UVU MBA Team -CFAI Research Challenge (1)

CFA Institute Research Challenge
Hosted in
Salt Lake City, UT
Utah Valley University, MBA Team

Financial Sector, Banking Industry
NASDAQ
Zions Bancorporation
Date: 31 Dec 2016 Closing Price: $43.04 Recommendation: Hold
Ticker: ZION Headquarters: Salt Lake City, UT Target Price: $43.18 1% Upside
Figure 1
Source: Company Website
Figure 2
Source: Company Filings, Bloomberg
EXECUTIVE SUMMARY
Zions Bancorporation (NASDAQ: “ZION”) is a mid-sized regional bank-holding corporation
based in Salt Lake City, Utah. The company operates within the financial sector of the banking
industry. Currently, shares are priced at $43.04 per share, with a market capitalization of $8.87
billion and 203.6 million shares outstanding.
Investment Recommendation
We issue a HOLD recommendation on Zions Bancorporation (“ZION”) with a target price of
$43.18 using the price to earnings valuation method. With the dividend yield of 0.73%, this
offers a 1.0% upside. ZION has benefited from a reenergized financial sector since the
election results and recent Federal Reserve (“FED”) activity point towards regulation changes
and a rising interest rate environment. ZION has been among the leaders of the sector with
93.1% growth in its equity value over the last 12 months, compared to the industry average of
43.2%. This is due to recent efforts to reduce its exposure to risky loans within its portfolio,
consolidating its charters, and increased investor confidence tied to improved communication
and data. We are optimistic about the company’s future but acknowledge that the market has
appropriately responded and priced in the positive outlook which has led to outpacing its peers
in the sector.
Energy Risk Declining, Fee Income Focus, and Operations Centralized
The three major factors we took into consideration in valuing ZION were its credit quality,
operational expenses, and fee collections. ZION has recently enhanced its ability to streamline
its processes, cut costs and add to the bottom line. Management has emphasized its focus on
generating more fee income, primarily through building asset management offerings to current
and new customers. We acknowledge the appropriate goal management has placed on
developing the asset management side of its operations, but understand the difficulty of this
task to build assets under management in a highly competitive industry. Over the last few
years the investments into the oil industry caused net charge-offs due to the decline in oil
prices, but with the revival in oil price, the risk associated with these investments are
stabilizing, thereby offering less charge-offs.
Valuation Thesis
Using the Earnings Multiple Valuation Approach, Dividend Discount Model, and Monte Carlo
simulations, we estimated the intrinsic value of ZION. We believe, the stock offers a modest
upside through a strengthening financial sector and small business growth in the state of Utah
specifically. With the recent surge in price since the Presidential Election and increased
optimism following the FED’s interest rate increase and proposed future increases, we believe
that the current $43.04 price has these elements priced in. As market corrections and changes
to the banking industry occur, our $43.18 stock price will accurately forecast the 2017 value.
Additionally, the potential for a higher upside price of $46.03 given our conservative
estimations from our price model has led us to our recommendation.
Limited Risks due to Regulatory Environment
ZIONs downside risks are limited due to the fact that the interest rate and regulatory
environments are both poised to improve in favor of the banking sector. If successful in
eliminating the stress testing requirement that the Dodd-Frank Act requires of banks with
assets over $50B, this would remove substantial costs they currently incur. The biggest risks
lay in the deregulatory promises by the new administration falling through, or the FED not
raising interest rates as planned. This reversal of sentiments would negate much of the recent
gains ZION and the financial sector have experienced, but these scenarios seem unlikely to
occur in the near-term.Figure 3
Source: Team Calculations Source: Bloomberg
Figure 4

INVESTMENT SUMMARY
Business Description
The corporation was founded in 1873 and has grown to hold many subsidiary
banks throughout the western United States. Through its various subsidiaries,
ZION provides a full range of banking and related services primarily in Utah,
Arizona, and Nevada. Its primary holding is Zions First National Bank based in Salt
Lake City.
The company has grown quickly since the early 1990s by acquiring other banks
and expanding existing operations. Company stock is traded on NASDAQ, and is
a member of the S&P 500. ZION went public in 1966 and has paid a dividend on
their preferred shares every year since. Currently, it pays $0.08 per quarter on its
common stock, and management has stated their plans to maintain this payout
ratio.
Liquidity Benefits ZION’s Ownership
ZION stock has experienced an average volume of 3.13 million shares per
month, representing about 1.5% of shares outstanding, and a 200.08 million public
float. For the size of the firm, the equity is quite liquid, benefiting the position of
investors wishing to easily trade their shares on the market. The major
shareholders include institutional investors, mutual fund companies, company
insiders and individual investors. Figure 6 shows the ownership comparison
between these different types of investors. The largest institutional investors
include Vanguard Group, Invesco Ltd. and Invesco Advisors, Inc.
High EPS Growth Fueling ZION Ahead of its Competitors
Of the valuation ratios, price to book value was 1.08, much lower than the industry
average of 1.33. ZION’s P/E ratio of 23.23 is higher than the peer group average
of 15.24. This higher P/E is not a concern because when looking at the PEG ratio,
it has one of the lowest we observed among its peer group at 1.21, compared to
the industry average of 2.02.
ZION's Reduction in Obligations Leaves Flexibility for Future Capital Investments
Over the last few years, ZION has made a priority to pay down its long-term debt
and preferred stock. This move has strategically positioned ZION to purchase
long & short-term debt and service interest payments for new ventures. This gives
it a competitive advantage against its peers as it will have greater leveraging
capacity and lower interest/dividend payment obligations. In a rising interest rate
environment and a president’s intentions of regulation changes of the financial
industry, ZION is in a superior position to take advantage of this new banking
climate. The reduction in the interest and dividend payments as well as its
liabilities on its balance sheet give it a positive outlook as it heads into an
optimistic financial industry future.
ZION’s Efficiency Leads to an Ability to Generate Yield Above Competitors.
Data from the FDIC database shows ZION with higher yield on earning assets
and net interest margin than industry peers.
ZION is a parent company with fourteen subsidiaries that have undergone
extensive consolidation in the past three years. These include the institutions
seen in figure 5 and a full list of subsidiaries in Appendix H. The majority of the
revenue comes from Arizona, Nevada, Texas and California with Utah.
Leadership
ZION has one Chairman/CEO, one President/COO and thirteen Executive VP’s
with various oversights. Chairman Harris Simmons took over the company from
his father, Roy Simmons, in 1998. The board has power over the succession of
upper management and casts a vote to appoint new leadership. There have been
multiple attempts to divide responsibilities between chairman and CEO. The board
has consistently voted against the proposition and maintains to keep both
responsibilities with one person.
The company has undergone recent restructuring, beginning in June of 2013. The
restructuring plan included provisions to cease all bank and subsidiary operations
as separate entities, and to instead run them as one single company. The plan
was implemented to cut $120 million in operating expenses.
Figure 5
Source: US Bank Locations
Figure 6
Source: MorningStar
Figure 7
Source: MorningStar
Figure 8
Source: Bloomberg

Management and Governance
ZION management offers benefits to its shareholders through their ample
amounts of experience in the banking industry (Appendix F). With new regulations
recently put into place, the company has focused on building a management team
to ensure continuing success. This motivation has led to a new CFO who has
nearly 30 years’ experience in positions as treasurer and executive VP in the
banking industry. ZION’s current CEO has spent his entire working career of 35
years with ZION. He has given extensive amounts of insight and understanding to
position ZION competitively in the western region of the United States.
Eleven of the thirteen of board members are independent per Nasdaq standards.
Each member of the board has experience to assist in goals achievement
according to the 2015 10K. The board members have great experience in real
estate development, process streamlining, implementation, mergers &
acquisitions, economics, and healthcare. The board has continued to see growth
in individuals who can assist in investments made in Texas and oil as ZION has
experienced a drop in credit quality in that specific sector.
Pay Scale Comparison
Senior management’s pay scale compared to ZION asset peers is extremely low
at $2.5 million for the CEO where the average total compensation is well above $7
million. Part of the reason for the lower pay is partly due to the lower cost of living
in Utah along with the compensation committee’s evaluation of the CEO’s
performance and efficiency ratios remain sub-par to its asset peers. Other
executive officers are in line with their peer average. In accordance with the Dodd-
Frank Act, ZIONs hired a new CFO to assist in the required stress testing.
The board’s compensation compared to the S&P 500 index companies is well
below average. According to Bloomberg, the average pay is $251,000 while the
average at ZION is $158,000. There is no indication of members of the board
losing independence as their own personal salary is well above what they receive
from sitting on the board.
INDUSTRY OVERVIEW AND COMPETITIVE POSITIONING
Industry Overview
ZION is a relatively small bank-holding corporation within this industry within the
financial services sector of the banking industry. Its combined business entities
and subsidiaries comprise 0.65% of the total industry, with only marginal growth in
market share over the past five years. To give some perspective, big industry
players such as Wells Fargo, Bank of America, and JPMorgan Chase currently
possess 9.9%, 9.22%, and 8.63% respectively.
Demand Drivers
The commercial banking industry has experienced an annual decline of 0.9%
between 2011 and 2016, per the IBIS World Industry Report. However, according
to the same report, the industry is projected to grow by 4% between 2016 and
2021. External drivers for banking performance are Federal Reserve Policy, laws
and regulations, and overall macroeconomic strength.
Currently the Federal Funds Rate fluctuates minutely between 0.5 and 0.75%.
Figure 12 outlines the probabilities for rate increases at each FED meeting date
throughout 2017, along with probabilities for the ranges of where the rates should
fall with each hike. This data is useful to project changes in the finance industry.
For example, interest rates will affect loan and mortgage demand changes and
how much interest income will be affected due to potential rate increases.
Figure 9
Source: Bloomberg
Figure 10
Source: Bloomberg
Figure 11
Source: Bloomberg
Figure 12 Forecasted FED Rate Probabilities
Source: Bloomberg

Figure 13 – Bank Security Valuations 2016
Source: S&P Dow Jones Indices
Figure 14
*DATA HAS BEEN BASED AT 100. Source: S&P Dow Jones
Indices
Figure 15
Source: US Bank Location
Figure 16
Source: Desert News
Figure 17
Source: US Financial Services Conference 2016
With the new regulatory developments coming in the near future, there could be a
boom for financial service firms. Additionally, the possibility of the Dodd-Frank Act
being amended would lead to relaxed regulatory requirements and reduced
expenses from scaling back certain oversight activities. These expectations have
already had a positive effect on bank security valuations over the last quarter of
2016, specifically from November until now.
Figure 14 outlines the changes in the index values for the S&P Bank Index
compared to the S&P 500. The banking industry experienced a large increase in
value over the last year, but more so between November and January, drastically
exceeding the S&P growth rate.
From a macroeconomic perspective, GDP growth is expected to remain strong
and stable, driving bank earnings over the next few years.
Competitive Positioning and Strategies
As of the end of 2015, ZION was the 23rd largest bank-holding company in terms
of deposits. It is also listed on the S&P 500 and NASDAQ Top 100 financial firms.
The company operates in 450 branches throughout the western and southwestern
states. Currently, ZION’s management is making a concerted effort to expand its
online offerings to match consumer preferences in the digital age.
Strategies
ZION has four main long-term strategies:
§ Focus banking business in growth markets throughout the western
United States.
§ Highly decentralized in customer facing issues, providing a small-town
banking feel and autonomy to individual branches in terms of product
offerings
§ Management believes they have achieved better economies of scale and
risk management practices over similar institutions
§ Centralized in non-customer facing issues, dealing in their own risk
management and operations behind the scenes
ZION Continues to Move Towards a Centralization
Through the streamlining process, ZION continues to maintain customer facing
operations with a small-town feel to keep the autonomous appearance. However,
in the operational sense, they are rapidly centralizing to improve efficiency and
decrease costs. It is also standardizing internal subsidiary payment system to
lower operational expenses.
Efficiency Ratio
As part of this strategy to decrease costs, ZION recently increased focus on the its
efficiency ratio. In 2015 management set target goals to decrease noninterest
expenses. ZION reached its 2015 goal of $1.6 billion, a decrease of 4% year-over-
year. As of Q3 2016 it was in line to meet the target goal of $1.58 billion.
Reducing Risks
The company continues making efforts to reduce risks, including selling off CDOs,
buying high quality assets, and reducing the amount of oil and gas related
exposure. The company’s general measures for capital, credit quality, and liquidity
generally rank within the top quartile of regional bank peers.
Porter’s Five Forces
To analyze the company’s current position and strategy in the banking sector, we
built a Porter’s Five Forces model to asses ZION’s strength within the market in
relation to industry influences. This model lays out five important factors affecting
a company’s profitability and sustainability within a given industry. The five forces
are: Threat of new entrants, supplier power, buyer power, competitive rivalry, and
threat of substitution. Our model pertaining to ZION can be found in Figure 18 and
Appendix G.
Figure 18
Source: Team Calculations

VALUATION
P/E Valuation
We used the Price-to-Earnings method to derive an estimated future price of
$43.18 per common share. This method involved forecasting future earnings
based on expected performance and multiplying it by the company’s current P/E
ratio of 23.23.
Using the P/E method our forecasting model focused closely on expected
changes to the major drivers of the business: Interest Earning Assets (IEA), Non-
Interest Income (NII), and Interest Bearing Liabilities (IBL). We analyzed each
driver’s historical performance and what industry or economic factors had the
greatest impact on performance. We then researched expected future industry
trends and from these made projections for the annual growth of each driver going
out 5 years to 2020. For the IEA driver, we also added 3 scenarios to the model:
Base, Upside, and Downside. The Base scenario assumes normal expected
economic growth and keeps IEA forecasts in line with the general industry
consensus. The Upside scenario assumes stronger economic conditions for the
future
Commercial - The largest components are commercial and industrial (C&I) (62%
of commercial) and owner occupied (33% of commercial). From 2011 to 2015
ZION’s commercial loans grew at an average rate of 3% annually, driven largely
by C&I loans. Management has expressed expectations of slight-to-moderate loan
growth for commercial loans. From this approach, ZION’s per share value can be
broken down to a Base scenario value of $21.75, an Upside value of $16.11, and
a Downside value of $6.36 for a total per share value of $43.18.
Loans and Other Interest-Earnings Assets
We broke down the loan portfolio to the three largest groupings: Commercial
(53.3%), Commercial Real Estate (25.3%), and Consumer (21.4%). We then
assigned each loan category a growth rate considering historical performance and
outlook.
Commercial Real Estate - CRE consists of construction and land development
loans (22% of CRE), and term loans (78% of CRE). CRE has seen a small but
steady level of attrition since 2011 averaging a less than 2% decrease per year. In
2015 management indicated their intention to limit construction and land
development loan commitment growth to improve the risk profile of the company.
However, we feel recent events such as interest rate increases and movement
towards changes in bank regulation indicates a strong signal for growth in 2017.
Consumer - The largest components are home equity credit line (27% of
consumer) and 1-4 family residential (61% of consumer). The average annual
growth rate for the last 5 years has been 6%. This was driven primarily by 1-4
family residential loans which grew by 36% in the last 5 years. ZION’s plans to
focus on ensuring and maintaining consistent growth in consumer loans.
Other Interest Earning Assets - As other IEA makes up a smaller portion of assets
and there is little change in balances over time, we held each of these at a
relatively constant level in line with the average balance for the last 5 years. Other
assets make up about 25% of total interest-earning assets. This is broken down
into money market investments (15%), investment securities (9.75%), and loans
held for sale (0.25%).
Non-Interest Income
Management has expressed a goal for 2017 to maintain mid-single digit rates in
core fee income. As such, we applied a 5% growth rate to non-interest income
going forward.
Non-Interest income (NII) accounts for an average of 20% of total revenue. Its two
largest drivers are:
§ Service charges and fees on deposit accounts
§ Other service charges, commission and fees
Over the last 5 years, instead of growing steadily NII has fluctuated around an
average amount of $428.4 million. Recent increases were attributed to increased
commercial credit card fees and fees generated on sales of swaps to clients. We
believe that use of bank services will steadily increase leading to larger revenues
from fees and commissions paid by customers based on bank regulation changes
increasing in likelihood and a positive outlook for the financial sector overall.
Figure 19
Figure 20
Source: Company Filings
Figure 21
Source: US Financial Services Conference 2016
Figure 22
Source: Bloomberg

Figure 23
Figure 24
Source: Bloomberg
Figure 25 Bank Revenues and Banks EPS
Source: Bloomberg
Deposits and Interest-Bearing Liabilities
Interest bearing liabilities (IBL) is broken down to 4 types: saving, money market
and foreign (82%), time (11%), long-term debt (6%), and due to banks (1%). Much
like interest-earning assets, we looked at the historical changes in balances to find
the trends and drivers that affect interest-bearing liabilities. We then projected
future changes based on the company’s goals and general economic outlook.
§ Saving, Money Market and Foreign - We assigned a growth rate of 2% to
short-term deposit accounts. Deposits to short term accounts at ZION
has consistently increased by 2% annually for the last five years. We do
not see a high probability of this changing in the near future. Increased
interest rates in 2017, as has been indicated by the Federal Reserve
Board, is not likely to affect short-term deposit accounts in a large way. It
is more likely that long-term deposit accounts will see a greater change in
use from customers.
§ Time - We assigned an aggressive growth rate of 3% for time and long-
term deposit accounts. In the last five years, ZION’s balances in long-
term deposits, such as CD’s, have decreased at an average rate of 12%
per year but this rate has slowed in recent years. As returns on long-term
deposits are tied almost exclusively to the FED and banks’ borrowing
rates, we believe returns will increase as the FED increases rates in the
next few quarters similar to Q4 2016. This will drive greater demand for
long-term low-risk deposit accounts as banks begin offering slightly
higher returns. Therefore, we believe not only will the trend of decreasing
balances stop, but will begin to increase.
§ Long-term debt - We projected long-term debt to grow at a conservative
rate of 2%. In 2015 company management took significant actions to
positively improve the company’s risk profile. This included reducing
long-term debt by more than half its balance in 2013. We suspect this
was done in an effort to strengthen its CET1 and Tier 1 Capital ratios in
light of having failed the Federal Reserve Stress Test in 2014. We don’t
believe will make significant changes to this balance in the near term.
With the increasing likelihood of bank regulation changes on the horizon,
it might be under less rigorous scrutiny which will give them the ability to
hold more long-term debt.
§ Due to banks - Due to banks only makes up 1% of IBL. The average
balance since 2013 was $245 million. Our forecast used the same
average for future years.
Non-Interest Expense
We forecasted noninterest expense (NIE) for 2016 and 2017 as in line with the
company’s target levels indicated in their 2015 10-K. ZION met their goal of
holding NIE to below $1.6 billion in 2015. As of Q3 2016, ZION was in line to meet
its goal to be under $1.58 billion for the year. These goals were part of an attempt
to improve its efficiency ratio. The company had an efficiency ratio of 70% in 2015
and a 2016 goal of less than 66%. As of Q3, the NIE looked to be within reach of
its goal.
Actions ZION has taken to lower NIE consisted of:
• decreasing consulting fees by $13 million
• consolidating 7 subsidiary banks, a trust company, and ZION service
company into a single bank
• employing a new integrated system for loans and deposits using
improved technology
These measures were undertaken with the aim of driving down costs. This
emphasis on decreasing NIE and the results it has achieved allows us to
confidently forecast levels in line with company goals for 2016 and 2017. In our
model, for the years following, we set NIE as 71% of pre-provision net-revenue,
which is 1% higher than the 2017 level.
Revenues and EPS
Compared to industry peers, EPS seems low, but is on a healthy upward trend.
Compared to its peer groups, the Best EPS average is $1.93/share, while the
industry median is $2.23/share. While there is still plenty of room for improvement,
this is less troubling since ZION recently retired large portions of its long-term debt
(FIGURE XX), which would have reduced the EPS for the last few years. With less
interest payments and repayments of debt, ZION will have more earnings to
distribute to shareholders in the future, and that number will only increase if
deregulation occurs and interest rates continue their climb. The year-over-year
revenue growth also makes up for the lack in EPS, a healthy 13.40 percent
compared to the industry median of 6.66 percent. This year-over-year growth with
the other strategic positioning ZION has taken is a large contributor to ZION
outpacing its peers’ stock growth.

Earnings
After forecasting the growth of assets and expenses we projected the remaining
elements of ZION income statement to arrive at earnings. We assumed a 35% tax
rate, the average rate for the last five years. Preferred stock dividends were held
at the levels indicated by management for 2016 and 2017. Weighted average
shares were forecasted to grow at a rate consistent with growth over the last five
years. We divided the weighted shares by net income to common to arrive at
earnings per share which was then multiplied by ZION’s P/E ratio as of 1/12/17.
This calculation was then done for all three scenarios:
• The Base scenario resulted in a price of $42.35 which was then
multiplied by its assigned weight of probability, 50%, arriving at a value of
$21.18.
• The Upside scenario resultant price was $46.03. With a weighted
probability of 35% the value derived is $16.11
• The Downside scenario price was $39.28 which when adjusted for a 15%
probability gives a value of $5.89
Adding the three values together we arrived at our 2017 target price of $43.18.
The models for this analysis can be viewed in Appendix D.
Dividend Discount Valuation
Price to earnings was the main valuation approach we relied on for our forecast. In
addition, we built a Dividend Discount Model (DDM). We built the DDM because
the multiples approach makes certain assumptions that carry risk. For instance,
the model assumes future growth is accounted for in the stock’s current price.
Using the DDM, we arrived at a price of $36.82. Although we did not use this price
as our target price we believe it does support our hold recommendation with our
reasoning explained below.
We began by dividing our 2016 projected earnings by total dividends paid during
the year to find the payout ratio of 18.86%. We then used that same payout ratio
for the next four periods. We did this based on management’s expressed intention
to keep future dividend rates at a relatively consistent level with earnings. We
multiplied this rate by each periods’ projected earnings and then divided it by the
projected weighted average shares to arrive at the dividend per share amount.
This model and the fundamental ratios from that model can be found in Appendix
E .
NPV
When all discounted cash flows are added together the resulting stock price for
2017 is $36.82. Although this is not our recommended target price, we believe this
value supports our hold recommendation.
It could be argued the DDM price is adjusted for market sentiment and investors’
expectations which are already accounted for in the current share price of $43.04.
Therefore, it reflects a more accurate market price for the value of ZION and all
the company assets today (Appendix D).
Terminal Value - The terminal value was based on a dividend growth rate
of 5.22% which is the time adjusted dividend growth from 2015-2020.
This rate was used to calculate the dividend for 2021 which was then
used to find terminal value price for 2020 using the Gordon Growth
Model. Using that model, the required rate of return was found by
dividing the 2017 projected dividend by ZIONs current stock price plus a
growth rate of 4.6%. This growth rate came from multiplying ZIONs’
return on equity (5.67%) by 1 minus the 18.86% payout ratio. The
terminal value price came out to $42.07. Finally, we added the dividend
of $0.29 giving a total value of $42.36.
Discounted Value - The terminal value for year 2020 and the dividend
payments for 2019 and 2018 were then appropriately discounted to
present value using the same required return rate of 5.32%.
Figure 26
Figure 27 Figure 28
Source: Team Calculations Source: Team Calculations

FINANCIAL ANALYSIS
We collected a five-year history of financial data including income statements
(Appendix A), balance sheets (Appendix B), and statements of cash flows
(Appendix C). We ran excel models to compare the company’s financial
performance alongside similar companies in the industry. We extrapolated growth
rates and formulated realistic assumptions based on historical performance.
Bloomberg’s estimated earnings for ZION can be seen in Figure 31
Monte Carlo Simulation
After mining historic data, we ran financial forecasts with a five-year outlook. Our
assumptions were based partly on technical analysis, with alterations to account
for possible changes in the industry or operational adjustments made by ZION.
Our forecasts provide great insight into expected performance of the firm and our
target price for 2017. We used the historical data to formulate important financial
ratios that are key to performance. A Monte Carlo simulation was performed to
iterate 10,000 different stock prices based on historical rates of return and
standard deviations of returns. The standard deviation for this simulation of returns
was wide (0.40), implying a high level of price volatility.
Figure 30 Monte Carlo Summary Statistics
Figure 29
Source: Bloomberg, Team Research

Figure 34 10-2 Spread
Source: Federal Reserve of St Louis
Figure 31
Source: Bloomberg
Figure 32 Beta Co-Efficients
Source: Bloomberg
Figure 33 Purchasing Managers Index
Source: ISM
ZION bank must stay in compliance with the minimum capital requirements as
outlined in the Basel III framework. Non-compliance can result in regulators
limiting ZION’s capital actions such as dividend payments and share buybacks.
Such limitations can result in decreased investor confidence and a lower stock
price.
Stress Tests
In the 2016 Dodd-Frank Act Stress Test performed by the Federal Reserve, ZION
met the required minimum levels for each capital ratio but generally performed
lower than its industry peers. Most notably, the change to minimum CET1 ratio
based on the severely adverse scenario was 5.6% compared to an industry
median of 3.5%. Total projected loan loss rate was 6.3% compared to a 5.6%
industry median. Pre-provision net revenue rate in the severely adverse scenario
was 1.1% with a 2.4% industry median. Pre-tax net income rate was -3.7% while
the industry median was only -1.5%.
Although ZION’s ratios met the minimum requirements as put out by the Basel
committee, for each stressed scenario they consistently underperformed when
compared to the 32 other banks also tested. The beginning ratios reported were
generally stronger than most competitors but when put through the stress tests,
the changes to its ratios were more extreme than the changes to most peers and
the ending result were ratios lower than the industry median. This could signify
ZION’s books contain riskier assets than its peers. The high equity beta of 1.6
compared to the industry beta of .9 is also an indication of its higher level of risk
in relation to the market.
Overall Economic Health Indicators
In assessing overall economic health, we analyzed two leading indicators used to
estimate GDP growth. The first indicator is the Purchasing Managers’ Index
(PMI). This index is provided by the nonprofit Institute for Supply Management, or
ISM. The index measures overall purchasing trends for manufacturing
companies, which is an indicator of production sentiment. The index is based
around 50, with any figure approaching 50 or dropping below that level indicating
a worsening viewpoint of economic health.
Conversely, a rising PMI above 50 indicates a positive outlook in purchasing
trends, meaning production and GDP are expected to grow. The figure
referenced shows the PMI levels over 2016. The level fluctuated, but never
dropped below 50. The last quarter of the year proved to be optimistic for GDP
growth with a rising PMI level above 54. We expect this positive trend to continue
through December 2017, inferring stable GDP growth over the next year.
The second indicator we assessed is known as the 10-2 Spread. This spread
tracks the trend in the 10 year US Treasury yield to maturity and compares it to
the yield on 2 year US Treasuries. The line chart maps the 10 year yield and
subtracts the 2 year yield. This gives the baseline of 0 to measure the overall
spread. Historically, any time the 10-year yield drops below 0 and yields less than
the 2 year treasuries, a recession follows. The recessions are indicated by the
vertical gray shaded areas in the chart. By this measure, one could reasonably
expect a recession 1-3 years after the spread falls below 0. This is a narrow area
of focus, but has historically been a good indication of overall economic health.
We believe it is worth monitoring as the negative spread has directly correlated
with recessionary periods in the past. The spread has recently begun to widen
once again since the final quarter of 2016, leading us to believe the macro-
economy has stabilized and is improving.

Figure 35
Figure 36
Figure 36 Bank Capital to Total Assets
Source: Federal Reserve of St Louis
INVESTMENT RISKS
Regulatory Risk: Minimum Equity Requirements
There is a risk that ZION may not be able to meet the Basel III minimum capital
requirements. The company has failed to do so in the recent past, but are
currently in compliance with all required ratios. Future economic and political
landscape suggests this risk is not a major threat to ZION. President-elect Donald
Trump has indicated his intentions to change banking regulations creating an
optimistic prospect for the industry. This positive outlook appears to be priced in
the equity of ZION and its competitors. A reversal of these intentions would likely
lead to a significant downturn for ZION’s stock price and the banking sector. In
the current political climate, we see a scale back of industry regulations. Risk lies
in the uncertainty of what regulations will change and how this will affect a
regional commercial bank like ZION.
Based on our analysis the best way for ZION to maintain or improve its capital
ratios is to increase its equity balance. An efficient way is to minimize dividends
paid to shareholders. Financial statements currently show it pays a lower
dividend compared to its peers. It is one of the few banks in the financial sector
not expected to increase its common dividend. Management indicated in their
MD&A the intent to maintain quarterly dividends to common shareholders at
$0.08.
Liquidity Risk: Downgrades from Credit Agencies
ZION maintains a chance of a downgrade by major credit rating agencies leading
to increased difficulty accessing capital markets and paying higher interest rates
on borrowed capital. This would result in reduced company equity and greater
difficulty maintaining minimum capital requirements, resulting in tighter capital
controls by regulators. Moody’s rating agency recently upgraded ZION to Baa3
on November 2, 2016 meaning ZION is rated the lowest level of investment
grade. This rating indicates the company is still subject to moderate credit risk.
To mitigate liquidity risk, ZION has focused the last year on increasing its
holdings in high quality liquid assets. The Basel III Capital Rules require ZION
have a 2.50% capital conservation buffer. It has reached 1.25% and is on
schedule to achieve 2.50% by January 1, 2019. ZION is currently abiding by
regulations and has passed the ongoing stress tests required. With ZION meeting
regulatory standards and the current political climate aimed to alter regulations,
liquidity risk is not a major factor for current and potential investors.
Credit Risk: Loans to Risky Borrowers
Borrowers of loans issued by ZION always have a possibility of default. The
largest segment of the company’s loan portfolio is commercial real estate.
Economic downturns are uncontrollable and would result in defaults of
commercial real estate loans. This being the majority of the loan portfolio, the
negative impact could be severe. This requires ZION to increase its provision for
loan losses; therefore, net loans would decrease, ultimately resulting in lower
earnings.
As a regional bank, ZION’s exposure to credit risk is based on the economic
strength of the regions where they have operations. The largest percentage of
total assets are in Salt Lake City (33%), Houston (24%), and San Diego (20%).
The other 23% is spread over four areas with the largest area holding less than
10% (Figure 36).
Catalysts to credit risk are insufficient requirements for credit standards used to
vet loan applicants, and are major disruptors in industries of companies to which
ZION offers loans. For instance, this was seen in 2014 with the major decline in
oil prices adversely affecting ZION’s energy loan portfolio, resulting in large
amounts of net charge offs of these loans.
As a way to minimize credit risk, ZION has worked to appropriately diversify loan
portfolios to avoid overexposure to any one industry. Other ways to reduce credit
risk are proper vetting of loan applicants to ensure credit worthiness and
effectively managing risk weighted assets in relation to the amount of liquid
capital available.

Appendix A
Zions Bankcorp - Model - Income Statement
USD $ in Millions Except Per Share and Per Unit Data
Interest-Earning Assets (IEA) and
Interest-Bearing Liabilities (IBL): Units FY11 FY12 FY13 FY14 FY15
INT EREST -EARNING ASSET S (IEA):
Gross Loans and Leases:
Commercial $M 19,006 19,394 20,186 21,125 21,419
Commercial Real Estate $M 11,088 10,533 10,386 10,337 10,178
Consumer $M 6,802 7,110 7,537 8,060 8,574
T otal Gross Loans: $M 36,896 37,037 38,109 39,522 40,171
Money Market Investments $M 5,357 7,931 8,850 8,215 8,252
Investment Securities $M 4,771 3,845 3,901 4,142 5,826
Loans held for Sale $M 146 186 147 128 125
T otal Interest-Earning Assets (IEA) $M 47,170 48,999 51,007 52,007 54,374
Average Interest-Earning Assets (IEA) $M 48,085 50,003 51,507 53,191
Interest Income Earned On:
Commercial $M 1,074.4 991.6 940.8 922.6 903.2
Commercial Real Estate $M 644.5 575.6 556.4 483.7 453.5
Consumer $M 334.1 325.0 320.4 327.5 335.3
T otal Gross Loans: $M 2,053.0 1,892.2 1,817.6 1,733.8 1,692.0
Money Market Investments $M 13.8 21.1 23.4 21.4 23.2
Investment Securities $M 136.3 137.2 110.7 109.4 131.7
Loans held for Sale $M 5.7 6.6 5.4 4.6 4.5
T otal Interest Earning Assets (IEA): $M 2,208.8 2,057.1 1,957.1 1,869.2 1,851.4
Average Yield Earned On:
Commercial % 5.7% 5.2% 4.8% 4.5% 4.2%
Commercial Real Estate % 5.8% 5.3% 5.3% 4.7% 4.4%
Consumer % 4.9% 4.7% 4.4% 4.2% 4.0%
T otal Gross Loans: % 5.6% 5.1% 4.8% 4.5% 4.2%
Money Market Investments % 0.3% 0.3% 0.3% 0.3% 0.3%
Investment Securities % 2.9% 3.2% 2.9% 2.7% 2.6%
Loans held for Sale % 3.9% 4.0% 3.2% 3.3% 3.6%
T otal Interest Earning Assets (IEA): % 4.3% 3.9% 3.6% 3.5%
INT EREST -BEARING LIABILIT IES (IBL):
Saving, money market and foreign $M 22,991 23,554 24,553 24,174 24,998
Time $M 3,750 3,208 2,792 2,490 2,274
Due to Banks $M 832 499 278 223 235
Long-term debt $M 1,913 2,234 2,274 1,811 1,021
T otal Interest-Bearing Liabilities (IBL): $M 29,486 29,495 29,897 28,698 28,528
Avg. Interest-Bearing Liabilities (IBL): $M 29,491 29,696 29,298 28,613
Interest Expense Paid On:
Saving, money market and foreign $M (92.9) (57.0) (43.0) (38.2) (39.5)
Time $M (35.6) (23.1) (15.8) (11.5) (9.8)
Due to Banks $M (6.7) (1.4) (0.3) (0.3) (0.4)
Long-term debt $M (297.2) (225.2) (185.0) (123.0) (68.5)
T otal Interest-Bearing Liabilities (IBL): $M (432.4) (306.7) (244.1) (173.0) (118.2)
Historical

-Based on our analysis we assigned the Base Scenario values a weight of 50%. We believe the Base Scenario growth rates are the
most likely to occur after assessing the general state and direction of the market driving forces for the banking industry.
Source: Team’s Estimates and Company’s Annual Report
Commercial $M 22,062 22,723 23,405 24,107 24,830
Consumer $M 9,088 9,634 10,212 10,824 11,474
Average Interest-Earning Assets (IEA) $M 54405.04 55,137 56,548 58,069 59,713
Commercial $M 913.1 985.3 1,061.0 1,092.8 1,125.6
Consumer $M 362.1 402.5 446.5 473.3 501.7
Commercial % 4.2% 4.4% 4.6% 4.6% 4.6%
Consumer % 4.1% 4.3% 4.5% 4.5% 4.5%
T otal Interest Earning Assets (IEA): % 3.5% 3.7% 3.9% 3.9% 3.9%
Time $M 2,342 2,412 2,485 2,559 2,636
Due to Banks $M 245 245 245 245 245
Long-term debt $M 1,021 1,041 1,062 1,083 1,105
Avg. Interest-Bearing Liabilities (IBL): $M 28817.257 29,407 30,014 30,634 31,267
Time $M (11.6) (13.6) (16.1) (19.0) (22.4)
Due to Banks $M (0.4) (0.4) (0.4) (0.4) (0.4)
Long-term debt $M (78.8) (90.6) (104.2) (119.8) (137.8)
Projected (Base)

-Based on our analysis we assigned the Upside Scenario stock price a weight of 35%. We believe the Upside Scenario growth rates
are less likely than the Base Scenario but more likely than the Downside Scenario. This was assumed after assessing the general
state and direction of the market driving forces for the banking industry.
Commercial $M 22,490 23,614 24,795 26,035 27,337
Consumer $M 9,260 10,001 10,801 11,665 12,598
Commercial $M 922.1 1,014.3 1,113.4 1,169.1 1,227.5
Consumer $M 365.6 414.1 468.0 505.5 545.9
Commercial % 4.2% 4.4% 4.6% 4.6% 4.6%
Consumer % 4.1% 4.3% 4.5% 4.5% 4.5%
Time $M 2,342 2,412 2,485 2,559 2,636
Due to Banks $M 245 245 245 245 245
Long-term debt $M 1,021 1,041 1,062 1,083 1,105
Time $M (11.6) (13.6) (16.1) (19.0) (22.4)
Due to Banks $M (0.4) (0.4) (0.4) (0.4) (0.4)
Long-term debt $M (78.8) (90.6) (104.2) (119.8) (137.8)
Projected (Upside)

-Based on our analysis we assigned the Downside Scenario stock price a weight of 15%. We believe the Downside Scenario
growth rates are less likely than the Base Scenario and the Upside Scenario. This was assumed after assessing the general state
and direction of the market driving forces for the banking industry.
Commercial $M 21,740 22,066 22,397 22,733 23,074
Consumer $M 8,917 9,274 9,645 10,030 10,432
Commercial $M 906.3 963.7 1,022.7 1,038.0 1,053.6
Consumer $M 358.6 391.1 425.7 442.7 460.4
Commercial % 4.2% 4.4% 4.6% 4.6% 4.6%
Consumer % 4.1% 4.3% 4.5% 4.5% 4.5%
Time $M 2,342 2,412 2,485 2,559 2,636
Due to Banks $M 245 245 245 245 245
Long-term debt $M 1,021 1,041 1,062 1,083 1,105
Time $M (11.6) (13.6) (16.1) (19.0) (22.4)
Due to Banks $M (0.4) (0.4) (0.4) (0.4) (0.4)
Long-term debt $M (78.8) (90.6) (104.2) (119.8) (137.8)
Projected (Downside)

Income Statement Units FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20
Net Interest Income: $M
(+) Interest Income: $M 1,921.6 2,088.5 2,290.2 2,403.1 2,522.5 1,892.4 1,993.9 2,119.2 2,155.5 2,192.8
(-) Interest Expense: $M (134.2) (152.4) (173.3) (197.0) (224.2) (134.2) (152.4) (173.3) (197.0) (224.2)
T otal Net Interest Income: $M 1,787.5 1,936.0 2,116.9 2,206.0 2,298.3 1,758.2 1,841.5 1,946.0 1,958.4 1,968.6
10K Reconciliation 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9
Reconciled T otal Net Interest Income: $M 1,769.6 1,918.1 2,099.0 2,188.1 2,280.4 1,740.3 1,823.6 1,928.1 1,940.5 1,950.7
Noninterest Income $M 395.955 415.8 436.5 458.4 481.3 395.955 415.8 436.5 458.4 481.3
T otal Revenue $M 2,165.5 2,333.9 2,535.6 2,646.5 2,761.7 2,136.2 2,239.3 2,364.6 2,398.9 2,432.0
Provision for loan losses $M 40 50 60 70 80 40 50 60 70 80
Noninterest Expense $M 1,570.0 1,570 1,800 1,879 1,961 1,570.0 1,570 1,679 1,703 1,727
Pre-T ax Income: $M 555.5 713.9 675.3 697.5 720.9 526.2 619.3 625.7 625.7 625.3
Income Taxes $M 194.4 249.86 236.36 244.12 252.31 184.2 216.76 219.01 218.99 218.85
Net Income $M 361.1 464.0 439.0 453.4 468.6 342.1 402.6 406.7 406.7 406.4
Net loss applicable to noncontrolling interests $M - - - - - - - - - -
Preferred stock dividends $M (54.0) (45) (57) (58) (60) (54.0) (45) (52) (52) (52)
Preferred stock redemption - - - - - - - - - -
Net Income to Common $M 307.1 419.0 382.3 394.9 408.1 288.1 357.6 354.3 354.2 354.0
Weighted Average Shares: M Shares 203.7 209.4 215.2 221.2 227.3 203.7 209.4 215.2 221.2 227.3
Earnings Per Share (EPS): $ / Share 1.51 2.00 1.78 1.8 1.80 1.41 1.71 1.65 1.6 1.56
$M
Projected (Upside) Projected (Downside)

Appendix B
Zions Bankcorp - Balance Sheet
Income Statement Units FY11 FY12 FY13 FY14 FY15
Total Assets
Cash & Cash Equivalents $M 1,224.4 1,841.9 1,175.1 841.9 798.3
Interbank Assets $M 7,123.1 8,754.3 8,457.3 8,564.4 6,727.9
ST And LT Investments $M 4,944.1 4,732.0 5,181.1 5,428.1 9,085.1
Total Commercial Loans $M 29,882.0 30,086.2 31,269.2 31,927.9 32,220.2
Commercial RE Loans $M 10,834.0 10,746.0 10,901.5 10,892.5 11,182.8
Other Commercial Loans $M 19,048.0 19,340.2 20,367.7 21,035.4 21,037.3
Total Consumer Loans $M 6,625.0 7,050.8 7,576.3 8,135.7 8,429.4
Total Loans $M 37,459.5 37,916.9 39,214.7 40,196.2 40,799.4
Reserve for Loan Losses $M 1,051.7 896.1 746.3 604.7 606.0
Net Loans $M 36,407.8 37,020.8 38,468.4 39,591.5 40,193.4
Net Fixed Assets $M 719.3 708.9 726.4 829.8 905.5
Total Intangible Assets $M 1,083.0 1,064.9 1,050.6 1,039.6 1,030.4
Total Deferred Tax Assets $M 955.0 824.0 637.0 462.4 437.5
Total Derivative Assets $M 92.0 - 65.7 66.4 77.6
Other Assets $M 600.6 565.1 269.6 384.7 413.9
Total Assets $M 53,149.1 55,511.9 56,031.1 57,208.9 59,669.5
Liabilities & Shareholders' Equity
Demand Deposits $M 16,110.9 18,469.5 18,758.8 20,529.1 22,276.7
Interest Bearing Deposits $M 26,764.8 27,663.6 27,603.1 27,319.0 28,097.4
Saving Deposits $M 21,775.8 22,896.6 23,029.9 24,583.6 25,672.4
Time Deposits $M 4,988.9 4,767.0 4,573.2 2,735.3 2,425.1
Total Deposits $M 42,875.6 46,133.1 46,361.9 47,848.1 50,374.1
ST Borrowings & Repos $M 722.9 370.9 801.2 244.2 347.0
LT Debt $M 2,056.9 2,425.6 1,902.5 1,173.4 892.2
Pension Liabilities 49.2 46.5 14.2 27.4 26.8
Total Deferred Tax Liabilities - - 332.7 238.2 234.4
Total Derivative Liabilities 94.8 89.1 68.4 66.1 72.6
Other Liabilities 366.6 398.1 85.9 242.0 214.9
Total Liabilities $M 46,165.9 49,463.3 49,566.6 49,839.3 52,162.0
Equity
Preferred Equity $M 2,337.6 1,128.3 1,004.0 1,004.0 828.3
Share Capital & APIC $M 4,163.2 4,166.1 4,179.0 4,723.9 4,766.9
Retained Earnings $M 1,036.6 1,203.8 1,473.7 1,769.7 1,966.9
Other Equity $M (592.1) (446.2) (192.4) (128.0) (54.6)
Equity before Minority Interest $M 6,985.3 6,052.1 6,464.6 7,369.5 7,507.5
Minority/Non Controlling Interest $M (2.1) (3.4) - - -
Total Equity $M 6,983.2 6,048.6 6,464.6 7,369.5 7,507.5
Total Liabilities & Equity $M 53,149.1 55,511.9 56,031.1 57,208.9 59,669.5
Historical

Zions Bankcorp - Balance Sheet
Total Assets
Cash & Cash Equivalents $M 1,176.3 1,176.3 1,176.3 1,176.3 1,176.3
Interbank Assets $M 8,100.0 8,170.4 7,925.4 7,925.4 7,925.4
ST And LT Investments $M 5,784.1 5,784.1 5,784.1 5,784.1 5,784.1
Total Commercial Loans $M 32,392.2 33,209.0 34,048.0 34,909.8 35,795.1
Commercial RE Loans $M 10,330.7 10,485.6 10,642.9 10,802.6 10,964.6
Other Commercial Loans $M 22,061.6 22,723.4 23,405.1 24,107.3 24,830.5
Total Consumer Loans $M 9,088.4 9,633.7 10,211.8 10,824.5 11,473.9
Total Loans $M 41,480.7 42,842.8 44,259.8 45,734.3 47,269.0
Reserve for Loan Losses $M 700.0 725.0 750.0 775.0 800.0
Net Loans $M 40,780.7 42,117.8 43,509.8 44,959.3 46,469.0
Net Fixed Assets $M 1,000.0 1,150.0 1,300.0 1,300.0 1,025.0
Total Intangible Assets $M 1,030.0 1,053.7 1,053.7 1,053.7 1,053.7
Total Deferred Tax Assets $M 475.0 550.0 663.0 663.0 663.0
Total Derivative Assets $M 75.0 75.0 75.0 75.0 75.0
Other Assets $M 446.8 446.8 446.8 446.8 446.8
Total Assets $M 58,867.9 60,524.1 61,934.1 63,383.6 64,618.3
Liabilities & Shareholders' Equity
Demand Deposits $M 22,557.2 24,000.0 25,000.0 26,000.0 27,000.0
Interest Bearing Deposits $M 27,489.6 27,489.6 27,489.6 27,489.6 27,489.6
Saving Deposits $M 25,498.0 26,007.9 26,528.1 27,058.6 27,599.8
Time Deposits $M 2,342.2 2,412.5 2,484.9 2,559.4 2,636.2
Total Deposits $M 50,046.8 51,489.6 52,489.6 53,489.6 54,489.6
ST Borrowings & Repos $M 497.0 497.0 497.0 497.0 497.0
LT Debt $M 900.0 1,100.0 1,300.0 1,400.0 1,400.0
Pension Liabilities 32.8 32.8 32.8 32.8 32.8
Total Deferred Tax Liabilities 210.0 190.0 170.0 150.0 114.0
Total Derivative Liabilities 78.2 78.2 78.2 78.2 78.2
Other Liabilities 261.5 261.5 261.5 261.5 261.5
Total Liabilities $M 52,026.3 53,649.1 54,829.1 55,909.1 56,873.1
Equity
Preferred Equity $M 900.0 900.0 900.0 900.0 900.0
Share Capital & APIC $M 4,100.0 4,100.0 4,100.0 4,229.1 4,399.8
Retained Earnings $M 1,966.6 2,100.0 2,159.6 2,400.0 2,500.0
Other Equity $M (125.0) (225.0) (54.6) (54.6) (54.6)
Equity before Minority Interest $M 6,841.6 6,875.0 7,105.0 7,474.5 7,745.2
Minority/Non Controlling Interest $M - - - - -
Total Equity $M 6,841.6 6,875.0 7,105.0 7,474.5 7,745.2
Total Liabilities & Equity $M 58,867.9 60,524.1 61,934.1 63,383.6 64,618.3
Projected

Appendix C
Zions Bankcorp - Statement of Cash Flows
Cash from Operating Activities
Net Income $M 323.8 349.5 263.8 398.5 309.5
Depreciation & Amortization $M 299.9 185.2 130.6 128.6 151.1
Provision for Loan Losses $M 65.2 18.6 (104.2) (106.7) 33.8
Non-Cash Items $M 207.2 103.1 222.5 39.7 97.4
Gain on Sale of Secs & Loans $M - 106.5 165.1 (10.4) 139.0
Deferred Income Taxes $M 115.6 9.8 (60.1) 25.9 (29.8)
Other Non-Cash Adjustments $M 91.6 (13.2) 117.5 24.1 (11.8)
Net Ch in Operating Capital $M 232.1 79.7 327.6 (5.8) (56.5)
Trading Assets & Liab $M 8.4 12.0 (6.3) (36.0) 22.5
Net Ch in Operating Loans $M 50.7 (31.4) 80.3 38.6 (6.0)
Other Op Assets/Liab $M 173.0 99.2 253.5 (8.3) (73.0)
Cash from Operating Activities $M 1,128.21 736.20 840.27 454.32 535.2
Cash from Investing Activities
Net Change in Fixed Assets $M (77.7) (68.9) (88.6) (175.8) (157.4)
Net Change in Investments $M (1,580.9) (1,309.8) 51.0 (71.5) (3,769.9)
Decrease in Investments $M 2,328.2 1,340.3 1,532.0 1,887.7 1,804.5
Dec in HTM Investments $M 101.9 128.3 130.9 108.4 123.2
Dec in AFS Investments $M 2,206.9 1,212.0 1,104.0 1,779.3 1,681.3
Dec in Other Investments $M 19.4 - 297.0 - -
Increase in Investments $M (3,909.1) (2,650.1) (1,481.0) (1,959.2) (5,574.4)
Inc in HTM Investments $M (69.2) (86.8) (155.3) (164.7) (61.0)
Inc in AFS Investments $M (1,423.1) (932.0) (1,325.7) (1,794.5) (5,513.4)
Inc in Other Investments $M (2,416.7) (1,631.3) - - -
Net Ch in Loans & Interbank $M (1,227.5) (725.8) (1,452.2) (1,184.2) 1,202.9
Net Ch in Customer Loans $M (1,245.2) (792.0) (1,452.2) (1,079.2) (633.6)
Net Ch in Interbank Assets $M - - - (105.1) 1,836.5
Cash from Investing Activities $M (2,523.6) (1,879.5) (1,356.9) (1,342.5) (2,650.7)
Cash from Financing Activities
Dividends Paid $M (156.1) (133.6) (119.7) (96.1) (108)
Cash From (Repayment) Debt $M (111.1) 14.5 (243.8) (1,319.4) (185.0)
Cash From (Repay) ST Debt $M (208.5) (370.3) (12.3) (96.1) 102.8
Cash From LT Debt $M 106.1 757.6 646.4 - -
Repayments of LT Debt $M (8.7) (372.9) (877.9) (1,223.3) (287.8)
Cash (Repurchase) of Equity $M 25.7 143.2 794.1 526.4 (153.3)
Increase in Capital Stock $M 25.7 143.2 794.1 526.4 22.4
Decrease in Capital Stock $M - - - - (175.7)
Net Change In Deposits $M 1,940.7 3,286.8 228.8 1,485.2 2,526.0
Other Financing Activities $M (3.5) (1,550.0) (809.7) (39.0) (7.8)
Cash from Financing Activities $M 1,695.6 1,760.9 (150.2) 557.1 2,071.9
Net Changes in Cash $M 300.2 617.6 (666.8) (331.1) (43.6)
Historical

Zions Bankcorp - Statement of Cash Flows
Cash from Operating Activities
Net Income $M 350.8 430.5 421.3 427.6 434.0
Depreciation & Amortization $M 179.1 179.1 179.1 179.1 179.1
Provision for Loan Losses $M 40 50 60 70 80
Non-Cash Items $M 178.9 180.8 176.9 179.6 182.3
Gain on Sale of Secs & Loans $M 119.3 107.6 105.3 106.9 108.5
Deferred Income Taxes $M 10.5 12.9 12.6 12.8 13.0
Other Non-Cash Adjustments $M 49.1 60.3 59.0 59.9 60.8
Net Ch in Operating Capital $M 122.8 150.7 147.4 149.7 151.9
Trading Assets & Liab $M 10.5 12.9 12.6 12.8 13.0
Net Ch in Operating Loans $M 24.55 30.1 29.5 29.9 30.4
Other Op Assets/Liab $M 87.7 107.6 105.3 106.9 108.5
Cash from Operating Activities $M 699.9 739.7 742.6 757.4 772.4
Cash from Investing Activities
Net Change in Fixed Assets $M (127.0) (127.0) (127.0) (127.0) (127.0)
Net Change in Investments $M (3,069.3) (1,422.6) 208.6 208.6 208.6
Decrease in Investments $M 3,715.6 1,712.4 1,712.4 1,712.4 1,712.4
Dec in HTM Investments $M 115.6 115.6 115.6 115.6 115.6
Dec in AFS Investments $M 3,600.0 1,596.7 1,596.7 1,596.7 1,596.7
Dec in Other Investments $M - - - - -
Increase in Investments $M (6,784.9) (3,134.9) (1,503.8) (1,503.8) (1,503.8)
Inc in HTM Investments $M (134.9) (134.9) (134.9) (134.9) (134.9)
Inc in AFS Investments $M (6,000.0) (3,000.0) (1,368.9) (1,368.9) (1,368.9)
Inc in Other Investments $M (650.0) - - - -
Net Ch in Loans & Interbank $M (80.0) (716.0) (1,155.2) (1,097.4) (1,042.6)
Net Ch in Customer Loans $M (1,280.0) (1,216.0) (1,155.2) (1,097.4) (1,042.6)
Net Ch in Interbank Assets $M 1,200.0 500.0 - - -
Cash from Investing Activities $M (3,276.3) (2,265.6) (1,073.6) (1,015.8) (961.0)
Cash from Financing Activities
Dividends Paid $M (107.0) (110.7) (119.1) (120.1) (121.1)
Cash From (Repayment) Debt $M 495.0 (100.0) (45.0) 4.3 49.7
Cash From (Repay) ST Debt $M 875.0 200.0 160.0 128.0 102.4
Cash From LT Debt $M - 100.0 115.0 132.3 152.1
Repayments of LT Debt $M (380.0) (400.0) (320.0) (256.0) (204.8)
Cash (Repurchase) of Equity $M (240.0) - 100.0 150.0 200.0
Increase in Capital Stock $M 10.0 50.0 100.0 150.0 200.0
Decrease in Capital Stock $M (250.0) (50.0) - - -
Net Change In Deposits $M 1,800.0 1,800.0 1,800.0 1,800.0 1,800.0
Other Financing Activities $M (145.00) (45.70) (45.70) (45.70) (45.70)
Cash from Financing Activities $M 1,803.0 1,543.6 1,690.2 1,788.4 1,882.9
Net Changes in Cash $M (773.4) 17.7 1,359.2 1,530.0 1,694.3
Projected

Appendix D

Zions Bankcorp - Operating Model - Dividend Discount Model
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Div Payout Ratio 4.80% 4.14% 8.20% 9.56% 18.30% 18.31% 18.31% 18.31% 18.31% 18.31%
Net Income 153.40 178.6 293.4 326.6 246.6 296.8 385.5 366.9 372.4 378.0
Dividend 7.36 7.39 24.06 31.22 45.13 54.33 70.58 67.17 68.18 69.20
# common shares 182.4 183 183.8 192.2 203.3 209.0 214.8 220.7 226.9 233.2
DIV/Share 0.04 0.04 0.13 0.16 0.22 0.26 0.33 0.30 0.30 0.30
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Div Payout Ratio 18.86% 18.86% 18.86% 18.86% 18.86% 17.69% 17.69% 17.69% 17.69% 17.69%
Net Income 288.1 357.6 354.3 354.2 354.0 307.1 419.0 382.3 394.9 408.1
Dividend 54.33 67.43 66.81 66.81 66.76 54.33 74.13 67.64 69.86 72.20
# common shares 209.0 214.8 220.7 226.9 233.2 209.0 214.8 220.7 226.9 233.2
DIV/Share 0.26 0.31 0.30 0.29 0.29 0.26 0.35 0.31 0.31 0.31
Projected (Downside) Projected (Upside)
Historical Projected (Base)
Fundamentals
Risk Free Rate 1.57% 2016 2017 2018 2019 2020 2021
ROE 5.67% DIV/Share 0.26 0.33 0.30 0.30 0.30 0.31
Payout Ratio 18.31% Terminal Value 41.97
Retention Rate 81.69% TV + DIV 42.26
Growth Rate 4.63% Present Value 0.33 0.29 0.27 36.11
Required Return 5.38% NPV $36.67
Div Growth 5.98%
Dividend Discount

Appendix E
Financial Ratios
Source: Bloomberg
Ratio Analysis ZIONS New York Comm East West People's United Synovus Signature Regions Suntrust Keycorp Citizens Financial Average
Valuation Multiples
Price to Earnings 19.77 15.92 17.27 20.72 19.56 17.09 15.58 15.42 14.92 16.98 17.32
Price to Book Value 1.29 1.35 2.17 1.22 1.81 2.29 1.10 1.20 1.34 0.94 1.47
Solvency Ratios
Debt to Equity 16.51 265.36 39.24 NA 78.79 122.32 49.63 59.26 103.09 67.79 NA
Debt to Capital 14.17 72.63 28.18 53.05 44.07 55.02 33.17 37.21 50.76 40.40 42.87
Debt to Assets 2.08 31.30 3.79 13.75 8.21 10.57 6.63 7.28 11.66 9.64 10.49
Financial Leverage 8.96 8.44 10.22 8.00 9.66 11.28 7.74 8.66 9.05 7.01 8.90
Profitability Ratios
Net Interest Margin 3.19 3.35 2.88 3.19 3.26 3.14 2.91 2.88 3.10
Net Profit Margin 14.79 (7.62) 33.93 20.25 20.64 36.78 19.75 24.07 21.67 17.41 20.17
Operating Profit Margin 21.60 (21.33) 51.04 30.40 32.74 61.93 28.45 33.70 28.90 26.18 29.36
Pretax Margin 21.60 (21.33) 51.04 30.40 32.74 61.93 28.45 33.70 28.90 26.18 29.36
Return on Assets (ROA) 0.73 (0.05) 1.28 0.71 0.82 1.11 0.92 0.97 0.68 0.70 0.79
Operating Return on Assets 1.08 (0.18) 1.74 1.05 1.28 1.84 1.32 1.38 0.87 1.03 1.14
Return on Total Capital 4.73 (0.11) 10.47 2.89 4.53 6.87 4.83 4.81 3.09 2.96 4.51
Return on Equity 5.51 (0.45) 12.80 5.74 7.99 12.07 6.74 8.00 6.00 4.94 6.93
Basic EPS 1.20 (0.11) 2.67 0.86 1.63 7.35 0.76 3.62 1.06 1.55 2.06
Diluted EPS 1.20 (0.11) 2.66 0.86 1.62 7.27 0.75 3.58 1.05 1.55 2.04
Free Cash Flow
Free Cash Flow to Equity (45.73) 1,066.69 576.25 866.20 506.78 2,038.11 3,750.00 (5,390.00) 3,334.00 (507.00) 619.53
Dupont Analysis
Tax Burden 58.02 29.73 73.77 67.39 61.00 60.10 65.92 67.69 76.20 66.85 62.67
Asset Turnover 0.04 0.04 0.04 0.04 0.04 0.04 0.05 0.05 0.04 0.04 0.04
Leverage Ratio 8.96 8.44 10.22 8.00 9.66 11.28 7.74 8.66 9.05 7.01 8.90
Adjusted Return on Equity 5.61 8.83 12.80 5.71 8.45 12.07 6.81 7.69 7.71 4.84 8.05
5 Year Average Adj ROE 4.86 8.53 5.15 9.81 13.15 6.08 7.20 8.98 7.97
Payout Ratio 18.30 77.03 25.65 - 30.07 25.50 27.35 29.13
Sustainable Growth Rate 3.09 8.98 1.28 5.55 13.85 4.40 6.31 6.21 3.20 5.87

Appendix F
Board Members
Source: 2016 Proxy Statement
Nam e Title Background Tenure Independent
Harris H. Simmons Chairman and CEO and member of the
Executive Committee
Mr. Simmons' over 40 years of experience in banking and leadership
of the company. During his tenure as President and then Charman and
CEO, we have grown from $3 billion in assets to our present $60
billion.
27 No
Jerry C. Atkin Chairman of the Compensation Committee
and member of Executive and Nominating
& Corporate Governance Committees
Mr. Atkin has skills and experience as the head of a publicly traded
company for 40 years as well as an accounting background. At
SkyWest, he led the company's growth from annual revenue of less
than $1 million to more than $3 billion.
23 Yes
Patricia Frobes Lead Director, Chairman of the Executive
Committee and member of the Nominating
& Corporate Governance Committee
Ms. Frobes brings a strong real estate and legal background, as well
as broad knowledge of the California market. She has specialties in
real estate development and financing matters.
13 Yes
Suren K. Gupta Member of the Risk Oversight Committee Mr. Gupta's deep experience in technology, operations, and business
strategy adds depth to our Board's knowledge about data, technology,
and security, areas of evolving and increasing risk to the financial
services industry.
1 Yes
J. David Heaney Member of the Audit and Nominating &
Corporate Governance Committees
Mr. Heaney contributes financial and legal expertise, and broad
knowledge of the Texas market. He was founding director of Amegy
Bancorporation, Inc., which we acquired in December 2005.
11 Yes
Vivian S. Lee Member of the Audit Committee Dr. Lee brings a wealth of experience as a CEO focused on
streamlining processes and improving efficiency in the highly regulated
and rapidly evolving health care industry. She is responsible for an
annual budget of more than $2.4 billion, and leads a healthcare
system comprising four hospitals, numerous clinical and research
specialty centers, neighborhood health centers, an insurance plan, and
more than 1,200 board-certified physicians.
1 Yes
Edward F. Murphy Chairman of the Audit Committee and
member of the Executive and Risk
Oversight Committees
Mr. Murphy is a Certified Public Accountant who contributes significant
expertise in accounting and financial reporting in the banking industry,
as well as extensive experience in operational risk management and
internal control processes.
2 Yes
Roger B. Porter Member of the Compensation and
Nominating & Corporate Governance
Committees
Dr. Porter brings to the Board his broad knowledge of business-
government relations and economics. He has served for more than a
decade in senior economic policy positions in the White House,
including as assistant to the president for economic and domestic
policy from 1989 to 1993.
23 Yes
Stephen D. Quinn Member of the Audit and Risk Oversight
Committees
Mr. Quinn contributes financial and investment banking expertise. At
Goldman Sachs, he specialized in corporate finance, spending two
decades structuring mergers and acquisitions, debt and equity
financings, and other transactions for some of America's best-known
corporations.
14 Yes
L. E. Simmons Board Member Mr. Simmons brings extensive finance, investment, and merger and
acquisition experience. Prior to founding SCF, Mr. Simmons co-
founded Simmons & Company International, an investment banking
firm to oil field service companies. Mr. Simmons also benefits the
Board through his broad knowledge of the energy industry and of the
Texas market.
38 No
Shelley Thomas
Williams
Member of the Risk Oversight and
Compensation Committees
Ms. Williams' wide-ranging experience in media and public relations is
a tremendous resource. She was senior director of communications for
the Huntsman Cancer Institute at the University of Utah, a senior vice
president for the Olympic Winter Games of 2002, vice president for
public affairs of Smith's Food & Drug Centers, Inc., now part of Kroger
Corporation, and a director of The Regence Group, which is privately
held.
18 Yes
John C. Erickson Former Chairman of the Risk Oversight
Committee and member of Executive and
Audit Committees
Mr. Erickson resigned from the Board and its committess in April 2016
to accept a senior executive positions with another financial institution
and is not standing for reelection at the 2016 Annual Meeting. The
appointment of a new Chair for the Risk Oversight Committee is
pending.
2 Yes
Steven C.
Wheelwright
Former Chairman of the Nominating &
Corporate Governance Committee and
member of Executive and Compensation
Committees
Mr. Wheelwright reached retirement age as specified in the Company's
Corporate Governance Guidelines and therefore has not been
nominated to stand for reelection at the 2016 Annual Meeting
12 Yes

Appendix G
Five Forces Analysis on ZION’s core business elements.
Threat of New Entrants - Minimal
The current regulatory atmosphere is not conducive for bank startups. It is highly unlikely a bank will be able to enter the market and
viably compete against ZION
Supplier Power - High Threat
We categorized ZION’s supplier as the FED who holds high power as it controls rates and the supply of money. Individual
customers also supply ZION with deposits but have minimal influence beyond the ability to select who their financial services
provider. Finally, other banks can loan ZION money but have minimal power given their influence is tied to the Prime Rate.
Buyer Power - Moderate Threat
Customers, considered individual borrowers, have no control once the loan is signed. Their only power is consumer discretion in
deciding who to borrow from. They have myriad of choices and can invest their money with competitors instead. Businesses come
to ZION for loans and have the same discretion as the individual borrowers.
Competitive Rivalry - High Threat
The financial sector is highly competitive, with banks constantly vying to offer the best products, services and rates. ZION’s
management must ensure they can adapt with technological changes in the industry, such as making concerted pushes into online
and mobile banking. The industry is filled with regional banks, national banks, and credit unions all competing for market share.
Each of these institutions is increasing their reach through online platforms, enhancing the aggressive atmosphere all while opening
each institution to a wider customer base.
Threat of Substitution - High Threat
There are numerous companies offering the same services as ZION. As such, there are multiple banks and financial firms that
consumers and businesses can turn to for their financing needs. The services and investment products ZIONs offers can easily be
replicated, often with more attractive interest rates or other benefits. For this reason ZION has made stronger efforts to enhance
their online capabilities and improve their own services.

Appendix H
Subsidiaries by State
ZION has expanded its size and market share through organic growth as well as acquisitions. It has grown to 14 subsidiaries.
Recently ZION has focused on consolidating its subsidiaries into a single charter while still operating under regional brand names
according to geographic location.
Source: Company’s Annual Report

Disclosures:
Ownership and material conflicts of interest:
The author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company.
The author(s), or a member of their household, of this report does not know of the existence of any conflicts of interest that might bias the
content or publication of this report.
Receipt of compensation:
Compensation of the author(s) of this report is not based on investment banking revenue.
Position as a officer or director:
The author(s), or a member of their household, does not serve as an officer, director or advisory board member of the subject company.
Market making:
The author(s) does not act as a market maker in the subject company’s securities.
Disclaimer:
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be
reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information
is not intended to be used as the basis of any investment decisions by any person or entity. This information does not constitute investment
advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by
any individual affiliated with CFA Society of Salt Lake, CFA Institute or the CFA Institute Research Challenge with regard to this company’s stock.

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