Fitch Rates Zion's $500MM Sub Debt Issue 'BBB+'.Business Editors NEW YORK--(BUSINESS WIRE)--Sept. 4, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned a rating of 'BBB+' to Zions Bancorporation's (ZION) $500 million of twelve-year subordinated notes. The Rating Outlook is Stable. The company expects to use the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to repay other debt and for general corporate purposes. Having grown through a series of acquisitions, ZION operates a geographically diverse banking franchise across eight attractive states in the western half of the U.S. ZION's ratings reflect the company's broad customer base, sound asset quality measures and historically somewhat aggressive capital management. ZION reported improved results for 1H03 with the absence of one-time charges that had impacted some previous quarters. Supported by a solid net interest margin (NIM nim 1 tr. & intr.v. nimmed, nim·ming, nims Archaic To steal; pilfer. [Middle English nimen, to take, from Old English niman; see ) and growth in average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin , net interest income remains the company's primary source of revenues. The NIM has been relatively stable in a difficult market for asset sensitive companies like ZION reflecting the company's usage of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. to reduce NIM volatility. Non-interest income, currently running north of 25% of total revenues, is dominated by deposit service charges. In addition, the company has completed a program to reduce operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , helping to drive an improving efficiency ratio. ZION's asset quality has held up well in a weakened economic environment although both non-performing assets and net charge-offs have inched-up. Still, asset quality measures remain better than many peers. The company continues to expect credit quality to be stable to slowly improving. The company's loan loss reserve appears adequate given the portfolio composition and the outlook for the regional economy. The tangible capital ratio, which had been aggressively managed through buybacks and balance sheet growth, has been managed upward over the last two years. |
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