deferral is made.

(b) Excess K-Test Contributions: The Plan Administrator shall direct the Trustee to distribute to a Participant his Excess K-Test Contribution plus income, if any, allocable thereto. The distribution shall be designated by the Plan Administrator as a distribution of an excess contribution and shall be made any time during or after the Plan Year in which the excess contribution arose, but within 12 months after the end of the Plan Year.

If the Employer has made a Matching Contribution attributable to any portion of the Participant’s Excess K-Test Contribution distributed to the Participant pursuant to the above, the Plan Administrator shall treat the Matching Contribution as a forfeiture. The forfeited amount shall be used to reduce the Employer’s Matching Contribution otherwise required for the Plan Year or for any subsequent Plan Year.

(c) Excess M-Test Contributions: The Plan Administrator shall direct the Trustee to hold the excess M-Test Contribution Amount and shall use this Amount to reduce any future Matching Contribution obligation of the Employer to the Plan.

For purposes of the above, income shall include realized and unrealized gains and losses for the Plan Year and for the period from the end of the Plan Year to the date of distribution (the “gap period”) and shall be allocated to excess contributions in accordance with all appropriate Code and Regulations provisions issued by the Secretary. Distributions of excess contributions pursuant to the above shall be made without regard to any consent by the Participant or Spouse otherwise required under this Plan. With the exception of distributions attributable to excess K-Test Contributions for the Plan Years commencing in 2006 and 2007, the Plan specifically elects not to include income for the period from the end of the Plan Year to the date of distribution (the “Gap Period”) when making any distribution under this Section. Distributions attributable to excess K-Test Contributions for the Plan Years commencing in 2006 and 2007 shall be adjusted for income (gain or loss), including an adjustment for income during the Gap Period. The Plan Administrator may, in its discretion, use any reasonable

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method for computing the income allocable to excess K-Test Contributions, provided that the method does not violate Code §401(a)(4), is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participant’s Accounts. The Plan need not allocate income to excess K-Test Contributions that is accrued within seven days before the date of distribution.

In lieu of the reasonable method provided above, the Plan Administrator may use the safe harbor method to determine income on excess K-Test Contributions for the Gap Period. Under the safe harbor method, income on excess K-Test Contributions for the Gap Period is equal to 10% of the income allocable to excess K-Test Contributions for the Plan Year, multiplied by the number of calendar months that have elapsed since the end of the Plan Year. Income allocable to K-Test Contributions shall be determined by multiplying the income for the Plan Year allocable to the Elective Deferrals and other amounts taken into account under the K-Test described in Section 5.10 (including contributions made for the Plan Year), by a fraction, the numerator of which is the excess K-Test Contributions for the Participant for the Plan Year, and the denominator of which is the sum of the:

(d) account balance attributable to Elective Deferrals and other amounts taken into account under the K-Test as of the beginning of the Plan Year, and

(e) any additional amount of such contributions made for the Plan Year.

For purposes of calculating the number of calendar months that have elapsed under the safe harbor method, a corrective distribution that is made on or before the 15th day of a month is treated as made on the last day of the preceding month and a distribution made after the 15th day of a month is treated as made on the last day of the month.

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ARTICLE VI

ALLOCATIONS TO ACCOUNTS

6.1 Revaluation of Assets: Not less frequently than as of the Annual Valuation Date each year, the Plan Administrator shall re-value the net assets of all Participants’ General Investments Accounts and Employer Securities Accounts in the Investment Fund. The valuation shall determine the current fair market value. At the Plan Administrator’s discretion, applied on a consistent basis, the Plan Administrator may similarly re-value the Investment Fund at the end of a semi-annual, quarterly, monthly or more frequent period, which may be as frequent as the close of each business day. The last day of each valuation period shall be referred to as an Interim Valuation Date. The net investment income or loss on the Investment Fund since the previous Annual or Interim Valuation Date shall then be determined. An independent appraiser meeting requirements similar to those prescribed by Treasury regulations under Code §170(a)(1) must perform all valuations of Employer Securities that are not readily tradeable on an established securities market. The valuation requirement of the immediately preceding sentence applies to all Employer Securities acquired by the Plan.

6.2 Allocation of Contributions and Forfeitures: Contributions and forfeitures for any period shall be credited to the Accounts of Participants in the following manner:

(a) With respect to Elective Deferral contributions made pursuant to Section 5.1, an amount equal to the Participant’s Elective Deferral since the previous Annual or Interim Valuation Date shall be allocated and credited to his Elective Deferral Account.

(b) Matching Contributions made pursuant to Section 5.6, if any, shall be allocated on each Annual Valuation Date (or if the Employer makes Matching Contributions on a calendar quarter or other periodic basis, on the last day of each calendar quarter or other period) to each Participant’s Account who satisfies the requirements of Section 6.4(a), in an amount equal to the Employer Matching Contribution percentage determined by the Employer for the Plan Year, but in no event less than the percentage required under Section 5.6. If the Employer makes a Matching Contribution to the Plan at any time during the Plan Year, any limit on the percentage amount shall not be determined by reference to Annual Compensation for the Plan Year, but by reference to Compensation paid only during the period to which the Matching Contribution relates. Effective January 1, 2006, and for all Plan Years thereafter the Employer Matching Contribution shall be allocated according to the total Elective Deferrals (and effective June 1, 2007, the aggregate of the Participant’s pretax Elective Deferrals and Roth Elective Deferrals) and the total Compensation of the Participant for the Plan Year without regard to when during the Plan Year the Participant’s Elective Deferral or the Employer’s Matching Contribution is made.

(c) Employer Non-Elective Contributions made pursuant to Section 5.7 shall be allocated on each Annual Valuation Date to each Participant’s Account who satisfies the requirements of Section 6.4(b). The Employer’s Non-Elective Contribution shall be credited to the Accounts of eligible Participants in an amount equal to that percentage of each annual Employer Non-Elective Contribution to this Plan that is in the same proportion that each Participant’s Annual Compensation for the Plan Year for which the Employer makes the

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Non-Elective Contribution bears to the total Annual Compensation of all Participants for the Plan Year. For purposes of this Section 6.2(c) only Compensation paid to the Employee from and after the date applicable to the Participant as provided in subsection 6.4(c) during the portion of the Plan Year during which the Employee is a Participant in the Plan shall be taken into account. At the time the Employer makes its Non-Elective Contribution the Employer shall designate to the Administrator the Plan Year for which the Non-Elective Contribution shall be deemed to have been made (which may be the current Plan Year or the immediately prior Plan Year, as the Employer deems appropriate). If the Employer makes no designation, the Employer’s Non-Elective Contribution shall be deemed to have been made for the Plan Year that begins concurrent with or within the taxable year of the Employer for which the Employer claims a deduction under Code §404.

(d) Forfeitures that the Employer elects to use to reduce or as the Employer’s Non-Elective Contribution for the Plan Year pursuant to Section 11.6 shall be allocated as of each Annual Valuation Date to the Account of each Participant who satisfies the requirements of Section 6.4(b). Subject to Section 5.7 such allocated amounts shall be credited to the Non-Elective Contribution Accounts of such Participants in the same manner provided for allocation of Employer Non-Elective Contributions in Section 6.2(c) above.

(e) With respect to Rollover Contributions made pursuant to Section 5.5, an amount equal to the Participant’s rollover contributions since the previous Annual or Interim Valuation Date shall be credited to the Participant’s Rollover Contribution Account.

(f) Contributions by the Employer of Employer Securities or of cash that is immediately used to purchase Employer Securities shall be allocated solely to the Employer Securities Account. All other contributions, whether by the Employer or any Participant, shall be allocated solely to the General Investments Account.

6.3 Adjustment of Accounts and Dividends on Employer Securities: As of each Annual or Interim Valuation Date all Participants’ and Former Participants’ Accounts shall be adjusted to reflect contributions, income and dividends received, profits and losses, distributions from and expenses of the Trust Fund since the previous Annual or Interim Valuation Date. The adjustments shall be made in the following manner and order;

(a) Each Account shall be charged with all forfeitures, withdrawals and distributions from the Account since the previous Annual or Interim Valuation Dale. In making a forfeiture reduction under this Section 6.3(a) the Plan Administrator, to the extent possible, first must forfeit from a Participant’s General Investments Account before making a forfeiture from his Employer Securities Account.

(b) Each Account shall be charged with any administrative costs or expenses incurred and paid by the Plan that are allocable to the Account since the previous Annual or Interim Valuation Date. All administrative costs and expenses, to the extent possible, shall be paid from a Participant’s General Investments Account before being paid from his Employer Securities Account

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(c) Each Participant’s General Investments Account that has a non-zero balance after the application of (a) and (b) above, shall be credited (or charged) with its proportionate share of the net investment income (or loss) and expenses since the previous Annual or Interim Valuation Dale. The amount to be credited or charged to each Account shall be determined based on the ratio that: (i) the balance in the Account on the previous Annual or Interim Valuation Date less any forfeitures, withdrawals or distributions from the Account since that date bears to (ii) the total of such amounts determined for all Accounts. Notwithstanding the previous sentence, in the sole discretion of the Plan Administrator, the method of allocating the net investment income (or loss) of the General Investment Account may be adjusted to reflect the effect of cash flows into and out of such Accounts (such as contributions, payments on Participant loans, distributions, etc.) based on the length of time between the date of such cash flow and the current Annual or Interim Valuation Date. Any such adjustment pursuant to the previous sentence shall be made in a uniform and non-discriminatory manner among Participants and/or the types of Accounts.

(d) Each Account shall be credited with the contributions allocated to it since the previous Annual or Interim Valuation Date, subject to the following rules:

(1) The Employer Securities Account maintained for each Participant shall be credited with the Participant’s allocable share of Employer Securities (including fractional shares) purchased and paid for by the Trust or contributed in kind to the Trust, with any forfeitures of Employer Securities and with any slock dividends on Employer Securities allocated to his Employer Securities Account. Employer Securities acquired with an Exempt Loan under Section 14.3 shall be allocated in accordance with that Section, subject however, to the provisions of this Section 6.3. Except as otherwise specifically provided in Section 14.3, the Plan Administrator will base allocations to the Participant’s Employer Securities Account on dollar values expressed as shares of Employer Securities or on the basis of actual shares, assuming there is only a single class of Employer Securities.

(2) The General Investments Account maintained for each Participant shall be credited with the Participant’s allocable share of Elective Deferrals and any Employer Contribution not attributable to Employer Securities, according to the provisions of Section 6.2.

(e) Cash dividends the Employer pays with respect to Employer Securities held by the Plan shall be allocated pro-rata to the Dividend Account of each Participant according to the number of Employer Securities in the Participant’s Employer Securities Account as of the dividend date of record, less any Employer Securities allocated to or acquired for the Participant’s Employer Securities Account on or after the immediately preceding ex-dividend date. The Plan Administrator will not allocate to a Dividend Account any cash dividends the Employer directs the Trustee to apply to the payment of an Exempt Loan nor any cash dividends the Employer directs the Trustee to distribute directly to a Participant in accordance with Section 9.7.

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Each Participant who is entitled to receive an allocation of a cash dividend to his Dividend Account shall have the option to invest all or any portion of the cash dividend in Employer Securities or withdraw from the Plan the portion of the cash dividend not so invested. The Participant’s election shall be subject to the following rules:

(1) The Participant shall have the right to elect, no less often than annually, to invest the allocable share of dividends in Employer Securities or withdraw as cash.

(2) The initial period during which a Participant may exercise the annual election shall extend from April 15, 2003, to May 15, 2003, for all individuals who are Participants in the Plan on April 15, 2003. Commencing January 1, 2004, and 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, postmarked no later than the last day of the election period.

(5) Dividends to be invested in Employer Securities shall be so invested as soon as Administratively Feasible following their receipt by the Plan. Withdrawal of any cash dividends must occur no later than 90 days after the close of the Plan Year in which the dividends were paid.

(6) Until invested in Employer Securities or distributed in cash, dividends in a Dividend Account shall be held and invested as provided in Section 18.4.

If the Employer directs the Trustee to apply cash dividends on Employer Securities to the payment of an Exempt Loan, the Plan Administrator will first allocate the released Employer Securities to the Participants’ Employer Securities Accounts in the same ratio, determined on the dividend declaration date, that Employer Securities allocated to a Participant’s Employer Securities Account bear to the Employer Securities allocated to all Employer Securities Accounts. This first allocation of released Employer Securities must equal the greater of: (1) the shares of released Employer Securities equal to the fair market value of the cash dividends attributable to the allocated Employer Securities; or (2) the number of shares of all released Employer Securities attributable to the cash dividends

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on allocated Employer Securities. If any released Employer Securities remain unallocated after the first allocation, the Plan Administrator will allocate these remaining released Employer Securities as if the Employer has made an Employer Contribution equal to the amount of the cash dividend attributable to the unallocated Employer Securities.

6.4 Eligibility for Allocation of Employer Matching and Non-Elective Contributions: The eligibility of Participants to receive allocations of Employer Matching and Non-Elective Contributions for each Plan Year shall be determined in the following manner:

(a) The Administrator shall determine allocations of Matching Contributions on the basis of the Plan Year, unless the Employer makes its Matching Contributions during the Plan Year on a periodic basis, such as monthly or according to payroll periods, in which case the Matching Contribution shall be allocated during the Plan year on the same periodic basis as made. That is, in allocating Matching Contributions to a Participant’s Account, the Administrator shall take into account only the Compensation paid the Participant during the specific period during the Plan Year to which the allocation applies and a valid, executed Salary Reduction Agreement is in effect and on file with the Administrator for the period, subject, however, to the maximum amount of Annual Compensation that may be taken into account under Code §401(a)(17). Matching Contributions, whether or not made on a periodic basis during the Plan Year, shall be allocated to Accounts of Participants without regard to any minimum Service or specific day employment requirement.

(b) Except as otherwise provided in this Section 6.4, the Administrator shall determine allocations of Employer Non-Elective Contributions on the basis of the Plan Year. In allocating Employer Non-Elective Contributions to a Participant’s Account, the Administrator shall take into account only Compensation paid the Employee from and after the date applicable to the Participant as provided in subsection (c) below. For any Plan Year Employer Non-Elective Contributions shall be allocated only to Accounts of Participants who complete at least 1,000 Hours of Service during the Plan Year and who are employed by the Employer on the last day of the Plan Year. The rules set forth in subsection (c) below shall also apply in determining when the Participant is eligible to receive an Employer Non-elective Contribution.

(c) If an Employee becomes a Participant in the Plan prior to the first anniversary of his Employment Commencement Date, he shall not receive an allocation of Employer Non-Elective Contributions (regardless of the number of his Hours of Service or the amount of his Elective Deferrals) for any period prior to the earlier of January 1 or July 1 following the first anniversary of his Employment Commencement Date. From and after the applicable date the Participant shall be entitled to an allocation of Employer Non-Elective Contributions for the Plan Year, without regard to whether the Participant has been continuously employed from his Employment Commencement Date, provided the Participant first satisfies the Hours of Service and employment requirements of subsection (b) above.

6.5 Restriction on Certain Allocations: To the extent a shareholder sells Employer Securities to the Trust and is eligible for and elects (with the consent of the Employer) non-recognition of

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gain under Code §1042, the Plan Administrator will not, either directly or indirectly, allocate under the Plan at any time any portion of the purchased Employer Securities to:

(a) the selling shareholder,

(b) the selling shareholder’s spouse, brothers or sisters (whether by the whole or half blood), ancestors or lineal descendants; or

(c) any shareholder owning (as determined under Code §318(a)) more than 25% of any class or the value of any class of Employer Securities.

For purposes of this Section 6.5 the term “shareholder” includes the shareholder’s executor and the term “purchased Employer Securities” includes any dividends or other income attributable to the purchased Employer Securities. A shareholder of Employer Securities of a Zions Employer shall not be eligible to elect non-recognition of gain under Code §1042 as long as the Employer Securities are readily tradeable on an established securities market.

6.6 Participant Diversification of Investments: Except as specifically provided in Section 6.3(e) and in this Section 6.6 and in Section 18.6, the Plan does not permit individual direction of investment by Participants of their Employer Securities Accounts. Effective January 1, 2007, individual direction of investment by Participants of their Employer Securities Account is permitted as provided in this Section and in Sections 18.2 and 18.6.

(a) Each Qualified Participant may direct the investment into a Segregated Investment Account of up to 25% of the value of the Participant’s Eligible Account within 90 days after the Accounting Date of each Plan Year (to the extent a direction amount exceeds the amount to which a prior direction under this Section 6.6 applies) during the Participant’s Qualified Election Period. For the last Plan Year in the Participant’s Qualified Election Period, “50%” shall be substituted for “25%” in the immediately preceding sentence. The Qualified Participant must make his direction in writing or in another form acceptable to the Plan Administrator, which may include any approved electronic means. The direction may be effective no later than 180 days after the close of the Plan Year to which the direction applies, and the direction must specify which, if any, of the investment options in the Segregated Investment Account the Participant selects. Effective January 1, 2004, a Qualified Participant may direct the investment of his or her Eligible Account as provided in this subsection at any time during the Plan Year. When given, the direction shall be effective immediately.

(b) A Qualified Participant may choose one of the following alternative investment options:

(1) The distribution of the portion of his Eligible Account covered by the election. The Administrator will direct the distribution within 90 days after the last day of the period during which the Qualified Participant may make the election. The provisions of this Plan applicable to a distribution of Employer Securities, including any applicable put option requirements of Article XXII, apply to this investment option. Effective January 1, 2004, this option shall no longer be available.

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(2) The liquidation and transfer of the portion of his Eligible Account covered by the election to the General Investment Account in the Plan. The Trustee will make the transfer no later than 90 days after the last day of the period during which the Qualified Participant may make the election. Effective January 1, 2004, the Trustee shall carry out all such investment directions and make all transfers as soon as Administratively Feasible.

(c) The Participant’s Segregated Investment Account shall alone receive all income it earns and bear all expense or loss it incurs.

(d) For purposes of this Section 6.6 the following definitions apply:

(1) “Eligible Account” shall mean that portion of the Participant’s total Account that consists of the Employer Securities Account.

(2) “Qualified Participant” means a Participant who has attained age 55 and who has completed at least 10 years of participation in the Plan (without regard to the Participant’s years of participation in a Predecessor Plan, but taking into account the Participant’s years of participation in the Prior Plan). A “year of participation” means a Plan Year in which the Participant was eligible for an allocation of Employer contributions, irrespective of whether the Employer actually contributed to the Plan for that Plan Year.

(3) “Qualified Election Period” means the six-Plan-Year period beginning with the Plan Year in which the Participant first becomes a Qualified Participant.

(e) Effective January 1, 2004, the following additional rules shall apply in determining a Participant’s right to diversify the Employer Securities Account.

(1) A Participant who has completed at least five Years of Vesting Service, regardless of age or the number of years of participation in the Plan, may direct diversification into the Segregated Investment Account of up to 100% of the Participant’s Employer Matching Contribution Account, except that portion in the Employer Securities Account attributable to Employer Non-Elective Contributions and dividends thereon. Effective January 1, 2007, the five Years of Vesting Service requirement shall no longer apply. A Participant who has completed three years of participation in the Plan, regardless of age, may direct diversification into the Segregated Investment Account of up to 100% of the Participant’s Employer Securities Account attributable to Employer Non-Elective Contributions and dividends thereon.

(2) The Participant must make his direction in writing or in another form acceptable to the Plan Administrator, which may include any approved electronic means. The direction must specify which, if any, of the investment options in the Segregated Investment Account the Participant selects. The Participant may make his investment direction at any time during the Plan Year and when given, the direction shall be effective immediately.

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(3) The Trustee shall carry out all investment directions and make all transfers as soon as Administratively Feasible.

(4) Amounts in the Participant’s Employer Matching Contribution Account that are diversified into the Participant’s Segregated Investment Account pursuant to this subsection (e) shall not be applied to reduce the amount available for diversification in the Eligible Account by a Qualified Participant under subsection (a).

(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 that consists of Employer Securities and dividends from such Employer Securities that 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 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 that consists of Employer Securities and dividends from such Employer Securities that 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 6.6.

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ARTICLE VII

LIMITATIONS ON ALLOCATIONS

7.1 Special Definitions: The following terms shall be defined as follows:

(a) “Annual Additions” shall mean the sum of the following amounts allocated on behalf of a Participant for a Limitation Year:

(1) Employer contributions; and

(2) Employee contributions; and

(3) Forfeitures available for reallocation, if applicable; and

(4) Allocations under any simplified employee pension plans.

Participant Elective Deferrals shall be considered to be Employer contributions. Amounts reapplied to reduce Employer contributions and amounts reapplied from a suspense account (if any) under Section 7.2 as well as contributions allocated to any Individual Medical Benefit Account that is part of a defined benefit plan shall also be included as Annual Additions.

For purposes of this Article, an Annual Addition is credited to the Account of a Participant for a particular Limitation Year if it is allocated to the Participant’s Account as of any day within such Limitation Year. Employer contributions will not be deemed credited to a Participant unless the contributions are actually made to the Plan no later than the end of the period described in Code §404(a)(6) applicable to the taxable year with or within which the particular Limitation Year ends.

“Annual Additions” do not include any Employer Contributions applied by the Plan Administrator (not later than the due date, including extensions, for filing the Employer’s federal income tax return for the Plan Year) to pay interest (charged to a Participant’s Account) on an Exempt Loan, and any Leveraged Employer Securities the Plan Administrator allocates as forfeitures; provided however, the provisions of this sentence do not apply in a Limitation Year for which the Plan Administrator allocates more than one-third of the Employer Contributions applied to pay principal and interest on an Exempt Loan to Highly Compensated Employee-Participants.

(b) “Compensation” for purposes of this Article VII (compliance with Code §415) and for purposes of compliance with any applicable non-discrimination test, including the determination of an Employee’s status as a Highly Compensated Employee and the K-Test and M-Test procedures described in Section 5.10, shall mean and be determined as follows:

(1) The term “Compensation” shall include:

(A) The Participant’s wages, salaries, fees for professional service and other amounts received (whether or not paid in cash) for personal services actually

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rendered in the course of employment with an Employer maintaining the plan (including, but not limited to, commissions paid to salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements and expense allowances).

(B) In the case of a Participant who is an employee within the meaning of Code §401(c)(l), the Participant’s earned income as described in Code §401(c)(2).

(C) Any amounts contributed by the Employer or received by the Participant pursuant to an unfunded, non-qualified plan of deferred compensation to the extent such amounts are includable in the gross income of the Participant for the Limitation Year.

(D) Any amount contributed or deferred by the Employer at the election of the Participant and that is not includable in the gross income of the Participant by reason of Code §§125, 401(k), 403(b) or 457.

(E) Elective amounts that are not includable in the gross income of the Employee by reason of Code §132(f)(4).

(F) Payments of Post-Severance Compensation made to a Participant by the later of (i) 2 ¹/2 months from the date of Termination of Employment, or (ii) the end of the Limitation Year for which the Employer is required to furnish the Participants a written statement under Code §§6041(d), 6051(a)(3) and 6052 or the last day of the Plan Year.

(2) The term “Compensation” does not include items such as:

(A) Except as provided in subparagraph (1)(D) above, any Employer contributions to a qualified retirement plan and any Employer contributions to any other retirement plan that receive special tax benefits to the extent the contributions are not includable in the gross income of the Participant for the taxable year in which made; and any distributions from any qualified retirement plan, regardless of whether the distributions are includable in the gross income of the Participant.

(B) Employer contributions made on behalf of a Participant to a simplified employee pension described in Code §408(k) to the extent such contributions are deductible by the Employer under Code §219(b)(7).

(C) Except as provided in subparagraph (1)(D) above, other forms of compensation that receive special tax benefits, such as premiums for group health insurance and group term life insurance (but only to the extent that the compensation is not includable in the gross income of the Participant).

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(D) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by a Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture (see Code §83 and the regulations thereunder).

(E) Amounts realized from the sale, exchange, or other disposition of stock acquired under a qualified stock option.

(F) Compensation in excess of $200,000, or such greater amount as adjusted by the Secretary of the Treasury for increases in the cost of living in accordance with Code §401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to determine the Compensation limit for the Limitation Year that begins with or within such calendar year.

(G) Any payment to a Participant by the Employer after the Participant’s Termination of Employment that is not Post-Severance Compensation as defined herein, even if payment of the amount is made within the lime period specified in 7.1(b)(1)(F) above.

(H) For Limitation Years beginning after December 31, 2008, any differential wage payment, as defined in Code §3401 (h)(2).

(3) Compensation actually paid or made available to a Participant within the Limitation Year shall be the Compensation used for the purposes of applying the limitations of this Article and Code §415. In the case of a group of Employers that constitutes an Affiliated Group, all Employers shall apply this same rule.

(c) “Defined Contribution Dollar Limitation” shall mean the lesser of:

(1) $40,000, as adjusted for increases in the cost-of-living under Code §415(d), or

(2) one hundred percent (100%) of the Participant’s Compensation, as defined in this Section 7.1, for the Limitation Year. The Compensation limit referred to in this subsection 7.1(c)(2) shall not apply to any contribution for medical benefits after separation from service (effective January 1, 2002, severance from employment) (within the meaning of Code §401(h) or Code §419A(f)(2)) that is otherwise treated as an Annual Addition.

(d) “Employer” shall mean the Employer that adopts this Plan and, in the case of a group of employers that constitutes an Affiliated Group, all such employers shall be considered a single Employer for purposes of applying the limitations of this Article.

(e) “Excess Amount” shall mean the excess of the Participant’s Annual Additions for the Limitation Year over the Maximum Permissible Amount for such Limitation Year.

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(f) “Individual Medical Benefit Account” shall mean any separate account that is established for a Participant under a defined benefit plan and from which benefits described in Code §401(h) are payable solely to such Participant, his spouse or his dependents.

(g) “Limitation Year” shall mean the 12 consecutive month period specified in Article II.

The Limitation Year may be changed by amending the election previously made by the Employer. Any change in the Limitation Year must be a change to a 12 month period commencing with any day within the current Limitation Year. The limitations of this Article (and Code §415) are to be separately applied to a limitation period that begins with the first day of the current Limitation Year and that ends on the day before the first day of the first Limitation Year for which the change is effective.

The dollar limitation on Annual Additions with respect to this limitation period is determined by multiplying the applicable dollar limitation for the calendar year in which the limitation period ends by a fraction, the numerator of which is the number of months (computed to the nearest whole month) in the limitation period and the denominator of which is 12.

The Limitation Year for all years prior to the effective date of Code §415 shall, as applied to this Plan, be the 12 consecutive month period selected as the Limitation Year for the first Limitation Year after the effective dale of Code §415.

(h) “Maximum Permissible Amount” shall mean, for a given Limitation Year, the Defined Contribution Dollar Limitation. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12 consecutive month period, the Maximum Permissible Amount for such short Limitation Year shall not exceed the amount in (1) above multiplied by a fraction, the numerator of which is the number of months in the short Limitation Year (computed to the nearest whole month) and the denominator of which is 12.

(i) “Post-Severance Compensation” shall mean any amount received as regular pay after Termination of Employment if:

(1) The payment is regular remuneration for services during the Participant’s regular working hours, or remuneration for services outside the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments; and

(2) The payment would have been paid to the Participant prior to a Termination of Employment if the Participant had continued in employment with the Employer.

7.2 Coordination With Other Plans:

(a) If the Employer maintains any other qualified cash or deferred arrangement (“401(k) Plan”) covering Participants in this Plan and if the Annual Additions to a Participant’s Account in this Plan and the annual additions to the Participant’s account in the 401(k)

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Plan would result in the allocation on an allocation date of this Plan that coincides with an allocation date of the 401(k) Plan of an Excess Amount, the Excess Amount attributed to this Plan shall be determined by the Plan Administrator on a uniform and non-discriminatory basis, considering the amount of elective deferrals and Employer contributions made to each Participant’s account in the 401(k) Plan, and the anticipated allocation of the Employer Contribution to this Plan. The Plan Administrator shall coordinate its actions with those of the plan administrator of the 401(k) Plan to provide for the maximum possible allocation to all Participants in both plans, taking into account the provisions of the 401(k) Plan allowing for distribution of elective deferrals to reduce an Excess Amount. In this regard, the Plan Administrator, whenever possible, shall allow for the allocation and distribution of elective deferrals from the 401(k) Plan so as to eliminate or reduce the possibility of creating a suspense account under this Plan or under the 401(k) Plan. If, after distributing all amounts that may be distributed from the 401(k) Plan, there still remains an Excess Amount, the Plan Administrator will attribute the total Excess Amount to the 401(k) Plan.

(b) If the Employer maintains another qualified defined contribution plan during any Limitation Year that covers Participants in this Plan and as a consequence of the requirements of Section 7.4 an Excess Amount is allocated to a Participant’s Account in this Plan on an allocation date that coincides with an allocation date in the other plan, the total Excess Amount shall be deemed allocated to the other plan.

7.3 Limitations on Allocations and Order of Limitations: Effective for any Limitation Year commencing on or after July 1, 2007, no Employer Contributions shall be made to this Plan for any Limitation Year that will result in an Annual Addition to a Participant’s Account that is an Excess Amount. If, pursuant to this Article, it is necessary to limit or reduce the amount of Contributions credited to a Participant under this Plan during a Limitation Year, the limitation or reduction shall be made:

(a) First, from the Participant’s General Investment Account, in the following order:

(1) Unmatched Participant Elective Deferrals;

(2) Employer Matching Contributions (if any have been allocated to the General Investments Account);

(3) Matched Participant Elective Deferrals;

(4) Employer Non-Elective Contributions.

(b) Second, from Employer Non-Elective Contributions to the Participant’s Employer Securities Account.

7.4 Aggregation of Plans: For purposes of applying the limitations of this Article applicable to a Participant for a particular Limitation Year, all qualified defined contribution plans ever maintained by the Employer shall be treated as one defined contribution plan and any Employee contributions to a defined benefit plan shall be treated as a defined contribution plan.

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7.5 Suspense Account: If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant’s Compensation for the Limitation Year, or under other limited facts and circumstances allowed under Reg. §1.415-6(b), the Annual Additions to this Plan would cause an allocation to the Account of a Participant in excess of the Maximum Permissible Amount for the Limitation Year, the Plan Administrator shall deal with the Excess Amount as follows:

(a) First, the Plan Administrator shall distribute to the Participant his Elective Deferrals for the Limitation Year to the extent that the distribution reduces the Excess Amount, provided that the Plan Administrator shall not distribute any Elective Deferral to the Participant that would cause the Plan to make a concurrent reduction in the amount of Employer Matching Contributions allocated to the Participant’s Account. A distribution under this provision shall include earnings or gains attributable to the returned Elective Deferrals. All distributions shall be made no later than and in the manner provided in Section 5.12(d).

(b) Second, to the extent there remains an Excess Amount after application of Section 7.5(a), the Plan Administrator shall hold the Excess Amount in a suspense account and allocate and reallocate the amount in the suspense account in the following Limitation Year (and in succeeding Limitation Years, if necessary) to reduce Employer Non-Elective Contributions, Employer Matching Contributions and Elective Deferrals (in that order) to the Account of that Participant if that Participant is covered by the Plan as of the end of the Limitation Year. If the Participant is not covered, the excess amount shall be allocated and reallocated in the next Limitation Year to all Participants’ Accounts in the Plan before any Employer Non-Elective Contributions, Employer Matching Contributions and Elective Deferrals (in that order) that would constitute Annual Additions are made to the Plan for the Limitation Year, or at the option of the Zions Employer, the Excess Amount shall be used to reduce Employer Non-Elective Contributions and Employer Matching Contributions to the Plan for the Limitation Year by the amount in the suspense account that is allocated and reallocated during the Limitation Year. The suspense account shall be an unallocated account equal to the sum of all Excess Amounts for all Participants in the Plan during the Limitation Year. The suspense account shall not share in any earnings or losses of the Trust Fund. The Plan may not distribute any amounts in the suspense account to any Participant whether before or after Termination of Employment or termination of the Plan.

The foregoing provisions of this Section 7.5 shall not apply for any Limitation Year commencing on or after July 1, 2007.

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ARTICLE VIII

IN-SERVICE AND HARDSHIP WITHDRAWALS

8.1 In-Service Withdrawals, Withdrawals of Rollover Contributions and Withdrawals Due to Attainment of Age 59 ¹/2, Disability or Hardship: Subject to the provisions of Article XXII and except as otherwise provided in this Section 8.1 and Section 8.4, no amounts may be withdrawn by a Participant from any Account held for his benefit prior to termination of employment with the Employer.

(a) A Participant may make in-service withdrawals from his Voluntary Contribution Account to the extent permitted in Section 8.4.

(b) A Participant who has attained age 59 ¹/2 may withdraw all or any portion of his Account, except any amount attributable to the Roth Elective Deferral Account or any amount in the Rollover Account that is attributable to Roth elective deferrals to another plan. A Participant who has attained age 59 ¹/2 and has surpassed the five Plan Year period that includes the first Plan Year in which the Participant made Roth Elective Deferrals to the Plan (the “59 ¹/2 and Five Year Rule”) may withdraw all or any portion of his Account attributable to the Roth Elective Deferral Account. A Participant may withdraw any amount in the Rollover Account that is attributable to Roth elective deferrals to another plan if the Participant has satisfied the 59 ¹/2 and Five-Year Rule with respect to the other plan.

(c) A Participant who suffers a Disability as defined in Section 2.13 may withdraw all or any portion of his Account without regard to the Participant’s age or whether he has incurred a Termination of Employment.

(d) A Participant may elect to withdraw an amount credited to his Elective Deferral Account without regard to the Participant’s age (except any amount attributable to the Roth Elective Deferral Account or any amount in the Rollover Account that is attributable to Roth elective deferrals to another plan) but only if he obtains prior approval from the Plan Administrator, which approval shall be granted only upon a determination of Financial Hardship. However, notwithstanding the foregoing, if: (i) a Participant obtains prior approval from the Plan Administrator, granted only upon a determination of Financial Hardship and (ii) such Participant has satisfied the 59 ¹/2 Year Rule with respect to this Plan; then such Participant may withdraw an amount from his Roth Elective Deferral Account; or (regardless of whether such Participant has satisfied the 59 ¹/2 Year Rule with respect to this Plan) from a Rollover Account that is attributable to Roth elective deferrals to another plan if the Participant has satisfied the 59 ¹/2 Year Rule with respect to the other plan. Any distribution pursuant to this subsection (d) shall be limited to an amount (aggregating all sources for the Financial Hardship distribution) not to exceed the amount determined by the Plan Administrator to satisfy the Financial Hardship distribution rules under Section 8.2 and 8.3. Such Participant who is eligible for the Financial Hardship distribution, may direct the amount that comes from each source that is eligible for distribution in accordance with this Section. In the case of a withdrawal due to Financial Hardship, the amount of the withdrawal shall be limited to the total amount in the Participant’s

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Elective Deferral Account, including income allocable thereto as of December 31, 1988. A Participant shall be entitled to a withdrawal from his Participant Elective Deferral Account, including income allocable thereto as of December 31, 1988. A Participant shall be entitled to a withdrawal from his Participant Elective Deferral Account under this Plan only after receiving as a hardship withdrawal all amounts available first, from his Rollover Account and second, from his Voluntary Contribution Account. Upon granting approval, the Plan Administrator shall direct the Trustee to distribute the indicated portion of the Participant’s Elective Deferral Account to the Participant.

(e) In the event a Participant has previously made any Rollover Contribution to the Plan, the Participant shall, upon written notice to the Plan Administrator, be entitled to withdraw at any time, without regard to the Participant’s age, any amount up to the balance of the Rollover Contributions held in his Rollover Contribution Account. Withdrawals shall have no effect upon any benefits provided under any other provisions of this Plan.

(f) Whenever a withdrawal is permitted from more than one sub-account under this Section 8.1 the withdrawal shall be made (to the extent permitted under Code §72) in the following order: first, from the Participant Voluntary Contribution Account and second, from the Participant Elective Deferral Account. Withdrawals shall also be made from a Participant’s General Investments Account before being taken from his Employer Securities Account whenever possible.

8.2 Financial Hardship Distribution Rules: The Plan adopts the deemed hardship distribution standards set forth in Reg. §I.401(k)-l(d)(3)(iv) and as modified below in connection with the passage of the Pension Protection Act of 2006. As a consequence, the Plan Administrator shall not approve any distribution on account of Financial Hardship unless the distribution is determined by the Administrator to be necessary to meet an immediate and heavy financial need of the Participant, and effective February 15, 2007, his/her spouse; dependent or a beneficiary as designated under this Plan. The distribution will be deemed necessary if:

(a) The distribution is not in excess of the amount of the immediate and heavy financial need of the Participant, including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution; and

(b) Other resources of the Participant are not reasonably available to meet this need.

The condition in (b) above is deemed to be met if the Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer, provided however, if in the judgment of the Plan Administrator the issuance of a loan from the Plan to the Participant will result in further financial hardship to the Participant, all loans currently available from the Plan shall be deemed to have been made. A participant who has received or who receives a distribution on account of Financial Hardship shall be prohibited from making Elective Deferrals under this and all other plans of the Employer (as set forth above) until (6) months after receipt of the distribution.

8.3 Determination of Immediate and Heavy Financial Need: For purposes of Section 8.2, a distribution shall be deemed to be on account of an immediate and heavy financial need if the distribution is for:

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(a) Expenses for medical care described in Code §213(d) incurred by the Participant, the Participant’s spouse or any dependent of the Participant or expenses necessary for these persons to obtain such medical care;

(b) Payment of tuition and related educational fees for the next 12 months of post-secondary education for the Participant, the Participant’s spouse or any dependent of the Participant;

(c) Costs directly related to purchase (excluding mortgage payments) a principal residence for the Participant; or

(d) Payments necessary to prevent the eviction of the Participant from his principal residence or foreclosure of the mortgage on that residence.

Effective January 1, 2011, a distribution shall also be deemed to be on account of an immediate and heavy financial need if the distribution is on account of either of the following additional circumstances:

(e) Payments for burial or funeral expenses for the Participant’s deceased parent, spouse, children or dependents (as defined in Code §152, without regard to Code §152(d)(1)(B)); or

(f) Expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction under Code §165 (determined without regard to whether the loss exceeds 10% of adjusted gross income),

8.4 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 8.4 all or any part of his Accrued Benefit attributable to Voluntary Contributions that 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 8.4 the Participant shall notify the Plan Administrator in writing of his request at least 15 days before 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 8.4 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 8.5.

If the Participant’s Accrued Benefit is not more than $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 9.6, 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 (that was merged into the Plan on July 24, 2006) as Employer Match and Non-Elective contributions allocated

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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.

8.5 Determination of Available Withdrawal Amount: The amount that a Participant may withdraw under Section 8.4 shall be the total of the Participant’s Voluntary Contributions to the Plan as of December 31, 1986, including earnings thereon, plus the Participant’s Voluntary Contributions to the Plan after that date but prior to October 1, 1992, together with earnings thereon. No Voluntary Contributions after September 30, 1992 or earnings thereon shall be available for in-service withdrawal or included in any calculation of amount available for withdrawal. Upon any withdrawal pursuant to Section 8.4 the Plan shall first charge the amount (to the extent possible) to the balance of Voluntary Contributions determined as of December 31, 1986, which shall be considered a return of Voluntary Contributions under the “grandfather rule” of Notice 87-13, Q&A-13. All Voluntary Contributions to the Plan after December 31, 1986 and prior to October 1, 1992 together with earnings thereon, shall be considered by the Plan to be a “separate contract” within the meaning of Code §72(d). Allocations between investment in the contract and earnings with respect to any withdrawal including amounts attributable to the “separate contract” shall be made in accordance with Code §72(e)(8) and Notice 87-13. The Plan Administrator shall maintain such records of a Participant’s Voluntary Contributions as may be necessary to ensure compliance with this Section 8.5.

8.6 Withdrawal of Rollover Contributions: If a Participant has a Rollover Contribution Account in the Plan, and if the Participant’s Accrued Benefit is not more than $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 9.6 (except with respect to any amount in the Rollover Account that is attributable to Roth elective deferrals to another plan). A Participant may withdraw any amount in the Rollover Account that is attributable to Roth elective deferrals to another plan if the Participant has attained age 59 ¹/2 and has surpassed the live Plan Year period (as defined in Section 8.7) that includes the first Plan Year in which the Participant made Roth Elective Deferrals to the other plan. Withdrawals from the Rollover Contribution Account on account of hardship shall have no effect upon any benefits provided under any other provisions of this Plan. All hardship distributions from the Rollover Contribution Account shall be administered in a uniform and non-discriminatory manner.

The amount withdrawn shall be distributed to the Participant in the manner and form provided in Section 11.2 as if the amount were distributed on account of the Participant’s Termination of Employment or, if the Participant is eligible for Normal Retirement, in the manner and form provided in Article IX as if the amount were distributed on account of the Participant’s Retirement. If the spousal consent rules of Section 9.6 apply to any amount in the Participant’s Account, then no amount shall be withdrawn unless prior to the withdrawal the Participant’s spouse, if any, consents to the withdrawal.

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8.7 Determination of Five Plan Year Period: For purposes of calculating the Five Plan Year Period when determining whether a withdrawal or distribution is a Qualified Roth Distribution, the following rules shall apply.

(a) The Five Plan Year Period commences as of the first day of the Plan Year that includes the first day of the first taxable year of the Employee in which the Employee makes a Roth Elective Deferral to the Roth Elective Deferral Account under the Plan and ends as of the last day of the Plan Year in which five consecutive taxable years have been completed. For this purpose, the first taxable year in which an Employee makes a Roth Elective Deferral is the year in which the amount is includible in the employee’s gross income.

(b) A Roth Elective Deferral that is returned to the Employee as an Excess Deferral or an Excess K-Test Contribution under the provisions of Section 5.11 does not begin the consecutive taxable year period and does not result in commencement of the Five Plan Year Period.

(c) A Roth Elective Deferral returned to an Employee as a permissible withdrawal under Section 5.13 does not begin the consecutive taxable year period and does not result in commencement of the Five Plan Year Period.

(d) The Five Plan Year Period shall be determined separately for each Plan of the Employer in which the Employee participates.

(e) If a direct rollover contribution of a distribution from a designated Roth account under another plan is made by the Employee to the Plan, the consecutive taxable year period and the commencement of the Five Plan Year Period begins on the first day of the Employee’s taxable year in which the Employee first made a Roth contribution to the designated Roth account in the other plan, if earlier than the first taxable year in which a Roth Elective Deferral is made by the Employee to the Plan.

(f) The beginning of the consecutive taxable year period and commencement of the Five Plan Year Period is not redetermined for any portion of an Employee’s Roth Account in the Plan, even if the entire Roth Account is distributed during the Five Plan Year Period and the Employee subsequently makes additional Roth Elective Deferrals or rollovers of Roth deferrals from another plan to the Plan.

(g) The rule in subsection (f) above applies if the Employee dies or the Roth Account is divided pursuant to a qualified domestic relations order. In either event, if a portion of the Roth Account is not payable to the Employee, but is payable to the Employee’s Beneficiary or to an Alternate Payee, the age, death or disability of the Employee is used to determine whether the distribution is a Qualified Roth Distribution. However, if the Employee makes a rollover to this Plan of a Roth deferral from another plan that the Employee has received as an alternate payee or a spousal beneficiary, the Employee’s own age, disability or death shall be used to determine whether a subsequent withdrawal or distribution from the Plan is a Qualified Roth Distribution.

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ARTICLE IX

RETIREMENT BENEFITS

9.1 Normal or Late Retirement: A Participant shall be eligible for Normal Retirement on reaching his Normal Retirement Date. A Participant who has not become an Excluded Employee may continue in the service of the Employer as a Participant hereunder beyond his Normal Retirement Date. In the event such a Participant continues in the service of the Employer, he shall continue to be treated in all respects as a Participant until his actual retirement. When any Participant has a Termination of Employment following his Normal Retirement Date he shall be considered a retired Participant and he shall be entitled to receive the entire amount of his Accrued Benefit, distributed as set forth below.

9.2 Disability Retirement: Upon any Participant incurring a Disability, he shall be considered a disabled Participant and entitled to begin receiving his Vested Accrued Benefit, without regard to whether he has also incurred a Termination of Employment. Such amount shall be distributed as provided in Section 9.3, or deferred until such later date as elected by the disabled Participant and then distributed as provided in Section 9.3.

9.3 Method of Payment: Subject to the rules of Section 9.7, upon receipt of a claim for benefits a retired or disabled Participant’s Vested Accrued Benefit shall be payable, as elected in writing or other appropriate electronic means by the Participant, in one or a combination of the following forms:

(a) A single lump sum payment. The amount of the lump sum payment shall be equal to the entire Vested Interest of the Participant in his Account on the dale payment is made.

(b) Substantially equal monthly, quarterly or annual installments over any period not exceeding the life expectancy of the Participant or the Participant and his or her spouse, if longer, until the Participant’s Vested Accrued Benefit has been fully distributed. Fractional share installment amounts of Employer Securities shall be withheld and accumulated until a whole share of Employer Securities can be distributed. Any fractional share remaining upon payment of the final installment shall be paid in cash.

Not fewer than 30 days nor more than 90 days (effective January 1, 2007, 180 days) before the Distribution Date, the Plan Administrator shall notify the Participant of the terms, conditions and forms of payment available from the Plan, including a description of the election procedures under this Section and a general explanation of the financial effect on a Participant’s Accrued Benefit of the election. The minimum 30-day waiting period after the notification is provided until the Distribution Dale may be disregarded if the Plan Administrator informs the Participant of his or her right to the full minimum 30-day waiting period, and the Participant elects in writing (or by other means acceptable to the Plan Administrator) to waive the minimum 30-day waiting period.

If a Participant fails to elect a form of payment, payment of the Participant’s benefits shall be paid in the form of a lump sum. Except as permitted in Section 9.4, no payment shall be made to a Participant prior to his Normal Retirement Age unless the Participant consents in writing (or by other means acceptable to the Plan Administrator) to the payment not more than 90 days prior to his Distribution Date.

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If the lump sum amount that would be payable to a Participant (whether disabled or retired) is not more than $5,000, without regard to whether the amount in the Participant’s Account has ever exceeded that amount at the time of any prior distribution, the benefit shall be paid as a single lump sum payment as soon as Administratively Feasible following the end of the month in which his Termination of Employment occurs without any requirement of participant consent. However, a single lump sum payment shall not be made to a Participant after his Distribution Date unless the Participant consents in writing to the payment. If the Participant dies prior to the complete distribution of the Participant’s Accrued Benefit to him, then the Plan Administrator, upon notice of the Participant’s death, shall direct the Trustee to make payment in accordance with the provisions of Article X.

For all distributions commencing on or after March 28, 2005, the $5,000 threshold amount in this Section shall be reduced to $1,000.

9.4 Time of Payment: Payment of the retired or disabled Participant’s Vested Accrued Benefit shall commence as soon as Administratively Feasible following the Participant’s Termination of Employment on account of retirement or disability, or if later, as soon as Administratively Feasible following the date a claim for benefits is submitted by the Participant to the Plan Administrator. Unless a Participant elects otherwise (and failure to submit a claim for benefits shall be deemed such an election) payment of benefits under this Plan will commence not later than 60 days after the close of the Plan Year in which the latest of the following events occurs:

(a) the attainment by the Participant of age 65; or

(b) the 10th anniversary of the Participant’s Entry Date; or

(e) the date the Participant has a Termination of Employment from the Employer.

If the amount of the payment required to commence on the date determined above cannot be ascertained by such date, or if it is not possible to make such payment on such date because the Plan Administrator has been unable to locate the Participant after making reasonable efforts to do so, a payment retroactive to such date may be made no later than 60 days after the earliest date on which the amount of such payment can be ascertained or the date the Participant is located, whichever is applicable.

9.5 Minimum Distribution Requirements: This Section 9.5 and Section 10.4 shall take precedence over any inconsistent provisions of this Plan. All distributions required to be made under this Section 9.5 (life distributions) or under Section 10.4 (death distributions) will be determined and made in accordance with the Treasury regulations under Code §401 (a)(9).

(a) Effective Date. This Section and Section 10.4 will apply for purposes of determining required minimum distributions for all calendar years beginning with the Effective Dale. Required minimum distributions for the 2002 calendar year under this Section and Section 10.4 will be determined as follows. If the total amount of 2002 required minimum distributions under the Plan made to a Participant or Beneficiary prior to the effective date of this Section equals or exceeds the required minimum distributions determined under this Section, then no additional distributions will be required to be made for the 2002 calendar year on or after such date to the Participant or Beneficiary. If the total amount of the 2002

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calendar year required minimum distributions under the Plan made to the Participant or Beneficiary prior to the effective date of this Section is less than the amount determined under this Section, then required minimum distributions for the 2002 calendar year on and after such date will be determined so that the total amount of required minimum distributions for the 2002 calendar year made to the Participant or Beneficiary will be the amount determined under this Section.

(b) Time and Manner of Distribution.

(1) Required Beginning Date. The Participant’s entire Vested Accrued Benefit will be distributed, or begin to be distributed, to the Participant no later than the participant’s Required Beginning Date.

(2) Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant’s entire Vested Accrued Benefit will be distributed, or begin to be distributed, as provided in Section 10.4.

(3) Forms of Distribution. Unless the participant’s interest has been distributed in the form of a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Section 9.5(c).

(c) Required Minimum Distributions During Participant’s Lifetime.

(1) Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the participant’s lifetime, the minimum amount that will be distributed for each Distribution Calendar Year is the lesser of:

(A) the quotient obtained by dividing the Participant’s Account Balance by the distribution period in the Uniform Lifetime Table set forth in Treas. Reg. Section 1.401(a)(9)-9, using the Participant’s age as of the Participant’s birthday in the Distribution Calendar Year; or

(B) if the Participant’s sole Designated Beneficiary for the Distribution Calendar Year is the Participant’s spouse, the quotient obtained by dividing the Participant’s Account Balance by the number in the Joint and Last Survivor Table set forth in Treas. Reg. Section 1.401(a)(9)-9, using the Participant’s and spouse’s attained ages as of the participant’s and spouse’s birthdays in the Distribution Calendar Year.

(2) Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death. Required minimum distributions will be determined under this Section 9.5(c) beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes the Participant’s date of death,

(d) Definitions. For purposes of this Section 9.5 and Section 10.4 the following definitions shall apply.

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(1) “Designated Beneficiary” shall mean the individual who is designated as the Beneficiary under Section 10.2 of the Plan and is the Designated Beneficiary under Code §1.401(a)(9)-4.

(2) “Distribution Calendar Year” shall mean a calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year that contains the Participant’s Required Beginning Date. For distributions beginning after the Participant’s death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin under Section 10.4. The required minimum distribution for the Participant’s first Distribution Calendar Year will be made on or before the Participant’s Required Beginning Date. The required minimum distribution for other Distribution Calendar Years, including the required minimum distribution for the Distribution Calendar Year in which the Participant’s Required Beginning Date occurs, will be made on or before December 31 of that Distribution Calendar Year.

(3) “Life Expectancy” shall mean Life Expectancy as computed by use of the Single Life Table in Treas. Reg.§1.401(a)(9)-9.

(4) “Participant’s Account Balance” shall mean the balance in the Participant’s Account as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the Distribution Calendar Year if distributed or transferred in the valuation calendar year.

(5) “Required Beginning Date” shall mean, if a Participant is a more than five percent (5%) owner in the Plan Year ending in or with the calendar year in which the Participant attains age 70 ¹/2, April 1st following that calendar year. For any other Participant the Required Beginning Date is April 1st following the close of the calendar year in which the Participant attains age 70 ¹/2, or, if later, April 1st following the close of the calendar year in which the Participant has a Termination of Employment.

(6) “Five percent owner” shall have the meaning set forth in Reg. §1.401(a)(9)-1, Q&A-2(c).

(e) Form of Benefit Payment. If payment of the Participant’s Accrued Benefit commences under this Section 9.5, it shall be distributed to the Participant (consistent with the Participant’s election and the requirements of Section 9.3):

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(1) in the form of a cash lump sum payment of the Participant’s entire Accrued Benefit; or

(2) in the form of minimum annual cash installment payments over a period not extending beyond the life expectancy of the Participant, or the joint life expectancy of the Participant and his Beneficiary.

(f) Redetermination of Life Expectancy. For purposes of determining the amount of any minimum annual cash installment payments the life expectancy of the Participant and his spouse, but not of his non-spouse Beneficiary, shall be redetermined annually, unless otherwise elected by the Participant. Notwithstanding the above, any distribution required under the incidental death benefit requirements of Code §401(a) shall be treated as a required distribution.

(g) Temporary Suspension of Required Minimum Distributions. A Participant may elect not to receive the required minimum distribution (or any portion thereof) attributable to the 2009 Distribution Calendar Year. The Participant election shall be made by notifying the Plan in writing (or by other acceptable electronic means) at any time prior to the latest possible date that the minimum required distribution would otherwise be made. Any required minimum distribution (or portion thereof) attributable to the 2009 Distribution Calendar Year which is made to a Participant shall be treated by the Plan as an Eligible Rollover Distribution, except that it shall not be subject to any income tax withholding requirement that may otherwise apply under Code §72(t).

9.6 No Annuity Benefits: Accrued Benefits payable from this Plan shall not be paid in any form of annuity.

9.7 Distribution of Employer Securities and Cash:

(a) If so elected by the Participant, distributions of benefits from the Plan may be made entirely in Employer Securities, valued at fair market value at the time of distribution, or, effective March 1, 2003, entirely in cash. If the Participant elects a distribution that is part cash and part Employer Securities, the distribution shall be consist only of the Employer Securities in the Employer Securities Account and the cash value of the General Investments Account at the time the payment is made. A Participant who elects a distribution method other than a lump sum may designate prior to payment of the first installment the amount of the first and each subsequent installment that will be Employer Securities and that will be cash. Any fractional security share to which a Participant or his Beneficiary is entitled shall be paid in cash. If the Participant makes no election, then the Participant’s Account shall be distributed in cash and in Employer Securities, according to the ratio of investment in the Participant’s Account in the General Investments and Employer Securities Accounts, respectively.

(b) Notwithstanding the provisions of Section 9.7(a), if a Participant has elected under Section 6.3(c) to withdraw (rather than reinvest) the cash dividends on Employer Securities allocated or allocable to his Account, the Plan Administrator shall direct the Trustee to pay to the Participant in cash the cash dividends on Employer Securities so allocated or

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allocable to the Participant’s Employer Securities Account, irrespective of whether the Participant is fully vested in his Employer Securities Account. The Plan Administrator’s direction must slate whether the Trustee is to pay the cash dividend distributions currently, or within the 90-day period following the close of the Plan Year in which the Employer pays the dividends to the Trust. The Plan Administrator may also request the Employer to pay cash dividends on Employer Securities directly to Participants.

9.8 Special Distribution Rules: Unless the Participant elects in writing other distribution provisions of the Plan or unless other distribution provisions of the Plan require earlier distribution of the Participant’s Accrued Benefit, the Participant shall commence receiving his Accrued Benefit at the time prescribed by this Section 9.8, irrespective of any other provision of the Plan. The distribution provisions of this Section 9.8 are subject to the consent and form of distribution requirements of Section 9.3.

(a) If the Participant incurs a Termination of Employment after attainment of Normal Retirement Age (age 65) or by reason of death or disability, distribution of his Accrued Benefit shall commence during but not later than the last day of the Plan Year in which the applicable event occurs.

(b) If the Participant incurs a Termination of Employment for any reason not specified in (a), distribution of his Accrued Benefit shall commence as soon as Administratively Feasible during but not later than the last day of the Plan Year after the close of the 5th Plan Year following the Plan Year in which the Participant incurred the Termination of Employment. If the Participant resumes employment with the Employer on or before the last day of the 5th Plan Year following the Plan Year of his/her separation from Service (effective January 1, 2002, severance from employment), the mandatory distribution provisions of this paragraph (b) do not apply.

For purposes of this Section 9.8(b), a distribution to a Participant of his Accrued Benefit shall not include any Employer Securities acquired with the proceeds of an Exempt Loan until the close of the Plan Year in which the Exempt Loan is paid in full.

The distributions required under this Section 9.8 shall be made in equal annual installments over a period not exceeding five years unless the Participant is permitted and otherwise elects a longer period under the other distribution provisions of the Plan. If a Participant’s Accrued Benefit exceeds $500,000, the payment period, subject to the longer period elected by the Participant, shall be live years plus one additional year (but no more than five additional years) for each $100,000 (or fraction of $100,000) by which his Accrued Benefit exceeds $500,000. The $500,000 and $100,000 amounts set forth in this Section shall be adjusted at the same time and in the same manner as the factor prescribed by the Secretary of the Treasury under Code §415(d). In no event will the distribution period exceed the period permitted under Section 9.5 of the Plan.

9.9 Distribution of Transferred Benefits: To the extent not already provided under the terms of this Plan, and notwithstanding any other provisions to the contrary, this Plan guarantees to each Participant whose Account includes Transferred Benefits (and to each Beneficiary thereof) the right to receive all Transferred Benefits in any optional form of benefit (including lime, manner and

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method of distribution) protected under Code §411(d)(6). The extent and nature of the optional forms of benefits so protected shall be determined by reference to the Predecessor Plan(s).

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ARTICLE X

DEATH BENEFITS

10.1 Death Benefits Payable: If a Participant who has not received a distribution of his entire Vested Interest dies, whether before or after his Distribution Date, the death benefit payable to the Beneficiary, Contingent Beneficiary or estate (as the case may be) of the Participant shall be all amounts credited (or to be credited) to his Accounts then held by the Trustee for the Participant’s benefit, without regard to the Participant’s Vested Percentage and that have yet to be distributed. If an Inactive Participant who has not received a distribution of his entire Vested Interest dies, whether before or after his Distribution Date, the death benefit payable to the Beneficiary, Contingent Beneficiary or estate (as the case may be) of the Inactive Participant shall only be the remaining Vested Interest in the Inactive Participant’s Accounts then held by the Trustee for the Inactive Participant’s benefit.

10.2 Designation of Beneficiary: Each Participant or Inactive Participant may designate a Beneficiary and Contingent Beneficiary who shall be entitled to receive the death benefit payable under Section 10.1. From time to time the Participant or Inactive Participant may file with the Plan Administrator a new or revised designation, provided that his or her spouse shall be his or her Beneficiary unless his or her spouse has consented in writing to the designation of a Beneficiary other than his or her spouse or it is established to the satisfaction of the Plan Administrator that the consent of the spouse may not be obtained because there is no spouse, the spouse cannot be located or because of such other circumstances as may be set forth in Regulations issued pursuant to Code §417(a)(2)(B). The change in marital status of a Participant from married to unmarried or vice versa shall void any outstanding beneficiary designation and require the completion and execution of a new beneficiary designation consistent with the provisions of this Section. Beneficiary designations shall be completed in the manner approved by the Plan Administrator or set forth in writing on a form provided by the Plan Administrator.

If upon the Participant’s death his designated Beneficiary does not survive him, the Contingent Beneficiary shall become the Beneficiary and any death benefit payable under Section 10.1 shall be paid to him or her. If a deceased Participant is not survived by a designated Beneficiary or Contingent Beneficiary, or if no Beneficiary was designated, the benefits shall be paid to the person (or in equal shares to the persons) in the first of the following classes of successive preference beneficiaries then surviving: the Participant’s (a) widow or widower, (b) children per stirpes, (c) parents, (d) brothers and sisters, (e) executor or administrator of his estate. For purposes of determining the right of a Beneficiary, Contingent Beneficiary, surviving spouse or other survivor to receive a benefit on account of the death of a Participant, he or she shall not be deemed to have survived the Participant unless he or she shall survive the Participant by at least 30 days.

If the Beneficiary, Contingent Beneficiary or surviving spouse survives the Participant and is entitled to receive benefits under this Section 10.2, but dies prior to receiving the entire death benefit payable to him or her, the remaining portion of the death benefit shall be paid to the person’s named beneficiary or, if none, to the person’s estate subject to the right of commutation.

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10.3 Death Benefit Payment Procedure: Upon receipt of a claim for benefits, the Participant’s death benefit shall be paid by the Trustee to the Beneficiary designated by the Participant pursuant to Section 10.2. The Beneficiary of a Participant may elect to receive death benefits payable hereunder in any form of payment provided in Section 9.3, subject to the right to receive the distribution in cash or in Employer Securities as provided in Section 9.7. The Beneficiary’s election to receive distribution shall be made in the same manner provided under Articles IX and XI for distribution to Participants. If the Beneficiary fails to elect a form of payment, then subject to the small benefit distribution rules in the next paragraph of this Section 10.3 and except as provided in Section 10.4(g), the Plan shall distribute the death benefit in annual installments over the life expectancy of the Beneficiary, consistent with the rules in Section 10.4. Installments shall commence no later than December 31 of the Plan Year following the Plan Year of the Participant’s death, with each subsequent installment payment to be made no later than each December 31, thereafter.

If the lump sum benefit otherwise payable to the Beneficiary is not more than $5,000 and payment of benefits to the deceased Participant has not previously commenced, the benefit shall be paid as a single lump sum payment, subject to the distribution rules of Section 9.7. Payment of any death benefits under this paragraph shall commence as soon as Administratively Feasible following the Participant’s date of death. However, if the amount of the benefit required to be paid on the date determined above cannot be ascertained by that date, or if it is not possible to make the payment on that date because the Plan Administrator has been unable to ascertain or locate the Beneficiary after making reasonable efforts to do so, a payment retroactive to such date may be made as soon as Administratively Feasible after the earliest date on which the Beneficiary or amount of the payment can be ascertained or the date the Beneficiary is located, whichever is applicable.

10.4 Required Distributions Upon Death: Notwithstanding any other provisions of this Plan, payment of death benefits shall be subject to the following rules:

(a) Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant’s entire Vested Accrued Benefit will be distributed, or begin to be distributed no later than as follows:

(1) If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, then unless otherwise provided herein, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 ¹/2, if later.

(2) If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, then except as otherwise provided herein, distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(3) If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire Vested Accrued Benefit will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

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(4) If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section 10.4(a), other than subsection (a)(i), will apply as if the surviving spouse were the Participant.

For purposes of this Section 10.4(a) and Sections 10.4(e) and (f), unless Section 10.4(a)(4) applies, distributions are considered to begin on the participant’s Required Beginning Date. If Section 10.4(a)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section 10.4(a)(i).

(b) Forms of Distribution. Unless the participant’s interest has been distributed in the form of a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections 10.4(e) and (f).

(c) Beneficiaries’ Election of Five Year Rule. Beneficiaries may elect on an individual basis whether the Five Year Rule or the Life Expectancy rule in Sections 10.4(a) and (f) applies to distributions after the death of a Participant who has a Designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under Section 10.4(a) or by September 30 of the calendar year that contains the fifth anniversary of the Participant’s (or, if applicable, surviving spouse’s) death. If neither the Participant nor Beneficiary makes an election under this subsection, distributions will be made in accordance with Sections 10.4(a) and (f).

(d) Transition Rule for Designated Beneficiary Receiving Distributions Under Five Year Rule to Elect Life Expectancy Distributions. A Designated Beneficiary who is receiving payments under the Five Year Rule may make a new election to receive payments under the Life Expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the Life Expectancy rule for all Distribution Calendar Years before 2004 are distributed by the earlier of December 31, 2003, or the end of the five year period.

(e) Death On or After Date Distributions Begin.

(1) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the longer of the remaining Life Expectancy of the Participant or the remaining Life Expectancy of the Participant’s Designated Beneficiary, determined as follows:

(A) The Participant’s remaining Life Expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

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(B) If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, the remaining Life Expectancy of the surviving spouse is calculated for each Distribution Calendar Year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For Distribution Calendar Years after the year of the surviving spouse’s death, the remaining Life Expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.

(C) If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, the Designated Beneficiary’s remaining Life Expectancy is calculated using the age of the Beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(2) No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no Designated Beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the Participant’s remaining Life Expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(f) Death Before Date Distributions Begin.

(1) Participant Survived by Designated Beneficiary. If the Participant dies before the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the remaining Life Expectancy of the Participant’s Designated Beneficiary, determined as provided in Section 10.4(e).

(2) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(3) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 10.4(a)(i), this Section 10.4(f) will apply as if the surviving spouse were the Participant.

(g) Rollover of Death Benefit for Non-spouse Beneficiary after December 31, 2009.

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(1) If the Participant dies before his or her required beginning date, the required minimum distribution for purposes of determining the amount eligible for rollover with respect to a non-spouse beneficiary shall be determined under the 5-year rule described in Code §401(a)(9)(B)(ii). Under this rule, no amount shall be a required minimum distribution for the year in which the Participant dies. The rule in Q&A-7(b) of Reg. §1.402(c)-2 (relating to distributions before an employee has attained age 7 ¹/2) shall not apply to a non-spouse beneficiary.

(2) Under the five-year rule as adopted by the Plan, no amount is required to be distributed to a non-spouse beneficiary until the fifth calendar year following the year of the Participant’s death. In that year, if no prior distribution has been made, the entire amount to which the beneficiary is entitled under the Plan must be distributed.

(3) If the non-spouse beneficiary so elects, the Plan shall permit the non-spouse beneficiary to directly roll over the beneficiary’s entire benefit until the end of the fourth calendar year following the year of death. On or after January 1 of the fifth year following the calendar year in which the Participant died, no amount payable to the non-spouse beneficiary under the Plan shall be eligible for rollover.

(4) If a Participant dies on or after his or her required beginning date, within the meaning of Code §401(a)(9)(C), then for the year of the Participant’s death, the required minimum distribution not eligible for rollover shall be the same as the amount that would have applied if the Participant were still alive and had elected the direct rollover. The amount not eligible for rollover shall include all undistributed required minimum distributions for the year in which the direct rollover occurs and any prior year, including years before the Participant’s death.

(h) Temporary Suspension of Beneficiary Distributions. A Beneficiary receiving distributions from the Plan under an election made pursuant to subsection (c) may elect not to receive the distribution amount (or any portion thereof) that would otherwise be attributable to the 2009 Distribution Calendar Year. The Beneficiary’s election shall be made by notifying the Plan in writing (or by other acceptable electronic means) at any time prior to the latest possible date that the distribution would otherwise be made. If a distribution (or portion thereof) otherwise attributable to the 2009 Distribution Calendar Year is suspended, then the five year period for payout of the Accrued Benefit to the Beneficiary shall be extended an additional year to take into account the suspension of payment.

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ARTICLE XI

BENEFITS UPON OTHER TERMINATION OF EMPLOYMENT

11.1 Vested Amounts: A Participant shall become 100% vested in his Accrued Benefit on attainment of Normal Retirement Age while employed by a Zions Employer. Prior to his Normal Retirement Age a Participant shall have a Vested Interest in those sub-accounts not otherwise excepted below that make up his Accrued Benefit equal to the sum of the following:

(a) One hundred percent (100%) of the balance in his Participant Elective Deferral Account and in his Employer Matching Contribution Account, as adjusted for any contributions or distributions since the preceding Valuation Date; and

(b) One hundred percent (100%) of the balance in his Participant Rollover Contribution Account and in his Voluntary Contribution Account, if any, as adjusted for any contributions or distributions since the preceding Valuation Date; and

(c) One hundred percent (100%) of the balance in his Dividend Account if any (whether cash or Employer Securities), as adjusted for any contributions or distributions since the preceding Valuation Date; and

(d) His vested percentage of the balance in his Employer Non-Elective Contribution Account, as adjusted for any contributions or distributions since the preceding Valuation Date, according to the Participant’s Years of Vesting Service, except as provided in subsection (e) below and for Employer Non-Elective Contributions made for Plan Years beginning before January 1, 2007 and consistent with the following schedule:

Years of Vesting Service	Percent of Vested Accrued  Benefit
Fewer than five years		none
At least live years		100	%

For Employer Non-Elective Contributions made for Plan Years beginning after December 31, 2006 and consistent with the following schedule:

Years of Vesting Service	Percent of Vested Service Accrued Benefit
Less than two years		none
Two years		20	%
Three years		40	%
Four years		60	%
Five or more years		100	%

(e) A Participant’s Predecessor Plan Account (if any) shall be vested pursuant to the vesting rules set forth in the Predecessor Plan Account.

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The percentage of the Participant’s Accrued Benefit attributable to various sub-accounts in which he is not vested shall be forfeited by him as provided in Section 11.7.

11.2 Distribution of Vested Interest: Subject to the rules of Section 9.7, a Participant who incurs a Termination of Employment for any reason other than retirement, death or disability may elect in writing or other appropriate electronic means one or a combination of the following forms of distribution of his Vested Interest:

(a) A single lump sum payment. The amount of the lump sum payment shall be equal to the Participant’s Vested Interest in his or her Account on the date payment is made.

(b) Substantially equal monthly, quarterly or annual installments over any period not exceeding the life expectancy of the Participant or the Participant and his or her spouse, if longer, until the Participant’s Vested Accrued Benefit has been fully distributed. Fractional share installment amounts of Employer Securities shall be withheld and accumulated until a whole share of Employer Securities can be distributed. Any fractional share remaining upon payment of the final installment shall be paid in cash.

Distribution shall commence no later than the time specified in Section 9.8 unless the Participant fails to elect a form or time of payment or elects a deferred payment, then payment of the Participant’s Accrued Benefit shall be deferred to the subsequent date elected by the Participant, that may be no later than the latest date permitted under Section 9.5, and then distributed in accordance with the provisions of Section 9.3. If the Participant elects later payment of the Participant’s Vested Accrued Benefit, distribution shall commence as soon as Administratively Feasible following the date a claim for benefits is submitted by the Participant to the Plan Administrator, which may be no later than the earlier of the date permitted under Sections 9.4 and 9.5. If at that time the Participant has attained Normal Retirement Age or incurred a disability, or if the Participant dies before his Normal Retirement Age or if earlier, before his Distribution Date, the Plan Administrator, upon notice of the attainment of Retirement Age or of death, shall direct the Trustee to make payment of the Participant’s Vested Interest to him (or to his Beneficiary if the Participant is deceased) in accordance with the provisions of Article X in the case of death, or Section 9.3 in the case of disability or attainment of Normal Retirement Age.

Not fewer than 30 days nor more than 90 days (effective January 1, 2007, 180 days) before the Distribution Date, the Plan Administrator shall notify the Participant of the terms, conditions and forms of payment available from the Plan, including a description of the election procedures under this Section and a general explanation of the financial effect on a Participant’s Accrued Benefit of the election. The minimum 30-day waiting period after the notification is provided until the Distribution Date may be disregarded if the Plan Administrator informs the Participant of his or her right to the full minimum 30-day waiting period, and the Participant elects in writing (or by other means acceptable to the Plan Administrator) to waive the minimum 30-day waiting period.

If the Participant elects immediate distribution following Termination of Employment, whether as a single lump sum payment or term certain payments, payment shall be made as soon as Administratively Feasible following Termination of Employment. However, if a Participant terminates employment in a month that is the end of a quarter of the calendar year (i.e., March, June, September, December),

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then the distribution of the Participant’s Account shall be made on the 25th day of the second month following the Participant’s Termination of Employment. If the Former Participant dies or incurs a Disability before his Normal Retirement Date, the Plan Administrator, upon notice of the death or Disability, shall direct the Trustee to make payment of the Participant’s Vested Interest to him (or to his Beneficiary if the Participant is deceased) in accordance with the provisions of Article X in the case of death, or Section 9.2 in the case of Disability.

Notwithstanding the above, if a terminated Participant is re-employed by the Employer prior to distribution of his Vested Interest, distribution shall not be made until his employment is again terminated or until the occurrence of another event permitting distribution under the terms of the Plan.

11.3 Distribution of Small Amounts: Notwithstanding the provisions of Section 11.2 if a Participant incurs a Termination of Employment for any reason other than retirement, death or disability and if the Vested Accrued Benefit that would be payable to a Participant is not more than $5,000, without regard to whether the amount in the Participant’s Account has ever exceeded that amount at the time of any prior distribution, then the Plan shall make distribution to the Participant in a single lump sum cash payment pursuant to the provisions of Sections 9.7 and 9.8 without first obtaining the Participant’s written consent.

For all distributions commencing on or after March 28, 2005, the $5,000 threshold amount in this Section shall be reduced to $1,000.

11.4 Eligible Rollover Distributions: Notwithstanding any provision of this Plan to the contrary, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. For purposes of this Section 11.4 the following definitions shall apply:

(a) “Eligible Rollover Distribution” shall mean any distribution of all or any portion of the balance to the credit in the Account of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code §401(a)(9), and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Any amount that is distributed on account of hardship (without regard to whether the hardship withdrawal is attributable to Elective Deferrals) shall not be an Eligible Rollover Distribution and the Distributee may not elect to have any portion of such a distribution paid directly to an eligible retirement plan.

Effective for distributions first commencing on or after January 1, 2007, an “Eligible Rollover Distribution” does not include the portion of the distribution that is payable on behalf of a non-spouse beneficiary and that is a required distribution under Code §401 (a)(9) because the distribution first commences after the close of the calendar year in

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which the death of the Participant occurs, nor does it include any portion of the distribution to a non-spouse beneficiary who has elected the Five Year Rule under Section 10.4(c) and the distribution does not commence prior to the close of the fourth calendar year following the calendar year in which the Participant’s death occurred.

Effective for distributions first commencing after September 27, 2010, an “Eligible Rollover Distribution” also includes any distribution from this Plan that otherwise satisfies the Plan’s distribution rules and the requirements of Code §402(c)(4) and which is directly rolled over to the In-plan Roth Rollover Account.

(b) “Eligible Retirement Plan” shall mean an individual retirement account described in Code §408(a), an individual retirement annuity described in Code §408(b) (jointly or separately, an “IRA”), an annuity plan described in Code §403(a), a qualified trust described in Code §401(a), that accepts the Distributee’s Eligible Rollover Distribution, an annuity contract described in Code §403(b) and an eligible plan under Code §457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and that agrees to separately account for amounts transferred into such plan from this Plan. This definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Code §414(p). However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an IRA.

Effective for distributions first commencing on or after January 1, 2007, on behalf of a non-spouse beneficiary, an “Eligible Retirement Plan” shall only include an IRA established on behalf of the non-spouse beneficiary that will be treated as an inherited IRA pursuant to Code §402(c)(l 1) and that satisfies the requirements of Notice 2007-7, Q&A-13.

For distributions made after December 31, 2007, an Eligible Retirement Plan shall also mean a Roth IRA described in Code Section 408A(b).

For distributions made after September 27, 2010 which are rolled over to the In-plan Roth Rollover Account, an Eligible Retirement Plan shall also mean this Plan.

(c) “Distributee” shall mean an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code §414(p), are Distributees with regard to the interest of the spouse or former spouse. Effective for distributions first commencing on or after January 1, 2007, a “Distributee” shall also include any non-spouse beneficiary who is a designated beneficiary under the provisions of Section 10.2.

(d) “Direct Rollover” shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

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11.5 Breaks in Service and Vesting: If a Participant has a One Year Break in Service, the Participant’s Years of Vesting Service before the One Year Break in Service shall not be included in computing Years of Vesting Service until the Participant shall have completed one Year of Vesting Service after the One Year Break in Service. If an Employee terminated employment prior to becoming a Participant and incurred a One Year Break in Service, or if a Participant did not have any Vested Interest derived from Employer contributions prior to a One Year Break in Service, Years of Vesting Service before a One Year Break in Service shall not be included in Years of Vesting Service calculated after the Participant’s One Year Break in Service if the number of consecutive One Year Breaks in Service equals or exceeds the greater of five or the aggregate number of such Years of Vesting Service before the One Year Break in Service.

Solely for the purpose of determining the vested percentage of a Participant’s Accrued Benefit derived from Employer contributions that accrued prior to a five consecutive one-year Break in Service period, the Plan shall disregard any Year of Service subsequent to such five consecutive one-year Breaks in Service period.

If a Participant has a One Year Break in Service, and the break does not arise on account of Termination of Employment, the Participant shall not be credited with a Year of Vesting Service for that Plan Year. However, no amounts in the Participant’s Accounts shall be forfeited.

11.6 No Increase in Pre-break Vesting: For purposes of Section 11.1, Years of Vesting Service after a Termination of Employment that resulted in five consecutive One Year Breaks in Service shall not increase the vested percentage of a Participant’s Account that was earned before such five consecutive One Year Breaks in Service.

11.7 Occurrence and Disposition of Forfeitures:

(a) Forfeiture of the Participant’s non-vested interest in his or her Employer Non-Elective Contribution Account shall occur:

(1) In the case of a Participant who receives a lump sum distribution of his or her Vested Interest on account of Termination of Employment, on the day the Participant receives the distribution.

(2) In the case of a Participant who has a Vested Interest derived from Employer Contributions (which for this purpose shall include Elective Deferral Contributions) and does not receive a total distribution of such Vested Interest, on the last day of the Plan Year in which the Participant incurs five consecutive One Year Breaks in Service.

(3) In the case of a Participant who has no Vested Interest derived from Employer Contributions (which for this purpose shall include Elective Deferral Contributions), regardless of the sub-account to which the Employer Contributions have been allocated, on the day the Participant incurs the Termination of Employment.

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Non-vested interests of terminated Participants shall be held by the Trustee in the respective Accounts of the Participant until the date determined above and shall then be forfeited by the Participant and used or allocated in accordance with this Section.

(b) Amounts forfeited by terminated Participants from their Employer Non-Elective Contribution Accounts, if not used first to restore Accounts under Sections 11.10 and 23.11, shall be used to reduce the amount of the Employer’s Non-Elective Contribution otherwise made pursuant to Section 5.7 for the Plan Year. In the event the Employer does not make a Non-Elective Contribution for the Plan Year, then the amounts forfeited shall be used at the Employer’s election:

(1) to offset costs and expenses of Plan administration (to the extent and in the manner permitted under Section 14.6),

(2) as the sole Employer Non-Elective Contribution for the Plan Year and allocated in accordance with Section 6.2(c),

(3) to reduce the amount of the Employer’s Matching Contribution for the Plan year, or

(4) any combination of the foregoing.

(c) To the extent possible, the Plan Administrator must forfeit from a Participant’s General Investments Account before making a forfeiture from his or her Employer Securities Account.

11.8 Distribution to Participants Who Are Less Than 100% Vested in Their Entire Account: In the event a Participant who is less than 100% vested hereunder incurs a Termination of Employment and returns to the employ of the Employer before a forfeiture of his non-vested interest shall have occurred, and prior to his re-employment was paid a portion of his Vested Interest, a separate account for the Participant’s remaining interest in the Plan as of the time of the distribution shall be maintained. At any relevant time, the Participant’s vested portion of the separate account shall be an amount “X” determined by the following formula:

X = P (AB+(RxD)) - (RxD)

For purposes of applying the formula:

P is the vested percentage at the relevant time;

AB is the account balance at the relevant time;

D is the amount of the distribution;

R is the ratio of the account balance at the relevant time to the account balance after distribution.

In the event a Participant who is less than 100% vested hereunder incurs a Termination of Employment and returns to the employ of the Employer after a forfeiture of his non-vested interest but

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prior to incurring five consecutive One Year Breaks in Service, and prior to his re-employment was paid his Vested Interest, the non-vested portion of his Accrued Benefit that was forfeited by the Participant shall be disregarded in computing his Accrued Benefit after re-entry into the Plan, unless the Participant repays, pursuant to Section 11.8, the amounts distributed from his Account from which an amount was forfeited. If a Participant does repay the distribution, the balance in such Account shall be restored as provided in Section 11.9.

In the event a Participant who had no Vested Interest in his Employer Regular Contribution Account separated from service and returns to the employ of the Employer after a forfeiture of his non-vested interest but prior to incurring five consecutive One Year Breaks in Service, any non-vested amounts forfeited by the Participant shall be restored, as provided in Section 11.9, to the Account from which an amount was forfeited.

11.9 Repayment of Distribution: A Participant described in the second paragraph of Section 11.7 who received a lump sum distribution of less than 100% of his Accrued Benefit shall be entitled to repay the amount so distributed from the Employer Contribution Account in which he was less than 100% vested. The repayment must be for the full amount distributed from the Account and must be made not later than the earlier of:

(a) the date on which the Participant incurs five consecutive One Year Breaks in Service after the date of distribution; or

(b) the end of the five year period beginning with the date the Participant is re-employed by the Employer.

Any repayment shall not be included in applying the limitations of Article V or Article VIII hereunder.

11.10 Restoration of Accounts: Any amount repaid pursuant to Section 11.8 shall be credited to the Participant’s Accounts for which it is repaid, with credit to be made as of the date of repayment. The Account shall also be credited with the amount previously forfeited from the Account, with credit to be made as of the last day of the Plan Year in which repayment is made.

In the case of a Participant to whom the third paragraph of Section 11.7 applies, the Participant’s Accounts from which amounts were previously forfeited shall be credited with the amount so forfeited, with credit to be made as of the last day of the Plan Year in which the Participant resumes participation in the Plan.

Any previously forfeited amounts that are credited to Participants’ Accounts pursuant to this Section shall be derived from the following sources in the following order of priority:

(a) First, the amount, if any, to be credited to such types of Accounts for the Plan Year pursuant to Section 11.5;

(b) Second, Employer contributions for the Plan Year, if any, that are not required to be credited to such types of Accounts for other Participants; and

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(c) Third, an additional Employer contribution for the Plan Year, regardless of whether the Employer has any Net Profits for the year.

If for any Plan Year, the Accounts of more than one Participant are required to be restored, then restorations shall be derived from the above sources in the same proportion that the amount to be restored to each Participant bears to the total amount to be restored to all such Participants for the Plan Year. Any such amounts credited to a Participant’s Accounts shall not be included in applying the limitations of Article V or Article VIII hereunder.

11.11 Amendments to the Vesting Schedule: No amendment to the vesting schedule or provisions of Section 11.1, or to this Plan that directly or indirectly affects the computation of a Participant’s Accrued Benefit, shall deprive a Participant of a vested right to the benefits accrued to the effective date of the amendment. Furthermore, if the vesting schedule or provisions of Section 11.1 are amended, each Participant with at least three (3) Years of Vesting Service (determined as of the later of the date the amendment is adopted or the date the amendment is effective) may elect to have his vesting percentage computed under the Plan without regard to the amendment. The period during which the election may be made shall commence with the date the amendment is adopted and shall end on the latest of:

(a) 60 days after the amendment is adopted;

(b) 60 days after the amendment becomes effective; or

(c) 60 days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator.

In the absence of any written notice under (c) above, any Participant who has at least three (3) Years of Vesting Service (as determined above) shall at all times receive a Vested Interest under whichever vesting schedule provides the greatest Vested Interest.

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ARTICLE XII

FIDUCIARY DUTIES

12.1 General Fiduciary Duty: A Fiduciary, whether or not a Named Fiduciary, shall discharge his duties solely in the interest of the Participants and their Beneficiaries hereunder. All assets of this Plan shall be devoted to the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan. Each Fiduciary, whether or not a Named Fiduciary, shall discharge his duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Each Fiduciary shall also discharge his duties in a manner consistent with the documents and instruments governing the Plan to the extent such documents and instruments are consistent with law. No Fiduciary, whether or not a Named Fiduciary, shall engage in any prohibited transactions with a Disqualified Person or party-in-interest as those terms and transactions are defined herein and by ERISA.

12.2 Allocation of Responsibilities: Each Named Fiduciary shall have only those duties and responsibilities expressly allocated under the terms of this Plan. No other duties or responsibilities shall be implied.

12.3 Delegation of Responsibilities: Each Named Fiduciary may delegate the fiduciary responsibilities other than Trustee responsibilities allocated to such Fiduciary under this Plan to any person other than a Named Fiduciary. If any duties or responsibilities are delegated under this section, the person to whom the duties or responsibilities are delegated shall acknowledge the fact in writing and shall specify in writing the duties and responsibilities so delegated. All other duties and responsibilities shall be deemed not to have been delegated.

12.4 Liability for Allocation or Delegation of Responsibilities: A Named Fiduciary shall not be liable for the acts or omissions of a person to whom responsibilities or duties are allocated or delegated in accordance with Section 12.2 or Section 12.3 except to the extent such Named Fiduciary breaches his obligation under Section 12.1:

(a) with respect to the allocation or delegation;

(b) with respect to establishing or implementing a procedure for allocation or delegation; or

(c) by continuing the allocation or delegation.

Nothing in this section shall relieve a Fiduciary from liability incurred under Section 12.5.

12.5 Liability for Co-Fiduciaries: In addition to the liability a Fiduciary may incur for the breach of his duty under Section 12.1 or 12.4, a Fiduciary shall be liable for a breach of Fiduciary duty committed by another Fiduciary in the following circumstances:

(a) if he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other Fiduciary knowing such act or omission is a breach;

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(b) if, by his failure to comply with Section 12.1 he has enabled such other Fiduciary to commit a breach;

(c) if he has knowledge of a breach by such other Fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.

12.6 Same Person May Serve in More than One Capacity: Nothing herein shall prevent any person from serving in more than one Fiduciary capacity.

12.7 Indemnification: The Plan Sponsor shall hold harmless and indemnify to the fullest extent permitted by ERISA each non-Trustee Fiduciary of the Plan with respect to the consequences of all actions or failures to act of the Fiduciary while carrying out his or her responsibilities under the Plan. The Plan Sponsor shall further hold harmless and indemnify each Fiduciary who is subjected to any claim or action or who is made a party in any threatened, pending or completed proceeding, including, without limitation, any proceeding brought by or in the name of the Plan or by any participant thereof or by any governmental agency. The Employer’s indemnification shall include any and all expenses (including attorney’s and/or consultant’s fees), costs, damages, judgments, fines, interest, penalties (including any that may be imposed under ERISA §502(1)) and/or amounts paid in settlement and that are actually and reasonably incurred by a Fiduciary in connection with the investigation, defense, settlement, preparation for trial, trial, or appeal of any proceeding, claim or action. Notwithstanding the foregoing, the Employer shall not be obligated to hold harmless or indemnify a Fiduciary of the Plan if indemnification is inconsistent with applicable law or if the act(s) or omission(s) of the Fiduciary to be indemnified are determined to have involved intentional misconduct, gross negligence or a knowing violation of ERISA or other applicable law by the Fiduciary.

To the extent a Fiduciary is a named insured under any policy of liability insurance maintained by the Plan or the Employer, the policy and the payment obligations of the insurance company under the policy shall be deemed primary and in lieu of the Employer’s obligations under this Section 12.7, but only to the extent of the coverage provided in the policy. No insurer under any policy shall claim any right to reimbursement or refund from the Employer and no obligation of the Employer hereunder shall be deemed to inure to the benefit of any third party.

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ARTICLE XIII

THE PLAN ADMINISTRATOR

13.1 Appointment of Plan Administrator: The Board of Directors of the Plan Sponsor shall appoint the Plan Administrator, which may be the Plan Sponsor, If the Plan Sponsor is appointed as Plan Administrator, the Plan Sponsor may appoint one or more Committees to carry out the duties of the Plan Administrator under this Plan. In that event all references in the Plan to the Plan Administrator shall be deemed to refer to the appointed Committee. The duties of the Committees shall be divided as the Plan Administrator deems appropriate and may be designated by separate instrument. The Committees shall act by majority vote except that they shall act by unanimous vote at any time when there are only two members comprising the Committee.

13.2 Acceptance by Plan Administrator: The Plan Administrator shall accept its appointment by joining with the Employer in the execution of this Agreement.

13.3 Signature of Plan Administrator: All persons dealing with the Plan Administrator may rely on any document executed by the Plan Administrator; or, in the event of appointment of a Committee or Committees, such persons may rely on any document executed by at least one member of the appropriate Committee as being the act of the Plan Administrator.

13.4 Appointment of an Investment Manager: The Plan Administrator may appoint an Investment Manager or Managers to manage, acquire and dispose of any assets of the Plan. In the event responsibility for appointment of Investment Managers is delegated by the Plan Administrator to a named Committee, that delegation shall carry with it the authority of the Committee to act as a Named Fiduciary for purposes of ERISA in appointing an Investment Manager. The Investment Manager shall accept his appointment by written agreement executed by the Plan Administrator and Investment Manager. This written agreement shall specify the Plan assets for which the Investment Manager is responsible and such written instrument shall be kept with the other documents governing the operation of the Plan. The Trustee shall be entitled to rely on written instructions from the Investment Manager and shall be under no obligation to invest or otherwise manage any asset of the Plan subject to the management of the Investment Manager.

13.5 Duties of the Plan Administrator: The Plan Administrator shall be responsible for the general administration of the Plan including, but not limited to, the following:

(a) to prepare an annual report, summary plan description and modifications thereto, and summary annual report;

(b) to complete and file the various reports and tax forms with the appropriate government agencies as required by law;

(c) to distribute to Plan Participants and/or their Beneficiaries the summary plan description and reports sufficient to inform such Participants or Beneficiaries of their Accrued Benefit and their Vested Accrued Benefit as required by law;

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(d) to determine annually, or more frequently if necessary, which Employees are eligible to participate in the Plan;

(e) to determine the benefits to which Participants and their Beneficiaries are entitled and to approve or deny claims for benefits;

(f) to provide Plan Participants with a written explanation of the effect of electing an optional form of benefit payment;

(g) to retain copies of all documents or instruments under which the Plan operates in its own office, the principal place of business of the Plan Sponsor and such other place as the Secretary of Labor or his delegate may by regulation prescribe; to make all such documents and instruments governing the operation of the Plan available for inspection by Plan Participants and/or their Beneficiaries; and to furnish copies of such documents or instruments to Plan Participants and/or their Beneficiaries on request, charging only the cost thereof as prescribed by regulation of the Secretary of Labor or his delegate;

(h) to interpret Plan provisions as needed and in this regard to have complete and total discretion in the interpretation of the Plan; and

(i) to act as the Plan’s agent for the service of legal process, unless another agent is designated by the Plan Sponsor and to act on behalf of the Plan in all matters in which the Plan is or may be a party.

13.6 Claims Procedure: A claim for benefits under the Plan may be filed with the Plan by any Participant or Beneficiary on a form supplied by the Plan Sponsor for that purpose or through any other communication medium approved by the Plan Administrator. Written notice of the disposition of a claim shall be furnished to the claimant within 90 days after the application thereof is filed. In the event the claim is denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how the claimant may perfect the claim shall be provided. In addition, the claimant shall be furnished with an explanation of the Plan’s claim review procedure.

13.7 Claims Review Procedure: Any Participant or Beneficiary whose benefit claim submitted pursuant to Section 13.6 has been denied (whether in full or in part) shall be entitled to request further consideration to his claim by filing an appeal with the Plan Administrator, which may be in the form of a request for reconsideration. The request, together with a written statement of the reasons why the claimant believes his appeal should be allowed, shall be filed with the Plan Administrator no later than 60 days after receipt of the written notification provided for in Section 13.6. The Plan Administrator shall conduct the review of the appeal. The Plan Administrator, in its sole discretion, may order a hearing at which the claimant may be represented by an attorney or any other representative of his choosing and at which the claimant shall have an opportunity to submit written and oral evidence and arguments in support of his claim. During the appeal review period or at the hearing (upon five business days prior written notice to the Plan Administrator) the claimant or his representative shall have an opportunity to review all documents in the possession of the Plan that are pertinent to the claim at issue and its disallowance. A final decision on the claim shall be made by the Plan Administrator within 60 days of receipt of the appeal unless (i) because of special circumstances there

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has been an extension of 60 days that has been communicated in writing to the claimant, or (ii) a hearing is held, in which event the final decision shall be made within 120 days of receipt of the appeal. The communication containing the Plan Administrator’s decision shall be in writing and shall be written in a manner calculated to be understood by the claimant. The communication shall include specific reasons for the Plan Administrator’s decision and specific references to the pertinent Plan provisions on which the decision is based. The communication shall also inform the claimant of the limitation on any further action by the claimant set forth in Section 13.8.

13.8 Limitations of Actions on Claims: The delivery to the claimant of the final decision of the Plan Administrator with respect to a claim for benefits under Section 13.6 that has been reviewed and considered under the appeal procedures of Section 13.7 shall commence the period during which the claimant may bring legal action under ERISA for judicial review of the Plan Administrator’s decision. No civil action with respect to the claim for benefits or the subject matter thereof may be commenced by the claimant, whether such action is pursued through litigation, arbitration or otherwise, prior to the completion of the claims and claims review process set forth in Sections 13.6 and 13.7, nor following the expiration of two (2) years from the date of delivery of the final decision of the Plan Administrator to the claimant under Section 13.7.

13.9 Compensation and Expenses of Plan Administrator: The Plan Administrator may engage the services of any person, including counsel, whose services, in the opinion of the Plan Administrator, are necessary to assist it in carrying out its responsibilities under the Plan. The Employer may direct the Trustee to pay any expenses properly and actually incurred for such services from the Trust Fund, including such reasonable compensation for services provided by the Plan Administrator as shall have been agreed upon between them, or, alternatively, the Employer may pay such expenses or compensation directly, provided, however, that no individual acting as Plan Administrator shall receive any compensation if he already receives full-time pay from the Employer.

13.10 Removal or Resignation: A Plan Administrator may be removed by the Board of Directors of the Plan Sponsor upon 30 days written notice, and may resign upon 30 days written notice to the Board of Directors. Upon such removal or resignation, or the inability of the Plan Administrator for any other reason to act as Plan Administrator, the Board of Directors shall appoint a successor Plan Administrator, The successor Plan Administrator, upon written acceptance, shall have all the duties and responsibilities of a Plan Administrator herein. The former Plan Administrator shall deliver to the successor Plan Administrator all records and documents that it holds relating to the Plan upon removal or resignation.

13.11 Records of Plan Administrator: The Plan Sponsor shall have access, upon request, to all the records of the Plan Administrator that relate to the Plan.

13.12 Other Responsibilities: Nothing in this Article shall be construed to limit the responsibilities and duties allocated to the Plan Administrator in other Articles of this Plan.

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ARTICLE XIV

THE TRUSTEE

14.1 Appointment of Trustee: The Board of Directors of the Plan Sponsor shall appoint the Trustee. Nothing in this Plan shall prevent the Plan Sponsor from appointing multiple Trustees or creating multiple Trust Funds, each with separate Trustees. If more than one person is appointed as Trustee of a single Trust Fund, they shall act by majority vote; provided, however, that they shall act by unanimous vote at any lime when there are only two Trustees. In the event there is more than one Trustee, the reference to Trustee shall be deemed to refer to all the Trustees.

14.2 Acceptance by Trustee: The Trustee shall accept its appointment by executing a separate trust agreement in a form acceptable to the Trustee and Employer. Subject to Section 14.3, the provisions of the separate Trust Agreement shall control over those in this Plan, to the extent such provisions define the duties of the Trustee with respect to the Trust Fund.

14.3 Provisions of Trust Agreement: The separate Trust Agreement shall authorize and empower the Trustee to invest up to 100% of the Trust Fund in Employer Securities. The Trust Agreement shall also authorize and empower the Trustee to engage in Exempt Loan transactions on behalf of the Plan. An Exempt Loan transaction is a loan to the Trust that is primarily for the benefit of the Participants and their Beneficiaries and further satisfies the following terms and conditions:

(a) The Trustee will use the proceeds of the loan, within a reasonable time after receipt, only for any or all of the following purposes: (i) to acquire Employer Securities, (ii) to repay such loan, or (iii) to repay a prior Exempt Loan. Except as provided under Article XXII, no Employer Security acquired with the proceeds of an Exempt Loan may be subject to a put, call or other option, or buy-sell or similar arrangement while held by and when distributed from this Plan, whether or not this Plan is then an employee stock ownership plan.

(b) At the time the Exempt Loan is made the interest rate for the Exempt Loan must be reasonable and in combination, the rate of interest for the Exempt Loan and the price of the Employer Securities to be acquired with the Exempt Loan proceeds shall not be such that Plan assets may be drained off.

(c) Any collateral the Trustee pledges to the creditor must consist only of the assets purchased by the borrowed funds and those assets the Trust used as collateral on the prior Exempt Loan repaid with the proceeds of the current Exempt Loan.

(d) The creditor may have no recourse against the Trust under the Exempt Loan except with respect to such collateral given for the Exempt Loan, contributions (other than contributions of Employer Securities) that the Employer makes to the Trust to meet its obligations under the Exempt Loan, and earnings attributable to such collateral and the investment of such contributions. The payment made with respect to an Exempt Loan by the Plan during a Plan Year must not exceed an amount equal to the sum of such contributions and earnings received during or prior to the year less such payments in prior years. The Advisory

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Committee and the Trustee must account separately for such contributions and earnings in the books of account of the Plan until the Trust repays the Exempt Loan.

(e) The Exempt Loan must provide for transfer of Plan assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of the Exempt Loan.

(f) The Trustee must add and maintain all assets acquired with the proceeds of an Exempt Loan in a Suspense Account. In withdrawing assets from the Suspense Account, the Trustee will apply the provisions of Treas. Reg. §§54.4975-7(b)(8) and (15) as if all securities in the Suspense Account were encumbered. Upon the payment of any portion of the loan, the Trustee will effect the release of assets in the Suspense Account from encumbrances. For each Plan Year during the duration of the Exempt Loan, the number of Employer Securities released must equal the number of encumbered Employer Securities held immediately before release for the current Plan Year multiplied by a fraction. The numerator of the fraction is the amount of principal and interest paid for the Plan Year. The denominator of the fraction is the sum of the numerator plus the principal and interest to be paid for all future Plan Years. The number of future Plan Years under the loan must be definitely ascertainable and must be determined without taking into account any possible extension or renewal periods. If the interest rate under the Exempt Loan is variable, the interest to be paid in future Plan Years must be computed by using the interest rate applicable as of the end of the Plan Year. If collateral includes more than one class of Employer Securities, the number of Employer Securities of each class to be released for a Plan Year must be determined by applying the same fraction to each such class. The Plan Administrator will allocate assets withdrawn from the Suspense Account to the Accounts of Participants who otherwise share in the allocation of the Employer’s Contribution for the Plan Year for which the Trustee has paid the portion of the Exempt Loan resulting in the release of the assets. The Plan Administrator will make this allocation consistently as of each Accounting Date on the basis of non-monetary units, taking into account the relative Compensation of all such Participants for such Plan Year.

(g) The loan must be for a specific term and may not be payable at the demand of any person except in the case of default.

(h) Notwithstanding the fact this Plan ceases to be an employee stock ownership plan, Employer Securities acquired with the proceeds of an Exempt Loan will continue after the Trustee repays the loan to be subject to the provisions of Treas. Reg. §§54.4975-7(b)(4), (10), (11) and (12) relating to put, call or other options and to buy-sell or similar arrangements, except to the extent these regulations are inconsistent with Code §409(h).

14.4 Participant Voting Rights: The separate Trust Agreement shall provide for voting Employer Securities by Participants in the following manner.

(a) With respect to the voting of Employer Securities that are not part of a registration-type class of securities (as defined in Code §409(e)(4)), a Participant (or Beneficiary) has the right to direct the Trustee regarding the voting of such Employer Securities allocated to his Employer Securities Account with respect to any corporate matter that involves the

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approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business, or such similar transaction as the Treasury may prescribe in regulations.

(b) With respect to Employer Securities allocated to the Participant’s Employer Securities Account that are part of a registration type class of securities, a Participant’s right to direct the Trustee to vote such Employer Securities shall extend to all corporate matters requiring a vote of stockholders. The Plan Administrator shall cause to be prepared and delivered to each Participant a notice of the stockholders’ meeting with a descriptive statement of the items upon which the Participant may exercise his right to direct the Trustee’s vote. Each Participant shall be given notice that if he fails to exercise his voting rights, the Trustee may elect to vote the Employer Securities allocated to the Participant’s Account.

The Trustee may vote any Employer Securities described in subsection (b) as to which a Participant (or Beneficiary) fails to direct a vole as authorized by this Section 14.4. The Trustee shall not vole any Employer Securities described in subsection (a) as to which a Participant is entitled to direct the Trustee to vote and the Trustee receives no direction from the Participant.

14.5 Investment Committee: In the event of appointment of an Investment Committee by the Plan Administrator, then except to the extent responsibility for certain Plan assets has been allocated to an Investment Manager as provided in Section 13.4, the Investment Committee is authorized and empowered to direct investment of the Trust Fund, consistent with the terms of the separate Trust Agreement. The Investment Committee shall direct investment and reinvestment of the Trust Fund to keep the Trust Fund invested without distinction between principal and income and in such securities or property, real or personal, wherever situated, as the Committee shall deem advisable consistent with the investment policy of the Plan established under Article XVIII. The Committee shall give due regard to any limitations imposed by the Code or ERISA so that at all limes this Plan may qualify as a qualified Plan and Trust.

14.6 Liability for Plan Expenses: The Plan specifically permits the payment of Plan administration and operation expenses from the Plan’s Trust Fund. Moreover, the Plan also permits the allocation of certain administration expenses to an individual Participant’s Account whenever an expense can be specifically determined and the Participant’s Account identified that gives rise to the expense. Expenses not attributable to particular Participant Accounts but nevertheless payable from the Trust Fund may be allocated among all Participant Accounts pro rata, or by any other appropriate method. The Plan Sponsor shall determine in its sole discretion the extent to which Plan administration and operation expenses shall be paid from the Trust Fund or from individual Participant Accounts, provided that all such payments and charges shall comply with ERISA and all regulations and other guidance issued by the Department of Labor. The Plan Sponsor shall be entitled to reimbursement from the Plan for payment of all Plan expenses advanced by the Plan Sponsor (whether charged to an individual Participant’s Account or the Trust Fund as a whole) that are reasonably subject to reimbursement pursuant to ERISA and DOL regulations and other guidance, provided that no reimbursement to the Plan Sponsor shall be made with respect to any charge applicable to an individual Participant’s Account unless the Participant has been previously informed through a summary plan description or similar document that his or her Account may be subject to such charges.

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14.7 Payment From the Trust Fund: At the direction of the Plan Administrator, the Trustee shall, from time to time, in accordance with the terms of the Plan, make payments out of the Trust Fund. The Trustee shall not be responsible in any way for the application of such payments.

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ARTICLE XV

THE EMPLOYER

15.1 Notification: The Plan Sponsor shall notify the Plan Administrator and the Trustee in writing if a new Plan Administrator or Trustee has been appointed hereunder.

15.2 Record Keeping: Each participating Zions Employer shall maintain records with respect to each Employee sufficient to enable the Plan Administrator and Trustee to fulfill their duties and responsibilities under the Plan.

15.3 Bonding: The Plan Administrator shall procure bonding to insure the Plan against risk of loss. The persons to be bonded and the amount necessary shall be determined in accordance with ERISA and regulations thereunder. No bonding shall be required pursuant to state law.

15.4 Signature of Employer: All persons dealing with the Plan may rely on any document executed in the name of the Plan Sponsor by its corporate President, Vice-President, or other duly authorized corporate officer, or by any other individual duly authorized by its Board of Directors, whether retroactive or prospective.

15.5 Plan Counsel and Expenses: The Plan Sponsor may engage the service of any person or organization, including counsel, whose services, in the opinion of the Plan Sponsor are necessary for the establishment or maintenance of this Plan. The expenses incurred or charged by a person or organization engaged by the Plan Sponsor pursuant to the previous sentence shall be paid by the Plan Sponsor, or alternatively, the Plan Sponsor may direct the Trustee to pay such expenses from the Trust Fund.

15.6 Other Responsibilities: Nothing in this Article shall be construed to limit the responsibilities or duties allocated to the Plan Sponsor and Zions Employers in other Articles of the Plan.

15.7 Affiliated Groups:

(a) For purposes of crediting Hours of Service, all employees of all corporations or entities that are members of an Affiliated Group and all employees of any other entity required to be aggregated with the Employer pursuant to regulations under Code §414(o) shall be treated as employed by a single Employer for purposes of Article III (Service), Article IV (Eligibility), Article V (Contributions) and Article XI, (Vesting). Except as provided in Section 7.1, all employees of all corporations or entities that are members of an Affiliated Group and all employees of any other entity required to be aggregated with the Employer pursuant to regulations under Code §414(o) shall be treated as employed by a single Employer.

(b) If the Employer is a member of a Affiliated Group and if such group maintains more than one qualified retirement plan that is integrated with Social Security, only a single integration level shall be applicable to each Participant who is a Participant in one or more integrated plans. The integration level for each Participant shall be prorated in each integrated plan in the ratio that the Annual Compensation received by the Participant from

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the member of the group maintaining the integrated plan bears to the Annual Compensation received by the Participant from all members of the group maintaining all such integrated plans.

(c) If more than one Employer has adopted this Plan and if all such Employers are members of the same Affiliated Group:

(1) The provisions of Articles XVI and XVII shall be applicable to each adopting Employer as an individual Employer;

(2) The provisions of Section 15.7(a) through (c) shall not be applicable to such adopting Employers; and

(3) The “effective date” for any adopting Employer who adopts this Plan on other than the Effective Date shall be the first day of the Plan Year in which such adopting Employer shall first elect to be covered by this Plan.

15.8 Employer Contributions: Each participating Zions Employer shall contribute to the Plan that Employer’s share of Employer Contributions, as determined by the Plan Administrator.

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ARTICLE XVI

PLAN AMENDMENT OR MERGER

16.1 Power to Amend: The Plan Sponsor and the Plan Administrator shall each have the power to amend, alter, or wholly revise the Plan, prospectively or retrospectively, at any time, and the interest of every Participant is subject to the power so reserved. The Plan Administrator shall not exercise its power to amend without consent of the Plan Sponsor unless the Plan Sponsor has ceased to operate as a viable business entity or has filed or is subject to a petition under Chapter 7 of the U.S. Bankruptcy Code.

16.2 Limitations on Amendments: Upon execution of any amendment, the Employer, Plan Administrator, Trustees, Participants and their Beneficiaries shall be bound thereby; provided, however, that no amendment:

(a) shall enlarge the duties or responsibilities of the Plan Administrator or Trustee without its consent; or

(b) shall cause any part of the assets contributed to the Plan to be diverted to any use or purpose other than for the exclusive benefit of the Participants and their Beneficiaries (including the reasonable cost of administering the Plan) prior to the satisfaction of all liabilities (fixed and contingent) under the Plan to Participants and their Beneficiaries; or

(c) shall reduce the vesting percentage of any Participant, Former Participant, or Beneficiary; or

(d) shall reduce or restrict the Account Balance of any Participant, Former Participant or Beneficiary; or

(e) shall eliminate an optional form of benefit, with respect to benefits attributable to service before the amendment.

Notwithstanding the above, any amendment may be made that may be or become necessary in order that the Plan will conform to the requirements of Code §401(a), or of any generally similar successor provision, or in order that all of the provisions of the Plan will conform to all valid requirements of applicable federal and state laws.

16.3 Method of Amendment: If the Plan is amended by the Plan Sponsor, the amendment shall be staled in an instrument in writing signed in the name of the Plan Sponsor by a duly authorized corporate officer, or by any other individual duly authorized by the Plan Sponsor, whether retroactive or prospective. If the Plan is amended by the Plan Administrator, the amendment shall be stated in an instrument in writing signed in the name of the Plan Administrator by the individual duly authorized by the Plan Administrator for that purpose, whether retroactive or prospective.

16.4 Notice of Amendment: Written notice of each amendment shall be given promptly by the Plan Sponsor to any other Employers, the Plan Administrator and the Trustee.

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16.5 Merger or Consolidation: This Plan and Trust may be merged or consolidated with, or its assets or liabilities may be transferred to, any other plan only if the benefits that would be received by each Participant of this Plan, in the event of a termination of the Plan immediately after such merger, consolidation or transfer, are at least equal to the benefits the Participant would have received if the Plan had terminated immediately before the merger, consolidation or transfer. The Trustee possesses the specific authority to enter into merger agreements or direct transfer of assets agreements with the Trustees of other retirement plans described in Code §401(a) and to accept the direct transfer of Plan assets, or to transfer Plan assets, as a party to any such agreement. Notwithstanding the foregoing, this Plan shall not enter into any merger or transfer agreement to transfer assets to this Plan from a plan that is subject to the provisions of Code §417.

The Trustee may accept a direct transfer of Plan assets on behalf of an Employee prior to the date the Employee satisfies the Plan’s eligibility condition(s). If the Trustee accepts such a direct transfer of Plan assets, the Advisory Committee and Trustee shall treat the Employee as a Participant for all purposes of the Plan except the Employee shall not make Elective Deferral contributions under Article V nor shall the Employee share in Employer contributions or Participant forfeitures under Article VI until he actually becomes a Participant in the Plan.

The Trustee shall hold, administer and distribute the transferred assets as a part of the Trust Fund and the Trustee shall maintain a separate Predecessor Plan Account for the benefit of the Employee on whose behalf the Trustee accepted the transfer in order to reflect the value of the transferred assets.

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ARTICLE XVII

TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS

17.1 Right to Terminate: The Plan Sponsor may terminate the Plan at any time by a written resolution by the Board of Directors specifying the termination date. The Plan Sponsor shall promptly notify the Plan Administrator, Trustee and any other Employers of such action. Further, the Plan Sponsor shall notify all Participants and Former Participants of such action, and shall file all required reports with federal agencies, in accordance with applicable regulations.

17.2 Effect of Termination: In the event of a Plan termination or a complete discontinuance of Employer Contributions, the rights of all affected Participants to their Accrued Benefits as of the dale of such termination shall be fully vested and shall not thereafter be subject to forfeiture, except to the extent that law or regulation may preclude such vesting in order to prohibit discrimination in favor of officers, shareholders, or highly compensated Employees. For purposes of the preceding sentence, a Participant who has terminated employment with the Employer and incurred five consecutive One Year Breaks in Service as of the termination date shall not be considered to be affected by such Plan termination, and shall be vested in his Accrued Benefit only to the extent provided in the other applicable Articles of this Plan. All rights of Participants in this Plan affecting Employer Securities held in trust for the benefit of Participants shall continue notwithstanding any Plan termination.

17.3 Manner of Distribution: In the event of a Plan termination, the Plan Administrator shall direct the Trustee to distribute the Accrued Benefits of all Participants, Former Participants, and Beneficiaries in accordance with Article IX or Article XI.

Notwithstanding the above, no payment shall be made to a Participant from his Participant Elective Deferral Account (or any other Account the contributions to which have been included in the Deferral Account for the Participant) unless or until such time as the Participant:

(a) is eligible for Retirement Benefits as provided in Article IX;

(b) dies;

(c) has a severance from employment;

(d) attains the age of 59 ¹/2;

(e) incurs a Disability; or

(f) incurs a Financial Hardship.

All Elective Deferral Accounts shall be maintained by the Trustee and distributed at such time and in such manner as previously provided herein. Alternatively, the balance in such Accounts may be transferred to another plan maintained or established by the Employer that qualifies under Code §401(a) as provided above, but only if such other plan contains the same restrictions on the distribution of such transferred amounts as described in the preceding paragraph.

17.4 No Reversion: No termination or amendment of this Plan and Trust and no other action shall divert any part of the funds to any purpose other than the exclusive benefit of Participants,

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Former Participants or their Beneficiaries except, and notwithstanding any other provision of this Plan to the contrary, any amount held in an unallocated suspense account that cannot be allocated to any Participant due to the limitations of Article VIII may be returned to the Employer upon termination of the Plan.

17.5 Termination of an Employer: An Employer, other than the Plan Sponsor, may terminate its participation in the Plan at any time by a written resolution by the Board of Directors specifying the termination date. The Employer shall promptly notify the Plan Sponsor, Plan Administrator and Trustee of any such action or direction. The participation of an Employer in the Plan shall also terminate in the event of a complete discontinuance of contributions by such Employer.

17.6 Partial Termination: A partial termination of the Plan may be deemed to have occurred if a significant percentage of Participants are excluded from coverage by reason of amendment of the Plan, severance by an Employer or termination of an Employer, or if the Plan is amended to adversely affect the rights of employees to vest in benefits under the Plan or to reduce or eliminate future benefit accruals under the Plan. The determination of whether a partial termination has occurred shall be made on the basis of the facts and circumstances in a particular case.

17.7 Effect of Partial Termination: In the event of a partial termination of the Plan, the provisions of Section 17.2 shall apply to those Participants affected by the partial termination.

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ARTICLE XVIII

FUNDING POLICY FOR PLAN BENEFITS

18.1 Funding Method: The benefits provided by this Plan shall be funded by contributions of the Employer. Employer Non-Elective contributions and Employer Matching Contributions shall consist entirely of Employer Securities. The Employer may make its Non-Elective Contribution or its Matching Contribution in cash or in kind, provided however, that if the Non-Elective Contribution or the Matching Contribution is made in cash, the Plan shall immediately acquire Employer Securities with the entire amount of the Non-Elective Contribution and Matching Contribution and if the Non-Elective Contribution or the Matching Contribution is made in kind, it shall be made in the form of Employer Securities only. Elective Deferral Contributions shall be made in cash only. All Employer Contribution amounts shall be determined as provided in this Plan.

18.2 Investment Policy: This Plan has been established for the sole purpose of providing benefits to the Participants and their Beneficiaries. In determining investment directions hereunder, the Investment Committee shall lake account the investment policy rules and limitations provided in the Plan, the advice provided by the Plan Administrator as to funding policy, and the short and long-range needs of the Plan based on the evident and probable requirements of the Plan as to the lime benefits shall be payable and the requirements therefor. Benefits may be provided through any combination of investment media designed to provide the requisite liquidity, growth and security appropriate to this Plan.

The following rules shall apply as of the Effective Date with respect to the investment of contributions to the Plan (regardless of source) and existing Accounts in the Plan.

(a) Subject to Section 18.6(e), no Participant shall direct investment into or out of Employer Securities in any Account. Effective January 1, 2007, this restriction shall apply only with respect to Employer Securities in the Employer Non-Elective Contribution Account.

(b) Contributions to the Participant Elective Deferral Account shall be invested exclusively in the General Investments Account. Amounts in a Participant Elective Deferral Account as of the Effective Date, including earnings and dividends thereon, may not be transferred between the General Investments Account and Employer Securities Account.

(c) Contributions to the Employer Matching Contribution Account shall be invested exclusively in the Employer Securities Account.

(d) Contributions to the Participant Voluntary Contribution Account shall be invested exclusively in the Employer Securities Account.

(e) Contributions to the Participant Rollover Account shall be invested exclusively in the General Investments Account. Amounts in the Participant Rollover Account as of the Effective Date, including earnings and dividends thereon, may not be transferred between the General Investments Account and Employer Securities Account.

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(f) Amounts in the Paysop Account as of the Effective Date, including earnings and dividends thereon, shall remain in the Employer Securities Account and may not be transferred between the General Investments Account and Employer Securities Account.

(g) Contributions to the Employer Non-Elective Contribution Account shall be invested exclusively in the Employer Securities Account.

(h) All restrictions in the foregoing subsections to investment direction into or out of Employer Securities or transfer of Employer Securities to or from the Employer Securities Account shall be subject to the dividend investment rules of Section 6.3(e) and the diversification provisions of Section 6.6.

18.3 No Purchase of Life Insurance Contracts: Unless authorized by the Plan Sponsor pursuant to amendment to this Article XVIII, no insurance contracts shall be purchased by the Trustee on the life of any Participant.

18.4 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 18.6.

All cash dividends received and held in a Participant’s Dividend Account shall be invested in the stable asset fund described in section 18.6(b) until invested in Employer Securities or distributed in cash pursuant to the Participant’s election under Section 6.3(e). Effective July 24, 2006, all dividends attributable to Employer Securities shall be subject to the same Participant investment direction rights as the Employer Securities that were the source of the dividend.

18.5 Non-transferability of Annuity Contracts: In the event the assets of the Trust Fund include allocated annuity contracts, all incidents of ownership in such contracts may be exercised by the Trustee, as directed by the Plan Administrator, except to the extent any death benefits payable thereunder may be paid to the Beneficiary designated by the Participant. All such contracts shall provide that the owner may not change the ownership of the contract, nor may it be sold, assigned or pledged as collateral for a loan, as security for the performance of an obligation, or for any other purpose to anyone. No annuity contract may be delivered to a Participant as a distribution from the Plan.

18.6 Establishment of Separate Funds: There is hereby reserved to the Plan Administrator (or the Committee designated by the Plan Administrator for this purpose) the right to direct the Trustee to establish separate investment funds within the General Investments Account. The Plan Administrator (or Committee) may follow different investment policies with respect to each investment fund so established. In the sole discretion of the Sponsoring Employer a Participant, Inactive Participant, Beneficiary or Alternate Payee shall be allowed to direct the Trustee to invest the amounts in his or her

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General Investments Account, consistent with the rules in this Section 18.6, in any or all of the investment Funds. The following administrative rules shall apply if such Funds are established:

(a) Income, gains and losses from each investments Fund will be reinvested in the same Fund and credited only to the General Investments Accounts of those Participants who have a balance in such Fund, in a manner consistent with Section 6.3.

(b) At least one Fund shall be a stable asset fund that invests in cash equivalent securities and contracts. For this purpose “cash equivalent securities and contracts” shall mean short term U. S. Government obligations, prime commercial paper, certificates of deposit, savings accounts in banks or savings and loan associations, guaranteed interest contracts and pooled funds that invest exclusively in some or all of the foregoing.

(c) Each Participant shall be entitled to direct the portion of the contributions made to his/her General Investments Account that are to be invested in each of the investment funds available. Upon the occurrence of any event or decision of the Plan Administrator that results in the deletion of any of the investment funds, that replaces any such fund with another fund, or that adds a new investment fund, the Plan Administrator shall designate a default investment fund or funds into which contributions on behalf of a Participant shall be invested in the event no specific direction for investment is made by the Participant. The Plan Administrator shall designate a default investment fund for any Participant or Beneficiary (including any Beneficiary by virtue of a Qualified Domestic Relations Order) who does not provide for investment instructions with respect to his/her General Investments Account into any investment fund under this Section 18.6. Effective January 1, 2008, or as soon thereafter as the Plan Administrator shall have selected a “Qualified Default Investment Alternative,” as defined in DOL Reg. §2550.404c-5(e)) (“QDIA”), and for all Plan Years commencing after that date, the default investment fund shall be the designated QDIA. Upon selection of the QDIA the Plan Administrator shall notify each Employee in the Plan of the default investment option if an Employee fails to provide the Plan Administrator with investment instructions for his/her Account. The Notice shall be written in a manner calculated to be understood by the average Plan Participant and shall be provided to the Participant at least 30 days (or if alter, as soon as possible following the Employment Commencement Date) prior to the beginning of each Plan Year. The Notice shall include an explanation of:

(1) the circumstances under which the Participant’s Account will be invested in a QDIA in the absence of any other investment election by the Employee,

(2) the right of Participants and Beneficiaries to direct the investment of assets in their individual accounts, including a description of:

(A) the QDIA and its investment objectives, risk and return characteristics (if applicable), and attendant fees and expenses;

(B) the right of Participants and Beneficiaries on whose behalf assets are invested in a QDIA to direct the investment of those assets to any other investment

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alternative under the Plan, including a description of any applicable restrictions, fees or expenses in connection with a transfer; and

(C) where Participants and Beneficiaries can obtain investment information concerning the other investment alternatives available under the Plan.

(d) Each Participant shall have the right to change the portion of succeeding contributions to be invested in each Fund and the right to direct that the asset balance or any portion thereof in any Funds in his General Investments Account be liquidated and the proceeds thereof transferred to any other Fund. Changes in Fund investments pursuant to Participant direction shall be made effective as provided under procedures negotiated between the Plan and the Trustee (or custodian, if appointed by the Plan Administrator or Trustee), which procedures may include daily movement of General Investment Account moneys between Funds, provided valuation of the Funds is also conducted daily.

(e) A Participant may not direct (except as provided in Section 6.3(e)) any investment into the Employer Securities Account or (except as provided in Section 6.6) the liquidation or sale of any Employer Securities in that Account. Effective January 1, 2007, a Participant may direct investment into the Employer Securities Account from any other sub-account in the Plan, with the exception of the Dividend Account, which shall continue to be subject to the rules in Section 18.4.

(f) The Plan Administrator may establish reasonable rules regarding:

(1) The number and types of Funds that shall be available to the General Investments Account.

(2) The maximum number of Funds that may be utilized by an individual Participant or by the General Investments Account.

(3) The minimum, maximum and incremental percentages of contributions that may be invested in a particular Fund.

(4) The minimum, maximum and incremental percentages of the current balance in the General Investments Account in any Fund that may be transferred to another Fund.

These rules shall be in writing and shall be administered in a uniform and non-discriminatory manner.

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ARTICLE XIX

TOP-HEAVY PROVISIONS

19.1 Application: The provisions of this Article XIX shall apply and shall supersede any conflicting provisions contained in any other Article of this Plan for purposes of determining whether the Plan is a top-heavy plan under Code §416(g) for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code §416(c) for such years. For Plan Years prior to January 1, 2002, the provisions of the Prior Plan shall apply.

19.2 Special Definitions: For purposes of this Article and related Plan provisions, the following terms shall have the following meanings unless a different meaning is plainly required by the context:

(a) “Determination Date” shall mean, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan the Determination Date shall mean the last day of that Plan Year.

(b) “Five Percent Owner” shall mean:

(1) if the Employer is a corporation, any person who owns (or is considered as owning within the meaning of Code §318) more than 5% of the outstanding stock of the corporation or stock possessing more than 5% of the total combined voting power of all stock of the corporation; or

(2) if the Employer is not a corporation, any person who owns more than 5% of the capital or profits interest in the Employer.

(c) “Key Employee” shall mean any Employee or former Employee (and any Beneficiary of the Employee) who at any time during the Plan Year that includes the Determination Date was:

(1) an officer of the Employer having Top Heavy Compensation greater than $130,000 (as adjusted under Code §416(i)(l) for Plan Years beginning after December 31, 2002),

(2) a Five Percent Owner of the Employer, or

(3) a One Percent Owner of the Employer having annual compensation of more than $150,000.

For purposes of subparagraph (1), no more than 50 Employees (or, if lesser, the greater of 3% or 10% of the number of Employees) shall be treated as officers.

For purposes of determining who is a Five-Percent or a One-Percent Owner in subparagraphs (2) and (3) above, the rules of subsections (b), (c) and (m) of Code §414 do not apply. Beneficiaries of an Employee acquire the character of the Employee who performed

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service for the Employer. Inherited benefits will retain the character of the benefits of the Employee who performed services for the Employer.

(d) “Non-Key Employee” shall mean any Employee or Inactive Employee (and any Beneficiary of such Employee) who is not a Key Employee. Non-Key Employees include Employees who are Inactive Key Employees.

(e) “One Percent Owner” shall mean:

(1) if the Employer is a corporation, any person who owns (or is considered as owning within the meaning of Code §318) more than 1% of the outstanding stock of the corporation or stock possessing more than 1% of the total combined voting power of all stock of the corporation; or

(2) if the Employer is not a corporation, any person who owns more than 1 % of the capital or profits interest in the Employer.

(f) “Permissive Aggregation Group” shall mean the Required Aggregation Group of plans plus any other plan or plans of the Employer that, when selected and considered by the Employer as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code §§401(a)(4) and 410.

(g) “Present Value” shall mean the actuarial present value of an amount or series of amounts determined based on the Top-Heavy determination provisions of a defined benefit plan that is part of a Required Aggregation Group or Permissive Aggregation Group with this Plan.

(h) “Required Aggregation Group” shall mean:

(1) each qualified plan of the Employer in which at least one Key Employee participates in the Plan Year containing the Determination Date or any of the four preceding plan years (regardless of whether the plan has terminated; and

(2) any other qualified plan of the Employer that enables a plan described in subparagraph (1) to meet the requirements of Code §§401(a)(4) or 410.

(i) “Top Heavy Average Monthly Compensation” shall mean 1/12th of the average of a Participant’s Top-Heavy Compensation during the five consecutive Plan Years (or the total number of such years of the Participant’s employment, if fewer than five) that produces the highest average, but taking into account only Top-Heavy Compensation for years that this Plan was Top-Heavy and any years preceding a year that this Plan was Top-Heavy.

(j) “Top-Heavy Compensation” shall have the same meaning as the term ‘Compensation’ defined in Section 7.1(b). Top Heavy Compensation includes all Compensation paid for the Limitation Year without regard to when the Participant commenced participation in the Plan.

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(k) “Top-Heavy Ratio” shall mean and be determined as follows:

(1) If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan or any defined contribution plan terminated within the one (1) year period ending on the Determination Date) and the Employer has never maintained any defined benefit plan that has covered or could cover a Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date and the denominator of which is the sum of all account balances of all Participants as of the Determination Date. Both the numerator and denominator of the Top-Heavy Ratio shall be adjusted to reflect any part of any account balance distributed in the one (1) year period ending on the Determination Date, including distributions under a terminated plan that, had it not been terminated, would have been aggregated with the Plan under Code §416(g)(2)(A)(i), and any contribution that is due but unpaid as of the Determination Date. In the case of any distribution made for a reason other than severance from employment, death, or disability, the phrase “5-year period” shall be substituted for “1-year period” in the preceding two sentences. In the case of a defined contribution plan that is not subject to Code §412, the adjustment for contributions due but unpaid is generally the amount of any contributions actually made after the Top-Heavy Valuation Date but on or before the Determination Date; however, for the first plan year of such a plan, the adjustment shall also reflect the amount of any contributions made after the Top-Heavy Valuation Date that are allocated as of a date in that first plan year. In the case of a defined contribution plan that is subject to Code §412, the account balances shall include contributions that would be allocated as of a date not later than the Determination Date, even though those amounts are not yet required to be contributed; furthermore, the adjustment for contributions due but unpaid shall reflect the amount of any contribution actually made (or due to be made) after the Top-Heavy Valuation Date but before the expiration date of the extended payment period in Code §412(c)(10).

(2) If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer maintains or has maintained one or more defined benefit plans that have covered or could cover a Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of account balances under the defined contribution plans for all Key Employees and the Present Value of accrued benefits under the defined benefit plans for all Key Employees, and the denominator of which is the sum of the account balances under the defined contribution plans for all Participants and the Present Value of accrued benefits under the defined benefit plans for all Participants. Both the numerator and denominator of the Top-Heavy Ratio are adjusted for any part of any account balance or accrued benefit distributed in the one (1) year period ending on the Determination Date and any contribution to a defined contribution plan due but unpaid as of the Determination Date. In the case of any distribution made for a reason other than severance from employment, death, or disability, the phrase “5-year period” shall be substituted for “1-year period” in the preceding sentence. In the case of a defined

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contribution plan that is not subject to Code §412, the adjustment for contributions due but unpaid is generally the amount of any contributions actually made after the Top-Heavy Valuation Date but on or before the Determination Date; however, for the first plan year of such a plan, the adjustment shall also reflect the amount of any contributions made after the Top-Heavy Valuation Date that are allocated as of a date in that first plan year. In the case of a defined contribution plan that is subject to Code §412, the account balances shall include contributions that would be allocated as of a date not later than the Determination Date, even though those amounts are not yet required to be contributed; furthermore, the adjustment for contributions due but unpaid shall reflect the amount of any contribution actually made (or due to be made) after the Top-Heavy Valuation Date but before the expiration date of the extended payment period in Code §412(c)(10).

(3) For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits shall be determined as of the most recent Top-Heavy Valuation Date that falls within or ends with the twelve month period ending on the Determination Date. The account balances and accrued benefits of a Participant who is not a Key Employee but who was a Key Employee in any prior year shall be disregarded. The account balances and accrued benefits of any Participant who has not performed any service for the Employer at any time during the one (1) year period ending on the Determination Date shall be disregarded. In the case of a defined benefit plan, the Present Value of Accrued Benefits shall not reflect any proportional subsidies and shall reflect any non-proportional subsidies provided by the plan. The calculations of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account shall be made in accordance with Code §416 and the Regulations thereunder. In the case of unrelated rollovers and transfers: (1) the plan making the distribution or transfer shall count the distribution as part of an accrued benefit distributed; and (2) the plan accepting the rollover or transfer shall not consider the rollover or transfer as part of the accrued benefit if such rollover or transfer was accepted after December 31, 1983, and shall consider the rollover or transfer as part of the accrued benefit if such rollover or transfer was accepted prior to January 1, 1984. In the case of related rollovers and transfers, the plan making the distribution or transfer shall not count the distribution or transfer as part of an accrued benefit distributed, and the plan accepting the rollover or transfer shall count the rollover or transfer as part of the accrued benefit. Deductible employee contributions shall not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.

For purposes of the above, a Participant’s Accrued Benefit in a defined benefit plan shall be determined under a uniform accrual method that applies for all defined benefit plans maintained by the Employer or, if there is no such method, under the method described in Code §411(b)(1)(C) that provides the slowest rate of accrual.

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(1) “Top-Heavy Valuation Date” shall mean the date as of which the Present Value of accrued benefits under a defined benefit plan or account balances under a defined contribution plan, that is part of a Permissive Aggregation Group or Required Aggregation Group, is determined for calculating the Top-Heavy Ratio. For a defined benefit plan, the date shall be the same as the actuarial valuation date used for computing plan costs under Code §412, regardless of whether an actuarial valuation is performed that year, For a defined contribution plan, the date shall be the last day of the plan year.

19.3 Top Heavy Status: This Plan is Top-Heavy if any of the following conditions apply:

(a) if the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans;

(b) if this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggregation Group of plans exceeds 60%; or

(c) if this Plan is a part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.

19.4 Top-Heavy Minimum Required Allocation: For any Plan Year in which the Plan is Top-Heavy:

(a) Except as otherwise provided below, the Employer contributions and forfeitures allocated on behalf of any Participant who is a Non-Key Employee shall not be less than the lesser of:

(1) three percent of the Participant’s Top-Heavy Compensation; or

(2) in the case where the Employer has no defined benefit plan that designates this Plan to satisfy Code §§401 and 416(c), the largest percentage of Employer contributions and forfeitures, as a percentage of the first $200,000 (or such larger amount as may be prescribed by the Secretary of the Treasury or his delegate), of the Key Employee’s Top-Heavy Compensation, allocated on behalf of any Key Employee for that year. In calculating this percentage all amounts contributed by the Employer to the Key Employee’s Elective Deferral Account pursuant to a Salary Reduction Agreement shall be treated as Employer contributions. The $200,000 amount shall be adjusted each Plan Year as provided in Code §401(a)(17)(B). For any period during which the Plan Year is not or was not coincident with the calendar year, the dollar adjustment in the Annual Compensation limit for the Plan Year shall be based on the amount in effect as of January 1st for the Plan Year beginning within that calendar year.

(b) The minimum allocation shall be determined without regard to any Social Security contribution by the Employer. This minimum allocation shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the Plan Year because of:

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(1) the Participant’s failure to complete 1,000 Hours of Service (or any equivalent provided in the Plan);

(2) the Participant’s failure to make mandatory employee contributions to the Plan;

(3) Compensation less than a stated amount;

(4) the Employer having no Net Profits; or

(5) in the case of a plan qualified under Code §401(k), the Participant’s failure to make elective contributions to such plan.

If a Participant is required to receive a minimum allocation under this Section and the amount exceeds the amount that the Participant would receive under other Plan provisions, the Employer shall make an additional contribution for that Participant. The additional contribution shall be allocated to the Employer Contribution Account of the Participant in the same manner as regular Employer contributions, pursuant to Article VII.

(c) The provisions in subsections (a) and (b) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year.

(d) The minimum benefit requirement of this Section shall be met through contributions to this Plan regardless of whether the Employer maintains any other plan (including another plan that may consist solely of a cash or deferred arrangement that meets the requirements of Code §401(k)(12) and matching contributions with respect to which the requirements of Code §401(m)(11) are met).

(e) Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code §416(c)(2) and this Section. The preceding sentence shall apply with respect to matching contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of determining M-Test Contributions under the Plan and the actual contribution percentage test and other requirements of Code §401(m).

19.5 Non-forfeitability of Minimum Top Heavy Allocation: The minimum allocation of Employer contributions or forfeitures required under Section 19.4 (to the extent required to be nonforfeitable under Code §416(b)) shall not be forfeited in the case of a suspension of benefits under Code §411(a)(3)(B) or a withdrawal of mandatory employee contributions under Code §411(a)(3)(D).

19.6 Minimum Vesting Provision: For any Plan Year in which this Plan is Top-Heavy, the following vesting schedule shall automatically apply to each Participant in the Plan, unless under Section 11.1 the Participant would be entitled to a larger vested benefit, in which case the benefit as provided in Section 11.1 shall apply to the Participant:

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Years of Vesting Service	Vesting Percentage
Less than 3		0	%
3 or more		100	%

This vesting schedule applies to all accrued benefits within the meaning of Code §411(a)(7), except those attributable to employee contributions, including benefits accrued before the effective date of Code §416 and benefits accrued before the Plan became Top-Heavy. No reduction in vested percentage may occur in the event the Plan’s status as Top-Heavy changes for any Plan Year. Any change in the Plan’s vesting schedule due to a change in Top-Heavy status shall be subject to the provision of Section 11.10. However, this Section does not apply to the Accrued Benefit of any Employee who does not have an Hour of Service after the Plan has initially become Top Heavy; such Employee’s Vested Interest attributable to Employer contributions and forfeitures shall be determined without regard to this Section.

19.7 Participant Elective Deferrals: Elective Deferrals shall not be taken into account in determining under Section 19.4 the amount of Employer contributions to be allocated to a Participant who is a Non-key Employee.

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ARTICLE XX

PROVISIONS AFFECTING BENEFITS

20.1 Availability of Loans: Upon acceptance of an application by a Participant who is an active Employee, the Plan Administrator shall direct the Trustee to make a loan to the Participant from his Plan Accounts (including any Rollover Accounts, but excluding his Employer Securities Account and his Dividend Account), subject to the provisions of this Article. In considering a Participant’s application for a loan, the Plan Administrator shall base its decision whether to grant a loan on a uniform and non-discriminatory policy, without regard to the race, color, religion, sex, age or national origin of the applicant.

20.2 Loan Administration: The Employer shall prepare and adopt a written Participant Loan Administration Policy Statement, whose provisions shall be made part of this Plan. The Policy Statement shall set forth:

(a) the identity of the person or persons authorized to administer the loan program;

(b) the procedure for applying for a loan;

(c) the basis on which loans will be approved or denied;

(d) limitations, if any, on the types and amounts of loans offered;

(e) the procedure for determining a reasonable rate of interest;

(f) the types of collateral that may secure a loan; and

(g) the events constituting default and the steps to be taken to preserve plan assets in the event of a default.

20.3 Amount of Loan: The amount of any loan to a Participant shall not be less than $1,000. When added to the outstanding balance of any previous loans made to a Participant pursuant to this Article or under any other qualified plan maintained by the Employer, the amount of any loan shall not exceed the lesser of:

(a) Fifty percent of the Vested Interest in his Plan Accounts (including any Rollover Accounts, but excluding his Employer Securities Account, effective January 1, 2007, excluding only his Employer Non-Elective Contribution Account and his Dividend Account); or

(b) $50,000, reduced by the excess (if any) of:

(1) the highest outstanding balance of loans from the plan during the one-year period ending on the day before the dale on which such loan was made, over

(2) the outstanding balance of loans from the plan on the date on which such loan was made.

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20.4 Collateral Requirements: Any loan to a Participant shall be secured solely by the balance in his Plan Account (including any Rollover Accounts, but excluding his Employer Securities Account). In the event of default on the loan, however, foreclosure and attachment of the security shall not occur until a distributable event occurs under the Plan.

20.5 Loan Terms: Any loan made to a Participant by the Trustee shall be evidenced by a promissory note of the Participant drawn in favor of the Trust. The note shall bear a reasonable rate of interest and shall be amortized in level installments payable at least quarterly within a specified period of time not to exceed five years, unless the loan is used to acquire a dwelling unit that, within a reasonable period of time (determined at the time the loan is made), will be used as the principal residence of the Participant, in which case the specified period of time shall not exceed 10 years. Effective January 1, 2002, repayment of a loan to a Participant who is on a leave of absence may be suspended for the shorter of (i) one year or (ii) the term of the leave of absence, provided that upon commencement of repayments, the loan shall continue to satisfy all requirements of the Plan and all applicable laws and regulations. Suspension of loan repayments shall also be governed by the rules in Section 3.13(f) with respect to any Qualified Military Service.

20.6 Accounting for Loans: Any loan to a Participant pursuant to this Article shall be treated as a directed investment of his Participant Accounts (excluding his Employer Security Account). For purposes of allocating income in the General Investments Account of the Trust Fund pursuant to Section 6.3(c), the balance in his General Investments Account shall be treated as equal to the actual balance in the Account minus the outstanding balance of any loans. Furthermore, for purposes of Section 6.3, repayments of principal and interest on the loan shall be treated as deposits to the adjusted balance (determined pursuant to the preceding sentence) of his General Investments Account

20.7 Effect of Termination of Employment or Plan: If a Participant terminates employment with the Employer for any reason, the outstanding balance of any loans made to him shall become fully payable no later than the last day of the calendar quarter following the calendar quarter in which his Termination of Employment occurs, or, if earlier, on his Distribution Date. In the event of a termination of the Plan, any outstanding loans shall be due and fully payable within 90 days of the effective dale of such termination, or the date the Participant or Beneficiary is notified of such termination. If the Participant or Beneficiary has not fully repaid any loan as of the date full payment is due, any unpaid balance shall be deducted from his Vested Accrued Benefit prior to determining the amount of any immediate or deferred benefit payable to the Participant or Beneficiary, his spouse or his Beneficiary and applied toward repayment of the loan. The deduction shall be applied only against the Participant’s General Investments Account.

20.8 No Spousal Consent: No spousal consent shall be required for any loan from any Account in the Plan.

20.9 Anti-Alienation: Except as specifically provided in Section 20.10 no benefit that shall be payable out of the Trust Fund to any person (including a Participant, Former Participant or Beneficiary) shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. No benefit shall in any manner be liable for or subject

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to the debts, contracts, liabilities, engagements, or toils of any person, nor shall it be subject to attachment or legal process for or against person, and the same shall not be recognized by the Trustee, except to such extent as may be required by law.

20.10 Qualified Domestic Relations Orders: Section 20.9 shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant, Former Participant or Beneficiary pursuant to a Domestic Relations Order, unless such Domestic Relations Order is determined to be a Qualified Domestic Relations Order (“QDRO”). In the event the Plan, the Trustee, or the Plan Administrator receives a Domestic Relations Order, the Plan Administrator shall promptly notify the Participant, Former Participant or Beneficiary whose benefit is the subject of such order and provide him with a copy of the Plan’s written procedures for administering QDROs. Administration expenses incurred by the Plan with respect to the QDRO (including costs associated with review and determination of the order as a valid QDRO) shall be chargeable to the individual Participant’s Account. Unless and until the order is set aside, the following provisions shall apply:

(a) The Plan Administrator shall establish reasonable procedures to determine whether an order received by it or the Trustee is a QDRO and to administer distributions pursuant to said order. The procedures shall set forth all rules to be applied by the Plan for notice to affected parties, suspension of Account activity, including distributions, investment direction and participant loans, and payment of benefits based upon the QDRO or the failure of the Domestic Relations Order to be a QDRO.

(b) The Plan Administrator shall within a reasonable time determine whether the order is a QDRO and shall notify the Participant, Former Participant or Beneficiary whose benefit is the subject of the order, of its determination. The Plan Administrator may designate a representative to carry out its duties under this Section 20.10.

(c) Nothing in this Section 20.10 shall be deemed to allow payment under a QDRO to an Alternate Payee of any benefit prior to the first day of the month following the date the Participant or Former Participant whose benefits are subject to the QDRO terminates employment or attains age 50, unless (i) earlier distribution is specifically provided under the terms of the QDRO and (ii) if the value of the Alternate Payee’s benefit exceeds $5,000, the Alternate Payee consents to any distribution occurring prior to the Participant’s attainment of earliest retirement age.

20.11 QDRO Definitions: For purposes of Section 20.10 the following definitions and rules shall apply:

(a) “Alternate Payee” shall mean any spouse, former spouse, child or other dependent of a Participant or Former Participant who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant or Former Participant.

(b) “Domestic Relations Order” shall mean any judgment, decree, or order (including approval of a properly settlement agreement) that:

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(1) relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Participant or Former Participant and

(2) is made pursuant to a state domestic relations law (including a community property law).

(c) “Qualified Domestic Relations Order” shall mean any Domestic Relations Order that satisfies the criteria set forth in the QDRO procedures established by the Plan Administrator.

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ARTICLE XXI

MULTIPLE EMPLOYER PROVISIONS

21.1 Adoption by Other Zions Employers: With the consent of the Sponsoring Employer and by a properly executed document evidencing the intent and will of the adopting Zions Employer, any other Zions Employer may adopt this Plan and all of the provisions hereof and participate herein and be known as a Participating Employer.

21.2 Requirements of Participating Zions Employers:

(a) Each Participating Zions Employer shall be required to use the Trustee determined by the Plan Sponsor or Plan Administrator.

(b) The Trustee may, but shall not be required to, commingle, hold and invest as one Trust Fund all contributions made by Participating Zions Employers, as well as all increments thereof. The assets of the Plan shall, on an ongoing basis, be available to pay benefits to all Participants and Beneficiaries under the Plan without regard to the Participating Zions Employer who contributed such assets.

(c) The transfer of any Participant from or to Zions Employer participating in this Plan, whether he is an Employee of the Sponsoring Employer or a Participating Zions Employer, shall not affect the Participant’s rights under the Plan, and the Participant’s Accounts, as well as all accumulated service with the transferor or predecessor, shall continue to his credit.

(d) Any expenses of the Trust and Plan that are to be paid by the Employer or borne by the Trust Fund, including funding of benefits, shall be paid by each Participating Zions Employer in the same proportion that the total amount of the Accounts standing to the credit of all Participants employed by such Zions Employer bears to the total of the Accounts standing to the credit of all Participants.

21.3 Designation of Agent: Each Participating Zions Employer shall be deemed to be a part of this Plan. With respect to all of its relations with the Trustee and Plan Administrator for the purpose of this Plan, each Participating Zions Employer shall be deemed to have designated irrevocably the Sponsoring Employer as its agent. Unless the context of the Plan clearly indicates the contrary, the word “Employer” shall be deemed to include each Participating Zions Employer as related to its adoption of the Plan.

21.4 Employee Transfers: It is anticipated that an Employee may be transferred between Participating Zions Employers, and in the event of any transfer, the Employee involved shall carry with him all of his accumulated service and eligibility. No transfer shall effect a termination of employment hereunder, and the Participating Zions Employer to which the Employee is transferred shall thereupon become obligated hereunder with respect to such Employee in the same manner as was the Participating Zions Employer from whom the Employee was transferred.

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21.5 Amendment: The Sponsoring Employer may amend this Plan at any time without regard to whether there are Participating Zions Employers hereunder. No written action of a Participating Zions Employer shall be required to validate an amendment.

21.6 Discontinuance of Participation: A Participating Zions Employer shall be permitted to discontinue or revoke its participation in the Plan. At the time of any discontinuance or revocation, satisfactory evidence thereof and of any applicable conditions imposed shall be delivered to the Trustee. If so directed by the Plan Administrator, the Trustee shall transfer, deliver and assign Contracts and other Fund assets allocable to the Participants of such Participating Zions Employer to the new Trustee as shall have been designated by the Participating Zions Employer, in the event that it has established a separate pension plan for its Employees. No such transfer shall be made if the result is the elimination or reduction of any Code §411(d)(6) protected benefits. If no successor is designated, the Trustee shall retain the assets for the Employees of the Participating Zions Employer pursuant to the provisions of the Plan. In no event shall any part of the corpus or income of the Trust as it relates to the Participating Zions Employer be used for or diverted for purposes other than for the exclusive benefit of the Employees of the Participating Zions Employer.

21.7 Administrator’s Authority: The Plan Administrator shall have authority to make any and all necessary rules or regulations, binding upon all Participating Zions Employers and all Participants, to effectuate the purposes of this Article.

21.8 Participating Employer Contributions: All contributions made by a Participating Zions Employer, as provided for in this Plan, shall be determined separately for each Participating Zions Employer, and shall be allocated only among Participants eligible to share who are Employees of the Participating Zions Employer making the contribution. The Administrator shall keep separate books and records concerning the affairs of each Participating Zions Employer hereunder and as to the accounts and credits of the Employees of each Participating Zions Employer. The Trustee may, but need not, register Contracts so as to evidence that a particular Participating Zions Employer is the interested Employer hereunder. In the event of an Employee transfer from one Participating Zions Employer to another, the employing Employer shall immediately notify the Administrator.

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ARTICLE XXII

PURCHASE OF EMPLOYER SECURITIES

22.1 No Put option: The Plan may not obligate itself to acquire Employer Securities from a particular holder thereof at any indefinite time determined upon the happening of an event such as the death of the holder. So long as all Employer Securities held by the Plan are tradable on an established market, the Plan may not obligate itself to acquire Employer Securities under a put option binding upon the Plan.

22.2 Purchase Price For Employer Securities: All purchases of Employer Securities shall be made at a price that, in the judgment of the Plan Administrator, does not exceed the fair market value thereof. All sales of Employer Securities shall be made at a price that, in the judgment of the Plan Administrator, is not less than the fair market value thereof.

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ARTICLE XXIII

MISCELLANEOUS

23.1 Participant’s Rights: This plan shall not be deemed to constitute a contract between the Employer and any Participant or to be a consideration or an inducement for the employment of any Participant or Employee. Nothing contained in this Plan shall be deemed to give any Participant or Employee the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any Participant or Employee at any time regardless of the effect that such discharge shall have upon him as a Participant of this Plan.

23.2 Actions Consistent with Terms of Plan: All actions taken by the Employer. Plan Administrator or Trustee with respect to Trust assets shall be in accordance with the terms of the Plan and Trust.

23.3 Performance of Duties: All parties to this Plan and Trust, or those claiming any interest hereunder, agree to perform any and all acts and execute any and all documents and papers that are necessary or desirable for carrying out this Plan and Trust or any of its provisions.

23.4 Validity of Plan: This Plan shall be construed in a way that is consistent with ERISA and regulations thereunder, the Internal Revenue Code and regulations thereunder, and, to the extent state law has not been preempted by federal law, the laws of the state in which the Plan Sponsor has its principal office. In case any provision of this Plan shall be held illegal or invalid for any reason, such determination shall not affect the remaining provisions of the Plan; but the Plan shall be construed and enforced as if such provision had never been included therein.

23.5 Legal Action: In the event any claim, suit, or proceeding is brought regarding the Trust and/or Plan established hereunder to which the Trustee or the Plan Administrator may be a party, and such claim, suit, or proceeding is resolved in favor of the Trustee or Plan Administrator, they shall be entitled to be reimbursed from the Trust Fund for any and all costs, attorney’s fees, and other expenses pertaining thereto incurred by them for which they shall have become liable.

23.6 Gender and Number: Wherever any words are used herein in the masculine, feminine or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply, and whenever any words are used herein in the singular or plural form, they shall be construed as though they were also used in the other form in all cases where they would so apply.

23.7 Uniformity: All provisions of this Plan shall be interpreted and applied in a uniform, nondiscriminatory manner.

23.8 Headings: The headings and subheadings of this Agreement have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof.

23.9 Receipt and Release for Payments: Any payment to any Participant, his legal representative, Beneficiary, or to any guardian or committee appointed for such Participant or Beneficiary in accordance with the provisions of the Plan, shall, to the extent thereof, be in full satisfaction of all

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claims against the Trustee and the Employer, either of whom may require such Participant, legal representative, Beneficiary, guardian or committee, as a condition precedent to such payment, to execute a receipt and release thereof in such form as shall be determined by the Trustee or Employer.

23.10 Payments to Minors, Incompetents: In the event the Plan Administrator must direct a payment from the Plan to or for the benefit of any minor or incompetent Participant or Beneficiary, the Plan Administrator, in its sole and absolute discretion may, but need not, order the Trustee to make distribution to any of the following: a legal or natural guardian of the minor or other relative or adult with whom the minor temporarily or permanently resides, a court-appointed conservator of any incompetent, a relative or adult with whom the incompetent temporarily or permanently resides, a residential care facility, rest home, sanitarium or similar entity with which the incompetent temporarily or permanently resides, a person or entity that has applied for and been designated by the United Stales Government as the recipient or custodian for Social Security benefits for the minor or incompetent. The Plan Administrator may also make payment as directed by the attorney-in-fact of an incompetent Participant when such direction is pursuant to an unrevoked and valid durable power of attorney. Any guardian, conservator, relative, attorney-in-fact, other person or entity shall have full authority and discretion to expend the distribution for the use and benefit of the minor or incompetent. The receipt of the distribution by the guardian, conservator, relative, attorney-in-fact, other person or entity shall be a complete discharge to the Plan, Plan Administrator and Trustee, without any responsibility on the part of the Trustee or the Plan Administrator to see to the application thereof. A Participant shall be deemed incompetent if he or she is incapable of properly using, expending, investing, or otherwise disposing of the distribution, and a court order or the written opinion of a qualified physician, psychiatrist or psychologist setting forth facts consistent with the standards outlined in this Section is presented to the Plan Administrator.

23.11 Missing Persons: Notwithstanding any provision in this Plan and Trust to the contrary, if the Plan Administrator is unable to locate any Inactive Participant who has incurred a Termination of Employment and is entitled to benefits under this Plan within three (3) years of the date he becomes entitled to a distribution from the Trust Fund, any amounts being held for his behalf shall be forfeited as of the last day of the Plan Year that contains the third anniversary of the date of his distribution entitlement. The forfeited amounts shall be applied as provided in Section 11.7(b). The Plan Administrator shall proceed with due diligence in attempting to locale any Former Participant. In the Plan Administrator’s sole discretion, due diligence may include any or all of the following actions:

(a) inquiry of any Beneficiary or Alternate Payee of the Inactive Participant whose names and addresses are known to the Plan Administrator;

(b) use of the Internal Revenue Service letter forwarding program under Rev. Rul. 94-22;

(c) use of a commercial locator service; or

(d) use of the Social Security Administration search program.

In no event shall a forfeiture occur until the Plan Administrator has mailed the Inactive Participant a notice of the benefits and the provisions of this section to his last known address, via U.S. Mail postage prepaid, return receipt requested.

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If the Inactive Participant is located subsequent to such forfeiture, the forfeited amount shall be reinstated and the Inactive Participant shall receive a distribution of his Vested Interest in accordance with the provisions of the Plan.

23.12 Prohibition Against Diversion of Funds: It shall be impossible by operation of the Plan or of the Trust, by termination of either, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by any other means, for any part of the corpus or income of any trust fund maintained pursuant to the Plait or any funds contributed thereto to be used for, or diverted to, purposes other than the exclusive benefit of Participants, Former Participants or their Beneficiaries, except as provided in Sections 17.4 and 23.17.

23.13 Applicability of Plan: The provisions of this Plan shall apply only to persons who are or who become Participants in this Plan on or after the Effective Date or with respect to Plan provisions with alternate effective dates, such alternate dates. Except as specifically provided in this Plan, the provisions of the Prior Plan will continue to apply to persons who are Former Participants or who are not employed by a Zions Employer on the Effective Date or as applicable, alternate effective dates, unless and until such time as such persons may again become Participants in this Plan.

23.14 Misstatement of Age: If a Participant or Beneficiary misstates or misrepresents his age, date of birth or any other material information to the Employer, Plan Administrator or Trustee, the amount, terms and conditions of any benefits payable from the Plan that are attributable to periods prior to the discovery of such misstatement or misrepresentation shall be limited to the lesser (or more restrictive) of: the amount, terms and conditions determined based on the misstated information; or the amount, terms and conditions determined based on the correct information. The Plan Administrator shall have sole and absolute authority for applying the preceding sentence.

23.15 Return of Contributions to the Employer: Notwithstanding any provision of this Plan to the contrary, if any contribution (or portion thereof) by the Employer to the Trust is made as a result of a mistake of fact, or if any contribution (or part thereof) by the Employer to the Trust Fund that is conditioned upon the deductibility of the contribution by the Employer under the Code is disallowed, whether by agreement within the Internal Revenue Service or by final decision of a court of competent jurisdiction, the Employer may demand repayment of the mistaken or disallowed amount. The Trustee shall return the mistaken or disallowed contribution within one year following the time the mistaken contribution was made or the disallowed contribution was disallowed. Investment earnings attributable to the mistaken or disallowed amount shall not be returned, but any investment losses attributable thereto shall reduce the amount so returned.

23.16 Correction of Incorrect Benefit Payments: In the event of a misstatement, computational error or other error in Plan records or administration, including a failure by the Plan to value correctly a Participant’s Account or any assets therein (including any Employer Securities) or to calculate or determine correctly costs or expenses attributable to a Participant’s Account, or in the event costs or expenses attributable to a Participant’s Account or assets therein are not incurred by the Plan prior to the dale distribution of the Participant’s Account occurs, and as a result a Participant or Beneficiary is underpaid or overpaid, the Plan shall not be liable to the Participant or Beneficiary for any more than the correct benefit amount under the Plan.

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Underpayment amounts may be corrected by the Plan by adding to future payments or by making a single one-time lump sum payment. Overpayment amounts may be deducted by the Plan from any future payments due from the Plan to the Participant or Beneficiary. In lieu of receiving reduced future payments a Participant or Beneficiary may make a lump sum payment to the Plan of any overpayment. In the event no future payments are owing or will be made, the Plan may require a lump sum repayment from the Participant or Beneficiary of the overpayment amount. Each Participant and Beneficiary in the Plan shall receive any distribution from the Plan, regardless of when paid, subject to the right of the Plan to obtain recovery of overpaid amounts as provided herein. The right of the Plan to establish the propriety of distributions from the Plan and/or obtain recovery shall be an equitable remedy and shall extend to all amounts distributed from the Plan, without regard to when the distribution occurs or may have previously occurred.

23.17 Counterparts: This Plan and Trust may be executed in any number of counterparts, each of which shall be deemed to be an original, and the counterparts shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be executed by its duly authorized representative and the Plan Administrator has accepted the Plan this 24th day of December, 2010.

PLAN SPONSOR:		PLAN ADMINISTRATOR:
Zions Bancorporation		Zions Bancorporation
By:	/s/ Diana M. Andersen	By:	/s/ Diana M. Andersen
Name:	Diana M. Andersen	Name:	Diana M. Andersen
Title:	SVP & Dir. of Corp. Benefits	Title:	SVP & Dir. of Corp. Benefits

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EX-10.29

EXHIBIT 10.29

ZIONS BANCORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

STANDARD DIRECTORS STOCK OPTION AWARD AGREEMENT

This Directors Stock Option Award Agreement (this “Agreement”) is made and entered into as of the date set forth on Exhibit A (the “Grant Date”) by and between Zions Bancorporation, a Utah corporation (the “Company”), and the person named on Exhibit A (the “Grantee”) pursuant to the Company’s 2005 Stock Option and Incentive Plan (the “Plan”). Capitalized terms not defined in this Agreement have the meanings ascribed to them in the Plan.

1. Grant of Stock Option. Pursuant and subject to the Plan and this Agreement, the Company hereby grants to the Grantee the right and option (an “Option”) to purchase all or any part of the aggregate number of shares of the Company’s Common Stock (the “Common Stock”) set forth on Exhibit A at the purchase price per share set forth on Exhibit A (the “Option Exercise Price”).

2. Term of Option. This Option shall expire on the date set forth on Exhibit A (the “Expiration Date”) and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is earlier terminated in accordance with the provisions of the Plan or Section 4 of this Agreement.

3. Vesting. Except as otherwise provided herein, this Option shall vest as set forth on Exhibit A and shall be exercisable only to the extent it has vested. This Option shall cease to vest upon Grantee’s Termination of Employment and may be exercised after Grantee’s date of termination only as set forth in the Plan or in Section 4 of this Agreement.

4. Termination of Employment.

4.1 Termination of Employment by Grantee for any Reason or By the Company for Cause. Except to the extent otherwise provided in Sections 4.2 through 4.5 below, this Option, whether or not vested and to the extent not therefore exercised, shall terminate immediately upon (i) the Grantee’s Termination of Employment at Grantee’s election for any reason or (ii) Grantee’s Termination of Employment by the Company for Cause.

4.2 At election of Company or a Related Entity. Upon the Termination of Employment of a Grantee at the election of the Company or a Related Entity (other than in circumstances governed by Section 4.1 above or Section 4.3 through 4.5 Grantee below) the Grantee may exercise this Option on the following terms and conditions: (i) exercise may be made only to the extent that the Grantee was entitled to exercise this Option on the date of the Termination of Employment; and (ii) exercise must occur within three (3) months after the Termination of Employment but in no event after the Expiration Date.

4.3 Retirement. Upon the Termination of Employment of Grantee by reason of the Grantee’s Retirement, Grantee may exercise this Option on the following terms and conditions: (i) exercise may be made only to the extent that Grantee was entitled to exercise this Option on the date of Retirement; (ii) exercise must occur within three (3) years after Retirement but in no event after the Expiration Date; and (iii) notwithstanding clause (ii) above, the option or right shall terminate on the date Grantee begins or agrees to begin employment with another company that is in the financial services industry unless such employment is specifically approved by the Committee.

4.4 Disability. Upon the Termination of Employment of Grantee by reason of Disability, Grantee may exercise this Option on the following terms and conditions: (i) exercise may be made only to the extent that Grantee was entitled to exercise this Option on the date of Termination of Employment; and (ii) exercise must occur within six (6) months after the Termination of Employment but in no event after the Expiration Date.

4.5 Death. If Grantee dies during the period in which this Option is exercisable, whether pursuant to its terms or pursuant to Section 4.2 through 4.4 above, this Option shall be exercisable on the following terms and conditions: (i) exercise may be made only to the extent that Grantee was entitled to exercise this Option on the date of death; and (ii) exercise must occur within six (6) months after the date of the Grantee’s death. Any such exercise of this Option following Grantee’s death shall be made only by Grantee’s executor (or administrator) or only by the recipient of such specific disposition. If Grantee’s executor (or administrator) or the recipient of a specific disposition under Grantee’s will shall be entitled to exercise this Option pursuant to the preceding sentence, such executor (or administrator) or recipient shall be bound by all the terms and conditions of the Plan and this Agreement which would have applied to the Grantee.

5. Manner of Exercise.

5.1 Stock Option Exercise Agreement. To exercise this Option, Grantee (or in the case of exercise after Grantee’s death, Grantee’s executor, administrator or recipient of a specific disposition) must deliver to the Company an executed stock option exercise agreement in such form as may be required by the Company from time to time (the “Exercise Agreement”), which shall set forth, among other things, Grantee’s election to exercise this Option, the number of shares being purchased, any restrictions imposed on the shares of Common Stock and any representations, warranties and agreements regarding Grantee’s investment intent and access to information as may be required by the Company to comply with applicable securities laws. If someone other than Grantee exercises this Option, then such person must submit documentation reasonably acceptable to the Company that such person has the right to exercise this Option.

5.2 Payment. The Exercise Agreement shall be accompanied by full payment for the shares of Common Stock being purchased (the “Exercise Price”). Such payment shall be made (i) in cash (by check), (ii) by delivery of shares of Common Stock (which, if acquired pursuant to the exercise of a stock option or under an Award

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made under the Plan or any other compensatory plan of the Company, were acquired at least six (6) months prior to the option exercise date) having a Fair Market Value (determined as of the exercise date) equal to all or part of the exercise price and cash for any remaining portion of the exercise price or (iii) to the extent permitted by law, by such other method as the Committee may from time to time prescribe, including a cashless exercise procedure through a broker-dealer. Any shares of Common stock delivered in payment of the Exercise Price shall be fully paid and free and clear of all liens, claims, encumbrances and security interests.

5.3 Tax Withholding. Prior to the issuance of the shares of Common Stock upon exercise of this Option, Grantee must pay, or otherwise provide for to the satisfaction of the Company, any applicable federal or state withholding obligations of the Company.

5.4 Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance, to the reasonable satisfaction of the Committee, with all applicable federal and state securities laws, as they are in effect on the date of exercise. This Option may not be exercised as to fewer than 100 shares of Common Stock unless it is exercised as to all shares as to which this Option is then exercisable.

5.5 Other Conditions. The Committee may require that Grantee comply with such other procedures relating to the exercise of this Option and delivery of shares pursuant to such exercise as the Committee may determine, including the use of specified broker-dealers and the manner in which Grantee shall satisfy tax withholding obligations with respect to such shares.

5.6 Issuance of Shares. As promptly as is practicable after the receipt of the Exercise Agreement, in form and substance satisfactory to the Company, payment of the Exercise Price and satisfaction of Sections 5.3 through 5.5 above, the Company shall issue the shares of Common Stock registered in the name of Grantee, Grantee’s authorized assignee, or Grantee’s legal representative. The Company may postpone such delivery until it receives satisfactory proof that the issuance of such shares will not violate any of the provisions of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, any rules or regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder, or the requirements of applicable state law relating to authorization, issuance or sale of securities, or until there has been compliance with the provisions of such acts or rules. Grantee understands that the Company is under no obligation to register or qualify the shares of Common Stock with the SEC, any state securities commission or any stock exchange to effect such compliance. Even if the shares of Common Stock are registered with the SEC, because Grantee is deemed to be an insider under the rules of the SEC, shares issued upon exercise of this Option will still bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable under applicable law, including a legend substantially in the following form:

No sale, pledge, gift hypothecation or other transfer of this certificate or the securities represented hereby, or any interest therein, shall be valid or effective unless a Registration Statement under the Securities Act of 1933 is in effect as to

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such transfer, and the securities represented herby have been duly qualified for sale under applicable state securities laws, or in the opinion of counsel to the Company such registration and qualification is unnecessary in order for such transfer to comply with the Securities Act of 1933, as amended, and applicable state securities laws.

6. Right of Offset. The Company shall have the right to offset against the obligation to deliver shares of Common Stock in respect of any exercise of this Option, any outstanding amounts then owed by Grantee to the Company.

7. Nontransferability of Option. This Option shall not be assignable or transferable by Grantee other than by will or by the laws of descent and distribution, and shall be exercisable during the life of the Grantee only by the Grantee or the Grantee’s legal representative and any such attempted assignment, transfer or exercise in contravention of this Section 7 shall be void.

8. Privileges of Stock Ownership. Grantee shall not have any of the rights of a stockholder of the Company with respect to any shares of Common Stock subject to the issuance of such shares to Grantee. Except as otherwise provided in Section 1.6(c) of the Plan, no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such shares are issued.

9. No Right to Retain Status as Director. Nothing contained in this Agreement shall confer upon Grantee any right to continue as a director of the Company or any of its subsidiaries.

10. Non-Qualified Options. It is intended that this Option shall be treated as a non-qualified option under the Code.

11. Change in Control. Subject to the terms of the Plan, Grantee shall be entitled to the benefits of Section 3.7 of the Plan with respect to this Option.

12. Entire Agreement. This Option is granted pursuant to the Plan and this Option and Agreement are subject to the terms and conditions of the Plan. The Plan is incorporated herein by reference. This Agreement, the Plan, and such other documents as may be executed in connection with the exercise of this Option constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter. Any action taken or decision made by the Committee arising out of or in connection with the construction, administration, interpretation or effect of this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on the Grantee and all persons claiming under or through the Grantee.

13. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice

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required to be given or delivered to Grantee shall be in writing and addressed to Grantee at the address indicated below or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

14. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement and the Plan shall be binding upon Grantee and Grantee’s heirs, executors, administrators, legal representatives, successors and assigns.

15. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah without regard to that body of law pertaining to choice of law or conflict of laws.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date noted above.

ZIONS BANCORPORATION

By:

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Exhibit A

Grant Date:

Name of Grantee:

Number of Option Shares:

Option Exercise Price:

Expiration Date:

Vesting Schedule: The right of Grantee to purchase the aggregate number of shares of Common Stock covered by the Option shall vest as follows:

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ZIONS BANCORPORATION

2005 STOCK OPTION EXERCISE AGREEMENT

If you are exercising your option through a broker-dealer you do not need to fill out this form but must complete forms provided by the broker-dealer and acceptable to the Company in its sole discretion.

I hereby elect to purchase the number of shares of Common Stock of Zions Bancorporation (the “Company”) as set forth below:

Grantee:	Number of Shares To Be Purchased:
Social Security Number:	Purchase Price per Share:
Share Delivery Instructions:	Aggregate Purchase Price:
	Date of Grant:
	Phone Number:
Type of Option:    ¨  Incentive Stock Option	¨  Nonqualified Stock Option

Please issue the new stock certificate(s) representing the option shares in my name and                                          (co-owner, if desired) as [            ] joint tenants or [            ] tenants in common (initial one).

Delivery of Purchase Price. Grantee hereby delivers to the Company the Exercise Price, to the extent permitted in the Stock Option Award Agreement between the Company and Grantee as follows (check as applicable and complete):

¨ Cash Exercise: by check* in the amount of $            ;

¨ Stock Swap: by delivery of                      fully-paid, nonassessable and vested shares of the Common Stock of the Company owned by Grantee for at least six (6) months prior to the date hereof and a check* in the amount of $             to cover the fractional share amount due.

Payment of Withholding Tax (Non-Qualified options only).

¨ Grantee hereby delivers to the Company a check* in the amount of $             necessary to satisfy any withholding tax obligations of the Company.

Date: Signature of Grantee

* Checks should be made payable to Zions Bancorporation

[FOR COMPANY USE ONLY]

Received on                     . The closing Price for the stock on this day was $             per share.

Return form to Jennifer Jolley, interoffice: UT KC11-0669, mail: One South Main Street, Suite 1134, Salt Lake City, UT 84111

EX-10.31

EXHIBIT 10.31

ZIONS BANCORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

DEFERRED SALARY STOCK UNIT AWARD AGREEMENT

This Salary Stock Unit Award Agreement (the “Agreement”) is made and entered into as of January 1, 2011 by and between Zions Bancorporation, a Utah corporation (the “Company”), and the person named on Exhibit A (the “Grantee”) pursuant to the Company’s 2005 Stock Option and Incentive Plan (the “Plan”). Capitalized terms not defined in this Agreement have the meanings ascribed to them in the Plan.

1. Grant of Deferred Stock Units. Pursuant and subject to the Plan and this Agreement, the Company agrees to grant as of the bi-weekly payroll dates for services performed for the Company by the Grantee in 2011, a number of Deferred Stock Units (the “Stock Units”). The Stock Units will be calculated by dividing the bi-weekly salary stock cash value (the “Salary Stock Cash Value”) set forth on Exhibit A less applicable payroll taxes (e.g., FICA and FUTA) and dividing the net amount by the closing price of Zions Bancorporation common stock as of the applicable payroll date. The Stock Units will be immediately 100% vested upon the Grant Dates. Grantee’s ownership of and rights with respect to the Stock Units are limited by the terms and conditions of the Plan and this Agreement, including restrictions on Grantee’s right to transfer the Stock Units.

2. Transfer Restriction. The Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the Plan or this Agreement.

3. Payment Dates. The Stock Units will be paid in cash in increments of 50% as of January 15, 2012 and 50% as of December 15, 2012; provided that Grantee has satisfied all applicable tax withholding obligations as provided in Section 5.1 below and the conditions of Sections 5.2 and 5.3 below have been satisfied. Upon the payment dates, settlement shall be made in cash.

4. Termination of Employment; Termination of Right to Stock Units. In the event of Grantee’s death prior to the payment dates, the cash value of the vested Stock Units shall be paid as of the date one month following the date of death. Upon Termination of Employment for any other reason, the Stock Units that have not yet been paid as of the date of such termination shall remain subject to the provisions of Section 3 above. Grantee’s rights in respect of future grants of Stock Units shall immediately terminate upon Termination of Employment, except that Grantee shall be entitled to receive a final grant of Stock Units determined in accordance with Section 1 for any portion of Grantee’s Salary Stock Cash Value that had accrued through the date of Termination of Employment but had not yet been paid. In addition, Grantee’s right to future Stock Units under this Agreement will terminate on December 31, 2011.

5. Conditions to Lapse of Transfer Restrictions.

5.1 Tax Withholding. Prior to the lapse of transfer restriction on the Stock Units, Grantee must pay, or otherwise provide for to the satisfaction of the Company, any

applicable federal or state withholding obligations of the Company. Unless the Committee permits otherwise, Grantee shall provide for payment of withholding taxes (e.g., income taxes) upon the applicable payment date by hereby allowing and directing the Company to retain cash based on the Fair Market Value (determined as of the applicable payment date) equal to the statutory minimum amount of taxes required to be withheld. In such case, the Company shall pay the net cash amount to Grantee after such deduction.

5.2 Compliance with Laws. The transfer restrictions set fourth in Section 2 above shall not lapse unless such lapse and the issuance or release of the related Stock Units is in compliance, to the reasonable satisfaction of the Committee, with all applicable federal and state laws, as they are in effect on the date of the lapse of restrictions.

5.3 Other Conditions. The Committee may require that Grantee comply with such other procedures relating to the payment of amounts under the Stock Units as the Committee may determine, including, but not limited to, the manner in which Grantee shall satisfy tax withholding obligations with respect to the Stock Units.

6. Right of Offset. The Company shall have the right to offset against the obligation to release shares of Common Stock, any outstanding amounts then owed by Grantee to the Company, but only to the extent such offset does not violate Section 409A of the Code.

7. Nontransferability of Agreement. The rights conferred by this Agreement shall not be assignable or transferable by Grantee other than by will or by the laws of descent and distribution, and shall be exercisable during the life of the Grantee only by the Grantee or the Grantee’s legal representative and any such attempted assignment, transfer or exercise in contravention of this Section 7 shall be void.

8. Privileges of Stock Ownership. Grantee shall not have the rights of a stockholder with respect to voting or dividends.

9. No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Grantee any right to continue in the employ of, or to continue or establish any other relationship with, the Company or any Related Entity, or limit in any way the right of the Company or any Related Entity to terminate Grantee’s employment or other relationship at any time, with or without Cause. The Company has not yet determined whether, and to what extent, the Stock Units will be taken into account for purposes of determining benefits under other compensation and benefit plans, programs, policies and arrangements maintained by the Company. Any such determination will be made in the sole discretion of the Company and the Company will inform Grantee once such a determination has been made.

10. Change in Control. Subject to the terms of the Plan upon the occurrence of a Change in Control, the Stock Units shall be paid as soon as practicable thereafter to the extent permitted under applicable law, rules, regulation and guidance.

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11. Amendment; Committee Discretion. The Committee may at any time amend the terms and conditions set forth in this Agreement; provided that, notwithstanding the foregoing, no such amendment shall materially adversely affect Grantee’s rights and obligations under this Agreement with respect to amounts that Grantee has already earned and accrued without Grantee’s prior written consent (or the consent of Grantee’s estate, if such consent is obtained after Grantee’s death) and any such amendment shall be made in accordance with Section 409A of the Code. Any amendment of this Agreement shall be in writing signed by an authorized member of the Committee or a person or persons designated by the Committee. Subject to the other provisions of this Section 11, the Committee shall have full discretion with respect to any actions to be taken or determinations to be made in connection with this Agreement, and its determinations shall be final, binding and conclusive.

12. Entire Agreement. These Stock Units are granted pursuant to Section 2.13 of the Plan and this Agreement. The Plan is incorporated herein by reference. This Agreement, the Plan and such other documents as may be executed in connection with this Stock Unit grant constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter. Any action taken or decision made by the Committee arising out of or in connection with the construction, administration, interpretation or effect of this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on the Grantee and all persons claiming under or through the Grantee.

13. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Grantee shall be in writing and addressed to Grantee at the address on file in the Corporate Human Resource directory or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

14. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement and the Plan shall be binding upon Grantee and Grantee’s heirs, executors, administrators, legal representatives, successors and assigns.

15. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah without regard to that body of law pertaining to choice of law or conflict of laws.

16. Regulatory Matters/Compliance with Laws. Compensation under this Agreement is subject to applicable regulations issued by the U.S. Department of the Treasury and applicable requirements of agreements between the Company and the U.S. government, as the same are in effect from time to time. Grantee may receive compensation under this Agreement only to the extent that it is consistent with those regulations and requirements. In the event that the grant, exercise, lapse of restrictions, payment, settlement, or accrual of this award or any term of this award is restricted or prohibited or otherwise conflicts with any applicable statute (including, without limitation, the Emergency Economic Stabilization Act of 2008, as

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amended by the American Recovery and Reinvestment Act of 2009) or any applicable regulation or other guidance thereunder, or any agreement or arrangement with or restriction imposed by, the United States Department of the Treasury, any bank regulatory agency or any other governmental agency (a “Governmental Restriction”), in each case, as determined by Committee in its sole discretion, then the Committee may unilaterally modify the terms of this award in such manner as the Committee determines in its sole discretion to be necessary to avoid such restriction or prohibition or eliminate such conflict, all without the further consent of Grantee, such consent being given through Grantee’s acceptance of this award.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date noted above.

ZIONS BANCORPORATION

By:

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EX-10.37

EXHIBIT 10.37

ZIONS BANCORPORATION

CHANGE IN CONTROL AGREEMENT

SENIOR EXECUTIVES

(3X)

April 28, 2010

Ken Peterson

One South Main, 5^th Floor

Salt Lake City, UT 84106

Dear Ken

Zions Bancorporation (the “Company”) considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel. In connection with this, the Company’s Board of Directors (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that the uncertainty and questions that it may raise among management could result in the departure or distraction of management personnel to the detriment of the Company and its shareholders.

The Board has decided to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without the distraction arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Company or any of its affiliates (collectively, the “Company”), the Company hereby agrees that after this letter agreement (this “Agreement”) has been fully executed, you shall receive the severance benefits set forth in Section 5 of this Agreement in the event your employment with the Company is terminated under the circumstances described in Section 4 of this Agreement subsequent to a Change in Control (as defined in Section 2).

1. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect through December 31, 2013; provided, however, that commencing on March 1, 2013 and on each March 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than March 1 of that preceding year, the Company shall have given notice that it does not wish to extend this Agreement; provided, further, that if a Change in Control (as defined in Section 2), occurs during the original or any extended term of this Agreement, the term of this Agreement shall continue in effect for a period of not less than thirty-six (36) months beyond the month in which such Change in Control occurred.

2. Change in Control. No benefits shall be payable or provided under Section 3, 4 or 5 of this Agreement unless there has been a Change in Control. For purposes of

this Agreement, a Change in Control shall not be deemed to have occurred if the Board consisting of a majority of Continuing Directors as defined in Section (b) determines that, in their reasonable judgment, a change in control has not occurred. Without such a determination, a change in control will be deemed to have occurred if:

(a) any Person (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities (“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following shall not constitute a Change in Control; (i) any acquisition by the Company or any corporation controlled by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iii) any acquisition by a Person of 20% of the Outstanding Company Voting Securities as a result of an acquisition of common stock of the Company by the Company which, by reducing the number of shares of common stock of the Company outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Outstanding Company Voting Securities; provided, however, that if a Person shall become the beneficial owner of 20% or more of the Outstanding Company Voting Securities by reason of a share acquisition by the Company as described above and shall, after such share acquisition by the Company, become the beneficial owner of any additional shares of common stock of the Company, then such acquisition shall constitute a Change in Control;

(b) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with Company to effect a transaction described in Sections 2(a), (c) or (e)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (hereinafter referred to as “Continuing Directors”), cease for any reason to constitute at least a majority thereof;

(c) the consummation by the Company of a merger or consolidation of Company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 20% of the Outstanding Company Voting Securities shall not constitute a Change in Control;

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(d) the stockholders of the Company approve a plan of complete liquidation 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 acquiring entity outstanding immediately after such sale or disposition.

3. Accelerated Vesting Upon a Change in Control.

(a) All outstanding options, if any, granted to you by the Board (“Options”) under any of the Company’s stock option plans, incentive plans, or other similar plans (or options substituted therefore covering the stock of a successor corporation) shall become fully vested and exercisable immediately prior to the Change in Control as to all shares of stock covered thereby, and the restricted period with respect to any restricted stock, salary share units or any other equity award granted to you thereunder shall lapse and such shares shall be distributed to you immediately prior to the Change in Control.

(b) all unpaid Senior Management Value Sharing Awards will be payable at the higher of their target value as established by the Executive Compensation Committee of the Board (the “Committee”) or their value calculated under the terms of the Value Sharing Plan based on the average annual growth in Earnings per Share and the average Tangible Return on Equity from the inception of each Plan Period through the fiscal quarter ending prior to the effective date of the Change of Control. Any such payments will be pro-rated based on multiplying them times a fraction, the numerator of which is the number of quarters completed in the performance cycle and the denominator of which is the original number of quarters in the performance cycle called for in the plan. The payments described in this Section 3(b) shall be paid in a single lump sum within 30 days following the Change in Control (with the actual payment date during such 30-day period to be determined in the Company’s sole discretion).

4. Termination of Employment Following a Change in Control.

(a) General. During the term of this Agreement, if any of the events described in Section 2 constituting a Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 5(c) upon the subsequent termination of your employment, provided that such termination occurs during the term of this Agreement and within the two (2) year period immediately following the date of such Change in Control, unless such termination is (i) because of your death or Disability (as defined in Section 4(b)), (ii) by the Company for Cause (as defined in Section 4(c)), or (iii) by you other than for Good Reason (as defined in Section 4(d)). In the event that you are entitled to such benefits, such benefits shall be paid notwithstanding the subsequent expiration of the term of this Agreement.

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(b) Disability. If, as a result of your incapacity due to physical or mental illness, you shall have been absent from the full-time performance of your duties with the Company for six (6) consecutive months, and within thirty (30) days after written notice of termination is given you shall not have returned to the full-time performance of your duties, your employment may be terminated for “Disability.”

(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 incapacity due to physical or mental illness or any such actual or anticipated failure after your issuance of a Notice of Termination (as defined in Section 4(e) 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, (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 incapacity due to physical or mental illness 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 willful commission of an act of fraud or dishonesty resulting in material economic or financial injury to the Company, or (iv) upon your willful engagement in illegal conduct or gross misconduct, in each case which is materially and demonstrably injurious to the Company

(d) Good Reason. You shall be entitled to terminate your employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without your express written consent, the occurrence after a Change in Control of any of the following circumstances unless (except in the case of Sections 4(d)(iv)), such circumstances are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination (as defined in Section 4(f)) specified in the Notice of Termination given in respect thereof:

(i) the assignment to you of any duties materially inconsistent with the position in the Company that you held immediately prior to the Change in Control, a significant adverse alteration in the nature or status of your responsibilities or the conditions of your employment from those in effect immediately prior to such Change in Control, or any other action by the Company that results in a material diminution in your position, authority, duties or responsibilities;

(ii) the Company’s reduction by more than 10% of your annual total compensation as in effect on the date hereof or as the same may be increased from time to time;

(iii) the relocation of the Company’s offices at which you are principally employed immediately prior to the date of the Change in Control (your

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“Principal Location”) which results in the one-way commuting distance for you increasing by more than thirty (30) miles from such location, or the Company’s requiring you, without your written consent, to be based anywhere other than your Principal Location, except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations;

(iv) the Company’s failure to pay to you any portion of your current compensation or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) days after the date such compensation is due;

(v) the Company’s failure to continue in effect any material compensation or benefit plan in which you participate immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the Company’s failure to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the Change in Control; or

(vi) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 4(e) hereof (and, if applicable, the requirements of Section 4(c) hereof), which purported termination shall not be effective for purposes of this Agreement.

Notwithstanding the foregoing, if you do not provide the Company with written notice of the occurrence of an act or circumstance of a type described above in this Section 4 within sixty (60) days of your having knowledge thereof occurrence of a type described above in this Section 4, such act or occurrence shall no longer constitute a basis for an event of termination for “Good Reason”. Your right to terminate your employment pursuant to this Section 4(d) shall not be affected by your incapacity due to physical or mental illness. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

(e) Notice of Termination. Any purported termination of your employment by the Company or by you (other than termination due to death which shall terminate your employment automatically) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7. “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(f) Date of Termination, Etc. “Date of Termination” shall mean (a) if your employment is terminated due to your death, the date of your death; (b) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your

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duties during such thirty (30)-day period), and (c) if your employment is terminated pursuant to Section 4(c), Section 4(d) or Section 4(e) or for any other reason (other than death or Disability), the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than thirty (30) days from the date such Notice of Termination is given, and in the case of a termination for Good Reason shall not be less than fifteen (15) nor more than sixty (60) days from the date such Notice of Termination is given).

5. Compensation Upon Termination or During Disability Following A Change in Control. Following a Change in Control during the term of this Agreement, you shall be entitled to the benefits described below during a period of disability, or upon termination of your employment, as the case may be, provided that such period or termination occurs during the term of this Agreement and within the two (2) year period immediately following the date of such Change in Control. The benefits to which you are entitled, subject to the terms and conditions of this Agreement, are:

(a) During any period during which you fail to perform your full-time duties with the Company as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary and salary share units at the rate in effect at the commencement of any such period, together with all compensation payable to you under the Company’s disability plan or program or other similar plan during such period, until this Agreement is terminated pursuant to Section 4(b) hereof. Thereafter, or in the event your employment is terminated by reason of your death, your benefits shall be determined under the Company’s retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.

(b) If your employment shall be terminated (i) by the Company for Cause or (ii) by you other than for Good Reason, the Company shall pay you (1) your full base salary and salary share units, when due, through the Date of Termination at the rate in effect at the time Notice of Termination is given, (2) the unpaid portion, if any, of any annual bonus for any prior year, and (3) all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

(c) If your employment by the Company shall be terminated by you for Good Reason or by the Company other than for Cause or Disability, then you shall be entitled to the benefits provided below:

(i) the Company shall pay to you (1) your full base salary and salary share units, when due, through the Date of Termination at the rate in effect at the time Notice of Termination is given, at the time specified in the addendum attached to this Agreement and incorporated herein by reference (the “Addendum”), (2) the unpaid portion, if any, of any annual bonus, plus an amount equal to your targeted annual bonus, pro rated from January 1 of the termination year through the Date of Termination, and (3) all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due;

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(ii) in lieu of any further salary payments and salary share unit grants to you for periods subsequent to the Date of Termination, the Company shall pay as severance pay to you, at the time specified in the Addendum, a lump sum severance payment equal to the sum of three (3) times your annual rate of base salary and salary share units as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater, and three (3) times your targeted annual bonus as in effect as of the Date of Termination or the average annual bonus awarded to you (without reduction by reason of any arrangement to defer payment of such bonus) with respect to the three (3) years immediately prior to the Change in Control, whichever is greater;

(iii) for a period of three (3) years following the Date of Termination, the Company shall continue to provide you and your eligible family members, based on the cost sharing arrangement between you and the Company on the date of the Change in Control, with medical and dental health benefits at least equal to those which would have been provided to you and them if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter, provided, however, that if you become re-employed with another employer and are eligible to receive medical and dental health benefits under another employer’s plans, the Company’s obligations under this Section 5(c)(iii) shall be reduced to the extent comparable benefits are actually received by you, and any such benefits actually received by you shall be reported to the Company. In the event you are ineligible under the terms of such benefit plans or programs to continue to be so covered, in such event, the Company shall provide you with substantially equivalent coverage through other sources or will provide you with quarterly payments (on the first business day of each calendar quarter, in advance) in such amounts that, after all taxes on such amounts, shall be equal to the cost to you of providing yourself such benefit coverage. At the termination of the benefits coverage under the second preceding sentence, you, your spouse and your dependents shall be entitled to continuation coverage pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), Sections 601-608 of the Employee Retirement Income Security Act of 1974, as amended, and under any other applicable law, to the extent required by such laws, as if you had terminated employment with the Company on the date such benefits coverage terminates. The lump sum shall be determined on a present value basis using the interest rate provided in Section 1274(b)(2)(B) of the Code on the Date of Termination. In each case, (other than a benefit plan providing for reimbursement of expenses referred to in Section 105(b) of the Code relating to amounts expended for medical care), the amount of benefits and payments to be provided under this clause (iii) during a calendar year shall not affect the amount of benefits and payments to be provided in any other taxable year and any such benefits and payments shall not be subject to liquidation or exchange for another benefit;

(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

7

in your sole discretion, at an aggregate cost to the Company not to exceed twenty five percent (25%) of your annual rate of base salary and salary share units as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater. Except as otherwise expressly provided herein, to the extent any expense reimbursement under this clause (iv) is determined to be subject to Section 409A (as defined below), the amount of any such expenses eligible for reimbursement in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year, in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement be subject to liquidation or exchange for another benefit;

(v) you shall be fully vested in your accrued benefits under any qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plans maintained by the Company for your benefit, except to the extent that the acceleration of vesting of such benefits would violate any applicable law or require the Company to accelerate the vesting of the accrued benefits of all participants in such plan or plans, in which case the Company may elect to pay you a lump sum payment at the time specified in the Addendum in an amount equal to the value of such unvested accrued benefits in lieu of accelerating the vesting of your benefits. In addition, the Company shall pay to you an amount equal to the amount the Company would have contributed to your account under the Company’s 401(k) plan as a matching contribution had you remained employed by the Company for three (3) years after your Date of Termination and had you made the maximum elected deferral contributions. The matching contributions described in the immediately preceding sentence shall be paid in a single lump sum within 30 days following the Date of Termination (with the actual payment date during such 30-day period to be determined in the Company’s sole discretion);

(vi) (1) anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution to you or for your benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code by reason of being “contingent on a change in the ownership or control” of the Company, within the meaning of Section 280G of the Code or to any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest or penalties, are collectively referred to as the “Excise Tax”), then your total payment or distribution will be reduced to such extent as required to not trigger the excise tax. The determination of which payments or benefits to reduce to comply with this provision will be made by you.

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(2) for the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax.

6. Successors; Binding Agreement.

(a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to terminate your employment and receive compensation from the Company in the same amount and on the same terms to which you would be entitled hereunder if you terminate your employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. Unless expressly provided otherwise, “Company” as used herein shall mean the Company as defined in this Agreement and any successor to its business and/or assets as aforesaid.

(b) This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

7. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

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8. Confidentiality, Non-Competition and Non-Solicitation Covenants.

(a) Confidentiality. You hereby agree that you shall not, directly or indirectly, disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below). You agree that, upon termination of your employment with the Company, all Confidential Information in your possession that is in written or other tangible form (together with all copies or duplicates thereof, including computer files) shall be returned to the Company and shall not be retained by you or furnished to any third party, in any form except as provided herein; provided, however, that you shall not be obligated to treat as confidential, or return to the Company copies of any Confidential Information that (i) was publicly known at the time of disclosure to you, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by any person or entity, or (iii) is lawfully disclosed to you by a third party. As used in this Agreement, the term “Confidential Information” means; information disclosed to you or known by you as a consequence of or through your relationship with the Company, about the customers, employees, business methods, public relations methods, organization, procedures or finances, including, without limitation, information of or relating to customer lists, of the Company.

(b) Non-Compete. You hereby agree that, for the period commencing on the Date of Termination and terminating on the first anniversary thereof, you shall:

(i) not, directly or indirectly (whether as principal, agent, independent contractor, consultant, employee or otherwise), own, manage, operate, join, control or otherwise carry on, participate in the ownership, management, operation or control of, provide services to, or be engaged in or concerned with, any business competitive with that of the Company or any of its affiliates, which business is located within, or does business within, 50 miles of your primary work location at the time of termination of your employment (for purposes of the foregoing, any business competitive with the Company or any of its affiliates shall include any organizational activities with respect to a business that would be so competitive once such business is organized and operating and shall include, but not be limited to, a bank, a savings and loan, a credit union, a broker-dealer or an entity providing investment advisory services) (a “Competing Business”), provided that you shall not be prohibited from owning passively less than 5% of a Competing Business;

(ii) inform any person which seeks to engage your services that you are bound by this Section 8(b) and the other terms of this Agreement.

(c) Non-Solicitation. You hereby agree that, for the period commencing on the Date of Termination and terminating on the first anniversary thereof, you shall not, either on your own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or corporation, directly or indirectly solicit or attempt to solicit

10

away from the Company any of its officers or employees or offer employment to any person who is an officer or employee of the Company; provided, however, that a general advertisement to which an employee of the Company responds shall in no event be deemed to result in a breach of this Section 8(c).

(d) Survival. Any termination of your employment or of this Agreement (or breach of this Agreement by you or the Company) shall have no effect on the continuing operation of this Section 8.

(e) Validity. The parties hereto acknowledge that the potential restrictions on your future employment imposed by this Section 8 are reasonable in both duration and geographic scope and in all other respects. If for any reason any court of competent jurisdiction shall find any provisions of this Section 8 unreasonable in duration or geographic scope or otherwise, you and the Company hereby agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction.

(f) Consideration. The parties acknowledge that this Agreement would not have been entered into and the benefits described in Sections 3 and 5 would not have been promised in the absence of your promises under this Section 8.

9. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed on a non-exclusive basis by the laws of the State of Utah without giving effect to its conflicts of laws rules.

10. Joint and Several Liability. Any successors or assigns shall be jointly and severally liable with the Company under this Agreement.

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. Any obligations of the Company under Sections 5 and 6 shall survive the expiration of the term of this Agreement. The section headings contained in this Agreement are for convenience only, and shall not affect the interpretation of this Agreement.

Notwithstanding anything to be contrary contained in Section 1 or this Section 11, the Company may amend, supplement or terminate the Agreement at any time by giving you at least seven calendar days prior written notice of amendment, supplementation or termination;

11

provided, however, that the Company may amend, supplement or terminate this Agreement under this Section 11 only if,

(a) (i) the Board or Compensation Committee of the Board has determined generally to amend or supplement the terms and conditions of outstanding change in control agreements or generally to terminate outstanding change in control agreements and replace them with new, modified change in control agreements, and (ii) concurrently with the amendment, supplementation or termination of this Agreement the Company provides you with an executed amendment or supplement or new change in control agreement containing terms and conditions substantially the same as those contained in the general amendments, supplements or new agreements (it being understood that the multiples contained in Section 5(c) of this Agreement and the terms of years contained in Sections 4, 5 or 8 of this Agreement will remain the same in the amendment, supplement or new agreement provided to you); and

(b) (i) a Change in Control has not occurred prior to the effective date of the amendment, supplementation or termination of this Agreement and (ii) the Company is not then or at such effective date, or within three months of such effective date docs not become, a party to a definitive agreement providing for transactions which, if consummated, would constitute a Change in Control.

12. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

14. Legal Fees. In addition to all other amounts payable to you under this Agreement, the Company shall pay to you all reasonable legal fees and expenses incurred by you in connection with any Dispute arising out of or relating to this Agreement or the interpretation thereof (including, without limitation, all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or in seeking to obtain or enforce any right or benefit provided by this Agreement, or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder), regardless of the outcome of such proceeding; provided, however, that in the event you commence such action, you shall not be entitled to recover such fees and costs if the court determines that you brought the claim in bad faith or the claim was frivolous.

15. 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, subject to your rights, if any, under any employment agreement with the Company in effect at the time of such termination.

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16. Effectiveness; Entire Agreement. This Agreement shall become effective only upon our receipt from you of a copy of this Agreement executed by you and the Company. This Agreement sets forth the entire agreement of the parties hereto 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 with respect to your severance benefits upon a Change in Control and upon termination of your employment under the circumstances described in Section 4 of this Agreement subsequent to a Change in Control, and any prior agreement of the parties hereto in respect of such severance benefits solely under such circumstances is hereby terminated and cancelled, except with respect to the payments and benefits you may become entitled to receive in accordance with Section 6 of the employment agreement, dated March 24, 2010, between you and the Company. 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 any employment agreement between you and the Company. Provisions of this Agreement shall not in any way abrogate your rights under such other plans and agreements.

17. Section 409A. Notwithstanding anything to the contrary in this Agreement or elsewhere, if you are a “specified employee” as determined pursuant to Section 409A of the Code (“Section 409A”) as of the date of your “separation from service” (within the meaning of Final Treasury Regulation 1.409A-l(h)) and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise provided without subjecting you to “additional tax”, interest or penalties under Section 409A, then any such payment or benefit that is payable during the first six months following your “separation from service” shall be paid or provided to you in a cash lump-sum, with interest at LIBOR, on the first business day of the seventh calendar month following the month in which your “separation from service” occurs. In addition, any payment or benefit due upon a termination of your employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to you upon a “separation from service”.

18. Compliance with Applicable Law. In no event shall any payment, benefit or grant be paid, provided, made or issued (and no payment or benefit in any other form will be made) be made to you under this Agreement or otherwise, unless such payment, benefit or grant complies with the provisions of Troubled Asset Relief Program under the Emergency Economic Stabilization Act of 2008, including the TARP Standards for Compensation and Corporate Governance; Interim Final Rule, as amended, and any other rules and regulations thereunder, as amended (collectively, “Applicable Law”). This Agreement is subject to and shall be, to the fullest extent possible, interpreted to be consistent with Applicable Law. In the event of any conflict, the provisions of Applicable Law control over the terms of this Agreement. Notwithstanding anything in this Agreement to the contrary, in no event shall any payment, benefit or grant under this Agreement vest or be settled, paid or accrued, if any such vesting, settlement, payment or accrual would be in violation of Applicable Law. In the event of any such violation, you and the Company will cooperate in good faith to endeavor to meet the requirements of Applicable Law in a manner which preserves to the greatest extent possible the intent and purposes of this Agreement.

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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:	/s/ Connie Linarakis
Its:	Chief Human Resources Officer
	4-28-10

/s/ Ken Peterson
Ken Peterson
Dated:	4-28-10

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EX-10.38

EXHIBIT 10.38

Execution Copy

STOCK PURCHASE AND SHAREHOLDER AGREEMENT

dated

June 1, 2004

by and among

WELMAN HOLDINGS, INC.,

ZIONS BANCORPORATION,

ZIONS FIRST NATIONAL BANK

and

PCS WEALTH MANAGEMENT, LLC

Table of Contents

		Page
	ARTICLE I
	Definitions
1.1	Definitions		2
	ARTICLE II
	Purchase and Sale of Common Stock
2.1	Authorization of Common Stock		8
2.2	Sale and Purchase		9
2.3	Closing		9
2.4	Delivery		9
	ARTICLE III
	Series A Cumulative Preferred Stock
3.1	Issuance of Preferred Stock		9
3.2	Contributed Assets		10
3.3	Additional Issuances of Preferred Stock		10
3.4	Preferred Participation Amount Issuance		11
3.5	Repurchases of Preferred Stock		11
	ARTICLE IV
	Representations and Warranties of Zions, ZFNB and the Company
4.1	Organization, Good Standing and Authority		12
4.2	Capitalization		12
4.3	Authorization; No Breach		13
4.4	Regulatory Matters		14
4.5	Rights of Common Stock		14
4.6	Ownership of Common Stock		14
4.7	Litigation		14
4.8	Company Activities		15
	ARTICLE V
	Representations and Warranties of PCS LLC
5.1	Organization, Execution, Delivery and Performance		16
5.2	Offering		16
5.3	Investment		16
5.4	No Breach		17
5.5	Financing		17

i

Table of Contents

(continued)

		Page
5.6	Litigation		17
	ARTICLE VI
	Conditions to the PCS LLC’s Obligations at Closing
6.1	Representations and Warranties; Performance		18
6.2	Proceedings		18
6.3	Closing Certificate		18
6.4	Employment Agreement		19
6.5	No Governmental Action		19
6.6	Legal Opinion		19
6.7	Waiver		19
	ARTICLE VII
	Conditions to Zions’ and ZFNB’s Obligations at Closing
7.1	Representations and Warranties; Performance		19
7.2	Closing Certificate		20
7.3	Employment Agreement		20
7.4	PCS LLC Operating Agreement		20
7.5	No Governmental Action		20
7.6	Waiver		20
	ARTICLE VIII
	Covenants
8.1	Filings		20
8.2	Conditions to Closing		21
8.3	Restrictions on Other Agreements		21
	ARTICLE IX
	Company Governance and Operations
9.1	The Board of Directors		21
9.2	Financial Information		21
9.3	Guaranteed Investment		22
9.4	Loans and Deposits		23
9.5	Other Services		25
9.6	Company Policies		25
9.7	Limitations on Ownership; Additional Common Stock		25
9.8	Asset Sales		26

ii

Table of Contents

(continued)

		Page
	ARTICLE X
	Transfers of Capital Stock
10.1	Prohibition Against Transfers		26
10.2	Regulatory Compliance		26
10.3	ZFNB Right of First Refusal		26
10.4	Transfer by ZFNB		27
10.5	ZFNB Calls		28
10.6	PCS LLC’s Put		30
10.7	Buy-Back Payment; Buy-Back Closings		31
10.8	Valuation Procedures		34
10.9	Legends		37
	ARTICLE XI
	Termination
11.1	Mutual Consent		37
11.2	Termination by Either Party		37
11.3	Termination by PCS LLC		38
11.4	Termination by Zions or ZFNB		38
11.5	Liability for Termination		38
	ARTICLE XII
	Indemnification
12.1	Indemnification by ZFNB		38
12.2	Defense of Claims		39
	ARTICLE XIII
	Miscellaneous
13.1	Interpretation		41
13.2	Waiver and Amendment		42
13.3	Counterparts		42
13.4	Governing Law		42
13.5	Arbitration		42
13.6	Expenses		44
13.7	Notices		44
13.8	Entire Agreement, Etc		46
13.9	Assignment		46
13.10	Survival of Representations and Warranties		46
13.11	Termination		46
13.12	Severability		46

iii

EXHIBIT LIST

Exhibit A	Form of Common Stock Certificate
Exhibit B	Series A Certificate of Designation
Exhibit C	Contributed Assets
Exhibit D	Preferred Participation Amount
Exhibit E	Articles of Incorporation of the Company
Exhibit F	Employment Agreement
Exhibit G	Form of PCS Wealth Management, LLC Operating Agreement
Exhibit H	Calculation of Income After Capital Charges

iv

STOCK PURCHASE AND SHAREHOLDER AGREEMENT

This Stock Purchase and Shareholder Agreement (this “Agreement”) is entered into as of June 1, 2004, by and among Zions Bancorporation, a Utah corporation (“Zions”), Zions First National Bank, a national banking association (“ZFNB”), Welman Holdings, Inc., a Utah corporation (the “Company”), and PCS Wealth Management, LLC, a Utah limited liability company (“PCS LLC”).

RECITALS

WHEREAS, ZFNB has organized the Company for the purpose of developing a private client wealth management business (the “Business”) in cooperation with George M. Feiger (“Feiger”);

WHEREAS, Zions, the parent of ZFNB, is, simultaneously with the execution of this Agreement, entering into an employment agreement with Feiger pursuant to which Feiger will be responsible for the development and management of the Business;

WHEREAS, the parties have agreed that Feiger and certain members of his management team in connection with the Business may purchase 10% of the common stock of the Company, with ZFNB retaining 90% of the common stock of the Company, and that the Company shall issue to ZFNB Preferred Stock (as defined below) in connection with the contributions of assets by ZFNB to the Company and the organization of the Company and the Business;

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WHEREAS, Feiger has organized PCS LLC, of which Feiger is the managing member, to facilitate his management team’s investment in the common stock of the Company pursuant to this Agreement;

WHEREAS, in connection with the transactions contemplated by this agreement, the Company has authorized the sale and issuance of (i) one thousand (1,000) shares (the “Common Shares”) of its common stock, par value $0.01 per share (the “Common Stock”) and (ii) two thousand seventy-seven (2,077) shares (the “Preferred Shares”) of its Series A Cumulative Preferred Stock, par value $0.01 per share (the “Preferred Stock”);

WHEREAS, PCS LLC desires to purchase one thousand (1,000) Common Shares from the Company, representing, when issued, 10% of the outstanding Common Stock, on the terms and conditions set forth herein;

WHEREAS, the Company desires to issue and sell the Common Stock to PCS LLC on the terms and subject to the conditions set forth herein; and

WHEREAS, the Company will issue the Preferred Stock to ZFNB on the terms and subject to conditions described herein;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

Definitions

1.1 Definitions. As used in this Agreement, the following terms shall have the following meanings:

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“Act” means the Utah Revised Business Corporation Act.

“Additional Contribution” has the meaning specified in Section 3.3 hereto.

“Administrator” has the meaning specified in Section 13.5 hereto.

“Affiliate” has the meaning set forth in Rule 12b-2 promulgated by the Securities and Exchange Commission under the Exchange Act, except that, for purposes of this Agreement, the Company and its subsidiaries shall not be Affiliates of ZFNB.

“arbitration clause” has the meaning specified in Section 13.5 hereto.

“Board” has the meaning specified in Section 3.2 hereto.

“Business” has the meaning specified in the Recitals hereto.

“Buy-Back Closing” has the meaning specified in Section 10.7 hereto.

“Buy-Back Notice” has the meaning specified in Section 10.7 hereto.

“Buy-Back Period” has the meaning specified in Section 10.6 hereto.

“Buy-Back Price” has the meaning specified in Section 10.8 hereto.

“Buy-Back Securities” has the meaning specified in Section 10.5 hereto.

“Call Notice” has the meaning specified in Section 10.5 hereto.

“Change in Control” (a) with respect to Zions, has the meaning set forth Section 2 of the Zions Bancorporation Change in Control Agreement, dated as of June 1 2004, by and between Zions and Feiger and (b) with respect to ZFNB, means the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 1.4(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power or economic interests of the then-outstanding voting securities of such entity entitled to vote

3

generally in the election of directors, except that the initial investment in the Company by ZFNB shall not be a Change in Control.

“Closing” has the meaning specified in Section 2.3 hereto.

“Closing Date” has the meaning specified in Section 2.3 hereto.

“Common Shares” has the meaning specified in the Recitals hereto.

“Common Stock” has the meaning specified in the Recitals hereto.

“Company Revaluation” has the meaning specified in Section 10.7 hereto.

“Company Valuation” has the meaning specified in Section 10.8 hereto.

“Contributed Assets” has the meaning specified in Section 3.2 hereto.

“Disposition Notice” has the meaning specified in Section 10.3 hereto.

“Dispute” has the meaning specified in Section 13.5 hereto.

“Employment Agreement” has the meaning specified in Section 6.4 hereto.

“Engagement Period” has the meaning specified in Section 10.8 hereto.

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

“Exercise Notice” has the meaning specified in Section 10.3 hereto.

“Exit Date” means the date to be mutually agreed between Zions and Feiger which is within 30 days after the delivery of a Put Notice by PCS LLC pursuant to Section 10.6 hereto and which is prior to the commencement of the Company Valuation.

“FDIA” means the Federal Deposit Insurance Act, as amended.

“Feiger” has the meaning specified in the Recitals hereto.

“First Refusal Right” has the meaning specified in Section 10.3 hereto.

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“GAAP” means generally accepted accounting principles as consistently applied in the United States.

“Guaranteed Investment” has the meaning specified in Section 9.3 hereto.

“Independent” when used with respect to an Investment Bank means an Investment Bank which has not been engaged by ZFNB or any Affiliate thereof for a fee’ in excess of $25,000 during the 12-month period preceding the date of its engagement hereunder.

“Income After Capital Charges” has the meaning specified in Section 9.4 hereto.

“Investment Bank” means a nationally recognized investment banking firm with experience in evaluating or valuing banking organizations.

“Investors” means, collectively, Feiger and all of the Members as of the date of this Agreement.

“Liabilities” means liabilities or obligations of any nature, whether known or unknown, whether absolute, accrued, contingent, choate, inchoate or otherwise, whether due or to become due, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP.

“Loss” means (1) the amount of any damage, loss, liability or expense (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses in connection with any action, suit or proceeding) incurred or suffered by the Company or its directors, officers or employees as a result of any matter for which indemnity may be sought under Section 12.1, less (2) the amount of compensation (if

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any) to the Company or its directors, officers or employees occurring or reasonably anticipated to occur in connection with such damage, loss, liability or expense under insurance policies, by recovery through set-off or counterclaim or otherwise.

“Material Adverse Effect” means a material adverse effect on (i) the business, results of operations or financial condition of the applicable entity and its subsidiaries, taken as a whole, other than any such effect attributable to or resulting from (x) any change in banking or similar laws, rules or regulations of general applicability or interpretations thereof by courts or governmental authorities or (y) any change in GAAP or regulatory accounting principles applicable to banks or their holding companies or (ii) the ability of the applicable entity to perform its obligations pursuant to this Agreement.

“Members” means each member of PCS LLC, whether or not such Person is a Member of PCS LLC at the Closing Date, and shall not include Feiger.

“Nasdaq” means the Nasdaq National Market.

“New PCS Loans and Deposits” has the meaning specified in Section 9.4 hereto.

“OCC” means the Office of the Comptroller of the Currency.

“Offered Stock” has the meaning specified in Section 10.3 hereto.

“Officer’s Certificate” means a certificate signed by the chief executive officer or the chief financial officer of ZFNB, stating that (i) the person signing such certificate has made or has caused to be made such investigations as are necessary in order to permit him to verify the accuracy of the information set forth in such certificate, and (ii) to the best of such person’s knowledge, such certificate does not misstate any

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material fact or omit to state any material fact necessary to make the certificate not misleading.

“Operating Agreement” has the meaning specified in Section 7.4 hereto.

“PCS LLC” has the meaning specified in the Recitals hereto.

“PCS Loans and Deposits” has the meaning specified in Section 9.4 hereto.

“Person” means an individual, partnership, corporation, limited liability company or partnership, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof, or other entity of any kind.

“Preexisting PCS Loans and Deposits” has the meaning specified in Section 9.4 hereto.

“Preferred Shares” has the meaning specified in the Recitals hereto.

“Preferred Stock” has the meaning specified in the Recitals hereto.

“Proportionate Interest” means, with respect to Feiger or any of the Members, the Common Shares owned by PCS LLC which represent such Person’s proportionate equity interest in PCS LLC.

“Proportionate Share” means a fraction, the numerator of which is the total number of shares of Common Stock owned by PCS LLC and the denominator of which is the total number of shares of outstanding Common Stock at such time.

“Prospective Transferee” has the meaning specified in Section 10.3 hereto.

“Purchase Price” has the meaning specified in Section 2.2 hereto.

“Put Notice” has the meaning specified in Section 10.6 hereto.

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“Revaluation Notice” has the meaning specified in Section 10.7 hereto.

“Related Documents” has the meaning specified in Section 13.5 hereto.

“Rights” means securities or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, or any options, calls or commitments relating to, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of Common Stock or other equity securities.

“Securities Act” means the U.S. Securities Act of 1933.

“Series A Certificate of Designation” has the meaning specified in Section 3.1 hereto.

“Shareholders” means ZFNB and each of the Investors.

“Spread Income Right” has the meaning specified in Section 9.4 hereto.

“Third-Party Claim” has the meaning specified in Section 12.2 hereto.

“Tie Breaker” has the meaning specified in Section 10.8 hereto.

“Transfer” has the meaning specified in Section 10.1 hereto.

“Zions” has the meaning specified in the Recitals hereto.

ARTICLE II

Purchase and Sale of Common Stock

2.1 Authorization of Common Stock. On or prior to the date hereof, ZFNB shall have caused the Company to, and the Company shall, have duly authorized and taken all necessary corporate action for the sale and issuance to PCS LLC of the Common Stock.

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2.2 Sale and Purchase. Subject to the terms and conditions hereof, at the Closing (as defined below), ZFNB agrees to cause the Company to, and the Company agrees to, issue and sell to PCS LLC, and PCS LLC agrees to purchase from the Company, 1,000 Common Shares, for an aggregate purchase price of one hundred thousand dollars ($100,000.00) (the “Purchase Price”).

2.3 Closing. The consummation of the sale and purchase (the “Closing”) of the Common Stock by PCS LLC under this Agreement shall take place on June 9, 2004, at the offices of Callister Nebekef & McCullough, a Professional Corporation, Gateway Tower East, Suite 900, 10 East South Temple, Salt Lake City, Utah 84133 or at such other time or place as ZFNB and PCS LLC may mutually agree. The date on which the Closing occurs is herein referred to as the “Closing Date.”

2.4 Delivery. At the Closing, subject to the terms hereof and the satisfaction or waiver of the conditions to Closing set forth in Articles VI and VII hereto, the Company will deliver to PCS LLC a stock certificate in substantially the form of Exhibit A hereto, issued in PCS IXC’s name and representing the Common Shares. PCS LLC shall transfer and deliver to the Company the Purchase Price by wire transfer of immediately available funds to the Company’s account provided to PCS LLC in writing no later than the third business day immediately preceding the Closing.

ARTICLE III

Series A Cumulative Preferred Stock

3.1 Issuance of Preferred Stock. Within 30 days of the execution of this Agreement, and in no event later than the Closing Date, the Company shall issue to ZFNB shares of Preferred Stock having the preferences and rights provided for in the

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Certificate of Designation attached hereto as Exhibit B (the “Series A Certificate of Designation”). The Preferred Stock shall have a per-share liquidation preference of one thousand dollars ($1,000.00). The number of shares of Preferred Stock to be issued to ZFNB shall be equal to (x) the value of the Contributed Assets (as defined below) divided by (y) one thousand dollars ($1,000), such that the aggregate liquidation value at the time of issuance of the Preferred Stock shall equal the value of the Contributed Assets.

3.2 Contributed Assets. Attached hereto as Exhibit C is a list of the aggregate tangible and intangible assets contributed to the Company by ZFNB as of the Closing for the purpose of developing the Business (the “Contributed Assets”).

3.3 Additional Issuances of Preferred Stock.

(a) Additional Preferred Shares shall be issued by the Company to ZFNB immediately upon any additional contribution of cash or assets by ZFNB to the Company or the Company’s subsidiaries (each, an “Additional Contribution”). Additional Contributions shall include, but shall not be limited to, (i) any contribution of cash made pursuant to the Guaranteed Investment as provided in Section 9.3 hereof, (ii) any contribution of cash made other than pursuant to the Guaranteed Investment, including advances required to fund the operation of the Business or otherwise, (iii) the fair market value of any assets or operations contributed to the Company or its subsidiaries by ZFNB or its Affiliates and (iv) the value of any acquisitions of businesses or assets made by or on behalf of the Company and to the extent funded by ZFNB or its Affiliates. The dollar amount of each Additional Contribution shall be rounded so that such amount is a multiple of one thousand dollars ($1,000). Additional Contributions

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may only be made upon the written request of the Board of Directors of the Company (the “Board”) to ZFNB.

(b) The number of Preferred Shares issued to ZFNB shall be in an amount equal to (a)(i) the amount of the cash contributed, (ii) the value of the assets or operations contributed as determined by the Board or (iii) in the case of assets or businesses acquired, the value of the consideration paid by ZFNB, divided by (b) one thousand dollars ($1,000), such that the liquidation preference of the total number of Preferred Shares issued to ZFNB pursuant to this Section 3.3 equals the value of the Additional Contribution.

3.4 Preferred Participation Amount Issuance. As soon as reasonably practicable after the delivery of a Buy-Back Notice, and prior to the commencement of an initial Company Valuation pursuant to the procedures set forth in Section 10.8 hereto, (i) to the extent that the Preferred Participation Amount as calculated pursuant to Exhibit D hereto is a positive amount, the Company shall issue to ZFNB a number of Preferred Shares such that the liquidation preference of the total number of Preferred Shares issued to ZFNB pursuant to this Section 3.4 equals the Preferred Participation Amount, or (ii) to the extent that such Preferred Participation Amount is a negative amount, Zions or ZFNB shall make a cash payment to the Company of such Preferred Participation Amount in a manner to be mutually agreed between Zions or ZFNB and the Company.

3.5 Repurchases of Preferred Stock. Subject to the restrictions contained in the Company’s Articles of Incorporation, the Act and other applicable state and federal law, and upon request by PCS LLC to the Board, the Company may, from

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time to time and in the sole discretion of the Board, repurchase outstanding Preferred Stock from ZFNB in a manner consistent with the Series A Certificate of Designation.

ARTICLE IV

Representations and Warranties of Zions, ZFNB and the Company

Zions, ZFNB and the Company, jointly and severally, hereby represent and warrant to PCS LLC that, as of the date hereof and, except as otherwise provided herein, as of the Closing Date:

4.1 Organization, Good Standing and Authority. Each of Zions, ZFNB and the Company is duly organized, validly existing and, in the case of Zions and the Company, in good standing under the laws of its jurisdiction of organization, and each have all requisite power and authority to execute, deliver, carry out and perform their respective obligations under the terms of this Agreement. The Company is a newly organized corporation which, as of the date hereof, has no preexisting or outstanding material liabilities.

4.2 Capitalization.

(a) The authorized capital stock of the Company consists of 250,000 shares of Common Stock and 250,000 shares of Preferred Stock. As of the date hereof, there are, and immediately prior to the Closing there will be, 9,000 shares of Common Stock outstanding, owned beneficially and of record by ZFNB. As of the date hereof, there are no shares of Preferred Stock outstanding. The common shareholders’ equity of the Company as of the date hereof, and immediately prior to the Closing will be, nine hundred thousand dollars ($900,000).

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(b) All of the outstanding shares of the capital stock of the Company are, or will at the Closing be, validly issued, fully paid and nonassessable and, upon the issuance and sale of the Common Stock to be acquired by PCS LLC, the Common Stock will be validly issued, fully paid and nonassessable.

4.3 Authorization; No Breach. The execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby have been duly authorized by all requisite corporate action of Zions, ZFNB and the Company. Assuming due execution by PCS LLC and Feiger, this Agreement constitutes a valid and binding obligation of each of Zions, ZFNB and the Company, enforceable against each of them in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting the rights of creditors of national banking associations and to general principles of equity. The execution, delivery and performance by Zions, ZFNB and the Company of this Agreement and the consummation of the transactions contemplated hereunder does not and will not (with or without the giving of notice, the lapse of time or both) result in the creation of any lien, claim, security interest, charge or other encumbrance upon Zions’, ZFNB’s or the Company’s capital stock or assets or (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) give any third party the right to accelerate any obligation under or (iv) result in a violation of, the Articles of Incorporation or Bylaws of Zions, the Articles of Association or Bylaws of ZFNB or the Articles of Incorporation or Bylaws of the Company, or any law, statute, rule, regulation, instrument, order, judgment or decree to which Zions, ZFNB or the Company or any of their respective properties is

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subject, or any contract, instrument or document to which any of Zions, ZFNB or the Company is a party or by which it is bound or to which any of its respective properties is subject.

4.4 Regulatory Matters. Other than notice to the OCC pursuant to 12 C.F.R. Section 5.34, no consent, approval, authorization, order, registration or qualification of any court, governmental authority or any third party is required to be obtained by Zions, ZFNB or the Company in connection with the execution, delivery or performance by Zions, ZFNB or the Company of this Agreement, or their obligations hereunder, except such consents, approvals, authorizations, orders, registrations or qualifications as may be required under federal or state banking laws.

4.5 Rights of Common Stock. Each share of Common Stock issued and sold to PCS LLC hereunder will have the rights set forth in the Company’s Articles of Incorporation, a copy of which is set forth as Exhibit E hereto.

4.6 Ownership of Common Stock. Upon delivery of the Common Stock to PCS LLC and payment therefor pursuant hereto, good and valid title to such Common Stock, free and clear of all liens, encumbrances, equities or claims, will pass to PCS LLC. The issuance and sale of the Common Stock pursuant hereto will not give rise to any preemptive rights or violate any law, statute, rule, regulation, instrument, order, judgment or decree to which the Company or any of its assets are subject.

4.7 Litigation. There are no actions, suits, claims, arbitrations, proceedings or investigations pending, or, to the knowledge of Zions and ZFNB, threatened against, affecting or involving Zions, ZFNB or the Company in connection

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with the transactions contemplated by this Agreement, at law or in equity or before or by any court, arbitrator or governmental authority, domestic or foreign.

4.8 Company Activities. The Company was formed on March 30, 2004. The Company has not conducted any activities other than those incidental to its formation. Since the date of its formation, the Company has not incurred any Liabilities. Except for this Agreement, the Company has not entered into or committed to enter into any agreements. The Company has no employees.

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ARTICLE V

Representations and Warranties

of PCS LLC

PCS LLC hereby represents and warrants to Zions and ZFNB that, as of the date hereof and, except as otherwise provided herein, as of the Closing Date:

5.1 Organization, Execution, Delivery and Performance. PCS LLC is duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation. PCS LLC has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by PCS LLC and, assuming due execution by Zions and ZFNB, is its valid and binding obligation, enforceable against it in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity. No consent, approval, authorization, order, Sling, registration or qualification of or with any court, governmental authority or third person is required to be obtained by PCS LLC in connection with the execution and delivery of this Agreement or the performance of its obligations hereunder or thereunder.

5.2 Offering. The offering and sale of interests in PCS LLC was and is (i) exempt from registration under the Securities Act of 1933, as amended, and (ii) qualified or registered under, or exempt from, the applicable requirements of state “Blue Sky” laws.

5.3 Investment. PCS LLC is acquiring the Common Stock for investment and not with a view to its distribution. Feiger is an “accredited investor” as that term is defined in Rule 501(a) under the Securities Act. PCS LLC has no more than 35 members who are not accredited investors, and each Investor has such knowledge and

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experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment. PCS LLC hereby agrees that it has provided, or will provide prior to Closing, all information required pursuant to Rule 02(b) under the Securities Act to each of the Investors.

5.4 No Breach. The execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby have been duly authorized by all requisite corporate action of PCS LLC. The execution and delivery by PCS LLC of this Agreement and the consummation of the transactions contemplated hereby do not and will not (with or without the giving of notice, the lapse of time or both) (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any lien, security interest; charge or encumbrance upon PCS LLC’s membership interests or assets, (iv) give any third party the right to accelerate any obligation under, or (v) result in a Violation of, any law, statute, rule, regulation, instrument, order, judgment or decree to which PCS LLC or any of PCS LLC’s properties is subject, or any contract to which it is a party or by which PCS LLC is bound or to which any of PCS LLC’s properties is subject

5.5 Financing. PCS LLC has, or will have at the Closing, funds mailable to it to consummate the purchase of the Common Stock pursuant to the terms of this Agreement. No part of the Purchase Price will be borrowed by PCS LLC from Zions, ZFNB or any of their Affiliates.

5.6 Litigation. There are no actions, suits, claims, arbitrations, Proceedings or investigations pending, or, to the knowledge of PCS LLC, threatened

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against, affecting or involving PCS LLC in connection with the transactions contemplated by this Agreement, at law or in equity or before or by any court, arbitrator or governmental authority, domestic or foreign.

ARTICLE VI

Conditions to the PCS LLC’s Obligations at Closing

The obligation of PCS LLC to purchase and pay for the Common Stock to be purchased by it at the Closing is subject to the satisfaction on or before the Closing Date of the following conditions:

6.1 Representations and Warranties; Performance. The representations and warranties of Zions, ZFNB and the Company contained in Article IV hereof shall be true and correct in ail material respects at and as of the Closing as if made on and as of such date, except as expressly contemplated thereby. Zions, ZNFB and the Company shall have performed, in all material respects, each of their covenants and agreements contained in this Agreement to be performed prior to the Closing.

6.2 Proceedings. All corporate and other proceedings taken or required to be taken by Zions, ZFNB or the Company in connection with the transactions contemplated hereby to be consummated at or prior to the Closing shall have been taken and all documents incident thereto shall be satisfactory in form and substance to Feiger in his capacity as the managing member of PCS LLC.

6.3 Closing Certificate. PCS LLC shall have received an Officer’s Certificate of Zions and ZFNB dated the Closing Date and stating that the conditions set forth in Sections 6.1 and 6.2 have been satisfied.

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6.4 Employment Agreement. Zions and Feiger shall have entered into the Employment Agreement substantially in the form attached hereto as Exhibit F (the “Employment Agreement”).

6.5 No Governmental Action. No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which is reasonably expected to (i) restrain, prohibit or invalidate the transactions contemplated by this Agreement, or (ii) have a Material Adverse Effect on PCS LLC prior to the Closing.

6.6 Legal Opinion. PCS LLC shall have received a legal opinion from Callister, Nebecker & McCullough, a Professional Corporation, as to the due authorization, full payment and non-assessability of the Common Stock.

6.7 Waiver. Any condition specified in this Article VI may be waived in writing by PCS LLC.

ARTICLE VII

Conditions to Zions’ and ZFNB’s Obligations at Closing

The obligations of Zions and ZFNB to cause the Company to deliver the Common Shares to PCS LLC at the Closing are subject to the satisfaction on or before the Closing Date of the following conditions:

7.1 Representations and Warranties; Performance. The representations and warranties of PCS LLC contained in Article V hereof shall be true and correct in all material respects at and as of the date of the Closing as if made on and as of such date, except as expressly contemplated thereby. PCS LLC shall have

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performed, in all material respects, each of its covenants and agreements contained in this Agreement to be performed prior to the Closing.

7.2 Closing Certificate. Zions and ZFNB shall have received an Officer’s Certificate of Feiger in his capacity as the managing member of PCS LLC dated the Closing Date and stating that the conditions set forth in Section 7.1 have been satisfied.

7.3 Employment Agreement. Zions and Feiger shall have entered into the Employment Agreement.

7.4 PCS LLC Operating Agreement. Feiger and the Members shall have executed the PCS LLC operating agreement substantially in the form attached hereto as Exhibit G (the “Operating Agreement”).

7.5 No Governmental Action. No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which is reasonably expected to (i) restrain, prohibit or invalidate the transactions contemplated by this Agreement, or (ii) have a Material Adverse Effect on Zions, ZFNB or the Company prior to the Closing.

7.6 Waiver. Any condition specified in this Article VII may be waived in writing by Zions and ZFNB.

ARTICLE VIII

Covenants

8.1 Filings. If and when necessary, as promptly as practicable, Zions, ZFNB and PCS LLC shall make, and ZFNB shall cause the Company to make, all filings and submissions under applicable banking laws and regulations as may be reasonably

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required to be made in connection with this Agreement and the transactions contemplated hereby Zions and ZFNB shall furnish to PCS LLC, and PCS LLC shall furnish to Zions and ZFNB, such information and assistance as the other may reasonably request in connection with the preparation of any such filings or submissions.

8.2 Conditions to Closing. Zions, ZFNB and PCS LLC shall each use their commercially reasonable efforts to cause (a) the conditions to the Closing, as described herein in Articles VI and VII, to be satisfied, including, in the case of ZFNB, to cause the Company to take the actions contemplated hereby, and (b) the Closing to occur promptly after satisfaction of the conditions thereto.

8.3 Restrictions on Other Agreements. Except as otherwise provided herein, none of the Shareholders shall grant any proxy or enter into, or agree to be bound by, any voting trust or voting agreement with respect to the Common Stock, nor shall any of the Shareholders enter into any agreement, contract or arrangement with any Person with respect to any shares of Common Stock that would adversely affect its ability to perform its obligations under this Agreement in any material respect.

ARTICLE IX

Company Governance and Operations

9.1 The Board of Directors. The business and affairs of the Company shall be managed under the direction of the Board. So long as this Agreement has not been terminated pursuant to its terms, the Board shall consist of not more than five members.

9.2 Financial Information. In addition to such internal audits and credit examinations as may be undertaken by Zions and ZFNB’s personnel, for each

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fiscal year commencing with the fiscal year ending December 31, 2004 to and including the fiscal year ending December 31, 2011, ZFNB shall cause its independent accountants to perform an annual audit of the financial statements of the Company. Such financial statements shall be prepared in accordance with GAAP applied on a consistent basis. The cost of the internal and external audits and the credit examinations shall be borne by the Company. Taxes in respect of income shall be computed by the Company and its consolidated subsidiaries as if it were a separate entity, in accordance with a tax sharing policy conforming to Zions’ practices with its other subsidiaries.

9.3 Guaranteed Investment. Subject to the fiduciary duties and obligations of its board of directors, ZFNB hereby agrees to further the development of the Business by investing in the Company at the request of Feiger (i) up to twelve million dollars ($12,000,000.00) during the period between the Closing Date and the first anniversary of the Closing Date, (ii) up to ten million dollars ($10,000,000.00) during the period between the first anniversary of the Closing Date and the second anniversary of the Closing-Date, and (iii) up to eight million dollars ($8,000,000.00) during the period between the second anniversary of the Closing Date and the third anniversary of the Closing Date (collectively, the “Guaranteed Investment”); provided, however, that ZFNB’s and its Affiliates’ obligations with respect to the Guaranteed Investment shall terminate and shall be deemed discharged upon the earlier of (i) the termination of Feiger’s employment with Zions for any reason, including his death or disability and (ii) the third anniversary of the Closing Date. Feiger may request that ZFNB make a contribution to the Company pursuant to this Section 9.3 not more than once during any period of 30 consecutive days and in amounts not less than one million dollars

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($1,000,000.00). To the extent that any portion of the Guaranteed Investment for each of the first two years following the Closing Date is not requested by Feiger during such period, such portion of the Guaranteed Investment for such period will be added to the amount of the Guaranteed Investment for the following year; provided, however, that the Company will not be entitled to any portion of the Guaranteed Investment not requested by Feiger as of the third anniversary of the Closing Date. Both (i) contributions made to the Company and included in the Contributed Assets and (ii) acquisitions of assets or businesses made pursuant to Section 3.3 hereof shall be excluded from amounts counted towards satisfaction of ZFNB’s obligations with respect to the Guaranteed Investment.

9.4 Loans and Deposits.

(a) Preexisting PCS Loans and Deposits. At any time after the Closing Date, but in no event more frequently than once per fiscal quarter of Zions, the Company may purchase from Zions the right (the “Spread Income Right”) to receive from Zions all current and future net interest income and applicable fees, as described in Exhibit H hereto (“Income After Capital Charges”), with respect to certain loan and deposit assets held by ZFNB and its Affiliates and not attributable to the Company or its activities (“Preexisting PCS Loans and Deposits”). Payment by the Company to Zions for the Spread Income Right with respect to any Pool of Preexisting Loans and Deposits shall be made at the time of purchase in cash and in an amount equal to the Pool Contribution Value (each of “Pool” and “Pool Contribution Value” as defined in Exhibit D hereto).

(b) New PCS Loans and Deposits. With respect to any new loans, deposits and other activities made, held or conducted by ZFNB or its Affiliates in

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connection with or on behalf of customers and clients of the Company after the Closing Date which are not Preexisting PCS Loans and Deposits (“New PCS Loans and Deposits”, and, together with Preexisting PCS Loans and Deposits, “PCS Loans and Deposits”), the Company shall have a Spread Income Right with respect to such New PCS Loans and Deposits.

(c) Recording of PCS Loans and Deposits. Upon (i) the purchase by the Company of the Spread Income Right with respect to Preexisting PCS Loans and Deposits or (ii) the making, origination, establishment, commencement or opening of New PCS Loans and Deposits, Zions shall take all necessary measures to ensure that such PCS Loans and Deposits made, held or conducted by ZFNB or its Affiliates shall be recorded, coded or marked in a manner such that such PCS Loans and Deposits are identifiable as PCS Loans and Deposits, the related Spread Income Right of which the Company is entitled. At the time of the contribution to the Company by ZFNB or its Affiliates of the Spread Income Right with respect to any Preexisting PCS Loans and Deposits, ZFNB and the Company shall cooperate in the determination and recordation of (i) the Pool Contribution Value, (ii) the Pool Contribution Multiple and (iii) the Annualized Contribution Net Spread, each as defined in Exhibit D hereto, applicable to such Preexisting PCS Loans and Deposits.

(d) Payment of Income After Capital Charges. Within 30 days after the end of each fiscal quarter of Zions, either Zions or ZFNB, at their election, shall pay to the Company in cash the Income After Capital Charges attributable to all PCS Loans and Deposits during the preceding fiscal quarter of Zions.

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9.5 Other Services. For so long as this Agreement remains in effect, the Company will pay to ZFNB and its Affiliates, for any and all services provided to the Company in connection with the Business and not covered by Section 9.4 hereof or otherwise relating to PCS Loans and Deposits, including, but not limited to, general, administrative and processing services related to trust, insurance and brokerage services, at the market rate and on an arm’s length basis.

9.6 Company Policies. PCS LLC (a), acknowledges that the Company’s practices and policies as of the date hereof with respect to accounting, credit (including provisioning for credit losses and the adequacy of the allowance for such losses), risk management (including liquidity, interest rate risk and capital management), internal controls and similar matters may not necessarily conform to the practices and policies applicable to Zions’ and ZFNB’s other subsidiaries generally and (b) agrees that ZFNB has the right in its sole discretion at any time to require the Company to implement new practices and policies which ZFNB deems to be prudent or otherwise warranted under the circumstances and in accordance with safe and sound banking practices.

9.7 Limitations on Ownership; Additional Common Stock. The Company may issue additional Common Shares (i) to third parties and (ii) to PCS LLC for consideration to be mutually agreed by the Company and PCS LLC; provided, however, that in no event shall (i) PCS LLC’s percentage ownership in the outstanding Common Stock exceed ten percent (10%) or (ii) any Investor’s individual Proportionate Interest exceed five percent (5%) of the outstanding Common Stock.

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9.8 Asset Sales. ZFNB agrees to consult with PCS LLC prior to the sale not in the ordinary course of business by the Company to ZFNB or to any of its Affiliates of any assets.

ARTICLE X

Transfers of Capital Stock

10.1 Prohibition Against Transfers. Without the prior written consent of ZFNB, which consent will not be unreasonably withheld, PCS LLC may not sell, assign, transfer, pledge or otherwise dispose of (collectively, a “Transfer”) any Common Stock other than as provided in this Article X. Any purported Transfer of Common Stock in violation of this Article X shall be null and void and of no effect whatsoever.

10.2 Regulatory Compliance. Notwithstanding any other provision of this Agreement, neither ZFNB nor PCS LLC may Transfer any shares of Common Stock otherwise than in compliance with the Securities Act and all other applicable laws.

10.3 ZFNB Right of First Refusal.

(a) Grant. ZFNB is hereby granted a right of first refusal (the “First Refusal Right”), exercisable in connection with any proposed Transfer of Common Stock by PCS LLC.

(b) Notice of Intended Transfer. If PCS LLC desires to accept a bona fide offer from a creditworthy third party (a “Prospective Transferee”) for any or all of such PCS LLC’s Common Stock (the stock subject to such offer to be hereinafter called the “Offered Stock”), PCS LLC shall promptly deliver to ZFNB written notice (the “Disposition Notice”) of the terms and conditions of the offer, including the

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purchase price, the number of shares of Offered Stock to be transferred and the identity of a Prospective Transferee.

(c) Exercise of First Refusal Right. ZFNB (or its assignees) shall, for a period of thirty (30) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Offered Stock specified in the Disposition Notice upon substantially the same terms and conditions specified therein. Such right shall be exercisable by delivery of written notice (the “Exercise Notice”) to PCS LLC prior to the expiration of the thirty (30) day exercise period. If such right is exercised with respect to all of the Offered Stock specified in the Disposition Notice, then ZFNB (or its assignees) shall effect the repurchase of the Offered Stock, including payment of the purchase price, not more than ten (10) business days after delivery of the Exercise Notice; and at such time PCS LLC shall deliver to ZFNB the certificates representing the Offered Stock to be repurchased, each certificate to be properly endorsed for Transfer to ZFNB.

10.4 Transfer by ZFNB. Except to an Affiliate of Zions or as provided in this Section 10.4, ZFNB may not Transfer shares of Common Stock or Preferred Stock beneficially owned by it unless (i) ZFNB is acquired in a merger or other business combination (in which case this Agreement shall be expressly assumed by the surviving entity), (ii) PCS LLC, in its sole discretion, consents in writing prior to such Transfer or (iii) ZFNB Transfers all (but not less than all) of its shares of Common Stock and Preferred Stock beneficially owned by it to a Person in a bona fide transaction at arm’s-length and simultaneously with such Transfer by ZFNB, and as a condition of ZFNB’s Transfer, the transferee of such shares of Common Stock shall offer to purchase from the Investors their shares of Common Stock in accordance with this Section 10.4 at the same

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price being received by ZFNB for its Common Stock and for the same type of consideration if the purchase price is paid solely in cash, or, if the purchase price is made in whole or in part in securities of the acquiring person, PCS LLC shall receive for each share of Common Stock the same consideration received by ZFNB for each of its shares of Common Stock provided that the receipt of any securities would be a non-taxable event to PCS LLC. If the receipt of securities would be taxable to PCS LLC and such securities are publicly traded such that there is a readily ascertainable market price for such securities, then PCS LLC shall be entitled to receive in U.S. dollars a cash purchase price per share of Common Stock equal to the sum of any cash and the value of the securities to be received by ZFNB for each share of Common Stock as calculated in accordance with the agreement entered into with the acquiring person and valued as of the date of the execution of the agreement. As a condition to the closing of any Transfer pursuant to this Section 10.4(iii), an Investment Bank selected by PCS LLC with the approval of ZFNB, which approval shall not be unreasonably withheld, shall deliver, at ZFNB’s expense and if requested by PCS LLC, a fairness opinion to the Board that the consideration to be received for such Common Stock in such Transfer is fair to PCS LLC from a financial point of view. PCS LLC shall not be entitled to any consideration pursuant to this Section 10.4(iii) unless such Transfer is consummated.

10.5 ZFNB Calls.

(a) ZFNB shall give to PCS LLC written notice (the “Call Notice”), which shall be irrevocable, and shall repurchase the Common Shares beneficially owned by PCS LLC (the “Buy-Back Securities”) at the Buy-Back Price immediately prior to

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the consummation of a transaction which would result in a Change in Control of either Zions or ZFNB.

(b) In the event that Feiger’s employment with Zions is terminated for Just Cause, other than for Material Breach by Zions, or at the end of the Period of Employment after the delivery of a Non-Renewal Notice by Feiger to Zions (as such terms are defined in the Employment Agreement) pursuant to Section 6(c) of the Employment Agreement, ZFNB shall deliver a Call Notice to PCS LLC and repurchase from PCS LLC, and PCS LLC agrees to sell to ZFNB, Feiger’s Proportionate Interest for the Buy-Back Price of such Common Shares at any time within 180 days after the date of termination of Feiger’s employment.

(c) In the event that any Member’s employment with the Company is terminated for any reason, including death or disability, ZFNB shall deliver a Call Notice to PCS LLC and repurchase such Member’s Proportionate Interest from PCS LLC, and PCS LLC agrees to sell such Member’s Proportionate Interest to ZFNB, for the Buy-Back Price of such Common Shares within:

(i) 180 days after the date of termination of such Member’s employment with the Company in the event that such date of termination is on or prior to the third anniversary of the Closing Date; and

(ii) 180 days after the next anniversary of the Closing Date following the date of termination of such Member’s employment with the Company in the event that such date of termination is after the third anniversary of the Closing Date.

(d) In the event that Feiger’s employment with Zions is terminated without Just Cause pursuant to Section 6(a) of the Employment Agreement or for

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Material Breach by Zions pursuant to Section 6(b) of the Employment Agreement, ZFNB shall repurchase from PCS LLC, and PCS LLC agrees to sell to ZFNB, Feiger’s Proportionate Interest at the Buy-Back Price for such Common Shares not later than the earlier of (i) the first anniversary of the date of termination of Feiger’s employment and (ii) the fifth anniversary of the Closing Date; provided, that ZFNB shall deliver to PCS LLC a Call Notice with respect to such repurchase no earlier than 90 days prior to the first anniversary of the date of termination of Feiger’s employment or the fifth anniversary of the Closing Date, as the case may be.

(e) In the event that Feiger’s employment with Zions is terminated as a result of death or disability pursuant to Section 6(d) of the Employment Agreement, ZFNB shall deliver a Call Notice to PCS LLC and repurchase Feiger’s Proportionate Interest at the Buy-Back Price within 180 days after the date of termination of Feiger’s employment.

(f) At any time after the eighth anniversary of the Closing Date, ZFNB may give to PCS LLC a Call Notice with respect to all of the Buy-Back Securities, which Buy-Back Securities ZFNB shall repurchase, and PCS LLC agrees to sell such Buy-Back Securities to ZFNB, at the Buy-Back Price.

The Buy-Back Price shall be paid in cash. PCS LLC and ZFNB recognize that their obligations under this Section 10.5 are unconditional.

10.6 PCS LLC’s Put. At any time (i) after the fifth anniversary of the Closing Date and for a period of six months thereafter, (ii) after the sixth anniversary of the Closing Date and for a period of six months thereafter, and (iii) after the seventh anniversary of the Closing Date and for a period of six months thereafter (each, a “Buy-Back Period”),

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PCS LLC may give to ZFNB written notice (the “Put Notice”, and together with the Call Notice, the “Buy-Back Notice”), which shall be irrevocable, of PCS LLC’s intention to exercise its right under this Section 10.6 to require ZFNB to purchase all of the Buy-Back Securities at the Buy-Back Price. The Buy-Back Price shall be paid in cash at a Buy-Back Closing in accordance with Section 10.7 hereof. PCS LLC and ZFNB recognize that their obligations under this Section 10.6 are unconditional.

10.7 Buy-Back Payment; Buy-Back Closings.

(a) Payment for and delivery of the Buy-Back Securities shall be made in three installments and shall occur at three closings (each, a “Buy-Back Closing”). The first Buy-Back Closing shall occur at such location and on such date as shall be agreed in writing by PCS LLC and ZFNB; provided, however, that such first Buy-Back Closing shall occur no later than 60 days after the giving of a conclusive Company Valuation (as defined below). At the first Buy-Back Closing, PCS LLC shall deliver to ZFNB the certificates representing one third ( ¹/3) of the Buy-Back Securities outstanding as of the date of such first Buy-Back Closing, registered in the name of PCS LLC and duly endorsed in favor of ZFNB, and ZFNB shall make payment of one third ( ¹/3) of the Buy-Back Price by wire transfer of immediately available funds to an account or accounts designated by PCS LLC.

(b) The second Buy-Back Closing shall occur on the first anniversary of the first Buy-Back Closing or on such other date as shall be agreed in writing by PCS LLC and ZFNB. At any time before the date which is 30 days prior to the first anniversary of the first Buy-Back Closing, both ZFNB and PCS LLC shall be entitled to request a new Company Valuation (as defined below) by giving notice (a “Revaluation

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Notice”) to the other party; provided, however, that PCS LLC shall not have any right to request a new Company Valuation in the event that, as of the deadline for delivery of the Revaluation Notice, Feiger’s employment has been terminated by Zions for Just Cause or at the end of the Period of Employment after the delivery of a Non-Renewal Notice by Feiger to Zions pursuant to Section 6(c) of the Employment Agreement. If a Revaluation Notice is delivered by either party, a new Company Valuation (a “Company Revaluation”) shall be performed in accordance with the procedures set forth in Section 10.8 hereof at the expense of the party delivering the Revaluation Notice. If the Company Revaluation is more than fifteen percent (15%) greater than or less than the previous Company Valuation, the portion of the Buy-Back Price payable at the second Buy-Back Closing shall reflect the Company Revaluation; provided, however, that if the Company Revaluation is not more than fifteen percent (15%) greater than or less than the previous Company Valuation, the portion of the Buy-Back Price payable at the second Buy-Back Closing shall reflect the original Company Valuation performed prior to the first Buy-Back Closing. At the second Buy-Back Closing, PCS LLC shall deliver to ZFNB the certificates representing one half ( ¹/2) of the Buy-Back Securities outstanding as of the date of such second Buy-Back Closing, registered in the name of PCS LLC and duly endorsed in favor of ZFNB, and ZFNB shall make payment of one half ( ¹/2) of the Buy-Back Price, as determined in accordance with the previous sentence by reference to the applicable Company Valuation or Company Revaluation, as case may be, by wire transfer of immediately available funds to an account or accounts designated by PCS LLC.

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(c) The third Buy-Back Closing shall occur on the second anniversary of the first Buy-Back Closing or on such other date as shall be agreed in writing by PCS LLC and ZFNB. At any time before the date which is 30 days prior to the second anniversary of the first Buy-Back Closing, both ZFNB and PCS LLC shall be entitled to request a Company Revaluation by giving a Revaluation Notice to the other party; provided, however, that PCS LLC shall not have any right to request a Company Revaluation in the event that, as of the deadline for delivery of the Revaluation Notice, Feiger’s employment has been terminated by Zions for Just Cause or at the end of the Period of Employment after the delivery of a Non-Renewal Notice by Feiger to Zions pursuant to Section 6(c) of the Employment Agreement. If a Revaluation Notice is delivered by either party, a Company Revaluation shall be performed in accordance with the procedures set forth in Section 10.8 hereof at the expense of the party delivering the Revaluation Notice. If the Company Revaluation is more than fifteen percent (15%) greater than or less than the previous Company Valuation or Company Revaluation, the portion of the Buy-Back Price payable at the third Buy-Back Closing shall reflect the new Company Revaluation; provided, however, that if the Company Revaluation is not more than fifteen percent (15%) greater than or less than the previous Company Valuation or Company Revaluation, the portion of the Buy-Back Price payable at the third Buy-Back Closing shall reflect the original Company Valuation performed prior to the first Buy-Back Closing or, if the original Company Valuation is superseded by a Company Revaluation pursuant to Section 10.7(b) hereof, such Company Revaluation. At the third Buy-Back Closing, PCS LLC shall deliver to ZFNB the certificates representing all of the Buy-Back Securities outstanding as of the date of the second anniversary of the first Buy-Back

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Closing, registered in the name of PCS LLC and duly endorsed in favor of ZFNB, and ZFNB shall make payment of the Buy-Back Price, as determined in accordance with the previous sentence by reference to the applicable Company Valuation or Company Revaluation, as the case may be, by wire transfer of immediately available funds to an account or accounts designated by PCS LLC.

10.8 Valuation Procedures.

(a) Within five days after delivery of a Buy-Back Notice or Revaluation Notice, except in the case of a valuation in connection with the termination of the employment of a Member or Members pursuant to Section 10.5(c) hereof and not otherwise being performed pursuant to PCS LLC’s exercise of its put right pursuant to Section 10.6 hereof, ZFNB and PCS LLC (acting together) shall each hire an Investment Bank to provide a valuation of all of the shares of Common Stock (the “Company Valuation”) as of the date of such Buy-Back Notice or Revaluation Notice. Such Company Valuation shall be conducted independently of, and without reference to, any previously performed Company Valuation. For purposes of this Section 10.8, the Company Valuation shall be an amount equal to (but in no event less than US$1.00) the aggregate fair market value of all of the outstanding shares of Common Stock (including Common Stock beneficially owned by ZFNB) as of the date of the Buy-Back Notice or Revaluation Notice, as the case may be, based on the estimated aggregate U.S. dollar value of all shares of Common Stock on the assumption that the Common Stock is being traded on the Nasdaq as an independent going concern and not in the context of a sale of the Company. If the greater of the Investment Banks’ two valuations is less than one hundred ten percent (110%) of the lesser valuation, the Company Valuation shall be

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deemed to be the mean of the two valuations. If, within 30 days of the commencement of their engagement (the “Engagement Period”), the two Investment Banks are unable to arrive at valuations which may be averaged in the manner contemplated by the previous sentence, then (i) each Investment Bank shall furnish its own Company Valuation and (ii) ZFNB and PCS LLC shall choose a third Investment Bank (the “Tie Breaker”), which shall be engaged to select as the conclusive Company Valuation either of the Company Valuations proposed by the initial Investment Banks but not a third company valuation. If ZFNB and PCS LLC are unable to agree on the selection of the Tie Breaker within 10 business days after the end of the Engagement Period, then ZFNB shall recommend three Independent Investment Banks to PCS LLC and PCS LLC shall select one of such Investment Banks within five business days of such recommendation to act as the Tie Breaker to provide the conclusive Company Valuation. Within 20 business days after its engagement, the Tie Breaker shall deliver to each of ZFNB and PCS LLC the final, conclusive Company Valuation. In making such Company Valuation, the Tie Breaker shall observe the valuation parameters set forth in the second and third sentences of this Section 10.8(a) and shall consult with, and listen to the views of, PCS LLC and ZFNB and their respective Investment Banks. Except in the case of a Company Revaluation, the fees and expenses of the initial Investment Banks shall be paid by ZFNB or PCS LLC, as the case may be. If it is necessary to retain a Tie Breaker, then ZFNB shall pay 50% and PCS LLC shall pay 50% of the Tie Breaker’s fees and expenses incurred in connection with its providing the final, conclusive Company Valuation.

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(b) Each of ZFNB and PCS LLC agrees to provide the Tie-Breaker with such indemnification and hold harmless provisions as the Tie-Breaker reasonably requests.

(c) In the case of a valuation in connection with the termination of the employment of a Member or Members pursuant to Section 10.5(c)(1) hereof, the Company Valuation shall be performed by Zions in good faith and in a manner consistent with Zions’ practice with respect to performing valuations of other of its subsidiaries, and such Company Valuation performed by Zions shall be conclusive and binding on the parties hereto and the Members in the absence of manifest error. In the case of a valuation in connection with the termination of the employment of a Member or Members pursuant to Section 10.5(c)(ii) hereof, unless such valuation is also to be performed pursuant to PCS LLC’s exercise of its put right pursuant to Section 10.6 hereof, (i) the Company Valuation shall be performed by a single Investment Bank to be mutually agreed by ZFNB and PCS LLC and (ii) ZFNB shall pay 50% and PCS LLC shall pay 50% of the Investment Bank’s fees and expenses incurred in connection with its providing the Company Valuation.

(d) For purposes of this Section 10.8, the “Buy-Back Price” shall consist of (A) the sum of PCS LLC’s Proportionate Share of the Company Valuation or Company Revaluation with respect to the Common Stock (without discount for a minority interest), minus (B) the amount of any dividends declared and paid to PCS LLC from the date of the Buy-Back Notice or Revaluation Notice up to and including the date of the applicable Buy-Back Closing.

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10.9 Legends. All certificates for shares of the Common Stock issued to PCS LLC pursuant to this Agreement shall bear a legend substantially in the form set forth below:

ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF A HOLDER OF SUCH SHARES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED IN A STOCK PURCHASE AND SHAREHOLDER AGREEMENT, DATED AS OF JUNE 1, 2004. THE COMPANY WILL NOT TRANSFER ON ITS BOOKS ANY CERTIFICATES REPRESENTING SHARES NOR ISSUE ANY CERTIFICATES IN LIEU THEREOF UNLESS ALL THE CONDITIONS FOR TRANSFER CONTAINED IN SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH, AND A PURPORTED TRANSFER NOT IN ACCORDANCE WITH THE TERMS THEREOF SHALL BE NULL AND VOID AND OF NO EFFECT. THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES.

ARTICLE XI

Termination

11.1 Mutual Consent. Prior to the Closing the parties may terminate this Agreement at any time by mutual written agreement.

11.2 Termination by Either Party. ZFNB or PCS LLC may terminate this Agreement, by notice to the other, if:

(a) any application or notice for regulatory approval or exemption filed with any regulatory agency or authority for the acquisition of the Common Stock by PCS LLC is denied or withdrawn; or

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(b) a court or other governmental authority of competent jurisdiction shall have issued an order, writ, injunction or decree or shall have taken any other action permanently restraining or otherwise prohibiting the acquisition of the Common Stock pursuant to this Agreement, and such order, writ, injunction, decree or other action shall become final and non-appealable.

11.3 Termination by PCS LLC. PCS LLC may terminate this Agreement if any condition set forth in Article VI shall be incapable of being satisfied.

11.4 Termination by-Zions or ZFNB. Zions or ZFNB may terminate this Agreement if any condition set forth in Article VII shall be incapable of being-satisfied.

11.5 Liability for Termination. Termination of this Agreement shall not relieve any party of any liability for any breach, default or non-performance under this Agreement.

ARTICLE XII

Indemnification

12.1 Indemnification by ZFNB.

(a) Following the Closing Date, ZFNB will indemnify the Company and its directors, officers and employees against, and agrees to hold each of them harmless from, any claim or Loss asserted against or incurred or suffered by them and reasonably attributable to the creation or management prior to the Closing Date of any trusts or other fiduciary relationships included among the Contributed Assets or for any cause of action which arises, directly or indirectly, out of events or actions which occur prior to the Closing Date.

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(b) Except for any cause of action which arises, directly or indirectly, out of events or actions which occur prior to the Closing Date, ZFNB will not be liable under Section 12.1(a) with respect to any Loss to the extent arising from the Company’s failure to take, or cause to be taken, such action as the Company in the prudent management of its business would customarily pursue to protect its interests and the interests of ZFNB and its Affiliates or otherwise to mitigate the amount of the Loss. Without limiting the rights of ZFNB and its Affiliates and the obligations of the Company set forth elsewhere in this Agreement, the Company agrees to pursue, to the extent the Company in the prudent management of its business would customarily pursue:

(i) those remedies available as trustee, independent fiduciary, investment advisor or similar fiduciary under the governing instruments for such relationship for the payment of any claims, damages, charges, costs, expenses, losses and liabilities;

(ii) the granting of allowances by a court in any proceeding;

(iii) reimbursement of any recovery by any beneficiaries to any trust in any proceeding; and/or

(iv) any other reasonable source for payment of any items for which the Company is entitled to indemnification under Section 12.1 (a), including, but not limited to, the insurance policies of ZFNB and the Company.

12.2 Defense of Claims.

(a) The Company will give notice (setting forth in reasonable detail the facts and circumstances pertaining thereto and the basis for its right to

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indemnification) to ZFNB as soon as practicable after the Company becomes aware of any fact, condition or event that may give rise to Losses for which indemnification may be sought under this Article XII. Without limiting the generality of the preceding sentence, if any third party notifies the Company of a claim that may give rise to Losses for which indemnification may be sought under this Article XII, including by way of service of a complaint or summons (a “Third-Party Claim”), the Company will give notice to ZFNB as promptly as practicable but in no event later than 5 days after the service of a complaint or summons. The failure of the Company to give timely notice will not affect rights to indemnification under this Article XII, except to the extent that ZFNB is actually prejudiced by the failure.

(b) If ZFNB notifies the Company that ZFNB agrees that it is obligated to indemnify the Company under this Article XII in connection with a Third-Party Claim, then the ZFNB will be entitled, if it so elects, to take control of the defense and investigation of the Third-Party Claim and to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party’s expense; provided that, if the Company reasonably determines in good faith that its interest with respect to a Third-Party Claim cannot appropriately be represented by ZFNB, the Company will have the right to assume control of the defense of such claim. Regardless of which party is controlling the defense of any Third-Party Claim, (1) both ZFNB and the Company will act in good faith; (2) no settlement of such claim may be agreed to without the written consent of both ZFNB and the Company, which consent will not be unreasonably withheld; and (iii) the fees and expenses of one firm of counsel retained to defend such claim (in respect of all indemnified parties) will be payable by ZFNB. The controlling

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party will deliver to the other party, upon request, copies of all correspondence, pleadings, motions, briefs, appeals or other written statements relating to or submitted in connection with the defense of any Third Party Claim, and timely notices of, and the right to participate in (as an observer), any hearing or other court proceeding relating to such claim. The Company will cooperate in all reasonable respects with ZFNB and such attorneys in the investigation, trial and defense of any Third-Party Claim and any related appeal; provided that the Company may, at its own cost, participate in the investigation, trial and defense of any Third-Party Claim and any related appeal.

(c) Without limiting the rights and obligations provided elsewhere in this Article XII, and subject to the procedures for indemnification claims set forth in this Section 12.2, each of ZFNB and the Company will act in good faith, will use the same discretion in the use of personnel and the incurring of expenses it would use if it were engaged and acting entirely at its own cost and for its own account, and will consult regularly with the other party regarding the conduct of any proceedings or the taking of any action for which indemnification may be sought.

ARTICLE XIII

Miscellaneous

13.1 Interpretation. The table of contents and headings contained in this Agreement are for ease of reference only and shall not affect the meaning or interpretation of this Agreement. Whenever the words “includes”, “includes”, or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation”. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.

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13.2 Waiver and Amendment. Any provision of this Agreement may be (i) waived in writing by the party benefited by the provision or (ii) amended or modified at any time by an agreement in writing between Zions and PCS LLC.

13.3 Counterparts. This Agreement may be executed in counterparts each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same instrument.

13.4 Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Utah without giving effect to Utah conflicts of law principles and, to the extent applicable, the laws of the United States.

13.5 Arbitration.

(a) Any claim or controversy (“Dispute”) between or among the parties and their employees, agents, affiliates, and assigns, including, but not limited to, Disputes arising out of or relating to this Agreement, this Section 13.5 (“arbitration clause”), or, other than the Employment Agreement, any related agreements or instruments relating hereto or delivered in connection herewith (“Related Documents”), and including, but not limited to, a Dispute based on or arising from an alleged tort, shall at the request of any party be resolved by binding arbitration in accordance with the applicable arbitration rules of the American Arbitration Association (the “Administrator”). The provisions of this arbitration clause shall survive any termination, amendment, or expiration of this Agreement or Related Documents. The provisions of this arbitration clause shall supercede any prior arbitration agreement between or among the parties.

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(b) The arbitration proceedings shall be conducted in a city mutually agreed by the parties. Absent such an agreement, arbitration will be conducted in Salt Lake City, Utah. The Administrator and the arbitrator(s) shall have the authority to the extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrators)’ award issued within 150 days of the filing of the Dispute with the Administrator. The arbitrator(s) shall have the authority to impose sanctions on any party that fails to comply with time periods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. The arbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this Agreement, this arbitration clause, or Related Documents, including any claim or controversy regarding the arbitrability of any Dispute. All limitations periods applicable to any Dispute or defense, whether by statute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute or defense is barfed by a limitations period and, if so, to summarily enter an award dismissing any Dispute or defense on that basis. The doctrines of compulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that a party must state as a counterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of the Dispute.

(c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitrator shall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a majority vote of the three

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arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be a practicing attorney. The arbitrators) shall award to the prevailing party recovery of all costs and fees (including attorneys fees and costs, arbitration administration fees and costs, and arbitrator(s)’ fees). The arbitrators), either during the pendency of the arbitration proceeding or as part of the arbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief.

(d) Judgment upon an arbitration award may be entered in any court having jurisdiction.

(e) Notwithstanding the applicability of any other law to this Agreement, the arbitration clause, or Related Documents between or among the parties, the Federal Arbitration Act, 9 U.S.C. § 1 et seq., shall apply to the construction and interpretation of this arbitration clause. If any provision of this arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect.

13.6 Expenses. Except as set forth herein, each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby.

13.7 Notices. All notices, requests, acknowledgments and other communications hereunder to a party shall be in writing and shall be deemed to have been duly given when delivered by hand, first-class mail, registered or certified with return receipt requested, overnight carrier or telecopy (with receipt confirmed by

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telephone) to such party at its address set forth below or such other address as such party may specify by notice to the other party hereto.

If to Zions, ZFNB or the Company:

Zions Bancorporation

One South Main, Suite 1380

Salt Lake City, Utah 84111

Telecopy: (801) 524-2129

Attention: Harris H. Simmons

With a copy to:

Sullivan & Cromwell LLP

1888 Century Park East

Los Angeles, California 90067-1725

Telecopy: (310) 712-8800

Attention: Stanley F. Farrar

And to:

Callister Nebeker & McCullough, a Professional Corporation

Gateway Tower East, Suite 900

10 East South Temple

Salt Lake City, Utah 84133

Telecopy: (801) 364-9127

Attention: Laurie S. Hart

If to PCS LLC or George M. Feiger:

George M. Feiger

189 Cliff Road

Wellesley, Massachusetts 02481

Telecopy: (510) 808-2741

With a copy to:

Holme Roberts & Owen LLP

299 South Main Street, Suite 1800

Salt Lake City, Utah 84111-2263

Telecopy: (801) 521-9639

Attention: Stuart A. Fredman

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13.8 Entire Agreement, Etc. This Agreement represents the entire understanding of the parties hereto with respect to the matters contemplated hereby and supersedes any and all other oral or written agreements heretofore made. All terms and previsions of the Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Nothing in this Agreement is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement.

13.9 Assignment. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties. In the event that ZFNB is acquired in a merger or other business combination and does not exercise its right to repurchase the outstanding Buy-Back Securities pursuant to Section 10.5 hereto, this Agreement shall be expressly assumed by the surviving entity.

13.10 Survival of Representations and Warranties. The representations and warranties contained in Articles IV and V hereof shall survive the Closing for a period of one year.

13.11 Termination. This Agreement shall terminate and cease to be in effect at such time as PCS LLC no longer beneficially owns any Common Stock.

13.12 Severability. If one or more provisions of this Agreement are determined to be unenforceable under applicable law, such provisions shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

ZIONS BANCORPORATION
By	/s/ Harris H. Simmons
	Name:	Harris H. Simmons
	Title:	Chairman, President and Chief Executive Officer
ZIONS FIRST NATIONAL BANK
By	/s/ Doyle L. Arnold
	Name:	Doyle L. Arnold
	Title:	Executive Vice President
WELMAN HOLDINGS, INC.
By	/s/ Harris H. Simmons
	Name:	Harris H. Simmons
	Title:	Chairman of the Board of Directors
PCS WEALTH MANAGEMENT, LLC
By	/s/ George M. Feiger
	Name:	George M. Feiger
	Title:	Managing Member

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EX-12

EXHIBIT 12

RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

The following table sets forth certain information regarding our consolidated ratios of earnings to fixed charges and earnings to fixed charges and preferred stock dividends. Fixed charges represent interest expense, a portion of rent expense representative of interest, trust-preferred securities related expense and amortization of debt issuance costs.

(Dollar amounts in thousands)	Year ended December 31,
	2010			2009			2008			2007			2006
Fixed charges:
Interest expense excluding deposits	$	395,961			191,496			281,993			346,022			303,689
Portion of rents representative of an interest factor		19,886			19,720			19,093			17,994			17,182
Fixed charges excluding interest on deposits		415,847			211,216			301,086			364,016			320,871
Interest on deposits		196,495			426,298			720,260			977,352			749,708
Fixed charges including interest on deposits	$	612,342			637,514			1,021,346			1,341,368			1,070,579
Fixed charges and preferred stock dividends:
Interest expense excluding deposits	$	395,961			191,496			281,993			346,022			303,689
Portion of rents representative of an interest factor		19,886			19,720			19,093			17,994			17,182
Preferred stock dividend requirement		122,884			102,969			24,424			21,157			5,927
Fixed charges and preferred stock dividends excluding interest on deposits		538,731			314,185			325,510			385,173			326,798
Interest on deposits		196,495			426,298			720,260			977,352			749,708
Fixed charges and preferred stock dividends including interest on deposits	$	735,226			740,483			1,045,770			1,362,525			1,076,506
Earnings:
Income from continuing operations before income taxes	$	(403,168	)		(1,623,020	)		(314,698	)		737,498			912,924
Equity in undistributed earnings of unconsolidated subsidiaries		(6,757	)		(6,785	)		(10,105	)		(11,731	)		(5,800	)
Fixed charges excluding interest on deposits		415,847			211,216			301,086			364,016			320,871
Earnings excluding interest on deposits		5,922			(1,418,589	)		(23,717	)		1,089,783			1,227,995
Interest on deposits		196,495			426,298			720,260			977,352			749,708
Earnings including interest on deposits	$	202,417			(992,291	)		696,543			2,067,135			1,977,703
Ratio of earnings to fixed charges:
Excluding interest on deposits		0.01			(a	)		(a	)		2.99			3.83
Including interest on deposits		0.33			(a	)		(a	)		1.54			1.85
Ratio of earnings to fixed charges and preferred stock dividends:
Excluding interest on deposits		0.01			(a	)		(a	)		2.83			3.76
Including interest on deposits		0.28			(a	)		(a	)		1.52			1.84
(a)    Ratio is less than one; earnings are inadequate to cover fixed charges. The dollar amount of the coverage deficiency for the affected periods is presented below. The amount is the same whether including or excluding interest on deposits:
Coverage deficiency – earnings to fixed charges				$	(1,629,805	)		(324,803	)
Coverage deficiency – earnings to fixed charges and preferred stock dividends					(1,732,774	)		(349,227	)

EX-21

EXHIBIT 21

LIST OF SUBSIDIARIES

ZIONS BANCORPORATION

AT DECEMBER 31, 2010

SUBSIDIARY	STATE OR JURISDICTION OF INCORPORATION/ORGANIZATION
Zions First National Bank	Federally chartered doing business in Utah and Idaho
California Bank & Trust	California
Amegy Corporation	Texas
National Bank of Arizona	Federally chartered doing business in Arizona
Nevada State Bank	Nevada
Vectra Bank Colorado	Federally chartered doing business in Colorado and New Mexico
The Commerce Bank of Washington	Federally chartered doing business in Washington
The Commerce Bank of Oregon	Oregon
Cash Access, Inc.	Utah
Great Western Financial Corporation	Utah
PPS Data, LLC	Nevada
Stockmen’s (AZ) Statutory Trust II (not consolidated)	Connecticut
Stockmen’s (AZ) Statutory Trust III (not consolidated)	Connecticut
Welman Holdings, Inc.	Utah
Zions Capital Trust B (not consolidated)	Delaware
Zions Insurance Agency, Inc.	Utah
Zions Management Services Company	Utah
ZMFU II, 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:

(i) Registration Statement (Form S-8 No. 333-36205) and related Prospectus pertaining to Zions Bancorporation Employee Investment Savings Plan, now known as the Zions Bancorporation Payshelter 401(k) and Employee Stock Ownership Plan;

(ii) Registration Statement (Form S-8 No. 333-74179) and related Prospectus pertaining to Zions Bancorporation 1996 Non-Employee Directors Stock Option Plan;

(iii) Registration Statement (Form S-8 No. 333-79699) and related Prospectus pertaining to Zions Key Employee Incentive Stock Option Plan;

(iv) Registration Statement (Form S-8 No. 333-124696) and related Prospectus pertaining to Zions Bancorporation 2005 Stock Option and Incentive Plan; and

(v) Registration Statement (Form S-8 No. 333-130222) and related Prospectus pertaining to Amegy Bancorporation 1989 Stock Option Plan, Amegy Bancorporation 1993 Stock Option Plan, as Amended and Restated, Amegy Bancorporation 1996 Stock Option Plan, as Amended and Restated, Amegy Bancorporation 1993 Stock Option and Incentive Plan, Amegy Bancorporation Second Amended and Restated Non-Employee Directors Deferred Fee Plan, and Amegy Bancorporation 2004 Omnibus Incentive Plan;

of our reports dated March 1, 2011, with respect to the consolidated financial statements of Zions Bancorporation and subsidiaries and the effectiveness of internal control over financial reporting of Zions Bancorporation and subsidiaries included in this Annual Report (Form 10-K) of Zions Bancorporation and subsidiaries for the year ended December 31, 2010.

/s/ ERNST & YOUNG LLP

Salt Lake City, Utah

March 1, 2011

EX-31.1

EXHIBIT 31.1

C E R T I F I C A T I O N

Principal Executive Officer

I, Harris H. Simmons, certify that:

1. I have reviewed this annual report on Form 10-K of Zions Bancorporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2011	/s/ Harris H. Simmons
	Harris H. Simmons, Chairman, President
	and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

C E R T I F I C A T I O N

Principal Financial Officer

I, Doyle L. Arnold, certify that:

1. I have reviewed this annual report on Form 10-K of Zions Bancorporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2011	/s/ Doyle L. Arnold
	Doyle L. Arnold, Vice Chairman and
	Chief Financial Officer

EX-32

EXHIBIT 32

C E R T I F I C A T I O N

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. §1350, the undersigned officers of Zions Bancorporation (the “Company”) hereby certify that, to the best of their knowledge, the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (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, 2011	/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.

EX-99.1

EXHIBIT 99.1

ZIONS BANCORPORATION

U.S. Treasury No. 37

I, Harris H. Simmons, certify, based on my knowledge, that:

(i) The compensation committee of Zions Bancorporation has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to Zions Bancorporation;

(ii) The compensation committee of Zions Bancorporation has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Zions Bancorporation and has identified any features of the employee compensation plans that pose risks to Zions Bancorporation and has limited those features to ensure that Zions Bancorporation is not unnecessarily exposed to risks;

(iii) The compensation committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Zions Bancorporation to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of Zions Bancorporation will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v) The compensation committee of Zions Bancorporation will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Zions Bancorporation;

(B) Employee compensation plans that unnecessarily expose Zions Bancorporation to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of Zions Bancorporation to enhance the compensation of an employee;

(vi) Zions Bancorporation has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) Zions Bancorporation has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(viii) Zions Bancorporation has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period;

(ix) Zions Bancorporation and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

(x) Zions Bancorporation will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi) Zions Bancorporation will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii) Zions Bancorporation will disclose whether Zions Bancorporation, the board of directors of Zions Bancorporation, or the compensation committee of Zions Bancorporation has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) Zions Bancorporation has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(xiv) Zions Bancorporation has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Zions Bancorporation and Treasury, including any amendments;

(xv) Zions Bancorporation has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001.)

/s/ Harris H. Simmons	Date: March 1, 2011
Harris H. Simmons
Chairman, President and Chief Executive Officer
(Principal Executive Officer)

EX-99.2

EXHIBIT 99.2

ZIONS BANCORPORATION

U.S. Treasury No. 37

I, Doyle L. Arnold, certify, based on my knowledge, that:

(i) The compensation committee of Zions Bancorporation has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to Zions Bancorporation;

(ii) The compensation committee of Zions Bancorporation has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Zions Bancorporation and has identified any features of the employee compensation plans that pose risks to Zions Bancorporation and has limited those features to ensure that Zions Bancorporation is not unnecessarily exposed to risks;

(iii) The compensation committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Zions Bancorporation to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of Zions Bancorporation will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v) The compensation committee of Zions Bancorporation will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Zions Bancorporation;

(B) Employee compensation plans that unnecessarily expose Zions Bancorporation to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of Zions Bancorporation to enhance the compensation of an employee;

(vi) Zions Bancorporation has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) Zions Bancorporation has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(viii) Zions Bancorporation has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period;

(ix) Zions Bancorporation and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

(x) Zions Bancorporation will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi) Zions Bancorporation will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii) Zions Bancorporation will disclose whether Zions Bancorporation, the board of directors of Zions Bancorporation, or the compensation committee of Zions Bancorporation has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) Zions Bancorporation has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(xiv) Zions Bancorporation has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Zions Bancorporation and Treasury, including any amendments;

(xv) Zions Bancorporation has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001.)

/s/ Doyle L. Arnold	Date: March 1, 2011
Doyle L. Arnold
Vice Chairman and Chief Financial Officer
(Principal Financial Officer)